Deere Reports Record Fourth-Quarter Earnings of $688 Million

- Full-year earnings reach record $3.065 billion on improved net sales and 
revenues. 
- Demand for U.S. farm equipment paces performance while construction 
continues recovery. 
- Further improvement in sales and profit forecast for 2013. 
MOLINE, Ill., Nov. 21, 2012 /CNW/ - Net income attributable to Deere & Company 
(NYSE: DE) was $687.6 million, or $1.75 per share, for the fourth quarter 
ended October 31, compared with $669.6 million, or $1.62 per share, for the 
same period last year. 
For fiscal 2012, net income attributable to Deere & Company was $3.065 
billion, or $7.63 per share, compared with $2.800 billion, or $6.63 per share, 
in 2011. 
Worldwide net sales and revenues rose 14 percent, to $9.792 billion, for the 
fourth quarter and increased 13 percent to $36.157 billion for the full year. 
Net sales of the equipment operations were $9.047 billion for the quarter and 
$33.501 billion for the year, compared with $7.903 billion and $29.466 billion 
for the same periods in 2011. 
"In the face of continuing global economic pressure, John Deere has completed 
another record year," said Samuel R. Allen, chairman and chief executive 
officer. "Our success reflects positive customer response to our lines of 
innovative equipment coupled with extensive efforts to expand our global 
competitive position." 
During the year, Deere continued with the record introduction of new products, 
while opening or moving ahead with new factories in China, India, and Brazil. 
In the U.S., the company announced capacity expansions for tractors, sprayers, 
and cylinders. "John Deere's performance illustrates the continuing impact of 
our operating model, which stresses a disciplined approach to cost and asset 
management," Allen said. "As a result, we are achieving strong financial 
results and generating high levels of cash flow. These dollars are funding 
growth activities throughout the world and providing value directly to 
investors." 
Summary of Operations 
Net sales of the worldwide equipment operations increased 14 percent for the 
fourth quarter and full year compared with the same periods in 2011. Sales 
included price realization of 4 percent and an unfavorable 
currency-translation effect of 3 percent for both periods. Equipment net sales 
in the United States and Canada increased 26 percent for the quarter and 20 
percent for the year. Outside the U.S. and Canada, net sales decreased 2 
percent for the quarter and increased 5 percent for the year, with unfavorable 
currency-translation effects of 7 percent and 6 percent for these periods. 
Deere's equipment operations reported operating profit of $1.051 billion for 
the quarter and $4.397 billion for the full year, compared with $955 million 
and $3.839 billion for the same periods in 2011. The improvement in the 
quarter was primarily due to the impact of higher shipment volumes and price 
realization. These factors were partially offset by higher production costs 
and increased selling, administrative and general, and research and 
development expenses. Also affecting results was a goodwill impairment charge 
related to the company's John Deere Water reporting unit and unfavorable 
effects of foreign currency exchange. 
Full-year results improved primarily due to the impact of price realization 
and higher shipment volumes. Partially offsetting these factors were higher 
production and raw-material costs, unfavorable effects of foreign currency 
exchange, and increased research and development, and selling, administrative 
and general expenses. The increase in production costs for both periods was 
primarily related to new products, engine-emission requirements and incentive 
compensation expenses. 
Net income of the company's equipment operations was $576 million for the 
fourth quarter and $2.616 billion for the full year, compared with $552 
million and $2.329 billion in 2011. The same operating factors mentioned 
above, along with a higher effective tax rate and increased interest expense, 
affected both quarterly and annual results. 
Financial services reported net income attributable to Deere & Company of 
$121.7 million for the quarter and $460.3 million for the year compared with 
$122.1 million and $471.0 million in 2011. Results were slightly lower for the 
quarter primarily due to higher reserves for crop insurance claims, increased 
selling, administrative and general expenses, a higher provision for credit 
losses and narrower financing spreads. These factors were almost entirely 
offset by growth in the credit portfolio. Fiscal-year 2012 results were lower 
primarily due to increased selling, administrative and general expenses, 
higher reserves for crop insurance claims and narrower financing spreads, 
partially offset by growth in the credit portfolio and a lower provision for 
credit losses. 
