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: November 20, 2013
(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) |
________________________________________________________
(Former name or former address, if changed since last report.)
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 November 20, 2013 concerning Fourth Quarter of Fiscal 2013 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 Fourth Quarter 2013 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: November 20, 2013 |
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Exhibit Index
Number and Description of Exhibit
Press Release and Supplemental Financial Information (Filed herewith) | |
Fourth Quarter 2013 Earnings Conference Call Information (Furnished herewith) |
(Filed herewith)
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NEWS RELEASE
Contact:
Ken Golden
Director, Global Public Relations
309-765-5678
Deere Announces Record Fourth-Quarter Earnings of $807 Million
§ Fourth-quarter income rises 17%; earnings per share up 21%.
§ Full-year earnings reach record $3.54 billion.
§ New products, additional capacity help expand global customer base.
§ Forecast calls for income of $3.3 billion in 2014.
MOLINE, Illinois (November 20, 2013) Net income attributable to Deere & Company was $806.8 million, or $2.11 per share, for the fourth quarter ended October 31, compared with $687.6 million, or $1.75 per share, for the same period last year.
For fiscal 2013, net income attributable to Deere & Company was $3.537 billion, or $9.09 per share, compared with $3.065 billion, or $7.63 per share, in 2012.
Worldwide net sales and revenues decreased 3 percent, to $9.451 billion, for the fourth quarter and increased 5 percent, to $37.795 billion, for the full year. Net sales of the equipment operations were $8.624 billion for the quarter and $34.998 billion for the year, compared with $9.047 billion and $33.501 billion for the same periods in 2012.
With our strong financial results in the fourth quarter, John Deere has wrapped up another year of impressive achievement, said Samuel R. Allen, chairman and chief executive officer. Income for the periods was higher than in any previous fourth quarter or full year, he pointed out. During the year, Deere continued with a record number of product introductions and completed seven new factories, in Brazil, Russia, India and China. These products and additional capacity are essential to helping the company expand its global customer base and realize its long-term business objectives.
Deeres performance is a testament to our ability to execute our business plans, which stress the rigorous management of costs and assets, Allen stated.
Deere Announces Fourth-Quarter Earnings |
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This has led to an all-time high in profitability, as measured by operating return on operating assets, and record earnings for the last three years. In addition, the company has delivered healthy levels of cash flow, which has been used to fund global growth programs and provide direct benefit to investors through dividends and share repurchases.
Summary of Operations
Net sales of the worldwide equipment operations decreased 5 percent for the quarter and increased 4 percent for the full year compared with the same periods in 2012. Sales included price realization of 4 percent for the quarter and 3 percent for the year and an unfavorable currency-translation effect of 2 percent for the quarter and 1 percent for the year. Equipment net sales in the United States and Canada decreased 6 percent for the quarter and increased 5 percent for the year. Outside the U.S. and Canada, net sales decreased 2 percent for the quarter and increased 4 percent for the year, with unfavorable currency-translation effects of 4 percent and 3 percent for these periods.
Deeres equipment operations reported operating profit of $1.114 billion for the quarter and $5.058 billion for the full year, compared with $1.051 billion and $4.397 billion in 2012. The improvement for the quarter was due primarily to the impact of price realization, partially offset by the unfavorable effects of foreign-currency exchange, lower shipment volumes and a less favorable product mix. Full-year results improved largely due to the impact of price realization and higher shipment volumes. Annual results also were impacted by unfavorable effects of foreign-currency exchange, increased production costs, higher selling, administrative and general expenses and higher warranty costs. Increased production costs were due primarily to higher manufacturing-overhead expenses in support of growth, new products and engine-emission requirements, partially offset by lower raw-material costs.
In conjunction with the previously announced agreement to sell a majority interest in John Deere Landscapes, these operations were written down to realizable value in the quarter. In addition, both the quarterly and year-to-date periods were affected by impairment charges for long-lived assets related to John Deere Water operations.
Deere Announces Fourth-Quarter Earnings |
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Net income of the companys equipment operations was $650 million for the fourth quarter and $2.974 billion for the full year, compared with $576 million and $2.616 billion in 2012. The operating factors mentioned above, along with a lower effective tax rate, had an impact on the quarters results. Increased interest expense and a higher effective tax rate also affected annual results.
Financial services reported net income attributable to Deere & Company of $157.1 million for the quarter and $565.0 million for the year compared with $121.7 million and $460.3 million in 2012. Results for both periods were aided by growth in the credit portfolio and higher crop insurance margins, partially offset by higher selling, administrative and general expenses. Further, the quarters results were impacted by less favorable financing spreads, and full-year 2012 results benefited from revenue related to wind energy credits.
Company Outlook & Summary
Company equipment sales are projected to decrease about 3 percent for fiscal 2014 and be down about 2 percent for the first quarter compared with year-ago periods. For fiscal 2014, net income attributable to Deere & Company is anticipated to be about $3.3 billion. The outlook contemplates the sale of 60 percent of John Deere Landscapes operations, as previously announced.
Supported by record 2013 performance, John Deere remains in a prime position to carry out its wide-ranging growth plans and attract new customers throughout the world, Allen said. Thanks in large measure to the commitment of our employees, dealers and suppliers, John Deeres plans for helping meet the worlds need for food, shelter and infrastructure are firmly on track, he said. We remain confident in the companys direction and its ability to serve a population growing in both size and prosperity in the years ahead. In spite of lingering global economic concerns, we believe these developments continue to hold great promise and should provide significant benefits to our investors and other stakeholders well into the future.
* * *
Deere Announces Fourth-Quarter Earnings |
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Equipment Division Performance
Agriculture & Turf. Sales decreased 4 percent for the quarter primarily due to lower shipment volumes and the unfavorable effects of currency translation, partially offset by price realization. Sales increased 7 percent for the full year largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.
Operating profit was $996 million for the quarter and $4.680 billion for the year, compared with $931 million and $3.921 billion, respectively, in 2012. The improvement for the quarter was driven primarily by price realization, partially offset by the unfavorable effects of foreign-currency exchange, a less favorable product mix and lower shipment volumes. Full-year results improved due primarily to the impact of price realization and higher shipment volumes. These factors were partially offset by the unfavorable effects of foreign-currency exchange, increased production costs, higher selling, administrative and general expenses, and higher warranty costs. Both periods also were affected by a charge to write down John Deere Landscapes operations to realizable value and an impairment charge for long-lived assets related to John Deere Water.
Construction & Forestry. Construction and forestry sales decreased 8 percent for the quarter and the full year mainly as a result of lower shipment volumes, partially offset by price realization. Operating profit was $118 million for the quarter and $378 million for the year, compared with $120 million and $476 million in 2012. Results were slightly lower for the quarter primarily because of reduced shipment volumes and higher selling, administrative and general expenses, mostly offset by price realization and lower production costs. Full-year results decreased mainly due to lower shipment volumes, a less favorable product mix, increases in production costs, and higher selling, administrative and general expenses. These factors were partially offset by price realization.
Market Conditions & Outlook
Agriculture & Turf. Deeres worldwide sales of agriculture and turf equipment are forecast to decrease by about 6 percent for full-year 2014. The outlook contemplates the sale of a majority interest in the John Deere Landscapes operations. Although commodity prices and farm incomes are expected to remain at
Deere Announces Fourth-Quarter Earnings |
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healthy levels in 2014 by historical standards, they are forecast to be lower than in 2013. The company believes the decline will have a dampening effect on demand, primarily for large farm equipment.
Industry sales for agricultural machinery in the U.S. and Canada are forecast to be down 5 to 10 percent for the year, with the decline mainly reflecting lower sales of large equipment such as high-horsepower tractors and combines.
Full-year industry sales in the EU28 are forecast to be down about 5 percent due to lower commodity prices and farm incomes. In South America, industry sales of tractors and combines are projected to be down 5 to 10 percent from strong 2013 levels. Industry sales in the Commonwealth of Independent States are expected to be down slightly for the year, while Asian sales are projected to be up slightly.
