john deere financial portfolio and funding...portfolio composition by segment john deere financial...

John DeereFinancial Portfolioand Funding

Deere & CompanySeptember 2017

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Safe Harbor Statement & Disclosures

This presentation includes forward-looking comments subject to important risksand uncertainties. It may also contain financial measures that are not inconformance with accounting principles generally accepted in the United Statesof America (GAAP).

Refer to Deere’s reports filed on Forms 8-K (current), 10-Q (quarterly), and10-K (annual) for information on factors that could cause actual results to differmaterially from information in this presentation and for information reconcilingfinancial measures to GAAP. Past performance may not be representative offuture results.

Guidance noted in the following slides was effective as of the company’s mostrecent earnings release and conference call (18 August 2017). Nothing in thispresentation should be construed as reaffirming or disaffirming such guidance.

This presentation is not, nor part of, an offer to sell or a solicitation of offers tobuy any of Deere’s securities.

Deere & Company | September 20172

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Deere Use-of-Cash Priorities

Manage the balance sheet, including liquidity, to support a ratingthat provides access to low-cost and readily available short- andlong-term funding mechanisms

Reflects the strategic nature of our financial services operation

Committed to “A” Rating

Cash from Operations

Fund Operating and Growth Needs

Common Stock Dividend

Share Repurchase

Fund value-creating investments in our businesses

Consistently and moderately raise dividend targeting a 25%-35% payout ratio of mid-cycle earnings

Consider share repurchase as a means to deploy excess cashto shareholders, once above requirements are met andrepurchase is viewed as value-enhancing


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Portfolio Composition bySegment

John Deere Financial Services

Portfolio Composition byGeography

Portfolio Composition byProduct

A&T85%

C&F15%

Installmentand Finance

Lease57%

Wholesale/Floorplan

19%

RevolvingCredit8%

OperatingLease16%

U.S.75%

Canada10%

Europe5%

LatinAmerica

6%

Australia3% Asia

1%

Note: Information above includes all John Deere Financial Services lending activities worldwide. John Deere Capital Corporation is the largest lending operation of Deere & Company.

$38.1 billion Net Owned Portfolio as of 31 October 2016


| Deere & Company | September 2017

John Deere Capital CorporationProfitability and Growth

342

282

149

319364 383

469

544498

-30

70

170

270

370

470

570

2008 2009 2010 2011 2012 2013 2014 2015 2016

Net Income ($ Millions)

0.33%

0.70%0.48%

0.12% 0.05%0.03%

0.09% 0.11% 0.23%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Write-offs/Average Owned Portfolio

19.1 19.3 21.123.3

26.630.7

33.1 32.7 32.1

2008 2009 2010 2011 2012 2013 2014 2015 2016

Administered Portfolio Growth ($ Billions)

5


John Deere Capital CorporationRetail Notes 60+ Days Past Due vs. Write-offs

Agriculture & Turf1

• Continued extremely low write-offs• Average write-offs less than 5 bps over last

10 years

Construction & Forestry• Low write-offs, below 10-year

average

(1) 1983 – 1985 includes Construction; 1986 - 1994 includes Lawn & Grounds Care; beginning in 2009 includes both Ag and Turf equipment; As %of Owned Losses After Dealer Reserve Charges

Source: 1983 – 1994 internal reporting, 1995 - 2011 JDCC 10-K filings, 2012-2016 internal reporting

-0.05%

0.45%

0.95%

1.45%

1.95%

2.45%

2.95%

3.45%

3.95%

'83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15Net Write-offs (Ag) Installments 60+DPD (Ag)

-0.05%

0.45%

0.95%

1.45%

1.95%

2.45%

2.95%

3.45%

3.95%

'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15Net Write-offs (C&F) Installments 60+DPD (C&F)

6


Worldwide Financial ServicesCredit Loss History

Provision for Credit Losses / Average Owned Portfolio

0.0%

0.5%

1.0%

1.5%

2.0%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

10 Year Average

0.23%

15 Year Average

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Ag & Turf Dealer Reserve• Dealers have financial interest in performance• 1% withheld on each note, pooled reserve• Reserve level caps ranging from 0.5% to 3.0% of outstanding portfolio

