Committed to Those Linked to the Land - Deere
Transcript of Committed to Those Linked to the Land - Deere
John DeereCommitted to Those Linked to the Land
Investor Presentation
Deere & CompanyMay/June 2014
| Deere & Company | May/June 2014
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 (14 May 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.
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|
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
Deere & Company | May/June 20143
John Deere Strategy
|5 Deere & Company | May/June 2014
* SVA: Shareholder Value Added
*
*
| Deere & Company | May/June 2014
* OROA: Operating Return on Operating Assets** SVA: Shareholder Value Added*** Excludes fiscal 2009 expenses related to goodwill impairment and voluntary employee-separation, for reconciliation to GAAP see “2009 OROA* Reconciliation to GAAP” slide in Appendix.
The John Deere StrategyFoundational Success Factors
Exceptional Operating Performance - Equipment Operations− 31.8% OROA* in 2013
12%
20%
28%
2001
2002
2003
200420052006
20072008
2009
2009, adjusted***
20102011 2012
2013
-5%
0%
5%
10%
15%
20%
25%
30%
35%
% of Normal Volume
80%Low
100%Normal
120%High
12% OROA (SVA** Neutral)
6
| Deere & Company | May/June 2014
Exceptional Operating Performance - Equipment Operations− Higher Net Cash Flow, More Consistently
The John Deere StrategyFoundational Success Factors
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ M
illio
ns
Sale of Trade Receivables to Credit
Adoption of SVA* Model
Roughly $8.0 billion in Pension/OPEB contributions, 2001-2013
7
* SVA: Shareholder Value Added
|
-1,600
-1,200
-800
-400
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
3,600
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Deere & Company | May/June 2014
SVA (
$ m
illio
ns)
* SVA: Shareholder Value AddedNote: For reconciliation of SVA to GAAP, please see “SVA* Reconciliation to GAAP” slide in Appendix
Disciplined SVA* Growth - Equipment Operations− SVA Journey, 1992 - 2013
8
The John Deere StrategyFoundational Success Factors
Adoption of SVA Model
FoundationalSuccess Factors
Building on Core Strengths That Have Guided Our Success
| Deere & Company | May/June 2014
Asset Management Dramatic Reduction in Asset Intensity
20%
25%
30%
35%
40%
45%
50%
55%
60%
20002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
Prior Year
Current Year
Trade Receivables and Net Sales
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Trade Receivables Net Sales
$ M
illio
ns1998 2013
• Avoided ~ $8.5 billion in working capital in 2013 vs. 1998• Receivable level in 2013 consistent with 1998, with almost 3x the sales
Quarterly Receivables & Inventory as a % of Previous 12 Months Sales
10
*Through 2nd quarter 2014
| Deere & Company | May/June 2014
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
Net Sales and Revenues per Employee
$0
$100
$200
$300
$400
$500
$600
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
$ Th
ousa
nds
11
| Deere & Company | May/June 2014
Investment in New Products and Technologies
R&D as Percent of Net Sales
Source: Deere & Company and competitor SEC filings
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
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
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Net Sales by Product CategoryEquipment Operations - Fiscal Year 2013
Deere & Company | May/June 2014
Agriculture & Turf – $29.1B Construction & Forestry – $5.9B
Construction
Forestry
Commercial Worksite Products
Other
Large Ag
Small Ag
Turf
Other
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| Deere & Company | May/June 2014
Deere Use-of-Cash Priorities
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
14
| Deere & Company | May/June 201415
Share RepurchaseAs Part of Publicly Announced Plans
Cumulative cost of repurchases 2004-2Q2014: ~ $11.8 billionAmount remaining on December 2013 authorization of $8 billion: ~ $7.9 billion30 April 2014 period ended basic shares: ~ 363.8 million2Q2014 average diluted shares: ~ 369.8 millionShares repurchased 2004-2Q2014: ~ 191.3 millionAverage repurchase price 2004-2Q2014: $61.67
