Deere Announces Record Fourth-Quarter Earnings of $807 Million

- Fourth-quarter income rises 17%; earnings per share up 21%. 
- Full-year earnings reach record $3.54 billion. 
- New products, additional capacity help expand global customer base. 
- Forecast calls for income of $3.3 billion in 2014. 
MOLINE, Ill., Nov. 20, 2013 /CNW/ - Net income attributable to Deere & Company 
(NYSE: DE) was $806.8 million, or $2.11 per share, for the fourth quarter 
ended October 31, compared with $687.6 million, or $1.75 per share, for the 
same period last year. 
For fiscal 2013, net income attributable to Deere & Company was $3.537 
billion, or $9.09 per share, compared with $3.065 billion, or $7.63 per share, 
in 2012. 
Worldwide net sales and revenues decreased 3 percent, to $9.451 billion, for 
the fourth quarter and increased 5 percent, to $37.795 billion, for the full 
year. Net sales of the equipment operations were $8.624 billion for the 
quarter and $34.998 billion for the year, compared with $9.047 billion and 
$33.501 billion for the same periods in 2012. 
"With our strong financial results in the fourth quarter, John Deere has 
wrapped up another year of impressive achievement," said Samuel R. Allen, 
chairman and chief executive officer. Income for the periods was higher than 
in any previous fourth quarter or full year, he pointed out. "During the year, 
Deere continued with a record number of product introductions and completed 
seven new factories, in Brazil, Russia, India and China. These products and 
additional capacity are essential to helping the company expand its global 
customer base and realize its long-term business objectives. 
"Deere's performance is a testament to our ability to execute our business 
plans, which stress the rigorous management of costs and assets," Allen 
stated. "This has led to an all-time high in profitability, as measured by 
operating return on operating assets, and record earnings for the last three 
years. In addition, the company has delivered healthy levels of cash flow, 
which has been used to fund global growth programs and provide direct benefit 
to investors through dividends and share repurchases." 
Summary of Operations 
Net sales of the worldwide equipment operations decreased 5 percent for the 
quarter and increased 4 percent for the full year compared with the same 
periods in 2012. Sales included price realization of 4 percent for the quarter 
and 3 percent for the year and an unfavorable currency-translation effect of 2 
percent for the quarter and 1 percent for the year. Equipment net sales in the 
United States and Canada decreased 6 percent for the quarter and increased 5 
percent for the year. Outside the U.S. and Canada, net sales decreased 2 
percent for the quarter and increased 4 percent for the year, with unfavorable 
currency-translation effects of 4 percent and 3 percent for these periods. 
Deere's equipment operations reported operating profit of $1.114 billion for 
the quarter and $5.058 billion for the full year, compared with $1.051 billion 
and $4.397 billion in 2012. The improvement for the quarter was due primarily 
to the impact of price realization, partially offset by the unfavorable 
effects of foreign-currency exchange, lower shipment volumes and a less 
favorable product mix. Full-year results improved largely due to the impact of 
price realization and higher shipment volumes. Annual results also were 
impacted by unfavorable effects of foreign-currency exchange, increased 
production costs, higher selling, administrative and general expenses and 
higher warranty costs. Increased production costs were due primarily to higher 
manufacturing-overhead expenses in support of growth, new products and 
engine-emission requirements, partially offset by lower raw-material costs. 
In conjunction with the previously announced agreement to sell a majority 
interest in John Deere Landscapes, these operations were written down to 
realizable value in the quarter. In addition, both the quarterly and 
year-to-date periods were affected by impairment charges for long-lived assets 
related to John Deere Water operations. 
Net income of the company's equipment operations was $650 million for the 
fourth quarter and $2.974 billion for the full year, compared with $576 
million and $2.616 billion in 2012. The operating factors mentioned above, 
along with a lower effective tax rate, had an impact on the quarter's results. 
Increased interest expense and a higher effective tax rate also affected 
annual results. 
