Deere & Company (DE) 10-Q 28 Aug 09 2009 Q3 Quarterly report Financial data

Statement of Consolidated Incom

Statement of Consolidated Income (USD $)
In Millions, except Per Share data	3 Months Ended Jul. 31, 2009	3 Months Ended Jul. 31, 2008	9 Months Ended Jul. 31, 2009	9 Months Ended Jul. 31, 2008
Net Sales and Revenues
Net sales	5282.7	7070.2	16029.8	19069.7
Finance and interest income	459.7	511.6	1368.4	1548.8
Other income	142.2	156.9	380.1	418
Total	5884.6	7738.7	17778.3	21036.5
Costs and Expenses
Cost of sales	4057.6	5421.9	12356.5	14292.3
Research and development expenses	243.3	238.1	718.4	672.5
Selling, administrative and general expenses	659.5	772	1986.4	2191.4
Interest expense	249.3	270.2	793.2	848.9
Other operating expenses	165.7	167.5	528.9	468.3
Total	5375.4	6869.7	16383.4	18473.4
Income of Consolidated Group before Income Taxes	509.2	869	1394.9	2563.1
Provision for income taxes	87.9	307.1	298.6	888.1
Income of Consolidated Group	421.3	561.9	1096.3	1,675
Equity in income (loss) of unconsolidated affiliates	-1.3	13.3		32.7
Net Income	$420	575.2	1096.3	1707.7
Per Share Data
Net income - basic (in dollars per share)	0.99	1.34	2.59	3.94
Net income - diluted (in dollars per share)	0.99	1.32	2.59	3.89
Average Shares Outstanding
Basic (in millions of shares)	422.9	429.3	422.7	433.6
Diluted (in millions of shares)	424.8	434.4	424.1	439.4

Condensed Consolidated Balance

Condensed Consolidated Balance Sheet (USD $)
In Millions	Jul. 31, 2009	Oct. 31, 2008	Jul. 31, 2008
Assets
Cash and cash equivalents	4314.8	2211.4	2822.8
Marketable securities	181	977.4	944
Receivables from unconsolidated affiliates	37.6	44.7	45.1
Trade accounts and notes receivable - net	3,230	3234.6	3982.7
Financing receivables - net	14122.2	16,017	16,023
Restricted financing receivables - net	3,803	1644.8	1933.8
Other receivables	695.8	664.9	678.6
Equipment on operating leases - net	1663.5	1638.6	1,661
Inventories	3,020	3041.8	3474.2
Property and equipment - net	4,411	4127.7	3938.5
Investments in unconsolidated affiliates	214.3	224.4	215.1
Goodwill	1293.9	1224.6	1329.8
Other intangible assets - net	141.8	161.4	183.4
Retirement benefits	1185.1	1,106	2047.5
Deferred income taxes	1555.5	1440.6	1564.2
Other assets	1517.2	974.7	844
Total Assets	41386.7	38734.6	41687.7
Liabilities and Stockholders' Equity
Short-term borrowings	8048.4	8520.5	10114.2
Payables to unconsolidated affiliates	76	169.2	178.5
Accounts payable and accrued expenses	5589.9	6393.6	6705.3
Deferred income taxes	161	171.8	207.8
Long-term borrowings	16720.9	13898.5	13397.4
Retirement benefits and other liabilities	3366.9	3048.3	3544.5
Total liabilities	33963.1	32201.9	34147.7
Commitments and contingencies (Note 5)
Common stock, $1 par value (issued shares at July 31, 2009 - 536,431,204)	2988.1	2,934	2,931
Common stock in treasury	-5573.8	-5594.6	-5277.4
Retained earnings	11321.7	10580.6	10353.8
Accumulated other comprehensive income (loss)	-1312.4	-1387.3	-467.4
Stockholders' equity	7423.6	6532.7	7,540
Total Liabilities and Stockholders' Equity	41386.7	38734.6	41687.7

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheet Parenthetical Disclosures (USD $)
	Jul. 31, 2009
CONDENSED CONSOLIDATED BALANCE SHEET
Common stock par value (in dollars per share)	$1
Issued shares at end of quarter (in shares)	536,431,204

