Deere & Co. (DE) 10-K risk factor changes: FY2017 vs FY2016

This discussion of risk factors should be considered closely in conjunction with [removed: Management’s] [added: Management's] Discussion and Analysis beginning on page [removed: 22,] [added: 19,] including the risks and uncertainties described in the Safe Harbor Statement on pages [removed: 24] [added: 21] and [removed: 25,] [added: 22,] and the Notes to Consolidated Financial Statements beginning on page [removed: 37.][added: 34.]

Although each risk is discussed [added: separately, many are interrelated.]

International, national and regional laws, regulations and policies directly or indirectly related to or restricting the import and export of John [removed: Deere’s] [added: Deere's] products, services and technology, including protectionist policies in particular jurisdictions or for the benefit of favored industries or sectors, could harm John [removed: Deere’s] [added: Deere's] multinational business and subject John Deere to civil and criminal [removed: sanctions.][added: sanctions for violations.]

Trade [removed: restrictions] [added: restrictions, including potential limitations on existing trade agreements and trade terms,] could limit John [removed: Deere’s] [added: Deere's] ability to capitalize on current and future growth opportunities in international markets and impair John [removed: Deere’s] [added: Deere's] ability to expand the business by offering new technologies, products and services.

Additionally, John [removed: Deere’s] [added: Deere's] competitive position and results could be adversely affected by changes [removed: in—or] [added: in–or] uncertainty [removed: surrounding—U.S.] [added: surrounding–U.S.] trade policy.

[removed: Policies] impacting exchange rates and commodity prices or those limiting the export or import of commodities could have a material adverse effect on the international flow of agricultural and other commodities that may result in a corresponding negative effect on the demand for agricultural and forestry equipment in many areas of the world.

John [removed: Deere’s] [added: Deere's] agricultural equipment sales could be especially harmed [added: by such policies] because farm income strongly influences sales of agricultural equipment around the [removed: world.][added: world, including the withdrawal or material modification of the North American Free Trade Agreement.]

Furthermore, [removed: embargoes and] sanctions [added: and export controls] imposed by the U.S. and other governments restricting or prohibiting [removed: sales or] transactions [removed: to specific] [added: with certain] persons, including financial institutions, [removed: or countries] [added: to certain countries,] or [removed: based on product classification] [added: involving certain products] expose John Deere to potential criminal and civil sanctions.

Although John Deere has a compliance program in place designed to reduce the likelihood of potential violations of import and export laws and sanctions, [added: violations of] these laws [added: or sanctions could have an adverse effect on John Deere's reputation, business] and [removed: sanctions, particularly with respect to eastern Europe, Cuba,] [added: results of operations] and [removed: Iran, are changing rapidly.][added: financial condition.]

Government policies on [removed: taxes and] spending can also affect John Deere, especially the construction and forestry segment due to the impact of government spending on infrastructure development.

_Changing worldwide demand for food and different forms of bio-energy could have an effect on the price of farm commodities and consequently the demand for certain John Deere equipment and could also result in higher research and development costs related to changing machine fuel [removed: requirements_.][added: requirements._]

John [removed: Deere’s] [added: Deere's] efforts to grow its businesses depend to a large extent upon access to additional geographic [removed: markets] [added: markets,] including, but not limited to, Brazil, China, India and Russia, and its success in developing market share and operating profitably in such markets.

Expanding business operations globally also increases exposure to currency fluctuations which can materially affect the [removed: Company’s financial results.]

In addition, demand for John [removed: Deere’s] [added: Deere's] products and services can be significantly reduced by concerns regarding the diverse economic and political circumstances of the individual countries in the eurozone, the debt burden of certain eurozone countries and their ability to meet future financial obligations, uncertainty related to the [removed: potential] [added: anticipated] withdrawal of the United Kingdom from the European Union, [removed: and] the [added: risk that one or more other European Union countries could come under increasing pressure to leave the European Union, or the] long term stability of the euro as a single common currency.

[removed: In recent years, negative] [added: Negative] economic conditions [added: can] have [removed: frequently had] an adverse effect on the financial industry in which the financial services segment operates.

[removed: Our products] [added: Similarly, disputes] may [added: arise regarding whether our products or technologies] infringe the [removed: intellectual property] [added: proprietary] rights of [removed: others._][added: others.]

We may incur substantial costs if our competitors or other third parties initiate [removed: litigation to challenge the validity of our patents or allege that we infringe their patents,] [added: such litigation,] or if we initiate any proceedings to protect our proprietary rights.

[removed: _The] [added: The] Dodd-Frank Wall Street Reform and Consumer Protection Act [removed: (Act)] and [removed: the] [added: its] regulations [removed: implementing the Act impose] [added: impose, or may impose,] additional [removed: supervisory, financial and reporting] [added: reporting, stress testing, leverage, liquidity, capital] requirements and [added: other supervisory and financial standards and restrictions that increase regulatory] compliance costs [removed: on] [added: for] John Deere and John [removed: Deere’s] [added: Deere's] financial services operations and could [removed: therefore] adversely affect John Deere and its financial services [removed: segment._][added: segment's funding activities, liquidity, structure (including relationships with affiliates), operations and performance.]

Moreover, John [removed: Deere’s] [added: Deere's] operations, including those outside of the United States, [removed: will] [added: may] also be impacted by non-U.S. regulatory [removed: reforms, including Basel III,] [added: reforms] being implemented to further regulate non-U.S. financial institutions and markets.

Temperature affects the rate of growth, crop maturity and crop [removed: quality.]

Changes in the availability and price of these raw materials, components and whole goods, which have fluctuated significantly in the past and are more likely to fluctuate during times of economic [removed: volatility,] [added: volatility and regulatory instability,] can significantly increase the costs of production which could have a material negative effect on the profitability of the business, particularly if John Deere, due to pricing considerations or other factors, is unable to recover the increased costs from its customers.

Supply chain disruptions due to supplier financial distress, capacity constraints, [added: labor shortages,] business continuity, quality, delivery or disruptions due to weather-related or natural disaster events could affect John [removed: Deere’s] [added: Deere's] operations and profitability.

_John [removed: Deere’s] [added: Deere's] operations, suppliers and customers are subject to and affected by increasingly rigorous [removed: environmental,_ _health] [added: environmental, health] and safety laws and [removed: regulations_ _of] [added: regulations of] federal, state and local authorities in the U.S. and various regulatory authorities with jurisdiction over John [removed: Deere’s] [added: Deere's] international [removed: operations._ _In addition, private civil litigation on these subjects has increased, primarily in the U.S._][added: operations.]

_Increasingly stringent engine emission [removed: standards] [added: regulations] could impact John [removed: Deere’s] [added: Deere's] ability to manufacture and distribute certain engines or equipment, which could negatively affect business results._

John [removed: Deere’s] [added: Deere's] equipment operations must meet increasingly stringent engine emission reduction [removed: standards, including Final Tier 4 non-road diesel emission requirements in] [added: regulations throughout] the [removed: U.S. and] [added: world, including] the European [removed: Union’s Stage IV standard and recently enacted] [added: Union's] Stage V standard.

These [removed: standards] [added: laws and regulations] are applicable to [removed: many] engines manufactured by John [removed: Deere and] [added: Deere, including those] used in [removed: many models of] John Deere agriculture and construction and forestry equipment.

John Deere has incurred and continues to incur substantial research and development costs [removed: and is introducing many new equipment models, largely due] [added: related] to the implementation of these more rigorous [removed: standards.][added: laws and regulations.]

There is a [added: global] political and scientific consensus that emissions of greenhouse gases (GHG) continue to alter the composition of [removed: Earth’s] [added: Earth's] atmosphere in ways that are affecting and are expected to continue to affect the global climate.

The secure operation of these information technology networks and the processing and maintenance of this [added: information is critical to John Deere's business operations and strategy.]

John Deere collects personally identifiable information (PII) and other data as [removed: an] integral [removed: part] [added: parts] of its business processes and activities.

Any inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, or comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations [added: (including at newly acquired companies)] could result in additional cost and liability to us or company officials, damage our reputation, inhibit sales, and otherwise adversely affect our business.

In addition, while John Deere strives to reduce the impact of the departure of [removed: its] employees, John [removed: Deere’s] [added: Deere's] operations or ability to execute its business strategy may be impacted by the loss of personnel.

