UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report: November 23, 2016
(Date of earliest event reported)
DEERE & COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE |
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1-4121 |
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36-2382580 |
(State or other jurisdiction of
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(Commission File Number) |
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(IRS Employer Identification No.) |
One John Deere Place
Moline, Illinois 61265
(Address of principal executive offices and zip code)
(309) 765-8000
(Registrants telephone number, including area code)
___________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Items 2.02
and 8.01 Results of Operations and Financial Condition and Other Events.
The following consists of Deere & Companys press release dated November 23, 2016 concerning Fourth Quarter of Fiscal 2016 financial results and supplemental financial information filed as Exhibit 99.1 to this report and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
(99.1) Press release and supplemental financial information (Filed herewith)
Items 2.02
and 7.01 Results of Operations and Financial Condition and Regulation FD Disclosure (Furnished herewith)
The attached schedules of Other Financial Information (Exhibit 99.2) and Fourth Quarter 2016 Earnings Conference Call Information (Exhibit 99.3) are furnished under Form 8-K Items 2.02 and 7.01. The information is not filed for purposes of the Securities Exchange Act of 1934 and is not deemed incorporated by reference by any general statements incorporating by reference this report or future filings into any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Deere & Company specifically incorporates the information by reference.
Exhibit Index
Number and Description of Exhibit
Press Release and Supplemental Financial Information (Filed herewith) |
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(99.3) |
Fourth Quarter 2016 Earnings Conference Call Information (Furnished herewith) |
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(Filed herewith) |
NEWS RELEASE
Media Contact:
Ken Golden
Director, Global Public Relations
Deere & Company
309-765-5678
Deere Reports Earnings of $285 Million for Fourth Quarter and $1.524 Billion for Year
· Global farm recession, weak construction-equipment markets lead to lower sales and earnings for fourth quarter and full year.
· Sound execution and broad business lineup aid performance.
· Efforts to establish more efficient cost structure make headway.
· Fiscal 2017 forecast calls for earnings of $1.4 billion on slightly lower sales volumes.
MOLINE, Illinois (November 23, 2016) Net income attributable to Deere & Company was $285.3 million, or $0.90 per share, for the fourth quarter ended October 31, compared with $351.2 million, or $1.08 per share, for the same period of 2015. For fiscal 2016, net income attributable to Deere & Company was $1.524 billion, or $4.81 per share, compared with $1.940 billion, or $5.77 per share, in 2015.
Worldwide net sales and revenues decreased 3 percent, to $6.520 billion, for the fourth quarter and were down 8 percent, to $26.644 billion, for the full year. Net sales of the equipment operations were $5.650 billion for the quarter and $23.387 billion for the year, compared with respective totals of $5.932 billion and $25.775 billion in 2015.
John Deere has completed another successful year in spite of continuing weakness in the global agricultural and construction equipment sectors, said Samuel R. Allen, chairman and chief executive officer. The company in 2016 had one of its ten-best years in both sales and earnings, a noteworthy achievement in light of the difficult business climate. Deeres performance benefited from the adept execution of its operating plans and disciplined cost management as well as the impact of a broad product portfolio. As a result, the company has remained well-positioned to serve its customers while making continued
Deere Announces Fourth-Quarter Earnings |
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investments in quality and innovation that were confident will be supportive of growth in the future.
Summary of Operations
Net sales of the worldwide equipment operations declined 5 percent for the quarter and 9 percent for the full year compared with the same periods in 2015. Sales included price realization of 3 percent for the quarter and 2 percent for the full year. Additionally, sales included a favorable currency-translation effect of 1 percent for the quarter and an unfavorable currency translation effect of 2 percent for the full year. Equipment net sales in the United States and Canada decreased 14 percent for the quarter and 13 percent for the full year. Outside the U.S. and Canada, net sales increased 11 percent for the quarter and were down 3 percent for the full year, with a favorable currency-translation effect of 3 percent for the quarter and an unfavorable currency-translation effect of 4 percent for the year.
Deeres equipment operations reported operating profit of $354 million for the quarter and $1.880 billion for the full year, compared with $335 million and $2.177 billion in 2015. The improvement for the quarter was primarily driven by price realization, partially offset by lower shipment volumes, an impairment charge for international construction and forestry operations, and higher production costs. Results were down for the year primarily on account of reduced shipment volumes, the unfavorable effects of foreign-currency exchange and a less-favorable product mix, partially offset by price realization, lower production costs and lower selling, administrative and general expenses. Full-year results also benefited from a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne Landscape Supply, Inc.
Net income of the companys equipment operations was $185 million for the fourth quarter and $1.058 billion for the year, compared with $200 million and $1.308 billion for the corresponding periods in 2015. In addition to the operating factors mentioned above, a higher effective tax rate in 2016 reduced both quarterly and annual results.
Financial services reported net income attributable to Deere & Company of $109.8 million for the quarter and $467.6 million for the year compared with $153.0 million and $632.9 million in 2015. The decline for both periods was primarily due to less-favorable financing spreads, higher losses on lease residual values and a higher provision for credit losses. Additionally, full-year results in 2015 benefited from a gain on the sale of the crop insurance business.
Deere Announces Fourth-Quarter Earnings |
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Company Outlook & Summary
Company equipment sales are projected to decrease about 1 percent for fiscal 2017 and be down about 4 percent for the first quarter compared with the same periods of 2016. Included in the forecast is a positive foreign-currency translation effect of about 1 percent for the year and about 2 percent for the first quarter. Net sales and revenues are projected to decrease about 1 percent for fiscal 2017, while net income attributable to Deere & Company is anticipated to be about $1.4 billion.
During the fourth quarter of 2016, the company announced voluntary employee-separation programs as part of its effort to reduce operating costs. The expense of these programs is recorded in the period in which employees accept their separation offer. Total pretax expenses related to the programs are estimated to be $116 million, of which $11 million was recorded in the fourth quarter of 2016, and $105 million will be recorded in the first quarter of 2017. Savings from the separation programs are expected to be approximately $75 million in 2017.
Our forecast continues to represent a standard of performance that is considerably higher than in earlier downturns, Allen said. This illustrates our ongoing success developing a more durable business model and a wider range of revenue sources. At the same time, we are driving further efficiency gains and have confidence we can deliver structural cost reductions of at least $500 million by the end of 2018.
Allen reaffirmed his view that the future is quite promising for the company and its stakeholders. John Deere remains in a strong position to carry out its growth plans and attract new customers throughout the world, he said. Thanks to the commitment of employees, dealers and suppliers, our plans for helping meet the worlds increasing need for food, shelter and infrastructure are making solid progress. We remain confident in the companys present direction and believe Deere will provide significant value to its customers and investors in the future.
* * *
Equipment Division Performance
Agriculture & Turf. Sales fell 5 percent for the quarter and 7 percent for the year due to lower shipment volumes, partially offset by the favorable effects of currency translation for the quarter and unfavorable currency effects for the year. Both periods benefited from price realization.
Operating profit was $371 million for the quarter and $1.700 billion for the year, compared with $271 million and $1.649 billion, respectively, in 2015. The quarters
Deere Announces Fourth-Quarter Earnings |
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improvement was mainly driven by price realization, partially offset by lower shipment volumes. Results were higher for the year primarily due to price realization, lower production costs, and lower selling, administrative and general expenses, partially offset by lower shipment volumes, unfavorable effects of foreign-currency exchange and a less favorable product mix. Full-year results benefited from a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne Landscape Supply, Inc.
Construction & Forestry. Construction and forestry sales decreased 5 percent for the quarter and 18 percent for the year, largely as a result of lower shipment volumes and higher sales-incentive costs.
The division had an operating loss of $17 million for the quarter and operating profit of $180 million for the year. This compared with operating profit of $64 million and $528 million for the periods in 2015. Lower results for the quarter were mainly attributable to higher sales-incentive expenses, an impairment charge for international operations and higher production costs. Full-year results decreased primarily due to lower shipment volumes and higher sales-incentive costs, partially offset by a reduction in both selling, administrative and general expenses and production costs.
