**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

WASHINGTON,D.C.  20549

 

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** **

**FORM 10-Q**

 

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QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIESEXCHANGE ACT OF 1934

 

**For thequarterly period ended July 31, 2009**

 

Commission fileno: 1-6458

 

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## **JOHN DEERE CAPITAL CORPORATION**

 

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

 

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

 

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

 

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

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

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

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

 
| Indicate by  check mark whether the registrant is a shell company (as defined in  Rule 12b-2 of the Exchange Act). |
|-------------------------------------------------------------------------------------------------------------------------|
| Yes                                                                                                                     |   |   No | X |   |
|                                                                                                                    |   |   |   |   |

 
| At July 31,  2009, 2,500 shares of common stock, without par value, of the registrant were  outstanding, all of which were owned by John Deere Credit Company, a  wholly-owned subsidiary of Deere & Company. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
| The registrant  meets the conditions set forth in General Instruction H(1)(a) and  (b) of Form 10-Q and is therefore filing this Form with  certain reduced disclosures as permitted by those instructions. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

Index to Exhibits: Page 26

 

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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**                     | ** ** | ** **                                 | **Nine Months Ended** |
|------------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------|-----------------------|
| ** **                                           | ** ** | **July 31,**                          | ** ** | ** **                                 | **July 31,**     |
| ** **                                           | ** ** | ** **                                 | **2009**   | ** **                                 | **2008**              | ** ** | ** ** | ** ** | ** ** | **2009** | ** ** | **2008** | ** ** |
| **Revenues**                                         |       |                                       |       |                                       |                  |   |   |   |   |
| Finance  income earned on retail notes               |       | $      182.2 |       | $      209.1 |                  | $      561.9 |   | $      646.9 |   |
| Lease  revenues                                      |       | 78.8                                       |       | 82.3                                       |                  | 237.4 |   | 246.7 |   |
| Revolving  charge account income                     |       | 66.4                                       |       | 59.3                                       |                  | 175.7 |   | 162.4 |   |
| Finance  income earned on wholesale receivables      |       | 81.1                                       |       | 73.7                                       |                  | 229.9 |   | 232.0 |   |
| Operating  loan income                               |       | 3.4                                        |       | 4.8                                        |                  | 11.0 |   | 18.5 |   |
| Income  on receivables sold                          |       | .7                                         |       | 1.3                                        |                  | 1.9 |   | 5.6 |   |
| Crop  insurance commissions                          |       | 40.2                                       |       | 39.3                                       |                  | 52.3 |   | 95.3 |   |
| Other  income                                        |       | 12.5                                       |       | 13.8                                       |                  | 58.7 |   | 59.9 |   |
| Total  revenues                                      |       | 465.3                                      |       | 483.6                                      |                  | 1,328.8 |   | 1,467.3 |   |
| **Expenses**                                         |       |                                       |       |                                       |                  |   |   |   |   |
| Interest  expense                                    |       | 195.3                                      |       | 193.9                                      |                  | 606.5 |   | 622.5 |   |
| Operating  expenses:                                 |       |                                       |       |                                       |                  |   |   |   |   |
| Administrative  and operating expenses               |       | 78.9                                       |       | 103.0                                      |                  | 231.8 |   | 266.0 |   |
| Provision  for credit losses                         |       | 36.1                                       |       | 16.1                                       |                  | 110.3 |   | 46.8 |   |
| Fees  paid to John Deere                             |       | 7.2                                        |       | 9.1                                        |                  | 24.5 |   | 27.4 |   |
| Depreciation  of equipment on operating leases       |       | 51.1                                       |       | 53.1                                       |                  | 155.9 |   | 160.9 |   |
| Total  operating expenses                            |       | 173.3                                      |       | 181.3                                      |                  | 522.5 |   | 501.1 |   |
| Total  expenses                                      |       | 368.6                                      |       | 375.2                                      |                  | 1,129.0 |   | 1,123.6 |   |
| **Income of consolidated group before income taxes** |       | 96.7                                       |       | 108.4                                      |                  | 199.8 |   | 343.7 |   |
| **Provision for income taxes**                       |       | 37.6                                       |       | 38.5                                       |                  | 72.0 |   | 119.8 |   |
| **Income of consolidated group**                     |       | 59.1                                       |       | 69.9                                       |                  | 127.8 |   | 223.9 |   |
| **Equity in income of unconsolidated affiliates**    |       |                                       |       | .2                                         |                  | .3 |   | .7 |   |
| **Net income**                                       |       | 59.1                                       |       | 70.1                                       |                  | 128.1 |   | 224.6 |   |
| **Dividends paid**                                   |       |                                       |       | (40.0                                      | )                     |   |   | (465.1 | ) |
| **Retained earnings at beginning of period**         |       | 951.9                                      |       | 795.0                                      |                  | 882.9 |   | 1,065.6 |   |
| **Retained earnings at end of period**               |       | $    1,011.0           |       | $      825.1 |                  | $    1,011.0 |   | $      825.1 |   |
|                                                      |            |                                            |            |                                            |                       |  |  |  |  |  |  |  |  |

 

 

See Condensed Notes toInterim Financial Statements.

 

2

 

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

**Consolidated Balance Sheets**

**(Unaudited)**

(in millions)

 
| ** **                                                                                                        | ** ** | **July 31,**                                                  | ** ** | **October 31,** | ** **                                         | **July 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|----------------------|----------------------------------------------------|-------------------|------------|
| ** **                                                                                                        | ** ** | **2009**                                                           | ** ** | **2008**             | ** **                                         | **2008**          | ** ** |
| **Assets**                                                                                                        |       |                                                               |       |                 |                                               |              |       |
| Cash  and cash equivalents                                                                                        |       | $       1,972.3                 |       |                 | $       1,082.6 |              |       | $           495.6 |   |   |
| Receivables:                                                                                                      |       |                                                               |       |                 |                                               |              |       |   |   |   |
| Retail  notes                                                                                                     |       | 7,276.9                                                            |       |                 | 10,136.6                                           |              |       | 9,886.6 |   |   |
| Restricted  securitized retail notes                                                                              |       | 3,793.4                                                            |       |                 | 1,592.5                                            |              |       | 1,857.0 |   |   |
| Revolving  charge accounts                                                                                        |       | 2,074.0                                                            |       |                 | 1,825.1                                            |              |       | 1,776.0 |   |   |
| Operating  loans                                                                                                  |       | 346.4                                                              |       |                 | 357.9                                              |              |       | 385.9 |   |   |
| Wholesale  receivables                                                                                            |       | 4,582.3                                                            |       |                 | 3,570.6                                            |              |       | 4,051.6 |   |   |
| Financing  leases                                                                                                 |       | 397.9                                                              |       |                 | 417.9                                              |              |       | 452.4 |   |   |
| Total  receivables                                                                                                |       | 18,470.9                                                           |       |                 | 17,900.6                                           |              |       | 18,409.5 |   |   |
| Allowance  for credit losses                                                                                      |       | (129.2                                                             | )          |                 | (105.2                                             | )                 |       | (106.0 | ) |   |
| Total  receivables – net                                                                                     |       | 18,341.7                                                           |       |                 | 17,795.4                                           |              |       | 18,303.5 |   |   |
| Other  receivables                                                                                                |       | 30.8                                                               |       |                 | 25.4                                               |              |       | 31.8 |   |   |
| Equipment  on operating leases – net                                                                         |       | 994.3                                                              |       |                 | 1,053.4                                            |              |       | 985.9 |   |   |
| Notes  receivable from John Deere                                                                                 |       | 714.3                                                              |       |                 | 799.3                                              |              |       | 667.0 |   |   |
| Investment  in unconsolidated affiliates                                                                          |       | 6.1                                                                |       |                 | 5.4                                                |              |       | 6.3 |   |   |
| Other  assets                                                                                                     |       | 1,075.8                                                            |       |                 | 552.1                                              |              |       | 447.8 |   |   |
| **Total Assets**                                                                                                  |       | $     23,135.3                            |       |                 | $     21,313.6            |              |       | $      20,937.9 |   |   |
| **Liabilities and Stockholder’s Equity**                                                                     |       |                                                               |       |                 |                                               |              |       |   |   |   |
| Short-term  borrowings:                                                                                           |       |                                                               |       |                 |                                               |              |       |   |   |   |
| Commercial  paper                                                                                                 |       | $          222.0 |       |                 | $       2,814.5 |              |       | $        2,674.9 |   |   |
| Other  notes payable                                                                                              |       | 3,684.7                                                            |       |                 | 1,622.2                                            |              |       | 1,893.0 |   |   |
| John  Deere                                                                                                       |       | 13.7                                                               |       |                 | 315.6                                              |              |       | 162.0 |   |   |
| Current  maturities of long-term borrowings                                                                       |       | 2,660.1                                                            |       |                 | 3,141.9                                            |              |       | 3,586.3 |   |   |
| Total  short-term borrowings                                                                                      |       | 6,580.5                                                            |       |                 | 7,894.2                                            |              |       | 8,316.2 |   |   |
| Accounts  payable and accrued expenses                                                                            |       | 769.3                                                              |       |                 | 583.4                                              |              |       | 533.5 |   |   |
| Deposits  withheld from dealers and merchants                                                                     |       | 161.4                                                              |       |                 | 173.5                                              |              |       | 171.3 |   |   |
| Deferred  income taxes                                                                                            |       | 73.5                                                               |       |                 | 67.9                                               |              |       | 60.9 |   |   |
| Long-term  borrowings                                                                                             |       | 13,344.6                                                           |       |                 | 10,529.7                                           |              |       | 10,150.7 |   |   |
| Total  liabilities                                                                                                |       | 20,929.3                                                           |       |                 | 19,248.7                                           |              |       | 19,232.6 |   |   |
| Commitments  and contingencies (Note 4)                                                                           |       |                                                               |       |                 |                                               |              |       |   |   |   |
| Stockholder’s  equity:                                                                                       |       |                                                               |       |                 |                                               |              |       |   |   |   |
| Common  stock, without par value (issued and outstanding – 2,500 shares owned by John  Deere Credit Company) |       | 1,212.8                                                            |       |                 | 1,212.8                                            |              |       | 812.8 |   |   |
| Retained  earnings                                                                                                |       | 1,011.0                                                            |       |                 | 882.9                                              |              |       | 825.1 |   |   |
| Accumulated  other comprehensive income (loss):                                                                   |       |                                                               |       |                 |                                               |              |       |   |   |   |
| Cumulative  translation adjustment                                                                                |       | 36.6                                                               |       |                 | 9.2                                                |              |       | 79.8 |   |   |
| Unrealized  loss on derivatives                                                                                   |       | (54.4                                                              | )          |                 | (40.0                                              | )                 |       | (12.4 | ) |   |
| Total  accumulated other comprehensive income (loss)                                                              |       | (17.8                                                              | )          |                 | (30.8                                              | )                 |       | 67.4 |   |   |
| Total  stockholder’s equity                                                                                  |       | 2,206.0                                                            |       |                 | 2,064.9                                            |              |       | 1,705.3 |   |   |
| **Total Liabilities and Stockholder’s Equity**                                                               |       | $      23,135.3                      |       |                 | $      21,313.6      |              |       | $      20,937.9 |   |   |
| ** **                                                                                                        |       |                                                               |       |                 |                                               |              |       |   |   |   |

 

See Condensed Notes to InterimFinancial Statements.

