**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 THE**

**SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended April 30, 2008**

 

Commission fileno: 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 of principal 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 for thepast 90 days.

Yes   x  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 definition of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of 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, 2008,2,500 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 21

 

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## **PART I.  FINANCIAL INFORMATION**

## ** **

## **Item 1.     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,**             | ** ** |
| ** **                                            | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
| **Revenues**                                          |       |                             |       |                           |       |   |   |   |   |
| Finance income  earned on retail notes                |       | $                                | 215.0      |                           | $          | 206.0 |   | $ | 437.8 |   | $ | 406.4 |   |
| Lease revenues                                        |       | 81.0                             |       | 77.4                           |       | 164.4 |   | 154.6 |   |
| Revolving charge  account income                      |       | 52.3                             |       | 51.6                           |       | 103.1 |   | 100.5 |   |
| Finance income  earned on wholesale receivables       |       | 80.8                             |       | 95.6                           |       | 158.3 |   | 178.2 |   |
| Operating loan  income                                |       | 6.9                              |       | 7.5                            |       | 13.7 |   | 16.1 |   |
| Income on  receivables sold                           |       | 1.9                              |       | 8.0                            |       | 4.3 |   | 14.5 |   |
| Crop insurance  commissions                           |       | 27.0                             |       | 14.4                           |       | 56.0 |   | 24.0 |   |
| Other income                                          |       | 22.3                             |       | 22.6                           |       | 46.1 |   | 39.5 |   |
| Total revenues                                        |       | 487.2                            |       | 483.1                          |       | 983.7 |   | 933.8 |   |
|                                                  |       |                             |       |                           |       |   |   |   |   |
| **Expenses**                                          |       |                             |       |                           |       |   |   |   |   |
| Interest expense                                      |       | 205.0                            |       | 215.1                          |       | 428.6 |   | 417.0 |   |
| Operating  expenses:                                  |       |                             |       |                           |       |   |   |   |   |
| Administrative  and operating expenses                |       | 83.3                             |       | 76.7                           |       | 163.0 |   | 141.9 |   |
| Provision for  credit losses                          |       | 15.6                             |       | 13.8                           |       | 30.7 |   | 24.9 |   |
| Fees paid to  John Deere                              |       | 9.2                              |       | 8.7                            |       | 18.3 |   | 16.8 |   |
| Depreciation of  equipment on operating leases        |       | 53.0                             |       | 52.1                           |       | 107.8 |   | 104.0 |   |
| Total operating  expenses                             |       | 161.1                            |       | 151.3                          |       | 319.8 |   | 287.6 |   |
| Total expenses                                        |       | 366.1                            |       | 366.4                          |       | 748.4 |   | 704.6 |   |
| **Income  of consolidated group before income taxes** |       | 121.1                            |       | 116.7                          |       | 235.3 |   | 229.2 |   |
| **Provision  for income taxes**                       |       | 44.1                             |       | 40.5                           |       | 81.3 |   | 79.9 |   |
| **Income  of consolidated group**                     |       | 77.0                             |       | 76.2                           |       | 154.0 |   | 149.3 |   |
| **Equity  in income of unconsolidated affiliates**    |       | .3                               |       | .1                             |       | .5 |   | .2 |   |
| **Net  income**                                       |       | 77.3                             |       | 76.3                           |       | 154.5 |   | 149.5 |   |
| **Dividends  paid**                                   |       | (285.1                           | )          | (270.0                         | )          | (425.1 | ) | (310.0 | ) |
| **Retained  earnings at beginning of period**         |       | 1,002.8                          |       | 1,334.1                        |       | 1,065.6 |   | 1,300.9 |   |
| **Retained  earnings at end of period**               |       | $                                | 795.0      |                           | $          | 1,140.4 |   | $ | 795.0 |   | $ | 1,140.4 |   |

 

See CondensedNotes 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,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                                                                                        | ** ** | **2008**           | ** ** | **2007**             | ** ** | **2007**           | ** ** |
| **Assets**                                                                                                        |       |               |       |                 |       |               |       |
| Cash and cash  equivalents                                                                                        |       | $                  | 162.2      |                 | $          | 190.8              |       | $ | 143.9 |   |
| Receivables:                                                                                                      |       |               |       |                 |       |               |       |
| Retail notes                                                                                                      |       | 9,362.1            |       | 9,810.3              |       | 8,232.0            |       |
| Restricted  securitized retail notes                                                                              |       | 2,109.4            |       | 2,150.4              |       | 2,615.6            |       |
| Revolving charge  accounts                                                                                        |       | 1,495.6            |       | 1,553.3              |       | 1,358.8            |       |
| Operating loans                                                                                                   |       | 533.0              |       | 286.5                |       | 283.7              |       |
| Wholesale  receivables                                                                                            |       | 4,503.2            |       | 3,521.3              |       | 4,545.0            |       |
| Financing leases                                                                                                  |       | 430.7              |       | 430.3                |       | 406.7              |       |
| Total  receivables                                                                                                |       | 18,434.0           |       | 17,752.1             |       | 17,441.8           |       |
| Allowance for  credit losses                                                                                      |       | (102.0             | )          | (99.2                | )          | (95.5              | )          |
| Total  receivables – net                                                                                     |       | 18,332.0           |       | 17,652.9             |       | 17,346.3           |       |
| Other  receivables                                                                                                |       | 29.6               |       | 35.8                 |       | 85.2               |       |
| Equipment on  operating leases – net                                                                         |       | 964.1              |       | 995.2                |       | 898.8              |       |
| Receivable from  John Deere                                                                                       |       |               |       |                 |       | 103.2              |       |
| Notes receivable  from John Deere                                                                                 |       | 668.6              |       | 586.5                |       | 453.3              |       |
| Investment in  unconsolidated affiliates                                                                          |       | 6.3                |       | 5.2                  |       | 5.0                |       |
| Other assets                                                                                                      |       | 421.4              |       | 295.1                |       | 235.8              |       |
| **Total  Assets**                                                                                                 |       | $                  | 20,584.2   |                 | $          | 19,761.5           |       | $ | 19,271.5 |   |
| ** **                                                                                                        |       |               |       |                 |       |               |       |
| **Liabilities  and Stockholder’s Equity**                                                                    |       |               |       |                 |       |               |       |
| Short-term  borrowings:                                                                                           |       |               |       |                 |       |               |       |
| Commercial paper                                                                                                  |       | $                  | 2,793.8    |                 | $          | 2,679.2            |       | $ | 2,728.6 |   |
| Other notes  payable                                                                                              |       | 2,230.5            |       | 2,199.0              |       | 2,722.9            |       |
| John Deere                                                                                                        |       | 6.0                |       | 127.8                |       |               |       |
| Current  maturities of long-term borrowings                                                                       |       | 4,021.8            |       | 3,835.9              |       | 3,249.2            |       |
| Total short-term  borrowings                                                                                      |       | 9,052.1            |       | 8,841.9              |       | 8,700.7            |       |
| Accounts payable  and accrued expenses                                                                            |       | 500.8              |       | 455.6                |       | 444.6              |       |
| Deposits  withheld from dealers and merchants                                                                     |       | 169.1              |       | 174.4                |       | 167.2              |       |
| Deferred income  taxes                                                                                            |       | 38.0               |       | 59.0                 |       | 85.3               |       |
| Long-term  borrowings                                                                                             |       | 9,163.4            |       | 8,276.1              |       | 7,863.2            |       |
| Total  liabilities                                                                                                |       | 18,923.4           |       | 17,807.0             |       | 17,261.0           |       |
| 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) |       | 812.8              |       | 812.8                |       | 812.8              |       |
| Retained  earnings                                                                                                |       | 795.0              |       | 1,087.1              |       | 1,140.4            |       |
| Accumulated  other comprehensive income:                                                                          |       |               |       |                 |       |               |       |
| Cumulative  translation adjustment                                                                                |       | 77.6               |       | 61.7                 |       | 45.8               |       |
| Unrealized gain  on investments                                                                                   |       |               |       | 1.2                  |       | 3.3                |       |
| Unrealized gain  (loss) on derivatives                                                                            |       | (24.6              | )          | (8.3                 | )          | 8.2                |       |
| Total  accumulated other comprehensive income                                                                     |       | 53.0               |       | 54.6                 |       | 57.3               |       |
| Total  stockholder’s equity                                                                                  |       | 1,660.8            |       | 1,954.5              |       | 2,010.5            |       |
| **Total  Liabilities and Stockholder’s Equity**                                                              |       | $                  | 20,584.2   |                 | $          | 19,761.5           |       | $ | 19,271.5 |   |

 

See Condensed Notes toInterim Financial Statements.

