John Deere 2010 Annual Report Download - page 3

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2
operating activities equaled $2.3 billion on an enterprise basis.
The total was more than enough to fund a healthy level of capital
projects, resume share repurchases, and pay out a record amount
in dividends to shareholders.
Deere’s performance reected continued success delivering
more prot from a lean slate of productive assets. Our prot and
asset model aims for all businesses to earn their cost of capital –
and deliver SVA, or Shareholder Value Added – across the
business cycle. In 2010, SVA reached a record $1.714 billion.
All company business units had improved SVA performance for
the year. What’s more, despite signicantly higher sales and
factory production, asset levels remained well under control.
A&T Pacing Performance
Our performance was led by the Agriculture and Turf (A&T)
division, which delivered particularly impressive results. With a
sales increase of just 10 percent, A&T reported almost twice as
much operating prot and more than four times the level of SVA
achieved in 2009. Deere’s largest division efciently managed
assets, brought advanced new products to market and broadened
its customer base. A&T results were aided by positive farm
conditions and strong sales of large equipment, particularly in
the United States.
John Deere 8345R tractor has more power than earlier models and “smart tractor”
telematics. Integrated with machine controls, telematics allows remote monitoring
and increased productivity. Deere’s 8R-series tractors are equipped with
engines that meet more-rigorous emissions standards taking effect in 2011.
Sales also rose dramatically in Brazil after a steep decrease in
2009. However, conditions in Europe – our second-largest regional
market, after North America – showed a further decline.
In other parts of our business, Construction and Forestry (C&F)
saw an impressive rebound with sales increasing by 41 percent
and operating prot turning strongly positive. C&F had success
introducing advanced new products, expanding into new
geographies and picking up market share in key categories. The
division’s results were especially noteworthy in light of underlying
weakness in U.S. construction markets. Even with the year’s
sharp improvement, sales remained well below what traditionally
has been considered a trough level.
Making a further contribution to last year’s performance was
John Deere Credit, which recorded signicantly higher nancial
results while continuing to provide competitive nancing to
our equipment customers. Credit’s earnings jumped 85 percent
as a result of higher loan margins and loan quality in addition to
growth in the average portfolio of about $1 billion. Loan quality
remained quite strong as the provision for loss declined to less
than $50 for each $10,000 of portfolio value.