12/09/2024 | Press release | Distributed by Public on 12/09/2024 20:21
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Per Share
|
Total
|
|||||
Public Offering Price(1)
|
$50.00
|
$1,350,000,000
|
||||
Underwriting Discount(1)(2)
|
$1.25
|
$33,750,000
|
||||
Proceeds to the Company (before expenses)
|
$48.75
|
$1,316,250,000
|
(1)
|
Assumes no exercise of the underwriters' option to purchase additional Mandatory Convertible Preferred Stock described below.
|
(2)
|
See "Underwriting" for a description of the compensation payable to underwriters.
|
Citigroup
|
J.P. Morgan
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Mizuho
|
||||
Joint Bookrunners
|
||||||
Barclays
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BNP PARIBAS
|
|||||
Deutsche Bank Securities
|
HSBC
|
Wells Fargo Securities
|
||||
Co-Managers
|
|||||||||
Academy Securities
|
ANZ Securities
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CIBC Capital Markets
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Credit Agricole CIB
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||||||
ING
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Loop Capital Markets
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Santander
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SOCIETE GENERALE
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||||||
Standard Chartered Bank
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TD Securities
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US Bancorp
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Page
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ABOUT THIS PROSPECTUS SUPPLEMENT
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S-1
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NON-GAAP FINANCIAL MEASURES
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S-2
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FORWARD-LOOKING STATEMENTS
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S-3
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SUMMARY
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S-5
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SUMMARY FINANCIAL INFORMATION
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S-10
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THE OFFERING
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S-13
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RISK FACTORS
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S-24
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USE OF PROCEEDS
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S-36
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
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S-37
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COMMON STOCK DIVIDEND POLICY
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S-60
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DESCRIPTION OF MANDATORY CONVERTIBLE PREFERRED STOCK
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S-61
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
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S-91
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CERTAIN ERISA CONSIDERATIONS
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S-98
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UNDERWRITING
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S-100
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VALIDITY OF THE MANDATORY CONVERTIBLE PREFERRED STOCK
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S-109
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EXPERTS
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S-110
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WHERE YOU CAN FIND MORE INFORMATION
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S-111
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INFORMATION INCORPORATED BY REFERENCE
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S-112
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Page
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ABOUT THIS PROSPECTUS
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1
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ABOUT THE COMPANY
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1
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FORWARD-LOOKING STATEMENTS
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2
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USE OF PROCEEDS
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3
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DESCRIPTION OF THE DEBT SECURITIES
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4
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DESCRIPTION OF CAPITAL STOCK
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12
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DESCRIPTION OF OTHER SECURITIES
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14
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PLAN OF DISTRIBUTION
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15
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VALIDITY OF THE SECURITIES
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16
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EXPERTS
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16
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WHERE YOU CAN FIND MORE INFORMATION
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16
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INFORMATION INCORPORATED BY REFERENCE
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17
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any anticipated financial or operational benefits associated with the segment realignment that became effective as of the beginning of the first quarter of fiscal year 2024;
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any projections, estimations or expectations of addressable markets and their sizes, revenue (including annualized revenue run-rate), margins, expenses (including stock-based compensation 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;
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recent amendments to accounting guidance and any potential impacts on our financial reporting therefrom;
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any projections or estimations of future orders, including as-a-service orders;
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any statements of the plans, strategies, and objectives of management for future operations, as well as the execution and consummation of corporate transactions or contemplated acquisitions and anticipated synergies thereto (including but not limited to our proposed acquisition of Juniper Networks, Inc.) and dispositions (including but not limited to the disposition of H3C shares and the receipt of proceeds therefrom), research and development expenditures, and any resulting benefit, cost savings, charges, or revenue or profitability improvements;
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any statements concerning the expected development, performance, market share, or competitive performance relating to products or services;
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any statements concerning technological and market trends, the pace of technological innovation, and adoption of new technologies, including artificial intelligence-related and other products and services offered by Hewlett Packard Enterprise;
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any statements regarding current or future macroeconomic trends or events and the impacts of those trends and events on Hewlett Packard Enterprise and our financial performance, including but not limited to supply chain, demand for our products and services, and access to liquidity, and our actions to mitigate such impacts on our business;
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the scope and duration of outbreaks, epidemics, pandemics, or public health crises, the ongoing conflicts between Russia and Ukraine and in the Middle East, and the relationship between China and the U.S., and our actions in response thereto, and their impacts on our business, operations, liquidity and capital resources, employees, customers, partners, supply chain, financial results, and the world economy;
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any statements regarding future regulatory trends and the resulting legal and reputational exposure, including but not limited to those relating to environmental, social, governance, cybersecurity, data privacy, and artificial intelligence issues, among others;
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any statements regarding pending investigations, claims, or disputes;
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any statements of expectation or belief, including those relating to future guidance and the financial performance of Hewlett Packard Enterprise; and
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any statements of assumptions underlying any of the foregoing.
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the competitive pressures faced by Hewlett Packard Enterprise's businesses;
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risks associated with executing Hewlett Packard Enterprise's strategy;
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the impact of macroeconomic and geopolitical trends and events, including but not limited to supply chain constraints, the use and development of artificial intelligence, the inflationary environment (though easing), the ongoing conflicts between Russia and Ukraine and in the Middle East, and the relationship between China and the U.S.;
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the need to effectively manage third-party suppliers and distribute Hewlett Packard Enterprise's products and services;
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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;
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risks associated with Hewlett Packard Enterprise's international operations (including from public health crises, such as pandemics or epidemics, and geopolitical events, such as those mentioned above);
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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;
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the execution of Hewlett Packard Enterprise's transformation and mix shift of its portfolio of offerings;
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the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients, and partners, including any impact thereon resulting from macroeconomic or geopolitical events, such as those mentioned above;
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the prospect of a shutdown of the U.S. federal government;
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the hiring and retention of key employees;
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the execution, integration, consummation and other risks associated with business combination, disposition and investment transactions, including but not limited to the risks associated with the disposition of H3C shares and the receipt of proceeds therefrom and completion of our proposed acquisition of Juniper Networks, Inc. and our ability to integrate and implement our plans, forecasts, and other expectations with respect to the consolidated business;
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the impact of changes to privacy, cybersecurity, environmental, global trade, and other governmental regulations;
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changes in our product, lease, intellectual property, or real estate portfolio;
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the payment or non-payment of a dividend for any period;
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the efficacy of using non-GAAP, rather than GAAP, financial measures in business projections and planning;
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the judgments required in connection with determining revenue recognition;
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impact of company policies and related compliance; utility of segment realignments;
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allowances for recovery of receivables and warranty obligations;
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provisions for, and resolution of, pending investigations, claims, and disputes;
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the impacts of tax law changes and related guidance or regulations; and
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other risks that are described in "Risk Factors" on page S-24 of this prospectus supplement and in our other filings with the SEC, including but not limited to the risks described under the caption "Risk Factors" contained in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2023 and under the caption "Risk Factors" contained in Part II, Item 1A of our Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2024, April 30, 2024 and July 31, 2024, and in other filings made by us from time to time with the SEC or in materials incorporated herein or therein.
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Server. This segment consists of general-purpose servers for multi-workload computing and workload-optimized servers to deliver the best performance and value for demanding applications and integrated systems comprised of software and hardware designed to address High-Performance Computing and Supercomputing (including exascale applications), Artificial Intelligence ("AI"), Data Analytics, and Transaction Processing workloads for government and commercial customers globally. This portfolio of products includes our secure and versatile HPE ProLiant Rack and Tower servers; HPE Synergy, a composable infrastructure for traditional and cloud-native applications; HPE Scale Up Servers product lines for critical applications, including large enterprise software applications and data analytics platforms; HPE Edgeline servers; HPE Cray EX; HPE Cray XD (formerly known as HPE Apollo); and HPE NonStop. Server offerings also include operational and support services sold with systems and as standalone services.
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Hybrid Cloud. This segment offers a wide variety of cloud-native and hybrid solutions across storage, private cloud and the infrastructure software-as-a-service space. Storage includes data storage and data management offerings with the HPE Alletra Storage portfolio; unstructured data solutions and analytics for AI; data protection and archiving; and storage networking. It also includes AIOps-driven intelligence with HPE InfoSight and HPE CloudPhysics. In private cloud, our HPE GreenLake offerings include new cloud-native offerings and capabilities for virtual machines, containers, and bare metal; a full suite of private cloud offerings that enable customers to self-manage or choose a fully managed experience; and a portfolio of world-class AI infrastructure delivered as-a-service. This segment also provides self-service private cloud on-demand with HPE GreenLake for Private Cloud Business Edition. Infrastructure software includes monitoring and observability for day two operations and beyond through our acquisition of OpsRamp and unified data access through our HPE Ezmeral Data Fabric and analytics suite, which helps move and transform data for use in AI and other applications. Hybrid Cloud segment also includes data lifecycle management and protection through our suite of offerings, including Zerto Disaster Recovery.
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Intelligent Edge. Our Intelligent Edge business offers wired and wireless local area networks, campus, branch, and data center switching, software-defined wide-area networks, private and public cellular network software, network security, and associated services that enable secure connectivity for businesses of any size. The HPE Aruba Networking product portfolio includes hardware products such as Wi-Fi access points, switches, and gateways. The HPE Aruba Networking software and services portfolio includes cloud-based management, network management, network access control, software-defined wide-area networking, network security, analytics and assurance, location services software, private and public cellular core software, and professional and support services, as well as as-a-service and consumption models through the HPE GreenLake edge-to-cloud platform for the Intelligent Edge portfolio of products. Intelligent Edge offerings are consolidated in the edge service platform, which takes a cloud-native approach that provides customers with a unified framework to
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Financial Services. HPE's 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. Financial Services also supports financial solutions for on-premise flexible consumption models, such as our HPE GreenLake edge-to-cloud platform.
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Corporate Investments and Other. This segment includes (i) the Advisory and Professional Services business, which primarily offers consultative-led services, HPE and partner technology expertise and advice, implementation services, and complex solution engagement capabilities; (ii) the Communications and Media Solutions business, which primarily offers software and related services to the telecommunications industry; and (iii) Hewlett Packard Labs, which is responsible for research and development.
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For the fiscal years ended October 31,
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|||||||||
In millions
|
2023
|
2022
|
2021
|
||||||
Net Earnings
|
$ 2,025
|
$868
|
$3,427
|
||||||
Provision for taxes
|
205
|
8
|
160
|
||||||
Earnings from equity interests
|
(245)
|
(215)
|
(180)
|
||||||
Litigation judgement
|
-
|
-
|
(2,351)
|
||||||
Interest and other, net
|
104
|
121
|
76
|
||||||
Depreciation
|
2,328
|
2,187
|
2,243
|
||||||
Amortization of intangible assets
|
288
|
293
|
354
|
||||||
Amortization of initial direct costs
|
-
|
4
|
8
|
||||||
Impairment of goodwill
|
-
|
905
|
-
|
||||||
Transformation costs
|
283
|
473
|
930
|
||||||
Disaster (recovery) charges
|
(12)
|
159
|
16
|
||||||
Stock based compensation expense
|
428
|
391
|
372
|
||||||
Acquisition, disposition and other related charges
|
69
|
19
|
36
|
||||||
Adjusted EBITDA
|
$ 5,473
|
$ 5,213
|
$5,091
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In millions
|
For the nine
months
ended
July 31,
2024
|
For the
year ended
October
31, 2023
|
For the nine
months
ended
July 31,
2023
|
Last twelve
months
(LTM)
ended
July 31, 2024
|
||||||||
Net Earnings
|
$ 1,213
|
$ 2,025
|
$ 1,383
|
$ 1,855
|
||||||||
Provision for taxes
|
323
|
205
|
298
|
230
|
||||||||
Earnings from equity interests
|
(161)
|
(245)
|
(180)
|
(226)
|
||||||||
Interest and other, net
|
122
|
104
|
81
|
145
|
||||||||
Depreciation
|
1,726
|
2,328
|
1,745
|
2,309
|
||||||||
Amortization of intangible assets
|
198
|
288
|
216
|
270
|
||||||||
Transformation costs
|
67
|
283
|
227
|
123
|
||||||||
Disaster (recovery) charges
|
(34)
|
(12)
|
2
|
(48)
|
||||||||
Stock based compensation expense
|
341
|
428
|
357
|
412
|
||||||||
Divestiture related exit costs
|
35
|
-
|
-
|
35
|
||||||||
Acquisition, disposition and other related charges
|
126
|
69
|
51
|
144
|
||||||||
Adjusted EBITDA
|
$ 3,956
|
$ 5,473
|
$ 4,180
|
$ 5,249
|
||||||||
In millions
|
For the six
months
ended
June 30,
2024
|
For the year
ended
December 31,
2023
|
For the six
months
ended
June 30,
2023
|
Last twelve
months
(LTM) ended
June 30,
2024
|
||||||||
Net Earnings
|
$33
|
$310
|
$110
|
$ 233
|
||||||||
Provision for taxes
|
(16)
|
30
|
35
|
(21)
|
||||||||
Earnings from equity interests(1)
|
4
|
10
|
4
|
10
|
||||||||
Interest and other, net(1)
|
10
|
121
|
108
|
23
|
||||||||
Depreciation(1)
|
54
|
127
|
65
|
116
|
||||||||
Amortization of intangible assets(1)
|
28
|
68
|
34
|
62
|
||||||||
Transformation costs(1)
|
6
|
98
|
16
|
88
|
||||||||
Disaster (recovery) charges
|
-
|
-
|
-
|
-
|
||||||||
Stock based compensation expense(1)
|
145
|
286
|
125
|
306
|
||||||||
Divestiture related exit costs
|
-
|
-
|
-
|
-
|
||||||||
Acquisition, disposition and other related charges(1)
|
37
|
-
|
-
|
37
|
||||||||
Other(1)
|
4
|
16
|
12
|
8
|
||||||||
Adjusted EBITDA
|
$ 305
|
$ 1,066
|
$ 509
|
$ 862
|
||||||||
(1)
|
Standalone financial data of Juniper has been reclassified to enhance comparability to the corresponding financial data of HPE.
