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Table of Content

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)    
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2021
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. Yes x 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 ¨ No x
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. Yes x 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). Yes x 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. x
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 $20,839,669,847 based on the last sale price of common stock on April 30, 2021.
The number of shares of Hewlett Packard Enterprise Company common stock outstanding as of December 7, 2021 was 1,293,439,907 shares.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT DESCRIPTION   10-K PART
Portions of the Registrant's proxy statement related to its 2022 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after Registrant's fiscal year end of October 31, 2021 are incorporated by reference into Part III of this Report.
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Hewlett Packard Enterprise Company
Form 10-K
For the Fiscal Year ended October 31, 2021
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Forward-Looking Statements
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 tax law changes and related guidance and 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; any projections of the amount, execution, timing and results of any transformation or impact of cost savings; restructuring plans, including estimates and assumptions related to the anticipated benefits, cost savings, or charges of implementing 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, 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 other 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.
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PART I
ITEM 1. Business
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, the Company completed the separation and merger of our Enterprise Services business with DXC Technology Company ("DXC", "the Everett Transaction" or "Everett").
On September 1, 2017, the Company completed the separation and merger of our Software business segment with Micro Focus International plc ("Micro Focus", "the Seattle Transaction" or "Seattle" ).
COVID-19 Pandemic Update
While great progress has been made in the fight against the novel coronavirus pandemic ("COVID-19" or "pandemic"), it remains a global challenge. In fiscal 2021, due to an unprecedented demand for electronic devices and related industry-wide supply constraints, the global economy encountered a challenging supply chain environment. The pandemic continues to have an impact on our financial performance and we are currently unable to predict the extent to which it may adversely impact our future business operations, financial performance and results of operations. 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 Part I, Item 1A.
In 2021, COVID-19 vaccines were broadly distributed and administered, and beginning October 4, 2021, we adopted a policy to require proof of vaccination from HPE personnel, contingent workers, and guests in order to return to our sites, where permitted by local laws and regulations and on the timeline determined appropriate for the geography (as of end of fiscal 2021, the policy was operationalized only in the U.S.). On October 20, 2021, we updated our vaccination policy to require vaccination as a condition of employment for all HPE personnel covered by President Biden's executive order, effective January 18, 2022. We recognize that there are existing legal challenges to the executive order, and we will ensure that the timing and scope of the implementation of our vaccination requirement is consistent with the legal status of the executive order. We are committed to help support costs for the vaccine through HPE health benefits or other programs, to the extent not covered by government programs, medical plans or other sources.
Our Strategy
The pace of technology disruption continues to increase, and the pandemic has accelerated several megatrends. First, data at the edge is increasing exponentially, driven by the proliferation of devices. Secure connectivity is essential to enable the digital experiences we now rely on – and power new, engaging digital experiences in the future. Second, enterprises need a cloud experience everywhere to manage data and workloads wherever they live across a distributed enterprise. Third, data growth is creating countless new opportunities. Enterprises need ways to generate insights from this data to build new business models. Across these trends is the shift in how enterprises are consuming their technology. Increasingly, customers want to digitally transform while preserving capital and eliminating operating expense by paying only for the IT they use.
Data insights are critical to deliver business outcomes, but extracting value from data is challenging. Data is growing and evolving rapidly. Its characteristics are shifting, as it becomes more unstructured, more time-sensitive and more distributed. Frequently, data is siloed and spread across different multi-gen IT systems, often trapped in critical legacy architecture. Many organizations cannot adequately extract insights from their data at the edge or face cloud migration challenges because of their legacy applications. Customers need a data-first modernization approach across edge to data center to cloud.
We declared our vision to be the edge-to-cloud company. Our HPE GreenLake platform accelerates multi-generation IT transformation through a unified cloud services experience that enables customers to access, control and maximize the value of all their workloads and data. Our solutions across connectivity, cloud and data – which are increasingly being delivered as-a-service through HPE GreenLake – are complemented by HPE Pointnext services that provide unique transformation capabilities, as well as HPE Financial Services, which helps customers unlock financial capacity.
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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 60,400 employees as of October 31, 2021, 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 drive our success, which is why we believe in investing in our employees and in the communities where we live and work. HPE has intensified its focus on embedding these values into a vibrant culture that creates a superior team member experience and a highly engaged workforce, driving improvements across our communications, our reward programs, and our work environment. Through such efforts, we are 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 increasing year-over-year and measuring 84%. More than 85% of team members would recommend HPE as a great place to work, and 89% 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 we can”, and in being a force for good. We embed these beliefs in a deep-rooted DNA that puts customers first, enabling us to partner, innovate and act with integrity. Our empowered and engaging culture is making HPE a destination for 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. At the close of fiscal 2021, the representation of women in our workforce had increased 1 percentage point since the prior year, with increased representation at every level worldwide, exceeding the goals in both technical and executive roles. We also increased our representation of all underrepresented minorities in the U.S., increasing such representation by 1.6 percentage points overall. The leadership standards 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 60,400 team members completed over 455,000 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.
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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
In October 2021, we renamed the segment previously known as High Performance Computing and Mission Critical Solutions ("HPC & MCS") to High Performance Computing and Artificial Intelligence ("HPC & AI").
Our operations are organized into six business segments: Compute, HPC & AI, Storage, Intelligent Edge, Financial Services ("FS"), and Corporate Investments and Other. 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:
Fiscal 2021 - Compute products, Compute services, Storage products
Fiscal 2020 - Compute products, Storage products, Compute services
Fiscal 2019 - Compute products, Storage products
A summary of our net revenue, earnings from operations and assets for our segments can be found in Note 2, "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; 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 ("VDI"), data management, transcoding and visualization. Compute offerings also include operational and support services. HPE GreenLake for Compute provides flexible Compute as-a-service ("aaS") IT infrastructure on a consumption basis.
HPC & AI
Our HPC & AI business offers standard and custom hardware and software solutions designed to support specific use cases. Our hardware solutions are segmented into several categories, High Performance Compute ("HPC"), Data Solutions, and Edge Compute. 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 Data Solutions portfolio (previously named Mission Critical Solutions) 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 Edge Compute product portfolio includes HPE Edgeline products for computing at the network edge. In connection with our hardware offerings, HPE offers a suite of software products, including AI-powered technologies designed to play a critical role in turning data into readily available, actionable information to fuel growth and innovation for our customers. These include the recently acquired Determined AI, which provides a software stack to train AI models using its open source machine learning platform.
HPC & AI offerings also include operational and support services and solutions delivered as-a-service through HPE GreenLake cloud services, which is a flexible as-a-service platform that HPE can provide on-premises or in a colocation facility. With offerings that are artificial intelligence-driven and built for hybrid cloud environments with GreenLake consumption models, we provide the right workload optimized destinations for data.
A portion of HPC & AI 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 Item 1A, "Risk Factors—Failure to comply with government contracting regulations could adversely affect our business and results of operations".
Storage
HPE Storage is transforming the customer experience with storage as-a-service and cloud data services through the HPE GreenLake edge-to-cloud platform and data infrastructure to enable customers to simplify IT and unlock greater levels of agility with a cloud operational experience. The customer experience transformation also includes AI and data-driven intelligence with
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HPE InfoSight and HPE CloudPhysics. Customers can store and serve their data with speed and high availability to applications, secure and protect their data across hybrid clouds from ransomware and cyber threats, and gain data mobility across private cloud, public cloud, and multi-cloud environments.
The Storage portfolio includes primary storage with HPE Alletra that offers cloud-native data infrastructure, HPE Primera, HPE Nimble Storage and HPE 3PAR; software-powered hyper-converged infrastructure consisting of HPE Nimble Storage dHCI and HPE SimpliVity; disaster recovery and ransomware recovery with Zerto, our recent acquisition; backup as-a-service with HPE Backup and Recovery Service, 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. We make our data infrastructure portfolio available as-a-service through HPE GreenLake. Storage offerings also include operational and support services, software subscription services, and solutions delivered as-a-service through HPE GreenLake.
Intelligent Edge
The Intelligent Edge business is comprised of a portfolio of secure edge-to-cloud solutions operating under the Aruba brand that include wired and wireless local area network ("LAN"), campus and data center switching, software-defined wide area networking (from the Silver Peak acquisition), network security, and associated services to enable secure connectivity for businesses of any size. The primary business drivers for Intelligent Edge solutions are work from anywhere environments, mobility, and internet-of-things ("IoT"). The insights from data generated at the edge are key to driving new business outcomes and experiences.
The HPE Aruba Product portfolio includes wired and wireless local area network hardware products such as Wi-Fi access points, switches, routers and sensors. The HPE Aruba software and services portfolio includes cloud-based management, network management, network access control, analytics and assurance, location services software, and professional and support services, as well as as-a-service and consumption models through HPE GreenLake for the Intelligent Edge portfolio of products.
We also offer Aruba ESP (Edge Services Platform), which takes a cloud-native approach to helping customers meet their connectivity, security, and financial requirements across campus, branch, data center, and remote worker environments, covering all aspects of wired, wireless LAN, and wide area networking ("WAN").
 Financial Services
Financial Services ("FS") 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 and Other
Corporate Investments and Other includes the Advisory and Professional Services ("A & PS") business which primarily offers consultative-led services, HPE and partner technology expertise and advice, implementation services as well as complex solution engagement capabilities; the Communications and Media Solutions ("CMS") business which primarily offers software and related services to the telecommunications industry; the Software business which offers HPE Ezmeral Container Platform and HPE Ezmeral Data Fabric; and Hewlett Packard Labs which is responsible for research and development.
Our Strengths
We believe that we possess a number of competitive advantages that distinguish us from our competitors, including:
Edge-to-cloud strategy and solutions uniquely solve customer challenges. As data grows and evolves and enterprises become increasingly distributed, HPE’s edge-to-cloud strategy is uniquely designed to enable customers to securely access, control and maximize the value of all their workloads and data assets to accelerate business outcomes. The HPE GreenLake platform is an open, secure, fully integrated platform that brings a unified experience across the edge, data center, colocation and cloud. It is automated and easy to consume with capacity available to scale up and down on demand. It offers true pay per use consumption so customers only pay for what they use, and they can have the entire hybrid cloud experience managed for them through our HPE GreenLake managed services offering.
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Comprehensive portfolio. We have a distinctive and industry leading portfolio of edge-to-cloud solutions and unique capabilities to help accelerate our customers' digital transformations. 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.
Multi-year innovation roadmap and strong balance sheet. We have been in the technology and innovation business for over 80 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 recovering over 3 million IT assets in fiscal 2020 and refurbishing close to 90% for reuse.
Experienced leadership team. 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. 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.
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 a 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 and offers choice. 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;
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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. This has resulted in a combined go-to-market model, in which we have a direct sales presence in a number of countries, while we sell and deliver our products, solutions and services through 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 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 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 supplier relationships properly" in Item 1A.
As a result of the pandemic, the industry is being impacted by an increased worldwide demand for electronic components that is anticipated to last at least through the end of this calendar year. This global shortage impacts HPE and the technology market segment as a whole. While we anticipate further industry-wide tightening we took proactive inventory buffering measures in order to position us well during the second half of the fiscal year and going forward. We will take additional inventory actions as appropriate in alignment to the market demand, and will continue to leverage strong partnerships and long-term agreements with our suppliers.
Backlog
Backlog represents the price of orders related to current or prior periods for which work has not been performed or goods have not been delivered as of the reporting period.
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The higher levels of backlog we experienced in the prior-year period due to the pandemic were largely delivered by the end of fiscal 2020. At the same time, the global pandemic resulted in an unprecedented demand for electronic devices, which, coupled with related industry-wide supply constraints, has led to a challenging supply chain environment. Additionally, the pandemic continues to play a role with ongoing delays to the global logistics environment. As a result, in the second half of fiscal 2021, we experienced a shortage of electric components and logistics timing issues which resulted in significantly higher levels of order backlog and commodity costs across our hardware segments, and particularly in Compute, Storage and Intelligent Edge. Currently, we expect these challenging supply chain conditions to persist in the near term.
During the 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 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 the pandemic, see risks identified in the section entitled "Risk Factors" 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 2, "Segment Information", to our Consolidated Financial Statements in Item 8 of Part II. Approximately 68% of our overall net revenue in fiscal 2021 came from sales 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 and the laws and regulatory regimes applying to international transactions 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 13, "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 $2.0 billion in fiscal 2021, $1.9 billion in fiscal 2020 and $1.8 billion in fiscal 2019. 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 other innovations from HPE are aligned to the requirements of our customers. In the area of software-as-a-service we are developing a cloud-native, cloud-based server management solution to complement our existing portfolio.
In HPC & AI, we deliver high-performance compute, storage, artificial intelligence and networking systems and solutions for the most demanding workloads. Our R&D investments are focused on developing new technologies in high-performance fabric, artificial intelligence platforms, scalable memory systems, and high-performance storage and data solutions that underpin our differentiated offerings. We also invest in software to enable our solutions. These investments include high-performance computing and artificial intelligence developer tools, cloud-native and scalable cluster management software, and transaction processing software. HPC & AI also hosts an applied research group, Labs, where we invest in long term, disruptive R&D including photonics, advanced systems architectures, and artificial intelligence software that comprise a pipeline of technologies to consider for future commercialization. All of our products are being developed with the potential to be delivered in a consumption model including integrated into our HPE GreenLake platform.
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In the Storage data management domain, we are investing in new technologies to address the demand in current and emerging markets. Our comprehensive on-premise scalable infrastructure is transforming to utilize HPE’s leadership in Compute, Networking, and Storage to provide end-to-end cloud-native infrastructure. This infrastructure serves as a foundation for our as-a-service offering, includes the industry-first 100% guarantee, and delivers cloud-native infrastructure tightly integrated and managed by our AI engines. Creatively augmented by an all-inclusive as-a-service HPE GreenLake offering, HPE continues to power the edge-to-core-to-cloud data pipeline with embedded AI that delivers deep learning analytics across the full data lifecycle.
In Intelligent Edge, we are investing in our cloud native Edge Services Platform ("ESP"), which enables simplified operation of wired and wireless networks, together with software defined wide area network ("SD-WAN") connectivity. The ESP platform complements a broad range of network devices in our unified network infrastructure layer with security capabilities that enable us to identify and authenticate users and IoT endpoints, to enforce policy, and finely segment traffic based on context to contain security threats. We are also investing in automation, machine learning and artificial intelligence based network operations to optimize user experience and improve operator efficiency. Many of these capabilities are enabled with the Aruba Central cloud service, and we are investing to integrate Aruba Central as part of the broader HPE GreenLake as-a-service offering.
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, 2021, our worldwide patent portfolio included approximately 13,000 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.
Seasonality
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 pandemic resulted in a temporary disruption 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.
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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 our segments operate 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 ("IBM"), 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.
HPC & AI predominantly operates in the market for data-intensive super-computing, analytics, and artificial intelligence. Our primary competitors are compute technology vendors that can design and build solutions that deliver performance scalability and connectivity necessary to handle super-compute and AI workloads, including Dell Technologies Inc., Lenovo Group Ltd., and IBM. 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, coupled with our global reach and partner ecosystem.
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.
Climate Change
Living Progress - Living Progress is our business strategy for creating sustainable IT solutions that meet the technology demands of the future, while advancing the way people live and work. This strategy underpins our commitment to the environmental, social, and governance ("ESG") factors most important to stakeholders. Our edge-to-cloud strategy helps our customers transform and digitize their business while reducing our environmental footprint. A legacy of ESG leadership increases our competitiveness and differentiates us in the marketplace by helping our customers achieve their business objectives and sustainability goals. The HPE Board of Directors provides oversight of our ESG strategy, practices, and policies to ensure integration with our core business strategy.
Sustainable Value Creation - Sustainability performance has become a core business discipline within HPE. Our Living Progress program is an increasingly powerful component of our relationships with customers, and our sustainability credentials provide us with a competitive advantage, support talent acquisition and retention, and ensure ongoing access to global markets.
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We remain committed to becoming a net zero enterprise by no later than 2050, with near-term targets set across our value chain to measure our progress.
In 2021, most of our greenhouse gas emissions ("GHG") resulted from the manufacture and use of our products. We recognize the opportunity to innovate technologies for a carbon-constrained world and are committed to delivering products and services that empower our customers to operate sustainably and efficiently while also gaining maximum productivity from their IT investments and reducing costs. For instance, as-a-service delivery models can drive the reduction of our climate impact and that of our customers, by eliminating IT inefficiencies and enabling sustainable digital transformations. HPE GreenLake, the Company's as-a-service offering, allows customers to consume IT resources and spend capital expenditures as needed, thereby reducing the energy and resource consumption of IT infrastructure through improved utilization and provisioning.
To ensure market access across the globe many of our products are certified by eco-labels such as Electronic Product Environment Assessment Tool, TCO Certified, Energy STAR, China SEPA and the China Energy Conservation Program, thus helping our customers make responsible purchasing choices.
Material Government Regulations
Our business activities 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 global trade and certain ESG 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 and other ESG-related 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 other ESG-related issues, and to facilitate compliance with related laws, regulations and treaties. We are committed to maintaining compliance with all environmental and ESG-related 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; a strict environmental management of our operations and worldwide environmental programs and services; an extensive supply chain responsibility program; and an approach to ethical standards and strong governance that are the foundations of our business.
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, see "Regulatory Risks" within "Risk Factors" in Item 1A.
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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 54 President and Chief Executive Officer
Thomas E. Black Jr. 52 Senior Vice President, General Manager of Storage
Kirt P. Karros 52 Senior Vice President, Finance and Treasurer
Neil B. MacDonald 53 Senior Vice President, General Manager of Compute
Alan May 63 Executive Vice President and Chief People Officer
Philip J. Mottram 53 President, Intelligent Edge
Jeff T. Ricci 60 Senior Vice President, Controller and Principal Accounting Officer
Tarek Robbiati 56 Executive Vice President and Chief Financial Officer
Irving H. Rothman 75 President and Chief Executive Officer, HPE Financial Services
John F. Schultz 57 Executive Vice President, Chief Operating and Legal Officer
Justin Hotard 47 Senior Vice President, General Manager of High Performance Computing and Artificial Intelligence

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. Since December 2017, Mr. Neri has served as a director of Anthem, Inc., a health insurance provider in the U.S. From March 2012 to February 2013, Mr. Neri served as a director of MphasiS Limited, an India-based technology company.
Thomas E. Black Jr.; 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 B. 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.
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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.
Philip J. Mottram; President, Intelligent Edge
Mr. Mottram has served as the President of our Intelligent Edge business since June 2021. Prior to that, Mr. Mottram served as Senior Vice President and General Manager of the Communications Technology Group from April 2019 to June 2021. Before joining Hewlett Packard Enterprise, he served as the Chief Revenue Officer of Zayo Group, a communications infrastructure provider, from November 2017 to February 2019. Prior to that, Mr. Mottram served as Director of the Enterprise Business Unit of Vodafone from May 2014 to November 2017, the Chief Executive Officer of Hong Kong CSL from September 2012 to May 2014, and Executive Director of Global Sales at Telstra International from September 2010 to September 2012, as well as a variety of different operational roles at other telecommunications companies.
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. Previously, Mr. Ricci served as Controller and Principal Accounting Officer at HP Co. on an interim basis from November 2013 to April 2014. Prior to that, 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.
Irving H. 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.
Justin Hotard; Senior Vice President, General Manager of HPC & AI
Mr. Hotard has served as our Senior Vice President and General Manager of HPC & AI global business group since March 2021. Previously, he served as Senior Vice President, Corporate Transformation from September 2020 to March 2021, where he led our transformation efforts to accelerate our pivot to as-a-service offerings. Prior to that, Mr. Hotard served as President and Managing Director of HPE Japan from October 2019 to September 2020, as Senior Vice President and General
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Manager of the Compute Global Business Unit from January 2017 to October 2019 and as Vice President of Strategy, Planning and Operations in the Data Center Infrastructure Group from August 2015 to January 2017. Before joining Hewlett Packard Enterprise, Mr. Hotard was President of NCR Small Business from July 2013 to November 2014 and Vice President of Corporate Development of NCR Corporation from July 2012 to August 2013. Prior to that, Mr. Hotard served in various corporate development and operational roles at Symbol Technologies and Motorola, Inc.
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:
Hewlett Packard Enterprise Company
Attention: Investor Relations
11445 Compaq Center West Drive
Houston, Texas 77070
http://investors.hpe.com/financial/requested-printed-reports



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ITEM 1A. Risk Factors.
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 ongoing 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. Most recently, we have announced a vaccination requirement for covered U.S. employees as required by Executive Order 14042 for federal contractors. We recognize that there are existing legal challenges to Executive Order 14042, and we will ensure that the timing and scope of the implementation of our vaccination requirement is consistent with the legal status of Executive Order 14042. 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. As such instances occur, employees have returned to the office in a phased process and remain subject to safety regimens anchored around vaccination or testing requirements, as we determine is appropriate based on local conditions. 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 vaccinated and/or tested for COVID-19 before being able to enter customer sites, which could potentially present an operational challenge. Also, 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. Our implementation of employee vaccination requirements may result in attrition, including attrition of critically skilled labor, and difficulty securing future labor needs, which could have a material adverse effect on our business, financial condition, and results of 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. There have been, and will continue to be, delays of hardware product shipments from our vendors and out of our manufacturing operations worldwide as a result of capacity issues. We also expect product shipment delays as a result of shortages and capacity issues that continue to impact logistics operations.
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, any changes to the profitability for the next fiscal year could impact the realizability of assets. 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.
To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition, and stock price, it may also have the effect of heightening many of the other risks described in this Part I, Item 1A of this Form 10-K.
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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, civil unrest, 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 is located in Houston, Texas, which suffers from floods, hurricanes, and other extreme weather, and a portion of our research and development activities are located in California, which suffers from drought conditions and catastrophic wildfires, each affecting the health and safety of our employees. In California, to mitigate wildfire risk, electric utilities are deploying public safety power shutoffs, which affects electricity reliability to our facilities and our communities. In 2017, our principal worldwide IT data centers in Houston were flooded due to Hurricane Harvey. Since then, HPE has increased its resiliency through site selection and 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, Malaysia, Taiwan, 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. Other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults known for seismic activity. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near vulnerable locations is continuing to be assessed.
Our transition to a subscription/consumption-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/consumption-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 choices 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/consumption-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/consumption transition, even if we successfully complete the transition. The transition to a subscription/consumption-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/consumption-based business model. We must adapt our sales processes for new sales and marketing approaches, including those required by our shift to subscription/consumption services and other changes resulting from the pandemic. Changing our go-to-market structure may affect employee compensation models and ultimately our ability to retain employees. 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. Further, our subscription/consumption offerings could subject us to increased risk of liability related to the provision of services as well as operational, technical, legal or other costs.
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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' abilities 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 have been and currently are experiencing delays and shortages of certain components as a result of strong demand and capacity constraints due to economic changes resulting from the COVID-19 pandemic, disruptions in the operations of component suppliers, and other problems experienced by suppliers or problems faced during the transition to new suppliers. A surge in demand for silicon has arisen across numerous markets affecting availability of key components of our products and our supplier's products, which may adversely affect customer deliveries and our anticipated revenues. As shortages or delays persist, the price of certain components has increased and may continue to increase, we may be exposed to quality issues, or, at some point, 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 long term agreements or 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.
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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 (whereby we are simplifying our operating model and streamlining our offerings, business processes and business systems) 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 3, "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 also 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 Prior Separations."
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 reasonably accurate 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.
For an acquisition or other combination, the acquisition partner may have differing or inadequate cybersecurity and data protection controls, which could impact our exposure to data security incidents and potentially increase anticipated costs or time to integrate the business.
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 divestitures 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
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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 during business combination and investment transactions and further impacted if we fail to successfully complete or integrate business combination and investment transactions that further our strategic objectives.
System security risks, data protection incidents, 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 have been able to circumvent or bypass our cyber security measures. Although some of these attacks have caused disruptions or exposure of information, so far, these attacks have not resulted in material losses to HPE, nor have any of HPE's consumers, customers, or employees informed HPE that these attacks resulted in material harm to them. It is possible that future attacks may result in material misappropriation, system disruptions or shutdowns, malicious alteration, or destruction of our confidential or personal information or that of third parties. 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 customer data, including commercially sensitive and personal data, subject to the European General Data Protection Regulation and other privacy laws. With our business increasingly providing cloud service offerings, malicious parties could target such services, potentially resulting in an increased risk of compromise of customer data and regulatory exposure. Incidents involving our cyber or physical security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information, sensitive, confidential, 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 or misuse of this information, result in regulatory fines, 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 managing an incident and 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, including those utilizing machine learning and artificial intelligence capabilities, 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,
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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 an edge-to-cloud platform as-a-service solution 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. Should such efforts fail to produce actionable insights or our products not perform as promised, our business results may be adversely affected. 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 an edge-to-cloud platform product, we must be able to scale 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 both direct and indirect (distributors and resellers) 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
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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. Certain equity-based incentive awards for certain executives 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,
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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 and the laws and regulatory regimes applying to international transactions 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.
Our business and financial performance also could be adversely affected by changes in U.S. trade policy, U.S. export controls and sanctions, and U.S. regulations concerning imports, as well as international laws and regulations relating to global trade. Current U.S. government trade policy includes the imposition of tariffs on certain foreign goods, including information and communication technology products. These measures have materially increased costs for certain 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. Similarly, changes in regulations relating to exports could prevent us from exporting products to certain locations or customers entirely. In addition, changes in requirements relating to making foreign direct investments 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.
Sales outside the United States constituted approximately 68% of our net revenue in fiscal 2021. 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;
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inflationary pressures, such as those the market is currently experiencing, which may increase costs for materials, supplies, and services;
network security, privacy and data sovereignty concerns, which could make foreign customers reluctant to purchase products and services from U.S.-based technology companies;
longer collection cycles and financial instability among customers;
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;
differing technology standards or customer requirements;
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.
We implement policies, procedures and training designed to facilitate compliance with anti-corruption laws around the world, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. But in many foreign countries, particularly in those with developing economies, people may engage in business practices prohibited by anti-corruption 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
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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
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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. A significant portion of our hardware revenues come from international sales. Any changes to current environmental legal requirements, such
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as the EU Restriction of Hazardous Substances Directive, the EU Waste Electrical and Electronic Equipment Directive or China's regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products, among others, may increase our cost of doing business internationally and impact our hardware revenues from the EU, China and/or other countries proposing or adopting similar environmental legal requirements. In addition, other ESG-related laws, regulations, treaties, and similar initiatives and programs are being proposed, adopted and implemented throughout the world (including, but not limited to, the European Commission’s proposal on Sustainable Corporate Governance). If we were to violate or become liable under environmental or certain ESG-related laws or if our products become non-compliant with such laws or market access requirements, our customers may refuse to purchase our products, and we could incur 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 government procurement laws and regulations, required contract provisions, and other requirements relating to contract formation, administration, and performance. Any violation of government contracting laws and regulations or contract terms could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and fines, treble damages, and suspension from future government contracting. Such failures could also cause reputational damage to our business. In addition, we will continue to be subject to qui tam litigation brought by private individuals on behalf of the government relating to our government contracts. 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 valuation of deferred tax assets and liabilities, changes in tax laws and the discovery of new information in the course of our tax return preparation process. The carrying value of our deferred tax assets is dependent on our ability to generate future taxable income.
The Organisation for Economic Co-operation and Development, an international association of 34 countries including the United States, has proposed changes to numerous long-standing tax principles. These proposals, if finalized and adopted by the associated countries, would impose a global minimum corporate tax rate of 15%, could increase tax complexity and uncertainty, and may adversely affect our provision for income taxes.
The U.S. House of Representatives has passed legislation consistent with the framework President Biden announced previously, which includes a number of changes that would impact the U.S. federal taxation of corporations. Among other items, the legislation includes provisions that would raise the tax rate on foreign income of U.S. corporations, apply the Global Intangible Low-Tax Income regime on a country-by-country basis, impose a new alternative minimum tax on book income, and impose a surcharge on corporate stock buybacks. The U.S. Senate has not voted on or agreed to the legislation, but if this happens and President Biden signs it into law, it could materially impact our tax provision, cash tax liability and effective tax rate.
During fiscal 2019, we executed a Termination and Mutual Release Agreement which terminated our Tax Matters Agreement with HP Inc. Because we now have limited indemnity rights from HP Inc., we potentially bear more economic risk for certain potential unfavorable tax assessments.
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Risks Related to Prior Separations
The stock distribution in either or both of the completed separations of our former Enterprise Services business and our former Software segment could result in significant tax liability, and DXC or Micro Focus (as applicable) may in certain cases be obligated to indemnify us for any such tax liability imposed on us.
The completed separations of our former Enterprise Services business and our Software Segment were conditioned upon the receipt of an opinion from outside counsel regarding the qualification of (i) the relevant distribution and related transactions as a "reorganization" within the meaning of Sections 368(a), 361 and 355 of the Internal Revenue Code of 1986 (the "Code"); and (ii) the relevant merger as a "reorganization" within the meaning of Section 368(a) of the Code. While the Software Separation generally qualified for tax-free treatment for us, Seattle SpinCo and Micro Focus, the acquisition of Seattle SpinCo by Micro Focus resulted in the recognition of gain (but not loss) for U.S. persons who received Micro Focus American Depositary Shares in the Software Separation.
Each opinion of outside counsel was based upon and relied on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of us, Everett SpinCo and CSC, or us, Seattle SpinCo and Micro Focus, as applicable. If any of these representations, statements or undertakings are, or become, inaccurate or incomplete, or if any party breaches any of its covenants in the relevant separation documents, the relevant opinion of counsel may be invalid and the conclusions reached therein could be jeopardized. Notwithstanding the opinions of counsel, the Internal Revenue Service (the "IRS") could determine that either or both of the distributions should be treated as a taxable transaction if it determines that any of the facts, assumptions, representations, statements or undertakings upon which the relevant opinion of counsel was based are false or have been violated, or if it disagrees with the conclusions in the opinion of counsel. An opinion of counsel is not binding on the IRS and there can be no assurance that the IRS will not assert a contrary position.
If the distribution of Everett SpinCo or Seattle SpinCo, as applicable, together with certain related transactions, failed to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code, in general, we would recognize taxable gain as if we had sold the stock of Everett SpinCo or Seattle SpinCo, as applicable, in a taxable sale for its fair market value, and our stockholders who receive Everett SpinCo shares or Seattle SpinCo shares in the relevant distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.
We obtained private letter rulings from the IRS regarding certain U.S. federal income tax matters relating to the separation of our Enterprise Services business and Software Segment. Those rulings concluded that certain transactions in those separations are generally tax-free for U.S. federal income tax purposes. The conclusions of the IRS private letter rulings were based, among other things, on various factual assumptions we have authorized and representations we have made to the IRS. If any of these assumptions or representations are, or become, inaccurate or incomplete, the validity of the IRS private letter rulings may be affected. Notwithstanding the foregoing, we incurred certain tax costs in connection with the completed separation of our former Enterprise Services business and Software Segment, including non-U.S. tax expenses resulting from the completed separation of our former Enterprise Services business and Software Segment in multiple non-U.S. jurisdictions that do not legally provide for tax-free separations, which may be material. If the completed separation of our former Enterprise Services business or Software Segment (including certain internal transactions undertaken in anticipation of those separations) are determined to be taxable for U.S. federal income tax purposes, we, our stockholders that are subject to U.S. federal income tax and/or DXC and/or Micro Focus could incur significant U.S. federal income tax liabilities.
Under the tax matters agreements entered into by us with Everett SpinCo and CSC, and with Seattle SpinCo and Micro Focus, Everett SpinCo and Seattle SpinCo generally would be required to indemnify us for any taxes resulting from the relevant separation (and any related costs and other damages) to the extent such amounts resulted from (i) certain actions taken by, or acquisitions of capital stock of, Everett SpinCo or Seattle SpinCo, as applicable (excluding actions required by the documents governing the relevant separation), or (ii) any breach of certain representations and covenants made by Everett SpinCo or Seattle SpinCo, as applicable. Any such indemnity obligations could be material.
We continue to face a number of risks related to the Separation from our former Parent, including those associated with ongoing indemnification obligations, which could adversely affect our financial condition and results of operations, and shared use of certain intellectual property rights, which could in the future adversely impact our reputation.
In connection with the Separation, Hewlett Packard Enterprise and HP Inc. entered into several agreements that determine the allocation of assets and liabilities between the companies following the Separation and include any necessary indemnifications related to liabilities and obligations. In these agreements, HP Inc. agreed to indemnify us for certain liabilities, and we agreed to indemnify HP Inc. for certain liabilities, including cross-indemnities that are designed and intended to place financial responsibility for the obligations and liabilities of our business with us, and financial responsibility for the obligations and liabilities of HP Inc.'s business with HP Inc. We may be obligated to fully indemnify HP Inc. for certain liabilities under the
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Separation agreements or HP Inc. may not be able to fully cover their indemnification obligations to us under the same Separation agreements. Each of these risks could negatively affect our business, financial position, results of operations and cash flows.
In addition, the terms of the Separation also include licenses and other arrangements to provide for certain ongoing use of intellectual property in the operations of both businesses. For example, through a joint brand holding structure, both Hewlett Packard Enterprise and HP Inc. retain the ability to make ongoing use of certain variations of the legacy Hewlett-Packard and HP branding, respectively. As a result of this continuing shared use of the legacy branding there is a risk that conduct or events adversely affecting the reputation of HP Inc. could also adversely affect the reputation of Hewlett Packard Enterprise.
General Risks
Our stock price has fluctuated and may continue to fluctuate, which may make future prices of our stock difficult to predict.
Investors should not rely on recent or historical trends to predict future stock prices, financial condition, results of operations or cash flows. Our stock price, like that of other technology companies, can be volatile and can be affected by, among other things, speculation, coverage or sentiment in the media or the investment community; the announcement of new, planned or contemplated products, services, technological innovations, acquisitions, divestitures or other significant transactions by us or our competitors; our quarterly financial results and comparisons to estimates by the investment community or financial outlook provided by us; the financial results and business strategies of our competitors; inflation; developments relating to pending investigations, claims and disputes; or the timing and amount of our share repurchases. General or industry specific market conditions or stock market performance or domestic or international macroeconomic and geopolitical factors unrelated to Hewlett Packard Enterprise's performance also may affect the price of Hewlett Packard Enterprise's stock. Volatility in the price of our securities could result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources.
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ITEM 1B. Unresolved Staff Comments.
None.
ITEM 2. Properties.
As of October 31, 2021, we owned or leased approximately 15 million square feet of space worldwide. A summary of the Company's operationally utilized space is provided below.
  As of October 31, 2021
  Owned Leased Total
  (Square feet in millions)
Administration and support
(Percentage) 33  % 67  % 100  %
Core data centers, manufacturing plants, research and development facilities, and warehouse operations
(Percentage) 50  % 50  % 100  %
 Total 11 
(Percentage) 36  % 64  % 100  %
We believe that our existing properties are in good condition and are suitable for the conduct of our business. Substantially all of our properties are utilized in whole or in part by our Compute, HPC & AI, Storage, and Intelligent Edge segments.
In connection with the transformation programs, we continue to anticipate changes in our real estate portfolio over the next two years. These changes may include reductions in overall space.
Principal Executive Offices
Our principal executive offices, including our global headquarters, are located at 11445 Compaq Center West Drive, Houston, Texas, 77070, United States of America.
Product Development, Services and Manufacturing
The locations of our major product development, services, manufacturing, and Hewlett Packard Labs facilities are as follows:
Americas

 Puerto Rico—Aguadilla
 
 United States—Alpharetta, Andover, Chippewa Falls, Colorado Springs, Fort Collins, Houston, Milpitas, Roseville, San Jose, Santa Clara, Sunnyvale
 
Europe, Middle East, Africa
 
United Kingdom—Erskine
Asia Pacific
 
 China—Beijing
   India—Bangalore
 Japan—Tokyo
Singapore—Singapore
Taiwan—Taipei
 
ITEM 3. Legal Proceedings.
Information with respect to this item may be found in Note 17, "Litigation and Contingencies", to the Consolidated Financial Statements in Item 8 of Part II, which is incorporated herein by reference.
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PART II
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
The common stock of Hewlett Packard Enterprise is listed on the New York Stock Exchange ("NYSE") with the ticker symbol "HPE".
Holders
According to the records of our transfer agent, there were 51,818 stockholders of record of Hewlett Packard Enterprise common stock as of November 30, 2021.
Dividends
During fiscal 2021, we paid a quarterly dividend of $0.12 per share to our shareholders. On November 30, 2021 we declared a quarterly dividend of $0.12 per share, payable on January 7, 2022, to stockholders of record as of the close of business on December 10, 2021.
The payment of any dividends in the future, and the timing and amount thereof, is within the discretion of our Board of Directors. Our Board of Directors' decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our debt, industry practice, legal requirements, regulatory constraints, and other factors that our Board of Directors deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets. We cannot guarantee that we will continue to pay a dividend in any future period.
Issuer Purchases of Equity Securities
Fourth Quarter of Fiscal 2021 Total Number of Shares Purchased and Settled Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
In thousands, except per share amounts
Month 1 (August 2021) —  $ —  —  $ 2,110,281 
Month 2 (September 2021) 6,638  $ 13.92  6,638  $ 2,017,871 
Month 3 (October 2021) 8,094  $ 14.96  8,094  $ 1,896,829 
Total 14,732  $ 14.49  14,732 
On October 13, 2015, the Company's Board of Directors approved a share repurchase program with a $3.0 billion authorization, which was refreshed with additional share repurchase authorizations of $3.0 billion, $5.0 billion and $2.5 billion on May 24, 2016, October 16, 2017 and February 21, 2018, respectively. This program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions. The Company may choose to repurchase shares when sufficient liquidity exists and the shares are trading at a discount relative to estimated intrinsic value.
On April 6, 2020, the Company announced that it suspended purchases under its share repurchase program in response to the global economic uncertainty that resulted from the worldwide spread of the novel coronavirus. On September 2, 2021, the Company announced that it reinstated the share repurchase program.
During the fiscal year ended October 31, 2021, the Company repurchased and settled 14.7 million shares of the Company's common stock. The Company had unsettled open market repurchases of 0.8 million shares as of October 31, 2021. Shares repurchased during fiscal 2021 were recorded as a $225 million reduction to stockholders' equity. As of October 31, 2021, the Company had a remaining authorization of $1.9 billion for future share repurchases.
Stock Performance Graph and Cumulative Total Return
The graph below shows the cumulative total stockholder return, the S&P 500 Index and the S&P Information Technology Index. This graph covers the period from October 31, 2016 through October 31, 2021. This graph assumes the investment of $100 in the stock or the index on October 31, 2016 (and the reinvestment of dividends thereafter). On April 1, 2017, we
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completed the separation and merger of our Enterprise Services business with DXC. HPE stockholders received 0.085904 shares of common stock in the new company for every one share of HPE common stock held at the close of business on the record date. On September 1, 2017, we completed the separation and merger of our Software business segment with Micro Focus. HPE stockholders received 0.13732611 American Depository Shares ("Micro Focus ADSs") in the new company, each of which represents one ordinary share of Micro Focus, for every one share of HPE common stock held at the close of business on the record date. The effect of the Everett and Seattle Transactions are reflected in the cumulative total return as reinvested dividends. The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, future performance of our common stock.
HPE-20211031_G1.JPG
10/2016 10/2017 10/2018 10/2019 10/2020 10/2021
Hewlett Packard Enterprise $ 100.00  $ 108.15  $ 121.25  $ 134.47  $ 73.79  $ 129.44 
S&P 500 Index $ 100.00  $ 123.62  $ 132.69  $ 151.69  $ 166.40  $ 237.77 
S&P Information Technology Index $ 100.00  $ 138.96  $ 156.05  $ 191.30  $ 257.25  $ 377.96 
ITEM 6. [Reserved]

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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") section, we use the terms "Hewlett Packard Enterprise", "HPE", "the Company", "we", "us", and "our" to refer to Hewlett Packard Enterprise Company. References in the MD&A section to "former Parent" refer to HP Inc.
This section of this Form 10-K generally discusses fiscal 2021 and fiscal 2020 items and year-to-year comparisons between fiscal 2021 and fiscal 2020. Discussions of fiscal 2019 items and year-to-year comparisons between fiscal 2020 and fiscal 2019 that are not included in this Form 10-K can be found in "Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2020, as filed with the SEC on December 10, 2020, which is available on the SEC's website at www.sec.gov.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist the reader in understanding our Consolidated Financial Statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our Consolidated Financial Statements. This discussion should be read in conjunction with our Consolidated Financial Statements and the related notes that appear in Part II, Item 8 of this document.
This MD&A is organized as follows:
Trends and Uncertainties. A discussion of material events and uncertainties known to management such as COVID-19, our response to the challenges and trends, and our pivot to as-a-service strategy.
Executive Overview. A discussion of our business and summary analysis of financial and other highlights, including non-GAAP financial measures, affecting the Company in order to provide context to the remainder of the MD&A.
Critical Accounting Policies and Estimates. A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.
Results of Operations. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level.
Liquidity and Capital Resources.  An analysis of changes in our cash flows and a discussion of our financial condition and liquidity.
Contractual Cash and Other Obligations. An overview of contractual obligations, retirement and post-retirement benefit plan funding, restructuring plans, uncertain tax positions and off-balance sheet arrangements.
GAAP to Non-GAAP Reconciliation. Each non-GAAP measure has been reconciled to the most directly comparable GAAP measure therein. This section also includes a discussion on the usefulness of non-GAAP financial measures, and material limitations associated with the use of non-GAAP financial measures.
TRENDS AND UNCERTAINTIES
COVID-19
While great progress has been made in the fight against COVID-19, it remains a global challenge and continues to have an impact on our operations. For a further discussion of the pandemic and the risks, uncertainties and actions taken in response to it, see the discussion in the section titled "COVID-19 Pandemic Update", "Manufacturing and Materials" and "Backlog" in Part I, Item 1, and risks identified in the section entitled " Risk Factors" in Part I, Item 1A.
The Company also believes that the pandemic has forced fundamental changes in businesses and communities that are aligned with the Company's edge-to-cloud platform delivered as-a-service strategy. Navigating through the pandemic and planning for a post-COVID world have increased customers' needs for as-a-service offerings, secure connectivity, remote work capabilities and analytics to unlock insights from data. Our solutions are aligned to these needs, and we see opportunity to help our customers drive digital transformations as they continue to adapt to operate in a new world.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Other Trends and Uncertainties
We are in the process of addressing many challenges facing our business. One set of challenges include dynamic and accelerating market trends, such as the market shift of workloads to cloud-related IT infrastructure business models, emergence of software-defined architectures and converged infrastructure functionality and growth in IT consumption models. Certain of our legacy hardware server and storage businesses face challenges as customers migrate to cloud-based offerings and reduce their purchases of hardware products. Therefore, the demand environment for traditional server and storage products is challenging and lower traditional compute and storage unit volume is impacting support attach opportunities within the associated services organization.
Another set of challenges relates to changes in the competitive landscape. Our major competitors are expanding their product and service offerings with integrated products and solutions, our business-specific competitors are exerting increased competitive pressure in targeted areas and are entering new markets, our emerging competitors are introducing new technologies and business models, and our alliance partners in some businesses are increasingly becoming our competitors.
A third set of challenges relates to business model changes and our go-to-market execution. We intend to provide our customers with a choice between traditional consumption models or subscription-based, pay-per-use and as-a-service offerings across our entire portfolio of HPE products and services.
Additionally, the global pandemic has accelerated several trends relevant to the Company. First, the exponential increase of data at the edge driven by the proliferation of devices. Second is the need for a cloud experience everywhere to manage the growth of data at the edge. Third, data growth is creating new opportunities with the need to quickly extract value from the captured data. Enterprises have embraced multi-cloud strategies, as they recognize the need for different cloud environments for different types of data and workloads. Increasingly, customers want to digitally transform, while preserving capital and eliminating operating expense, by paying only for the IT they use.
In response to the aforementioned challenges and trends, we are accelerating growth in our areas of strategic focus, which include the Intelligent Edge and High Performance Computing and Artificial Intelligence ("HPC & AI") businesses while at the same time, we are strengthening our core Compute and Storage businesses, doubling down in key areas of growth, and accelerating our as-a-service pivot to become the edge-to-cloud platform-as-a-service choice for our customers and partners.
At the same time our transformation programs have improved our cost structure, channel execution and alignment of our sales coverage with our strategic goals. We continue to pursue new product innovations that build on our existing capabilities in areas such as cloud and data center computing, software-defined networking, converged storage, high-performance compute, and wireless networking, which will keep us aligned with market demand, industry trends and the needs of our customers and partners. In addition, we continue to improve our operations, with a particular focus on enhancing our end-to-end processes and efficiencies.
Examples of accelerating and strengthening growth in our segments include the following:
Intelligent Edge - we are seeing continued traction from our investment at the edge including rich software capabilities in security and edge services from HPE Aruba. The Aruba Edge Services Platform ("ESP") with Aruba’s built-in identity-based network security is unique in the market and provides the ideal foundation for building a zero trust and secure access service edge. Our comprehensive portfolio and Artificial Intelligence-powered cloud-driven platforms, such as Aruba ESP and Aruba Central, will continue to accelerate WAN and security deployments, advance cloud and IoT adoption and fast-track digital transformation. We are on track to grow high-margin recurring revenue with technology that accelerates our ability to capture the high-growth WAN market opportunity. Additionally, we introduced a new class of cloud-native and fully automated data center switching products specifically designed for edge cloud data centers which represents a significant market opportunity for HPE.
HPC & AI - enterprises are running analytics on increasingly large data sets and are adopting new techniques, such as AI, deep learning, and machine learning. They now will have access to HPC technologies, including exascale supercomputing systems, that were historically prohibitive due to their cost and complexity. HPE GreenLake cloud services is a flexible as-a-service platform that customers can run on-premises or in a colocation facility.
Compute - our strategy to grow profitability and pivot to more as-a-service solutions is paying off. Compute includes three new HPE ProLiant Solutions targeting 5G deployments for telecommunication companies and virtual desktop infrastructure. We launched our new HPE 5G Open radio access network ("RAN") solution stack for telecommunications companies to accelerate the commercial adoption of Open RAN in 5G network deployments. This
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
is a transformative technology, featuring the industry’s first server-optimized for 5G Open RAN workloads with our HPE ProLiant Servers.
Storage - we continue to see strength in key software defined solutions, which drive our ability to attach rich services and provide data insights with our portfolio offerings. We introduced a new portfolio of cloud native data infrastructure called HPE Alletra which delivers workload optimized systems and provides customers with architectural flexibility to run any application without compromise, from edge-to-cloud with our operational experience. These innovations are propelling our storage business into a cloud-native software-defined data services business through organic innovation and targeted acquisitions.
Annualized Revenue Run-rate ("ARR")
Our pivot to as-a-service continues its strong momentum with the addition of HPE GreenLake Cloud Services. Our mix of ARR is becoming more software-rich as we build our GreenLake Cloud platform, which is improving our margin profile. On the innovation front, we announced a transformative new data storage services platform that brings our cloud operations model to wherever data lives by unifying data operations. The platform will be available through HPE GreenLake Central and include a new data services cloud console and a suite of software subscription services that simplifies and automates global infrastructure at scale. We will continue to invest aggressively in HPE GreenLake Cloud Services to provide a true cloud experience and operating model, whether at the edge, on-premises or across multiple clouds.
ARR represents the annualized revenue of all net GreenLake services revenue, related financial services revenue (which includes rental income from operating leases and interest income from capital leases) and software-as-a-service, subscription, and other as-a-service offerings, recognized during a quarter and multiplied by four. We use ARR as a performance metric. ARR should be viewed independently of net revenue, and is not intended to be combined with it.
The following presents our ARR as of October 31, 2021 and 2020:
For the fiscal years ended October 31,
2021 2020
In millions
ARR $ 796  $ 585 
year-over-year growth rate 36  % N/A
The 36% increase in ARR in fiscal 2021 as compared to the prior-year period was due to growth in HPE GreenLake services and related financial services due to an expanding customer installed base. Additionally, ARR increased due to higher Intelligent Edge as-a-service activity, including Silver Peak, and growth in Storage as-a-service driven by Zerto, a recent acquisition.
The following Executive Overview, Results of Operations and Liquidity discussions and analysis compare fiscal 2021 to fiscal 2020, unless otherwise noted. The Capital Resources and Contractual Cash and Other Obligations discussions present information as of October 31, 2021, unless otherwise noted.
EXECUTIVE OVERVIEW
Net revenue of $27.8 billion represented an increase of 3.0% (increased 1.0% on a constant currency basis) due to a variety of factors including improvements in the overall demand environment from the prior-year period resulting in revenue growth across most of our segments, a strong order backlog at the beginning of the period, incremental revenue from the Silver Peak acquisition and favorable currency fluctuations. The revenue increase was moderated by a decrease in unit shipments due largely to industry-wide material constraints and a related challenging supply chain environment which resulted in significantly higher levels of order backlog across our hardware segments at the end of the current period. The gross profit margin of 33.7% represented an increase of 2.3 percentage points due to a combination of factors led by strong pricing discipline, cost savings from our transformation programs and a continued mix shift toward higher-margin software-rich offerings. The operating profit margin of 4.1% represented an increase of 5.3 percentage points due primarily to our strong operational execution in fiscal 2021 and the absence of a goodwill impairment charge which we recognized in fiscal 2020. We generated $5.9 billion of cash flow from operations (including $2.2 billion of after-tax cash from Oracle Corporation's satisfaction of a judgment in the Itanium breach of contract litigation) due to higher net earnings and improved working capital management. Free cash flow excluding the litigation judgment was $1.6 billion.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Financial Results
The following table summarizes our consolidated GAAP financial results:
For the fiscal years ended October 31,
2021 2020 Change
In millions, except per share amounts
Net revenue 27,784  26,982  3.0%
Gross profit $ 9,376  $ 8,469  10.7%
Gross profit margin 33.7  % 31.4  % 2.3pts
Earnings (loss) from operations $ 1,132  $ (329) NM
Operating profit margin 4.1  % (1.2) % 5.3pts
Net earnings (loss) $ 3,427  $ (322) NM
Diluted net earnings (loss) per share $ 2.58  $ (0.25) $ 2.83 
Cash flow from operations $ 5,871  $ 2,240  162.1  %
NM - Not meaningful
The following table summarizes our consolidated non-GAAP financial results:
For the fiscal years ended October 31,
2021 2020 Change
In millions, except per share amounts
Net revenue adjusted for currency $ 27,247  $ 26,982  1.0%
Non-GAAP gross profit $ 9,424  $ 8,543  10.3%
Non-GAAP gross profit margin 33.9  % 31.7  % 2.2pts
Non-GAAP earnings from operations $ 2,848  $ 2,282  24.8%
Non-GAAP operating profit margin 10.3  % 8.5  % 1.8pts
Non-GAAP net earnings $ 2,602  $ 2,005  29.8%
Non-GAAP diluted net earnings per share $ 1.96  $ 1.54  $0.42
Free cash flow $ 1,551  $ 560  $991
Each non-GAAP measure has been reconciled to the most directly comparable GAAP measure herein. Please refer to the section "GAAP to Non-GAAP Reconciliations" included in this MD&A for these reconciliations, usefulness of non-GAAP financial measures, and material limitations associated with the use of non-GAAP financial measures.
Returning capital to our shareholders remains an important part of our capital allocation framework which consists of capital returns to shareholders and strategic investments. We believe our existing balance of cash, cash equivalents and marketable securities, along with commercial paper and other short-term liquidity arrangements, are sufficient to satisfy our working capital needs, capital asset purchases, dividends, debt repayments and other liquidity requirements associated with our existing operations. As of October 31, 2021, our cash, cash equivalents and restricted cash were $4.3 billion, compared to the October 31, 2020 balance of $4.6 billion, representing a decrease of $0.3 billion. We maintain a $4.75 billion five year senior unsecured committed credit facility that was entered into in August 2019. As of October 31, 2021 no borrowings were outstanding under this credit facility.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements are prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), which requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities. A summary of significant accounting policies and a summary of recent accounting pronouncements applicable to our Consolidated Financial Statements are included in Note 1, "Overview and Summary of Significant Accounting Policies", to the Consolidated Financial Statements in Item 8 of Part II, which is incorporated herein by reference. An accounting policy is deemed to be critical if the nature of the estimate or assumption it incorporates is subject to material level of judgment related to matters that are highly uncertain and changes in those estimates and assumptions are reasonably likely to materially impact our Consolidated Financial Statements.
Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.
We believe the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, or complex judgments.
Revenue Recognition
We enter into contracts with customers that may include combinations of products and services, resulting in arrangements containing multiple performance obligations for hardware and software products and/or various services.
The majority of our revenue is derived from sales of product and the associated support and maintenance which is recognized when, or as, control of promised products or services is transferred to the customer at the transaction price. Transaction price is adjusted for variable consideration which may be offered in contracts with customers, partners and distributors and may include rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs.
Significant judgment is applied in determining the transaction price as we may be required to estimate variable consideration at the time of revenue recognition. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. Variable consideration is recognized only to the extent that it is probable that a significant reversal of revenue will not occur. We also consider the customers' right of return in determining the transaction price, where applicable.
To recognize revenue for the products and services for which control has been transferred, we allocate the transaction price for the contract among the performance obligations on a relative standalone selling price ("SSP") basis. We establish SSP for most of our products and services based on the observable price of the products or services when sold separately in similar circumstances to similar customers. When the SSP is not directly observable, we estimate SSP based on management judgment by considering available data such as internal margin objectives, pricing strategies, market/competitive conditions, historical profitability data, as well as other observable inputs. We establish SSP ranges for our products and services and reassesses them periodically.
Taxes on Earnings
We calculate our current and deferred tax provisions based on estimates and assumptions that could differ from the final positions reflected in our income tax returns. We will adjust our current and deferred tax provisions based on our tax returns which are generally filed in the third or fourth quarters of the subsequent fiscal year.
We recognize deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which we expect the differences to reverse.
We record a valuation allowance to reduce deferred tax assets to the amount that we are more likely than not to realize. In determining the need for a valuation allowance, we consider future market growth, forecasted earnings, future sources of taxable income, the mix of earnings in the jurisdictions in which we operate, and prudent and feasible tax planning strategies. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Our effective tax rate includes the impact of certain undistributed foreign earnings and basis differences for which we have not provided for U.S. federal taxes because we plan to reinvest such earnings and basis differences indefinitely outside the U.S. We will remit non-indefinitely reinvested earnings of our non-U.S. subsidiaries for which deferred U.S. state income and foreign withholding taxes have been provided where excess cash has accumulated and when we determine that it is advantageous for business operations, tax or cash management reasons.
We are subject to income taxes in the U.S. and approximately 90 other countries, and we are subject to routine corporate income tax audits in many of these jurisdictions. We believe that positions taken on our tax returns are fully supported, but tax authorities may challenge these positions, which may not be fully sustained on examination by the relevant tax authorities. Accordingly, our income tax provision includes amounts intended to satisfy assessments that may result from these challenges. Determining the income tax provision for these potential assessments and recording the related effects requires management judgments and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our (Provision) benefit for taxes, Net earnings (loss) and cash flows. Our accrual for uncertain tax positions is attributable primarily to uncertainties concerning the tax treatment of our international operations, including the allocation of income among different jurisdictions, intercompany transactions and related interest, and uncertain tax positions from acquired companies. For further discussion on taxes on earnings, refer to Note 6, "Taxes on Earnings", to the Consolidated Financial Statements.
Business Combinations
We allocate the fair value of purchase consideration to the assets acquired, including in-process research and development ("IPR&D"), liabilities assumed, and non-controlling interests in the acquiree generally based on their fair values at the acquisition date. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. The excess of the fair value of purchase consideration over the fair value of these assets acquired, liabilities assumed and non-controlling interests in the acquiree is recorded as goodwill.
When determining the fair values of assets acquired, liabilities assumed, and non-controlling interests in the acquiree, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins, attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. Fair value estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.
Goodwill
We review goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. We are permitted to conduct a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test.
In the goodwill impairment test, we compare the fair value of each reporting unit to its carrying amount. Estimating the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We estimate the fair value of our reporting units using a weighting of fair values derived most significantly from the income approach and, to a lesser extent, the market approach, with the exception of the Software reporting unit which uses a weighting derived most significantly from the market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on discrete forecast periods as well as terminal value determinations, including revenue growth rates and operating margins used to calculate projected future cash flows. These cash flow projections are discounted to arrive at the fair value of each reporting unit. The discount rate used is based on the weighted-average cost of capital of comparable public companies adjusted for the relevant risk associated with business specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with operating and investment characteristics similar to the reporting unit. We weight the fair value derived from the market approach commensurate with the level of comparability of these publicly traded companies to the reporting unit. When market comparables are not meaningful or not available, we estimate the fair value of a reporting unit using only the income approach. A significant and sustained decline in our stock price could provide evidence of a need to record a goodwill impairment charge.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to individual reporting units to determine the carrying amount of each reporting unit.
On March 31, 2020, due to the macroeconomic impacts of the pandemic on our projected future results of operations, we determined that an indicator of potential impairment existed to require an interim quantitative goodwill impairment test for its reporting units. The quantitative goodwill impairment test indicated that the carrying value of the HPC & AI reporting unit exceeded its fair value by $865 million. As a result, we recorded a partial goodwill impairment charge of $865 million in the second quarter of fiscal 2020.
During the annual impairment test in fiscal 2020, we determined that no additional impairment of goodwill existed.
Our annual goodwill impairment analysis, which we performed as of the first day of the fourth quarter of fiscal 2021, did not result in any additional impairment charges. The excess of fair value over carrying amount for our reporting units ranged from approximately 8% to 133% of the respective carrying amounts. In order to evaluate the sensitivity of the estimated fair value of our reporting units in the goodwill impairment test, we applied a hypothetical 10% decrease to the fair value of each reporting unit. Based on the results of this hypothetical 10% decrease all of the reporting units had an excess of fair value over carrying amount, with the exception of HPC & AI reporting unit.
As of the annual test date, the HPC & AI reporting unit had a goodwill of $3.7 billion and an excess of fair value over carrying value of net assets of 8%. The HPC & AI business is facing challenges on the current and projected future results as the revenue growth is dependent on timing of delivery and related achievement of customer acceptance milestones. If we are not successful in addressing these challenges, the projected revenue growth rates or operating margins could decline resulting in a decrease in the fair value of the HPC & AI reporting unit. The fair value of the HPC & AI reporting unit could also be negatively impacted by changes in its weighted average cost of capital, changes in management's business strategy or significant and sustained declines in the stock price, which could result in an indicator of impairment. Further impairment charges, if any, may be material to our results of operations and financial position. See Part I, Item 1A, "Risk Factors" for a discussion of the potential impacts of the pandemic on the fair value of our assets.
Intangible Assets
We review intangible assets with finite lives for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of our finite-lived intangible assets is assessed based on the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the undiscounted future cash flows are less than the carrying amount, the finite-lived intangible assets are considered to be impaired. The amount of the impairment loss, if any, is measured as the difference between the carrying amount of the asset and its fair value. We estimate the fair value of finite-lived intangible assets by using an income approach or, when available and appropriate, using a market approach.
In March 2020, prior to the quantitative goodwill impairment test, we tested the recoverability of long-lived assets and other assets of the HPC & AI reporting unit and concluded that such assets were not impaired.
Contingencies
We are subject to the possibility of losses from various contingencies. Significant judgment is necessary to estimate the probability and amount of a loss, if any, from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We review these matters at least quarterly and adjust these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other updated information and events, pertaining to a particular case.
Based on our experience, we believe that any damage amounts claimed in the specific litigation and contingency matters further discussed in Note 17, "Litigation and Contingencies", to the Consolidated Financial Statements are not a meaningful indicator of our potential liability. Litigation is inherently unpredictable. However, we believe we have valid defenses with respect to legal matters pending against us. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. We believe we have recorded adequate provisions for any such matters and, as of October 31, 2021, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in our financial statements.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
RESULTS OF OPERATIONS
Revenue from our international operations has historically represented, and we expect will continue to represent, a majority of our overall net revenue. As a result, our revenue growth has been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. In order to provide a framework for assessing performance excluding the impact of foreign currency fluctuations, we present the year-over-year percentage change in revenue on a constant currency basis, which assumes no change in foreign currency exchange rates from the prior-year period and doesn't adjust for any repricing or demand impacts from changes in foreign currency exchange rates. This change in revenue on a constant currency basis is calculated as the quotient of (a) current year revenue converted to U.S. dollars using the prior-year period's foreign currency exchange rates divided by (b) prior-year period revenue. This information is provided so that revenue can be viewed without the effect of fluctuations in foreign currency exchange rates, which is consistent with how management evaluates our revenue results and trends. This constant currency disclosure is provided in addition to, and not as a substitute for, the year-over-year percentage change in revenue on a GAAP basis. Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes.
Results of operations in dollars and as a percentage of net revenue were as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
Dollars % of Revenue Dollars % of Revenue Dollars % of Revenue
  Dollars in millions
Net revenue $ 27,784  100.0  % $ 26,982  100.0  % $ 29,135  100.0  %
Cost of sales 18,408  66.3  % 18,513  68.6  % 19,642  67.4  %
Gross profit 9,376  33.7  % 8,469  31.4  % 9,493  32.6  %
Research and development 1,979  7.1  % 1,874  6.9  % 1,842  6.3  %
Selling, general and administrative 4,929  17.7  % 4,624  17.2  % 4,907  16.9  %
Amortization of intangible assets 354  1.3  % 379  1.4  % 267  0.8  %
Impairment of goodwill —  —  % 865  3.2  % —  —  %
Transformation costs 930  3.3  % 950  3.5  % 453  1.6  %
Disaster charges (recovery) 16  0.1  % 26  0.1  % (7) —  %
Acquisition, disposition and other related charges 36  0.1  % 80  0.3  % 757  2.6  %
 Earnings (loss) from operations 1,132  4.1  % (329) (1.2) % 1,274  4.4  %
Interest and other, net (211) (0.8) % (215) (0.8) % (177) (0.6) %
Tax indemnification and related adjustments 65  0.2  % (101) (0.4) % 377  1.3  %
Non-service net periodic benefit credit 70  0.3  % 136  0.5  % 59  0.2  %
Litigation judgment 2,351  8.5  % —  —  % —  —  %
Earnings from equity interests 180  0.6  % 67  0.3  % 20  —  %
 Earnings (loss) before taxes 3,587  12.9  % (442) (1.6) % 1,553  5.3  %
 (Provision) benefit for taxes (160) (0.6) % 120  0.4  % (504) (1.7) %
Net earnings (loss) $ 3,427  12.3  % $ (322) (1.2) % $ 1,049  3.6  %
Fiscal 2021 compared with fiscal 2020
Net revenue
In fiscal 2021, total net revenue of $27.8 billion, increased by $0.8 billion, or 3.0% (increased 1.0% on a constant currency basis). U.S. net revenue decreased by $0.3 billion or 3.4% to $8.9 billion, while net revenue from outside of the U.S. increased by $1.1 billion or 6.3% to $18.9 billion.
From a segment perspective, net revenue increased across most of our segments due to the improved demand environment led by revenue growth of 15% in Intelligent Edge and 5%, 3%, 2% and 2% in Corporate Investments and Other,
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
HPC & AI, Storage, and Financial Service, respectively. Compute net revenue was largely unchanged from the prior-year period.
The components of the weighted net revenue change by segment were as follows:
  For the fiscal years ended October 31,
  2021 2020
  Percentage Points
Compute —  (5.0)
HPC & AI 0.3  0.4 
Storage 0.3  (2.0)
Intelligent Edge 1.6  (0.2)
Financial Services 0.2  (0.8)
Corporate Investments and Other 0.2  0.1 
Total segment 2.6  (7.5)
Elimination of intersegment net revenue 0.4  0.1 
Total HPE 3.0  (7.4)
Gross Profit
Our gross profit margin increased 2.3 percentage points due primarily to a combination of factors led by strong pricing discipline, cost savings from our transformation programs, a continued mix shift toward higher-margin software-rich offerings and favorable currency fluctuations.
Operating expenses
Research and development
R&D expense increased by $105 million, or 6% due primarily to higher employee compensation expense which contributed 11.0 percentage points to the change. The increase was moderated by cost savings of 4.5 percentage points as we rationalize our R&D through transformation programs by focusing investment in growth areas.
Selling, general and administrative
SG&A expense increased by $305 million, or 7% due primarily to higher employee compensation expense and unfavorable currency fluctuations, which contributed 4.1 percentage points and 2.1 percentage points to the change, respectively.
Amortization of intangible assets
Amortization expense decreased by $25 million, or 7% due to certain intangible assets associated with prior acquisitions reaching the end of their amortization in the current period and higher write-offs of certain intangible assets in the prior-year period. The decrease was moderated by an increase in amortizations in the current period resulting from recent acquisitions.
Impairment of goodwill
Impairment of goodwill for fiscal 2020 represents a partial goodwill impairment charge of $865 million recorded in the second quarter of fiscal 2020, as it was determined that the fair value of the HPC & AI reporting unit was below the carrying value of its net assets.
Transformation programs and costs
Our transformation programs consist of the cost optimization and prioritization plan (launched in 2020) and HPE Next initiative (launched in 2017). The cost optimization and prioritization plan focuses on realigning our workforce to areas of growth, 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. The HPE Next initiative was intended to put in place a purpose-built company designed to compete and win in the markets where we
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
participate by simplifying our operating model, streamlining our offerings, business processes and business systems to improve our execution. The implementation period for HPE Next was extended to fiscal 2023.
Transformation costs decreased by $20 million, or 2% due primarily to lower restructuring charges recorded in the current year, with higher IT costs and lower gains on real estate sales in the current period moderating the decrease.
Disaster charges
In fiscal 2021 and fiscal 2020, disaster charges represent direct costs resulting from the pandemic and are primarily related to HPE hosted, co-hosted, or sponsored events which were converted to a virtual format or cancelled.
Acquisition, disposition and other related charges
Acquisition, disposition and other related charges decreased by $44 million due primarily to lower business acquisition costs related to retention bonuses and integration activities in the current year period.
Interest and other, net
Interest and other, net expense was relatively unchanged from period to period, due to offsetting factors with the current period including higher gains from equity investments, lower interest expense from lower average borrowings, and lower unfavorable currency fluctuations, offset by early debt redemption costs, lower gains on the sale of certain assets and lower interest income.
Tax indemnification and related adjustments
We record changes in certain pre-Separation tax liabilities for which we share joint and several liability with HP Inc. and for which we were indemnified under the Termination and Mutual Release Agreement within Tax Indemnification and related Adjustments. We also record changes to certain pre-Separation and pre-divestiture tax liabilities and tax receivables for which we remain liable on behalf of the separated or divested business, but which may not be subject to indemnification.
We recorded Tax indemnification and related adjustments income of $65 million and expense of $101 million in fiscal 2021 and 2020, respectively.
Tax indemnification and related adjustments in fiscal 2021 primarily included the impacts of a Brazilian Supreme Court decision received regarding the base on which two social contribution taxes in Brazil ("PIS" and "COFINS") are imposed. As a result of this decision, the Company is entitled to recover credits and associated interest related to the overpayment of these transaction taxes imposed between 2005 and 2019 to be used to offset future Brazilian tax liabilities. As such, we have recorded benefits of $17 million and $80 million, both net of taxes, for the recovery of PIS and COFINS, respectively, during fiscal 2021, of which $25 million was included in Net revenue, $10 million related to interest income was included in Interest and other, net, and $80 million related to pre-Separation liabilities was included in Tax indemnification and related adjustments. The corresponding income taxes of $18 million as a result of this recovery were included in (Provision) benefit for taxes in the Consolidated Statement of Earnings.
Tax indemnification and related adjustments in fiscal 2020 resulted from changes in certain pre-Separation tax liabilities for which we shared joint and several liability with HP Inc. and for which we are indemnified under the Termination and Mutual Release Agreement and changes to certain pre-divestiture tax liabilities and tax receivables.
Non-service net periodic benefit credit
Non-service net periodic benefit credit represents the components of net periodic pension benefit costs, other than service cost, for the Hewlett Packard Enterprise defined benefit pension and post-retirement benefit plans such as interest cost, expected return on plan assets, and the amortization of prior plan amendments and actuarial gains or losses. The credit also includes the impact of any plan settlements, curtailments, or special termination benefits.
Non-service net periodic benefit credit decreased by $66 million due primarily to lower expected returns on plan assets.
Litigation judgment
In October 2021, the Company received $2.35 billion which represents Oracle Corporation's satisfaction of the judgment in the Itanium breach of contract dispute. The gain was recognized as other income and presented as a Litigation judgment in
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
the Consolidated Statements of Earnings. For further discussion, refer to Note 17, “Litigation and Contingencies" to the Consolidated Financial Statements in Item 8 of Part II, which is incorporated herein by reference.
Earnings from equity interests
Earnings from equity interests primarily represents our 49% interest in H3C Technologies and the amortization of our interest in a basis difference. Earnings from equity interests increased by $113 million due to higher net income earned by H3C and gains from certain venture investments.
(Provision) benefit for taxes
For fiscal 2021 and 2020, we recorded income tax expense of $160 million and an income tax benefit of $120 million, respectively, which reflect effective tax rates of 4.5% and 27.1%, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 21% due to favorable tax rates associated with certain earnings from our operations in lower tax jurisdictions throughout the world but may also be materially impacted by discrete tax adjustments during the fiscal year. The jurisdictions with favorable tax rates that had the most significant impact on our effective tax rate in the periods presented include Puerto Rico and Singapore.
In fiscal 2021, we recorded $294 million of net income tax benefits related to items discrete to the year. These amounts primarily included:
$180 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges,
$157 million of income tax benefits related to releases of foreign valuation allowances,
$39 million of income tax benefits related to tax rate changes on deferred taxes,
$32 million of income tax benefits related to the change in pre-Separation tax liabilities, primarily those for which we share joint and several liability with HP Inc. and for which we are indemnified by HP Inc.
These benefits were partially offset by $337 million of net income tax charges associated with income from the Itanium litigation judgment, against which $244 million of income tax attributes previously subject to a valuation allowance were utilized, resulting in a net tax expense of $93 million.
In fiscal 2020, we recorded $362 million of net income tax benefits related to items discrete to the year. These amounts primarily included:
$174 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges,
$66 million of income tax benefits related to the change in pre-Separation tax liabilities, primarily those for which we shared joint and several liability with HP Inc. and for which we are indemnified by HP Inc.,
$57 million of income tax benefits related to Indian distribution tax rate changes, and
$40 million of income tax benefits related to tax rate changes on deferred taxes.
These discrete tax benefits were offset by $242 million of net income tax charges related to normal operations and the impact of the Company's goodwill impairment charge being non-deductible from a tax perspective.
Segment Information
Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker ("CODM"), who is the Chief Executive Officer ("CEO"), uses to evaluate, view and run our business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results.
In October 2021, we renamed the segment previously known as High Performance Computing and Mission Critical Solutions ("HPC & MCS") to High Performance Computing and Artificial Intelligence ("HPC & AI").
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
As described in Note 1, "Overview and Summary of Significant Accounting Policies" to the Consolidated Financial Statements in Item 8 of Part II, effective at the beginning of the first quarter of fiscal 2021, we (a) excluded stock-based compensation expense from our segment earnings from operations; and (b) implemented certain organizational changes to align our segment financial reporting more closely with our current business structure. As a result of these organizational changes, our operations are now organized into six segments for financial reporting purposes: Compute, HPC & AI, Storage, Intelligent Edge, FS, and Corporate Investments and Other. The Corporate Investments and Other Segment now includes the A & PS operating segment, the Communications and Media Solutions operating segment, the Software operating segment, and Hewlett Packard Enterprise Labs which is responsible for research and development. We reflected these changes in our segment information retrospectively to the earliest period presented, which primarily resulted in the realignment of net revenue and operating profit for each of the segments. These changes had no impact on Hewlett Packard Enterprise's previously reported consolidated results.
A description of the products and services for each segment, along with other pertinent information related to Segments can be found in Note 2, "Segment Information", to the Consolidated Financial Statements in Item 8 of Part II, which is incorporated herein by reference.
Segment Results
The following provides an overview of our key financial metrics by segment for fiscal 2021, as compared to fiscal 2020:
HPE
Consolidated
Compute HPC & AI Storage Intelligent Edge Financial Services
Corporate
Investments and Other
Dollars in millions, except for per share amounts
Net revenue(1)
$ 27,784  $ 12,292  $ 3,188  $ 4,763  $ 3,287  $ 3,401  $ 1,356 
Year-over-year change % 3.0  % 0.1  % 2.7  % 1.7  % 15.1  % 1.5  % 4.5  %
Earnings (loss) from operations(2)
$ 1,132  $ 1,326  $ 234  $ 778  $ 500  $ 390  $ (95)
Earnings (loss) from operations as a % of net revenue 4.1  % 10.8  % 7.3  % 16.3  % 15.2  % 11.5  % (7.0) %
Year-over-year change percentage points 5.3  pts 2.6  pts (1.9) pts (1.1) pts 3.4  pts 3.0  pts 8.9  pts
(1)HPE consolidated net revenue excludes intersegment net revenue.
(2)Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense, amortization of initial direct costs, amortization of intangible assets, impairment of goodwill, transformation costs, disaster charges and acquisition, disposition and other related charges.
Compute
  For the fiscal years ended October 31,
  2021 2020 2019
  Dollars in millions
Net revenue $ 12,292  $ 12,285  $ 13,730 
Earnings from operations $ 1,326  $ 1,007  $ 1,719 
Earnings from operations as a % of net revenue 10.8  % 8.2  % 12.5  %
Fiscal 2021 compared with fiscal 2020
Compute net revenue increased by $7 million, or 0.1% (decreased 2.0% on a constant currency basis) due primarily to favorable currency fluctuations and an increase in average unit prices. The net revenue increase was partially offset by a decrease in unit shipments resulting from material constraints due to a challenging supply chain environment. As a result, we ended the period with a significantly higher level of order backlog.
From a product perspective, Compute experienced revenue growth in the rack and synergy server product categories partially moderated by a revenue decline due to certain products approaching their end-of-life. Services net revenue was relatively unchanged from period to period.
43

