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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

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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