SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2015, 2014 AND 2013

12 Months Ended

Oct. 31, 2015

SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2015, 2014 AND 2013

SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2015, 2014 AND 2013

28. SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2015, 2014 AND 2013

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; loaders; combines, corn pickers, cotton and sugarcane harvesters and related front-end equipment and sugarcane loaders; 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. In addition to the following unaffiliated sales and revenues by segment, intersegment sales and revenues in 2015, 2014 and 2013 were as follows: agriculture and turf net sales of $49 million, $89 million and $69 million, construction and forestry net sales of $1 million, $1 million and $2 million, and financial services revenues of $225 million, $228 million and $220 million, respectively.

OPERATING SEGMENTS	2015		2014		2013
Net sales and revenues
Unaffiliated customers:
Agriculture and turf net sales	$	19,812	$	26,380	$	29,132
Construction and forestry net sales		5,963		6,581		5,866
Total net sales		25,775		32,961		34,998
Financial services revenues		2,591		2,577		2,349
Other revenues*		497		529		448
Total	$	28,863	$	36,067	$	37,795

*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	$	1,649	$	3,649	$	4,680
Construction and forestry		528		648		378
Financial services*		963		921		870
Total operating profit		3,140		5,218		5,928
Interest income		61		57		55
Investment income				2		2
Interest expense		(273)		(289)		(297)
Foreign exchange gains (losses) from equipment operations’ financing activities		13		(2)		(8)
Corporate expenses — net		(160)		(196)		(197)
Income taxes		(840)		(1,627)		(1,946)
Total		(1,199)		(2,055)		(2,391)
Net income		1,941		3,163		3,537
Less: Net income attributable to noncontrolling interests		1		1
Net income attributable to Deere & Company	$	1,940	$	3,162	$	3,537

*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	$	14	$	17	$	24
Construction and forestry		2		1		2
Financial services		1,687		1,754		1,668
Corporate		61		57		55
Intercompany		(253)		(268)		(247)
Total	$	1,511	$	1,561	$	1,502

*Does not include finance rental income for equipment on operating leases.

Interest expense
Agriculture and turf	$	160	$	175	$	167
Construction and forestry		45		37		36
Financial services		455		431		488
Corporate		273		289		297
Intercompany		(253)		(268)		(247)
Total	$	680	$	664	$	741
Depreciation* and amortization expense
Agriculture and turf	$	659	$	681	$	627
Construction and forestry		133		115		106
Financial services		590		511		407
Total	$	1,382	$	1,307	$	1,140

*Includes depreciation for equipment on operating leases.

Equity in income (loss) of unconsolidated affiliates
Agriculture and turf	$	7	$	8	$	(1)
Construction and forestry		(7)		(18)
Financial services		1		2		1
Total	$	1	$	(8)
Identifiable operating assets
Agriculture and turf	$	8,332	$	9,442	$	10,799
Construction and forestry		3,295		3,405		3,461
Financial services		40,909		42,784		38,646
Corporate*		5,412		5,705		6,615
Total	$	57,948	$	61,336	$	59,521

*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	$	522	$	868	$	981
Construction and forestry		138		145		174
Financial services		6		3		3
Total	$	666	$	1,016	$	1,158
Investments in unconsolidated affiliates
Agriculture and turf	$	116	$	110	$	24
Construction and forestry		177		182		187
Financial services		10		11		10
Total	$	303	$	303	$	221

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	2015		2014		2013
Net sales and revenues
Unaffiliated customers:
U.S. and Canada:
Equipment operations net sales (87%)*	$	16,498	$	20,171	$	21,821
Financial services revenues (78%)*		2,252		2,220		2,031
Total		18,750		22,391		23,852
Outside U.S. and Canada:
Equipment operations net sales		9,277		12,790		13,177
Financial services revenues		339		357		318
Total		9,616		13,147		13,495
Other revenues		497		529		448
Total	$	28,863	$	36,067	$	37,795

*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 2015, 2014 and 2013.

Operating profit
U.S. and Canada:
Equipment operations	$	1,643	$	3,311	$	4,062
Financial services		802		727		706
Total		2,445		4,038		4,768
Outside U.S. and Canada:
Equipment operations		534		986		996
Financial services		161		194		164
Total		695		1,180		1,160
Total	$	3,140	$	5,218	$	5,928
Property and equipment
U.S.	$	3,098	$	3,154	$	2,997
Germany		568		640		647
Other countries		1,515		1,784		1,823
Total	$	5,181	$	5,578	$	5,467