 

3

 

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

**Statements of Consolidated Cash Flows**

**For the Nine Months Ended July 31,2009 and 2008**

**(Unaudited)**

(in millions)

 
| ** **                                                                         | ** ** | **2009**                                         | ** ** | **2008** | ** **                                       |
|------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|----------|--------------------------------------------------|
| **Cash Flows from Operating Activities:**                                          |       |                                             |       |     |                                             |
| Net  income                                                                        |       | $       128.1 |       |     | $       224.6 |   |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |       |                                             |       |     |                                             |   |   |
| Provision  for credit losses                                                       |       | 110.3                                            |       |     | 46.8                                             |   |   |
| Provision  for depreciation and amortization                                       |       | 161.4                                            |       |     | 167.2                                            |   |   |
| Provision  for deferred income taxes                                               |       | 13.1                                             |       |     | 15.3                                             |   |   |
| Undistributed  earnings of unconsolidated affiliates                               |       | (.3                                              | )          |     | (.7                                              | ) |   |
| Change  in accounts payable and accrued expenses                                   |       | 30.0                                             |       |     | 13.6                                             |   |   |
| Change  in accrued income taxes payable/receivable                                 |       | 24.3                                             |       |     | 17.6                                             |   |   |
| Other                                                                              |       | (56.9                                            | )          |     | (39.4                                            | ) |   |
| Net  cash provided by operating activities                                         |       | 410.0                                            |       |     | 445.0                                            |   |   |
|                                                                               |       |                                             |       |     |                                             |   |   |
| **Cash Flows from Investing Activities:**                                          |       |                                             |       |     |                                             |   |   |
| Cost  of receivables acquired                                                      |       | (23,598.4                                        | )          |     | (23,814.9                                        | ) |   |
| Collections  of receivables                                                        |       | 23,113.3                                         |       |     | 23,178.3                                         |   |   |
| Cost  of equipment on operating leases acquired                                    |       | (335.6                                           | )          |     | (358.0                                           | ) |   |
| Proceeds  from sales of equipment on operating leases                              |       | 220.8                                            |       |     | 215.3                                            |   |   |
| Cost  of notes receivable with John Deere                                          |       | (242.4                                           | )          |     | (244.8                                           | ) |   |
| Collection  of notes receivable with John Deere                                    |       | 327.4                                            |       |     | 164.3                                            |   |   |
| Proceeds  from sales of receivables                                                |       | 33.0                                             |       |     | 101.6                                            |   |   |
| Change  in restricted cash                                                         |       | (37.5                                            | )          |     | (6.7                                             | ) |   |
| Other                                                                              |       | 1.4                                              |       |     | (22.1                                            | ) |   |
| Net  cash used for investing activities                                            |       | (518.0                                           | )          |     | (787.0                                           | ) |   |
|                                                                               |       |                                             |       |     |                                             |   |   |
| **Cash Flows from Financing Activities:**                                          |       |                                             |       |     |                                             |   |   |
| Decrease  in commercial paper - net                                                |       | (2,649.7                                         | )          |     | (74.3                                            | ) |   |
| Increase  (decrease) in other notes payable - net                                  |       | 2,062.8                                          |       |     | (307.2                                           | ) |   |
| Increase  (decrease) in payable with John Deere - net                              |       | (306.6                                           | )          |     | 34.2                                             |   |   |
| Proceeds  from issuance of long-term borrowings                                    |       | 4,159.4                                          |       |     | 4,053.8                                          |   |   |
| Payments  of long-term borrowings                                                  |       | (2,187.2                                         | )          |     | (2,587.5                                         | ) |   |
| Dividends  paid                                                                    |       |                                             |       |     | (465.1                                           | ) |   |
| Debt  issuance costs                                                               |       | (111.3                                           | )          |     | (16.2                                            | ) |   |
| Net  cash provided by financing activities                                         |       | 967.4                                            |       |     | 637.7                                            |   |   |
|                                                                               |       |                                             |       |     |                                             |   |   |
| **Effect of exchange rate changes on cash and cash  equivalents**                  |       | 30.3                                             |       |     | 9.1                                              |   |   |
| **Net increase in cash and cash equivalents**                                      |       | 889.7                                            |       |     | 304.8                                            |   |   |
| **Cash and cash equivalents at beginning of period**                               |       | 1,082.6                                          |       |     | 190.8                                            |   |   |
| **Cash and cash equivalents at end of period**                                     |       | $    1,972.3                 |       |     | $       495.6 |   |   |
| ** **                                                                         |       |                                             |       |     |                                             |   |   |

 

See Condensed Notes toInterim Financial Statements.

 

4

 

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# **JohnDeere Capital Corporation and Subsidiaries**

**Condensed Notes to Interim Financial Statements**

**(Unaudited)**

 
| (1)    | The  consolidated financial statements of John Deere Capital Corporation (Capital  Corporation) and its subsidiaries (collectively called the Company) have been  prepared by the Company, without audit, pursuant to the rules and  regulations of the U.S. Securities and Exchange Commission (SEC). Certain  information and footnote disclosures normally included in annual financial  statements prepared in accordance with accounting principles generally  accepted in the U.S. have been condensed or omitted as permitted by such  rules and regulations. All adjustments, consisting of normal recurring  adjustments, have been included. Management believes that the disclosures are  adequate to present fairly the financial position, results of operations and  cash flows at the dates and for the periods presented. It is suggested that  these interim financial statements be read in conjunction with the financial  statements and the notes thereto appearing in the Company’s latest annual  report on Form 10-K. Results for interim periods are not necessarily  indicative of those to be expected for the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The  preparation of financial statements in conformity with accounting principles  generally accepted in the U.S. requires management to make estimates and  assumptions that affect the reported amounts and related disclosures. Actual  results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Subsequent  events have been evaluated through August 28, 2009, which is the date  these financial statements were issued on Form 10-Q with the SEC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (2)    | The  Company provides and administers financing for retail purchases of new  equipment manufactured by Deere & Company’s agriculture and turf and  construction and forestry divisions and used equipment taken in trade for  this equipment. John Deere’s agricultural equipment operations and the  commercial and consumer equipment operations were combined into the  agriculture and turf operations at the beginning of the third quarter of  2009. The Company generally purchases retail installment sales and loan  contracts (retail notes) from Deere & Company and its wholly-owned  subsidiaries (collectively called John Deere). John Deere generally acquires  these retail notes through John Deere retail dealers. The Company also  purchases and finances a limited amount of non-Deere retail notes and  continues to service a small portfolio of recreational products and other  retail notes. In addition, the Company leases John Deere equipment and a  limited amount of non-Deere equipment to retail customers (financing and  operating leases). The Company also finances and services revolving charge  accounts, in most cases acquired from and offered through merchants in the  agriculture and turf and construction and forestry markets (revolving charge  accounts). Further, the Company finances and services operating loans, in  most cases offered through and acquired from farm input providers, through  direct relationships with agricultural producers or through agribusinesses  (operating loans). The Company also provides wholesale financing for  inventories of John Deere agriculture and turf and construction and forestry  equipment owned by dealers of those products (wholesale receivables). The  Company also offers credit enhanced international export financing to select  customers and dealers which generally involves John Deere products and offers  certain crop risk mitigation products in the U.S. In addition, the Company  makes loans to certain affiliated companies that directly invest in wind  energy projects. Retail notes, revolving charge accounts, operating loans,  financing leases and wholesale receivables are collectively called  “Receivables.” Receivables and operating leases are collectively called “Receivables  and Leases.” |

 

5

 

