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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.