Policies

Embargoes and sanctions laws are changing rapidly for certain geographies, including with respect to Russia, Cuba, Iran, and Sudan.

_Changes in tax rates, tax legislation, or exposure to additional tax liabilities could have a negative effect on John Deere._

John Deere is subject to income taxes in the U.S. and numerous foreign jurisdictions.

The Company's domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.

Tax rates in various jurisdictions may be subject to significant change.

John Deere's effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation.

If the Company's effective tax rates were to increase, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, John Deere's operating results, cash flows and financial condition could be adversely affected.

Company's financial results.

Infringement of the intellectual property rights of others by Deere may also have a material adverse effect on the Company._

quality.

In addition, private civil litigation on these subjects has increased, primarily in the U.S._

_John Deere may not realize all of the anticipated benefits of our acquisitions, joint ventures or divestitures, or these benefits may take longer to realize than expected._

From time to time, the Company makes strategic acquisitions and divestitures—such as its acquisition of Wirtgen—or participates in joint ventures.

Transactions that the Company has entered into, or may enter into in the future, may involve significant challenges and risks, including that the transactions do not advance our business strategy, or fail to produce satisfactory returns on our investment.

The Company may encounter difficulties in integrating acquisitions with its operations, in applying internal control processes to these acquisitions, in managing strategic investments, and in assimilating new capabilities to meet the future needs of the Company's business.

Integrating acquisitions is often costly and may require significant attention from management.

Furthermore, John Deere may not realize all of the anticipated benefits of these transactions, or the realized benefits may be significantly delayed.

While our

evaluation of any potential transaction includes business, legal, and financial due diligence with the goal of identifying and evaluating the material risks involved, our due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential risks of a particular transaction, including potential exposure to regulatory sanctions resulting from an acquisition target's previous activities or costs associated with any quality issues with an acquisition target's products or services.

separately, many are interrelated.

Violations of these laws could have an adverse effect on John Deere’s reputation, business and results of operations and financial condition.

We also cannot be certain that our products or technologies have not infringed or will not infringe the proprietary rights of others.

The Act was enacted on July 21, 2010 to broadly reform practices in the financial services industry, including equipment financing and securitizations.

The Act directs federal agencies, including the Consumer Financial Protection Bureau, the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation and others, to adopt rules to regulate depository institutions, systemically important financial institutions, holding companies, the consumer finance industry and the capital markets, including certain commercial transactions such as derivatives contracts.

Although the effects of the Act on the capital markets and the financial industry will not be fully known until all the regulations have been finalized and implemented, the Act and its regulations impose, or may impose, additional reporting, stress testing, leverage, liquidity, and capital requirements; and other supervisory and financial standards and restrictions that increase regulatory compliance costs for John Deere and John Deere’s financial services operations and could adversely affect John Deere and its financial services segment’s funding activities, liquidity, structure (including relationships with affiliates), operations and performance.

information is critical to John Deere’s business operations and strategy.

See the information under the caption [removed: “Management’s] [added: "Management's] Discussion and [removed: Analysis”] [added: Analysis"] on pages [removed: 22 — 31.][added: 19 – 28.]

See the information under [removed: “Management’s] [added: "Management's] Discussion and [removed: Analysis”] [added: Analysis"] beginning on page [removed: 22] [added: 19] and in Note 27 to the Consolidated Financial Statements.

The _agriculture and turf_ segment primarily manufactures and distributes a full line of agriculture and turf equipment and related service parts — including large, medium and utility tractors; [added: tractor] loaders; combines, cotton pickers, cotton strippers, and sugarcane harvesters; related [removed: front-end] harvesting [added: front-end] equipment; sugarcane loaders and pull-behind scrapers; tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery; hay and forage equipment, including self-propelled forage harvesters and attachments, balers and mowers; turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements; integrated agricultural management systems technology and solutions; and other outdoor power products.

Additional information is presented in the discussion of business segment and geographic area results on page [removed: 23.][added: 20.]

The [removed: Company’s] [added: Company's] equipment sales are projected to [removed: decrease 1] [added: increase by about 22] percent for fiscal [removed: year 2017] [added: 2018] and [removed: decrease] [added: by] about [removed: 4] [added: 38] percent for the first [removed: quarter,] [added: quarter] compared with the same periods [removed: in 2016.][added: of 2017.]

Included in the forecast is a positive [removed: foreign currency] [added: foreign-currency] translation effect of about [removed: 1] [added: 2] percent for the year and about [removed: 2] [added: 3] percent for the [added: first] quarter.

_Agriculture & Turf._ The [removed: Company’s] [added: Company's] worldwide sales of agriculture and turf equipment are forecast to [removed: decrease] [added: increase] by about [removed: 1] [added: 9] percent for fiscal [removed: year 2017,] [added: 2018,] including a positive [removed: currency translation] [added: currency-translation] effect of about [removed: 1] [added: 2] percent.

Industry sales for agricultural equipment in the U.S. and Canada are forecast to be [removed: down] [added: up] 5 to 10 percent for [removed: 2017.][added: 2018, supported by higher demand for large equipment.]

[removed: Full year 2017] [added: Full-year] industry sales in the EU28 member nations are forecast to [removed: decline] [added: be up] about 5 [removed: percent, with the decline attributable] [added: percent due] to [removed: low commodity prices] [added: improving conditions in the dairy] and [removed: farm incomes.][added: livestock sectors.]

South American industry sales of tractors and combines are projected to [removed: increase about 15] [added: be flat to up 5] percent as a result of [removed: improving economic and political conditions] [added: continued positive conditions, particularly] in [removed: Brazil and] Argentina.

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about [removed: the same] [added: flat] for [removed: 2017, with company sales outpacing the industry.][added: 2018.]

_Construction & Forestry._ The [removed: Company’s] [added: Company's worldwide sales of] construction and forestry equipment [removed: sales] are [removed: forecast] [added: anticipated] to [removed: increase] [added: be up] about [removed: 1] [added: 69] percent for [removed: 2017,] [added: 2018,] including a positive [removed: currency translation] [added: currency-translation] effect of about 1 percent.

_Financial Services._ Fiscal [removed: year 2017] [added: 2018] net income attributable to [removed: Deere &] [added: the] Company for the financial services operations is expected to be approximately [removed: $480] [added: $515] million.

The [removed: outlook reflects] [added: increase was largely due to] lower losses on lease residual values, partially offset by less favorable financing [removed: spreads] [added: spreads,] and [removed: an increased provision for credit losses.][added: higher selling, administrative and general expenses.]

[removed: 2016] [added: 2017] Consolidated Results Compared with [removed: 2015][added: 2016]

Worldwide net income attributable to [removed: Deere &] [added: the] Company in [removed: 2016] [added: fiscal 2017] was [removed: $1,524] [added: $2,159] million, or [removed: $4.81] [added: $6.68] per share diluted [removed: ($4.83] [added: ($6.76] basic), compared with [removed: $1,940] [added: $1,524] million, or [removed: $5.77] [added: $4.81] per share diluted [removed: ($5.81] [added: ($4.83] basic), in [removed: 2015.][added: 2016.]

Worldwide net sales and revenues [removed: decreased 8] [added: increased 12] percent to [removed: $26,644] [added: $29,738] million in [removed: 2016,] [added: 2017,] compared with [removed: $28,863] [added: $26,644] million in [removed: 2015.][added: fiscal 2016.]

Net sales of the worldwide equipment operations [removed: declined 9] [added: rose 11] percent in [removed: 2016] [added: fiscal 2017] to [removed: $23,387] [added: $25,885] million from [removed: $25,775] [added: $23,387] million last year.

Sales included price realization of [removed: 2] [added: 1] percent and [removed: an unfavorable] [added: a favorable] currency translation effect of [removed: 2] [added: 1] percent.

Equipment net sales in the United States and Canada [removed: decreased 13] [added: increased 5] percent for [removed: 2016.][added: fiscal 2017.]

Outside the U.S. and Canada, net sales [removed: decreased 3] [added: increased 20] percent for the year, with [removed: an unfavorable] [added: a favorable] currency translation effect of [removed: 4] [added: 1] percent for [removed: 2016.][added: fiscal 2017.]

Worldwide equipment operations had an operating profit of [removed: $1,880] [added: $2,821] million in [removed: 2016,] [added: fiscal 2017,] compared with [removed: $2,177] [added: $1,880] million in [removed: 2015.][added: fiscal 2016.]

