Hewlett Packard : Quarterly results CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(In millions, except per share amounts)

		Three months ended
		April 30,		January 31,			April 30,
		2019			2019			2018
Net revenue(a)	$	7,150		$	7,553		$	7,468
Costs and expenses:
Cost of sales		4,845			5,207			5,210
Research and development		457			466			403
Selling, general and administrative		1,214			1,211			1,245
Amortization of intangible assets		69			72			72
Restructuring charges		-			-			10
Transformation costs		54			78			120
Disaster charges		(7)			-			-
Acquisition, disposition and other related charges		84			63			16
Separation costs		-			-			26
Total costs and expenses		6,716			7,097			7,102
Earnings from continuing operations		434			456			366
Interest and other, net		(18)			(51)			(78)
Tax indemnification adjustments(b)		4			219			(425)
Non-service net periodic benefit credit(c)		17			16			31
Earnings (loss) from equity interests		3			15			(10)
Earnings (loss) from continuing operations before taxes		440			655			(116)
(Provision) benefit for taxes(d)		(21)			(478)			966
Net earnings from continuing operations		419			177			850
Net loss from discontinued operations		-			-			(72)
Net earnings	$	419		$	177		$	778
Net earnings (loss) per share:
Basic
Continuing operations	$	0.31	$	0.13	$	0.55
Discontinued operations		-			-			(0.05)
Total basic net earnings per share	$	0.31		$	0.13		$	0.50
Diluted
Continuing operations	$	0.30	$	0.13	$	0.54
Discontinued operations		-			-			(0.05)
Total diluted net earnings per share	$	0.30		$	0.13		$	0.49
Cash dividends declared per share
$	0.1125	$	0.1125	$	0.1125
Weighted-average shares used to compute net earnings per share:
Basic		1,367			1,401			1,552
Diluted		1,382			1,412			1,582

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(In millions, except per share amounts)

		Six Months Ended April 30,
		2019			2018
Net revenue(a)	$	14,703		$	15,142
Costs and expenses:
Cost of sales		10,052			10,715
Research and development		923			792
Selling, general and administrative		2,425			2,463
Amortization of intangible assets		141			150
Restructuring charges		-			15
Transformation costs		132			365
Disaster charges		(7)			-
Acquisition, disposition and other related charges		147			46
Separation costs		-			2
Total costs and expenses		13,813			14,548
Earnings from continuing operations		890			594
Interest and other, net		(69)			(99)
Tax indemnification adjustments(b)		223			(1,344)
Non-service net periodic benefit credit(c)		33			64
Earnings from equity interests		18			12
Earnings (loss) from continuing operations before taxes		1,095			(773)
(Provision) benefit for taxes(d)		(499)			3,105
Net earnings from continuing operations		596			2,332
Net loss from discontinued operations		-			(118)
Net earnings	$	596		$	2,214
Net earnings (loss) per share:
Basic
Continuing operations	$	0.43	$	1.48
Discontinued operations		-			(0.07)
Total basic net earnings per share	$	0.43		$	1.41
Diluted
Continuing operations	$	0.43	$	1.46
Discontinued operations		-			(0.08)
Total diluted net earnings per share	$	0.43		$	1.38
Cash dividends declared per share
$	0.2250	$	0.2625
Weighted-average shares used to compute net earnings per share:
Basic		1,384			1,571
Diluted		1,397			1,601

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,

OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE

(Unaudited)

(In millions, except percentages and per share amounts)

Three months	Diluted net	Three months
ended
ended April	earnings	January 31,
30, 2019	per share	2019

Diluted net	Three months	Diluted net
earnings	ended April	earnings
per share	30, 2018	per share

GAAP net earnings from continuing	$	419	$	0.30	$	177	$	0.13	$	850	$	0.54
operations

Non-GAAP adjustments:

Amortization of intangible assets

Restructuring charges(c)

Transformation costs(c)

Disaster charges

Acquisition, disposition and other related charges

Separation costs(c)

Tax indemnification adjustments(b)

Non-service net periodic benefit credit(c)

Loss from equity interests(e)Adjustments for taxes(d)(f)

Non-GAAP net earnings from continuing

operations$

GAAP earnings from continuing

operations$

Non-GAAP adjustments related to continuing operations:

