- Safeguarding employees helps keep operations running, customers
served during pandemic.
- Digital tools provide unique customer experience in challenging
conditions.
- Full year net income forecast to be $1.6
billion to $2 billion,
reflecting market uncertainties.
MOLINE, Ill., May 22, 2020
/CNW/ -- Deere & Company (NYSE: DE) reported net
income of $665.8 million for the
second quarter ended May 3, 2020, or
$2.11 per share, compared with net
income of $1.135 billion, or
$3.52 per share, for the quarter
ended April 28, 2019. For the first
six months of the year, net income attributable to Deere &
Company was $1.182 billion, or
$3.73 per share, compared with
$1.633 billion, or $5.07 per share, for the same period last
year.
Worldwide net sales and revenues decreased 18 percent, to
$9.253 billion, for the second
quarter of 2020 and decreased 13 percent, to $16.884 billion, for six months. Net sales of the
equipment operations were $8.224
billion for the quarter and $14.754
billion for six months, compared with $10.273 billion and $17.214 billion last year.
"John Deere's foremost priority in confronting the coronavirus
crisis has been to safeguard the health and well-being of employees
while fulfilling its obligation as an essential business serving
customers throughout the world," said John
C. May, chairman and chief executive officer. "We've had
good success in these areas thanks to the proactive measures we
have taken to keep employees safe and our production facilities and
parts distribution centers operational. At the same time, the
company has reached out to our local communities to help those in
need as a result of the pandemic. Deere and its employees have
provided generous support to area food banks and other
organizations offering assistance during this difficult time."
COVID-19 Response and Actions
The company is executing its plan to address the impact of
COVID-19 through a number of key actions, as described below:
Safeguarding and Supporting Employees. Deere's first
priority is the health, safety, and overall welfare of our
employees. Protecting the workforce is essential for the company to
deliver on its commitment to customers and fulfill its role as an
essential business. Deere has proactively implemented health and
safety measures at its operations around the world. These measures
include employee health screening, additional personal protective
equipment, social distancing guidelines, enhanced cleaning and
sanitation efforts, and staggered production schedules.
Supporting Dealers and Customers. Because maintaining
customer uptime is critical to delivering value to our customers,
Deere continues to produce and ship machinery and repair parts to
meet demand. Responding to this demand in the face of the pandemic
has been a challenge as a result of various regulatory, economic,
and other barriers that have affected production facilities and the
supply chain. The company is represented by a world-class dealer
channel that has continued operating throughout the crisis.
Leveraging digital tools and connected-support abilities has
allowed our dealers to remotely service customer machines and
maintain appropriate social distancing protocols. Measures to
ensure continuity of operations have helped customers continue the
essential work of promoting food security and providing critical
infrastructure. Additionally, John Deere Financial has provided
continuous financing through the duration of any COVID-19
disruptions.
Serving Communities. In addition, Deere and its employees
have taken actions to strengthen social safety nets in communities
where the company operates throughout the world. These include
making donations of face shields and coverings to health-care
workers and first responders and contributing to local food banks
and Red Cross chapters.
Managing Liquidity & Financial Position. Significant
actions also have been taken to strengthen the company's financial
position. These include raising about $4.5
billion in medium- to long-term funding, aggressively
reducing operating expenses, decreasing capital spending budgets,
and other actions to preserve liquidity.
Company Outlook & Summary
Net income attributable to Deere & Company is forecast to be
in a range of $1.6 billion to
$2 billion for the full year.
However, many uncertainties remain regarding the effects of the
COVID-19 global pandemic that could negatively affect the company's
results and financial position in the future.
"I would like to express my appreciation to the thousands of
John Deere employees, dealers and suppliers who have worked
tirelessly to keep our operations safe and our customers up and
running during this challenging period," May said. "Deere is
well-known for developing strong relationships with a range of
stakeholders, which prove extremely valuable in difficult times. We
remain committed to offering a full suite of advanced digital tools
that give our customers unique capabilities and help them do their
work more efficiently and profitably. As a result, we're confident
the company will successfully manage the pandemic's effects and
strengthen its position serving customers in the future."
Deere &
Company
|
Second
Quarter
|
|
Year to
Date
|
$ in
millions
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
Net sales and
revenues
|
$
|
9,253
|
|
$
|
11,342
|
|
-18%
|
|
$
|
16,884
|
|
$
|
19,326
|
|
-13%
|
Net income
|
$
|
666
|
|
$
|
1,135
|
|
-41%
|
|
$
|
1,182
|
|
$
|
1,633
|
|
-28%
|
Fully diluted
EPS
|
$
|
2.11
|
|
$
|
3.52
|
|
|
|
$
|
3.73
|
|
$
|
5.07
|
|
|
In the second quarter, the company recorded impairments totaling
$114 million pretax and approximately
$105 million after-tax related to
certain fixed assets, operating lease equipment, and a minority
investment in a construction equipment company headquartered in
South Africa.
Equipment
Operations
|
|
Second
Quarter
|
$ in
millions
|
|
2020
|
|
2019
|
|
% Change
|
Net sales
|
|
$
|
8,224
|
|
$
|
10,273
|
|
-20%
|
Operating
profit
|
|
$
|
890
|
|
$
|
1,366
|
|
-35%
|
Net income
|
|
$
|
623
|
|
$
|
1,010
|
|
-38%
|
For a discussion of net sales and operating profit results, see
the Agriculture & Turf and Construction & Forestry sections
below.
