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SEGMENT AND GEOGRAPHIC AREA DATA | 12 Months Ended
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Oct. 29, 2017
SEGMENT AND GEOGRAPHIC AREA DATA |
SEGMENT AND GEOGRAPHIC AREA DATA | 28. SEGMENT AND GEOGRAPHIC AREA DATA The company’s operations are presently organized and reported in three major business segments described as follows: The agriculture and turf segment primarily manufactures and distributes a full line of agriculture and turf equipment and related service parts – including large, medium and utility tractors; tractor loaders; combines, cotton pickers, cotton strippers, and sugarcane harvesters; related harvesting front-end equipment; sugarcane loaders and pull-behind scrapers; tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery; hay and forage equipment, including self-propelled forage harvesters and attachments, balers and mowers; turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements; integrated agricultural management systems technology and solutions; and other outdoor power products. The construction and forestry segment primarily manufactures and distributes a broad range of machines and service parts used in construction, earthmoving, material handling, and timber harvesting – including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters, and related attachments. The products and services produced by the segments above are marketed primarily through independent retail dealer networks and major retail outlets. The financial services segment primarily finances sales and leases by John Deere dealers of new and used agriculture and turf equipment and construction and forestry equipment. In addition, the financial services segment provides wholesale financing to dealers of the foregoing equipment, finances retail revolving charge accounts, and offers extended equipment warranties. Because of integrated manufacturing operations and common administrative and marketing support, a substantial number of allocations must be made to determine operating segment and geographic area data. Intersegment sales and revenues represent sales of components and finance charges, which are generally based on market prices. Information relating to operations by operating segment in millions of dollars follows for the years ended October 29, 2017, October 30, 2016, and November 1, 2015. In addition to the following unaffiliated sales and revenues by segment, intersegment sales and revenues in 2017, 2016, and 2015 were as follows: agriculture and turf net sales of $39 million, $31 million, and $49 million, construction and forestry net sales of $1 million, $1 million, and $1 million, and financial services revenues of $244 million, $225 million, and $225 million, respectively.
OPERATING SEGMENTS |  | 2017 |  | 2016 |  | 2015 |
Net sales and revenues |  |  |  |  |  |  |  |  |  |
Unaffiliated customers: |  |  |  |  |  |  |  |  |  |
Agriculture and turf net sales |  | $ | 20,167 |  | $ | 18,487 |  | $ | 19,812 |
Construction and forestry net sales |  |  | 5,718 |  |  | 4,900 |  |  | 5,963 |
Total net sales |  |  | 25,885 |  |  | 23,387 |  |  | 25,775 |
Financial services revenues |  |  | 2,935 |  |  | 2,694 |  |  | 2,591 |
Other revenues* |  |  | 918 |  |  | 563 |  |  | 497 |
Total |  | $ | 29,738 |  | $ | 26,644 |  | $ | 28,863 |
* Other revenues are primarily the equipment operations’ revenues for finance and interest income, and other income as disclosed in Note 31, net of certain intercompany eliminations.
Operating profit |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 2,484 |  | $ | 1,700 |  | $ | 1,649 |
Construction and forestry |  |  | 337 |  |  | 180 |  |  | 528 |
Financial services* |  |  | 722 |  |  | 709 |  |  | 963 |
Total operating profit |  |  | 3,543 |  |  | 2,589 |  |  | 3,140 |
Interest income |  |  | 55 |  |  | 48 |  |  | 61 |
Interest expense |  |  | (264) |  |  | (251) |  |  | (273) |
Foreign exchange gains (losses) from equipment operations’ financing activities |  |  | (12) |  |  | (12) |  |  | 13 |
Corporate expenses – net |  |  | (192) |  |  | (153) |  |  | (160) |
Income taxes |  |  | (971) |  |  | (700) |  |  | (840) |
Total |  |  | (1,384) |  |  | (1,068) |  |  | (1,199) |
Net income |  |  | 2,159 |  |  | 1,521 |  |  | 1,941 |
Less: Net income (loss) attributable to noncontrolling interests |  |  |  |  |  | (3) |  |  | 1 |
Net income attributable to Deere & Company |  | $ | 2,159 |  | $ | 1,524 |  | $ | 1,940 |
* Operating profit of the financial services business segment includes the effect of its interest expense and foreign exchange gains or losses.
Interest income* |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 16 |  | $ | 12 |  | $ | 14 |
Construction and forestry |  |  | 1 |  |  | 1 |  |  | 2 |
Financial services |  |  | 1,771 |  |  | 1,650 |  |  | 1,687 |
Corporate |  |  | 55 |  |  | 48 |  |  | 61 |
Intercompany |  |  | (268) |  |  | (240) |  |  | (253) |
Total |  | $ | 1,575 |  | $ | 1,471 |  | $ | 1,511 |
* Does not include finance rental income for equipment on operating leases.