Market Conditions & Outlook
Agriculture & Turf. Deeres worldwide sales of agriculture and turf equipment are forecast to decrease by about 1 percent for fiscal-year 2017, including a positive currency-translation effect of about 1 percent. Industry sales for agricultural equipment in the U.S. and Canada are forecast to be down 5 to 10 percent for 2017. The decline, which reflects the continuing impact of low commodity prices and weak farm incomes, is expected to be felt in the sale of both large and small models of equipment.
Full-year 2017 industry sales in the EU28 member nations are forecast to be down about 5 percent, with the decline attributable to low commodity prices and farm incomes. South American industry sales of tractors and combines are projected to be up about 15 percent as a result of improving economic and political conditions in Brazil and Argentina. Asian sales are projected to be flat to up slightly, benefiting from higher sales in India.
Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about flat for 2017, with Deere sales outpacing the industry.
Construction & Forestry. Deeres worldwide sales of construction and forestry equipment are forecast to be up about 1 percent for 2017, including a positive currency-translation effect of about 1 percent. The forecast reflects the impact of generally slow
Deere Announces Fourth-Quarter Earnings |
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economic growth worldwide. In forestry, global industry sales are expected to be about the same as in 2016 with some moderation in the North American market.
Financial Services. Fiscal-year 2017 net income attributable to Deere & Company for the financial services operations is expected to be approximately $480 million. The outlook reflects lower losses on lease residual values, partially offset by less-favorable financing spreads and an increased provision for credit losses.
John Deere Capital Corporation
The following is disclosed on behalf of the companys financial services subsidiary, John Deere Capital Corporation (JDCC), in connection with the disclosure requirements applicable to its periodic issuance of debt securities in the public market.
Net income attributable to JDCC was $81.7 million for the fourth quarter and $341.6 million for the full year, compared with $121.8 million and $498.2 million for the respective periods in 2015. The decline for the quarter and the full year was primarily due to less-favorable financing spreads, higher losses on lease residual values and a higher provision for credit losses.
Net receivables and leases financed by JDCC were $31.999 billion at October 31, 2016, compared with $32.592 billion last year.
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 companys businesses.
The companys agricultural equipment business is subject to a number of uncertainties including the factors that affect farmers confidence and financial condition. These factors include demand for agricultural products, world grain stocks, weather conditions, soil conditions, harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production), real estate values, available acreage for farming, the land ownership policies of
Deere Announces Fourth-Quarter Earnings |
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governments, changes in government farm programs and policies, international reaction to such programs, changes in environmental regulations and their impact on farming practices; changes in and effects of crop insurance programs, global trade agreements, animal diseases and their effects on poultry, beef and pork consumption and prices, crop pests and diseases, and the level of farm product exports (including concerns about genetically modified organisms).
Factors affecting the outlook for the companys turf and utility equipment include consumer confidence, weather conditions, customer profitability, consumer borrowing patterns, consumer purchasing preferences, housing starts, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.
Consumer spending patterns, real estate and housing prices, the number of housing starts, interest rates and the levels of public and non-residential construction are important to sales and results of the companys construction and forestry equipment. Prices for pulp, paper, lumber and structural panels are important to sales of forestry equipment.
All of the companys 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 companys 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 companys earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the companys 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 companys investment management activities could be impaired by changes in the equity, bond and other financial markets, which would negatively affect earnings.
Deere Announces Fourth-Quarter Earnings |
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The potential withdrawal of the United Kingdom from the European Union and the perceptions as to the impact of the withdrawal may adversely affect business activity, political stability and economic conditions in the United Kingdom, the European Union and elsewhere. The economic conditions and outlook could be further adversely affected by (i) the uncertainty concerning the timing and terms of the exit, (ii) new or modified trading arrangements between the United Kingdom and other countries, (iii) the risk that one or more other European Union countries could come under increasing pressure to leave the European Union, or (iv) the risk that the euro as the single currency of the Eurozone could cease to exist. Any of these developments, or the perception that any of these developments are likely to occur, could affect economic growth or business activity in the United Kingdom or the European Union, and could result in the relocation of businesses, cause business interruptions, lead to economic recession or depression, and impact the stability of the financial markets, availability of credit, currency exchange rates, interest rates, financial institutions, and political, financial and monetary systems. Any of these developments could affect our businesses, liquidity, results of operations and financial position.
Additional factors that could materially affect the companys operations, access to capital, expenses and results include changes in and the impact of governmental trade, banking, monetary and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs and other areas, and governmental programs, policies, tariffs and sanctions in particular jurisdictions or for the benefit of certain industries or sectors; actions by central banks; actions by financial and securities regulators; actions by environmental, health and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor regulations; changes to accounting standards; changes in tax rates, estimates, and regulations and company actions related thereto; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.
Other factors that could materially affect results include production, design and technological innovations and difficulties, including capacity and supply constraints and prices; the availability and prices of strategically sourced materials, components and whole goods; delays or disruptions in the companys supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations or distribution; the failure of suppliers to comply with laws, regulations and company policy
Deere Announces Fourth-Quarter Earnings |
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pertaining to employment, human rights, health, safety, the environment and other ethical business practices; events that damage the companys 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; labor relations and contracts; acquisitions and divestitures of businesses; the integration of new businesses; the implementation of organizational changes; difficulties related to the conversion and implementation of enterprise resource planning systems; security breaches and other disruptions to the companys 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 companys 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 companys 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 companys financial results, is included in the companys other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the companys most recent annual report on Form 10-K and quarterly reports on Form 10-Q).
Deere Announces Fourth-Quarter Earnings |
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Fourth Quarter 2016 Press Release
(in millions of dollars)
Unaudited
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Three Months Ended |
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Twelve Months Ended |
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October 31 |
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October 31 |
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||||||||||||
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% |
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|
|
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% |
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||||
|
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2016 |
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2015 |
|
Change |
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2016 |
|
2015 |
|
Change |
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||||
Net sales and revenues: |
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|
|
|
|
|
|
|
|
|
|
|
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||||
Agriculture and turf |
|
$ |
4,441 |
|
$ |
4,656 |
|
-5 |
|
$ |
18,487 |
|
$ |
19,812 |
|
-7 |
|
Construction and forestry |
|
1,209 |
|
1,276 |
|
-5 |
|
4,900 |
|
5,963 |
|
-18 |
|
||||
Total net sales |
|
5,650 |
|
5,932 |
|
-5 |
|
23,387 |
|
25,775 |
|
-9 |
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||||
Financial services |
|
740 |
|
654 |
|
+13 |
|
2,694 |
|
2,591 |
|
+4 |
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||||
Other revenues |
|
130 |
|
129 |
|
+1 |
|
563 |
|
497 |
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+13 |
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||||
Total net sales and revenues |
|
$ |
6,520 |
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$ |
6,715 |
|
-3 |
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$ |
26,644 |
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$ |
28,863 |
|
-8 |
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|
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||||
Operating profit: * |
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Agriculture and turf |
|
$ |
371 |
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$ |
271 |
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+37 |
|
$ |
1,700 |
|
$ |
1,649 |
|
+3 |
|
Construction and forestry |
|
(17) |
|
64 |
|
|
|
180 |
|
528 |
|
-66 |
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||||
Financial services |
|
164 |
|
226 |
|
-27 |
|
709 |
|
963 |
|
-26 |
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||||
Total operating profit |
|
518 |
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561 |
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-8 |
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2,589 |
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3,140 |
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-18 |
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Reconciling items ** |
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(93) |
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(105) |
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-11 |
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(365) |
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(360) |
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+1 |
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||||
Income taxes |
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(140) |
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(105) |
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+33 |
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(700) |
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(840) |
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-17 |
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Net income attributable to Deere & Company |
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$ |
285 |
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$ |
351 |
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-19 |
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$ |
1,524 |
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$ |
1,940 |
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-21 |
|
* Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains or losses.
** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses and net income attributable to noncontrolling interests.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended October 31, 2016 and 2015
(In millions of dollars and shares except per share amounts) Unaudited
|
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2016 |
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2015 |
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Net Sales and Revenues |
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|
|
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Net sales |
|
$ |
5,650.1 |
|
$ |
5,932.0 |
Finance and interest income |
|
662.2 |
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614.5 |
||
Other income |
|
207.4 |
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168.9 |
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Total |
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6,519.7 |
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6,715.4 |
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Costs and Expenses |
|
|
|
|
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Cost of sales |
|
4,383.5 |
|
4,670.4 |
||
Research and development expenses |
|
386.0 |
|
404.0 |
||
Selling, administrative and general expenses |
|
747.1 |
|
719.1 |
||
Interest expense |
|
198.8 |
|
162.9 |
||
Other operating expenses |
|
369.9 |
|
302.0 |
||
Total |
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6,085.3 |
|
6,258.4 |
||
|
|
|
|
|
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Income of Consolidated Group before Income Taxes |
|
434.4 |
|
457.0 |
||
Provision for income taxes |
|
140.2 |
|
104.5 |
||
Income of Consolidated Group |
|
294.2 |
|
352.5 |
||
Equity in loss of unconsolidated affiliates |
|
(9.8) |
|
(.9) |
||
Net Income |
|
284.4 |
|
351.6 |
||
Less: Net income (loss) attributable to noncontrolling interests |
|
(.9) |
|
.4 |
||
Net Income Attributable to Deere & Company |
|
$ |
285.3 |
|
$ |
351.2 |
|
|
|
|
|
||
Per Share Data |
|
|
|
|
||
Basic |
|
$ |
.91 |
|
$ |
1.09 |
Diluted |
|
$ |
.90 |
|
$ |
1.08 |
|
|
|
|
|
||
Average Shares Outstanding |
|
|
|
|
||
Basic |
|
314.6 |
|
323.0 |
||
Diluted |
|
316.2 |
|
324.6 |
See Condensed Notes to Interim Consolidated Financial Statements.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Years Ended October 31, 2016 and 2015
(In millions of dollars and shares except per share amounts) Unaudited
|
|
2016 |
|
2015 |
||
Net Sales and Revenues |
|
|
|
|
||
Net sales |
|
$ |
23,387.3 |
|
$ |
25,775.2 |
Finance and interest income |
|
2,511.2 |
|
2,381.1 |
||
Other income |
|
745.5 |
|
706.5 |
||
Total |
|
26,644.0 |
|
28,862.8 |
||
|
|
|
|
|
||
Costs and Expenses |
|
|
|
|
||
Cost of sales |
|
18,248.9 |
|
20,143.2 |
||
Research and development expenses |
|
1,389.1 |
|
1,425.1 |
||
Selling, administrative and general expenses |
|
2,763.7 |
|
2,873.3 |
||
Interest expense |
|
763.7 |
|
680.0 |
||
Other operating expenses |
|
1,254.6 |
|
961.1 |
||
Total |
|
24,420.0 |
|
26,082.7 |
||
|
|
|
|
|
||
Income of Consolidated Group before Income Taxes |
|
2,224.0 |
|
2,780.1 |
||
Provision for income taxes |
|
700.1 |
|
840.1 |
||
Income of Consolidated Group |
|
1,523.9 |
|
1,940.0 |
||
Equity in income (loss) of unconsolidated affiliates |
|
(2.4) |
|
.9 |
||
Net Income |
|
1,521.5 |
|
1,940.9 |
||
Less: Net income (loss) attributable to noncontrolling interests |
|
(2.4) |
|
.9 |
||
Net Income Attributable to Deere & Company |
|
$ |
1,523.9 |
|
$ |
1,940.0 |
|
|
|
|
|
||
Per Share Data |
|
|
|
|
||
Basic |
|
$ |
4.83 |
|
$ |
5.81 |
Diluted |
|
$ |
4.81 |
|
$ |
5.77 |
|
|
|
|
|
||
Average Shares Outstanding |
|
|
|
|
||
Basic |
|
315.2 |
|
333.6 |
||
Diluted |
|
316.6 |
|
336.0 |
See Condensed Notes to Interim Consolidated Financial Statements.
DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
As of October 31, 2016 and 2015
(In millions of dollars) Unaudited
|
|
2016 |
|
|
2015 |
|
||
Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
4,335.8 |
|
|
$ |
4,162.2 |
|
Marketable securities |
|
453.5 |
|
|
437.4 |
|
||
Receivables from unconsolidated affiliates |
|
16.5 |
|
|
33.3 |
|
||
Trade accounts and notes receivable - net |
|
3,011.3 |
|
|
3,051.1 |
|
||
Financing receivables - net |
|
23,702.3 |
|
|
24,809.0 |
|
||
Financing receivables securitized - net |
|
5,126.5 |
|
|
4,834.6 |
|
||
Other receivables |
|
1,018.5 |
|
|
991.2 |
|
||
Equipment on operating leases - net |
|
5,901.5 |
|
|
4,970.4 |
|
||
Inventories |
|
3,340.5 |
|
|
3,817.0 |
|
||
Property and equipment - net |
|
5,170.6 |
|
|
5,181.5 |
|
||
Investments in unconsolidated affiliates |
|
232.6 |
|
|
303.5 |
|
||
Goodwill |
|
815.7 |
|
|
726.0 |
|
||
Other intangible assets - net |
|
104.1 |
|
|
63.6 |
|
||
Retirement benefits |
|
93.6 |
|
|
215.6 |
|
||
Deferred income taxes |
|
2,964.4 |
|
|
2,767.3 |
|
||
Other assets |
|
1,694.0 |
|
|
1,583.9 |
|
||
Total Assets |
|
$ |
57,981.4 |
|
|
$ |
57,947.6 |
|
|
|
|
|
|
|
|
||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
||
Short-term borrowings |
|
$ |
6,912.2 |
|
|
$ |
8,426.6 |
|
Short-term securitization borrowings |
|
5,002.5 |
|
|
4,590.0 |
|
||
Payables to unconsolidated affiliates |
|
81.6 |
|
|
80.6 |
|
||
Accounts payable and accrued expenses |
|
7,240.1 |
|
|
7,311.5 |
|
||
Deferred income taxes |
|
166.0 |
|
|
160.8 |
|
||
Long-term borrowings |
|
23,759.7 |
|
|
23,832.8 |
|
||
Retirement benefits and other liabilities |
|
8,274.5 |
|
|
6,787.7 |
|
||
Total liabilities |
|
51,436.6 |
|
|
51,190.0 |
|
||
|
|
|
|
|
|
|
||
Redeemable noncontrolling interest |
|
14.0 |
|
|
|
|
||
|
|
|
|
|
|
|
||
Stockholders Equity |
|
|
|
|
|
|
||
Total Deere & Company stockholders equity |
|
6,520.0 |
|
|
6,743.4 |
|
||
Noncontrolling interests |
|
10.8 |
|
|
14.2 |
|
||
Total stockholders equity |
|
6,530.8 |
|
|
6,757.6 |
|
||
Total Liabilities and Stockholders Equity |
|
$ |
57,981.4 |
|
|
$ |
57,947.6 |
|
See Condensed Notes to Interim Consolidated Financial Statements.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Years Ended October 31, 2016 and 2015
(In millions of dollars) Unaudited
|
|
2016 |
|
|
2015 |
|
||
Cash Flows from Operating Activities |
|
|
|
|
|
|
||
Net income |
|
$ |
1,521.5 |
|
|
$ |
1,940.9 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Provision for credit losses |
|
94.3 |
|
|
55.4 |
|
||
Provision for depreciation and amortization |
|
1,559.8 |
|
|
1,382.4 |
|
||
Impairment charges |
|
85.1 |
|
|
34.8 |
|
||
Share-based compensation expense |
|
56.1 |
|
|
66.1 |
|
||
Undistributed earnings of unconsolidated affiliates |
|
(1.9 |
) |
|
(1.0 |
) |
||
Provision (credit) for deferred income taxes |
|
282.7 |
|
|
(18.4 |
) |
||
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Trade, notes and financing receivables related to sales |
|
335.2 |