69		0.05			72			0.05			72			0.05
-		-			-			-			10			0.01
54		0.04			78			0.06			120			0.08
(7)		(0.01)			-			-			-			-
84		0.06			63			0.04			16			0.01
-		-			-			-			26			0.02
(4)		-			(219)			(0.16)			425			0.26
(17)		(0.01)			(16)			(0.01)			(31)			(0.02)
38		0.03			38			0.03			38			0.02
(57)		(0.04)			397			0.28			(1,020)			(0.65)
579	$	0.42	$	590	$	0.42	$	506	$	0.32
434			$	456				$	366

Amortization of intangible assets		69						72						72
Restructuring charges(c)		-				-				10
Transformation costs(c)		54						78						120
Disaster charges		(7)						-				-
Acquisition, disposition and other		84						63						16
related charges
Separation costs(c)		-					-					26
Non-GAAP earnings from continuing	$	634			$	669			$	610
operations
GAAP operating margin from continuing		6%						6%						5%
operations
Non-GAAP adjustments from continuing		3%						3%						3%
operations
Non-GAAP operating margin from		9%						9%						8%
continuing operations
GAAP net loss from discontinued		- $	- $	- $	- $	(72)	$	(0.05)
operations	$
Non-GAAP adjustments related to
discontinued operations:
Tax indemnification adjustments(b)		-			-			-			-			72			0.05

Non-GAAP net earnings from	$	-		$	-		$	-		$	-		$	-		$	-
discontinued operations
Total GAAP net earnings	$	419	$	0.30	$	177	$	0.13	$	778	$	0.49
Total Non-GAAP net earnings
$	579	$	0.42	$	590	$	0.42	$	506	$	0.32

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,

OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE

(Unaudited)

(In millions, except percentages and per share amounts)

		Six months		Diluted net			Six months		Diluted net
		ended April		earnings per			ended April		earnings per
		30, 2019			share			30, 2018			share
GAAP net earnings from continuing operations	$	596		$	0.43		$	2,332		$	1.46
Non-GAAP adjustments:
Amortization of intangible assets		141			0.11			150			0.09
Restructuring charges(c)		-			-			15			0.01
Transformation costs(c)		132			0.09			365			0.23
Disaster charges		(7)			(0.01)			-			-
Acquisition, disposition and other related charges		147			0.11			46			0.03
Separation costs(c)		-			-			2			-
Tax indemnification adjustments(b)		(223)			(0.16)			1,344			0.84
Non-service net periodic benefit credit(c)		(33)			(0.02)			(64)			(0.04)
Loss from equity interests(e)		76			0.05			75			0.05
Adjustments for taxes(d)(f)		340			0.24			(3,239)			(2.03)
Non-GAAP net earnings from continuing operations	$	1,169		$	0.84		$	1,026		$	0.64
GAAP earnings from continuing operations	$	890				$	594
Non-GAAP adjustments related to continuing operations:
Amortization of intangible assets		141						150
Restructuring charges(c)		-						15
Transformation costs(c)		132						365
Disaster charges		(7)						-
Acquisition, disposition and other related charges		147						46
Separation costs(c)		-						2
Non-GAAP earnings from continuing operations	$	1,303					$	1,172
GAAP operating margin from continuing operations		6%						4%
Non-GAAP adjustments from continuing operations		3%						4%
Non-GAAP operating margin from continuing operations		9%						8%
GAAP net loss from discontinued operations	$	-	$	-	$	(118)	$	(0.08)
Non-GAAP adjustments related to discontinued operations:
Separation costs		-			-			51			0.03
Tax indemnification adjustments(b)		-			-			68			0.05
Adjustments for taxes		-			-			(1)			-
Non-GAAP net earnings from discontinued operations	$	-		$	-		$	-		$	-
Total GAAP net earnings	$	596	$	0.43	$	2,214	$	1.38
Total Non-GAAP net earnings	$	1,169		$	0.84		$	1,026		$	0.64

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except par value)

			As of
			April 30, 2019		October 31, 2018
	ASSETS
Current assets:
Cash and cash equivalents	$	3,585	$	4,880
Accounts receivable			3,143			3,263
Financing receivables			3,453			3,396
Inventory			2,182			2,447
Assets held for sale			1			6
Other current assets(g)			2,636			3,280
Total current assets			15,000			17,272
Property, plant and equipment			6,138			6,138

