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FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended
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Apr. 29, 2018
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 29, 2018 |  | October 29, 2017 |  | April 30, 2017 |
|  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |
Financing receivables – net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations ** |  | $ | 76 |  | $ | 74 |  |  |  |  |  |  |  |  |  |  |  |  |
Financial services |  |  | 24,200 |  |  | 23,997 |  | $ | 25,104 |  | $ | 24,946 |  | $ | 23,301 |  | $ | 23,141 |
Total |  | $ | 24,276 |  | $ | 24,071 |  | $ | 25,104 |  | $ | 24,946 |  | $ | 23,301 |  | $ | 23,141 |
Financing receivables securitized – net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations ** |  | $ | 113 |  | $ | 110 |  |  |  |  |  |  |  |  |  |  |  |  |
Financial services |  |  | 4,323 |  |  | 4,273 |  | $ | 4,159 |  | $ | 4,130 |  | $ | 4,282 |  | $ | 4,253 |
Total |  | $ | 4,436 |  | $ | 4,383 |  | $ | 4,159 |  | $ | 4,130 |  | $ | 4,282 |  | $ | 4,253 |
Short-term securitization borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations ** |  | $ | 113 |  | $ | 113 |  |  |  |  |  |  |  |  |  |  |  |  |
Financial services |  |  | 4,288 |  |  | 4,274 |  | $ | 4,119 |  | $ | 4,118 |  | $ | 4,225 |  | $ | 4,225 |
Total |  | $ | 4,401 |  | $ | 4,387 |  | $ | 4,119 |  | $ | 4,118 |  | $ | 4,225 |  | $ | 4,225 |
Long-term borrowings due within one year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations ** |  | $ | 274 |  | $ | 273 |  | $ | 154 |  | $ | 154 |  | $ | 120 |  | $ | 119 |
Financial services |  |  | 6,566 |  |  | 6,559 |  |  | 6,064 |  |  | 6,079 |  |  | 5,339 |  |  | 5,345 |
Total |  | $ | 6,840 |  | $ | 6,832 |  | $ | 6,218 |  | $ | 6,233 |  | $ | 5,459 |  | $ | 5,464 |
Long-term borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations ** |  | $ | 5,537 |  | $ | 5,850 |  | $ | 5,491 |  | $ | 6,026 |  | $ | 4,520 |  | $ | 5,020 |
Financial services |  |  | 20,742 |  |  | 20,769 |  |  | 20,400 |  |  | 20,606 |  |  | 18,733 |  |  | 18,864 |
Total |  | $ | 26,279 |  | $ | 26,619 |  | $ | 25,891 |  | $ | 26,632 |  | $ | 23,253 |  | $ | 23,884 |
* 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. ** See Note 18.
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 29 |  | October 29 |  | April 30 |
|  | 2018* |  | 2017* |  | 2017* |
Marketable securities |  |  |  |  |  |  |  |  |  |
Equity fund |  | $ | 46 |  | $ | 48 |  | $ | 135 |
Fixed income fund |  |  | 14 |  |  | 15 |  |  | 15 |
U.S. government debt securities |  |  | 86 |  |  | 77 |  |  | 79 |
Municipal debt securities |  |  | 46 |  |  | 39 |  |  | 39 |
Corporate debt securities |  |  | 137 |  |  | 135 |  |  | 132 |
International debt securities |  |  | 17 |  |  | 20 |  |  | 28 |
Mortgage-backed securities ** |  |  | 133 |  |  | 118 |  |  | 118 |
Total marketable securities |  |  | 479 |  |  | 452 |  |  | 546 |
Other assets |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  |  | 87 |  |  | 116 |  |  | 142 |
Foreign exchange contracts |  |  | 101 |  |  | 108 |  |  | 60 |
Cross-currency interest rate contracts |  |  | 6 |  |  | 11 |  |  | 14 |
Total assets *** |  | $ | 673 |  | $ | 687 |  | $ | 762 |
Accounts payable and accrued expenses |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | 341 |  | $ | 131 |  | $ | 79 |
Foreign exchange contracts |  |  | 28 |  |  | 26 |  |  | 50 |
Cross-currency interest rate contracts |  |  | 2 |  |  | 1 |  |  | 2 |
Total liabilities |  | $ | 371 |  | $ | 158 |  | $ | 131 |
* All measurements above were Level 2 measurements except for Level 1 measurements of the equity fund of $46 million, $48 million, and $135 million at April 29, 2018, October 29, 2017, and April 30, 2017, respectively; the fixed income fund of $14 million, $15 million, and $15 million at April 29, 2018, October 29, 2017, and April 30, 2017, respectively; and U.S. government debt securities of $42 million, $44 million, and $46 million at April 29, 2018, October 29, 2017, and April 30, 2017, respectively. In addition, $14 million, $17 million, and $23 million of the international debt securities were Level 3 measurements at April 29, 2018, October 29, 2017, and April 30, 2017, respectively. There were no transfers between Level 1 and Level 2 during the first six 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.
Contractual Maturities of Debt Securities | The contractual maturities of debt securities at April 29, 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 |  | $ | 29 |  | $ | 28 |
Due after one through five years |  |  | 107 |  |  | 105 |
Due after five through 10 years |  |  | 95 |  |  | 91 |
Due after 10 years |  |  | 62 |  |  | 62 |
Mortgage-backed securities |  |  | 139 |  |  | 133 |
Debt securities |  | $ | 432 |  | $ | 419 |
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 |  | Six Months Ended |
|  | April 29 |  | April 30 |  | April 29 |  | April 30 |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Beginning of period balance |  | $ | 15 |  | $ | 23 |  | $ | 17 |  | $ | 28 |
Principal payments |  |  | (1) |  |  | (1) |  |  | (3) |  |  | (6) |
Change in unrealized gain |  |  |  |  |  | 1 |  |  |  |  |  | 1 |
End of period balance |  | $ | 14 |  | $ | 23 |  | $ | 14 |  | $ | 23 |
Fair Value, Nonrecurring, Level 1 Measurements | Fair value, nonrecurring Level 1 measurements from impairments in millions of dollars follow:
|  | Fair Value * |  | Losses |
|  |  |  |  |  |  |  |  |  |  | Three Months Ended |  | Six Months Ended |
|  | April 29 |  | October 29 |  | April 30 |  | April 29 |  | April 30 |  | April 29 |  | April 30 |
|  | 2018 |  | 2017 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Investments in unconsolidated affiliates |  |  |  |  | $ | 28 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
* See financing receivables with specific allowances in Note 10. Losses were not significant.

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