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Compute earnings from operations as a percentage of net revenue increased 2.6 percentage points due to decreases in costs of products and services as a percentage of net revenue and operating expenses as a percentage of net revenue. The decrease in costs of products and services as a percentage of net revenue was due primarily to favorable currency fluctuations, lower supply chain overhead costs from operational efficiencies, and disciplined pricing. The decrease in operating expenses as a percentage of net revenue was due primarily to cost savings from our transformation programs partially offset by higher employee compensation expense.
Fiscal 2020 compared with fiscal 2019
Compute net revenue decreased by $1.4 billion, or 10.5% (decreased 9.4% on a constant currency basis) due to the impact of the pandemic on the demand environment as we experienced multiple factors including competitive pricing pressures, manufacturing capacity constraints in North America in the first quarter of fiscal 2020, and unfavorable currency fluctuations. As a result, Compute experienced a decline in unit shipments and average unit selling prices.
Compute earnings from operations as a percentage of net revenue decreased 4.3 percentage points due primarily to an increase in costs of products and services as a percentage of net revenue and an increase in operating expenses as a percentage of net revenue. The increase in cost of products as a percentage of net revenue was due primarily to competitive pricing pressures, unfavorable currency fluctuations, higher supply chain costs and the scale of the net revenue decline, partially offset by lower commodity costs and a favorable mix. The increase in operating expenses as a percentage of net revenue was due to the scale of the net revenue decline as total operating expenses declined due primarily to lower spending resulting from our cost containment measures and lower variable compensation expense, partially offset by higher field selling costs.
HPC & AI
  For the fiscal years ended October 31,
  2021 2020 2019
  Dollars in millions
Net revenue $ 3,188  $ 3,105  $ 2,983 
Earnings from operations $ 234  $ 285  $ 365 
Earnings from operations as a % of net revenue 7.3  % 9.2  % 12.2  %
Fiscal 2021 compared with fiscal 2020
HPC & AI net revenue increased by $83 million or 2.7% (increased 1.8% on a constant currency basis) as the challenges encountered in the prior year period resulting from the pandemic receded, such as delays with meeting customer milestones, and the demand environment improved. This resulted in net revenue growth in the Apollo and Cray product categories within HPC and growth in Edge Compute. Favorable currency fluctuations also added to the net revenue increase. These increases were moderated by revenue declines in Data Solutions and Services due to certain products approaching their end-of-life and lower support services, respectively.
HPC & AI earnings from operations as a percentage of net revenue decreased 1.9 percentage points primarily due to increases in cost of products and services as a percentage of net revenue and operating expenses as a percentage of net revenue. The increase in cost of products and services as a percentage of net revenue was due primarily to a lower mix of revenue from services and higher-margin Data Solutions, while cost savings from our transformation programs moderated the increase. The increase in operating expenses as a percentage of net revenue was due primarily to higher field selling costs and employee compensation expense, while cost savings from our transformation programs moderated the increase.
Fiscal 2020 compared with fiscal 2019
HPC & AI net revenue increased by $122 million, or 4.1% (increased 4.4% on a constant currency basis) due primarily to higher revenue in HPC from the addition of product and services revenue resulting from the acquisition of Cray, partially offset by a revenue decline in Edge Compute and Data Solutions.
HPC & AI earnings from operations as a percentage of net revenue decreased 3.0 percentage points due to an increase in operating expenses as a percentage of net revenue partially offset by lower cost of products and services as a percentage of net revenue. The decrease in cost of products and services as a percentage of net revenue was due primarily to an improved product mix resulting from Cray. The increase in operating expenses as a percentage of net revenue was due to the addition of operating expenses from Cray.
44

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Storage
  For the fiscal years ended October 31,
  2021 2020 2019
  Dollars in millions
Net revenue $ 4,763  $ 4,685  $ 5,255 
Earnings from operations $ 778  $ 813  $ 1,009 
Earnings from operations as a % of net revenue 16.3  % 17.4  % 19.2  %
Fiscal 2021 compared with fiscal 2020
Storage net revenue increased by $78 million, or 1.7% (decreased 0.1% on a constant currency basis) as we continue our transition to more services, and software-rich offerings. The net revenue increase was led by favorable currency fluctuations, growth in Storage services and incremental revenue from the Zerto acquisition. Net revenue in Storage products was unchanged as growth from HPE Primera products, Traditional Storage and Nimble Storage was offset by revenue declines in SimpliVity and HPE 3PAR, while we are transitioning to the next-generation HPE Primera and HPE Alletra product set.
Storage earnings from operations as a percentage of net revenue decreased 1.1 percentage points due to an increase in operating expenses as a percentage of net revenue, partially offset by a decrease in cost of products and services as a percentage of net revenue. The decrease in cost of products and services as a percentage of net revenue was due primarily to a favorable mix of higher-margin HPE Primera and Big Data products, and improved operational efficiencies achieved through our transformation programs, the effects of which were partially offset by higher fixed overhead costs as a percentage of net revenue. Operating expenses as a percentage of net revenue increased across all functions due to higher employee compensation expense and planned investments in our cloud data services.
Fiscal 2020 compared with fiscal 2019
Storage net revenue decreased by $570 million, or 10.8% (decreased 9.9% on a constant currency basis) due primarily to the impact of the pandemic on the demand environment as we experienced commodity and manufacturing capacity constraints in North America in the first quarter of fiscal 2020, and lower revenue from the expiration of a one-time legacy contract, partially offset by higher revenue from Big Data.
Storage earnings from operations as a percentage of net revenue decreased 1.8 percentage points due to an increase in cost of product and services as a percentage of net revenue and an increase in operating expenses as a percentage of net revenue. The increase in cost of product and services as a percentage of net revenue was due primarily to a combination of factors including competitive pricing pressures, increased cost of products due to higher fixed overhead cost, and unfavorable currency fluctuations, partially offset by lower cost of services due to delivery efficiencies. The increase in operating expenses as a percentage of net revenue was due primarily to the scale of the net revenue decline while total operating expenses declined due to lower field selling costs amid lower spending resulting from our cost containment measures.
Intelligent Edge
For the fiscal years ended October 31,
2021 2020 2019
Dollars in millions
Net revenue $ 3,287  $ 2,855  $ 2,913 
Earnings from operations $ 500  $ 337  $ 216 
Earnings from operations as a % of net revenue 15.2  % 11.8  % 7.4  %
45

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Fiscal 2021 compared with fiscal 2020
Intelligent Edge net revenue increased by $432 million, or 15.1% (increased 12.8% on a constant currency basis) from growth in product and services revenue due to an improved demand environment in the current period, the addition of revenue from Silver Peak and favorable currency fluctuations. The increase in product revenue was led by the Switching and WLAN product categories. The increase in services revenue was led by higher attached support services and increased as-a-service offerings.
Intelligent Edge earnings from operations as a percentage of net revenue increased 3.4 percentage points due primarily to decreases in cost of products and services as a percentage of net revenue and operating expenses as a percentage of net revenue. The decrease in cost of product and services as a percentage of net revenue was due primarily to lower product costs in Switching and WLAN and addition of higher-margin Silver Peak activity. The decrease in operating expenses as a percentage of net revenue was due primarily to improved operational efficiencies including cost savings from transformation programs, while higher employee compensation expense and the addition of expenses from Silver Peak moderated the decrease.
Fiscal 2020 compared with fiscal 2019
Intelligent Edge net revenue decreased by $58 million, or 2.0% (decreased 1.2% on a constant currency basis) due primarily to weak market demand, competitive pricing pressures and unfavorable currency fluctuations. As a result, we experienced lower revenue from WLAN, switching products, and software offerings. These declines were partially offset by an increase in net revenue due to higher service renewals.
Intelligent Edge earnings from operations as a percentage of net revenue increased 4.4 percentage points due to a decrease in operating expenses as a percentage of net revenue coupled with lower cost of products and services as a percentage of net revenue. The decrease in cost of product and services as a percentage of net revenue was due primarily to a favorable mix of revenue from services and lower costs of switching products, partially offset by higher logistics cost. The decrease in operating expenses as a percentage of net revenue was due primarily to lower spending as a result of cost containment measures, partially offset by higher variable compensation expense.
Financial Services
  For the fiscal years ended October 31,
  2021 2020 2019
  Dollars in millions
Net revenue $ 3,401  $ 3,352  $ 3,581 
Earnings from operations $ 390  $ 284  $ 310 
Earnings from operations as a % of net revenue 11.5  % 8.5  % 8.7  %
Fiscal 2021 compared with fiscal 2020
FS net revenue increased by $49 million, or 1.5% (decreased 0.9% on a constant currency basis) due primarily to favorable currency fluctuations, partially offset by a decrease in rental revenue due to lower average operating lease assets, along with lower asset management revenue from lease buyouts.
FS earnings from operations as a percentage of net revenue increased 3.0 percentage points due primarily to lower cost of services as a percentage of net revenue. The decrease to cost of services as a percentage of net revenue resulted primarily from lower borrowing costs while operating expenses as a percentage of net revenue remained relatively flat.
Fiscal 2020 compared with fiscal 2019
FS net revenue decreased by $229 million, or 6.4% (decreased 5.2% on a constant currency basis) due primarily to a decrease in rental revenue due to lower average operating leases assets and lower lease equipment buyout revenue, along with unfavorable currency fluctuations, partially offset by higher revenue from lease extensions.
FS earnings from operations as a percentage of net revenue decreased 0.2 percentage points due primarily to an increase in operating expenses as a percentage of net revenue, partially offset by lower cost of services as a percentage of net revenue. The decrease to cost of services as a percentage of net revenue resulted from lower depreciation expense and borrowing costs, partially offset by higher bad debt expense. The increase to operating expenses as a percentage of net revenue was due primarily to lower capitalized initial direct costs as a result of adopting the new lease accounting standard.
46

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Financing Volume
  For the fiscal years ended October 31,
  2021 2020 2019
  Dollars in millions
Financing volume $ 6,168  $ 6,005  $ 6,200 
Financing volume, which represents the amount of financing provided to customers for equipment and related software and services, including intercompany activity, increased by 2.7% in fiscal 2021 and decreased 3.1% in fiscal 2020 as compared to the prior-year periods. The increase in fiscal 2021 was primarily driven by favorable currency fluctuations, along with higher financing associated with third-party product sales and related service offerings. The decrease in fiscal 2020 was primarily related to lower financing associated with both third-party and HPE product sales and related service offerings, along with unfavorable currency fluctuations.
Portfolio Assets and Ratios
The FS business model is asset intensive and uses certain internal metrics to measure its performance against other financial services companies, including a segment balance sheet that is derived from our internal management reporting system. The accounting policies used to derive FS amounts are substantially the same as those used by the Company. However, intercompany loans and certain accounts that are reflected in the segment balances are eliminated in our Consolidated Financial Statements.
The portfolio assets and ratios derived from the segment balance sheets for FS were as follows:
  As of October 31,
  2021 2020
  Dollars in millions
Financing receivables, gross $ 9,198  $ 9,058 
Net equipment under operating leases 4,001  4,027 
Capitalized profit on intercompany equipment transactions(1)
275  315 
Intercompany leases(1)
96  92 
Gross portfolio assets 13,570  13,492 
Allowance for doubtful accounts(2)
228  154 
Operating lease equipment reserve 39  64 
Total reserves 267  218 
Net portfolio assets $ 13,303  $ 13,274 
Reserve coverage 2.0  % 1.6  %
Debt-to-equity ratio(3)
7.0x 7.0x
(1)Intercompany activity is eliminated in consolidation.
(2)Allowance for credit losses for financing receivables includes both the short- and long-term portions.
(3)Debt benefiting FS consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt, and borrowing- and funding-related activity associated with FS and its subsidiaries. Debt benefiting FS totaled $11.9 billion and $11.7 billion at October 31, 2021 and 2020, respectively, and was determined by applying an assumed debt-to-equity ratio, which management believes to be comparable to that of other similar financing companies. FS equity at both October 31, 2021 and October 31, 2020 was $1.7 billion.
As of October 31, 2021 and 2020, FS net cash and cash equivalents were $898 million and $729 million, respectively.
Net portfolio assets as of October 31, 2021 increased 0.2% from October 31, 2020. The increase generally resulted from favorable currency fluctuations, largely offset by portfolio runoff exceeding new financing volume during the period.
FS bad debt expense includes charges to general reserves, specific reserves and write-offs for sales-type, direct-financing and operating leases. FS recorded net bad debt expense of $95 million, $93 million and $75 million in fiscal 2021, 2020 and 2019, respectively.
47

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
As of October 31, 2021, FS experienced an increase in billed finance receivables compared to October 31, 2020, which included a limited impact to collections from customers as a result of the pandemic. We are currently unable to fully predict the extent to which the pandemic may adversely impact future collections of our receivables.
Corporate Investments and Other
  For the fiscal years ended October 31,
  2021 2020 2019
  Dollars in millions
Net revenue $ 1,356  $ 1,298  $ 1,288 
Loss from operations $ (95) $ (206) $ (314)
Loss from operations as a % of net revenue (7.0) % (15.9) % (24.4) %
Fiscal 2021 compared with fiscal 2020
Corporate Investments and Other net revenue increased by $58 million, or 4.5% (increased 2.5% on a constant currency basis) due to favorable currency fluctuations and higher revenue from Communications and Media Solutions ("CMS") and Software.
Corporate Investments and Other loss from operations as a percentage of net revenue decreased 8.9 percentage points due primarily to a decrease in cost of services and operating expenses as a percentage of net revenue. The decrease in cost of services as a percentage of net revenue was due primarily to service delivery and overhead efficiencies achieved through our transformation programs. The decrease in operating expenses as a percentage of net revenue was due primarily to lower spending resulting from cost containment measures.
Fiscal 2020 compared with fiscal 2019
Corporate Investments and Other net revenue increased by $10 million, or 0.8% (increased 1.2% on a constant currency basis) due to higher revenue from Software partially offset by lower revenue from A & PS and CMS, and unfavorable currency fluctuations.
Corporate Investments and Other loss from operations as a percentage of net revenue decreased 8.5 percentage points due to a decrease in costs of services and operating expenses as a percentage of net revenue. The decrease in cost of services as a percentage of net revenue was due primarily to service delivery and overhead efficiencies achieved through our transformation programs. The decrease in operating expenses as a percentage of net revenue was due primarily to lower spending resulting from our cost containment measures.
LIQUIDITY AND CAPITAL RESOURCES
Current Overview
We use cash generated by operations as our primary source of liquidity. We believe that internally generated cash flows will be generally sufficient to support our operating businesses, capital expenditures, product development initiatives, acquisition and disposal activities including legal settlements, restructuring activities, transformation costs, indemnifications, maturing debt, interest payments, and income tax payments, in addition to any future investments, share repurchases, and stockholder dividend payments. We expect to supplement this short-term liquidity, if necessary, by accessing the capital markets, issuing commercial paper, and borrowing under credit facilities made available by various domestic and foreign financial institutions. However, our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions. We anticipate that the available funds and cash generated from operations along with our access to capital markets will be sufficient to meet our liquidity requirements for at least the next twelve months. We continue to monitor the severity and duration of the COVID-19 pandemic and its impact on the U.S. and other global economies, the capital markets, consumer behavior, our businesses, results of operations, financial condition and cash flows. Our liquidity is subject to various risks including the risks identified in the section entitled "Risk Factors" in Item 1A and market risks identified in the section entitled "Quantitative and Qualitative Disclosures about Market Risk" in Item 7A, each of which is incorporated herein by reference.
48

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Our cash balances are held in numerous locations throughout the world, with a substantial amount held outside the U.S as of October 31, 2021. We utilize a variety of planning and financing strategies in an effort to ensure that our worldwide cash is available when and where it is needed.
Amounts held outside of the U.S. are generally utilized to support our non-U.S. liquidity needs. Repatriations of amounts held outside the U.S. generally will not be taxable from a U.S. federal tax perspective, but may be subject to state income or foreign withholding tax. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S. and to meet liquidity needs through ongoing cash flows, external borrowings, or both. We do not expect restrictions or potential taxes incurred on repatriation of amounts held outside of the U.S. to have a material effect on our overall liquidity, financial condition or results of operations.
As a result of increased uncertainty due to the pandemic, purchases under our share repurchase program previously authorized by our Board of Directors, were temporarily suspended in April, 2020. We resumed our share repurchase program in the fourth quarter of fiscal 2021 and settled $213 million of our stock. As of October 31, 2021, we had a remaining authorization of $1.9 billion for future share repurchases. For more information on our share repurchase program, refer to Note 15, "Stockholders' Equity", to the Consolidated Financial Statements in Part II, Item 8, which is incorporated herein by reference.
Liquidity
Our cash, cash equivalents, restricted cash, total debt and available borrowing resources were as follows:
  As of October 31,
  2021 2020 2019
  In millions
Cash, cash equivalents and restricted cash $ 4,332  $ 4,621  $ 4,076 
Total debt $ 13,448  $ 15,941  $ 13,820 
Available borrowing resources $ 6,017  $ 6,297  $ 5,639 

The tables below represent the way in which management reviews cash flows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Net cash provided by operating activities $ 5,871  $ 2,240  $ 3,997 
Net cash used in investing activities (2,796) (2,578) (3,457)
Net cash (used in) provided by financing activities (3,364) 883  (1,548)
Net (decrease) increase in cash, cash equivalents and restricted cash $ (289) $ 545  $ (1,008)
Operating Activities
Net cash provided by operating activities increased by $3.6 billion, for fiscal 2021 as compared to fiscal 2020. The increase was due primarily to higher earnings, which includes a $2.2 billion litigation judgment.
Our key working capital metrics were as follows:
  As of October 31,
  2021 2020 2019
Days of sales outstanding in accounts receivable ("DSO") 49  42  37 
Days of supply in inventory ("DOS") 82  48  45 
Days of purchases outstanding in accounts payable ("DPO") (128) (97) (104)
Cash conversion cycle (7) (22)
49

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
The cash conversion cycle is the sum of DSO and DOS less DPO. Items which may cause the cash conversion cycle in a particular period to differ include, but are not limited to, changes in business mix, changes in payment terms (including extended payment terms to customers or from suppliers), early or late invoice payments from customers or to suppliers, the extent of receivables factoring, seasonal trends, the timing of sales and inventory purchases within the period, the impact of commodity costs and acquisition activity.
DSO measures the average number of days our receivables are outstanding. DSO is calculated by dividing ending accounts receivable, net of allowance for doubtful accounts, by a 90-day average of net revenue. For fiscal 2021, as compared to the prior-year period, DSO increased due primarily to a decrease in early payments and factoring, extended payments terms and unfavorable billing linearity.
DOS measures the average number of days from procurement to sale of our product. DOS is calculated by dividing ending inventory by a 90-day average of cost of goods sold. For fiscal 2021, as compared to the prior-year period, the DOS increased due primarily to higher levels of inventory resulting from a combination of supply chain constraints, positioning of inventory to fulfill planned future shipments and strategic purchases of certain key components.
DPO measures the average number of days our accounts payable balances are outstanding. DPO is calculated by dividing ending accounts payable by a 90-day average of cost of goods sold. For fiscal 2021, as compared to the prior-year period, DPO increased due primarily to higher inventory purchases for planned future shipments and extended payment terms.
Investing Activities
Net cash used in investing activities increased by $0.2 billion in fiscal 2021 as compared to fiscal 2020. The change was primarily due to higher cash utilized for investment in property, plant and equipment, net of sales proceeds of $0.5 billion and higher cash utilized in net financial collateral activities of $0.1 billion, partially offset by lower payments made in connection with business acquisitions, net of $0.4 billion.
Financing Activities
Net cash generated in financing activities decreased by $4.2 billion in fiscal 2021 as compared to fiscal 2020. The decrease was due primarily to lower proceeds from debt issuance of $4.0 billion, higher cash utilized for debt repayment of $0.4 billion and lower cash utilized for share repurchase of $0.1 billion.
Free Cash Flow
For the fiscal years ended October 31,
2021 2020 2019
In millions
Net cash provided by operating activities $ 5,871  $ 2,240  $ 3,997 
Litigation judgment, net of taxes paid (2,172) —  — 
Net cash provided by operating activities, excluding litigation judgment, net of taxes paid 3,699  2,240  3,997 
Investment in property, plant and equipment (2,502) (2,383) (2,856)
Proceeds from sale of property, plant and equipment 354  703  597 
Free Cash Flow $ 1,551  $ 560  $ 1,738 
Free cash flow is defined as cash flow from operations less investments in property, plant and equipment net of proceeds from the sale of property, plant and equipment. In fiscal 2021, free cash flow does not include $2.2 billion of after-tax cash impact from Oracle’s satisfaction of the judgment in the Itanium litigation. Free cash flow increased by $1.0 billion in fiscal 2021 as compared to fiscal 2020. The increase was due to higher cash generated from operations and improved net working capital moderated by increased cash used for investments in property, plant and equipment, net of sales proceeds.
Our improved free cash flow outlook and cash position help to ensure we have ample liquidity to run operations, continuing to invest in our business to drive growth and return capital to shareholders.
For more information on the impact from operating assets and liabilities to cash flows, see Note 7, "Balance Sheet Details", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
50

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Capital Resources
Debt Levels
  As of October 31,
  2021 2020 2019
  In millions
Short-term debt $ 3,552  $ 3,755  $ 4,425 
Long-term debt $ 9,896  $ 12,186  $ 9,395 
Weighted-average interest rate 2.9  % 3.2  % 4.1  %
We maintain debt levels that we establish through consideration of a number of factors, including cash flow expectations, cash requirements for operations, investment plans (including acquisitions), share repurchase activities, our cost of capital, and targeted capital structure.
For more information on the activity for fiscal 2021 relating to Unsecured Senior Notes and Asset-Backed Debt Securities, see Note 14, "Borrowings", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
Commercial Paper
We maintain two commercial paper programs, "the Parent Programs", and a wholly-owned subsidiary maintains a third program. Our U.S. program provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $4.75 billion which was increased from $4.0 billion in March 2020. Our euro commercial paper program provides for the issuance of commercial paper outside of the U.S. denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those programs at any one time cannot exceed $4.75 billion as authorized by our Board of Directors. In addition, our subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $1.0 billion. As of October 31, 2021 and October 31, 2020, no borrowings were outstanding under the Parent Programs, and $705 million and $677 million, respectively, were outstanding under our subsidiary's program. During fiscal 2021, we issued $757 million and repaid $728 million of commercial paper.
Our weighted-average interest rate reflects the average effective rate on our borrowings prevailing during the period and reflects the impact of interest rate swaps. For more information on our interest rate swaps, see Note 13, "Financial Instruments", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
In December 2020, we filed a shelf registration statement with the Securities and Exchange Commission that allows us to sell, at any time and from time to time, in one or more offerings, debt securities, preferred stock, common stock, warrants, depository shares, purchase contracts, guarantees or units consisting of any of these securities.
Revolving Credit Facility
We maintain a $4.75 billion five year senior unsecured committed credit facility that was entered into in August 2019. Loans under the revolving credit facility may be used for general corporate purposes, including support of the commercial paper program. Commitments under the Credit Agreement are available for a period of five years, which period may be extended, subject to the satisfaction of certain conditions, by up to two, one-year periods. Commitment fees, interest rates and other terms of borrowing under the credit facility vary based on Hewlett Packard Enterprise's external credit rating. As of October 31, 2021 and October 31, 2020, no borrowings were outstanding under the Credit Agreement.
51

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Available Borrowing Resources
As of October 31, 2021, we had the following resources available to obtain short- or long-term financing if we need additional liquidity:
  As of
October 31, 2021
  In millions
Commercial paper programs $ 5,045 
Uncommitted lines of credit $ 972 
For more information on our available borrowing resources and the impact of operating assets and liabilities to cash flows, see Note 14, "Borrowings", and Note 7, "Balance Sheet Details", respectively, to the Consolidated Financial Statements in Part II, Item 8, which is incorporated herein by reference.
CONTRACTUAL CASH AND OTHER OBLIGATIONS
In fiscal 2020 the total of our contractual cash and other obligations was $20.8 billion and in fiscal 2021 totals $17.9 billion. Hence we do not currently expect changes to our contractual cash and other obligations to significantly impact our free cash flow expectations.
Our contractual cash and other obligations as of October 31, 2021, were as follows:
    Payments Due by Period
Total 1 Year or
Less
1-3 Years 3-5 Years More than
5 Years
  In millions
Principal payments on long-term debt(1)
$ 12,404  $ 2,597  $ 4,292  $ 3,265  $ 2,250 
Interest payments on long-term debt(2)
3,539  377  556  378  2,228 
Operating lease obligations (net of sublease rental income)(3)
1,140  187  316  241  396 
Unconditional purchase obligations(4)
768  458  228  59  23 
Capital lease obligations (includes interest) 62  13  14  28 
Total(5)(6)(7)
$ 17,913  $ 3,626  $ 5,405  $ 3,957  $ 4,925 
(1)Amounts represent the principal cash payments relating to our long-term debt, including current portion of long-term debt, and do not include fair value adjustments, discounts or premiums and debt issuance costs. As of October 31, 2021, the future principal payments related to asset-backed debt securities were expected to be $1.2 billion in fiscal 2022, $0.7 billion in fiscal 2023 and $0.2 billion in fiscal 2024. For more information on our debt, see Note 14, "Borrowings", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
(2)Amounts represent the expected interest payments relating to our long-term debt. We use interest rate swaps to mitigate the exposure of our fixed rate debt to changes in fair value resulting from changes in interest rates, or hedge the variability of cash flows in the interest payments associated with our variable-rate debt. The impact of our outstanding interest rate swaps at October 31, 2021 was factored into the calculation of the future interest payments on long-term debt.
(3)Amounts include uncommenced operating leases as of fiscal 2021 and do not reflect imputed interest adjustments.
(4)For additional information on our Unconditional Purchase Obligations, see Note 19, "Commitments", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
(5)In fiscal 2022, we anticipate making contributions of $199 million to our non-U.S. pension plans. Our policy is to fund pension plans so that we meet at least the minimum contribution requirements, as established by various authorities including local government and taxing authorities. Expected contributions and payments to our pension and post-retirement benefit plans are excluded from the contractual obligations table because they do not represent contractual cash outflows, as they are dependent on numerous factors which may result in a wide range of outcomes. For more information on our retirement and post-retirement benefit plans, see Note 4, "Retirement and Post-Retirement Benefit Plans", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
(6)As of October 31, 2021, we expect future cash payments of approximately $0.8 billion in connection with our approved restructuring plans, which includes $0.5 billion expected to be paid in fiscal 2022 and $0.3 billion expected to be paid thereafter. Payments for restructuring activities have been excluded from the contractual obligations table, because they do not represent contractual cash
52

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
outflows and there is uncertainty as to the timing of these payments. For more information on our restructuring activities, see Note 3, "Transformation Programs", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
(7)As of October 31, 2021, we had approximately $428 million of recorded liabilities and related interest and penalties pertaining to uncertain tax positions. These liabilities and related interest and penalties include $68 million expected to be paid within one year. For the remaining amount, we are unable to make a reasonable estimate as to when cash settlement with the tax authorities might occur due to the uncertainties related to these tax matters. Payments of these obligations would result from settlements with taxing authorities. For more information on our uncertain tax positions, see Note 6, "Taxes on Earnings", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
Off-balance Sheet Arrangements
As part of our ongoing business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
We have third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. For more information on our third-party revolving short-term financing arrangements, see Note 7, "Balance Sheet Details", to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference.
GAAP TO NON-GAAP RECONCILIATIONS
Effective at the beginning of the first quarter of fiscal 2021, the Company excluded stock-based compensation expense from its segment earnings from operations results and excluded stock-based compensation expense from non-GAAP results. The Company has reflected this change retrospectively to its financial results for the earliest period presented. This change had no impact on Hewlett Packard Enterprise's previously reported consolidated GAAP results. However, the Company reflected the change resulting from the reclassification of its stock-based compensation expense by restating its consolidated non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP earnings from operations, non-GAAP operating profit margin, non-GAAP net earnings and non-GAAP net earnings per share.
The following tables provide reconciliation of GAAP to non-GAAP measures for fiscal 2021 and 2020:
53

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Reconciliation of GAAP net earnings and diluted net earnings per share to non-GAAP net earnings and diluted net earnings per share.
For the fiscal years ended October 31,
2021 2020
Dollars in millions Diluted net earnings per share Dollars in millions Diluted net earnings per share
GAAP net earnings (loss) $ 3,427  $ 2.58  $ (322) $ (0.25)
Non-GAAP adjustments:
Amortization of initial direct costs 0.01  10  0.01 
Amortization of intangible assets 354  0.27  379  0.29 
Impairment of goodwill —  —  865  0.67 
Transformation costs 930  0.70  950  0.74 
Disaster charges 16  0.01  26  0.02 
Stock-based compensation expense 372  0.28  274  0.21 
Acquisition, disposition and other related charges 36  0.03  107  0.08 
Tax indemnification and related adjustments (65) (0.05) 101  0.08 
Non-service net periodic benefit credit (70) (0.05) (136) (0.11)
Litigation judgment (2,351) (1.78) —  — 
Early debt redemption costs 100  0.08  —  — 
Earnings from equity interests(1)
109  0.08  145  0.11 
Adjustments for taxes (264) (0.20) (394) (0.31)
Non-GAAP net earnings $ 2,602  $ 1.96  $ 2,005  $ 1.54 
(1) Represents the amortization of basis difference adjustments related to the H3C divestiture.
Reconciliation of GAAP earnings from operations and operating profit margin to non-GAAP earnings from operations and operating profit margin.
For the fiscal years ended October 31,
2021 2020
Dollars % of
Revenue
Dollars % of
Revenue
In millions
GAAP earnings (loss) from operations $ 1,132  4.1  % $ (329) (1.2) %
Non-GAAP adjustments:
Amortization of initial direct costs —  % 10  —  %
Amortization of intangible assets 354  1.3  % 379  1.4  %
Impairment of goodwill —  —  % 865  3.2  %
Transformation costs 930  3.3  % 950  3.5  %
Disaster charges 16  0.1  % 26  0.1  %
Stock-based compensation expense 372  1.3  % 274  1.0  %
Acquisition, disposition and other related charges 36  0.1  % 107  0.4  %
Non-GAAP earnings from operations $ 2,848  10.3  % $ 2,282  8.5  %
54

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Reconciliation of GAAP gross profit and gross profit margin to non-GAAP gross profit and gross profit margin.
For the fiscal years ended October 31,
2021 2020
Dollars % of
Revenue
Dollars % of
Revenue
In millions
GAAP Net revenue $ 27,784  100  % $ 26,982  100  %
GAAP Cost of sales 18,408  66.3  % 18,513  68.7  %
GAAP gross profit $ 9,376  33.7  % $ 8,469  31.4  %
Non-GAAP adjustments
Amortization of initial direct costs —  % 10  —  %
Stock-based compensation expense 40  0.2  % 37  0.2  %
Acquisition, disposition and other related charges(1)
—  —  % 27  0.1  %
Non-GAAP gross profit $ 9,424  33.9  % $ 8,543  31.7  %
(1) Represent charges related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray, which was included in Cost of Sales.
Reconciliation of net cash provided by operating activities to free cash flow.
For the fiscal years ended October 31,
2021 2020
In millions
Net cash provided by operating activities $ 5,871  $ 2,240 
Litigation judgment, net of taxes paid (2,172) — 
Net cash provided by operating activities, excluding litigation judgment, net of taxes paid 3,699  2,240 
Investment in property, plant and equipment (2,502) (2,383)
Proceeds from sale of property, plant and equipment 354  703 
Free cash flow $ 1,551  $ 560 
Non-GAAP financial measures
The non-GAAP financial measures presented are net revenue on a constant currency basis, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue), non-GAAP net earnings, non-GAAP diluted net earnings per share and free cash flow. These non-GAAP financial measures are used by management for purposes of evaluating our historical and prospective financial performance, as well as evaluating our performance relative to our competitors. These non-GAAP financial measures are not computed in accordance with, or as an alternative to, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to net revenue on a constant currency basis is net revenue. The GAAP measure most directly comparable to non-GAAP gross profit is gross profit. The GAAP measure most directly comparable to non-GAAP gross profit margin is gross profit margin. The GAAP measure most directly comparable to non-GAAP earnings from operations is earnings from operations. The GAAP measure most directly comparable to non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net revenue) is operating profit margin (Earnings from operations as a percentage of net revenue). The GAAP measure most directly comparable to non-GAAP net earnings is net earnings. The GAAP measure most directly comparable to non-GAAP diluted net earnings per share is diluted net earnings per share. The GAAP measure most directly comparable to cash flow from operations and free cash flow, each excluding litigation judgment, net of taxes paid, is cash flow from operations.
Net revenue on a constant currency basis assumes no change in the foreign exchange rate from the prior-year period. Non-GAAP gross profit and non-GAAP gross profit margin is defined to exclude charges related to the amortization of initial direct costs, stock-based compensation expense and certain acquisition, disposition and other related charges. Non-GAAP earnings from operations and non-GAAP operating profit margin (non-GAAP earnings from operations as a percentage of net
55

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
revenue) consist of earnings from operations excluding any charges related to the amortization of initial direct costs, amortization of intangible assets, impairment of goodwill, transformation costs, disaster charges, stock-based compensation expense and acquisition, disposition and other related charges. Non-GAAP net earnings and Non-GAAP diluted net earnings per share consist of net earnings or diluted net earnings per share excluding those same charges, as well as items such as tax indemnification and related adjustments, non-service net periodic benefit credit, litigation judgment, early debt redemption costs, earnings from equity interests, certain income tax valuation allowances and separation taxes, the impact of U.S. tax reform, structural rate adjustment and excess tax benefit from stock-based compensation. In addition, non-GAAP net earnings and non-GAAP diluted net earnings per share are adjusted by the amount of additional taxes or tax benefits associated with each non-GAAP item. We believe that excluding the items mentioned above from these non-GAAP financial measures allows management to better understand our consolidated financial performance in relation to the operating results of our segments. Management does not believe that the excluded items are reflective of ongoing operating results, and excluding them facilitates a more meaningful evaluation of our current operating performance in comparison to our peers. The excluded items can be inconsistent in amount and frequency and/or not reflective of the operational performance of the business.
These non-GAAP financial measures have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are that they can have a material impact on the equivalent GAAP earnings measures, they may be calculated differently by other companies and may not reflect the full economic effect of the loss in value of certain assets.
We compensate for these limitations on the use of non-GAAP financial measures by relying primarily on our GAAP results and using non-GAAP financial measures only as a supplement. We also provide a reconciliation of each non-GAAP financial measure to its most directly comparable GAAP measure. We believe that providing net revenue on a constant currency basis, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP earnings from operations, non-GAAP operating profit margin, non-GAAP net earnings and non-GAAP diluted net earnings per share in addition to the related GAAP measures provides greater transparency to the information used in our financial and operational decision making and allows the reader of our Consolidated Financial Statements to see our financial results “through the eyes” of management.
56

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
In the normal course of business, we are exposed to foreign currency exchange rate and interest rate risks that could impact our financial position and results of operations. Our risk management strategy with respect to these market risks may include the use of derivative financial instruments. We use derivative contracts only to manage existing underlying exposures. Accordingly, we do not use derivative contracts for speculative purposes. Our risks, risk management strategy and a sensitivity analysis estimating the effects of changes in fair value for each of these exposures is outlined below.
Actual gains and losses in the future may differ materially from the sensitivity analyses based on changes in the timing and amount of foreign currency exchange rate and interest rate movements and our actual exposures and derivatives in place at the time of the change, as well as the effectiveness of the derivative to hedge the related exposure.
Foreign currency exchange rate risk
We are exposed to foreign currency exchange rate risk inherent in our sales commitments, anticipated sales, anticipated purchases, and assets and liabilities denominated in currencies other than the U.S. dollar. We transact business in approximately 50 currencies worldwide, of which the most significant foreign currencies to our operations for fiscal 2021 were the euro, Japanese yen, British pound, and Chinese yuan (renminbi). For most currencies, we are a net receiver of the foreign currency and therefore benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to the foreign currency. Even where we are a net receiver of the foreign currency, a weaker U.S. dollar may adversely affect certain expense figures, if taken alone.
We use a combination of forward contracts and, from time to time, options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted net revenue and, to a lesser extent, cost of sales, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. In addition, when debt is denominated in a foreign currency, we may use swaps to exchange the foreign currency principal and interest obligations for U.S. dollar-denominated amounts to manage the exposure to changes in foreign currency exchange rates. We also use other derivatives not designated as hedging instruments, consisting primarily of forward contracts, to hedge foreign currency balance sheet exposures. Alternatively, we may choose not to hedge the risk associated with our foreign currency exposures, primarily if such exposure acts as a natural hedge for offsetting amounts denominated in the same currency or if the currency is too difficult or too expensive to hedge.
We have performed sensitivity analyses as of October 31, 2021 and 2020, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant. The analyses cover all of our foreign currency derivative contracts offset by underlying exposures. The foreign currency exchange rates we used in performing the sensitivity analysis were based on market rates in effect at October 31, 2021 and 2020. The sensitivity analyses indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a foreign exchange fair value loss of $35 million and $29 million at October 31, 2021 and 2020, respectively.
Interest rate risk
We also are exposed to interest rate risk related to debt we have issued, our investment portfolio and financing receivables. We issue long-term debt in either U.S. dollars or foreign currencies based on market conditions at the time of financing.
We often use interest rate and/or currency swaps to modify the market risk exposures in connection with the debt to achieve U.S. dollar based floating or fixed interest expense. The swap transactions generally involve the exchange of fixed for floating interest payments. However, in circumstances where we believe additional fixed-rate debt would be beneficial, we may choose to terminate a previously executed swap, or swap certain floating interest payments to fixed.
In order to hedge the fair value of certain fixed-rate investments, we may enter into interest rate swaps that convert fixed interest returns into variable interest returns. We may use cash flow hedges to hedge the variability of interest income received on certain variable-rate investments, by entering into interest rate swaps that convert variable rate interest returns into fixed-rate interest returns.
We have performed sensitivity analyses as of October 31, 2021 and 2020, using a modeling technique that measures the change in the fair values arising from a hypothetical 10% adverse movement in the levels of interest rates across the entire yield curve, with all other variables held constant. The analyses cover our debt, investments, financing receivables, and interest rate swaps. The analyses use actual or approximate maturities for the debt, investments, financing receivables, and interest rate swaps. The discount rates used were based on the market interest rates in effect at October 31, 2021 and 2020. The sensitivity analyses indicated that a hypothetical 10% adverse movement in interest rates would result in a loss in the fair values of our
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Table of Contents
debt, investments and financing receivables, net of interest rate swaps, of $58 million and $47 million at October 31, 2021 and 2020, respectively.
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Table of Contents
ITEM 8. Financial Statements and Supplementary Data.
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Hewlett Packard Enterprise Company

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Hewlett Packard Enterprise Company and subsidiaries (the Company) as of October 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended October 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 10, 2021, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
60

Valuation of goodwill
Description of the matter
At October 31, 2021, the Company’s goodwill was $18.3 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 test was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting units, particularly for an individual reporting unit with a fair value 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.
How we addressed the matter in our audit
We 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 the Company’s annual impairment test.
Estimation of variable consideration
Description of the matter
As 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, 2021. 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.
How we addressed
the matter in our audit

We 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, 2021, 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.


/s/ Ernst & Young LLP

We have served as the Company's auditor since 2014.
San Jose, California
December 10, 2021

61

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Hewlett Packard Enterprise Company

Opinion on Internal Control over Financial Reporting
We have audited Hewlett Packard Enterprise Company and subsidiaries’ internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hewlett Packard Enterprise Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 31, 2021, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Zerto, Ltd., which is included in the 2021 consolidated financial statements of the Company and constituted less than 1% of total assets as of October 31, 2021 and less than 1% and 1% of net revenues and net earnings, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Zerto, Ltd.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended October 31, 2021, and the related notes and our report dated December 10, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP

San Jose, California
December 10, 2021
62

Management's Report on Internal Control Over Financial Reporting
Hewlett Packard Enterprise's management is responsible for establishing and maintaining adequate internal control over financial reporting for Hewlett Packard Enterprise. Hewlett Packard Enterprise's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Hewlett Packard Enterprise's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Hewlett Packard Enterprise; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Hewlett Packard Enterprise are being made only in accordance with authorizations of management and directors of Hewlett Packard Enterprise; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Hewlett Packard Enterprise's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Hewlett Packard Enterprise's management assessed the effectiveness of Hewlett Packard Enterprise's internal control over financial reporting as of October 31, 2021, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Management's evaluation of internal control over financial reporting excluded the internal control activities of Zerto Ltd., which is included in the 2021 consolidated financial statements of Hewlett Packard Enterprise and constituted less than 1% of total assets as of October 31, 2021 and less than 1% and 1% of net revenue and net earnings, respectively, for the year then ended. Based on the assessment by Hewlett Packard Enterprise's management, we determined that Hewlett Packard Enterprise's internal control over financial reporting was effective as of October 31, 2021. The effectiveness of Hewlett Packard Enterprise's internal control over financial reporting as of October 31, 2021 has been audited by Ernst & Young LLP, Hewlett Packard Enterprise's independent registered public accounting firm, as stated in their report on the preceding pages.
/s/ ANTONIO F. NERI /s/ TAREK A. ROBBIATI
Antonio F. Neri
President and Chief Executive Officer
 
Tarek A. Robbiati
Executive Vice President and Chief Financial Officer
December 10, 2021 December 10, 2021

63

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions, except per share amounts
Net revenue:      
Products $ 17,011  $ 16,264  $ 18,170 
Services 10,279  10,249  10,507 
Financing income 494  469  458 
Total net revenue 27,784  26,982  29,135 
Costs and expenses:      
Cost of products 11,892  11,698  12,533 
Cost of services 6,304  6,544  6,812 
Financing interest 212  271  297 
Research and development 1,979  1,874  1,842 
Selling, general and administrative 4,929  4,624  4,907 
Amortization of intangible assets 354  379  267 
Impairment of goodwill —  865  — 
Transformation costs 930  950  453 
Disaster charges (recoveries) 16  26  (7)
Acquisition, disposition and other related charges 36  80  757 
Total costs and expenses 26,652  27,311  27,861 
Earnings (loss) from operations 1,132  (329) 1,274 
Interest and other, net (211) (215) (177)
Tax indemnification and related adjustments 65  (101) 377 
Non-service net periodic benefit credit 70  136  59 
Litigation judgment 2,351  —  — 
Earnings from equity interests 180  67  20 
Earnings (loss) before (provision) benefit for taxes 3,587  (442) 1,553 
(Provision) benefit for taxes (160) 120  (504)
Net earnings (loss) $ 3,427  $ (322) $ 1,049 
Net earnings (loss) per share:      
 Basic $ 2.62  $ (0.25) $ 0.78 
Diluted $ 2.58  $ (0.25) $ 0.77 
Weighted-average shares used to compute net earnings (loss) per share:      
Basic 1,309  1,294  1,353 
Diluted 1,330  1,294  1,366 


The accompanying notes are an integral part of these Consolidated Financial Statements.
64

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Net earnings (loss) $ 3,427  $ (322) $ 1,049 
Other comprehensive income (loss) before taxes:      
Change in net unrealized gains (losses) on available-for-sale securities:      
Net unrealized gains (losses) arising during the period (3) (1)
(Gains) losses reclassified into earnings —  (4) (3)
(3) (5)
Change in net unrealized gains (losses) on cash flow hedges:      
Net unrealized gains (losses) arising during the period (50) (40) 308 
Net (gains) losses reclassified into earnings 156  (21) (371)
106  (61) (63)
Change in unrealized components of defined benefit plans:      
Net unrealized gains (losses) arising during the period 763  (358) (701)
Amortization of net actuarial loss and prior service benefit 281  249  216 
Curtailments, settlements and other 10  15 
1,048  (99) (470)
Change in cumulative translation adjustment 16  (12) (18)
Other comprehensive income (loss) before taxes 1,167  (177) (545)
(Provision) benefit for taxes (143) 36 
Other comprehensive income (loss), net of taxes 1,024  (169) (509)
Comprehensive income (loss) $ 4,451  $ (491) $ 540 

The accompanying notes are an integral part of these Consolidated Financial Statements.
65

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
  As of October 31,
  2021 2020
  In millions, except par value
ASSETS    
Current assets:    
Cash and cash equivalents $ 3,996  $ 4,233 
Accounts receivable, net of allowances 3,979  3,386 
Financing receivables, net of allowances 3,932  3,794 
Inventory 4,511  2,674 
Other current assets 2,460  2,469 
Total current assets 18,878  16,556 
Property, plant and equipment 5,613  5,625 
Long-term financing receivables and other assets 11,670  10,544 
Investments in equity interests 2,210  2,170 
Goodwill 18,306  18,017 
Intangible assets 1,022  1,103 
Total assets $ 57,699  $ 54,015 
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Notes payable and short-term borrowings $ 3,552  $ 3,755 
Accounts payable 7,004  5,383 
Employee compensation and benefits 1,778  1,391 
Taxes on earnings 169  148 
Deferred revenue 3,408  3,430 
Accrued restructuring 290  366 
Other accrued liabilities 4,486  4,265 
Total current liabilities 20,687  18,738 
Long-term debt 9,896  12,186 
Other non-current liabilities 7,099  6,995 
Commitments and contingencies
Stockholders' equity    
HPE stockholders' equity:
Common stock, $0.01 par value (9,600 shares authorized; 1,295 and 1,287 issued and outstanding at October 31, 2021 and October 31, 2020, respectively)
13  13 
Additional paid-in capital 28,470  28,350 
Accumulated deficit (5,597) (8,375)
Accumulated other comprehensive loss (2,915) (3,939)
Total HPE stockholders' equity 19,971  16,049 
Non-controlling interests 46  47 
Total stockholders' equity 20,017  16,096 
Total liabilities and stockholders' equity $ 57,699  $ 54,015 

The accompanying notes are an integral part of these Consolidated Financial Statements.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Cash flows from operating activities:      
Net earnings (loss) $ 3,427  $ (322) $ 1,049 
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:    
Depreciation and amortization 2,597  2,625  2,535 
Impairment of goodwill —  865  — 
Stock-based compensation expense 382  274  268 
Provision for inventory and doubtful accounts 176  308  240 
Restructuring charges 620  769  221 
Deferred taxes on earnings (167) (294) 1,079 
Earnings from equity interests (180) (67) (20)
Dividends received from equity investees 184  165  156 
Other, net 202  163  204 
Changes in operating assets and liabilities, net of acquisitions:    
Accounts receivable (591) (461) 374 
Financing receivables (165) (487) (410)
Inventory (1,959) (527) 46 
Accounts payable 1,608  (225) (525)
Taxes on earnings (73) (122) (1,093)
Restructuring (527) (478) (331)
Other assets and liabilities 337  54  204 
Net cash provided by operating activities 5,871  2,240  3,997 
Cash flows from investing activities:      
Investment in property, plant and equipment (2,502) (2,383) (2,856)
Proceeds from sale of property, plant and equipment 354  703  597 
Purchases of available-for-sale securities and other investments (60) (101) (39)
Maturities and sales of available-for-sale securities and other investments 15  48  26 
Financial collateral posted (903) (644) (403)
Financial collateral received 805  665  744 
Payments made in connection with business acquisitions, net of cash acquired (505) (866) (1,526)
Net cash used in investing activities (2,796) (2,578) (3,457)
Cash flows from financing activities:      
Short-term borrowings with original maturities less than 90 days, net (36) (9) (53)
Proceeds from debt, net of issuance costs 3,022  7,007  3,517 
Payment of debt (5,465) (5,099) (2,203)
Net (payments) proceeds related to stock-based award activities (29) (36) 48 
Repurchase of common stock (213) (355) (2,249)
Cash dividends paid to non-controlling interests (18) (7) — 
Cash dividends paid to shareholders (625) (618) (608)
Net cash (used in) provided by financing activities (3,364) 883  (1,548)
(Decrease) increase in cash, cash equivalents and restricted cash (289) 545  (1,008)
Cash, cash equivalents and restricted cash at beginning of period 4,621  4,076  5,084 
Cash, cash equivalents and restricted cash at end of period $ 4,332  $ 4,621  $ 4,076 
Supplemental cash flow disclosures:      
Income taxes paid, net of refunds $ 398  $ 297  $ 518 
Interest expense paid $ 486  $ 574  $ 593 

The accompanying notes are an integral part of these Consolidated Financial Statements.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Common Stock
Number of Shares Par Value Additional Paid-in Capital  (Accumulated Deficit) Retained Earnings Accumulated
Other
Comprehensive
Loss
Equity
Attributable
to the
Company
Non-
controlling
Interests
Total
Equity
In millions, except number of shares in thousands
Balance at October 31, 2018 1,423,303  $ 14  $ 30,342  $ (5,899) $ (3,218) $ 21,239  $ 35  $ 21,274 
Net earnings 1,049  1,049  16  1,065 
Other comprehensive loss (509) (509) —  (509)
Comprehensive income 540  16  556 
Stock-based compensation expense 270  270 270
Tax withholding related to vesting of employee stock plans (61) (61) (61)
Issuance of common stock in connection with employee stock plans and other 19,093  113  113 113
Repurchases of common stock (148,027) (1) (2,220) (2,221) (2,221)
Cash dividends declared ($0.4575 per common share)
(601) (601) (601)
Effects of adoption of accounting standard updates (1)
(2,181) (2,181) (2,181)
Balance at October 31, 2019 1,294,369  $ 13  $ 28,444  $ (7,632) $ (3,727) $ 17,098  $ 51  $ 17,149 
Net earnings (loss) (322) (322) 11 (311)
Other comprehensive loss (169) (169) —  (169)
Comprehensive income (loss) (491) 11  (480)
Stock-based compensation expense 278  278  278 
Tax withholding related to vesting of employee stock plans (89) (89) (89)
Issuance of common stock in connection with employee stock plans and other 17,397  63  63  64 
Repurchases of common stock (24,756) (346) (346) (346)
Cash dividends declared ($0.36 per common share)
(464) (464) (16) (480)
Effects of adoption of accounting standard updates (2)
43  (43) —  — 
Balance at October 31, 2020 1,287,010  $ 13  $ 28,350  $ (8,375) $ (3,939) $ 16,049  $ 47  $ 16,096 
Net earnings 3,427  3,427  3,436 
Other comprehensive income 1,024  1,024  —  1,024 
Comprehensive income 4,451  4,460 
Stock-based compensation expense 382  382  382 
Tax withholding related to vesting of employee stock plans (86) (86) (86)
Issuance of common stock in connection with employee stock plans and other 23,135  49  1 50  50 
Repurchases of common stock (15,511) (225) (225) (225)
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Cash dividends declared ($0.48 per common share)
(625) (625) (10) (635)
Effects of adoption of accounting standard updates (3)
(25) (25) (25)
Balance at October 31, 2021 1,294,634 $ 13  $ 28,470  $ (5,597) $ (2,915) $ 19,971  $ 46  $ 20,017 
(1) For fiscal 2019, includes $2.3 billion related to an addition to accumulated deficit as a result of the adoption of an accounting standard update for Income Taxes and $124 million related to a reduction to accumulated deficit as a result of the adoption of the new revenue accounting standard.
(2) For fiscal 2020, $43 million represents the impact of the adoption of an accounting standard update that allows for the reclassification of stranded tax effects from accumulated other comprehensive loss to accumulated deficit.
(3) For fiscal 2021, $25 million represents the impact of the adoption of the accounting standard on the measurement of credit losses on financing receivables.
    
The accompanying notes are an integral part of these Consolidated Financial Statements.

