MOLINE, Ill., Feb. 16, 2018 /PRNewswire/ -- Deere &
Company (NYSE: DE) reported a net loss of $535.1 million for the first quarter ended
January 28, 2018, or $1.66 per share, compared with net income of
$199.0 million, or $0.62 per share, for the quarter ended
January 29, 2017.
Affecting first-quarter 2018 results were charges to the
provision for income taxes due to the enactment of U.S. tax reform
legislation on December 22, 2017 (tax
reform). The provisional income tax expense includes a write-down
of net deferred tax assets of $715.6
million, reflecting a reduction in the U.S. corporate tax
rate from 35 percent to 21 percent beginning on the enactment date,
as well as the cost of a mandatory deemed repatriation of
previously untaxed non-U.S. earnings of $261.6 million, partially offset by a favorable
reduction in the annual effective tax rate and other adjustments of
$12.1 million. Without these
adjustments, first-quarter net income would have been $430.0 million, or $1.31 per share. (Information on non-GAAP
financial measures is included in the appendix.)
Worldwide net sales and revenues for the first quarter increased
23 percent, to $6.913 billion,
compared with $5.625 billion for the
same period last year. Net sales of the equipment operations were
$5.974 billion for the quarter
compared with $4.698 billion a year
ago.
"Deere has continued to experience strong increases in demand
for its products as conditions in key markets show further
improvement," said Samuel R. Allen,
chairman and chief executive officer. "Sales gains for the quarter,
however, were moderated by bottlenecks in the supply chain and
logistical delays in shipping products to our dealers. In line with
strengthening conditions, we have raised our sales and
adjusted-earnings forecasts for 2018 and have confidence we will be
able to fulfill the needs of our customers over the course of the
year."
Summary of Operations
Net sales of the worldwide equipment operations increased 27
percent for the quarter. Deere's completion of the acquisition of
the Wirtgen Group (Wirtgen) in December
2017 added 5 percent to net sales for the quarter. Sales
also included a favorable currency-translation effect of 3 percent.
Equipment net sales in the United
States and Canada increased
24 percent, with Wirtgen adding 1 percent. Outside the U.S. and
Canada, net sales increased 33
percent, with Wirtgen adding 12 percent, and a favorable
currency-translation effect of 5 percent.
Deere's equipment operations reported operating profit of
$419 million for the quarter,
compared with $255 million for the
period in 2017. Results for the quarter included an operating loss
for Wirtgen of $92 million,
attributable to the unfavorable effects of purchase accounting and
acquisition costs. Excluding the Wirtgen loss, the improvement was
primarily driven by higher shipment volumes and lower warranty
costs, partially offset by higher production costs. In addition,
the prior period included a gain on the sale of SiteOne Landscapes
Supply, Inc. (SiteOne), and incurred expenses associated with a
voluntary employee-separation program.
The company's equipment operations reported a net loss of
$964 million for the first quarter,
compared with net income of $85
million for the same period last year. In addition to the
operating factors mentioned above, the quarter was unfavorably
affected by a provisional income tax expense and adjustments of
$1.243 billion related to tax
reform.
Financial services reported net income attributable to Deere
& Company of $425.3 million for
the quarter compared with $114.4
million for the same period last year. The increase was
largely attributable to a provisional income tax benefit of
$278.1 million related to tax reform.
Additionally, quarterly results benefited from a higher average
portfolio and lower losses on lease residual values. Last year's
results included expenses associated with a voluntary
employee-separation program.
Company Outlook & Summary
Company equipment sales are projected to increase by about 29
percent for fiscal 2018 and by 30 to 40 percent for the second
quarter compared with the same periods of 2017. Of these amounts,
Wirtgen is expected to add about 12 percent to Deere's net sales
for the full year and about 16 percent for the second quarter. Also
included in the forecast is a positive foreign-currency translation
effect of about 3 percent for the year and about 4 percent for the
second quarter. Net sales and revenues are projected to increase by
about 25 percent for fiscal 2018. Net income attributable to Deere
& Company is forecast to be about $2.1
billion. The net income outlook includes an unfavorable
impact of tax reform estimated at $750
million, representing the net impact of the tax provision
recorded at the enactment date of tax reform, partially offset by a
lower effective tax rate over the remainder of the year. As a
result, adjusted net income without the impact of the tax-reform
adjustments is expected to be about $2.85
billion for the year. (Information on non-GAAP financial
measures is included in the appendix.)
"Although net income for the quarter and full year are being
affected by the upfront costs of U.S. tax reform legislation, we
believe the changes will reduce the company's overall tax rate and
be beneficial in the future," said Allen. "At the same time,
Deere is in good position to capitalize on the strengthening
conditions we see in the world's agricultural and construction
equipment markets. This underscores our success developing a more
durable business model while making steady investments in new
products, businesses, markets and technologies. As a result of
these steps, Deere has become more profitable across the business
cycle than in the past. We remain confident in the company's
present direction and believe Deere is on track to continue
delivering significant value to customers and investors in the
future."
Equipment Division Performance
Agriculture & Turf. Sales increased 18 percent for
the quarter due to higher shipment volumes and the favorable
effects of currency translation.
Operating profit was $387 million
compared with $218 million last year.
The quarter's improvement was driven mainly by higher shipment
volumes and lower warranty costs, partially offset by higher
production costs. The prior period benefited from a gain on the
SiteOne sale and was affected by voluntary employee-separation
expenses.