Financial services reported net income attributable to Deere & Company of 
$157.1 million for the quarter and $565.0 million for the year compared with 
$121.7 million and $460.3 million in 2012. Results for both periods were aided 
by growth in the credit portfolio and higher crop insurance margins, partially 
offset by higher selling, administrative and general expenses. Further, the 
quarter's results were impacted by less favorable financing spreads, and 
full-year 2012 results benefited from revenue related to wind energy credits. 
Company Outlook & Summary 
Company equipment sales are projected to decrease about 3 percent for fiscal 
2014 and be down about 2 percent for the first quarter compared with year-ago 
periods. For fiscal 2014, net income attributable to Deere & Company is 
anticipated to be about $3.3 billion. The outlook contemplates the sale of 60 
percent of John Deere Landscapes operations, as previously announced. 
Supported by record 2013 performance, John Deere remains in a prime position 
to carry out its wide-ranging growth plans and attract new customers 
throughout the world, Allen said. "Thanks in large measure to the commitment 
of our employees, dealers and suppliers, John Deere's plans for helping meet 
the world's need for food, shelter and infrastructure are firmly on track," he 
said. "We remain confident in the company's direction and its ability to serve 
a population growing in both size and prosperity in the years ahead. In spite 
of lingering global economic concerns, we believe these developments continue 
to hold great promise and should provide significant benefits to our investors 
and other stakeholders well into the future." 
Equipment Division Performance 
Agriculture & Turf. Sales decreased 4 percent for the quarter primarily due to 
lower shipment volumes and the unfavorable effects of currency translation, 
partially offset by price realization. Sales increased 7 percent for the full 
year largely due to higher shipment volumes and price realization, partially 
offset by the unfavorable effects of currency translation. 
Operating profit was $996 million for the quarter and $4.680 billion for the 
year, compared with $931 million and $3.921 billion, respectively, in 2012. 
The improvement for the quarter was driven primarily by price realization, 
partially offset by the unfavorable effects of foreign-currency exchange, a 
less favorable product mix and lower shipment volumes. Full-year results 
improved due primarily to the impact of price realization and higher shipment 
volumes. These factors were partially offset by the unfavorable effects of 
foreign-currency exchange, increased production costs, higher selling, 
administrative and general expenses, and higher warranty costs. Both periods 
also were affected by a charge to write down John Deere Landscapes operations 
to realizable value and an impairment charge for long-lived assets related to 
John Deere Water. 
Construction & Forestry. Construction and forestry sales decreased 8 percent 
for the quarter and the full year mainly as a result of lower shipment 
volumes, partially offset by price realization. Operating profit was $118 
million for the quarter and $378 million for the year, compared with $120 
million and $476 million in 2012. Results were slightly lower for the quarter 
primarily because of reduced shipment volumes and higher selling, 
administrative and general expenses, mostly offset by price realization and 
lower production costs. Full-year results decreased mainly due to lower 
shipment volumes, a less favorable product mix, increases in production costs, 
and higher selling, administrative and general expenses. These factors were 
partially offset by price realization. 
Market Conditions & Outlook 
Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment 
are forecast to decrease by about 6 percent for full-year 2014. The outlook 
contemplates the sale of a majority interest in the John Deere Landscapes 
operations. Although commodity prices and farm incomes are expected to remain 
at healthy levels in 2014 by historical standards, they are forecast to be 
lower than in 2013. The company believes the decline will have a dampening 
effect on demand, primarily for large farm equipment. 
Industry sales for agricultural machinery in the U.S. and Canada are forecast 
to be down 5 to 10 percent for the year, with the decline mainly reflecting 
lower sales of 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 lower commodity prices and farm incomes. In South America, industry 
sales of tractors and combines are projected to be down 5 to 10 percent from 
strong 2013 levels. Industry sales in the Commonwealth of Independent States 
are expected to be down slightly for the year, while Asian sales are projected 
to be up slightly. 
In the U.S. and Canada, industry sales of turf and utility equipment are 
expected to be up about 5 percent for 2014, reflecting improved market 
conditions. 