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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Note 1: Overview and Summary of Significant Accounting Policies
Background
Hewlett Packard Enterprise Company ("Hewlett Packard Enterprise", "HPE", or the "Company") is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. Hewlett Packard Enterprise enables 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. Hewlett Packard Enterprise's customers range from small- and medium-sized businesses ("SMBs") to large global enterprises and governmental entities.
Acquisition
In August 2021, the Company completed the acquisition of Zerto Ltd. ("Zerto"), an industry leader in cloud data management and protection for a fair value consideration of $416 million. Zerto's results of operations were included within the Storage segment from the date of acquisition. This acquisition expands HPE GreenLake and further enables the shift of the Storage segment toward more cloud-native and software-defined data services solutions. For further discussion on this acquisition, refer to Note 10, "Acquisitions".
Litigation Judgment
In October 2021, the Company received $2.35 billion which represents Oracle Corporation’s satisfaction of the judgment in the Itanium litigation. The gain was recognized as other income and presented as Litigation judgment in the Consolidated Statements of Earnings. For further discussion on this litigation judgment, refer to Note 17, “Litigation and Contingencies".
Basis of Presentation and Principles of Consolidation
The Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles.
The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany transactions and accounts within the consolidated businesses of the Company have been eliminated.
The Company consolidates a Variable Interest Entity ("VIE") where it has been determined that the Company is the primary beneficiary of the entity's operation. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its variable interest holders. The Company also evaluates its economic interests in the VIE.
The Company accounts for investments in companies over which it has the ability to exercise significant influence but does not hold a controlling interest under the equity method of accounting, and the Company records its proportionate share of income or losses in Earnings (loss) from equity interests in the Consolidated Statements of Earnings.
Non-controlling interests are presented as a separate component within Total stockholders' equity in the Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Consolidated Statements of Earnings and are not presented separately, as they were not material for any periods presented.
Segment Realignment and Reclassifications
In October 2021, we renamed the segment previously known as High Performance Computing and Mission Critical Solutions ("HPC & MCS") to High Performance Computing and Artificial Intelligence ("HPC & AI").
Effective at the beginning of the first quarter of fiscal 2021, HPE implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes are: (i) the transfer of the lifecycle event services business, previously reported within the Advisory and Professional Services ("A & PS") reportable segment to the Compute, Storage and HPC & AI reportable segments; (ii) the transfer of certain software and related services businesses, previously reported within the Compute, Storage and A & PS reportable segments to the Corporate Investments and Other reportable segment, to form a new Software operating segment; and (iii) the transfer of the remaining A & PS operating
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
segment, previously reported as a separate reportable segment, to the Corporate Investments and Other reportable segment. As a result of these changes, the Corporate Investments and Other Segment now includes the A & PS operating segment, the Communications and Media Solutions operating segment, the Software operating segment, and Hewlett Packard Enterprise Labs which is responsible for research and development.
Additionally, effective at the beginning of the first quarter of fiscal 2021, the Company excluded stock-based compensation expense from its segment earnings from operations.
The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the realignment of net revenue, operating profit and total assets for each of the segments as described above. These changes had no impact on Hewlett Packard Enterprise’s previously reported consolidated net revenue, net earnings, net earnings per share ("EPS") or total assets. For further discussion on the Company's segments, refer to Note 2, "Segment Information".
Use of Estimates
The preparation of financial statements requires management to make estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are assessed each period and updated to reflect current information, including those related to revenue recognition, stock-based compensation, net periodic benefit costs, restructuring accruals, provision for taxes, valuation allowance for deferred taxes, provision for expected credit losses, inventory reserves, and impairment assessments of goodwill, intangible assets and other long-lived assets. The Company believes that these estimates, judgments and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company's control. Should any of these estimates change, it could adversely affect the Company's results of operations. Actual results could differ materially from these estimates under different assumptions or conditions.
Foreign Currency Translation
The Company predominately uses the U.S. dollar as its functional currency. Assets and liabilities denominated in non-U.S. currencies are remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. Net revenue, costs and expenses denominated in non-U.S. currencies are recorded in U.S. dollars at the average rates of exchange prevailing during the period. The Company includes gains or losses from foreign currency remeasurement in Interest and other, net in the Consolidated Statements of Earnings and gains and losses from cash flow hedges in Net revenue as the hedged revenue is recognized. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and the Company records the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and includes them as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets. The effect of foreign currency exchange rates on cash and cash equivalents was not material for any of the fiscal years presented.
Revenue Recognition
The Company accounts for a contract with a customer when both parties have provided written approval and are committed to perform, each party's rights including payment terms are identified, the contract has commercial substance, and collection of consideration is probable.
The Company enters into contracts with customers that may include combinations of products and services, resulting in arrangements containing multiple performance obligations for hardware and software products and/or various services. The Company determines whether each product or service is distinct in order to identify the performance obligations in the contract and allocate the contract transaction price among the distinct performance obligations. Arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether the commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. The Company classifies its hardware, perpetual software licenses, and software-as-a-service ("SaaS") as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where the Company delivers hardware or software, it is typically the principal and records revenue and costs of goods sold on a gross basis.
The majority of the Company's revenue is derived from sales of product and the associated support and maintenance which is recognized when, or as, control of promised products or services is transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled, in exchange for those products or services. Variable
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
consideration offered in contracts with customers, partners and distributors may include rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs. Variable consideration is estimated at contract inception and updated at the end of each reporting period as additional information becomes available and recognized only to the extent that it is probable that a significant reversal of revenue will not occur.
Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for maintenance and services as the customer receives the benefit over the contract term. The Company's hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On its product sales, the Company records consideration from shipping and handling on a gross basis within net product sales. Revenue is recorded net of any associated sales taxes.
The Company allocates the transaction price for the contract among the performance obligations on a relative standalone selling price basis. The standalone selling price ("SSP") is the price at which an entity would sell a promised product or service separately to a customer. The Company establishes SSP for most of its products and services based on the observable price of the products or services when sold separately in similar circumstances to similar customers. When the SSP is not directly observable, the Company estimates SSP based on management judgment by considering available data such as internal margin objectives, pricing strategies, market/competitive conditions, historical profitability data, as well as other observable inputs. The Company establishes SSP ranges for its products and services and reassesses them periodically.
Judgment is applied in determining the transaction price as the Company may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration may include various rebates, volume-based discounts, cooperative marketing, price protection, and other incentive programs that are offered to customers, partners and distributors. When determining the amount of revenue to recognize, the Company estimates the expected usage of these programs, applying the expected value or most likely estimate and updates the estimate at each reporting period as actual utilization becomes available. The Company also considers the customers' right of return in determining the transaction price, where applicable.
Contract Balances
Accounts receivable and contract assets
A receivable is a right to consideration in exchange for products or services the Company has transferred to a customer that is unconditional. A contract asset is a right to consideration in exchange for products or services transferred to a customer that is conditional on something other than the passage of time. A receivable is recorded when the right to consideration becomes unconditional.
The Company's contract assets include unbilled receivables which are recorded when the Company recognizes revenue in advance of billings. Unbilled receivables generally relate to services contracts where a service has been performed and control has transferred, but invoicing to the customer is subject to future milestone billings or other contractual payment schedules. The Company classifies unbilled receivables as Accounts receivable.
Contract liabilities
A contract liability is an obligation to transfer products or services to a customer for which the Company has received consideration, or the amount is due, from the customer. The Company's contract liabilities primarily consist of deferred revenue. Deferred revenue is recorded when amounts invoiced to customers are in excess of revenue that can be recognized because performance obligations have not been satisfied and control of the promised products or services has not transferred to the customer. Deferred revenue largely represents amounts invoiced in advance for product (hardware/software) support contracts, consulting projects and product sales where revenue cannot be recognized yet.
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Notes to Consolidated Financial Statements (Continued)
Costs to obtain a contract with a customer
The Company capitalizes the incremental costs of obtaining a contract with a customer, primarily sales commissions, if the Company expects to recover those costs. The Company has elected, as a practical expedient, to expense the costs of obtaining a contract as incurred for contracts with terms of one year or less. The typical amortization periods used range from two to five years. The Company periodically reviews the capitalized sales commission costs for possible impairment losses. The amortization of capitalized costs to obtain a contract are included in Selling, general and administrative expense. Refer to Note 7, "Balance Sheet Details" for additional information.
Shipping and Handling
The Company includes costs related to shipping and handling in Cost of products.
Stock-Based Compensation
Stock-based compensation expense is based on the measurement date fair value of the award and is recognized only for those awards expected to meet the service and performance vesting conditions. Stock-based compensation expense for stock options and restricted stock units with only a service condition is recognized on a straight-line basis over the requisite service period of the award. For stock options and restricted stock units with both a service condition and a performance or market condition, the expense is recognized on a graded vesting basis over the requisite service period of the award. Stock-based compensation expense is determined at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions. The forfeiture rate is estimated based on historical experience.
Retirement and Post-Retirement Plans
The Company has various defined benefit, other contributory and noncontributory, retirement and post-retirement plans. The costs and obligations for these plans depend on various assumptions. Major assumptions relate primarily to discount rates, mortality rates, expected increases in compensation levels and the expected long-term return on plan assets. These assumptions vary by plan, and the weighted-average rates used are set forth in Note 4, "Retirement and Post-Retirement Benefit Plans".
The discount rate assumption is based on current investment yields of high-quality fixed-income securities with maturities similar to the expected benefits payment period. Mortality rates help predict the expected life of plan participants and are based on a historical demographic study of the plan. The expected increase in the compensation levels assumption reflects long-term actual experience and future expectations. The expected long-term return on plan assets is determined based on asset allocations, historical portfolio results, historical asset correlations and management's expected returns for each asset class. In any fiscal year, significant differences may arise between the actual return and the expected long-term return on plan assets. Historically, differences between the actual return and expected long-term return on plan assets have resulted from changes in target or actual asset allocation, short-term performance relative to expected long-term performance, and to a lesser extent, differences between target and actual investment allocations, the timing of benefit payments compared to expectations, and the use of derivatives intended to effect asset allocation changes or hedge certain investment or liability exposures.
The following table provides the impact changes in the weighted-average assumptions of discount rates, the expected increase in compensation levels and the expected long-term return on plan assets would have had on the net periodic benefit cost for fiscal 2021:
Change in basis
 points
Change in Net Periodic Benefit Cost
In millions
Assumptions:    
Discount rate (25) $ 23 
Expected increase in compensation levels 25  $
Expected long-term return on plan assets (25) $ 35 
The Company generally amortizes unrecognized actuarial gains and losses on a straight-line basis over the average remaining estimated service life or, in the case of closed plans, life expectancy of participants. In limited cases, actuarial gains and losses are amortized using the corridor approach.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Advertising
Costs to produce advertising are expensed as incurred during production. Costs to communicate advertising are expensed when the advertising is first run. Advertising expense totaled approximately $172 million in fiscal 2021, $143 million in fiscal 2020, and $188 million in fiscal 2019.
Restructuring
The Company's transformation programs include charges to approved restructuring plans. Restructuring charges include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. These restructuring actions require management to estimate the timing and amount of severance and other employee separation costs for workforce reduction and enhanced early retirement programs, the fair value of assets made redundant or obsolete, and the value of lease and contract cancellation and other exit costs. The Company records restructuring charges based on estimated employee terminations and site closure and consolidation plans. The Company accrues for severance and other employee separation costs under these actions when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on existing plans, historical experiences and negotiated settlements. For a full description of our restructuring actions, refer to our discussions in Note 3, "Transformation Programs".
Taxes on Earnings
The Company recognizes deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse.
The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In determining the need for a valuation allowance, the Company considers future market growth, forecasted earnings, future sources of taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies. In the event the Company were to determine that it is more likely than not that the Company will be unable to realize all or part of its deferred tax assets in the future, the Company would increase the valuation allowance and recognize a corresponding charge to earnings in the period in which such a determination was made. Likewise, if the Company later determines that the deferred tax assets are more likely than not to be realized, the Company would reverse the applicable portion of the previously recognized valuation allowance. In order for the Company to realize deferred tax assets, the Company must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located.
The Company records accruals for uncertain tax positions when the Company believes that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The provision for income taxes includes the effects of adjustments for uncertain tax positions as well as any related interest and penalties. The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in (Provision) benefit for taxes in the Consolidated Statements of Earnings.
The Company is subject to the Global Intangible Low Taxed Income ("GILTI") tax in the U.S. The Company elected to treat taxes on future GILTI inclusions in U.S. taxable income as a current period expense when incurred.
Allowance for Doubtful Accounts
Accounts Receivable
The allowance for expected credit losses related to accounts receivable is comprised of a general reserve and a specific reserve. The Company may record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer's operating results or financial position. If there are additional changes in circumstances related to the specific customer, the Company further adjusts estimates of the recoverability of receivables. The Company maintains an allowance for credit losses for all other customers based on a variety of factors, including the use of third-party credit risk models that generate quantitative measures of default probabilities based on market factors, the financial condition of customers and the length of time receivables are past due. These qualitative factors are subjective and require a degree of management judgment. The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable. The Company establishes an allowance for expected credit losses related to accounts receivable, including unbilled receivables.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Financing Receivable
The allowance for expected credit losses related to financing receivables is comprised of a general reserve and a specific reserve. The Company establishes a specific reserve for financing receivables with identified exposures, such as customer defaults, bankruptcy or other events, that make it unlikely the Company will recover its investment. For individually evaluated receivables, the Company determines the expected cash flow for the receivable, which includes consideration of estimated proceeds from disposition of the collateral and calculates an estimate of the potential loss and the probability of loss. For those accounts where a loss is considered probable, the Company records a specific reserve. The Company maintains a general reserve using a credit loss model on a regional basis and bases such percentages on several factors, including consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, current economic conditions, and forward-looking information, including reasonable and supportable forecasts. The Company excludes accounts evaluated as part of the specific reserve from the general reserve analysis. The Company generally writes off a receivable or records a specific reserve when a receivable becomes 180 days past due, or sooner if the Company determines that the receivable is not collectible.
Non-Accrual and Past-Due Financing Receivables
The Company considers a financing receivable to be past due when the minimum payment is not received by the contractually specified due date. The Company generally places financing receivables on non-accrual status, which is the suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due. Subsequently, the Company may recognize revenue on non-accrual financing receivables as payments are received, which is on a cash basis, if the Company deems the recorded financing receivable to be fully collectible; however, if there is doubt regarding the ultimate collectability of the recorded financing receivable, all cash receipts are applied to the carrying amount of the financing receivable, which is the cost recovery method. In certain circumstances, such as when the Company deems a delinquency to be of an administrative nature, financing receivables may accrue interest after becoming 90 days past due. The non-accrual status of a financing receivable may not impact a customer's risk rating. After all of a customer's delinquent principal and interest balances are settled, the Company may return the related financing receivable to accrual status.
Concentrations of Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and restricted cash, investments, receivables from trade customers and contract manufacturers, financing receivables and derivatives.
The Company maintains cash, cash equivalents and restricted cash, investments, derivatives, and certain other financial instruments with various financial institutions. These financial institutions are located in many different geographic regions, and the Company's policy is designed to limit exposure from any particular institution. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. The Company utilizes derivative contracts to protect against the effects of foreign currency and interest rate exposures. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss. For more details on the collateral program, see Note 13, "Financial Instruments".
Credit risk with respect to accounts receivable from trade customers and financing receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company performs ongoing credit evaluations of the financial condition of its customers and may require collateral, such as letters of credit and bank guarantees, in certain circumstances. As of October 31, 2021 and 2020 no single customer accounted for more than 10% of the Company's receivable from trade customers and financing receivables.
The Company utilizes outsourced manufacturers around the world to manufacture company-designed products. The Company may purchase product components from suppliers and sell those components to its outsourced manufacturers thereby creating receivable balances from the outsourced manufacturers. The three largest outsourced manufacturer receivable balances collectively represented 92% and 89% of the Company's manufacturer receivables of $947 million and $687 million at October 31, 2021 and 2020, respectively. The Company includes the manufacturer receivables in Other current assets in the Consolidated Balance Sheets on a gross basis. The Company's credit risk associated with these receivables is mitigated wholly or in part by the amount the Company owes to these outsourced manufacturers, as the Company generally has the legal right to offset its payables to the outsourced manufacturers against these receivables. The Company does not reflect the sale of these components in revenue and does not recognize any profit on these component sales until the manufactured products are sold by
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Notes to Consolidated Financial Statements (Continued)
the Company, at which time any profit is recognized as a reduction to cost of sales. The Company obtains certain components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a single source supplier, the deterioration of the Company's relationship with a single source supplier, or any unilateral modification to the contractual terms under which the Company is supplied components by a single source supplier could adversely affect the Company's revenue and gross margins.
Restricted Cash
Restricted cash is included within Other current assets in the accompanying Consolidated Balance Sheets and is primarily related to cash received under the Company's collateral securities agreements for its derivative instruments and cash restricted under the fixed-term securitization program for the issuance of asset-backed debt securities.
Inventory
The Company values inventory at the lower of cost or net realizable value. Cost is computed using standard cost which approximates actual cost on a first-in, first-out basis. At each reporting period, the Company assesses the value of its inventory and writes down the cost of inventory to its net realizable value if required, for estimated excess or obsolescence. Factors influencing these adjustments include changes in future demand forecasts, market conditions, technological changes, product life-cycle and development plans, component cost trends, product pricing, physical deterioration, and quality issues. The write down for excess or obsolescence is charged to the provision of inventory, which is a component of Cost of Products and Cost of Services in the Consolidated Statement of Earnings. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Property, Plant and Equipment
The Company states property, plant and equipment at cost less accumulated depreciation. The Company capitalizes additions and improvements and expenses maintenance and repairs as incurred. Depreciation expense is recognized on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives are five to 40 years for buildings and improvements and three to 15 years for machinery and equipment. The Company depreciates leasehold improvements over the life of the lease or the asset, whichever is shorter. The Company depreciates equipment held for lease over the initial term of the lease to the equipment's estimated residual value. The estimated useful lives of assets used solely to support a customer services contract generally do not exceed the term of the customer contract. On retirement or disposition, the asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated Statements of Earnings.
The Company capitalizes certain internal and external costs incurred to acquire or create internal use software, principally related to software coding, designing system interfaces and installation and testing of the software. The Company amortizes capitalized internal use software costs using the straight-line method over the estimated useful lives of the software, generally from three to five years.
Leases
Lessee Accounting
The Company enters into various leases as a lessee for assets including office buildings, data centers, vehicles, and aviation. The Company determines if an arrangement is a lease at inception. An arrangement contains a lease when the arrangement conveys the right to control the use of an identified asset over the lease term. Upon lease commencement, the Company records a lease liability for the obligation to make lease payments and right-of-use ("ROU") asset for the right to use the underlying asset for the lease term in the Consolidated Balance Sheet. The lease liability is measured at commencement date based on the present value of lease payments not yet paid over the lease term and the Company's incremental borrowing rate. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate which approximates the rate at which the Company would borrow, on a secured basis, in the country where the lease was executed. The ROU asset is based on the lease liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. Fixed payments are included in the recognition of ROU assets and liabilities, while non-lease components, such as maintenance or utility charges are expensed as incurred. The Company has agreements with lease and non-lease components that are accounted for separately and not included in its leased assets and corresponding liabilities for the majority of the Company's lease agreements. The Company allocates consideration to the lease and non-lease components using their relative standalone values.
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Notes to Consolidated Financial Statements (Continued)
For finance leases, the ROU asset is amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the lease liability is recorded separately using the interest method. For operating leases, lease expense is generally recognized on a straight-line basis over the lease term.
Lessor Accounting
The Company's lease offerings are non-cancelable and the payment schedule primarily consists of fixed payments. Variable payments that are based on an index are included in lease receivables. The Company allocates consideration amongst lease components and non-lease components on a relative standalone selling price basis, when lease arrangements include multiple performance obligations. At the end of the lease term, the Company allows the client to either return the equipment, purchase the equipment or renew the lease based on mutually agreed upon terms.
The Company retains a residual position in equipment through lease and finance agreements which is equivalent to an estimated market value. The residual amount is established prior to lease inception, based upon estimated equipment values at end of lease using product road map trends, historical analysis, future projections and remarketing experience. The Company's residual amounts are evaluated at least annually to assess the appropriateness of our carrying values. Any anticipated declines in specific future residual values that are considered to be other-than-temporary would be recorded in current earnings. The Company is able to optimize the recovery of residual values by selling equipment in place, extending lease arrangements on a fixed term basis, entering into a monthly usage rental term beyond the initial lease term, and selling lease returned equipment in the secondary market. The contractual lease agreement also identifies return conditions that ensures the leased equipment will be in good operating condition upon return minus any normal wear and tear. During the residual review process, product changes, product updates, as well as market conditions are reviewed and adjustments if other than temporary are made to residual values in accordance with the impact of any such changes. The remarketing sales organization closely manages the sale of equipment lease returns to optimize the recovery of outstanding residual by product.
Business Combinations
The Company includes the results of operations of acquired businesses in the Company's consolidated results prospectively from the date of acquisition. The Company allocates the fair value of purchase consideration to the assets acquired including in-process research and development ("IPR&D"), liabilities assumed, and non-controlling interests in the acquired entity based on their fair values at the acquisition date. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. The excess of the fair value of purchase consideration over the fair value of the assets acquired, liabilities assumed and non-controlling interests in the acquired entity is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired company and the Company and the value of the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. Acquisition-related expenses and post-acquisition restructuring costs are recognized separately from the business combination and are expensed as incurred.
Goodwill
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performs a quantitative test for all of its reporting units as part of its annual goodwill impairment test in the fourth quarter of each fiscal year.
The Company estimates the fair value of its reporting units using a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach with the exception of the Software reporting unit which uses a weighting derived most significantly from the market approach. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows covering discrete forecast periods as well as terminal value determinations. The Company prepares cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The Company bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, the Company estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. The Company weights the fair value derived from the market approach commensurate with the level of comparability of these publicly traded companies to the reporting unit. When market comparables are not meaningful or not available, the Company estimates the fair value of a reporting unit using only the income approach.
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Notes to Consolidated Financial Statements (Continued)
If the fair value of a reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than its carrying amount, goodwill is impaired. The goodwill impairment loss is measured as the excess of the reporting unit's carrying value over its fair value (not to exceed the total goodwill allocated to that reporting unit).
Intangible Assets and Long-Lived Assets
The Company reviews intangible assets with finite lives, long-lived assets and ROU assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For lease assets such circumstances would include a decision to abandon the use of all or part of an asset, or subleases that do not fully recover the costs of the associated lease. The Company assesses the recoverability of assets based on the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the undiscounted future cash flows are less than the carrying amount, the asset is impaired. The Company measures the amount of impairment loss, if any, as the difference between the carrying amount of the asset and its fair value using an income approach or, when available and appropriate, using a market approach. The Company amortizes intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from one to ten years.
Equity Method Investments
Investments and ownership interests are accounted for under equity method accounting if the Company has the ability to exercise significant influence, but does not have a controlling financial interest. The Company records its interest in the net earnings of its equity method investees, along with adjustments for unrealized profits or losses on intra-entity transactions and amortization of basis differences, within Earnings or loss from equity interests in the Consolidated Statements of Earnings. Profits or losses related to intra-entity sales with its equity method investees are eliminated until realized by the investor or investee. Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to them. Equity method goodwill is not amortized or tested for impairment; instead the equity method investment is tested for impairment. The Company records its interest in the net earnings of its equity method investments based on the most recently available financial statements of the investees.
The carrying amount of the investment in equity interests is adjusted to reflect the Company's interest in net earnings, dividends received and other-than-temporary impairments. The Company reviews for impairment whenever factors indicate that the carrying amount of the investment might not be recoverable. In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statement of Earnings.
Equity Securities Investments
Equity securities investments with readily determinable fair values (other than those accounted for under the equity method or those that result in consolidation of the investee) are measured at fair value and any changes in fair value are recognized in Interest and other, net in the Consolidated Statement of Earnings. For equity investments without readily determinable fair values, the Company has elected to use the fair value option or apply the measurement alternative, under which investments are measured at cost, less impairment, and adjusted for qualifying observable price changes on a prospective basis. The Company reviews for impairment at each reporting period, assessing factors such as deterioration of earnings, adverse change in market/industry conditions, the ability to operate as a going concern, and other factors which indicate that the carrying amount of the investment might not be recoverable. In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statement of Earnings.
Debt Securities Investments
Debt securities are generally considered available-for-sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets. Realized gains and losses for available-for-sale securities are calculated based on the specific identification method and included in Interest and other, net in the Consolidated Statements of Earnings. The Company monitors its investment portfolio for potential impairment on a quarterly basis. When the carrying amount of an investment in debt securities exceeds its fair value and the decline in value is determined to be due to credit-related factors, the Company recognizes the impairment using an allowance for credit loss in Interest and other, net, in the Consolidated Statements of Earnings, while the impairment that is not credit related is recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets.
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Notes to Consolidated Financial Statements (Continued)
Derivatives
The Company uses derivative financial instruments, primarily forwards, swaps, and, at times, options, to manage a variety of risks, including risks related to foreign currency and interest rate exposures. The Company does not use derivative financial instruments for speculative purposes.
The Company receives fair value to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. When prices in active markets are not available for an identical asset or liability, the Company generally uses industry standard valuation models to measure the fair value of derivative positions. Such measurements involve projecting future cash flows and discounting the future amounts to present value using market based observable inputs, including interest rate curves, Company and counterparty credit risk, foreign currency exchange rates, and forward and spot prices. In the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. The determination of fair value often involves significant judgments about assumptions such as determining an appropriate discount rate that factors in both risk and liquidity premiums, identifying the similarities and differences in market transactions, weighting those differences accordingly and then making the appropriate adjustments to those market transactions to reflect the risks specific to the asset or liability being valued.
For a further discussion of fair value measurements and derivative instruments, refer to Note 12, "Fair Value" and Note 13, "Financial Instruments", respectively.
Contingencies
The Company is involved in various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. The Company records a liability for contingencies when it believes it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company does not record gain contingencies until realized. See Note 17, "Litigation and Contingencies", for a full description of the Company's contingencies.
Warranties
The Company accrues the estimated cost of product warranties at the time of recognizing revenue. The Company's standard product warranty terms generally include post-sales support and repairs or replacement of a product at no additional charge for a specified period of time. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers. The estimated warranty obligation is based on contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failure outside of the Company's baseline experience. Warranty terms generally range from one to five years for parts and labor, depending upon the product. For certain networking products, the Company offers a lifetime warranty. Over the last three fiscal years, the annual warranty expense has averaged approximately 1.3% of annual net product revenue. Refer to Note 18, "Guarantees, Indemnifications and Warranties" for additional information.
Recently Adopted Accounting Pronouncements
In October 2021, the Financial Accounting Standards Board ("FASB") amended guidance to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Generally, this new guidance will result in the Company recognizing contract assets and contract liabilities consistent with those reported by the acquiree immediately before the acquisition date. The Company adopted the guidance in the fourth quarter of fiscal 2021 retrospectively to all business combinations completed since the beginning of fiscal 2021. There was no material impact on the Company's Consolidated Financial Statements.
In January 2021, the FASB issued guidance to clarify that all derivative instruments affected by changes to the interest rates used for discounting, margining or contract price alignment can apply certain optional expedients and exceptions mentioned in its reference rate reform guidance even though they do not reference to LIBOR or a rate being discontinued. This guidance was effective upon issuance. The Company adopted the guidance in the first quarter of fiscal 2021 and there was no impact on its Consolidated Financial Statements upon adoption.
In December 2019, the FASB amended the existing accounting standards for income taxes. The amendments clarify and simplify the accounting for income taxes by eliminating certain exceptions to the general principles. The Company adopted the guidance in the first quarter of fiscal 2021 and there was no material impact on its Consolidated Financial Statements.
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Notes to Consolidated Financial Statements (Continued)
In August 2018, the FASB issued guidance on a customer's accounting for implementation costs incurred in cloud computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The Company adopted the guidance in the first quarter of fiscal 2021 and there was no material impact on its Consolidated Financial Statements.
In August 2018, the FASB issued guidance which changes the disclosure requirements for fair value measurements and defined benefit pension plans. The Company adopted the guidance in the first quarter of fiscal 2021 and there was no impact on its Consolidated Financial Statements. See Note 4, "Retirement and Post-Retirement Benefit Plans" for additional disclosures.
In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses with additional amendments in 2018, 2019 and 2020. These amendments primarily require the measurement and recognition of current expected credit losses for financial assets held at amortized cost. The amended accounting standard replaces the existing incurred loss impairment model with an expected loss model, which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. The Company adopted the Current Expected Credit Losses standard (the “CECL standard”) as of November 1, 2020 using the modified retrospective method, with the cumulative-effect adjustment recorded to the opening balance of Accumulated deficit within stockholders’ equity in the Consolidated Balance Sheets. The cumulative effect of adopting the CECL standard resulted in an increase of $28 million to the allowance for expected credit losses within financing receivables, and a corresponding increase of $25 million, net of $3 million of deferred taxes to Accumulated deficit as of November 1, 2020.
Recently Enacted Accounting Pronouncements
In November 2021, the FASB issued guidance to increase the transparency of government assistance received by an entity by requiring disclosures relating to accounting policy, nature of the assistance, and the effect of the assistance on the financial statements. The Company is required to adopt the guidance in the first quarter of fiscal 2023, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements.
In January 2020, the FASB issued guidance to clarify certain interactions between the guidance to account for equity securities, the guidance to account for investments under the equity method of accounting, and the guidance to account for derivatives and hedging. The new guidance clarifies the application of measurement alternatives and the accounting for certain forward contracts and purchased options to acquire investments. The Company is required to adopt the guidance in the first quarter of fiscal 2022, though early adoption is permitted. The Company does not expect the guidance to have a material impact on its Consolidated Financial Statements.
Note 2: Segment Information
As described in Note 1, "Overview and Summary of Significant Accounting Policies", effective at the beginning of the first quarter of fiscal 2021, the Company implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. Hewlett Packard Enterprise's operations are now organized into six segments for financial reporting purposes: Compute, HPC & AI, Storage, Intelligent Edge, Financial Services ("FS"), and Corporate Investments and Other. Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker ("CODM"), who is the Chief Executive Officer ("CEO"), uses to evaluate, view and run the Company's business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The six segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results. A summary of the types of products and services within each segment is as follows:
Compute includes both general purpose servers for multi-workload computing and workload optimized servers to offer the best performance and value for demanding applications. This portfolio of products includes the HPE Proliant rack and tower servers; HPE Synergy and HPE BladeSystems. Compute offerings also include operational and support services and HPE GreenLake for Compute as-a-service.
High Performance Computing & Artificial Intelligence offers standard and custom hardware and software solutions designed to support specific use cases. The HPC hardware solutions are segmented into several categories, High Performance Computing (“HPC”), Data Solutions, and Edge Compute. The HPC portfolio of products includes the HPE Apollo and Cray products that are often sold as supercomputing systems, including exascale supercomputers. The Data Solutions portfolio (formerly named Mission Critical Solutions) includes the HPE Superdome Flex, HPE Nonstop and HPE Integrity product lines.
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Notes to Consolidated Financial Statements (Continued)
Edge Compute primarily offers HPE Edgeline products. HPC & AI offerings also include operational and support services and solutions delivered as-a-service through HPE GreenLake.
Storage provides workload optimized storage product and service offerings which include an intelligent hyperconverged infrastructure ("HCI") with HPE Nimble Storage dHCI and HPE SimpliVity. The portfolio also includes primary storage with HPE Primera, HPE Nimble Storage, HPE Alletra and HPE 3PAR Storage for mission-critical and general-purpose workloads, HPE Recovery Manager Central, HPE StoreOnce, HPE Cloud Volumes Backup and Big Data solutions running on 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, software subscription services, and solutions delivered as-a-service through HPE GreenLake.
Intelligent Edge offers wired and wireless local area network ("LAN"), campus and data center switching, software-defined wide-area-network (from the Silver Peak acquisition), network security, and associated services to enable secure connectivity for businesses of any size. The HPE Aruba product portfolio includes products such as Wi-Fi access points, switches, routers, and sensors. The HPE Aruba software and services portfolio includes cloud-based management, network management, network access control, analytics and assurance, location services software and professional and support services, as well as as-a-service and consumption models through HPE GreenLake for the Intelligent Edge portfolio of products. Intelligence Edge also offers an Edge Service Platform ("Aruba ESP") to help customers meet their connectivity, security, and financial requirements across campus, branch, data center, and remote worker environments, covering all aspects of wired, wireless LAN, and wide area networking.
Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, 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.
Corporate Investments and Other includes the A & PS business which primarily offers consultative-led services, HPE and partner technology expertise and advice, implementation services as well as complex solution engagement capabilities; the Communications and Media Solutions business ("CMS") which primarily offers software and related services to the telecommunications industry; the HPE Software business which offers HPE Ezmeral Container Platform and HPE Ezmeral Data Fabric; and Hewlett Packard Labs which is responsible for research and development.
Segment Policy
Hewlett Packard Enterprise derives the results of its business segments directly from its internal management reporting system. The accounting policies that Hewlett Packard Enterprise uses to derive segment results are substantially the same as those the consolidated company uses. The CODM measures the performance of each segment based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to allocate resources to each of the segments.
Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm's-length basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as operating leases by FS to our customers. Hewlett Packard Enterprise's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements.
Financing interest in the Consolidated Statements of Earnings reflects interest expense on borrowing and funding-related activity associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds benefited FS.
Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include certain corporate costs and eliminations, stock-based compensation expense, amortization of initial direct costs, amortization of intangible assets, impairment of goodwill, transformation costs, disaster charges and acquisition, disposition and other related charges.
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Notes to Consolidated Financial Statements (Continued)
Segment Operating Results
  Compute HPC & AI Storage Intelligent Edge Financial Services Corporate Investments and Other Total
  In millions
2021        
Net revenue $ 12,041  $ 3,041  $ 4,681  $ 3,277  $ 3,388  $ 1,356  $ 27,784 
Intersegment net revenue 251  147  82  10  13  —  503 
Total segment net revenue $ 12,292  $ 3,188  $ 4,763  $ 3,287  $ 3,401  $ 1,356  $ 28,287 
Segment earnings (loss) from operations $ 1,326  $ 234  $ 778  $ 500  $ 390  $ (95) $ 3,133 
2020        
Net revenue $ 11,905  $ 3,014  $ 4,592  $ 2,838  $ 3,340  $ 1,293  $ 26,982 
Intersegment net revenue 380  91  93  17  12  598 
Total segment net revenue $ 12,285  $ 3,105  $ 4,685  $ 2,855  $ 3,352  $ 1,298  $ 27,580 
Segment earnings (loss) from operations $ 1,007  $ 285  $ 813  $ 337  $ 284  $ (206) $ 2,520 
2019        
Net revenue $ 13,332  $ 2,861  $ 5,183  $ 2,901  $ 3,573  $ 1,285  $ 29,135 
Intersegment net revenue 398  122  72  12  615 
Total segment net revenue $ 13,730  $ 2,983  $ 5,255  $ 2,913  $ 3,581  $ 1,288  $ 29,750 
Segment earnings (loss) from operations $ 1,719  $ 365  $ 1,009  $ 216  $ 310  $ (314) $ 3,305 
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Notes to Consolidated Financial Statements (Continued)
The reconciliation of segment operating results to Consolidated Statement of Earnings results was as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Net revenue:      
Total segments $ 28,287  $ 27,580  $ 29,750 
Elimination of intersegment net revenue (503) (598) (615)
Total consolidated net revenue $ 27,784  $ 26,982  $ 29,135 
Earnings before taxes:      
Total segment earnings from operations $ 3,133  $ 2,520  $ 3,305 
Unallocated corporate costs and eliminations (285) (238) (286)
Stock-based compensation expense (372) (274) (268)
Amortization of initial direct costs (8) (10) — 
Amortization of intangible assets (354) (379) (267)
Impairment of goodwill —  (865) — 
Transformation costs (930) (950) (453)
Disaster (charge) recovery (16) (26)
Acquisition, disposition and other related charges (36) (107) (764)
Interest and other, net (211) (215) (177)
Tax indemnification adjustments 65  (101) 377 
Non-service net periodic benefit credit 70  136  59 
Litigation judgment 2,351  —  — 
Earnings from equity interests 180  67  20 
Total earnings (loss) before (provision) benefit for taxes $ 3,587  $ (442) $ 1,553 
Segment Assets
Hewlett Packard Enterprise allocates assets to its business segments based on the segments primarily benefiting from the assets. Total assets by segment and the reconciliation of segment assets to total assets as per Consolidated Balance Sheets were as follows:
  As of October 31,
  2021 2020
  In millions
Compute $ 16,208  $ 14,962 
HPC & AI 6,726  6,245 
Storage 7,097  6,438 
Intelligent Edge 4,435  4,352 
Financial Services 14,951  14,765 
Corporate Investments and Other 1,209  1,124 
Corporate and unallocated assets 7,073  6,129 
Total assets $ 57,699  $ 54,015 
Major Customers
No single customer represented 10% or more of the Company's total net revenue in any fiscal year presented.

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Notes to Consolidated Financial Statements (Continued)
Geographic Information
Net revenue by country is based upon the sales location that predominately represents the customer location. For each of the fiscal years of 2021, 2020 and 2019, other than the U.S., no country represented more than 10% of the Company's net revenue.
Net revenue by country was as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Americas
U.S. $ 8,850  $ 9,162  $ 9,582 
Americas excluding U.S. 1,825  1,700  1,922 
Total Americas 10,675  10,862  11,504 
Europe, Middle East and Africa 10,329  9,745  10,828 
Asia Pacific and Japan 6,780  6,375  6,803 
Total consolidated net revenue $ 27,784  $ 26,982  $ 29,135 
Property, plant and equipment by country in which the Company's operates was as follows:
  As of October 31,
  2021 2020
  In millions
U.S.  $ 2,811  $ 2,762 
Other countries 2,802  2,863 
Total property, plant and equipment $ 5,613  $ 5,625 
Note 3: Transformation Programs
Transformation programs are comprised of the cost optimization and prioritization plan and the HPE Next initiative. During the third quarter of fiscal 2020, the Company launched the cost optimization and prioritization plan which focuses on realigning the workforce to areas of growth, a new hybrid workforce model called Edge-to-Office, real estate strategies and simplifying and evolving our product portfolio strategy. The implementation period of the cost optimization and prioritization plan is through fiscal 2023. During this time the Company expects to incur transformation costs predominantly related to labor restructuring, non-labor restructuring, IT investments, design and execution charges and real estate initiatives.
During the third quarter of fiscal 2017, the Company launched an initiative called HPE Next to put in place a purpose-built company designed to compete and win in the markets where it participates. Through this program the Company is simplifying the operating model, streamlining our offerings, business processes and business systems to improve our execution. The implementation period of the HPE Next initiative is extended through fiscal 2023. During the remaining implementation period, the Company expects 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.
Cost Optimization and Prioritization Plan
During fiscal 2021 and 2020, the Company incurred $695 million and $384 million, respectively, of charges related to the cost optimization and prioritization plan of which $690 million and $384 million were recorded within Transformation costs, and $5 million in fiscal 2021 was recorded with in Non-service net periodic benefit credit in the Consolidated Statements of Earnings, the components of which were as follows:
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Notes to Consolidated Financial Statements (Continued)
For the fiscal years ended October 31,
2021 2020
In millions
Program management $ 83  $ 55 
IT costs 14  — 
Restructuring charges 598  329 
Total $ 695  $ 384 
HPE Next
During fiscal 2021, 2020 and 2019, the Company incurred $240 million, $569 million and $462 million, respectively, in net charges associated with HPE Next. For fiscal 2021, 2020 and 2019, $240 million, $566 million and $453 million were recorded within Transformation costs, and $3 million and $9 million were recorded within Non-service net periodic benefit credit in the Consolidated Statements of Earnings for fiscal 2020 and 2019, respectively.
The components of costs relating to HPE Next were as follows:
For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Program management $ 14  $ 35  $ 29 
IT costs 174  100  134 
Restructuring charges 22  440  219 
Gains on real estate sales (3) (45) (7)
Impairment on real estate assets 10  47 
Other 29  29  40 
Total $ 240  $ 569  $ 462 
Restructuring Plan
On May 19, 2020, the Company's Board of Directors approved a restructuring plan in connection with the cost optimization and prioritization plan. As of October 31, 2021, the Company estimates that it will incur aggregate charges of approximately $1.3 billion through fiscal 2023 in connection with the cost optimization and prioritization plan which relates to labor restructuring and non-labor restructuring, primarily relating to real estate site exits. The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee works councils and other employee representatives, as appropriate.
On October 16, 2017, the Company's Board of Directors approved a restructuring plan in connection with the HPE Next (the "HPE Next Plan") and on September 20, 2018, the Company's Board of Directors approved a revision to that restructuring plan. As of October 31, 2020, the headcount exits under the HPE Next Plan were complete. The Company estimates that it will incur charges through fiscal 2023, relating to non-labor restructuring, primarily from real estate site exits.
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Notes to Consolidated Financial Statements (Continued)
Restructuring activities related to the Company's employees and infrastructure under the cost optimization and prioritization plan and HPE Next Plan, are presented in the table below:
Cost Optimization and Prioritization Plan
HPE Next Plan
  Employee
Severance
Infrastructure
and other
Employee
Severance
Infrastructure
and other
In millions In millions
Liability as of October 31, 2018 $ —  $ —  $ 291  $ 33 
Charges —  —  154  65 
Cash payments —  —  (256) (37)
Non-cash items —  —  (11) (19)
Liability as of October 31, 2019 $ —  $ —  $ 178  $ 42 
Charges 230  99  341  99 
Cash payments (18) (3) (383) (50)
Non-cash items (2) (28) (39)
Liability as of October 31, 2020 $ 210  $ 68  $ 144  $ 52 
Charges 277  321  —  22 
Cash payments (255) (127) (101) (37)
Non-cash items (4) (73) (4)
Liability as of October 31, 2021 $ 228  $ 189  $ 44  $ 33 
Total costs incurred to date as of October 31, 2021 $ 507  $ 420  $ 1,261  $ 247 
Total expected costs to be incurred as of October 31, 2021 $ 700  $ 600  $ 1,261  $ 255 
The current restructuring liability related to the transformation programs, reported in Consolidated Balance Sheets as of October 31, 2021 and 2020, was $287 million and $359 million, respectively, in accrued restructuring, and $27 million and $24 million, respectively, in Other accrued liabilities. The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Consolidated Balance Sheets as of October 31, 2021 and 2020 was $180 million and $91 million, respectively.
Note 4: Retirement and Post-Retirement Benefit Plans
Defined Benefit Plans
The Company sponsors defined benefit pension plans worldwide, the most significant of which are the United Kingdom ("UK") and Germany plans. The pension plan in the UK is closed to new entrants, however, members continue to earn benefit accruals. This plan provides benefits based on final pay and years of service and generally requires contributions from members. The German pension program that is open to new hires consists of cash balance plans that provide employer credits as a percentage of pay, certain employee pay deferrals and employer matching contributions. There also are previously closed German pension programs that include cash balance and final average pay plans. These previously closed pension programs comprise the majority of the pension obligations in Germany. 
Post-Retirement Benefit Plans
The Company sponsors retiree health and welfare benefit plans, the most significant of which is in the U.S. Generally, employees hired before August 2008 are eligible for employer credits under the Hewlett Packard Enterprise Retirement Medical Savings Account Plan ("RMSA") upon attaining age 45. Employer credits to the RMSA available after September 2008 are provided in the form of matching credits on employee contributions made to a voluntary employee beneficiary association. Upon retirement, employees may use these employer credits for the reimbursement of certain eligible medical expenses.
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Notes to Consolidated Financial Statements (Continued)
Defined Contribution Plans
The Company offers various defined contribution plans for U.S. and non-U.S. employees. The Company's defined contribution expense was approximately $170 million in fiscal 2021, $160 million in fiscal 2020 and $181 million in fiscal 2019. U.S. employees are automatically enrolled in the Hewlett Packard Enterprise Company 401(k) Plan ("HPE 401(k) Plan"), when they meet eligibility requirements, unless they decline participation. The HPE 401(k) Plan's quarterly employer matching contributions are 100% of an employee's contributions, up to a maximum of 4% of eligible compensation. Due to cost containment measures put in place in response to COVID-19, the Company suspended the employer match for U.S. employees from July 1, 2020 through the end of the calendar year 2020.
Pension Benefit Expense
The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated Statements of Earnings for fiscal 2021, 2020 and 2019 are presented in the table below.
  As of October 31,
  2021 2020 2019 2021 2020 2019
  Defined Benefit Plans Post-Retirement Benefit Plans
  In millions
Service cost $ 97  $ 94  $ 85  $ $ $
Interest cost(1)
118  143  215 
Expected return on plan assets(1)
(479) (544) (511) (1) (1) (1)
Amortization and deferrals(1):
           
Actuarial loss (gain) 296  264  235  (2) (1) (4)
Prior service benefit (13) (14) (15) —  —  — 
Net periodic benefit cost 19  (57)
Settlement loss(1)
10  13  —  —  — 
Special termination benefits(1)
—  —  — 
Total net benefit cost (credit) $ 26  $ (45) $ 24  $ $ $
(1)These non-service components of net periodic benefit cost are included in Non-service net periodic benefit credit in the Consolidated Statements of Earnings.
The weighted-average assumptions used to calculate the net benefit cost (credit) in the table above for fiscal 2021, 2020 and 2019 were as follows:
  As of October 31,
  2021 2020 2019 2021 2020 2019
  Defined Benefit Plans Post-Retirement Benefit Plans
Discount rate used to determine benefit obligation 1.0  % 1.2  % 2.1  % 2.8  % 3.4  % 4.9  %
Discount rate used to determine service cost 1.3  % 1.6  % 2.3  % 2.6  % 3.0  % 4.4  %
Discount rate used to determine interest cost 0.8  % 1.0  % 1.8  % 2.3  % 3.2  % 4.7  %
Expected increase in compensation levels 2.5  % 2.5  % 2.5  % —  —  — 
Expected long-term return on plan assets 3.3  % 4.1  % 4.3  % 2.3  % 2.3  % 2.6  %
Interest crediting rate(1)
2.5  % 2.5  % 2.5  % 2.7  % 3.7  % 3.7  %
(1)The average assumed interest credited for HPE's cash balance plans and postretirement plans, as applicable.
To estimate the service and interest cost components of net periodic benefit cost for defined benefit plans that use the yield curve approach, which represent substantially all of the Company's defined benefit plans, the Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.
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Notes to Consolidated Financial Statements (Continued)
Funded Status
The funded status of the plans was as follows:
  As of October 31,
  2021 2020 2021 2020
  Defined Benefit Plans Post-Retirement Benefit Plans
  In millions
Change in fair value of plan assets:        
Fair value—beginning of year $ 14,127  $ 13,434  $ 57  $ 54 
Addition/deletion of plans(1)
60  —  — 
Actual return on plan assets 1,256  557  — 
Employer contributions 167  167 
Participant contributions 23  24 
Benefits paid (486) (410) (9) (7)
Settlement (32) (51) —  — 
Currency impact 239  401  —  — 
Fair value—end of year $ 15,354  $ 14,127  $ 60  $ 57 
Change in benefit obligation:        
Projected benefit obligation—beginning of year $ 14,845  $ 14,225  $ 167  $ 179 
Addition/deletion of plans(1)
68  —  — 
Service cost 97  94 
Interest cost 118  143 
Participant contributions 23  24 
Actuarial loss (gain) 13  368  (10) (9)
Benefits paid (486) (410) (9) (7)
Plan amendments —  (3) —  — 
Curtailment (5) —  —  — 
Settlement (32) (51) —  — 
Special termination benefits —  — 
Currency impact 228  448  (7)
Projected benefit obligation—end of year $ 14,872  $ 14,845  $ 161  $ 167 
Funded status at end of year $ 482  $ (718) $ (101) $ (110)
Accumulated benefit obligation $ 14,668  $ 14,619  $ —  $ — 
(1)Includes the addition/deletion of plans resulting from acquisitions.
For the year ended October 31, 2021, the benefit obligation remained flat at approximately $14.9 billion primarily due to the effects of increasing discount rates offset by increases in long-term inflation assumptions for various plans. Assets returned much better than expected resulting in an increase in pension assets from approximately $14.1 billion to $15.4 billion. For the year ended October 31, 2020, the increase in the benefit obligation was primarily attributable to a decrease in the discount rate which resulted in an increase to HPE's pension liability of approximately $0.6 billion. Assets performed as expected contributing to an increase in pension assets from $13.4 billion to $14.1 billion.

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Notes to Consolidated Financial Statements (Continued)
The weighted-average assumptions used to calculate the projected benefit obligations were as follows:
  As of October 31,
  2021 2020 2021 2020
  Defined Benefit Plans Post-Retirement Benefit Plans
Discount rate 1.3  % 1.0  % 3.0  % 2.8  %
Expected increase in compensation levels 2.6  % 2.5  % —  — 
Interest crediting rate 2.5  % 2.5  % 2.7  % 2.7  %
The net amounts recognized for defined benefit and post-retirement benefit plans in the Company's Consolidated Balance Sheets were as follows:
  As of October 31,
  2021 2020 2021 2020
  Defined Benefit Plans Post-Retirement Benefit Plans
  In millions
Non-current assets $ 1,898  $ 1,046  $ —  $ — 
Current liabilities (48) (49) (7) (6)
Non-current liabilities (1,368) (1,715) (94) (104)
Funded status at end of year $ 482  $ (718) $ (101) $ (110)
The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in accumulated other comprehensive loss for the defined benefit plans:
  As of October 31, 2021
  Defined
Benefit Plans
Post-Retirement
Benefit Plans
  In millions
Net actuarial loss (gain) $ 2,575  $ (2)
Prior service benefit (14) — 
Total recognized in accumulated other comprehensive loss $ 2,561  $ (2)
Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows:
  As of October 31,
  2021 2020
  In millions
Aggregate fair value of plan assets $ 1,191  $ 4,160 
Aggregate projected benefit obligation $ 2,606  $ 5,924 
Defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows:
  As of October 31,
  2021 2020
  In millions
Aggregate fair value of plan assets $ 1,164  $ 4,094 
Aggregate accumulated benefit obligation $ 2,487  $ 5,723 
Fair Value of Plan Assets
The Company pays the U.S. defined benefit plan obligations when they come due since these plans are unfunded. The table below sets forth the fair value of non-U.S. defined benefit plan assets by asset category within the fair value hierarchy as of October 31, 2021 and 2020.
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Notes to Consolidated Financial Statements (Continued)
  As of
October 31, 2021
As of
October 31, 2020
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
  In millions
Asset Category:                
Equity securities                
U.S.  $ 884  $ 128  $ —  $ 1,012  $ 155  $ 117  $ —  $ 272 
Non-U.S.  345  196  —  541  955  217  —  1,172 
Debt securities              
Corporate —  1,859  —  1,859  —  1,778  —  1,778 
Government(1)
—  6,998  —  6,998  —  6,007  —  6,007 
Government at NAV(2)
822  875 
Other(3)
—  673  748  1,421  —  683  555  1,238 
Alternative investments              
Private Equity —  46  48  —  35  39 
Hybrids(4)
19  1,613  116  1,748  18  1,486  90  1,594 
Hybrids at NAV(5)
561  504 
Common Contractual Funds at NAV(6)
Equities at NAV 1,513  1,393 
Fixed Income at NAV 734  782 
Emerging Markets at NAV 464  362 
Alternative investments at NAV 214  350 
Real Estate Funds 29  246  48  323  27  229  39  295 
Insurance Group Annuity Contracts —  98  33  131  —  56  36  92 
Cash and Cash Equivalents 254  239  —  493  241  176  —  417 
Other(7)
44  47  92  24  95  120 
Obligation to return cash received from repurchase agreements(1)
—  (3,620) —  (3,620) —  (3,163) —  (3,163)
Total $ 1,575  $ 8,479  $ 992  $ 15,354  $ 1,420  $ 7,685  $ 756  $ 14,127 
(1)Repurchase agreements, primarily in the UK, represent the plans' short-term borrowing to hedge against interest rate and inflation risks. Investments in approximately $5 billion of government bonds collateralize this short-term borrowing at October 31, 2021 and 2020. The plans have an obligation to return the cash after the term of the agreements. Due to the short-term nature of the agreements, the outstanding balance of the obligation approximates fair value.
(2)Includes a fund that invests in various government bonds issued by worldwide governments, interest rate swaps, and cash, to match or slightly outperform the benchmark of the future liabilities of the fund. While the fund is not publicly traded, the custodian strikes a net asset value daily. There are no redemption restrictions or future commitments on these investments.
(3)Includes funds that invest primarily in asset-backed securities, mortgage backed securities, collateralized loan obligations, and/or private debt investments. Primary valuation techniques for level 3 investments include discounted cash flows and broker quotes and/or 3rd party pricing services. Significant unobservable inputs include yields which are determined by considering the market yield of comparable public debt instruments adjusted for estimated losses to reflect where the expected recovery rate would be less than 100%. The yields ranged from 4% to 17%, with the weighted average around 7%. Generally, an increase in yield may result in a decrease in the fair value of certain investments.
(4)Includes funds, primarily in the UK, that invest in both private and public equities, as well as emerging markets across all sectors. The funds also hold fixed income and derivative instruments to hedge interest rate and inflation risk. In addition, the funds include units in transferable securities, collective investment schemes, money market funds, asset-backed income, cash, and deposits. Primary valuation techniques for level 3 investments include discounted cash flows and book value or net asset value. Significant unobservable inputs include discount rates. The discount rates ranged from 3% to 25%, with the main weighted average around 7%. Generally, an increase in discount rates may result in a decrease in the fair value of certain investments.
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Notes to Consolidated Financial Statements (Continued)
(5)Includes a pooled fund in the UK, that seeks a rate of return with direct or indirect linkage to UK inflation by investing in vehicles including bonds, long lease property, income strips, asset-backed securities, and index linked assets. Units are available for subscription on the first day of each calendar month at net asset value. There are no redemption restrictions or future commitments on these investments.
(6)HPE Invest Common Contractual Funds (CCFs) are investment arrangements in which institutional investors pool their assets.  Units may be acquired in four different sub-funds focused on equities, fixed income, alternative investments, and emerging markets. Each sub-fund is invested in accordance with the fund's investment objective and units are issued in relation to each sub-fund. While the sub-funds are not publicly traded, the custodian strikes a net asset value either once or twice a month, depending on the sub-fund. There are no redemption restrictions or future commitments on these investments.
(7)Includes international insured contracts, derivative instruments, and unsettled transactions.
As of October 31, 2021 post-retirement benefit plan assets of $60 million were invested in publicly traded registered investment entities of which $49 million are classified within Level 1 and $11 million within Level 2 of the fair value hierarchy. As of October 31, 2020 post-retirement benefit plan assets of $57 million were invested in publicly traded registered investment entities of which $46 million are classified within Level 1 and $11 million within Level 2 of the fair value hierarchy.
Changes in fair value measurements of Level 3 investments for the non-U.S. defined benefit plans were as follows:
  For the fiscal year ended October 31, 2021
  Alternative Investments        
  Debt-Other Private
Equity
Hybrids Real
Estate
Funds
Insurance
Group
Annuities
Other Total
  In millions
Balance at beginning of year $ 555  $ 35  $ 90  $ 39  $ 36  $ $ 756 
Actual return on plan assets:      
Relating to assets held at the reporting date 43  13  10  (3) —  68 
Relating to assets sold during the period —  10  —  —  —  —  10 
Purchases, sales, and settlements 150  (12) 16  —  —  158 
Balance at end of year $ 748  $ 46  $ 116  $ 48  $ 33  $ $ 992 

