John Deere 2010 Annual Report Download - page 47

47
Before Tax After
Tax (Expense) Tax
Amount Credit Amount
2010
Retirement benefi ts adjustment:
Net actuarial losses and
prior service cost .............................. $ (213) $ 77 $ (136)
Reclassifi cation of actuarial losses
and prior service cost
to net income .................................... 474 (180) 294
Net unrealized gain ................................ 261 (103) 158
Cumulative translation adjustment .............. 49 (13) 36
Unrealized loss on derivatives:
Hedging loss ......................................... (56) 19 (37)
Reclassifi cation of realized loss
to net income .................................... 79 (27) 52
Net unrealized gain ................................ 23 (8) 15
Unrealized holding gain and net
unrealized gain on investments .............. 8 (3) 5
Total other comprehensive income (loss) .... $ 341 $ (127) $ 214
26. FAIR VALUE MEASUREMENTS
The fair values of fi nancial instruments that do not approximate
the carrying values in the fi nancial statements at October 31 in
millions of dollars follow:
2010 2009
______________ ______________
Carrying Fair Carrying Fair
Value Value Value Value
Financing receivables ...................... $ 17,682 $ 17,759 $ 15,255 $ 15,434
Restricted fi nancing receivables ....... $ 2,238 $ 2,257 $ 3,108 $ 3,146
Short-term secured borrowings*....... $ 2,209 $ 2,229 $ 3,132 $ 3,162
Long-term borrowings due
within one year:
Equipment Operations ............. $ 40 $ 42 $ 312 $ 323
Financial Services ................... 3,214 3,267 3,349 3,389
Total ....................................... $ 3,254 $ 3,309 $ 3,661 $ 3,712
Long-term borrowings:
Equipment Operations ................. $ 3,329 $ 3,745 $ 3,073 $ 3,303
Financial Services ....................... 13,486 14,048 14,319 14,818
Total ....................................... $ 16,815 $ 17,793 $ 17,392 $ 18,121
* See Note 18.
Fair values of the long-term fi nancing receivables were
based on the discounted values of their related cash fl ows at
current market interest rates. The fair values of the remaining
fi nancing 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 and credit risk, or on the discounted
values of their related cash fl ows 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 at October 31 at fair value
on a recurring basis in millions of dollars follow:
2010* 2009*
Marketable securities
U.S. government debt securities ............................. $ 63 $ 52
Municipal debt securities ........................................ 28 24
Corporate debt securities ........................................ 63 43
Residential mortgage-backed
securities** ........................................................ 72 73
Other debt securities .............................................. 2
Total marketable securities ......................................... 228 192
Other assets
Derivatives:
Interest rate contracts ............................................ 493 550
Foreign exchange contracts .................................... 24 17
Cross-currency interest rate contracts ..................... 3 173
Total assets*** ............................................................... $ 748 $ 932
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts ............................................ $ 38 $ 121
Foreign exchange contracts .................................... 23 32
Cross-currency interest rate contracts ..................... 48 1
Total liabiliti es ................................................................. $ 109 $ 154
* All measurements above were Level 2 measurements except for Level 1 measure-
ments of U.S. government debt securities of $36 million and $32 million at October
31, 2010 and 2009, respectively.
** Primarily issued by U.S. government sponsored enterprises.
*** Excluded from this table are the company’s cash and cash equivalents, which are
carried at par value or amortized cost approximating fair value. The cash and cash
equivalents consist primarily of money market funds.
Fair value, nonrecurring, Level 3 measurements at
October 31 and related losses in millions of dollars follow:
Fair Value* Losses
________________ ________________
2010 2009 2010 2009
Retail notes ..................... $ 3 $ 3 $ 4
Operating loans ............... 1 13 $ 3 14
Financial leases ............... 1 1
Wholesale notes .............. 17 6 2 2
Financing receivables ...... $ 21 $ 23 $ 5 $ 21
Trade receivables ............ $ 1
Goodwill .......................... $ 34 $ 106 $ 27 $ 289
Property and equipment
held for sale** ............. $ 918 $ 35
* Does not include cost to sell.
** See Note 4.
Level 1 measurements consist of quoted prices in active
markets for identical assets or liabilities. Level 2 measurements
include signifi cant 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 signifi cant unobservable inputs.