Slide 1: Fourth Quarter 2007 Earnings Conference Call
Fourth Quarter 2007 Earnings Conference Call 25 Exhibit 99.3 (Furnished herewith)
Slide 2: Safe Harbor Statement & Disclosures
Safe Harbor Statement & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning the company’s projections, plans and objectives for the future, including estimates and assumptions with respect to economic, political, technological, weather,
Slide 3: Stock Split Details
Stock Split Details Two-for-one stock split approved by shareholders: 14 November 2007 Form: 100% stock dividend Record date: 26 November 2007 Distribution date: 3 December 2007 Price adjustment date: 4 December 2007 27
Slide 4: Supplemental Information: Stock Split – Fourth Quarter 2007
Supplemental Information Stock Split – Fourth Quarter 2007 As reported and as adjusted to reflect stock split: As Proforma Reported Stock Split Net Income As Reported (millions) $ 422.1 $ 422.1 Average Shares Outstanding (millions): Diluted 224.1 448.1 Earnings Per Share: Diluted $1.88 $0.94 28
Slide 5: Fourth Quarter Overview
Fourth Quarter Overview 53% $276 $422 Income from Continuing Operations 57% $1.20 $1.88 Diluted EPS from Continuing Operations 21% $4,486 $5,423 Net Sales 20% $5,118 $6,141 Net Sales and Revenues Change Q4 2006 Q4 2007 (in millions of dollars except per share amounts) 29
Slide 6: Fourth Quarter Overview: Net Sales
Equipment operations net sales: up 21% in the fourth quarter compared to Q4 2006 Price realization: ~ +2 points Currency translation: ~ +4 points LESCO added ~ $220 million (~ +5 points) Fourth Quarter Overview Net Sales 30
Slide 7: Production Tonnage
Deere & Company Forecast as of 21 November 2007 (Previous Forecast as of 15 August 2007) -22 +74 +25 +26 +5 -19 +56 +26 Q4 2007 Actual +6 -22 U.S. and Canada C&F +27 +19 U.S. and Canada AG +7 +11 Outside U.S. and Canada +7 +3 Total U.S. and Canada +3 Flat Worldwide CCE Flat -18 Worldwide C&F +9 +16
Slide 8: 2008 Company Outlook
2008 Company Outlook First Quarter 2008 Forecast Net Sales up ~ 25% vs. 1Q 2007 Net Income of ~ $325 million Fiscal Year 2008 Forecast Net Sales up ~ 12% from FY 2007 Net price realization: ~ +2 points LESCO: ~ +2 points Net Income of ~ $2.1 billion Deere & Company Forecast as of 21 November 2007 32
Slide 9: Worldwide Agricultural Equipment Fourth Quarter Overview
+171% $143 $388 Operating Profit* +56% Production Tonnage +35% $2,370 $3,188 Net Sales Change Q4 2006 Q4 2007 (in millions of dollars) * Operating Profit impacted by: Higher sales and production volumes Improved price realization Higher SA&G Incremental margin: ~ 30% Worldwide Agricultural Equipment
Slide 10: Global Production vs. Use: Wheat, Corn & Soybeans
Global Production vs. Use Wheat, Corn & Soybeans 21.1% -13 234 221 07/08P 27.6% 11 225 236 06/07E 24.6% 215 220 05/06 Soybeans -21 14.5% 763 768 07/08P 14.6% -18 721 703 06/07E 17.5% 704 696 05/06 Corn -41 17.8% -14 618 603 07/08P 20.1% -24 617 594 06/07E 23.6% 624 622 05/06 Wheat Stocks To Use Net
Slide 11: U.S. Farm Cash Receipts Estimates
U.S. Farm Cash Receipts Estimates 280.2 128.3 139.6 Previous 2008 294.3 134.0 148.0 2008 Forecast 281.9 133.1 135.0 Previous 2007 291.8 138.8 139.4 2007 Forecast 255.1 Total Cash Receipts Government Payments 119.3 Livestock 120.0 Crops 2006 Estimate (in billions of dollars) Deere & Company Forecast
Slide 12: U.S. Commodity Price Estimates
