Growing a Business As Great As Our Products. Deere & Company September 2010

Transcription

1 Growing a Business As Great As Our Products Deere & Company September 2010

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 (18 August 2010). 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. 2

3 Table of Contents Commitment to SVA and OROA 5 Macro economic Tailwinds 15 Global Construction and Infrastructure 24 Customer Focus and Innovation 27 JDPS Engine Emissions and Technology 36 Global Markets and Opportunities 42 John Deere Credit Operations 52 Appendix 61 3

4 Summary: Superior Sustainable Growth and Financial Performance Commitment to SVA and OROA Intense asset management Shareholder Value Added (SVA) metric: Highly effective in driving enterprise performance Cash generation Profitability targets based on structure line Aligned high performance teamwork Macro-economic tailwinds Global food, energy, housing and infrastructure demands offer great opportunities Global affluence / increasing food demand Bio-energy Global infrastructure Deere & Company in a unique position to capitalize on these opportunities Innovation 4

5 Commitment to SVA and OROA

6 Asset Management Dramatic Reduction in Asset Intensity Avoided ~$8 billion in working capital in 2009 vs Receivable level in 2009 consistent with 1989, with over 3x the sales 60% $25,000 Trade Receivables and Net Sales 55% Receivables & Inventory to Previous 12 Months Sales 50% 45% 40% 35% 30% 25% Prior Year Current Year $Millions $20,000 $15,000 $10,000 $5,000 20% $0 '00 Q3 Q4 '01 Q1 Q2 Q3 Q4 '02 Q1 Q2 Q3 Q4 '03 Q1 Q2 Q3 Q4 '04 Q1 Q2 Q3 Q4 '05 Q1 Q2 Q3 Q4 '06 Q1 Q2 Q3 Q4 '07 Q1 Q2 Q3 Q4 '08 Q1 Q2 Q3 Q4 '09 Q1 Q2 Q3 Q4 '10 Q1 Q2 Q3 Trade Receivables Net Sales 6

7 SVA Journey Enterprise ,800 1,400 SVA ($ millions) 1, Note: For reconciliation of SVA to GAAP, please see Enterprise SVA Reconciliation to GAAP slide in Appendix 7

8 SVA Journey Equipment Operations ,600 1,200 SVA ($ millions) , Note: For reconciliation of SVA to GAAP, please see Equipment Ops SVA Reconciliation to GAAP slide in Appendix 8

9 Net Cash Provided by Operating Activities Equipment Operations SVA Model: Higher Cash Flow, More Consistently 3,000 2,500 Adoption of SVA Model Sale of Trade Receivables to Credit 2,000 $ Millions 1,500 1, Over $6 billion in pension/opeb contributions,

10 Deere Quarterly Dividend History Q Q $0.35 $0.30 $0.28 $0.30 $0.25 $0.20 $0.20 $0.22 $0.25 $0.15 $0.14 $0.16 $0.10 $0.11 $0.05 $0.00 '03 Q1 Q2 Q3 Q4 '04 Q1 Q2 Q3 Q4 '05 Q1 Q2 Q3 Q4 '06 Q1 Q2 Q3 Q4 '07 Q1 Q2 Q3 Q4 '08 Q1 Q2 Q3 Q4 '09 Q1 Q2 Q3 Q4 '10 Q1 Q2 Q3 10

11 Target Profitability Structure Equipment Operations OROA Targets 12.5% OROA in 2009, in face of historic economic slowdown 30% 25% 20% 15% 10% 2009, as adjusted* % % % % OROA (SVA Neutral) 5% % 80% Low % Normal 120% High % of Normal Volume *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. 11

12 Productivity Improvement ~6% CAGR over 25+ Years Deere s net sales and revenues per employee have increased at a CAGR of ~6% since $600 $500 $400 $300 $200 $100 $ Net Sales and Revenues per Employee

13 Manufacturing Efficiencies Waterloo, IA Journey to a 6-Day Drive Train Days Relocation of 412 machines Eliminated 155 machines Days Machining departments based on part families Arranged machines using cellular concepts Started evacuation of multi-story buildings 35 Production Days Days Total evacuation of multi-story buildings New heat treat fully operational Set-up improvement On-site forging storage Insourcing of core processes -2 Days Run size optimization and set-up improvement Daily run size parameters 5 Outsourcing non-core processes 0 Prior to

14 Aligned High-Performance Teamwork: Integral Part of Strategy, Reinforced with Compensation Global Performance Management reinforces alignment Base pay changes linked to achieving goals STI: Short-Term Incentive Bonus focuses on OROA Covers most worldwide salaried employees MTI: Mid-Term Incentive Bonus driven by sustained SVA creation About 7,500 management employees eligible LTI: Long-Term Incentive Primarily stock options Top 750 employees eligible Minimum stock holding requirements for senior management (~top 125) 14

15 Macro-economic Tailwinds

16 Global Population by Geography Additional 1.9 billion people need food, shelter, infrastructure billion People Share of Global Population Increase billion People 7.0 Population (billions) % % 2.0 8% 1.0 0% 0.0 4% F 2015F 2020F 2025F 2030F 2035F North America Europe Latin America & Caribbean Africa Asia & Oceania Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision 16

17 Distribution of GDP Increase Asia accounts for large portion of global GDP increase $120 $39.7 trillion dollars $81.7 trillion dollars $100 U.S. dollars (trillions) $80 $60 $40 4% 8% Share of Global GDP Increase % $20 21% $0 22% F 2015F 2020F 2025F 2030F 2035F Source: IHS Global Insight, October 2009 North America Europe Latin America & Caribbean Africa Asia & Oceania 17