 

3

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

**Statementsof Consolidated Cash Flows**

**Forthe Six Months Ended April 30, 2008 and 2007**

**(Unaudited)**

(in millions)

 
| ** **                                                                         | ** ** | **2008**  | ** ** | **2007**  | ** ** |
|------------------------------------------------------------------------------------|------------|-----------|------------|-----------|------------|
| **Cash  Flows from Operating Activities:**                                         |       |      |       |      |       |
| Net income                                                                         |       | $         | 154.5      |      | $          | 149.5 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |      |       |      |       |
| Provision for  credit losses                                                       |       | 30.7      |       | 24.9      |       |
| Provision for  depreciation and amortization                                       |       | 110.0     |       | 107.5     |       |
| Credit for  deferred income taxes                                                  |       | (1.0      | )          | (21.6     | )          |
| Undistributed  earnings of unconsolidated affiliates                               |       | (.5       | )          | (.2       | )          |
| Change in  accounts payable and accrued expenses                                   |       | (30.8     | )          | (13.4     | )          |
| Change in  accrued income taxes payable/receivable                                 |       | 14.0      |       | 19.9      |       |
| Other                                                                              |       | 20.6      |       | 3.5       |       |
| Net cash  provided by operating activities                                         |       | 297.5     |       | 270.1     |       |
|                                                                               |       |      |       |      |       |
| **Cash  Flows from Investing Activities:**                                         |       |      |       |      |       |
| Cost of  receivables acquired                                                      |       | (15,512.1 | )          | (13,771.3 | )          |
| Collections of  receivables                                                        |       | 14,894.9  |       | 13,174.2  |       |
| Cost of  equipment on operating leases acquired                                    |       | (220.8    | )          | (221.9    | )          |
| Proceeds from  sales of equipment on operating leases                              |       | 152.5     |       | 102.8     |       |
| Cost of notes  receivable with John Deere                                          |       | (215.3    | )          | (244.1    | )          |
| Collection of  notes receivable with John Deere                                    |       | 133.2     |       | 29.4      |       |
| Proceeds from  sales of receivables                                                |       | 52.3      |       | 104.4     |       |
| Change in  restricted cash                                                         |       | (4.1      | )          | 86.3      |       |
| Other                                                                              |       | (13.1     | )          | 54.8      |       |
| Net cash used  for investing activities                                            |       | (732.5    | )          | (685.4    | )          |
|                                                                               |       |      |       |      |       |
| **Cash  Flows from Financing Activities:**                                         |       |      |       |      |       |
| Increase in  commercial paper - net                                                |       | 41.3      |       | 388.4     |       |
| Increase in  other notes payable - net                                             |       | 30.8      |       | 515.5     |       |
| Decrease in  payable with John Deere - net                                         |       | (121.8    | )          | (281.4    | )          |
| Proceeds from  issuance of long-term borrowings                                    |       | 2,528.1   |       | 989.5     |       |
| Payments of  long-term borrowings                                                  |       | (1,642.5  | )          | (860.1    | )          |
| Dividends paid                                                                     |       | (425.1    | )          | (310.0    | )          |
| Other                                                                              |       | (11.3     | )          | (4.4      | )          |
| Net cash  provided by financing activities                                         |       | 399.5     |       | 437.5     |       |
|                                                                               |       |      |       |      |       |
| **Effect  of exchange rate changes on cash and cash equivalents**                  |       | 6.9       |       | 2.5       |       |
| **Net  increase (decrease) in cash and cash equivalents**                          |       | (28.6     | )          | 24.7      |       |
| **Cash  and cash equivalents at beginning of period**                              |       | 190.8     |       | 119.2     |       |
| **Cash  and cash equivalents at end of period**                                    |       | $         | 162.2      |      | $          | 143.9 |   |

 

See Condensed Notesto Interim Financial Statements.

 

4

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# **John Deere Capital Corporation and Subsidiaries**

**CondensedNotes to Interim Financial Statements**

**(Unaudited)**

 

(1)                                  Theconsolidated financial statements of John Deere Capital Corporation (CapitalCorporation) and its subsidiaries (collectively called the Company) have beenprepared by the Company, without audit, pursuant to the rules andregulations of the U.S. Securities and Exchange Commission. Certain informationand footnote disclosures normally included in annual financial statementsprepared in accordance with accounting principles generally accepted in theU.S. have been condensed or omitted as permitted by such rules andregulations. All adjustments, consisting of normal recurring adjustments, havebeen included. Management believes that the disclosures are adequate to presentfairly the financial position, results of operations and cash flows at thedates and for the periods presented. It is suggested that these interimfinancial statements be read in conjunction with the financial statements andthe notes thereto included in the Company’s latest annual report on Form 10-K.Results for interim periods are not necessarily indicative of those to beexpected for the year.

 

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the U.S. requires management to make estimates and assumptions thataffect the reported amounts and related disclosures. Actual results coulddiffer from those estimates.

 

(2)                                  TheCompany provides and administers financing for retail purchases of newequipment manufactured by Deere & Company’s agricultural equipment,commercial and consumer equipment and construction and forestry divisions andused equipment taken in trade for this equipment. The Company generallypurchases 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 retaildealers. The Company also purchases and finances a limited amount of non-Deereretail notes and continues to service a small portfolio of recreationalproducts and other retail notes. In addition, the Company leases John Deereequipment and a limited amount of non-Deere equipment to retail customers(financing and operating leases). The Company also finances and servicesrevolving charge accounts, in most cases acquired from and offered throughmerchants in the agricultural, commercial and consumer and construction andforestry markets (revolving charge accounts). Further, the Company finances andservices operating loans, in most cases offered through and acquired from farminput providers, through direct relationships with agricultural producers orthrough agribusinesses (operating loans). The Company also provides wholesalefinancing for inventories of John Deere agricultural, commercial and consumerand construction and forestry equipment owned by dealers of those products(wholesale receivables). The Company also offers credit enhanced internationalexport financing to select customers and dealers which generally involves JohnDeere products and offers certain crop risk mitigation products in the U.S. Inaddition, the Company invests in wind energy generation by making loans tocertain affiliated companies that have directly invested in wind energyprojects. Retail notes, revolving charge accounts, operating loans, financingleases and wholesale receivables are collectively called “Receivables.”Receivables and operating leases are collectively called “Receivables andLeases.”

 

5

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(3)                                Comprehensiveincome, which includes all changes in the Company’s equity during the periodexcept transactions with the stockholder, was as follows in millions ofdollars:

 
| ** **                                      | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                      | ** ** | **April 30,**               | ** ** | **April 30,**             | ** ** |
| ** **                                      | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
| Net Income                                      |       | $                                | 77.3       |                           | $          | 76.3 |   | $ | 154.5 |   | $ | 149.5 |   |
|                                            |       |                             |       |                           |       |   |   |   |   |
| Other comprehensive  income (loss), net of tax: |       |                             |       |                           |       |   |   |   |   |
| Change in  cumulative translation adjustment    |       | 15.2                             |       | 12.5                           |       | 15.9 |   | 17.7 |   |
| Unrealized loss  on investments                 |       | (.5                              | )          |                           |       | (1.2 | ) | (.2 | ) |
| Unrealized gain  (loss) on derivatives          |       | 16.9                             |       | (1.3                           | )          | (16.3 | ) | (.2 | ) |
| Total comprehensive  income                     |       | $                                | 108.9      |                           | $          | 87.5 |   | $ | 152.9 |   | $ | 166.8 |   |

 

(4)                                  Commitmentsand contingencies:

 

At April 30,2008, John Deere Credit Inc., the John Deere finance subsidiary in Canada, had$106 million of commercial paper and $1,676 million of medium-term notesoutstanding that were guaranteed by the Company. In addition, the Company hasprovided a letter of credit for John Deere Credit Inc. as part of retail notesales. At April 30, 2008, the Company’s maximum exposure under thisagreement was approximately $3 million.

