** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C.  20549**

 

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# **FORM 10-Q**

 

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**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended April 30, 2009**

 

**Commissionfile no: 1-6458**

 

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## **JOHN DEERE CAPITAL CORPORATION**

 

| **Delaware**(State of  Incorporation) | ** ** | **36-2386361**(IRS Employer  Identification No.) |
|---------------------------------------|------------|--------------------------------------------------|

 

**1 EastFirst Street, Suite 600Reno, Nevada  89501**(Address ofprincipal executive offices)

 

TelephoneNumber:  **(775)786-5527**

 

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Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.
| Yes  x   No  o |   |
|----------------------------------------------|--------|

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files).
| Yes  o   No  o |   |
|----------------------------------------------|--------|

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of“large accelerated filer,” “accelerated filer” and “smaller reporting company”in Rule 12b-2 of the Exchange Act.

 
| Large accelerated filer                        | o      |   |   | Accelerated filer          | o |   |
|------------------------------------------------|--------|--------|--------|----------------------------|---|--------|
| Non-accelerated filer                          | x      |   |   | Smaller reporting  company | o |   |
| (Do not check if a  smaller reporting company) |   |   |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).
| Yes  o   No  x |   |
|----------------------------------------------|--------|

 

At April 30, 2009,2,500 shares of common stock, without par value, of the registrant wereoutstanding, all of which were owned by John Deere Credit Company, awholly-owned subsidiary of Deere & Company.

 

The registrant meets theconditions set forth in General Instruction H(1)(a) and (b) of Form 10-Qand is therefore filing this Form with certain reduced disclosures aspermitted by those instructions.

 

 

 

Index to Exhibits: Page 24

 

 

## **PART I.  FINANCIAL INFORMATION**

## ** **

## **Item1.     Financial Statements.**

 

## **John Deere Capital Corporation and Subsidiaries**

**Statementsof Consolidated Income and Retained Earnings**

**(Unaudited)**

(in millions)

 
| ** **                                            | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                            | ** ** | **April 30,**     | ** ** | **April 30,**   | ** ** |
| ** **                                            | ** ** | **2009**               | ** ** | **2008**             | ** ** | **2009** | ** ** | **2008** | ** ** |
| **Revenues**                                          |       |                   |       |                 |       |   |   |   |   |
| Finance income  earned on retail notes                |       | $                      | 181.9      |                 | $          | 215.0 |   | $ | 379.7 |   | $ | 437.8 |   |
| Lease revenues                                        |       | 76.6                   |       | 81.0                 |       | 158.6 |   | 164.4 |   |
| Revolving charge  account income                      |       | 58.6                   |       | 52.3                 |       | 109.3 |   | 103.1 |   |
| Finance income  earned on wholesale receivables       |       | 85.0                   |       | 80.8                 |       | 148.8 |   | 158.3 |   |
| Operating loan  income                                |       | 3.8                    |       | 6.9                  |       | 7.6 |   | 13.7 |   |
| Income on  receivables sold                           |       | .8                     |       | 1.9                  |       | 1.2 |   | 4.3 |   |
| Crop insurance  commissions                           |       | 5.5                    |       | 27.0                 |       | 12.1 |   | 56.0 |   |
| Other income                                          |       | 13.7                   |       | 22.3                 |       | 46.2 |   | 46.1 |   |
| Total revenues                                        |       | 425.9                  |       | 487.2                |       | 863.5 |   | 983.7 |   |
| **Expenses**                                          |       |                   |       |                 |       |   |   |   |   |
| Interest expense                                      |       | 203.9                  |       | 205.0                |       | 411.2 |   | 428.6 |   |
| Operating  expenses:                                  |       |                   |       |                 |       |   |   |   |   |
| Administrative  and operating expenses                |       | 66.8                   |       | 83.3                 |       | 152.9 |   | 163.0 |   |
| Provision for  credit losses                          |       | 41.8                   |       | 15.6                 |       | 74.2 |   | 30.7 |   |
| Fees paid to  John Deere                              |       | 8.0                    |       | 9.2                  |       | 17.3 |   | 18.3 |   |
| Depreciation of  equipment on operating leases        |       | 50.9                   |       | 53.0                 |       | 104.8 |   | 107.8 |   |
| Total operating  expenses                             |       | 167.5                  |       | 161.1                |       | 349.2 |   | 319.8 |   |
| Total expenses                                        |       | 371.4                  |       | 366.1                |       | 760.4 |   | 748.4 |   |
| **Income  of consolidated group before income taxes** |       | 54.5                   |       | 121.1                |       | 103.1 |   | 235.3 |   |
| **Provision  for income taxes**                       |       | 20.7                   |       | 44.1                 |       | 34.4 |   | 81.3 |   |
| **Income  of consolidated group**                     |       | 33.8                   |       | 77.0                 |       | 68.7 |   | 154.0 |   |
| **Equity  in income of unconsolidated affiliates**    |       | .1                     |       | .3                   |       | .3 |   | .5 |   |
| **Net  income**                                       |       | 33.9                   |       | 77.3                 |       | 69.0 |   | 154.5 |   |
| **Dividends  paid**                                   |       |                   |       | (285.1               | )          |   |   | (425.1 | ) |
| **Retained  earnings at beginning of period**         |       | 918.0                  |       | 1,002.8              |       | 882.9 |   | 1,065.6 |   |
| **Retained  earnings at end of period**               |       | $                      | 951.9      |                 | $          | 795.0 |   | $ | 951.9 |   | $ | 795.0 |   |

 

See Condensed Notes to Interim Financial Statements.

 

2

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## **John Deere Capital Corporation and Subsidiaries**

**ConsolidatedBalance Sheets**

**(Unaudited)**

(in millions)

 
| ** **                                                                                                        | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                                                                                        | ** ** | **2009**           | ** ** | **2008**             | ** ** | **2008**           | ** ** |
| **Assets**                                                                                                        |       |               |       |                 |       |               |       |
| Cash and cash  equivalents                                                                                        |       | $                  | 2,131.3    |                 | $          | 1,082.6            |       | $ | 162.2 |   |
| Receivables:                                                                                                      |       |               |       |                 |       |               |       |
| Retail notes                                                                                                      |       | 7,502.5            |       | 10,136.6             |       | 9,362.1            |       |
| Restricted  securitized retail notes                                                                              |       | 3,135.7            |       | 1,592.5              |       | 2,109.4            |       |
| Revolving charge  accounts                                                                                        |       | 1,824.7            |       | 1,825.1              |       | 1,495.6            |       |
| Operating loans                                                                                                   |       | 410.2              |       | 357.9                |       | 533.0              |       |
| Wholesale  receivables                                                                                            |       | 5,184.5            |       | 3,570.6              |       | 4,503.2            |       |
| Financing leases                                                                                                  |       | 372.5              |       | 417.9                |       | 430.7              |       |
| Total  receivables                                                                                                |       | 18,430.1           |       | 17,900.6             |       | 18,434.0           |       |
| Allowance for  credit losses                                                                                      |       | (119.5             | )          | (105.2               | )          | (102.0             | )          |
| Total  receivables — net                                                                                     |       | 18,310.6           |       | 17,795.4             |       | 18,332.0           |       |
| Other  receivables                                                                                                |       | 40.4               |       | 25.4                 |       | 29.6               |       |
| Equipment on operating  leases — net                                                                         |       | 981.3              |       | 1,053.4              |       | 964.1              |       |
| Notes receivable  from John Deere                                                                                 |       | 755.2              |       | 799.3                |       | 668.6              |       |
| Investment in  unconsolidated affiliates                                                                          |       | 5.9                |       | 5.4                  |       | 6.3                |       |
| Other assets                                                                                                      |       | 936.3              |       | 552.1                |       | 421.4              |       |
| **Total  Assets**                                                                                                 |       | $                  | 23,161.0   |                 | $          | 21,313.6           |       | $ | 20,584.2 |   |
| **Liabilities  and Stockholder’s Equity**                                                                    |       |               |       |                 |       |               |       |
| Short-term  borrowings:                                                                                           |       |               |       |                 |       |               |       |
| Commercial paper                                                                                                  |       | $                  | 654.3      |                 | $          | 2,814.5            |       | $ | 2,793.8 |   |
| Other notes  payable                                                                                              |       | 3,118.9            |       | 1,622.2              |       | 2,230.5            |       |
| John Deere                                                                                                        |       | 207.4              |       | 315.6                |       | 6.0                |       |
| Current  maturities of long-term borrowings                                                                       |       | 2,713.7            |       | 3,141.9              |       | 4,021.8            |       |
| Total short-term  borrowings                                                                                      |       | 6,694.3            |       | 7,894.2              |       | 9,052.1            |       |
| Accounts payable  and accrued expenses                                                                            |       | 701.9              |       | 583.4                |       | 500.8              |       |
| Deposits  withheld from dealers and merchants                                                                     |       | 160.3              |       | 173.5                |       | 169.1              |       |
| Deferred income  taxes                                                                                            |       | 38.1               |       | 67.9                 |       | 38.0               |       |
| Long-term borrowings                                                                                              |       | 13,454.9           |       | 10,529.7             |       | 9,163.4            |       |
| Total  liabilities                                                                                                |       | 21,049.5           |       | 19,248.7             |       | 18,923.4           |       |
| Commitments and  contingencies (Note 4)                                                                           |       |               |       |                 |       |               |       |
| Stockholder’s  equity:                                                                                       |       |               |       |                 |       |               |       |
| Common stock,  without par value (issued and outstanding — 2,500 shares owned by John Deere  Credit Company) |       | 1,212.8            |       | 1,212.8              |       | 812.8              |       |
| Retained  earnings                                                                                                |       | 951.9              |       | 882.9                |       | 795.0              |       |
| Accumulated  other comprehensive income (loss):                                                                   |       |               |       |                 |       |               |       |
| Cumulative  translation adjustment                                                                                |       | 11.1               |       | 9.2                  |       | 77.6               |       |
| Unrealized loss  on derivatives                                                                                   |       | (64.3              | )          | (40.0                | )          | (24.6              | )          |
| Total  accumulated other comprehensive income (loss)                                                              |       | (53.2              | )          | (30.8                | )          | 53.0               |       |
| Total  stockholder’s equity                                                                                  |       | 2,111.5            |       | 2,064.9              |       | 1,660.8            |       |
| **Total  Liabilities and Stockholder’s Equity**                                                              |       | $                  | 23,161.0   |                 | $          | 21,313.6           |       | $ | 20,584.2 |   |

 

See CondensedNotes to Interim Financial Statements.

