falsedesktopHPE2020-10-31000164559020000056{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large accelerated filer\t☒\tAccelerated filer\t☐\tNon-accelerated filer\t☐\tSmaller reporting company\t☐\n\t\t\t\t\t\tEmerging growth company\t☐\n", "q10k_tbl_1": "\t\tPage\n\tPART I\t\nItem 1.\tBusiness\t2\nItem 1A.\tRisk Factors\t14\nItem 1B.\tUnresolved Staff Comments\t27\nItem 2.\tProperties\t27\nItem 3.\tLegal Proceedings\t27\nItem 4.\tMine Safety Disclosures\t28\n\tPART II\t\nItem 5.\tMarket for Registrant's Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities\t28\nItem 6.\tSelected Financial Data\t30\nItem 7.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t31\nItem 7A.\tQuantitative and Qualitative Disclosures about Market Risk\t62\nItem 8.\tFinancial Statements and Supplementary Data\t64\nItem 9.\tChanges in and Disagreements with Accountants on Accounting and Financial Disclosure\t140\nItem 9A.\tControls and Procedures\t140\nItem 9B.\tOther Information\t140\n\tPART III\t\nItem 10.\tDirectors Executive Officers and Corporate Governance\t141\nItem 11.\tExecutive Compensation\t141\nItem 12.\tSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\t141\nItem 13.\tCertain Relationships and Related Transactions and Director Independence\t141\nItem 14.\tPrincipal Accounting Fees and Services\t141\n\tPART IV\t\nItem 15.\tExhibits Financial Statement Schedules\t142\n", "q10k_tbl_2": "Name\tAge\tPosition\nAntonio Neri\t53\tPresident and Chief Executive Officer\nTom Black\t51\tSenior Vice President General Manager of Storage\nKirt P. Karros\t51\tSenior Vice President Finance and Treasurer\nNeil MacDonald\t52\tSenior Vice President General Manager of Compute\nAlan May\t62\tExecutive Vice President and Chief People Officer\nKeerti Melkote\t50\tPresident Intelligent Edge\nJeff T. Ricci\t59\tSenior Vice President Controller and Principal Accounting Officer\nTarek Robbiati\t55\tExecutive Vice President and Chief Financial Officer\nIrv Rothman\t74\tPresident and Chief Executive Officer HPE Financial Services\nJohn F. Schultz\t56\tExecutive Vice President Chief Operating and Legal Officer\nPeter Ungaro\t52\tSenior Vice President General Manager of High Performance Compute and Mission-Critical Systems and Hewlett Packard Labs\n", "q10k_tbl_3": "\tAs of October 31 2020\t\t\n\tOwned\tLeased\tTotal\n\t(Square feet in millions)\t\t\nAdministration and support\t4\t7\t11\n(Percentage)\t36%\t64%\t100%\nCore data centers manufacturing plants research and development facilities and warehouse operations\t1\t1\t2\n(Percentage)\t50%\t50%\t100%\nTotal\t5\t8\t13\n(Percentage)\t38%\t62%\t100%\n", "q10k_tbl_4": "\t11/2015\t10/2016\t10/2017\t10/2018\t10/2019\t10/2020\nHewlett Packard Enterprise\t100.00\t157.00\t169.80\t190.36\t211.12\t115.85\nS&P 500 Index\t100.00\t103.27\t127.67\t137.04\t156.66\t171.85\nS&P Information Technology Index\t100.00\t109.74\t152.49\t171.25\t209.93\t282.32\n", "q10k_tbl_5": "\tFor the fiscal years ended October 31\t\t\t\t\n\t2020\t2019\t2018\t2017\t2016\n\tIn millions except per share amounts\t\t\t\t\nStatements of Earnings:\t\t\t\t\t\nNet revenue\t26982\t29135\t30852\t28871\t30280\nEarnings (loss) from continuing operations\t(329)\t1274\t1737\t564\t3741\nNet earnings (loss) from continuing operations\t(322)\t1049\t2012\t436\t3237\nNet loss from discontinued operations\t0\t0\t(104)\t(92)\t(76)\nNet earnings (loss)\t(322)\t1049\t1908\t344\t3161\nNet earnings (loss) per share\t\t\t\t\t\nBasic\t\t\t\t\t\nContinuing operations\t(0.25)\t0.78\t1.32\t0.26\t1.89\nDiscontinued operations\t0\t0\t(0.07)\t(0.05)\t(0.05)\nTotal basic net earnings (loss) per share\t(0.25)\t0.78\t1.25\t0.21\t1.84\nDiluted\t\t\t\t\t\nContinuing operations\t(0.25)\t0.77\t1.30\t0.26\t1.86\nDiscontinued operations\t0\t0\t(0.07)\t(0.05)\t(0.04)\nTotal diluted net earnings (loss) per share\t(0.25)\t0.77\t1.23\t0.21\t1.82\nCash dividends declared per share\t0.3600\t0.4575\t0.4875\t0.2600\t0.2200\nBasic shares outstanding\t1294\t1353\t1529\t1646\t1715\nDiluted shares outstanding\t1294\t1366\t1553\t1674\t1739\nBalance Sheets:\t\t\t\t\t\nAt year-end:\t\t\t\t\t\nTotal assets\t54015\t51803\t55493\t61406\t79629\nLong-term debt\t12186\t9395\t10136\t10182\t12168\nTotal debt\t15941\t13820\t12141\t14032\t15693\n", "q10k_tbl_6": "\tHPE Consolidated\tCompute\tHPC & MCS\tStorage\tA & PS\tIntelligent Edge\tFinancial Services\tCorporate Investments\t\n\tDollars in millions except for per share amounts\t\t\t\t\t\t\t\t\nNet revenue(1)\t26982\t12215\t3036\t4681\t951\t2855\t3352\t490\t\nYear-over-year change %\t(7.4)%\t(10.5)%\t4.3%\t(9.7)%\t(6.0)%\t(2.0)%\t(6.4)%\t(3.4)%\t\nEarnings (loss) from operations (2)\t(329)\t893\t237\t719\t(5)\t281\t278\t(100)\t\nEarnings (loss) from operations as a % of net revenue\t(1.2)%\t7.3%\t7.8%\t15.4%\t(0.5)%\t9.8%\t8.3%\t(20.4)%\t\nYear-over-year change percentage points\t(5.6)\tpts (4.1)\tpts (3.2)\tpts (2.4)\tpts 4.8\tpts 4.3\tpts (0.2)\tpts 0.9\tpts\nNet loss\t(322)\t\t\t\t\t\t\t\t\nDiluted net loss per share\t(0.25)\t\t\t\t\t\t\t\t\nSupplemental Non-GAAP information:\t\t\t\t\t\t\t\t\t\nNon-GAAP earnings from operations\t2008\t\t\t\t\t\t\t\t\nNon-GAAP earnings from operations as a % of net revenue\t7.4%\t\t\t\t\t\t\t\t\nNon-GAAP net earnings\t1765\t\t\t\t\t\t\t\t\nNon-GAAP diluted net earnings per share\t1.35\t\t\t\t\t\t\t\t\n", "q10k_tbl_7": "\tFiscal year ended October 31 2020\tDiluted net earnings per share\n\tIn millions\t\nGAAP net earnings (loss)\t(322)\t(0.25)\nNon-GAAP adjustments:\t\t\nAmortization of initial direct costs\t10\t0.01\nAmortization of intangible assets\t379\t0.29\nImpairment of goodwill\t865\t0.67\nTransformation costs\t950\t0.74\nDisaster charges\t26\t0.02\nAcquisition disposition and other related charges\t107\t0.08\nTax indemnification adjustments\t101\t0.08\nNon-service net periodic benefit credit\t(136)\t(0.11)\nEarnings from equity interests(1)\t145\t0.11\nAdjustments for taxes\t(360)\t(0.29)\nNon-GAAP net earnings\t1765\t1.35\nGAAP earnings (loss) from operations\t(329)\t\nNon-GAAP adjustments:\t\t\nAmortization of initial direct costs\t10\t\nAmortization of intangible assets\t379\t\nImpairment of goodwill\t865\t\nTransformation costs\t950\t\nDisaster charges\t26\t\nAcquisition disposition and other related charges\t107\t\nNon-GAAP earnings from operations\t2008\t\nGAAP operating profit margin\t(1.2)%\t\nNon-GAAP adjustments\t8.6%\t\nNon-GAAP operating profit margin\t7.4%\t\nGAAP Net revenue\t26982\t\nGAAP Cost of sales\t18513\t\nGAAP gross profit\t8469\t\nNon-GAAP adjustments\t\t\nAmortization of initial direct costs\t10\t\nAcquisition disposition and other related charges(2)\t27\t\nNon-GAAP gross profit\t8506\t\nGAAP gross profit margin\t31.4%\t\nNon-GAAP adjustments\t0.1%\t\nNon-GAAP gross profit margin\t31.5%\t\n", "q10k_tbl_8": "\tFor the fiscal years ended October 31\t\t\t\t\t\n\t2020\t\t2019\t\t2018\t\n\tDollars\t% of Revenue\tDollars\t% of Revenue\tDollars\t% of Revenue\n\tDollars in millions\t\t\t\t\t\nNet revenue\t26982\t100.0%\t29135\t100.0%\t30852\t100.0%\nCost of sales\t18513\t68.6%\t19642\t67.4%\t21621\t70.1%\nGross profit\t8469\t31.4%\t9493\t32.6%\t9231\t29.9%\nResearch and development\t1874\t6.9%\t1842\t6.3%\t1667\t5.4%\nSelling general and administrative\t4624\t17.1%\t4907\t16.9%\t4921\t15.9%\nAmortization of intangible assets\t379\t1.4%\t267\t0.8%\t294\t1.0%\nImpairment of goodwill\t865\t3.2%\t0\t-%\t88\t0.3%\nRestructuring charges\t0\t-%\t0\t-%\t19\t0.1%\nTransformation costs\t950\t3.5%\t453\t1.6%\t414\t1.3%\nDisaster charges (recovery)\t26\t0.1%\t(7)\t-%\t0\t-%\nAcquisition disposition and other related charges\t80\t0.3%\t757\t2.6%\t82\t0.3%\nSeparation costs\t0\t-%\t0\t-%\t9\t-%\nEarnings (loss) from continuing operations\t(329)\t(1.2)%\t1274\t4.4%\t1737\t5.6%\nInterest and other net\t(215)\t(0.8)%\t(177)\t(0.6)%\t(274)\t(0.9)%\nTax indemnification adjustments\t(101)\t(0.4)%\t377\t1.3%\t(1354)\t(4.3)%\nNon-service net periodic benefit credit\t136\t0.5%\t59\t0.2%\t121\t0.4%\nEarnings from equity interests\t67\t0.3%\t20\t-%\t38\t0.1%\nEarnings (loss) from continuing operations before taxes\t(442)\t(1.6)%\t1553\t5.3%\t268\t0.9%\n(Provision) benefit for taxes\t120\t0.4%\t(504)\t(1.7)%\t1744\t5.6%\nNet earnings (loss) from continuing operations\t(322)\t(1.2)%\t1049\t3.6%\t2012\t6.5%\nNet loss from discontinued operations\t0\t-%\t0\t-%\t(104)\t(0.3)%\nNet earnings (loss)\t(322)\t(1.2)%\t1049\t3.6%\t1908\t6.2%\n", "q10k_tbl_9": "\tFor the fiscal years ended October 31\t\n\t2020\t2019\n\tPercentage Points\t\nCompute\t(4.9)\t(4.9)\nHPC & MCS\t0.4\t(0.2)\nStorage\t(1.7)\t0.1\nA & PS\t(0.2)\t(0.4)\nIntelligent Edge\t(0.2)\t(0.3)\nFinancial Services\t(0.8)\t(0.3)\nCorporate Investments\t(0.1)\t(0.1)\nTotal Segment\t(7.5)\t(6.1)\nElimination of Intersegment Net Revenue\t0.1\t0.5\nTotal HPE\t(7.4)\t(5.6)\n", "q10k_tbl_10": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t12215\t13642\t15142\nEarnings from operations\t893\t1550\t1306\nEarnings from operations as a % of net revenue\t7.3%\t11.4%\t8.6%\n", "q10k_tbl_11": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t3036\t2910\t2987\nEarnings from operations\t237\t320\t384\nEarnings from operations as a % of net revenue\t7.8%\t11.0%\t12.9%\n", "q10k_tbl_12": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t4681\t5185\t5158\nEarnings from operations\t719\t924\t830\nEarnings from operations as a % of net revenue\t15.4%\t17.8%\t16.1%\n", "q10k_tbl_13": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t951\t1012\t1118\nEarnings from operations\t(5)\t(54)\t(79)\nEarnings from operations as a % of net revenue\t(0.5)%\t(5.3)%\t(7.1)%\n", "q10k_tbl_14": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t2855\t2913\t3013\nEarnings from operations\t281\t159\t339\nEarnings from operations as a % of net revenue\t9.8%\t5.5%\t11.3%\n", "q10k_tbl_15": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t3352\t3581\t3671\nEarnings from operations\t278\t305\t286\nEarnings from operations as a % of net revenue\t8.3%\t8.5%\t7.8%\n", "q10k_tbl_16": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nFinancing volume\t6005\t6200\t6521\n", "q10k_tbl_17": "\tAs of October 31\t\n\t2020\t2019\n\tDollars in millions\t\nFinancing receivables gross\t9058\t8652\nNet equipment under operating leases\t4027\t4084\nCapitalized profit on intercompany equipment transactions(1)\t315\t382\nIntercompany leases(1)\t92\t100\nGross portfolio assets\t13492\t13218\nAllowance for doubtful accounts(2)\t154\t131\nOperating lease equipment reserve\t64\t60\nTotal reserves\t218\t191\nNet portfolio assets\t13274\t13027\nReserve coverage\t1.6%\t1.4%\nDebt-to-equity ratio(3)\t7.0x\t7.0x\n", "q10k_tbl_18": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nNet revenue\t490\t507\t543\nLoss from operations\t(100)\t(108)\t(91)\nLoss from operations as a % of net revenue\t(20.4)%\t(21.3)%\t(16.8)%\n", "q10k_tbl_19": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nCash cash equivalents and restricted cash\t4621\t4076\t5084\nTotal debt\t15941\t13820\t12141\nAvailable borrowing resources\t6297\t5639\t5757\n", "q10k_tbl_20": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nNet cash provided by operating activities\t2240\t3997\t2964\nNet cash used in investing activities\t(2578)\t(3457)\t(1880)\nNet cash (used in) provided by financing activities\t883\t(1548)\t(5592)\nNet Increase (decrease) in cash cash equivalents and restricted cash\t545\t(1008)\t(4508)\n", "q10k_tbl_21": "\tAs of October 31\t\t\n\t2020\t2019\t2018\nDays of sales outstanding in accounts receivable\t42\t37\t37\nDays of supply in inventory\t48\t45\t40\nDays of purchases outstanding in accounts payable\t(97)\t(104)\t(100)\nCash conversion cycle\t(7)\t(22)\t(23)\n", "q10k_tbl_22": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tDollars in millions\t\t\nShort-term debt\t3755\t4425\t2005\nLong-term debt\t12186\t9395\t10136\nWeighted-average interest rate\t3.2%\t4.1%\t4.5%\n", "q10k_tbl_23": "\t\tPayments Due by Period\t\t\t\n\tTotal\t1 Year or Less\t1-3 Years\t3-5 Years\tMore than 5 Years\n\tIn millions\t\t\t\t\nPrincipal payments on long-term debt(1)\t14740\t2772\t4461\t4506\t3001\nInterest payments on long-term debt(2)\t4147\t468\t783\t519\t2377\nOperating lease obligations (net of sublease rental income)(3)\t1256\t167\t330\t269\t490\nUnconditional Purchase obligations(4)\t544\t231\t264\t17\t32\nCapital lease obligations (includes interest)\t68\t6\t13\t14\t35\nTotal(5)(6)(7)(8)\t20755\t3644\t5851\t5325\t5935\n", "q10k_tbl_24": "\tPage\nReports of Independent Registered Public Accounting Firm\t65\nManagement's Report on Internal Control Over Financial Reporting\t68\nConsolidated Statements of Earnings\t69\nConsolidated Statements of Comprehensive Income\t70\nConsolidated Balance Sheets\t71\nConsolidated Statements of Cash Flows\t72\nConsolidated Statements of Stockholders' Equity\t73\nNotes to Consolidated Financial Statements\t75\nNote 1: Overview and Summary of Significant Accounting Policies\t75\nNote 2: Segment Information\t86\nNote 3: Transformation Programs\t90\nNote 4: Retirement and Post-Retirement Benefit Plans\t91\nNote 5: Stock-Based Compensation\t98\nNote 6: Taxes on Earnings\t101\nNote 7: Balance Sheet Details\t105\nNote 8: Accounting for Leases as a Lessee\t108\nNote 9: Accounting for Leases as a Lessor\t110\nNote 10: Acquisitions\t115\nNote 11: Goodwill and Intangible Assets\t116\nNote 12: Fair Value\t118\nNote 13: Financial Instruments\t120\nNote 14: Borrowings\t125\nNote 15: Stockholders' Equity\t128\nNote 16: Net Earnings Per Share\t130\nNote 17: Litigation and Contingencies\t131\nNote 18: Guarantees Indemnifications and Warranties\t135\nNote 19: Commitments\t136\nNote 20: Equity Method Investments\t137\nQuarterly Summary\t139\n", "q10k_tbl_25": "\tValuation of goodwill\nDescription of the matter\tAt October 31 2020 the Company's goodwill was $18.0 billion. As discussed in Note 11 to the consolidated financial statements goodwill is tested for impairment at least annually at the reporting unit level and more frequently when warranted based on indicators of impairment. Auditing management's goodwill impairment tests were complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting units particularly for those reporting units with a fair value below or only marginally in excess of carrying value. In particular the fair value estimate was sensitive to significant assumptions such as changes in the weighted average cost of capital revenue growth rate operating margin and terminal value which are affected by expectations about future market or economic conditions.\nHow we addressed the matter in our audit\tWe obtained an understanding evaluated the design and tested the operating effectiveness of controls over the Company's goodwill impairment review process including controls over management's review of the significant assumptions described above. To test the estimated fair value of the Company's reporting units we performed audit procedures that included among others assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company's business model product mix and other factors would affect the significant assumptions. We assessed the historical accuracy of management's estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions. In addition we tested management's reconciliation of the fair value of the reporting units to the market capitalization of the Company. We involved our valuation professionals to evaluate the application of valuation methodologies in each of the Company's impairment tests.\n\tEstimation of variable consideration\nDescription of the matter\tAs described in Note 1 to the consolidated financial statements the Company recognizes revenue for sales to its customers after deducting management's estimates of variable consideration which may include various rebates volume-based discounts cooperative marketing price protection and other incentive programs that are offered to customers partners and distributors. Estimated variable consideration is presented within other accrued liabilities on the consolidated balance sheet and totaled $1.0 billion at October 31 2020. Auditing the estimates of variable consideration was complex and judgmental due to the level of uncertainty involved in management's estimate of expected usage of these programs.\nHow we addressed the matter in our audit\tWe obtained an understanding evaluated the design and tested the operating effectiveness of controls over the Company's process for estimating variable consideration including controls over management's review of the significant assumptions described above. To test the Company's determination of variable consideration we performed audit procedures that included among others evaluating the methodologies testing the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions to historical experience of the Company to develop an expectation of the variable consideration associated with product remaining in the distribution channel at October 31 2020 which we compared to management's recorded amount. In addition we inspected the underlying agreements and compared the incentive rates used in the Company's analyses with contractual rates. We assessed the historical accuracy of management's estimates by comparing previous estimates of variable consideration to the amount of actual payments in subsequent periods.\n", "q10k_tbl_26": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions except per share amounts\t\t\nNet revenue:\t\t\t\nProducts\t16264\t18170\t19504\nServices\t10249\t10507\t10901\nFinancing income\t469\t458\t447\nTotal net revenue\t26982\t29135\t30852\nCosts and expenses:\t\t\t\nCost of products\t11698\t12533\t14090\nCost of services\t6544\t6812\t7253\nFinancing interest\t271\t297\t278\nResearch and development\t1874\t1842\t1667\nSelling general and administrative\t4624\t4907\t4921\nAmortization of intangible assets\t379\t267\t294\nImpairment of goodwill\t865\t0\t88\nRestructuring charges\t0\t0\t19\nTransformation costs\t950\t453\t414\nDisaster charges (recoveries)\t26\t(7)\t0\nAcquisition disposition and other related charges\t80\t757\t82\nSeparation costs\t0\t0\t9\nTotal costs and expenses\t27311\t27861\t29115\nEarnings (loss) from continuing operations\t(329)\t1274\t1737\nInterest and other net\t(215)\t(177)\t(274)\nTax indemnification adjustments\t(101)\t377\t(1354)\nNon-service net periodic benefit credit\t136\t59\t121\nEarnings from equity interests\t67\t20\t38\nEarnings (loss) from continuing operations before taxes\t(442)\t1553\t268\n(Provision) benefit for taxes\t120\t(504)\t1744\nNet earnings (loss) from continuing operations\t(322)\t1049\t2012\nNet loss from discontinued operations\t0\t0\t(104)\nNet earnings (loss)\t(322)\t1049\t1908\nNet earnings (loss) per share:\t\t\t\nBasic\t\t\t\nContinuing operations\t(0.25)\t0.78\t1.32\nDiscontinued operations\t0\t0\t(0.07)\nTotal basic net earnings (loss) per share\t(0.25)\t0.78\t1.25\nDiluted\t\t\t\nContinuing operations\t(0.25)\t0.77\t1.30\nDiscontinued operations\t0\t0\t(0.07)\nTotal diluted net earnings (loss) per share\t(0.25)\t0.77\t1.23\nWeighted-average shares used to compute net earnings (loss) per share:\t\t\t\nBasic\t1294\t1353\t1529\nDiluted\t1294\t1366\t1553\n", "q10k_tbl_27": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nNet earnings (loss)\t(322)\t1049\t1908\nOther comprehensive loss before taxes:\t\t\t\nChange in net unrealized gains (losses) on available-for-sale securities:\t\t\t\nNet unrealized gains (losses) arising during the period\t(1)\t9\t(3)\n(Gains) losses reclassified into earnings\t(4)\t(3)\t(9)\n\t(5)\t6\t(12)\nChange in net unrealized gains (losses) on cash flow hedges:\t\t\t\nNet unrealized gains (losses) arising during the period\t(40)\t308\t169\nNet (gains) losses reclassified into earnings\t(21)\t(371)\t8\n\t(61)\t(63)\t177\nChange in unrealized components of defined benefit plans:\t\t\t\nNet unrealized gains (losses) arising during the period\t(358)\t(701)\t(423)\nAmortization of net actuarial loss and prior service benefit\t249\t216\t191\nCurtailments settlements and other\t10\t15\t22\n\t(99)\t(470)\t(210)\nChange in cumulative translation adjustment:\t\t\t\nCumulative translation adjustment arising during the period\t(12)\t(18)\t(70)\nRelease of cumulative translation adjustment as a result of divestitures and country exits\t0\t0\t20\n\t(12)\t(18)\t(50)\nOther comprehensive loss before taxes\t(177)\t(545)\t(95)\n(Provision) benefit for taxes\t8\t36\t(42)\nOther comprehensive loss net of taxes\t(169)\t(509)\t(137)\nComprehensive income (loss)\t(491)\t540\t1771\n", "q10k_tbl_28": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions except par value\t\nASSETS\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t4233\t3753\nAccounts receivable net of allowance for doubtful accounts\t3386\t2957\nFinancing receivables net of allowance for doubtful accounts\t3794\t3572\nInventory\t2674\t2387\nAssets held for sale\t77\t46\nOther current assets\t2392\t2428\nTotal current assets\t16556\t15143\nProperty plant and equipment\t5625\t6054\nLong-term financing receivables and other assets\t10544\t8918\nInvestments in equity interests\t2170\t2254\nGoodwill\t18017\t18306\nIntangible assets\t1103\t1128\nTotal assets\t54015\t51803\nLIABILITIES AND STOCKHOLDERS' EQUITY\t\t\nCurrent liabilities:\t\t\nNotes payable