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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 25, 1997
(Date of earliest event reported)
D E E R E & C O M P A N Y
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-4121
(Commission File Number)
36-2382580
(IRS Employer Identification No.)
John Deere Road
Moline, Illinois 61265
(Address of principal executive offices and zip code)
(309)765-8000
(Registrant's telephone number, including area code)
_______________________________________
(Former name or former address, if changed since last report.)
Page 1 of 11 pages.
The Exhibit Index appears at Page 4.
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Item 7. Financial Statements, Pro Forma Financial Information
and
Exhibits.
(c) Exhibits
(99) Press release and additional information.
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Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereto duly authorized.
DEERE & COMPANY
By /s/ Frank S. Cottrell
---------------------------------
Frank S. Cottrell, Secretary
Dated: November 25, 1997
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Exhibit Index
Sequential
Number and Description of Exhibit Page Number
- --------------------------------- ----------
(99) Press release and additional information Pg. 5
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EXHIBIT 99
Contact: Marie Z. Ziegler
Deere & Company
(309)765-4491
DEERE & COMPANY FOURTH QUARTER 1997 EARNINGS
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For Immediate Release (November 25, 1997)
Deere & Company today reported record fourth quarter worldwide
net income of $211.3 million, or $.84 per share, for the quarter
ended October 31, an increase of 24 percent in earnings per
share, compared with $173.9 million, or $.68 per share, in the
fourth quarter of 1996. For the fiscal year, net income was a
record $960.1 million, or $3.78 per share, compared with $817.3
million, or $3.14 per share, last year. Deere & Company Chairman
and Chief Executive Officer Hans W. Becherer said, "The higher
profits resulted from strong worldwide demand for the company's
products. Operating margins remained at strong levels as a
result of the company's continuous improvement and quality
initiatives." Net income for the fiscal year increased 17
percent compared with last year, while net income per share
increased 20 percent due to the recently completed share
repurchase program.
Worldwide net sales and revenues increased 18 percent to $3.444
billion for the fourth quarter compared with $2.919 billion last
year. For the year, net sales and revenues were $12.791 billion,
an increase of 14 percent compared to $11.229 billion last year.
Net sales to dealers of agricultural, construction and commercial
and consumer equipment were $2.979 billion for the quarter and
$11.082 billion for the year compared with $2.488 billion and
$9.640 billion last year. International demand remained at
strong levels, with export sales from the United States totaling
$489 million for the quarter and $2.013 billion for the year
compared with $365 million and $1.584 billion last year.
Overseas sales also increased, rising by nine percent over last
year's fourth quarter and 11 percent for the year. Overall, the
company's worldwide physical volume of sales (excluding the sales
by the newly consolidated Mexican subsidiaries) increased 23
percent for the quarter and 15 percent for the year, reflecting
the strong worldwide demand for our products.
The company's worldwide equipment operations, which exclude the
financial services subsidiaries and unconsolidated affiliates,
had record net income of $181.5 million for the fourth quarter
and $816.7 million for the current year compared with $123.4
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million and $610.0 million, respectively, last year. The 1996
fourth quarter results were negatively affected by a $15 million
after-tax write-off associated with the integration and
consolidation of our various Mexican subsidiaries.
. Worldwide agricultural equipment operating profit in 1997
was $260 million for the quarter and $1,072 million for the year
compared with $202 million and $821 million last year. The
improvements were primarily due to higher sales and production
volumes and improved efficiencies, partially offset by higher
selling and administrative expenses.
. Worldwide construction equipment operating profit in 1997
totaled $40 million for the quarter and $216 million for the year
compared with $34 million and $186 million last year. The
increases reflected higher sales and production volumes and
improved efficiencies, partially offset by growth expenditures
and start-up expenses primarily at the new engine facility in
Torreon, Mexico.
. Worldwide commercial and consumer equipment operating profit
in 1997 was $6 million for the quarter and $114 million for the
year compared with $1 million and $118 million last year.
Benefits from increased sales for both periods were offset by
write-offs associated with the hand-held product line, start-up
costs at new facilities and growth expenditures.
Net income of the financial services subsidiaries was $27.9
million for the quarter and $138.1 million for the year compared
with $47.6 million and $196.8 million, respectively, last year.
