CORRESP 1 filename1.htm Exhibit


sam2016pressreleasev1a16.jpg
April 15, 2020
 
Division of Corporation Finance
United States Securities and Exchange Commission
Washington, D.C. 20549
 
Attn: Suying Li / Angela Lumley, Office of Trade & Services

Re:
Hewlett Packard Enterprise Company
Item 2.02 Form 8-K dated March 3, 2020
File No. 001-37483


Dear Mses. Li and Lumley:

Hewlett Packard Enterprise Company (“HPE,” the “Company” or “we”) hereby sets forth the following information in response to the comments contained in the correspondence of the staff of the Securities and Exchange Commission (the “Staff”), dated April 10, 2020, relating to our Current Report on Form 8-K, filed March 3, 2020. We have set forth below the comment received by the Staff, as well as the Company’s response thereto.


Item 2.02 Form 8-K dated March 3, 2020
Exhibit 99.1, page 1

1. Please revise your disclosure to provide a quantitative reconciliation for your non-GAAP gross margin and free cash flow to their most directly comparable GAAP financial measures as required by Item 10(e)(1)(i)(B) of Regulation S-K.

Response: We acknowledge the Staff’s comment regarding GAAP to non-GAAP reconciliations in connection with our earnings release furnished on Form 8-K filed March 3, 2020. We have expanded the reconciliation tables provided in connection with such earnings release to include quantitative reconciliations of non-GAAP gross margin to GAAP gross margin and free cash flow to cash flow from operations. A draft of these expanded reconciliation tables is attached hereto as Attachment A. We will include these reconciliations with respect to the three months ended January 31, 2020 in the tables accompanying our earnings release to be published with respect to the fiscal quarter ended April 30, 2020, which will be furnished on Form 8-K. We confirm that future discussions of non-GAAP gross margin and free cash flow will be accompanied by quantitative reconciliations to their most directly comparable GAAP financial measures.

Sincerely,

/s/ Tarek Robbiati

Tarek Robbiati
Chief Financial Officer

6280 America Center Drive
San Jose, CA 95002
hpe.com
 




Attachment A
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
 ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING PROFIT MARGIN,
GROSS PROFIT, GROSS PROFIT MARGIN, CASH FLOW FROM OPERATING ACTIVITIES AND
DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except percentages and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended January 31, 2020
 
Diluted net earnings per share
 
Three months ended
October 31, 2019
 
Diluted net earnings per share
 
Three months ended January 31, 2019
 
Diluted net earnings per share
GAAP net earnings
$
333

 
$
0.25

 
$
480

 
$
0.36

 
$
177

 
$
0.13

 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
Amortization of initial direct costs
3

 
—

 
—

 
—

 
—

 
—

Amortization of intangible assets
120

 
0.09

 
68

 
0.05

 
72

 
0.05

Transformation costs
89

 
0.07

 
151

 
0.11

 
78

 
0.06

Acquisition, disposition and other related charges(1)
42

 
0.03

 
54

 
0.04

 
63

 
0.04

Tax indemnification adjustments
21

 
0.02

 
(288
)
 
(0.22
)
 
(219
)
 
(0.16
)
Non-service net periodic benefit credit
(37
)
 
(0.03
)
 
(14
)
 
(0.01
)
 
(16
)
 
(0.01
)
Loss from equity interests
37

 
0.03

 
38

 
0.03

 
38

 
0.03

Adjustments for taxes
(33
)
 
(0.02
)
 
155

 
0.13

 
397

 
0.28

Non-GAAP net earnings
$
575

 
$
0.44

 
$
644

 
$
0.49

 
$
590

 
$
0.42

 
 
 
 
 
 
 
 
 
 
 
 
GAAP earnings from operations
$
348

 
 
 
$
460

 
 
 
$
456

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments
 
 
 
 
 
 
 
 
 
 
 
Amortization of initial direct costs
3

 
 
 
—

 
 
 
—

 
 
Amortization of intangible assets
120

 
 
 
68

 
 
 
72

 
 
Transformation costs
89

 
 
 
151

 
 
 
78

 
 
Acquisition, disposition and other related charges(1)
42

 
 
 
54

 
 
 
63

 
 
Non-GAAP earnings from operations
$
602

 
 
 
$
733

 
 
 
$
669

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating profit margin
5
%
 
 
 
6
%
 
 
 
6
%
 
 
Non-GAAP adjustments
4
%
 
 
 
4
%
 
 
 
3
%
 
 
Non-GAAP operating profit margin
9
%
 
 
 
10
%
 
 
 
9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Net revenue
$
6,949

 
 
 
$
7,215

 
 
 
$
7,553

 
 
GAAP cost of sales
4,667

 
 
 
4,822

 
 
 
5,207

 
 
GAAP gross profit
$
2,282

 
 
 
$
2,393

 
 
 
$
2,346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments
 
 
 
 
 
 
 
 
 
 
 
Amortization of initial direct costs
$
3

 
 
 
$
—

 
 
 
$
—

 
 
Acquisition, disposition and other related charges(1)
20

 
 
 
7

 
 
 
—

 
 
Non-GAAP gross profit
$
2,305

 
 
 
$
2,400

 
 
 
$
2,346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP gross profit margin
32.8
%
 

 
33.2
%
 
 
 
31.1
%
 
 
Non-GAAP adjustments
0.4
%
 
 
 
0.1
%
 
 
 
—
%
 
 
Non-GAAP gross profit margin
33.2
%
 

 
33.3
%
 
 
 
31.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(79
)
 
 
 
$
1,432

 
 
 
$
382

 
 
Investment in property, plant and equipment
(568
)
 
 
 
(703
)
 
 
 
(729
)
 
 
Proceeds from sale of property, plant and equipment
462

 
 
 
149

 
 
 
157

 
 
Free cash flow
$
(185
)
 
 
 
$
878

 
 
 
$
(190
)
 
 
 
 
(1) Three months ended January 31, 2020 and October 31, 2019 includes Acquisition, disposition and other related charges of $20 million and $7 million, respectively, related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray, Inc., which was included in Cost of Sales.