and short-term borrowings\t3755\t4425\nAccounts payable\t5383\t5595\nEmployee compensation and benefits\t1391\t1522\nTaxes on earnings\t148\t186\nDeferred revenue\t3430\t3234\nAccrued restructuring\t366\t195\nOther accrued liabilities\t4265\t4002\nTotal current liabilities\t18738\t19159\nLong-term debt\t12186\t9395\nOther non-current liabilities\t6995\t6100\nCommitments and contingencies\t\t\nStockholders' equity\t\t\nHPE stockholders' equity:\t\t\nPreferred stock $0.01 par value (300 shares authorized; none issued)\t0\t0\nCommon stock $0.01 par value (9600 shares authorized; 1287 and 1294 issued and outstanding at October 31 2020 and October 31 2019 respectively)\t13\t13\nAdditional paid-in capital\t28350\t28444\nAccumulated deficit\t(8375)\t(7632)\nAccumulated other comprehensive loss\t(3939)\t(3727)\nTotal HPE stockholders' equity\t16049\t17098\nNon-controlling interests\t47\t51\nTotal stockholders' equity\t16096\t17149\nTotal liabilities and stockholders' equity\t54015\t51803\n", "q10k_tbl_29": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nCash flows from operating activities:\t\t\t\nNet earnings (loss)\t(322)\t1049\t1908\nAdjustments to reconcile net earnings (loss) to net cash provided by operating activities:\t\t\t\nDepreciation and amortization\t2625\t2535\t2576\nImpairment of goodwill\t865\t0\t88\nStock-based compensation expense\t274\t268\t286\nProvision for inventory and doubtful accounts\t308\t240\t198\nRestructuring charges\t769\t221\t550\nDeferred taxes on earnings\t(294)\t1079\t2229\nEarnings from equity interests\t(67)\t(20)\t(38)\nDividends received from equity investee\t165\t156\t164\nOther net\t163\t204\t(158)\nChanges in operating assets and liabilities net of acquisitions:\t\t\t\nAccounts receivable\t(461)\t374\t(220)\nFinancing receivables\t(487)\t(410)\t(366)\nInventory\t(527)\t46\t(260)\nAccounts payable\t(225)\t(525)\t(27)\nTaxes on earnings\t(122)\t(1093)\t(4516)\nRestructuring\t(478)\t(331)\t(647)\nOther assets and liabilities\t54\t204\t1197\nNet cash provided by operating activities\t2240\t3997\t2964\nCash flows from investing activities:\t\t\t\nInvestment in property plant and equipment\t(2383)\t(2856)\t(2956)\nProceeds from sale of property plant and equipment\t703\t597\t1094\nPurchases of available-for-sale securities and other investments\t(101)\t(39)\t(33)\nMaturities and sales of available-for-sale securities and other investments\t48\t26\t98\nFinancial collateral posted\t(644)\t(403)\t(1625)\nFinancial collateral received\t665\t744\t1736\nPayments made in connection with business acquisitions net of cash acquired\t(866)\t(1526)\t(207)\nProceeds from business divestitures net\t0\t0\t13\nNet cash used in investing activities\t(2578)\t(3457)\t(1880)\nCash flows from financing activities:\t\t\t\nShort-term borrowings with original maturities less than 90 days net\t(9)\t(53)\t5\nProceeds from debt net of issuance costs\t7007\t3517\t2457\nPayment of debt\t(5099)\t(2203)\t(4138)\nNet proceeds (payments) related to stock-based award activities\t(36)\t48\t116\nRepurchase of common stock\t(355)\t(2249)\t(3568)\nNet transfer of cash and cash equivalents to Everett\t0\t0\t(41)\nNet transfer of cash and cash equivalents from Seattle\t0\t0\t156\nCash dividends paid to non-controlling interests net of contributions\t(7)\t0\t(9)\nCash dividends paid\t(618)\t(608)\t(570)\nNet cash provided by (used in) financing activities\t883\t(1548)\t(5592)\nIncrease (decrease) in cash cash equivalents and restricted cash\t545\t(1008)\t(4508)\nCash cash equivalents and restricted cash at beginning of period\t4076\t5084\t9592\nCash cash equivalents and restricted cash at end of period\t4621\t4076\t5084\nSupplemental cash flow disclosures:\t\t\t\nIncome taxes paid net of refunds\t297\t518\t538\nInterest expense paid\t574\t593\t609\n", "q10k_tbl_30": "\tCommon Stock\t\t\t\t\t\t\t\n\tNumber of Shares\tPar Value\tAdditional Paid-in Capital\t(Accumulated Deficit) Retained Earnings\tAccumulated Other Comprehensive Loss\tEquity Attributable to the Company\tNon- controlling Interests\tTotal Equity\n\tIn millions except number of shares in thousands\t\t\t\t\t\t\t\nBalance at October 31 2017\t1595161\t16\t33583\t(7238)\t(2895)\t23466\t39\t23505\nActivity related to separation and merger transactions\t\t\t\t164\t(186)\t(22)\t\t(22)\nNet earnings (loss)\t\t\t\t1908\t\t1908\t(4)\t1904\nOther comprehensive loss\t\t\t\t\t(137)\t(137)\t0\t(137)\nComprehensive income (loss)\t\t\t\t\t\t1771\t(4)\t1767\nStock-based compensation expense\t\t\t309\t\t\t309\t\t309\nTax withholding related to vesting of employee stock plans\t\t\t(175)\t\t\t(175)\t\t(175)\nIssuance of common stock in connection with employee stock plans and other\t50369\t\t202\t\t\t202\t\t202\nRepurchases of common stock\t(222227)\t(2)\t(3577)\t\t\t(3579)\t\t(3579)\nCash dividends declared ($0.4875 per common share)\t\t\t\t(733)\t\t(733)\t\t(733)\nBalance at October 31 2018\t1423303\t14\t30342\t(5899)\t(3218)\t21239\t35\t21274\nNet earnings\t\t\t\t1049\t\t1049\t16\t1065\nOther comprehensive loss\t\t\t\t\t(509)\t(509)\t0\t(509)\nComprehensive income\t\t\t\t\t\t540\t16\t556\nStock-based compensation expense\t\t\t270\t\t\t270\t\t270\nTax withholding related to vesting of employee stock plans\t\t\t(61)\t\t\t(61)\t\t(61)\nIssuance of common stock in connection with employee stock plans and other\t19093\t\t113\t\t\t113\t\t113\nRepurchases of common stock\t(148027)\t(1)\t(2220)\t\t\t(2221)\t\t(2221)\nCash dividends declared ($0.4575 per common share)\t\t\t\t(601)\t\t(601)\t\t(601)\nEffects of adoption of accounting standard updates (1)\t\t\t\t(2181)\t\t(2181)\t\t(2181)\nBalance at October 31 2019\t1294369\t13\t28444\t(7632)\t(3727)\t17098\t51\t17149\nNet earnings (loss)\t\t\t\t(322)\t\t(322)\t11\t(311)\nOther comprehensive loss\t\t\t\t\t(169)\t(169)\t0\t(169)\nComprehensive income (loss)\t\t\t\t\t\t(491)\t11\t(480)\nStock-based compensation expense\t\t\t278\t\t\t278\t\t278\nTax withholding related to vesting of employee stock plans\t\t\t(89)\t\t\t(89)\t\t(89)\nIssuance of common stock in connection with employee stock plans and other\t17397\t\t63\t\t\t63\t1\t64\nRepurchases of common stock\t(24756)\t\t(346)\t\t\t(346)\t\t(346)\n", "q10k_tbl_31": "Cash dividends declared ($0.36 per common share)\t\t\t\t(464)\t\t(464)\t(16)\t(480)\nEffects of adoption of accounting standard updates (2)\t\t\t\t43\t(43)\t0\t\t0\nBalance at October 31 2020\t1287010\t13\t28350\t(8375)\t(3939)\t16049\t47\t16096\n", "q10k_tbl_32": "\tCompute\tHPC & MCS\tStorage\tA & PS\tIntelligent Edge\tFinancial Services\tCorporate Investments\tTotal\n\tIn millions\t\t\t\t\t\t\t\n2020\t\t\t\t\t\t\t\t\nNet revenue\t11821\t2965\t4583\t946\t2837\t3340\t490\t26982\nIntersegment net revenue\t394\t71\t98\t5\t18\t12\t0\t598\nTotal segment net revenue\t12215\t3036\t4681\t951\t2855\t3352\t490\t27580\nSegment earnings (loss) from operations\t893\t237\t719\t(5)\t281\t278\t(100)\t2303\n2019\t\t\t\t\t\t\t\t\nNet revenue\t13250\t2786\t5114\t1004\t2904\t3570\t507\t29135\nIntersegment net revenue\t392\t124\t71\t8\t9\t11\t0\t615\nTotal segment net revenue\t13642\t2910\t5185\t1012\t2913\t3581\t507\t29750\nSegment earnings (loss) from operations\t1550\t320\t924\t(54)\t159\t305\t(108)\t3096\n2018\t\t\t\t\t\t\t\t\nNet revenue\t14616\t2875\t5054\t1111\t2997\t3656\t543\t30852\nIntersegment net revenue\t526\t112\t104\t7\t16\t15\t0\t780\nTotal segment net revenue\t15142\t2987\t5158\t1118\t3013\t3671\t543\t31632\nSegment earnings (loss) from operations\t1306\t384\t830\t(79)\t339\t286\t(91)\t2975\n", "q10k_tbl_33": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nNet revenue:\t\t\t\nTotal segments\t27580\t29750\t31632\nElimination of intersegment net revenue\t(598)\t(615)\t(780)\nTotal Hewlett Packard Enterprise consolidated net revenue\t26982\t29135\t30852\nEarnings before taxes:\t\t\t\nTotal segment earnings from operations\t2303\t3096\t2975\nUnallocated corporate costs and eliminations\t(238)\t(286)\t(259)\nUnallocated stock-based compensation expense\t(57)\t(59)\t(73)\nAmortization of initial direct costs\t(10)\t0\t0\nAmortization of intangible assets\t(379)\t(267)\t(294)\nImpairment of goodwill\t(865)\t0\t(88)\nRestructuring charges\t0\t0\t(19)\nTransformation costs\t(950)\t(453)\t(414)\nDisaster (charge) recovery\t(26)\t7\t0\nAcquisition disposition and other related charges\t(107)\t(764)\t(82)\nSeparation costs\t0\t0\t(9)\nInterest and other net\t(215)\t(177)\t(274)\nTax indemnification adjustments\t(101)\t377\t(1354)\nNon-service net periodic benefit credit\t136\t59\t121\nEarnings from equity interests\t67\t20\t38\nTotal Hewlett Packard Enterprise consolidated earnings (loss) from continuing operations before taxes\t(442)\t1553\t268\n", "q10k_tbl_34": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nCompute\t14858\t14066\nHPC & MCS\t6192\t6819\nStorage\t6796\t7214\nA&PS\t477\t440\nIntelligent Edge\t4343\t3318\nFinancial Services\t14765\t14700\nCorporate Investments\t467\t461\nCorporate and unallocated assets\t6117\t4785\nTotal Hewlett Packard Enterprise consolidated assets\t54015\t51803\n", "q10k_tbl_35": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nAmericas\t\t\t\nU.S.\t9162\t9582\t10192\nAmericas excluding U.S.\t1700\t1922\t2135\nTotal Americas\t10862\t11504\t12327\nEurope Middle East and Africa\t9745\t10828\t11295\nAsia Pacific and Japan\t6375\t6803\t7230\nTotal Hewlett Packard Enterprise consolidated net revenue\t26982\t29135\t30852\n", "q10k_tbl_36": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nU.S.\t2762\t2894\nOther countries\t2863\t3160\nTotal net property plant and equipment\t5625\t6054\n", "q10k_tbl_37": "\tFiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nProgram management\t35\t29\t95\nIT costs\t100\t134\t148\nRestructuring charges\t440\t219\t531\nGains on real estate sales\t(45)\t(7)\t(405)\nImpairment on real estate assets\t10\t47\t0\nOther\t29\t40\t76\nTotal Transformation Costs\t569\t462\t445\n", "q10k_tbl_38": "\tCost Optimization and Prioritization Plan\t\tHPE Next Plan\t\n\tEmployee Severance\tInfrastructure and other\tEmployee Severance\tInfrastructure and other\n\tIn millions\t\tIn millions\t\nLiability as of October 31 2017\t0\t0\t296\t0\nCharges\t0\t0\t470\t61\nCash payments\t0\t0\t(452)\t(14)\nNon-cash items\t0\t0\t(23)\t(14)\nLiability as of October 31 2018\t0\t0\t291\t33\nCharges\t0\t0\t154\t65\nCash payments\t0\t0\t(256)\t(37)\nNon-cash items\t0\t0\t(11)\t(19)\nLiability as of October 31 2019\t0\t0\t178\t42\nCharges\t230\t99\t341\t99\nCash payments\t(18)\t(3)\t(383)\t(50)\nNon-cash items\t(2)\t(60)\t8\t(56)\nLiability as of October 31 2020\t210\t36\t144\t35\nTotal costs incurred to date as of October 31 2020\t230\t99\t1261\t225\nTotal expected costs to be incurred as of October 31 2020\t700\t610\t1261\t248\n", "q10k_tbl_39": "\tAs of October 31\t\t\t\t\t\n\t2020\t2019\t2018\t2020\t2019\t2018\n\tDefined Benefit Plans\t\t\tPost-Retirement Benefit Plans\t\t\n\tIn millions\t\t\t\t\t\nService cost\t94\t85\t105\t1\t1\t1\nInterest cost(1)\t143\t215\t225\t5\t7\t7\nExpected return on plan assets(1)\t(544)\t(511)\t(567)\t(1)\t(1)\t(1)\nAmortization and deferrals(1):\t\t\t\t\t\t\nActuarial loss (gain)\t264\t235\t211\t(1)\t(4)\t(3)\nPrior service benefit\t(14)\t(15)\t(17)\t0\t0\t0\nNet periodic benefit cost\t(57)\t9\t(43)\t4\t3\t4\nCurtailment gain(1)\t0\t0\t(1)\t0\t0\t0\nSettlement loss(1)\t10\t13\t20\t0\t0\t0\nSpecial termination benefits(1)\t2\t2\t6\t0\t0\t0\nTotal net benefit (credit) cost\t(45)\t24\t(18)\t4\t3\t4\n", "q10k_tbl_40": "\tAs of October 31\t\t\t\t\t\n\t2020\t2019\t2018\t2020\t2019\t2018\n\tDefined Benefit Plans\t\t\tPost-Retirement Benefit Plans\t\t\nDiscount rate used to determine benefit obligation\t1.2%\t2.1%\t2.0%\t3.4%\t4.9%\t4.5%\nDiscount rate used to determine service cost\t1.6%\t2.3%\t2.4%\t3.0%\t4.4%\t3.7%\nDiscount rate used to determine interest cost\t1.0%\t1.8%\t1.7%\t3.2%\t4.7%\t4.2%\nExpected increase in compensation levels\t2.5%\t2.5%\t2.3%\t0\t0\t0\nExpected long-term return on plan assets\t4.1%\t4.3%\t4.4%\t2.3%\t2.6%\t2.6%\n", "q10k_tbl_41": "\tAs of October 31\t\t\t\n\t2020\t2019\t2020\t2019\n\tDefined Benefit Plans\t\tPost-Retirement Benefit Plans\t\n\tIn millions\t\t\t\nChange in fair value of plan assets:\t\t\t\t\nFair value-beginning of year\t13434\t12167\t54\t52\nTransfers\t0\t(5)\t0\t0\nAddition/deletion of plans(1)\t5\t(14)\t0\t0\nActual return on plan assets\t557\t1542\t0\t1\nEmployer contributions\t167\t166\t5\t5\nParticipant contributions\t24\t24\t5\t4\nBenefits paid\t(410)\t(387)\t(7)\t(8)\nSettlement\t(51)\t(67)\t0\t0\nCurrency impact\t401\t8\t0\t0\nFair value-end of year\t14127\t13434\t57\t54\nChange in benefit obligation:\t\t\t\t\nProjected benefit obligation-beginning of year\t14225\t12668\t179\t160\nTransfers\t0\t(7)\t0\t0\nAddition/deletion of plans(1)\t5\t(12)\t0\t0\nService cost\t94\t85\t1\t1\nInterest cost\t143\t215\t5\t7\nParticipant contributions\t24\t24\t5\t4\nActuarial (gain) loss\t368\t1710\t(9)\t17\nBenefits paid\t(410)\t(387)\t(7)\t(8)\nPlan amendments\t(3)\t12\t0\t0\nSettlement\t(51)\t(67)\t0\t0\nSpecial termination benefits\t2\t2\t0\t0\nCurrency impact\t448\t(18)\t(7)\t(2)\nProjected benefit obligation-end of year\t14845\t14225\t167\t179\nFunded status at end of year\t(718)\t(791)\t(110)\t(125)\nAccumulated benefit obligation\t14619\t13995\t0\t0\n", "q10k_tbl_42": "\tAs of October 31\t\t\t\n\t2020\t2019\t2020\t2019\n\tDefined Benefit Plans\t\tPost-Retirement Benefit Plans\t\nDiscount rate\t1.0%\t1.2%\t2.8%\t3.4%\nExpected increase in compensation levels\t2.5%\t2.5%\t0\t0\n", "q10k_tbl_43": "\tAs of October 31\t\t\t\n\t2020\t2019\t2020\t2019\n\tDefined Benefit Plans\t\tPost-Retirement Benefit Plans\t\n\tIn millions\t\t\t\nNon-current assets\t1046\t864\t0\t0\nCurrent liabilities\t(49)\t(45)\t(6)\t(6)\nNon-current liabilities\t(1715)\t(1610)\t(104)\t(119)\nFunded status at end of year\t(718)\t(791)\t(110)\t(125)\n", "q10k_tbl_44": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nAggregate fair value of plan assets\t4160\t3585\nAggregate projected benefit obligation\t5924\t5238\n", "q10k_tbl_45": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nAggregate fair value of plan assets\t4094\t3574\nAggregate accumulated benefit obligation\t5723\t5088\n", "q10k_tbl_46": "\tAs of October 31 2020\t\t\t\tAs of October 31 2019\t\t\t\n\tLevel 1\tLevel 2\tLevel 3\tTotal\tLevel 1\tLevel 2\tLevel 3\tTotal\n\tIn millions\t\t\t\t\t\t\t\nAsset Category:\t\t\t\t\t\t\t\t\nEquity securities\t\t\t\t\t\t\t\t\nU.S.\t155\t117\t0\t272\t172\t8\t0\t180\nNon-U.S.\t955\t217\t0\t1172\t836\t222\t0\t1058\nDebt securities\t\t\t\t\t\t\t\t\nCorporate\t0\t1778\t0\t1778\t0\t1502\t0\t1502\nGovernment(1)\t0\t6007\t0\t6007\t0\t5344\t0\t5344\nGovernment at NAV(2)\t\t\t\t875\t\t\t\t897\nOther(3)\t0\t683\t555\t1238\t0\t361\t401\t762\nAlternative investments\t\t\t\t\t\t\t\t\nPrivate Equity\t0\t4\t35\t39\t0\t2\t42\t44\nHybrids(4)\t18\t1486\t90\t1594\t0\t1343\t71\t1414\nHybrids at NAV(5)\t\t\t\t504\t\t\t\t491\nCommon Contractual Funds at NAV(6)\t\t\t\t\t\t\t\t\nEquities at NAV\t\t\t\t1393\t\t\t\t1398\nFixed Income at NAV\t\t\t\t782\t\t\t\t724\nEmerging Markets at NAV\t\t\t\t362\t\t\t\t318\nAlternative investments at NAV\t\t\t\t350\t\t\t\t379\nReal Estate Funds\t27\t229\t39\t295\t8\t203\t39\t250\nInsurance Group Annuity Contracts\t0\t56\t36\t92\t0\t54\t37\t91\nCash and Cash Equivalents\t241\t176\t0\t417\t252\t310\t0\t562\nOther(7)\t24\t95\t1\t120\t30\t51\t1\t82\nObligation to return cash received from repurchase agreements(1)\t0\t(3163)\t0\t(3163)\t0\t(2062)\t0\t(2062)\nTotal\t1420\t7685\t756\t14127\t1298\t7338\t591\t13434\n", "q10k_tbl_47": "\tFiscal year ended October 31 2020\t\t\t\t\t\t\n\t\tAlternative Investments\t\t\t\t\t\n\tDebt-Other\tPrivate Equity\tHybrids\tReal Estate Funds\tInsurance Group Annuities\tOther\tTotal\n\t\tIn millions\t\t\t\t\t\nBalance at beginning of year\t401\t42\t71\t39\t37\t1\t591\nActual return on plan assets:\t\t\t\t\t\t\t\nRelating to assets held at the reporting date\t(25)\t(3)\t(3)\t0\t0\t0\t(31)\nRelating to assets sold during the period\t0\t4\t0\t0\t0\t0\t4\nPurchases sales and settlements\t179\t(8)\t22\t0\t(1)\t0\t192\nBalance at end of year\t555\t35\t90\t39\t36\t1\t756\n", "q10k_tbl_48": "\tFiscal year ended October 31 2019\t\t\t\t\t\t\n\t\tAlternative Investments\t\t\t\t\t\n\tDebt-Other\tPrivate Equity\tHybrids\tReal Estate Funds\tInsurance Group Annuities\tOther\tTotal\n\tIn millions\t\t\t\t\t\t\nBalance at beginning of year\t102\t40\t30\t37\t38\t1\t248\nActual return on plan assets:\t\t\t\t\t\t\t\nRelating to assets held at the reporting date\t69\t1\t0\t2\t0\t0\t72\nRelating to assets sold during the period\t0\t0\t0\t0\t0\t0\t0\nPurchases sales and settlements\t230\t1\t41\t0\t(1)\t0\t271\nBalance at end of year\t401\t42\t71\t39\t37\t1\t591\n", "q10k_tbl_49": "\tDefined Benefit Plans\t\t\n\t\tPlan Assets\t\nAsset Category\t2020 Target Allocation\t2020\t2019\nPublic equity securities\t\t22.6%\t22.0%\nPrivate/hybrid equity securities\t\t17.6%\t17.3%\nReal estate and other\t\t2.9%\t2.5%\nEquity-related investments\t44.1%\t43.1%\t41.8%\nDebt securities\t54.4%\t53.9%\t54.0%\nCash and cash equivalents\t1.5%\t3.0%\t4.2%\nTotal\t100.0%\t100.0%\t100.0%\n", "q10k_tbl_50": "Fiscal year\tDefined Benefit Plans\tPost-Retirement Benefit Plans\n\tIn millions\t\n2021\t483\t10\n2022\t481\t11\n2023\t496\t11\n2024\t509\t11\n2025\t533\t11\nNext five fiscal years to October 31 2030\t2842\t55\n", "q10k_tbl_51": "\tFiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nStock-based compensation expense\t278\t270\t309\nIncome tax benefit\t(51)\t(50)\t(56)\nStock-based compensation expense net of tax\t227\t220\t253\n", "q10k_tbl_52": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nCost of sales\t37\t37\t39\nResearch and development\t81\t70\t73\nSelling general and administrative\t156\t161\t174\nTransformation costs\t0\t2\t3\nAcquisition disposition and other related charges\t4\t0\t10\nSeparation costs\t0\t0\t10\nStock-based compensation expense\t278\t270\t309\n", "q10k_tbl_53": "\tShares\tWeighted- Average Grant Date Fair Value Per Share\n\tIn thousands\t\nOutstanding at beginning of year\t39700\t14\nGranted and replacement awards for acquisition\t25221\t13\nVested\t(18469)\t15\nForfeited/canceled\t(4127)\t15\nOutstanding at end of year\t42325\t13\n", "q10k_tbl_54": "\tShares\tWeighted- Average Exercise Price\tWeighted- Average Remaining Contractual Term\tAggregate Intrinsic Value\n\tIn thousands\t\tIn years\tIn millions\nOutstanding at beginning of year\t10162\t11\t\t\nReplacement awards for acquisition(1)\t10340\t2\t\t\nExercised\t(1454)\t8\t\t\nForfeited/canceled/expired\t(403)\t9\t\t\nOutstanding at end of year\t18645\t6\t5.1\t64\nVested and expected to vest at end of year\t17547\t7\t5.0\t58\nExercisable at end of year\t8586\t11\t2.8\t6\n", "q10k_tbl_55": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nU.S.\t(2008)\t(1067)\t(2805)\nNon-U.S.