The operating profit [removed: decline] [added: increase] was primarily [removed: on account of reduced] [added: due to higher] shipment volumes, [added: a gain on] the [removed: unfavorable effects] [added: sale] of [removed: foreign currency exchange] [added: the remaining interest in SiteOne Landscape Supply, Inc. (SiteOne) (see Note 5), price realization] and a [removed: less] favorable product mix, partially offset by [removed: price realization, lower] [added: increases in] production costs, [removed: lower] selling, administrative and general [removed: expenses] [added: expenses,] and [removed: a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne.][added: warranty related expenses.]

Net income of the [removed: Company’s] [added: Company's] equipment operations was [removed: $1,058] [added: $1,707] million for [removed: 2016,] [added: fiscal 2017,] compared with [removed: $1,308] [added: $1,058] million in [removed: 2015.][added: fiscal 2016.]

[removed: Net income of the] [added: The] financial services operations [added: reported net income] attributable to [removed: Deere &] [added: the] Company in [removed: 2016 decreased to $468] [added: fiscal 2017 of $477] million, compared with [removed: $633] [added: $468] million in [removed: 2015.][added: fiscal 2016.]

The cost of sales to net sales ratio for [removed: 2016] [added: fiscal 2017] was [removed: 78.0] [added: 77.0] percent, compared with [removed: 78.1] [added: 78.0] percent last year.

The [removed: decrease] [added: improvement] was due primarily to price realization and [removed: lower production costs, largely offset by the unfavorable effects of foreign currency exchange and the impact of] a [removed: less] favorable product [removed: mix.][added: mix, partially offset by increases in production costs and warranty related expenses.]

Additional information on [removed: 2016] [added: fiscal 2017] results is presented on pages [removed: 22-24.][added: 19-21.]

The [removed: segment’s] [added: segment's] equipment operations are consolidated into five product platforms — crop harvesting (combines, cotton pickers, cotton strippers, and sugarcane harvesters, related [removed: front-end] harvesting [added: front-end] equipment, sugarcane loaders and pull-behind scrapers); turf and utility (utility vehicles, riding lawn equipment, walk-behind mowers, commercial mowing equipment, golf course equipment, implements for [removed: mowing,tilling,] [added: mowing, tilling,] snow and debris handling, aerating and many other residential, commercial, golf and sports turf care applications and other outdoor power products); hay and forage (self-propelled forage harvesters and attachments, balers and mowers); crop care (tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery); and tractors (loaders and large, medium and utility tractors and related attachments).

John Deere has developed a comprehensive agricultural management systems approach using advanced communications, data collection and global satellite positioning technologies to enable farmers to better control input costs and yields, improve soil conservation, minimize chemical use, [removed: and to gather information.]

In addition to the John Deere brand, the agriculture and turf segment purchases and sells a variety of equipment attachments under the Frontier, Kemper and Green Systems brand [removed: names, and manufactures and sells walk-behind mowers and scarifiers in select European countries under the SABO brand name.][added: names.]

A large proportion of the equipment [removed: operations’] [added: operations'] total agricultural equipment sales in the U.S. and Canada, and a significant proportion of sales in many countries outside the U.S. and Canada, [removed: comprises] [added: are comprised of] tractors over 100 horsepower, self-propelled combines, self-propelled cotton pickers, self-propelled forage harvesters, self-propelled sprayers and seeding equipment.

[removed: However, John Deere’s sales of small tractors below 100 horsepower are increasing, and] [added: Further,] John Deere offers a number of harvesting solutions to support development of the mechanized harvesting of grain, oilseeds, cotton, sugar and biomass.

[added: _Seasonality._] Seasonal patterns in retail demand for agricultural equipment result in substantial variations in the volume and mix of products sold to retail customers during the year.

To provide support to its dealers for these used equipment trade-ins, John Deere provides dealers in these countries with [removed: a pool] [added: pools] of funds, awarded to dealers as a percentage of the dealer cost for eligible new equipment sales.

John Deere also owns Nortrax, Inc. [removed: that] [added: which] in turn owns Nortrax Canada Inc. [removed: that] [added: which] in turn owns Nortrax Quebec Inc. (collectively called Nortrax).

The competitive environment for the agriculture and turf segment includes some global competitors, including AGCO Corporation, CLAAS KGaA mbH, CNH Global N.V., Kubota Tractor [removed: Corporation] [added: Corporation, Mahindra,] and The Toro Company and many regional and local competitors.

The construction [removed: and forestry segment] [added: business] operates in highly competitive [added: markets in] North [removed: American] and [added: South America and other] global markets, including [removed: Brazil,] China and Russia.

Global competitors of the construction and forestry segment include Caterpillar Inc., Komatsu Ltd., Volvo Construction Equipment (part of Volvo Group AB), CNH Global N.V., [added: Doosan Infracore Co., Ltd. and its subsidiary Doosan Bobcat Inc.,] Tigercat Industries Inc. and Ponsse Plc.

The segment manufactures over 90 percent of the types of construction equipment used in the U.S. and Canada, including construction, [removed: earthmoving] [added: forestry, earthmoving,] and material handling equipment.

Such expenditures were [removed: $1,389] [added: $1,368] million, or [removed: 5.9] [added: 5.3] percent of net sales, in [removed: 2016, $1,425] [added: 2017; $1,389] million, or [removed: 5.5] [added: 5.9] percent of net sales, in [removed: 2015] [added: 2016;] and [removed: $1,452] [added: $1,425] million, or [removed: 4.4] [added: 5.5] percent of net sales, in [removed: 2014.][added: 2015.]

[added: _Manufacturing Plants._] In the U.S. and Canada, the equipment operations own and operate 21 factory locations and lease and operate another two locations, which contain approximately [removed: 28.7] [added: 29.1] million square feet of floor space.

Recent Developments

On December 1, 2017, the Company completed its previously announced acquisition of substantially all of the business operations of Wirtgen Group Holding GmbH (Wirtgen).

Wirtgen, which was a privately-held international company, is the leading manufacturer worldwide of road construction equipment spanning processing, mixing, paving, compaction and rehabilitation.

Headquartered in Germany, the operating group of companies includes product brands "WIRTGEN", "VÖGELE", "HAMM", "KLEEMANN," "BENNINGHOVEN", and "CIBER"; as well as sales and service companies worldwide.

Wirtgen owns and operates 10 factory locations, sells products in more than 100 countries, and has approximately 8,200 employees.

Wirtgen will be included in the Company's construction and forestry operating segment.

For additional information, see Note 30—Subsequent Events.

Net sales and revenues are projected to increase about 19 percent for fiscal 2018, with net income attributable to the Company of about $2.6 billion.

The acquisition of the Wirtgen Group closed on December 1, 2017, and is forecast to contribute about $3.1 billion in net sales in fiscal 2018.

Wirtgen is expected to add about 12 percent to Deere's sales for the full year and about 6 percent for the first quarter in

comparison with 2017.

After estimated expenses for purchase accounting and transaction costs, Wirtgen is expected to contribute about $75 million to operating profit and about $25 million to net income in fiscal 2018.

Asian sales are forecast to be flat with strength in India offsetting weakness in China.

Deere's turf sales are expected to outperform the industry owing to the success of new products.

The Wirtgen business is expected to add about 54 percent to the division's sales for the year.

The outlook reflects moderate economic growth worldwide, including higher housing starts in the U.S. and increased activity in the oil and gas sector.

In forestry, global industry sales are expected to be flat to up 5 percent mainly as a result of improved lumber prices in North America.

The outlook reflects a higher average portfolio, partially offset by increased selling, administrative and general expenses.

The operating factors mentioned affected the results.

Additional information is presented in the following discussion of the "Worldwide Financial Services Operations."

and to gather information.

The segment also manufactures and sells sprayers under the Hagie and Mazzotti brand names, planters and cultivators under the Monosem brand name, and walk-behind mowers and scarifiers in select European countries under the SABO brand name.

However, small tractors are an increasingly important part of our global tractor business.

The supply agreement with Hitachi for distribution in certain Asian markets was terminated in 2015; however, Hitachi may place orders for Deere equipment through October of 2018.

The forestry business operates globally.

Infringement of the intellectual property rights of others by Deere may also have a material adverse effect on the Company_.

