SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 11, 1997
(Date of earliest event reported)
D E E R E & C O M P A N Y
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-4121
(Commission File Number)
36-2382580
(IRS Employer Identification No.)
John Deere Road
Moline, Illinois 61265
(Address of principal executive offices and zip code)
(309)765-8000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report.)
Page 1 of 9 pages.
The Exhibit Index appears at Page 4.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits
(99) Press release and additional information.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereto duly authorized.
DEERE & COMPANY
By /s/ Frank S. Cottrell
Frank S. Cottrell, Secretary
Dated: February 11, 1997
EXHIBIT INDEX
Sequential
Page Number
Number and Description of Exhibit
(99) Press release and additional information Pg. 5
EXHIBIT 99
Contact: Robert J. Combs
Deere & Company
309/765-5014
DEERE & COMPANY FIRST QUARTER 1997 EARNINGS
For Immediate Release (February 11, 1997)
MOLINE, ILLINOIS -- Deere & Company today reported record first
quarter worldwide net income of $176.7 million or $.69 per share
for the quarter ended January 31, an increase of 10 percent in
earnings per share compared with $166.2 million or $.63 per share
in the first quarter of 1996. Deere & Company Chairman and Chief
Executive Officer Hans W. Becherer said, "The higher profits
resulted from strong worldwide retail demand for the company's
products, especially new tractors and combines. Operating margins
also improved, reflecting the results of the company's continuous
improvement and quality initiatives. First quarter net income
increased six percent, while net income per share increased 10
percent due to the company's previously announced share
repurchase program."
Worldwide net sales and revenues for the first quarter increased
three percent to $2.396 billion compared with $2.318 billion for
the first quarter of 1996. Net sales of agricultural, industrial,
and commercial and consumer equipment were $2.003 billion for the
quarter compared with $1.937 billion last year, a gain of three
percent. Export sales from the United States benefited from
increased sales to the former Soviet Union and totaled $392
million for the quarter compared to $308 million for the same
period last year. Overseas sales also increased, rising by nine
percent over last year's strong first quarter levels. Overall,
the company's comparable physical volume of sales to dealers
(excluding the sales by the newly consolidated Mexican
subsidiaries) was up slightly compared to last year.
The company's worldwide equipment operations, which exclude the
financial services subsidiaries and unconsolidated affiliates,
had net income of $135.4 million for the first quarter compared
with $116.1 million for the same period last year. Worldwide
equipment operating profit increased to $237 million or 12
percent of net sales in the first quarter compared with $221
million or 11 percent of net sales last year. Worldwide
agricultural equipment operating profit increased 32 percent to
$195 million for the quarter compared with $148 million last
year, reflecting higher sales volumes as well as improved
operating margins, in both the company's North American and
overseas operations. Worldwide industrial equipment operating
profit totaled $38 million, lower than last year's levels due to
costs associated with growth initiatives including the continued
development of new, more fuel-efficient engines and start-up
expenses associated with the major engine facility in Torreon,
Mexico. However, sales related to construction equipment products
continued at strong levels in the first quarter. Worldwide
commercial and consumer equipment operating profit totaled $4
million, down from last year's first quarter levels, primarily as
a result of lower shipping activity associated with the company's
asset control efforts. These efforts include a program started
during the fourth quarter of 1996, that focuses on providing
products closer to the required customer delivery dates, thereby
enabling the company to reduce its level of asset investment.
Overseas operating profit totaled $69 million, up 17 percent from
last year, reflecting strong sales demand and improved operating
efficiencies.
The company's asset management initiatives continued to show
excellent results with equipment operations' asset levels as a
percent of the last 12 months net sales totaling 72 percent at
the end of the first quarter of 1997 compared with 79 percent a
year ago. Trade receivables and company inventories totaled
$4.211 billion at January 31 compared with $4.357 billion at the
end of the same period last year.
Net income of the financial services subsidiaries was $43.3
million for the first quarter compared with $48.7 million last
year. Net income of the credit operations decreased from $34.5
million last year to $32.9 million this year. Higher income from
a larger receivable and lease portfolio was more than offset by
lower financing spreads and higher expenditures associated with
several growth initiatives. Net income of the insurance
operations decreased from $9.6 million last year to $9.0 million
for the current quarter due to a small gain from the sale of the
personal lines book of business last year. Health care
operations' net income totaled $1.4 million this year compared
with $4.6 million last year, reflecting higher selling,
administrative and general expenses associated with several new
business initiatives. These initiatives should result in
continued growth in John Deere Health Care membership in future
periods.
Outlook
"The company's first quarter sales and revenues were in line
with our expectations and provide a solid base for strong full-
year sales activity," Becherer said. "The remainder of 1997
should benefit from a moderately growing domestic economy,
healthy agricultural markets and generally high levels of farmer
confidence. Additionally, improving dietary trends and rapid
income growth in many developing nations continue to stimulate
strong demand for farm commodities, resulting in the need for
high levels of future plantings. Although grain and oilseed
prices have declined from the historical highs experienced in
early 1996, they remain at relatively good levels. Additionally,
most domestic livestock producers have benefited from lower grain
prices. In 1996, many U.S. farmers received substantial direct
government payments provided by the new farm bill. These payments
were unrelated to farm income and are expected to continue during
1997. Based on these factors, continued strong overseas demand,
and excellent customer response to the many new and innovative
products introduced by the company last year, we expect 1997 to
be another strong year for the company's agricultural equipment
division.