Company Outlook & Summary 
Company equipment sales are projected to increase by about 5 percent for full 
year 2013 and to be up about 10 percent for the first quarter compared with 
the same periods of 2012. For fiscal 2013, net income attributable to Deere & 
Company is anticipated to be about $3.2 billion. 
"Deere remains well-positioned to carry out its growth plans and capitalize on 
positive long-term trends, even though present global economic and fiscal 
concerns warrant continued caution," Allen said. "With support from a highly 
committed group of employees, dealers and suppliers, our plans for helping 
meet the world's growing need for food and infrastructure are moving ahead and 
achieving a good deal of success. 
"We are proud of the company's performance in 2012 and look forward to 
building on these gains in 2013 and beyond. Despite fragile economic 
conditions in many regions, we have great confidence in the company's 
prospects and in our ability to deliver value to investors and other 
stakeholders in the future." 
Equipment Division Performance 
Agriculture & Turf. Sales increased 16 percent for the quarter and 13 percent 
for the year largely due to higher shipment volumes and price realization, 
partially offset by the unfavorable effects of currency translation. 
Operating profit was $931 million for the quarter and $3.921 billion for the 
year, compared with $868 million and $3.447 billion, respectively, in 2011. 
The improvement in both periods was primarily due to the impact of higher 
shipment volumes and price realization. Results in the quarter were partially 
offset by higher production costs and increased selling, administrative and 
general, and research and development expenses. Also affecting fourth-quarter 
performance was a goodwill impairment charge and unfavorable effects of 
foreign currency exchange. For the full year, results were partially offset by 
higher production and raw-material costs, unfavorable effects of foreign 
currency exchange, and increased research and development, and selling, 
administrative and general expenses. 
Construction & Forestry. Construction and forestry sales increased 7 percent 
for the quarter and 19 percent for the year mainly due to higher shipment 
volumes and price realization. Operating profit was $120 million for the 
quarter and $476 million for the year, compared with $87 million and $392 
million, respectively, in 2011. Results increased for both periods primarily 
due to the impact of price realization and higher shipment volumes. These 
factors were partially offset by increased production costs and higher 
selling, administrative and general expenses. In addition, higher raw-material 
costs and increased research and development expenses affected the year. 
Market Conditions & Outlook 
Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment 
are forecast to increase by about 4 percent for fiscal year 2013. Relatively 
high commodity prices and strong farm incomes are expected to continue 
supporting a favorable level of demand for farm machinery during the year. 
Deere's sales are expected to benefit from global expansion and lines of 
advanced new equipment. 
Industry sales for agricultural machinery in the U.S. and Canada are forecast 
to be about flat for 2013 in relation to the prior year's healthy levels. 
Caution around the U.S. livestock and dairy sectors is expected to offset 
continued strength in demand for large equipment such as high-horsepower 
tractors. 
Full-year industry sales in the EU27 are forecast to be flat to down 5 percent 
due to continuing deterioration in the overall economy and a poor harvest in 
the U.K. Sales in the Commonwealth of Independent States are expected to be 
modestly higher in 2013. 
In South America, industry sales are projected to be up about 10 percent as a 
result of favorable commodity prices and higher planting intentions. Industry 
sales in Asia are projected to be little-changed from 2012 due to softer 
economic conditions in India and China. 
U.S. and Canada industry sales of turf and utility equipment are expected to 
be up about 5 percent for 2013, reflecting some improvement in the U.S. 
economy. Deere's sales are expected to increase more than the industry due to 
the impact of new products. 
Construction & Forestry. Deere's worldwide sales of construction and forestry 
equipment are forecast to increase by about 8 percent for fiscal 2013 due in 
part to modest improvement in U.S. economic conditions. Sales in world 
forestry markets are projected to be about flat for the year as further 
weakness in European markets offsets stronger demand in the U.S. 