Statement of Consolidated Cash

Statement of Consolidated Cash Flows (USD $)
In Millions	9 Months Ended Jul. 31, 2009	9 Months Ended Jul. 31, 2008
Cash Flows from Operating Activites
Net income	1096.3	1707.7
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful receivables	138.7	65.1
Provision for depreciation and amortization	653.2	626.9
Share-based compensation expense	63.9	63.7
Undistributed earnings of unconsolidated affiliates	0.8	-18.2
Credit for deferred income taxes	-77.9	-143.1
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales	-261.9	-656.7
Inventories	-88.1	-1212.9
Accounts payable and accrued expenses	-902.4	509.8
Accrued income taxes payable/receivable	-86.2	264.6
Retirement benefits	65.4	(115)
Other	-118.8	-149.3
Net cash provided by operating activities	483	942.6
Cash Flows from Investing Activities
Collections of receivables	8808.6	9,400
Proceeds from sales of financing receivables	10.3	38.7
Proceeds from maturities and sales of marketable securities	819.3	1415.9
Proceeds from sales of equipment on operating leases	340.2	354.9
Proceeds from sales of businesses, net of cash sold		41.1
Cost of receivables acquired	-8460.8	-9648.1
Purchases of marketable securities	-15.9	-769.2
Purchases of property and equipment	-647.4	-631.2
Cost of equipment on operating leases acquired	-284.8	-306.9
Acquisitions of businesses, net of cash acquired	-47.4	-241.4
Other	-38.5	-37.1
Net cash provided by (used for) investing activities	483.6	-383.3
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	-392.7	60.3
Proceeds from long-term borrowings	4732.8	4400.3
Payments of long-term borrowings	-2770.8	-3032.2
Proceeds from issuance of common stock	9.5	107
Repurchases of common stock	-3.2	(1,358)
Dividends paid	-354.9	-327.9
Excess tax benefits from share-based compensation	1.6	71.7
Other	-122.1	-14.2
Net cash provided by (used for) financing activities	1100.2	(93)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	36.6	77.9
Net Increase in Cash and Cash Equivalents	2103.4	544.2
Cash and Cash Equivalents at Beginning of Period	2211.4	2278.6
Cash and Cash Equivalents at End of Period	4314.8	2822.8

Summary of Significant Accounti

Summary of Significant Accounting Policies
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Summary of Significant Accounting Policies	(1) The consolidated financial statements of Deere Company and consolidated subsidiaries have been prepared by the Company, without audit, pursuant to the rulesand regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rulesand regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the financial statements and the notes thereto appearing in the Companys latest annual report on Form10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year. The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates. Subsequent events have been evaluated through August28, 2009, which is the date these financial statements were issued on Form10-Q with the SEC. Certain items previously reported in specific financial statement captions in the third quarter of 2008 have been reclassified to conform to the year end 2008 and third quarter of 2009 financial statement presentation. In particular, Accrued taxes previously presented separately has been combined with Accounts payable and accrued expenses on the Condensed Consolidated Balance Sheet. Cash Flow Information All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in the Statement of Consolidated Cash Flows as these receivables arise from sales to the Companys customers. Cash flows from financing receivables that are related to sales to the Companys customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by independent dealers and are included in investing activities. The Company had the following non-cash operating and investing activities that were not included in the Statement of Consolidated Cash Flows. The Company transferred inventory to equipment on operating leases of approximately $201 million and $219 million in the first nine months of 2009 and 2008, respectively. The Company also had non-cash transactions for accounts payable related to purchases of property and equipment of approximately $87 million and $90 million at July31, 2009 and 2008, respectively. Variable Interest Entities The Company is the primary beneficiary of and consolidates a supplier that is a variable interest entity (VIE). The Company would absorb more than a majority of the VIEs expected losses based on a cost sharing supply contract. No additional support beyond what was

Structure of Operations

Structure of Operations
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Structure of Operations	(2) The information in the notes and related commentary are presented in a format which includes data grouped as follows: Equipment Operations Includes the Companys agriculture and turf operations and construction and forestry operations with Financial Services reflected on the equity basis through the first nine months of 2009. The agricultural equipment operations and the commercial and consumer equipment operations were combined into the agriculture and turf operations at the beginning of the third quarter of 2009 (see Note 19). Financial Services Includes the Companys credit and certain miscellaneous service operations. Consolidated Represents the consolidation of the Equipment Operations and Financial Services. References to Deere Company or the Company refer to the entire enterprise. See Notes 1 and 6 for VIE information.