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 12.4 $1.1
* 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 2004-2Q2014
| Deere & Company | May/June 2014
Deere Quarterly Dividends Declared* Q1 2003 – Q2 2014
* Adjusted for 2 for 1 stock split on 26 November 2007** See slide 5 for John Deere Strategy
16
$0.11$0.14
$0.16
$0.20$0.22
$0.25$0.28
$0.30
$0.35
$0.41
$0.46
$0.51
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Dividend raised 82% since launch of the revised John Deere Strategy in 2010**
| Deere & Company | May/June 201417
Sources and Uses of Cash Fiscal 2004–2013Equipment Operations
Source: Deere & Company SEC filings
= Source of Cash
= Use of Cash
(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
$4,287
$23,994
$607
$7,685
$1,203$1,980
$4,720
$9,077
$1,200
$0
$3,000
$6,000
$9,000
$12,000
$15,000
$18,000
$21,000
$24,000
$27,000
$30,000
$33,000
BeginningCash & CashEquivalents(10/31/03)
Cash FromOperations
Divestitures,net of
Acquisitions
CapitalExpenditures
Investment inFinancialServices
Net Change inDebt and
IntercompanyBalances
Dividends ShareRepurchase,
net ofCommon
StockIssuances
Other Ending Cash &Cash
Equivalents(10/31/13)
(1)
$ M
illio
ns
$3,023~58% of cash from operations returned to shareholders
Global Markets and Opportunities
| Deere & Company | May/June 2014
Growing Global Presence
• FY 2013 equipment net sales outside U.S. & Canada 4.5 times the level in FY 2000
20%
25%
30%
35%
40%
45%
50%
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ M
illio
ns
Net Sales Outside U.S. and Canada
Net Sales Outside U.S. & Canada % of Total Net Sales
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| Deere & Company | May/June 2014
Global GrowthInvest 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
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| Deere & Company | May/June 2014
Net Sales by Major MarketsEquipment Operations
21
$13.8$15.1
$13.0$14.8
$17.4
$20.8$21.8
2007 2008 2009 2010 2011 2012 2013
U.S. & Canada8% CAGR
$3.9$4.6
$3.4 $3.4$4.4 $4.3 $4.4
2007 2008 2009 2010 2011 2012 2013
Western Europe2% CAGR
$1.0
$1.9
$0.7 $0.7$1.4 $1.7 $1.6
2007 2008 2009 2010 2011 2012 2013
Central Europe & CIS8% CAGR
$1.6$2.6
$1.8$2.6
$3.6 $3.6$4.3
2007 2008 2009 2010 2011 2012 2013
Central & South America18% CAGR
$0.8 $1.1 $1.2 $1.4$1.9 $2.1 $2.1
2007 2008 2009 2010 2011 2012 2013
Asia, Africa & Middle East17% CAGR
$0.4 $0.6 $0.6 $0.6 $0.8 $1.0 $0.8
2007 2008 2009 2010 2011 2012 2013
Australia & New Zealand12% CAGR
$ Billions
|
U.S. and CanadaFactory Locations
Deere & Company | May/June 201422
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
Illinois, USA• Combine Harvesters• Headers• Planting Equipment• Hydraulic Cylinders
North Dakota, USA• Air Seeding Equipment• Electronics• Tillage Equipment
North Carolina, USA• Commercial Mowers• Golf & Turf Mowers• Utility Vehicles• Hydraulic Excavators
Alberta, Canada• Remanufactured ComponentsBritish Columbia, Canada
• Log Loaders & Specialty Products
California, USA• Satellite Receivers
Kansas, USA• Power Transmission Equipment
Missouri, USA• Remanufactured Components
Louisiana, USA• Sugarcane Harvesting Equipment• Tractor Loaders• Scrapers• Cotton Strippers
Georgia, USA• Utility Tractors• Compact Utility Tractors
Tennessee, USA• Lawn Tractors
Wisconsin, USA• Lawn & Garden Equipment• Utility Vehicles• Golf & Turf Reel Mowers
| Deere & Company | May/June 2014
EU 28Factory Locations
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
Saran, France• Engines
Madrid, Spain• Components
Horst, The Netherlands• Spraying Equipment
Stadtlohn, Germany• Headers
Gummersbach, Germany• Walk-Behind Mowers
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BrazilFactory Locations
Deere & Company | May/June 2014
Catalão, Brazil• Sugarcane Harvesters• Sprayers
Montenegro, Brazil• Tractors
Horizontina, Brazil• Combine Harvesters• Planters
