Contract Balances

3 Months Ended

Jan. 29, 2023

Revenue from Contract with Customer [Abstract]

Contract Balances

Contract Balances

Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.

Contract assets are generally classified as current and are included in Other Current Assets in the Consolidated Condensed Balance Sheets. Contract liabilities are classified as current or non-current based on the timing of when performance obligations will be satisfied and associated revenue is expected to be recognized.

Contract balances at the end of each reporting period were as follows:

	January 29, 2023		October 30, 2022
	(In millions)
Contract assets	$	155	$	173
Contract liabilities	$	3,082	$	3,142

The decrease in contract assets during the three months ended January 29, 2023 was primarily due to a reduction in payments that were conditional upon technical sign off.

During the three months ended January 29, 2023, we recognized revenue of approximately $1.6 billion related to contract liabilities at October 30, 2022. Contract liabilities decreased during the three months ended January 29, 2023 due to revenue recognized related to contract liabilities at October 30, 2022, partially offset by new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of January 29, 2023.

There were no credit losses recognized on our accounts receivables and contract assets during both the three months ended January 29, 2023 and January 30, 2022.

As of January 29, 2023, the amount of remaining unsatisfied performance obligations on contracts with an original estimated duration of one year or more was approximately $4.2 billion, of which approximately 45% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter.

We have elected the available practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.