- Quarterly net sales rise 5% to $10.3
billion.
- Construction & Forestry sales and profit register strong
gains.
- Persistent uncertainty in agricultural markets weighs on
outlook.
- Full-year earnings forecast revised to $3.3 billion on sales increase of about 5%.
MOLINE, Ill., May 17, 2019
/PRNewswire/ -- Deere & Company (NYSE:
DE) reported net income of $1.135
billion for the second quarter ended April 28, 2019, or
$3.52 per share, compared with net
income of $1.208 billion, or
$3.67 per share, for the quarter
ended April 29, 2018. For the first six months of the year,
net income attributable to Deere & Company was
$1.633 billion, or $5.07 per share, compared with $673.2 million, or $2.05 per share, for the same period last
year.
Affecting last year's results were charges to the provision for
income taxes due to U.S. tax reform legislation (tax reform).
Without these adjustments, net income attributable to Deere &
Company for the second quarter and first six months of 2018 would
have been $1.034 billion, or
$3.14 per share, and $1.476 billion, or $4.49 per share, respectively. (Information on
non-GAAP financial measures is included in the appendix.)
Worldwide net sales and revenues increased 6 percent, to
$11.342 billion, for the second
quarter of 2019 and rose 10 percent, to $19.326 billion, for six months. Net sales of the
equipment operations were $10.273
billion for the quarter and $17.214
billion for six months, compared with $9.747 billion and $15.721
billion last year.
"John Deere produced solid results for the quarter despite
uncertain conditions in the agricultural sector," said Samuel R. Allen, chairman and chief executive
officer. "Ongoing concerns about export-market access, near-term
demand for commodities such as soybeans, and a delayed planting
season in much of North America
are causing farmers to become much more cautious about making major
purchases. At the same time, overall economic conditions remain
positive, a fact that along with a growing customer base has
contributed to strong results from our construction and forestry
business."
Company Outlook & Summary
Company equipment sales are projected to increase by about 5
percent for fiscal 2019 compared with 2018. Included in the
forecast are Wirtgen results for the full fiscal year of 2019
compared with 10 months of the prior year. This adds about 1
percent to the company's net sales forecast for the current year.
Also included in the forecast is a negative foreign-currency
translation effect of about 3 percent for the year. Net sales and
revenues are projected to increase about 5 percent for fiscal 2019.
Net income attributable to Deere & Company is forecast to be
about $3.3 billion.
"Although the long-term fundamentals for our businesses remain
favorable, softening conditions in the agricultural sector have led
Deere to adopt a more cautious financial outlook for the year,"
said Allen. "The lower forecast is partly a result of actions we
are taking to prudently manage field inventories, which will cause
production levels to be below retail sales in the second half of
the year. At the same time, Deere's long-term strategies remain on
track and we are fully committed to their successful execution. We
continue to expand our global customer base and are encouraged by
the market's positive response to our line-up of advanced products
and services."
Deere &
Company
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net sales and
revenues
|
$
|
11,342
|
|
$
|
10,720
|
|
6%
|
|
$
|
19,326
|
|
$
|
17,633
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,135
|
|
$
|
1,208
|
|
-6%
|
|
$
|
1,633
|
|
$
|
673
|
|
143%
|
Fully diluted
EPS
|
$
|
3.52
|
|
$
|
3.67
|
|
|
|
$
|
5.07
|
|
$
|
2.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income –
adjusted
|
$
|
1,135
|
|
$
|
1,034
|
|
10%
|
|
$
|
1,633
|
|
$
|
1,476
|
|
11%
|
Fully diluted EPS –
adjusted
|
$
|
3.52
|
|
$
|
3.14
|
|
|
|
$
|
5.07
|
|
$
|
4.49
|
|
|
Results were favorably affected by $174
million in the second quarter of 2018 and unfavorably
affected by $803 million for the
six-month period due to discrete adjustments to the provision for
income taxes related to tax reform. (Information on non-GAAP
financial measures is included in the appendix.)
Equipment
Operations
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net sales
|
$
|
10,273
|
|
$
|
9,747
|
|
5%
|
|
$
|
17,214
|
|
$
|
15,721
|
|
9%
|
Operating
profit
|
$
|
1,366
|
|
$
|
1,315
|
|
4%
|
|
$
|
1,943
|
|
$
|
1,734
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,010
|
|
$
|
1,103
|
|
-8%
|
|
$
|
1,350
|
|
$
|
139
|
|
871%
|
Tax reform
unfavorable (favorable) adjustments
|
|
|
|
$
|
(207)
|
|
|
|
|
|
|
$
|
1,032
|
|
|
Net income without
tax reform
|
$
|
1,010
|
|
$
|
896
|
|
13%
|
|
$
|
1,350
|
|
$
|
1,171
|
|
15%
|
For a discussion on net sales and operating profit results, see
the Agriculture & Turf and Construction & Forestry sections
below. Wirtgen results are included for the entire year-to-date
period of 2019 while the prior year reflected four months of the
respective period. The two additional months increased the
company's year-to-date net sales by about 3%.
Agriculture &
Turf
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net sales
|
$
|
7,282
|
|
$
|
7,049
|
|
3%
|
|
$
|
11,963
|
|
$
|
11,292
|
|
6%
|
Operating
profit
|
$
|
1,019
|
|
$
|
1,056
|
|
-4%
|
|
$
|
1,367
|
|
$
|
1,443
|
|
-5%
|
Operating
margin
|
|
14.0%
|
|
|
15.0%
|
|
|
|
|
11.4%
|
|
|
12.8%
|
|
|
Agriculture & Turf sales for the quarter and year to date
increased due to higher shipment volumes and price realization,
partially offset by the unfavorable effects of currency
translation. Operating profit declined for both periods mainly due
to higher production costs, the unfavorable effects of
foreign-currency exchange and higher research and development
expenses, partially offset by price realization and higher shipment
volumes.