In fiscal 2017, no significant work stoppages occurred due to shortages of raw materials or other commodities, but John Deere experienced an increasing number of supply chain disruptions linked to supplier labor shortages.

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| Rajesh Kalathur | | | 49 | | Senior Vice President and Chief Financial Officer | | 2012 | | Has held this position for the last five years |

| John C. May | | | 48 | | President, Agricultural Solutions & Chief Information Officer | | 2012 | | Has held this position for the last five years |

For fiscal year 2017, net income attributable to Deere & Company is anticipated to be about $1.4 billion.

In December 2016, the Company sold a portion of its interest in SiteOne Landscape Supply, Inc. (SiteOne) (see Note 30) resulting in a gain of approximately $105 million pretax or $66 million after-tax.

This gain is not included in the fiscal year 2017 net income forecast above.

During the fourth quarter of 2016, the Company announced voluntary employee separation programs as part of its effort to reduce operating costs.

The expense of these programs is recorded in the period in which employees accept their separation offer.

Total pretax expenses related to the programs are estimated to be $111 million, of which $11 million was recorded in the fourth quarter of 2016, and $100 million will be recorded primarily in the first quarter of 2017.

Savings from the separation programs are expected to be approximately $70 million in 2017.

The decline, which reflects the continuing impact of low commodity prices and weak farm incomes, is expected to be felt in the sale of both large and small models of equipment.

Asian sales are projected to be about the same to up slightly, benefiting from higher sales in India.

The forecast reflects the impact of generally slow economic growth worldwide.

In forestry, global industry sales are expected to be about the same as in 2016 with some moderation in the North American market.

In addition to the operating factors mentioned above, a higher effective tax rate in 2016 reduced net income.

The decline was primarily due to less favorable financing spreads, higher losses on lease residual values, and a higher provision for credit losses.

Prior year results benefited from a gain on the sale of the crop insurance business

_Seasonality_.

Bell and John Deere terminated the articulated dump truck manufacturing and license agreements in 2016.

John Deere also has supply agreements with Hitachi under which a range of construction, earthmoving, material handling and forestry equipment manufactured by John Deere in the U.S., Finland and New Zealand is distributed by Hitachi in certain Asian markets.

_Manufacturing Plants_.

business, and their loss could have a material adverse effect on the Company.

Our products may infringe the intellectual property rights of others_.

In fiscal year 2016, John Deere experienced no significant work stoppages as a result of shortages of raw materials or other commodities.

_U.S. and Canada_.

_Outside the U.S. and Canada_.

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| Rajesh Kalathur | 48 | Senior Vice President and Chief Financial Officer | 2012 | | 2012 Deputy Financial Officer; 2009 – 2012 Vice President, Sales & Marketing, China/India/South and East Asia/Sub-Saharan and South Africa, Agriculture & Turf Division |

| John C. May | 47 | President, Agricultural Solutions & Chief Information Officer | 2012 | | 2009 – 2012 Vice President, Agriculture & Turf Global Platform, Turf & Utility |

John Deere believes the reasonably possible range of losses for [removed: these] unresolved legal actions [removed: in addition to the amounts accrued] would not have a material effect on its financial statements.

Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that John Deere reasonably believes could exceed $100,000.

The following matter is disclosed solely pursuant to that requirement: On July 6, 2017, after self-reporting to the Iowa Department of Natural Resources, John Deere received a Notice of Violation alleging that one Iowa facility location exceeded permitted emission limits.

John Deere responded and is actively cooperating with the Iowa Department of Natural Resources to revise the permits and resolve the notice.

UNITED [removed: STATES][added: STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. 20549

ANNUAL REPORT PURSUANT TO SECTION 13 OR [removed: 15(d)][added: 15(d)]

[removed: OF] [added: OF] THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: FOR] [added: FOR] THE FISCAL YEAR ENDED OCTOBER [removed: 31, 2016][added: 29, 2017]

DEERE & [removed: COMPANY][added: COMPANY]

[removed: (Exact] [added: (Exact] name of registrant as specified in its charter)

| [added: Delaware] (State of incorporation) | | [added: 36-2382580] (IRS Employer Identification No.) |

| One John Deere Place, Moline, Illinois [added: (Address of principal executive offices)] | | 61265 [added: (Zip Code)] | | (309) 765-8000 [added: (Telephone Number)] |

[removed: SECURITIES] [added: SECURITIES] REGISTERED PURSUANT TO SECTION 12(b) OF THE [removed: ACT][added: ACT]

| [removed: 8-1/2%] [added: 81/2%] Debentures Due 2022 | | New York Stock Exchange |

[removed: SECURITIES] [added: SECURITIES] REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: [removed: NONE][added: NONE]

Yes [removed: x] [added: ý] No o

Yes o No [removed: x][added: ý]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of [removed: registrant’s] [added: registrant's] knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: x][added: o]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of [removed: “large] [added: "large] accelerated [removed: filer,” “accelerated filer” and “smaller] [added: filer," "accelerated filer," "smaller] reporting [removed: company”] [added: company," and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

| [added: Large accelerated filer ý | | Accelerated filer o | |] Non-accelerated filer o [added: (Do not check if a smaller reporting company)] | [added: |] Smaller reporting company o [added: Emerging growth company o] |

The aggregate quoted market price of voting stock of registrant held by non-affiliates at April 30, [removed: 2016] [added: 2017] was [removed: $26,385,877,434.][added: $35,641,157,591.]

At November 30, [removed: 2016, 316,872,632] [added: 2017, 322,595,010] shares of common stock, $1 par value, of the registrant were outstanding.

[removed: _Documents] [added: Documents] Incorporated by [removed: Reference_.][added: Reference.]

Portions of the proxy statement for the annual meeting of stockholders to be held on February [removed: 22, 2017] [added: 28, 2018] are incorporated by reference into Part III of this Form 10-K.

TABLE OF [removed: CONTENTS][added: CONTENTS]

| | | [added: | |] Page |

| PART I | | | [added: | |]

| [ITEM [removed: 5.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM5_MARKETFORREGISTRANTSCOMMON_124222)] [added: 5.](#ce14602_item_5._market_for_registrant___ite04647)] | [added: |] [MARKET FOR [removed: REGISTRANT’S] [added: REGISTRANT'S] COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM5_MARKETFORREGISTRANTSCOMMON_124222)] [added: SECURITIES](#ce14602_item_5._market_for_registrant___ite04647)] | [removed: [17](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM5_MARKETFORREGISTRANTSCOMMON_124222)] | [added: [15](#ce14602_item_5._market_for_registrant___ite04647) |]

| [ITEM [removed: 12.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM12_SECURITYOWNERSHIPOFCERTAI_124518)] [added: 12.](#cg14602_item_12._security_ownership_of__ite03985)] | [added: |] [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM12_SECURITYOWNERSHIPOFCERTAI_124518)] [added: MATTERS](#cg14602_item_12._security_ownership_of__ite03985)] | [removed: [20](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM12_SECURITYOWNERSHIPOFCERTAI_124518)] | [added: [17](#cg14602_item_12._security_ownership_of__ite03985) |]

| [ITEM [removed: 15.](#19008-4-BG_ITEM15)] [added: 15.](#ci14602_item_15._exhibits_and_financial_statement_schedules.)] | [added: |] [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULES](#19008-4-BG_ITEM15)] [added: SCHEDULES](#ci14602_item_15._exhibits_and_financial_statement_schedules.)] | [removed: [21](#19008-4-BG_ITEM15)] | [added: [18](#ci14602_item_15._exhibits_and_financial_statement_schedules.) |]

10-K 1 a2233505z10-k.htm 10-K

Use these links to rapidly review the document

[ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.](#ci14602_item_15._exhibits_and_financial_statement_schedules.)