18 Dynamics of Food Demand Per Capita Income Services >$10 per day Processed Products $ per day Livestock Products 27% of world s population (Most hunger problems solved at $2.50 threshold) $ per day Commodities 20% of world s population (2/3rds experience hunger & malnutrition) <$1.25 per day Source: World Bank

19 Diets Change With Rising Incomes $50,000 $45,000 $40,000 $35, GDP per capita (nominal U.S. dollars) 2003 Meat Consumption (kilograms/capita/year) Trend - Meat Consumption (kilograms/capita/year) $30,000 $25,000 $20, $15,000 $10,000 $5, $- 0 India Philippines China Thailand Russia Brazil Argentina South Africa Mexico New Zealand Spain Canada Germany United Kingdom Japan United States Switzerland Source: Meat consumption per capita FAO, September 2009 GDP per capita IHS Global Insight, June

20 Global Diet Composition 1979/ Milk & Dairy and Meat components kg/capita/yr kg/capita/yr kg/capita/yr kg/capita/yr 200 Percent Increase 1979/1981 to 2050F 150 (kg / capita / year) 100 Meat +27% Meat +26% Meat +11% Meat +76% 50 Milk & Dairy +2% Milk & Dairy +17% Milk & Dairy +9% Milk & Dairy +31% / / F 2050F Milk & Dairy Meat Source: FAO; World agriculture: towards 2030/2050, June

21 Global Food Demand Global Food Consumption (billions of metric tons) Today Gap E Gap E Consumption increase driven by: Population growth Income growth 3.1bn people below $2.50 per day Biofuels demand on grain and oilseed crops Gross output increase per year: 2.4% last 10 years 3.4% next 10 years (required to meet demand) 1- Real GDP (expenditure method) base year and 2050 gaps estimated based on FAO Outlook (Nov 2008) and UN projections respectively Source: Food Demand Data and Growth Rates - IFPRI and FAO projections Population and Income Growth Projections - Global Insights 21

22 Government Support of Agriculture China 2010F Material Subsidy (basic subsidy for purchase of inputs) Grain Direct Subsidy (for growing encouraged crops) Seed Subsidy (for purchasing high-performing seed) Equipment Subsidy (for purchasing encouraged equipment) RMB (in billions) Source: China Ministry of Agriculture 22

23 Government Support of Agriculture Brazil R$116 billion approved for 2010/2011 Agriculture and Livestock Plan R$100 billion targeted towards Agribusiness (large-scale operations) 8% higher than 2009/2010 R$16 billion targeted towards family agriculture (small-scale operations) Government programs to support equipment purchases Program Description Interest Rate Grace Period Terms Expiration MDA More Food National, hp tractors 2% 3 yrs 10 yrs Perennial Approval Pro-Tractor Sao Paulo state, hp tractors 0% 2 yrs 5 yrs 12/31/10 Moderfrota National, equipment & capital goods 7.5%-9.5%* 1.5 yrs 6-8 yrs** 6/30/11 FINAME PSI National, equipment & capital goods 5.5% 2 yrs 10 yrs 3/31/11 * 7.5% small farmers; 9.5% medium / large farmers ** Tractors 6 years; Combines 8 years 23

24 Global Construction and Infrastructure

25 Global Construction and Infrastructure Needs Infrastructure is expected to be the fastest growing segment of construction Estimated gross spending as a percent of 2008 global GDP Residential Non-residential Infrastructure WW Construction spending Gross output, $ 2008 Billions CAGR Percent Construction 12% Mining & Quarrying 7% Ag, Hunting, Forestry & Fishing 7% 3.6% 9,915 6,509 2, ,266 3, All Other 2,356 74% 1,888 3, Note: Construction and Mines & Quarries account for ~5% and ~4% of 2008 value-added WW GDP, respectively Source: IHS Global Insight, March 2009; Off Highway Research; AEM; CCMA; Yengst; Deere analysis 25

26 China will be the largest market for construction in 2020, surpassing the USA in 2010 Construction spending 2020 absolute, Top 10 (Billions of 2008 $s) Construction spending change, Top 10 (Billions of 2008 $s) China 2,101 China 1,340 U.S. 1,439 U.S. 387 India Japan Spain UK Infrastructure Non-residential Residential All Construction India Russia Australia Indonesia Infrastructure Non-residential Residential All Construction France 353 Brazil 74 Russia 289 Saudi Arabia 61 Italy 288 Spain 58 Germany 273 Turkey 56 Top 10 countries account for 68% of total U.S. & BRIC represent 47% China & U.S. alone account for 36% of total 2020 spending Top 10 growers account for 78% of growth China & U.S. represent 51% of total growth 7 of top 10 growers are emerging countries Source: IHS Global Insight, March

27 Deere to Capitalize on Trends Through Customer Focus and Innovation

28 Innovation Spheres Megatrends Understanding Global Change Driven by megatrends Impact Trends Understanding the Impact to Deere Growth opportunities Innovation Spheres Define Aspirations for Growth Provides a common vision Sets organizational targets Leadership driven and externally validated Connecting Land and Lifestyles Environmental Sustainability Machine Productivity Water Management Worksite Solutions Renewable Energy 28 28

29 Innovation Spheres MACHINE PRODUCTIVITY Technology advances, access to information, and automation, enabling customers to work harder, faster, and smarter. Corn and Soybean Planting Windows 98% Yield Potential Central Corn Belt Central Corn Belt April 20-May 5 Corn April 20 May 5 Soybeans April 28 May 15 Yield Level 100% 95% 90% April 15 May 1 May 15 May 30 April 10 April 20 April 30 May 10 May 20 Source: Average of Land Grant Schools in the Central Corn Belt - Iowa State University, University of Illinois, Purdue University 29