Construction &
Forestry
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net sales
|
$
|
2,991
|
|
$
|
2,698
|
|
11%
|
|
$
|
5,251
|
|
$
|
4,429
|
|
19%
|
Operating
profit
|
$
|
347
|
|
$
|
259
|
|
34%
|
|
$
|
576
|
|
$
|
291
|
|
98%
|
Operating
margin
|
|
11.6%
|
|
|
9.6%
|
|
|
|
|
11.0%
|
|
|
6.6%
|
|
|
Construction & Forestry sales were up for the quarter and
year to date due to higher shipment volumes and price realization,
partially offset by the unfavorable effects of currency
translation. Additionally, the inclusion of Wirtgen's sales for two
additional months accounted for about 9% of the increase in net
sales year to date. Wirtgen's operating profit for the second
quarter and first six months was $102
million and $116 million,
compared with operating profit of $41
million and an operating loss of $51
million for the corresponding periods last year. Excluding
Wirtgen, the improvement in Construction & Forestry results for
both periods was primarily driven by price realization and higher
shipment volumes, partially offset by higher production costs and a
less-favorable product mix.
Financial
Services
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net income
|
$
|
121
|
|
$
|
104
|
|
16%
|
|
$
|
275
|
|
$
|
529
|
|
-48%
|
Tax reform
unfavorable (favorable) adjustments
|
|
|
|
$
|
33
|
|
|
|
|
|
|
$
|
(229)
|
|
|
Net income without
tax reform
|
$
|
121
|
|
$
|
137
|
|
-12%
|
|
$
|
275
|
|
$
|
300
|
|
-8%
|
Excluding last year's tax-reform adjustment, the decrease in
financial services net income for the quarter and first six months
was due to unfavorable financing spreads and a higher provision for
credit losses, partially offset by income earned on a higher
average portfolio.
Market Conditions
and Outlook (annual)
|
$ in
millions
|
|
|
|
|
|
|
|
|
|
Agriculture &
Turf
|
|
Net Sales
|
|
|
2%
|
|
Currency
Translation
|
|
-3%
|
Construction &
Forestry
|
|
Net Sales
|
|
|
11%
|
|
Currency
Translation
|
|
-2%
|
|
|
|
|
|
|
|
|
|
|
John Deere
Financial
|
|
Net Income
|
|
|
$ 600
|
|
|
|
|
Agriculture & Turf. Industry sales of
agricultural equipment in the U.S. and Canada are forecast to be flat to up 5 percent
for the full year, while industry sales in the EU28 member
nations are forecast to be about flat. South American industry
sales of tractors and combines are projected to be flat to up 5
percent benefiting from strength in Brazil. Asian sales are forecast to be flat to
down slightly. Industry sales of turf and utility equipment in the
U.S. and Canada are expected to be
flat to up 5 percent for 2019.
Construction & Forestry. The Construction &
Forestry forecast includes a full year of Wirtgen sales, versus 10
months in fiscal 2018, with the two additional months adding about
4 percent to division sales for the year. The outlook reflects
generally positive fundamentals and economic growth worldwide. In
forestry, global industry sales are expected to be flat to up 5
percent mainly as a result of improved demand in EU28 countries
and Russia.
Financial Services. Results are expected to benefit
from a higher average portfolio, offset by a higher provision for
credit losses, less-favorable financing spreads, and higher selling
and administrative expenses. Financial services net income for 2018
of $942 million included a tax
benefit related to tax reform of $341
million. Excluding the tax benefit, net income for 2018
would have been $601 million.
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.
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Revenue
|
$
|
703
|
|
$
|
617
|
|
14%
|
|
$
|
1,364
|
|
$
|
1,203
|
|
13%
|
Net income
|
$
|
84
|
|
$
|
119
|
|
-29%
|
|
$
|
206
|
|
$
|
519
|
|
-60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending portfolio
balance
|
|
|
|
|
|
|
|
|
$
|
37,747
|
|
$
|
34,535
|
|
9%
|
Prior-year results for the second quarter and year to date
included a favorable provision for income taxes associated with tax
reform. Results for the current quarter and first six months
included a less-favorable financing spread and higher provision for
credit losses, partially offset by income from a higher average
portfolio.
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 tax
reform. Net income attributable to Deere & Company and diluted
earnings per share measures that exclude this item are not in
accordance with nor 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 and six months ended April 29, 2018.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
April
29, 2018
|
|
April
29, 2018
|
|
Net Income
|
|
|
|
|
Net Income
|
|
|
|
|
Attributable
to
|
|
Diluted
|
|
Attributable
to
|
|
Diluted
|
|
Deere
&
|
|
Earnings
|
|
Deere
&
|
|
Earnings
|
|
Company
|
|
Per Share
|
|
Company
|
|
Per Share
|
GAAP
measure
|
$
|
1,208.3
|
|
$
|
3.67
|
|
$
|
673.2
|
|
$
|
2.05
|
Discrete tax reform
expense (benefit)
|
|
(174.3)
|
|
|
(.53)
|
|
|
802.9
|
|
|
2.44
|
Non-GAAP
measure
|
$
|
1,034.0
|
|
$
|
3.14
|
|
$
|
1,476.1
|
|
$
|
4.49
|
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, trade restrictions and tariffs, global
trade agreements (e.g., the North American Free Trade Agreement),
the level of farm product exports (including concerns about
genetically modified organisms), 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 and effects of crop insurance programs, changes in
environmental regulations and their impact on farming practices,
animal diseases (e.g., African swine fever) and their effects on
poultry, beef and pork consumption and prices and on livestock feed
demand, and crop pests and diseases.
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;
retaliatory actions to such changes in trade, banking, monetary and
fiscal policies; 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; changes
to and compliance with privacy regulations; 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).