  For the fiscal year ended October 31, 2020
  Alternative Investments        
  Debt-Other Private
Equity
Hybrids Real
Estate
Funds
Insurance
Group
Annuities
Other Total
  In millions
Balance at beginning of year $ 401  $ 42  $ 71  $ 39  $ 37  $ $ 591 
Actual return on plan assets:          
Relating to assets held at the reporting date (25) (3) (3) —  —  —  (31)
Relating to assets sold during the period —  —  —  —  — 
Purchases, sales, and settlements 179  (8) 22  —  (1) —  192 
Balance at end of year $ 555  $ 35  $ 90  $ 39  $ 36  $ $ 756 
The following is a description of the valuation methodologies used to measure plan assets at fair value.
Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded. For corporate, government backed debt securities, and some other investments, fair value is based on observable inputs of comparable market transactions. The valuation of certain real estate funds, insurance group annuity contracts and alternative investments, such as limited partnerships and joint ventures, may require significant management judgment and involves a level of uncertainty. The valuation is generally based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but are not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. The use of
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Notes to Consolidated Financial Statements (Continued)
different techniques or assumptions to estimate fair value could result in a different fair value measurement at the reporting date. Cash and cash equivalents includes money market funds, which are valued based on cost, which approximates fair value. Other than those assets that have quoted prices from an active market, investments are generally classified in Level 2 or Level 3 of the fair value hierarchy based on the lowest level input that is significant to the fair value measure in its entirety. Investments measured using net asset value as a practical expedient are not categorized within the fair value hierarchy.
Plan Asset Allocations
The weighted-average target and actual asset allocations across the benefit plans at the respective measurement dates for the non-U.S. defined benefit plans were as follows:
  Defined
Benefit Plans
    Plan Assets
Asset Category 2021
Target
Allocation
2021 2020
Public equity securities   23.0  % 22.6  %
Private/hybrid equity securities   16.7  % 17.6  %
Real estate and other   2.7  % 2.9  %
Equity-related investments 43.7  % 42.4  % 43.1  %
Debt securities 55.0  % 54.4  % 53.9  %
Cash and cash equivalents 1.3  % 3.2  % 3.0  %
Total 100.0  % 100.0  % 100.0  %
For the Company's post-retirement benefit plans, approximately 81% of the plan assets are invested in cash and cash equivalents and approximately 19% in multi-asset credit investments which consists primarily of investment grade credit, emerging market debt and high yield bonds.
Investment Policy
The Company's investment strategy is to seek a competitive rate of return relative to an appropriate level of risk depending on the funded status of each plan and the timing of expected benefit payments. The majority of the plans' investment managers employ active investment management strategies with the goal of outperforming the broad markets in which they invest. Risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. A number of the plans' investment managers are authorized to utilize derivatives for investment or liability exposures, and the Company may utilize derivatives to effect asset allocation changes or to hedge certain investment or liability exposures.
Asset allocation decisions are typically made by an independent board of trustees for the specific plan. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed income securities than would otherwise be deployed. The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees or investment committees for the specific plan.
Basis for Expected Long-Term Rate of Return on Plan Assets
The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns, which considers each country's specific inflation outlook. Because the Company's investment policy is to employ primarily active investment managers who seek to outperform the broader market, the expected returns are adjusted to reflect the expected additional returns, net of fees.
Employer Contributions and Funding Policy
During fiscal 2021, the Company contributed approximately $167 million to its non-U.S. pension plans and paid $5 million to cover benefit claims under the Company's post-retirement benefit plans.
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Notes to Consolidated Financial Statements (Continued)
During fiscal 2022, the Company expects to contribute approximately $199 million to its non-U.S. pension plans and an additional $2 million to cover benefit payments to U.S. non-qualified plan participants. In addition, the Company expects to pay approximately $7 million to cover benefit claims for its post-retirement benefit plans. The Company's policy is to fund its pension plans so that it makes at least the minimum contribution required by various authorities including local government and taxing authorities.
Estimated Future Benefits Payments
As of October 31, 2021, estimated future benefits payments for the Company's retirement plans were as follows:
Fiscal year Defined
Benefit Plans
Post-Retirement
Benefit Plans
  In millions
2022 $ 523  $ 11 
2023 524  12 
2024 530  11 
2025 561  11 
2026 565  11 
Next five fiscal years to October 31, 2031 3,027  53 
Note 5: Stock-Based Compensation
On April 14, 2021 (the "Approval Date"), shareholders of the Company approved the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan (the "2021 Plan") that replaced the Company’s 2015 Stock Incentive Plan (the “2015 Plan”). The 2021 Plan provides for the grant of various types of awards including restricted stock awards, stock options and performance-based awards. These awards generally vest over 3 years from the grant date. The maximum number of shares that may be delivered to the participants under the 2021 Plan shall not exceed 7 million shares, plus 35.8 million shares that were available for grant under the 2015 Plan as of the Approval Date and any awards granted under the 2015 Plan prior to the Approval Date that were cash-settled, forfeited, terminated or lapsed after the Approval Date. The Company's stock-based incentive compensation program also includes various replacement awards through acquisitions under which stock-based awards are outstanding.
Stock-Based Compensation Expense
Stock-based compensation expense and the resulting tax benefits were as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
Stock-based compensation expense $ 382  $ 278  $ 270 
Income tax benefit (70) (51) (50)
Stock-based compensation expense, net of tax $ 312  $ 227  $ 220 
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Notes to Consolidated Financial Statements (Continued)
Stock-based compensation expense as presented in the table above is recorded within the following cost and expense lines in the Consolidated Statement of Earnings.
For the fiscal years ended October 31,
2021 2020 2019
In millions
Cost of sales $ 40  $ 37  $ 37 
Research and development 124  81  70 
Selling, general and administrative 208  156  161 
Transformation costs —  — 
Acquisition, disposition and other related charges 10  — 
Stock-based compensation expense $ 382  $ 278  $ 270 
Employee Stock Purchase Plan
Effective November 1, 2015, the Company adopted the Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan ("ESPP"). The total number of shares of Company's common stock authorized under the ESPP was 80 million. The ESPP allows eligible employees to contribute up to 10% of their eligible compensation to purchase Hewlett Packard Enterprise's common stock. The ESPP provides for a discount not to exceed 15% and an offering period up to 24 months. The Company currently offers 6-month offering periods during which employees have the ability to purchase shares at 95% of the closing market price on the purchase date. No stock-based compensation expense was recorded in connection with those purchases, as the criteria of a non-compensatory plan were met.
Restricted Stock Units
Restricted stock units have forfeitable dividend equivalent rights equal to the dividend paid on common stock. Restricted stock units do not have the voting rights of common stock, and the shares underlying restricted stock units are not considered issued and outstanding upon grant. The fair value of the restricted stock units is the closing price of the Company's common stock on the grant date of the award. The Company expenses the fair value of restricted stock units ratably over the period during which the restrictions lapse.
The following table summarizes restricted stock unit activity for the year ended October 31, 2021:
  Shares Weighted-Average Grant Date Fair Value Per Share
  In thousands  
Outstanding at beginning of year 42,325  $ 13 
Granted and replacement awards for acquisition
28,403  $ 13 
Vested (20,605) $ 14 
Forfeited/canceled (4,374) $ 13 
Outstanding at end of year 45,749  $ 13 
The total grant date fair value of restricted stock awards vested for Company employees in fiscal 2021, 2020 and 2019 was $271 million, $254 million and $182 million, respectively. As of October 31, 2021, there was $259 million of unrecognized pre-tax stock-based compensation expense related to unvested restricted stock units, which the Company expects to recognize over the remaining weighted-average vesting period of 1.3 years.
Performance Restricted Units
The Company issues performance stock units ("PSU") that vest on the satisfaction of service and performance conditions. The fair value of the PSUs is the closing price of the Company's common stock on the grant date of the award. The Company also issues performance-adjusted restricted stock units ("PARSU") that vest only on the satisfaction of service, performance and market conditions. The Company estimates the fair value of PARSUs subject to performance-contingent vesting conditions using the Monte Carlo simulation model. The expenses associated with these performance restricted units were not material for any of the periods presented.
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Notes to Consolidated Financial Statements (Continued)
Stock Options
Stock options granted under the Plan are generally non-qualified stock options, but the Plan permits some options granted to qualify as incentive stock options under the U.S. Internal Revenue Code. The exercise price of a stock option is equal to the closing price of the Company's common stock on the option grant date. The majority of the stock options issued by the Company contain only service vesting conditions. The Company has also issued performance-contingent stock options that vest only on the satisfaction of both service and market conditions. The Company did not issue stock options in fiscal 2021 and 2020, other than those that were replacement awards through acquisitions in fiscal 2020. The expenses associated with these stock options were not material for any of the periods presented.
The Company utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. The Company estimates the fair value of stock options subject to performance-contingent vesting conditions using a combination of a Monte Carlo simulation model and a lattice model, as these awards contain market conditions.
Note 6: Taxes on Earnings
Provision for Taxes
The domestic and foreign components of Net earnings (loss) from operations before taxes were as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
U.S. $ (1,128) $ (2,008) $ (1,067)
Non-U.S. 4,715  1,566  2,620 
$ 3,587  $ (442) $ 1,553 
The increase in the foreign earnings from fiscal 2020 to fiscal 2021 was primarily a result of the income from the Itanium litigation judgment.
The (Provision) benefit for taxes on Net earnings (loss) from operations were as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions
U.S. federal taxes:      
Current $ (26) $ 55  $ 763 
Deferred 79  149  (1,046)
Non-U.S. taxes:      
Current (305) (284) (246)
Deferred 116  133  (101)
State taxes:      
Current 55  58 
Deferred (28) 12  68 
$ (160) $ 120  $ (504)
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Notes to Consolidated Financial Statements (Continued)
The differences between the U.S. federal statutory income tax rate and the Company's effective tax rate were as follows:
  For the fiscal years ended October 31,
  2021
2020(1)
2019
U.S. federal statutory income tax rate 21.0  % 21.0  % 21.0  %
State income taxes, net of federal tax benefit 0.7  % 0.9  % (0.1) %
Lower rates in other jurisdictions, net (7.6) % (2.3) % (7.3) %
Valuation allowance (10.0) % 20.8  % 5.8  %
U.S. permanent differences 3.6  % (3.4) % 6.0  %
U.S. R&D credit (1.3) % 8.4  % (2.3) %
Uncertain tax positions (0.9) % 7.6  % (14.3) %
Goodwill impairment —  % (41.2) % —  %
Tax law changes (1.1) % 15.5  % 24.5  %
Other, net 0.1  % (0.2) % (0.8) %
4.5  % 27.1  % 32.5  %
(1)Positive numbers represent tax benefits and negative numbers represent tax expense as the Company recorded income tax benefit on a pretax loss.
The jurisdictions with favorable tax rates that had the most significant impact on the Company's effective tax rate in the periods presented include Puerto Rico and Singapore.
In fiscal 2021, the Company recorded $294 million of net income tax benefits related to items discrete to the year. These amounts primarily included $180 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $157 million of income tax benefits related to releases of foreign valuation allowances, $39 million of income tax benefits related to tax rate changes on deferred taxes, and $32 million of income tax benefits related to the change in pre-Separation tax liabilities, primarily those for which the Company shares joint and several liability with HP Inc. and for which the Company is indemnified by HP Inc. These benefits were partially offset by $337 million of net income tax charges associated with income from the Itanium litigation judgment, against which $244 million of income tax attributes previously subject to a valuation allowance were utilized, resulting in a net tax expense of $93 million.
In fiscal 2020, the Company recorded $362 million of net income tax benefits related to items discrete to the year. These amounts primarily included $174 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $66 million of income tax benefits related to the change in pre-Separation tax liabilities, primarily those for which the Company shared joint and several liability with HP Inc. and for which the Company is indemnified by HP Inc., $57 million of income tax benefits related to Indian distribution tax rate changes, and $40 million of income tax benefits related to tax rate changes on deferred taxes.
In fiscal 2019, the Company recorded $152 million of net income tax charges related to items discrete to the year. These amounts primarily included $488 million of net income tax charges related to changes in U.S. federal and state valuation allowances primarily as a result of impacts of the Tax Act and $40 million of income tax charges related to future withholding costs on potential intercompany distributions of earnings, the effects of which were partially offset by $274 million of income tax benefits related to the change in pre-Separation tax liabilities for which the Company shared joint and several liability with HP Inc., and $104 million of income tax benefits on transformation costs, and acquisition, disposition and other related charges.
As a result of certain employment actions and capital investments the Company has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates through 2037. The gross foreign income tax benefits attributable to these actions and investments were $889 million ($0.67 diluted net EPS) in fiscal 2021, $521 million ($0.40 diluted net EPS) in fiscal 2020, and $837 million ($0.61 diluted net EPS) in fiscal 2019. Refer to Note 16, "Net Earnings Per Share" for details on shares used to compute diluted net EPS.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Uncertain Tax Positions
A reconciliation of unrecognized tax benefits is as follows:
  As of October 31,
  2021 2020 2019
  In millions
Balance at beginning of year $ 2,159  $ 2,269  $ 8,826 
Increases:      
For current year's tax positions 24  27  43 
For prior years' tax positions 64  40  37 
Decreases:      
For prior years' tax positions (31) (71) (17)
Statute of limitations expiration (44) (17) (38)
Settlements with taxing authorities (15) (53) (7)
Settlements related to joint and several positions of former Parent (26) (36) (6,575)
Balance at end of year $ 2,131  $ 2,159  $ 2,269 
Up to $688 million, $731 million and $772 million of Hewlett Packard Enterprise's unrecognized tax benefits at October 31, 2021, 2020 and 2019, respectively, would affect the Company's effective tax rate if realized.
Hewlett Packard Enterprise recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in (Provision) benefit for taxes in the Consolidated Statements of Earnings. The Company recognized $17 million of interest expense, $10 million of interest income, and $13 million of interest income in fiscal 2021, 2020, and 2019, respectively. As of October 31, 2021 and 2020, the Company had accrued $136 million and $119 million, respectively, for interest and penalties in the Consolidated Balance Sheets.
Hewlett Packard Enterprise is subject to income tax in the U.S. and approximately 90 other countries and is subject to routine corporate income tax audits in many of these jurisdictions.
With the resolution of the 2013 through 2015 U.S. Internal Revenue Service ("IRS") tax audits of its former parent in fiscal 2019, Hewlett Packard Enterprise is no longer subject to U.S. federal tax audits for years prior to 2016. With respect to major state and foreign tax jurisdictions, HPE is no longer subject to tax authority examinations for years prior to 2005.
Hewlett Packard Enterprise is joint and severally liable for certain pre-Separation state tax liabilities of HP Inc. HP Inc. is subject to numerous ongoing audits by state tax authorities.
Hewlett Packard Enterprise engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. Hewlett Packard Enterprise does not expect complete resolution of any IRS audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions, joint and several tax liabilities and other matters. Accordingly, Hewlett Packard Enterprise believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $69 million within the next 12 months.
Hewlett Packard Enterprise believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the (Provision) benefit for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.
Hewlett Packard Enterprise has not provided for U.S. federal and state income and foreign withholding taxes on $8.9 billion of undistributed earnings and basis differences from non-U.S. operations as of October 31, 2021 because the Company intends to reinvest such earnings indefinitely outside of the U.S. Determination of the amount of unrecognized deferred tax liability related to these earnings and basis differences is not practicable. The Company will remit non-indefinitely
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Notes to Consolidated Financial Statements (Continued)
reinvested earnings of its non-U.S. subsidiaries for which deferred U.S. state income and foreign withholding taxes have been provided where excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons.
Deferred Income Taxes
Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.
The significant components of deferred tax assets and deferred tax liabilities were as follows:
  As of October 31,
  2021 2020
  In millions
Deferred tax assets:
Loss and credit carryforwards $ 7,526  $ 7,596 
Inventory valuation 79  75 
Intercompany prepayments 308  295 
Other intercompany transactions 13  31 
Warranty 50  69 
Employee and retiree benefits 287  571 
Restructuring 93  118 
Deferred revenue 517  565 
Intangible assets 91  94 
Lease liabilities 184  166 
Other 246  206 
Total deferred tax assets 9,394  9,786 
Valuation allowance (7,368) (7,724)
Total deferred tax assets net of valuation allowance 2,026  2,062 
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries (168) (172)
ROU assets (159) (165)
Fixed assets (170) (237)
Total deferred tax liabilities (497) (574)
Net deferred tax assets and liabilities $ 1,529  $ 1,488 
Deferred tax assets and liabilities included in the Consolidated Balance Sheets are as follows:
  As of October 31,
  2021 2020
  In millions
Deferred tax assets $ 2,023  $ 1,778 
Deferred tax liabilities (494) (290)
Deferred tax assets net of deferred tax liabilities $ 1,529  $ 1,488 
As of October 31, 2021, the Company had $555 million, $3.2 billion and $19.8 billion of federal, state and foreign net operating loss carryforwards, respectively. Amounts included in federal, state and foreign net operating loss carryforwards will begin to expire in years 2030, 2022, and 2022, respectively. Hewlett Packard Enterprise has provided a valuation allowance of $171 million and $4.4 billion for deferred tax assets related to state and foreign net operating losses carryforwards, respectively. As of October 31, 2021, the Company also had $6.0 billion, $6.0 billion, and $112 million of federal, state, and foreign capital loss carryforwards, respectively. Amounts included in federal and state capital loss carryforwards will begin to expire in 2023;
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Notes to Consolidated Financial Statements (Continued)
foreign capital losses can carry forward indefinitely. Hewlett Packard Enterprise has provided a valuation allowance of $1.3 billion, $181 million, and $33 million for deferred tax assets related to federal, state, and foreign capital loss carryforwards, respectively.
As of October 31, 2021, Hewlett Packard Enterprise had recorded deferred tax assets for various tax credit carryforwards as follows:
  Carryforward Valuation Allowance Initial Year of Expiration
  In millions
U.S. foreign tax credits $ 922  $ (912) 2026
U.S. research and development and other credits 151  (1) 2022
Tax credits in state and foreign jurisdictions 153  (87) 2022
Balance at end of year $ 1,226  $ (1,000)  
Total valuation allowances decreased by $356 million in fiscal 2021, primarily as a result of the release of foreign valuation allowances due to sufficient history of income and release of U.S. valuation allowances as a result of foreign tax credit utilization resulting from the Itanium litigation judgment.
Tax Matters Agreement and Other Income Tax Matters
In connection with the Separation, the Company entered into a Tax Matters Agreement with HP Inc., which was terminated with the Termination and Mutual Release Agreement in fiscal 2019. Pursuant to that termination, HP Inc. paid the Company $200 million in fiscal 2019 and $50 million in both fiscal 2020 and fiscal 2021. In connection with the Everett and Seattle Transactions, the Company entered into a DXC Tax Matters Agreement with DXC and a Micro Focus Tax Matters Agreement with Micro Focus, respectively. See Note 18, "Guarantees, Indemnifications and Warranties", for a description of the DXC Tax Matters Agreement and Micro Focus Tax Matters Agreement.
Note 7: Balance Sheet Details
Balance sheet details were as follows:
Cash, Cash Equivalents and Restricted Cash
As of October 31,
2021 2020
In millions
Cash and cash equivalents $ 3,996  $ 4,233 
Restricted cash 336  388 
Total $ 4,332  $ 4,621 
Accounts Receivable, Net
  As of October 31,
  2021 2020
  In millions
Unbilled receivable $ 206  $ 205 
Accounts receivable 3,796  3,227 
Allowances (23) (46)
Total $ 3,979  $ 3,386 
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The allowance for doubtful accounts related to accounts receivable and changes therein were as follows:
  As of October 31,
  2021 2020 2019
  In millions
Balance at beginning of year $ 46  $ 31  $ 39 
Provision for credit losses
11  29 
Write offs, net of recoveries
(34) (14) (17)
Balance at end of year $ 23  $ 46  $ 31 
The Company has third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. The Company recorded an obligation of $65 million, $75 million and $80 million in Notes payable and short-term borrowings in its Consolidated Balance Sheets as of October 31, 2021, 2020 and 2019, respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred. For arrangements involving an element of recourse, the fair value of the recourse obligation is measured using market data from similar transactions and reported as a current liability in Other accrued liabilities in the Consolidated Balance Sheets.
The activity related to Hewlett Packard Enterprise's revolving short-term financing arrangements was as follows:
  As of October 31,
  2021 2020 2019
  In millions
Balance at beginning of period(1)
$ 122  $ (10) $ 166 
Trade receivables sold 4,190  3,897  4,533 
Cash receipts (3,975) (3,768) (4,710)
Foreign currency and other (1)
Balance at end of period(1)
$ 336  $ 122  $ (10)
(1)Beginning and ending balances represent amounts for trade receivables sold but not yet collected. The ending credit balance as of October 31, 2019 represents credit memos issued but not applied to trade receivables prior to cash remittance.
Inventory
As of October 31,
  2021 2020
In millions
Finished goods $ 1,684  $ 1,197 
Purchased parts and fabricated assemblies 2,827  1,477 
Total $ 4,511  $ 2,674 
Property, Plant and Equipment
  As of October 31,
  2021 2020
  In millions
Land $ 76  $ 89 
Buildings and leasehold improvements 1,751  1,886 
Machinery and equipment, including equipment held for lease 9,735  9,624 
11,562  11,599 
Accumulated depreciation (5,949) (5,974)
Total $ 5,613  $ 5,625 
Depreciation expense was $2.2 billion, $2.2 billion and $2.3 billion in fiscal 2021, 2020 and 2019, respectively.
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Notes to Consolidated Financial Statements (Continued)
Long-Term Financing Receivables and Other Assets
  As of October 31,
  2021 2020
  In millions
Financing receivables, net $ 5,038  $ 5,110 
ROU assets 884  930 
Deferred tax assets 2,023  1,778 
Prepaid pension 1,898  1,046 
Other 1,827  1,680 
Total $ 11,670  $ 10,544 
Other Accrued Liabilities
  As of October 31,
  2021 2020
  In millions
Value-added and property taxes $ 782  $ 842 
Warranty 163  192 
Sales and marketing programs 977  1,022 
Operating lease liabilities 192  188 
Contract manufacturer liabilities 709  383 
Other 1,663  1,638 
Total $ 4,486  $ 4,265 
Other Non-Current Liabilities
  As of October 31,
  2021 2020
  In millions
Pension, post-retirement, and post-employment $ 1,496  $ 1,856 
Deferred revenue 2,972  2,785 
Taxes on earnings 365  447 
Operating lease liabilities 938  898 
Other 1,328  1,009 
Total $ 7,099  $ 6,995 
Contract Liabilities and Remaining Performance Obligations
Contract liabilities consist of deferred revenue. The aggregate balance of current and non-current deferred revenue was $6.4 billion and $6.2 billion as of October 31, 2021 and 2020, respectively. During fiscal 2021, approximately $3.2 billion of deferred revenue as of October 31, 2020 was recognized as revenue.
Revenue allocated to remaining performance obligations represents contract work that has not yet been performed and does not include contracts where the customer is not committed. Remaining performance obligations estimates are subject to change and are affected by several factors, including contract terminations, changes in the scope of contracts, adjustments for revenue that has not materialized and adjustments for currency.
Remaining performance obligations consist of deferred revenue. As of October 31, 2021, the aggregate amount of remaining performance obligations was $6.4 billion. The Company expect to recognize approximately 53% of this amount as revenue over the next twelve months with the remainder to be recognized thereafter.
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Notes to Consolidated Financial Statements (Continued)
Costs to obtain a Contract
As of October 31, 2021, the current and non-current portions of the capitalized costs to obtain a contract were $64 million and $95 million, respectively. As of October 31, 2020, the current and non-current portions of the capitalized costs to obtain a contract were $54 million and $76 million, respectively. The current and non-current portions of the capitalized costs to obtain a contract were included in Other current assets, and Long-term financing receivables and other assets, respectively, in the Consolidated Balance Sheets. In fiscal 2021 and 2020, the Company amortized $73 million and $58 million, respectively, of the capitalized costs to obtain a contract which are included in Selling, general and administrative expense in the Consolidated Statements of Earnings.
Note 8: Accounting for Leases as a Lessee
Components of lease cost included in the Consolidated Statement of Earnings were as follows:
For the fiscal years ended October 31,
2021 2020
In millions
Operating lease cost $ 207  $ 236 
Finance lease cost
Sublease rental income (35) (61)
Total lease cost $ 177  $ 183 
In fiscal 2021 and 2020, the Company recorded $3 million and $41 million, respectively, of net gain from sale and leaseback transactions.
The ROU assets and lease liabilities for operating and finance leases included on the Hewlett Packard Enterprise Consolidated Balance Sheet were as follows:
As of October 31,
Balance Sheet Classification 2021 2020
In millions
Operating Leases
ROU Assets Long-term financing receivables and other assets $ 884  $ 930 
Lease Liabilities:
Operating lease liabilities – current Other accrued liabilities $ 192  188 
Operating lease liabilities – non-current Other non-current liabilities 938  898 
Total operating lease liabilities $ 1,130  $ 1,086 
Finance Leases
Finance lease ROU Assets: Property, plant and equipment
Gross finance lease ROU assets $ 36  $ 52 
Less: Accumulated depreciation (8) (11)
Net finance lease ROU assets $ 28  $ 41 
Lease Liabilities:
Finance lease liabilities – current Notes payable and short-term borrowings $ $
Finance lease liabilities – non-current Long-term debt 48  53 
Total finance lease liabilities $ 53  $ 58 
Total ROU assets $ 912  $ 971 
Total lease liabilities $ 1,183  $ 1,144 
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Notes to Consolidated Financial Statements (Continued)
The weighted-average remaining lease term and the weighted-average discount rate for the operating and finance leases were as follows:
As of October 31,
2021 2020
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted-average remaining lease term (in years) 7.7 8.5 6.8 9.5
Weighted-average discount rate 2.7  % 3.5  % 2.6  % 3.5  %
Supplemental cash flow information related to leases was as follows:
For the fiscal years ended October 31,
Cash Flow Statement Activity 2021 2020
In millions
Cash outflows from operating leases Net cash used in operating activities $ 220  $ 239 
ROU assets obtained in exchange for new operating lease liabilities Non-cash activities $ 248  $ 298 
The following tables shows the future payments on the Company's operating and finance leases:
As of October 31, 2021
Operating Leases Finance Leases
Fiscal year In millions
2022 $ 219  $
2023 198 
2024 170 
2025 146 
2026 123 
Thereafter 412  27 
Total future lease payments $ 1,268  $ 61 
Less: imputed interest (138) (8)
Total lease liabilities $ 1,130  $ 53 
As of October 31, 2021, the Company entered into $16 million of operating leases that have not yet commenced and are not yet recorded on the Consolidated Balance Sheet. These operating leases are scheduled to commence during fiscal 2022 and contain lease terms of 1 to 10 years.
Note 9: Accounting for Leases as a Lessor
Financing Receivables
Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. These receivables typically have terms ranging from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The allowance for credit losses represents future expected credit losses over the life of the receivables based on past experience, current information and forward-looking economic considerations. The components of financing receivables were as follows:
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Notes to Consolidated Financial Statements (Continued)
  As of October 31,
  2021 2020
  In millions
Minimum lease payments receivable $ 9,526  $ 9,448 
Unguaranteed residual value 390  364 
Unearned income (718) (754)
Financing receivables, gross 9,198  9,058 
Allowance for credit losses (228) (154)
Financing receivables, net 8,970  8,904 
Less: current portion (3,932) (3,794)
Amounts due after one year, net $ 5,038  $ 5,110 
As of October 31, 2021, scheduled maturities of the Company's minimum lease payments receivable were as follows:
As of October 31,
2021
Fiscal year In millions
2022 $ 4,338 
2023 2,557 
2024 1,567 
2025 747 
2026 233 
Thereafter 84 
Total undiscounted cash flows $ 9,526 
   Present value of lease payments (recognized as finance receivables) $ 8,808 
   Difference between undiscounted cash flows and discounted cash flows $ 718 
Sale of Financing Receivables
The Company entered into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions. During the fiscal years ended October 31, 2021 and 2020, the Company sold $142 million and $103 million, respectively, of financing receivables.
Credit Quality Indicators
Due to the homogeneous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction and periodically updates the risk ratings when there is a change in the underlying credit quality. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits.
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Notes to Consolidated Financial Statements (Continued)
The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2021, presented on an amortized cost basis by year of origination was as follows:
 
As of October 31, 2021
Risk Rating
Low Moderate High
Fiscal Year In millions
2021 $ 1,978  $ 1,542  $ 49 
2020 1,441  1,061  87 
2019 829  771  85 
2018 364  407  78 
2017 and prior 169  234  103 
Total $ 4,781  $ 4,015  $ 402 
The credit risk profile of gross financing receivables, based on internal risk ratings as of October 31, 2020, was as follows:
  As of October 31,
  2020
  In millions
Risk Rating:  
Low $ 4,590 
Moderate 4,091 
High 377 
Total $ 9,058 
Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. Effective November 1, 2020, under the new guidance for credit losses, the Company discloses its credit quality by year of origination. The credit quality indicators do not reflect any mitigation actions taken to transfer credit risk to third parties.
Allowance for Credit Losses
The allowance for credit losses for financing receivables and changes therein were as follows:
  As of October 31,
  2021 2020 2019
  In millions
Balance at beginning of period $ 154  $ 131  $ 120 
Adjustment for adoption of the new credit loss standard 28  —  — 
Provision for credit losses 61  43  33 
Adjustment to the existing allowance 19  —  — 
Write-offs (34) (20) (22)
Balance at end of period $ 228  $ 154  $ 131 
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Notes to Consolidated Financial Statements (Continued)
Non-Accrual and Past-Due Financing Receivables
The following table summarizes the aging and non-accrual status of gross financing receivables:
  As of October 31,
  2021 2020
  In millions
Billed:(1)
   
Current 1-30 days $ 410  $ 340 
Past due 31-60 days 35  43 
Past due 61-90 days 17  22 
Past due >90 days 111  140 
Unbilled sales-type and direct-financing lease receivables 8,625  8,513 
Total gross financing receivables $ 9,198  $ 9,058 
Gross financing receivables on non-accrual status(2)
$ 257  $ 364 
Gross financing receivables 90 days past due and still accruing interest(2)
$ 78  $ 74 
(1)Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables.
(2)Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.
Operating Leases
Operating lease assets included in Property, plant and equipment in the Consolidated Balance Sheets were as follows:
  As of October 31,
  2021 2020
  In millions
Equipment leased to customers $ 7,039  $ 7,184 
Accumulated depreciation (3,038) (3,157)
Total $ 4,001  $ 4,027 
As of October 31, 2021, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows:
As of October 31,
2021
Fiscal year In millions
2022 $ 1,744 
2023 1,090 
2024 457 
2025 89 
2026 26 
Total $ 3,406 
If a lease is classified as an operating lease, the Company records lease revenue on a straight-line basis over the lease term. At commencement of an operating lease, initial direct costs are deferred and are expensed over the lease term on the same basis as the lease revenue is recorded.
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Notes to Consolidated Financial Statements (Continued)
The following table presents amounts included in the Consolidated Statement of Earnings related to lessor activity:
For the fiscal years ended October 31,
2021 2020 2019
In millions
Sales-type leases and direct financing leases:
Interest income $ 494  $ 469  $ 458 
Lease income - operating leases 2,383  2,431  2,596 
Total lease income $ 2,877  $ 2,900  $ 3,054 
Variable Interest Entities
The Company has issued asset-backed debt securities under a fixed-term securitization program to private investors. The asset-backed debt securities are collateralized by the U.S. fixed-term financing receivables and leased equipment in the offering, which is held by a Special Purpose Entity ("SPE"). The SPE meets the definition of a VIE and is consolidated, along with the associated debt, into the Consolidated Financial Statements as the Company is the primary beneficiary of the VIE. The SPE is a bankruptcy-remote legal entity with separate assets and liabilities. The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets.
The Company's risk of loss related to securitized receivables and leased equipment is limited to the amount by which the Company's right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities.
The following table presents the assets and liabilities held by the consolidated VIE as of October 31, 2021 and 2020, which are included in the Consolidated Balance Sheets. The assets in the table below includes those that can be used to settle the obligations of the VIE. Additionally, general Creditors do not have recourse to the assets of the VIE.
  As of October 31,
2021 2020
Assets held by VIE In millions
Other current assets $ 165  $ 120 
Financing receivables
Short-term $ 749  $ 531 
Long-term $ 707  $ 584 
Property, plant and equipment $ 854  $ 665 
Liabilities held by VIE
Notes payable and short-term borrowings, net of unamortized debt issuance costs $ 1,204  $ 886 
Long-term debt, net of unamortized debt issuance costs $ 950  $ 834 
Financing receivables transferred via securitization through the SPE were $1.1 billion and $1.2 billion for the fiscal years ended October 31, 2021 and 2020, respectively. Leased equipment transferred via securitization through the SPE was $720 million and $675 million for the fiscal years ended October 31, 2021 and 2020, respectively.
Note 10: Acquisitions
Acquisitions in fiscal 2021
The purchase price allocations for the acquisitions described below reflect various preliminary fair value estimates and analysis, including preliminary work performed by third-party valuation specialists, of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and non-income based taxes, and residual goodwill, which are subject to change within the measurement period as valuations are finalized. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined. Pro forma results of operations for these acquisitions have not been presented because they are not material to the Company's consolidated results of operations, either individually or in the aggregate. Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, is not deductible for tax purposes.
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Notes to Consolidated Financial Statements (Continued)
During fiscal 2021, the Company completed four acquisitions, none of which were material, both individually and in the aggregate, to the Company's Consolidated Financial Statements. The following table presents the aggregate purchase price allocation, including those items that were preliminary allocations and subject to change, for the Company's acquisitions for the fiscal year ended October 31, 2021:
In millions
Goodwill $ 300 
Amortizable intangible assets 262 
In-process research and development 11 
Net tangible liabilities assumed (5)
Total fair value consideration $ 568 
On August 31, 2021, the Company completed the acquisition of Zerto, an industry leader in cloud data management and protection. Zerto's results of operations were included within the Storage segment. The acquisition date fair value consideration of $416 million primarily consisted of cash paid for outstanding common stock and vested in-the-money stock awards. In connection with this acquisition, the Company recorded approximately $214 million of goodwill, and $208 million of intangible assets. The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of seven years.
Acquisitions in fiscal 2020
During fiscal 2020, the Company completed two acquisitions. The following table presents the aggregate purchase price allocation for the Company's acquisitions for the fiscal year ended October 31, 2020:
In millions
Goodwill $ 561 
Amortizable intangible assets 354 
Net tangible liabilities assumed (29)
Total fair value consideration $ 886 
On September 21, 2020, the Company completed the acquisition of Silver Peak, a Software-Defined Wide Area Network leader. Silver Peak's results of operations were included within the Intelligent Edge segment. The acquisition date fair value consideration of $879 million consisted of cash paid for outstanding common stock, pre-acquisition service of the replacement awards, and vested in-the-money stock awards. In connection with this acquisition, the Company recorded approximately $561 million of goodwill, and $348 million of intangible assets. The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of five years.
Acquisitions in fiscal 2019
During fiscal 2019, the Company completed three acquisitions. The following table presents the aggregate purchase price allocation for the Company's acquisitions for the fiscal year ended October 31, 2019:
In millions
Goodwill $ 771 
Amortizable intangible assets 465 
In-process research and development 141 
Net tangible assets assumed 235 
Total fair value consideration $ 1,612 
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
On September 25, 2019, the Company completed the acquisition of Cray, a global supercomputer leader. Cray's results of operations are included within the HPC & AI segment. The acquisition date fair value consideration of $1.5 billion consisted of cash paid for outstanding common stock, vested in-the-money stock awards and amount attributable to pre-acquisition service of the replacement awards. In connection with this acquisition, the Company recorded approximately $702 million of goodwill, $425 million of intangible assets and $141 million of in-process research and development. The Company is amortizing the intangible assets on a straight-line basis over an estimated weighted-average useful life of four years.
Note 11: Goodwill and Intangible Assets
Goodwill
Goodwill and related changes in the carrying amount by reportable segment were as follows:
 
Compute
HPC & AI Storage Intelligent Edge Financial
Services
Corporate Investments & Other Total
In millions
Balance at October 31, 2019 (1)(2)
$ 7,532  $ 4,478  $ 3,945  $ 1,994  $ 144  $ 213  $ 18,306 
Goodwill from acquisitions —  —  —  572  —  —  572 
Impairment of goodwill —  (865) —  —  —  —  (865)
Goodwill adjustments —  —  —  — 
Balance at October 31, 2020 (1)(2)
7,532  3,616  3,946  2,566  144  213  18,017 
Goodwill from acquisitions —  86  214  —  —  —  300 
Goodwill adjustments —  —  —  (11) —  —  (11)
Balance at October 31, 2021 (1)(2)
$ 7,532  $ 3,702  $ 4,160  $ 2,555  $ 144  $ 213  $ 18,306 
(1)As a result of the organizational realignments which were effective as of November 1, 2020, (described in Note 1, "Overview and Summary of Significant Accounting Policies"), $213 million of goodwill was reallocated from the Storage segment to the Software reporting unit within Corporate Investments and Other as of the beginning of the period using a relative fair value approach.
(2)Goodwill is net of accumulated impairment losses of $953 million. Of this amount, $865 million related to HPC & AI which was recorded during the second quarter of fiscal 2020 and $88 million related to the CMS reporting unit within Corporate Investments and Other was recorded during fiscal 2018. There is no goodwill remaining in the CMS reporting unit.
Goodwill Impairments    
Goodwill is tested for impairment at the reporting unit level. As of October 31, 2021, our reporting units with goodwill are consistent with the reportable segments identified in Note 2, "Segment Information" to the Consolidated Financial Statements, with the exception of Corporate Investments and Other which contains three reporting units, Software, CMS and A&PS.
Based on the results of the Company's interim and annual impairment tests in fiscal 2021, the Company determined that no impairment of goodwill existed. As of our annual test date, performed at the beginning of the fourth quarter, the excess of fair value over carrying amount for our reporting units ranged from approximately 8% to 133% of the respective carrying amounts. In order to evaluate the sensitivity of the estimated fair value of our reporting units in the goodwill impairment test, the Company applied a hypothetical 10% decrease to the fair value of each reporting unit. Based on the results of this hypothetical 10% decrease all of the reporting units had an excess of fair value over carrying amount, with the exception of the HPC & AI reporting unit.
As of the annual test date, the HPC & AI reporting unit had goodwill of $3.7 billion and an excess of fair value over carrying value of net assets of 8%. The fair value of the HPC & AI reporting unit is based on a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. The HPC & AI business is facing challenges on the current and projected future results as revenue growth is dependent on timing of delivery and related achievement of customer acceptance milestones. If the Company is not successful in addressing these challenges, the projected revenue growth rates or operating margins could decline resulting in a decrease in the fair value of the HPC & AI reporting unit. The fair value of the HPC & AI reporting unit could also be negatively impacted by changes in its weighted average cost of capital, changes in management's business strategy or significant and sustained declines in the stock price, which could result in an indicator of impairment.
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Notes to Consolidated Financial Statements (Continued)
In addition, should economic conditions deteriorate or remain depressed for a prolonged period of time, estimates of future cash flows for each of the Company's reporting units may be insufficient to support the carrying value and the goodwill assigned to them, requiring impairment charges, including additional impairment charges for the HPC & AI reporting unit. Further impairment charges, if any, may be material to the results of operations and financial position.
Based on the results of the Company’s annual impairment test in fiscal 2020 the Company determined that no impairment of goodwill existed.
Based on the results of the Company’s interim impairment test in the second quarter of fiscal 2020, it was concluded that the fair value of the HPC & AI reporting unit was below the carrying value of net assets assigned to HPC & AI. The decline in the fair value of the HPC & AI reporting unit resulted from macroeconomic impacts of COVID-19 which lowered the projected revenue growth rates and profitability levels of the reporting unit. The fair value of the HPC & AI reporting unit was based on the above described methodology for the annual test which was a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which the Company considers to be a level 3 unobservable input in the fair value hierarchy. The Company prepares cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration the historical performance and the current macroeconomic industry and market conditions. The Company bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, the Company estimates fair value based on market multiple earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. The Company weights the fair value derived from the market approach commensurate with the level of comparability of these publicly traded companies to the reporting unit.
Prior to the quantitative goodwill impairment test, the Company tested the recoverability of long-lived assets and other assets of the HPC & AI reporting unit and concluded that such assets were not impaired. The quantitative goodwill impairment test indicated that the carrying value of the HPC & AI reporting unit exceeded its fair value by $865 million. As a result, the Company recorded a partial goodwill impairment charge of $865 million in the second quarter of fiscal 2020.
Intangible Assets
Intangible assets comprise:
  As of October 31, 2021 As of October 31, 2020
  Gross Accumulated
Amortization
Net Gross Accumulated
Amortization
Net
  In millions
Customer contracts, customer lists and distribution agreements $ 472  $ (175) $ 297  $ 429  $ (163) $ 266 
Developed and core technology and patents 1,187  (537) 650  1,267  (627) 640 
Trade name and trade marks 144  (73) 71  141  (50) 91 
In-process research and development —  106  —  106 
Total intangible assets $ 1,807  $ (785) $ 1,022  $ 1,943  $ (840) $ 1,103 
For fiscal 2021, the decrease in gross intangible assets was due primarily to $409 million of intangible assets which became fully amortized and were eliminated from gross intangible assets and accumulated amortization, partially offset by $273 million of purchases related to acquisitions.
For fiscal 2021, the Company reclassified in-process research and development assets acquired of $113 million to developed and core technology and patents as the projects were completed, and began amortization. For fiscal 2020, no in-process research and development assets were completed.
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Notes to Consolidated Financial Statements (Continued)
As of October 31, 2021, the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows:
Finite-Lived Intangible Assets Weighted-Average
Remaining
Useful Lives
  In years
Customer contracts, customer lists and distribution agreements 5
Developed and core technology and patents 4
Trade name and trade marks 3

As of October 31, 2021, estimated future amortization expense related to finite-lived intangible assets was as follows:
Fiscal year In millions
2022 $ 291 
2023 265 
2024 207 
2025 95 
2026 79 
Thereafter 81 
Total $ 1,018 
Note 12: Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
Fair Value Hierarchy
The Company uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.
Level 3—Unobservable inputs for the asset or liability.
The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs.
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Notes to Consolidated Financial Statements (Continued)
The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis:
  As of October 31, 2021 As of October 31, 2020
  Fair Value
Measured Using
  Fair Value
Measured Using
 
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
  In millions
Assets                
Cash Equivalents and Investments:                
Time deposits $ —  $ 806  $ —  $ 806  $ —  $ 939  $ —  $ 939 
Money market funds 1,495  —  —  1,495  1,167  —  —  1,167 
Equity Securities 57  —  129  186  —  —  —  — 
Foreign bonds —  122  —  122  —  125  —  125 
Other debt securities —  —  42  42  —  —  21  21 
Derivative Instruments:                
Interest rate contracts —  95  —  95  —  220  —  220 
Foreign exchange contracts —  308  —  308  —  290  —  290 
Other derivatives —  —  —  —  —  — 
Total assets $ 1,552  $ 1,335  $ 171  $ 3,058  $ 1,167  $ 1,574  $ 21  $ 2,762 
Liabilities                
Derivative Instruments:                
Interest rate contracts $ —  $ —  $ —  $ —  $ —  $ $ —  $
Foreign exchange contracts —  127  —  127  —  189  —  189 
Other derivatives —  —  —  —  —  — 
Total liabilities $ —  $ 127  $ —  $ 127  $ —  $ 194  $ —  $ 194 
For the fiscal years ended October 31, 2021 and 2020, there were no transfers between levels within the fair value hierarchy.
Valuation Techniques
Cash Equivalents and Investments: The Company holds time deposits, money market funds, debt securities primarily consisting of corporate and foreign government notes and bonds. The Company values cash equivalents using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt and equity investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data.
Derivative Instruments: The Company uses forward contracts, interest rate and total return swaps to hedge certain foreign currency and interest rate exposures. The Company uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, the Company and counterparties' credit risk, foreign currency exchange rates, and forward and spot prices for currencies and interest rates. See Note 13, "Financial Instruments", for a further discussion of the Company's use of derivative instruments.
Other Fair Value Disclosures
Short- and Long-Term Debt: The Company estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk. The portion of the Company's debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt's carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. As of October 31, 2021, the estimated fair value of the Company's short-term and long-term debt was $14.6 billion and
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
the carrying value was $13.4 billion. As of October 31, 2020, the estimated fair value of the Company's short-term and long-term debt was $17.1 billion and the carrying value was $15.9 billion. If measured at fair value in the Consolidated Balance Sheets, short-term and long-term debt would be classified in Level 2 of the fair value hierarchy.
Other Financial Instruments: For the balance of the Company's financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in other accrued liabilities, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy.
Equity investments without readily determinable fair value: Equity Investments are recorded at cost and measured at fair value, when they are deemed to be impaired or when there is an adjustment from observable price changes. For the fiscal years ended October 31, 2021, 2020 and 2019, there were no material impairment charges relating to equity investments. For the fiscal years ended October 31, 2021, 2020 and 2019, the Company recognized a gain of $64 million, $19 million and $13 million in Interest and other, net in the Consolidated Statements of Earnings, based on observable price changes for certain equity investments without readily determinable fair value. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy.
Non-Financial Assets: The Company's non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at cost. The Company records ROU assets based on the lease liability, adjusted for lease prepayments, lease incentives received and the lessee's initial direct costs. Fair value adjustments are made to these non-financial assets in the period an impairment charge is recognized.
In fiscal 2021 and 2020, the Company recorded a ROU asset impairment charge of $89 million and $74 million, respectively in Transformation costs in the Consolidated Statements of Earnings as the carrying value of certain ROU assets exceeded its fair value. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy.
In the second quarter of fiscal 2020, the Company recorded a goodwill impairment charge of $865 million associated with the HPC & AI reporting unit. The fair value of the Company's reporting units was classified in Level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using company-specific information. For more information on the goodwill impairment, see Note 11, "Goodwill and Intangible Assets".
Note 13: Financial Instruments
Cash Equivalents and Available-for-Sale Investments
Cash equivalents and available-for-sale investments were as follows:
  As of
October 31, 2021
As of
October 31, 2020
  Cost Gross
Unrealized
Gains
Fair
Value
Cost Gross
Unrealized
Gains
Fair
Value
  In millions
Cash Equivalents:            
Time deposits $ 806  $ —  $ 806  $ 939  $ —  $ 939 
Money market funds 1,495  —  1,495  1,167  —  1,167 
Total cash equivalents 2,301  —  2,301  2,106  —  2,106 
Available-for-Sale Investments:            
Foreign bonds 108  14  122  108  17  125 
Other debt securities 41  42  20  21 
Total available-for-sale investments 149  15  164  128  18  146 
Total cash equivalents and available-for-sale investments $ 2,450  $ 15  $ 2,465  $ 2,234  $ 18  $ 2,252 
All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of October 31, 2021 and 2020, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. Interest income related to cash, cash equivalents and debt securities was approximately $18 million
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Notes to Consolidated Financial Statements (Continued)
in fiscal 2021, $44 million in fiscal 2020 and $64 million in fiscal 2019. Time deposits were primarily issued by institutions outside the U.S. as of October 31, 2021 and October 31, 2020. The estimated fair value of the available-for-sale investments may not be representative of values that will be realized in the future.
Contractual maturities of investments in available-for-sale debt securities were as follows:
  As of
October 31, 2021
  Amortized Cost Fair Value
  In millions
Due in one to five years 26  26 
Due in more than five years 123  138 
$ 149  $ 164 
Non-marketable equity investments in privately held companies are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets. These non-marketable equity investments are carried either at fair value or under the measurement alternative.
The carrying amount of those non-marketable equity investments accounted for under the measurement alternative was $253 million and $295 million as of October 31, 2021 and 2020, respectively. During the twelve months ended October 31, 2021, the Company recorded an unrealized gain of $64 million on these investments.
The carrying amount of those non-marketable equity investments accounted for under the fair value option was $129 million as of October 31, 2021. During the twelve months ended October 31, 2021, the Company recorded an unrealized gain of $50 million on these investments.
Equity investments with readily determinable fair values are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets. The carrying amount of such equity investments amounted to $57 million as of October 31, 2021. During the twelve months ended October 31, 2021, the Company recorded an unrealized gain of $25 million on these investments.
Investments in equity securities that are accounted for using the equity method are included in Investments in equity interests in the Consolidated Balance Sheets. These amounted to $2.2 billion at October 31, 2021 and 2020. For additional information, see Note 20, "Equity Method Investments".
Derivative Instruments
The Company is a global company exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, the Company uses derivative instruments, primarily forward contracts, interest rate swaps and total return swaps to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. The Company's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities. The Company does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. The Company may designate its derivative contracts as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, the Company categorizes those economic hedges as other derivatives. Derivative instruments are recognized at fair value in the Consolidated Balance Sheets. The change in fair value of the derivative instruments is recognized in the Consolidated Statements of Earnings or Consolidated Statements of Comprehensive Income depending upon the type of hedge as further discussed below. The Company classifies cash flows from its derivative programs with the activities that correspond to the underlying hedged items in the Consolidated Statements of Cash Flows.
As a result of its use of derivative instruments, the Company is exposed to the risk that its counterparties will fail to meet their contractual obligations. To mitigate counterparty credit risk, the Company has a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and the Company maintains dollar risk limits that correspond to each financial institution's credit rating and other factors. The Company's established policies and procedures for mitigating credit risk include reviewing and establishing limits for credit exposure and periodically reassessing the creditworthiness of its counterparties. Master netting agreements also mitigate credit exposure to counterparties by permitting the Company to net amounts due from the Company to a counterparty against amounts due to the Company from the same counterparty under certain conditions.
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Notes to Consolidated Financial Statements (Continued)
To further mitigate credit exposure to counterparties, the Company has collateral security agreements, which allows the Company to hold collateral from, or require the Company to post collateral to counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of the Company and its counterparties. If the Company's credit rating falls below a specified credit rating, the counterparty has the right to request full collateralization of the derivatives' net liability position. Conversely, if the counterparty's credit rating falls below a specified credit rating, the Company has the right to request full collateralization of the derivatives' net liability position. Collateral is generally posted within two business days. The fair value of the Company's derivatives with credit contingent features in a net liability position was $3 million and $45 million at October 31, 2021 and 2020, respectively, all of which were fully collateralized within two business days.
Under the Company's derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting the Company that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect the Company's financial position or cash flows as of October 31, 2021 and 2020.
Fair Value Hedges
The Company issues long-term debt in U.S. dollars based on market conditions at the time of financing. The Company may enter into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar LIBOR-based floating interest rate. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, the Company may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, the Company may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and may designate these swaps as fair value hedges.
For derivative instruments that are designated and qualify as fair value hedges, the Company recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Statements of Earnings in the period of change.
Cash Flow Hedges
The Company uses forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. The Company's foreign currency cash flow hedges mature generally within twelve months; however, forward contracts associated with sales-type and direct-financing leases and intercompany loans extend for the duration of the lease or loan term, which can extend up to five years.
The Company uses interest rate contracts designated as cash flow hedges to hedge the variability of cash flows in the interest payments associated with its variable-rate debt due to changes in the U.S. dollar LIBOR-based floating interest rate. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts.
For derivative instruments that are designated and qualify as cash flow hedges, and as long as they remain highly effective, the Company records the changes in fair value of the derivative instrument in Accumulated other comprehensive loss as a separate component of equity in the Consolidated Balance Sheets and subsequently reclassifies these amounts into earnings in the same financial statement line item when the hedged transaction is recognized.
Net Investment Hedges
The Company uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. The Company records the changes in the fair value of the hedged items in cumulative translation adjustment as a separate component of Equity in the Consolidated Balance Sheets.
Other Derivatives
Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. The Company also uses total return swaps, based on equity or fixed income indices, to hedge its executive deferred compensation plan liability.
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Notes to Consolidated Financial Statements (Continued)
For derivative instruments not designated as hedging instruments, the Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated Statements of Earnings in the period of change.
Hedge Effectiveness
For interest rate swaps designated as fair value hedges, the Company measures hedge effectiveness by offsetting the change in fair value of the hedged items with the change in fair value of the derivative. For forward contracts designated as cash flow or net investment hedges, the Company measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates.
Fair Value of Derivative Instruments in the Consolidated Balance Sheets
The gross notional and fair value of derivative instruments in the Consolidated Balance Sheets was as follows:
As of
October 31, 2021
As of
October 31, 2020
  Fair Value   Fair Value
Outstanding
Gross
Notional
Other
Current
Assets
Long-Term
Financing
Receivables
and Other
Assets
Other
Accrued
Liabilities
Long-Term
Other
Liabilities
Outstanding
Gross
Notional
Other
Current
Assets
Long-Term
Financing
Receivables
and Other
Assets
Other
Accrued
Liabilities
Long-Term
Other
Liabilities
  In millions
Derivatives designated as hedging instruments                    
Fair value hedges:                    
Interest rate contracts $ 3,850  $ 15  $ 80  $ —  $ —  $ 3,850  $ —  $ 220  $ — 
Cash flow hedges:                    
Foreign currency contracts 7,664  125  68  49  32  7,652  75  85  95  38 
Interest rate contracts —  —  —  —  —  500  —  —  — 
Net investment hedges:                    
Foreign currency contracts 1,860  33  40  12  18  1,804  34  44  11 
Total derivatives designated as hedging instruments 13,374  173  188  61  50  13,806  109  349  108  47 
Derivatives not designated as hedging instruments                    
Foreign currency contracts 6,994  25  17  16  —  6,157  43  35 
Other derivatives 113  —  —  —  105  —  —  — 
Total derivatives not designated as hedging instruments 7,107  29  17  16  —  6,262  43  38 
Total derivatives $ 20,481  $ 202  $ 205  $ 77  $ 50  $ 20,068  $ 152  $ 358  $ 146  $ 48 
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Notes to Consolidated Financial Statements (Continued)
Offsetting of Derivative Instruments
The Company recognizes all derivative instruments on a gross basis in the Consolidated Balance Sheets. The Company's derivative instruments are subject to master netting arrangements and collateral security arrangements. The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under collateral security agreements. As of October 31, 2021 and 2020, information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements was as follows:
  As of
October 31, 2021
  In the Consolidated Balance Sheets    
  (i) (ii) (iii) = (i)–(ii) (iv) (v)   (vi) = (iii)–(iv)–(v)
        Gross Amounts
Not Offset
   
  Gross
Amount
Recognized
Gross
Amount
Offset
Net Amount
Presented
Derivatives Financial
Collateral
  Net Amount
  In millions
Derivative assets $ 407  $ —  $ 407  $ 123  $ 173  (1) $ 111 
Derivative liabilities $ 127  $ —  $ 127  $ 123  $ (2) $ (1)
  As of
October 31, 2020
  In the Consolidated Balance Sheets  
  (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v)
        Gross Amounts
Not Offset
   
  Gross
Amount
Recognized
Gross
Amount
Offset
Net Amount
Presented
Derivatives Financial
Collateral
  Net Amount
  In millions
Derivative assets $ 510  $ —  $ 510  $ 137  $ 321  (1) $ 52 
Derivative liabilities $ 194  $ —  $ 194  $ 137  $ 55  (2) $
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.
(2)Represents the collateral posted by the Company in cash or through re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of October 31, 2021 and 2020 the entire amount of the collateral posted of $5 million and $55 million, respectively, was through re-use of counterparty collateral.
The amounts recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges were as follows:
Carrying amount of the hedged assets/ (liabilities) Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities)
As of As of
Balance Sheet Line Item of Hedged Item October 31, 2021 October 31, 2020 October 31, 2021 October 31, 2020
In millions In millions
Notes payable and short-term borrowings $ (1,365) $ —  $ (15) $ — 
Long-term debt $ (2,573) $ (4,059) $ (80) $ (220)
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Notes to Consolidated Financial Statements (Continued)
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") were as follows:
Gains (Losses) Recognized in OCI on Derivatives
2021 2020 2019
In millions
Derivatives in Cash Flow Hedging relationship
Foreign exchange contracts $ (50) $ (34) $ 307 
Interest rate contracts —  (6)
Derivatives in Net Investment Hedging relationship
Foreign exchange contracts (33) 56  2
Total $ (83) $ 16  $ 310 
As of October 31, 2021, the Company expects to reclassify an estimated net accumulated other comprehensive gain of approximately $57 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges.
Effect of Derivative Instruments on the Consolidated Statements of Earnings
The pre-tax effect of derivative instruments on the Consolidated Statements of Earnings were as follows:
Gains (Losses) Recognized in Income
2021 2020 2019
Net revenue Interest and other, net Net revenue Interest and other, net Net revenue Interest and other, net
In millions
Total 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 $ 27,784  $ (211) $ 26,982  $ (215) $ 29,135  $ (177)
Gains (losses) on derivatives in fair value hedging relationships
Interest rate contracts
Hedged items $ —  $ 125  $ —  $ (159) $ —  $ (414)
Derivatives designated as hedging instruments —  (125) —  159  —  414 
Gains (losses) on derivatives in cash flow hedging relationships
Foreign exchange contracts
Amount of gains (losses) reclassified from accumulated other comprehensive income into income (81) (73) 38  (14) 233  138 
Interest rate contracts
Amount of gains (losses) reclassified from accumulated other comprehensive income into income —  (2) —  (3) —  — 
Gains (losses) on derivatives not designated as hedging instruments
Foreign exchange contracts —  (68) —  44  —  (134)
Other derivatives —  —  (5) — 
Total gains (losses) $ (81) $ (137) $ 38  $ 22  $ 233  $ 12 
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Notes to Consolidated Financial Statements (Continued)
Note 14: Borrowings
Notes Payable and Short-Term Borrowings
Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:
  As of October 31,
  2021 2020
  Amount
Outstanding
Weighted-Average
Interest Rate
Amount
Outstanding
Weighted-Average
Interest Rate
  Dollars in millions
Current portion of long-term debt(1)
$ 2,613  2.1  % $ 2,768  2.0  %
Commercial paper 705  (0.3) % 677  —  %
Notes payable to banks, lines of credit and other 234  1.0  % 310  1.3  %
Total notes payable and short-term borrowings $ 3,552    $ 3,755   
(1)As of October 31, 2021, the Current portion of long-term debt, net of discount and issuance costs, includes $1.2 billion associated with the Company issued asset-backed debt securities.
































