Form 8-K DEERE & CO For: Aug 19
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: August 19, 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 August 19, 2016 concerning Third 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 Third 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.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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DEERE & COMPANY | |
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By: |
/s/ Todd E. Davies |
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Todd E. Davies |
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Secretary |
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Dated: August 19, 2016 |
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Exhibit Index
Number and Description of Exhibit
(99.1) Press Release and Supplemental Financial Information (Filed herewith)
(99.2) Other Financial Information (Furnished herewith)
(99.3) Third Quarter 2016 Earnings Conference Call Information (Furnished herewith)
Exhibit 99.1 (Filed herewith) |
NEWS RELEASE
Media Contact:
Ken Golden
Director, Global Public Relations
Deere & Company
309-765-5678
Deere Announces Third-Quarter Earnings of $489 Million
· Weakness in global markets for farm and construction equipment leads to decline in sales and net income; earnings per share show slight gain.
· All company businesses remain profitable, benefiting from sound execution and disciplined cost and asset management.
· Full-year 2016 earnings forecast increased to $1.35 billion.
MOLINE, Illinois (August 19, 2016) Net income attributable to Deere & Company was $488.8 million, or $1.55 per share, for the third quarter ended July 31, compared with $511.6 million, or $1.53 per share, for the same period last year.
For the first nine months of the year, net income attributable to Deere & Company was $1.239 billion, or $3.91 per share, compared with $1.589 billion, or $4.67 per share, last year.
Worldwide net sales and revenues decreased 11 percent, to $6.724 billion, for the third quarter and declined 9 percent, to $20.124 billion, for nine months. Net sales of the equipment operations were $5.861 billion for the quarter and $17.737 billion for the first nine months, compared with $6.840 billion and $19.843 billion for the periods last year.
John Deeres performance in the third quarter reflected the continuing impact of the global farm recession as well as difficult conditions in construction equipment markets, said Samuel R. Allen, chairman and chief executive officer. All of Deeres businesses remained profitable with the Agriculture & Turf division reporting higher operating profit than last year. As in past quarters, our results benefited from the sound execution of our operating plans, the impact of a broad product portfolio, and our success keeping a tight rein on costs and assets.
Deere Announces Third-Quarter Earnings |
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Summary of Operations
Net sales of the worldwide equipment operations declined 14 percent for the quarter and 11 percent for the first nine months compared with the same periods a year ago. Sales included price realization of 2 percent for the quarter and year to date. Additionally, sales included an unfavorable currency-translation effect of 2 percent for both the quarter and nine months. Equipment net sales in the United States and Canada decreased 16 percent for the quarter and 13 percent year to date. Outside the U.S. and Canada, net sales decreased 12 percent for the quarter and 7 percent for the first nine months, with unfavorable currency-translation effects of 4 percent and 6 percent for the respective periods.
Deeres equipment operations reported operating profit of $625 million for the quarter and $1.526 billion for nine months, compared with $601 million and $1.842 billion last year. The improvement for the quarter was primarily driven by price realization, lower production costs and a decrease in selling, administrative and general expenses, partially offset by reduced shipment volumes and the unfavorable effects of foreign-currency exchange. The year-to-date decline was mostly due to lower shipment volumes, unfavorable effects of foreign-currency exchange and a less favorable product mix. Partially offsetting these factors for the year-to-date period were price realization, lower production costs and decreased selling, administrative and general expenses. Both periods benefited from a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne Landscape Supply, LLC.
Net income of the companys equipment operations was $353 million for the third quarter and $873 million for the first nine months, compared with $344 million and $1.109 billion for the corresponding periods of 2015.
Financial services reported net income attributable to Deere & Company of $125.9 million for the quarter and $357.9 million for nine months compared with $153.4 million and $480.0 million last year. Lower results for the quarter were primarily due to less-favorable financing spreads, a higher provision for credit losses and higher losses on lease residual values. The year-to-date decline was largely a result of higher losses on lease residual values, less-favorable financing spreads and a higher provision for credit losses. Additionally, prior year-to-date results benefited from a gain on the sale of the crop insurance business.
Company Outlook & Summary
Company equipment sales are projected to decrease about 10 percent for fiscal 2016 and be down about 8 percent for the fourth quarter compared with year-ago periods. Included in the forecast is a negative foreign-currency translation effect of about 2 percent
Deere Announces Third-Quarter Earnings |
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for the full year and a positive translation effect of about 1 percent in the fourth quarter. For fiscal 2016, net income attributable to Deere & Company is anticipated to be about $1.350 billion.
Deere continues to perform well in the face of challenging market conditions, particularly in relation to agricultural downturns of the past, Allen said. This underscores the success of our efforts to develop a more durable business model and a wider range of revenue sources. At the same time, we are continuing to focus on ways to make our operations more efficient and achieve further structural cost reductions. We remain confident in the companys present direction and firmly believe Deere is on the right track to deliver significant value to its customers and investors in the years ahead.
* * *
Equipment Division Performance
Agriculture & Turf. Sales fell 11 percent for the quarter and 7 percent for nine months due largely to lower shipment volumes and the unfavorable effects of currency translation. These factors were partially offset by price realization.
Operating profit was $571 million for the quarter and $1.329 billion year to date, compared with $472 million and $1.378 billion, respectively, last year. The improvement for the quarter was primarily driven by price realization, lower production costs and lower selling, administrative and general expenses, partially offset by lower shipment volumes and unfavorable effects of foreign-currency exchange. Year-to-date results were down primarily because of reduced shipment volumes, unfavorable effects of foreign-currency exchange and a less favorable product mix, partially offset by price realization and lower production costs and selling, administrative and general expenses. Both periods benefited from a gain on the sale of a partial interest in SiteOne Landscape Supply, LLC.
Construction & Forestry. Construction and forestry sales decreased 24 percent for the quarter and 21 percent for nine months mainly as a result of lower shipment volumes.
Operating profit was $54 million for the quarter and $197 million for nine months, compared with $129 million and $464 million for the corresponding periods last year. Operating profit fell for the quarter mainly due to reduced shipment volumes and a less favorable product mix, partially offset by lower production costs, a decrease in selling, administrative and general expenses and price realization. Year-to-date results declined primarily due to lower shipment volumes, partially offset by lower production costs and selling, administrative and general expenses.
Deere Announces Third-Quarter Earnings |
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Market Conditions & Outlook
Agriculture & Turf. Deeres worldwide sales of agriculture and turf equipment are forecast to decrease by about 8 percent for fiscal-year 2016, including a negative currency-translation effect of about 2 percent.
Industry sales for agricultural equipment in the U.S. and Canada are forecast to be down 15 to 20 percent for 2016. The decline, reflecting the impact of low commodity prices and weak farm incomes, has been most pronounced in the sale of higher-horsepower models.
Full-year 2016 industry sales in the EU28 are forecast to be flat to down 5 percent, with the decline attributable to low commodity prices and farm incomes, including continued pressure on the dairy sector. In South America, industry sales of tractors and combines are projected to be down 15 to 20 percent largely as a result of economic and political concerns in Brazil. Asian sales are projected to be flat to down slightly, due in part to weakness in China.
Industry sales of turf and utility equipment in the U.S. and Canada are expected to be flat to up 5 percent for 2016. Deere sales are benefiting from new products and general economic growth.
Construction & Forestry. Deeres worldwide sales of construction and forestry equipment are forecast to be down about 18 percent for 2016, including a negative currency-translation effect of about 1 percent. The forecast decline in sales largely reflects the impact of weak conditions in North America. In forestry, global industry sales are expected to be down 5 to 10 percent from last years strong levels.
Financial Services. Fiscal-year 2016 net income attributable to Deere & Company for the financial services operations is expected to be approximately $480 million. The outlook reflects less-favorable financing spreads, higher losses on lease residual values and an increased provision for credit losses. Additionally, 2015 results benefited from a gain on the sale of the crop insurance business.