Second Quarter 2019
Press Release
|
(in millions of
dollars)
|
Unaudited
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
April 28
|
|
April 29
|
|
%
|
|
April 28
|
|
April 29
|
|
%
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
Net sales and
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
$
|
7,282
|
|
$
|
7,049
|
|
+3
|
|
$
|
11,963
|
|
$
|
11,292
|
|
+6
|
Construction and
forestry
|
|
2,991
|
|
|
2,698
|
|
+11
|
|
|
5,251
|
|
|
4,429
|
|
+19
|
Total net
sales
|
|
10,273
|
|
|
9,747
|
|
+5
|
|
|
17,214
|
|
|
15,721
|
|
+9
|
Financial
services
|
|
886
|
|
|
795
|
|
+11
|
|
|
1,741
|
|
|
1,572
|
|
+11
|
Other
revenues
|
|
183
|
|
|
178
|
|
+3
|
|
|
371
|
|
|
340
|
|
+9
|
Total net sales and
revenues
|
$
|
11,342
|
|
$
|
10,720
|
|
+6
|
|
$
|
19,326
|
|
$
|
17,633
|
|
+10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
$
|
1,019
|
|
$
|
1,056
|
|
-4
|
|
$
|
1,367
|
|
$
|
1,443
|
|
-5
|
Construction and
forestry
|
|
347
|
|
|
259
|
|
+34
|
|
|
576
|
|
|
291
|
|
+98
|
Financial
services
|
|
170
|
|
|
179
|
|
-5
|
|
|
362
|
|
|
396
|
|
-9
|
Total operating
profit
|
|
1,536
|
|
|
1,494
|
|
+3
|
|
|
2,305
|
|
|
2,130
|
|
+8
|
Reconciling items
**
|
|
(57)
|
|
|
(109)
|
|
-48
|
|
|
(144)
|
|
|
(222)
|
|
-35
|
Income
taxes
|
|
(344)
|
|
|
(177)
|
|
+94
|
|
|
(528)
|
|
|
(1,235)
|
|
-57
|
Net income
attributable to Deere & Company
|
$
|
1,135
|
|
$
|
1,208
|
|
-6
|
|
$
|
1,633
|
|
$
|
673
|
|
+143
|
|
|
*
|
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 April 28, 2019 and April 29, 2018
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
2019
|
|
2018
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
10,272.8
|
|
$
|
9,747.0
|
Finance and interest
income
|
|
|
837.8
|
|
|
753.9
|
Other
income
|
|
|
231.8
|
|
|
219.1
|
Total
|
|
|
11,342.4
|
|
|
10,720.0
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
7,754.7
|
|
|
7,333.3
|
Research and
development expenses
|
|
|
457.1
|
|
|
415.2
|
Selling,
administrative and general expenses
|
|
|
946.9
|
|
|
939.2
|
Interest
expense
|
|
|
350.8
|
|
|
303.7
|
Other operating
expenses
|
|
|
359.5
|
|
|
344.9
|
Total
|
|
|
9,869.0
|
|
|
9,336.3
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
1,473.4
|
|
|
1,383.7
|
Provision for income
taxes
|
|
|
343.5
|
|
|
177.1
|
Income of
Consolidated Group
|
|
|
1,129.9
|
|
|
1,206.6
|
Equity in income of
unconsolidated affiliates
|
|
|
6.4
|
|
|
3.1
|
Net
Income
|
|
|
1,136.3
|
|
|
1,209.7
|
Less: Net income
attributable to noncontrolling interests
|
|
|
1.4
|
|
|
1.4
|
Net Income
Attributable to Deere & Company
|
|
$
|
1,134.9
|
|
$
|
1,208.3
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
3.57
|
|
$
|
3.73
|
Diluted
|
|
$
|
3.52
|
|
$
|
3.67
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
317.9
|
|
|
324.2
|
Diluted
|
|
|
322.2
|
|
|
329.2
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED INCOME
|
For the Six Months
Ended April 28, 2019 and April 29, 2018
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
2019
|
|
2018
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
17,213.7
|
|
$
|
15,721.0
|
Finance and interest
income
|
|
|
1,652.7
|
|
|
1,476.8
|
Other
income
|
|
|
459.6
|
|
|
435.7
|
Total
|
|
|
19,326.0
|
|
|
17,633.5
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
13,186.3
|
|
|
12,037.8
|
Research and
development expenses
|
|
|
863.8
|
|
|
772.0
|
Selling,
administrative and general expenses
|
|
|
1,710.6
|
|
|
1,644.3
|
Interest
expense
|
|
|
703.8
|
|
|
590.0
|
Other operating
expenses
|
|
|
710.9
|
|
|
687.8
|
Total
|
|
|
17,175.4
|
|
|
15,731.9
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
2,150.6
|
|
|
1,901.6
|
Provision for income
taxes
|
|
|
527.5
|
|
|
1,234.7
|
Income of
Consolidated Group
|
|
|
1,623.1
|
|
|
666.9
|
Equity in income of
unconsolidated affiliates
|
|
|
12.8
|
|
|
8.0
|
Net
Income
|
|
|
1,635.9
|
|
|
674.9
|
Less: Net income
attributable to noncontrolling interests
|
|
|
2.5
|
|
|
1.7
|
Net Income
Attributable to Deere & Company
|
|
$
|
1,633.4
|
|
$
|
673.2
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
5.13
|
|
$
|
2.08
|
Diluted
|
|
$
|
5.07
|
|
$
|
2.05
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
318.1
|
|
|
323.4
|
Diluted
|
|
|
322.4
|
|
|
328.4
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(In millions of
dollars) Unaudited
|
|
|
April 28
|
|
October 28
|
|
April 29
|
|
|
2019
|
|
2018
|
|
2018