 

3

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## **John Deere Capital Corporation and Subsidiaries**

**Statementsof Consolidated Cash Flows**

**Forthe Six Months Ended April 30, 2009 and 2008**

**(Unaudited)**

(in millions)

 
| ** **                                                                         | ** ** | **2009**  | ** ** | **2008**  | ** ** |
|------------------------------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| **Cash  Flows from Operating Activities:**                                         |       |      |       |      |       |
| Net income                                                                         |       | $         | 69.0       |      | $          | 154.5 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |      |       |      |       |
| Provision for  credit losses                                                       |       | 74.2      |       | 30.7      |       |
| Provision for  depreciation and amortization                                       |       | 108.0     |       | 110.0     |       |
| Credit for  deferred income taxes                                                  |       | (17.1     | )          | (1.0      | )          |
| Undistributed  earnings of unconsolidated affiliates                               |       | (.3       | )          | (.5       | )          |
| Change in  accounts payable and accrued expenses                                   |       | 13.5      |       | (30.8     | )          |
| Change in  accrued income taxes payable/receivable                                 |       | 8.4       |       | 14.0      |       |
| Other                                                                              |       | .3        |       | 20.6      |       |
| Net cash  provided by operating activities                                         |       | 256.0     |       | 297.5     |       |
|                                                                               |       |      |       |      |       |
| **Cash  Flows from Investing Activities:**                                         |       |      |       |      |       |
| Cost of  receivables acquired                                                      |       | (15,528.2 | )          | (15,512.1 | )          |
| Collections of  receivables                                                        |       | 14,920.8  |       | 14,894.9  |       |
| Cost of  equipment on operating leases acquired                                    |       | (200.4    | )          | (220.8    | )          |
| Proceeds from  sales of equipment on operating leases                              |       | 159.3     |       | 152.5     |       |
| Cost of notes  receivable with John Deere                                          |       | (181.0    | )          | (215.3    | )          |
| Collection of  notes receivable with John Deere                                    |       | 225.1     |       | 133.2     |       |
| Proceeds from  sales of receivables                                                |       | 18.0      |       | 52.3      |       |
| Change in  restricted cash                                                         |       | (17.3     | )          | (4.1      | )          |
| Other                                                                              |       | (22.1     | )          | (13.1     | )          |
| Net cash used  for investing activities                                            |       | (625.8    | )          | (732.5    | )          |
|                                                                               |       |      |       |      |       |
| **Cash  Flows from Financing Activities:**                                         |       |      |       |      |       |
| Increase  (decrease) in commercial paper - net                                     |       | (2,117.4  | )          | 41.3      |       |
| Increase in  other notes payable - net                                             |       | 1,497.0   |       | 30.8      |       |
| Decrease in  payable with John Deere - net                                         |       | (109.1    | )          | (121.8    | )          |
| Proceeds from  issuance of long-term borrowings                                    |       | 3,943.5   |       | 2,528.1   |       |
| Payments of  long-term borrowings                                                  |       | (1,695.7  | )          | (1,642.5  | )          |
| Dividends paid                                                                     |       |      |       | (425.1    | )          |
| Debt issuance  costs                                                               |       | (105.6    | )          | (11.3     | )          |
| Net cash  provided by financing activities                                         |       | 1,412.7   |       | 399.5     |       |
|                                                                               |       |      |       |      |       |
| **Effect  of exchange rate changes on cash and cash equivalents**                  |       | 5.8       |       | 6.9       |       |
| **Net  increase (decrease) in cash and cash equivalents**                          |       | 1,048.7   |       | (28.6     | )          |
| **Cash  and cash equivalents at beginning of period**                              |       | 1,082.6   |       | 190.8     |       |
| **Cash  and cash equivalents at end of period**                                    |       | $         | 2,131.3    |      | $          | 162.2 |   |

 

See CondensedNotes to Interim Financial Statements.

 

4

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| **John Deere Capital Corporation and Subsidiaries**  |
|------------------------------------------------------|
| **Condensed  Notes to Interim Financial Statements** |
| **(Unaudited)**                                      |
|                                                 |   |
| (1)                                                  | The consolidated  financial statements of John Deere Capital Corporation (Capital Corporation)  and its subsidiaries (collectively called the Company) have been prepared by  the Company, without audit, pursuant to the rules and regulations of the  U.S. Securities and Exchange Commission. Certain information and footnote  disclosures normally included in annual financial statements prepared in accordance  with accounting principles generally accepted in the U.S. have been condensed  or omitted as permitted by such rules and regulations. All adjustments,  consisting of normal recurring adjustments, have been included. Management  believes that the disclosures are adequate to present fairly the financial  position, results of operations and cash flows at the dates and for the  periods presented. It is suggested that these interim financial statements be  read in conjunction with the financial statements and the notes thereto  appearing in the Company’s latest annual report on Form 10-K. Results  for interim periods are not necessarily indicative of those to be expected  for the year. |
|                                                 |   |
|                                                 | The  preparation of financial statements in conformity with accounting principles  generally accepted in the U.S. requires management to make estimates and  assumptions that affect the reported amounts and related disclosures. Actual  results could differ from those estimates. |
|                                                 |   |
| (2)                                                  | The  Company provides and administers financing for retail purchases of new  equipment manufactured by Deere & Company’s agricultural equipment,  commercial and consumer equipment and construction and forestry divisions and  used equipment taken in trade for this equipment. The Company generally  purchases retail installment sales and loan contracts (retail notes) from  Deere & Company and its wholly-owned subsidiaries (collectively  called John Deere). John Deere generally acquires these retail notes through  John Deere retail dealers. The Company also purchases and finances a limited  amount of non-Deere retail notes and continues to service a small portfolio  of recreational products and other retail notes. In addition, the Company  leases John Deere equipment and a limited amount of non-Deere equipment to  retail customers (financing and operating leases). The Company also finances  and services revolving charge accounts, in most cases acquired from and  offered through merchants in the agricultural, commercial and consumer and  construction and forestry markets (revolving charge accounts). Further, the  Company finances and services operating loans, in most cases offered through  and acquired from farm input providers, through direct relationships with  agricultural producers or through agribusinesses (operating loans). The  Company also provides wholesale financing for inventories of John Deere  agricultural, commercial and consumer and construction and forestry equipment  owned by dealers of those products (wholesale receivables). The Company also  offers credit enhanced international export financing to select customers and  dealers which generally involves John Deere products and offers certain crop  risk mitigation products in the U.S. In addition, the Company makes loans to  certain affiliated companies that directly invest in wind energy projects.  Retail notes, revolving charge accounts, operating loans, financing leases  and wholesale receivables are collectively called “Receivables.” Receivables  and operating leases are collectively called “Receivables and Leases.” |
|                                                 |   |
|                                                 | In  April 2009, John Deere announced it will combine the agricultural  equipment segment with the commercial and consumer equipment segment  effective at the beginning of the third quarter of 2009. |
|                                                 |   |
| (3)                                                  | Comprehensive  income, which includes all changes in the Company’s equity during the period  except transactions with the stockholder, was as follows (in millions of  dollars): |

 
| ** **                                      | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                      | ** ** | **April 30,**     | ** ** | **April 30,**   | ** ** |
| ** **                                      | ** ** | **2009**               | ** ** | **2008**             | ** ** | **2009** | ** ** | **2008** | ** ** |
| Net income                                      |       | $                      | 33.9       |                 | $          | 77.3 |   | $ | 69.0 |   | $ | 154.5 |   |
|                                            |       |                   |       |                 |       |   |   |   |   |
| Other  comprehensive income (loss), net of tax: |       |                   |       |                 |       |   |   |   |   |
| Change in  cumulative translation adjustment    |       | 10.6                   |       | 15.2                 |       | 1.9 |   | 15.9 |   |
| Unrealized loss  on investments                 |       |                   |       | (.5                  | )          |   |   | (1.2 | ) |
| Unrealized gain  (loss) on derivatives          |       | 8.2                    |       | 16.9                 |       | (24.3 | ) | (16.3 | ) |
| Total  comprehensive income                     |       | $                      | 52.7       |                 | $          | 108.9 |   | $ | 46.6 |   | $ | 152.9 |   |

 

5

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| (4)    | Commitments and  contingencies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | At  April 30, 2009, John Deere Credit Inc., the John Deere finance  subsidiary in Canada, had $257 million of commercial paper and $1,382  million of medium-term notes outstanding that were guaranteed by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | At  April 30, 2009, the Company had $38 million of guarantees issued to  turbine manufacturers for John Deere Renewables, LLC wind turbine purchases.  John Deere Renewables, LLC is an affiliated company that has commitments to  purchase wind turbines related to its direct investments in wind energy  projects. At April 30, 2009, the maximum remaining term of these  purchase commitments was approximately one year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The  Company’s subsidiary, John Deere Risk Protection, Inc., offers crop  insurance products through managing general agency agreements (Agreements)  with insurance companies (Insurance Carriers) rated “Excellent” by A.M.  Best Company. As a managing general agent, John Deere Risk  Protection, Inc. will receive commissions from the Insurance Carriers  for selling crop insurance to producers. The Company has guaranteed certain  obligations under the Agreements, including the obligation to pay the  Insurance Carriers for any uncollected premiums. At April 30, 2009, the  maximum exposure for uncollected premiums was approximately $179 million.  Substantially all of the Company’s crop insurance risk under the Agreements  has been mitigated by a syndicate of private reinsurance companies. The  reinsurance companies are rated “Excellent” or higher by A.M. Best  Company. In the event of a widespread catastrophic crop failure throughout  the U.S. and the default of these highly rated private reinsurance companies  on their reinsurance obligations, the Company would be required to reimburse  the Insurance Carriers for exposures under the Agreements of approximately  $828 million at April 30, 2009. The Company believes that the  likelihood of the occurrence of events that would give rise to the exposures  under these Agreements is substantially remote and as a result, at  April 30, 2009, the Company’s accrued liability under the  Agreements was not material. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The  Company has commitments to extend credit to customers and John Deere dealers  through lines of credit and other pre-approved credit arrangements. The  Company applies the same credit policies and approval process for these  commitments to extend credit as it does for its Receivables. Collateral is  not required for these commitments, but if credit is extended, collateral may  be required upon funding. The amount of unused commitments to extend credit  to John Deere dealers was $2.6 billion at April 30, 2009. The  amount of unused commitments to extend credit to customers was  $43.3 billion at April 30, 2009. A significant portion of these  commitments is not expected to be fully drawn upon; therefore, the total  commitment amounts likely do not represent a future cash requirement. The  Company generally has the right to unconditionally cancel, alter or amend the  terms of these commitments at any time. Over 95 percent of these unused  commitments to extend credit to customers relate to revolving charge  accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | At April 30,  2009, the Company had restricted other assets of $3 million. See Note 5 for  additional restricted assets associated with borrowings related to  securitizations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The  Company also had other miscellaneous contingent liabilities totaling  approximately $4 million at April 30, 2009, for which it believes the  probability for payment is substantially remote. The accrued liability for  these contingencies was not material at April 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (5)    | Securitization of receivables:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The  Company, as a part of its overall funding strategy, periodically transfers  certain receivables (retail notes) into variable interest entities (VIEs)  that are special purpose entities (SPEs) as part of its asset-backed  securities programs (securitizations). The structure of these transactions is  such that the transfer of the retail notes did not meet the criteria of sales  in accordance with Financial Accounting Standards Board (FASB) Statement No. 140,  Accounting for Transfers and Servicing of Financial Assets and Extinguishment  of Liabilities, and is, therefore, accounted for as secured borrowings. SPEs  utilized in securitizations of retail notes differ from other entities  included in the Company’s consolidated statements because the assets they  hold are legally isolated. For bankruptcy analysis purposes, the Capital Corporation  has sold the receivables to the SPEs in a true sale and the SPEs are separate  legal entities. Use of the assets held by the SPEs is restricted by terms of  the documents governing the securitization transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