. Net income of the credit operations was $41.1 million for
the quarter and $147.2 million for the year compared with $36.9
million and $146.6 million last year. Fourth quarter and annual
results reflected higher income from a larger average receivable
and lease portfolio and higher gains from the sales of retail
notes, partially offset by lower securitization and servicing fee
income, narrower financing spreads and higher expenditures
associated with several growth initiatives.
. Net income of the insurance operations was $5.9 million for
the quarter and $29.6 million for the year compared with $6.4
million and $32.7 million last year. Fourth quarter earnings
reflected lower underwriting results from unfavorable loss
experience. Annual results compared to last year were affected
by lower investment income, lower underwriting results and a
small gain from the sale of the personal lines business last
year.
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. The health care operations incurred net losses of $19.1
million for the quarter and $38.7 million for the year as
expected, compared with net income of $4.3 million and $17.5
million last year. The losses reflected reduced margins caused
by unusually competitive industry conditions, higher claims
costs, strengthening of health care claims reserves and higher
selling and administrative expenses. Additionally, charges for
projected losses on certain insured contracts were recorded in
the fourth quarter. Despite losses on external business, John
Deere Health Care's efforts in providing Deere & Company with
quality health care at competitive costs remain on target.
Market Conditions and Outlook
Worldwide demand for John Deere agricultural equipment remained
at strong levels this year as a result of favorable fundamentals
in the farm economy. Increased acres planted and favorable
weather conditions in major producing areas of North America
resulted in historically high levels of production. However,
strong domestic and export demand for grains and oilseeds are
expected to hold carryover stocks relatively low. As a result,
grain and soybean prices have remained at favorable levels.
Overseas demand for John Deere agricultural equipment also
remained strong, reflecting good demand from the republics of the
former Soviet Union and favorable market conditions in Latin
America. Despite recent economic instability in the world's
financial markets, current overall fundamentals are expected to
remain favorable for farm equipment sales in 1998.
Construction equipment demand rose in 1997 due to low interest
rates, moderate economic growth and low inflation, all of which
should continue in 1998. These factors promoted high levels of
consumer confidence and housing activity this past year. Housing
starts for next year are expected to approximate this year's
level and expenditures on highways and streets are anticipated to
grow in 1998 when a new federal highway bill is passed. These
favorable economic conditions should promote good construction
equipment demand next year.
Sales of John Deere commercial and consumer equipment increased
this year from the weather depressed levels of last year. With
low unemployment rates, growing incomes, low interest rates,
moderate economic growth and new product introductions, demand is
anticipated to remain at favorable levels in 1998.
The credit operations are expected to improve as a result of the
strong demand for the company's products and favorable economic
conditions. The insurance operations are expected to maintain
reasonable operating returns despite the continued competitive
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environment in commercial lines. Although the health care
operations should continue to face margin pressures and a very
competitive environment, substantially improved results are
expected for next year.
Based on these market conditions, the company's worldwide
physical volume of sales is currently projected to increase by
approximately six percent in 1998 compared with 1997. First
quarter physical volumes are projected to be 15 percent higher
than comparable levels in the first quarter of 1997.
"Overall, the fundamentals of the company's businesses remain
favorable," Becherer said. "Industry demand for our products
remains strong and operating margins are benefiting from our
continuous improvement initiatives. The company's investment in
the development of new products and markets should further its
worldwide leadership position. Based on these factors and our
exceptional employees and dealer organization, we expect another
strong operating performance next year."
John Deere Capital Corporation
The following is disclosed on behalf of the company's United
States credit subsidiary, John Deere Capital Corporation, in
connection with the disclosure requirements of programs providing
for the issuance of debt securities:
John Deere Capital Corporation's net income was $39.3 million in
the fourth quarter of 1997 and $135.8 million for the entire year
compared with $31.6 million and $134.1 million, respectively,
last year. Fourth quarter and annual results reflect higher
income from a larger average receivable and lease portfolio and
higher gains from the sales of retail notes, partially offset by
lower securitization and servicing fee income, narrower financing
spreads and higher expenditures associated with several growth
initiatives. The average balance of receivables and leases
financed was 19 percent higher for the year compared with a year
ago.
Receivable and lease acquisition volumes increased 15 percent
during the fourth quarter and 17 percent for the year compared
with last year. Volumes of John Deere notes acquired were 12
percent higher in the current year, primarily due to increased
retail sales of John Deere equipment. Volumes of retail notes,
wholesale receivables, leases and revolving charge accounts all
increased in 1997 compared with last year. Annual 1997 retail
note volumes totaled $3.362 billion, a 13 percent increase over
1996.