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,483.7
|
|
$
|
3,904.0
|
|
$
|
4,201.4
|
Marketable
securities
|
|
|
545.1
|
|
|
490.1
|
|
|
479.3
|
Receivables from
unconsolidated affiliates
|
|
|
34.1
|
|
|
21.7
|
|
|
34.3
|
Trade accounts and
notes receivable - net
|
|
|
7,519.3
|
|
|
5,004.3
|
|
|
6,511.1
|
Financing receivables
- net
|
|
|
25,870.3
|
|
|
27,054.1
|
|
|
24,275.5
|
Financing receivables
securitized - net
|
|
|
4,813.6
|
|
|
4,021.4
|
|
|
4,436.3
|
Other
receivables
|
|
|
1,477.7
|
|
|
1,735.5
|
|
|
1,398.2
|
Equipment on
operating leases - net
|
|
|
7,039.9
|
|
|
7,165.4
|
|
|
6,723.1
|
Inventories
|
|
|
7,160.9
|
|
|
6,148.9
|
|
|
6,888.9
|
Property and
equipment - net
|
|
|
5,757.1
|
|
|
5,867.5
|
|
|
5,742.9
|
Investments in
unconsolidated affiliates
|
|
|
234.8
|
|
|
207.3
|
|
|
202.1
|
Goodwill
|
|
|
3,024.9
|
|
|
3,100.7
|
|
|
3,188.7
|
Other intangible
assets - net
|
|
|
1,475.9
|
|
|
1,562.4
|
|
|
1,692.2
|
Retirement
benefits
|
|
|
1,382.7
|
|
|
1,298.3
|
|
|
617.9
|
Deferred income
taxes
|
|
|
1,038.9
|
|
|
808.0
|
|
|
1,718.5
|
Other
assets
|
|
|
1,870.7
|
|
|
1,718.4
|
|
|
1,762.6
|
Total
Assets
|
|
$
|
72,729.6
|
|
$
|
70,108.0
|
|
$
|
69,873.0
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
11,761.8
|
|
$
|
11,061.4
|
|
$
|
10,894.6
|
Short-term
securitization borrowings
|
|
|
4,702.2
|
|
|
3,957.3
|
|
|
4,401.1
|
Payables to
unconsolidated affiliates
|
|
|
199.5
|
|
|
128.9
|
|
|
145.7
|
Accounts payable and
accrued expenses
|
|
|
9,625.8
|
|
|
10,111.0
|
|
|
9,789.6
|
Deferred income
taxes
|
|
|
513.5
|
|
|
555.8
|
|
|
562.7
|
Long-term
borrowings
|
|
|
28,255.4
|
|
|
27,237.4
|
|
|
26,278.6
|
Retirement benefits
and other liabilities
|
|
|
5,733.1
|
|
|
5,751.0
|
|
|
7,366.1
|
Total
liabilities
|
|
|
60,791.3
|
|
|
58,802.8
|
|
|
59,438.4
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.3
|
|
|
14.0
|
|
|
14.6
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Total Deere &
Company stockholders' equity
|
|
|
11,919.5
|
|
|
11,287.8
|
|
|
10,410.3
|
Noncontrolling
interests
|
|
|
4.5
|
|
|
3.4
|
|
|
9.7
|
Total stockholders'
equity
|
|
|
11,924.0
|
|
|
11,291.2
|
|
|
10,420.0
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
72,729.6
|
|
$
|
70,108.0
|
|
$
|
69,873.0
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED CASH FLOWS
|
For the Six Months
Ended April 28, 2019 and April 29, 2018
|
(In millions of
dollars) Unaudited
|
|
2019
|
|
2018
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
Net income
|
$
|
1,635.9
|
|
$
|
674.9
|
Adjustments to
reconcile net income to net cash used for operating
activities:
|
|
|
|
|
|
Provision for credit
losses
|
|
36.6
|
|
|
26.8
|
Provision for
depreciation and amortization
|
|
1,016.5
|
|
|
950.8
|
Share-based
compensation expense
|
|
44.4
|
|
|
39.8
|
Gain on sales of
businesses
|
|
|
|
|
(13.2)
|
Undistributed earnings
of unconsolidated affiliates
|
|
(8.6)
|
|
|
(4.5)
|
Provision (credit) for
deferred income taxes
|
|
(282.2)
|
|
|
604.3
|
Changes in assets and
liabilities:
|
|
|
|
|
|
Trade, notes, and
financing receivables related to sales
|
|
(2,731.3)
|
|
|
(2,094.1)
|
Inventories
|
|
(1,394.3)
|
|
|
(1,796.8)
|
Accounts payable and
accrued expenses
|
|
(66.4)
|
|
|
306.9
|
Accrued income taxes
payable/receivable
|
|
157.0
|
|
|
153.0
|
Retirement
benefits
|
|
20.3
|
|
|
67.6
|
Other
|
|
77.3
|
|
|
(135.6)
|
Net cash used for
operating activities
|
|
(1,494.8)
|
|
|
(1,220.1)
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
Collections of
receivables (excluding receivables related to sales)
|
|
9,175.3
|
|
|
8,780.9
|
Proceeds from
maturities and sales of marketable securities
|
|
30.3
|
|
|
23.8
|
Proceeds from sales
of equipment on operating leases
|
|
823.4
|
|
|
748.6
|
Proceeds from sales
of businesses, net of cash sold
|
|
|
|
|
55.0
|
Cost of receivables
acquired (excluding receivables related to sales)
|
|
(8,886.7)
|
|
|
(8,181.2)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
|
|
(5,171.1)
|
Purchases of
marketable securities
|
|
(59.6)
|
|
|
(62.8)
|
Purchases of property
and equipment
|
|
(490.9)
|
|
|
(352.2)
|
Cost of equipment on
operating leases acquired
|
|
(924.1)
|
|
|
(926.5)
|
Other
|
|
(39.9)
|
|
|
(73.2)
|
Net cash used for
investing activities
|
|
(372.2)
|
|
|
(5,158.7)
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
Increase in total
short-term borrowings
|
|
1,570.4
|
|
|
199.1
|
Proceeds from
long-term borrowings