In the U.S. and Canada, industry sales of turf and utility equipment are expected to be up about 5 percent for 2014, reflecting improved market conditions.
Construction & Forestry. Deeres worldwide sales of construction and forestry equipment are forecast to increase by about 10 percent for 2014. The gain reflects further economic recovery and higher housing starts in the U.S. as well as sales increases outside the U.S. and Canada. Global forestry sales are expected to be up for the year due to general economic growth and higher sales in European markets.
Financial Services. Full-year 2014 net income attributable to Deere & Company for the financial services operations is expected to be approximately $600 million. The outlook reflects improvement primarily due to continued growth in the credit portfolio, partially offset by a projected increase in the provision for credit losses from the low level in 2013.
John Deere Capital Corporation
The following is disclosed on behalf of the companys financial services 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 $132.9 million for the fourth quarter and $468.5 million for full-year 2013, compared with $112.6
Deere Announces Fourth-Quarter Earnings |
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million and $382.7 million for the respective periods in 2012. Results improved for both periods due primarily to growth in the credit portfolio, partially offset by higher selling, administrative and general expenses. Less favorable financing spreads also impacted results for the quarter.
Net receivables and leases financed by JDCC were $30.594 billion and $26.509 billion at October 31, 2013 and 2012, respectively.
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 (including low subsoil moisture from recent drought conditions), harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, the growth and sustainability 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 Argentina, Brazil, China, the European Union, India, Russia and the U.S.), international reaction to such programs, changes in and effects of crop insurance 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
Deere Announces Fourth-Quarter Earnings |
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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 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. Uncertainty about and actual government spending and taxing could adversely affect the economy, employment, consumer and corporate spending, and company results.
Customer and company operations and results could be affected by changes in weather patterns (including the effects of drought conditions in parts of the U.S. and dryer than normal conditions in certain other markets); 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. Financial market conditions could also negatively impact customer access to capital for purchases of the companys products and customer confidence and purchase decisions; borrowing and repayment practices; and the number and size of customer loan delinquencies and defaults. A debt crisis, in Europe or elsewhere, could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, 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
Deere Announces Fourth-Quarter Earnings |
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bond markets, which would negatively affect 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, funding costs and other areas, and governmental programs, policies and tariffs in particular jurisdictions or for the benefit of certain industries or sectors (including protectionist and expropriation 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/Stage IIIb and Final Tier 4/Stage IV non-road diesel emission requirements in the U.S. and European Union), carbon and other greenhouse gas emissions, noise and the risk of climate change; changes in labor regulations; changes to accounting standards; changes in tax rates, estimates, and regulations and company actions related thereto; compliance with U.S. and foreign laws when expanding to new markets; and actions by other regulatory bodies including changes in laws and regulations affecting the sectors in which the company operates. Customer and company operations and results also could be affected by changes to GPS radio frequency bands or their permitted uses.
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 or the loss of liquidity by suppliers; the failure of suppliers to comply with laws, regulations and company policy pertaining to employment, human rights, health, safety, the environment and other ethical business practices; 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; gaps or limitations in rural broadband coverage, capacity and speed needed to support technology solutions; 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
Deere Announces Fourth-Quarter Earnings |
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levels of new and used field inventories; labor relations; acquisitions and divestitures of businesses, the integration of 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; security breaches and other disruptions to the companys information technology infrastructure; changes in company declared dividends and common stock issuances and repurchases.
Company results are also affected by changes in the level and funding of employee retirement benefits, changes in market values of investment assets, the level of interest and discount rates, and compensation, retirement and mortality 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 failure of reinsurers of the companys insurance business also could materially affect results.
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 Fourth-Quarter Earnings |
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Fourth Quarter 2013 Press Release
(in millions of dollars)
Unaudited
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Three Months Ended October 31 |
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Twelve Months Ended October 31 | ||||||||||||||||
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2013 |
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2012 |
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% |
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2013 |
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2012 |
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% | ||||||||
Net sales and revenues: |
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Agriculture and turf |
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$ |
7,102 |
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$ |
7,393 |
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-4 |
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$ |
29,132 |
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$ |
27,123 |
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+7 |
Construction and forestry |
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1,522 |
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1,654 |
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-8 |
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5,866 |
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6,378 |
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-8 | ||||
Total net sales |
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8,624 |
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9,047 |
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-5 |
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34,998 |
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33,501 |
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+4 | ||||
Financial services |
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699 |
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633 |
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+10 |
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2,349 |
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2,235 |
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+5 | ||||
Other revenues |
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128 |
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112 |
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+14 |
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448 |
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421 |
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+6 | ||||
Total net sales and revenues |
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$ |
