Deere & Company (DE) 10-Q 1 Mar 10 2010 Q1 Quarterly report Financial data

STATEMENT OF CONSOLIDATED INCOM

STATEMENT OF CONSOLIDATED INCOME (USD $)
In Millions, except Per Share data	3 Months Ended Jan. 31, 2010	3 Months Ended Jan. 31, 2009
Net Sales and Revenues
Net sales	4237.3	4560.2
Finance and interest income	467.2	466.6
Other income	130.3	119.1
Total	4834.8	5145.9
Costs and Expenses
Cost of sales	3205.5	3542.5
Research and development expenses	235.7	219.4
Selling, administrative and general expenses	642.1	638.9
Interest expense	218.5	274.5
Other operating expenses	168.7	196.8
Total	4470.5	4872.1
Income of Consolidated Group before Income Taxes	364.3	273.8
Provision for income taxes	109.9	73.5
Income of Consolidated Group	254.4	200.3
Equity in income (loss) of unconsolidated affiliates	-8.8	3.7
Net Income	245.6	204
Less: Net income attributable to noncontrolling interests	2.4	0.1
Net Income Attributable to Deere & Company	243.2	203.9
Per Share Data
Basic (in dollars per share)	0.57	0.48
Diluted (in dollars per share)	0.57	0.48
Average Shares Outstanding
Basic (in millions of shares)	423.6	422.5
Diluted (in millions of shares)	427.5	423.7

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Millions	Jan. 31, 2010	Oct. 31, 2009	Jan. 31, 2009
Assets
Cash and cash equivalents	5043.3	4651.7	5004.1
Marketable securities	206.4	192	230.5
Receivables from unconsolidated affiliates	38.4	38.4	45.3
Trade accounts and notes receivable - net	3120.5	2616.9	3475.4
Financing receivables - net	14686.7	15254.7	13379.3
Restricted financing receivables - net	2603.9	3108.4	3268.9
Other receivables	774.5	864.5	688.8
Equipment on operating leases - net	1613.1	1733.3	1543.7
Inventories	2752.5	2397.3	3836.6
Property and equipment - net	4424.8	4532.2	4149.4
Investments in unconsolidated affiliates	220.4	212.8	213.7
Goodwill	1010.1	1036.5	1,241
Other intangible assets - net	130.6	136.3	152
Retirement benefits	124	94.4	1131.8
Deferred income taxes	2750.2	2804.8	1419.9
Other assets	1281.3	1458.4	1559.2
Total Assets	40780.7	41132.6	41339.6
Liabilities and Stockholders' Equity
Short-term borrowings	7679.4	7158.9	9333.2
Payables to unconsolidated affiliates	77.4	55	118.6
Accounts payable and accrued expenses	4777.3	5371.4	5524.5
Deferred income taxes	155.4	167.3	166.2
Long-term borrowings	17090.6	17391.7	16574.7
Retirement benefits and other liabilities	6014.6	6165.5	3062.7
Total liabilities	35794.7	36309.8	34779.9
Commitments and contingencies (Note 12)
Common stock, $1 par value (issued shares at January 31, 2010 - 536,431,204)	3040.1	2996.2	2968.2
Common stock in treasury	-5540.8	-5564.7	-5582.7
Retained earnings	11,105	10980.5	10666.1
Accumulated other comprehensive income (loss)	-3624.7	-3593.3	-1496.7
Total Deere & Company stockholders' equity	4979.6	4818.7	6554.9
Noncontrolling interests	6.4	4.1	4.8
Total stockholders' equity	4,986	4822.8	6559.7
Total Liabilities and Stockholders' Equity	40780.7	41132.6	41339.6

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
	Jan. 31, 2010	Oct. 31, 2009	Jan. 31, 2009
CONDENSED CONSOLIDATED BALANCE SHEET
Common stock, par value (in dollars per share)	$1	$1	$1
Common stock, issued shares at January 31, 2010	536,431,204