|
|
811.6 |
|
||
Insurance receivables |
|
|
|
|
333.4 |
|
||
Inventories |
|
(106.1 |
) |
|
(691.4 |
) |
||
Accounts payable and accrued expenses |
|
(155.2 |
) |
|
(503.6 |
) |
||
Accrued income taxes payable/receivable |
|
1.6 |
|
|
(137.6 |
) |
||
Retirement benefits |
|
238.6 |
|
|
427.5 |
|
||
Other |
|
(147.4 |
) |
|
40.2 |
|
||
Net cash provided by operating activities |
|
3,764.3 |
|
|
3,740.3 |
|
||
|
|
|
|
|
|
|
||
Cash Flows from Investing Activities |
|
|
|
|
|
|
||
Collections of receivables (excluding receivables related to sales) |
|
14,611.4 |
|
|
14,919.7 |
|
||
Proceeds from maturities and sales of marketable securities |
|
169.4 |
|
|
860.7 |
|
||
Proceeds from sales of equipment on operating leases |
|
1,256.2 |
|
|
1,049.4 |
|
||
Proceeds from sales of business and unconsolidated affiliates, net of cash sold |
|
81.1 |
|
|
149.2 |
|
||
Cost of receivables acquired (excluding receivables related to sales) |
|
(13,954.5 |
) |
|
(14,996.5 |
) |
||
Purchases of marketable securities |
|
(171.2 |
) |
|
(154.9 |
) |
||
Purchases of property and equipment |
|
(644.4 |
) |
|
(694.0 |
) |
||
Cost of equipment on operating leases acquired |
|
(2,310.7 |
) |
|
(2,132.1 |
) |
||
Acquisitions of businesses, net of cash acquired |
|
(198.5 |
) |
|
|
|
||
Other |
|
(16.0 |
) |
|
(60.2 |
) |
||
Net cash used for investing activities |
|
(1,177.2 |
) |
|
(1,058.7 |
) |
||
|
|
|
|
|
|
|
||
Cash Flows from Financing Activities |
|
|
|
|
|
|
||
Increase (decrease) in total short-term borrowings |
|
(1,213.6 |
) |
|
501.6 |
|
||
Proceeds from long-term borrowings |
|
5,070.7 |
|
|
5,711.0 |
|
||
Payments of long-term borrowings |
|
(5,267.6 |
) |
|
(4,863.2 |
) |
||
Proceeds from issuance of common stock |
|
36.0 |
|
|
172.1 |
|
||
Repurchases of common stock |
|
(205.4 |
) |
|
(2,770.7 |
) |
||
Dividends paid |
|
(761.3 |
) |
|
(816.3 |
) |
||
Excess tax benefits from share-based compensation |
|
5.4 |
|
|
18.5 |
|
||
Other |
|
(64.7 |
) |
|
(72.1 |
) |
||
Net cash used for financing activities |
|
(2,400.5 |
) |
|
(2,119.1 |
) |
||
|
|
|
|
|
|
|
||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
(13.0 |
) |
|
(187.3 |
) |
||
|
|
|
|
|
|
|
||
Net Increase in Cash and Cash Equivalents |
|
173.6 |
|
|
375.2 |
|
||
Cash and Cash Equivalents at Beginning of Year |
|
4,162.2 |
|
|
3,787.0 |
|
||
Cash and Cash Equivalents at End of Year |
|
$ |
4,335.8 |
|
|
$ |
4,162.2 |
|
See Condensed Notes to Interim Consolidated Financial Statements.
Condensed Notes to Interim Consolidated Financial Statements (Unaudited)
(1) In May 2016, the Company received a distribution of $60 million from SiteOne Landscapes Supply, Inc. (SiteOne) that reduced the Companys investment in unconsolidated affiliates. The distribution included $4 million of a return on investment, which is shown in the statement of consolidated cash flows in undistributed earnings of unconsolidated affiliates in net cash provided by operating activities, and $56 million of a return of investment shown in other cash flows from investing activities. In May 2016, the Company also sold approximately 30 percent of its interest in SiteOne in an initial public offering and terminated a service agreement resulting in gross proceeds of approximately $81 million with a total gain of $75 million pretax or $47 million after-tax. The gain is recorded in other income. The Company retained approximately a 24 percent ownership interest in SiteOne.
(2) Dividends declared and paid on a per share basis were as follows:
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
|
October 31 |
|
October 31 |
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
||||
|
|
|
|
|
|
|
|
|
||||
Dividends declared |
|
$ |
.60 |
|
$ |
.60 |
|
$ |
2.40 |
|
$ |
2.40 |
Dividends paid |
|
$ |
.60 |
|
$ |
.60 |
|
$ |
2.40 |
|
$ |
2.40 |
(3) 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.
(4) The consolidated financial statements represent the consolidation of all Deere & Companys subsidiaries. In the supplemental consolidating data in Note 5 to the financial statements, Equipment Operations include the Companys 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 October 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
||||
Net Sales and Revenues |
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
5,650.1 |
|
$ |
5,932.0 |
|
|
|
|
||
Finance and interest income |
|
15.3 |
|
18.2 |
|
$ |
701.2 |
|
$ |
656.1 |
||
Other income |
|
156.7 |
|
151.7 |
|
85.1 |
|
57.5 |
||||
Total |
|
5,822.1 |
|
6,101.9 |
|
786.3 |
|
713.6 |
||||
|
|
|
|
|
|
|
|
|
||||
Costs and Expenses |
|
|
|
|
|
|
|
|
||||
Cost of sales |
|
4,384.1 |
|
4,671.0 |
|
|
|
|
||||
Research and development expenses |
|
386.0 |
|
404.0 |
|
|
|
|
||||
Selling, administrative and general expenses |
|
619.9 |
|
599.6 |
|
128.8 |
|
120.5 |
||||
Interest expense |
|
54.8 |
|
64.8 |
|
149.8 |
|
109.0 |
||||
Interest compensation to Financial Services |
|
48.4 |
|
48.8 |
|
|
|
|
||||
Other operating expenses |
|
57.6 |
|
82.5 |
|
344.6 |
|
258.3 |
||||
Total |
|
5,550.8 |
|
5,870.7 |
|
623.2 |
|
487.8 |
||||
|
|
|
|
|
|
|
|
|
||||
Income of Consolidated Group before Income Taxes |
|
271.3 |
|
231.2 |
|
163.1 |
|
225.8 |
||||
Provision for income taxes |
|
86.4 |
|
31.4 |
|
53.8 |
|
73.1 |
||||
Income of Consolidated Group |
|
184.9 |
|
199.8 |
|
109.3 |
|
152.7 |
||||
|
|
|
|
|
|
|
|
|
||||
Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
|
||||
Financial Services |
|
109.8 |
|
153.0 |
|
.5 |
|
.3 |
||||
Other |
|
(10.3) |
|
(1.2) |
|
|
|
|
||||
Total |
|
99.5 |
|
151.8 |
|
.5 |
|
.3 |
||||
Net Income |
|
284.4 |
|
351.6 |
|
109.8 |
|
153.0 |
||||
Less: Net income (loss) attributable to noncontrolling interests |
|
(.9) |
|
.4 |
|
|
|
|
||||
Net Income Attributable to Deere & Company |
|
$ |
285.3 |
|
$ |
351.2 |
|
$ |
109.8 |
|
$ |
153.0 |
|
|
|
|
|
|
|
|
|
* 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 INCOME
For the Years Ended October 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
||||
Net Sales and Revenues |
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
23,387.3 |
|
$ |
25,775.2 |
|
|
|
|
||
Finance and interest income |
|
61.1 |
|
77.0 |
|
$ |
2,690.1 |
|
$ |
2,557.0 |
||
Other income |
|
653.7 |
|
602.7 |
|
229.0 |
|
258.9 |
||||
Total |
|
24,102.1 |
|
26,454.9 |
|
2,919.1 |
|
2,815.9 |
||||
|
|
|
|
|
|
|
|
|
||||
Costs and Expenses |
|
|
|
|
|
|
|
|
||||
Cost of sales |
|
18,250.8 |
|
20,145.2 |
|
|
|
|
||||
Research and development expenses |
|
1,389.1 |
|
1,425.1 |
|
|
|
|
||||
Selling, administrative and general expenses |
|
2,262.5 |
|
2,393.8 |
|
508.5 |
|
487.3 |
||||
Interest expense |
|
250.5 |
|
272.8 |
|
536.5 |
|
455.0 |
||||
Interest compensation to Financial Services |
|
216.6 |
|
204.8 |
|
|
|
|
||||
Other operating expenses |
|
215.7 |
|
195.0 |
|
1,167.0 |
|