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Net receivables and leases financed by John Deere Capital
Corporation were $6.217 billion at October 31, 1997 compared with
$5.536 billion one year ago. The increase resulted from
acquisitions exceeding collections, partially offset by retail
note sales. Net receivables and leases administered, which
include receivables previously securitized and sold, totaled
$7.531 billion at October 31, 1997 compared with $6.724 billion
at October 31, 1996.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
Statements under the "Market Conditions and Outlook" heading,
which relate to future operating periods, are subject to
important risks and uncertainties that could cause actual results
to differ materially. The company's businesses include equipment
operations (agricultural, construction and commercial and
consumer) and financial services (credit, insurance and health
care). Forward-looking statements relating to these businesses
involve certain factors that are subject to change, including:
the many interrelated factors that affect farmers' confidence,
including worldwide demand for agricultural products, world grain
stocks, commodities prices, weather conditions such as El Nino,
animal diseases, crop pests, harvest yields, real estate values
and government farm programs; general economic conditions and
housing starts; legislation, primarily legislation relating to
agriculture, the environment, commerce and government spending on
infrastructure; actions of competitors in the various industries
in which the company competes; production difficulties, including
capacity and supply constraints; dealer practices; labor
relations; interest and currency exchange rates; accounting
standards; and other risks and uncertainties. Instability in the
world's financial markets could also impact the global economy,
credit availability and world trade. The company's outlook is
based upon assumptions relating to the factors described in the
preceding sentence. Further information concerning the company
and its businesses, including factors that potentially could
materially affect the company's financial results, is included in
the company's filings with the Securities and Exchange
Commission.
# # #
The attached data accompany this press release.
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Fourth Quarter 1997 Press Release
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Net sales and revenues:
(millions of dollars)
Three Months Ended Twelve Months Ended
October 31 October 31
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% %
1997 1996 Chng 1997 1996 Chng
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Net sales:
Agricultural
equipment $1,919 $1,660 + 16 $ 7,048 $ 6,097 +16
Construction
equipment 632 465 + 36 2,262 1,919 +18
Commercial and
consumer equipment 428 363 + 18 1,772 1,624 + 9
Total net sales 2,979 2,488 + 20 11,082 9,640 +15
Financial Services
revenues 419 387 + 8 1,554 1,446 + 7
Other revenues 46 44 + 5 155 143 + 8
Total net sales
and revenues $3,444 $2,919 + 18 $12,791 $11,229 +14
United States
and Canada:
Equipment net sales $2,270 $1,836 + 24 $ 8,018 $ 6,886 +16
Financial Services
revenues 419 387 + 8 1,554 1,446 + 7
Total 2,689 2,223 + 21 9,572 8,332 +15
Overseas net sales 709 652 + 9 3,064 2,754 +11
Other revenues 46 44 + 5 155 143 + 8
Total net sales
and revenues $3,444 2,919 + 18 $12,791 11,229 +14
Operating profit*:
Agricultural
equipment $ 260 $ 202 + 29 $ 1,072 $ 821 +31
Construction
equipment 40 34 + 18 216 186 +16
Commercial and
consumer equipment 6 1 +500 114 118 - 3
Equipment Operations** 306 237 + 29 1,402 1,125 +25
Financial Services 43 74 - 42 214 303 -29
Total operating profit 349 311 + 12 1,616 1,428 +13
Interest and corporate
expenses - net (33) (23) + 43 (105) (131) -20
Income taxes (105) (114) - 8 (551) (480) +15
Net income $ 211 $ 174 + 21 $ 960 $ 817 +17
** Includes overseas
operating profit
(loss) $ 11 $ (7) $ 301 $ 258 +17
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Fourth Quarter and 1997 Press Release
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Selected balance sheet data:
(millions of dollars) October 31 October 31
1997 1996
Equipment Operations:
Trade accounts and notes
receivable - net $3,334 $3,153
Inventories $1,073 $ 829
Financial Services:
Financing receivables and leases
financed - net $6,902 $6,086
Financing receivables and leases
administered - net $8,416 $7,487
Insurance companies' assets $ 994 $1,068
Health care companies' assets $ 233 $ 236
Average shares outstanding 253,722,625 260,547,221
* Operating profit is defined as income before interest expense,
foreign exchange gains and losses, income taxes and certain
corporate expenses, except for the operating profit of Financial
Services which includes the effect of interest expense.
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