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In millions
|
LTM(1)
|
||
HPE Adjusted EBITDA
|
$ 5,249
|
||
Juniper Adjusted EBITDA
|
862
|
||
Combined Company Adjusted EBITDA (excl. synergies)
|
$6,111
|
||
Expected Synergies(2)
|
450
|
||
Adjusted EBITDA (incl. synergies)(2)
|
$ 6,561
|
||
(1)
|
In the case of HPE, LTM represents the twelve-month period ended July 31, 2024. In the case of Juniper, LTM represents the twelve-month period ended June 30, 2024.
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(2)
|
This combined company financial information includes the realization of certain annual run-rate cost savings from operating efficiencies, synergies or other restructuring activities which might result within three years after the Merger. The anticipated benefits and cost savings of the Merger may not be realized fully or at all, may take longer to realize than expected or could have other adverse effects that HPE and Juniper do not currently foresee. Some of the assumptions that HPE and Juniper have made, such as the achievement of these synergies, may not be realized. Therefore, actual outcomes and results may differ materially from the synergies presented herein.
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the declared dividend, divided by
|
•
|
$5.64, which amount represents approximately 35% of the Initial Price (as defined below) (subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each Fixed Conversion Rate, as described below) (such dollar amount, as adjusted, the "Floor Price").
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the amount of such undeclared, accumulated and unpaid dividends per share of the Mandatory Convertible Preferred Stock (such amount, the "Additional Conversion Amount"), divided by
|
•
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the greater of (x) the Floor Price and (y) 97% of the Average Price (calculated using September 1, 2027 as the applicable dividend payment date).
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Assumed Applicable Market
Value of our
common stock
|
Assumed Conversion Rate
(number
of shares of our common
stock to be
received upon mandatory
conversion
of each share of the
Mandatory
Convertible Preferred Stock)
|
||
Greater than the Threshold Appreciation Price
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2.5352 shares of common stock
|
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Equal to or less than the Threshold Appreciation Price but greater than or equal to the Initial Price
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Between 2.5352 and 3.1056 shares of common stock, determined by dividing $50.00 by the Applicable Market Value of our common stock
|
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Less than the Initial Price
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3.1056 shares of common stock
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the aggregate amount of undeclared, accumulated and unpaid dividends per share of the Mandatory Convertible Preferred Stock for all such prior full dividend periods (such amount, the "Early Conversion Additional Amount"), divided by
|
•
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the greater of (x) the Floor Price and (y) the Average VWAP per share of our common stock over the 20 consecutive Trading Day period commencing on, and including, the 21st Scheduled Trading Day immediately preceding the Early Conversion Date (such Average VWAP, the "Early Conversion Average Price").
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1.
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amend or alter the provisions of our certificate of incorporation so as to authorize or create, or increase the authorized number of, any class or series of Senior Stock (as defined below);
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2.
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amend, alter or repeal the provisions of our certificate of incorporation (the "Certificate of Incorporation") or the certificate of designations governing the terms of the Mandatory Convertible Preferred Stock (the "Certificate of Designations") so as to materially and adversely affect the special rights, preferences or voting powers of the Mandatory Convertible Preferred Stock; or
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3.
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consummate a binding share exchange or reclassification involving the shares of the Mandatory Convertible Preferred Stock, a merger or consolidation of us with another entity or a conversion of the Company or domestication in or transfer to a foreign jurisdiction, unless, in each case: (i) the shares of the Mandatory Convertible Preferred Stock remain outstanding following the consummation of such binding share exchange, reclassification, merger or consolidation or, in the case of (x) any such merger or consolidation with respect to which we are not the surviving or resulting entity (or in which the Mandatory Convertible Preferred Stock is otherwise exchanged or reclassified) or (y) any such conversion, domestication or transfer, are converted or reclassified into or exchanged for preference securities of the surviving or resulting entity, of the converted, domesticated or transferred entity or, in either case, such entity's ultimate parent; and (ii) the shares of the Mandatory Convertible Preferred Stock that remain outstanding or such shares of preference securities, as the case may be, have such rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences and voting powers, taken as a whole, of the Mandatory Convertible Preferred Stock immediately prior to the consummation of such transaction, in each case, subject to certain exceptions.
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•
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senior to (i) our common stock, (ii) our Series B Junior Participating Redeemable Preferred Stock (as defined in "Description of Mandatory Convertible Preferred Stock-Ranking") and
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on parity with any class or series of our capital stock established after the Initial Issue Date the terms of which expressly provide that such class or series will rank on parity with the Mandatory Convertible Preferred Stock as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as "Parity Stock");
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•
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junior to each class or series of our capital stock established after the Initial Issue Date, the terms of which expressly provide that such class or series will rank senior to the Mandatory Convertible Preferred Stock as to dividend rights or distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as "Senior Stock"); and
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•
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junior to our existing and future indebtedness and other liabilities.
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•
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making it more difficult for us to satisfy our obligations;
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•
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increasing our vulnerability to adverse economic or industry conditions;
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•
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requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
|
•
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increasing our vulnerability to, and limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate;
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•
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exposing us to the risk of increased interest rates as our outstanding borrowings under our revolving credit facility are subject to variable rates of interest;
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•
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placing us at a competitive disadvantage compared to our competitors that have less debt; and
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•
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limiting our ability to borrow additional funds.
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preserving customer and other important relationships of Juniper and attracting new business and operational relationships;
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•
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integrating financial forecasting and controls, procedures and reporting cycles;
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•
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consolidating and integrating corporate, information technology, finance and administrative infrastructures;
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•
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coordinating sales and marketing efforts to effectively position our capabilities;
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•
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coordinating and integrating operations, including in countries in which we have not previously operated; and
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•
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integrating employees and related human capital management systems and benefits, maintaining employee morale and retaining key employees.
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a)
|
Juniper shareholders will receive $40.00 per share in cash upon the completion of the transaction, representing an equity value of approximately $13.3 billion.
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b)
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Consideration for the Merger will be funded in part by a portion of the proceeds from borrowings of approximately $9.5 billion, which is assumed for the purposes of this unaudited pro forma condensed combined financial information to be comprised of $6.5 billion, aggregate principal amount of senior unsecured notes, (the "Senior Notes") and a $3.0 billion three-year term loan, with a consortium of lenders (the "Term Loan", and together with the Senior Notes the "Debt Financing"). The Senior Notes are assumed to include four series that each pay a fixed rate of interest and mature at various tenors ranging from five to thirty years. The Term Loan interest rate is indexed to the Secured Overnight Financing Rate ("SOFR") plus an Applicable Rate, (i.e., subject to the credit rating of the Company), plus 0.10% of a credit spread adjustment. The Debt Financing will ultimately be utilized to fund the Merger Consideration and repay all principal, interest and fees outstanding under Juniper's current revolving credit arrangement (entered into through its credit agreement dated June 15, 2023).
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c)
|
Consideration for the Merger is also expected to be funded by HPE's issuance of Mandatory Convertible Preferred Stock expected to result in aggregate gross proceeds of $1.5 billion, (the "Equity Financing"). The par value of these shares is assumed to be $0.01 and cumulative dividends will accrue at an estimated annual coupon of 8.0% on the liquidation preference of $50.00 per share. The shares are not expected to be redeemable, unless the Merger does not close. Further, the preferred shareholders have no voting rights unless the Company defaults on its obligation to pay dividends.
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d)
|
HPE will also be utilizing all of the cash consideration of the $2.1 billion ($2.0 billion, net of cash tax) in gross proceeds generated from the sale of its 30% stake in H3C Technologies Co., Limited ("H3C") to fund the Merger. The H3C sale was executed, pursuant to an Amended and Restated Put Share Agreement, dated May 24, 2024, among Unisplendour International Technology Limited and certain wholly owned subsidiaries of the Company. The sale of the 30% stake in H3C closed on September 4, 2024.
|
e)
|
In connection with the Merger, each of the outstanding and unvested equity awards of Juniper which is comprised of restricted stock units ("RSUs"), restricted stock awards ("RSAs"), performance stock awards ("PSAs") and stock options (collectively referred to as "Juniper equity awards") which had been previously issued to its employees, will be converted into HPE equity awards (the "new HPE equity awards"), utilizing the Exchange Ratio (as defined below). The terms and conditions of the new HPE equity awards are substantially similar to those of Juniper's equity awards (other than certain performance vesting conditions).
|
TABLE OF CONTENTS
•
|
For the Company, the unaudited condensed consolidated financial statements as of July 31, 2024.
|
•
|
For Juniper, the unaudited condensed consolidated financial statements as of June 30, 2024.
|
•
|
For the Company, the audited consolidated financial statements for the year ended October 31, 2023.
|
•
|
For Juniper, the audited consolidated financial statements for the year ended December 31, 2023.
|
•
|
For the Company, the unaudited condensed consolidated financial statements for the nine months ended July 31, 2024.
|
•
|