9,451 |
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$ |
9,792 |
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-3 |
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$ |
37,795 |
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$ |
36,157 |
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+5 |
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Operating profit: * |
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Agriculture and turf |
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$ |
996 |
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$ |
931 |
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+7 |
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$ |
4,680 |
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$ |
3,921 |
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+19 |
Construction and forestry |
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118 |
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120 |
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-2 |
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378 |
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476 |
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-21 | ||||
Financial services |
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241 |
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191 |
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+26 |
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870 |
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712 |
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+22 | ||||
Total operating profit |
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1,355 |
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1,242 |
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+9 |
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5,928 |
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5,109 |
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+16 | ||||
Reconciling items ** |
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(111 |
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(129 |
) |
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-14 |
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(445 |
) |
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(385 |
) |
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+16 | ||||
Income taxes |
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(437 |
) |
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(425 |
) |
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+3 |
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(1,946 |
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(1,659 |
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+17 | ||||
Net income attributable to Deere & Company |
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$ |
807 |
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$ |
688 |
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+17 |
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$ |
3,537 |
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$ |
3,065 |
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+15 |
* |
Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains or losses. |
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** |
Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses and net income attributable to noncontrolling interests. |
DEERE & COMPANY STATEMENT OF CONSOLIDATED INCOME For the Three Months Ended October 31, 2013 and 2012 (In millions of dollars and shares except per share amounts) Unaudited |
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2013 |
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2012 |
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Net Sales and Revenues |
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Net sales |
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$ |
8,624.4 |
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$ |
9,047.0 |
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Finance and interest income |
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571.1 |
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529.0 |
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Other income |
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255.0 |
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215.6 |
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Total |
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9,450.5 |
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9,791.6 |
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Costs and Expenses |
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Cost of sales |
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6,332.4 |
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6,841.4 |
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Research and development expenses |
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405.2 |
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401.2 |
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Selling, administrative and general expenses |
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947.9 |
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|
948.3 |
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Interest expense |
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187.6 |
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200.0 |
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Other operating expenses |
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333.2 |
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278.4 |
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Total |
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8,206.3 |
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8,669.3 |
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Income of Consolidated Group before Income Taxes |
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1,244.2 |
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1,122.3 |
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Provision for income taxes |
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437.1 |
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425.2 |
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Income of Consolidated Group |
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807.1 |
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697.1 |
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Equity in loss of unconsolidated affiliates |
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(.1 |
) |
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(8.2 |
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Net Income |
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807.0 |
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688.9 |
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Less: Net income attributable to noncontrolling interests |
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.2 |
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1.3 |
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Net Income Attributable to Deere & Company |
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$ |
806.8 |
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$ |
687.6 |
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Per Share Data |
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Basic |
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$ |
2.13 |
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$ |
1.76 |
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Diluted |
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$ |
2.11 |
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$ |
1.75 |
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|
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Average Shares Outstanding |
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|
|
|
|
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Basic |
|
378.8 |
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|
389.5 |
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Diluted |
|
382.2 |
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|
393.9 |
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See Condensed Notes to Consolidated Financial Statements. |
