HPE Next

3 Months Ended

Jan. 31, 2020

Restructuring and Related Activities [Abstract]

The Company extended the HPE Next initiative to fiscal 2021 in order to mitigate recent global developments and the evolving economic uncertainty. With this extension, the Company expects to incur expenses related to streamlining, upgrading and simplifying back-end operations as it implements further cost take-out actions designed to deliver incremental savings. These costs may be partially offset by gains from real estate sales.

Transformation Costs

During the three months ended January 31, 2020, the Company incurred $89 million of net charges which were recorded within Transformation costs in the Condensed Consolidated Statements of Earnings. During the three months ended January 31, 2019, the Company incurred $83 million of net charges, of which $78 million were recorded within Transformation costs, and $5 million were recorded within Non-service net periodic benefit credit, in the Condensed Consolidated Statements of Earnings, respectively.



	Three months ended January 31,
	2020			2019
	In millions
Program management⁽¹⁾	$	11		$	11
IT costs	28			27
Restructuring charges	84			33
Gain on real estate sales	(34		)	—
Other⁽²⁾	—			12
Total	$	89		$	83


(1)	Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the HPE Next initiative.


(2)	Primarily consists of site relocation costs in connection with the HPE Next initiative.

Restructuring Plan

On October 16, 2017, the Company's Board of Directors approved a restructuring plan in connection with the HPE Next initiative (the "HPE Next Plan") and on September 20, 2018, the Company's Board of Directors approved a revision to that restructuring plan. As a result of the revision to the plan, cost amounts and total headcount exits were revised and the completion of the workforce reductions was extended to fiscal 2020. The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee work councils and other employee representatives, as appropriate.



	Employee Severance			Infrastructure and other
	In millions
Liability as of October 31, 2019	$	178		$	42
Charges	51			33
Cash payments	(67		)	(12		)
Non-cash items	—			(4		)
Liability as of January 31, 2020	$	162		$	59
Total costs incurred to date, as of January 31, 2020	$	971		$	159
Total costs expected to be incurred, as of January 31, 2020	$	1,200		$	180

As of January 31, 2020 and October 31, 2019, the current restructuring liability related to the HPE Next Plan, reported in Accrued restructuring in the Condensed Consolidated Balance Sheets, was $160 million and $164 million, respectively. The non-current restructuring liability related to the HPE Next Plan, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of January 31, 2020 and October 31, 2019 was $61 million and $56 million, respectively.