John Deere 2010 Annual Report Download - page 43

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Lines of credit available from U.S. and foreign banks were
$5,294 million at October 31, 2010. Some of these credit lines
are available to both Deere & Company and Capital Corporation.
At October 31, 2010, $3,222 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 $3,750 million, expiring in February 2012
and a long-term credit facility agreement of $1,500 million,
expiring in April 2013. The agreements are mutually extendable
and the annual facility fees are not signifi cant. These credit
agreements require Capital Corporation to maintain its consoli-
dated 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 indebtedness, to capital base (total subordinated
debt and Capital Corporation 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 agree-
ments also require the Equipment Operations to maintain a ratio
of total debt to total capital (total debt and Deere & Company
stockholders’ equity excluding accumulated other comprehen-
sive income (loss)) of 65 percent or less at the end of each fi scal
quarter. Under this provision, the company’s excess equity
capacity and retained earnings balance free of restriction at
October 31, 2010 was $7,832 million. Alternatively under
this provision, the Equipment Operations had the capacity to
incur additional debt of $14,545 million at October 31, 2010.
All of these requirements of the credit agreements have been
met during the periods included in the consolidated fi nancial
statements.
Deere & Company has an agreement with Capital
Corporation pursuant to which it has agreed to continue to
own at least 51 percent of the voting shares of capital stock
of Capital Corporation and to maintain Capital Corporation’s
consolidated tangible net worth at not less than $50 million.
This agreement also obligates Deere & Company to make
income maintenance payments to Capital Corporation such
that its consolidated ratio of earnings to fi xed charges is not less
than 1.05 to 1 for each fi scal quarter. Deere & Company’s
obligations to make payments to Capital Corporation under the
agreement are independent of whether Capital Corporation is
in default on its indebtedness, obligations or other liabilities.
Further, Deere & Company’s obligations under the agreement
are not measured by the amount of Capital Corporation’s
indebtedness, obligations or other liabilities. Deere & Company’s
obligations to make payments under this agreement are expressly
stated not to be a guaranty of any specifi c indebtedness,
obligation or liability of Capital Corporation and are enforceable
only by or in the name of Capital Corporation. No payments
were required under this agreement during the periods included
in the consolidated fi nancial statements.
19. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at October 31 consisted
of the following in millions of dollars:
2010 2009
Equipment Operations
Accounts payable:
Trade payables ......................................................... $ 1,825 $ 1,09 3
Dividends payable .................................................... 127 118
Other ....................................................................... 106 131
Accrued expenses:
Employee benefi ts .................................................... 999 861
Product warranties ................................................... 560 513
Dealer sales discounts .............................................. 847 774
Accrued income taxes .............................................. 81 5
Other ....................................................................... 1,212 1,119
Total .................................................................... 5,757 4,614
Financial Services
Accounts payable:
Deposits withheld from dealers and merchants .......... 182 181
Other ....................................................................... 270 261
Accrued expenses:
Unearned revenue .................................................... 286 280
Accrued interest ....................................................... 190 204
Employee benefi ts .................................................... 69 51
Accrued income taxes .............................................. 73 55
Other ....................................................................... 183 231
Total .................................................................... 1,253 1,263
Eliminations* ................................................................ 528 506
Accounts payable and accrued expenses ............... $ 6,4 8 2 $ 5,371
* Primarily trade receivable valuation accounts which are reclassifi ed as accrued
expenses by the Equipment Operations as a result of their trade receivables being
sold to Financial Services.
20. LONG-TERM BORROWINGS
Long-term borrowings at October 31 consisted of the following
in millions of dollars:
2010 2009
Equipment Operations
Notes and debentures:
6.95% notes due 2014: ($700 principal)
Swapped $300 to variable interest
rate of 1.25% – 2009 .......................................... $ 763* $ 800*
4.375% notes due 2019 ........................................... 750 750
8-1/2% debentures due 2022 .................................. 105 105
6.55% debentures due 2028 .................................... 200 200
5.375% notes due 2029 .......................................... 500 500
8.10% debentures due 2030 .................................... 250 250
7.125% notes due 2031 ........................................... 300 300
Other notes .............................................................. 461 168
Total .................................................................... $ 3,329 $ 3,073
(continued)