STATEMENT OF CONSOLIDATED CASH

STATEMENT OF CONSOLIDATED CASH FLOWS (USD $)
In Millions	3 Months Ended Jan. 31, 2010	3 Months Ended Jan. 31, 2009
Cash Flows from Operating Activities
Net income	245.6	$204
Adjustments to reconcile net income to net cash used for operating activities:
Provision for doubtful receivables	25.9	40
Provision for depreciation and amortization	241.4	216.9
Share-based compensation expense	40.1	45.7
Undistributed earnings of unconsolidated affiliates	8.7	-3.9
Provision for deferred income taxes	39.3	29.9
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales	-205.6	(283)
Inventories	-348.2	(874)
Accounts payable and accrued expenses	-416.9	-882.4
Accrued income taxes payable/receivable	4.8	-12.9
Retirement benefits	-48.7	6.7
Other	95.3	-102.5
Net cash used for operating activities	-318.3	-1615.5
Cash Flows from Investing Activities
Collections of receivables	3211.8	3381.2
Proceeds from sales of financing receivables	0.2	5.7
Proceeds from maturities and sales of marketable securities	3.5	764.4
Proceeds from sales of equipment on operating leases	158.9	117.9
Proceeds from sales of businesses, net of cash sold	5.7
Cost of receivables acquired	-2697.7	-2613.8
Purchases of marketable securities	-18.5	-7.9
Purchases of property and equipment	-162.7	-262.1
Cost of equipment on operating leases acquired	-54.5	-74.6
Acquisitions of businesses, net of cash acquired	-18.7	-40.9
Other	-55.5	1.9
Net cash provided by investing activities	372.5	1271.8
Cash Flows from Financing Activities
Increase in short-term borrowings	571.6	1157.1
Proceeds from long-term borrowings	335.1	2842.2
Payments of long-term borrowings	-461.6	-653.1
Proceeds from issuance of common stock	24.5	3.1
Repurchases of common stock	-3.8	-3.2
Dividends paid	-118.5	-118.2
Excess tax benefits from share-based compensation	6.8	0.5
Other	-8.3	(96)
Net cash provided by financing activities	345.8	3132.4
Effect of Exchange Rate Changes on Cash and Cash Equivalents	-8.4	4
Net Increase in Cash and Cash Equivalents	391.6	2792.7
Cash and Cash Equivalents at Beginning of Period	4651.7	2211.4
Cash and Cash Equivalents at End of Period	5043.3	5004.1

STATEMENT OF CHANGES IN CONSOLI

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY (USD $)
In Millions	Common Stock	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Non-Controlling Interests	Total
Balance at Oct. 31, 2008	$2,934	-5594.6	10580.6	-1387.3	4.5	6537.2
Increase (Decrease) in Stockholders' Equity
Net income			203.9		0.1	204
Other comprehensive income (loss)
Retirement benefits adjustment				10.5		10.5
Cumulative translation adjustment				-93.1	0.3	-92.8
Unrealized gain (loss) on derivatives				-32.4		-32.4
Unrealized gain on investments				5.6		5.6
Comprehensive income					0.4	94.9
Repurchases of common stock		-3.2				-3.2
Treasury shares reissued		15.1				15.1
Dividends declared			-118.3			-118.3
Stock options and other	34.2		-0.1		-0.1	34
Balance at Jan. 31, 2009	2968.2	-5582.7	10666.1	-1496.7	4.8	6559.7
Balance at Oct. 31, 2009	2996.2	-5564.7	10980.5	-3593.3	4.1	4822.8
Increase (Decrease) in Stockholders' Equity
Net income			243.2		2.4	245.6
Other comprehensive income (loss)
Retirement benefits adjustment				71.8		71.8
Cumulative translation adjustment				-109.8	-0.1	-109.9
Unrealized gain (loss) on derivatives				6.3		6.3
Unrealized gain on investments				0.3		0.3
Comprehensive income					2.3	214.1
Repurchases of common stock		-3.8				-3.8
Treasury shares reissued		27.7				27.7
Dividends declared			-118.7			-118.7
Stock options and other	43.9					43.9
Balance at Jan. 31, 2010	3040.1	-5540.8	$11,105	-3624.7	6.4	$4,986