\t1566\t2620\t3073\n\t(442)\t1553\t268\n", "q10k_tbl_56": "\tFor the fiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nU.S. federal taxes:\t\t\t\nCurrent\t55\t763\t2177\nDeferred\t149\t(1046)\t(150)\nNon-U.S. taxes:\t\t\t\nCurrent\t(284)\t(246)\t(419)\nDeferred\t133\t(101)\t188\nState taxes:\t\t\t\nCurrent\t55\t58\t(52)\nDeferred\t12\t68\t0\n\t120\t(504)\t1744\n", "q10k_tbl_57": "\tFor the fiscal years ended October 31\t\t\n\t2020(1)\t2019\t2018\nU.S. federal statutory income tax rate\t21.0%\t21.0%\t23.3%\nState income taxes net of federal tax benefit\t0.9%\t(0.1)%\t4.3%\nLower rates in other jurisdictions net\t13.6%\t(7.3)%\t(121.4)%\nValuation allowance\t20.8%\t5.8%\t(59.8)%\nU.S. permanent differences\t(3.4)%\t6.0%\t39.3%\nU.S. R&D credit\t8.4%\t(2.3)%\t(7.0)%\nUncertain tax positions\t7.6%\t(14.3)%\t(693.4)%\nGoodwill impairment\t(41.2)%\t-%\t-%\nImpacts of the Tax Act\t(0.4)%\t24.5%\t158.0%\nOther net\t(0.2)%\t(0.8)%\t6.0%\n\t27.1%\t32.5%\t(650.7)%\n", "q10k_tbl_58": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nBalance at beginning of year\t2269\t8826\t11262\nIncreases:\t\t\t\nFor current year's tax positions\t27\t43\t163\nFor prior years' tax positions\t40\t37\t66\nDecreases:\t\t\t\nFor prior years' tax positions\t(71)\t(17)\t(82)\nStatute of limitations expiration\t(17)\t(38)\t(86)\nSettlements with taxing authorities\t(53)\t(7)\t(2)\nSettlements related to joint and several positions of former Parent\t(36)\t(6575)\t(2495)\nBalance at end of year\t2159\t2269\t8826\n", "q10k_tbl_59": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nDeferred tax assets:\t\t\nLoss and credit carryforwards\t7596\t8110\nInventory valuation\t75\t59\nIntercompany prepayments\t295\t179\nOther intercompany transactions\t31\t41\nWarranty\t69\t72\nEmployee and retiree benefits\t571\t584\nRestructuring\t118\t65\nDeferred revenue\t565\t531\nIntangible assets\t94\t130\nLease liabilities\t166\t0\nOther\t206\t243\nTotal deferred tax assets\t9786\t10014\nValuation allowance\t(7724)\t(8225)\nTotal deferred tax assets net of valuation allowance\t2062\t1789\nDeferred tax liabilities:\t\t\nUnremitted earnings of foreign subsidiaries\t(172)\t(233)\nROU assets\t(165)\t0\nFixed assets\t(237)\t(352)\nTotal deferred tax liabilities\t(574)\t(585)\nNet deferred tax assets and liabilities\t1488\t1204\n", "q10k_tbl_60": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nDeferred tax assets\t1778\t1515\nDeferred tax liabilities\t(290)\t(311)\nDeferred tax assets net of deferred tax liabilities\t1488\t1204\n", "q10k_tbl_61": "\tCarryforward\tValuation Allowance\tInitial Year of Expiration\n\tIn millions\t\t\nU.S. foreign tax credits\t1129\t(1119)\t2026\nU.S. research and development and other credits\t194\t(1)\t2021\nTax credits in state and foreign jurisdictions\t171\t(142)\t2021\nBalance at end of year\t1494\t(1262)\t\n", "q10k_tbl_62": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nCash and cash equivalents\t4233\t3753\nRestricted cash\t388\t323\nTotal\t4621\t4076\n", "q10k_tbl_63": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nUnbilled receivable\t205\t206\nAccounts receivable\t3227\t2782\nAllowance for doubtful accounts\t(46)\t(31)\nTotal\t3386\t2957\n", "q10k_tbl_64": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nBalance at beginning of year\t31\t39\t42\nProvision for doubtful accounts\t29\t9\t20\nDeductions net of recoveries\t(14)\t(17)\t(23)\nBalance at end of year\t46\t31\t39\n", "q10k_tbl_65": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nBalance at beginning of period(1)\t(10)\t166\t121\nTrade receivables sold\t3897\t4533\t4844\nCash receipts\t(3768)\t(4710)\t(4794)\nForeign currency and other\t3\t1\t(5)\nBalance at end of period(1)\t122\t(10)\t166\n", "q10k_tbl_66": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nFinished goods\t1197\t1198\nPurchased parts and fabricated assemblies\t1477\t1189\nTotal\t2674\t2387\n", "q10k_tbl_67": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nLand\t89\t241\nBuildings and leasehold improvements\t1886\t2196\nMachinery and equipment including equipment held for lease\t9624\t9464\n\t11599\t11901\nAccumulated depreciation\t(5974)\t(5847)\nTotal\t5625\t6054\n", "q10k_tbl_68": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nFinancing receivables net\t5110\t4949\nROU assets\t930\t0\nDeferred tax assets\t1778\t1515\nPrepaid pension\t1046\t864\nOther\t1680\t1590\nTotal\t10544\t8918\n", "q10k_tbl_69": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nValue-added and property taxes\t842\t806\nWarranty\t192\t199\nSales and marketing programs\t1022\t1065\nOperating lease liabilities\t188\t0\nOther\t2021\t1932\nTotal\t4265\t4002\n", "q10k_tbl_70": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nPension post-retirement and post-employment\t1856\t1772\nDeferred revenue\t2785\t2751\nTaxes on earnings\t447\t538\nOperating lease liabilities\t898\t0\nOther\t1009\t1039\nTotal\t6995\t6100\n", "q10k_tbl_71": "\tBalance Sheet Classification\tAs of October 31 2020\n\t\tIn millions\nOperating Leases\t\t\nROU Assets\tLong-term financing receivables and other assets\t930\nLease Liabilities:\t\t\nOperating lease liabilities - current\tOther accrued liabilities\t188\nOperating lease liabilities - non-current\tOther non-current liabilities\t898\nTotal operating lease liabilities\t\t1086\nFinance Leases\t\t\nFinance lease ROU Assets:\tProperty plant and equipment\t\nGross finance lease ROU assets\t\t52\nLess: Accumulated depreciation\t\t(11)\nNet finance lease ROU assets\t\t41\nLease Liabilities:\t\t\nFinance lease liabilities - current\tNotes payable and short-term borrowings\t5\nFinance lease liabilities - non-current\tLong-term debt\t53\nTotal finance lease liabilities\t\t58\nTotal ROU assets\t\t971\nTotal lease liabilities\t\t1144\n", "q10k_tbl_72": "\tAs of October 31 2020\t\n\tOperating Leases\tFinance Leases\nFiscal year\tIn millions\t\n2021\t207\t6\n2022\t188\t6\n2023\t172\t7\n2024\t147\t7\n2025\t128\t7\nThereafter\t342\t35\nTotal future lease payments\t1184\t68\nLess: imputed interest\t(98)\t(10)\nTotal lease liabilities\t1086\t58\n", "q10k_tbl_73": "\tAs of October 31 2019\t\n\tOperating Leases\tFinance Leases\n\tIn millions\t\nFiscal year\t\t\n2020\t233\t6\n2021\t187\t6\n2022\t164\t7\n2023\t149\t6\n2024\t127\t7\nThereafter\t541\t41\nTotal\t1401\t73\n", "q10k_tbl_74": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nMinimum lease payments receivable\t9448\t9070\nUnguaranteed residual value\t364\t336\nUnearned income\t(754)\t(754)\nFinancing receivables gross\t9058\t8652\nAllowance for doubtful accounts\t(154)\t(131)\nFinancing receivables net\t8904\t8521\nLess: current portion(1)\t(3794)\t(3572)\nAmounts due after one year net(1)\t5110\t4949\n", "q10k_tbl_75": "\tAs of\n\tOctober 31 2020\nFiscal year\tIn millions\n2021\t4182\n2022\t2662\n2023\t1572\n2024\t720\n2025\t252\nThereafter\t60\nTotal undiscounted cash flows\t9448\nPresent value of lease payments (recognized as finance receivables)\t8694\nDifference between undiscounted cash flows and discounted cash flows\t754\n", "q10k_tbl_76": "\tAs of\n\tOctober 31 2019\nFiscal year\tIn millions\n2020\t3939\n2021\t2449\n2022\t1555\n2023\t752\n2024\t306\nThereafter\t69\nTotal\t9070\n", "q10k_tbl_77": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nRisk Rating:\t\t\nLow\t4590\t4432\nModerate\t4091\t3933\nHigh\t377\t287\nTotal\t9058\t8652\n", "q10k_tbl_78": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nBalance at beginning of year\t131\t120\t86\nProvision for doubtful accounts\t43\t33\t49\nWrite-offs\t(20)\t(22)\t(15)\nBalance at end of year\t154\t131\t120\n", "q10k_tbl_79": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nGross financing receivables collectively evaluated for loss\t8620\t8255\nGross financing receivables individually evaluated for loss(1)\t438\t397\nTotal\t9058\t8652\nAllowance for financing receivables collectively evaluated for loss\t89\t84\nAllowance for financing receivables individually evaluated for loss\t65\t47\nTotal\t154\t131\n", "q10k_tbl_80": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nBilled:(1)\t\t\nCurrent 1-30 days\t340\t301\nPast due 31-60 days\t43\t62\nPast due 61-90 days\t22\t15\nPast due >90 days\t140\t88\nUnbilled sales-type and direct-financing lease receivables\t8513\t8186\nTotal gross financing receivables\t9058\t8652\nGross financing receivables on non-accrual status(2)\t364\t276\nGross financing receivables 90 days past due and still accruing interest(2)\t74\t121\n", "q10k_tbl_81": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nEquipment leased to customers\t7184\t7185\nAccumulated depreciation\t(3157)\t(3101)\nTotal\t4027\t4084\n", "q10k_tbl_82": "\tAs of\n\tOctober 31 2020\nFiscal year\tIn millions\n2021\t1798\n2022\t1049\n2023\t440\n2024\t78\n2025\t7\nThereafter\t2\nTotal\t3374\n", "q10k_tbl_83": "\tAs of October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nSales-type leases and direct financing leases:\t\t\t\nInterest income\t469\t458\t447\nLease income - operating leases\t2431\t2596\t2690\nTotal lease income\t2900\t3054\t3137\n", "q10k_tbl_84": "\tAs of October 31\t\n\t2020\t2019\nAssets held by VIE\tIn millions\t\nOther current assets\t120\t76\nFinancing receivables\t\t\nShort-term\t531\t194\nLong-term\t584\t229\nProperty plant and equipment\t665\t303\nLiabilities held by VIE\t\t\nNotes payable and short-term borrowings net of unamortized debt issuance costs\t886\t385\nLong-term debt net of unamortized debt issuance costs\t834\t370\n", "q10k_tbl_85": "\tCompute\tHPC & MCS\tStorage\tIntelligent Edge\tFinancial Services\tTotal\n\tIn millions\t\t\t\t\nBalance at October 31 2018 (1)\t7530\t3779\t4090\t1994\t144\t17537\nGoodwill acquired during the period\t0\t699\t68\t0\t0\t767\nGoodwill adjustments\t2\t0\t0\t0\t0\t2\nBalance at October 31 2019 (1)\t7532\t4478\t4158\t1994\t144\t18306\nGoodwill acquired during the period\t0\t0\t0\t572\t0\t572\nImpairment of goodwill\t0\t(865)\t0\t0\t0\t(865)\nGoodwill adjustments\t0\t3\t1\t0\t0\t4\nBalance at October 31 2020 (1)\t7532\t3616\t4159\t2566\t144\t18017\n", "q10k_tbl_86": "\tAs of October 31 2020\t\t\tAs of October 31 2019\t\t\n\tGross\tAccumulated Amortization\tNet\tGross\tAccumulated Amortization\tNet\n\tIn millions\t\t\t\t\t\nCustomer contracts customer lists and distribution agreements\t429\t(163)\t266\t312\t(96)\t216\nDeveloped and core technology and patents\t1267\t(627)\t640\t1371\t(719)\t652\nTrade name and trade marks\t141\t(50)\t91\t163\t(44)\t119\nIn-process research and development\t106\t0\t106\t141\t0\t141\nTotal intangible assets\t1943\t(840)\t1103\t1987\t(859)\t1128\n", "q10k_tbl_87": "Fiscal year\tIn millions\n2021\t313\n2022\t235\n2023\t200\n2024\t148\n2025\t41\nThereafter\t60\nTotal\t997\n", "q10k_tbl_88": "\tAs of October 31 2020\t\t\t\tAs of October 31 2019\t\t\t\n\tFair Value Measured Using\t\t\t\tFair Value Measured Using\t\t\t\n\tLevel 1\tLevel 2\tLevel 3\tTotal\tLevel 1\tLevel 2\tLevel 3\tTotal\n\tIn millions\t\t\t\t\t\t\t\nAssets\t\t\t\t\t\t\t\t\nCash Equivalents and Investments:\t\t\t\t\t\t\t\t\nTime deposits\t0\t939\t0\t939\t0\t803\t0\t803\nMoney market funds\t1167\t0\t0\t1167\t859\t0\t0\t859\nForeign bonds\t0\t125\t0\t125\t7\t126\t0\t133\nOther debt securities\t0\t0\t21\t21\t0\t0\t32\t32\nDerivative Instruments:\t\t\t\t\t\t\t\t\nInterest rate contracts\t0\t220\t0\t220\t0\t73\t0\t73\nForeign exchange contracts\t0\t290\t0\t290\t0\t392\t0\t392\nOther derivatives\t0\t0\t0\t0\t0\t3\t0\t3\nTotal assets\t1167\t1574\t21\t2762\t866\t1397\t32\t2295\nLiabilities\t\t\t\t\t\t\t\t\nDerivative Instruments:\t\t\t\t\t\t\t\t\nInterest rate contracts\t0\t2\t0\t2\t0\t11\t0\t11\nForeign exchange contracts\t0\t189\t0\t189\t0\t136\t0\t136\nOther derivatives\t0\t3\t0\t3\t0\t0\t0\t0\nTotal liabilities\t0\t194\t0\t194\t0\t147\t0\t147\n", "q10k_tbl_89": "\tAs of October 31 2020\t\tAs of October 31 2019\t\t\n\tCost\tGross Unrealized Gains\tFair Value\tCost\tGross Unrealized Gains\t\t\t\t\t\t\t\t\t\tFair Value\t\t\n\tIn millions\t\t\t\t\nCash Equivalents:\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nTime deposits\t939\t0\t939\t803\t0\t\t\t\t\t\t\t\t\t\t803\t\t\nMoney market funds\t1167\t0\t1167\t859\t0\t\t\t\t\t\t\t\t\t\t859\t\t\nTotal cash equivalents\t2106\t0\t2106\t1662\t0\t\t\t\t\t\t\t\t\t\t1662\t\t\nAvailable-for-Sale Investments:\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nForeign bonds\t108\t17\t125\t110\t23\t\t\t\t\t\t\t\t\t\t133\t\t\nOther debt securities\t20\t1\t21\t32\t0\t\t\t\t\t\t\t\t\t\t32\t\t\nTotal available-for-sale investments\t128\t18\t146\t142\t23\t\t\t\t\t\t\t\t\t\t165\t\t\nTotal cash equivalents and available-for-sale investments\t2234\t18\t2252\t1804\t23\t\t\t\t\t\t\t\t\t\t1827\t\t\n", "q10k_tbl_90": "\tAs of October 31 2020\t\n\tAmortized Cost\tFair Value\n\tIn millions\t\nDue in one year\t1\t1\nDue in more than five years\t127\t145\n\t128\t146\n", "q10k_tbl_91": "\tAs of October 31 2020\t\t\t\t\tAs of October 31 2019\t\t\t\t\n\t\tFair Value\t\t\t\t\tFair Value\t\t\t\n\tOutstanding Gross Notional\tOther Current Assets\tLong-Term Financing Receivables and Other Assets\tOther Accrued Liabilities\tLong-Term Other Liabilities\tOutstanding Gross Notional\tOther Current Assets\tLong-Term Financing Receivables and Other Assets\tOther Accrued Liabilities\tLong-Term Other Liabilities\n\tIn millions\t\t\t\t\t\t\t\t\t\nDerivatives designated as hedging instruments\t\t\t\t\t\t\t\t\t\t\nFair value hedges:\t\t\t\t\t\t\t\t\t\t\nInterest rate contracts\t3850\t0\t220\t0\t0\t6850\t0\t72\t11\t0\nCash flow hedges:\t\t\t\t\t\t\t\t\t\t\nForeign currency contracts\t7652\t75\t85\t95\t38\t8578\t164\t141\t45\t27\nInterest rate contracts\t500\t0\t0\t2\t0\t500\t0\t1\t0\t0\nNet investment hedges:\t\t\t\t\t\t\t\t\t\t\nForeign currency contracts\t1804\t34\t44\t11\t9\t1766\t31\t36\t18\t10\nTotal derivatives designated as hedging instruments\t13806\t109\t349\t108\t47\t17694\t195\t250\t74\t37\nDerivatives not designated as hedging instruments\t\t\t\t\t\t\t\t\t\t\nForeign currency contracts\t6157\t43\t9\t35\t1\t6398\t17\t3\t33\t3\nOther derivatives\t105\t0\t0\t3\t0\t97\t3\t0\t0\t0\nTotal derivatives not designated as hedging instruments\t6262\t43\t9\t38\t1\t6495\t20\t3\t33\t3\nTotal derivatives\t20068\t152\t358\t146\t48\t24189\t215\t253\t107\t40\n", "q10k_tbl_92": "\tAs of October 31 2020\t\t\t\t\t\t\n\tIn the Consolidated Balance Sheets\t\t\t\t\t\t\n\t(i)\t(ii)\t(iii) = (i)-(ii)\t(iv)\t(v)\t\t(vi) = (iii)-(iv)-(v)\n\t\t\t\tGross Amounts Not Offset\t\t\t\n\tGross Amount Recognized\tGross Amount Offset\tNet Amount Presented\tDerivatives\tFinancial Collateral\t\tNet Amount\n\tIn millions\t\t\t\t\t\t\nDerivative assets\t510\t0\t510\t137\t321\t(1)\t52\nDerivative liabilities\t194\t0\t194\t137\t55\t(2)\t2\n", "q10k_tbl_93": "\tAs of October 31 2019\t\t\t\t\t\t\n\tIn the Consolidated Balance Sheets\t\t\t\t\t\t\n\t(i)\t(ii)\t(iii) = (i)-(ii)\t(iv)\t(v)\t(vi) = (iii)-(iv)-(v)\n\t\t\t\tGross Amounts Not Offset\t\t\t\n\tGross Amount Recognized\tGross Amount Offset\tNet Amount Presented\tDerivatives\tFinancial Collateral\t\tNet Amount\n\tIn millions\t\t\t\t\t\t\nDerivative assets\t468\t0\t468\t123\t263\t(1)\t82\nDerivative liabilities\t147\t0\t147\t123\t19\t(2)\t5\n", "q10k_tbl_94": "\tCarrying amount of the hedged assets/ (liabilities)\t\tCumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities)\t\n\tAs of\t\tAs of\t\nBalance Sheet Line Item of Hedged Item\tOctober 31 2020\tOctober 31 2019\tOctober 31 2020\tOctober 31 2019\n\tIn millions\t\tIn millions\t\nNotes payable and short-term borrowings\t0\t(2987)\t0\t11\nLong-term debt\t(4059)\t(3908)\t(220)\t(72)\n", "q10k_tbl_95": "\tGains (Losses) Recognized in OCI on Derivatives\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nDerivatives in Cash Flow Hedging relationship\t\t\t\nForeign exchange contracts\t(34)\t307\t169\nInterest rate contracts\t(6)\t1\t0\nDerivatives in Net Investment Hedging relationship\t\t\t\nForeign exchange contracts\t56\t2\t81\nTotal\t16\t310\t250\n", "q10k_tbl_96": "\tGains (Losses) Recognized in Income\t\t\t\t\t\n\t2020\t\t2019\t\t2018\t\n\tNet revenue\tInterest and other net\tNet revenue\tInterest and other net\tNet revenue\tInterest and other net\n\tIn millions\t\t\t\t\t\nTotal amounts of income and expense line items presented in the Consolidated Statements of Earnings in which the effects of fair value hedges cash flow hedges and derivatives not designated as hedging instruments are recorded\t26982\t(215)\t29135\t(177)\t30852\t(274)\nGains (losses) on derivatives in fair value hedging relationships\t\t\t\t\t\t\nInterest rate contracts\t\t\t\t\t\t\nHedged items\t0\t(159)\t0\t(414)\t0\t211\nDerivatives designated as hedging instruments\t0\t159\t0\t414\t0\t(211)\nGains (losses) on derivatives in cash flow hedging relationships\t\t\t\t\t\t\nForeign exchange contracts\t\t\t\t\t\t\nAmount of gains (losses) reclassified from accumulated other comprehensive income into income\t38\t(14)\t233\t138\t(24)\t16\nInterest rate contracts\t\t\t\t\t\t\nAmount of gains (losses) reclassified from accumulated other comprehensive income into income\t0\t(3)\t0\t0\t0\t0\nGains (losses) on derivatives not designated as hedging instruments\t\t\t\t\t\t\nForeign exchange contracts\t0\t44\t0\t(134)\t0\t301\nOther derivatives\t0\t(5)\t0\t8\t0\t(6)\nTotal gains (losses)\t38\t22\t233\t12\t(24)\t311\n", "q10k_tbl_97": "\tAs of October 31\t\t\t\n\t2020\t\t2019\t\n\tAmount Outstanding\tWeighted-Average Interest Rate\tAmount Outstanding\tWeighted-Average Interest Rate\n\tDollars in millions\t\t\t\nCurrent portion of long-term debt(1)\t2768\t2.0%\t3441\t4.1%\nFS Commercial paper\t677\t-%\t698\t(0.1)%\nNotes payable to banks lines of credit and other(2)\t310\t1.3%\t286\t2.7%\nTotal notes payable and short-term borrowings\t3755\t\t4425\t\n", "q10k_tbl_98": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nHewlett Packard Enterprise Unsecured Senior Notes\t\t\n1000 issued at discount to par at a price of 99.883% in July 2020 at 1.45% due April 1 2024 interest payable semi-annually on April 1 and October 1 of each year\t999\t0\n750 issued at discount to par at a price of 99.820% in July 2020 at 1.75% due April 1 2026 interest payable semi-annually on April 1 and October 1 of each year\t749\t0\n1250 issued at discount to par at a price of 99.956% in April 2020 at 4.45% due October 2 2023 interest payable semi-annually on April 2 and October 2 of each year\t1250\t0\n1000 issued at discount to par at a price of 99.817% in April 2020 at 4.65% due October 1 2024 interest payable semi-annually on April 1 and October 1 of each year\t998\t0\n3000 issued at discount to par at a price of 99.972% in October 2015 at 3.6% paid August 17 2020 interest payable semi-annually on April 15 and October 15 of each year.\t0\t3000\n500 issued at par in September 2019 at three-month USD LIBOR plus 0.68% due March 12 2021 interest payable quarterly on March 12 June 12 September 12 and December 12 of each year\t500\t500\n500 issued at discount to par at a price of 99.861% in September 2018 at 3.5% due October 5 2021 interest payable semi-annually on April 5 and October 5 of each year\t500\t500\n800 issued at par in September 2018 at three-month USD LIBOR plus 0.72% due October 5 2021 interest payable quarterly on January 5 April 5 July 5 and October 5 of each year\t800\t800\n1350 issued at discount to par at a price of 99.802% in October 2015 at 4.4% due October 15 2022 interest payable semi-annually on April 15 and October 15 of each year\t1349\t1349\n1000 issued at discount to par at a price of 99.979% in September 2019 at 2.25% due April 1 2023 interest payable semi-annually on April 1 and October 1 of each year\t1000\t1000\n2500 issued at discount to par at a price of 99.725% in October 2015 at 4.9% due October 15 2025 interest payable semi-annually on April 15 and October 15 of each year\t2497\t2495\n750 issued at discount to par at a price of 99.942% in October 2015 at 6.2% due October 15 2035 interest payable semi-annually on April 15 and October 15 of each year\t750\t750\n1500 issued at discount to par at a price of 99.932% in October 2015 at 6.35% due October 15 2045 interest payable semi-annually on April 15 and October 15 of each year\t1499\t1499\nHewlett Packard Enterprise Asset-Backed Debt Securities\t\t\n1000 issued in June 2020 in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 1.19% payable monthly from August 2020\t822\t0\n755 issued in February 2020 of in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 1.87% payable monthly from April 2020\t519\t0\n763 issued in September 2019 in six tranches at a discount to par at a weighted average price of 99.99% and a weighted average interest rate of 2.31% payable monthly from November 2019\t385\t763\nOther including capital lease obligations at 0.00%-9.00% due in calendar years 2020-2030(1)\t171\t166\nFair value adjustment related to hedged debt\t220\t61\nUnamortized debt issuance costs\t(54)\t(47)\nLess: current portion\t(2768)\t(3441)\nTotal long-term debt\t12186\t9395\n", "q10k_tbl_99": "\t\tFiscal years ended October 31\t\t\nExpense\tLocation\t2020\t2019\t2018\n\t\tIn millions\t\t\nFinancing interest\tFinancing interest\t271\t297\t278\nInterest expense\tInterest and other net\t332\t311\t353\nTotal interest expense\t\t603\t608\t631\n", "q10k_tbl_100": "Fiscal year\tIn millions\n2021\t2776\n2022\t1962\n2023\t2509\n2024\t2010\n2025\t2507\nThereafter\t3033\nTotal\t14797\n", "q10k_tbl_101": "\tFiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nTaxes on change in net unrealized gains (losses) on cash flow hedges:\t\t\t\nTax (provision) benefit on net unrealized gains (losses) arising during the period\t(10)\t(33)\t(22)\nTax provision (benefit) on net (gains) losses reclassified into earnings\t21\t43\t(1)\n\t11\t10\t(23)\nTaxes on change in unrealized components of defined benefit plans:\t\t\t\nTax (provision) benefit on net unrealized gains (losses) arising during the period\t10\t40\t2\nTax provision on amortization of net actuarial loss and prior service benefit\t(17)\t(13)\t(14)\nTax provision on curtailments settlements and other\t(1)\t(1)\t(10)\n\t(8)\t26\t(22)\nTaxes on change in cumulative translation adjustment:\t\t\t\nTax (provision) benefit on cumulative translation adjustment arising during the period\t5\t0\t3\n\t5\t0\t3\nTax (provision) benefit on other comprehensive loss\t8\t36\t(42)\n", "q10k_tbl_102": "\tFiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nOther comprehensive loss net of taxes:\t\t\t\nChange in net unrealized gains (losses) on available-for-sale securities:\t\t\t\nNet unrealized gains (losses) arising during the period\t(1)\t9\t(3)\n(Gains) losses reclassified into earnings\t(4)\t(3)\t(9)\n\t(5)\t6\t(12)\nChange in net unrealized gains (losses) on cash flow hedges:\t\t\t\nNet unrealized gains (losses) arising during the period\t(50)\t275\t147\nNet (gains) losses reclassified into earnings\t0\t(328)\t7\n\t(50)\t(53)\t154\nChange in unrealized components of defined benefit plans:\t\t\t\nNet unrealized gains (losses) arising during the period\t(348)\t(661)\t(421)\nAmortization of net actuarial loss and prior service benefit\t232\t203\t177\nCurtailments settlements and other\t9\t14\t12\n\t(107)\t(444)\t(232)\nChange in cumulative translation adjustment:\t\t\t\nCumulative translation adjustment arising during the period\t(7)\t(18)\t(67)\nRelease of cumulative translation adjustment as a result of divestitures and country exits\t0\t0\t20\n\t(7)\t(18)\t(47)\nOther comprehensive loss net of taxes\t(169)\t(509)\t(137)\n", "q10k_tbl_103": "\tNet unrealized gains (losses) on available-for-sale securities\tNet unrealized gains (losses) on cash flow hedges\tUnrealized components of defined benefit plans\tCumulative translation adjustment\tAccumulated other comprehensive loss\n\tIn