Document and Entity Information
Document and Entity Information | 9 Months Ended |
Jul. 28, 2019shares | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Jul. 28, 2019 |
Entity File Number | 1-4121 |
Entity Registrant Name | DEERE & CO |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 36-2382580 |
Entity Address, Address Line One | One John Deere Place |
Entity Address, City or Town | Moline |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 61265 |
City Area Code | 309 |
Local Phone Number | 765-8000 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 314,872,834 |
Current Fiscal Year End Date | --11-03 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q3 |
Entity Central Index Key | 0000315189 |
Amendment Flag | false |
Common Stock | |
Title of 12(b) Security | Common stock, $1 par value |
Trading Symbol | DE |
Security Exchange Name | NYSE |
8-1/2% Debentures Due 2022 | |
Title of 12(b) Security | 8½% Debentures Due 2022 |
Trading Symbol | DE22 |
Security Exchange Name | NYSE |
6.55% Debentures Due 2028 | |
Title of 12(b) Security | 6.55% Debentures Due 2028 |
Trading Symbol | DE28 |
Security Exchange Name | NYSE |
STATEMENT OF CONSOLIDATED INCOM
STATEMENT OF CONSOLIDATED INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Net Sales and Revenues | ||||
Net sales and revenues | $ 10,036 | $ 10,308 | $ 29,362 | $ 27,942 |
Costs and Expenses | ||||
Research and development expenses | 431 | 416 | 1,295 | 1,188 |
Selling, administrative and general expenses | 896 | 913 | 2,607 | 2,557 |
Interest expense | 374 | 291 | 1,078 | 881 |
Total | 8,923 | 9,118 | 26,099 | 24,850 |
Income of Consolidated Group before Income Taxes | 1,113 | 1,190 | 3,263 | 3,092 |
Provision for income taxes | 221 | 289 | 748 | 1,524 |
Income of Consolidated Group | 892 | 901 | 2,515 | 1,568 |
Equity in income of unconsolidated affiliates | 7 | 10 | 20 | 18 |
Net Income | 899 | 911 | 2,535 | 1,586 |
Less: Net income attributable to noncontrolling interests | 0 | 1 | 3 | 2 |
Net Income Attributable to Deere & Company | $ 899 | $ 910 | $ 2,532 | $ 1,584 |
Per Share Data | ||||
Basic (in dollars per share) | $ 2.84 | $ 2.81 | $ 7.98 | $ 4.90 |
Diluted (in dollars per share) | $ 2.81 | $ 2.78 | $ 7.87 | $ 4.82 |
Average Shares Outstanding | ||||
Basic (in shares) | 315.9 | 323.5 | 317.3 | 323.4 |
Diluted (in shares) | 319.8 | 328 | 321.5 | 328.2 |
Net Sales | ||||
Net Sales and Revenues | ||||
Net sales and revenues | $ 8,969 | $ 9,286 | $ 26,182 | $ 25,007 |
Costs and Expenses | ||||
Costs and expenses | 6,870 | 7,152 | 20,056 | 19,190 |
Finance and Interest Income | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 884 | 786 | 2,537 | 2,263 |
Other | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 183 | 236 | 643 | 672 |
Costs and Expenses | ||||
Costs and expenses | $ 352 | $ 346 | $ 1,063 | $ 1,034 |
STATEMENT OF CONSOLIDATED COMPR
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME | ||||
Net income | $ 899 | $ 911 | $ 2,535 | $ 1,586 |
Other Comprehensive Income (Loss), Net of Income Taxes | ||||
Retirement benefits adjustment | 15 | 40 | 84 | 205 |
Cumulative translation adjustment | 26 | (421) | (218) | (197) |
Unrealized gain (loss) on derivatives | (22) | (1) | (37) | 10 |
Unrealized gain (loss) on debt securities | 10 | 1 | 25 | (8) |
Other Comprehensive Income (Loss), Net of Income Taxes | 29 | (381) | (146) | 10 |
Comprehensive Income of Consolidated Group | 928 | 530 | 2,389 | 1,596 |
Less: Comprehensive income attributable to noncontrolling interests | 0 | 0 | 3 | 1 |
Comprehensive Income Attributable to Deere & Company | $ 928 | $ 530 | $ 2,386 | $ 1,595 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Jul. 28, 2019 | Apr. 28, 2019 | Oct. 29, 2018 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Oct. 29, 2017 |
ASSETS | |||||||
Cash and cash equivalents | $ 3,383 | $ 3,904 | $ 3,923 | ||||
Marketable securities | 565 | 490 | 488 | ||||
Receivables from unconsolidated affiliates | 54 | 22 | 28 | ||||
Trade accounts and notes receivable - net | 6,758 | 5,004 | 6,208 | ||||
Financing receivables - net | 27,049 | 27,054 | 25,213 | ||||
Financing receivables securitized - net | 5,200 | 4,022 | 4,662 | ||||
Other receivables | 1,535 | 1,736 | 1,300 | ||||
Equipment on operating leases - net | 7,269 | 7,165 | 6,805 | ||||
Inventories | 6,747 | 6,149 | 6,239 | ||||
Property and equipment - net | 5,798 | 5,868 | 5,638 | ||||
Investments in unconsolidated affiliates | 219 | 207 | 199 | ||||
Goodwill | 3,013 | 3,101 | 3,047 | $ 1,033 | |||
Other intangible assets - net | 1,444 | 1,562 | 1,581 | ||||
Retirement benefits | 1,431 | 1,298 | 737 | ||||
Deferred income taxes | 1,088 | 808 | 1,645 | ||||
Other assets | 1,977 | $ 1,828 | 1,718 | 1,677 | |||
Total Assets | 73,530 | 70,108 | 69,390 | ||||
LIABILITIES | |||||||
Short-term borrowings | 11,142 | 11,062 | 11,004 | ||||
Short-term securitization borrowings | 5,048 | 3,957 | 4,528 | ||||
Payables to unconsolidated affiliates | 136 | 129 | 111 | ||||
Accounts payable and accrued expenses | 9,390 | $ 10,221 | 10,111 | 9,483 | |||
Deferred income taxes | 507 | 556 | 524 | ||||
Long-term borrowings | 29,242 | 27,237 | 26,838 | ||||
Retirement benefits and other liabilities | 5,781 | 5,751 | 6,522 | ||||
Total liabilities | 61,246 | 58,803 | 59,010 | ||||
Commitments and contingencies (Note 15) | |||||||
Redeemable noncontrolling interest | 14 | 14 | 14 | ||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, $1 par value (issued shares at July 28, 2019 - 536,431,204) | 4,599 | 4,474 | 4,451 | ||||
Common stock in treasury | (17,121) | (16,312) | (15,814) | ||||
Retained earnings | 29,369 | 27,553 | 26,272 | ||||
Accumulated other comprehensive income (loss) | (4,581) | (4,427) | (4,553) | ||||
Total Deere & Company stockholders' equity | 12,266 | 11,288 | 10,356 | ||||
Noncontrolling interests | 4 | 3 | 10 | ||||
Total stockholders' equity | 12,270 | $ 11,924 | 11,291 | 10,366 | $ 10,420 | $ 9,560 | |
Total Liabilities and Stockholders' Equity | $ 73,530 | $ 70,108 | $ 69,390 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) | Jul. 28, 2019$ / sharesshares |
CONDENSED CONSOLIDATED BALANCE SHEET | |
Common stock, par value (in dollars per share) | $ / shares | $ 1 |
Common stock, issued shares | shares | 536,431,204 |
STATEMENT OF CONSOLIDATED CASH
STATEMENT OF CONSOLIDATED CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Jul. 28, 2019 | Jul. 29, 2018 | |
Cash Flows from Operating Activities | ||
Net income | $ 2,535 | $ 1,586 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Provision for credit losses | 58 | 66 |
Provision for depreciation and amortization | 1,522 | 1,445 |
Share-based compensation expense | 63 | 63 |
Gain on sales of businesses | (25) | |
Undistributed earnings of unconsolidated affiliates | 10 | (10) |
Provision (credit) for deferred income taxes | (332) | 641 |
Changes in assets and liabilities: | ||
Trade, notes, and financing receivables related to sales | (2,206) | (2,365) |
Inventories | (1,168) | (1,539) |
Accounts payable and accrued expenses | (306) | 213 |
Accrued income taxes payable/receivable | 253 | 176 |
Retirement benefits | 40 | (814) |
Other | (65) | (109) |
Net cash provided by (used for) operating activities | 404 | (672) |
Cash Flows from Investing Activities | ||
Collections of receivables (excluding receivables related to sales) | 12,685 | 12,162 |
Proceeds from maturities and sales of marketable securities | 72 | 56 |
Proceeds from sales of equipment on operating leases | 1,171 | 1,116 |
Proceeds from sales of businesses, net of cash sold | 133 | |
Cost of receivables acquired (excluding receivables related to sales) | (13,662) | (12,586) |
Acquisitions of businesses, net of cash acquired | (5,171) | |
Purchases of marketable securities | (110) | (101) |
Purchases of property and equipment | (756) | (571) |
Cost of equipment on operating leases acquired | (1,462) | (1,428) |
Other | (67) | (103) |
Net cash used for investing activities | (2,129) | (6,493) |
Cash Flows from Financing Activities | ||
Increase (decrease) in total short-term borrowings | (336) | 1,183 |
Proceeds from long-term borrowings | 7,440 | 5,739 |
Payments of long-term borrowings | (4,356) | (4,372) |
Proceeds from issuance of common stock | 133 | 209 |
Repurchases of common stock | (880) | (454) |
Dividends paid | (703) | (583) |
Other | (82) | (66) |
Net cash provided by financing activities | 1,216 | 1,656 |
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | (24) | 71 |
Net Decrease in Cash, Cash Equivalents, and Restricted Cash | (533) | (5,438) |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 4,015 | 9,467 |
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ 3,482 | $ 4,029 |
STATEMENT OF CHANGES IN CONSOLI
STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Common Stock | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
Balance at Oct. 29, 2017 | $ 4,281 | $ (15,461) | $ 25,301 | $ (4,564) | $ 3 | $ 9,560 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 1,584 | 1 | 1,585 | |||
Other comprehensive income (loss) | 11 | (1) | 10 | |||
Repurchases of common stock | (454) | (454) | ||||
Treasury shares reissued | 101 | 101 | ||||
Dividends declared | (613) | (2) | (615) | |||
Acquisitions | 8 | 8 | ||||
Stock options and other | 170 | 1 | 171 | |||
Balance at Jul. 29, 2018 | 4,451 | (15,814) | 26,272 | (4,553) | 10 | 10,366 |
Redeemable Noncontrolling Interest - Balance at Oct. 29, 2017 | 14 | |||||
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||||
Net income | 1 | |||||
Dividends declared | (1) | |||||
Redeemable Noncontrolling Interest - Balance at Jul. 29, 2018 | 14 | |||||
Balance at Apr. 29, 2018 | 4,423 | (15,426) | 25,586 | (4,173) | 10 | 10,420 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 910 | 1 | 911 | |||
Other comprehensive income (loss) | (380) | (1) | (381) | |||
Repurchases of common stock | (394) | (394) | ||||
Treasury shares reissued | 6 | 6 | ||||
Dividends declared | (223) | (223) | ||||
Stock options and other | 28 | (1) | 27 | |||
Balance at Jul. 29, 2018 | 4,451 | (15,814) | 26,272 | (4,553) | 10 | 10,366 |
Redeemable Noncontrolling Interest - Balance at Apr. 29, 2018 | 14 | |||||
Redeemable Noncontrolling Interest - Balance at Jul. 29, 2018 | 14 | |||||
Balance at Oct. 28, 2018 | 4,474 | (16,312) | 27,553 | (4,427) | 3 | 11,291 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 2,532 | 3 | 2,535 | |||
Other comprehensive income (loss) | (146) | (146) | ||||
Repurchases of common stock | (880) | (880) | ||||
Treasury shares reissued | 71 | 71 | ||||
Dividends declared | (725) | (2) | (727) | |||
Stock options and other | 125 | 1 | 126 | |||
Balance at Jul. 28, 2019 | 4,599 | (17,121) | 29,369 | (4,581) | 4 | 12,270 |
Redeemable Noncontrolling Interest - Balance at Oct. 28, 2018 | 14 | |||||
Redeemable Noncontrolling Interest - Balance at Jul. 28, 2019 | 14 | |||||
Balance at Apr. 28, 2019 | 4,559 | (16,739) | 28,709 | (4,610) | 5 | 11,924 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 899 | 899 | ||||
Other comprehensive income (loss) | 29 | 29 | ||||
Repurchases of common stock | (400) | (400) | ||||
Treasury shares reissued | 18 | 18 | ||||
Dividends declared | (240) | (1) | (241) | |||
Stock options and other | 40 | 1 | 41 | |||
Balance at Jul. 28, 2019 | $ 4,599 | $ (17,121) | 29,369 | (4,581) | $ 4 | 12,270 |
Redeemable Noncontrolling Interest - Balance at Apr. 28, 2019 | 14 | |||||
Redeemable Noncontrolling Interest - Balance at Jul. 28, 2019 | $ 14 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
ASU No. 2016-01 adoption | $ 8 | $ (8) |
ORGANIZATION AND CONSOLIDATION
ORGANIZATION AND CONSOLIDATION | 9 Months Ended |
Jul. 28, 2019 | |
ORGANIZATION AND CONSOLIDATION | |
ORGANIZATION AND CONSOLIDATION | (1) Organization and Consolidation The information in the notes and related commentary are presented in a format which includes data grouped as follows: Equipment Operations – Financial Services – Consolidated – The Company uses a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The third quarter ends for fiscal year 2019 and 2018 were July 28, 2019 and July 29, 2018, respectively. Both periods contained 13 weeks. Variable Interest Entities The Company consolidates certain variable interest entities (VIEs) related to retail note securitizations (see Note 12). The Company also has an interest in a joint venture that manufactures construction equipment in Brazil for local and overseas markets. The joint venture is a VIE; however, the Company is not the primary beneficiary. Therefore, the entity’s financial results are not fully consolidated in the Company’s consolidated financial statements, but are included on an equity basis. During the second quarter of 2019, the Company made an additional contribution to the joint venture in exchange for non-voting preferred stock and terminated the loan guarantee. The maximum exposure to losses at July 28, 2019 and October 28, 2018 in millions of dollars follows: July 28, 2019 October 28, 2018 Receivables from unconsolidated affiliates $ 3 $ 2 Investment in unconsolidated affiliates 20 Loan guarantee 25 Total $ 23 $ 27 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CASH FLOW INFORMATION | 9 Months Ended |
Jul. 28, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CASH FLOW INFORMATION | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (2) Summary of Significant Accounting Policies and Cash Flow Information T The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates. |
CASH FLOW INFORMATION | Cash Flow Information All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in the statement of consolidated cash flows as these receivables arise from sales to the Company’s customers. Cash flows from financing receivables that are related to sales to the Company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by independent dealers and are included in investing activities. The Company had the following non-cash operating and investing activities that were not included in the statement of consolidated cash flows. The Company transferred inventory to equipment on operating leases of approximately $498 million and $564 million in the first nine months of 2019 and 2018, respectively. The Company also had accounts payable related to purchases of property and equipment of approximately $70 million and $57 million at July 28, 2019 and July 29, 2018, respectively. The Company’s equipment operations held restricted cash of $9 million, $7 million, $7 million, and $6 million at July 28, 2019, October 28, 2018, July 29, 2018, and October 29, 2017, respectively. The equipment operation’s restricted cash relates to miscellaneous operational activities. The Company’s financial services operations held restricted cash of $90 million, $104 million, $99 million, and $126 million at July 28, 2019, October 28, 2018, July 29, 2018, and October 29, 2017, respectively. The financial services operations’ restricted cash primarily relates to securitization of financing receivables (see Note 12). The restricted cash is recorded in other assets in the consolidated balance sheet. |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | 9 Months Ended |
Jul. 28, 2019 | |
NEW ACCOUNTING STANDARDS | |
NEW ACCOUNTING STANDARDS | (3) New Accounting Standards New Accounting Standards Adopted In the first quarter of 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition. The ASU was adopted using a modified-retrospective approach to all incomplete contracts as of the adoption date. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. A five step model is used to determine the amount and timing of revenue recognized. The ASU also requires expanded disclosures to include disaggregated revenue by geographic regions and major product lines. The ASU required that a gross asset and liability rather than a net liability be recorded for the value of estimated service parts returns and the related refund liability. The gross asset is recorded in other assets for the inventory value of estimated parts returns and the gross liability is recorded in accounts payable and accrued expenses for the estimated dealer refund. The table below reflects the change for the estimated parts returns in the affected lines on the consolidated balance sheet in millions of dollars. October 28, 2018 Cumulative Effect October 29, 2018 Assets Other assets $ 1,718 $ 110 $ 1,828 Liabilities Accounts payable and accrued expenses $ 10,111 $ 110 $ 10,221 There were no significant changes affecting the timing of revenue recognition from the adoption. The Company’s updated revenue policies and additional disclosures are included in Note 4. In the first quarter of 2019, the Company adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends ASC 825-10, Financial Instruments – Overall. This ASU changed the treatment for available for sale equity investments by recognizing unrealized fair value changes directly in net income and no longer in other comprehensive income (OCI). The cumulative effect of adoption resulted in an $8 million after-tax reclassification from OCI to retained earnings. In the first quarter of 2019, the Company adopted ASU No. 2016-18, Restricted Cash, which amends ASC 230, Statement of Cash Flows. The ASU requires that restricted cash be included with cash and cash equivalents in the statement of cash flows. The ASU was adopted using a retrospective transition approach resulting in an update to the 2018 consolidated and supplemental consolidating statement of cash flows (see Note 2). The ASU did not have a material effect on the Company’s consolidated financial statements. In the first quarter of 2019, the Company early adopted ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities, which amends ASC 815, Derivatives and Hedging. The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements, and improve the disclosures of hedging arrangements. The adoption did not have a material effect on the Company’s consolidated financial statements (see Note 17). The Company continues to evaluate potential additional hedge accounting relationships provided by the new standard to further improve risk management. The Company also adopted the following standards in the first quarter of 2019, none of which had a material effect on the Company’s consolidated financial statements: Accounting Standards Updates 2016-15 Classification of Certain Cash Receipts and Cash Payments, which amends ASC 230, Statement of Cash Flows 2016-16 Intra-Entity Transfers of Assets Other Than Inventory, which amends ASC 740, 2017-01 Clarifying the Definition of a Business, which amends ASC 805, Business Combinations 2017-09 Scope of Modification Accounting, which amends ASC 718, Compensation - 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement 2018-14 Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit 2018-16 Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which amends ASC 815, Derivatives and Hedging New Accounting Standards to be Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. The ASU’s primary change is the requirement for lessee entities to recognize a lease liability for payments and a right of use asset during the term of operating lease arrangements. The ASU does not significantly change the lessee’s recognition, measurement, and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases: Targeted Improvements. Both ASUs amend ASC 842, Leases. The provisions affecting the Company in these ASUs are an option that will not require earlier periods to be restated at the adoption date and an option for lessors, if certain criteria are met, to avoid separating the lease and nonlease components (such as preventative maintenance services) in an agreement. In December 2018, the FASB issued ASU No. 2018-20, Narrow-Scope Improvements for Lessors. This ASU provides an election for lessors to exclude sales and related taxes from consideration in the contract, requires lessors to exclude from revenue and expense lessor costs paid directly to a third party by lessees, and clarifies lessors’ accounting for variable payments related to both lease and nonlease components. In March 2019, the FASB issued ASU No. 2019-01, Leases: Codification Improvements. The ASU allows certain lessors, including captive finance companies, to use their cost as the fair value of the to-be-leased asset. The ASU also clarifies the presentation of lease payments in the statement of cash flows and the required transition disclosures. The effective date will be the first quarter of fiscal year 2020. The Company is implementing a software application for lessee accounting, designing new processes and controls, and evaluating the potential effects on the consolidated financial statements. The ASU will be adopted using the modified-retrospective approach that will not require earlier periods to be restated. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes ASC 326, Financial Instruments - Credit Losses. The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This ASU clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In May 2019, the FASB issued ASU No. 2019-05, Targeted Transition Relief, which amends ASC 326. This ASU provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The effective date will be the first quarter of fiscal year 2021. The ASUs will be adopted using a modified-retrospective approach. The Company is evaluating the potential effects on the consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends ASC 310-20, Receivables – Nonrefundable Fees and Other Costs. This ASU reduces the amortization period for certain callable debt securities held at a premium to the earliest call date. The treatment of securities held at a discount is unchanged. The effective date is the first quarter of fiscal year 2020. The ASU will be adopted using a modified-retrospective approach. The adoption will not have a material effect on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718, Compensation – Stock Compensation. The ASU requires that most of the guidance related to stock compensation granted to employees be followed for non-employees, including the measurement date, valuation approach, and performance conditions. The expense is recognized in the same period as though cash were paid for the good or service. The effective date is the first quarter of fiscal year 2020. The ASU will be adopted using a modified-retrospective approach. The adoption will not have a material effect on the consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software. This ASU requires customers in a hosting arrangement that is a service contract to evaluate the implementation costs of the hosting arrangement using the guidance to develop internal-use software. The project development stage determines the implementation costs that are capitalized or expensed. Capitalized implementation costs are amortized over the term of the service arrangement and are presented in the same income statement line item as the service contract costs. The effective date will be the first quarter of fiscal year 2021, with early adoption permitted. The Company will adopt the ASU on a prospective basis. The Company is evaluating the potential effects on the Company’s consolidated financial statements. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The effective dates for the separate portions of the ASU and the expected effect on the consolidated financial statements are as follows: (1) clarifications to ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, is the first quarter of fiscal year 2021, which is under evaluation, (2) clarifications to ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities, is the first quarter of fiscal year 2020, with early adoption permitted, which will not have a material effect, and (3) clarifications to ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, is the first quarter of fiscal year 2021, with early adoption permitted, which will not have a material effect. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Jul. 28, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | (4) Revenue Recognition Sales of equipment and service parts. In limited instances, equipment is transferred to a customer or a financial institution with an obligation to repurchase the equipment for a specified amount, which is exercisable at the customer’s option. When the equipment is expected to be repurchased, those arrangements are accounted for as leases. When the operating lease criteria are met, no sale is recorded at the time of the equipment transfer and the difference between sale price and the specified repurchase amount is recognized as revenue on a straight-line basis until the customer’s option expires. When this equipment is not expected to be repurchased, a sale is recorded with a return obligation. Under the terms of sales agreements with dealers, interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range from one to twelve months for most equipment. Interest-free periods may not be extended. Interest is primarily charged to dealers on outstanding balances, from the earlier of the date when goods are sold to retail customers by the dealer or the expiration of certain interest-free periods granted at the time of the sale to the dealer, until payment is received by the Company. Interest charged may not be forgiven and the past due interest rates exceed market rates. Dealers cannot cancel purchases after the equipment is shipped and are responsible for payment even if the equipment is not sold to retail customers. If the interest-free or below market interest rate period exceeds one year, the Company adjusts the expected sales revenue for the effects of the time value of money using a current market interest rate. The revenue related to the financing component is recognized in finance and interest income using the interest method. The Company elected to not adjust the sales price to account for a financing component if the expected interest-free or below market period is one year or less. Service parts and certain attachments returns are estimable and accrued at the time a sale is recognized. The estimated parts returns are recorded in other assets for the inventory value of estimated part returns, adjusted for restocking fees. The estimated dealer refund liability, adjusted for restocking fees, is recorded in accounts payable and accrued expenses. The estimated returns are based on historical return rates, current dealer inventory levels, and current economic conditions. Sales incentives. Product warranties. Remanufactured components and parts. Precision guidance, telematics, and other information enabled solutions. Allowance for credit losses. Sales and transaction taxes. Shipping and handling costs. Contract costs The Company’s revenue by primary geographical market, major product line, and timing of revenue recognition in millions of dollars follow: Three Months Ended July 28, 2019 Agriculture Construction Financial Total Primary geographical markets: United States $ 2,870 $ 1,594 $ 632 $ 5,096 Canada 299 260 148 707 Western Europe 1,154 458 22 1,634 Central Europe and CIS 324 229 10 563 Latin America 708 171 66 945 Asia, Africa, Australia, New Zealand, 684 375 32 1,091 Total $ 6,039 $ 3,087 $ 910 $ 10,036 Major product lines: Large Agriculture $ 2,985 $ 2,985 Small Agriculture 2,172 2,172 Turf 704 704 Construction $ 1,319 1,319 Compact Construction 320 320 Road Building 1,008 1,008 Forestry 333 333 Financial Products 25 7 $ 910 942 Other 153 100 253 Total $ 6,039 $ 3,087 $ 910 $ 10,036 Timing of revenue recognition: Revenue recognized at a point in time $ 5,988 $ 3,055 $ 9,043 Revenue recognized over time 51 32 $ 910 993 Total $ 6,039 $ 3,087 $ 910 $ 10,036 Nine Months Ended July 28, 2019 Agriculture Construction Financial Total Primary geographical markets: United States $ 9,411 $ 4,495 $ 1,810 $ 15,716 Canada 784 773 458 2,015 Western Europe 3,362 1,174 63 4,599 Central Europe and CIS 865 555 28 1,448 Latin America 2,028 515 199 2,742 Asia, Africa, Australia, New Zealand, 1,784 966 92 2,842 Total $ 18,234 $ 8,478 $ 2,650 $ 29,362 Major product lines: Large Agriculture $ 8,647 $ 8,647 Small Agriculture 6,613 6,613 Turf 2,199 2,199 Construction $ 3,806 3,806 Compact Construction 904 904 Road Building 2,420 2,420 Forestry 1,023 1,023 Financial Products 69 20 $ 2,650 2,739 Other 706 305 1,011 Total $ 18,234 $ 8,478 $ 2,650 $ 29,362 Timing of revenue recognition: Revenue recognized at a point in time $ 18,088 $ 8,402 $ 26,490 Revenue recognized over time 146 76 $ 2,650 2,872 Total $ 18,234 $ 8,478 $ 2,650 $ 29,362 Following is a description of the Company’s major product lines: Large Agriculture Small Agriculture Turf Construction Compact Construction Road Building Forestry Financial Products Other The Company invoices in advance of recognizing the sale of certain products and the revenue for certain services. These items are primarily for premiums for extended warranties, advance payments for future equipment sales, and subscription and service revenue related to precision guidance and telematic services. These advanced customer payments are presented as deferred revenue, a contract liability, in accounts payable and accrued expenses in the consolidated balance sheet. The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note 15, was $1,022 million and $915 million at July 28, 2019 and October 28, 2018, respectively. The contract liability is reduced as the revenue is recognized. During the third quarter and first nine months of 2019, $101 million and $360 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of 2019. The Company entered into contracts with customers to deliver equipment and services that have not been recognized at July 28, 2019 because the equipment or services have not been provided. These contracts primarily relate to extended warranty and certain precision guidance and telematic services. The amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $878 million at July 28, 2019. The estimated revenue to be recognized by fiscal year follows in millions of dollars: remainder of 2019 - $133, 2020 - $348, 2021 - $197, 2022 - $116, 2023 - $58, and later years - $26. As permitted, the Company elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are generally for sales to dealers and end customers for equipment, service parts, repair services, and certain telematics services. |
OTHER COMPREHENSIVE INCOME ITEM
OTHER COMPREHENSIVE INCOME ITEMS | 9 Months Ended |
Jul. 28, 2019 | |
OTHER COMPREHENSIVE INCOME ITEMS | |
OTHER COMPREHENSIVE INCOME ITEMS | (5) Other Comprehensive Income Items The after-tax changes in accumulated other comprehensive income (loss) in millions of dollars follow: Total Unrealized Unrealized Accumulated Retirement Cumulative Gain (Loss) Gain (Loss) Other Benefits Translation on on Comprehensive Adjustment Adjustment Derivatives Debt Securities Income (Loss) Balance October 29, 2017 $ (3,580) $ (999) $ 5 $ 10 $ (4,564) Other comprehensive income (loss) items before reclassification 81 (196) 12 (7) (110) Amounts reclassified from accumulated other comprehensive income 124 (2) (1) 121 Net current period other comprehensive income (loss) 205 (196) 10 (8) 11 Balance July 29, 2018 $ (3,375) $ (1,195) $ 15 $ 2 $ (4,553) Balance October 28, 2018 $ (3,237) $ (1,203) $ 15 $ (2) $ (4,427) ASU No. 2016-01 adoption* (8) (8) Other comprehensive income (loss) items before reclassification 30 (218) (33) 26 (195) Amounts reclassified from accumulated other comprehensive income 54 (4) (1) 49 Net current period other comprehensive income (loss) 84 (218) (37) 25 (146) Balance July 28, 2019 $ (3,153) $ (1,421) $ (22) $ 15 $ (4,581) * See Note 3. Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars: Before Tax After Tax (Expense) Tax Three Months Ended July 28, 2019 Amount Credit Amount Cumulative translation adjustment $ 27 $ (1) $ 26 Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) (27) 6 (21) Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (1) (1) Net unrealized gain (loss) on derivatives (28) 6 (22) Unrealized gain (loss) on debt securities: Unrealized holding gain (loss) 13 (2) 11 Reclassification of realized (gain) loss – Other income (1) (1) Net unrealized gain (loss) on debt securities 12 (2) 10 Retirement benefits adjustment: Pensions Net actuarial gain (loss) (3) 1 (2) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 35 (9) 26 Prior service (credit) cost 2 2 Settlements/curtailments 1 1 OPEB Net actuarial gain (loss) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 4 (1) 3 Prior service (credit) cost (19) 4 (15) Net unrealized gain (loss) on retirement benefits adjustment 20 (5) 15 Total other comprehensive income (loss) $ 31 $ (2) $ 29 * Before Tax After Tax (Expense) Tax Nine Months Ended July 28, 2019 Amount Credit Amount Cumulative translation adjustment $ (217) $ (1) $ (218) Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) (42) 9 (33) Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (6) 2 (4) Net unrealized gain (loss) on derivatives (48) 11 (37) Unrealized gain (loss) on debt securities: Unrealized holding gain (loss) 32 (6) 26 Reclassification of realized (gain) loss – Other income (1) (1) Net unrealized gain (loss) on debt securities 31 (6) 25 Retirement benefits adjustment: Pensions Net actuarial gain (loss) (21) 5 (16) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 106 (26) 80 Prior service (credit) cost 8 (2) 6 Settlements/curtailments 1 1 OPEB Net actuarial gain (loss) 60 (14) 46 Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 12 (3) 9 Prior service (credit) cost (55) 13 (42) Net unrealized gain (loss) on retirement benefits adjustment 111 (27) 84 Total other comprehensive income (loss) $ (123) $ (23) $ (146) * Before Tax After Tax (Expense) Tax Three Months Ended July 29, 2018 Amount Credit Amount Cumulative translation adjustment $ (421) $ 1 $ (420) Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) 1 1 Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (2) (2) Net unrealized gain (loss) on derivatives (1) (1) Unrealized gain (loss) on investments: Unrealized holding gain (loss) 2 (1) 1 Reclassification of realized (gain) loss – Other income Net unrealized gain (loss) on investments 2 (1) 1 Retirement benefits adjustment: Pensions Net actuarial gain (loss) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 53 (14) 39 Prior service (credit) cost 3 (1) 2 Settlements/curtailments 1 1 OPEB Net actuarial gain (loss) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 16 (4) 12 Prior service (credit) cost (19) 5 (14) Net unrealized gain (loss) on retirement benefits adjustment 54 (14) 40 Total other comprehensive income (loss) $ (366) $ (14) $ (380) * In the third quarter of 2019 and 2018, the noncontrolling interests’ comprehensive income in both periods was none, which consisted of net income of none and $1 million and cumulative translation adjustments of none and $(1) million, respectively. Before Tax After Tax (Expense) Tax Nine Months Ended July 29, 2018 Amount Credit Amount Cumulative translation adjustment $ (196) $ (196) Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) 16 $ (4) 12 Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (3) 1 (2) Net unrealized gain (loss) on derivatives 13 (3) 10 Unrealized gain (loss) on investments: Unrealized holding gain (loss) (9) 2 (7) Reclassification of realized (gain) loss – Other income (1) (1) Net unrealized gain (loss) on investments (10) 2 (8) Retirement benefits adjustment: Pensions Net actuarial gain (loss) 46 (11) 35 Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 168 (48) 120 Prior service (credit) cost 9 (3) 6 Settlements/curtailments 7 (2) 5 OPEB Net actuarial gain (loss) 60 (14) 46 Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 47 (13) 34 Prior service (credit) cost (57) 16 (41) Net unrealized gain (loss) on retirement benefits adjustment 280 (75) 205 Total other comprehensive income (loss) $ 87 $ (76) $ 11 * In the first nine months of 2019 and 2018, the noncontrolling interests’ comprehensive income was $3 million and $1 million, respectively, which consisted of net income of $3 million and $2 million and cumulative translation adjustments of none and $(1) million, respectively. |
DIVIDENDS DECLARED AND PAID
DIVIDENDS DECLARED AND PAID | 9 Months Ended |
Jul. 28, 2019 | |
DIVIDENDS DECLARED AND PAID | |
DIVIDENDS DECLARED AND PAID | (6) Dividends Declared and Paid Dividends declared and paid on a per share basis were as follows: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Dividends declared $ .76 $ .69 $ 2.28 $ 1.89 Dividends paid $ .76 $ .60 $ 2.21 $ 1.80 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Jul. 28, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | (7) Earnings Per Share A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Net income attributable to Deere & Company $ 899 $ 910 $ 2,532 $ 1,584 Average shares outstanding 315.9 323.5 317.3 323.4 Basic per share $ 2.84 $ 2.81 $ 7.98 $ 4.90 Average shares outstanding 315.9 323.5 317.3 323.4 Effect of dilutive share-based compensation 3.9 4.5 4.2 4.8 Total potential shares outstanding 319.8 328.0 321.5 328.2 Diluted per share $ 2.81 $ 2.78 $ 7.87 $ 4.82 The income allocable to participating securities was insignificant for all periods and is reflected in the earnings per share. During the third quarter and first nine months of 2019, .9 million shares and .7 million shares, respectively, were excluded from the computation because the incremental shares would have been antidilutive. During the third quarter and first nine months of 2018, .5 million shares and .4 million shares, respectively, were excluded from the above per share computation. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFITS | 9 Months Ended |
Jul. 28, 2019 | |
PENSION AND OTHER POSTRETIREMENT BENEFITS | |
PENSION AND OTHER POSTRETIREMENT BENEFITS | (8) Pension and Other Postretirement Benefits The Company has several defined benefit pension plans and postretirement benefit (OPEB) plans, primarily health care and life insurance plans, covering its U.S. employees and employees in certain foreign countries. The worldwide components of net periodic pension cost consisted of the following in millions of dollars: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Service cost $ 65 $ 75 $ 197 $ 223 Interest cost 112 97 334 292 Expected return on plan assets (200) (193) (600) (581) Amortization of actuarial loss 35 53 106 168 Amortization of prior service cost 2 3 8 9 Settlements/curtailments 1 1 1 7 Net cost $ 15 $ 36 $ 46 $ 118 The worldwide components of net periodic OPEB cost consisted of the following in millions of dollars: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Service cost $ 11 $ 11 $ 31 $ 33 Interest cost 53 47 160 143 Expected return on plan assets (8) (5) (26) (16) Amortization of actuarial loss 4 16 12 47 Amortization of prior service credit (19) (19) (55) (57) Net cost $ 41 $ 50 $ 122 $ 150 The components of net periodic pension and OPEB costs excluding the service cost component are included in the line item other operating expenses in the statement of consolidated income. In August 2019, a committee of the Company’s Board of Directors approved a voluntary contribution to a U.S. OPEB plan for up to $500 million. During the first nine months of 2019, the Company contributed approximately $47 million to its pension plans and $97 million to its OPEB plans. The Company presently anticipates contributing an additional $20 million to its pension plans and $340 million to its OPEB plans during the remainder of fiscal year 2019. The anticipated OPEB contributions include a voluntary $300 million to a U.S. plan, which will increase plan assets. The pension and remaining OPEB contributions exceeding the voluntary amounts primarily include direct benefit payments from Company funds. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Jul. 28, 2019 | |
INCOME TAXES | |
INCOME TAXES | (9) Income Taxes In 2019, the Company is subject to additional provisions of the U.S. tax reform legislation enacted in December 2017 (tax reform). The Company’s 2019 U.S. statutory corporate income tax rate is 21 percent and was approximately 23.3 percent for 2018. The provisions of tax reform affecting the Company in 2019 include a tax on global intangible low-taxed income (GILTI), a tax determined by base erosion and anti-abuse tax benefits (BEAT) for certain payments between a U.S. corporation and foreign subsidiaries, a limitation on the deductibility of certain executive compensation, a deduction for foreign derived intangible income (FDII), and interest expense limitations. Based on the current interpretations of tax reform legislation and related regulations, along with the Company’s 2019 forecasts, the Company does not expect the combined effect of these provisions to be significant for the 2019 provision for income taxes. In 2019 and 2018, the Company recorded discrete tax adjustments related to the remeasurement of the Company’s net deferred tax assets to the new corporate income tax rate and for the deemed earnings repatriation tax (repatriation tax). Those adjustments for the third quarter and first nine months of 2019 and 2018 in millions of dollars follow: Three Months Ended Nine Months Ended Equipment Operations Financial Services Total Equipment Operations Financial Services Total Net deferred tax asset remeasurement $ 5 $ 5 Deemed earnings repatriation tax $ (24) $ (8) $ (32) $ (24) (8) (32) Total discrete tax expense (benefit) $ (24) $ (8) $ (32) $ (24) $ (3) $ (27) Three Months Ended Nine Months Ended Equipment Operations Financial Services Total Equipment Operations Financial Services Total Net deferred tax asset remeasurement $ (58) $ (4) $ (62) $ 795 $ (318) $ 477 Deemed earnings repatriation tax 179 85 264 Total discrete tax expense (benefit) $ (58) $ (4) $ (62) $ 974 $ (233) $ 741 The full year 2018 discrete tax expense for the remeasurement of the net deferred tax assets was $414 million and the repatriation tax was $290 million. The full year 2018 repatriation tax included an accrual of approximately $63 million for foreign withholding taxes on earnings of subsidiaries outside the U.S. that were previously expected to be indefinitely reinvested. The repatriation tax determination for the 2018 U.S. income tax return was completed in the third quarter of 2019 and resulted in a discrete tax benefit of approximately $32 million. The discrete benefit was based on adjustments from completing the 2018 income tax returns and the interpretation of the tax law and associated regulations for the repatriation tax, primarily related to fiscal year end companies. The Company paid the repatriation tax in 2019 with a U.S. income tax overpayment. The Company’s unrecognized tax benefits at July 28, 2019 were $630 million, compared to $279 million at October 28, 2018. The liability at July 28, 2019, October 28, 2018, and July 29, 2018 consisted of approximately $274 million, $128 million, and $137 million, respectively, which would affect the effective tax rate if the tax benefits were recognized. The increase from the previously reported periods primarily relates to the interpretation of a recently issued repatriation tax regulation for fiscal year end companies. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. The Company expects that any reasonably possible change in the amounts of unrecognized tax benefits in the next 12 months would not be significant. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Jul. 28, 2019 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | (10) Segment Reporting Worldwide net sales and revenues, operating profit, and identifiable assets by segment in millions of dollars follow: Three Months Ended Nine Months Ended July 28 July 29 % July 28 July 29 % 2019 2018 Change 2019 2018 Change Net sales and revenues: Agriculture and turf $ 5,946 $ 6,293 -6 $ 17,909 $ 17,585 +2 Construction and forestry 3,023 2,993 +1 8,273 7,422 +11 Total net sales 8,969 9,286 -3 26,182 25,007 +5 Financial services 910 830 +10 2,650 2,402 +10 Other revenues 157 192 -18 530 533 -1 Total net sales and revenues $ 10,036 $ 10,308 -3 $ 29,362 $ 27,942 +5 Operating profit: * Agriculture and turf $ 612 $ 806 -24 $ 1,978 $ 2,249 -12 Construction and forestry 378 281 +35 954 573 +66 Financial services 204 196 +4 566 591 -4 Total operating profit 1,194 1,283 -7 3,498 3,413 +2 Reconciling items ** (74) (84) -12 (218) (305) -29 Income taxes (221) (289) -24 (748) (1,524) -51 Net income attributable to Deere & Company $ 899 $ 910 -1 $ 2,532 $ 1,584 +60 Intersegment sales and revenues: Agriculture and turf net sales $ 9 $ 14 -36 $ 27 $ 38 -29 Construction and forestry net sales 1 Financial services 93 89 +4 261 234 +12 Equipment operations outside the U.S. and Canada: Net sales $ 4,026 $ 4,232 -5 $ 10,985 $ 11,036 Operating profit 430 398 +8 1,088 1,079 +1 July 28 October 28 2019 2018 Identifiable assets: Agriculture and turf $ 10,629 $ 10,161 +5 Construction and forestry 10,161 9,855 +3 Financial services 48,444 45,720 +6 Corporate 4,296 4,372 -2 Total assets $ 73,530 $ 70,108 +5 * ** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and OPEB costs excluding the service cost component, and net income attributable to noncontrolling interests. |
FINANCING RECEIVABLES
FINANCING RECEIVABLES | 9 Months Ended |
Jul. 28, 2019 | |
FINANCING RECEIVABLES | |
FINANCING RECEIVABLES | (11) Financing Receivables Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent loans for which the Company has ceased accruing finance income. Beginning in the first quarter of 2019, the Company ceased accruing finance income when these receivables are generally 90 days delinquent. Previously, finance income ceased accruing when the receivables were generally 120 days delinquent. This change in estimate was made on a prospective basis and did not have a significant effect on the Company’s consolidated financial statements. Management’s methodology to determine the collectability of delinquent accounts was not affected by the change. Generally, when receivables are 120 days delinquent the estimated uncollectible amount, after charging the dealer’s withholding account, if any, is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured. An age analysis of past due financing receivables that are still accruing interest and non-performing financing receivables in millions of dollars follows: July 28, 2019 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due Retail Notes: Agriculture and turf $ 136 $ 63 $ 3 $ 202 Construction and forestry 87 35 2 124 Other: Agriculture and turf 38 22 60 Construction and forestry 17 7 24 Total $ 278 $ 127 $ 5 $ 410 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes: Agriculture and turf $ 202 $ 301 $ 18,038 $ 18,541 Construction and forestry 124 135 3,249 3,508 Other: Agriculture and turf 60 37 8,833 8,930 Construction and forestry 24 14 1,417 1,455 Total $ 410 $ 487 $ 31,537 32,434 Less allowance for credit losses 185 Total financing receivables – net $ 32,249 October 28, 2018 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due Retail Notes: Agriculture and turf $ 133 $ 74 $ 63 $ 270 Construction and forestry 79 45 52 176 Other: Agriculture and turf 36 16 8 60 Construction and forestry 18 5 3 26 Total $ 266 $ 140 $ 126 $ 532 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes: Agriculture and turf $ 270 $ 201 $ 17,836 $ 18,307 Construction and forestry 176 40 3,101 3,317 Other: Agriculture and turf 60 15 8,274 8,349 Construction and forestry 26 3 1,252 1,281 Total $ 532 $ 259 $ 30,463 31,254 Less allowance for credit losses 178 Total financing receivables – net $ 31,076 July 29, 2018 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due Retail Notes: Agriculture and turf $ 138 $ 53 $ 54 $ 245 Construction and forestry 105 43 50 198 Other: Agriculture and turf 37 14 12 63 Construction and forestry 12 6 3 21 Total $ 292 $ 116 $ 119 $ 527 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes: Agriculture and turf $ 245 $ 203 $ 17,048 $ 17,496 Construction and forestry 198 42 2,967 3,207 Other: Agriculture and turf 63 14 8,009 8,086 Construction and forestry 21 3 1,249 1,273 Total $ 527 $ 262 $ 29,273 30,062 Less allowance for credit losses 187 Total financing receivables – net $ 29,875 An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows: Revolving Retail Charge Notes Accounts Other Total Three Months Ended July 28, 2019 Allowance: Beginning of period balance $ 115 $ 43 $ 24 $ 182 Provision 7 18 1 26 Write-offs (9) (26) (1) (36) Recoveries 5 8 13 Translation adjustments 2 (2) End of period balance * $ 120 $ 43 $ 22 $ 185 Nine Months Ended July 28, 2019 Allowance: Beginning of period balance $ 113 $ 43 $ 22 $ 178 Provision 21 34 7 62 Write-offs (29) (51) (5) (85) Recoveries 15 17 1 33 Translation adjustments (3) (3) End of period balance * $ 120 $ 43 $ 22 $ 185 Financing receivables: End of period balance $ 22,049 $ 3,877 $ 6,508 $ 32,434 Balance individually evaluated ** $ 145 $ 10 $ 155 * Individual allowances were not significant. ** Remainder is collectively evaluated. Revolving Retail Charge Notes Accounts Other Total Three Months Ended July 29, 2018 Allowance: Beginning of period balance $ 120 $ 40 $ 27 $ 187 Provision 8 21 3 32 Write-offs (9) (26) (1) (36) Recoveries 3 5 8 Translation adjustments (4) (4) End of period balance * $ 118 $ 40 $ 29 $ 187 Nine Months Ended July 29, 2018 Allowance: Beginning of period balance $ 121 $ 40 $ 26 $ 187 Provision 13 29 7 49 Write-offs (23) (44) (5) (72) Recoveries 13 15 1 29 Translation adjustments (6) (6) End of period balance * $ 118 $ 40 $ 29 $ 187 Financing receivables: End of period balance $ 20,703 $ 3,750 $ 5,609 $ 30,062 Balance individually evaluated ** $ 120 $ 1 $ 13 $ 134 * ** Remainder is collectively evaluated. Financing receivables are considered impaired when it is probable the Company will be unable to collect all amounts due according to the contractual terms. Receivables reviewed for impairment generally include those that are either past due, or have provided bankruptcy notification, or require significant collection efforts. Receivables that are impaired are generally classified as non-performing. An analysis of the impaired financing receivables in millions of dollars follows: Unpaid Average Recorded Principal Specific Recorded Investment Balance Allowance Investment July 28, 2019* Receivables with specific allowance ** $ 37 $ 36 $ 13 $ 37 Receivables without a specific allowance ** 35 33 39 Total $ 72 $ 69 $ 13 $ 76 Agriculture and turf $ 51 $ 50 $ 9 $ 52 Construction and forestry $ 21 $ 19 $ 4 $ 24 October 28, 2018* Receivables with specific allowance ** $ 28 $ 27 $ 10 $ 30 Receivables without a specific allowance ** 37 35 41 Total $ 65 $ 62 $ 10 $ 71 Agriculture and turf $ 50 $ 48 $ 9 $ 54 Construction and forestry $ 15 $ 14 $ 1 $ 17 July 29, 2018* Receivables with specific allowance ** $ 31 $ 30 $ 12 $ 33 Receivables without a specific allowance ** 37 35 40 Total $ 68 $ 65 $ 12 $ 73 Agriculture and turf $ 51 $ 49 $ 10 $ 54 Construction and forestry $ 17 $ 16 $ 2 $ 19 * ** A troubled debt restructuring is generally the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first nine months of 2019, the Company identified 416 receivable contracts, primarily trade receivables and retail notes, as troubled debt restructurings with aggregate balances of $34 million pre-modification and $33 million post-modification. During the first nine months of 2018, there were 410 receivable contracts, primarily retail notes, identified as troubled debt restructurings with aggregate balances of $22 million pre-modification and $22 million post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At July 28, 2019, the Company had commitments to lend approximately $13 million to borrowers whose accounts were modified in troubled debt restructurings. |
SECURITIZATION OF FINANCING REC
SECURITIZATION OF FINANCING RECEIVABLES | 9 Months Ended |
Jul. 28, 2019 | |
SECURITIZATION OF FINANCING RECEIVABLES | |