For Juniper, the unaudited condensed consolidated statement of operations for the six months ended June 30, 2024, and three months ended December 31, 2023, which has been calculated by deducting Juniper's results for the nine months ended September 30, 2023, from its results for the fiscal year ended December 31, 2023. The historical results of operations (i.e., sales, income and costs) for Juniper pertaining to the three months ended December 31, 2023, have been included in the unaudited pro forma condensed combined statement of operations for both the twelve months ended October 31, 2023, and the nine months ended June 30, 2024.
|
TABLE OF CONTENTS
HPE
Historical
(as of
July 31,
2024)
|
Juniper
Historical
(as of
June 30,
2024),
As
Adjusted
(Note 2)
|
Transaction
Accounting
Adjustments -
Merger
(Note 4 & 5)
|
Notes
|
Transaction
Accounting
Adjustments
- Debt
Financing
and Equity
Financing
(Note 6)
|
Notes
|
Transaction
Accounting
Adjustments -
H3C
Stake Sale
(Note 7)
|
Notes
|
Pro Forma
Combined
|
|||||||||||||||||||
ASSETS
|
|||||||||||||||||||||||||||
Current Assets:
|
|||||||||||||||||||||||||||
Cash and cash equivalents
|
$3,642
|
$935
|
$(13,079)
|
4(g) 5(e)
|
$10,924
|
6(a) 6(b)
|
$2,023
|
7
|
$4,445
|
||||||||||||||||||
Accounts receivable, net of allowances
|
3,857
|
879
|
-
|
-
|
-
|
4,736
|
|||||||||||||||||||||
Financing receivables, net of allowances
|
3,705
|
-
|
-
|
-
|
-
|
3,705
|
|||||||||||||||||||||
Inventory
|
7,679
|
1,012
|
555
|
4(a)
|
-
|
-
|
9,246
|
||||||||||||||||||||
Assets held for sale
|
6
|
-
|
-
|
-
|
-
|
6
|
|||||||||||||||||||||
Other current assets
|
3,516
|
705
|
-
|
-
|
-
|
4,221
|
|||||||||||||||||||||
Total current assets
|
$22,405
|
$3,531
|
$(12,524)
|
$10,924
|
$2,023
|
$26,359
|
|||||||||||||||||||||
Property, plant and equipment, net
|
5,738
|
685
|
226
|
4(b)
|
-
|
-
|
6,649
|
||||||||||||||||||||
Long-term financing receivables and other assets
|
11,926
|
1,415
|
(1,081)
|
4(f) 4(h)
|
-
|
-
|
12,260
|
||||||||||||||||||||
Investments in equity interests
|
2,318
|
-
|
-
|
-
|
(1,419)
|
7
|
899
|
||||||||||||||||||||
Goodwill
|
17,988
|
3,734
|
2,549
|
4(e)
|
-
|
-
|
24,271
|
||||||||||||||||||||
Intangible assets, net
|
477
|
64
|
6,536
|
4(c)
|
-
|
-
|
7,077
|
||||||||||||||||||||
Total assets
|
$60,852
|
$9,429
|
$(4,294)
|
$10,924
|
$604
|
$77,515
|
|||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||||||||||||||||||||||
Current Liabilities:
|
|||||||||||||||||||||||||||
Notes payable and short-term borrowings
|
3,864
|
-
|
-
|
150
|
6(a)
|
-
|
4,014
|
||||||||||||||||||||
Accounts payable
|
10,085
|
268
|
-
|
-
|
-
|
10,353
|
|||||||||||||||||||||
Employee compensation and benefits
|
1,166
|
264
|
-
|
-
|
-
|
1,430
|
|||||||||||||||||||||
Taxes on earnings
|
150
|
108
|
-
|
-
|
90
|
7
|
348
|
||||||||||||||||||||
Deferred revenue
|
3,803
|
1,148
|
-
|
-
|
-
|
4,951
|
|||||||||||||||||||||
Accrued restructuring
|
86
|
9
|
-
|
-
|
-
|
95
|
|||||||||||||||||||||
Liabilities held for sale
|
59
|
-
|
-
|
-
|
-
|
59
|
|||||||||||||||||||||
Other accrued liabilities
|
4,652
|
247
|
(2)
|
4(f)
|
-
|
-
|
4,897
|
||||||||||||||||||||
Total current liabilities
|
$23,865
|
$2,044
|
$(2)
|
$150
|
$90
|
$26,147
|
|||||||||||||||||||||
Long-term debt
|
7,939
|
1,607
|
-
|
9,311
|
6(a)
|
-
|
18,857
|
||||||||||||||||||||
Other non-current liabilities
|
6,914
|
1,276
|
(12)
|
4(f)
|
-
|
-
|
8,178
|
||||||||||||||||||||
Commitments and Contingencies
|
|||||||||||||||||||||||||||
Stockholders' Equity
|
|||||||||||||||||||||||||||
TABLE OF CONTENTS
HPE
Historical
(as of
July 31,
2024)
|
Juniper
Historical
(as of
June 30,
2024),
As
Adjusted
(Note 2)
|
Transaction
Accounting
Adjustments -
Merger
(Note 4 & 5)
|
Notes
|
Transaction
Accounting
Adjustments
- Debt
Financing
and Equity
Financing
(Note 6)
|
Notes
|
Transaction
Accounting
Adjustments -
H3C
Stake Sale
(Note 7)
|
Notes
|
Pro Forma
Combined
|
|||||||||||||||||||
HPE stockholders' Equity:
|
|||||||||||||||||||||||||||
Mandatory convertible preferred stock
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Common stock
|
13
|
-
|
-
|
-
|
-
|
13
|
|||||||||||||||||||||
Additional paid-in capital
|
28,361
|
6,766
|
(6,480)
|
4(d) 5(e)
|
1,463
|
6(b)
|
30,110
|
||||||||||||||||||||
Accumulated deficit
|
(3,240)
|
(2,273)
|
2,209
|
4(d) 5(d)
|
-
|
514
|
7
|
(2,790)
|
|||||||||||||||||||
Accumulated other comprehensive loss
|
(3,057)
|
9
|
(9)
|
4(d)
|
-
|
-
|
(3,057)
|
||||||||||||||||||||
Total HPE stockholders' equity
|
$22,077
|
$4,502
|
$(4,280)
|
$1,463
|
$514
|
$24,276
|
|||||||||||||||||||||
Non-controlling interests
|
57
|
-
|
-
|
-
|
-
|
57
|
|||||||||||||||||||||
Total stockholders' equity
|
$22,134
|
$4,502
|
$(4,280)
|
1,463
|
$514
|
$24,333
|
|||||||||||||||||||||
Total liabilities and stockholders' equity
|
$60,852
|
$9,429
|
$(4,294)
|
$10,924
|
$604
|
$77,515
|
|||||||||||||||||||||
TABLE OF CONTENTS
HPE
Historical
(Fiscal
Year
Ended
October 31,
2023)
|
Juniper
Historical
(Fiscal
Year
Ended
December 31,
2023),
As
Adjusted
(Note 2)
|
Transaction
Accounting
Adjustments -
Merger
(Note 5)
|
Notes
|
Transaction
Accounting
Adjustments -
Debt
Financing
(Note 6)
|
Notes
|
Transaction
Accounting
Adjustments -
H3C Stake
Sale
(Note 7)
|
Notes
|
Pro Forma
Combined
|
|||||||||||||||||||
Net Revenue:
|
|||||||||||||||||||||||||||
Products
|
$18,100
|
$3,633
|
$-
|
-
|
-
|
$21,733
|
|||||||||||||||||||||
Services
|
10,488
|
1,932
|
-
|
12,420
|
|||||||||||||||||||||||
Financing income
|
547
|
-
|
-
|
-
|
-
|
547
|
|||||||||||||||||||||
Total net revenue
|
29,135
|
5,565
|
-
|
-
|
-
|
34,700
|
|||||||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||||||||
Cost of products
|
11,958
|
1,792
|
527
|
5(a) 5(b) 5(e)
|
-
|
-
|
14,277
|
||||||||||||||||||||
Cost of services
|
6,555
|
618
|
(16)
|
5(b) 5(e)
|
-
|
-
|
7,157
|
||||||||||||||||||||
Financing cost
|
383
|
-
|
-
|
-
|
-
|
383
|
|||||||||||||||||||||
Research and development
|
2,349
|
1,083
|
(6)
|
5(b) 5(e)
|
-
|
-
|
3,426
|
||||||||||||||||||||
Selling, general and administrative
|
5,160
|
1,435
|
(11)
|
5(b) 5(e)
|
-
|
-
|
6,584
|
||||||||||||||||||||
Amortization of intangible assets
|
288
|
69
|
799
|
5(c)
|
-
|
-
|
1,156
|
||||||||||||||||||||
Transformation costs
|
283
|
98
|
-
|
-
|
-
|
381
|
|||||||||||||||||||||
Disaster charges
|
1
|
-
|
-
|
-
|
-
|
1
|
|||||||||||||||||||||
Acquisition, disposition, and other related charges
|
69
|
-
|
64
|
5(d)
|
-
|
-
|
133
|
||||||||||||||||||||
Total costs and expenses
|
27,046
|
5,095
|
1,357
|
-
|
-
|
33,498
|
|||||||||||||||||||||
Earnings from operations
|
2,089
|
470
|
(1,357)
|
-
|
-
|
1,202
|
|||||||||||||||||||||
Interest and other, net
|
(156)
|
(121)
|
-
|
(538)
|
6(a)
|
-
|
(815)
|
||||||||||||||||||||
Tax indemnification and other adjustments
|
55
|
55
|
|||||||||||||||||||||||||
Non-service net periodic benefit (cost) credit
|
(3)
|
-
|
-
|
(3)
|
|||||||||||||||||||||||
Gain from sale of equity interests
|
-
|
-
|
-
|
-
|
724
|
7
|
724
|
||||||||||||||||||||
Earnings (Loss) from equity interests
|
245
|
(10)
|
-
|
-
|
(150)
|
7
|
85
|
||||||||||||||||||||
Earnings before provision for taxes
|
2,230
|
339
|
(1,357)
|
(538)
|
574
|
1,248
|
|||||||||||||||||||||
Provision for taxes
|
(205)
|
(29)
|
229
|
5(f)
|
118
|
5(f)
|
(183)
|
7
|
(70)
|
||||||||||||||||||
Net earnings after taxes
|
2,025
|
310
|
(1,128)
|
(420)
|
391
|
1,178
|
|||||||||||||||||||||
Dividends on mandatory convertible preferred Stock
|
-
|
-
|
-
|
(120)
|
6(b)
|
-
|
(120)
|
||||||||||||||||||||
Net earnings available to common shareholders
|
$2,025
|
$310
|
$(1,128)
|
$(540)
|
$391
|
$1,058
|
|||||||||||||||||||||
TABLE OF CONTENTS
HPE
Historical
(Fiscal
Year
Ended
October 31,
2023)
|
Juniper
Historical
(Fiscal
Year
Ended
December 31,
2023),
As
Adjusted
(Note 2)
|
Transaction
Accounting
Adjustments -
Merger
(Note 5)
|
Notes
|
Transaction
Accounting
Adjustments -
Debt
Financing
(Note 6)
|
Notes
|
Transaction
Accounting
Adjustments -
H3C Stake
Sale
(Note 7)
|
Notes
|
Pro Forma
Combined
|
|||||||||||||||||||
Net Earnings Per Share:
|
|||||||||||||||||||||||||||
Basic
|
$1.56
|
$0.81
|
|||||||||||||||||||||||||
Diluted
|
$1.54
|
$0.82
|
|||||||||||||||||||||||||
Weighted-average Shares Used to Compute Net Earnings Per Share:
|
|||||||||||||||||||||||||||
Basic
|
1,299
|
1,299
|
|||||||||||||||||||||||||
Diluted
|
1,316
|
1,434
|
|||||||||||||||||||||||||
TABLE OF CONTENTS
HPE
Historical
(Nine
Months
Ended
July 31,
2024)
|
Juniper
Historical
(Nine
Months
Ended
June 30,
2024),
As
Adjusted
(Note 2)
|
Transaction
Accounting
Adjustments -
Merger
(Note 5)
|
Notes
|
Transaction
Accounting
Adjustments -
Debt
Financing
(Note 6)
|
Notes
|
Transaction
Accounting
Adjustments -
H3C
Stake Sale
(Note 7)
|
Notes
|
Pro Forma
Combined
|
|||||||||||||||||||
Net Revenue:
|
|||||||||||||||||||||||||||
Products
|
$13,134
|
$2,192
|
$-
|
$-
|
$-
|
$15,326
|
|||||||||||||||||||||
Services
|
8,049
|
1,512
|
-
|
-
|
-
|
9,561
|
|||||||||||||||||||||
Financing income
|
486
|
-
|
-
|
-
|
-
|
486
|
|||||||||||||||||||||
Total net revenue
|
21,669
|
3,704
|
-
|
-
|
-
|
25,373
|
|||||||||||||||||||||
Costs and Expenses:
|
|||||||||||||||||||||||||||
Cost of products
|
8,998
|
1,100
|
(19)
|
5(b) 5(e)
|
-
|
-
|
10,079
|
||||||||||||||||||||
Cost of services
|
5,032
|
463
|
(14)
|
5(b) 5(e)
|
-
|
-
|
5,481
|
||||||||||||||||||||
Financing cost
|
367
|
-
|
-
|
-
|
-
|
367
|
|||||||||||||||||||||
Research and development
|
1,719
|
818
|
(27)
|
5(b) 5(e)
|
-
|
-
|
2,510
|
||||||||||||||||||||
Selling, general and administrative
|
3,660
|
1,059
|
(29)
|
5(b) 5(e)
|
-
|
-
|
4,690
|
||||||||||||||||||||
Amortization of intangible assets
|
198
|
45
|
606
|
5(c)
|
-
|
-
|
849
|
||||||||||||||||||||
Disaster Charges
|
5
|
-
|
-
|
-
|
5
|
||||||||||||||||||||||
Transformation costs
|
67
|
25
|
-
|
-
|
-
|
92
|
|||||||||||||||||||||
Acquisition, disposition, and other related charges
|
126
|
37
|
-
|
-
|
-
|
163
|
|||||||||||||||||||||
Total costs and expenses
|
20,172
|
3,547
|
517
|
-
|
-
|
24,236
|
|||||||||||||||||||||
Earnings from operations
|
1,497
|
157
|
(517)
|
-
|
-
|
1,137
|
|||||||||||||||||||||
Interest and other, net
|
(122)
|
(18)
|
-
|
(397)
|
6(a)
|
-
|
(537)
|
||||||||||||||||||||
Earnings (Loss) from equity interests
|
161
|
(8)
|
-
|
-
|
(99)
|
7
|
54
|
||||||||||||||||||||
Earnings before provision for taxes
|
1,536
|
131
|
(517)
|
(397)
|
(99)
|
654
|
|||||||||||||||||||||
(Provision) benefit for taxes
|
(323)
|
27
|
56
|
5(f)
|
87
|
5(f)
|
14
|
7
|
(139)
|
||||||||||||||||||
Net earnings after taxes
|
1,213
|
158
|
(461)
|
(310)
|
(85)
|
515
|
|||||||||||||||||||||
Dividends on mandatory convertible preferred stock
|
-
|
-
|
-
|
(90)
|
6(b)
|
-
|
(90)
|
||||||||||||||||||||
Net earnings available to common shareholders
|
$1,213
|
$158
|
$(461)
|
$(400)
|
$(85)
|
$425
|
|||||||||||||||||||||
Net Earnings Per Share:
|
|||||||||||||||||||||||||||
Basic
|
$0.93
|
$0.32
|
|||||||||||||||||||||||||
Diluted
|
$0.92
|
$0.36
|
|||||||||||||||||||||||||
Weighted-average Shares Used to Compute Net Earnings Per Share:
|
|||||||||||||||||||||||||||
Basic
|
1,308
|
1,308
|
|||||||||||||||||||||||||
Diluted
|
1,325
|
1,440
|
|||||||||||||||||||||||||
TABLE OF CONTENTS
1.
|
Basis of Pro Forma Presentation
|
2.
|
Juniper Reclassification Adjustments
|
TABLE OF CONTENTS
TABLE OF CONTENTS
Juniper
Historical1
|
Reclassification
Adjustments
|
Notes
|
Juniper Historical,
As Adjusted
|
|||||||||
ASSETS
|
||||||||||||
Current Assets:
|
||||||||||||
Cash and cash equivalents
|
$935
|
$-
|
$935
|
|||||||||
Short-term investments
|
187
|
(187)
|
2(a)
|
-
|
||||||||
Accounts receivable, net of allowances
|
879
|
-
|
879
|
|||||||||
Inventory
|
926
|
86
|
2(e)
|
1,012
|
||||||||
Prepaid expenses and other current assets
|
518
|
(518)
|
2(b)
|
-
|
||||||||
Other current assets
|
-
|
705
|
2(a)
2(b)
|
705
|
||||||||
Total current assets
|
$3,445
|
$86
|
$3,531
|
|||||||||
Property, plant and equipment, net
|
685
|
-
|
685
|
|||||||||
Operating lease assets
|
147
|
(147)
|
2(c)
|
-
|
||||||||
Long-term financing receivables and other assets
|
-
|
1,415
|
2(c)
2(d)
2(e)
|
1,415
|
||||||||
Long-term investments
|
309
|
(309)
|
2(d)
|
-
|
||||||||
Goodwill
|
3,734
|
-
|
3,734
|
|||||||||
Intangible assets, net
|
64
|
-
|
64
|
|||||||||
Other long-term assets
|
1,045
|
(1,045)
|
2(e)
|
-
|
||||||||
Total assets
|
$9,429
|
$-
|
$9,429
|
|||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||
Current Liabilities:
|
||||||||||||
Accounts payable
|
268
|
-
|
268
|
|||||||||
Employee compensation and benefits
|
-
|
264
|
2(f)
|
264
|
||||||||
Accrued compensation
|
264
|
(264)
|
2(f)
|
-
|
||||||||
Taxes on earnings
|
-
|
108
|
2(l)
|
108
|
||||||||
Deferred revenue
|
1,148
|
-
|
1,148
|
|||||||||
Accrued restructuring
|
-
|
9
|
2(g)
|
9
|
||||||||
Other accrued liabilities
|
364
|
(117)
|
2(g)
2(l)
|
247
|
||||||||
Total current liabilities
|
$2,044
|
$-
|
$2,044
|
|||||||||
Long-term debt
|
1,607
|
-
|
1,607
|
|||||||||
Long-term deferred revenue
|
940
|
(940)
|
2(h)
|
-
|
||||||||
Long-term income taxes payable
|
75
|
(75)
|
2(i)
|
-
|
||||||||
Long-term operating lease liabilities
|
120
|
(120)
|
2(j)
|
-
|
||||||||
Other long-term liabilities
|
141
|
(141)
|
2(k)
|
-
|
||||||||
Other non-current liabilities
|
-
|
1,276
|
2(h)
2(i)
2(j)
2(k)
|
1,276
|
||||||||
Total liabilities
|
$4,927
|
$-
|
$ 4,927
|
|||||||||
Commitments and Contingencies
|
-
|
|||||||||||
Stockholders' Equity
|
-
|
|||||||||||
Common stock
|
-
|
-
|
-
|
|||||||||
Additional paid-in capital
|
6,766
|
-
|
6,766
|
|||||||||
1
|
The nine-month period ended June 30, 2024, is equal to the six months period ended June 30, 2024, plus the three-month period resulting from deducting the results of the nine months period ended September 30, 2023, from the results for the year ended December 31, 2023.
