The Concept of Humanity in Islam and its effects at future of humanity
2014oct presentation
1. John Deere
Committed to Those
Linked to the Land
Investor Presentation
Deere & Company
October 2014
2. Safe Harbor Statement & Disclosures
This presentation includes forward-looking comments subject to important risks
and uncertainties. It may also contain financial measures that are not in
conformance with accounting principles generally accepted in the United States
of America (GAAP).
Refer to Deere’s reports filed on Forms 8-K (current), 10-Q (quarterly), and
10-K (annual) for information on factors that could cause actual results to differ
materially from information in this presentation and for information reconciling
financial measures to GAAP.
Guidance noted in the following slides was effective as of the company’s most
recent earnings release and conference call (13 August 2014). Nothing in this
presentation should be construed as reaffirming or disaffirming such guidance.
This presentation is not an offer to sell or a solicitation of offers to buy any of
Deere’s securities.
| Deere & Company | October 2014
2
3. Table of Contents
|
Slide #
John Deere Strategy 4
Foundational Success Factors 9
Global Markets and Opportunities 18
John Deere Financial Services 31
John Deere Power Systems 36
Market Fundamentals 41
Appendix 47
3 Deere & Company | October 2014
10. Asset Management
Dramatic Reduction in Asset Intensity
• Avoided ~ $8.5 billion in working capital in 2013 vs. 1998
• Receivable level in 2013 consistent with 1998, with almost 3x the sales
*Through 3rd quarter 2014
| Deere & Company | October 2014
60%
55%
50%
45%
40%
35%
30%
25%
20%
Prior Year
Current Year
20002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
Trade Receivables and Net Sales
$40,000
$35,000
$30,000
$25,000
$ Millions 1998 2013
$20,000
$15,000
$10,000
$5,000
$0
Trade Receivables Net Sales
Quarterly Receivables & Inventory as a % of Previous 12 Months Sales
10
11. Productivity Improvement
~ 6% CAGR over 30 Years
• Deere’s net sales and revenues per employee have increased at a CAGR
of ~ 6% over last 30 years
$600
$500
$400
$300
$200
$100
| Deere & Company | October 2014
Net Sales and Revenues per Employee
$0
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
$ Thousands
11
12. Investment in New Products and Technologies
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
| Deere & Company | October 2014
R&D as Percent of Net Sales
Source: Deere & Company and competitor SEC filings
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Deere R&D $ Deere % Competitor A % Competitor B % Competitor C %
12
13. Net Sales by Product Category
Equipment Operations - Fiscal Year 2013
|
Agriculture & Turf – $29.1B Construction & Forestry – $5.9B
Deere & Company | October 2014
Construction
Commercial
Worksite
Products
Forestry
Other
Large Ag
Small Ag
Turf
Other
13
14. Deere Use-of-Cash Priorities
Cash from Operations
| Deere & Company | October 2014
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
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
14
15. Share Repurchase
As Part of Publicly Announced Plans
Cumulative cost of repurchases 2004-3Q2014: ~ $12.3 billion
Amount remaining on December 2013 authorization of $8 billion: ~ $7.3 billion
31 July 2014 period ended basic shares: ~ 358.4 million
3Q2014 average diluted shares: ~ 365.1 million
Shares repurchased 2004-3Q2014: ~ 197.2 million
Average repurchase price 2004-3Q2014: $62.54
15 | Deere & Company | October 2014
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
2014 YTD 18.4 $1.6
* 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 2004-3Q2014
16. Deere Quarterly Dividends Declared*
Q1 2003 – Q4 2014
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