Retained Earnings Analysis

Retained Earnings Analysis
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Retained Earnings Analysis	(3) An analysis of the Companys retained earnings in millions of dollars follows: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Balance, beginning of period $ 11,020.0 $ 9,898.7 $ 10,580.6 $ 9,031.7 Net income 420.0 575.2 1,096.3 1,707.7 Dividends declared (118.4 ) (120.2 ) (355.1 ) (337.6 ) Adoption of FIN No.48 * (48.0 ) Other .1 .1 (.1 ) Balance, end of period $ 11,321.7 $ 10,353.8 $ 11,321.7 $ 10,353.8 *Financial Accounting Standards Board (FASB) Interpretation No.48, Accounting for Uncertainty in Income Taxes

Inventories

Inventories
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Inventories	(4) Most inventories owned by Deere Company and its U.S. equipment subsidiaries are valued at cost on the last-in, first-out (LIFO) method. If all of the Companys inventories had been valued on a first-in, first-out (FIFO) method, estimated inventories by major classification in millions of dollars would have been as follows: July31 2009 October31 2008 July31 2008 Raw materials and supplies $ 1,025 $ 1,170 $ 1,157 Work-in-process 426 519 507 Finished goods and parts 2,949 2,677 3,138 Total FIFO value 4,400 4,366 4,802 Less adjustment to LIFO basis 1,380 1,324 1,328 Inventories $ 3,020 $ 3,042 $ 3,474

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Commitments and Contingencies	(5) Commitments and contingencies: The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty (based on dealer inventories and retail sales). The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized warranty premiums (deferred revenue) included in the following table totaled $222 million and $242 million at July31, 2009 and 2008, respectively. A reconciliation of the changes in the warranty liability in millions of dollars follows: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Balance, beginning of period $ 799 $ 811 $ 814 $ 774 Payments (143 ) (125 ) (381 ) (373 ) Amortization of premiums received (20 ) (25 ) (74 ) (65 ) Accruals for warranties 104 173 335 427 Premiums received 25 29 72 83 Foreign exchange 8 1 7 18 Balance, end of period $ 773 $ 864 $ 773 $ 864 At July31, 2009, the Company had approximately $160 million of guarantees issued primarily to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere equipment. The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At July31, 2009, the Company had an accrued liability of approximately $10 million under these agreements. The maximum remaining term of the receivables guaranteed at July31, 2009 was approximately six years. The credit operations subsidiary, John Deere Risk Protection,Inc., offers crop insurance products through managing general agency agreements (Agreements) with insurance companies (Insurance Carriers) rated Excellent withA.M. Best Company. As a managing general agent, John Deere Risk Protection,Inc. will receive commissions from the Insurance Carriers for selling crop insurance to producers. The credit operations have guaranteed certain obligations under the Agreements, including the obligation to pay the Insurance Carriers for any uncollected premiums. At July31, 2009, the maximum exposure for uncollected premiums was approximately $179 million. Substantially all of the credit operations crop insurance risk under the Agreements has been mitigated by a syndicate of private reinsurance companies. These reinsurance companies are rated Excellent or higher byA.M. Best Company. In the event of a widespread catastrophic crop failure throughout the U.S. and the default of these highly rated private reinsurance companies on their reinsurance obligations, the credit operations would be required to reimburse the Insurance Carriers for exposure under the Agreements of approximately $915 million at July31, 2009. The credit op

