MOLINE, Ill., Aug. 18, 2017 /CNW/ --
- Improving farm- and construction-equipment markets contribute
to higher third-quarter results.
- Performance benefits from advanced products, flexible cost
structure.
- Company maintains strong position to seize powerful long-term
trends.
- Full-year forecast calls for 10% sales increase, net income of
$2.075 billion.
Net income attributable to Deere & Company (NYSE:
DE) was $641.8 million, or
$1.97 per share, for the third
quarter ended July 30, 2017, compared
with $488.8 million, or $1.55 per share, for the quarter ended
July 31, 2016.
For the first nine months of fiscal 2017, net income
attributable to Deere & Company was $1.649 billion, or $5.11 per share, compared with $1.239 billion, or $3.91 per share, for the same period last
year.
Worldwide net sales and revenues increased 16 percent, to
$7.808 billion, for the third quarter
and increased 8 percent, to $21.720
billion, for the first nine months. Net sales of the
equipment operations were $6.833
billion for the third quarter and $18.791 billion for nine months, compared with
$5.861 billion and $17.737 billion for the periods last year.
"John Deere reported another quarter of strong performance as
the company continued to benefit from improving market conditions
throughout the world," said Samuel R.
Allen, chairman and chief executive officer. "We are seeing
higher overall demand for our products with farm machinery sales in
South America experiencing strong
gains and construction equipment sales rising sharply. Deere's
performance also is being assisted by an advanced product portfolio
and the continuing impact of a flexible cost structure and lean
asset base."
Summary of Operations
Net sales of the worldwide equipment operations increased 17
percent for the quarter and 6 percent for the first nine months
compared with the year-ago periods. Sales included price
realization of 1 percent for the quarter and 2 percent year to
date. Foreign-currency rates did not have a material translation
effect on net sales for either period compared with last year.
Equipment net sales in the United
States and Canada increased
11 percent for the quarter and were down 1 percent for the first
nine months. Outside the U.S. and Canada, net sales increased 25 percent for the
quarter and 17 percent for nine months, with favorable
currency-translation effects of 1 percent for both periods.
Deere's equipment operations reported operating profit of
$795 million for the quarter and
$2.152 billion for nine months,
compared with $625 million and
$1.526 billion, respectively, last
year. The improvement for the quarter was primarily driven by
higher shipment volumes and price realization, partially offset by
increased production costs, higher selling, administrative and
general expenses and warranty costs. On a year-to-date basis,
results benefited from higher shipment volumes, price realization
and a favorable product mix, partially offset by increased
production costs, higher warranty costs and higher selling,
administrative and general expenses. Results for both periods were
aided by a gain on the sale of a partial interest in SiteOne
Landscape Supply, Inc. (SiteOne).
Net income of the company's equipment operations was
$506 million for the third quarter
and $1.291 billion for nine months,
compared with $353 million and
$873 million for the corresponding
periods of 2016. In addition to the operating factors mentioned
above, a lower effective tax rate improved results for the third
quarter of 2017.
Financial services reported net income attributable to Deere
& Company of $131.2 million for
the quarter and $349.1 million for
nine months compared with $125.9
million and $357.9 million
last year. Results for the quarter benefited from lower losses on
lease residual values, partially offset by a higher provision for
credit losses and higher selling, administrative and general
expenses. Year-to-date results were affected by less-favorable
financing spreads and higher selling, administrative and general
expenses, partially offset by lower losses on lease residual
values.
Company Outlook & Summary
Company equipment sales are projected to increase about 10
percent for fiscal 2017 and be up about 24 percent for the fourth
quarter compared with the same periods of 2016. Included in the
forecast is a positive foreign-currency translation effect of about
1 percent for the full year and about 2 percent in the fourth
quarter. Net sales and revenues are projected to increase about 11
percent for fiscal 2017 with net income attributable to Deere &
Company of about $2.075 billion.
"Deere's ability to deliver consistently strong financial
results is proof of our success building a more durable business
model," Allen said. "We are continuing to find ways to make our
operations more efficient and profitable while providing even more
value to our global customers. As a result, we're confident Deere
is well-positioned to continue its strong performance and to fully
capitalize on the world's increasing need for advanced machinery
and services in the future."
Equipment Division Performance
Agriculture & Turf. Sales increased 13 percent for
the quarter and 5 percent for nine months primarily due to higher
shipment volumes and price realization, partially offset by higher
warranty costs.
Operating profit was $685 million
for the quarter and $1.899 billion
year to date, compared with respective totals of $571 million and $1.329
billion last year. Results for the quarter benefited from
higher shipment volumes and price realization, partially offset by
increases in production costs, warranty expenses and selling,
administrative and general expenses. Year-to-date results received
support from higher shipment volumes, price realization and a
more-favorable sales mix, partially offset by increased production
costs and higher warranty expenses. The gain on the sale of a
partial interest in SiteOne contributed to the division's results
for both periods.
Construction & Forestry. Construction and forestry
sales increased 29 percent for the quarter and 10 percent for nine
months mainly as a result of higher shipment volumes. Results were
negatively affected by higher sales-incentive expenses for the
quarter and by higher warranty costs year to date.
Operating profit was $110 million
for the quarter and $253 million for
nine months, compared with $54
million and $197 million last
year. Results for the quarter were helped by increased shipment
volumes, partially offset by higher selling, administrative and
general expenses, higher sales-incentive expenses and increased
production costs. Benefiting nine-month results were higher
shipment volumes, partially offset by increases in warranty costs,
selling, administrative and general expenses and production
costs.
Market Conditions & Outlook
Agriculture & Turf. Deere's worldwide sales of
agriculture and turf equipment are forecast to increase by about 9
percent for fiscal-year 2017, including a positive
currency-translation effect of about 1 percent. Industry sales for
agricultural equipment in the U.S. and Canada are forecast to be down about 5 percent
for 2017, reflecting weakness in the livestock sector and the
continuing impact of low crop prices. The decline is affecting both
large and small equipment.
Full-year 2017 industry sales in the EU28 member nations are
forecast to be flat to down 5 percent, with the decline
attributable to low commodity prices and farm incomes. South
American industry sales of tractors and combines are projected to
be up about 20 percent as a result of improving economic and
political conditions in Brazil and
Argentina. Asian sales are
projected to be flat to down slightly.
Industry sales of turf and utility equipment in the U.S. and
Canada are expected to be about
flat for 2017.