 

At April 30,2008, the Company had $208 million of guarantees issued to turbinemanufacturers for John Deere Renewables, LLC wind turbine purchases. John DeereRenewables, LLC is an affiliated company that has commitments to purchase windturbines related to its direct investments in wind energy projects. At April 30,2008, the maximum remaining term of these purchase commitments wasapproximately two years.

 

The Company’ssubsidiary, John Deere Risk Protection, Inc., offers crop insurance productsthrough a managing general agency agreement (Agreement) with an insurancecompany (Insurance Carrier) rated “Excellent” by A.M. Best Company. As amanaging general agent, John Deere Risk Protection, Inc. will receivecommissions from the Insurance Carrier for selling crop insurance to producers.The Company has guaranteed certain obligations under the Agreement, includingthe obligation to pay the Insurance Carrier for any uncollected premiums. At April 30,2008, the maximum exposure for uncollected premiums was approximately $144million. Substantially all of the Company’s crop insurance risk under theAgreement has been mitigated by a syndicate of private reinsurance companies.These reinsurance companies are rated “Excellent” or higher by A.M. BestCompany. In the event of a widespread catastrophic crop failure throughout theU.S. and the default of these highly rated private reinsurance companies ontheir reinsurance obligations, the Company would be required to reimburse theInsurance Carrier for exposures under the Agreement of approximately$830 million at April 30, 2008. The Company believes that thelikelihood of the occurrence of events that give rise to the exposures underthis Agreement is substantially remote and as a result, at April 30, 2008,the Company’s accrued liability under the Agreement was not material.

 

The Company hascommitments to extend credit to customers and John Deere dealers through linesof credit and other pre-approved credit arrangements. The Company applies thesame credit policies and approval process for these commitments to extendcredit as it does for its Receivables. Collateral is not required for thesecommitments, but if credit is extended, collateral may be required uponfunding. The amount of unused commitments to extend credit to John Deeredealers was $2.7 billion at April 30, 2008. The amount of unusedcommitments to extend credit to customers was $33.4 billion at April 30,2008. A significant portion of these commitments is not expected to be fullydrawn upon; therefore, the total commitment amounts likely do not represent afuture cash requirement. The Company generally has the right to unconditionallycancel, alter or amend the terms of these commitments at any time. Over95 percent of these unused commitments to extend credit to customersrelate to revolving charge accounts.

 

6

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The Company hascertain recourse obligations on Receivables that it has previously sold. If theReceivables sold are not collected, the Company would be required to coverthose losses up to the amount of its recourse obligation. At April 30,2008, the maximum amount of exposure to losses under these agreements was $9million. The accrued liability for the estimated credit risk associated withsold Receivables was not material at April 30, 2008. The Company mayrecover a portion of any required payments incurred under these agreements fromthe repossession of the equipment collateralizing the Receivables. At April 30, 2008, the maximum remainingterm of the Receivables sold was approximately five years.

 

The Company alsohad other miscellaneous contingent liabilities totaling approximately $10million at April 30, 2008, for which it believes the probability forpayment is substantially remote. At April 30, 2008, the Company also hadrestricted other assets of $8 million.

 

(5)                                  Securitizationof receivables:

 

The Company, as apart of its overall funding strategy, periodically transfers certainreceivables (retail notes) into special purpose entities (SPEs) as part of itsasset-backed securities programs (securitizations). The structure of thesetransactions is such that the transfer of the retail notes did not meet thecriteria of sales in accordance with FASB Statement No. 140, Accountingfor Transfers and Servicing of Financial Assets and Extinguishment ofLiabilities, and are, therefore, accounted for as secured borrowings. SPEsutilized in securitizations of retail notes differ from other entities includedin the Company’s consolidated statements because the assets they hold arelegally isolated. For bankruptcy analysis purposes, the Capital Corporation hassold the receivables to the SPEs in a true sale and the SPEs are separate legalentities. Use of the assets held by the SPEs is restricted by terms of thedocuments governing the securitization transaction. Further information relatedto the secured borrowings is provided below.

 

In securitizationsof retail notes related to secured borrowings, the retail notes are transferredto certain SPEs which in turn issue debt to investors. The resulting securedborrowings are included in short-term borrowings on the balance sheet as shownin the following table. The securitized retail notes are recorded as“Restricted securitized retail notes” on the balance sheet. The totalrestricted assets on the balance sheet related to these securitizations includethe restricted securitized retail notes less an allowance for credit losses,and other assets representing restricted cash as shown in the following table.The SPEs supporting the secured borrowings to which the retail notes aretransferred are consolidated unless the Company is not the primary beneficiaryor the SPE is a qualified special purpose entity as defined in FASB Statement No. 140.

 

The components ofconsolidated restricted assets related to secured borrowings in securitizationtransactions were as follows (in millions of dollars):

 
| ** **                           | ** ** | **April 30,  2008** | ** ** | **October 31,  2007** | ** ** | **April 30,  2007** | ** ** |
|--------------------------------------|------------|--------------------------|------------|----------------------------|------------|--------------------------|------------|
| Restricted  securitized retail notes |       | $                        | 2,109.4    |                       | $          | 2,150.4                  |       | $ | 2,615.6 |   |
| Allowance for  credit losses         |       | (14.5                    | )          | (11.3                      | )          | (14.9                    | )          |
| Other assets                         |       | 53.0                     |       | 44.0                       |       | 40.1                     |       |
| Total restricted  securitized assets |       | $                        | 2,147.9    |                       | $          | 2,183.1                  |       | $ | 2,640.8 |   |

 

The components ofconsolidated secured borrowings and other liabilities related tosecuritizations were as follows (in millions of dollars):

 
| ** **                                                  | ** ** | **April 30,  2008** | ** ** | **October 31,  2007** | ** ** | **April 30,  2007** | ** ** |
|-------------------------------------------------------------|------------|--------------------------|------------|----------------------------|------------|--------------------------|------------|
| Other notes  payable                                        |       | $                        | 2,199.9    |                       | $          | 2,191.6                  |       | $ | 2,701.8 |   |
| Accounts payable  and accrued expenses                      |       | 3.1                      |       | 4.4                        |       | 3.9                      |       |
| Total  liabilities related to restricted securitized assets |       | $                        | 2,203.0    |                       | $          | 2,196.0                  |       | $ | 2,705.7 |   |

 

7

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The securedborrowings related to these restricted securitized retail notes are obligationsthat are payable as the retail notes are liquidated. Repayment of the securedborrowings depends primarily on cash flows generated by the restricted assets.Due to the Company’s short-term credit rating, cash collections from theserestricted assets are not required to be placed into a restricted collectionaccount until immediately prior to the time payment is required to the securedcreditors. Under FASB Interpretation No. 46 (revised December 2003),Consolidation of Variable Interest Entities, an SPE was consolidated thatincluded assets (restricted retail notes) of $1,661 million, $1,494 million and$1,824 million at April 30, 2008, October 31, 2007 and April 30,2007, respectively. These restricted retail notes are included in therestricted securitized retail notes related to securitizations shown in thetable above. At April 30, 2008, the maximum remaining term of allrestricted receivables was approximately six years.

 

(6)                                  Newaccounting standard adopted in the first quarter of  2008 was as follows:

 

The Companyadopted FASB Interpretation (FIN) No. 48, Accounting for Uncertainty inIncome Taxes, at the beginning of the first fiscal quarter of 2008. ThisInterpretation clarifies that the recognition for uncertain tax positionsshould be based on a more-likely-than-not threshold that the tax position willbe sustained upon audit. The tax position is measured as the largest amount ofbenefit that has a greater than 50 percent probability of being realized uponsettlement. As a result of adoption, the Company recorded an increase in itsliability for unrecognized tax benefits of $23.7 million, an increase inaccrued interest and penalties payable of $10.1 million, an increase indeferred tax liabilities of $.9 million, a reduction in the beginning retainedearnings balance of $21.5 million, an increase in tax receivables of $1.9million and an increase in deferred tax assets of $11.3 million.

