Fair Value Measurements (Tables)

9 Months Ended

Jul. 31, 2012

Fair Value Disclosures [Abstract]

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 July 31, 2012
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Marketable securities:
U.S. Treasury bills	$	139	$	—	$	—	$	139
Other U.S. and non-U.S. government bonds	—		—		—		—
Other	20		—		—		20
Derivative financial instruments:
Foreign currency contracts	—		1		—		1
Commodity contracts	—		—		—		—
Total assets	$	159	$	1	$	—	$	160
Liabilities
Derivative financial instruments:
Foreign currency contracts	$	—	$	2	$	—	$	2
Commodity contracts	—		6		—		6
Guarantees	—		—		7		7
Total liabilities	$	—	$	8	$	7	$	15

	As of October 31, 2011
(in millions)	Level 1		Level 2		Level 3		Total
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
(in millions)	Guarantees		Retained interests		Commodity contracts		Guarantees		Retained interests		Commodity contracts
Three Months Ended July 31
Balance at May 1	$	7	$	—	$	—	$	—	$	—	$	6
Total losses (realized/unrealized) included in earnings (A)	—		—		—		—		—		(1		)
Settlements	—		—		—		—		—		(3		)
Balance at July 31	$	7	$	—	$	—	$	—	$	—	$	2
Change in unrealized gains on assets and liabilities still held	$	—	$	—	$	—	$	—	$	—	$	2

Nine Months Ended July 31
Balance at November 1	$	6	$	—	$	(2	)	$	—	$	53		$	2
Total gains (losses) (realized/unrealized) included in earnings (A)	—		—		(1		)	—		1			5
Transfers into Level 3	—		—		—			—		—			—
Transfers out of Level 3	—		—		2			—		—			—
Issuances	1		—		—			—		—			—
Settlements	—		—		1			—		(54		)	(5		)
Balance at July 31	$	7	$	—	$	—		$	—	$	—		$	2
Change in unrealized gains on assets and liabilities still held	$	—	$	—	$	—		$	—	$	—		$	2

_____________

(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 nine months ended July 31, 2012 and 2011, there were no purchases or sales of Level 3 financial instruments. Additionally, for the three months ended July 31, 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
(in millions)	July 31, 2012		October 31, 2011
Finance receivables (A)	$	4	$	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 July 31, 2012, impaired receivables with a carrying amount of $15 million had specific loss reserves of $11 million and a fair value of $4 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 July 31, 2012
	Estimated Fair Value								Carrying Value
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Retail notes	$	—	$	—	$	689	$	689	$	687
Notes receivable	—		—		59		59		61
Liabilities
Debt:
Manufacturing operations
8.25% Senior Notes, due 2021	865		—		—		865		872
3.0% Senior Subordinated Convertible Notes, due 2014(A)	517		—		—		517		514
Debt of majority-owned dealerships	—		—		74		74		75
Financing arrangements	—		—		115		115		122
Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040	—		236		—		236		225
Promissory Note	—		—		33		33		33
Asset-Based Credit Facility	—		—		238		238		238
Other	—		—		42		42		43
Financial Services operations
Asset-backed debt issued by consolidated SPEs, at various rates, due serially through 2019	—		—		1,301		1,301		1,299
Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017	—		—		818		818		857
Commercial paper, at variable rates, due serially through 2012	53		—		—		53		53
Borrowings secured by operating and finance leases, at various rates, due serially through 2017	—		—		56		56		57

	As of October 31, 2011
	Estimated Fair Value								Carrying Value
(in millions)	Level 1		Level 2		Level 3		Total
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.