DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Jul. 31, 2014

DERIVATIVE INSTRUMENTS

Fair Value Hedge Interest Rate Contracts and Underlying Borrowings

The gains (losses) on these contracts and the underlying borrowings recorded in interest expense were as follows in millions of dollars:

	Three Months Ended						Nine Months Ended
	July 31						July 31
	2014			2013			2014			2013
Interest rate contracts *	$	32		$	(290	)	$	(49	)	$	(293	)
Borrowings **	(33		)	288			47			293

* Includes changes in fair values of interest rate contracts excluding net accrued interest income of $44 million and $39 million during the third quarter of 2014 and 2013 and $121 million and $118 million during the first nine months of 2014 and 2013, respectively.

** Includes adjustments for fair values of hedged borrowings excluding accrued interest expense of $69 million and $64 million during the third quarter of 2014 and 2013 and $194 million and $199 million during the first nine months of 2014 and 2013, respectively.

Fair Value of Derivative Instruments in Consolidated Balance Sheet

Fair values of derivative instruments in the condensed consolidated balance sheet in millions of dollars follow:

Other Assets	July 31 2014		October 31 2013		July 31 2013
Designated as hedging instruments:
Interest rate contracts	$	266	$	295	$	307
Cross-currency interest rate contracts	12		14		11
Total designated	278		309		318
Not designated as hedging instruments:
Interest rate contracts	55		52		58
Foreign exchange contracts	14		32		36
Cross-currency interest rate contracts	1		1		1
Total not designated	70		85		95
Total derivatives	$	348	$	394	$	413
Accounts Payable and Accrued Expenses
Designated as hedging instruments:
Interest rate contracts	$	50	$	71	$	96
Cross-currency interest rate contracts			16		39
Total designated	50		87		135
Not designated as hedging instruments:
Interest rate contracts	51		49		59
Foreign exchange contracts	32		42		36
Cross-currency interest rate contracts	1		1		1
Total not designated	84		92		96
Total derivatives	$	134	$	179	$	231

Gains (Losses) Related to Derivative Instruments on Statement of Consolidated Income

The classification and gains (losses) including accrued interest expense related to derivative instruments on the statement of consolidated income consisted of the following in millions of dollars:

	Expense or	Three Months Ended				Nine Months Ended
	OCI	July 31				July 31
	Classification	2014		2013		2014		2013
Fair Value Hedges:
Interest rate contracts	Interest	$	76	$	(251)	$	72	$	(175)
Cash Flow Hedges:
Recognized in OCI
(Effective Portion):
Interest rate contracts	OCI (pretax) *	(1)		(1)		(5)		(9)
Foreign exchange contracts	OCI (pretax) *	(1)		18		(6)		30
Reclassified from OCI
(Effective Portion):
Interest rate contracts	Interest *	(3)		(6)		(11)		(17)
Foreign exchange contracts	Other *	(1)		17		(7)		23
Recognized Directly in Income
(Ineffective Portion)		**		**		**		**
Not Designated as Hedges:
Interest rate contracts	Interest *			$	(1)	$	4	$	(5)
Foreign exchange contracts	Cost of sales	$	(30)	41				34
Foreign exchange contracts	Other *	(39)		87		(28)		88
Total not designated		$	(69)	$	127	$	(24)	$	117

*    Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.

**  The amount is not significant.

Impact on Derivative Assets and Liabilities Related to Netting Arrangements and Collateral

Derivatives are recorded without offsetting for netting arrangements or collateral.  The impact on the derivative assets and liabilities related to netting arrangements and any collateral received or paid in millions of dollars follows:

July 31, 2014	Gross Amounts Recognized		Netting Arrangements		Collateral Received		Net Amount
Derivatives:
Assets	$	348	$	(85)	$	(5)	$	258
Liabilities	134		(85)				49
October 31, 2013	Gross Amounts Recognized		Netting Arrangements		Collateral Received		Net Amount
Derivatives:
Assets	$	394	$	(120)	$	(8)	$	266
Liabilities	179		(120)				59
July 31, 2013	Gross Amounts Recognized		Netting Arrangements		Collateral Received		Net Amount
Derivatives:
Assets	$	413	$	(121)	$	(13)	$	279
Liabilities	231		(121)				110