FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Jul. 31, 2014

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 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.

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 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.

Contractual Maturities of Debt Securities

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

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.