CORRESP 1 filename1.htm

 

Deere & Company

Law Department

One John Deere Place, Moline, IL 61265 USA

Phone: 309-765-5161

Fax (309) 749-0085 or (309) 765-5892

Email: DaviesToddE@JohnDeere.com

 

Todd E. Davies

Corporate Secretary &

Associate General Counsel

 

30 October 2020

 

Division of Corporation Finance
Office of Technology

Securities and Exchange Commission
Washington, D.C. 20549

 

Attention:

 

Melissa Kindelan

 

 

Senior Staff Accountant

 

 

 

 

 

Eiko Yaoita Pyles

 

 

Staff Accountant

 

 

 

Subject:

 

Deere & Company

 

 

Form 10-Q for the Quarterly Period Ended August 2, 2020

 

 

Filed August 27, 2020

 

 

Commission File No. 001-04121

 

Dear Ms. Kindelan and Ms. Pyles:

 

On behalf of Deere & Company, a Delaware corporation (“Deere” or the “Company”), set forth below is the Company’s response to the comment of the Division of Corporation Finance of the Securities and Exchange Commission, dated October 15, 2020, pertaining to the Company’s Form 10-Q for the quarterly period ended August 2, 2020.

 

Comment:

 

Form 10-Q for the Quarterly Period Ended August 2, 2020

Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

Note 21. Consolidating Data, page 42

 

We note your response to prior comment 1. We continue to believe that including the Financial Services segment using the equity method of accounting in your presentation of Equipment Operations is a tailored accounting principle under Question 100.04 of the Non-GAAP Compliance and Disclosure Interpretations. Please remove this presentation in future filings.

 

Response:

 

The Company will revise future filings, including the comparative periods in those filings, to remove the equity method of accounting presentation in the Supplemental Consolidating Schedules (Supplemental Schedules).

 


 

30 October 2020

Page 2

 

A preliminary version of the updated Supplemental Schedules is attached as Appendix 1. The final version that will be included with future filings will have explanatory notes for the elimination amounts.

 

Should you have additional questions or comments concerning this response to your comment letter, please contact me at (309) 765-5161.

 

Sincerely,

 

 

 

/s/ Todd E. Davies

 

 

Todd E. Davies

Corporate Secretary

 


 

30 October 2020

Page 3

 

Deere & Company

 

Appendix 1

Supplemental Income Statement

 

(1 of 3)

For the Nine Months Ended August 2, 2020

 

 

(In millions of dollars)

 

 

 

 

 

Equipment
Operations

1

Financial
Services

 

Eliminations

 

Consolidated

 

Net Sales and Revenues

 

 

 

 

 

 

 

 

 

Net sales

 

$

22,612

 

 

 

 

 

$

22,612

 

Finance and interest income

 

75

 

$

2,720

 

$

(211

)

2,584

 

Other income

 

597

 

196

 

(180

)

613

 

Total

 

23,284

 

2,916

 

(391

)

25,809

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

Cost of sales

 

17,208

 

 

 

(2

)

17,206

 

Research and development expenses

 

1,201

 

 

 

 

 

1,201

 

Selling, administrative and general expenses

 

1,989

 

483

 

(5

)

2,467

 

Interest expense

 

237

 

747

 

(15

)

969

 

Interest compensation to Financial Services

 

195

 

 

 

(195

)

 

 

Other operating expenses

 

186

 

1,187

 

(174

)

1,199

 

Total

 

21,016

 

2,417

 

(391

)

23,042

 

 

 

 

 

 

 

 

 

 

 

Income before Income Taxes

 

2,268

 

499

 

 

 

2,767

 

Provision for income taxes

 

632

 

120

 

 

 

752

 

 

 

 

 

 

 

 

 

 

 

Income after Income Taxes

 

1,636

 

379

 

 

 

2,015

 

Equity in income (loss) of unconsolidated affiliates

 

(22

)

2

 

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

Net Income

 

1,614

 

381

 

 

 

1,995

 

Less: Net income attributable to noncontrolling interests

 

2

 

 

 

 

 

2

 

Net Income Attributable to Deere & Company

 

$

1,612

 

$

381

 

 

 

$

1,993

 

 

1 - The equipment operations represents the enterprise without financial services. Includes the company’s agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues and expenses not reflected within financial services.

 


 

30 October 2020

Page 4

 

Deere & Company

 

Appendix 1

Supplemental Balance Sheet

 

(2 of 3)

As of August 2, 2020

 

 

(In millions of dollars)

 

 

 

 

 

Equipment
Operations

1

Financial
Services

 

Eliminations

 

Consolidated

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,440

 

$

750

 

 

 

$

8,190

 

Marketable securities

 

8

 

632

 

 

 

640

 

Receivables from unconsolidated subsidiaries and affiliates

 

3,619

 

 

 

$

  (3,593

)

26

 

Trade accounts and notes receivable - net

 

1,251

 

5,595

 

(1,373

)

5,473

 

Financing receivables - net

 

111

 

27,703

 

 

 

27,814

 

Financing receivables securitized - net

 

37

 

5,432

 

 

 

5,469

 

Other receivables

 

1,083

 

162

 

(28

)

1,217

 

Equipment on operating leases - net

 

 

 

7,158

 

 

 

7,158

 

Inventories

 

5,650

 

 

 

 

 

5,650

 

Property and equipment - net

 

5,711

 

43

 

 

 

5,754

 

Investments in unconsolidated affiliates

 

180

 

19

 

 

 

199

 

Goodwill

 

2,984

 

 

 

 

 