DEERE & COMPANY STATEMENT OF CONSOLIDATED INCOME For the Years Ended October 31, 2013 and 2012 (In millions of dollars and shares except per share amounts) Unaudited |
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2013 |
|
|
2012 |
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Net Sales and Revenues |
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|
|
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|
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Net sales |
|
$ |
34,997.9 |
|
|
$ |
33,500.9 |
|
Finance and interest income |
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2,115.1 |
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|
1,981.3 |
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Other income |
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682.4 |
|
|
674.9 |
| ||
Total |
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37,795.4 |
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|
36,157.1 |
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|
|
|
|
|
|
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Costs and Expenses |
|
|
|
|
|
| ||
Cost of sales |
|
25,667.3 |
|
|
25,007.8 |
| ||
Research and development expenses |
|
1,477.3 |
|
|
1,433.6 |
| ||
Selling, administrative and general expenses |
|
3,605.5 |
|
|
3,417.0 |
| ||
Interest expense |
|
741.3 |
|
|
782.8 |
| ||
Other operating expenses |
|
820.6 |
|
|
781.5 |
| ||
Total |
|
32,312.0 |
|
|
31,422.7 |
| ||
|
|
|
|
|
|
| ||
Income of Consolidated Group before Income Taxes |
|
5,483.4 |
|
|
4,734.4 |
| ||
Provision for income taxes |
|
1,945.9 |
|
|
1,659.4 |
| ||
Income of Consolidated Group |
|
3,537.5 |
|
|
3,075.0 |
| ||
Equity in income (loss) of unconsolidated affiliates |
|
.1 |
|
|
(3.4 |
) | ||
Net Income |
|
3,537.6 |
|
|
3,071.6 |
| ||
Less: Net income attributable to noncontrolling interests |
|
.3 |
|
|
6.9 |
| ||
Net Income Attributable to Deere & Company |
|
$ |
3,537.3 |
|
|
$ |
3,064.7 |
|
|
|
|
|
|
|
| ||
Per Share Data |
|
|
|
|
|
| ||
Basic |
|
$ |
9.18 |
|
|
$ |
7.72 |
|
Diluted |
|
$ |
9.09 |
|
|
$ |
7.63 |
|
|
|
|
|
|
|
| ||
Average Shares Outstanding |
|
|
|
|
|
| ||
Basic |
|
385.3 |
|
|
397.1 |
| ||
Diluted |
|
389.2 |
|
|
401.5 |
|
|
|
See Condensed Notes to Consolidated Financial Statements. |
DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEET As of October 31, 2013 and 2012 (In millions of dollars) Unaudited |
|
|
2013 |
|
2012 | ||||
Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
3,504.0 |
|
|
$ |
4,652.2 |
|
Marketable securities |
|
1,624.8 |
|
|
1,470.4 |
| ||
Receivables from unconsolidated affiliates |
|
31.2 |
|
|
59.7 |
| ||
Trade accounts and notes receivable - net |
|
3,758.2 |
|
|
3,799.1 |
| ||
Financing receivables - net |
|
25,632.7 |
|
|
22,159.1 |
| ||
Financing receivables securitized - net |
|
4,153.1 |
|
|
3,617.6 |
| ||
Other receivables |
|
1,464.0 |
|
|
1,790.9 |
| ||
Equipment on operating leases - net |
|
3,152.2 |
|
|
2,527.8 |
| ||
Inventories |
|
4,934.7 |
|
|
5,170.0 |
| ||
Property and equipment - net |
|
5,466.9 |
|
|
5,011.9 |
| ||
Investments in unconsolidated affiliates |
|
221.4 |
|
|
215.0 |
| ||
Goodwill |
|
844.8 |
|
|
921.2 |
| ||
Other intangible assets - net |
|
77.1 |
|
|
105.0 |
| ||
Retirement benefits |
|
551.1 |
|
|
20.2 |
| ||
Deferred income taxes |
|
2,325.4 |
|
|
3,280.4 |
| ||
Other assets |
|
1,274.7 |
|
|
1,465.3 |
| ||
Assets held for sale |
|
505.0 |
|
|
|
| ||
Total Assets |
|
$ |
59,521.3 |
|
|
$ |
56,265.8 |
|
|
|
|
|
|
|
| ||
Liabilities and Stockholders Equity |
|
|
|
|
|
| ||
Short-term borrowings |
|
$ |
8,788.9 |
|
|
$ |
6,392.5 |
|
Short-term securitization borrowings |
|
4,109.1 |
|
|
3,574.8 |
| ||
Payables to unconsolidated affiliates |
|
106.9 |
|
|
135.2 |
| ||
Accounts payable and accrued expenses |
|
8,973.6 |
|
|
8,988.9 |
| ||
Deferred income taxes |
|
160.3 |
|
|
164.4 |
| ||
Long-term borrowings |
|
21,577.7 |
|
|
22,453.1 |
| ||
Retirement benefits and other liabilities |
|
5,416.7 |
|
|
7,694.9 |
| ||
Liabilities held for sale |
|
120.4 |
|
|
|
| ||
Total liabilities |
|
49,253.6 |
|
|
49,403.8 |
| ||
Total Deere & Company stockholders equity |
|
10,265.8 |
|
|
6,842.1 |
| ||
Noncontrolling interests |
|
1.9 |
|
|
19.9 |
| ||
Total stockholders equity |
|
10,267.7 |
|
|
6,862.0 |
| ||
Total Liabilities and Stockholders Equity |
|
$ |
59,521.3 |
|
|
$ |
56,265.8 |
|
|
|
See Condensed Notes to Consolidated Financial Statements. |
DEERE & COMPANY STATEMENT OF CONSOLIDATED CASH FLOWS For the Years Ended October 31, 2013 and 2012 (In millions of dollars) Unaudited |
|
|
2013 |
|
|
2012 |
| ||
Cash Flows from Operating Activities |
|
|
|
|
|
| ||
Net income |
|
$ |
3,537.6 |
|
|
$ |
3,071.6 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Provision for credit losses |
|
20.5 |
|
|
5.1 |
| ||
Provision for depreciation and amortization |
|
1,140.3 |
|
|
1,004.2 |
| ||
Impairment charges |
|
102.0 |
|
|
33.4 |
| ||
Share-based compensation expense |
|
80.7 |
|
|
74.5 |
| ||
Undistributed earnings of unconsolidated affiliates |
|
9.1 |
|
|
1.8 |
| ||
Credit for deferred income taxes |
|
(172.6 |
) |
|
(91.8 |
) | ||
Changes in assets and liabilities: |
|
|
|
|
|
| ||
Trade, notes and financing receivables related to sales |
|
(1,510.2 |
) |
|
(1,901.6 |
) | ||
Insurance receivables |
|
263.4 |
|
|
(338.5 |
) | ||
Inventories |
|
(728.4 |
) |
|
(1,510.2 |
) | ||
Accounts payable and accrued expenses |
|
217.1 |
|
|
1,061.8 |
| ||
Accrued income taxes payable/receivable |
|
80.4 |
|
|
(72.3 |
) | ||
Retirement benefits |
|
262.0 |
|
|
63.3 |
| ||
Other |
|
(47.6 |
) |
|
(233.6 |
) | ||
Net cash provided by operating activities |
|
3,254.3 |
|
|
1,167.7 |
| ||
|
|
|
|
|
|
| ||
Cash Flows from Investing Activities |
|
|
|
|
|
| ||
Collections of receivables (excluding receivables related to sales) |
|
14,088.0 |
|
|
13,064.9 |
| ||
Proceeds from maturities and sales of marketable securities |
|
843.9 |
|
|
240.3 |
| ||
Proceeds from sales of equipment on operating leases |
|
936.7 |
|
|
799.5 |
| ||
Proceeds from sales of businesses, net of cash sold |
|
22.0 |
|
|
30.2 |
| ||
Cost of receivables acquired (excluding receivables related to sales) |
|
(17,011.7 |
) |
|
(15,139.0 |
) | ||
Purchases of marketable securities |
|
(1,026.3 |
) |
|
(922.2 |
) | ||
Purchases of property and equipment |
|
(1,158.4 |
) |
|
(1,319.2 |
) | ||
Cost of equipment on operating leases acquired |
|
(1,216.9 |
) |
|
(801.8 |
) | ||
Acquisitions of businesses, net of cash acquired |
|
(83.5 |
) |
|
|
| ||
Other |
|
(214.5 |
) |
|
43.2 |
| ||
Net cash used for investing activities |
|
(4,820.7 |
) |
|
(4,004.1 |
) | ||
|
|
|
|
|
|
| ||
Cash Flows from Financing Activities |
|
|
|
|
|
| ||
Increase in total short-term borrowings |
|
2,749.4 |
|
|
894.9 |
| ||
Proceeds from long-term borrowings |
|
4,734.0 |
|
|
10,642.0 |
| ||
Payments of long-term borrowings |
|
(4,958.5 |
) |
|
(5,396.0 |
) | ||
Proceeds from issuance of common stock |
|
174.5 |
|
|
61.0 |
| ||
Repurchases of common stock |
|
(1,531.4 |
) |
|
(1,587.7 |
) | ||
Dividends paid |
|
(752.9 |
) |
|
(697.9 |
) | ||
Excess tax benefits from share-based compensation |
|
50.7 |
|
|
30.1 |
| ||
Other |
|
(59.3 |
) |
|
(66.2 |
) | ||
Net cash provided by financing activities |
|
406.5 |
|
|
3,880.2 |
| ||
|
|
|
|
|
|
| ||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
11.7 |
|
|
(38.8 |
) | ||
|
|
|
|
|
|
| ||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
(1,148.2 |
) |
|
1,005.0 |
| ||
Cash and Cash Equivalents at Beginning of Year |
|
4,652.2 |
|
|
3,647.2 |
| ||
Cash and Cash Equivalents at End of Year |
|
$ |
3,504.0 |
|
|
$ |
4,652.2 |
|
|
|
See Condensed Notes to Consolidated Financial Statements. |
|
Condensed Notes to Consolidated Financial Statements (Unaudited) |
|
|
(1) |
In October 2013, the Company entered into an investment agreement with a private equity investment firm affiliated with Clayton, Dubilier & Rice, LLC (CD&R) for the future sale of 60 percent of its subsidiary John Deere Landscapes LLC (Landscapes). Landscapes is included in the Companys agriculture and turf segment and distributes irrigation equipment, nursery products and landscape supplies, including seed, fertilizer and hardscape materials, primarily to landscape service professionals. The sale is a result of the Companys intention to invest its resources in growing its core businesses. The 60 percent sale for approximately $300 million proceeds includes a $174 million equity contribution from CD&R and third party debt to be raised by Landscapes. The equity contribution is in the form of newly issued cumulative convertible participating preferred units representing 60 percent of the voting rights (on an as converted basis), which will rank senior to the Companys common stock as to dividends. The Company will retain initially 40 percent of the Landscapes business in the form of common stock and report the results as an equity investment in unconsolidated affiliates. The fair value of the Companys 40 percent equity investment to be retained was approximately $80 million at October 31, 2013. |