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| (3)    | Comprehensive  income, which includes all changes in the Company’s equity during the period  except transactions with the stockholder, was as follows (in millions of  dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three Months  Ended |   | Nine Months  Ended |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | July 31, |   | July 31, |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2009 |   | 2008 |   | 2009 |   | 2008 |   |   |
|   | Net  income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $     59.1 |   |   | $     70.1 |   |   | $  128.1 |   |   | $  224.6 |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Other  comprehensive income (loss), net of tax:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Change  in cumulative translation adjustment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 25.5 |   |   | 2.2 |   |   | 27.4 |   |   | 18.1 |   |   |   |
|   | Unrealized  loss on investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   | (1.2 | ) |   |   |
|   | Unrealized  gain (loss) on derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 9.9 |   |   | 12.2 |   |   | (14.4 | ) |   | (4.1 | ) |   |   |
|   | Total  comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $     94.5 |   |   | $     84.5 |   |   | $  141.1 |   |   | $  237.4 |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (4)    | Commitments and  contingencies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | At  July 31, 2009, John Deere Credit Inc., the John Deere finance subsidiary  in Canada, had $101 million of commercial paper and $1,639 million of  medium-term notes outstanding that were guaranteed by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | At  July 31, 2009, the Company had $18 million of guarantees issued to  turbine manufacturers for John Deere Renewables, LLC wind turbine purchases.  John Deere Renewables, LLC is an affiliated company that has commitments to  purchase wind turbines related to its direct investments in wind energy  projects. At July 31, 2009, the maximum remaining term of these purchase  commitments was approximately one year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The  Company’s subsidiary, John Deere Risk Protection, Inc., offers crop  insurance products through managing general agency agreements (Agreements)  with insurance companies (Insurance Carriers) rated “Excellent” by A.M.  Best Company. As a managing general agent, John Deere Risk  Protection, Inc. will receive commissions from the Insurance Carriers  for selling crop insurance to producers. The Company has guaranteed certain  obligations under the Agreements, including the obligation to pay the  Insurance Carriers for any uncollected premiums. At July 31, 2009, the  maximum exposure for uncollected premiums was approximately $179 million.  Substantially all of the Company’s crop insurance risk under the Agreements  has been mitigated by a syndicate of private reinsurance companies. The  reinsurance companies are rated “Excellent” or higher by A.M. Best  Company. In the event of a widespread catastrophic crop failure throughout  the U.S. and the default of these highly rated private reinsurance companies  on their reinsurance obligations, the Company would be required to reimburse  the Insurance Carriers for exposures under the Agreements of approximately  $915 million at July 31, 2009. The Company believes that the  likelihood of the occurrence of events that would give rise to the exposures  under these Agreements is substantially remote and as a result, at July 31, 2009,  the Company’s accrued liability under the Agreements was not material. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The  Company has commitments to extend credit to customers and John Deere dealers  through lines of credit and other pre-approved credit arrangements. The  Company applies the same credit policies and approval process for these  commitments to extend credit as it does for its Receivables. Collateral is  not required for these commitments, but if credit is extended, collateral may  be required upon funding. The amount of unused commitments to extend credit  to John Deere dealers was $2.9 billion at July 31, 2009. The amount  of unused commitments to extend credit to customers was $42.3 billion at  July 31, 2009. A significant portion of these commitments is not  expected to be fully drawn upon; therefore, the total commitment amounts  likely do not represent a future cash requirement. The Company generally has  the right to unconditionally cancel, alter or amend the terms of these  commitments at any time. Over 95 percent of these unused commitments to  extend credit to customers relate to revolving charge accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | At July 31,  2009, the Company had restricted other assets of $3 million. See Note 5 for  additional restricted assets associated with borrowings related to  securitizations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

6

 

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|   | The  Company also had other miscellaneous contingent liabilities totaling  approximately $4 million at July 31, 2009, for which it believes the  probability for payment is substantially remote. The accrued liability for  these contingencies was not material at July 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (5)    | Securitization  of receivables:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The  Company, as a part of its overall funding strategy, periodically transfers  certain receivables (retail notes) into variable interest entities (VIEs)  that are special purpose entities (SPEs) as part of its asset-backed  securities programs (securitizations). The structure of these transactions is  such that the transfer of the retail notes did not meet the criteria of sales  of receivables, and is, therefore, accounted for as secured borrowings. SPEs  utilized in securitizations of retail notes differ from other entities  included in the Company’s consolidated statements because the assets they  hold are legally isolated. For bankruptcy analysis purposes, the Capital  Corporation has sold the receivables to the SPEs in a true sale and the SPEs  are separate legal entities. Use of the assets held by the SPEs is restricted  by terms of the documents governing the securitization transaction.                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In  securitizations of retail notes related to secured borrowings, the retail  notes are transferred to certain SPEs which in turn issue debt to investors.  The resulting secured borrowings are included in short-term borrowings on the  balance sheet as shown in the table below. The securitized retail notes are  recorded as “Restricted securitized retail notes” on the balance sheet. The  total restricted assets on the balance sheet related to these securitizations  include the restricted securitized retail notes less an allowance for credit  losses, and other assets primarily representing restricted cash as shown in  the following table. The SPEs supporting the secured borrowings to which the  retail notes are transferred are consolidated unless the Company is not the  primary beneficiary. No additional support to these SPEs beyond what was  previously contractually required has been provided during the first nine  months of 2009.                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In  certain securitizations, the Company is the primary beneficiary of the SPEs  and, as such, consolidates the entities. The restricted assets (retail notes,  allowance for credit losses and other assets) of the consolidated SPEs  totaled $1,855 million, $1,303 million and $1,503 million at  July 31, 2009, October 31, 2008 and July 31, 2008,  respectively. The liabilities (other notes payable and accounts payable and  accrued expenses) of these SPEs totaled $1,796 million, $1,287 million and  $1,490 million at July 31, 2009, October 31, 2008 and July 31,  2008, respectively. The credit holders of these SPEs do not have legal  recourse to the Company’s general credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In  other securitizations, the Company transfers retail notes into  bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that  are not consolidated. The Company is not considered to be the primary  beneficiary of these conduits, because the Company’s variable interests in  the conduits will not absorb a majority of the conduits’ expected losses,  residual returns, or both. This is primarily due to these interests  representing significantly less than a majority of the conduits’ total assets  and liabilities. These conduits provide a funding source to the Company (as  well as other transferors into the conduit) as they fund the retail notes  through the issuance of commercial paper. The Company’s carrying values and  variable interests related to these conduits were restricted assets (retail  notes, allowance for credit losses and other assets) of $2,060 million,  $334 million and $395 million at July 31, 2009,  October 31, 2008 and July 31, 2008, respectively. The liabilities  (other notes payable and accounts payable and accrued expenses) related to  these conduits were $1,895 million, $334 million and $388 million  at July 31, 2009, October 31, 2008 and July 31, 2008,  respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The  Company’s carrying amount of the liabilities to the unconsolidated conduits,  compared to the maximum exposure to loss related to these conduits, which  would only be incurred in the event of a complete loss on the restricted  assets was as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | July 31,  2009 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|   | Carrying value of  liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ | 1,895.4 |   |
|   | Maximum exposure to  loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2,059.7 |   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |

 

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|   | The  assets of unconsolidated conduits related to securitizations in which the  Company’s variable interests were considered significant were approximately  $34 billion at July 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The  components of consolidated restricted assets related to secured borrowings in  securitization transactions were as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | July 31,  2009 |   | October 31,  2008 |   | July 31,  2008 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |
|   | Restricted  securitized retail notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $ | 3,793.4 |   | $ | 1,592.5 |   | $ | 1,857.0 |   |
|   | Allowance  for credit losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (17.6 | ) | (10.9 | ) | (12.5 | ) |
|   | Other  assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 139.1 |   | 55.0 |   | 53.6 |   |
|   | Total  restricted securitized assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $ | 3,914.9 |   | $ | 1,636.6 |   | $ | 1,898.1 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The  components of consolidated secured borrowings and other liabilities related  to securitizations were as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | July 31,  2009 |   | October 31,  2008 |   | July 31,  2008 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |
|   | Other  notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $ | 3,684.7 |   | $ | 1,618.3 |   | $ | 1,875.2 |   |
|   | Accounts  payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 6.7 |   | 3.0 |   | 2.7 |   |
|   | Total  liabilities related to restricted securitized assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $ | 3,691.4 |   | $ | 1,621.3 |   | $ | 1,877.9 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The  secured borrowings related to these restricted securitized retail notes are  obligations that are payable as the retail notes are liquidated. Repayment of  the secured borrowings depends primarily on cash flows generated by the  restricted assets. Due to the Company’s short-term credit rating, cash  collections from these restricted assets are not required to be placed into a  restricted collection account until immediately prior to the time payment is  required to the secured creditors. At July 31, 2009, the maximum  remaining term of all restricted receivables was approximately six years. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (6)    | Assets  and liabilities measured at fair value on a recurring basis were as follows  (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | July 31,  2009 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Total |   | Level 2 |   |   |
|   | Other  assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
|   | Derivatives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $       497.7 |   |   | $        497.7 |   |   |   |
|   | Foreign  exchange contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 1.3 |   |   | 1.3 |   |   |   |
|   | Cross-currency  interest rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 128.1 |   |   | 128.1 |   |   |   |
|   | Total  assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $       627.1 |   |   | $        627.1 |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
|   | Accounts  payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
|   | Derivatives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $       161.1 |   |   | $        161.1 |   |   |   |
|   | Foreign  exchange contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 14.7 |   |   | 14.7 |   |   |   |
|   | Cross-currency  interest rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | .9 |   |   | .9 |   |   |   |
|   | Total  liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $       176.7 |   |   | $        176.7 |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Financial  assets measured at fair value on a nonrecurring basis and the losses during  the periods were as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | July 31,  2009 |   | Three Months  Ended  July 31, 2009 |   | Nine Months  Ended  July 31, 2009 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Level 3 |   | Losses |   | Losses |   |
|   | Receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $24.2 |   | $4.5 |   | $13.2 |   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

8

 

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|   | Level  1 measurements consist of quoted prices in active markets for identical  assets or liabilities. Level 2 measurements include significant other  observable inputs such as quoted prices for similar assets or liabilities in  active markets; identical assets or liabilities in inactive markets;  observable inputs such as interest rates and yield curves; and other  market-corroborated inputs. Level 3 measurements include significant  unobservable inputs. There were no assets or liabilities valued using level 1  measurements at July 31, 2009.                                                                                             |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Fair  value is defined as the price that would be received to sell an asset or paid  to transfer a liability in an orderly transaction between market participants  at the measurement date. In determining fair value, the Company uses various  methods including market and income approaches. The Company utilizes  valuation models and techniques that maximize the use of observable inputs.  The models are industry-standard models that consider various assumptions  including time values and yield curves as well as other economic measures.  These valuation techniques are consistently applied.                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The  following is a description of the valuation methodologies the Company uses to  measure financial instruments at fair value:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | *Derivative Instruments –*The Company’s derivative financial  instruments consist of interest rate swaps and caps, foreign currency  forwards and cross-currency interest rate swaps. The portfolio is valued  based on a discounted cash flow approach using market observable inputs,  including swap curves and both forward and spot exchange rates for  currencies.                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | *Receivables –*Receivables with specific reserves established due  to payment defaults are valued based on a discounted cash flow approach or  realizable values for the underlying collateral. The related credit  allowances represent cumulative adjustments to measure those specific  receivables at fair value.                                                                                                                                                                                                                                                                                                                                            |
|   | * *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (7)    | The  fair values of financial instruments that do not approximate the carrying values  in the financial statements were as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | July 31, 2009 |   | October 31, 2008 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Carrying  Value |   |   | Fair  Value |   |   | Carrying  Value |   |   | Fair  Value |   |   |
|   | Receivables financed - net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $  14,566 |   |   | $  14,571 |   |   | $  16,213 |   |   | $  15,815 |   |   |
|   | Restricted securitized retail notes - net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 3,776 |   |   | 3,785 |   |   | 1,582 |   |   | 1,578 |   |   |
|   | Short-term secured borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 3,685 |   |   | 3,699 |   |   | 1,618 |   |   | 1,583 |   |   |
|   | Long-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 13,345 |   |   | 13,690 |   |   | 10,530 |   |   | 9,749 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Fair  values of the long-term Receivables were based on the discounted values of  their related cash flows at current market interest rates. The fair values of  the remaining Receivables approximated the carrying amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Fair  values of long-term borrowings and short-term secured borrowings were based  on the discounted values of their related cash flows at current market  interest rates. Certain long-term borrowings have been swapped to current  variable interest rates. The carrying values of these long-term borrowings  include adjustments related to fair value hedges.                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Fair  values of derivative financial instruments are included in Note 6. The  carrying values and the fair values are the same since they are recorded at  fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (8)    | It  is the Company’s policy that derivative transactions are executed only to  manage exposures arising in the normal course of business and not for the  purpose of creating speculative positions or trading. The Company manages the  relationship of the types and amounts of its funding sources to its  receivable and lease portfolio in an effort to diminish risk due to interest  rate and foreign currency fluctuations, while responding to favorable  financing opportunities. The Company also has foreign currency exposures at  some of its foreign and domestic operations related to financing in  currencies other than the local currencies. |