ORGANIZATION AND CONSOLIDATION

ORGANIZATION AND CONSOLIDATION
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
ORGANIZATION AND CONSOLIDATION	(1) 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. 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. 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 previously contractually required has been provided during any periods presented. The VIE produces blended fertilizer and other lawn care products for the agriculture and turf segment. The assets and liabilities of this supplier VIE consisted of the following in millions of dollars: January31 2010 October31 2009 January31 2009 Intercompany receivables $ 9 $ 32 $ 26 Inventory 63 36 79 Property and equipment 5 5 6 Other assets 6 3 3 Total assets $ 83 $ 76 $ 114 Accounts payable and accrued expenses $ 72 $ 59 $ 101 Short-term borrowings 15 23 25 Total liabilities $ 87 $ 82 $ 126 The VIE is financed through its own accounts payable and short-term borrowings. The assets of the VIE can only be used to settle the obligations of the VIE. The creditors of the VIE do not have recourse to the general credit of the Company. The Company is the primary beneficiary of and consolidates certain wind energy entities that are VIEs, which invest in wind farms that own and operate turbines to generate electrical energy. Although the Company owns less than a majority of the equity voting rights, it owns most of the financial rights that would absorb the VIEs expected losses or returns. No additional support to the VIEs beyond what was previously contractually required has been provided during any periods presented. The assets and liabilities of these wind energy VIEs consisted of the following in millions of dollars: January31 2010 October31 2009 January31 2009 Receivables $ 31 $ 32 $ 2 Property and equipment 139 141 162 Other assets 1 1 1 Total assets $ 171 $ 174 $ 165 Intercompany borrowings $ 53 $ 55 $ 57 Accounts payable and accrued expenses 8 6 9 Total liabilities $ 61 $ 61 $ 66 The VIEs are financed primarily through intercompany borrowings and equity. The VIEs assets are pledged as security interests for the intercompany borrowings. The remaining creditors of the VIEs do not have recourse to the general credit of the Company. See Note 9 for VIEs related to securitiza

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	(2) 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. Certain items previously reported in specific financial statement captions in previous periods have been reclassified to conform to the first quarter of 2010 financial statement presentation as a result of the adoption of the guidance in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 810, Consolidation (FASB Statement No.160, Noncontrolling Interests in Consolidated Financial Statements) (See Note 3).
CASH FLOW INFORMATION	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 $45 million and $34 million in the first three months of 2010 and 2009, respectively. The Company also had accounts payable related to purchases of property and equipment of approximately $25 million and $118 million at January31, 2010 and 2009, respectively.

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
NEW ACCOUNTING STANDARDS	(3) New accounting standards adopted in the first three months of 2010 were as follows: In the first quarter of 2010, the Company adopted FASB ASC 810, Consolidation (FASB Statement No.160, Noncontrolling Interests in Consolidated Financial Statements). ASC 810 requires that noncontrolling interests are reported as a separate line in stockholders equity. The net income for both Deere Company and the noncontrolling interests are included in Net Income. The Net income attributable to the noncontrolling interests is deducted from Net Income to determine the Net Income Attributable to Deere Company, which will continue to be used to determine earnings per share. ASC 810 also requires certain prospective changes in accounting for noncontrolling interests primarily related to increases and decreases in ownership and changes in control. As required, the presentation and disclosure requirements were adopted through retrospective application, and the consolidated financial statement prior period information has been adjusted accordingly. The adoption did not have a material effect on the Companys consolidated financial statements. In the first quarter of 2010, the Company adopted FASB ASC 805, Business Combinations (FASB Statement No.141 (revised 2007), Business Combinations). ASC 805 requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. This standard also requires the fair value measurement of certain other assets and liabilities related to the acquisition such as contingencies and research and development. The adoption did not have a material effect on the Companys consolidated financial statements. In the first quarter of 2010, the Company adopted FASB ASC 820, Fair Value Measurements and Disclosures (FASB Statement No.157, Fair Value Measurements), for nonrecurring measurements of nonfinancial assets and liabilities. The standard requires that these measurements comply with certain guidance for fair value measurements and the disclosure of such measurements. The adoption did not have a material effect on the Companys consolidated financial statements. In the first quarter of 2010, the Company adopted FASB ASC 260, Earnings Per Share (FASB Staff Position (FSP) Emerging Issues Task Force 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities). Based on this guidance, the Companys nonvested restricted stock awards are considered participating securities since they contain nonforfeitable dividend equivalent rights. The diluted earnings per share are reported as the most dilutive of either the two-class method or the treasury stock method. This requires the Company to compute earnings per share on the two-class method. The adoption did not have a material effect on the Companys consolidated financial statements (see Note 5). In the first quarter of 2010, the Company adopted FASB Accounting Standards Update (ASU) No. 2010-09, Amendments to Certain Recognition and Disclosu

