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FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended
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Jan. 31, 2016
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:
|  | January 31, 2016 |  | October 31, 2015 |  | January 31, 2015 |
|  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |
Financing receivables - net |  | $ | 23,630 |  | $ | 23,519 |  | $ | 24,809 |  | $ | 24,719 |  | $ | 25,806 |  | $ | 25,733 |
Financing receivables securitized - net |  |  | 4,003 |  |  | 3,986 |  |  | 4,835 |  |  | 4,820 |  |  | 3,893 |  |  | 3,868 |
Short-term securitization borrowings |  |  | 3,879 |  |  | 3,882 |  |  | 4,590 |  |  | 4,590 |  |  | 3,888 |  |  | 3,891 |
Long-term borrowings due within one year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 96 |  | $ | 89 |  | $ | 86 |  | $ | 78 |  | $ | 216 |  | $ | 207 |
Financial services |  |  | 4,977 |  |  | 4,981 |  |  | 5,167 |  |  | 5,167 |  |  | 4,660 |  |  | 4,669 |
Total |  | $ | 5,073 |  | $ | 5,070 |  | $ | 5,253 |  | $ | 5,245 |  | $ | 4,876 |  | $ | 4,876 |
Long-term borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 4,519 |  | $ | 4,889 |  | $ | 4,461 |  | $ | 4,835 |  | $ | 4,622 |  | $ | 5,344 |
Financial services |  |  | 20,014 |  |  | 19,979 |  |  | 19,372 |  |  | 19,348 |  |  | 19,485 |  |  | 19,687 |
Total |  | $ | 24,533 |  | $ | 24,868 |  | $ | 23,833 |  | $ | 24,183 |  | $ | 24,107 |  | $ | 25,031 |
* 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:
|  | January 31 |  | October 31 |  | January 31 |
|  | 2016* |  | 2015* |  | 2015* |
Marketable securities |  |  |  |  |  |  |  |  |  |
Equity fund |  | $ | 44 |  | $ | 43 |  | $ | 45 |
U.S. government debt securities |  |  | 87 |  |  | 82 |  |  | 179 |
Municipal debt securities |  |  | 33 |  |  | 31 |  |  | 29 |
Corporate debt securities |  |  | 119 |  |  | 124 |  |  | 134 |
International debt securities |  |  | 76 |  |  | 47 |  |  |  |
Mortgage-backed securities ** |  |  | 117 |  |  | 110 |  |  | 107 |
Total marketable securities |  |  | 476 |  |  | 437 |  |  | 494 |
Other assets |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  |  | 437 |  |  | 353 |  |  | 478 |
Foreign exchange contracts |  |  | 92 |  |  | 50 |  |  | 125 |
Cross-currency interest rate contracts |  |  | 29 |  |  | 25 |  |  | 22 |
Total assets *** |  | $ | 1,034 |  | $ | 865 |  | $ | 1,119 |
Accounts payable and accrued expenses |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | 62 |  | $ | 60 |  | $ | 80 |
Foreign exchange contracts |  |  | 24 |  |  | 18 |  |  | 49 |
Total liabilities |  | $ | 86 |  | $ | 78 |  | $ | 129 |
* M easurements above were Level 2 measurements except for Level 1 measurements of the equity fund of $44 million, $43 million and $45 million at January 31, 2016, October 31, 2015 and January 31, 2015, respectively; and the U.S. government debt securities of $43 million, $37 million and $129 million at January 31, 2016, October 31, 2015 and January 31, 2015, respectively. In addition, $44 million and $29 million of the international debt securities were Level 3 measurements at January 31, 2016 and October 31, 2015. There were no transfers between Level 1 and Level 2 during the first three months of 2016 or 2015. ** 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 January 31, 2016 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 |  | Fair |
|  | Cost |  | Value |
Due in one year or less |  | $ | 50 |  | $ | 48 |
Due after one through five years |  |  | 127 |  |  | 121 |
Due after five through 10 years |  |  | 100 |  |  | 103 |
Due after 10 years |  |  | 40 |  |  | 43 |
Mortgage-backed securities |  |  | 114 |  |  | 117 |
Debt securities |  | $ | 431 |  | $ | 432 |
Fair Value, Recurring, Level 3 Measurements | Fair value, recurring, Level 3 measurements from available for sale marketable securities in millions of dollars follow:
|  | Three Months Ended |
|  | January 31 |
|  | 2016 |
Beginning of period balance |  | $ | 29 |
Purchases |  |  | 25 |
Principal Payments |  |  | (2) |
Change in unrealized gain (loss) |  |  | (8) |
End of period balance |  | $ | 44 |
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 |
|  | January 31 |  | October 31 |  | January 31 |  | January 31 |
|  | 2016 |  | 2015 |  | 2015 |  | 2016 |  | 2015 |
Equipment on operating leases – net |  | $ | 469 |  | $ | 479 |  |  |  |  | $ | 4 |  |  |  |
Property and equipment – net |  |  |  |  | $ | 33 |  |  |  |  |  |  |  |  |  |
Other assets |  | $ | 126 |  | $ | 112 |  |  |  |  | $ | 9 |  |  |  |
* See financing receivables with specific allowances in Note 10. Losses were not significant.

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