SECURITIZATION OF FINANCING RECEIVABLES | (12) Securitization of Financing Receivables The Company, as a part of its overall funding strategy, periodically transfers certain financing receivables (retail notes) into variable interest entities (VIEs) that are special purpose entities (SPEs), or non-VIE banking operations, as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that the transfer of the retail notes did not meet the accounting criteria for sales of receivables, and is, therefore, accounted for as a secured borrowing. SPEs utilized in securitizations of retail notes differ from other entities included in the Company’s consolidated statements because the assets they hold are legally isolated. Use of the assets held by the SPEs or the non-VIEs is restricted by terms of the documents governing the securitization transactions. In these securitizations, the retail notes are transferred to certain SPEs or to non-VIE banking operations, which in turn issue debt to investors. The debt securities issued to the third party investors resulted in secured borrowings, which are recorded as “Short-term securitization borrowings” on the balance sheet. The securitized retail notes are recorded as “Financing receivables securitized – net” on the balance sheet. The total restricted assets on the consolidated balance sheet related to these securitizations include the financing receivables securitized less an allowance for credit losses, and other assets primarily representing restricted cash. Restricted cash results from contractual requirements in securitized borrowing arrangements and serves as a credit enhancement. The restricted cash is used to satisfy payment deficiencies, if any, in the required payments on secured borrowings. The balance of restricted cash is contractually stipulated and is either a fixed amount as determined by the initial balance of the financing receivables securitized or a fixed percentage of the outstanding balance of the securitized financing receivables. The restriction is removed either after all secured borrowing payments are made or proportionally as these receivables are collected and borrowing obligations reduced. For those securitizations in which retail notes are transferred into SPEs, the SPEs supporting the secured borrowings are consolidated unless the Company does not have both the power to direct the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the SPEs. No additional support to these SPEs beyond what was previously contractually required has been provided during the reporting periods. In certain securitizations, the Company consolidates the SPEs since it has both the power to direct the activities that most significantly impact the SPEs’ economic performance through its role as servicer of all the receivables held by the SPEs and the obligation through variable interests in the SPEs to absorb losses or receive benefits that could potentially be significant to the SPEs. The restricted assets (retail notes securitized, allowance for credit losses, and other assets) of the consolidated SPEs totaled $3,425 million, $2,593 million, and $2,971 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. The liabilities (short-term securitization borrowings and accrued interest) of these SPEs totaled $3,316 million, $2,520 million, and $2,860 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. The credit holders of these SPEs do not have legal recourse to the Company’s general credit. In certain securitizations, the Company transfers retail notes to non-VIE banking operations, which are not consolidated since the Company does not have a controlling interest in the entities. The Company’s carrying values and interests related to the securitizations with the unconsolidated non-VIEs were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of $587 million, $504 million, and $592 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. The liabilities (short-term securitization borrowings and accrued interest) were $546 million, $475 million, and $553 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. In certain securitizations, the Company transfers retail notes into bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that are not consolidated. The Company does not service a significant portion of the conduits’ receivables, and therefore, does not have the power to direct the activities that most significantly impact the conduits’ economic performance. These conduits provide a funding source to the Company (as well as other transferors into the conduit) as they fund the retail notes through the issuance of commercial paper. The Company’s carrying values and variable interest related to these conduits were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of $1,286 million, $1,033 million, and $1,213 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. The liabilities (short-term securitization borrowings and accrued interest) related to these conduits were $1,190 million, $965 million, and $1,118 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. The Company’s carrying amount of the liabilities to the unconsolidated conduits, compared to the maximum exposure to loss related to these conduits, which would only be incurred in the event of a complete loss on the restricted assets, was as follows in millions of dollars: July 28 2019 Carrying value of liabilities $ 1,190 Maximum exposure to loss 1,286 The total assets of unconsolidated VIEs related to securitizations were approximately $34 billion at July 28, 2019. The components of consolidated restricted assets related to secured borrowings in securitization transactions follow in millions of dollars: July 28 October 28 July 29 2019 2018 2018 Financing receivables securitized (retail notes) $ 5,214 $ 4,032 $ 4,674 Allowance for credit losses (14) (10) (12) Other assets 98 108 114 Total restricted securitized assets $ 5,298 $ 4,130 $ 4,776 The components of consolidated secured borrowings and other liabilities related to securitizations follow in millions of dollars: July 28 October 28 July 29 2019 2018 2018 Short-term securitization borrowings $ 5,048 $ 3,957 $ 4,528 Accrued interest on borrowings 4 3 3 Total liabilities related to restricted securitized assets $ 5,052 $ 3,960 $ 4,531 The secured borrowings related to these restricted securitized retail notes are obligations that are payable as the retail notes are liquidated. Repayment of the secured borrowings depends primarily on cash flows generated by the restricted assets. Due to the Company’s short-term credit rating, cash collections from these restricted assets are not required to be placed into a segregated collection account until immediately prior to the time payment is required to the secured creditors. At July 28, 2019, the maximum remaining term of all securitized retail notes was approximately six years. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Jul. 28, 2019 | |
INVENTORIES | |
INVENTORIES | (13) Inventories A majority of inventory owned by Deere & Company and its U.S. equipment subsidiaries and certain foreign equipment subsidiaries are valued at cost on the “last-in, first-out” (LIFO) method. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) method, estimated inventories by major classification in millions of dollars would have been as follows: July 28 October 28 July 29 2019 2018 2018 Raw materials and supplies $ 2,365 $ 2,233 $ 2,126 Work-in-process 815 776 795 Finished goods and parts 5,345 4,777 4,768 Total FIFO value 8,525 7,786 7,689 Less adjustment to LIFO value 1,778 1,637 1,450 Inventories $ 6,747 $ 6,149 $ 6,239 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS-NET | 9 Months Ended |
Jul. 28, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS-NET | |
GOODWILL AND OTHER INTANGIBLE ASSETS-NET | (14) Goodwill and Other Intangible Assets – Net The changes in amounts of goodwill by operating segments were as follows in millions of dollars: Agriculture Construction and Turf and Forestry Total Goodwill at October 29, 2017 $ 521 $ 512 $ 1,033 Acquisitions 28 2,067 2,095 Divestitures (18) (18) Translation adjustments (4) (59) (63) Goodwill at July 29, 2018 $ 545 $ 2,502 $ 3,047 Goodwill at October 28, 2018 $ 583 $ 2,518 $ 3,101 Translation adjustments (1) (87) (88) Goodwill at July 28, 2019 $ 582 $ 2,431 $ 3,013 There were no accumulated impairment losses in the reported periods. The components of other intangible assets were as follows in millions of dollars: Useful Lives * July 28 October 28 July 29 (Years) 2019 2018 2018 Amortized intangible assets: Customer lists and relationships 16 $ 525 $ 542 $ 562 Technology, patents, trademarks, and other 18 1,057 1,080 1,052 Total at cost 1,582 1,622 1,614 Less accumulated amortization ** 261 183 156 Total 1,321 1,439 1,458 Unamortized intangible assets: In-process research and development 123 123 123 Other intangible assets – net $ 1,444 $ 1,562 $ 1,581 * ** The amortization of other intangible assets in the third quarter and the first nine months of 2019 was $27 million and $82 million and for 2018 was $27 million and $71 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2019 – $26, 2020 – $104, 2021 – $103, 2022 – $102, and 2023 – $100. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jul. 28, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | (15) Commitments and Contingencies The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled $542 million and $486 million at July 28, 2019 and July 29, 2018, respectively. A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Beginning of period balance $ 1,714 $ 1,591 $ 1,652 $ 1,468 Payments (252) (212) (714) (642) Amortization of premiums received (57) (56) (168) (170) Accruals for warranties 263 250 772 704 Premiums received 75 72 209 198 Acquisitions 80 Foreign exchange 3 (21) (5) (14) End of period balance $ 1,746 $ 1,624 $ 1,746 $ 1,624 At July 28, 2019, the Company had approximately $325 million of guarantees issued primarily to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere and Wirtgen equipment. The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At July 28, 2019, the Company had accrued losses of approximately $14 million under these agreements. The maximum remaining term of the receivables guaranteed at July 28, 2019 was approximately seven years. At July 28, 2019, the Company had commitments of approximately $452 million for the construction and acquisition of property and equipment. Also, at July 28, 2019, the Company had restricted assets of $93 million, classified as other assets. See Note 12 for additional restricted assets associated with borrowings related to securitizations. The Company also had other miscellaneous contingent liabilities totaling approximately $70 million at July 28, 2019. The accrued liability for these contingencies was not material at July 28, 2019. The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, and trademark matters. The Company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidated financial statements. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Jul. 28, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | (16) Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses various methods including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs. The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow: July 28, 2019 October 28, 2018 July 29, 2018 Carrying Fair Carrying Fair Carrying Fair Financing receivables – net: Equipment operations $ 100 $ 93 $ 93 $ 91 $ 78 $ 75 Financial services 26,949 26,921 26,961 26,722 25,135 24,911 Total $ 27,049 $ 27,014 $ 27,054 $ 26,813 $ 25,213 $ 24,986 Financing receivables securitized – net: Equipment operations $ 54 $ 52 $ 76 $ 73 $ 90 $ 89 Financial services 5,146 5,154 3,946 3,895 4,572 4,517 Total $ 5,200 $ 5,206 $ 4,022 $ 3,968 $ 4,662 $ 4,606 Short-term securitization borrowings: Equipment operations $ 53 $ 54 $ 75 $ 75 $ 90 $ 89 Financial services 4,995 5,017 3,882 3,870 4,438 4,426 Total $ 5,048 $ 5,071 $ 3,957 $ 3,945 $ 4,528 $ 4,515 Long-term borrowings due within one year: Equipment operations $ 1,009 $ 1,013 $ 970 $ 979 $ 238 $ 239 Financial services 6,922 6,914 5,427 5,411 5,955 5,947 Total $ 7,931 $ 7,927 $ 6,397 $ 6,390 $ 6,193 $ 6,186 Long-term borrowings: Equipment operations $ 5,364 $ 6,017 $ 4,714 $ 4,948 $ 5,526 $ 5,838 Financial services 23,878 24,143 22,523 22,590 21,312 21,388 Total $ 29,242 $ 30,160 $ 27,237 $ 27,538 $ 26,838 $ 27,226 * Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by the Company for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts. Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges. Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow*: July 28 October 28 July 29 2019 2018 2018 Level 1: Marketable securities Equity fund *** $ 59 $ 46 $ 46 Fixed income fund *** 9 U.S. government debt securities 49 44 39 Total Level 1 marketable securities 108 90 94 Level 2: Marketable securities U.S. government debt securities 73 67 60 Municipal debt securities 57 46 47 Corporate debt securities 156 140 138 International debt securities 9 2 3 Mortgage-backed securities ** 158 137 136 Total Level 2 marketable securities 453 392 384 Other assets Derivatives: Interest rate contracts 265 80 68 Foreign exchange contracts 53 83 50 Cross-currency interest rate contracts 2 5 6 Total Level 2 other assets 320 168 124 Accounts payable and accrued expenses Derivatives: Interest rate contracts 99 350 330 Foreign exchange contracts 45 49 52 Cross-currency interest rate contracts 2 2 Total Level 2 accounts payable and accrued expenses 146 399 384 Level 3: Marketable securities International debt securities 4 8 10 * ** ***During the third quarter and first nine months of 2019, $1 million and $7 million, respectively, of net unrealized gains on equity securities were recorded in “Other income”. The contractual maturities of debt securities at July 28, 2019 in millions of dollars are shown below. Actual maturities may differ from those scheduled as a result of prepayments by the issuers. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity. Amortized Fair Cost Value Due in one year or less $ 30 $ 30 Due after one through five years 101 102 Due after five through 10 years 92 96 Due after 10 years 115 120 Mortgage-backed securities 155 158 Debt securities $ 493 $ 506 Fair value, recurring Level 3 measurements from available-for-sale marketable securities in millions of dollars follow: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Beginning of period balance $ 4 $ 14 $ 8 $ 17 Principal payments (4) (5) (7) Other 1 End of period balance $ 4 $ 10 $ 4 $ 10 There were no fair value, nonrecurring measurements from impairments in the reported periods. Financing receivables with specific allowances are shown in Note 11. Losses were not significant. The following is a description of the valuation methodologies the Company uses to measure certain financial instruments on the balance sheet at fair value: Marketable Securities – Derivatives – Financing Receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using a market approach (appraisal values or realizable values). Inputs include a selection of realizable values. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Jul. 28, 2019 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | (17) Derivative Instruments It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The Company’s financial services operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The Company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling, and financing in currencies other than the functional currencies. In addition, the Company has interest rate exposure at certain equipment operations units for below market retail financing programs that are used as sales incentives and are offered for extended periods, along with periodic long-term debt issuances. All derivatives are recorded at fair value on the balance sheet. Cash collateral received or paid is not offset against the derivative fair values on the balance sheet. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, or the underlying hedged transaction is no longer likely to occur, or the hedge designation is removed, or the derivative is terminated, hedge accounting is discontinued. Cash Flow Hedges Certain interest rate and cross-currency interest rate contracts (swaps) were designated as hedges of future cash flows from borrowings. The total notional amounts of the receive-variable/pay-fixed interest rate contracts at July 28, 2019, October 28, 2018, and July 29, 2018 were $2,750 million, $3,050 million, and $2,400 million, respectively. Included in the July 28, 2019 notional amount is $250 million for a forecasted debt issuance expected to occur in the fourth quarter of 2019. The total notional amount of the cross-currency interest rate contract at July 29, 2018 was $11 million. Fair value gains or losses on these cash flow hedges were recorded in OCI and subsequently reclassified into interest expense or other operating expenses (foreign exchange) in the same periods during which the hedged transactions affected earnings. These amounts offset the effects of interest rate or foreign currency exchange rate changes on the related borrowings. The cash flows from these contracts were recorded in operating activities in the statement of consolidated cash flows. The amount of loss recorded in OCI at July 28, 2019 that is expected to be reclassified to interest expense or other operating expenses in the next twelve months if interest rates or exchange rates remain unchanged is approximately $6 million after-tax. The Company is hedging a portion of its expected exposure to interest rate changes in a forecasted, fourth quarter 2019 debt issuance using an interest rate contract with a term of 30 years. There were no gains or losses reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur. Fair Value Hedges Certain interest rate contracts (swaps) were designated as fair value hedges of borrowings. The total notional amounts of the receive-fixed/pay-variable interest rate contracts at July 28, 2019, October 28, 2018, and July 29, 2018 were $9,245 million, $8,479 million, and $7,792 million, respectively. The fair value gains or losses on these contracts were generally offset by fair value gains or losses on the hedged items (fixed-rate borrowings) with both items recorded in interest expense. The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships in millions of dollars follow: Cumulative Increase (Decrease) of Fair Value Hedging Adjustments Included in the Carrying Amount Carrying Active Amount of Hedging Discontinued July 28, 2019 Hedged Item Relationships Relationships Total Long-term borrowings due within one year* $ 187 $ 1 $ (5) $ (4) Long-term borrowings 9,154 184 (50) 134 * Derivatives not designated as hedging instruments The Company has certain interest rate contracts (swaps and caps), foreign exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. These derivatives were held as economic hedges for underlying interest rate or foreign currency exposures, primarily for certain borrowings, purchases or sales of inventory, and below market retail financing programs. The total notional amounts of these interest rate swaps at July 28, 2019, October 28, 2018, and July 29, 2018 were $7,607 million, $8,075 million, and $6,519 million, the foreign exchange contracts were $6,362 million, $6,842 million, and $7,752 million, and the cross-currency interest rate contracts were $90 million, $81 million, and $96 million, respectively. To facilitate borrowings through securitization of retail notes, interest rate caps were sold with notional amounts of $8 million, $66 million, and $92 million at July 28, 2019, October 28, 2018, and July 29, 2018, respectively. Interest rate caps were also purchased with notional amounts of $8 million, $66 million, and $92 million at the same dates. The fair value gains or losses from the interest rate contracts were recognized currently in interest expense or net sales, and the gains or losses from foreign exchange contracts in cost of sales or other operating expenses, generally offsetting over time the expenses on the exposures being hedged. The cash flows from these non-designated contracts were recorded in operating activities in the statement of consolidated cash flows. Fair values of derivative instruments in the condensed consolidated balance sheet in millions of dollars follow: July 28 October 28 July 29 Other Assets 2019 2018 2018 Designated as hedging instruments: Interest rate contracts $ 232 $ 29 $ 24 Cross-currency interest rate contracts 3 Total designated 232 29 27 Not designated as hedging instruments: Interest rate contracts 33 51 44 Foreign exchange contracts 53 83 50 Cross-currency interest rate contracts 2 5 3 Total not designated 88 139 97 Total derivative assets $ 320 $ 168 $ 124 Accounts Payable and Accrued Expenses Designated as hedging instruments: Interest rate contracts $ 55 $ 321 $ 305 Total designated 55 321 305 Not designated as hedging instruments: Interest rate contracts 44 29 25 Foreign exchange contracts 45 49 52 Cross-currency interest rate contracts 2 2 Total not designated 91 78 79 Total derivative liabilities $ 146 $ 399 $ 384 The classification and gains (losses) including accrued interest expense related to derivative instruments on the statement of consolidated income consisted of the following in millions of dollars: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Fair Value Hedges: Interest rate contracts - Interest expense $ 193 $ (10) $ 468 $ (264) Cash Flow Hedges Recognized in OCI Interest rate contracts - OCI (pretax) * (27) 1 (42) 15 Foreign exchange contracts - OCI (pretax) * 1 Reclassified from OCI Interest rate contracts - Interest expense * 1 2 6 3 Not Designated as Hedges: Interest rate contracts - Net sales $ (6) $ (23) Interest rate contracts - Interest expense * (7) $ (3) (25) $ (3) Foreign exchange contracts - Cost of sales (8) (10) (1) (22) Foreign exchange contracts - Other operating * (12) 144 88 92 Total not designated $ (33) $ 131 $ 39 $ 67 * Counterparty Risk and Collateral Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Company manages individual counterparty exposure by setting limits that consider the credit rating of the counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between the Company and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Each master agreement permits the net settlement of amounts owed in the event of default or termination. Certain of the Company’s derivative agreements contain credit support provisions that may require the Company to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position at July 28, 2019, October 28, 2018, and July 29, 2018, was $101 million, $350 million, and $331 million, respectively. In accordance with the limits established in these agreements, the Company paid $59 million and $34 million in cash collateral at October 28, 2018 and July 29, 2018, respectively. No cash collateral was paid or received at July 28, 2019. Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and any collateral received or paid in millions of dollars follows: Gross Amounts Netting Collateral July 28, 2019 Recognized Arrangements Paid Net Amount Assets $ 320 $ (70) $ 250 Liabilities 146 (70) 76 Gross Amounts Netting Collateral October 28, 2018 Recognized Arrangements Paid Net Amount Assets $ 168 $ (65) $ 103 Liabilities 399 (65) $ (59) 275 Gross Amounts Netting Collateral July 29, 2018 Recognized Arrangements Paid Net Amount Assets $ 124 $ (67) $ 57 Liabilities 384 (67) $ (34) 283 |
STOCK OPTION AND RESTRICTED STO
STOCK OPTION AND RESTRICTED STOCK AWARDS | 9 Months Ended |
Jul. 28, 2019 | |
STOCK OPTION AND RESTRICTED STOCK AWARDS | |
STOCK OPTION AND RESTRICTED STOCK AWARDS | (18) Stock Option and Restricted Stock Awards In December 2018, the Company granted stock options to employees for the purchase of 402 thousand shares of common stock at an exercise price of $148.14 per share and a binomial lattice model fair value of $46.96 per share at the grant date. At July 28, 2019, options for 7.5 million shares were outstanding with a weighted-average exercise price of $91.97 per share. The Company also granted 446 thousand restricted stock units to employees and non-employee directors in the first nine months of 2019, of which 355 thousand are subject to service based only conditions and 91 thousand are subject to performance/service based conditions. The weighted-average fair value of the service based only units at the grant date was $149.54 per unit based on the market price of a share of underlying common stock. The weighted-average fair value of the performance/service based units at the grant date was $140.49 per unit based on the market price of a share of underlying common stock excluding dividends. At July 28, 2019, the Company was authorized to grant an additional 8.3 million shares related to stock option and restricted stock awards. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Jul. 28, 2019 | |
ACQUISITIONS | |
ACQUISITIONS | (19) Acquisitions In September 2018, the Company acquired PLA, a privately held manufacturer of sprayers, planters, and specialty products for agriculture. PLA is based in Argentina, with manufacturing facilities in Las Roses, Argentina and Canoas, Brazil. The total cash purchase price after the final adjustment, net of cash acquired of $1 million, was $69 million with $4 million retained by the Company as escrow to secure indemnity obligations. In addition to the cash purchase price, the Company assumed $29 million of liabilities. The asset and liability fair values at the acquisition date in millions of dollars follow: September 2018 Trade accounts and notes receivable $ 2 Other receivables 14 Inventories 14 Property and equipment 1 Goodwill 44 Other intangible assets 22 Other assets 1 Total assets $ 98 Short-term borrowings $ 8 Accounts payable and accrued expenses 17 Deferred income taxes 4 Total liabilities $ 29 The identifiable intangible assets were primarily related to technology, trademarks, and customer relationships, which have a weighted-average amortization period of five years. The goodwill was the result of future cash flows and related fair values of the entity exceeding the fair value of the identified assets and liabilities, and is not expected to be deducted for tax purposes. The results of PLA were included in the Company’s consolidated financial statements in the agriculture and turf segment since the date of acquisition. The pro forma results of operations as if the acquisition had occurred at the beginning of the prior fiscal year would not differ significantly from the reported results. |
SUPPLEMENTAL CONSOLIDATING DATA
SUPPLEMENTAL CONSOLIDATING DATA | 9 Months Ended |
Jul. 28, 2019 | |
SUPPLEMENTAL CONSOLIDATING DATA | |
