FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Oct. 31, 2016

FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The fair values of financial instruments that do not approximate the carrying values at October 31 in millions of dollars follow:

	2016				2015
	Carrying		Fair		Carrying		Fair
	Value		Value*		Value		Value*
Financing receivables – net	$	23,702	$	23,564	$	24,809	$	24,719
Financing receivables securitized – net	$	5,127	$	5,114	$	4,835	$	4,820
Short-term securitization borrowings	$	5,003	$	5,005	$	4,590	$	4,590
Long-term borrowings due within one year:
Equipment operations	$	85	$	80	$	86	$	78
Financial services		5,259		5,259		5,167		5,167
Total	$	5,344	$	5,339	$	5,253	$	5,245
Long-term borrowings:
Equipment operations	$	4,586	$	5,184	$	4,461	$	4,835
Financial services		19,174		19,273		19,372		19,348
Total	$	23,760	$	24,457	$	23,833	$	24,183

*    Fair value measurements above were Level 3 for all financing receivables and Level 2 for all borrowings.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at October 31 at fair value on a recurring basis in millions of dollars follow:

	2016*		2015*
Marketable securities
Equity fund	$	45	$	43
Fixed income fund		15
U.S. government debt securities		88		82
Municipal debt securities		43		31
Corporate debt securities		118		124
International debt securities		34		47
Mortgage-backed securities**		111		110
Total marketable securities		454		437
Other assets
Derivatives:
Interest rate contracts		294		353
Foreign exchange contracts		60		50
Cross-currency interest rate contracts		21		25
Total assets***	$	829	$	865
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts	$	29	$	60
Foreign exchange contracts		43		18
Total liabilities	$	72	$	78

*      All measurements above were Level 2 measurements except for Level 1 measurements of U.S. government debt securities of $53 million and $37 million at October 31, 2016 and 2015, respectively, and the equity fund of $45 million and $43 million at October 31, 2016 and 2015, respectively, and the fixed income fund of $15 million at October 31, 2016. In addition, $28 million and $29 million of the international debt securities were Level 3 measurements at October 31, 2016 and 2015, respectively. There were no transfers between Level 1 and Level 2 during 2016 and 2015.

**    Primarily issued by U.S. government sponsored enterprises.

***  Excluded from this table were 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.

Fair Value, Recurring, Level 3 Measurements

Fair value, recurring, Level 3 measurements from available-for-sale marketable securities at October 31 in millions of dollars follow:

	2016		2015
Beginning of period balance	$	29
Purchases		25	$	30
Principal payments		(22)
Change in unrealized gain (loss)		(4)		(1)
End of period balance	$	28	$	29

Fair Value, Nonrecurring, Level 3 Measurements

Fair value, nonrecurring, Level 3 measurements from impairments at October 31 in millions of dollars follow:

	Fair Value*				Losses*
	2016		2015		2016		2015		2014
Equipment on operating leases – net	$	654	$	479	$	31	$	10
Property and equipment – net	$	31	$	33	$	13	$	10	$	44
Investments in unconsolidated affiliates	$	1			$	12
Other assets	$	184	$	112	$	29	$	15	$	16
Assets held for sale – Water operations									$	36

*    See financing receivables with specific allowances in Note 12 that were not significant. See Note 5 for impairments.