ORGANIZATION AND CONSOLIDATION

12 Months Ended

Oct. 31, 2013

ORGANIZATION AND CONSOLIDATION

ORGANIZATION AND CONSOLIDATION

1. ORGANIZATION AND CONSOLIDATION

Structure of Operations

The information in the notes and related commentary are presented in a format which includes data grouped as follows:

Equipment Operations– Includes the company’s agriculture and turf operations and construction and forestry operations with financial services reflected on the equity basis.

Financial Services– Includes primarily the company’s financing operations.

Consolidated– Represents the consolidation of the equipment operations and financial services. References to “Deere & Company” or “the company” refer to the entire enterprise.

Principles of Consolidation

The consolidated financial statements represent primarily the consolidation of all companies in which Deere & Company has a controlling interest. Certain variable interest entities (VIEs) are consolidated since the company has both the power to direct the activities that most significantly impact the VIEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs. Deere & Company records its investment in each unconsolidated affiliated company (generally 20 to 50 percent ownership) at its related equity in the net assets of such affiliate (see Note 10). Other investments (less than 20 percent ownership) are recorded at cost.

Variable Interest Entities

The company was previously the primary beneficiary of and consolidated a supplier that was a VIE. The company had both the power to direct the activities of the VIE that most significantly impacted the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In the first quarter of 2013, the entity was deconsolidated since the company no longer has a variable interest in the supplier. No related parties were involved in the deconsolidation. The effect on the financial statements for the deconsolidation was a decrease in assets, liabilities and noncontrolling interests of approximately $26 million, $15 million and $11 million, respectively, with no gain or loss. No additional support beyond what was previously contractually required was provided during any periods presented. The VIE produced blended fertilizer and other lawn care products for the agriculture and turf segment.

The assets and liabilities of this supplier VIE consisted of the following last year at October 31 in millions of dollars:

	2012
Cash and cash equivalents	$	26
Intercompany receivables	7
Inventories	25
Property and equipment – net	2
Other assets	5
Total assets	$	65
Short-term borrowings	$	5
Accounts payable and accrued expenses	48
Total liabilities	$	53

The VIE was financed primarily through its own liabilities. The assets of the VIE could only be used to settle the obligations of the VIE. The creditors of the VIE did not have recourse to the general credit of the company.

See Note 13 for VIEs related to securitization of financing receivables.