Agriculture &
Turf
|
|
Second
Quarter
|
$ in
millions
|
|
2020
|
|
2019
|
|
% Change
|
Net sales
|
|
$
|
5,968
|
|
$
|
7,282
|
|
-18%
|
Operating
profit
|
|
$
|
794
|
|
$
|
1,019
|
|
-22%
|
Operating
margin
|
|
|
13.3%
|
|
|
14.0%
|
|
|
Agriculture & Turf sales decreased for the quarter due to
lower shipment volumes and the unfavorable effects of currency
translation, partially offset by price realization. Operating
profit declined for the second quarter primarily due to lower
shipment volumes / sales mix, along with the unfavorable effects of
foreign-currency exchange. These factors were partially offset by
price realization, lower selling, administrative, and general
expenses, reduced production costs, and lower research and
development expenses.
Construction &
Forestry
|
|
Second
Quarter
|
|
$ in
millions
|
|
2020
|
|
2019
|
|
% Change
|
|
Net sales
|
|
$
|
2,256
|
|
$
|
2,991
|
|
-25%
|
|
Operating
profit
|
|
$
|
96
|
|
$
|
347
|
|
-72%
|
|
Operating
margin
|
|
|
4.3%
|
|
|
11.6%
|
|
|
|
Construction & Forestry sales declined for the quarter
mainly due to lower shipment volumes and the unfavorable effects of
currency translation, partially offset by price
realization. Second quarter operating profit deteriorated
largely due to lower shipment volumes / sales mix, impairments in
certain fixed assets and an unconsolidated equipment company
headquartered in South Africa, and
the unfavorable effects of foreign-currency exchange, partially
offset by lower production costs and price realization.
Financial
Services
|
|
Second
Quarter
|
|
$ in
millions
|
|
2020
|
|
2019
|
|
% Change
|
|
Net income
|
|
$
|
60
|
|
$
|
121
|
|
-50%
|
|
Financial services net income for the quarter declined due
primarily to a higher provision for credit losses, unfavorable
financing spreads, and increased losses and impairments on lease
residual values, partially offset by income earned on a higher
average portfolio.
Market Conditions
and Outlook (Annual)
|
|
|
|
Currency
|
|
Price
|
|
$ in
millions
|
|
Net Sales
|
|
Translation
|
|
Realization
|
|
Agriculture &
Turf
|
|
-10% to -15%
|
|
-2%
|
|
2%
|
|
Construction &
Forestry
|
|
-30% to -40%
|
|
-2%
|
|
1%
|
|
|
|
|
|
|
|
|
|
John Deere
Financial
|
|
Net Income
|
|
$ 490
|
|
|
|
Agriculture & Turf. Deere worldwide sales
of agriculture and turf equipment are forecast to decline 10 to 15
percent for fiscal year 2020, including a negative
currency-translation effect of about 2 percent. Industry
sales of agricultural equipment are expected to be down about 10
percent from last year for the U.S. and Canada, while sales in Europe are expected to be down 5 to 10
percent. South American industry sales of tractors and combines are
projected to be down 10 to 15 percent. Asian sales are forecast to
be down moderately due in large part to the pandemic-related
shutdown in India. Industry sales
of turf and utility equipment in the U.S. and Canada are expected to be down about 10
percent for 2020.
Construction & Forestry. Deere's worldwide sales
of construction and forestry equipment are anticipated to be down
30 to 40 percent for 2020, with foreign-currency rates having an
unfavorable translation effect of about 2 percent. The outlook
reflects market uncertainty as a result of COVID-19 as well as
efforts to bring down field inventory levels. Industry
construction-equipment sales in North
America are expected to decline by 20 to 30 percent for the
year. In forestry, global industry sales are expected to be
down 15 to 20 percent due to weaker demand in North
America and Russia.
Financial Services. Results are expected to decline
due to a higher provision for credit losses and less-favorable
financing spreads, partially offset by lower losses and impairments
on operating-lease residual values.
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
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
|
Revenue
|
$
|
700
|
|
$
|
703
|
|
|
|
$
|
1,419
|
|
$
|
1,364
|
|
4%
|
|
Net income
|
$
|
26
|
|
$
|
84
|
|
-69%
|
|
$
|
125
|
|
$
|
206
|
|
-39%
|
|
Ending portfolio
balance
|
|
|
|
|
|
|
|
|
$
|
38,223
|
|
$
|
37,747
|
|
1%
|
|
Results for the current quarter and first six months declined
due to a higher provision for credit losses, unfavorable financing
spreads, and increased losses and impairments on lease residual
values, in part offset by income from a higher average
portfolio.
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 (e.g.,
China), global trade agreements
(e.g., the United
States-Mexico-Canada 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 and the impact of the COVID-19 pandemic on the
agricultural industry including demand for, and production and
exports of, agricultural products, and commodity prices.
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. Many of these factors have been and
may continue to be impacted by the global economic downturn
resulting from the COVID-19 pandemic and responses to the pandemic
taken by governments and other authorities.
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. Many of these factors affecting
the outlook for the company's construction and forestry equipment
have been and may continue to be impacted by the global economic
downturn resulting from the COVID-19 pandemic and responses to the
pandemic taken by governments and other authorities.
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 (including the
availability of IBOR reference 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 (including the COVID-19 pandemic) and government and
industry responses to epidemics such as travel restrictions and
extended shut down of businesses.
