Deere Announces Third-Quarter Record Earnings of $997 Million

- Income jumps 26% on 4% gain in net sales and revenues. 
- Performance driven by strong profits in farm machinery and financial 
services. 
- Extensive growth investments remain on track, helping expand company's 
global footprint. 
- Full-year income forecast raised to $3.45 billion. 
MOLINE, Ill., Aug. 14, 2013 /CNW/ - Net income attributable to Deere & Company 
(NYSE: DE) was $996.5 million, or $2.56 per share, for the third quarter ended 
July 31, compared with $788.0 million, or $1.98 per share, for the same period 
last year. 
For the first nine months of the year, net income attributable to Deere & 
Company was $2.730 billion, or $6.97 per share, compared with $2.377 billion, 
or $5.88 per share, last year. 
Worldwide net sales and revenues increased 4 percent, to $10.010 billion, for 
the third quarter and rose 8 percent to $28.345 billion for nine months. Net 
sales of the equipment operations were $9.316 billion for the quarter and 
$26.373 billion for nine months, compared with $8.930 billion and $24.454 
billion for the same periods last year. 
"John Deere is well on the road to another year of impressive performance 
after reporting record third-quarter results," said Samuel R. Allen, chairman 
and chief executive officer. Sales and income for the period were higher than 
in any prior third quarter, he pointed out. "Deere's success is a reflection 
of considerable strength in the farm sector, especially in North and South 
America. We also are making further progress executing our wide-ranging 
operating and marketing plans, which call for expanding our global market 
presence while keeping a close watch on costs and assets." 
Summary of Operations 
Net sales of the worldwide equipment operations increased 4 percent for the 
quarter and 8 percent for nine months compared with the same periods a year 
ago. Sales included price realization of 3 percent and an unfavorable 
currency-translation effect of 1 percent for both the quarter and nine months. 
Equipment net sales in the United States and Canada rose 4 percent for the 
quarter and 9 percent year to date. Outside the U.S. and Canada, net sales 
increased 5 percent for the quarter and 6 percent for nine months, with 
unfavorable currency-translation effects of 1 percent and 3 percent for these 
periods. 
Deere's equipment operations reported operating profit of $1.443 billion for 
the quarter and $3.943 billion for nine months, compared with $1.127 billion 
and $3.347 billion last year. The improvement for both periods was due 
primarily to the impact of price realization and higher shipment volumes. Also 
affecting third-quarter results was an impairment charge for long-lived assets 
related to John Deere Water operations. In addition, nine-month results were 
impacted by increases in production costs, selling, administrative and general 
expenses and warranty costs, as well as the unfavorable effects of foreign 
exchange. Increased production costs were related primarily to higher 
manufacturing-overhead expenses, partially offset by lower raw-material costs. 
The higher manufacturing-overhead expenses were in support of growth, new 
products and engine-emission requirements. 
Net income of the company's equipment operations was $846 million for the 
third quarter and $2.324 billion for the first nine months, compared with $678 
million and $2.040 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 
$150.0 million for the quarter and $407.9 million for nine months compared 
with $110.4 million and $338.6 million last year. Results for both periods 
were aided by growth in the credit portfolio and improved crop insurance 
margins. These factors were partially offset by an increased provision for 
credit losses in the quarter and by higher selling, administrative and general 
expenses for the year to date. Last year's nine-month results also benefited 
from revenue related to wind energy credits. 
Company Outlook & Summary 
Company equipment sales are projected to be up about 5 percent for fiscal 2013 
and to decrease by about 5 percent for the fourth quarter compared with the 
year-ago periods. 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 $3.45 billion. 
According to Allen, Deere is poised for a very successful 2013. "Last year's 
fourth-quarter sales were particularly strong, in part because our factories 
were running at a high rate to catch up with customer orders. Even with this 
difficult comparison, our financial guidance implies a healthy level of income 
for the coming quarter and a third consecutive year of record results." 
Longer term, Allen said he remains quite optimistic about the company's 
prospects. "We continue to believe our investment in new products and capacity 
will allow Deere to be the provider of choice for a growing global customer 
base in the years ahead," he said. "In our view, broad trends based on a 
growing, more affluent, and increasingly mobile population have ample staying 
power and should help the company deliver substantial value to its customers, 
investors and other stakeholders in the future." 
Equipment Division Performance 
Agriculture & Turf. Sales increased 8 percent for the quarter and 12 percent 
for nine months largely due to higher shipment volumes and price realization, 
partially offset by the unfavorable effects of currency translation. 
Operating profit was $1.336 billion for the quarter and $3.684 billion year to 
date, compared with $1.014 billion and $2.991 billion, respectively, last 
year. The improvement for the quarter was driven primarily by the impact of 
price realization and higher shipment volumes. Also affecting third-quarter 
results was an impairment charge for long-lived assets related to John Deere 
Water operations. Year-to-date results improved due primarily to higher 
shipment volumes and price realization. These factors were partially offset by 
increases in production costs, selling, administrative and general expenses, 
warranty costs, and unfavorable effects of foreign exchange. 
