John Deere 2014 Annual Report Download - page 46

11. MARKETABLE SECURITIES
All marketable securities are classified as available-for-sale,
with unrealized gains and losses shown as a component of
stockholders’ equity. Realized gains or losses from the sales of
marketable securities are based on the specific identification
method.
The amortized cost and fair value of marketable securities
at October 31 in millions of dollars follow:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
2014
Equity fund .................................. $ 39 $ 6 $ 45
Fixed income fund ....................... 10 10
U.S. government debt securities ... 806 3 $ 1 808
Municipal debt securities ............. 31 3 34
Corporate debt securities ............. 167 7 2 172
Mortgage-backed securities* ....... 145 3 2 146
Marketable securities .............. $ 1,198 $ 22 $ 5 $ 1,215
2013
Equity fund .................................. $ 18 $ 2 $ 20
U.S. government debt securities ... 1,309 5 $ 2 1,312
Municipal debt securities ............. 34 2 36
Corporate debt securities ............. 135 6 3 138
Mortgage-backed securities* ....... 121 2 4 119
Marketable securities .............. $ 1,617 $ 17 $ 9 $ 1,625
* Primarily issued by U.S. government sponsored enterprises.
The contractual maturities of debt securities at October 31,
2014 in millions of dollars follow:
Amortized Fair
Cost Value
Due in one year or less ................................................. $ 722 $ 723
Due after one through five years .................................... 90 93
Due after five through 10 years ..................................... 140 143
Due after 10 years ........................................................ 52 55
Mortgage-backed securities .......................................... 145 146
Debt securities .......................................................... $ 1,149 $ 1,160
Actual maturities may differ from contractual maturities
because some securities may be called or prepaid. Because of
the potential for prepayment on mortgage-backed securities,
they are not categorized by contractual maturity. Proceeds from
the sales of available-for-sale securities were $6 million in 2014,
$7 million in 2013 and $7 million in 2012. Realized gains,
realized losses, the increase (decrease) in net unrealized gains or
losses and unrealized losses that have been continuous for over
twelve months were not significant in 2014, 2013 and 2012.
Unrealized losses at October 31, 2014 and 2013 were primarily
the result of an increase in interest rates and were not recognized
in income due to the ability and intent to hold to maturity.
There were no impairment write-downs in the periods reported.
12. RECEIVABLES
Trade Accounts and Notes Receivable
Trade accounts and notes receivable at October 31 consisted of
the following in millions of dollars:
2014 2013
Trade accounts and notes:
Agriculture and turf ................................................. $ 2,633 $ 3,127
Construction and forestry......................................... 645 631
Trade accounts and notes receivable–net ............. $ 3,278 $ 3,758
At October 31, 2014 and 2013, dealer notes included in
the previous table were $61 million and $75 million, and the
allowance for credit losses was $55 million and $67 million,
respectively.
The equipment operations sell a significant portion of their
trade receivables to financial services and provide compensation
to these operations at approximate market rates of interest.
Trade accounts and notes receivable primarily arise from
sales of goods to independent dealers. Under the terms of the
sales to dealers, interest is primarily charged to dealers on
outstanding balances, from the earlier of the date when goods are
sold to retail customers by the dealer or the expiration of certain
interest-free periods granted at the time of the sale to the dealer,
until payment is received by the company. Dealers cannot cancel
purchases after the equipment is shipped and are responsible for
payment even if the equipment is not sold to retail customers.
The interest-free periods are determined based on the type of
equipment sold and the time of year of the sale. These periods
range from one to twelve months for most equipment.
Interest-free periods may not be extended. Interest charged may
not be forgiven and the past due interest rates exceed market
rates. The company evaluates and assesses dealers on an ongoing
basis as to their creditworthiness and generally retains a security
interest in the goods associated with the trade receivables.
The company is obligated to repurchase goods sold to a dealer
upon cancellation or termination of the dealer’s contract for
such causes as change in ownership and closeout of the business.
Trade accounts and notes receivable have significant
concentrations of credit risk in the agriculture and turf sector
and construction and forestry sector as shown in the previous
table. On a geographic basis, there is not a disproportionate
concentration of credit risk in any area.
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