 

After adoption atthe beginning of the first quarter, the Company had a total liability forunrecognized tax benefits of $23.7 million. Approximately $11.4 million of this balance would affect the effectivetax rate if the tax benefits were recognized. The remaining liability wasrelated to tax positions for which there are offsetting tax receivables, or theuncertainty was only related to timing. These items would not affect theeffective tax rate due to offsetting changes to the receivables or deferredtaxes. The liability for unrecognized tax benefits at April 30, 2008 was$24.9 million. The Company does not have any tax positions for which it expectsthat the liability for unrecognized tax benefits would change significantlywithin the next 12 months.

 

The Company’s continuingpolicy is to recognize interest related to uncertain tax positions in interestexpense and interest income, and recognize penalties in administrative andoperating expenses.  After adoption atthe beginning of the first quarter of 2008, the liability for accrued interestand penalties totaled $10.1 million, which has not changed materiallyduring the first six months of 2008.

 

The Company filesits tax returns according to the tax laws of the jurisdictions in which itoperates, which includes the U.S. federal jurisdiction, and various state andforeign jurisdictions. The Company is included in the consolidated U.S. incometax return and various state returns of Deere & Company. The U.S.Internal Revenue Service has completed its examination of Deere &Company’s federal income tax returns for periods prior to 2001, and for theyears 2002, 2003 and 2004. The year 2001, and 2005 through 2007 federal incometax returns are either currently under examination or remain subject toexamination. Various state and foreign income tax returns also remain subjectto examination by taxing authorities.

 

New accountingstandards 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 FinancialStatements. Statement No. 141 (revised 2007) requires an acquirer tomeasure the identifiable assets acquired, the liabilities assumed and anynoncontrolling interest in the acquiree at their fair values on the acquisitiondate, with goodwill being the excess value over the net identifiable assetsacquired. Statement No. 160 requires that a noncontrolling interest in asubsidiary be reported as equity in the consolidated financial statements.Consolidated net income should include the net income for both the parent andthe noncontrolling interest with disclosure of both amounts on the consolidatedstatement of income. The effective date for both Statements is the beginning offiscal year 2010. The Company has currently not determined the potentialeffects on the consolidated financial statements.

 

8

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In September 2006,the FASB issued Statement No. 157, Fair Value Measurements. This Statementdefines fair value and expands disclosures about fair value measurements. Thesedefinitions will apply to other accounting standards that use fair valuemeasurements and may change the application of certain measurements used incurrent practice. The effective date is the beginning of fiscal year 2009 forfinancial assets and liabilities. For nonfinancial assets and liabilities, theeffective date is the beginning of fiscal year 2010, except items that arerecognized or disclosed on a recurring basis (at least annually). The adoptionis not expected to have a material effect on the Company’s consolidatedfinancial statements.

 

In February 2007,the FASB issued Statement No. 159, The Fair Value Option for FinancialAssets and Financial Liabilities. This Statement permits entities to measuremost financial instruments at fair value. It may be applied on a contract bycontract basis and is irrevocable once applied to those contracts.  The standard may be applied at the time ofadoption for existing eligible items, or at initial recognition of eligibleitems. After election of this option, changes in fair value are reported inearnings. The items measured at fair value must be shown separately on thebalance sheet. The effective date is the beginning of fiscal year 2009. The cumulativeeffect of adoption would be reported as an adjustment to beginning retainedearnings. The Company has currently not determined the potential effect on theconsolidated financial statements.

 

In March 2008,the FASB issued Statement No. 161, Disclosures about DerivativeInstruments and Hedging Activities. This Statement significantly increases thedisclosure requirements for derivative instruments. The new requirementsinclude the location and fair value amounts of all derivatives by category reportedin the consolidated balance sheet; the location and amount of gains or lossesof all derivatives and designated hedged items by category reported in theconsolidated income statement or in other comprehensive income in theconsolidated balance sheet; and measures of volume such as notional amounts.For derivatives designated as hedges, the gains or losses must be divided intothe effective portions and the ineffective portions. The Statement alsorequires the disclosure of group concentrations of credit risk bycounterparties, including the maximum amount of loss due to credit risk andpolicies concerning collateral and master netting arrangements. Mostdisclosures are required on an interim and annual basis. The effective date isthe second quarter of fiscal year 2009. The adoption will not have a materialeffect on the Company’s consolidated financial statements.

 

In May 2008,the FASB issued Statement No. 162, The Hierarchy of Generally AcceptedAccounting Principles. This Statement identifies the sources for generallyaccepted accounting principles (GAAP) in the U.S. and lists the categories indescending order. An entity should follow the highest category of GAAPapplicable for each of its accounting transactions. The adoption will not havea material effect on the Company’s consolidated financial statements.

 

(7)                                  The Company is a participating employer incertain Deere & Company sponsored defined benefit pension plans foremployees in the U.S. and certain defined benefit pension plans outside the U.S.These pension plans provide for benefits that are based primarily on years ofservice and employee compensation. Pension expense is actuarially determinedbased on the Company’s employees included in the plan. The Company’s pensionexpense amounted to $2.5 million in the first six months of 2008. Theaccumulated benefit obligation and plan net assets for the employees of theCompany are not determined separately from Deere & Company. TheCompany generally provides defined benefit health care and life insurance plansfor retired employees in the U.S. as a participating employer in Deere &Company’s sponsored plans. Health care and life insurance benefits expense isactuarially determined based on the Company’s employees included in the plansand amounted to $2.1 million during the first six months of 2008. Furtherdisclosure for these plans is included in Deere & Company’s Form 10-Qfor the quarter ended April 30, 2008.

 

(8)                                  OnMay 29, 2008, the Capital Corporation declared a $40 million dividend, tobe paid to John Deere Credit Company on June 6, 2008. John Deere CreditCompany, in turn, declared a $40 million dividend to Deere &Company, also payable on June 6, 2008.

 

9

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Item 2.    Management’s Discussion andAnalysis of Financial Condition and Results of Operations.

 

Results ofOperations

 

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 invests in wind energy generation. 

 

Trends andEconomic Conditions

 

The Company’sbusiness is closely related to John Deere’s business. Industry sales of farmmachinery for 2008 are forecast to be up about 20 percent for the year in theU.S. and Canada. Industry sales in Western Europe are forecast to be up 3 to 5percent for the year. Greater increases are expected in Central Europe and theCIS (Commonwealth of Independent States) countries, including Russia, wheredemand for productive farm machinery is experiencing rapid growth. SouthAmerican markets are expected to show further improvement in 2008, withindustry sales forecast to increase by about 30 percent. John Deere’sagricultural equipment sales were up 34 percent for the second quarter andfirst six months of 2008. With support from continuing strength in the globalfarm sector, John Deere’s agricultural equipment sales are forecast to increaseabout 35 percent for the year, including about 7 percent related to currencytranslation. John Deere’s commercial and consumer equipment sales increased 8percent for the second quarter and 11 percent year to date, including 12percent from LESCO, Inc. (LESCO) for both periods. LESCO was acquired inthe third quarter of 2007. John Deere’s commercial and consumer equipment salesare projected to increase about 4 percent for the year, including about 6percent from a full year of LESCO sales. U.S. markets for construction andforestry equipment are forecast to remain under continued pressure due to asharp decline in housing starts. John Deere’s construction and forestry salesdeclined 7 percent in the second quarter and first six months of 2008, and forthe year are expected to decline by approximately 3 percent. The Company’s netincome in 2008 is forecast to be approximately $300 million. The forecastdecrease from 2007 is primarily due to an increase in leverage, an increase inthe provision for credit losses and higher costs in support of growthinitiatives, partially offset by growth in the portfolio and increased cropinsurance income.