Securitization of Financing Rec

Securitization of Financing Receivables
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Securitization of Financing Receivables	(6) Securitization of financing receivables: The Company, as a part of its overall funding strategy, periodically transfers certain financing receivables (retail notes) into variable interest entities (VIEs) that are special purpose entities (SPEs) as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that the transfer of the retail notes did not meet the criteria of sales of receivables, and is, therefore, accounted for as secured borrowings. SPEs utilized in securitizations of retail notes differ from other entities included in the Companys consolidated statements because the assets they hold are legally isolated. For bankruptcy analysis purposes, the Company has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities. Use of the assets held by the SPEs is restricted by terms of the documents governing the securitization transaction. In securitizations of retail notes related to secured borrowings, the retail notes are transferred to certain SPEs which in turn issue debt to investors. The resulting secured borrowings are included in short-term borrowings on the balance sheet as shown in the following table. The securitized retail notes are recorded as Restricted financing receivables net on the balance sheet. The total restricted assets on the balance sheet related to these securitizations include the restricted financing receivables less an allowance for credit losses, and other assets primarily representing restricted cash as shown in the following table. The SPEs supporting the secured borrowings to which the retail notes are transferred are consolidated unless the Company is not the primary beneficiary. No additional support to these SPEs beyond what was previously contractually required has been provided during the first nine months of 2009. In certain securitizations, the Company is the primary beneficiary of the SPEs and, as such, consolidates the entities. The restricted assets (retail notes, allowance for credit losses and other assets) of the consolidated SPEs totaled $1,855 million, $1,303 million and $1,503 million at July31, 2009, October31, 2008 and July31, 2008, respectively. The liabilities (short-term borrowings and accrued interest) of these SPEs totaled $1,796 million, $1,287 million and $1,490 million at July31, 2009, October31, 2008 and July31, 2008, respectively. The credit holders of these SPEs do not have legal recourse to the Companys general credit. In other securitizations, the Company transfers retail notes into bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that are not consolidated. The Company is not considered to be the primary beneficiary of these conduits, because the Companys variable interests in the conduits will not absorb a majority of the conduits expected losses, residual returns, or both. This is primarily due to these interests representing significantly less than a majority of the conduits total assets and liabilities. These conduits provide a funding source to the Company (as well as other transferors into the conduit) as they fund the retail notes through th

Segment Reporting

Segment Reporting
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Segment Reporting	(7) Worldwide net sales and revenues, operating profit and identifiable assets by segment in millions of dollars follow: Three Months Ended July31 Nine Months Ended July31 2009 2008 % Change 2009 2008 % Change Net sales and revenues *: Agriculture and turf net sales **** $ 4,651 $ 5,876 -21 $ 14,057 $ 15,500 -9 Construction and forestry net sales 632 1,194 -47 1,973 3,570 -45 Total net sales ** 5,283 7,070 -25 16,030 19,070 -16 Credit revenues 501 550 -9 1,432 1,632 -12 Other revenues 101 119 -15 316 334 -5 Total net sales and revenues ** $ 5,885 $ 7,739 -24 $ 17,778 $ 21,036 -15 Operating profit (loss): *** Agriculture and turf **** $ 480 $ 725 -34 $ 1,472 $ 2,001 -26 Construction and forestry (28 ) 93 (85 ) 376 Credit 95 111 -14 206 376 -45 Other 5 5 9 12 -25 Total operating profit ** 552 934 -41 1,602 2,765 -42 Interest, corporate expenses net and income taxes (132 ) (359 ) -63 (506 ) (1,057 ) -52 Net income $ 420 $ 575 -27 $ 1,096 $ 1,708 -36 Identifiable assets: Agriculture and turf **** $ 7,239 $ 7,627 -5 Construction and forestry 2,211 2,528 -13 Credit 26,967 25,203 +7 Other 267 215 +24 Corporate 4,703 6,115 -23 Total assets $ 41,387 $ 41,688 -1 * Additional intersegment sales and revenues Agriculture and turf net sales **** $ 11 $ 11 $ 22 $ 35 -37 Construction and forestry net sales 2 2 3 7 -57 Credit revenues 68 57 +19 207 191 +8 ** Includes equipment operations outside the U.S. and Canada as follows: Net sales $ 1,940 $ 3,072 -37 $ 5,912 $ 7,942 -26 Operating profit 79 332 -76 245 925 -74 *** Operating profit (loss) is income from continuing operations before external interest expense, certain foreign exchange gains and losses, income taxes and certain corporate expenses. However, operating profit of the credit segment includes the effect of interest expense and foreign exchange gains or losses. **** At the beginning of the third quarter of 2009, the Company combined the agricultural equipment and the commercial and consumer equipment organizations. As a result, these two segments have been combined into the agriculture and turf segment. The net sales, intersegment net sales, operating profit and identifiable assets for the agriculture and turf segment for the third quarter and first nine months of 2009 and 2008 were as shown above. The information for the first two quarters of 2009 and 2008 and fiscal years 2008 and 2007 in millions of dollars were as follows: First Quarter Second Quarter Years Agriculture and Turf 2009 2008 20

Dividends Declared and Paid

Dividends Declared and Paid
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Dividends Declared and Paid	(8) Dividends declared and paid on a per share basis were as follows: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Dividends declared $ .28 $ .28 $ .84 $ .78 Dividends paid * $ .25 $ .84 * $ .75 * Due to the dividend payment dates, a quarterly dividend was not included in the third quarter of 2009. Two quarterly dividends of $.28 per share were included in the second quarter of 2009 and one quarterly dividend of $.28 per share was included in the first quarter of 2009.