Construction & Forestry. Deere's worldwide sales of
construction and forestry equipment are forecast to be up about 15
percent for 2017, with no material currency-translation impact. The
forecast reflects moderate economic growth worldwide. In forestry,
global industry sales are expected to be down 5 to 10 percent due
to soft conditions in North
America.
Financial Services. Fiscal-year 2017 net income
attributable to Deere & Company for the financial services
operations is expected to be approximately $475 million. In comparison with performance in
2016, the outlook reflects lower losses on lease residual values,
partially offset by higher selling, administrative and general
expenses, less-favorable financing spreads and an increased
provision for credit losses.
John Deere Capital Corporation
The following is disclosed on behalf of the company's financial
services subsidiary, John Deere Capital Corporation (JDCC), in
connection with the disclosure requirements applicable to its
periodic issuance of debt securities in the public market.
Net income attributable to JDCC was $88.3
million for the third quarter and $227.0 million year to date, compared with
$90.4 million and $259.9 million for the respective periods last
year. The decline for both periods was primarily due to
less-favorable financing spreads, higher selling, administrative
and general expenses and a lower average portfolio, partially
offset by lower losses on lease residual values.
Net receivables and leases financed by JDCC were $32.929 billion at July
30, 2017, compared with $32.928
billion at July 31, 2016.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Statements under "Company Outlook
& Summary," "Market Conditions & Outlook," and other
forward-looking statements herein that relate to future events,
expectations, and trends involve factors that are subject to
change, and risks and uncertainties that could cause actual results
to differ materially. Some of these risks and uncertainties
could affect particular lines of business, while others could
affect all of the company's businesses.
The company's agricultural equipment business is subject to a
number of uncertainties including the factors that affect farmers'
confidence and financial condition. These factors include
demand for agricultural products, world grain stocks, weather
conditions, soil conditions, harvest yields, prices for commodities
and livestock, crop and livestock production expenses, availability
of transport for crops, the growth and sustainability of non-food
uses for some crops (including ethanol and biodiesel production),
real estate values, available acreage for farming, the land
ownership policies of governments, changes in government farm
programs and policies, international reaction to such programs,
changes in environmental regulations and their impact on farming
practices; changes in and effects of crop insurance programs,
global trade agreements, animal diseases and their effects on
poultry, beef and pork consumption and prices, crop pests and
diseases, and the level of farm product exports (including concerns
about genetically modified organisms).
Factors affecting the outlook for the company's turf and utility
equipment include consumer confidence, weather conditions, customer
profitability, consumer borrowing patterns, consumer purchasing
preferences, housing starts, infrastructure investment, spending by
municipalities and golf courses, and consumable input costs.
Consumer spending patterns, real estate and housing prices, the
number of housing starts, interest rates and the levels of public
and non-residential construction are important to sales and results
of the company's construction and forestry equipment. Prices
for pulp, paper, lumber and structural panels are important to
sales of forestry equipment.
All of the company's businesses and its results are affected by
general economic conditions in the global markets and industries in
which the company operates; customer confidence in general economic
conditions; government spending and taxing; foreign currency
exchange rates and their volatility, especially fluctuations in the
value of the U.S. dollar; interest rates; inflation and deflation
rates; changes in weather patterns; the political and social
stability of the global markets in which the company operates; the
effects of, or response to, terrorism and security threats; wars
and other conflicts; natural disasters; and the spread of major
epidemics.
Significant changes in market liquidity conditions, changes in
the company's credit ratings and any failure to comply with
financial covenants in credit agreements could impact access to
funding and funding costs, which could reduce the company's
earnings and cash flows. Financial market conditions could
also negatively impact customer access to capital for purchases of
the company's products and customer confidence and purchase
decisions, borrowing and repayment practices, and the number and
size of customer loan delinquencies and defaults. A debt
crisis, in Europe or elsewhere,
could negatively impact currencies, global financial markets,
social and political stability, funding sources and costs, asset
and obligation values, customers, suppliers, demand for equipment,
and company operations and results. The company's investment
management activities could be impaired by changes in the equity,
bond and other financial markets, which would negatively affect
earnings.
The potential withdrawal of the United
Kingdom from the European Union and the perceptions as to
the impact of the withdrawal may adversely affect business
activity, political stability and economic conditions in the
United Kingdom, the European Union
and elsewhere. The economic conditions and outlook could be further
adversely affected by (i) the uncertainty concerning the timing and
terms of the exit, (ii) new or modified trading arrangements
between the United Kingdom and
other countries, (iii) the risk that one or more other European
Union countries could come under increasing pressure to leave the
European Union, or (iv) the risk that the euro as the single
currency of the Eurozone could cease to exist. Any of these
developments, or the perception that any of these developments are
likely to occur, could affect economic growth or business activity
in the United Kingdom or the
European Union, and could result in the relocation of businesses,
cause business interruptions, lead to economic recession or
depression, and impact the stability of the financial markets,
availability of credit, currency exchange rates, interest rates,
financial institutions, and political, financial and monetary
systems. Any of these developments could affect our businesses,
liquidity, results of operations and financial position.
Additional factors that could materially affect the company's
operations, access to capital, expenses and results include changes
in, uncertainty surrounding and the impact of governmental trade,
banking, monetary and fiscal policies, including financial
regulatory reform and its effects on the consumer finance industry,
derivatives, funding costs and other areas, and governmental
programs, policies, tariffs and sanctions in particular
jurisdictions or for the benefit of certain industries or sectors;
actions by central banks; actions by financial and securities
regulators; actions by environmental, health and safety regulatory
agencies, including those related to engine emissions, carbon and
other greenhouse gas emissions, noise and the effects of climate
change; changes to GPS radio frequency bands or their permitted
uses; changes in labor regulations; changes to accounting
standards; changes in tax rates, estimates, and regulations and
company actions related thereto; compliance with U.S. and foreign
laws when expanding to new markets and otherwise; and actions by
other regulatory bodies.