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Notes to Consolidated Financial Statements (Continued)
Long-Term Debt
  As of October 31,
  2021 2020
  In millions
Hewlett Packard Enterprise Unsecured Senior Notes    
$1,000 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
$ 999  $ 999 
$750 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
749  749 
$1,250 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
1,250  1,250 
$1,000 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
—  998 
$500 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
—  500 
$1,000 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
1,000  1,000 
$500 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
—  500 
$800 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
—  800 
$1,350 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
1,349  1,349 
$2,500 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
2,497  2,497 
$750 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
750  750 
$1,500 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
1,499  1,499 
Hewlett Packard Enterprise Asset-Backed Debt Securities
$753 issued in June 2021, in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 0.58%, payable monthly from August 2021 with a stated final maturity date of March 2029
636  — 
$1,000 issued in March 2021, in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 0.49%, payable monthly from April 2021 with a stated final maturity date of March 2031
676  — 
$1,000 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 with a stated final maturity date of July 2030
442  822 
$755 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 with a stated final maturity date of February 2030
261  519 
$763 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 with a stated final
maturity date of September 2029
145  385 
Other, including capital lease obligations, at 1.1%-9.0%, due in calendar years 2021-2030(1)
198  171 
Fair value adjustment related to hedged debt 95  220 
Unamortized debt issuance costs (37) (54)
Less: current portion (2,613) (2,768)
Total long-term debt $ 9,896  $ 12,186 
(1)Other, including capital lease obligations includes $70 million and $98 million as of October 31, 2021 and 2020, respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries that are collateralized by receivables and underlying assets associated with the related capital and operating leases. For both the periods presented, the carrying amount of the assets approximated the carrying amount of the borrowings.
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Notes to Consolidated Financial Statements (Continued)
Interest expense on borrowings recognized in the Consolidated Statements of Earnings was as follows:
    For the fiscal years ended October 31,
Expense Location 2021 2020 2019
    In millions
Financing interest Financing interest $ 212  $ 271  $ 297 
Interest expense Interest and other, net 289  332  311 
Total interest expense   $ 501  $ 603  $ 608 
Hewlett Packard Enterprise Unsecured Senior Notes
On October 29, 2021, the Company redeemed $1 billion of 4.65% Senior Notes with an original maturity date of October 1, 2024. The Company recognized $100 million as early debt redemption costs within Interest and other, net in the Consolidated Statements of Earnings.
On September 7, 2021, the Company redeemed $500 million of 3.5% Senior Notes with an original maturity date of October 5, 2021, and $800 million of its outstanding Floating Rate Senior Notes at three-month USD LIBOR plus 0.72% due October 5, 2021.
On March 12, 2021, the Company repaid $500 million of Floating Rate Senior Notes at three-month USD LIBOR plus 0.68% on their original maturity date.
On August 17, 2020, the Company redeemed $3.0 billion of 3.60% Senior Notes with an original maturity date of October 15, 2020. These notes were fully hedged with interest rate swaps. As part of the transaction, the Company terminated and settled the related hedges and incurred make-whole premium provision charges of $7 million.
On July 17, 2020, the Company completed its offering of $1.0 billion of 1.45% Senior Notes due April 1, 2024 and $750 million of 1.75% Senior Notes due April 1, 2026. The net proceeds from this offerings, together with the cash on hand, were used to fund the redemption of the $3.0 billion outstanding principal amount of the 3.60% Notes due October 15, 2020.
On April 9, 2020, the Company completed its offering of $1.3 billion of 4.45% Senior Notes due October 2, 2023 and $1.0 billion of 4.65% Senior Notes due October 1, 2024. The net proceeds of the offering were used for general corporate purposes, including repayment of existing debt.
As disclosed in Note 13, "Financial Instruments", the Company uses interest rate swaps to mitigate the exposure of its fixed rate debt to changes in fair value resulting from changes in interest rates, or hedge the variability of cash flows in the interest payments associated with its variable-rate debt. Interest rates on long-term debt in the table above have not been adjusted to reflect the impact of any interest rate swaps.
Commercial Paper
Hewlett Packard Enterprise maintains two commercial paper programs, "the Parent Programs," and a wholly-owned subsidiary maintains a third program. Hewlett Packard Enterprise's U.S. program provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $4.75 billion which was increased from $4.0 billion in March 2020. Hewlett Packard Enterprise's euro commercial paper program provides for the issuance of commercial paper outside of the U.S. denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those programs at any one time cannot exceed the $4.75 billion as authorized by Hewlett Packard Enterprise's Board of Directors. In addition, the Hewlett Packard Enterprise subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $1.0 billion. As of October 31, 2021 and 2020, no borrowings were outstanding under the Parent Programs, and $705 million and $677 million, respectively, were outstanding under the subsidiary's program.
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Notes to Consolidated Financial Statements (Continued)
Revolving Credit Facility
We maintain a $4.75 billion five year senior unsecured committed credit facility that was entered into in August 2019. Loans under the revolving credit facility may be used for general corporate purposes, including support of the commercial paper program. Commitments under the Credit Agreement are available for a period of five years, which period may be extended, subject to satisfaction of certain conditions, by up to two one-year periods. Commitment fees, interest rates and other terms of borrowing under the credit facility vary based on Hewlett Packard Enterprise's external credit rating. As of October 31, 2021 and 2020, no borrowings were outstanding under the Credit Agreement.
Future Maturities of Borrowings
As of October 31, 2021, aggregate future maturities of the Company's borrowings at face value (excluding a fair value adjustment related to hedged debt of $95 million and a net discount on debt issuance of $7 million), including capital lease obligations were as follows:
Fiscal year In millions
2022 $ 2,602 
2023 3,054 
2024 1,248 
2025 2,516 
2026 761 
Thereafter 2,276 
Total $ 12,457 
Note 15: Stockholders' Equity
The components of accumulated other comprehensive loss, net of taxes as of October 31, 2021 and changes during fiscal 2021 were as follows:
Net unrealized
gains (losses) on
available-for-sale
securities
Net unrealized
gains (losses)
on cash
flow hedges
Unrealized
components
of defined
benefit plans
Cumulative
translation
adjustment
Accumulated
other
comprehensive
loss
In millions
Balance at beginning of period $ 18  $ (7) $ (3,473) $ (477) $ (3,939)
Other comprehensive income (loss) before reclassifications (3) (50) 763  16  726 
Reclassifications of (gains) losses into earnings —  156  285  —  441 
Tax (provision) benefit —  (18) (120) (5) (143)
Balance at end of period $ 15  $ 81  $ (2,545) $ (466) $ (2,915)
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Notes to Consolidated Financial Statements (Continued)
The components of accumulated other comprehensive loss, net of taxes as of October 31, 2020 and changes during fiscal 2020 were as follows:
Net unrealized
gains (losses) on
available-for-sale
securities
Net unrealized
gains (losses)
on cash
flow hedges
Unrealized
components
of defined
benefit plans
Cumulative
translation
adjustment
Accumulated
other
comprehensive
loss
In millions
Balance at beginning of period $ 23  $ 53  $ (3,366) $ (437) $ (3,727)
Effect of change in accounting principle (1)
—  (10) —  (33) (43)
Other comprehensive income (loss) before reclassifications (1) (40) (358) (12) (411)
Reclassifications of (gains) losses into earnings (4) (21) 259  —  234 
Tax (provision) benefit —  11  (8)
Balance at end of period $ 18  $ (7) $ (3,473) $ (477) $ (3,939)
(1)Reflects the adoption of the FASB guidance on stranded tax effects.
The components of accumulated other comprehensive loss, net of taxes as of October 31, 2019 and changes during fiscal 2019 were as follows:
Net unrealized
gains (losses) on
available-for-sale
securities
Net unrealized
gains (losses)
on cash
flow hedges
Unrealized
components
of defined
benefit plans
Cumulative
translation
adjustment
Accumulated
other
comprehensive
loss
In millions
Balance at beginning of period $ 17  $ 106  $ (2,922) $ (419) $ (3,218)
Other comprehensive income (loss) before reclassifications 308  (701) (18) (402)
Reclassifications of (gains) losses into earnings (3) (371) 231  —  (143)
Tax (provision) benefit —  10  26  —  36 
Balance at end of period $ 23  $ 53  $ (3,366) $ (437) $ (3,727)
Dividends
The stockholders of HPE common stock are entitled to receive dividends when and as declared by HPE's Board of Directors. Dividends declared were $0.48 per common share in fiscal 2021 and $0.36 per common share in fiscal 2020.
On November 30, 2021, the Company declared a regular cash dividend of $0.12 per share on the Company's common stock, payable on January 7, 2022, to the stockholders of record as of the close of business on December 10, 2021.
Share Repurchase Program
On October 13, 2015, the Company's Board of Directors approved a share repurchase program with a $3.0 billion authorization, which was refreshed with additional share repurchase authorizations of $3.0 billion, $5.0 billion and $2.5 billion on May 24, 2016, October 16, 2017 and February 21, 2018, respectively. This program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions.
On April 6, 2020, the Company temporarily suspended its share repurchases in response to the global economic uncertainty that resulted from the pandemic. In the fourth quarter of fiscal 2021, the Company resumed its share repurchase activity.
In fiscal 2021, the Company repurchased and settled a total of 14.7 million shares under its share repurchase program through open market repurchases and there were no unsettled open market repurchases outstanding as of October 31, 2020. Additionally, the Company had unsettled open market repurchases of 0.8 million shares as of October 31, 2021. Shares repurchased during the fiscal 2021 were recorded as a $0.2 billion reduction to stockholders' equity. As of October 31, 2021, the Company had a remaining authorization of $1.9 billion for future share repurchases.
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Notes to Consolidated Financial Statements (Continued)
In fiscal 2020, the Company repurchased and settled a total of 25.3 million shares under its share repurchase program through open market repurchases, which included 0.5 million shares that were unsettled open market purchase as of October 31, 2019. As of October 31, 2020, the Company had no unsettled open market repurchases of shares. Shares repurchased during fiscal 2020 were recorded as a $0.3 billion reduction to stockholders' equity. As of October 31, 2020, the Company had a remaining authorization of $2.1 billion for future share repurchases.
Note 16: Net Earnings (Loss) Per Share
The Company calculates basic net earnings per share ("EPS") using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes the weighted-average dilutive effect of outstanding restricted stock units, stock options, and performance-based awards.
The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:
  For the fiscal years ended October 31,
  2021 2020 2019
  In millions, except per share amounts
Numerator:      
Net earnings (loss) $ 3,427  $ (322) $ 1,049 
Denominator:      
Weighted-average shares used to compute basic net EPS 1,309  1,294  1,353 
Dilutive effect of employee stock plans 21  —  13 
Weighted-average shares used to compute diluted net EPS 1,330  1,294  1,366 
Net earnings (loss) per share:
Basic $ 2.62  $ (0.25) $ 0.78 
Diluted $ 2.58  $ (0.25) $ 0.77 
Anti-dilutive weighted-average stock awards(1)
49 
(1)The Company excludes shares potentially issuable under employee stock plans that could dilute basic net EPS in the future from the calculation of diluted net earnings (loss) per share, as their effect, if included, would have been anti-dilutive for the periods presented.
Note 17: Litigation and Contingencies
Hewlett Packard Enterprise is involved in various lawsuits, claims, investigations and proceedings including those consisting of intellectual property, commercial, securities, employment, employee benefits and environmental matters, which arise in the ordinary course of business. In addition, as part of the Separation and Distribution Agreement, Hewlett Packard Enterprise and HP Inc. (formerly known as "Hewlett-Packard Company") agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreement included provisions that allocate liability and financial responsibility for pending litigation involving the parties, as well as provide for cross-indemnification of the parties against liabilities to one party arising out of liabilities allocated to the other party. The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. arising prior to the Separation. Hewlett Packard Enterprise records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. Hewlett Packard Enterprise reviews these matters at least quarterly and adjusts these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events pertaining to a particular matter. Litigation is inherently unpredictable. However, Hewlett Packard Enterprise believes it has valid defenses with respect to legal matters pending against us. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of October 31, 2021, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements.
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Notes to Consolidated Financial Statements (Continued)
Litigation, Proceedings and Investigations
Ross and Rogus v. Hewlett Packard Enterprise Company. On November 8, 2018, a putative class action complaint was filed in the Superior Court of California, County of Santa Clara alleging that HPE pays its California-based female employees "systemically lower compensation" than HPE pays male employees performing substantially similar work. The complaint alleges various California state law claims, including California's Equal Pay Act, Fair Employment and Housing Act, and Unfair Competition Law, and seeks certification of a California-only class of female employees employed in certain "Covered Positions." The complaint seeks damages, statutory and civil penalties, attorneys' fees and costs. On April 2, 2019, HPE filed a demurrer to all causes of action and an alternative motion to strike portions of the complaint. On July 2, 2019, the court denied HPE’s demurrer as to the claims of the putative class and granted HPE's demurrer as to the claims of the individual plaintiffs.
India Directorate of Revenue Intelligence Proceedings.  On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the "DRI") issued show cause notices to Hewlett-Packard India Sales Private Ltd ("HP India"), a subsidiary of HP Inc., seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties. Prior to the issuance of the show cause notices, HP India deposited approximately $16 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India.
On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $386 million, of which HP India had already deposited $9 million. On December 11, 2012, HP India voluntarily deposited an additional $10 million in connection with the products-related show cause notice. On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $17 million, of which HP India had already deposited $7 million. After the order, HP India deposited an additional $3 million in connection with the parts-related show cause notice to avoid certain penalties.
HP India filed appeals of the Commissioner's orders before the Customs Tribunal along with applications for waiver of the pre-deposit of remaining demand amounts as a condition for hearing the appeals. The Customs Department has also filed cross-appeals before the Customs Tribunal. On January 24, 2013, the Customs Tribunal ordered HP India to deposit an additional $24 million against the products order, which HP India deposited in March 2013. The Customs Tribunal did not order any additional deposit to be made under the parts order. In December 2013, HP India filed applications before the Customs Tribunal seeking early hearing of the appeals as well as an extension of the stay of deposit as to HP India and the individuals already granted until final disposition of the appeals. On February 7, 2014, the application for extension of the stay of deposit was granted by the Customs Tribunal until disposal of the appeals. On October 27, 2014, the Customs Tribunal commenced hearings on the cross-appeals of the Commissioner's orders. The Customs Tribunal rejected HP India's request to remand the matter to the Commissioner on procedural grounds. The hearings were scheduled to reconvene on April 6, 2015, and again on November 3, 2015, April 11, 2016, and January 15, 2019, but were canceled at the request of the Customs Tribunal. The hearing was again rescheduled for January 20, 2021 but was postponed and has not yet been rescheduled.
ECT Proceedings.  In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos ("ECT"), notified a former subsidiary of HP Inc. in Brazil ("HP Brazil") that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly coordinated their bids and fixed results for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP Brazil it had decided to apply the penalties against HP Brazil and suspend HP Brazil's right to bid and contract with ECT for five years, based upon the evidence before it. In August 2011, HP Brazil appealed ECT's decision. In April 2013, ECT rejected HP Brazil's appeal, and the administrative proceedings were closed with the penalties against HP Brazil remaining in place. In parallel, in September 2011, HP Brazil filed a civil action against ECT seeking to have ECT's decision revoked. HP Brazil also requested an injunction suspending the application of the penalties until a final ruling on the merits of the case. The court of first instance has not issued a decision on the merits of the case, but it has denied HP Brazil's request for injunctive relief. HP Brazil appealed the denial of its request for injunctive relief to the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five to two years. HP Brazil appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until a final ruling on the merits of the case. HP Brazil expects any appeal of the decision on the merits to last several years.
Forsyth, et al. vs. HP Inc. and Hewlett Packard Enterprise. This purported class and collective action was filed on August 18, 2016 and an amended complaint was filed on December 19, 2016 in the United States District Court for the
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Notes to Consolidated Financial Statements (Continued)
Northern District of California, against HP Inc. and Hewlett Packard Enterprise (collectively, "Defendants") alleging Defendants violated the Federal Age Discrimination in Employment Act ("ADEA"), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers.  Plaintiffs seek to certify a nationwide collective action under the ADEA comprised of all individuals age 40 years and older who had their employment terminated by an HP entity pursuant to a work force reduction ("WFR") plan on or after December 9, 2014 for individuals terminated in deferral states and on or after April 8, 2015 in non-deferral states. Plaintiffs also seek to certify a Rule 23 class under California law comprised of all persons 40 years or older employed by Defendants in the state of California and terminated pursuant to a WFR plan on or after August 18, 2012. Following the filing of Plaintiffs' Fourth Amended Complaint, Plaintiffs filed a Motion for Preliminary Class Certification on December 30, 2020. On April 14, 2021, Plaintiffs’ Motion for Conditional Class Certification was granted. The conditionally certified collective action consists of all individuals who had their employment terminated by Defendants pursuant to a WFR Plan on or after November 1, 2015, and who were 40 years or older at the time of such termination. The collective action excludes all individuals who signed a Waiver and General Release Agreement or an Agreement to Arbitrate Claims.
Hewlett-Packard Company v. Oracle (Itanium). On June 15, 2011, HP Inc. filed suit against Oracle in the Superior Court of California, County of Santa Clara in connection with Oracle's March 2011 announcement that it was discontinuing software support for HP Inc.'s Itanium-based line of mission critical servers. HP Inc. asserted, among other things, that Oracle's actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle's hiring of Mark Hurd. Trial was bifurcated into two phases. HP Inc. prevailed in the first phase of the trial, in which the court ruled that the contract at issue required Oracle to continue to offer its software products on HP Inc.'s Itanium-based servers for as long as HP Inc. decided to sell such servers.  Phase 2 of the trial was then postponed by Oracle's appeal of the trial court's denial of Oracle's "anti-SLAPP" motion, in which Oracle argued that HP Inc.'s damages claim infringed on Oracle's First Amendment rights. On August 27, 2015, the California Court of Appeal rejected Oracle's appeal.  The matter was remanded to the trial court for Phase 2 of the trial, which began on May 23, 2016, and was submitted to the jury on June 29, 2016. On June 30, 2016, the jury returned a verdict in favor of HP Inc., awarding HP Inc. approximately $3.0 billion in damages: $1.7 billion for past lost profits and $1.3 billion for future lost profits. On October 20, 2016, the court entered judgment for this amount with interest accruing until the judgment is paid. Oracle's motion for a new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court's judgment on January 17, 2017. On February 2, 2017, HP Inc. filed a notice of cross-appeal challenging the trial court's denial of prejudgment interest. On May 16, 2019, HP Inc. filed its application to renew the judgment. As of May 16, 2019, the renewed judgment is approximately $3.8 billion. Daily interest on the renewed judgment is now accruing at $1 million and will be recorded upon receipt. On June 14, 2021, the California Court of Appeal affirmed the judgment of the trial court. Oracle filed a Petition for Rehearing with the California Court of Appeal, which was denied on July 8, 2021. On July 26, 2021, Oracle filed a Petition for Review with the California Supreme Court. The California Supreme Court denied the petition on September 29, 2021, and the California Court of Appeal issued the remittitur on September 30, 2021. On October 12, 2021, Oracle paid $4.66 billion, reflecting all amounts owed on the judgment plus accrued interest. Pursuant to the terms of the Separation and Distribution Agreement between HP Inc. and HPE, this amount was split evenly between the parties following the reimbursement of approximately $48 million in pre-separation legal costs incurred by HPE in prosecution of the litigation. In total, HPE has received payment of approximately $2.35 billion. On October 27, 2021, HP Inc. filed an acknowledgement of full satisfaction of judgment. Oracle has until December 28, 2021 to file a petition for certiorari asking the United States Supreme Court for review. Review by the United States Supreme Court is discretionary, and we believe the likelihood the award of damages will be reduced or reversed is remote.
Oracle America, Inc., et al. v. Hewlett Packard Enterprise Company (Terix copyright matter). On March 22, 2016, Oracle filed a complaint against HPE in the United States District Court for the Northern District of California, alleging copyright infringement, interference with contract, intentional interference with prospective economic relations, and unfair competition. Oracle’s claims arise out of HPE's prior use of a third-party maintenance provider named Terix Computer Company, Inc. ("Terix"). Oracle contends that in connection with HPE's use of Terix as a subcontractor for certain customers of HPE's multivendor support business, Oracle's copyrights were infringed, and HPE is liable for vicarious and contributory infringement and related claims. The lawsuit against HPE follows a prior lawsuit brought by Oracle against Terix in 2013 relating to Terix's alleged unauthorized provision of Solaris patches to customers on Oracle hardware. On January 29, 2019, the court granted HPE's Motion for Summary Judgment as to all of Oracle's claims. On February 20, 2019, the court entered judgment in favor of HPE, dismissing Oracle's claims in their entirety. Oracle appealed the trial court's ruling to the United States Court of Appeals for the Ninth Circuit. On August 20, 2020, the United States Court of Appeals for the Ninth Circuit issued its ruling, affirming in part and reversing in part the trial court's decision granting summary judgment in favor of HPE. On October 6, 2020, the matter was remanded to the United States District Court for the Northern District of California. On
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Notes to Consolidated Financial Statements (Continued)
June 4, 2021, the Court issued an order denying HPE’s motion for summary judgment and granting-in-part Oracle’s motion for partial summary judgment as to a certain of HPE’s defenses. The Court has rescheduled the start of trial to May 23, 2022.
Network-1 Technologies, Inc. v. Alcatel-Lucent USA Inc., et al. This patent infringement action was filed on September 15, 2011 in the United States District Court for the Eastern District of Texas, alleging that various Hewlett Packard Enterprise switches and access points infringe Network-1's patent relating to the 802.3af and 802.3at "Power over Ethernet" standards. Network-1 seeks damages, attorneys' fees and costs, and declaratory and injunctive relief. A jury trial was conducted beginning on November 6, 2017. On November 13, 2017, the jury returned a verdict in favor of HPE, finding that HPE did not infringe Network-1's patent and that the patent was invalid. On August 29, 2018, the court denied Network-1's motion for a new trial on infringement and entered the jury's verdict finding that HPE does not infringe the relevant Network-1 patent. The court also granted Network-1's motion for Judgment as a Matter of Law on validity. Network-1 appealed the jury verdict of non-infringement to the United States Court of Appeals for the Federal Circuit. HPE cross-appealed the court's decision to grant Network-1's motion for Judgment as a Matter of Law on validity. On September 24, 2020, the Federal Circuit issued its ruling, affirming-in-part and reversing-in-part the jury's verdict, and finding that an erroneous claim construction was presented to the jury that prejudiced Network-1. The matter has been remanded back to United States District Court for the Eastern District of Texas for further proceedings consistent with the Federal Circuit's ruling. On May 7, 2021, the District Court issued an order granting Network-1's motion for a new trial. The parties have agreed to the terms of a settlement that resolves the litigation with no material financial statements impact. The lawsuit was dismissed on August 13, 2021 and the matter is now closed.
Q3 Networking Litigation. On September 21 and September 22, 2020, Q3 Networking LLC filed complaints against HPE, Aruba Networks, Commscope and Netgear in the United States District Court for the District of Delaware and the United States International Trade Commission (“ITC”). Both complaints allege infringement of four patents, and the ITC complaint defines the “accused products” as “routers, access points, controllers, network management servers, other networking products, and hardware and software components thereof.” The ITC action was instituted on October 23, 2020. The District of Delaware action has been stayed pending resolution of the ITC action. The evidentiary hearing before the ITC has been completed. On December 7, 2021, the Administrative Law Judge issued his initial determination finding no violation of section 337 of the Tariff Act. A public version of the initial determination will be available by January 7, 2022. The ITC must decide whether to adopt the Administrative Law Judge’s findings or grant review of the initial determination no later than February 7, 2022.
Shared Litigation with HP Inc., DXC and Micro Focus
As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., Hewlett Packard Enterprise and DXC, and Hewlett Packard Enterprise and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise and the separation of Seattle SpinCo from Hewlett Packard Enterprise), in each case arising prior to the applicable separation.
Environmental
The Company's operations and products are or may in the future become subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the substances and materials used in the Company's products, the energy consumption of products, services and operations and the operational or financial responsibility for recycling, treatment and disposal of those products. This includes legislation 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"). The Company could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws, including those related to addressing climate change and other environmental, social, and governance-related issues, or if its products become non-compliant with such environmental laws. The Company's potential exposure includes impacts on revenue, fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs. The amount and timing of costs to comply with environmental laws are difficult to predict.
In particular, the Company may become a party to, or otherwise involved in, proceedings brought by U.S. or state environmental agencies under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), known as "Superfund," or other federal, state or foreign laws and regulations addressing the clean-up of contaminated sites, and
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs. The Company is also contractually obligated to make financial contributions to address actions related to certain environmental liabilities, both ongoing and arising in the future, pursuant to its Separation and Distribution Agreement with HP Inc.
Note 18: Guarantees, Indemnifications and Warranties
Guarantees
In the ordinary course of business, the Company may issue performance guarantees to certain of its clients, customers and other parties pursuant to which the Company has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, the Company would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. The Company believes the likelihood of having to perform under a material guarantee is remote.
The Company has entered into service contracts with certain of its clients that are supported by financing arrangements. If a service contract is terminated as a result of the Company's non-performance under the contract or failure to comply with the terms of the financing arrangement, the Company could, under certain circumstances, be required to acquire certain assets related to the service contract. The Company believes the likelihood of having to acquire a material amount of assets under these arrangements is remote.
Indemnifications
In the ordinary course of business, the Company enters into contractual arrangements under which the Company may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of the Company or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. The Company also provides indemnifications to certain vendors and customers against claims of IP infringement made by third parties arising from the use by such vendors and customers of the Company's software products and support services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.
General Cross-indemnification
In connection with the Separation, Everett and Seattle transactions, the Company entered into a Separation and Distribution Agreement with HP Inc., DXC and Micro Focus respectively, whereby the Company agreed to indemnify HP Inc., DXC and Micro Focus, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to the Company as part of the Separation, Everett and Seattle transactions. Similarly, HP Inc., DXC and Micro Focus agreed to indemnify the Company, each of its subsidiaries and each of their respective directors, officers and employees from and against all claims and liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP Inc., DXC and Micro Focus as part of the Separation, Everett and Seattle transactions.
Tax Matters Agreement with DXC/Micro Focus and Other Income Tax Matters
In connection with the Everett Transaction and the Seattle Transaction, the Company entered into a Tax Matters Agreement with DXC and Micro Focus respectively (the "DXC Tax Matters Agreement" and the "Micro Focus Tax Matters Agreement"). The DXC Tax Matters Agreement and the Micro Focus Tax Matters Agreement govern the rights and obligations of the Company and DXC/Micro Focus for certain pre-divestiture tax liabilities and tax receivables. The DXC Tax Matters Agreement and the Micro Focus Tax Matters Agreement generally provide that the Company will be responsible for pre-divestiture tax liabilities and will be entitled to pre-divestiture tax receivables that arise from adjustments made by tax authorities to the Company's and DXC's, or Micro Focus', as applicable, U.S. and certain non-U.S. tax returns. In certain jurisdictions, the Company and DXC/Micro Focus have joint and several liability for past tax liabilities and accordingly, the Company could be legally liable under applicable tax law for such liabilities and required to make additional tax payments.
In addition, if the distribution of Everett's or Seattle's common shares to Hewlett Packard Enterprise's stockholders is determined to be taxable, the Company would generally bear the tax liability, unless the taxability of the distribution is the direct result of actions taken by DXC/Micro Focus, in which case DXC/Micro Focus would be responsible for any taxes imposed on the distribution.
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Notes to Consolidated Financial Statements (Continued)
As of October 31, 2021 and 2020, the Company's receivable and payable balances related to indemnified litigation matters and other contingencies, and income tax-related indemnification covered by these agreements were as follows:
As of October 31,
  2021 2020
  In millions
Litigation matters and other contingencies
Receivable $ 54  $ 70 
Payable $ 53  $ 53 
Income tax-related indemnification(1)
Net indemnification receivable - long-term
$ 50  $ 62 
Net indemnification receivable - short-term
$ 11  $ 65 
Net indemnification payable - long-term
$ —  $ 15 
(1)The actual amount that the Company may receive or pay could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several years.
Warranties
The Company's aggregate product warranty liabilities and changes therein were as follows:
  For the fiscal years ended October 31,
  2021 2020
  In millions
Balance at beginning of year $ 385  $ 400 
Charges 203  238 
Adjustments related to pre-existing warranties (27) (3)
Settlements made (234) (250)
Balance at end of year(1)
$ 327  $ 385 
(1)The Company includes the current portion in Other accrued liabilities, and amounts due after one year in Other non-current liabilities in the accompanying Consolidated Balance Sheets.
Note 19: Commitments
Unconditional Purchase Obligations
As of October 31, 2021, the Company had unconditional purchase obligations of approximately $768 million. These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction, as well as settlements that the Company has reached with third parties, requiring it to pay determined amounts over a specified period of time. These unconditional purchase obligations are related principally to inventory purchase, software maintenance and support services and other items. Unconditional purchase obligations exclude agreements that are cancellable without penalty.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
As of October 31, 2021, future unconditional purchase obligations were as follows:
Fiscal Year In millions
2022 $ 458 
2023 175 
2024 53 
2025 50 
2026
Thereafter 23 
Total $ 768 
Note 20: Equity Method Investments
The Company includes investments which are accounted for using the equity method, under Investments in equity interests on the Company's Consolidated Balance Sheets. As of October 31, 2021 and October 31, 2020, the Company's Investments in equity interests were $2.2 billion and primarily related to a 49% equity interest in H3C Technologies ("H3C").
In the periods presented, the Company recorded its interest in the net earnings of H3C along with an adjustment to eliminate unrealized profits on intra-entity sales, and the amortization of basis difference, within Earnings from equity interests in the Consolidated Statements of Earnings.
The difference between the sale date carrying value of the Company's investment in H3C and its proportionate share of the net assets fair value of H3C, created a basis difference of $2.5 billion, which was allocated as follows:
In millions
Equity method goodwill $ 1,674 
Intangible assets 749 
In-process research and development 188 
Deferred tax liabilities (152)
Other 75 
Basis difference $ 2,534 
The Company amortizes the basis difference over the estimated useful lives of the assets that gave rise to this difference. The weighted-average life of the H3C intangible assets is five years and is being amortized using the straight-line method. As of October 31, 2021 and 2020, the Company determined that no impairment of its equity method investments existed.
Earnings from equity interest
The Company recorded earnings from equity interests of $180 million, $67 million and $20 million in fiscal 2021, 2020 and 2019, respectively, in the Consolidated Statements of Earnings, the components of which are as follows:
For the fiscal years ended October 31,
2021 2020 2019
In millions
Earnings from equity interests, net of taxes(1)
$ 292  $ 211  $ 167 
Basis difference amortization (109) (145) (152)
Elimination of profit on intra-entity sales adjustment
(3)
Earnings from equity interests $ 180  $ 67  $ 20 
(1) In fiscal 2021, earnings from equity interests, net of taxes included $260 million from H3C and $32 million from other venture investments.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
During fiscals 2021 and 2020, the Company received a cash dividend of $184 million and $165 million, respectively, from H3C. This amount was accounted for as a return on investment and reflected as a reduction in the carrying balance of the Company's Investments in equity interests in its Consolidated Balance Sheets.
The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage and networking products and services. During fiscals 2021, 2020 and 2019, HPE recorded approximately $794 million, $737 million and $897 million of sales to H3C and $150 million, $215 million and $202 million of purchases from H3C, respectively. Payables due to H3C as of October 31, 2021 and 2020 were approximately $32 million and $29 million, respectively. Receivables due from H3C as of October 31, 2021 and 2020 were approximately $70 million and $19 million, respectively.

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ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
ITEM 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the "Evaluation Date"). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company's management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
See Management's Report of Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm on our internal control over financial reporting in Item 8, which are incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any change in our internal control over financial reporting during that quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting even though our global workforce continues to primarily work-from-home due to COVID-19. We are continually monitoring and assessing the COVID-19 situation and its impact on our internal controls.
ITEM 9B. Other Information.
Effective December 8, 2021, HPE and Keerti Melkote, former President of HPE's Intelligent Edge business unit, entered into a retirement agreement (the “Agreement”) that amended Mr. Melkote’s outstanding restricted stock unit (“RSU”) award agreements to provide that the underlying RSU awards shall be eligible to continue vesting on their current vesting schedule after Mr. Melkote’s December 31, 2021 retirement, subject to (i) all existing performance vesting criteria for performance-adjusted RSUs, (ii) Mr. Melkote’s entry into a standard release of claims and (iii) Mr. Melkote’s ongoing adherence to standard non-competition and non-solicitation covenants for the duration of the RSU awards’ vesting schedule. The foregoing description of the Agreement is qualified entirely by the Agreement itself, which is attached hereto as Exhibit 10.32 and incorporated by reference herein.
The following disclosure is being made under Section 13(r) of the Exchange Act:
On March 2, 2021, the U.S. Secretary of State designated the Russian Federal Security Service (“FSB”) as a party subject to the provisions of U.S. Executive Order No. 13382 issued in 2005 (“Executive Order 13382”). On the same day, the U.S. Department of the Treasury’s Office of Foreign Assets Control updated General License 1B (“General License 1B”) which generally authorizes U.S. companies to engage in certain licensing, permitting, certification, notification and related transactions with the FSB as may be required for the importation, distribution or use of information technology products in the Russian Federation. Our local subsidiary is required to engage on a regular basis with the FSB as a licensing authority and file documents in order to conduct business within the Russian Federation. There are no gross revenues or net profits directly associated with any such dealings by us with the FSB and all such dealings are explicitly authorized by General License 1B. We plan to continue these activities as required to continue to conduct business in the Russian Federation to the extent permitted by applicable law.
On April 15, 2021, the U.S. Government issued an executive order on Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation (“Executive Order 14024”), implementing additional U.S. sanctions against the Russian government and against Russian actors that threaten U.S. interests, including certain technology companies that support the Russian Intelligence Service. The U.S. Secretary of the Treasury designated Pozitiv
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Teknolodzhiz, AO (“Positive Technologies”) under Executive Order 14024 and Executive Order 13382. Prior to its designation, HPE’s local Russian subsidiary, occasionally through distributors and resellers, had sold equipment to and entered into service contracts with Positive Technologies. HPE’s local subsidiary had also entered into an original equipment manufacturing agreement with Positive Technologies and approved it as a reseller. Following the sanctions designation, our local subsidiary immediately initiated procedures to terminate its relationship with Positive Technologies. HPE does not plan to engage in any further transactions with this entity, except wind down activities that are authorized by OFAC going forward. In fiscal 2021, the total cash received, excluding sales tax, from our business with Positive Technologies since its designation was $33,412, of which $1,755 has been recognized as revenue and the remaining $31,657 has been recorded as deferred revenue. There are no identifiable net profits associated with HPE’s relationship with Positive Technologies for this reporting period.
For a summary of our revenue recognition policies, see "Revenue Recognition" described in Note 1, "Overview and Summary of Significant Accounting Policies" to the Consolidated Financial Statements in Item 8 of Part II, which is incorporated herein by reference.
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PART III
ITEM 10. Directors, Executive Officers and Corporate Governance.
The names of the executive officers of Hewlett Packard Enterprise and their ages, titles and biographies as of the date hereof are incorporated by reference from Part I, Item 1, above.
The following information is included in Hewlett Packard Enterprise's Proxy Statement related to its 2022 Annual Meeting of Stockholders to be filed within 120 days after Hewlett Packard Enterprise's fiscal year end of October 31, 2021 (the "Proxy Statement") and is incorporated herein by reference:
Information regarding directors of Hewlett Packard Enterprise including those who are standing for reelection and any persons nominated to become directors of Hewlett Packard Enterprise is set forth under "Our Board—Board Leadership Structure" and/or "Proposals to be Voted On—Proposal No. 1—Election of Directors."
Information regarding Hewlett Packard Enterprise's Audit Committee and designated "audit committee financial experts" is set forth under "Our Board—Committees of the Board—Audit Committee."
Information on Hewlett Packard Enterprise's code of business conduct and ethics for directors, officers and employees, also known as the "Standards of Business Conduct," and on Hewlett Packard Enterprise's Corporate Governance Guidelines is set forth under "Governance—Governance Documents."
ITEM 11. Executive Compensation.
The following information is included in the Proxy Statement and is incorporated herein by reference:
Information regarding Hewlett Packard Enterprise's compensation of its named executive officers is set forth under "Executive Compensation."
Information regarding Hewlett Packard Enterprise's compensation of its directors is set forth under "Our Board—Director Compensation and Stock Ownership Guidelines."
The report of Hewlett Packard Enterprise's HR and Compensation Committee is set forth under "Executive Compensation—HRC Committee Report on Executive Compensation."
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following information is included in the Proxy Statement and is incorporated herein by reference:
Information regarding security ownership of certain beneficial owners, directors and executive officers is set forth under "Governance—Stock Ownership Information—Common Stock Ownership of Certain Beneficial Owners and Management."
Information regarding Hewlett Packard Enterprise's equity compensation plans, including both stockholder approved plans and non-stockholder approved plans, is set forth in the section entitled "Equity Compensation Plan Information."
ITEM 13. Certain Relationships and Related Transactions, and Director Independence.
The following information is included in the Proxy Statement and is incorporated herein by reference:
Information regarding transactions with related persons is set forth under "Governance—Related Persons Transactions Policies and Procedures."
Information regarding director independence is set forth under "Governance—Director Independence."
ITEM 14. Principal Accounting Fees and Services.
Information regarding principal accounting fees and services is set forth under "Audit-Related Matters—Principal Accounting Fees and Services" in the Proxy Statement, which information is incorporated herein by reference.
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PART IV
ITEM 15. Exhibits, Financial Statement Schedules.
(a)The following documents are filed as part of this report:
1. All Financial Statements:
The following financial statements are filed as part of this report under Item 8—"Financial Statements and Supplementary Data."
60
64
65
66
67
68
70
2. Financial Statement Schedules:
All schedules are omitted as the required information is not applicable or the information is presented in the Consolidated Financial Statements and notes thereto in Item 8 above.
3. Exhibits:
A list of exhibits filed or furnished with this Annual Report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished by Hewlett Packard Enterprise) is provided in the accompanying Exhibit Index. Hewlett Packard Enterprise will furnish copies of exhibits for a reasonable fee (covering the expense of furnishing copies) upon request. Stockholders may request exhibits copies by contacting:
Hewlett Packard Enterprise Company
Attn: Investor Relations
11445 Compaq Center West Drive
Houston, Texas 77070
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
  Incorporated by Reference
Exhibit
Number
Exhibit Description Form File No. Exhibit(s) Filing Date
2.1 8-K 001-37483 2.1 November 5, 2015
2.2 8-K 001-37483 2.2 November 5, 2015
2.3 8-K 001-37483 2.4 November 5, 2015
2.4 8-K 001-37483 2.5 November 5, 2015
2.5 8-K 001-37483 2.6 November 5, 2015
2.6 8-K 001-37483 2.7 November 5, 2015
2.7 8-K 001-37483 2.1 May 26, 2016
2.8 8-K 001-37483 2.2 May 26, 2016
2.9 8-K 001-37483 2.1 September 7, 2016
2.10 8-K 001-37483 2.2 September 7, 2016
2.11 8-K 001-37483 2.3 September 7, 2016
2.12 8-K 001-37483 2.1 November 2, 2016
2.13 8-K 001-37483 2.2 November 2, 2016
2.14 8-K 001-37483 99.1 March 7, 2017
2.15 8-K 001-37483 99.2 March 7, 2017
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
  Incorporated by Reference
Exhibit
Number
Exhibit Description Form File No. Exhibit(s) Filing Date
2.16 8-K 001-38033 2.1 April 6, 2017
2.17 8-K 001-38033 2.2 April 6, 2017
2.18 8-K 001-38033 2.3 April 6, 2017
2.19 8-K 001-38033 2.4 April 6, 2017
2.20 8-K 001-38033 2.5 April 6, 2017
2.21 8-K 001-38033 2.6 April 6, 2017
2.22 8-K 001-37483
2.1 September 1, 2017
2.23 8-K 001-37483
2.2 September 1, 2017
2.24 8-K 001-37483
2.3 September 1, 2017
2.25 8-K 001-37483
2.4 September 1, 2017
2.26 8-K 001-37483 2.1 May 17, 2019
2.27 8-K 001-37483 2.1 July 13, 2020
3.1 8-K 001-37483 3.1 November 5, 2015
3.2 8-K 001-37483 3.2 November 5, 2015
3.3 8-K 001-37483 3.1 March 20, 2017
3.4 8-K 001-37483 3.2 March 20, 2017
4.1 8-K 001-37483 4.1 October 13, 2015
4.2 8-K 001-37483 4.5 October 13, 2015
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
  Incorporated by Reference
Exhibit
Number
Exhibit Description Form File No. Exhibit(s) Filing Date
4.3 8-K 001-37483 4.6 October 13, 2015
4.4 8-K 001-37483 4.7 October 13, 2015
4.5 8-K 001-37483 4.8 October 13, 2015
4.6 8-K 001-37483 4.2 September 13, 2019
4.7 8-K 001-37483 4.2 April 9, 2020
4.8 8-K 001-37483 4.2 July 17, 2020
4.9 8-K 001-37483 4.3 July 17, 2020
4.10 8-K 001-37483 4.12 October 13, 2015
4.11 S-3ASR 333-222102 4.5 December 15, 2017
4.12 10-K 001-37483 4.16 December 10, 2020
10.1 8-K 001-37483 10.1 January 30, 2017
10.2 S-8 333-255839 4.4 May 6, 2021
10.3 10-12B/A 001-37483 10.4 September 28, 2015
10.4 S-8 333-207679 4.4 October 30, 2015
10.5 8-K 001-37483 10.4 November 5, 2015
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
  Incorporated by Reference
Exhibit
Number
Exhibit Description Form File No. Exhibit(s) Filing Date
10.6 8-K 001-37483 10.8 November 5, 2015
10.7 8-K 001-37483 10.9 November 5, 2015
10.8 8-K 001-37483 10.10 November 5, 2015
10.9 10-Q 001-37483 10.14 March 10, 2016
10.10 10-Q 001-37483 10.15 March 10, 2016
10.11 8-K 001-37483 10.1 May 26, 2016
10.12 S-8 333-216481 4.3 March 6, 2017
10.13 S-8 333-217349 4.3 April 18, 2017
10.14 S-8 333-217438 4.3 April 24, 2017
10.15 10-K 000-51333 10.3 September 10, 2012
10.16 S-8 333-221254 4.3 November 1, 2017
10.17 S-8 333-221254 4.4 November 1, 2017
10.18 S-8 333-226181 4.3 July 16, 2018
10.19 10-Q 001-37483 10.29 September 4, 2018
10.20 10-Q 001-37483 10.30 September 4, 2018
10.21 10-K 001-37483 10.27 December 12, 2018
10.22 10-K 001-37483 10.29 December 12, 2018
10.23 S-8 333-229449 4.3 January 31, 2019
10.24 8-K 001-37483 10.1 August 20, 2019
10.25 S-8 333-234033 4.3 October 1, 2019
10.26 10-K 001-37483 10.31 December 13, 2019
10.27 10-Q 001-37483 10.32 March 9, 2020
10.28 S-8 333-249731 4.3 October 29, 2020
10.29 S-8 333-249731 4.4 October 29, 2020
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
  Incorporated by Reference
Exhibit
Number
Exhibit Description Form File No. Exhibit(s) Filing Date
10.30
10.31
10.32
21
23.1
24
31.1
31.2
32
101.INS Inline XBRL Instance Document‡
101.SCH Inline XBRL Taxonomy Extension Schema Document‡
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document‡
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document‡
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document‡
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document‡
104 The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2021, formatted in Inline XBRL (included within the Exhibit 101 attachments)
* Indicates management contract or compensation plan, contract or arrangement
‡ Filed herewith
† Furnished herewith
The registrant agrees to furnish to the Commission supplementally upon request a copy of any instrument with respect to long-term debt not filed herewith as to which the total amount of securities authorized thereunder does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis.
ITEM 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 10, 2021 HEWLETT PACKARD ENTERPRISE COMPANY
  By: /s/ Tarek A. Robbiati
Tarek A. Robbiati
Executive Vice President and
Chief Financial Officer

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Tarek A. Robbiati, John F. Schultz and Rishi Varma, or any of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated
Signature Title(s) Date
/s/ Antonio F. Neri President, Chief Executive Officer and Director
(Principal Executive Officer)
December 10, 2021
Antonio F. Neri
/s/ Tarek A. Robbiati Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
December 10, 2021
Tarek A. Robbiati
/s/ Jeff T. Ricci Senior Vice President and Controller
(Principal Accounting Officer)
December 10, 2021
Jeff T. Ricci
/s/ Patricia F. Russo Chairman December 10, 2021
Patricia F. Russo
/s/ Daniel L. Ammann Director December 10, 2021
Daniel L. Ammann
/s/ Pamela L. Carter Director December 10, 2021
Pamela L. Carter
/s/ Jean M. Hobby Director December 10, 2021
Jean M. Hobby
/s/ George R. Kurtz Director December 10, 2021
George R. Kurtz
/s/ Raymond J. Lane Director December 10, 2021
Raymond J. Lane
/s/ Ann M. Livermore Director December 10, 2021
Ann M. Livermore
141

Table of Contents

/s/ Charles H. Noski Director December 10, 2021
Charles H. Noski
/s/ Raymond E. Ozzie Director December 10, 2021
Raymond E. Ozzie
/s/ Gary M. Reiner Director December 10, 2021
Gary M. Reiner
/s/ Mary Agnes Wilderotter Director December 10, 2021
Mary Agnes Wilderotter
142

Exhibit 10.30
IMAGE_02.JPG

2021 STOCK INCENTIVE PLAN
GLOBAL GRANT AGREEMENT [RSU Agreement for FPR]


Name: fld_NAME_AC Employee ID: fld_EMPLID
    
Grant Date: expGRANT_DATE
Grant ID: fld_GRANT_NBR
Amount: 0
Plan: fld_DESCR
Vesting Schedule: fld_HTMLAREA1

Restricted Stock Units

    THIS GLOBAL GRANT AGREEMENT, including any special terms and conditions set forth in Appendices A and B attached hereto (collectively the “Grant Agreement”), as of the Grant Date noted above between Hewlett Packard Enterprise Company, a Delaware Corporation (“Company” or “HPE”), and the Employee named above (“Team Member”), is entered into as follows:

    WHEREAS, the continued participation of the Team Member is considered by the Company to be important for the Company’s continued growth; and

    WHEREAS, in order to align the interests of the Team Member with those of the shareholders of the Company and to facilitate the consistent governance of its internal affairs, and to give the Team Member an incentive to continue in the employ of the Company (or its Affiliates or Subsidiaries) and to accept any ancillary agreements designed to protect the legitimate business interests of the Company that are made a condition of this grant, the HR and Compensation Committee of the Board of Directors of the Company or its delegates (“Committee”) has determined that the Team Member shall be granted restricted stock units representing hypothetical shares of the Company’s common stock (“RSUs”), with each RSU equal in value to one share of the Company’s $0.01 par value common stock (“Share”), subject to the restrictions stated below and in accordance with the terms and conditions of the plan named above (“Plan”), a copy of which can be found on the Long-term Incentives website along with a copy of the related prospectus. The Plan and the related prospectus also can be obtained by written or telephonic request to the Company Secretary. Unless otherwise defined in this Grant Agreement, any capitalized terms in this Grant Agreement shall have the meaning ascribed to such terms in the Plan.

    THEREFORE, the parties agree as follows:

1.Grant of Restricted Stock Units; Team Member Acceptance Procedures.
Subject to the terms and conditions of this Grant Agreement and of the Plan, the Company hereby grants to the Team Member the number of RSUs set forth above. As is described below, if the Team Member declines this Grant Agreement via the Merrill Benefits Online® website (www.mybenefits.ml.com) or fails to accept this Grant Agreement via the Merrill Benefits Online® website by an applicable deadline set forth below, then the RSUs shall terminate and will become null and void.

If the Team Member resides in a European Economic Area or European Union member state or Brazil, due to legal requirements, the Team Member must accept this Grant Agreement via the Merrill Benefits Online® website (www.mybenefits.ml.com) by the “Acceptance Deadline” below or the RSUs shall terminate and will become null and void. The Acceptance Deadline is the earlier of: (i) the date eleven (11) months after the Grant Date above (e.g., if Grant Date is December 1st, this date would be the following November 1st) and (ii) the Team Member’s last day of employment. However, if the Acceptance Deadline would otherwise be a weekend, U.S. holiday or other non-trading day, the Acceptance Deadline will instead be the next following trading day for the New York Stock Exchange.

If the Team Member does not reside in a European Economic Area or European Union member state or in Brazil and also does not agree with the terms and conditions of this Grant Agreement, then the Team Member must reject via the Merrill Benefits Online® website (www.mybenefits.ml.com) by the date forty-five (45) days after the Grant Date. If not rejected via the Merrill website by that deadline, the Company will automatically accept the Grant Agreement on the Team Member's behalf (except in the case of Vice President-level and higher roles as described in the immediately following paragraph). The Team Member may not decline this Grant on or after the date forty-five (45) days after the Grant Date.

Notwithstanding the foregoing, if the Team Member is employed in a Vice President-level or higher level role and is notified by the Company of a requirement to accept the Grant Agreement and, in some cases, a corresponding Agreement Regarding Confidential Information and Proprietary Developments (“ARCIPD”) as described in Section 18, then the Team Member must accept this Grant
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Agreement (and any corresponding ARCIPD, as applicable) within 75 days of the Grant Date listed above (or, if such 75th day is a weekend, U.S. holiday or other non-trading day, then the following NYSE trading day).

2.Vesting Schedule.
The interest of the Team Member in the RSUs shall vest according to the vesting schedule set forth above, or if earlier, in accordance with Section 8 or 9, below, except to the extent a severance plan applicable to the Team Member provides otherwise. Unless the provisions of Section 8, 9 or 10 apply, the Team Member must remain in the employ of the Company, any Subsidiary or Affiliate on a continuous basis through the close of business on the applicable vesting date, as set forth above, and the Team Member must be in compliance with the requirements and conditions provided for in the Plan and this Grant Agreement for the interest of the Team Member in the RSUs to become fully vested on that date.

3.Benefit Upon Vesting.
Within 75 days of each vesting date set forth on the above vesting schedule or, if earlier, a vesting event pursuant to Section 8 or 9 below, the Company shall deliver or pay, as applicable, to the Team Member (or the Team Member’s guardian, estate or beneficiary in the event of Section 8 or 9) Shares or a combination of cash and Shares, as the Company determines in its sole discretion, with a value equal to:

(a)    the number of RSUs that have become vested as of such vesting date or vesting event, as applicable, multiplied by the Fair Market Value of a Share on the date on which such RSUs vested; plus
(b)    a dividend equivalent payment determined by:
(1)multiplying, separately, the number of RSUs that became vested as determined in Section 3(a) by the dividend per Share on each dividend payment date between the Grant Date and the applicable vesting date to determine the dividend equivalent amount for each applicable dividend payment date;
(2)dividing the amount determined in Section 3(b)(1) by the Fair Market Value of a Share on the dividend payment date to determine the number of additional whole and fractional RSUs to be credited to the Team Member; and
(3)multiplying the number of additional whole and fractional RSUs determined in Section 3(b)(2) by the Fair Market Value of a Share on the vesting date to determine the aggregate value of dividend equivalent payments for such vested RSUs;
provided, however, that if any aggregated dividend equivalent payments in Section 3(b)(2) above to be delivered in Shares results in a payment of a fractional Share, such fractional Share shall be rounded up to the nearest whole Share.

4.Restrictions.
Except as otherwise provided for in this Grant Agreement, the RSUs or rights granted hereunder may not be sold, pledged or otherwise transferred. The period of time between the Grant Date and the date the RSUs become fully vested pursuant to Section 2 is referred to herein as the “Restriction Period.”
5.Custody of Restricted Stock Units.
The RSUs subject hereto shall be recorded in an account with the Plan broker in the name of the Team Member. Upon termination of the Restriction Period, if the Company determines, in its sole discretion, to deliver Shares pursuant to Section 3 above, such Shares shall be released into the Team Member’s account; provided, however, that a portion of such Shares shall be surrendered in payment of Tax-Related Items, as defined and in accordance with Section 12 below, unless the Company, in its sole discretion, establishes alternative procedures for the payment of Tax-Related Items.

6.No Stockholder Rights.
RSUs represent hypothetical Shares. The Team Member shall not be entitled to any of the rights or benefits generally accorded to stockholders until the Shares are issued to the Team Member pursuant to the terms of this Grant Agreement and the Team Member becomes a holder of record of the Shares following the vesting of the RSUs.

7.Termination of Employment.
Except as otherwise provided for in this Grant Agreement or in the Plan or as otherwise determined by the Company in its sole discretion, if the Team Member’s employment with the Company, any Subsidiary or Affiliate is terminated at any time for any reason prior to the lapse of the Restriction Period, all unvested RSUs granted hereunder shall be forfeited by the Team Member, except to the extent a severance plan applicable to the Team Member provides otherwise.

For purposes of this Grant Agreement, the Team Member’s employment or service will be considered terminated as of the date the Team Member is no longer actively providing services to the Company, any Subsidiary or Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Team Member is employed or retained or the terms of the Team Member’s employment or service agreement, if any) and will not be extended by any notice period (e.g., the Team Member’s period of employment or service would not include any contractual notice period, common law notice period, severance notice period, or any period of “garden leave” or similar period mandated under the employment laws in the jurisdiction where the Team Member is employed or retained or the terms of the Team Member’s employment or service agreement, if any). The Committee shall have the exclusive discretion to determine when the Team Member’s employment or service is terminated for purposes of this Grant Agreement (including whether the Team Member may still be considered to be providing service while on a leave of absence).

8.Disability of the Team Member.
If the Team Member’s employment is terminated prior to the end of the Restriction Period by reason of the Team Member’s total and permanent disability, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that, if applicable, the Team Member shall have executed a current Agreement Regarding Confidential Information and Proprietary Developments (“ARCIPD”) that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.

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9.Death of the Team Member.
In the event of the Team Member’s death prior to the end of the Restriction Period, all unvested RSUs shall immediately vest including any amounts for dividend equivalent payments on such vested RSUs.

10.Retirement of the Team Member.
If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy of the Company, all unvested RSUs shall continue to vest and payout in accordance with the vesting schedule set forth above subject to the condition that, if applicable, the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that is in violation of any agreement with the Company concerning confidentiality of Company information or post-employment restrictive covenants or otherwise creates a conflict of interest in the opinion of the Company.

11.Section 409A.
This section applies to the extent the Team Member is subject to taxation in the U.S. Payments made pursuant to the Plan and this Grant Agreement are intended to comply with or qualify for an exemption from Section 409A of the Code (“Section 409A”). The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Grant Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, including any amendments or actions that would result in the reduction of benefits payable under this Grant Agreement, as the Company determines are necessary or appropriate to ensure that all RSUs are made in a manner that qualifies for an exemption from, or complies with, Section 409A or mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A; provided however, that the Company makes no representations that the RSUs will be exempt from any penalties that may apply under Section 409A and makes no undertaking to preclude Section 409A from applying to this RSU. For the avoidance of doubt, the Team Member hereby acknowledges and agrees that the Company will have no liability to the Team Member or any other party if any amounts payable under this Grant Agreement are not exempt from, or compliant with, Section 409A, or for any action taken by the Company with respect thereto. Any payments under this Grant Agreement that are considered non-qualified deferred compensation subject to Section 409A (“NQDC”) and are payable on the date of, or a date that is determined by reference to, the Team Member's “separation from service” (within the meaning of Section 409A) of a “specified employee” (as defined under Section 409A), shall be made on a date that is the earliest of (a) the Team Member’s death, (b) the original specified settlement date and (c) the date which is one day following six months after the date of the Team Member’s separation from service. If the RSUs or dividend equivalents are considered NQDC and the payment period contemplated in Sections 8 or 10 crosses a calendar year, the RSUs or dividend equivalents shall be paid in the second calendar year.

12.Taxes.
(a)The Team Member shall be liable for any and all taxes, including income tax, social insurance, fringe benefit tax, payroll tax, payment on account, employer taxes or other tax-related items related to the Team Member’s participation in the Plan and legally applicable to or otherwise recoverable from the Team Member by the Company and/or, if different, the Team Member’s employer (the “Employer”) whether incurred at grant, vesting, sale, prior to vesting or at any other time (“Tax-Related Items”). In the event that the Company or the Employer (which, for purposes of this Section 12, shall include a former employer) is required, allowed or permitted to withhold Tax-Related Items as a result of the RSUs or the Shares acquired pursuant to such RSUs, or due upon receipt of dividend equivalent payments or dividends, the Team Member shall surrender a sufficient number of whole Shares, make a cash payment or make adequate arrangements satisfactory to the Company and/or the Employer to withhold such Tax-Related Items from the Team Member’s wages or other cash compensation paid to the Team Member by the Company and/or the Employer at the election of the Company, in its sole discretion, or, if permissible under local law, the Company may sell or arrange for the sale of Shares that the Team Member acquires as necessary to cover all Tax-Related Items that the Company or the Employer has to withhold or that are legally recoverable from the Team Member (such as fringe benefit tax), unless the Company, in its sole discretion, has established alternative procedures for such payment. However, with respect to any RSUs subject to Section 409A, the Employer shall limit the surrender of Shares to the minimum number of Shares permitted to avoid a prohibited acceleration under Section 409A. The Team Member will receive a cash refund for any fraction of a surrendered Share or Shares in excess of any and all Tax-Related Items. To the extent that any surrender of Shares or payment of cash or alternative procedure for such payment is insufficient, the Team Member authorizes the Company, its Affiliates and Subsidiaries, which are qualified to deduct tax at source, to deduct from the Team Member’s compensation all Tax-Related Items. The Team Member agrees to pay any Tax-Related Items that cannot be satisfied from wages or other cash compensation, to the extent permitted by Applicable Law.

The Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding amounts or other applicable withholding rates, including maximum applicable rates in the Team Member’s jurisdiction(s), in which case the Team Member will receive a refund of any over-withheld amount in cash and will have no entitlement to the Share equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Team Member is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Team Member’s participation in the Plan.

(b)Regardless of any action the Company or the Employer takes with respect to any or all Tax-Related Items, the Team Member acknowledges and agrees that the ultimate liability for all Tax-Related Items is and remains the Team Member’s responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. The Team Member further acknowledges that the Company and/or the Employer: (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this grant of RSUs or dividend equivalents, including, but not limited to, the grant, vesting or settlement of RSUs or dividend equivalents, the subsequent delivery of Shares and/or cash upon settlement of such RSUs or the subsequent sale of any Shares acquired pursuant to such RSUs and receipt of any dividends or dividend equivalent payments; and (ii) notwithstanding Section 11, do not commit to and are under no obligation to structure the terms or any aspect of this grant of RSUs and/or dividend equivalents to reduce or eliminate the Team Member’s liability for Tax-Related Items or to achieve any particular tax result. Further, if the Team Member has become subject to tax in more than one jurisdiction, the Team Member acknowledges that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Team Member shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Team Member’s participation in the Plan or the Team Member’s receipt of RSUs that cannot be satisfied by the means
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previously described. The Company may refuse to deliver the benefit described in Section 3 if the Team Member fails to comply with the Team Member’s obligations in connection with the Tax-Related Items.

(c)In accepting the RSUs, the Team Member consents and agrees that in the event the RSUs or the dividend equivalents become subject to an employer tax that is legally permitted to be recovered from the Team Member, as may be determined by the Company and/or the Employer at their sole discretion, and whether or not the Team Member’s employment with the Company and/or the Employer is continuing at the time such tax becomes recoverable, the Team Member will assume any liability for any such taxes that may be payable by the Company and/or the Employer in connection with the RSUs and dividend equivalents. Further, by accepting the RSUs, the Team Member agrees that the Company and/or the Employer may collect any such taxes from the Team Member by any of the means set forth in this Section 12. The Team Member further agrees to execute any other consents or elections required to accomplish the above, promptly upon request of the Company.

13.Privacy Notice and Consent.
The following provision applies only to Employees who reside in the United States:
(a)The Employee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Employee’s personal data as described in this Grant Agreement and any other materials by and among, as applicable, the Company, the Employer and its other Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Plan.

(b)The Employee understands that the Company, the Employer and its other Subsidiaries and Affiliates may hold certain personal information about the Employee, including, but not limited to, name, home address, email address, and telephone number, date of birth, social insurance number, passport or other identification number, salary, year-to-date taxable income, nationality, residency, status, job title, any shares of stock or directorships held in the Company, details of all RSUs, options or any other entitlement to shares of stock granted, canceled, purchased, exercised, vested, unvested or outstanding in the Employee’s favor (“Data”) for the exclusive purpose of implementing, managing and administering the Plan.

(c)The Employee understands that Data will be transferred to the Company or one or more stock plan service providers as may be selected by the Company from time to time, which is assisting the Company with the implementation, administration and management of the Plan. The Employee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country of operation (e.g., the United States) may have different data privacy laws and protections than the Employee’s country. The Employee understands that if the Employee resides outside the United States, the Employee may request a list with the names and addresses of any potential recipients of the Data by contacting the Employee's local human resources representative. The Employee authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Employee’s participation in the Plan. The Employee understands that Data will be held only as long as is necessary to implement, administer and manage the Employee’s participation in the Plan. The Employee understands that if the Employee resides outside the United States, the Employee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Employee's local human resources representative.

(d)Further, the Employee understands that the Employee is providing the consents herein on a purely voluntary basis. If the Employee does not consent, or if the Employee later seeks to revoke the Employee's consent, the Employee cannot participate in the Plan. This would not affect the Employee’s salary or the Employee's career; the Employee would merely forfeit the opportunities associated with the Plan For more information on the consequences of the Employee’s refusal to consent or withdrawal of consent, the Employee understands that the Employee may contact the Employee's local human resources representative.

Employees who reside outside the United States must refer to Appendix A, Section 2 (Privacy Notice and Consent).

14.Plan Information.
The Team Member agrees to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with Applicable Laws outside the United States, from the Long-term Incentives website and stockholder information, including copies of any annual report, proxy and Form 10-K, from the investor relations section of the Company’s website at www.hpe.com. The Team Member acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Company Secretary. The Team Member hereby consents to receive any documents related to current or future participation in the Plan by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

15.Acknowledgment and Waiver.
By accepting this grant of RSUs, the Team Member understands, acknowledges and agrees that:

(a)all decisions with respect to future grants, if any, will be at the sole discretion of the Company;

(b)the Team Member’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Team Member’s employment relationship at any time and it is expressly agreed and understood that employment is terminable at the will of either party; and

(c)if the Company determines that the Team Member has engaged in misconduct prohibited by Applicable Law or any applicable policy of the Company, as in effect from time to time (including engagement in Detrimental Activities to the extent Section 17 of the Grant Agreement applies), or the Company is required to make recovery from the Team Member under Applicable Law or a Company policy adopted to comply with applicable legal requirements, then the Company may, in its sole discretion, to the extent it determines appropriate, (i) recover from the Team Member the proceeds from RSUs vested up to three years prior to the Team Member’s termination of employment or any time thereafter, (ii) cancel the Team Member’s outstanding RSUs, and (iii) take any other action it deems to be required and appropriate.

16.No Advice Regarding Grant.
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The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Team Member’s participation in the Plan, or the Team Member’s acquisition or sale of the underlying Shares. The Team Member is hereby advised to consult with the Team Member's own personal tax, legal and financial advisors regarding the Team Member's participation in the Plan before taking any action related to the Plan.

17.Agreement to Avoid Detrimental Activities.
In addition to any other eligibility criteria provided for in the Plan, and as a condition of this Grant Agreement, the Team Member agrees to avoid “Detrimental Activities” (as defined below) if the Team Member is employed in the United States as a Vice-President or higher level role (which includes without limitation Fellow, Senior Fellow, Executive Vice-President, Senior Vice-President, Chief and President positions). If such Vice-President or higher level employee does not accept this Grant Agreement within 75 days of the Grant Date set forth above or such other date as of which the Company shall require in its discretion, this grant of RSUs shall be canceled and the Team Member shall have no further rights under this Grant Agreement. However, if the 75-day deadline to accept the Grant Agreement would otherwise be a weekend, holiday or other non-trading day, the deadline will instead be the next following trading day for the New York Stock Exchange.

(a)    For purposes of this Grant Agreement, “Detrimental Activities” refers to conduct that is in violation of any contract or other legal obligation the Team Member has to the Company and any one or more of the following activities if engaged in by the Team Member in the twelve (12) month period following the Termination of Employment:

(i)    the provision of services to a Competitor in any role or position (as an employee, consultant, or otherwise) that would involve Conflicting Business Activities;

(ii)    knowingly participating (directly or indirectly through assistance to others) in soliciting or communicating with any customer of the Company in pursuit of a Competing Line of Business if the Team Member either had business-related contact with that customer or received Confidential Information about that customer in the last two years of the Team Member's employment with Company;

(iii)    knowingly participating (directly or indirectly through assistance to others), for the benefit of a Competitor, in soliciting or communicating with an HPE Employee for the purpose of persuading or helping the HPE Employee to end or reduce the Team Member's employment relationship with the Company if the Team Member either worked with that the HPE Employee or received Confidential Information about that the HPE Employee in the last two years of employment with Company; and,

(iv)    knowingly participating (directly or indirectly through assistance to others), for the benefit of a Competitor, in soliciting or communicating with an HPE Supplier for the purpose of persuading or helping the HPE Supplier to end or modify to HPE’s detriment an existing business relationship with the Company if Team Member either worked with that the HPE Supplier or received Confidential Information about that the HPE Supplier in the last two years of employment with the Company;

collectively parts (i) – (iv) above shall be referred to in this Grant Agreement as the “Restrictive Covenants.”

(b)    As used here, “Competitor” means an individual, corporation, or other business entity, or separately operated business unit of such an entity, that engages in a Competing Line of Business. “Competing Line of Business” means a business that involves a product or service offered by anyone other than the Company that would replace or compete with any product or service offered or to be offered by the Company with which the Team Member had material involvement while employed by the Company (unless the Company is no longer engaged in or planning to engage in that line of business). “Conflicting Business Activities” means job duties or other business-related activities in the United States or in any other country where the Company business units that the Team Member provides services to do business, and management or supervision of such job duties or business-related activities, if such job duties or business-related activities are the same as or similar in any material way to the job duties or business-related activities that the Team Member participates in or receives Confidential Information or trade secrets about in the last two years of the Team Member's employment with Company. The Team Member stipulates it is reasonable for the scope of Conflicting Business Activities to include a national or larger geographic area given the scope of trade secret and Confidential Information made available to him or her. “HPE Employee” means an individual employed by or retained as a consultant to Company or its subsidiaries. “HPE Supplier” means an individual, corporation, other business entity or separately operated business unit of an entity that regularly provides goods or services to the Company or its subsidiaries, including without limitation any original equipment manufacturer, original design manufacturer or subcontractor. “Confidential Information” has the meaning provided for in the Team Member’s ARCIPD.

(c)    Some activities by the Team Member following employment would, by their nature, involve unauthorized use or disclosure of Company trade secrets and Confidential Information, whether or not intentional, which would cause irreparable harm to the Company and be undetectable until it is too late to obtain any effective remedy. In order to resolve any dispute over what activities would fall into this category, the parties agree that the activities prohibited by the Restrictive Covenants are activities of this nature that must be avoided by the Team Member in order to avoid irreparable harm to the Company.

(d)    The Restrictive Covenants will apply and be valid notwithstanding any change in the Team Member’s duties, responsibilities, position, or title, or the termination of the Team Member’s employment with the Company irrespective of which party terminates the relationship or why; provided, however, that unless the Team Member is provided with written notice to the contrary at the time of termination, the restriction in Section 17(a)(i) shall not apply in the event the Team Member’s employment with Company is involuntary terminated by Company as a direct result of a workforce restructuring program or similar reduction in force (layoff).

(e)    If the Team Member violates or threatens to violate a Restrictive Covenant, the Company will be entitled to withhold or recover the benefits of compliance with this Grant Agreement, and where permitted by controlling law to pursue and receive: injunctive relief by temporary restraining order, temporary injunction, and/or permanent injunction; where permitted by law, recovery of attorneys' fees and costs incurred in obtaining such relief; and, any other legal and equitable relief to which it may be entitled. Injunctive relief will not exclude other remedies that might apply. For purposes of any award of fees or costs, the Company shall be considered the prevailing party if it is awarded any part of the relief requested by it, either through partial enforcement, reformation of this Grant Agreement, or otherwise. If the Team Member is found to have violated any restriction(s) in the Restrictive Covenants, then the time period for the violated restriction(s) will be extended by one day for each day that the
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Team Member is found to have violated the restriction(s), up to a maximum extension equal to the time period originally prescribed for the violated restriction(s). If the Restrictive Covenants are held unenforceable as written, the parties expressly authorize the court or arbiter to enforce the restriction to such lesser degree as would be enforceable and/or to revise, delete, or add to the unenforceable restriction to the extent necessary to enforce the intent of the parties and provide the Company with effective protection.

(f)    The enforceability of the Restrictive Covenants as written (and the Team Member’s agreement to comply with them as a whole) and the Company’s agreement to provide the Team Member the items of benefit conveyed by this Grant Agreement (by way of example only, shares, stock options, stock units, restricted stock units, stock appreciation rights, or cash awards (the conveyed “Incentives”)) are mutually dependent. In the event the Restrictive Covenants are held to be unenforceable by a court or arbiter (in whole or in any part deemed material by the Company), the Company’s obligations under this Grant Agreement shall be voidable at the election of the Company and where permitted by law the Company shall have the right to terminate any unvested Incentives and recover from the Team Member the Incentives granted to the Team Member under this Grant Agreement, or if the Team Member no longer possesses the Incentives then the monetary value of the Incentives at the time the Team Member sold or otherwise transferred the Incentives to another party.

(g)The Team Member stipulates that the benefits provided to the Team Member through this Grant Agreement are of significant and meaningful value, and serve as additional, mutually agreed upon, fair and reasonable consideration for the Team Member’s agreement to avoid Detrimental Activities. The Team Member has been notified that the Team Member has the right to consult legal counsel prior to signing this Grant Agreement. The Team Member was provided as long as 14 days to consider this Grant Agreement before being required to execute it, and if the Team Member executes it before the expiration of 14 days then the Team Member does so voluntarily with the intent to waive the unused remainder of the 14 days allowed.

(h)Nothing in this section prohibits the Team Member from reporting possible violations of law or regulation to any governmental agency or entity, or making other disclosures that are protected under the whistleblower provisions of law or regulation. The Team Member does not need the prior authorization of the Company to make any such reports or disclosures, and the Team Member is not required to notify the Company that the Team Member has made such reports or disclosures.

(i)The limitations agreed to by the Team Member in this section are voluntary, not a term or condition of employment, and a matter of choice for the Team Member. The Team Member will have the choice between complying with the terms of this section or forgoing the benefits that the Team Member would otherwise receive under the Grant Agreement. Nothing in this section shall be applied to the extent that it would violate controlling law or impose a penalty or restriction that violates controlling law.

18.Additional Eligibility Requirements.
In addition to any other eligibility criteria provided for in the Plan, the Company may require that the Team Member execute a separate document agreeing to the terms of a current arbitration agreement and/or a current ARCIPD, each in a form acceptable to the Company and/or that the Team Member be in compliance with the ARCIPD throughout the entire Restriction Period and through the date the RSU is to be granted or settled. If such separate documents are required by the Company and the Team Member does not accept them within 75 days of the Grant Date or such other date as of which the Company shall require in its discretion, this RSU shall be canceled and the Team Member shall have no further rights under this Grant Agreement.

19.Appendices.
Notwithstanding any provisions in this Grant Agreement or the Plan, if the Team Member resides in country outside the United States or is otherwise subject to the law of country other than the United States, the RSU grant shall be subject to the additional terms and conditions set forth in Appendix A to this Grant Agreement and to any special terms and conditions set forth in Appendix B to this Grant Agreement for the Team Member’s country. Moreover, if the Team Member relocates to one of the countries included in Appendix B, the special terms and conditions for such country will apply to the Team Member, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendices A and B constitute part of this Grant Agreement.

In addition, the Company reserves the right to impose other requirements on the Team Member’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Team Member to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

20.Governing Law and Venue.
The RSU grant and the provisions of this Grant Agreement are governed by, and subject to, the laws of the State of Delaware (USA), without regard to the conflict of law provisions. For purposes of any action, lawsuit or other proceedings brought to enforce this Grant Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts of the State of Delaware, County of New Castle, or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and no other courts, where this grant is made and/or to be performed.

21.Miscellaneous.
(a)The Company shall not be required to treat as owner of RSUs and any associated benefits hereunder, any transferee to whom such RSUs or benefits shall have been transferred in violation of any of the provisions of this Grant Agreement.

(b)The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Grant Agreement.

(c)The Plan is incorporated herein by reference. The Plan and this Grant Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Team Member with respect to the subject matter hereof, other than the terms of any severance plan applicable to the Team Member that provides more favorable vesting and the terms of the Team Member’s ARCIPD and any other agreements containing post-employment restrictive covenants that validly impose greater post-employment restrictions on the Team Member. Notwithstanding the foregoing, nothing in the Plan or this Grant Agreement shall affect the validity or interpretation of any duly authorized written agreement between the Company and the Team Member under which an award properly granted under and pursuant to the Plan serves as any part of the consideration furnished to the Team Member. This
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Grant Agreement is voluntarily entered into and is not a condition of employment with the Company. This Grant Agreement is governed by the laws of the state of Delaware without regard to its conflict of law provisions. All actions and proceedings seeking to enforce any provision of, or based on any right arising out of, this Grant Agreement must be brought against either of the parties in the courts of the State of Delaware, County of New Castle, or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. If employed as a Vice-President or higher level role, Team Member stipulates that this Grant Agreement involves contractual rights (such as the Restrictive Covenants) with a value in excess of US$100,000, and that Delaware Code Title 6. Commerce and Trade § 2708 applies to this Grant Agreement.

(d)By participating in the Plan, the Team Member acknowledges that the Team Member is sufficiently proficient in English or has consulted with an advisor who is sufficiently proficient in English so as to allow the Team Member to understand the terms and conditions of the Grant Agreement. If the Team Member has received this or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

(e)The provisions of this Grant Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

(f)Notwithstanding Sections 21(c) and 21(e), the Company’s obligations under this Grant Agreement and the Team Member’s agreement to the terms of an arbitration agreement and/or an ARCIPD, if any, are mutually dependent. In the event that the Team Member breaches the arbitration agreement or the Team Member’s ARCIPD is breached or found not to be binding upon the Team Member for any reason by a court of law, then the Company will have no further obligation or duty to perform under the Plan or this Grant Agreement.

(g)A waiver by the Company of a breach of any provision of this Grant Agreement shall not operate or be construed as a waiver of any other provision of this Grant Agreement, or of any subsequent breach by the Team Member or any other participant in the Plan.

(h)The Company reserves the right to impose other requirements on the Team Member’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Team Member to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

(i)Any notice required or permitted hereunder to the Team Member shall be given in writing and shall be deemed effectively given upon delivery to the Team Member at the address then on file with the Company.

(j)Any notice to be given under the terms of this Grant Agreement to the Company will be addressed in care of Attn: Global Equity Administration at Hewlett Packard Enterprise Company, 6280 America Center Drive, San Jose, California 95002, USA.

(k)The Team Member acknowledges that there may be certain foreign asset and/or account reporting requirements which may affect the Team Member's ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan (including from any dividends or dividend equivalent payments) in a brokerage or bank account outside the Team Member’s country. The Team Member may be required to report such accounts, assets or transactions to the tax or other authorities in the Team Member's country. The Team Member also may be required to repatriate sale proceeds or other funds received as a result of the Team Member’s participation in the Plan to the Team Member's country through a designated bank or broker within a certain time after receipt. The Team Member acknowledges that it is the Team Member's responsibility to be compliant with such regulations, and the Team Member is advised to consult the Team Member's personal legal advisor for any details.



HEWLETT PACKARD ENTERPRISE COMPANY

IMAGE_11.JPG
    Alan May
Executive Vice President, Chief People Officer



RETAIN THIS GRANT AGREEMENT FOR YOUR RECORDS

Important Note: Your grant is subject to the terms and conditions of this Grant Agreement, including Appendices A and B, and to the Company obtaining all necessary government approvals. If you have questions regarding your grant, please contact Global Equity Administration (global.equity@hpe.com).

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HEWLETT PACKARD ENTERPRISE COMPANY 2021 STOCK INCENTIVE PLAN

APPENDIX A TO THE GLOBAL GRANT AGREEMENT
ADDITIONAL TERMS FOR EMPLOYEES OUTSIDE THE UNITED STATES
The following terms and conditions apply to Employees who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. In general, the terms and conditions in this Appendix A supplement the provisions of the Grant Agreement, unless otherwise indicated herein.
1.Acknowledgment and Waiver.

