DERIVATIVE INSTRUMENTS

12 Months Ended

Nov. 02, 2025

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

26. DERIVATIVE INSTRUMENTS

Fair values of our derivative instruments and the associated notional amounts at the end of 2025 and 2024 are presented below. Assets are recorded in “Other assets,” while liabilities are recorded in “Accounts payable and accrued expenses.”

			Fair Value
	Notional		Assets		Liabilities
2025
Cash flow hedges:
Interest rate contracts	$	2,675			$	21
Fair value hedges:
Interest rate contracts		11,465	$	160		228
Cross-currency interest rate contracts		2,058		91		11
Net investment hedges:
Cross-currency interest rate contracts		1,131				9
Not designated as hedging instruments:
Interest rate contracts		14,084		94		81
Foreign exchange contracts		7,372		46		33
Cross-currency interest rate contracts		132		2		6
2024
Cash flow hedges:
Interest rate contracts	$	2,875	$	3	$	20
Fair value hedges:
Interest rate contracts		15,864		115		467
Cross-currency interest rate contracts		975		31
Not designated as hedging instruments:
Interest rate contracts		12,518		97		75
Foreign exchange contracts		7,533		95		20
Cross-currency interest rate contracts		158		16

The amounts recorded in the consolidated balance sheets at November 2, 2025, and October 27, 2024, related to borrowings and fair value hedges are presented in the table below. Fair value hedging adjustments are included in the carrying amount of hedged items.

	Carrying		Cumulative
	Amount of		Fair Value
	Hedged		Hedging
	Items		Amounts
2025
Short-term borrowings	$	2,998	$	(30)
Long-term borrowings		25,013		(203)
2024
Short-term borrowings	$	2,069	$	6
Long-term borrowings		24,751		(575)

The table above includes carrying amounts of short-term borrowings of $2,544 and $1,782 and of long-term borrowings of $11,963 and $8,626 at November 2, 2025, and October 27, 2024, respectively, for hedged items that are in discontinued hedge relationships. Also included are cumulative fair value hedging amounts on discontinued hedge relationships of short-term borrowings of $(30) and $7 and of long-term borrowings of $(185) and $(228) at November 2, 2025, and October 27, 2024, respectively. At October 27, 2024, long-term borrowings with a carrying amount of $598 were in both active and discontinued hedging relationships as a result of hedging activities associated with reference rate reform.

The classification and gains (losses), including accrued interest expense, related to derivative instruments on the statements of consolidated income consisted of the following:

	​2025		​2024		​2023
Fair value hedges
Interest rate contracts – Interest expense	$	103	$	226	$	(542)
Cash flow hedges
Recognized in OCI:
Interest rate contracts – OCI (pretax)	$	1	$	(10)	$	25
Reclassified from OCI:
Interest rate contracts – Interest expense		(21)		71		62
Net investment hedges
Interest rate contracts – Interest expense	$	10
Recognized in OCI:
Interest rate contracts – OCI (pretax)		(9)
Not designated as hedges
Interest rate contracts – Net sales					$	1
Interest rate contracts – Interest expense	$	(11)	$	(4)		40
Foreign exchange contracts – Net sales		(6)		(2)		(6)
Foreign exchange contracts – Cost of sales		(5)		10		8
Foreign exchange contracts – Other operating expenses		147		(135)		100
Total not designated	$	125	$	(131)	$	143

The amount of loss recorded in OCI at November 2, 2025, that is expected to be reclassified to “Interest expense” in the next twelve months if interest rates remain unchanged is $9 after-tax. There

were no gains or losses reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur.

Counterparty Risk and Collateral

Derivative instruments are subject to significant concentrations of credit risk to the banking sector. We manage individual counterparty exposure by setting limits that consider the credit rating of the counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between us and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Some of these agreements include credit support provisions. Each master agreement permits the net settlement of amounts owed in the event of default or termination.

Certain of our derivative agreements contain credit support provisions that may require us to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position at November 2, 2025, and October 27, 2024, was $356 and $562, respectively. In accordance with the limits established in these agreements, we posted $62 and $245 of cash collateral at November 2, 2025, and October 27, 2024, respectively. In addition, we paid $8 of collateral that was outstanding at both November 2, 2025, and October 27, 2024, to participate in an international futures market to hedge currency exposure, not included in the following table.

Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and collateral at November 2, 2025, and October 27, 2024, follows:

	Gross Amounts		Netting				Net
	Recognized		Arrangements		Collateral		Amount
2025
Assets	$	393	$	(202)			$	191
Liabilities		389		(202)	$	(64)		123
2024
Assets	$	357	$	(142)			$	215
Liabilities		582		(142)	$	(246)		194