UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report: May 18, 2011
(Date of earliest event reported)
DEERE & COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE |
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1-4121 |
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36-2382580 |
(State or other jurisdiction of |
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(Commission File Number) |
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(IRS Employer Identification No.) |
One John Deere Place
Moline, Illinois 61265
(Address of principal executive offices and zip code)
(309) 765-8000
(Registrants telephone number, including area code)
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(Former name or former address, if changed since last report.) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Items 2.02
and 8.01 Results of Operations and Financial Condition and Other Events.
The following consists of Deere & Companys press release dated May 18, 2011 concerning Second Quarter of fiscal 2011 financial results and supplemental financial information filed as Exhibit 99.1 to this report and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
(99.1) Press release and supplemental financial information (Filed herewith)
Items 2.02
and 7.01 Results of Operations and Financial Condition and Regulation FD Disclosure (Furnished herewith)
The attached schedules of Other Financial Information (Exhibit 99.2) and Second Quarter 2011 Earnings Conference Call Information (Exhibit 99.3) are furnished under Form 8-K Items 2.02 and 7.01. The information is not filed for purposes of the Securities Exchange Act of 1934 and is not deemed incorporated by reference by any general statements incorporating by reference this report or future filings into any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Deere & Company specifically incorporates the information by reference.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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DEERE & COMPANY | |
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By: |
/s/ Gregory R. Noe |
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Gregory R. Noe |
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Secretary |
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Dated: May 18, 2011 |
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Exhibit Index
Number and Description of Exhibit | ||
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Press Release and Supplemental Financial Information (Filed herewith) | |
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Second Quarter 2011 Earnings Conference Call Information (Furnished herewith) |
(Filed herewith)
For immediate release
News Media Contact:
Ken Golden
Director, Global Public Relations
Deere & Company
309-765-5678
DEERE REPORTS RECORD SECOND-QUARTER EARNINGS
OF $904 MILLION
¾ Income jumps 65 percent on 25 percent increase in net sales and revenues.
¾ Sales and profit set all-time quarterly record.
¾ Performance paced by strong demand for farm machinery.
¾ Earnings forecast for year increased to about $2.65 billion.
MOLINE, Illinois (May 18, 2011) Net income attributable to Deere & Company was $904.3 million, or $2.12 per share, for the second quarter ended April 30, compared with $547.5 million, or $1.28 per share, for the same period last year.
Second-quarter 2010 earnings were $677.0 million, or $1.58 per share, excluding a tax charge of $129.5 million, or $0.30 per share, related to the enactment of U.S. health-care legislation. (Information on non-GAAP financial measures is included in the appendix.)
For the first six months of the year, net income attributable to Deere & Company was $1.418 billion, or $3.32 per share, compared with $790.7 million, or $1.85 per share, last year. Six-month 2010 results also were affected by the tax charge.
Deere Announces Second-Quarter Earnings |
Worldwide net sales and revenues increased 25 percent, to $8.910 billion, for the second quarter and were up 26 percent to $15.029 billion for six months. Net sales of the equipment operations were $8.328 billion for the quarter and $13.841 billion for six months, compared with $6.548 billion and $10.785 billion for the corresponding periods last year.
With our record second-quarter performance, John Deere is well on its way to a year of exceptional results, said Samuel R. Allen, chairman and chief executive officer. Our success reflects strong demand for our innovative lines of equipment and the continued skillful execution of our business plans. Deeres actions to expand its global competitive position are attracting new customers worldwide and making a major contribution to our results.
Sales of large farm machinery, particularly in the United States, Canada and Brazil, are continuing to support the companys performance. Construction equipment shipments are moving higher in spite of lingering weakness in the residential and commercial construction sectors. Markets for construction equipment in the U.S. and for farm machinery in Europe are in the early stages of recovery, Allen said. Were optimistic about the longer-term opportunity for further improvement in these and other key areas.
Summary of Operations
Net sales of the worldwide equipment operations increased 27 percent for the quarter and 28 percent for six months compared with the same periods a year ago. Sales included a favorable currency-translation effect of 3 percent for the quarter and 2 percent for six months and price realization of 4 percent for the quarter and 3 percent for the year to date. Equipment net sales in the United States and Canada increased 17 percent for the quarter and were up 24 percent year to date. Outside the U.S. and Canada, net sales were up 45 percent for the quarter and 36 percent for six months, with
Deere Announces Second-Quarter Earnings |
favorable currency-translation effects of 8 percent and 4 percent for these periods.
Deeres equipment operations reported operating profit of $1.268 billion for the quarter and $1.914 billion for six months, compared with $988 million and $1.303 billion last year.
Results were better in both periods primarily due to the impact of higher shipment and production volumes and improved price realization, partially offset by increased raw-material costs and higher selling, administrative and general expenses.
Net income of the companys equipment operations was $797 million for the quarter and $1.193 billion for six months, compared with $454 million and $623 million for the respective periods last year. The same operating factors mentioned above, along with a lower effective tax rate, affected both quarterly and six-month results. The lower tax rate was mainly due to the previously mentioned tax charge in 2010.
Financial services reported net income attributable to Deere & Company of $105.1 million for the quarter and $223.3 million for six months compared with $86.9 million and $172.0 million last year. Results were higher for both periods primarily due to growth in the portfolio and a lower provision for credit losses.
Company Outlook & Summary
Company equipment sales are projected to be up 21 to 23 percent for fiscal 2011 and up about 20 percent for the third quarter compared with the same periods a year ago. Included is a favorable currency-translation impact of about 3 percent for the year and about 6 percent for the quarter. For the full year, net income attributable to Deere & Company is anticipated to be about $2.650 billion.
The annual forecast includes a negative impact of approximately $300 million in sales and $70 million in operating profit resulting from the recent Japanese earthquake and tsunami.
Deere Announces Second-Quarter Earnings |
According to Allen, the companys record of strong financial performance is helping support aggressive levels of organic growth. Our consistent investment in new products and expanded global capacity puts the company on a solid footing for the future, he said. As a result, John Deere is well-positioned to address the worlds growing need for agricultural commodities, shelter and infrastructure. We believe these developments will have a positive impact on demand for productive farm and construction equipment in the years ahead and hold exciting promise for the company well into the future.
* * *
Equipment Division Performance
Agriculture & Turf. Sales rose 24 percent for the quarter and 23 percent for six months largely due to higher shipment volumes, improved price realization and the favorable effects of currency translation.
Operating profit was $1.163 billion for the quarter and $1.720 billion year to date, compared with $952 million and $1.304 billion, respectively, last year. Operating profit was higher in both periods primarily due to the impact of higher shipment and production volumes and improved price realization, partially offset by increased raw-material costs and higher selling, administrative and general expenses.
Construction & Forestry. Construction and forestry sales climbed 46 percent for the quarter and 61 percent for six months mainly due to higher shipment volumes and improved price realization. The division had operating profit of $105 million for the quarter and $194 million for six months, compared with last years operating profit of $36 million in the quarter and an operating loss of $1 million for the six-month period. The improvement in both periods was primarily due to higher shipment and production volumes and improved price realization, partially offset by higher selling, administrative and general expenses and increased raw-material costs.
Deere Announces Second-Quarter Earnings |
Market Conditions & Outlook
Agriculture & Turf. Worldwide sales of agriculture and turf equipment are forecast to increase by about 20 percent for full-year 2011, benefiting from favorable global farm conditions and a positive currency-translation impact of about 4 percent.
Farmers in most of the worlds major markets are experiencing solid levels of income due to strong global demand for agricultural commodities, low grain stocks in relation to use, and relatively high prices for key crops. Farm commodity prices have escalated sharply since the beginning of the year and are expected to average well above prior-year levels for 2011.
After staging a healthy advance in 2010, industry farm-machinery sales in the U.S. and Canada are forecast to be up 5 to 10 percent for 2011. Overall conditions remain positive and demand for high-horsepower equipment continues to be strong. Production limits and transitional issues, both associated with the broad launch of Interim Tier 4 emissions-compliant equipment, are having a moderating effect on near-term sales potential.
Industry sales in the EU 27 nations of Western and Central Europe are forecast to increase by about 15 percent, while sales in the Commonwealth of Independent States are expected to see notably stronger gains from the previous years depressed level. Farm conditions are strengthening in the European and CIS markets. Sales in Asia are forecast to grow strongly again this year.
In South America, industry sales for the year are projected to be down 5 to 10 percent versus the strong levels of 2010. Weakness in the small-tractor market in Brazil and recently enacted trade policies in Argentina are contributing to the decline. Deeres own sales in the region are benefiting from a broader lineup of recently introduced products.
Industry sales of turf and utility equipment in the U.S. and Canada are expected to be flat after experiencing modest recovery in 2010.
Deere Announces Second-Quarter Earnings |
Construction & Forestry. Deeres worldwide sales of construction and forestry equipment are forecast to rise by about 35 percent for 2011. The increase reflects somewhat-improved market conditions in relation to the prior years low level and increased activity outside of the U.S. and Canada. Construction equipment sales to independent rental companies are seeing growth, while world forestry markets are experiencing further improvement as a result of strong wood and pulp prices.