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 John Deere Capital Corporation was $90.4 million for the third quarter and $259.9 million year to date, compared with $126.9 million and $376.4 million for the respective periods last year. The decline for the quarter was primarily due to a less favorable financing spread, higher losses on lease residual values and a higher
Deere Announces Third-Quarter Earnings |
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provision for credit losses. Year-to-date results decreased mainly due to higher losses on lease residual values, less-favorable financing spreads and a higher provision for credit losses.
Net receivables and leases financed by JDCC were $32.928 billion at July 31, 2016, compared with $33.400 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, trends and operating periods involve certain factors that are subject to change, and important 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 many interrelated factors that affect farmers confidence and financial condition. These factors include demand for agricultural products, world grain stocks, weather conditions (including its effects on timely planting and harvesting), soil conditions (including low subsoil moisture), 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 various governments, changes in government farm programs and policies (including those in Argentina, Brazil, China, the European Union, India, Russia and the U.S.), 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 and interest rates are especially important to sales of the companys construction and forestry equipment. The levels of public and non-residential construction also impact the
Deere Announces Third-Quarter Earnings |
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results of the companys construction and forestry segment. Prices for pulp, paper, lumber and structural panels are important to sales of forestry equipment.
All of the companys businesses and its reported results are affected by general economic conditions in the global markets and industries in which the company operates, especially material changes in economic activity in these markets and industries; customer confidence in general economic conditions; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates; and inflation and deflation rates. Government spending and taxing could adversely affect the economy, employment, consumer and corporate spending, and company results.
Customer and company operations and results could be affected by 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 and the threat thereof and the response thereto; natural disasters; and the spread of major epidemics.
Significant changes in market liquidity conditions 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.
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
Deere Announces Third-Quarter Earnings |
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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 (including protectionist, economic, punitive and expropriation policies and trade and licensing restrictions that could disrupt international commerce); actions by the U.S. Federal Reserve Board and other central banks; actions by the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission and other financial 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 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 including changes in laws and regulations affecting the sectors in which the company operates. Trade, financial and other sanctions imposed by the U.S., the European Union, Russia and other countries could negatively impact company assets, operations, sales, forecasts and results. Customer and company operations and results also could be affected by changes to GPS radio frequency bands or their permitted uses.
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 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 new products; the success of new product initiatives and customer acceptance of new products; changes in customer product preferences and sales mix whether as a result of changes in equipment design to meet government regulations or for other reasons; gaps or limitations in rural broadband coverage, capacity and speed needed to support technology solutions; oil
Deere Announces Third-Quarter Earnings |
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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 that disrupt business, negatively impact supply or distribution relationships or create higher than expected costs; security breaches and other disruptions to the companys and suppliers information technology infrastructure; and changes in company declared dividends and common stock issuances and repurchases.
Company results are also affected by changes in the level and funding of employee retirement benefits, changes in market values of investment assets, the level of interest and discount rates, and compensation, retirement and mortality rates which impact retirement benefit costs, and significant changes in health care costs including those which may result from governmental action.
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, to fund operations and costs associated with engaging in diversified funding activities, and to fund 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 potentially 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 Third-Quarter Earnings |
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Third Quarter 2016 Press Release
(in millions of dollars)
Unaudited
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Three Months Ended |
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Nine Months Ended |
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July 31 |
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July 31 |
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% |
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% |
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2016 |
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2015 |
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Change |
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2016 |
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2015 |
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Change |
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Net sales and revenues: |
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Agriculture and turf |
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$ |
4,704 |
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$ |
5,308 |
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-11 |
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$ |
14,046 |
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$ |
15,155 |
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-7 |
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Construction and forestry |
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1,157 |
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1,532 |
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-24 |
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3,691 |
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4,688 |
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-21 |
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Total net sales |
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5,861 |
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6,840 |
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-14 |
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17,737 |
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19,843 |
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-11 |
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Financial services |
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667 |
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636 |
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+5 |
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1,954 |
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1,937 |
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+1 |
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Other revenues |
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196 |
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118 |
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+66 |
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433 |
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367 |
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+18 |
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Total net sales and revenues |
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$ |
6,724 |
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$ |
7,594 |
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-11 |
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$ |
20,124 |
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$ |
22,147 |
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-9 |
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Operating profit: * |
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Agriculture and turf |
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$ |
571 |
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$ |
472 |
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+21 |
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$ |
1,329 |
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$ |
1,378 |
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-4 |
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Construction and forestry |
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54 |
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129 |
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-58 |
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197 |
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464 |
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-58 |
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Financial services |
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191 |
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239 |
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-20 |
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545 |
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737 |
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-26 |
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Total operating profit |
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816 |
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840 |
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-3 |
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2,071 |
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2,579 |
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-20 |
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Reconciling items ** |
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(100) |
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(87) |
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+15 |
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(272) |
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(254) |
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+7 |
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Income taxes |
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(227) |
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(241) |
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-6 |
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(560) |
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(736) |
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-24 |
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Net income attributable to Deere & Company |
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$ |
489 |
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$ |
512 |
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-4 |
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$ |
1,239 |
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$ |
1,589 |
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-22 |
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* Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains or losses.
** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses and net income attributable to noncontrolling interests.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended July 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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Net sales |
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$ |
5,861.4 |
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$ |
6,839.5 |
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Finance and interest income |
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638.5 |
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596.7 |
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Other income |
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224.5 |
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157.5 |
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Total |
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6,724.4 |
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7,593.7 |
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Costs and Expenses |
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Cost of sales |
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4,494.2 |
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5,358.0 |
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Research and development expenses |
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338.8 |
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346.8 |
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Selling, administrative and general expenses |
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709.0 |
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755.3 |
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Interest expense |
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200.7 |
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171.5 |
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Other operating expenses |
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276.6 |
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223.6 |
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Total |
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6,019.3 |
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6,855.2 |
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Income of Consolidated Group before Income Taxes |
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705.1 |
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738.5 |
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Provision for income taxes |
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226.5 |
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241.0 |
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Income of Consolidated Group |
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478.6 |
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497.5 |
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Equity in income of unconsolidated affiliates |
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10.0 |
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14.2 |
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Net Income |
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488.6 |
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511.7 |
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Less: Net income (loss) attributable to noncontrolling interests |
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(.2 |
) |
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.1 |
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Net Income Attributable to Deere & Company |
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$ |
488.8 |
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$ |
511.6 |
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Per Share Data |
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Basic |
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$ |
1.55 |
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$ |
1.54 |
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Diluted |
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$ |
1.55 |
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$ |
1.53 |
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Average Shares Outstanding |
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|
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|
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Basic |
|
314.3 |
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|
331.4 |
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Diluted |
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315.7 |
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|
334.1 |
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See Condensed Notes to Interim Consolidated Financial Statements.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Nine Months Ended July 31, 2016 and 2015
(In millions of dollars and shares except per share amounts) Unaudited
|
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2016 |
|
2015 | ||
Net Sales and Revenues |
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|
|
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Net sales |
|
$ |
17,737.1 |
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$ |
19,843.1 |
Finance and interest income |
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1,849.0 |
|
1,766.7 | ||
Other income |
|
538.3 |
|
537.7 | ||
Total |
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20,124.4 |
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22,147.5 | ||
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Costs and Expenses |
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|
|
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Cost of sales |
|
13,865.3 |
|
15,472.8 | ||
Research and development expenses |
|
1,003.1 |
|
1,021.1 | ||
Selling, administrative and general expenses |
|
2,016.8 |
|
2,154.2 | ||
Interest expense |
|
564.9 |
|
517.1 | ||
Other operating expenses |
|
884.7 |
|
659.1 | ||
Total |
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18,334.8 |
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19,824.3 | ||
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|
|
|
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Income of Consolidated Group before Income Taxes |
|
1,789.6 |
|
2,323.2 | ||
Provision for income taxes |
|
559.9 |
|
735.6 | ||
Income of Consolidated Group |
|
1,229.7 |
|
1,587.6 | ||
Equity in income of unconsolidated affiliates |
|
7.3 |
|
1.8 | ||
Net Income |
|
1,237.0 |
|
1,589.4 | ||
Less: Net income (loss) attributable to noncontrolling interests |
|
(1.6) |
|
.6 | ||
Net Income Attributable to Deere & Company |
|
$ |
1,238.6 |
|
$ |
1,588.8 |
|
|
|
|
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Per Share Data |
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|
|
| ||
Basic |
|
$ |
3.93 |
|
$ |
4.71 |
Diluted |
|
$ |
3.91 |
|
$ |
4.67 |
|
|
|
|
| ||
Average Shares Outstanding |
|
|
|
| ||
Basic |
|
315.4 |
|
337.3 | ||
Diluted |
|
316.7 |
|
339.9 |
See Condensed Notes to Interim Consolidated Financial Statements.
DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions of dollars) Unaudited
|
|
July 31 |
|
October 31 |
|
July 31 | |||
|
|
2016 |
|
2015 |
|
2015 | |||
Assets |
|
|
|
|
|
| |||
Cash and cash equivalents |
|
$ |
4,321.0 |
|
$ |
4,162.2 |
|
$ |
4,130.8 |
Marketable securities |
|
468.9 |
|
437.4 |
|
421.1 | |||
Receivables from unconsolidated affiliates |
|
18.7 |
|
33.3 |
|
43.2 | |||
Trade accounts and notes receivable - net |
|
3,924.6 |
|
3,051.1 |
|
4,220.4 | |||
Financing receivables - net |
|
22,594.8 |
|
24,809.0 |
|
24,973.4 | |||
Financing receivables securitized - net |
|
5,947.4 |
|
4,834.6 |
|
4,737.8 | |||
Other receivables |
|
811.9 |
|
991.2 |
|
823.1 | |||
Equipment on operating leases - net |
|
5,602.7 |
|
4,970.4 |
|
4,426.0 | |||
Inventories |
|
3,851.3 |
|
3,817.0 |
|
4,319.0 | |||
Property and equipment - net |
|
5,047.3 |
|
5,181.5 |
|
5,126.4 | |||
Investments in unconsolidated affiliates |
|
246.2 |
|
303.5 |
|
310.6 | |||
Goodwill |
|
823.6 |
|
726.0 |
|
715.9 | |||
Other intangible assets - net |
|
109.5 |
|
63.6 |
|
57.8 | |||
Retirement benefits |
|
323.1 |
|
215.6 |
|
335.0 | |||
Deferred income taxes |
|
2,612.6 |
|
2,767.3 |
|
2,705.0 | |||
Other assets |
|
1,902.8 |
|
1,583.9 |
|
1,586.7 | |||
Total Assets |
|
$ |
58,606.4 |
|
$ |
57,947.6 |
|
$ |
58,932.2 |
|
|
|
|
|
|
| |||
Liabilities and Stockholders Equity |
|
|
|
|
|
| |||
|
|
|
|
|
|
| |||
Liabilities |
|
|
|
|
|
| |||
Short-term borrowings |
|
$ |
7,362.1 |
|
$ |
8,426.6 |
|
$ |
9,347.9 |
Short-term securitization borrowings |
|
5,728.9 |
|
4,590.0 |
|
4,595.4 | |||
Payables to unconsolidated affiliates |
|
74.2 |
|
80.6 |
|
73.7 | |||
Accounts payable and accrued expenses |
|
6,799.5 |
|
7,311.5 |
|
7,235.8 | |||
Deferred income taxes |
|
172.3 |
|
160.8 |
|
150.9 | |||
Long-term borrowings |
|
24,128.4 |
|
23,832.8 |
|
23,200.9 | |||
Retirement benefits and other liabilities |
|
6,886.9 |
|
6,787.7 |
|
6,602.6 | |||
Total liabilities |
|
51,152.3 |
|
51,190.0 |
|
51,207.2 | |||
|
|
|
|
|
|
| |||
Redeemable noncontrolling interest |
|
14.4 |
|
|
|
| |||
|
|
|
|
|
|
| |||
Stockholders Equity |
|
|
|
|
|
| |||
Total Deere & Company stockholders equity |
|
7,428.4 |
|
6,743.4 |
|
7,723.1 | |||
Noncontrolling interests |
|
11.3 |
|
14.2 |
|
1.9 | |||
Total stockholders equity |
|
7,439.7 |
|
6,757.6 |
|
7,725.0 | |||
Total Liabilities and Stockholders Equity |
|
$ |
58,606.4 |
|
$ |
57,947.6 |
|
$ |
58,932.2 |
See Condensed Notes to Interim Consolidated Financial Statements.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended July 31, 2016 and 2015
(In millions of dollars) Unaudited
|
|
2016 |
|
2015 |
| ||
Cash Flows from Operating Activities |
|
|
|
|
| ||
Net income |
|
$ |
1,237.0 |
|
$ |
1,589.4 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Provision for credit losses |
|
70.3 |
|
35.4 |
| ||
Provision for depreciation and amortization |
|
1,158.4 |
|
1,029.2 |
| ||
Impairment charges |
|
49.7 |
|
|
| ||
Share-based compensation expense |
|
51.8 |
|
47.7 |
| ||
Undistributed earnings of unconsolidated affiliates |
|
.7 |
|
(5.2 |
) | ||
Provision for deferred income taxes |
|
155.5 |
|
73.0 |
| ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Trade, notes and financing receivables related to sales |
|
(588.1) |
|
(598.0 |
) | ||
Insurance receivables |
|
|
|
333.4 |
| ||
Inventories |
|
(380.1) |
|
(941.5 |
) | ||
Accounts payable and accrued expenses |
|
(461.9) |
|
(594.6 |
) | ||
Accrued income taxes payable/receivable |
|
78.3 |
|
(58.1 |
) | ||
Retirement benefits |
|
145.8 |
|
293.4 |
| ||
Other |
|
(197.5) |
|
(12.3 |
) | ||
Net cash provided by operating activities |
|
1,319.9 |
|
1,191.8 |
| ||
|
|
|
|
|
| ||
Cash Flows from Investing Activities |
|
|
|
|
| ||
Collections of receivables (excluding receivables related to sales) |
|
11,312.7 |
|
11,517.9 |
| ||
Proceeds from maturities and sales of marketable securities |
|
139.2 |
|
833.0 |
| ||
Proceeds from sales of equipment on operating leases |
|
916.6 |
|
773.7 |
| ||
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) |
|
(10,423.4) |
|
(11,162.9 |
) | ||
Purchases of marketable securities |
|
(149.9) |
|
(100.8 |
) | ||
Purchases of property and equipment |
|
(387.0) |
|
(461.4 |
) | ||
Cost of equipment on operating leases acquired |
|
(1,730.6) |
|
(1,355.7 |
) | ||
Acquisitions of businesses, net of cash acquired |
|
(198.9) |
|
|
| ||
Other |
|
77.8 |
|
(23.4 |
) | ||
Net cash provided by (used for) investing activities |
|
(362.4) |
|
169.6 |
| ||
|
|
|
|
|
| ||
Cash Flows from Financing Activities |
|
|
|
|
| ||
Increase (decrease) in total short-term borrowings |
|
(133.7) |
|
1,805.2 |
| ||
Proceeds from long-term borrowings |
|
4,115.2 |
|
3,639.8 |
| ||
Payments of long-term borrowings |
|
(3,977.3) |
|
(3,980.1 |
) | ||
Proceeds from issuance of common stock |
|
17.5 |
|
170.4 |
| ||
Repurchases of common stock |
|
(205.4) |
|
(1,833.9 |
) | ||
Dividends paid |
|
(572.6) |
|
(617.9 |
) | ||
Excess tax benefits from share-based compensation |
|
3.8 |
|
18.5 |
| ||
Other |
|
(53.6) |
|
(56.9 |
) | ||
Net cash used for financing activities |
|
(806.1) |
|
(854.9 |
) | ||
|
|
|
|
|
| ||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
7.4 |
|
(162.7 |
) | ||
|
|
|
|
|
| ||
Net Increase in Cash and Cash Equivalents |
|
158.8 |
|
343.8 |
| ||
Cash and Cash Equivalents at Beginning of Period |
|
4,162.2 |
|
3,787.0 |
| ||
Cash and Cash Equivalents at End of Period |
|
$ |
4,321.0 |
|
$ |
4,130.8 |
|
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, LLC (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 an approximately 24 percent ownership interest in SiteOne.
