Derivative Instruments (Tables)

3 Months Ended

Jan. 28, 2018

Derivative Instruments

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
	January 28		January 29
	2018		2017
Interest rate contracts *	$	(145.6)	$	(229.7)
Borrowings **		144.3		231.7

*    Includes changes in fair values of interest rate contracts excluding net accrued interest income of $11.9 million and $24.7 million during the first three months of 2018 and 2017, respectively.

**  Includes adjustments for fair values of hedged borrowings excluding accrued interest expense of $59.5 million and $61.4 million during the first three months of 2018 and 2017, 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):

	January 28		October 29		January 29
	2018		2017		2017
Receivables from John Deere
Designated as hedging instruments:
Interest rate contracts	$	30.9	$	64.8	$	76.2
Not designated as hedging instruments:
Interest rate contracts		33.8		20.6		24.1
Cross-currency interest rate contracts		3.5		5.6		14.0
Total not designated		37.3		26.2		38.1
Other Assets
Designated as hedging instruments:
Interest rate contracts		8.3		7.0		35.8
Not designated as hedging instruments:
Interest rate contracts		1.2		1.1		1.4
Foreign exchange contracts				24.6		.9
Total not designated		1.2		25.7		2.3
Total derivative assets	$	77.7	$	123.7	$	152.4
Other Payables to John Deere
Designated as hedging instruments:
Interest rate contracts	$	216.6	$	107.2	$	83.7
Not designated as hedging instruments:
Interest rate contracts		28.4		18.4		20.6
Cross-currency interest rate contracts		2.0		.9
Total not designated		30.4		19.3		20.6
Accounts Payable and Accrued Expenses
Not designated as hedging instruments:
Foreign exchange contracts		40.9		6.0		12.4
Total not designated		40.9		6.0		12.4
Total derivative liabilities	$	287.9	$	132.5	$	116.7

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):

		Three Months Ended
	Expense or OCI	January 28		January 29
	Classification	2018		2017
Fair Value Hedges
Interest rate contracts	Interest expense	$	(133.7)	$	(205.0)
Cash Flow Hedges
Recognized in OCI
(Effective Portion):
Interest rate contracts	OCI (pretax) *		7.6		3.1
Reclassified from OCI
(Effective Portion):
Interest rate contracts	Interest expense *				(.2)
Recognized Directly in Income
(Ineffective Portion)			**		**
Not Designated as Hedges
Interest rate contracts	Interest expense *	$	1.3	$	.6
Foreign exchange contracts	Administrativeandoperatingexpenses*		(103.3)		(5.6)
Total not designated		$	(102.0)	$	(5.0)

*    Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.

**  The amounts were 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):

January 28, 2018
Derivatives:	Gross Amounts Recognized		Netting Arrangements		Collateral Received	Net Amount
Assets
External	$	9.5				$	9.5
John Deere		68.2	$	(33.7)			34.5
Liabilities
External		40.9					40.9
John Deere		247.0		(33.7)			213.3

October 29, 2017
Derivatives:	Gross Amounts Recognized		Netting Arrangements		Collateral Received	Net Amount
Assets
External	$	32.7	$	(.1)		$	32.6
John Deere		91.0		(65.9)			25.1
Liabilities
External		6.0		(.1)			5.9
John Deere		126.5		(65.9)			60.6

January 29, 2017
Derivatives:	Gross Amounts Recognized		Netting Arrangements		Collateral Received	Net Amount
Assets
External	$	38.1	$	(.9)		$	37.2
John Deere		114.3		(90.7)			23.6
Liabilities
External		12.4		(.9)			11.5
John Deere		104.3		(90.7)			13.6