Deere Posts Record Earnings for Fourth Quarter and Full Year



    
    - Net income reaches $422 million for quarter, $1.82 billion for full
year.

    - Quarter's EPS from continuing operations climbs 57%; net sales and
    revenues up 20%.

    - Agricultural operations pace improvement.

    - Further sales and profit gains forecast for 2008.
    

    MOLINE, Ill., Nov. 21 /CNW/ -- Deere & Company today announced worldwide
net income of $422.1 million, or $1.88 per share, for the fourth quarter ended
October 31, compared with $277.3 million, or $1.20 per share, for the same
period last year. Income from continuing operations was $422.1 million, or
$1.88 per share, for the fourth quarter, versus $276.7 million, or $1.20 per
share, last year.
    
    (Logo: http://www.newscom.com/cgi-bin/prnh/20030326/JOHNDEERELOGO)
    
    For the full year, net income was $1.822 billion, or $8.01 per share,
compared with $1.694 billion, or $7.18 per share, last year. Full-year income
from continuing operations was $1.822 billion, or $8.01 per share, in
comparison with $1.453 billion, or $6.16 per share, a year ago.
    Earnings per share figures do not reflect the recently approved
two-for-one stock split.  The split, in the form of a 100 percent stock
dividend on December 3, to holders of record on November 26, was approved by
shareholders earlier this month. (Refer to Note 4 in the accompanying
consolidated financial statements for further details.)
    "Deere's continuing strong performance reflects improving execution of
our plans to create a fundamentally more profitable, resilient business," said
Robert W. Lane, chairman and chief executive officer. "As a result, the
company has delivered four successive years of record results, and done so in
the face of mixed market conditions." In 2007, Deere benefited from an
improving global farm economy yet saw weakening in the construction, forestry,
commercial and consumer sectors, chiefly as a result of the U.S. housing
downturn. Said Lane, "In addition to our ongoing focus on cost and asset
management, Deere has successfully entered new markets, made important
acquisitions, and expanded its global customer base with advanced lines of
innovative products and services."
    Worldwide net sales and revenues increased 20 percent to $6.141 billion
for the fourth quarter and were up 9 percent to $24.082 billion for the full
year. Net sales of the equipment operations were $5.423 billion for the
quarter and $21.489 billion for the year, compared with $4.486 billion and
$19.884 billion for the respective periods last year.
    
    Summary of Operations
    
    Net sales of the worldwide equipment operations increased 21 percent for
the quarter and rose 8 percent for the year. Included were positive effects
for currency translation and price changes of 6 percent for the quarter and 5
percent for the year. Equipment sales in the U.S. and Canada were up 15
percent for the quarter and flat for the year, while net sales outside the
U.S. and Canada increased by 32 percent for the quarter and 27 percent for the
year. Currency translation added 9 percentage points to sales outside the U.S.
and Canada for the quarter and 7 points for the year.
    Deere's equipment divisions reported operating profit of $511 million for
the quarter and $2.318 billion for the year, compared with $276 million and
$1.905 billion for the same periods last year. The operating profit
improvement for the quarter was largely due to the favorable impact of higher
sales volumes and improved price realization, partially offset by higher
selling, administrative and general expenses, and increased research and
development costs. Full-year operating profit rose primarily due to improved
price realization and higher sales and production volumes. Higher selling,
administrative and general expenses, increased raw-material costs, and higher
research and development costs partially offset the improvement for the full
year.
    Trade receivables and inventories at the end of the quarter were $5.392
billion, or 25 percent of previous 12-month sales, compared with $4.995
billion, or 25 percent of sales, a year ago.
    Financial services reported net income of $96.9 million for the quarter
and $363.7 million for the full year versus $87.5 million and $584.3 million
for the comparable periods last year, which included results from the
discontinued health-care business. Income from continuing operations was $96.9
million for the quarter and $363.7 million for the year, versus $86.9 million
and $343.7 million a year earlier. The improvement for both periods was
primarily due to growth in the credit portfolio, partially offset by increased
selling, administrative and general expenses.  Full-year results were affected
by a higher provision for credit losses.
    
    Company Outlook
    
    Company equipment sales are projected to increase by about 12 percent for
the full year and to be up approximately 25 percent for the first quarter of
2008. LESCO operations are expected to account for about 2 percentage points
of the sales increase for the year and 3 points in the first quarter. Deere's
net income is forecast to be about $2.1 billion for 2008 and about $325
million for the first quarter.
    