Construction & Forestry. Deere's worldwide sales of construction and forestry 
equipment are forecast to increase by about 10 percent for 2014. The gain 
reflects further economic recovery and higher housing starts in the U.S. as 
well as sales increases outside the U.S. and Canada. Global forestry sales are 
expected to be up for the year due to general economic growth and higher sales 
in European markets. 
Financial Services. Full-year 2014 net income attributable to Deere & Company 
for the financial services operations is expected to be approximately $600 
million. The outlook reflects improvement primarily due to continued growth in 
the credit portfolio, partially offset by a projected increase in the 
provision for credit losses from the low level in 2013. 
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 $132.9 million 
for the fourth quarter and $468.5 million for full-year 2013, compared with 
$112.6 million and $382.7 million for the respective periods in 2012. Results 
improved for both periods due primarily to growth in the credit portfolio, 
partially offset by higher selling, administrative and general expenses. Less 
favorable financing spreads also impacted results for the quarter. 
Net receivables and leases financed by JDCC were $30.594 billion and $26.509 
billion at October 31, 2013 and 2012, 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 and sustainability 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). 
_____________________________________________________________________
|Fourth Quarter 2013 Press Release                                    |
|_____________________________________________________________________|
|(in millions of dollars)                                             |
|_____________________________________________________________________|
|Unaudited                                                            |
|_____________________________________________________________________|
|            |Three Months Ended October||Twelve Months Ended October |
|            |31                        ||31                          |
|____________|__________________________||____________________________|
|            |        ||        ||%     ||         ||         ||%     |
|            |2013    ||2012    ||      ||2013     ||2012     ||      |
|            |        ||        ||Change||         ||         ||Change|
|____________|________||________||______||_________||_________||______|
|Net sales   | |     ||| |     |||      || |      ||| |      |||      |
|and         | |     ||| |     |||      || |      ||| |      |||      |
|revenues:   | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Agriculture |$|7,102|||$|7,393|||-4    ||$|29,132|||$|27,123|||+7    |
|and turf    | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Construction|1,522  |||1,654  |||-8    ||5,866   |||6,378   |||-8    |
|and forestry|       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Total net   |8,624  |||9,047  |||-5    ||34,998  |||33,501  |||+4    |
|sales       |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Financial   |699    |||633    |||+10   ||2,349   |||2,235   |||+5    |
|services    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Other       |128    |||112    |||+14   ||448     |||421     |||+6    |
|revenues    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Total net   | |     ||| |     |||      || |      ||| |      |||      |
|sales and   |$|9,451|||$|9,792|||-3    ||$|37,795|||$|36,157|||+5    |
|revenues    | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Operating   |       |||       |||      ||        |||        |||      |
|profit: *   |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Agriculture |$|996  |||$|931  |||+7    ||$|4,680 |||$|3,921 |||+19   |
|and turf    | |     ||| |     |||      || |      ||| |      |||      |
|____________|_|_____|||_|_____|||______||_|______|||_|______|||______|
|Construction|118    |||120    |||-2    ||378     |||476     |||-21   |
|and forestry|       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Financial   |241    |||191    |||+26   ||870     |||712     |||+22   |
|services    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Total       |       |||       |||      ||        |||        |||      |
|operating   |1,355  |||1,242  |||+9    ||5,928   |||5,109   |||+16   |
|profit      |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Reconciling |(111)  |||(129)  |||-14   ||(445)   |||(385)   |||+16   |
|items **    |       |||       |||      ||        |||        |||      |
|____________|_______|||_______|||______||________|||________|||______|
|Income taxes|(437)  |||(425)  |||+3    ||(1,946) |||(1,659) |||+17   |
|____________|_______|||_______|||______||________|||________|||______|
|Net income  | |     ||| |     |||      || |      ||| |      |||      |
|attributable| |     ||| |     |||      || |      ||| |      |||      |
|to          |$|807  |||$|688  |||+17   ||$|3,537 |||$|3,065 |||+15   |
|            | |     ||| |     |||      || |      ||| |      |||      |
|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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