 

Items of concernfor the Company include the slowdown in the U.S. economy and credit issues.Potential changes in government sponsored farmer programs are also a concern.

 

2008 Compared with 2007

 

Net income was$77.3 million for the second quarter and $154.5 million for the first sixmonths of 2008, compared with $76.3 million and $149.5 million, respectively,last year. The improvements for the quarter and year-to-date were primarily dueto growth in the portfolio and increased crop insurance income, partiallyoffset by an increase in leverage, increased administrative and operatingexpenses and lower income on receivables sold.

 

10

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Revenues totaled$487.2 million for the second quarter and $983.7 million for the first sixmonths of 2008, compared to $483.1 million and $933.8 million, respectively,last year. The year-to-date increase was primarily due to increased cropinsurance income and a 6 percent increase in the average balance ofReceivables and Leases financed, partially offset by lower income onreceivables sold. Finance income earned on retail notes totaled$437.8 million for the first six months of 2008, up $31.4 million comparedto $406.4 million for the same period in 2007. This increase was primarilydue to a 9 percent increase in the average retail note portfolio balances.Lease revenues totaled $164.4 million in the first six months of 2008,compared to $154.6 million in the first six months of 2007. This increase wasprimarily due to a 5 percent increase in the average amount of leases.Revenues earned on revolving charge accounts amounted to $103.1 million inthe first six months of 2008, compared to $100.5 million during the sameperiod last year. This increase was primarily due to an increase in the averagebalance of revolving charge accounts, partially offset by lower financing ratesin the first six months of 2008, compared with the same period last year.Finance income earned on wholesale receivables totaled $158.3 million for thefirst six months of 2008, compared to $178.2 million for the same periodin 2007. The decrease was primarily due to a 4 percent decrease in the averagebalance of wholesale receivables and lower financing rates. Operating loan incomeamounted to $13.7 million in the first six months of 2008, compared to$16.1 million in the first six months of 2007. The decrease was primarilydue to lower financing rates. Revenues earned from John Deere totaled$143.0 million for the second quarter and $275.7 million in the first sixmonths of 2008, compared to $144.5 million and $261.9 million for the sameperiods last year.

 

Income onreceivables sold totaled $1.9 million for the second quarter and $4.3 millionfor the first six months of 2008, compared to $8.0 million and $14.5 millionfor the same periods in 2007. In the second quarter of 2008, the Companyexercised a cleanup call to repurchase the remaining securitization transactionthat met the criteria of sales in accordance with FASB Statement No. 140.Income on receivables sold relates to Receivables sold to other financialinstitutions or limited-purpose business trusts and primarily includes theinterest earned on interests that continue to be held by the Company,reimbursed administrative expenses received and the net gain on Receivablessold, including adjustments to prior sales related to cleanup calls andrevaluations of interests that continue to be held and the related permanentimpairments.

 

Crop insurancecommissions totaled $27.0 million for the second quarter and $56.0 million forthe first six months of 2008, compared to $14.4 million and $24.0 million forthe same periods in 2007. The increase was due to increased crop insurancesales to producers as a result of expanded market coverage, increased commodityprices causing higher insurance premiums and favorable underwriting experienceresulting in increased contingent commissions.

 

Other incometotaled $22.3 million for the second quarter and $46.1 million for the firstsix months of 2008, compared to $22.6 million and $39.5 million for the sameperiods in 2007. The year-to-date improvement was primarily due to increasedinterest income as a result of higher average loans to certain affiliatedcompanies that have directly invested in wind energy projects.

 

Interest expensetotaled $205.0 million for the second quarter and $428.6 million for the firstsix months of 2008, compared to $215.1 million and $417.0 for the same periodsin 2007. The decrease for the quarter was due to lower borrowing rates,partially offset by higher average borrowings. The increase for the six monthswas due to higher average borrowings, partially offset by lower borrowingrates.

 

Administrative andoperating expenses were $83.3 million in the second quarter and $163.0 millionfor the first six months of 2008, compared with $76.7 million and $141.9million for the same periods in 2007. The increases were primarily due tohigher costs in support of the Company’s growth initiatives and higheremployment costs associated with administering a larger Receivable and Leaseportfolio.

 

During the secondquarter and first six months of 2008, the provision for credit losses totaled$15.6 million and $30.7 million, respectively, compared with $13.8 million and$24.9 million in the same periods in 2007. For the first six months of 2008,the Company has experienced higher write-offs of construction and forestryequipment retail notes. Total net write-offs of Receivables financed were $15.3million and $28.5 million for the second quarter and first six months of 2008,compared with $12.6 million and $23.1 million in the same periods in 2007. Theannualized provision for credit losses, as a percentage of the average balanceof total Receivables financed, was .35 percent for the second quarter and..36 percent for the first six months of 2008, compared with .33 percent and .30percent for the same periods in 2007. See the Company’s most recently filedannual report on Form 10-K for further information regarding the Company’sallowance for credit losses policies.

 

Depreciation ofequipment on operating leases was $53.0 million in the second quarter and$107.8 million for the first six months of 2008, compared to $52.1 millionand $104.0 million for the same periods in 2007. The increases were primarilythe result of higher average amounts of equipment on operating leases.

 

11

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The Company’sratio of earnings to fixed charges was 1.59 to 1 for the second quarter of2008, compared with 1.54 to 1 for the second quarter of 2007. The ratio ofearnings to fixed charges was 1.55 to 1 for the first six months of 2008,compared with 1.55 to 1 for the first six months of 2007. “Earnings” consist ofincome before income taxes, the cumulative effect of changes in accounting andfixed charges. “Fixed charges” consist of interest on indebtedness,amortization of debt discount and expense, an estimated amount of rentalexpense under capitalized leases that is deemed to be representative of theinterest factor and rental expense under operating leases.

 

Receivable and Lease acquisition volumes were asfollows (in millions of dollars):

 
| ** **                           | ** ** | **Three Months**         | ** ** | ** ** | ** ** | ** **              | ** ** |
|--------------------------------------|------------|-------------------------------|------------|------------|------------|-------------------------|------------|
| ** **                           | ** ** | **Ended April 30,** | ** ** | ** ** | ** ** | ** **              | ** ** |
| ** **                           | ** ** | **2008**                      | ** ** | **2007**   | ** ** | **$  Change** | ** ** | **% Change** | ** ** |
| Retail notes:                        |       |                          |       |       |       |                    |       |   |   |
| Agricultural equipment               |       | $                             | 1,271.2    |       | $          | 1,124.8                 |       | $ | 146.4 |   | 13 | % |
| Construction and  forestry equipment |       | 205.2                         |       | 348.7      |       | (143.5                  | )          | (41 | ) |
| Commercial and  consumer equipment   |       | 105.3                         |       | 141.0      |       | (35.7                   | )          | (25 | ) |
| Total retail  notes                  |       | 1,581.7                       |       | 1,614.5    |       | (32.8                   | )          | (2 | ) |
| Revolving charge  accounts           |       | 1,056.3                       |       | 927.2      |       | 129.1                   |       | 14 |   |
| Operating loans                      |       | 744.7                         |       | 244.9      |       | 499.8                   |       | 204 |   |
| Wholesale  receivables               |       | 5,975.8                       |       | 5,189.7    |       | 786.1                   |       | 15 |   |
| Financing leases                     |       | 62.8                          |       | 61.5       |       | 1.3                     |       | 2 |   |
| Equipment on  operating leases       |       | 129.8                         |       | 133.7      |       | (3.9                    | )          | (3 | ) |
| Total Receivables  and Leases        |       | $                             | 9,551.1    |       | $          | 8,171.5                 |       | $ | 1,379.6 |   | 17 | % |

