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FAIR VALUE MEASUREMENTS (Notes)
 3 Months Ended
Jan. 31, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
 
The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The guidance establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

Level 1- applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2- applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are observable, either directly or indirectly, for the asset or liability such as: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in less active markets; or other inputs that can be derived principally from, or corroborated by, observable market data.

Level 3- applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2024 were as follows:
 
  Fair Value Measurement at January 31, 2024 Using
 January 31,
2024
Quoted Prices
 in Active
 Markets for
 Identical Assets
 (Level 1)
Significant
 Other
 Observable
 Inputs
 (Level 2)
Significant
 Unobservable
 Inputs
 (Level 3)
 (in millions)
Assets:    
Short-term    
Cash equivalents (money market funds)$1,102 $1,102 $— $— 
Derivative instruments (foreign exchange contracts)12 — 12 — 
Long-term
Trading securities38 38 — — 
Other investments29 — 29 — 
Total assets measured at fair value$1,181 $1,140 $41 $— 
Liabilities:    
Short-term
Derivative instruments (foreign exchange contracts) $10 $— $10 $— 
Contingent consideration1 — — 1 
Long-term
Deferred compensation liability38 — 38 — 
Total liabilities measured at fair value$49 $— $48 $1 

Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2023 were as follows:
 
  Fair Value Measurement at October 31, 2023 Using
 October 31,
2023
Quoted Prices
 in Active
 Markets for
 Identical Assets
 (Level 1)
Significant
 Other
 Observable
 Inputs
 (Level 2)
Significant
 Unobservable
 Inputs
 (Level 3)
 (in millions)
Assets:    
Short-term    
Cash equivalents (money market funds)$994 $994 $— $— 
Derivative instruments (foreign exchange contracts)19 — 19 — 
Long-term
Trading securities36 36 — — 
Other investments26 — 26 — 
Total assets measured at fair value$1,075 $1,030 $45 $— 
Liabilities:    
Short-term
Derivative instruments (foreign exchange contracts)$2 $— $2 $— 
Contingent consideration1 — — 1 
Long-term
Deferred compensation liability36 — 36 — 
Total liabilities measured at fair value$39 $— $38 $1 
 
Our money market funds and trading securities are generally valued using quoted market prices and therefore are classified within level 1 of the fair value hierarchy. Our derivative financial instruments are classified within level 2, as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets. Our deferred compensation liability is classified as level 2 because, although the values are not directly based on quoted market prices, the inputs used in the calculations are observable.

Other investments represent shares we own in a special fund that targets underlying investments of approximately 40 percent in debt securities and 60 percent in equity securities. These shares have been classified as level 2 because, although the shares of the fund are not traded on any active stock exchange, each of the individual underlying securities are or can be derived from similar securities traded on an active market and hence we have a readily determinable value for the underlying securities, from which we are able to determine the fair market value for the special fund itself.

Trading securities, which are comprised of mutual funds, bonds and other similar instruments, other investments and deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in net income. Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss) within stockholders' equity. Realized gains and losses from the sale of these instruments are recorded in net income.

Gains and losses reflected in other income (expense), net for our equity investments with readily determinable fair value ("RDFV") and equity investments without RDFV are summarized below:
Three Months Ended
January 31,
20242023
(in millions)
Net gain (loss) recognized during the period on equity securities$3 $(10)
Less: Net gain (loss) on equity securities sold during the period$— $(11)
Unrealized gain (loss) on equity securities $3 $1 

Contingent Consideration. As of January 31, 2024, the fair value of the contingent consideration liability relates to milestone payments in connection with one acquisition.

The contingent consideration liability is our only recurring Level 3 asset or liability. A summary of the Level 3 activity follows:

Three Months Ended
January 31,
20242023
(in millions)
Beginning balance$1 $67 
Additions to contingent consideration (including measurement period adjustment)— — 
Payments— (65)
Change in fair value (included within selling, general and administrative expenses)— 1 
Ending balance$1 $3 

The fair value of the contingent consideration liability as of January 31, 2024, was estimated to be $1 million which was recorded in other accrued liabilities on the condensed consolidated balance sheet. During the three months ended January 31, 2023, we made a contingent consideration payment of $65 million related to the achievement of a certain technical milestone associated with our acquisition of Resolution Bioscience.

Resolution Bioscience. In the third quarter of fiscal year 2023, we decided to exit the Resolution Bioscience business and subsequently divested our interest in the business in the fourth quarter of fiscal year 2023. We project that there are no potential future milestone payments related to the Resolution Bioscience business.

Impairment of Investments. There were no impairments of investments for the three months ended January 31, 2024 and 2023.
 
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

For the three months ended January 31, 2024 long-lived assets held and used with a carrying value of $8 million were written down to their fair value of $0 million resulting in an impairment of $8 million. For the three months ended January 31, 2024, there were no impairments of long-lived assets held for sale. For the three months ended January 31, 2023, there were no impairments of long-lived assets held and used or long-lived assets held for sale.

Non-Marketable Equity Securities

For the three months ended January 31, 2024 and 2023, there were no impairments or unrealized gain (loss) adjustments to the carrying value of non-marketable securities without readily determinable fair value based on an observable market transaction.

As of January 31, 2024, the cumulative net gain (loss) on our non-marketable equity securities without readily determinable fair values was comprised of a $38 million gain and a $29 million loss, and the carrying amount was $102 million. As of January 31, 2023, the cumulative net gain (loss) on our non-marketable equity securities without readily determinable fair values was comprised of a $35 million gain and no losses, and the carrying amount was $126 million.

Fair values for the non-marketable securities included in long-term investments on the condensed consolidated balance sheet were measured using Level 3 inputs because they are primarily equity stock issued by private companies without quoted market prices. To estimate the fair value of our non-marketable securities, we use the measurement alternative to record these investments at cost and adjust for impairments and observable price changes (orderly transactions for the identical or a similar security from the same issuer) as and when they occur.