Interest expense |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 182 |  | $ | 173 |  | $ | 160 |
Construction and forestry |  |  | 53 |  |  | 44 |  |  | 45 |
Financial services |  |  | 669 |  |  | 536 |  |  | 455 |
Corporate |  |  | 264 |  |  | 251 |  |  | 273 |
Intercompany |  |  | (268) |  |  | (240) |  |  | (253) |
Total |  | $ | 900 |  | $ | 764 |  | $ | 680 |
Depreciation* and amortization expense |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 695 |  | $ | 667 |  | $ | 659 |
Construction and forestry |  |  | 145 |  |  | 136 |  |  | 133 |
Financial services |  |  | 876 |  |  | 757 |  |  | 590 |
Total |  | $ | 1,716 |  | $ | 1,560 |  | $ | 1,382 |
* Includes depreciation for equipment on operating leases.
Equity in income (loss) of unconsolidated affiliates |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 2 |  | $ | 9 |  | $ | 7 |
Construction and forestry |  |  | (27) |  |  | (13) |  |  | (7) |
Financial services |  |  | 1 |  |  | 2 |  |  | 1 |
Total |  | $ | (24) |  | $ | (2) |  | $ | 1 |
Identifiable operating assets |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 9,359 |  | $ | 8,405 |  | $ | 8,332 |
Construction and forestry |  |  | 3,212 |  |  | 3,017 |  |  | 3,295 |
Financial services |  |  | 42,596 |  |  | 40,837 |  |  | 40,866 |
Corporate* |  |  | 10,619 |  |  | 5,659 |  |  | 5,390 |
Total |  | $ | 65,786 |  | $ | 57,918 |  | $ | 57,883 |
* Corporate assets are primarily the equipment operations’ retirement benefits, deferred income tax assets, marketable securities, and cash and cash equivalents as disclosed in Note 31, net of certain intercompany eliminations.
Capital additions |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 485 |  | $ | 556 |  | $ | 522 |
Construction and forestry |  |  | 114 |  |  | 115 |  |  | 138 |
Financial services |  |  | 3 |  |  | 3 |  |  | 6 |
Total |  | $ | 602 |  | $ | 674 |  | $ | 666 |
Investments in unconsolidated affiliates |  |  |  |  |  |  |  |  |  |
Agriculture and turf |  | $ | 25 |  | $ | 56 |  | $ | 116 |
Construction and forestry |  |  | 143 |  |  | 165 |  |  | 177 |
Financial services |  |  | 14 |  |  | 12 |  |  | 10 |
Total |  | $ | 182 |  | $ | 233 |  | $ | 303 |
The company views and has historically disclosed its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada, shown below in millions of dollars. No individual foreign country’s net sales and revenues were material for disclosure purposes.
GEOGRAPHIC AREAS |  | 2017 |  | 2016 |  | 2015 |
Net sales and revenues |  |  |  |  |  |  |  |  |  |
Unaffiliated customers: |  |  |  |  |  |  |  |  |  |
U.S. and Canada: |  |  |  |  |  |  |  |  |  |
Equipment operations net sales (88%)* |  | $ | 15,031 |  | $ | 14,376 |  | $ | 16,498 |
Financial services revenues (79%)* |  |  | 2,526 |  |  | 2,366 |  |  | 2,252 |
Total |  |  | 17,557 |  |  | 16,742 |  |  | 18,750 |
Outside U.S. and Canada: |  |  |  |  |  |  |  |  |  |
Equipment operations net sales |  |  | 10,854 |  |  | 9,011 |  |  | 9,277 |
Financial services revenues |  |  | 409 |  |  | 328 |  |  | 339 |
Total |  |  | 11,263 |  |  | 9,339 |  |  | 9,616 |
Other revenues |  |  | 918 |  |  | 563 |  |  | 497 |
Total |  | $ | 29,738 |  | $ | 26,644 |  | $ | 28,863 |
* The percentages indicate the approximate proportion of each amount that relates to the U.S. only and are based upon a three-year average for 2017, 2016, and 2015.
Operating profit |  |  |  |  |  |  |  |  |  |
U.S. and Canada: |  |  |  |  |  |  |  |  |  |
Equipment operations |  | $ | 1,724 |  | $ | 1,305 |  | $ | 1,643 |
Financial services |  |  | 523 |  |  | 551 |  |  | 802 |
Total |  |  | 2,247 |  |  | 1,856 |  |  | 2,445 |
Outside U.S. and Canada: |  |  |  |  |  |  |  |  |  |
Equipment operations |  |  | 1,097 |  |  | 575 |  |  | 534 |
Financial services |  |  | 199 |  |  | 158 |  |  | 161 |
Total |  |  | 1,296 |  |  | 733 |  |  | 695 |
Total |  | $ | 3,543 |  | $ | 2,589 |  | $ | 3,140 |
Property and equipment |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 2,976 |  | $ | 3,077 |  | $ | 3,098 |
Germany |  |  | 598 |  |  | 569 |  |  | 568 |
Other countries |  |  | 1,494 |  |  | 1,525 |  |  | 1,515 |
Total |  | $ | 5,068 |  | $ | 5,171 |  | $ | 5,181 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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