Edgar Filing: DEERE & CO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2015

Commission file no: 1-4121

DEERE & COMPANY

(Exact name of registrant as specified in its charter)

Delaware		36-2382580
(State of incorporation)		(IRS employer identification no.)

One John Deere Place

Moline, Illinois 61265

(Address of principal executive offices)

Telephone Number: (309) 765-8000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer X Accelerated Filer

Non-Accelerated Filer Smaller Reporting Company

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

At April 30, 2015, 333,871,447 shares of common stock, $1 par value, of the registrant were outstanding.

Index to Exhibits: Page 52

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended April 30, 2015 and 2014
(In millions of dollars and shares except per share amounts) Unaudited

	2015			2014

Net Sales and Revenues
Net sales	$	7,398.5		$	9,246.2
Finance and interest income	576.3			544.1
Other income	195.9			157.6
Total	8,170.7			9,947.9

Costs and Expenses
Cost of sales	5,694.2			6,871.8
Research and development expenses	341.1			354.1
Selling, administrative and general expenses	740.0			846.5
Interest expense	165.5			165.8
Other operating expenses	212.9			245.9
Total	7,153.7			8,484.1

Income of Consolidated Group before Income Taxes	1,017.0			1,463.8
Provision for income taxes	324.0			479.0
Income of Consolidated Group	693.0			984.8
Equity in loss of unconsolidated affiliates	(2.2		)	(3.6		)
Net Income	690.8			981.2
Less: Net income attributable to noncontrolling interests	.3			.5
Net Income Attributable to Deere & Company	$	690.5		$	980.7

Per Share Data
Basic	$	2.05		$	2.67
Diluted	$	2.03		$	2.65

Average Shares Outstanding
Basic	337.1			366.6
Diluted	339.7			369.8

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
For the Three Months Ended April 30, 2015 and 2014
(In millions of dollars) Unaudited

	2015			2014

Net Income	$	690.8		$	981.2

Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment	20.9			37.6
Cumulative translation adjustment	(66.6		)	106.5
Unrealized gain (loss) on derivatives	1.3			(.6		)
Unrealized gain (loss) on investments	(4.2		)	2.4
Other Comprehensive Income (Loss), Net of Income Taxes	(48.6		)	145.9

Comprehensive Income of Consolidated Group	642.2			1,127.1
Less: Comprehensive income attributable to noncontrolling interests	.3			.5
Comprehensive Income Attributable to Deere & Company	$	641.9		$	1,126.6

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Six Months Ended April 30, 2015 and 2014
(In millions of dollars and shares except per share amounts) Unaudited

	2015			2014
Net Sales and Revenues
Net sales	$	13,003.6		$	16,194.8
Finance and interest income	1,169.9			1,075.6
Other income	380.3			331.6
Total	14,553.8			17,602.0

Costs and Expenses
Cost of sales	10,114.8			12,067.3
Research and development expenses	674.3			677.8
Selling, administrative and general expenses	1,398.9			1,612.5
Interest expense	345.6			337.5
Other operating expenses	435.5			478.2
Total	12,969.1			15,173.3

Income of Consolidated Group before Income Taxes	1,584.7			2,428.7
Provision for income taxes	494.6			759.6
Income of Consolidated Group	1,090.1			1,669.1
Equity in loss of unconsolidated affiliates	(12.4		)	(6.6		)
Net Income	1,077.7			1,662.5
Less: Net income attributable to noncontrolling interests	.5			.7
Net Income Attributable to Deere & Company	$	1,077.2		$	1,661.8

Per Share Data
Basic	$	3.17		$	4.50
Diluted	$	3.14		$	4.46

Average Shares Outstanding
Basic	340.2			369.2
Diluted	342.8			372.6

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
For the Six Months Ended April 30, 2015 and 2014
(In millions of dollars) Unaudited

	2015			2014

Net Income	$	1,077.7		$	1,662.5

Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment	63.2			87.7
Cumulative translation adjustment	(577.0		)	(61.5		)
Unrealized gain (loss) on derivatives	(.2		)	2.3
Unrealized gain on investments	3.1			1.1
Other Comprehensive Income (Loss), Net of Income Taxes	(510.9		)	29.6

Comprehensive Income of Consolidated Group	566.8			1,692.1
Less: Comprehensive income attributable to noncontrolling interests	.2			.7
Comprehensive Income Attributable to Deere & Company	$	566.6		$	1,691.4

