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DEERE & COMPANY 1993 FOURTH QUARTER AND FULL YEAR EARNINGS SUMMARY

 MOLINE, Ill., Dec. 7 /PRNewswire/ -- Deere & Company (NYSE: DE) today reported significantly improved results (before special items) for both the fourth quarter and full year (ended Oct. 31), compared with the same periods last year. Following are highlights provided by the company:
 1993 4TH QUARTER RESULTS (BEFORE SPECIAL ITEMS)
 -- Income of $103.5 million, or $1.33 per share, compared with year- ago income of $4.2 million, or $.05 per share. The $103.5 million of net income represents the company's best-ever 4th Quarter performance.
 -- The income of $103.5 million is also the company's fifth-best performance for any quarter.
 -- Net sales and revenues of $2.175 billion, a 15 percent increase from last year's total of $1.896 billion.
 -- Worldwide production tonnage 31 percent higher than last year.
 1993 FULL YEAR RESULTS (BEFORE SPECIAL ITEMS)
 -- Income of $286.3 million, or $3.70 per share, compared with 1992 income of $37.4 million or $.49 per share.
 -- Net sales and revenues of $7.754 billion, an 11 percent increase from the 1992 total of $6.961 billion.
 -- Worldwide production tonnage 11 percent higher than last year.
 KEY FACTORS INFLUENCING 1993 RESULTS
 -- Strongly improved North American equipment operations -- higher sales and production volumes.
 -- Better pricing in all North American equipment lines as sales incentive costs continued to be much lower.
 -- Productivity improvements.
 -- Continued strong contributions from financial services.
 SUMMARY OF SPECIAL ITEMS
 -- Overseas restructuring charges of $80 million (reported in the company's 2nd quarter earnings last May).
 -- Income tax rate benefit of $16.4 million.
 -- Adoption of Financial Accounting Standards Board (FASB) Statement No. 106, Employees' Accounting for Postretirement Benefits other than Pensions, and FASB Statement No. 112, Employers' Accounting for Postemployment Benefits. Our adoption of these accounting changes, effective Nov. 1, 1992, resulted in a cumulative non-cash charge of $1,143.6 million.
 SUMMARY OF FASB STATEMENTS NO. 106 & 112
 -- The standards generally require that companies shift from cash to accrual accounting for a variety of benefits, primarily health care and life insurance benefits, for current and future retirees.
 -- The adoption of these standards is a non-cash transaction and does not effect the company's cash flow or general financial strength.
 -- On the company's balance sheet, the change will reduce total stockholders' equity, to $2.085 million.
 Deere & Company reported significantly improved 1993 financial results before the effects of adopting new accounting standards and certain other special items. Details relating to these special items are found below and in the financial summary accompanying this news release.
 Deere & Company today reported income before special items of $103.5 million or $1.33 per share in the fourth quarter of its 1993 fiscal year. Income before special items for the entire 1993 fiscal year, ended Oct. 31, totaled $286.3 million or $3.70 per share. Last year, the company reported net income of $4.2 million or $.05 per share for the fourth quarter and net income of $37.4 million or $.49 per share for the full year.
 The company recorded several special items in 1993 which consisted of after-tax non-cash charges of $1,143.6 million for the adoption of accounting changes related mainly to retiree health care benefits (a $1,105.3 million cumulative effect plus a $38.3 million incremental effect), overseas restructuring charges of $80.0 million and partially offsetting income tax rate benefits of $16.4 million. Therefore, the company reported a net loss after these special items of $920.9 million or $11.91 per share for the 1993 fiscal year.
 Previously reported results for the first three quarters of 1993 were restated for the effects of the accounting changes. For the fourth quarter, net income including the special items, which consisted of the incremental effect of the accounting changes of $10.4 million and the income tax rate benefit of $16.4 million, totaled $109.5 million or $1.41 per share.
 Deere & Company Chairman and Chief Executive Officer Hans W. Becherer said, "Results for the quarter were significantly better than last year due to substantially improved North American equipment operations. Our sales and production volumes were significantly higher this year due to increased retail demand for our products and because several manufacturing units were shut down during last year's final quarter to facilitate the reduction of dealer and company inventories. Price realization improved in all of our North American equipment businesses as the level of sales incentive costs continued to be significantly lower, productivity continued to improve and results of our financial services subsidiaries' reflected another strong quarterly performance," Becherer said.