    Company Summary
    
    In addition to achieving strong financial performance, Deere in 2007
funded a disciplined global growth plan, returned $1.9 billion to investors
through share repurchases and dividends, and made further strides in operating
and asset efficiency. "Deere is well-positioned to continue benefiting from
powerful global economic trends such as growing affluence and increasing
demand for food, feed and biofuels," Lane said. "Our plans for growing a great
business are well on track, and yielding impressive results, thanks to the
strong support of our employees, customers, suppliers and dealers."
    
    Equipment Division Performance
    
    Agricultural. Division sales rose 35 percent for the quarter and 18
percent for the full year. For both periods, the increases were a result of
higher volumes, the favorable effects of currency translation, and improved
price realization. Operating profit was $388 million for the quarter and
$1.443 billion for the full year, compared with $143 million and $882 million
for the respective periods last year. Operating profit was higher for both the
quarter and full year primarily due to the favorable impact of higher sales
and production volumes and improved price realization, partially offset by
higher selling, administrative and general expenses, which were attributable
in large part to the division's growth initiatives and currency translation.
Also affecting full-year results were increased raw-material costs and higher
research and development costs.
    Commercial & Consumer. Division sales rose 35 percent for the quarter and
12 percent for the full year compared with 2006. LESCO operations accounted
for 29 percentage points of the quarter's increase and 9 points for the full
year. The division had an operating loss of $11 million for the quarter and an
operating profit of $304 million for the full year, compared with last year's
operating loss of $3 million for the quarter and operating profit of $221
million for the year. Operating profit declined for the quarter largely due to
higher selling, administrative and general expenses, primarily related to
LESCO, partially offset by higher sales volumes. The year's profit increase
primarily resulted from the impact of higher sales volumes and improved price
realization, partially offset by higher selling, administrative and general
expenses largely attributable to LESCO. A supplier of consumable lawn care,
landscape, golf course and pest control products, LESCO was acquired by Deere
in the third quarter of 2007.
    Construction & Forestry. Sales declined 11 percent for the fourth quarter
and were down 13 percent for the full year. Operating profit was $134 million
for the quarter and $571 million for the full year, compared with $136 million
and $802 million a year ago. Operating profit declined for the quarter mainly
due to lower sales volumes, largely offset by improved price realization.  The
year's decline in operating profit was primarily due to lower sales and
production volumes and higher raw-material costs, partially offset by positive
price realization. Last year's results included expenses related to the
closure of a Canadian forestry-equipment facility.
    
    Market Conditions & Outlook
    
    Agricultural.  Driven by continuing strength in the farm sector,
worldwide sales of John Deere agricultural equipment are expected to increase
by about 17 percent for full-year 2008.  Included in the division's sales
forecast is one percentage point for currency translation and one point
related to the acquisition of Ningbo Benye, a Chinese-based tractor
manufacturer purchased by Deere in the fourth quarter of 2007.
    Worldwide farm conditions remain quite positive, benefiting from growing
economic prosperity, healthy commodity prices and demand for renewable fuels.
Relative to consumption, global grain stocks such as wheat and corn are
continuing to run at or near 30-year lows. John Deere sales are expected to
receive further support from a large number of advanced new products reaching
global customers in 2008.
    On an industry basis, sales of farm machinery in the U.S. and Canada are
forecast to be up 10 to 15 percent for the year, due in part to a substantial
jump in farm cash receipts. Large tractors and combines are expected to pace
the sales improvement, while demand for cotton pickers is expected to be
lower. Industry sales in Western Europe are forecast to be flat to up slightly
for the year with greater increases expected in Eastern Europe and the CIS
(Commonwealth of Independent States) countries, including Russia. These latter
areas are expected to continue experiencing strong growth due to rising demand
for productive farm machinery. South American markets are expected to show
further improvement in 2008, with industry sales forecast to increase by 10 to
15 percent. Farm machinery demand in Brazil, while receiving support from
strong commodity prices, may be tempered by uncertainties over the status of
government-backed financing programs. Deere anticipates its sales will be
helped by an expanded product line and additional production capacity
associated with the opening of a new tractor-manufacturing facility in
Montenegro, Brazil.
    Commercial & Consumer.  John Deere commercial and consumer equipment
sales are projected to be up about 10 percent for the year, including about 8
percentage points from a full year of LESCO sales.  Division sales, in
addition, are expected to benefit from new products, such as an expanded line
of innovative commercial mowing equipment. Given the nature of Deere's
commercial and consumer businesses, sales tend to have a high degree of
sensitivity to weather patterns and U.S. housing markets.
    Construction & Forestry.  U.S. markets for construction and forestry
equipment are forecast to remain under pressure in 2008 due in large part to a
continuing slump in housing starts. Non-residential construction is expected
to remain flat at last year's relatively strong levels. Pressure on the U.S.
housing market is expected to contribute to lower worldwide sales of forestry
equipment in 2008, though sales in Europe are forecast to remain at strong
levels. Despite this generally weak environment, Deere sales are expected to
benefit from new products and a return to factory-production levels in closer
alignment with retail demand. Last year, the company made a significant
reduction in construction and forestry inventories, which restrained
production. In addition, Deere's sales to the independent rental channel,
which saw a large decline in 2007, are expected to be flat in the coming year.
For 2008, the company's worldwide sales of construction and forestry equipment
are forecast to be approximately equal to the prior year.
    Credit.  Full-year 2008 net income for Deere's credit operations is
forecast to be approximately $375 million, with the improvement driven by
growth in the credit portfolio.
    