|
|
4,232.2
|
|
|
4,077.7
|
Payments of long-term
borrowings
|
|
(3,426.8)
|
|
|
(2,888.7)
|
Proceeds from
issuance of common stock
|
|
94.7
|
|
|
198.6
|
Repurchases of common
stock
|
|
(480.4)
|
|
|
(60.6)
|
Dividends
paid
|
|
(462.3)
|
|
|
(386.9)
|
Other
|
|
(55.6)
|
|
|
(43.9)
|
Net cash provided by
financing activities
|
|
1,472.2
|
|
|
1,095.3
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash, Cash Equivalents, and Restricted
Cash
|
|
(34.8)
|
|
|
145.9
|
|
|
|
|
|
|
Net Decrease in
Cash, Cash Equivalents, and Restricted Cash
|
|
(429.6)
|
|
|
(5,137.6)
|
Cash, Cash
Equivalents, and Restricted Cash at Beginning of
Period
|
|
4,015.3
|
|
|
9,466.8
|
Cash, Cash
Equivalents, and Restricted Cash at End of Period
|
$
|
3,585.7
|
|
$
|
4,329.2
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
Condensed Notes to
Interim Consolidated Financial Statements (Unaudited)
|
|
|
(1)
|
Dividends declared
and paid on a per share basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28
|
|
April 29
|
|
April 28
|
|
April 29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared
|
|
$
|
.76
|
|
$
|
.60
|
|
$
|
1.52
|
|
$
|
1.20
|
|
|
|
|
|
|
Dividends
paid
|
|
$
|
.76
|
|
$
|
.60
|
|
$
|
1.45
|
|
$
|
1.20
|
|
|
|
|
|
|
|
(2)
|
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.
|
|
|
(3)
|
In the first quarter
of 2019, the Company adopted Financial Accounting Standards Board
Accounting Standards Update (ASU) No. 2016-18, which amends ASC
230, Statement of Cash Flows. The ASU requires that restricted cash
be included with cash and cash equivalents in the statement of cash
flows. The ASU was adopted on a retrospective basis. As a result,
the 2018 consolidated statement of cash flows was updated to add
$132 million and $128 million of restricted cash in the beginning
period and ending period balances, respectively. The 2018
supplemental consolidating statement of cash flows was updated to
add $6 million and $8 million of restricted cash in the equipment
operations' beginning and ending period balances, respectively, and
$126 million and $120 million in the financial services' beginning
and ending period balances, respectively. The equipment operations'
restricted cash at October 28, 2018 and April 28, 2019 was $7
million and $10 million, respectively. The financial services'
restricted cash for the same periods was $104 million and $92
million, respectively.
|
|
|
(4)
|
The consolidated
financial statements represent the consolidation of all
Deere & Company's subsidiaries. In the supplemental
consolidating data in Note 5 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.
|
(5) SUPPLEMENTAL
CONSOLIDATING DATA
|
STATEMENT OF
INCOME
|
For the Three Months
Ended April 28, 2019 and April 29, 2018
|
(In millions of dollars) Unaudited
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
10,272.8
|
|
$
|
9,747.0
|
|
|
|
|
|
|
Finance and interest
income
|
|
25.1
|
|
|
27.8
|
|
$
|
909.7
|
|
$
|
812.5
|
Other
income
|
|
213.6
|
|
|
202.9
|
|
|
72.4
|
|
|
64.9
|
Total
|
|
10,511.5
|
|
|
9,977.7
|
|
|
982.1
|
|
|
877.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
7,755.1
|
|
|
7,333.8
|
|
|
|
|
|
|
Research and
development expenses
|
|
457.1
|
|
|
415.2
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
795.2
|
|
|
799.5
|
|
|
153.6
|
|
|
141.5
|
Interest
expense
|
|
43.5
|
|
|
78.2
|
|
|
311.7
|
|
|
231.2
|
Interest compensation
to Financial Services
|
|
92.4
|
|
|
80.6
|
|
|
|
|
|
|
Other operating
expenses
|
|
67.1
|
|
|
66.7
|
|
|
344.5
|
|
|
324.7
|
Total
|
|
9,210.4
|
|
|
8,774.0
|
|
|
809.8
|
|
|
697.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
1,301.1
|
|
|
1,203.7
|
|
|
172.3
|
|
|
180.0
|
Provision for income
taxes
|
|
291.4
|
|
|
100.8
|
|
|
52.1
|
|
|
76.3
|
Income of
Consolidated Group
|
|
1,009.7
|
|
|
1,102.9
|
|
|
120.2
|
|
|
103.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
120.7
|
|
|
104.1
|
|
|
.5
|
|
|
.4
|
Other
|
|
5.9
|
|
|
2.7
|
|
|
|
|
|
|
Total
|
|
126.6
|
|
|
106.8
|
|
|
.5
|
|
|
.4
|
Net
Income
|
|
1,136.3
|
|
|
1,209.7
|
|
|
120.7
|
|
|
104.1
|
Less: Net income
attributable to noncontrolling interests
|
|
1.4
|
|
|
1.4
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
$
|
1,134.9
|
|
$
|
1,208.3
|
|
$
|
120.7
|
|
$
|
104.1
|
|
|
* 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.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
|
STATEMENT OF
INCOME
|