millions\t\t\t\t\nBalance at beginning of period\t23\t53\t(3366)\t(437)\t(3727)\nEffect of change in accounting principle (1)\t0\t(10)\t0\t(33)\t(43)\nOther comprehensive income (loss) before reclassifications\t(1)\t(50)\t(348)\t(7)\t(406)\nReclassifications of (gains) losses into earnings\t(4)\t0\t241\t0\t237\nBalance at end of period\t18\t(7)\t(3473)\t(477)\t(3939)\n", "q10k_tbl_104": "\tFiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions except per share amounts\t\t\nNumerator:\t\t\t\nNet earnings (loss) from continuing operations\t(322)\t1049\t2012\nNet loss from discontinued operations\t0\t0\t(104)\nNet earnings (loss)\t(322)\t1049\t1908\nDenominator:\t\t\t\nWeighted-average shares used to compute basic net EPS\t1294\t1353\t1529\nDilutive effect of employee stock plans\t0\t13\t24\nWeighted-average shares used to compute diluted net EPS\t1294\t1366\t1553\nBasic net earnings (loss) per share:\t\t\t\nContinuing operations\t(0.25)\t0.78\t1.32\nDiscontinued operations\t0\t0\t(0.07)\nBasic net earnings (loss) per share\t(0.25)\t0.78\t1.25\nDiluted net earnings (loss) per share:\t\t\t\nContinuing operations\t(0.25)\t0.77\t1.30\nDiscontinued operations\t0\t0\t(0.07)\nDiluted net earnings (loss) per share\t(0.25)\t0.77\t1.23\nAnti-dilutive weighted-average stock awards(1)\t49\t4\t2\n", "q10k_tbl_105": "\tAs of October 31\t\n\t2020\t2019\n\tIn millions\t\nLitigation matters and other contingencies\t\t\nReceivable\t70\t85\nPayable\t53\t55\nIncome tax-related indemnification(1)\t\t\nNet indemnification receivable - long-term\t62\t202\nNet indemnification receivable - short-term\t65\t63\nNet indemnification payable - long-term\t15\t9\n", "q10k_tbl_106": "\tFiscal years ended October 31\t\n\t2020\t2019\n\tIn millions\t\nBalance at beginning of year\t400\t430\nAccruals for warranties issued\t238\t239\nAdjustments related to pre-existing warranties\t(3)\t6\nSettlements made\t(250)\t(275)\nBalance at end of year(1)\t385\t400\n", "q10k_tbl_107": "Fiscal Year\tIn millions\n2021\t231\n2022\t195\n2023\t69\n2024\t8\n2025\t9\nThereafter\t32\nTotal\t544\n", "q10k_tbl_108": "\tFiscal years ended October 31\t\t\n\t2020\t2019\t2018\n\tIn millions\t\t\nEarnings from equity interests net of taxes\t211\t167\t192\nBasis difference amortization\t(145)\t(152)\t(151)\nElimination of profit on intra-entity sales adjustment\t1\t5\t(3)\nEarnings from equity interests\t67\t20\t38\n", "q10k_tbl_109": "\tFor the three-month periods ended in fiscal 2020\t\t\t\n\tJanuary 31\tApril 30\tJuly 31\tOctober 31\nNet revenue\t6949\t6009\t6816\t7208\nCost of sales\t4667\t4095\t4749\t5002\nEarnings (loss) from operations\t348\t(834)\t12\t145\nNet earnings (loss)\t333\t(821)\t9\t157\nNet earnings (loss) per share - basic\t0.26\t(0.64)\t0.01\t0.12\nNet earnings (loss) per share - diluted\t0.25\t(0.64)\t0.01\t0.12\n", "q10k_tbl_110": "\tFor the three-month periods ended in fiscal 2019\t\t\t\n\tJanuary 31\tApril 30\tJuly 31\tOctober 31\nNet revenue\t7553\t7150\t7217\t7215\nCost of sales\t5207\t4845\t4768\t4822\nEarnings (loss) from operations\t456\t434\t(76)\t460\nNet earnings (loss)\t177\t419\t(27)\t480\nNet earnings (loss) per share - basic\t0.13\t0.31\t(0.02)\t0.37\nNet earnings (loss) per share - diluted\t0.13\t0.30\t(0.02)\t0.36\n", "q10k_tbl_111": "\t\tIncorporated by Reference\t\t\t\nExhibit Number\tExhibit Description\tForm\tFile No.\tExhibit(s)\tFiling Date\n2.1\tSeparation and Distribution Agreement dated as of October 31 2015 by and among Hewlett-Packard Company Hewlett Packard Enterprise Company and the Other Parties Thereto\t8-K\t001-37483\t2.1\tNovember 5 2015\n2.2\tTransition Services Agreement dated as of November 1 2015 by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company\t8-K\t001-37483\t2.2\tNovember 5 2015\n2.3\tEmployee Matters Agreement dated as of October 31 2015 by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company\t8-K\t001-37483\t2.4\tNovember 5 2015\n2.4\tReal Estate Matters Agreement dated as of October 31 2015 by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company\t8-K\t001-37483\t2.5\tNovember 5 2015\n2.5\tMaster Commercial Agreement dated as of November 1 2015 by and between Hewlett-Packard Company and Hewlett Packard Enterprise Company\t8-K\t001-37483\t2.6\tNovember 5 2015\n2.6\tInformation Technology Service Agreement dated as of November 1 2015 by and between Hewlett-Packard Company and HP Enterprise Services LLC\t8-K\t001-37483\t2.7\tNovember 5 2015\n2.7\tAgreement and Plan of Merger dated as of May 24 2016 among Hewlett Packard Enterprise Company Computer Sciences Corporation Everett SpinCo Inc. and Everett Merger Sub Inc.\t8-K\t001-37483\t2.1\tMay 26 2016\n2.8\tSeparation and Distribution Agreement dated as of May 24 2016 between Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-37483\t2.2\tMay 26 2016\n2.9\tAgreement and Plan of Merger dated as of September 7 2016 by and among Hewlett Packard Enterprise Company Micro Focus International plc Seattle SpinCo Inc. Seattle Holdings Inc. and Seattle MergerSub Inc.\t8-K\t001-37483\t2.1\tSeptember 7 2016\n2.10\tSeparation and Distribution Agreement dated as of September 7 2016 by and between Hewlett Packard Enterprise Company and Seattle SpinCo Inc.\t8-K\t001-37483\t2.2\tSeptember 7 2016\n2.11\tEmployee Matters Agreement dated as of September 7 2016 by and among Hewlett Packard Enterprise Company Seattle SpinCo Inc. and Micro Focus International plc\t8-K\t001-37483\t2.3\tSeptember 7 2016\n2.12\tFirst Amendment to the Agreement and Plan of Merger dated as of November 2 2016 among Hewlett Packard Enterprise Company Computer Sciences Corporation Everett SpinCo Inc. New Everett Merger Sub Inc. and Everett Merger Sub Inc.\t8-K\t001-37483\t2.1\tNovember 2 2016\n2.13\tFirst Amendment to the Separation and Distribution Agreement dated as of November 2 2016 between Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-37483\t2.2\tNovember 2 2016\n2.14\tAgreement and Plan of Merger dated as of March 6 2017 by and among Hewlett Packard Enterprise Company Nimble Storage Inc. and Nebraska Merger Sub Inc.\t8-K\t001-37483\t99.1\tMarch 7 2017\n2.15\tTender and Support Agreement dated as of March 6 2017 by and among Hewlett Packard Enterprise Company Nebraska Merger Sub Inc. and each of the persons set forth on Schedule A thereto\t8-K\t001-37483\t99.2\tMarch 7 2017\n", "q10k_tbl_112": "\t\tIncorporated by Reference\t\t\t\nExhibit Number\tExhibit Description\tForm\tFile No.\tExhibit(s)\tFiling Date\n2.16\tEmployee Matters Agreement dated March 31 2017 by and among Computer Sciences Corporation Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-38033\t2.1\tApril 6 2017\n2.17\tTax Matters Agreement dated March 31 2017 by and among Computer Sciences Corporation Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-38033\t2.2\tApril 6 2017\n2.18\tIP Matters Agreement dated March 31 2017 by and among Hewlett Packard Enterprise Company Hewlett Packard Enterprise Development LP and Everett SpinCo Inc.\t8-K\t001-38033\t2.3\tApril 6 2017\n2.19\tTransition Services Agreement dated March 31 2017 between Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-38033\t2.4\tApril 6 2017\n2.20\tReal Estate Matters Agreement dated March 31 2017 between Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-38033\t2.5\tApril 6 2017\n2.21\tFourth Amendment to the Separation and Distribution Agreement dated March 31 2017 by and between Hewlett Packard Enterprise Company and Everett SpinCo Inc.\t8-K\t001-38033\t2.6\tApril 6 2017\n2.22\tTax Matters Agreement dated September 1 2017 by and among Hewlett Packard Enterprise Company Seattle SpinCo Inc. and Micro Focus International plc\t8-K\t001-37483\t2.1\tSeptember 1 2017\n2.23\tIntellectual Property Matters Agreement dated September 1 2017 by and among Hewlett Packard Enterprise Company Hewlett Packard Enterprise Development LP and Seattle SpinCo Inc.\t8-K\t001-37483\t2.2\tSeptember 1 2017\n2.24\tTransition Services Agreement dated September 1 2017 by and among Hewlett Packard Enterprise Company and Seattle SpinCo Inc.\t8-K\t001-37483\t2.3\tSeptember 1 2017\n2.25\tReal Estate Matters Agreement dated September 1 2017 by and among Hewlett Packard Enterprise Company and Seattle SpinCo Inc.\t8-K\t001-37483\t2.4\tSeptember 1 2017\n2.26\tAgreement and Plan of Merger dated as of May 16 2019 by and among Hewlett Packard Enterprise Company Cray Inc. and Canopy Merger Sub Inc.\t8-K\t001-37483\t2.1\tMay 17 2019\n2.27\tAgreement and Plan of Merger dated as of July 11 2020 by and among Hewlett Packard Enterprise Company Santorini Merger Sub Inc. Silver Peak Systems Inc. and certain other parties thereto\t8-K\t001-37483\t2.1\tJuly 13 2020\n3.1\tRegistrant's Amended and Restated Certificate of Incorporation\t8-K\t001-37483\t3.1\tNovember 5 2015\n3.2\tRegistrant's Amended and Restated Bylaws effective October 31 2015\t8-K\t001-37483\t3.2\tNovember 5 2015\n3.3\tCertificate of Designation of Series A Junior Participating Redeemable Preferred Stock of Hewlett Packard Enterprise Company\t8-K\t001-37483\t3.1\tMarch 20 2017\n3.4\tCertificate of Designation of Series B Junior Participating Redeemable Preferred Stock of Hewlett Packard Enterprise Company\t8-K\t001-37483\t3.2\tMarch 20 2017\n4.1\tIndenture dated as of October 9 2015 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee\t8-K\t001-37483\t4.1\tOctober 13 2015\n", "q10k_tbl_113": "\t\tIncorporated by Reference\t\t\t\nExhibit Number\tExhibit Description\tForm\tFile No.\tExhibit(s)\tFiling Date\n4.2\tFourth Supplemental Indenture dated as of October 9 2015 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 4.400% notes due 2022\t8-K\t001-37483\t4.5\tOctober 13 2015\n4.3\tFifth Supplemental Indenture dated as of October 9 2015 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 4.900% notes due 2025\t8-K\t001-37483\t4.6\tOctober 13 2015\n4.4\tSixth Supplemental Indenture dated as of October 9 2015 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 6.200% notes due 2035\t8-K\t001-37483\t4.7\tOctober 13 2015\n4.5\tSeventh Supplemental Indenture dated as of October 9 2015 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 6.350% notes due 2045\t8-K\t001-37483\t4.8\tOctober 13 2015\n4.6\tEleventh Supplemental Indenture dated as of September 19 2018 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 3.500% notes due 2021\t8-K\t001-37483\t4.2\tSeptember 19 2018\n4.7\tTwelfth Supplemental Indenture dated as of September 19 2018 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's floating rate notes due 2021\t8-K\t001-37483\t4.3\tSeptember 19 2018\n4.8\tThirteenth Supplemental Indenture dated as of September 13 2019 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as trustee relating to Hewlett Packard Enterprise Company's 2.250% notes due 2023\t8-K\t001-37483\t4.2\tSeptember 13 2019\n4.9\tFourteenth Supplemental Indenture dated as of September 13 2019 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as trustee relating to Hewlett Packard Enterprise Company's floating rate Notes due 2021\t8-K\t001-37483\t4.3\tSeptember 13 2019\n4.10\tFifteenth Supplemental Indenture dated as of April 9 2020 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 4.450% notes due 2023\t8-K\t001-37483\t4.2\tApril 9 2020\n4.11\tSixteenth Supplemental Indenture dated as of April 9 2020 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 4.650% notes due 2024\t8-K\t001-37483\t4.3\tApril 9 2020\n4.12\tSeventeenth Supplemental Indenture dated as of July 17 2020 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company's 1.450% notes due 2024\t8-K\t001-37483\t4.2\tJuly 17 2020\n", "q10k_tbl_114": "\t\tIncorporated by Reference\t\t\t\nExhibit Number\tExhibit Description\tForm\tFile No.\tExhibit(s)\tFiling Date\n4.13\tEighteenth Supplemental Indenture dated as of July 17 2020 between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee relating to Hewlett Packard Enterprise Company''s 1.750% notes due 2026\t8-K\t001-37483\t4.3\tJuly 17 2020\n4.14\tRegistration Rights Agreement dated as of October 9 2015 among Hewlett Packard Enterprise Company Hewlett-Packard Company and the representatives of the initial purchasers of the Notes\t8-K\t001-37483\t4.12\tOctober 13 2015\n4.15\tForm of Indenture between Hewlett Packard Enterprise Company and The Bank of New York Mellon Trust Company N.A. as Trustee\tS-3ASR\t333-222102\t4.5\tDecember 15 2017\n4.16\tDescription of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934‡\t\t\t\t\n10.1\tHewlett Packard Enterprise Company 2015 Stock Incentive Plan (amended and restated January 25 2017)*\t8-K\t001-37483\t10.1\tJanuary 30 2017\n10.2\tHewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*\t10-12B/A\t001-37483\t10.4\tSeptember 28 2015\n10.3\tHewlett Packard Enterprise Grandfathered Executive Deferred Compensation Plan*\tS-8\t333-207679\t4.4\tOctober 30 2015\n10.4\tForm of Non-Qualified Stock Option Grant Agreement*\t8-K\t001-37483\t10.4\tNovember 5 2015\n10.5\tForm of Restricted Stock Units Grant Agreement*\t8-K\t001-37483\t10.7\tNovember 5 2015\n10.6\tForm of Performance-Contingent Non-Qualified Stock Option Grant Agreement*\t8-K\t001-37483\t10.8\tNovember 5 2015\n10.7\tForm of Non-Employee Director Stock Options Grant Agreement*\t8-K\t001-37483\t10.9\tNovember 5 2015\n10.8\tForm of Non-Employee Director Restricted Stock Unit Grant Agreement*\t8-K\t001-37483\t10.10\tNovember 5 2015\n10.9\tForm of Restricted Stock Units Grant Agreement as amended and restated effective January 1 2016*\t10-Q\t001-37483\t10.14\tMarch 10 2016\n10.10\tForm of Performance-Adjusted Restricted Stock Units Grant Agreement as amended and restated effective January 1 2016*\t10-Q\t001-37483\t10.15\tMarch 10 2016\n10.11\tDescription of Amendment to Equity Awards (incorporated by reference to Item 5.02 of the 8-K filed on May 26 2016)*\t8-K\t001-37483\t10.1\tMay 26 2016\n10.12\tNiara Inc. 2013 Equity Incentive Plan*\tS-8\t333-216481\t4.3\tMarch 6 2017\n10.13\tNimble Storage Inc. 2008 Equity Incentive Plan as amended*\tS-8\t333-217349\t4.3\tApril 18 2017\n10.14\tNimble Storage Inc. 2013 Equity Incentive Plan (Amended and Restated May 23 2014)*\tS-8\t333-217349\t4.4\tApril 18 2017\n10.15\tSimpliVity Corporation 2009 Stock Plan*\tS-8\t333-217438\t4.3\tApril 24 2017\n10.16\tSilicon Graphics International Corp. 2005 Equity Incentive Plan as amended*\t10-K\t000-51333\t10.3\tSeptember 10 2012\n10.17\tCloud Technology Partners Inc. 2011 Equity Incentive Plan*\tS-8\t333-221254\t4.3\tNovember 1 2017\n10.18\tAmendment to the Cloud Technology Partners Inc. 2011 Equity Incentive Plan*\tS-8\t333-221254\t4.4\tNovember 1 2017\n10.19\tPlexxi Inc. 2011 Stock Plan*\tS-8\t333-226181\t4.3\tJuly 16 2018\n", "q10k_tbl_115": "\t\tIncorporated by Reference\t\t\t\nExhibit Number\tExhibit Description\tForm\tFile No.\tExhibit(s)\tFiling Date\n10.20\tHewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan (as amended and restated on July 18 2018 effective as of October 8 2015)\t10-Q\t001-37483\t10.29\tSeptember 4 2018\n10.21\tForm of Restricted Stock Units Grant Agreement\t10-Q\t001-37483\t10.30\tSeptember 4 2018\n10.22\tHewlett Packard Enterprise Executive Deferred Compensation Plan (as amended and restated December 1 2018)*\t10-K\t001-37483\t10.27\tDecember 12 2018\n10.23\tFirst Amendment to the Hewlett Packard Enterprise Company Severance and Long-Term Incentive Change in Control Plan for Executive Officers*\t10-K\t001-37483\t10.29\tDecember 12 2018\n10.24\tBlueData Software Inc. 2012 Stock Incentive Plan*\tS-8\t333-229449\t4.3\tJanuary 31 2019\n10.25\tAircraft Time Sharing Agreement dated as of December 13 2019 by and between Hewlett Packard Enterprise and Antonio Neri*\t10-Q\t001-37483\t10.32\tMarch 9 2020\n10.26\tFive-Year Credit Agreement dated as of August 16 2019 by and among Hewlett Packard Enterprise Company the lenders Party thereto JPMorgan Chase Bank N.A. as Administrative Processing Agent and Co-Administrative Agent and Citibank N.A. as Co-Administrative Agent\t8-K\t001-37483\t10.1\tAugust 20 2019\n10.27\tCray Inc. 2013 Equity Incentive Plan (as amended and restated June 11 2019)*\tS-8\t333-234033\t4.3\tOctober 1 2019\n10.28\tTermination and Mutual Release Agreement dated as of October 30 2019 by and between Hewlett Packard Enterprise Company and HP Inc.\t10-K\t001-37483\t10.31\tDecember 13 2019\n10.29\tSilver Peak Systems Inc. (fka Cheyenne Networks Inc.) 2004 Stock Plan as amended*\tS-8\t333-249731\t4.3\tOctober 29 2020\n10.30\tSilver Peak Systems Inc. 2014 Equity Incentive Plan as amended*\tS-8\t333-249731\t4.4\tOctober 29 2020\n21\tSubsidiaries of Hewlett Packard Enterprise Company‡\t\t\t\t\n23.1\tConsent of Independent Registered Public Accounting Firm‡\t\t\t\t\n24\tPower of Attorney (included on the signature page)\t\t\t\t\n31.1\tCertification of Chief Executive Officer pursuant to Rule 13a- 14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended‡\t\t\t\t\n31.2\tCertification of Chief Financial Officer pursuant to Rule 13a- 14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended‡\t\t\t\t\n32\tCertification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†\t\t\t\t\n101.INS\tInline XBRL Instance Document‡\t\t\t\t\n101.SCH\tInline XBRL Taxonomy Extension Schema Document‡\t\t\t\t\n101.CAL\tInline XBRL Taxonomy Extension Calculation Linkbase Document‡\t\t\t\t\n101.DEF\tInline XBRL Taxonomy Extension Definition Linkbase Document‡\t\t\t\t\n101.LAB\tInline XBRL Taxonomy Extension Label Linkbase Document‡\t\t\t\t\n101.PRE\tInline XBRL Taxonomy Extension Presentation Linkbase Document‡\t\t\t\t\n", "q10k_tbl_116": "Signature\tTitle(s)\tDate\n/s/ Antonio F. Neri\tPresident Chief Executive Officer and Director (Principal Executive Officer)\tDecember 10 2020\nAntonio F. Neri\t\n/s/ Tarek A. Robbiati\tExecutive Vice President and Chief Financial Officer (Principal Financial Officer)\tDecember 10 2020\nTarek A. Robbiati\t\n/s/ Jeff T. Ricci\tSenior Vice President and Controller (Principal Accounting Officer)\tDecember 10 2020\nJeff T. Ricci\t\n/s/ Patricia F. Russo\tChairman\tDecember 10 2020\nPatricia F. Russo\t\n/s/ Daniel L. Ammann\tDirector\tDecember 10 2020\nDaniel L. Ammann\t\n/s/ Pamela L. Carter\tDirector\tDecember 10 2020\nPamela L. Carter\t\n/s/ Jean M. Hobby\tDirector\tDecember 10 2020\nJean M. Hobby\t\n/s/ George R. Kurtz\tDirector\tDecember 10 2020\nGeorge R. Kurtz\t\n/s/ Raymond J. Lane\tDirector\tDecember 10 2020\nRaymond J. Lane\t\n/s/ Ann M. Livermore\tDirector\tDecember 10 2020\nAnn M. Livermore\t\n", "q10k_tbl_117": "/s/ Charles H. Noski\tDirector\tDecember 10 2020\nCharles H. Noski\t\n/s/ Raymond E. Ozzie\tDirector\tDecember 10 2020\nRaymond E. Ozzie\t\n/s/ Gary M. Reiner\tDirector\tDecember 10 2020\nGary M. Reiner\t\n/s/ Lip-Bu Tan\tDirector\tDecember 10 2020\nLip-Bu Tan\t\n/s/ Mary Agnes Wilderotter\tDirector\tDecember 10 2020\nMary Agnes Wilderotter\t\n"}{"bs": "q10k_tbl_28", "is": "q10k_tbl_26", "cf": "q10k_tbl_29"}None
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2020
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-37483
HEWLETT PACKARD ENTERPRISE COMPANY
(Exact name of registrant as specified in its charter)
Delaware
47-3298624
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
11445 Compaq Center West Drive,
Houston,
Texas
77070
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code: (650)687-5817
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
HPE
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yesx No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨Nox
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesx No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The aggregate market value of the registrant's common stock held by non-affiliates was $12,872,878,346 based on the last sale price of common stock on April 30, 2020.
The number of shares of Hewlett Packard Enterprise Company common stock outstanding as of December 7, 2020 was 1,293,499,810 shares.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT DESCRIPTION
10-K PART
Portions of the Registrant's proxy statement related to its 2021 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after Registrant's fiscal year end of October 31, 2020 are incorporated by reference into Part III of this Report.