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions of dollars) Unaudited

	April 30			October 31			April 30
	2015			2014			2014
Assets
Cash and cash equivalents	$	4,355.4		$	3,787.0		$	3,078.5
Marketable securities	392.9			1,215.1			1,571.7
Receivables from unconsolidated affiliates	46.4			30.2			38.3
Trade accounts and notes receivable - net	4,717.1			3,277.6			5,119.7
Financing receivables - net	24,745.8			27,422.2			25,496.1
Financing receivables securitized - net	4,741.1			4,602.3			4,345.4
Other receivables	873.4			1,500.3			1,194.2
Equipment on operating leases - net	4,195.2			4,015.5			3,203.8
Inventories	4,624.2			4,209.7			5,849.6
Property and equipment - net	5,245.1			5,577.8			5,373.1
Investments in unconsolidated affiliates	299.2			303.2			308.5
Goodwill	737.0			791.2			839.6
Other intangible assets - net	60.4			68.8			71.2
Retirement benefits	313.9			262.0			580.7
Deferred income taxes	2,659.4			2,776.6			2,458.1
Other assets	1,587.5			1,496.9			1,249.2
Assets held for sale							84.7
Total Assets	$	59,594.0		$	61,336.4		$	60,862.4

Liabilities and Stockholders’ Equity
Short-term borrowings	$	8,989.0		$	8,019.2		$	8,763.0
Short-term securitization borrowings	4,702.7			4,558.5			4,329.5
Payables to unconsolidated affiliates	130.1			101.0			134.5
Accounts payable and accrued expenses	7,260.2			8,554.1			8,150.3
Deferred income taxes	149.3			160.9			162.0
Long-term borrowings	23,622.8			24,380.7			23,166.9
Retirement benefits and other liabilities	6,563.9			6,496.5			5,438.8
Liabilities held for sale							49.8
Total liabilities	51,418.0			52,270.9			50,194.8

Commitments and contingencies (Note 14)

Common stock, $1 par value (issued shares at April 30, 2015 – 536,431,204)	3,745.2			3,675.4			3,621.6
Common stock in treasury	(13,951.2		)	(12,834.2		)	(11,224.1		)
Retained earnings	22,673.4			22,004.4			20,931.3
Accumulated other comprehensive income (loss)	(4,293.6		)	(3,783.0		)	(2,663.5		)
Total Deere & Company stockholders’ equity	8,173.8			9,062.6			10,665.3
Noncontrolling interests	2.2			2.9			2.3
Total stockholders’ equity	8,176.0			9,065.5			10,667.6
Total Liabilities and Stockholders’ Equity	$	59,594.0		$	61,336.4		$	60,862.4

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Six Months Ended April 30, 2015 and 2014
(In millions of dollars) Unaudited

	2015			2014
Cash Flows from Operating Activities
Net income	$	1,077.7		$	1,662.5
Adjustments to reconcile net income to net cash used for operating activities:
Provision for credit losses	15.1			9.8
Provision for depreciation and amortization	682.9			630.3
Impairment charges				62.3
Share-based compensation expense	28.7			44.7
Undistributed earnings of unconsolidated affiliates	8.8			7.9
Provision (credit) for deferred income taxes	117.8			(138.0		)
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales	(860.8		)	(1,692.8		)
Insurance receivables	333.4			175.4
Inventories	(932.9		)	(1,268.2		)
Accounts payable and accrued expenses	(698.3		)	(578.7		)
Accrued income taxes payable/receivable	(76.3		)	86.8
Retirement benefits	186.6			138.0
Other	(37.4		)	28.1
Net cash used for operating activities	(154.7		)	(831.9		)

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)	8,332.4			8,344.7
Proceeds from maturities and sales of marketable securities	791.9			611.3
Proceeds from sales of equipment on operating leases	552.3			570.9
Proceeds from sales of businesses, net of cash sold	148.8			307.2
Cost of receivables acquired (excluding receivables related to sales)	(7,426.1		)	(8,409.3		)
Purchases of marketable securities	(33.9		)	(562.8		)
Purchases of property and equipment	(324.3		)	(426.2		)
Cost of equipment on operating leases acquired	(830.2		)	(618.1		)
Other	(58.9		)	(85.1		)
Net cash provided by (used for) investing activities	1,152.0			(267.4		)

