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NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended
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Oct. 31, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In May 2014, the FASB issued new revenue recognition guidance, ASC Topic 606, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The objective of the new revenue standard is to significantly enhance comparability and clarify principles of revenue recognition practices across entities, industries, jurisdictions and capital markets. Under the new guidance, there are specific criteria to determine if a performance obligation should be recognized over time or at a point in time. On November 1, 2018, we adopted ASC 606 using the modified retrospective approach only to contracts not completed as of this date. Results for reporting periods after November 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported in accordance with ASC Topic 605, Revenue Recognition. We recorded a net increase to beginning retained earnings of $23 million as of November 1, 2018 due to the cumulative impact of adopting ASC 606. The impact to beginning retained earnings is primarily due to an increase in contract assets (unbilled accounts receivable), a reduction in inventory and a reduction in contract liabilities (deferred revenue). The net increase in retained earnings and resulting changes in assets and liabilities was mainly driven by the change in timing of the recognition of revenue from the fulfillment of separate performance obligations as control transfers to the customer. Had we continued to use the revenue recognition guidance in effect prior to fiscal year 2019, no material changes would have resulted to the consolidated statements of income, comprehensive income, or cash flows for the year ended October 31, 2019. As a result, comparisons of revenue and operating profit performance between periods are not materially affected by the adoption of this standard. Refer to Note 1, "Overview and Summary of Significant Accounting Policies"for a description of the company’s revenue recognition policies and Note 4, "Revenue" for the disclosures required by the standard. As of November 1, 2018, we elected to early adopt new accounting guidance which amends reporting comprehensive income to allow a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for the deferred taxes previously recorded in AOCI that exceed the current federal tax rate of 21 percent resulting from the enacted corporate tax rate in the U.S. Tax Cuts and Jobs Act ("the Tax Act"). The adoption of this guidance resulted in a reclassification of $7 million from AOCI to beginning retained earnings on our consolidated balance sheet. As of November 1, 2018, we adopted new accounting guidance which eliminates the exception in ASC 740, Income Taxes against immediate recognition of income tax consequences of intra-entity transfers of assets other than inventory. The amendment in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of period of adoption. We recorded a net decrease in beginning retained earnings of $2 million as of November 1, 2018 due to removing unamortized tax expense previously deferred. As of November 1, 2018, we adopted new accounting guidance which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments and also the related guidance which addresses technical corrections and improvements to this guidance. The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The total impact of adoption to our consolidated balance sheet was an increase of $7 million to long-term investments and a net increase of $5 million to beginning retained earnings. The following table summarizes the impacts of recently adopted accounting pronouncements on our consolidated balance sheet as of November 1, 2018:
| October 31, 2018 |  | Impact of Adopting New |  | November 1, 2018
| As Reported |  | Revenue Recognition Guidance |  | Tax Effects on Items in AOCI Guidance |  | Intra-Entity Tax Guidance |  | Investments Valuation Guidance |  | As Adopted
| (in millions)
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 2,247 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,247 |
Accounts receivable, net | 776 |  |  | 24 |  |  | — |  |  | — |  |  | — |  |  | 800 |
Inventory | 638 |  |  | (10 | ) |  | — |  |  | — |  |  | — |  |  | 628 |
Other current assets | 187 |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | 190 |
Total current assets | 3,848 |  |  | 17 |  |  | — |  |  | — |  |  | — |  |  | 3,865 |
Property, plant and equipment, net | 822 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 822 |
Goodwill | 2,973 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,973 |
Other intangible assets, net | 491 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 491 |
Long-term investments | 68 |  |  | — |  |  | — |  |  | — |  |  | 7 |  |  | 75 |
Other assets | 339 |  |  | (3 | ) |  | — |  |  | (2 | ) |  | (2 | ) |  | 332 |
Total assets | $ | 8,541 |  |  | $ | 14 |  |  | $ | — |  |  | $ | (2 | ) |  | $ | 5 |  |  | $ | 8,558 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable | $ | 340 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 340 |
Employee compensation and benefits | 304 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 304 |
Deferred revenue | 324 |  |  | (11 | ) |  | — |  |  | — |  |  | — |  |  | 313 |
Other accrued liabilities | 203 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 203 |
Total current liabilities | 1,171 |  |  | (11 | ) |  | — |  |  | — |  |  | — |  |  | 1,160 |
Long-term debt | 1,799 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,799 |
Retirement and post-retirement benefits | 239 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 239 |
Other long-term liabilities | 761 |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | 763 |
Total liabilities | 3,970 |  |  | (9 | ) |  | — |  |  | — |  |  | — |  |  | 3,961 |