This Annual Report on Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7, contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise Company and its consolidated subsidiaries ("Hewlett Packard Enterprise") may differ materially from those expressed or implied by such forward-looking statements and assumptions. The words "believe", "expect", "anticipate", "optimistic", "intend", "aim", "will", "should" and similar expressions are intended to identify such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to the scope and duration of the novel coronavirus pandemic ("COVID-19") and its impact on our business, operations, liquidity and capital resources, employees, customers, partners, supply chain, financial results and the world economy; any projections of revenue, margins, expenses, investments, effective tax rates, interest rates, the impact of the U.S. Tax Cuts and Jobs Act of 2017 and related guidance or regulations, net earnings, net earnings per share, cash flows, liquidity and capital resources, inventory, goodwill, impairment charges, hedges and derivatives and related offsets, order backlog, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates, repayments of debts including our asset-backed debt securities, or other financial items; the projections, execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the anticipated benefits, cost savings or charges of implementing the transformation and restructuring plans; any statements of the plans, strategies and objectives of management for future operations, as well as the execution of corporate transactions or contemplated acquisitions, research and development expenditures, and any resulting benefit, cost savings, charges, or revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Hewlett Packard Enterprise and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise's businesses; the competitive pressures faced by Hewlett Packard Enterprise's businesses; risks associated with executing Hewlett Packard Enterprise's strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of Hewlett Packard Enterprise's products and the delivery of Hewlett Packard Enterprise's services effectively; the protection of Hewlett Packard Enterprise's intellectual property assets, including intellectual property licensed from third parties and intellectual property shared with its former parent; risks associated with Hewlett Packard Enterprise's international operations (including pandemics and public health problems, such as the outbreak of COVID-19); the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients and partners, including any impact thereon resulting from events such as the COVID-19 pandemic; the hiring and retention of key employees; the execution, integration and risks associated with business combination and investment transactions; the impact of changes to environmental, global trade, and other governmental regulations; changes in our product, lease, intellectual property or real estate portfolio; the payment or non-payment of a dividend for any period; the efficacy of using non-GAAP, rather than GAAP, financial measures in business projections and planning; the judgments required in connection with determining revenue recognition; impact of company policies and related compliance; utility of segment realignments; allowances for recovery of receivables and warranty obligations; provisions for, and resolution of, pending investigations, claims and disputes; and other risks that are described herein, including but not limited to the items discussed in "Risk Factors" in Item 1A of Part I of this report and that are otherwise described or updated from time to time in Hewlett Packard Enterprise's reports filed with the Securities and Exchange Commission. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements, except as required by applicable law.
We are a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. We enable customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. Our customers range from small-and-medium-sized businesses ("SMBs") to large global enterprises and governmental entities. Our legacy dates back to a partnership founded in 1939 by William R. Hewlett and David Packard, and we strive every day to uphold and enhance that legacy through our dedication to providing innovative technological solutions to our customers.
On November 1, 2015, HP Inc. ("former Parent"), formerly known as Hewlett-Packard Company ("HP Co.") spun-off Hewlett Packard Enterprise Company ("we", "us", "our", "Hewlett Packard Enterprise", "HPE", or "the Company") pursuant to a separation agreement (the "Separation and Distribution Agreement") (collectively the "Separation"). Since the Separation, we have operated as an independent, publicly-traded company.
On April 1, 2017, we completed the separation and merger of our Enterprise Services business with DXC Technology Company ("DXC", "the Everett Transaction" or "Everett").
On September 1, 2017, we completed the separation and merger of our Software business segment with Micro Focus International plc ("Micro Focus", "the Seattle Transaction" or "Seattle").
Transformation Programs
Cost Optimization and Prioritization Plan
During the third quarter of fiscal 2020, we launched a cost optimization and prioritization plan which focuses on realigning our workforce to areas of growth, including a new hybrid workforce model called Edge-to-Office, real estate strategies and simplifying and evolving our product portfolio strategy. The implementation period for the cost optimization and prioritization plan is through fiscal 2023. During this implementation period, we expect to incur transformation costs predominantly related to labor restructuring, non-labor restructuring, IT investments and design and execution charges.
HPE Next
During the third quarter of fiscal 2017, we launched an initiative called HPE Next to put in place a purpose-built company designed to compete and win in the markets where we participate. Through this program, we are simplifying our operating model, streamlining our offerings, business processes and business systems to improve our execution. The implementation period for HPE Next has been extended to fiscal 2023. During the remaining implementation period we expect to incur transformation costs predominantly related to IT infrastructure costs for streamlining, upgrading and simplifying back-end operations, and real estate initiatives. These costs are expected to be partially offset by gains from real estate sales.
Impacts of the COVID-19 Pandemic on HPE's Business
The outbreak of COVID-19 in 2020 resulted in a global slowdown of economic activity including worldwide travel restrictions, prohibitions of non-essential work activities, disruption and shutdown of businesses and greater uncertainty in global financial markets, all of which resulted in COVID-19 having an impact on our financial performance in fiscal 2020. As this pandemic endures and continues to have an impact on global economic activity, the extent to which COVID-19 adversely impacts our future business operations, financial performance and results of operations is uncertain and will depend on many factors outside the Company's control. For a further discussion of the risks, uncertainties and actions taken in response to COVID-19, refer to Item 1A "Risk Factors" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations".
Our Strategy
The pace of technology disruption continues to accelerate. The global pandemic has served as a catalyst making digital transformation a strategic imperative for enterprises. Enterprises now require more resilient IT to ensure continuity in their operations. They also need to deliver secure connectivity, remote work solutions, data analytics capabilities and mobile-first, cloud-like experiences to their employees and customers, while preserving liquidity to navigate the macro economic uncertainty and to adapt to the new world.
We are answering the call for transformation with our edge-to-cloud strategy and solutions that are aligned to the evolving needs of our customers. We help enterprises transform and digitize their businesses so that they may accelerate their business outcomes by delivering new digital experiences and unlocking insights from their data. We saw that the foundation of
every business would be edge-to-cloud and in response HPE brings industry-leading IT infrastructure, software, services, financing resources and as-a-service capabilities to meet this demand.
Human Capital Resources
At HPE we are united by our purpose, which is to advance the way people live and work. We believe technology’s greatest promise lies in its potential for positive change. This is the guidepost for each decision we make at HPE. We believe it not only helps guide our contribution to society, but also makes good business sense. Our company has always been an engine of innovation, and our approximately 59,400 employees as of October 31, 2020, are proud of the ways our technology enables our customers to achieve meaningful outcomes like curing disease, modernizing farming to cure world-hunger and democratizing transportation through autonomous vehicles.
Our Culture: We recognize the critical importance of talent and culture to the success of HPE and our ability to fulfill our purpose. We are passionate about the values that have underpinned the success of the company over years. This is why we believe in investing in our employees and communities where we live and work. HPE has intensified its focus on creating a superior team member experience and a highly engaged workforce, driving improvements across our communications, our culture, our reward programs, and our work environment and fostering a collaborative, inclusive and inspiring experience for all our team members. Our most recent global engagement survey shows how these intentional efforts are making a difference, with our overall Employee Engagement Index measuring 83%. More than 80% of team members would recommend HPE as a great place to work, and 87% say they are proud to work for HPE.
Building a Vibrant Culture: We have identified four key cultural beliefs that guide how we lead on a daily basis: belief in accelerating what’s next, in bold moves, in the “power of yes”, and in being a force for good. We embed these beliefs in an unshakable DNA that puts customers first, ensuring we partner, innovate and act with uncompromising integrity. Our empowered and engaging culture is making HPE a destination for the best talent while driving innovation and excellence for our customers.
Diversity, Equity and Inclusion: We are committed to being unconditionally inclusive to capture the ideas and perspectives that fuel innovation and enable our workforce, customers, and communities to succeed in the digital age. This is because, by harnessing the potential of our technologies and our team members, we can be a force for good. Annual goals are set to increase the representation of both women and ethnically diverse talent by at least 1 percentage point year-over-year. In 2020, HPE increased our female workforce at every level worldwide, including technical and executive roles. We also increased our representation of all underrepresented minorities in the U.S. The leadership standards sponsored, clearly articulate that all people leaders are expected to continuously develop their inclusive leadership capabilities. Our Board, CEO and Executive Committee role model high standards for diversity, equity and inclusion and are leading sustainable change, with strong governance and oversight via our Inclusion and Diversity Council.
Talent: We invest in attracting, developing and retaining the best talent. We do this by communicating a clear purpose and strategy, transparent goal setting, driving accountability, continuously assessing, developing, advancing talent, and a leadership-driven talent strategy. The dynamism of our industry and our company enables team members to grow in their current roles and build new skills. Over the past year, our approximately 59,400 team members completed over 330,000 online and instructor-led courses across a broad range of categories – leadership, inclusion and diversity, professional skills, technical and compliance. HPE is deeply committed to identifying and developing the next generation of top tier leadership with a special focus on diverse and technical talent. We conduct an in-depth annual talent and succession review with our CEO and Executive Committee members. The process focuses on accelerating talent development, strengthening succession pipelines, and advancing diversity representation for our most critical roles.
Work That Fits Your Life:This global initiative, which was launched in 2019, is an important example of how HPE is investing in our culture and creating a team member experience that makes HPE a destination of choice for the best talent in the industry. It includes an industry-leading paid parental leave program (minimum 6 months), part-time work opportunities for new parents or team members transitioning to retirement, and "Wellness Fridays" encouraging team members to leave work early one Friday per month to focus on their well-being. HPE's broader wellness program offers flexibility built around team member needs while continuing to deliver on critical business results. Key features include mental health support including employee assistance programs and free headspace accounts, physical fitness activities, and financial wellness programs.
Total Rewards: HPE requires a uniquely talented workforce and is committed to providing total rewards that are market-competitive and performance based, driving innovation and operational excellence. Our compensation programs, practices, and policies reflect our commitment to reward short- and long-term performance that aligns with, and drives, stockholder value. Total direct compensation is generally positioned within a competitive range of the market median, with differentiation based on tenure, skills, proficiency, and performance to attract and retain key talent.
HPE’s strong and healthy culture is critical to accelerating what’s next for our customers and partners – and the success of our company. Our team is energized and more engaged than ever and will enable our ability to pivot and grow, which will, in turn, power the next chapter at Hewlett Packard Enterprise.
Our Business Segments, Products and Services
Our operations are organized into seven business segments: Compute, High Performance Compute and Mission Critical Systems ("HPC & MCS"), Storage, Advisory and Professional Services ("A & PS"), Intelligent Edge, Financial Services ("FS"), and Corporate Investments. The class of similar product categories within each segment which accounted for more than 10% of our consolidated net revenue in each of the past three years were as follows:
A summary of our net revenue, earnings from operations and assets for our segments can be found in Note 3, "Segment Information", to our Consolidated Financial Statements in Item 8 of Part II. A discussion of certain factors potentially affecting our operations is set forth in Item 1A, "Risk Factors."
Compute
Our Compute portfolio offers both general purpose servers for multi-workload computing and workload-optimized servers which offer the best performance and value for demanding applications. This portfolio of products includes our secure and versatile HPE ProLiant rack and tower servers; HPE BladeSystem, a modular infrastructure that converges server, storage and networking; and HPE Synergy, a composable infrastructure for traditional and cloud-native applications. HPE ProLiant servers are the compute foundation for the fastest growing workloads in the industry including hyperconverged infrastructure ("HCI"), virtual workspaces, and artificial intelligence ("AI"). Compute offerings also include operational and support services. The Compute support team is also a provider of on-premises flexible consumption models, such as HPE GreenLake.
HPC & MCS
Our HPC & MCS portfolio offers specialized compute servers designed to support specific use cases. The HPC portfolio includes the HPE Apollo and Cray products that are sold as supercomputing systems, including exascale supercomputers (systems which have exaflops performance or a billion billion calculations per second), to support data-intensive workloads for high performance computing, data analytics and artificial intelligence applications. The MCS portfolio includes the HPE Superdome Flex, HPE Nonstop and HPE Integrity product lines for critical applications such as payments and transaction processing that require high availability, fault-tolerant computing infrastructure. The HPC & MCS segment also includes the Edge Compute business which consists of the HPE Moonshot and HPE Edgeline products for computing at the network edge. HPC & MCS offerings also include operational and support services. HPC & MCS products can also be purchased through on-premises flexible consumption models, such as HPE GreenLake. With offerings that are artificial intelligence-driven and built for hybrid cloud environments with as-a-service consumption and flexible investment options, we provide the right workload optimized destinations for data.
A portion of HPC and MCS revenue is generated by sales to government entities, which are subject to the terms and rights for the convenience of the government entity. These terms and rights include in some instances a dependence on the appropriation of future funding and also termination rights contingent upon not achieving certain milestones. For a discussion of certain risks related to contracts with government entities, see "Risk Factors—Failure to comply with government contracting regulations could adversely affect our business and results of operations."
Storage
We provide workload-optimized products and service offerings that are AI-driven and built for cloud environments with flexible consumption models from HPE GreenLake and flexible investment options. Powered by HPE InfoSight-advanced artificial intelligence operations, HPE solutions deliver an intelligent data platform that enables customers to unleash the power of their data. Key offerings include an intelligent HCI portfolio with HPE Nimble Storage dHCI, a disaggregated HCI solution for the enterprise data center and HPE SimpliVity, a hyperconverged platform for general purpose and edge workloads. The portfolio also includes HPE Primera, HPE Nimble Storage and HPE 3PAR primary storage solutions, comprehensive data protection solutions with HPE Cloud Volumes Backup and HPE StoreOnce, and big data solutions running on HPE Apollo servers. Storage also provides solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE Modular Storage Arrays ("MSA") and HPE XP. Storage offerings also include operational and support services.
Our A & PS business provides consultative-led services, HPE and partner technology expertise and advice, implementation services and complex solution engagement capabilities. Our advisors and experts engage early with customers to lead them through their digital transformations and to improve their business outcomes. A & PS is also a provider of on-premises flexible consumption models that enable IT agility, simplify operations, and align cost to value. A & PS is of strategic importance to HPE as it drives large value sales of HPE infrastructure products and services such as HPE GreenLake, HPE Ezmeral, HPC & MCS and other Compute & Storage infrastructure products.
Intelligent Edge
The Intelligent Edge business is comprised of a portfolio ofsecureedge-to-cloud solutions operating under the Aruba brand that include wireless local area network ("LAN"), campus and data center switching, software-defined wide-area-networking, which now includes Silver Peak, security, and associated services to enable secure connectivity for businesses of any size. The primary business drivers for Intelligent Edge solutions are mobility and IoT.
The HPE Aruba Product portfolio includes wired and wireless LAN hardware products such as Wi-Fi access points, switches, routers and sensors. The HPE Aruba software and services portfolio of products includes cloud-based management, network management, which now includes Silver Peak, network access control, analytics and assurance, location services software and professional and support services, as well as as-a-Service and consumption models for the Intelligent Edge portfolio of products.
Financial Services
Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and utility programs and asset management services, for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. FS also supports financial solutions for on-premise flexible consumption models, such as HPE Greenlake. In order to provide flexible services and capabilities that support the entire IT life cycle, FS partners with customers globally to help build investment strategies that enhance their business agility and support their business transformation. FS offers a wide selection of investment solution capabilities for large enterprise customers and channel partners, along with an array of financial options to SMBs and educational and governmental entities.
Corporate Investments
Corporate Investments includes Hewlett Packard Labs which is responsible for research and development, the Communications and Media Solutions ("CMS") business and certain business incubation projects.
Forthcoming Segment Realignments
In order to align our segment financial reporting structure more closely with our current business structure, effective November 1, 2020, we will report the following changes to our reportable segments: the lifecycle event services business which was previously reported within the A & PS segment will be reported within each of the related hardware segments; certain software related business offerings previously reported within Compute, Storage and A & PS will be combined and reported within the Corporate Investments segment; and the remainder of A & PS, which was previously reported as a reportable segment, will be reported within the Corporate Investments segment. Additionally, the stock-based compensation expense which was previously reported within segment operating results will be now be reported as a corporate cost.
