John Deere 2013 Annual Report Download - page 49

2013 2012
Financial Services
Notes and debentures:
Medium-term notes due 2014 – 2023:
(principal $15,055 - 2013, $15,242 - 2012)
Average interest rates of 1.2% – 2013,
1.6% – 2012 ....................................................... $ 15,316* $ 15,737*
2.75% senior note due 2022: ($500 principal)
Swapped $500 to variable interest rate
of .9% – 2013, 1.1% – 2012 ................................ 491* 518*
Other notes .............................................................. 900 753
Total .................................................................... 16,707 17,0 08
Long-term borrowings** .......................................... $ 21,578 $ 22,453
* Includes unamortized fair value adjustments related to interest rate swaps.
** All interest rates are as of year end.
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: 2014 – $821,
2015 – $266, 2016 – $211, 2017 – $28 and 2018 – $23.
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: 2014 – $4,408, 2015 – $4,649,
2016 – $3,374, 2017 – $2,954 and 2018 – $2,376.
21. LEASES
At October 31, 2013, future minimum lease payments under
capital leases amounted to $37 million as follows: 2014 – $23,
2015 – $5, 2016 – $4, 2017 – $2, 2018 – $1 and later years $2.
Total rental expense for operating leases was $237 million
in 2013, $215 million in 2012 and $175 million in 2011.
At October 31, 2013, future minimum lease payments under
operating leases amounted to $413 million as follows:
2014 – $130, 2015 – $95, 2016 – $61, 2017 – $45, 2018 – $34
and later years $48.
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 $342 million and $292 million at
October 31, 2013 and 2012, respectively.
19. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at October 31 consisted
of the following in millions of dollars:
2013 2012
Equipment Operations
Accounts payable:
Trade payables ......................................................... $ 2,174 $ 2,287
Dividends payable .................................................... 192 179
Other ....................................................................... 197 147
Accrued expenses:
Dealer sales discounts .............................................. 1,491 1,413
Employee benefits .................................................... 1,408 1,337
Product warranties ................................................... 822 733
Unearned revenue .................................................... 368 282
Other ....................................................................... 1,339 1,301
Total .................................................................... 7,9 91 7,679
Financial Services
Accounts payable:
Deposits withheld from dealers and merchants .......... 197 194
Other ....................................................................... 368 505
Accrued expenses:
Unearned revenue .................................................... 551 452
Accrued interest ....................................................... 130 160
Employee benefits .................................................... 86 69
Insurance claims reserve* ......................................... 197 449
Other ....................................................................... 321 301
Total .................................................................... 1,850 2,130
Eliminations** ............................................................... 867 820
Accounts payable and accrued expenses ............... $ 8,974 $ 8,989
* See Note 9.
** Primarily trade receivable valuation accounts which are reclassified 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:
2013 2012
Equipment Operations
Notes and debentures:
6.95% notes due 2014: ($700 principal) .................. $ 718*
4.375% notes due 2019 ........................................... $ 750 750
8-1/2% debentures due 2022 .................................. 105 105
2.60% notes due 2022 ............................................ 1,000 1,000
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
3.90% notes due 2042 ............................................ 1,250 1,250
Other notes .............................................................. 516 372
Total .................................................................... $ 4,871 $ 5,445
(continued)
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