v3.10.0.1

Financial Instruments | 9 Months Ended
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Jul. 31, 2018
Investments, All Other Investments [Abstract] |
Financial Instruments | Financial Instruments Cash Equivalents and Available-for-Sale Investments Cash equivalents and available-for-sale investments were as follows:
| As of July 31, 2018 |  | As of October 31, 2017
| Cost |  | Gross Unrealized Gain |  | Gross Unrealized Loss |  | Fair Value |  | Cost |  | Gross Unrealized Gain |  | Gross Unrealized Loss |  | Fair Value
| In millions
Cash Equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits | $ | 954 |  |  | $ | — |  |  | $ | — |  |  | $ | 954 |  |  | $ | 1,159 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,159 |
Money market funds | 2,461 |  |  | — |  |  | — |  |  | 2,461 |  |  | 5,592 |  |  | — |  |  | — |  |  | 5,592 |
Total cash equivalents | 3,415 |  |  | — |  |  | — |  |  | 3,415 |  |  | 6,751 |  |  | — |  |  | — |  |  | 6,751 |
Available-for-Sale Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign bonds | 116 |  |  | 21 |  |  | — |  |  | 137 |  |  | 183 |  |  | 40 |  |  | — |  |  | 223 |
Other debt securities | 27 |  |  | — |  |  | (2 | ) |  | 25 |  |  | 37 |  |  | — |  |  | (11 | ) |  | 26 |
Total available-for-sale investments | 143 |  |  | 21 |  |  | (2 | ) |  | 162 |  |  | 220 |  |  | 40 |  |  | (11 | ) |  | 249 |
Total cash equivalents and available-for-sale investments | $ | 3,558 |  |  | $ | 21 |  |  | $ | (2 | ) |  | $ | 3,577 |  |  | $ | 6,971 |  |  | $ | 40 |  |  | $ | (11 | ) |  | $ | 7,000 |
As of July 31, 2018 and October 31, 2017, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. Time deposits were primarily issued by institutions outside the U.S. as of July 31, 2018 and October 31, 2017. The estimated fair value of the available-for-sale investments may not be representative of values that will be realized in the future. Contractual maturities of investments in available-for-sale debt securities were as follows:
| July 31, 2018
| Amortized Cost |  | Fair Value
| In millions
Due in more than five years | $ | 143 |  |  | $ | 162 |
Equity securities in privately held companies that are accounted for as cost method investments are included in Long-term financing receivables and other assets in the Condensed Consolidated Balance Sheets. These investments amounted to $165 million and $149 million at July 31, 2018 and October 31, 2017, respectively. Investments in equity securities that are accounted for using the equity method are included in Investments in equity interests in the Condensed Consolidated Balance Sheets. These investments amounted to $2.5 billion at July 31, 2018 and October 31, 2017. Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets The gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets were as follows:
| As of July 31, 2018 |  | As of October 31, 2017
|  |  | Fair Value |  |  |  | Fair Value
| Outstanding Gross Notional |  | Other Current Assets |  | Long-Term Financing Receivables and Other Assets |  | Other Accrued Liabilities |  | Long-Term Other Liabilities |  | Outstanding Gross Notional |  | Other Current Assets |  | Long-Term Financing Receivables and Other Assets |  | Other Accrued Liabilities |  | Long-Term Other Liabilities
| In millions
