3. NEW ACCOUNTING PRONOUNCEMENTS

There were no changes to the new accounting pronouncements as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015 except for the following:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued amendments that change the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The standard also allows us to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. The amendments also remove the requirement to delay the recognition of an excess tax benefit until it reduces current taxes payable. Under the new guidance the benefit will be recorded when it arises with a cumulative effect adjustment to opening retained earnings for previously unrecognized benefits. The new guidance is effective for us beginning November 1, 2017, with early adoption permitted.

We elected to early adopt the new guidance in the third quarter of fiscal year 2016, on a retrospective basis, which requires us to reflect any adjustments as of November 1, 2015, the beginning of the annual period that includes the interim period of adoption. The impact of adoption on previously reported quarterly results was the recognition of tax shortfalls of $2 million in our provision for income taxes for the first quarter of fiscal year 2016. Additional amendments to the accounting for income taxes on previously reported quarterly results was the recognition of the windfall tax benefits as a cumulative effect adjustment to opening retained earnings of $195 million together with an increase in deferred tax assets included in other assets of $97 million, an increase in additional paid in capital of $4 million, a reduction in other accrued liabilities of $1 million and a decrease of $99 million in other long term liabilities. There was no impact from minimum statutory withholding tax requirements to retained earnings as of November 1, 2015. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period.

The adoption of the new guidance did not have a significant impact on the calculation of diluted weighted average shares. The impact of the adoption on our previously reported quarterly results for fiscal year 2016 follows:



	Three Months Ended January 31, 2016				Six Months Ended April 30, 2016
	As Reported		As Adjusted		As Reported		As Adjusted
	(in millions, except per share amounts)
Condensed Consolidated Statement of Operations:
Provision for income taxes	$	19	$	21	$	45	$	47
Net income	$	123	$	121	$	214	$	212
Net income per share - Basic	$	0.37	$	0.37	$	0.65	$	0.65
Net income per share - Diluted	$	0.37	$	0.36	$	0.65	$	0.64
Weighted average shares used in computing net income per share - Diluted	332		332		330		330

We elected to apply the presentation requirements for cash flows related to excess tax benefits and employee taxes paid for withheld shares retrospectively to all periods presented which resulted in an increase to both net cash from operations and net cash used in financing of $1 million and $6 million for the three and nine months ended July 31, 2016, respectively. The presentation requirements for cash flows also impacted our previously reported quarterly condensed consolidated statement of cash flows for fiscal years 2016 and 2015 as follows:



	Three Months Ended January 31, 2016						Six Months Ended April 30, 2016
	As Reported			As Adjusted			As Reported			As Adjusted
	(in millions)
Condensed Consolidated Statement of Cash Flows:
Net cash provided by operating activities	$	104		$	111		$	360		$	365
Net cash used in financing activities	$	(132	)	$	(139	)	$	(102	)	$	(107	)



	Three Months Ended January 31, 2015						Six Months Ended April 30, 2015						Nine Months Ended July 31, 2015
	As Reported			As Adjusted			As Reported			As Adjusted			As Revised⁽¹⁾			As Adjusted
	(in millions)
Condensed Consolidated Statement of Cash Flows:
Net cash provided by (used in) operating activities	$	(20	)	$	(9	)	$	163		$	175		$	254		$	271
Net cash used in financing activities	$	(828	)	$	(839	)	$	(929	)	$	(941	)	$	(1,039	)	$	(1,056	)

(1) See Note 2, "Revision of Prior Period Financial Statements" for additional information.



	January 31, 2016				April 30, 2016
	As Reported		As Adjusted		As Reported		As Adjusted
	(in millions)
Condensed Consolidated Balance Sheet:
Other assets	$	242	$	353	$	339	$	436
Other accrued liabilities	$	169	$	168	$	188	$	187
Other long-term liabilities	$	412	$	329	$	446	$	347
Additional paid-in-capital	$	9,085	$	9,087	$	9,103	$	9,107
Retained earnings	$	5,666	$	5,859	$	5,720	$	5,913

In August 2016, the FASB issued amendments to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for us beginning November 1, 2018 and interim periods in the following year. Early adoption is permitted. If we decide to early adopt the amendments, we will be required to adopt all of the amendments in the same period. We are evaluating the potential impact of the amendments on our consolidated statement of cash flows and disclosures.

In March 2016, the FASB issued amendments to simplify the transition to the equity method of accounting. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The amendments are effective for us beginning November 1, 2017 and interim periods in the following year. We are evaluating the potential impact of this amendment on our consolidated financial statements.

In February 2016, the FASB issued guidance which amends the existing accounting standards for leases. Consistent with existing guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. Under the new guidance, a lessee will be required to recognize right-of-use assets and lease liabilities on the balance sheet. The new guidance is effective for us beginning November 1, 2020, and interim periods in the following year. Early adoption of this guidance is permitted and we will be required to adopt using a modified retrospective approach. We are evaluating the timing and the impact of adopting this guidance on our consolidated financial statements and disclosures.

In January 2016, the FASB issued amendments to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The provisions under this amendment are effective for us beginning November 1, 2018, and for interim periods in the following year and early adoption is not permitted. We are evaluating the impact of adopting this guidance to our consolidated financial statements.

In November 2015, the FASB issued guidance to simplify accounting for deferred taxes. Beginning on November 1, 2017 and including the interim periods following that date, we will be required to present all deferred tax balances as non-current. Existing GAAP guidance requires us to record deferred tax balances as either current or non-current in accordance with the classification of the underlying attributes. Early adoption of this guidance is permitted and may be applied either prospectively or retrospectively to all periods presented. We adopted this guidance at the end of the period ended April 30, 2016 prospectively and therefore, the July 31, 2016 condensed consolidated balance sheet reflects the new disclosure requirements but prior periods have not been adjusted.

In May 2014, the FASB issued amendments to the accounting guidance related to revenue recognition. The objective of the amendments was to significantly enhance comparability and clarify principles of revenue recognition practices across entities, industries, jurisdictions and capital markets. In March 2016, the FASB clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB clarified certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB provided additional guidance related to disclosure of remaining performance obligations, as well as other amendments to guidance on collectibility, non-cash consideration and the presentation of sales and other similar taxes collected from customers. The amendments are effective for us beginning November 1, 2018. Early adoption is permitted for us beginning November 1, 2017. The company is currently assessing the potential impact of these amendments on our consolidated financial statements.

Other amendments to GAAP in the U.S. that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.