Cash Flows from Financing Activities
Increase in total short-term borrowings	1,147.0			956.7
Proceeds from long-term borrowings	2,512.2			4,253.8
Payments of long-term borrowings	(2,453.3		)	(3,135.5		)
Proceeds from issuance of common stock	86.1			108.7
Repurchases of common stock	(1,173.9		)	(1,093.4		)
Dividends paid	(415.8		)	(382.3		)
Excess tax benefits from share-based compensation	11.7			24.2
Other	(39.1		)	(32.9		)
Net cash provided by (used for) financing activities	(325.1		)	699.3

Effect of Exchange Rate Changes on Cash and Cash Equivalents	(103.8		)	(25.5		)

Net Increase (Decrease) in Cash and Cash Equivalents	568.4			(425.5		)
Cash and Cash Equivalents at Beginning of Period	3,787.0			3,504.0
Cash and Cash Equivalents at End of Period	$	4,355.4		$	3,078.5

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY

For the Six Months Ended April 30, 2014 and 2015

(In millions of dollars) Unaudited

				Deere & Company Stockholders
	Total Stockholders’ Equity			Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interests

Balance October 31, 2013	$	10,267.7		$	3,524.2	$	(10,210.9	)	$	19,645.6		$	(2,693.1	)	$	1.9
Net income	1,662.5								1,661.8						.7
Other comprehensive income	29.6											29.6
Repurchases of common stock	(1,093.4		)			(1,093.4		)
Treasury shares reissued	80.2					80.2
Dividends declared	(376.4		)						(376.1		)				(.3		)
Stock options and other	97.4			97.4
Balance April 30, 2014	$	10,667.6		$	3,621.6	$	(11,224.1	)	$	20,931.3		$	(2,663.5	)	$	2.3




Balance October 31, 2014	$	9,065.5		$	3,675.4	$	(12,834.2	)	$	22,004.4		$	(3,783.0	)	$	2.9
Net income	1,077.7								1,077.2						.5
Other comprehensive loss	(510.9		)									(510.6		)	(.3		)
Repurchases of common stock	(1,173.9		)			(1,173.9		)
Treasury shares reissued	56.9					56.9
Dividends declared	(408.9		)						(408.0		)				(.9		)
Stock options and other	69.6			69.8					(.2		)
Balance April 30, 2015	$	8,176.0		$	3,745.2	$	(13,951.2	)	$	22,673.4		$	(4,293.6	)	$	2.2

See Condensed Notes to Interim Consolidated Financial Statements.

Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

(1) The information in the notes and related commentary are presented in a format which includes data grouped as follows:

Equipment Operations - Includes the Company’s agriculture and turf operations and construction and forestry operations with financial services reflected on the equity basis.

Financial Services - Includes primarily the Company’s financing operations.

Consolidated - Represents the consolidation of the equipment operations and financial services. References to “Deere & Company” or “the Company” refer to the entire enterprise.

(2) The consolidated financial statements of Deere & Company and consolidated subsidiaries have been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latest annual report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

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

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 $276 million and $272 million in the first six months of 2015 and 2014, respectively. The Company also had accounts payable related to purchases of property and equipment of approximately $39 million and $44 million at April 30, 2015 and 2014, respectively.

(3) New accounting standards to be adopted are as follows:

In May 2014, the Financial Accounting Standards Board (FASB) issued 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. This 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. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In April 2015, the FASB issued a proposed ASU to defer the effective date by one year. If the proposed ASU is finalized, the effective date will be the first quarter of fiscal year 2019 with early adoption permitted in the first quarter of fiscal year 2018. The adoption will use one of two retrospective application methods. The Company has not determined the potential effects on the consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which amends ASC 718, Compensation - Stock Compensation. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Therefore, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The total compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The effective date will be the first quarter of fiscal year 2017. The adoption will not have a material effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amends ASC 835-30, Interest - Imputation of Interest. This ASU requires that debt issuance costs related to borrowings be presented in the balance sheet as a direct deduction from the carrying amount of the borrowing. This treatment is consistent with debt discounts. The ASU does not affect the amount or timing of expenses for debt issuance costs. The effective date will be the first quarter of fiscal year 2017 and will be applied retrospectively. The adoption will not have a material effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which amends ASC 350-40, Intangibles-Goodwill and Other-Internal-Use Software. This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If an arrangement includes a software license, the accounting for the license will be consistent with licenses of other intangible assets. If the arrangement does not include a license, the arrangement will be accounted for as a service contract. The effective date will be the first quarter of fiscal year 2017 and can be adopted prospectively or retrospectively. The Company has not determined the potential effects on the consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which amends ASC 820, Fair Value Measurement. This ASU removes the requirement to categorize within the fair value hierarchy investments without readily determinable fair values in entities that elect to measure fair value using net asset value per share or its equivalent. The ASU requires that these investments continue to be shown in the investment disclosure amount to allow the disclosure to reconcile to the investment amount presented in the balance sheet. The effective date will be the first quarter of fiscal year 2017 and will be applied retrospectively with early adoption permitted. The Company is evaluating early adoption. The adoption will not have a material effect on the Company’s consolidated financial statements.