• Based on credit performance, avoiding reserve charges, and dealerengagement

Collection• Experts in the equipment markets served• Strong analytics to support approach• Internally serviced / regional assignments• Close working relationship with dealers

Remarketing• Product expertise• Best distribution channel

– Dealer network• Dedicated remarketing team• Proven inspection process• Strong collateral support

Effective Management of Risks and Losses byProven Lending, Collection and RemarketingPractices


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John Deere Financial Funding Strategy

Maintain diverse, sustainable funding sources:• Term Debt, Asset Backed Securitization, and Commercial Paper• Commercial Paper issuances backstopped by a $6.75 billion credit

facility

Sustain appropriate liquidity profile:• Develop redundancy and flexibility in funding options• Balance funding cost and refunding risk


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Committed Bank Group Supports Credit Facility• Average length of continuous relationship = ~30 Years• $6.75 billion credit facility supporting commercial paper

– $2.5 billion tranche expiring in 2022– $2.5 billion tranche expiring in 2021– $1.75 billion 364-day tranche expiring in 2018– Have not drawn on facility– $3.6 billion incremental capacity as of 28 July 2017

Credit Facility Size & Commercial Paper Outstanding

$M

illio

ns

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Facility CP Outstanding as of October 31


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Multiple Sources of Liquidity

Successful Access to Traditional Markets• Unsecured Term Debt

– USD– EUR– CAD– ARS– AUD

• Term Asset Backed Securitization• Commercial Paper

Incremental Sources of Liquidity• Asset Backed Commercial Paper Conduit• Retail Notes

11 Deere & Company | September 201711

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John Deere Financial External Funding Mix


67%72% 70%

74%78%

84%80%

83% 83%

75%80% 78% 80%

22%17%

17% 12%8%

15%

11%

12% 13%

14%

15%14%

16%

11% 11% 13% 14% 14%

1%9%

4% 4%11%

7% 9%4%

0%

20%

40%

60%

80%

100%

Oct FY04 Oct FY05 Oct FY06 Oct FY07 Oct FY08 Oct FY09 Oct FY10 Oct FY11 Oct FY12 Oct FY13 Oct FY14 Oct FY15 Oct FY16

Per

cen

to

fT

ota

lExt

ern

alFu

nd

ing

Long Term Debt ABS CP

$14.8 $18.1 $21.0$20.2 $26.6$20.9 $22.9Total Debt ($B) $30.8$31.4 $31.9$19.7$17.0 $28.5

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John Deere Capital Corp.United States

(Deere Support Agreement)

Deere & CompanyUnited States

John Deere Financial Ltd.Australia

(Debt guaranteed by JDCC*)

Support Agreement - Deere agrees to:

• Maintain JDCC’s fixed charge coverage > 1.05 to 1

• Own > 51% voting shares of JDCC’s capital stock

• Maintain JDCC net worth > $50 million

Key Funding Entities

John Deere Cash Mgmt.Luxembourg

(Debt guaranteed by Deere*)

John Deere Canada ULC(Debt guaranteed by Deere*)

John Deere Bank S.A.Luxembourg


John Deere Financial Inc.Canada


John Deere CanadaFunding Inc.



John Deere Credit CompañíaFinanciera S.A.

Argentina(No guarantee)

* Debt guarantee applies to specific debt programsfor which a guarantee has been executed by theguarantor.

13

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Funding Programs

Institutional Unsecured Term Debt:• United States: Deere & Company and John Deere Capital Corporation• EMTN: Deere & Company, John Deere Bank S.A., John Deere Cash Mgmt S.A., John Deere

Capital Corp• Canada: John Deere Canada Funding Inc.• Australia & New Zealand: John Deere Financial Ltd.• Argentina: John Deere Credit Compañía Financiera S.A.

Asset Backed Securitization:• United States ABCP & Term Debt ABS: John Deere Capital Corporation (Servicer)

Unsecured Commercial Paper:• United States: All key funding entities• Europe: All key funding entities• Canada: John Deere Canada ULC and John Deere Financial Inc.• Australia & New Zealand: John Deere Financial Ltd.

Retail Unsecured Term Debt:• United States Retail Notes: John Deere Capital Corporation


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John Deere Financial Maturity Profile


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