911.7 |
||||
Total |
|
22,585.2 |
|
24,636.7 |
|
2,212.0 |
|
1,854.0 |
||||
|
|
|
|
|
|
|
|
|
||||
Income of Consolidated Group before Income Taxes |
|
1,516.9 |
|
1,818.2 |
|
707.1 |
|
961.9 |
||||
Provision for income taxes |
|
459.0 |
|
509.9 |
|
241.1 |
|
330.2 |
||||
Income of Consolidated Group |
|
1,057.9 |
|
1,308.3 |
|
466.0 |
|
631.7 |
||||
|
|
|
|
|
|
|
|
|
||||
Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
|
||||
Financial Services |
|
467.6 |
|
632.9 |
|
1.6 |
|
1.2 |
||||
Other |
|
(4.0) |
|
(.3) |
|
|
|
|
||||
Total |
|
463.6 |
|
632.6 |
|
1.6 |
|
1.2 |
||||
Net Income |
|
1,521.5 |
|
1,940.9 |
|
467.6 |
|
632.9 |
||||
Less: Net income (loss) attributable to noncontrolling interests |
|
(2.4) |
|
.9 |
|
|
|
|
||||
Net Income Attributable to Deere & Company |
|
$ |
1,523.9 |
|
$ |
1,940.0 |
|
$ |
467.6 |
|
$ |
632.9 |
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEET
As of October 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
||||
Assets |
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
3,140.5 |
|
$ |
2,900.0 |
|
$ |
1,195.3 |
|
$ |
1,262.2 |
Marketable securities |
|
34.2 |
|
47.7 |
|
419.3 |
|
389.7 |
||||
Receivables from unconsolidated subsidiaries and affiliates |
|
3,150.1 |
|
2,428.7 |
|
|
|
|
||||
Trade accounts and notes receivable - net |
|
654.2 |
|
485.2 |
|
3,370.5 |
|
3,553.1 |
||||
Financing receivables - net |
|
.4 |
|
.9 |
|
23,701.9 |
|
24,808.1 |
||||
Financing receivables securitized - net |
|
|
|
|
|
5,126.5 |
|
4,834.6 |
||||
Other receivables |
|
855.4 |
|
849.5 |
|
164.0 |
|
152.9 |
||||
Equipment on operating leases - net |
|
|
|
|
|
5,901.5 |
|
4,970.4 |
||||
Inventories |
|
3,340.5 |
|
3,817.0 |
|
|
|
|
||||
Property and equipment - net |
|
5,118.5 |
|
5,126.2 |
|
52.1 |
|
55.3 |
||||
Investments in unconsolidated subsidiaries and affiliates |
|
4,697.0 |
|
4,817.6 |
|
11.9 |
|
10.5 |
||||
Goodwill |
|
815.7 |
|
726.0 |
|
|
|
|
||||
Other intangible assets - net |
|
104.1 |
|
63.6 |
|
|
|
|
||||
Retirement benefits |
|
93.6 |
|
211.9 |
|
20.5 |
|
25.0 |
||||
Deferred income taxes |
|
3,556.0 |
|
3,092.0 |
|
75.5 |
|
67.9 |
||||
Other assets |
|
855.8 |
|
807.3 |
|
840.1 |
|
779.1 |
||||
Total Assets |
|
$ |
26,416.0 |
|
$ |
25,373.6 |
|
$ |
40,879.1 |
|
$ |
40,908.8 |
|
|
|
|
|
|
|
|
|
||||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
||||
Short-term borrowings |
|
$ |
249.0 |
|
$ |
464.3 |
|
$ |
6,663.2 |
|
$ |
7,962.3 |
Short-term securitization borrowings |
|
|
|
|
|
5,002.5 |
|
4,590.0 |
||||
Payables to unconsolidated subsidiaries and affiliates |
|
81.5 |
|
80.6 |
|
3,133.6 |
|
2,395.4 |
||||
Accounts payable and accrued expenses |
|
6,661.2 |
|
6,801.2 |
|
1,595.2 |
|
1,511.2 |
||||
Deferred income taxes |
|
87.3 |
|
86.8 |
|
745.9 |
|
466.6 |
||||
Long-term borrowings |
|
4,586.2 |
|
4,460.6 |
|
19,173.5 |
|
19,372.2 |
||||
Retirement benefits and other liabilities |
|
8,206.0 |
|
6,722.5 |
|
89.0 |
|
86.4 |
||||
Total liabilities |
|
19,871.2 |
|
18,616.0 |
|
36,402.9 |
|
36,384.1 |
||||
|
|
|
|
|
|
|
|
|
||||
Redeemable noncontrolling interest |
|
14.0 |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Stockholders Equity |
|
|
|
|
|
|
|
|
||||
Total Deere & Company stockholders equity |
|
6,520.0 |
|
6,743.4 |
|
4,476.2 |
|
4,524.7 |
||||
Noncontrolling interests |
|
10.8 |
|
14.2 |
|
|
|
|
||||
Total stockholders equity |
|
6,530.8 |
|
6,757.6 |
|
4,476.2 |
|
4,524.7 |
||||
Total Liabilities and Stockholders Equity |
|
$ |
26,416.0 |
|
$ |
25,373.6 |
|
$ |
40,879.1 |
|
$ |
40,908.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF CASH FLOWS
For the Years Ended October 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
1,521.5 |
|
$ |
1,940.9 |
|
$ |
467.6 |
|
$ |
632.9 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
||||
Provision for credit losses |
|
8.2 |
|
5.5 |
|
86.1 |
|
49.9 |
||||
Provision for depreciation and amortization |
|
803.4 |
|
791.8 |
|
846.7 |
|
688.5 |
||||
Impairment charges |
|
25.4 |
|
15.3 |
|
59.7 |
|
19.5 |
||||
Undistributed earnings of unconsolidated subsidiaries and affiliates |
|
94.0 |
|
46.6 |
|
(1.5) |
|
(1.0) |
||||
Provision (credit) for deferred income taxes |
|
13.2 |
|
(139.8) |
|
269.5 |
|
121.4 |
||||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
||||
Trade receivables |
|
(175.3) |
|
113.4 |
|
|
|
|
||||
Insurance receivables |
|
|
|
|
|
|
|
333.4 |
||||
Inventories |
|
578.4 |
|
(17.0) |
|
|
|
|
||||
Accounts payable and accrued expenses |
|
(169.6) |
|
(253.8) |
|
40.6 |
|
(245.4) |
||||
Accrued income taxes payable/receivable |
|
12.8 |
|
(133.0) |
|
(11.2) |
|
(4.6) |
||||
Retirement benefits |
|
232.4 |
|
414.3 |
|
6.2 |
|
13.2 |
||||
Other |
|
(38.0) |
|
271.1 |
|
97.1 |
|
(25.7) |
||||
Net cash provided by operating activities |
|
2,906.4 |
|
3,055.3 |
|
1,860.8 |
|
1,582.1 |
||||
|
|
|
|
|
|
|
|
|
||||
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
||||
Collections of receivables (excluding trade and wholesale) |
|
|
|
|
|
15,831.4 |
|
16,266.1 |
||||
Proceeds from maturities and sales of marketable securities |
|
81.9 |
|
700.1 |
|
87.5 |
|
160.6 |
||||
Proceeds from sales of equipment on operating leases |
|
|
|
|
|
1,256.2 |
|
1,049.4 |
||||
Proceeds from sales of business and unconsolidated affiliates, net of cash sold |
|
81.1 |
|
|
|
|
|
149.2 |
||||
Cost of receivables acquired (excluding trade and wholesale) |
|
|
|
|
|
(15,168.2) |
|
(16,327.8) |
||||
Purchases of marketable securities |
|
(59.4) |
|
(60.0) |
|
(111.8) |
|
(94.9) |
||||
Purchases of property and equipment |
|
(641.8) |
|
(688.1) |
|
(2.6) |
|
(5.9) |
||||
Cost of equipment on operating leases acquired |
|
|
|
|
|
(3,235.7) |
|
(3,043.6) |
||||
Increase in investment in Financial Services |
|
(28.2) |
|
(27.4) |
|
|
|
|
||||
Decrease in trade and wholesale receivables |
|
|
|
|
|
492.5 |
|
657.0 |
||||
Acquisitions of businesses, net of cash acquired |
|
(198.5) |
|
|
|
|
|
|
||||
Other |
|
(55.2) |
|
6.8 |
|
24.6 |
|
(45.1) |
||||
Net cash used for investing activities |
|
(820.1) |
|
(68.6) |
|
(826.1) |
|
(1,235.0) |
||||
|
|
|
|
|
|
|
|
|
||||
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
||||
Increase (decrease) in total short-term borrowings |
|
(207.2) |
|
211.9 |
|
(1,006.4) |
|
289.7 |
||||
Change in intercompany receivables/payables |
|
(756.0) |
|
928.6 |
|
756.0 |
|
(928.6) |
||||
Proceeds from long-term borrowings |
|
173.4 |
|
6.2 |
|
4,897.3 |
|
5,704.8 |
||||
Payments of long-term borrowings |
|
(72.8) |
|
(214.2) |
|
(5,194.8) |
|
(4,649.0) |
||||
Proceeds from issuance of common stock |
|
36.0 |
|
172.1 |
|
|
|
|
||||
Repurchases of common stock |
|
(205.4) |
|
(2,770.7) |
|
|
|
|
||||
Capital investment from Equipment Operations |
|
|
|
|
|
28.2 |
|
27.4 |
||||
Dividends paid |
|
(761.3) |
|
(816.3) |
|
(562.1) |
|
(679.6) |