DIVIDENDS DECLARED AND PAID

DIVIDENDS DECLARED AND PAID
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
DIVIDENDS DECLARED AND PAID	(4) Dividends declared and paid on a per share basis were as follows: Three Months Ended January31 2010 2009 Dividends declared $ .28 $ .28 Dividends paid $ .28 $ .28

EARNINGS PER SHARE

EARNINGS PER SHARE
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
EARNINGS PER SHARE	(5) A reconciliation of basic and diluted net income attributable to Deere Company per share in millions, except per share amounts, follows: Three Months Ended January31 2010 2009 Net income attributable to Deere Company $ 243.2 $ 203.9 Less income allocable to participating securities (see Note 3) * .1 Income allocable to common stock $ 243.1 $ 203.9 Average shares outstanding 423.6 422.5 Basic per share $ .57 $ .48 Average shares outstanding 423.6 422.5 Effect of dilutive stock options 3.9 1.2 Total potential shares outstanding 427.5 423.7 Diluted per share $ .57 $ .48 Out of the total stock options outstanding during the first quarter of 2010 and 2009, options to purchase 1.9 million shares and 9.4 million shares, respectively, were excluded from the above diluted per share computation because the incremental shares under the treasury stock method for the exercise of these options would have been antidilutive. * Effect on prior periods was not material.

PENSION AND OTHER POSTRETIREMEN

PENSION AND OTHER POSTRETIREMENT BENEFITS
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
PENSION AND OTHER POSTRETIREMENT BENEFITS	(6) 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 postretirement health care and life insurance plans for employees in the U.S. and Canada. The worldwide components of net periodic pension cost (income) consisted of the following in millions of dollars: Three Months Ended January31 2010 2009 Service cost $ 44 $ 29 Interest cost 131 139 Expected return on plan assets (190 ) (184 ) Amortization of actuarial loss 29 2 Amortization of prior service cost 10 7 Settlements/curtailments 1 Early-retirement benefits 2 Net cost (income) $ 25 $ (5 ) The worldwide components of net periodic postretirement benefits cost (health care and life insurance) consisted of the following in millions of dollars: Three Months Ended January31 2010 2009 Service cost $ 12 $ 8 Interest cost 85 83 Expected return on plan assets (30 ) (30 ) Amortization of actuarial loss 84 10 Amortization of prior service credit (4 ) (3 ) Early-retirement benefits 1 Net cost $ 147 $ 69 During the first quarter of 2010, the Company contributed approximately $170 million to its pension plans and $37 million to its other postretirement benefit plans. The Company presently anticipates contributing an additional $339 million to its pension plans and $40 million to its other postretirement benefit plans during the remainder of fiscal year 2010. These contributions include payments from Company funds to either increase plan assets or make direct payments to plan participants.

UNRECOGNIZED TAX BENEFITS

UNRECOGNIZED TAX BENEFITS
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
UNRECOGNIZED TAX BENEFITS	(7) The Companys unrecognized tax benefits at January31, 2010 were $172 million of which approximately $63 million would affect the effective tax rate if they were recognized. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. Based on worldwide tax audits which closed, the Company had changes related to transfer pricing that caused a decrease of approximately $15 million for settlements, a decrease of $110 million for positions taken during prior years and an increase of approximately $47 million for positions taken during prior years. These changes in unrecognized tax benefits did not have a material impact on the effective tax rate due to compensating adjustments to related tax receivables. Other changes to the unrecognized tax benefits were not significant.

