FAIR VALUE MEASUREMENTS

12 Months Ended

Oct. 29, 2023

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

25. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, we use various methods including market and income approaches. We utilize valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied.

Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs.

Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by us for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts.

Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates.

The fair values of financial instruments that do not approximate the carrying values at October 29, 2023 and October 30, 2022 follow:


		2023						2022
		Carrying			Fair			Carrying			Fair
		Value			Value*			Value			Value*
Financing receivables – net		$	43,673		$	42,777		$	36,634		$	35,526
Financing receivables securitized – net			7,335			7,056			5,936			5,698
Short-term securitization borrowings			6,995			6,921			5,711			5,577
Long-term borrowings due within one year**			8,331			8,156			7,466			7,322
Long-term borrowings**			38,428			36,873			33,566			31,852

* Fair value measurements above were Level 3 for all financing receivables and Level 2 for all borrowings.

**	Values exclude finance lease liabilities that are presented as borrowings (see Note 24).

Assets and liabilities measured at October 29, 2023 and October 30, 2022 at fair value on a recurring basis follow, excluding our cash equivalents, which were carried at a cost that approximates fair value and consisted of money market funds and time deposits:


		2023			2022
Level 1:
Marketable securities
International equity securities		$	3		$	3
International mutual funds securities			101
U.S. equity fund			86			70
U.S. fixed income fund			32
U.S. government debt securities			78			62
Total Level 1 marketable securities			300			135

Level 2:
Marketable securities
Corporate debt securities			244			200
International debt securities			1			60
Mortgage-backed securities*			185			155
Municipal debt securities			75			63
U.S. government debt securities			141			121
Total Level 2 marketable securities			646			599
Other assets - Derivatives			292			373
Accounts payable and accrued expenses - Derivatives			1,130			1,231

Level 3:
Accounts payable and accrued expenses – Deferred consideration			186			236

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

Fair value, nonrecurring level 3 measurements from impairments at October 29, 2023 and October 30, 2022 follow:


		Fair Value						Losses
		2023			2022¹			2023			2022			2021
Inventories					$	19					$	19
Property and equipment – net						15						41		$	44
Other intangible assets – net												28
Other assets															6

¹ Related to assessments on the Russian operations, performed at May 1, 2022 and updated on July 31, 2022 and October 30, 2022.

The following is a description of the valuation methodologies we use to measure certain financial instruments on the balance sheets at fair value. For more information on asset impairments, see Note 4.

Marketable securities – The portfolio of investments is valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are valued using the fund’s net asset value, based on the fair value of the underlying securities.

Derivatives – Our derivative financial instruments consist of interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards and swaps), and cross-currency interest rate contracts (swaps). The portfolio is valued based on an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates for currencies.

Financing receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using a market approach (appraisal values or realizable values). Inputs include a selection of realizable values (see Note 11).

Inventories – The impairment was based on net realizable value, less reasonably predictable selling and disposal costs.

Property and equipment – net – The valuations were based on cost and market approaches. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence, or quoted prices when available.

Other intangible assets – net – In 2022, we considered external valuations based on our probability weighted cash flow analysis.

Other assets – In 2021, the impairments were measured at the fair value of a right of use operating lease asset.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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