SEGMENT AND GEOGRAPHIC AREA DATA

12 Months Ended

Nov. 01, 2020

SEGMENT AND GEOGRAPHIC AREA DATA

SEGMENT AND GEOGRAPHIC AREA DATA

28. SEGMENT AND GEOGRAPHIC AREA DATA

The company’s operations are presently organized and reported in three major business segments described as follows:

The agriculture and turf segment primarily manufactures and distributes a full line of agriculture and turf equipment and related service parts, including: large, medium, and utility tractors; tractor loaders; combines, cotton pickers, cotton strippers, and sugarcane harvesters; harvesting front-end equipment; sugarcane loaders and pull-behind scrapers; tillage, seeding, and application equipment, including sprayers, nutrient management, and soil preparation machinery; hay and forage equipment, including self-propelled forage harvesters and attachments, balers and mowers; turf and utility equipment, including riding lawn equipment, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements; integrated agricultural solutions and precision technologies; 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, roadbuilding, 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; milling machines; recyclers; slipform pavers; surface miners; asphalt pavers; compactors; tandem and static rollers; mobile crushers and screens; mobile and stationary asphalt plants; log skidders; feller bunchers; log loaders; log forwarders; log harvesters; and related logging attachments; and precision technologies.

The products and services produced by the segments above are marketed primarily through independent retail dealer networks and major retail outlets, and, as it relates to roadbuilding products, primarily through company-owned sales and service subsidiaries.

The financial services segment primarily finances sales and leases by John Deere dealers of new and used agriculture and turf equipment and construction and forestry equipment. In addition, the financial services segment provides wholesale financing to dealers of the foregoing equipment, finances retail revolving charge accounts, and offers extended equipment warranties.

Because of integrated manufacturing operations and common administrative and marketing support, a substantial number of allocations must be made to determine operating segment and geographic area data. Intersegment sales and revenues represent sales of components and finance charges, which are generally based on market prices.

Information relating to operations by operating segment in millions of dollars follows for the years ended November 1, 2020, November 3, 2019, and October 28, 2018. In addition to the following unaffiliated sales and revenues by segment, intersegment sales and revenues in 2020, 2019, and 2018 were as follows: agriculture and turf net sales of $24 million, $34 million, and $47 million, construction and forestry net sales of $1 million, $1 million, and none, and financial services revenues of $278 million, $348 million, and $308 million, respectively.

OPERATING SEGMENTS	2020		2019		2018
Net sales and revenues
Unaffiliated customers:
Agriculture and turf net sales	$	22,325	$	23,666	$	23,191
Construction and forestry net sales		8,947		11,220		10,160
Total net sales		31,272		34,886		33,351
Financial services revenues		3,589		3,621		3,252
Other revenues*		679		751		755
Total	$	35,540	$	39,258	$	37,358

*    Other revenues are primarily the equipment operations’ revenues for finance and interest income, and other income.

(continued)

OPERATING SEGMENTS	2020		2019		2018
Operating profit
Agriculture and turf	$	2,969	$	2,506	$	2,816
Construction and forestry		590		1,215		868
Financial services*		746		694		792
Total operating profit*		4,305		4,415		4,476
Interest income		62		85		80
Interest expense		(329)		(256)		(298)
Foreign exchange gains (losses) from equipment operations’ financing activities		17		(22)		36
Pension and OPEB benefit (cost), excluding service cost component		31		67		(15)
Corporate expenses – net		(251)		(180)		(181)
Income taxes		(1,082)		(852)		(1,727)
Total		(1,552)		(1,158)		(2,105)
Net income		2,753		3,257		2,371
Less: Net income attributable to noncontrolling interests		2		4		3
Net income attributable to Deere & Company	$	2,751	$	3,253	$	2,368

*    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	$	38	$	22	$	14
Construction and forestry		12		11		33
Financial services		2,122		2,316		1,997
Corporate		62		85		80
Intercompany		(272)		(360)		(330)
Total	$	1,962	$	2,074	$	1,794

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

Interest expense
Agriculture and turf	$	187	$	245	$	229
Construction and forestry		61		91		71
Financial services		942		1,234		936
Corporate		329		256		298
Intercompany		(272)		(360)		(330)
Total	$	1,247	$	1,466	$	1,204
Depreciation* and amortization expense
Agriculture and turf	$	727	$	723	$	723
Construction and forestry		289		292		251
Financial services		1,227		1,135		1,077
Intercompany		(125)		(131)		(124)
Total	$	2,118	$	2,019	$	1,927

*    Includes depreciation for equipment on operating leases.

(continued)

OPERATING SEGMENTS	2020		2019		2018
Equity in income (loss) of unconsolidated affiliates
Agriculture and turf	$	2	$	6	$	6
Construction and forestry		(52)		14		19
Financial services		2		1		2
Total	$	(48)	$	21	$	27
Identifiable operating assets
Agriculture and turf	$	9,575	$	10,379	$	10,161
Construction and forestry		8,802		9,387		9,855
Financial services		48,719		48,483		45,720
Corporate*		7,995		4,762		4,372
Total	$	75,091	$	73,011	$	70,108

*    Corporate assets are primarily the equipment operations’ retirement benefits, deferred income tax assets, marketable securities, and cash and cash equivalents.

Capital additions
Agriculture and turf	$	654	$	859	$	675
Construction and forestry		157		245		308
Financial services		4		3		2
Total	$	815	$	1,107	$	985
Investments in unconsolidated affiliates
Agriculture and turf	$	30	$	28	$	26
Construction and forestry		144		171		166
Financial services		19		16		15
Total	$	193	$	215	$	207

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	2020		2019		2018
Net sales and revenues
Unaffiliated customers:
U.S. and Canada:
Equipment operations net sales and revenues*	$	18,288	$	20,647	$	18,847
Financial services revenues*		3,098		3,099		2,785
Total		21,386		23,746		21,632
Outside U.S. and Canada:
Equipment operations net sales and revenues		13,663		14,990		14,504
Financial services revenues		491		522		467
Total		14,154		15,512		14,971
Other revenues						755
Total	$	35,540	$	39,258	$	37,358

*    The 2018 equipment operations’ amounts are only for net sales and approximate the proportion of each amount that relates to the U.S. only based on a three-year average. The equipment operations’ percentage for 2018 was 88%. The financial services’ U.S. only percentages was 79% for 2018. See Note 6 for additional 2020 and 2019 geographic net sales and revenues information.

(continued)

GEOGRAPHIC AREAS	2020		2019		2018
Operating profit
U.S. and Canada:
Equipment operations	$	2,194	$	2,335	$	2,356
Financial services		581		506		604
Total		2,775		2,841		2,960
Outside U.S. and Canada:
Equipment operations		1,365		1,386		1,328
Financial services		165		188		188
Total		1,530		1,574		1,516
Total	$	4,305	$	4,415	$	4,476

Property and equipment
U.S.	$	3,150	$	3,169	$	3,031
Germany		1,113		1,137		1,164
Other countries		1,554		1,667		1,673
Total	$	5,817	$	5,973	$	5,868