 
| ** **                           | ** ** | **Six Months**           | ** ** | ** ** | ** ** | ** **        | ** ** |
|--------------------------------------|------------|-------------------------------|------------|------------|------------|-------------------|------------|
| ** **                           | ** ** | **Ended April 30,** | ** ** | ** ** | ** ** | ** **        | ** ** |
| ** **                           | ** ** | **2008**                      | ** ** | **2007**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Retail notes:                        |       |                          |       |       |       |              |       |   |   |
| Agricultural  equipment              |       | $                             | 2,323.0    |       | $          | 1,949.2           |       | $ | 373.8 |   | 19 | % |
| Construction and  forestry equipment |       | 432.5                         |       | 703.9      |       | (271.4            | )          | (39 | ) |
| Commercial and  consumer equipment   |       | 165.9                         |       | 224.4      |       | (58.5             | )          | (26 | ) |
| Total retail  notes                  |       | 2,921.4                       |       | 2,877.5    |       | 43.9              |       | 2 |   |
| Revolving charge  accounts           |       | 1,887.6                       |       | 1,587.0    |       | 300.6             |       | 19 |   |
| Operating loans                      |       | 1,228.9                       |       | 807.4      |       | 421.5             |       | 52 |   |
| Wholesale  receivables               |       | 9,360.6                       |       | 8,403.4    |       | 957.2             |       | 11 |   |
| Financing leases                     |       | 113.6                         |       | 96.0       |       | 17.6              |       | 18 |   |
| Equipment on  operating leases       |       | 220.8                         |       | 221.9      |       | (1.1              | )          |   |   |
| Total  Receivables and Leases        |       | $                             | 15,732.9   |       | $          | 13,993.2          |       | $ | 1,739.7 |   | 12 | % |

 

Retail notevolumes for agricultural equipment increased in the second quarter and firstsix months of 2008, when compared to last year, primarily due to increases inretail sales of John Deere agricultural equipment. Retail note volumes forconstruction and forestry equipment and commercial and consumer equipmentdecreased in the second quarter and first six months of 2008, when compared tolast year, primarily due to decreases in retail sales of John Deereconstruction and forestry equipment and John Deere commercial and consumerequipment. Revolving charge account volumes increased in the second quarter andfirst six months of 2008, when compared to last year, primarily as a result ofincreased market coverage. Operating loan volumes increased during the secondquarter and first six months of 2008, when compared to last year, primarily dueto increased borrowings by farm input providers as a result of higher commodityprices. Wholesale receivable volumes increased during the second quarter andfirst six months of 2008, when compared to last year, primarily due toincreased shipments of John Deere equipment as a result of increased retailsales activity in the agricultural markets.

 

12

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

 
| ** **                           | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|--------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                           | ** ** | **2008**           | ** ** | **2007**             | ** ** | **2007**           | ** ** |
| Retail notes:                        |       |               |       |                 |       |               |       |
| Agricultural  equipment              |       | $                  | 8,379.3    |                 | $          | 8,535.8            |       | $ | 7,403.7 |   |
| Construction and  forestry equipment |       | 2,174.3            |       | 2,409.1              |       | 2,449.0            |       |
| Commercial and  consumer equipment   |       | 907.4              |       | 1,003.5              |       | 980.0              |       |
| Recreational  products               |       | 10.5               |       | 12.3                 |       | 14.9               |       |
| Total retail  notes                  |       | 11,471.5           |       | 11,960.7             |       | 10,847.6           |       |
| Revolving charge  accounts           |       | 1,495.6            |       | 1,553.3              |       | 1,358.8            |       |
| Operating loans                      |       | 533.0              |       | 286.5                |       | 283.7              |       |
| Wholesale  receivables               |       | 4,503.2            |       | 3,521.3              |       | 4,545.0            |       |
| Financing leases                     |       | 430.7              |       | 430.3                |       | 406.7              |       |
| Equipment on  operating leases       |       | 964.1              |       | 995.2                |       | 898.8              |       |
| Total  Receivables and Leases        |       | $                  | 19,398.1   |                 | $          | 18,747.3           |       | $ | 18,340.6 |   |

 

Receivables andLeases administered by the Company, which include retail notes sold, were asfollows (in millions of dollars):

 
| ** **                                                    | ** ** | **April 30,** | ** ** | **October 31,** | ** ** | **April 30,** | ** ** |
|---------------------------------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                                    | ** ** | **2008**           | ** ** | **2007**             | ** ** | **2007**           | ** ** |
| Receivables and  Leases administered:                         |       |               |       |                 |       |               |       |
| Owned by the Company                                          |       | $                  | 17,288.7   |                 | $          | 16,596.9           |       | $ | 15,725.0 |   |
| Owned by the  Company – restricted due to securitization |       | 2,109.4            |       | 2,150.4              |       | 2,615.6            |       |
| Total  Receivables and Leases owned by the Company            |       | 19,398.1           |       | 18,747.3             |       | 18,340.6           |       |
| Sold and  serviced – with limited recourse*              |       | 112.9              |       | 177.9                |       | 558.8              |       |
| Sold and  serviced – without recourse**                  |       | 43.0               |       | 44.6                 |       | 25.9               |       |
| Total  Receivables and Leases administered                    |       | $                  | 19,554.0   |                 | $          | 18,969.8           |       | $ | 18,925.3 |   |

 
| *      |   | The Company’s maximum  exposure under all Receivable and Lease recourse provisions at April 30,  2008, October 31, 2007 and April 30, 2007 was $9 million, $25  million and $74 million, respectively. In addition, the Company has provided  letters of credit for John Deere Credit Inc., the John Deere finance subsidiary  in Canada, as part of retail note sales. At April 30, 2008,  October 31, 2007 and April 30, 2007 the Company’s maximum exposure  under these agreements was approximately $3 million, $3 million and  $2 million, respectively. The Company does not record the recourse  obligations as liabilities as they are contingent liabilities that are remote  at this time. However, the probable loss on receivables that have been sold  was accrued at the time of sale, and any subsequent necessary adjustments are  made as part of ongoing reviews. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **     |   | Represents  Receivables and Leases that the Company has sold but continues to administer  for a fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

 

13

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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,** | ** ** |
|--------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                           | ** ** | **2008**           | ** ** | **2007**             | ** ** | **2007**           | ** ** |
| ** **                           | ** ** | **Dollars**        | ** ** | **Percent**          | ** ** | **Dollars**        | ** ** | **Percent** | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |               |       |                 |       |               |       |   |   |   |   |   |   |
| Agricultural  equipment              |       | $                  | 14.2       |                 | .17        | %                  | $          | 14.4 |   | .17 | % | $ | 15.9 |   | .21 | % |
| Construction and  forestry equipment |       | 9.1                |       | .42                  |       | 6.9                |       | .29 |   | 6.2 |   | .25 |   |
| Commercial and  consumer equipment   |       | 1.8                |       | .20                  |       | 1.5                |       | .15 |   | 1.5 |   | .15 |   |
| Recreational  products               |       |               |       |                 |       |               |       |   |   | .1 |   | .67 |   |
| Total retail  notes                  |       | 25.1               |       | .22                  |       | 22.8               |       | .19 |   | 23.7 |   | .22 |   |
| Revolving charge  accounts*          |       | 19.1               |       | 1.28                 |       | 15.3               |       | .98 |   | 22.5 |   | 1.66 |   |
| Operating loans                      |       |               |       |                 |       |               |       |   |   | .6 |   | .21 |   |
| Wholesale  receivables               |       | 1.4                |       | .03                  |       | .9                 |       | .03 |   | 3.1 |   | .07 |   |
| Financing leases                     |       | 5.5                |       | 1.28                 |       | 4.7                |       | 1.09 |   | 4.7 |   | 1.16 |   |
| Total  Receivables                   |       | $                  | 51.1       |                 | .28        | %                  | $          | 43.7 |   | .25 | % | $ | 54.6 |   | .31 | % |

