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FAIR VALUE MEASUREMENTS (Tables)
 9 Months Ended
Jul. 30, 2017
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 30, 2017

 

October 30, 2016

 

July 31, 2016

 

 

 

Carrying
Value

 

Fair
Value *

 

Carrying
Value

 

Fair
Value *

 

Carrying
Value

 

Fair
Value *

 

Financing receivables – net

   

$
23,722

   

$
23,592

   

$
23,702

   

$
23,564

   

$
22,595

   

$
22,459

 

Financing receivables securitized – net

 

 
4,923

 

 
4,892

 

 
5,127

 

 
5,114

 

 
5,947

 

 
5,939

 

Short-term securitization borrowings

 

 
4,781

 

 
4,786

 

 
4,998

 

 
5,005

 

 
5,723

 

 
5,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings due within one year:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$
142

 

$
141

 

$
85

 

$
80

 

$
61

 

$
57

 

Financial services

 

 
5,382

 

 
5,394

 

 
5,258

 

 
5,259

 

 
5,372

 

 
5,368

 

Total

 

$
5,524

 

$
5,535

 

$
5,343

 

$
5,339

 

$
5,433

 

$
5,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$
4,523

 

$
5,110

 

$
4,565

 

$
5,184

 

$
4,557

 

$
5,350

 

Financial services

 

 
19,151

 

 
19,339

 

 
19,138

 

 
19,273

 

 
19,512

 

 
19,724

 

Total

 

$
23,674

 

$
24,449

 

$
23,703

 

$
24,457

 

$
24,069

 

$
25,074

 

* 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 30

    

October 30

    

July 31

 

 

 

2017*

 

2016*

 

2016*

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

U.S. equity securities and funds

 

$
45

 

$
45

 

$
48

 

Fixed income fund

 

 
15

 

 
15

 

 
9

 

U.S. government debt securities

 

 
77

 

 
88

 

 
86

 

Municipal debt securities

 

 
39

 

 
43

 

 
40

 

Corporate debt securities

 

 
120

 

 
118

 

 
118

 

International debt securities

 

 
22

 

 
34

 

 
40

 

Mortgage-backed securities **

 

 
108

 

 
111

 

 
128

 

Total marketable securities

 

 
426

 

 
454

 

 
469

 

Other assets

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

 
142

 

 
294

 

 
488

 

Foreign exchange contracts

 

 
32

 

 
60

 

 
47

 

Cross-currency interest rate contracts

 

 
10

 

 
21

 

 
24

 

Total assets ***

 

$
610

 

$
829

 

$
1,028

 

Accounts payable and accrued expenses

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$
81

 

$
29

 

$
47

 

Foreign exchange contracts

 

 
95

 

 
43

 

 
48

 

Cross-currency interest rate contracts

 

 
4

 

 

 

 

 

 

 

Total liabilities

 

$
180

 

$
72

 

$
95

 

*  Measurements above were Level 2 measurements except for Level 1 measurements of the U.S. equity securities and funds of $45 million, $45 million, and $48 million at July 30, 2017, October 30, 2016, and July 31, 2016, respectively; the fixed income fund of $15 million, $15 million, and $9 million at July 30, 2017, October 30, 2016, and July 31, 2016, respectively; and U.S. government debt securities of $46 million, $53 million, and $47 million at July 30, 2017, October 30, 2016, and July 31, 2016, respectively. In addition, $18 million, $28 million, and $34 million of the international debt securities were Level 3 measurements at July 30, 2017, October 30, 2016, and July 31, 2016, respectively. There were no transfers between Level 1 and Level 2 during the first nine months of 2017 or 2016.

** 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 30, 2017 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

 

Fair

 

 

 

Cost

 

Value

 

Due in one year or less

 

$
23

 

$
22

 

Due after one through five years

 

 
94

 

 
94

 

Due after five through 10 years

 

 
86

 

 
88

 

Due after 10 years

 

 
52

 

 
54

 

Mortgage-backed securities

 

 
109

 

 
108

 

Debt securities

 

$
364

 

$
366

 

 

Fair Value, Recurring Level 3 Measurements from Available for Sale Marketable Securities

Fair value, recurring Level 3 measurements from available for sale marketable securities in millions of dollars follow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended 

 

Nine Months Ended 

 

 

 

July 30

 

July 31

 

July 30

 

July 31

 

 

 

2017

 

2016

 

2017

 

2016

 

Beginning of period balance

 

$
23

 

$
40

 

$
28

 

$
29

 

Purchases

 

 

 

 

 

 

 

 

 

 

 
25

 

Principal payments

 

 
(5)

 

 
(8)

 

 
(12)

 

 
(16)

 

Change in unrealized gain (loss)

 

 

 

 

 
2

 

 
2

 

 
(4)

 

End of period balance

 

$
18

 

$
34

 

$
18

 

$
34

 

 

Fair Value, Nonrecurring Level 3 Measurements from Impairments

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value *

 

Losses

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Nine Months Ended 

 

 

 

July 30

 

October 30

 

July 31

 

July 30

 

July 31

 

July 30

 

July 31

 

 

  

2017

  

2016

  

2016

  

2017

  

2016

  

2017

  

2016

 

Equipment on operating leases – net

 

 

 

 

$

654

 

 

 

 

 

 

 

 

 

 

 

 

 

$

30

 

Property and equipment – net

 

 

 

 

$

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in unconsolidated affiliates

 

 

 

 

$

 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

$

184

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20

 

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