By accepting this grant of RSUs, the Team Member understands, acknowledges and agrees that:

(a)except as provided in Sections 8, 9 and 10 of the Grant Agreement, the vesting of the RSUs is earned only by continuing employment with the Company or one of its Subsidiaries or Affiliates and that being hired and granted RSUs will not result in the RSUs vesting;

(b)this Grant Agreement and its incorporated documents reflect all agreements on its subject matters and the Team Member is not accepting this Grant Agreement based on any promises, representations or inducements other than those reflected in this Grant Agreement;

(c)all good faith decisions and interpretations of the Committee regarding the Plan and Awards granted under the Plan are binding, conclusive and final;

(d)the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;
(e)the grant of RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs or other awards, or benefits in lieu of RSUs, even if Shares or RSUs have been granted in the past;

(f)all decisions with respect to future grants, if any, will be at the sole discretion of the Company;

(g)the Team Member’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Team Member’s employment relationship at any time and it is expressly agreed and understood that employment is terminable at the will of either party;

(h)the Team Member is voluntarily participating in the Plan;
(i)RSUs and their resulting benefits are extraordinary items that are outside the scope of the Team Member’s employment contract, if any;

(j)RSUs and their resulting benefits are not intended to replace any pension rights or compensation;

(k)RSUs and their resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, holiday pay, bonuses, long-service awards, leave-related payments, pension or retirement or welfare benefits or similar mandatory payments;

(l)RSUs and their resulting benefits should in no event be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary or Affiliate;

(m)unless otherwise agreed by the Company, the RSUs and their resulting benefits are not granted as consideration for, or in connection with, the service the Team Member may provide as a director of a Subsidiary or Affiliate;

(n)this grant of RSUs will not be interpreted to form an employment contract or relationship with the Company, and furthermore, this grant of RSUs will not be interpreted to form an employment contract with any Subsidiary or Affiliate;

(o)the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(p)no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from termination of the Team Member’s employment (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Team Member is employed or retained or the terms of the Team Member’s employment or service agreement, if any), and in consideration of the grant of the RSUs, the Team Member agrees not to institute any claim against the Company, the Employer or any other Subsidiary or Affiliate;

(q)the Company, the Employer or any other Subsidiary or Affiliate will not be liable for any foreign exchange rate fluctuation between the Team Member’s local currency and the United States dollar that may affect the value of the RSUs or any amounts due to the Team Member pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement;

(r)if the Company determines that the Team Member has engaged in misconduct prohibited by Applicable Law or any applicable policy of the Company, as in effect from time to time (including engagement in Detrimental Activities to the extent Section 17 of the Grant Agreement applies or breach of any ARCIPD required pursuant to Section 18 of the Grant Agreement), or the Company is required to make recovery from the Team Member under Applicable Law or a Company policy adopted to comply with applicable legal requirements, then the Company may, in its sole discretion, to the extent it determines appropriate, (i) recover from the Team Member the proceeds from RSUs vested up to three years prior to the Team Member’s termination of employment or any time thereafter, (ii) cancel the Team Member’s outstanding RSUs, and (iii) take any other action it deems to be required and appropriate; and
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(s)the delivery of any documents related to the Plan or Awards granted under the Plan, including the Plan, this Grant Agreement, the Plan prospectus and any reports of the Company generally provided to the Company’s stockholders, may be made by electronic delivery. Such means of electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via electronic mail or other such means of electronic delivery specified by the Company. The Team Member may receive from the Company a paper copy of any documents delivered electronically at no cost to the Team Member by contacting the Company in writing in accordance with Section 21(j). If the attempted electronic delivery of any document fails, the Team Member will be provided with a paper copy of such document. The Team Member may revoke the Team Member's consent to the electronic delivery of documents or may change the electronic mail address to which such documents are to be delivered (if the Team Member has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised electronic mail address in accordance with Section 21(j). The Team Member is not required to consent to the electronic delivery of documents.

2.Privacy Notice and Consent.
    
(a)The Company is located at 11445 Compaq Center West Drive, Houston, Texas, 77070, USA, and grants Employees of the Company and its Subsidiaries RSUs, at the Company’s sole discretion. If the Employee would like to participate in the Plan, the Employee should review the following information about the Company’s data processing practices and declare the Employee's consent by accepting this Grant Agreement on the Benefits Online® website of Merrill Lynch, Pierce, Fenner & Smith Inc. (“Merrill”).

(b)Data Collection and Usage. The Company collects, processes and uses personal data of participants, specifically: the Employee’s name, home address, email address, telephone number, date of birth, hire/rehire date, termination date (if applicable), termination classification code, employee identification number, payroll country, business division, directorship held in the Company (including its subsidiaries), and details of all RSUs, canceled, vested, or outstanding in the Employee’s favor, which the Company receives from the Employee or the Employer. If the Company offers the Employee a grant of RSUs under the Plan, then the Company will collect the Employee’s personal data for purposes of allocating stock and implementing, administering and managing the Plan. The Company’s legal basis, where required, for the processing of the Employee’s personal data would be the Employee's consent.

(c)Stock Plan Administration Service Providers. The Company transfers participant data, or parts thereof, to Merrill, an independent service provider based in the United States, which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select one or more different U.S. based service providers and share the Employee’s data with other companies that serve in a similar manner. The Company’s service providers will open an account for the Employee to receive and trade stock. The Employee will be asked to agree on separate terms and data processing practices with the service providers, which is a condition to the Employee’s ability to participate in the Plan. The service providers are responsible for processing any personal data they collect from the Employee in compliance with applicable law.

(d)International Data Transfers. The Company and Merrill are based in the United States. If the Employee is based outside the United States, the Employee should note that the Employee's personal data will be transferred to service providers in the United States and may be transferred onward to other countries Merrill and its affiliates and sub-processors operate it. In this case, the Company’s legal basis for the transfer of the Employee’s personal data to its United States operations and its U.S. based service providers is the Employee's consent. Information regarding international data transfers within the Company can be found in the Employee Privacy Policy.

(e)Data Retention. The Company will use the Employee’s personal data only as long as is necessary to implement, administer and manage the Employee’s participation in the Plan or as required to comply with legal or regulatory obligations, including under tax and security laws. When the Company no longer needs the Employee’s personal data, which will generally be seven years after the Employee is granted RSUs under the Plan, the Company will remove it from its systems. If the Company keeps data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis would be compliance with the relevant laws or regulations.

(f)Voluntariness and Consequences of Consent Denial or Withdrawal. The Employee’s participation in the Plan and the Employee’s grant of consent is purely voluntary. Depending on the Employee’s country, they may have the right to deny or withdraw consent at any time by contacting the Company at Hewlett Packard Enterprise Company, Attn: Legal Department, 11445 Compaq Center West Drive, Houston, Texas, 77070, USA. If the Employee does not consent, or if the Employee withdraws the Employee's consent, the Employee cannot participate in the Plan. This would not affect the Employee’s salary as an employee or the Employee's career; the Employee would merely forfeit the opportunities associated with the Plan.

(g)Data Subject Rights, International Data Transfers. Information regarding data subject rights and transfers of personal data to third countries is available in the Company’s Employee Privacy Policy.

(h)Right to File Complaint with a Supervisory Authority. If the Employee considers that the processing of the Employee’s personal data infringes the European General Data Protection Regulation (“GDPR”) or other applicable privacy legislation, the Employee has the right to lodge a complaint with the supervisory authority in the country where the Employee works or where the Employee considers that the data protection rules have been breached.

(i)The Company’s Data Protection Officer. The Company’s Chief Privacy Officer has been appointed as the Data Protection Officer (“DPO”) for many of the countries the Company operates in. The Employee can contact the DPO by sending an email to hpeprivacy@hpe.com.

3.Language. The Team Member acknowledges and represents that the Team Member is proficient in the English language, or has consulted with an advisor who is sufficiently proficient in English, so as to allow the Team Member to understand the terms of this Grant Agreement, including this Appendix A, Appendix B and any other documents related to the Plan.

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If the Team Member has received the Grant Agreement, including Appendices A and B, or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control, unless otherwise prescribed by local law.

4.Insider Trading/Market Abuse Laws.
The Team Member acknowledges and understands that, depending on the Team Member’s or broker’s country of residence or where the Company Shares are listed, the Team Member may be subject to insider trading restrictions and/or market abuse laws, which may affect the Team Member’s ability to accept, acquire, sell or otherwise dispose of Shares or rights to Shares during times the Team Member is considered to have “inside information” regarding the Company (as defined by the laws in the Team Member’s country). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Team Member placed before the Team Member possessed inside information.  Furthermore, the Team Member could be prohibited from (i) disclosing the inside information to any third party (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities.  Keep in mind third parties includes fellow employees. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Team Member acknowledges that it is the Team Member's responsibility to comply with such regulations and that the Team Member should consult with the Team Member's personal advisor on this matter.

5.Exchange Control, Tax and Foreign Asset/Account Reporting Requirements. The Team Member acknowledges that there may be exchange control, tax, foreign asset and/or account reporting requirements which may affect the Team Member’s ability to acquire or hold Shares or cash received from participating in the Plan (including from any dividends paid on Shares acquired under the Plan) in a brokerage or bank account outside the Team Member’s country. The Team Member may be required to report such accounts, balances, assets and/or the related transactions to the tax or other authorities in the Team Member's country. The Team Member also may be required to repatriate sale proceeds or other funds received as a result of the Team Member’s participation in the Plan to the Team Member's country through a designated bank or broker within a certain time after receipt. The Team Member acknowledges that it is the Team Member’s responsibility to be compliant with such regulations, and the Team Member should consult the Team Member's personal legal advisor for any details.

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HEWLETT PACKARD ENTERPRISE COMPANY 2021 STOCK INCENTIVE PLAN

APPENDIX B TO THE GLOBAL GRANT AGREEMENT
COUNTRY SPECIFIC TERMS FOR EMPLOYEES OUTSIDE THE UNITED STATES

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Grant Agreement or the Plan.
This Appendix B includes additional terms and conditions that govern the RSUs granted to the Team Member if the Team Member resides and/or works in one of the countries listed herein. This Appendix B is part of the Grant Agreement.
If the Team Member is a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which the Team Member is currently residing and/or working, or if the Team Member transfers to another country after the Grant Date, the Company shall, in its discretion, determine to what extent the special terms and conditions contained herein shall be applicable to the Team Member.
This Appendix B also includes information and notices regarding securities, exchange control, tax and certain other issues of which the Team Member should be aware with respect to the Team Member's participation in the Plan. The information is based on the securities, exchange control, tax and other laws in effect in the respective countries as of September 2021. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Team Member not rely on the information contained herein as the only source of information relating to the consequences of the Team Member's participation in the Plan because the information may be out of date at the time the Team Member vests in the RSUs, receives Shares, a cash payment or a dividend equivalent payment upon vesting, sells any Shares acquired under the Plan or receive dividends paid on such Shares. In addition, the information is general in nature and may not apply to the Team Member’s particular situation, and the Company is not in a position to assure the Team Member of any particular result. Therefore, the Team Member is advised to seek appropriate professional advice as to how the relevant laws in the Team Member's country may apply to the Team Member’s individual situation.
ARGENTINA
Terms and Conditions
Compliance with the Law
By accepting the RSUs, the Team Member acknowledges the Team Member's agreement to comply with applicable Argentine laws and, regardless of any action taken by the Company or the Employer, to pay any and all applicable Tax-Related Items.
Notifications
Securities Law Notification
Neither the RSUs nor the underlying Shares of the Company are publicly offered or listed on any stock exchange in Argentina. The offer is private and not subject to any filing or disclosure requirements in Argentina.
Exchange Control Notification
The Team Member is solely responsible for complying with the exchange control rules that may apply in connection with Employee’s participation in the Plan and/or the transfer of proceeds acquired under the Plan into Argentina. Prior to vesting in the RSUs or transferring proceeds into Argentina, the Team Member should consult the Team Member's local bank and exchange control advisor to confirm the exchange control rules and required documentation.
Foreign Asset/Account Reporting Notification
Argentine residents must report any Shares acquired under the Plan and held by the resident on December 31st of each year on their annual tax return for that year. Argentine residents should consult with their personal tax advisor to determine their personal reporting obligations.
AUSTRALIA
Terms and Conditions
The provision below replaces Section 10 of the Grant Agreement. Notwithstanding the forgoing, in the event cessation of employment is no longer a taxable event for RSUs granted to Employees in Australia, the RSUs will be subject to Section 10 of the Grant Agreement.
10. Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.

Breach of Law
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Notwithstanding anything to the contrary in the Plan or the Grant Agreement, the Team Member will not be entitled to, and shall not claim any benefit (including without limitation a legal right) under the Plan if the provision of such benefit would give rise to a breach of Part 2D.2 of the Corporations Act 2001 (Cth), any other provision of that Act, or any other applicable statute, rule or regulation which limits or restricts the giving of such benefits. Further, the Employer is under no obligation to seek or obtain the approval of its stockholders in a general meeting for the purpose of overcoming any such limitation or restriction.
Australian Offer Document
The Employee’s right to participate in the Plan and the RSUs granted under the Plan are subject to the terms and conditions stated in the Offer Document as attached hereto as Exhibit A, the Plan, the Grant Agreement, Appendix A and this Appendix B. By accepting the RSUs, the Team Member acknowledges and confirms that the Team Member has reviewed these documents.
Notifications
Securities Law Notification
If the Team Member acquires Shares under the Plan and subsequently offers to sell the Shares to a person or entity resident in Australia, such offer may be subject to disclosure requirements under Australian law. The Team Member should obtain legal advice regarding any applicable disclosure requirements prior to making any such offer.
Exchange Control Notification
Exchange control reporting is required for cash transactions exceeding AUD 10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on behalf of the Team Member.
Tax Notification
The Plan is a plan to which Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) (the “Act”) applies (subject to the conditions in the Act).
AUSTRIA
Notifications
Exchange Control Notification
If the Team Member holds Shares acquired under the Plan outside Austria, the Team Member will be required to submit reports to the Austrian National Bank as follows: (i) on a quarterly basis if the value of the Shares as of any given quarter exceeds EUR 30,000,000; and (ii) on an annual basis if the value of the Shares as of December 31 exceeds EUR 5,000,000. If quarterly reporting is required, the reports must be filed by the 15th day of the month following the last day of the respective quarter. The deadline for filing the annual report is January 31 of the following year. Effective January 2022, the EUR 30,000,000 threshold for securities held outside Austria will be eliminated.
If the Team Member sells Shares or receives any cash dividends or dividend equivalent payments, the Team Member may have exchange control obligations if the Team Member holds the cash proceeds outside Austria. If the transaction volume of all the Team Member’s accounts abroad exceeds EUR 10,000,000, the Team Member must report the movements and balances of all accounts on a monthly basis, as of the last day of the month, on or before the 15th day of the following month, on the prescribed form (Meldungen SI-Forderungen und/oder SI-Verpflichtungen).
BELGIUM
Notifications
Foreign Asset/Account Reporting Notification
The Team Member is required to report any bank accounts opened and maintained outside Belgium on the Team Member's annual tax return. In a separate report, the Team Member may be required to provide the National Bank of Belgium with certain details regarding such foreign accounts (including the account number, bank name and country in which any such account was opened). This report, as well as additional information on how to complete it, can be found on the website of the National Bank of Belgium, www.nbb.be, under Kredietcentrales / Centrales des crédits caption. The Team Member should consult with the Team Member's personal tax advisor to determine the Team Member's personal reporting obligations.
Stock Exchange Tax Information
A stock exchange tax applies to transactions executed by a Belgian resident through a non-Belgian financial intermediary, such as a U.S. broker. The stock exchange tax likely will apply when Shares acquired under the Plan are sold. The Team Member should consult the Team Member's personal tax advisor for additional details on the Team Member’s obligations with respect to the stock exchange tax.
Annual Securities Accounts Tax
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An annual securities. accounts tax may be payable if the total value of securities held in a Belgian or foreign securities account (e.g., shares of Common Stock acquired under the Plan) exceeds a certain threshold on four reference dates within the relevant reporting period (i.e., December 31, March 31, June 30 and September 30). In such case, the tax will be due on the value of the qualifying securities held in such account. The Team Member should consult with the Team Member's personal tax or financial advisor for additional details.
BRAZIL
Terms and Conditions
Intent to Comply with Law
By accepting the RSUs, the Team Member acknowledges the Team Member's agreement to comply with applicable Brazilian laws and to report and pay any and all applicable taxes associated with the vesting of the RSUs, the sale of any Shares acquired upon vesting of the RSUs and the receipt of any dividends or dividend equivalents.
Labor Law Acknowledgment
By accepting this grant of RSUs, the Team Member understands, acknowledges and agrees that, for all legal purposes: (i) the benefits provided to the Team Member under the Plan are unrelated to the Team Member's employment; (ii) the Plan is not a part of the terms and conditions of the Team Member’s employment; and (iii) the income from the RSUs, if any, is not part of the Team Member’s remuneration from employment.
Notifications
Exchange Control Information
The Team Member is required to prepare and submit a declaration of assets and rights held outside Brazil to the Central Bank on an annual basis. The assets and rights that must be reported include Shares issued under the Plan. However, if the Team Member holds assets or rights valued at less than US$1,000,000, the Team Member will not be required to submit a declaration. If such amount exceeds US$100,000,000, the referred declaration is required quarterly.
Tax on Financial Transactions
If the Team Member repatriates the proceeds from the sale of Shares and any cash dividends into Brazil and converts the funds into local currency, the Team Member will be subject to the Tax on Financial Transactions.
BULGARIA
Notifications
Exchange Control Information
If the Team Member is a Bulgarian resident, the Team Member will be required to file statistical forms with the Bulgarian National Bank annually regarding receivables in the Team Member’s foreign bank accounts as well as securities held abroad (e.g., Shares acquired under the Plan) if the total sum of all such receivables and securities equals or exceeds BGN50,000 as of the previous calendar year-end.  The reports are due by March 31. The Team Member understands that the Team Member should contact the Team Member's bank in Bulgaria for additional information regarding these requirements.
Foreign Asset/Account Reporting Notification
The Team Member is required to report the acquisition of Shares under the Plan on the Team Member's annual tax return in the year of acquisition and in each subsequent annual tax return for as long as the Team Member holds the Shares.
CANADA
Terms and Conditions
Termination of Employment
This provision replaces the second paragraph of Section 7 of the Grant Agreement:
For purposes of this Grant Agreement, the Team Member’s employment or service will be considered terminated as of the earlier of: (a) the date the Team Member terminates employment; or (b) the date the Team Member receives written notice of termination of employment from the Employer, regardless of any period during which notice, pay in lieu of such notice or related payments or damages are required to be provided under local law (including, but not limited to statutory law, regulatory law and/or common law). For greater certainty, the Team Member will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which the Team Member’s right to vest terminates, nor will the Team Member be entitled to any compensation for lost vesting.
Notwithstanding the foregoing, if applicable employment standards legislation explicitly requires continued entitlement to vesting during a statutory notice period, the Team Member’s right to vest in the RSUs under the Plan, if any, will terminate effective as of the last day of the Team Member’s minimum statutory notice period, but the Team Member will not earn or be entitled to pro-rated vesting if the vesting
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date falls after the end of the Team Member’s statutory notice period, nor will the Team Member be entitled to any compensation for lost vesting.
Payout of RSUs in Shares Only
Pursuant to its discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, with respect to all Employees residing in Canada, the Company will convert all vested RSUs only into an equivalent number of Shares. Employees residing in Canada (or in the event of death, such Employee’s legal representative or estate) will not receive an equivalent or fractional Share cash payment with respect to vested RSUs.
Plan Document Acknowledgment
In accepting the grant of RSUs, the Team Member acknowledges that the Team Member has received a copy of the Plan, has reviewed the Plan and the Grant Agreement in their entirety and fully understands and accepts all provisions of the Plan and the Grant Agreement.
The following provisions will also apply to Employees who are resident in Quebec:
Consent to Receive Information in English
The parties acknowledge that it is their express wish that the Grant Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais du Contrat d'Attribution (« Grant Agreement »), ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées en vertu du, ou liés directement ou indirectement au, Contrat d'Attribution.
Data Privacy
This provision supplements Grant Agreement Appendix A: Section 2 (“Privacy Notice and Consent”):
The Team Member hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Team Member further authorizes the Company and any Subsidiary or Affiliate and the Administrator of the Plan to disclose and discuss the Plan with their advisors. The Team Member further authorizes the Company and any Subsidiary or Affiliate to record such information and to keep such information in the Team Member’s employee file.
Notifications
Securities Law Notification
The Team Member is permitted to sell Shares acquired in settlement of the RSUs through the designated broker appointed under the Plan provided the resale of Shares acquired in settlement of the RSUs takes place outside Canada through facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange in the United States under the ticker symbol “HPE”.
Foreign Asset/Account Reporting Notification
If the total value of the Team Member’s foreign specified property exceeds CAD 100,000 at any time during the year, the Team Member must report all of the Team Member's foreign property on Form T1135 (Foreign Income Verification Statement) by April 30 of the following year. Foreign specified property includes Shares acquired under the Plan and the RSUs. The RSUs must be reported--generally at a nil cost--if the CAD 100,000 cost threshold is exceeded because of other foreign specified property the Team Member holds. If Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB would normally equal the fair market value of the Shares at vesting, but if the Team Member owns other shares, this ACB may have to be averaged with the ACB of the other shares. The Team Member should speak with a personal tax advisor to determine the scope of foreign property that must be considered for purposes of this requirement.
CHILE
Notifications
Securities Law Notification
The offer of RSUs constitutes a private offering in Chile effective as of the Grant Date. The offer of RSUs is made subject to general ruling n° 336 of the Chilean Commission for the Financial Markets (“CMF”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the CMF, and, therefore, such securities are not subject to oversight of the SVS. Given that the RSUs are not registered in Chile, the Company is not required to provide public information about the RSUs or the Shares in Chile. Unless the RSUs and/or the Shares are registered with the CMF, a public offering of such securities cannot be made in Chile.
Información bajo la Ley de Mercado de Valores
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Esta oferta de Unidades de Acciones Restringidas (“RSU”) constituye una oferta privada en Chile y se inicia en la Fecha de la Concesión. Esta oferta de RSU se acoge a las disposiciones de la Norma de Carácter General N° 336 de la Comisión para el Mercado Financiero Chilena (“CMF”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la CMF, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse las RSU de valores no registrados en Chile, no existe obligación por parte de la Compañía de entregar en Chile información pública respecto de los RSU o sus Acciones. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente.
Exchange Control Notification
The Team Member is not required to repatriate funds obtained from the sale of Shares or the receipt of any dividends or dividend equivalents. However, if the Team Member decides to repatriate such funds, the Team Member must do so through the Formal Exchange Market (i.e., a commercial bank or registered foreign exchange office in Chile) if the amount of the funds exceeds USD 10,000. In such case, the Team Member must report the payment to the commercial bank or registered foreign exchange office receiving the funds. If the Team Member does not repatriate the proceeds and uses such proceeds for the payment of other obligations contemplated under a different Chapter of the Foreign Exchange Regulations, the Team Member must sign Annex 1 of the Manual of Chapter XII of the Foreign Exchange Regulations and file it directly with the Central Bank of Chile within the first 10 days of the month immediately following the transaction.
The Team Member is responsible for complying with foreign exchange requirements in Chile. For general information purposes, as of the date hereof, the Team Member’s aggregate investments held outside Chile exceed USD 5,000,000 (including the Shares and any other cash proceeds obtained under the Plan), the Team Member must report the investments annually to the Central Bank. Annex 3.1 of Chapter XII of the Foreign Exchange Regulations must be used to file this report. Please note that exchange control regulations in Chile are subject to change. The Team Member should consult with the Team Member's personal legal advisor regarding any exchange control obligations that the Team Member may have prior to vesting in the RSUs, receiving proceeds from the sale of Shares acquired upon vesting of the RSUs or cash dividends or dividend equivalents.
Foreign Asset/Account Reporting Notification
The Chilean Internal Revenue (“CIRS”) requires all taxpayers to provide information annually regarding (i) the results of investments held abroad and (ii) any taxes paid abroad which the taxpayers will use as credit against Chilean income tax. The sworn statements disclosing this information (or Formularios) must be submitted electronically through the CIRS website www.sii.cl using Form 1929. Form 1929 is due before July 1 of each year.
CHINA
Terms and Conditions
This provision replaces Section 10 of the Grant Agreement:
10. Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in the People’s Republic of China (the “PRC”), the RSUs granted to Employees residing in the PRC (including any dividend equivalents) shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
Notifications
Exchange Control Notification
The following terms and conditions will apply to Employees who are subject to exchange control restrictions and regulations in the PRC, including the requirements imposed by the State Administration of Foreign Exchange (“SAFE”), as determined by the Company in its sole discretion:
The Team Member understands and agrees that, pursuant to local exchange control requirements, the Team Member will not be permitted to receive Shares or cash under the Plan unless or until the Company, its Subsidiary or the Employer in the PRC has obtained an approval from SAFE for the Plan. If the Company changes its designated brokerage firm, the Team Member acknowledges and agrees that the Company may transfer any Shares issued under the Plan to the new designated brokerage firm, if necessary for legal or administrative reasons. The Team Member agrees to sign any documentation necessary to facilitate the transfer of Shares.
The Team Member further understands and agrees that, pursuant to local exchange control requirements, the Team Member will be required to immediately repatriate any cash payments or proceeds obtained with respect to participation in the Plan to the PRC. The Team Member further understands that such repatriation of any cash payments or proceeds may need to be effectuated through a special exchange control account established by the Company, any Parent or Subsidiary, or the Employer, and the Team Member
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hereby consents and agrees that any payment or proceeds may be transferred to such special account prior to being delivered to the Team Member.
Any payment or proceeds may be paid to the Team Member in U.S. dollars or local currency at the Company’s discretion. If the payments or proceeds are paid to the Team Member in U.S. dollars, the Team Member will be required to set up a U.S. dollar bank account in the PRC so that the payments or proceeds may be deposited into this account. If the payments or proceeds are paid to the Team Member in local currency, the Company is under no obligation to secure any particular exchange conversion rate and the Company may face delays in converting the payments or proceeds to local currency due to exchange control restrictions.
The Team Member further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.
COLOMBIA
Terms and Conditions
Labor Law Acknowledgement
This provision supplements Section 1 of Appendix A:
The Team Member acknowledges that pursuant to Article 128 of the Colombian Labor Code, the Plan and related benefits do not constitute a component of the Team Member’s “salary” for any legal purpose. The Plan and related benefits will not be included and / or considered for purposes of calculating any and all labor benefits, such as legal / fringe benefits, vacation, indemnities, payroll taxes, social insurance contributions and / or any other labor related amount which may be payable.
Notifications
Securities Law Notification
The Shares are not and will not be registered with the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and therefore the Shares may not be offered to the public in Colombia. Nothing in the Grant Agreement should be construed as making a public offer of securities in Colombia.
Exchange Control Notification
The Team Member is responsible for complying with any and all Colombian foreign exchange requirements in connection with the RSUs, any Shares acquired and funds remitted into Colombia in connection with the Plan. This may include, among others, reporting obligations to the Central Bank (Banco de la República) and, in certain circumstances, repatriation requirements. The Team Member is responsible for ensuring the Team Member's compliance with any applicable requirements and should speak to the Team Member's personal legal advisor on this matter.
Foreign Asset / Account Reporting Notification
The Team Member may be required file an annual informative return with the Colombian Tax Office detailing any assets held abroad. If the individual value of any of these assets exceeds a certain threshold, the Team Member must describe each asset and indicate the jurisdiction in which it is located, its nature and its value.
COSTA RICA
No country-specific provisions.
CZECH REPUBLIC
Notifications
Exchange Control Notification
Upon request of the Czech National Bank (“CNB”), the Team Member may need to fulfill certain notification duties when the Team Member acquires Shares upon vesting of the RSUs and the opening and maintenance of a foreign account. Even in the absence of a request from the CNB, the Team Member may need to report foreign direct investments with a value of CZK 2,500,000 or more in the aggregate and/or other foreign financial assets with a value of CZK 200,000,000 or more. However, because exchange control regulations change frequently and without notice, the Team Member should consult with the Team Member's personal legal advisor prior to the vesting of the RSUs and the sale of Shares to ensure compliance with current regulations. It is the Team Member’s responsibility to comply with any applicable Czech exchange control laws.
DENMARK
Terms and Conditions
This provision replaces Section 10 of the Grant Agreement:
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10. Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
Danish Stock Option Act
By participating in the Plan, the Team Member acknowledges that the Team Member received an Employer Statement translated into Danish attached hereto as Exhibit B, which is being provided to comply with the Danish Stock Option Act.
Notifications
Exchange Control Notification
The Team Member understands that if the Team Member establishes an account holding Shares or an account holding cash outside Denmark, they must report the account to the Danish Tax Administration. The form which should be used in this respect can be obtained from a local bank. (These obligations are separate from and in addition to the obligations described above.)
Foreign Asset/Account Reporting Notification
If the Team Member establishes an account holding Shares or an account holding cash outside Denmark, the Team Member must report the account to the Danish Tax Administration. The form which should be used in this respect can be obtained from a local bank.
EGYPT
Notifications
Exchange Control Notification
If the Team Member transfers funds into Egypt in connection with the remittance of proceeds from the vesting of RSUs, sale of Shares or the receipt of any dividends or dividend equivalent payments, the Team Member may be required to transfer the funds through a bank registered in Egypt.
FINLAND
No country-specific provisions.
FRANCE
Terms and Conditions
Data Privacy
This provision supplements Grant Agreement Appendix A: Section 2 (“Privacy Notice and Consent”):
In addition to Merrill, the Company also transfers participant data to Banque Transatlantique, an independent service provider based in France, which assists the Company with the administration of the Plan and related tax and reporting obligations. In the future, the Company may select a one or more different service providers and share the Team Member’s data with other companies that serve in a similar manner. The Team Member may be asked to agree on separate terms and data processing practices with Banque Transatlantique and any such successor service provider, which is a condition to the Team Member’s ability to participate in the Plan. Banque Transatlantique and any such successor service provider is responsible for processing any personal data they collect from the Team Member in compliance with applicable law. By accepting the RSUs, the Team Member consents to these data processing practices.
French-qualified RSUs under the French Sub-Plan
The RSUs are granted to the Team Member pursuant to the Rules of the French Sub-Plan to the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan (“French Sub-Plan”), created as a Sub-plan to the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan, and are subject to the terms and conditions stated in the French Sub-Plan, the Plan and the Grant Agreement, including this Appendix B. The French Sub-Plan is incorporated herein by reference and references to the Plan include the French Sub-Plan. By accepting the RSUs, the Team Member acknowledges and agrees to be bound by the terms of the French Sub-Plan and the Grant Agreement, including this Appendix B.
The RSUs are intended to qualify for the specific tax and social security treatment under Sections L. 225-197-1 to L. 225-197-5 and Articles L. 22-10-59 and L. 22-10-60 of the French Commercial Code, as amended. The Company does not undertake to maintain the qualified status of the RSUs and the Team Member will not be entitled to any damages of any nature whatsoever if the RSUs become disqualified.
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Payout of RSUs in Shares Only
Pursuant to the French Sub-Plan and the Company’s discretion under Section 4(b)(v) of the Plan, with respect to all Employees residing in France, the Company will convert all vested RSUs only into an equivalent number of Shares. Employees residing in France (or in the event of death, such Employee’s legal representative) will not receive an equivalent cash payment with respect to vested RSUs granted under the French Sub-Plan.
Dividend Equivalents
This provision supplements Section 3(b) of the Grant Agreement:
Any dividend equivalent payments made in connection with the RSUs will not qualify for the specific tax and social security treatment under Articles L. 225-197-1 to L. 225-197-5 and Articles L. 22-10-59 and L. 22-10-60 of the French Commercial Code, as amended.
Vesting Schedule
Notwithstanding anything to the contrary in Section 2 of the Grant Agreement, in no event shall the first vesting date occur prior to the second anniversary of the Grant Date of the RSUs, or such other period as is required to comply with the minimum vesting period under Article L. 225-197-1 of the French Commercial Code, as amended. If the Vesting Schedule provides for one or several vesting(s) before the second anniversary of the Grant Date of the RSUs, or such other period as is required to comply with the minimum vesting period under Article L. 225-197-1 of the French Commercial Code, as amended, this/these vesting(s) will be delayed until the first day as from which the vesting of the RSUs is authorized under the French Sub-plan.
Closed Periods
Any Shares acquired upon vesting of the RSUs may not be sold during certain Closed Periods as provided for and defined by Article L. 225-197-1 of the French Commercial Code, as amended, and by the French Sub-Plan, for so long as and to the extent that the Closed Periods are applicable to Shares underlying French-Qualified RSUs granted by the Company. Under current law, such Closed Periods include: (a) thirty calendar days before the announcement of an intermediate financial report or annual report that the Company is required to make public; and (b) any period during which the Chief Executive Officer (directeur général), any deputy chief executive officer (directeur général délégué), or any member of the Board of Directors (conseil d’administration), the supervisory board (conseil de surveillance) or the executive board (directoire) of the Company, or any employee, possesses knowledge of inside information which has not been disclosed to the public. For purposes of the foregoing, “inside information” shall be interpreted within the meaning of Article 7 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council of April 16, 2014 on market abuse (Market Abuse Regulation) and cancelling the Directive 2003/6/UE and Directives 2003/124/CE Parliament and 2004/72/CE of the Commission.
Disability of the Team Member
This provision supplements Section 8 of the Grant Agreement:
In the event of the Team Member’s termination of employment due to the Team Member’s Disability (as defined in the French Sub-Plan), the Team Member will not be subject to the Closed Period restrictions referenced above in this Appendix B.
Death of the Team Member
This provision replaces Section 9 of the Grant Agreement, and, to the extent inconsistent with, supersedes Section 2 of the Grant Agreement:
In accordance with Section 5 of the French Sub-Plan, in the event of the Team Member’s death prior to the end of the Restriction Period, all outstanding and unvested RSUs shall immediately vest, and upon the Company’s receipt of a written request from Employee’s heirs in a form satisfactory to the Company within six months following the Team Member’s death, the Company shall transfer the Shares held in the Team Member’s account to an account for the benefit of the Team Member’s heirs. In the event of the Team Member’s death, the Team Member's heirs will not be subject to the Closed Period restrictions referenced above in this Appendix B.
Language Consent
By accepting the grant of the RSUs, the Team Member confirms having read and understood the Plan and the Grant Agreement, which were provided in the English language. The Team Member accepts the terms of those documents accordingly.
Consentement Relatif à la Langue Utilisée
En acceptant l'attribution de droits sur des actions assujettis à des restrictions (« RSUs »), le Salarié confirme avoir lu et compris le Plan et le Contrat d’Attribution qui lui ont été transmis en langue anglaise. Le Salarié accepte les termes de ces documents en connaissance de cause.
Notifications
Exchange Control Notification
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If the Team Member imports or exports cash (e.g., sales proceeds received under the Plan) with a value equal to or exceeding EUR 10,000 and does not use a financial institution to do so, the Team Member must submit a report to the customs and excise authorities.
Foreign Asset/Account Reporting Notification
The Team Member is required to report all foreign accounts (whether open, current or closed) to the French tax authorities when filing the Team Member's annual tax return. The Team Member should consult the Team Member's personal advisor to ensure compliance with applicable reporting obligations. Failure to complete this reporting obligation may trigger penalties for the Team Member. The Team Member should consult with the Team Member's personal tax advisor to determine the Team Member's personal reporting obligations.
GERMANY
Notifications
Exchange Control Notification
Cross-border payments in excess of EUR 12,500 must be reported monthly to the German Federal Bank. If the Team Member receives a cross-border payment in excess of EUR 12,500 (e.g., proceeds from the sale of Shares acquired under the Plan), the Team Member must report the payment to German Federal Bank electronically using the “General Statistics Reporting Portal” available via the Bank’s website (www.bundesbank.de). The Team Member should file the report by the fifth day of the month following the month in which the payment is made.
Foreign Asset/Account Reporting Information
If the acquisition of Shares under the Plan leads to a “qualified participation” at any point during the calendar year, the Team Member will need to report the acquisition when the Team Member files the Team Member's tax return for the relevant year. A qualified participation is attained if (i) the value of the Shares acquired exceeds EUR 150,000 or (ii) in the unlikely event the Team Member holds Shares exceeding 10% of the total Common Stock. However, if the Shares are listed on a recognized U.S. stock exchange and the Team Member owns less than 1% of the Company, this requirement will not apply to the Team Member.
GREECE
No country-specific provisions.
HONG KONG
Terms and Conditions
Sale Restriction
Any Shares received at vesting are accepted as a personal investment. Notwithstanding anything contrary in the Grant Agreement or the Plan, in the event the RSUs vest and Shares are issued to the Team Member or the Team Member's legal representatives or estate within six months of the Grant Date, the Team Member agrees that the Team Member or the Team Member's legal representatives or estate will not offer to the public or otherwise dispose of any Shares acquired prior to the six-month anniversary of the Grant Date.
Payout of RSUs in Shares Only
Pursuant to its discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, with respect to all Employees residing in Hong Kong, the Company will convert all vested RSUs only into an equivalent number of Shares. Employees residing in Hong Kong (or in the event of death, the Team Member’s legal representative or estate) will not receive an equivalent cash payment with respect to vested RSUs.
Notifications
Securities Warning
The contents of this document have not been reviewed by any regulatory authority in Hong Kong. The Team Member is advised to exercise caution in relation to the offer. If the Team Member is in any doubt about any of the contents of this document, the Team Member should obtain independent professional advice. The RSUs and Shares acquired upon vesting of the RSUs do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or any Subsidiary or Affiliate. The Plan, the Grant Agreement and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The RSUs are intended only for the personal use of each eligible employee of the Company or any Subsidiary or Affiliate and may not be distributed to any other person.
HUNGARY
Terms and Conditions
Payout of RSUs in Cash Only
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Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Hungary, the RSUs granted to Employees residing in Hungary shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
INDIA
Notifications
Exchange Control Notification
The Team Member understands that the Team Member must repatriate to India any proceeds from the sale of Shares acquired under the Plan and any dividend equivalent payment within such time as prescribed under applicable Indian exchange control laws as may be amended from time to time. The Team Member will receive a foreign inward remittance certificate (“FIRC”) from the bank where the Team Member deposits the foreign currency. The Team Member should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation.
Foreign Asset/Account Reporting Notification
Indian residents are required to declare any foreign bank accounts and any foreign financial assets (including Shares held outside India) in their annual tax return. Indian residents should consult with their personal tax advisor to determine their personal reporting obligations.
INDONESIA
Notifications
Exchange Control Notification
Indonesian residents must provide the Bank of Indonesia with information on foreign exchange activities on an online monthly report no later than the 15th day of the month following the month of the activity. In addition, if the Team Member remits funds into Indonesia (e.g., proceeds from the sale of Shares), the Indonesian bank through which the transaction is made will submit a report of the transaction to the Bank of Indonesia for statistical reporting purposes. For transactions of USD 10,000 or more, a more detailed description of the transaction must be included in the report and the Team Member may be required to provide information about the transaction (e.g., the relationship between the Team Member and the transferor of the funds, the source of the funds, etc.) to the bank in order for the bank to complete the report.
IRELAND
No country-specific provisions.
ISRAEL
Terms and Conditions
Israeli Sub-Plan
The RSUs are granted to the Team Member pursuant to the Israeli Sub-Plan to the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan, as amended and restated (the “Israeli Sub-Plan”), and are subject to the terms and conditions stated in the Israeli Sub-Plan, the Plan and the Grant Agreement, including this Appendix B. By accepting the RSUs, the Team Member acknowledges and agrees to be bound by the terms of the Israeli Sub-Plan. The Israeli Sub-Plan is incorporated herein by reference and references to the Plan include the Israeli Sub-Plan.
The RSUs and Shares issued upon vesting of such RSUs are intended to qualify for the tax treatment available in Israel pursuant to the provisions of the “capital gain route” under Section 102 of the Israeli Tax Ordinance (“Section 102”), including the provisions of the Income Tax (Tax Abatement on the Grant of Shares to Employees) Regulations 2003 (the “Regulations”), and any tax ruling or agreement obtained by the Company or the Employer with regard to the Plan. It is clarified that in order to qualify for the “capital gains route,” the RSUs may be settled only in Shares.
If the Team Member resides in Israel and has not already signed a Beneficiary 102 Undertaking in connection with grants made under the Plan, then the Team Member must print, sign and deliver the signed copy of the Beneficiary 102 Undertaking attached hereto as Exhibit C within 45 days to HPE Israel HR (currently to the attention of Chevy Tal). If you do not return the signed Beneficiary 102 Undertaking within 45 days of your first RSU grant from HPE in Israel, the RSUs shall not qualify under the capital gain tax treatment in accordance and pursuant to Section 102(b)(3) of the Income Tax Ordinance [New Version].
Custody of RSUs
The following provisions replace Section 5 of the Grant Agreement:
5.Custody of Restricted Stock Units.
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a.The RSUs subject hereto shall be held in trust by I.B.I Capital Trust Ltd, as trustee (the “Trustee”) and further recorded in a restricted book entry account in the name of the Team Member. Each RSU will be deemed granted on the date stated above, provided that (i) the Company has provided a copy of this Agreement to the Trustee and (ii) the Team Member has signed all documents required pursuant to Applicable Law and under the Plan. Upon completion of the Restriction Period, Shares issued pursuant to Section 3 of the Grant Agreement shall be deposited with the Trustee (as further detailed below) in lieu of the RSUs previously held by the Trustee; provided, however, that a portion of such Shares may be surrendered in payment of any Tax-Related in accordance with Section 12 of this Grant Agreement, unless the Company, in its sole discretion, establishes alternative procedures for the payment of such taxes.
b.Without derogating from the above, the Shares shall further be held in accordance with the undertakings of the Company and the Trustee, under a Trust Agreement in accordance with Section 102(b)(2) of the Israeli Tax Ordinance. Under the conditions of Section 102(b)(2), the RSUs and the Shares may be issued to the Team Member only through the Trustee. To receive the tax treatment provided for in Section 102(b)(2), the RSUs and the Shares must be issued to the Trustee for a period of no less than 24 months from their Grant Date and deposit with the Trustee (the “Lock-Up Period”). In order for the tax benefits of Section 102(b)(2) to apply, as long as the RSUs are held by the Trustee, the RSUs or the underlying Shares may not be sold, transferred, assigned, pledged or mortgaged (other than through a transfer by will or by operation of law), nor may they be the subject of an attachment or security interest, and no power of attorney or transfer deed shall be given in respect thereof prior to the payment of the tax liability. Upon the conclusion of the Lock-Up Period, the Trustee may release the Shares issued hereunder to the Team Member only after (i) the receipt by the Trustee of an acknowledgment from the Israeli Income Tax Authority that the Team Member has paid all applicable tax due pursuant to the Israeli Tax Ordinance and Section 102, or (ii) the Trustee withholds any applicable tax due pursuant to the Israeli Tax Ordinance and Section 102. Notwithstanding the foregoing, in the event the Team Member shall elect to release the Shares prior to the conclusion of the Lock-up Period, the sanctions under Section 102 shall apply to and shall be borne solely by the Team Member.
c.The Team Member understands that in the event of a distribution of rights, including an issuance of stock dividend or bonus shares, in connection with the RSU (the “Additional Rights”), all such Additional Rights shall be deposited with and/or issued to the Trustee for the benefit of the Team Member, and shall also be subject to the provisions of Section 102(b)(2). The Lock-Up Period for such Additional Rights shall be measured from the commencement of the Lock-Up Period of the RSU to be issued hereunder, from which the Additional Rights were declared or distributed.
Death of the Team Member
This provision supplements Section 9 of the Grant Agreement:
As long as the Shares are held by the Trustee for the benefit of the Team Member, all rights of the Team Member over the Shares cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.
ITALY
Terms and Conditions
Plan Document Acknowledgment
By accepting the RSUs, the Team Member acknowledges that the Team Member has received a copy of the Plan and the Grant Agreement and has reviewed the Plan and the Grant Agreement, including this Appendix B, in their entirety and fully understands and accepts all provisions of the Plan and the Grant Agreement, including this Appendix B. The Team Member acknowledges having read and specifically and expressly approves the following sections of the Grant Agreement: Section 2 (“Vesting Schedule”), Section 4 (“Restrictions”), Section 5 (“Custody of Restricted Stock Units”), Section 12 (“Taxes”), Section 14 (“Plan Information”), Section 16 (“No Advice Regarding Grant”), Section 21(d) (“Language”), Section 21(h) (“Imposition of Other Requirements”), Sections 21(i) and (j) (“Notices”), and the following section of Appendix A: Section 1 (“Acknowledgment and Waiver”), Section 2 (“Privacy Notice and Consent”).
Notifications
Foreign Asset / Account Tax Reporting Notification
Italian residents who, at any time during the fiscal year, hold foreign financial assets (such as cash, Shares) which may generate income taxable in Italy are required to report such assets on their annual tax returns or on a special form if no tax return is due. The same reporting duties apply to Italian residents who are beneficial owners of the foreign financial assets pursuant to Italian money laundering provisions, even if they do not directly hold the foreign asset abroad. The Team Member is advised to consult the Team Member's personal legal advisor to ensure compliance with applicable reporting requirements.
Foreign Asset Tax Information
The value of the financial assets held outside Italy by Italian residents is subject to a foreign asset tax. The taxable amount will be the fair market value of the financial assets (e.g., Shares) assessed at the end of the calendar year.
JAPAN
Notifications
Foreign Asset/Account Reporting Notification
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The Team Member will be required to report details of any assets held outside Japan as of December 31 (including any Shares acquired under the Plan) to the extent such assets have a total net fair market value exceeding JPY 50,000,000. Such report will be due by March 15 each year. The Team Member should consult with the Team Member's personal tax advisor as to whether the reporting obligation applies to the Team Member and whether the Team Member will be required to report details of any outstanding RSUs, Shares or cash held by the Team Member in the report.
KAZAKHSTAN
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Kazakhstan, the RSUs granted to Employees residing in Kazakhstan shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
Notifications
Securities Law Notification
This offer is addressed only to certain eligible employees resident in Kazakhstan with respect to rights to Shares or their cash equivalent. As of the date hereof, the Shares are traded on the New York Stock Exchange under the ticker symbol “HPE.”  The Grant Agreement has not been approved, nor does it need to be approved, by the National Bank of Kazakhstan.  The Grant Agreement is intended only for the Team Member and is not for general circulation in the Republic of Kazakhstan.
Exchange Control Notification
No exchange formalities should apply to the Team Member’s participation in the Plan as no consideration will be paid for the RSUs. However, prior to the RSUs vesting the Team Member should confirm the Team Member's applicable exchange control obligations with the Team Member's personal advisor.
KOREA
Notifications
Foreign Asset/Account Reporting Notification
Korean residents must declare all foreign financial accounts (e.g., non-Korean bank accounts, brokerage accounts) based in foreign countries to the Korean tax authority and file a report with respect to such accounts if the monthly balance of such accounts exceeds KRW 500 million (or an equivalent amount in foreign currency) on any month-end date during a calendar year. The Team Member should consult with the Team Member's personal tax advisor for additional information about this reporting obligation.
LUXEMBOURG
No country-specific provisions.
MALAYSIA
Terms and Conditions
Data Privacy
This provision supplements Grant Agreement Appendix A: Section 2 (“Privacy Notice and Consent”):
B-12


The Team Member hereby explicitly, voluntarily and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Team Member’s personal data as described in this Agreement and any other Plan materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Team Member’s participation in the Plan. 
The Team Member understands that the Company and the Employer may hold certain personal information about the Team Member, including, but not limited to, the Team Member’s name, home address, email address and telephone number, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of any entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Team Member’s favor for the purpose of implementing, administering and managing the Plan (“Data”).
The Team Member understands that the Data will be transferred to Merrill or such other stock plan providers as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan.  The Team Member understands that those receiving the Data may be located in the United States or elsewhere, and that the applicable country (e.g., the United States) may have different data privacy laws and protections than the Team Member’s country.  The Team Member understands that the Team Member may request a list with the names and addresses of any potential Employees of Data by contacting the Team Member's human resources representative. The Team Member authorizes the Company, and any other possible Employees which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Team Member’s participation in the Plan. The Team Member understands that Data will be held only as long as is necessary to implement, administer and manage the Team Member's participation in the Plan. The Team Member understands that the Team Member may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case, without cost, by contacting in writing the Team Member's local human resources representative Shirley Lee at shirley-boon-choo.lee@hpe.com.
Further, the Team Member understands that the Team Member is providing the consents herein on a purely voluntary basis.  If the Team Member does not consent, later seeks to revoke the consent, the Team Member’s employment status or service with the Employer will not be affected; the only consequence of refusing or withdrawing the consent is that the Company would not be able to grant the RSUs or other equity awards under the Plan, or administer or maintain such awards.  Therefore, the Team Member understands that refusing or withdrawing the Team Member's consent may affect the Team Member’s ability to participate in the Plan. The refusal and/or withdrawal of consent will have no further impact. For more information on the consequences of the refusal to consent or withdrawal of consent, the Team Member understands that the Team Member may contact the Team Member's human resources representative.
Penerima dengan ini secara eksplicit, secara sukarela dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain, data peribadi Penerima seperti yang dinyatakan dalam Perjanjian ini dan apa-apa bahan Pelan, oleh dan di antara, sebagaimana yang berkenaan, Majikan, Syarikat, dan anak-anak syarikat bagi tujuan ekslusif untuk melaksanakan, mentadbir, dan menguruskan penyertaan Penerima dalam Pelan tersebut.
Penerima memahami bahawa Syarikat dan Majikan mungkin memegang maklumat peribadi tertentu tentang Penerima, termasuk, tetapi tidak terhad kepada, nama, alamat rumah, alamat emel dan nombor telefon, , tarikh lahir, insurans sosial, nombor pasport atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan Penerima, apa-apa syer dalam saham atau jawatan pengarah yang dipegang dalam Syarikat, butir-butir apa-apa hak untuk syer yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun tertunggak bagi faedah Penerima untuk melaksanakan, mentadbir dan menguruskan Pelan tersebut (“Data”).
Penerima memahami bahawa Data akan dipindah kepada Merrill atau pembekal-pembekal pelan saham yang lain sebagaimana yang dipilih oleh Syarikat pada masa depan, yang membantu Syarikat dalam pelaksanaan, pentadbiran dan pengurusan Pelan tersebut. Penerima memahami bahawa mereka yang menerima Data mungkin berada di Amerika Syarikat atau di tempat lain, dan negara yang berkenaan (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza daripada negara Penerima. Penerima memahami bahawa dia boleh meminta senarai nama dan alamat mana-mana pihak yang mungkin menerima Data dengan menghubungi wakil sumber manusianya. Penerima memberi kuasa kepada Syarikat, dan mana-mana penerima lain yang mungkin membantu Syarikat (masa sekarang atau pada masa depan) untuk melaksanakan, mentadbir dan menguruskan Pelan tersebut untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, semata-mata dengan tujuan untuk melaksanakan, mentadbir dan menguruskan penyertaan Penerima dalam Pelan tersebut. Penerima memahami bahawa Data akan dipegang hanya untuk tempoh yang diperlukan untuk melaksanakan, mentadbir dan menguruskan penyertaannya dalam Pelan tersebut. Penerima memahami bahawa dia boleh, pada bila-bila masa, melihat data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta apa-apa pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusianya, di mana butir-butir hubungannya adalah Shirley Lee, shirley-boon-choo.lee@hpe.com.
Selanjutnya, Penerima memahami bahawa dia memberikan persetujuan di sini secara sukarela. Jika Penerima tidak bersetuju, kemudian membatalkan persetujuannya, status dan perkhidmatan pekerjaan Penerima dengan Majikan tidak akan terjejas; satunya akibat jika dia tidak bersetuju atau menarik balik persetujuannya adalah bahawa Syarikat tidak akan dapat memberikan Unit Saham Terbatas (“UST”) atau anugerah ekuiti lain atau mentadbir atau mengekalkan anugerah tersebut. Oleh itu, Penerima memahami bahawa keengganan atau penarikan balik persetujuannya boleh menjejaskan keupayaan Penerima untuk mengambil bahagian dalam Pelan tersebut. Untuk maklumat lanjut mengenai akibat keengganannya untuk memberikan keizinan atau penarikan balik keizinan, Penerima memahami bahawa dia boleh menghubungi wakil sumber manusianya.
B-13



Director Reporting Notification
If the Team Member is a director of a Malaysian Subsidiary or Affiliate, the Team Member is subject to certain notification requirements under the Malaysian Companies Act 2016. Among these requirements is an obligation to notify the Malaysian Subsidiary or Affiliate in writing when the Team Member receives or disposes of an interest (e.g., RSUs or Shares) in the Company or any related company. This notification must be made within 14 days of receiving or disposing of any interest in the Company or any related company.
MEXICO
Terms and Conditions
Labor Law Acknowledgment
This provision supplements Section 1 of Appendix A:
By accepting this grant of RSUs, the Team Member understands, acknowledges and agrees with the following:
The RSUs are not related to the salary and other contractual benefits granted to the Team Member by the Employer; and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of employment.
Policy Statement
The invitation the Company is making under the Plan is unilateral and discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue it at any time without any liability to the Team Member.
The Company, with its registered office at 11445 Compaq Center West Drive, Houston, TX 77070, USA, is solely responsible for the administration of the Plan. Participation in the Plan and the acquisition of Shares does not, in any way, establish an employment relationship between the Team Member and the Company since the Team Member is participating in the Plan on a wholly commercial basis and the sole employer is the Employer, nor does it establish any rights between the Team Member and Employer.
Plan Document Acknowledgment
By accepting the RSUs, the Team Member acknowledges he/she has received a copy of the Plan, has reviewed the Plan and the Grant Agreement in their entirety and fully understands and accepts all provisions of the Plan and the Grant Agreement.
In addition, by signing below, the Team Member further acknowledges that having read and specifically and expressly approved the terms and conditions in Appendix A: Section 1 (“Acknowledgment and Waiver”), in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company, its Subsidiaries and its Affiliates are not responsible for any decrease in the value of the Shares underlying the RSUs.
Finally, the Team Member does not reserve any action or right to bring any claim against the Company for any compensation or damages as a result of participation in the Plan and the Team Member therefore grants a full and broad release to his/her Employer and the Company and its other Subsidiaries and Affiliates with respect to any claim that may arise under the Plan.
Spanish Translation
Reconocimiento de la Ley Laboral
Las siguientes disposiciones complementan la Sección 1 del Apéndice A:
Al aceptar las Unidades de Acciones, el Empleado reconoce que entiende y acepta que:
(i) las Unidades de Acciones no se encuentran relacionadas con el salario ni con otras prestaciones contractuales concedidas al Empleado por parte del Empleador; y (ii) cualquier modificación del Plan o su terminación no constituye un cambio o desmejora de los términos y condiciones de empleo.
Declaración de Política
La invitación por parte de la Compañía bajo el Plan, es unilateral y discrecional; por lo tanto, la Compañía se reserva el derecho absoluto de modificar el mismo y discontinuarlo en cualquier tiempo, sin ninguna responsabilidad para el Empleado.
La Compañía, con oficinas registradas ubicadas en 11445 Compaq Center West Drive, Houston, TX 77070, USA es la única responsable de la administración del Plan y de la participación en el mismo y la adquisición de Acciones Comunes no establece de forma alguna, una relación de trabajo entre el Empleado y la Compañía, ya que la participación del Empleado en el Plan es completamente comercial y el único empleador es el Empleador, así como tampoco establece ningún derecho entre el Empleado y su Empleador.
Reconocimiento del Documento del Plan
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Por medio de la aceptación las Unidades de Acciones, el Empleado reconoce que ha recibido una copia del Plan, que el mismo ha sido revisado al igual que la totalidad del Acuerdo de Otorgamiento y, que ha entendido y aceptado completamente todas las disposiciones contenidas en el Pan y en el Acuerdo de Otorgamiento.
Adicionalmente, al firmar abajo, el Empleado reconoce que ha leído, y que aprueba específica y expresamente los términos y condiciones contenidos en la Sección 1 del Apéndice A ("Reconocimiento y Exención"), en la cual se encuentra claramente descrito y establecido que: (i) la participación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el mismo es ofrecida por la Compañía de forma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) la Compañía, así como sus Subsidiarias y Afiliadas no son responsables por cualquier detrimento en el valor de las Acciones Comunes en relación con las Unidades de Acciones.
Finalmente, el Empleado declara que no se reserva ninguna acción o derecho para interponer una demanda en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su participación en el Plan y en consecuencia, otorga el más amplio finiquito a su Empleador, así como a la Compañía, a sus otras Subsidiarias y Afiliadas con respecto a cualquier demanda que pudiera originarse en virtud del Plan.
Notifications
Securities Law Notification
The RSUs granted, and any Shares acquired, under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico.  In addition, the Plan, the Grant Agreement and any other document relating to the RSUs may not be publicly distributed in Mexico. These materials are addressed to the Team Member because of the Team Member's existing relationship with the Company and any Subsidiary or Affiliate, and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present employees of HPE Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.
NETHERLANDS
Terms and Conditions
This provision replaces Section 10 of the Grant Agreement:
10. Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
NEW ZEALAND
Securities Law Notification
Warning
This is a grant of RSUs. The underlying Shares give you a stake in the ownership of the Company. The Team Member may receive a return if dividends are paid.
If the Company runs into financial difficulties and is wound up, the Team Member will be paid only after all creditors and holders of preference shares have been paid. The Team Member may lose some or all of the Team Member's investment.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors to make an informed decision. The usual rules do not apply to this offer because it is made under an employee share purchase scheme. As a result, the Team Member may not be given all the information usually required. The Team Member will also have fewer other legal protections for this investment.
For more information on risk factors impacting the Company’s business that may affect the value of the shares of Common Stock, I should refer to the risk factors discussion in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are filed with the U.S. Securities and Exchange Commission and are available online at www.sec.gov, as well as on the Company’s website at: http://investors.hpe.com.
Ask questions, read all documents carefully, and seek independent financial advice before committing yourself.
NORWAY
No country-specific provisions.
PERU
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Terms and Conditions
Labor Law Acknowledgment
This provision supplements Section 1 of Appendix A:
By accepting the RSUs, the Team Member acknowledges, understands and agrees that the RSUs are being granted ex gratia to the Team Member with the purpose of rewarding him or her as set forth in the Plan.
Notifications
Securities Law Notification
The grant of RSUs is considered a private offering in Peru; therefore, it is not subject to registration. For more information concerning this offer, please refer to the Plan, this Grant Agreement, the Plan Prospectus and any other grant documents made available to the Team Member by the Company. For more information regarding the Company, please refer to the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q available at www.sec.gov.
PHILIPPINES
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in the Philippines, the RSUs granted to Employees residing in the Philippines (including any dividend equivalents) shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
POLAND
Terms and Conditions
This provision replaces Section 10 of the Grant Agreement:
10.    Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
Notifications
Exchange Control Notification
If the Team Member holds foreign securities (including Shares) and maintains accounts abroad, the Team Member may be required to file certain reports with the National Bank of Poland. Specifically, if the value of securities and cash (when combined with all other assets held abroad) held in such foreign accounts exceeds PLN 7 million, the Team Member must file reports on the transactions and balances of the accounts on a quarterly basis. Further, any fund transfers into or out of Poland in excess of EUR 15,000 (or PLN 15,000 if such transfer of funds is connected with the business activity of an entrepreneur) must be effected through a bank in Poland. Polish residents are required to store all documents related to foreign exchange transactions for a period of five years.
PORTUGAL
Terms and Conditions
Language Consent
The Team Member hereby expressly declares that the Team Member has full knowledge of the English language and has read, understood and fully accepted and agreed with the terms and conditions established in the Plan and Grant Agreement.
Consentimento sobre Língua
O Empregado Contratado, pelo presente instrumento, declara expressamente que domina a língua inglesa e que leu, compreendeu e livremente aceitou e concordou com os termos e condições estabelecidos no Plano e no Acordo de Atribuição.
B-16


Notifications
Exchange Control Notification
If the Team Member holds Shares upon vesting of the RSUs, the acquisition of Shares should be reported to the Banco de Portugal for statistical purposes. If the Shares are deposited with a commercial bank or financial intermediary in Portugal, such bank or financial intermediary will submit the report on the Team Member’s behalf. If the Shares are not deposited with a commercial bank or financial intermediary in Portugal, the Team Member is responsible for submitting the report to the Banco de Portugal.
PUERTO RICO
No country-specific provisions.
QATAR
No country-specific provisions.
ROMANIA
Notifications
Exchange Control Notification
If the Team Member deposits the proceeds from the sale of Shares issued to him or her at vesting and settlement of the Shares or any cash dividends or dividend equivalent payments in a bank account in Romania, the Team Member may be required to provide the Romanian bank with appropriate documentation explaining the source of the funds. The Team Member should consult the Team Member's personal advisor to determine whether the Team Member will be required to submit such documentation to the Romanian bank.
RUSSIA
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Russia, the RSUs granted to Employees residing in Russia shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
Compliance with Laws and Regulations
This provision supplements Section 1 of Appendix A:
By accepting this grant of RSUs, the Team Member understands, acknowledges and agrees with the following:
(a)To participate in the Plan, the Team Member must comply with all Applicable Laws and regulations in Russia.
(b)A copy of this Grant Agreement has been sent to the Team Member by the Company as an offer from the territory of the United States of America and by agreeing to accept the RSUs, this Grant Agreement shall be deemed to have been concluded at the location of the Company at the following address: 11445 Compaq Center West Drive, Houston, TX 77070, USA.
(c)All actions and proceedings seeking to enforce any provision of, or based on any right arising out of, this Grant Agreement must be brought against either of the parties in the courts of the State of Delaware, County of New Castle, or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.
(d)The Team Member will comply with the Russian foreign exchange legislation in force at the relevant time.
(e)The Team Member will be solely responsible for (i) the proper declaration of all income received in accordance with the Plan and (ii) the payment of all relevant Tax-Related Items in connection with the receipt of such income as required by applicable Russian law.
(f)The Team Member agrees to execute such further instruments and to take such other action as may be necessary to facilitate the Team Member's participation in the Plan.
Notifications
Securities Law Notification
B-17


The Grant Agreement, the Plan and all other materials the Team Member may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. Absent any requirement under local law, the issuance of securities pursuant to the Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Exchange Control Notification
The Team Member is responsible for complying with any and all Russian foreign exchange requirements in connection with the RSUs, any Shares acquired and funds remitted into Russia in connection with the Plan. This may include, in certain circumstances, reporting and repatriation requirements. The Team Member should contact the Team Member's personal advisor regarding any such requirements resulting from participation in the Plan.
Foreign Asset/Account Reporting Notification
The Team Member is required to report the opening, closing or change of details of any foreign bank account to Russian tax authorities within one month of opening, closing or change of details of such account. The Team Member is also are required to report (i) the beginning and ending balances in such a foreign bank account each year and (ii) transactions related to such a foreign account during the year to the Russian tax authorities, on or before June 1 of the following year. The tax authorities can require the Team Member to provide appropriate supporting documents related to transactions in a foreign bank account. The Team Member should consult with the Team Member's personal legal advisor to determine the applicability of these reporting requirements to any brokerage account opened in connection with the Team Member’s participation in the Plan.
Anti-Corruption Notification
Anti-corruption laws prohibit certain public servants, their spouses and their dependent children from owning any foreign-source financial instruments (e.g., shares of foreign companies such as the Corporation). Accordingly, if the Team Member is covered by these laws, the Team Member should inform the Corporation because the Team Member should not hold Shares that may be acquired under the Plan.
SAUDI ARABIA
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Saudi Arabia, the Company may settle RSUs granted to Employees in Saudi Arabia in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and not provide any right for the Team Member to receive Shares.
SINGAPORE
Terms and Conditions
This provision replaces Section 10 of the Grant Agreement:
10. Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
Payout of RSUs in Cash Only for Mobile Employees
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Singapore, the RSUs granted to Employees residing in Singapore shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
Notifications
Securities Law Notification
The grant of RSUs is being made to the Team Member in reliance on the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”) and not being made with the view to the underlying Shares being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Team Member should note that the RSUs are subject to section 257 of the SFA and the Team Member will not be able to make any subsequent sale directly to any person in Singapore, or any offer of such subsequent sale of the Shares underlying the RSUs, unless such sale or offer in Singapore is made (i) after six months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.
B-18


Director Reporting Notification
A director, associate director or shadow director of the Company’s Singapore Subsidiary or Affiliate is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Company’s Singapore Subsidiary or Affiliate in writing when the Team Member receives an interest (e.g., RSUs or Shares) in the Company or any Subsidiary or Affiliate. In addition, the Team Member must notify the Company’s Singapore Subsidiary or Affiliate when the Team Member sells Shares (including when the Team Member sells Shares issued upon vesting and settlement of the RSUs). These notifications must be made within two days of acquiring or disposing of any interest in the Company or any Subsidiary or Affiliate. In addition, a notification of the Team Member’s interests in the Company or any Subsidiary or Affiliate must be made within two days of becoming the director, associate director or shadow director. The above notification requirements may apply to the chief executive officer (“CEO”) of a Singapore Subsidiary or Affiliate.
SLOVAKIA
No country-specific provisions.
SOUTH AFRICA
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in South Africa, the RSUs granted to Employees residing in South Africa shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
Notifications
Exchange Control Notification
Because no transfer of funds from South Africa is required under the RSUs, no filing or reporting requirements should apply when the RSUs are granted or when a payment is received upon vesting and settlement of the RSUs. However, because the exchange control regulations are subject to change, the Team Member should consult the Team Member's personal advisor prior to vesting and settlement of the RSUs to ensure compliance with current regulations. The Team Member is responsible for ensuring compliance with all exchange control laws in South Africa.
SPAIN
Terms and Conditions
Acknowledgment and Waiver
This provision supplements Section 1 of Appendix A:
By accepting the grant of RSUs, the Team Member acknowledges that the Team Member consents to participation in the Plan and has received a copy of the Plan.
The Team Member understands that the Company has unilaterally, gratuitously and discretionally decided to grant RSUs under the Plan to individuals who may be employees of the Company or its Subsidiaries or Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries or Affiliates on an ongoing basis except as provided in the Plan. Consequently, the Team Member understands that the RSUs are granted on the assumption and condition that the RSUs or the Shares acquired upon vesting shall not become a part of any employment contract (either with the Company or any of its Subsidiaries or Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the Team Member understands that this grant would not be made to the Team Member but for the assumptions and conditions referred to above; thus, the Team Member acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then the RSUs shall be null and void.
The RSUs are a conditional right to Shares and can be forfeited in the case of, or affected by, the Team Member’s termination of service or employment. This will be the case, for example, even if (1) the Team Member is considered to be unfairly dismissed without good cause; (2) the Team Member is dismissed for disciplinary or objective reasons or due to a collective dismissal; (3) the Team Member terminates employment or service due to a change of work location, duties or any other employment or contractual condition; (4) the Team Member terminates employment or service due to unilateral breach of contract of the Company, the Employer, or any other Subsidiary or Affiliate; or (5) the Team Member’s employment or service terminates for any other reason whatsoever, except for reasons specified in the Grant Agreement. Consequently, upon termination of the Team Member’s employment or service for any of the reasons set forth above, the Team Member may automatically lose any rights to the unvested RSUs granted to him or her as of the date of the Team Member’s termination of employment, as described in the Plan and the Grant Agreement.
Notifications
Exchange Control Notification
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The Team Member must declare the acquisition of Shares to the Dirección General de Comercial Internacional e Inversiones (the “DGCI”) of the Ministerio de Economia for statistical purposes. The Team Member must also declare ownership of any Shares by filing a D-6 form with the DGCI. Generally, the declaration must be made in January for Shares owned as of December 31 of the prior year and/or Shares acquired or disposed of during the prior year; however, if the value of Shares acquired or disposed of or the amount of the sale proceeds exceeds a certain threshold (or if the Team Member holds 10% or more of the share capital of the Company), the declaration must be filed within one month of the acquisition or disposition, as applicable.
In addition, the Team Member may be required to electronically declare to the Bank of Spain any foreign accounts (including brokerage accounts held abroad), any foreign instruments (including Shares acquired under the Plan), and any transactions with non-Spanish residents (including any payments of Shares made pursuant to the Plan), depending on the balances in such accounts together with the value of such instruments as of December 31 of the relevant year, or the volume of transactions with non-Spanish residents during the relevant year.
The Team Member is required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed EUR 1,000,000.
Securities Law Notification
The grant of RSUs and the Shares issued pursuant to the vesting of the RSUs are considered a private placement outside the scope of Spanish laws on public offerings and issuances of securities. Neither the Plan nor the Award Agreement has been nor will they be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and they do not constitute a public offering prospectus.
Foreign Asset/Account Reporting Notification
To the extent that the Team Member holds Shares and/or has bank accounts outside Spain with a value in excess of EUR 50,000 (for each type of asset) as of December 31, the Team Member will be required to report information on such assets on the Team Member's tax return (tax form 720) for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than EUR 20,000. The reporting must be completed by the following March 31.
SWEDEN
Terms and Conditions
Tax Withholding
This provision supplements Section 12 of the Grant Agreement:
Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax-Related Items as set forth in Section 12 of the Grant Agreement, in accepting the grant of RSUs, the Team Member authorizes the Company and/or the Employer to withhold Shares or to sell Shares otherwise deliverable to the Team Member upon vesting/settlement to satisfy Tax-Related Items, regardless of whether the Company and/or the Employer have an obligation to withhold such Tax-Related Items.
SWITZERLAND
Notifications
Securities Law Notification
Neither this document nor any other materials relating to the RSUs constitute a prospectus according to article 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), and neither this document nor any other materials relating to the RSUs may be publicly distributed nor otherwise made publicly available in Switzerland to any person other than an employee of the Company. Neither this document nor any other offering or marketing material relating to the RSUs have been or will be filed with, or approved or supervised by, any Swiss reviewing body according to article 51 FinSA or any Swiss regulatory authority (in particular, the Swiss Financial Market Supervisory Authority (FINMA)).
TAIWAN
Terms and Conditions
This provision replaces Section 10 of the Grant Agreement:
10. Retirement of the Team Member.