||||
Excess tax benefits from share-based compensation |
|
5.4 |
|
18.5 |
|
|
|
|
||||
Other |
|
(36.7) |
|
(45.4) |
|
(28.0) |
|
(26.7) |
||||
Net cash used for financing activities |
|
(1,824.6) |
|
(2,509.3) |
|
(1,109.8) |
|
(262.0) |
||||
|
|
|
|
|
|
|
|
|
||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
(21.2) |
|
(146.6) |
|
8.2 |
|
(40.7) |
||||
|
|
|
|
|
|
|
|
|
||||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
240.5 |
|
330.8 |
|
(66.9) |
|
44.4 |
||||
Cash and Cash Equivalents at Beginning of Year |
|
2,900.0 |
|
2,569.2 |
|
1,262.2 |
|
1,217.8 |
||||
Cash and Cash Equivalents at End of Year |
|
$ |
3,140.5 |
|
$ |
2,900.0 |
|
$ |
1,195.3 |
|
$ |
1,262.2 |
|
|
|
|
|
|
|
|
|
* 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 |
|
(Furnished herewith) |
For the Twelve Months Ended October 31, |
|
Equipment Operations |
|
Agriculture and Turf |
|
Construction and Forestry |
|
||||||||||||
Dollars in millions |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||||
Net Sales |
|
$ |
23,387 |
|
$ |
25,775 |
|
$ |
18,487 |
|
$ |
19,812 |
|
$ |
4,900 |
|
$ |
5,963 |
|
Average Identifiable Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
With Inventories at LIFO |
|
$ |
11,816 |
|
$ |
12,491 |
|
$ |
8,669 |
|
$ |
9,056 |
|
$ |
3,147 |
|
$ |
3,435 |
|
With Inventories at Standard Cost |
|
$ |
13,092 |
|
$ |
13,840 |
|
$ |
9,718 |
|
$ |
10,173 |
|
$ |
3,374 |
|
$ |
3,667 |
|
Operating Profit |
|
$ |
1,880 |
|
$ |
2,177 |
|
$ |
1,700 |
|
$ |
1,649 |
|
$ |
180 |
|
$ |
528 |
|
Percent of Net Sales |
|
8.0 |
% |
8.4 |
% |
9.2 |
% |
8.3 |
% |
3.7 |
% |
8.9 |
% |
||||||
Operating Return on Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
With Inventories at LIFO |
|
15.9 |
% |
17.4 |
% |
19.6 |
% |
18.2 |
% |
5.7 |
% |
15.4 |
% |
||||||
With Inventories at Standard Cost |
|
14.4 |
% |
15.7 |
% |
17.5 |
% |
16.2 |
% |
5.3 |
% |
14.4 |
% |
||||||
SVA Cost of Assets |
|
$ |
(1,570) |
|
$ |
(1,661) |
|
$ |
(1,165) |
|
$ |
(1,221) |
|
$ |
(405) |
|
$ |
(440) |
|
SVA |
|
$ |
310 |
|
$ |
516 |
|
$ |
535 |
|
$ |
428 |
|
$ |
(225) |
|
$ |
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For the Twelve Months Ended October 31, |
|
Financial Services |
|
|
|
|
|
|
|
|
|
||||||||
Dollars in millions |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
||||||
Net Income Attributable to Deere & Company |
|
$ |
468 |
|
$ |
633 |
|
|
|
|
|
|
|
|
|
||||
Average Equity |
|
$ |
4,488 |
|
$ |
4,655 |
|
|
|
|
|
|
|
|
|
||||
Return on Equity |
|
10.4 |
% |
13.6 |
% |
|
|
|
|
|
|
|
|
||||||
Operating Profit |
|
$ |
709 |
|
$ |
963 |
|
|
|
|
|
|
|
|
|
||||
Average Equity |
|
$ |
4,488 |
|
$ |
4,655 |
|
|
|
|
|
|
|
|
|
||||
Cost of Equity |
|
$ |
(680) |
|
$ |
(705) |
|
|
|
|
|
|
|
|
|
||||
SVA |
|
$ |
29 |
|
$ |
258 |
|
|
|
|
|
|
|
|
|
||||
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 segments 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 Companys investment in the asset. The Financial Services segment is assessed an annual pretax cost of approximately 15 percent of the segments average equity. The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of each segment to determine the amount of SVA. |
Exhibit 99.3
(Furnished herewith)
Fourth Quarter 2016 Earnings Conference Call 23 November 2016 Exhibit 99.3 (Furnished herewith) 24
4th Quarter 2016 Earnings Conference Call 2 Safe Harbor Statement & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning the companys plans and projections for the future, including estimates and assumptions with respect to economic, political, technological, weather, market acceptance and other factors that impact our businesses and customers. They also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Words such as forecast, projection, outlook, prospects, expected, estimated, will, plan, anticipate, intend, believe, or other similar words or phrases often identify forward-looking statements. Actual results may differ materially from those projected in these forward-looking statements based on a number of factors and uncertainties. Additional information concerning factors that could cause actual results to differ materially is contained in the companys most recent Form 8-K and periodic report filed with the U.S. Securities and Exchange Commission, and is incorporated by reference herein. Investors should refer to and consider the incorporated information on risks and uncertainties in addition to the information presented here. Investors should consider non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. The company, except as required by law, undertakes no obligation to update or revise its forward-looking statements whether as a result of new developments or otherwise. The call and accompanying materials are not an offer to sell or a solicitation of offers to buy any of the companys securities. 25
4th Quarter 2016 Earnings Conference Call 3 2016 Overview (in millions of dollars except per share amounts) FY 2016 FY 2015 Change Net Sales and Revenues $26,644 $28,863 -8% Net Sales $23,387 $25,775 -9% Net Income Attributable to Deere & Company $1,524 $1,940 -21% Diluted EPS $4.81 $5.77 -17% 26
4th Quarter 2016 Earnings Conference Call 4 Fourth Quarter Overview (in millions of dollars except per share amounts) Q4 2016 Q4 2015 Change Net Sales and Revenues $6,520 $6,715 -3% Net Sales $5,650 $5,932 -5% Net Income Attributable to Deere & Company $285 $351 -19% Diluted EPS $0.90 $1.08 -17% 27
4th Quarter 2016 Earnings Conference Call 5 Fourth Quarter Overview Net Sales Equipment operations net sales: Down 5% in Q4 2016 vs. Q4 2015 Price realization: +3 points Currency translation: +1 point 28
4th Quarter 2016 Earnings Conference Call 6 Worldwide Agriculture & Turf Fourth Quarter Overview *Q4 2016 operating profit impacted by: (in millions of dollars) Q4 2016 Q4 2015 Change Net Sales $4,441 $4,656 -5% Operating Profit* $371 $271 +37% Favorable Unfavorable Price Realization Shipment Volumes 29
4th Quarter 2016 Earnings Conference Call U.S. Farm Cash Receipts Source: 2001 2015: USDA, 30 August 2016 2016F 2017F: Deere & Company Forecast as of 23 November 2016 7 30 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F $ Billions Crops Livestock Government Payments
4th Quarter 2016 Earnings Conference Call 8 World Farm Fundamentals Global Stocks-to-Use Ratios Source: USDA, 9 November 2016 Cotton Wheat Corn Soybeans 31 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 1995 1998 2001 2004 2007 2010 2013 2016P
4th Quarter 2016 Earnings Conference Call 9 Deere & Company Forecast as of 23 November 2016 Economic Update EU 28 Fiscal 2017 Slow economic growth, impacted by geopolitical risks Arable income remains under pressure Weak dairy sector beginning to bottom out Beef prices above average; downside to pork prices 32