Construction & Forestry. Construction and forestry
sales increased 57 percent for the quarter, with Wirtgen adding 23
percent. Additionally, net sales increased due to higher shipment
volumes and the favorable effects of currency
translation.
The division reported operating profit of $32 million for the quarter compared with
$37 million for the period in 2017.
Lower results were attributable to an operating loss for Wirtgen of
$92 million related to the effects of
purchase accounting and acquisition costs. Excluding Wirtgen, the
improvement for the quarter was primarily driven by higher shipment
volumes, partially offset by higher production costs. Results last
year also included voluntary employee-separation costs.
Market Conditions & Outlook
Agriculture & Turf. Deere's worldwide sales of
agriculture and turf equipment are forecast to increase by about 15
percent for fiscal-year 2018, including a positive
currency-translation effect of about 3 percent. Industry sales for
agricultural equipment in the U.S. and Canada are forecast to be up about 10 percent
for 2018, led by higher demand for large equipment. Full-year
industry sales in the EU28 member nations are forecast to be up
about 5 percent due to improving conditions in the dairy and
livestock sectors. South American industry sales of tractors and
combines are projected to be flat to up 5 percent as a result of
continued positive conditions, particularly in Argentina. Asian sales are forecast to be in
line with last year. Industry sales of turf and utility equipment
in the U.S. and Canada are
expected to be flat to up 5 percent for 2018. Deere's turf sales
are expected to outperform the industry owing to the success of new
products.
Construction & Forestry. Deere's worldwide sales of
construction and forestry equipment are anticipated to be up about
80 percent for 2018, including a positive currency-translation
effect of about 2 percent. Wirtgen is expected to add about 56
percent to the division's sales for the year. The outlook reflects
continued improvement in demand driven by higher housing starts in
the U.S., increased activity in the oil and gas sector, and
economic growth worldwide. In forestry, global industry sales
are expected to be up about 5 percent mainly as a result of
improved demand throughout the world, led by North America.
Financial Services. Fiscal-year 2018 net income
attributable to Deere & Company for the financial services
operations is expected to be approximately $840 million, which includes about $320 million of favorable changes associated with
tax reform. Additionally, results are expected to benefit from a
higher average portfolio and lower losses on lease residual values,
partially offset by increased selling, administrative and general
expenses.
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 $399.4 million for the quarter compared with
$74.2 million for the same period in
2017. Results for the quarter benefited from a favorable provision
for income taxes associated with tax reform, a higher average
portfolio and lower losses on lease residual values. The prior
period included employee-separation expenses.
Net receivables and leases financed by JDCC were $32.449 billion at January
28, 2018, compared with $30.643
billion at January 29,
2017.
APPENDIX
DEERE &
COMPANY
SUPPLEMENTAL STATEMENT OF CONSOLIDATED INCOME
INFORMATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
(Millions, except per-share amounts)
(Unaudited)
In addition to reporting financial results in conformity with
accounting principles generally accepted in the United States (GAAP), the company also
discusses non-GAAP measures that exclude adjustments related to
U.S. tax reform legislation. Net income (loss) attributable to
Deere & Company and diluted earnings per share measures
that exclude this item is not in accordance with, nor is it a
substitute for, GAAP measures. The company believes that discussion
of results excluding this item provides a useful analysis of
ongoing operating trends.
The table below provides a reconciliation of the non-GAAP
financial measure with the most directly comparable GAAP financial
measure for the three months ended January 28, 2018, and the
outlook for the twelve months ended October
28, 2018.
|
|
Three Months
Ended January 28,
2018
|
|
|
Net Income
(Loss) Attributable
to Deere &
Company
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
GAAP
measure
|
|
$
|
(535.1)
|
|
$
|
(1.66)
|
|
|
|
|
|
U.S. tax reform
legislation
|
|
965.1
|
|
2.97
|
|
|
|
|
|
Non-GAAP
measure
|
|
$
|
430.0
|
|
$
|
1.31
|
|
|
|
|
Twelve Months
Ended October 28,
2018
|
|
|
|
Net Income
Attributable to Deere &
Company
|
|
|
|
|
|
GAAP
measure
|
|
$
|
2,100.0
|
|
|
|
|
|
U.S. tax reform
legislation
|
|
750.0
|
|
|
|
|
|
Non-GAAP
measure
|
|
$
|
2,850.0
|
|
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 (including the North American Free Trade
Agreement and the Trans-Pacific Partnership), 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, labor supply, consumer borrowing patterns, consumer
purchasing preferences, housing starts and supply, 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 anticipated 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 and immigration regulations; changes to
accounting standards; changes in tax rates, estimates, laws 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 closing or 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).