30 Innovation Spheres MACHINE PRODUCTIVITY Technology advances, access to information, and automation, enabling customers to work harder, faster, and smarter. 8R/8RT Series Tractor Unparalleled total vehicle efficiency & unmatched reliability for maximum uptime DB120 Planter Largest planter ever offered by Deere - a 120-foot, 48- row, 30-inch-row spacing machine; plant up to 1,200 acres in a 10- to 12-hour day Innovative Technology New CommandView II Cab -Increased space and storage New AirCushion Suspension System (8RT) Improved Controls IVT Transmission - Now available on 8RT hp increase Innovative Technology Enabled by GPS and RowCommand technologies 125-bushel seed capacity SeedStar 2 monitoring Variable-rate seed drives and pneumatic downforce 30

31 Innovation Spheres MACHINE PRODUCTIVITY Technology advances, access to information, and automation, enabling customers to work harder, faster, and smarter Sprayer with Load Command Allows a self-propelled sprayer applicator to load a 1,200 gallon tank in about three minutes versus a traditional fill time of 12 to 15 minutes G-Series Graders with Grade Pro Package Offers increased operator acceptance, productivity, reliability, durability, serviceability and low daily operating costs Innovative Technology Industry first feature -4-5x faster loading time -Automatic decoupling Up to a 40% productivity gain Reduced spillage/waste Greater asset utilization Increased operator comfort Innovative Technology Exclusive integrated blade cross slope control - Select a desired slope and maintain it operating just one side of the blade Grade-control ready - Trimble or Topcon grade control compatible JDLink machine performance information 31

32 Innovation Spheres WATER MANAGEMENT Utilizing an important reusable resource in an efficient manner. Building the Water Business Platform through John Deere Water John Deere Water Today Enjoys a Leadership Position in Agricultural Irrigation June Entry point into agricultural irrigation Manufacturing Locations: Argentina, Australia, Brazil, Chile, Ecuador, France, India, Israel, Spain, U.S. Workforce: Over 1,400 employees Founded 1968 Major markets: North America, Latin America, Europe, Asia, Australia (~75 countries total coverage) May 2008 June 2008 Founded 1977 Founded Drip tape irrigation market leader - Leading drip/micro irrigation OEM Product Focus: Drip tape, drip line, drip tubes, sprinklers, micro-sprinklers, rotors, foggers/mist sprayers, stakes, jets, spray stakes, polyethylene blank tube, lay-flat, design software, soil moisture monitoring, and agronomic software Applications: Seasonal fruits and vegetables, horticulture, floriculture, nurseries, greenhouses, orchards, vineyards, permanent crops and mining operations 32

33 Innovation Spheres WATER MANAGEMENT Utilizing an important reusable resource in an efficient manner. John Deere Green Tech Utilizing a complete wireless approach to make irrigation and landscape management more efficient and cost effective CropSense Soil Moisture Monitoring By combining in-ground moisture sensors and an agronomic database, this technology offers growers moisture management prescriptions Innovative Technology Irrigation based on evapotranspiration (ET) by zip code ZipET Online configuration Central irrigation control systems SMART ALERTS via or cell phone Wireless signaling assemblies Wireless Wire Innovative Technology Precision capacitance sensors placed at multiple depths within the root zone taking readings at regular intervals Detects movement of water through the soil profile or height of the water table 33

34 Innovation Spheres WORKSITE SOLUTIONS Breakthrough solutions to help our customers manage equipment, people, and time more effectively Cotton Harvester Systems solutions to improve the cotton value chain 764 High-Speed Dozer First new machine form introduced to the construction & forestry industry in decades Innovative Technology Complete field-to-gin module tracking system User interface Systems integration - John Deere Des Moines Works - John Deere Agri Services - Intelligent Vehicle Systems Innovative Technology Combines the speed of a grader with the floatation of a crawler Articulated frame Rubber-tracked Cab forward Grade-control ready 34

35 Investment in New Products and Technologies $1,200 R&D as Percent of Net Sales 6.0% $1, % $ % millions of dollars $600 $ % 2.0% $ % $ % Deere R&D $ Deere % Competitor A % Competitor B % Competitor C % Source: Deere & Company and competitor SEC filings 35

36 John Deere Power Systems - Engine Emissions and Technology

37 Tier 4 Engine Implementation Interim Tier 4 (IT4): 50% Nitrogen Oxide (NOx) reduction 90% Particulate Matter (PM) reduction 100 hp emission break removed Final Tier 4 (FT4): 80% NOx reduction 175 hp emission break removed Same regulations from hp Tier 1 PM, g/kw-hr Interim Tier 4 Tier 3 Tier 2 Final Tier NOx, g/kw-hr 37

38 Interim Tier 4 January 2011 Building on Proven Technology & Fuel Efficiency Decision to use cooled exhaust gas recirculation (EGR) with diesel oxidation catalyst (DOC)/diesel particulate filter (DPF) driven by customer focus and needs analysis. A simple solution No additional fluids (Urea) More operator friendly Less complex to maintain A fuel efficient solution optimal performance & fuel-choice flexibility Tier 3/Stage IIIA cooled EGR John Deere 8320R rated the most fuel efficient tractor ever reviewed at the Nebraska Test Lab Operate efficiently with low-sulfur diesel and B5-B20 blends A field proven solution Since 2005, John Deere cooled EGR engines have a proven record of reliability in on-the-farm use An integrated vehicle solution John Deere designs, manufactures and services the engine, drivetrain, hydraulics, cooling and electrical systems John Deere Precision Farming Technology delivers input and labor savings to increase yields A fully supported solution John Deere dealers worldwide are highly trained to provide service and support as well as increase productivity / reliability / utilization of Deere machines. 38

