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DEERE & COMPANY REPORTS RESULTS

 DEERE & COMPANY REPORTS RESULTS
 MOLINE, Ill., Aug. 25 /PRNewswire/ -- Deere & Company (NYSE: DE)


today reported third quarter net income of $9.1 million or $.12 per share, compared with net income of $31.3 million or $.41 per share in the second quarter of 1991. The third quarter of Deere & Company's fiscal year ended July 31.
 Worldwide net sales and revenues decreased 2 percent to $1.754 billion in the third quarter of 1992 from $1.790 billion in the same quarter last year. Third quarter production tonnage declined by 5 percent compared with the already low level in the third quarter of 1991.
 Deere & Company Chairman and Chief Executive Officer Hans W. Becherer said, ''Operating results for the quarter continue to reflect lower production and sales volumes compared with last year in response to soft market conditions. Although price realization has improved, sales incentive costs remain relatively high due to very competitive markets.''
 Net sales and revenues include net sales of equipment to dealers, which were $1.449 billion in the current quarter, a decrease of 2 percent from sales of $1.486 billion in last year's third quarter. Net sales and revenues also include revenues from the company's credit, insurance and health care operations. Those revenues increased 2 percent to $277 million in the third quarter this year, compared with $272 million in the same quarter of 1991.
 Worldwide net income in the first nine months of 1992 was $33.2 million or $.44 per share compared with net income of $61.3 million or $.80 per share in the first half of 1991. Worldwide net sales and revenues of $5.065 billion for the initial nine months of 1992 decreased 2 percent from $5.153 billion in the first nine months of last year. Production tonnage was 4 percent lower during the first nine months of 1992.
 Net sales of equipment decreased 3 percent during the first nine months of 1992 to $4.148 billion from $4.264 billion during the same period of 1991. The company's financial services revenues grew 4 percent to $832 million compared with $797 million in the first nine months of 1991.
 ''Industry retail sales of agricultural equipment, both domestic and overseas, have remained weak in recent months,'' Becherer said. ''North American retail sales of John Deere agricultural equipment have decreased in each of the first three quarters of 1992 compared with the same periods last year. Despite the current reasonably favorable economic fundamentals of North American agriculture, farmers have remained very cautious in making capital purchases and retail sales have been lower than anticipated. Mainly because of weakness in Western Europe, retail sales of our agricultural equipment outside the United States and Canada have also been below 1991 levels.
 ''Retail sales of industrial equipment by the industry in North America have been slow in 1992, even though there has been a gradual improvement in construction activity thus far this year,'' Becherer said. ''Retail sales in North America of John Deere industrial equipment during the third quarter and first nine months of this year were comparable to last year's low volumes.
 ''The soft domestic economy appears to be affecting consumer confidence and spending for durable goods,'' Becherer said. ''After showing good improvement in our second quarter, retail sales of John Deere lawn and grounds care products were lower than in last year's third quarter and are now down slightly on a year-to-date basis compared with 1991.''
 The company's worldwide equipment operations, which exclude the financial services subsidiaries, had a net loss of $33.1 million in the third quarter this year compared with net income of $0.6 million in the same period of 1991. For the first nine months of this year, these operations incurred a net loss of $73.6 million, which compares with a net loss of $28.3 million in the first nine months of 1991. Results in both years were affected by lower production and sales volumes, particularly in 1992. High sales incentive costs also affected both years. Net income in the third quarter of 1991 benefited by $9.2 million after taxes from the expected reduction of inventories valued on a last-in, first-out (LIFO) basis. This year's third quarter did not contain a LIFO inventory benefit. Results in the first nine months of 1992 and 1991 reflect LIFO inventory benefits of $22.1 million and $19.4 million, respectively.
 Net income of the company's credit operations was $30.7 million in the third quarter this year compared with $21.7 million in the same period last year. For the first nine months, net income of these subsidiaries was $80.8 million in 1992 compared with $62.0 million last year. Net credit receivables totaled $4.527 billion at July 31, 1992, compared with $4.288 billion one year ago.
 Net income from insurance and health care operations was $9.8 million in the third quarter of 1992 compared with $7.6 million last year. For the first nine months, income from these operations totaled $22.0 million this year compared with $29.0 million in 1991. Insurance earnings for the first nine months of 1992 were adversely affected by higher loss experience and a corresponding increase in loss reserves during the first quarter.
 Operating profit of the company's North American agricultural equipment division was significantly lower in the third quarter and first nine months of 1992 compared with the same period last year. The company's North American industrial equipment division generated an operating profit in the current quarter of 1992 compared with a loss during the same quarter last year, and for the first nine months of 1992 has incurred a smaller loss than last year. Although the company's North American lawn and grounds care equipment division incurred a larger operating loss in the third quarter this year, these operations recorded a small operating profit in the first nine months of both 1992 and 1991. Compared with the same periods last year, the overseas equipment operations had a somewhat lower operating profit for the first nine months of 1992. Operating profit is defined as income before interest expense, income taxes and certain other expenses.