First Quarter 2018
Press Release
|
(in millions of
dollars)
|
Unaudited
|
|
|
|
Three Months
Ended
|
|
|
January 28
|
|
January 29
|
|
%
|
|
|
2018
|
|
2017
|
|
Change
|
Net sales and
revenues:
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
|
$
|
4,243
|
|
$
|
3,598
|
|
+18
|
Construction and
forestry
|
|
|
1,731
|
|
|
1,100
|
|
+57
|
Total net
sales
|
|
|
5,974
|
|
|
4,698
|
|
+27
|
Financial
services
|
|
|
776
|
|
|
696
|
|
+11
|
Other
revenues
|
|
|
163
|
|
|
231
|
|
-29
|
Total net sales and
revenues
|
|
$
|
6,913
|
|
$
|
5,625
|
|
+23
|
|
|
|
|
|
|
|
|
|
Operating profit:
*
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
|
$
|
387
|
|
$
|
218
|
|
+78
|
Construction and
forestry
|
|
|
32
|
|
|
37
|
|
-14
|
Financial
services
|
|
|
217
|
|
|
167
|
|
+30
|
Total operating
profit
|
|
|
636
|
|
|
422
|
|
+51
|
Reconciling items
**
|
|
|
(113)
|
|
|
(94)
|
|
+20
|
Income
taxes
|
|
|
(1,058)
|
|
|
(129)
|
|
+720
|
Net income (loss)
attributable to Deere & Company
|
|
$
|
(535)
|
|
$
|
199
|
|
|
|
|
*
|
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, pension and
postretirement benefit costs excluding the service cost component,
and net income attributable to noncontrolling interests.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED INCOME
|
For the Three Months
Ended January 28, 2018 and January 29, 2017
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
2018
|
|
2017
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,973.9
|
|
$
|
4,697.8
|
Finance and interest
income
|
|
|
722.9
|
|
|
655.5
|
Other
income
|
|
|
216.7
|
|
|
271.9
|
Total
|
|
|
6,913.5
|
|
|
5,625.2
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
4,704.5
|
|
|
3,781.5
|
Research and
development expenses
|
|
|
356.8
|
|
|
312.1
|
Selling,
administrative and general expenses
|
|
|
705.0
|
|
|
667.3
|
Interest
expense
|
|
|
286.3
|
|
|
208.1
|
Other operating
expenses
|
|
|
343.0
|
|
|
328.2
|
Total
|
|
|
6,395.6
|
|
|
5,297.2
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
517.9
|
|
|
328.0
|
Provision for income
taxes
|
|
|
1,057.5
|
|
|
129.2
|
Income (Loss) of
Consolidated Group
|
|
|
(539.6)
|
|
|
198.8
|
Equity in income
(loss) of unconsolidated affiliates
|
|
|
4.9
|
|
|
(.4)
|
Net Income
(Loss)
|
|
|
(534.7)
|
|
|
198.4
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
.4
|
|
|
(.6)
|
Net Income (Loss)
Attributable to Deere & Company
|
|
$
|
(535.1)
|
|
$
|
199.0
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.66)
|
|
$
|
.63
|
Diluted
|
|
$
|
(1.66)
|
|
$
|
.62
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
322.8
|
|
|
316.7
|
Diluted
|
|
|
322.8
|
|
|
319.7
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(In millions of
dollars) Unaudited
|
|
|
January 28
|
|
October 29
|
|
January 29
|
|
|
2018
|
|
2017
|
|
2017
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,915.1
|
|
$
|
9,334.9
|
|
$
|
3,890.0
|
Marketable
securities
|
|
|
462.3
|
|
|
451.6
|
|
|
445.5
|
Receivables from
unconsolidated affiliates
|
|
|
33.7
|
|
|
35.9
|
|
|
28.9
|
Trade accounts and
notes receivable - net
|
|
|
4,684.6
|
|
|
3,924.9
|
|
|
3,236.3
|
Financing receivables
- net
|
|
|
23,855.1
|
|
|
25,104.1
|
|
|
23,030.9
|
Financing receivables
securitized - net
|
|
|
4,474.0
|
|
|
4,158.8
|
|
|
4,250.4
|
Other
receivables
|
|
|
1,036.1
|
|
|
1,200.0
|
|
|
882.3
|
Equipment on
operating leases - net
|
|
|
6,619.8
|
|
|
6,593.7
|
|
|
5,825.3
|
Inventories
|
|
|
6,614.2
|
|
|
3,904.1
|
|
|
3,959.6
|
Property and
equipment - net
|
|
|
5,781.2
|
|
|
5,067.7
|
|
|
5,030.4
|
Investments in
unconsolidated affiliates
|
|
|
194.0
|
|
|
182.5
|
|
|
220.9
|
Goodwill
|
|
|
3,111.8
|
|
|
1,033.3
|
|
|
809.2
|
Other intangible
assets - net
|
|
|
1,659.5
|
|
|
218.0
|
|
|
95.5
|
Retirement
benefits
|
|
|
580.3
|
|
|
538.2
|
|
|
133.7
|
Deferred income
taxes
|
|
|
1,876.2
|
|
|
2,415.0
|
|
|
2,957.5
|
Other
assets
|
|
|
1,679.6
|
|
|
1,623.6
|
|
|
1,499.8
|
Total
Assets
|
|
$
|
66,577.5
|
|
$
|
65,786.3
|
|
$
|
56,296.2
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
9,743.5
|
|
$
|
10,035.3
|
|
$
|
7,441.6
|
Short-term
securitization borrowings
|
|
|
4,428.3
|
|
|
4,118.7
|
|
|
4,220.2
|
Payables to
unconsolidated affiliates
|
|
|
118.0
|
|
|
121.9
|
|
|
94.7
|
Accounts payable and
accrued expenses
|
|
|
8,489.7
|
|
|
8,417.0
|
|
|
6,334.5
|
Deferred income
taxes
|
|
|
590.2
|
|
|
209.7
|
|
|
168.9
|
Long-term
borrowings
|
|
|
26,421.8
|
|
|
25,891.3
|
|
|
22,916.6
|
Retirement benefits
and other liabilities
|
|
|
7,507.1
|
|
|
7,417.9
|
|
|
8,270.4
|
Total
liabilities
|
|
|
57,298.6
|
|
|
56,211.8
|
|
|
49,446.9
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.0
|
|
|
14.0
|
|
|
14.0
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Total Deere &
Company stockholders' equity
|
|
|
9,252.6
|
|
|
9,557.3
|
|
|
6,825.1
|
Noncontrolling
interests
|
|
