3 debt benefiting fs consists of intercompany equity

(3) Debt benefiting FS consists of intercompany equity that is treated as debt for segment reporting
purposes, intercompany debt, and borrowing- and funding-related activity associated with FS and
its subsidiaries. Debt benefiting FS totaled $11.4 billion at October 31, 2019 and 2018,
respectively, and was determined by applying an assumed debt-to-equity ratio, which
management believes to be comparable to that of other similar financing companies. FS equity at
both October 31, 2019 and October 31, 2018 was $1.6 billion.
At October 31, 2019 and 2018, FS net cash and cash equivalents were $711 million and $813 million,
respectively.
Net portfolio assets at October 31, 2019 increased 0.9% from October 31, 2018. The increase generally
resulted from new financing volume exceeding portfolio runoff during the period.
FS bad debt expense includes charges to reserves for sales-type, direct-financing and operating leases.
FS recorded net bad debt expense of $75 million, $91 million and $45 million in fiscal 2019, 2018 and 2017,
respectively.
| HEWLETT PACKARD ENTERPRISE 10-K 57

58
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Corporate Investments
For the fiscal years ended
October 31,
2019 2018 2017
Dollars in millions
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 507 $ 543 $ 553
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (108) $ (91) $ (91)
Loss from operations as a % of net revenue . . . . . . . . . . . . . . (21.3)% (16.8)% (16.5)%
Fiscal 2019 compared with Fiscal 2018
Corporate Investments net revenue decreased by $36 million, or 6.6% (decreased 4.4% on a constant
currency bases), in fiscal 2019 as compared to fiscal 2018. The decrease in Corporate Investments net
revenue was due to lower services revenue from the Communications and Media Solutions (‘‘CMS’’) business
and unfavorable currency fluctuations.
Corporate Investments loss from operations as a percentage of net revenue increased 4.5 percentage
points in fiscal 2019 as compared to fiscal 2018, due primarily to higher R&D expenses from Hewlett Packard
Labs and a legal settlement expense in the CMS business, partially offset by a higher gross margin from the
CMS business.
Fiscal 2018 compared with Fiscal 2017
Corporate Investments net revenue decreased by $10 million, or 1.8% (decreased 4.0% on a constant
currency bases), in fiscal 2018 as compared to fiscal 2017. The decrease in Corporate Investments net
revenue, was due to lower services revenue from the CMS business.
Corporate Investments loss from operations as a percentage of net revenue increased 0.3 percentage
points in fiscal 2018 as compared to fiscal 2017, due primarily to the net revenue decline and a lower gross
margin partially offset by lower R&D expenses from Hewlett Packard Labs, lower field selling costs and
administrative expense from the CMS business.
We use cash generated by operations as our primary source of liquidity. We believe that internally
generated cash flows will be generally sufficient to support our operating businesses, capital expenditures,
product development initiatives, acquisition and disposal activities including legal settlements, restructuring