"Retail demand for industrial equipment should remain strong
during 1997 as moderate economic growth and projected low
inflation rates should result in relatively favorable mortgage
rates and continued good housing demand this year," Becherer
said. "Additionally, commercial and consumer equipment industry
volumes are projected to increase as sales recover from the
weather related problems in 1996. Financial services operations
are also expected to remain at favorable levels, reflecting both
the healthy demand for the company's products and good economic
conditions.
Based on this outlook, the 1997 planned comparable physical
volume of sales has been increased and is now expected to be six
percent higher than last year. Second quarter physical volume is
also forecasted to increase, and is expected to be 12 percent
higher than a year ago.
"Overall, the outlook for the company's businesses remains very
positive," Becherer said. "Although we are investing in numerous
strategic growth opportunities throughout the world, our overall
net sales and revenues and operating margins will continue at
strong levels in response to our continuous improvement
initiatives. Additionally, the company's excellent worldwide
dealer organization provides strong and critically important
linkage to assist the company in exceeding customers'
expectations, while reinforcing our commitment to high levels of
customer satisfaction. Based on these factors, we expect
continued excellent operating performance during the remainder of
1997."
John Deere Capital Corporation
The following is disclosed on behalf of the company's credit
subsidiary, John Deere Capital Corporation, in connection with
the disclosure requirements of programs providing for the
issuance of debt securities:
John Deere Capital Corporation's net income was $29.7 million in
the first quarter of 1997 compared with $32.3 million for the
same period last year. Higher income from a 15 percent increase
in the average balance of receivables and leases financed was
more than offset by lower financing spreads and higher
expenditures associated with several growth initiatives.
Financing receivable and lease acquisition volumes for the
quarter increased 29 percent compared to a year ago primarily due
to the increased sales of John Deere equipment. Acquisitions of
retail notes, revolving charge accounts, leases and wholesale
receivables all increased compared with last year.
Net receivables and leases financed by John Deere Capital
Corporation were $5.788 billion at January 31, 1997 compared with
$5.005 billion one year ago. The increase resulted from financing
receivable acquisitions exceeding collections during the last 12
months, partially offset by retail note sales during the same
period. Net receivables and leases administered, which include
receivables previously securitized and sold, totaled $6.757
billion at January 31, 1997 compared with $5.969 billion at
January 31, 1996.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
Statements under the "Outlook" heading that relate to future
operating periods are subject to important risks and
uncertainties that could cause actual results to differ
materially. The company's businesses include Equipment Operations
(agricultural, industrial and commercial and consumer) and
Financial Services (credit, insurance and health care). Forward-
looking statements relating to these businesses involve certain
factors that are subject to change, including: the many
interrelated factors that affect farmers' confidence, including
worldwide demand for agricultural products, world grain stocks,
commodities prices, weather, animal diseases, crop pests, harvest
yields, real estate values and government farm programs; general
economic conditions and housing starts; legislation, primarily
legislation relating to agriculture, the environment, commerce
and government spending on infrastructure; actions of competitors
in the various industries in which the company competes;
production difficulties, including capacity and supply
constraints; dealer practices; labor relations; interest and
currency exchange rates; accounting standards; and other risks
and uncertainties. The company's outlook is based upon
assumptions relating to the factors described in the preceding
sentence. Further information concerning the company and its
businesses, including factors that potentially could materially
affect the company's financial results, is included in the
company's most recent annual report on Form 10-K as filed with
the Securities and Exchange Commission.
# # #
The attached data accompany this press release.
First Quarter 1997 Press Release
Net sales and revenues:
(millions of dollars)
Three Months Ended
January 31
%
1997 1996 Change
Net sales:
Agricultural equipment 1,273 1,186 + 7
Industrial equipment 461 443 + 4
Commercial and consumer equipment 269 308 -13
Total net sales 2,003 1,937 + 3
Financial Services revenues 354 347 + 2
Other revenues 39 34 +15
Total net sales and revenues 2,396 2,318 + 3
United States and Canada:
Equipment net sales 1,415 1,397 + 1
Financial Services revenues 354 347 + 2
Total 1,769 1,744 + 1
Overseas net sales 588 540 + 9
Other revenues 39 34 +15
Total net sales and revenues 2,396 2,318 + 3
Operating profit*:
Agricultural equipment 195 148 +32
Industrial equipment 38 52 -27
Commercial and consumer equipment 4 21 -81
Equipment Operations 237 221 + 7
Financial Services 68 75 - 9
Total operating profit 305 296 + 3
Interest and corporate expenses - net (22) (37) -41
Income taxes (106) (93) +14
Net income 177 166 + 6
Selected balance sheet data:
(millions of dollars) Jan 31 Oct 31 Jan 31
1997 1996 1996
Equipment Operations:
Trade accounts and notes
receivable - net 3,017 3,153 3,378
Inventories 1,194 829 980
Financial Services:
Financing receivables and
leases financed - net 6,376 6,086 5,549
Financing receivables and
leases administered - net 7,512 7,487 6,618
Insurance companies' assets 1,066 1,068 1,153
Health care companies' assets 240 236 234
Average shares
outstanding 256,129,258 260,547,221 262,228,903
* Operating profit is defined as income before interest expense,
foreign exchange gains and losses, income taxes and certain
corporate expenses, except for the operating profit of Financial
Services which includes the effect of interest expense.
END