Financial Services. Full-year 2011 net income attributable to Deere & Company for the financial services operations is forecast to be approximately $435 million. The forecast increase from 2010 is primarily due to growth in the portfolio and a lower provision for credit losses.
John Deere Capital Corporation
The following is disclosed on behalf of the companys credit subsidiary, John Deere Capital Corporation (JDCC), in connection with the disclosure requirements applicable to its periodic issuance of debt securities in the public market.
Net income attributable to John Deere Capital Corporation was $85.9 million for the second quarter and $169.6 million year to date, compared with $69.4 million and $133.4 million for the respective periods last year. Results were higher for both periods primarily due to growth in the portfolio and a lower provision for credit losses.
Net receivables and leases financed by JDCC were $22.482 billion at April 30, 2011, compared with $19.818 billion last year.
Deere Announces Second-Quarter Earnings |
APPENDIX
DEERE & COMPANY
SUPPLEMENTAL STATEMENT OF CONSOLIDATED INCOME INFORMATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Millions, except per-share amounts)
(Unaudited)
In addition to reporting financial results in conformity with accounting principles generally accepted in the United States (GAAP), the company also discusses non-GAAP measures that exclude the tax charge due to the enactment of U.S. health-care legislation during the companys second fiscal quarter in 2010. Net income attributable to Deere & Company and diluted earnings per share measures that exclude this item are not in accordance with, nor are they a substitute for, GAAP measures. The company believes that discussion of results excluding this item provides a useful analysis of ongoing operating trends.
The table below provides a reconciliation of the non-GAAP financial measure with the most directly comparable GAAP financial measure for the three months ended April 30, 2010.
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Three Months Ended |
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April 30, 2010 |
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Net Income |
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Diluted |
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GAAP measure |
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$ |
547.5 |
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$ |
1.28 |
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Tax charge due to enactment of Patient Protection and Affordable Care Act as amended by the Healthcare and Education Reconciliation Act of 2010 |
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129.5 |
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.30 |
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Non-GAAP measure |
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$ |
677.0 |
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1.58 |
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Deere Announces Second-Quarter Earnings |
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under Company Outlook & Summary, Market Conditions & Outlook, and other forward-looking statements herein that relate to future events, expectations, trends and operating periods involve certain factors that are subject to change, and important risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the companys businesses.
The companys agricultural equipment business is subject to a number of uncertainties including the many interrelated factors that affect farmers confidence. These factors include worldwide economic conditions, demand for agricultural products, world grain stocks, weather conditions (including its effects on timely planting and harvesting), soil conditions, harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, the growth of non-food uses for some crops (including ethanol and biodiesel production), real estate values, available acreage for farming, the land ownership policies of various governments, changes in government farm programs and policies (including those in the U.S., Russia, Argentina and Brazil), international reaction to such programs, global trade agreements, animal 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).
Factors affecting the outlook for the companys turf and utility equipment include general economic conditions, consumer confidence, weather conditions, customer profitability, consumer borrowing patterns, consumer purchasing preferences, housing starts, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.
General economic conditions, consumer spending patterns, real estate and housing prices, the number of housing starts and interest rates are
Deere Announces Second-Quarter Earnings |
especially important to sales of the companys construction and forestry equipment. The levels of public and non-residential construction also impact the results of the companys construction and forestry segment. Prices for pulp, paper, lumber and structural panels are important to sales of forestry equipment.
All of the companys businesses and its reported results are affected by general economic conditions in the global markets in which the company operates, especially material changes in economic activity in these markets; customer confidence in general economic conditions; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates; and inflation and deflation rates. General economic conditions can affect demand for the companys equipment as well.
Customer and company operations and results could be affected by changes in weather patterns (including the effects of dry weather in France, Germany and Poland and the effects of flooding in the U.S.); the political and social stability of the global markets in which the company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts and the threat thereof; and the spread of major epidemics.
Significant changes in market liquidity conditions and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the companys earnings and cash flows. Market conditions could also negatively impact customer access to capital for purchases of the companys products; borrowing and repayment practices; and the number and size of customer loan delinquencies and defaults. A sovereign debt crisis, in Europe or elsewhere, could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, customers, and company operations and results. State debt crises also could negatively impact customers, suppliers, demand for equipment, and company operations and results. The companys investment management activities could be impaired by changes in the equity and bond markets, which would negatively affect earnings.
Deere Announces Second-Quarter Earnings |
Additional factors that could materially affect the companys operations, access to capital, expenses and results include changes in and the impact of governmental trade, banking, monetary and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives and other areas, and governmental programs in particular jurisdictions or for the benefit of certain industries or sectors (including protectionist policies and trade and licensing restrictions that could disrupt international commerce); actions by the U.S. Federal Reserve Board and other central banks; actions by the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission and other financial regulators; actions by environmental, health and safety regulatory agencies, including those related to engine emissions (in particular Interim Tier 4 and Final Tier 4 emission requirements), carbon emissions, noise and the risk of climate change; changes in labor regulations; changes to accounting standards; changes in tax rates and regulations; and actions by other regulatory bodies including changes in laws and regulations affecting the sectors in which the company operates.
Other factors that could materially affect results include production, design and technological innovations and difficulties, including capacity and supply constraints and prices; the availability and prices of strategically sourced materials, components and whole goods; delays or disruptions in the companys supply chain due to weather, natural disasters or financial hardship or the loss of liquidity by suppliers (including the impact of the earthquake and resulting events in Japan); start-up of new plants and new products; the success of new product initiatives and customer acceptance of new products; changes in customer product preferences and sales mix whether as a result of changes in equipment design to meet government regulations or for other reasons; oil and energy prices and supplies; the availability and cost of freight; actions of competitors in the various industries in which the company competes, particularly price discounting; dealer practices especially as to levels of new and used field inventories; labor relations; acquisitions and divestitures of businesses, the integration of
Deere Announces Second-Quarter Earnings |
new businesses; the implementation of organizational changes; difficulties related to the conversion and implementation of enterprise resource planning systems that disrupt business, negatively impact supply or distribution relationships or create higher than expected costs; changes in company declared dividends and common stock issuances and repurchases.
Company results are also affected by changes in the level of employee retirement benefits, changes in market values of investment assets and the level of interest rates, which impact retirement benefit costs, and significant changes in health care costs including those which may result from governmental action.
The liquidity and ongoing profitability of John Deere Capital Corporation and other credit subsidiaries depend largely on timely access to capital to meet future cash flow requirements and fund operations and the costs associated with engaging in diversified funding activities and to fund purchases of the companys products. If market uncertainty increases and general economic conditions worsen, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.
The companys outlook is based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The company, except as required by law, undertakes no obligation to update or revise its outlook, whether as a result of new developments or otherwise. Further information concerning the company and its businesses, including factors that potentially could materially affect the companys financial results, is included in the companys other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the companys most recent annual report on Form 10-K and quarterly reports on Form 10-Q).
Deere Announces Second-Quarter Earnings |
Second Quarter 2011 Press Release
(in millions of dollars)
Unaudited
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Three Months Ended |
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Six Months Ended |
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2011 |
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2010 |
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% |
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2011 |
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2010 |
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% |
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Net sales and revenues: |
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Agriculture and turf |
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$ |
6,999 |
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$ |
5,637 |
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+24 |
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$ |
11,369 |
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$ |
9,245 |
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+23 |
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Construction and forestry |
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1,329 |
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911 |
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+46 |
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2,472 |
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1,540 |
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+61 |
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Total net sales |
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8,328 |
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6,548 |
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+27 |
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13,841 |
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10,785 |
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+28 |
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Financial services * |
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491 |
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499 |
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-2 |
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998 |
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1,005 |
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-1 |
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Other revenues |
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91 |
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84 |
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+8 |
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190 |
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176 |
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+8 |
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Total net sales and revenues |
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$ |
8,910 |
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$ |
7,131 |
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+25 |
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$ |
15,029 |
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$ |
11,966 |
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+26 |
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Operating profit (loss): ** |
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Agriculture and turf |
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$ |
1,163 |
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$ |
952 |
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+22 |
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$ |
1,720 |
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$ |
1,304 |
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+32 |
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Construction and forestry |
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105 |
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36 |
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+192 |
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194 |
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(1) |
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Financial services * |
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163 |
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110 |
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+48 |
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335 |
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212 |
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+58 |
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Total operating profit |
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1,431 |
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1,098 |
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+30 |
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2,249 |
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1,515 |
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+48 |
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Other reconciling items *** |
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(527) |
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(551) |
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-4 |
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(831) |
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(724) |
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+15 |
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Net income attributable to Deere & Company |
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$ |
904 |
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$ |
547 |
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+65 |
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$ |
1,418 |
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$ |
791 |
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+79 |
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Equipment operations outside the U.S. and Canada: |
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Net sales |
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$ |
3,403 |
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$ |
2,341 |
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+45 |
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$ |
5,496 |
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$ |
4,052 |
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+36 |
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Operating profit |
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334 |
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207 |
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+61 |
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548 |
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325 |
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+69 |
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* At the beginning of the first quarter of 2011, the Company combined the reporting of the credit segment and the Other segment into the financial services segment. The Other segment consisted of an insurance business related to extended warranty policies that did not meet the materiality threshold of reporting. The revenues and operating profit for previous periods were revised as shown above or as follows:
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Third Quarter |
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Years |
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2010 |
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2010 |
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2009 |
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Financial Services |
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Revenues |
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528 |
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2,073 |
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2,029 |
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Operating profit |
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148 |
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499 |
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242 |
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** Operating profit (loss) 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 or losses.