Earnings Per Share

Earnings Per Share
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Earnings Per Share	(9) A reconciliation of basic and diluted net income per share in millions, except per share amounts, follows: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Net income $ 420.0 $ 575.2 $ 1,096.3 $ 1,707.7 Average shares outstanding 422.9 429.3 422.7 433.6 Basic net income per share $ .99 $ 1.34 $ 2.59 $ 3.94 Average shares outstanding 422.9 429.3 422.7 433.6 Effect of dilutive stock options 1.9 5.1 1.4 5.8 Total potential shares outstanding 424.8 434.4 424.1 439.4 Diluted net income per share $ .99 $ 1.32 $ 2.59 $ 3.89 Out of the total stock options outstanding during the third quarter and first nine months of 2009 and 2008, options to purchase 4.7 million shares in both periods of 2009 and 2.0 million shares in both periods of 2008 were excluded from the above diluted per share computation because the incremental shares related to the exercise of these options under the treasury stock method would have caused an antidilutive effect on net income per share.

Comprehensive Income

Comprehensive Income
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Comprehensive Income	(10) Comprehensive income, which includes all changes in the Companys equity during the period except transactions with stockholders, was as follows in millions of dollars: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Net income $ 420.0 $ 575.2 $ 1,096.3 $ 1,707.7 Other comprehensive income (loss), net of tax: Retirement benefits adjustment 14.7 19.7 (90.6 ) 70.3 Cumulative translation adjustment 210.8 25.5 173.4 107.5 Unrealized gain (loss) on investments .5 (1.4 ) 6.4 (2.7 ) Unrealized gain (loss) on derivatives 9.9 12.3 (14.3 ) (5.0 ) Comprehensive income $ 655.9 $ 631.3 $ 1,171.2 $ 1,877.8

Pension and Other Postretiremen

Pension and Other Postretirement Benefits
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Pension and Other Postretirement Benefits	(11) The Company has several defined benefit pension plans covering its U.S. employees and employees in certain foreign countries. The Company also has several defined benefit health care and life insurance plans for retired employees in the U.S. and Canada. The components of net periodic pension cost (income) consisted of the following in millions of dollars: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Service cost $ 29 $ 40 $ 89 $ 122 Interest cost 141 129 421 387 Expected return on plan assets (185 ) (186 ) (553 ) (559 ) Amortization of actuarial loss 1 9 4 36 Amortization of prior service cost 7 7 19 20 Early-retirement benefits 1 1 3 2 Net cost (income) $ (6 ) $ $ (17 ) $ 8 The components of other net periodic postretirement cost (health care and life insurance) consisted of the following in millions of dollars: Three Months Ended July31 Nine Months Ended July31 2009 2008 2009 2008 Service cost $ 7 $ 13 $ 21 $ 37 Interest cost 86 81 258 242 Expected return on plan assets (30 ) (45 ) (89 ) (133 ) Amortization of actuarial loss 17 21 50 62 Amortization of prior service credit (3 ) (5 ) (9 ) (13 ) Early-retirement benefits 1 Net cost $ 77 $ 65 $ 232 $ 195 During the first nine months of 2009, the Company contributed approximately $50 million to its pension plans and $83 million to its other postretirement benefit plans. The Company presently anticipates contributing an additional $188 million to its pension plans and $19 million to its other postretirement benefit plans in the remainder of fiscal year 2009. These contributions include payments from Company funds to either increase plan assets or make direct payments to plan participants.

