ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

9 Months Ended

Jul. 31, 2011

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE.

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

(8)	Assets and liabilities measured at fair value as Level 2 measurements on a recurring basis were as follows (in millions of dollars):
						July 31,				October 31,				July 31,
						2011				2010				2010
	Receivables from John Deere
	Derivatives:
	Interest rate contracts					$	73.8
	Cross-currency interest rate contracts					.1
	Other assets
	Derivatives:
	Interest rate contracts					279.4				$	454.3			$	501.1
	Foreign exchange contracts					.4				4.0				.9
	Cross-currency interest rate contracts					1.0				2.9				4.4
	Total assets *					$	354.7			$	461.2			$	506.4
	Other payables to John Deere
	Derivatives:
	Interest rate contracts					$	2.6
	Cross-currency interest rate contracts					2.1
	Accounts payable and accrued expenses
	Derivatives:
	Interest rate contracts					5.3				$	31.2			$	45.4
	Foreign exchange contracts					23.2				4.5				15.7
	Cross-currency interest rate contracts					8.6				48.2				95.7
	Total liabilities					$	41.8			$	83.9			$	156.8
	*      Excluded from this table are the Company’s cash and cash equivalents, which are carried at par value or amortized cost approximating fair value. The cash and cash equivalents consist primarily of money market funds.
	Fair value, nonrecurring, Level 3 measurements were as follows (in millions of dollars):
		Fair Value *										Losses
												Nine Months Ended
		July 31,		October 31,				July 31,				July 31,
		2011		2010				2010				2011				2010
	Receivables:
	Retail notes	$	.7	$	1.7			$	1.6			$	.1			$	.4
	Wholesale receivables			16.9				18.9								3.4
	Financing leases	.7		.2				.4				.3				.2
	Operating loans	.6		1.1				.7
	Total Receivables	$	2.0	$	19.9			$	21.6			$	.4			$	4.0
	*   Does not include cost to sell.
	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, 2011.
	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:

Derivatives – The Company’s derivative financial instruments consist of interest rate swaps and caps, foreign currency forwards and swaps and cross-currency interest rate swaps. The portfolio is valued based on an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates for currencies.

Receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using an income approach (discounted cash flow) or a market approach (appraisal values or realizable values). Inputs include interest rates and selection of realizable values.