Other factors that could materially affect results include
production, design and technological innovations and difficulties,
including capacity and supply constraints and prices; the loss of
or challenges to intellectual property rights whether through
theft, infringement, counterfeiting or otherwise; the availability
and prices of strategically sourced materials, components and whole
goods; delays or disruptions in the company's supply chain or the
loss of liquidity by suppliers; disruptions of infrastructures that
support communications, operations or distribution; the failure of
suppliers or the company to comply with laws, regulations and
company policy pertaining to employment, human rights, health,
safety, the environment, anti-corruption, privacy and data
protection and other ethical business practices; events that damage
the company's reputation or brand; significant investigations,
claims, lawsuits or other legal proceedings; start-up of new plants
and products; the success of new product initiatives; changes in
customer product preferences and sales mix; gaps or limitations in
rural broadband coverage, capacity and speed needed to support
technology solutions; oil and energy prices, supplies and
volatility; the availability and cost of freight; actions of
competitors in the various industries in which the company
competes, particularly price discounting; dealer practices
especially as to levels of new and used field inventories; changes
in demand and pricing for used equipment and resulting impacts on
lease residual values; labor relations and contracts; changes in
the ability to attract, train and retain qualified personnel;
acquisitions and divestitures of businesses; greater than
anticipated transaction costs; the integration of new businesses;
the failure or delay in realizing anticipated benefits of
acquisitions, joint ventures or divestitures; the implementation of
organizational changes; the failure to realize anticipated savings
or benefits of cost reduction, productivity, or efficiency efforts;
difficulties related to the conversion and implementation of
enterprise resource planning systems; security breaches,
cybersecurity attacks, technology failures and other disruptions to
the company's and suppliers' information technology infrastructure;
changes in company declared dividends and common stock issuances
and repurchases; changes in the level and funding of employee
retirement benefits; changes in market values of investment assets,
compensation, retirement, discount and mortality rates which impact
retirement benefit costs; and significant changes in health care
costs.
The liquidity and ongoing profitability of John Deere Capital
Corporation and other credit subsidiaries depend largely on timely
access to capital in order to meet future cash flow requirements,
and to fund operations, costs, and purchases of the company's
products. If general economic conditions deteriorate or
capital markets become more volatile, funding could be unavailable
or insufficient. Additionally, customer confidence levels may
result in declines in credit applications and increases in
delinquencies and default rates, which could materially impact
write-offs and provisions for credit losses.
The company's outlook is based upon assumptions relating to the
factors described above, which are sometimes based upon estimates
and data prepared by government agencies. Such estimates and
data are often revised. The company, except as required by
law, undertakes no obligation to update or revise its outlook,
whether as a result of new developments or otherwise. Further
information concerning the company and its businesses, including
factors that could materially affect the company's financial
results, is included in the company's other filings with the SEC
(including, but not limited to, the factors discussed in Item 1A.
Risk Factors of the company's most recent annual report on Form
10-K and quarterly reports on Form 10-Q).
Third Quarter 2017
Press Release
(in millions of
dollars)
Unaudited
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
July 30
|
|
July 31
|
|
%
|
|
July 30
|
|
July 31
|
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Net sales and
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf
|
|
$
|
5,338
|
|
$
|
4,704
|
|
+13
|
|
$
|
14,730
|
|
$
|
14,046
|
|
+5
|
Construction and forestry
|
|
|
1,495
|
|
|
1,157
|
|
+29
|
|
|
4,061
|
|
|
3,691
|
|
+10
|
Total net sales
|
|
|
6,833
|
|
|
5,861
|
|
+17
|
|
|
18,791
|
|
|
17,737
|
|
+6
|
Financial
services
|
|
|
741
|
|
|
667
|
|
+11
|
|
|
2,153
|
|
|
1,954
|
|
+10
|
Other
revenues
|
|
|
234
|
|
|
196
|
|
+19
|
|
|
776
|
|
|
433
|
|
+79
|
Total net
sales and revenues
|
|
$
|
7,808
|
|
$
|
6,724
|
|
+16
|
|
$
|
21,720
|
|
$
|
20,124
|
|
+8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf
|
|
$
|
685
|
|
$
|
571
|
|
+20
|
|
$
|
1,899
|
|
$
|
1,329
|
|
+43
|
Construction and
forestry
|
|
|
110
|
|
|
54
|
|
+104
|
|
|
253
|
|
|
197
|
|
+28
|
Financial services
|
|
|
200
|
|
|
191
|
|
+5
|
|
|
529
|
|
|
545
|
|
-3
|
Total operating
profit
|
|
|
995
|
|
|
816
|
|
+22
|
|
|
2,681
|
|
|
2,071
|
|
+29
|
Reconciling items
**
|
|
|
(100)
|
|
|
(100)
|
|
|
|
|
(283)
|
|
|
(272)
|
|
+4
|
Income
taxes
|
|
|
(253)
|
|
|
(227)
|
|
+11
|
|
|
(749)
|
|
|
(560)
|
|
+34
|
Net income attributable to
Deere & Company
|
|
$
|
642
|
|
$
|
489
|
|
+31
|
|
$
|
1,649
|
|
$
|
1,239
|
|
+33
|
|
|
*
|
Operating profit is
income from continuing operations before corporate expenses,
certain external interest expense, certain foreign exchange gains
and losses, and income taxes. Operating profit of the financial
services segment includes the effect of interest expense and
foreign exchange gains or losses.
|
|
|
**
|
Reconciling items are
primarily corporate expenses, certain external interest expense,
certain foreign exchange gains and losses, and net income
attributable to noncontrolling interests.