(2) Dividends declared and paid on a per share basis were as follows:
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
July 31 |
|
July 31 |
| ||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Dividends declared |
|
$ |
.60 |
|
$ |
.60 |
|
$ |
1.80 |
|
$ |
1.80 |
|
Dividends paid |
|
$ |
.60 |
|
$ |
.60 |
|
$ |
1.80 |
|
$ |
1.80 |
|
(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 July 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES | ||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 | ||||
Net Sales and Revenues |
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
5,861.4 |
|
$ |
6,839.5 |
|
|
|
| ||
Finance and interest income |
|
15.1 |
|
20.8 |
|
$ |
691.0 |
|
$ |
644.3 | ||
Other income |
|
216.9 |
|
140.8 |
|
27.6 |
|
51.2 | ||||
Total |
|
6,093.4 |
|
7,001.1 |
|
718.6 |
|
695.5 | ||||
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
| ||||
Cost of sales |
|
4,494.6 |
|
5,358.4 |
|
|
|
| ||||
Research and development expenses |
|
338.8 |
|
346.8 |
|
|
|
| ||||
Selling, administrative and general expenses |
|
573.1 |
|
633.5 |
|
137.6 |
|
123.9 | ||||
Interest expense |
|
65.9 |
|
69.6 |
|
140.8 |
|
113.6 | ||||
Interest compensation to Financial Services |
|
61.6 |
|
56.7 |
|
|
|
| ||||
Other operating expenses |
|
45.6 |
|
36.3 |
|
248.9 |
|
219.3 | ||||
Total |
|
5,579.6 |
|
6,501.3 |
|
527.3 |
|
456.8 | ||||
|
|
|
|
|
|
|
|
| ||||
Income of Consolidated Group before Income Taxes |
|
513.8 |
|
499.8 |
|
191.3 |
|
238.7 | ||||
Provision for income taxes |
|
160.9 |
|
155.5 |
|
65.6 |
|
85.5 | ||||
Income of Consolidated Group |
|
352.9 |
|
344.3 |
|
125.7 |
|
153.2 | ||||
|
|
|
|
|
|
|
|
| ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
| ||||
Financial Services |
|
125.9 |
|
153.4 |
|
.2 |
|
.2 | ||||
Other |
|
9.8 |
|
14.0 |
|
|
|
| ||||
Total |
|
135.7 |
|
167.4 |
|
.2 |
|
.2 | ||||
Net Income |
|
488.6 |
|
511.7 |
|
125.9 |
|
153.4 | ||||
Less: Net income (loss) attributable to noncontrolling interests |
|
(.2) |
|
.1 |
|
|
|
| ||||
Net Income Attributable to Deere & Company |
|
$ |
488.8 |
|
$ |
511.6 |
|
$ |
125.9 |
|
$ |
153.4 |
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF INCOME
For the Nine Months Ended July 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES | ||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 | ||||
Net Sales and Revenues |
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
17,737.1 |
|
$ |
19,843.1 |
|
|
|
| ||
Finance and interest income |
|
45.8 |
|
58.8 |
|
$ |
1,988.9 |
|
$ |
1,900.9 | ||
Other income |
|
497.1 |
|
451.2 |
|
143.9 |
|
201.4 | ||||
Total |
|
18,280.0 |
|
20,353.1 |
|
2,132.8 |
|
2,102.3 | ||||
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
| ||||
Cost of sales |
|
13,866.7 |
|
15,474.2 |
|
|
|
| ||||
Research and development expenses |
|
1,003.1 |
|
1,021.1 |
|
|
|
| ||||
Selling, administrative and general expenses |
|
1,642.6 |
|
1,794.1 |
|
379.6 |
|
366.9 | ||||
Interest expense |
|
195.7 |
|
208.0 |
|
386.7 |
|
346.0 | ||||
Interest compensation to Financial Services |
|
168.2 |
|
156.0 |
|
|
|
| ||||
Other operating expenses |
|
158.2 |
|
112.6 |
|
822.4 |
|
653.3 | ||||
Total |
|
17,034.5 |
|
18,766.0 |
|
1,588.7 |
|
1,366.2 | ||||
|
|
|
|
|
|
|
|
| ||||
Income of Consolidated Group before Income Taxes |
|
1,245.5 |
|
1,587.1 |
|
544.1 |
|
736.1 | ||||
Provision for income taxes |
|
372.5 |
|
478.5 |
|
187.4 |
|
257.1 | ||||
Income of Consolidated Group |
|
873.0 |
|
1,108.6 |
|
356.7 |
|
479.0 | ||||
|
|
|
|
|
|
|
|
| ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
| ||||
Financial Services |
|
357.9 |
|
480.0 |
|
1.2 |
|
1.0 | ||||
Other |
|
6.1 |
|
.8 |
|
|
|
| ||||
Total |
|
364.0 |
|
480.8 |
|
1.2 |
|
1.0 | ||||
Net Income |
|
1,237.0 |
|
1,589.4 |
|
357.9 |
|
480.0 | ||||
Less: Net income (loss) attributable to noncontrolling interests |
|
(1.6) |
|
.6 |
|
|
|
| ||||
Net Income Attributable to Deere & Company |
|
$ |
1,238.6 |
|
$ |
1,588.8 |
|
$ |
357.9 |
|
$ |
480.0 |
|
|
|
|
|
|
|
|
|
* 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)
CONDENSED BALANCE SHEET
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
| ||||||||||||||
|
|
July 31 |
|
October 31 |
|
July 31 |
|
July 31 |
|
October 31 |
|
July 31 |
| ||||||
|
|
2016 |
|
2015 |
|
2015 |
|
2016 |
|
2015 |
|
2015 |
| ||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
|
$ |
3,134.9 |
|
$ |
2,900.0 |
|
$ |
2,907.1 |
|
$ |
1,186.1 |
|
$ |
1,262.2 |
|
$ |
1,223.7 |
|
Marketable securities |
|
40.2 |
|
47.7 |
|
47.4 |
|
428.7 |
|
389.7 |
|
373.7 |
| ||||||
Receivables from unconsolidated subsidiaries and affiliates |
|
2,429.5 |
|
2,428.7 |
|
2,941.5 |
|
|
|
|
|
|
| ||||||
Trade accounts and notes receivable - net |
|
535.4 |
|
485.2 |
|
581.2 |
|
4,560.6 |
|
3,553.1 |
|
4,780.9 |
| ||||||
Financing receivables - net |
|
.4 |
|
.9 |
|
4.7 |
|
22,594.4 |
|
24,808.1 |
|
24,968.7 |
| ||||||
Financing receivables securitized - net |
|
|
|
|
|
|
|
5,947.4 |
|
4,834.6 |
|
4,737.8 |
| ||||||
Other receivables |
|
726.6 |
|
849.5 |
|
779.2 |
|
103.0 |
|
152.9 |
|
76.2 |
| ||||||
Equipment on operating leases - net |
|
|
|
|
|
|
|
5,602.7 |
|
4,970.4 |
|
4,426.0 |
| ||||||
Inventories |
|
3,851.3 |
|
3,817.0 |
|
4,319.0 |
|
|
|
|
|
|
| ||||||
Property and equipment - net |
|
4,994.7 |
|
5,126.2 |
|
5,072.4 |
|
52.6 |
|
55.3 |
|
54.0 |
| ||||||
Investments in unconsolidated subsidiaries and affiliates |
|
4,752.9 |
|
4,817.6 |
|
4,923.8 |
|
11.6 |
|
10.5 |
|
10.2 |
| ||||||
Goodwill |
|
823.6 |
|
726.0 |
|
715.9 |
|
|
|
|
|
|
| ||||||
Other intangible assets - net |
|
109.5 |
|
63.6 |
|
57.8 |
|
|
|
|
|
|
| ||||||
Retirement benefits |
|
319.0 |
|
211.9 |
|
335.5 |
|
21.8 |
|
25.0 |
|
27.1 |
| ||||||
Deferred income taxes |
|
3,173.2 |
|
3,092.0 |
|
3,028.6 |
|
71.9 |
|
67.9 |
|
61.6 |
| ||||||
Other assets |
|
860.1 |
|
807.3 |
|
859.4 |
|
1,045.8 |
|
779.1 |
|
730.0 |
| ||||||
Total Assets |
|
$ |
25,751.3 |
|
$ |
25,373.6 |
|
$ |
26,573.5 |
|
$ |
41,626.6 |
|
$ |
40,908.8 |
|
$ |
41,469.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Short-term borrowings |
|
$ |
261.7 |
|
$ |
464.3 |
|
$ |
650.8 |
|
$ |
7,100.4 |
|
$ |
7,962.3 |
|
$ |
8,697.1 |
|
Short-term securitization borrowings |
|
|
|
|
|
|
|
5,728.9 |
|
4,590.0 |
|
4,595.4 |
| ||||||
Payables to unconsolidated subsidiaries and affiliates |
|
74.2 |
|
80.6 |
|
73.7 |
|
2,410.7 |
|
2,395.4 |
|
2,898.3 |
| ||||||
Accounts payable and accrued expenses |
|
6,470.8 |
|
