XML 31 R16.htm IDEA: XBRL DOCUMENT v3.23.3
Financial Assets and Liabilities
12 Months Ended
Oct. 31, 2023
Financial Assets And Liabilities [Abstract]  
Financial Assets and Liabilities Financial Assets and Liabilities
Cash Equivalents and Short-term Investments
As of October 31, 2023, the balances of our cash equivalents and short-term investments are as follows:
Amortized CostGross
Unrealized
Gains
Gross
Unrealized
Losses Less Than 12 Continuous Months
Gross
Unrealized
Losses 12 Continuous Months or Longer
Estimated
Fair Value
(1)
 (in thousands)
Cash equivalents:
Money market funds$10,129 $— $— $— $10,129 
U.S. Treasury, agency & T-bills2,994 — — — 2,994 
Total:$13,123 $— $— $— $13,123 
Short-term investments:
U.S. Treasury, agency & T-bills$15,752 $— $(61)$(2)$15,689 
Municipal bonds515 — — (16)499 
Corporate debt securities103,213 13 (455)(396)102,375 
Asset-backed securities33,245 21 (93)(97)33,076 
Total:$152,725 $34 $(609)$(511)$151,639 
(1)See Note 8. Fair Value Measurements for further discussion on fair values.
Our short-term investment portfolio includes both corporate and government debt securities that have a maximum maturity of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As yields increase, those securities with a lower yield-at-cost show a mark-to-market unrealized loss. Most of our unrealized losses are due to changes in market interest rates, and bond yields. We believe that we have the ability to realize the full value of all of these investments upon maturity. As of October 31, 2023, our investments that were in a continuous loss position of 12 months or more, as well as the unrealized losses on those investments, were immaterial.
The contractual maturities of our available-for-sale debt securities as of October 31, 2023 are as follows:
Amortized CostFair Value
(in thousands)
Less than 1 year$74,398 $73,879 
1-5 years74,604 74,104 
5-10 years1,723 1,721 
>10 years2,000 1,935 
Total$152,725 $151,639 
As of October 31, 2022, the balances of our cash equivalents and short-term investments are as follows:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses Less Than 12 Continuous Months
Gross
Unrealized
Losses 12 Continuous Months or Longer
Estimated
Fair Value
(1)
 (in thousands)
Cash equivalents:
Money market funds$77,683 $— $— $— $77,683 
Total:$77,683 $— $— $— $77,683 
Short-term investments:
U.S. Treasury, agency & T-bills$25,816 $— $(174)$(39)$25,603 
Municipal bonds2,970 — (12)(80)2,878 
Corporate debt securities95,899 (747)(1,135)94,024 
Asset-backed securities25,826 — (149)(269)25,408 
Total:$150,511 $$(1,082)$(1,523)$147,913 
(1)See Note 8. Fair Value Measurements for further discussion on fair values.
Restricted cash
We include amounts generally described as restricted cash in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. Restricted cash is primarily associated with office leases and employee loan programs.
The following table provides a reconciliation of cash, cash equivalents and restricted cash included in the consolidated balance sheets:
As of October 31,
20232022
(in thousands)
Cash and cash equivalents$1,438,913 $1,417,608 
Restricted cash included in prepaid and other current assets1,549 1,566 
Restricted cash included in other long-term assets725 690 
Total cash, cash equivalents and restricted cash$1,441,187 $1,419,864 
Non-marketable equity securities
Our portfolio of non-marketable equity securities consists of strategic investments in privately held companies. There were no material impairments of non-marketable equity securities in fiscal 2023, fiscal 2022, or fiscal 2021.
Derivatives
We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value and provide qualitative and quantitative disclosures about such derivatives. We operate internationally and are exposed to potentially adverse movements in foreign currency exchange rates. We enter into hedges in the form of foreign currency forward contracts to reduce our exposure to foreign currency rate changes on non-functional currency denominated forecasted transactions and balance sheet positions including: (1) certain assets and liabilities, (2) shipments forecasted to occur within approximately one month, (3) future billings and revenue on previously shipped orders, and (4) certain future intercompany invoices denominated in foreign currencies.
The duration of forward contracts, the majority of which are short-term, ranges from approximately 1 month to 27 months at inception. We do not use foreign currency forward contracts for speculative or trading purposes. We enter into foreign exchange forward contracts with high credit quality financial institutions that are rated "A" or above and to date have not experienced nonperformance by counterparties. In addition, we mitigate credit risk in derivative
transactions by permitting net settlement of transactions with the same counterparty and anticipate continued performance by all counterparties to such agreements.
The assets or liabilities associated with the forward contracts are recorded at fair value in other current assets or accrued liabilities in the consolidated balance sheets. The accounting for gains and losses resulting from changes in fair value depends on the use of the foreign currency forward contract and whether it is designated and qualifies for hedge accounting. The cash flow impact upon settlement of the derivative contracts is included in “net cash provided by operating activities” in the consolidated statements of cash flows.