6

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|   | In  securitizations of retail notes related to secured borrowings, the retail  notes are transferred to certain SPEs which in turn issue debt to investors.  The resulting secured borrowings are included in short-term borrowings on the  balance sheet as shown in the table below. The securitized retail notes are  recorded as “Restricted securitized retail notes” on the balance sheet. The  total restricted assets on the balance sheet related to these securitizations  include the restricted securitized retail notes less an allowance for credit  losses, and other assets primarily representing restricted cash as shown in  the following table. The SPEs supporting the secured borrowings to which the  retail notes are transferred are consolidated unless the Company is not the  primary beneficiary in accordance with FASB Interpretation (FIN) No. 46  (revised December 2003), Consolidation of Variable Interest Entities. No  additional support to these SPEs beyond what was previously contractually required  has been provided during the first six months of 2009.                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In  certain securitizations, the Company is the primary beneficiary of the SPEs  and, as such, consolidates the entities. The restricted assets (retail notes,  allowance for credit losses and other assets) of the consolidated SPEs  totaled $1,246 million, $1,303 million and $1,700 million at  April 30, 2009, October 31, 2008 and April 30, 2008,  respectively. The liabilities (other notes payable and accounts payable and  accrued expenses) of these SPEs totaled $1,241 million, $1,287 million and  $1,744 million at April 30, 2009, October 31, 2008 and  April 30, 2008, respectively. The credit holders of these SPEs do not  have legal recourse to the Company’s general credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In  other securitizations, the Company transfers retail notes into  bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that  are not consolidated. The Company is not considered to be the primary  beneficiary of these conduits, because the Company’s variable interests in  the conduits will not absorb a majority of the conduits’ expected losses,  residual returns, or both. This is primarily due to these interests  representing significantly less than a majority of the conduits’ total assets  and liabilities. These conduits provide a funding source to the Company (as  well as other transferors into the conduit) as they fund the retail notes  through the issuance of commercial paper. The Company’s carrying values and  variable interests related to these conduits were restricted assets (retail  notes, allowance for credit losses and other assets) of $1,983 million,  $334 million and $448 million at April 30, 2009,  October 31, 2008 and April 30, 2008, respectively. The liabilities  (other notes payable and accounts payable and accrued expenses) related to  these conduits were $1,884 million, $334 million and $459 million  at April 30, 2009, October 31, 2008 and April 30, 2008,  respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The  Company’s carrying amount of the liabilities to the unconsolidated conduits,  compared to the maximum exposure to loss related to these conduits, which  would only be incurred in the event of a complete loss on the restricted  assets was as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 
| ** **                     | ** ** | **April 30, 2009** | ** ** |
|--------------------------------|------------|-------------------------|------------|
|                           |       |                    |       |
| Carrying value  of liabilities |       | $                       | 1,884.1    |   |
| Maximum exposure  to loss      |       | 1,982.6                 |       |
|                                |            |                         |            |  |

 
|   | The  assets of unconsolidated conduits related to securitizations in which the  Company’s variable interests were considered significant were approximately  $41 billion at April 30, 2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

7

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|   | The  components of consolidated restricted assets related to secured borrowings in  securitization transactions were as follows (in millions of dollars): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

 
| ** **                           | ** ** | **April 30,  2009** | ** ** | **October 31,  2008** | ** ** | **April 30,  2008** | ** ** |
|--------------------------------------|------------|--------------------------|------------|----------------------------|------------|--------------------------|------------|
| Restricted  securitized retail notes |       | $                        | 3,135.7    |                       | $          | 1,592.5                  |       | $ | 2,109.4 |   |
| Allowance for  credit losses         |       | (10.8                    | )          | (10.9                      | )          | (14.5                    | )          |
| Other assets                         |       | 104.1                    |       | 55.0                       |       | 53.0                     |       |
| Total restricted  securitized assets |       | $                        | 3,229.0    |                       | $          | 1,636.6                  |       | $ | 2,147.9 |   |

 
|   | The  components of consolidated secured borrowings and other liabilities related  to securitizations were as follows (in millions of dollars): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

 
| ** **                                                  | ** ** | **April 30,  2009** | ** ** | **October 31,  2008** | ** ** | **April 30,  2008** | ** ** |
|-------------------------------------------------------------|------------|--------------------------|------------|----------------------------|------------|--------------------------|------------|
| Other notes  payable                                        |       | $                        | 3,118.9    |                       | $          | 1,618.3                  |       | $ | 2,199.9 |   |
| Accounts payable  and accrued expenses                      |       | 6.1                      |       | 3.0                        |       | 3.1                      |       |
| Total  liabilities related to restricted securitized assets |       | $                        | 3,125.0    |                       | $          | 1,621.3                  |       | $ | 2,203.0 |   |

 
|   | The  secured borrowings related to these restricted securitized retail notes are  obligations that are payable as the retail notes are liquidated. Repayment of  the secured borrowings depends primarily on cash flows generated by the  restricted assets. Due to the Company’s short-term credit rating, cash  collections from these restricted assets are not required to be placed into a  restricted collection account until immediately prior to the time payment is  required to the secured creditors. At April 30, 2009, the maximum  remaining term of all restricted receivables was approximately six years. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (6)    | Assets  and liabilities measured at fair value on a recurring basis were as follows  (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 
| ** **                              | ** ** | **April 30, 2009** | ** ** |
|-----------------------------------------|------------|------------------------------|------------|
| ** **                              | ** ** | **Total**                    | ** ** | **Level 2** | ** ** |
| Other assets                            |       |                         |       |   |   |
| Derivatives:                            |       |                         |       |   |   |
| Interest rate  contracts                |       | $                            | 525.5      |   | $ | 525.5 |   |
| Foreign exchange  contracts             |       | 9.4                          |       | 9.4 |   |
| Cross-currency  interest rate contracts |       | 40.1                         |       | 40.1 |   |
| Total assets                            |       | $                            | 575.0      |   | $ | 575.0 |   |
|                                    |       |                         |       |   |   |
| Accounts payable  and accrued expenses  |       |                         |       |   |   |
| Derivatives:                            |       |                         |       |   |   |
| Interest rate  contracts                |       | $                            | 162.4      |   | $ | 162.4 |   |
| Foreign exchange  contracts             |       | 8.4                          |       | 8.4 |   |
| Cross-currency  interest rate contracts |       | .5                           |       | .5 |   |
| Total  liabilities                      |       | $                            | 171.3      |   | $ | 171.3 |   |

 
|   | Financial assets  measured at fair value on a nonrecurring basis and the losses during the  period were as follows (in millions of dollars): |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

 
| ** **  | ** ** | **April 30, 2009** | ** ** | **Three Months Ended  April 30, 2009** | ** ** | **Six Months Ended  April 30, 2009** | ** ** |
|-------------|------------|-------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|
| ** **  | ** ** | **Level 3**        | ** ** | **Losses**                                  | ** ** | **Losses**                                | ** ** |
| Receivables |       | $                       | 20.6       |                                        | $          | 3.7                                       |       | $ | 8.7 |   |
|             |            |                         |            |                                             |            |                                           |            |  |  |  |

 

8

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|   | 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. There were no assets or liabilities valued using level 1  measurements at April 30, 2009.                                                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | FASB Statement No. 157, Fair Value  Measurements, defines fair value as the price that would be received to sell  an asset or paid to transfer a liability in an orderly transaction between  market participants at the measurement date. In determining fair value, the  Company uses various methods including market and income approaches. The  Company utilizes valuation models and techniques that maximize the use of  observable inputs. The models are industry-standard models that consider  various assumptions including time values and yield curves as well as other  economic measures. These valuation techniques are consistently applied.                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The following is a description of the valuation  methodologies the Company uses to measure financial instruments at fair  value:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | *Derivative Instruments —*The  Company’s derivative financial instruments consist of interest rate swaps and  caps, foreign currency forwards and cross-currency interest rate swaps. The  portfolio is valued based on a discounted cash flow approach using market  observable inputs, including swap curves and both forward and spot exchange  rates for currencies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | *Receivables —*Receivables with  specific reserves established due to payment defaults are valued based on a  discounted cash flow approach or realizable values for the underlying  collateral. The related credit allowances represent cumulative adjustments to  measure those specific receivables at fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (7)    | It is the Company’s policy that derivative  transactions are executed only to manage exposures arising in the normal  course of business and not for the purpose of creating speculative positions  or trading. The Company manages the relationship of the types and amounts of  its funding sources to its receivable and lease portfolio in an effort to  diminish risk due to interest rate and foreign currency fluctuations, while  responding to favorable financing opportunities. The Company also has foreign  currency exposures at some of its foreign and domestic operations related to  financing in currencies other than the local currencies.                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | All derivatives are recorded at fair value on the  balance sheet. Each derivative is designated as a cash flow hedge, a fair  value hedge, or remains undesignated. All designated hedges are formally  documented as to the relationship with the hedged item as well as the  risk-management strategy. Both at inception and on an ongoing basis the  hedging instrument is assessed as to its effectiveness, when applicable. If  and when a derivative is determined not to be highly effective as a hedge, or  the underlying hedged transaction is no longer likely to occur, or the  derivative is terminated, hedge accounting is discontinued. Any past or  future changes in the derivative’s fair value that will not be effective as  an offset to the income effects of the item being hedged are recognized  currently in the income statement. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Certain of the Company’s derivative agreements  contain credit support provisions that require the Company to post collateral  based on reductions in credit ratings. The aggregate fair value of all  derivatives with credit-risk-related contingent features that are in a  liability position at April 30, 2009 was $24 million. The Company, due  to its credit rating, has not posted any collateral. If the  credit-risk-related contingent features were triggered, the Company would be  required to post full collateral for this liability position.                                                                                                                                                                                                                                                                                          |