If the Team Member’s employment is terminated more than three months after the Grant Date and prior to the end of the Restriction Period by reason of the Team Member’s retirement in accordance with the applicable retirement policy, all RSUs shall immediately vest including any amounts for dividend equivalent payments on RSUs that vest at termination subject to the condition
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that the Team Member shall have executed a current ARCIPD that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
Notifications
Securities Law Notification
The RSUs and the Shares to be issued pursuant to the Plan are available only to employees of the Company, its Subsidiaries and Affiliates. The grant of the RSUs does not constitute a public offer of securities and is not subject to registration in Taiwan.
Exchange Control Notification
The Team Member may acquire and remit foreign currency (including proceeds from the sale of Shares) into and out of Taiwan up to USD 5,000,000 per year. If the transaction amount is TWD 500,000 or more in a single transaction, the Team Member must submit a foreign exchange transaction form and also provide supporting documentation to the satisfaction of the remitting bank. If the transaction amount is USD 500,000 or more in a single transaction, the Team Member may be required to provide additional supporting documentation to the satisfaction of the remitting bank. The Team Member should consult the Team Member's personal advisor to ensure compliance with applicable exchange control laws in Taiwan.
THAILAND
Notifications
Exchange Control Notification
When the Team Member sells Shares issued upon vesting of the RSUs or receives dividends or dividend equivalent payments, the Team Member must repatriate to Thailand any cash proceeds or payments of at least USD 1,000,000 within 360 days from the date the sale transaction was entered into. The Team Member must either convert the amounts to local currency or deposit the funds into a foreign currency account within 360 days of repatriation. If the amount of the Team Member’s proceeds is USD 1,000,000 or more, the Team Member must specifically report the inward remittance to the Bank of Thailand on a foreign exchange transaction form. If the Team Member fails to comply with these obligations, the Team Member may be subject to penalties assessed by the Bank of Thailand. The Team Member should consult the Team Member's personal legal advisor prior to taking any action with respect to the remittance of proceeds into Thailand. The Team Member is responsible for ensuring compliance with all exchange control laws in Thailand, and neither the Company nor the Employer will be liable for any fines or penalties resulting from the Team Member’s failure to comply with applicable laws.
TUNISIA
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Tunisia, the RSUs granted to Employees residing in Tunisia shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.
Exchange Control Acknowledgement
If the Team Member is a resident of Tunisia, the Team Member acknowledges, consents and agrees to comply with exchange control requirements with respect to the RSU and to obtain any necessary approval from the Central Bank of Tunisia. If the Team Member holds assets (including Shares acquired under the Plan) outside Tunisia and the value of such assets exceeds a certain threshold (currently TND 500), the Team Member must declare the assets to the Central Bank of Tunisia within six months of their acquisition. All proceeds from the RSUs, the Shares and the sale of Shares must be repatriated to Tunisia. The Team Member should consult the Team Member's personal advisor before taking action with respect to remittance of proceeds into Tunisia.
TURKEY
Notifications
Securities Law Notification
Under Turkish law, the Team Member is not permitted to sell any Shares acquired under the Plan in Turkey. The Shares are currently traded on the New York Stock Exchange, which is located outside Turkey, under the ticker symbol “HPE” and Shares acquired under the Plan may be sold through this exchange.
Exchange Control Notification
Under Turkish law, Turkish residents are permitted to purchase and sell securities or derivatives traded on exchanges abroad only through a financial intermediary licensed in Turkey. Therefore, the Team Member may be required to appoint a Turkish broker to assist the Team Member with the sale of the Shares acquired under the Plan. 
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UNITED ARAB EMIRATES
Notifications
Securities Law Notification
The Plan is being offered only to qualified employees and is in the nature of providing equity incentives to employees of the Company or its Subsidiary in the UAE. Any documents related to the Plan, including the Plan, the Grant Agreement, this Appendix B, the Plan prospectus and other grant documents (“Plan Documents”), are intended for distribution only to such employees and must not be delivered to, or relied on by any other person. Prospective recipients of the securities offered (i.e., the RSUs) should conduct their own due diligence on the securities.
The Emirates Securities and Commodities Authority has no responsibility for reviewing or verifying any Plan Documents nor has it taken steps to verify the information set out in them, and thus, is not responsible for such documents. Further, neither the Ministry of Economy nor the Dubai Department of Economic Development has approved this statement nor taken steps to verify the information set out in it, and has no responsibility for it.
Employees should, as prospective stockholders, conduct their own due diligence on the securities. Any securities (i.e., Shares) acquired at vesting of the RSUs may be subject to restrictions on their resale. Prospective acquirers of the securities offered should conduct their own due diligence with respect to the securities. If the Team Member does not understand the contents of this statement, the Plan or the Grant Agreement, including this Appendix B, the Team Member should consult an authorized financial advisor.
UNITED KINGDOM
Terms and Conditions
Payout of RSUs in Shares Only
Pursuant to its discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, with respect to all Employees residing in the United Kingdom, the Company will convert all vested RSUs only into an equivalent number of Shares. Employees residing in the United Kingdom (or in the event of death, such Employee’s legal representative) will not receive an equivalent cash payment with respect to vested RSUs.
Tax Withholding
This provision supplements Section 12 of the Grant Agreement:
The Team Member agrees that the Team Member is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company, the Employer or by Her Majesty’s Revenue & Customs (“HMRC”) (or any other tax authority or any other relevant authority). The Team Member also agrees to indemnify and keep indemnified the Company and the Employer against any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Team Member’s behalf.
Notwithstanding the foregoing, if the Team Member is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the Team Member understands that the Team Member may not be able to indemnify the Company for the amount of any income tax not collected from or paid by the Team Member within ninety (90) days of the end of the U.K. tax year in which the event giving rise to the Tax-Related Items occurs as it may be considered to be a loan and therefore, it may constitute a benefit to the Team Member on which additional income tax and National Insurance contributions (“NICs”) may be payable. The Team Member understands that the Team Member will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company and/or the Employer (as appropriate) the amount of any NICs due on this additional benefit, which may also be recovered from the Team Member by any of the means referred to in Section 12 of the Grant Agreement. If the Team Member fails to comply with the Team Member's obligations in connection with the income tax as described in this section, the Company may refuse to deliver the Shares underlying the RSUs.
VIETNAM
Terms and Conditions
Payout of RSUs in Cash Only
Pursuant to the Company’s discretion under Section 2(ii) of the Plan and Section 3 of the Grant Agreement, due to legal considerations in Vietnam, the RSUs granted to Employees residing in Vietnam shall be settled in cash only (less any Tax-Related Items or other withholding obligations set forth in Section 12 of the Grant Agreement in accordance with Applicable Law and/or fees) and do not provide any right for the Team Member to receive Shares.

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EXHIBIT A

AUSTRALIA OFFER DOCUMENT
HEWLETT PACKARD ENTERPRISE COMPANY 2021 STOCK INCENTIVE PLAN

OFFER TO AUSTRALIAN RESIDENT EMPLOYEES


We are pleased to provide you with this offer to participate in the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan (the “Plan”). This Offer Document sets out information regarding the grant of Restricted Stock Units (“RSUs”) by Hewlett Packard Enterprise Company (the “Company”) under the Plan to certain Australian resident employees of the Company and its Australian Affiliates (“Eligible Participants”). This Offer Document is intended to comply with the provisions of the Corporations Act 2001, the Australian Securities and Investment Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order CO 14/1000.
The purpose of the Plan is to encourage ownership in the Company by key personnel whose long-term employment is considered essential to the Company’s continued progress and, thereby, encourage recipients to act in the shareholders’ interest and share in the Company’s success and to provide any opportunity for cash awards to incentivize or reward employees.
Capitalized terms used but not otherwise defined herein shall have the same meanings ascribed to them in the Plan.
1.OFFER OF RSUs
This is an offer made by the Company under the Plan to certain Eligible Participants of the Company or an Affiliate to accept RSUs as may be granted from time to time in accordance with the Plan.
2.TERMS OF GRANT
The specific terms of your grant are set out in the Grant Agreement. The rules of the Plan are incorporated into the Grant Agreement and this Offer Document by reference. By accepting a grant of RSUs, you will be bound by the rules of the Plan and your Grant Agreement.

3.ADDITIONAL DOCUMENTS
In addition to the information set out in this Offer Document, also provided or made available are copies of the following documents (collectively referenced as “Additional Documents”):
(a)the Grant Agreement;
(b)the Plan (plan document); and
(c)the Plan prospectus.
The Plan and the Plan prospectus can be found on the Long-term Incentives website.

Please note that the Plan prospectus is not a prospectus for the purposes of the Corporations Act 2001 and has not been modified to reflect the rules specific to offers in Australia. To the extent of any inconsistency between the Offer Document and the Plan prospectus, the terms of the Offer Document will prevail for participants in Australia.

The Additional Documents provide further information necessary to make an informed investment decision in relation to your participation in the Plan.
4.RELIANCE ON STATEMENTS
You should not rely upon any oral statements made to you in relation to this offer. You should only rely upon the statements contained in this Offer Document and the Additional Documents when considering your participation in the Plan.
RESTRICTED STOCK UNITS

5.     WHAT IS A RESTRICTED STOCK UNIT?

An RSU is a contractual obligation between the Company and the holder whereby the holder is entitled to receive Shares at a time in the future from the Company if certain conditions are met or cash in an amount equal to the fully-paid value of Shares. The Company currently intends to settle the RSUs in Shares. Prior to satisfaction of those conditions and the Company’s issuance of the Shares, the holder of an RSU does not have any ownership rights to the underlying Shares. An RSU is subject to substantial risk of forfeiture and to restrictions on its sale or other transfer. The Committee is authorized to determine the Eligible Participants to whom, and the time or times at which, RSUs will be granted, the form of settlement of the RSUs, the number of Shares subject to an RSU, the time or times within which an RSU will be subject to forfeiture, the time or times at which the restrictions will terminate and all other terms and conditions of the grants.

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6.    HOW MANY SHARES WILL I RECEIVE UNDER MY RESTRICTED STOCK UNIT AWARD AND WHAT IS THE PURCHASE PRICE OF THE SHARES?

The number of Shares subject to your RSU award is set forth in your Grant Agreement. Please note that you are not required to pay for your RSUs or the Shares that are issuable pursuant to your RSUs.
GENERAL INFORMATION
7.    DO I HAVE RIGHTS AS A STOCKHOLDER OF THE COMPANY AS A RESULT OF THE AWARD?
No. You will not have the right to receive any cash or stock dividends or to vote the Shares underlying your RSUs until you satisfy the terms and conditions of your Grant Agreement and the Company actually delivers the underlying Shares to you upon satisfaction of such terms and conditions. The terms and conditions of the RSU may include (but are not limited to) a requirement that you remain in the continuous service with the Company for a specified period of time.
8.     WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
The following individuals may be granted Awards under the Plan:
(i)an Officer of the Company (as defined in the Plan);
(ii)an employee of the Company; or
(iii)an employee of an Affiliate (as defined in the Plan).
9.     HOW MANY SHARES ARE AVAILABLE FOR ISSUANCE UNDER THE PLAN?
The total number of Shares available for delivery pursuant to Awards under the Plan is 7,000,000 plus the number of shares remaining available for grant under the Company’s 2015 Stock Incentive Plan as of April 14, 2021 plus the number of shares relating to RSU awards either granted under the Plan or outstanding under the 2015 Stock Incentive Plan as of April 14, 2021 that are forfeited, cancelled, settled in cash or otherwise not issued.

10.    HOW CAN I ASCERTAIN THE CURRENT MARKET PRICE OF A SHARE?
You may ascertain the market price of the Shares by obtaining the current trading price of the Company’s Common Stock on the New York Stock Exchange (the “NYSE”) at https://www.nyse.com/index under the code “HPE”.
The Australian dollar equivalent of that price can be obtained at:
    http://www.rba.gov.au/statistics/frequency/exchange-rates.html
11.     ADDITIONAL INFORMATION RELEVANT TO AUSTRALIAN-RESIDENT EMPLOYEES
Any advice given by the Company in connection with the offer under the Plan is general advice only, and Eligible Participants should consider obtaining their own financial product advice from an independent person who is licensed by ASIC to give such advice.

11.1     Who administers the Plan?
The Plan is administered by the Board except to the extent the Board delegates administration pursuant to the Plan (the “Administrator”).

Subject to certain limitations, the Board may delegate all or a portion of the administration of the Plan to one or more committees, or to senior managers of the Company or its Subsidiaries, and may authorize further delegation by such committees to senior managers of the Company or its Subsidiaries, in each case to the extent permitted by Delaware law and U.S. regulations (the “Administrator”). In accordance with Section 16 of the Plan, the Administrator may terminate or amend the Plan.

11.2     What is a share of common stock in the Company?
Common stock in a U.S. corporation is the same as ordinary shares of an Australian corporation. Each holder of common stock is entitled to one vote for every share of common stock held in the Company.
Dividends may be paid on the Shares out of any funds of the Company legally available for dividends at the discretion of the Board of Directors of the Company.
The only issued capital of the Company is currently common stock. The Shares are listed and may be traded on the NYSE. Shares are not subject to any further calls for payment of capital or for other assessment by the Company and have no sinking fund provisions, pre-emptive rights, conversion rights or redemption provisions.
11.3     What additional risk factors apply to Australian residents’ participation in the Plan?
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Eligible Participants should consider the risk factors relevant to investment in securities generally and, in particular, to the holding of Shares.
For example, the price at which Shares are quoted on the NYSE may increase or decrease due to a number of factors. There is no guarantee that the price of the Shares will increase. Factors which may affect the price of the Shares include fluctuations in the domestic and international market for listed stocks, general economic conditions, including interest rates, inflation rates, commodity and oil prices, changes to government fiscal, monetary or regulatory policies, legislation or regulation, the nature of the markets in which the Company operates and general operational and business risks.

You should be aware that in addition to fluctuations in value caused by the performance of the Company, the value of any Shares you may receive upon vesting of the RSUs, will be affected by the U.S./Australian dollar exchange rate. Participating in the Plan involves risks related to fluctuations in this rate of exchange.

11.4     What are the Australian taxation consequences of participating in the Plan?
2General
The Australian tax legislation contains specific rules governing the taxation of shares and rights (called “ESS interests”) acquired by employees under employee share schemes. If the RSUs issued under the Plan are settled in shares they should be regarded as a right to acquire shares and accordingly, ESS interests for these purposes.
On the other hand, if the RSUs issued under the Plan are settled in cash, you will generally be subject to income tax as well as Medicare Levy and, if applicable, a surcharge on the amount of the payment at the time the payment is made. Your employer will withhold applicable taxes from the cash payment and remit them to tax authorities on your behalf. The remainder of this summary assumes your RSUs will be settled in shares.
3Grant
You should not be subject to tax when RSUs are granted to you. Your assessable income includes the discount given in relation to the acquisition of the ESS interest at grant, unless the ESS interest is either (i) subject to a real risk of forfeiture or ii) you are genuinely restricted from immediately disposing of the RSUs and there is a statement in the grant documents that the RSUs are to be subject to deferred taxation, in which case you will be subject to deferred taxation.
In the case of the RSUs, the real risk of forfeiture test requires that:
(i)    there be a real risk that, under the conditions of the Plan, you will forfeit the RSUs or lose them (other than by disposing of them or the RSUs vesting); or
(ii)    there be a real risk that, under the conditions of the Plan, you will forfeit or lose any Shares acquired at vesting of your RSUs (other than by disposing of them).
The terms of your RSU grant are set out in your RSU Agreement. It is understood that your RSUs will satisfy the real risk of forfeiture test (because you forfeit the RSUs if you terminate employment prior to the settlement date). However, whether your RSUs are subject to a real risk of forfeiture may depend upon your personal circumstances and you should seek advice applicable to your circumstances. In any event, the RSUs are also non-transferable and the grant documents contain a statement that tax deferral is to apply. Accordingly, you should be subject to deferred taxation (i.e., you should not be subject to tax when RSUs are granted to you).
4Deferred Taxing Point
You will be required to include an amount in your assessable income for the income year (i.e., the financial year ending 30 June) in which the earliest of the events described below occurs in relation to the RSUs (the “ESS deferred taxing point”). In addition to income taxes, this amount also will be subject to Medicare Levy and, if applicable, a surcharge.
Your ESS deferred taxing point will be the earliest of the following:
(i)    when the RSUs vest and are settled and there is no real risk of you forfeiting the resulting share and there is no genuine restriction (present at acquisition) on the disposal of the resulting share (if such risks or restrictions exist, the taxing point is delayed until they lift); or
(ii)    cessation of employment.
Generally, this means that you will be subject to tax when your RSUs are settled and Shares are issued to you. However, the ESS deferred taxing point for your RSUs will be moved to the time you sell the underlying Shares if you sell the underlying Shares within 30 days of the original ESS deferred taxing point.
5Assessable Amount
The amount you must include in your assessable income in the income year (i.e., the financial year ending 30 June) in which the ESS deferred taxing point occurs in relation to your RSUs will be the difference between the “market value” of the underlying Shares at the ESS deferred taxing point and the cost base of the RSUs (which should be nil because you do not have to pay anything to acquire the RSUs or the underlying Shares).
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If, however, you sell the underlying Shares in an arm’s length transaction within 30 days of the ESS deferred taxing point, the amount to be included in your assessable income in the income year in which the sale occurs will be equal to the difference between the sale proceeds and the cost base of the RSUs (which should be nil).
The “market value” of the underlying Shares at the ESS deferred taxing point will be determined under Australian tax law according to ordinary principles.
6Sale of Shares
If you sell the Shares acquired upon vesting of your RSUs within 30 days of the original ESS deferred taxing point, your ESS deferred taxing point will be shifted to the date of sale for purposes of determining the amount of assessable income as described above and you will not be subject to capital gains tax.

If you sell the Shares acquired upon vesting of your RSUs more than 30 days after the original ESS deferred taxing point, you will be subject to capital gains tax to the extent that the sales proceeds exceed your cost basis in the shares sold, assuming that the sale of shares occurs in an arm’s-length transaction (as will generally be the case provided that the shares are sold through the NYSE). Your cost basis in the Shares will generally be equal to the market value of the shares at the ESS deferred taxing point (which will generally be the vesting date) plus any incremental costs you incur in connection with the sale (e.g., brokers fees).

The amount of any capital gain you realize must be included in your assessable income for the year in which the Shares are sold. However, if you hold the Shares for at least one (1) year prior to selling (excluding the dates you acquired and sold the shares), you may be able to apply a discount to the amount of capital gain that you are required to include in your assessable income. If this discount is available, you may calculate the amount of capital gain to be included in your assessable income by first subtracting all available capital losses from your capital gains and then multiplying each capital gain by the discount percentage of 50%.

You are responsible for reporting any income you realize from the sale of Shares acquired upon vesting of your Award and paying any applicable taxes due on such income.

If your sales proceeds are lower than your cost basis in the Shares sold (assuming the sale occurred in an arm’s-length transaction), you will realize a capital loss. Capital losses may be used to offset capital gains realized in the current tax year or in any subsequent tax year, but may not be used to offset other types of income (e.g., salary or wage income).

7Withholding and Reporting
It is your responsibility to report on your tax return and pay any tax liability and any Medicare Levy and, if applicable, a surcharge in relation to the RSUs and any Shares issued to you at settlement. It is also your responsibility to report and pay any tax liability resulting from the sale of Shares and the receipt of any dividends.
Your employer will be required to withhold tax due on the RSUs only if you have not provided your Tax File Number or Australian Business Number (as applicable) to your employer. However, your employer will provide you (no later than 14 July after the end of the tax year) and the Commissioner of Taxation (no later than 14 August after the end of the tax year) with a statement containing certain information about your participation in the Plan in the income year in which the ESS deferred taxing point occurs (including an estimate of the market value of the underlying Shares at the taxing point or the sale proceeds if you sell the Shares (and your employer is aware of such sale) within 30 days of the ESS deferred taxing point). Note that if you sell your Shares in an arm’s length transaction within 30 days of the original ESS deferred taxing point, the taxable amount will not be based on the market value of the Shares at the ESS deferred taxing point (as reported by your employer) but on the sale proceeds. It will be your responsibility to determine this amount and calculate your applicable tax accordingly.
11.5     What are the U.S. tax consequences of participation in the Plan?
Eligible Participants will not be subject to U.S. tax consequences by reason only of the acquisition of Shares and/or the sale of Shares. However, liability to U.S. taxes may accrue if an employee is otherwise subject to U.S. taxes.
Again, the above is an indication only of the likely U.S. tax consequences for Australian resident Eligible Participants who accept RSUs granted under the Plan. Eligible Participants should seek advice as to the U.S. tax consequences of participation from their personal tax advisers.
    
* * * * *
We urge you to carefully review the information contained in this Offer Document and the Additional Documents. If you have any questions, please contact:

Hazel Reodique - hreodique@hpe.com
Sincerely,

Hewlett Packard Enterprise Company

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EXHIBIT B
EMPLOYER STATEMENT ON RESTRICTED STOCK UNITS IN
HEWLETT PACKARD ENTERPRISE COMPANY

Pursuant to Section 3(1) of the Act on Stock Options in employment relations, as amended effective January 1, 2019 (the “Stock Option Act”), you are entitled to receive the following information regarding the grant of restricted stock units (“RSUs”) pursuant to the Hewlett Packard Enterprise Company (“HPE”) 2021 Stock Incentive Plan (the “Plan”) in a separate written statement.
This statement contains only information mentioned in the Stock Option Act. Additional terms and conditions related to the grant of RSUs are described in the Plan, plan web site, plan prospectus, and the RSU Agreement (the “Agreement”), which have been made available to you. Capitalized terms used but not defined herein shall have the same meaning as terms defined in the Plan and/or Agreement.
1.Time of grant of RSU
The grant mentioned herein has been made on the basis of an assessment and decision taken by Hewlett Packard Enterprise Company (“HPE”).
An RSU covering shares of HPE common stock (the “Shares”) was granted on the date specified in your Agreement (the “Grant Date”). The RSU grant represents a promise by HPE to pay you Shares or a cash equivalent upon fulfilment of all the conditions in the Agreement.
2.Terms or conditions for grant of RSUs
The Plan is offered at the discretion of HPE’s Board of Directors. Subject to any limitations under the Plan, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator. Under the terms of the Plan, you have no entitlement or claim to receive or claim to receive future grants of RSUs.
3.Acquisition Date
If you are employed by HPE or one of its participating subsidiaries at the time the RSUs vest, Shares or a cash equivalent, at HPE’s discretion, will be paid to you as soon as administratively possible.
Generally, the RSUs will vest 33.33% on the first, second and third anniversary of the Grant Date. You are not required to exercise the RSUs. Upon maturity, HPE will contact you regarding the payment of Shares or a cash equivalent, at HPE’s discretion.
4.Purchase Price
You are not required to pay a purchase price to receive the RSUs nor any Shares subject to this grant of RSUs.
5.Your rights upon termination of employment
Generally, upon termination of employment in accordance with the terms of the Agreement, your treatment will be:
a)all rights to the payment of Shares or a cash equivalent under the Agreement will lapse at the termination of the employee’s employment, except to the extent a severance plan applicable to the employee provides otherwise, however, see items (b) and (c) below;
b)in the event that employment is terminated due to retirement more than three months after the Grant Date (in accordance with the applicable retirement policy), the RSUs shall continue to vest and paid in accordance with the original vesting schedule, provided all terms of the Agreement are met; or
c)in the event that employment is terminated due to the employee’s death or permanent and total disability, the RSUs will vest immediately and be paid according to the terms of the Agreement, provided all terms of the Agreement are met.
You can find a copy of the plan at the plan web site at:
https://content.int.hpe.com/sites/LTI/imports/2021_HPE_Stock_Incentive_Plan.pdf
6.Financial Aspects of Participating in the Plan
The RSUs allotted under the Agreement are financial instruments connected with the general uncertainty of the stock market. Participation in the Plan does not guarantee a financial gain. Shares of stock are financial instruments and investing in stocks will always have financial risk. The possibility of profit at the time you sell your Shares will not only be dependent on HPE’s financial development and the fluctuation in exchange rates, but also on the general development on the stock market. In addition, after you receive Shares, the Shares could decrease in value, even below the value on the date they were received.
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Receipt and/or vesting of RSUs may be subject to taxation. The employee is liable to pay taxes and duties arising out of the RSUs. To the extent that the employee does not observe his/her obligations in this respect, HPE and the companies within the group are entitled to take any necessary steps to ensure fulfilment of such obligations (e.g., through deductions in salary).
The value of the RSUs and the value of the payment of Shares or a cash equivalent pursuant to the RSUs are not included when calculating holiday allowance, pension contributions or other consideration calculated on the basis of salary.
Any questions relating to the above may be directed to:
Compensation and Benefits Department
Hewlett Packard Enterprise A.p.S.
8 Engholm Parkvej
3450 Allerod
Denmark
Yours sincerely,
Hewlett Packard Enterprise A.p.S.
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ARBEJDSGIVERERKLÆRING VEDRØRENDE BETINGEDE AKTIER (RSU’ER) I
HEWLETT PACKARD ENTERPRISE COMPANY

I henhold til § 3, stk. 1, i lov om brug af køberet eller tegningsret m.v. i ansættelsesforhold som ændret med virkning fra 1. januar 2019 (“Aktieoptionsloven”) er du berettiget til i en særskilt skriftlig erklæring at modtage følgende oplysninger vedrørende tildelingen af betingede aktier (restricted stock units) (“RSU’er”) i henhold til Hewlett Packard Enterprise Company’s (“HPE”) “2021 Stock Incentive Plan” (“Ordningen”).
Denne erklæring indeholder kun de oplysninger, der er nævnt i Aktieoptionsloven. De øvrige vilkår og betingelser for tildelingen af RSU’er er beskrevet nærmere i Ordningen, på Ordningens hjemmeside, i prospektet for Ordningen og i RSU-aftalen (“Aftalen”), som du har fået adgang til. Begreber, der står med stort begyndelsesbogstav i denne Arbejdsgivererklæring, men som ikke er defineret heri, har samme betydning som i Ordningen og/eller Aftalen.
1.Tidspunkt for tildeling af RSU’er
Den heri nævnte tildeling er sket på grundlag af en vurdering og en beslutning, som er foretaget af Hewlett-Packard Enterprise Company (“HPE”).
En RSU vedrørende ordinære HPE-aktier (“Aktierne”) er blevet tildelt på den dato, der er anført i din Aftale (“Tildelingstidspunktet”). Den tildelte RSU repræsenterer et løfte fra HPE om at udbetale enten Aktier eller et tilsvarende kontantbeløb til dig, når alle de betingelser, der fremgår af Aftalen, er opfyldt.
2.Vilkår og betingelser for tildeling af RSU’er
Ordningen tilbydes efter HPE’s bestyrelses skøn. Med forbehold for eventuelle begrænsninger i henhold til Ordningen kan Administrator til enhver tid helt eller delvist ændre, modificere, suspendere eller opsige Ordningen. I henhold til vilkårene i Ordningen har du ikke hverken ret til eller krav på at modtage RSU’er i fremtiden.
3.Erhvervelsestidspunkt
Hvis du er ansat i HPE eller i et af HPE’s deltagende datterselskaber på det tidspunkt, hvor RSU’erne modnes, vil du efter HPE’s skøn få udbetalt enten Aktier eller et tilsvarende kontantbeløb, så snart det er praktisk muligt.
Generelt modnes RSU’erne med 33,33% årligt på første, anden og tredje årsdag for Tildelingstidspunktet. Du er ikke forpligtet til at udnytte RSU’erne. I forbindelse med modningen vil HPE kontakte dig vedrørende udbetalingen af enten Aktier eller et tilsvarende kontantbeløb efter HPE’s skøn.
4.Købskurs
Du er ikke forpligtet til at betale en købskurs for modtagelsen af RSU’erne eller de Aktier, der er omfattet af de tildelte RSU’er.
5.Din retsstilling i forbindelse med fratræden
I forbindelse med din fratræden i overensstemmelse med Aftalens bestemmelser vil din Option generelt blive behandlet som følger:
a)Alle rettigheder til udbetaling af enten Aktier eller et tilsvarende kontantbeløb i henhold til Aftalen bortfalder ved ansættelsesforholdets ophør, medmindre andet fremgår af en for medarbejderen gældende fratrædelsesaftale, jf. dog pkt. (b) og (c) nedenfor.
b)Såfremt ansættelsesforholdet ophører som følge af pensionering senere end tre måneder efter Tildelingstidspunktet (i overensstemmelse med den gældende pensionspolitik), vil RSU’erne fortsætte med at modnes og blive udbetalt i overensstemmelse med den oprindelige modningstidsplan, forudsat at alle vilkår i Aftalen er opfyldt.
c)Såfremt ansættelsesforholdet ophører som følge af medarbejderens død eller som følge af permanent eller total invaliditet, vil RSU’erne modnes omgående og blive udbetalt i henhold til bestemmelserne i Aftalen, forudsat at alle Aftalens betingelser er opfyldt.
En kopi af Ordningen kan findes på Ordningens hjemmeside på:
https://content.int.hpe.com/sites/LTI/imports/2021_HPE_Stock_Incentive_Plan.pdf
6.Økonomiske aspekter af deltagelse i ordningen
De i henhold til Aftalen tildelte RSU’er er finansielle instrumenter, der er forbundet med en vis usikkerhed på aktiemarkedet. Deltagelse i Ordningen giver ikke nogen garanti for en økonomisk gevinst. Aktier er finansielle instrumenter, og investering i aktier vil altid være forbundet med en økonomisk risiko. Muligheden for en gevinst på det tidspunkt, hvor du sælger dine Aktier, afhænger ikke kun af HPE’s økonomiske udvikling og udsvingene i valutakurserne, men også af den generelle udvikling på aktiemarkedet. Derudover vil Aktierne kunne falde i værdi og blive mindre værd end på det tidspunkt, hvor du modtog dem.
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Tildelingen og/eller modningen af RSU’erne vil kunne være skattepligtig. Medarbejderen bærer selv ansvaret for at betale de skatter og afgifter, der måtte opstå i forbindelse med RSU’erne. I det omfang medarbejderen ikke overholder sine forpligtelser i denne henseende, vil HPE og dets koncernselskaber være berettiget til at tage de nødvendige skridt til at sikre, at disse forpligtelser overholdes (f.eks. ved lønfradrag).
Værdien af RSU’erne og af de udbetalte Aktier eller det tilsvarende kontantbeløb indgår ikke i beregningen af feriepenge, pensionsbidrag eller øvrige vederlagsafhængige ydelser.
Eventuelle spørgsmål vedrørende ovennævnte bedes rettet til følgende:
Afdelingen for løn og medarbejdergoder
Hewlett Packard Enterprise A.p.S.
Engholm Parkvej 8
3450  Allerød
Danmark
Med venlig hilsen
Hewlett Packard Enterprise A.p.S.

B-30





EXHIBIT C


To
Hewlett-Packard Enterprise Company
(the “Company”)
To
I.B.I Capital Trust Ltd
(the “Trustee”)


RE: Beneficiary 102 Undertaking
1.I hereby agree that any RSU, RSA or options (the “Options”) granted to me by Hewlett-Packard Enterprise Company (the “Company”) according to and under the terms and conditions of the Israel sub-plan adopted by the Company as of April 14, 2021 (collectively, the “Plan”) are granted to me to qualify under the capital gain tax treatment in accordance and pursuant to Section 102(b)(3) of the Income Tax Ordinance [New Version] unless I am otherwise notified subject to the Company’s absolute discretion to change such election on future grants and subject to the Tax Authorities approval.
2.I declare and confirm that I am familiar with the provisions of the trust agreement signed between the Company and the Trustee, as well as the terms of the plan, Section 102, the Rules, and the implications and consequences of the chosen tax arrangement with respect to the Shares, and consent that all the terms and conditions set forth in Section 102 and the Rules, as shall be amended from time to time, shall apply to me and bind me.
3.Without derogating from the generality of the aforesaid, I agree that the Shares and all the rights that I shall be entitled to with respect to the Shares, including, without limitation, dividend, bonus shares and shares issued pursuant to adjustments made by the Company will be deposited in trust with the Trustee and be held in trust in accordance with Section 102, the Rules and the Trust Agreement.
4.Without derogating from the generality of the aforesaid, I acknowledge that during the “Holding Period” as determined by the Tax Ordinance I am prevented from selling the Shares, or releasing them from the Trustee, before the termination of the “Holding Period” and I understand the tax implications and consequences that may be applied as a result of breaching such obligation, as set by Section 102, which I am familiar with.
5.If I will cease to be an Israeli resident or if my employment will be terminated for any reason, the Shares shall remain subject to Section 102, the Rules and the Trust Agreement.
6.I hereby agree that any tax liability whatsoever arising from the grant, exercise of any options, the sale of Shares, the release of Shares from the Trustee or any other event or act with respect to the Shares granted to me, shall be borne solely by me. I declare and consent that the Company and/or the Trustee shall make any tax payment due, out of the proceeds of any sale of Shares, to any tax authority, according to Section 102, the Rules, the Trust Agreement or any other compulsory payments or applicable law.
7.I understand that this grant of Shares under the capital gain track is conditioned upon the receipt, inter alia, of all required approvals from the tax authorities. Accordingly, to the extent that for whatever reason the Company shall not be granted an approval by the Israeli Tax Authorities under Section 102, I shall bear and pay any and all taxes and any other compulsory payments applicable to the grant, exercise, sale or other disposition of options or stocks; I hereby declare and consent for the Company and/or the Trustee to deduct any tax payment due, out of the proceeds of any sale of Shares, for any payment to The tax authorities, according to the Rules, or any other applicable compulsory payments.
8.I confirm that the Company and/or the Trustee shall not be required to release any Shares or any proceeds deriving from the sale of Shares, to me, until all required tax payments according to Section 102, the Rules and the Trust Agreement, including any other compulsory payments, or applicable law, have been fully assured.


__________________________ _________________ ________________________
Name of the Beneficiary        I.D Number            Signature

B-31

Exhibit 10.31
IMAGE_01A.JPG
2021 STOCK INCENTIVE PLAN
GRANT AGREEMENT
Name: Employee ID:

Grant Date: [TO BE UPDATED]
Grant ID: [TO BE UPDATED]
Target Amount: __________
Plan: HPE 2021 Stock Incentive Plan

Performance-Adjusted Restricted Stock Units
GRANT SUMMARY
Target Amount _________ Shares
Performance Period 01 November 2021 – 31 October 2024
Segment 1 01 November 2021 – 31 October 2023
Segment 2 01 November 2021 – 31 October 2024

THIS PERFORMANCE-ADJUSTED RESTRICTED STOCK UNITS GRANT AGREEMENT (this “Grant Agreement”), as of the Grant Date noted above between Hewlett Packard Enterprise Company, a Delaware corporation (the “Company”), and the Employee named above (the “Team Member”), is entered into as follows:
WHEREAS, the continued participation of the Team Member is considered by the Company to be important for the Company’s continued growth; and
WHEREAS, in order to give the Team Member an incentive to continue in the employ of the Company (or its Affiliates or Subsidiaries), to accept ancillary agreements designed to protect the legitimate business interests of the Company that are made a condition of this grant and to participate in the affairs of the Company, the HR and Compensation Committee of the Board of Directors of the Company or its delegates (the “Committee”) has determined that the Team Member shall be granted the number of performance-adjusted restricted stock units (“PARSUs”) representing hypothetical shares of the Company’s common stock (the “Grant”). Each PARSU will be equal in value to one share of the Company’s $0.01 par value common stock (“Shares”) and is subject to the restrictions stated below and subject to forfeiture until it vests pursuant to Section 4 of this Grant Agreement. The target amount stated above reflects the target number of PARSUs that may be achieved if the performance criteria are attained at 100% of the target level performance (the “Target Amount”), but the actual number of PARSUs that vest and become nonforfeitable shall be determined based on the actual attainment level of performance. The number of PARSUs achieved will be determined at the end of each Segment (as defined below). The PARSUs are subject to the terms of this Grant Agreement and the plan named above (the “Plan”), a copy of which can be found on the Company’s Long-term Incentives website along with a copy of the related prospectus. The Plan and the related prospectus can also be obtained by written or telephonic request to the Company Secretary. Unless otherwise defined in this Grant Agreement, any capitalized terms in this Grant Agreement shall have the meanings ascribed to such terms in the Plan.
THEREFORE, the parties agree as follows:
1.Grant of Performance-Adjusted Restricted Stock Units.
Subject to the terms and conditions of this Grant Agreement and of the Plan, the Company hereby grants to the Team Member the PARSUs, as set forth below.



2.Performance Criteria and Performance Periods.
The Grant is divided into two separate segments, each with a different performance period, as set forth in the Grant Summary above. One-half (1/2) of the Target Amount of the PARSUs is subject to performance criteria for Segment 1 (defined above in the Grant Summary), which is two (2) fiscal years, and one-half (1/2) of the Target Amount of the PARSUs is subject to performance criteria for Segment 2 (defined above in the Grant Summary) which is three (3) fiscal years. Segment 1 and Segment 2 are each individually referred to as a “Segment” and are jointly referred to herein as “Segments.”
For each Segment, the Team Member may be credited with PARSUs based on (a) the Company’s achieving goals for that Segment related to Non-GAAP Net Income (“Net Income”), subject to a multiplier based on the Company’s achievement of relative total shareholder return (“TSR”), (b) the Team Member’s continued employment through the last U.S. business day of the relevant Segment, and (c) the Team Member’s compliance with the requirements and conditions provided for in the Plan and this Grant Agreement.
The goals associated with this Grant shall be established by the Committee and will be communicated separately to the Team Member by the Company. Shares vested at the end of each Segment with respect to each PARSU will range from 0% to 200% of the Target Amount of PARSUs, based upon the Company’s performance against the Net Income and TSR goals as certified by the Committee. No PARSUs will vest for a Segment if performance is below minimum levels.
3.Shares Eligible for Vesting for Each Segment.
(a)Net Income and TSR. 100% of the Target Amount of Shares for each Segment (i.e., 50% of the total Target Amount of Shares) will be determined based upon performance against the Net Income goals for that Segment, as certified by the Committee. That number of Shares will then be subject to a modifier based on TSR for that Segment as certified by the Committee. The relevant number of Shares eligible for vesting for a Segment, based on the Company’s Net Income performance during the relevant Segment, shall be as follows: 0% if Net Income performance is below the minimum level, 50% if Net Income performance is at the minimum level, 100% if Net Income performance is at target level and 200% if Net Income performance is at or above the maximum level. For performance between the minimum level and target level or between target level and the maximum level, a proportionate percentage will be applied based on straight-line interpolation between levels. In all cases in which the Net Income performance is at or above the minimum level of performance, the number of shares eligible for vesting may be increased or decreased by up to twenty percent (20%) based on the Company’s TSR performance against goal for that Segment, except the aggregate number of Shares eligible for vesting for a Segment shall never exceed 200% of the Target Amount of Shares for the Segment.
(b)Service Requirement. Notwithstanding Section 3(a) above, except as provided herein, the Team Member must be employed on the last day of the relevant Segment in order to be eligible to vest in any Shares for that Segment.
4.Vesting of Performance-Adjusted Restricted Stock Units.
Following the Committee’s certification (if applicable) at the end of the relevant Segment that the goals associated with the Grant have been met and that the terms and conditions set forth in this Grant Agreement have been fulfilled (and in any event within seventy-five (75) days of the last day of the relevant Segment), the Company shall deliver a number of Shares corresponding to the number of PARSUs that have become vested pursuant to Section 3 (and Sections 7 through 10, as applicable) and, with respect to such vested Shares, the Company shall deliver additional Shares with a value equal to the aggregate amount (without interest) of the cash dividends declared on the Company’s common stock for which the record date is between the Grant Date and the vesting date (as determined pursuant to this Section 4).
5.Restrictions.
Except as otherwise provided for in this Grant Agreement, the PARSUs or Shares granted hereunder may not be sold, pledged or otherwise transferred.
6.Custody of Performance-Adjusted Restricted Stock Units.
The PARSUs subject hereto shall be held in a restricted account in the name of the Team Member. Upon completion of the relevant Segment, any Shares vested pursuant to Section 4 above shall be released into an unrestricted brokerage account in the name of the Team Member; provided, however, that a portion of such Shares shall be surrendered in payment of Tax-Related Items in accordance with Section 12 below, unless the Company, in its sole discretion, establishes alternative procedures for the payment of such taxes. Any Shares not vested pursuant to Section 4 above shall be forfeited from the Team Member’s account.
7.Termination of Employment.
Except in the case of a termination of employment due to the Team Member’s death, due to a retirement that occurs more than three months after the Grant Date, or due to a total and permanent disability, the Team Member must remain in the employ of the Company (or a Subsidiary or Affiliate) on a continuous basis through the last U.S. business day of the relevant Segment in for any amount of the Shares to become vested except to the extent a severance plan applicable to the Team Member provides otherwise, subject to the terms and conditions of this Grant Agreement. The Committee shall have the exclusive discretion to determine when the Team Member's employment or service is terminated for purposes of this Grant Agreement (including whether the Team Member may still be considered to be providing service while on a leave of absence).
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8.Disability of the Team Member.
In the event that termination of employment is due to the total and permanent disability of the Team Member, the Target Amount of Shares for each then-uncompleted Segment shall become vested, subject to the condition that the Team Member shall have executed a current Agreement Regarding Confidential Information and Proprietary Developments (“ARCIPD”) that is satisfactory to the Company, and shall not have engaged in any conduct that creates a conflict of interest in the opinion of the Company.
9.Death of the Team Member.
In the event that termination of employment is due to the death of the Team Member, the Target Amount of Shares for each then-uncompleted Segment shall become vested.
10.Retirement of the Team Member.
If the Team Member’s employment is terminated more than three months after the Grant Date by reason of the Team Member’s retirement in accordance with the applicable retirement policy of the Company, all unvested PARSUs shall continue to vest and payout in accordance with the vesting and payment schedule set forth above, and for the avoidance of doubt, subject to satisfaction of the applicable performance criteria, and also subject to the condition that the Team Member (i) if requested, shall have executed a current ARCIPD that is satisfactory to the Company, and (ii) shall not have engaged in any conduct that is in violation of any agreement with the Company concerning confidentiality of Company information or post-employment restrictive covenants or otherwise creates a conflict of interest in the opinion of the Company.

11.Section 409A.
Payments made pursuant to the Plan and this Grant Agreement are intended to comply with or qualify for an exemption from Section 409A of the Code (“Section 409A”). The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Grant Agreement or to adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or to take any other actions, including any amendments or actions that would result in the reduction of benefits payable under this Grant Agreement, as the Company determines are necessary or appropriate to ensure that all PARSUs are granted in a manner that qualifies for an exemption from, or complies with, Section 409A or mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A; provided however, that the Company makes no representations that the PARSUs will be exempt from any penalties that may apply under Section 409A and makes no undertaking to preclude Section 409A from applying to the PARSUs. For the avoidance of doubt, the Team Member hereby acknowledges and agrees that the Company will have no liability to the Team Member or any other party if any amounts payable under this Grant Agreement are not exempt from, or compliant with, Section 409A, or for any action taken by the Company with respect thereto.
12.Taxes.
(a)The Team Member shall be liable for any and all taxes, including income tax, social insurance, fringe benefit tax, payroll tax, payment on account, employer taxes or other tax-related items related to the Team Member’s participation in the Plan and legally applicable to or otherwise recoverable from the Team Member by the Company and/or, if different, the Team Member’s employer (the “Employer”), whether incurred at grant, vesting or sale, prior to vesting, upon receipt of any dividends or at any other time (“Tax-Related Items”). In the event that the Company or the Employer (which, for purposes of this Section 12, shall include a former employer) is required, allowed or permitted to withhold Tax-Related Items as a result of the PARSUs or the Shares acquired pursuant to such PARSUs, or due upon receipt of dividend equivalent payments or dividends, the Team Member shall surrender a sufficient number of whole Shares, make a cash payment or make adequate arrangements satisfactory to the Company and/or the Employer to withhold such Tax-Related Items from the Team Member’s wages or other cash compensation paid to the Team Member by the Company and/or the Employer at the election of the Company, in its sole discretion, or, if permissible under local law, the Company may sell or arrange for the sale of Shares that the Team Member acquires as necessary to cover all Tax-Related Items that the Company or the Employer has to withhold or that are legally recoverable from the Team Member (such as fringe benefit tax), unless the Company, in its sole discretion, has established alternative procedures for such payment. The Team Member will receive a cash refund for any fraction of a surrendered Share or Shares in excess of any and all Tax-Related Items. To the extent that any surrender of Shares or payment of cash or alternative procedure for such payment is insufficient, the Team Member authorizes the Company, its Affiliates and Subsidiaries, which are qualified to deduct tax at source, to deduct from the Team Member's compensation all Tax-Related Items. The Team Member agrees to pay any Tax-Related Items that cannot be satisfied from wages or other cash compensation, to the extent permitted by Applicable Law.
The Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding amounts or other applicable withholding rates, including maximum applicable rates in the Team Member’s jurisdiction(s), in which case the Team Member will receive a refund of any over-withheld amount in cash and will have no entitlement to the Share equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Team Member is deemed to have been issued the full number of Shares subject to the vested PARSUs, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Team Member’s participation in the Plan.
(b)Regardless of any action the Company or the Employer takes with respect to any or all Tax-Related Items, the Team Member acknowledges and agrees that the ultimate liability for all Tax-Related Items is and remains the Team Member’s responsibility and may exceed the amount actually withheld by the Company or
3



the Employer, if any. The Team Member further acknowledges that the Company and/or the Employer: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Grant of PARSUs, including, but not limited to, the grant, vesting or settlement of PARSUs, the release of restrictions on the Shares or the subsequent sale of such Shares and receipt of any dividend payments; and (ii) do not commit to and are under no obligation to structure the terms or any aspect of this Grant to reduce or eliminate the Team Member’s liability for Tax-Related Items or to achieve any particular tax result. Further, if the Team Member has become subject to tax in more than one jurisdiction, the Team Member acknowledges that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Team Member shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Team Member’s participation in the Plan or the Team Member’s receipt of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the benefit described herein if the Team Member fails to comply with the Team Member’s obligations in connection with the Tax-Related Items.
(c)In accepting the PARSUs, the Team Member consents and agrees that in the event the PARSUs become subject to an employer tax that is legally permitted to be recovered from the Team Member, as may be determined by the Company and/or the Employer at their sole discretion, and whether or not the Team Member’s employment with the Company and/or the Employer is continuing at the time such tax becomes recoverable, the Team Member will assume any liability for any such taxes that may be payable by the Company and/or the Employer in connection with the PARSUs. Further, by accepting the PARSUs, the Team Member agrees that the Company and/or the Employer will collect any such taxes from the Team Member by the means set forth in this Section 12. The Team Member further agrees to execute any other consents or elections required to accomplish the above, promptly upon request of the Company.
13.Privacy Notice and Consent.
(a)The Team Member hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Team Member’s personal data as described in this Grant Agreement and any other materials by and among, as applicable, the Company, the Employer and its other Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing the Team Member’s participation in the Plan.
(b)The Team Member understands that the Company, the Employer and its other Subsidiaries and Affiliates may hold certain personal information about the Team Member , including, but not limited to, name, home address, email address, and telephone number, date of birth, social insurance number, passport or other identification number, salary, year-to-date taxable income, nationality, residency, status, job title, any shares of stock or directorships held in the Company, details of all PARSUs, RSUs, options or any other entitlement to shares of stock granted, canceled, purchased, exercised, vested, unvested or outstanding in the Team Member ’s favor (“Data”) for the exclusive purpose of implementing, managing and administering the Plan.
(c)The Team Member understands that Data will be transferred to the Company or one or more stock plan service providers as may be selected by the Company from time to time, which is assisting the Company with the implementation, administration and management of the Plan. The Team Member understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country of operation (e.g., the United States) may have different data privacy laws and protections than the Team Member’s country. The Team Member understands that if the Team Member resides outside the United States, the Team Member may request a list with the names and addresses of any potential recipients of the Data by contacting the Team Member's local human resources representative. The Team Member authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Team Member’s participation in the Plan. The Team Member understands that Data will be held only as long as is necessary to implement, administer and manage the Team Member’s participation in the Plan. The Team Member understands that if the Team Member resides outside the United States, the Team Member may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Team Member's local human resources representative.
(d)Further, the Team Member understands that the Team Member is providing the consents herein on a purely voluntary basis. If the Team Member does not consent, or if the Team Member later seeks to revoke the Team Member's consent, the Team Member cannot participate in the Plan. This would not affect the Team Member’s salary or the Team Member's career; the Team Member would merely forfeit the opportunities associated with the Plan For more information on the consequences of the Team Member’s refusal to consent or withdrawal of consent, the Team Member understands that the Team Member may contact the Team Member's local human resources representative.
14.Plan Information.
The Team Member agrees to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with Applicable Laws outside the United States, from the Company’s Long-term Incentives website, and to receive stockholder information, including copies of any annual report, proxy and Form 10-K, from the investor relations section of the Company’s website at www.hpe.com. The Team Member acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Company Secretary. The Team Member hereby consents to receive any documents related
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to current or future participation in the Plan by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.
15.Acknowledgment and Waiver.
By accepting this Grant, the Team Member understands, acknowledges and agrees that:
(a)this Grant Agreement and its incorporated documents reflect all agreements with regard to their respective subject matters, and the Team Member is not accepting this Grant Agreement based on any promises, representations or inducements other than those reflected in this Grant Agreement;
(b)all good-faith decisions and interpretations of the Committee regarding the Plan and Awards granted under the Plan are binding, conclusive and final;
(c)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
(d)This Grant is voluntary and occasional and does not create any contractual or other right to receive future grants of PARSUs or other awards, or benefits in lieu of PARSUs, even if Shares or PARSUs have been granted in the past;
(e)all decisions with respect to future grants, if any, will be at the sole discretion of the Company;
(f)the Team Member’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Team Member’s employment relationship at any time, and it is expressly agreed and understood that employment is terminable at the will of either party;
(g)the Team Member is voluntarily participating in the Plan;
(h)PARSUs and their resulting benefits are extraordinary items that are outside the scope of the Team Member’s employment contract, if any;
(i)PARSUs and their resulting benefits are not intended to replace any pension rights or compensation;
(j)PARSUs and their resulting benefits are not part of normal or expected compensation or salary for any purposes, including but not limited to calculating any severance, resignation, termination, redundancy, dismissal, or end-of-service payments, holiday pay, bonuses, long-service awards, leave-related payments, pension or retirement or welfare benefits, or similar mandatory payments;
(k)PARSUs and their resulting benefits should in no event be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary or Affiliate.
(l)unless otherwise agreed by the Company, the PARSUs and their resulting benefits are not granted as consideration for, or in connection with, the service the Team Member may provide as a director of a Subsidiary or Affiliate;
(m)this Grant will not be interpreted to form an employment contract or relationship with the Company, and furthermore, this grant of PARSUs will not be interpreted to form an employment contract with any Subsidiary or Affiliate;
(n)the future value of the Shares is unknown and indeterminable and cannot be predicted with certainty;
(o)no claim or entitlement to compensation or damages shall arise from forfeiture of the PARSUs resulting from the termination of the Team Member’s employment (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction in which the Team Member is employed or retained or the terms of the Team Member’s employment or service agreement, if any), and in consideration of the grant of the PARSUs to which the Team Member is otherwise not entitled, the Team Member irrevocably agrees never to institute any claim against the Company, the Employer or any other Subsidiary or Affiliate and releases the Company, the Employer and any other Subsidiary and Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Team Member shall be deemed irrevocably to have agreed not to pursue such claim and to have agreed to execute any and all documents necessary to request dismissal or withdrawal of such claims;
(p)the Company, the Employer or any other Subsidiary or Affiliate will not be liable for any foreign exchange rate fluctuation between the Team Member’s local currency and the U.S. dollar that may affect the value of the Shares;
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(q)if the Company’s performance is below the minimum level as set forth in this Grant Agreement, no PARSUs will vest and all Shares will be forfeited by the Team Member;
(r)if the Company determines that the Team Member has engaged in misconduct prohibited by Applicable Law or any applicable policy of the Company, as in effect from time to time (including engagement in Detrimental Activities), or if the Company is required to make recovery from the Team Member under Applicable Law or a Company policy adopted to comply with applicable legal requirements, then the Company may, in its sole discretion, to the extent it determines appropriate, (i) recover from the Team Member the PARSUs that vested up to three (3) years prior to the Team Member’s termination of employment or at any time thereafter, (ii) cancel the Team Member’s outstanding PARSUs, and (iii) take any other action it deems to be required and appropriate; and
(s)the delivery of any documents related to the Plan or Awards granted under the Plan, including the Plan, this Grant Agreement, the Plan prospectus and any reports of the Company generally provided to the Company’s stockholders, may be made by electronic delivery. Such means of electronic delivery may include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, and the delivery of the document via electronic mail or other such means of electronic delivery specified by the Company. The Team Member may receive from the Company a paper copy of any documents delivered electronically at no cost to the Team Member by contacting the Company in writing in accordance with Section 18(k). If the attempted electronic delivery of any document fails, the Team Member will be provided with a paper copy of such document. The Team Member may revoke his or her consent to the electronic delivery of documents or may change the electronic-mail address to which such documents are to be delivered (if the Team Member has provided an electronic-mail address) at any time by notifying the Company of such revoked consent or revised electronic-mail address in accordance with Section 18(k). The Team Member is not required to consent to the electronic delivery of documents.
16.No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Team Member’s participation in the Plan or the Team Member’s acquisition or sale of the Shares. The Team Member is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
17.Additional Eligibility Requirements.
In addition to any other eligibility criteria provided for in the Plan, and as a condition of this Grant Agreement, the Team Member agrees to avoid Detrimental Activities (as defined below) if the Team Member is employed in a Vice-President or higher-level role (which includes without limitation Fellow, Senior Fellow, Executive Vice-President, Senior Vice-President, Chief and President positions). If such Vice-President or higher level employee does not accept this Grant Agreement within 75 days of the Grant Date set forth above or such other date as of which the Company shall require in its discretion, this grant of PARSUs shall be cancelled and the Team Member shall have no further rights under this Grant Agreement. However, if the 75-day deadline to accept the Grant Agreement would otherwise be a weekend, holiday or other non-trading day, the deadline will instead be the next following trading day for the New York Stock Exchange.
(a)For purposes of this Grant Agreement, “Detrimental Activities” refers to conduct that is in violation of any contract or other legal obligation the Team Member has to the Company and any one or more of the following activities if engaged in by the Team Member in the twelve (12) month period following the Termination of Employment:
(i)the provision of services to a Competitor in any role or position (as an employee, consultant, or otherwise) that would involve Conflicting Business Activities;
(ii)knowingly participating (directly or indirectly through assistance to others) in soliciting or communicating with any customer of the Company in pursuit of a Competing Line of Business if the Team Member either had business-related contact with that customer or received Confidential Information about that customer in the last two (2) years of the Team Member’s employment with Company;
(iii)knowingly participating (directly or indirectly through assistance to others), for the benefit of a Competitor, in soliciting or communicating with an HPE Employee for the purpose of persuading or helping the HPE Employee to end or reduce his or her employment relationship with the Company if the Team Member either worked with that HPE Employee or received Confidential Information about that HPE Employee in the last two (2) years of the Team Member’s employment with the Company; and
(iv)knowingly participating (directly or indirectly through assistance to others), for the benefit of a Competitor, in soliciting or communicating with an HPE Supplier for the purpose of persuading or helping the HPE Supplier to end or modify to HPE’s detriment an existing business relationship with the Company if the Team Member either worked with that HPE Supplier or received Confidential Information about that HPE Supplier in the last two (2) years of the Team Member’s employment with the Company;
collectively parts (i) – (iv) above shall be referred to in this Grant Agreement as the “Restrictive Covenants.”
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(b)As used here, “Competitor” means an individual, corporation, or other business entity, or separately operated business unit of such an entity, that engages in a Competing Line of Business. “Competing Line of Business” means a business that involves a product or service offered by anyone other than the Company that would replace or compete with any product or service offered or to be offered by the Company with which the Team Member had material involvement while employed by the Company (unless the Company is no longer engaged in or planning to engage in that line of business). “Conflicting Business Activities” means job duties or other business-related activities in the United States or in any other country where the Company business units that the Team Member provides services to do business, and management or supervision of such job duties or business-related activities, if such job duties or business-related activities are the same as or similar in any material way to the job duties or business-related activities that the Team Member participates in or receives Confidential Information or trade secrets about in the last two years of the Team Member's employment with Company. The Team Member stipulates it is reasonable for the scope of Conflicting Business Activities to include a national or larger geographic area given the scope of trade secret and Confidential Information made available to him or her. “HPE Employee” means an individual employed by or retained as a consultant to Company or its subsidiaries. “HPE Supplier” means an individual, corporation, other business entity or separately operated business unit of an entity that regularly provides goods or services to the Company or its subsidiaries, including without limitation any original equipment manufacturer, original design manufacturer or subcontractor. “Confidential Information” has the meaning provided for in the Team Member’s ARCIPD.
(c)Some activities by the Team Member following employment would, by their nature, involve unauthorized use or disclosure of Company trade secrets and Confidential Information, whether or not intentional, which would cause irreparable harm to the Company and be undetectable until it is too late to obtain any effective remedy. In order to resolve any dispute over what activities would fall into this category, the parties agree that the activities prohibited by the Restrictive Covenants are activities of this nature that must be avoided by the Team Member in order to avoid irreparable harm to the Company.
(d)The Restrictive Covenants will apply and be valid notwithstanding any change in the Team Member's duties, responsibilities, position, or title, or the termination of the Team Member's employment with the Company irrespective of which party terminates the relationship or why; provided, however, that unless the Team Member is provided with written notice to the contrary at the time of termination, the restriction in Section 17(a)(i) shall not apply in the event the Team Member's employment with Company is involuntary terminated by Company as a direct result of a workforce restructuring program or similar reduction in force (layoff).
(e)If the Team Member violates or threatens to violate a Restrictive Covenant, the Company will be entitled to withhold or recover the benefits of compliance with this Grant Agreement, and where permitted by controlling law to pursue and receive: injunctive relief by temporary restraining order, temporary injunction, and/or permanent injunction; where permitted by law, recovery of attorneys' fees and costs incurred in obtaining such relief; and, any other legal and equitable relief to which it may be entitled. Injunctive relief will not exclude other remedies that might apply. For purposes of any award of fees or costs, the Company shall be considered the prevailing party if it is awarded any part of the relief requested by it, either through partial enforcement, reformation of this Grant Agreement, or otherwise. If the Team Member is found to have violated any restriction(s) in the Restrictive Covenants, then the time period for the violated restriction(s) will be extended by one day for each day that the Team Member is found to have violated the restriction(s), up to a maximum extension equal to the time period originally prescribed for the violated restriction(s). If the Restrictive Covenants are held unenforceable as written, the parties expressly authorize the court or arbiter to enforce the restriction to such lesser degree as would be enforceable and/or to revise, delete, or add to the unenforceable restriction to the extent necessary to enforce the intent of the parties and provide the Company with effective protection.
(f)The enforceability of the Restrictive Covenants as written (and the Team Member's agreement to comply with them as a whole) and the Company's agreement to provide the Team Member the items of benefit conveyed by this Grant Agreement (by way of example only, shares, stock options, stock units, restricted stock units, stock appreciation rights, or cash awards (the conveyed "Incentives")) are mutually dependent. In the event the Restrictive Covenants are held to be unenforceable by a court or arbiter (in whole or in any part deemed material by the Company), the Company's obligations under this Grant Agreement shall be voidable at the election of the Company and where permitted by law the Company shall have the right to terminate any unvested Incentives and recover from the Team Member the Incentives granted to the Team Member under this Grant Agreement, or if the Team Member no longer possesses the Incentives then the monetary value of the Incentives at the time the Team Member sold or otherwise transferred the Incentives to another party.
(g)The Team Member stipulates that the benefits provided to the Team Member through this Grant Agreement are of significant and meaningful value, and serve as additional, mutually agreed upon, fair and reasonable consideration for the Team Member's agreement to avoid Detrimental Activities. The Team Member has been notified that the Team Member has the right to consult legal counsel prior to signing this Grant Agreement. The Team Member was provided as long as 14 days to consider this Grant Agreement before being required to execute it, and if the Team Member executes it before the expiration of 14 days then the Team Member does so voluntarily with the intent to waive the unused remainder of the 14 days allowed.
(h)Nothing in this section prohibits the Team Member from reporting possible violations of law or regulation to any governmental agency or entity, or making other disclosures that are protected under the whistleblower provisions of law or regulation. The Team Member does not need the prior authorization of the Company to
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make any such reports or disclosures, and the Team Member is not required to notify the Company that the Team Member has made such reports or disclosures.
(i)The limitations agreed to by the Team Member in this section are voluntary, not a term or condition of employment, and a matter of choice for the Team Member. The Team Member will have the choice between complying with the terms of this section or forgoing the benefits that the Team Member would otherwise receive under the Grant Agreement. Nothing in this section shall be applied to the extent that it would violate controlling law or impose a penalty or restriction that violates controlling law.
18.Miscellaneous.
(a)The Company shall not be required to treat as owner of Shares and associated benefits hereunder any transferee to whom such Shares or benefits shall have been transferred in violation of any of the provisions of this Grant Agreement.
(b)The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Grant Agreement.
(c)The Plan is incorporated herein by reference. The Plan and this Grant Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Team Member with respect to the subject matter hereof, other than the terms of any severance plan applicable to the Team Member that provides more favorable vesting and the terms of the Team Member's ARCIPD and any other agreements containing post-employment restrictive covenants that validly impose greater post-employment restrictions on the Team Member. Notwithstanding the foregoing, nothing in the Plan or this Grant Agreement shall affect the validity or interpretation of any duly authorized written agreement between the Company and the Team Member under which an award properly granted under and pursuant to the Plan serves as any part of the consideration furnished to the Team Member. This Grant Agreement is voluntarily entered into and is not a condition of employment with the Company. This Grant Agreement is governed by the laws of the state of Delaware without regard to its conflict of law provisions. All actions and proceedings seeking to enforce any provision of, or based on any right arising out of, this Grant Agreement must be brought against either of the parties in the courts of the State of Delaware, County of New Castle, or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. The Team Member stipulates that this Grant Agreement involves contractual rights (such as the Restrictive Covenants) with a value in excess of US$100,000, and that Delaware Code Title 6. Commerce and Trade § 2708 applies to this Grant Agreement.
(d)If the Team Member has received this or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(e)The provisions of this Grant Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
(f)Notwithstanding Sections 18(c) and 18(e), the Company’s obligations under this Grant Agreement and the Team Member’s agreement to the terms of an arbitration agreement and/or an ARCIPD, if any, are mutually dependent. In the event that the Team Member breaches the arbitration agreement or the Team Member’s ARCIPD is breached or found not to be binding upon the Team Member for any reason by a court of law, then the Company will have no further obligation or duty to perform under the Plan or this Grant Agreement.
(g)A waiver by the Company of a breach of any provision of this Grant Agreement shall not operate or be construed as a waiver of any other provision of this Grant Agreement, or of any subsequent breach by the Team Member or any other Awardee.
(h)The Team Member acknowledges that, depending on his or her country of residence, the Team Member may be subject to insider trading restrictions and/or market abuse laws, which may affect the Team Member’s ability to acquire or sell Shares under the Plan during such times as the Team Member is considered to have “inside information” regarding the Company (as defined by the laws in the Team Member’s country of residence). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Team Member is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
(i)The Company reserves the right to impose other requirements on the Team Member’s participation in the Plan, on the PARSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Team Member to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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(j)Any notice to the Team Member required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to the Team Member at the address then on file with the Company.
(k)Any notice to be given under the terms of this Grant Agreement to the Company will be addressed in care of Attn: Global Equity Administration at Hewlett Packard Enterprise Company, 6280 America Center Drive, San Jose, California 95002, USA.
(l)The Team Member acknowledges that there may be certain foreign asset and/or account reporting requirements which may affect his or her ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan (including from any dividend payments) in a brokerage or bank account outside the Team Member’s country of residence. The Team Member may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country of residence. The Team Member also may be required to repatriate sale proceeds or other funds received as a result of the Team Member’s participation in the Plan to his or her country of residence through a designated bank or broker within a certain time after receipt. The Team Member acknowledges that it is his or her responsibility to be compliant with such regulations, and the Team Member is advised to consult his or her personal legal advisor for any details.
HEWLETT PACKARD ENTERPRISE COMPANY
 
IMAGE_1B.JPG
Alan May
Executive Vice President, Chief People Officer

RETAIN THIS GRANT AGREEMENT FOR YOUR RECORDS
Important Note: Your grant is subject to the terms and conditions of this Grant Agreement, including any Appendix for your country, and to the Company obtaining all necessary government approvals. If you have questions regarding your grant, please contact Stock Plan Administration.
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RETIREMENT AGREEMENT

This Retirement Agreement (this “Agreement”) is entered into by and between Keerti Melkote (“Executive”) and Hewlett Packard Enterprise Company, a Delaware corporation (the “Company”, and in combination with its subsidiaries, affiliates and assigns, “HPE”), effective as of the date Executive signs this Agreement, with reference to the following facts:

A.Executive desires to retire from employment with the Company at close of business on December 31, 2021 (the “Retirement Date”).