|
DEERE &
COMPANY
STATEMENT OF
CONSOLIDATED INCOME
For the Three Months
Ended July 30, 2017 and July 31, 2016
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
|
2017
|
|
2016
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,833.0
|
|
$
|
5,861.4
|
Finance and interest
income
|
|
|
688.8
|
|
|
638.5
|
Other
income
|
|
|
286.0
|
|
|
224.5
|
Total
|
|
|
7,807.8
|
|
|
6,724.4
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
5,265.1
|
|
|
4,494.2
|
Research and
development expenses
|
|
|
335.4
|
|
|
338.8
|
Selling,
administrative and general expenses
|
|
|
791.2
|
|
|
709.0
|
Interest
expense
|
|
|
216.3
|
|
|
200.7
|
Other operating
expenses
|
|
|
309.9
|
|
|
276.6
|
Total
|
|
|
6,917.9
|
|
|
6,019.3
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
889.9
|
|
|
705.1
|
Provision for income
taxes
|
|
|
253.2
|
|
|
226.5
|
Income of
Consolidated Group
|
|
|
636.7
|
|
|
478.6
|
Equity in income of
unconsolidated affiliates
|
|
|
5.6
|
|
|
10.0
|
Net
Income
|
|
|
642.3
|
|
|
488.6
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
.5
|
|
|
(.2)
|
Net Income
Attributable to Deere & Company
|
|
$
|
641.8
|
|
$
|
488.8
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
2.00
|
|
$
|
1.55
|
Diluted
|
|
$
|
1.97
|
|
$
|
1.55
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
320.8
|
|
|
314.3
|
Diluted
|
|
|
325.1
|
|
|
315.7
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
STATEMENT OF
CONSOLIDATED INCOME
For the Nine Months
Ended July 30, 2017 and July 31, 2016
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
|
2017
|
|
2016
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
18,790.7
|
|
$
|
17,737.1
|
Finance and interest
income
|
|
|
2,009.3
|
|
|
1,849.0
|
Other
income
|
|
|
920.0
|
|
|
538.3
|
Total
|
|
|
21,720.0
|
|
|
20,124.4
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
14,506.5
|
|
|
13,865.3
|
Research and
development expenses
|
|
|
970.7
|
|
|
1,003.1
|
Selling,
administrative and general expenses
|
|
|
2,225.8
|
|
|
2,016.8
|
Interest
expense
|
|
|
651.3
|
|
|
564.9
|
Other operating
expenses
|
|
|
978.5
|
|
|
884.7
|
Total
|
|
|
19,332.8
|
|
|
18,334.8
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
2,387.2
|
|
|
1,789.6
|
Provision for income
taxes
|
|
|
748.7
|
|
|
559.9
|
Income of
Consolidated Group
|
|
|
1,638.5
|
|
|
1,229.7
|
Equity in income of
unconsolidated affiliates
|
|
|
10.0
|
|
|
7.3
|
Net
Income
|
|
|
1,648.5
|
|
|
1,237.0
|
Less: Net loss
attributable to noncontrolling interests
|
|
|
(.3)
|
|
|
(1.6)
|
Net Income
Attributable to Deere & Company
|
|
$
|
1,648.8
|
|
$
|
1,238.6
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
5.17
|
|
$
|
3.93
|
Diluted
|
|
$
|
5.11
|
|
$
|
3.91
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
318.8
|
|
|
315.4
|
Diluted
|
|
|
322.5
|
|
|
316.7
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
CONDENSED
CONSOLIDATED BALANCE SHEET
(In millions of
dollars) Unaudited
|
|
|
|
July 30
|
|
October 30
|
|
July 31
|
|
|
2017
|
|
2016
|
|
2016
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
6,537.4
|
|
$
|
4,335.8
|
|
$
|
4,321.0
|
Marketable
securities
|
|
|
426.1
|
|
|
453.5
|
|
|
468.9
|
Receivables from
unconsolidated affiliates
|
|
|
28.5
|
|
|
16.5
|
|
|
18.7
|
Trade accounts and
notes receivable - net
|
|
|
4,389.8
|
|
|
3,011.3
|
|
|
3,924.6
|
Financing receivables
- net
|
|
|
23,722.1
|
|
|
23,702.3
|
|
|
22,594.8
|
Financing receivables
securitized - net
|
|
|
4,923.1
|
|
|
5,126.5
|
|
|
5,947.4
|
Other
receivables
|
|
|
829.2
|
|
|
1,018.5
|
|
|
811.9
|
Equipment on
operating leases - net
|
|
|
6,235.6
|
|
|
5,901.5
|
|
|
5,602.7
|
Inventories
|
|
|
4,252.9
|
|
|
3,340.5
|
|
|
3,851.3
|
Property and
equipment - net
|
|
|
4,968.5
|
|
|
5,170.6
|
|
|
5,047.3
|
Investments in
unconsolidated affiliates
|
|
|
220.8
|
|
|
232.6
|
|
|
246.2
|
Goodwill
|
|
|
845.8
|
|
|
815.7
|
|
|
823.6
|
Other intangible
assets - net
|
|
|
92.0
|
|
|
104.1
|
|
|
109.5
|
Retirement
benefits
|
|
|
219.1
|
|
|
93.6
|
|
|
323.1
|
Deferred income
taxes
|
|
|
3,067.7
|
|
|
2,964.4
|
|
|
2,612.6
|
Other
assets
|
|
|
1,591.3
|
|
|
1,631.1
|
|
|
1,835.5
|
Total
Assets
|
|
$
|
62,349.9
|
|
$
|
57,918.5
|
|
$
|
58,539.1
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
9,019.4
|
|
$
|
6,910.7
|
|
$
|
7,360.6
|
Short-term
securitization borrowings
|
|
|
4,780.9
|
|
|
4,997.8
|
|
|
5,722.6
|
Payables to
unconsolidated affiliates
|
|
|
77.8
|
|
|
81.6
|
|
|
74.2
|
Accounts payable and
accrued expenses
|
|
|
7,599.0
|
|
|
7,240.1
|
|
|
6,799.5
|
Deferred income
taxes
|
|
|
190.0
|
|
|
166.0
|
|
|
172.3
|
Long-term
borrowings
|
|
|
23,674.3
|
|
|
23,703.0
|
|
|
24,068.9
|
Retirement benefits
and other liabilities
|
|
|
8,419.6
|
|
|
8,274.5
|
|
|
6,886.9
|
Total
liabilities
|
|
|
53,761.0
|
|
|
51,373.7
|
|
|
51,085.0
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.0
|
|
|
14.0
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Total Deere &
Company stockholders' equity
|
|
|
8,572.2
|
|
|
6,520.0
|
|
|
7,428.4
|
Noncontrolling
interests
|
|
|
2.7
|
|
|
10.8
|
|
|
11.3
|
Total
stockholders' equity
|
|
|
8,574.9
|
|
|
6,530.8
|
|
|
7,439.7
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
62,349.9
|
|
$
|
57,918.5
|
|
$
|
58,539.1
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
STATEMENT OF
CONSOLIDATED CASH FLOWS
For the Nine Months
Ended July 30, 2017 and July 31, 2016
(In millions of
dollars) Unaudited
|
|
|
|
2017
|
|
2016
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net income
|
|
$
|
1,648.5
|
|
$
|
1,237.0
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Provision for credit losses
|
|
|
76.8
|
|
|
70.3
|
Provision for depreciation and amortization
|
|
|
1,279.0
|
|
|
1,158.4
|
Impairment charges
|
|
|
|
|
|
49.7
|
Share-based compensation expense
|
|
|
50.7
|
|
|
51.8
|
Gain on
sale of unconsolidated affiliates and investments
|
|
|
(375.1)
|
|
|
(74.5)
|
Undistributed earnings of unconsolidated affiliates
|
|
|
(9.3)
|
|
|
.7
|
Provision (credit) for deferred income taxes
|
|
|
(77.5)
|
|
|
155.5
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
Trade, notes and financing
receivables related to sales
|
|
|