| | | | | |

Yes ý No o

Yes ý No o

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes o No ý

| | | | | |

| --- | --- | --- | --- | --- |

| [ITEM 1.](#ca14602_item_1._business.) | | [BUSINESS](#ca14602_item_1._business.) | | [2](#ca14602_item_1._business.) |

| [ITEM 1A.](#cc14602_item_1a._risk_factors.) | | [RISK FACTORS](#cc14602_item_1a._risk_factors.) | | [9](#cc14602_item_1a._risk_factors.) |

| [ITEM 1B.](#ce14602_item_1b._unresolved_staff_comments.) | | [UNRESOLVED STAFF COMMENTS](#ce14602_item_1b._unresolved_staff_comments.) | | [15](#ce14602_item_1b._unresolved_staff_comments.) |

| [ITEM 2.](#ce14602_item_2._properties.) | | [PROPERTIES](#ce14602_item_2._properties.) | | [15](#ce14602_item_2._properties.) |

| [ITEM 3.](#ce14602_item_3._legal_proceedings.) | | [LEGAL PROCEEDINGS](#ce14602_item_3._legal_proceedings.) | | [15](#ce14602_item_3._legal_proceedings.) |

| [ITEM 4.](#ce14602_item_4._mine_safety_disclosures.) | | [MINE SAFETY DISCLOSURES](#ce14602_item_4._mine_safety_disclosures.) | | [15](#ce14602_item_4._mine_safety_disclosures.) |

| [ PART II](#part2_ce) | | | | |

| [ITEM 6.](#cg14602_item_6._selected_financial_data.) | | [SELECTED FINANCIAL DATA](#cg14602_item_6._selected_financial_data.) | | [16](#cg14602_item_6._selected_financial_data.) |

| [ITEM 7.](#cg14602_item_7._management_s_discussio__ite03649) | | [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#cg14602_item_7._management_s_discussio__ite03649) | | [16](#cg14602_item_7._management_s_discussio__ite03649) |

| [ITEM 7A.](#cg14602_item_7a._quantitative_and_qual__ite02650) | | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#cg14602_item_7a._quantitative_and_qual__ite02650) | | [16](#cg14602_item_7a._quantitative_and_qual__ite02650) |

| [ITEM 8.](#cg14602_item_8._financial_statements_and_supplementary_data.) | | [FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](#cg14602_item_8._financial_statements_and_supplementary_data.) | | [16](#cg14602_item_8._financial_statements_and_supplementary_data.) |

| [ITEM 9.](#cg14602_item_9._changes_in_and_disagre__ite03557) | | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](#cg14602_item_9._changes_in_and_disagre__ite03557) | | [16](#cg14602_item_9._changes_in_and_disagre__ite03557) |

| [ITEM 9A.](#cg14602_item_9a._controls_and_procedures.) | | [CONTROLS AND PROCEDURES](#cg14602_item_9a._controls_and_procedures.) | | [16](#cg14602_item_9a._controls_and_procedures.) |

| [ITEM 9B.](#cg14602_item_9b._other_information.) | | [OTHER INFORMATION](#cg14602_item_9b._other_information.) | | [17](#cg14602_item_9b._other_information.) |

| [ PART III](#part3_cg) | | | | |

| [ITEM 10.](#cg14602_item_10._directors,_executive___ite02317) | | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](#cg14602_item_10._directors,_executive___ite02317) | | [17](#cg14602_item_10._directors,_executive___ite02317) |

| [ITEM 11.](#cg14602_item_11._executive_compensation.) | | [EXECUTIVE COMPENSATION](#cg14602_item_11._executive_compensation.) | | [17](#cg14602_item_11._executive_compensation.) |

| [ITEM 13.](#cg14602_item_13._certain_relationships__ite03048) | | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](#cg14602_item_13._certain_relationships__ite03048) | | [17](#cg14602_item_13._certain_relationships__ite03048) |

| [ITEM 14.](#cg14602_item_14._principal_accountant_fees_and_services.) | | [PRINCIPAL ACCOUNTANT FEES AND SERVICES](#cg14602_item_14._principal_accountant_fees_and_services.) | | [17](#cg14602_item_14._principal_accountant_fees_and_services.) |

| [ PART IV](#part4_cg) | | | | |

10-K 1 a2230400z10-k.htm 10-K

| Delaware | | 36-2382580 |

| --- | --- | --- |

| (Address of principal executive offices) | | (Zip Code) | | (Telephone Number) |

| Large accelerated filer x | Accelerated filer o |

| --- | --- |

| (Do not check if a smaller reporting company) | |

| [ITEM 1.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bi_ITEM1_BUSINESS__124040) | [BUSINESS](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bi_ITEM1_BUSINESS__124040) | [2](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bi_ITEM1_BUSINESS__124040) |

| [ITEM 1A.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM1A_RISKFACTORS__124129) | [RISK FACTORS](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM1A_RISKFACTORS__124129) | [10](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM1A_RISKFACTORS__124129) |

| [ITEM 1B.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM1B_UNRESOLVEDSTAFFCOMMENTS__125541) | [UNRESOLVED STAFF COMMENTS](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM1B_UNRESOLVEDSTAFFCOMMENTS__125541) | [17](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM1B_UNRESOLVEDSTAFFCOMMENTS__125541) |

| [ITEM 2.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM2_PROPERTIES__124150) | [PROPERTIES](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM2_PROPERTIES__124150) | [17](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM2_PROPERTIES__124150) |

| [ITEM 3.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM3_LEGALPROCEEDINGS__124200) | [LEGAL PROCEEDINGS](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM3_LEGALPROCEEDINGS__124200) | [17](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM3_LEGALPROCEEDINGS__124200) |

| [ITEM 4.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM4_MINESAFETYDISCLOSURES__124208) | [MINE SAFETY DISCLOSURES](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM4_MINESAFETYDISCLOSURES__124208) | [17](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_ITEM4_MINESAFETYDISCLOSURES__124208) |

| | | |

| [PART II](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bk_PARTII_124216) | | |

| [ITEM 6.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM6_SELECTEDFINANCIALDATA__124306) | [SELECTED FINANCIAL DATA](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM6_SELECTEDFINANCIALDATA__124306) | [18](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM6_SELECTEDFINANCIALDATA__124306) |

| [ITEM 7.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM7_MANAGEMENTSDISCUSSIONANDAN_124319) | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM7_MANAGEMENTSDISCUSSIONANDAN_124319) | [18](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM7_MANAGEMENTSDISCUSSIONANDAN_124319) |

| [ITEM 7A.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM7A_QUANTITATIVEANDQUALITATIV_124653) | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM7A_QUANTITATIVEANDQUALITATIV_124653) | [18](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM7A_QUANTITATIVEANDQUALITATIV_124653) |

| [ITEM 8.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_TEM8_FINANCIALSTATEMENTSANDSUPPL_124346) | [FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_TEM8_FINANCIALSTATEMENTSANDSUPPL_124346) | [18](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_TEM8_FINANCIALSTATEMENTSANDSUPPL_124346) |

| [ITEM 9.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9_CHANGESINANDDISAGREEMENTSW_124413) | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9_CHANGESINANDDISAGREEMENTSW_124413) | [18](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9_CHANGESINANDDISAGREEMENTSW_124413) |

| [ITEM 9A.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9A_CONTROLSANDPROCEDURES__124636) | [CONTROLS AND PROCEDURES](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9A_CONTROLSANDPROCEDURES__124636) | [19](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9A_CONTROLSANDPROCEDURES__124636) |

| [ITEM 9B.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9B_OTHERINFORMATION__124443) | [OTHER INFORMATION](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9B_OTHERINFORMATION__124443) | [19](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM9B_OTHERINFORMATION__124443) |

| [PART III](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_PARTIII_124452) | | |

| [ITEM 10.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM10_DIRECTORSEXECUTIVEOFFICER_124458) | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM10_DIRECTORSEXECUTIVEOFFICER_124458) | [19](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM10_DIRECTORSEXECUTIVEOFFICER_124458) |

| [ITEM 11.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM11_EXECUTIVECOMPENSATION__124507) | [EXECUTIVE COMPENSATION](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM11_EXECUTIVECOMPENSATION__124507) | [19](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM11_EXECUTIVECOMPENSATION__124507) |

| [ITEM 13.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM13_CERTAINRELATIONSHIPSANDRE_124526) | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM13_CERTAINRELATIONSHIPSANDRE_124526) | [20](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM13_CERTAINRELATIONSHIPSANDRE_124526) |

| [ITEM 14.](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM14_PRINCIPALACCOUNTANTFEESAN_124534) | [PRINCIPAL ACCOUNTANT FEES AND SERVICES](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM14_PRINCIPALACCOUNTANTFEESAN_124534) | [20](https://www.sec.gov/Archives/edgar/data/315189/000104746916017244/a2230400z10-k.htm#19008-4-bm_ITEM14_PRINCIPALACCOUNTANTFEESAN_124534) |

| [PART IV](#19008-4-BG_PARTIV) | | |

The equipment operations own or lease [removed: nine] [added: eleven] facilities [removed: housing one] [added: comprised of two locations supporting] centralized parts distribution [removed: center] and [removed: eight] [added: nine] regional parts depots and distribution centers throughout the U.S. and Canada.