 
| * |   | 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$198 million, $170 million and $168 million at April 30, 2008, October 31,2007 and April 30, 2007, 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 1.72 percent, 1.42 percent and 1.55 percentat April 30, 2008, October 31, 2007 and April 30, 2007,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,** | ** ** |
|--------------------------------------|------------|--------------------|------------|----------------------|------------|--------------------|------------|
| ** **                           | ** ** | **2008**           | ** ** | **2007**             | ** ** | **2007**           | ** ** |
| ** **                           | ** ** | **Dollars**        | ** ** | **Percent**          | ** ** | **Dollars**        | ** ** | **Percent** | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |               |       |                 |       |               |       |   |   |   |   |   |   |
| Agricultural  equipment              |       | $                  | 15.6       |                 | .19        | %                  | $          | 21.6 |   | .25 | % | $ | 14.8 |   | .20 | % |
| Construction and  forestry equipment |       | 12.9               |       | .59                  |       | 2.2                |       | .09 |   | 2.7 |   | .11 |   |
| Commercial and  consumer equipment   |       | 3.7                |       | .41                  |       | 1.8                |       | .18 |   | 1.3 |   | .13 |   |
| Recreational  products               |       | .1                 |       | .95                  |       | .1                 |       | .81 |   |   |   |   |   |
| Total retail  notes                  |       | 32.3               |       | .28                  |       | 25.7               |       | .21 |   | 18.8 |   | .17 |   |
| Revolving charge  accounts           |       | .6                 |       | .04                  |       | 1.2                |       | .08 |   | 1.1 |   | .08 |   |
| Operating loans                      |       | 2.5                |       | .47                  |       | 3.5                |       | 1.22 |   | 5.6 |   | 1.97 |   |
| Wholesale  receivables               |       | 1.4                |       | .03                  |       | 4.5                |       | .13 |   | 1.5 |   | .03 |   |
| Financing leases                     |       | 11.3               |       | 2.62                 |       | 13.3               |       | 3.09 |   | 10.3 |   | 2.53 |   |
| Total  Receivables                   |       | $                  | 48.1       |                 | .26        | %                  | $          | 48.2 |   | .27 | % | $ | 37.3 |   | .21 | % |

 

The increase inthe balance of non-performing construction and forestry equipment retail notesat April 30, 2008 was primarily due to the continued weak U.S.construction market.

 

14

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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,**               | ** ** |
| ** **                           | ** ** | **2008**                         | ** ** | **2007**                         | ** ** |
| ** **                           | ** ** | **Dollars**                      | ** ** | **Percent**                      | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |                             |       |                             |       |   |   |   |   |
| Agricultural  equipment              |       | $                                | .5         |                             | .02        | % | $ | (.3 | ) | (.02 | )% |
| Construction and  forestry equipment |       | 6.8                              |       | 1.22                             |       | 4.9 |   | .81 |   |
| Commercial and  consumer equipment   |       | .4                               |       | .18                              |       | .4 |   | .17 |   |
| Recreational  products               |       |                             |       |                             |       | .1 |   | 2.57 |   |
| Total retail  notes                  |       | 7.7                              |       | .27                              |       | 5.1 |   | .19 |   |
| Revolving charge  accounts           |       | 7.7                              |       | 2.30                             |       | 6.6 |   | 2.17 |   |
| Operating loans                      |       | (.3                              | )          | (.26                             | )          |   |   |   |   |
| Wholesale  receivables               |       | .2                               |       | .02                              |       | .2 |   | .02 |   |
| Financing leases                     |       |                             |       |                             |       | .7 |   | .72 |   |
| Total  Receivables                   |       | $                                | 15.3       |                             | .35        | % | $ | 12.6 |   | .30 | % |

 
| ** **                           | ** ** | **Six Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| ** **                           | ** ** | **April 30,**             | ** ** | **April 30,**             | ** ** |
| ** **                           | ** ** | **2008**                       | ** ** | **2007**                       | ** ** |
| ** **                           | ** ** | **Dollars**                    | ** ** | **Percent**                    | ** ** | **Dollars** | ** ** | **Percent** | ** ** |
| Retail notes:                        |       |                           |       |                           |       |   |   |   |   |
| Agricultural  equipment              |       | $                              | .7         |                           | .02        | % | $ | (.7 | ) | (.02 | )% |
| Construction and  forestry equipment |       | 13.1                           |       | 1.17                           |       | 9.1 |   | .77 |   |
| Commercial and  consumer equipment   |       | .9                             |       | .20                            |       | .5 |   | .10 |   |
| Recreational  products               |       | .3                             |       | 5.43                           |       | .3 |   | 3.76 |   |
| Total retail  notes                  |       | 15.0                           |       | .26                            |       | 9.2 |   | .17 |   |
| Revolving charge  accounts           |       | 12.6                           |       | 1.88                           |       | 12.8 |   | 2.06 |   |
| Operating loans                      |       | (.3                            | )          | (.14                           | )          | (.2 | ) | (.10 | ) |
| Wholesale  receivables               |       | .1                             |       | .01                            |       |   |   |   |   |
| Financing leases                     |       | 1.1                            |       | .54                            |       | 1.3 |   | .66 |   |
| Total  Receivables                   |       | $                              | 28.5       |                           | .33        | % | $ | 23.1 |   | .28 | % |

 

Deposits withheldfrom dealers and merchants, representing mainly the aggregate dealer retailnote and lease withholding accounts from individual John Deere dealers to whichlosses from retail notes and leases originating from the respective dealers canbe charged, amounted to $169 million at April 30, 2008 compared with $174million at October 31, 2007 and $167 million at April 30, 2007.

 

The Company’sallowance for credit losses on all Receivables financed totaled $102 million atApril 30, 2008, $99 million at October 31, 2007 and $96 millionat April 30, 2007. The allowance for credit losses represented..55 percent of the total Receivables financed at April 30, 2008, .56percent at October 31, 2007 and .55 percent at April 30, 2007. The levelof the allowance is based on many quantitative and qualitative factors,including historical loss experience by product category, portfolio duration,delinquency trends, economic conditions and credit risk quality. The Companybelieves its allowance is sufficient to provide for losses in its existingreceivable portfolio.

 

15

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Safe Harbor Statement

 

*SafeHarbor Statement under the Private Securities Litigation Reform Act of 1995:*Statementsherein that relate to future operating periods are subject to important risksand uncertainties that could cause actual results to differ materially. Actionsby the U.S. Federal Reserve Board and other central banks may affect the costsand expenses of financing the Company and the rates it is able to offer. TheCompany’s business is affected by general economic conditions in and thepolitical instability of the global markets in which the Company operatesbecause deteriorating economic conditions and political instability can resultin higher loan losses and greater currency risk. The Company’s business is alsoaffected by actions of banks, financing and leasing companies and other lendersthat compete with the Company for customers. In addition, the Company’sbusiness is closely related to John Deere’s business. Further information,including factors that potentially could materially affect the Company’s andJohn Deere’s financial results, is included in the most recent Deere &Company Form 10-K (including the factors discussed in Item 1A) and otherDeere & Company and Capital Corporation filings with the Securitiesand 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 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 sixmonths of 2008, resulting primarily from a net increase in total externalborrowings, partially offset by dividends paid to John Deere Credit Company,which in turn paid comparable dividends to Deere & Company, and adecrease in payables to Deere & Company. Net cash used for investingactivities totaled $733 million in the first six months of 2008, primarilydue to the cost of Receivables and Leases acquired exceeding collections andthe cost of notes receivables with John Deere exceeding collections. Cash andcash equivalents decreased $29 million during the first six months of2008.

 

During the firstsix months of 2007, the aggregate net cash provided by operating and financingactivities was used primarily to increase Receivables. Net cash provided byoperating activities was $270 million in the first six months of 2007. Net cashprovided by financing activities totaled $438 million in the first sixmonths of 2007, resulting primarily from a net increase in total externalborrowings, partially offset by dividends paid to John Deere Credit Company,which in turn paid comparable dividends to Deere & Company. Net cashused for investing activities totaled $685 million in the first six monthsof 2007, primarily due to the cost of Receivables and Leases acquired exceedingcollections and the cost of notes receivables with John Deere exceedingcollections. Cash and cash equivalents increased $25 million during thefirst six months of 2007.

 

The financing ofretail purchases and leases of John Deere products and of wholesale receivablesowed by John Deere dealers represented approximately 80 percent and 85 percentof the Company’s acquisition volume for the six months ended April 30,2008 and 2007, respectively. Any extended reduction or suspension of JohnDeere’s sale or production of products due to a decline in demand orproduction, governmental actions or other events could have an adverse effecton the Company’s acquisition volume of Receivables and Leases.

