Page 12
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: May 13, 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: May 13, 1997
EXHIBIT INDEX
Sequential
Number and Description of Exhibit Page
Number
(99) Press release and additional information Pg. 5
EXHIBIT 99
Contact: Robert J. Combs
Deere & Company
309/765-5014
DEERE & COMPANY SECOND QUARTER 1997 EARNINGS
For Immediate Release (May 13, 1997)
MOLINE, ILLINOIS - Deere & Company today reported record
second quarter worldwide net income of $319.5 million or $1.25
per share for the quarter ended April 30, an increase of 20
percent in earnings per share compared with $272.7 million or
$1.04 per share in the second quarter of 1996. Net income for
the first six months was $496.2 million or $1.94 per share
compared with $438.9 million or $1.67 per share last year. 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 tractors and
combines. Operating margins also improved, reflecting the
results of the company's continuous improvement and quality
initiatives. Net income for the first six months increased 13
percent compared with last year, while net income per share
increased 16 percent due to the company's previously announced
share repurchase program."
Worldwide net sales and revenues for the second quarter
increased 14 percent to $3.521 billion and nine percent to $5.917
billion for the first six months of 1997 compared with $3.088
billion and $5.406 billion, respectively, last year. Net sales
of the agricultural, construction (formerly known as industrial),
and commercial and consumer equipment divisions increased 15
percent to $3.108 billion for the quarter and 10 percent to
$5.110 billion for the first six months compared with $2.700
billion and $4.636 billion, respectively, last year. Export
sales from the United States continued to benefit from increased
sales to the former Soviet Union and totaled $547 million for the
quarter and $939 million year-to-date compared to $415 million
and $723 million for the same periods last year. Overseas sales
also increased, rising by 20 percent over last year's strong
second quarter levels and 15 percent for the first six months
compared with a year ago. Overall, the company's physical volume
of sales (excluding the sales by the newly consolidated Mexican
subsidiaries) increased eight percent for the first six months of
1997 compared to last year.
The company's worldwide equipment operations, which exclude
the financial services subsidiaries and unconsolidated
affiliates, had net income of $278.6 million for the second
quarter and $414.0 million for the first six months compared with
$217.3 million and $333.4 million for the same periods last year.
Worldwide equipment operating profit increased to $474 million or
15 percent of net sales for the quarter and to $711 million or 14
percent of net sales for the first six months of 1997 compared
with $384 million or 14 percent of net sales for the quarter and
$605 million or 13 percent of net sales for the first six months
of last year. Worldwide agricultural equipment operating profit
increased 33 percent to $339 million for the quarter and also 33
percent to $534 million for the first six months compared with
$255 million and $403 million, respectively, last year,
reflecting higher production and sales volumes as well as
improved operating margins in both the company's North American
and overseas operations. Worldwide construction equipment
operating profit totaled $77 million in the quarter and $115
million year-to-date compared with $48 million and $100 million,
respectively, last year, reflecting higher sales, lower sales
incentive costs and improved operating efficiencies. Worldwide
commercial and consumer equipment operating profit totaled $58
million for the quarter and $62 million year-to-date, down from
last year's $81 million and $102 million, respectively. The
quarterly decline was due primarily to higher growth expenditures
and costs associated with the discontinuation of the electric
start string trimmer line in the quarter. Additionally, year-to-
date results were affected by 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. As a result of this program, shipments to
dealers for the remainder of 1997 should be at higher levels than
last year. Overseas equipment operating profit totaled $112
million for the quarter and $181 million year-to-date, compared
to $101 million and $160 million, respectively, a year ago,
reflecting strong sales demand.
The company's asset management initiatives continued to show
excellent results. Equipment operations' assets at April 30,
1997 represented 76 percent of the last 12 months net sales
compared with 82 percent a year ago. Trade receivables and
company inventories totaled $4.929 billion at April 30 compared
with $4.897 billion at the end of the same period last year.
Net income of the financial services subsidiaries was $40.2
million for the second quarter and $83.5 million year-to-date
compared with $52.4 million and $101.1 million, respectively,
last year. Net income of the credit operations decreased from
$40.0 million in the second quarter and $74.5 million in the
first six months of last year to $31.6 million and $64.6 million,
respectively, this year, primarily reflecting a gain from the
sale of retail notes last year. Additionally, earnings from
credit operations decreased this year due to lower financing
spreads and higher expenditures associated with several growth
initiatives, which were partially offset by higher income from a
larger receivable and lease portfolio. Net income of the
insurance operations was $8.2 million for the quarter and $17.1
million year-to-date this year compared with $8.7 million and
$18.2 million, respectively, last year, due to lower investment
income in both periods of this year and a small gain from the
sale of the personal lines business in the first six months of
last year. Health care operations' net income was $.4 million
for the quarter and $1.8 million year-to-date this year compared
with $3.7 million and $8.4 million, respectively, last year,
reflecting higher selling, administrative and general expenses
associated with several business initiatives, higher claims
activity and reduced margins on some governmental business. The
various growth initiatives of the financial services operations
should result in improvements in future periods.
Outlook
"The company's strong results for the first six months were
in line with our expectations for both the period and the full
year," Becherer said. "The remainder of 1997 should benefit from
a growing global economy, healthy agricultural markets and
generally high levels of farmer confidence. Improving dietary
trends and rapid income growth in many developing nations
continue to stimulate strong demand for farm commodities, and
grain and oilseed prices remain at relatively strong levels.