(1,091.1)
|
|
|
(588.1)
|
Inventories
|
|
|
(1,348.0)
|
|
|
(380.1)
|
Accounts payable and accrued
expenses
|
|
|
316.2
|
|
|
(461.9)
|
Accrued income taxes
payable/receivable
|
|
|
167.8
|
|
|
82.1
|
Retirement
benefits
|
|
|
173.1
|
|
|
145.8
|
Other
|
|
|
(81.8)
|
|
|
(123.0)
|
Net cash
provided by operating activities
|
|
|
729.3
|
|
|
1,323.7
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
Collections of
receivables (excluding receivables related to sales)
|
|
|
11,334.4
|
|
|
11,312.7
|
Proceeds from
maturities and sales of marketable securities
|
|
|
388.8
|
|
|
139.2
|
Proceeds from sales
of equipment on operating leases
|
|
|
1,086.6
|
|
|
916.6
|
Proceeds from sales
of businesses and unconsolidated affiliates, net of cash
sold
|
|
|
113.9
|
|
|
81.1
|
Cost of receivables
acquired (excluding receivables related to sales)
|
|
|
(11,325.6)
|
|
|
(10,423.4)
|
Purchases of
marketable securities
|
|
|
(77.0)
|
|
|
(149.9)
|
Purchases of property
and equipment
|
|
|
(373.7)
|
|
|
(387.0)
|
Cost of equipment on
operating leases acquired
|
|
|
(1,395.3)
|
|
|
(1,730.6)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
|
|
|
(198.9)
|
Other
|
|
|
(53.3)
|
|
|
77.8
|
Net cash used
for investing activities
|
|
|
(301.2)
|
|
|
(362.4)
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
|
1,648.9
|
|
|
(133.7)
|
Proceeds from
long-term borrowings
|
|
|
4,364.5
|
|
|
4,115.2
|
Payments of long-term
borrowings
|
|
|
(4,205.6)
|
|
|
(3,977.3)
|
Proceeds from
issuance of common stock
|
|
|
488.6
|
|
|
17.5
|
Repurchases of common
stock
|
|
|
(6.2)
|
|
|
(205.4)
|
Dividends
paid
|
|
|
(571.3)
|
|
|
(572.6)
|
Other
|
|
|
(62.9)
|
|
|
(53.6)
|
Net cash
provided by (used for) financing activities
|
|
|
1,656.0
|
|
|
(809.9)
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
|
117.5
|
|
|
7.4
|
|
|
|
|
|
|
|
Net Increase in
Cash and Cash Equivalents
|
|
|
2,201.6
|
|
|
158.8
|
Cash and Cash
Equivalents at Beginning of Period
|
|
|
4,335.8
|
|
|
4,162.2
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
6,537.4
|
|
$
|
4,321.0
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
Condensed Notes to
Interim Consolidated Financial Statements (Unaudited)
|
|
|
(1)
|
In December 2016, the
Company sold approximately 38 percent of its interest in SiteOne
Landscape Supply, Inc. (SiteOne) resulting in gross proceeds of
$114 million and a gain of $105 million pretax or $66 million
after-tax. In April 2017, the Company sold an additional 68 percent
of its then remaining interest in SiteOne resulting in gross
proceeds of $184 million and a gain of $176 million pretax or $111
million after-tax. In July 2017, the Company sold its remaining
interest in SiteOne resulting in gross proceeds of $98 million and
a gain of $94 million pretax or $59 million after-tax. The gains
were recorded in other income in the agriculture and turf operating
segment.
|
|
|
(2)
|
In the third quarter
of 2017, the Company early adopted ASU No. 2016-09, Improvements to
Employee Share-Based Payment Accounting, which amends ASC 718,
Compensation – Stock Compensation. This ASU changes the treatment
of share based payment transactions by recognizing the impact of
excess tax benefits or deficiencies related to exercised or vested
awards in income tax expense in the period of exercise or vesting,
instead of common stock. As required, this change was reflected for
all periods in fiscal year 2017. This change increased net income
in the third quarter and first nine months of fiscal year 2017 by
$14 million and $25 million, respectively. The ASU also modified
the presentation of excess tax benefits in the statement of
consolidated cash flows by including that amount with other income
tax cash flows as an operating activity and no longer presented
separately as a financing activity. This change was recognized
through a retrospective application that increased net cash flow
provided by operating activities by approximately $25 million and
$4 million for the first nine months of fiscal years 2017 and 2016,
respectively.
|
|
|
(3)
|
During the fourth
quarter of 2016, the Company announced voluntary employee
separation programs as part of its effort to reduce operating
costs. The programs provided for cash payments based on previous
years of service. The expense is recorded in the period the
employees accept the separation offer. The programs' total pretax
expenses are approximately $113 million, of which $11 million was
recorded in the fourth quarter of 2016, $94 million was recorded in
the first quarter of 2017, $5 million was recorded in the second
quarter, and $2 million was recorded in the third quarter with $1
million to be recognized in the fourth quarter. The payments for
all programs were substantially made in the first quarter of 2017.
The total 2017 expenses are allocated approximately 30 percent cost
of sales, 16 percent research and development, and 54 percent
selling, administrative and general. In addition, the expenses are
allocated 74 percent to agriculture and turf operations, 18 percent
to the construction and forestry operations, and 8 percent to the
financial services operations. Savings from these programs are
estimated to be approximately $70 million in 2017.
|
|
|
(4)
|
Dividends declared
and paid on a per share basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
July 30
|
|
July 31
|
|
July 30
|
|
July 31
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared
|
|
$
|
.60
|
|
$
|
.60
|
|
$
|
1.80
|
|
$
|
1.80
|
|
Dividends
paid
|
|
$
|
.60
|
|
$
|
.60
|
|
$
|
1.80
|
|
$
|
1.80
|
|
|
|
(5)
|
The calculation of
basic net income per share is based on the average number of shares
outstanding. The calculation of diluted net income per share
recognizes any dilutive effect of share-based
compensation.
|
|
|
(6)
|
The consolidated
financial statements represent the consolidation of all
Deere & Company's subsidiaries. In the supplemental
consolidating data in Note 7 to the financial statements,
"Equipment Operations" include the Company's agriculture and turf
operations and construction and forestry operations with "Financial
Services" reflected on the equity basis.
