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DEERE & COMPANY REPORTS RESULTS

 MOLINE, Ill., Feb. 23 /PRNewswire/ -- Deere & Company (NYSE: DE) today reported a net loss of $27.6 million or $.36 per share in the first quarter of its 1993 fiscal year, compared with a net loss of $19.9 million or $.26 per share in the first quarter of 1992. The first quarter of Deere & Company's fiscal year ended Jan. 31.
 Worldwide net sales and revenues decreased 2 percent to $1.424 billion in the first quarter of 1993 from $1.452 billion in the same quarter last year.
 Deere & Company Chairman and Chief Executive Officer Hans W. Becherer said, "Income from our financial services operations was substantially higher, but our equipment operations incurred higher losses this year due to very low agricultural equipment volumes. Total worldwide production tonnage was 2 percent lower than in last year's first quarter and net sales of equipment declined 3 percent.
 "First quarter production is normally at a seasonally low level," Becherer said. "Along with the normal holiday shutdowns, several of our factories scheduled additional shutdowns during the first quarter of both years in order to facilitate reductions of dealers' receivables, which largely represent dealers' inventories. This had a significant impact on first quarter results. However, dealers' receivables were reduced by $186 million during the quarter and are $276 million lower than a year ago as a result of our planned lower production and significantly higher first quarter retail sales."
 Net sales and revenues include net sales of equipment to dealers, which were $1.115 billion in the current quarter compared with $1.144 billion in the first quarter last year. Net sales and revenues also include revenues of the company's credit, insurance and health care operations, which totaled $281 million in the first quarter this year compared with last year's $278 million.
 "In contrast to our lower sales to dealers, retail sales of John Deere agricultural equipment in North America were significantly higher in the first quarter compared with the same period last year," Becherer said. "To some extent, this may reflect purchases postponed last fall, but customer reaction to our recently introduced new lines of tractors continues to be extremely favorable.
 "North American retail sales of our lawn and grounds care equipment also increased strongly in this year's initial quarter, as consumer confidence appeared to strengthen," Becherer said. "Our North American industrial equipment retail sales were also higher, reflecting increases in residential and public construction. Demand remains weak for agricultural equipment in Western Europe."
 The company's worldwide equipment operations, which exclude the financial services subsidiaries, incurred a net loss of $68.9 million in the first quarter this year compared with a net loss of $46.5 million in the same period of 1992. First quarter 1993 and 1992 results benefited by $8.7 million and $7.2 million after taxes, respectively, from the expected reduction of inventories which are valued on a last-in, first- out (LIFO) basis.
 Compared with last year's initial quarter, the company's North American lawn and grounds care equipment business generated substantially higher operating profit in the first quarter this year, as sales increased 11 percent and production tonnage was up 27 percent. The North American industrial equipment operations had a lower operating loss due to a 19 percent increase in sales and 9 percent higher production. Mainly due to a 13 percent decline in production and a 12 percent decrease in sales, the North American agricultural equipment business incurred a significant operating loss in this year's initial quarter compared with last year's small operating profit. However, the lower volumes combined with significantly higher retail sales facilitated a large reduction in agricultural dealer receivables in the quarter. The overseas equipment operations incurred a much larger operating loss than in the same quarter last year as sales were off 5 percent and agricultural equipment production declined 3 percent. Operating profit is defined as income before interest expense, income taxes, and certain other expenses.
 Net income of the company's credit business improved in the first quarter of 1993, totaling $30.8 million compared with $24.3 million in last year's first quarter.
 Net income from insurance and health care operations was $10.3 million in the first quarter of 1993 compared with $1.3 million last year. Insurance results thus far in 1993 have improved compared with the same period last year when high loss experience and corresponding increases in loss reserves adversely affected profitability.
 "First quarter North American retail sales levels were improved over last year, and provide a good base for the remainder of the year," Becherer said. "North American net farm cash income is expected to increase modestly over 1992, which was relatively strong by historic standards. Total planted acreage should remain essentially unchanged from last year, while livestock production is forecasted to increase in 1993. However, farmers have concerns regarding low commodity price levels, export opportunities and rising input costs. The proposed investment tax credit should stimulate demand, if adopted, and provide a more attractive market environment.