SUPPLEMENTAL CONSOLIDATING DATA | (20) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended July 28, 2019 and July 29, 2018 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2019 2018 2019 2018 Net Sales and Revenues Net sales $ 8,969 $ 9,286 Finance and interest income 30 31 $ 952 $ 852 Other income 185 231 51 67 Total 9,184 9,548 1,003 919 Costs and Expenses Cost of sales 6,871 7,153 Research and development expenses 431 416 Selling, administrative and general expenses 751 769 147 145 Interest expense 67 52 311 250 Interest compensation to Financial Services 93 86 Other operating expenses 64 80 339 326 Total 8,277 8,556 797 721 Income of Consolidated Group before Income Taxes 907 992 206 198 Provision for income taxes 190 242 31 47 Income of Consolidated Group 717 750 175 151 Equity in Income of Unconsolidated Subsidiaries and Affiliates Financial Services 175 151 Other 7 10 Total 182 161 Net Income 899 911 175 151 Less: Net income attributable to noncontrolling interests 1 Net Income Attributable to Deere & Company $ 899 $ 910 $ 175 $ 151 * 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 Nine Months Ended July 28, 2019 and July 29, 2018 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2019 2018 2019 2018 Net Sales and Revenues Net sales $ 26,182 $ 25,007 Finance and interest income 79 70 $ 2,727 $ 2,441 Other income 614 631 184 195 Total 26,875 25,708 2,911 2,636 Costs and Expenses Cost of sales 20,058 19,192 Research and development expenses 1,295 1,188 Selling, administrative and general expenses 2,191 2,159 422 403 Interest expense 182 226 910 675 Interest compensation to Financial Services 254 228 Other operating expenses 203 219 1,008 962 Total 24,183 23,212 2,340 2,040 Income of Consolidated Group before Income Taxes 2,692 2,496 571 596 Provision (credit) for income taxes 625 1,607 123 (83) Income of Consolidated Group 2,067 889 448 679 Equity in Income of Unconsolidated Subsidiaries and Affiliates Financial Services 450 681 2 2 Other 18 16 Total 468 697 2 2 Net Income 2,535 1,586 450 681 Less: Net income attributable to noncontrolling interests 3 2 Net Income Attributable to Deere & Company $ 2,532 $ 1,584 $ 450 $ 681 * 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 July 28 October 28 July 29 July 28 October 28 July 29 2019 2018 2018 2019 2018 2018 Assets Cash and cash equivalents $ 2,694 $ 3,195 $ 2,803 $ 689 $ 709 $ 1,120 Marketable securities 5 8 11 560 482 477 Receivables from unconsolidated subsidiaries 2,395 1,700 1,795 Trade accounts and notes receivable – net 1,606 1,374 1,586 6,807 4,906 6,080 Financing receivables – net 100 93 78 26,949 26,961 25,135 Financing receivables securitized – net 54 76 90 5,146 3,946 4,572 Other receivables 1,428 1,010 1,131 126 776 176 Equipment on operating leases – net 7,269 7,165 6,805 Inventories 6,747 6,149 6,239 Property and equipment – net 5,753 5,821 5,592 45 47 46 Investments in unconsolidated subsidiaries 5,309 5,231 4,992 16 15 15 Goodwill 3,013 3,101 3,047 Other intangible assets – net 1,444 1,562 1,581 Retirement benefits 1,374 1,241 727 57 57 14 Deferred income taxes 1,579 1,503 1,984 72 69 68 Other assets 1,269 1,133 1,148 708 587 530 Total Assets $ 34,770 $ 33,197 $ 32,804 $ 48,444 $ 45,720 $ 45,038 Liabilities and Stockholders’ Equity Liabilities Short-term borrowings $ 1,372 $ 1,434 $ 789 $ 9,770 $ 9,628 $ 10,215 Short-term securitization borrowings 53 75 90 4,995 3,882 4,438 Payables to unconsolidated subsidiaries 136 129 111 2,341 1,678 1,766 Accounts payable and accrued expenses 9,422 9,383 9,047 1,641 2,056 1,902 Deferred income taxes 454 497 431 616 823 500 Long-term borrowings 5,364 4,714 5,526 23,878 22,523 21,312 Retirement benefits and other liabilities 5,685 5,660 6,430 97 91 96 Total liabilities 22,486 21,892 22,424 43,338 40,681 40,229 Commitments and contingencies (Note 15) Redeemable noncontrolling interest 14 14 14 Stockholders’ Equity Common stock, $1 par value (issued shares at July 28, 2019 – 536,431,204) 4,599 4,474 4,451 2,107 2,100 2,100 Common stock in treasury (17,121) (16,312) (15,814) Retained earnings 29,369 27,553 26,272 3,338 3,257 3,009 Accumulated other comprehensive income (loss) (4,581) (4,427) (4,553) (339) (318) (300) Total Deere & Company stockholders’ equity 12,266 11,288 10,356 5,106 5,039 4,809 Noncontrolling interests 4 3 10 Total stockholders’ equity 12,270 11,291 10,366 5,106 5,039 4,809 Total Liabilities and Stockholders’ Equity $ 34,770 $ 33,197 $ 32,804 $ 48,444 $ 45,720 $ 45,038 * 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 Nine Months Ended July 28, 2019 and July 29, 2018 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2019 2018 2019 2018 Cash Flows from Operating Activities Net income $ 2,535 $ 1,586 $ 450 $ 681 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 1 19 57 47 Provision for depreciation and amortization 782 741 836 800 Gain on sales of businesses (25) Undistributed earnings of unconsolidated subsidiaries and affiliates (62) (235) (1) (1) Provision (credit) for deferred income taxes (123) 986 (209) (345) Changes in assets and liabilities: Trade receivables and Equipment Operations' financing receivables (248) (331) Inventories (670) (975) Accounts payable and accrued expenses 50 519 23 66 Accrued income taxes payable/receivable (282) 231 535 (55) Retirement benefits 35 (821) 5 7 Other (59) (86) 140 141 Net cash provided by operating activities 1,959 1,609 1,836 1,341 Cash Flows from Investing Activities Collections of receivables (excluding trade and wholesale) 13,807 13,246 Proceeds from maturities and sales of marketable securities 9 9 63 47 Proceeds from sales of equipment on operating leases 1,171 1,116 Proceeds from sales of businesses, net of cash sold 133 Cost of receivables acquired (excluding trade and wholesale) (14,597) (13,830) Acquisitions of businesses, net of cash acquired (5,171) Purchases of marketable securities (3) (107) (101) Purchases of property and equipment (754) (569) (2) (2) Cost of equipment on operating leases acquired (2,135) (2,190) Increase in trade and wholesale receivables (2,551) (2,330) Other (64) 42 12 (61) Net cash used for investing activities (812) (5,556) (4,339) (4,105) Cash Flows from Financing Activities Increase (decrease) in total short-term borrowings (119) 119 (217) 1,064 Change in intercompany receivables/payables (683) (797) 683 797 Proceeds from long-term borrowings 868 159 6,572 5,580 Payments of long-term borrowings (194) (118) (4,162) (4,254) Proceeds from issuance of common stock 133 209 Repurchases of common stock (880) (454) Dividends paid (703) (583) (377) (454) Other (52) (41) (22) (25) Net cash provided by (used for) financing activities (1,630) (1,506) 2,477 2,708 Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash (16) 89 (8) (18) Net Decrease in Cash, Cash Equivalents, and Restricted Cash (499) (5,364) (34) (74) Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 3,202 8,174 813 1,293 Cash, Cash Equivalents, and Restricted Cash at End of Period $ 2,703 $ 2,810 $ 779 $ 1,219 * 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. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CASH FLOW INFORMATION (Policies) | 9 Months Ended |
Jul. 28, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CASH FLOW INFORMATION | |
Fiscal Period, Policy | The Company uses a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The third quarter ends for fiscal year 2019 and 2018 were July 28, 2019 and July 29, 2018, respectively. Both periods contained 13 weeks. |
Use of Estimates in Financial Statements | The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates. |
Revenue Recognition | Sales of equipment and service parts. In limited instances, equipment is transferred to a customer or a financial institution with an obligation to repurchase the equipment for a specified amount, which is exercisable at the customer’s option. When the equipment is expected to be repurchased, those arrangements are accounted for as leases. When the operating lease criteria are met, no sale is recorded at the time of the equipment transfer and the difference between sale price and the specified repurchase amount is recognized as revenue on a straight-line basis until the customer’s option expires. When this equipment is not expected to be repurchased, a sale is recorded with a return obligation. Under the terms of sales agreements with dealers, interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range from one to twelve months for most equipment. Interest-free periods may not be extended. Interest is primarily charged to dealers on outstanding balances, from the earlier of the date when goods are sold to retail customers by the dealer or the expiration of certain interest-free periods granted at the time of the sale to the dealer, until payment is received by the Company. Interest charged may not be forgiven and the past due interest rates exceed market rates. Dealers cannot cancel purchases after the equipment is shipped and are responsible for payment even if the equipment is not sold to retail customers. If the interest-free or below market interest rate period exceeds one year, the Company adjusts the expected sales revenue for the effects of the time value of money using a current market interest rate. The revenue related to the financing component is recognized in finance and interest income using the interest method. The Company elected to not adjust the sales price to account for a financing component if the expected interest-free or below market period is one year or less. Service parts and certain attachments returns are estimable and accrued at the time a sale is recognized. The estimated parts returns are recorded in other assets for the inventory value of estimated part returns, adjusted for restocking fees. The estimated dealer refund liability, adjusted for restocking fees, is recorded in accounts payable and accrued expenses. The estimated returns are based on historical return rates, current dealer inventory levels, and current economic conditions. Sales incentives. Product warranties. Remanufactured components and parts. Precision guidance, telematics, and other information enabled solutions. Allowance for credit losses. Sales and transaction taxes. Shipping and handling costs. Contract costs |
Financing Receivables - Non-Performing, Policy | Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent loans for which the Company has ceased accruing finance income. Beginning in the first quarter of 2019, the Company ceased accruing finance income when these receivables are generally 90 days delinquent. Previously, finance income ceased accruing when the receivables were generally 120 days delinquent. This change in estimate was made on a prospective basis and did not have a significant effect on the Company’s consolidated financial statements. Management’s methodology to determine the collectability of delinquent accounts was not affected by the change. Generally, when receivables are 120 days delinquent the estimated uncollectible amount, after charging the dealer’s withholding account, if any, is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured. Financing receivables are considered impaired when it is probable the Company will be unable to collect all amounts due according to the contractual terms. Receivables reviewed for impairment generally include those that are either past due, or have provided bankruptcy notification, or require significant collection efforts. Receivables that are impaired are generally classified as non-performing. |
Troubled Debt Restructuring, Policy | A troubled debt restructuring is generally the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first nine months of 2019, the Company identified 416 receivable contracts, primarily trade receivables and retail notes, as troubled debt restructurings with aggregate balances of $34 million pre-modification and $33 million post-modification. During the first nine months of 2018, there were 410 receivable contracts, primarily retail notes, identified as troubled debt restructurings with aggregate balances of $22 million pre-modification and $22 million post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At July 28, 2019, the Company had commitments to lend approximately $13 million to borrowers whose accounts were modified in troubled debt restructurings. |
Inventory Valuation, Policy | A majority of inventory owned by Deere & Company and its U.S. equipment subsidiaries and certain foreign equipment subsidiaries are valued at cost on the “last-in, first-out” (LIFO) method. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) method, estimated inventories by major classification in millions of dollars would have been as follows: |
Product Warranties | The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. |
Extended Product Warranty, Policy | The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled $542 million and $486 million at July 28, 2019 and July 29, 2018, respectively. |
Fair Value of Financial Instruments, Policy | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses various methods including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied. |
Derivative Financial Instruments | It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The Company’s financial services operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The Company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling, and financing in currencies other than the functional currencies. In addition, the Company has interest rate exposure at certain equipment operations units for below market retail financing programs that are used as sales incentives and are offered for extended periods, along with periodic long-term debt issuances. All derivatives are recorded at fair value on the balance sheet. Cash collateral received or paid is not offset against the derivative fair values on the balance sheet. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, or the underlying hedged transaction is no longer likely to occur, or the hedge designation is removed, or the derivative is terminated, hedge accounting is discontinued. |
ORGANIZATION AND CONSOLIDATION
ORGANIZATION AND CONSOLIDATION (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
ORGANIZATION AND CONSOLIDATION | |
Maximum Exposure to Losses from Variable Interest Entities | The Company also has an interest in a joint venture that manufactures construction equipment in Brazil for local and overseas markets. The joint venture is a VIE; however, the Company is not the primary beneficiary. Therefore, the entity’s financial results are not fully consolidated in the Company’s consolidated financial statements, but are included on an equity basis. During the second quarter of 2019, the Company made an additional contribution to the joint venture in exchange for non-voting preferred stock and terminated the loan guarantee. The maximum exposure to losses at July 28, 2019 and October 28, 2018 in millions of dollars follows: July 28, 2019 October 28, 2018 Receivables from unconsolidated affiliates $ 3 $ 2 Investment in unconsolidated affiliates 20 Loan guarantee 25 Total $ 23 $ 27 |
NEW ACCOUNTING STANDARDS (Table
NEW ACCOUNTING STANDARDS (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
NEW ACCOUNTING STANDARDS | |
Schedule of Change for the Estimated Parts Returns | The ASU required that a gross asset and liability rather than a net liability be recorded for the value of estimated service parts returns and the related refund liability. The gross asset is recorded in other assets for the inventory value of estimated parts returns and the gross liability is recorded in accounts payable and accrued expenses for the estimated dealer refund. The table below reflects the change for the estimated parts returns in the affected lines on the consolidated balance sheet in millions of dollars. October 28, 2018 Cumulative Effect October 29, 2018 Assets Other assets $ 1,718 $ 110 $ 1,828 Liabilities Accounts payable and accrued expenses $ 10,111 $ 110 $ 10,221 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
REVENUE RECOGNITION | |
Schedule of Revenue Recognition | The Company’s revenue by primary geographical market, major product line, and timing of revenue recognition in millions of dollars follow: Three Months Ended July 28, 2019 Agriculture Construction Financial Total Primary geographical markets: United States $ 2,870 $ 1,594 $ 632 $ 5,096 Canada 299 260 148 707 Western Europe 1,154 458 22 1,634 Central Europe and CIS 324 229 10 563 Latin America 708 171 66 945 Asia, Africa, Australia, New Zealand, 684 375 32 1,091 Total $ 6,039 $ 3,087 $ 910 $ 10,036 Major product lines: Large Agriculture $ 2,985 $ 2,985 Small Agriculture 2,172 2,172 Turf 704 704 Construction $ 1,319 1,319 Compact Construction 320 320 Road Building 1,008 1,008 Forestry 333 333 Financial Products 25 7 $ 910 942 Other 153 100 253 Total $ 6,039 $ 3,087 $ 910 $ 10,036 Timing of revenue recognition: Revenue recognized at a point in time $ 5,988 $ 3,055 $ 9,043 Revenue recognized over time 51 32 $ 910 993 Total $ 6,039 $ 3,087 $ 910 $ 10,036 Nine Months Ended July 28, 2019 Agriculture Construction Financial Total Primary geographical markets: United States $ 9,411 $ 4,495 $ 1,810 $ 15,716 Canada 784 773 458 2,015 Western Europe 3,362 1,174 63 4,599 Central Europe and CIS 865 555 28 1,448 Latin America 2,028 515 199 2,742 Asia, Africa, Australia, New Zealand, 1,784 966 92 2,842 Total $ 18,234 $ 8,478 $ 2,650 $ 29,362 Major product lines: Large Agriculture $ 8,647 $ 8,647 Small Agriculture 6,613 6,613 Turf 2,199 2,199 Construction $ 3,806 3,806 Compact Construction 904 904 Road Building 2,420 2,420 Forestry 1,023 1,023 Financial Products 69 20 $ 2,650 2,739 Other 706 305 1,011 Total $ 18,234 $ 8,478 $ 2,650 $ 29,362 Timing of revenue recognition: Revenue recognized at a point in time $ 18,088 $ 8,402 $ 26,490 Revenue recognized over time 146 76 $ 2,650 2,872 Total $ 18,234 $ 8,478 $ 2,650 $ 29,362 |
OTHER COMPREHENSIVE INCOME IT_2
OTHER COMPREHENSIVE INCOME ITEMS (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
OTHER COMPREHENSIVE INCOME ITEMS | |
Schedule of After-Tax Changes in Accumulated Other Comprehensive Income (Loss) | The after-tax changes in accumulated other comprehensive income (loss) in millions of dollars follow: Total Unrealized Unrealized Accumulated Retirement Cumulative Gain (Loss) Gain (Loss) Other Benefits Translation on on Comprehensive Adjustment Adjustment Derivatives Debt Securities Income (Loss) Balance October 29, 2017 $ (3,580) $ (999) $ 5 $ 10 $ (4,564) Other comprehensive income (loss) items before reclassification 81 (196) 12 (7) (110) Amounts reclassified from accumulated other comprehensive income 124 (2) (1) 121 Net current period other comprehensive income (loss) 205 (196) 10 (8) 11 Balance July 29, 2018 $ (3,375) $ (1,195) $ 15 $ 2 $ (4,553) Balance October 28, 2018 $ (3,237) $ (1,203) $ 15 $ (2) $ (4,427) ASU No. 2016-01 adoption* (8) (8) Other comprehensive income (loss) items before reclassification 30 (218) (33) 26 (195) Amounts reclassified from accumulated other comprehensive income 54 (4) (1) 49 Net current period other comprehensive income (loss) 84 (218) (37) 25 (146) Balance July 28, 2019 $ (3,153) $ (1,421) $ (22) $ 15 $ (4,581) * See Note 3. |
Schedule of Amounts Recorded in and Reclassifications out of Other Comprehensive Income (Loss) and the Income Tax Effects | Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars: Before Tax After Tax (Expense) Tax Three Months Ended July 28, 2019 Amount Credit Amount Cumulative translation adjustment $ 27 $ (1) $ 26 Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) (27) 6 (21) Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (1) (1) Net unrealized gain (loss) on derivatives (28) 6 (22) Unrealized gain (loss) on debt securities: Unrealized holding gain (loss) 13 (2) 11 Reclassification of realized (gain) loss – Other income (1) (1) Net unrealized gain (loss) on debt securities 12 (2) 10 Retirement benefits adjustment: Pensions Net actuarial gain (loss) (3) 1 (2) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 35 (9) 26 Prior service (credit) cost 2 2 Settlements/curtailments 1 1 OPEB Net actuarial gain (loss) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 4 (1) 3 Prior service (credit) cost (19) 4 (15) Net unrealized gain (loss) on retirement benefits adjustment 20 (5) 15 Total other comprehensive income (loss) $ 31 $ (2) $ 29 * Before Tax After Tax (Expense) Tax Nine Months Ended July 28, 2019 Amount Credit Amount Cumulative translation adjustment $ (217) $ (1) $ (218) Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) (42) 9 (33) Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (6) 2 (4) Net unrealized gain (loss) on derivatives (48) 11 (37) Unrealized gain (loss) on debt securities: Unrealized holding gain (loss) 32 (6) 26 Reclassification of realized (gain) loss – Other income (1) (1) Net unrealized gain (loss) on debt securities 31 (6) 25 Retirement benefits adjustment: Pensions Net actuarial gain (loss) (21) 5 (16) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 106 (26) 80 Prior service (credit) cost 8 (2) 6 Settlements/curtailments 1 1 OPEB Net actuarial gain (loss) 60 (14) 46 Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 12 (3) 9 Prior service (credit) cost (55) 13 (42) Net unrealized gain (loss) on retirement benefits adjustment 111 (27) 84 Total other comprehensive income (loss) $ (123) $ (23) $ (146) * Before Tax After Tax (Expense) Tax Three Months Ended July 29, 2018 Amount Credit Amount Cumulative translation adjustment $ (421) $ 1 $ (420) Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) 1 1 Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (2) (2) Net unrealized gain (loss) on derivatives (1) (1) Unrealized gain (loss) on investments: Unrealized holding gain (loss) 2 (1) 1 Reclassification of realized (gain) loss – Other income Net unrealized gain (loss) on investments 2 (1) 1 Retirement benefits adjustment: Pensions Net actuarial gain (loss) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 53 (14) 39 Prior service (credit) cost 3 (1) 2 Settlements/curtailments 1 1 OPEB Net actuarial gain (loss) Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 16 (4) 12 Prior service (credit) cost (19) 5 (14) Net unrealized gain (loss) on retirement benefits adjustment 54 (14) 40 Total other comprehensive income (loss) $ (366) $ (14) $ (380) * In the third quarter of 2019 and 2018, the noncontrolling interests’ comprehensive income in both periods was none, which consisted of net income of none and $1 million and cumulative translation adjustments of none and $(1) million, respectively. Before Tax After Tax (Expense) Tax Nine Months Ended July 29, 2018 Amount Credit Amount Cumulative translation adjustment $ (196) $ (196) Unrealized gain (loss) on derivatives: Unrealized hedging gain (loss) 16 $ (4) 12 Reclassification of realized (gain) loss to: Interest rate contracts – Interest expense (3) 1 (2) Net unrealized gain (loss) on derivatives 13 (3) 10 Unrealized gain (loss) on investments: Unrealized holding gain (loss) (9) 2 (7) Reclassification of realized (gain) loss – Other income (1) (1) Net unrealized gain (loss) on investments (10) 2 (8) Retirement benefits adjustment: Pensions Net actuarial gain (loss) 46 (11) 35 Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 168 (48) 120 Prior service (credit) cost 9 (3) 6 Settlements/curtailments 7 (2) 5 OPEB Net actuarial gain (loss) 60 (14) 46 Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 47 (13) 34 Prior service (credit) cost (57) 16 (41) Net unrealized gain (loss) on retirement benefits adjustment 280 (75) 205 Total other comprehensive income (loss) $ 87 $ (76) $ 11 * In the first nine months of 2019 and 2018, the noncontrolling interests’ comprehensive income was $3 million and $1 million, respectively, which consisted of net income of $3 million and $2 million and cumulative translation adjustments of none and $(1) million, respectively. |
DIVIDENDS DECLARED AND PAID (Ta
DIVIDENDS DECLARED AND PAID (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
DIVIDENDS DECLARED AND PAID | |
Dividends Declared and Paid | Dividends declared and paid on a per share basis were as follows: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Dividends declared $ .76 $ .69 $ 2.28 $ 1.89 Dividends paid $ .76 $ .60 $ 2.21 $ 1.80 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
EARNINGS PER SHARE | |
Reconciliation of Basic and Diluted Net Income (Loss) Per Share | A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Net income attributable to Deere & Company $ 899 $ 910 $ 2,532 $ 1,584 Average shares outstanding 315.9 323.5 317.3 323.4 Basic per share $ 2.84 $ 2.81 $ 7.98 $ 4.90 Average shares outstanding 315.9 323.5 317.3 323.4 Effect of dilutive share-based compensation 3.9 4.5 4.2 4.8 Total potential shares outstanding 319.8 328.0 321.5 328.2 Diluted per share $ 2.81 $ 2.78 $ 7.87 $ 4.82 |
PENSION AND OTHER POSTRETIREM_2
PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
PENSION AND OTHER POSTRETIREMENT BENEFITS | |
Components of Pension and Other Postretirement Benefit Costs | The worldwide components of net periodic pension cost consisted of the following in millions of dollars: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Service cost $ 65 $ 75 $ 197 $ 223 Interest cost 112 97 334 292 Expected return on plan assets (200) (193) (600) (581) Amortization of actuarial loss 35 53 106 168 Amortization of prior service cost 2 3 8 9 Settlements/curtailments 1 1 1 7 Net cost $ 15 $ 36 $ 46 $ 118 The worldwide components of net periodic OPEB cost consisted of the following in millions of dollars: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Service cost $ 11 $ 11 $ 31 $ 33 Interest cost 53 47 160 143 Expected return on plan assets (8) (5) (26) (16) Amortization of actuarial loss 4 16 12 47 Amortization of prior service credit (19) (19) (55) (57) Net cost $ 41 $ 50 $ 122 $ 150 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
INCOME TAXES | |
