(15) The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow:

	July 31, 2014				October 31, 2013				July 31, 2013
	Carrying Value		Fair Value *		Carrying Value		Fair Value *		Carrying Value		Fair Value *
Financing receivables - net	$	27,080	$	26,952	$	25,633	$	25,572	$	24,183	$	24,143
Financing receivables securitized - net	4,264		4,222		4,153		4,124		3,891		3,868
Short-term securitization borrowings	4,143		4,145		4,109		4,113		3,780		3,778

Long-term borrowings due within one year:
Equipment operations	$	245	$	238	$	821	$	837	$	787	$	814
Financial services	4,915		4,927		4,408		4,441		4,320		4,370
Total	$	5,160	$	5,165	$	5,229	$	5,278	$	5,107	$	5,184

Long-term borrowings:
Equipment operations	$	4,678	$	5,120	$	4,871	$	5,141	$	4,892	$	5,162
Financial services	19,357		19,569		16,707		16,887		16,807		16,980
Total	$	24,035	$	24,689	$	21,578	$	22,028	$	21,699	$	22,142

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

Fair values of 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:

	July 31		October 31				July 31
	2014*		2013*				2013*
Marketable securities
Equity fund	$	32	$			20	$	13
Fixed income fund	10
U.S. government debt securities	1,108		1,312				1,408
Municipal debt securities	34		36				35
Corporate debt securities	169		138				130
Mortgage-backed securities **	136		119				120
Total marketable securities	1,489		1,625				1,706
Other assets
Derivatives:
Interest rate contracts	321		347				365
Foreign exchange contracts	14		32				36
Cross-currency interest rate contracts	13		15				12
Total assets ***	$	1,837	$		2,019		$	2,119

Accounts payable and accrued expenses
Derivatives:
Interest rate contracts	$	101	$	120			$	155
Foreign exchange contracts	32		42				36
Cross-currency interest rate contracts	1		17				40
Total liabilities	$	134	$	179			$	231

* All measurements above were Level 2 measurements except for Level 1 measurements of U.S. government debt securities of $1,041 million, $1,247 million and $1,347 million at July 31, 2014, October 31, 2013 and July 31, 2013, respectively, the equity fund of $32 million, $20 million and $13 million at July 31, 2014, October 31, 2013 and July 31, 2013, respectively, and the fixed income fund of $10 million at July 31, 2014. There were no transfers between Level 1 and Level 2 during the first nine months of 2014 or 2013.

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

*** Excluded from this table are 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.

The contractual maturities of debt securities at July 31, 2014 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 Cost		Fair Value
Due in one year or less	$	1,021	$	1,021
Due after one through five years	86		90
Due after five through 10 years	141		145
Due after 10 years	53		55
Mortgage-backed securities	137		136
Debt securities	$	1,438	$	1,447

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

	Fair Value *					Losses
						Three Months Ended		Nine Months Ended
	July 31	October 31		July 31		July 31		July 31
	2014	2013		2013		2014	2013	2014		2013

Property and equipment – net		$	36	$	39			$	26	$	43

Other intangible assets – net				$	2					$	7
Assets held for sale – Water operations **								$	36

* See financing receivables with specific allowances in Note 10. Losses were not significant.

** See Note 19.

The fair value measurement and impairment losses shown above were the result of changes in circumstances that indicate it was probable the future cash flows would not cover the carrying amounts of certain long-lived assets. The non-cash charge of $26 million pretax and after-tax was recognized in the first quarter of 2014 in cost of sales. The 2013 non-cash charges of $50 million pretax, or $44 million after-tax, for property and equipment was included in cost of sales and for other intangible assets was included in selling, administrative and general expenses. The impairments were associated with the Company’s John Deere Water operations, which are included in the agriculture and turf operating segment, and were due to a decline in forecasted financial performance and a review of strategic options for the business (see Note 19).

Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied.

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 primarily 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 primarily valued using the fund’s net asset value, based on the fair value of the underlying securities.

Derivatives — The Company’s derivative financial instruments consist of interest rate swaps and caps, foreign currency forwards and swaps and cross-currency interest rate 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). Inputs include a selection of realizable values.

Property and Equipment - Net — The impairments are measured at the lower of the carrying amount, or fair value. The valuations were based on an income approach using probability weighted cash flows of potential outcomes of the ongoing strategic option review. The inputs include estimates of the cash flow related to each of the alternatives being considered and management’s estimate of the likelihood of each alternative.

Other Intangible Assets – Net – The impairments are measured at the lower of the carrying amount, or fair value. The valuations were based on an income approach (discounted cash flows). The inputs include estimates of future cash flows.

Assets Held for Sale – Water Operations – The impairment of the disposal group is measured at the lower of the carrying amount, or fair value less cost to sell. Fair value is based on the probable sale price. The inputs include estimates of the final sale price.