|
TABLE OF CONTENTS
Juniper
Historical1
|
Reclassification
Adjustments
|
Notes
|
Juniper Historical,
As Adjusted
|
|||||||||
Accumulated deficit
|
(2,273)
|
-
|
(2,273)
|
|||||||||
Accumulated other comprehensive income
|
9
|
-
|
9
|
|||||||||
Total stockholders' equity
|
$4,502
|
$-
|
$4,502
|
|||||||||
Total liabilities and stockholders' equity
|
$9,429
|
$-
|
$9,429
|
|||||||||
2(a)
|
Represents the reclassification of Juniper's "Short-term investments," amounts to "Other current assets" to conform to HPE's historical presentation.
|
2(b)
|
Represents the reclassification of Juniper's "Prepaid expenses and other current assets" amounts, which includes deposits, prepaid expenses, and other current assets to "Other current assets" to conform to HPE's historical presentation.
|
2(c)
|
Represents the reclassification of Juniper's "Operating lease assets" amounts to "Long-term financing receivables and other assets" to conform to HPE's historical presentation.
|
2(d)
|
Represents the reclassification of Juniper's "Long-term investments" amounts to "Long-term financing receivables and other assets" to conform to HPE's historical presentation.
|
2(e)
|
Represents the reclassification of Juniper's "Other long-term assets" amounts, which includes long-term deferred income taxes, equity investments, long-term restricted investments, and long-term restricted cash, to "Long-term financing receivables and other assets". Further, Juniper's long-term inventory has been reclassified to current portion of "Inventory" to conform to HPE's historical presentation.
|
2(f)
|
Represents the reclassification of Juniper's "Accrued compensation" amounts to "Employee compensation and benefits" to conform to HPE's historical presentation.
|
2(g)
|
Represents the reclassification of Juniper's amounts related to restructuring accruals that are sitting within their "Other accrued liabilities" to "Accrued restructuring" to conform to HPE's historical presentation.
|
2(h)
|
Represents the reclassification of Juniper's "Long-term deferred revenue" amounts to "Other non-current liabilities" to conform to HPE's historical presentation.
|
2(i)
|
Represents the reclassification of Juniper's "Long-term income taxes payable" amounts to "Other non-current liabilities" to conform to HPE's historical presentation.
|
2(j)
|
Represents the reclassification of Juniper's "Long-term operating lease liabilities" amounts to "Other non-current liabilities" to conform to HPE's historical presentation.
|
2(k)
|
Represents the reclassification of Juniper's "Other long-term liabilities" amounts, which includes derivatives, deferred compensation, and tax items to "Other non-current liabilities" to conform to HPE's historical presentation.
|
2(l)
|
Represents the reclassification of Juniper's amounts related to taxes on earnings that are sitting within "Other accrued liabilities" amounts to "Taxes on earnings" to conform to HPE's historical presentation.
|
TABLE OF CONTENTS
Juniper
Historical
|
Reclassification
Adjustments
|
Notes
|
Juniper
Historical,
As Adjusted
|
|||||||||
Net Revenue:
|
||||||||||||
Products
|
$3,633
|
$-
|
$3,633
|
|||||||||
Services
|
1,932
|
-
|
1,932
|
|||||||||
Total net revenue
|
5,565
|
-
|
5,565
|
|||||||||
Costs and Expenses:
|
||||||||||||
Cost of products
|
1,782
|
10
|
2(o)
2(t)
|
1,792
|
||||||||
Cost of services
|
581
|
37
|
2(t)
|
618
|
||||||||
Total cost of revenues
|
2,363
|
47
|
2,410
|
|||||||||
Gross margin
|
3,202
|
(47)
|
3,155
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
1,144
|
(61)
|
2(t)
|
1,083
|
||||||||
Selling, general and administrative
|
-
|
1,435
|
2(m)
2(t)
|
1,435
|
||||||||
Sales and marketing
|
1,234
|
(1,234)
|
2(m)
2(o)
|
-
|
||||||||
General and administrative
|
256
|
(256)
|
2(m)
2(o)
|
-
|
||||||||
Restructuring charges
|
98
|
(98)
|
2(n)
|
-
|
||||||||
Amortization of intangible assets
|
-
|
69
|
2(o)
|
69
|
||||||||
Transformation costs
|
-
|
98
|
2(n)
|
98
|
||||||||
Total operating expenses
|
2,732
|
(47)
|
2,685
|
|||||||||
Operating income
|
470
|
-
|
470
|
|||||||||
(Loss) Gain on privately-held investments, net
|
(97)
|
97
|
2(p)
|
-
|
||||||||
Other expense, net
|
(24)
|
24
|
2(q)
|
-
|
||||||||
Earnings from operations
|
349
|
121
|
470
|
|||||||||
Interest and other, net
|
-
|
(121)
|
2(p)
2(q)
|
(121)
|
||||||||
Loss from equity interests
|
-
|
(10)
|
2(r)
|
(10)
|
||||||||
Earnings before provision for taxes
|
349
|
(10)
|
339
|
|||||||||
Provision for taxes
|
(29)
|
-
|
(29)
|
|||||||||
Loss from equity method investment, net of tax
|
(10)
|
10
|
2(r)
|
-
|
||||||||
Net earnings
|
$310
|
$-
|
$310
|
|||||||||
TABLE OF CONTENTS
Juniper
Historical1
|
Reclassification
Adjustments
|
Notes
|
Juniper
Historical,
As Adjusted
|
|||||||||
Net Revenue:
|
||||||||||||
Products
|
$2,192
|
$-
|
$2,192
|
|||||||||
Services
|
1,512
|
-
|
1,512
|
|||||||||
Total net revenue
|
3,704
|
-
|
3,704
|
|||||||||
Costs and Expenses:
|
||||||||||||
Cost of products
|
1,091
|
9
|
2(o)
2(t)
|
1,100
|
||||||||
Cost of services
|
436
|
27
|
2(t)
|
463
|
||||||||
Total cost of revenues
|
1,527
|
36
|
1,563
|
|||||||||
Gross margin
|
2,177
|
(36)
|
2,141
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
860
|
(42)
|
2(t)
|
818
|
||||||||
Selling, general and administrative
|
-
|
1,059
|
2(m)
2(t)
|
1,059
|
||||||||
Sales and marketing
|
914
|
(914)
|
2(m)
2(o)
|
-
|
||||||||
General and administrative
|
184
|
(184)
|
2(m)
2(o)
|
-
|
||||||||
Restructuring charges
|
25
|
(25)
|
2(n)
|
-
|
||||||||
Amortization of intangible assets
|
-
|
45
|
2(o)
|
45
|
||||||||
Transformation costs
|
-
|
25
|
2(n)
|
25
|
||||||||
Acquisition, disposition, and other related charges
|
-
|
37
|
2(s)
|
37
|
||||||||
Merger-related charges
|
37
|
(37)
|
2(s)
|
-
|
||||||||
Total operating expenses
|
2,020
|
(36)
|
1,984
|
|||||||||
Operating income
|
157
|
-
|
157
|
|||||||||
(Loss) Gain on privately-held investments, net
|
(19)
|
19
|
2(p)
|
-
|
||||||||
Other income (expense), net
|
1
|
(1)
|
2(q)
|
-
|
||||||||
Earnings from operations
|
139
|
18
|
157
|
|||||||||
Interest and other, net
|
-
|
(18)
|
2(p)
2(q)
|
(18)
|
||||||||
Loss from equity interests
|
-
|
(8)
|
2(r)
|
(8)
|
||||||||
Earnings before provision for taxes
|
139
|
(8)
|
131
|
|||||||||
Benefit for taxes
|
27
|
-
|
27
|
|||||||||
Loss from equity method investment, net of tax
|
(8)
|
8
|
2(r)
|
-
|
||||||||
Net earnings
|
$158
|
$-
|
$158
|
|||||||||
2(m)
|
Represents the combination and reclassification of Juniper's "Sales and marketing" and "General and administrative" amounts to "Selling, general and administrative" to conform to HPE's historical presentation.
|
2(n)
|
Represents the reclassification of Juniper's "Restructuring charges" amounts to "Transformation costs" to conform to HPE's historical presentation.
|
1
|
The nine-month period ended June 30, 2024, is equal to the six months period ended June 30, 2024, plus the three-month period resulting from deducting the results of the nine months period ended September 30, 2023, from the results for the year ended December 31, 2023.
|
TABLE OF CONTENTS
2(o)
|
Represents the reclassification of Juniper's amortization of intangible assets, included within their "Cost of Products" and "Sales and marketing" and "General and administrative" to "Amortization of intangible assets" to conform to HPE's historical presentation.
|
2(p)
|
Represents the reclassification of Juniper's "Gain (loss) on privately-held investments, net" amounts to "Interest and other, net" to conform to HPE's historical presentation
|
2(q)
|
Represents the reclassification of Juniper's "Other expense, net" amounts to "Interest and other, net" to conform to HPE's historical presentation.
|
2(r)
|
Represents the reclassification of Juniper's "Loss from equity method investment, net of tax" amounts to "Earnings (Loss) from equity interests" to conform to HPE's historical presentation.
|
2(s)
|
Represents the reclassification of Juniper's "Merger-related charges" amounts to " Acquisition, disposition and other related charges" to conform to HPE's historical presentation.
|
2(t)
|
Reclassification of Juniper's depreciation expense from within "Research and Development" and "Selling, General and Administrative" to "Cost of Products", "Costs of Services" and "Research and Development" in order to conform with the HPE's historical presentation
|
3.
|
Preliminary Purchase Price Allocation
|
(a)
|
The preliminary Merger consideration is calculated as follows:
|
Preliminary Purchase Consideration Paid to Juniper Shareholders
(in millions except per share amounts)
|
Amount
|
||
Common stock outstanding2
|
325.3
|
||
Per share cash purchase price
|
$40.00
|
||
Cash paid to Juniper's shareholders
|
13,012
|
||
Plus: Consideration for paying non-employee awards (refer Note 5(e))
|
3
|
||
Total cash consideration paid to Juniper
|
$13,015
|
||
Plus: Conversion of Juniper's equity awards attributable to the pre-combination period (refer Note 5(e))
|
286
|
||
Total consideration
|
$13,301
|
||
(b)
|
Preliminary Purchase Price Allocation
|
2
|
The number of shares of Juniper's common stock outstanding to be converted as a part of the Merger consideration is subject to change as the closing date of the merger approaches.
|
TABLE OF CONTENTS
Preliminary Purchase Price Allocation
(in millions)
|
Estimated Fair Value
|
||
Assets acquired:
|
|||
Cash and cash equivalents
|
$935
|
||
Accounts receivable, net of allowances
|
879
|
||
Inventory
|
1,567
|
||
Other current assets
|
705
|
||
Property, plant and equipment, net
|
911
|
||
Goodwill
|
6,283
|
||
Intangible assets
|
6,600
|
||
Long-term financing receivables and other assets
|
334
|
||
Total assets acquired
|
$18,214
|
||
Accounts payable
|
$268
|
||
Employee compensation and benefits
|
264
|
||
Taxes on earnings
|
108
|
||
Deferred revenue
|
1,148
|
||
Accrued restructuring
|
9
|
||
Other accrued liabilities
|
245
|
||
Long-term debt
|
1,607
|
||
Other non-current liabilities
|
1,264
|
||
Total liabilities assumed
|
$4,913
|
||
Estimated Purchase consideration
|
$13,301
|
||
4.
|
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
|
(a)
|
Represents an adjustment related to the preliminary fair value step up of inventory of Juniper. The inventories are primarily comprised of raw materials, work-in-progress and finished goods. The fair value of the finished goods was estimated using the comparative sales method.
|
Inventory (in millions)
|
As of July 31, 2024
|
||
Fair value of inventory
|
$1,567
|
||
Less: Inventory book value
|
(1,012)
|
||
Pro forma adjustment3
|
$555
|
||
(b)
|
Represents the net adjustment to the estimated fair value of property, plant, and equipment of Juniper. Preliminary property, plant and equipment fair values in the pro forma financial information are provided in the table below. The preliminary value of the identifiable property, plant and equipment is determined using the cost and/or market approaches, as applicable for each asset class. The fair values are determined by comparing current data with market data, asset trends and industry standards, with the useful lives determined by using the standard useful lives, per Company policy, minus the effective age of the asset (i.e., between the date such asset was placed in service and the date of valuation).
|
Property, plant and equipment, net
(in millions)
|
Estimated Fair
Value
|
Estimated
Useful Life
(in years)
|
||||
Site improvements
|
$17
|
4
|
||||
Buildings
|
153
|
30
|
||||
Building improvements
|
83
|
5
|
||||
Network equipment
|
212
|
2
|
||||
3
|
The fair value adjustment increase in inventory is estimated to be expensed within a year, which is reflected as a pro forma adjustment in cost of products.
|
TABLE OF CONTENTS
Property, plant and equipment, net
(in millions)
|
Estimated Fair
Value
|
Estimated
Useful Life
(in years)
|
||||
Leasehold improvements
|
75
|
2
|
||||
Computer hardware
|
24
|
2
|
||||
Computer servers
|
62
|
2
|
||||
Off-the-Shelf software
|
20
|
2
|
||||
Office furniture & fixtures
|
8
|
2
|
||||
Computer shelving & rack systems
|
5
|
10
|
||||
Total Property, plant, and equipment subject to depreciation
|
$659
|
6
|
||||
Property, plant, and equipment not subject to depreciation:
|
||||||
Land
|
$240
|
NA
|
||||
Construction in progress
|
4
|
NA
|
||||
ARO and clearing assets
|
8
|
NA
|
||||
Total Property, plant, and equipment
|
$911
|
|||||
Less: Historical book value of property, plant and equipment
|
(685)
|
|||||
Pro forma adjustment to balance sheet
|
$226
|
|||||
(c)
|
Represents the net adjustment to the estimated fair value of intangible assets acquired in the Merger. Preliminary identifiable intangible assets in the unaudited pro forma condensed combined financial information are provided in the table below. The preliminary value of the identifiable tradenames and developed technology is determined using the relief from royalty method whereas customer relationships are valued using a discounted cash flow model.