Tax Reform Measurement Period Adjustments and Effects on Results | In 2019 and 2018, the Company recorded discrete tax adjustments related to the remeasurement of the Company’s net deferred tax assets to the new corporate income tax rate and for the deemed earnings repatriation tax (repatriation tax). Those adjustments for the third quarter and first nine months of 2019 and 2018 in millions of dollars follow: Three Months Ended Nine Months Ended Equipment Operations Financial Services Total Equipment Operations Financial Services Total Net deferred tax asset remeasurement $ 5 $ 5 Deemed earnings repatriation tax $ (24) $ (8) $ (32) $ (24) (8) (32) Total discrete tax expense (benefit) $ (24) $ (8) $ (32) $ (24) $ (3) $ (27) Three Months Ended Nine Months Ended Equipment Operations Financial Services Total Equipment Operations Financial Services Total Net deferred tax asset remeasurement $ (58) $ (4) $ (62) $ 795 $ (318) $ 477 Deemed earnings repatriation tax 179 85 264 Total discrete tax expense (benefit) $ (58) $ (4) $ (62) $ 974 $ (233) $ 741 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
SEGMENT REPORTING | |
Schedule of Segment Reporting Information | Worldwide net sales and revenues, operating profit, and identifiable assets by segment in millions of dollars follow: Three Months Ended Nine Months Ended July 28 July 29 % July 28 July 29 % 2019 2018 Change 2019 2018 Change Net sales and revenues: Agriculture and turf $ 5,946 $ 6,293 -6 $ 17,909 $ 17,585 +2 Construction and forestry 3,023 2,993 +1 8,273 7,422 +11 Total net sales 8,969 9,286 -3 26,182 25,007 +5 Financial services 910 830 +10 2,650 2,402 +10 Other revenues 157 192 -18 530 533 -1 Total net sales and revenues $ 10,036 $ 10,308 -3 $ 29,362 $ 27,942 +5 Operating profit: * Agriculture and turf $ 612 $ 806 -24 $ 1,978 $ 2,249 -12 Construction and forestry 378 281 +35 954 573 +66 Financial services 204 196 +4 566 591 -4 Total operating profit 1,194 1,283 -7 3,498 3,413 +2 Reconciling items ** (74) (84) -12 (218) (305) -29 Income taxes (221) (289) -24 (748) (1,524) -51 Net income attributable to Deere & Company $ 899 $ 910 -1 $ 2,532 $ 1,584 +60 Intersegment sales and revenues: Agriculture and turf net sales $ 9 $ 14 -36 $ 27 $ 38 -29 Construction and forestry net sales 1 Financial services 93 89 +4 261 234 +12 Equipment operations outside the U.S. and Canada: Net sales $ 4,026 $ 4,232 -5 $ 10,985 $ 11,036 Operating profit 430 398 +8 1,088 1,079 +1 July 28 October 28 2019 2018 Identifiable assets: Agriculture and turf $ 10,629 $ 10,161 +5 Construction and forestry 10,161 9,855 +3 Financial services 48,444 45,720 +6 Corporate 4,296 4,372 -2 Total assets $ 73,530 $ 70,108 +5 * ** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and OPEB costs excluding the service cost component, and net income attributable to noncontrolling interests. |
FINANCING RECEIVABLES (Tables)
FINANCING RECEIVABLES (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
FINANCING RECEIVABLES | |
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | An age analysis of past due financing receivables that are still accruing interest and non-performing financing receivables in millions of dollars follows: July 28, 2019 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due Retail Notes: Agriculture and turf $ 136 $ 63 $ 3 $ 202 Construction and forestry 87 35 2 124 Other: Agriculture and turf 38 22 60 Construction and forestry 17 7 24 Total $ 278 $ 127 $ 5 $ 410 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes: Agriculture and turf $ 202 $ 301 $ 18,038 $ 18,541 Construction and forestry 124 135 3,249 3,508 Other: Agriculture and turf 60 37 8,833 8,930 Construction and forestry 24 14 1,417 1,455 Total $ 410 $ 487 $ 31,537 32,434 Less allowance for credit losses 185 Total financing receivables – net $ 32,249 October 28, 2018 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due Retail Notes: Agriculture and turf $ 133 $ 74 $ 63 $ 270 Construction and forestry 79 45 52 176 Other: Agriculture and turf 36 16 8 60 Construction and forestry 18 5 3 26 Total $ 266 $ 140 $ 126 $ 532 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes: Agriculture and turf $ 270 $ 201 $ 17,836 $ 18,307 Construction and forestry 176 40 3,101 3,317 Other: Agriculture and turf 60 15 8,274 8,349 Construction and forestry 26 3 1,252 1,281 Total $ 532 $ 259 $ 30,463 31,254 Less allowance for credit losses 178 Total financing receivables – net $ 31,076 July 29, 2018 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due Retail Notes: Agriculture and turf $ 138 $ 53 $ 54 $ 245 Construction and forestry 105 43 50 198 Other: Agriculture and turf 37 14 12 63 Construction and forestry 12 6 3 21 Total $ 292 $ 116 $ 119 $ 527 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes: Agriculture and turf $ 245 $ 203 $ 17,048 $ 17,496 Construction and forestry 198 42 2,967 3,207 Other: Agriculture and turf 63 14 8,009 8,086 Construction and forestry 21 3 1,249 1,273 Total $ 527 $ 262 $ 29,273 30,062 Less allowance for credit losses 187 Total financing receivables – net $ 29,875 |
Analysis of the Allowance for Credit Losses and Investment in Financing Receivables | An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows: Revolving Retail Charge Notes Accounts Other Total Three Months Ended July 28, 2019 Allowance: Beginning of period balance $ 115 $ 43 $ 24 $ 182 Provision 7 18 1 26 Write-offs (9) (26) (1) (36) Recoveries 5 8 13 Translation adjustments 2 (2) End of period balance * $ 120 $ 43 $ 22 $ 185 Nine Months Ended July 28, 2019 Allowance: Beginning of period balance $ 113 $ 43 $ 22 $ 178 Provision 21 34 7 62 Write-offs (29) (51) (5) (85) Recoveries 15 17 1 33 Translation adjustments (3) (3) End of period balance * $ 120 $ 43 $ 22 $ 185 Financing receivables: End of period balance $ 22,049 $ 3,877 $ 6,508 $ 32,434 Balance individually evaluated ** $ 145 $ 10 $ 155 * Individual allowances were not significant. ** Remainder is collectively evaluated. Revolving Retail Charge Notes Accounts Other Total Three Months Ended July 29, 2018 Allowance: Beginning of period balance $ 120 $ 40 $ 27 $ 187 Provision 8 21 3 32 Write-offs (9) (26) (1) (36) Recoveries 3 5 8 Translation adjustments (4) (4) End of period balance * $ 118 $ 40 $ 29 $ 187 Nine Months Ended July 29, 2018 Allowance: Beginning of period balance $ 121 $ 40 $ 26 $ 187 Provision 13 29 7 49 Write-offs (23) (44) (5) (72) Recoveries 13 15 1 29 Translation adjustments (6) (6) End of period balance * $ 118 $ 40 $ 29 $ 187 Financing receivables: End of period balance $ 20,703 $ 3,750 $ 5,609 $ 30,062 Balance individually evaluated ** $ 120 $ 1 $ 13 $ 134 * ** Remainder is collectively evaluated. |
Analysis of the Impaired Financing Receivables | An analysis of the impaired financing receivables in millions of dollars follows: Unpaid Average Recorded Principal Specific Recorded Investment Balance Allowance Investment July 28, 2019* Receivables with specific allowance ** $ 37 $ 36 $ 13 $ 37 Receivables without a specific allowance ** 35 33 39 Total $ 72 $ 69 $ 13 $ 76 Agriculture and turf $ 51 $ 50 $ 9 $ 52 Construction and forestry $ 21 $ 19 $ 4 $ 24 October 28, 2018* Receivables with specific allowance ** $ 28 $ 27 $ 10 $ 30 Receivables without a specific allowance ** 37 35 41 Total $ 65 $ 62 $ 10 $ 71 Agriculture and turf $ 50 $ 48 $ 9 $ 54 Construction and forestry $ 15 $ 14 $ 1 $ 17 July 29, 2018* Receivables with specific allowance ** $ 31 $ 30 $ 12 $ 33 Receivables without a specific allowance ** 37 35 40 Total $ 68 $ 65 $ 12 $ 73 Agriculture and turf $ 51 $ 49 $ 10 $ 54 Construction and forestry $ 17 $ 16 $ 2 $ 19 * ** |
SECURITIZATION OF FINANCING R_2
SECURITIZATION OF FINANCING RECEIVABLES (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
SECURITIZATION OF FINANCING RECEIVABLES | |
Unconsolidated Conduits, Carrying Amount of Liabilities Compared to Maximum Exposure to Loss | The Company’s carrying amount of the liabilities to the unconsolidated conduits, compared to the maximum exposure to loss related to these conduits, which would only be incurred in the event of a complete loss on the restricted assets, was as follows in millions of dollars: July 28 2019 Carrying value of liabilities $ 1,190 Maximum exposure to loss 1,286 |
Components of Consolidated Restricted Assets, Secured Borrowings and Other Liabilities Related to Securitization Transactions | The components of consolidated restricted assets related to secured borrowings in securitization transactions follow in millions of dollars: July 28 October 28 July 29 2019 2018 2018 Financing receivables securitized (retail notes) $ 5,214 $ 4,032 $ 4,674 Allowance for credit losses (14) (10) (12) Other assets 98 108 114 Total restricted securitized assets $ 5,298 $ 4,130 $ 4,776 The components of consolidated secured borrowings and other liabilities related to securitizations follow in millions of dollars: July 28 October 28 July 29 2019 2018 2018 Short-term securitization borrowings $ 5,048 $ 3,957 $ 4,528 Accrued interest on borrowings 4 3 3 Total liabilities related to restricted securitized assets $ 5,052 $ 3,960 $ 4,531 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
INVENTORIES | |
Major Classification of Inventories | A majority of inventory owned by Deere & Company and its U.S. equipment subsidiaries and certain foreign equipment subsidiaries are valued at cost on the “last-in, first-out” (LIFO) method. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) method, estimated inventories by major classification in millions of dollars would have been as follows: July 28 October 28 July 29 2019 2018 2018 Raw materials and supplies $ 2,365 $ 2,233 $ 2,126 Work-in-process 815 776 795 Finished goods and parts 5,345 4,777 4,768 Total FIFO value 8,525 7,786 7,689 Less adjustment to LIFO value 1,778 1,637 1,450 Inventories $ 6,747 $ 6,149 $ 6,239 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS-NET (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS-NET | |
Changes in Goodwill by Operating Segments | The changes in amounts of goodwill by operating segments were as follows in millions of dollars: Agriculture Construction and Turf and Forestry Total Goodwill at October 29, 2017 $ 521 $ 512 $ 1,033 Acquisitions 28 2,067 2,095 Divestitures (18) (18) Translation adjustments (4) (59) (63) Goodwill at July 29, 2018 $ 545 $ 2,502 $ 3,047 Goodwill at October 28, 2018 $ 583 $ 2,518 $ 3,101 Translation adjustments (1) (87) (88) Goodwill at July 28, 2019 $ 582 $ 2,431 $ 3,013 There were no accumulated impairment losses in the reported periods. |
Components of Other Intangible Assets | The components of other intangible assets were as follows in millions of dollars: Useful Lives * July 28 October 28 July 29 (Years) 2019 2018 2018 Amortized intangible assets: Customer lists and relationships 16 $ 525 $ 542 $ 562 Technology, patents, trademarks, and other 18 1,057 1,080 1,052 Total at cost 1,582 1,622 1,614 Less accumulated amortization ** 261 183 156 Total 1,321 1,439 1,458 Unamortized intangible assets: In-process research and development 123 123 123 Other intangible assets – net $ 1,444 $ 1,562 $ 1,581 * ** |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Reconciliation of the Changes in Warranty Liability and Unearned Premiums | A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Beginning of period balance $ 1,714 $ 1,591 $ 1,652 $ 1,468 Payments (252) (212) (714) (642) Amortization of premiums received (57) (56) (168) (170) Accruals for warranties 263 250 772 704 Premiums received 75 72 209 198 Acquisitions 80 Foreign exchange 3 (21) (5) (14) End of period balance $ 1,746 $ 1,624 $ 1,746 $ 1,624 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
FAIR VALUE MEASUREMENTS | |
Fair Value of Financial Instruments | The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow: July 28, 2019 October 28, 2018 July 29, 2018 Carrying Fair Carrying Fair Carrying Fair Financing receivables – net: Equipment operations $ 100 $ 93 $ 93 $ 91 $ 78 $ 75 Financial services 26,949 26,921 26,961 26,722 25,135 24,911 Total $ 27,049 $ 27,014 $ 27,054 $ 26,813 $ 25,213 $ 24,986 Financing receivables securitized – net: Equipment operations $ 54 $ 52 $ 76 $ 73 $ 90 $ 89 Financial services 5,146 5,154 3,946 3,895 4,572 4,517 Total $ 5,200 $ 5,206 $ 4,022 $ 3,968 $ 4,662 $ 4,606 Short-term securitization borrowings: Equipment operations $ 53 $ 54 $ 75 $ 75 $ 90 $ 89 Financial services 4,995 5,017 3,882 3,870 4,438 4,426 Total $ 5,048 $ 5,071 $ 3,957 $ 3,945 $ 4,528 $ 4,515 Long-term borrowings due within one year: Equipment operations $ 1,009 $ 1,013 $ 970 $ 979 $ 238 $ 239 Financial services 6,922 6,914 5,427 5,411 5,955 5,947 Total $ 7,931 $ 7,927 $ 6,397 $ 6,390 $ 6,193 $ 6,186 Long-term borrowings: Equipment operations $ 5,364 $ 6,017 $ 4,714 $ 4,948 $ 5,526 $ 5,838 Financial services 23,878 24,143 22,523 22,590 21,312 21,388 Total $ 29,242 $ 30,160 $ 27,237 $ 27,538 $ 26,838 $ 27,226 * |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow*: July 28 October 28 July 29 2019 2018 2018 Level 1: Marketable securities Equity fund *** $ 59 $ 46 $ 46 Fixed income fund *** 9 U.S. government debt securities 49 44 39 Total Level 1 marketable securities 108 90 94 Level 2: Marketable securities U.S. government debt securities 73 67 60 Municipal debt securities 57 46 47 Corporate debt securities 156 140 138 International debt securities 9 2 3 Mortgage-backed securities ** 158 137 136 Total Level 2 marketable securities 453 392 384 Other assets Derivatives: Interest rate contracts 265 80 68 Foreign exchange contracts 53 83 50 Cross-currency interest rate contracts 2 5 6 Total Level 2 other assets 320 168 124 Accounts payable and accrued expenses Derivatives: Interest rate contracts 99 350 330 Foreign exchange contracts 45 49 52 Cross-currency interest rate contracts 2 2 Total Level 2 accounts payable and accrued expenses 146 399 384 Level 3: Marketable securities International debt securities 4 8 10 * ** ***During the third quarter and first nine months of 2019, $1 million and $7 million, respectively, of net unrealized gains on equity securities were recorded in “Other income”. |
Contractual Maturities of Debt Securities | The contractual maturities of debt securities at July 28, 2019 in millions of dollars are shown below. Actual maturities may differ from those scheduled as a result of prepayments by the issuers. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity. Amortized Fair Cost Value Due in one year or less $ 30 $ 30 Due after one through five years 101 102 Due after five through 10 years 92 96 Due after 10 years 115 120 Mortgage-backed securities 155 158 Debt securities $ 493 $ 506 |
Fair Value, Recurring, Level 3 Measurements | Fair value, recurring Level 3 measurements from available-for-sale marketable securities in millions of dollars follow: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Beginning of period balance $ 4 $ 14 $ 8 $ 17 Principal payments (4) (5) (7) Other 1 End of period balance $ 4 $ 10 $ 4 $ 10 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
DERIVATIVE INSTRUMENTS | |
Amounts Recorded in the Balance Sheet Related to Borrowings Designated in Fair Value Hedging Relationships | The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships in millions of dollars follow: Cumulative Increase (Decrease) of Fair Value Hedging Adjustments Included in the Carrying Amount Carrying Active Amount of Hedging Discontinued July 28, 2019 Hedged Item Relationships Relationships Total Long-term borrowings due within one year* $ 187 $ 1 $ (5) $ (4) Long-term borrowings 9,154 184 (50) 134 * |
Fair Value of Derivative Instruments in Consolidated Balance Sheet | Fair values of derivative instruments in the condensed consolidated balance sheet in millions of dollars follow: July 28 October 28 July 29 Other Assets 2019 2018 2018 Designated as hedging instruments: Interest rate contracts $ 232 $ 29 $ 24 Cross-currency interest rate contracts 3 Total designated 232 29 27 Not designated as hedging instruments: Interest rate contracts 33 51 44 Foreign exchange contracts 53 83 50 Cross-currency interest rate contracts 2 5 3 Total not designated 88 139 97 Total derivative assets $ 320 $ 168 $ 124 Accounts Payable and Accrued Expenses Designated as hedging instruments: Interest rate contracts $ 55 $ 321 $ 305 Total designated 55 321 305 Not designated as hedging instruments: Interest rate contracts 44 29 25 Foreign exchange contracts 45 49 52 Cross-currency interest rate contracts 2 2 Total not designated 91 78 79 Total derivative liabilities $ 146 $ 399 $ 384 |
Gains (Losses) Related to Derivative Instruments on Statement of Consolidated Income | The classification and gains (losses) including accrued interest expense related to derivative instruments on the statement of consolidated income consisted of the following in millions of dollars: Three Months Ended Nine Months Ended July 28 July 29 July 28 July 29 2019 2018 2019 2018 Fair Value Hedges: Interest rate contracts - Interest expense $ 193 $ (10) $ 468 $ (264) Cash Flow Hedges Recognized in OCI Interest rate contracts - OCI (pretax) * (27) 1 (42) 15 Foreign exchange contracts - OCI (pretax) * 1 Reclassified from OCI Interest rate contracts - Interest expense * 1 2 6 3 Not Designated as Hedges: Interest rate contracts - Net sales $ (6) $ (23) Interest rate contracts - Interest expense * (7) $ (3) (25) $ (3) Foreign exchange contracts - Cost of sales (8) (10) (1) (22) Foreign exchange contracts - Other operating * (12) 144 88 92 Total not designated $ (33) $ 131 $ 39 $ 67 * |
Impact on Derivative Assets and Liabilities Related to Netting Arrangements and Collateral | Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and any collateral received or paid in millions of dollars follows: Gross Amounts Netting Collateral July 28, 2019 Recognized Arrangements Paid Net Amount Assets $ 320 $ (70) $ 250 Liabilities 146 (70) 76 Gross Amounts Netting Collateral October 28, 2018 Recognized Arrangements Paid Net Amount Assets $ 168 $ (65) $ 103 Liabilities 399 (65) $ (59) 275 Gross Amounts Netting Collateral July 29, 2018 Recognized Arrangements Paid Net Amount Assets $ 124 $ (67) $ 57 Liabilities 384 (67) $ (34) 283 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
ACQUISITIONS | |
Asset and Liability Fair Values at the Acquisition Date | In September 2018, the Company acquired PLA, a privately held manufacturer of sprayers, planters, and specialty products for agriculture. PLA is based in Argentina, with manufacturing facilities in Las Roses, Argentina and Canoas, Brazil. The total cash purchase price after the final adjustment, net of cash acquired of $1 million, was $69 million with $4 million retained by the Company as escrow to secure indemnity obligations. In addition to the cash purchase price, the Company assumed $29 million of liabilities. The asset and liability fair values at the acquisition date in millions of dollars follow: September 2018 Trade accounts and notes receivable $ 2 Other receivables 14 Inventories 14 Property and equipment 1 Goodwill 44 Other intangible assets 22 Other assets 1 Total assets $ 98 Short-term borrowings $ 8 Accounts payable and accrued expenses 17 Deferred income taxes 4 Total liabilities $ 29 |
SUPPLEMENTAL CONSOLIDATING DA_2
SUPPLEMENTAL CONSOLIDATING DATA (Tables) | 9 Months Ended |
Jul. 28, 2019 | |
SUPPLEMENTAL CONSOLIDATING DATA | |
Supplemental Consolidating Data Income Statement | (20) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended July 28, 2019 and July 29, 2018 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2019 2018 2019 2018 Net Sales and Revenues Net sales $ 8,969 $ 9,286 Finance and interest income 30 31 $ 952 $ 852 Other income 185 231 51 67 Total 9,184 9,548 1,003 919 Costs and Expenses Cost of sales 6,871 7,153 Research and development expenses 431 416 Selling, administrative and general expenses 751 769 147 145 Interest expense 67 52 311 250 Interest compensation to Financial Services 93 86 Other operating expenses 64 80 339 326 Total 8,277 8,556 797 721 Income of Consolidated Group before Income Taxes 907 992 206 198 Provision for income taxes 190 242 31 47 Income of Consolidated Group 717 750 175 151 Equity in Income of Unconsolidated Subsidiaries and Affiliates Financial Services 175 151 Other 7 10 Total 182 161 Net Income 899 911 175 151 Less: Net income attributable to noncontrolling interests 1 Net Income Attributable to Deere & Company $ 899 $ 910 $ 175 $ 151 * 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 Nine Months Ended July 28, 2019 and July 29, 2018 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2019 2018 2019 2018 Net Sales and Revenues Net sales $ 26,182 $ 25,007 Finance and interest income 79 70 $ 2,727 $ 2,441 Other income 614 631 184 195 Total 26,875 25,708 2,911 2,636 Costs and Expenses Cost of sales 20,058 19,192 Research and development expenses 1,295 1,188 Selling, administrative and general expenses 2,191 2,159 422 403 Interest expense 182 226 910 675 Interest compensation to Financial Services 254 228 Other operating expenses 203 219 1,008 962 Total 24,183 23,212 2,340 2,040 Income of Consolidated Group before Income Taxes 2,692 2,496 571 596 Provision (credit) for income taxes 625 1,607 123 (83) Income of Consolidated Group 2,067 889 448 679 Equity in Income of Unconsolidated Subsidiaries and Affiliates Financial Services 450 681 2 2 Other 18 16 Total 468 697 2 2 Net Income 2,535 1,586 450 681 Less: Net income attributable to noncontrolling interests 3 2 Net Income Attributable to Deere & Company $ 2,532 $ 1,584 $ 450 $ 681 * 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 Condensed Balance Sheet | SUPPLEMENTAL CONSOLIDATING DATA (Continued) CONDENSED BALANCE SHEET (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES July 28 October 28 July 29 July 28 October 28 July 29 2019 2018 2018 2019 2018 2018 Assets Cash and cash equivalents $ 2,694 $ 3,195 $ 2,803 $ 689 $ 709 $ 1,120 Marketable securities 5 8 11 560 482 477 Receivables from unconsolidated subsidiaries 2,395 1,700 1,795 Trade accounts and notes receivable – net 1,606 1,374 1,586 6,807 4,906 6,080 Financing receivables – net 100 93 78 26,949 26,961 25,135 Financing receivables securitized – net 54 76 90 5,146 3,946 4,572 Other receivables 1,428 1,010 1,131 126 776 176 Equipment on operating leases – net 7,269 7,165 6,805 Inventories 6,747 6,149 6,239 Property and equipment – net 5,753 5,821 5,592 45 47 46 Investments in unconsolidated subsidiaries 5,309 5,231 4,992 16 15 15 Goodwill 3,013 3,101 3,047 Other intangible assets – net 1,444 1,562 1,581 Retirement benefits 1,374 1,241 727 57 57 14 Deferred income taxes 1,579 1,503 1,984 72 69 68 Other assets 1,269 1,133 1,148 708 587 530 Total Assets $ 34,770 $ 33,197 $ 32,804 $ 48,444 $ 45,720 $ 45,038 Liabilities and Stockholders’ Equity Liabilities Short-term borrowings $ 1,372 $ 1,434 $ 789 $ 9,770 $ 9,628 $ 10,215 Short-term securitization borrowings 53 75 90 4,995 3,882 4,438 Payables to unconsolidated subsidiaries 136 129 111 2,341 1,678 1,766 Accounts payable and accrued expenses 9,422 9,383 9,047 1,641 2,056 1,902 Deferred income taxes 454 497 431 616 823 500 Long-term borrowings 5,364 4,714 5,526 23,878 22,523 21,312 Retirement benefits and other liabilities 5,685 5,660 6,430 97 91 96 Total liabilities 22,486 21,892 22,424 43,338 40,681 40,229 Commitments and contingencies (Note 15) Redeemable noncontrolling interest 14 14 14 Stockholders’ Equity Common stock, $1 par value (issued shares at July 28, 2019 – 536,431,204) 4,599 4,474 4,451 2,107 2,100 2,100 Common stock in treasury (17,121) (16,312) (15,814) Retained earnings 29,369 27,553 26,272 3,338 3,257 3,009 Accumulated other comprehensive income (loss) (4,581) (4,427) (4,553) (339) (318) (300) Total Deere & Company stockholders’ equity 12,266 11,288 10,356 5,106 5,039 4,809 Noncontrolling interests 4 3 10 Total stockholders’ equity 12,270 11,291 10,366 5,106 5,039 4,809 Total Liabilities and Stockholders’ Equity $ 34,770 $ 33,197 $ 32,804 $ 48,444 $ 45,720 $ 45,038 * 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 Statement of Cash Flows | SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENT OF CASH FLOWS For the Nine Months Ended July 28, 2019 and July 29, 2018 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES 2019 2018 2019 2018 Cash Flows from Operating Activities Net income $ 2,535 $ 1,586 $ 450 $ 681 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 1 19 57 47 Provision for depreciation and amortization 782 741 836 800 Gain on sales of businesses (25) Undistributed earnings of unconsolidated subsidiaries and affiliates (62) (235) (1) (1) Provision (credit) for deferred income taxes (123) 986 (209) (345) Changes in assets and liabilities: Trade receivables and Equipment Operations' financing receivables (248) (331) Inventories (670) (975) Accounts payable and accrued expenses 50 519 23 66 Accrued income taxes payable/receivable (282) 231 535 (55) Retirement benefits 35 (821) 5 7 Other (59) (86) 140 141 Net cash provided by operating activities 1,959 1,609 1,836 1,341 Cash Flows from Investing Activities Collections of receivables (excluding trade and wholesale) 13,807 13,246 Proceeds from maturities and sales of marketable securities 9 9 63 47 Proceeds from sales of equipment on operating leases 1,171 1,116 Proceeds from sales of businesses, net of cash sold 133 Cost of receivables acquired (excluding trade and wholesale) (14,597) (13,830) Acquisitions of businesses, net of cash acquired (5,171) Purchases of marketable securities (3) (107) (101) Purchases of property and equipment (754) (569) (2) (2) Cost of equipment on operating leases acquired (2,135) (2,190) Increase in trade and wholesale receivables (2,551) (2,330) Other (64) 42 12 (61) Net cash used for investing activities (812) (5,556) (4,339) (4,105) Cash Flows from Financing Activities Increase (decrease) in total short-term borrowings (119) 119 (217) 1,064 Change in intercompany receivables/payables (683) (797) 683 797 Proceeds from long-term borrowings 868 159 6,572 5,580 Payments of long-term borrowings (194) (118) (4,162) (4,254) Proceeds from issuance of common stock 133 209 Repurchases of common stock (880) (454) Dividends paid (703) (583) (377) (454) Other (52) (41) (22) (25) Net cash provided by (used for) financing activities (1,630) (1,506) 2,477 2,708 Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash (16) 89 (8) (18) Net Decrease in Cash, Cash Equivalents, and Restricted Cash (499) (5,364) (34) (74) Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 3,202 8,174 813 1,293 Cash, Cash Equivalents, and Restricted Cash at End of Period $ 2,703 $ 2,810 $ 779 $ 1,219 * 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. |
ORGANIZATION AND CONSOLIDATIO_2
ORGANIZATION AND CONSOLIDATION (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Oct. 28, 2018 | |
Fiscal period duration | 91 days | 91 days | |
Maximum Exposure to Losses | |||