Uncertainties related to the magnitude and duration of the
COVID-19 pandemic may significantly adversely affect the company's
business and outlook. These uncertainties include: prolonged
reduction or closure of the company's operations, or a delayed
recovery in our operations; additional closures as mandated or
otherwise made necessary by governmental authorities; disruptions
in the supply chain and a prolonged delay in resumption of
operations by one or more key suppliers, or the failure of any key
suppliers; the company's ability to meet commitments to customers
on a timely basis as a result of increased costs and supply
challenges; the ability to receive goods on a timely basis and at
anticipated costs; increased logistics costs; delays in the
company's strategic initiatives as a result of reduced spending on
research and development; additional operating costs at facilities
that remain open due to remote working arrangements, adherence to
social distancing guidelines and other COVID-19-related challenges;
absence of employees due to illness; the impact of the pandemic on
the company's customers and dealers, and their delays in their
plans to invest in new equipment; requests by the company's
customers or dealers for payment deferrals and contract
modifications; the impact of disruptions in the global capital
markets and/or continued declines in the company's financial
performance, outlook or credit ratings, which could impact the
company's ability to obtain funding in the future; and the impact
of the pandemic on demand for our products and services as
discussed above. It is unclear when an economic recovery
could occur and what a recovery may look like. All of these
factors could materially and adversely affect our business,
liquidity, results of operations and financial position.
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 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) uncertainty regarding any new or modified
trade arrangements between the United
Kingdom and the European Union and/or other countries, (ii)
the risk that one or more other European Union countries could come
under increasing pressure to leave the European Union, or (iii) 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, including as a result of the
COVID-19 pandemic, 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 2020
Press Release
|
(in millions of
dollars)
|
Unaudited
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
May
3
|
|
April 28
|
|
%
|
|
May
3
|
|
April 28
|
|
%
|
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
Net sales and
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
$
|
5,968
|
|
$
|
7,282
|
|
-18
|
|
$
|
10,455
|
|
$
|
11,963
|
|
-13
|
Construction and
forestry
|
|
2,256
|
|
|
2,991
|
|
-25
|
|
|
4,299
|
|
|
5,251
|
|
-18
|
Total net
sales
|
|
8,224
|
|
|
10,273
|
|
-20
|
|
|
14,754
|
|
|
17,214
|
|
-14
|
Financial
services
|
|
875
|
|
|
886
|
|
-1
|
|
|
1,806
|
|
|
1,741
|
|
+4
|
Other
revenues
|
|
154
|
|
|
183
|
|
-16
|
|
|
324
|
|
|
371
|
|
-13
|
Total net sales and
revenues
|
$
|
9,253
|
|
$
|
11,342
|
|
-18
|
|
$
|
16,884
|
|
$
|
19,326
|
|
-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
$
|
794
|
|
$
|
1,019
|
|
-22
|
|
$
|
1,167
|
|
$
|
1,367
|
|
-15
|
Construction and
forestry
|
|
96
|
|
|
347
|
|
-72
|
|
|
189
|
|
|
576
|
|
-67
|
Financial
services
|
|
75
|
|
|
170
|
|
-56
|
|
|
254
|
|
|
362
|
|
-30
|
Total operating
profit
|
|
965
|
|
|
1,536
|
|
-37
|
|
|
1,610
|
|
|
2,305
|
|
-30
|
Reconciling items
**
|
|
(54)
|
|
|
(58)
|
|
-7
|
|
|
(133)
|
|
|
(144)
|
|
-8
|
Income
taxes
|
|
(245)
|
|
|
(343)
|
|
-29
|
|
|
(295)
|
|
|
(528)
|
|
-44
|
Net income
attributable to Deere & Company
|
$
|
666
|
|
$
|
1,135
|
|
-41
|
|
$
|
1,182
|
|
$
|
1,633
|
|
-28
|
|
|
*
|
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 May 3, 2020 and April 28, 2019
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
2020
|
|
2019
|
Net Sales and
Revenues
|
|
|
|
|
|
Net sales
|
$
|
8,224
|
|
$
|
10,273
|
Finance and interest
income
|
|
849
|
|
|
838
|
Other
income
|
|
180
|
|
|
231
|
Total
|
|
9,253
|
|
|
11,342
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
Cost of
sales
|
|
6,294
|
|
|
7,755
|
Research and
development expenses
|
|
406
|
|
|
457
|
Selling,
administrative and general expenses
|
|
906
|
|
|
947
|
Interest
expense
|
|
342
|
|
|
351
|
Other operating
expenses
|
|
377
|
|
|
359
|
Total
|
|
8,325
|
|
|
9,869
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
928
|
|
|
1,473
|
Provision for income
taxes
|
|
245
|
|
|
343
|
Income of
Consolidated Group
|
|
683
|
|
|
1,130
|
Equity in income