SEGMENT REPORTING

SEGMENT REPORTING
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
SEGMENT REPORTING	(8) Worldwide net sales and revenues, operating profit and identifiable assets by segment in millions of dollars follow: Three Months Ended January31 % 2010 2009 Change Net sales and revenues: * Agriculture and turf ***** $ 3,607 $ 3,819 -6 Construction and forestry 630 741 -15 Total net sales ** 4,237 4,560 -7 Credit revenues 483 474 +2 Other revenues 115 112 +3 Total net sales and revenues ** $ 4,835 $ 5,146 -6 Operating profit (loss):*** Agriculture and turf ***** $ 352 $ 289 +22 Construction and forestry (37 ) 18 Credit 94 53 +77 Other 7 4 +75 Total operating profit ** 416 364 +14 Other reconciling items **** (173 ) (160 ) +8 Net income attributable to Deere Company $ 243 $ 204 +19 Identifiable assets: Agriculture and turf ***** $ 6,714 $ 7,748 -13 Construction and forestry 2,084 2,318 -10 Credit 25,695 26,748 -4 Other 272 271 Corporate 6,016 4,255 +41 Total assets $ 40,781 $ 41,340 -1 * Additional intersegment sales and revenues Agriculture and turf net sales ***** $ 13 $ 8 +63 Construction and forestry net sales 1 1 Credit revenues 52 68 -24 ** Includes equipment operations outside the U.S. and Canada as follows: Net sales $ 1,711 $ 1,817 -6 Operating profit 118 79 +49 *** Operating profit (loss) is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses and income taxes. Operating profit of the credit segment includes the effect of interest expense and foreign exchange gains and losses. **** Other reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, income taxes and net income attributable to noncontrolling interests. ***** At the beginning of the third quarter of 2009, the Company combined the agricultural equipment and the commercial and consumer equipment organizations and internal reporting. As a result, these two segments have been combined into the agriculture and turf segment for the first three months ended January31, 2009.

SECURITIZATION OF FINANCING REC

SECURITIZATION OF FINANCING RECEIVABLES
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
SECURITIZATION OF FINANCING RECEIVABLES	(9) 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 does not meet the criteria of sales of receivables, and is, therefore, accounted for as a secured borrowing. 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. 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. 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 reporting periods. 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 $1,842 million, $2,157 million and $1,517 million at January31, 2010, October31, 2009 and January31, 2009, respectively. The liabilities (short-term borrowings and accrued interest) of these SPEs totaled $1,827 million, $2,133 million and $1,518 million at January31, 2010, October31, 2009 and January31, 2009, 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 the issuance of commercial paper. The Companys carrying values and v

INVENTORIES

INVENTORIES
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
INVENTORIES	(10) 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: January31 2010 October31 2009 January31 2009 Raw materials and supplies $ 993 $ 940 $ 1,346 Work-in-process 448 387 581 Finished goods and parts 2,700 2,437 3,242 Total FIFO value 4,141 3,764 5,169 Less adjustment to LIFO basis 1,388 1,367 1,332 Inventories $ 2,753 $ 2,397 $ 3,837

GOODWILL AND OTHER INTANGIBLE A

GOODWILL AND OTHER INTANGIBLE ASSETS-NET
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
GOODWILL AND OTHER INTANGIBLE ASSETS-NET	(11) The changes in amounts of goodwill by operating segments were as follows in millions of dollars: Agriculture and Turf Construction and Forestry Total Balance October31, 2009: Goodwill $ 698 $ 628 $ 1,326 Less accumulated impairment losses 289 289 Goodwill-net 409 628 1,037 Translation adjustments (4 ) (22 ) (26 ) Other (1 ) (1 ) Balance January31, 2010: Goodwill 694 605 1,299 Less accumulated impairment losses 289 289 Goodwill-net $ 405 $ 605 $ 1,010 The components of other intangible assets were as follows in millions of dollars: Useful Lives * Years January31 2010 Amortized intangible assets: Customer lists and relationships 13 $ 96 Technology, patents, trademarks and other 15 98 Total at cost 194 Less accumulated amortization 63 ** Other intangible assets-net $ 131 * Weighted-averages ** Accumulated amortization for customer lists and relationships totaled $37 million and technology, patents and trademarks totaled $26 million. The amortization of other intangible assets in the first quarter of 2010 was $5 million. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2010 - $13, 2011 - $15, 2012 - $14, 2013 - $13 and 2014 - $12.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES	(12) 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 $208 million and $225 million at January31, 2010 and 2009, respectively. A reconciliation of the changes in the warranty liability in millions of dollars follows: Three Months Ended January31 2010 2009 Balance, beginning of period $ 727 $ 814 Payments (136 ) (124 ) Amortization of premiums received (24 ) (26 ) Accruals for warranties 122 117 Premiums received 19 23 Foreign exchange (8 ) (3 ) Balance, end of period $ 700 $ 801 At January31, 2010, the Company had approximately $167 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 January31, 2010, the Company had an accrued liability of approximately $7 million under these agreements. The maximum remaining term of the receivables guaranteed at January31, 2010 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 byA.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 January31, 2010, the maximum exposure for uncollected premiums was approximately $22 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 $32 million at January31, 2010. The credit operations believe that the likelihood of the occurrence of events that give rise to the exposures under these Agreements is substantially remote and as a result, at January31,