39 John Deere 8320R The Most Fuel-Efficient Row-Crop Tractor ever Tested* 19.5 PTO at Rated Engine Speed % of Pull at Reduced Engine Speed Hp-hr/gal Hp-hr/gal John Deere 8320R (1) CNH Magnum 335 (2) NH T8050 (3) AGCO DT275B / Challenger MT675C / MF 8680 (4) (Consumption of DEF not considered) 14.0 John Deere 8320R (1) CNH Magnum 335 (2) NH T8050 (3) AGCO DT275B / Challenger MT675C / MF 8680 (4) (Consumption of DEF not considered) * The 8320R set a record as the most fuel efficient row-crop tractor ever to be tested at the NTTL delivering hp-hr/gal (226 g/kw.hr) while producing PTO hp in the Rated Engine Speed Power Take-Off test, beating the record previously held by a John Deere The 8320R set a record as the most fuel efficient row crop tractor ever to be tested at the NTTL delivering hp-hr/gal (240 g/kw.hr) while producing drawbar hp in the 75% of Max Power at Reduced Engine Speed Drawbar test, beating the record previously held by the John Deere Nebraska OECD Tractor Test 1963 Summary Nebraska OECD Tractor Test 1936 Summary 611. Case IH is a registered trademark of CNH America LLC. 3 Nebraska OECD Tractor Test 1937 Summary 612. New Holland is a registered trademark of CNH America LLC. 4 Nebraska OECD Tractor Test 2499 Summaries 655, 659, 651. AGCO, Challenger, and Massey Ferguson are registered trademarks of AGCO Corporation. 39

40 Interim Tier 4 Emissions Technology Options Engines with Cooled EGR and Exhaust Filter Selective Catalytic Reduction (SCR) 40

41 Interim Tier 4 Emissions Technology Options Engines with Cooled EGR and Exhaust Filter Selective Catalytic Reduction (SCR) Cooled EGR system EGR cooler EGR valve Venturi flow management SCR catalyst Diesel-exhaust fluid (DEF) tank DEF filter DEF sensors that monitor tank temperature and measure tank level Urea heating elements NOx sensor Variable Geometry Turbocharger (VGT) or Series Turbochargers (VGT & Fixed) Exhaust filter (DOC & DPF) Intake throttle valve Fixed geometry turbocharger In-cylinder solution Single fluid (diesel fuel) Two fluids (diesel fuel & DEF) 41

42 Global Markets and Opportunities

43 Growing Global Presence FY 2009 equipment net sales outside U.S. & Canada, while down from historic FY 2008 levels, remain over 2.5x the level in FY 2000 $12,000 Net Sales Outside U.S. and Canada 50% $10,000 45% $8,000 40% $ Millions $6,000 $4,000 35% 30% $2,000 25% $ % Net Sales Outside U.S. & Canada % of Total Net Sales 43

44 Net Sales by Major Markets Fiscal Years 2009, 2008, 2007, 2006 (in millions of dollars) % Change United States 11,568 13,166-12% 12,241 12,246 Canada 1,454 1,902-24% 1,588 1,605 Western Europe 3,427 4,610-26% 3,889 3,248 Central Europe & CIS 749 1,874-60% 1, Central & South America 1,787 2,577-31% 1, Asia, Africa & Middle East 1,166 1, % Asia Pacific, Australia & New Zealand % Total 20,756 25,803-20% 21,489 19,884 44

45 Agriculture & Turf Global Operating Model Customer Focus Regions Product Platforms 45

46 Agriculture & Turf - Customer Focus Regions Organized by Customer Needs / Market Similarities

47 Agriculture & Turf - External Platforms Portfolios of like product lines Crop Harvesting Turf and Utility Hay and Forage Crop Care Tractors Combines Front-End Equipment Cane Cotton Utility Vehicles Riding Lawn Equipment Commercial Mowing Golf Walk Behind Mowers SPFH Heads Balers Mowing Seeding Tillage Application Equipment Large (8000, 9000) Medium (6000, 7000) Utility (Compact, 4000, 5000) Loaders 47

48 Significant Commitments to Important Markets Brazil Brazil converted ~14 million hectares from pasture land into crop land in last 10 years - Soybeans and sugar cane Deere projects ~20 million hectares will be brought into production in the next decade - Soybeans and corn Deere projects a ~5% CAGR in industry equipment sales over the next decade Montenegro, Brazil Tractor Factory Horizontina, Brazil Combine Factory Catalão, Brazil Sugarcane Harvester Factory 48

49 Significant Commitments to Important Markets CIS Russian Federation ~1.7 billion hectares of total land mass Approximately million hectares of arable land Approximately million hectares could come back into use Approximately 20 million hectares for production agriculture; remaining 20 million for other agricultural purposes, such as grazing Deere estimates western-style equipment used <25% of farmed hectares > 70 dealer locations Additional ~60 million hectares of arable land in Belarus, Ukraine and Kazakhstan Deere construction dealers and forestry distributors cover majority of Russia market Orenburg, Russia Seeding Assembly Factory Domodedovo, Leased Assembly Facility Kaluga Region, Land owned for future expansion 49

50 Significant Commitments to Important Markets India Constant land available for Ag (~142 million hectares) Infrastructure investment projected to be ~9% of GDP by 2012 (~4.6% in 2008) Annual industry tractor sales >400,000 units -Launch of 5038D (38 hp) has significantly contributed to John Deere s growth in India -5036C and 5041C tractors introduced in June Designed and developed in India specifically for the India market -Targets the largest segment of the India tractor market (31 40 horsepower) -Export opportunities to select markets John Deere is the largest exporter of tractors from India Pune, India Tractor Factory Pune, India Technology Center Backhoe and 4-Wheel Drive Loader JV 50

