John Deere 2011 Annual Report Download - page 45

The approximate principal amounts of the equipment
operations’ long-term borrowings maturing in each of the
next five years in millions of dollars are as follows: 2012 – $244,
2013 – $217, 2014 – $773, 2015 – $41 and 2016 – none.
The approximate principal amounts of the financial services’
long-term borrowings maturing in each of the next five years in
millions of dollars are as follows: 2012 – $5,198, 2013 – $4,736,
2014 – $2,631, 2015 – $1,266 and 2016 – $1,613.
21. LEASES
At October 31, 2011, future minimum lease payments under
capital leases amounted to $30 million as follows: 2012 – $5,
2013 – $5, 2014 – $3, 2015 – $2, 2016 – $1 and later years $14.
Total rental expense for operating leases was $175 million in
2011, $189 million in 2010 and $187 million in 2009.
At October 31, 2011, future minimum lease payments under
operating leases amounted to $435 million as follows:
2012 – $139, 2013 – $95, 2014 – $69, 2015 – $45, 2016 – $28
and later years $59.
22. COMMITMENTS AND CONTINGENCIES
The company generally determines its warranty liability by
applying historical claims rate experience to the estimated amount
of equipment that has been sold and is still under warranty based
on dealer inventories and retail sales. The historical claims rate
is primarily determined by a review of five-year claims costs and
current quality developments.
The premiums for the company’s extended warranties
are primarily recognized in income in proportion to the costs
expected to be incurred over the contract period. The unamor-
tized extended warranty premiums (deferred revenue) included
in the following table totaled $230 million and $203 million at
October 31, 2011 and 2010, respectively.
A reconciliation of the changes in the warranty liability
and unearned premiums in millions of dollars follows:
Warranty Liability/
Unearned Premiums
_______________
2011 2010
Beginning of year balance ........................................ $ 762 $ 727
Payments ..................................................................... ( 517) (517)
Amortization of premiums received ................................ (93) (100)
Accruals for warranties ................................................. 665 568
Premiums received ....................................................... 120 90
Foreign exchange ......................................................... (45) (6)
End of year balance .................................................. $ 892 $ 762
At October 31, 2011, the company had approximately
$230 million of guarantees issued primarily to banks outside the
U.S. related to third-party receivables for the retail financing of
John Deere equipment. The company may recover a portion of
any required payments incurred under these agreements from
repossession of the equipment collateralizing the receivables.
At October 31, 2011, the company had accrued losses of
approximately $7 million under these agreements. The maximum
remaining term of the receivables guaranteed at October 31, 2011
was approximately five years.
At October 31, 2011, the company had commitments of
approximately $339 million for the construction and acquisition
of property and equipment. At October 31, 2011, the company
also had pledged or restricted assets of $96 million, primarily as
collateral for borrowings. In addition, see Note 13 for restricted
assets associated with borrowings related to securitizations.
The company also had other miscellaneous contingencies
totaling approximately $50 million at October 31, 2011, for
which it believes the probability for payment is substantially
remote. The accrued liability for these contingencies was not
material at October 31, 2011.
The company is subject to various unresolved legal actions
which arise in the normal course of its business, the most
prevalent of which relate to product liability (including asbestos
related liability), retail credit, software licensing, patent,
trademark and environmental matters. The company believes
the reasonably possible range of losses for these unresolved legal
actions in addition to the amounts accrued would not have a
material effect on its financial statements.
23. CAPITAL STOCK
Changes in the common stock account in millions were
as follows:
Number of
Shares Issued Amount
Balance at October 31, 2008 .............................. 536.4 $ 2,934
Stock options and other ...................................... 62
Balance at October 31, 2009 .............................. 536.4 2,996
Stock options and other ...................................... 110
Balance at October 31, 2010 .............................. 536.4 3,106
Stock options and other ...................................... 146
Balance at October 31, 2011 ........................... 536.4 $ 3,252
The number of common shares the company is authorized
to issue is 1,200 million. The number of authorized preferred
shares, none of which has been issued, is nine million.
The Board of Directors at its meeting in May 2008
authorized the repurchase of up to $5,000 million of additional
common stock (65.9 million shares based on the October 31,
2011 closing common stock price of $75.90 per share).
At October 31, 2011, this repurchase program had $4,074
million (53.7 million shares at the same price) remaining to
be repurchased. Repurchases of the company’s common stock
under this plan will be made from time to time, at the company’s
discretion, in the open market.
45