(4) The after-tax changes in accumulated other comprehensive income (loss) in millions of dollars follow:

	Retirement Benefits Adjustment		Cumulative Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Unrealized Gain (Loss) on Investments		Total Accumulated Other Comprehensive Income (Loss)
Balance October 31, 2014	$	(3,493)	$	(303)			$	13	$	(3,783)
Other comprehensive income (loss) items before reclassification	(20)		(577)		$	(2)	5		(594)
Amounts reclassified from accumulated other comprehensive income	83				2		(2)		83
Net current period other comprehensive income (loss)	63		(577)				3		(511)
Balance April 30, 2015	$	(3,430)	$	(880)			$	16	$	(4,294)

Balance October 31, 2013	$	(2,809)	$	113	$	(3)	$	6	$	(2,693)
Other comprehensive income (loss) items before reclassification	12		(62)		(7)		1		(56)
Amounts reclassified from accumulated other comprehensive income	76				9				85
Net current period other comprehensive income (loss)	88		(62)		2		1		29
Balance April 30, 2014	$	(2,721)	$	51	$	(1)	$	7	$	(2,664)

Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars:

Three Months April 30, 2015	Before Tax Amount			Tax (Expense) Credit			After Tax Amount
Cumulative translation adjustment:	$	(67	)				$	(67	)
Unrealized gain (loss) on derivatives:
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense	3			$	(2	)	1
Foreign exchange contracts – Other operating expense	(1		)	1
Net unrealized gain (loss) on derivatives	2			(1		)	1
Unrealized gain (loss) on investments:
Unrealized holding gain (loss)	(5		)	2			(3		)
Reclassification of realized (gain) loss – Other income	(2		)	1			(1		)
Net unrealized gain (loss) on investments	(7		)	3			(4		)
Retirement benefits adjustment:
Pensions
Net actuarial gain (loss)	(17		)	6			(11		)
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	55			(20		)	35
Prior service (credit) cost	6			(3		)	3
Health care and life insurance
Net actuarial gain (loss)	(12		)	3			(9		)
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	23			(8		)	15
Prior service (credit) cost	(19		)	7			(12		)
Net unrealized gain (loss) on retirement benefits adjustments	36			(15		)	21
Total other comprehensive income (loss)	$	(36	)	$	(13	)	$	(49	)

* These accumulated other comprehensive income amounts are included in net periodic postretirement costs. See Note 7 for additional detail.

Six Months Ended April 30, 2015	Before Tax Amount			Tax (Expense) Credit			After Tax Amount
Cumulative translation adjustment:	$	(575	)	$	(2	)	$	(577	)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)	(4		)	2			(2		)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense	6			(2		)	4
Foreign exchange contracts – Other operating expense	(2		)				(2		)
Net unrealized gain (loss) on derivatives
Unrealized gain (loss) on investments:
Unrealized holding gain (loss)	8			(3		)	5
Reclassification of realized (gain) loss – Other income	(4		)	2			(2		)
Net unrealized gain (loss) on investments	4			(1		)	3
Retirement benefits adjustment:
Pensions
Net actuarial gain (loss)	(17		)	6			(11		)
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	110			(40		)	70
Prior service (credit) cost	12			(5		)	7
Settlements/curtailments	1						1
Health care and life insurance
Net actuarial gain (loss)	(12		)	3			(9		)
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	46			(17		)	29
Prior service (credit) cost	(38		)	14			(24		)
Net unrealized gain (loss) on retirement benefits adjustments	102			(39		)	63
Total other comprehensive income (loss)	$	(469	)	$	(42	)	$	(511	)

* These accumulated other comprehensive income amounts are included in net periodic postretirement costs. See Note 7 for additional detail.