For the Six Months
Ended April 28, 2019 and April 29, 2018
|
(In millions of dollars)
Unaudited
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
17,213.7
|
|
$
|
15,721.0
|
|
|
|
|
|
|
Finance and interest
income
|
|
48.5
|
|
|
39.4
|
|
$
|
1,775.9
|
|
$
|
1,589.4
|
Other
income
|
|
428.5
|
|
|
399.3
|
|
|
132.9
|
|
|
127.7
|
Total
|
|
17,690.7
|
|
|
16,159.7
|
|
|
1,908.8
|
|
|
1,717.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
13,187.2
|
|
|
12,038.8
|
|
|
|
|
|
|
Research and
development expenses
|
|
863.8
|
|
|
772.0
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
1,439.7
|
|
|
1,390.2
|
|
|
274.9
|
|
|
257.7
|
Interest
expense
|
|
115.0
|
|
|
174.2
|
|
|
598.8
|
|
|
425.3
|
Interest compensation
to Financial Services
|
|
161.5
|
|
|
142.2
|
|
|
|
|
|
|
Other operating
expenses
|
|
138.5
|
|
|
138.9
|
|
|
669.5
|
|
|
635.9
|
Total
|
|
15,905.7
|
|
|
14,656.3
|
|
|
1,543.2
|
|
|
1,318.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
1,785.0
|
|
|
1,503.4
|
|
|
365.6
|
|
|
398.2
|
Provision (credit)
for income taxes
|
|
435.5
|
|
|
1,364.7
|
|
|
92.0
|
|
|
(130.0)
|
Income of
Consolidated Group
|
|
1,349.5
|
|
|
138.7
|
|
|
273.6
|
|
|
528.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
274.6
|
|
|
529.4
|
|
|
1.0
|
|
|
1.2
|
Other
|
|
11.8
|
|
|
6.8
|
|
|
|
|
|
|
Total
|
|
286.4
|
|
|
536.2
|
|
|
1.0
|
|
|
1.2
|
Net
Income
|
|
1,635.9
|
|
|
674.9
|
|
|
274.6
|
|
|
529.4
|
Less: Net income
attributable to noncontrolling interests
|
|
2.5
|
|
|
1.7
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
$
|
1,633.4
|
|
$
|
673.2
|
|
$
|
274.6
|
|
$
|
529.4
|
|
|
* 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
|
|
April 28
|
|
October 28
|
|
April 29
|
|
April 28
|
|
October 28
|
|
April 29
|
|
2019
|
|
2018
|
|
2018
|
|
2019
|
|
2018
|
|
2018
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,893.4
|
|
$
|
3,194.8
|
|
$
|
2,988.9
|
|
$
|
590.3
|
|
$
|
709.2
|
|
$
|
1,212.5
|
Marketable
securities
|
|
6.9
|
|
|
8.2
|
|
|
16.9
|
|
|
538.2
|
|
|
481.9
|
|
|
462.4
|
Receivables from
unconsolidated subsidiaries and affiliates
|
|
1,091.6
|
|
|
1,700.4
|
|
|
1,668.0
|
|
|
|
|
|
|
|
|
|
Trade accounts and
notes receivable - net
|
|
1,607.8
|
|
|
1,373.7
|
|
|
1,515.9
|
|
|
7,554.2
|
|
|
4,906.4
|
|
|
6,436.0
|
Financing receivables
- net
|
|
101.8
|
|
|
93.1
|
|
|
75.7
|
|
|
25,768.5
|
|
|
26,961.0
|
|
|
24,199.8
|
Financing receivables
securitized - net
|
|
58.9
|
|
|
76.1
|
|
|
113.1
|
|
|
4,754.7
|
|
|
3,945.3
|
|
|
4,323.2
|
Other
receivables
|
|
1,325.3
|
|
|
1,009.7
|
|
|
1,273.3
|
|
|
166.2
|
|
|
775.7
|
|
|
190.1
|
Equipment on
operating leases - net
|
|
|
|
|
|
|
|
|
|
|
7,039.9
|
|
|
7,165.4
|
|
|
6,723.1
|
Inventories
|
|
7,160.9
|
|
|
6,148.9
|
|
|
6,888.9
|
|
|
|
|
|
|
|
|
|
Property and
equipment - net
|
|
5,711.9
|
|
|
5,820.6
|
|
|
5,696.0
|
|
|
45.2
|
|
|
46.9
|
|
|
46.9
|
Investments in
unconsolidated subsidiaries and affiliates
|
|
5,186.8
|
|
|
5,231.2
|
|
|
4,915.9
|
|
|
15.6
|
|
|
15.2
|
|
|
15.3
|
Goodwill
|
|
3,024.9
|
|
|
3,100.7
|
|
|
3,188.7
|
|
|
|
|
|
|
|
|
|
Other intangible
assets - net
|
|
1,475.9
|
|
|
1,562.4
|
|
|
1,692.2
|
|
|
|
|
|
|
|
|
|
Retirement
benefits
|
|
1,325.3
|
|
|
1,241.5
|
|
|
617.9
|
|
|
57.4
|
|
|
56.8
|
|
|
15.0
|
Deferred income
taxes
|
|
1,574.9
|
|
|
1,502.6
|
|
|
2,065.5
|
|
|
72.8
|
|
|
69.4
|
|
|
76.4
|
Other
assets
|
|
1,235.1
|
|
|
1,132.8
|
|
|
1,186.3
|
|
|
636.7
|
|
|
587.1
|
|
|
577.3
|
Total
Assets
|
$
|
33,781.4
|
|
$
|
33,196.7
|
|
$
|
33,903.2
|
|
$
|
47,239.7
|
|
$
|
45,720.3
|
|
$
|
44,278.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
1,336.9
|
|
$
|
1,434.0
|
|
$
|
659.1
|
|
$
|
10,424.9
|
|
$
|
9,627.4
|
|
$
|
10,235.5
|
Short-term
securitization borrowings
|
|
58.3
|
|
|
75.6
|
|
|
113.2
|
|
|
4,643.9
|
|
|
3,881.7
|
|
|
4,287.9
|
Payables to
unconsolidated subsidiaries and affiliates
|
|
199.5
|
|
|
128.9
|
|
|
145.7
|
|
|
1,057.5
|
|
|
1,678.7
|
|
|
1,633.7
|
Accounts payable and
accrued expenses
|
|
9,470.7
|
|
|
9,382.5
|
|
|
9,265.7
|
|
|
1,812.6
|
|
|
2,055.7
|
|
|
2,030.8
|
Deferred income
taxes
|
|
460.9
|
|
|
496.8
|
|
|
462.9
|
|
|
661.5
|
|
|
823.0
|
|
|
523.2
|
Long-term
borrowings
|
|
4,678.8
|
|
|
4,713.9
|
|
|
5,536.5
|
|
|
23,576.6
|
|
|
22,523.5
|
|
|
20,742.1
|
Retirement benefits
and other liabilities
|
|
5,638.0
|
|
|
5,659.8
|
|
|
7,285.5
|
|
|
95.1
|
|
|
91.2
|
|
|
95.6
|
Total
liabilities
|
|
21,843.1
|
|
