FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Feb. 02, 2020

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:

	February 2, 2020				November 3, 2019				January 27, 2019
	Carrying Value		Fair Value *		Carrying Value		Fair Value *		Carrying Value		Fair Value *
Financing receivables – net:
Equipment operations	$	130	$	123	$	65	$	61	$	102	$	99
Financial services		27,164		27,177		29,130		29,106		25,048		24,900
Total	$	27,294	$	27,300	$	29,195	$	29,167	$	25,150	$	24,999
Financing receivables securitized – net:
Equipment operations	$	42	$	40	$	44	$	43	$	67	$	65
Financial services		4,436		4,464		4,339		4,362		4,496		4,454
Total	$	4,478	$	4,504	$	4,383	$	4,405	$	4,563	$	4,519
Short-term securitization borrowings:
Equipment operations	$	42	$	42	$	44	$	45	$	67	$	67
Financial services		4,374		4,403		4,277		4,302		4,397		4,391
Total	$	4,416	$	4,445	$	4,321	$	4,347	$	4,464	$	4,458
Long-term borrowings due within one year: **
Equipment operations	$	567	$	567	$	642	$	645	$	928	$	937
Financial services		6,638		6,650		6,786		6,788		5,198		5,186
Total	$	7,205	$	7,217	$	7,428	$	7,433	$	6,126	$	6,123
Long-term borrowings: **
Equipment operations	$	5,544	$	6,403	$	5,415	$	6,138	$	4,712	$	4,989
Financial services		24,908		25,299		24,814		25,122		23,143		23,217
Total	$	30,452	$	31,702	$	30,229	$	31,260	$	27,855	$	28,206

* 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.

** Carrying values exclude finance lease liabilities that are presented as borrowings beginning in 2020 (see Notes 3 and 15).

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*:

	February 2		November 3		January 27
	2020		2019		2019
Level 1:
Marketable securities
International equity securities ***	$	3
Equity fund ***		62	$	59	$	51
U.S. government debt securities		52		50		44
Total Level 1 marketable securities		117		109		95
Level 2:
Marketable securities
U.S. government debt securities		87		81		76
Municipal debt securities		62		60		51
Corporate debt securities		173		165		141
International debt securities		4		5		9
Mortgage-backed securities**		165		160		145
Total Level 2 marketable securities		491		471		422
Other assets
Derivatives:
Interest rate contracts		443		363		76
Foreign exchange contracts		37		20		59
Cross-currency interest rate contracts		1		1		3
Total Level 2 other assets		481		384		138
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts		57		65		232
Foreign exchange contracts		40		71		64
Cross-currency interest rate contracts		4		3		2
Total Level 2 accounts payable and accrued expenses		101		139		298
Level 3:
Marketable securities
International debt securities		1		1		6

* 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 first quarter of 2020 and 2019 net unrealized gains on equity securities recorded in “Other income” were $6 million and none, respectively.

Contractual Maturities of Debt Securities

The contractual maturities of debt securities at February 2, 2020 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	$	28	$	24
Due after one through five years		96		99
Due after five through 10 years		96		103
Due after 10 years		143		153
Mortgage-backed securities		159		165
Debt securities	$	522	$	544

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
	February 2		January 27
	2020		2019
Beginning of period balance	$	1	$	8
Principal payments				(3)
Other				1
End of period balance	$	1	$	6

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
	February 2	November 3		January 27	February 2	January 27
	2020	2019		2019	2020	2019
Equipment on operating leases – net		$	855
Other assets		$	142

*  See financing receivables with specific allowances in Note 11. Losses were not significant.