Additionally, in 1996, many U.S. farmers received substantial
direct government payments provided by the new farm bill and
these payments, which were unrelated to commodity prices, are
expected to continue during 1997. Based on these factors, as
well as continued strong overseas demand and the excellent
customer response to the many new and innovative products being
introduced by the company, we expect 1997 to be another strong
year for the company's agricultural equipment division.
"Industry retail demand for construction equipment is strong
and is expected to remain at similar levels throughout 1997 as
favorable economic growth, rising incomes and low inflation rates
continue to result in good housing demand," Becherer said.
"Additionally, Deere retail demand is expected to benefit from
sales of the recently announced new construction equipment
models. Commercial and consumer equipment industry retail sales
volumes increased compared with last year's levels, which were
adversely impacted by a late spring selling season. Retail
volumes for both the industry and Deere are expected to be at
strong levels throughout the remainder of the year. Financial
services operations also are 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 to dealers has been increased and is now expected
to be approximately eight percent higher than last year,"
Becherer said. "Third quarter comparable physical volume of
sales to dealers also has been increased, and is expected to be
approximately 10 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 continue at
strong levels due to favorable market conditions and our
continuous improvement initiatives. Additionally, the company's
excellent worldwide dealer organization, which provides a strong
and important link to our customers, continues to effectively
market and support our lines of quality products and assists the
company in attaining exceptionally high levels of customer
satisfaction. In summary, industry demand for our products
remains strong, and the recent introductions of a wide array of
exciting new products should promote market share growth in
existing and new markets throughout the world. 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 $29.0 million
in the second quarter and $58.7 million for the first six months
of 1997 compared with $37.9 million and $70.2 million for the
same periods last year, primarily reflecting a gain from the sale
of retail notes during the second quarter of last year.
Additionally, earnings decreased this year due to lower financing
spreads and higher expenditures associated with several growth
initiatives, which were partially offset by higher income from a
16 percent increase in the average balance of receivables and
leases financed during the first six months.
Financing receivable and lease acquisition volumes increased
17 percent for the quarter and 23 percent for the first six
months of 1997 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 $6.146 billion at April 30, 1997 compared with
$4.806 billion one year ago. The increase resulted from
financing receivable and lease 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 $6.866 billion at April 30, 1997 compared with $6.045
billion at April 30, 1996.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
Statements under the "Outlook" heading as well as the
sentence immediately preceding the "Outlook" section, which
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, construction 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.
Second Quarter 1997 Press Release
Net sales and revenues:
(millions of dollars)
Three Months Ended
April 30
%
1997 1996 Change
Net sales:
Agricultural equipment $1,949 $1,639 +19
Construction equipment 591 515 +15
Commercial and consumer
equipment 568 546 + 4
Total net sales 3,108 2,700 +15
Financial Services revenues 381 360 + 6
Other revenues 32 28 +14
Total net sales and revenues $3,521 $3,088 +14
United States and Canada:
Equipment net sales $2,221 $1,962 +13
Financial Services revenues 381 360 + 6
Total 2,602 2,322 +12
Overseas net sales 887 738 +20
Other revenues 32 28 +14
Total net sales and revenues $3,521 $3,088 +14
Operating profit*:
Agricultural equipment $ 339 $ 255 +33
Construction equipment 77 48 +60
Commercial and consumer
equipment 58 81 -28
Equipment Operations 474 384 +23
Financial Services 62 80 -23
Total operating profit 536 464 +16
Interest and corporate
expenses - net (28) (35) -20
Income taxes (189) (156) +21
Net income $ 319 $ 273 +17
Second Quarter 1997 Press Release
Net sales and revenues:
(millions of dollars)
Six Months Ended
April 30
%
1997 1996 Change
Net sales:
Agricultural equipment $3,221 $2,825 +14
Construction equipment 1,052 958 +10
Commercial and consumer
equipment 837 853 - 2
Total net sales 5,110 4,636 +10
Financial Services revenues 735 708 + 4
Other revenues 72 62 +16
Total net sales and revenues $5,917 $5,406 + 9
United States and Canada:
Equipment net sales $3,635 $3,358 + 8
Financial Services revenues 735 708 + 4
Total 4,370 4,066 + 7
Overseas net sales 1,475 1,278 +15
Other revenues 72 62 +16
Total net sales and revenues $5,917 $5,406 + 9
Operating profit*:
Agricultural equipment $ 534 $ 403 +33
Construction equipment 115 100 +15
Commercial and consumer
equipment 62 102 -39
Equipment Operations 711 605 +18
Financial Services 129 155 -17
Total operating profit 840 760 +11
Interest and corporate
expenses - net (49) (72) -32
Income taxes (295) (249) +18
Net income $ 496 $ 439 +13
Second Quarter 1997 Press Release
Selected balance sheet data:
(millions of dollars) April 30 October 31 April 30
1997 1996 1996
Equipment Operations:
Trade accounts and notes
receivable - net $3,640 $3,153 $3,831
Inventories 1,290 829 1,067
Financial Services:
Financing receivables and
leases financed - net 6,759 6,086 5,410
Financing receivables and
leases administered - net 7,615 7,487 6,744
Insurance companies'
assets 1,008 1,068 1,065
Health care companies'
assets 246 236 223
Average shares
outstanding 255,254,274 260,547,221 262,199,237
* 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