|
12.3
|
|
|
3.2
|
|
|
10.2
|
Total stockholders'
equity
|
|
|
9,264.9
|
|
|
9,560.5
|
|
|
6,835.3
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
66,577.5
|
|
$
|
65,786.3
|
|
$
|
56,296.2
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED CASH FLOWS
|
For the Three Months
Ended January 28, 2018 and January 29, 2017
|
(In millions of
dollars) Unaudited
|
|
|
2018
|
|
2017
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(534.7)
|
|
$
|
198.4
|
Adjustments to
reconcile net income to net cash used for operating
activities:
|
|
|
|
|
|
|
Provision for credit
losses
|
|
|
2.5
|
|
|
6.5
|
Provision for
depreciation and amortization
|
|
|
463.2
|
|
|
415.7
|
Share-based
compensation expense
|
|
|
16.7
|
|
|
18.2
|
Undistributed earnings
of unconsolidated affiliates
|
|
|
(6.6)
|
|
|
(1.0)
|
Provision for deferred
income taxes
|
|
|
479.7
|
|
|
11.9
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade, notes and
financing receivables related to sales
|
|
|
(34.9)
|
|
|
61.9
|
Inventories
|
|
|
(1,238.8)
|
|
|
(743.1)
|
Accounts payable and
accrued expenses
|
|
|
(915.1)
|
|
|
(717.7)
|
Accrued income taxes
payable/receivable
|
|
|
425.1
|
|
|
10.1
|
Retirement
benefits
|
|
|
65.6
|
|
|
46.5
|
Other
|
|
|
(19.5)
|
|
|
(44.1)
|
Net cash used for
operating activities
|
|
|
(1,296.8)
|
|
|
(736.7)
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
Collections of
receivables (excluding receivables related to sales)
|
|
|
5,226.1
|
|
|
4,814.8
|
Proceeds from
maturities and sales of marketable securities
|
|
|
13.1
|
|
|
23.7
|
Proceeds from sales
of equipment on operating leases
|
|
|
339.6
|
|
|
368.2
|
Proceeds from sales
of businesses and unconsolidated affiliates, net of cash
sold
|
|
|
49.7
|
|
|
113.9
|
Cost of receivables
acquired (excluding receivables related to sales)
|
|
|
(4,006.6)
|
|
|
(3,644.6)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
(5,129.7)
|
|
|
|
Purchases of
marketable securities
|
|
|
(24.3)
|
|
|
(21.7)
|
Purchases of property
and equipment
|
|
|
(176.3)
|
|
|
(155.2)
|
Cost of equipment on
operating leases acquired
|
|
|
(365.7)
|
|
|
(382.6)
|
Other
|
|
|
(16.2)
|
|
|
(12.1)
|
Net cash provided by
(used for) investing activities
|
|
|
(4,090.3)
|
|
|
1,104.4
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
Decrease in total
short-term borrowings
|
|
|
(535.5)
|
|
|
(1,064.9)
|
Proceeds from
long-term borrowings
|
|
|
2,262.1
|
|
|
1,295.8
|
Payments of long-term
borrowings
|
|
|
(1,871.2)
|
|
|
(1,048.9)
|
Proceeds from
issuance of common stock
|
|
|
143.0
|
|
|
263.3
|
Repurchases of common
stock
|
|
|
(9.7)
|
|
|
(6.2)
|
Dividends
paid
|
|
|
(193.0)
|
|
|
(188.9)
|
Other
|
|
|
(26.7)
|
|
|
(24.4)
|
Net cash used for
financing activities
|
|
|
(231.0)
|
|
|
(774.2)
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
|
198.3
|
|
|
(39.3)
|
|
|
|
|
|
|
|
Net Decrease in
Cash and Cash Equivalents
|
|
|
(5,419.8)
|
|
|
(445.8)
|
Cash and Cash
Equivalents at Beginning of Period
|
|
|
9,334.9
|
|
|
4,335.8
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
3,915.1
|
|
$
|
3,890.0
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
Condensed Notes to
Interim Consolidated Financial Statements (Unaudited)
|
|
|
(1)
|
On December 1, 2017,
the Company acquired the stock and certain assets of substantially
all of Wirtgen Group Holding GmbH's (Wirtgen) operations. The total
cash purchase price, net of cash acquired of $197 million, was
$5,130 million, a portion of which is held in escrow to secure
certain indemnity obligations of Wirtgen. In addition to the cash
purchase price, the Company assumed $1,724 million in liabilities,
which represented substantially all of Wirtgen's liabilities. The
preliminary fair values assigned to the assets and liabilities of
the acquired entity in millions of dollars, which is based on
information as of the acquisition date and available at January 28,
2018 follows:
|
|
|
|
|
|
|
Trade accounts and
notes receivable
|
$
|
463
|
|
|
Financing
receivables
|
|
36
|
|
|
Financing receivables
securitized
|
|
126
|
|
|
Other
receivables
|
|
100
|
|
|
Inventories
|
|
1,568
|
|
|
Property and
equipment
|
|
755
|
|
|
Goodwill
|
|
2,062
|
|
|
Other intangible
assets
|
|
1,453
|
|
|
Deferred income
taxes
|
|
79
|
|
|
Other
assets
|
|
221
|
|
|
Total
assets
|
$
|
6,863
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
257
|
|
|
Short-term
securitization borrowings
|
|
127
|
|
|
Accounts payable and
accrued expenses
|
|
729
|
|
|
Deferred income
taxes
|
|
504
|
|
|
Long-term
borrowings
|
|
79
|
|
|
Retirement benefits
and other liabilities
|
|
28
|
|
|
Total
liabilities
|
$
|
1,724
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
$
|
9
|
|
|
|
|
The Company continues
to review the fair value of the assets and liabilities acquired,
which may be updated during the measurement period.
