MOLINE, Ill., May 19, 2017 /PRNewswire/ --


    --  Improving demand for farm and construction equipment leads to higher
        second-quarter results.
    --  Key markets show signs of further stabilization.
    --  Sound execution, broad business lineup benefit performance.
    --  Results include gain on sale of partial interest in SiteOne affiliate.
    --  Full-year earnings forecast increased to $2 billion, on 9% sales gain.

Net income attributable to Deere & Company (NYSE: DE) was $802.4 million, or $2.49 per share, for the second quarter ended April 30, 2017, compared with $495.4 million, or $1.56 per share, for the period ended May 1, 2016.

For the first six months of the year, net income attributable to Deere & Company was $996.2 million, or $3.10 per share, compared with $749.8 million, or $2.36 per share, last year.

Worldwide net sales and revenues increased 5 percent, to $8.287 billion, for the second quarter and increased 4 percent, to $13.912 billion, for six months. Net sales of the equipment operations were $7.260 billion for the quarter and $11.958 billion for the first six months, compared with $7.107 billion and $11.876 billion for the same periods last year.

"John Deere reported strong results in the second quarter as market conditions showed signs of further stabilization," said Samuel R. Allen, chairman and chief executive officer. "We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recovery. Deere's performance also reflects the sound execution of our operating plans, the strength of a broad product portfolio, and the impact of our actions to develop a more agile cost structure. As a result, we have raised our forecast and are now calling for significantly higher earnings for the full year."

Summary of Operations

Net sales of the worldwide equipment operations increased 2 percent for the quarter and 1 percent for the first six months compared with the same periods a year ago. Sales included price realization of 2 percent for both periods. Foreign-currency rates did not have a material translation effect on net sales for either the quarter or first six months compared with the same periods in the prior year. Equipment net sales in the United States and Canada decreased 5 percent for the quarter and were down 6 percent for the first six months. Outside the U.S. and Canada, net sales increased 14 percent for the quarter and 13 percent for the first six months, with no material effect of currency translation in either period.

Deere's equipment operations reported operating profit of $1.111 billion for the quarter and $1.358 billion for six months, compared with $688 million and $902 million, respectively, last year. The improvement for the quarter was primarily driven by price realization, the impact of a favorable sales mix, favorable effects of foreign-currency exchange and higher shipment volumes, partially offset by higher warranty costs. Improved year-to-date results benefited from price realization, a favorable sales mix, and higher shipment volumes, partially offset by expenses associated with the previously announced voluntary employee-separation program and higher warranty costs. Additionally, quarterly and year-to-date results were aided significantly by a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne Landscape Supply, Inc. (SiteOne).

Net income of the company's equipment operations was $694 million for the second quarter and $774 million for the first six months, compared with $393 million and $520 million for the corresponding periods of 2016. In addition to the operating factors mentioned above, a higher effective tax rate reduced results for the first six months of 2017.

Financial services reported net income attributable to Deere & Company of $103.5 million for the quarter and $217.9 million for six months compared with $102.6 million and $232.0 million last year. Results for the quarter benefited from lower losses on lease residual values, largely offset by less-favorable financing spreads and higher selling, administrative and general expenses. Year-to-date results were affected by less-favorable financing spreads and higher selling, administrative and general expenses, including voluntary employee-separation expenses, partially offset by lower losses on lease residual values.

Company Outlook & Summary

Company equipment sales are projected to increase about 9 percent for fiscal 2017 and to rise about 18 percent for the third quarter compared with the same periods of 2016. Foreign-currency rates are not expected to have a material translation effect on equipment sales for the year or third quarter. Net sales and revenues are projected to increase about 9 percent for fiscal 2017 with net income attributable to Deere & Company of about $2.0 billion.

"Deere is demonstrating a continuing ability to produce impressive results through all phases of the business cycle," Allen said. "This resilience illustrates our success driving improved operating efficiencies and developing a wider range of revenue sources. It also shows the impact of the company's consistent investments in advanced technology, new products and additional markets. These actions are leading to strong performance in 2017, and they reinforce our conviction that Deere is well-positioned to deliver significant value to customers and investors over the long term."

Equipment Division Performance

Agriculture & Turf. Sales increased 1 percent for the quarter and first six months primarily due to price realization. Year-to-date results were also affected by lower shipment volumes.

Operating profit was $1.003 billion for the quarter and $1.215 billion year to date, compared with respective totals of $614 million and $759 million last year. Results for the quarter benefited from a more favorable sales mix, price realization and the favorable effects of foreign exchange. For the first six months, results were helped by price realization and a more-favorable sales mix, partially offset by voluntary employee-separation expenses. The gain on the sale of a partial interest in SiteOne made a significant contribution to the division's results for both periods.

Construction & Forestry. Construction and forestry sales increased 7 percent for the quarter and 1 percent for six months, mainly as a result of higher shipment volumes and price realization, partially offset by higher warranty costs.

Operating profit was $108 million for the quarter and $143 million for six months, compared with $74 million and $143 million last year. Results for the quarter were assisted by increased shipment volumes and price realization, partially offset by higher warranty costs and a less-favorable sales mix. For the first six months, results were about the same as in the prior period and were affected by the same operating factors as for the quarter, as well as by voluntary employee-separation expenses.

Market Conditions & Outlook

Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment are forecast to increase by about 8 percent for fiscal-year 2017, with currency translation not expected to have a material effect. Industry sales for agricultural equipment in the U.S. and Canada are forecast to be down about 5 percent for 2017, reflecting weakness in the livestock sector and the continuing impact of low crop prices. The decline is affecting both large and small equipment.

