Capital Leases

Property under capital leases is comprised primarily of computers and related equipment. Capital lease assets included in the Balance Sheets were $346 million and $274 million as of December 31, 2018 and March 31, 2018, respectively. Accumulated depreciation on the property under capital leases was $99 million and $57 million as of December 31, 2018 and March 31, 2018, respectively.

Depreciation expense for capital lease assets was $29 million and $21 million for the three months ended December 31, 2018 and December 31, 2017, respectively. Depreciation expense for capital lease assets was $76 million and $51 million for the nine months ended December 31, 2018 and December 31, 2017, respectively.

Capital lease obligations primarily consist of contractual arrangements with HPE’s wholly-owned leasing subsidiary (“HPE Financial Services”). Capital lease obligations included in the Balance Sheets were $289 million and $304 million as of December 31, 2018 and March 31, 2018, respectively. Interest expense on capital lease obligations was $5 million and zero for the three months ended December 31, 2018 and December 31, 2017, respectively. Interest expense on capital lease obligations was $14 million and $7 million for the nine months ended December 31, 2018 and December 31, 2017, respectively.

As of December 31, 2018, future minimum lease payments required to be made under capital leases were as follows:



Fiscal Year	(in millions)
Remainder of fiscal year 2019	$	51
2020	127
2021	79
2022	47
2023	12
Thereafter	1
Total minimum lease payments	317
Less: Amount representing interest and executory costs	28
Present value of net minimum lease payments	289
Less: Current capital lease liability	140
Non-current capital lease liability	$	149