 

9

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|   | Derivative  instruments are subject to significant concentrations of credit risk to the  banking sector. The Company manages individual counterparty exposure by  setting limits that consider the credit rating of the counterparty and the  size of other financial commitments and exposures between the Company and the  counterparty banks. All interest rate derivatives are transacted under  International Swaps and Derivatives Association (ISDA) documentation. Some of  these agreements include collateral support arrangements or mutual put  options at fair value. Each master agreement permits the net settlement of  amounts owed in the event of early termination. The maximum amount of loss  that the Company would incur if counterparties to derivative instruments fail  to meet their obligations, not considering collateral received or netting  arrangements, was $575 million as of April 30, 2009. The amount of  collateral received at April 30, 2009 to offset this potential maximum  loss was $7 million. The netting provisions of the agreements would reduce  the maximum amount of loss the Company would incur if the counterparties to  derivative instruments fail to meet their obligations by an additional $135  million as of April 30, 2009. None of the concentrations of risk with  any individual counterparty was considered significant at April 30,  2009. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Cash flow hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Certain  interest rate contracts (swaps) were designated as hedges of future cash  flows from variable interest rate borrowings. The total notional amount of  these receive-variable/pay-fixed interest rate contracts at April 30,  2009 was $3,511 million. The effective portions of the fair value gains or  losses on these cash flow hedges were recorded in other comprehensive income  (OCI) and subsequently reclassified into interest expense as payments were  accrued and the contracts approached maturity. These amounts offset the  effects of interest rate changes on the related borrowings. Any ineffective  portions of the gains or losses on all cash flow interest rate contracts designated  as hedges were recognized currently in interest expense. The cash flows from  these contracts were recorded in operating activities in the consolidated  statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The  amount of loss recorded in OCI at April 30, 2009 that is expected to be  reclassified to interest expense in the next twelve months if interest rates  remain unchanged is approximately $18 million after-tax. These contracts  mature in up to 25 months. There were no significant gains or losses  reclassified from OCI to earnings based on the probability that the original  forecasted transaction would not occur.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Fair value  hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Certain  interest rate contracts (swaps) were designated as fair value hedges of  fixed-rate, long-term borrowings. The total notional amount of these  receive-fixed/pay-variable interest rate contracts at April 30, 2009 was  $5,204 million. The effective portions of the fair value gains or losses on  these contracts were offset by fair value gains or losses on the hedged items  (fixed-rate borrowings). Any ineffective portions of the gains or losses on  these interest rate contracts designated as hedges were recognized currently  in interest expense. The ineffective portions totaled a $2 million loss in  the second quarter of 2009 and a $1 million gain in the first six months  of 2009. The cash flows from these contracts were recorded in operating  activities in the consolidated statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The gains (losses)  including interest on these contracts and the underlying borrowings recorded in  interest expense were as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

 
| ** **               | ** ** | **Three Months**        | ** ** | **Six  Months**          | ** ** |
|--------------------------|------------|-------------------------|------------|--------------------------|------------|
| ** **               | ** ** | **Ended**               | ** ** | **Ended**                | ** ** |
| ** **               | ** ** | **April 30, 2009** | ** ** | **April 30,  2009** | ** ** |
| Interest rate  contracts |       | $                       | 10.1       |                     | $          | 281.2 |   |
| Borrowings               |       | (43.7                   | )          | (357.0                   | )          |
|                          |            |                         |            |                          |            |  |  |

 
|   | Derivatives not  designated as hedging instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The  Company has certain interest rate contracts (swaps and caps), foreign  exchange contracts (forwards and swaps) and cross-currency interest rate  contracts (swaps), which were not formally designated as hedges under FASB  Statement No. 133, Accounting for Derivative Instruments and Hedging  Activities. These derivatives were held as economic hedges for underlying  interest rate or foreign currency exposures primarily for certain borrowings.  The total notional amount of the interest rate swaps was $913 million, the  foreign exchange contracts was $1,164 million and the cross-currency interest  rate contracts was $855 million at April 30, 2009. There were also  $2,264 million of interest rate caps |

 

10

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|   | purchased and $2,264  million sold at the same capped interest rate to facilitate borrowings  through securitization of retail notes at April 30, 2009. The fair value  gains or losses from the interest rate contracts were recognized currently in  interest expense and the gains or losses from foreign exchange contracts in  administrative and operating expenses, generally offsetting over time the  expenses on the exposures being hedged. The cash flows from these  non-designated contracts were recorded in operating activities in the  consolidated statement of cash flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Fair  values of derivative instruments in the consolidated balance sheet were as  follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 
| ** **                              | ** ** | **April 30,  2009** | ** ** |
|-----------------------------------------|------------|--------------------------|------------|
| ** **                              | ** ** | **Other  Assets**        | ** ** | **Accounts  Payable  and Accrued  Expenses** | ** ** |
| Designated as  hedging instruments:     |       |                     |       |   |   |
| Interest rate  contracts                |       | $                        | 466.9      |   | $ | 111.8 |   |
|                                    |       |                     |       |   |   |
| Not designated  as hedging instruments: |       |                     |       |   |   |
| Interest rate  contracts                |       | 58.6                     |       | 50.6 |   |
| Foreign exchange  contracts             |       | 9.4                      |       | 8.4 |   |
| Cross-currency  interest rate contracts |       | 40.1                     |       | .5 |   |
| Total not  designated                   |       | 108.1                    |       | 59.5 |   |
|                                    |       |                     |       |   |   |
| Total  derivatives                      |       | $                        | 575.0      |   | $ | 171.3 |   |

 
|   | The  effects of derivative instruments on the statement of consolidated income  consisted of the following (in millions of dollars): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

 
| ** **                                             | ** ** | **Classification of  Gains (Losses)** | ** ** | **Three Months  Ended  April 30, 2009** | ** ** | **Six Months  Ended  April 30, 2009** | ** ** |
|--------------------------------------------------------|------------|---------------------------------------|------------|----------------------------------------------|------------|--------------------------------------------|------------|
| Fair Value  Hedges:                                    |       |                                  |       |                                         |       |                                       |       |
| Interest rate  contracts                               |       | Interest expense                      |       | $                                            | 10.1       |                                       | $          | 281.2 |   |
|                                                   |       |                                  |       |                                         |       |                                       |       |
| Cash Flow  Hedges:                                     |       |                                  |       |                                         |       |                                       |       |
| Total Recognized  in OCI  (Effective Portion):         |       |                                  |       |                                         |       |                                       |       |
| Interest rate  contracts                               |       | OCI (pretax)                          |       | $                                            | (19.5      | )                                          | $          | (69.2 | ) |
| Reclassified  from OCI  (Effective Portion):           |       |                                  |       |                                         |       |                                       |       |
| Interest rate  contracts                               |       | Interest expense                      |       | $                                            | (24.5      | )                                          | $          | (32.4 | ) |
| Recognized  Directly in Income  (Ineffective Portion): |       |                                  |       |                                         |       |                                       |       |
| Interest rate  contracts                               |       | Interest expense                      |       | $                                            | .1         |                                       | $          | .1 |   |
|                                                   |       |                                  |       |                                         |       |                                       |       |
| Not Designated  as Hedges:                             |       |                                  |       |                                         |       |                                       |       |
| Interest rate  contracts *                             |       | Interest expense                      |       | $                                            | 8.6        |                                       | $          | .2 |   |
| Foreign exchange  contracts *                          |       | Administrative and operating expenses |       | (2.3                                         | )          | 52.3                                       |       |
| Total                                                  |       |                                  |       | $                                            | 6.3        |                                       | $          | 52.5 |   |

 
|   | *      Includes  interest and foreign exchange expenses from cross-currency interest rate  contracts. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

 

11

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(8)                     Newaccounting standards adopted in the first quarter of  2009 were as follows:

 

In the first quarter of 2009, the Company adopted FASBStatement No. 157, Fair Value Measurements, for financial assets andliabilities recognized or disclosed at fair value (see Note 6). This Statementdefines fair value and expands disclosures about fair value measurements. Thesedefinitions apply to other accounting standards that use fair valuemeasurements and may change the application of certain measurements used incurrent practice. For nonfinancial assets and liabilities, the effective dateis the beginning of fiscal year 2010, except items that are recognized ordisclosed at fair value on a recurring basis. The adoption did not have amaterial effect on the Company’s consolidated financial statements.

 

In the first quarter of 2009, the Company adopted FASBStatement No. 159, The Fair Value Option for Financial Assets andFinancial Liabilities. This Statement permits entities to measure mostfinancial instruments at fair value if desired. It may be applied on a contractby contract basis and is irrevocable once applied to those contracts. Thestandard may be applied at the time of adoption for existing eligible items, orat initial recognition of eligible items. After election of this option,changes in fair value are reported in earnings. The items measured at fairvalue must be shown separately on the balance sheet.  The cumulative effect of adoption would bereported as an adjustment to beginning retained earnings. The Company did notchange the valuation of any financial instruments based on this Statement and,therefore, the adoption had no effect on the Company’s consolidated financialstatements.

