Financial Instruments

9 Months Ended

Jul. 31, 2020

Investments, All Other Investments [Abstract]

Cash Equivalents and Available-for-Sale Debt Investments

Cash equivalents and available-for-sale debt investments were as follows:


	As of July 31, 2020										As of October 31, 2019
	Cost		Gross Unrealized Gain		Fair Value		Cost		Gross Unrealized Gain			Fair Value
	In millions
Cash Equivalents:
Time deposits	$	4,778	$	—	$	4,778	$	803	$	—		$	803
Money market funds	1,668		—		1,668		859		—			859
Total cash equivalents	6,446		—		6,446		1,662		—			1,662
Available-for-Sale Debt Investments:
Foreign bonds	83		14		97		110		23			133
Other debt securities	20		1		21		32		—			32
Total available-for-sale debt investments	103		15		118		142		23			165
Total cash equivalents and available-for-sale debt investments	$	6,549	$	15	$	6,564	$	1,804	$	23		$	1,827

As of July 31, 2020 and October 31, 2019, 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 in the U.S. as of July 31, 2020 and outside the U.S. as of October 31, 2019. The estimated fair value of the available-for-sale debt investments may not be representative of values that will be realized in the future.

Contractual maturities of available-for-sale debt investments were as follows:


	July 31, 2020
	Amortized Cost		Fair Value
	In millions

Due in more than five years	$	103	$	118
	$	103	$	118

Equity securities investments in privately held companies are included in Long-term financing receivables and other assets in the Condensed Consolidated Balance Sheets. The carrying amount of those without readily determinable fair values amounted to $283 million and $190 million at July 31, 2020 and October 31, 2019, respectively. The carrying amount of those marketable equity securities with readily determinable fair value amounted to $29 million as of July 31, 2020. The Company did not have any marketable equity securities with readily determinable fair value as of October 31, 2019.

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 amounted to $2.3 billion at July 31, 2020 and October 31, 2019.

The Company did not recognize any impairments on these equity investments during the nine months ended July 31, 2020.

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, 2020																		As of October 31, 2019
			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	$	6,850	$	4	$	255	$	—	$	—	$	6,850	$	—	$	72	$	11	$	—
Cash flow hedges:
Foreign currency contracts	7,929		61		85		176		47		8,578		164		141		45		27
Interest rate contracts	500		—		—		4		—		500		—		1		—		—
Net investment hedges:
Foreign currency contracts	1,778		29		37		13		6		1,766		31		36		18		10
Total derivatives designated as hedging instruments	17,057		94		377		193		53		17,694		195		250		74		37
Derivatives not designated as hedging instruments
Foreign currency contracts	6,013		86		7		65		1		6,398		17		3		33		3
Other derivatives	101		2		—		—		—		97		3		—		—		—
Total derivatives not designated as hedging instruments	6,114		88		7		65		1		6,495		20		3		33		3
Total derivatives	$	23,171	$	182	$	384	$	258	$	54	$	24,189	$	215	$	253	$	107	$	40

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. The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:


	As of July 31, 2020
	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	$	566	$	—	$	566	$	202	$	391	⁽¹⁾	$	(27)
Derivative liabilities	$	312	$	—	$	312	$	202	$	83	⁽²⁾	$	27


	As of October 31, 2019
	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	$	468	$	—	$	468	$	123	$	263	⁽¹⁾	$	82
Derivative liabilities	$	147	$	—	$	147	$	123	$	19	⁽²⁾	$	5

(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. As of July 31, 2020, $83 million of collateral posted was entirely through re-use of counterparty collateral. As of October 31, 2019, $19 million of collateral posted was entirely by way of re-use of counterparty collateral.

The amounts recorded on the Condensed Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges were as follows:


	Carrying amount of the hedged assets/ (liabilities)						Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities)
	As of						As of
	July 31, 2020		October 31, 2019		July 31, 2020		October 31, 2019
	In millions						In millions
Notes payable and short-term borrowings	$	(3,004)	$	(2,987)	$	(4)	$	11
Long-term debt	$	(4,093)	$	(3,908)	$	(255)	$	(72)

The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") were as follows:


	Gains (Losses) Recognized in OCI on Derivatives
	Three months ended July 31, 2020		Three months ended July 31, 2019		Nine months ended July 31, 2020		Nine months ended July 31, 2019
	In millions
Derivatives in Cash Flow Hedging relationship
Foreign exchange contracts	$	(456)	$	63	$	(79)	$	225
Interest rate contracts	—		—		(6)		—
Derivatives in Net Investment Hedging relationship
Foreign exchange contracts	(83)		(18)		50		(23)
Total	$	(539)	$	45	$	(35)	$	202

As of July 31, 2020, the Company expects to reclassify an estimated net accumulated other comprehensive loss of

approximately $99 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.

Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

The pre-tax effect of derivative instruments on the Condensed Consolidated Statements of Earnings were as follows:


	Gains (Losses) Recognized in Income
	Three months ended July 31, 2020						Three months ended July 31, 2019						Nine months ended July 31, 2020				Nine months ended July 31, 2019
	Net revenue		Interest and other, net		Net revenue		Interest and other, net		Net revenue		Interest and other, net		Net revenue		Interest and other, net
	In millions
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded	$	6,816	$	(71)	$	7,217	$	(70)	$	19,774	$	(158)	$	21,920	$	(139)
Gains (losses) on derivatives in fair value hedging relationships
Interest rate contracts
Hedged items	$	—	$	(13)	$	—	$	(123)	$	—	$	(198)	$	—	$	(341)
Derivatives designated as hedging instruments	—		13		—		123		—		198		—		341
Gains (losses) on derivatives in cash flow hedging relationships
Foreign exchange contracts
Amount of gains (losses) reclassified from accumulated other comprehensive income into income	23		(264)		42		16		97		(55)		168		91
Interest rate contracts
Amount of gains (losses) reclassified from accumulated other comprehensive income into income	—		(1)		—		—		—		(1)		—		—
Gains (losses) on derivatives not designated as hedging instruments
Foreign exchange contracts	—		8		—		55		—		53		—		(68)
Other derivatives	—		(6)		—		(2)		—		(1)		—		5
Total gains (losses)	$	23	$	(263)	$	42	$	69	$	97	$	(4)	$	168	$	28