Indaiatuba, Brazil• Backhoe Loaders• 4WD Loaders
Indaiatuba, Brazil (JV)• Excavators
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CISFactory Locations
Deere & Company | May/June 201425
Orenburg, Russia• Seeding Equipment• Tillage Equipment
Domodedovo, Russia• Tractors• Combine Harvesters
|
ChinaFactory Locations
Deere & Company | May/June 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)
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IndiaFactory Locations
Deere & Company | May/June 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)
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Other RegionsFactory Locations
Deere & Company | May/June 201428
Kibbutz Beit Hashita, Israel• Cotton Picker Components
Rosario, Argentina• Engines• Tractors• Combines
Monterrey, Mexico• Rotary Cutters• Implements• Components
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
|
Worldwide Parts ServicesSupporting the Global Growth of Our Equipment Operations
Deere & Company | May/June 201429
Highlights:● 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 DepotsDistribution Centers under construction
| Deere & Company | May/June 2014
John Deere FarmSightTM
30
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● 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
John Deere Financial Services
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John Deere Financial ServicesSupporting the Global Growth of Our Equipment Operations
Deere & Company | May/June 201432
• Expanding EU-28 coverage to majority of countries
Owned Operations
Bank/Finance Company Partners
Retail programs through JDF not currently offered
| Deere & Company | May/June 2014
Portfolio Composition by Market
John Deere Financial Services$36.8 Billion Owned Portfolio at 31 October 2013
Portfolio Composition by Geography
Portfolio Composition by Product
Information above includes all Deere lending activities worldwide. John Deere Capital Corporation is the largest lending operation of Deere & Company.
Ag & Turf88%
C&F12%
U.S.74%
Canada11%
Europe6%
Latin America6%
Australia3%
33
Installment Financing
57%
Wholesale / Floorplan
23%
Leasing13%
Revolving Credit7%
| Deere & Company | May/June 2014
John Deere Capital CorporationProfitability and Growth
34
383
291 311282
149
319364
2006 2007 2008 2009 2010 2011 2012 2013
Net Income ($ Millions)
0.22% 0.29% 0.33%
0.70%
0.48%
0.12%0.05% 0.03%
2006 2007 2008 2009 2010 2011 2012 2013
Write-offs/Average Owned Portfolio
18.6 19.0 19.1 19.321.1
23.3
26.6
30.7
2006 2007 2008 2009 2010 2011 2012 2013
Administered Portfolio Growth ($ Billions)
469
| Deere & Company | May/June 2014
John Deere Capital Corporation Retail Notes60+ Days Past Due vs. Write-offs
Agriculture & Turf1
• Continued extremely low write-offs• Average write-offs less than 5 bps over last
10 years
Construction & Forestry• Extremely low write-offs in
2013• Steady decline in write-offs
since 2009
(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
-0.05%
0.45%
0.95%
1.45%
1.95%
2.45%
2.95%
3.45%
3.95%
'83 '86 '89 '92 '95 '98 '01 '04 '07 '10 13Net Write-offs (Ag) Installments 60+DPD (Ag)
-0.05%
0.45%
0.95%
1.45%
1.95%
2.45%
2.95%
3.45%
3.95%
'95 '98 '01 '04 '07 '10 13Net Write-offs (C&F) Installments 60+DPD (C&F)
John DeerePower Systems
Engine Emissions and Technology
| Deere & Company | May/June 2014
Interim Tier 4 (IT4): • 50% Nitrogen Oxide (NOx) reduction• 90% Particulate Matter (PM) reduction
Final Tier 4 (FT4):• 80% NOx reduction
Tier 4 Engine Implementation
Final Tier 4
0
0.10
0.20
0.30
0.40
0.50
0 2.00 4.00 6.00 8.00 10.00 12.00
Tier 1
Tier 2
Tier 3
Interim Tier 4
NOx, g/kw-hr
PM
, g
/kw
-hr
37
|
Engine EmissionsInterim Tier 4/Stage IIIB
Deere & Company | May/June 201438
Successful transition from Tier 3/Stage IIIA
• Integrated vehicle solution
• Meeting customer performance and reliability requirements
• Over 50 million hours in the field*
• Single fluid solution well accepted• No need for Diesel Exhaust Fluid
• Deere tractors with 9.0L engine have 1-5% better fuel economy than competitive tractors**
