John Deere 2014 Annual Report Download - page 22

State debt crises also could negatively impact customers,
suppliers, demand for equipment, and company operations and
results. The company’s investment management activities could
be impaired by changes in the equity, bond and other financial
markets, which would negatively affect earnings.
Additional factors that could materially affect the com-
pany’s operations, access to capital, expenses and results include
changes in and the impact of governmental trade, banking,
monetary and fiscal policies, including financial regulatory
reform and its effects on the consumer finance industry,
derivatives, funding costs and other areas, and governmental
programs, policies, tariffs and sanctions in particular jurisdictions
or for the benefit of certain industries or sectors (including
protectionist, economic, punitive and expropriation policies
and trade and licensing restrictions that could disrupt interna-
tional commerce); actions by the U.S. Federal Reserve Board
and other central banks; actions by the U.S. Securities and
Exchange Commission (SEC), the U.S. Commodity Futures
Trading Commission and other financial regulators; actions by
environmental, health and safety regulatory agencies, including
those related to engine emissions (in particular Interim Tier 4/
Stage IIIb and Final Tier 4/Stage IV non-road diesel emission
requirements in the U.S. and European Union), carbon and
other greenhouse gas emissions, noise and the effects of climate
change; changes in labor regulations; changes to accounting
standards; changes in tax rates, estimates, and regulations and
company actions related thereto; compliance with U.S. and
foreign laws when expanding to new markets and otherwise;
and actions by other regulatory bodies including changes in
laws and regulations affecting the sectors in which the company
operates. Trade, financial and other sanctions imposed by the
U.S., the European Union, Russia and other countries could
negatively impact company assets, operations, sales, forecasts
and results. Customer and company operations and results also
could be affected by changes to GPS radio frequency bands or
their permitted uses.
Other factors that could materially affect results include
production, design and technological innovations and difficul-
ties, including capacity and supply constraints and prices;
the availability and prices of strategically sourced materials,
components and whole goods; delays or disruptions in the
company’s supply chain or the loss of liquidity by suppliers;
the failure of suppliers to comply with laws, regulations and
company policy pertaining to employment, human rights,
health, safety, the environment and other ethical business
practices; events that damage the company’s reputation or
brand; start-up of new plants and new products; the success
of new product initiatives and customer acceptance of new
products; changes in customer product preferences and sales
mix whether as a result of changes in equipment design to meet
government regulations or for other reasons; gaps or limitations
in rural broadband coverage, capacity and speed needed to
support technology solutions; oil and energy prices and supplies;
the availability and cost of freight; actions of competitors in the
various industries in which the company competes, particularly
price discounting; dealer practices especially as to levels of new
and used field inventories; labor relations; acquisitions and
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divestitures of businesses; the integration of new businesses;
the implementation of organizational changes; difficulties
related to the conversion and implementation of enterprise
resource planning systems that disrupt business, negatively
impact supply or distribution relationships or create higher
than expected costs; security breaches and other disruptions
to the company’s information technology infrastructure; and
changes in company declared dividends and common stock
issuances and repurchases.
Company results are also affected by changes in the level
and funding of employee retirement benefits, changes in market
values of investment assets, the level of interest and discount
rates, and compensation, retirement and mortality rates which
impact retirement benefit costs, and significant changes in
health care costs including those which may result from
governmental action.
The liquidity and ongoing profitability of John Deere
Capital Corporation and other credit subsidiaries depend largely
on timely access to capital in order to meet future cash flow
requirements, to fund operations and costs associated with
engaging in diversified funding activities, and to fund purchases
of the company’s products. If general economic conditions
deteriorate or capital markets become volatile, funding could be
unavailable or insufficient. Additionally, customer confidence
levels may result in declines in credit applications and increases
in delinquencies and default rates, which could materially
impact write-offs and provisions for credit losses. The failure
of reinsurers of the company’s insurance business also could
materially affect results.
The company’s outlook is based upon assumptions
relating to the factors described above, which are sometimes
based upon estimates and data prepared by government agencies.
Such estimates and data are often revised. The company, except
as required by law, undertakes no obligation to update or revise
its outlook, whether as a result of new developments or
otherwise. Further information concerning the company and
its businesses, including factors that potentially could materially
affect the company’s financial results, is included in the com-
pany’s other filings with the SEC.
2013 COMPARED WITH 2012
CONSOLIDATED RESULTS
Worldwide net income attributable to Deere & Company in
2013 was $3,537 million, or $9.09 per share diluted ($9.18 basic),
compared with $3,065 million, or $7.63 per share diluted
($7.72 basic), in 2012. Net sales and revenues increased
5 percent to $37,795 million in 2013, compared with $36,157
million in 2012. Net sales of the equipment operations
increased 4 percent in 2013 to $34,998 million from $33,501
million in 2012. The sales increase included improved price
realization of 3 percent and an unfavorable foreign currency
translation effect of 1 percent. Net sales in the U.S. and Canada
increased 5 percent in 2013. Net sales outside the U.S. and
Canada increased by 4 percent in 2013, which included an
unfavorable effect of 3 percent for foreign currency translation.
Worldwide equipment operations had an operating
profit of $5,058 million in 2013, compared with $4,397 million