10-KPeriod: FY2010

DEERE & CO Annual Report, Year Ended Oct 31, 2010

Filed December 17, 2010For Securities:DE

Summary

Deere & Company's (DE) 2010 10-K filing indicates a strong rebound in financial performance following a challenging economic period. The company reported a significant increase in net income attributable to Deere & Company to $1.865 billion for the fiscal year ended October 31, 2010, a substantial improvement from $873 million in 2009. This growth was driven by a 13% increase in total net sales and revenues to $26 billion, primarily fueled by higher shipment volumes and improved price realization across its Equipment Operations. The company's Construction and Forestry segment saw a particularly notable recovery, with net sales increasing by 41% and the segment moving from an operating loss in 2009 to an operating profit in 2010. The Agriculture and Turf segment also performed well, with net sales up 10% and operating profit increasing significantly. The Financial Services segment also showed improved profitability due to better financing spreads and a lower provision for credit losses. Looking ahead, Deere & Company projected continued sales growth in fiscal year 2011 across its segments, driven by favorable global farm conditions and expected improvements in construction and forestry markets. The company also highlighted its ongoing efforts to meet increasingly stringent engine emission standards, which required substantial research and development investment but are expected to lead to a record number of new equipment model introductions. The company's balance sheet remained strong, with positive cash flows from operations supporting investments and shareholder returns.

Financial Highlights

31 data points
Beta

Revenue

$26.00B

33.1% Gross Margin

Net Income

$1.86B

7.2% Net Margin

EPS (Diluted)

$4.35

Free Cash Flow

$1.52B

Financial Statements
Beta
Revenue$26.00B
Cost of Revenue$17.40B
Gross Profit$8.61B
R&D Expenses$1.05B
SG&A Expenses$2.97B
Operating Income$3.41B
Interest Expense$811.40M
Net Income$1.86B
EPS (Basic)$4.40
EPS (Diluted)$4.35
Shares Outstanding (Basic)424.00M
Shares Outstanding (Diluted)428.60M

Key Highlights

  • 1Net income attributable to Deere & Company surged to $1.865 billion in FY2010, a significant increase from $873 million in FY2009, reflecting a robust recovery.
  • 2Total net sales and revenues grew by 13% to $26 billion in FY2010, primarily driven by higher shipment volumes and improved price realization in Equipment Operations.
  • 3The Construction and Forestry segment rebounded strongly, with net sales up 41% and a shift from an operating loss to a profit in FY2010.
  • 4The Agriculture and Turf segment reported a 10% increase in net sales and a substantial rise in operating profit, benefiting from favorable global farm conditions.
  • 5Financial Services operations improved profitability due to better financing spreads and a lower provision for credit losses.
  • 6The company announced plans for a record number of new equipment model introductions in FY2011 to comply with more rigorous global engine emission standards, supported by significant R&D investment.
  • 7Deere & Company maintained a strong liquidity position with positive cash flows from operations, enabling investments and stock repurchases.

Frequently Asked Questions

In fiscal year 2010, Deere & Company experienced a strong financial rebound. Net income attributable to Deere & Company more than doubled to $1.865 billion ($4.35 per share diluted) from $873 million ($2.06 per share diluted) in fiscal year 2009. This improvement was driven by a 13% increase in net sales and revenues to $26 billion, with higher shipment volumes and improved price realization contributing significantly to the Equipment Operations' profitability.

The Construction and Forestry segment showed remarkable recovery, with net sales increasing by 41% and the segment shifting from an operating loss in 2009 to an operating profit in 2010. The Agriculture and Turf segment also demonstrated strong performance with a 10% increase in net sales and a significant rise in operating profit, benefiting from favorable global farm conditions.

Deere & Company identified several key risks, including the impact of international trade laws and government policies, changes in government banking, monetary, and fiscal policies, fluctuating worldwide demand for food and bio-energy, negative economic conditions impacting demand and access to funding, currency translation risks, and the impact of unfavorable weather conditions or natural disasters. Additionally, the company highlighted risks associated with increasingly rigorous environmental, health, and safety regulations, particularly new engine emission standards, and the potential impact of climate change.

Deere & Company projected a positive outlook for fiscal year 2011, with an anticipated 10-12% increase in company equipment sales. Growth is expected across all segments: Agriculture and Turf sales were forecast to increase by 7-9%, driven by favorable global farm conditions. Construction and Forestry sales were projected to rise by 25-30% due to improved market conditions and growth in sales to rental companies. Net income for the credit operations was forecast to increase to approximately $360 million. The company also anticipated higher raw material costs and a less favorable sales mix in Agriculture and Turf.