Assets and Liabilities Measured

Assets and Liabilities Measured at Fair Value
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Assets and Liabilities Measured at Fair Value	(12) Assets and liabilities measured at fair value in the financial statements on a recurring basis in millions of dollars follow: July31, 2009 Total Level 1 Level 2 Marketable securities U.S. government debt securities $ 49 $ 32 $ 17 Municipal debt securities 24 24 Corporate debt securities 38 38 Residential mortgage-backed securities * 70 70 Total marketable securities 181 32 149 Other assets Derivatives: Interest rate contracts 630 630 Foreign exchange contracts 11 11 Cross-currency interest rate contracts 128 128 Total assets $ 950 $ 32 $ 918 Accounts payable and accrued expenses Derivatives: Interest rate contracts $ 169 $ 169 Foreign exchange contracts 50 50 Cross-currency interest rate contracts 1 1 Total liabilities $ 220 $ 220 *Primarily issued by U.S. government sponsored enterprises. Financial assets measured at fair value on a nonrecurring basis and the losses during the periods in millions of dollars were as follows: July31, 2009 Three Months Ended July31, 2009 Nine Months Ended July31, 2009 Level 3 Losses Losses Financing receivables $24 $5 $11 Trade receivables 1 2 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 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. In determining fair value, the Company uses various methods including market and income approaches. The Company utilizes 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. The following is a description of the valuation methodologies the Company uses to measure financial instruments at fair value: Investments Available for Sale The portfolio of investments is primarily valued on a matrix pricing model in which all significant inputs are observable or can be derived from or corroborated by observable market data. Derivative Instruments The Companys derivative financial instruments consist of interest rate swaps and caps, foreign currency forwards and cross-currency interest rate swaps. The portfolio is valued based on a discounted cash flow approach using market observable inputs, including swap curves and both forward and spot exc

Fair Value of Financial Instrum

Fair Value of Financial Instruments
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Fair Value of Financial Instruments	(13) The fair values of financial instruments that do not approximate the carrying values in the financial statements in millions of dollars follow: July31, 2009 October31, 2008 Carrying Value Fair Value Carrying Value Fair Value Financing receivables $ 14,122 $ 14,184 $ 16,017 $ 15,588 Restricted financing receivables 3,803 3,812 1,645 1,640 Short-term secured borrowings 3,712 3,727 1,682 1,648 Long-term borrowings: Equipment Operations $ 1,653 $ 1,754 $ 1,992 $ 1,895 Financial Services 15,068 15,448 11,907 11,112 Total $ 16,721 $ 17,202 $ 13,899 $ 13,007 Fair values of the long-term financing receivables were based on the discounted values of their related cash flows at current market interest rates. The fair values of the remaining financing receivables approximated the carrying amounts. Fair values of long-term borrowings and short-term secured borrowings were based on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges. Fair values of derivative financial instruments are included in Note 12. The carrying values and the fair values are the same since they are recorded at fair value.

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Derivative Instruments and Hedging Activities	(14) It is the Companys policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The Companys credit operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The Company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling and financing in currencies other than the local currencies. All derivatives are recorded at fair value on the balance sheet. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness, when applicable. If and when a derivative is determined not to be highly effective as a hedge, or the underlying hedged transaction is no longer likely to occur, or the derivative is terminated, hedge accounting is discontinued. Any past or future changes in the derivatives fair value, which will not be effective as an offset to the income effects of the item being hedged, are recognized currently in the income statement. Certain of the Companys derivative agreements contain credit support provisions that require the Company to post collateral based on reductions in credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that are in a liability position at July31, 2009 was $22 million. The Company, due to its credit rating, has not posted any collateral. If the credit-risk-related contingent features were triggered, the Company would be required to post full collateral for this liability position. Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Company manages individual counterparty exposure by setting limits that consider the credit rating of the counterparty and the size of other financial commitments and exposures between the Company and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Some of these agreements include collateral support arrangements or mutual put options at fair value. Each master agreement permits the net settlement of amounts owed in the event of early termination. The maximum amount of loss that the Company would incur if counterparties to derivative instruments fail to meet their obligations, not considering collateral received or netting arrangements, was $769 million as of July31, 2009. The amount of collateral received at July31, 2009 to offset this potential maximum loss was $40 million. The netting provisions of the agreements would reduce the maximum amount of loss the Company would incur if the counterparties to derivative instruments fail

Unrecognized Tax Benefits

Unrecognized Tax Benefits
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Unrecognized Tax Benefits	(15) The Companys unrecognized tax benefits at October31, 2008 were $236 million of which approximately $61 million would affect the effective tax rate if they were recognized. These amounts have not changed materially at July31, 2009. Based on worldwide tax audits which are scheduled to close over the next twelve months, the Company expects to have decreases to these uncertain tax benefits primarily related to transfer pricing. An estimate of the decreases can not be made at this time. However, they are not expected to have a material impact on the effective tax rate due to compensating adjustments to related tax receivables.