U.S. Commodity Price Estimates $.580 $7.65 $4.00 $3.25 Previous 2008/09 $.620 $9.50 $4.75 $3.50 2008/09 Forecast $.480 $7.45 $4.85 $2.90 Previous 2007/08 $.540 $9.40 $6.50 $3.30 2007/08 Forecast $.465 $6.43 $4.26 $3.05 2006/07 Estimate Cotton (per pound) Soybeans (per bushel) Wheat (per bushel) Corn
Slide 13: Ethanol Outlook Calls for Continued Growth
1167 995 1323 1603 2100 5050 4800 4500 4100 2900 Source: Informa Forecast – November 2007 Ethanol Outlook Calls for Continued Growth U.S. Corn Used in Ethanol (millions of bushels) '02/03 '03/04 '04/05 '05/06 '06/07F '07/08F '08/09F '09/10F '10/11F '11/12F 37
Slide 14: Agricultural Equipment Retail Sales Industry Outlook
Agricultural Equipment Retail Sales Industry Outlook U.S. and Canada: Up 10% - 15% for Fiscal 2008 Substantial increase in 2007 farm cash receipts Strength in large tractors and combines Weakness in cotton South America: Up 10% – 15% for Fiscal 2008 Markets recovering, supported by higher commodity
Slide 15: Farm Net Income Brazil & Argentina
Farm Net Income Brazil & Argentina 1.2 0.8 0.7 Wheat -0.2 -0.1 -0.5 Rice 4.9 0.7 0.2 3.3 2006 Argentina Brazil (in billions of U.S. dollars) 7.6 5.1 7.2 6.5 -0.5 0.8 0.5 Sunflower 0.9 0.8 1.8 1.2 -1.1 Corn 1.0 2.6 3.3 Sugar Cane 0.6 0.3 -0.2 Cotton 4.7 3.0 4.0 2.5 -2.0 Soybeans 2008 Forecast 2007 Fo
Slide 16: Agricultural Equipment Retail Sales Industry Outlook
Western Europe: Flat to up slightly for Fiscal 2008 Australia: Up 5% - 10% for Fiscal 2008 Deere & Company Forecast as of 21 November 2007 Agricultural Equipment Retail Sales Industry Outlook 40
Slide 17: Worldwide Agricultural Equipment Outlook: Fiscal Year 2008 Forecast
Fiscal Year 2008 Forecast Net sales projected to be up ~ 17% Growth in Central Europe and CIS, including Russia Ningbo Benye revenues of ~ $100 million (~ +1 point) Positive currency translation of ~ +1 point New products New tractor factory in Brazil Deere & Company Forecast as of 21 November 2007
Slide 18: Worldwide Commercial & Consumer Equipment Fourth Quarter Overview
+267% -$3 -$11 Operating Profit* +5% Production Tonnage +35% $758 $1,027 Net Sales Change Q4 2006 Q4 2007 (in millions of dollars) Worldwide Commercial & Consumer Equipment Fourth Quarter Overview * Operating Profit impacted by: Higher SA&G expenses, mainly LESCO Higher sales volumes 42
Slide 19: LESCO, Inc. Acquisition: 2007 Overview
LESCO, Inc. Acquisition closed on 7 May 2007 Income statement impact Net Sales ~ $ 345 million Q3: ~ $125 million Q4: ~ $220 million SA&G ~ $95 million Q3: ~ $35 million Q4: ~ $60 million Breakeven for year Worldwide Commercial & Consumer Equipment 2007 Overview 43
Slide 20: Worldwide Commercial & Consumer Equipment Outlook
Fiscal Year 2008 Forecast Net sales projected to be up ~ 10% U.S. economic factors Housing starts Regional drought New products Across many product areas LESCO Incremental increase of ~ $350 million Deere & Company Forecast as of 21 November 2007 Worldwide Commercial & Consumer Equipment Deere & Com
Slide 21: Worldwide Construction & Forestry Fourth Quarter Overview
-1% $136 $134 Operating Profit* -19% Production Tonnage -11% $1,358 $1,208 Net Sales Change Q4 2006 Q4 2007 (in millions of dollars) * Operating Profit impacted by: Lower sales volumes Improved price realization 4Q 2006 plant closing expenses Worldwide Construction & Forestry Fourth Quarter Overview
Slide 22: Construction & Forestry Outlook – 2008 Assumptions