|
|
|
The major classes of the total consolidated assets and liabilities of the Landscapes business that were classified as held for sale were as follows in millions of dollars: |
|
|
|
October 31, 2013 | ||||
|
Trade accounts and notes receivable - net |
|
|
$ |
153 |
|
|
|
Inventories |
|
|
219 |
|
| |
|
Property and equipment - net |
|
|
37 |
|
| |
|
Goodwill |
|
|
106 |
|
| |
|
Other intangible assets - net |
|
|
25 |
|
| |
|
Other assets |
|
|
10 |
|
| |
|
Asset impairment |
|
|
(45 |
) |
| |
|
Total assets held for sale |
|
|
$ |
505 |
|
|
|
|
|
|
|
|
| |
|
Accounts payable and accrued expenses, and Total liabilities held for sale |
|
|
$ |
120 |
|
|
(2) |
In March 2013, the Company changed the corporate structure of most of its German operations from a branch to a subsidiary of Deere & Company. The change provides the Company increased flexibility and efficiency in funding growth in international operations. As a result, the tax status of these operations has changed. Formerly, as a branch these earnings were taxable in the U.S. as earned. As a subsidiary, these earnings will now be taxable in the U.S. if they are distributed to Deere & Company as dividends, which is the same as the Companys other foreign subsidiaries. The earnings of the new German subsidiary remain taxable in Germany. Due to the change in tax status and the expectation that the German subsidiarys earnings are indefinitely reinvested, the deferred tax assets and liabilities related to U.S. taxable temporary differences for the previous German branch were written off. The effect of this write-off was a decrease in net deferred tax assets and a charge to the income tax provision of $56 million during the second fiscal quarter of 2013. |
(3) |
Dividends declared and paid on a per share basis were as follows: |
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||||||
Dividends declared |
|
$ |
.51 |
|
|
$ |
.46 |
|
|
$ |
1.99 |
|
|
$ |
1.79 |
|
|
Dividends paid |
|
$ |
.51 |
|
|
$ |
.46 |
|
|
$ |
1.94 |
|
|
$ |
1.74 |
|
|
(4) |
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. |
|
|
(5) |
The consolidated financial statements represent the consolidation of all Deere & Companys subsidiaries. In the supplemental consolidating data in Note 6 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. |
(6) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended October 31, 2013 and 2012 | ||||||||||||||||
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
|
FINANCIAL SERVICES |
| ||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 | ||||||||
Net Sales and Revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
8,624.4 |
|
|
$ |
9,047.0 |
|
|
|
|
|
|
| ||
Finance and interest income |
|
23.8 |
|
|
19.4 |
|
|
$ |
611.7 |
|
|
$ |
571.0 |
| ||
Other income |
|
155.8 |
|
|
133.3 |
|
|
144.0 |
|
|
110.2 |
| ||||
Total |
|
8,804.0 |
|
|
9,199.7 |
|
|
755.7 |
|
|
681.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales |
|
6,332.9 |
|
|
6,841.8 |
|
|
|
|
|
|
| ||||
Research and development expenses |
|
405.2 |
|
|
401.2 |
|
|
|
|
|
|
| ||||
Selling, administrative and general expenses |
|
830.4 |
|
|
840.6 |
|
|
120.3 |
|
|
110.8 |
| ||||
Interest expense |
|
80.1 |
|
|
73.9 |
|
|
120.6 |
|
|
136.9 |
| ||||
Interest compensation to Financial Services |
|
51.3 |
|
|
50.6 |
|
|
|
|
|
|
| ||||
Other operating expenses |
|
100.7 |
|
|
60.5 |
|
|
274.0 |
|
|
242.3 |
| ||||
Total |
|
7,800.6 |
|
|
8,268.6 |
|
|
514.9 |
|
|
490.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income of Consolidated Group before Income Taxes |
|
1,003.4 |
|
|
931.1 |
|
|
240.8 |
|
|
191.2 |
| ||||
Provision for income taxes |
|
353.3 |
|
|
355.2 |
|
|
83.8 |
|
|
70.0 |
| ||||
Income of Consolidated Group |
|
650.1 |
|
|
575.9 |
|
|
157.0 |
|
|
121.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Financial Services |
|
157.1 |
|
|
121.7 |
|
|
.1 |
|
|
.5 |
| ||||
Other |
|
(.2 |
) |
|
(8.7 |
) |
|
|
|
|
|
| ||||
Total |
|
156.9 |
|
|
113.0 |
|
|
.1 |
|
|
.5 |
| ||||
Net Income |
|
807.0 |
|
|
688.9 |
|
|
157.1 |
|
|
121.7 |
| ||||
Less: Net income attributable to noncontrolling interests |
|
.2 |
|
|
1.3 |
|
|
|
|
|
|
| ||||
Net Income Attributable to Deere & Company |
|
$ |
806.8 |
|
|
$ |
687.6 |
|
|
$ |
157.1 |
|
|
$ |
121.7 |
|
|
|
* 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 Years Ended October 31, 2013 and 2012 | ||||||||||||||||
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
|
FINANCIAL SERVICES |
| ||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 | ||||||||
Net Sales and Revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
34,997.9 |
|
|
$ |
33,500.9 |
|
|
|
|
|
|
| ||
Finance and interest income |
|
80.8 |
|
|
74.0 |
|
|
$ |
2,280.5 |
|
|
$ |
2,155.7 |
| ||
Other income |
|
549.1 |
|
|
493.2 |
|
|
288.4 |
|
|
298.8 |
| ||||
Total |
|
35,627.8 |
|
|
34,068.1 |
|
|
2,568.9 |
|
|
2,454.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales |
|
25,668.8 |
|
|
25,009.2 |
|
|
|
|
|
|
| ||||
Research and development expenses |
|
1,477.3 |
|
|
1,433.6 |
|
|
|
|
|
|
| ||||
Selling, administrative and general expenses |
|
3,143.9 |
|
|
2,988.8 |
|
|
473.2 |
|
|
439.3 |
| ||||
Interest expense |
|
297.1 |
|
|
231.1 |
|
|
487.6 |
|
|
596.4 |
| ||||
Interest compensation to Financial Services |
|
202.7 |
|
|
203.6 |
|
|
|
|
|
|
| ||||
Other operating expenses |
|
223.7 |
|
|
178.1 |
|
|
739.0 |
|
|
708.1 |
| ||||
Total |
|
31,013.5 |
|
|
30,044.4 |
|
|
1,699.8 |
|
|
1,743.8 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income of Consolidated Group before Income Taxes |
|
4,614.3 |
|
|
4,023.7 |
|
|
869.1 |
|
|
710.7 |
| ||||
Provision for income taxes |
|
1,640.7 |
|
|
1,407.6 |
|
|
305.2 |
|
|
251.8 |
| ||||
Income of Consolidated Group |
|
2,973.6 |
|
|
2,616.1 |
|
|
563.9 |
|
|
458.9 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Financial Services |
|
565.0 |
|
|
460.3 |
|
|
1.1 |
|
|
1.4 |
| ||||
Other |
|
(1.0 |
) |
|
(4.8 |
) |
|
|
|
|
|
| ||||
Total |
|
564.0 |
|
|
455.5 |
|
|
1.1 |
|
|
1.4 |
| ||||
Net Income |
|
3,537.6 |
|
|
3,071.6 |
|
|
565.0 |
|
|
460.3 |
| ||||
Less: Net income attributable to noncontrolling interests |
|
.3 |
|
|
6.9 |
|
|
|
|
|
|
| ||||
Net Income Attributable to Deere & Company |
|
$ |
3,537.3 |
|
|
$ |
3,064.7 |
|
|
$ |
565.0 |
|
|
$ |
460.3 |
|
|
|
* 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 As of October 31, 2013 and 2012 |
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
|
FINANCIAL SERVICES |
| ||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 | ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
|
$ |
3,023.3 |
|
|
$ |
3,907.9 |
|
|
$ |
480.8 |
|
|
$ |
744.3 |
|
Marketable securities |
|
1,207.2 |
|
|
1,101.5 |
|
|
417.6 |
|
|
368.9 |
| ||||
Receivables from unconsolidated subsidiaries and affiliates |
|
3,502.0 |
|
|
1,579.0 |
|
|
|
|
|
|
| ||||
Trade accounts and notes receivable - net |
|
1,061.8 |
|
|
1,279.7 |
|
|
3,555.9 |
|
|
3,333.3 |
| ||||
Financing receivables - net |
|
16.5 |
|
|
11.5 |
|
|
25,616.2 |
|
|
22,147.5 |
| ||||
Financing receivables securitized - net |
|
|
|
|
|
|
|
4,153.1 |
|
|
3,617.6 |
| ||||
Other receivables |
|
983.1 |
|
|
1,092.4 |
|
|
486.6 |
|
|
703.6 |
| ||||
Equipment on operating leases - net |
|
|
|
|
|
|
|
3,152.2 |
|
|
2,527.8 |
| ||||
Inventories |
|
4,934.7 |
|
|
5,170.0 |
|
|
|
|
|
|
| ||||
Property and equipment - net |
|
5,408.5 |
|
|
4,950.5 |
|
|
58.4 |
|
|
61.4 |
| ||||
Investments in unconsolidated subsidiaries and affiliates |
|
4,569.0 |
|
|
4,102.4 |
|
|
10.2 |
|
|
8.7 |
| ||||
Goodwill |
|
844.8 |
|
|
921.2 |
|
|
|
|
|
|
| ||||
Other intangible assets - net |
|
73.1 |
|
|
101.0 |
|
|
4.0 |
|
|
4.0 |
| ||||
Retirement benefits |
|
517.7 |
|
|
14.9 |
|
|
37.5 |
|
|
44.6 |
| ||||
Deferred income taxes |
|
2,575.4 |
|
|
3,497.3 |
|
|
51.3 |
|
|
50.3 |
| ||||
Other assets |
|
654.3 |
|
|
582.9 |
|
|
622.2 |
|
|
883.5 |
| ||||
Assets held for sale |
|
505.0 |
|
|
|
|
|
|
|
|
|
| ||||
Total Assets |
|
$ |
29,876.4 |
|
|
$ |