Long-term financing receivables and other assets Investments in equity interests

Goodwill and intangible assets

Total assets

	9,317			11,359
	2,421			2,398
	18,264			18,326
$	51,140		$	55,493

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Notes payable and short-term borrowings	$	2,114	$	2,005
Accounts payable		5,483			6,092
Employee compensation and benefits		1,263			1,412
Taxes on earnings		236			378
Deferred revenue		3,141			3,177
Accrued restructuring		192			294
Other accrued liabilities		3,648			3,840
Total current liabilities		16,077			17,198
Long-term debt		10,332			10,136
Other non-current liabilities		6,490			6,885
Stockholders' equity
HPE stockholders' equity:
Preferred stock, $0.01 par value (300 shares authorized; none issued and outstanding at		-			-
April 30, 2019)
Common stock, $0.01 par value (9,600 shares authorized; 1,346 and 1,423 shares		13			14
issued and outstanding at April 30, 2019 and October 31, 2018, respectively)
Additional paid-in capital		29,130			30,342
Accumulated deficit(i)		(7,765)			(5,899)
Accumulated other comprehensive loss		(3,180)			(3,218)
Total HPE stockholders' equity		18,198			21,239
Non-controlling interests		43			35
Total stockholders' equity		18,241			21,274
Total liabilities and stockholders' equity	$	51,140		$	55,493

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Three months ended	Six months ended
April 30, 2019	April 30, 2019

Cash flows from operating activities:

Net earnings	$
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization
Stock-based compensation expense
Provision for doubtful accounts and inventory
Restructuring charges
Deferred taxes on earnings
Earnings from equity interests
Other, net
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
Financing receivables
Inventory
Accounts payable
Taxes on earnings
Restructuring
Other assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Investment in property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchases of available-for-sale securities and other investments
Maturities and sales of available-for-sale securities and other investments

Financial collateral posted

Financial collateral returned

Payments made in connection with business acquisitions, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities:

Short-term borrowings with original maturities less than 90 days, net

Proceeds from debt, net of issuance costs

Payment of debt

Net proceeds related to stock-based award activities

Repurchase of common stock

Cash dividends paid

Net cash used in financing activities

Decrease in cash, cash equivalents and restricted cash(g)

419	$	596
648		1,287
74		149
76		118
19		52

1. 344

1. (18)

1. 45

30	143
124	(32)
54	153

1. (565)

1. (185)

1. (198)

48	(520)
987	1,369

1. (1,528)

214371

1. (25)

12

1. (315)

226507

-(76)

1. (1,064)

37	25
236	625

1. (560)

269

1. (1,388)

1. (311)

1. (1,600)

1. (1,295)

Cash, cash equivalents and restricted cash at beginning of period(g)		3,905			5,084
Cash, cash equivalents and restricted cash at end of period(g)	$	3,789		$	3,789

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited) (In millions)

		Three months ended
		April 30,		January 31,			April 30,
		2019			2019			2018
Net revenue:(a)(h)
Hybrid IT	$	5,636	$	5,970	$	5,893
Intelligent Edge		666			686			706
Financial Services		896			919			916
Corporate Investments		125			118			134
Total segment net revenue		7,323			7,693			7,649
Elimination of intersegment net revenue and other		(173)			(140)			(181)
Total Hewlett Packard Enterprise consolidated net revenue	$	7,150		$	7,553		$	7,468
Earnings from continuing operations before taxes:(c)(h)
Hybrid IT	$	645	$	675	$	591
Intelligent Edge		20			9			56
Financial Services		77			77			72
Corporate Investments		(29)			(28)			(28)
Total segment earnings from operations		713			733			691
Unallocated corporate costs and eliminations(c)		(64)			(50)			(61)
Unallocated stock-based compensation expense		(15)			(14)			(20)
Amortization of intangible assets		(69)			(72)			(72)
Restructuring charges(c)		-			-			(10)
Transformation costs(c)		(54)			(78)			(120)
Disaster charges		7			-			-
Acquisition, disposition and other related charges		(84)			(63)			(16)
Separation costs(c)		-			-			(26)
Interest and other, net		(18)			(51)			(78)
Tax indemnification adjustments(b)		4			219			(425)
Non-service net periodic benefit credit(c)		17			16			31
Earnings (loss) from equity interests		3			15			(10)
Total Hewlett Packard Enterprise consolidated earnings (loss) from
continuing operations before taxes	$	440	$	655	$	(116)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited) (In millions)