(loss) of unconsolidated affiliates
|
|
(17)
|
|
|
6
|
Net
Income
|
|
666
|
|
|
1,136
|
Less: Net income
attributable to noncontrolling interests
|
|
|
|
|
1
|
Net Income
Attributable to Deere & Company
|
$
|
666
|
|
$
|
1,135
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
Basic
|
$
|
2.13
|
|
$
|
3.57
|
Diluted
|
$
|
2.11
|
|
$
|
3.52
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
Basic
|
|
313.2
|
|
|
317.9
|
Diluted
|
|
316.2
|
|
|
322.2
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED INCOME
|
For the Six Months
Ended May 3, 2020 and April 28, 2019
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
2020
|
|
2019
|
Net Sales and
Revenues
|
|
|
|
|
|
Net sales
|
$
|
14,754
|
|
$
|
17,214
|
Finance and interest
income
|
|
1,745
|
|
|
1,653
|
Other
income
|
|
385
|
|
|
459
|
Total
|
|
16,884
|
|
|
19,326
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
Cost of
sales
|
|
11,371
|
|
|
13,186
|
Research and
development expenses
|
|
831
|
|
|
864
|
Selling,
administrative and general expenses
|
|
1,715
|
|
|
1,710
|
Interest
expense
|
|
678
|
|
|
704
|
Other operating
expenses
|
|
792
|
|
|
711
|
Total
|
|
15,387
|
|
|
17,175
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
1,497
|
|
|
2,151
|
Provision for income
taxes
|
|
295
|
|
|
528
|
Income of
Consolidated Group
|
|
1,202
|
|
|
1,623
|
Equity in income
(loss) of unconsolidated affiliates
|
|
(18)
|
|
|
13
|
Net
Income
|
|
1,184
|
|
|
1,636
|
Less: Net income
attributable to noncontrolling interests
|
|
2
|
|
|
3
|
Net Income
Attributable to Deere & Company
|
$
|
1,182
|
|
$
|
1,633
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
Basic
|
$
|
3.77
|
|
$
|
5.13
|
Diluted
|
$
|
3.73
|
|
$
|
5.07
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
Basic
|
|
313.3
|
|
|
318.1
|
Diluted
|
|
316.7
|
|
|
322.4
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(In millions of
dollars) Unaudited
|
|
May
3
|
|
November 3
|
|
April 28
|
|
2020
|
|
2019
|
|
2019
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
8,900
|
|
$
|
3,857
|
|
$
|
3,484
|
Marketable
securities
|
|
626
|
|
|
581
|
|
|
545
|
Receivables from
unconsolidated affiliates
|
|
32
|
|
|
46
|
|
|
34
|
Trade accounts and
notes receivable - net
|
|
5,986
|
|
|
5,230
|
|
|
7,519
|
Financing receivables
- net
|
|
27,256
|
|
|
29,195
|
|
|
25,870
|
Financing receivables
securitized - net
|
|
4,685
|
|
|
4,383
|
|
|
4,814
|
Other
receivables
|
|
1,212
|
|
|
1,487
|
|
|
1,477
|
Equipment on
operating leases - net
|
|
7,245
|
|
|
7,567
|
|
|
7,040
|
Inventories
|
|
6,171
|
|
|
5,975
|
|
|
7,161
|
Property and
equipment - net
|
|
5,685
|
|
|
5,973
|
|
|
5,757
|
Investments in
unconsolidated affiliates
|
|
192
|
|
|
215
|
|
|
235
|
Goodwill
|
|
2,917
|
|
|
2,917
|
|
|
3,025
|
Other intangible
assets - net
|
|
1,311
|
|
|
1,380
|
|
|
1,476
|
Retirement
benefits
|
|
960
|
|
|
840
|
|
|
1,383
|
Deferred income
taxes
|
|
1,435
|
|
|
1,466
|
|
|
1,039
|
Other
assets
|
|
2,713
|
|
|
1,899
|
|
|
1,871
|
Total
Assets
|
$
|
77,326
|
|
$
|
73,011
|
|
$
|
72,730
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
11,179
|
|
$
|
10,784
|
|
$
|
11,762
|
Short-term
securitization borrowings
|
|
4,640
|
|
|
4,321
|
|
|
4,702
|
Payables to
unconsolidated affiliates
|
|
91
|
|
|
142
|
|
|
200
|
Accounts payable and
accrued expenses
|
|
9,072
|
|
|
9,656
|
|
|
9,626
|
Deferred income
taxes
|
|
475
|
|
|
495
|
|
|
514
|
Long-term
borrowings
|
|
34,324
|
|
|
30,229
|
|
|
28,255
|
Retirement benefits
and other liabilities
|
|
5,680
|
|
|
5,953
|
|
|
5,733
|
Total
liabilities
|
|
65,461
|
|
|
61,580
|
|
|
60,792
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
|
|
14
|
|
|
14
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Total Deere &
Company stockholders' equity
|
|
11,864
|
|
|
11,413
|
|
|
11,919
|
Noncontrolling
interests
|
|
1
|
|
|
4
|
|
|
5
|
Total stockholders'
equity
|
|
11,865
|
|
|
11,417
|
|
|
11,924
|
Total Liabilities
and Stockholders' Equity
|
$
|
77,326
|
|
$
|
73,011
|
|
$
|
72,730
|
|
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED CASH FLOWS
|
For the Six Months
Ended May 3, 2020 and April 28, 2019
|
(In millions of
dollars) Unaudited
|
|
|
2020
|
|
2019
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net income
|
|
$
|
1,184
|
|
$
|
1,636
|
Adjustments to
reconcile net income to net cash provided by (used for) operating
activities:
|
|
|
|
|
|
|
Provision for credit
losses
|
|
|
107
|
|
|
37
|
Provision for
depreciation and amortization
|
|
|
1,067
|
|
|
1,016
|
Impairment
charges
|
|
|
114
|
|
|
|
Share-based
compensation expense
|
|
|
48
|
|
|
44
|
Undistributed earnings