Construction & Forestry. Construction and forestry sales decreased 11 percent 
for the quarter and 8 percent for nine months mainly as a result of lower 
shipment volumes. Operating profit was $107 million for the quarter and $259 
million for nine months, compared with $113 million and $356 million last 
year. The quarterly operating-profit decline was primarily because of 
decreased shipment volumes, mostly offset by price realization and lower 
research and development expenses. Nine-month results were lower mainly due to 
reduced shipment volumes, increases in production costs, an unfavorable 
product mix and higher selling, administrative and general expenses, partially 
offset by price realization. 
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 advanced new products. 
Industry sales for agricultural machinery in the U.S. and Canada are forecast 
to be up about 5 percent for the year, reflecting continued strength in demand 
for large equipment such as high-horsepower tractors and combines. 
Full-year industry sales in the EU28 are forecast to be down about 5 percent 
due to weakness in the overall economy and soft conditions in the U.K. farm 
sector. In South America, industry sales are projected to be up about 20 
percent as a result of strong market conditions and the impact of 
government-financing programs in Brazil. Industry sales in the Commonwealth of 
Independent States are expected to be moderately lower than in 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 up about 5 percent for 2013, reflecting improved market 
conditions. 
Construction & Forestry. Deere's worldwide sales of construction and forestry 
equipment are forecast to decrease by about 8 percent for 2013. The decline 
mostly reflects a cautious outlook for U.S. economic growth. Global forestry 
sales are expected to be higher for the year as improved U.S. demand more than 
offsets weakness in European markets. 
Financial Services. Full-year 2013 net income attributable to Deere & Company 
for the financial services operations is expected to be approximately $560 
million. The forecast improvement over last year is due primarily 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 $124.7 million 
for the third quarter and $335.6 million year to date, compared with $98.5 
million and $270.2 million for the respective periods last year. Results 
improved for both periods due primarily to growth in the credit portfolio. 
Nine-month results were also impacted by higher selling, administrative and 
general expenses. 
Net receivables and leases financed by JDCC were $30.096 billion at July 31, 
2013, compared with $25.766 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. 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/Stage IIIb and Final Tier 4/Stage IV 
non-road diesel emission requirements in the U.S. and European Union), 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 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). 
 ______________________________________________________________________
|Third Quarter 2013 Press Release                                      |
|______________________________________________________________________|
|(in millions of dollars)                                              |
|______________________________________________________________________|
|Unaudited                                                         |
|__________________________________________________________________|
|            |Three Months Ended       ||Nine Months Ended         |
|            |                         ||                          |
|            |July 31                  ||July 31                   |
|____________|_________________________||__________________________|
|            | |      || |     ||%     || |      || |      ||%     |
|            | |2013  || |2012 ||      || |2013  || |2012  ||      |
|            | |      || |     ||Change|| |      || |      ||Change|
|____________|_|______||_|_____||______||_|______||_|______||______|
|Net sales   | |      || |     ||      || |      || |      ||      |
|and         | |      || |     ||      || |      || |      ||      |
|revenues:   | |      || |     ||      || |      || |      ||      |
|____________|_|______||_|_____||______||_|______||_|______||______|
|Agriculture |$|7,847 ||$|7,271||+8    ||$|22,029||$|19,730||+12   |
|and turf    | |      || |     ||      || |      || |      ||      |
|____________|_|______||_|_____||______||_|______||_|______||______|
|Construction|1,469   ||1,659  ||-11   ||4,344   ||4,724   ||-8    |
|and forestry|        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Total net   |9,316   ||8,930  ||+4    ||26,373  ||24,454  ||+8    |
|sales       |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Financial   |587     ||565    ||+4    ||1,650   ||1,602   ||+3    |
|services    |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Other       |107     ||95     ||+13   ||322     ||309     ||+4    |
|revenues    |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Total net   | |      || |     ||      || |      || |      ||      |
|sales and   |$|10,010||$|9,590||+4    ||$|28,345||$|26,365||+8    |
|revenues    | |      || |     ||      || |      || |      ||      |
|____________|_|______||_|_____||______||_|______||_|______||______|
|Operating   |        ||       ||      ||        ||        ||      |
|profit: *   |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Agriculture |$|1,336 ||$|1,014||+32   ||$|3,684 ||$|2,991 ||+23   |
|and turf    | |      || |     ||      || |      || |      ||      |
|____________|_|______||_|_____||______||_|______||_|______||______|
|Construction|107     ||113    ||-5    ||259     ||356     ||-27   |
|and forestry|        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Financial   |234     ||170    ||+38   ||629     ||520     ||+21   |
|services    |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Total       |        ||       ||      ||        ||        ||      |
|operating   |1,677   ||1,297  ||+29   ||4,572   ||3,867   ||+18   |
|profit      |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Reconciling |(127)   ||(82)   ||+55   ||(333)   ||(256)   ||+30   |
|items **    |        ||       ||      ||        ||        ||      |
|____________|________||_______||______||________||________||______|
|Income taxes|(553)   ||(427)  ||+30   ||(1,509) ||(1,234) ||+22   |
|____________|________||_______||______||________||________||______|
|Net income  | |      || |     ||      || |      || |      ||      |
|attributable|$|997   ||$|788  ||+26   ||$|2,730 ||$|2,377 ||+15   |
|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. |
|__|_________________________________________________|
 

SOURCE  Deere & Company 
Ken Golden, Director, Global Public Relations, 309-765-5678 
http://www.deere.com 
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