		Six Months Ended April 30,
		2019			2018
Net revenue:(a)(h)
Hybrid IT	$	11,606		$	12,051
Intelligent Edge		1,352			1,362
Financial Services		1,815			1,804
Corporate Investments		243			270
Total segment net revenue		15,016			15,487
Elimination of intersegment net revenue and other		(313)			(345)
Total Hewlett Packard Enterprise consolidated net revenue	$	14,703		$	15,142
Earnings from continuing operations before taxes:(c)(h)
Hybrid IT	$	1,320		$	1,163
Intelligent Edge		29			90
Financial Services		154			143
Corporate Investments		(57)			(54)
Total segment earnings from operations		1,446			1,342
Unallocated corporate costs and eliminations(c)		(114)			(120)
Unallocated stock-based compensation expense		(29)			(50)
Amortization of intangible assets		(141)			(150)
Restructuring charges(c)		-		(15)
Transformation costs(c)		(132)			(365)
Disaster charges		7			-
Acquisition, disposition and other related charges		(147)			(46)
Separation costs		-		(2)
Interest and other, net		(69)			(99)
Tax indemnification adjustments(b)		223			(1,344)
Non-service net periodic benefit credit(c)		33			64
Earnings from equity interests		18			12
Total Hewlett Packard Enterprise consolidated earnings (loss) from continuing
operations before taxes	$	1,095		$	(773)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

SEGMENT/BUSINESS UNIT INFORMATION

(Unaudited)

(In millions, except percentages)

		Three months ended			Change (%)
		April 30,		January 31,			April 30,		Q/Q		Y/Y
		2019			2019			2018
Net revenue:(a)(h)
Hybrid IT
Hybrid IT Product
Compute	$	3,093	$	3,402	$	3,263		(9%)	(5%)
Storage		942			975			912		(3%)	3%
Total Hybrid IT Product		4,035			4,377			4,175		(8%)	(3%)
HPE Pointnext		1,601			1,593			1,718		1%	(7%)
Total Hybrid IT		5,636			5,970			5,893		(6%)	(4%)
Intelligent Edge
HPE Aruba Product		577			597			629		(3%)	(8%)
HPE Aruba Services		89			89			77		-%	16%
Total Intelligent Edge		666			686			706		(3%)	(6%)
Financial Services		896			919			916		(3%)	(2%)
Corporate Investments		125			118			134		6%	(7%)
Total segment net revenue		7,323			7,693			7,649		(5%)	(4%)
Elimination of intersegment net revenue and other		(173)			(140)			(181)		24%	(4%)
Total Hewlett Packard Enterprise consolidated net revenue	$	7,150	$	7,553	$	7,468		(5%)	(4%)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

SEGMENT/BUSINESS UNIT INFORMATION

(Unaudited)

(In millions, except percentages)

		Six Months Ended April 30,
		2019			2018			Y/Y
Net revenue:(a)(h)
Hybrid IT
Hybrid IT Product
Compute	$	6,495	$	6,781			(4%)
Storage		1,917			1,860			3%
Total Hybrid IT Product		8,412			8,641			(3%)
HPE Pointnext		3,194			3,410			(6%)
Total Hybrid IT		11,606			12,051			(4%)
Intelligent Edge
HPE Aruba Product		1,174			1,211			(3%)
HPE Aruba Services		178			151			18%
Total Intelligent Edge		1,352			1,362			(1%)
Financial Services		1,815			1,804			1%
Corporate Investments		243			270			(10%)
Total segment net revenue		15,016			15,487			(3%)
Elimination of intersegment net revenue and other		(313)			(345)			(9%)
Total Hewlett Packard Enterprise consolidated net revenue	$	14,703		$	15,142			(3%)

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

SEGMENT OPERATING MARGIN SUMMARY DATA

(Unaudited)

	Three months ended		Change in Operating
		Margin (pts)
	April 30, 2019			Q/Q		Y/Y
Segment operating margin:(c)(h)
Hybrid IT	11.4 %		0.1 pts		1.4 pts
Intelligent Edge	3.0	%		1.7 pts		(4.9) pts
Financial Services	8.6	%		0.2 pts		0.7 pts
Corporate Investments	(23.2)%		0.5 pts		(2.3) pts
Total segment operating margin	9.7	%		0.2 pts		0.7 pts