Full-year 2017 industry sales in the EU28 member nations are forecast to be flat to down 5 percent due to low commodity prices and farm incomes. In South America, industry sales of tractors and combines are projected to be up about 20 percent as a result of improving economic and political conditions in Brazil and Argentina. Asian sales are projected to be flat to up slightly, benefiting from higher sales in India.

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about flat for 2017.

Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are forecast to be up about 13 percent for 2017, with no material currency-translation impact. The forecast reflects moderate economic growth worldwide. In forestry, global industry sales are expected to be down about 5 percent due to soft conditions in North America.

Financial Services. Fiscal-year 2017 net income attributable to Deere & Company for the financial services operations is expected to be approximately $475 million. In comparison with performance in 2016, the outlook reflects lower losses on lease residual values, partially offset by less-favorable financing spreads and an increased provision for credit losses.

John Deere Capital Corporation

The following is disclosed on behalf of the company's financial services subsidiary, John Deere Capital Corporation (JDCC), in connection with the disclosure requirements applicable to its periodic issuance of debt securities in the public market.

Net income attributable to JDCC was $64.5 million for the second quarter and $138.7 million year to date, compared with $69.6 million and $169.4 million for the respective periods last year. The decline for both periods was primarily due to less-favorable financing spreads, higher selling, administrative and general expenses including voluntary employee-separation expenses, and a lower average portfolio, partially offset by lower losses on lease residual values.

Net receivables and leases financed by JDCC were $32.015 billion at April 30, 2017, compared with $33.208 billion at May 1, 2016.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under "Company Outlook & Summary," "Market Conditions & Outlook," and other forward-looking statements herein that relate to future events, expectations, and trends involve factors that are subject to change, and risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the company's businesses.

The company's agricultural equipment business is subject to a number of uncertainties including the factors that affect farmers' confidence and financial condition. These factors include demand for agricultural products, world grain stocks, weather conditions, soil conditions, harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production), real estate values, available acreage for farming, the land ownership policies of governments, changes in government farm programs and policies, international reaction to such programs, changes in 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 company's turf and utility equipment include consumer confidence, weather conditions, customer profitability, consumer borrowing patterns, consumer purchasing preferences, housing starts, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.

Consumer spending patterns, real estate and housing prices, the number of housing starts, interest rates and the levels of public and non-residential construction are important to sales and results of the company's construction and forestry equipment. Prices for pulp, paper, lumber and structural panels are important to sales of forestry equipment.

All of the company's businesses and its results are affected by general economic conditions in the global markets and industries in which the company operates; customer confidence in general economic conditions; government spending and taxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates; inflation and deflation rates; changes in weather patterns; the political and social stability of the global markets in which the company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; natural disasters; and the spread of major epidemics.

Significant changes in market liquidity conditions, changes in the company's credit ratings and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the company's earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the company's products and customer confidence and purchase decisions, borrowing and repayment practices, and the number and size of customer loan delinquencies and defaults. A debt crisis, in Europe or elsewhere, could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, demand for equipment, and company operations and results. The company's investment management activities could be impaired by changes in the equity, bond and other financial markets, which would negatively affect earnings.

The potential withdrawal of the United Kingdom from the European Union and the perceptions as to the impact of the withdrawal may adversely affect business activity, political stability and economic conditions in the United Kingdom, the European Union and elsewhere. The economic conditions and outlook could be further adversely affected by (i) the uncertainty concerning the timing and terms of the exit, (ii) new or modified trading arrangements between the United Kingdom and other countries, (iii) the risk that one or more other European Union countries could come under increasing pressure to leave the European Union, or (iv) the risk that the euro as the single currency of the Eurozone could cease to exist. Any of these developments, or the perception that any of these developments are likely to occur, could affect economic growth or business activity in the United Kingdom or the European Union, and could result in the relocation of businesses, cause business interruptions, lead to economic recession or depression, and impact the stability of the financial markets, availability of credit, currency exchange rates, interest rates, financial institutions, and political, financial and monetary systems. Any of these developments could affect our businesses, liquidity, results of operations and financial position.

Additional factors that could materially affect the company's operations, access to capital, expenses and results include changes in, uncertainty surrounding and the impact of governmental trade, banking, monetary and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs and other areas, and governmental programs, policies, tariffs and sanctions in particular jurisdictions or for the benefit of certain industries or sectors; actions by central banks; actions by financial and securities regulators; actions by environmental, health and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor regulations; changes to accounting standards; changes in tax rates, estimates, and regulations and company actions related thereto; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

Other factors that could materially affect results include production, design and technological innovations and difficulties, including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights whether through theft, infringement, counterfeiting or otherwise; the availability and prices of strategically sourced materials, components and whole goods; delays or disruptions in the company's supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations or distribution; the failure of suppliers or the company to comply with laws, regulations and company policy pertaining to employment, human rights, health, safety, the environment, anti-corruption, privacy and data protection and other ethical business practices; events that damage the company's reputation or brand; significant investigations, claims, lawsuits or other legal proceedings; start-up of new plants and products; the success of new product initiatives; changes in customer product preferences and sales mix; gaps or limitations in rural broadband coverage, capacity and speed needed to support technology solutions; oil and energy prices, supplies and volatility; the availability and cost of freight; actions of competitors in the various industries in which the company competes, particularly price discounting; dealer practices especially as to levels of new and used field inventories; changes in demand and pricing for used equipment and resulting impacts on lease residual values; labor relations and contracts; changes in the ability to attract, train and retain qualified personnel; acquisitions and divestitures of businesses; the integration of new businesses; the implementation of organizational changes; difficulties related to the conversion and implementation of enterprise resource planning systems; security breaches and other disruptions to the company's and suppliers' information technology infrastructure; changes in company declared dividends and common stock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market values of investment assets, compensation, retirement, discount and mortality rates which impact retirement benefit costs; and significant changes in health care costs.