These facilities contain approximately [removed: 4.7] [added: 5.4] million square feet of floor space.

Outside the U.S. and Canada, the equipment operations also own or lease and occupy [removed: buildings housing] four centralized parts distribution centers in Brazil, Germany, India and Russia and regional parts depots and distribution centers in Argentina, Australia, China, Mexico, South Africa, Sweden and the United Kingdom.

These facilities contain approximately [removed: 2.9] [added: 3.1] million square feet of floor space.

John Deere also owns and leases facilities for the manufacture and distribution of other brands of replacement parts containing approximately [removed: 1.4] [added: 1.3] million square feet.

The [removed: Company’s] [added: Company's] administrative offices and research facilities, [added: some of] which are owned and [added: some of which are] leased by John Deere, contain about 3.8 million square feet of floor space globally and miscellaneous other facilities total [removed: 4.1] [added: 4.2] million square feet globally.

Overall, John Deere owns approximately [removed: 59.1] [added: 59.8] million square feet of facilities and leases approximately [removed: 15.2] [added: 14.9] million additional square feet in various locations.

[removed: (a)] The [removed: Company’s] [added: Company's] common stock is listed on the New York Stock Exchange.

[removed: (b)] Not applicable.

[removed: (c)] The [removed: Company’s] [added: Company's] purchases of its common stock during the fourth quarter of [removed: 2016] [added: 2017] were as follows:

| Total | | | | | | | | | | [added: | |]

[removed: (1)] During the fourth quarter of [removed: 2016,] [added: 2017,] the Company had a share repurchase plan that was announced in December 2013 to purchase up to $8,000 million of shares of the [removed: Company’s] [added: Company's] common stock.

The maximum number of shares above that may yet be purchased under the $8,000 million plan was based on the end of the fourth quarter closing share price of [removed: $87.17] [added: $133.25] per share.

At the end of the fourth [removed: quarter,] [added: quarter of 2017,] $3,260 million of common stock remains to be purchased under this plan.

(a)

(b)

(c)

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | Total Number of Shares Purchased (thousands) | | | Average Price Paid Per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (thousands) | | | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1) (millions) |

| Jul 31 to Aug 27 | | | | | | | | | | | 24.5 |

| Aug 28 to Sept 24 | | | | | | | | | | | 24.5 |

| Sept 25 to Oct 29 | | | | | | | | | | | 24.5 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

(1)

| | | | | | | | | Maximum | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Total Number of | | Number of Shares | |

| | | | | | | Shares Purchased | | that May Yet Be | |

| | | Total Number of | | | | as Part of Publicly | | Purchased under | |

| | | Shares | | Average Price | | Announced Plans | | the Plans or | |

| | | Purchased | | Paid Per | | or Programs (1) | | Programs (1) | |

| Period | | (thousands) | | Share | | (thousands) | | (millions) | |

| | | | | | | | | | |

| Aug 1 to Aug 31 | | | | | | | | 37.4 | |

| Sept 1 to Sept 30 | | | | | | | | 37.4 | |

| Oct 1 to Oct 31 | | | | | | | | 37.4 | |

| (Millions of dollars except per share amounts) | | [removed: 2016] [added: October 29 2017] | | | [removed: 2015] [added: October 30 2016] | | | [removed: 2014] [added: November 1 2015] | | | [removed: 2013] [added: November 2 2014] | | | [removed: 2012] [added: October 27 2013] | | |

| For the [removed: Year Ended October 31:] [added: Years Ended:] | | | | | | | | | | | | | | | | |

| Total net sales and revenues | | $ | [removed: 26,644] [added: 29,738] | | $ | [removed: 28,863] [added: 26,644] | | $ | [removed: 36,067] [added: 28,863] | | $ | [removed: 37,795] [added: 36,067] | | $ | [removed: 36,157] [added: 37,795] | |

| Net income attributable to Deere & Company | | $ | [removed: 1,524] [added: 2,159] | | $ | [removed: 1,940] [added: 1,524] | | $ | [removed: 3,162] [added: 1,940] | | $ | [removed: 3,537] [added: 3,162] | | $ | [removed: 3,065] [added: 3,537] | |

| Net income per share — basic | | $ | [removed: 4.83] [added: 6.76] | | $ | [removed: 5.81] [added: 4.83] | | $ | [removed: 8.71] [added: 5.81] | | $ | [removed: 9.18] [added: 8.71] | | $ | [removed: 7.72] [added: 9.18] | |

| Net income per share — diluted | | $ | [removed: 4.81] [added: 6.68] | | $ | [removed: 5.77] [added: 4.81] | | $ | [removed: 8.63] [added: 5.77] | | $ | [removed: 9.09] [added: 8.63] | | $ | [removed: 7.63] [added: 9.09] | |

| Dividends declared per share | | $ | 2.40 | | $ | 2.40 | | $ | [removed: 2.22] [added: 2.40] | | $ | [removed: 1.99] [added: 2.22] | | $ | [removed: 1.79] [added: 1.99] | |

| | | | | | | | | | | | | | | | | |

| At Year End: | | | | | | | | | | | | | | | | |

| Total assets | | $ | 65,786 | | $ | 57,918 | | $ | 57,883 | | $ | 61,267 | | $ | 59,454 | |

| Long-term borrowings | | $ | 25,891 | | $ | 23,703 | | $ | 23,775 | | $ | 24,318 | | $ | 21,518 | |

| At October 31: | | | | | | | | | | | | | | | | |

| Total assets | | $ | 57,981 | | $ | 57,948 | | $ | 61,336 | | $ | 59,521 | | $ | 56,266 | |

| Long-term borrowings | | $ | 23,760 | | $ | 23,833 | | $ | 24,381 | | $ | 21,578 | | $ | 22,453 | |

See the Consolidated Financial Statements and notes thereto and supplementary data on pages [removed: 32 — 69.][added: 29 – 66.]

The [removed: Company’s] [added: Company's] principal executive officer and its principal financial officer have concluded that the [removed: Company’s] [added: Company's] disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective as of October [removed: 31, 2016,] [added: 29, 2017,] based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act.

Management assessed the effectiveness of the [removed: Company’s] [added: Company's] internal control over financial reporting as of October [removed: 31, 2016,] [added: 29, 2017,] using the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on that assessment, management believes that, as of October [removed: 31, 2016,] [added: 29, 2017,] the [removed: Company’s] [added: Company's] internal control over financial reporting was effective.

The information regarding directors in the definitive proxy statement expected to be filed no later than January [removed: 13, 2017] [added: 12, 2018] (proxy statement), under the captions [removed: “Election] [added: "Election] of [removed: Directors,”] [added: Directors,"] and in the second bullet point in the [removed: “Audit] [added: "Audit] Review [removed: Committee”] [added: Committee"] item under the caption [removed: “Board Committees,”] [added: "Board Committees,"] is incorporated herein by reference.

The Company has adopted a code of ethics that applies to its [added: executives, including its] principal executive officer, principal financial officer and principal accounting officer.

This code of ethics and the [removed: Company’s] [added: Company's] corporate governance policies are posted on the [removed: Company’s] [added: Company's] website at [removed: http://www.JohnDeere.com.][added: http://www.JohnDeere.com/Governance.]

[removed: (a)] _Securities authorized for issuance under equity compensation plans._

[removed: (b)] _Security ownership of certain beneficial owners._

[removed: (c)] _Security ownership of management._

The information on shares of common stock of the Company beneficially owned by, and under option to (i) each director, (ii) certain named executive officers and (iii) the directors and officers as a group, contained in the proxy statement under the captions [removed: “Security] [added: "Security] Ownership of Certain Beneficial Owners and [removed: Management”] [added: Management"] and [removed: “Executive] [added: "Executive] Compensation Tables - Outstanding Equity Awards at Fiscal [removed: 2016 Year-End”] [added: 2017 Year-End"] is incorporated herein by reference.