U.S. housing starts at 1.1 million Non-residential spending flat at strong level U.S. GDP growth of 2.0% Deere & Company Forecast as of 21 November 2007 Worldwide Construction & Forestry Deere & Company Outlook – 2008 Assumptions 46
Slide 23: Worldwide Construction & Forestry Outlook
Fiscal Year 2008 Forecast Net sales projected to be flat Produce closer to retail demand New products Flat sales to independent rental channel Forestry Europe: Down from high levels U.S. & Canada: Down Deere & Company Forecast as of 21 November 2007 Worldwide Construction & Forestry Deere & Company
Slide 24: Credit
Fourth Quarter 2007 Net income of ~ $96 million up 9% vs. Q4 2006 Growth in credit portfolio Higher SA&G expenses Fiscal Year 2008 Forecast Net income ~ $375 million Growth in credit portfolio Deere & Company Forecast as of 21 November 2007 Credit 48
Slide 25: Credit Loss History
Low losses driven by strong obligor cash flows, low repossession rates and strong used equipment market Credit Loss History 49 Provision for Credit Losses / Average Owned Portfolio 0.00% 0.50% 1.00% 1.50% 2.00% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Slide 26: Consolidated Trade Receivables & Inventory Change
Flat 2008 Forecast 80 250 225 100 375 2007 Prior Forecast 397 Total, as reported* 96 Total, constant exchange* C&F* CCE* AG (in millions of dollars) 310 114 593 2007 Actual Deere & Company Forecast as of 21 November 2007 (Previous Forecast as of 15 August 2007) * 2007 Actual includes: CCE: ~ $165 mi
Slide 27: Continued Strong Asset Management in 2007
Continued strong asset management in 2007 Consolidated Trade Receivables & Inventory 20% 25% 30% 35% 40% 45% 50% 55% 60% '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 Inventory & Receivables to Sales Prior Year Current Year
Slide 28: October Retail Sales U.S. and Canada
Flat double digits; more than industry double digits; less than industry a single digit Deere** 59% 4 WD Tractors 8% Combines 24% Flat Industry* Row-Crop Tractors Utility Tractors * As reported by the Association of Equipment Manufacturers ** As reported to the Association of Equipment Manufacturers
Slide 29: Deere Dealer Inventories U.S. and Canada
2006 2007 Combines 21% 19% Row-Crop Tractors As reported to the Association of Equipment Manufacturers at 31 October – in units as a % of trailing 12 months retail sales Deere Dealer Inventories U.S. and Canada 53 1% 2%
Slide 30: October Retail Sales Western Europe
a single digit a single digit Deere & Company Combines Tractors Based on EU Government Reporting of Registrations October Retail Sales Western Europe 54
Slide 31: October Retail Sales U.S. and Canada
double digits First-in-the-Dirt double digits Settlements Construction and Forestry a single digit Commercial and Consumer Equipment Deere & Company October Retail Sales U.S. and Canada 55
Slide 32: Net Sales by Major Markets Fiscal Years 2007 and 2006
10% Asia, Africa & Middle East -1% Canada 20% Western Europe 52% Central Europe & CIS 60% Central & South America -5% Asia Pacific, Australia & New Zealand Flat $12,246 $12,241 United States $19,884 $21,489 Change 2006 2007 (in millions of dollars) Net Sales by Major Markets Fiscal Years 2007 and 20
Slide 33: Raw Material and Freight
Fourth Quarter 2007 Up ~ $20 million vs. Q4 2006 Fiscal Year 2007 Up ~ $185 million vs. FY2006 Fiscal Year 2008 Up $150 - $175 million vs. FY2007 Deere & Company Forecast as of 21 November 2007 Raw Material and Freight Equipment Operations 57
