XML 43 R24.htm IDEA: XBRL DOCUMENT

FAIR VALUE MEASUREMENTS

6 Months Ended

Apr. 30, 2023

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

(17) Fair Value Measurements

The fair values of financial instruments that do not approximate the carrying values were as follows in millions of dollars. Long-term borrowings exclude finance lease liabilities.


		April 30, 2023						October 30, 2022						May 1, 2022
		Carrying Value			Fair Value			Carrying Value			Fair Value			Carrying Value			Fair Value
Financing receivables – net		$	38,954		$	38,337		$	36,634		$	35,526		$	34,085		$	33,540
Financing receivables securitized – net			5,659			5,494			5,936			5,698			4,073			4,016
Short-term securitization borrowings			5,379			5,271			5,711			5,577			4,006			3,944
Long-term borrowings due within one year			7,618			7,461			7,466			7,322			8,434			8,398
Long-term borrowings			35,571			34,802			33,566			31,852			32,410			31,975

Fair value measurements above were Level 3 for all financing receivables and Level 2 for all 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, excluding the Company’s cash equivalents, which were carried at cost that approximates fair value and consisted of money market funds and time deposits.


		April 30			October 30			May 1
		2023			2022			2022
Level 1:
Marketable securities
International equity securities		$	2		$	3		$	2
International mutual funds			11
U.S. equity fund			92			70			65
U.S. fixed income fund			97
U.S. government debt securities			64			62			59
Total Level 1 marketable securities			266			135			126

Level 2:
Marketable securities
U.S. government debt securities			138			121			130
Municipal debt securities			70			63			67
Corporate debt securities			213			200			206
International debt securities			1			60			2
Mortgage-backed securities			168			155			151
Total Level 2 marketable securities			590			599			556
Other assets - Derivatives			367			373			407
Accounts payable and accrued expenses - Derivatives			758			1,231			780

Level 3:
Accounts payable and accrued expenses - Deferred consideration			214			236			262

The contractual maturities of debt securities at April 30, 2023 in millions of dollars are shown below. Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Unrealized losses were not recognized in income due to the ability and intent to hold to maturity. 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		$	25		$	25
Due after one through five years			123			116
Due after five through 10 years			192			171
Due after 10 years			206			174
Mortgage-backed securities			193			168
Debt securities		$	739		$	654

Fair value, nonrecurring Level 3 measurements from impairments, excluding financing receivables with specific allowances which were not significant, were as follows in millions of dollars. Inventories and property and equipment – net fair values for October 30, 2022 represent the fair value assessment at May 1, 2022.


		Fair Value									Losses
											Three Months Ended						Six Months Ended
		April 30			October 30			May 1			April 30			May 1			April 30			May 1
		2023			2022			2022			2023			2022			2023			2022
Inventories					$	19		$	19					$	8					$	8
Property and equipment – net						15			15						41						41
Other intangible assets – net															28						28

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 is 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 valued using closing prices in the active market in which the investment trades.

Derivatives – The Company’s derivative financial instruments consist of interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (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).

Inventories – The impairment was based on net realizable value.

Property and equipment - net – The valuations were based on cost and market approaches. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence.

Other intangible assets - net – The Company considered external valuations based on the Company’s probability weighted cash flow analysis.

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 + Details