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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Jul. 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:

		July 29, 2018						October 29, 2017						July 30, 2017
		Carrying Value			Fair Value *			Carrying Value			Fair Value *			Carrying Value			Fair Value *
Financing receivables – net:
Equipment operations **		$	78		$	75
Financial services			25,135			24,911		$	25,104		$	24,946		$	23,722		$	23,592
Total		$	25,213		$	24,986		$	25,104		$	24,946		$	23,722		$	23,592
Financing receivables securitized – net:
Equipment operations **		$	90		$	89
Financial services			4,572			4,517		$	4,159		$	4,130		$	4,923		$	4,892
Total		$	4,662		$	4,606		$	4,159		$	4,130		$	4,923		$	4,892
Short-term securitization borrowings:
Equipment operations **		$	90		$	89
Financial services			4,438			4,426		$	4,119		$	4,118		$	4,781		$	4,786
Total		$	4,528		$	4,515		$	4,119		$	4,118		$	4,781		$	4,786
Long-term borrowings due within one year:
Equipment operations **		$	238		$	239		$	154		$	154		$	142		$	141
Financial services			5,955			5,947			6,064			6,079			5,382			5,394
Total		$	6,193		$	6,186		$	6,218		$	6,233		$	5,524		$	5,535
Long-term borrowings:
Equipment operations **		$	5,526		$	5,838		$	5,491		$	6,026		$	4,523		$	5,110
Financial services			21,312			21,388			20,400			20,606			19,151			19,339
Total		$	26,838		$	27,226		$	25,891		$	26,632		$	23,674		$	24,449

* 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:

		July 29			October 29			July 30
		2018*			2017*			2017*
Marketable securities
Equity fund		$	46		$	48		$	45
Fixed income fund			9			15			15
U.S. government debt securities			99			77			77
Municipal debt securities			47			39			39
Corporate debt securities			138			135			120
International debt securities			13			20			22
Mortgage-backed securities **			136			118			108
Total marketable securities			488			452			426
Other assets
Derivatives:
Interest rate contracts			68			116			142
Foreign exchange contracts			50			108			32
Cross-currency interest rate contracts			6			11			10
Total assets ***		$	612		$	687		$	610
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts		$	330		$	131		$	81
Foreign exchange contracts			52			26			95
Cross-currency interest rate contracts			2			1			4
Total liabilities		$	384		$	158		$	180

* All measurements above were Level 2 measurements except for Level 1 measurements of the equity fund of $46 million, $48 million, and $45 million at July 29, 2018, October 29, 2017, and July 30, 2017, respectively; the fixed income fund of $9 million, $15 million, and $15 million at July 29, 2018, October 29, 2017, and July 30, 2017, respectively; and U.S. government debt securities of $39 million, $44 million, and $46 million at July 29, 2018, October 29, 2017, and July 30, 2017, respectively. In addition, $10 million, $17 million, and $18 million of the international debt securities were Level 3 measurements at July 29, 2018, October 29, 2017, and July 30, 2017, respectively. There were no transfers between Level 1 and Level 2 during the first nine 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 and time deposits.

Contractual Maturities of Debt Securities

The contractual maturities of debt securities at July 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		$	23		$	22
Due after one through five years			118			116
Due after five through 10 years			93			91
Due after 10 years			69			68
Mortgage-backed securities			142			136
Debt securities		$	445		$	433

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						Nine Months Ended
		July 29			July 30			July 29			July 30
		2018			2017			2018			2017
Beginning of period balance		$	14		$	23		$	17		$	28
Principal payments			(4)			(5)			(7)			(12)
Change in unrealized gain												2
End of period balance		$	10		$	18		$	10		$	18

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						Nine Months Ended
		July 29			October 29			July 30			July 29			July 30			July 29			July 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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