FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

May 03, 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:

	May 3, 2020				November 3, 2019				April 28, 2019
	Carrying Value		Fair Value *		Carrying Value		Fair Value *		Carrying Value		Fair Value *
Financing receivables – net:
Equipment operations	$	118	$	111	$	65	$	61	$	102	$	95
Financial services		27,138		27,317		29,130		29,106		25,768		25,697
Total	$	27,256	$	27,428	$	29,195	$	29,167	$	25,870	$	25,792
Financing receivables securitized – net:
Equipment operations	$	37	$	35	$	44	$	43	$	59	$	57
Financial services		4,648		4,722		4,339		4,362		4,755		4,726
Total	$	4,685	$	4,757	$	4,383	$	4,405	$	4,814	$	4,783
Short-term securitization borrowings:
Equipment operations	$	37	$	37	$	44	$	45	$	58	$	58
Financial services		4,603		4,632		4,277		4,302		4,644		4,653
Total	$	4,640	$	4,669	$	4,321	$	4,347	$	4,702	$	4,711
Long-term borrowings due within one year: **
Equipment operations	$	480	$	477	$	642	$	645	$	982	$	987
Financial services		6,587		6,609		6,786		6,788		5,321		5,305
Total	$	7,067	$	7,086	$	7,428	$	7,433	$	6,303	$	6,292
Long-term borrowings: **
Equipment operations	$	9,921	$	11,192	$	5,415	$	6,138	$	4,679	$	5,110
Financial services		24,377		24,537		24,814		25,122		23,576		23,805
Total	$	34,298	$	35,729	$	30,229	$	31,260	$	28,255	$	28,915

* 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*:

	May 3		November 3		April 28
	2020		2019		2019
Level 1:
Marketable securities
International equity securities ***	$	2
Equity fund ***		62	$	59	$	58
U.S. government debt securities		50		50		44
Total Level 1 marketable securities		114		109		102
Level 2:
Marketable securities
U.S. government debt securities		104		81		73
Municipal debt securities		63		60		55
Corporate debt securities		177		165		148
International debt securities		2		5		9
Mortgage-backed securities **		165		160		154
Total Level 2 marketable securities		511		471		439
Other assets
Derivatives:
Interest rate contracts		842		363		139
Foreign exchange contracts		92		20		99
Cross-currency interest rate contracts		17		1		2
Total Level 2 other assets		951		384		240
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts		131		65		165
Foreign exchange contracts		68		71		48
Cross-currency interest rate contracts				3		2
Total Level 2 accounts payable and accrued expenses		199		139		215
Level 3:
Marketable securities
International debt securities		1		1		4

* 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 second quarter of 2020 and 2019, net unrealized gains/(losses) on equity securities of $(8) million and $5 million, respectively, were recorded in “Other income.” During the first six months of 2020 and 2019, net unrealized gains/(losses) on equity securities were $(2) million and $5 million, respectively.

Contractual Maturities of Debt Securities

The contractual maturities of debt securities at May 3, 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	$	21	$	17
Due after one through five years		98		102
Due after five through 10 years		99		109
Due after 10 years		157		169
Mortgage-backed securities		156		165
Debt securities	$	531	$	562

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				Six Months Ended
	May 3		April 28		May 3		April 28
	2020		2019		2020		2019
Beginning of period balance	$	1	$	6	$	1	$	8
Principal payments				(2)				(5)
Other								1
End of period balance	$	1	$	4	$	1	$	4

Fair Value, Nonrecurring Measurements from Impairments

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

	Fair Value *					Losses
						Three Months Ended			Six Months Ended
	May 3		November 3		April 28	May 3		April 28	May 3		April 28
	2020		2019		2019	2020		2019	2020		2019
Equipment on operating leases – net	$	371	$	855		$	22		$	22
Property and equipment – net	$	70				$	62		$	62
Investments in unconsolidated affiliates	$	10				$	20		$	20
Other assets	$	59	$	142		$	10		$	10

*  See financing receivables with specific allowances in Note 11. The fair value measurement for the investment in unconsolidated affiliates was Level 1. The other fair value measurements were Level 3.