51 Significant Commitments to Important Markets China Broad presence in market 5 operations Government support of agriculture Central government spending on rural areas and farmers increased by 20% to 716 billion RMB in 2009 The government raised minimum state purchasing prices for grain by 13-15% in 2009 Tianjin, China Drivetrain Factory Tianjin, China Tractor Joint Venture Ningbo, China Tractor Factory Jiamusi, China Combine Factory Xuzhou, China XCG Excavator JV 51

52 John Deere Credit Operations

53 Worldwide Credit Operations $22.8 Billion Owned Portfolio at 31 October 2009 Portfolio Composition by Market Portfolio Composition by Geography Portfolio Composition by Product Ag Financial Services 8% Latin America 5% Australia 3% Revolving Credit 10% Other 1% C&F 15% Europe 8% Installment Financing 58% Canada 11% Leasing 12% Ag & Turf 77% U.S. 73% Wholesale / Floorplan 19% Information above includes all Deere credit activities worldwide. John Deere Capital Corporation is the largest credit operation of Deere & Company. 53

54 John Deere Capital Corporation Profitability and Growth Net Income ($ Millions) Administered Portfolio Growth ($ Billions) Write-offs/Average Owned Portfolio % 0.28% 0.16% 0.22% 0.29% 0.33% 0.70%

55 John Deere Capital Corporation Retail Notes 60+ Days Past Due vs. Write-offs Agricultural Equipment % 3.45% 2.95% 2.45% 1.95% 1.45% 0.95% 0.45% Extremely low write-offs; average ~7 bps for last 10 years Even in severe Ag market of the 1980s, losses were comparatively low Construction & Forestry 3.95% 3.45% 2.95% 2.45% 1.95% 1.45% 0.95% 0.45% 2009 performance reflective of market conditions; continuing weak markets in U.S % '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 Net Write-offs (Ag) Installments 60+DPD (Ag) -0.05% '95 '97 '99 '01 '03 '05 '07 '09 Net Write-offs (C&F) Installments 60+DPD (C&F) (1) includes Construction; includes Lawn & Grounds Care; 2009 includes both Ag and Turf equipment; As % of Owned Losses After Dealer Reserve Charges Source: internal reporting, JDCC 10-K filings, 2009 Deere & Company 8-K filed with SEC 25 November

56 U.S. Resale Value vs. Loan Balance 7830 Tractor and 9760 Combine 7830 Tractor (1) 110% 100% 9760 Combine (2) 110% 100% Resale Value as a % of Original List Price 90% 80% 70% 60% 50% 40% 30% 20% 10% Loan Balance Resale Value as a % of Original List Price 90% 80% 70% 60% 50% 40% 30% 20% 10% Loan Balance 0% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Time Since Origination Model Year % Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Time Since Origination Model Year (1) Model 7810 was replaced with Model 7820 in In 2007 the 7830 series was introduced to the market. Loan balance assumes a 30% down payment on the highest list price financed for 5 years with annual payments at a rate of 6.3%. (2) Model 9650 was replaced with Model 9660 in Model 9660 was subsequently replaced with Model 9760 in Loan balance assumes a 30% down payment on the highest list price financed for 5 years with annual payments at a rate of 6.3%. Source for equipment values: North American Equipment Dealers Association 56

57 Lending, Collection and Remarketing Practices Contribute to Low Losses Ag & Turf Dealer Reserve Total dealer reserve levels are 1.1% of the portfolio as of 31 July 2010 Dealers have financial interest in performance 1% withheld on each note, pooled reserve Reserve levels capped at 1%, 2%, 3% of outstanding portfolio Based on credit performance, avoiding reserve charges Collection Experts in the equipment markets served Strong analytics to support approach Internally serviced / regional assignments Close working relationship with dealers Remarketing Product expertise Best distribution channel Dealer network Dedicated remarketing team Proven inspection process Strong collateral support 57

58 Multiple Sources of Liquidity Successful Access to Traditional Markets Commercial Paper Term Asset Backed Securitization Unsecured Term Debt USD EUR CAD Incremental Sources of Liquidity Asset Backed Commercial Paper Conduit Retail Notes 58

59 Worldwide Credit Operations External Funding Mix Total Debt: $9.9B $11.4B $12.6B $14.3B $14.8B $17.3B $18.3B $19.7B $20.2B $21.0B 100% 80% 49% 60% 62% 67% 67% 66% 70% 69% 73% 78% 84% 40% 21% 14% 20% 0% 21% 20% 22% 19% 18% 30% 12% 8% 24% 12% 13% 11% 11% 13% 14% 14% 15% CP ABS Long Term Debt 1% *Years 2007 and prior include off-balance sheet ABS funding. 59

60 Public Asset Backed Securitizations Deere s public ABS transactions have consistently exhibited low losses John Deere Capital Corporation Term ABS Issuances As of: July Month-End 2010 (15 August 10 Settlement) JD Owner Pool Cumulative Pool Mix Trust ($ Millions) Factor Loss % AG (1) C&F (2) 2010 $747 85% % 35% 2009-B $775 55% % 34% 2009 $702 48% % 35% 2008 $654 21% % 35% 2007 $1,016 11% % 35% 2006 $803 Paid Out % 35% 2005 $752 Paid Out % 35% 2004 $753 Paid Out % 35% 2003 $750 Paid Out % 35% 2001 $932 Paid Out % 43% 1999-A $806 Paid Out % 51% 1995-A $750 Paid Out % 5% 1994-A $500 Paid Out % 4% 1993-B $600 Paid Out % 22% 1993-A $600 Paid Out % 8% 1992-A $500 Paid Out % 12% $11,640 (1) Agricultural Equipment (2) Construction & Forestry Equipment 60