Three Months April 30, 2014	Before Tax Amount			Tax (Expense) Credit			After Tax Amount
Cumulative translation adjustment:	$	107					$	107
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)	(5		)	$	1		(4		)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense	3			(1		)	2
Foreign exchange contracts – Other operating expense	1						1
Net unrealized gain (loss) on derivatives	(1		)				(1		)
Unrealized gain (loss) on investments:
Unrealized holding gain (loss)	4			(2		)	2
Net unrealized gain (loss) on investments	4			(2		)	2
Retirement benefits adjustment:
Pensions
Net actuarial gain (loss)	(39		)	15			(24		)
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	43			(16		)	27
Prior service (credit) cost	6			(3		)	3
Settlements/curtailments	4			(1		)	3
Health care and life insurance
Net actuarial gain (loss)	39			(15		)	24
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	8			(3		)	5
Prior service (credit) cost	(1		)	1
Net unrealized gain (loss) on retirement benefits adjustments	60			(22		)	38
Total other comprehensive income (loss)	$	170		$	(24	)	$	146

* These accumulated other comprehensive income amounts are included in net periodic postretirement costs. See Note 7 for additional detail.

In the second quarter of 2015 and 2014, the noncontrolling interests’ comprehensive income was $.3 million and $.5 million, respectively, which consisted of net income of $.3 million in 2015 and $.5 million in 2014.

Six Months Ended April 30, 2014	Before Tax Amount			Tax (Expense) Credit			After Tax Amount
Cumulative translation adjustment:	$	(63	)	$	1		$	(62	)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)	(10		)	3			(7		)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense	8			(3		)	5
Foreign exchange contracts – Other operating expense	6			(2		)	4
Net unrealized gain (loss) on derivatives	4			(2		)	2
Unrealized gain (loss) on investments:
Unrealized holding gain (loss)	1						1
Net unrealized gain (loss) on investments	1						1
Retirement benefits adjustment:
Pensions
Net actuarial gain (loss)	(20		)	8			(12		)
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	86			(31		)	55
Prior service (credit) cost	12			(5		)	7
Settlements/curtailments	6			(2		)	4
Health care and life insurance
Net actuarial gain (loss)	39			(15		)	24
Reclassification through amortization of actuarial (gain) loss and prior service (credit) cost to net income: *
Actuarial (gain) loss	17			(6		)	11
Prior service (credit) cost	(2		)	1			(1		)
Net unrealized gain (loss) on retirement benefits adjustments	138			(50		)	88
Total other comprehensive income (loss)	$	80		$	(51	)	$	29

* These accumulated other comprehensive income amounts are included in net periodic postretirement costs. See Note 7 for additional detail.

In the first six months of 2015, the noncontrolling interests’ comprehensive income was $.2 million, which consisted of net income of $.5 million and cumulative translation adjustments of $(.3) million. In the first six months of 2014, the noncontrolling interests’ comprehensive income was $.7 million, which consisted of net income of $.7 million.

(5) Dividends declared and paid on a per share basis were as follows:

	Three Months Ended April 30				Six Months Ended April 30

	2015		2014		2015		2014


Dividends declared	$	.60	$	.51	$	1.20	$	1.02

Dividends paid	$	.60	$	.51	$	1.20	$	1.02

(6) A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts:

	Three Months Ended April 30				Six Months Ended April 30
	2015		2014		2015		2014
Net income attributable to Deere & Company	$	690.5	$	980.7	$	1,077.2	$	1,661.8

Less income allocable to participating securities	.3		.4		.4		.6

Income allocable to common stock	$	690.2	$	980.3	$	1,076.8	$	1,661.2

Average shares outstanding	337.1		366.6		340.2		369.2

Basic per share	$	2.05	$	2.67	$	3.17	$	4.50

Average shares outstanding	337.1		366.6		340.2		369.2

Effect of dilutive share-based compensation	2.6		3.2		2.6		3.4

Total potential shares outstanding	339.7		369.8		342.8		372.6

Diluted per share	$	2.03	$	2.65	$	3.14	$	4.46

During the second quarter and first six months of 2015 and 2014, 3.0 million shares and 2.4 million shares, respectively, in both periods were excluded from the above diluted per share computation because the incremental shares under the treasury stock method would have been antidilutive.