Cash Flow Hedging Activities
Certain foreign exchange forward contracts are designated and qualify as cash flow hedges. These contracts have durations of approximately 27 months or less. Certain forward contracts are rolled over periodically to capture the full length of exposure to our foreign currency risk, which can be up to three years. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on the hedged transactions. The related gains or losses resulting from changes in fair value of these hedges is initially reported, net of tax, as a component of other comprehensive income (loss) (OCI) in stockholders’ equity and reclassified into revenue or operating expenses, as appropriate, at the time the hedged transactions affect earnings. We expect a majority of the hedge balance in OCI to be reclassified to the statements of income within the next 12 months.
We did not record any gains or losses related to discontinuation of cash flow hedges for fiscal years 2023, 2022 and 2021.
Non-designated Hedging Activities
Our foreign exchange forward contracts that are used to hedge non-functional currency denominated balance sheet assets and liabilities are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of the forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the underlying assets and liabilities, which are also recorded in other income (expense), net. The duration of the forward contracts for hedging our balance sheet exposure is approximately one month.
We also have certain foreign exchange forward contracts for hedging certain international revenues and expenses that are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of the forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the foreign currency in operating income. The duration of these forward contracts is usually less than one year. The overall goal of our hedging program is to minimize the impact of currency fluctuations on the net income over the fiscal year.
The effects of the non-designated derivative instruments on our consolidated statements of income are summarized as follows: 
 
Year Ended October 31,
 202320222021
 (in thousands)
Gains (losses) recorded in other income (expense), net$(5,899)$(15,851)$(855)
The notional amounts in the table below for derivative instruments provide one measure of the transaction volume outstanding:
As of October 31,
20232022
 (in thousands)
Total gross notional amounts$1,666,758 $1,386,140 
Net fair value$(2,308)$(50,080)
Our exposure to the market gains or losses will vary over time as a function of currency exchange rates. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
The following table represents the consolidated balance sheets location and amount of derivative instrument fair values segregated between designated and non-designated hedge instruments: 
Fair values of
derivative instruments
designated as
hedging instruments
Fair values of
derivative instruments
not designated as
hedging instruments
 (in thousands)
Balance at October 31, 2023
Other current assets$12,962 $491 
Accrued liabilities$14,665 $1,096 
Balance at October 31, 2022
Other current assets$2,315 $223 
Accrued liabilities$52,171 $447 
The following table represents the location of the amount of gains and losses on derivative instrument fair values for designated hedge instruments, net of tax in the consolidated statements of income:
Location of gains (losses)
recognized in OCI on
derivatives
Amount of gains (losses)
recognized in 
OCI on
derivatives
(effective portion)
Location of gains (losses)
reclassified 
from OCI
Amount of
gains (losses)
reclassified 
from OCI
(effective 
portion)
 (in thousands)
Fiscal year ended October 31, 2023
Foreign exchange contractsRevenue$8,390 Revenue$(9,942)
Foreign exchange contractsOperating expenses16,596 Operating expenses(15,334)
Total$24,986 $(25,276)
Fiscal year ended October 31, 2022
Foreign exchange contractsRevenue$(19,755)Revenue$10,975 
Foreign exchange contractsOperating expenses(59,314)Operating expenses(15,869)
Total$(79,069)$(4,894)
Fiscal year ended October 31, 2021
Foreign exchange contractsRevenue$1,148 Revenue$4,181 
Foreign exchange contractsOperating expenses8,712 Operating expenses10,378 
Total$9,860 $14,559 
Other Commitments — Credit and Term Loan
On December 14, 2022, we entered into a Fifth Extension and Amendment Agreement (the Fifth Amendment), which amended and restated our previous credit agreement, dated as of January 22, 2021 (as amended and restated, the Credit Agreement).
The Fifth Amendment increased the existing senior unsecured revolving credit facility (the Revolver) from $650.0 million to $850.0 million and extended the maturity date from January 22, 2024 to December 14, 2027, which could be further extended at our option. The Credit Agreement also provides an uncommitted incremental revolving loan facility of up to $150.0 million in the aggregate principal amount. The Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants. As of October 31, 2023, we were in compliance with the financial covenant.
Borrowings bear interest at the adjusted term Secured Overnight Financing Rate (SOFR) plus an applicable margin between 0.785% and 0.975% based upon our consolidated leverage ratio. In addition, facility fees are payable on the Revolver at rates between 0.09% and 0.15% per year based on our leverage ratio on the daily amount of the revolving commitment.
There was no outstanding balance under the Revolver as of October 31, 2023 and October 31, 2022.
In July 2018, we entered into a 12-year 220.0 million Renminbi (approximately $33.0 million) credit agreement with a lender in China to support our facilities expansion. Borrowings bear interest at a floating rate based on the 5-year Loan Prime Rate plus 0.74%. As of October 31, 2023, we had a $18.1 million outstanding balance under the agreement. The carrying amount of the short-term and long-term debt approximates the estimated fair value.