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | 7,900 |  |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | 333 |  |  | $ | 9,500 |  |  | $ | — |  |  | $ | — |  |  | $ | 16 |  |  | $ | 126 |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | 8,298 |  |  | 179 |  |  | 62 |  |  | 39 |  |  | 49 |  |  | 7,202 |  |  | 105 |  |  | 45 |  |  | 101 |  |  | 70 |
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | 1,817 |  |  | 25 |  |  | 29 |  |  | 22 |  |  | 13 |  |  | 1,944 |  |  | 35 |  |  | 10 |  |  | 36 |  |  | 41 |
Total derivatives designated as hedging instruments | 18,015 |  |  | 204 |  |  | 91 |  |  | 64 |  |  | 395 |  |  | 18,646 |  |  | 140 |  |  | 55 |  |  | 153 |  |  | 237 |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | 7,568 |  |  | 25 |  |  | 7 |  |  | 34 |  |  | 8 |  |  | 9,552 |  |  | 61 |  |  | 3 |  |  | 79 |  |  | 8 |
Other derivatives | 107 |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | 96 |  |  | 1 |  |  | — |  |  | — |  |  | — |
Total derivatives not designated as hedging instruments | 7,675 |  |  | 27 |  |  | 7 |  |  | 34 |  |  | 8 |  |  | 9,648 |  |  | 62 |  |  | 3 |  |  | 79 |  |  | 8 |
Total derivatives | $ | 25,690 |  |  | $ | 231 |  |  | $ | 98 |  |  | $ | 98 |  |  | $ | 403 |  |  | $ | 28,294 |  |  | $ | 202 |  |  | $ | 58 |  |  | $ | 232 |  |  | $ | 245 |
Offsetting of Derivative Instruments The Company recognizes all derivative instruments on a gross basis in the Condensed Consolidated Balance Sheets. The Company's derivative instruments are subject to master netting arrangements and collateral security arrangements. The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under collateral security agreements. As of July 31, 2018 and October 31, 2017, information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements was as follows:
| As of July 31, 2018
| In the Condensed Consolidated Balance Sheets |  |  |  |
| (i) |  | (ii) |  | (iii) = (i)–(ii) |  | (iv) |  | (v) |  |  |  | (vi) = (iii)–(iv)–(v)
|  |  |  |  |  |  | Gross Amounts Not Offset |  |  |  |
| Gross Amount Recognized |  | Gross Amount Offset |  | Net Amount Presented |  | Derivatives |  | Financial Collateral |  |  |  | Net Amount
| In millions
Derivative assets | $ | 329 |  |  | $ | — |  |  | $ | 329 |  |  | $ | 160 |  |  | $ | 104 |  |  | (1) |  | $ | 65 |
Derivative liabilities | $ | 501 |  |  | $ | — |  |  | $ | 501 |  |  | $ | 160 |  |  | $ | 254 |  |  | (2) |  | $ | 87 |
| As of October 31, 2017
| In the Condensed Consolidated Balance Sheets |  |  |  |
| (i) |  | (ii) |  | (iii) = (i)–(ii) |  | (iv) |  | (v) |  |  |  | (vi) = (iii)–(iv)–(v)
|  |  |  |  |  |  | Gross Amounts Not Offset |  |  |  |
| Gross Amount Recognized |  | Gross Amount Offset |  | Net Amount Presented |  | Derivatives |  | Financial Collateral |  |  |  | Net Amount
| In millions
Derivative assets | $ | 260 |  |  | $ | — |  |  | $ | 260 |  |  | $ | 209 |  |  | $ | 34 |  |  | (1) |  | $ | 17 |
Derivative liabilities | $ | 477 |  |  | $ | — |  |  | $ | 477 |  |  | $ | 209 |  |  | $ | 242 |  |  | (3) |  | $ | 26 |
(1) | Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date.
(2) | Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. Of the $254 million of collateral posted, $205 million was in cash and, $49 million was through re-use of counterparty collateral.
(3) | Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. Of the $242 million of collateral posted, $220 million was in cash and, $22 million was through re-use of counterparty collateral.
Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the three and nine months ended July 31, 2018 and 2017 were as follows:
|  | Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item |  |
Derivative Instrument |  | Location |  | Three months ended July 31, 2018 |  | Nine months ended July 31, 2018 |  | Hedged Item |  | Location |  | Three months ended July 31, 2018 |  | Nine months ended July 31, 2018
|  |  |  | In millions |  |  |  |  |  | In millions
Interest rate contracts |  | Interest and other, net |  | $ | 16 |  |  | $ | (194 | ) |  | Fixed-rate debt |  | Interest and other, net |  | $ | (16 | ) |  | $ | 194 |
|  | Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item |  |
Derivative Instrument |  | Location |  | Three months ended July 31, 2017 |  | Nine months ended July 31, 2017 |  | Hedged Item |  | Location |  | Three months ended July 31, 2017 |  | Nine months ended July 31, 2017
|  |  |  | In millions |  |  |  |  |  | In millions
Interest rate contracts |  | Interest and other, net |  | $ | 23 |  |  | $ | (202 | ) |  | Fixed-rate debt |  | Interest and other, net |  | $ | (23 | ) |  | $ | 202 |
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and nine months ended July 31, 2018 were as follows:
| Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) |  | Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion)
| Three months ended July 31, 2018 |  | Nine months ended July 31, 2018 |  | Location |  | Three months ended July 31, 2018 |  | Nine months ended July 31, 2018
| In millions |  |  |  | In millions
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 121 |  |  | $ | 59 |  |  | Net revenue |  | $ | 29 |  |  | $ | (82 | )
Foreign currency contracts | 28 |  |  | (9 | ) |  | Interest and other, net |  | 14 |  |  | 4 |
Total cash flow hedges | $ | 149 |  |  | $ | 50 |  |  | Net earnings from continuing operations |  | $ | 43 |  |  | $ | (78 | )
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | 57 |  |  | $ | 31 |  |  | Interest and other, net |  | $ | — |  |  | $ | — |
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and nine months ended July 31, 2017 was as follows:
| Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) |  | Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion)
| Three months ended July 31, 2017 |  | Nine months ended July 31, 2017 |  | Location |  | Three months ended July 31, 2017 |  | Nine months ended July 31, 2017
| In millions |  |  |  | In millions
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | (160 | ) |  | $ | (163 | ) |  | Net revenue |  | $ | (45 | ) |  | $ | 9 |
Foreign currency contracts | — |  |  | (1 | ) |  | Cost of products |  | — |  |  | — |
Foreign currency contracts | 28 |  |  | 170 |  |  | Interest and other, net |  | 29 |  |  | 178 |
Subtotal | (132 | ) |  | 6 |  |  | Net earnings from continuing operations |  | (16 | ) |  | 187 |
Foreign currency contracts | (1 | ) |  | 1 |  |  | Net loss from discontinued operations |  | 1 |  |  | 44 |
Total cash flow hedges | $ | (133 | ) |  | $ | 7 |  |  | Net earnings (loss) |  | $ | (15 | ) |  | $ | 231 |
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | (97 | ) |  | $ | (107 | ) |  | Interest and other, net |  | $ | — |  |  | $ | — |
As of July 31, 2018 and 2017, no portion of the hedging instruments' gain or loss was excluded from the assessment of effectiveness for fair value, cash flow or net investment hedges. Hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for the three and nine months ended July 31, 2018 and 2017. As of July 31, 2018, the Company expects to reclassify an estimated net Accumulated other comprehensive gain of approximately $71 million, net of taxes, to earnings in the next twelve months, along with the earnings effects of the related forecasted transactions associated with cash flow hedges. The pre-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Earnings for the three and nine months ended July 31, 2018 and 2017 was as follows:
|  |  | Gains (Losses) Recognized in Earnings on Derivatives
| Location |  | Three months ended July 31, 2018 |  | Three months ended July 31, 2017 |  | Nine months ended July 31, 2018 |  | Nine months ended July 31, 2017
|  |  | In millions
Foreign currency contracts | Interest and other, net |  | $ | 233 |  |  | $ | (279 | ) |  | $ | 104 |  |  | $ | (525 | )
Other derivatives | Interest and other, net |  | — |  |  | — |  |  | — |  |  | 4 |
Total |  |  | $ | 233 |  |  | $ | (279 | ) |  | $ | 104 |  |  | $ | (521 | )

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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- References No definition available. + Details
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