XML 33 R22.htm IDEA: XBRL DOCUMENT
v3.8.0.1

FAIR VALUE MEASUREMENTS | 3 Months Ended
--- | ---
Jan. 28, 2018
FAIR VALUE MEASUREMENTS |
FAIR VALUE MEASUREMENTS | (15) Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses various methods including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs. The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow:
|  | January 28, 2018 |  | October 29, 2017 |  | January 29, 2017 |
|  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |
Financing receivables – net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 52 |  | $ | 51 |  |  |  |  |  |  |  | $ | 1 |  | $ | 1 |
Financial services |  |  | 23,803 |  |  | 23,597 |  | $ | 25,104 |  | $ | 24,946 |  |  | 23,030 |  |  | 22,841 |
Total |  | $ | 23,855 |  | $ | 23,648 |  | $ | 25,104 |  | $ | 24,946 |  | $ | 23,031 |  | $ | 22,842 |
Financing receivables securitized – net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 125 |  | $ | 125 |  |  |  |  |  |  |  |  |  |  |  |  |
Financial services |  |  | 4,349 |  |  | 4,303 |  | $ | 4,159 |  | $ | 4,130 |  | $ | 4,250 |  | $ | 4,218 |
Total |  | $ | 4,474 |  | $ | 4,428 |  | $ | 4,159 |  | $ | 4,130 |  | $ | 4,250 |  | $ | 4,218 |
Short-term securitization borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 126 |  | $ | 126 |  |  |  |  |  |  |  |  |  |  |  |  |
Financial services |  |  | 4,302 |  |  | 4,293 |  | $ | 4,119 |  | $ | 4,118 |  | $ | 4,220 |  | $ | 4,220 |
Total |  | $ | 4,428 |  | $ | 4,419 |  | $ | 4,119 |  | $ | 4,118 |  | $ | 4,220 |  | $ | 4,220 |
Long-term borrowings due within one year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 289 |  | $ | 289 |  | $ | 154 |  | $ | 154 |  | $ | 122 |  | $ | 115 |
Financial services |  |  | 6,124 |  |  | 6,127 |  |  | 6,064 |  |  | 6,079 |  |  | 6,038 |  |  | 6,037 |
Total |  | $ | 6,413 |  | $ | 6,416 |  | $ | 6,218 |  | $ | 6,233 |  | $ | 6,160 |  | $ | 6,152 |
Long-term borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 5,573 |  | $ | 6,076 |  | $ | 5,491 |  | $ | 6,026 |  | $ | 4,534 |  | $ | 5,004 |
Financial services |  |  | 20,849 |  |  | 21,023 |  |  | 20,400 |  |  | 20,606 |  |  | 18,383 |  |  | 18,513 |
Total |  | $ | 26,422 |  | $ | 27,099 |  | $ | 25,891 |  | $ | 26,632 |  | $ | 22,917 |  | $ | 23,517 |
* Fair value measurements above were Level 3 for all financing receivables, Level 3 for equipment operations short-term securitization borrowings, and Level 2 for all other borrowings. Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by the Company for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts. Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges. Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow:
|  | January 28 |  | October 29 |  | January 29 |
|  | 2018* |  | 2017* |  | 2017* |
Marketable securities |  |  |  |  |  |  |  |  |  |
Equity fund |  | $ | 52 |  | $ | 48 |  | $ | 45 |
Fixed income fund |  |  | 14 |  |  | 15 |  |  | 14 |
U.S. government debt securities |  |  | 75 |  |  | 77 |  |  | 82 |
Municipal debt securities |  |  | 41 |  |  | 39 |  |  | 38 |
Corporate debt securities |  |  | 137 |  |  | 135 |  |  | 124 |
International debt securities |  |  | 18 |  |  | 20 |  |  | 29 |
Mortgage-backed securities ** |  |  | 125 |  |  | 118 |  |  | 113 |
Total marketable securities |  |  | 462 |  |  | 452 |  |  | 445 |
Other assets |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  |  | 94 |  |  | 116 |  |  | 144 |
Foreign exchange contracts |  |  | 31 |  |  | 108 |  |  | 21 |
Cross-currency interest rate contracts |  |  | 8 |  |  | 11 |  |  | 24 |
Total assets *** |  | $ | 595 |  | $ | 687 |  | $ | 634 |
Accounts payable and accrued expenses |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | 248 |  | $ | 131 |  | $ | 102 |
Foreign exchange contracts |  |  | 124 |  |  | 26 |  |  | 68 |