*** Other reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, income taxes and net income attributable to noncontrolling interests.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended April 30, 2011 and 2010
(In millions of dollars and shares except per share amounts) Unaudited
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2011 |
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2010 |
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Net Sales and Revenues |
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Net sales |
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$ |
8,327.6 |
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$ |
6,548.2 |
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Finance and interest income |
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468.5 |
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435.1 |
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Other income |
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113.6 |
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147.6 |
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Total |
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8,909.7 |
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7,130.9 |
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Costs and Expenses |
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Cost of sales |
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6,106.9 |
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4,765.2 |
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Research and development expenses |
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298.5 |
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266.0 |
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Selling, administrative and general expenses |
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828.2 |
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733.3 |
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Interest expense |
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192.3 |
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207.3 |
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Other operating expenses |
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143.1 |
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170.2 |
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Total |
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7,569.0 |
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6,142.0 |
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Income of Consolidated Group before Income Taxes |
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1,340.7 |
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988.9 |
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Provision for income taxes |
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438.9 |
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448.4 |
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Income of Consolidated Group |
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901.8 |
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540.5 |
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Equity in income of unconsolidated affiliates |
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4.9 |
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9.3 |
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Net Income |
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906.7 |
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549.8 |
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Less: Net income attributable to noncontrolling interests |
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2.4 |
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2.3 |
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Net Income Attributable to Deere & Company |
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$ |
904.3 |
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$ |
547.5 |
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Per Share Data |
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Basic |
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$ |
2.15 |
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$ |
1.29 |
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Diluted |
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$ |
2.12 |
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$ |
1.28 |
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Average Shares Outstanding |
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Basic |
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420.7 |
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424.4 |
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Diluted |
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426.4 |
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429.0 |
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See Condensed Notes to Interim Financial Statements.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Six Months Ended April 30, 2011 and 2010
(In millions of dollars and shares except per share amounts) Unaudited
|
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2011 |
|
2010 |
| ||
Net Sales and Revenues |
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|
|
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Net sales |
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$ |
13,841.4 |
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$ |
10,785.5 |
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Finance and interest income |
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928.6 |
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902.3 |
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Other income |
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258.9 |
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277.9 |
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Total |
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15,028.9 |
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11,965.7 |
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|
|
|
|
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Costs and Expenses |
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|
|
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Cost of sales |
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10,201.0 |
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7,970.7 |
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Research and development expenses |
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567.4 |
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501.7 |
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Selling, administrative and general expenses |
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1,493.1 |
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1,375.6 |
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Interest expense |
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394.8 |
|
425.7 |
| ||
Other operating expenses |
|
285.9 |
|
338.9 |
| ||
Total |
|
12,942.2 |
|
10,612.6 |
| ||
|
|
|
|
|
| ||
Income of Consolidated Group before Income Taxes |
|
2,086.7 |
|
1,353.1 |
| ||
Provision for income taxes |
|
671.0 |
|
558.3 |
| ||
Income of Consolidated Group |
|
1,415.7 |
|
794.8 |
| ||
Equity in income of unconsolidated affiliates |
|
5.4 |
|
.6 |
| ||
Net Income |
|
1,421.1 |
|
795.4 |
| ||
Less: Net income attributable to noncontrolling interests |
|
3.0 |
|
4.7 |
| ||
Net Income Attributable to Deere & Company |
|
$ |
1,418.1 |
|
$ |
790.7 |
|
|
|
|
|
|
| ||
Per Share Data |
|
|
|
|
| ||
Basic |
|
$ |
3.36 |
|
$ |
1.86 |
|
Diluted |
|
$ |
3.32 |
|
$ |
1.85 |
|
|
|
|
|
|
| ||
Average Shares Outstanding |
|
|
|
|
| ||
Basic |
|
421.3 |
|
424.0 |
| ||
Diluted |
|
427.0 |
|
428.2 |
| ||
|
|
|
|
|
|
See Condensed Notes to Interim Financial Statements.
DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions of dollars) Unaudited
|
|
April 30 |
|
October 31 |
|
April 30 |
| |||
|
|
2011 |
|
2010 |
|
2010 |
| |||
Assets |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
|
$ |
3,949.8 |
|
$ |
3,790.6 |
|
$ |
3,614.9 |
|
Marketable securities |
|
239.5 |
|
227.9 |
|
234.2 |
| |||
Receivables from unconsolidated affiliates |
|
45.1 |
|
38.8 |
|
37.7 |
| |||
Trade accounts and notes receivable - net |
|
4,157.4 |
|
3,464.2 |
|
4,014.2 |
| |||
Financing receivables - net |
|
18,455.4 |
|
17,682.2 |
|
15,039.7 |
| |||
Financing receivables securitized - net |
|
2,871.2 |
|
2,238.3 |
|
3,084.6 |
| |||
Other receivables |
|
828.6 |
|
925.6 |
|
610.6 |
| |||
Equipment on operating leases - net |
|
1,945.2 |
|
1,936.2 |
|
1,717.3 |
| |||
Inventories |
|
4,687.0 |
|
3,063.0 |
|
3,002.9 |
| |||
Property and equipment - net |
|
3,968.5 |
|
3,790.7 |
|
4,430.4 |
| |||
Investments in unconsolidated affiliates |
|
220.9 |
|
244.5 |
|
227.0 |
| |||
Goodwill |
|
1,038.7 |
|
998.6 |
|
1,006.4 |
| |||
Other intangible assets - net |
|
130.7 |
|
117.0 |
|
129.3 |
| |||
Retirement benefits |
|
200.8 |
|
146.7 |
|
169.0 |
| |||
Deferred income taxes |
|
2,825.8 |
|
2,477.1 |
|
2,593.4 |
| |||
Other assets |
|
1,020.9 |
|
1,194.0 |
|
1,102.5 |
| |||
Assets held for sale |
|
|
|
931.4 |
|
|
| |||
Total Assets |
|
$ |
46,585.5 |
|
$ |
43,266.8 |
|
$ |
41,014.1 |
|
|
|
|
|
|
|
|
| |||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
| |||
Short-term borrowings |
|
$ |
7,071.9 |
|
$ |
5,325.7 |
|
$ |
3,195.0 |
|
Short-term securitization borrowings |
|
2,821.5 |
|
2,208.8 |
|
3,065.6 |
| |||
Payables to unconsolidated affiliates |
|
193.5 |
|
203.5 |
|
151.4 |
| |||
Accounts payable and accrued expenses |
|
6,777.2 |
|
6,481.7 |
|
5,625.9 |
| |||
Deferred income taxes |
|
162.6 |
|
144.3 |
|
136.5 |
| |||
Long-term borrowings |
|
16,192.2 |
|
16,814.5 |
|
17,375.8 |
| |||
Retirement benefits and other liabilities |
|
5,933.0 |
|
5,784.9 |
|
5,804.5 |
| |||
Total liabilities |
|
39,151.9 |
|
36,963.4 |
|
35,354.7 |
| |||
Total Deere & Company stockholders equity |
|
7,423.3 |
|
6,290.3 |
|
5,650.9 |
| |||
Noncontrolling interests |
|
10.3 |
|
13.1 |
|
8.5 |
| |||
Total stockholders equity |
|
7,433.6 |
|
6,303.4 |
|
5,659.4 |
| |||
Total Liabilities and Stockholders Equity |
|
$ |
46,585.5 |
|
$ |
43,266.8 |
|
$ |
41,014.1 |
|
|
|
|
|
|
|
|
|
See Condensed Notes to Interim Financial Statements.
DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Six Months Ended April 30, 2011 and 2010
(In millions of dollars) Unaudited
|
|
2011 |
|
2010 |
| ||
Cash Flows from Operating Activities |
|
|
|
|
| ||
Net income |
|
$ |
1,421.1 |
|
$ |
795.4 |
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
|
|
|
|
| ||
Provision for doubtful receivables |
|
13.7 |
|
59.3 |
| ||
Provision for depreciation and amortization |
|
448.7 |
|
463.4 |
| ||
Share-based compensation expense |
|
33.1 |
|
51.7 |
| ||
Undistributed earnings of unconsolidated affiliates |
|
4.1 |
|
4.5 |
| ||
Provision (credit) for deferred income taxes |
|
(310.3) |
|
109.1 |
| ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Trade, notes and financing receivables related to sales |
|
(1,228.4) |
|
(1,220.4) |
| ||
Inventories |
|
(1,623.6) |
|
(754.9) |
| ||
Accounts payable and accrued expenses |
|
284.3 |
|
458.6 |
| ||
Accrued income taxes payable/receivable |
|
239.5 |
|
199.1 |
| ||
Retirement benefits |
|
220.2 |
|
(34.5) |
| ||
Other |
|
(167.7) |
|
285.3 |
| ||
Net cash provided by (used for) operating activities |
|
(665.3) |
|
416.6 |
| ||
|
|
|
|
|
| ||
Cash Flows from Investing Activities |
|
|
|
|
| ||
Collections of receivables (excluding receivables related to sales) |
|
6,664.8 |
|
5,889.8 |
| ||
Proceeds from maturities and sales of marketable securities |
|
18.8 |
|
9.2 |
| ||
Proceeds from sales of equipment on operating leases |
|
383.4 |
|
330.9 |
| ||
Government grants related to property and equipment |
|
|
|
21.6 |
| ||
Proceeds from sales of businesses, net of cash sold |
|
893.5 |
|
5.8 |
| ||
Cost of receivables (excluding receivables related to sales) |
|
(7,041.7) |
|
(6,034.9) |
| ||
Purchases of marketable securities |
|
(34.0) |
|
(45.7) |
| ||
Purchases of property and equipment |
|
(441.0) |
|
(311.2) |
| ||
Cost of equipment on operating leases acquired |
|
(265.7) |
|
(208.2) |
| ||
Acquisitions of businesses, net of cash acquired |
|
(46.6) |
|
(41.6) |
| ||
Other |
|
(121.0) |
|
(65.8) |
| ||
Net cash provided by (used for) investing activities |
|
10.5 |
|
(450.1) |
| ||
|
|
|
|
|
| ||
Cash Flows from Financing Activities |
|
|
|
|
| ||
Increase (decrease) in total short-term borrowings |
|
803.2 |
|
(77.3) |
| ||
Proceeds from long-term borrowings |
|
1,440.6 |
|
939.8 |
| ||
Payments of long-term borrowings |
|
(782.1) |
|
(1,609.2) |
| ||
Proceeds from issuance of common stock |
|
160.7 |
|
43.5 |
| ||
Repurchases of common stock |
|
(601.2) |
|
(3.8) |
| ||
Dividends paid |
|
(275.0) |
|
(237.6) |
| ||
Excess tax benefits from share-based compensation |
|
64.7 |
|
13.7 |
| ||
Other |
|
(24.9) |
|
(19.9) |
| ||
Net cash provided by (used for) financing activities |
|
786.0 |
|
(950.8) |
| ||
|
|
|
|
|
| ||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
28.0 |
|
(52.5) |
| ||
|
|
|
|
|
| ||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
159.2 |
|
(1,036.8) |
| ||
Cash and Cash Equivalents at Beginning of Period |
|
3,790.6 |
|
4,651.7 |
| ||
Cash and Cash Equivalents at End of Period |
|
$ |
3,949.8 |
|
$ |
3,614.9 |
|
|
|
|
|
|
|
|
|
See Condensed Notes to Interim Financial Statements.
Condensed Notes to Interim Financial Statements (Unaudited)
(1) Dividends declared and paid on a per share basis were as follows:
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Dividends declared |
|
$ |
.35 |
|
|
$ |
.28 |
|
|
$ |
.70 |
|
|
$ |
.56 |
|
|
Dividends paid |
|
$ |
.35 |
|
|
$ |
.28 |
|
|
$ |
.65 |
|
|
$ |
.56 |
|
|
(2) The calculation of basic net income per share is based on the average number of shares outstanding. The calculation of diluted net income per share recognizes any dilutive effect of share-based compensation.
(3) Total comprehensive income, which includes all changes in the total stockholders equity during the period except transactions with stockholders, was as follows in millions of dollars:
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
906.7 |
|
$ |
549.8 |
|
$ |
1,421.1 |
|
$ |
795.4 |
|
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
| ||||
Retirement benefits adjustment |
|
36.1 |
|
155.2 |
|
102.3 |
|
227.0 |
| ||||
Cumulative translation adjustment |
|
223.7 |
|
34.4 |
|
244.1 |
|
(75.5) |
| ||||
Unrealized gain on derivatives |
|
4.5 |
|
15.6 |
|
9.6 |
|
21.9 |
| ||||
Unrealized gain (loss) on investments |
|
.7 |
|
.3 |
|
(3.4) |
|
.6 |
| ||||
Comprehensive income |
|
$ |
1,171.7 |
|
$ |
755.3 |
|
$ |
1,773.7 |
|
$ |
969.4 |
|
(4) The consolidated financial statements represent the consolidation of all Deere & Companys subsidiaries. In the supplemental consolidating data in Note 5 to the financial statements, Equipment Operations include the Companys agriculture and turf operations and construction and forestry operations, with Financial Services reflected on the equity basis.
(5) SUPPLEMENTAL CONSOLIDATING DATA
STATEMENT OF INCOME
For the Three Months Ended April 30, 2011 and 2010
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
| ||||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||||
Net Sales and Revenues |
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
8,327.6 |
|
|
$ |
6,548.2 |
|
|
|
|
|
| ||
Finance and interest income |
|
18.0 |
|
|
7.6 |
|
$ |
513.0 |
|
|
$ |
482.8 |
| ||
Other income |
|
109.8 |
|
|
99.6 |
|
36.6 |
|
|
73.2 |
| ||||
Total |
|
8,455.4 |
|
|
6,655.4 |
|
549.6 |
|
|
556.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales |
|
6,107.2 |
|
|
4,765.6 |
|
|
|
|
|
| ||||
Research and development expenses |
|
298.5 |
|
|
266.0 |
|
|
|
|
|
| ||||
Selling, administrative and general expenses |
|
728.4 |
|
|
611.1 |
|
102.8 |
|
|
124.9 |
| ||||
Interest expense |
|
50.1 |
|
|
45.4 |
|
156.2 |
|
|
171.8 |
| ||||
Interest compensation to Financial Services |
|
48.5 |
|
|
49.2 |
|
|
|
|
|
| ||||
Other operating expenses |
|
44.7 |
|
|
39.4 |
|
127.9 |
|
|
149.3 |
| ||||
Total |
|
7,277.4 |
|
|
5,776.7 |
|
386.9 |
|
|
446.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income of Consolidated Group before Income Taxes |
|
1,178.0 |
|
|
878.7 |
|
162.7 |
|
|
110.0 |
| ||||
Provision for income taxes |
|
381.0 |
|
|
424.8 |
|
57.9 |
|
|
23.4 |
| ||||
Income of Consolidated Group |
|
797.0 |
|
|
453.9 |
|
104.8 |
|
|
86.6 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
|
|
|
| ||||
Financial Services |
|
105.1 |
|
|
86.9 |
|
.3 |
|
|
.2 |
| ||||
Other |
|
4.6 |
|
|
9.1 |
|
|
|
|
|
| ||||
Total |
|
109.7 |
|
|
96.0 |
|
.3 |
|
|
.2 |
| ||||
Net Income |
|
906.7 |
|
|
549.9 |
|
105.1 |
|
|
86.8 |
| ||||
Less: Net income (loss) attributable to noncontrolling interests |
|
2.4 |
|
|
2.4 |
|
|
|
|
(.1) |
| ||||
Net Income Attributable to Deere & Company |
|
$ |
904.3 |
|
|
$ |
547.5 |
|
$ |
105.1 |
|
|
$ |
86.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF INCOME
For the Six Months Ended April 30, 2011 and 2010
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
| |||||||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| |||||||||
Net Sales and Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
13,841.4 |
|
|
$ |
10,785.5 |
|
|
|
|
|
|
|
| |||
Finance and interest income |
|
33.5 |
|
|
33.3 |
|
|
$ |
1,011.0 |
|
|
$ |
969.2 |
|
| |||
Other income |
|
223.7 |
|
|
189.8 |
|
|
93.7 |
|
|
146.3 |
|
| |||||
Total |
|
14,098.6 |
|
|
11,008.6 |
|
|
1,104.7 |
|
|
1,115.5 |
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of sales |
|
10,201.6 |
|
|
7,971.4 |
|
|
|
|
|
|
|
| |||||
Research and development expenses |
|
567.4 |
|
|
501.7 |
|
|
|
|
|
|
|
| |||||
Selling, administrative and general expenses |
|
1,299.7 |
|
|
1,139.3 |
|
|
199.2 |
|
|
241.6 |
|
| |||||
Interest expense |
|
101.9 |
|
|
88.7 |
|
|
319.5 |
|
|
356.7 |
|
| |||||
Interest compensation to Financial Services |
|
89.3 |
|
|
91.8 |
|
|
|
|
|
|
|
| |||||
Other operating expenses |
|
86.3 |
|
|
73.5 |
|
|
251.6 |
|
|
306.2 |
|
| |||||
Total |
|
12,346.2 |
|
|
9,866.4 |
|
|
770.3 |
|
|
904.5 |