|
|
|
|
Wirtgen's results
were included in the Company's consolidated financial statements
beginning on the acquisition date. The results are incorporated
with the Company's results using a 30-day lag period and are
included in the construction and forestry segment. The net sales
and revenues and loss before income taxes, which includes interest
expense not included in operating profit, included in the Company's
statement of consolidated income in the first quarter of 2018 are
$255 million and $98 million, respectively.
|
|
|
(2)
|
On December 22, 2017,
the U.S. government enacted new tax legislation (Tax Act). As a
result of the provisions in the Tax Act, the Company recorded a
provisional income tax expense of $965 million in the first quarter
of fiscal year 2018. The provisional income tax expense was a
charge of $1,243 million for the Equipment Operations and a benefit
of $278 million for Financial Services. The discrete expense
primarily related to a remeasurement of the Company's net deferred
tax assets to the new corporate income tax rate of $715 million and
a one-time, deemed earnings repatriation tax of $262 million. The
discrete tax expense was partially offset by a net benefit of $12
million, primarily related to the lower income tax rate on current
year income. The Company continues to analyze the provisions of the
Tax Act, the information necessary to refine the estimate
calculations, and evaluate potential Company actions. As a result,
the first quarter provisional income tax expense may
change.
|
|
|
(3)
|
Dividends declared
and paid on a per share basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
January 28
|
|
January 29
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared
|
$
|
.60
|
|
$
|
.60
|
|
|
Dividends
paid
|
$
|
.60
|
|
$
|
.60
|
|
|
|
(4)
|
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.
|
|
|
(5)
|
The consolidated
financial statements represent the consolidation of all
Deere & Company's subsidiaries. In the supplemental
consolidating data in Note 6 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.
|
(6) SUPPLEMENTAL
CONSOLIDATING DATA
|
STATEMENT OF
INCOME
|
For the Three Months
Ended January 28, 2018 and January 29, 2017
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,973.9
|
|
$
|
4,697.8
|
|
|
|
|
|
|
Finance and interest
income
|
|
|
11.5
|
|
|
21.3
|
|
$
|
777.0
|
|
$
|
687.3
|
Other
income
|
|
|
196.5
|
|
|
258.1
|
|
|
62.7
|
|
|
58.3
|
Total
|
|
|
6,181.9
|
|
|
4,977.2
|
|
|
839.7
|
|
|
745.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
4,705.0
|
|
|
3,781.9
|
|
|
|
|
|
|
Research and
development expenses
|
|
|
356.8
|
|
|
312.1
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
|
590.5
|
|
|
545.4
|
|
|
116.2
|
|
|
123.3
|
Interest
expense
|
|
|
96.0
|
|
|
66.7
|
|
|
194.1
|
|
|
148.8
|
Interest compensation
to Financial Services
|
|
|
61.7
|
|
|
45.7
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
72.2
|
|
|
65.6
|
|
|
311.2
|
|
|
305.3
|
Total
|
|
|
5,882.2
|
|
|
4,817.4
|
|
|
621.5
|
|
|
577.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
299.7
|
|
|
159.8
|
|
|
218.2
|
|
|
168.2
|
Provision (credit)
for income taxes
|
|
|
1,263.8
|
|
|
74.9
|
|
|
(206.3)
|
|
|
54.3
|
Income (Loss) of
Consolidated Group
|
|
|
(964.1)
|
|
|
84.9
|
|
|
424.5
|
|
|
113.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
(Loss) of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
|
425.3
|
|
|
114.4
|
|
|
.8
|
|
|
.5
|
Other
|
|
|
4.1
|
|
|
(.9)
|
|
|
|
|
|
|
Total
|
|
|
429.4
|
|
|
113.5
|
|
|
.8
|
|
|
.5
|
Net Income
(Loss)
|
|
|
(534.7)
|
|
|
198.4
|
|
|
425.3
|
|
|
114.4
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
.4
|
|
|
(.6)
|
|
|
|
|
|
|
Net Income (Loss)
Attributable to Deere & Company
|
|
$
|
(535.1)
|
|
$
|
199.0
|
|
$
|
425.3
|
|
$
|
114.4
|
|
|
* 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
|
|
|
January 28
|
|
October 29