 Fourth quarter results benefited by $11.7 million after taxes from the reduction of inventories valued on a last-in, first-out (LIFO) basis, compared with $20.7 million in the final quarter last year. After-tax LIFO inventory benefits totaled $32.9 million in fiscal year 1993 compared with $42.8 million for 1992.
 Worldwide net sales and revenues increased 15 percent to $2.175 billion in the fourth quarter of 1993 from $1.896 billion in last year's final quarter. Total worldwide production tonnage was up 31 percent compared with the fourth quarter of 1992. Additionally, company inventories and receivables from dealers at the end of fiscal 1993 were $212 million lower than year-ago levels.
 Net sales and revenues include net sales to dealers of agricultural, industrial and lawn and grounds care equipment, which were $1.849 billion in the quarter, an increase of 17 percent over fourth quarter 1992 sales of $1.575 billion. Net sales and revenues also include revenues of the company's credit, insurance and health care operations, which increased three percent to $302 million in the fourth quarter compared with $292 million in the same quarter last year.
 Worldwide net sales and revenues were $7.754 billion for fiscal year 1993, an 11 percent increase over 1992 net sales and revenues of $6.961 billion. Net sales of equipment increased 13 percent in 1993 to $6.479 billion from $5.723 billion in fiscal year 1992. Production tonnage was about 11 percent higher this year. The company's financial services revenues increased five percent to $1,175 million in 1993 compared with $1,124 million for all of 1992.
 "Retail sales of John Deere agricultural equipment in North America during the fourth quarter and fiscal year were considerably higher compared with the same periods last year," Becherer said. "North American retail sales of our industrial equipment also increased significantly during both the fourth quarter and full year compared with 1992, while retail sales of John Deere lawn and grounds care equipment were somewhat higher for the quarter and up significantly for the full year. Although industry retail sales of agricultural equipment in overseas markets remain relatively weak, retail sales of John Deere agricultural equipment were higher in 1993, reflecting good acceptance of our new tractors and combines. Overseas retail sales of our lawn and grounds care products were also higher this year."
 The company's worldwide equipment operations, which exclude the financial services subsidiaries, had income before special items of $58.7 million in the fourth quarter of 1993 compared with a net loss of $33.7 million in the last quarter of 1992. For the entire year, before the effects of special items, these operations had income of $114.5 million in 1993 compared with a net loss of $107.3 million last year. Significantly improved price realization, higher sales and production volumes, lower employment levels and enhanced efficiencies in the company's North American operations explain these improvements. However, the overseas equipment operations incurred a substantially higher net loss this year due mainly to lower production volumes, higher cost levels and unfavorable changes in currency relationships. Both years were affected by the previously mentioned LIFO inventory reductions. After including the special items, the equipment operations reported net income of $64.7 million for the fourth quarter of 1993 and a net loss of $1,085.4 million for the entire 1993 fiscal year.
 Fourth quarter 1993 net income of the company's credit operations was virtually unaffected by the special items and totaled $30.9 million compared with $25.2 million in the final quarter of 1992. Before the effects of the special items, the credit operations earned $122.7 million for the 1993 fiscal year compared with $106.0 million last year. Net income for 1993 totaled $118.4 million after including the special items.
 Net income from insurance and health care operations for the final quarter of 1993 was also virtually unaffected by the special items, totaling $11.4 million compared with $10.3 million in the fourth quarter of 1992. Before the effects of the special items, fiscal year 1993 income from these operations was $42.0 million compared with $32.3 million in 1992. Insurance results reflect improved underwriting income compared with last year, while health care operating results have shown very good improvement compared with 1992 due to higher volume and improved underwriting margins. Net income for 1993 was $39.0 million after including the special items.
