DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Jul. 31, 2016

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
	2016		2015		2016		2015
Interest rate contracts *	$	82	$	(10)	$	148	$	45
Borrowings **		(80)		10		(147)		(44)

* Includes changes in fair values of interest rate contracts excluding net accrued interest income of $36 million and $42 million during the third quarter of 2016 and 2015, respectively, and $114 million and $131 million during the first nine months of 2016 and 2015, respectively.

** Includes adjustments for fair values of hedged borrowings excluding accrued interest expense of $75 million and $68 million during the third quarter of 2016 and 2015, respectively, and $217 million and $207 million during the first nine months of 2016 and 2015, 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	2016		2015		2015
Designated as hedging instruments:
Interest rate contracts	$	443	$	299	$	284
Cross-currency interest rate contracts		12		14		14
Total designated		455		313		298
Not designated as hedging instruments:
Interest rate contracts		45		54		57
Foreign exchange contracts		47		50		57
Cross-currency interest rate contracts		12		11		13
Total not designated		104		115		127
Total derivatives	$	559	$	428	$	425
Accounts Payable and Accrued Expenses
Designated as hedging instruments:
Interest rate contracts	$	4	$	8	$	20
Total designated		4		8		20
Not designated as hedging instruments:
Interest rate contracts		43		52		63
Foreign exchange contracts		48		18		26
Total not designated		91		70		89
Total derivatives	$	95	$	78	$	109

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	2016		2015		2016		2015
Fair Value Hedges:
Interest rate contracts	Interest	$	118	$	32	$	262	$	176
Cash Flow Hedges:
Recognized in OCI
(Effective Portion):
Interest rate contracts	OCI (pretax) *		(1)		(4)		(4)		(10)
Foreign exchange contracts	OCI (pretax) *						1		2
Reclassified from OCI
(Effective Portion):
Interest rate contracts	Interest *		(1)		(3)		(6)		(9)
Foreign exchange contracts	Other operating *				1		1		3
Recognized Directly in Income
(Ineffective Portion)			**		**		**		**
Not Designated as Hedges:
Interest rate contracts	Interest *	$	(5)	$	(6)	$	(2)	$	(18)
Foreign exchange contracts	Cost of sales		18		43		(11)		69
Foreign exchange contracts	Other operating *		97		81		36		281
Total not designated		$	110	$	118	$	23	$	332

* 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:

	Gross Amounts		Netting		Collateral
July 31, 2016	Recognized		Arrangements		Received		Net Amount
Assets	$	559	$	(53)	$	(44)	$	462
Liabilities		95		(53)				42

	Gross Amounts		Netting		Collateral
October 31, 2015	Recognized		Arrangements		Received	Net Amount
Assets	$	428	$	(62)		$	366
Liabilities		78		(62)			16

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