Slide 34: Research & Development Expense
Deere & Company Forecast as of 21 November 2007 Research & Development Expense Equipment Operations Fourth Quarter 2007 Up 15% vs. Q4 2006 Fiscal Year 2008 Forecast Up ~ 5% vs. FY2007 58
Slide 35: Pension & OPEB Expense
Deere & Company Forecast as of 21 November 2007 Pension & OPEB Expense Equipment Operations Fiscal Year 2008 Forecast Down ~ $125 million vs. FY2007 Cost of Sales: ~ 60% SA&G: ~ 40% Resulting from Higher discount rate Asset growth and performance 59
Slide 36: Selling, Administrative & General Expense
Fourth Quarter 2007 Up 29% vs. Q4 2006 Includes ~ 17 points related to global growth initiatives (including LESCO) and currency translation Fiscal Year 2008 Forecast anticipates up ~ 5% vs. FY2007 Deere & Company Forecast as of 21 November 2007 Selling, Administrative & General Expense Equipment Ope
Slide 37: Tax Rate
Fiscal Year 2007 Effective tax rate of ~ 33% Fiscal Year 2008 Forecast Assumes a tax rate of ~ 35% Deere & Company Forecast as of 21 November 2007 Tax Rate Equipment Operations 61
Slide 38: Share Repurchase as Part of Publicly Announced Plans
Share Repurchase as Part of Publicly Announced Plans Total $ Amount (in billions) Shares Repurchased (in millions) Actual $0.2 2004 $3.9 46.7 Total $1.5 12.8 2007 $1.3 17.0 2006 $0.9 13.9 2005 Note: All data on a pre-split basis 62 31 Oct 2007 period ending shares: 219.8 million 3.0
Slide 39: Other Information Fiscal Year 2007
Equipment Operations Capital Expenditures $575 million Depreciation and Amortization $429 million Pension/OPEB Contributions $511 million Financial Services Capital Expenditures – wind $448 million Other Information Fiscal Year 2007 63
Slide 40: Other Information Fiscal Year 2008 Forecast
Equipment Operations Capital Expenditures $600 - $700 million Depreciation and Amortization ~ $450 million Pension/OPEB Contributions ~ $300 million Financial Services Capital Expenditures – wind ~ $550 million Other Information Fiscal Year 2008 Forecast Deere & Company Forecast as of 21 November 20
Slide 41: Appendix
Appendix @) Sonn Deere
Slide 42: Additional Supplemental Information: SFAS 158
Additional Supplemental Information SFAS 158 – Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans 66 In the Fourth Quarter of 2007, Deere & Company adopted SFAS 158. The standard requires recognition of the over-funded or under-funded status of pension and other postret
Slide 43: Additional Supplemental Information: Stock Split – Fiscal Year 2007
Additional Supplemental Information Stock Split – Fiscal Year 2007 455.0 227.5 $4.00 $8.01 2007 448.1 224.1 $0.94 $1.88 Q4 453.6 226.8 $1.18 $2.37 Q3 458.6 229.3 $1.36 $2.72 Q2 459.7 229.8 $0.52 $1.04 Q1 Proforma Stock Split As Reported Proforma Stock Split As Reported As reported and as adjusted to
Slide 44: Additional Supplemental Information: Special Items
NOTE: Due to the magnitude of the amounts for the items listed above either in the quarter or for the year, management believes the above additional supplemental data provides valuable insight into the operating performance for fiscal year 2006. Management believes this presentation will enhance the
Slide 45: First-quarter 2008 conference call scheduled
Deere’s first-quarter 2008 conference call is scheduled for 9:00 a.m. central time on Wednesday, February 13, 2008 69