 Operating profit is defined as income before interest expense, income taxes and certain other expenses. The following comparisons exclude the effects of the 1993 special items. Operating profit of each of the North American equipment operations was favorably affected by improved price realization, higher volumes and improved productivity in both the 1993 final quarter and fiscal year. The company's North American farm equipment division generated significantly higher operating profit in the 1993 fourth quarter and fiscal year compared with the same periods in 1992. The overseas agricultural equipment operations incurred significant operating losses in both the fourth quarter and 1993 fiscal year, with the full year's loss substantially exceeding last year's operating loss. The worldwide lawn and grounds care equipment division's operating profit was higher than last year for the quarter, and substantially higher for fiscal year 1993 compared with 1992. The worldwide industrial equipment division had an operating profit for both the fourth quarter and fiscal year compared with large operating losses in the same periods of 1992.
 "Flooding and excessively wet conditions in certain areas of the Midwest and drought conditions in parts of the Southeast resulted in an estimated 31 percent decrease in corn production and a 16 percent decline in soybean production in 1993," Becherer said. "However, the lower production caused grain prices to rise above 1992 levels. Livestock producers enjoyed favorable prices and profit margins during 1993 and farmers boosted their cash flow by selling inventories accumulated from record corn and soybean yields in 1992. Additionally, government payments to farmers are expected to increase, aiding farmers most heavily impacted by this year's flooding. As a result of all these factors, United States farm income is expected to achieve record levels in 1993.
 "Due to the lower 1993 grain production and the resulting reduction in carryover stocks, a substantial increase in planted and harvested acreage of corn and soybeans is expected in 1994," Becherer said. "While farm income will likely be lower in 1994 due mainly to lower corn and soybean marketings related to the 1993 production shortfall, next year's farm income should still be one of the highest in history. These developments, if coupled with more normal weather patterns and continuing lower levels of interest rates, are currently expected to result in 1994 North American industry retail sales of agricultural equipment being near the levels achieved in 1993.
 "European industry retail sales of agricultural equipment are expected to continue the downward trend of recent years," Becherer said. "The European agricultural industry remains in the midst of fundamental change as revisions to government agricultural policies, GATT negotiations and the general economic environment will likely result in lower farm incomes and crop production in 1994.
 "The North American general economy has recovered very slowly from the 1990-91 recession, and 1994 is forecasted to be another year of moderate growth," Becherer said. "While factors including tax increases, governmental efforts to reduce deficits, downsizing of the defense industry and recessionary conditions among many of our trading partners will limit general growth prospects, the lowest mortgage interest rates since the 1970s should further stimulate housing starts next year. Additionally, public construction is expected to experience moderate real growth in 1994, particularly in street, highway, bridge and sewer projects. Such developments should favorably affect demand for industrial and construction equipment. Lawn and grounds care retail sales should also benefit from general economic growth and higher housing starts.
 "Initial 1994 worldwide production schedules, in tons, are about nine percent higher than actual 1993 output," Becherer said. "Worldwide agricultural equipment production is scheduled to be up approximately five percent over 1993, when receivables from dealers were reduced by $146 million. Lawn and grounds care equipment production is scheduled to increase about 10 percent, and initial industrial equipment production schedules are about 17 percent higher than 1993 output. Accordingly, results of the company's equipment operations are currently expected to improve significantly in 1994.
 "First quarter 1994 production tonnage is expected to be about 26 percent higher than in last year's depressed initial quarter when several of the company's factories were shut down for one-to two-week periods in addition to the normal holiday shutdowns," Becherer said.
 "The current outlook for our businesses is relatively positive for 1994," Becherer said. "Our new products continue to be well accepted and our competitive position worldwide remains very strong. As volumes have increased, operating margins continue to improve in response to our ongoing efforts to improve quality, reduce costs, and enhance productivity."