The liquidity and ongoing profitability of John Deere Capital Corporation and other credit subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of the company's products. If general economic conditions deteriorate or capital markets become more volatile, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.

The company's outlook is based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The company, except as required by law, undertakes no obligation to update or revise its outlook, whether as a result of new developments or otherwise. Further information concerning the company and its businesses, including factors that could materially affect the company's financial results, is included in the company's other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q).



                                                                                Second Quarter 2017 Press Release
                                                                                ---------------------------------

                                                                                     (in millions of dollars)

                                                                                            Unaudited


                                           Three Months Ended           Six Months Ended
                                           ------------------           ----------------

                                 April 30                       May 1     %                             April 30        May 1               %

                                      2017                         2016  Change                                    2017       2016            Change
                                      ----                         ----  ------                                    ----       ----            ------

    Net sales and revenues:

    Agriculture and turf                                 $5,794                $5,742                                +1              $9,392            $9,341      +1

    Construction and forestry                             1,466                 1,365                                +7               2,566             2,535      +1
                                                          -----                 -----                                                -----             -----

    Total net sales                                       7,260                 7,107                                +2              11,958            11,876      +1

    Financial services                                      716                   651                               +10               1,412             1,287     +10

    Other revenues                                          311                   117                              +166                 542               237    +129
                                                            ---                   ---                                                  ---               ---

      Total net sales and
       revenues                                          $8,287                $7,875                                +5             $13,912           $13,400      +4
                                                         ======                ======                                              =======           =======


    Operating profit: *

    Agriculture and turf                                 $1,003                  $614                               +63              $1,215              $759     +60

    Construction and forestry                               108                    74                               +46                 143               143

    Financial services                                      160                   160                                                  328               354      -7
                                                            ---                   ---                                                  ---               ---

      Total operating profit                              1,271                   848                               +50               1,686             1,256     +34

    Reconciling items **                                   (97)                (115)                              -16               (184)            (173)     +6

    Income taxes                                          (372)                (238)                              +56               (506)            (333)    +52
                                                           ----                  ----                                                 ----              ----

      Net income attributable to
       Deere & Company                                     $802                  $495                               +62                $996              $750     +33
                                                           ====                  ====                                                 ====              ====



    *              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 April 30, 2017 and May 1, 2016

    (In millions of dollars and shares except per share amounts) Unaudited
    ----------------------------------------------------------------------

                                                          2017                      2016
                                                          ----                      ----

    Net Sales and
     Revenues

    Net sales                                                              $7,259.8      $7,106.6

    Finance and interest
     income                                                                   665.0         611.4

    Other income                                                              362.2         157.4
                                                                              -----         -----

    Total                                                                   8,287.0       7,875.4
                                                                            -------       -------


    Costs and Expenses

    Cost of sales                                                           5,444.7       5,531.0

    Research and
     development expenses                                                     324.4         345.0

    Selling,
     administrative and
     general expenses                                                         775.3         714.8

    Interest expense                                                          226.9         191.0

    Other operating
     expenses                                                                 346.4         360.3
                                                                              -----         -----

    Total                                                                   7,117.7       7,142.1
                                                                            -------       -------


    Income of
     Consolidated Group
     before Income Taxes                                                    1,169.3         733.3

    Provision for income
     taxes                                                                    371.9         237.8
                                                                              -----         -----

    Income of
     Consolidated Group                                                       797.4         495.5

    Equity in income
     (loss) of
     unconsolidated
     affiliates                                                                 4.8          (.8)
                                                                                ---           ---

    Net Income                                                                802.2         494.7

    Less: Net loss
     attributable to
     noncontrolling
     interests                                                                 (.2)         (.7)
                                                                                ---           ---

    Net Income
     Attributable to
     Deere & Company                                                         $802.4        $495.4
                                                                             ======        ======


    Per Share Data

    Basic                                                                     $2.51         $1.57

    Diluted                                                                   $2.49         $1.56


    Average Shares
     Outstanding

    Basic                                                                     319.2         315.1

    Diluted                                                                   322.5         316.5



    See Condensed Notes to Interim
     Consolidated Financial
     Statements.


    DEERE & COMPANY

    STATEMENT OF CONSOLIDATED INCOME

    For the Six Months Ended April 30, 2017 and May 1, 2016

    (In millions of dollars and shares except per share amounts) Unaudited
    ----------------------------------------------------------------------

                                                          2017                       2016
                                                          ----                       ----

    Net Sales and
     Revenues

    Net sales                                                              $11,957.7      $11,875.8

    Finance and
     interest income                                                         1,320.5        1,210.5

    Other income                                                               634.0          313.6
                                                                               -----          -----

    Total                                                                   13,912.2       13,399.9
                                                                            --------       --------


    Costs and Expenses

    Cost of sales                                                            9,241.5        9,371.1

    Research and
     development
     expenses                                                                  635.3          664.3

    Selling,
     administrative and
     general expenses                                                        1,434.7        1,307.7

    Interest expense                                                           434.9          364.3

    Other operating
     expenses                                                                  668.5          608.0
                                                                               -----          -----

    Total                                                                   12,414.9       12,315.4
                                                                            --------       --------


    Income of
     Consolidated Group
     before Income
     Taxes                                                                   1,497.3        1,084.5

    Provision for
     income taxes                                                              506.4          333.3
                                                                               -----          -----

    Income of
     Consolidated Group                                                        990.9          751.2

    Equity in income
     (loss) of
     unconsolidated
     affiliates                                                                  4.5          (2.7)
                                                                                 ---           ----

    Net Income                                                                 995.4          748.5

    Less: Net loss
     attributable to
     noncontrolling
     interests                                                                  (.8)         (1.3)
                                                                                 ---           ----

    Net Income
     Attributable to
     Deere & Company                                                          $996.2         $749.8
                                                                              ======         ======


    Per Share Data

    Basic                                                                      $3.13          $2.37

    Diluted                                                                    $3.10          $2.36


    Average Shares
     Outstanding

    Basic                                                                      317.9          315.8

    Diluted                                                                    321.1          317.1



    See Condensed Notes to Interim
     Consolidated Financial
     Statements.