|
Intangible Assets
(in millions)
|
Estimated Fair
Value
|
Estimated Useful Life
(in years)
|
||||
Customer relationships
|
$3,500
|
9
|
||||
Trademarks/Tradenames - Definite
|
300
|
7
|
||||
Developed technology
|
2,800
|
6
|
||||
Total intangibles fair value
|
$6,600
|
7
|
||||
Less: intangibles book value
|
(64)
|
|||||
Pro forma adjustment to balance sheet
|
$6,536
|
|||||
(d)
|
Represents elimination of Juniper's historical equity.
|
(in millions)
|
As of July 31, 2024
|
||
Common stock
|
$-
|
||
Additional-paid-in capital
|
(6,766)
|
||
Accumulated deficit
|
2,273
|
||
Accumulated other comprehensive income
|
(9)
|
||
Total stockholders' equity elimination
|
$(4,502)
|
||
(e)
|
The pro forma adjustment represents the preliminary estimate of goodwill of $6,283 million, offset by the elimination of historical goodwill. Goodwill represents the excess of total consideration over the preliminary fair value of assets acquired and liabilities assumed.
|
Goodwill
(in millions)
|
Estimated Fair Value
|
||
Assets acquired:
|
|||
TABLE OF CONTENTS
Goodwill
(in millions)
|
Estimated Fair Value
|
||
Cash and cash equivalents
|
$935
|
||
Accounts receivable, net of allowances
|
879
|
||
Inventory
|
1,567
|
||
Other current assets
|
705
|
||
Property, plant and equipment, net
|
911
|
||
Intangible assets
|
6,600
|
||
Long-term financing receivables and other assets
|
334
|
||
Total assets acquired
|
$11,931
|
||
Accounts payable
|
$268
|
||
Employee compensation and benefits
|
264
|
||
Taxes on earnings
|
108
|
||
Deferred revenue
|
1,148
|
||
Accrued restructuring
|
9
|
||
Other accrued liabilities
|
245
|
||
Long-term debt
|
1,607
|
||
Other non-current liabilities
|
1,264
|
||
Total liabilities assumed
|
$4,913
|
||
Net assets acquired
|
$7,018
|
||
Estimated Purchase consideration
|
13,301
|
||
Estimated Goodwill
|
$6,283
|
||
Less: Juniper's historical goodwill
|
(3,734)
|
||
Pro forma adjustment to Goodwill
|
$2,549
|
||
(f)
|
As part of the allocation of the purchase price in a business combination, lease terms are compared to market terms to determine if the leases are favorable or unfavorable. Any favorable or unfavorable leasehold interests identified increase (favorable) or reduce (unfavorable) the associated right-of-use ("ROU) lease asset and are recognized over the life of the related right-of-use asset. The unaudited pro forma condensed combined financial information reflects the preliminary fair value adjustments of the favorable and unfavorable leasehold interests acquired from Juniper.
|
Lease liabilities and ROU assets
(in millions)
|
As of July 31, 2024
|
||
Lease liabilities - Current portion (per valuation results)
|
$44
|
||
Less: Historical book value
|
(46)
|
||
Net Impact (Lease liabilities current)
|
$(2)
|
||
Lease liabilities - Non-current portion (per valuation results)
|
$108
|
||
Less: Historical book value
|
(120)
|
||
Net Impact (Lease liabilities non-current)
|
$(12)
|
||
ROU asset (per valuation results)
|
$162
|
||
Less: Historical book value
|
(147)
|
||
(Favorable) / Unfavorable adjustment
|
(10)
|
||
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Lease liabilities and ROU assets
(in millions)
|
As of July 31, 2024
|
||
Net Impact (Long-term financing receivables and other assets)
|
$5
|
||
(g)
|
Reflects the following adjustments to cash and cash equivalents:
|
(in millions)
|
As of July 31, 2024
|
||
Estimated consideration4
|
$13,012
|
||
Transaction costs5
|
64
|
||
Pro forma adjustment to Cash and cash equivalents
|
$13,076
|
||
(h)
|
Reflects an adjustment related to deferred tax liabilities which are primarily derived based on fair value adjustments from the preliminary purchase allocation.
|
5.
|
Transaction Accounting Adjustments to Unaudited Pro Forma Combined Statements of Operations
|
(a)
|
Reflects the impact on cost of goods sold as follows:
|
Inventory Step-up
(in millions)
|
For the Year Ended
October 31, 2023
|
||
Fair value of inventory
|
$1,567
|
||
Less: Inventories book value (current portion)
|
(1,012)
|
||
Pro forma adjustment to income statement
|
$555
|
||
(b)
|
Represents the adjustment to record elimination of historical depreciation expense and recognition of new straight-line depreciation expense based on the estimated fair value as of July 31, 2024. The depreciation of property, plant and equipment is based on the estimated remaining useful lives of the assets as discussed in Note 4(b) above.
|
Depreciation Expense- Property, Plant and Equipment
(in millions)
|
For the Nine Months
Ended July 31, 2024
|
For the Year
Ended October 31,
2023
|
||||
Pro forma depreciation expense
|
$55
|
$73
|
||||
Less: Juniper depreciation expense, as reported
|
(87)
|
(123)
|
||||
Pro forma adjustment to income statements
|
$(32)
|
$(50)
|
||||
Depreciation expense adjustment
(in millions)
|
For the Nine Months
Ended July 31, 2024
|
For the Year Ended
October 31, 2023
|
||||
Cost of products
|
$(17)
|
$(27)
|
||||
Cost of services
|
(10)
|
(15)
|
||||
Research and development
|
(1)
|
(1)
|
||||
Selling, general and administrative
|
(4)
|
(7)
|
||||
Pro forma adjustment to income statements
|
$(32)
|
$(50)
|
||||
(c)
|
Represents the adjustment to record elimination of historical amortization expense and recognition of new amortization expense related to identifiable intangible assets based on the estimated fair value. Amortization expense is calculated based on the estimated fair value of each of the identifiable intangible assets and the associated estimated useful life as discussed in Note 4(c) above and is included under the amortization of intangible assets line item on the pro forma income statements.
|
4
|
Refer to Note 3(a) for more details.
|
5
|
Refer to Note 5(d) for more details.
|
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Amortization Expense - Intangible Assets, net
(in millions)
|
For the Nine Months
Ended July 31, 2024
|
For the Year Ended
October 31, 2023
|
||||
Total pro forma intangible assets amortization
|
$651
|
$868
|
||||
Less: Juniper amortization expense, as reported
|
(45)
|
(69)
|
||||
Pro forma adjustment to income statements
|
$606
|
$799
|
||||
(d)
|
Transaction Costs
|
1.
|
Incurred by HPE: HPE has incurred, and has plans to incur, $141.6 million of non-recurring transaction costs. Of this amount, $77.4 million of transaction costs have been incurred through the nine months ended July 31, 2024.
|
2.
|
Incurred by Juniper: Juniper has also incurred certain non-recurring transaction costs during the six months ended June 30, 2024, which have been expensed and included in the historical financial statements. Therefore, no pro forma adjustments were made pertaining to the transaction costs incurred by Juniper. Further, any transaction costs incurred by Juniper after June 30, 2024 (i.e., after the historical period) will not be included in the pro forma financial statements as adjustments.
|
(e)
|
Stock Based Compensation and Severance
|
Amount
|
|||
Purchase consideration per share
|
$40.00
|
||
HPE average stock price (average of 10 days prior to September 4, 2024)
|
$(19.00)
|
||
Exchange Ratio
|
2.11
|
||
(in millions, except for exchange ratio and per share amounts)
|
As of July 31, 2024
|
||
RSA, RSU and PSUs outstanding
|
18.13
|
||
Exchange ratio
|
2.11
|
||
Number of replacement HPE awards
|
38.17
|
||
Fair value per share of HPE awards (as of September 4, 2024)
|
$18.77
|
||
Fair value of replacement awards to be allocated between pre- and post-combination periods
|
$716.4
|
||
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a)
|
the weighted average remaining unvested period of Juniper's stock awards as of June 30, 2024, which is approximately 1.7 years.
|
b)
|
30% of the CEO's equity awards will immediately vest on the close of the Merger.
|
c)
|
the additional HPE retention and time-based equity awards being issued to the chief executive officer of Juniper. The impact of new HPE performance-based awards that are being issued to the chief executive officer of Juniper is not reflected in the below calculation because the performance conditions are not likely to be met.
|
Stock Based Compensation Expense/(Income)
(in millions)
|
For the Nine
Months Ended July 31,
2024
|
For the Year
Ended October 31,
2023
|
||||
Post-combination stock-based compensation expense
|
$166
|
$240
|
||||
Less: Historical compensation expense
|
(223)
|
(251)
|
||||
Pro forma adjustment to income statement
|
$(57)
|
$(11)
|
||||
Stock Based Compensation
(in millions)
|
For the Nine
Months Ended
July 31, 2024
|
For the Year
Ended
October 31, 2023
|
||||
Cost of products
|
$(2)
|
$(1)
|
||||
Cost of services
|
(4)
|
(1)
|
||||
Research and development
|
(26)
|
(5)
|
||||
Selling, general and administrative
|
(25)
|
(4)
|
||||
Pro forma adjustment to income statement
|
$(57)
|
$(11)
|
||||
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(f)
|
Income Taxes
|
6.
|
Acquisition Financing
|
(a)
|
Debt Financing
|
(in millions)
|
Debt
Financing
|
Interest expense
|
Interest expense
|
||||||
As of July
31, 2024
|
For the Nine
months ended
July 31, 2024
|
For the Year ended
October 31, 2023
|
|||||||
Fixed rate Senior Notes6
|
$6,500
|
$252
|
$336
|
||||||
Variable rate Term Loan6
|
3,000
|
141
|
197
|
||||||
Add/ (Less): Unamortized New debt issuance costs (balance sheet) and Amortization of debt issuance costs (income statement)
|
(39)
|
4
|
5
|
||||||
Less: Juniper's historical revolving credit not assumed7
|
-
|
-
|
-
|
||||||
Pro forma adjustment
|
$9,461
|
$397
|
$538
|
||||||
As of July 31, 2024
|
|||
Current portion of long-term debt
|
$150
|
||
Long-term debt (term loan)
|
2,844
|
||
Senior Notes
|
6,467
|
||
Pro forma adjustment
|
$9,461
|
||
Sensitivity Analysis
(in millions)
|
For the Nine
months ended July
31, 2024
|
For the Year
ended October 31,
2023
|
||||
Increase of 0.125%
|
$145
|
$203
|
||||
Decrease of 0.125%
|
$140
|
$196
|
||||
6
|
In order to fund the Merger, HPE assumes for the purposes of this unaudited pro forma condensed combined financial information to have entered into two types of debt instruments involving issuance of fixed rate Senior Notes of $6.5 billion and a variable rate Term Loan of $3 billion.
|
7
|
Pursuant to Juniper's June 30, 2024, Form 10-Q, Juniper has not drawn any amount of revolving credit loans.
|
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Sensitivity Analysis
(in millions)
|
For the Nine
months ended July
31, 2024
|
For the Year
ended October 31,
2023
|
||||
Increase of 0.125%
|
$256
|
$341
|
||||
Decrease of 0.125%
|
$250
|
$333
|
||||
(b)
|
Equity Financing
|
(in millions)
|
As of July 31, 2024
|
||
Issue price of Mandatory convertible preferred stock
|
$1,500
|
||
Less: Issuance fees of 2.5%
|
(37)
|
||
Pro forma adjustment to Stockholders equity and Cash and cash equivalents
|
$1,463
|
||
(in millions)
|
For the Nine
months ended July
31, 2024
|
For the Year
ended October 31,
2023
|
||||
Pro forma Dividends on mandatory convertible preferred stock
|
$90
|
$120
|
||||
7.
|
H3C Disposition Adjustment
|
Sale of interest in H3C by HPE (in millions, except for percentages)
|
As of July 31, 2024
|
||
Investments in equity interest (by HPE)
|
$2,318
|
||
Percentage of interest held by HPE in H3C
|
49%
|
||
Percentage of interest sold by HPE in H3C
|
30%
|
||
Net impact to Investments in equity interests
|
$1,419
|
||
Cash received on sale of stake in H3C (in millions, except for percentages)
|
As of July 31, 2024
|
||
Sale price of 30% stake
|
$2,143
|
||
Less: Income tax on gain (paid in cash)8
|
(120)
|
||
Net impact to Cash and cash equivalents
|
$2,023
|
||
Income taxes on gain
|
As of July 31, 2024
|
||
Income tax on gain (paid in cash)8
|
$120
|
||
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Income taxes on gain
|
As of July 31, 2024
|
||
Income tax on gain (non-cash)8
|
90
|
||
Total income taxes on gain
|
$210
|
||
Impact to accumulated deficit (in millions, except for percentages)
|
As of July 31, 2024
|
||
Sale price of 30% stake (net of tax)
|
$1,933
|
||
Less: Book value of investment in H3C
|
(1,419)
|
||
Net impact to Accumulated deficit
|
$514
|
||
Sale of interest in H3C by HPE (in millions)
|
For the Nine
Months Ended
July 31, 2024
|
For the Year Ended
October 31, 2023
|
||||
Sale price of 30% interest held by HPE in H3C
|
$-
|
$2,143
|
||||
Less: Book value of investment in H3C sold by HPE
|
-
|
(1,419)
|
||||
Net Impact to Gain from sale of equity interests
|
$-
|
$724
|
||||
Impact to Earnings from equity interest and taxes
|
||||||
Net impact to Earnings from equity interests (upon sale by HPE of 30% interest in H3C)
|
(99)
|
(150)
|
||||
Adjustment for income tax benefit (expense)
|
14
|
(183)
|
||||
Net impact to Income statement
|
$(85)
|
$391
|
||||
8.
