John Deere 2011 Annual Report Download - page 48

Before Tax After
Tax (Expense) Tax
Amount Credit Amount
2011
Retirement benefits adjustment:
Net actuarial losses and
prior service cost .............................. $ (989) $ 368 $ (621)
Reclassification of actuarial losses
and prior service cost
to net income .................................... 450 (167) 283
Net unrealized loss ................................ (539) 201 (338)
Cumulative translation adjustment .............. 14 4 18
Unrealized gain on derivatives:
Hedging gain ......................................... 31 (11) 20
Reclassification of realized loss
to net income .................................... 1 1
Net unrealized gain ................................ 32 (11) 21
Unrealized holding gain and net
unrealized gain on investments .............. 2 (1) 1
Total other comprehensive income (loss) .... $ (491) $ 193 $ (298)
26. FAIR VALUE MEASUREMENTS
The fair values of financial instruments that do not approximate
the carrying values at October 31 in millions of dollars follow:
2011 2010
______________ ______________
Carrying Fair Carrying Fair
Value Value Value Value
Financing receivables ...................... $ 19,924 $ 19,919 $ 17,6 82 $ 17,75 9
Financing receivables securitized ..... $ 2,905 $ 2,907 $ 2,238 $ 2,257
Short-term securitization
borrowings .................................. $ 2,777 $ 2,789 $ 2,209 $ 2,229
Long-term borrowings due
within one year:
Equipment operations .............. $ 244 $ 233 $ 40 $ 42
Financial services .................... 5,249 5,331 3,214 3,267
Total ....................................... $ 5,493 $ 5,564 $ 3,254 $ 3,309
Long-term borrowings:
Equipment operations .................. $ 3,167 $ 3,771 $ 3,329 $ 3,745
Financial services ........................ 13,793 14,154 13,486 14,048
Total ....................................... $ 16,960 $ 17,925 $ 16,815 $ 17,793
Fair values of the long-term financing receivables were
based on the discounted values of their related cash flows at
current market interest rates. The fair values of the remaining
financing receivables approximated the carrying amounts.
Fair values of long-term borrowings and short-term
securitization borrowings were based on current market quotes
for identical or similar borrowings and credit risk, or on the
discounted values of their related cash flows 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:
2011* 2010*
Marketable securities
U.S. government debt securities ............................. $ 576 $ 63
Municipal debt securities ........................................ 36 28
Corporate debt securities ........................................ 89 63
Residential mortgage-backed
securities** ........................................................ 86 72
Other debt securities .............................................. 2
Total marketable securities ......................................... 787 228
Other assets
Derivatives:
Interest rate contracts ............................................ 471 493
Foreign exchange contracts .................................... 12 24
Cross-currency interest rate contracts ..................... 2 3
Total assets*** ............................................................... $ 1,272 $ 748
Accounts payable and accrued expenses
Derivatives:
Interest rate contracts ............................................ $ 61 $ 38
Foreign exchange contracts .................................... 100 23
Cross-currency interest rate contracts ..................... 7 48
Total liabilities ................................................................. $ 168 $ 109
* All measurements above were Level 2 measurements except for Level 1 measure-
ments of U.S. government debt securities of $540 million and $36 million at
October 31, 2011 and 2010, 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 cost that approximates fair value. The cash and cash equivalents consist
primarily of money market funds.
Fair value, nonrecurring, Level 3 measurements at
October 31 in millions of dollars follow:
Fair Value* Losses
_____________ ____________________
2011 2010 2011 2010 2009
Financing receivables**.... $ 5 $ 21 $ 5 $ 21
Goodwill .......................... $ 34 $ 27 $ 289
Property and equipment
held for sale*** ............ $ 918 $ 35
* Does not include cost to sell.
** Primarily wholesale notes and operating loans.
*** See Note 4.
Level 1 measurements consist of quoted prices in active
markets for identical assets or liabilities. Level 2 measurements
include significant 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 significant unobservable inputs.
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