[removed: (d)] _Change in control._

(a)

(b)

(c)

(d)

| | | [removed: Page] | | [added: Page] |

| (1) [removed: _Financial Statements_] | | [added: _Financial Statements_] | | |

| [removed: [](#SCI) [Statement] [added: | | [ Statement] of Consolidated Income for the years ended October [removed: 31,] [added: 29, 2017, October 30,] 2016, [removed: 2015] and [removed: 2014](#SCI) |] [added: November 1, 2015](#inc_fe)] | | [ [removed: 32](#SCI) |] [added: 29](#inc_fe)] |

| [removed: [](#SCCI) [Statement] [added: | | [ Statement] of Consolidated Comprehensive Income for the years ended October [removed: 31,] [added: 29, 2017, October 30,] 2016, [removed: 2015] and [removed: 2014](#SCCI) |] [added: November 1, 2015](#com_fg)] | | [ [removed: 33](#SCCI) |] [added: 30](#com_fg)] |

| [removed: [](#CBS) [Consolidated] [added: | | [ Consolidated] Balance Sheet as of October [removed: 31, 2016] [added: 29, 2017] and [removed: 2015](#CBS) |] [added: October 30, 2016](#bal_fi)] | | [ [removed: 34](#CBS) |] [added: 31](#bal_fi)] |

| [removed: [](#SCCF) [Statement] [added: | | [ Statement] of Consolidated Cash Flows for the years ended October [removed: 31,] [added: 29, 2017, October 30,] 2016, [removed: 2015] and [removed: 2014](#SCCF) |] [added: November 1, 2015](#cas_fk)] | | [ [removed: 35](#SCCF) |] [added: 32](#cas_fk)] |

| [removed: [](#SCCSE) [Statement] [added: | | [ Statement] of Changes in Consolidated Stockholders' Equity for the years ended [added: November 1, 2015,] October [removed: 31,] [added: 30,] 2016, [removed: 2015] and [removed: 2014](#SCCSE) |] [added: October 29, 2017](#cha_fm)] | | [ [removed: 36](#SCCSE) |] [added: 33](#cha_fm)] |

| [removed: [](#NCFS) [Notes] [added: | | [ Notes] to Consolidated Financial [removed: Statements](#NCFS) |] [added: Statements](#notes_fo)] | | [ [removed: 37](#NCFS) |] [added: 34](#notes_fo)] |

| (2) [added: | |] _Schedule to Consolidated Financial Statements_ | | | [removed: | |]

| [removed: [](#19008-4-GG_SCHEDULEII_012120) [Schedule] [added: | | [ Schedule] II—Valuation and Qualifying Accounts for the years ended October [removed: 31,] [added: 29, 2017, October 30,] 2016, [removed: 2015] and [removed: 2014](#19008-4-GG_SCHEDULEII_012120) |] [added: November 1, 2015](#sch_jg)] | | [ [removed: 73](#19008-4-GG_SCHEDULEII_012120) |] [added: 73](#sch_jg)] |

| (3) [removed: _Exhibits_] | | [added: _Exhibits_] | | |

[added: | | |] See the "Index to Exhibits" on pages [removed: 74 - 76] [added: 68 – 70] of this report [added: | | |]

[added: | | |] Certain instruments relating to long-term borrowings, constituting less than 10 percent of registrant's total assets, are not filed as exhibits herewith pursuant to Item 601(b)4(iii)(A) of Regulation S-K. [added: Registrant agrees to file copies of such instruments upon request of the Commission. | | |]

[added: |] Financial Statement Schedules Omitted [added: | | | | |]

[added: | | |] The following schedules for the Company and consolidated subsidiaries are omitted because of the absence of the conditions under which they are required: I, III, IV and V. [added: | | |]

| RESULTS OF OPERATIONS FOR THE YEARS ENDED OCTOBER [removed: 31,] [added: 29, 2017, OCTOBER 30,] 2016, [removed: 2015] AND [removed: 2014] [added: NOVEMBER 1, 2015] |

The information in the following discussion is presented in a format that includes information grouped as consolidated, equipment [removed: operations] [added: operations,] and financial services.

The company's agriculture and turf equipment sales [removed: decreased 7] [added: increased 9] percent in [removed: 2016] [added: 2017] and are [removed: forecast] [added: projected] to [removed: decrease 1] [added: increase about 9] percent for [removed: 2017.][added: 2018.]

Industry agricultural machinery sales in the U.S. and Canada for [removed: 2017] [added: 2018] are forecast to [removed: decrease] [added: increase] 5 to 10 percent, compared to [removed: 2016.][added: 2017.]

Industry sales in the European Union (EU)28 member nations are forecast to [removed: decline] [added: increase] approximately 5 percent in [removed: 2017,] [added: 2018,] while South American industry sales are projected to [removed: increase] [added: be] about [removed: 15] [added: the same or increase 5] percent from [removed: 2016] [added: 2017] levels.

Asian sales are [removed: projected] [added: forecast] to be about the same [removed: or increase slightly] in [removed: 2017.][added: 2018.]

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be approximately the same for [removed: 2017.][added: 2018.]

The company's construction and forestry sales [removed: decreased 18] [added: increased 17] percent in [removed: 2016] [added: 2017] and are forecast to increase about [removed: 1] [added: 69] percent in [removed: 2017.][added: 2018.]

Global forestry industry sales are expected to be [removed: approximately] [added: about] the same [added: to 5 percent higher] in [removed: 2017,] [added: 2018,] compared to [removed: 2016.][added: 2017.]

Net income of the company's financial services operations attributable to Deere & Company in [removed: 2017] [added: 2018] is expected to be approximately [removed: $480] [added: $515] million.

Items of concern include the uncertainty of the effectiveness of governmental actions in respect to monetary and fiscal policies, the [removed: global economic recovery, the] impact of sovereign debt, eurozone issues, capital market disruptions, trade agreements, changes in demand and pricing for used equipment, and geopolitical events.

The company completed a successful year [removed: in spite of continuing weakness in the global agricultural] [added: as markets for farm] and construction equipment [removed: sectors.][added: improved.]

Net sales of the worldwide equipment operations declined 9 percent in 2016 to $23,387 million from $25,775 million [removed: last year.][added: in 2015.]

[removed: Sales] [added: 2016 sales] included price realization of 2 percent and an unfavorable currency translation effect of 2 percent.

Equipment net sales in the United States and Canada decreased 13 percent [removed: for] [added: in] 2016.

Outside the U.S. and Canada, net sales decreased 3 percent [removed: for the year,] [added: in 2016,] with an unfavorable currency translation effect of 4 [removed: percent for 2016.][added: percent.]

The operating profit decline was primarily on account of reduced shipment volumes, the unfavorable effects of foreign currency [removed: exchange] [added: exchange,] and a less favorable product mix, partially offset by price realization, lower production costs, lower selling, administrative and general [removed: expenses] [added: expenses,] and a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne [removed: Landscape Supply, Inc. (SiteOne)] (see Note 5).

[removed: Prior year] [added: The] results [added: in 2015 also] benefited from a gain on the sale of the crop insurance business (see Note 4).

The cost of sales to net sales ratio for 2016 was 78.0 percent, compared with 78.1 percent [removed: last year.][added: in 2015.]

[removed: Other income increased due primarily to a gain on the sale of a partial interest in SiteOne] (see Note 5) and was primarily offset by the gain on the sale of the [removed: Crop Insurance] [added: crop insurance] operations in 2015 (see Note 4).

[added: |] Selling, administrative and general expenses [removed: decreased due primarily to][added: | | | 3,066.6 | | | 2,763.7 | | | 2,873.3 | |]

[added: Selling, administrative and general expenses decreased due primarily to] lower pension and postretirement benefit expenses, lower incentive compensation [removed: expense] [added: expense,] and the favorable effects of currency translation, partially offset by a higher provision for credit losses.

In [removed: 2017,] [added: 2018,] the expected return will be approximately [removed: 7.2] [added: 6.8] percent.

The company's postretirement costs in [removed: 2017] [added: 2018] are expected to increase approximately [removed: $30] [added: $10] million.

Total company contributions in [removed: 2017] [added: 2018] are expected to be approximately [removed: $97] [added: $137] million, which are primarily direct benefit payments for unfunded plans.

The Wirtgen acquisition is expected to add 54 percent to the construction and forestry annual sales forecast (see Note 30).

Sales of farm machinery in South America made especially strong gains.

The Wirtgen acquisition was finalized in December, which will establish the company as a more prominent participant in the global construction equipment markets.