Our Strengths
We believe that we possess a number of competitive advantages that distinguish us from our competitors, including:
•Digital transformation is at the forefront of our business priorities. We have a distinctive and industry leading portfolio of edge-to-cloud solutions and unique capabilities to help accelerate our customers' digital transformation. We combine our software-defined infrastructure and services capabilities to provide what we believe is the strongest portfolio of enterprise solutions in the IT industry. Our ability to deliver a comprehensive IT strategy and connect our customers' data from edge to cloud, through our high-quality products and high-value consulting and support services in a single package, is one of our principal differentiators.
•Differentiated consumption-based IT solutions for a growing opportunity. Enterprises of all sizes are looking to digitally transform in order to develop next-generation cloud-native applications, create actionable insights from their data, and drive business growth, but they face many challenges including lack of in-house IT skills, limited budgets and options for financing, and lack of flexibility to choose the technology foundation that best meets their needs.
Consumption-based IT offers solutions to these challenges by providing greater agility, empowering people to shift from managing infrastructure to driving innovation by leveraging insights from their data, while eliminating capital and operating expenses tied to infrastructure over-provisioning. HPE is distinctly differentiated in delivering a true consumption-based IT experience. We saw the opportunity early, and that has allowed us to build capabilities and partnerships that are unique in the industry including the ability to deliver our as-a-Service portfolio with over 700 channel partners that can sell the as-a-Service portfolio.
•Multi-year innovation roadmap and strong balance sheet. We have been in the technology and innovation business for over 75 years. Our vast intellectual property portfolio and global research and development capabilities are part of a broader innovation roadmap designed to help organizations take advantage of the expanding amount of data available and leverage the latest technology developments like cloud, artificial intelligence, and cybersecurity to drive business outcomes now and in the future. We also have a strong balance sheet and liquidity profile that provides the financial flexibility and speed to take advantage of acquisition opportunities.
•Global distribution and partner ecosystem. We are experts in delivering innovative technological solutions to our customers in complex multi-country, multi-vendor and/or multi-language environments. We have one of the largest go-to-market capabilities in our industry, including a large ecosystem of channel partners, which enables us to market and deliver our product offerings to customers located virtually anywhere in the world.
•Custom financial solutions. Through Financial Services we can help customers create investment capacity to accelerate their transformations by helping them free up capital, capture value from older assets, achieve sustainability goals, invest in new technologies as a service, and weather financial volatility. Financial Services is also an enabler of our consumption-based IT models by helping spread our upfront solution costs over the duration of the customer contract. Through Financial Services' Global Asset Recovery Centers, we are helping customers achieve their own sustainability goals by processing more than 4 million assets every year.
•Experienced leadership team and business group leaders aligned to market trends and financial segmentation. Our management team has an extensive track record of performance and execution. We are led by our President and Chief Executive Officer, Antonio Neri, who has proven experience in developing transformative business models, building global brands and driving sustained growth and expansion in the technology industry. Mr. Neri's experience includes over 20 years combined at HPE and HP Co. in various leadership positions. This year we simplified our operating model and have aligned it to the financial segmentation providing more visibility and accountability in our business segments. Our senior management team has many years of experience in our industry and possesses extensive knowledge of and experience in the enterprise IT business and the markets in which we compete. Moreover, we have a deep bench of management and technology talent that we believe provides us with an unparalleled pipeline of future leaders and innovators.
•Open platforms. The world is shifting from centralized and closed approaches in large data centers to a future of centers of data everywhere which are highly decentralized and distributed. This shift demands a common cloud platform that can put the agility and intelligence close to the customers data sources to create real-time insights, everywhere. Many of our competitors want to lock customers into one flavor of cloud and cloud stack. Conversely, we believe that the cloud experience should be open and seamless across all our customers' clouds — and the best cloud transformation partner is one who is unbiased, offers choice, and is neutral without an agenda. We are unique in our ability to enable any hybrid cloud strategy and a consistent experience that is open to any cloud and differentiated with our partner integrations.
Sales, Marketing and Distribution
We manage our business and report our financial results based on the segments described above. Our customers are organized by commercial and large enterprise groups, including business and public sector enterprises, and purchases of our products, solutions and services may be fulfilled directly by us or indirectly through a variety of partners, including:
•resellers that sell our products and services, frequently with their own value-added products or services, to targeted customer groups;
•distribution partners that supply our solutions to resellers;
•original equipment manufacturers ("OEMs") that integrate our products and services with their own products and services, and sell the integrated solution;
•independent software vendors that provide their clients with specialized software products and often assist us in selling our products and services to clients purchasing their products;
•systems integrators that provide expertise in designing and implementing custom IT solutions and often partner with us to extend their expertise or influence the sale of our products and services; and
•advisory firms that provide various levels of management and IT consulting, including some systems integration work, and typically partner with us on client solutions that require our unique products and services.
The mix of our business conducted by direct sales or channel differs substantially by business and region. We believe that customer buying patterns and different regional market conditions require us to tailor our sales, marketing and distribution efforts accordingly. We are focused on driving the depth and breadth of our coverage, in addition to identifying efficiencies and productivity gains, in both our direct and indirect businesses. For example, through our HPE Next Initiative, we reduced the number of countries in which we have a direct sales presence, while simultaneously migrating to a channel-only model in the remaining countries. In those countries where we have a direct sales presence, we typically assign an account manager to manage relationships across our business with large enterprise customers as well as with large public sector accounts. The account manager is supported by a team of specialists with product and services expertise. For other customers, our businesses collaborate to manage relationships with commercial resellers targeting smaller accounts, both in the commercial and public sector space.
Manufacturing and Materials
We utilize a significant number of outsourced and contract manufacturers around the world to manufacture products that we design. The use of outsourced and contract manufacturers is intended to generate cost efficiencies and reduce time to market for our products as well as create manufacturing flexibility in our supply chain and processes. In some circumstances, third-party OEMs produce products that we purchase and resell under our brand. In addition to our use of outsourced and contract manufacturers, we currently manufacture a limited number of finished products from components and subassemblies that we acquire from a wide range of vendors.
Historically, we have utilized two primary methods of fulfilling demand for products: building products to order and configuring products to order. We build products to order to maximize manufacturing and logistics efficiencies by producing high volumes of basic product configurations. Alternatively, configuring products to order enables units to match a customer's particular hardware and software customization requirements. Our inventory management and distribution practices in both building products to order and configuring products to order seek to minimize inventory holding periods by taking delivery of the inventory and manufacturing shortly before the sale or distribution of products to our customers.
We purchase materials, supplies and product subassemblies from a substantial number of vendors. For most of our products, we have existing alternate sources of supply or such alternate sources of supply are readily available. However, we do rely on single-source suppliers for certain customized parts (although some of these sources have operations in multiple locations in the event of a disruption) and a disruption or loss of a single-source supplier could delay production of some products. In some instances, our single-source suppliers (e.g. Intel and AMD as suppliers of certain x86 processors) are also the single-source suppliers for the entire market; disruptions with these suppliers would result in industry-wide dislocations and therefore would not disproportionately disadvantage us relative to our competitors.
Like other participants in the IT industry, we ordinarily acquire materials and components through a combination of blanket and scheduled purchase orders to support our demand requirements for periods averaging 90 to 120 days. From time to time, we may experience significant price volatility or supply constraints for certain components that are not available from multiple sources due to certain events taking place where our suppliers are geographically concentrated. When necessary, we are often able to obtain scarce components for somewhat higher prices on the open market, which may have an impact on our gross margin, but does not generally disrupt production. We may also acquire component inventory in anticipation of supply constraints, or enter into longer-term pricing commitments with vendors to improve the priority, price and availability of supply. See "Risk Factors—We depend on third-party suppliers, and our financial results could suffer if we fail to manage our suppliers relationships properly" in Item 1A.
International
Our products and services are available worldwide. We believe geographic diversity allows us to meet demand on a worldwide basis for our customers, draws on business and technical expertise from a worldwide workforce, provides stability to our operations, provides revenue streams that may offset geographic economic trends, and offers us an opportunity to access new markets for maturing products.
A summary of our domestic and international results is set forth in Note 3, "Segment Information", to our Consolidated Financial Statements in Item 8 of Part II. Approximately 66% of our overall net revenue in fiscal 2020 came from outside the United States.
For a discussion of certain risks attendant to our international operations, see "Risk Factors—Due to the international nature of our business, political or economic changes or other factors could harm our future revenue, costs and expenses, and financial condition," and "—We are exposed to fluctuations in foreign currency exchange rates" in Item 1A, "Quantitative and Qualitative Disclosure about Market Risk" in Item 7A of Part II and Note 14, "Financial Instruments", to our Consolidated Financial Statements in Item 8 of Part II, which are incorporated herein by reference.
Research and Development
Innovation is a key element of our culture and critical to our success. Our research and development efforts ("R&D") are focused on designing and developing products, services and solutions that anticipate customers' changing needs and desires and emerging technological trends. Our efforts also are focused on identifying the areas where we believe we can make a unique contribution and where partnering with other leading technology companies will leverage our cost structure and maximize our customers' experiences.
Expenditures for R&D were $1.9 billion in fiscal 2020, $1.8 billion in fiscal 2019 and $1.7 billion in fiscal 2018. We anticipate that we will continue to have significant R&D expenditures in the future to support the design and development of innovative, high-quality products, services and solutions to maintain and enhance our competitive position.
Included in the R&D work currently taking place at the Company are the following initiatives:
In Compute, we are developing high quality next-generation compute solutions (servers, server attached options, and software) that integrate the latest industry technology, which coupled with innovations from HPE are aligned to the requirements of our customers.
In HPC & MCS, we are investing in high-performance compute, storage and networking systems for the most demanding workloads from the edge-to-core. Investment in technologies in high-performance networking, memory-driven compute, and high-performance storage and data management underpin our differentiated offerings. We also invest significantly in software, including cloud native developer and highly scalable cluster operating environments, application and performance capabilities, and high-availability solutions. HPC & MCS also hosts an applied research group where we invest in long term, disruptive R&D such as silicon photonics creating a pipeline of technologies for future offerings.
In the Storage data management sphere, we are investing in new technologies to address the demand in mature and emerging markets. Our comprehensive on-premises scalable infrastructure that includes an industry-first 100% guarantee offering, is being creatively augmented by an all-inclusive as-a-service HPE Greenlake offering. The Company continues to empower the edge-to-core data pipeline with embedded AI built-to-scale and to provide deep learning analytics across its entirety.
In Intelligent Edge, we are shifting significant investment towards a "cloud first" innovation model for the comprehensive management of wireless, switching and software defined branch ("SD-Branch") with the cloud native Edge Services Platform ("ESP"). Another key investment priority is artificial intelligence based network operations for the end-to-end optimization of network performance and user experience, combined with securing the network edge infrastructure by segmenting the internet-of-things ("IoT") user traffic with dynamic context based policies.
In Hewlett Packard Labs, we are focused on disruptive innovation and applied research in collaboration with other HPE business groups to deliver differentiated intellectual property ("IP"). Our innovation agenda is focused on developing technologies in the areas of system architecture, networking, AI, accelerators and silicon photonics. We also continue to invest in our silicon design capability to accelerate the development and delivery of our technology with custom integrated circuits.
For a discussion of risks attendant to our R&D activities, see "Risk Factors—If we cannot successfully execute our go-to-market strategy and continue to develop, manufacture and market innovative products, services and solutions, our business and financial performance may suffer" in Item 1A.
Patents
Our general policy is to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position. As of October 31, 2020, our worldwide patent portfolio included approximately 15,000 issued and pending patents.
Patents generally have a term of up to 20 years from the date they are filed. As our patent portfolio has been built over time, the remaining terms of the individual patents across our patent portfolio vary. We believe that our patents and patent applications are important for maintaining the competitive differentiation of our products and services, enhancing our freedom of action to sell our products and services in markets in which we choose to participate, and maximizing our return on research
and development investments. No single patent is in itself essential to our company as a whole or to any of our business segments.
In addition to developing our patent portfolio, we license intellectual property from third parties as we deem appropriate. We have also granted and continue to grant to others licenses and other rights under our patents when we consider these arrangements to be in our interest. These license arrangements include a number of cross-licenses with third parties.
For a discussion of risks attendant to intellectual property rights, see "Risk Factors—Our financial performance may suffer if we cannot continue to develop, license or enforce the intellectual property rights on which our businesses depend" and "—Our products and services depend in part on intellectual property and technology licensed from third parties" in Item 1A.
Backlog
In fiscal 2020 the outbreak of COVID-19 resulted in a disruption to our supply chain process. The outbreak resulted in a global slowdown of economic activity including worldwide travel restrictions, prohibitions of non-essential work activities, disruption and shutdown of businesses and greater uncertainty in global financial markets. These events introduced a disruption to our supply chain at the beginning of the calendar year resulting in significantly higher levels of backlog, particularly in Compute, HPC & MCS, and Storage as lockdown restrictions imposed across the globe disrupted our order fulfillment process and limited our ability to perform on-site installations and meet customer acceptance requirements. Subsequently, by the latter part of the fiscal period we made significant progress in clearing our backlog such that we exited the fiscal year with normalized backlog levels.
During the COVID-19 pandemic, we have also viewed backlog as an indication of demand health as governments around the world continue to impose restrictions on non-essential work activities and travel. As and when the COVID-19 pandemic subsides our focus on backlog may again become less relevant as a reliable indicator of future demand.
For a further discussion of the risks, uncertainties and actions taken in response to COVID-19, see risks identified in the section entitled "Risk Factors" in Item 1A, and the "COVID-19 Update" in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7.
Seasonality
General economic conditions have an impact on our business and financial results. From time to time, the markets in which we sell our products, services and solutions experience weak economic conditions that may negatively affect sales. We experience some seasonal trends in the sale of our products and services. For example, European sales are often weaker in the summer months. However, the impact of the COVID-19 outbreak may result in temporary changes to the seasonal fluctuation of our business. See "Risk Factors—Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable" in Item 1A.
Competition
We have a broad technology portfolio of enterprise IT infrastructure products, solutions and services. We encounter strong competition in all areas of our business. We compete primarily on the basis of technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, range of products and services, ease of use of our products, account relationships, customer training, service and support, security, and the availability of our IT infrastructure offerings.
The markets in which we compete are characterized by strong competition among major corporations with long-established positions and a large number of new and rapidly growing firms. Most product life cycles are relatively short, and to remain competitive we must develop new products and services, continuously enhance our existing products and services and compete effectively on the basis of the factors listed above, among others. In addition, we compete with many of our current and potential partners, including OEMs that design, manufacture and market their products under their own brand names. Our successful management of these competitive partner relationships is critical to our future success. Moreover, we anticipate that we will have to continue to adjust prices on many of our products and services to stay competitive.
The competitive environments in which each segment operates are described below:
The Compute and Storage businesses operate in the highly competitive enterprise data center infrastructure market, which is characterized by rapid and ongoing technological innovation and price competition. Our primary competitors are technology vendors such as Dell Technologies Inc., Cisco Systems, Inc., Lenovo Group Ltd., International Business Machines Corporation, and NetApp Inc. In certain regions, we also experience competition from local companies and from generically branded or "white-box" manufacturers. Our strategy is to deliver superior products, high-value technology support services and differentiated integrated solutions that combine our infrastructure, software and services capabilities. Our competitive advantages include our broad end-to-end solutions portfolio, supported by our strong intellectual property portfolio and research and development capabilities, coupled with our global reach and partner ecosystem.
The HPC & MCS business predominantly services customers with data-intensive super-computing, analytics, and artificial intelligence needs. Our primary competitors are compute technology vendors than can design and build solutions that deliver performance scalability and connectivity necessary to handle super-compute and artificial intelligence ("AI") workloads, including Dell Technologies Inc., Lenovo Group Ltd., and International Business Machines Corporation. Similar to the compute space, our strategy is to deliver superior products, high-value technology support services and differentiated integrated solutions that combine our infrastructure, software and services capabilities. Our competitive advantages include our deep expertise and capabilities designing and delivering these solutions, broad end-to-end solutions portfolio, supported by our strong intellectual property portfolio and research and development capabilities.
The A & PS business predominantly delivers digital transformation expertise to customers. The strategy of the business is to partner with customers to prioritize, define and implement the technology transformations that will achieve customers' digital transformation goals. The business has practice areas in digital transformation advisory, hybrid cloud transformation, AI and data, networking & edge, security, IoT, digital workplaces, education and management of change. Our primary competitors for this business are the consulting services arms of major technology vendors such as International Business Machines Corporation, Dell Technologies Inc., Cisco Systems, Inc., and Accenture.
Intelligent Edge operates in the highly competitive networking and connectivity infrastructure market, which is characterized by rapid and ongoing technological innovation and price competition. Our primary competitors are technology vendors such as Cisco Systems, Inc., Extreme Networks, Inc., Juniper Networks, Inc., and Arista Networks Inc. Our strategy is to deliver superior enterprise wired and wireless local-area networking components and software, high-value technology support services and differentiated integrated solutions that combine our infrastructure, software and services capabilities. Our competitive advantage includes our broad end-to-end solutions portfolio, supported by our strong intellectual property portfolio and research and development capabilities, coupled with our global reach and partner ecosystem.
Financial Services. In our financing business, our primary competitors are captive financing companies, such as IBM Global Financing, Dell Financial Services, and Cisco Capital, as well as banks and other financial institutions. Our primary IT Asset Disposition (ITAD) competitors are ERI, Ingram Micro, Sage Sustainable Electronics, and Sims Recycling Solutions. We believe our competitive advantage over banks, other financial institutions, and ITAD providers is our ability to bring together our investment solutions with our expertise in managing technology assets. Not only are we able to deliver investment solutions that help customers create unique technology deployments based on specific business needs, but we also help them extract value from existing IT investments while more efficiently managing the retirement of those assets. All of these solutions can help customers accelerate digital transformation, create new budget streams, and meet Circular Economy objectives.
For a discussion of certain risks attendant to these competitive environments, see "Risk Factors—We operate in an intensely competitive industry and competitive pressures could harm our business and financial performance" in Item 1A.
Material Government Regulations
Our business activities are worldwide and are subject to various federal, state, local, and foreign laws and our products and services are governed by a number of rules and regulations. Costs and accruals incurred to comply with these governmental regulations are presently not material to our capital expenditures, results of operations and competitive position. Although there is no assurance that existing or future government laws applicable to our operations, services or products will not have a material adverse effect on our capital expenditures, results of operations and competitive position, we do not currently anticipate material expenditures for government regulations. Nonetheless, as discussed below, we believe that environmental and global trade regulations could potentially materially impact our business.
Environment
Our products and operations are, or may in the future be, subject to various federal, state, local, and foreign laws and regulations concerning the environment, including, among others, laws addressing the discharge of pollutants into the air and water; the management, movement, and disposal of hazardous substances and wastes and the clean-up of contaminated sites;
product safety, such as chemical composition, packaging and labeling; energy consumption of our products and services; and the manufacture and distribution of chemical substances. We are also subject to legislation in an increasing number of jurisdictions that makes producers of electrical goods, including servers and networking equipment, financially responsible for specified collection, recycling, treatment, and disposal of past and future covered products (sometimes referred to as "product take-back legislation"). Finally, as climate change laws, regulations, treaties, and similar initiatives and programs are adopted and implemented throughout the world, we will be required to comply or potentially face market access limitations or other sanctions, including fines. However, we believe that technology will be fundamental to finding solutions to achieve compliance with and manage those requirements, and we are collaborating with industry, business groups and governments to find and promote ways that our technology can be used to address climate change and to facilitate compliance with related laws, regulations and treaties. We are committed to maintaining compliance with all environmental laws applicable to our operations, products and services, and to reducing our environmental impact across all aspects of our business. We meet this commitment with a comprehensive environmental, health and safety policy, strict environmental management of our operations and worldwide environmental programs and services.
Global Trade
As a global company, the import and export of our products and services are subject to laws and regulations including international treaties, U.S. export controls and sanctions laws, customs regulations, and local trade rules around the world. Such laws, rules and regulations may delay the introduction of some of our products or impact our competitiveness through restricting our ability to do business in certain places or with certain entities and individuals, or the need to comply with domestic preference programs, laws concerning transfer and disclosure of sensitive or controlled technology or source code, unique technical standards, localization mandates, and duplicative in-country testing and inspection requirements. The consequences of any failure to comply with domestic and foreign trade regulations could limit our ability to conduct business globally. We continue to support open trade policies that recognize the importance of integrated cross-border supply chains that will continue to contribute to the growth of the global economy and measures that standardize compliance for manufacturers to ensure that products comply with safety and security requirements.
For a discussion of the risks associated with government regulations that may materially impact us, please see the section entitled "Risk Factors" in Item 1A.
Additional Information
Itanium is a trademark of Intel Corporation or its subsidiaries.
Information about our Executive Officers
The following are our current executive officers:
Name
Age
Position
Antonio Neri
53
President and Chief Executive Officer
Tom Black
51
Senior Vice President, General Manager of Storage
Kirt P. Karros
51
Senior Vice President, Finance and Treasurer
Neil MacDonald
52
Senior Vice President, General Manager of Compute
Alan May
62
Executive Vice President and Chief People Officer
Keerti Melkote
50
President, Intelligent Edge
Jeff T. Ricci
59
Senior Vice President, Controller and Principal Accounting Officer
Tarek Robbiati
55
Executive Vice President and Chief Financial Officer
Irv Rothman
74
President and Chief Executive Officer, HPE Financial Services
John F. Schultz
56
Executive Vice President, Chief Operating and Legal Officer
Peter Ungaro
52
Senior Vice President, General Manager of High Performance Compute and Mission-Critical Systems and Hewlett Packard Labs
Antonio Neri; President and Chief Executive Officer
Mr. Neri has served as our President and Chief Executive Officer since June 2017 and February 2018, respectively. Mr. Neri previously served as Executive Vice President and General Manager of our Enterprise Group from November 2015 to June 2017. Prior to that, Mr. Neri served in a similar role for HP Co.'s Enterprise Group from October 2014 to November 2015. Mr. Neri served as Senior Vice President and General Manager of the HP Servers business unit from September 2013 to October 2014 and concurrently as Senior Vice President and General Manager of the HP Networking business unit from May
2014 to October 2014. Prior to that, Mr. Neri served as Senior Vice President and General Manager of the HP Technology Services business unit from August 2011 to September 2013 and as Vice President, Customer Services for the HP Personal Systems Group from 2007 to August 2011, having first joined HP Co. in 1996. From March 2012 to February 2013, Mr. Neri served as a director of MphasiS Limited, an India-based technology company.
Tom Black; Senior Vice President, General Manager of Storage
Mr. Black has served as Senior Vice President and General Manager of our Storage business segment since December 2019. Prior to that, Mr. Black served as Senior Vice President and General Manager of Switching within our Intelligent Edge business segment from October 2018 to December 2019. From January 2016 to October 2018, Mr. Black served as the Vice President and General Manager of Switching within our Intelligent Edge business. From June 2013 to January 2016, Mr. Black was the Vice President of Engineering for the Networking group at HP Co., and later, at HPE. Prior to that, Mr. Black served in various roles, including Vice President of Engineering and other engineering positions at Cisco Systems from November 1999 to May 2013.