B.As of the Retirement Date, Executive will not have reached the 55 years of age which is a standard eligibility requirement for the retirement vesting benefit in Company equity awards, but the Company desires to provide a retirement vesting benefit to Executive in exchange for certain commitments from Executive.

C.Executive and the Company desire to establish the obligations of the parties in connection with the Executive’s retirement from employment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

1.Termination of Employment.

(a)Termination. Executive’s employment with the Company shall end effective as of the Retirement Date.

(b)    Accrued Compensation, Expenses and Benefits. On the Retirement Date, the Company shall pay to Executive: (i) all accrued salary and (ii) any unreimbursed business expenses incurred by Executive prior to the Retirement Date that are substantiated and reimbursable in accordance with applicable Company policy. In addition, Executive will be eligible to receive the Company health and retirement benefits for which Executive is otherwise eligible, under the terms of those ERISA plans. Executive is entitled to these payments and benefits regardless of whether Executive executes this Agreement.

(c)    Full Payment. Executive acknowledges that the amounts described in Section 1(b) above constitute full and complete satisfaction of any and all amounts properly due and owing to Executive as a result of Executive’s employment with the Company and separation therefrom. Except as specified in Section 2 below, Executive acknowledges that any unvested and outstanding cash and equity awards shall be deemed forfeited as of close of business on the Retirement Date. Executive further acknowledges that any eligibility for benefits under the Company’s Severance and Long-Term Change in Control Plan for Executive Officers shall be deemed forfeited as of the Retirement Date.

2.Retirement Vesting in HPE Equity. Conditioned upon (x) Executive’s entry into the general release agreement in the form attached as Exhibit A (the “Release”) during the 21-day period commencing on the Retirement Date and (y) the absence of any revocation of the Release by the Executive before its Effective Date (as defined in the Release), Executive’s Grant Agreement for Restricted Stock Units dated December 10, 2019 (Grant ID: 3-674531) and Executive’s Global Grant Agreement for Restricted Stock Units dated December 10, 2020 (Grant ID: 3-744186) (the “HPE RSU Agreements”) are amended in the form attached as Exhibit B-1 and Executive’s Grant Agreement for Performance-Adjusted Restricted Stock Units dated December 10, 2019 (Grant ID: 3-674539) and Executive’s Grant Agreement for Performance-Adjusted Restricted Stock Units dated December 10, 2020 (Grant ID: 3-744132) (the “HPE PARSU Agreements” and, together with the HPE RSU Agreements, the “HPE Equity Agreements”) are amended in the form attached as Exhibit B-2.

3.Return of Property. Executive agrees to return to HPE all confidential and proprietary information of HPE on or before the Retirement Date.

4.Restrictive Covenant Agreements. Executive reaffirms his commitments and obligations set forth in the Agreement Regarding Confidential Information and Proprietary Developments attached as



Exhibit C (the “ARCIPD”), and Executive agrees that these commitments and obligations shall survive Executive’s termination of employment with the Company as is specified in the ARCIPD.

5.No Disparagement; Cooperation. Executive will not at any time disparage HPE or its products, services or business practices or make any unfair or misleading statement regarding same. HPE agrees to instruct its directors and officers not to, directly or indirectly, make any disparaging remarks or statements regarding the Executive to any person or entity, either orally or in writing, except as may be required by law. Upon the receipt of reasonable notice from HPE, Executive agrees to reasonably cooperate with and assist HPE and its legal counsel in connection with any current or future litigation, investigation or other legal matters involving HPE about which Executive has knowledge or information including by offering availability at mutually convenient times and reasonable locations. Executive understands HPE will reimburse Executive for reasonable travel expenses incurred as a result of, and directly related to, Executive’s cooperation. In the event Executive is made aware of any issue or matter related to HPE, asked by a third party to provide information regarding HPE, or called other than by HPE as a witness to testify in any proceeding or matter related to HPE, Executive agrees to notify HPE immediately in order to give HPE a reasonable opportunity to respond and/or participate in such proceeding or matter. Nothing in this Agreement shall be construed to prevent Executive from providing truthful testimony if mandated by subpoena or court order to do so, or from cooperating fully with any request from or investigation by any federal, state or local government agency or commission (each, a “Government Agency”).

6.No Admission of Liability. This Agreement is not and shall not be construed or contended by Executive to be an admission or evidence of any wrongdoing or liability on the part of Releasees (as defined in the Release).

7.Choice of Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to any conflicts of laws principles that would require the laws of any other jurisdiction to apply. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.

8.Arbitration; Venue. Subject to the limitations of the Mutual Agreement to Arbitrate Claims between Executive and the Company attached as Exhibit D, the exclusive venue for any legal action arising from this Agreement will be a federal or state court of competent jurisdiction located in the State of Delaware. Executive and the Company hereby stipulate and consent to the personal jurisdiction of such courts, and expressly waive any right to object to any such court’s exercise of jurisdiction over Executive on grounds of convenience or otherwise.

9.Assignability; Successors. The rights and benefits under this Agreement are personal to the Executive and such rights and benefits shall not be subject to assignment, alienation or transfer, except to the extent such rights and benefits are lawfully available to the estate or beneficiaries of the Executive upon death. The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns, personnel and legal representatives.

10.Complete and Voluntary Agreement. This Agreement (together with Exhibit C, Exhibit D) and the HPE Equity Agreements (as amended) constitute the entire agreement between Executive and the Company with respect to Company’s employment of the Executive and any other subject matters hereof and supersedes all prior negotiations and agreements, whether written or oral, relating to such subject matters. Executive acknowledges that neither Releasees nor their agents or attorneys have made any promise, representation or warranty whatsoever, either express or implied, written or oral, that is not contained in this Agreement for the purpose of inducing Executive to execute the Agreement, and Executive acknowledges that Executive has executed this Agreement in reliance only upon such promises, representations and warranties as are contained herein, and that Executive is executing this Agreement voluntarily, free of any duress or coercion. By signing below, Executive affirms that Executive was advised to consult with an attorney prior to signing this Agreement.

11.Severability. The provisions of this Agreement are severable, and if any part of it is found to be invalid or unenforceable, the other parts shall remain fully valid and enforceable.
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12.Notice. Any notice to be given hereunder shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below.

To the Executive:
At the Executive’s current home address reflected in the Company’s employment files

To the Company at:
Hewlett Packard Enterprise
Attn: General Counsel
11445 Compaq Center West Drive
Houston, TX 77070

13.Modification; Counterparts; Facsimile/PDF Signatures. It is expressly agreed that this Agreement may not be altered, amended, modified, or otherwise changed in any respect except by another written agreement that specifically refers to this Agreement, executed by authorized representatives of each of the parties to this Agreement. This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. Execution of a facsimile or PDF copy shall have the same force and effect as execution of an original, and a copy of a signature will be equally admissible in any legal proceeding as if an original.

[Signatures on next page]

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date indicated next to their respective signatures below.
DATED: December 8, 2021 /s/ Keerti Melkote
Keerti Melkote
HEWLETT PACKARD ENTERPRISE COMPANY
DATED: December 9, 2021
By: /s/ Alan May
Name: Alan May
Title: EVP, Chief People Officer
Signature Page to Retirement Agreement


EXHIBIT A

FORM OF RELEASE
(To be signed and returned on or within 21 days after the Retirement Date.)


1.Context of Agreement. This Release Agreement (this “Agreement”) is entered into by and between Keerti Melkote (“Executive”) and Hewlett Packard Enterprise Company, a Delaware corporation (the “Company”, and in combination with its subsidiaries, affiliates, and assigns, “HPE”), effective as of the eighth day following the date Executive signs this Agreement (the “Effective Date”) with reference to the termination of Executive’s employment with the Company.

2.    General Release and Waiver of Claims. In consideration for the valuable opportunities and rights offered by Section 2 of Executive’s Retirement Agreement dated December ___, 2021 (the “Retirement Agreement”), to the fullest extent permitted by law, Executive, on behalf of Executive and Executive’s heirs, assigns, executors, administrators, trusts, spouse and estate, hereby releases, forever discharges and waives any other claims Executive may have against the Company, its direct and indirect subsidiaries and affiliates (including each of their predecessors, successors and assigns), and each of their past, present and future officers, directors, agents and employees (the “Releasees”), whether or not acting in their official capacity, from all liability, claims, damages and causes of action of every kind in connection with matters, facts or events through the Effective Date of this Agreement. This release extends, without limitation, to all “wrongful discharge” or retaliation claims, claims relating to any contract of employment, express or implied, any covenant of good faith and fair dealing, express or implied, public policy violation, any tort of any nature, or any federal, state, or local statute or ordinance, any claim for employment discrimination, including harassment, any claim under Title VII of the Civil Rights Act of 1964 as amended, Age Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act, 42 U.S.C. 1981, the Worker Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act, the California Fair Employment and Housing Act, or any other federal, state or local laws relating to employment or employment discrimination, and any claims for attorney’s fees and costs. This release extends to any claims that may be brought on Executive’s behalf by any person or agency, as well as any class or representative action under which Executive may have any rights or benefits; Executive agrees not to accept any recovery or benefits under any such claim or action, and Executive assigns any such recovery or benefits to the Company. This release does not apply to any claim or right that cannot lawfully be waived or released by private agreement between Executive and the Company. Nothing in this Agreement shall be construed to prohibit Executive from filing a charge or complaint, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission, National Labor Relations Board, or any other comparable federal, state or local agency charged with the investigation and enforcement of any employment laws or participating in any investigation or proceeding conducted by the EEOC, NLRB or other comparable federal, state or local agency, although by signing this Agreement, Executive agrees and understands that Executive is waiving his/her right to individual relief based on claims asserted in such a charge or complaint. Executive intends this release to apply as a full and final settlement of all claims encompassed by this paragraph, whether known or unknown, suspected or unsuspected, and accordingly Executive waives any rights Executive might otherwise have under Section 1542 of the Civil Code of California, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Executive and the Company do not intend to release claims any (i) claims for coverage under any D&O or other similar insurance policy of the Company, (ii) claims for enforcement of Executive’s Retirement Agreement with the Company, (iii) claims for reimbursement of unreimbursed business expenses properly incurred prior to the Retirement Date in accordance with the Company’s policy; and (iv) claims as an equityholder in the Company (including any rights Executive has arising under operative documents applicable to Executive in such capacity).
Exhibit A
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2.Choice of Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to any conflicts of laws principles that would require the laws of any other jurisdiction to apply. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.

3.Arbitration; Venue. Subject to the limitations of the Mutual Agreement to Arbitrate Claims between Executive and the Company attached to the Retirement Agreement, the exclusive venue for any legal action arising from this Agreement will be a federal or state court of competent jurisdiction located in the state of Delaware. Executive and the Company hereby stipulate and consent to the personal jurisdiction of such courts, and expressly waive any right to object to any such court's exercise of jurisdiction over Executive on grounds of convenience or otherwise. Executive agrees that Delaware has the most material interest of any state in the enforcement of this Agreement because it is designed to help preserve shareholder value and rights in a Delaware corporation.

4.Attorneys’ Fees. If any action is brought to enforce the terms of this Agreement, the prevailing party will be entitled to recover its reasonable attorneys’ fees, costs and expenses from the other party, in addition to any other relief to which the prevailing party may be entitled.

5.Assignability; Successors. The rights and benefits under this Agreement are personal to the Executive and such rights and benefits shall not be subject to assignment, alienation or transfer, except to the extent such rights and benefits are lawfully available to the estate or beneficiaries of the Executive upon death. The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns, personnel and legal representatives.

6.No Admission of Liability. This Agreement is not and shall not be construed or contended by Executive to be an admission or evidence of any wrongdoing or liability on the part of Releasees.

7.Complete and Voluntary Agreement. This Agreement, along with Executive’s Mutual Agreement to Arbitration Claims, Executive’s Agreement Regarding Confidential Information and Proprietary Developments (ARCIPD), Executive’s Retirement Agreement and Executive’s HPE Equity Agreements (as such term is defined in the Retirement Agreement), each of which will remain in effect, sets forth the entire agreement between Executive and HPE concerning the termination of Executive’s employment, and supersedes any other written or oral promises concerning the subject matter of this Agreement. Executive has not relied on any representations or statements not set forth in this Agreement with regard to the subject matter, basis or effect of this Agreement.

8.Severability. The provisions of this Agreement are severable, and if any part of it is found to be invalid or unenforceable, the other parts shall remain fully valid and enforceable. Specifically, should a court or arbitrator conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release, the waiver of unknown claims and the covenant not to sue above shall otherwise remain effective to release any and all other claims.

9.Modification; Facsimile/PDF Signatures. It is expressly agreed that this Agreement may not be altered, amended, modified, or otherwise changed in any respect except by another written agreement that specifically refers to this Agreement, executed by authorized representatives of each of the parties to this Agreement. Execution of a facsimile or PDF copy shall have the same force and effect as execution of an original, and a copy of a signature will be equally admissible in any legal proceeding as if an original.

10.Review of Agreement; Expiration of Offer. Executive understands that Executive may take up to twenty-one (21) days to consider this Agreement (the “Consideration Period”). The offer set forth in this Agreement, if not accepted by Executive before the end of the Consideration Period, will automatically expire. By signing below, Executive affirms that Executive was advised to consult with an attorney prior to signing this Agreement. Executive also understands that Executive may revoke this Agreement within seven (7) days of signing this document. If Executive either fails to properly sign or validly revokes this
Exhibit A
2



Agreement, it will be null and void in its entirety, and Executive will not be entitled to the rights described in Section 2 of the Retirement Agreement between the parties.
DATED: __________________________
Keerti Melkote





Exhibit A
3



EXHIBIT B-1

AMENDMENT TO HPE RSU AGREEMENTS

A.Section 2 of each of the HPE RSU Agreements (as defined in the attached Retirement Agreement by and between Keerti Melkote and Hewlett Packard Enterprise Company) is amended as follows.

“2. Vesting Schedule
The interest of the Employee in the RSUs shall vest according to the vesting schedule set forth above, or if earlier, in accordance with Section 8 or 9, below, except to the extent a severance plan applicable to the Employee provides otherwise. Unless the provisions ofExcept as specified otherwise in Section 7, 8, 9 or 10 apply, the Employee must remain in the employ of the Company, any Subsidiary or Affiliate on a continuous basis through the close of business on the applicable Vesting Date, as set forth above, and the Employee must be in compliance with the requirements and conditions provided for in the Plan and this Grant Agreement for the interest of the Employee in the RSUs to become fully vested on that date.”

B.Section 7 of each of the HPE RSU Agreements is amended as follows.

“7. Termination of Employment.
Except as otherwise provided for in this Grant Agreement or in the Plan or as otherwise determined by the Company in its sole discretion, if the Employee’s employment with the Company, any Subsidiary or Affiliate is terminated at any time for any reason prior to the lapse of the Restriction Period, all unvested RSUs granted hereunder shall be forfeited by the Employee, except to the extent a severance plan applicable to the Employee provides otherwise.

For purposes of this Grant Agreement, the Employee’s employment or service will be considered terminated as of the date he or she is no longer actively providing services to the Company, any Subsidiary or Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Employee is employed or retained or the terms of the Employee’s employment or service agreement, if any) and will not be extended by any notice period (e.g., the Employee’s period of employment or service would not include any contractual notice period, common law notice period, severance notice period, or any period of “garden leave” or similar period mandated under the employment laws in the jurisdiction where the Employee is employed or retained or the terms of the Employee’s employment or service agreement, if any). The Committee shall have the exclusive discretion to determine when the Employee’s employment or service is terminated for purposes of this Grant Agreement (including whether the Employee may still be considered to be providing service while on a leave of absence).

Notwithstanding anything to the contrary in this Grant Agreement, with respect to all RSUs that are unvested and outstanding as of December 31, 2021 (the “Additional Post-Termination Units”), Employee shall be offered the opportunity to vest in such Additional Post-Termination Units after termination of employment in accordance with the vesting schedule set forth above but only for so long as the Employee does not engage in Detrimental Activities (as defined in Section 17 of this Grant Agreement). If Employee chooses to engage in Detrimental Activities, then the Additional Post-Termination Units will be deemed unearned and no further Additional Post-Termination Units may vest after the date on which Employee chooses to do so. Notwithstanding Section 21(e) of this Grant Agreement, Employee’s forbearance from Detrimental Activities and the Company’s obligation to credit vesting in Additional Post-Termination Units are mutually dependent items of consideration. In the event that Employee’s obligation in this paragraph to avoid Detrimental Activities is deemed unenforceable or invalid for any reason, then the Company will have no obligation to credit vesting in Additional Post-Termination Units for the period of time during which such obligation of Employee has been deemed unenforceable or invalid.

Exhibit B-1
1


C.The first sentence of Section 17(a) of each of the HPE RSU Agreements is amended as follows.

“17(a)    For purposes of this Grant Agreement, ‘Detrimental Activities’ refers to conduct that is in violation of any contract or other legal obligation the Employee has to the Company and any one or more of the following activities if engaged in by the Employee in the twelve (12) month period following the termination of employment during the vesting schedule set forth above.”

D.Section 21(e) of each of the HPE RSU Agreements is amended as follows.
“21(e)    Except as specified in Section 7, Tthe provisions of this Grant Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.”

E.Except as specified herein, the HPE RSU Agreements remain in effect unaltered.
Exhibit B-1
2


EXHIBIT B-2

AMENDMENT TO HPE PARSU AGREEMENTS


A.Section 7 of each of the HPE PARSU Agreements (as defined in the attached Retirement Agreement by and between Keerti Melkote and Hewlett Packard Enterprise Company) is amended as follows.

“7. Termination of Employment.
Except in the case of a termination of employment due to the Employee’s death, due to a retirement that occurs more than three months after the Grant Date, or due to a total and permanent disability, the Employee must remain in the employ of the Company (or a Subsidiary or Affiliate) on a continuous basis through the last U.S. business day of the relevant Segment in for any amount of the Shares to become vested except to the extent a severance plan applicable to the Employee provides otherwise, subject to the terms and conditions of this Grant Agreement. The Committee shall have the exclusive discretion to determine when the Employee's employment or service is terminated for purposes of this Grant Agreement (including whether the Employee may still be considered to be providing service while on a leave of absence).

Notwithstanding anything to the contrary in this Grant Agreement, with respect to all PARSUs that are unvested and outstanding as of December 31, 2021 (the “Additional Post-Termination Units”), Employee shall be offered the opportunity to vest in such Additional Post-Termination Units after termination of employment in accordance with the Segment vesting schedule set forth above, and for the avoidance of doubt, subject to Company satisfaction of the applicable performance criteria referenced in Section 2 of this Grant Agreement, but only for so long as the Employee does not engage in Detrimental Activities (as defined in Section 17 of this Grant Agreement). If Employee chooses to engage in Detrimental Activities, then the Additional Post-Termination Units will be deemed unearned and no further Additional Post-Termination Units may vest after the date on which Employee chooses to do so. Notwithstanding Section 18(e) of this Grant Agreement, Employee’s forbearance from Detrimental Activities and the Company’s obligation to credit vesting in Additional Post-Termination Units are mutually dependent items of consideration. In the event that Employee’s obligation in this paragraph to avoid Detrimental Activities is deemed unenforceable or invalid for any reason, then the Company will have no obligation to credit vesting in Additional Post-Termination Units for the period of time during which such obligation of Employee has been deemed unenforceable or invalid.

B.The first sentence of Section 17(a) of each of the HPE PARSU Agreements is amended as follows.

“17(a)    For purposes of this Grant Agreement, ‘Detrimental Activities’ refers to conduct that is in violation of any contract or other legal obligation the Employee has to the Company and any one or more of the following activities if engaged in by the Employee in the twelve (12) month period following the termination of employment during the Segment vesting schedule set forth above.”

C.Section 18(e) of each of the HPE PARSU Agreements is amended as follows.

“18(e)    TExcept as specified in Section 7, the provisions of this Grant Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.”

D.Except as specified herein, the HPE PARSU Agreements remain in effect unaltered.
Exhibit B-2
1


EXHIBIT C

AGREEMENT REGARDING CONFIDENTIAL INFORMATION AND PROPRIETARY DEVELOPMENTS DATED MARCH 2, 2015


HP Agreement Regarding Confidential Information and Proprietary Developments

(With Protective Covenants Relating to Post-Employment Activity)


1.     Relationship to Employment. I desire to be employed by Hewlett-Packard Company or by one of its affiliates or subsidiaries (collectively, "HP" or the "Company"). This Agreement states important terms that will apply during and after my employment by HP. I understand, however, that nothing relating to this Agreement will be interpreted as a contract or commitment whereby HP is deemed to promise continuing employment for a specified duration.

2.     Confidential Information. This Agreement concerns trade secrets, confidential business and technical information, and know-how not generally known to the public (hereinafter "Confidential Information") which is acquired or produced by me in connection with my employment by HP. Confidential Information may include, without limitation, information regarding HP organizations, staffing, finance, structure, employee performance, compensation of others, research and development, manufacturing and marketing, files, keys, certificates, passwords and other computer information, as well as information that HP receives from others under an obligation of confidentiality. I agree to abide by HP's Confidential Information Policy and specifically agree that with regard to HP Confidential Information:

a.     to use such information only in the performance of HP duties;

b.     to hold such information in confidence and trust; and

c.     to use all reasonable precautions to assure that such information is not disclosed to unauthorized persons, including, without limitation, through the media, blogs, social networking sites or other online forums, or otherwise used in an unauthorized manner, both during and after my employment with HP.

I further agree that any organizational information or staffing information learned by me in connection with my employment by HP is the Confidential Information of HP, and I agree that I will not share such information with any recruiters or any other employers, either during or subsequent to my employment with HP; further, I agree that I will not use or permit use of such as a means to recruit or solicit other HP employees away from HP (either for myself or for others).

3.    Proprietary Developments. This Agreement also concerns inventions and discoveries (whether or not patentable), designs, works of authorship, mask works, improvements, data, processes, computer programs and software (hereinafter called "Proprietary Developments") that are conceived or made by me alone or with others while I am employed by HP and that relate to the research and development or the business of HP, or that result from work performed by me for HP, or that are developed, in whole or in part, using HP's equipment, supplies, facilities or trade secrets information. Such Proprietary Developments are the sole property of HP, and I hereby assign and transfer all rights in such Proprietary Developments to HP. I also agree that any works of authorship created by me shall be deemed to be "works made for hire." For all Proprietary Developments, I further agree:

a.     to disclose them promptly to HP;

b.     to sign any assignment document to formally perfect and confirm my assignment of title to HP;

c.     to assign any right of recovery for past damages to HP; and

Exhibit C
1


d.     to execute any other documents deemed necessary by HP to obtain, record and perfect patent, copyright, mask works and/or trade secret protection in all countries, in HP's name and at HP's expense.

I understand that HP may assign and/or delegate these rights. I agree that, if requested, my disclosure, assignment, execution and cooperation duties will be provided to the entity designated by HP.

In compliance with prevailing provisions of relevant state statutes,* this Agreement does not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee's own time, unless (a) the invention relates (i) to the business of the employer or (ii) to the employer's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the employee for the employer.

4.     Respect for Rights of Former Employers. I agree to honor any valid disclosure or use restrictions on information or intellectual property known to me and received from any former employers or any other parties prior to my employment by HP. I agree that without prior written consent of such former employers or other parties, I will not knowingly use any such information in connection with my HP work or work product, and I will not bring onto the premises of HP any such information in whatever tangible or readable form.

5.     Work Product. The product of all work performed by me during and within the scope of my HP employment including, without limitation, any files, presentations, reports, documents, drawings, computer programs, devices and models, will be the sole property of HP. I understand that HP has the sole right to use, sell, license, publish or otherwise disseminate or transfer rights in such work product.

6.     HP Property. I will not remove any HP property from HP premises without HP's permission. Upon termination of my employment with HP, I will return all HP property to HP unless HP's written permission to keep it is obtained.

7.     Protective Covenants. I acknowledge that a simple agreement not to disclose or use HP's Confidential Information or Proprietary Developments after my employment by HP ends would be inadequate, standing alone, to protect HP's legitimate business interests because some activities by a former employee who had held a position like mine would, by their nature, compromise such Confidential Information and Proprietary Developments as well as the goodwill and customer relationships that HP will pay me to develop for the Company during my employment by HP. I recognize that activities that violate HP's rights in this regard, whether or not intentional, are often undetectable by HP until it is too late to obtain any effective remedy, and that such activities will cause irreparable injury to HP. To prevent this kind of irreparable harm, I agree that for a period of twelve months following the termination of my employment with HP, I will abide by the following Protective Covenants:

(a)     No Conflicting Business Activities. I will not provide services to a Competitor in any role or position (as an employee, consultant, or otherwise) that would involve Conflicting Business Activities, however, in the event my employment with HP terminates as a result of a Workforce Restructuring program or similar reduction in force, the restriction in this clause (paragraph 7, subpart (a)) will not apply;

(b)     No Solicitation of Customers. I will not (in person or through assistance to others) knowingly participate in soliciting or communicating with any customer of HP in pursuit of a Competing Line of Business if I either had business-related contact with that customer or received Confidential Information about that customer in the last two years of my employment at HP;

[You may wish to consider clarifying that for purposes of any backward looking restrictions such as the preceding one, employment at Aruba prior to the closing is considered to be employment at HP. In this case, since HP is purchasing Aruba, the current customers of Aruba should be considered to be customers of HP. In addition, in order to improve enforceability in CA (if this provision were to get before a CA court), we would generally recommend incorporating the sort of language that is in the section relating to solicitation of suppliers “end or modify to HP’s detriment an existing business relationship with HP”. Some suggested language has been provided above for your consideration.]

Exhibit C
2


(c)     No Solicitation of HP Employees. I will not (in person or through assistance to others) knowingly participate in soliciting or communicating with an HP Employee for the purpose of persuading or helping the HP Employee to end or reduce his or her employment relationship with HP if I either worked with that HP Employee or received Confidential Information about that HP Employee in the last two years of my employment with HP; and

(d)     No Solicitation of HP Suppliers. I will not (in person or through assistance to others) knowingly participate in soliciting or communicating with an HP Supplier for the purpose of persuading or helping the HP Supplier to end or modify to HP's detriment an existing business relationship with HP if I either worked with that HP Supplier or received Confidential Information about that HP Supplier in the last two years of my employment with HP.

As used here, "Competitor" means an individual, corporation, other business entity or separately operated business unit of an entity that engages in a Competing Line of Business. "Competing Line of Business" means a business that involves a product or service offered by anyone other than HP that would replace or compete with any product or service offered or to be offered by HP with which I had material involvement while employed by HP (unless HP and its subsidiaries are no longer engaged in or planning to engage in that line of business). "Conflicting Business Activities" means job duties or other business-related activities in the United States or in any other country where the HP business units in which I work do business, or management or supervision of such job duties or business-related activities, if such job duties or business related activities are the same as or similar to the job duties or business-related activities in which I participate or as to which I receive Confidential Information in the last two years of my employment with HP. "HP Employee" means an individual employed by or retained as a consultant to HP or its subsidiaries. "HP Supplier" means an individual, corporation, other business entity or separately operated business unit of an entity that regularly provides goods or services to HP or its subsidiaries, including without limitation any OEM, ODM or subcontractor.

8.     Enforcement. I make these agreements to avoid any future dispute between myself and HP regarding specific restrictions on my post-employment conduct that will be reasonable, necessary and enforceable to protect HP's Confidential Information and Proprietary Developments and other legitimate business interests. The Protective Covenants are ancillary to the other terms of this Agreement and my employment relationship with HP. This Agreement benefits both me and HP because, among other things, it provides finality and predictability for both me and the Company regarding enforceable boundaries on my future conduct. Accordingly, I agree that this Agreement and the restrictions in it should be enforced under common law rules favoring the enforcement of such agreements. For these reasons, I agree that I will not pursue any legal action to set aside or avoid application of the Protective Covenants.

9.     Notice of Post-Employment Activities. If I accept a position with a Competitor at any time within twelve months following termination of my employment with HP, I will promptly give written notice to the senior Human Resources manager for the HP business sector in which I worked, with a copy to HP's General Counsel, and will provide HP with the information it needs about my new position to determine whether such position would likely lead to a violation of this Agreement (except that I need not provide any information that would include the Competitor's trade secrets). I consent to HP notifying my new employer of my rights and obligations under this Agreement.

10.     Relief; Extension. I understand that if I violate this Agreement (particularly the Protective Covenants), HP will be entitled to (i) injunctive relief by temporary restraining order, temporary injunction, and/or permanent injunction, (ii) recovery of attorney's fees and costs incurred by HP in obtaining such relief where allowed by law, and (iii) any other legal and equitable relief to which HP may be entitled. Injunctive relief will not exclude other remedies that might apply. If I am found to have violated any restrictions in the Protective Covenants, then the time period for such restrictions will be extended by one day for each day that I am found to have violated them, up to a maximum extension equal to the time period originally prescribed for the restrictions. I acknowledge that if the Company determines that (i) I have engaged in misconduct prohibited by applicable law or any applicable policy of the Company, as in effect from time to time, or (ii) the Company is required to make recovery from me under applicable law or a Company policy adopted to comply with applicable legal requirements, then the Company may, in its sole discretion, to the extent it determines appropriate and to the extent
Exhibit C
3


permitted under applicable law, (a) recover from me any incentive payments (whether cash or equity) paid to me up to three years prior to the end of my employment or any time thereafter; (b) cancel my outstanding incentive awards (cash and equity) whether or not vested, and cancel future payments due hereunder, and (c) take any other action required or permitted by applicable law; provided, however, that the Company will not, unless required or permitted by applicable law, recover amounts from a plan of non-qualified deferred compensation to the extent the recovery would result in tax penalties to me under Internal Revenue Code Section 409A.

11.    Severability; Authority for Revision; Inure to Successors. The provisions of this Agreement will be separately construed. If any provision contained in this Agreement is determined to be void, illegal or unenforceable, in whole or in part, then the other provisions contained herein will remain in full force and effect as if the provision so determined had not been contained herein. If the restrictions provided in this Agreement are deemed unenforceable as written, the parties expressly authorize the court to revise, delete, or add to such restrictions to the extent necessary to enforce the intent of the parties and to provide HP's goodwill, Confidential Information, Proprietary Developments and other business interests with effective protection. The title and paragraph headings in this Agreement are provided for convenience of reference only, and shall not be considered in determining its meaning, intent or applicability. This Agreement will inure to the benefit of the parties' heirs, successors, and assigns.

12.     Governing Law; Venue. The laws of the state of Delaware shall govern this Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto without regard to any conflicts of laws principles to the contrary. Subject to the limitations of any mandatory arbitration obligation I may be subject to, the exclusive venue for any legal action arising from this Agreement will be a federal or state court of competent jurisdiction located in the state of Delaware. I hereby stipulate and consent to the personal jurisdiction of such courts, and expressly waive any right to object to any such court's exercise of jurisdiction over me on grounds of convenience or otherwise.

Signature required:         /s. Keerti Melkote                 03-02-2015    
Keerti Melkote                         Date

*Including: California Labor Code Section 2870; Delaware Code Title 19 Section 805; Illinois 765ILCS1060/1-3, "Employees Patent Act"; Kansas Statutes Section 44-130; Minnesota Statutes 13A Section 181.78; North Carolina General Statutes Article 10A, Chapter 66, Commerce and Business, Section 66-57.1; Utah Code Sections 34-39-l through 34-39-3, "Employment Inventions Act"; Washington Rev. Code, Title 49 RCW: Labor Regulations, Chapter 49.44.140. Rev.061314/MG4-All Us


Exhibit C
4


EXHIBIT D

MUTUAL AGREEMENT TO ARBITRATE CLAIMS DATED FEBRUARY 22, 2021


February 22, 2021

IMAGE_0.JPG

MUTUAL AGREEMENT TO ARBITRATE CLAIMS

Name: Melkote, Keerti
Employee ID: xxxxxx


This Mutual Agreement to Arbitrate Claims (“Agreement”) is between me (hereafter “Employee”) and Hewlett Packard Enterprise Company (hereafter the “Company” or “HPE”) or the subsidiary by which Employee is employed. Any reference to the “Company” includes all direct and indirect parent, subsidiary, partners, divisions, and affiliated entities, and all successors, predecessors, and assigns of any of them. The Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) shall govern this Agreement, which confirms a transaction involving interstate commerce. This Agreement shall be construed, interpreted, and its validity and enforceability determined, in accordance with the FAA. The mutual obligations by the Company and by Employee to arbitrate any disputes provide mutual consideration for this Agreement. Employee and the Company mutually agree that any and all disputes or claims between Employee and the Company shall be submitted to exclusively to binding arbitration, to the maximum extent permitted by applicable law, as provided below.

1. Scope of Agreement. This Agreement applies to any past, present, or future dispute arising out of or related to Employee's application, employment or separation from employment with the Company, and survives after the employment relationship ends. The Agreement applies to any dispute that the Company may have against Employee or that Employee may have against: (1) the Company; (2) its current and former officers, directors, principals, shareholders, owners, employees, partners, vendors or agents; (3) the Company’s benefit plans or the plan’s sponsors, fiduciaries, administrators, affiliates, or agents; and (4) all successors, predecessors and assigns of any of them. Except as it otherwise provides, this Agreement is intended to apply to all disputes that otherwise would be resolved in a court of law or before a forum other than arbitration to the maximum extent permitted by applicable law. This Agreement requires that all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by a court or jury trial or administrative hearing, to the maximum extent permitted by applicable law. With the exception of claims regarding the validity, scope, or enforceability (including unconscionability) of the Class Action Waiver and Collective Action Waiver, addressed below, Employee and the Company agree to submit to the arbitrator all claims or issues regarding arbitrability, the validity, scope, enforceability, interpretation, or application of this Agreement, the arbitrator’s jurisdiction, as well as any gateway, threshold, or any other challenges to this Agreement, including claims that this Agreement is unconscionable.

2. Covered Claims. Except as it otherwise provides, this Agreement applies, without limitation, to disputes or claims arising out of or relating to Employee’s employment relationship with the Company (including the recruitment to or termination from), and including, but not limited to claims alleging: (i) discrimination or harassment based on race, creed, color, religion, sex, age, disability, leave status, national origin, ancestry, sexual orientation, marital status, veteran or military reserve status, or any other characteristic protected by federal, state or local law; (ii)
Exhibit D
1


retaliation, including, but not limited to, whistleblower status or retaliation for filing a workers' compensation claim; (iii) torts, including, but not limited to, battery, defamation, invasion of privacy, infliction of emotional distress, or workplace injury not otherwise covered by applicable workers' compensation laws; (iv) all employment related laws, including, but not limited to, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay Act, Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the Worker Adjustment Retraining and Notification Act, and any amendments to these laws, and any such related or similar state or local laws; (v) any federal, state or local law or common law doctrine for breach of contract, promissory estoppel, wrongful discharge or conversion; (vi) claims under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or any other claims concerning the Company’s benefit plans, that are not excluded below; (vii) claims regarding compensation or wages including, without limitation, claims for pay, minimum wage and overtime, wage or other penalties, benefits (except as excluded below), vacation, meal and rest breaks, classification, reimbursement of expenses, compensation, stock, or incentive bonus plans; (viii) claims concerning trade secrets, unfair competition, the Uniform Trade Secrets Act, intellectual property rights and associated laws; and (ix) federal and state statutes, regulations, ordinances, or other laws addressing any of the foregoing or similar subject matters, and all other state statutory and common law claims to the maximum extent permitted by applicable law.

3. Claims Not Covered By This Agreement. This Agreement does not apply to claims for workers compensation benefits, state disability insurance, and unemployment insurance benefits. This Agreement does not apply to (a) claims for benefits under any ERISA-covered benefit plan sponsored by the Company or funded by insurance, which include their own dispute resolution procedure; provided however that this Agreement does apply to any claims for breach of fiduciary duty, for penalties, or alleging any other violation of ERISA, even if such breach of fiduciary duty claim is combined with a claim for benefits; (b) claims for benefits under any benefit plan sponsored by the Company which includes its own arbitration procedure; provided however, if such arbitration procedure is held to be not binding or unenforceable, then this Agreement does apply; and (c) claims under ERISA that may have a preclusive effect on the interests of other participants in a benefit plan sponsored by the Company. The Company and Employee may pursue provisional relief as provided by applicable law, including temporary and/or preliminary injunctive relief, in a court of competent jurisdiction on the ground that an award may be rendered ineffective without provisional relief pending arbitration; provided, however, that all issues of final relief shall continue to be decided through arbitration, and the pursuit of the provisional relief described herein shall not constitute a waiver of the parties’ agreement to arbitrate. Disputes that by law may not be subject to pre-dispute arbitration are excluded from the coverage of this Agreement.

4. Administrative Agency Claims. Regardless of any other terms of this Agreement, claims may be brought before and remedies awarded by an administrative agency if, and only if, applicable law permits access to such an agency even with the existence of an agreement to arbitrate. Such administrative claims include without limitation claims or charges brought before the Equal Employment Opportunity Commission (www.eeoc.gov), the U.S. Department of Labor (www.dol.gov), the National Labor Relations Board (www.nlrb.gov), or the Office of Federal Contract Compliance Programs (www.dol.gov/esa/ofccp).Nothing in this Agreement shall be deemed to stop or excuse a party from filing an administrative claim or charge with any agency in order to fulfill the party's requirement to exhaust administrative remedies and procedures before making a claim in arbitration.

5. Notice of Claim and Exhaustion of Internal Procedures. All claims in arbitration are subject to the same statutes of limitation that would apply in court. The party bringing the claim must file and serve a demand arbitration in writing and deliver the written demand by hand, overnight delivery or first class mail to the other party within the applicable statute of limitations period. The demand for arbitration shall include identification of the parties, a statement of the legal and factual basis of the claim(s), and a specification of the remedy sought. Any demand for arbitration made to the Company shall be provided to the Company’s principal office located at 6280 America Center Dr., San Jose, CA 95002, attention General Counsel. Notice to the
Exhibit D
2


Employee shall be sent to the Employee’s last known home address as reflected in HPE’s system of record. The arbitrator shall resolve all disputes regarding the timeliness or propriety of the demand for arbitration. Before initiating arbitration, Employee must utilize, and nothing contained in this Agreement shall be construed to prevent or excuse Employee or the Company from utilizing, the Company's or applicable benefit plan’s existing internal procedures for investigation and/or resolution of complaints, and this Agreement is not intended to be a substitute for the utilization of such procedures.

6. Class and Collective Action Waivers. Employee and the Company agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective, multiple-plaintiff, or private attorney general representative action basis. Accordingly, the Employee and Company agree as follows:

(a)There will be no right or authority for any dispute to be brought, heard, or arbitrated as a class action (“Class Action Waiver”). The Class Action Waiver shall not be severable from this Agreement in any case in which (1) the dispute is filed as a class action; and (2) a civil court of competent jurisdiction finds the Class Action Waiver is unenforceable. In such instances, the class action must be litigated in a civil court of competent jurisdiction.

(b)There will be no right or authority for any dispute to be brought, heard, or arbitrated as a collective action (“Collective Action Waiver”). The Collective Action Waiver shall not be severable from this Agreement in any case in which (1) the dispute is filed as a collective action; and (2) a civil court of competent jurisdiction finds the Collective Action Waiver is unenforceable. In such instances, the collective action must be litigated in a civil court of competent jurisdiction.

(c)There will be no right or authority for any dispute to be brought, heard, or arbitrated jointly with other plaintiffs (“Multiple-Plaintiff Waiver”). The Multiple-Plaintiff Waiver shall not be severable from this Agreement in any case in which (1) the dispute is filed as a single plaintiff case and other plaintiffs seek to join their cases together; and (2) a civil court of competent jurisdiction finds the Multiple-Plaintiff Waiver is unenforceable. In such instances, the multiple-plaintiff action(s) must be litigated in a civil court of competent jurisdiction.

(d)There will be no right or authority for any dispute to be arbitrated as a private attorney general representative action. Any private attorney general claim must be litigated in a civil court of competent jurisdiction. The parties agree that any private attorney general action shall be stayed pending resolution of all claims that are properly subject to arbitration.

(e)Notwithstanding any other clause contained in this Agreement, any claim that all or part of the Class Action Waiver or Collective Action Waiver is invalid, unenforceable, unconscionable, void, or voidable may be determined only by a court of competent jurisdiction and not by an arbitrator.

(f)The Class Action Waiver and Collective Action Waiver shall be severable from this agreement in any case in which the dispute is filed as an individual action and severance is necessary to ensure that the individual action proceeds in arbitration.

7. Mandatory Mediation. After submission of the written claim as set forth above, the parties shall submit the matter to non-binding mediation before a mutually selected neutral mediator. The Company shall pay the reasonable fees of the mediator and the expenses associated with the mediation. JAMS or some comparable independent mediation service shall be used to provide the mediator and the rules under which the mediation will be conducted. In the event the claim is not resolved through the mediation process, the claim shall be submitted to binding arbitration, as provided herein.

Exhibit D
3


8. Selection of the Arbitrator and Arbitration Rules. The parties shall select a neutral arbitrator from JAMS and, except as provided in this Agreement, the binding arbitration shall be conducted in accordance with the then current JAMS Employment Arbitration Rules and Procedures. The JAMS rules are available from the Company’s Office of the General Counsel or from JAMS (currently they can be found at www.jamsadr.com/rules-employmentarbitration/). Unless the parties jointly agree otherwise, the Arbitrator shall be either an attorney who is experienced in employment law and licensed to practice law in the state in which the arbitration is convened, or a retired judge (the "Arbitrator"), and the arbitration shall take place in or near the city in which Employee is currently or was last employed by the Company, as reflected in the Company directory.

9. Pre-Hearing Procedures. The Arbitrator shall have jurisdiction to hear and rule on prehearing disputes. The Arbitrator shall permit and rule on a motion to dismiss and/or a motion for summary judgment by either party and shall apply the standards governing such motions as set forth in the Federal Rules of Civil Procedure.

10. Substantive Law and Arbitration Proceeding. The Arbitrator shall apply the substantive law including, but not limited to, applicable statutes of limitations, of the state of Delaware, without regard to its conflict of law provisions. The Arbitrator is without jurisdiction to apply any different substantive law. In arbitration, the parties will have the right to conduct adequate discovery, bring dispositive motions, and present witnesses and evidence as needed to present their cases and defenses, and any disputes in this regard shall be resolved by the Arbitrator. The Federal Rules of Evidence shall apply. Within 30 days of the close of the arbitration hearing, any party will have the right to prepare, serve on the other party and file with the Arbitrator a brief.

11. Confidentiality. Except as may be permitted or required by law, as determined by the Arbitrator, neither a party nor an Arbitrator may disclose the content (including all testimony, information and discovery materials), or results of any arbitration hereunder without the prior written consent of all parties.

12. The Arbitrator’s Award. The Arbitrator may award any party any remedy to which that party is entitled under applicable law, but such remedies shall be limited to those that would be available to a party in his or her individual capacity in a court of law, and no remedies that otherwise would be available to an individual in a court of law will be forfeited by virtue of this Agreement.

13. The Arbitrator’s Written Decision. The Arbitrator will issue a decision or award in writing, stating the essential findings of fact and conclusions of law. A court of competent jurisdiction shall have the authority to enter a judgment upon the award made pursuant to the arbitration. The Arbitrator shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error.

14. Arbitration Fees. Each party will pay the fees for his, her, or its own attorneys, subject to any remedies to which that party may later be entitled under applicable law. In all cases where required by law, the Company will pay the Arbitrator's and arbitration fees. However, if under applicable law the Company is not required to pay all of the Arbitrator's and/or arbitration fees, such fee(s) will be apportioned between the parties in accordance with said applicable law, and any disputes in that regard will be resolved by the Arbitrator.

15. Successors and Assigns. This Agreement will inure to the benefit of the parties’ heirs, successors, and assigns. Employee agrees this Agreement may be assigned by the Company to a subsequent employer, successor, or assign without the need for further authorization or agreement from Employee.

16. Entire Agreement. This Agreement is the full and complete agreement relating to the formal resolution of Covered Claims. Except as stated above regarding the Class Action Waiver and
Exhibit D
4


Collective Action Waiver, in the event any portion of this Agreement is deemed unenforceable, the unenforceable provision will be severed from the Agreement and the remainder of this Agreement will be enforceable. Notwithstanding any contrary language, if any, in any Company policy or writing, this Agreement may not be modified, revised or terminated absent a writing signed by both parties.

17. At-Will Employment. This Agreement does not in any way alter the “at-will” status of my employment; Employee understands and agrees his/her employment with HPE is for an indefinite term and is terminable, with or without cause, at any time by either Employee or HPE.

I, Employee, have carefully read this agreement and agree to its terms.

I, Employee, understand and agree that by accepting this agreement, the Company and I are each giving up our respective rights to a jury trial and that pursuant to the terms of this agreement, we are agreeing to arbitrate all disputes covered by this agreement.

I, Employee, agree that my electronic signature/acceptance of this agreement shall have the same binding effect as a handwritten signature and acceptance.

HEWLETT PACKARD ENTERPRISE COMPANY

/s/ Alan May

Alan May
Executive Vice President, Chief People Officer


Accepted on February 22, 2021
Exhibit D
5

Exhibit 21
Principal Subsidiaries of Hewlett Packard Enterprise Company

The registrant's principal subsidiaries and affiliates as of October 31, 2021 are included in the list below.
COUNTRY SUBSIDIARY
ARGENTINA Hewlett-Packard Argentina S.R.L.
AUSTRALIA Hewlett-Packard Australia Pty Ltd
HP Financial Services (Australia) Pty Limited
AUSTRIA Hewlett-Packard Gesellschaft mbH
BELGIUM Hewlett Packard Enterprise Belgium BV/SRL
BRAZIL HP Financial Services Arrendamento Mercantil S.A.
Hewlett-Packard Brasil Ltda.
BULGARIA Hewlett-Packard Global Delivery Bulgaria Center EOOD
CANADA Hewlett-Packard Financial Services Canada Company
Hewlett Packard Enterprise Canada Co.
CAYMAN ISLANDS H3C Holdings Limited
CHILE Hewlett-Packard Chile Comercial Limitada
HP Financial Services (Chile) Limitada
CHINA New H3C Technologies Co., Ltd.
Hewlett Packard Enterprise (China) Co., Ltd.
Hewlett Packard Enterprise Financial Leasing Co., Ltd
Shanghai Hewlett-Packard Co. Ltd.
Unis Huashan Technologies Co., Limited
COLOMBIA Hewlett Packard Colombia Ltda.
COSTA RICA Hewlett-Packard Enterprise Costa Rica, Ltda.
CZECH REPUBLIC Hewlett-Packard s.r.o.
DENMARK Hewlett-Packard ApS
EGYPT Hewlett-Packard Egypt Ltd.
ENGLAND & WALES Hewlett-Packard Holdings Ltd.
Hewlett-Packard Limited
FINLAND Hewlett-Packard OY
FRANCE Hewlett-Packard France SAS
Hewlett-Packard Centre de Compétences, France SAS
GERMANY Hewlett-Packard GmbH
GREECE Hewlett-Packard Hellas EPE
HONG KONG Hewlett-Packard HK SAR Ltd.
HUNGARY Hewlett-Packard Informatikai Korlátolt Felelösségü Társaság
INDIA Hewlett Packard Enterprise India Private Limited
Hewlett-Packard Financial Services (India) Private Limited
Hewlett Packard Enterprise GlobalSoft Private Limited
Hewlett-Packard (India) Software Operation Private Limited
Global e-Business Operations Private Limited
IRELAND Hewlett-Packard International Bank Designated Activity Company
Hewlett-Packard Galway Limited
Hewlett Packard Enterprise Ireland Limited
ISRAEL Hewlett-Packard (Israel) Ltd.
ITALY Hewlett-Packard Italiana S.r.l.



HPFS Rental S.R.L.
JAPAN Hewlett Packard Japan, G.K.
HP Financial Services (Japan) K.K.
KOREA, REPUBLIC OF Hewlett-Packard Korea Ltd.
MACAU Hewlett-Packard Macau Limited
MALAYSIA Hewlett-Packard (M) Sdn. Bhd.
MAURITIUS Compaq Computer (Mauritius)
MEXICO Hewlett-Packard Mexico S. de R.L. de C.V.
Hewlett-Packard Operations Mexico, S. de R.L. de C.V.
Hewlett-Packard Centro de Servicios Globales, S. de R.L. de C.V.
MOROCCO Hewlett-Packard SARL
MOZAMBIQUE Hewlett-Packard Moçambique, Limitada - Sociedada em Liquidação
NETHERLANDS Compaq Trademark B.V.
Hewlett-Packard Caribe B.V.
Hewlett Packard Enterprise B.V.
Hewlett-Packard Nederland B.V.
Hewlett Packard Enterprise CRL
Hewlett Packard Ventures B.V.
Hewlett Packard Enterprise Holdings CRL
NEW ZEALAND Hewlett-Packard New Zealand
NIGERIA Hewlett-Packard (Nigeria) Limited
NORWAY Hewlett-Packard Norge AS
PERU Hewlett-Packard Peru S.R.L.
PHILIPPINES Hewlett-Packard Philippines Corporation
POLAND Hewlett Packard Enterprise Polska sp. z o.o.
Hewlett Packard Enterprise Global Business Center Sp. z o.o.
PORTUGAL Hewlett-Packard Portugal Lda.
PUERTO RICO Hewlett Packard Caribe BV LLC – Puerto Rico Branch
HP International Trade B.V.
ROMANIA Global E-Business Operations Centre SRL
RUSSIAN FEDERATION Limited Liability Company Hewlett Packard Enterprise
SAUDI ARABIA Hewlett Packard Enterprise Limited
SINGAPORE Hewlett-Packard Asia Pacific Pte. Ltd.
Hewlett-Packard Singapore (Sales) Pte. Ltd.
Hewlett Packard Enterprise Singapore Pte. Ltd
SOUTH AFRICA Hewlett-Packard South Africa (Proprietary) Limited
SPAIN Hewlett-Packard Servicios España S.L
SWEDEN Hewlett-Packard Sverige AB
SWITZERLAND Hewlett Packard Enterprise B.V., Amstelveen, Meyrin Branch
Hewlett-Packard International Sàrl
Hewlett-Packard (Schweiz) GmbH
TAIWAN Hewlett Packard Taiwan Ltd.
Hewlett Packard Enterprise International Pte. Ltd., Taiwan Branch
THAILAND Hewlett-Packard (Thailand) Limited
TURKEY Hewlett-Packard Teknoloji Çözümleri Limited Şirketi
UNITED ARAB EMIRATES Hewlett-Packard Middle East FZ-LLC
UNITED STATES 3Com International, Inc.



3PAR Inc.
Aruba Networks, LLC
Cloud Technology Partners, LLC
Cray Inc.
EDS World Corporation (Far East) LLC
Hewlett-Packard Financial Services Company
Hewlett Packard Pathfinder, LLC
HP Financial Services International Holdings Company
HPE Government, LLC
HPFS Global Holdings II, LLC
Nimble Storage, Inc.
Hewlett Packard Enterprise Development LP
VENEZUELA Hewlett-Packard Venezuela, S.R.L.




Exhibit 23.1
Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:
(1)    Registration Statement (Form S-8 No. 333-207679) pertaining to the Hewlett Packard Enterprise Executive Deferred Compensation Plan and the Hewlett Packard Enterprise Grandfathered Executive Deferred Compensation Plan,
(2)    Registration Statement (Form S-8 No. 333-207671) pertaining to the Hewlett Packard Enterprise Company 2015 Stock Incentive Plan and the Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan,
(3)    Registration Statement (Form S-8 No. 333-217152) pertaining to the Hewlett Packard Enterprise Company 2015 Stock Incentive Plan,
(4)    Registration Statement (Form S-8 No. 333-207680) pertaining to the Hewlett Packard Enterprise 401(k) Plan,
(5)    Registration Statement (Form S-8 No. 333-216481) pertaining to the Niara, Inc. 2013 Equity Incentive Plan,
(6)    Registration Statement (Form S-8 No. 333-217349) pertaining to the Nimble Storage, Inc. 2008 Equity Incentive Plan, as amended, and Nimble Storage, Inc. 2013 Equity Incentive Plan, as amended and restated,
(7)    Registration Statement (Form S-8 No. 333-217438) pertaining to the Simplivity Corporation 2009 Stock Plan,
(8)    Registration Statement (Form S-8 No. 333-221254) pertaining to the Cloud Technology Partners, Inc. 2011 Equity Incentive Plan, as amended,
(9)    Registration Statement (Form S-8 No. 333-226181) pertaining to the Plexxi, Inc. 2011 Stock Plan,
(10)    Registration Statement (Form S-3 ASR No. 333-222102) of Hewlett Packard Enterprise Company,
(11)    Registration Statement (Form S-8 No. 333-229449) pertaining to the Bluedata Software Inc. 2012 Stock Incentive Plan,
(12)    Registration Statement (Form S-8 No. 333-234033) pertaining to the Cray Inc. Amended and Restated 2013 Equity Incentive Plan,
(13)    Registration Statement (Form S-8 No. 333-249731) pertaining to the Silver Peak Systems, Inc. 2004 Stock Plan, as amended, and the Silver Peak Systems, Inc. 2014 Equity Incentive Plan, as amended,
(14)    Registration Statement (Form S-8 No. 333-255839) pertaining to the Hewlett Packard Enterprise Company 2021 Stock Incentive Plan, and the Hewlett Packard Enterprise Executive Deferred Compensation Plan, as amended and restated, and
(15)    Registration Statement (Form S-8 POS No. 333-207671 and No. 333-217152) pertaining to the Hewlett Packard Enterprise Company 2015 Stock Incentive Plan, as amended and restated, and Hewlett Packard Enterprise Company 2021 Stock Incentive Plan,




of our reports dated December 10, 2021, with respect to the consolidated financial statements of Hewlett Packard Enterprise Company and the effectiveness of internal control over financial reporting of Hewlett Packard Enterprise Company, included in this Annual Report (Form 10-K) for the year ended October 31, 2021.

/s/ Ernst & Young LLP
San Jose, California
December 10, 2021


Exhibit 31.1
CERTIFICATION
I, Antonio F. Neri, certify that:
1.     I have reviewed this Annual Report on Form 10-K of Hewlett Packard Enterprise Company;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 10, 2021
 
/s/ Antonio F. Neri
 
Antonio F. Neri
President and Chief Executive Officer
(Principal Executive Officer)



Exhibit 31.2
CERTIFICATION
I, Tarek A. Robbiati, certify that:
1.     I have reviewed this Annual Report on Form 10-K of Hewlett Packard Enterprise Company;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 10, 2021
  /s/ Tarek A. Robbiati
 
Tarek A. Robbiati
 Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Authorized Signatory)



Exhibit 32
CERTIFICATION
PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Antonio F. Neri, the Chief Executive Officer, and Tarek A. Robbiati, the Chief Financial Officer, of Hewlett Packard Enterprise Company hereby certify that, to their knowledge:
1.    The Annual Report on Form 10-K of Hewlett Packard Enterprise Company for the fiscal year ended October 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.    The information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Hewlett Packard Enterprise Company.
December 10, 2021
    /s/ Antonio F. Neri
  By:
Antonio F. Neri
 President and Chief Executive Officer

    /s/ Tarek A. Robbiati
  By:
Tarek A. Robbiati
 Executive Vice President and Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to Hewlett Packard Enterprise Company and will be retained by Hewlett Packard Enterprise Company and furnished to the Securities and Exchange Commission or its staff upon request.