of unconsolidated affiliates
|
|
|
(8)
|
|
|
(9)
|
Credit for deferred
income taxes
|
|
|
(61)
|
|
|
(282)
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade, notes, and
financing receivables related to sales
|
|
|
(491)
|
|
|
(2,731)
|
Inventories
|
|
|
(496)
|
|
|
(1,394)
|
Accounts payable and
accrued expenses
|
|
|
(707)
|
|
|
(66)
|
Accrued income taxes
payable/receivable
|
|
|
(173)
|
|
|
157
|
Retirement
benefits
|
|
|
58
|
|
|
20
|
Other
|
|
|
134
|
|
|
77
|
Net cash provided by
(used for) operating activities
|
|
|
776
|
|
|
(1,495)
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
Collections of
receivables (excluding receivables related to sales)
|
|
|
9,624
|
|
|
9,176
|
Proceeds from
maturities and sales of marketable securities
|
|
|
39
|
|
|
30
|
Proceeds from sales
of equipment on operating leases
|
|
|
898
|
|
|
823
|
Cost of receivables
acquired (excluding receivables related to sales)
|
|
|
(9,367)
|
|
|
(8,887)
|
Purchases of
marketable securities
|
|
|
(71)
|
|
|
(59)
|
Purchases of property
and equipment
|
|
|
(441)
|
|
|
(491)
|
Cost of equipment on
operating leases acquired
|
|
|
(960)
|
|
|
(924)
|
Collateral on
derivatives - net
|
|
|
319
|
|
|
60
|
Other
|
|
|
(11)
|
|
|
(100)
|
Net cash provided by
(used for) investing activities
|
|
|
30
|
|
|
(372)
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
Increase in total
short-term borrowings
|
|
|
1,138
|
|
|
1,570
|
Proceeds from
long-term borrowings
|
|
|
7,275
|
|
|
4,232
|
Payments of long-term
borrowings
|
|
|
(3,315)
|
|
|
(3,427)
|
Proceeds from
issuance of common stock
|
|
|
70
|
|
|
95
|
Repurchases of common
stock
|
|
|
(263)
|
|
|
(481)
|
Dividends
paid
|
|
|
(481)
|
|
|
(462)
|
Other
|
|
|
(81)
|
|
|
(54)
|
Net cash provided by
financing activities
|
|
|
4,343
|
|
|
1,473
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash, Cash Equivalents, and Restricted
Cash
|
|
|
(102)
|
|
|
(35)
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash, Cash Equivalents, and Restricted
Cash
|
|
|
5,047
|
|
|
(429)
|
Cash, Cash
Equivalents, and Restricted Cash at Beginning of
Period
|
|
|
3,956
|
|
|
4,015
|
Cash, Cash
Equivalents, and Restricted Cash at End of Period
|
|
$
|
9,003
|
|
$
|
3,586
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
Condensed Notes to
Interim Consolidated Financial Statements (Unaudited)
|
|
|
(1)
|
The Company recorded
non-cash asset impairments in the second quarter totaling $114
million pretax and approximately $105 million after-tax. The
impairments related to the following: $62 million pretax of fixed
assets of an asphalt plant factory in Germany, which is included in
the Company's construction and forestry operations with the
impairment recorded in "Cost of sales"; $32 million pretax of
equipment on operating leases and matured operating lease
inventory, which is included in the financial services operations
with the impairments recorded in "Other operating expenses"; and
$20 million pretax of a minority investment in a construction
equipment company headquartered in South Africa, which is included
in the construction and forestry operations with the impairment
recorded in "Equity in loss of unconsolidated
affiliates."
|
|
|
(2)
|
During the first
quarter of 2020, the Company announced a broad voluntary
employee-separation program for the U.S. salaried workforce that
continues the efforts to create a more efficient organization
structure and reduce operating costs. The program provided for cash
payments based on years of service. The expense was recorded
primarily in the period in which the employees irrevocably accepted
the separation offer. The program's total estimated pretax expenses
are approximately $138 million, of which $9 million was recorded in
the second quarter and $136 million in the first half of 2020. The
payments for the program were substantially made in the first
quarter of 2020. Included in the total pretax expense is a non-cash
charge of $21 million resulting from a curtailment in certain OPEB
plans, which was recorded outside of operating profit in "Other
operating expenses." The first half of 2020 expenses that are
included in operating profit of $113 million are allocated 36
percent "Cost of sales," 16 percent "Research and development," and
48 percent "Selling, administrative and general." In addition, the
expenses are allocated 74 percent to the agriculture and turf
operations, 24 percent to the construction and forestry operations,
and 2 percent to the financial services operations. Annual savings
from this program are estimated to be approximately $85 million
with about $65 million in 2020.
