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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Apr. 30, 2014

FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

       The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow:

		April 30, 2014						October 31, 2013						April 30, 2013
		Carrying Value			Fair Value *			Carrying Value			Fair Value *			Carrying Value			Fair Value *
Financing receivables - net		$	25,496		$	25,383		$	25,633		$	25,572		$	22,745		$	22,796
Financing receivables securitized - net		4,345			4,308			4,153			4,124			3,788			3,785
Short-term securitization borrowings		4,330			4,333			4,109			4,113			3,788			3,794
Long-term borrowings due within one year:
Equipment operations		$	130		$	128		$	821		$	837		$	911		$	939
Financial services		4,391			4,405			4,408			4,441			5,008			5,065
Total		$	4,521		$	4,533		$	5,229		$	5,278		$	5,919		$	6,004
Long-term borrowings:
Equipment operations		$	4,817		$	5,181		$	4,871		$	5,141		$	4,925		$	5,626
Financial services		18,350			18,548			16,707			16,887			16,828			17,029
Total		$	23,167		$	23,729		$	21,578		$	22,028		$	21,753		$	22,655

* Fair value measurements above were Level 3 for all financing receivables and Level 2 for all borrowings.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow:

		April 30			October 31			April 30
		2014*			2013*			2013*
Marketable securities
Equity fund		$	30		$	20		$	3
Fixed income fund		10
U.S. government debt securities		1,213			1,312			1,102
Municipal debt securities		35			36			38
Corporate debt securities		155			138			130
Mortgage-backed securities **		129			119			126
Total marketable securities		1,572			1,625			1,399
Other assets
Derivatives:
Interest rate contracts		296			347			589
Foreign exchange contracts		20			32			25
Cross-currency interest rate contracts		16			15			5
Total assets ***		$	1,904		$	2,019		$	2,018
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts		$	136		$	120		$	66
Foreign exchange contracts		33			42			36
Cross-currency interest rate contracts					17			54
Total liabilities		$	169		$	179		$	156

* All measurements above were Level 2 measurements except for Level 1 measurements of U.S. government debt securities of $1,144 million, $1,247 million and $1,041 million at April 30, 2014, October 31, 2013 and April 30, 2013, respectively, the equity fund of $30 million, $20 million and $3 million at April 30, 2014, October 31, 2013 and April 30, 2013, respectively, and the fixed income fund of $10 million at April 30, 2014.  There were no transfers between Level 1 and Level 2 during the first six months of 2014 or 2013.

** Primarily issued by U.S. government sponsored enterprises.

*** Excluded from this table are the Company’s cash equivalents, which were carried at cost that approximates fair value.  The cash equivalents consist primarily of money market funds that were Level 1 measurements.

Contractual Maturities of Debt Securities

The contractual maturities of debt securities at April 30, 2014 in millions of dollars are shown below.  Actual maturities may differ from those scheduled as a result of prepayments by the issuers.  Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity.

		Amortized Cost		Fair Value
Due in one year or less		$  1,123		$  1,123
Due after one through five years		83		87
Due after five through 10 years		134		136
Due after 10 years		55		57
Mortgage-backed securities		131		129
Debt securities		$  1,526		$  1,532

Fair Value, Nonrecurring, Level 3 Measurements

Fair value, nonrecurring, Level 3 measurements from impairments in millions of dollars follow:

		Fair Value *						Losses
								Three Months Ended				Six Months Ended
		April 30		October 31		April 30		April 30				April 30
		2014		2013		2013		2014		2013		2014		2013
Property and equipment – net				$        36								$        26
Assets held for sale – Water operations **		$        91						$        36				$        36

* See financing receivables with specific allowances in Note 10.  Losses were not significant.

** Does not include cost to sell.  See Note 19.

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