Total | $ 1,286 | ||
VIE-Not Primary Beneficiary | |||
Maximum Exposure to Losses | |||
Receivables from unconsolidated affiliates | 3 | $ 2 | |
Investment in unconsolidated affiliates | 20 | ||
Loan guarantee | 25 | ||
Total | $ 23 | $ 27 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CASH FLOW INFORMATION (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Jul. 28, 2019 | Jul. 29, 2018 | Oct. 28, 2018 | Oct. 29, 2017 | |
Transfer of inventory to equipment on operating leases | $ 498 | $ 564 | ||
Accounts payable related to purchases of property and equipment | 70 | 57 | ||
Equipment Operations | ||||
Restricted cash | 9 | 7 | $ 7 | $ 6 |
Financial Services | ||||
Restricted cash | $ 90 | $ 99 | $ 104 | $ 126 |
NEW ACCOUNTING STANDARDS (Detai
NEW ACCOUNTING STANDARDS (Details) - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 29, 2018 | Oct. 28, 2018 | Jul. 29, 2018 |
New accounting standards | ||||
Other assets | $ 1,977 | $ 1,828 | $ 1,718 | $ 1,677 |
Accounts payable and accrued expenses | $ 9,390 | 10,221 | $ 10,111 | $ 9,483 |
ASU 2014-09 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected [Fixed List] | Modified Retrospective | |||
ASU 2016-01 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2016-18 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected [Fixed List] | Retrospective | |||
ASU 2017-12 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
Change in Accounting Principle, Accounting Standards Update, Early Adoption [true false] | true | |||
ASU 2016-15 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2016-16 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2017-01 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2017-09 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2018-13 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2018-14 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2018-16 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |||
ASU 2016-02 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false | |||
ASU 2016-13 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false | |||
ASU 2017-08 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false | |||
ASU 2018-07 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false | |||
ASU 2018-15 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false | |||
ASU 2019-04 | ||||
New accounting standards | ||||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false | |||
Retained Earnings | ||||
New accounting standards | ||||
ASU No. 2016-01 adoption | $ 8 | |||
Accumulated Other Comprehensive Income (Loss) | ||||
New accounting standards | ||||
ASU No. 2016-01 adoption | $ (8) | |||
Cumulative Effect from Adoption | ASU 2014-09 | ||||
New accounting standards | ||||
Other assets | 110 | |||
Accounts payable and accrued expenses | $ 110 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Revenue Recognition | ||||
Revenue, Practical Expedient, Financing Component [true false] | true | |||
Historical claims rate, review period | 5 years | |||
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false] | true | |||
Net sales and revenues | $ 10,036 | $ 10,308 | $ 29,362 | $ 27,942 |
Revenue recognized at a point in time | ||||
Revenue Recognition | ||||
Net sales and revenues | 9,043 | 26,490 | ||
Revenue recognized over time | ||||
Revenue Recognition | ||||
Net sales and revenues | 993 | 2,872 | ||
Large Agriculture | ||||
Revenue Recognition | ||||
Net sales | 2,985 | 8,647 | ||
Small Agriculture | ||||
Revenue Recognition | ||||
Net sales | 2,172 | 6,613 | ||
Turf | ||||
Revenue Recognition | ||||
Net sales | 704 | 2,199 | ||
Construction | ||||
Revenue Recognition | ||||
Net sales | 1,319 | 3,806 | ||
Compact Construction | ||||
Revenue Recognition | ||||
Net sales | 320 | 904 | ||
Road Building | ||||
Revenue Recognition | ||||
Net sales | 1,008 | 2,420 | ||
Forestry | ||||
Revenue Recognition | ||||
Net sales | 333 | 1,023 | ||
Financial Products | ||||
Revenue Recognition | ||||
Net sales and revenues | 942 | 2,739 | ||
Other | ||||
Revenue Recognition | ||||
Net sales and revenues | 253 | 1,011 | ||
U.S. | ||||
Revenue Recognition | ||||
Net sales and revenues | 5,096 | 15,716 | ||
Canada | ||||
Revenue Recognition | ||||
Net sales and revenues | 707 | 2,015 | ||
Western Europe | ||||
Revenue Recognition | ||||
Net sales and revenues | 1,634 | 4,599 | ||
Central Europe and CIS | ||||
Revenue Recognition | ||||
Net sales and revenues | 563 | 1,448 | ||
Latin America | ||||
Revenue Recognition | ||||
Net sales and revenues | 945 | 2,742 | ||
Asia, Africa, Australia, New Zealand, and Middle East | ||||
Revenue Recognition | ||||
Net sales and revenues | 1,091 | 2,842 | ||
Agriculture and Turf | ||||
Revenue Recognition | ||||
Net sales and revenues | 6,039 | 18,234 | ||
Agriculture and Turf | Revenue recognized at a point in time | ||||
Revenue Recognition | ||||
Net sales and revenues | 5,988 | 18,088 | ||
Agriculture and Turf | Revenue recognized over time | ||||
Revenue Recognition | ||||
Net sales and revenues | 51 | 146 | ||
Agriculture and Turf | Large Agriculture | ||||
Revenue Recognition | ||||
Net sales | 2,985 | 8,647 | ||
Agriculture and Turf | Small Agriculture | ||||
Revenue Recognition | ||||
Net sales | 2,172 | 6,613 | ||
Agriculture and Turf | Turf | ||||
Revenue Recognition | ||||
Net sales | 704 | 2,199 | ||
Agriculture and Turf | Financial Products | ||||
Revenue Recognition | ||||
Net sales and revenues | 25 | 69 | ||
Agriculture and Turf | Other | ||||
Revenue Recognition | ||||
Net sales and revenues | 153 | 706 | ||
Agriculture and Turf | U.S. | ||||
Revenue Recognition | ||||
Net sales and revenues | 2,870 | 9,411 | ||
Agriculture and Turf | Canada | ||||
Revenue Recognition | ||||
Net sales and revenues | 299 | 784 | ||
Agriculture and Turf | Western Europe | ||||
Revenue Recognition | ||||
Net sales and revenues | 1,154 | 3,362 | ||
Agriculture and Turf | Central Europe and CIS | ||||
Revenue Recognition | ||||
Net sales and revenues | 324 | 865 | ||
Agriculture and Turf | Latin America | ||||
Revenue Recognition | ||||
Net sales and revenues | 708 | 2,028 | ||
Agriculture and Turf | Asia, Africa, Australia, New Zealand, and Middle East | ||||
Revenue Recognition | ||||
Net sales and revenues | 684 | 1,784 | ||
Construction and Forestry | ||||
Revenue Recognition | ||||
Net sales and revenues | 3,087 | 8,478 | ||
Construction and Forestry | Revenue recognized at a point in time | ||||
Revenue Recognition | ||||
Net sales and revenues | 3,055 | 8,402 | ||
Construction and Forestry | Revenue recognized over time | ||||
Revenue Recognition | ||||
Net sales and revenues | 32 | 76 | ||
Construction and Forestry | Construction | ||||
Revenue Recognition | ||||
Net sales | 1,319 | 3,806 | ||
Construction and Forestry | Compact Construction | ||||
Revenue Recognition | ||||
Net sales | 320 | 904 | ||
Construction and Forestry | Road Building | ||||
Revenue Recognition | ||||
Net sales | 1,008 | 2,420 | ||
Construction and Forestry | Forestry | ||||
Revenue Recognition | ||||
Net sales | 333 | 1,023 | ||
Construction and Forestry | Financial Products | ||||
Revenue Recognition | ||||
Net sales and revenues | 7 | 20 | ||
Construction and Forestry | Other | ||||
Revenue Recognition | ||||
Net sales and revenues | 100 | 305 | ||
Construction and Forestry | U.S. | ||||
Revenue Recognition | ||||
Net sales and revenues | 1,594 | 4,495 | ||
Construction and Forestry | Canada | ||||
Revenue Recognition | ||||
Net sales and revenues | 260 | 773 | ||
Construction and Forestry | Western Europe | ||||
Revenue Recognition | ||||
Net sales and revenues | 458 | 1,174 | ||
Construction and Forestry | Central Europe and CIS | ||||
Revenue Recognition | ||||
Net sales and revenues | 229 | 555 | ||
Construction and Forestry | Latin America | ||||
Revenue Recognition | ||||
Net sales and revenues | 171 | 515 | ||
Construction and Forestry | Asia, Africa, Australia, New Zealand, and Middle East | ||||
Revenue Recognition | ||||
Net sales and revenues | 375 | 966 | ||
Financial Services | ||||
Revenue Recognition | ||||
Net sales and revenues | 910 | $ 830 | 2,650 | $ 2,402 |
Financial Services | Revenue recognized over time | ||||
Revenue Recognition | ||||
Net sales and revenues | 910 | 2,650 | ||
Financial Services | Financial Products | ||||
Revenue Recognition | ||||
Net sales and revenues | 910 | 2,650 | ||
Financial Services | U.S. | ||||
Revenue Recognition | ||||
Net sales and revenues | 632 | 1,810 | ||
Financial Services | Canada | ||||
Revenue Recognition | ||||
Net sales and revenues | 148 | 458 | ||
Financial Services | Western Europe | ||||
Revenue Recognition | ||||
Net sales and revenues | 22 | 63 | ||
Financial Services | Central Europe and CIS | ||||
Revenue Recognition | ||||
Net sales and revenues | 10 | 28 | ||
Financial Services | Latin America | ||||
Revenue Recognition | ||||
Net sales and revenues | 66 | 199 | ||
Financial Services | Asia, Africa, Australia, New Zealand, and Middle East | ||||
Revenue Recognition | ||||
Net sales and revenues | $ 32 | $ 92 |
REVENUE RECOGNITION - Advanced
REVENUE RECOGNITION - Advanced Customer Payments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Jul. 28, 2019 | Jul. 28, 2019 | Oct. 28, 2018 | |
Advanced customer payments | |||
Deferred revenue received | $ 1,022 | $ 1,022 | $ 915 |
Revenue recognized from deferred revenue | $ 101 | $ 360 |
REVENUE RECOGNITION - Unsatisfi
REVENUE RECOGNITION - Unsatisfied Performance Obligations (Details) $ in Millions | Jul. 28, 2019USD ($) |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 878 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-29 | |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 133 |
Unsatisfied performance obligations | |
Period estimated revenue to be recognized | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-11-04 | |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 348 |
Unsatisfied performance obligations | |
Period estimated revenue to be recognized | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-11-02 | |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 197 |
Unsatisfied performance obligations | |
Period estimated revenue to be recognized | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-11-01 | |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 116 |
Unsatisfied performance obligations | |
Period estimated revenue to be recognized | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-31 | |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 58 |
Unsatisfied performance obligations | |
Period estimated revenue to be recognized | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-30 | |
REVENUE RECOGNITION | |
Performance obligations for contracts with an original duration greater than one year | $ 26 |
Unsatisfied performance obligations | |
Period estimated revenue to be recognized | 24 months |
OTHER COMPREHENSIVE INCOME IT_3
OTHER COMPREHENSIVE INCOME ITEMS - After-Tax Changes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Accumulated other comprehensive income (loss) | ||||
Balance | $ 11,924 | $ 10,420 | $ 11,291 | $ 9,560 |
Net current period other comprehensive income (loss) | 29 | (381) | (146) | 10 |
Balance | 12,270 | 10,366 | 12,270 | 10,366 |
Total Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated other comprehensive income (loss) | ||||
Balance | (4,427) | (4,564) | ||
ASU No. 2016-01 adoption | (8) | (8) | ||
Other comprehensive income (loss) items before reclassification | (195) | (110) | ||
Amounts reclassified from accumulated other comprehensive income | 49 | 121 | ||
Net current period other comprehensive income (loss) | (146) | 11 | ||
Balance | (4,581) | (4,553) | (4,581) | (4,553) |
Retirement Benefits Adjustment | ||||
Accumulated other comprehensive income (loss) | ||||
Balance | (3,237) | (3,580) | ||
Other comprehensive income (loss) items before reclassification | 30 | 81 | ||
Amounts reclassified from accumulated other comprehensive income | 54 | 124 | ||
Net current period other comprehensive income (loss) | 84 | 205 | ||
Balance | (3,153) | (3,375) | (3,153) | (3,375) |
Cumulative Translation Adjustment | ||||
Accumulated other comprehensive income (loss) | ||||
Balance | (1,203) | (999) | ||
Other comprehensive income (loss) items before reclassification | (218) | (196) | ||
Net current period other comprehensive income (loss) | (218) | (196) | ||
Balance | (1,421) | (1,195) | (1,421) | (1,195) |
Unrealized Gain (Loss) on Derivatives | ||||
Accumulated other comprehensive income (loss) | ||||
Balance | 15 | 5 | ||
Other comprehensive income (loss) items before reclassification | (33) | 12 | ||
Amounts reclassified from accumulated other comprehensive income | (4) | (2) | ||
Net current period other comprehensive income (loss) | (37) | 10 | ||
Balance | (22) | 15 | (22) | 15 |
Unrealized Gain (Loss) on Debt Securities | ||||
Accumulated other comprehensive income (loss) | ||||
Balance | (2) | |||
ASU No. 2016-01 adoption | (8) | (8) | ||
Other comprehensive income (loss) items before reclassification | 26 | |||
Amounts reclassified from accumulated other comprehensive income | (1) | |||
Net current period other comprehensive income (loss) | 25 | |||
Balance | $ 15 | $ 15 | ||
Unrealized Gain (Loss) on Investments | ||||
Accumulated other comprehensive income (loss) | ||||
Balance | 10 | |||
Other comprehensive income (loss) items before reclassification | (7) | |||
Amounts reclassified from accumulated other comprehensive income | (1) | |||
Net current period other comprehensive income (loss) | (8) | |||
Balance | $ 2 | $ 2 |
OTHER COMPREHENSIVE INCOME IT_4
OTHER COMPREHENSIVE INCOME ITEMS - Amounts Recorded in and Reclassifications out of (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Other Comprehensive Income (Loss), Before Tax | ||||
Interest expense | $ (374) | $ (291) | $ (1,078) | $ (881) |
Total other comprehensive income (loss), before tax | 31 | (366) | (123) | 87 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Total other comprehensive income (loss), tax (expense) credit | (2) | (14) | (23) | (76) |
Other Comprehensive Income (Loss), After Tax | ||||
Other Comprehensive Income (Loss), Net of Income Taxes | 29 | (380) | (146) | 11 |
Cumulative Translation Adjustment | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Total other comprehensive income (loss), before tax | 27 | (421) | (217) | (196) |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Total other comprehensive income (loss), tax (expense) credit | (1) | 1 | (1) | |
Other Comprehensive Income (Loss), After Tax | ||||
Other Comprehensive Income (Loss), Net of Income Taxes | 26 | (420) | (218) | (196) |
Unrealized Gain (Loss) on Derivatives | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other comprehensive income (loss) before reclassification, before tax | (27) | 1 | (42) | 16 |
Total other comprehensive income (loss), before tax | (28) | (1) | (48) | 13 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Other comprehensive income (loss) before reclassification, tax (expense) credit | 6 | 9 | (4) | |
Total other comprehensive income (loss), tax (expense) credit | 6 | 11 | (3) | |
Other Comprehensive Income (Loss), After Tax | ||||
Other comprehensive income (loss) before reclassification, after tax | (21) | 1 | (33) | 12 |
Other Comprehensive Income (Loss), Net of Income Taxes | (22) | (1) | (37) | 10 |
Unrealized Gain (Loss) on Derivatives | Interest Rate Contracts | Reclassification out of accumulated other comprehensive income (loss) | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Interest expense | (1) | (2) | (6) | (3) |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Reclassification from accumulated other comprehensive income, tax (expense) credit | 2 | 1 | ||
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | (1) | (2) | (4) | (2) |
Unrealized Gain (Loss) on Debt Securities | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other comprehensive income (loss) before reclassification, before tax | 13 | 32 | ||
Total other comprehensive income (loss), before tax | 12 | 31 | ||
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Other comprehensive income (loss) before reclassification, tax (expense) credit | (2) | (6) | ||
Total other comprehensive income (loss), tax (expense) credit | (2) | (6) | ||
Other Comprehensive Income (Loss), After Tax | ||||
Other comprehensive income (loss) before reclassification, after tax | 11 | 26 | ||
Other Comprehensive Income (Loss), Net of Income Taxes | 10 | 25 | ||
Unrealized Gain (Loss) on Debt Securities | Reclassification out of accumulated other comprehensive income (loss) | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other income | (1) | (1) | ||
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | (1) | (1) | ||
Unrealized Gain (Loss) on Investments | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other comprehensive income (loss) before reclassification, before tax | 2 | (9) | ||
Total other comprehensive income (loss), before tax | 2 | (10) | ||
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Other comprehensive income (loss) before reclassification, tax (expense) credit | (1) | 2 | ||
Total other comprehensive income (loss), tax (expense) credit | (1) | 2 | ||
Other Comprehensive Income (Loss), After Tax | ||||
Other comprehensive income (loss) before reclassification, after tax | 1 | (7) | ||
Other Comprehensive Income (Loss), Net of Income Taxes | 1 | (8) | ||
Unrealized Gain (Loss) on Investments | Reclassification out of accumulated other comprehensive income (loss) | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other income | (1) | |||
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | (1) | |||
Retirement Benefits Adjustment | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Total other comprehensive income (loss), before tax | 20 | 54 | 111 | 280 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Total other comprehensive income (loss), tax (expense) credit | (5) | (14) | (27) | (75) |
Other Comprehensive Income (Loss), After Tax | ||||
Other Comprehensive Income (Loss), Net of Income Taxes | 15 | 40 | 84 | 205 |
Retirement Benefits Adjustment | Pensions | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other comprehensive income (loss) before reclassification, before tax | (3) | (21) | 46 | |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Other comprehensive income (loss) before reclassification, tax (expense) credit | 1 | 5 | (11) | |
Other Comprehensive Income (Loss), After Tax | ||||
Other comprehensive income (loss) before reclassification, after tax | (2) | (16) | 35 | |
Retirement Benefits Adjustment | OPEB | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other comprehensive income (loss) before reclassification, before tax | 60 | 60 | ||
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Other comprehensive income (loss) before reclassification, tax (expense) credit | (14) | (14) | ||
Other Comprehensive Income (Loss), After Tax | ||||
Other comprehensive income (loss) before reclassification, after tax | 46 | 46 | ||
Actuarial (Gain) Loss | Reclassification out of accumulated other comprehensive income (loss) | Pensions | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other operating expenses | 35 | 53 | 106 | 168 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Reclassification from accumulated other comprehensive income, tax (expense) credit | (9) | (14) | (26) | (48) |
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | 26 | 39 | 80 | 120 |
Actuarial (Gain) Loss | Reclassification out of accumulated other comprehensive income (loss) | OPEB | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other operating expenses | 4 | 16 | 12 | 47 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Reclassification from accumulated other comprehensive income, tax (expense) credit | (1) | (4) | (3) | (13) |
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | 3 | 12 | 9 | 34 |
Prior Service (Credit) Cost | Reclassification out of accumulated other comprehensive income (loss) | Pensions | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other operating expenses | 2 | 3 | 8 | 9 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Reclassification from accumulated other comprehensive income, tax (expense) credit | (1) | (2) | (3) | |
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | 2 | 2 | 6 | 6 |
Prior Service (Credit) Cost | Reclassification out of accumulated other comprehensive income (loss) | OPEB | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other operating expenses | (19) | (19) | (55) | (57) |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Reclassification from accumulated other comprehensive income, tax (expense) credit | 4 | 5 | 13 | 16 |
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | (15) | (14) | (42) | (41) |
Settlements/Curtailments | Reclassification out of accumulated other comprehensive income (loss) | Pensions | ||||
Other Comprehensive Income (Loss), Before Tax | ||||
Other operating expenses | 1 | 1 | 1 | 7 |
Other Comprehensive Income (Loss), Tax (Expense) Credit | ||||
Reclassification from accumulated other comprehensive income, tax (expense) credit | (2) | |||
Other Comprehensive Income (Loss), After Tax | ||||
Reclassification from accumulated other comprehensive income, after tax | $ 1 | $ 1 | $ 1 | $ 5 |
OTHER COMPREHENSIVE INCOME IT_5
OTHER COMPREHENSIVE INCOME ITEMS - Noncontrolling Interests' (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interests | ||||
Comprehensive income (loss) attributable to noncontrolling interests | $ 0 | $ 0 | $ 3 | $ 1 |
Net income (loss) attributable to noncontrolling interests | 0 | 1 | 3 | 2 |
Cumulative translation adjustments attributable to noncontrolling interests | $ 0 | $ (1) | $ 0 | $ (1) |
DIVIDENDS DECLARED AND PAID (De
DIVIDENDS DECLARED AND PAID (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
DIVIDENDS DECLARED AND PAID | ||||
Dividends declared (in dollars per share) | $ 0.76 | $ 0.69 | $ 2.28 | $ 1.89 |
Dividends paid (in dollars per share) | $ 0.76 | $ 0.60 | $ 2.21 | $ 1.80 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
EARNINGS PER SHARE | ||||
Net income attributable to Deere & Company | $ 899 | $ 910 | $ 2,532 | $ 1,584 |
Average shares outstanding | 315.9 | 323.5 | 317.3 | 323.4 |
Basic (in dollars per share) | $ 2.84 | $ 2.81 | $ 7.98 | $ 4.90 |
Diluted Earnings Per Share | ||||
Average shares outstanding | 315.9 | 323.5 | 317.3 | 323.4 |
Effect of dilutive share-based compensation (in shares) | 3.9 | 4.5 | 4.2 | 4.8 |
Total potential shares outstanding | 319.8 | 328 | 321.5 | 328.2 |
Diluted (in dollars per share) | $ 2.81 | $ 2.78 | $ 7.87 | $ 4.82 |
Antidilutive incremental shares excluded from computation of earnings per share | 0.9 | 0.5 | 0.7 | 0.4 |
PENSION AND OTHER POSTRETIREM_3
PENSION AND OTHER POSTRETIREMENT BENEFITS - Components of Net Periodic Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | Aug. 25, 2019 | |
Net Periodic Cost | |||||
Location of costs excluding the service component | us-gaap:OtherCostOfOperatingRevenue | us-gaap:OtherCostOfOperatingRevenue | us-gaap:OtherCostOfOperatingRevenue | us-gaap:OtherCostOfOperatingRevenue | |
Pensions | |||||
Net Periodic Cost | |||||
Service cost | $ 65 | $ 75 | $ 197 | $ 223 | |
Interest cost | 112 | 97 | 334 | 292 | |
Expected return on plan assets | (200) | (193) | (600) | (581) | |
Amortization of actuarial (gain) loss | 35 | 53 | 106 | 168 | |
Amortization of prior service (credit) cost | 2 | 3 | 8 | 9 | |
Settlements/curtailments | 1 | 1 | 1 | 7 | |
Net cost | 15 | 36 | 46 | 118 | |
Employer Contributions | |||||
Defined benefit plan employer contributions | 47 | ||||
Defined benefit plan employer contributions expected for the remainder of the fiscal year | 20 | 20 | |||
OPEB | |||||
Net Periodic Cost | |||||
Service cost | 11 | 11 | 31 | 33 | |
Interest cost | 53 | 47 | 160 | 143 | |
Expected return on plan assets | (8) | (5) | (26) | (16) | |
Amortization of actuarial (gain) loss | 4 | 16 | 12 | 47 | |
Amortization of prior service (credit) cost | (19) | (19) | (55) | (57) | |
Net cost | 41 | $ 50 | 122 | $ 150 | |
Employer Contributions | |||||
Defined benefit plan employer contributions | 97 | ||||
Defined benefit plan employer contributions expected for the remainder of the fiscal year | 340 | 340 | |||
OPEB | U.S. | |||||
Employer Contributions | |||||
Defined benefit plan employer contributions expected for the remainder of the fiscal year | $ 300 | $ 300 | |||
OPEB | U.S. | Subsequent Event | |||||
Approved Employer Contributions | |||||
Defined benefit plan approved voluntary employer contributions | $ 500 |
INCOME TAXES - Tax Reform (Deta
INCOME TAXES - Tax Reform (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | Oct. 28, 2018 | |
U.S. Tax Reform | |||||
Federal corporate statutory tax rate (as a percent) | 21.00% | 23.30% | |||
Net deferred tax asset remeasurement | $ (62) | $ 5 | $ 477 | $ 414 | |
Deemed earnings repatriation tax | $ (32) | (32) | 264 | 290 | |
Total discrete tax expense (benefit) | (32) | (62) | (27) | 741 | |
Accrued foreign withholding taxes on earnings of subsidiaries outside the U.S. | $ 63 | ||||
Equipment Operations | |||||
U.S. Tax Reform | |||||
Net deferred tax asset remeasurement | (58) | 795 | |||
Deemed earnings repatriation tax | (24) | (24) | 179 | ||
Total discrete tax expense (benefit) | (24) | (58) | (24) | 974 | |
Financial Services | |||||
U.S. Tax Reform | |||||
Net deferred tax asset remeasurement | (4) | 5 | (318) | ||
Deemed earnings repatriation tax | (8) | (8) | 85 | ||
Total discrete tax expense (benefit) | $ (8) | $ (4) | $ (3) | $ (233) |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
UNRECOGNIZED TAX BENEFITS | |||
Unrecognized tax benefits | $ 630 | $ 279 | |
Unrecognized tax benefits affecting effective tax rate if recognized | $ 274 | $ 128 | $ 137 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | Oct. 28, 2018 | |
Net Sales and Revenues | |||||
Net sales and revenues | $ 10,036 | $ 10,308 | $ 29,362 | $ 27,942 | |
% Change - Net sales and revenues | (3.00%) | 5.00% | |||
Operating Profit (Loss) | |||||
Total operating profit (loss) | $ 1,194 | 1,283 | $ 3,498 | 3,413 | |
% Change - Operating profit (loss) | (7.00%) | 2.00% | |||
Net income (loss) attributable to Deere & Company | $ 899 | 910 | $ 2,532 | 1,584 | |