|
Earnings per share
|
In millions, except per share amounts
|
For the Nine
Months Ended
July 31, 2024
|
For the Year Ended
October 31, 2023
|
||||
Numerator
|
||||||
Pro forma net earnings used to compute basic net EPS
|
$425
|
$1,058
|
||||
Dividends on mandatory convertible preferred stock
|
90
|
120
|
||||
Pro forma net earnings used to compute diluted net EPS
|
$515
|
$1,178
|
||||
Denominator:
|
||||||
Weighted-average shares used to compute basic net EPS
|
1,308
|
1,299
|
||||
Dilutive effect of employee stock plans
|
53
|
56
|
||||
Issuance of mandatory convertible preferred stock
|
79
|
79
|
||||
Weighted-average shares used to compute diluted net EPS
|
1,440
|
1,434
|
||||
Net earnings per share
|
||||||
Basic
|
$0.32
|
$0.81
|
||||
Diluted
|
$0.36
|
$0.82
|
||||
8
|
Because the adjustments contained in the pro forma financial information are based on estimates, the effective tax rate herein will likely vary from the effective rate in periods subsequent to the merger.
|
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TABLE OF CONTENTS
•
|
9,600,000,000 are designated as common stock; and
|
•
|
300,000,000 are designated as preferred stock.
|
•
|
senior to (i) our common stock, (ii) our Series B Junior Participating Redeemable Preferred Stock (the "Series B Junior Preferred Stock") and (iii) each other class or series of our capital stock established after the first original issue date of shares of the Mandatory Convertible Preferred Stock (which we refer to as the "Initial Issue Date"), the terms of which do not expressly provide that such class or series ranks either (x) senior to the Mandatory Convertible Preferred Stock as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution or (y) on parity with the Mandatory Convertible Preferred Stock as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as "Junior Stock");
|
•
|
on parity with any class or series of our capital stock established after the Initial Issue Date, the terms of which expressly provide that such class or series will rank on parity with the Mandatory Convertible Preferred Stock as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as "Parity Stock");
|
•
|
junior to each class or series of our capital stock established after the Initial Issue Date, the terms of which expressly provide that such class or series will rank senior to the Mandatory Convertible Preferred Stock as to dividend rights or distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as "Senior Stock"); and
|
•
|
junior to our existing and future indebtedness and other liabilities.
|
TABLE OF CONTENTS
TABLE OF CONTENTS
•
|
in cash;
|
•
|
by delivery of shares of our common stock; or
|
•
|
through any combination of cash and shares of our common stock.
|
TABLE OF CONTENTS
•
|
the declared dividend, divided by
|
•
|
$5.64, which amount represents approximately 35% of the Initial Price (as defined below), subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each Fixed Conversion Rate as set forth below in "-Anti-Dilution Adjustments" (such dollar amount, as adjusted, the "Floor Price").
|
TABLE OF CONTENTS
TABLE OF CONTENTS
•
|
pay cash in lieu of delivering all or any portion of the shares of common stock equal to the Acquisition Termination Conversion Rate (as defined below), or
|
•
|
deliver common stock in lieu of all or any portion of the Acquisition Termination Dividend Amount (as defined below),
|
•
|
a number of shares of common stock equal to the Acquisition Termination Conversion Rate; plus
|
•
|
cash in an amount equal to the Acquisition Termination Dividend Amount;
|
TABLE OF CONTENTS
•
|
the Fundamental Change Dividend Make-Whole Amount (as defined under "-Conversion at the Option of the Holder upon Fundamental Change; Fundamental Change Dividend Make-Whole Amount-Fundamental Change Dividend Make-Whole Amount and Accumulated Dividend Amount"); and
|
•
|
the Accumulated Dividend Amount (as defined under "-Conversion at the Option of the Holder upon Fundamental Change; Fundamental Change Dividend Make-Whole Amount- Fundamental Change Dividend Make-Whole Amount and Accumulated Dividend Amount"),
|
•
|
we may elect to pay cash in lieu of delivering all or any portion of the common stock equal to the Acquisition Termination Conversion Rate. If we make such an election, we will deliver cash (rounded to the nearest cent) in an amount equal to such common stock in respect of which we have made this election multiplied by the Acquisition Termination Market Value; and
|
•
|
we may elect to deliver common stock in lieu of paying cash for some or all of the Acquisition Termination Dividend Amount.
|
•
|
the Acquisition Termination Make-Whole Amount;
|
•
|
if the Acquisition Termination Share Price exceeds the Initial Price, the number of shares of common stock and the amount of cash comprising the Reference Amount per Mandatory Convertible Preferred
|
TABLE OF CONTENTS
•
|
if the Acquisition Termination Share Price exceeds the Initial Price, whether we will pay cash in lieu of common stock equal to the Acquisition Termination Conversion Rate comprising a portion of the Reference Amount (specifying, if applicable, the number of such shares of common stock in respect of which cash will be paid);
|
•
|
if the Acquisition Termination Share Price exceeds the Initial Price, whether we will deliver common stock in lieu of paying cash for all or any portion of the Acquisition Termination Dividend Amount comprising a portion of the Reference Amount (specifying, if applicable, the percentage of the Acquisition Termination Dividend Amount in respect of which common stock will be delivered in lieu of cash); and
|
•
|
the Acquisition Termination Redemption Date (specifying, as applicable, a fixed date or that the Acquisition Termination Redemption Date will be the second Business Day following the last Trading Day of the 20 consecutive Trading Day period used to determine the Acquisition Termination Market Value).
|
TABLE OF CONTENTS
TABLE OF CONTENTS
•
|
amend or alter the provisions of our Certificate of Incorporation so as to authorize or create, or increase the authorized number of, any class or series of Senior Stock;
|
•
|
amend, alter or repeal any provision of our Certificate of Incorporation or the Certificate of Designations so as to materially and adversely affect the special rights, preferences or voting powers of the Mandatory Convertible Preferred Stock; or
|
•
|
consummate a binding share exchange or reclassification involving the shares of the Mandatory Convertible Preferred Stock, a merger or consolidation of us with another entity or a conversion of the Company or domestication in or transfer to a foreign jurisdiction, unless in each case: (i) the shares of the Mandatory Convertible Preferred Stock remain outstanding following the consummation of such binding share exchange, reclassification, merger or consolidation or, in the case of (x) any such merger or consolidation with respect to which we are not the surviving or resulting entity (or the Mandatory Convertible Preferred Stock is otherwise exchanged or reclassified) or (y) any such conversion, domestication or transfer, are converted or reclassified into or exchanged for preference securities of the surviving or resulting entity, of the converted, domesticated or transferred entity or, in either case, such entity's ultimate parent; and (ii) the shares of the Mandatory Convertible Preferred Stock that remain outstanding or such shares of preference securities, as the case may be, have such rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences and voting powers, taken as a whole, of the Mandatory Convertible Preferred Stock immediately prior to the consummation of such transaction;
|
TABLE OF CONTENTS
•
|
to cure any ambiguity, omission, inconsistency or mistake in any such agreement (including any provision contained in the Certificate of Designations that may be defective or inconsistent with any other provision contained in such Certificate of Designations);
|
•
|
to make any provision with respect to matters or questions relating to the Mandatory Convertible Preferred Stock that is not inconsistent with the provisions of our Certificate of Incorporation or the Certificate of Designations;
|
•
|
to waive any of our rights with respect to the Mandatory Convertible Preferred Stock; or
|
•
|
to make any other change that does not materially and adversely affect the rights of any holder of the Mandatory Convertible Preferred Stock (other than any holder that consents to such change).
|
•
|
if the Applicable Market Value (as defined below) of our common stock is greater than the Threshold Appreciation Price, which is approximately $19.72, the Conversion Rate will be 2.5352 shares of our common stock per share of the Mandatory Convertible Preferred Stock (the "Minimum Conversion Rate");
|
•
|
if the Applicable Market Value of our common stock is less than or equal to the Threshold Appreciation Price but equal to or greater than the Initial Price, which is approximately $16.10, the Conversion Rate will be equal to $50.00, divided by the Applicable Market Value of our common stock, rounded to the nearest ten-thousandth of a share; or
|
TABLE OF CONTENTS
•
|
if the Applicable Market Value of our common stock is less than the Initial Price, the Conversion Rate will be 3.1056 shares of our common stock per share of the Mandatory Convertible Preferred Stock (the "Maximum Conversion Rate").
|
•
|
the amount of such undeclared, accumulated and unpaid dividends per share of the Mandatory Convertible Preferred Stock (the "Additional Conversion Amount"), divided by
|
•
|
the greater of (x) the Floor Price and (y) 97% of the Average Price (calculated using September 1, 2027, as the applicable Dividend Payment Date).
|
Assumed Applicable Market
Value of our common stock
|
Number of shares of our common stock
to be received upon mandatory
conversion
|
Assumed conversion value (calculated as
Applicable Market Value multiplied by
the number of shares of our common
stock to be received upon mandatory
conversion)
|
||||
13.50
|
3.1056
|
41.93
|
||||
14.00
|
3.1056
|
43.48
|
||||
14.50
|
3.1056
|
45.03
|
||||
TABLE OF CONTENTS
Assumed Applicable Market
Value of our common stock
|
Number of shares of our common stock
to be received upon mandatory
conversion
|
Assumed conversion value (calculated as
Applicable Market Value multiplied by
the number of shares of our common
stock to be received upon mandatory
conversion)
|
||||
15.00
|
3.1056
|
46.58
|
||||
15.50
|
3.1056
|
48.14
|
||||
16.12
|
3.1017
|
50.00
|
||||
16.50
|
3.0303
|
50.00
|
||||
17.00
|
2.9412
|
50.00
|
||||
17.50
|
2.8571
|
50.00
|
||||
18.00
|
2.7778
|
50.00
|
||||
19.72
|
2.5355
|
50.00
|
||||
20.00
|
2.5352
|
50.70
|
||||
20.50
|
2.5352
|
51.97
|
||||
21.00
|
2.5352
|
53.24
|
||||
21.50
|
2.5352
|
54.51
|
||||
22.00
|
2.5352
|
55.77
|
||||
•
|
greater than the $50.00 liquidation preference of the share of the Mandatory Convertible Preferred Stock, if the Applicable Market Value is greater than the Threshold Appreciation Price;
|
•
|
equal to the $50.00 liquidation preference of the share of the Mandatory Convertible Preferred Stock, if the Applicable Market Value is less than or equal to the Threshold Appreciation Price and greater than or equal to the Initial Price; and
|
•
|
less than the $50.00 liquidation preference of the share of the Mandatory Convertible Preferred Stock, if the Applicable Market Value is less than the Initial Price.
|
•
|
a failure by the Relevant Stock Exchange to open for trading during its regular trading session; or
|
•
|
the occurrence or existence, prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for our common stock, for more than a one half-hour period in the aggregate during regular trading hours, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the Relevant Stock Exchange or otherwise) in our common stock.
|
TABLE OF CONTENTS
•
|
there is no Market Disruption Event; and
|
•
|
trading in our common stock generally occurs on the Relevant Stock Exchange;
|
•
|
such amount of undeclared, accumulated and unpaid dividends per share of the Mandatory Convertible Preferred Stock for such prior full dividend periods (the "Early Conversion Additional Amount"), divided by
|
•
|
the greater of (x) the Floor Price and (y) the Average VWAP per share of our common stock over the 20 consecutive Trading Day period (the "Early Conversion Settlement Period") commencing on, and including, the 21st Scheduled Trading Day immediately preceding the Early Conversion Date (such Average VWAP, the "Early Conversion Average Price").
|
TABLE OF CONTENTS
i.
|
convert their shares of the Mandatory Convertible Preferred Stock, in whole or in part (but in no event in increments of less than one share of the Mandatory Convertible Preferred Stock), into a number of shares of our common stock (or Units of Exchange Property as described below) at the conversion rate specified in the table below (the "Fundamental Change Conversion Rate");
|
ii.
|
with respect to such converted shares, receive a Fundamental Change Dividend Make-Whole Amount (as defined below) payable in cash or shares of our common stock; and
|
iii.
|
with respect to such converted shares, receive the Accumulated Dividend Amount (as defined below) payable in cash or shares of our common stock,
|
i.
|
the consummation of (A) any recapitalization, reclassification or change of our common stock (other than changes resulting from a subdivision or combination or change in par value) as a result of which our common stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or a combination thereof); (B) any consolidation, merger or other combination of us or binding share exchange pursuant to which our common stock will be converted into, or exchanged for, stock, other securities or other property or assets (including cash or a combination thereof); or (C) any sale, lease or other transfer or disposition in one transaction or a series of transactions of all or substantially all of the consolidated assets of ours and our subsidiaries taken as a whole, to any person or one or more of our wholly-owned subsidiaries;
|
ii.
|
any "person" or "group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other than us, any of our wholly-owned subsidiaries or any of our or any of our wholly-owned subsidiaries' employee benefit plans (or any person or entity acting
|
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iii.
|
our common stock (or other common stock constituting Exchange Property (as defined under "-Recapitalizations, Reclassifications and Changes of Our Common Stock")) ceases to be listed or quoted for trading on the NYSE, the Nasdaq Global Select Market or the Nasdaq Global Market (or another U.S. national securities exchange or any of their respective successors).