The company is confident in the present course and believes it is positioned to deliver stronger, more consistent results in the future.

| 2017 COMPARED WITH 2016 |

Worldwide net sales and revenues increased 12 percent to $29,738 million in 2017, compared with $26,644 million in 2016.

Other income increased due primarily to the gain on the sale of the remaining interest in SiteOne (see Note 5).

Selling, administrative and general expenses increased due primarily to higher incentive compensation expense, higher commissions paid to dealers on direct sales, and expenses related to voluntary employee-separation programs.

Other operating expenses increased primarily due to higher depreciation of equipment on operating leases, partially offset by lower losses on lease residual values.

7.3 percent in 2016, or $807 million in 2017 and $810 million in 2016.

Operating profit was higher due primarily to increased shipment volumes, a gain on the sale of the remaining interest in SiteOne (see Note 5), price realization, and a favorable sales mix, partially offset by increases in production costs, selling, administrative and general expenses, and warranty related expenses.

Net sales increased 17 percent for the year on account of higher shipment volumes, price realization, and the favorable effects of currency translation.

The increase was largely due to lower losses on lease residual values, partially offset by less favorable financing spreads and higher selling, administrative and general expenses.

Interest expense increased 25 percent in

2017 as a result of higher average borrowing rates.

The increase was due primarily to higher shipment volumes, a gain on the sale of the remaining interest in SiteOne (see Note 5), a favorable sales mix, and price realization, partially offset by increases in production costs, selling, administrative and general expenses, and warranty related expenses.

Net sales increased 5 percent due primarily to higher shipment volumes.

Net sales increased 20 percent in 2017 compared to 2016.

Net sales and revenues are projected to increase about 19 percent for fiscal 2018, with net income attributable to Deere & Company of about $2.6 billion.

The acquisition of the Wirtgen Group, which closed in December 2017, is forecast to contribute about $3.1 billion in net sales in fiscal 2018 (see Note 30).

Wirtgen is expected to add about 12 percent to the company's sales for the full year and about 6 percent for the first quarter in comparison with 2017.

After estimated expenses for purchase accounting and transaction costs, Wirtgen is expected to contribute about $75 million to operating profit and about $25 million to net income in fiscal 2018.

Asian sales are projected to be about the same with strength in India offsetting weakness in China.

same for 2018.

The company's turf sales are expected to outperform the industry owing to the success of new products.

The Wirtgen acquisition is expected to add about 54 percent to the segment's sales forecast for the year (see Note 30).

The outlook reflects moderate economic growth worldwide, including higher housing starts in the U.S. and increased activity in the oil and gas sector.

In forestry, global industry sales are expected to be about the same to 5 percent higher than in 2017, mainly as a result of improved lumber prices in North America.

The outlook reflects a higher average portfolio, partially offset by increased selling, administrative and general expenses.

carbon and other greenhouse gas emissions, noise and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor regulations; changes to accounting standards; changes in tax rates, estimates, laws, and regulations and company actions related thereto; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

Additionally, customer confidence levels may result in declines in credit applications and

Further information concerning the company and its businesses, including factors that could materially affect the company's financial results, is included in the company's other filings with the SEC.

Other income increased due primarily to a gain on the sale of a partial interest in SiteOne

borrowing rates, partially offset by lower average borrowings.

Cash inflows from financing activities were $4,287 million in 2017 due primarily to an increase in borrowings of $4,616 million and proceeds from issuance of common stock (resulting from the exercise of stock options) of $529 million, partially offset by dividends paid of $764 million.

The increase in cash and cash equivalents was primarily related to the

pending Wirtgen acquisition which closed on December 1, 2017 (see Note 30).

At October 29, 2017, foreign subsidiaries also held cash of approximately $3,624 million for the Wirtgen acquisition, which closed on December 1, 2017 (see Note 30).

Included in the total credit lines at October 29, 2017 were 364-day credit facility agreements of $1,750 million, expiring in February 2018, and $750 million, expiring in October 2018.

Trade receivables increased by $914 million in 2017 due primarily to higher shipment volumes.

Registrant agrees to file copies of such instruments upon request of the Commission.

Designing and producing products with engines that continue to meet high performance standards and increasingly stringent emissions regulations is one of the company's major priorities.

The results reflect adept execution of the operating plans and disciplined cost management as well as the impact of a broad product portfolio.

The forecast calls for lower results in

2017, but the outlook is considerably better than in earlier downturns with a more durable business model and a focus on further efficiency gains.

The company remains in a strong position to carry out its growth plans and attract new customers throughout the world.

The company is confident in the present direction and believes it will provide value to customers and investors in the future.

reduction in both selling, administrative and general expenses and production costs.

For fiscal year 2017, net income attributable to Deere & Company is anticipated to be about $1.4 billion.

This gain is not included in the fiscal year 2017 net income forecast above.

recorded in the fourth quarter of 2016, and $100 million will be recorded primarily in the first quarter of 2017.

The decline, which reflects the continuing impact of low commodity prices and weak farm incomes, is expected to be felt in the sale of both large and small models of equipment.

Asian sales are projected to be about the same to up slightly, benefiting from higher sales in India.

The forecast reflects the impact of generally slow economic growth worldwide.

In forestry, global industry sales are expected to be about the same as in 2016 with some moderation in the North American market.

diseases and their effects on poultry, beef and pork consumption and prices, crop pests and diseases, and the level of farm product exports (including concerns about genetically modified organisms).

impact the stability of the financial markets, availability of credit, currency exchange rates, interest rates, financial institutions, and political, financial and monetary systems.

| 2015 COMPARED WITH 2014 |

Net sales and revenues decreased 20 percent to $28,863 million in 2015, compared with $36,067 million in 2014.

The operating profit decline was due primarily to lower shipment volumes, the impact of a less favorable product mix and the unfavorable effects of foreign currency exchange.

The lower rate resulted mainly from a reduction of a valuation allowance recorded during the fourth quarter of 2015 due to a change in the expected realizable value of a deferred tax asset.

Results improved due to growth in the average credit portfolio, the previously announced crop insurance sale and higher crop insurance margins experienced prior to divestiture (see Note 4), and lower selling, administrative and general expenses.

These factors were partially offset by the unfavorable effects of foreign currency exchange translation, less favorable financing spreads and higher losses on residual values primarily for construction equipment operating leases.

The results in 2014 also benefited from a more favorable effective tax rate.

following discussion of the "Worldwide Financial Services Operations."

Other income decreased due primarily to a reduction in crop insurance premiums as a result of the sale of the Crop Insurance operations (see Note 4), partially offset by the gain on the sale of the Crop Insurance operations and higher extended warranty revenue.

Research and development costs decreased largely due to the effect of currency translation.

Selling, administrative and general expenses decreased mainly due to the effect of currency translation, lower incentive compensation and dealer commission expenses, the sale of the Water and Crop Insurance operations, and the deconsolidation of Landscapes (see Note 4).

Other operating expenses decreased primarily due to a reduction in crop insurance claims, the Water operations' impairment and sale in 2014 (see Note 4), the effect of currency translation, partially offset by higher depreciation of equipment on operating leases.

These factors were partially offset by price realization.

Net sales decreased 9 percent in 2015 mainly as a result of lower shipment volumes and the unfavorable effect of currency translation, partially offset by price realization.

Operating profit declined mainly due to lower shipment volumes, the unfavorable

The results improved due to growth in the average credit portfolio, the previously announced Crop Insurance operations sale (see Note 4) and higher crop insurance margins experienced prior to the divestiture, and lower selling, administrative and general expenses.

Interest expense increased 6 percent in 2015 as a result of higher average borrowings and higher average interest rates.

The decline was due primarily to lower shipment volumes and the impact of a less favorable product mix.

The decline was partially offset by price realization.

Net sales decreased 18 percent due primarily to lower shipment volumes and the unfavorable effects of currency translation, partially offset by price realization.

Net sales were 28 percent lower primarily reflecting decreased shipment volumes and the unfavorable effects of foreign currency translation, partially offset by price realization.

Cash outflows from investing activities were $1,177 million in 2016, due primarily to purchases of property and equipment of $644 million, the cost of receivables

Cash outflows from financing activities were $2,401 million in 2016 due primarily to a decrease in borrowings of $1,411 million, dividends paid of $761 million and repurchases of common stock of $205 million.