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS
	3 Months Ended Jan. 31, 2010 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 millions of dollars follow: January31, 2010 October31, 2009 Carrying Value Fair Value Carrying Value Fair Value Financing receivables $ 14,687 $ 14,774 $ 15,255 $ 15,434 Restricted financing receivables 2,604 2,650 3,108 3,146 Short-term secured borrowings 2,673 2,678 3,132 3,162 Long-term borrowings: Equipment Operations $ 3,050 $ 3,288 $ 3,073 $ 3,303 Financial Services 14,041 14,587 14,319 14,818 Total $ 17,091 $ 17,875 $ 17,392 $ 18,121 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 14. The carrying values and the fair values are the same since they are recorded at fair value.

ASSETS AND LIABILITIES MEASURED

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE	(14) Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow: January31 2010* October31 2009* January31 2009* Marketable securities U.S. government debt securities $ 56 $ 52 $ 53 Municipal debt securities 24 24 24 Corporate debt securities 51 43 79 Residential mortgage-backed securities ** 75 73 75 Total marketable securities 206 192 231 Other assets Derivatives: Interest rate contracts 487 550 746 Foreign exchange contracts 34 17 69 Cross-currency interest rate contracts 7 173 14 Total assets $ 734 $ 932 $ 1,060 Accounts payable and accrued expenses Derivatives: Interest rate contracts $ 99 $ 121 $ 194 Foreign exchange contracts 13 32 40 Cross-currency interest rate contracts 24 1 25 Total liabilities $ 136 $ 154 $ 259 * All measurements above were Level 2 measurements except for Level 1 measurements of U.S. government debt securities of $32 million, $32 million and $35 million at January31, 2010, October31, 2009 and January31, 2009, respectively. ** Primarily issued by U.S. government sponsored enterprises. Assets measured at fair value as Level 3 measurements on a nonrecurring basis and the losses during the periods in millions of dollars were as follows: January31 October31 January31 Three Months Ended January31 2010 2009 2009 2010 2009 Financing receivables $ 11 $ 23 $ 16 $ 5 Trade receivables 1 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: Marketable Securities 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 such as interest rates, yield curves, volatilities, credit risk and prepayment speeds. Derivatives The Companys derivative fina

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
DERIVATIVE INSTRUMENTS	(15) 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 hedge designation is removed, 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 were in a liability position at January31, 2010, October31, 2009 and January31, 2009, was $17 million, $13 million and $37 million, respectively. 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 $528 million, $740 million and $829 million as of January31, 2010, October31, 2009 and January31, 2009, respectively. The amount of collateral received at January31, 2010, October3

STOCK OPTION AND RESTRICTED STO

STOCK OPTION AND RESTRICTED STOCK AWARDS
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
STOCK OPTION AND RESTRICTED STOCK AWARDS	(16) In December2009, the Company granted options to employees for the purchase of 4.1 million shares of common stock at an exercise price of $52.25 per share and a binomial lattice model fair value of $15.71 per share. At January31, 2010, options for 23.0 million shares were outstanding with a weighted-average exercise price of $43.31 per share. The Company also granted .2 million of restricted stock units with a weighted-average fair value of $52.25 per share in the first quarter of 2010. A total of 6.7 million shares remained available for the granting of future options and restricted stock.