|
|
January 29
|
|
January 28
|
|
October 29
|
|
January 29
|
|
|
2018
|
|
2017
|
|
2017
|
|
2018
|
|
2017
|
|
2017
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,617.1
|
|
$
|
8,168.4
|
|
$
|
2,667.9
|
|
$
|
1,298.0
|
|
$
|
1,166.5
|
|
$
|
1,222.1
|
Marketable
securities
|
|
|
17.6
|
|
|
20.2
|
|
|
29.1
|
|
|
444.7
|
|
|
431.4
|
|
|
416.4
|
Receivables from
unconsolidated subsidiaries and affiliates
|
|
|
667.7
|
|
|
1,032.1
|
|
|
2,855.8
|
|
|
|
|
|
|
|
|
|
Trade accounts and
notes receivable - net
|
|
|
1,051.3
|
|
|
876.3
|
|
|
537.4
|
|
|
4,907.1
|
|
|
4,134.1
|
|
|
3,787.5
|
Financing receivables
- net
|
|
|
51.6
|
|
|
|
|
|
.7
|
|
|
23,803.5
|
|
|
25,104.1
|
|
|
23,030.2
|
Financing receivables
securitized - net
|
|
|
124.9
|
|
|
|
|
|
|
|
|
4,349.1
|
|
|
4,158.8
|
|
|
4,250.4
|
Other
receivables
|
|
|
885.7
|
|
|
1,045.6
|
|
|
778.6
|
|
|
156.4
|
|
|
195.5
|
|
|
116.2
|
Equipment on
operating leases - net
|
|
|
|
|
|
|
|
|
|
|
|
6,619.8
|
|
|
6,593.7
|
|
|
5,825.3
|
Inventories
|
|
|
6,614.2
|
|
|
3,904.1
|
|
|
3,959.6
|
|
|
|
|
|
|
|
|
|
Property and
equipment - net
|
|
|
5,733.0
|
|
|
5,017.3
|
|
|
4,979.3
|
|
|
48.2
|
|
|
50.4
|
|
|
51.1
|
Investments in
unconsolidated subsidiaries and affiliates
|
|
|
5,285.8
|
|
|
4,812.3
|
|
|
4,658.6
|
|
|
15.5
|
|
|
13.8
|
|
|
12.2
|
Goodwill
|
|
|
3,111.8
|
|
|
1,033.3
|
|
|
809.2
|
|
|
|
|
|
|
|
|
|
Other intangible
assets - net
|
|
|
1,659.5
|
|
|
218.0
|
|
|
95.5
|
|
|
|
|
|
|
|
|
|
Retirement
benefits
|
|
|
580.2
|
|
|
538.1
|
|
|
133.7
|
|
|
16.2
|
|
|
16.9
|
|
|
19.8
|
Deferred income
taxes
|
|
|
2,248.7
|
|
|
3,098.8
|
|
|
3,567.1
|
|
|
80.1
|
|
|
79.8
|
|
|
72.1
|
Other
assets
|
|
|
1,118.2
|
|
|
973.9
|
|
|
847.0
|
|
|
563.1
|
|
|
651.4
|
|
|
654.5
|
Total
Assets
|
|
$
|
31,767.3
|
|
$
|
30,738.4
|
|
$
|
25,919.5
|
|
$
|
42,301.7
|
|
$
|
42,596.4
|
|
$
|
39,457.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
858.2
|
|
$
|
375.5
|
|
$
|
269.7
|
|
$
|
8,885.3
|
|
$
|
9,659.8
|
|
$
|
7,171.9
|
Short-term
securitization borrowings
|
|
|
125.8
|
|
|
|
|
|
|
|
|
4,302.5
|
|
|
4,118.7
|
|
|
4,220.2
|
Payables to
unconsolidated subsidiaries and affiliates
|
|
|
118.0
|
|
|
121.9
|
|
|
94.7
|
|
|
634.0
|
|
|
996.2
|
|
|
2,826.9
|
Accounts payable and
accrued expenses
|
|
|
7,894.3
|
|
|
7,718.1
|
|
|
5,885.0
|
|
|
1,876.9
|
|
|
1,827.1
|
|
|
1,552.4
|
Deferred income
taxes
|
|
|
491.2
|
|
|
115.6
|
|
|
87.4
|
|
|
551.6
|
|
|
857.7
|
|
|
763.2
|
Long-term
borrowings
|
|
|
5,572.5
|
|
|
5,490.9
|
|
|
4,533.8
|
|
|
20,849.3
|
|
|
20,400.4
|
|
|
18,382.8
|
Retirement benefits
and other liabilities
|
|
|
7,428.4
|
|
|
7,341.9
|
|
|
8,199.6
|
|
|
94.8
|
|
|
92.9
|
|
|
90.6
|
Total
liabilities
|
|
|
22,488.4
|
|
|
21,163.9
|
|
|
19,070.2
|
|
|
37,194.4
|
|
|
37,952.8
|
|
|
35,008.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.0
|
|
|
14.0
|
|
|
14.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Deere & Company stockholders' equity
|
|
|
9,252.6
|
|
|
9,557.3
|
|
|
6,825.1
|
|
|
5,107.3
|
|
|
4,643.6
|
|
|
4,449.8
|
Noncontrolling
interests
|
|
|
12.3
|
|
|
3.2
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
9,264.9
|
|
|
9,560.5
|
|
|
6,835.3
|
|
|
5,107.3
|
|
|
4,643.6
|
|
|
4,449.8
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
31,767.3
|
|
$
|
30,738.4
|
|
$
|
25,919.5
|
|
$
|
42,301.7
|
|
$
|
42,596.4
|
|
$
|
39,457.8
|
|
|
* 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 Three Months
Ended January 28, 2018 and January 29, 2017
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(534.7)
|
|
$
|
198.4
|
|
$
|
425.3
|
|
$
|
114.4
|
Adjustments to
reconcile net income to net cash provided by (used for) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (credit) for
credit losses
|
|
|
.8
|
|
|
(.2)
|
|
|
1.7
|
|
|
6.7
|
Provision for
depreciation and amortization
|
|
|
232.4
|
|
|
212.3
|
|
|
261.6
|
|
|
233.3
|
Undistributed earnings