|
21,891.5
|
|
|
23,468.6
|
|
|
42,272.1
|
|
|
40,681.2
|
|
|
39,548.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
14.3
|
|
|
14.0
|
|
|
14.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Deere & Company stockholders' equity
|
|
11,919.5
|
|
|
11,287.8
|
|
|
10,410.3
|
|
|
4,967.6
|
|
|
5,039.1
|
|
|
4,729.2
|
Noncontrolling
interests
|
|
4.5
|
|
|
3.4
|
|
|
9.7
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
11,924.0
|
|
|
11,291.2
|
|
|
10,420.0
|
|
|
4,967.6
|
|
|
5,039.1
|
|
|
4,729.2
|
Total Liabilities
and Stockholders' Equity
|
$
|
33,781.4
|
|
$
|
33,196.7
|
|
$
|
33,903.2
|
|
$
|
47,239.7
|
|
$
|
45,720.3
|
|
$
|
44,278.0
|
|
|
* 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 Six Months
Ended April 28, 2019 and April 29, 2018
|
(In millions of dollars)
Unaudited
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,635.9
|
|
$
|
674.9
|
|
$
|
274.6
|
|
$
|
529.4
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit
losses
|
|
4.5
|
|
|
9.2
|
|
|
32.1
|
|
|
17.6
|
Provision for
depreciation and amortization
|
|
525.2
|
|
|
483.8
|
|
|
557.3
|
|
|
529.3
|
Gain on sales of
businesses
|
|
|
|
|
(13.2)
|
|
|
|
|
|
|
Undistributed earnings
of unconsolidated subsidiaries and affiliates
|
|
29.8
|
|
|
(93.8)
|
|
|
(.8)
|
|
|
(1.0)
|
Provision (credit) for
deferred income taxes
|
|
(117.7)
|
|
|
934.5
|
|
|
(164.5)
|
|
|
(330.2)
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables and
Equipment Operations' financing receivables
|
|
(271.1)
|
|
|
(188.5)
|
|
|
|
|
|
|
Inventories
|
|
(1,086.2)
|
|
|
(1,439.5)
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
247.4
|
|
|
578.0
|
|
|
53.0
|
|
|
84.2
|
Accrued income taxes
payable/receivable
|
|
(344.1)
|
|
|
147.4
|
|
|
501.1
|
|
|
5.6
|
Retirement
benefits
|
|
16.6
|
|
|
62.7
|
|
|
3.7
|
|
|
4.9
|
Other
|
|
67.7
|
|
|
(104.5)
|
|
|
99.6
|
|
|
71.9
|
Net cash provided by
operating activities
|
|
708.0
|
|
|
1,051.0
|
|
|
1,356.1
|
|
|
911.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
Collections of
receivables (excluding trade and wholesale)
|
|
|
|
|
|
|
|
9,893.7
|
|
|
9,486.7
|
Proceeds from
maturities and sales of marketable securities
|
|
5.3
|
|
|
3.6
|
|
|
25.0
|
|
|
20.2
|
Proceeds from sales
of equipment on operating leases
|
|
|
|
|
|
|
|
823.4
|
|
|
748.6
|
Proceeds from sales
of businesses, net of cash sold
|
|
|
|
|
55.0
|
|
|
|
|
|
|
Cost of receivables
acquired (excluding trade and wholesale)
|
|
|
|
|
|
|
|
(9,422.9)
|
|
|
(8,918.8)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
|
|
(5,171.1)
|
|
|
|
|
|
|
Purchases of
marketable securities
|
|
(2.0)
|
|
|
|
|
|
(57.6)
|
|
|
(62.8)
|
Purchases of property
and equipment
|
|
(489.9)
|
|
|
(351.6)
|
|
|
(1.0)
|
|
|
(.6)
|
Cost of equipment on
operating leases acquired
|
|
|
|
|
|
|
|
(1,340.5)
|
|
|
(1,409.3)
|
Increase in trade and
wholesale receivables
|
|
|
|
|
|
|
|
(3,028.1)
|
|
|
(2,293.8)
|
Other
|
|
(51.3)
|
|
|
44.2
|
|
|
19.5
|
|
|
(52.6)
|
Net cash used for
investing activities
|
|
(537.9)
|
|
|
(5,419.9)
|
|
|
(3,088.5)
|
|
|
(2,482.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
(130.7)
|
|
|
(67.1)
|
|
|
1,701.1
|
|
|
266.2
|
Change in
intercompany receivables/payables
|
|
610.8
|
|
|
(641.6)
|
|
|
(610.8)
|
|
|
641.6
|
Proceeds from
long-term borrowings
|
|
120.3
|
|
|
107.1
|
|
|
4,111.9
|
|
|
3,970.6
|
Payments of long-term
borrowings
|
|
(157.5)
|
|
|
(85.3)
|
|
|
(3,269.3)
|
|
|
(2,803.4)
|
Proceeds from
issuance of common stock
|
|
94.7
|
|
|
198.6
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
(480.4)
|
|
|
(60.6)
|
|
|
|
|
|
|
Dividends
paid
|
|
(462.3)
|
|
|
(386.9)
|
|
|
(312.2)
|
|
|
(439.1)
|
Other
|
|
(36.1)
|
|
|
(25.5)
|
|
|
(12.1)
|
|
|
(18.5)
|
Net cash provided by
(used for) financing activities
|
|
(441.2)
|
|
|
(961.3)
|
|
|
1,608.6
|
|
|
1,617.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash, Cash Equivalents, and Restricted
Cash
|
|
(26.9)
|
|
|
152.3
|
|
|
(7.9)
|
|
|
(6.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash, Cash Equivalents, and Restricted
Cash
|
|
(298.0)
|
|
|
(5,177.9)
|
|
|
(131.7)
|
|
|
40.3
|
Cash, Cash
Equivalents, and Restricted Cash at Beginning of
Period
|
|
3,201.8
|
|
|
8,174.4
|
|
|
813.5
|
|
|
1,292.4
|
Cash, Cash
Equivalents, and Restricted Cash at End of Period
|
$
|
2,903.8
|
|
$
|
2,996.5
|
|
$
|
681.8
|
|
$
|
1,332.7
|
|
|
* 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.