|
(7) SUPPLEMENTAL
CONSOLIDATING DATA
STATEMENT OF INCOME
For the Three Months
Ended July 30, 2017 and July 31, 2016
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,833.0
|
|
$
|
5,861.4
|
|
|
|
|
|
|
Finance and interest
income
|
|
|
20.3
|
|
|
15.1
|
|
$
|
744.8
|
|
$
|
691.0
|
Other
income
|
|
|
266.6
|
|
|
216.9
|
|
|
63.4
|
|
|
27.6
|
Total
|
|
|
7,119.9
|
|
|
6,093.4
|
|
|
808.2
|
|
|
718.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
5,265.5
|
|
|
4,494.6
|
|
|
|
|
|
|
Research and
development expenses
|
|
|
335.4
|
|
|
338.8
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
|
639.7
|
|
|
573.1
|
|
|
152.7
|
|
|
137.6
|
Interest
expense
|
|
|
65.8
|
|
|
65.9
|
|
|
161.3
|
|
|
140.8
|
Interest compensation
to Financial Services
|
|
|
65.4
|
|
|
61.6
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
58.1
|
|
|
45.6
|
|
|
294.3
|
|
|
248.9
|
Total
|
|
|
6,429.9
|
|
|
5,579.6
|
|
|
608.3
|
|
|
527.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
690.0
|
|
|
513.8
|
|
|
199.9
|
|
|
191.3
|
Provision for income
taxes
|
|
|
184.2
|
|
|
160.9
|
|
|
69.0
|
|
|
65.6
|
Income of
Consolidated Group
|
|
|
505.8
|
|
|
352.9
|
|
|
130.9
|
|
|
125.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services
|
|
|
131.2
|
|
|
125.9
|
|
|
.3
|
|
|
.2
|
Other
|
|
|
5.3
|
|
|
9.8
|
|
|
|
|
|
|
Total
|
|
|
136.5
|
|
|
135.7
|
|
|
.3
|
|
|
.2
|
Net
Income
|
|
|
642.3
|
|
|
488.6
|
|
|
131.2
|
|
|
125.9
|
Less:
Net income (loss) attributable to noncontrolling
interests
|
|
|
.5
|
|
|
(.2)
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
641.8
|
|
$
|
488.8
|
|
$
|
131.2
|
|
$
|
125.9
|
|
|
* Deere & Company with Financial
Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
STATEMENT OF INCOME
For the Nine Months
Ended July 30, 2017 and July 31, 2016
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
18,790.7
|
|
$
|
17,737.1
|
|
|
|
|
|
|
Finance and interest
income
|
|
|
60.3
|
|
|
45.8
|
|
$
|
2,148.6
|
|
$
|
1,988.9
|
Other
income
|
|
|
864.2
|
|
|
497.1
|
|
|
182.5
|
|
|
143.9
|
Total
|
|
|
19,715.2
|
|
|
18,280.0
|
|
|
2,331.1
|
|
|
2,132.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
14,507.8
|
|
|
13,866.7
|
|
|
|
|
|
|
Research and
development expenses
|
|
|
970.7
|
|
|
1,003.1
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
|
1,816.2
|
|
|
1,642.6
|
|
|
414.0
|
|
|
379.6
|
Interest
expense
|
|
|
199.6
|
|
|
195.7
|
|
|
479.4
|
|
|
386.7
|
Interest compensation
to Financial Services
|
|
|
171.5
|
|
|
168.2
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
189.7
|
|
|
158.2
|
|
|
910.2
|
|
|
822.4
|
Total
|
|
|
17,855.5
|
|
|
17,034.5
|
|
|
1,803.6
|
|
|
1,588.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
1,859.7
|
|
|
1,245.5
|
|
|
527.5
|
|
|
544.1
|
Provision for income
taxes
|
|
|
569.2
|
|
|
372.5
|
|
|
179.5
|
|
|
187.4
|
Income of
Consolidated Group
|
|
|
1,290.5
|
|
|
873.0
|
|
|
348.0
|
|
|
356.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services
|
|
|
349.1
|
|
|
357.9
|
|
|
1.1
|
|
|
1.2
|
Other
|
|
|
8.9
|
|
|
6.1
|
|
|
|
|
|
|
Total
|
|
|
358.0
|
|
|
364.0
|
|
|
1.1
|
|
|
1.2
|
Net
Income
|
|
|
1,648.5
|
|
|
1,237.0
|
|
|
349.1
|
|
|
357.9
|
Less:
Net loss attributable to noncontrolling interests
|
|
|
(.3)
|
|
|
(1.6)
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
1,648.8
|
|
$
|
1,238.6
|
|
$
|
349.1
|
|
$
|
357.9
|
|
|
* Deere & Company with Financial
Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
CONDENSED BALANCE
SHEET
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
July 30
|
|
October 30
|
|
July 31
|
|
July 30
|
|
October 30
|
|
July 31
|
|
|
2017
|
|
2016
|
|
2016
|
|
2017
|
|
2016
|
|
2016
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
5,338.4
|
|
$
|
3,140.5
|
|
$
|
3,134.9
|
|
$
|
1,199.0
|
|
$
|
1,195.3
|
|
$
|
1,186.1
|
Marketable
securities
|
|
|
21.4
|
|
|
34.2
|
|
|
40.2
|
|
|
404.7
|
|
|
419.3
|
|
|
428.7
|
Receivables from
unconsolidated subsidiaries and affiliates
|
|
|
2,570.9
|
|
|
3,150.1
|
|
|
2,429.5
|
|
|
|
|
|
|
|
|
|
Trade accounts and
notes receivable - net
|
|
|
758.8
|
|
|
654.2
|
|
|
535.4
|
|
|
4,828.8
|
|
|
3,370.5
|
|
|
4,560.6
|
Financing receivables
- net
|
|
|
|
|
|
.4
|
|
|
.4
|
|
|
23,722.1
|
|
|
23,701.9
|
|
|
22,594.4
|
Financing receivables
securitized - net
|
|
|
|
|
|
|
|
|
|
|
|
4,923.1
|
|
|
5,126.5
|
|
|
5,947.4
|
Other
receivables
|
|
|
708.0
|
|
|
855.4
|
|
|
726.6
|
|
|
147.1
|
|
|
164.0
|
|
|
103.0
|
Equipment on
operating leases - net
|
|
|
|
|
|
|
|
|
|
|
|
6,235.6
|
|
|
5,901.5
|
|
|
5,602.7
|
Inventories
|
|
|
4,252.9
|
|
|
3,340.5
|
|
|
3,851.3
|
|
|
|
|
|
|
|
|
|
Property and
equipment - net
|
|
|
4,919.1
|
|
|
5,118.5
|
|
|
4,994.7
|
|
|
49.4
|
|
|
52.1
|
|
|
52.6
|
Investments in
unconsolidated subsidiaries
