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FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended
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Apr. 28, 2019
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 28, 2019 |  | October 28, 2018 |  | April 29, 2018 |
|  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |  | Carrying Value |  | Fair Value * |
Financing receivables – net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 102 |  | $ | 95 |  | $ | 93 |  | $ | 91 |  | $ | 76 |  | $ | 74 |
Financial services |  |  | 25,768 |  |  | 25,697 |  |  | 26,961 |  |  | 26,722 |  |  | 24,200 |  |  | 23,997 |
Total |  | $ | 25,870 |  | $ | 25,792 |  | $ | 27,054 |  | $ | 26,813 |  | $ | 24,276 |  | $ | 24,071 |
Financing receivables securitized – net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 59 |  | $ | 57 |  | $ | 76 |  | $ | 73 |  | $ | 113 |  | $ | 110 |
Financial services |  |  | 4,755 |  |  | 4,726 |  |  | 3,946 |  |  | 3,895 |  |  | 4,323 |  |  | 4,273 |
Total |  | $ | 4,814 |  | $ | 4,783 |  | $ | 4,022 |  | $ | 3,968 |  | $ | 4,436 |  | $ | 4,383 |
Short-term securitization borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 58 |  | $ | 58 |  | $ | 75 |  | $ | 75 |  | $ | 113 |  | $ | 113 |
Financial services |  |  | 4,644 |  |  | 4,653 |  |  | 3,882 |  |  | 3,870 |  |  | 4,288 |  |  | 4,274 |
Total |  | $ | 4,702 |  | $ | 4,711 |  | $ | 3,957 |  | $ | 3,945 |  | $ | 4,401 |  | $ | 4,387 |
Long-term borrowings due within one year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 982 |  | $ | 987 |  | $ | 970 |  | $ | 979 |  | $ | 274 |  | $ | 273 |
Financial services |  |  | 5,321 |  |  | 5,305 |  |  | 5,427 |  |  | 5,411 |  |  | 6,566 |  |  | 6,559 |
Total |  | $ | 6,303 |  | $ | 6,292 |  | $ | 6,397 |  | $ | 6,390 |  | $ | 6,840 |  | $ | 6,832 |
Long-term borrowings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 4,679 |  | $ | 5,110 |  | $ | 4,714 |  | $ | 4,948 |  | $ | 5,537 |  | $ | 5,850 |
Financial services |  |  | 23,576 |  |  | 23,805 |  |  | 22,523 |  |  | 22,590 |  |  | 20,742 |  |  | 20,769 |
Total |  | $ | 28,255 |  | $ | 28,915 |  | $ | 27,237 |  | $ | 27,538 |  | $ | 26,279 |  | $ | 26,619 |
* 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.
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 28 |  | October 28 |  | April 29 |
|  | 2019 |  | 2018 |  | 2018 |
Level 1: |  |  |  |  |  |  |  |  |  |
Marketable securities |  |  |  |  |  |  |  |  |  |
Equity fund |  | $ | 58 |  | $ | 46 |  | $ | 46 |
Fixed income fund |  |  |  |  |  |  |  |  | 14 |
U.S. government debt securities |  |  | 44 |  |  | 44 |  |  | 42 |
Total Level 1 marketable securities |  |  | 102 |  |  | 90 |  |  | 102 |
Level 2: |  |  |  |  |  |  |  |  |  |
Marketable securities |  |  |  |  |  |  |  |  |  |
U.S. government debt securities |  |  | 73 |  |  | 67 |  |  | 44 |
Municipal debt securities |  |  | 55 |  |  | 46 |  |  | 46 |
Corporate debt securities |  |  | 148 |  |  | 140 |  |  | 137 |
International debt securities |  |  | 9 |  |  | 2 |  |  | 3 |
Mortgage-backed securities ** |  |  | 154 |  |  | 137 |  |  | 133 |
Total Level 2 marketable securities |  |  | 439 |  |  | 392 |  |  | 363 |
Other assets |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  |  | 139 |  |  | 80 |  |  | 87 |
Foreign exchange contracts |  |  | 99 |  |  | 83 |  |  | 101 |
Cross-currency interest rate contracts |  |  | 2 |  |  | 5 |  |  | 6 |
Total Level 2 other assets |  |  | 240 |  |  | 168 |  |  | 194 |
Accounts payable and accrued expenses |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  |  | 165 |  |  | 350 |  |  | 341 |
Foreign exchange contracts |  |  | 48 |  |  | 49 |  |  | 28 |
Cross-currency interest rate contracts |  |  | 2 |  |  |  |  |  | 2 |
Total Level 2 accounts payable and accrued expenses |  |  | 215 |  |  | 399 |  |  | 371 |
Level 3: |  |  |  |  |  |  |  |  |  |
Marketable securities |  |  |  |  |  |  |  |  |  |
International debt securities |  |  | 4 |  |  | 8 |  |  | 14 |
* 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. ** Primarily issued by U.S. government sponsored enterprises.
Contractual Maturities of Debt Securities | The contractual maturities of debt securities at April 28, 2019 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 |  | $ | 28 |  | $ | 28 |
Due after one through five years |  |  | 111 |  |  | 111 |
Due after five through 10 years |  |  | 96 |  |  | 97 |
Due after 10 years |  |  | 95 |  |  | 97 |
Mortgage-backed securities |  |  | 155 |  |  | 154 |
Debt securities |  | $ | 485 |  | $ | 487 |
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 28 |  | April 29 |  | April 28 |  | April 29 |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
Beginning of period balance |  | $ | 6 |  | $ | 15 |  | $ | 8 |  | $ | 17 |
Principal payments |  |  | (2) |  |  | (1) |  |  | (5) |  |  | (3) |
Other |  |  |  |  |  |  |  |  | 1 |  |  |  |
End of period balance |  | $ | 4 |  | $ | 14 |  | $ | 4 |  | $ | 14 |

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