of unconsolidated subsidiaries and affiliates
|
|
|
(392.9)
|
|
|
25.1
|
|
|
(.8)
|
|
|
(.5)
|
Provision (credit) for
deferred income taxes
|
|
|
786.4
|
|
|
(10.8)
|
|
|
(306.7)
|
|
|
22.7
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
|
295.1
|
|
|
102.1
|
|
|
|
|
|
|
Inventories
|
|
|
(1,099.7)
|
|
|
(624.6)
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
(735.7)
|
|
|
(618.5)
|
|
|
8.9
|
|
|
(23.9)
|
Accrued income taxes
payable/receivable
|
|
|
453.1
|
|
|
.9
|
|
|
(28.0)
|
|
|
9.2
|
Retirement
benefits
|
|
|
63.2
|
|
|
44.2
|
|
|
2.4
|
|
|
2.3
|
Other
|
|
|
(50.6)
|
|
|
(74.7)
|
|
|
65.9
|
|
|
60.5
|
Net cash provided by
(used for) operating activities
|
|
|
(982.6)
|
|
|
(745.8)
|
|
|
430.3
|
|
|
424.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections of
receivables (excluding trade and wholesale)
|
|
|
|
|
|
|
|
|
5,601.4
|
|
|
5,132.5
|
Proceeds from
maturities and sales of marketable securities
|
|
|
2.7
|
|
|
6.2
|
|
|
10.4
|
|
|
17.5
|
Proceeds from sales
of equipment on operating leases
|
|
|
|
|
|
|
|
|
339.6
|
|
|
368.2
|
Proceeds from sales
of businesses and unconsolidated affiliates, net of cash
sold
|
|
|
49.7
|
|
|
113.9
|
|
|
|
|
|
|
Cost of receivables
acquired (excluding trade and wholesale)
|
|
|
|
|
|
|
|
|
(4,368.5)
|
|
|
(3,864.2)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
(5,129.7)
|
|
|
|
|
|
|
|
|
|
Purchases of
marketable securities
|
|
|
|
|
|
|
|
|
(24.3)
|
|
|
(21.7)
|
Purchases of property
and equipment
|
|
|
(176.0)
|
|
|
(154.9)
|
|
|
(.3)
|
|
|
(.3)
|
Cost of equipment on
operating leases acquired
|
|
|
|
|
|
|
|
|
(553.8)
|
|
|
(542.8)
|
Increase in trade and
wholesale receivables
|
|
|
|
|
|
|
|
|
(601.9)
|
|
|
(213.5)
|
Other
|
|
|
57.6
|
|
|
(5.7)
|
|
|
(3.5)
|
|
|
(6.4)
|
Net cash provided by
(used for) investing activities
|
|
|
(5,195.7)
|
|
|
(40.5)
|
|
|
399.1
|
|
|
869.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
|
132.9
|
|
|
(14.5)
|
|
|
(668.4)
|
|
|
(1,050.4)
|
Change in
intercompany receivables/payables
|
|
|
388.1
|
|
|
316.9
|
|
|
(388.1)
|
|
|
(316.9)
|
Proceeds from
long-term borrowings
|
|
|
77.8
|
|
|
19.2
|
|
|
2,184.3
|
|
|
1,276.6
|
Payments of long-term
borrowings
|
|
|
(68.0)
|
|
|
(18.3)
|
|
|
(1,803.2)
|
|
|
(1,030.6)
|
Proceeds from
issuance of common stock
|
|
|
143.0
|
|
|
263.3
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
|
(9.7)
|
|
|
(6.2)
|
|
|
|
|
|
|
Dividends
paid
|
|
|
(193.0)
|
|
|
(188.9)
|
|
|
(38.2)
|
|
|
(140.0)
|
Other
|
|
|
(17.5)
|
|
|
(19.1)
|
|
|
(9.2)
|
|
|
(5.3)
|
Net cash provided by
(used for) financing activities
|
|
|
453.6
|
|
|
352.4
|
|
|
(722.8)
|
|
|
(1,266.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
|
173.4
|
|
|
(38.7)
|
|
|
24.9
|
|
|
(.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
|
(5,551.3)
|
|
|
(472.6)
|
|
|
131.5
|
|
|
26.8
|
Cash and Cash
Equivalents at Beginning of Period
|
|
|
8,168.4
|
|
|
3,140.5
|
|
|
1,166.5
|
|
|
1,195.3
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
2,617.1
|
|
$
|
2,667.9
|
|
$
|
1,298.0
|
|
$
|
1,222.1
|
|
|
* 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 Three Months
Ended
|
|
Equipment Operations*
|
Agriculture and Turf
|
Construction and Forestry*
|
|
|
January 28
|
January 29
|
January 28
|
January 29
|
January 28
|
January 29
|
Dollars in millions
|
|
2018
|
2017**
|
2018
|
2017**
|
2018
|
2017**
|
Net
Sales
|
|
$
|
5,974
|
|
$
|
4,698
|
|
$
|
4,243
|
|
$
|
3,598
|
|
$
|
1,731
|
|
$
|
1,100
|
|
Net Sales -
excluding Wirtgen
|
|
$
|
5,719
|
|
$
|
4,698
|
|
$
|
4,243
|
|
$
|
3,598
|
|
$
|
1,476
|
|
$
|
1,100
|
|
Average
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO
|
|
$
|
17,558
|
|
$
|
11,596
|
|
$
|
9,937
|
|
$
|
8,591
|
|
$
|
7,621
|
|
$
|
3,005
|
|
With Inventories at
LIFO - excluding Wirtgen
|
|
$
|
13,112
|
|
$
|
11,596
|
|
$
|
9,937
|
|
$
|
8,591
|
|
$
|
3,175
|
|
$
|
3,005
|
|
With Inventories at