and affiliates
|
|
|
4,800.4
|
|
|
4,697.0
|
|
|
4,752.9
|
|
|
13.8
|
|
|
11.9
|
|
|
11.6
|
Goodwill
|
|
|
845.8
|
|
|
815.7
|
|
|
823.6
|
|
|
|
|
|
|
|
|
|
Other intangible
assets - net
|
|
|
92.0
|
|
|
104.1
|
|
|
109.5
|
|
|
|
|
|
|
|
|
|
Retirement
benefits
|
|
|
219.1
|
|
|
93.6
|
|
|
319.0
|
|
|
17.9
|
|
|
20.5
|
|
|
21.8
|
Deferred income
taxes
|
|
|
3,720.6
|
|
|
3,556.0
|
|
|
3,173.2
|
|
|
68.8
|
|
|
75.5
|
|
|
71.9
|
Other
assets
|
|
|
948.5
|
|
|
834.9
|
|
|
838.7
|
|
|
644.7
|
|
|
798.1
|
|
|
999.9
|
Total
Assets
|
|
$
|
29,195.9
|
|
$
|
26,395.1
|
|
$
|
25,729.9
|
|
$
|
42,255.0
|
|
$
|
40,837.1
|
|
$
|
41,580.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
342.8
|
|
$
|
249.0
|
|
$
|
261.7
|
|
$
|
8,676.6
|
|
$
|
6,661.7
|
|
$
|
7,098.9
|
Short-term
securitization borrowings
|
|
|
|
|
|
|
|
|
|
|
|
4,780.9
|
|
|
4,997.8
|
|
|
5,722.6
|
Payables to
unconsolidated subsidiaries and affiliates
|
|
|
77.8
|
|
|
81.5
|
|
|
74.2
|
|
|
2,542.4
|
|
|
3,133.6
|
|
|
2,410.7
|
Accounts payable and
accrued expenses
|
|
|
7,213.5
|
|
|
6,661.2
|
|
|
6,470.8
|
|
|
1,611.2
|
|
|
1,595.2
|
|
|
1,521.0
|
Deferred income
taxes
|
|
|
105.2
|
|
|
87.3
|
|
|
97.3
|
|
|
806.5
|
|
|
745.9
|
|
|
707.5
|
Long-term
borrowings
|
|
|
4,523.6
|
|
|
4,565.3
|
|
|
4,557.2
|
|
|
19,150.7
|
|
|
19,137.7
|
|
|
19,511.7
|
Retirement benefits
and other liabilities
|
|
|
8,344.1
|
|
|
8,206.0
|
|
|
6,814.6
|
|
|
93.4
|
|
|
89.0
|
|
|
90.0
|
Total
liabilities
|
|
|
20,607.0
|
|
|
19,850.3
|
|
|
18,275.8
|
|
|
37,661.7
|
|
|
36,360.9
|
|
|
37,062.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.0
|
|
|
14.0
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Deere & Company stockholders' equity
|
|
|
8,572.2
|
|
|
6,520.0
|
|
|
7,428.4
|
|
|
4,593.3
|
|
|
4,476.2
|
|
|
4,518.3
|
Noncontrolling
interests
|
|
|
2.7
|
|
|
10.8
|
|
|
11.3
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
8,574.9
|
|
|
6,530.8
|
|
|
7,439.7
|
|
|
4,593.3
|
|
|
4,476.2
|
|
|
4,518.3
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
29,195.9
|
|
$
|
26,395.1
|
|
$
|
25,729.9
|
|
$
|
42,255.0
|
|
$
|
40,837.1
|
|
$
|
41,580.7
|
|
|
* Deere &
Company with Financial Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
STATEMENT OF CASH
FLOWS
For the Nine Months
Ended July 30, 2017 and July 31, 2016
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,648.5
|
|
$
|
1,237.0
|
|
$
|
349.1
|
|
$
|
357.9
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses
|
|
|
1.5
|
|
|
5.3
|
|
|
75.3
|
|
|
65.0
|
Provision for depreciation and amortization
|
|
|
640.1
|
|
|
613.7
|
|
|
725.1
|
|
|
615.5
|
Impairment charges
|
|
|
|
|
|
|
|
|
|
|
|
49.7
|
Gain on
sale of unconsolidated affiliates and investments
|
|
|
(375.1)
|
|
|
(74.5)
|
|
|
|
|
|
|
Undistributed earnings of unconsolidated subsidiaries
and affiliates
|
|
|
(37.3)
|
|
|
55.9
|
|
|
(1.0)
|
|
|
(1.0)
|
Provision (credit) for deferred income taxes
|
|
|
(145.1)
|
|
|
(77.0)
|
|
|
67.6
|
|
|
232.5
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(104.2)
|
|
|
(57.5)
|
|
|
|
|
|
|
Inventories
|
|
|
(829.4)
|
|
|
59.5
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
|
471.8
|
|
|
(285.6)
|
|
|
28.9
|
|
|
7.8
|
Accrued income taxes
payable/receivable
|
|
|
150.9
|
|
|
76.2
|
|
|
16.9
|
|
|
5.9
|
Retirement
benefits
|
|
|
166.6
|
|
|
139.6
|
|
|
6.5
|
|
|
6.2
|
Other
|
|
|
(50.9)
|
|
|
(44.3)
|
|
|
116.0
|
|
|
56.8
|
Net cash
provided by operating activities
|
|
|
1,537.4
|
|
|
1,648.3
|
|
|
1,384.4
|
|
|
1,396.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections of
receivables (excluding trade and wholesale)
|
|
|
|
|
|
|
|
|
12,275.9
|
|
|
12,208.1
|
Proceeds from
maturities and sales of marketable securities
|
|
|
296.3
|
|
|
75.6
|
|
|
92.5
|
|
|
63.6
|
Proceeds from sales
of equipment on operating leases
|
|
|
|
|
|
|
|
|
1,086.6
|
|
|
916.6
|
Proceeds from sales
of businesses and unconsolidated
affiliates, net of cash sold
|
|
|
113.9
|
|
|
81.1
|
|
|
|
|
|
|
Cost of receivables
acquired (excluding trade and wholesale)
|
|
|
|
|
|
|
|
|
(12,366.5)
|
|
|
(11,236.7)
|
Purchases of
marketable securities
|
|
|
|
|
|
(61.0)
|
|
|
(77.0)
|
|
|
(88.9)
|
Purchases of property
and equipment
|
|
|
(372.5)
|
|
|
(385.4)
|
|
|
(1.2)
|
|
|
(1.6)
|
Cost of equipment on
operating leases acquired
|
|
|
|
|
|
|
|
|
(2,096.2)
|
|
|
(2,324.8)
|
Increase in trade and
wholesale receivables
|
|
|
|
|
|
|
|
|
(1,070.9)
|
|
|
(786.5)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
|
|
|
(198.9)
|
|
|
|
|
|
|
Other
|
|
|
(55.7)
|
|
|
(24.2)
|
|
|
(18.7)
|
|
|
70.7
|
Net cash used
for investing activities
|
|
|
(18.0)
|
|
|
(512.8)
|
|
|
(2,175.5)
|
|
|
(1,179.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
|
42.3
|
|
|
(170.0)
|
|
|
1,606.6
|
|
|
36.3
|