4th Quarter 2016 Earnings Conference Call 10 Economic Update Other Selected Markets Fiscal 2017 China Slower economic growth continues Value of agricultural production expected to be stable Uncertainty due to recent policy announcements India Economy growing, driven by strong consumer demand Government continues to support the agricultural sector Value of agricultural production expected to increase Normal monsoon, following two consecutive below average seasons Deere & Company Forecast as of 23 November 2016 33
4th Quarter 2016 Earnings Conference Call 11 Crop Value of Agricultural Production Brazil Source: IHS Global Insight, November 2016 Crop Value of Agricultural Production Expected to increase ~ 7% in 2017 over prior season 2016 Mix by Crop US$ Billions 34 $0 $20 $40 $60 $80 $100 $120 2001 2003 2007 2009 2011 2013 2015 2017F 42% 38% 13% 7% Soybeans Sugarcane Corn Other Grains
Eligible Finance Rates for Agricultural Equipment Brazil 4th Quarter 2016 Earnings Conference Call 12 Source: ABIMAQ (Brazilian Association of Machinery and Equipment) and BNDES PSI-FINAME was the key credit line for machinery acquisition from 2011 2014; Moderfrota is currently the most attractive credit line * Moderfrota suspended September November 2015 35 Farmers with Annual Revenues <R$90M Farmers with Annual Revenues >R$90M 2011 2012 2013 2014 2015* 2016 12% 10% 8% 6% 4% 2% 0% All Farmers
4th Quarter 2016 Earnings Conference Call 13 Agriculture & Turf Retail Sales Industry Outlook Fiscal 2017 2017 Forecast U.S. and Canada Ag Down 5-10% EU 28 Ag Down ~ 5% South America Ag (Tractors and Combines) Up ~ 15% Asia Ag Flat to up slightly U.S. and Canada Turf and Utility Equipment ~ Flat Deere & Company Forecast as of 23 November 2016 36
4th Quarter 2016 Earnings Conference Call 14 Worldwide Agriculture & Turf Deere & Company Outlook Fiscal Year 2017 Forecast Net sales: Down ~ 1% Currency translation: ~ +1 point Deere & Company Forecast as of 23 November 2016 37
4th Quarter 2016 Earnings Conference Call 15 Worldwide Construction & Forestry Fourth Quarter Overview (in millions of dollars) Q4 2016 Q4 2015 Change Net Sales $1,209 $1,276 -5% Operating Profit* ($17) $64 *Q4 2016 operating profit impacted by: Unfavorable Sales-Incentive Expenses Impairment Charge for International Operations Production Costs 38
U.S. Economic Indicators 2017 Forecast GDP Growth (annual percentage rate)* +2.0% Housing Starts (thousands) 1,197 Total Construction Investment (annual percentage rate)* +1.9% Government Construction Investment (annual percentage rate)* +2.6% 4th Quarter 2016 Earnings Conference Call 16 Worldwide Construction & Forestry Deere & Company Outlook Source: IHS Global Insight, Calendar Year Estimates, October 2016 * Change from prior year in real dollars Fiscal Year 2017 Forecast Net sales: Up ~ 1% Currency translation: ~ +1 point Deere & Company Forecast as of 23 November 2016 39
4th Quarter 2016 Earnings Conference Call 17 Worldwide Financial Services Provision for Credit Loss Provision for Credit Loss / Average Owned Portfolio 0.29% 15 Year Average Deere & Company Forecast as of 23 November 2016 40 0.0% 0.5% 1.0% 1.5% 2.0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017F 10 Year Average
4th Quarter 2016 Earnings Conference Call 18 Fourth Quarter 2016 $110 million in Q4 2016 vs. $153 million in Q4 2015 Fiscal Year 2016 $468 million in 2016 vs. $633 million in 2015 Fiscal Year 2017 Forecast ~ $480 million Deere & Company Forecast as of 23 November 2016 Worldwide Financial Services Net Income Attributable to Deere & Company 41
4th Quarter 2016 Earnings Conference Call 19 Consolidated Trade Receivables & Inventory (in millions of dollars) 2016* Actual 2016* Previous Forecast 2017** Forecast A&T $81 $100 $125 C&F $436 $400 $125 Total, as reported $517 $500 $250 Total, constant exchange $549 $550 $300 * Change at 31 October 2016 vs. 31 October 2015 ** Forecasted change at 31 October 2017 vs. 31 October 2016 Note: Before the sale of receivables to John Deere Financial Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 42
4th Quarter 2016 Earnings Conference Call 20 Cost of Sales as a Percent of Net Sales Equipment Operations Fourth Quarter 2016 77.6% Fiscal Year 2016 78.0% Previous forecast: ~ 78.7% Fiscal Year 2017 Forecast ~ 78% Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 43
4th Quarter 2016 Earnings Conference Call 21 Research & Development Expense Equipment Operations Fourth Quarter 2016 Down 4% vs. Q4 2015 Fiscal Year 2016 Down 3% vs. FY 2015 Currency translation: (1) point Previous forecast: Down ~ 1% vs. FY 2015 Fiscal Year 2017 Forecast Down ~ 3% vs. FY 2016 Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 44
4th Quarter 2016 Earnings Conference Call 22 Selling, Administrative & General Expense Equipment Operations Fourth Quarter 2016 Up 3% vs. Q4 2015 Commissions paid to dealers: +2 points Incentive compensation: +1 point Voluntary separation program: +1 point Pension/OPEB: (2) points Fiscal Year 2016 Down 5% vs. FY 2015 Currency translation: (2) points Pension/OPEB: (2) points Incentive compensation: (2) points No change from previous forecast Deere & Company Previous Forecast as of 19 August 2016 45
4th Quarter 2016 Earnings Conference Call 23 Selling, Administrative & General Expense Equipment Operations Fiscal Year 2017 Forecast Up ~ 1% vs. FY 2016 Voluntary separation program: ~ +2 points Currency translation: ~ +1 point Incentive compensation: ~ (1) point Deere & Company Forecast as of 23 November 2016 46
4th Quarter 2016 Earnings Conference Call 24 Pension and OPEB Expense Fourth Quarter 2016 Down $53 million vs. Q4 2015 Fiscal Year 2016 Down $200 million vs. FY 2015 Previous forecast: Down ~ $210 million vs. FY 2015 Deere & Company Previous Forecast as of 19 August 2016 47
4th Quarter 2016 Earnings Conference Call 25 Income Taxes Equipment Operations Fourth Quarter 2016 Effective tax rate: 32% Fiscal Year 2016 Effective tax rate: 30% Previous forecast: 29-31% Fiscal Year 2017 Forecast Effective tax rate: 33-35% Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 48
4th Quarter 2016 Earnings Conference Call 26 Strong Operating Performance Equipment Operations Fiscal Year Cash Flows from Operations * Previous forecast ~ $2.1 billion Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) $ Billions ~$2.5 49
4th Quarter 2016 Earnings Conference Call 27 2017 Company Outlook First Quarter 2017 Forecast Net sales: Down ~ 4% vs. Q1 2016 Price realization: ~ +1 point Currency translation: ~ +2 points Fiscal Year 2017 Forecast Net sales: Down ~ 1% vs. FY 2016 Price realization: ~ +1 point Currency translation: ~ +1 point Net income attributable to Deere & Company of ~ $1.4 billion Deere & Company Forecast as of 23 November 2016 50