|
|
|
(3)
|
Dividends declared
and paid on a per share basis were as follows:
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
May
3
|
|
April 28
|
|
May
3
|
|
April 28
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Dividends
declared
|
|
|
|
|
|
|
$
|
.76
|
|
$
|
.76
|
|
$
|
1.52
|
|
$
|
1.52
|
|
|
Dividends
paid
|
$
|
.76
|
|
$
|
.76
|
|
$
|
1.52
|
|
$
|
1.45
|
|
|
|
(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 May 3, 2020 and April 28, 2019
|
(In millions of dollars) Unaudited
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
8,224
|
|
$
|
10,273
|
|
|
|
|
|
|
Finance and interest
income
|
|
23
|
|
|
25
|
|
$
|
906
|
|
$
|
910
|
Other
income
|
|
181
|
|
|
213
|
|
|
61
|
|
|
72
|
Total
|
|
8,428
|
|
|
10,511
|
|
|
967
|
|
|
982
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
6,294
|
|
|
7,755
|
|
|
|
|
|
|
Research and
development expenses
|
|
406
|
|
|
457
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
700
|
|
|
795
|
|
|
208
|
|
|
154
|
Interest
expense
|
|
83
|
|
|
44
|
|
|
266
|
|
|
312
|
Interest compensation
to Financial Services
|
|
73
|
|
|
92
|
|
|
|
|
|
|
Other operating
expenses
|
|
21
|
|
|
67
|
|
|
416
|
|
|
344
|
Total
|
|
7,577
|
|
|
9,210
|
|
|
890
|
|
|
810
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
851
|
|
|
1,301
|
|
|
77
|
|
|
172
|
Provision for income
taxes
|
|
228
|
|
|
291
|
|
|
17
|
|
|
52
|
Income of
Consolidated Group
|
|
623
|
|
|
1,010
|
|
|
60
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
(Loss) of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
60
|
|
|
121
|
|
|
|
|
|
1
|
Other
|
|
(17)
|
|
|
5
|
|
|
|
|
|
|
Total
|
|
43
|
|
|
126
|
|
|
|
|
|
1
|
Net
Income
|
|
666
|
|
|
1,136
|
|
|
60
|
|
|
121
|
Less: Net income
attributable to noncontrolling interests
|
|
|
|
|
1
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
$
|
666
|
|
$
|
1,135
|
|
$
|
60
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 May 3, 2020 and April 28, 2019
|
(In millions of dollars) Unaudited
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
14,754
|
|
$
|
17,214
|
|
|
|
|
|
|
Finance and interest
income
|
|
49
|
|
|
49
|
|
$
|
1,841
|
|
$
|
1,776
|
Other
income
|
|
391
|
|
|
428
|
|
|
124
|
|
|
133
|
Total
|
|
15,194
|
|
|
17,691
|
|
|
1,965
|
|
|
1,909
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
11,372
|
|
|
13,187
|
|
|
|
|
|
|
Research and
development expenses
|
|
831
|
|
|
864
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
1,373
|
|
|
1,440
|
|
|
346
|
|
|
275
|
Interest
expense
|
|
146
|
|
|
115
|
|
|
541
|
|
|
599
|
Interest compensation
to Financial Services
|
|
137
|
|
|
162
|
|
|
|
|
|
|
Other operating
expenses
|
|
92
|
|
|
138
|
|
|
824
|
|
|
669
|
Total
|
|
13,951
|
|
|
15,906
|
|
|
1,711
|
|
|
1,543
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
1,243
|
|
|
1,785
|
|
|
254
|
|
|
366
|
Provision for income
taxes
|
|
237
|
|
|
436
|
|
|
58
|
|
|
92
|
Income of
Consolidated Group
|
|
1,006
|
|
|
1,349
|
|
|
196
|
|
|
274
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
(Loss) of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
197
|
|
|
275
|
|
|
1
|
|
|
1
|
Other
|
|
(19)
|
|
|
12
|
|
|
|
|
|
|
Total
|
|
178
|
|
|
287
|
|
|
1
|
|
|
1
|
Net
Income
|
|
1,184
|
|
|
1,636
|
|
|
197
|
|
|
275
|
Less: Net income
attributable to noncontrolling interests
|
|
2
|
|
|
3
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
$
|
1,182
|
|
$
|
1,633
|
|
$
|
197
|
|
$
|
275
|
|
|
* 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
|
|
May
3
|
|
November 3
|
|
April 28
|
|
May
3
|
|
November 3
|
|
April 28
|
|
2020
|
|
2019
|
|
2019
|
|
2020
|
|
2019
|
|
2019
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
7,466
|
|
$
|
3,175
|
|
$
|
2,894
|
|
$
|
1,434
|
|
$
|
682
|
|
$
|
590
|
Marketable
securities
|
|
3
|
|
|
1
|
|
|
7
|
|
|
623
|
|
|
580
|
|
|
538
|
Receivables from
unconsolidated subsidiaries and affiliates
|
|
2,248
|
|
|
2,017
|
|
|
1,091
|
|
|
|
|
|
|
|
|
|
Trade accounts and
notes receivable - net
|
|
1,419
|
|
|
1,482
|
|
|
1,608
|
|
|
6,050
|
|
|
5,153
|
|
|
7,554
|
Financing receivables
- net
|
|
118
|
|
|
65
|
|
|
101
|
|
|
27,138
|
|
|
29,130
|
|
|
25,769
|
Financing receivables
securitized - net
|
|
37
|
|
|
44
|
|
|
59
|
|
|
4,648
|
|
|
4,339
|
|
|
4,755