 "Industry retail sales of agricultural equipment in Europe are expected to continue the downward trend of recent years," Becherer said. "European agriculture continues to experience a period of fundamental change which will likely result in lower income to farmers and reduced crop production in 1993, putting further pressure on our overseas operating results.
 "The North American economy is generally expected to continue to slowly recover in 1993," Becherer said. "Housing and public construction are expected to improve, and an expanding economy should result in continued increases in purchases of consumer durable goods. This should provide a positive climate for industrial equipment and lawn and grounds care equipment sales. Lawn and grounds care equipment retail sales outside of North America are expected to show further gains in 1993.
 "We have made selective increases to our production schedules and fiscal year 1993 worldwide production tonnage is now scheduled to be about 5 percent higher than actual 1992 output," Becherer said. "Worldwide agricultural equipment production schedules are now slightly higher than last year. While overseas agricultural equipment production schedules have been reduced, increases in domestic schedules more than offset these reductions. Lawn and grounds care equipment and industrial equipment schedules are significantly higher than 1992 levels. These production levels should still facilitate reductions in dealer and company inventories for the year.
 "Production volumes during the last three quarters of 1993 are scheduled to be higher than in the first quarter, which should enable us to operate at a more efficient level during the remainder of the year," Becherer said. "Therefore, the results of the company's equipment operations are expected to improve significantly in 1993 compared with 1992. However, equipment margins, particularly overseas, will remain under pressure due to relatively low volumes and very competitive markets for all of the company's products.
 "The improving economic environment and first quarter retail activity provide a basis for guarded optimism about our future prospects," Becherer said. "Additionally, customer and dealer acceptance of our recently introduced new products has been extremely positive. Our competitive position worldwide is very strong and we continue to emphasize cost reduction and improved efficiency in all of our operations."
 The following information is disclosed on behalf of the company's U.S. 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.'s net income totaled $27.4 million for the first quarter of the 1993 fiscal year compared with income of $20.6 million in the same period last year. First quarter 1993 earnings were higher mainly as a result of continued high margins earned on the receivable and lease portfolio and lower provisions for credit losses.
 The total average receivable and lease portfolio financed was 2 percent lower this year due primarily to sales of receivables during the fourth quarter of 1992. Revenues were 2 percent lower for the first quarter of 1993 compared with the same period last year. However, interest expense was down 18 percent compared with the first quarter of 1992 due primarily to lower average borrowing rates this year.
 Total receivable and lease acquisitions were 22 percent higher in the initial quarter of 1993 compared with the same period last year. This significant increase resulted mainly from improvements in the general economy, increased retail sales of John Deere equipment and a higher revolving charge account volume. Total net credit receivables and leases financed by John Deere Capital Corp. were $3.933 billion at Jan. 31, 1993, compared with $3.910 billion one year ago. Net credit receivables and leases administered, which include receivables previously securitized and sold, amounted to $4.520 billion at Jan. 31, 1993, compared with $4.305 billion at Jan. 31, 1992.
 DEERE & COMPANY
 Net Sales and Revenues - First Quarter 1993
 (Millions of dollars)
 Three months ended Jan. 31 1993 1992 Pct. Change
 Net Sales:
 Agricultural equipment $ 689 $ 777 -11
 Industrial equipment 231 203 +14
 Lawn and grounds care equipment 195 164 +19
 Total net sales 1,115 1,144 -3
 Financial Services revenues 281 278 +1
 Other revenues 28 30 -7
 Total net sales and revenues $1,424 $1,452 -2
 United States and Canada:
 Equipment net sales $ 829 $ 842 -2
 Financial Services revenues 281 278 +1
 Total 1,110 1,120 -1
 Overseas net sales 286 302 -5
 Other revenues 28 30 -7
 Total net sales and revenues $1,424 $1,452 -2
 Selected Balance Sheet Data
 (Millions of dollars)
 1/31/93 10/31/92 1/31/92
 Equipment Operations:
 Dealer accounts and notes
 receivable - net $2,759 $2,946 $3,035
 Inventories $ 719 $ 525 $ 674
 Financial Services:
 Credit receivables - net $4,229 $4,315 $4,217
 Insurance and health care
 companies' assets $1,284 $1,266 $1,172
 Actual shares outstanding
 (end of period) 76,313,676 76,320,652 76,232,921
 -0- 2/23/93
 /CONTACT: Robert J. Combs of Deere & Company, 309-765-5014/
 (DE)


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

GK -- NY024 -- 9313 02/23/93 10:06 EST
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Date:Feb 23, 1993
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