Derivative Instruments (Tables)

9 Months Ended

Jul. 31, 2014

Fair Value Hedge Interest Rate Contracts and Underlying Borrowings

The gains (losses) on these contracts and the underlying borrowings recorded in interest expense were as follows (in millions of dollars):

	Three Months Ended July 31				Nine Months Ended July 31
	2014		2013		2014		2013
Interest rate contracts *	$	31.6	$	(286.8)	$	(49.5)	$	(286.6)
Borrowings **	(33.1)		284.6		47.0		287.0

		* Includes changes in fair value of interest rate contracts excluding net accrued interest income of $41.9 million and $36.1 million during the third quarter of 2014 and 2013 and $116.2 million and $111.2 million during the first nine months of 2014 and 2013, respectively.

		** Includes adjustments for fair values of hedged borrowings excluding accrued interest expense of $64.3 million and $57.9 million during the third quarter of 2014 and 2013 and $179.7 million and $181.5 million during the first nine months of 2014 and 2013, respectively.

Fair Value of Derivative Instruments in Consolidated Balance Sheet

Fair values of derivative instruments in the consolidated balance sheet were as follows (in millions of dollars):

	July 31 2014		October 31 2013		July 31 2013
Receivables from John Deere
Designated as hedging instruments:
Interest rate contracts	$	129.9	$	144.3	$	131.9

Not designated as hedging instruments:
Interest rate contracts	37.2		31.2		34.0
Cross-currency interest rate contracts	1.0		1.1		.8
Total not designated	38.2		32.3		34.8

Other Assets
Designated as hedging instruments:
Interest rate contracts	124.7		140.5		152.9

Not designated as hedging instruments:
Interest rate contracts	12.5		16.3		18.6
Foreign exchange contracts	4.5		1.0		.8
Cross-currency interest rate contracts			.1
Total not designated	17.0		17.4		19.4

Total derivatives	$	309.8	$	334.5	$	339.0

Other Payables to John Deere
Designated as hedging instruments:
Interest rate contracts	$	50.4	$	71.0	$	95.5
Cross-currency interest rate contracts			.4		.8
Total designated	50.4		71.4		96.3

Not designated as hedging instruments:
Interest rate contracts	19.6		13.8		18.6
Cross-currency interest rate contracts	.9		.7		1.4
Total not designated	20.5		14.5		20.0

Accounts Payable and Accrued Expenses
Designated as hedging instruments:
Cross-currency interest rate contracts			16.0		38.3

Not designated as hedging instruments:
Interest rate contracts	26.4		29.9		32.4
Foreign exchange contracts	4.5		15.8		13.9
Total not designated	30.9		45.7		46.3

Total derivatives	$	101.8	$	147.6	$	200.9

Gains (Losses) Related to Derivative Instruments on Statement of Consolidated Income

The classification and gains (losses), including accrued interest expense related to derivative instruments on the statement of consolidated income consisted of the following (in millions of dollars):

	Expense or OCI	Three Months Ended July 31				Nine Months Ended July 31
	Classification	2014		2013		2014		2013
Fair Value Hedges:
Interest rate contracts	Interest expense	$	73.5	$	(250.7)	$	66.7	$	(175.4)

Cash Flow Hedges:
Recognized in OCI
(Effective Portion):
Interest rate contracts	OCI (pretax) *	.8		(2.1)		(2.8)		(9.8)
Foreign exchange contracts	OCI (pretax) *			12.7		(4.1)		23.1

Reclassified from OCI
(Effective Portion):
Interest rate contracts	Interest expense *	(2.0)		(4.6)		(7.9)		(13.7)
Foreign exchange contracts	Administrative and operating expenses *			10.6		(5.5)		16.4

Recognized Directly in Income
(Ineffective Portion)		**		**		**		**

Not Designated as Hedges:
Interest rate contracts	Interest expense *	$	.8	$	.5	$	5.7	$	(3.6)
Foreign exchange contracts	Administrative and operating expenses *	(27.2)		86.9		(35.8)		82.1
Total not designated		$	(26.4)	$	87.4	$	(30.1)	$	78.5

		* Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.
		** The amount is not significant.

Impact on Derivative Assets and Liabilities for External Derivatives and those with John Deere Related to Netting Arrangements and Collateral

Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities for external derivatives and those with John Deere related to netting arrangements and any collateral received or paid were as follows (in millions of dollars):

July 31, 2014
Derivatives:	Gross Amounts Recognized	Netting Arrangements		Collateral Received		Net Amount
Assets
External	$ 141.7	$ (27.4	)			$ 114.3
John Deere	168.1	(68.6	)			99.5
Liabilities
External	30.9	(27.4	)			3.5
John Deere	70.9	(68.6	)			2.3

October 31, 2013
Derivatives:	Gross Amounts Recognized	Netting Arrangements		Collateral Received		Net Amount
Assets
External	$ 157.9	$ (42.6	)	$ (2.4	)	$ 112.9
John Deere	176.6	(82.9	)			93.7
Liabilities
External	61.7	(42.6	)			19.1
John Deere	85.9	(82.9	)			3.0

July 31, 2013
Derivatives:	Gross Amounts Recognized	Netting Arrangements		Collateral Received		Net Amount
Assets
External	$ 172.3	$ (44.8	)	$ (6.4	)	$ 121.1
John Deere	166.7	(112.5	)			54.2
Liabilities
External	84.6	(44.8	)			39.8
John Deere	116.3	(112.5	)			3.8