 

In the first quarter of 2009, the Company adopted FASBStatement No. 161, Disclosures about Derivative Instruments and HedgingActivities. This Statement increases the disclosure requirements for derivativeinstruments (see Note 7). Most disclosures are required on an interim andannual basis. The adoption did not have a material effect on the Company’sconsolidated financial statements.

 

In the first quarter of 2009, the Company adopted FASBStatement No. 162, The Hierarchy of Generally Accepted AccountingPrinciples. This Statement identifies the sources for generally acceptedaccounting principles (GAAP) in the U.S. and lists the categories in descendingorder. An entity should follow the highest category of GAAP applicable for eachof its accounting transactions. The adoption did not have a material effect onthe Company’s consolidated financial statements.

 

In the first quarter of 2009, the Company adopted FASBStaff Position Financial Accounting Statement 140-4 and FIN 46(R)-8,Disclosures by Public Entities (Enterprises) about Transfers of FinancialAssets and Interests in Variable Interest Entities (see Note 5).  The new standard requires additionaldisclosure for transfers of financial assets in securitization transactions andan entity’s involvement with variable interest entities. The adoption did nothave a material effect on the Company’s consolidated financial statements.

 

Newaccounting standards to be adopted are as follows:

 

In December 2007, the FASB issued Statement No. 141(revised 2007), Business Combinations, and Statement No. 160,Noncontrolling Interests in Consolidated Financial Statements. Statement No. 141(revised 2007) requires an acquirer to measure the identifiable assetsacquired, the liabilities assumed and any noncontrolling interest in theacquiree at their fair values on the acquisition date, with goodwill being theexcess value over the net identifiable assets acquired. Statement No. 160requires that a noncontrolling interest in a subsidiary be reported as equityin the consolidated financial statements. Consolidated net income shouldinclude the net income for both the parent and the noncontrolling interest withdisclosure of both amounts on the consolidated statement of income. Theeffective date for both Statements is the beginning of fiscal year 2010. TheCompany has currently not determined the potential effects on the consolidatedfinancial statements.

 

12

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(9)                                                                       TheCompany is a participating employer in certain Deere & Companysponsored defined benefit pension plans for employees in the U.S. and certaindefined benefit pension plans outside the U.S. These pension plans provide forbenefits that are based primarily on years of service and employeecompensation. Pension expense is actuarially determined based on the Company’semployees included in the plan. The Company’s pension expense amounted to$1.9 million in the first six months of 2009. The accumulated benefitobligation and plan net assets for the employees of the Company are notdetermined separately from Deere & Company. The Company generallyprovides defined benefit health care and life insurance plans for retiredemployees in the U.S. as a participating employer in Deere & Company’ssponsored plans. Health care and life insurance benefits expense is actuariallydetermined based on the Company’s employees included in the plans and amountedto $1.5 million during the first six months of 2009. Further disclosure forthese plans is included in Deere & Company’s Form 10-Q for thequarter ended April 30, 2009.

 

Item 2.                Management’sDiscussion and Analysis of Financial Condition and Results of Operations.

 

Results of Operations

 

Overview

 

 

Organization

 

The Companyprimarily generates revenues and cash by financing John Deere dealers’ salesand leases of new and used agricultural, commercial and consumer andconstruction and forestry equipment. In addition, the Company provideswholesale financing to dealers of the foregoing equipment, provides operatingloans, finances retail revolving charge accounts, offers certain crop riskmitigation products and makes loans to certain affiliated companies thatdirectly invest in wind energy projects. 

 

Trends andEconomic Conditions

 

The Company’sbusiness is closely related to John Deere’s business. Industry farm machinery sales for 2009 areforecast to be flat to down slightly for the year in the U.S. and Canada withsupport from an increase in four-wheel-drive tractors, combines, sprayers andseeding equipment. In other parts of the world, industry farm machinery salesare forecast to be down for the year. North American industry sales of turfequipment and compact utility tractors are expected to be down about 20 percentfor the year. John Deere’s agricultural equipment sales were down 4 percent forthe second quarter and up 4 percent for the first six months of 2009. JohnDeere’s commercial and consumer equipment sales declined 24 percent for thesecond quarter and first six months of 2009. John Deere’s agriculture and turfsales, which combines agricultural equipment and commercial and consumerequipment sales, are forecast to decrease about 14 percent for the fullyear. This forecast includes a negative effect of about 6 percent for currencytranslation. John Deere’s construction and forestry sales declined 55percent in the second quarter and 44 percent in the first six months of 2009.These sales are expected to decrease approximately 42 percent for the year,largely as a consequence of a declining global economy and historically lowlevels of construction activity in the U.S. The Company’s net income in2009 is forecast to decrease to approximately $160 million, compared to $282million in 2008. The forecast decrease from 2008 is primarily due to narrowerfinancing spreads related to the current funding environment, a higherprovision for credit losses and lower commissions from crop insurance.

 

Items of concernfor the Company include the sharp downturn in global economic activity, theturmoil in financial markets and the effectiveness of governmental policies topromote economic recovery and the availability of credit for the Company’scustomers. Significant fluctuations in foreign currency exchange rates couldalso impact the Company’s results.  

 

The deepeningglobal recession and volatile foreign exchange rates have put downward pressureon the Company’s financial results. However, the Company has continued tobenefit from a strong liquidity position and access to global capital marketson a competitive basis.

 

13

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2009 Compared with 2008

 

Net income was$33.9 million for the second quarter and $69.0 million for the first six monthsof 2009, compared with $77.3 million and $154.5 million, respectively, lastyear. Results were lower for both periods primarily due to narrower financingspreads, a higher provision for credit losses and lower commissions from cropinsurance.

 

Revenues totaled$425.9 million for the second quarter and $863.5 million for the first sixmonths of 2009, compared to $487.2 million and $983.7 million, respectively,last year. The decreases were primarily due to lower financing rates and lowercommissions from crop insurance. Finance income earned on retail notes totaled$379.7 million for the first six months of 2009, down $58.1 millioncompared to $437.8 million for the same period in 2008. This decrease wasprimarily due to lower financing rates and a 5 percent decrease in theaverage retail note portfolio balances. Lease revenues totaled$158.6 million in the first six months of 2009, compared to$164.4 million in the first six months of 2008. This decrease wasprimarily due to lower financing rates. Revenues earned on revolving chargeaccounts amounted to $109.3 million in the first six months of 2009,compared to $103.1 million during the same period last year. The increasewas primarily due to an increase in the average balance of revolving chargeaccounts, partially offset by lower financing rates in the first six months of2009, compared with the same period last year. Finance income earned onwholesale receivables totaled $148.8 million for the first six months of 2009,compared to $158.3 million for the same period in 2008. The decrease wasprimarily due to lower financing rates, partially offset by an 11 percentincrease in the average balance of wholesale receivables. Operating loan incomeamounted to $7.6 million in the first six months of 2009, compared to$13.7 million in the first six months of 2008. The decrease was primarilydue to lower financing rates and a 13 percent decrease in the average balanceof operating loans. Revenues earned from John Deere totaled $137.2 millionfor the second quarter and $270.4 million in the first six months of 2009,compared to $143.0 million and $275.7 million for the same periods lastyear.

 

Crop insurancecommissions totaled $5.5 million for the second quarter and $12.1 million forthe first six months of 2009, compared to $27.0 million and $56.0 million forthe same periods in 2008. The decreases were primarily due to less favorableunderwriting experience that resulted in lower contingent commissions in thesecond quarter and first six months of 2009, compared to the same periods in 2008.

 

Interest expensetotaled $203.9 million for the second quarter and $411.2 million for the firstsix months of 2009, compared to $205.0 million and $428.6 million for the sameperiods in 2008. The decreases were due to lower average interest rates, partiallyoffset by an increase in average borrowings. 

 

Administrative andoperating expenses were $66.8 million in the second quarter and $152.9 millionfor the first six months of 2009, compared with $83.3 million and $163.0million for the same periods in 2008. The decreases were primarily due to loweremployment costs.

 

During the secondquarter and first six months of 2009, the provision for credit losses totaled$41.8 million and $74.2 million, respectively, compared with $15.6 million and$30.7 million for the same periods in 2008. For the first six months of 2009,the Company has experienced higher write-offs of construction and forestryequipment retail notes and revolving charge accounts. Total net write-offs ofReceivables financed were $33.3 million and $59.9 million for the secondquarter and first six months of 2009, compared with $15.3 million and $28.5million for the same periods in 2008. The annualized provision for creditlosses, as a percentage of the average balance of total Receivables financed,was .94 percent for the second quarter and .83 percent first six months of2009, compared with .35 percent and .36 percent for the same periods in2008. See the Company’s most recently filed annual report on Form 10-K forfurther information regarding the Company’s allowance for credit lossespolicies. 

 

The Company’sratio of earnings to fixed charges was 1.26 to 1 for the second quarter of2009, compared with 1.59 to 1 for the second quarter of 2008. The ratio ofearnings to fixed charges was 1.25 to 1 for the first six months of 2009,compared with 1.55 to 1 for the first six months of 2008. “Earnings”consist of income before income taxes, the cumulative effect of changes inaccounting and fixed charges excluding capitalized interest. “Fixed charges”consist of interest on indebtedness, amortization of debt discount and expense,interest related to uncertain tax positions, an estimated amount of rentalexpense under capitalized leases that is deemed to be representative of theinterest factor and rental expense under operating leases, and capitalizedinterest.