    DEERE & COMPANY

    CONDENSED CONSOLIDATED BALANCE SHEET

    (In millions of dollars) Unaudited
    ----------------------------------

                                         April 30            October 30  May 1

                                              2017                  2016             2016
                                              ----                  ----             ----

    Assets

    Cash and
     cash
     equivalents                                    $4,525.8                    $4,335.8   $4,133.2

    Marketable
     securities                                        546.3                       453.5      475.5

    Receivables
     from
     unconsolidated
     affiliates                                         34.9                        16.5       81.3

    Trade
     accounts
     and notes
     receivable
     -net                                            4,482.3                     3,011.3    4,898.9

    Financing
     receivables
     -net                                           23,301.1                    23,702.3   23,415.3

    Financing
     receivables
     securitized
     -net                                            4,281.8                     5,126.5    4,734.7

    Other
     receivables                                       931.3                     1,018.5      876.2

    Equipment on
     operating
     leases -
     net                                             5,923.9                     5,901.5    5,455.5

    Inventories                                      4,114.8                     3,340.5    4,061.0

    Property and
     equipment -
     net                                             4,959.9                     5,170.6    5,079.7

    Investments
     in
     unconsolidated
     affiliates                                        215.7                       232.6      236.7

    Goodwill                                           806.2                       815.7      835.0

    Other
     intangible
     assets -
     net                                                90.8                       104.1      120.5

    Retirement
     benefits                                          176.2                        93.6      285.4

    Deferred
     income
     taxes                                           3,041.9                     2,964.4    2,681.9

    Other assets                                     1,535.9                     1,631.1    1,745.4
                                                     -------                     -------    -------

    Total Assets                                   $58,968.8                   $57,918.5  $59,116.2
                                                   =========                   =========  =========


    Liabilities
     and
     Stockholders'
     Equity


    Liabilities

    Short-term
     borrowings                                     $7,963.6                    $6,910.7   $8,574.3

    Short-term
     securitization
     borrowings                                      4,224.6                     4,997.8    4,636.7

    Payables to
     unconsolidated
     affiliates                                        101.6                        81.6      109.5

    Accounts
     payable and
     accrued
     expenses                                        7,215.9                     7,240.1    6,980.8

    Deferred
     income
     taxes                                             169.0                       166.0      180.3

    Long-term
     borrowings                                     23,253.1                    23,703.0   24,587.7

    Retirement
     benefits
     and other
     liabilities                                     8,333.2                     8,274.5    6,856.2
                                                     -------                     -------    -------

    Total
     liabilities                                    51,261.0                    51,373.7   51,925.5
                                                    --------                    --------   --------


    Redeemable
     noncontrolling
     interest                                           14.0                        14.0       14.0


     Stockholders'
     Equity

    Total Deere
     & Company
     stockholders'
     equity                                          7,684.7                     6,520.0    7,164.3

     Noncontrolling
     interests                                           9.1                        10.8       12.4
                                                         ---                        ----       ----

    Total
     stockholders'
     equity                                          7,693.8                     6,530.8    7,176.7
                                                     -------                     -------    -------

    Total
     Liabilities
     and
     Stockholders'
     Equity                                        $58,968.8                   $57,918.5  $59,116.2
                                                   =========                   =========  =========



    See Condensed Notes to Interim
     Consolidated Financial
     Statements.


    DEERE & COMPANY

    STATEMENT OF CONSOLIDATED CASH FLOWS

    For the Six Months Ended April 30, 2017 and May 1, 2016

    (In millions of dollars) Unaudited
    ----------------------------------

                                                            2017           2016
                                                            ----           ----

    Cash Flows from Operating Activities

    Net income                                                      $995.4          $748.5

    Adjustments to reconcile net income to
     net cash used for operating
     activities:

    Provision for credit losses                                       32.6            35.1

    Provision for depreciation and
     amortization                                                    843.1           761.8

    Impairment charges                                                               49.7

    Share-based compensation expense                                  32.3            32.0

    Gain on sale of unconsolidated
     affiliates and investments                                    (281.4)

    Undistributed earnings of
     unconsolidated affiliates                                       (3.1)            5.3

    Provision (credit) for deferred income
     taxes                                                         (100.4)           93.3

    Changes in assets and liabilities:

    Trade, notes and financing receivables
     related to sales                                              (989.5)      (1,311.5)

    Inventories                                                  (1,090.4)        (405.8)

    Accounts payable and accrued expenses                            103.6         (367.8)

    Accrued income taxes payable/
     receivable                                                      195.1            12.0

    Retirement benefits                                              115.6            91.1

    Other                                                           (27.9)         (56.1)
                                                                     -----           -----

    Net cash used for operating activities                         (175.0)        (312.4)
                                                                    ------          ------


    Cash Flows from Investing Activities

    Collections of receivables (excluding
     receivables related to sales)                                 8,228.0         8,120.6

    Proceeds from maturities and sales of
     marketable securities                                            41.3            71.4

    Proceeds from sales of equipment on
     operating leases                                                786.4           630.1