* Adjusted for 2 for 1 stock split on 26 November 2007
** See slide 5 for John Deere Strategy
| Deere & Company | October 2014
16
$0.11
$0.14
$0.16
$0.20
$0.22
$0.25
$0.28
$0.35
$0.30
$0.41
$0.46
$0.51
$0.60
$0.00
Dividend raised 114%
since launch of the
revised John Deere
Strategy in 2010**
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
17. Sources and Uses of Cash Fiscal 2004–2013
Equipment Operations
$4,287
$23,994
$33,000
$30,000
$27,000
$24,000
$21,000
$18,000
$15,000
$12,000
$9,000
$6,000
$3,000
Source: Deere & Company SEC filings
17 | Deere & Company | October 2014
= Source of Cash
= Use of Cash
$607
$7,685
$1,203
$1,980
$4,720
$9,077
$1,200
(1) Other includes proceeds from maturities and sales of marketable securities and purchases of marketable securities and reconciliation for non-cash
items including excess tax benefits from share-based compensation and the effect of exchange rates on cash and cash equivalents
$0
Beginning
Cash & Cash
Equivalents
(10/31/03)
Cash From
Operations
Divestitures,
net of
Acquisitions
Capital
Expenditures
Investment in
Financial
Services
Net Change in
Debt and
Intercompany
Balances
Dividends Share
Repurchase,
net of
Common
Stock
Issuances
Other Ending Cash &
Cash
Equivalents
(10/31/13)
(1)
$ Millions
~58% of cash from operations $3,023
returned to shareholders
19. Growing Global Presence
• FY 2013 equipment net sales outside U.S. & Canada 4.5 times the
level in FY 2000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
| Deere & Company | October 2014
50%
45%
40%
35%
30%
25%
20%
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ Millions
Net Sales Outside U.S. and Canada
Net Sales Outside U.S. & Canada % of Total Net Sales
19
20. Global Growth
Invest Resources to Growing Our Core Businesses
• April 2014 – $40 million investment in Catalão, Brazil to expand
sugarcane harvester and sprayer production capacity by 30%
• April 2014 – Introduced over 60 new products in South America
• February 2014 – Definitive agreement to sell irrigation operations
• October 2013 – $30 million investment in Bruchsal, Germany to expand
manufacturing capacity and flexibility
• October 2013 – Agreement to sell majority interest in JD Landscapes
• September 2013 – Acquisition of Bauer Built Manufacturing to accelerate
growth of planter business globally
• September 2013 – $40 million investment to create capacity to
manufacture 8R tractors in Montenegro, Brazil factory
| Deere & Company | October 2014
20
21. Net Sales by Major Markets
Equipment Operations
U.S. & Canada
8% CAGR
Central & South America
18% CAGR
| Deere & Company | October 2014
21
$13.8
$15.1
$13.0
$14.8
$17.4
$20.8
$21.8
2007 2008 2009 2010 2011 2012 2013
$3.9
Western Europe
$4.6
2% CAGR
$3.4 $3.4
$4.4 $4.3 $4.4
2007 2008 2009 2010 2011 2012 2013
$1.0
Central Europe & CIS
$1.9
8% CAGR
$0.7 $0.7
$1.4 $1.7 $1.6
2007 2008 2009 2010 2011 2012 2013
$1.6
$2.6
$1.8
$2.6
$3.6 $3.6
$4.3
2007 2008 2009 2010 2011 2012 2013
Asia, Africa & Middle East
17% CAGR
$0.8 $1.1 $1.2 $1.4
$1.9 $2.1 $2.1
2007 2008 2009 2010 2011 2012 2013
Australia & New Zealand
12% CAGR
$0.4 $0.6 $0.6 $0.6 $0.8 $1.0 $0.8
2007 2008 2009 2010 2011 2012 2013
$ Billions
22. U.S. and Canada
Factory Locations
Iowa, USA
• Cotton Harvesting Equipment
• Planting Equipment
• Spraying Equipment
• Tillage Equipment
• Ag Tractors
• Components
• Foundry
• Engines
• Hay & Forage Equipment
• Articulated Dump Trucks
• 4WD Loaders
• Motor Graders
• Skidders
•Wheeled Feller Bunchers
• Backhoes
• Compact Tracked Loaders
• Crawler Dozers
• High-Speed Dozers
• Knuckleboom Loaders
• Skid Steer Loaders
• Tracked Feller Bunchers
• Tracked Harvesters
22 |
Deere & Company | October 2014
Wisconsin, USA
• Lawn & Garden Equipment
• Utility Vehicles
• Golf & Turf Reel Mowers
Illinois, USA
• Combine Harvesters