Financial Services. Fiscal-year 2013 net income attributable to Deere & 
Company for the financial services operations is expected to be approximately 
$500 million. The forecast improvement is primarily due to expected growth in 
the credit portfolio and lower crop insurance claims. These factors are 
projected to be partially offset by an increase in the provision for credit 
losses, which is anticipated to return to a more typical level. 
John Deere Capital Corporation 
The following is disclosed on behalf of the company's financial services 
subsidiary, John Deere Capital Corporation (JDCC), in connection with the 
disclosure requirements applicable to its periodic issuance of debt securities 
in the public market. 
Net income attributable to John Deere Capital Corporation was $112.6 million 
for the fourth quarter and $382.7 million for full-year 2012, compared with 
$93.5 million and $363.6 million for the respective periods in 2011. The 
quarter's improvement was mainly due to growth in the credit portfolio, 
partially offset by an increased provision for credit losses and higher 
selling, administrative and general expenses. Full-year 2012 results were 
higher primarily due to growth in the credit portfolio and a lower provision 
for credit losses, partially offset by higher selling, administrative and 
general expenses and narrower financing spreads. 
Net receivables and leases financed by JDCC were $26.509 billion and $23.184 
billion at October 31, 2012 and 2011, respectively. 
Safe Harbor Statement 
Safe Harbor Statement under the Private Securities Litigation Reform Act of 
1995:  Statements under "Company Outlook & Summary," "Market Conditions & 
Outlook," and other forward-looking statements herein that relate to future 
events, expectations, trends and operating periods involve certain factors 
that are subject to change, and important risks and uncertainties that could 
cause actual results to differ materially.  Some of these risks and 
uncertainties could affect particular lines of business, while others could 
affect all of the company's businesses. 
The company's agricultural equipment business is subject to a number of 
uncertainties including the many interrelated factors that affect farmers' 
confidence.  These factors include worldwide economic conditions, demand for 
agricultural products, world grain stocks, weather conditions (including its 
effects on timely planting and harvesting), soil conditions (including low 
subsoil moisture from recent drought conditions), harvest yields, prices for 
commodities and livestock, crop and livestock production expenses, 
availability of transport for crops, the growth of non-food uses for some 
crops (including ethanol and biodiesel production), real estate values, 
available acreage for farming, the land ownership policies of various 
governments, changes in government farm programs and policies (including those 
in Argentina, Brazil, China, the European Union, India, Russia and the U.S.), 
international reaction to such programs, changes in and effects of crop 
insurance programs, global trade agreements, animal diseases and their effects 
on poultry, beef and pork consumption and prices, crop pests and diseases, and 
the level of farm product exports (including concerns about genetically 
modified organisms). 
Factors affecting the outlook for the company's turf and utility equipment 
include general economic conditions, consumer confidence, weather conditions, 
customer profitability, consumer borrowing patterns, consumer purchasing 
preferences, housing starts, infrastructure investment, spending by 
municipalities and golf courses, and consumable input costs. 
General economic conditions, consumer spending patterns, real estate and 
housing prices, the number of housing starts and interest rates are especially 
important to sales of the company's construction and forestry equipment.  The 
levels of public and non-residential construction also impact the results of 
the company's construction and forestry segment.  Prices for pulp, paper, 
lumber and structural panels are important to sales of forestry equipment. 
All of the company's businesses and its reported results are affected by 
general economic conditions in the global markets in which the company 
operates, especially material changes in economic activity in these markets; 
customer confidence in general economic conditions; foreign currency exchange 
rates and their volatility, especially fluctuations in the value of the U.S. 
dollar; interest rates; and inflation and deflation rates.  General economic 
conditions can affect demand for the company's equipment as well.  Uncertainty 
about and actual government spending and taxing could adversely affect the 
economy, employment, consumer and corporate spending, and company results. 
Customer and company operations and results could be affected by changes in 
weather patterns (including the effects of drought conditions in parts of the 
U.S. and dryer than normal conditions in certain other markets); the political 
and social stability of the global markets in which the company operates; the 
effects of, or response to, terrorism and security threats; wars and other 
conflicts and the threat thereof; and the spread of major epidemics. 