 

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|   | All  derivatives are recorded at fair value on the balance sheet. Each derivative  is designated as a cash flow hedge, a fair value hedge, or remains  undesignated. All designated hedges are formally documented as to the  relationship with the hedged item as well as the risk-management strategy.  Both at inception and on an ongoing basis the hedging instrument is assessed  as to its effectiveness, when applicable. If and when a derivative is  determined not to be highly effective as a hedge, or the underlying hedged  transaction is no longer likely to occur, or the derivative is terminated,  hedge accounting is discontinued. Any past or future changes in the  derivative’s fair value, which will not be effective as an offset to the  income effects of the item being hedged, are recognized currently in the  income statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Certain  of the Company’s derivative agreements contain credit support provisions that  require the Company to post collateral based on reductions in credit ratings.  The aggregate fair value of all derivatives with credit-risk-related  contingent features that are in a liability position at July 31, 2009  was $22 million. The Company, due to its credit rating, has not posted any  collateral. If the credit-risk-related contingent features were triggered,  the Company would be required to post full collateral for this liability  position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Derivative  instruments are subject to significant concentrations of credit risk to the  banking sector. The Company manages individual counterparty exposure by  setting limits that consider the credit rating of the counterparty and the  size of other financial commitments and exposures between the Company and the  counterparty banks. All interest rate derivatives are transacted under  International Swaps and Derivatives Association (ISDA) documentation. Some of  these agreements include collateral support arrangements or mutual put  options at fair value. Each master agreement permits the net settlement of  amounts owed in the event of early termination. The maximum amount of loss  that the Company would incur if counterparties to derivative instruments fail  to meet their obligations, not considering collateral received or netting  arrangements, was $627 million as of July 31, 2009. The amount of  collateral received at July 31, 2009 to offset this potential maximum  loss was $40 million. The netting provisions of the agreements would reduce  the maximum amount of loss the Company would incur if the counterparties to  derivative instruments fail to meet their obligations by an additional $125  million as of July 31, 2009. None of the concentrations of risk with any  individual counterparty was considered significant at July 31, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Cash flow hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Certain  interest rate contracts (swaps) were designated as hedges of future cash  flows from variable interest rate borrowings. The total notional amount of  these receive-variable/pay-fixed interest rate contracts at July 31,  2009 was $3,411 million. The effective portions of the fair value gains or  losses on these cash flow hedges were recorded in other comprehensive income  (OCI) and subsequently reclassified into interest expense as payments were  accrued and the contracts approached maturity. These amounts offset the  effects of interest rate changes on the related borrowings. Any ineffective  portions of the gains or losses on all cash flow interest rate contracts  designated as hedges were recognized currently in interest expense. The cash  flows from these contracts were recorded in operating activities in the  consolidated statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The  amount of loss recorded in OCI at July 31, 2009 that is expected to be  reclassified to interest expense in the next twelve months if interest rates  remain unchanged is approximately $40 million after-tax. These contracts  mature in up to 22 months. There were no significant gains or losses  reclassified from OCI to earnings based on the probability that the original  forecasted transaction would not occur.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Fair value hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Certain  interest rate contracts (swaps) were designated as fair value hedges of  fixed-rate, long-term borrowings. The total notional amount of these  receive-fixed/pay-variable interest rate contracts at July 31, 2009 was  $6,238 million. The effective portions of the fair value gains or losses on  these contracts were offset by fair value gains or losses on the hedged items  (fixed-rate borrowings). Any ineffective portions of the gains or losses on  these interest rate contracts designated as hedges were recognized currently  in interest expense. The ineffective portions totaled a $1 million loss in  the third quarter of 2009 and a $.1 million gain in the first nine  months of 2009. The cash flows from these contracts were recorded in  operating activities in the consolidated statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

 

10

 

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|   | The gains (losses)  including interest on these contracts and the underlying borrowings recorded  in interest expense were as follows (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Three Months  Ended  July 31, 2009 |   | Nine Months  Ended  July 31, 2009 |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $         2.1 |   |   | $      283.3 |   |   |   |
|   | Borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (34.9 | ) |   | (391.9 | ) |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Derivatives not  designated as hedging instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The  Company has certain interest rate contracts (swaps and caps), foreign  exchange contracts (forwards and swaps) and cross-currency interest rate  contracts (swaps), which were not formally designated as hedges. These  derivatives were held as economic hedges for underlying interest rate or  foreign currency exposures primarily for certain borrowings. The total  notional amount of the interest rate swaps was $990 million, the foreign  exchange contracts was $1,227 million and the cross-currency interest rate  contracts was $847 million at July 31, 2009. There were also $2,670  million of interest rate caps purchased and $2,670 million sold at the same  capped interest rate to facilitate borrowings through securitization of  retail notes at July 31, 2009. The fair value gains or losses from the  interest rate contracts were recognized currently in interest expense and the  gains or losses from foreign exchange contracts in administrative and  operating expenses, generally offsetting over time the expenses on the  exposures being hedged. The cash flows from these non-designated contracts  were recorded in operating activities in the consolidated statement of cash  flows. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Fair values of  derivative instruments in the consolidated balance sheet were as follows (in  millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | July 31,  2009 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Other  Assets |   | Accounts Payable  and Accrued  Expenses |   |
|   | Designated  as hedging instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $ | 436.7 |   |   | $ | 99.2 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |
|   | Not  designated as hedging instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 61.0 |   |   | 61.9 |   |   |
|   | Foreign  exchange contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 1.3 |   |   | 14.7 |   |   |
|   | Cross-currency  interest rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 128.1 |   |   | .9 |   |   |
|   | Total  not designated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 190.4 |   |   | 77.5 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |
|   | Total  derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $ | 627.1 |   |   | $ | 176.7 |   |   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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|   | The  effects of derivative instruments on the statement of consolidated income  consisted of the following (in millions of dollars):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Classification of  Gains (Losses) |   | Three Months  Ended  July 31, 2009 |   | Nine Months  Ended  July 31, 2009 |   |
|   | Fair  Value Hedges:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Interest expense |   | $ | 2.1 |   |   | $ | 283.3 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |
|   | Cash  Flow Hedges:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |
|   | Total  Recognized in OCI                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |
|   | (Effective  Portion):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | OCI (pretax) |   | (11.1 | ) |   | (80.3 | ) |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |
|   | Reclassified  from OCI                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |
|   | (Effective  Portion):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Interest expense |   | (26.1 | ) |   | (58.5 | ) |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |
|   | Recognized  Directly in Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |
|   | (Ineffective  Portion) *:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |
|   | Interest  rate contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Interest expense |   | * |   |   | * |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |
|   | Not  Designated as Hedges:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
|   | Interest  rate contracts **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Interest expense |   | $ | 5.9 |   |   | $ | 6.1 |   |   |
|   | Foreign  exchange contracts **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Administrative and  operating expenses |   | (53.9 | ) |   | (1.6 | ) |   |
|   | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   | $ | (48.0 | ) |   | $ | 4.5 |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|   | *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | The amount is  less than $.1 million. |
|   | **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Includes  interest and foreign exchange expenses from cross-currency interest rate  contracts. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (9)    | New accounting  standards adopted in the first nine months of 2009 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  the first quarter of 2009, the Company adopted Financial Accounting Standards  Board (FASB) Statement No. 157, Fair Value Measurements, for financial  assets and liabilities recognized or disclosed at fair value (see Note 6).  This Statement defines fair value and expands disclosures about fair value  measurements. These definitions apply to other accounting standards that use  fair value measurements and may change the application of certain  measurements used in current practice. For nonfinancial assets and  liabilities, the effective date is the beginning of fiscal year 2010, except  items that are recognized or disclosed at fair value on a recurring basis.  The adoption did not have a material effect on the Company’s consolidated  financial statements.                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  the first quarter of 2009, the Company adopted FASB Statement No. 159,  The Fair Value Option for Financial Assets and Financial Liabilities. This  Statement permits entities to measure most financial instruments at fair  value if desired. It may be applied on a contract by contract basis and is  irrevocable once applied to those contracts. The standard may be applied at  the time of adoption for existing eligible items, or at initial recognition  of eligible items. After election of this option, changes in fair value are  reported in earnings. The items measured at fair value must be shown  separately on the balance sheet. The cumulative effect of adoption would be  reported as an adjustment to beginning retained earnings. The Company did not  change the valuation of any financial instruments based on this Statement  and, therefore, the adoption had no effect on the Company’s consolidated  financial statements. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  the first quarter of 2009, the Company adopted FASB Statement No. 161,  Disclosures about Derivative Instruments and Hedging Activities. This  Statement increases the disclosure requirements for derivative instruments  (see Note 8). Most disclosures are required on an interim and annual basis.  The adoption did not have a material effect on the Company’s consolidated  financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |

 

