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Discontinued Operations | 6 Months Ended
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Apr. 30, 2017
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On April 1, 2017, HPE completed the Everett Transaction. As a result, HPE distributed all of the shares of Everett to HPE stockholders. 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. Following the share distribution, the Merger Sub merged with and into CSC, which will continue as a wholly-owned subsidiary of Everett. At the time of the merger, Everett changed its name to DXC. HPE and Everett have entered into several agreements that govern the relationship between the parties, including the following:
• | Separation and Distribution Agreement;
• | Transition Services Agreement;
• | Tax Matters Agreement;
• | Employee Matters Agreement;
• | Real Estate Matters Agreement;
• | Intellectual Property Matters Agreement;
• | Information Technology Service Agreement; and
• | Preferred Vendor Agreements
These agreements provide for the allocation of assets, employees, liabilities and obligations (including its investments, property, employee benefits, litigation, and tax-related assets and liabilities) between HPE and Everett, attributable to periods prior to, at and after the separation. Obligations under the service and commercial contracts generally extend through five years. With the completion of the Everett Transaction, HPE no longer consolidates the financial results of Everett within its financial results from continuing operations. For all periods prior to the Everett Transaction, the financial results of Everett are presented as Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings and in assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets. The following table presents the financial results for HPE's discontinued operations up to the completion of the separation on April 1, 2017. For the period following the completion of the Everett Transaction, discontinued operations primarily includes separation costs related to third-party consulting, contractor fees and other incremental costs arising from the transaction:
| Three Months Ended April 30, |  | Six Months Ended April 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
| In millions
Net Revenue | $ | 2,487 |  |  | $ | 4,202 |  |  | $ | 6,338 |  |  | $ | 8,394 |
Cost of revenue(1) | 2,073 |  |  | 3,601 |  |  | 5,357 |  |  | 7,312 |
Expenses(2) | 643 |  |  | 560 |  |  | 1,203 |  |  | 1,129 |
Interest and other, net | 4 |  |  | 8 |  |  | 4 |  |  | 14 |
(Loss) earnings from discontinued operations before taxes | (233 | ) |  | 33 |  |  | (226 | ) |  | (61 | )
Benefit (provision) for taxes | 108 |  |  | (35 | ) |  | 113 |  |  | (36 | )
Net loss from discontinued operations | $ | (125 | ) |  | $ | (2 | ) |  | $ | (113 | ) |  | $ | (97 | )
(1) | Cost of revenue includes cost of products and cost of services.
(2) | Expenses for the three and six months ended April 30, 2017 and 2016 include expenses primarily consisting of selling, general and administrative (“SG&A”) expenses, research and development (“R&D”) expenses, restructuring charges, separation costs related to the Everett Transaction, amortization of intangible assets, acquisition and other related charges, and defined benefit plan settlement charges and remeasurement (benefit).
For the three and six months ended April 30, 2017 and 2016, significant non-cash items and capital expenditures of discontinued operations are outlined below:
| Three Months Ended April 30, |  | Six Months Ended April 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
| In millions
Depreciation and amortization | $ | 129 |  |  | $ | 358 |  |  | $ | 388 |  |  | $ | 734 |
Purchases of property, plant and equipment | $ | 53 |  |  | $ | 224 |  |  | $ | 131 |  |  | $ | 486 |
The following table presents assets and liabilities that are presented as discontinued operations in the Consolidated Balance Sheet as of October 31, 2016 and that were transferred to Everett as of April 1, 2017:
| As of
| October 31, 2016
Accounts receivable | $ | 3,093 |
Inventory | 34 |
Other current assets | 1,116 |
Total current assets of discontinued operations | $ | 4,243 |
Property, plant and equipment | $ | 3,332 |
Long-term financing receivables and other non-current assets | 1,591 |
Total non-current assets of discontinued operations | $ | 4,923 |
Notes payable and short-term borrowings | $ | 3 |
Accounts payable | 933 |
Employee compensation and benefits | 838 |
Taxes on earnings | 55 |
Deferred revenue | 849 |
Other accrued liabilities | 1,504 |
Total current liabilities of discontinued operations | $ | 4,182 |
Long-term debt | $ | 392 |
Other non-current liabilities | 3,621 |
Total non-current liabilities of discontinued operations | $ | 4,013 |
In the second quarter of fiscal 2017, in connection with the Everett Transaction, HPE made a net cash transfer of $559 million to DXC. Further working capital adjustments are expected through December 2017.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=51716988&loc=SL51721533-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721665-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5C -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721675-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=51719941&loc=SL51724579-110230 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721663-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=51719941&loc=d3e2941-110230 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51717284&loc=d3e1361-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5B -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721673-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721659-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721671-107760 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5D -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721677-107760 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=51717284&loc=d3e1474-107760 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721683-107760 + Details
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