|
Other
receivables
|
|
1,072
|
|
|
1,376
|
|
|
1,325
|
|
|
148
|
|
|
116
|
|
|
166
|
Equipment on
operating leases - net
|
|
|
|
|
|
|
|
|
|
|
7,245
|
|
|
7,567
|
|
|
7,040
|
Inventories
|
|
6,171
|
|
|
5,975
|
|
|
7,161
|
|
|
|
|
|
|
|
|
|
Property and
equipment - net
|
|
5,642
|
|
|
5,929
|
|
|
5,712
|
|
|
43
|
|
|
44
|
|
|
45
|
Investments in
unconsolidated subsidiaries and affiliates
|
|
5,119
|
|
|
5,326
|
|
|
5,187
|
|
|
17
|
|
|
16
|
|
|
16
|
Goodwill
|
|
2,917
|
|
|
2,917
|
|
|
3,025
|
|
|
|
|
|
|
|
|
|
Other intangible
assets - net
|
|
1,311
|
|
|
1,380
|
|
|
1,476
|
|
|
|
|
|
|
|
|
|
Retirement
benefits
|
|
908
|
|
|
836
|
|
|
1,325
|
|
|
58
|
|
|
58
|
|
|
58
|
Deferred income
taxes
|
|
1,796
|
|
|
1,896
|
|
|
1,575
|
|
|
52
|
|
|
57
|
|
|
73
|
Other
assets
|
|
1,506
|
|
|
1,158
|
|
|
1,235
|
|
|
1,208
|
|
|
741
|
|
|
636
|
Total
Assets
|
$
|
37,733
|
|
$
|
33,577
|
|
$
|
33,781
|
|
$
|
48,664
|
|
$
|
48,483
|
|
$
|
47,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
1,398
|
|
$
|
987
|
|
$
|
1,337
|
|
$
|
9,781
|
|
$
|
9,797
|
|
$
|
10,425
|
Short-term
securitization borrowings
|
|
37
|
|
|
44
|
|
|
58
|
|
|
4,603
|
|
|
4,277
|
|
|
4,644
|
Payables to
unconsolidated subsidiaries and affiliates
|
|
91
|
|
|
142
|
|
|
200
|
|
|
2,216
|
|
|
1,970
|
|
|
1,057
|
Accounts payable and
accrued expenses
|
|
8,416
|
|
|
9,232
|
|
|
9,470
|
|
|
2,149
|
|
|
1,836
|
|
|
1,813
|
Deferred income
taxes
|
|
395
|
|
|
414
|
|
|
461
|
|
|
493
|
|
|
568
|
|
|
662
|
Long-term
borrowings
|
|
9,947
|
|
|
5,415
|
|
|
4,679
|
|
|
24,377
|
|
|
24,814
|
|
|
23,576
|
Retirement benefits
and other liabilities
|
|
5,584
|
|
|
5,912
|
|
|
5,638
|
|
|
101
|
|
|
94
|
|
|
95
|
Total
liabilities
|
|
25,868
|
|
|
22,146
|
|
|
21,843
|
|
|
43,720
|
|
|
43,356
|
|
|
42,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
|
|
14
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Deere & Company stockholders' equity
|
|
11,864
|
|
|
11,413
|
|
|
11,919
|
|
|
4,944
|
|
|
5,127
|
|
|
4,968
|
Noncontrolling
interests
|
|
1
|
|
|
4
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
11,865
|
|
|
11,417
|
|
|
11,924
|
|
|
4,944
|
|
|
5,127
|
|
|
4,968
|
Total Liabilities
and Stockholders' Equity
|
$
|
37,733
|
|
$
|
33,577
|
|
$
|
33,781
|
|
$
|
48,664
|
|
$
|
48,483
|
|
$
|
47,240
|
|
|
* 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 May 3, 2020 and April 28, 2019
|
(In millions of dollars) Unaudited
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,184
|
|
$
|
1,636
|
|
$
|
197
|
|
$
|
275
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit
losses
|
|
9
|
|
|
5
|
|
|
98
|
|
|
32
|
Provision for
depreciation and amortization
|
|
515
|
|
|
525
|
|
|
621
|
|
|
557
|
Impairment
charges
|
|
82
|
|
|
|
|
|
32
|
|
|
|
Undistributed earnings
of unconsolidated subsidiaries and affiliates
|
|
21
|
|
|
30
|
|
|
(1)
|
|
|
(1)
|
Provision (credit) for
deferred income taxes
|
|
9
|
|
|
(118)
|
|
|
(70)
|
|
|
(164)
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables and
Equipment Operations' financing receivables
|
|
(80)
|
|
|
(271)
|
|
|
|
|
|
|
Inventories
|
|
(242)
|
|
|
(1,086)
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
(659)
|
|
|
247
|
|
|
30
|
|
|
53
|
Accrued income taxes
payable/receivable
|
|
(154)
|
|
|
(344)
|
|
|
(19)
|
|
|
501
|
Retirement
benefits
|
|
50
|
|
|
16
|
|
|
8
|
|
|
4
|
Other
|
|
107
|
|
|
68
|
|
|
95
|
|
|
99
|
Net cash provided by
operating activities
|
|
842
|
|
|
708
|
|
|
991
|
|
|
1,356
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
Collections of
receivables (excluding trade and wholesale)
|
|
|
|
|
|
|
|
10,385
|
|
|
9,894
|
Proceeds from
maturities and sales of marketable securities
|
|
|
|
|
5
|
|
|
39
|
|
|
25
|
Proceeds from sales
of equipment on operating leases
|
|
|
|
|
|
|
|
898
|
|
|
823
|
Cost of receivables
acquired (excluding trade and wholesale)
|
|
|
|
|
|
|
|
(9,885)
|
|
|
(9,423)
|
Purchases of
marketable securities
|
|
|
|
|
(2)
|
|
|
(71)
|
|
|
(57)
|
Purchases of property
and equipment
|
|
(440)
|
|
|
(490)
|
|
|
(1)
|
|
|
(1)
|
Cost of equipment on
operating leases acquired
|
|
|
|
|
|
|
|
(1,304)
|
|
|
(1,341)
|
Increase in trade and
wholesale receivables
|
|
|
|
|
|
|
|
(673)
|
|
|
(3,028)
|
Collateral on
derivatives - net
|
