SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 17, 1998
(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)
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(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.
Page 2
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 17, 1998
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Exhibit Index
Sequential
Number and Description of Exhibit Page Number
- --------------------------------- -----------
(99) Press release and additional information Pg. 5
Page 4
EXHIBIT 99
Curtis G. Linke
(Deere Logo) Deere & Company
(309)765-4634
Deere Posts Earnings Gain of 15 Percent; EPS Up 17 Percent
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For Immediate Release (17 February 1998)
MOLINE, IL -- Deere & Company today reported record first-
quarter net income of $203.3 million, or $.81 per share, for the
period ended January 31, an increase of 15 percent compared with
$176.7 million, or $.69 per share, in first-quarter 1997.
Earnings per share rose by 17 percent due to ongoing share
repurchases. Deere has reported record earnings for 18 of the
last 19 quarters.
"Significant revenue growth and continued favorable margins
were primary reasons for the strong results," said Hans W.
Becherer, chairman and chief executive officer. "Strong customer
response to new products and continuing progress from our
quality improvement initiatives is driving our earnings
performance, even as spending has increased for growth
initiatives and as some global markets have become more
challenging."
Worldwide net sales and revenues rose 19 percent to $2.846
billion for the first quarter, compared with $2.396 billion last
year. Net sales to dealers of agricultural, construction, and
commercial and consumer equipment were $2.405 billion for the
quarter, versus $2.003 billion last year. Export sales from the
United States remained robust, totaling $444 million for the
quarter, compared with $392 million last year. Overseas sales
were approximately equal to last year's first quarter total.
Overall, the company's worldwide physical volume of sales
increased 22 percent for the quarter.
Worldwide equipment operations, which exclude the financial
services subsidiaries and unconsolidated affiliates, had record
net income of $166.9 million for the first quarter, compared
with $135.4 million last year. Worldwide equipment operating
profit increased to $288 million in the first quarter, compared
with $237 million a year ago.
. Worldwide agricultural equipment operating profit was $206
million for the quarter, compared with $195 million last year,
reflecting higher sales and production volumes, partially offset
by higher expenses related to the development of new products
and markets, higher sales incentive costs, and a less favorable
sales mix.
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. Worldwide construction equipment operating profit totaled
$64 million for the quarter, in comparison with $38 million last
year. The increase reflected higher sales and production volumes
and improved operating efficiencies, partially offset by growth
expenditures and start-up expenses primarily at the new engine
facility in Torreon, Mexico.
. Worldwide commercial and consumer equipment operating
profit was $18 million for the quarter compared with $4 million
last year. Results benefited from higher sales and production
volumes and a more favorable yen exchange rate, partially offset
by start-up costs at new facilities and growth expenditures.
Trade receivables and company inventories are at target
levels. Equipment operations assets at January 31, 1998, were
72.6 percent of the last 12 months' net sales, compared with
72.2 percent a year ago.
Net income of the financial services subsidiaries was $36.0
million for the quarter, compared with $43.3 million last year.
. Net income of the credit operations was $32.9 million for
the first quarter of both years. Higher income from a larger
average receivable and lease portfolio was offset by higher
operating expenses, lower securitization and servicing fee
income, and narrower financing spreads.
. Net income of the insurance operations was $5.5 million for
the quarter compared with $9.0 million last year, primarily due
to less favorable underwriting results.
. Health care operations incurred a net loss of $2.4 million
for the quarter, compared with net income of $1.4 million last
year. The loss primarily reflected reduced margins caused by
very competitive industry conditions. Compared with last year,
these operations are expected to report significantly improved
results in the remainder of 1998.
Market Conditions and Outlook
Worldwide demand for John Deere agricultural equipment
remained strong for the quarter as a result of favorable
fundamentals in the farm economy and excellent customer response
to new products. With regard to the future, worldwide commodity
carryover stocks should remain relatively low, while grain and
soybean prices, although trending down, are expected to continue
at profitable levels. Near-term commodity-price volatility could
increase until the full effects of El Nino are known. At the
same time, U.S. farm cash receipts are expected to remain near,
or slightly below, the high levels of the previous two years.
U.S. farmers' balance sheets should remain strong as a result of
rising farmland prices and low interest rates. With regard to
the Asian economic situation, Deere does not have significant
sales to the region, and, according to the U.S. Department of
Agriculture, farm exports to Asia are expected to show only a
modest decline for the year. However, the Asian financial crisis
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is contributing to global uncertainty, currency realignments and
pricing challenges in some parts of the world. Concurrently,
worldwide commodity consumption is expected to increase again
this year, and overall fundamentals are expected to remain
generally favorable for farm equipment sales in 1998.