6,801.2 |
|
7,025.1 |
|
1,521.0 |
|
1,511.2 |
|
1,387.3 |
| ||||||
Deferred income taxes |
|
97.3 |
|
86.8 |
|
79.9 |
|
707.5 |
|
466.6 |
|
456.2 |
| ||||||
Long-term borrowings |
|
4,578.6 |
|
4,460.6 |
|
4,475.4 |
|
19,549.8 |
|
19,372.2 |
|
18,725.5 |
| ||||||
Retirement benefits and other liabilities |
|
6,814.6 |
|
6,722.5 |
|
6,543.6 |
|
90.0 |
|
86.4 |
|
86.7 |
| ||||||
Total liabilities |
|
18,297.2 |
|
18,616.0 |
|
18,848.5 |
|
37,108.3 |
|
36,384.1 |
|
36,846.5 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Redeemable noncontrolling interest |
|
14.4 |
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total Deere & Company stockholders equity |
|
7,428.4 |
|
6,743.4 |
|
7,723.1 |
|
4,518.3 |
|
4,524.7 |
|
4,623.4 |
| ||||||
Noncontrolling interests |
|
11.3 |
|
14.2 |
|
1.9 |
|
|
|
|
|
|
| ||||||
Total stockholders equity |
|
7,439.7 |
|
6,757.6 |
|
7,725.0 |
|
4,518.3 |
|
4,524.7 |
|
4,623.4 |
| ||||||
Total Liabilities and Stockholders Equity |
|
$ |
25,751.3 |
|
$ |
25,373.6 |
|
$ |
26,573.5 |
|
$ |
41,626.6 |
|
$ |
40,908.8 |
|
$ |
41,469.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF CASH FLOWS
For the Nine Months Ended July 31, 2016 and 2015
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES | ||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 | ||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
1,237.0 |
|
$ |
1,589.4 |
|
$ |
357.9 |
|
$ |
480.0 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
| ||||
Provision for credit losses |
|
5.3 |
|
2.1 |
|
65.0 |
|
33.3 | ||||
Provision for depreciation and amortization |
|
613.7 |
|
605.6 |
|
615.5 |
|
503.2 | ||||
Impairment charges |
|
|
|
|
|
49.7 |
|
| ||||
Undistributed earnings of unconsolidated subsidiaries and affiliates |
|
55.9 |
|
(4.9) |
|
(1.0) |
|
(.8) | ||||
Provision (credit) for deferred income taxes |
|
(77.0) |
|
(39.6) |
|
232.5 |
|
112.6 | ||||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
| ||||
Trade receivables |
|
(57.5) |
|
37.2 |
|
|
|
| ||||
Insurance receivables |
|
|
|
|
|
|
|
333.4 | ||||
Inventories |
|
59.5 |
|
(473.2) |
|
|
|
| ||||
Accounts payable and accrued expenses |
|
(285.6) |
|
(113.4) |
|
7.8 |
|
(322.3) | ||||
Accrued income taxes payable/receivable |
|
72.4 |
|
(82.9) |
|
5.9 |
|
24.8 | ||||
Retirement benefits |
|
139.6 |
|
282.1 |
|
6.2 |
|
11.3 | ||||
Other |
|
(118.8) |
|
145.8 |
|
56.8 |
|
(25.5) | ||||
Net cash provided by operating activities |
|
1,644.5 |
|
1,948.2 |
|
1,396.3 |
|
1,150.0 | ||||
|
|
|
|
|
|
|
|
| ||||
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
| ||||
Collections of receivables (excluding trade and wholesale) |
|
|
|
|
|
12,208.1 |
|
12,516.5 | ||||
Proceeds from maturities and sales of marketable securities |
|
75.6 |
|
700.1 |
|
63.6 |
|
132.9 | ||||
Proceeds from sales of equipment on operating leases |
|
|
|
|
|
916.6 |
|
773.7 | ||||
Proceeds from sales of business and unconsolidated affiliates, net of cash sold |
|
81.1 |
|
|
|
|
|
149.2 | ||||
Cost of receivables acquired (excluding trade and wholesale) |
|
|
|
|
|
(11,236.7) |
|
(12,063.2) | ||||
Purchases of marketable securities |
|
(61.0) |
|
(49.1) |
|
(88.9) |
|
(51.7) | ||||
Purchases of property and equipment |
|
(385.4) |
|
(458.1) |
|
(1.6) |
|
(3.3) | ||||
Cost of equipment on operating leases acquired |
|
|
|
|
|
(2,324.8) |
|
(1,988.6) | ||||
Increase in trade and wholesale receivables |
|
|
|
|
|
(786.5) |
|
(924.0) | ||||
Acquisitions of businesses, net of cash acquired |
|
(198.9) |
|
|
|
|
|
| ||||
Other |
|
(24.2) |
|
2.2 |
|
70.7 |
|
(22.1) | ||||
Net cash provided by (used for) investing activities |
|
(512.8) |
|
195.1 |
|
(1,179.5) |
|
(1,480.6) | ||||
|
|
|
|
|
|
|
|
| ||||
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
| ||||
Increase (decrease) in total short-term borrowings |
|
(170.0) |
|
318.5 |
|
36.3 |
|
1,486.7 | ||||
Change in intercompany receivables/payables |
|
(12.1) |
|
447.2 |
|
12.1 |
|
(447.2) | ||||
Proceeds from long-term borrowings |
|
139.4 |
|
6.7 |
|
3,975.8 |
|
3,633.1 | ||||
Payments of long-term borrowings |
|
(70.3) |
|
(147.1) |
|
(3,907.0) |
|
(3,833.0) | ||||
Proceeds from issuance of common stock |
|
17.5 |
|
170.4 |
|
|
|
| ||||
Repurchases of common stock |
|
(205.4) |
|
(1,833.9) |
|
|
|
| ||||
Dividends paid |
|
(572.6) |
|
(617.9) |
|
(412.1) |
|
(479.6) | ||||
Excess tax benefits from share-based compensation |
|
3.8 |
|
18.5 |
|
|
|
| ||||
Other |
|
(28.7) |
|
(38.1) |
|
(3.8) |
|
9.5 | ||||
Net cash provided by (used for) financing activities |
|
(898.4) |
|
(1,675.7) |
|
(298.7) |
|
369.5 | ||||
|
|
|
|
|
|
|
|
| ||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
1.6 |
|
(129.7) |
|
5.8 |
|
(33.0) | ||||
|
|
|
|
|
|
|
|
| ||||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
234.9 |
|
337.9 |
|
(76.1) |
|
5.9 | ||||
Cash and Cash Equivalents at Beginning of Period |
|
2,900.0 |
|
2,569.2 |
|
1,262.2 |
|
1,217.8 | ||||
Cash and Cash Equivalents at End of Period |
|
$ |
3,134.9 |
|
$ |
2,907.1 |
|
$ |
1,186.1 |
|
$ |
1,223.7 |
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
|
Deere & Company |
|
Exhibit 99.2 |
|
Other Financial Information |
|
(Furnished herewith) |
For the Nine Months Ended July 31, |
|
Equipment Operations |
Agriculture and Turf |
Construction and Forestry | |||||||||||||||
Dollars in millions |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| ||||||
Net Sales |
|
$ |
17,737 |
|
$ |
19,843 |
|
$ |
14,046 |
|
$ |
15,155 |
|
$ |
3,691 |
|
$ |
4,688 |
|
Average Identifiable Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
With Inventories at LIFO |
|
$ |
11,918 |
|
$ |
12,720 |
|
$ |
8,750 |
|
$ |
9,260 |
|
$ |
3,168 |
|
$ |
3,460 |
|
With Inventories at Standard Cost |
|
$ |
13,188 |
|
$ |
14,073 |
|
$ |
9,794 |
|
$ |
10,383 |
|
$ |
3,394 |
|
$ |
3,690 |
|
Operating Profit |
|
$ |
1,526 |
|
$ |
1,842 |
|
$ |
1,329 |
|
$ |
1,378 |
|
$ |
197 |
|
$ |
464 |
|
Percent of Net Sales |
|
8.6 |
% |
9.3 |
% |
9.5 |
% |
9.1 |
% |
5.3 |
% |
9.9 |
% | ||||||
Operating Return on Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
With Inventories at LIFO |
|
12.8 |
% |
14.5 |
% |
15.2 |
% |
14.9 |
% |
6.2 |
% |
13.4 |
% | ||||||
With Inventories at Standard Cost |
|
11.6 |
% |
13.1 |
% |
13.6 |
% |
13.3 |
% |
5.8 |
% |
12.6 |
% | ||||||
SVA Cost of Assets |
|
$ |
(1,187) |
|
$ |
(1,266) |
|
$ |
(881) |
|
$ |
(934) |
|
$ |
(306) |
|
$ |
(332) |
|
SVA |
|
$ |
339 |
|
$ |
576 |
|
$ |
448 |
|
$ |
444 |
|
$ |