28,312.2 |
|
|
$ |
38,646.0 |
|
|
$ |
34,495.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short-term borrowings |
|
$ |
1,080.4 |
|
|
$ |
424.8 |
|
|
$ |
7,708.5 |
|
|
$ |
5,967.7 |
|
Short-term securitization borrowings |
|
|
|
|
|
|
|
4,109.1 |
|
|
3,574.8 |
| ||||
Payables to unconsolidated subsidiaries and affiliates |
|
106.9 |
|
|
135.2 |
|
|
3,470.8 |
|
|
1,519.3 |
| ||||
Accounts payable and accrued expenses |
|
7,990.9 |
|
|
7,679.0 |
|
|
1,849.8 |
|
|
2,129.9 |
| ||||
Deferred income taxes |
|
92.4 |
|
|
93.3 |
|
|
369.1 |
|
|
338.3 |
| ||||
Long-term borrowings |
|
4,870.9 |
|
|
5,444.9 |
|
|
16,706.8 |
|
|
17,008.2 |
| ||||
Retirement benefits and other liabilities |
|
5,346.8 |
|
|
7,673.0 |
|
|
74.1 |
|
|
61.2 |
| ||||
Liabilities held for sale |
|
120.4 |
|
|
|
|
|
|
|
|
|
| ||||
Total liabilities |
|
19,608.7 |
|
|
21,450.2 |
|
|
34,288.2 |
|
|
30,599.4 |
| ||||
Total Deere & Company stockholders equity |
|
10,265.8 |
|
|
6,842.1 |
|
|
4,357.8 |
|
|
3,896.1 |
| ||||
Noncontrolling interests |
|
1.9 |
|
|
19.9 |
|
|
|
|
|
|
| ||||
Total stockholders equity |
|
10,267.7 |
|
|
6,862.0 |
|
|
4,357.8 |
|
|
3,896.1 |
| ||||
Total Liabilities and Stockholders Equity |
|
$ |
29,876.4 |
|
|
$ |
28,312.2 |
|
|
$ |
38,646.0 |
|
|
$ |
34,495.5 |
|
|
|
* Deere & Company with Financial Services on the equity basis. |
The supplemental 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 Years Ended October 31, 2013 and 2012 |
(In millions of dollars) Unaudited |
|
EQUIPMENT OPERATIONS* |
|
FINANCIAL SERVICES |
| ||||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 | |||||||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
$ |
3,537.6 |
|
|
$ |
3,071.6 |
|
|
$ |
565.0 |
|
|
$ |
460.3 |
| |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Provision (credit) for credit losses |
|
10.8 |
|
|
6.0 |
|
|
9.7 |
|
|
(.9 |
) | |||||
Provision for depreciation and amortization |
|
733.0 |
|
|
643.1 |
|
|
492.2 |
|
|
439.2 |
| |||||
Impairment charges |
|
102.0 |
|
|
33.4 |
|
|
|
|
|
|
| |||||
Undistributed earnings of unconsolidated subsidiaries and affiliates |
|
(369.0 |
) |
|
(413.7 |
) |
|
(.9 |
) |
|
(1.3 |
) | |||||
Provision (credit) for deferred income taxes |
|
(204.6 |
) |
|
(115.7 |
) |
|
32.0 |
|
|
23.9 |
| |||||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Trade receivables |
|
26.1 |
|
|
(255.0 |
) |
|
|
|
|
|
| |||||
Insurance receivables |
|
|
|
|
|
|
|
263.4 |
|
|
(338.5 |
) | |||||
Inventories |
|
(69.6 |
) |
|
(947.6 |
) |
|
|
|
|
|
| |||||
Accounts payable and accrued expenses |
|
470.5 |
|
|
887.0 |
|
|
(207.9 |
) |
|
382.1 |
| |||||
Accrued income taxes payable/receivable |
|
84.2 |
|
|
(102.7 |
) |
|
(3.8 |
) |
|
30.4 |
| |||||
Retirement benefits |
|
241.6 |
|
|
71.2 |
|
|
20.4 |
|
|
(7.9 |
) | |||||
Other |
|
106.0 |
|
|
70.5 |
|
|
73.5 |
|
|
(109.9 |
) | |||||
Net cash provided by operating activities |
|
4,668.6 |
|
|
2,948.1 |
|
|
1,243.6 |
|
|
877.4 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Collections of receivables (excluding trade and wholesale) |
|
|
|
|
|
|
|
15,440.0 |
|
|
14,320.7 |
| |||||
Proceeds from maturities and sales of marketable securities |
|
800.1 |
|
|
200.1 |
|
|
43.8 |
|
|
40.2 |
| |||||
Proceeds from sales of equipment on operating leases |
|
|
|
|
|
|
|
936.7 |
|
|
799.5 |
| |||||
Proceeds from sales of businesses, net of cash sold |
|
22.0 |
|
|
30.2 |
|
|
|
|
|
|
| |||||
Cost of receivables acquired (excluding trade and wholesale) |
|
|
|
|
|
|
|
(18,792.7 |
) |
|
(16,730.2 |
) | |||||
Purchases of marketable securities |
|
(911.1 |
) |
|
(802.2 |
) |
|
(115.2 |
) |
|
(120.0 |
) | |||||
Purchases of property and equipment |
|
(1,155.2 |
) |
|
(1,316.2 |
) |
|
(3.2 |
) |
|
(3.1 |
) | |||||
Cost of equipment on operating leases acquired |
|
|
|
|
|
|
|
(2,107.2 |
) |
|
(1,562.0 |
) | |||||
Increase in investment in Financial Services |
|
(121.6 |
) |
|
(264.1 |
) |
|
|
|
|
|
| |||||
Acquisitions of businesses, net of cash acquired |
|
(83.5 |
) |
|
|
|
|
|
|
|
|
| |||||
Increase in trade and wholesale receivables |
|
|
|
|
|
|
|
(1,152.7 |
) |
|
(1,518.5 |
) | |||||
Other |
|
(120.0 |
) |
|
(95.6 |
) |
|
(94.5 |
) |
|
138.8 |
| |||||
Net cash used for investing activities |
|
(1,569.3 |
) |
|
(2,247.8 |
) |
|
(5,845.0 |
) |
|
(4,634.6 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Increase (decrease) in total short-term borrowings |
|
36.0 |
|
|
(36.4 |
) |
|
2,713.5 |
|
|
931.3 |
| |||||
Change in intercompany receivables/payables |
|
(2,007.2 |
) |
|
45.5 |
|
|
2,007.2 |
|
|
(45.5 |
) | |||||
Proceeds from long-term borrowings |
|
282.9 |
|
|
2,521.5 |
|
|
4,451.1 |
|
|
8,120.5 |
| |||||
Payments of long-term borrowings |
|
(191.0 |
) |
|
(220.1 |
) |
|
(4,767.4 |
) |
|
(5,175.9 |
) | |||||
Proceeds from issuance of common stock |
|
174.5 |
|
|
61.0 |
|
|
|
|
|
|
| |||||
Repurchases of common stock |
|
(1,531.4 |
) |
|
(1,587.7 |
) |
|
|
|
|
|
| |||||
Capital investment from Equipment Operations |
|
|
|
|
|
|
|
121.6 |
|
|
264.1 |
| |||||
Dividends paid |
|
(752.9 |
) |
|
(697.9 |
) |
|
(186.0 |
) |
|
(43.5 |
) | |||||
Excess tax benefits from share-based compensation |
|
50.7 |
|
|
30.1 |
|
|
|
|
|
|
| |||||
Other |
|
(40.1 |
) |
|
(32.7 |
) |
|
(19.2 |
) |
|
(33.6 |
) | |||||
Net cash provided by (used for) financing activities |
|
(3,978.5 |
) |
|
83.3 |
|
|
4,320.8 |
|
|
4,017.4 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
(5.4 |
) |
|
(63.2 |
) |
|
17.1 |
|
|
24.4 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
(884.6 |
) |
|
720.4 |
|
|
(263.5 |
) |
|
284.6 |
| |||||
Cash and Cash Equivalents at Beginning of Year |
|
3,907.9 |
|
|
3,187.5 |
|
|
744.3 |
|
|
459.7 |
| |||||
Cash and Cash Equivalents at End of Year |
|
$ |
3,023.3 |
|
|
$ |
3,907.9 |
|
|
$ |
480.8 |
|
|
$ |
744.3 |
| |
|
|
* 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.
|
Deere & Company |
|
|
Other Financial Information |
(Furnished herewith) |
For the Twelve Months Ended October 31, |
|
|
Equipment Operations |
|
|
Agriculture and Turf |
|
|
Construction and Forestry |
|
| ||||||||||||
Dollars in millions |
|
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
| ||||||
Net Sales |
|
|
$ |
34,998 |
|
$ |
33,501 |
|
|
$ |
29,132 |
|
$ |
27,123 |
|
|
$ |
5,866 |
|
$ |
6,378 |
|
|
Average Identifiable Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
With Inventories at LIFO |
|
|
$ |
14,569 |
|
$ |
13,594 |
|
|
$ |
11,103 |
|
$ |
10,422 |
|
|
$ |
3,466 |
|
$ |
3,172 |
|
|
With Inventories at Standard Cost |
|
|
$ |
15,924 |
|
$ |
14,965 |
|
|
$ |
12,211 |
|
$ |
11,564 |
|
|
$ |
3,713 |
|
$ |
3,401 |
|
|
Operating Profit |
|
|
$ |
5,058 |
|
$ |
4,397 |
|
|
$ |
4,680 |
|
$ |
3,921 |
|
|
$ |
378 |
|
$ |
476 |
|
|
Percent of Net Sales |
|
|
14.5 |
% |
13.1 |
% |
|
16.1 |
% |
14.5 |
% |
|
6.4 |
% |
7.5 |
% |
| ||||||
Operating Return on Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
With Inventories at LIFO |
|
|
34.7 |
% |
32.3 |
% |
|
42.2 |
% |
37.6 |
% |
|
10.9 |
% |
15.0 |
% |
| ||||||
With Inventories at Standard Cost |
|
|
31.8 |
% |
29.4 |
% |
|
38.3 |
% |
33.9 |
% |
|
10.2 |
% |
14.0 |
% |
| ||||||
SVA Cost of Assets |
|
|
$ |
(1,911 |
) |
$ |
(1,795 |
) |
|
$ |
(1,465 |
) |
$ |
(1,387 |
) |
|
$ |
(446 |
) |
$ |
(408 |
) |
|
SVA |
|
|
$ |
3,147 |
|
$ |
2,602 |
|
|
$ |
3,215 |
|
$ |
2,534 |
|
|
$ |
(68 |
) |
$ |
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended October 31, |
|
|
Financial Services |
|
|
|
|
|
|
|
| ||||||||||||
Dollars in millions |
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net Income Attributable to Deere & Company |
|
|
$ |
565 |
|
$ |
460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity |
|
|
$ |
4,073 |
|
$ |
3,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Equity |
|
|
|
13.9 |
% |
|
13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit |
|
|
$ |
870 |
|
$ |
712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Equity |
|
|
$ |
4,073 |
|
$ |
3,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Equity |
|
|
$ |
(627 |
) |
$ |
(538 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA |
|
|
$ |
243 |
|
$ |
174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
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 approximately 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. The Financial Services segment is assessed an annual pretax cost of approximately 15 percent of the segments average equity. The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of each segment to determine the amount of SVA.
