SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2014, 2013 AND 2012

12 Months Ended

Oct. 31, 2014

SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2014, 2013 AND 2012

SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2014, 2013 AND 2012

28. SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2014, 2013 AND 2012

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 crop risk mitigation products and extended equipment warranties. The company signed an agreement in December 2014 to sell the stock of the Crop Insurance operations (see Note 30).

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 2014, 2013 and 2012 were as follows: agriculture and turf net sales of $89 million, $69 million and $84 million, construction and forestry net sales of $1 million, $2 million and $1 million, and financial services revenues of $228 million, $220 million and $219 million, respectively.

OPERATING SEGMENTS	2014		2013		2012
Net sales and revenues
Unaffiliated customers:
Agriculture and turf net sales	$	26,380	$	29,132	$	27,123
Construction and forestry net sales	6,581		5,866		6,378
Total net sales	32,961		34,998		33,501
Financial services revenues	2,577		2,349		2,235
Other revenues*	529		448		421
Total	$	36,067	$	37,795	$	36,157

* 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	$	3,649		$	4,680		$	3,921
Construction and forestry	648			378			476
Financial services*	921			870			712
Total operating profit	5,218			5,928			5,109
Interest income	57			55			43
Investment income	2			2			2
Interest expense	(289		)	(297		)	(231)
Foreign exchange losses from equipment operations’ financing activities	(2		)	(8		)	(11)
Corporate expenses — net	(196		)	(197		)	(181)
Income taxes	(1,627		)	(1,946		)	(1,659)
Total	(2,055		)	(2,391		)	(2,037)
Net income	3,163			3,537			3,072
Less: Net income attributable to noncontrolling interests	1						7
Net income attributable to
Deere & Company	$	3,162		$	3,537		$	3,065

* Operating profit of the financial services business segment includes the effect of its interest expense and foreign exchange gains or losses.

OPERATING SEGMENTS	2014			2013			2012
Interest income*
Agriculture and turf	$	17		$	24		$	29
Construction and forestry	1			2			2
Financial services	1,754			1,668			1,610
Corporate	57			55			43
Intercompany	(268		)	(247		)	(248)
Total	$	1,561		$	1,502		$	1,436

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

Interest expense
Agriculture and turf	$	175		$	167		$	168
Construction and forestry	37			36			36
Financial services	431			488			596
Corporate	289			297			231
Intercompany	(268		)	(247		)	(248)
Total	$	664		$	741		$	783

Depreciation* and amortization expense
Agriculture and turf	$	681	$	627	$	550
Construction and forestry	115		106		93
Financial services	511		407		361
Total	$	1,307	$	1,140	$	1,004

*   Includes depreciation for equipment on operating leases.

Equity in income (loss) of unconsolidated affiliates
Agriculture and turf	$	8		$	(1	)	$	(2)
Construction and forestry	(18		)				(2)
Financial services	2			1			1
Total	$	(8	)				$	(3)

Identifiable operating assets
Agriculture and turf	$	9,442	$	10,799	$	10,429
Construction and forestry	3,405		3,461		3,365
Financial services	42,784		38,646		34,495
Corporate*	5,705		6,615		7,977
Total	$	61,336	$	59,521	$	56,266

* 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	$	868	$	981	$	1,145
Construction and forestry	145		174		228
Financial services	3		3		3
Total	$	1,016	$	1,158	$	1,376

Investments in unconsolidated affiliates
Agriculture and turf	$	110	$	24	$	32
Construction and forestry	182		187		174
Financial services	11		10		9
Total	$	303	$	221	$	215

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	2014		2013		2012
Net sales and revenues
Unaffiliated customers:
U.S. and Canada:
Equipment operations net sales (87%)*	$	20,171	$	21,821	$	20,807
Financial services revenues (78%)*	2,220		2,031		1,930
Total	22,391		23,852		22,737
Outside U.S. and Canada:
Equipment operations net sales	12,790		13,177		12,694
Financial services revenues	357		318		305
Total	13,147		13,495		12,999
Other revenues	529		448		421
Total	$	36,067	$	37,795	$	36,157

* 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 2014, 2013 and 2012.  

Operating profit
U.S. and Canada:
Equipment operations	$	3,311	$	4,062	$	3,836
Financial services	727		706		566
Total	4,038		4,768		4,402
Outside U.S. and Canada:
Equipment operations	986		996		561
Financial services	194		164		146
Total	1,180		1,160		707
Total	$	5,218	$	5,928	$	5,109
Property and equipment
U.S.	$	3,154	$	2,997	$	2,742
Germany	640		647		568
Other countries	1,784		1,823		1,702
Total	$	5,578	$	5,467	$	5,012