Restructuring and Related Activ

Restructuring and Related Activity Disclosures
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Restructuring and Related Activity Disclosures	(16) In September2008, the Company announced it would close its manufacturing facility in Welland, Ontario, Canada, and transfer production to Company operations in Horicon, Wisconsin, U.S. and Monterrey and Saltillo, Mexico. The Welland factory manufactures utility vehicles and attachments for the agriculture and turf businesses. The move supports ongoing efforts aimed at improved efficiency and profitability. The factory is scheduled to close by the end of 2009. The closure is expected to result in total expenses recognized in cost of sales in millions of dollars as follows: Fiscal Year 2008 Nine Months 2009 Remainder Total Pension and other postretirement benefits $10 $3 $27 $40 Property and equipment impairments 21 21 Employee termination benefits 18 7 25 Other expenses 7 4 11 Total $49 $17 $31 $97 All expenses are included in the agriculture and turf segment (see Note 19). The total pretax cash expenditures associated with this closure will be approximately $50 million. The annual pretax increase in earnings and cash flows in the future due to this restructuring is estimated to be approximately $40 million. The remaining liability for employee termination benefits at July31, 2009 was $21 million, which included accrued benefit expenses to date of $25 million and an increase due to foreign currency translation of $1 million, which were partially offset by $5 million of benefits paid during the first nine months of 2009.

New Accounting Standards

New Accounting Standards
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
New Accounting Standards	(17) New accounting standards adopted in the first nine months of 2009 were as follows: In the first quarter of 2009, the Company adopted FASB Statement No.157, Fair Value Measurements, for financial assets and liabilities recognized or disclosed at fair value (see Note 12). This Statement defines fair value and expands disclosures about fair value measurements. These definitions apply to other accounting standards that use fair value measurements and may change the application of certain measurements used in current practice. For nonfinancial assets and liabilities, the effective date is the beginning of fiscal year 2010, except items that are recognized or disclosed at fair value on a recurring basis. The adoption did not have a material effect on the Companys consolidated financial statements. In the first quarter of 2009, the Company adopted FASB Statement No.159, The Fair Value Option for Financial Assets and Financial Liabilities. This Statement permits entities to measure most financial instruments at fair value if desired. It may be applied on a contract by contract basis and is irrevocable once applied to those contracts. The standard may be applied at the time of adoption for existing eligible items, or at initial recognition of eligible items. After election of this option, changes in fair value are reported in earnings. The items measured at fair value must be shown separately on the balance sheet. The cumulative effect of adoption would be reported as an adjustment to beginning retained earnings. The Company did not change the valuation of any financial instruments based on this Statement and, therefore, the adoption had no effect on the Companys consolidated financial statements. In the first quarter of 2009, the Company adopted FASB Statement No.161, Disclosures about Derivative Instruments and Hedging Activities. This Statement increases the disclosure requirements for derivative instruments (see Note 14). Most disclosures are required on an interim and annual basis. The adoption did not have a material effect on the Companys consolidated financial statements. In the first quarter of 2009, the Company adopted FASB Statement No.162, The Hierarchy of Generally Accepted Accounting Principles. This Statement identifies the sources for generally accepted accounting principles (GAAP) in the U.S. and lists the categories in descending order. An entity should follow the highest category of GAAP applicable for each of its accounting transactions. The adoption did not have a material effect on the Companys consolidated financial statements. In the first quarter of 2009, the Company adopted FASB Staff Position (FSP) Financial Accounting Statement (FAS) 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (see Notes 1 and 6). The new standard requires additional disclosure for transfers of financial assets in securitization transactions and an entitys involvement with variable interest entities. The adoption did not have a material effect on the Companys consolidated financial statements. In the third quarter of 2

Acquisitions

Acquisitions
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Acquisitions	(18) In November2008, the Company acquired the remaining 50 percent ownership interest in ReGen Technologies, LLC, a remanufacturing company located in Springfield, Missouri, for approximately $40 million. The preliminary values assigned to the assets and liabilities related to the 50 percent acquisition were approximately $13 million of inventories, $30 million of goodwill, $6 million of other assets, $3 million of accounts payable and accrued expenses and $6 million of long-term borrowings. The goodwill generated in the transaction was the result of future cash flows and related fair values of the additional acquisition exceeding the fair value of the identifiable assets and liabilities. The goodwill is expected to be deductible for tax purposes. The entity was consolidated and the results of these operations have been included in the Companys consolidated financial statements since the date of the acquisition. The acquisition was allocated between the Companys agricultural and turf segment and the construction and forestry segment. The pro forma results of operations as if the acquisition had occurred at the beginning of the fiscal year would not differ significantly from the reported results.