Significant changes in market liquidity conditions and any failure to comply 
with financial covenants in credit agreements could impact access to funding 
and funding costs, which could reduce the company's earnings and cash flows.  
Financial market conditions could also negatively impact customer access to 
capital for purchases of the company's products and customer confidence and 
purchase decisions; borrowing and repayment practices; and the number and size 
of customer loan delinquencies and defaults.  The sovereign debt crisis, in 
Europe or elsewhere, could negatively impact currencies, global financial 
markets, social and political stability, funding sources and costs, asset and 
obligation values, customers, suppliers, and company operations and results.  
State debt crises also could negatively impact customers, suppliers, demand 
for equipment, and company operations and results.  The company's investment 
management activities could be impaired by changes in the equity and bond 
markets, which would negatively affect earnings. 
Additional factors that could materially affect the company's operations, 
access to capital, expenses and results include changes in and the impact of 
governmental trade, banking, monetary and fiscal policies, including financial 
regulatory reform and its effects on the consumer finance industry, 
derivatives, funding costs and other areas, and governmental programs, 
policies and tariffs in particular jurisdictions or for the benefit of certain 
industries or sectors (including protectionist and expropriation policies and 
trade and licensing restrictions that could disrupt international commerce); 
actions by the U.S. Federal Reserve Board and other central banks; actions by 
the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures 
Trading Commission and other financial regulators; actions by environmental, 
health and safety regulatory agencies, including those related to engine 
emissions (in particular Interim Tier 4, Final Tier 4 and Stage IIIb non-road 
diesel emission requirements), carbon and other greenhouse gas emissions, 
noise and the risk of climate change; changes in labor regulations; changes to 
accounting standards; changes in tax rates, estimates, and regulations; 
compliance with U.S. and foreign laws when expanding to new markets; and 
actions by other regulatory bodies including changes in laws and regulations 
affecting the sectors in which the company operates.  Customer and company 
operations and results also could be affected by changes to GPS radio 
frequency bands or their permitted uses. 
Other factors that could materially affect results include production, design 
and technological innovations and difficulties, including capacity and supply 
constraints and prices; the availability and prices of strategically sourced 
materials, components and whole goods; delays or disruptions in the company's 
supply chain or the loss of liquidity by suppliers; the failure of suppliers 
to comply with laws, regulations and company policy pertaining to employment, 
human rights, health, safety, the environment and other ethical business 
practices; start-up of new plants and new products; the success of new product 
initiatives and customer acceptance of new products; changes in customer 
product preferences and sales mix whether as a result of changes in equipment 
design to meet government regulations or for other reasons; gaps or 
limitations in rural broadband coverage, capacity and speed needed to support 
technology solutions; oil and energy prices and supplies; the availability and 
cost of freight; actions of competitors in the various industries in which the 
company competes, particularly price discounting; dealer practices especially 
as to levels of new and used field inventories; labor relations; acquisitions 
and divestitures of businesses, the integration of new businesses; the 
implementation of organizational changes; difficulties related to the 
conversion and implementation of enterprise resource planning systems that 
disrupt business, negatively impact supply or distribution relationships or 
create higher than expected costs; security breaches and other disruptions to 
the company's information technology infrastructure; changes in company 
declared dividends and common stock issuances and repurchases. 
Company results are also affected by changes in the level and funding of 
employee retirement benefits, changes in market values of investment assets 
and the level of interest rates, which impact retirement benefit costs, and 
significant changes in health care costs including those which may result from 
governmental action. 
The liquidity and ongoing profitability of John Deere Capital Corporation and 
other credit subsidiaries depend largely on timely access to capital to meet 
future cash flow requirements and fund operations and the costs associated 
with engaging in diversified funding activities and to fund purchases of the 
company's products.  If market uncertainty increases and general economic 
conditions worsen, funding could be unavailable or insufficient.  
Additionally, customer confidence levels may result in declines in credit 
applications and increases in delinquencies and default rates, which could 
materially impact write-offs and provisions for credit losses.  The failure of 
reinsurers of the company's insurance business also could materially affect 
results. 