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|   | In  the first quarter of 2009, the Company adopted FASB Statement No. 162,  The Hierarchy of Generally Accepted Accounting Principles. This Statement  identifies the sources for generally accepted accounting principles (GAAP) in  the U.S. and lists the categories in descending order. An entity should follow  the highest category of GAAP applicable for each of its accounting  transactions. The adoption did not have a material effect on the Company’s  consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  the first quarter of 2009, the Company adopted FASB Staff Position (FSP) Financial  Accounting Statement (FAS) 140-4 and FIN 46(R)-8, Disclosures by Public  Entities (Enterprises) about Transfers of Financial Assets and Interests in  Variable Interest Entities (see Note 5). The new standard requires additional  disclosure for transfers of financial assets in securitization transactions  and an entity’s involvement with variable interest entities. The adoption did  not have a material effect on the Company’s consolidated financial  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  the third quarter of 2009, the Company adopted FASB Statement No. 165,  Subsequent Events. This Statement establishes general standards of accounting  for and disclosure of events that occur after the balance sheet date but  before the financial statements are issued, or available to be issued if not  widely distributed. The financial statements should reflect all subsequent  events that provide additional evidence about conditions that existed at the  date of the balance sheet. The financial statements should not reflect  subsequent events that provide evidence about conditions that did not exist  at the date of the balance sheet. An entity must disclose the date through  which subsequent events have been evaluated, as well as whether that date is  the date the financial statements were issued, or the date they were  available to be issued (see Note 1). The adoption did not have a material  effect on the Company’s consolidated financial statements.                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  the third quarter of 2009, the Company adopted FSP FAS 107-1 and Accounting  Principles Bulletin (APB) 28-1, Interim Disclosures about Fair Value of  Financial Instruments (see Note 7). The new standard requires the fair value  disclosures as described in FASB Statement No. 107, Disclosures about  Fair Value of Financial Instruments, on an interim basis. Previously, this  was disclosed on an annual basis only. The adoption did not have a material  effect on the Company’s consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | New accounting  standards to be adopted are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  December 2007, the FASB issued Statement No. 141 (revised 2007),  Business Combinations, and Statement No. 160, Noncontrolling Interests  in Consolidated Financial Statements. Statement No. 141 (revised 2007)  requires an acquirer to measure the identifiable assets acquired, the liabilities  assumed and any noncontrolling interest in the acquiree at their fair values  on the acquisition date, with goodwill being the excess value over the net  identifiable assets acquired. Statement No. 160 requires that a  noncontrolling interest in a subsidiary be reported as equity in the  consolidated financial statements. Consolidated net income should include the  net income for both the parent and the noncontrolling interest with  disclosure of both amounts on the consolidated statement of income. The  effective date for both Statements is the beginning of fiscal year 2010. The  adoptions are not expected to have material effects on the Company’s  consolidated financial statements. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  June 2009, the FASB issued Statement No. 166, Accounting for  Transfers of Financial Assets an amendment of FASB Statement No. 140.  Statement No. 166 eliminates the qualifying special purpose entities  from the consolidation guidance and clarifies the requirements for isolation  and limitations on portions of financial assets that are eligible for sale  accounting. It requires additional disclosures about the risks from  continuing involvement in transferred financial assets accounted for as  sales. The effective date is the beginning of fiscal year 2011. The adoption  is not expected to have a material effect on the Company’s consolidated  financial statements.                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In  June 2009, the FASB issued Statement No. 167, Amendments to FASB  Interpretation No. 46(R). This Statement requires a qualitative analysis  to determine the primary beneficiary of a variable interest entity (VIE). The  analysis identifies the primary beneficiary as the enterprise that has both  the power to direct the activities of a VIE that most significantly impact  the VIE’s economic performance and the obligation to absorb losses or the  right to receive benefits that could be significant to the VIE. The Statement  also requires additional disclosures about an enterprise’s involvement in a  VIE. The effective date is the beginning of fiscal year 2011. The Company has  currently not determined the potential effects on the consolidated financial  statements.                                                                                                                                                                                                                            |

 

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|   | In  June 2009, the FASB issued Statement No. 168, The FASB Accounting  Standards Codification and the Hierarchy of Generally Accepted Accounting  Principles (GAAP). This Statement replaces Statement No. 162 and  establishes the FASB Accounting Standards Codification (Codification) as the  source of authoritative accounting principles recognized by the FASB.  Rules and interpretive releases of the SEC under federal securities laws  are also sources of authoritative GAAP for SEC registrants. All guidance  contained in the Codification carries an equal level of authority. The  effective date is the fourth quarter of 2009. The adoption will not have a  material effect on the Company’s consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (10)   | The  Company is a participating employer in certain Deere & Company  sponsored defined benefit pension plans for employees 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 of service and employee  compensation. Pension expense is actuarially determined based on the  Company’s employees included in the plan. The Company’s pension expense  amounted to $3.0 million in the first nine months of 2009. The  accumulated benefit obligation and plan net assets for the employees of the  Company are not determined separately from Deere & Company. The  Company generally provides defined benefit health care and life insurance  plans for retired employees in the U.S. as a participating employer in  Deere & Company’s sponsored plans. Health care and life insurance  benefits expense is actuarially determined based on the Company’s employees  included in the plans and amounted to $2.6 million during the first nine  months of 2009. Further disclosure for these plans is included in  Deere & Company’s Form 10-Q for the quarter ended July 31,  2009. |

 

14

 

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Item 2.            Management’s Discussion and Analysis of FinancialCondition and Results of Operations.

 

Results of Operations

 

Overview

 

Organization

 

The Company primarily generates revenues and cash byfinancing John Deere dealers’ sales and leases of new and used agriculture, turf,construction and forestry equipment. In addition, the Company provideswholesale financing to dealers of the foregoing equipment, provides operatingloans, finances retail revolving charge accounts, offers certain crop riskmitigation products and makes loans to certain affiliated companies thatdirectly invest in wind energy projects. 

 

Trends andEconomic Conditions

 

The Company’s business is closely related to JohnDeere’s business. Industry farm machinery sales for 2009 are forecast to bedown slightly for the year in the U.S. and Canada though sales of largetractors, combines, sprayers and seeding equipment are expected to be higher.Industry farm machinery sales in Western Europe are forecast to decline10 to 15 percent for the year. In other parts of the world, markets areexpected to be sharply lower. Industry sales of turf equipment and compactutility tractors in the U.S. and Canada are also expected to be down about 20percent. John Deere’s agriculture and turf equipment sales were down 21 percentfor the third quarter, 9 percent for the first nine months of 2009 and areforecast to decrease about 15 percent for the full year. This forecast includesa negative currency translation effect of about 5 percent. John Deere’sconstruction and forestry sales declined 47 percent in the third quarter and 45percent in the first nine months of 2009. These sales are expected to decrease approximately 47 percent for theyear, attributable to the decline in the global economy and historically lowlevels of construction activity in the U.S. The Company’s net income in 2009 is forecast to decrease toapproximately $165 million, compared to $282 million in 2008. The forecastdecrease from 2008 is primarily due to narrower financing spreads, a higherprovision for credit losses and lower commissions from crop insurance.

 

Items of concern for the Company include the declinein global economic activity and expected slow recovery, the turmoil infinancial markets and the effectiveness of governmental policies to promoteeconomic recovery and the availability of credit for the Company’s customers.Significant fluctuations in foreign currency exchange rates could also impactthe Company’s results.  

 

2009 Compared with 2008

 

Net income was $59.1 million for the third quarter and$128.1 million for the first nine months of 2009, compared with $70.1 millionand $224.6 million, respectively, last year. Results were lower for the quarterprimarily due to a higher provision for credit losses and narrower financingspreads, partially offset by foreign exchange gains and lower administrativeand operating losses. Year-to-date results were lower primarily due to narrowerfinancing spreads, a higher provision for credit losses and lower commissionsfrom crop insurance, partially offset by lower administrative and operatingexpenses.

 

15

 

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Revenues totaled $465.3 million for the third quarterand $1,328.8 million for the first nine months of 2009, compared to $483.6million and $1,467.3 million, respectively, last year. The year-to-datedecrease was primarily due to lower financing rates and lower commissions fromcrop insurance. Finance income earned on retail notes totaled$561.9 million for the first nine months of 2009, down $85.0 millioncompared to $646.9 million for the same period in 2008. This decrease wasprimarily due to lower financing rates and a 5 percent decrease in theaverage retail note portfolio balances. Lease revenues totaled$237.4 million in the first nine months of 2009, compared to$246.7 million in the first nine months of 2008. This decrease wasprimarily due to lower financing rates. Revenues earned on revolving chargeaccounts amounted to $175.7 million in the first nine months of 2009,compared to $162.4 million during the same period last year. The increasewas primarily due to an increase in the average balance of revolving chargeaccounts, partially offset by lower financing rates in the first nine months of2009, compared with the same period last year. Finance income earned onwholesale receivables totaled $229.9 million for the first nine months of 2009,compared to $232.0 million for the same period in 2008. The decrease wasprimarily due to lower financing rates, partially offset by a 14 percent increasein the average balance of wholesale receivables. Operating loan income amountedto $11.0 million in the first nine months of 2009, compared to$18.5 million in the first nine months of 2008. The decrease was primarilydue to lower financing rates and a 12 percent decrease in the average balanceof operating loans. Revenues earned from John Deere totaled $133.3 millionfor the third quarter and $403.7 million in the first nine months of 2009,compared to $133.7 million and $409.4 million for the same periods lastyear.

 

Crop insurance commissions totaled $40.2 million forthe third quarter and $52.3 million for the first nine months of 2009, comparedto $39.3 million and $95.3 million for the same periods in 2008. Theyear-to-date decrease was primarily due to less favorable underwritingexperience that resulted in lower commissions in the first and second quartersof 2009, compared to the same periods in 2008. 

 

Interest expense totaled $195.3 million for the thirdquarter and $606.5 million for the first nine months of 2009, compared to$193.9 million and $622.5 million for the same periods in 2008. Theyear-to-date decrease was due to lower average interest rates, partially offsetby higher average borrowings. 

 

Administrative and operating expenses were $78.9million in the third quarter and $231.8 million for the first nine months of2009, compared with $103.0 million and $266.0 million for the same periodsin 2008. The decreases were primarily due to lower compensation costs andforeign exchange gains.