• Headers
• Planting Equipment
• Hydraulic Cylinders
North Dakota, USA
• Air Seeding Equipment
• Electronics
• Tillage Equipment
Tennessee, USA
• Lawn Tractors
North Carolina, USA
• Commercial Mowers
• Golf & Turf Mowers
• Utility Vehicles
• Hydraulic Excavators
Alberta, Canada
British Columbia, Canada • Remanufactured Components
• Log Loaders & Specialty Products
California, USA
• Satellite Receivers
Kansas, USA
• Power Transmission Equipment
Missouri, USA
• Remanufactured Components
Georgia, USA
• Utility Tractors
• Compact Utility Tractors
Louisiana, USA
• Sugarcane Harvesting Equipment
• Tractor Loaders
• Scrapers
• Cotton Strippers
23. EU 28
Factory Locations
Horst, The Netherlands
• Spraying Equipment
Saran, France
• Engines
| Deere & Company | October 2014
Joensuu, Finland
• Wheel Forwarders
•Wheel Harvesters
• Forestry Attachments
Bruchsal, Germany
• Tractor, Harvesting & Forestry Cabs
Mannheim, Germany
• Tractors
Zweibrücken, Germany
• Combines & Forage Harvesters
Arc-les-Gray, France
• Forage Equipment
• Balers
• Ag Loaders
Madrid, Spain
• Components
Stadtlohn, Germany
• Headers
Gummersbach, Germany
• Walk-Behind Mowers
23
24. Brazil
Factory Locations
|
Catalão, Brazil
• Sugarcane Harvesters
• Sprayers
Montenegro, Brazil
• Tractors
Horizontina, Brazil
• Combine Harvesters
• Planters
Deere & Company | October 2014
Indaiatuba, Brazil
• Backhoe Loaders
• 4WD Loaders
Indaiatuba, Brazil (JV)
• Excavators
24
25. CIS
Factory Locations
25 |
Deere & Company | October 2014
Orenburg, Russia
• Seeding Equipment
• Tillage Equipment
Domodedovo, Russia
• Tractors
• Combine Harvesters
26. China
Factory Locations
|
Deere & Company | October 2014
Ningbo, China
• Tractors (28-70 hp)
• Small Combine Harvesters
• Hydraulic Cylinders
Tianjin (TEDA), China
• Tractors (75-135 hp)
• Transmissions
Jiamusi, China
• Large Combine Harvesters
• Corn Pickers
• Cotton Pickers
Harbin, China
• Combine Harvesters
• Tractors (150+ hp)
• Sprayers
Tianjin (TEDA), China
• 4WD Loaders
• Excavators
Tianjin (TEDA), China
• Engines (50-220 hp)
26
27. India
Factory Locations
|
Deere & Company | October 2014
Gummidipoondi, India (JV)
• Side-Shift Backhoes
Pune, India
• Engines
• Transmissions
• Tractors (36-75 hp)
• Electronics
Sirhind, India
• Combine Harvesters
Dewas, India
• Tractors (36-50 hp)
27
28. Other Regions
Factory Locations
Monterrey, Mexico
• Rotary Cutters
• Implements
• Components
28 |
Deere & Company | October 2014
Kibbutz Beit Hashita, Israel
• Cotton Picker Components
Rosario, Argentina
• Engines
• Tractors
• Combines
Ramos, Mexico
• Ag Loaders
• Compact Utility Tractor Loaders
• Utility Tractor Cabs
• Hydraulic Cylinders
Saltillo, Mexico
• Ag Tractors
• Transaxles
Torreon, Mexico
• Axles
• Engines
• Electronics Tokoroa, New Zealand
• Forestry Harvester Heads
29. Worldwide Parts Services
Supporting the Global Growth of Our Equipment Operations
Highlights:
● Campinas, Brazil
29 |
Deere & Company | October 2014
Expansion of existing facility… to be completed in late 2014
● Nagpur, India
Announced India Parts Distribution Center… targeted to open in late 2014
● Johannesburg, South Africa
New, larger Regional Distribution Center opened 4Q 2012
● Rosario, Argentina
New, larger Regional Distribution Center opened 4Q 2012
● Stockholm, Sweden
New, larger Regional Distribution Center serving C&F and A&T opened May 2012
● Bruchsal, Germany
E-PDC deconsolidation & packaging facility opened Nov 2011
Anchor Parts Distribution Centers
Regional Parts Distribution Centers
or Depots
Distribution Centers under
construction
30. John Deere FarmSightTM
Integrated wireless technology linking the equipment, managers, operators, dealers, and
agricultural consultants to provide more productivity, efficiency and yield to a farm or
business.