 

14

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 Receivable andLease acquisition volumes were as follows (in millions of dollars):

 
| ** **                           | ** ** | **Three Months**              | ** ** | ** ** | ** ** | ** **        | ** ** |
|--------------------------------------|------------|-------------------------------|------------|------------|------------|-------------------|------------|
| ** **                           | ** ** | **Ended April 30,** | ** ** | ** ** | ** ** | ** **        | ** ** |
| ** **                           | ** ** | **2009**                      | ** ** | **2008**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Retail notes:                        |       |                          |       |       |       |              |       |   |   |
| Agricultural  equipment              |       | $                             | 1,184.2    |       | $          | 1,271.2           |       | $ | (87.0 | ) | (7 | )% |
| Construction and  forestry equipment |       | 98.6                          |       | 205.2      |       | (106.6            | )          | (52 | ) |
| Commercial and  consumer equipment   |       | 81.0                          |       | 105.3      |       | (24.3             | )          | (23 | ) |
| Total retail notes                   |       | 1,363.8                       |       | 1,581.7    |       | (217.9            | )          | (14 | ) |
| Revolving charge  accounts           |       | 1,137.1                       |       | 1,056.3    |       | 80.8              |       | 8 |   |
| Operating loans                      |       | 249.3                         |       | 744.7      |       | (495.4            | )          | (67 | ) |
| Wholesale  receivables               |       | 5,756.2                       |       | 5,975.8    |       | (219.6            | )          | (4 | ) |
| Financing leases                     |       | 37.7                          |       | 62.8       |       | (25.1             | )          | (40 | ) |
| Equipment on operating  leases       |       | 116.8                         |       | 129.8      |       | (13.0             | )          | (10 | ) |
| Total  Receivables and Leases        |       | $                             | 8,660.9    |       | $          | 9,551.1           |       | $ | (890.2 | ) | (9 | )% |

 
| ** **                           | ** ** | **Six Months**                | ** ** | ** ** | ** ** | ** **        | ** ** |
|--------------------------------------|------------|-------------------------------|------------|------------|------------|-------------------|------------|
| ** **                           | ** ** | **Ended April 30,** | ** ** | ** ** | ** ** | ** **        | ** ** |
| ** **                           | ** ** | **2009**                      | ** ** | **2008**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Retail notes:                        |       |                          |       |       |       |              |       |   |   |
| Agricultural  equipment              |       | $                             | 2,008.4    |       | $          | 2,323.0           |       | $ | (314.6 | ) | (14 | )% |
| Construction and  forestry equipment |       | 229.8                         |       | 432.5      |       | (202.7            | )          | (47 | ) |
| Commercial and  consumer equipment   |       | 129.8                         |       | 165.9      |       | (36.1             | )          | (22 | ) |
| Total retail  notes                  |       | 2,368.0                       |       | 2,921.4    |       | (553.4            | )          | (19 | ) |
| Revolving charge  accounts           |       | 2,133.2                       |       | 1,887.6    |       | 245.6             |       | 13 |   |
| Operating loans                      |       | 799.8                         |       | 1,228.9    |       | (429.1            | )          | (35 | ) |
| Wholesale  receivables               |       | 10,151.8                      |       | 9,360.6    |       | 791.2             |       | 8 |   |
| Financing leases                     |       | 75.4                          |       | 113.6      |       | (38.2             | )          | (34 | ) |
| Equipment on  operating leases       |       | 200.4                         |       | 220.8      |       | (20.4             | )          | (9 | ) |
| Total  Receivables and Leases        |       | $                             | 15,728.6   |       | $          | 15,732.9          |       | $ | (4.3 | ) | 0 | % |

 

Retail notevolumes for agricultural equipment decreased in the second quarter and firstsix months of 2009, when compared to last year, primarily due to a decrease infinanced market share. Retail note volumes for construction and forestryequipment and commercial and consumer equipment decreased in the second quarterand first six months of 2009, when compared to last year, primarily due todecreases in retail sales of John Deere construction and forestry equipment andJohn Deere commercial and consumer equipment. Revolving charge account volumesincreased in the second quarter and first six months of 2009, when compared tolast year, primarily as a result of increased market coverage. Operating loanvolumes decreased during the second quarter and first six months of 2009, whencompared to last year, primarily due to decreased borrowings by farm inputproviders. Wholesale receivable volumes decreased during the second quarter dueto lower volumes for construction and forestry equipment and commercial andconsumer equipment but increased during the first six months of 2009, whencompared to last year, due to increased shipments of John Deere agriculturalequipment as a result of increased retail sales activity.

 

15

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Total Receivables andLeases held were as follows (in millions of dollars):

 
| ** **                           | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|--------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                           | ** ** | **2009**           | ** ** | **2008**             | ** ** | **2008**           | ** ** |
| Retail notes:                        |       |               |       |                 |       |               |       |
| Agricultural  equipment              |       | $                  | 8,214.1    |                 | $          | 8,836.6            |       | $ | 8,379.3 |   |
| Construction and  forestry equipment |       | 1,643.4            |       | 1,986.5              |       | 2,174.3            |       |
| Commercial and  consumer equipment   |       | 773.1              |       | 896.8                |       | 907.4              |       |
| Recreational  products               |       | 7.6                |       | 9.2                  |       | 10.5               |       |
| Total retail  notes                  |       | 10,638.2           |       | 11,729.1             |       | 11,471.5           |       |
| Revolving charge  accounts           |       | 1,824.7            |       | 1,825.1              |       | 1,495.6            |       |
| Operating loans                      |       | 410.2              |       | 357.9                |       | 533.0              |       |
| Wholesale  receivables               |       | 5,184.5            |       | 3,570.6              |       | 4,503.2            |       |
| Financing leases                     |       | 372.5              |       | 417.9                |       | 430.7              |       |
| Equipment on  operating leases       |       | 981.3              |       | 1,053.4              |       | 964.1              |       |
| Total  Receivables and Leases        |       | $                  | 19,411.4   |                 | $          | 18,954.0           |       | $ | 19,398.1 |   |

 

Receivables andLeases administered by the Company were as follows (in millions of dollars):

 
| ** **                                                    | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|---------------------------------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                                    | ** ** | **2009**           | ** ** | **2008**             | ** ** | **2008**           | ** ** |
| Receivables and  Leases administered:                         |       |               |       |                 |       |               |       |
| Owned by the  Company                                         |       | $                  | 16,275.7   |                 | $          | 17,361.5           |       | $ | 17,288.7 |   |
| Owned by the  Company — restricted due to securitization |       | 3,135.7            |       | 1,592.5              |       | 2,109.4            |       |
| Total  Receivables and Leases owned by the Company            |       | 19,411.4           |       | 18,954.0             |       | 19,398.1           |       |
| Administered —  with limited recourse*                   |       | 119.9              |       | 118.7                |       | 112.9              |       |
| Administered —  without recourse**                       |       | 42.7               |       | 44.0                 |       | 43.0               |       |
| Total  Receivables and Leases administered                    |       | $                  | 19,574.0   |                 | $          | 19,116.7           |       | $ | 19,554.0 |   |

 

*                      TheCompany’s maximum exposure under all Receivable and Lease recourse provisionsat April 30, 2009, October 31, 2008 and April 30, 2008 was$9 million, $8 million and $9 million, respectively. The Company does notrecord the recourse obligations as liabilities as they are contingentliabilities that are remote at this time. However, the probable loss onreceivables that have been sold was accrued at the time of sale, and anysubsequent necessary adjustments are made as part of ongoing reviews. 

 

**               RepresentsReceivables and Leases that the Company has sold but continues to administerfor a fee.

 

16

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Total Receivableamounts 60 days or more past due in the table below represent the amount of allcustomer payments past due 60 days or more, by product, and as a percent of therespective receivables. They were as follows (in millions of dollars):

 
| ** **                           | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|--------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                           | ** ** | **2009**           | ** ** | **2008**             | ** ** | **2008**           | ** ** |
| ** **                           | ** ** | **Dollars**        | ** ** | **Percent**          | ** ** | **Dollars**        | ** ** | **Percent** | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |               |       |                 |       |               |       |   |   |   |   |   |   |
| Agricultural  equipment              |       | $                  | 17.1       |                 | .21        | %                  | $          | 11.9 |   | .13 | % | $ | 14.2 |   | .17 | % |
| Construction and  forestry equipment |       | 10.2               |       | .62                  |       | 8.3                |       | .42 |   | 9.1 |   | .42 |   |
| Commercial and  consumer equipment   |       | 2.1                |       | .27                  |       | 1.8                |       | .20 |   | 1.8 |   | .20 |   |
| Recreational  products               |       |               |       |                 |       |               |       |   |   |   |   |   |   |
| Total retail  notes                  |       | 29.4               |       | .28                  |       | 22.0               |       | .19 |   | 25.1 |   | .22 |   |
| Revolving charge  accounts*          |       | 29.3               |       | 1.61                 |       | 14.6               |       | .80 |   | 19.1 |   | 1.28 |   |
| Operating loans                      |       |               |       |                 |       | .5                 |       | .14 |   |   |   |   |   |
| Wholesale  receivables               |       | 5.1                |       | .10                  |       | 2.3                |       | .06 |   | 1.4 |   | .03 |   |
| Financing leases                     |       | 6.4                |       | 1.72                 |       | 5.4                |       | 1.29 |   | 5.5 |   | 1.28 |   |
| Total  Receivables                   |       | $                  | 70.2       |                 | .38        | %                  | $          | 44.8 |   | .25 | % | $ | 51.1 |   | .28 | % |

 
| * |   | Due to the nature of  revolving charge accounts, the customer payments past due 60 days or more  also represent the total balance. |
|---|--------|------------------------------------------------------------------------------------------------------------------------------------|

 

The balance ofretail notes held (principal plus accrued interest) with any installment 60days or more past due represents the total retail note balance for a customerwho has any portion of their note 60 days or more past due. These amounts were$214 million, $163 million and $198 million at April 30, 2009, October 31,2008 and April 30, 2008, respectively. The balances of retail notes heldon which any installment was 60 days or more past due as a percentage of theending retail notes receivable was 2.01 percent, 1.39 percent and 1.72 percentat April 30, 2009, October 31, 2008 and April 30, 2008,respectively.