    Proceeds from sales of businesses and
     unconsolidated affiliates, net of
     cash sold                                                       113.9

    Cost of receivables acquired
     (excluding receivables related to
     sales)                                                      (7,628.6)      (6,872.9)

    Purchases of marketable securities                              (43.7)        (112.2)

    Purchases of property and equipment                            (253.0)        (232.6)

    Cost of equipment on operating leases
     acquired                                                      (925.1)      (1,204.1)

    Acquisitions of businesses, net of
     cash acquired                                                                (198.9)

    Other                                                           (18.7)            8.6
                                                                     -----             ---

    Net cash provided by investing
     activities                                                      300.5           210.0
                                                                     -----           -----


    Cash Flows from Financing Activities

    Increase in total short-term
     borrowings                                                      183.1            38.3

    Proceeds from long-term borrowings                             2,661.6         3,276.6

    Payments of long-term borrowings                             (2,742.2)      (2,686.6)

    Proceeds from issuance of common stock                           383.6            11.1

    Repurchases of common stock                                      (6.2)        (205.4)

    Dividends paid                                                 (379.5)        (383.2)

    Excess tax benefits from share-based
     compensation                                                     11.3             2.7

    Other                                                           (39.7)         (32.6)
                                                                     -----           -----

    Net cash provided by financing
     activities                                                       72.0            20.9
                                                                      ----            ----


    Effect of Exchange Rate Changes on
     Cash and Cash Equivalents                                       (7.5)           52.5
                                                                      ----            ----


    Net Increase (Decrease) in Cash and
     Cash Equivalents                                                190.0          (29.0)

    Cash and Cash Equivalents at Beginning
     of Period                                                     4,335.8         4,162.2
                                                                   -------         -------

    Cash and Cash Equivalents at End of
     Period                                                       $4,525.8        $4,133.2
                                                                  ========        ========



    See Condensed Notes to Interim
     Consolidated Financial
     Statements.


          Condensed Notes to Interim Consolidated
              Financial Statements (Unaudited)
          ---------------------------------------


             (1)    During the fourth quarter of
                     2016, the Company announced
                     voluntary employee separation
                     programs as part of its effort
                     to reduce operating costs. The
                     programs provided for cash
                     payments based on previous years
                     of service. The expense is
                     recorded in the period the
                     employees accept the separation
                     offer. The programs' total
                     pretax expenses are
                     approximately $113 million, of
                     which $11 million was recorded
                     in the fourth quarter of 2016,
                     $94 million was recorded in the
                     first quarter of 2017, and $5
                     million was recorded in the
                     second quarter, with $3 million
                     to be recognized over the
                     remainder of the fiscal year.
                     The payments for all programs
                     were substantially made in the
                     first quarter of 2017. The total
                     2017 expenses are allocated
                     approximately 30 percent cost of
                     sales, 16 percent research and
                     development, and 54 percent
                     selling, administrative and
                     general. In addition, the
                     expenses are allocated 74
                     percent to agriculture and turf
                     operations, 18 percent to the
                     construction and forestry
                     operations, and 8 percent to the
                     financial services operations.
                     Savings from these programs are
                     estimated to be approximately
                     $70 million in 2017.


             (2)    In December 2016, the Company
                     sold approximately 38 percent of
                     its interest in SiteOne
                     Landscape Supply, Inc. (SiteOne)
                     resulting in gross proceeds of
                     $114 million and a gain of $105
                     million pretax or $66 million
                     after-tax. In April 2017, the
                     Company sold an additional 68
                     percent of its then remaining
                     interest in SiteOne resulting in
                     gross proceeds of $184 million
                     and a gain of $176 million
                     pretax or $111 million after-
                     tax. The gains in both periods
                     were recorded in other income in
                     the agriculture and turf
                     operating segment. The proceeds
                     from the April sale were
                     received in the fiscal third
                     quarter and were presented in
                     other receivables at April 30,
                     2017. The Company retained
                     approximately a 5 percent
                     ownership interest in SiteOne
                     after these sales. In addition,
                     at April 30, 2017, the remaining
                     investment in SiteOne of $90
                     million was recorded as an
                     available for sale security and
                     presented in marketable
                     securities.


             (3)    Dividends declared and paid on a
                     per share basis were as follows:



               Three Months Ended        Six Months Ended
               ------------------        ----------------

                    April 30           May 1              April 30      May 1

                             2017         2016                     2017       2016
                             ----         ----                     ----       ----


     Dividends
     declared                     $.60                            $.60             $1.20 $1.20

     Dividends
     paid                         $.60                            $.60             $1.20 $1.20



    (4)              The calculation of basic net
                     income per share is based on the
                     average number of shares
                     outstanding. The calculation of
                     diluted net income per share
                     recognizes any dilutive effect of
                     share-based compensation.


    (5)              The consolidated financial
                     statements represent the
                     consolidation of all Deere &
                     Company's subsidiaries. In the
                     supplemental consolidating data
                     in Note 6 to the financial
                     statements, "Equipment
                     Operations" include the Company's
                     agriculture and turf operations
                     and construction and forestry
                     operations with "Financial
                     Services" reflected on the equity
                     basis.