61 Appendix

62 Enterprise SVA Reconciliation to GAAP (millions of dollars unless stated otherwise) Equipment Operations Net Sales 11,703 13,349 17,673 19,401 19,884 21,489 25,803 20,756 Average Identifiable Assets With Inventories at LIFO 6,229 5,965 6,482 7,248 7,546 8,092 9,652 9,647 With Inventories at Standard Cost 7,147 6,925 7,477 8,312 8,634 9,205 10,812 10,950 Operating Profit ,905 1,842 1,905 2,318 2,927 1,365 Percent of Net Sales 3.4% 5.3% 10.8% 9.5% 9.6% 10.8% 11.3% 6.6% Operating Return on Assets With Inventories at LIFO 6.4% 11.9% 29.4% 25.4% 25.2% 28.6% 30.3% 14.1% With Inventories at Standard Cost 5.6% 10.2% 25.5% 22.2% 22.1% 25.2% 27.1% 12.5% SVA Cost of Assets (858) (831) (897) (998) (1,036) (1,094) (1,284) (1,301) SVA (457) (123) 1, ,224 1, Financial Services Operating Profit Change in Allowance for Doubtful Receivables (8) (12) (4) 68 SVA Income Average Equity Continuing Operations 2,019 2,079 2,163 2,110 2,424 2,524 2,355 2,732 Average Allowance for Doubtful Receivables SVA Equity 2,180 2,239 2,328 2,260 2,572 2,691 2,538 2,927 SVA Income less Cost of Equity (408) (420) (414) (410) (457) (480) (430) (458) SVA Continuing Operations (19) (148) SVA Discontinued Operations (11) Financial Services SVA (5) (148) Deere & Company - Enterprise SVA (462) (33) 1, ,314 1,702 (84) 62

63 Equipment Ops SVA Reconciliation to GAAP (millions of dollars unless stated otherwise) Equipment Operations Net Sales 5,848 5,723 6,479 7,663 8,830 9,640 11,082 11,926 9,701 11,169 Average Identifiable Assets With Inventories at LIFO 5,585 5,765 5,449 5,551 6,187 6,502 6,682 7,672 7,724 8,069 With Inventories at Standard Cost 6,702 6,846 6,442 6,494 7,131 7,488 7,703 8,711 8,739 9,039 Operating Profit ,006 1,125 1,402 1, Percent of Net Sales 0.3% 1.3% 3.7% 11.1% 11.4% 11.7% 12.6% 12.4% 2.8% 6.2% Operating Return on Assets With Inventories at LIFO 0.3% 1.3% 4.4% 15.3% 16.3% 17.3% 21.0% 19.3% 3.5% 8.6% With Inventories at Standard Cost 0.2% 1.1% 3.8% 13.0% 14.1% 15.0% 18.2% 16.9% 3.1% 7.7% SVA Cost of Assets (804) (821) (773) (780) (856) (898) (924) (1,045) (1,049) (1,085) SVA (788) (744) (531) (776) (392) Equipment Operations Net Sales 11,077 11,703 13,349 17,673 19,401 19,884 21,489 25,803 20,756 Average Identifiable Assets With Inventories at LIFO 8,743 6,229 5,965 6,482 7,248 7,546 8,092 9,652 9,647 With Inventories at Standard Cost 9,678 7,147 6,925 7,477 8,312 8,634 9,205 10,812 10,950 Operating Profit (46) ,905 1,842 1,905 2,318 2,927 1,365 Percent of Net Sales -0.4% 3.4% 5.3% 10.8% 9.5% 9.6% 10.8% 11.3% 6.6% Operating Return on Assets With Inventories at LIFO - 0.5% 6.4% 11.9% 29.4% 25.4% 25.2% 28.6% 30.3% 14.1% With Inventories at Standard Cost -0.5% 5.6% 10.2% 25.5% 22.2% 22.1% 25.2% 27.1% 12.5% SVA Cost of Assets (1,162) (858) (831) (897) (998) (1,036) (1,094) (1,284) (1,301) SVA (1,208) (457) (123) 1, ,224 1,

64 2009 OROA Reconciliation to GAAP Equipment Operations (millions of dollars unless stated otherwise) Equipment Operations 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, ,745 Percent of Net Sales 6.6% 8% Operating Return on Assets With Inventories at LIFO 14.1% 18.1% With Inventories at Standard Cost 12.5% 15.9% 64

65 Deere Use of Cash Priorities Committed to A rating Fund operating and growth needs Capital expenditures, R&D, acquisitions Pension and OPEB funding Common stock dividend Revisit share repurchase plan periodically considering: Excess cash position and generation Other uses of cash Multi-year view Market and business environment 65

66 Sources and Uses of Cash Fiscal Equipment Operations $12,000 $9,000 $1,099 $1,222 ($2,118) $ Millions $6,000 $6,478 ($2,788) ($1,308) ($372) $3,000 $0 $1,477 Beginning Cash & Cash Equivalents (10/31/06) Cash From Operations Net Change in Debt (1) (2) Other Capital Expenditures, Net ~63% of cash from operations returned to shareholders and ~46% of total cash generated Net Share Repurchases Dividends Acquisitions, Net $3,690 Ending Cash & Cash Equivalents (10/31/09) (1) Composed of issuance of debt of $1,385 mm and repayment of debt of $286 mm. (2) Other includes increase in investment in financial services, excess tax benefits from share-based compensation, effect of exchange rates on cash, proceeds from maturities and sales of marketable securities, purchases of marketable securities and change in intercompany receivables / payables. Source: Deere & Company SEC Filings 66

67 Net Sales by Product Category Equipment Operations - Fiscal Year 2009 Agriculture & Turf Construction & Forestry Other Commercial Worksite Other Turf Large Ag Forestry Small Ag Construction 67