Construction equipment demand is expected to remain strong
in 1998, sustained by low interest rates, moderate economic
growth and low inflation. Housing starts are expected to
approximate last year's level, while expenditures on highways
and streets are anticipated to grow in connection with the
approval of pending federal highway legislation.
Sales for commercial and consumer equipment are expected to
benefit from growing incomes, low interest rates, moderate
economic growth, a strong housing market and new-product
introductions.
The credit operations' performance is expected to improve
this year as a result of strong demand for John Deere products
and favorable economic conditions. The insurance operations will
continue to face competitive market conditions, with results
expected to fall below last year's levels. Although health-care
operations continue to experience margin pressures and a very
competitive environment, significant improvement is expected for
1998 over the previous year.
Based on these conditions, the company's worldwide physical
volume of sales is currently projected to increase by
approximately 8 percent in 1998 compared with 1997. Second-
quarter physical volumes are projected to be 13 percent higher
than comparable levels for second-quarter 1997.
"Overall, the general fundamentals of the company's business
remain favorable." Becherer said. "With the commitment of our
employees and enthusiastic support of our dealers, we're
confident the strong operating performance will continue for the
remainder of 1998."
John Deere Capital Corporation
The following is disclosed on behalf of the company's United
States 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 $30.6
million in the first quarter of 1998 compared with $29.7 million
last year. First quarter results reflect higher income from a
larger average receivable and lease portfolio, partially offset
by higher operating expenses, lower securitization and servicing
fee income, and narrower financing spreads. The average balance
of receivables and leases financed was 11 percent higher for the
quarter compared with a year ago.
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Net receivables and leases financed by John Deere Capital
Corporation were $6.468 billion at January 31, 1998 compared
with $5.788 billion one year ago. The increase resulted from
acquisitions exceeding collections, partially offset by retail
note sales. Net receivables and leases administered, which
include receivables previously securitized and sold, totaled
$7.482 billion at January 31, 1998 compared with $6.757 billion
at January 31, 1997. Receivable and lease acquisition volumes
increased 4 percent during the first quarter compared with last
year.
SAFE HARBOR STATEMENT
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
Statements under the "Market Conditions and Outlook"
heading, 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
conditions such as El Nino, 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. Economic difficulties in Asia could affect
North American grain and meat export prospects and could trigger
instability in the world's financial markets. The company's
outlook is based upon assumptions relating to the factors
described above. 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 filings with the Securities and Exchange
Commission.
# # #
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First Quarter 1998 Press Release
Net sales and revenues:
(millions of dollars except per share amounts)
Three Months Ended
January 31
%
1998 1997 Change
Net sales: ------ ------ ------
Agricultural equipment $1,451 $1,273 + 14
Construction equipment 578 461 + 25
Commercial and consumer equipment 376 269 + 40
Total net sales 2,405 2,003 + 20
Financial Services revenues 401 354 + 13
Other revenues 40 39 + 3
Total net sales and revenues $2,846 $2,396 + 19
United States and Canada:
Equipment net sales $1,815 $1,415 + 28
Financial Services revenues 401 354 + 13
Total 2,216 1,769 + 25
Overseas net sales 590 588
Other revenues 40 39 + 3
Total net sales and revenues $2,846 $2,396 + 19
Operating profit:
Agricultural equipment $ 206 $ 195 + 6
Construction equipment 64 38 + 68
Commercial and consumer equipment 18 4 +350
Equipment Operations* 288 237 + 22
Financial Services 57 68 - 16
Total operating profit 345 305 + 13
Interest and corporate expenses-net (24) (22) + 9
Income taxes (118) (106) + 11
Net income $ 203 $ 177 + 15
Per Share:
Net income $ .81 $ .69 + 17
Net income - diluted $ .81 $ .68 + 19
* Includes overseas operating profit $ 57 $ 69 - 17
Selected balance sheet data: Jan 31 Oct 31 Jan 31
(millions of dollars and shares) 1998 1997 1997
------ ------ ------
Equipment Operations:
Trade accounts and notes
receivable-net $3,526 $3,334 $3,017
Inventories $1,464 $1,073 $1,194
Financial Services:
Financing receivables and leases
financed - net $7,165 $6,902 $6,376
Financing receivables and leases
administered - net $8,347 $8,416 $7,512
Insurance companies' assets $ 991 $ 994 $1,066
Health care companies' assets $ 260 $ 233 $ 240
Average shares outstanding 249.5 253.7 256.1
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