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income of Consolidated Group before Income Taxes |
|
1,752.4 |
|
|
1,142.2 |
|
|
334.4 |
|
|
211.0 |
|
| |||||
Provision for income taxes |
|
559.4 |
|
|
518.8 |
|
|
111.7 |
|
|
39.6 |
|
| |||||
Income of Consolidated Group |
|
1,193.0 |
|
|
623.4 |
|
|
222.7 |
|
|
171.4 |
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Equity in Income of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financial Services |
|
223.3 |
|
|
172.0 |
|
|
.6 |
|
|
.5 |
|
| |||||
Other |
|
4.8 |
|
|
.1 |
|
|
|
|
|
|
|
| |||||
Total |
|
228.1 |
|
|
172.1 |
|
|
.6 |
|
|
.5 |
|
| |||||
Net Income |
|
1,421.1 |
|
|
795.5 |
|
|
223.3 |
|
|
171.9 |
|
| |||||
Less: |
Net income (loss) attributable to noncontrolling interests |
|
3.0 |
|
|
4.8 |
|
|
|
|
|
(.1 |
) |
| ||||
Net Income Attributable to Deere & Company |
|
$ |
1,418.1 |
|
|
$ |
790.7 |
|
|
$ |
223.3 |
|
|
$ |
172.0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS * |
|
| |||||||||||||||
|
|
April 30 |
|
October 31 |
|
April 30 |
|
April 30 |
|
October 31 |
|
April 30 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
|
$ |
3,515.0 |
|
$ |
3,348.3 |
|
$ |
3,290.7 |
|
$ |
434.8 |
|
$ |
442.3 |
|
$ |
324.1 |
|
Marketable securities |
|
|
|
|
|
|
|
239.5 |
|
227.9 |
|
234.2 |
| ||||||
Receivables from unconsolidated subsidiaries and affiliates |
|
1,785.7 |
|
1,712.6 |
|
1,401.5 |
|
|
|
1.6 |
|
1.5 |
| ||||||
Trade accounts and notes receivable - net |
|
1,066.3 |
|
999.8 |
|
834.5 |
|
3,786.2 |
|
2,979.7 |
|
3,783.5 |
| ||||||
Financing receivable - net |
|
8.9 |
|
9.4 |
|
8.4 |
|
18,446.4 |
|
17,672.8 |
|
15,031.2 |
| ||||||
Financing receivables securitized - net |
|
|
|
|
|
|
|
2,871.2 |
|
2,238.3 |
|
3,084.6 |
| ||||||
Other receivables |
|
715.1 |
|
889.5 |
|
490.9 |
|
120.8 |
|
49.4 |
|
121.4 |
| ||||||
Equipment on operating leases - net |
|
|
|
|
|
|
|
1,945.2 |
|
1,936.2 |
|
1,717.3 |
| ||||||
Inventories |
|
4,687.0 |
|
3,063.0 |
|
3,002.9 |
|
|
|
|
|
|
| ||||||
Property and equipment - net |
|
3,902.0 |
|
3,722.4 |
|
3,368.2 |
|
66.5 |
|
68.3 |
|
1,062.2 |
| ||||||
Investments in unconsolidated subsidiaries and affiliates |
|
3,381.5 |
|
3,420.2 |
|
3,333.9 |
|
8.1 |
|
7.0 |
|
6.3 |
| ||||||
Goodwill |
|
1,038.7 |
|
998.6 |
|
1,006.4 |
|
|
|
|
|
|
| ||||||
Other intangible assets - net |
|
126.8 |
|
113.0 |
|
125.3 |
|
4.0 |
|
4.0 |
|
4.0 |
| ||||||
Retirement benefits |
|
200.0 |
|
145.8 |
|
167.9 |
|
29.9 |
|
31.4 |
|
6.9 |
| ||||||
Deferred income taxes |
|
2,917.7 |
|
2,737.1 |
|
2,750.9 |
|
103.8 |
|
103.2 |
|
98.7 |
| ||||||
Other assets |
|
446.4 |
|
381.2 |
|
355.9 |
|
574.6 |
|
812.9 |
|
746.9 |
| ||||||
Assets held for sale |
|
|
|
|
|
|
|
|
|
931.4 |
|
|
| ||||||
Total Assets |
|
$ |
23,791.1 |
|
$ |
21,540.9 |
|
$ |
20,137.4 |
|
$ |
28,631.0 |
|
$ |
27,506.4 |
|
$ |
26,222.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Short-term borrowings |
|
$ |
431.6 |
|
$ |
85.0 |
|
$ |
368.7 |
|
$ |
6,640.3 |
|
$ |
5,240.7 |
|
$ |
2,826.2 |
|
Short-term securitization borrowings |
|
|
|
|
|
|
|
2,821.5 |
|
2,208.8 |
|
3,065.6 |
| ||||||
Payables to unconsolidated subsidiaries and affiliates |
|
193.5 |
|
205.2 |
|
152.9 |
|
1,740.5 |
|
1,673.7 |
|
1,363.8 |
| ||||||
Accounts payable and accrued expenses |
|
6,355.3 |
|
5,757.1 |
|
5,056.3 |
|
1,124.6 |
|
1,253.3 |
|
1,175.5 |
| ||||||
Deferred income taxes |
|
102.8 |
|
92.0 |
|
79.5 |
|
255.5 |
|
415.5 |
|
313.1 |
| ||||||
Long-term borrowings |
|
3,361.4 |
|
3,328.6 |
|
3,053.4 |
|
12,830.8 |
|
13,485.9 |
|
14,322.3 |
| ||||||
Retirement benefits and other liabilities |
|
5,912.9 |
|
5,771.6 |
|
5,768.9 |
|
49.2 |
|
43.8 |
|
41.4 |
| ||||||
Total liabilities |
|
16,357.5 |
|
15,239.5 |
|
14,479.7 |
|
25,462.4 |
|
24,321.7 |
|
23,107.9 |
| ||||||
Total Deere & Company stockholders equity |
|
7,423.3 |
|
6,290.3 |
|
5,650.9 |
|
3,168.6 |
|
3,182.7 |
|
3,113.3 |
| ||||||
Noncontrolling interests |
|
10.3 |
|
11.1 |
|
6.8 |
|
|
|
2.0 |
|
1.6 |
| ||||||
Total stockholders equity |
|
7,433.6 |
|
6,301.4 |
|
5,657.7 |
|
3,168.6 |
|
3,184.7 |
|
3,114.9 |
| ||||||
Total Liabilities and Stockholders Equity |
|
$ |
23,791.1 |
|
$ |
21,540.9 |
|
$ |
20,137.4 |
|
$ |
28,631.0 |
|
$ |
27,506.4 |
|
$ |
26,222.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF CASH FLOWS
For the Six Months Ended April 30, 2011 and 2010
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
| ||||||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
1,421.1 |
|
|
$ |
795.5 |
|
|
$ |
223.3 |
|
|
$ |
171.9 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Provision for doubtful receivables |
|
1.4 |
|
|
1.7 |
|
|
12.2 |
|
|
57.6 |
|
| ||||
Provision for depreciation and amortization |
|
294.6 |
|
|
282.1 |
|
|
191.6 |
|
|
213.1 |
|
| ||||
Undistributed earnings of unconsolidated subsidiaries and affiliates |
|
(24.4 |
) |
|
(97.0 |
) |
|
(.6 |
) |
|
(.5 |
) |
| ||||
Provision (credit) for deferred income taxes |
|
(314.9 |
) |
|
108.3 |
|
|
4.6 |
|
|
.7 |
|
| ||||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Receivables |
|
(20.4 |
) |
|
(105.9 |
) |
|
|
|
|
(9.4 |
) |
| ||||
Inventories |
|
(1,458.1 |
) |
|
(598.2 |
) |
|
|
|
|
|
|
| ||||
Accounts payable and accrued expenses |
|
465.1 |
|
|
604.9 |
|
|
(1.1 |
) |
|
(46.9 |
) |
| ||||
Accrued income taxes payable/receivable |
|
250.4 |
|
|
200.3 |
|
|
(10.9 |
) |
|
(1.1 |
) |
| ||||
Retirement benefits |
|
213.7 |
|
|
(42.4 |
) |
|
6.5 |
|
|
8.0 |
|
| ||||
Other |
|
(153.2 |
) |
|
127.7 |
|
|
39.3 |
|
|
232.0 |
|
| ||||
Net cash provided by operating activities |
|
675.3 |
|
|
1,277.0 |
|
|
464.9 |
|
|
625.4 |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Collections of receivables (excluding trade and wholesale) |
|
|
|
|
|
|
|
7,202.4 |
|
|
6,477.9 |
|
| ||||
Proceeds from maturities and sales of marketable securities |
|
|
|
|
|
|
|
18.8 |
|
|
9.2 |
|
| ||||
Proceeds from sales of equipment on operating leases |
|
|
|
|
|
|
|
383.4 |
|
|
330.9 |
|
| ||||
Government grants related to property and equipment |
|
|
|
|
|
|
|
|
|
|
21.6 |
|
| ||||
Proceeds from sales of businesses, net of cash sold |
|
893.5 |
|
|
5.8 |
|
|
|
|
|
|
|
| ||||
Cost of receivables acquired (excluding trade and wholesale) |
|
|
|
|
|
|
|
(7,575.1 |
) |
|
(6,476.0 |
) |
| ||||
Purchases of marketable securities |
|
|
|
|
|
|
|
(34.0 |
) |
|
(45.7 |
) |
| ||||
Purchases of property and equipment |
|
(440.2 |
) |
|
(281.3 |
) |
|
(.9 |
) |
|
(29.9 |
) |
| ||||
Cost of equipment on operating leases acquired |
|
|
|
|
|
|
|
(489.4 |
) |
|
(420.0 |
) |
| ||||
Acquisitions of businesses, net of cash acquired |
|
(46.6 |
) |
|
(33.3 |
) |
|
|
|
|
(8.3 |
) |
| ||||
Increase in trade and wholesale receivables |
|
|
|
|
|
|
|
(1,390.8 |
) |
|
(1,361.0 |
) |
| ||||
Other |
|
(60.7 |
) |
|
(59.7 |
) |
|
(86.3 |
) |
|
(39.6 |
) |
| ||||
Net cash provided by (used for) investing activities |
|
346.0 |
|
|
(368.5 |
) |
|
(1,971.9 |
) |
|
(1,540.9 |
) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Increase (decrease) in total short-term borrowings |
|
291.8 |
|
|
(126.3 |
) |
|
511.4 |
|
|
49.0 |
|
| ||||
Change in intercompany receivables/payables |
|
(544.3 |
) |
|
(941.6 |
) |
|
544.3 |
|
|
941.6 |
|
| ||||
Proceeds from long-term borrowings |
|
31.6 |
|
|
.1 |
|
|
1,409.1 |
|
|
939.6 |
|
| ||||
Payments of long-term borrowings |
|
(11.5 |
) |
|
(5.9 |
) |
|
(770.6 |
) |
|
(1,603.3 |
) |
| ||||
Proceeds from issuance of common stock |
|
160.7 |
|
|
43.5 |
|
|
|
|
|
|
|
| ||||
Repurchases of common stock |
|
(601.2 |
) |
|
(3.8 |
) |
|
|
|
|
|
|
| ||||
Dividends paid |
|
(275.0 |
) |
|
(237.6 |
) |
|
(194.1 |
) |
|
(70.0 |
) |
| ||||
Excess tax benefits from share-based compensation |
|
64.7 |
|
|
13.7 |
|
|
|
|
|
|
|
| ||||
Other |
|
(9.3 |
) |
|
(9.5 |
) |
|
9.3 |
|
|
33.1 |
|
| ||||
Net cash provided by (used for) financing activities |
|
(892.5 |
) |
|
(1,267.4 |
) |
|
1,509.4 |
|
|
290.0 |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
37.9 |
|
|
(40.2 |
) |
|
(9.9 |
) |
|
(12.3 |
) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
166.7 |
|
|
(399.1 |
) |
|
(7.5 |
) |
|
(637.8 |
) |
| ||||
Cash and Cash Equivalents at Beginning of Period |
|
3,348.3 |
|
|
3,689.8 |
|
|
442.3 |
|
|
961.9 |
|
| ||||
Cash and Cash Equivalents at End of Period |
|
$ |
3,515.0 |
|
|
$ |
3,290.7 |
|
|
$ |
434.8 |
|
|
$ |
324.1 |
|
|
|
|
|
|
|
|
|
|
|
|
* Deere & Company with Financial Services on the equity basis.
The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
(Furnished herewith)
Deere & Company | ||||||||||||||||||||||||
Other Financial Information | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
|
For the Six Months Ended April 30, |
Equipment Operations |
Agriculture and Turf |
Construction and Forestry | ||||||||||||||||||||
|
Dollars in millions |
2011 |
|
2010 |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| |||||||||||
|
Net Sales |
$ |
13,841 |
|
$ |
10,785 |
|
$ |
11,369 |
|
$ |
9,245 |
|
$ |
2,472 |
|
$ |
1,540 |
| |||||
|
Average Identifiable Assets |
|
|
|
|
|
| |||||||||||||||||
|
With Inventories at LIFO |
$ |
11,029 |
|
$ |
8,913 |
|
$ |
8,492 |
|
$ |
6,806 |
|
$ |
2,537 |
|
$ |
2,107 |
| |||||
|
With Inventories at Standard Cost |
$ |
12,366 |
|
$ |
10,244 |
|
$ |
9,629 |
|
$ |
7,922 |
|
$ |
2,737 |
|
$ |
2,302 |
| |||||
|
Operating Profit (Loss) |
$ |
1,914 |
|
$ |
1,303 |
|
$ |
1,720 |
|
$ |
1,304 |
|
$ |
194 |
|
$ |
(1 |
) | |||||
|
Percent of Net Sales |
|
13.8 |
% |
|
12.1 |
% |
|
15.1 |
% |
|
14.1 |
% |
|
7.8 |
% |
|
(.1 |
)% | |||||
|
Operating Return on Assets |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
With Inventories at LIFO |
|
17.4 |
% |
|
14.6 |
% |
|
20.3 |
% |
|
19.2 |
% |
|
7.6 |
% |
|
0 |
% | |||||
|
With Inventories at Standard Cost |
|
15.5 |
% |
|
12.7 |
% |
|
17.9 |
% |
|
16.5 |
% |
|
7.1 |
% |
|
0 |
% | |||||
|
SVA Cost of Assets |
$ |
(742 |
) |
$ |
(613 |
) |
$ |
(578 |
) |
$ |
(475 |
) |
$ |
(164 |
) |
$ |
(138 |
) | |||||
|
SVA |
$ |
1,172 |
|
$ |
690 |
|
$ |
1,142 |
|
$ |
829 |
|
$ |
30 |
|
$ |
(139 |
) | |||||
| ||||||||||||||||||||||||
|
For the Six Months Ended April 30, |
Financial Services |
|
| ||||||||||||||||||||
|
Dollars in millions |
|
2011 |
|
|
2010 |
| |||||||||||||||||
|
Net Income Attributable to Deere & Company |
$ |
223 |
|
$ |
172 |
| |||||||||||||||||
|
Average Equity |
$ |
3,142 |
|
$ |
3,001 |
| |||||||||||||||||
|
Return on Equity |
|
7.1 |
% |
|
5.7 |
% | |||||||||||||||||
|
Operating Profit |
$ |
335 |
|
$ |
212 |
| |||||||||||||||||
|
Change in Allowance for Doubtful Receivables |
$ |
|
|
$ |
(8 |
) | |||||||||||||||||
|
SVA Income |
$ |
335 |
|
$ |
204 |
| |||||||||||||||||
|
Average Equity |
$ |
3,142 |
|
$ |
3,001 |
| |||||||||||||||||
|
Average Allowance for Doubtful Receivables |
$ |
|
|
$ |
232 |
| |||||||||||||||||
|
SVA Average Equity |
$ |
3,142 |
|
$ |
3,233 |
| |||||||||||||||||
|
Cost of Equity |
$ |
(233 |
) |
$ |
(189 |
) | |||||||||||||||||
|
SVA |
$ |
102 |
|
$ |
15 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
The Company evaluates its business results on the basis of accounting principles generally accepted in the United States. In addition, it uses a metric referred to as Shareholder Value Added (SVA), which management believes is an appropriate measure for the performance of its businesses. SVA is, in effect, the pretax profit left over after subtracting the cost of enterprise capital. The Company is aiming for a sustained creation of SVA and is using this metric for various performance goals. Certain compensation is also determined on the basis of performance using this measure. For purposes of determining SVA, each of the equipment segments is assessed a pretax cost of assets, which on an annual basis is 12 percent of the segments average identifiable operating assets during the applicable period with inventory at standard cost. Management believes that valuing inventories at standard cost more closely approximates the current cost of inventory and the Companys investment in the asset. Financial Services is assessed an annual pretax cost of average equity of 15 percent. In 2010, the average equity excluded the effect of the allowance for doubtful receivables. In 2011, the change in allowance for doubtful receivables is no longer an adjustment. The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of the equipment segments or financial services to determine the amount of SVA. For this purpose, the operating profit of financial services is net income before income taxes in 2011 and net income before income taxes and changes to the allowance for doubtful receivables in 2010. |
| ||||||||||||||||||||||
|
|
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| 2nd Quarter 2011 Earnings Conference Call 2 Safe Harbor Statement & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning the companys projections, plans and objectives for the future, including estimates and assumptions with respect to economic, political, technological, weather, market acceptance and other factors that impact our businesses and customers. They also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Words such as forecast, projection, outlook, prospects, expected, estimated, will, plan, anticipate, intend, believe, or other similar words or phrases often identify forward-looking statements. Actual results may differ materially from those projected in these forward-looking statements based on a number of factors and uncertainties. Additional information concerning factors that could cause actual results to differ materially is contained in the companys most recent Form 8-K and periodic report filed with the U.S. Securities and Exchange Commission, and is incorporated by reference herein. Investors should refer to and consider the incorporated information on risks and uncertainties in addition to the information presented here. Investors should consider non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. The company, except as required by law, undertakes no obligation to update or revise its forward-looking statements whether as a result of new developments or otherwise. The call and accompanying materials are not an offer to sell or a solicitation of offers to buy any of the companys securities. 28 |
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| 2nd Quarter 2011 Earnings Conference Call 3 Second Quarter Overview (in millions of dollars except per share amounts) Q2 2011 Q2 2010 Change Net Sales and Revenues $8,910 $7,131 +25% Net Sales $8,328 $6,548 +27% Net Income Attributable to Deere & Company $904 $547 +65% Diluted EPS $2.12 $1.28 +66% 29 |
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| 2nd Quarter 2011 Earnings Conference Call 4 Supplemental Data Second Quarter 2010 NOTE: Due to the magnitude of the amount for the item listed above, management believes the above additional supplemental data provides valuable insight into the operating performance for second quarter 2010. Management believes this presentation will enhance the readers understanding of the impact of this item on Deere & Companys performance during the quarter. Management does not intend this presentation to be considered in isolation of or as a substitute for the related measures under GAAP. 30 (millions) Diluted EPS Net income attributable to Deere & Company, as reported 547.5 $ 1.28 $ Tax charge for U.S. health-care legislation 129.5 0.30 Net income attributable to Deere & Company, as adjusted 677.0 $ 1.58 $ Q2 2010 |
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| 2nd Quarter 2011 Earnings Conference Call 5 Second Quarter Overview Net Sales Equipment operations net sales: Up 27% in Q2 2011 vs. Q2 2010 Price realization: +4 points Currency translation: +3 points 31 |
