Deere Announces Record Second-Quarter Earnings of $1.084 Billion

-  Sales and income reach new single-quarter records. 
-  Results benefit from higher sales of farm machinery, skillful execution of 
business plans. 
-  Investment in capacity, new products attracting customers worldwide. 
MOLINE, Ill., May 15, 2013 /CNW/ - Net income attributable to Deere & Company 
(NYSE: DE) was $1.084 billion, or $2.76 per share, for the second quarter 
ended April 30, compared with $1.056 billion, or $2.61 per share, for the same 
period last year. 
For the first six months of the year, net income attributable to Deere & 
Company was $1.734 billion, or $4.41 per share, compared with $1.589 billion, 
or $3.91 per share, last year. 
Worldwide net sales and revenues increased 9 percent, to $10.914 billion, for 
the second quarter and rose 9 percent to $18.335 billion for six months. Net 
sales of the equipment operations were $10.265 billion for the quarter and 
$17.058 billion for six months, compared with $9.405 billion and $15.524 
billion for the periods last year. 
"After a record-setting second quarter, John Deere is well on its way to 
another year of strong performance," said Samuel R. Allen, chairman and chief 
executive officer. Second-quarter sales and income were the highest for any 
quarterly period in company history, he pointed out. "Deere's results are a 
reflection of positive conditions in the global farm economy, which continues 
to show impressive strength. The company's performance also offers further 
proof of the adept execution of our operating and marketing plans, which are 
aimed at expanding our global market presence." 
Summary of Operations 
Net sales of the worldwide equipment operations increased 9 percent for the 
quarter and 10 percent for six months compared with the same periods a year 
ago. Sales included price realization of 3 percent for the quarter and year to 
date and an unfavorable currency-translation effect of 2 percent for the 
quarter and 1 percent for six months. Equipment net sales in the United States 
and Canada increased 9 percent for the quarter and 13 percent year to date. 
Outside the U.S. and Canada, net sales increased 9 percent for the quarter and 
6 percent for six months, with unfavorable currency-translation effects of 4 
percent and 3 percent for the periods. 
Deere's equipment operations reported operating profit of $1.663 billion for 
the quarter and $2.500 billion for six months, compared with $1.522 billion 
and $2.220 billion last year. The improvement for both periods was due 
primarily 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 as well as unfavorable effects of 
foreign-currency exchange. The higher production costs were related primarily 
to manufacturing overhead expenses in support of growth and new products, 
engine-emission requirements, and postretirement benefit expenses. These items 
were partially offset by lower raw-material costs. In addition, higher 
warranty costs and research and development expenses affected year-to-date 
Net income of the company's equipment operations was $953 million for the 
second quarter and $1.478 billion for the first six months, compared with $947 
million and $1.362 billion in 2012. The operating factors mentioned above, 
along with a higher effective tax rate and increased interest expense, 
affected both quarterly and year-to-date results. 
Financial services reported net income attributable to Deere & Company of 
$125.0 million for the quarter and $257.9 million for six months compared with 
$109.2 million and $228.3 million last year. Results were higher for both 
periods primarily due to growth in the credit portfolio, partially offset by 
increased selling, administrative and general expenses. In addition, last 
year's six-month results benefited from revenue related to wind energy credits. 
Company Outlook & Summary 
Company equipment sales are projected to increase by about 5 percent for 
fiscal 2013 and by about 3 percent for the third quarter compared with the 
same periods a year ago. Included is an unfavorable currency-translation 
impact of about 1 percent for the year. For the full year, net income 
attributable to Deere & Company is anticipated to be about $3.3 billion. 
Although Deere expects to deliver record earnings for the year, global 
financial pressures as well as adverse weather patterns have added a note of 
caution to the outlook. "Deere's near-term forecast is being tempered by 
lingering economic concerns in many parts of the world, which are restraining 
business confidence and growth," Allen stated. "In addition, cool, wet weather 
in North America has delayed crop planting, slowed construction activity and 
hurt sales of turf-care equipment." 
Allen said he remained confident about the company's longer-term prospects for 
growth. "We continue to believe our investment in new products and additional 
capacity will allow Deere to fully capitalize on the world's increasing need 
for food, shelter and infrastructure in the years ahead," he said. "These 
trends appear to have considerable resilience and we're confident they should 
prove rewarding to our customers and investors." 
Equipment Division Performance 
Agriculture & Turf. Sales increased 12 percent for the quarter and 14 percent 
for six months largely due to higher shipment volumes and price realization, 
partially offset by the unfavorable effects of currency translation. 
Operating profit was $1.582 billion for the quarter and $2.347 billion year to 
date, compared with $1.403 billion and $1.977 billion, respectively, last 
year. The improvement in both periods was primarily driven by the impact of 
higher shipment volumes and price realization. These factors were partially 
offset by increased production costs as well as higher selling, administrative 
and general expenses and the unfavorable effects of foreign exchange. In 
addition, six-month results were impacted by higher warranty costs and 
research and development expenses. 
Construction & Forestry. Construction and forestry sales decreased 6 percent 
for the quarter and six months mainly due to lower shipment volumes. Operating 
profit was $81 million for the quarter and $153 million for six months, 
compared with $119 million and $243 million last year. The decline in 
operating profit for both periods was due primarily to lower shipment volumes, 
increases in production costs and higher selling, administrative and general 
expenses, partially offset by price realization. In addition, an unfavorable 
product mix and higher research and development expenses affected year-to-date 
Market Conditions & Outlook 
Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment 
are forecast to increase by about 7 percent for full-year 2013, including a 
negative currency-translation impact of about 1 percent. Relatively high 
commodity prices and strong farm incomes are continuing to support a favorable 
level of demand for farm machinery in much of the world. Deere's sales are 
further benefiting from global expansion and a number of advanced new products. 