 ''Because of slow industry retail demand, particularly for large tractors and combines, we recently announced a further reduction in our 1992 fiscal year production schedules to a level which is now about 9 percent lower than 1991 production tonnage,'' Becherer said. ''Worldwide agricultural equipment production for 1992 is now scheduled to be approximately 14 percent lower than last year's output. Industrial equipment production will be down about 3 percent for the year, while North American lawn and grounds care equipment production is scheduled to be up approximately 13 percent over 1991.
 ''Fourth quarter production tonnage is now scheduled to be down about 21 percent from last year,'' Becherer said. ''Although the lower production will facilitate our efforts to reduce company and dealer inventories, profitability will remain under pressure and our equipment operations will incur a net loss in the fourth quarter and for the entire fiscal year. However, our financial services operations are expected to continue to perform well during the remainder of 1992.
 ''Consumer confidence remains at a low level and the pattern of slow, uneven growth in the domestic economy is expected to continue,'' Becherer said. ''The extent of recovery in housing starts and consumer spending for durable goods will be key determinants of the level of future demand for our construction and lawn and grounds care equipment. In North America, farmers continue to be cautious buyers, and overseas agricultural equipment demand is expected to remain soft. Accordingly, our outlook for the remainder of this fiscal year and into early 1993 remains uncertain.
 ''During the fourth quarter we will introduce to our dealers and the marketplace a completely new line of agricultural tractors along with complementary new implements,'' Becherer said. ''These unique and innovative tractors reflect the results of our strategic emphasis on research and development and capital expenditures to help ensure the long-term success of Deere & Company. These investments allow us to take advantage of new technologies while providing genuine value to our customers for their investment in our products. We are confident these new products will further strengthen our industry leadership position.''
 The following information is disclosed on behalf of the company's United States credit subsidiary, John Deere Capital Corp., in connection with the disclosure requirements of programs providing for the issuance of debt securities:
 John Deere Capital Corp. earned $27.8 million in the third quarter of the 1992 fiscal year compared with $19.1 million in the same period last year. For the first nine months of 1992, net income was $72.2 million compared with $54.4 million in the same period of 1991. Results in both the third quarter and first nine months of 1992 have benefited from a higher volume of receivables financed and a from improved credit experience resulting in a lower provision for credit losses this year.
 Revenues were approximately the same in the third quarter and first nine months of 1992 compared with the same periods last year. The average receivable and lease portfolio financed was approximately 7 percent higher in the third quarter and 9 percent higher in the first nine months this year than in the comparable periods last year. Revenues have been affected by the lower levels of interest rates and correspondingly lower finance charges earned by the company compared with the same periods last year. However, borrowing costs have also been lower.
 Retail sales of John Deere equipment were lower in the first nine months of 1992 compared with the same period last year, due to the continuing recessionary pressures in the general economy. Total receivable and lease acquisitions by the company were approximately the same this year compared with acquisitions in the first nine months of 1991 as higher acquisitions of wholesale receivables and revolving charge accounts were offset by lower retail note and lease acquisitions. Total net credit receivables and leases financed by John Deere Capital Corp. were $4.230 billion at July 31, 1992, compared with $3.998 billion one year ago.
 DEERE & COMPANY
 NET SALES AND REVENUES
 (in millions of dollars)
 THREE MONTHS ENDED NINE MONTHS ENDED
 July 31, July 31,
 1992 1991 PCT 1992 1991 PCT
 CHANGE CHANGE
 NET SALES:
 Agricultural equipment $ 943 $1,038 - 9 $2,751 $2,974 - 7
 Industrial equipment 313 255 23 779 742 5
 Lawn and grounds care
 equipment 193 193 618 548 13
 TOTAL NET SALES 1,449 1,486 - 2 4,148 4,264 - 3
 Financial services
 revenues 277 272 2 832 797 4
 Other revenues 28 32 -13 85 92 - 8
 TOTAL NET SALES
 AND REVENUES $1,754 $1,790 - 2 $5,065 $5,153 - 2
 UNITED STATES & CANADA:
 Equipment net sales $1,022 $1,084 - 6 $2,983 $3,164 - 6
 Financial Services
 revenues 277 272 2 832 797 4
 Total 1,299 1,356 - 4 3,815 3,961 - 4
 Overseas net sales 427 402 6 1,165 1,100 6
 Other revenues 28 32 -13 85 92 - 8
 Total net sales
 and revenues $1,754 $1,790 -2 $5,065 $5,153 - 2
 SELECTED BALANCE SHEET DATA (MILLIONS OF DOLLARS)
 July 31, Oct. 31, July 31,
 1992 1991 1991
 EQUIPMENT OPERATIONS:
 Dealer accounts & notes
 receivable-net $3,135 $2,958 $3,093
 Inventories 723 538 673
 FINANCIAL SERVICES:
 Credit receivables-net 4,527 4,671 4,288
 Insurance & health care
 companies' assets 1,245 1,130 1,102
 Average shares outstanding
 (end of period) 76,322,971 76,234,768 76,210,243
 -0- 8/25/92
 /CONTACT: Bob Combs, 309-765-5014, of Deere & Company/
 (DE) CO: Deere & Company ST: Illinois IN: MAC SU: ERN


DC -- NY028 -- 3000 08/25/92 11:37 EDT
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Date:Aug 25, 1992
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