FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Jul. 28, 2019

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 28, 2019				October 28, 2018				July 29, 2018
	Carrying Value		Fair Value *		Carrying Value		Fair Value *		Carrying Value		Fair Value *
Financing receivables – net:
Equipment operations	$	100	$	93	$	93	$	91	$	78	$	75
Financial services		26,949		26,921		26,961		26,722		25,135		24,911
Total	$	27,049	$	27,014	$	27,054	$	26,813	$	25,213	$	24,986
Financing receivables securitized – net:
Equipment operations	$	54	$	52	$	76	$	73	$	90	$	89
Financial services		5,146		5,154		3,946		3,895		4,572		4,517
Total	$	5,200	$	5,206	$	4,022	$	3,968	$	4,662	$	4,606
Short-term securitization borrowings:
Equipment operations	$	53	$	54	$	75	$	75	$	90	$	89
Financial services		4,995		5,017		3,882		3,870		4,438		4,426
Total	$	5,048	$	5,071	$	3,957	$	3,945	$	4,528	$	4,515
Long-term borrowings due within one year:
Equipment operations	$	1,009	$	1,013	$	970	$	979	$	238	$	239
Financial services		6,922		6,914		5,427		5,411		5,955		5,947
Total	$	7,931	$	7,927	$	6,397	$	6,390	$	6,193	$	6,186
Long-term borrowings:
Equipment operations	$	5,364	$	6,017	$	4,714	$	4,948	$	5,526	$	5,838
Financial services		23,878		24,143		22,523		22,590		21,312		21,388
Total	$	29,242	$	30,160	$	27,237	$	27,538	$	26,838	$	27,226

*  Fair value measurements above were Level 3 for all financing receivables, Level 3 for equipment operations short-term securitization borrowings, and Level 2 for all other 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 28		October 28		July 29
	2019		2018		2018
Level 1:
Marketable securities
Equity fund ***	$	59	$	46	$	46
Fixed income fund ***						9
U.S. government debt securities		49		44		39
Total Level 1 marketable securities		108		90		94
Level 2:
Marketable securities
U.S. government debt securities		73		67		60
Municipal debt securities		57		46		47
Corporate debt securities		156		140		138
International debt securities		9		2		3
Mortgage-backed securities **		158		137		136
Total Level 2 marketable securities		453		392		384
Other assets
Derivatives:
Interest rate contracts		265		80		68
Foreign exchange contracts		53		83		50
Cross-currency interest rate contracts		2		5		6
Total Level 2 other assets		320		168		124
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts		99		350		330
Foreign exchange contracts		45		49		52
Cross-currency interest rate contracts		2				2
Total Level 2 accounts payable and accrued expenses		146		399		384
Level 3:
Marketable securities
International debt securities		4		8		10

* Excluded from this table were the Company’s cash equivalents, which were carried at cost that approximates fair value. The cash equivalents consist primarily of money market funds and time deposits.

**  Primarily issued by U.S. government sponsored enterprises.

***During the third quarter and first nine months of 2019, $1 million and $7 million, respectively, of net unrealized gains on equity securities were recorded in “Other income”.

Contractual Maturities of Debt Securities

The contractual maturities of debt securities at July 28, 2019 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	$	30	$	30
Due after one through five years		101		102
Due after five through 10 years		92		96
Due after 10 years		115		120
Mortgage-backed securities		155		158
Debt securities	$	493	$	506

Fair Value, Recurring, Level 3 Measurements

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

	Three Months Ended				Nine Months Ended
	July 28		July 29		July 28		July 29
	2019		2018		2019		2018
Beginning of period balance	$	4	$	14	$	8	$	17
Principal payments				(4)		(5)		(7)
Other						1
End of period balance	$	4	$	10	$	4	$	10