% Change - Net income (loss) attributable to Deere & Company | (1.00%) | 60.00% | |||
Identifiable Assets | |||||
Total Assets | $ 73,530 | 69,390 | $ 73,530 | 69,390 | $ 70,108 |
% Change - Identifiable assets | 5.00% | ||||
Operating Segments (Other) | |||||
Reconciling items | $ (74) | (84) | $ (218) | (305) | |
% Change - Reconciling items | (12.00%) | (29.00%) | |||
Income taxes | $ (221) | (289) | $ (748) | (1,524) | |
% Change - Income taxes | (24.00%) | (51.00%) | |||
Equipment Operations | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 9,184 | 9,548 | $ 26,875 | 25,708 | |
Operating Profit (Loss) | |||||
Net income (loss) attributable to Deere & Company | 899 | 910 | 2,532 | 1,584 | |
Identifiable Assets | |||||
Total Assets | 34,770 | 32,804 | 34,770 | 32,804 | 33,197 |
Operating Segments (Other) | |||||
Income taxes | (190) | (242) | (625) | (1,607) | |
Equipment Operations | Outside U.S. and Canada: | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 4,026 | 4,232 | 10,985 | 11,036 | |
% Change - Net sales and revenues | (5.00%) | ||||
Operating Profit (Loss) | |||||
Total operating profit (loss) | $ 430 | 398 | $ 1,088 | 1,079 | |
% Change - Operating profit (loss) | 8.00% | 1.00% | |||
Corporate | |||||
Identifiable Assets | |||||
Total Assets | $ 4,296 | $ 4,296 | 4,372 | ||
% Change - Identifiable assets | (2.00%) | ||||
Other Revenues | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 157 | 192 | $ 530 | 533 | |
% Change - Net sales and revenues | (18.00%) | (1.00%) | |||
Agriculture and Turf | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 6,039 | $ 18,234 | |||
Intersegment sales and revenues | $ 9 | 14 | $ 27 | 38 | |
% Change - Intersegment sales and revenues | (36.00%) | (29.00%) | |||
Operating Profit (Loss) | |||||
Total operating profit (loss) | $ 612 | 806 | $ 1,978 | 2,249 | |
% Change - Operating profit (loss) | (24.00%) | (12.00%) | |||
Identifiable Assets | |||||
Total Assets | $ 10,629 | $ 10,629 | 10,161 | ||
% Change - Identifiable assets | 5.00% | ||||
Construction and Forestry | |||||
Net Sales and Revenues | |||||
Net sales and revenues | 3,087 | $ 8,478 | |||
Intersegment sales and revenues | 1 | ||||
Operating Profit (Loss) | |||||
Total operating profit (loss) | $ 378 | 281 | $ 954 | 573 | |
% Change - Operating profit (loss) | 35.00% | 66.00% | |||
Identifiable Assets | |||||
Total Assets | $ 10,161 | $ 10,161 | 9,855 | ||
% Change - Identifiable assets | 3.00% | ||||
Financial Services | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 910 | 830 | $ 2,650 | 2,402 | |
% Change - Net sales and revenues | 10.00% | 10.00% | |||
Intersegment sales and revenues | $ 93 | 89 | $ 261 | 234 | |
% Change - Intersegment sales and revenues | 4.00% | 12.00% | |||
Operating Profit (Loss) | |||||
Total operating profit (loss) | $ 204 | 196 | $ 566 | 591 | |
% Change - Operating profit (loss) | 4.00% | (4.00%) | |||
Identifiable Assets | |||||
Total Assets | $ 48,444 | $ 48,444 | $ 45,720 | ||
% Change - Identifiable assets | 6.00% | ||||
Net Sales | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 8,969 | 9,286 | $ 26,182 | 25,007 | |
% Change - Net sales and revenues | (3.00%) | 5.00% | |||
Net Sales | Equipment Operations | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 8,969 | 9,286 | $ 26,182 | 25,007 | |
Net Sales | Agriculture and Turf | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 5,946 | 6,293 | $ 17,909 | 17,585 | |
% Change - Net sales and revenues | (6.00%) | 2.00% | |||
Net Sales | Construction and Forestry | |||||
Net Sales and Revenues | |||||
Net sales and revenues | $ 3,023 | $ 2,993 | $ 8,273 | $ 7,422 | |
% Change - Net sales and revenues | 1.00% | 11.00% |
FINANCING RECEIVABLES - Past Du
FINANCING RECEIVABLES - Past Due Age Analysis (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||||
Jul. 28, 2019 | Oct. 28, 2018 | Apr. 28, 2019 | Jul. 29, 2018 | Apr. 29, 2018 | Oct. 29, 2017 | |
Financing Receivable, Past Due | ||||||
Minimum number of days for a financing receivable to be considered past due | 30 days | |||||
Generally the number of days for a financing receivable to be considered non-performing | 90 days | 120 days | ||||
Generally the number of days before a receivable is delinquent and the estimated uncollectible amount is written off | 120 days | |||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | $ 410 | $ 532 | $ 527 | |||
Total Non-Performing | 487 | 259 | 262 | |||
Current | 31,537 | 30,463 | 29,273 | |||
Total Financing Receivables | 32,434 | 31,254 | 30,062 | |||
Less allowance for credit losses | 185 | 178 | $ 182 | 187 | $ 187 | $ 187 |
Total financing receivables - net | 32,249 | 31,076 | 29,875 | |||
30-59 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 278 | 266 | 292 | |||
60-89 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 127 | 140 | 116 | |||
90 Days or Greater Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 5 | 126 | 119 | |||
Retail Notes | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Financing Receivables | 22,049 | 20,703 | ||||
Less allowance for credit losses | 120 | 113 | $ 115 | 118 | $ 120 | $ 121 |
Retail Notes | Agriculture and Turf | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 202 | 270 | 245 | |||
Total Non-Performing | 301 | 201 | 203 | |||
Current | 18,038 | 17,836 | 17,048 | |||
Total Financing Receivables | 18,541 | 18,307 | 17,496 | |||
Retail Notes | Agriculture and Turf | 30-59 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 136 | 133 | 138 | |||
Retail Notes | Agriculture and Turf | 60-89 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 63 | 74 | 53 | |||
Retail Notes | Agriculture and Turf | 90 Days or Greater Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 3 | 63 | 54 | |||
Retail Notes | Construction and Forestry | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 124 | 176 | 198 | |||
Total Non-Performing | 135 | 40 | 42 | |||
Current | 3,249 | 3,101 | 2,967 | |||
Total Financing Receivables | 3,508 | 3,317 | 3,207 | |||
Retail Notes | Construction and Forestry | 30-59 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 87 | 79 | 105 | |||
Retail Notes | Construction and Forestry | 60-89 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 35 | 45 | 43 | |||
Retail Notes | Construction and Forestry | 90 Days or Greater Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 2 | 52 | 50 | |||
Other Financing Receivables | Agriculture and Turf | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 60 | 60 | 63 | |||
Total Non-Performing | 37 | 15 | 14 | |||
Current | 8,833 | 8,274 | 8,009 | |||
Total Financing Receivables | 8,930 | 8,349 | 8,086 | |||
Other Financing Receivables | Agriculture and Turf | 30-59 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 38 | 36 | 37 | |||
Other Financing Receivables | Agriculture and Turf | 60-89 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 22 | 16 | 14 | |||
Other Financing Receivables | Agriculture and Turf | 90 Days or Greater Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 8 | 12 | ||||
Other Financing Receivables | Construction and Forestry | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 24 | 26 | 21 | |||
Total Non-Performing | 14 | 3 | 3 | |||
Current | 1,417 | 1,252 | 1,249 | |||
Total Financing Receivables | 1,455 | 1,281 | 1,273 | |||
Other Financing Receivables | Construction and Forestry | 30-59 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | 17 | 18 | 12 | |||
Other Financing Receivables | Construction and Forestry | 60-89 Days Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | $ 7 | 5 | 6 | |||
Other Financing Receivables | Construction and Forestry | 90 Days or Greater Past Due | ||||||
Age Analysis of Past Due Financing Receivables Still Accruing Interest and Non-Performing Financing Receivables | ||||||
Total Past Due | $ 3 | $ 3 |
FINANCING RECEIVABLES - Allowan
FINANCING RECEIVABLES - Allowance for Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | Oct. 28, 2018 | |
Allowance: | |||||
Beginning of period balance | $ 182 | $ 187 | $ 178 | $ 187 | |
Provision | 26 | 32 | 62 | 49 | |
Write-offs | (36) | (36) | (85) | (72) | |
Recoveries | 13 | 8 | 33 | 29 | |
Translation adjustments | (4) | (3) | (6) | ||
End of period balance | 185 | 187 | 185 | 187 | |
Financing receivables: | |||||
End of period balance | 32,434 | 30,062 | 32,434 | 30,062 | $ 31,254 |
Balance individually evaluated | 155 | 134 | 155 | 134 | |
Retail Notes | |||||
Allowance: | |||||
Beginning of period balance | 115 | 120 | 113 | 121 | |
Provision | 7 | 8 | 21 | 13 | |
Write-offs | (9) | (9) | (29) | (23) | |
Recoveries | 5 | 3 | 15 | 13 | |
Translation adjustments | 2 | (4) | (6) | ||
End of period balance | 120 | 118 | 120 | 118 | |
Financing receivables: | |||||
End of period balance | 22,049 | 20,703 | 22,049 | 20,703 | |
Balance individually evaluated | 145 | 120 | 145 | 120 | |
Revolving Charge Accounts | |||||
Allowance: | |||||
Beginning of period balance | 43 | 40 | 43 | 40 | |
Provision | 18 | 21 | 34 | 29 | |
Write-offs | (26) | (26) | (51) | (44) | |
Recoveries | 8 | 5 | 17 | 15 | |
End of period balance | 43 | 40 | 43 | 40 | |
Financing receivables: | |||||
End of period balance | 3,877 | 3,750 | 3,877 | 3,750 | |
Balance individually evaluated | 1 | 1 | |||
Other Financing Receivables | |||||
Allowance: | |||||
Beginning of period balance | 24 | 27 | 22 | 26 | |
Provision | 1 | 3 | 7 | 7 | |
Write-offs | (1) | (1) | (5) | (5) | |
Recoveries | 1 | 1 | |||
Translation adjustments | (2) | (3) | |||
End of period balance | 22 | 29 | 22 | 29 | |
Financing receivables: | |||||
End of period balance | 6,508 | 5,609 | 6,508 | 5,609 | |
Balance individually evaluated | $ 10 | $ 13 | $ 10 | $ 13 |
FINANCING RECEIVABLES - Impaire
FINANCING RECEIVABLES - Impaired (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Jul. 28, 2019 | Jul. 29, 2018 | Oct. 28, 2018 | |
Analysis of Impaired Financing Receivables | |||
Recorded investment, with specific allowance | $ 37 | $ 31 | $ 28 |
Recorded investment, without specific allowance | 35 | 37 | 37 |
Recorded Investment | 72 | 68 | 65 |
Unpaid principal balance, with specific allowance | 36 | 30 | 27 |
Unpaid principal balance, without specific allowance | 33 | 35 | 35 |
Unpaid Principal Balance | 69 | 65 | 62 |
Specific Allowance | 13 | 12 | 10 |
Average recorded investment, with specific allowance | 37 | 33 | 30 |
Average recorded investment, without specific allowance | 39 | 40 | 41 |
Average Recorded Investment | 76 | 73 | 71 |
Agriculture and Turf | |||
Analysis of Impaired Financing Receivables | |||
Recorded Investment | 51 | 51 | 50 |
Unpaid Principal Balance | 50 | 49 | 48 |
Specific Allowance | 9 | 10 | 9 |
Average Recorded Investment | 52 | 54 | 54 |
Construction and Forestry | |||
Analysis of Impaired Financing Receivables | |||
Recorded Investment | 21 | 17 | 15 |
Unpaid Principal Balance | 19 | 16 | 14 |
Specific Allowance | 4 | 2 | 1 |
Average Recorded Investment | $ 24 | $ 19 | $ 17 |
FINANCING RECEIVABLES - Trouble
FINANCING RECEIVABLES - Troubled Debt Restructuring (Details) $ in Millions | 9 Months Ended | |
Jul. 28, 2019USD ($)item | Jul. 29, 2018USD ($)item | |
Financing Receivables Related to Troubled Debt Restructurings | ||
Financing receivable contracts in troubled debt restructuring, number | item | 416 | 410 |
Financing receivables in troubled debt restructurings, aggregate balances, pre-modification | $ 34 | $ 22 |
Financing receivables in troubled debt restructurings, aggregate balances, post-modification | 33 | $ 22 |
Commitments to lend additional funds to borrowers whose accounts were modified in troubled debt restructurings | $ 13 |
SECURITIZATION OF FINANCING R_3
SECURITIZATION OF FINANCING RECEIVABLES (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | |
Securitization Transactions | |||
Unconsolidated conduits, carrying value of liabilities | $ 1,190 | ||
Unconsolidated conduits, maximum exposure to loss | 1,286 | ||
Financing receivables securitized (retail notes) | 5,214 | $ 4,032 | $ 4,674 |
Allowance for credit losses - securitization transactions | (14) | (10) | (12) |
Other assets - securitization transactions | 98 | 108 | 114 |
Total restricted securitized assets - securitization transactions | 5,298 | 4,130 | 4,776 |
Short-term securitization borrowings | 5,048 | 3,957 | 4,528 |
Accrued interest on borrowings - securitization transactions | 4 | 3 | 3 |
Total liabilities related to restricted securitized assets - securitization transactions | $ 5,052 | 3,960 | 4,531 |
Maximum remaining term of all restricted securitized retail notes | 6 years | ||
VIE-Primary Beneficiary | |||
Securitization Transactions | |||
Total restricted securitized assets - securitization transactions | $ 3,425 | 2,593 | 2,971 |
Total liabilities related to restricted securitized assets - securitization transactions | 3,316 | 2,520 | 2,860 |
Non-VIE Banking Operation | |||
Securitization Transactions | |||
Total restricted securitized assets - securitization transactions | 587 | 504 | 592 |
Total liabilities related to restricted securitized assets - securitization transactions | 546 | 475 | 553 |
VIE-Not Primary Beneficiary | |||
Securitization Transactions | |||
Unconsolidated conduits, maximum exposure to loss | 23 | 27 | |
Total Assets | 34,000 | ||
Total restricted securitized assets - securitization transactions | 1,286 | 1,033 | 1,213 |
Total liabilities related to restricted securitized assets - securitization transactions | $ 1,190 | $ 965 | $ 1,118 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
INVENTORIES | |||
Raw materials and supplies | $ 2,365 | $ 2,233 | $ 2,126 |
Work-in-process | 815 | 776 | 795 |
Finished goods and parts | 5,345 | 4,777 | 4,768 |
Total FIFO value | 8,525 | 7,786 | 7,689 |
Less adjustment to LIFO value | 1,778 | 1,637 | 1,450 |
Inventories | $ 6,747 | $ 6,149 | $ 6,239 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS-NET - Goodwill (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jul. 28, 2019 | Jul. 29, 2018 | |
Changes in Amounts of Goodwill | ||
Goodwill - net, beginning balance | $ 3,101 | $ 1,033 |
Acquisitions | 2,095 | |
Divestitures | (18) | |
Translation adjustments | (88) | (63) |
Goodwill - net, ending balance | 3,013 | 3,047 |
Accumulated impairment loss | 0 | 0 |
Agriculture and Turf | ||
Changes in Amounts of Goodwill | ||
Goodwill - net, beginning balance | 583 | 521 |
Acquisitions | 28 | |
Translation adjustments | (1) | (4) |
Goodwill - net, ending balance | 582 | 545 |
Construction and Forestry | ||
Changes in Amounts of Goodwill | ||
Goodwill - net, beginning balance | 2,518 | 512 |
Acquisitions | 2,067 | |
Divestitures | (18) | |
Translation adjustments | (87) | (59) |
Goodwill - net, ending balance | $ 2,431 | $ 2,502 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS-NET - Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | |
Amortized intangible assets: | |||
Total at cost | $ 1,582 | $ 1,622 | $ 1,614 |
Less accumulated amortization | 261 | 183 | 156 |
Total amortized intangible assets - net | 1,321 | 1,439 | 1,458 |
Unamortized intangible assets: | |||
Other intangible assets - net | $ 1,444 | 1,562 | 1,581 |
Customer Lists and Relationships | |||
Amortized intangible assets: | |||
Weighted-average useful lives | 16 years | ||
Total at cost | $ 525 | 542 | 562 |
Less accumulated amortization | $ 71 | 46 | 38 |
Technology, Patents, Trademarks, and Other | |||
Amortized intangible assets: | |||
Weighted-average useful lives | 18 years | ||
Total at cost | $ 1,057 | 1,080 | 1,052 |
Less accumulated amortization | 190 | 137 | 118 |
In-process Research and Development | |||
Unamortized intangible assets: | |||
Unamortized intangible assets | $ 123 | $ 123 | $ 123 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS-NET - Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Amortized Intangible Assets: | ||||
Amortization expense of other intangible assets | $ 27 | $ 27 | $ 82 | $ 71 |
Amortization expense of other intangible assets - remainder of 2019 | 26 | 26 | ||
Amortization expense of other intangible assets - 2020 | 104 | 104 | ||
Amortization expense of other intangible assets - 2021 | 103 | 103 | ||
Amortization expense of other intangible assets - 2022 | 102 | 102 | ||
Amortization expense of other intangible assets - 2023 | $ 100 | $ 100 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Warranty (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
COMMITMENTS AND CONTINGENCIES | ||||
Historical claims rate, review period | 5 years | |||
Unamortized extended warranty premiums (deferred revenue) | $ 542 | $ 486 | $ 542 | $ 486 |
Change in Warranty Liability and Unearned Premiums | ||||
Beginning of period balance | 1,714 | 1,591 | 1,652 | 1,468 |
Payments | (252) | (212) | (714) | (642) |
Amortization of premiums received | (57) | (56) | (168) | (170) |
Accruals for warranties | 263 | 250 | 772 | 704 |
Premiums received | 75 | 72 | 209 | 198 |
Acquisitions | 80 | |||
Foreign exchange | 3 | (21) | (5) | (14) |
End of period balance | $ 1,746 | $ 1,624 | $ 1,746 | $ 1,624 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Other (Details) $ in Millions | 9 Months Ended |
Jul. 28, 2019USD ($) | |
Long Term Purchase Commitments | |
Commitments for the construction and acquisition of property and equipment | $ 452 |
Restricted Assets and Other Contingent Liabilities | |
Other restricted assets | 93 |
Miscellaneous contingent liabilities | 70 |
Guarantees, Third-party Receivables | |
Guarantee Obligations | |
Guarantee obligations maximum exposure | 325 |
Guarantee obligations accrued losses | $ 14 |
Guarantee obligations term | 7 years |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
Fair Values of Financial Instruments | |||
Financing receivables - net | $ 27,049 | $ 27,054 | $ 25,213 |
Financing receivables securitized - net | 5,200 | 4,022 | 4,662 |
Short-term securitization borrowings | 5,048 | 3,957 | 4,528 |
Long-term borrowings | 29,242 | 27,237 | 26,838 |
Level 2 | |||
Fair Values of Financial Instruments | |||
Long-term borrowings due within one year | 7,927 | 6,390 | 6,186 |
Long-term borrowings | 30,160 | 27,538 | 27,226 |
Level 3 | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 27,014 | 26,813 | 24,986 |
Financing receivables securitized - net | 5,206 | 3,968 | 4,606 |
Level 2 and Level 3 | |||
Fair Values of Financial Instruments | |||
Short-term securitization borrowings | 5,071 | 3,945 | 4,515 |
Carrying Value | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 27,049 | 27,054 | 25,213 |
Financing receivables securitized - net | 5,200 | 4,022 | 4,662 |
Short-term securitization borrowings | 5,048 | 3,957 | 4,528 |
Long-term borrowings due within one year | 7,931 | 6,397 | 6,193 |
Long-term borrowings | 29,242 | 27,237 | 26,838 |
Equipment Operations | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 100 | 93 | 78 |
Financing receivables securitized - net | 54 | 76 | 90 |
Short-term securitization borrowings | 53 | 75 | 90 |
Long-term borrowings | 5,364 | 4,714 | 5,526 |
Equipment Operations | Level 2 | |||
Fair Values of Financial Instruments | |||
Long-term borrowings due within one year | 1,013 | 979 | 239 |
Long-term borrowings | 6,017 | 4,948 | 5,838 |
Equipment Operations | Level 3 | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 93 | 91 | 75 |
Financing receivables securitized - net | 52 | 73 | 89 |
Short-term securitization borrowings | 54 | 75 | 89 |
Equipment Operations | Carrying Value | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 100 | 93 | 78 |
Financing receivables securitized - net | 54 | 76 | 90 |
Short-term securitization borrowings | 53 | 75 | 90 |
Long-term borrowings due within one year | 1,009 | 970 | 238 |
Long-term borrowings | 5,364 | 4,714 | 5,526 |
Financial Services | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 26,949 | 26,961 | 25,135 |
Financing receivables securitized - net | 5,146 | 3,946 | 4,572 |
Short-term securitization borrowings | 4,995 | 3,882 | 4,438 |
Long-term borrowings | 23,878 | 22,523 | 21,312 |
Financial Services | Level 2 | |||
Fair Values of Financial Instruments | |||
Short-term securitization borrowings | 5,017 | 3,870 | 4,426 |
Long-term borrowings due within one year | 6,914 | 5,411 | 5,947 |
Long-term borrowings | 24,143 | 22,590 | 21,388 |
Financial Services | Level 3 | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 26,921 | 26,722 | 24,911 |
Financing receivables securitized - net | 5,154 | 3,895 | 4,517 |
Financial Services | Carrying Value | |||
Fair Values of Financial Instruments | |||
Financing receivables - net | 26,949 | 26,961 | 25,135 |
Financing receivables securitized - net | 5,146 | 3,946 | 4,572 |
Short-term securitization borrowings | 4,995 | 3,882 | 4,438 |
Long-term borrowings due within one year | 6,922 | 5,427 | 5,955 |
Long-term borrowings | $ 23,878 | $ 22,523 | $ 21,312 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liaibilities - Recurring (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | $ 565 | $ 565 | $ 490 | $ 488 |
Derivative assets | 320 | 320 | 168 | 124 |
Derivative liabilities | 146 | 146 | 399 | 384 |
Other Assets | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative assets | 320 | 320 | 168 | 124 |
Accounts Payable and Accrued Expenses | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative liabilities | 146 | 146 | 399 | 384 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 1 | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 108 | 108 | 90 | 94 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 1 | Equity Fund | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 59 | 59 | 46 | 46 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 1 | Fixed Income Funds | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 9 | |||
Unrealized gain on equity securities | 1 | 7 | ||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 1 | U.S. Government Debt Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 49 | 49 | 44 | 39 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 453 | 453 | 392 | 384 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Other Assets | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative assets | 320 | 320 | 168 | 124 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Accounts Payable and Accrued Expenses | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative liabilities | 146 | 146 | 399 | 384 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Interest Rate Contracts | Other Assets | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative assets | 265 | 265 | 80 | 68 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Interest Rate Contracts | Accounts Payable and Accrued Expenses | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative liabilities | 99 | 99 | 350 | 330 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Foreign Exchange Contracts | Other Assets | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative assets | 53 | 53 | 83 | 50 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Foreign Exchange Contracts | Accounts Payable and Accrued Expenses | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative liabilities | 45 | 45 | 49 | 52 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Cross-Currency Interest Rate Contracts | Other Assets | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative assets | 2 | 2 | 5 | 6 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Cross-Currency Interest Rate Contracts | Accounts Payable and Accrued Expenses | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Derivative liabilities | 2 | 2 | 2 | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | U.S. Government Debt Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 73 | 73 | 67 | 60 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Municipal Debt Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 57 | 57 | 46 | 47 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Corporate Debt Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 156 | 156 | 140 | 138 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | International Debt Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 9 | 9 | 2 | 3 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 2 | Mortgage-backed Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | 158 | 158 | 137 | 136 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Level 3 | International Debt Securities | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||
Marketable securities | $ 4 | $ 4 | $ 8 | $ 10 |
FAIR VALUE MEASUREMENTS - Contr
FAIR VALUE MEASUREMENTS - Contractual Maturities of Debt Securities (Details) $ in Millions | Jul. 28, 2019USD ($) |
Contractual Maturities of Debt Securities, Amortized Cost | |
Amortized cost, due in one year or less | $ 30 |
Amortized cost, due after one through five years | 101 |
Amortized cost, due after five through 10 years | 92 |
Amortized cost, due after 10 years | 115 |
Amortized cost, mortgage-backed securities | 155 |
Amortized cost, debt securities | 493 |
Contractual Maturities of Debt Securities, Fair Value | |
Fair value, due in one year or less | 30 |
Fair value, due after one through five years | 102 |
Fair value, due after five through 10 years | 96 |
Fair value, due after 10 years | 120 |
Fair value, mortgage-backed securities | 158 |
Fair value, debt securities | $ 506 |
FAIR VALUE MEASUREMENTS - Recur
FAIR VALUE MEASUREMENTS - Recurring, Level 3 Measurements (Details) - Assets and Liabilities Measured at Fair Value on a Recurring Basis - Level 3 - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Fair Value, Recurring Level 3 Measurements from Available-for-Sale Marketable Securities | ||||
Beginning of period balance | $ 4 | $ 14 | $ 8 | $ 17 |
Principal payments | (4) | (5) | (7) | |
Other | 1 | |||
End of period balance | $ 4 | $ 10 | $ 4 | $ 10 |
DERIVATIVE INSTRUMENTS - Cash F
DERIVATIVE INSTRUMENTS - Cash Flow Hedges (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | |
Cash Flow Hedges | |||
Cash flow hedge loss recorded in OCI to be reclassified within twelve months | $ (6) | ||
Maximum maturity of cash flow interest rate contract | 30 years | ||
Gains or losses reclassified from OCI to earnings | $ 0 | ||
Interest Rate Contracts | Cash Flow Hedges Member | Designated as Hedging Instruments | |||
Cash Flow Hedges | |||
Notional amount of cash flow hedge derivatives | 2,750 | $ 3,050 | $ 2,400 |