RESTRUCTURING AND RELATED ACTIV

RESTRUCTURING AND RELATED ACTIVITIES DISCLOSURES
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
RESTRUCTURING AND RELATED ACTIVITIES DISCLOSURES	(17) 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 manufactured utility vehicles and attachments for the agriculture and turf businesses. The move supports ongoing efforts aimed at improved efficiency and profitability. The factory discontinued manufacturing in the fourth quarter of 2009. The closure is expected to result in total expenses recognized in cost of sales in millions of dollars as follows: 2008 2009 First Quarter 2010 Future Total Pension and other postretirement benefits $ 10 $ 27 $ 1 $ 7 $ 45 Property and equipment impairments 21 3 24 Employee termination benefits 18 7 25 Other expenses 11 4 15 Total $ 49 $ 48 $ 5 $ 7 $ 109 All expenses are included in the agriculture and turf segment. The total pretax cash expenditures associated with this closure will be approximately $57 million. The annual pretax increase in earnings and cash flows in 2010 due to this restructuring is expected to be approximately $40 million. The remaining liability for employee termination benefits at January31, 2010 was $11 million, which included accrued benefit expenses to date of $25 million and an increase due to foreign currency translation of $3 million, which were partially offset by $13 million of benefits paid during 2009 and $4 million paid during the first three months of 2010.

COMBINATION OF OPERATING SEGMEN

COMBINATION OF OPERATING SEGMENTS
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
COMBINATION OF OPERATING SEGMENTS	(18) 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 8). 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. Annual savings from the separation program related to the combination are expected to be approximately $50 million to $60 million in 2010.

SUPPLEMENTAL CONSOLIDATING DATA

SUPPLEMENTAL CONSOLIDATING DATA
	3 Months Ended Jan. 31, 2010 USD / shares
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
SUPPLEMENTAL CONSOLIDATING DATA	(19) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended January31, 2010 and 2009 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2010 2009 2010 2009 Net Sales and Revenues Net sales $ 4,237.3 $ 4,560.2 Finance and interest income 25.7 24.7 $ 486.4 $ 505.7 Other income 90.2 89.7 73.0 60.8 Total 4,353.2 4,674.6 559.4 566.5 Costs and Expenses Cost of sales 3,205.9 3,542.9 Research and development expenses 235.7 219.4 Selling, administrative and general expenses 528.0 522.2 116.7 118.9 Interest expense 43.3 45.5 184.9 244.9 Interest compensation to Financial Services 42.6 48.0 Other operating expenses 34.2 79.3 157.0 146.2 Total 4,089.7 4,457.3 458.6 510.0 Income of Consolidated Group before Income Taxes 263.5 217.3 100.8 56.5 Provision for income taxes 93.9 63.7 16.0 9.8 Income of Consolidated Group 169.6 153.6 84.8 46.7 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit 80.6 44.5 .3 .1 Other (4.6 ) 5.9 Total 76.0 50.4 .3 .1 Net Income 245.6 204.0 85.1 46.8 Less: Net income attributable tononcontrolling interests 2.4 .1 Net Income Attributable to Deere Company $ 243.2 $ 203.9 $ 85.1 $ 46.8 * 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. SUPPLEMENTAL CONSOLIDATING DATA (Continued) CONDENSED BALANCE SHEET (In millions of dollars) Unaudited EQUIPMENT OPERATIONS * FINANCIAL SERVICES January31 2010 October31 2009 January31 2009 January31 2010 October31 2009 January31 2009 Assets Cash and cash equivalents $ 3,397.2 $ 3,689.8 $ 1,881.3 $ 1,646.1 $ 961.9 $ 3,122.8 Marketable securities 49.3 206.4 192.0 181.1 Receivables from unconsolidatedsubsidiaries and affiliates 280.0 461.4 364.1 Trade accounts and notes receivable - net 677.7 775.4 860.2 2,971.3 2,345.5 3,152.1 Financing receivables - net 3.7 5.4 2.0 14,683.0 15,249.3 13,377.3 Restricted financing receivables - net 2,603.9 3,108.4 3,268.9 Other receivables 625.8 734.4 546.9 137.5 130.8 134.9 Equipment on operating leases - net 1,613.1 1,733.3 1,543.7 Inventories 2,752.5 2,397.3 3,836.6 Property and equipment - net 3,357.7 3,457.2 3,023.9 1,067.1 1,075.1 1,125.6 Investments in unconsolidatedsubsidiaries and affiliates 3,165.7 3,164.6 2,800.7 6.3 6.5 5.6 Goodwill 1,010.1 1,036.5 1,241.0 Other intangible assets - net 130.6 136.3 1

Document and Entity Information

Document and Entity Information (USD $)
	3 Months Ended Jan. 31, 2010
Document and Entity Information
Entity Registrant Name	DEERE & CO
Entity Central Index Key	0000315189
Document Type	10-Q
Document Period End Date	2010-01-31
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	424,008,363