Total equity: |  |  |  |  |  |  |  |  |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock; $0.01 par value; 125 million shares authorized; none issued and outstanding | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Common stock; $0.01 par value; 2 billion shares authorized; 318 million shares at October 31, 2018 issued | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |
Additional paid-in-capital | 5,308 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,308 |
Accumulated deficit | (336 | ) |  | 23 |  |  | 7 |  |  | (2 | ) |  | 5 |  |  | (303 | )
Accumulated other comprehensive loss | (408 | ) |  | — |  |  | (7 | ) |  | — |  |  | — |  |  | (415 | )
Total stockholders' equity | 4,567 |  |  | 23 |  |  | — |  |  | (2 | ) |  | 5 |  |  | 4,593 |
Non-controlling interest | 4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4 |
Total equity | 4,571 |  |  | 23 |  |  | — |  |  | (2 | ) |  | 5 |  |  | 4,597 |
Total liabilities and equity | $ | 8,541 |  |  | $ | 14 |  |  | $ | — |  |  | $ | (2 | ) |  | $ | 5 |  |  | $ | 8,558 |
As of November 1, 2018, we adopted new accounting guidance which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. A reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet follows:
| October 31
| 2019 |  | 2018 |  | 2017
| (in millions) |  |
Cash and cash equivalents | $ | 1,382 |  |  | $ | 2,247 |  |  | $ | 2,678 |
Restricted cash included in other assets | 6 |  |  | 7 |  |  | 8 |
Total cash, cash equivalents and restricted cash | $ | 1,388 |  |  | $ | 2,254 |  |  | $ | 2,686 |
As of November 1, 2018, we adopted new accounting guidance which requires employers that present a measure of operating income in their statements of operations to include only the service cost component of net periodic postretirement benefit cost in operating expenses. The service cost component of net periodic pension and postretirement benefit cost should be presented in the same operating expense line items as other employee compensation costs arising from services rendered during the period. The other components of net periodic pension and postretirement benefit costs, including interest costs, expected return on assets, amortization of prior service cost/credit and actuarial gains/losses, and settlement and curtailment effects, are to be included separately and outside of any subtotal of operating income. The adoption of this guidance resulted in a reclassification of income from our income from operations to other income (expense), net on our consolidated statement of operations of approximately $10 million, $24 million and $34 million in the year ended October 31, 2019, 2018 and 2017, respectively. As adoption is required to be on a retrospective basis, we have recast our historical consolidated statements of operations and segment information to conform to current year presentation. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued guidance which amends the existing accounting standards for leases. Consistent with existing guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. Under the new guidance, a lessee will be required to recognize right-of-use assets ("ROU") and lease liabilities on the balance sheet. On November 1, 2019, we adopted the lease accounting guidance using the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning November 1, 2019 will be presented under the new accounting guidance, while prior period amounts will not be adjusted. As of November 1, 2019, the new accounting guidance had a material impact on our consolidated balance sheet but is expected to have an insignificant impact on the consolidated net income and cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the accounting for capital leases remained substantially unchanged. For leases that commenced before the effective date of adoption of the new accounting guidance, we elected the permitted practical expedients to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) capitalization of initial direct costs for any existing leases. As a result of the cumulative impact of adopting the new accounting guidance we will record operating lease ROU assets around $195 million and operating lease liabilities of the same amounts, primarily related to real estate and automobile leases. The accounting applied to lease arrangements in which we are the lessor is largely unchanged from that applied under the prior standard and will not have a significant impact to our consolidated balance sheet, net income or cash flows In January 2017, the FASB issued an amendment to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The amendment also simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments are effective for us beginning November 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect to early adopt nor do we expect this guidance to have a material impact on our consolidated financial statements and disclosures. In August 2018, the FASB issued updates to improve the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement which eliminates certain disclosure requirements and modifies others. These amendments are effective for us beginning November 1, 2020, and for interim periods within that year with early adoption permitted. We currently do not expect this guidance to have a material impact on our consolidated financial statements and disclosures. In August 2018, the FASB issued updates to improve the effectiveness of disclosures for defined benefit plans under Accounting Standard Codification Topic 715-20. The amendments in this guidance remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. These amendments are effective for us beginning November 1, 2021, with early adoption permitted. We currently do not expect this guidance to have a material impact on our consolidated financial statements and disclosures. Other amendments to GAAP in the U.S. that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

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- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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