Deere & Company (DE) 10-Q 28 May 10 2010 Q2 Quarterly report Financial data

STATEMENT OF CONSOLIDATED INCOM

STATEMENT OF CONSOLIDATED INCOME (USD $)
In Millions, except Per Share data	3 Months Ended Apr. 30, 2010	3 Months Ended Apr. 30, 2009	6 Months Ended Apr. 30, 2010	6 Months Ended Apr. 30, 2009
Net Sales and Revenues
Net sales	6548.2	$6,187	10785.5	10747.1
Finance and interest income	435.1	442.1	902.3	908.7
Other income	147.6	118.7	277.9	238
Total	7130.9	6747.8	11965.7	11893.8
Costs and Expenses
Cost of sales	4765.2	4756.4	7970.7	8298.9
Research and development expenses	266	255.7	501.7	475.1
Selling, administrative and general expenses	733.3	688	1375.6	1,327
Interest expense	207.3	269.4	425.7	543.9
Other operating expenses	170.2	166.4	338.9	363.2
Total	6,142	6135.9	10612.6	11008.1
Income of Consolidated Group before Income Taxes	988.9	611.9	1353.1	885.7
Provision for income taxes	448.4	137.1	558.3	210.7
Income of Consolidated Group	540.5	474.8	794.8	675
Equity in income (loss) of unconsolidated affiliates	9.3	-2.6	0.6	1.2
Net Income	549.8	472.2	795.4	676.2
Less: Net income (loss) attributable to noncontrolling interests	2.3	-0.1	4.7
Net Income Attributable to Deere & Company	547.5	472.3	790.7	676.2
Per Share Data
Basic (in dollars per share)	1.29	1.12	1.86	1.6
Diluted (in dollars per share)	1.28	1.11	1.85	1.6
Average Shares Outstanding
Basic (in millions of shares)	424.4	422.7	424	422.6
Diluted (in millions of shares)	429	423.7	428.2	423.7

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Millions	6 Months Ended Apr. 30, 2010	6 Months Ended Apr. 30, 2009	12 Months Ended Oct. 31, 2009
Assets
Cash and cash equivalents	3614.9	4797.2	4651.7
Marketable securities	234.2	185.8	192
Receivables from unconsolidated affiliates	37.7	48	38.4
Trade accounts and notes receivable - net	4014.2	4373.1	2616.9
Financing receivables - net	15039.7	13511.4	15254.7
Restricted financing receivables - net	3084.6	3167.4	3108.4
Other receivables	610.6	635.6	864.5
Equipment on operating leases - net	1717.3	1553.2	1733.3
Inventories	3002.9	3,551	2397.3
Property and equipment - net	4430.4	4254.8	4532.2
Investments in unconsolidated affiliates	227	207.6	212.8
Goodwill	1006.4	1256.7	1036.5
Other intangible assets - net	129.3	145.2	136.3
Retirement benefits	169	1150.4	94.4
Deferred income taxes	2593.4	1571.9	2804.8
Other assets	1102.5	1391.5	1458.4
Total Assets	41014.1	41800.8	41132.6
Liabilities and Stockholders' Equity
Short-term borrowings	6260.6	8929.7	7158.9
Payables to unconsolidated affiliates	151.4	101.2	55
Accounts payable and accrued expenses	5625.9	5589.7	5371.4
Deferred income taxes	136.5	173.5	167.3
Long-term borrowings	17375.8	16850.2	17391.7
Retirement benefits and other liabilities	5804.5	3283.6	6165.5
Total liabilities	35354.7	34927.9	36309.8
Commitments and contingencies (Note 13)
Common stock, $1 par value (issued shares at April 30, 2010 - 536,431,204 )	3058.1	2976.6	2996.2
Common stock in treasury	-5521.5	-5580.1	-5564.7
Retained earnings	11533.4	11,020	10980.5
Accumulated other comprehensive income (loss)	-3419.1	-1548.3	-3593.3
Total Deere & Company stockholders' equity	5650.9	6868.2	4818.7
Noncontrolling interests	8.5	4.7	4.1
Total stockholders' equity	5659.4	6872.9	4822.8
Total Liabilities and Stockholders' Equity	41014.1	41800.8	41132.6

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
	Apr. 30, 2010	Oct. 31, 2009	Apr. 30, 2009
CONDENSED CONSOLIDATED BALANCE SHEET
Common stock, par value (in dollars per share)	$1	$1	$1
Common stock, issued shares at April 30, 2010	536,431,204

STATEMENT OF CONSOLIDATED CASH

STATEMENT OF CONSOLIDATED CASH FLOWS (USD $)
In Millions	6 Months Ended Apr. 30, 2010	6 Months Ended Apr. 30, 2009
Cash Flows from Operating Activities
Net income	795.4	676.2
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision for doubtful receivables	59.3	96.1
Provision for depreciation and amortization	463.4	430.7
Share-based compensation expense	51.7	56.3
Undistributed earnings of unconsolidated affiliates	4.5	-1.7
Provision (credit) for deferred income taxes	109.1	-73.3
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales	-1220.4	-1124.6
Inventories	-754.9	-626.5
Accounts payable and accrued expenses	458.6	-614.4
Accrued income taxes payable/receivable	199.1	(28)
Retirement benefits	-34.5	38.3
Other	285.3	(10)
Net cash provided by (used for) operating activities	416.6	-1180.9
Cash Flows from Investing Activities
Collections of receivables	5889.8	6256.6
Proceeds from sales of financing receivables	1.3	7.9
Proceeds from maturities and sales of marketable securities	9.2	810.4
Proceeds from sales of equipment on operating leases	330.9	226.5
Government grants related to property and equipment	21.6
Proceeds from sales of businesses, net of cash sold	5.8
Cost of receivables acquired	-6034.9	-5443.4
Purchases of marketable securities	-45.7	-12.3
Purchases of property and equipment	-311.2	-449.1
Cost of equipment on operating leases acquired	-208.2	-167.3
Acquisitions of businesses, net of cash acquired	-41.6	-44.3
Other	-67.1	-40.7
Net cash provided by (used for) investing activities	-450.1	1144.3
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	-77.3	804.3
Proceeds from long-term borrowings	939.8	4211.6
Payments of long-term borrowings	-1609.2	-1944.7
Proceeds from issuance of common stock	43.5	4.1
Repurchases of common stock	-3.8	-3.2
Dividends paid	-237.6	-354.5
Excess tax benefits from share-based compensation	13.7	0.7
Other	-19.9	-113.6
Net cash provided by (used for) financing activities	-950.8	2604.7
Effect of Exchange Rate Changes on Cash and Cash Equivalents	-52.5	17.7
Net Increase (Decrease) in Cash and Cash Equivalents	-1036.8	2585.8
Cash and Cash Equivalents at Beginning of Period	4651.7	2211.4
Cash and Cash Equivalents at End of Period	3614.9	4797.2

STATEMENT OF CHANGES IN CONSOLI

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY (USD $)
In Millions	Comprehensive Income (Loss)	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	676.2			676.2			676.2
Other comprehensive income (loss)
Retirement benefits adjustment	-105.3				-105.3		-105.3
Cumulative translation adjustment	-37.4				-37.4	0.3	-37.1
Unrealized gain (loss) on derivatives	-24.2				-24.2		-24.2
Unrealized gain on investments	5.9				5.9		5.9
Comprehensive income	515.2					0.3	515.5
Repurchases of common stock			-3.2				-3.2
Treasury shares reissued			17.7				17.7
Dividends declared				-236.7			-236.7
Stock options and other		42.6		-0.1		-0.1	42.4
Balance at Apr. 30, 2009		2976.6	-5580.1	11,020	-1548.3	4.7	6872.9
Balance at Oct. 31, 2009		2996.2	-5564.7	10980.5	-3593.3	4.1	4822.8
Increase (Decrease) in Stockholders' Equity
Net income	790.7			790.7		4.7	795.4
Other comprehensive income (loss)
Retirement benefits adjustment	227				227		227
Cumulative translation adjustment	-75.3				-75.3	-0.2	-75.5
Unrealized gain (loss) on derivatives	21.9				21.9		21.9
Unrealized gain on investments	0.6				0.6		0.6
Comprehensive income	964.9					4.5	969.4
Repurchases of common stock			-3.8				-3.8
Treasury shares reissued			47				47
Dividends declared				-237.7			-237.7
Stock options and other		61.9		-0.1		-0.1	61.7
Balance at Apr. 30, 2010		3058.1	-5521.5	11533.4	-3419.1	8.5	5659.4

ORGANIZATION AND CONSOLIDATION

ORGANIZATION AND CONSOLIDATION
	6 Months Ended Apr. 30, 2010
ORGANIZATION AND CONSOLIDATION
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: April30 2010 October31 2009 April30 2009 Intercompany receivables $ 22 $ 32 $ 50 Inventories 58 36 80 Property and equipment - net 5 5 6 Other assets 7 3 8 Total assets $ 92 $ 76 $ 144 Accounts payable and accrued expenses $ 86 $ 59 $ 107 Short-term borrowings 7 23 47 Total liabilities $ 93 $ 82 $ 154 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: April30 2010 October31 2009 April30 2009 Receivables - net $ 31 $ 32 $ 2 Property and equipment - net 134 141 167 Other assets 1 1 Total assets $ 165 $ 174 $ 170 Intercompany borrowings $ 52 $ 55 $ 57 Accounts payable and accrued expenses 4 6 4 Total liabilities $ 56 $ 61 $ 61 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 10 for VIEs related to se

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	6 Months Ended Apr. 30, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	(2) The consolidated financial statements of Deere Company 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 financial statement presentation as a result of the adoption in the first quarter of 2010 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 $157 million and $104 million in the first six months of 2010 and 2009, respectively. The Company also had accounts payable related to purchases of property and equipment of approximately $36 million and $82 million at April30, 2010 and 2009, respectively.

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS
	6 Months Ended Apr. 30, 2010
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS	(3) New accounting standards adopted in the first six 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 is included in Net Income. The Net income (loss) attributable to 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 6). In the first quarter of 2010, the Company adopted FASB Accounting Standards Update (ASU) No.2010-09, Amendments to Certain Recognition and Disclosur

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME
	6 Months Ended Apr. 30, 2010
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME	(4) 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 April30 Six Months Ended April30 2010 2009 2010 2009 Net income $ 549.8 $ 472.2 $ 795.4 $ 676.2 Other comprehensive income (loss), net of tax: Retirement benefits adjustment 155.2 (115.8) 227.0 (105.3 ) Cumulative translation adjustment 34.4 55.7 (75.5) (37.1 ) Unrealized gain (loss) on derivatives 15.6 8.2 21.9 (24.2 ) Unrealized gain on investments .3 .3 .6 5.9 Comprehensive income $ 755.3 $ 420.6 $ 969.4 $ 515.5 For the second quarter of 2010 and 2009, the table above includes noncontrolling interests comprehensive income (loss) of $2.2 million and $(.1) million, which consists of net income (loss) of $2.3 million and $(.1) million and cumulative translation adjustments of $(.1) million and none, respectively. For the first six months of 2010 and 2009, the table includes noncontrolling interests comprehensive income of $4.5 million and $.3 million, which consists of net income of $4.7 million and none and cumulative translation adjustments of $(.2) million and $.3 million, respectively.

DIVIDENDS DECLARED AND PAID

DIVIDENDS DECLARED AND PAID
	6 Months Ended Apr. 30, 2010
DIVIDENDS DECLARED AND PAID
DIVIDENDS DECLARED AND PAID	(5) Dividends declared and paid on a per share basis were as follows: Three Months Ended April30 Six Months Ended April30 2010 2009 2010 2009 Dividends declared $ .28 $ .28 $ .56 $ .56 Dividends paid $ .28 $ .56* $ .56 $ .84 * * Due to the dividend payment dates, two quarterly dividends of $.28 per share were included in the second quarter of 2009 and three quarterly dividends of $.28 per share were included in the first six months of 2009.

EARNINGS PER SHARE

EARNINGS PER SHARE
	6 Months Ended Apr. 30, 2010
EARNINGS PER SHARE
EARNINGS PER SHARE	(6) A reconciliation of basic and diluted net income attributable to Deere Company per share follows in millions of dollars, except per share amounts: Three Months Ended April30 Six Months Ended April30 2010 2009 2010 2009 Net income attributable to Deere Company $ 547.5 $ 472.3 $ 790.7 $ 676.2 Less income allocable to participating securities (see Note 3) * .2 .3 Income allocable to common stock $ 547.3 $ 472.3 $ 790.4 $ 676.2 Average shares outstanding 424.4 422.7 424.0 422.6 Basic per share $ 1.29 $ 1.12 $ 1.86 $ 1.60 Average shares outstanding 424.4 422.7 424.0 422.6 Effect of dilutive stock options 4.6 1.0 4.2 1.1 Total potential shares outstanding 429.0 423.7 428.2 423.7 Diluted per share $ 1.28 $ 1.11 $ 1.85 $ 1.60 Out of the total stock options outstanding during the second quarter of 2010 and 2009, options to purchase 1.9 million shares in both periods of 2010 and 9.3 million shares in both periods of 2009 were excluded from the above diluted per share computation because the incremental shares under the treasury stock method for these options would have been antidilutive. * Effect on prior periods was not material.

PENSION AND OTHER POSTRETIREMEN

PENSION AND OTHER POSTRETIREMENT BENEFITS
	6 Months Ended Apr. 30, 2010
PENSION AND OTHER POSTRETIREMENT BENEFITS
PENSION AND OTHER POSTRETIREMENT BENEFITS	(7) 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 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 April30 Six Months Ended April30 2010 2009 2010 2009 Service cost $ 43 $ 31 $ 87 $ 60 Interest cost 125 141 256 280 Expected return on plan assets (191) (184) (381) (368) Amortization of actuarial loss 30 1 59 3 Amortization of prior service cost 11 5 21 12 Settlements/curtailments 2 3 Early-retirement benefits 2 Net cost (income) $ 20 $ (6) $ 45 $ (11) The components of other net periodic postretirement cost (health care and life insurance) consisted of the following in millions of dollars: Three Months Ended April30 Six Months Ended April30 2010 2009 2010 2009 Service cost $ 10 $ 6 $ 22 $ 14 Interest cost 83 89 168 172 Expected return on plan assets (31) (29) (61) (59) Amortization of actuarial loss 71 23 155 33 Amortization of prior service credit (3) (3) (7) (6) Early-retirement benefits 1 Net cost $ 130 $ 86 $ 277 $ 155 During the first six months of 2010, the Company contributed approximately $288 million to its pension plans and $54 million to its other postretirement benefit plans. The Company presently anticipates contributing an additional $221 million to its pension plans and $20 million to its other postretirement benefit plans in 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.

INCOME TAXES

INCOME TAXES
	6 Months Ended Apr. 30, 2010
INCOME TAXES
INCOME TAXES	(8) The Companys unrecognized tax benefits at April30, 2010 were $185 million of which approximately $66 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 have closed, the Company had changes during the first six months of 2010 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. The Patient Protection and Affordable Care Act as amended by the Healthcare and Education Reconciliation Act of 2010 was signed into law in the Companys second fiscal quarter of 2010. Under the new legislation, to the extent the Companys future health care drug expenses are reimbursed under the Medicare PartD retiree drug subsidy (RDS) program, the expenses will no longer be tax deductible effective November1, 2013. Since the tax effects for the retiree health care liabilities are reflected in the Companys financial statements, the entire impact of this tax change relating to the future retiree drug costs must be recorded in tax expense in the period in which the legislation is enacted. As a result of the legislation, the Companys tax expenses were approximately $130 million higher in the second quarter of 2010.

SEGMENT REPORTING

SEGMENT REPORTING
	6 Months Ended Apr. 30, 2010
SEGMENT REPORTING
SEGMENT REPORTING	(9) Worldwide net sales and revenues, operating profit and identifiable assets by segment in millions of dollars follow: Three Months Ended April30 Six Months Ended April30 2010 2009 % Change 2010 2009 % Change Net sales and revenues: Agriculture and turf *** $ 5,637 $ 5,587 +1 $ 9,245 $ 9,406 -2 Construction and forestry 911 600 +52 1,540 1,341 +15 Total net sales 6,548 6,187 +6 10,785 10,747 Credit revenues 476 458 +4 958 931 +3 Other revenues 107 103 +4 223 216 +3 Total net sales and revenues $ 7,131 $ 6,748 +6 $ 11,966 $ 11,894 +1 Operating profit (loss): * Agriculture and turf *** $ 952 $ 703 +35 $ 1,304 $ 993 +31 Construction and forestry 36 (75) (1) (58) -98 Credit 105 58 +81 200 111 +80 Other 5 12 4 +200 Total operating profit 1,098 686 +60 1,515 1,050 +44 Other reconciling items ** (551) (214) +157 (724) (374) +94 Net income attributable to Deere Company $ 547 $ 472 +16 $ 791 $ 676 +17 Identifiable assets: Agriculture and turf *** $ 7,136 $ 7,730 -8 Construction and forestry 2,113 2,220 -5 Credit 25,952 26,681 -3 Other 271 267 +1 Corporate 5,542 4,903 +13 Total assets $ 41,014 $ 41,801 -2 Intersegment sales and revenues: Agriculture and turf net sales $ 12 $ 3 +300 $ 26 $ 11 +136 Construction and forestry net sales 3 1 +200 3 1 +200 Credit revenues 56 71 -21 108 139 -22 Equipment operations outside the U.S. and Canada: Net sales $ 2,341 $ 2,155 +9 $ 4,052 $ 3,972 +2 Operating profit 207 88 +135 325 166 +96 * 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 second quarter and first six months ended April30, 2009.

SECURITIZATION OF FINANCING REC

SECURITIZATION OF FINANCING RECEIVABLES
	6 Months Ended Apr. 30, 2010
SECURITIZATION OF FINANCING RECEIVABLES
SECURITIZATION OF FINANCING RECEIVABLES	(10) 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 $2,207 million, $2,157 million and $1,246 million at April30, 2010, October31, 2009 and April30, 2009, respectively. The liabilities (short-term borrowings and accrued interest) of these SPEs totaled $2,143 million, $2,133 million and $1,241 million at April30, 2010, October31, 2009 and April30, 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 variable

INVENTORIES

INVENTORIES
	6 Months Ended Apr. 30, 2010
INVENTORIES
INVENTORIES	(11) 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: April30 2010 October31 2009 April30 2009 Raw materials and supplies $ 1,043 $ 940 $ 1,169 Work-in-process 457 387 480 Finished goods and parts 2,821 2,437 3,240 Total FIFO value 4,321 3,764 4,889 Less adjustment to LIFO basis 1,318 1,367 1,338 Inventories $ 3,003 $ 2,397 $ 3,551

GOODWILL AND OTHER INTANGIBLE A

GOODWILL AND OTHER INTANGIBLE ASSETS-NET
	6 Months Ended Apr. 30, 2010
GOODWILL AND OTHER INTANGIBLE ASSETS-NET
GOODWILL AND OTHER INTANGIBLE ASSETS-NET	(12) 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 (1 ) (32 ) (33 ) Other 3 (1 ) 2 Balance April30, 2010: Goodwill 700 595 1,295 Less accumulated impairment losses 289 289 Goodwill-net $ 411 $ 595 $ 1,006 The components of other intangible assets were as follows in millions of dollars: Useful Lives * (Years) April30 2010 Amortized intangible assets: Customer lists and relationships 13 $ 97 Technology, patents, trademarks and other 15 98 Total at cost 195 Less accumulated amortization 70 ** Total 125 Unamortized intangible assets: Licenses 4 Other intangible assets-net $ 129 * Weighted-averages ** Accumulated amortization for customer lists and relationships was $40 million and technology, patents and trademarks was $30 million. The amortization of other intangible assets in the second quarter and the first six months of 2010 was $6 million and $11 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2010 - $8, 2011 - $15, 2012 - $14, 2013 - $13 and 2014 - $12.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES
	6 Months Ended Apr. 30, 2010
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	(13) 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 $221 million at April30, 2010 and 2009, respectively. A reconciliation of the changes in the warranty liability in millions of dollars follows: Three Months Ended April30 Six Months Ended April30 2010 2009 2010 2009 Balance, beginning of period $ 700 $ 801 $ 727 $ 814 Payments (117) (114) (252) (238) Amortization of premiums received (24) (27) (48) (54) Accruals for warranties 129 114 251 232 Premiums received 25 24 44 47 Foreign exchange (3) 1 (12) (2) Balance, end of period $ 710 $ 799 $ 710 $ 799 At April30, 2010, the Company had approximately $173 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 April30, 2010, the Company had an accrued liability of approximately $7 million under these agreements. The maximum remaining term of the receivables guaranteed at April30, 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 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 April30, 2010, the maximum exposure for uncollected premiums was approximately $162 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 $758 million at April30, 2010. The credit operations believe tha

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS
	6 Months Ended Apr. 30, 2010
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS	(14) The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow: April30, 2010 October31, 2009 Carrying Value Fair Value Carrying Value Fair Value Financing receivables $ 15,040 $ 15,128 $ 15,255 $ 15,434 Restricted financing receivables 3,085 3,091 3,108 3,146 Short-term secured borrowings 3,066 3,085 3,132 3,162 Long-term borrowings due within one year: Equipment Operations $ 306 $ 306 $ 312 $ 323 Financial Services 2,552 2,568 3,349 3,389 Total $ 2,858 $ 2,874 $ 3,661 $ 3,712 Long-term borrowings: Equipment Operations $ 3,054 $ 3,327 $ 3,073 $ 3,303 Financial Services 14,322 14,969 14,319 14,818 Total $ 17,376 $ 18,296 $ 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 current market quotes for identical or similar borrowings or 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.

ASSETS AND LIABILITIES MEASURED

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
	6 Months Ended Apr. 30, 2010
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE	(15) Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow: April30 October31 April30 2010* 2009* 2009* Marketable securities U.S. government debt securities $ 63 $ 52 $ 52 Municipal debt securities 23 24 24 Corporate debt securities 59 43 38 Residential mortgage-backed securities ** 76 73 72 Other debt securities 13 Total marketable securities 234 192 186 Other assets Derivatives: Interest rate contracts 428 550 664 Foreign exchange contracts 10 17 27 Cross-currency interest rate contracts 4 173 40 Total assets $ 676 $ 932 $ 917 Accounts payable and accrued expenses Derivatives: Interest rate contracts $ 72 $ 121 $ 172 Foreign exchange contracts 35 32 53 Cross-currency interest rate contracts 54 1 1 Total liabilities $ 161 $ 154 $ 226 * All measurements above were Level 2 measurements except for Level 1 measurements of U.S. government debt securities of $37 million, $32 million and $34 million at April30, 2010, October31, 2009 and April30, 2009, respectively. ** Primarily issued by U.S. government sponsored enterprises. Carrying values for assets as of the end of the periods and losses during the related periods for nonrecurring Level 3 fair value measurements in millions of dollars were as follows: Six Months Ended April30 October31 April30 April30 2010 2009 2009 2010 2009 Retail notes $ 2 $ 3 $ 1 Operating loans 1 13 $ 16 5 Financing leases 5 1 Wholesale notes 28 6 2 $ 2 1 Financing receivables $ 36 $ 23 $ 18 $ 2 $ 7 Trade receivables $ 1 $ 3 $ 2 The contractual maturities of marketable securities at April30, 2010 in millions of dollars are shown below. Actual maturities may differ from those scheduled as a result of prepayments by the issuers. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity. Amortized Cost Fair Value Due in one year or less $ 27 $ 27 Due after one through five years 46 48 Due after five through 10 years 50 53 Due after 10 years 29 30 Residential mortgage-backed securities 73 76 Marketable securities $ 225 $ 234 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

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS
	6 Months Ended Apr. 30, 2010
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS	(16) 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 April30, 2010, October31, 2009 and April30, 2009, was $23 million, $13 million and $24 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 $442 million, $740 million and $731 million as of April30, 2010, October31, 2009 and April30, 2009, respectively. The amount of collateral received at April30, 2010, October31, 2009 an

STOCK OPTION AND RESTRICTED STO

STOCK OPTION AND RESTRICTED STOCK AWARDS
	6 Months Ended Apr. 30, 2010
STOCK OPTION AND RESTRICTED STOCK AWARDS
STOCK OPTION AND RESTRICTED STOCK AWARDS	(17) 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 April30, 2010, options for 21.9 million shares were outstanding with a weighted-average exercise price of $43.81 per share. The Company also granted .2 million restricted stock awards with a weighted-average fair value of $53.03 per share in the first six months of 2010. In February2010, the stockholders approved an increase of 13.0 million to the number of shares authorized for awards. At April30, 2010, a total of 19.7 million shares remained available for the granting of future options and restricted stock.

RESTRUCTURING AND RELATED ACTIV

RESTRUCTURING AND RELATED ACTIVITIES DISCLOSURES
	6 Months Ended Apr. 30, 2010
RESTRUCTURING AND RELATED ACTIVITIES DISCLOSURES
RESTRUCTURING AND RELATED ACTIVITIES DISCLOSURES	(18) 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 business. 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 Six Months 2010 Future Total Pension and other postretirement benefits $ 10 $ 27 $ 2 $ 6 $ 45 Property and equipment impairments 21 3 24 Employee termination benefits 18 7 25 Other expenses 11 6 17 Total $ 49 $ 48 $ 8 $ 6 $ 111 All expenses are included in the agriculture and turf segment. The total pretax cash expenditures associated with this closure will be approximately $58 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 April30, 2010 was $7 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 $21 million of benefits paid to date.

COMBINATION OF OPERATING SEGMEN

COMBINATION OF OPERATING SEGMENTS
	6 Months Ended Apr. 30, 2010
COMBINATION OF OPERATING SEGMENTS
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 9). 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
	6 Months Ended Apr. 30, 2010
SUPPLEMENTAL CONSOLIDATING DATA
SUPPLEMENTAL CONSOLIDATING DATA	(20) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended April30, 2010 and 2009 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2010 2009 2010 2009 Net Sales and Revenues Net sales $ 6,548.2 $ 6,187.0 Finance and interest income 7.6 15.1 $ 482.8 $ 505.9 Other income 99.6 84.5 73.2 49.2 Total 6,655.4 6,286.6 556.0 555.1 Costs and Expenses Cost of sales 4,765.6 4,756.7 Research and development expenses 266.0 255.7 Selling, administrative and general expenses 611.1 565.7 124.9 125.2 Interest expense 45.4 41.8 171.8 236.5 Interest compensation to Financial Services 49.2 69.9 Other operating expenses 39.4 43.3 149.3 135.0 Total 5,776.7 5,733.1 446.0 496.7 Income of Consolidated Group before Income Taxes 878.7 553.5 110.0 58.4 Provision (credit) for income taxes 424.8 147.5 23.4 (10.4 ) Income of Consolidated Group 453.9 406.0 86.6 68.8 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit 83.5 68.3 .2 .1 Other 12.5 (2.1) Total 96.0 66.2 .2 .1 Net Income 549.9 472.2 86.8 68.9 Less: Net income (loss) attributable to noncontrolling interests 2.4 (.1) (.1) Net Income Attributable to Deere Company $ 547.5 $ 472.3 $ 86.9 $ 68.9 * 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) STATEMENT OF INCOME For the Six Months Ended April30, 2010 and 2009 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2010 2009 2010 2009 Net Sales and Revenues Net sales $ 10,785.5 $ 10,747.1 Finance and interest income 33.3 39.7 $ 969.2 $ 1,011.7 Other income 189.8 174.4 146.3 109.9 Total 11,008.6 10,961.2 1,115.5 1,121.6 Costs and Expenses Cost of sales 7,971.4 8,299.6 Research and development expenses 501.7 475.1 Selling, administrative and general expenses 1,139.3 1,087.8 241.6 244.3 Interest expense 88.7 87.3 356.7 481.3 Interest compensation to Financial Services 91.8 118.0 Other operating expenses 73.5 122.6 306.2 281.1 Total 9,866.4 10,190.4 904.5 1,006.7 Income of Consolidated Group before Income Taxes 1,142.2 770.8 211.0 114.9 Provision (credit) for income taxes 518.8 211.3 39.6 (.6 ) Income of Consolidated Group 623.4 559.5 171.4 115.5 Equity in Income of Unconsolid

Document and Entity Information

Document and Entity Information
	6 Months Ended Apr. 30, 2010
Document and Entity Information
Entity Registrant Name	DEERE & CO
Entity Central Index Key	0000315189
Document Type	10-Q
Document Period End Date	2010-04-30
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	424,837,898
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q2