• * As of February 2014•** Per Nebraska Tractor Test Laboratory Results
|
Engine EmissionsFinal Tier 4/Stage IV
Deere & Company | May/June 201439
• FT4/Stage IV technologies to deliver excellent performance and operation costs
• Shorter implementation horizon than IT4/Stage IIIA
• 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
IT4/Stage IIIA creates foundation for FT4/Stage IV delivery
|
Engine EmissionsWorldwide Emissions Regulations
Deere & Company | May/June 201440
Stage II/Tier 2Stage IIIA/Tier 3/TREM 3A (>50hp)
Stage IIIB/Interim Tier 4
None
2013 Emissions Regulations
• *Includes some non-EU28 countries that follow EU28 emissions regulations
U.S. and CanadaTransition to Final Tier 4• 175 - 750 hp: Jan 2014• 75 - 175 hp: Jan 2015
EU28*Transition to Stage IV• 175 – 750 hp: Jan 2014• 75 - 175 hp: Oct 2014
RussiaNo set date to transition from Stage II
ChinaAnticipated transition to Stage IIIA Oct 2015
BrazilTransition to Stage IIIA:• Construction Equipment: Jan 2015• Ag Equipment: Jan 2017
IndiaNo set date to transition from TREM 3A
Market Fundamentals
| Deere & Company | May/June 201442
U.S. Farm Cash Receipts
Source: 1999 – 2012: USDA 11 February 20142013F – 2014F: Deere & Company Forecast as of 14 May 2014
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F
$ Bill
ions
Government Payments Total Cash Receipts
Projected total cash receipts remain at historically high levels
| Deere & Company | May/June 2014
U.S. Farm Balance Sheet Strong
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,00019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
13F
2014
F
$ Bill
ions
Farm Debt Farm Equity Debt to Equity Ratio (%) Debt to Asset Ratio (%)
Source: 1971 – 2012: USDA 11 February 20142013F – 2014F: Deere & Company Forecast as of 14 May 2014
43
| Deere & Company | May/June 201444
World Farm FundamentalsGlobal Stocks-to-Use Ratios
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1993 1996 1999 2002 2005 2008 2011 2014P
Source: USDA – 9 May 2014
Cotton
Wheat
Corn
Soybeans
| Deere & Company | May/June 2014
U.S. Housing Starts
45
Source: 1961 – 2012: U.S. Census Bureau April 20142013F – 2014F: Deere & Company Forecast as of 14 May 2014
0.000
0.250
0.500
0.750
1.000
1.250
1.500
1.750
2.000
2.250
2.500
1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014F
Housing Starts (Millions of Units)
Multi-Family Housing Starts
Single-Family Housing Starts
| Deere & Company | May/June 2014
U.S. Construction Spending
46
-160%-150%-140%-130%-120%-110%-100%-90%-80%-70%-60%-50%-40%-30%-20%-10%0%10%20%30%40%50%60%70%
0100200300400500600700800900
1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,2002,300
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F
% Total C
onstruction Spend
Bill
ions
, 20
05 C
hain
ed $
’s
U.S. Construction Spending (Billions, 2005 Chained $’s)
Residential Investment in StructuresNonresidential Investment in StructuresGovernment Investment in StructuresGovernment Infrastructure Investment
Source: 1996 – 2012: U.S. Bureau of Economic Analysis April 20142013F – 2014F: Deere & Company Forecast as of 14 May 2014
Appendix
| Deere & Company | May/June 2014
2009 OROA* Reconciliation to GAAPEquipment Operations
Equipment Operations2009, 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 AssetsWith Inventories at LIFO 14.1% 18.1%With Inventories at Standard Cost 12.5% 15.9%
(millions of dollars unless stated otherwise)
48
* OROA: Operating Return on Operating Assets
| Deere & Company | May/June 2014
SVA* Reconciliation to GAAPEquipment Operations
Equipment Operations 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Net 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 AssetsWith 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 2013Net 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 AssetsWith 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
(millions of dollars unless stated otherwise)
49
* SVA: Shareholder Value Added
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