|
Fundamental Change Stock Price
|
||||||||||||||||||||||||||||||||||||||||||
Fundamental Change
Effective Date
|
$4.00
|
$6.00
|
$8.00
|
$10.00
|
$12.00
|
$14.00
|
$16.10
|
$18.60
|
$19.72
|
$25.00
|
$30.00
|
$35.00
|
$40.00
|
$50.00
|
||||||||||||||||||||||||||||
September 13, 2024
|
1.9200
|
2.2757
|
2.4150
|
2.4651
|
2.4762
|
2.4714
|
2.4607
|
2.4474
|
2.4421
|
2.4254
|
2.4196
|
2.4196
|
2.4224
|
2.4308
|
||||||||||||||||||||||||||||
September 1, 2025
|
2.2950
|
2.5429
|
2.6369
|
2.6577
|
2.6427
|
2.6134
|
2.5796
|
2.5437
|
2.5300
|
2.4858
|
2.4668
|
2.4598
|
2.4588
|
2.4631
|
||||||||||||||||||||||||||||
September 1, 2026
|
2.6931
|
2.8240
|
2.8784
|
2.8822
|
2.8465
|
2.7875
|
2.7187
|
2.6451
|
2.6175
|
2.5342
|
2.5039
|
2.4948
|
2.4937
|
2.4972
|
||||||||||||||||||||||||||||
September 1, 2027
|
3.1056
|
3.1056
|
3.1056
|
3.1056
|
3.1056
|
3.1056
|
3.1056
|
2.6882
|
2.5352
|
2.5352
|
2.5352
|
2.5352
|
2.5352
|
2.5352
|
||||||||||||||||||||||||||||
•
|
if the Fundamental Change Stock Price is between two Fundamental Change Stock Price amounts in the table or the Fundamental Change Effective Date is between two Fundamental Change Effective Dates in the table, the Fundamental Change Conversion Rate will be determined by a straight-line
|
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•
|
if the Fundamental Change Stock Price is in excess of $50.00 per share (subject to adjustment in the same manner as the Fundamental Change Stock Prices set forth in the column headings of the table above), then the Fundamental Change Conversion Rate will be the Minimum Conversion Rate; and
|
•
|
if the Fundamental Change Stock Price is less than $4.00 per share (subject to adjustment in the same manner as the Fundamental Change Stock Prices set forth in the column headings of the table above), then the Fundamental Change Conversion Rate will be the Maximum Conversion Rate.
|
a)
|
pay in cash (computed to the nearest cent), to the extent we are legally permitted to do so and to the extent permitted under the terms of the documents governing our indebtedness, an amount equal to the present value, calculated using a discount rate of 4.67% per annum, of all dividend payments (excluding any Accumulated Dividend Amount, and subject to the second sentence under "-General" above) on the Mandatory Convertible Preferred Stock for (i) the partial dividend period, if any, from, and including, the Fundamental Change Effective Date to, but excluding, the next Dividend Payment Date and (ii) all remaining full dividend periods from, and including, the Dividend Payment Date following the Fundamental Change Effective Date to, but excluding, September 1, 2027 (the "Fundamental Change Dividend Make-Whole Amount");
|
b)
|
increase the number of shares of our common stock (or Units of Exchange Property) to be issued upon conversion by a number equal to (i) the Fundamental Change Dividend Make-Whole Amount, divided by (ii) the greater of (x) the Floor Price and (y) 97% of the Fundamental Change Stock Price; or
|
c)
|
pay the Fundamental Change Dividend Make-Whole Amount through any combination of cash and shares of our common stock (or Units of Exchange Property) in accordance with the provisions of clauses (a) and (b) above.
|
•
|
in cash (computed to the nearest cent), to the extent we are legally permitted to do so and to the extent permitted under the terms of the documents governing our indebtedness;
|
•
|
in an additional number of shares of our common stock (or Units of Exchange Property) equal to (i) the Accumulated Dividend Amount, divided by (ii) the greater of (x) the Floor Price and (y) 97% of the Fundamental Change Stock Price; or
|
•
|
through a combination of cash and shares of our common stock (or Units of Exchange Property) in accordance with the provisions of the preceding two bullets.
|
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•
|
the Fundamental Change Conversion Rate (if we provide notice to holders prior to the anticipated Fundamental Change Effective Date, specifying how the Fundamental Change Conversion Rate will be determined);
|
•
|
the Fundamental Change Dividend Make-Whole Amount and whether we will pay such amount in cash, shares of our common stock (or to the extent applicable, Units of Exchange Property) or a combination thereof, specifying the combination, if applicable; and
|
•
|
the Accumulated Dividend Amount as of the Fundamental Change Effective Date and whether we will pay such amount in cash, shares of our common stock (or to the extent applicable, Units of Exchange Property) or a combination thereof, specifying the combination, if applicable.
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•
|
If shares of the Mandatory Convertible Preferred Stock are in global form, to convert the Mandatory Convertible Preferred Stock such holder must deliver to DTC the appropriate instruction form for conversion pursuant to DTC's conversion program.
|
•
|
If shares of the Mandatory Convertible Preferred Stock are held in certificated form, such holder must comply with certain procedures set forth in the Certificate of Designations.
|
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(1)
|
If we exclusively issue shares of our common stock as a dividend or distribution on shares of our common stock, or if we effect a share split or share combination, each Fixed Conversion Rate will be adjusted based on the following formula:
|
CR1
|
=
|
CR0
|
x
|
OS1
|
||||||||||||||
OS0
|
||||||||||||||||||
CR0 =
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date (as defined below) of such dividend or distribution, or immediately prior to the Open of Business on the effective date of such share split or share combination, as applicable;
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CR1 =
|
such Fixed Conversion Rate in effect immediately after the Close of Business on such record date or immediately after the Open of Business on such effective date, as applicable;
|
OS0 =
|
the number of shares of our common stock outstanding immediately prior to the Close of Business on such record date or immediately prior to the Open of Business on such effective date, as applicable, before giving effect to such dividend, distribution, share split or share combination; and
|
OS1 =
|
the number of shares of our common stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.
|
(2)
|
If we issue to all or substantially all holders of our common stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of our common stock at a price per share that is less than the Average VWAP per share of our common stock for the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, each Fixed Conversion Rate will be increased based on the following formula:
|
CR1
|
=
|
CR0
|
x
|
OS0 + X
|
||||||||||||||
OS0 + Y
|
||||||||||||||||||
CR0 =
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date for such issuance;
|
CR1 =
|
such Fixed Conversion Rate in effect immediately after the Close of Business on such record date;
|
OS0 =
|
the number of shares of our common stock outstanding immediately prior to the Close of Business on such record date;
|
X =
|
the total number of shares of our common stock issuable pursuant to such rights, options or warrants; and
|
Y =
|
the number of shares of our common stock equal to (i) the aggregate price payable to exercise such rights, options or warrants, divided by (ii) the Average VWAP per share of our common stock over the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.
|
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(3)(A)
|
If we distribute shares of our capital stock, evidences of our indebtedness, other assets or property of ours or rights, options or warrants to acquire our capital stock or other securities, to all or substantially all holders of our common stock, excluding:
|
•
|
dividends, distributions or issuances as to which the provisions set forth in clause (1) or (2) shall apply;
|
•
|
dividends or distributions paid exclusively in cash as to which the provisions set forth in clause (4) below shall apply;
|
•
|
any dividends and distributions upon conversion of, or in exchange for, our common stock in connection with a recapitalization, reclassification, change, consolidation, merger or other combination, share exchange, or sale, lease or other transfer or disposition resulting in the change in the conversion consideration as described below under "-Recapitalizations, Reclassifications and Changes of Our Common Stock";
|
•
|
except as otherwise described below, rights issued pursuant to a shareholder rights plan adopted by us; and
|
•
|
spin-offs as to which the provisions set forth below in clause (3)(B) shall apply;
|
CR1
|
=
|
CR0
|
x
|
SP0
|
||||||||||||||
SP0 - FMV
|
||||||||||||||||||
CR0 =
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date for such distribution;
|
CR1 =
|
such Fixed Conversion Rate in effect immediately after the Close of Business on such record date;
|
SP0 =
|
the Average VWAP per share of our common stock over the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the ex-date (as defined below) for such distribution; and
|
FMV =
|
the fair market value (as determined by our Board or an authorized committee thereof in good faith) of the shares of capital stock, evidences of indebtedness, assets, property, rights, options or warrants so distributed, expressed as an amount per share of our common stock on the ex-date for such distribution.
|
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•
|
we will not adjust the Fixed Conversion Rates pursuant to the foregoing in this clause (3)(A) until the earliest of these triggering events occurs; and
|
•
|
we will readjust the Fixed Conversion Rates to the extent any of these rights, options or warrants are not exercised before they expire or are terminated without exercise by any holder thereof; provided that the rights, options or warrants trade together with our common stock and will be issued in respect of future issuances of the shares of our common stock.
|
(3)(B)
|
With respect to an adjustment where there has been a payment of a dividend or other distribution on our common stock of shares of capital stock of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange, which we refer to as a "spin-off," each Fixed Conversion Rate will be increased based on the following formula:
|
CR1
|
=
|
CR0
|
x
|
FMV0 + MP0
|
||||||||||||||
MP0
|
||||||||||||||||||
CR0 =
|
such Fixed Conversion Rate in effect immediately prior to the Open of Business on the ex-date for the spin-off;
|
CR1 =
|
such Fixed Conversion Rate in effect immediately after the Open of Business on the ex-date for the spin-off;
|
FMV0 =
|
the Average VWAP per share of the capital stock or similar equity interest distributed to holders of our common stock applicable to one share of our common stock over the ten consecutive Trading Day period commencing on, and including, the ex-date for the spin-off (the "valuation period"); and
|
MP0 =
|
the Average VWAP per share of our common stock over the valuation period.
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(4)
|
If any cash dividend or distribution is made to all or substantially all holders of our common stock other than a regular, quarterly cash dividend that does not exceed $0.13 per share (the "Initial Dividend Threshold"), each Fixed Conversion Rate will be adjusted based on the following formula:
|
CR1
|
=
|
CR0
|
x
|
SP0 - T
|
||||||||||||||
SP0 - C
|
||||||||||||||||||
CR0 =
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date for such dividend or distribution;
|
CR1 =
|
such Fixed Conversion Rate in effect immediately after the Close of Business on the record date for such dividend or distribution;
|
SP0 =
|
the Average VWAP per share of our common stock over the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the ex-date for such distribution;
|
T =
|
the Initial Dividend Threshold; provided that if the dividend or distribution is not a regular quarterly cash dividend, the Initial Dividend Threshold will be deemed to be zero; and
|
C =
|
the amount in cash per share we distribute to all or substantially all holders of our common stock.
|
(5)
|
If we or any of our subsidiaries make a payment in respect of a tender or exchange offer for our common stock (and excluding a tender offer solely to holders of fewer than 100 shares of our common stock), to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the Average VWAP per share of our common stock over the ten consecutive Trading Day period (the "averaging period") commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the "expiration date"), each Fixed Conversion Rate will be increased based on the following formula:
|
CR1
|
=
|
CR0
|
x
|
AC + (SP1 x OS1)
|
||||||||||||||
OS0 x SP1
|
||||||||||||||||||
CR0 =
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the expiration date;
|
CR1 =
|
such Fixed Conversion Rate in effect immediately after the Close of Business on the expiration date;
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AC =
|
the aggregate value of all cash and any other consideration (as determined by our Board or an authorized committee thereof in good faith) paid or payable for shares purchased in such tender or exchange offer;
|
OS0 =
|
the number of shares of our common stock outstanding immediately prior to the expiration date (prior to giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer);
|
OS1 =
|
the number of shares of our common stock outstanding immediately after the expiration date (after giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer); and
|
SP1 =
|
the Average VWAP of our common stock over the averaging period.
|
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•
|
upon the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in common stock under any plan;
|
•
|
upon the issuance of any shares of our common stock or warrants, options, units or other rights to or securities exercisable for the purchase or issuance of those shares pursuant to any present or future retirement, deferred compensation, incentive, equity or other benefit plan or program of or assumed by us or any of our subsidiaries;
|
•
|
upon the issuance of any shares of our common stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding bullet and outstanding as of the Initial Issue Date;
|
•
|
for a change in the par value of our common stock;
|
•
|
for stock repurchases that are not tender or exchange offers referred to in clause (5) of the adjustments above, including structured or derivative transactions or pursuant to a stock repurchase program approved by our Board;
|
•
|
as a result of a tender offer that satisfies the exception described in clause (5) above for offers solely to holders of fewer than 100 shares of our common stock;
|
•
|
as a result of a tender or exchange offer by a person other than us or one or more of our subsidiaries;
|
•
|
for accumulated dividends on the Mandatory Convertible Preferred Stock, except as described above under "-Mandatory Conversion," "-Early Conversion at the Option of the Holder" and "-Conversion at the Option of the Holder upon Fundamental Change; Fundamental Change Dividend Make-Whole Amount"; or
|
•
|
as a result of a tender or exchange offer by a person other than us or one or more of our subsidiaries
|
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•
|
the record date for a dividend or distribution on shares of our common stock occurs after the end of the 20 consecutive Trading Day period used for calculating the Applicable Market Value and before the Mandatory Conversion Date; and
|
•
|
that dividend or distribution would have resulted in an adjustment of the number of shares issuable to the holders of the Mandatory Convertible Preferred Stock had such record date occurred on or before the last Trading Day of such 20-Trading Day period,
|
•
|
any consolidation or merger of us with or into another person or any conversion of the Company or domestication in or transfer to a foreign jurisdiction;
|
•
|
any sale, transfer, lease or conveyance to another person of all or substantially all of our property and assets;
|
•
|
any reclassification of our common stock into securities, including securities other than our common stock; or
|
•
|
any statutory exchange of our securities with another person (other than in connection with a merger or acquisition or conversion of the Company or domestication in or transfer to a foreign jurisdiction),
|
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•
|
a limited purpose trust company organized under the laws of the State of New York;
|
•
|
a "banking organization" within the meaning of New York Banking Law;
|
•
|
a member of the Federal Reserve System;
|
•
|
a "clearing corporation" within the meaning of the Uniform Commercial Code; and
|
•
|
a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act.
|
•
|
securities brokers and dealers;
|
•
|
banks and trust companies; and
|
•
|
clearing corporations and certain other organizations.
|
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•
|
the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States), in which case the Non-U.S. Holder will generally be taxed on such gain in the same manner as a "United States person" within the meaning of the Code;
|
•
|
the Non-U.S. Holder is a nonresident alien present in the United States for 183 days or more in the taxable year of the disposition and certain other requirements are met, in which case the Non-U.S. Holder will be subject to a 30% tax (or such lower rate as may be specified by an applicable income tax treaty) on the net gain derived from the disposition, which may be offset by certain U.S.-source capital losses; or
|
•
|
we are or have been a "United States real property holding corporation," as defined in the Code, at any time within the five-year period preceding the disposition or the Non-U.S. Holder's holding period, whichever period is shorter, and, generally, our common stockhas ceased to be regularly traded on an established securities market prior to the beginning of the calendar year in which the sale or disposition occurs. We believe that we are not, and do not anticipate becoming, a "United States real property holding corporation" for U.S. federal income tax purposes.