 

During the third quarter and first nine months of2009, the provision for credit losses totaled $36.1 million and $110.3 million,respectively, compared with $16.1 million and $46.8 million for the sameperiods in 2008. For the first nine months of 2009, the Company has experiencedhigher write-offs of construction and forestry equipment retail notes andrevolving charge accounts. Total net write-offs of Receivables financed were$27.2 million and $87.1 million for the third quarter and first nine months of2009, compared with $12.2 million and $40.7 million for the same periods in2008. The annualized provision for credit losses, as a percentage of theaverage balance of total Receivables financed, was .79 percent for thethird quarter and .82 percent first nine months of 2009, compared with .36percent and .36 percent for the same periods in 2008. See the Company’smost recently filed annual report on Form 10-K for further informationregarding the Company’s allowance for credit losses policies. 

 

The Company’s ratio of earnings to fixed charges was1.49 to 1 for the third quarter of 2009, compared with 1.56 to 1 for thethird quarter of 2008. The ratio of earnings to fixed charges was 1.33 to 1 forthe first nine months of 2009, compared with 1.55 to 1 for the first ninemonths of 2008. “Earnings” consist of income before income taxes, thecumulative effect of changes in accounting and fixed charges excludingcapitalized interest. “Fixed charges” consist of interest on indebtedness,amortization of debt discount and expense, interest related to uncertain taxpositions, an estimated amount of rental expense under capitalized leases thatis deemed to be representative of the interest factor and rental expense underoperating leases, and capitalized interest.

 

16

 

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 Receivable and Lease acquisition volumes wereas follows (in millions of dollars):

 
|                                 |   | Three Months         |    |    |   |          | ** ** |
|--------------------------------------|--------|----------------------|---------|---------|--------|---------------|------------|
|                                 |   | Ended  July 31, |    |    |   |          | ** ** |
|                                 |   | 2009                 |    | 2008    |   | $ Change |       | % Change | ** ** |
| Retail  notes:                       |   |                 |    |    |   |          |       |   |   |
| Agriculture  and turf equipment      |   | $                    | 1,470.8 |    | $      | 1,440.5       |       |   | $ | 30.3 |   |   | 2 | % |   |
| Construction  and forestry equipment |   | 121.8                |    | 256.0   |   |          | (134.2     | ) |   | (52 | ) |   |
| Total  retail notes                  |   | 1,592.6              |    | 1,696.5 |   |          | (103.9     | ) |   | (6 | ) |   |
| Revolving  charge accounts           |   | 1,250.8              |    | 1,304.7 |   |          | (53.9      | ) |   | (4 | ) |   |
| Operating  loans                     |   | 139.4                |    | 426.4   |   |          | (287.0     | ) |   | (67 | ) |   |
| Wholesale  receivables               |   | 5,017.8              |    | 4,794.8 |   |          | 223.0      |   |   | 5 |   |   |
| Financing  leases                    |   | 69.5                 |    | 80.4    |   |          | (10.9      | ) |   | (14 | ) |   |
| Equipment  on operating leases       |   | 135.2                |    | 137.2   |   |          | (2.0       | ) |   | (1 | ) |   |
| Total  Receivables and Leases        |   | $                    | 8,205.3 |    | $      | 8,440.0       |       |   | $ | (234.7 | ) |   | (3 | )% |   |

 
|                                 |   | Nine Months         |     |     |   |          | ** ** |
|--------------------------------------|--------|---------------------|----------|----------|--------|---------------|------------|
|                                 |   | Ended July 31, |     |     |   |          | ** ** |
|                                 |   | 2009                |     | 2008     |   | $ Change |       | % Change | ** ** |
| Retail  notes:                       |   |                |     |     |   |          |       |   |   |
| Agriculture  and turf equipment      |   | $                   | 3,609.0  |     | $      | 3,929.4       |       |   | $ | (320.4 | ) |   | (8 | )% |   |
| Construction  and forestry equipment |   | 351.6               |     | 688.5    |   |          | (336.9     | ) |   | (49 | ) |   |
| Total  retail notes                  |   | 3,960.6             |     | 4,617.9  |   |          | (657.3     | ) |   | (14 | ) |   |
| Revolving  charge accounts           |   | 3,384.0             |     | 3,192.3  |   |          | 191.7      |   |   | 6 |   |   |
| Operating  loans                     |   | 939.2               |     | 1,655.3  |   |          | (716.1     | ) |   | (43 | ) |   |
| Wholesale  receivables               |   | 15,169.6            |     | 14,155.4 |   |          | 1,014.2    |   |   | 7 |   |   |
| Financing  leases                    |   | 144.9               |     | 194.0    |   |          | (49.1      | ) |   | (25 | ) |   |
| Equipment  on operating leases       |   | 335.6               |     | 358.0    |   |          | (22.4      | ) |   | (6 | ) |   |
| Total  Receivables and Leases        |   | $                   | 23,933.9 |     | $      | 24,172.9      |       |   | $ | (239.0 | ) |   | (1 | )% |   |

 

Retailnote volumes for agriculture and turf equipment decreased in the first ninemonths of 2009, when compared to last year, primarily due to a decrease infinanced market share. Retail note volumes for construction and forestryequipment decreased in the third quarter and first nine months of 2009, whencompared to last year, primarily due to decreases in retail sales of John Deereconstruction and forestry equipment. Revolving charge account volumes increasedin the first nine months of 2009, when compared to last year, primarily as aresult of increased market coverage. Operating loan volumes decreased duringthe third quarter and first nine months of 2009, when compared to last year,primarily due to decreased borrowings by farm input providers. Wholesalereceivable volumes increased during the third quarter and first nine months of2009, when compared to last year, due to increased shipments of John Deereagriculture and turf equipment in the U.S. as a result of increased retailsales activity.

 

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

 
|                                 |   |   | July 31, |     | October 31, |     | July 31, |     |
|--------------------------------------|--------|--------|---------------|----------|------------------|----------|---------------|----------|
|                                 |   |   | 2009          |     | 2008             |     | 2008          |     |
| Retail  notes:                       |   |   |          |     |             |     |          |     |
| Agriculture  and turf equipment      |   |   | $             | 9,550.8  |             |     | $             | 9,733.4  |   |   | $ | 9,657.1 |   |   |
| Construction  and forestry equipment |   |   | 1,512.5       |     |             | 1,986.5  |          |     | 2,076.7 |   |   |
| Recreational  products               |   |   | 7.0           |     |             | 9.2      |          |     | 9.8 |   |   |
| Total  retail notes                  |   |   | 11,070.3      |     |             | 11,729.1 |          |     | 11,743.6 |   |   |
| Revolving  charge accounts           |   |   | 2,074.0       |     |             | 1,825.1  |          |     | 1,776.0 |   |   |
| Operating  loans                     |   |   | 346.4         |     |             | 357.9    |          |     | 385.9 |   |   |
| Wholesale  receivables               |   |   | 4,582.3       |     |             | 3,570.6  |          |     | 4,051.6 |   |   |
| Financing  leases                    |   |   | 397.9         |     |             | 417.9    |          |     | 452.4 |   |   |
| Equipment  on operating leases       |   |   | 994.3         |     |             | 1,053.4  |          |     | 985.9 |   |   |
| Total  Receivables and Leases        |   |   | $             | 19,465.2 |             |     | $             | 18,954.0 |   |   | $ | 19,395.4 |   |   |

 

17

 

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

 
|                                                          |   |   | July 31, |     | October 31, |     | July 31, |     |
|---------------------------------------------------------------|--------|--------|---------------|----------|------------------|----------|---------------|----------|
|                                                          |   |   | 2009          |     | 2008             |     | 2008          |     |
| Receivables and Leases  administered:                         |   |   |          |     |             |     |          |     |
| Owned  by the Company                                         |   |   | $             | 15,671.8 |             |     | $             | 17,361.5 |   |   | $ | 17,538.4 |   |   |
| Owned  by the Company – restricted due to securitization |   |   | 3,793.4       |     |             | 1,592.5  |          |     | 1,857.0 |   |   |
| Total  Receivables and Leases owned by the Company            |   |   | 19,465.2      |     |             | 18,954.0 |          |     | 19,395.4 |   |   |
| Administered  – with limited recourse*                   |   |   | 107.2         |     |             | 118.7    |          |     | 120.7 |   |   |
| Administered  – without recourse**                       |   |   | 39.1          |     |             | 44.0     |          |     | 43.8 |   |   |
| Total  Receivables and Leases administered                    |   |   | $             | 19,611.5 |             |     | $             | 19,116.7 |   |   | $ | 19,559.9 |   |   |

 

 

*                                         The Company’s maximum exposure under allReceivable and Lease recourse provisions at July 31, 2009, October 31,2008 and July 31, 2008 was $8 million. The Company does not record therecourse obligations as liabilities as they are contingent liabilities that areremote at this time. However, the probable loss on receivables that have beensold was accrued at the time of sale, and any subsequent necessary adjustmentsare made as part of ongoing reviews. 

