DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Jul. 31, 2015

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 follow in millions of dollars:

	Three Months Ended				Nine Months Ended
	July 31				July 31
	2015		2014		2015		2014
Interest rate contracts *	$	(10)	$	32	$	45	$	(49)
Borrowings **		10		(33)		(44)		47

* Includes changes in fair values of interest rate contracts excluding net accrued interest income of $42 million and $44 million during the third quarter of 2015 and 2014, respectively, and $131 million and $121 million during the first nine months of 2015 and 2014, respectively.

** Includes adjustments for fair values of hedged borrowings excluding accrued interest expense of $68 million and $69 million during the third quarter of 2015 and 2014, respectively, and $207 million and $194 million during the first nine months of 2015 and 2014, 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:

	July 31		October 31		July 31
Other Assets	2015		2014		2014
Designated as hedging instruments:
Interest rate contracts	$	284	$	266	$	266
Cross-currency interest rate contracts		14		13		12
Total designated		298		279		278
Not designated as hedging instruments:
Interest rate contracts		57		53		55
Foreign exchange contracts		57		18		14
Cross-currency interest rate contracts		13		3		1
Total not designated		127		74		70
Total derivatives	$	425	$	353	$	348
Accounts Payable and Accrued Expenses
Designated as hedging instruments:
Interest rate contracts	$	20	$	35	$	50
Total designated		20		35		50
Not designated as hedging instruments:
Interest rate contracts		63		46		51
Foreign exchange contracts		26		29		32
Cross-currency interest rate contracts						1
Total not designated		89		75		84
Total derivatives	$	109	$	110	$	134

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	2015		2014		2015		2014
Fair Value Hedges:
Interest rate contracts	Interest	$	32	$	76	$	176	$	72
Cash Flow Hedges:
Recognized in OCI
(Effective Portion):
Interest rate contracts	OCI (pretax) *		(4)		(1)		(10)		(5)
Foreign exchange contracts	OCI (pretax) *				(1)		2		(6)
Reclassified from OCI
(Effective Portion):
Interest rate contracts	Interest *		(3)		(3)		(9)		(11)
Foreign exchange contracts	Other operating *		1		(1)		3		(7)
Recognized Directly in Income
(Ineffective Portion)			**		**		**		**
Not Designated as Hedges:
Interest rate contracts	Interest *	$	(6)			$	(18)	$	4
Foreign exchange contracts	Cost of sales		43	$	(30)		69
Foreign exchange contracts	Other operating *		81		(39)		281		(28)
Total not designated		$	118	$	(69)	$	332	$	(24)

* 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 follows:

	Gross Amounts		Netting		Collateral
July 31, 2015	Recognized		Arrangements		Received		Net Amount
Derivatives:
Assets	$	425	$	(78)	$	(1)	$	346
Liabilities		109		(78)				31

	Gross Amounts		Netting		Collateral
October 31, 2014	Recognized		Arrangements		Received		Net Amount
Derivatives:
Assets	$	353	$	(76)	$	(5)	$	272
Liabilities		110		(76)				34

	Gross Amounts		Netting		Collateral
July 31, 2014	Recognized		Arrangements		Received		Net Amount
Derivatives:
Assets	$	348	$	(85)	$	(5)	$	258
Liabilities		134		(85)				49