● Machine Optimization
| Deere & Company | October 2014
30
● Solutions that get the most out of machinery
● Use of automation and machine sensors
● Increased machine uptime, and higher levels of machine
productivity, including the impact machines have on crop
productivity & input efficiency
● Logistics Optimization
● Coordination of field activities and resources
● Enable fleet management decisions from web enabled devices
● Machine-to-machine communication for in-field logistics
● Ag Decision Support
● Easy data flow between machines and trusted advisors
● Platform for secure, trusted data sharing
● Enable proactive management decisions through insights
32. John Deere Financial Services
Supporting the Global Growth of Our Equipment Operations
• Expanding EU-28 coverage
to majority of countries
32 |
Deere & Company | October 2014
Owned Operations
Bank/Finance Company Partners
Retail programs through JDF not currently offered
33. John Deere Financial Services
$36.8 Billion Owned Portfolio at 31 October 2013
Portfolio Composition by
Market
Ag & Turf
88%
C&F
12%
| Deere & Company | October 2014
Portfolio Composition by
Geography
Portfolio Composition by
Product
U.S.
74%
Latin America
6%
Europe
6%
Canada
11%
Australia
3%
Leasing
13%
Information above includes all Deere lending activities worldwide. John Deere Capital Corporation is the largest lending operation of Deere & Company.
33
Installment
Financing
57%
Wholesale /
Floorplan
23%
Revolving
Credit
7%
35. John Deere Capital Corporation Retail Notes
60+ Days Past Due vs. Write-offs
Agriculture & Turf1
• Continued extremely low write-offs
• Average write-offs less than 5 bps over last
10 years
3.95%
3.45%
2.95%
2.45%
1.95%
1.45%
0.95%
0.45%
-0.05%
| Deere & Company | October 2014
Construction & Forestry
• Extremely low write-offs in
2013
• Steady decline in write-offs
since 2009
3.95%
3.45%
2.95%
2.45%
1.95%
1.45%
0.95%
0.45%
(1) 1983 – 1985 includes Construction; 1986 - 1994 includes Lawn & Grounds Care; beginning in 2009 includes both Ag and Turf equipment; As %
of Owned Losses After Dealer Reserve Charges
Source: 1983 – 1994 internal reporting, 1995 - 2011 JDCC 10-K filings, 2012-2013 internal reporting
35
'83 '86 '89 '92 '95 '98 '01 '04 '07 '10 13
Net Write-offs (Ag) Installments 60+DPD (Ag)
-0.05%
'95 '98 '01 '04 '07 '10 13
Net Write-offs (C&F) Installments 60+DPD (C&F)
38. Engine Emissions
Interim Tier 4/Stage IIIB
Successful transition from Tier 3/Stage IIIA
• Integrated vehicle solution
• Meeting customer performance and reliability
requirements
• Over 76 million hours in the field*
• Single fluid solution well accepted
38 |
Deere & Company | October 2014
• No need for Diesel Exhaust Fluid
• Deere tractors with 9.0L engine have 1-5%
better fuel economy than competitive tractors**
• * As of June 2014
•** Per Nebraska Tractor Test Laboratory Results
39. Engine Emissions
Final Tier 4/Stage IV
IT4/Stage IIIA creates foundation for FT4/Stage IV delivery
• Over 600,000 hours of testing*
• FT4/Stage IV technologies to deliver excellent
performance and operation costs
• More applications to transition to FT4/Stage
IV than IT4/Stage IIIB emission programs
• Maintain Tier 2/Stage II and Tier 3/Stage IIIA
solutions for global markets
• * As of June 2014
39 |
Deere & Company | October 2014
