| Fair Value of Financial Instruments |
The fair values of financial instruments that do not approximate the carrying values at November 1, 2020 and November 3, 2019 in millions of dollars follow: | | | | | | | | | | | | | | | | 2020 | | 2019 | | | | Carrying | | Fair | | Carrying | | Fair | | | | Value | | Value* | | Value | | Value* | | Financing receivables – net: | | | | | | | | | | | | | | Equipment operations | | $ | 105 | | $ | 103 | | $ | 65 | | $ | 61 | | Financial services | | | 29,645 | | | 29,838 | | | 29,130 | | | 29,106 | | Total | | $ | 29,750 | | $ | 29,941 | | $ | 29,195 | | $ | 29,167 | | Financing receivables securitized – net: | | | | | | | | | | | | | | Equipment operations | | $ | 26 | | $ | 26 | | $ | 44 | | $ | 43 | | Financial services | | | 4,677 | | | 4,773 | | | 4,339 | | | 4,362 | | Total | | $ | 4,703 | | $ | 4,799 | | $ | 4,383 | | $ | 4,405 | | Short-term securitization borrowings: | | | | | | | | | | | | | | Equipment operations | | $ | 26 | | $ | 26 | | $ | 44 | | $ | 45 | | Financial services | | | 4,656 | | | 4,698 | | | 4,277 | | | 4,302 | | Total | | $ | 4,682 | | $ | 4,724 | | $ | 4,321 | | $ | 4,347 | | Long-term borrowings due within one year:** | | | | | | | | | | | | | | Equipment operations | | $ | 79 | | $ | 78 | | $ | 642 | | $ | 645 | | Financial services | | | 6,870 | | | 6,936 | | | 6,786 | | | 6,788 | | Total | | $ | 6,949 | | $ | 7,014 | | $ | 7,428 | | $ | 7,433 | | Long-term borrowings:** | | | | | | | | | | | | | | Equipment operations | | $ | 10,085 | | $ | 11,837 | | $ | 5,415 | | $ | 6,138 | | Financial services | | | 22,610 | | | 23,170 | | | 24,814 | | | 25,122 | | Total | | $ | 32,695 | | $ | 35,007 | | $ | 30,229 | | $ | 31,260 | |
* 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. ** | Values exclude finance lease liabilities that are presented as borrowings beginning in 2020 (see Note 25). |
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| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
Assets and liabilities measured at November 1, 2020 and November 3, 2019 at fair value on a recurring basis in millions of dollars follow*: | | | | | | | | | | 2020 | | 2019 | | Level 1: | | | | | | | | Marketable securities | | | | | | | | U.S. equity fund | | $ | 62 | | $ | 59 | | International equity securities | | | 2 | | | | | U.S. government debt securities | | | 55 | | | 50 | | Total Level 1 marketable securities | | | 119 | | | 109 | | | | | | | | | | Level 2: | | | | | | | | Marketable securities | | | | | | | | U.S. government debt securities | | | 113 | | | 81 | | Municipal debt securities | | | 68 | | | 60 | | Corporate debt securities | | | 188 | | | 165 | | International debt securities | | | 2 | | | 5 | | Mortgage-backed securities** | | | 147 | | | 160 | | Total Level 2 marketable securities | | | 518 | | | 471 | | Other assets | | | | | | | | Derivatives: | | | | | | | | Interest rate contracts | | | 669 | | | 363 | | Foreign exchange contracts | | | 48 | | | 20 | | Cross-currency interest rate contracts | | | 8 | | | 1 | | Total Level 2 other assets | | | 725 | | | 384 | | Accounts payable and accrued expenses | | | | | | | | Derivatives: | | | | | | | | Interest rate contracts | | | 88 | | | 65 | | Foreign exchange contracts | | | 26 | | | 71 | | Cross-currency interest rate contracts | | | 1 | | | 3 | | Total Level 2 accounts payable and accrued expenses | | | 115 | | | 139 | | | | | | | | | | Level 3: | | | | | | | | Marketable securities | | | | | | | | International debt securities | | | 4 | | | 1 | |
* 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.
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| Fair Value, Recurring, Level 3 Measurements |
Fair value, recurring Level 3 measurements from available-for-sale marketable securities at November 1, 2020, November 3, 2019, and October 28, 2018 in millions of dollars follow: | | | | | | | | | | | | | | 2020 | | 2019 | | 2018 | | | Beginning of year balance | | $ | 1 | | $ | 8 | | $ | 17 | | | Purchases | | | 9 | | | | | | | | | Principal payments | | | (1) | | | (8) | | | (9) | | | Change in unrealized gain | | | | | | | | | 1 | | | Other | | | (5) | | | 1 | | | (1) | | | End of year balance | | $ | 4 | | $ | 1 | | $ | 8 | | |
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| Fair Value, Nonrecurring Level 3 Measurements from Impairments |
Fair value, nonrecurring Level 3 measurements from impairments at November 1, 2020 and November 3, 2019 in millions of dollars follow: | | | | | | | | | | | | | | | | | | | Fair Value | | Losses | | | | 2020 | | 2019 | | 2020 | | 2019 | | 2018 | | Other receivables 1 | | $ | 1 | | | | | $ | 2 | | | | | | | | Equipment on operating leases – net 2 | | $ | 371 | | $ | 855 | | $ | 22 | | $ | 59 | | | | | Property and equipment – net 3 | | $ | 135 | | | | | $ | 102 | | | | | | | | Investments in unconsolidated affiliates 4 | | $ | 19 | | | | | $ | 50 | | | | | | | | Other intangible assets – net | | | | | | | | $ | 2 | | | | | | | | Other assets 2 | | $ | 59 | | $ | 142 | | $ | 16 | | $ | 18 | | | | |
1 Fair value as of August 2, 2020. 2 Fair value as of May 3, 2020. 3 Fair value of $70 million at May 3, 2020, $8 million at August 2, 2020, and $57 million at November 1, 2020. 4 Fair value as of November 1, 2020.
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