Cross-currency interest rate contracts |  |  | 2 |  |  | 1 |  |  |  |
Total liabilities |  | $ | 374 |  | $ | 158 |  | $ | 170 |
* All measurements above were Level 2 measurements except for Level 1 measurements of the equity fund of $52 million, $48 million, and $45 million at January 28, 2018, October 29, 2017, and January 29, 2017, respectively; the fixed income fund of $14 million, $15 million, and $14 million at January 28, 2018, October 29, 2017, and January 29, 2017, respectively; and U.S. government debt securities of $43 million, $44 million, and $49 million at January 28, 2018, October 29, 2017, and January 29, 2017, respectively. In addition, $15 million, $17 million, and $23 million of the international debt securities were Level 3 measurements at January 28, 2018, October 29, 2017, and January 29, 2017, respectively. There were no transfers between Level 1 and Level 2 during the first three months of 2018 or 2017. ** Primarily issued by U.S. government sponsored enterprises. *** Excluded from this table were 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. The contractual maturities of debt securities at January 28, 2018 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 |  | $ | 23 |  | $ | 22 |
Due after one through five years |  |  | 114 |  |  | 113 |
Due after five through 10 years |  |  | 85 |  |  | 85 |
Due after 10 years |  |  | 50 |  |  | 51 |
Mortgage-backed securities |  |  | 129 |  |  | 125 |
Debt securities |  | $ | 401 |  | $ | 396 |
Fair value, recurring Level 3 measurements from available-for-sale marketable securities in millions of dollars follow:
|  | Three Months Ended |
|  | January 28 |  | January 29 |
|  | 2018 |  | 2017 |
Beginning of period balance |  | $ | 17 |  | $ | 28 |
Principal payments |  |  | (2) |  |  | (6) |
Change in unrealized gain (loss) |  |  |  |  |  | 1 |
End of period balance |  | $ | 15 |  | $ | 23 |
Fair value, nonrecurring Level 1 measurements from impairments in millions of dollars follow:
|  | Fair Value * |  | Losses |
|  |  |  |  |  |  |  |  |  |  | Three Months Ended |
|  | January 28 |  | October 29 |  | January 29 |  | January 28 |  | January 29 |
|  | 2018 |  | 2017 |  | 2017 |  | 2018 |  | 2017 |
Investments in unconsolidated affiliates |  |  |  |  | $ | 28 |  |  |  |  |  |  |  |  |  |
* See financing receivables with specific allowances in Note 10. Losses were not significant. The following is a description of the valuation methodologies the Company uses to measure certain financial instruments on the balance sheet at fair value: Marketable Securities – The portfolio of investments, except for the Level 3 measurement international debt securities, is primarily valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are primarily valued using the fund’s net asset value, based on the fair value of the underlying securities. The Level 3 measurement international debt securities are primarily valued using an income approach based on discounted cash flows using yield curves derived from limited, observable market data. Derivatives – The Company’s derivative financial instruments consist of interest rate swaps and caps, foreign currency futures, forwards and swaps, and cross-currency interest rate swaps. The portfolio is valued based on an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates for currencies. Financing Receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using a market approach (appraisal values or realizable values). Inputs include a selection of realizable values. Investment in Unconsolidated Affiliates – Other than temporary impairments for investments are measured as the difference between the implied fair value and the carrying value of the investments. The fair value for publicly traded entities is the share price multiplied by the shares owned.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration