John Deere 2009 Annual Report Download - page 39

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The components of consolidated restricted assets related to
secured borrowings in securitization transactions at October 31
were as follows in millions of dollars:
2009 2008
Restricted fi nancing receivables (retail notes)................. $ 3,133 $ 1,656
Allowance for credit loss es ............................................ ( 2 5 ) (11)
Other assets ................................................................. 108 56
Total restricted securitized assets .......................... $ 3,216 $ 1,701
The components of consolidated secured borrowings and
other liabilities related to securitizations at October 31 were as
follows in millions of dollars:
2009 2008
Short-term borrowings .................................................. $ 3,132 $ 1,682
Accrued interest on borrowings ..................................... 5 3
Total liabilities related to restricted
securitized assets ................................................ $ 3,137 $ 1,685
The secured borrowings related to these restricted
securitized retail notes are obligations that are payable as the
retail notes are liquidated. Repayment of the secured borrowings
depends primarily on cash fl ows generated by the restricted
assets. Due to the company’s short-term credit rating, cash
collections from these restricted assets are not required to be
placed into a segregated collection account until immediately
prior to the time payment is required to the secured creditors.
At October 31, 2009, the maximum remaining term of all
restricted receivables was approximately fi ve years.
14. EQUIPMENT ON OPERATING LEASES
Operating leases arise primarily from the leasing of John Deere
equipment to retail customers. Initial lease terms generally range
from four to 60 months. Net equipment on operating leases
totaled $1,733 million and $1,639 million at October 31, 2009
and 2008, respectively. The equipment is depreciated on a
straight-line basis over the terms of the lease. The accumulated
depreciation on this equipment was $484 million and
$471 million at October 31, 2009 and 2008, respectively.
The corresponding depreciation expense was $288 million in
2009, $308 million in 2008 and $297 million in 2007.
Future payments to be received on operating leases totaled
$800 million at October 31, 2009 and are scheduled as follows
in millions of dollars: 2010 – $355, 2011 – $222, 2012 – $132,
2013 – $72 and 2014 – $19.
15. INVENTORIES
Most inventories owned by Deere & Company and its
U.S. equipment subsidiaries are valued at cost, on the “last-in,
fi rst-out” (LIFO) basis. Remaining inventories are generally
valued at the lower of cost, on the “fi rst-in, fi rst-out” (FIFO)
basis, or market. The value of gross inventories on the LIFO
basis represented 59 percent and 64 percent of worldwide gross
inventories at FIFO value on October 31, 2009 and 2008,
respectively. The pretax favorable income effect from the
liquidation of LIFO inventory during 2009 was approximately
$37 million. If all inventories had been valued on a FIFO basis,
estimated inventories by major classifi cation at October 31 in
millions of dollars would have been as follows:
2009 2008
Raw materials and supplies ........................................... $ 940 $ 1,170
Work-in-proce ss ........................................................... 3 87 519
Finished machines and parts ......................................... 2,437 2,677
Total FIFO value ........................................................ 3,764 4,366
Less adjustment to LIFO value ....................................... 1,367 1,324
Inventories ................................................................. $ 2,3 97 $ 3,0 42
16. PROPERTY AND DEPRECIATION
A summary of property and equipment at October 31 in millions
of dollars follows:
Useful Lives*
(Years) 2009 2008
Equipment Operations
Land .................................................. $ 116 $ 91
Buildings and building equipment ........ 24 2,144 1,840
Machinery and equipment ................... 11 3,826 3,457
Dies, patterns, tools, etc ..................... 7 1,081 933
All other ............................................. 5 672 617
Construction in progress ..................... 362 386
______ ______
Total at cost ................................... 8,201 7,324
Less accumulated depreciation ........... 4,744 4,333
______ ______
Total .............................................. 3,457 2,991
______ ______
Financial Services
Land .................................................. 4 4
Buildings and building equipment ........ 27 70 40
Machinery and equipment ................... 16 1,064 690
All other ............................................. 6 40 34
Construction in progress ..................... 37 447
______ ______
Total at cost ................................... 1,215 1,215
Less accumulated depreciation ........... 140 78
______ ______
Total .............................................. 1,075 1,137
______ ______
Property and equipment-net .......... $ 4,5 32 $ 4,128
______ ______
______ ______
* Weighted-averages
Property and equipment is stated at cost less accumulated
depreciation. Total property and equipment additions in 2009,
2008 and 2007 were $798 million, $1,147 million and $1,064
million and depreciation was $513 million, $467 million and
$402 million, respectively. Capitalized interest was $15 million,
$26 million and $31 million in the same periods, respectively.
The cost of leased property and equipment under capital leases
amounting to $47 million and $30 million at October 31, 2009
and 2008, respectively, is included in property and equipment.
Financial Services property and equipment additions
included above were $1 million, $359 million and $476 million
in 2009, 2008 and 2007 and depreciation was $62 million,
$34 million and $13 million, respectively. The Financial Services
additions were primarily due to wind turbines related to
investments in wind energy generation. Financial Services
had additions to cost of property and equipment in 2009 of