Kirt P. Karros; Senior Vice President, Finance and Treasurer
Mr. Karros has served as our Senior Vice President, Finance and Treasurer since November 2015. Prior to that, Mr. Karros served in a similar role at HP Co. and led its Investor Relations from May 2015 to October 2015. Mr. Karros previously served as Principal and Managing Director of Research for Relational Investors LLC, an investment fund, from 2001 to May 2015 and concurrently as a director of PMC-Sierra, a semiconductor company, from August 2013 to May 2015 and as a director of InnerWorkings, Inc. from August 2019 to October 2020.
Neil MacDonald; Senior Vice President, General Manager of Compute
Mr. MacDonald has served as Senior Vice President and General Manager of our Compute business segment since February 2020. Prior to that, Mr. MacDonald served as Senior Vice President and General Manager of the Compute Solutions group of the then Hybrid IT business segment, from October 2018 to February 2020. Mr. MacDonald previously served as Vice President and General Manager of BladeSystem from August 2015 to October 2020, having first joined HP Co. in 1996.
Alan May; Executive Vice President and Chief People Officer
Mr. May has served as our Executive Vice President, Chief People Officer since June 2015. Before joining Hewlett Packard Enterprise, Mr. May served as Vice President, Human Resources at Boeing Commercial Aircraft, a division of The Boeing Company, from April 2013 to June 2015. Prior to that, Mr. May served as Vice President, Human Resources for Boeing Defense, Space and Security at Boeing from April 2011 to June 2015 and as Vice President, Compensation, Benefits and Strategy at Boeing from August 2007 to April 2011. Mr. May has also served in senior human resources roles at Cerberus Capital Management and PepsiCo. He serves as a Trustee for the American Foundation for the Blind and is on the Board of Governors for the San Francisco Symphony.
Keerti Melkote; President, Intelligent Edge
Mr. Melkote has served as President of our Intelligent Edge business segment since January 2017. Mr. Melkote previously served as Chief Technology Officer of Intelligent Edge from May 2015 to December 2016. Prior to that, Mr. Melkote performed a similar role as Chief Technology Officer and Co-Founder of Aruba Networks from February 2009 until our acquisition of Aruba Networks in May 2015. Previously, Mr. Melkote served as Co-Founder and Vice President, Products at Aruba Networks from February 2002 to January 2009.
Jeff T. Ricci; Senior Vice President, Controller and Principal Accounting Officer
Mr. Ricci has served as our Senior Vice President, Controller and Principal Accounting Officer since November 2015. Prior to that, Mr. Ricci performed a similar role at HP Co. from April 2014 to November 2015. Mr. Ricci served as Controller and Principal Accounting Officer at HP Co. on an interim basis from November 2013 to April 2014. Previously, Mr. Ricci served as Vice President, Finance for several of HP Co.'s organizations, including Technology and Operations from May 2012 to November 2013, Global Accounts and HP Financial Services from March 2011 to May 2012, and HP Software from March 2009 to March 2011.
Tarek Robbiati; Executive Vice President and Chief Financial Officer
Mr. Robbiati has served as our Executive Vice President, Chief Financial Officer since September 2018. Before joining Hewlett Packard Enterprise, Mr. Robbiati served as Chief Financial Officer of Sprint Corporation from August 2015 to February 2018. Mr. Robbiati previously served as Chief Executive Officer and Managing Director of FlexiGroup Limited in Australia from January 2013 to August 2015. Prior to that, from December 2009 to December 2012, Mr. Robbiati was Group
Managing Director and President of Telstra International Group in Hong Kong and Executive Chairman of Hong Kong CSL Limited ("CSL"), a subsidiary of Telstra Corporation Limited. From July 2007 to May 2010, Mr. Robbiati served as the Chief Executive Officer of CSL in Hong Kong.
Irv Rothman; President and Chief Executive Officer, HPE Financial Services
Mr. Rothman has served as President and Chief Executive Officer of our Financial Services business segment, our IT investment and financing subsidiary, since November 2015. Prior to that, Mr. Rothman served in a similar role at HP Co. from May 2002 to November 2015. Prior to joining HP Co., Mr. Rothman was President and Chief Executive Officer of Compaq Financial Services Corporation from January 1997 to April 2002.
John F. Schultz; Executive Vice President, Chief Operating and Legal Officer
Mr. Schultz has served as our Executive Vice President, Chief Operating and Legal Officer since July 2020. Prior to that, he served as Executive Vice President, Chief Legal and Administrative Officer and Secretary from December 2017 to July 2020. Mr. Schultz previously served as Executive Vice President, General Counsel and Secretary from November 2015 to December 2017, performing a similar role at HP Co. from April 2012 to November 2015. Prior to that, Mr. Schultz served as Deputy General Counsel for Litigation, Investigations and Global Functions at HP Co. from September 2008 to April 2012. Prior to joining HP Co., Mr. Schultz was a partner in the litigation practice at Morgan, Lewis & Bockius LLP, a law firm, from March 2005 to September 2008, where, among other clients, he supported HP Co. as external counsel on a variety of litigation and regulatory matters.
Peter Ungaro; Senior Vice President, General Manager of High Performance Compute and Mission-Critical Systems and Hewlett Packard Labs
Mr. Ungaro has served as Senior Vice President and General Manager of our High Performance Compute and Mission Critical Systems business segment and Hewlett Packard Labs since September 2019. Prior to that, Mr. Ungaro was President and Chief Executive Officer of Cray from 2005 until our acquisition of Cray in September 2019. From September 2004 until March 2005, Mr. Ungaro served as Senior Vice President of Sales, Marketing, and Services at Cray and, from August 2003 until September 2004, he served as Vice President of Sales and Marketing at Cray. Before joining Cray in 2003, Ungaro served as Vice President of Sales for Worldwide Deep Computing at IBM. Mr. Ungaro held a variety of other sales leadership positions since joining IBM in 1991.
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available on our website at http://investors.hpe.com, as soon as reasonably practicable after we electronically file such reports with, or furnish those reports to, the Securities and Exchange Commission. Hewlett Packard Enterprise's Corporate Governance Guidelines, Board of Directors' committee charters (including the charters of the Audit Committee, Finance and Investment Committee, HR and Compensation Committee, Technology Committee, and Nominating, Governance and Social Responsibility Committee) and code of ethics entitled "Standards of Business Conduct" are also available at that same location on our website. Stockholders may request free printed copies of these documents from:
You should carefully consider the following risks and other information in this Form 10-K in evaluating Hewlett Packard Enterprise and its common stock. Any of the following risks could materially and adversely affect our results of operations or financial condition. The following risk factors should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operation" and the Consolidated Financial Statements and related notes in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.
Business and Operational Risks
We are unable to predict the extent to which the global COVID-19 pandemic may adversely impact our business operations, financial performance and results of operations.
The COVID-19 pandemic and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in most or all of the regions in which we sell our products and services and conduct our business operations. The pandemic has resulted in a global slowdown of economic activity, including travel restrictions, prohibitions of non-essential activities in some cases, disruption and shutdown of businesses and greater uncertainty in global financial markets. Our operations have been affected by a range of external factors related to the COVID-19 pandemic that are not within our control, including the various restrictions imposed by cities, counties, states and countries on our employees, customers, partners and suppliers designed to limit the spread of COVID-19. Although the immediate impacts of the COVID-19 pandemic have been assessed, the long-term magnitude and duration of the disruption and resulting decline in business activity is still highly uncertain and cannot currently be predicted.
In response to the COVID-19 pandemic and to ensure the safety of our employees, we have implemented a global work-from-home policy until further notice that applies to a significant majority of our employees, with the exception of those performing essential activities. Our employees may elect to return to the office in jurisdictions where both local requirements and our own health and safety standards have been met. If such instances occur, employees would return to the office in a phased process. Moreover, certain industry and customer events that we sponsor or at which we present have been canceled, postponed or moved to virtual-only experiences and we may deem it advisable to similarly alter, postpone or cancel entirely additional events in the future. We are also seeing an increase in customer requirements for HPE employees to be tested for COVID-19 before being able to enter customer sites, which could potentially present an operational challenge. However, work-from-home and other modified business practices introduce additional operational risks, including cybersecurity risks, which may result in inefficiencies or delays, and have affected the way we conduct our product development, sales, customer support and other activities. Unanticipated disruptions in services provided through our localized physical infrastructure caused by the COVID-19 pandemic can curtail the functioning of critical components of our IT systems, and adversely affect our ability to fulfill orders, provide services, respond to customer requests and maintain our worldwide business operations.
The pandemic has adversely affected, and could continue to adversely affect, our business, by negatively impacting the demand for our products and services; restricting our operations and sales, marketing and distribution efforts; disrupting the supply chains of hardware products; and disrupting our research and development capabilities, engineering, design and manufacturing processes and other important business activities. For example, we expect the conditions caused by the COVID-19 pandemic could affect the rate of IT spending, impact our customers' ability or willingness to purchase our products and services, delay prospective customers' purchasing decisions, delay the provisioning of our products and services, lengthen payment terms, reduce the value or duration of subscription contracts or affect attrition rates, all of which could adversely affect our sales, operating results and financial performance. There have been, and likely will continue to be, delays of components shipments from our vendors in China and other jurisdictions in which normal business operations are disrupted.
We expect the COVID-19 pandemic could continue to have a negative impact on our sales and our results of operations, the size and duration of which we are currently unable to predict. While such changes were factored into the forecast used to assess assets for reserves and impairment, including goodwill, and to calculate the annualized effective tax rate during the interim quarters of fiscal 2020, any changes to the profitability for the next fiscal year could impact the realizability of assets and the annualized effective tax rate applied to earnings. Additionally, concerns over the economic impact of the COVID-19 pandemic have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact our stock price, our ability to access capital markets and our ability to fund liquidity needs. In response, we announced our long-term cost optimization and prioritization plan to focus our investments and realign our workforce to areas of growth combined with short-term cost saving measures, including temporary base salary adjustments or unpaid leave for certain employees and hiring and salary freezes. Execution of the plan may not achieve the results and savings we anticipate and our temporary cost saving measures may negatively affect employee morale and our future recruiting efforts.
To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this "Risk Factors" section and those incorporated by reference herein, such as
those related to our products and services, demand and distribution, financial performance, credit rating and debt obligations. Given that developments concerning the COVID-19 pandemic have been constantly evolving, additional impacts and risks may arise that we are not aware of or able to appropriately respond to at this time.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our worldwide operations and supply chain could be disrupted by natural or human induced disasters including, but not limited to, earthquakes; tsunamis; floods; hurricanes, cyclones or typhoons; fires; other extreme weather conditions; power or water shortages; telecommunications failures; materials scarcity and price volatility; terrorist acts, conflicts or wars; and medical epidemics or pandemics. We are predominantly self-insured to mitigate the impact of most catastrophic events. Although it is impossible to completely predict the occurrences or consequences of any such events, forecasting disruptive events and building additional resiliency into our operations accordingly will become an increasing business imperative. The occurrence of business disruptions could result in significant losses, seriously harm our revenue, profitability and financial condition, adversely affect our competitive position, increase our costs and expenses, decrease in demand for our products, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain, result in the need to impose employee travel restrictions and require substantial expenditures and recovery time in order to fully resume operations.
Climate change serves as a risk multiplier increasing both the frequency and severity of natural disasters that may affect our worldwide business operations. Our corporate headquarters and a portion of our research and development activities are located in California, which suffers from drought conditions and catastrophic wildfires affecting the health and safety of our employees. To mitigate wildfire risk, electric utilities are deploying public safety power shutoffs (PSPS), which affects electricity reliability to our facilities and our communities. Other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults known for seismic activity. In 2017, our principal worldwide IT data centers in Houston were flooded due Hurricane Harvey. Since then, HPE has increased its resiliency through site selection infrastructure technological investments to mitigate and adapt to physical risks from climate change.
The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including the United States, Czech Republic, Mexico, China and Singapore. We also rely on major logistics hubs, which are strategically located near manufacturing facilities in the major regions and in proximity to HPE's distribution channels and customers. Our operations could be adversely affected if manufacturing, logistics or other operations in these locations are disrupted for any reason, including natural disasters, IT system failures, military actions or economic, business, labor, environmental, public health, regulatory or political issues. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near vulnerable locations is continuing to be assessed.
U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
Given the change in the U.S. presidential administration, we face uncertainty with regard to U.S. government trade policy. Current U.S. government trade policy includes the imposition of tariffs on certain foreign goods, including information and communication technology products. These measures may materially increase costs for goods imported into the United States. This in turn could require us to materially increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold. U.S. government trade policy has resulted in, and could result in more, U.S. trading partners adopting responsive trade policy making it more difficult or costly for us to export our products to those countries.
Our transition to a subscription-based business model may adversely affect our business, operating results and free cash flow.
We are currently transitioning to an as-a-Service company, providing our entire portfolio through a range of subscription-based, pay-per-use and as-a-Service offerings. We will also continue to provide our hardware and software in a capital expenditure and license-based model, ultimately giving our customers choice in consuming HPE products and services in a traditional or as-a-Service offering. Such business model changes entail significant risks and uncertainties, and we may be unable to complete the transition to a subscription-based business model, or manage the transition successfully and in a timely manner; and our ability to accurately forecast our future operating results may be adversely affected. Additionally, we may not realize all of the anticipated benefits of the subscription transition, even if we successfully complete the transition. The transition to a subscription-based business model also means that our historical results, especially those achieved before we began the transition, may not be indicative of our future results. Further, as customer demand for our consumption model offerings increases, we will experience differences in the timing of revenue recognition between our traditional offerings (for which revenue is generally recognized at the time of delivery) and our as-a-Service offerings (for which revenue is generally recognized ratably over the term of the arrangement).
In addition, the transition to an as-a-Service company is expected to require incremental capital requirements, resulting in a negative impact to cash flows in the near term, and may require us to dedicate additional resources, including sales and marketing costs. Furthermore, we anticipate needing to redesign our go-to-market structure, to better align with the subscription-based business model. There is no assurance that we will be able to successfully implement these adjustments in a timely or cost-effective manner, or that we will be able to realize all or any of the expected benefits from such adjustments.
We depend on third-party suppliers, and our financial results could suffer if we fail to manage our supplier relationships properly.
Our operations depend on our ability to anticipate our needs for components, products and services, as well as our suppliers' ability to deliver sufficient quantities of quality components, products and services at reasonable prices and in time for us to meet critical schedules for the delivery of our own products and services. Given the wide variety of solutions that we offer, the large and diverse distribution of our suppliers and contract manufacturers, and the long lead times required to manufacture, assemble and deliver certain solutions, problems could arise in production, planning and inventory management that could seriously harm our business. In addition, our ongoing efforts to optimize the efficiency of our supply chain could cause supply disruptions and be more expensive, time-consuming and resource-intensive than expected. Furthermore, certain of our suppliers may decide to discontinue conducting business with us. Other supplier problems that we could face include component shortages, excess supply, and contractual, relational and labor risks, each of which is described below.
•Component shortages. We may experience a shortage of, or a delay in receiving, certain components as a result of strong demand, capacity constraints, supplier financial weaknesses, the inability of suppliers to borrow funds in the credit markets, disputes with suppliers (some of whom are also our customers), disruptions in the operations of component suppliers, other problems experienced by suppliers or problems faced during the transition to new suppliers. If shortages or delays persist, the price of certain components may increase, we may be exposed to quality issues, or the components may not be available at all. We may not be able to secure enough components at reasonable prices or of acceptable quality to build products or provide services in a timely manner in the quantities needed or according to our specifications. Accordingly, our business and financial performance could suffer if we lose time-sensitive sales, incur additional freight costs or are unable to pass on price increases to our customers. If we cannot adequately address supply issues, we might have to reengineer some product or service offerings, which could result in further costs and delays.
•Excess supply. In order to secure components for our products or services, at times we may make advance payments to suppliers or enter into non-cancelable commitments with vendors. In addition, we may purchase components strategically in advance of demand to take advantage of favorable pricing or to address concerns about the availability of future components. If we fail to anticipate customer demand properly, a temporary oversupply could result in excess or obsolete components, which could adversely affect our business and financial performance.
•Contractual terms. As a result of binding long-term price or purchase commitments with vendors, we may be obligated to purchase components or services at prices that are higher than those available in the current market and be limited in our ability to respond to changing market conditions. If we commit to purchasing components or services for prices in excess of the then-current market price, we may be at a disadvantage to competitors who have access to components or services at lower prices, our gross margin could suffer, and we could incur additional charges relating to inventory obsolescence. Any of these developments could adversely affect our future results of operations and financial condition.
•Contingent workers. We also rely on third-party suppliers for the provision of contingent workers, and our failure to manage our use of such workers effectively could adversely affect our results of operations. We have been exposed to various legal claims relating to the status of contingent workers in the past and could face similar claims in the future. We may be subject to shortages, oversupply or fixed contractual terms relating to contingent workers. Our ability to manage the size of, and costs associated with, the contingent workforce may be subject to additional constraints imposed by local laws.
•Single-source suppliers. We obtain certain components from single-source suppliers due to technology, availability, price, quality, scale or customization needs. Replacing a single-source supplier could delay production of some products as replacement suppliers may initially be unable to meet demand or be subject to other output limitations. For some components, such as customized components, alternative sources either may not exist or may be unable to produce the quantities of those components necessary to satisfy our production requirements. In addition, we sometimes purchase components from single-source suppliers under short-term agreements that contain favorable pricing and other terms but that may be unilaterally modified or terminated by the supplier with limited notice and with little or no penalty. The performance of such single-source suppliers under those agreements (and the renewal or extension of those agreements upon similar terms) may affect the quality, quantity and price of our components. The loss of a single-source supplier, the deterioration of our relationship with a single-source supplier or any unilateral modification to the contractual terms under which we are supplied components by a single-source supplier could adversely affect our business and financial performance.
We may not achieve some or all of the expected benefits of our restructuring plans and our periodic restructuring programs can be disruptive to our business.
We have announced restructuring plans, including the HPE Next initiative and the cost optimization and prioritization plan in order to realign our cost structure due to the changing nature of our business and to achieve operating efficiencies that we expect to reduce costs, as well as simplify our organizational structure, upgrade our IT infrastructure and redesign business processes. We may not be able to obtain the cost savings and benefits that were initially anticipated in connection with our restructuring. Additionally, as a result of restructuring initiatives, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods. Reorganization and restructuring can require a significant amount of management and other employees' time and focus, which may divert attention from operating and growing our business. If we fail to achieve some or all of the expected benefits of restructuring, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows. For more information about our restructuring plans, the HPE Next initiative and the cost optimization and prioritization plan, see Note 4, "Transformation Programs", to the Consolidated Financial Statements.
Any failure by us to identify, manage and complete acquisitions and subsequent integrations, divestitures and other significant transactions successfully could harm our financial results, business and prospects.
As part of our strategy, we may acquire businesses, divest businesses or assets, enter into strategic alliances and joint ventures, and make investments to further our business, (collectively, "business combination and investment transactions") and handle any post-closing issues such as integration. For example, in September 2020, we acquired Silver Peak Systems, Inc., an SD-WAN industry leader and in September 2019, we acquired Cray Inc., a global supercomputer leader. In April 2017 and September 2017, we spun off our Enterprise Services and Software businesses, respectively. See also the risk factors below under the heading "Risks Related to the Separations of our Former Enterprise Services Business and our Former Software Segment".
Risks associated with business combination and investment transactions include the following, any of which could adversely affect our financial results, including our effective tax rate:
•We may not successfully combine product or service offerings or fully realize all of the anticipated benefits of any particular business combination and investment transaction, which may result in (1) failure to retain employees, customers, distributors, and suppliers; (2) increase in unanticipated delays or failure to meet contractual obligations which may cause financial results to differ from expectations; and (3) significant increase in costs and expenses, including those related to severance pay, early retirement costs, employee benefit costs, charges from the elimination of duplicative facilities and contracts, inventory adjustments, assumed litigation and other liabilities, legal, accounting and financial advisory fees, and required payments to executive officers and key employees under retention plans.
•Our ability to conduct due diligence with respect to business combination and investment transactions, and our ability to evaluate the results of such due diligence, is dependent upon the veracity and completeness of statements and disclosures made or actions taken by third parties or their representatives. We may fail to identify significant issues with the acquired company's product quality, financial disclosures, accounting practices or internal control deficiencies or all of the factors necessary to estimate accurately our costs, timing and other matters.
•In order to complete a business combination and investment transaction, we may issue common stock, potentially creating dilution for our existing stockholders or we may enter into financing arrangements, which could affect our liquidity and financial condition.
•Business combination and investment transactions may lead to litigation, which could impact our financial condition and results of operations.
•We have incurred and will incur additional depreciation and amortization expense over the useful lives of certain assets acquired in connection with business combination and investment transactions and, to the extent that the value of goodwill or intangible assets acquired in connection with a business combination and investment transaction becomes impaired, we may be required to incur additional material charges relating to the impairment of those assets.
•For a divestiture, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or we may dispose of a business at a price or on terms that are less desirable than we had anticipated.
•The impact of divestiture on our revenue growth may be larger than projected, as we may experience greater dis-synergies than expected. If we do not satisfy pre-closing conditions and necessary regulatory and governmental approvals on acceptable terms, it may prevent us from completing the transaction. Dispositions may also involve continued financial involvement in the divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations. Under these arrangements, performance by the divested businesses or other conditions outside of our control could affect our future financial results.
•Our certificate of incorporation and bylaws could make it difficult or discourage an acquisition of Hewlett Packard Enterprise if our Board of Directors deems it to be undesirable. Provisions such as indemnification, meeting
requirements, and blank check stock authorizations could deter or delay hostile takeovers, proxy contests, or changes in control or management of Hewlett Packard Enterprise.
Management's attention, or other resources, may be diverted if we fail to successfully complete or integrate business combination and investment transactions that further our strategic objectives.
System security risks, data protection breaches, cyberattacks and systems integration issues could disrupt our internal operations or IT services provided to customers, and any such disruption could reduce our revenue, increase our expenses, damage our reputation and adversely affect our stock price.
As a leading technology firm we are exposed to attacks from criminals, nation state actors and activist hackers (collectively, "malicious parties") who may be able to circumvent or bypass our cyber security measures and misappropriate, maliciously alter or destroy our confidential information or that of third parties, create system disruptions or cause shutdowns. Malicious parties also may be able to develop and deploy viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. Malicious parties may compromise our manufacturing supply chain to embed malicious software or hardware in our products for use in compromising our customers. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including flaws that could unexpectedly interfere with the operation of the system. The costs to us to eliminate or alleviate cyber or other security problems, including bugs, viruses, worms, malicious software programs and other security vulnerabilities, could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.
We manage and store various proprietary information and sensitive or confidential data relating to our business. In addition, our business may process, store and transmit our clients' data, including commercially sensitive and personal data, subject to the European General Data Protection Regulation and other privacy laws. Breaches of our cyber or physical security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information, sensitive or confidential data or personal data about us, our clients or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss (including regulatory fines) or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. We also could lose existing or potential customers of services or other IT solutions or incur significant expenses in connection with our customers' system failures or any actual or perceived security vulnerabilities in our products and services. In addition, the cost and operational consequences of implementing further data protection measures could be significant.
Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive and resource intensive. Such disruptions could adversely impact our ability to fulfill orders and respond to customer requests and interrupt other processes. Delayed sales, lower margins or lost customers resulting from these disruptions could reduce our revenue, increase our expenses, damage our reputation and adversely affect our stock price.
If we cannot successfully execute our go-to-market strategy and continue to develop, manufacture and market innovative products, services and solutions, our business and financial performance may suffer.
Our long-term strategy is focused on leveraging our portfolio of hardware, software and services as we deliver global edge to cloud platform-as-a-service to help customers accelerate outcomes by unlocking value from all of their data, everywhere. HPE delivers unique, open and intelligent technology solutions, with a consistent experience across all clouds and edge computing platforms. To successfully execute this strategy, we must address business model shifts and optimize go-to-market execution by improving cost structure, aligning sales coverage with strategic goals, improving channel execution and strengthening our capabilities in our areas of strategic focus, while continuing to pursue new product innovation that builds on our strategic capabilities in areas such as cloud and data center computing, software-defined networking, converged storage, high-performance compute, and wireless networking. Any failure to successfully execute this strategy, including any failure to invest sufficiently in strategic growth areas, could adversely affect our business, results of operations and financial condition.
The process of developing new high-technology products, software, services and solutions and enhancing existing hardware and software products, services and solutions is complex, costly and uncertain, and any failure by us to anticipate customers' changing needs and emerging technological trends accurately could significantly harm our market share, results of operations and financial condition. For example, as the transition to an environment characterized by cloud-based computing and software being delivered as a service progresses, we must continue to successfully develop and deploy cloud-based solutions for our customers. We must make long-term investments, develop or obtain and protect appropriate intellectual
property, and commit significant research and development and other resources before knowing whether our predictions will accurately reflect customer demand for our products, services and solutions. Any failure to accurately predict technological and business trends, control research and development costs or execute our innovation strategy could harm our business and financial performance. Our research and development initiatives may not be successful in whole or in part, including research and development projects which we have prioritized with respect to funding and/or personnel.
After we develop a product, we must be able to manufacture appropriate volumes quickly while also managing costs and preserving margins. To accomplish this, we must accurately forecast volumes, mixes of products and configurations that meet customer requirements, and we may not succeed at doing so within a given product's life cycle or at all. Any delay in the development, production or marketing of a new product, service or solution could result in us not being among the first to market, which could further harm our competitive position.
If we cannot continue to produce quality products and services, our reputation, business and financial performance may suffer.
In the course of conducting our business, we must adequately address quality issues associated with our products, services and solutions, including defects in our engineering, design and manufacturing processes and unsatisfactory performance under service contracts, as well as defects in third-party components included in our products and unsatisfactory performance or even malicious acts by third-party contractors or subcontractors or their employees. In order to address quality issues, we work extensively with our customers and suppliers and engage in product testing to determine the causes of problems and to develop and implement appropriate solutions. However, the products, services and solutions that we offer are complex, and our regular testing and quality control efforts may not be effective in controlling or detecting all quality issues or errors, particularly with respect to faulty components manufactured by third parties. If we are unable to determine the cause, find an appropriate solution or offer a temporary fix (or "patch") to address quality issues with our products, we may delay shipment to customers, which could delay revenue recognition and receipt of customer payments and could adversely affect our revenue, cash flows and profitability. In addition, after products are delivered, quality issues may require us to repair or replace such products. Addressing quality issues can be expensive and may result in additional warranty, repair, replacement and other costs, adversely affecting our financial performance. If new or existing customers have difficulty operating our products or are dissatisfied with our services or solutions, our results of operations could be adversely affected, and we could face possible claims if we fail to meet our customers' expectations. In addition, quality issues can impair our relationships with new or existing customers and adversely affect our brand and reputation, which could, in turn, adversely affect our results of operations.
If we fail to manage the distribution of our products and services properly, our business and financial performance could suffer.
We use a variety of distribution methods to sell our products and services around the world, including third-party resellers and distributors and both direct and indirect sales to enterprise accounts and consumers. Successfully managing the interaction of our direct and indirect channel efforts to reach various potential customer segments for our products and services is a complex process. Moreover, since each distribution method has distinct risks and gross margins, our failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue and gross margins and therefore our profitability.
Our financial results could be materially adversely affected due to distribution channel conflicts or if the financial conditions of our channel partners were to weaken. Our results of operations may be adversely affected by any conflicts that might arise between our various distribution channels or the loss or deterioration of any alliance or distribution arrangement. Moreover, some of our wholesale distributors may have insufficient financial resources and may not be able to withstand changes in business conditions, including economic weakness, industry consolidation and market trends. Many of our significant distributors operate on narrow margins and have been negatively affected by business pressures in the past. Considerable trade receivables that are not covered by collateral or credit insurance are outstanding with our distribution channel partners. Revenue from indirect sales could suffer, and we could experience disruptions in distribution, if our distributors' financial conditions, abilities to borrow funds in the credit markets or operations weaken.
Our inventory management is complex, as we continue to sell a significant mix of products through distributors. We must manage both owned and channel inventory effectively, particularly with respect to sales to distributors, which involves forecasting demand and pricing challenges. Distributors may increase orders during periods of product shortages, cancel orders if their inventory is too high or delay orders in anticipation of new products. Distributors also may adjust their orders in response to the supply of our products and the products of our competitors and seasonal fluctuations in end-user demand. Our reliance upon indirect distribution methods may reduce our visibility into demand and pricing trends and issues, and therefore make forecasting more difficult. If we have excess or obsolete inventory, we may have to reduce our prices and write down inventory. Moreover, our use of indirect distribution channels may limit our willingness or ability to adjust prices quickly and
otherwise to respond to pricing changes by competitors. We also may have limited ability to estimate future product rebate redemptions in order to price our products effectively.
In order to be successful, we must attract, retain, train, motivate, develop and transition key employees, and failure to do so could seriously harm us.
In order to be successful, we must attract, retain, train, motivate, develop and transition qualified executives and other key employees, including those in managerial, technical, development, sales, marketing and IT support positions. In order to attract and retain executives and other key employees in a competitive marketplace, we must provide a competitive compensation package, including cash- and equity-based compensation. Our equity-based incentive awards may contain conditions relating to our stock price performance and our long-term financial performance that make the future value of those awards uncertain. If the anticipated value of such equity-based incentive awards does not materialize, if our equity-based compensation otherwise ceases to be viewed as a valuable benefit, if our total compensation package is not viewed as being competitive, or if we do not obtain the stockholder approval needed to continue granting equity-based incentive awards in the amounts we believe are necessary, our ability to attract, retain, and motivate executives and key employees could be weakened.
Our failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations. Further, changes in our management team may be disruptive to our business, and any failure to successfully transition and assimilate key new hires or promoted employees could adversely affect our business and results of operations.
Industry Risks
We operate in an intensely competitive industry and competitive pressures could harm our business and financial performance.
We encounter aggressive competition from numerous and varied competitors in all areas of our business, and our competitors have targeted and are expected to continue targeting our key market segments. We compete primarily on the basis of our technology, innovation, performance, price, quality, reliability, brand, reputation, distribution, product range and ease of use, account relationships, customer training, service and support, and security of our offerings. If our products, services, support and cost structure do not enable us to compete successfully based on any of those criteria, our results of operations and business prospects could be harmed.
We have a large portfolio of products and services and must allocate our financial, personnel and other resources across all of our products and services while competing with companies that have smaller portfolios or specialize in one or more of our product or service lines. As a result, we may invest less in certain areas of our business than our competitors do, and our competitors may have greater financial, technical and marketing resources available to them compared to the resources allocated to our products and services that compete against their products and services. Industry consolidation may also affect competition by creating larger, more homogeneous and potentially stronger competitors in the markets in which we operate. Additionally, our competitors may affect our business by entering into exclusive arrangements with our existing or potential customers or suppliers.
Companies with whom we have vertical relationships in certain areas may be or become our competitors in other areas. In addition, companies with whom we have vertical relationships also may acquire or form relationships with our competitors, which could reduce their business with us. If we are unable to effectively manage these complicated relationships with vertical partners, our business and results of operations could be adversely affected.
We face aggressive price competition and may have to continue lowering the prices of many of our products and services to stay competitive, while simultaneously seeking to maintain or improve our revenue and gross margin. In addition, competitors who have a greater presence in some of the lower-cost markets in which we compete, or who can obtain better pricing, more favorable contractual terms and conditions or more favorable allocations of products and components during periods of limited supply may be able to offer lower prices than we are able to offer. Our cash flows, results of operations and financial condition may be adversely affected by these and other industry-wide pricing pressures.
Because our business model is based on providing innovative and high-quality products and services, we may spend a proportionately greater amount of our revenues on research and development than some of our competitors. If we cannot proportionately decrease our cost structure (apart from research and development expenses) on a timely basis in response to competitive price pressures, our gross margin and, therefore, our profitability could be adversely affected. In addition, if our pricing and other facets of our offerings are not sufficiently competitive, or if there is an adverse reaction to our product decisions, we may lose market share in certain areas, which could adversely affect our financial performance and business prospects.
Even if we are able to maintain or increase market share for a particular product, its financial performance could decline because the product is in a maturing industry or market segment or contains technology that is becoming obsolete. For example, our Storage business unit is experiencing the effects of a market transition towards software defined and public cloud, which has led to a decline in demand for our traditional storage products. Financial performance could decline due to increased competition from other types of products.
International Risks
Due to the international nature of our business, political or economic changes or other factors could harm our future revenue, costs and expenses, and financial condition.
Our business and financial performance depend significantly on worldwide economic conditions and the demand for technology hardware, software and services in the markets in which we compete. Economic weakness and uncertainty may adversely affect demand for our products, services and solutions, may result in increased expenses due to higher allowances for doubtful accounts and potential goodwill and asset impairment charges, and may make it more difficult for us to manage inventory and make accurate forecasts of revenue, gross margin, cash flows and expenses.
Economic weakness and uncertainty could cause our expenses to vary materially from our expectations. Any financial turmoil affecting the banking system and financial markets or any significant financial services institution failures could negatively impact our treasury operations, as the financial condition of such parties may deteriorate rapidly and without notice in times of market volatility and disruption. Poor financial performance of asset markets combined with lower interest rates and the adverse effects of fluctuating currency exchange rates could lead to higher pension and post-retirement benefit expenses. Interest and other expenses could vary materially from expectations depending on changes in interest rates, borrowing costs, currency exchange rates, and costs of hedging activities and the fair value of derivative instruments. Economic downturns also may lead to restructuring actions and associated expenses. Further, ongoing U.S. federal government spending priorities may limit demand for our products, services and solutions from organizations that receive funding from the U.S. government, and could negatively affect macroeconomic conditions in the United States, which could further reduce demand for our products, services and solutions.
Sales outside the United States constituted approximately 66% of our net revenue in fiscal 2020. Our future business and financial performance could suffer due to a variety of international factors, including:
•ongoing instability or changes in a country's or region's economic or political conditions, including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts, including uncertainties and instability in economic and market conditions caused by the COVID-19 pandemic;
•longer collection cycles and financial instability among customers;
•trade regulations and procedures and actions affecting production, pricing and marketing of products, including policies adopted by countries that may champion or otherwise favor domestic companies and technologies over foreign competitors, U.S. export controls and sanctions, and federal and state tax reforms;
•local labor conditions and regulations, including local labor issues faced by specific suppliers and original equipment manufacturers ("OEMs"), or changes to immigration and labor law policies which may adversely impact our access to technical and professional talent;
•managing our geographically dispersed workforce;
•changes in the international, national or local regulatory and legal environments;
•differing technology standards or customer requirements;
•import, export or other business licensing requirements or requirements relating to making foreign direct investments, which could increase our cost of doing business in certain jurisdictions, prevent us from shipping products to particular countries or markets, affect our ability to obtain favorable terms for components, increase our operating costs or lead to penalties or restrictions;
•difficulties associated with repatriating earnings in restricted countries, and changes in tax laws; and
•fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important geographic points of exit and entry for our products and shipments.
The factors described above also could disrupt our product and component manufacturing and key suppliers located outside of the United States. For example, we rely on suppliers in Asia for product assembly and manufacture.
In many foreign countries, particularly in those with developing economies, people may engage in business practices prohibited by anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. Although we implement policies, procedures and training designed to facilitate compliance with these laws, our employees and third parties we work with may take actions in violation of our policies, and those actions could have an adverse effect on our business and reputation.
We are exposed to fluctuations in foreign currency exchange rates.
Currencies other than the U.S. dollar, including the euro, the British pound, Chinese yuan (renminbi) and the Japanese yen, can have an impact on our results as expressed in U.S. dollars. Currency volatility contributes to variations in our sales of products and services in impacted jurisdictions. Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against the euro, could adversely affect our revenue growth in future periods. In addition, currency variations can adversely affect margins on sales of our products in countries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States.
From time to time, we may use forward contracts and options designated as cash flow hedges to protect against foreign currency exchange rate risks. The effectiveness of our hedges depends on our ability to accurately forecast future cash flows, which is particularly difficult during periods of uncertain demand for our products and services and highly volatile exchange rates. We may incur significant losses from our hedging activities due to factors such as demand volatility and currency variations. In addition, certain or all of our hedging activities may be ineffective, may expire and not be renewed or may not offset any or more than a portion of the adverse financial impact resulting from currency variations. Losses associated with hedging activities also may impact our revenue and to a lesser extent our cost of sales and financial condition.
Intellectual Property Risks
Our financial performance may suffer if we cannot continue to develop, license or enforce the intellectual property rights on which our businesses depend.
We rely upon patent, copyright, trademark, trade secret and other intellectual property laws in the United States, similar laws in other countries, and agreements with our employees, customers, suppliers and other parties, to establish and maintain intellectual property rights in the products and services we sell, provide or otherwise use in our operations. However, any of our intellectual property rights could be challenged, invalidated, infringed or circumvented, or such intellectual property rights may not be sufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions we may be unable to protect our proprietary technology adequately against unauthorized third-party copying or use; this, too, could adversely affect our ability to sell products or services and our competitive position.
Our products and services depend in part on intellectual property and technology licensed from third parties.
Much of our business and many of our products rely on key technologies developed or licensed by third parties. For example, many of our software offerings are developed using software components or other intellectual property licensed from third parties, including through both proprietary and open source licenses. These third-party software components may become obsolete, defective or incompatible with future versions of our products, or our relationship with the third party may deteriorate, or our agreements with the third party may expire or be terminated. We may face legal or business disputes with licensors that may threaten or lead to the disruption of inbound licensing relationships. In order to remain in compliance with the terms of our licenses, we must carefully monitor and manage our use of third-party software components, including both proprietary and open source license terms that may require the licensing or public disclosure of our intellectual property without compensation or on undesirable terms. Additionally, some of these licenses may not be available to us in the future on terms that are acceptable or that allow our product offerings to remain competitive. Our inability to obtain licenses or rights on favorable terms could have a material effect on our business, including our financial condition and results of operations. In addition, it is possible that as a consequence of a merger or acquisition, third parties may obtain licenses to some of our intellectual property rights or our business may be subject to certain restrictions that were not in place prior to such transaction. Because the availability and cost of licenses from third parties depends upon the willingness of third parties to deal with us on the terms we request, there is a risk that third parties who license to our competitors will either refuse to license us at all, or refuse to license us on terms equally favorable to those granted to our competitors. Consequently, we may lose a competitive advantage with respect to these intellectual property rights or we may be required to enter into costly arrangements in order to terminate or limit these rights.
Third-party claims of intellectual property infringement, including patent infringement, are commonplace in the IT industry and successful third-party claims may limit or disrupt our ability to sell our products and services.
Third parties may claim that we or customers indemnified by us are infringing upon their intellectual property rights. Patent assertion entities frequently purchase intellectual property assets for the purpose of extracting infringement settlements. If we cannot license, or replace, allegedly infringed intellectual property on reasonable terms, our operations could be adversely affected. Even if we believe that intellectual property claims are without merit, they can be time-consuming and costly to defend against and may divert management's attention and resources away from our business. Claims of intellectual property infringement also might require us to redesign affected products, discontinue certain product offerings, enter into costly settlement or license agreements, pay costly damage awards or face a temporary or permanent injunction prohibiting us from
importing, marketing or selling certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations to us.
Financial Risks
Failure to maintain a satisfactory credit rating could adversely affect our liquidity, capital position, borrowing costs and access to capital markets.
We currently maintain investment grade credit ratings with Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings Services. Despite these investment grade credit ratings, any future downgrades could increase the cost of borrowing under any indebtedness we may incur, reduce market capacity for our commercial paper or require the posting of additional collateral under our derivative contracts. Additionally, increased borrowing costs, including those arising from a credit rating downgrade, can potentially reduce the competitiveness of our financing business. There can be no assurance that we will be able to maintain our credit ratings, and any additional actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade, may have a negative impact on our liquidity, capital position and access to capital markets.
Our debt obligations may adversely affect our business and our ability to meet our obligations and pay dividends.
In addition to our current total carrying debt, we may also incur additional indebtedness in the future. This collective amount of debt could have important adverse consequences to us and our investors, including:
•requiring a substantial portion of our cash flow from operations to make principal and interest payments;
•making it more difficult to satisfy other obligations;
•increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing;
•increasing our vulnerability to general adverse economic and industry conditions;
•reducing the cash flows available to fund capital expenditures and other corporate purposes and to grow our business;
•limiting our flexibility in planning for, or reacting to, changes in our business and industry; and
•limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase our common stock.
To the extent that we incur additional indebtedness, the risks described above could increase. In addition, our actual cash requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to service our outstanding debt or to repay our outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to service or refinance our debt.
The revenue and profitability of our operations have historically varied, which makes our future financial results less predictable.
Our revenue, gross margin and profit vary among our diverse products and services, customer groups and geographic markets and therefore will likely be different in future periods than our historical results. Our revenue depends on the overall demand for our products and services. Delays or reductions in IT spending by our customers or potential customers could have a material adverse effect on demand for our products and services, which could result in a significant decline in revenue. In addition, revenue declines in some of our businesses may affect revenue in our other businesses as we may lose cross-selling opportunities. Overall gross margins and profitability in any given period are dependent partially on the product, service, customer and geographic mix reflected in that period's net revenue. Competition, lawsuits, investigations, increases in component and manufacturing costs that we are unable to pass on to our customers, component supply disruptions and other risks affecting our businesses may have a significant impact on our overall gross margin and profitability. Variations in fixed cost structure and gross margins across business units and product portfolios may lead to significant operating profit volatility on a quarterly or annual basis. In addition, newer geographic market opportunities may be relatively less profitable due to our investments associated with entering those markets and local pricing pressures, and we may have difficulty establishing and maintaining the operating infrastructure necessary to support the high growth rate associated with some of those markets. Market trends, industry shifts, competitive pressures, commoditization of products, increased component or shipping costs, regulatory impacts and other factors may result in reductions in revenue or pressure on gross margins of certain segments in a given period, which may lead to adjustments to our operations. Moreover, our efforts to address the challenges facing our business could increase the level of variability in our financial results because the rate at which we are able to realize the benefits from those efforts may vary from period to period.
Our uneven sales cycle makes planning and inventory management difficult and future financial results less predictable.
In some of our businesses, our quarterly sales have periodically reflected a pattern in which a disproportionate percentage of each quarter's total sales occurs towards the end of the quarter. This uneven sales pattern makes predicting revenue, earnings,
cash flow from operations and working capital for each financial period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition and places pressure on our inventory management and logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory. Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled. Depending on when they occur in a quarter, developments such as a systems failure, component pricing movements, component shortages or global logistics disruptions, could adversely impact our inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected. We experience some seasonal trends in the sale of our products that also may produce variations in our quarterly results and financial condition. Many of the factors that create and affect seasonal trends are beyond our control.
We make estimates and assumptions in connection with the preparation of our Consolidated Financial Statements and any changes to those estimates and assumptions could adversely affect our results of operations.
In connection with the preparation of our Consolidated Financial Statements, we use certain estimates and assumptions based on historical experience and other factors. Our most critical accounting estimates are described in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." In addition, as discussed in Note 1, "Overview and Summary of Significant Accounting Policies—Use of Estimates" and Note 17, "Litigation and Contingencies", to our Consolidated Financial Statements, we make certain estimates, including decisions related to provisions for legal proceedings and other contingencies. While we believe that these estimates and assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations.
Regulatory Risks
Our business is subject to various federal, state, local and foreign laws and regulations that could result in costs or other sanctions that adversely affect our business and results of operations.
We are subject to various federal, state, local and foreign laws and regulations such as those concerning environmental protection. For example, we face increasing complexity related to product design, the use of regulated, hazardous and scarce materials, the associated energy consumption and efficiency related to the use of products, the transportation and shipping of products, climate change regulations, and the reuse, recycling and/or disposal of products and their components at end-of-use or useful life as we adjust to new and future requirements relating to our transition to a more circular economy. If we were to violate or become liable under environmental laws or if our products become non-compliant with environmental laws or market access requirements, our customers may refuse to purchase our products and we could incur substantial costs or face other sanctions, such as restrictions on our products entering certain jurisdictions, fines, and/or civil or criminal sanctions. Environmental regulations may also impact the availability and cost of energy or emissions related to energy consumption which may increase our cost of manufacturing and/or the cost of powering and cooling owned IT infrastructures.
In addition, our business is subject to an ever growing number of laws addressing privacy and information security. In particular, we face an increasingly complex regulatory environment as we adjust to new and future requirements relating to the security of our offerings. If we were to violate or become liable under laws or regulations associated with privacy or security, we could incur substantial costs or face other sanctions. Our potential exposure includes regulatory fines and civil or criminal sanctions third-party claims and reputational damage.
Failure to comply with government contracting regulations could adversely affect our business and results of operations.
Our contracts with federal, state, provincial and local governmental customers are subject to various procurement regulations, contract provisions and other requirements relating to their formation, administration and performance. Any violation of government contracting regulations could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and, in the case of our government contracts, fines and suspension from future government contracting. Such failures could also cause reputational damage to our business. In addition, we may in the future be, subject to qui tam litigation brought by private individuals on behalf of the government relating to our government contracts, which could include claims for treble damages. If we are suspended or disbarred from government work or if our ability to compete for new government contracts is adversely affected, our financial performance could suffer.
Unanticipated changes in our tax provisions, the adoption of new tax legislation or exposure to additional tax liabilities could affect our financial performance.
We are subject to income and other taxes in the United States and numerous foreign jurisdictions. Our tax liabilities are affected by the amounts we charge in intercompany transactions for inventory, services, licenses, funding and other items. We are subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with our intercompany charges, cross-
jurisdictional transfer pricing or other matters, and may assess additional taxes as a result. There can be no assurance that we will accurately predict the outcomes of these audits, and the amounts ultimately paid upon resolution of audits could be materially different from the amounts previously included in our income tax expense and therefore could have a material impact on our tax provision, net income and cash flows. In addition, our effective tax rate in the future could be adversely affected by changes to our operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the v