|
| 4th Quarter 2013 Earnings Conference Call 2 Safe Harbor Statement & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning the companys plans and projections 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. 27 |
| 4th Quarter 2013 Earnings Conference Call 3 Fourth Quarter Overview (in millions of dollars except per share amounts) Q4 2013 Q4 2012 Change Net Sales and Revenues $9,451 $9,792 -3% Net Sales $8,624 $9,047 -5% Net Income Attributable to Deere & Company $807 $688 +17% Diluted EPS $2.11 $1.75 +21% 28 |
| 4th Quarter 2013 Earnings Conference Call 4 Fourth Quarter Overview Net Sales Equipment operations net sales: Down 5% in Q4 2013 vs. Q4 2012 Price realization: +4 points Currency translation: (2) points 29 |
JD Landscapes Agreement to Sell Majority Interest Deere will initially retain 40% equity interest and continue to participate in successful landscapes distribution business Assets held for sale at 31 October 2013: $505 million Invest Resources to Growing Our Core Businesses | 4th Quarter 2013 Earnings Conference Call 5 30 |
Acquisition of Bauer Built Manufacturing Investing in Global Growth Deere-Bauer Partnership Since 2002 Bauer manufactured co-branded planters 44 to 120 foot ultra-wide Largest planter available in the industry Predominantly North America market Acquisition Positions Deere to Capitalize on Growth Highly productive machines needed to feed the world Accelerates growth of planter business globally Enhances opportunity to serve large farms in key markets around the world Leverages global dealer network, manufacturing capabilities and management skills | 4th Quarter 2013 Earnings Conference Call 6 31 |
| 4th Quarter 2013 Earnings Conference Call 7 Worldwide Agriculture & Turf Fourth Quarter Overview *Q4 2013 operating profit impacted by: (in millions of dollars) Q4 2013 Q4 2012 Change Net Sales $7,102 $7,393 -4% Operating Profit* $996 $931 +7% Favorable Unfavorable Price Realization Foreign Currency Exchange Product Mix Shipment Volumes Impairment Charges 32 |
| 4th Quarter 2013 Earnings Conference Call 8 U.S. Farm Cash Receipts Source: 1998 2012: USDA 27 August 2013 2013F 2014F: Deere & Company Forecast as of 20 November 2013 Projected total cash receipts remain at historically high levels 33 |
| 4th Quarter 2013 Earnings Conference Call 9 World Farm Fundamentals Global Stocks-to-Use Ratios Source: USDA 11 October 2013 Cotton Wheat Corn Soybeans 34 |
| 4th Quarter 2013 Earnings Conference Call 10 Deere & Company Forecast as of 20 November 2013 Economic Update EU 28 Fiscal 2014 Short-term economic stress has diminished, but risks remain Only modest GDP growth expected Grain prices and farm income lower but to remain near long-term average Solid livestock margins Beef prices at historic highs Pork prices above long-term average Improved milk prices will support dairy farmers 35 |
| 4th Quarter 2013 Earnings Conference Call 11 Deere & Company Forecast as of 20 November 2013 Economic Update Other Selected Markets Fiscal 2014 Commonwealth of Independent States (CIS) Import policies affecting combine sales in Russia, Kazakhstan and Belarus Late fall planting due to rains puts 2014 winter crop at risk Continuing restrictions, increased collateral requirements & interest rates impacting credit availability China Subsidies expected to be supportive of agriculture Government focus on productivity, product quality, and increased farmer income India Ag sector growth expected very favorable 2013 monsoon season Government focus on mechanization 36 |
| 4th Quarter 2013 Earnings Conference Call 12 Gross Value of Agricultural Production Brazil Source: Actual: MAPA (Brazilian Ministry of Agriculture), October 2013 2013F 2014F: Deere & Company Forecast as of 20 November 2013 Gross Value of Agricultural Production* * In Brazilian Real Expected to increase ~ 3% in 2014 over prior season 2012 Mix by Crop 37 |
| 4th Quarter 2013 Earnings Conference Call 13 Agriculture & Turf Retail Sales Industry Outlook Fiscal 2014 Deere & Company Forecast as of 20 November 2013 Forecast U.S. and Canada Ag Down 5-10% EU 28 Ag Down ~ 5% South America Ag (Tractors and Combines) Down 5-10% CIS Countries Ag Down slightly Asia Ag Up slightly U.S. and Canada Turf and Utility Equipment Up ~ 5% 38 |
| 4th Quarter 2013 Earnings Conference Call 14 Worldwide Agriculture & Turf Deere & Company Outlook Fiscal Year 2014 Forecast Net sales: Down ~ 6% JD Landscapes: ~ (4) points Deere & Company Forecast as of 20 November 2013 39 |
| 4th Quarter 2013 Earnings Conference Call 15 Worldwide Construction & Forestry Fourth Quarter Overview (in millions of dollars) Q4 2013 Q4 2012 Change Net Sales $1,522 $1,654 -8% Operating Profit* $118 $120 -2% *Q4 2013 operating profit impacted by: Favorable Unfavorable Price Realization Shipment Volumes Production Costs Selling, Administrative and General Expenses 40 |
U.S. Economic Indicators 2014 Forecast GDP Growth (annual percentage rate)* +2.5% Housing Starts (thousands) 1,152 Non-Residential Spending Growth (annual percentage rate)* +2.6% Government Spending Growth (annual percentage rate)* -0.9% | 4th Quarter 2013 Earnings Conference Call 16 Worldwide Construction & Forestry Deere & Company Outlook Source: Global Insight, Calendar Year Estimates October 2013 * Change from prior year in real dollars Fiscal Year 2014 Forecast Net sales: Up ~ 10% Deere & Company Forecast as of 20 November 2013 41 |
| 4th Quarter 2013 Earnings Conference Call 17 Worldwide Financial Services Credit Loss History Provision for Credit Losses / Average Owned Portfolio 0.03% 42 |
| 4th Quarter 2013 Earnings Conference Call 18 Worldwide Financial Services Fourth Quarter 2013 Net income attributable to Deere & Company $157 million in Q4 2013 vs. $122 million in Q4 2012 Fiscal Year 2014 Forecast Net income attributable to Deere & Company of ~ $600 million Deere & Company Forecast as of 20 November 2013 43 |
| 4th Quarter 2013 Earnings Conference Call 19 Consolidated Trade Receivables & Inventory (in millions of dollars) 2013* Actual 2013* Previous Forecast 2014** Forecast A&T $103 $225 $325 C&F $173 $175 $175 Total, as reported $276 $50 $150 Total, constant exchange $285 $200 $75 * Change at 31 October 2013 vs. 31 October 2012 ** Forecasted change at 31 October 2014 vs. 31 October 2013 Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) A&T and Total impacted by $372 million of receivables and inventory for JD Landscapes that were reclassified to assets held for sale at 31 October 2013 44 |
| 4th Quarter 2013 Earnings Conference Call 20 Cost of Sales as a Percent of Net Sales Equipment Operations Deere & Company Forecast as of 20 November 2013 Fourth Quarter 2013 ~ 73% Fiscal Year 2013 ~ 73% Fiscal Year 2014 Forecast ~ 74% 45 |
| 4th Quarter 2013 Earnings Conference Call 21 Research & Development Expense Equipment Operations Fourth Quarter 2013 Up ~ 1% vs. Q4 2012 Fiscal Year 2013 Up ~ 3% vs. FY 2012 Previous forecast: Up ~ 3% vs. FY 2012 Fiscal Year 2014 Forecast Down ~ 3% vs. FY 2013 Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) 46 |