Note: in millions of dollars * 2017 Implied Operating Profit is based on guidance for net sales change year over year and operating margins by segment 4th Quarter 2016 Earnings Conference Call 28 2016 vs. 2017 Operating Profit Equipment Operations $40$90 million improvement to Adjusted Implied Operating Profit on lower volume Volume impact in excess of $200 million ** Portion of $105 million Voluntary Separation pretax expense related to Equipment Operations Deere & Company Forecast as of 23 November 2016 51
4th Quarter 2016 Earnings Conference Call 29 Appendix 52
Deere Use-of-Cash Priorities 4th Quarter 2016 Earnings Conference Call 30 Manage the balance sheet, including liquidity, to support a rating that provides access to low-cost and readily available short- and long-term funding mechanisms Reflects the strategic nature of our financial services operation Committed to A Rating Cash from Operations Fund Operating and Growth Needs Common Stock Dividend Share Repurchase Fund value-creating investments in our businesses Consistently and moderately raise dividend targeting a 25%-35% payout ratio of mid-cycle earnings Consider share repurchase as a means to deploy excess cash to shareholders, once above requirements are met and repurchase is viewed as value-enhancing 53
(1) Other includes proceeds from maturities and sales of marketable securities and purchases of marketable securities and reconciliation for non-cash items including excess tax benefits from share-based compensation and the effect of exchange rates on cash and cash equivalents (1) $ Millions ~62% of cash from operations returned to shareholders 4th Quarter 2016 Earnings Conference Call 31 Sources and Uses of Cash Fiscal 20042016 Equipment Operations Source: Deere & Company SEC filings = Source of Cash = Use of Cash 54
4th Quarter 2016 Earnings Conference Call Deere Quarterly Dividends Declared* Q1 2003 Q4 2016 * Adjusted for 2 for 1 stock split on 26 November 2007 32 Dividend raised 114% since launch of the revised John Deere Strategy in 2010 55 $0.11 $0.14 $0.16 $0.20 $0.22 $0.25 $0.28 $0.30 $0.35 $0.41 $0.46 $0.51 $0.60 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
4th Quarter 2016 Earnings Conference Call 33 Share Repurchase As Part of Publicly Announced Plans Cumulative cost of repurchases 2004-2016: $16.4 billion Amount remaining on December 2013 authorization of $8 billion: $3.3 billion 31 October 2016 period ended basic shares: 314.8 million 2016 average diluted shares: 316.6 million Shares repurchased 2004-2016: 245.0 million Average repurchase price 2004-2016: $66.96 * All shares adjusted for two-for-one stock split effective 26 November 2007 56 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 0 5 10 15 20 25 30 35 40 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Billions Shares Repurchased* (in millions) 37% Net Share Reduction 2004 - 2016 Shares Repurchased Amount Spent
4th Quarter 2016 Earnings Conference Call 34 Other Information Equipment Operations Fiscal Year 2016 Capital Expenditures: $642 million Previous forecast: ~ $650 million Depreciation and Amortization: $803 million Previous forecast: ~ $800 million Pension/OPEB Contributions: $127 million Previous forecast: ~ $105 million Deere & Company Previous Forecast as of 19 August 2016 57
4th Quarter 2016 Earnings Conference Call 35 Other Information Equipment Operations Fiscal Year 2017 Forecast Capital Expenditures: ~ $600 million Depreciation and Amortization: ~ $850 million Pension/OPEB Contributions: ~ $100 million Deere & Company Forecast as of 23 November 2016 58
4th Quarter 2016 Earnings Conference Call 36 U.S. Farm Commodity Prices (dollars per bushel, except cotton, which is dollars per pound) 2015/16 Estimate Previous 2015/16 2016/17 Projection Previous 2016/17 Corn $3.61 $3.60 $3.30 $3.15 Wheat $4.89 $4.89 $3.70 $3.75 Soybeans $8.95 $8.95 $9.20 $9.30 Cotton $0.58 $0.58 $0.67 $0.62 Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 59
U.S. Farm Commodity Prices 4th Quarter 2016 Earnings Conference Call 37 Source: USDA, 9 November 2016 60 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Cotton - Dollars per Pound Dollars per Bushel Cotton Wheat Corn Soybeans
4th Quarter 2016 Earnings Conference Call 38 U.S. Acres Harvested and Crop Yields (Yield in bushels per acre, except cotton, which is pounds per acre) Acres Harvested (millions) Yield 2015/16 Estimate 2016/17 Projection 2015/16 Estimate 2016/17 Projection Corn 80.7 86.8 168.4 175.3 Wheat 47.3 43.9 43.6 52.6 Soybeans 81.7 83.0 48.0 52.5 Cotton 8.1 9.7 766 803 Deere & Company Forecast as of 23 November 2016 61
4th Quarter 2016 Earnings Conference Call 39 U.S. Farm Cash Receipts (in billions of dollars) 2015 2016 Forecast Previous 2016 2017 Forecast Crops $189.4 $182.3 $188.2 $186.2 Livestock $189.8 $171.2 $171.3 $168.4 Government Payments $10.8 $13.5 $13.9 $12.5 Total Cash Receipts $390.0 $367.0 $373.4 $367.1 Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 62
4th Quarter 2016 Earnings Conference Call 40 U.S. Net Farm Cash Income (in billions of dollars) 2015 2016 Forecast Previous 2016 2017 Forecast Total Cash Receipts $390.0 $367.0 $373.4 $367.1 Other Farm-Related Income $34.4 $33.7 $34.9 $34.3 Gross Cash Income $424.4 $400.7 $408.3 $401.4 Cash Expenses ($315.9) ($306.6) ($323.0) ($299.0) Net Cash Income $108.5 $94.1 $85.3 $102.4 Deere & Company Forecast as of 23 November 2016 (Previous Forecast as of 19 August 2016) 63
4th Quarter 2016 Earnings Conference Call U.S. Farm Balance Sheet Source: 1973 2015: USDA, 30 August 2016 2016F 2017F: Deere & Company Forecast as of 23 November 2016 41 64 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F $ Billions Farm Debt Farm Equity Debt to Equity Ratio (%) Debt to Asset Ratio (%)
4th Quarter 2016 Earnings Conference Call 42 Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 7% low double digits 2WD Tractors (40 < 100 PTO hp) flat single digit 2WD Tractors (100+ PTO hp) 17% more than the industry 4WD Tractors 19% more than the industry Combines 27% more than the industry October 2016 Retail Sales and Dealer Inventories * As reported by the Association of Equipment Manufacturers ** As reported to the Association of Equipment Manufacturers *** At 31 October in units as a % of trailing 12 months retail sales, as reported to the Association of Equipment Manufacturers Deere Dealer Inventories*** U.S. and Canada Ag 2016 2015 2WD Tractors (100+ PTO hp) 31% 24% Combines 5% 6% 65
4th Quarter 2016 Earnings Conference Call 43 October 2016 Retail Sales EU 28 Deere* Tractors double digits Combines single digit U.S. and Canada Deere* Selected Turf & Utility Equipment double digits * Based on internal sales reports U.S. and Canada Construction & Forestry Deere* First-in-the-Dirt low double digits Settlements double digits 66
Deeres first quarter 2017 conference call is scheduled for 9:00 a.m. central time on Friday, February 17, 2017 67