 The following information 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 $28.2 million in the fourth quarter of 1993 compared with $22.8 million in the same period last year. Before the changes in accounting standards described below, income for the 1993 fiscal year totaled $111.2 million compared with $95.0 million in 1992. Compared with last year, income for both the 1993 fourth quarter and fiscal year were favorably affected by lower credit losses, securitization and servicing fee income from retail notes previously sold, and higher gains on retail notes sold, which more than offset the effects of a lower portfolio of credit receivables and leases financed. Income for the full year also benefited from higher financing margins. During the fourth quarter of 1993, John Deere Capital Corporation adopted FASB Statement No. 106 - Employers' Accounting for Postretirement Benefits Other Than Pensions and FASB Statement No. 112 - Employers' Accounting for Postemployment Benefits, effective Nov. 1, 1992. The adoption of those standards reduced after-tax income by $4.0 million for fiscal year 1993 and had an immaterial effect on fourth quarter net income. Prior quarters were restated to reflect the effects of these accounting changes. Fiscal year 1993 net income totaled $107.2 million after including the effect of the accounting changes.
 Revenues were three percent higher in the fourth quarter and down one percent for the 1993 fiscal year compared with the same periods last year. Revenues have been affected by a smaller average portfolio financed this year and the lower level of interest rates and correspondingly lower finance charges earned by the company in 1993. The decrease in finance charges earned this year was partially offset by securitization and servicing fee income from retail notes previously sold. Additionally, borrowing costs have also been lower this year due to the lower interest rates and a smaller portfolio financed. Interest expense was down seven percent in the fourth quarter and 11 percent for the year compared with the same periods in 1992. Compared with the same periods last year, the average receivable and lease portfolio financed was approximately 13 percent lower in the final quarter and seven percent lower for the full year of 1993, due primarily to sales of retail notes.
 Total receivable and lease acquisitions by the company decreased five percent during the quarter but increased five percent for fiscal year 1993 compared with acquisitions in the same periods of 1992. The higher acquisitions for the full year of 1993 resulted mainly from an increased volume of John Deere operating leases, revolving charge accounts and wholesale receivables, which more than offset lower acquisitions of retail notes. Acquisitions of recreational product notes were down significantly this year, while acquisitions of John Deere equipment notes were slightly lower than in 1992. Total credit receivable and lease acquisitions were lower in the fourth quarter of this year due mainly to lower acquisitions of John Deere equipment notes as a result of a higher level of cash purchases by John Deere customers and a more competitive agricultural financing environment.
 Net credit receivables and leases financed by John Deere Capital Corporation were $3.4 billion at October 31, 1993 compared with $4.0 billion one year ago. The decline in the receivable and lease portfolio financed resulted mainly from the sale of retail notes during 1993 that generated net proceeds of $1,143 million, which included proceeds of $566 million received in the fourth quarter from the sale of securitized retail notes in the public market. Net credit receivables and leases administered, which include receivables previously securitized and sold but still administered, amounted to $4.8 billion at Oct. 31, 1993 compared with $4.7 billion at Oct. 31, 1992.
 DEERE & COMPANY
 Fourth Quarter 1993 Press Release
 Net Sales and Revenues: (Millions of Dollars)
 Period ended Three Months Twelve Months
 Oct. 31, % %
 1993 1992 Change 1993 1992 Change
 Net Sales:
 Agricultural
 equipment $1,181 $1,008 +17 $4,078 $3,759 +8
 Industrial
 equipment 382 289 +32 1,348 1,068 +26
 Lawn and grounds
 care equipment 286 278 +3 1,053 896 +18
 Total net sales 1,849 1,575 +17 6,479 5,723 +13
 Financial Services
 revenues 302 292 +3 1,175 1,124 +5
 Other revenues 24 29 -17 100 114 -12
 Total net sales
 and revenues $2,175 $1,896 +15 $7,754 $6,961 +11
 United States and Canada:
 Equipment net
 sales $1,474 $1,164 +27 $4,934 $4,147 +19