Industry sales for agricultural machinery in the U.S. and Canada are forecast 
to be up about 5 percent in relation to last year's healthy levels. The 
increase reflects continued strength in demand for large equipment such as 
high-horsepower tractors and combines. 
Full-year industry sales in the EU27 are forecast to be down about 5 percent 
due to weakness in the overall economy and last year's poor harvest in the 
U.K. In South America, industry sales are projected to be up 15 to 20 percent 
as a result of strong market conditions in Brazil. Industry sales in the 
Commonwealth of Independent States are expected to be down slightly from 2012, 
while Asian sales are projected to be little-changed. 
In the U.S. and Canada, industry sales of turf and utility equipment are 
expected to be flat to down slightly for 2013, reflecting a cool, wet spring 
in North America and a continuation of cautious consumer sentiment. 
Construction & Forestry. Deere's worldwide sales of construction and forestry 
equipment are forecast to decrease by about 5 percent for 2013. The decline 
reflects a cautious outlook for U.S. economic growth, cool, wet weather 
conditions in North America, and flat sales in world forestry markets. In 
forestry, further weakness in European markets is expected to offset higher 
U.S. demand. 
Financial Services. Full-year 2013 net income attributable to Deere & Company 
for the financial services operations is expected to be approximately $550 
million. The forecast improvement over last year is primarily due to expected 
growth in the credit portfolio and lower crop insurance claims, partially 
offset by higher selling, administrative and general expenses. 
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 $105.9 million 
for the second quarter and $210.9 million year to date, compared with $78.3 
million and $171.7 million for the respective periods last year. Results 
improved for both periods due to growth in the credit portfolio, partially 
offset by higher selling, administrative and general expenses. 
Net receivables and leases financed by JDCC were $28.721 billion at April 30, 
2013, compared with $24.558 billion last year. 
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., flooding in other parts 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.  A  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 and 
company actions related thereto; 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, 
the level of interest and discount rates, and compensation, retirement and 
mortality 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 
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). 
|Second Quarter 2013 Press Release                                      |
|(in millions of dollars)                                               |
|Unaudited                                                              |
|                                                                       |
|            |Three Months Ended          ||Six Months Ended            |
|            |                            ||                            |
|            |April 30                    ||April 30                    |
|            |         ||         ||%     ||         ||         ||%     |
|            |2013     ||2012     ||      ||2013     ||2012     ||      |
|            |         ||         ||Change||         ||         ||Change|
|            | |      ||| |      |||      || |      ||| |      |||      |
|Net sales   |        |||        |||      ||        |||        |||      |
|and         |        |||        |||      ||        |||        |||      |
|revenues:   |        |||        |||      ||        |||        |||      |
|Agriculture |$|8,691 |||$|7,735 |||+12   ||$|14,182|||$|12,459|||+14   |
|and turf    | |      ||| |      |||      || |      ||| |      |||      |
|Construction|1,574   |||1,670   |||-6    ||2,876   |||3,065   |||-6    |
|and forestry|        |||        |||      ||        |||        |||      |
|            |        |||        |||      ||        |||        |||      |
|Total net   |10,265  |||9,405   |||+9    ||17,058  |||15,524  |||+10   |
|sales       |        |||        |||      ||        |||        |||      |
|Financial   |536     |||488     |||+10   ||1,063   |||1,036   |||+3    |
|services    |        |||        |||      ||        |||        |||      |
|Other       |113     |||116     |||-3    ||214     |||215     |||      |
|revenues    |        |||        |||      ||        |||        |||      |
|            | |      ||| |      |||      || |      ||| |      |||      |
|Total net   | |      ||| |      |||      || |      ||| |      |||      |
|sales and   |$|10,914|||$|10,009|||+9    ||$|18,335|||$|16,775|||+9    |
|revenues    | |      ||| |      |||      || |      ||| |      |||      |
|            |        |||        |||      ||        |||        |||      |
|            |        |||        |||      ||        |||        |||      |
|            |        |||        |||      ||        |||        |||      |
|            |        |||        |||      ||        |||        |||      |
|Operating   |        |||        |||      ||        |||        |||      |
|profit: *   |        |||        |||      ||        |||        |||      |
|Agriculture |$|1,582 |||$|1,403 |||+13   ||$|2,347 |||$|1,977 |||+19   |
|and turf    | |      ||| |      |||      || |      ||| |      |||      |
|Construction|81      |||119     |||-32   ||153     |||243     |||-37   |
|and forestry|        |||        |||      ||        |||        |||      |
|Financial   |198     |||175     |||+13   ||395     |||350     |||+13   |
|services    |        |||        |||      ||        |||        |||      |
|            |        |||        |||      ||        |||        |||      |
|Total       |        |||        |||      ||        |||        |||      |
|operating   |1,861   |||1,697   |||+10   ||2,895   |||2,570   |||+13   |
|profit      |        |||        |||      ||        |||        |||      |
|Reconciling |(111)   |||(100)   |||+11   ||(206)   |||(174)   |||+18   |
|items **    |        |||        |||      ||        |||        |||      |
|Income taxes|(666)   |||(541)   |||+23   ||(955)   |||(807)   |||+18   |
|            |        |||        |||      ||        |||        |||      |
|Net income  | |      ||| |      |||      || |      ||| |      |||      |
|attributable|$|1,084 |||$|1,056 |||+3    ||$|1,734 |||$|1,589 |||+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.            |
|  |                                                 |
|  |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, 309-765-5678 
SOURCE: Deere & Company 
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CO: Deere & Company
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-0- May/15/2013 11:02 GMT
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