v3.10.0.1
FAIR VALUE MEASUREMENTS (Tables)
 3 Months Ended
Jan. 27, 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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 27, 2019

 

October 28, 2018

 

January 28, 2018

 

 

 

Carrying
Value

 

Fair
Value *

 

Carrying
Value

 

Fair
Value *

 

Carrying
Value

 

Fair
Value *

 

Financing receivables – net:

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$

102

   

$

99

   

$
93

   

$
91

   

$
52

   

$
51

 

Financial services

 

 

25,048

 

 

24,900

 

 
26,961

 

 
26,722

 

 
23,803

 

 
23,597

 

Total

 

$

25,150

 

$

24,999

 

$
27,054

 

$
26,813

 

$
23,855

 

$
23,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing receivables securitized – net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$

67

 

$

65

 

$
76

 

$
73

 

$
125

 

$
125

 

Financial services

 

 

4,496

 

 

4,454

 

 
3,946

 

 
3,895

 

 
4,349

 

 
4,303

 

Total

 

$

4,563

 

$

4,519

 

$

4,022

 

$

3,968

 

$
4,474

 

$
4,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term securitization borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$

67

 

$

67

 

$
75

 

$
75

 

$
126

 

$
126

 

Financial services

 

 

4,397

 

 

4,391

 

 
3,882

 

 
3,870

 

 
4,302

 

 
4,293

 

Total

 

$

4,464

 

$

4,458

 

$

3,957

 

$

3,945

 

$

4,428

 

$

4,419

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings due within one year:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$

928

 

$

937

 

$
970

 

$
979

 

$
289

 

$
289

 

Financial services

 

 

5,198

 

 

5,186

 

 
5,427

 

 
5,411

 

 
6,124

 

 
6,127

 

Total

 

$

6,126

 

$

6,123

 

$
6,397

 

$
6,390

 

$
6,413

 

$
6,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment operations

 

$

4,712

 

$

4,989

 

$
4,714

 

$
4,948

 

$
5,573

 

$
6,076

 

Financial services

 

 

23,143

 

 

23,217

 

 
22,523

 

 
22,590

 

 
20,849

 

 
21,023

 

Total

 

$

27,855

 

$

28,206

 

$
27,237

 

$
27,538

 

$
26,422

 

$
27,099

 

* 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:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

January 27

    

October 28

    

January 28 

 

 

 

2019*

 

2018*

 

2018*

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

Equity fund ****

 

$

51

 

$

46

 

$

52

 

Fixed income fund

 

 

 

 

 

 

 

 
14

 

U.S. government debt securities

 

 

120

 

 

111

 

 

75

 

Municipal debt securities

 

 

51

 

 

46

 

 

41

 

Corporate debt securities

 

 

141

 

 

140

 

 

137

 

International debt securities

 

 

15

 

 

10

 

 

18

 

Mortgage-backed securities **

 

 

146

 

 

137

 

 

125

 

Total marketable securities

 

 

524

 

 

490

 

 

462

 

Other assets

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

 

76

 

 

80

 

 

94

 

Foreign exchange contracts

 

 

59

 

 

83

 

 

31

 

Cross-currency interest rate contracts

 

 
3

 

 
5

 

 
8

 

Total assets ***

 

$

662

 

$

658

 

$

595

 

Accounts payable and accrued expenses

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

232

 

$

350

 

$

248

 

Foreign exchange contracts

 

 

64

 

 

49

 

 

124

 

Cross-currency interest rate contracts

 

 
2

 

 

 

 

 
2

 

Total liabilities

 

$

298

 

$

399

 

$

374

 

*  All measurements above were Level 2 measurements except for Level 1 measurements of the equity fund of $51 million, $46 million, and $52 million at January 27, 2019, October 28, 2018, and January 28, 2018, respectively; the fixed income fund of $14 million at January 28, 2018; and U.S. government debt securities of $44 million, $44 million, and $43 million at January 27, 2019, October 28, 2018, and January 28, 2018, respectively. In addition, $6 million, $8 million, and $15 million of the international debt securities were Level 3 measurements at January 27, 2019, October 28, 2018, and January 28, 2018, respectively.

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

***  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.

****Beginning in the first quarter of fiscal year 2019, unrealized fair value changes are recognized directly in net income (see Note 3).

Contractual Maturities of Debt Securities

The contractual maturities of debt securities at January 27, 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

 

$

32

 

$

32

 

Due after one through five years

 

 

112

 

 

111

 

Due after five through 10 years

 

 

101

 

 

101

 

Due after 10 years

 

 

84

 

 

83

 

Mortgage-backed securities

 

 

150

 

 

146

 

Debt securities

 

$

479

 

$

473

 

 

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 

 

 

 

January 27

 

January 28 

 

 

 

2019

 

2018

 

Beginning of period balance

 

$
8

 

$
17

 

Principal payments

 

 
(3)

 

 
(2)

 

Other

 

 
1

 

 

 

 

End of period balance

 

$
6

 

$
15