John Deere 2009 Annual Report Download - page 40

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$71 million, which were mostly offset by cost reductions of
$70 million due to becoming eligible for government grants for
certain wind energy investments related to costs recognized in
prior and current periods.
Capitalized software is stated at cost less accumulated
amortization, and the estimated useful life is three years.
The amounts of total capitalized software costs, including
purchased and internally developed software, classifi ed as
“Other Assets” at October 31, 2009 and 2008 were $486 million
and $425 million, less accumulated amortization of $342 million
and $288 million, respectively. Amortization of these software
costs was $54 million in 2009, $35 million in 2008 and $33
million in 2007. The cost of leased software assets under capital
leases amounting to $33 million and $31 million at October 31,
2009 and 2008, respectively, is included in other assets.
The cost of compliance with foreseeable environmental
requirements has been accrued and did not have a material
effect on the company’s consolidated fi nancial statements.
17. GOODWILL AND OTHER INTANGIBLE ASSETS-NET
The amounts of goodwill by operating segment were as follows
in millions of dollars:
2009 2008
Agriculture and turf ...................................................... $ 409 $ 664
Construction and forestry ............................................. 628 561
Goodwill .................................................................... $ 1,037 $ 1,225
The decrease in goodwill in the agriculture and turf
segment was primarily due to an impairment write off of
$289 million, partially offset by the allocation of goodwill from
an acquisition of $20 million (see Note 4) and fl uctuations
in foreign currency translation. The increase in goodwill for
the construction and forestry segment was primarily due to
fl uctuations in foreign currency translation and an allocation
of goodwill from an acquisition of $11 million.
The components of other intangible assets are as follows
in millions of dollars:
Useful Lives*
(Years) 2009 2008
Amortized intangible assets:
Customer lists and relationships ............... 13 $ 93 $ 94
Technology, patents, trademarks
and other ............................................ 15 105 115
______ ______
Total at cost ........................................ 198 209
Less accumulated amortization ................ 62 48
______ ______
Other intangible assets-net ................ $ 136 $ 161
______ ______
______ ______
* Weighted-averages
Other intangible assets are stated at cost less accumulated
amortization. The amortization of other intangible assets in 2009,
2008 and 2007 was $18 million, $20 million and $12 million,
respectively. The estimated amortization expense for the next
fi ve years is as follows in millions of dollars: 2010 - $19,
2011 - $16, 2012 - $15, 2013 - $13 and 2014 - $12.
18. SHORT-TERM BORROWINGS
Short-term borrowings at October 31 consisted of the following
in millions of dollars:
2009 2008
Equipment Operations
Commercial paper ........................................................ $ 101 $ 124
Notes payable to banks ................................................. 77 85
Long-term borrowings due within one year .................... 312 9
______ ______
Total ........................................................................ 490 218
______ ______
Financial Services
Commercial paper ........................................................ 185 2,837
Notes payable to banks ................................................. 3 8
Notes payable related to securitizations (see below) ....... 3,132 1,682
Long-term borrowings due within one year .................... 3,349 3,776
______ ______
Total ........................................................................ 6,669 8,303
______ ______
Short-term borrowings ............................................. $ 7,15 9 $ 8,521
______ ______
______ ______
The notes payable related to securitizations for Financial
Services are secured by restricted fi nancing receivables (retail
notes) on the balance sheet (see Note 13). Although these notes
payable are classifi ed as short-term since payment is required if
the retail notes are liquidated early, the payment schedule for
these borrowings of $3,132 million at October 31, 2009 based
on the expected liquidation of the retail notes in millions of
dollars is as follows: 2010 - $1,551, 2011 - $954, 2012 - $506,
2013 - $120 and 2014 - $1.
The weighted-average interest rates on total short-term
borrowings, excluding current maturities of long-term borrowings,
at October 31, 2009 and 2008 were 1.7 percent and 3.2 percent,
respectively. The Financial Services’ short-term borrowings
represent obligations of the credit subsidiaries.
Lines of credit available from U.S. and foreign banks were
$4,558 million at October 31, 2009. Some of these credit lines
are available to both Deere & Company and Capital Corporation.
At October 31, 2009, $4,214 million of these worldwide lines of
credit were unused. For the purpose of computing the unused
credit lines, commercial paper and short-term bank borrowings,
excluding secured borrowings and the current portion of
long-term borrowings, were primarily considered to constitute
utilization.
Included in the above lines of credit was a long-term credit
facility agreement for $3.75 billion, expiring in February 2012.
The agreement is mutually extendable and the annual facility
fee is not signifi cant. The credit agreement requires the
Capital Corporation to maintain its consolidated ratio of earnings
to fi xed charges at not less than 1.05 to 1 for each fi scal quarter
and the ratio of senior debt, excluding securitization indebted-
ness, to capital base (total subordinated debt and stockholder’s
equity excluding accumulated other comprehensive income
(loss)) at not more than 11 to 1 at the end of any fi scal quarter.
The credit agreement also requires the Equipment Operations
to maintain a ratio of total debt to total capital (total debt and
stockholders’ equity excluding accumulated other comprehen-
sive income (loss)) of 65 percent or less at the end of each fi scal