Despite Deere's downturn, regular dividend paid.

The Deere & Co. board of directors announced on Dec. 11 that they would pay the regular quarterly dividend of 50 cents per share, payable Feb. 3, to shareholders of record on Dec. 31, 1991.

The day before the declaration, the company noted it was taking a one-time charge of $120 million to cover costs of cutting 2,100 jobs over the next two to three years, and closing a foundry. Because of that one-time charge, what would have been a profit of $99.8 million for the 1991 fiscal year became a loss of $20.2 million - which equates to a loss of 27 cents per share for the fiscal year that ended October 31.

Hans W. Becherer, Deere's chairman and CEO, forecast a flat market for the near future, saying "initial 1992 worldwide production, in tons, is scheduled to be about the same as the company's actual 1991 output...agricultural production is scheduled to be down modestly from last year, but offset by increases in lawn and grounds care equipment and industrial equipment schedules."

Becherer declared that "although the economic fundamentals of North American agriculture remain relatively strong, we expect farms to remain cautious in making new product purchase decisions in 1992. Consequently, domestic agricultural machinery retail sales are expected to remain near 1991 levels."

Comment: Is it meaningful that the only publicly-traded North American farm machinery company that makes its own lawn-and-garden product line is also the current dominant manufacturer on the continent?

Case, and Massey-Ferguson and Allis-Chalmers all once had their own lawn and garden lines. Deere started small in that market segment, making it's own riding mowers but selling private-label walk-behinds. Now Deere designs and build the bulk of its consumer and commercial product, except for chain saws, trimmers and other small items.

Deere's lawn and grounds operation is expected to help prop up the bottom line during 1992. In fiscal '91, Deere sold $780 million in consumer and commercial grounds equipment, down a long way from 1990 sales of $912 million. Importantly, insiders say, the "little" division is turning a profit.

Deere's captive finance company is also doing nicely - it showed a revenue increase of 11 percent and broke into the billion-dollar club in 1991 with revenues of $1.078 billion.

So...it appears Deere has succeeded in its policy of keeping "minor" functions like finance and consumer products tightly controlled in-house, rather than letting outsiders handle the work. There may be a lesson in that for dealers and distributors.