    (6) SUPPLEMENTAL CONSOLIDATING DATA

    STATEMENT OF INCOME

    For the Three Months Ended April 30, 2017 and May 1, 2016

    (In millions of dollars) Unaudited                         EQUIPMENT OPERATIONS*          FINANCIAL SERVICES
    ----------------------------------                         --------------------           ------------------

                                                                                2017             2016                 2017 2016
                                                                                ----             ----                 ---- ----

    Net Sales and Revenues

    Net sales                                                                        $7,259.8                    $7,106.6

    Finance and interest income                                                          18.7                        12.9       $716.4 $662.9

    Other income                                                                        339.6                       139.9         61.0   68.2
                                                                                        -----                       -----         ----   ----

    Total                                                                             7,618.1                     7,259.4        777.4  731.1
                                                                                      -------                     -------        -----  -----


    Costs and Expenses

    Cost of sales                                                                     5,445.1                     5,531.5

    Research and development expenses                                                   324.4                       345.0

    Selling, administrative and general expenses                                        637.5                       588.5        139.6  128.0

    Interest expense                                                                     67.0                        67.7        169.4  125.9

    Interest compensation to Financial Services                                          60.4                        61.8

    Other operating expenses                                                             73.8                        91.4        309.0  317.4
                                                                                         ----                        ----        -----  -----

    Total                                                                             6,608.2                     6,685.9        618.0  571.3
                                                                                      -------                     -------        -----  -----


    Income of Consolidated Group before Income Taxes                                  1,009.9                       573.5        159.4  159.8

    Provision for income taxes                                                          315.8                       180.4         56.1   57.4
                                                                                        -----                       -----         ----   ----

    Income of Consolidated Group                                                        694.1                       393.1        103.3  102.4
                                                                                        -----                       -----        -----  -----


    Equity in Income (Loss) of Unconsolidated Subsidiaries and
     Affiliates

    Financial Services                                                                  103.5                       102.6           .2     .2

    Other                                                                                 4.6                       (1.0)
                                                                                          ---                        ----

    Total                                                                               108.1                       101.6           .2     .2
                                                                                        -----                       -----          ---    ---

    Net Income                                                                          802.2                       494.7        103.5  102.6

    Less: Net loss attributable to noncontrolling interests                              (.2)                       (.7)
                                                                                          ---                         ---

    Net Income Attributable to Deere & Company                                         $802.4                      $495.4       $103.5 $102.6
                                                                                       ======                      ======       ====== ======



    * Deere & Company with
     Financial Services on the
     equity basis.


    The supplemental consolidating
     data is presented for
     informational purposes.
     Transactions between the
     "Equipment Operations" and
     "Financial Services" have been
     eliminated to arrive at the
     consolidated financial
     statements.


    SUPPLEMENTAL CONSOLIDATING DATA (Continued)

    STATEMENT OF INCOME

    For the Six Months Ended April 30, 2017 and May 1, 2016

    (In millions of dollars) Unaudited                         EQUIPMENT OPERATIONS*           FINANCIAL SERVICES
    ----------------------------------                         --------------------            ------------------

                                                                                2017             2016                   2017 2016
                                                                                ----             ----                   ---- ----

    Net Sales and Revenues

    Net sales                                                                        $11,957.7                    $11,875.8

    Finance and interest income                                                           40.0                         30.8       $1,403.7 $1,297.9

    Other income                                                                         597.6                        280.0          119.2    116.3
                                                                                         -----                        -----          -----    -----

    Total                                                                             12,595.3                     12,186.6        1,522.9  1,414.2
                                                                                      --------                     --------        -------  -------


    Costs and Expenses

    Cost of sales                                                                      9,242.3                      9,372.1

    Research and development expenses                                                    635.3                        664.3

    Selling, administrative and general expenses                                       1,176.4                      1,069.6          261.3    242.0

    Interest expense                                                                     133.8                        129.8          318.1    245.9

    Interest compensation to Financial Services                                          106.1                        106.6

    Other operating expenses                                                             131.7                        112.5          615.9    573.5
                                                                                         -----                        -----          -----    -----

    Total                                                                             11,425.6                     11,454.9        1,195.3  1,061.4
                                                                                      --------                     --------        -------  -------


    Income of Consolidated Group before Income Taxes                                   1,169.7                        731.7          327.6    352.8

    Provision for income taxes                                                           395.9                        211.5          110.5    121.8
                                                                                         -----                        -----          -----    -----

    Income of Consolidated Group                                                         773.8                        520.2          217.1    231.0
                                                                                         -----                        -----          -----    -----


    Equity in Income (Loss) of Unconsolidated Subsidiaries and
     Affiliates

    Financial Services                                                                   217.9                        232.0             .8      1.0

    Other                                                                                  3.7                        (3.7)
                                                                                           ---                         ----

    Total                                                                                221.6                        228.3             .8      1.0
                                                                                         -----                        -----            ---      ---

    Net Income                                                                           995.4                        748.5          217.9    232.0

    Less: Net loss attributable to noncontrolling interests                               (.8)                       (1.3)
                                                                                           ---                         ----

    Net Income Attributable to Deere & Company                                          $996.2                       $749.8         $217.9   $232.0
                                                                                        ======                       ======         ======   ======



    * 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
    ----------------------------------                               --------------------                 ------------------

                                                           April 30                           October 30  May 1              April 30               October 30     May 1

                                                                2017                                 2016              2016          2017                     2016               2016
                                                                ----                                 ----              ----          ----                     ----               ----

    Assets

    Cash and cash equivalents                                                        $3,343.8                     $3,140.5                 $2,790.8                        $1,182.0     $1,195.3   $1,342.4

    Marketable securities                                                               118.1                         34.2                     71.2                           428.2        419.3      404.3

    Receivables from unconsolidated subsidiaries and
     affiliates                                                                       3,453.0                      3,150.1                  2,226.2

    Trade accounts and notes receivable - net                                           742.9                        654.2                    631.2                         4,867.3      3,370.5    5,529.4

    Financing receivables - net                                                                                        .4                       .7                        23,301.1     23,701.9   23,414.6

    Financing receivables securitized - net                                                                                                                              4,281.8      5,126.5    4,734.7

    Other receivables                                                                   801.6                        855.4                    778.2                           136.0        164.0      130.8

    Equipment on operating leases - net                                                                                                                                  5,923.9      5,901.5    5,455.5

    Inventories                                                                       4,114.8                      3,340.5                  4,061.0

    Property and equipment - net                                                      4,909.7                      5,118.5                  5,026.2                            50.2         52.1       53.5

    Investments in unconsolidated subsidiaries                                        4,612.2                      4,697.0                  4,774.7                            12.5         11.9       11.9

    and affiliates

    Goodwill                                                                            806.2                        815.7                    835.0

    Other intangible assets - net                                                        90.8                        104.1                    120.5

    Retirement benefits                                                                 176.2                         93.6                    280.9                            18.9         20.5       23.2

    Deferred income taxes                                                             3,651.1                      3,556.0                  3,185.7                            76.3         75.5       70.4

    Other assets                                                                        901.1                        834.9                    861.0                           636.8        798.1      887.2
                                                                                        -----                        -----                    -----                           -----        -----      -----

    Total Assets                                                                    $27,721.5                    $26,395.1                $25,643.3                       $40,915.0    $40,837.1  $42,057.9
                                                                                    =========                    =========                =========                       =========    =========  =========


    Liabilities and Stockholders' Equity


    Liabilities

    Short-term borrowings                                                              $276.6                       $249.0                   $218.7                        $7,687.0     $6,661.7   $8,355.6

    Short-term securitization borrowings                                                                                                                                 4,224.6      4,997.8    4,636.7

    Payables to unconsolidated subsidiaries and affiliates                              101.6                         81.5                    109.5                         3,418.1      3,133.6    2,144.9

    Accounts payable and accrued expenses                                             6,765.0                      6,661.2                  6,674.5                         1,587.1      1,595.2    1,603.7

    Deferred income taxes                                                                89.7                         87.3                    102.7                           764.8        745.9      651.8

    Long-term borrowings                                                              4,520.4                      4,565.3                  4,562.0                        18,732.7     19,137.7   20,025.7

    Retirement benefits and other liabilities                                         8,260.4                      8,206.0                  6,785.2                            91.7         89.0       89.6
                                                                                      -------                      -------                  -------                            ----         ----       ----

    Total liabilities                                                                20,013.7                     19,850.3                 18,452.6                        36,506.0     36,360.9   37,508.0
                                                                                     --------                     --------                 --------                        --------     --------   --------


    Redeemable noncontrolling interest                                                   14.0                         14.0                     14.0


    Stockholders' Equity

    Total Deere & Company stockholders' equity                                        7,684.7                      6,520.0                  7,164.3                         4,409.0      4,476.2    4,549.9

    Noncontrolling interests                                                              9.1                         10.8                     12.4
                                                                                          ---                         ----                     ----

    Total stockholders' equity                                                        7,693.8                      6,530.8                  7,176.7                         4,409.0      4,476.2    4,549.9
                                                                                      -------                      -------                  -------                         -------      -------    -------

    Total Liabilities and Stockholders' Equity                                      $27,721.5                    $26,395.1                $25,643.3                       $40,915.0    $40,837.1  $42,057.9
                                                                                    =========                    =========                =========                       =========    =========  =========



    * 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 Six Months Ended April 30, 2017 and May 1, 2016

    (In millions of dollars) Unaudited                           EQUIPMENT OPERATIONS*          FINANCIAL 2SERVICES
    ----------------------------------                           --------------------           -------------------

                                                                                  2017             2016                  2017 2016
                                                                                  ----             ----                  ---- ----

    Cash Flows from Operating Activities

    Net income                                                                           $995.4                       $748.5            $217.9       $232.0

    Adjustments to reconcile net income to net cash provided by
     operating activities:

    Provision (credit) for credit losses                                                   (.2)                         4.0              32.8         31.1

    Provision for depreciation and amortization                                           427.0                        410.2             476.9        399.4

    Impairment charges                                                                                                                              49.7

    Gain on sale of unconsolidated affiliates and investments                           (281.4)

    Undistributed earnings of unconsolidated subsidiaries and
     affiliates                                                                            59.8                         51.5              (.6)       (1.0)

    Provision (credit) for deferred income taxes                                        (118.8)                      (87.3)             18.4        180.6

    Changes in assets and liabilities:

    Trade receivables                                                                    (87.7)                     (142.2)

    Inventories                                                                         (771.8)                     (136.7)

    Accounts payable and accrued expenses                                                 200.0                      (107.9)             18.0         14.7

    Accrued income taxes payable/receivable                                               191.5                           .2               3.6         11.8

    Retirement benefits                                                                   111.0                         86.8               4.6          4.3

    Other                                                                                (49.2)                      (18.2)            104.8         40.7
                                                                                          -----                        -----             -----         ----

    Net cash provided by operating activities                                             675.6                        808.9             876.4        963.3
                                                                                          -----                        -----             -----        -----


    Cash Flows from Investing Activities

    Collections of receivables (excluding trade and wholesale)                                                                       8,833.8      8,699.2

    Proceeds from maturities and sales of marketable securities                             7.9                         31.3              33.4         40.1

    Proceeds from sales of equipment on operating leases                                                                               786.4        630.1

    Proceeds from sales of businesses and unconsolidated                                  113.9

    affiliates, net of cash sold

    Cost of receivables acquired (excluding trade and wholesale)                                                                   (8,238.0)   (7,343.6)

    Purchases of marketable securities                                                                               (63.1)           (43.7)      (49.1)

    Purchases of property and equipment                                                 (252.2)                     (231.7)             (.8)        (.9)

    Cost of equipment on operating leases acquired                                                                                 (1,355.6)   (1,567.7)

    Increase in trade and wholesale receivables                                                                                    (1,012.7)   (1,547.0)

    Acquisitions of businesses, net of cash acquired                                                                (198.9)

    Other                                                                                (18.1)                      (70.9)             (.6)        53.6
                                                                                          -----                        -----               ---         ----

    Net cash used for investing activities                                              (148.5)                     (533.3)          (997.8)   (1,085.3)
                                                                                         ------                       ------            ------     --------


    Cash Flows from Financing Activities

    Increase (decrease) in total short-term borrowings                                    (7.4)                     (193.4)            190.5        231.7

    Change in intercompany receivables/payables                                         (287.5)                       290.8             287.5      (290.8)

    Proceeds from long-term borrowings                                                     19.1                        133.5           2,642.5      3,143.1

    Payments of long-term borrowings                                                     (24.7)                      (67.7)        (2,717.5)   (2,618.9)

    Proceeds from issuance of common stock                                                383.6                         11.1

    Repurchases of common stock                                                           (6.2)                     (205.4)

    Dividends paid                                                                      (379.5)                     (383.2)          (280.2)     (277.1)

    Excess tax benefits from share-based compensation                                      11.3                          2.7

    Other                                                                                (25.8)                      (14.4)           (13.9)         2.9
                                                                                          -----                        -----             -----          ---

    Net cash provided by (used for) financing activities                                (317.1)                     (426.0)            108.9        190.9
                                                                                         ------                       ------             -----        -----


    Effect of Exchange Rate Changes on Cash and Cash Equivalents                          (6.7)                        41.2              (.8)        11.3
                                                                                           ----                         ----               ---         ----


    Net Increase (Decrease) in Cash and Cash Equivalents                                  203.3                      (109.2)           (13.3)        80.2

    Cash and Cash Equivalents at Beginning of Period                                    3,140.5                      2,900.0           1,195.3      1,262.2
                                                                                        -------                      -------           -------      -------

    Cash and Cash Equivalents at End of Period                                         $3,343.8                     $2,790.8          $1,182.0     $1,342.4
                                                                                       ========                     ========          ========     ========



    * 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.




                                                                                                                                                                                          Deere & Company



                                                                                                                                                                                    Other Financial Information


    For the Six Months Ended                                                                                     Equipment Operations             Agriculture and Turf     Construction and Forestry
    ------------------------                                                                                   --------------------          --------------------    -------------------------

                                                                                                          April 30             May 1            April 30       May 1              April 30              May 1

    Dollars in millions                                                                                        2017                      2016          2017          2016                         2017          2016
    -------------------                                                                                        ----                      ----          ----          ----                         ----          ----

    Net Sales                                                                                                                        $11,958                                                $11,876                                            $9,392                                            $9,341                                            $2,566      $2,535

    Average Identifiable Assets

      With Inventories at LIFO                                                                                                       $11,868                                                $11,951                                            $8,797                                            $8,776                                            $3,071      $3,175

      With Inventories at Standard Cost                                                                                              $13,140                                                $13,216                                            $9,832                                            $9,814                                            $3,308      $3,402

    Operating Profit                                                                                                                  $1,358                                                   $902                                            $1,215                                              $759                                              $143        $143

      Percent of Net Sales                                                                                                             11.4%                                                  7.6%                                            12.9%                                             8.1%                                             5.6%       5.6%

    Operating Return on Assets

      With Inventories at LIFO                                                                                                         11.4%                                                  7.5%                                            13.8%                                             8.6%                                             4.7%       4.5%

      With Inventories at Standard Cost                                                                                                10.3%                                                  6.8%                                            12.4%                                             7.7%                                             4.3%       4.2%

    SVA Cost of Assets                                                                                                                $(789)                                                $(793)                                           $(590)                                           $(589)                                           $(199)     $(204)

    SVA                                                                                                                                 $569                                                   $109                                              $625                                              $170                                             $(56)      $(61)
    ---                                                                                                                                 ----                                                   ----                                              ----                                              ----                                              ----        ----


    For the Six Months Ended                                                                                    Financial Services
    ------------------------                                                                                    ------------------

                                                                                                          April 30             May 1

    Dollars in millions                                                                                        2017                      2016
    -------------------                                                                                        ----                      ----

    Net Income Attributable to Deere & Company                                                                                          $218                                                   $232

    Average Equity                                                                                                                    $4,431                                                 $4,462

    Return on Equity                                                                                                                    4.9%                                                  5.2%

    Operating Profit                                                                                                                    $328                                                   $354

    Average Equity                                                                                                                    $4,431                                                 $4,462

    Cost of Equity                                                                                                                    $(333)                                                $(340)

    SVA                                                                                                                                 $(5)                                                   $14
    ---                                                                                                                                  ---                                                    ---

     The Company evaluates its business results on the basis of accounting principles generally accepted in the United States. In addition, it uses a metric referred to as Shareholder Value Added (SVA), which management believes is an appropriate measure for the performance of its businesses. SVA is, in effect, the pretax profit left over
      after subtracting the cost of enterprise capital. The Company is aiming for a sustained creation of SVA and is using this metric for various performance goals. Certain compensation is also determined on the basis of performance using this measure. For purposes of determining SVA, each of the equipment segments is assessed a pretax
      cost of assets, which on an annual basis is approximately 12 percent of the segment's average identifiable operating assets during the applicable period with inventory at standard cost. Management believes that valuing inventories at standard cost more closely approximates the current cost of inventory and the Company's investment
      in the asset. The Financial Services segment is assessed an annual pretax cost of approximately 15 percent of the segment's 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.
     -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SOURCE Deere & Company