Standard Cost
|
|
$
|
18,837
|
|
$
|
12,870
|
|
$
|
10,970
|
|
$
|
9,627
|
|
$
|
7,867
|
|
$
|
3,243
|
|
With Inventories at
Standard Cost - excluding Wirtgen
|
|
$
|
14,391
|
|
$
|
12,870
|
|
$
|
10,970
|
|
$
|
9,627
|
|
$
|
3,421
|
|
$
|
3,243
|
|
Operating Profit
(Loss)
|
|
$
|
419
|
|
$
|
255
|
|
$
|
387
|
|
$
|
218
|
|
$
|
32
|
|
$
|
37
|
|
Operating Profit
(Loss) - excluding Wirtgen
|
|
$
|
511
|
|
$
|
255
|
|
$
|
387
|
|
$
|
218
|
|
$
|
124
|
|
$
|
37
|
|
Percent of Net Sales
- excluding Wirtgen
|
|
|
8.9
|
%
|
|
5.4
|
%
|
|
9.1
|
%
|
|
6.1
|
%
|
|
8.4
|
%
|
|
3.4
|
%
|
Operating Return
on Assets - excluding Wirtgen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO - excluding Wirtgen
|
|
|
3.9
|
%
|
|
2.2
|
%
|
|
3.9
|
%
|
|
2.5
|
%
|
|
3.9
|
%
|
|
1.2
|
%
|
With Inventories at
Standard Cost - excluding Wirtgen
|
|
|
3.6
|
%
|
|
2.0
|
%
|
|
3.5
|
%
|
|
2.3
|
%
|
|
3.6
|
%
|
|
1.1
|
%
|
SVA Cost of Assets
- excluding Wirtgen
|
|
$
|
(432)
|
|
$
|
(387)
|
|
$
|
(329)
|
|
$
|
(289)
|
|
$
|
(103)
|
|
$
|
(98)
|
|
SVA - excluding
Wirtgen
|
|
$
|
79
|
|
$
|
(132)
|
|
$
|
58
|
|
$
|
(71)
|
|
$
|
21
|
|
$
|
(61)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
Financial
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28
|
January 29
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in
millions
|
|
2018***
|
2017**
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
425
|
|
$
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company - Tax
Adjusted
|
|
$
|
147
|
|
$
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
|
$
|
4,791
|
|
$
|
4,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity -
Tax Adjusted
|
|
$
|
4,721
|
|
$
|
4,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Equity -
Tax Adjusted
|
|
|
3.1
|
%
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
217
|
|
$
|
167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity -
Tax Adjusted
|
|
$
|
4,721
|
|
$
|
4,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Equity
|
|
$
|
(174)
|
|
$
|
(163)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA
|
|
$
|
43
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
* On December 1,
2017, the Company acquired the stock and certain assets of
substantially all of Wirtgen Group Holding GmbH's operations
(Wirtgen), the leading manufacturer worldwide of road construction
equipment. Wirtgen is included in the construction and forestry
segment. Wirtgen is excluded from the metrics above in order to
provide comparability to the Company's performance in prior
periods.
** During the first
quarter of fiscal 2018, the Company adopted ASU No. 2017-07,
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost. The ASU requires that
employers report only the service cost component of the total
defined benefit pension and postretirement benefit cost in
Operating Profit. The ASU was adopted on a retrospective basis for
the presentation of Operating Profit and on a prospective basis for
the capitalization of only the service cost. Operating Profit
amounts reported for fiscal 2017 have been restated
accordingly.
*** On December 22,
2017, the U.S. government enacted new tax legislation (Tax Act).
The primary provisions of the Tax Act expected to impact the
Company in fiscal year 2018 are a reduction to the U.S. federal
income tax rate from 35 percent to 21 percent and a transition from
a worldwide corporate tax system to a territorial tax system. As
the Financial Services segment SVA is based on average equity, the
"Tax Adjusted" amounts remove the effects of the discrete income
tax benefit and the lower corporate tax rate provided in the Tax
Act for comparability to the prior period.
|
View original
content:http://www.prnewswire.com/news-releases/deere-reports-first-quarter-loss-of-535-million-including-effect-of-us-tax-reform-legislation-adjusted-net-income-totals-430-million-300599881.html
SOURCE Deere & Company