Notional amount of cash flow hedge derivatives for a forecasted debt issuance | $ 250 | ||
Cross-Currency Interest Rate Contracts | Cash Flow Hedges Member | Designated as Hedging Instruments | |||
Cash Flow Hedges | |||
Notional amount of cash flow hedge derivatives | $ 11 |
DERIVATIVE INSTRUMENTS - Fair V
DERIVATIVE INSTRUMENTS - Fair Value Hedges (Details) - Interest Rate Contracts - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
Fair Value Hedges | Designated as Hedging Instruments | |||
Fair Value Hedges | |||
Notional amount of interest rate fair value hedge derivatives | $ 9,245 | $ 8,479 | $ 7,792 |
Long-term Borrowings Due in One Year | |||
Borrowings Designated in Fair Value Hedging Relationships | |||
Carrying Amount of Hedged Item | 187 | ||
Active Hedging Relationships | 1 | ||
Discontinued Relationships | (5) | ||
Total | (4) | ||
Long-term Borrowings | |||
Borrowings Designated in Fair Value Hedging Relationships | |||
Carrying Amount of Hedged Item | 9,154 | ||
Active Hedging Relationships | 184 | ||
Discontinued Relationships | (50) | ||
Total | $ 134 |
DERIVATIVE INSTRUMENTS - Not De
DERIVATIVE INSTRUMENTS - Not Designated as Hedging Instruments (Details) - Not Designated as Hedging Instruments - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
Interest Rate Contracts | |||
Derivatives Not Designated as Hedging Instruments | |||
Notional amounts | $ 7,607 | $ 8,075 | $ 6,519 |
Interest Rate Cap Contracts | Sold | |||
Derivatives Not Designated as Hedging Instruments | |||
Notional amounts | 8 | 66 | 92 |
Interest Rate Cap Contracts | Purchased | |||
Derivatives Not Designated as Hedging Instruments | |||
Notional amounts | 8 | 66 | 92 |
Foreign Exchange Contracts | |||
Derivatives Not Designated as Hedging Instruments | |||
Notional amounts | 6,362 | 6,842 | 7,752 |
Cross-Currency Interest Rate Contracts | |||
Derivatives Not Designated as Hedging Instruments | |||
Notional amounts | $ 90 | $ 81 | $ 96 |
DERIVATIVE INSTRUMENTS - Fair_2
DERIVATIVE INSTRUMENTS - Fair Value (Details) - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
Fair Value of Derivative Instruments | |||
Total derivative assets | $ 320 | $ 168 | $ 124 |
Total derivative liabilities | 146 | 399 | 384 |
Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 320 | 168 | 124 |
Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | 146 | 399 | 384 |
Designated as Hedging Instruments | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 232 | 29 | 27 |
Designated as Hedging Instruments | Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | 55 | 321 | 305 |
Designated as Hedging Instruments | Interest Rate Contracts | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 232 | 29 | 24 |
Designated as Hedging Instruments | Interest Rate Contracts | Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | 55 | 321 | 305 |
Designated as Hedging Instruments | Cross-Currency Interest Rate Contracts | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 3 | ||
Not Designated as Hedging Instruments | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 88 | 139 | 97 |
Not Designated as Hedging Instruments | Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | 91 | 78 | 79 |
Not Designated as Hedging Instruments | Interest Rate Contracts | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 33 | 51 | 44 |
Not Designated as Hedging Instruments | Interest Rate Contracts | Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | 44 | 29 | 25 |
Not Designated as Hedging Instruments | Foreign Exchange Contracts | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 53 | 83 | 50 |
Not Designated as Hedging Instruments | Foreign Exchange Contracts | Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | 45 | 49 | 52 |
Not Designated as Hedging Instruments | Cross-Currency Interest Rate Contracts | Other Assets | |||
Fair Value of Derivative Instruments | |||
Total derivative assets | 2 | $ 5 | 3 |
Not Designated as Hedging Instruments | Cross-Currency Interest Rate Contracts | Accounts Payable and Accrued Expenses | |||
Fair Value of Derivative Instruments | |||
Total derivative liabilities | $ 2 | $ 2 |
DERIVATIVE INSTRUMENTS - Gains
DERIVATIVE INSTRUMENTS - Gains (Losses) on Statement of Consolidated Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Not designated as hedges, gains (losses) | $ (33) | $ 131 | $ 39 | $ 67 |
Interest Rate Contracts | ||||
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Cash flow hedges, recognized in OCI | (27) | 1 | (42) | 15 |
Interest Rate Contracts | Net Sales | ||||
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Not designated as hedges, gains (losses) | (6) | (23) | ||
Interest Rate Contracts | Interest Expense | ||||
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Fair value hedges, gains (losses) | 193 | (10) | 468 | (264) |
Cash flow hedges, reclassified from OCI | 1 | 2 | 6 | 3 |
Not designated as hedges, gains (losses) | (7) | (3) | (25) | (3) |
Foreign Exchange Contracts | ||||
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Cash flow hedges, recognized in OCI | 1 | |||
Foreign Exchange Contracts | Cost of Sales | ||||
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Not designated as hedges, gains (losses) | (8) | (10) | (1) | (22) |
Foreign Exchange Contracts | Other Operating Expense | ||||
Classification and gains (losses) including accrued interest expense related to derivative instruments | ||||
Not designated as hedges, gains (losses) | $ (12) | $ 144 | $ 88 | $ 92 |
DERIVATIVE INSTRUMENTS - Counte
DERIVATIVE INSTRUMENTS - Counterparty Risk and Collateral (Details) - USD ($) $ in Millions | Jul. 28, 2019 | Oct. 28, 2018 | Jul. 29, 2018 |
DERIVATIVE INSTRUMENTS | |||
Fair value of derivatives with credit-risk-related contingent features in a liability position | $ 101 | $ 350 | $ 331 |
Cash collateral paid | 0 | 59 | 34 |
Derivative Assets | |||
Gross amounts recognized | 320 | 168 | 124 |
Netting arrangements | (70) | (65) | (67) |
Net amount | 250 | 103 | 57 |
Derivative Liabilities | |||
Gross amounts recognized | 146 | 399 | 384 |
Netting arrangements | (70) | (65) | (67) |
Collateral paid | 0 | (59) | (34) |
Net amount | $ 76 | $ 275 | $ 283 |
STOCK OPTION AND RESTRICTED S_2
STOCK OPTION AND RESTRICTED STOCK AWARDS (Details) - $ / shares shares in Thousands | 1 Months Ended | 9 Months Ended |
Dec. 23, 2018 | Jul. 28, 2019 | |
Share-based Compensation, Aggregate Disclosures | ||
Number of additional shares authorized for grant related to stock option and restricted stock awards | 8,300 | |
Stock Options | ||
Share-based Compensation, Aggregate Disclosures | ||
Options granted (in shares) | 402 | |
Options granted, exercise price (in dollars per share) | $ 148.14 | |
Options granted, fair value (in dollars per share) | $ 46.96 | |
Options outstanding (in shares) | 7,500 | |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 91.97 | |
Fair value assumptions method used | lattice model | |
Restricted Stock Units | ||
Share-based Compensation, Aggregate Disclosures | ||
Restricted stock units granted (in shares) | 446 | |
Restricted Stock Units Subject to Service Based Conditions | ||
Share-based Compensation, Aggregate Disclosures | ||
Restricted stock units granted (in shares) | 355 | |
Restricted stock units granted, weighted-average fair value (in dollars per unit) | $ 149.54 | |
Restricted Stock Units Subject to Performance/Service Based Conditions | ||
Share-based Compensation, Aggregate Disclosures | ||
Restricted stock units granted (in shares) | 91 | |
Restricted stock units granted, weighted-average fair value (in dollars per unit) | $ 140.49 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | |||
Sep. 23, 2018 | Jul. 29, 2018 | Jul. 28, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Acquisitions | |||||
Cash purchase price, net of cash acquired | $ 5,171 | ||||
Asset and Liability Fair Values at the Acquisition Date | |||||
Goodwill | $ 3,047 | $ 3,013 | $ 3,101 | $ 1,033 | |
PLA | |||||
Acquisitions | |||||
Cash acquired | $ 1 | ||||
Cash purchase price, net of cash acquired | 69 | ||||
Escrow to secure indemnity obligations | 4 | ||||
Liabilities assumed | 29 | ||||
Asset and Liability Fair Values at the Acquisition Date | |||||
Trade accounts and notes receivable | 2 | ||||
Other receivables | 14 | ||||
Inventories | 14 | ||||
Property and equipment | 1 | ||||
Goodwill | 44 | ||||
Other intangible assets | 22 | ||||
Other assets | 1 | ||||
Total assets | 98 | ||||
Short-term borrowings | 8 | ||||
Accounts payable and accrued expenses | 17 | ||||
Deferred income taxes | 4 | ||||
Total liabilities | $ 29 | ||||
Identifiable Intangible Assets | |||||
Weighted-average useful lives (in years) | 5 years |
SUPPLEMENTAL CONSOLIDATING DA_3
SUPPLEMENTAL CONSOLIDATING DATA - Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Net Sales and Revenues | ||||
Net sales and revenues | $ 10,036 | $ 10,308 | $ 29,362 | $ 27,942 |
Costs and Expenses | ||||
Research and development expenses | 431 | 416 | 1,295 | 1,188 |
Selling, administrative and general expenses | 896 | 913 | 2,607 | 2,557 |
Interest expense | 374 | 291 | 1,078 | 881 |
Total | 8,923 | 9,118 | 26,099 | 24,850 |
Income of Consolidated Group before Income Taxes | 1,113 | 1,190 | 3,263 | 3,092 |
Provision for income taxes | 221 | 289 | 748 | 1,524 |
Income of Consolidated Group | 892 | 901 | 2,515 | 1,568 |
Equity in Income of Unconsolidated Subsidiaries and Affiliates | ||||
Net Income | 899 | 911 | 2,535 | 1,586 |
Less: Net income attributable to noncontrolling interests | 0 | 1 | 3 | 2 |
Net Income Attributable to Deere & Company | 899 | 910 | 2,532 | 1,584 |
Net Sales | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 8,969 | 9,286 | 26,182 | 25,007 |
Costs and Expenses | ||||
Costs and expenses | 6,870 | 7,152 | 20,056 | 19,190 |
Finance and Interest Income | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 884 | 786 | 2,537 | 2,263 |
Other | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 183 | 236 | 643 | 672 |
Costs and Expenses | ||||
Costs and expenses | 352 | 346 | 1,063 | 1,034 |
Equipment Operations | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 9,184 | 9,548 | 26,875 | 25,708 |
Costs and Expenses | ||||
Research and development expenses | 431 | 416 | 1,295 | 1,188 |
Selling, administrative and general expenses | 751 | 769 | 2,191 | 2,159 |
Interest expense | 67 | 52 | 182 | 226 |
Interest compensation to Financial Services | 93 | 86 | 254 | 228 |
Total | 8,277 | 8,556 | 24,183 | 23,212 |
Income of Consolidated Group before Income Taxes | 907 | 992 | 2,692 | 2,496 |
Provision for income taxes | 190 | 242 | 625 | 1,607 |
Income of Consolidated Group | 717 | 750 | 2,067 | 889 |
Equity in Income of Unconsolidated Subsidiaries and Affiliates | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | 182 | 161 | 468 | 697 |
Net Income | 899 | 911 | 2,535 | 1,586 |
Less: Net income attributable to noncontrolling interests | 1 | 3 | 2 | |
Net Income Attributable to Deere & Company | 899 | 910 | 2,532 | 1,584 |
Equipment Operations | Financial Services | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | 175 | 151 | 450 | 681 |
Equipment Operations | Other | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | 7 | 10 | 18 | 16 |
Equipment Operations | Net Sales | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 8,969 | 9,286 | 26,182 | 25,007 |
Costs and Expenses | ||||
Costs and expenses | 6,871 | 7,153 | 20,058 | 19,192 |
Equipment Operations | Finance and Interest Income | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 30 | 31 | 79 | 70 |
Equipment Operations | Other | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 185 | 231 | 614 | 631 |
Costs and Expenses | ||||
Costs and expenses | 64 | 80 | 203 | 219 |
Financial Services | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 1,003 | 919 | 2,911 | 2,636 |
Costs and Expenses | ||||
Selling, administrative and general expenses | 147 | 145 | 422 | 403 |
Interest expense | 311 | 250 | 910 | 675 |
Total | 797 | 721 | 2,340 | 2,040 |
Income of Consolidated Group before Income Taxes | 206 | 198 | 571 | 596 |
Provision for income taxes | 31 | 47 | 123 | (83) |
Income of Consolidated Group | 175 | 151 | 448 | 679 |
Equity in Income of Unconsolidated Subsidiaries and Affiliates | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | 2 | 2 | ||
Net Income | 175 | 151 | 450 | 681 |
Net Income Attributable to Deere & Company | 175 | 151 | 450 | 681 |
Financial Services | Financial Services | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates | 2 | 2 | ||
Financial Services | Finance and Interest Income | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 952 | 852 | 2,727 | 2,441 |
Financial Services | Other | ||||
Net Sales and Revenues | ||||
Net sales and revenues | 51 | 67 | 184 | 195 |
Costs and Expenses | ||||
Costs and expenses | $ 339 | $ 326 | $ 1,008 | $ 962 |
SUPPLEMENTAL CONSOLIDATING DA_4
SUPPLEMENTAL CONSOLIDATING DATA - Balance Sheet (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 28, 2019 | Apr. 28, 2019 | Oct. 29, 2018 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Oct. 29, 2017 |
ASSETS | |||||||
Cash and cash equivalents | $ 3,383 | $ 3,904 | $ 3,923 | ||||
Marketable securities | 565 | 490 | 488 | ||||
Receivables from unconsolidated subsidiaries and affiliates | 54 | 22 | 28 | ||||
Trade accounts and notes receivable - net | 6,758 | 5,004 | 6,208 | ||||
Financing receivables - net | 27,049 | 27,054 | 25,213 | ||||
Financing receivables securitized - net | 5,200 | 4,022 | 4,662 | ||||
Other receivables | 1,535 | 1,736 | 1,300 | ||||
Equipment on operating leases - net | 7,269 | 7,165 | 6,805 | ||||
Inventories | 6,747 | 6,149 | 6,239 | ||||
Property and equipment - net | 5,798 | 5,868 | 5,638 | ||||
Investments in unconsolidated subsidiaries and affiliates | 219 | 207 | 199 | ||||
Goodwill | 3,013 | 3,101 | 3,047 | $ 1,033 | |||
Other intangible assets - net | 1,444 | 1,562 | 1,581 | ||||
Retirement benefits | 1,431 | 1,298 | 737 | ||||
Deferred income taxes | 1,088 | 808 | 1,645 | ||||
Other assets | 1,977 | $ 1,828 | 1,718 | 1,677 | |||
Total Assets | 73,530 | 70,108 | 69,390 | ||||
LIABILITIES | |||||||
Short-term borrowings | 11,142 | 11,062 | 11,004 | ||||
Short-term securitization borrowings | 5,048 | 3,957 | 4,528 | ||||
Payables to unconsolidated subsidiaries and affiliates | 136 | 129 | 111 | ||||
Accounts payable and accrued expenses | 9,390 | $ 10,221 | 10,111 | 9,483 | |||
Deferred income taxes | 507 | 556 | 524 | ||||
Long-term borrowings | 29,242 | 27,237 | 26,838 | ||||
Retirement benefits and other liabilities | 5,781 | 5,751 | 6,522 | ||||
Total liabilities | 61,246 | 58,803 | 59,010 | ||||
Commitments and contingencies (Note 15) | |||||||
Redeemable noncontrolling interest | 14 | 14 | 14 | ||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, $1 par value (issued shares at July 28, 2019 - 536,431,204) | $ 4,599 | 4,474 | 4,451 | ||||
Common stock, par value (in dollars per share) | $ 1 | ||||||
Common stock, issued shares | 536,431,204 | ||||||
Common stock in treasury | $ (17,121) | (16,312) | (15,814) | ||||
Retained earnings | 29,369 | 27,553 | 26,272 | ||||
Accumulated other comprehensive income (loss) | (4,581) | (4,427) | (4,553) | ||||
Total Deere & Company stockholders' equity | 12,266 | 11,288 | 10,356 | ||||
Noncontrolling interests | 4 | 3 | 10 | ||||
Total stockholders' equity | 12,270 | $ 11,924 | 11,291 | 10,366 | $ 10,420 | $ 9,560 | |
Total Liabilities and Stockholders' Equity | 73,530 | 70,108 | 69,390 | ||||
Equipment Operations | |||||||
ASSETS | |||||||
Cash and cash equivalents | 2,694 | 3,195 | 2,803 | ||||
Marketable securities | 5 | 8 | 11 | ||||
Receivables from unconsolidated subsidiaries and affiliates | 2,395 | 1,700 | 1,795 | ||||
Trade accounts and notes receivable - net | 1,606 | 1,374 | 1,586 | ||||
Financing receivables - net | 100 | 93 | 78 | ||||
Financing receivables securitized - net | 54 | 76 | 90 | ||||
Other receivables | 1,428 | 1,010 | 1,131 | ||||
Inventories | 6,747 | 6,149 | 6,239 | ||||
Property and equipment - net | 5,753 | 5,821 | 5,592 | ||||
Investments in unconsolidated subsidiaries and affiliates | 5,309 | 5,231 | 4,992 | ||||
Goodwill | 3,013 | 3,101 | 3,047 | ||||
Other intangible assets - net | 1,444 | 1,562 | 1,581 | ||||
Retirement benefits | 1,374 | 1,241 | 727 | ||||
Deferred income taxes | 1,579 | 1,503 | 1,984 | ||||
Other assets | 1,269 | 1,133 | 1,148 | ||||
Total Assets | 34,770 | 33,197 | 32,804 | ||||
LIABILITIES | |||||||
Short-term borrowings | 1,372 | 1,434 | 789 | ||||
Short-term securitization borrowings | 53 | 75 | 90 | ||||
Payables to unconsolidated subsidiaries and affiliates | 136 | 129 | 111 | ||||
Accounts payable and accrued expenses | 9,422 | 9,383 | 9,047 | ||||
Deferred income taxes | 454 | 497 | 431 | ||||
Long-term borrowings | 5,364 | 4,714 | 5,526 | ||||
Retirement benefits and other liabilities | 5,685 | 5,660 | 6,430 | ||||
Total liabilities | 22,486 | 21,892 | 22,424 | ||||
Commitments and contingencies (Note 15) | |||||||
Redeemable noncontrolling interest | 14 | 14 | 14 | ||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, $1 par value (issued shares at July 28, 2019 - 536,431,204) | $ 4,599 | 4,474 | 4,451 | ||||
Common stock, par value (in dollars per share) | $ 1 | ||||||
Common stock, issued shares | 536,431,204 | ||||||
Common stock in treasury | $ (17,121) | (16,312) | (15,814) | ||||
Retained earnings | 29,369 | 27,553 | 26,272 | ||||
Accumulated other comprehensive income (loss) | (4,581) | (4,427) | (4,553) | ||||
Total Deere & Company stockholders' equity | 12,266 | 11,288 | 10,356 | ||||
Noncontrolling interests | 4 | 3 | 10 | ||||
Total stockholders' equity | 12,270 | 11,291 | 10,366 | ||||
Total Liabilities and Stockholders' Equity | 34,770 | 33,197 | 32,804 | ||||
Financial Services | |||||||
ASSETS | |||||||
Cash and cash equivalents | 689 | 709 | 1,120 | ||||
Marketable securities | 560 | 482 | 477 | ||||
Trade accounts and notes receivable - net | 6,807 | 4,906 | 6,080 | ||||
Financing receivables - net | 26,949 | 26,961 | 25,135 | ||||
Financing receivables securitized - net | 5,146 | 3,946 | 4,572 | ||||
Other receivables | 126 | 776 | 176 | ||||
Equipment on operating leases - net | 7,269 | 7,165 | 6,805 | ||||
Property and equipment - net | 45 | 47 | 46 | ||||
Investments in unconsolidated subsidiaries and affiliates | 16 | 15 | 15 | ||||
Retirement benefits | 57 | 57 | 14 | ||||
Deferred income taxes | 72 | 69 | 68 | ||||
Other assets | 708 | 587 | 530 | ||||
Total Assets | 48,444 | 45,720 | 45,038 | ||||
LIABILITIES | |||||||
Short-term borrowings | 9,770 | 9,628 | 10,215 | ||||
Short-term securitization borrowings | 4,995 | 3,882 | 4,438 | ||||
Payables to unconsolidated subsidiaries and affiliates | 2,341 | 1,678 | 1,766 | ||||
Accounts payable and accrued expenses | 1,641 | 2,056 | 1,902 | ||||
Deferred income taxes | 616 | 823 | 500 | ||||
Long-term borrowings | 23,878 | 22,523 | 21,312 | ||||
Retirement benefits and other liabilities | 97 | 91 | 96 | ||||
Total liabilities | 43,338 | 40,681 | 40,229 | ||||
Commitments and contingencies (Note 15) | |||||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, $1 par value (issued shares at July 28, 2019 - 536,431,204) | 2,107 | 2,100 | 2,100 | ||||
Retained earnings | 3,338 | 3,257 | 3,009 | ||||
Accumulated other comprehensive income (loss) | (339) | (318) | (300) | ||||
Total Deere & Company stockholders' equity | 5,106 | 5,039 | 4,809 | ||||
Total stockholders' equity | 5,106 | 5,039 | 4,809 | ||||
Total Liabilities and Stockholders' Equity | $ 48,444 | $ 45,720 | $ 45,038 |
SUPPLEMENTAL CONSOLIDATING DA_5
SUPPLEMENTAL CONSOLIDATING DATA - Statement of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 28, 2019 | Jul. 29, 2018 | Jul. 28, 2019 | Jul. 29, 2018 | |
Cash Flows from Operating Activities | ||||
Net income | $ 899 | $ 911 | $ 2,535 | $ 1,586 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||
Provision (credit) for credit losses | 58 | 66 | ||
Provision for depreciation and amortization | 1,522 | 1,445 | ||
Gain on sales of businesses | (25) | |||
Undistributed earnings of unconsolidated subsidiaries and affiliates | 10 | (10) | ||
Provision (credit) for deferred income taxes | (332) | 641 | ||
Changes in assets and liabilities: | ||||
Trade receivables and Equipment Operations' financing receivables | (2,206) | (2,365) | ||
Inventories | (1,168) | (1,539) | ||
Accounts payable and accrued expenses | (306) | 213 | ||
Accrued income taxes payable/receivable | 253 | 176 | ||
Retirement benefits | 40 | (814) | ||
Other | (65) | (109) | ||
Net cash provided by (used for) operating activities | 404 | (672) | ||
Cash Flows from Investing Activities | ||||
Proceeds from maturities and sales of marketable securities | 72 | 56 | ||
Proceeds from sales of equipment on operating leases | 1,171 | 1,116 | ||
Proceeds from sales of businesses, net of cash sold | 133 | |||
Acquisitions of businesses, net of cash acquired | (5,171) | |||
Purchases of marketable securities | (110) | (101) | ||
Purchases of property and equipment | (756) | (571) | ||
Cost of equipment on operating leases acquired | (1,462) | (1,428) | ||
Other | (67) | (103) | ||
Net cash provided by (used for) investing activities | (2,129) | (6,493) | ||
Cash Flows from Financing Activities | ||||
Increase (decrease) in total short-term borrowings | (336) | 1,183 | ||
Proceeds from long-term borrowings | 7,440 | 5,739 | ||
Payments of long-term borrowings | (4,356) | (4,372) | ||
Proceeds from issuance of common stock | 133 | 209 | ||
Repurchases of common stock | (880) | (454) | ||
Dividends paid | (703) | (583) | ||
Other | (82) | (66) | ||
Net cash provided by (used for) financing activities | 1,216 | 1,656 | ||
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | (24) | 71 | ||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | (533) | (5,438) | ||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 4,015 | 9,467 | ||
Cash, Cash Equivalents, and Restricted Cash at End of Period | 3,482 | 4,029 | 3,482 | 4,029 |
Equipment Operations | ||||
Cash Flows from Operating Activities | ||||
Net income | 899 | 911 | 2,535 | 1,586 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||
Provision (credit) for credit losses | 1 | 19 | ||
Provision for depreciation and amortization | 782 | 741 | ||
Gain on sales of businesses | (25) | |||
Undistributed earnings of unconsolidated subsidiaries and affiliates | (62) | (235) | ||
Provision (credit) for deferred income taxes | (123) | 986 | ||
Changes in assets and liabilities: | ||||
Trade receivables and Equipment Operations' financing receivables | (248) | (331) | ||
Inventories | (670) | (975) | ||
Accounts payable and accrued expenses | 50 | 519 | ||
Accrued income taxes payable/receivable | (282) | 231 | ||
Retirement benefits | 35 | (821) | ||
Other | (59) | (86) | ||
Net cash provided by (used for) operating activities | 1,959 | 1,609 | ||
Cash Flows from Investing Activities | ||||
Proceeds from maturities and sales of marketable securities | 9 | 9 | ||
Proceeds from sales of businesses, net of cash sold | 133 | |||
Acquisitions of businesses, net of cash acquired | (5,171) | |||
Purchases of marketable securities | (3) | |||
Purchases of property and equipment | (754) | (569) | ||
Other | (64) | 42 | ||
Net cash provided by (used for) investing activities | (812) | (5,556) | ||
Cash Flows from Financing Activities | ||||
Increase (decrease) in total short-term borrowings | (119) | 119 | ||
Change in intercompany receivables/payables | (683) | (797) | ||
Proceeds from long-term borrowings | 868 | 159 | ||
Payments of long-term borrowings | (194) | (118) | ||
Proceeds from issuance of common stock | 133 | 209 | ||
Repurchases of common stock | (880) | (454) | ||
Dividends paid | (703) | (583) | ||
Other | (52) | (41) | ||
Net cash provided by (used for) financing activities | (1,630) | (1,506) | ||
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | (16) | 89 | ||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | (499) | (5,364) | ||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 3,202 | 8,174 | ||
Cash, Cash Equivalents, and Restricted Cash at End of Period | 2,703 | 2,810 | 2,703 | 2,810 |
Financial Services | ||||
Cash Flows from Operating Activities | ||||
Net income | 175 | 151 | 450 | 681 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||
Provision (credit) for credit losses | 57 | 47 | ||
Provision for depreciation and amortization | 836 | 800 | ||
Undistributed earnings of unconsolidated subsidiaries and affiliates | (1) | (1) | ||
Provision (credit) for deferred income taxes | (209) | (345) | ||
Changes in assets and liabilities: | ||||
Accounts payable and accrued expenses | 23 | 66 | ||
Accrued income taxes payable/receivable | 535 | (55) | ||
Retirement benefits | 5 | 7 | ||
Other | 140 | 141 | ||
Net cash provided by (used for) operating activities | 1,836 | 1,341 | ||
Cash Flows from Investing Activities | ||||
Collections of receivables (excluding trade and wholesale) | 13,807 | 13,246 | ||
Proceeds from maturities and sales of marketable securities | 63 | 47 | ||
Proceeds from sales of equipment on operating leases | 1,171 | 1,116 | ||
Cost of receivables acquired (excluding trade and wholesale) | (14,597) | (13,830) | ||
Purchases of marketable securities | (107) | (101) | ||
Purchases of property and equipment | (2) | (2) | ||
Cost of equipment on operating leases acquired | (2,135) | (2,190) | ||
Increase in trade and wholesale receivables | (2,551) | (2,330) | ||
Other | 12 | (61) | ||
Net cash provided by (used for) investing activities | (4,339) | (4,105) | ||
Cash Flows from Financing Activities | ||||
Increase (decrease) in total short-term borrowings | (217) | 1,064 | ||
Change in intercompany receivables/payables | 683 | 797 | ||
Proceeds from long-term borrowings | 6,572 | 5,580 | ||
Payments of long-term borrowings | (4,162) | (4,254) | ||
Dividends paid | (377) | (454) | ||
Other | (22) | (25) | ||
Net cash provided by (used for) financing activities | 2,477 | 2,708 | ||
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | (8) | (18) | ||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | (34) | (74) | ||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 813 | 1,293 | ||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ 779 | $ 1,219 | $ 779 | $ 1,219 |