Combination of Operating Segmen

Combination of Operating Segments
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Combination of Operating Segments	(19) In April2009, the Company announced it was combining the agricultural equipment segment with the commercial and consumer equipment segment into the agriculture and turf segment effective at the beginning of the third quarter of 2009 (see Note 7). By combining these segments, the Company expects to achieve greater alignment and efficiency to meet worldwide customer needs while reducing overall costs. The Company further expects the combination will extend the reach of turf management equipment, utility vehicles and lower horsepower equipment through the improved access to established global markets. Voluntary employee separations related to the new organizational structure resulted in pretax expenses of $16 million in the third quarter and are currently expected to be approximately $85 million pretax in the fourth quarter of 2009. The expenses are expected to be approximately 60 percent cost of sales and 40 percent selling, administrative and general expenses. Annual savings from the separation program are expected to be approximately $50 million to $60 million in 2010.

Supplemental Consolidating Data

Supplemental Consolidating Data
	9 Months Ended Jul. 31, 2009 USD / shares
Condensed Notes to Interim Financial Statements
Supplemental Consolidating Data	(20) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended July31, 2009 and 2008 (In millions of dollars) Unaudited EQUIPMENTOPERATIONS* FINANCIAL SERVICES 2009 2008 2009 2008 Net Sales and Revenues Net sales $ 5,282.7 $ 7,070.2 Finance and interest income 14.6 26.1 $ 519.2 $ 560.2 Other income 84.8 101.3 74.1 66.9 Total 5,382.1 7,197.6 593.3 627.1 Costs and Expenses Cost of sales 4,058.0 5,422.2 Research and development expenses 243.3 238.1 Selling, administrative and general expenses 540.9 657.2 121.2 116.9 Interest expense 32.7 43.3 226.9 241.5 Interest compensation to Financial Services 63.7 60.3 Other operating expenses 33.8 23.1 145.7 153.1 Total 4,972.4 6,444.2 493.8 511.5 Income of Consolidated Group before Income Taxes 409.7 753.4 99.5 115.6 Provision (credit) for income taxes 90.5 274.8 (2.6 ) 32.3 Income of Consolidated Group 319.2 478.6 102.1 83.3 Equity in Income of Unconsolidated Subsidiaries and Affiliates Credit 99.2 80.3 .1 Other 1.6 16.3 Total 100.8 96.6 .1 Net Income $ 420.0 $ 575.2 $ 102.1 $ 83.4 * Deere Company with Financial Services on the equity basis. The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements. STATEMENT OF INCOME For the Nine Months Ended July31, 2009 and 2008 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2009 2008 2009 2008 Net Sales and Revenues Net sales $ 16,029.8 $ 19,069.7 Finance and interest income 54.3 77.3 $ 1,530.9 $ 1,687.6 Other income 259.2 282.5 183.9 195.8 Total 16,343.3 19,429.5 1,714.8 1,883.4 Costs and Expenses Cost of sales 12,357.6 14,293.4 Research and development expenses 718.4 672.5 Selling, administrative and general expenses 1,628.8 1,868.0 365.3 330.1 Interest expense 120.0 138.3 708.3 750.6 Interest compensation to Financial Services 181.6 176.0 Other operating expenses 156.4 105.0 426.9 415.9 Total 15,162.8 17,253.2 1,500.5 1,496.6 Income of Consolidated Group before Income Taxes 1,180.5 2,176.3 214.3 386.8 Provision (credit) for income taxes 301.8 768.1 (3.2 ) 120.0 Income of Consolidated Group 878.7 1,408.2 217.5 266.8 Equity in Income of Unconsolidated Subsidiaries and Affiliates Credit 212.1 260.1 .3 .7 Other 5.5 39.4 Total 217.6 299.5 .3 .7 Net Income $ 1,096.3 $ 1,707.7 $ 217.8 $ 267.5 * Deere Company with Financial Services on the equity basis. The supplemental consolidati

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Jul. 31, 2009	Apr. 30, 2008
Document and Entity Information
Document Type	10-Q
Document Period End Date	2009-07-31
Amendment Flag	false
Entity Registrant Name	Deere & Co
Entity Central Index Key	0000315189
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--10-31
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding	422,947,967
Entity Public Float		$36,116,700,082