2,984

 

Other intangible assets - net

 

1,301

 

 

 

 

 

1,301

 

Retirement benefits

 

972

 

59

 

 

 

1,031

 

Deferred income taxes

 

1,865

 

56

 

(387

)

1,534

 

Other assets

 

1,566

 

1,260

 

(2

)

2,824

 

Total Assets

 

$

33,778

 

$

48,869

 

$

(5,383

)

$

77,264

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

$

853

 

$

8,222

 

 

 

$

9,075

 

Short-term securitization borrowings

 

37

 

5,324

 

 

 

5,361

 

Payables to unconsolidated subsidiaries and affiliates

 

80

 

3,593

 

$

(3,593

)

80

 

Accounts payable and accrued expenses

 

8,834

 

2,134

 

(1,403

)

9,565

 

Deferred income taxes

 

398

 

468

 

(387

)

479

 

Long-term borrowings

 

10,217

 

23,820

 

 

 

34,037

 

Retirement benefits and other liabilities

 

5,671

 

105

 

 

 

5,776

 

Total liabilities

 

26,090

 

43,666

 

(5,383

)

64,373

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Total Deere & Company stockholders’ equity

 

12,888

 

5,203

 

(5,203

)

12,888

 

Noncontrolling interests

 

3

 

 

 

 

 

3

 

Financial Services equity

 

(5,203

)

 

 

5,203

 

 

 

Adjusted total stockholders’ equity

 

7,688

 

5,203

 

 

 

12,891

 

Total Liabilities and Stockholders’ Equity

 

$

33,778

 

$

48,869

 

$

(5,383

)

$

77,264

 

 

1 - The equipment operations represents the enterprise without financial services. Includes the company’s agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues and expenses not reflected within financial services.

 


 

30 October 2020

Page 5

 

Deere & Company

 

Appendix 1

Supplemental Statement of Cash Flows

 

(3 of 3)

For the Nine Months Ended August 2, 2020

 

 

(In millions of dollars)

 

 

 

 

 

Equipment
Operations

1

Financial
Services

 

Eliminations

 

Consolidated

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

Net income

 

$

1,614

 

$

381

 

 

 

$

1,995

 

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

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

6

 

117

 

 

 

123

 

Provision for depreciation and amortization

 

787

 

925

 

$

(98

)

1,614

 

Impairment charges

 

115

 

32

 

 

 

147

 

Share-based compensation expense

 

 

 

 

 

63

 

63

 

Undistributed earnings of unconsolidated affiliates - 2

 

257

 

(1

)

(261

)

(5

)

Credit for deferred income taxes

 

(57

)

(103

)

 

 

(160

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade receivables and Equipment Operations’ financing receivables

 

116

 

 

 

510

 

626

 

Inventories

 

387

 

 

 

(388

)

(1

)

Accounts payable and accrued expenses

 

(567

)

(38

)

33

 

(572

)

Accrued income taxes payable/receivable

 

(25

)

29

 

 

 

4

 

Retirement benefits

 

77

 

11

 

 

 

88

 

Other

 

145

 

89

 

(99

)

135

 

Net cash provided by operating activities

 

2,855

 

1,442

 

(240

)

4,057

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

Collections of receivables (excluding trade and wholesale)

 

 

 

14,352

 

(1,115

)

13,237

 

Proceeds from maturities and sales of marketable securities

 

 

 

70

 

 

 

70

 

Proceeds from sales of equipment on operating leases

 

 

 

1,310

 

 

 

1,310

 

Cost of receivables acquired (excluding trade and wholesale)

 

 

 

(15,367

)

918

 

(14,449

)

Purchases of marketable securities

 

 

 

(91

)

 

 

(91

)

Purchases of property and equipment

 

(591

)

(3

)

 

 

(594

)

Cost of equipment on operating leases acquired

 

 

 

(1,836

)

524

 

(1,312

)

Decrease in trade and wholesale receivables

 

 

 

423

 

(423

)

 

 

Collateral on derivatives - net

 

(6

)

330

 

 

 

324

 

Other

 

(55

)

(46

)

89

 

(12

)

Net cash used for investing activities

 

(652

)

(858

)

(7

)

(1,517

)

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

Increase (decrease) in total short-term borrowings

 

(32

)

202

 

 

 

170

 

Change in intercompany receivables/payables

 

(1,468

)

1,468

 

 

 

 

 

Proceeds from long-term borrowings

 

4,592

 

3,739

 

 

 

8,331

 

Payments of long-term borrowings

 

(179

)

(5,618

)

 

 

(5,797

)

Proceeds from issuance of common stock

 

111

 

 

 

 

 

111

 

Repurchases of common stock

 

(263

)

 

 

 

 

(263

)

Dividends paid

 

(718

)

(260

)

260

 

(718

)

Other

 

(86

)

(11

)

(13

)

(110

)

Net cash provided by (used for) financing activities

 

1,957

 

(480

)

$

247

 

1,724

 

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

 

95

 

(15

)

 

 

80

 

Net Increase in Cash, Cash Equivalents, and Restricted Cash

 

4,255

 

89

 

 

 

4,344

 

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

 

3,196

 

760

 

 

 

3,956

 

Cash, Cash Equivalents, and Restricted Cash at End of Period

 

$

7,451

 

$

849

 

 

 

$

8,300

 

 

1 - The equipment operations represents the enterprise without financial services. Includes the company’s agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues and expenses not reflected within financial services.

 

2 - The equipment operations net cash provided by operating activities includes dividends received from financial services that are eliminated in consolidation.