The company's outlook is based upon assumptions relating to the factors 
described above, which are sometimes based upon estimates and data prepared by 
government agencies.  Such estimates and data are often revised.  The company, 
except as required by law, undertakes no obligation to update or revise its 
outlook, whether as a result of new developments or otherwise.  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 other filings with the SEC (including, but not 
limited to, the factors discussed in Item 1A. Risk Factors of the company's 
most recent annual report on Form 10-K and quarterly reports on Form 10-Q). 
 _____________________________________________________________________
|Fourth Quarter 2012 Press Release                                    |
|_____________________________________________________________________|
|(in millions of dollars)                                             |
|_____________________________________________________________________|
|Unaudited                                                            |
|_____________________________________________________________________|
|                                                                     |
|_____________________________________________________________________|
|            |Three Months Ended October||Twelve Months Ended October |
|            |31                        ||31                          |
|____________|__________________________||____________________________|
|            |                          ||                            |
|____________|__________________________||____________________________|
|            | |     ||| |     |||%     || |      ||| |      |||%     |
|            | |2012 ||| |2011 |||      || |2012  ||| |2011  |||      |
|            | |     ||| |     |||Change|| |      ||| |      |||Change|
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|            | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Net sales   | |     ||| |     |||      || |      ||| |      |||      |
|and         | |     ||| |     |||      || |      ||| |      |||      |
|revenues:   | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Agriculture |$|7,393|||$|6,354|||+16   ||$|27,123|||$|24,094|||+13   |
|and turf    | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Construction|1,654  |||1,549  |||+7    ||6,378   |||5,372   |||+19   |
|and forestry|       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Total net   |9,047  |||7,903  |||+14   ||33,501  |||29,466  |||+14   |
|sales       |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Financial   |633    |||615    |||+3    ||2,235   |||2,163   |||+3    |
|services    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Other       |112    |||94     |||+19   ||421     |||384     |||+10   |
|revenues    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Total net   | |     ||| |     |||      || |      ||| |      |||      |
|sales and   |$|9,792|||$|8,612|||+14   ||$|36,157|||$|32,013|||+13   |
|revenues    | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Operating   |       |||       |||      ||        |||        |||      |
|profit: *   |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Agriculture |$|931  |||$|868  |||+7    ||$|3,921 |||$|3,447 |||+14   |
|and turf    | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Construction|120    |||87     |||+38   ||476     |||392     |||+21   |
|and forestry|       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Financial   |191    |||196    |||-3    ||712     |||725     |||-2    |
|services    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Total       |       |||       |||      ||        |||        |||      |
|operating   |1,242  |||1,151  |||+8    ||5,109   |||4,564   |||+12   |
|profit      |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Reconciling |(129)  |||(98)   |||+32   ||(385)   |||(340)   |||+13   |
|items **    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Income taxes|(425)  |||(383)  |||+11   ||(1,659) |||(1,424) |||+17   |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Net income  | |     ||| |     |||      || |      ||| |      |||      |
|attributable|$|688  |||$|670  |||+3    ||$|3,065 |||$|2,800 |||+9    |
|to Deere &  | |     ||| |     |||      || |      ||| |      |||      |
|Company     | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|            |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|  |Operating profit is income from continuing operations before      |
|  |corporate expenses, certain external interest expense, certain    |
|* |foreign exchange gains and losses and income taxes. Operating     |
|  |profit of the financial services segment includes the effect of   |
|  |interest expense and foreign exchange gains or losses.            |
|__|__________________________________________________________________|
|  ||                                                                 |
|__||_________________________________________________________________|
|  |Other reconciling items are primarily corporate expenses, certain |
|**|external interest expense, certain foreign exchange gains and     |
|  |losses and net income attributable to noncontrolling interests.   |
|__|__________________________________________________________________| 
Ken Golden, Director, Global Public Relations, +1-309-765-5678 
http://www.deere.com 
SOURCE: Deere & Company 
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CO: Deere & Company
ST: Illinois
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-0- Nov/21/2012 12:02 GMT
 
 
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