 

The Company relies on its ability to raise substantial amounts of fundsto finance its Receivable and Lease portfolios. Because of the multiplefunding sources that have been and continue to be available, the Companyexpects to have sufficient sources of liquidity to meet its ongoing fundingneeds. The Company’s ability to meet its debt obligations is supported in anumber of ways. The assets of the Company are self-liquidating in nature. A solidequity position is available to absorb unusual losses on these assets and allcommercial paper is backed by unsecured, committed borrowing lines from variousbanks. Liquidity is also provided by the Company’s ability to securitize theseassets and through the issuance of term debt. Additionally, liquidity may alsobe provided through loans from John Deere.

 

16

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During the first six months of 2008, the Company issued $2,525 millionof medium-term notes, obtained $644 million of secured borrowings, maintainedan average commercial paper balance of $2,855 million and received proceeds of$52 million from sales of Receivables. At April 30, 2008, theCompany’s funding profile included $2,794 million of commercial paper,$2,200 million of notes payable related to on-balance sheet securitizationfunding, $6 million of intercompany loans from Deere & Company,$13,185 million of unsecured term debt, and $1,661 million of equity capital.The Company’s funding profile may be altered to reflect such factors asrelative costs of funding sources, assets available for securitizations andcapital market accessibility.

 

The Company’scommercial paper outstanding at April 30, 2008, October 31, 2007 and April 30,2007 was approximately $2,794 million, $2,679 million and $2,729 million,respectively, while the total cash and cash equivalents position wasapproximately $162 million, $191 million and $144 million, respectively.

 

The Company issued$2,528 million and retired $1,642 million of long-term borrowings during thefirst six months of 2008. The issuances were primarily medium-term notes. Theretirements included $850 million of 3.90% notes due 2008 and the remainderconsisted primarily of medium-term notes.

 

Totalinterest-bearing indebtedness amounted to $18,216 million at April 30,2008, compared with $17,118 million at October 31, 2007, and$16,564 million at April 30, 2007. Included in this debt are securedborrowings of $2,200 million, $2,192 million and $2,702 million for thesame periods (see Note 5). Total external borrowings increased during the firstsix months of 2008 and increased in the past 12 months, generally correspondingwith the level of the Receivable and Lease portfolio, the level of cash andcash equivalents and the change in payable to John Deere. Total short-termindebtedness amounted to $9,052 million at April 30, 2008, which included$2,200 million of secured borrowings, compared with $8,842 million at October 31,2007, which included $2,192 million of secured borrowings and$8,701 million at April 30, 2007, which included $2,702 million ofsecured borrowings, while total long-term indebtedness amounted to $9,163million, $8,276 million and $7,863 million at these dates, respectively. Theratio of total interest-bearing debt, including securitization indebtedness, tostockholder’s equity was 11.0 to 1 at April 30, 2008, compared with 8.8 to1 at October 31, 2007 and 8.2 to 1 at April 30, 2007.

 

Stockholder’sequity was $1,661 million at April 30, 2008, compared with $1,955 millionat October 31, 2007 and $2,011 million at April 30, 2007. Thedecrease in the first six months of 2008 resulted primarily from dividendpayments of $425 million and a reduction of retained earnings of$22 million resulting from the adoption of FIN No. 48, Accounting for Uncertainty in Income Taxes, which werepartially offset by net income of $155 million.

 

*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 $4,523 million at April 30,2008, $1,476 million of which was unused. Forthe purpose of computing unused credit lines, commercial paper and short-termbank borrowings, excluding secured borrowings and the current portion oflong-term borrowings, of the Company and Deere & Company wereconsidered to constitute utilization. Included in the total credit linesat April 30, 2008 was the long-term credit facility agreement of $3,750million, expiring in February 2012. In the second quarter of 2008, theCompany added a 364 day credit facility agreement of $750 million, which isalso included in the total credit lines. The credit agreements require theCompany to maintain its consolidated ratio of earnings to fixed charges at notless than 1.05 to 1 for each fiscal quarter and its ratio of senior debt,excluding securitization indebtedness, to capital base (total subordinated debtand stockholder’s equity excluding accumulated other comprehensive income(loss)) at not more than 11 to 1 at the end of any fiscal quarter. In thesecond quarter of 2008, the required ratio was changed from not more than 9.5to 1. All of these requirements of the credit agreement have been met duringthe periods included in the consolidated financial statements.

 

*Debt Ratings*

 

The Company’s ability to obtain funding is affected by its debtratings, which are closely related to the outlook for and the financialcondition of John Deere, and the nature and availability of support facilities,such as its lines of credit and the support 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 repayment obligations.Each agency’s rating should be evaluated independently. Lower credit ratingsgenerally result in higher borrowing costs and reduced access to debt capitalmarkets.

 

17

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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      |       |

 

The Company paidin 2007 and in 2008 relatively large dividends, thus increasing its use ofborrowed capital. Based on discussion with the rating agencies, the Companyexpects that this increased use of debt capital will not have an adverse impacton its credit ratings.

 

*ContractualObligations*

 

The following isan update to the Contractual Obligations table in Management’s Discussion andAnalysis for the Company’s most recent annual report on Form 10-K. TheCompany adopted FIN No. 48, Accounting for Uncertainty in Income Taxes, atthe beginning of fiscal year 2008 (see Note 6). The resulting liability forunrecognized tax benefits totaled $24.9 million at April 30, 2008.The timing of future payments related to this liability is not reasonablyestimable at this time. 

 

*Dividend*

 

The CapitalCorporation declared and paid cash dividends to John Deere Credit Company of$425 million in the first six months of fiscal 2008. John Deere Credit Companypaid comparable dividends to Deere & Company. On May 29,2008, the Capital Corporation declared an additional $40 million dividend, tobe paid to John Deere Credit Company on June 6, 2008. John Deere CreditCompany, in turn, declared a $40 million dividend to Deere & Company,also payable on June 6, 2008.

 

Item 3.    Quantitative and Qualitative DisclosuresAbout Market Risk.

 

See the Company’smost recent annual report filed on Form 10-K (Item 7A). There has been nomaterial 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, 2008, based on the evaluation of thesecontrols and procedures required by Rule 13a-15(b) or 15d-15(b) ofthe Act.

 

18

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| PART II.  OTHER  INFORMATION |
|---------------------------------------------|
|                                        |
| 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 (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. |

 

19

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SIGNATURES

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.

 

 
|   |              | JOHN DEERE CAPITAL  CORPORATION |
|--------|-------------------|---------------------------------|
|   |              |                            |
|   |              |                            |
| Date:  | May 29, 2008 |                            | By: | */s/ M.  J. Mack, Jr.* |
|   |              |                            | M. J. Mack, Jr. |
|   |              |                            | Senior Vice President, |
|   |              |                            | Principal Financial  Officer |
|        |                   |                                 |  |  |

 

20

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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         | First Amendment to Five-Year  Credit Agreement among registrant, Deere & Company, various  financial institutions, JPMorgan Chase Bank N.A. as administrative agent,  Citibank N.A. and Credit Suisse First Boston as documentation agents, Merrill  Lynch Bank USA as co-documentation agent, and Bank of America, N.A. and  Deutsche Bank AG, New York Branch as syndication agents, et al, dated as of March 4,  2008. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |
| 4.2         | 364-Day Credit Agreement among  registrant, Deere & Company, various financial institutions,  JPMorgan Chase Bank N.A. as administrative agent, Citibank N.A. and Credit  Suisse First Boston as documentation agents, Merrill Lynch Bank USA as  co-documentation agent, and Bank of America, N.A. and Deutsche Bank AG, New  York Branch as syndication agents, et al, dated as of March 4, 2008.                       |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |
| 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, 2008                                                                                                                                                                                                                                                                                                                                  |       |
|        |  (Securities  and Exchange Commission file number 1-4121*)                                                                                                                                                                                                                                                                                                                                                                         |       |

 

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

 

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