40. Engine Emissions
2014 Worldwide Off-Road Emissions Regulations > 75hp
U.S. and Canada
Transition to Final Tier 4
• 175 - 750 hp: Jan 2014
• 75 - 175 hp: Jan 2015
None
Stage II/Tier 2
Stage IIIA/Tier 3/TREM 3A (>50hp)
Stage IIIB/Interim Tier 4
• *Includes some non-EU28 countries that follow EU28 emissions regulations
40 |
Deere & Company | October 2014
EU28*
Transition to Stage IV
• 175 – 750 hp: Jan 2014
• 75 - 175 hp: Oct 2014
Russia
No set date to transition
from Stage II
China
Anticipated transition to
Stage IIIA Oct 2015
Brazil
Transition to Stage IIIA:
• Construction Equipment: Jan 2015
• Ag Equipment: Jan 2017
India
No set date to transition
from TREM 3A
48. 2009 OROA* Reconciliation to GAAP
Equipment Operations
(millions of dollars unless stated otherwise)
Equipment Operations
* OROA: Operating Return on Operating Assets
| Deere & Company | October 2014
2009, as
Reported
Exclude Goodwill
Impairment &
Voluntary Employee-
Separation
2009, as
Adjusted
Net Sales 20,756 20,756
Average Identifiable Assets
With Inventories at LIFO 9,647 9,647
With Inventories at Standard Cost 10,950 10,950
Operating Profit 1,365 380 1,745
Percent of Net Sales 6.6% 8.4%
Operating Return on Assets
With Inventories at LIFO 14.1% 18.1%
With Inventories at Standard Cost 12.5% 15.9%
48
49. SVA* Reconciliation to GAAP
Equipment Operations
(millions of dollars unless stated otherwise)
Equipment Operations 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Net Sales 5,723 6,479 7,663 8,830 9,640 11,082 11,926 9 ,701 11,169 11,077 11,703
Average Identifiable Assets
With Inventories at LIFO 5,765 5,449 5,551 6,187 6,502 6,682 7,672 7,724 8,069 8,743 6,229
With Inventories at Standard Cost 6,846 6,442 6,494 7,131 7,488 7,703 8,711 8,739 9,039 9,678 7,147
Operating Profit 77 242 847 1,006 1,125 1,402 1,476 272 693 (46) 401
Percent of Net Sales 1.3% 3.7% 11.1% 11.4% 11.7% 12.6% 12.4% 2.8% 6.2% -0.4% 3.4%
Operating Return on Assets
With Inventories at LIFO 1.3% 4.4% 15.3% 16.3% 17.3% 21.0% 19.3% 3.5% 8.6% -0.5% 6.4%
With Inventories at Standard Cost 1.1% 3.8% 13.0% 14.1% 15.0% 18.2% 16.9% 3.1% 7.7% -0.5% 5.6%
SVA Cost of Assets (821) (773) (780) (856) (898) (924) (1,045) (1,049) (1,085) (1,162) (858)
SVA (744) (531) 67 150 227 477 431 (776) (392) (1,208) (457)
Equipment Operations 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Net Sales 13,349 17,673 19,401 19,884 21,489 25,803 20,756 23,573 29,466 33,501 34,998
Average Identifiable Assets
With Inventories at LIFO 5,965 6,482 7,248 7,546 8,092 9,652 9,647 9 ,196 11,516 13,594 14,569
With Inventories at Standard Cost 6,925 7,477 8,312 8,634 9,205 10,812 10,950 10,494 12,875 14,965 15,924
Operating Profit 708 1,905 1,842 1,905 2,318 2,927 1,365 2,909 3,839 4,397 5,058
Percent of Net Sales 5.3% 10.8% 9.5% 9.6% 10.8% 11.3% 6.6% 12.3% 13.0% 13.1% 14.5%
Operating Return on Assets
With Inventories at LIFO 11.9% 29.4% 25.4% 25.2% 28.6% 30.3% 14.1% 31.6% 33.3% 32.3% 34.7%
With Inventories at Standard Cost 10.2% 25.5% 22.2% 22.1% 25.2% 27.1% 12.5% 27.7% 29.8% 29.4% 31.8%
SVA Cost of Assets (831) (897) (998) (1,036) (1,094) (1,284) (1,301) (1,259) (1,545) (1,795) (1,911)
SVA (123) 1,008 844 869 1,224 1,643 64 1,650 2,294 2,602 3,147
* SVA: Shareholder Value Added
| Deere & Company | October 2014
49