 

**           Represents Receivables and Leasesthat the Company has sold but continues to administer for a fee.

 

Total Receivable amounts 60 days or more past due inthe table below represent the amount of all customer payments past due 60 daysor more, by product, and as a percent of the respective receivables. They wereas follows (in millions of dollars):

 
|                                 |   | July 31, |   | October 31, |   | July 31, | ** ** |
|--------------------------------------|--------|---------------|--------|------------------|--------|---------------|------------|
|                                 |   | 2009          |   | 2008             |   | 2008          | ** ** |
|                                 |   | Dollars       |   | Percent          |   | Dollars       |       | Percent |   | Dollars |   | Percent | ** ** |
| Retail  notes:                       |   |          |   |             |   |          |       |   |   |   |   |   |   |
| Agriculture  and turf equipment      |   | $             | 19.2   |             | .20    | %             |       | $ | 13.7 |   | .14 | % |   | $ | 16.3 |   | .17 | % |   |
| Construction  and forestry equipment |   | 10.3          |   | .68              |   |          | 8.3        |   | .42 |   |   | 9.0 |   | .43 |   |   |
| Recreational  products               |   |          |   |             |   |          |       |   |   |   |   |   |   |   |   |   |
| Total  retail notes                  |   | 29.5          |   | .27              |   |          | 22.0       |   | .19 |   |   | 25.3 |   | .22 |   |   |
| Revolving  charge accounts*          |   | 26.2          |   | 1.26             |   |          | 14.6       |   | .80 |   |   | 18.4 |   | 1.04 |   |   |
| Operating  loans                     |   | 5.5           |   | 1.59             |   |          | .5         |   | .14 |   |   |   |   |   |   |   |
| Wholesale  receivables               |   | 6.3           |   | .14              |   |          | 2.3        |   | .06 |   |   | .5 |   | .01 |   |   |
| Financing  leases                    |   | 5.9           |   | 1.48             |   |          | 5.4        |   | 1.29 |   |   | 5.7 |   | 1.26 |   |   |
| Total  Receivables                   |   | $             | 73.4   |             | .40    | %             |       | $ | 44.8 |   | .25 | % |   | $ | 49.9 |   | .27 | % |   |

 

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

 

The balance of retail notes held (principal plusaccrued interest) with any installment 60 days or more past due represents thetotal retail note balance for a customer who has any portion of their note 60days or more past due. These amounts were $217 million, $163 million and $192million at July 31, 2009, October 31, 2008 and July 31, 2008,respectively. The balances of retail notes held on which any installment was 60days or more past due as a percentage of the ending retail notes receivable was1.96 percent, 1.39 percent and 1.64 percent at July 31, 2009, October 31,2008 and July 31, 2008, respectively.

 

18

 

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Total non-performing Receivables, which representloans the Company has ceased accruing interest for, by product, and as apercent of the respective receivables were as follows (in millions of dollars):

 
|                                 |   | July 31, |   | October 31, |   | July 31, | ** ** |
|--------------------------------------|--------|---------------|--------|------------------|--------|---------------|------------|
|                                 |   | 2009          |   | 2008             |   | 2008          | ** ** |
|                                 |   | Dollars       |   | Percent          |   | Dollars       |       | Percent |   | Dollars |   | Percent | ** ** |
| Retail notes:                        |   |          |   |             |   |          |       |   |   |   |   |   |   |
| Agriculture and turf  equipment      |   | $             | 33.9   |             | .35    | %             |       | $ | 22.5 |   | .23 | % |   | $ | 23.7 |   | .25 | % |   |
| Construction and  forestry equipment |   | 19.5          |   | 1.29             |   |          | 15.4       |   | .78 |   |   | 15.9 |   | .77 |   |   |
| Recreational products                |   | .1            |   | 1.43             |   |          | .2         |   | 2.17 |   |   | .1 |   | 1.02 |   |   |
| Total retail notes                   |   | 53.5          |   | .48              |   |          | 38.1       |   | .32 |   |   | 39.7 |   | .34 |   |   |
| Revolving charge  accounts           |   | .9            |   | .04              |   |          | .7         |   | .04 |   |   | 3.3 |   | .19 |   |   |
| Operating loans                      |   | 34.1          |   | 9.84             |   |          | 27.6       |   | 7.71 |   |   | 27.1 |   | 7.02 |   |   |
| Wholesale receivables                |   | 5.8           |   | .13              |   |          |       |   |   |   |   | .2 |   |   |   |   |
| Financing leases                     |   | 15.0          |   | 3.77             |   |          | 13.2       |   | 3.16 |   |   | 13.6 |   | 3.01 |   |   |
| Total Receivables                    |   | $             | 109.3  |             | .59    | %             |       | $ | 79.6 |   | .44 | % |   | $ | 83.9 |   | .46 | % |   |

 

The increase in the balance of non-performingconstruction and forestry equipment retail notes at July 31, 2009 wasprimarily due to the continued weak U.S. construction market. The increase innon-performing operating loans at July 31, 2009 was due to paymentdefaults on operating loans to a turf equipment customer. The increase innon-performing wholesale receivables at July 31, 2009 was primarily due topayment defaults on wholesale receivables to a turf equipment dealer. Loan lossprovisions were recorded for the estimated uncollectible amounts.

 

At July 31, 2009, theCompany had a $55 million secured operating loan outstanding to an agribusinesscustomer in the poultry industry that filed for bankruptcy protection in December 2008.The customer continues to operate and is remitting interest payments while aplan for debt restructuring is being finalized by the bankruptcy court. 

 

19

 

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Total Receivable write-off amounts, net of recoveries,by product, and as an annualized percentage of average balances held during theperiod, were as follows (in millions of dollars):

 
|                                 |   | Three Months  Ended |   | Three Months  Ended |   |
|--------------------------------------|--------|---------------------|--------|---------------------|--------|
|                                 |   | July 31,       |   | July 31,       |   |
|                                 |   | 2009                |   | 2008                |   |
|                                 |   | Dollars             |   | Percent             |   | Dollars |   | Percent |   |
| Retail  notes:                       |   |                |   |                |   |   |   |   |   |
| Agriculture  and turf equipment      |   | $                   | 1.1    |                |   | .05 | % |   | $ | .7 |   |   | .03 | % |   |
| Construction  and forestry equipment |   | 10.0                |   |                | 2.56   |   |   | 3.8 |   |   | .72 |   |   |
| Recreational  products               |   | .2                  |   |                | 10.99  |   |   | .1 |   |   | 3.94 |   |   |
| Total  retail notes                  |   | 11.3                |   |                | .42    |   |   | 4.6 |   |   | .16 |   |   |
| Revolving  charge accounts           |   | 15.4                |   |                | 3.12   |   |   | 7.5 |   |   | 1.80 |   |   |
| Operating  loans                     |   | (.1                 | )      |                | (.11   | ) |   | (.4 | ) |   | (.38 | ) |   |
| Wholesale  receivables               |   | .2                  |   |                | .02    |   |   | .3 |   |   | .03 |   |   |
| Financing  leases                    |   | .4                  |   |                | .41    |   |   | .2 |   |   | .18 |   |   |
| Total  Receivables                   |   | $                   | 27.2   |                |   | .59 | % |   | $ | 12.2 |   |   | .27 | % |   |
|                                      |        |                     |        |                     |        |  |  |  |  |  |  |  |  |  |  |  |

 
|                                 |   | Nine Months  Ended |   | Nine Months  Ended |   |
|--------------------------------------|--------|--------------------|--------|--------------------|--------|
|                                 |   | July 31,      |   | July 31,      |   |
|                                 |   | 2009               |   | 2008               |   |
|                                 |   | Dollars            |   | Percent            |   | Dollars |   | Percent |   |
| Retail notes:                        |   |               |   |               |   |   |   |   |   |
| Agriculture and turf  equipment      |   | $                  | 2.9    |               |   | .04 | % |   | $ | 2.4 |   |   | .03 | % |   |
| Construction and  forestry equipment |   | 40.3               |   |               | 3.09   |   |   | 17.0 |   |   | 1.03 |   |   |
| Recreational products                |   | .7                 |   |               | 11.47  |   |   | .3 |   |   | 3.73 |   |   |
| Total retail notes                   |   | 43.9               |   |               | .53    |   |   | 19.7 |   |   | .23 |   |   |
| Revolving charge  accounts           |   | 40.1               |   |               | 3.02   |   |   | 20.1 |   |   | 1.85 |   |   |
| Operating loans                      |   | (.5                | )      |               | (.18   | ) |   | (.7 | ) |   | (.22 | ) |   |
| Wholesale receivables                |   | .9                 |   |               | .03    |   |   | .3 |   |   | .01 |   |   |
| Financing leases                     |   | 2.7                |   |               | .92    |   |   | 1.3 |   |   | .41 |   |   |
| Total Receivables                    |   | $                  | 87.1   |               |   | .65 | % |   | $ | 40.7 |   |   | .31 | % |   |
|                                      |        |                    |        |                    |        |  |  |  |  |  |  |  |  |  |  |  |

 

Deposits withheld fromdealers and merchants, representing mainly the aggregate dealer retail note andlease withholding accounts from individual John Deere dealers to which lossesfrom retail notes and leases originating from the respective dealers can becharged, amounted to $161 million at July 31, 2009 compared with $174 millionat October 31, 2008 and $171 million at July 31, 2008.

 

The Company’s allowancefor credit losses on all Receivables financed totaled $129 million atJuly 31, 2009, $105 million at October 31, 2008 and $106 millionat July 31, 2008. The allowance for credit losses represented..70 percent of the total Receivables financed at July 31, 2009, .59percent at October 31, 2008 and .58 percent at July 31, 2008. Thelevel of 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.

 

Safe Harbor Statement

 

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

 

20

 

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With respect to theglobal economic downturn and expected slow recovery, changes in governmentalbanking, monetary and fiscal policies to restore liquidity and increase theavailability of credit may not be effective and could have a material impact onthe Company’s customers and markets. Significant changes in market liquidity conditions could impact accessto funding and associated funding costs, which could reduce the Company’searnings and cash flows. The Company’s operations could be impaired by changesin the equity and bond markets, which could negatively affect earnings.

 

The economic downturn andmarket volatility have adversely affected the financial industry in which theCompany operates. The Company’s liquidity and ongoing profitability dependlargely on timely access to capital to meet future cash flow requirements andfund operations and the costs associated with engaging in diversified fundingactivities. If market disruption and volatility continue or worsen or access togovernmental liquidity programs decreases, funding could be unavailable orinsufficient. Additionally, under current market conditions customer confidencelevels may result in declines in credit applications and increases indelinquencies and default rates, which could materially impact the Company’swrite-offs and provision for credit losses.

 

In addition, the Company’s business is closely relatedto John Deere’s business. Further information, including factors thatpotentially could materially affect the Company’s and John Deere’s financialresults, is included in the most recent Deere & Company Form 10-Kand 10-Q (including the factors discussed in Item 1A. Risk Factors) and otherDeere & Company and Capital Corporation filings with the U.S.Securities and Exchange Commission.

 

Critical AccountingPolicies

 

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

 

Capital Resources andLiquidity

 

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

 

During the first ninemonths of 2009, the aggregate net cash provided by operating and financingactivities was used primarily to increase cash and cash equivalents and toincrease Receivables. Net cash provided by operating activities was $410million in the first nine months of 2009. Net cash provided by financingactivities totaled $967 million in the first nine months of 2009,resulting primarily from a net increase in total external borrowings, partiallyoffset by a decrease in payables to Deere & Company. Net cash used forinvesting activities totaled $518 million in the first nine months of2009, primarily due to the cost of Receivables and Leases acquired exceedingcollections. Cash and cash equivalents increased $890 million during thefirst nine months of 2009.