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| 2nd Quarter 2011 Earnings Conference Call 6 Production Tonnage Approximate % Change* Q2 2011 Actual Q2 2011 Previous Forecast Q3 2011 Forecast FY 2011 Forecast FY 2011 Previous Forecast Total Worldwide +27 +26 +11 +19 +16 Worldwide A&T +24 +23 +12 +17 +14 Worldwide C&F +51 +52 +7 +36 +29 U.S. and Canada +25 +21 +1 +17 +14 Outside U.S. and Canada +30 +34 +29 +24 +21 U.S. and Canada A&T +20 +15 +1 +13 +10 *Percentage change from same period in previous year, excluding purchased product Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) Approximate % Change* Q1 Q2 Q3 Q4 Total Worldwide Fiscal 2011 Actual +41 +27 Total Worldwide Fiscal 2011 Forecast +11 +4 32 |
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| 2nd Quarter 2011 Earnings Conference Call 7 2011 Company Outlook Third Quarter 2011 Forecast Net sales up ~ 20% vs. Q3 2010 Currency translation: ~ +6 points Fiscal Year 2011 Forecast Net sales up 21-23% vs. FY 2010 Currency translation: ~ +3 points Price realization: ~ +3 points Previous forecast up 18-20% vs. FY 2010 Currency translation: ~ +2 points Price realization: ~ +2 points Net income attributable to Deere & Company of ~ $2.65 billion Previous forecast: ~ $2.5 billion Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 33 |
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| 2nd Quarter 2011 Earnings Conference Call 8 Worldwide Agriculture & Turf Second Quarter Overview (in millions of dollars) Q2 2011 Q2 2010 Change Net Sales $6,999 $5,637 +24% Operating Profit* $1,163 $952 +22% Production Tonnage +24% Incremental Margin ~ 15% *Q2 2011 operating profit impacted by: Higher shipment and production volumes Improved price realization Increased raw-material costs Higher selling, administrative and general expenses 34 |
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| 2nd Quarter 2011 Earnings Conference Call 9 U.S. Commodity Price Estimates (dollars per bushel, except cotton, which is dollars per pound) 2009/10 2010/11 Estimate Previous 2010/11 2011/12 Forecast Previous 2011/12 Corn $3.55 $5.20 $5.20 $5.50 $4.90 Wheat $4.87 $5.75 $5.75 $7.25 $6.35 Soybeans $9.59 $11.55 $11.80 $12.75 $12.35 Cotton $0.63 $0.81 $0.80 $1.00 $0.70 Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 35 |
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| 2nd Quarter 2011 Earnings Conference Call 10 U.S. Farm Cash Receipts (in billions of dollars) 2009 2010 Forecast Previous 2010 2011 Forecast Previous 2011 2012 Forecast Crops $163.7 $170.9 $171.2 $210.1 $205.1 $202.0 Livestock $119.8 $141.5 $137.5 $149.4 $142.2 $152.0 Government Payments $12.3 $12.2 $12.4 $11.9 $11.9 $12.3 Total Cash Receipts $295.8 $324.6 $321.1 $371.4 $359.2 $366.3 Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 36 |
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(Yield in bushels per acre, except cotton, which is pounds per acre) Acres Planted (millions) Yield 2010/11 Estimate 2011/12 Forecast 2010/11 Estimate 2011/12 Forecast Corn 88.2 91.9 152.8 163.4 Wheat 53.6 58.0 46.4 42.8 Soybeans 77.4 76.6 43.5 43.8 Cotton 11.0 12.6 812 800 | 2nd Quarter 2011 Earnings Conference Call 11 U.S. Acres Planted and Crop Yields Deere & Company Forecast as of 18 May 2011 37 |
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| 2nd Quarter 2011 Earnings Conference Call 12 EU 27 Economic Update Deere & Company Forecast as of 18 May 2011 Farm income stable to positive due to improved prices Regions and segments differ Fundamentals remain positive Grain, beef, and milk prices remain at good levels Pork prices recovering, following seasonal trend Input costs increasing, but below peak levels Increased investment in agricultural machinery Low levels of used equipment 38 |
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| 2nd Quarter 2011 Earnings Conference Call 13 Farm Net Income (Loss) Brazil and Argentina Brazil (in billions of U.S. dollars) 2009 2010 Previous 2010 2011 Forecast Previous 2011 2012 Forecast Soybeans 2.8 4.5 4.4 8.8 8.8 6.7 Sugarcane 2.3 10.3 10.3 13.4 13.4 13.6 Other* (2.7) 0.6 (1.5) 3.9 1.5 1.9 Total 2.4 15.4 13.2 26.1 23.7 22.2 Argentina (in billions of U.S. dollars) 2009 2010 Previous 2010 2011 Forecast Previous 2011 2012 Forecast Total (2.5) 6.1 6.1 7.6 7.6 6.4 * Includes corn, paddy rice, and cotton Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 39 |
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| 2nd Quarter 2011 Earnings Conference Call 14 Agriculture & Turf Retail Sales Industry Outlook Fiscal 2011 U.S. and Canada Ag: Up 5-10% Previous forecast: Up ~ 5% EU 27 Ag: Up ~ 15% Previous forecast: Up ~ 10% CIS* countries Ag: Notably stronger gains from the previous years depressed level Previous forecast: Moderate gains in relation to the prior years depressed level Asia Ag: Sales forecast to grow strongly again this year Previous forecast: Sales expected to grow moderately South America Ag: Down 5-10% Previous forecast: ~ Flat U.S. and Canada turf and utility equipment: ~ Flat No change from previous forecast *Commonwealth of Independent States Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 40 |
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| 2nd Quarter 2011 Earnings Conference Call 15 Worldwide Agriculture & Turf Deere & Company Outlook Fiscal Year 2011 Forecast Net sales projected to be up ~ 20% Currency translation: ~ +4 points Previous forecast: Up ~ 16% Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 41 |
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Product Expansion - Large Square Baler | 2nd Quarter 2011 Earnings Conference Call 16 John Deere and Kuhn Group announce strategic cooperation Provides John Deere branded machines to EAME and CIS countries in 2012, worldwide by 2014 Adds key product offering for livestock, commercial, and contractor customer segments Leverages the strength of the John Deere dealer network 42 Deere & Company Forecast as of 18 May 2011 |
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| 2nd Quarter 2011 Earnings Conference Call 17 Construction of an agricultural equipment factory Located in Harbin, Heilongjiang Province Initial outlay of ~ $80 million Expect production to begin late 2012 Support demand for large agricultural machinery Mid- and large-sized tractors, sprayers, planters, harvesting equipment Becomes 7th manufacturing location in China Includes 2 joint ventures New Operations - China 43 Deere & Company Forecast as of 18 May 2011 |
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| 2nd Quarter 2011 Earnings Conference Call 18 Worldwide Construction & Forestry Second Quarter Overview (in millions of dollars) Q2 2011 Q2 2010 Change Net Sales $1,329 $911 +46% Operating Profit* $105 $36 +192% Production Tonnage +51% Incremental Margin ~ 17% *Q2 2011 operating profit impacted by: Higher shipment and production volumes Improved price realization Higher selling, administrative and general expenses Increased raw-material costs 44 |
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U.S. Economic Indicators 2011 Forecast 2012 Forecast GDP Growth (annual percentage rate) +2.8% +2.9% Housing Starts (thousands) 616 1,036 Non-Residential Spending Growth (annual percentage rate) -2.7% -3.0% Government Spending Growth (annual percentage rate) -3.2% -1.8% | 2nd Quarter 2011 Earnings Conference Call 19 Worldwide Construction & Forestry Deere & Company Outlook Source: Global Insight, Calendar Year Estimates April 2011 Fiscal Year 2011 Forecast Net sales projected to be up ~ 35% No change from previous forecast Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 45 |
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| 2nd Quarter 2011 Earnings Conference Call 20 Worldwide Financial Services Credit Loss History 0.10% Provision for Credit Losses / Average Owned Portfolio * Annualized provision for credit losses as of 30 April 2011 46 0.00% 0.50% 1.00% 1.50% 2.00% 1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 * |