|
|
|
|
1
|
|
|
319
|
|
|
59
|
Other
|
|
(40)
|
|
|
(52)
|
|
|
(36)
|
|
|
(39)
|
Net cash used for
investing activities
|
|
(480)
|
|
|
(538)
|
|
|
(329)
|
|
|
(3,088)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
554
|
|
|
(131)
|
|
|
584
|
|
|
1,701
|
Change in
intercompany receivables/payables
|
|
(292)
|
|
|
611
|
|
|
292
|
|
|
(611)
|
Proceeds from
long-term borrowings
|
|
4,602
|
|
|
120
|
|
|
2,673
|
|
|
4,112
|
Payments of long-term
borrowings
|
|
(152)
|
|
|
(158)
|
|
|
(3,163)
|
|
|
(3,269)
|
Proceeds from
issuance of common stock
|
|
70
|
|
|
95
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
(263)
|
|
|
(481)
|
|
|
|
|
|
|
Dividends
paid
|
|
(481)
|
|
|
(462)
|
|
|
(225)
|
|
|
(312)
|
Other
|
|
(61)
|
|
|
(35)
|
|
|
(13)
|
|
|
(12)
|
Net cash provided by
(used for) financing activities
|
|
3,977
|
|
|
(441)
|
|
|
148
|
|
|
1,609
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash, Cash Equivalents, and Restricted
Cash
|
|
(58)
|
|
|
(27)
|
|
|
(44)
|
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash, Cash Equivalents, and Restricted
Cash
|
|
4,281
|
|
|
(298)
|
|
|
766
|
|
|
(131)
|
Cash, Cash
Equivalents, and Restricted Cash at Beginning of
Period
|
|
3,196
|
|
|
3,202
|
|
|
760
|
|
|
813
|
Cash, Cash
Equivalents, and Restricted Cash at End of Period
|
$
|
7,477
|
|
$
|
2,904
|
|
$
|
1,526
|
|
$
|
682
|
|
|
* 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*
|
|
May
3
|
April 28
|
May
3
|
April 28
|
May
3
|
April 28
|
Dollars
in millions
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
Net Sales
|
$
|
14,754
|
|
$
|
17,214
|
|
$
|
10,455
|
|
$
|
11,963
|
|
$
|
4,299
|
|
$
|
5,251
|
|
Net Sales - excluding
Roadbuilding
|
$
|
13,426
|
|
$
|
15,801
|
|
$
|
10,455
|
|
$
|
11,963
|
|
$
|
2,971
|
|
$
|
3,838
|
|
Average Identifiable
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO
|
$
|
20,093
|
|
$
|
21,019
|
|
$
|
10,680
|
|
$
|
10,960
|
|
$
|
9,413
|
|
$
|
10,059
|
|
With Inventories at
LIFO - excluding Roadbuilding
|
$
|
14,130
|
|
$
|
14,623
|
|
$
|
10,680
|
|
$
|
10,960
|
|
$
|
3,450
|
|
$
|
3,663
|
|
With Inventories at
Standard Cost
|
$
|
21,512
|
|
$
|
22,389
|
|
$
|
11,831
|
|
$
|
12,064
|
|
$
|
9,681
|
|
$
|
10,325
|
|
With Inventories at
Standard Cost - excluding Roadbuilding
|
$
|
15,549
|
|
$
|
15,993
|
|
$
|
11,831
|
|
$
|
12,064
|
|
$
|
3,718
|
|
$
|
3,929
|
|
Operating
Profit
|
$
|
1,356
|
|
$
|
1,943
|
|
$
|
1,167
|
|
$
|
1,367
|
|
$
|
189
|
|
$
|
576
|
|
Operating Profit -
excluding Roadbuilding
|
$
|
1,313
|
|
$
|
1,827
|
|
$
|
1,167
|
|
$
|
1,367
|
|
$
|
146
|
|
$
|
460
|
|
Percent of Net Sales
- excluding Roadbuilding
|
|
9.8
|
%
|
|
11.6
|
%
|
|
11.2
|
%
|
|
11.4
|
%
|
|
4.9
|
%
|
|
12.0
|
%
|
Operating Return on
Assets - excluding Roadbuilding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO - excluding Roadbuilding
|
|
9.3
|
%
|
|
12.5
|
%
|
|
10.9
|
%
|
|
12.5
|
%
|
|
4.2
|
%
|
|
12.6
|
%
|
With Inventories at
Standard Cost - excluding Roadbuilding
|
|
8.4
|
%
|
|
11.4
|
%
|
|
9.9
|
%
|
|
11.3
|
%
|
|
3.9
|
%
|
|
11.7
|
%
|
SVA Cost of Assets -
excluding Roadbuilding
|
$
|
(932)
|
|
$
|
(960)
|
|
$
|
(710)
|
|
$
|
(724)
|
|
$
|
(222)
|
|
$
|
(236)
|
|
SVA
|
$
|
381
|
|
$
|
867
|
|
$
|
457
|
|
$
|
643
|
|
$
|
(76)
|
|
$
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
Financial
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May
3
|
April 28
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in
millions
|
2020
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
$
|
197
|
|
$
|
275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
$
|
5,071
|
|
$
|
5,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Equity
|
|
3.9
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
$
|
254
|
|
$
|
362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Equity
|
$
|
(330)
|
|
$
|
(333)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA
|
$
|
(76)
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
* The results and
assets related to the Company's Roadbuilding product line are
excluded from the calculation of SVA to allow time for integration
and assimilation of the 2017 acquisition of Wirtgen Group Holding
GmbH's operations.
|
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SOURCE Deere & Company