John Deere 2009 Annual Report Download - page 47

47
was $1,745 million, the foreign exchange contracts was $2,156
million and the cross-currency interest rate contracts was $839
million at October 31, 2009. There were also $1,560 million of
interest rate caps purchased and $1,560 million sold at the same
capped interest rate to facilitate borrowings through securitiza-
tion of retail notes at October 31, 2009. The fair value gains or
losses from the interest rate contracts were recognized currently
in interest expense and the gains or losses from foreign exchange
contracts in cost of sales or other operating expenses, generally
offsetting over time the expenses on the exposures being hedged.
The cash fl ows from these non-designated contracts were
recorded in operating activities in the consolidated statement
of cash fl ows.
Fair values of derivative instruments in the consolidated
balance sheet at October 31 in millions of dollars follow:
2009
_______________________
Accounts Payable
Other and
Assets Accrued Expenses
Designated as hedging instruments:
Interest rate contracts .................................. $ 507 $ 77
Not designated as hedging instruments:
Interest rate contracts .................................. 43 44
Foreign exchange contracts ......................... 17 32
Cross-currency interest rate contracts .......... 173 1
Total not designated ................................ 233 77
Total derivatives ........................................... $ 740 $ 154
The classifi cation and gains (losses) related to derivative
instruments on the statement of consolidated income consisted
of the following in millions of dollars:
2009
Fair Value Hedges
Interest rate contracts – Interest expense ...................................... $ 453
Cash Flow Hedges
Recognized in OCI
(Effective Portion):
Interest rate contracts – OCI (pretax) ............................................. (90)
Reclassifi ed from OCI
(Effective Portion):
Interest rate contracts – Interest expense ...................................... (84)
Recognized Directly in Income
(Ineffective Portion)*:
Interest rate contracts – Interest expense ...................................... *
Not Designated as Hedges
Interest rate contracts – Interest expense** .................................... (5)
Foreign exchange contracts – Cost of sales ................................... (64)
Foreign exchange contracts – Other operating expenses** ............. (90)
Total ........................................................................................ $ (159)
* The amount is not material.
** Includes interest and foreign exchange expenses from cross-currency interest
rate contracts.
28. SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS
ENDED OCTOBER 31, 2009, 2008 AND 2007
In April 2009, the company announced it was combining the
organization and internal reporting of the agricultural equipment
segment with the commercial and consumer equipment segment.
The operations were combined into the agriculture and turf
segment effective at the beginning of the third quarter of 2009.
By combining the organization of these segments, the company
expects to achieve greater alignment and effi ciency 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. The segment information has been
revised for this change.
The company’s operations are presently organized and
reported in three major business segments described as follows:
The agriculture and turf segment manufactures and
distributes a full line of farm and turf equipment and related
service parts – including large, medium and utility tractors;
loaders; combines, cotton and sugarcane harvesters and related
front-end equipment and sugarcane loaders; tillage, seeding and
application equipment including sprayers, nutrient management
and soil preparation machinery; hay and forage equipment,
including self-propelled forage harvesters and attachments, balers
and mowers; turf and utility equipment, including riding lawn
equipment and walk-behind mowers, golf course equipment,
utility vehicles, and commercial mowing equipment, along with
a broad line of associated implements; integrated agricultural
management systems technology; precision agricultural irrigation
equipment and supplies; landscape and nursery products; and
other outdoor power products.
The construction and forestry segment manufactures,
distributes to dealers and sells at retail a broad range of machines
and service parts used in construction, earthmoving, material
handling and timber harvesting – including backhoe loaders;
crawler dozers and loaders; four-wheel-drive loaders; excavators;
motor graders; articulated dump trucks; landscape loaders;
skid-steer loaders; and log skidders, feller bunchers, log loaders,
log forwarders, log harvesters and related attachments.
The products and services produced by the segments
above are marketed primarily through independent retail dealer
networks and major retail outlets.
The credit segment primarily fi nances sales and leases
by John Deere dealers of new and used agriculture and turf
equipment and construction and forestry equipment. In addition,
it provides wholesale fi nancing to dealers of the foregoing
equipment, provides operating loans, fi nances retail revolving
charge accounts, offers certain crop risk mitigation products and
invests in wind energy generation.
Certain operations do not meet the materiality threshold
of reporting and are included in the “Other” category.