Fair Value Measurements (Tables)

6 Months Ended

Apr. 30, 2012

Financial instruments measured at fair value, recurring basis

The following tables present the financial instruments measured at fair value on a recurring basis:



	As of April 30, 2012
	Level 1		Level 2		Level 3		Total
(in millions)
Assets
Marketable securities:
U.S. Treasury bills	$	249	$	—	$	—	$	249
Other U.S. and non-U.S. government bonds	68		—		—		68
Other	20		—		—		20
Derivative financial instruments:
Foreign currency contracts	—		—		—		—
Commodity contracts	—		1		—		1
Total assets	$	337	$	1	$	—	$	338
Liabilities
Derivative financial instruments:
Foreign currency contracts	$	—	$	1	$	—	$	1
Commodity contracts	—		3		—		3
Guarantees	—		—		7		7
Total liabilities	$	—	$	4	$	7	$	11



	As of October 31, 2011
	Level 1		Level 2		Level 3		Total
(in millions)
Assets
Marketable securities:
U.S. Treasury bills	$	283	$	—	$	—	$	283
Other U.S and non-U.S. government bonds	415		—		—		415
Other	20		—		—		20
Derivative financial instruments:
Commodity contracts	—		—		1		1
Foreign currency contracts	—		3		—		3
Total assets	$	718	$	3	$	1	$	722
Liabilities
Derivative financial instruments:
Commodity contracts	$	—	$	3	$	3	$	6
Cross currency swaps	—		4		—		4
Guarantees	—		—		6		6
Total liabilities	$	—	$	7	$	9	$	16

Financial instruments classified within Level 3

The tables below present the changes for those financial instruments classified within Level 3 of the valuation hierarchy:



	2012						2011
	Guarantees		Retained interests		Commodity contracts		Guarantees		Retained interests		Commodity contracts
(in millions)
Three Months Ended April 30
Balance at February 1	$	7	$	—	$	—	$	—	$	—	$	5
Total gains (losses) (realized/unrealized) included in earnings^(A)	—		—		—		—		—		2
Settlements	—		—		—		—		—		(1		)
Balance at April 30	$	7	$	—	$	—	$	—	$	—	$	6
Change in unrealized gains on assets and liabilities still held	$	—	$	—	$	—	$	—	$	—	$	—



Six Months Ended April 30
Balance at November 1	$	6	$	—	$	(2	)	$	—	$	53		$	2
Total gains (losses) (realized/unrealized) included in earnings^(A)	—		—		(1		)	—		1			6
Transfers into Level 3	—		—		—			—		—			—
Transfers out of Level 3	—		—		2			—		—			—
Issuances	1		—		—			—		—			—
Settlements	—		—		1			—		(54		)	(2		)
Balance at April 30	$	7	$	—	$	—		$	—	$	—		$	6
Change in unrealized gains on assets and liabilities still held	$	—	$	—	$	—		$	—	$	—		$	3

_____________


(A)	For commodity contracts, gains (losses) are included in Costs of products sold. For retained interests, gains recognized are included in Finance revenues.

Financial instruments measured at fair value, nonrecurring basis

During the three and six months ended April 30, 2012 and 2011, there were no purchases or sales of Level 3 financial instruments. Additionally, for the three months ended April 30, 2012 and 2011, there were no issuances of Level 3 financial instruments and there were no transfers into or out of Level 3.

The following table presents the financial instruments measured at fair value on a nonrecurring basis:



	Level 2
	April 30, 2012		October 31, 2011
(in millions)
Finance receivables^(A)	$	6	$	5

_____________

(A)

Certain impaired finance receivables are measured at fair value on a nonrecurring basis. An impairment charge is recorded for the amount by which the carrying value of the receivables exceeds the fair value of the underlying collateral, net of remarketing costs. As of April 30, 2012, impaired receivables with a carrying amount of $16 million had specific loss reserves of $10 million and a fair value of $6 million. As of October 31, 2011, impaired receivables with a carrying amount of $15 million had specific loss reserves of $10 million and a fair value of $5 million. Fair values of the underlying collateral are determined by reference to dealer vehicle value publications adjusted for certain market factors.

Carrying values and estimated fair values of financial instruments

The carrying values and estimated fair values of financial instruments are summarized in the tables below:



	As of April 30, 2012
	Estimated Fair Value								Carrying Value
	Level 1		Level 2		Level 3		Total
(in millions)
Assets
Retail notes	$	—	$	—	$	773	$	773	$	780
Notes receivable	—		—		37		37		39
Liabilities
Debt:
Manufacturing operations
8.25% Senior Notes, due 2021	1,011		—		—		1,011		871
3.0% Senior Subordinated Convertible Notes, due 2014^(A)	591		—		—		591		508
Debt of majority-owned dealerships	—		—		82		82		84
Financing arrangements	—		—		128		128		132
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040	—		242		—		242		225
Promissory Note	—		—		36		36		36
Asset-Based Credit Facility	—		—		100		100		100
Other	—		—		47		47		49
Financial Services operations
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2018	—		—		1,299		1,299		1,284
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017	—		—		1,057		1,057		1,060
Commercial paper, at variable rates, due serially through 2012	59		—		—		59		59
Borrowings secured by operating and finance leases, at various rates, due serially through 2017	—		—		64		64		66



	As of October 31, 2011
	Estimated Fair Value								Carrying Value
	Level 1		Level 2		Level 3		Total
(in millions)
Assets
Retail notes	$	—	$	—	$	954	$	954	$	958
Notes receivable	—		—		47		47		47
Liabilities
Debt:
Manufacturing operations
8.25% Senior Notes, due 2021	1,131		—		—		1,131		967
3.0% Senior Subordinated Convertible Notes, due 2014^(A)	633		—		—		633		497
Debt of majority-owned dealerships	—		—		88		88		94
Financing arrangements	—		—		112		112		114
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040	—		234		—		234		225
Promissory Note	—		—		39		39		40
Asset-Based Credit Facility	—		—		—		—		—
Other	—		—		26		26		39
Financial Services operations
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2018	—		—		1,695		1,695		1,664
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017	—		—		1,091		1,091		1,072
Commercial paper, at variable rates, due serially through 2012	70		—		—		70		70
Borrowings secured by operating and finance leases, at various rates, due serially through 2017	—		—		70		70		70

_________________________


(A)	The carrying value represents the financial statement amount of the debt after allocation of the conversion feature to equity, while the fair value is based on quoted market prices for the convertible note which includes the equity feature.

- Definition

Tabular disclosure of assets and liabilities by class, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). The disclosures that may be required or desired include: (a) the fair value measurements recorded during the period and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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