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS (LOSS) PER SHARE (Unaudited)

(In millions, except per share amounts)

		Three months ended
		April 30,	January 31,			April 30,
		2019			2019			2018
Numerator:
GAAP net earnings from continuing operations	$	419		$	177	$	850
GAAP net loss from discontinued operations	$	-		$	-		$	(72)
Non-GAAP net earnings from continuing operations
$	579		$	590	$	506
Non-GAAP net earnings from discontinued operations	$	-		$	-		$	-
Denominator:
Weighted-average shares used to compute basic net earnings per share		1,367			1,401			1,552
Dilutive effect of employee stock plans(j)		15			11			30
Weighted-average shares used to compute diluted net earnings per
share		1,382			1,412			1,582
GAAP net earnings per share from continuing operations
Basic	$	0.31		$	0.13	$	0.55
Diluted(j)	$	0.30		$	0.13	$	0.54
GAAP net loss per share from discontinued operations(l)
Basic	$	-	$	-	$	(0.05)
Diluted(j)	$	-	$	-	$	(0.05)
Non-GAAP net earnings per share from continuing operations
Basic	$	0.42		$	0.42	$	0.33
Diluted(k)	$	0.42		$	0.42	$	0.32
Non-GAAP net earnings per share from discontinued operations
Basic	$	-	$	-	$	-
Diluted	$	-	$	-	$	-
Total Hewlett Packard Enterprise GAAP basic net earnings per share	$	0.31		$	0.13	$	0.50
Total Hewlett Packard Enterprise GAAP diluted net earnings per share	$	0.30		$	0.13		$	0.49
Total Hewlett Packard Enterprise Non-GAAP basic net earnings per share
$	0.42		$	0.42	$	0.33
Total Hewlett Packard Enterprise Non-GAAP diluted net earnings per share	$	0.42		$	0.42		$	0.32

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS (LOSS) PER SHARE (Unaudited)

(In millions, except per share amounts)

		Six Months Ended April 30,
		2019			2018
Numerator:
GAAP net earnings from continuing operations	$	596		$	2,332
GAAP net loss from discontinued operations
$	-	$	(118)
Non-GAAP net earnings from continuing operations	$	1,169		$	1,026
Non-GAAP net earnings from discontinued operations
$	-	$	-
Denominator:
Weighted-average shares used to compute basic net earnings per share		1,384			1,571
Dilutive effect of employee stock plans(j)		13			30
Weighted-average shares used to compute diluted net earnings per share		1,397			1,601
GAAP net earnings per share from continuing operations
Basic	$	0.43		$	1.48
Diluted(j)	$	0.43		$	1.46
GAAP net loss per share from discontinued operations(l)
Basic	$	-	$	(0.07)
Diluted(j)	$	-	$	(0.08)
Non-GAAP net earnings per share from continuing operations
Basic	$	0.84		$	0.65
Diluted(k)	$	0.84		$	0.64
Non-GAAP net earnings per share from discontinued operations
Basic	$	-	$	-
Diluted	$	-	$	-
Total Hewlett Packard Enterprise GAAP basic net earnings per share	$	0.43		$	1.41
Total Hewlett Packard Enterprise GAAP diluted net earnings per share
$	0.43		$	1.38
Total Hewlett Packard Enterprise Non-GAAP basic net earnings per share	$	0.84		$	0.65
Total Hewlett Packard Enterprise Non-GAAP diluted net earnings per share
$	0.84		$	0.64