 

Totalnon-performing Receivables, which represent loans the Company has ceasedaccruing interest for, by product, and as a percent of the respectivereceivables were as follows (in millions of dollars):

 
| ** **                           | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|--------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                           | ** ** | **2009**           | ** ** | **2008**             | ** ** | **2008**           | ** ** |
| ** **                           | ** ** | **Dollars**        | ** ** | **Percent**          | ** ** | **Dollars**        | ** ** | **Percent** | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |               |       |                 |       |               |       |   |   |   |   |   |   |
| Agricultural  equipment              |       | $                  | 19.4       |                 | .24        | %                  | $          | 17.7 |   | .20 | % | $ | 15.6 |   | .19 | % |
| Construction and  forestry equipment |       | 20.2               |       | 1.23                 |       | 15.4               |       | .78 |   | 12.9 |   | .59 |   |
| Commercial and  consumer equipment   |       | 5.8                |       | .75                  |       | 4.8                |       | .54 |   | 3.7 |   | .41 |   |
| Recreational  products               |       | .2                 |       | 2.63                 |       | .2                 |       | 2.17 |   | .1 |   | .95 |   |
| Total retail  notes                  |       | 45.6               |       | .43                  |       | 38.1               |       | .32 |   | 32.3 |   | .28 |   |
| Revolving charge  accounts           |       | 1.1                |       | .06                  |       | .7                 |       | .04 |   | .6 |   | .04 |   |
| Operating loans                      |       | 34.0               |       | 8.29                 |       | 27.6               |       | 7.71 |   | 2.5 |   | .47 |   |
| Wholesale  receivables               |       | 8.6                |       | .17                  |       |               |       |   |   | 1.4 |   | .03 |   |
| Financing leases                     |       | 14.1               |       | 3.78                 |       | 13.2               |       | 3.16 |   | 11.3 |   | 2.62 |   |
| Total  Receivables                   |       | $                  | 103.4      |                 | .56        | %                  | $          | 79.6 |   | .44 | % | $ | 48.1 |   | .26 | % |

 

The increases inthe balance of non-performing construction and forestry equipment retail notesat April 30, 2009 and October 31, 2008 were primarily due to the continuedweak U.S. construction market. The increases in non-performing operating loansat April 30, 2009 and October 31, 2008 were due to payment defaultson operating loans to a commercial and consumer equipment customer. Theincrease in non-performing wholesale receivables at April 30, 2009 wasprimarily due to payment defaults on wholesale receivables to a commercial andconsumer equipment dealer. Loan loss provisions were recorded for the estimateduncollectible amounts.

 

At April 30, 2009, the Company had a $55 million secured operatingloan outstanding to an agribusiness customer in the poultry industry that filed for bankruptcy protection in December 2008.The customer continues to operate and is remitting interest payments while aplan for debt restructuring is being finalized by the bankruptcy court. 

 

17

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Total Receivablewrite-off amounts, net of recoveries, by product, and as an annualizedpercentage of average balances held during the period, were as follows (inmillions of dollars):

 
| ** **                           | ** ** | **Three Months Ended** | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                           | ** ** | **April 30,**     | ** ** | **April 30,**     | ** ** |
| ** **                           | ** ** | **2009**               | ** ** | **2008**               | ** ** |
| ** **                           | ** ** | **Dollars**            | ** ** | **Percent**            | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |                   |       |                   |       |   |   |   |   |
| Agricultural  equipment              |       | $                      | .4         |                   | .02        | % | $ | .5 |   | .02 | % |
| Construction and  forestry equipment |       | 15.6                   |       | 3.63                   |       | 6.8 |   | 1.22 |   |
| Commercial and  consumer equipment   |       | .7                     |       | .36                    |       | .4 |   | .18 |   |
| Recreational products                |       | .2                     |       | 9.90                   |       |   |   |   |   |
| Total retail  notes                  |       | 16.9                   |       | .63                    |       | 7.7 |   | .27 |   |
| Revolving charge  accounts           |       | 14.7                   |       | 3.56                   |       | 7.7 |   | 2.30 |   |
| Operating loans                      |       |                   |       |                   |       | (.3 | ) | (.26 | ) |
| Wholesale  receivables               |       | .4                     |       | .03                    |       | .2 |   | .02 |   |
| Financing leases                     |       | 1.3                    |       | 1.41                   |       |   |   |   |   |
| Total  Receivables                   |       | $                      | 33.3       |                   | .75        | % | $ | 15.3 |   | .35 | % |

 
| ** **                           | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------|------------|----------------------|------------|----------------------|------------|
| ** **                           | ** ** | **April 30,**   | ** ** | **April 30,**   | ** ** |
| ** **                           | ** ** | **2009**             | ** ** | **2008**             | ** ** |
| ** **                           | ** ** | **Dollars**          | ** ** | **Percent**          | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |                 |       |                 |       |   |   |   |   |
| Agricultural  equipment              |       | $                    | 1.0        |                 | .02        | % | $ | .7 |   | .02 | % |
| Construction and  forestry equipment |       | 30.3                 |       | 3.32                 |       | 13.1 |   | 1.17 |   |
| Commercial and  consumer equipment   |       | 1.0                  |       | .24                  |       | .9 |   | .20 |   |
| Recreational  products               |       | .6                   |       | 14.00                |       | .3 |   | 5.43 |   |
| Total retail  notes                  |       | 32.9                 |       | .59                  |       | 15.0 |   | .26 |   |
| Revolving charge  accounts           |       | 24.6                 |       | 2.96                 |       | 12.6 |   | 1.88 |   |
| Operating loans                      |       | (.4                  | )          | (.21                 | )          | (.3 | ) | (.14 | ) |
| Wholesale  receivables               |       | .6                   |       | .03                  |       | .1 |   | .01 |   |
| Financing leases                     |       | 2.2                  |       | 1.13                 |       | 1.1 |   | .54 |   |
| Total  Receivables                   |       | $                    | 59.9       |                 | .67        | % | $ | 28.5 |   | .33 | % |

 

Deposits withheld fromdealers and merchants, representing mainly the aggregate dealer retail note andlease withholding accounts from individual John Deere dealers to which lossesfrom retail notes and leases originating from the respective dealers can becharged, amounted to $160 million at April 30, 2009 compared with $174million at October 31, 2008 and $169 million at April 30, 2008.

 

The Company’s allowancefor credit losses on all Receivables financed totaled $120 million at April 30,2009, $105 million at October 31, 2008 and $102 million at April 30,2008. The allowance for credit losses represented .65 percent of the totalReceivables financed at April 30, 2009, .59 percent at October 31,2008 and .55 percent at April 30, 2008. The level of the allowance isbased on many quantitative and qualitative factors, including historical lossexperience by product category, portfolio duration, delinquency trends,economic conditions and credit risk quality. The Company believes its allowanceis sufficient to provide for losses in its existing receivable portfolio.

 

Safe Harbor Statement

 

*SafeHarbor Statement under the Private Securities Litigation Reform Act of 1995:*Statements herein that relate to futureoperating periods are subject to important risks and uncertainties that couldcause actual results to differ materially. Forward-looking statements involvecertain factors that are subject to change, including changing worldwideeconomic conditions. Actions by the U.S. Federal Reserve Board, the FDIC andother central banks and agencies may affect the costs and expenses of financingthe Company and the rates it is able to offer. The Company’s business isaffected by general economic conditions in and the political instability of theglobal markets in which the Company operates because deteriorating economicconditions and political instability can result in decreased customer confidence,lower demand for equipment, higher loan losses and greater currency risk. TheCompany’s business is also affected by actions of banks, financing and leasingcompanies and other lenders that compete with the Company for customers;capital market disruptions; significant changes in capital market liquidity andassociated funding costs; interest rates and foreign currency exchange rates;and the credit market crisis. 

 

18

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With respect to the current global economic downturn,changes in governmental banking, monetary and fiscal policies to restoreliquidity and increase the availability of credit may not be effective andcould have a material impact on the Company’s customers and markets.  Recent significant changes in marketliquidity conditions could impact access to funding and associated fundingcosts, which could reduce the Company’s earnings and cash flows. The Company’soperations could be impaired by changes in the equity and bond markets, whichcould negatively affect earnings.

 

The current economic downturn and market volatilityhave adversely affected the financial industry in which the Company operates.The Company’s liquidity and ongoing profitability depend largely on timelyaccess to capital to meet future cash flow requirements and fund operations andthe costs associated with engaging in diversified funding activities. Ifcurrent levels of market disruption and volatility continue or worsen or accessto governmental liquidity programs decreases, funding could be unavailable orinsufficient. Additionally, under current market conditions customer confidencelevels may result in declines in credit applications and increases indelinquencies and default rates, which could materially impact the Company’swrite-offs and provision for credit losses.

 

In addition, theCompany’s business is closely related to John Deere’s business. Furtherinformation, including factors that potentially could materially affect theCompany’s and John Deere’s financial results, is included in the most recentDeere & Company Form 10-K and 10-Q (including the factorsdiscussed in Item 1A. Risk Factors) and other Deere & Company andCapital Corporation filings with the U.S. Securities and Exchange Commission.

 

Critical AccountingPolicies

 

See the Company’scritical accounting policies discussed in the Management’s Discussion andAnalysis of the most recent annual report filed on Form 10-K. There havebeen no material changes to these policies.

 

Capital Resources andLiquidity

 

For additionalinformation on the Company’s dependence on and relationships with Deere &Company, see the Company’s most recently filed annual report on Form 10-K.

 

During the firstsix months of 2009, the aggregate net cash provided by operating and financingactivities was used primarily to increase cash and cash equivalents and toincrease Receivables. Net cash provided by operating activities was$256 million in the first six months of 2009. Net cash provided byfinancing activities totaled $1,413 million in the first six months of2009, resulting primarily from a net increase in total external borrowings,partially offset by a decrease in payables to Deere & Company. Netcash used for investing activities totaled $626 million in the first sixmonths of 2009, primarily due to the cost of Receivables and Leases acquiredexceeding collections. Cash and cash equivalents increased $1,049 millionduring the first six months of 2009.

 

During the firstsix months of 2008, the aggregate net cash provided by operating and financingactivities was used primarily to increase Receivables. Net cash provided byoperating activities was $298 million in the first six months of 2008. Net cashprovided by financing activities totaled $400 million in the first six monthsof 2008, resulting primarily from a net increase in total external borrowings,partially offset by dividends paid to John Deere Credit Company, which in turnpaid comparable dividends to Deere & Company, and a decrease inpayables to Deere & Company. Net cash used for investing activitiestotaled $733 million in the first six months of 2008, primarily due to thecost of Receivables and Leases acquired exceeding collections and the cost ofnotes receivables with John Deere exceeding collections. Cash and cashequivalents decreased $29 million during the first six months of 2008.

 

The financing ofretail purchases and leases of John Deere products and of wholesale receivablesowed by John Deere dealers represented approximately 80 percent of theCompany’s acquisition volume for the six months ended April 30, 2009 and2008, respectively. Any extended reduction or suspension of John Deere’s saleor production of products due to a decline in demand or production,governmental actions or other events could have an adverse effect on theCompany’s acquisition volume of Receivables and Leases.  