|
Deere &
Company
|
Other Financial
Information
|
|
For the Six Months
Ended
|
Equipment Operations*
|
Agriculture and Turf
|
Construction and Forestry*
|
|
April 28
|
April 29
|
April 28
|
April 29
|
April 28
|
April 29
|
Dollars in
millions
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
Net
Sales
|
$
|
17,214
|
|
$
|
15,721
|
|
$
|
11,963
|
|
$
|
11,292
|
|
$
|
5,251
|
|
$
|
4,429
|
|
Net Sales -
excluding Wirtgen
|
$
|
15,801
|
|
$
|
14,594
|
|
$
|
11,963
|
|
$
|
11,292
|
|
$
|
3,838
|
|
$
|
3,302
|
|
Average
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO
|
$
|
21,019
|
|
$
|
19,268
|
|
$
|
10,960
|
|
$
|
10,275
|
|
$
|
10,059
|
|
$
|
8,993
|
|
With Inventories at
LIFO - excluding Wirtgen
|
$
|
14,623
|
|
$
|
13,561
|
|
$
|
10,960
|
|
$
|
10,275
|
|
$
|
3,663
|
|
$
|
3,286
|
|
With Inventories at
Standard Cost
|
$
|
22,389
|
|
$
|
20,544
|
|
$
|
12,064
|
|
$
|
11,305
|
|
$
|
10,325
|
|
$
|
9,239
|
|
With Inventories at
Standard Cost - excluding Wirtgen
|
$
|
15,993
|
|
$
|
14,837
|
|
$
|
12,064
|
|
$
|
11,305
|
|
$
|
3,929
|
|
$
|
3,532
|
|
Operating
Profit
|
$
|
1,943
|
|
$
|
1,734
|
|
$
|
1,367
|
|
$
|
1,443
|
|
$
|
576
|
|
$
|
291
|
|
Operating Profit -
excluding Wirtgen
|
$
|
1,827
|
|
$
|
1,785
|
|
$
|
1,367
|
|
$
|
1,443
|
|
$
|
460
|
|
$
|
342
|
|
Percent of Net
Sales - excluding Wirtgen
|
|
11.6
|
%
|
|
12.2
|
%
|
|
11.4
|
%
|
|
12.8
|
%
|
|
12.0
|
%
|
|
10.4
|
%
|
Operating Return
on Assets - excluding Wirtgen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO - excluding Wirtgen
|
|
12.5
|
%
|
|
13.2
|
%
|
|
12.5
|
%
|
|
14.0
|
%
|
|
12.6
|
%
|
|
10.4
|
%
|
With Inventories at
Standard Cost - excluding Wirtgen
|
|
11.4
|
%
|
|
12.0
|
%
|
|
11.3
|
%
|
|
12.8
|
%
|
|
11.7
|
%
|
|
9.7
|
%
|
SVA Cost of Assets
- excluding Wirtgen
|
$
|
(960)
|
|
$
|
(890)
|
|
$
|
(724)
|
|
$
|
(678)
|
|
$
|
(236)
|
|
$
|
(212)
|
|
SVA - excluding
Wirtgen
|
$
|
867
|
|
$
|
895
|
|
$
|
643
|
|
$
|
765
|
|
$
|
224
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
Financial
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28
|
April 29
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in
millions
|
2019
|
2018**
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
$
|
275
|
|
$
|
529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company - Tax
Adjusted
|
|
|
|
$
|
271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
$
|
5,006
|
|
$
|
4,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity -
Tax Adjusted
|
|
|
|
$
|
4,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Equity
|
|
5.5
|
%
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Equity -
Tax Adjusted
|
|
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
$
|
362
|
|
$
|
396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
$
|
5,006
|
|
$
|
4,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Equity
|
$
|
(333)
|
|
$
|
(349)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA
|
$
|
29
|
|
$
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
13 percent of the segment's average equity (15 percent in 2018).
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
building equipment. Wirtgen is included in the construction and
forestry segment. Wirtgen is excluded from the metrics above.
** The 2018 SVA calculation was adjusted for certain effects of
U.S. Tax Reform legislation enacted on December 22, 2017 due to the
significant discrete income tax benefit in 2018. The 2019 SVA is
calculated with unadjusted US GAAP information.
|
View original
content:http://www.prnewswire.com/news-releases/deere-reports-second-quarter-net-income-of-1-135-billion-300852186.html
SOURCE Deere & Company