FAIR VALUE MEASUREMENTS

9 Months Ended

Jul. 31, 2019

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 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 July 31, 2019 and October 31, 2018 were as follows:

	Fair Value Measurements at
	July 31, 2019										October 31, 2018
	Total		Level 1		Level 2		Level 3		Other		Total		Level 1		Level 2		Level 3		Other
	(in millions)
Assets:
Short-term
Cash equivalents
Money market funds	$	802	$	802	$	—	$	—	$	—	$	484	$	484	$	—	$	—	$	—
Derivative instruments (foreign exchange contracts)	4		—		4		—		—		6		—		6		—		—
Long-term
Equity investments	37		37		—		—		—		30		30		—		—		—
Equity investments - other	9		—		—		—		9		16		—		—		—		16
Total assets measured at fair value	$	852	$	839	$	4	$	—	$	9	$	536	$	514	$	6	$	—	$	16
Liabilities:
Short-term
Derivative instruments (foreign exchange contracts)	$	4	$	—	$	4	$	—	$	—	$	6	$	—	$	6	$	—	$	—
Long-term
Deferred compensation liability	14		—		14		—		—		13		—		13		—		—
Total liabilities measured at fair value	$	18	$	—	$	18	$	—	$	—	$	19	$	—	$	19	$	—	$	—

Net recognized gains (losses) on equity investments were as follows:

	Three Months Ended		Nine Months Ended
	July 31, 2019
	(in millions)
Net realized gains on investments sold	$	—	$	1
Net unrealized gains on investments still held	4		7
Other-than-temporary impairments of investments	—		—
Total	$	4	$	8

Our money market funds and equity investments with readily determinable fair values are measured at fair value using quoted market prices and, therefore, are classified within Level 1 of the fair value hierarchy. Equity investments without readily determinable fair values that are measured at cost adjusted for observable changes in price or impairments are not categorized in the fair value hierarchy and are presented as "Equity investments - other" in the tables above. Our deferred compensation liability is classified as Level 2 because the inputs used in the calculations are observable, although the values are not directly based on quoted market prices. 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.

Equity investments including securities that are earmarked to pay the deferred compensation liability and the deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized in earnings. Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss). During the nine months ended July 31, 2019, we received proceeds of $7 million from the sale of a cost-method investment, classified as “Equity investments – other,” which was sold at cost. Realized gains and losses from the sale of these instruments are recorded in earnings.