Change in
intercompany receivables/payables
|
|
|
634.9
|
|
|
(12.1)
|
|
|
(634.9)
|
|
|
12.1
|
Proceeds from
long-term borrowings
|
|
|
64.8
|
|
|
139.4
|
|
|
4,299.7
|
|
|
3,975.8
|
Payments of long-term
borrowings
|
|
|
(44.5)
|
|
|
(70.3)
|
|
|
(4,161.1)
|
|
|
(3,907.0)
|
Proceeds from
issuance of common stock
|
|
|
488.6
|
|
|
17.5
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
|
(6.2)
|
|
|
(205.4)
|
|
|
|
|
|
|
Dividends
paid
|
|
|
(571.3)
|
|
|
(572.6)
|
|
|
(320.2)
|
|
|
(412.1)
|
Other
|
|
|
(43.2)
|
|
|
(28.7)
|
|
|
.3
|
|
|
(3.8)
|
Net cash
provided by (used for) financing activities
|
|
|
565.4
|
|
|
(902.2)
|
|
|
790.4
|
|
|
(298.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
|
113.1
|
|
|
1.6
|
|
|
4.4
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
|
2,197.9
|
|
|
234.9
|
|
|
3.7
|
|
|
(76.1)
|
Cash and Cash
Equivalents at Beginning of Period
|
|
|
3,140.5
|
|
|
2,900.0
|
|
|
1,195.3
|
|
|
1,262.2
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
5,338.4
|
|
$
|
3,134.9
|
|
$
|
1,199.0
|
|
$
|
1,186.1
|
|
|
* Deere &
Company with Financial Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
Deere &
Company Other
Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended
|
|
Equipment Operations
|
Agriculture and Turf
|
Construction and Forestry
|
|
|
July 30
|
July 31
|
July 30
|
July 31
|
July 30
|
July 31
|
Dollars in millions
|
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
Net
Sales
|
|
$
|
18,791
|
|
$
|
17,737
|
|
$
|
14,730
|
|
$
|
14,046
|
|
$
|
4,061
|
|
$
|
3,691
|
|
Average
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
Inventories at LIFO
|
|
$
|
12,020
|
|
$
|
11,918
|
|
$
|
8,897
|
|
$
|
8,750
|
|
$
|
3,123
|
|
$
|
3,168
|
|
With
Inventories at Standard Cost
|
|
$
|
13,293
|
|
$
|
13,188
|
|
$
|
9,933
|
|
$
|
9,794
|
|
$
|
3,360
|
|
$
|
3,394
|
|
Operating
Profit
|
|
$
|
2,152
|
|
$
|
1,526
|
|
$
|
1,899
|
|
$
|
1,329
|
|
$
|
253
|
|
$
|
197
|
|
Percent of
Net Sales
|
|
|
11.5
|
%
|
|
8.6
|
%
|
|
12.9
|
%
|
|
9.5
|
%
|
|
6.2
|
%
|
|
5.3
|
%
|
Operating Return
on Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
Inventories at LIFO
|
|
|
17.9
|
%
|
|
12.8
|
%
|
|
21.3
|
%
|
|
15.2
|
%
|
|
8.1
|
%
|
|
6.2
|
%
|
With
Inventories at Standard Cost
|
|
|
16.2
|
%
|
|
11.6
|
%
|
|
19.1
|
%
|
|
13.6
|
%
|
|
7.5
|
%
|
|
5.8
|
%
|
SVA Cost of
Assets
|
|
$
|
(1,196)
|
|
$
|
(1,187)
|
|
$
|
(893)
|
|
$
|
(881)
|
|
$
|
(303)
|
|
$
|
(306)
|
|
SVA
|
|
$
|
956
|
|
$
|
339
|
|
$
|
1,006
|
|
$
|
448
|
|
$
|
(50)
|
|
$
|
(109)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended
|
|
Financial
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 30
|
July 31
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in
millions
|
|
2017
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
349
|
|
$
|
358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
|
$
|
4,452
|
|
$
|
4,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Equity
|
|
|
7.8
|
%
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
529
|
|
$
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
|
$
|
4,452
|
|
$
|
4,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Equity
|
|
$
|
(505)
|
|
$
|
(511)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA
|
|
$
|
24
|
|
$
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company evaluates its business results on the basis of
accounting principles generally accepted in the United States. In
addition, it uses a metric referred to as Shareholder Value Added
(SVA), which management believes is an appropriate measure for the
performance of its businesses. SVA is, in effect, the pretax profit
left over after subtracting the cost of enterprise capital. The
Company is aiming for a sustained creation of SVA and is using this
metric for various performance goals. Certain compensation is also
determined on the basis of performance using this measure. For
purposes of determining SVA, each of the equipment segments is
assessed a pretax cost of assets, which on an annual basis is
approximately 12 percent of the segment's average identifiable
operating assets during the applicable period with inventory at
standard cost. Management believes that valuing inventories at
standard cost more closely approximates the current cost of
inventory and the Company's investment in the asset. The Financial
Services segment is assessed an annual pretax cost of approximately
15 percent of the segment's average equity. The cost of assets or
equity, as applicable, is deducted from the operating profit or
added to the operating loss of each segment to determine the amount
of SVA.
|
View original
content:http://www.prnewswire.com/news-releases/deere-announces-third-quarter-earnings-of-642-million-300506273.html
SOURCE Deere & Company