(7) The Company has several defined benefit pension plans and defined postretirement 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 April 30				Six Months Ended April 30
	2015		2014		2015		2014
Service cost	$	69	$	62	$	142	$	123

Interest cost	119		120		238		239

Expected return on plan assets	(192)		(193)		(385)		(386)

Amortization of actuarial loss	55		43		110		86

Amortization of prior service cost	6		6		12		12

Settlements/curtailments			4		1		6

Net cost	$	57	$	42	$	118	$	80

The worldwide components of net periodic postretirement benefits cost (health care and life insurance) consisted of the following in millions of dollars:

	Three Months Ended April 30				Six Months Ended April 30
	2015		2014		2015		2014
Service cost	$	12	$	11	$	23	$	22

Interest cost	64		65		129		131

Expected return on plan assets	(14)		(17)		(28)		(35)

Amortization of actuarial loss	23		8		46		17

Amortization of prior service credit	(19)		(1)		(38)		(2)

Net cost	$	66	$	66	$	132	$	133

During the first six months of 2015, the Company contributed approximately $40 million to its pension plans and $17 million to its other postretirement benefit plans. The Company presently anticipates contributing an additional $35 million to its pension plans and $10 million to its other postretirement benefit plans during the remainder of fiscal year 2015. These contributions include payments from Company funds to either increase plan assets or make direct payments to plan participants.

(8) The Company’s unrecognized tax benefits at April 30, 2015 were $228 million, compared to $213 million at October 31, 2014. The liability at April 30, 2015 consisted of approximately $72 million, which would affect the effective tax rate if it was recognized. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. The changes in the unrecognized tax benefits for the first six months of 2015 were not significant. The Company expects that any reasonably possible change in the amounts of unrecognized tax benefits in the next 12 months would not be significant.

(9) Worldwide net sales and revenues, operating profit and identifiable assets by segment in millions of dollars follow:

	Three Months Ended April 30					Six Months Ended April 30
	2015		2014		% Change	2015		2014		% Change

Net sales and revenues:
Agriculture and turf	$	5,766	$	7,646	-25	$	9,847	$	13,242	-26
Construction and forestry	1,633		1,600		+2	3,157		2,953		+7
Total net sales	7,399		9,246		-20	13,004		16,195		-20
Financial services	653		572		+14	1,301		1,159		+12
Other revenues	119		130		-8	249		248
Total net sales and revenues	$	8,171	$	9,948	-18	$	14,554	$	17,602	-17
Operating profit: *
Agriculture and turf	$	639	$	1,229	-48	$	907	$	2,026	-55
Construction and forestry	189		132		+43	335		226		+48
Financial services	265		229		+16	498		411		+21
Total operating profit	1,093		1,590		-31	1,740		2,663		-35
Reconciling items **	(79)		(130)		-39	(168)		(241)		-30
Income taxes	(324)		(479)		-32	(495)		(760)		-35
Net income attributable to Deere & Company	$	690	$	981	-30	$	1,077	$	1,662	-35
Intersegment sales and revenues:
Agriculture and turf net sales	$	12	$	23	-48	$	25	$	42	-40
Construction and forestry net sales								1
Financial services	56		59		-5	106		105		+1

Equipment operations outside the U.S. and Canada:
Net sales	$	2,628	$	3,672	-28	$	4,502	$	6,280	-28
Operating profit	231		341		-32	308		552		-44

	April 30 2015		October 31 2014
Identifiable assets:
Agriculture and turf	$	9,252	$	9,442	-2
Construction and forestry	3,565		3,405		+5
Financial services	41,398		42,784		-3
Corporate	5,379		5,705		-6
Total assets	$	59,594	$	61,336	-3

* Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains and losses.

** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses and net income attributable to noncontrolling interests.

(10) 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. These receivables are generally 120 days delinquent and the estimated uncollectible amount, after charging the dealer’s withholding account, if any, has been 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:

	April 30, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due
Retail Notes:
Agriculture and turf	$	108	$	55	$	49	$	212
Construction and forestry	57		24		12		93
Other:
Agriculture and turf	32		13		20		65
Construction and forestry	14		6		2		22
Total	$	211	$	98	$	83	$	392

	Total Past Due		Total Non- Performing		Current		Total Financing Receivables
Retail Notes:
Agriculture and turf	$	212	$	96	$	18,543	$	18,851
Construction and forestry	93		18		2,511		2,622
Other:
Agriculture and turf	65		16		7,051		7,132
Construction and forestry	22		7		1,016		1,045
Total	$	392	$