68 U.S. Farm Cash Receipts Operating Cash Receipts and Government Payments Total cash receipts remain at historically high levels $350 $300 $250 $ Billions $200 $150 $100 $50 $ F 2011F Government Payments Total Cash Receipts Source: : USDA 31 August F 2011F: Deere & Company Forecast as of 18 August

69 U.S. Farm Balance Sheet Strong $2,500 30% 28% $2,000 26% 24% $1,500 22% $ Billions $1,000 20% 18% 16% $500 14% 12% $0 10% Farm Debt Farm Equity Debt to Equity Ratio (%) Debt to Asset Ratio (%) P 2010F 2011F Source: P: USDA 31 August F 2011F: Deere & Company Forecast as of 18 August

70 Corn, Soybeans, Wheat and Cotton Prices Nearby Futures: 14 Sept Sept 2010 Dollars Per Bushel Corn /14/05 9/14/06 9/14/07 9/14/08 9/14/09 9/14/10 Dollars per Bushel Soybeans /14/05 9/14/06 9/14/07 9/14/08 9/14/09 9/14/ Wheat 1.50 Cotton Dollars per Bushel Dollars per Pound /14/05 9/14/06 9/14/07 9/14/08 9/14/09 9/14/10 9/14/05 9/14/06 9/14/07 9/14/08 9/14/09 9/14/10 Source: Chicago Board of Trade Corn, Soybeans & Wheat; Intercontinental Exchange Cotton 70

71 Agricultural Growth Energy 2007 U.S. Energy Bill Significantly expanded mandatory levels of renewable fuels Gallons (billions) Corn-Based Starch Ethanol Advanced Biofuels Source: Energy Independence and Security Act of

72 Uses of U.S. Corn Crop , % 20, % Bushels (millions) 15,000 10, % 33.0% 32.0% Percent 5, % % 2009/ / / / / / / / / / /20 Crop Year Feed & residual Food, Seed, & Industrial (Less Ethanol) Ethanol for fuel Exports Ethanol for Fuel as % of Total Corn Usage Source: USDA Agricultural Projections to 2019, February

73 World Farm Fundamentals Global Stocks-To-Use Ratios 70% 60% Cotton 50% 40% 30% 20% 10% Wheat Corn Soybeans 0% E 2010P Source: USDA - 10 September

74 Agricultural Growth Energy U.S. Ethanol 6,000 U.S. Corn Used In Ethanol 5,000 4,000 Bushels (millions) 3,000 2,000 1, /00 01/02 03/04 05/06 07/08 09/10F 11/12F 13/14F 15/16F Source: Informa - August

75 Series 18 models manufactured in 4 Deere locations *23 Specialty & Standard models sourced from suppliers engine HP US/Canada 5103 S Series 5203 S Series 5225 S Series 5325 S Series 5425 S Series 5325N S Series 5425N S Series Germany S Series 5625 S Series 5725 S Series 5725HC S Series Mexico India China *Italy 5103 AA Series 5310 S Series 846 Goldoni Series 946 Goldoni Series 1046 Goldoni Series 20A Goldoni Series 70RR Goldoni Series 50F Goldoni Series 70F Goldoni Series 85F Goldoni Series 70V Goldoni Series Series Series 5315 Agritalia Series 5415 Agritalia Series 5515 Agritalia Series 5515HC Agritalia Series 5215F Agritalia Series 5315F Agritalia Series 5515F Agritalia Series 5615F Agritalia Series 5315V Agritalia Series 5515V Agritalia Series Brazil 5603 S Series 5605 S Series 5705 S Series *France 3110 Renault Series 3210 Renault Series 3310 Renault Series 3410 Renault Series 75

76 Series 82 models manufactured in 6 Deere locations (includes 14 Benye branded) *31 Specialty & Standard models sourced from suppliers engine HP 5038D AA Series 5103 AA Series 5103S AA Series 5104 AA Series 5204 AA Series 5203S S Series 5310 S Series 5410 S Series 5610 S Series US/Canada 5083E 5E 4Cyl Series 5093E 5E 4Cyl Series 5101E 5E 4Cy Series 5095MH 5MH Series India 5045D AA Series 5055D AA Series 5045E S Series 5055E S Series 5065E S Series 5075E S Series 5083EN 5EN 4Cyl Series 5093EN 5EN 4Cyl Series 5101EN 5EN 4Cyl Series 5065M 5M Series 5075M 5M Series 5085M 5M Series 5095M 5M Series 5105M 5M Series 200/204 Benye Series 220/224 Benye Series 250/254 Benye Series 280/284 Benye Series 300/304 Benye Series 320/324 Benye Series 350/354 Benye Series 380/384 Benye Series 400/404 Benye Series 420/424 Benye Series 450/454 Benye Series 480/484 Benye Series China 5080R 5R Series 5090R 5RSeries 5100R 5R Series 5080RN 5RN Series 5090RN 5RN Series 5100RN 5RN Series 500/504 Benye Series 550/554 Benye Series 750/754 S Series 800/804 S Series 850/854 S Series 900 S Series 4035B 4B Series 5055B 5B Series 904 6B Series B Series B Series 6100B 6B Series 6110B 6B Series Germany 5080M 5M Series 5090M 5M Series 5100M 5M Series 846 Goldoni Series 946 Goldoni Series 1046 Goldoni Series 50C Goldoni Series Series Series Series Series Series Series 5725HC 25 Series 5425N 25N Series Mexico *Italy 20A Goldoni Series 30A Goldoni Series 40A Goldoni Series 50A Goldoni Series 70A Goldoni Series 40R Goldoni Series 50R Goldoni Series 70R Goldoni Series 70RR Goldoni Series 50F Goldoni Series 70F Goldoni Series 85F Goldoni Series 70V Goldoni Series 85L Goldoni Series Series Series 6110D 6D Series 6125D 6D Series 6100D 6D Series 6115D 6D Series 6130D 6D Series 6140D 6D Series 5215 Agritalia Series 5315 Agritalia Series 5415 Agritalia Series 5515 Agritalia Series 5515HC Agritalia Series 5215F Agritalia Series 5315F Agritalia Series 5515F Agritalia Series 5615F Agritalia Series 5215V Agritalia Series 5315V Agritalia Series 5515V Agritalia Series 5615V Agritalia Series Brazil 5303 S Series 5403 S Series 5603 S Series 5605 S Series 5705 S Series 76