1. The Company adopted the new revenue recognition accounting standard (ASC 606) on a modified retrospective basis effective the first quarter of fiscal 2019. Fiscal 2019 results are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the prior revenue recognition accounting standard (ASC 605).
2. For the three months ended January 31, 2019 and the six months ended April 30, 2019, this amount primarily includes the effects of U.S. tax reform on tax attributes related to fiscal periods prior to the Separation with HP Inc.
   For the three and six months endedApril 30, 2018 this amount primarily represents the settlement of certain pre-separationHewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HP Inc.
3. Effective at the beginning of the first quarter of fiscal 2019, subsequent to the adoption of the accounting standards update for retirement benefits (Topic 715), the Company reclassified itsnon-service net periodic benefit credit from operating expense to other income and expense in its Condensed Consolidated Statements of Earnings. The Company reflected these changes retrospectively, by transferring the non-service net periodic benefit credit, a portion of which was previously allocated to the segments, and the remainder of which was reported within Unallocated corporate costs and eliminations, Transformationcosts,RestructuringchargesandSeparationcosts,toNon-servicenetperiodicbenefitcreditasotherincome and expense for periods in fiscal 2018.
   These changes had no impact on Hewlett Packard Enterprise's previously reported condensed consolidated GAAP net earnings or GAAP net earnings per share.
4. For the three months ended January 31, 2019, and the six months ended April 30, 2019, the amounts primarily include $419 million and $398 million of tax expense, respectively, as a result of the impact of U.S. tax reform.
   For the three months ended April 30, 2018 the amount primarily includes $1.1 billion benefit following the closure of pre- separation Hewlett-Packard Company audits for fiscal years 2009 through 2012, partially offset by $140 million of tax expense as a result of the U.S. tax reform.
   For the six months ended April 30, 2018, this amount includes a $2.0 billion benefit in connection with the settlement of certain pre-separationHewlett-Packard Company income tax liabilities indemnified through the Tax Matters Agreement with HPInc., a $239 million benefit primarily from foreign tax credits and from the release of non U.S. valuation allowances on deferred taxes established in connection with the Everett Transaction, a $203 million benefit as a result of the liquidation of an insolvent non U.S. subsidiary, and an estimated tax benefit of $1.8 billion from the provisional application of the new tax rules including a lower federal tax rate to deferred tax assets and liabilities, partially offset by a provisional estimate of $1.1 billion of transition tax expense on accumulated non U.S. earnings.
   In connection with the adoption ofASU 2016-09, which requires the excess tax benefits or tax deficiencies associated with stock-based compensation to be recognized as a component of the provision for income taxes in the Statement of Earnings rather than additional paid-in capital in the Balance Sheet, this amount includes $28 million and $42 million, for the three and six months ended April 30, 2018, respectively.
5. Represents the amortization of basis difference adjustments related to the H3C divestiture.
6. Effective the first quarter of fiscal 2019, the Company uses a structural tax rate based onlong-termnon-GAAP financial projections.
7. The Company adopted the guidance for the classification and presentation of restricted cash in the statement of cash flows in the first quarter of fiscal 2019, beginning November 1, 2018, using the retrospective method. As a result of the adoption of this accounting standard update, for the three and six months ended April 30, 2019, the restricted cash balance, included in cash, cash equivalents and restricted cash as disclosed in the Statements of Cash Flows above, was $204 million and $328 million respectively, which was included in Other current assets in the Condensed Consolidated Balance Sheets.
8. Effective at the beginning of the first quarter of fiscal 2019, the Company implemented organizational changes to align its segmentfinancialreportingmorecloselywithitscurrentbusinessstructure.Theseorganizationalchangesprimarilyinclude:
   (i) the transfer of the data center networking ("DC Networking") business, which was previously reported within the Hybrid IT Product business unit in the Hybrid IT segment, to the HPE Aruba Product and HPE Aruba Services business units within the Intelligent Edge segment; (ii) the transfer of the edge compute business, which was previously reported within the HPE Aruba Product business unit in the Intelligent Edge segment, to the Hybrid IT Product business unit within the

Hybrid IT segment; and (iii) the transfer of the Communications and Media Solutions ("CMS") business, which was previouslyreportedwithintheHPEPointnextbusinessunitintheHybridITsegment,totheCorporateInvestmentssegment.

The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the transfer of net revenue and operating profit for each of the businesses as described above.

These changes had no impact on Hewlett Packard Enterprise's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share.

1. The Company adopted the accounting standard update for income taxes related tointra-entity transfers of assets other than inventory, using the modified retrospective method. As a result, the Company recognized $2.3 billion of income taxes as an adjustment to retained earnings in the first quarter of fiscal 2019.
2. GAAP diluted net earnings per share reflects any dilutive effect of restricted stock awards, stock options and performance- based awards, but the effect is excluded when calculating GAAP diluted net loss per share when it would beanti-dilutive.
3. Non-GAAPdiluted net earnings per share reflects any dilutive effect of restricted stock awards, stock options and performance-based awards.
4. Earnings per share for discontinued operations was calculated by deducting the earnings per share from continuing operations from the total earnings per share.