 

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The Company relieson its ability to raise substantial amounts of funds to finance its Receivableand Lease portfolios. Given the downturn in global economic activity and therecent significant changes in credit market liquidity, sources of funds for theCompany have been impacted. However, the Company expects to have sufficientsources of liquidity to meet its funding needs. The Company’s ability to meetits debt obligations is supported in a number of ways. The assets of theCompany are self-liquidating in nature. A solid equity position is available toabsorb unusual losses on these assets and all commercial paper is backed byunsecured, committed borrowing lines from various banks. Liquidity is alsoprovided by the Company’s ability to securitize these assets and through theissuance of term debt. Additionally, liquidity may also be provided throughloans from John Deere. The Company’s commercial paper outstanding at April 30,2009, October 31, 2008 and April 30, 2008 was approximately $654million, $2,814 million and $2,794 million, respectively, while thetotal cash and cash equivalents position was approximately $2,131 million,$1,083 million and $162 million, respectively.

 

On December 4,2008, John Deere Capital Corporation (Capital Corporation) and FPC Financial,f.s.b., a wholly-owned subsidiary of Capital Corporation, elected to continueto participate in the debt guaranty program that is part of the Federal DepositInsurance Corporation’s (FDIC’s) Temporary Liquidity Guarantee Program (TLGP).During December 2008, Capital Corporation issued $2.0 billion offixed-rate medium-term notes due June 19, 2012 at a rate of 2.875%, whichare guaranteed by the FDIC under the TLGP. The FDIC has notified CapitalCorporation that it needs additional review and written determination from theFDIC prior to issuing additional guaranteed debt. Accordingly, CapitalCorporation has submitted documentation to the FDIC and will continue to seekfurther guidance.

 

During January 2009,the Capital Corporation entered into a new revolving credit agreement toutilize bank conduit facilities to securitize retail notes (see Note 5). At April 30,2009, this facility had a total capacity, or “financing limit,” of up to$2,500 million of secured financings at any time. After a 364 dayrevolving period, unless the banks and the Capital Corporation agree to renewfor an additional 364 days, the Capital Corporation would liquidate the securedborrowings over time as payments on the retail notes are collected. At April 30,2009, $2,092 million of secured short-term borrowings was outstanding under theagreement. 

 

During the firstsix months of 2009, the Company issued $3,941 million of medium-term notes,obtained $2,400 million of secured borrowings and maintained an averagecommercial paper balance of $1,734 million. At April 30, 2009, theCompany’s funding profile included $654 million of commercial paper,$3,119 million of notes payable related to on-balance sheet securitizationfunding, $16,169 million of unsecured term debt, and $2,112 million of equitycapital. The Company’s funding profile may be altered to reflect such factorsas relative costs of funding sources, assets available for securitizations andcapital market accessibility. 

 

During the firstsix months of 2009, the Company issued $3,944 million and retired $1,696million of long-term borrowings. The issuances were primarily medium-termnotes. The retirements included $300 million of 6% Notes due 2009 and theremainder consisted primarily of medium-term notes.

 

Totalinterest-bearing indebtedness amounted to $20,149 million at April 30,2009, compared with $18,424 million at October 31, 2008, and$18,216 million at April 30, 2008. Included in this debt are securedborrowings of $3,119 million, $1,618 million and $2,200 million for thesame periods (see Note 5). Total external borrowings increased during the firstsix months of 2009 and increased in the past 12 months, generally correspondingwith the level of cash and cash equivalents, the level of the Receivable andLease portfolio and the change in payable to John Deere. Total short-termindebtedness amounted to $6,694 million at April 30, 2009, which included$3,119 million of secured borrowings, compared with $7,894 million at October 31,2008, which included $1,618 million of secured borrowings and$9,052 million at April 30, 2008, which included $2,200 million ofsecured borrowings, while total long-term indebtedness amounted to $13,455million, $10,530 million and $9,163 million at these dates, respectively. Theratio of total interest-bearing debt, including securitization indebtedness, tostockholder’s equity was 9.5 to 1 at April 30, 2009, compared with 8.9 to1 at October 31, 2008 and 11.0 to 1 at April 30, 2008. 

 

Stockholder’sequity was $2,112 million at April 30, 2009, compared with $2,065 millionat October 31, 2008 and $1,661 million at April 30, 2008. Theincrease in the first six months of 2009 resulted primarily from net income of$69 million, which was partially offset by a $24 million unrealizedloss on derivatives. 

 

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*Lines ofCredit*

 

The Company alsohas access to bank lines of credit with various banks throughout the world.Some of the lines are available to both the Company and Deere &Company. Worldwide lines of credit totaled $4,512 million at April 30, 2009,$2,379 million of which was unused. For thepurpose of computing unused credit lines, commercial paper and short-term bankborrowings, excluding secured borrowings and the current portion of long-termborrowings, of the Company and Deere & Company were considered toconstitute utilization. Included in the total credit lines at April 30,2009 was the long-term credit facility agreement of $3,750 million, expiring inFebruary 2012. The credit agreement requires the Company to maintain itsconsolidated ratio of earnings to fixed charges at not less than 1.05 to 1 foreach fiscal quarter and its ratio of senior debt, excluding securitizationindebtedness, to capital base (total subordinated debt and stockholder’s equityexcluding accumulated other comprehensive income (loss)) at not more than11 to 1 at the end of any fiscal quarter. All of these requirements of thecredit agreement have been met during the periods included in the consolidatedfinancial statements.

 

*DebtRatings*

 

The Company’sability to obtain funding is affected by its debt ratings, which are closely relatedto the outlook for and the financial condition of John Deere, and the natureand availability of support facilities, such as its lines of credit and thesupport agreement from Deere & Company. 

 

To access publicdebt capital markets, the Company relies on credit rating agencies to assignshort-term and long-term credit ratings to the Company’s securities as anindicator of credit quality for fixed income investors. A credit rating agencymay change or withdraw Company ratings based on its assessment of the Company’scurrent and future ability to meet interest and principal repaymentobligations. Each agency’s rating should be evaluated independently of anyother rating. Lower credit ratings generally result in higher borrowing costsand reduced access to debt capital markets. 

 

The seniorlong-term and short-term debt ratings and outlook currently assigned tounsecured Company securities by the rating agencies engaged by the Company arethe same as those for John Deere. Those ratings are as follows:

 
| ** **                                 | ** ** | **Senior Long-Term** | ** ** | **Short-Term** | ** ** | **Outlook** | ** ** |
|--------------------------------------------|------------|----------------------|------------|----------------|------------|-------------|------------|
| Moody’s  Investors Service, Inc. |       | A2                   |       | Prime-1        |       | Stable      |       |
| Standard &  Poor’s           |       | A                    |       | A-1            |       | Stable      |       |

 

Item 3.                                                             Quantitative and Qualitative DisclosuresAbout Market Risk.

 

See the Company’smost recent annual report filed on Form 10-K (Part II, Item 7A).There has been no material change in this information.

 

Item 4.                                                             Controls and Procedures.

 

The Company’sprincipal executive officer and its principal financial officer have concludedthat the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) of the Securities Exchange Act of 1934, as amended (“the Act”))were effective as of April 30, 2009, based on the evaluation of thesecontrols and procedures required by Rule 13a-15(b) or 15d-15(b) ofthe Act. During the second quarter, there were no changes that have materiallyaffected or are reasonably likely to materially affect the Company’s internalcontrols over financial reporting.

 

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PART II.  OTHERINFORMATION

 
| Item 1.  |   | Legal Proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | 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 state and federal laws and  regulations concerning retail credit. Although it is not possible to predict  with certainty the outcome of these unresolved legal actions or the range of  possible loss, the Company believes these unresolved legal actions will not  have a material effect on its consolidated financial statements. |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 1A. |   | Risk Factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | See the Company’s most  recently filed annual report on Form 10-K (Part I, Item 1A). There  has been no material change in this information.                                                                                                                                                                                                                                                                                                                                |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 2.  |   | Unregistered Sales of  Equity Securities and Use of Proceeds.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | Omitted pursuant to  instruction H.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 3.  |   | Defaults Upon Senior  Securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | Omitted pursuant to  instruction H.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 4.  |   | Submission of Matters  to a Vote of Security Holders.                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | Omitted pursuant to  instruction H.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 5.  |   | Other Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 6.  |   | Exhibits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | See the index to  exhibits immediately preceding the exhibits filed with this report.                                                                                                                                                                                                                                                                                                                                                                                                      |
|     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |   | Certain instruments  relating to long-term debt, constituting less than 10% of the registrant’s  total assets, are not filed as exhibits herewith pursuant to Item  601(b)(4)(iii)(A) of Regulation S-K.   The registrant will file copies of such instruments upon request of  the Commission.                                                                                                                                                                             |

 

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SIGNATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 
|   |              |   | JOHN DEERE CAPITAL  CORPORATION |
|--------|-------------------|--------|---------------------------------|
|   |              |   |                            |
|   |              |   |                            |
| Date:  | June 1, 2009 |   | By:                             | */s/ M.  J. Mack, Jr.* |
|   |              |   |                            | M. J. Mack, Jr. |
|   |              |   |                            | Senior Vice President, |
|   |              |   |                            | Principal Financial  Officer |

 

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INDEX TO EXHIBITS

 
| **Exhibit** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                           |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 3.1         |       | Certificate of  Incorporation, as amended (Exhibit 3.1 to Form 10-K of the  registrant for the year ended October 31, 1999, Securities and Exchange  Commission file number 1-6458*)                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 3.2         |       | Bylaws, as amended  (Exhibit 3.2 to Form 10-K of the registrant for the year ended  October 31, 1999, Securities and Exchange Commission file number  1-6458*)                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 4.1         |       | 364-Day Credit Agreement among  registrant, Deere & Company, various financial institutions,  JPMorgan Chase Bank N.A. as administrative agent, Citibank N.A., Credit  Suisse, Cayman Islands Branch and Deutsche Bank Ag New York Branch as  documentation agents, and Bank of America, N.A. as syndication agent, et al,  dated as of March 3, 2009. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 12          |       | Computation of  Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 31.1        |       | Rule 13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 31.2        |       | Rule 13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 32          |       | Section 1350  Certifications                                                                                                                                                                                                                                                                                                                                    |
|        |       |                                                                                                                                                                                                                                                                                                                                                                 |
| 99          |       | Part I of  Deere & Company Form 10-Q for the quarter ended April 30, 2009  (Securities and Exchange Commission file number 1-4121*)                                                                                                                                                                                                     |

 

*             Incorporated by reference.  Copies of these exhibits are available fromthe Company upon request.

 

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