77 1996 Construction Line 41 Models 190E EXCAVATOR 290D EXCAVATOR 490E EXCAVATOR 160 LC EXCAVATOR 450G DOZER 550G DOZER 650G DOZER 750C DOZER 850C DOZER 244E LOADER 344G LOADER 444G LOADER 544G LOADER 310E BACKHOE LOADER 310SE BACKHOE LOADER 315E BACKHOE LOADER 410E BACKHOE LOADER 710D BACKHOE LOADER 670B MOTOR GRADER 770B MOTOR GRADER 200D LC EXCAVATOR 595D EXCAVATOR 555G LOADER 655G LOADER 624G LOADER 644G LOADER 672B 6WD MOTOR GRADER 772B 6WD MOTOR GRADER 690E EXCAVATOR 744E LOADER 792D EXCAVATOR 892E EXCAVATOR 992E EXCAVATOR 3375 SKID STEER 4475 SKID STEER 5575 SKID STEER 6675 SKID STEER 8875 SKID STEER 482C FORKLIFT 762B SCRAPER 862B SCRAPER 77

78 2009 Construction Line 81 Models 17D EXCAVATOR 27D EXCAVATOR 35D EXCAVATOR 50D EXCAVATOR 60D EXCAVATOR 75D EXCAVATOR 85D EXCAVATOR 120D EXCAVATOR 135D EXCAVATOR 160D LC EXCAVATOR 190D W WHEELED EXCAVATOR 200D/ 200D LC EXCAVATOR 220D W WHEELED EXCAVATOR 225D LC EXCAVATOR 240D LC EXCAVATOR 270D LC EXCAVATOR 350D LC EXCAVATOR 450D LC EXCAVATOR 650D LC EXCAVATOR 850D LC EXCAVATOR 450J LT/LGP DOZER 550J LT/LGPDOZER 650J LT/XLT/LGP DOZER 700J LT/XLT/LGP DOZER 750J WT/LT/LGP DOZER 764 HIGH-SPEED DOZER 850J WT/LT/WLT/LGP DOZER 950J DOZER 1050J DOZER WASTE HANDLER DOZER 605C LOADER 655C SERIES II LOADER 755D LOADER CT315 COMPACT TRACK LOADER CT322 COMPACT TRACK LOADER CT332 COMPACT TRACK LOADER 313 SKID STEER 315 SKID STEER 317 SKID STEER 320 SKID STEER 325 SKID STEER 328 SKID STEER 332 SKID STEER 244J LOADER 304J LOADER 344J LOADER 444K LOADER 444K POWERLLEL LOADER 524K LOADER 544K LOADER 544K POWERLLEL LOADER 624K LOADER 624K POWERLLEL LOADER 644K LOADER 644K POWERLLEL LOADER 724K LOADER 744K LOADER 824K LOADER 844K LOADER WASTE HANDLER LOADERS 210LJ LANDSCAPE LOADER 110 TRACTOR LOADER BACKHOE 310J BACKHOE LOADER 310SJ BACKHOE LOADER 310SJ TMC BACKHOE LOADER 315SJ BACKHOE LOADER 410J BACKHOE LOADER 410J TMC BACKHOE LOADER 710J BACKHOE LOADER 670G MOTOR GRADER 770G MOTOR GRADER 870G MOTOR GRADER 672G 6WD MOTOR GRADER 772G 6WD MOTOR GRADER 872G 6WD MOTOR GRADER 250D ARTICULATED DUMP TRUCK 300D ADT 350D ADT 400D ADT EJECTOR AND CARRYALL SCRAPERS SCRAPER-SPECIAL TRACTOR 78

79 Committed Bank Group Supports Credit Facility Average length of continuous relationship = ~27 Years $5.25 billion credit facility supporting commercial paper $3.75 billion 5-year facility expiring in 2012 $1.50 billion 37-month facility expiring in 2013 Have not drawn on facility $4.1 billion incremental capacity as of 31 July 2010 $6,000 $5,000 Credit Facility Size & Commercial Paper Outstanding $ Millions $4,000 $3,000 $2,000 $1,000 $ Total Facility CP Outstanding as of October 31 79

80 Daily Ethanol Margin Per Bushel Corn Grind Based on Nearby Futures Prices (Excl ITDA*) $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 ($0.50) 9/1/06 10/30/06 12/28/06 2/28/07 4/26/07 6/22/07 8/20/07 10/16/07 12/12/07 2/11/08 4/9/08 6/5/08 8/1/08 9/29/08 11/24/08 1/23/09 3/23/09 5/19/09 7/16/09 9/11/09 11/6/09 1/6/10 3/5/10 5/3/10 6/29/10 8/25/10 *Interest, Tax, Depreciation and Amortization (ITDA) totals ~$0.50 and is often disregarded in margin calculations because it does not influence short term production decisions Source: Informa September

81 Cellulosic Material Harvesting Sugar Cane Harvester in Brazil Round Baler Eucalyptus forest in Uruguay being harvested by John Deere wheel harvesters Self-Propelled Forage Harvester Excavator-based Harvester Windrower Clambunk Source: Deere & Company June

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