John Deere 2014 Annual Report Download - page 5

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5
The company’s balance sheet has remained strong. At
year-end, Deere carried some $5 billion of cash and securities.
Our equipment operations had relatively low debt, while
nancial services continued to be conservatively capitalized.
BROAD LINEUP MAKING IMPACT
Although results were down, the Agriculture & Turf (A&T) division
remained solidly protable, with operating margins near
14 percent. This performance was achieved in spite of a sharp
decline in sales of some of our most protable models of farm
machinery. Further, Deere’s largest division brought important
products to market and continued to broaden its customer base.
In other businesses, Construction & Forestry (C&F) rebounded
strongly. It was helped by a recovering U.S. economy, an improved
market for forestry products, and an expanded product lineup.
Of signicance, the division started up two new factories in Brazil,
one with joint-venture partner Hitachi. The nation is expected
to play a central role in C&F’s growth ambitions.
Deere’s nancial-services unit posted record prots while
providing competitive nancing to our equipment customers.
Net income climbed to $624 million as the loan and lease portfolio
Setting new productivity standards, the 617-horsepower
8600 forage harvester meets the challenging requirements of
commercial-scale operations and contractors. Real-time
crop monitoring works in both corn and grass, an industry exclusive.
grew by more than $3 billion. Credit quality remained strong
with the provision for loss equaling less than one dollar for each
$1,000 of portfolio value. Over many years, Financial Services
has proved to be a reliable source of prots and a major driver
of John Deere equipment sales.
PIVOTAL YEAR AHEAD
While the company is well-positioned for long-term success,
2015 is likely to be a year of challenge. Our nancial forecast is
calling for a signicant reduction in sales and earnings, driven by
sharply lower demand for agricultural equipment, especially
larger, more protable models.
Despite the prospect of lower results, we do not view next year’s
outlook as discouraging. That the company expects to remain
solidly protable in the face of such a slowdown speaks to the
impact of our aggressive actions to control costs and assets
and balance factory production with demand. It also shows
the value of having a well-rounded business lineup that serves