| 4th Quarter 2013 Earnings Conference Call 22 Selling, Administrative & General Expense Equipment Operations Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) Fourth Quarter 2013 Down ~ 1% vs. Q4 2012 Fiscal Year 2013 Up ~ 5% vs. FY 2012 Previous forecast: Up ~ 7% vs. FY 2012 Fiscal Year 2014 Forecast Down ~ 4% vs. FY 2013 JD Landscapes: ~ (8) points 47 |
| 4th Quarter 2013 Earnings Conference Call 23 Pension and OPEB Expense Fourth Quarter 2013 Down ~ $5 million vs. Q4 2012 Fiscal Year 2013 Up ~ $65 million vs. FY 2012 Previous forecast: Up ~ $80 million vs. FY 2012 Fiscal Year 2014 Forecast Down ~ $150 million vs. FY 2013 Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) 48 |
| 4th Quarter 2013 Earnings Conference Call 24 Income Taxes Equipment Operations Fourth Quarter 2013 Effective tax rate: ~ 35% Fiscal Year 2013 Effective tax rate: ~ 36% Previous forecast: 34-36% Fiscal Year 2014 Forecast Projected effective tax rate: 34-36% Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) 49 |
| 4th Quarter 2013 Earnings Conference Call 25 Continued Strong Operating Performance Equipment Operations Fiscal Year Cash Flows from Operations * Previous forecast ~ $3.8 billion Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) $ Billions 50 |
Deere Use-of-Cash Priorities | 4th Quarter 2013 Earnings Conference Call 26 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 51 |
| 4th Quarter 2013 Earnings Conference Call 27 2014 Company Outlook Fiscal Year 2014 Forecast Net sales: Down ~ 3% vs. FY 2013 Price realization: ~ +2 points JD Landscapes: ~ (3) points Net income attributable to Deere & Company of ~ $3.3 billion First Quarter 2014 Forecast Net sales: Down ~ 2% vs. Q1 2013 Price realization: ~ +3 points Deere & Company Forecast as of 20 November 2013 52 |
| 4th Quarter 2013 Earnings Conference Call 28 Appendix 53 |
| 4th Quarter 2013 Earnings Conference Call 29 54 |
| 4th Quarter 2013 Earnings Conference Call 30 Sources and Uses of Cash Fiscal 20042013 Equipment Operations Source: Deere & Company SEC filings = Source of Cash = Use of Cash ~58% of cash from operations returned to shareholders 55 |
| 4th Quarter 2013 Earnings Conference Call Deere Quarterly Dividends Declared* Q1 2003 Q4 2013 31 Dividend raised 82% since launch of the revised John Deere Strategy in 2010** * Adjusted for 2 for 1 stock split on 26 November 2007 ** See revised John Deere Strategy in Appendix 56 |
| 4th Quarter 2013 Earnings Conference Call 32 Share Repurchase As Part of Publicly Announced Plans Cumulative cost of repurchases 2004-2013: ~ $10.7 billion Amount remaining on May 2008 authorization of $5 billion: ~ $1.0 billion 31 October 2013 period ended shares: ~ 373.8 million 2013 average diluted shares: ~ 389.2 million Shares repurchased 2004-2013: ~ 178.9 million Average repurchase price 2004-2013: $59.86 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 20.8 $1.7 2012 20.2 $1.6 2013 18.2 $1.5 * 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 2004-2013 57 |
| 4th Quarter 2013 Earnings Conference Call 33 Other Information Equipment Operations Fiscal Year 2013 Capital Expenditures: ~ $1.2 billion Previous forecast: ~ $1.3 billion Depreciation and Amortization: ~ $733 million Previous forecast: ~ $765 million Pension/OPEB Contributions: ~ $340 million Previous forecast: ~ $315 million Previous Forecast as of 14 August 2013 58 |
| 4th Quarter 2013 Earnings Conference Call 34 Other Information Equipment Operations Fiscal Year 2014 Forecast Capital Expenditures: ~ $1.2 billion Depreciation and Amortization: ~ $800 million Pension/OPEB Contributions: ~ $115 million Deere & Company Forecast as of 20 November 2013 59 |
| 4th Quarter 2013 Earnings Conference Call 35 U.S. Farm Commodity Prices Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) (dollars per bushel, except cotton, which is dollars per pound) 2012/13 Previous 2012/13 2013/14 Forecast Previous 2013/14 2014/15 Forecast Corn $6.89 $6.90 $4.40 $4.90 $4.50 Wheat $7.77 $7.77 $7.00 $6.80 $6.75 Soybeans $14.40 $14.35 $12.50 $11.25 $11.00 Cotton $.73 $.72 $.75 $.75 $.70 60 |
U.S. Farm Commodity Prices | 4th Quarter 2013 Earnings Conference Call 36 Source: Actual Data: USDA Forecast Data: Deere & Company Forecast as of 20 November 2013 61 |
(Yield in bushels per acre, except cotton, which is pounds per acre) Acres Harvested (millions) Yield 2012/13 Estimate 2013/14 Projection 2012/13 Estimate 2013/14 Projection Corn 87.4 87.2 123.4 160.4 Wheat 49.0 45.2 46.3 47.2 Soybeans 76.2 75.7 39.8 43.0 Cotton 9.4 7.8 887.0 808.0 | 4th Quarter 2013 Earnings Conference Call 37 U.S. Acres Harvested and Crop Yields Deere & Company Forecast as of 20 November 2013 62 |
| 4th Quarter 2013 Earnings Conference Call 38 U.S. Farm Cash Receipts Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) (in billions of dollars) 2012 2013 Forecast Previous 2013 2014 Forecast Previous 2014 Crops $223.5 $206.6 $206.8 $193.1 $198.3 Livestock $171.6 $173.8 $171.7 $173.5 $170.3 Government Payments $10.6 $11.4 $11.3 $11.1 $11.1 Total Cash Receipts $405.7 $391.8 $389.8 $377.7 $379.7 63 |
| 4th Quarter 2013 Earnings Conference Call 39 U.S. Net Farm Cash Income Deere & Company Forecast as of 20 November 2013 (Previous Forecast as of 14 August 2013) (in billions of dollars) 2012 2013 Forecast Previous 2013 2014 Forecast Total Cash Receipts $405.7 $391.8 $389.8 $377.7 Other Farm-Related Income $33.6 $36.4 $36.4 $27.0 Gross Cash Income $439.3 $428.2 $426.2 $404.7 Cash Expenses ($304.9) ($305.0) ($302.0) ($295.0) Net Cash Income $134.4 $123.2 $124.2 $109.7 64 |
| 4th Quarter 2013 Earnings Conference Call 40 Retail Sales U.S. and Canada Ag Industry* Deere** Utility Tractors 2% in line with the industry Row-Crop Tractors 5% in line with the industry 4WD Tractors 18% more than the industry Combines 28% more than the industry October 2013 Retail Sales and Dealer Inventories * As reported by the Association of Equipment Manufacturers ** As reported to the Association of Equipment Manufacturers *** At 31 October 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 2013 2012 Row-Crop Tractors 18% 19% Combines 4% 4% 65 |
| 4th Quarter 2013 Earnings Conference Call 41 October 2013 Retail Sales EU 28 Deere* Tractors a single digit Combines a single digit U.S. and Canada Deere* Selected Turf & Utility Equipment flat * Based on internal sales reports U.S. and Canada Construction & Forestry Deere* First-in-the-Dirt flat Settlements a single digit 66 |
| 4th Quarter 2013 Earnings Conference Call 42 2010 2011 2012 2013 Farmers with Annual Revenues <R$90M Farmers with Annual Revenues >R$90M FINAME-Eligible Finance Rates Brazil Source: ABIMAQ (Brazilian Association of Machinery and Equipment), November 2013 67 |
Deeres first quarter 2014 conference call is scheduled for 9:00 a.m. central time on Wednesday, February 12, 2014 68 |
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