(109) |
|
$ |
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
For the Nine Months Ended July 31, |
|
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Dollars in millions |
|
2016 |
2015 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Income Attributable to Deere & Company |
|
$ |
358 |
|
$ |
480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity |
|
$ |
4,481 |
|
$ |
4,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Equity |
|
|
8.0 |
% |
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit |
|
$ |
545 |
|
$ |
737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity |
|
$ |
4,481 |
|
$ |
4,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Equity |
|
$ |
(511) |
|
$ |
(540) |
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA |
|
$ |
34 |
|
$ |
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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) ThirdQuarter 2016 Earnings Conference Call 19 August 2016 24
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 2| 3rd Quarter 2016 Earnings Conference Call
Third Quarter Overview 26 3| 3rd Quarter 2016 Earnings Conference Call (in millions of dollars except per share amounts) Q3 2016 Q3 2015 Change Net Sales and Revenues $6,724 $7,594 -11% Net Sales $5,861 $6,840 -14% Net Income Attributable to Deere & Company $489 $512 -4% Diluted EPS $1.55 $1.53 +1%
Third Quarter Overview Net Sales Equipment operations net 2015 sales: Down 14% in Q3 2016 vs. Q3 Price realization: +2 points Currency translation: (2) points 27 4| 3rd Quarter 2016 Earnings Conference Call
Worldwide Agriculture & Turf Third Quarter Overview *Q3 2016 operating Favorable profit impacted by: Unfavorable Price Realization Gain on sale of partial Production Costs Shipment Volumes Foreign-Currency Exchange interest in SiteOne Selling, Administrative & General Expenses 28 5 | 3rd Quarter 2016 Earnings Conference Call (in millions of dollars) Q3 2016 Q3 2015 Change Net Sales $4,704 $5,308 -11% Operating Profit* $571 $472 +21%
Global Agriculture Tailwinds Still Robust Global GDP Industry Global Population 10% 10 World Advanced Emerging 8% 8 6% 6 4% 4 2% 2 0% 0 -2% -4% Urbanization 8 6 4 2 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Source: IMF, July 2016; United Nations, 2014 and 2015 29 6| 3rd Quarter 2016 Earnings Conference Call Annual Change Billions 1990 1995 2000 2005 2010 2015 2020 Billions 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Urban Population Rural Population Less developed regions (excluding LDCs) Least developed countries More developed regions
Production/Consumption Balance Stable But Still Sensitive Global Grains 2,500 2,300 2,100 1,900 1,700 Production Consumption Source: USDA, August 2016 30 7| 3rd Quarter 2016 Earnings Conference Call Million Metric Tons 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17F
Production/Consumption Balance Stable But Still Sensitive Global Grains 650 30% 600 550 25% 500 20% 450 400 15% 350 10% 300 Ending Stocks S/U Ratio Source: USDA, August 2016 31 8| 3rd Quarter 2016 Earnings Conference Call Million Metric Tons 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17F 10 Yr. A vg. = 21%
Production/Consumption Balance Stable But Still Sensitive 4.35 4.10 3.85 Jan Apr avg. = $3.65 3.60 3.35 3.10 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 .S. Soybean Prices 12.25 11.50 10.75 10.00 9.25 8.50 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Source: Bloomberg, 12 August 2016 32 9| 3rd Quarter 2016 Earnings Conference Call $ per Bushel $ per Bushel U Jan Apr avg. = $9.01 U.S. Corn Prices
2016 Increased Planted Acres Explained by Pared but Positive Farmer Margins United States Market prices Farm program subsidies Revenue insurance Production cost declines Other Exporting Countries Currency values Policy shifts 33 10 | 3rd Quarter 2016 Earnings Conference Call
U.S. Farm Sector Strong Balance Sheet 30% 3,000 2,500 25% 2,000 20% 1,500 15% 10% 1,000 500 5% 0 0% 1960 1970 1980 1990 2000 2010 2016F Farm Sector Debt Farm Sector Equity Debt/equity ratio Debt/asset ratio Source: USDA ERS, February 2016 34 11 | 3rd Quarter 2016 Earnings Conference Call $ Billions (Nominal) 2011 = $2T 2000 = $1T
Summary Observations Global Ag Sector Supplies fully adequate to meet needs Risk premia recently erased from grain markets Planted acres: Minimal farmer response to lower prices Aberrational factors at play Fourth consecutive favorable global weather year nearing completion Barring adverse weather events, little near-term improvement in ag market conditions anticipated Long-term drivers (population and income growth, urbanization) still intact 35 12 | 3rd Quarter 2016 Earnings Conference Call
Summary Observations U.S. Ag Sector Farmer financial conditions remain solid Farmer margins explain higher planted acres despite lower prices Production cost decreases Yield expectations Farm bill subsidies Revenue insurance risk reduction 36 13 | 3rd Quarter 2016 Earnings Conference Call
What to Watch Short Term Weather: Now the major market disruptor, outlook still one year at a time Next: Southern Hemisphere planting/growing season Then: Attention returns to Northern Hemisphere spring (2017) conditions Longer Term Disruptors Geopolitical hot spots: Potential drag on GDP growth U.S. dollar relative to other currency values Fed actions, U.S. politics, central bank behavior China economy, Brexit fallout, EU Nationalism: Future of globalization 37 14 | 3rd Quarter 2016 Earnings Conference Call
Agriculture & Turf Retail Sales Industry Outlook Fiscal 2016 Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 38 15 | 3rd Quarter 2016 Earnings Conference Call 2016 Forecast Previous Forecast U.S. and Canada Ag Down 15-20% No change between Previous Forecast and Current Forecast EU 28 Ag Flat to down 5% South America Ag (Tractors and Combines) Down 15-20% Asia Ag Flat to down slightly U.S. and Canada Turf and Utility Equipment Flat to up 5%
Worldwide Agriculture & Turf Deere & Company Outlook Fiscal Year 2016 Forecast Net sales: Down ~ 8% Currency translation: ~ (2) points forecast No change from previous Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 39 16 | 3rd Quarter 2016 Earnings Conference Call
Worldwide Construction & Forestry Third Quarter Overview *Q3 2016 operating Favorable profit impacted by: Unfavorable Production Costs Selling, Administrative Price Realization Shipment Volumes Product Mix & General Expenses 40 17 | 3rd Quarter 2016 Earnings Conference Call (in millions of dollars) Q3 2016 Q3 2015 Change Net Sales $1,157 $1,532 -24% Operating Profit* $54 $129 -58%