 Financial Services
 revenues 302 292 +3 1,175 1,124 +5
 Total 1,776 1,456 +22 6,109 5,271 +16
 Overseas net sales 375 411 -9 1,545 1,576 -2
 Other revenues 24 29 -17 100 114 -12
 Total net sales
 and revenues $2,175 $1,896 +15 $7,754 $6,961 +11
 Selected Balance Sheet Data: (Millions of Dollars)
 10/31/93 10/31/92
 Equipment Operations:
 Dealer accounts and notes
 receivable - net $2,794 $2,946
 Inventories $ 464 $ 524
 Financial Services:
 Credit receivables and leases
 financed - net $3,758 $4,400
 Credit receivables and leases
 administered - net $5,195 $5,136
 Insurance and health care
 companies' assets $1,337 $1,266
 Actual Shares Outstanding 85,502,101 76,320,652
 Fourth Quarter 1993 Press Release
 Income Analysis: (Millions of Dollars Except Per Share Data)
 Period ended Three Months Twelve Months
 Oct. 31, 1993 1992 1993 1992
 Income before
 Special Items 103.5 4.2 286.3 37.4
 Restructuring Charges (A) --- --- (80.0) ---
 Incremental Expense from
 Accounting Changes (B) (10.4) --- (38.3) ---
 Effect of Tax
 Rate Change (C) 16.4 --- 16.4 ---
 Income before Cumulative
 Effect of
 Accounting Changes 109.5 4.2 184.4 37.4
 Cumulative Effect of
 Accounting Changes (B) --- --- (1,105.3) ---
 Net Income (Loss) 109.5 4.2 (920.9) 37.4
 Per Share Data:
 Income Before
 Special Items 1.33 .05 3.70 .49
 Income Before Cumulative
 Effect of Accounting
 Changes 1.41 --- 2.39 ---
 Cumulative Effect of
 Accounting Changes --- --- (14.30) ---
 Net Income (Loss) 1.41 .05 (11.91) .49
 Average Number of Shares
 Outstanding --- --- 77,291 76,274
 Deere & Company's reported 1993 financial results were affected by the adoption of new accounting standards and certain other special items.
 (A) During the second quarter of 1993, the company initiated plans to downsize and rationalize its European operations. This resulted in a second quarter after-tax restructuring charge of $80 million or $1.03 per share, representing costs of employment reductions to be implemented during 1993 and the next few years.
 (B) In the fourth quarter of 1993, effective Nov. 1, 1992, the company adopted two new accounting standards, FASB Statement No. 106, Employers' Accounting for Postretirement Benefits other than Pensions, and FASB Statement No. 112, Employers' Accounting for Postemployment Benefits. These standards generally require the accrual of these benefits, which are primarily health care and life insurance benefits, during employees' years of active service. The company elected to recognize the cumulative effect of these accounting changes as a one- time charge to earnings. Accordingly, results for the first quarter of 1993 were restated for the cumulative effect as of Nov. 1, 1992, which totaled $1,105.3 million after taxes or $14.30 per share. Additionally, previously reported earnings for the first three quarters of 1993 were also restated to reflect incremental after-tax postretirement and postemployment benefits expense of $9.3 million or $.12 per share in each quarter compared with expense under the previous accounting principles. The fourth quarter of 1993 also includes an incremental increase in expense relating to these benefits of $10.4 million or $.13 per share compared with expense under the previous accounting principles. The incremental postretirement and postemployment benefits expense relating to the financial services subsidiaries was immaterial.
 Restated quarterly earnings data follow:
 Net Income(Loss)
 Net Income (Loss) Per Share
 Previously Previously
 Reported Restated Reported Restated
 Quarter 1 $(27.6) $(1,142.2) $(.36) $(14.78)
 Quarter 2 30.2 21.0 .39 .27
 Quarter 3 100.1 90.8 1.31 1.19
 (C) The Omnibus Budget Reconciliation Act of 1993, which enacted an increase in the United States federal income tax rate from 34 percent to 35 percent effective Jan. 1, 1993, was signed into law during the fourth quarter of 1993. As a result, in accordance with FASB Statement No. 109, Accounting for Income Taxes, income taxes relating to previously reported 1993 United States taxable income were recalculated and net United States deferred tax assets were revalued using the new tax rate of 35 percent which resulted in a credit of $16.4 million or $.21 per share to income tax expense. This rate change had an immaterial effect on the financial services subsidiaries.
 -0- 12/7/93
 /CONTACT: Bob Combs of Deere & Company, 309-765-5014/
 (DE)


CO: Deere & Company ST: Illinois IN: MAC SU: ERN

MP -- NY025 -- 1240 12/07/93 11:27 EST
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