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Underwriter
|
Number of
shares of
Mandatory
Convertible
Preferred Stock
|
||
Citigroup Global Markets Inc.
|
4,133,107
|
||
J.P. Morgan Securities LLC
|
4,133,107
|
||
Mizuho Securities USA LLC
|
4,133,107
|
||
BNP Paribas Securities Corp.
|
1,433,107
|
||
HSBC Securities (USA) Inc.
|
1,433,107
|
||
Wells Fargo Securities, LLC
|
1,433,107
|
||
Barclays Capital Inc.
|
1,414,111
|
||
Deutsche Bank Securities Inc.
|
1,414,111
|
||
Santander US Capital Markets LLC
|
1,119,565
|
||
SG Americas Securities, LLC
|
1,119,565
|
||
TD Securities (USA) LLC
|
1,119,565
|
||
ING Financial Markets LLC
|
1,038,019
|
||
Loop Capital Markets LLC
|
755,746
|
||
U.S. Bancorp Investments, Inc.
|
755,746
|
||
Credit Agricole Securities (USA) Inc.
|
401,350
|
||
Academy Securities, Inc.
|
290,895
|
||
ANZ Securities, Inc.
|
290,895
|
||
CIBC World Markets Corp.
|
290,895
|
||
Standard Chartered Bank
|
290,895
|
||
Total
|
27,000,000
|
||
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Per Share
|
Without
Option
|
With
Option
|
|||||||
Public offering price
|
$50.00
|
$1,350,000,000
|
$1,500,000,000
|
||||||
Underwriting discount
|
$1.25
|
$33,750,000
|
$37,500,000
|
||||||
Proceeds, before expenses, to us
|
$48.75
|
$1,316,250,000
|
$1,462,500,000
|
||||||
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•
|
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
|
•
|
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the securities pursuant to an offer made under Section 275 of the SFA except:
|
○
|
to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
|
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○
|
where no consideration is or will be given for the transfer;
|
○
|
where the transfer is by operation of law; or
|
○
|
as specified in Section 276(7) of the SFA.
|
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•
|
Hewlett Packard Enterprise's Annual Report on Form 10-K for the year ended October 31, 2023, filed on December 22, 2023, including the portions of Hewlett Packard Enterprise's Definitive Proxy Statement on Schedule 14A filed on February 21, 2024 that are incorporated by reference into Part III of such Annual Report on Form 10-K;
|
•
|
Hewlett Packard Enterprise's Quarterly Reports on Form 10-Q for the quarterly periods ended January 31, 2024, April 30, 2024 and July 31, 2024, filed on March 5, 2024, June 5, 2024 and September 5, 2024, respectively;
|
•
|
Hewlett Packard Enterprise's Current Reports on Form 8-K filed on December 15, 2023, January 10, 2024, January 23, 2024, January 24, 2024, February 8, 2024, February 22, 2024 (Amendment No. 1), April 1, 2024, April 12, 2024, May 24, 2024 and September 9, 2024;
|
•
|
Part I, Item 1A of Juniper Networks, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 7, 2024; and
|
•
|
Part II, Item 1A of Juniper Networks, Inc.'s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024 and June 30, 2024, filed on April 26, 2024 and July 26, 2024, respectively.
|
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Page
|
|||
ABOUT THIS PROSPECTUS
|
1
|
||
ABOUT THE COMPANY
|
1
|
||
FORWARD-LOOKING STATEMENTS
|
2
|
||
USE OF PROCEEDS
|
3
|
||
DESCRIPTION OF THE DEBT SECURITIES
|
4
|
||
DESCRIPTION OF CAPITAL STOCK
|
12
|
||
DESCRIPTION OF OTHER SECURITIES
|
14
|
||
PLAN OF DISTRIBUTION
|
15
|
||
VALIDITY OF THE SECURITIES
|
16
|
||
EXPERTS
|
16
|
||
WHERE YOU CAN FIND MORE INFORMATION
|
16
|
||
INFORMATION INCORPORATED BY REFERENCE
|
17
|
||
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•
|
whether the debt securities are senior or subordinated;
|
•
|
the offering price;
|
•
|
the title;
|
•
|
any limit on the aggregate principal amount;
|
•
|
the person who shall be entitled to receive interest, if other than the record holder on the record date;
|
•
|
the date the principal will be payable;
|
•
|
the interest rate, if any, the date interest will accrue, the interest payment dates and the regular record dates;
|
•
|
the interest rate, if any, payable on overdue installments of principal, premium or interest;
|
•
|
the place where payments shall be made;
|
•
|
any mandatory or optional redemption provisions;
|
•
|
if applicable, the method for determining how principal, premium, if any, or interest will be calculated by reference to an index or formula;
|
•
|
if other than U.S. currency, the currency or currency units in which principal, premium, if any, or interest will be payable and whether we or the holder may elect payment to be made in a different currency;
|
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the portion of the principal amount that will be payable upon acceleration of stated maturity, if other than the entire principal amount;
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if the principal amount payable at stated maturity will not be determinable as of any date prior to stated maturity, that the amount payable will be deemed to be the principal amount;
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any defeasance provisions if different from those described below under "Satisfaction and Discharge-Defeasance;"
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any conversion or exchange provisions;
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whether the debt securities will be issuable in the form of a global security and, if so, the identity of the depositary with respect to such global security;
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any subordination provisions if different from those described below under "Subordinated Debt Securities;"
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any paying agents, authenticating agents or security registrars;
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any guarantees on the debt securities;
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any security for any of the debt securities;
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any deletions of, or changes or additions to, the events of default or covenants; and
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any other specific terms of such debt securities.
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the debt securities will be registered debt securities; and
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registered debt securities denominated in U.S. dollars will be issued in denominations of $2,000 and any integral multiple of $1,000 in excess of $2,000.
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issue, register the transfer of, or exchange any debt security of that series during a period beginning at the opening of business 15 days before the day of sending a notice of redemption and ending at the close of business on the day of the transmission; or
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register the transfer of or exchange any debt security of that series selected for redemption, in whole or in part, except the unredeemed portion being redeemed in part.
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be registered in the name of a depositary that we will identify in a prospectus supplement;
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be deposited with the depositary or nominee or custodian; and
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bear any required legends.
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the depositary has notified us that it is unwilling or unable to continue as depositary or has ceased to be qualified to act as depositary and a successor depositary is not appointed by us within 90 days;
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an event of default is continuing; or
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any other circumstances described in a prospectus supplement have occurred permitting the issuance of certificated debt securities.
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entitled to have the debt securities registered in their names;
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entitled to physical delivery of certificated debt securities; and
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considered to be holders of those debt securities under the indenture.
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payment of interest on a debt security on any interest payment date will be made to the person in whose name the debt security is registered at the close of business on the regular record date; and
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payment on debt securities of a particular series will be payable at the office of a paying agent or paying agents designated by us.
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the successor, if any, is a U.S. corporation, limited liability company, partnership, trust or other entity;
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the successor assumes our obligations on the debt securities and under the indentures;
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immediately after giving effect to the transaction, no default or event of default shall have occurred and be continuing; and
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certain other conditions are met.
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failure to pay principal of or any premium on any debt security of that series at its maturity;
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(2)
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failure to pay any interest on any debt security of that series when due and payable, if that failure continues for 30 days;
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(3)
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failure to make any sinking fund payment when due and payable, if that failure continues for 30 days;
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(4)
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failure to perform any other covenant in the indenture, if that failure continues for 90 days after we are given the notice of the failure required in the indenture;
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(5)
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certain events of bankruptcy, insolvency or reorganization; and
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any other event of default specified in the prospectus supplement.
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(1)
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the holder has previously given to the trustee written notice of a continuing event of default with respect to the debt securities of that series;
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(2)
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the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written request and have offered reasonable indemnity to the trustee to institute the proceeding; and
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the trustee has failed to institute the proceeding and has not received direction inconsistent with the original request from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series within 60 days after the original request.
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providing for our successor to assume the covenants under the indenture;
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adding covenants or events of default or surrendering our rights or powers;
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making certain changes to facilitate the issuance of the securities;
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securing the securities;
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adding guarantees in respect of any securities;
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providing for a successor trustee;
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curing any ambiguities, defects or inconsistencies;
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permitting or facilitating the defeasance and discharge of the securities;
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making any other changes that do not adversely affect the rights of the holders of the securities; and
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other changes specified in the indenture.
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change the stated maturity of any debt security;
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reduce the principal, premium, if any, or interest rate on any debt security;
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reduce the amount of principal of an original issue discount security or any other debt security payable on acceleration of maturity;
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change the method of computing the amount of principal or interest of any debt security or the place of payment or the currency in which any debt security is payable;
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impair the right to sue for any payment after the stated maturity or redemption date;
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if subordinated debt securities, modify the subordination provisions in a materially adverse manner to the holders of subordinated debt securities;
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adversely affect the right to convert any debt security; or
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change the provisions in the indenture that relate to modifying or amending the indenture.
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either:
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all of the debt securities of that series that have been authenticated and delivered (except lost, stolen or destroyed securities which have been replaced or paid and securities for whose payment money has been held in trust) have been cancelled or delivered to the trustee for cancellation; or
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all of the debt securities of that series not cancelled or delivered to the trustee for cancellation (A) have become due and payable, (B) will become due and payable at their stated maturity within one year, or (C) are to be called for redemption within one year, under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of us, and we have irrevocably deposited or caused to be deposited enough money with the trustee to pay all the principal, interest and any premium due to the date of such deposit or the stated maturity date or redemption date of the debt securities, as the case may be;
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we have paid or caused to be paid all other sums payable by us under the indenture with respect to the debt securities of such series; and
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we have delivered to the trustee an officers' certificate and an opinion of counsel each stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture with respect to the debt securities of such series have been complied with.
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to be discharged from all of our obligations, subject to limited exceptions, with respect to any series of debt securities then outstanding; and
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to be released from our obligations under the following covenants and from the consequences of an event of default resulting from a breach of these and a number of other covenants:
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the limitations on sale and lease-back transactions under the senior indenture;
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the limitations on liens under the senior indenture;
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covenants as to payment of taxes and maintenance of properties; and
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the subordination provisions under the subordinated indenture.
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we or any restricted subsidiary would be entitled to incur indebtedness secured by a mortgage on the principal property involved in such transaction at least equal in amount to the attributable debt with respect to the lease, without equally and ratably securing the senior debt securities, pursuant to "Limitations on Liens" described above; or
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an amount equal to the greater of the following amounts is applied within 180 days of such sale to the retirement of our or any restricted subsidiary's long-term debt or the purchase or development of comparable property:
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the net proceeds from the sale; or
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the attributable debt with respect to the sale and lease-back transaction.
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the total amount of the sale and lease-back transactions; and
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the total amount of secured debt.
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in the event that holders of subordinated debt securities receive a payment before we have paid all senior indebtedness in full, the holders of such subordinated debt securities are required to pay over their share of such distribution to the trustee in bankruptcy, receiver or other person distributing our assets to pay all senior debt remaining to the extent necessary to pay all holders of senior debt in full; and
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our unsecured creditors who are not holders of subordinated debt securities or holders of senior debt may recover less, ratably, than holders of senior debt and may recover more, ratably, than the holders of subordinated debt securities.
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our indebtedness for borrowed money;
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our obligations evidenced by bonds, debentures, notes or similar instruments sold by us for cash;
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our obligations under any interest rate swaps, caps, collars, options, and similar arrangements;
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our obligations under any foreign exchange contract, currency swap contract, futures contract, currency option contract, or other foreign currency hedge arrangements;
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our obligations under any credit swaps, caps, floors, collars and similar arrangements;
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indebtedness incurred, assumed or guaranteed by us in connection with the acquisition by us or any of our subsidiaries of any business, properties or assets, except purchase-money indebtedness classified as accounts payable under generally accepted accounting principles;
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our obligations as lessee under leases required to be capitalized on our balance sheet in conformity with generally accepted accounting principles;
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all obligations under any lease or related document, including a purchase agreement, in connection with the lease of real property which provides that we are contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum residual value of the leased property to the lessor and our obligations under such lease or related document to purchase or to cause a third party to purchase such leased property;
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our reimbursement obligations in respect of letters of credit relating to indebtedness or our other obligations that qualify as indebtedness or obligations of the kind referred to above; and
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our obligations under direct or indirect guaranties in respect of, and obligations to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to above.
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(a)
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prior to such time, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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(b)
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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned:
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by persons who are directors and also officers; and
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by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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at or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
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(1)
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any merger or consolidation involving (i) the corporation or a direct or indirect majority-owned subsidiary of the corporation and (ii) the interested stockholder or any other corporation, partnership or entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation any of (a), (b) or (c) above is not applicable to the surviving entity;
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(2)
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any sale, lease, exchange, mortgage, transfer, pledge or other disposition of 10% or more of the assets or outstanding stock of the corporation or any direct or indirect majority-owned subsidiary of the corporation to or with the interested stockholder;
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(3)
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation or any direct or indirect majority-owned subsidiary of the corporation of any stock of the corporation or such subsidiary to the interested stockholder;
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(4)
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any transaction involving the corporation or any direct or indirect majority-owned subsidiary of the corporation that has the effect of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation or any such subsidiary which is beneficially owned by the interested stockholder; or
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(5)
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the receipt by the interested stockholder of the benefit, directly or indirectly, of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation or any direct or indirect majority-owned subsidiary of the corporation.
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through agents;
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to or through underwriters;
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through broker-dealers (acting as agent or principal);
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directly by us to purchasers, through a specific bidding or auction process or otherwise;
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through a combination of any such methods of sale; and
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through any other methods described in a prospectus supplement.
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Annual Report on Form 10-K for the fiscal year ended October 31, 2023;
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Current Report on Form 8-K filed with SEC on December 15, 2023; and
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Description of our common stock contained in our Information Statement filed as Exhibit 99.1 to the Registration Statement on Form 10 filed on October 7, 2015, as amended or updated.
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