Worldwide Construction & Forestry Deere & Company Outlook Fiscal Year 2016 Forecast Net sales: Down ~ 18% Currency translation: Previous forecast: Down ~ (1) point ~ 13% Currency translation: ~ (1) point Forecast Source: IHS Global Insight, Calendar Year Estimates, July 2016 * Change from prior year in real dollars Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 41 18 | 3rd Quarter 2016 Earnings Conference Call U.S. Economic Indicators 2016 Forecast Previous GDP Growth (annual percentage rate)* +1.9% +2.1% Housing Starts (thousands) 1,181 1,161 Total Construction Investment (annual percentage rate)* +2.8% +3.2% Government Construction Investment (annual percentage rate)* +3.6% +4.1%
Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 2.0% 1.5% 1.0% 0.5% 0.0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016* * Annualized provision for credit losses as of 31 July 2016 42 19 | 3rd Quarter 2016 Earnings Conference Call 0.24% 15 Year Average 10 Year Average
Worldwide Financial Services Third Quarter 2016 Net income attributable to Deere $126 million in Q3 2016 vs. $153 & Company million in Q3 2015 Fiscal Year 2016 Forecast Net income attributable to Deere & Company of ~ $480 million No change from previous forecast Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 43 20 | 3rd Quarter 2016 Earnings Conference Call
Consolidated Trade Receivables & Inventory * Change at 31 July 2016 vs. 31 July 2015 ** Forecasted change at 31 October 2016 vs. 31 October 2015 Note: Before the sale of receivables to John Deere Financial Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 44 21 | 3rd Quarter 2016 Earnings Conference Call (in millions of dollars) Q3 2016* Actual 2016** Forecast 2016** Previous Forecast A&T $137 $100 $100 C&F $627 $400 $300 Total, as reported $764 $500 $400 Total, constant exchange $718 $550 $475
Cost of Sales as a Percent Equipment Operations of Net Sales Third Quarter 2016 76.7% Fiscal Year 2016 Forecast ~ 78.7% Deere & Company Forecast as of 19 August 2016 45 22 | 3rd Quarter 2016 Earnings Conference Call
Research & Development Equipment Operations Expense Third Quarter 2016 Down 2% vs. Q3 2015 Fiscal Year 2016 Forecast Down ~ 1% vs. FY 2015 Currency translation: ~ (1) point No change from previous forecast Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 46 23 | 3rd Quarter 2016 Earnings Conference Call
Selling, Administrative Equipment Operations & General Expense Third Quarter 2016 Down 10% vs. Q3 2015 Incentive compensation: Commissions paid to dealers: Pension/OPEB: ~ ~ ~ ~ (4) (2) (2) (1) points points points point Currency translation: 47 24 | 3rd Quarter 2016 Earnings Conference Call
Selling, Administrative Equipment Operations & General Expense Fiscal Year 2016 Forecast Down ~ 5% vs. FY 2015 Incentive compensation: Currency translation: Pension/OPEB: ~ ~ ~ (2) (2) (2) points points points Previous forecast: Down ~ 4% vs. FY 2015 Incentive compensation: Currency translation: Pension/OPEB: ~ ~ ~ (3) (2) (2) points points points Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 48 25 | 3rd Quarter 2016 Earnings Conference Call
Pension and OPEB Expense Third Quarter 2016 Down $53 million vs. Q3 2015 Fiscal Year 2016 Forecast Down ~ $210 million vs. FY 2015 Previous forecast: Down ~ $200 million vs. FY 2015 Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 49 26 | 3rd Quarter 2016 Earnings Conference Call
Income Taxes Equipment Operations Third Quarter 2016 Effective tax rate: 31% Fiscal Year 2016 Forecast Effective tax rate: 29-31% Previous forecast: 31-33% Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 50 27 | 3rd Quarter 2016 Earnings Conference Call
Strong Operating Performance Equipment Operations Fiscal Year Cash Flows from Operations $4.7 $4.5 2008 2009 2010 2011 2012 2013 2014 2015 2016 Forecast* * No change from previous forecast Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 51 28 | 3rd Quarter 2016 Earnings Conference Call $ Billions $3.0$2.9 $3.1 $2.4$2.5 ~ $2.1 $1.4
2016 Company Outlook Fourth Quarter 2016 Forecast Net sales: Down ~ 8% vs. Q4 2015 Price realization: ~ ~ +1 +1 point point Currency translation: Deere & Company Forecast as of 19 August 2016 52 29 | 3rd Quarter 2016 Earnings Conference Call
2016 Company Outlook Fiscal Year 2016 Forecast Net sales: Down ~ 10% Price realization: Currency translation: Previous forecast: Down Price realization: Currency translation: vs. FY 2015 ~ +1 point ~ (2) points FY 2015 ~ +1 point ~ (2) points ~ 9% vs. Net income attributable to Deere & Company of ~ $1.35 billion Previous forecast ~ $1.2 billion Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 53 30 | 3rd Quarter 2016 Earnings Conference Call
Appendix 54 31 | 3rd Quarter 2016 Earnings Conference Call
The John Deere Strategy OUR PURPOSE: Committed to those linked to the land GlobalAgricultural Globally Diverse Construction Equipment Solutions $508 Sales (2018@ Mid-Cycle) 12% Operating Margins (@Mid-Cycle) 2.5 Asset Turns (2018@ Mid-Cycle) Equipment Solutions Preeminence INTEGRATED ENTERPRISE Leveraging the strengths and unique capabilities of three types of businesses T Global Growth Businesses Complementary Businesses Supporting Businesses Deep Customer Understanding Deliver Customer Value Distribution System Exceptional Operating Performance MEASURES Delivering results today, within each business,while building for the future Performance Health C) JOHN DEERE 55 32 I 3rd Quarter 2016 Earnings Conference Call Realizing sustainable SVA growth through global expansion OUR ASPIRATIONS
Deere Use-of-Cash Priorities 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 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 56 33 | 3rd Quarter 2016 Earnings Conference Call Share Repurchase Common Stock Dividend Fund Operating and Growth Needs Committed to A Rating Cash from Operations
Sources and Uses of Cash Fiscal 20042015 Equipment Operations $39,000 $36,000 $953 $33,000 $30,000 $27,000 $24,000 $21,000 $1,297 $18,000 $15,000 $12,000 $9,000 $6,000 operations eholders $3,000 $0 (1) Other Beginning Cash & Cash Equivalents (10/31/03) Cash From Operations Divestitures, net of Acquisitions Capital Expenditures Investment in Net Change in Dividends Share Repurchase, net of Common Stock Issuances Ending Cash & Cash Equivalents (10/31/15) Financial Services Debt and Intercompany Balances (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 Source: Deere & Company SEC filings 57 34 | 3rd Quarter 2016 Earnings Conference Call $ Millions = Source of Cash $9,419 = Use of Cash $31,582 $2,239 $6,323 $14,257 $387 ~65% of cash from $4,287 returned to shar $2,900