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| 2nd Quarter 2011 Earnings Conference Call 21 Worldwide Financial Services Second Quarter 2011 Net income attributable to Deere & Company $105 million in Q2 2011 vs. $87 million in Q2 2010 Fiscal Year 2011 Forecast Net income attributable to Deere & Company of ~ $435 million Previous forecast: ~ $400 million Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 47 |
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| 2nd Quarter 2011 Earnings Conference Call 22 Consolidated Trade Receivables & Inventory (in millions of dollars) Q2 2011* Actual 2011** Forecast 2011** Previous Forecast A&T 1,331 125 350 C&F 496 225 100 Total, as reported 1,827 100 250 Total, constant exchange 1,392 50 225 * Change at 30 April 2011 vs. 30 April 2010 ** Change at 31 October 2011 vs. 31 October 2010 Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 48 |
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| 2nd Quarter 2011 Earnings Conference Call 23 Retail Sales U.S. and Canada Ag Industry* Deere** Utility Tractors 5% in line with the industry Row-Crop Tractors 1% a low single digit 4WD Tractors 4% a single digit Combines 19% more than industry April 2011 Retail Sales and Dealer Inventories * As reported by the Association of Equipment Manufacturers ** As reported to the Association of Equipment Manufacturers *** At 30 April in units as a % of trailing 12 months retail sales, as reported to the Association of Equipment Manufacturers Deere Dealer Inventories*** U.S. and Canada Ag 2011 2010 Row-Crop Tractors 17% 18% Combines 10% 8% 49 |
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| 2nd Quarter 2011 Earnings Conference Call 24 April 2011 Retail Sales EU 27 Deere* Tractors double digits Combines double digits U.S. and Canada Deere* Selected Turf & Utility Equipment double digits * Based on internal sales reports U.S. and Canada Construction & Forestry Deere* First-in-the-Dirt double digits Settlements double digits 50 |
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| 2nd Quarter 2011 Earnings Conference Call 25 Material Costs and Freight Equipment Operations Second Quarter 2011 Up ~ $175 million vs. Q2 2010 Fiscal Year 2011 Forecast Margin impact: ~ (2) points vs. FY 2010 Previous forecast: (1-2) points Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 51 |
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| 2nd Quarter 2011 Earnings Conference Call 26 Research & Development Expense Equipment Operations Second Quarter 2011 Up ~ 12% vs. Q2 2010 Fiscal Year 2011 Forecast Up ~ 17% vs. FY 2010 Previous forecast: Up ~ 15% Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 52 |
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| 2nd Quarter 2011 Earnings Conference Call 27 Selling, Administrative & General Expense Equipment Operations Second Quarter 2011 Up ~ 19% vs. Q2 2010 Incentive compensation: ~ +8 points Currency translation: ~ +2 points Growth: ~ +1 point Fiscal Year 2011 Forecast Up ~ 14% vs. FY 2010 Incentive compensation: ~ +3 points Currency translation: ~ +2 points Growth: ~ +1 point Previous forecast: Up ~ 12% vs. FY 2010 Incentive compensation: ~ +3 points Growth: ~ +2 points Currency translation: ~ +1 point Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 53 |
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| 2nd Quarter 2011 Earnings Conference Call 28 Income Taxes Equipment Operations Second Quarter 2011 Effective tax rate of ~ 32% Fiscal Year 2011 Forecast Projected effective tax rate of 33-35% No change from previous forecast Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 54 |
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| 2nd Quarter 2011 Earnings Conference Call 29 Continued Strong Operating Performance Equipment Operations Cash Flows from Operations Fiscal Year 2008: $2.4 billion Fiscal Year 2009: $1.4 billion Fiscal Year 2010: $2.5 billion Fiscal Year 2011 Forecast: ~ $3.1 billion Previous forecast: ~ $3.3 billion Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 55 |
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| 2nd Quarter 2011 Earnings Conference Call 30 Other Information Fiscal Year 2011 Forecast Equipment Operations Capital Expenditures ~ $1.1 billion No change from previous forecast Depreciation and Amortization ~ $600 million No change from previous forecast Pension/OPEB Contributions ~ $115 million Previous forecast: ~ $100 million Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 56 |
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| 2nd Quarter 2011 Earnings Conference Call 31 Share Repurchase As Part of Publicly Announced Plans Actual Shares Repurchased* (in millions) Total Amount** (in billions) 2004 5.9 $0.2 2005 27.7 $0.9 2006 34.0 $1.3 2007 25.7 $1.5 2008 21.2 $1.7 2009 0.0 $0.0 2010 5.2 $0.4 2011 YTD 6.8 $0.6 Cumulative cost of repurchases 2004-2Q2011: ~ $6.5 billion Shares remaining on May 2007 40-million authorization: ~ 1.6 million May 2008 share authorization: $5.0 billion 30 April 2011 period ended shares: ~ 420.0 million Shares repurchased 2004-2Q2011: ~ 126.5 million Average repurchase price 2004-2Q2011: $51.57 * All shares adjusted for two-for-one stock split effective 26 November 2007 ** Rounded totals for each period sum may not tie to cumulative cost of repurchases 2004-2Q2011 57 |
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| 2nd Quarter 2011 Earnings Conference Call 32 Appendix 58 |
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Deere Use-of-Cash Priorities | 2nd Quarter 2011 Earnings Conference Call 33 Manage the balance sheet, including liquidity, to support a rating that provides access to low-cost and readily available short- and long-term funding mechanisms Reflects the strategic nature of our financial services operation Committed to A Rating Cash from Operations Fund Operating and Growth Needs Common Stock Dividend Share Repurchase Fund value-creating investments in our businesses Consistently and moderately raise dividend targeting a 25%-35% payout ratio of mid-cycle earnings Consider share repurchase as a means to deploy excess cash to shareholders, once above requirements are met and repurchase is viewed as value-enhancing 59 |
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| 2nd Quarter 2011 Earnings Conference Call 34 Worldwide Financial Services Unsecured Term Debt Maturities* * Maturities as of 30 April 2011 60 |
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| 2nd Quarter 2011 Earnings Conference Call 35 Sources and Uses of Cash Fiscal 20042010 Equipment Operations ~55% of cash from operations returned to shareholders (1) Other includes excess tax benefits from share-based compensation, effect of exchange rates on cash and cash equivalents, proceeds from maturities and sales of marketable securities and purchases of marketable securities Source: Deere & Company SEC filings (1) $4,160 $3,348 61 |
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U.S. Farm Prices | 2nd Quarter 2011 Earnings Conference Call 36 Source: Actual Data: USDA Forecast Data: Deere & Company Forecast as of 18 May 2011 62 |
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| 2nd Quarter 2011 Earnings Conference Call 37 World Farm Fundamentals Global Stocks-To-Use Ratios Corn Wheat Soybeans Source: USDA - 11 May 2011 Cotton 63 |
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| 2nd Quarter 2011 Earnings Conference Call 38 U.S. Net Farm Cash Income (in billions of dollars) 2009 2010 Forecast Previous 2010 2011 Forecast Previous 2011 2012 Forecast Total Cash Receipts $295.8 $324.6 $321.1 $371.4 $359.2 $366.3 Other Cash Income $22.0 $21.0 $22.8 $21.1 $23.3 $23.8 Gross Cash Income $317.8 $345.6 $343.9 $392.5 $382.5 $390.1 Cash Expenses ($248.5) ($254.2) ($253.9) ($280.0) ($272.0) ($284.0) Net Cash Income $69.3 $91.4 $90.0 $112.5 $110.5 $106.1 Deere & Company Forecast as of 18 May 2011 (Previous Forecast as of 16 February 2011) 64 |
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Deeres third quarter 2011 conference call is scheduled for 9:00 a.m. central time on Wednesday, August 17, 2011 65 |
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