 

During the first ninemonths of 2008, the aggregate net cash provided by operating and financingactivities was used primarily to increase Receivables and Leases. Net cashprovided by operating activities was $445 million in the first nine months of2008. Net cash provided by financing activities totaled $638 million inthe first nine months of 2008, resulting primarily from a net increase in totalexternal borrowings, partially offset by dividends paid to John Deere CreditCompany, which in turn paid comparable dividends to Deere & Company.Net cash used for investing activities totaled $787 million in the firstnine months of 2008, primarily due to the cost of Receivables and Leasesacquired exceeding collections and the cost of notes receivables with JohnDeere exceeding collections. Cash and cash equivalents increased$305 million during the first nine months of 2008.

 

The financing of retailpurchases and leases of John Deere products and of wholesale receivables owedby John Deere dealers represented approximately 80 percent of the Company’s acquisitionvolume for the nine months ended July 31, 2009 and 2008, respectively. Anyextended reduction or suspension of John Deere’s sale or production of productsdue to a decline in demand or production, governmental actions or other eventscould have an adverse effect on the Company’s acquisition volume of Receivablesand Leases.  

 

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The Company relies on itsability to raise substantial amounts of funds to finance its Receivable andLease portfolios. Given the downturn in global economic activity and thesignificant changes in credit market liquidity, sources of funds for the Companyhave been impacted. However, the Company expects to have sufficient sources ofliquidity to meet its funding needs. The Company’s ability to meet its debtobligations is supported in a number of ways. The assets of the Company areself-liquidating in nature. A solid equity position is available to absorbunusual losses on these assets and all commercial paper is backed by unsecured,committed borrowing lines from various banks. Liquidity is also provided by theCompany’s ability to securitize these assets and through the issuance of termdebt. Additionally, liquidity may also be provided through loans from JohnDeere. The Company’s commercial paper outstanding at July 31, 2009,October 31, 2008 and July 31, 2008 was approximately $222 million,$2,814 million and $2,675 million, respectively, while the total cashand cash equivalents position was approximately $1,972 million,$1,083 million and $496 million, respectively.

 

On December 4, 2008,Capital Corporation and FPC Financial, f.s.b., a wholly-owned subsidiary ofCapital Corporation, elected to continue to participate in the debt guarantyprogram that is part of the Federal Deposit Insurance Corporation’s (FDIC’s)Temporary Liquidity Guarantee Program (TLGP). During December 2008,Capital Corporation issued $2.0 billion of fixed-rate medium-term notesdue June 19, 2012 at a rate of 2.875%, which are guaranteed by the FDICunder the TLGP. Following that issuance, the FDIC notified Capital Corporationthat it needed additional review and written determination from the FDIC priorto issuing additional guaranteed debt. Accordingly, Capital Corporationsubmitted documentation to the FDIC seeking further guidance. CapitalCorporation has received written notification from the FDIC that the FDICdenied the request and that the FDIC had determined that such a denial wasappropriate because the request was inconsistent with the primary purpose ofthe TLGP. The notes issued under the TLGP during December 2008 continue tocarry the FDIC guarantee.

 

During January 2009,Capital Corporation entered into a new revolving credit agreement to utilizebank conduit facilities to securitize retail notes (see Note 5). AtJuly 31, 2009, this facility had a total capacity, or “financing limit,”of up to $2,500 million of secured financings at any time. After a 364 dayrevolving period, unless the banks and Capital Corporation agree to renew foran additional 364 days, Capital Corporation would liquidate the securedborrowings over time as payments on the retail notes are collected. AtJuly 31, 2009, $2,365 million of secured short-term borrowings wasoutstanding under the agreement. During August 2009, Capital Corporationliquidated approximately $950 million of its secured borrowings under thisrevolving credit agreement in addition to the normal payments related tocollections on the securitized retail notes.

 

In June 2009,Capital Corporation issued a $674 million retail note securitizationtransaction. The retail notes related to this secured borrowing were eligiblecollateral under the Federal Reserve Bank of New York’s Term Asset-BackedSecurities Loan Facility (TALF). 

 

During the first ninemonths of 2009, the Company issued $4,153 million of medium-term notes,obtained $3,605 million of secured borrowings and maintained an averagecommercial paper balance of $1,249 million. At July 31, 2009, theCompany’s funding profile included $222 million of commercial paper,$3,685 million of notes payable related to on-balance sheet securitizationfunding, $16,005 million of unsecured term debt, and $2,206 million of equitycapital. The Company’s funding profile may be altered to reflect such factorsas relative costs of funding sources, assets available for securitizations andcapital market accessibility. 

 

During the first ninemonths of 2009, the Company issued $4,159 million and retired $2,187 million oflong-term borrowings. The issuances were primarily medium-term notes. Theretirements included $300 million of 6% Notes due 2009 and the remainderconsisted primarily of medium-term notes.

 

Total interest-bearingindebtedness amounted to $19,925 million at July 31, 2009, compared with$18,424 million at October 31, 2008, and $18,467 million atJuly 31, 2008. Included in this debt are secured borrowings of $3,685 million,$1,618 million and $1,875 million for the same periods (see Note 5). Totalexternal borrowings increased during the first nine months of 2009 andincreased in the past 12 months, generally corresponding with the level of cashand cash equivalents, the level of the Receivable and Lease portfolio and thechange in payable to John Deere. Total short-term indebtedness amounted to$6,581 million at July 31, 2009, which included $3,685 million ofsecured borrowings, compared with $7,894 million at October 31, 2008,which included $1,618 million of secured borrowings and$8,316 million at July 31, 2008, which included $1,875 million ofsecured borrowings, while total long-term indebtedness amounted to $13,345million, $10,530 million and $10,151 million at these dates, respectively. Theratio of total interest-bearing debt, including securitization indebtedness, tostockholder’s equity was 9.0 to 1 at July 31, 2009, compared with 8.9 to 1at October 31, 2008 and 10.8 to 1 at July 31, 2008. 

 

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Stockholder’s equity was$2,206 million at July 31, 2009, compared with $2,065 million atOctober 31, 2008 and $1,705 million at July 31, 2008. The increase inthe first nine months of 2009 resulted primarily from net income of $128 millionand an increase in the cumulative translation adjustment of $27 million, whichwas partially offset by a $14 million unrealized loss on derivatives. 

 

*Lines ofCredit*

 

The Company also hasaccess to bank lines of credit with various banks throughout the world. Some ofthe lines are available to both the Company and Deere & Company.Worldwide lines of credit totaled $4,500 million at July 31, 2009,$4,006 million of which was unused. For thepurpose of computing unused credit lines, commercial paper and short-term bankborrowings, excluding secured borrowings and the current portion of long-termborrowings, of the Company and Deere & Company were considered toconstitute utilization. Included in the total credit lines atJuly 31, 2009 was the long-term credit facility agreement of $3,750million, expiring in February 2012. The credit agreement requires 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, excludingsecuritization indebtedness, to capital base (total subordinated debt andstockholder’s equity excluding accumulated other comprehensive income (loss))at not more than 11 to 1 at the end of any fiscal quarter. All of theserequirements of the credit agreement have been met during the periods includedin the consolidated financial statements.

 

*DebtRatings*

 

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

 

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

 

The senior long-term andshort-term debt ratings and outlook currently assigned to unsecured Companysecurities by the rating agencies engaged by the Company are the same as thosefor John Deere. Those ratings are as follows:

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

 

Item 3.            Quantitative and QualitativeDisclosures About Market Risk.

 

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

 

Item 4.            Controls and Procedures.

 

The Company’s principalexecutive officer and its principal financial officer have concluded that theCompany’s disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of1934, as amended (“the Act”)) were effective as of July 31, 2009, based onthe evaluation of these controls and procedures required byRule 13a-15(b) or 15d-15(b) of the Act. 

 

The Company is in theprocess of implementing a new retail note accounting system in the U.S. Duringthe third quarter of 2009, the Company began recording new retail notes on thissystem. The new system improves business effectiveness and enables a moreintegrated process for managing and recording financial information. During thethird quarter of 2009, there were no other changes in the Company’s internalcontrols over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) that materially affected the Company’sinternal control over financial reporting or are reasonably likely tomaterially affect the Company’s internal control over financial reporting.

 

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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 (Part I, Item 1A).  There has been no material change in this information.                                                                                                                                                                                                                                                                                                                                |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Item 2.  | Unregistered Sales of  Equity Securities and Use of Proceeds.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     | Omitted pursuant to  instruction H.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 
| Item 3. | Defaults Upon Senior  Securities.                                                                                                                                                                                                                                                                             |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                          |
|    | Omitted pursuant to  instruction H.                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                          |
| Item 4. | Submission of Matters  to a Vote of Security Holders.                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                          |
|    | Omitted pursuant to  instruction H.                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                          |
| Item 5. | Other Information.                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                          |
|    | None.                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                          |
| Item 6. | Exhibits.                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                          |
|    | See the index to  exhibits immediately preceding the exhibits filed with this report.                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                          |
|    | Certain  instruments relating to long-term debt, constituting less than 10% of the  registrant’s total assets, are not filed as exhibits herewith pursuant to  Item 601(b)(4)(iii)(A) of Regulation S-K.  The registrant will file copies of such  instruments upon request of the Commission. |

 

24

 

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SIGNATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|   |                 |   |                            |
|--------|----------------------|--------|---------------------------------|
|   |                 |   |                            |
|   |                 |   | JOHN DEERE CAPITAL  CORPORATION |
|   |                 |   |                            |   |
|   |                 |   |                            |   |
| Date:  | August 28, 2009 |   | By:                             | */s/ J. M. Field* |
|   |                 |   |                            | J. M. Field  Senior Vice President,  Principal Financial Officer |

 

25

 

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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*)                        |
|    |                                                                                                                                                                                                |
| 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 July 31, 2009                                                                                               |
|    |  (Securities and Exchange Commission file  number 1-4121*)                                                                                                                                     |

 

 
| * | Incorporated by  reference.  Copies of these exhibits  are available from the Company upon request. |
|---|----------------------------------------------------------------------------------------------------------|

 

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