Deere Quarterly Dividends Declared* Q1 2003 Q3 2016 $0.70 $0.60 $0.50 $0.40 $0.30 revised John Deere $0.20 $0.14 $0.10 $0.00 2003 2004 2005 2006 2007 2008 20092010 2011 2012 2013 2014 2015 2016 * Adjusted for 2 for 1 stock split on 26 November 2007 ** See revised John Deere Strategy in Appendix 58 35 | 3rd Quarter 2016 Earnings Conference Call $0.60 $0.51 $0.46 $0.41 $0.28 $0.35 $0.30 $0.25 $0.22 $0.20 Dividend raised 114% since launch of the $0.16 $0.11 Strategy in 2010**
Share Repurchase As Part of Publicly Announced Plans Cumulative cost of repurchases 2004-3Q2016: Amount remaining on December 2013 authorization of $8 billion: 31 July 2016 period ended basic shares: 3Q2016 average diluted shares: Shares repurchased 2004-3Q2016: Average repurchase price 2004-3Q2016: ~ ~ ~ ~ ~ $16.4 billion $3.3 billion 314.4 million 315.7 million 245.0 million $66.96 40.0 $3.0 35.0 30.0 25.0 20.0 $2.5 $2.0 $1.5 15.0 10.0 5.0 0.0 $1.0 $0.5 $0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Shares Repurchased Amount Spent * All shares adjusted for two-for-one stock split effective 26 November 2007 59 36 | 3rd Quarter 2016 Earnings Conference Call $ Billions Shares Repurchased* (in millions) ~37% Net Share Reduction 2004-3Q2016
Other Information Equipment Operations Fiscal Year 2016 Forecast Capital Expenditures: ~ $650 million Previous forecast:~ $725 million Depreciation and Amortization: ~ $800 million Previous forecast:~ $825 million Pension/OPEB Contributions: ~ $105 Previous forecast:~ $100 million million Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 60 37 | 3rd Quarter 2016 Earnings Conference Call
Economic Update EU 28 Fiscal 2016 Continued modest economic growth; increased to non-economic risks uncertainty due Arable income remains under pressure Continued weakness in dairy sector Beef prices remain above average; pork prices at low levels Deere & Company Forecast as of 19 August 2016 61 38 | 3rd Quarter 2016 Earnings Conference Call
Economic Update Other Selected Markets Fiscal 2016 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 Monsoon above average, seasons following two consecutive below normal Deere & Company Forecast as of 19 August 2016 62 39 | 3rd Quarter 2016 Earnings Conference Call
Crop Value of Agricultural Production Brazil Expected to decrease ~ 2% in 2016 over prior season Crop Value of Agricultural Production 2015 Mix by Crop $120 10% $100 17% $80 4% $60 29% $40 $20 Soybeans Sugarcane Corn Other Grains $0 2004 2006 2008 2010 2012 2014 2016F Source: IHS Global Insight, May 2016 63 40 | 3rd Quarter 2016 Earnings Conference Call US$ Billions
Eligible Brazil Finance Rates for Agricultural Equipment 12% 10% 8% 6% 4% 2% 0% 2011 2012 2013 2014 2015* 2016** All Farmers Farmers with Annual Revenues <R$90M Farmers with Annual Revenues >R$90M * Moderfrota suspended September November 2015 ** Rate change effective July 2016 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 64 41 | 3rd Quarter 2016 Earnings Conference Call
U.S. Farm Commodity Prices Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 65 42 | 3rd Quarter 2016 Earnings Conference Call (dollars per bushel, except cotton, which is dollars per pound) 2014/15 2015/16 Estimate Previous 2015/16 2016/17 Projection Previous 2016/17 Corn $3.70 $3.60 $3.60 $3.15 $3.35 Wheat $5.99 $4.89 $4.90 $3.75 $4.10 Soybeans $10.10 $8.95 $8.85 $9.30 $9.10 Cotton $0.61 $0.58 $0.58 $0.62 $0.57
U.S. Acres Harvested and Crop Yields Deere & Company Forecast as of 19 August 2016 66 43 | 3rd Quarter 2016 Earnings Conference Call (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 86.6 168.4 175.1 Wheat 47.1 44.1 43.6 52.6 Soybeans 81.8 83.0 48.0 48.9 Cotton 8.1 9.5 766 800
U.S. Farm Cash Receipts Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 67 44 | 3rd Quarter 2016 Earnings Conference Call (in billions of dollars) 2014 2015 Forecast Previous 2015 2016 Forecast Previous 2016 Crops $209.3 $191.3 $191.3 $188.2 $184.1 Livestock $212.2 $185.7 $185.7 $171.3 $177.1 Government Payments $9.8 $10.6 $10.6 $13.9 $13.9 Total Cash Receipts $431.3 $387.6 $387.6 $373.4 $375.1
U.S. Farm Cash Receipts $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F Crops Livestock Government Payments Source: 2000 2014: USDA, 9 February 2016 2015F 2016F: Deere & Company Forecast as of 19 August 2016 68 45 | 3rd Quarter 2016 Earnings Conference Call $ Billions
U.S. Net Farm Cash Income Deere & Company Forecast as of 19 August 2016 (Previous Forecast as of 20 May 2016) 69 46 | 3rd Quarter 2016 Earnings Conference Call (in billions of dollars) 2014 2015 Forecast Previous 2015 2016 Forecast Previous 2016 Total Cash Receipts $431.3 $387.6 $387.6 $373.4 $375.1 Other Farm-Related Income $35.4 $33.8 $33.8 $34.9 $34.1 Gross Cash Income $466.7 $421.4 $421.4 $408.3 $409.2 Cash Expenses ($338.6) ($328.2) ($328.2) ($323.0) ($322.0) Net Cash Income $128.1 $93.2 $93.2 $85.3 $87.2
July 2016 Retail Sales and Dealer Inventories *As reported by the Association of Equipment Manufacturers **As reported to the Association of Equipment Manufacturers *** At 31 July in units as a % of trailing 12 months retail sales, as reported to the Association of Equipment Manufacturers 70 47 | 3rd Quarter 2016 Earnings Conference Call Deere Dealer Inventories*** U.S. and Canada Ag 2016 2015 2WD Tractors (100+ PTO hp) 37% 25% Combines 20% 19% Retail Sales U.S. and Canada Ag Industry* Deere** 2WD Tractors (< 40 PTO hp) 7% single digit 2WD Tractors (40 < 100 PTO hp) 23% in line with the industry 2WD Tractors (100+ PTO hp) 26% less than the industry 4WD Tractors 43% more than the industry Combines 23% more than the industry
July 2016 Retail Sales * Based on internal sales reports 71 48 | 3rd Quarter 2016 Earnings Conference Call U.S. and Canada Construction & Forestry Deere* First-in-the-Dirt double digits Settlements single digit U.S. and Canada Deere* Selected Turf & Utility Equipment single digit EU 28 Deere* Tractors double digits Combines single digit
Deeres fourth quarter 2016 conference call is scheduled for 9:00 a.m. central time on Wednesday, November 23, 2016 72
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