    John Deere Capital Corporation
    
    The following is disclosed on behalf of the company's credit subsidiary,
John Deere Capital Corporation (JDCC), in connection with the disclosure
requirements applicable to its periodic issuance of debt securities in the
public market.
    JDCC's net income was $82.8 million for the fourth quarter and $311.2
million for the full year, compared with net income of $73.8 million and
$291.2 million for the respective periods last year. Results for both periods
benefited primarily from growth in the portfolio, partially offset by
increased selling, administrative and general expenses. The full year was also
affected by a higher provision for credit losses.
    Net receivables and leases financed by JDCC were $18.648 billion at
October 31, 2007, compared with $17.576 billion last year. Net receivables and
leases administered, which include receivables previously sold, totaled
$18.871 billion at October 31, 2007, compared with $18.529 billion one year
ago.
    
    Safe Harbor Statement
    
    Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995:  Statements under "Company Outlook," "Company Summary," "Market
Conditions & Outlook," and other statements herein that relate to future
operating periods are subject to important risks and uncertainties that could
cause actual results to differ materially.  Some of these risks and
uncertainties could affect particular lines of business, while others could
affect all of the Company's businesses.
    Forward-looking statements involve certain factors that are subject to
change, including for the Company's agricultural equipment segment, the many
interrelated factors that affect farmers' confidence.  These factors include
worldwide demand for agricultural products, world grain stocks, weather
conditions (including drought in the eastern U.S.), soil conditions, harvest
yields, prices for commodities and livestock, crop production expenses,
availability of transport for crops, the growth of non-food uses for some
crops (including ethanol and biodiesel production), real estate values,
available acreage for farming, the land ownership policies of various
governments, changes in government farm programs (including those that may
result from farm economic conditions in Brazil), international reaction to
such programs, uncertainties over passage of the U.S. Farm Bill, global trade
agreements, animal diseases and their effects on poultry and beef consumption
and prices (including bovine spongiform encephalopathy, commonly known as "mad
cow" disease, and avian flu), crop pests and diseases (including Asian rust),
and the level of farm product exports (including concerns about genetically
modified organisms).  The success of the fall harvest and the prices realized
by farmers for their crops especially affect retail sales of agricultural
equipment in the winter.
    Factors affecting the outlook for the Company's commercial and consumer
equipment segment include weather conditions, general economic conditions,
customer profitability, consumer confidence, consumer borrowing patterns,
consumer purchasing preferences, housing starts, infrastructure investment,
and spending by municipalities and golf courses.
    The number of housing starts, interest rates and consumer spending
patterns are especially important to sales of the Company's construction
equipment.  The levels of public and non-residential construction also impact
the results of the Company's construction and forestry segment.  Prices for
pulp, lumber and structural panels are important to sales of forestry
equipment.
    All of the Company's businesses and its reported results are affected by
general economic conditions in, and the political and social stability of, the
global markets in which the Company operates; production, design and
technological difficulties, including capacity and supply constraints and
prices, including for supply commodities such as steel and rubber; the
availability and prices of strategically sourced materials, components and
whole goods; delays or disruptions in the Company's supply chain due to
weather or natural disasters; start-up of new plants and new products; the
success of new product initiatives and customer acceptance of new products;
oil and energy prices and supplies; inflation and deflation rates, interest
rate levels and foreign currency exchange rates; the availability and cost of
freight; trade, monetary and fiscal policies of various countries; wars and
other international conflicts and the threat thereof; actions by the U.S.
Federal Reserve Board and other central banks; actions by the U.S. Securities
and Exchange Commission; actions by environmental regulatory agencies,
including those related to engine emissions and the risk of global warming;
actions by other regulatory bodies; actions by rating agencies; capital market
disruptions; customer borrowing and repayment practices, the number and size
of customer loan delinquencies and defaults, and the sub-prime credit market
crises; actions of competitors in the various industries in which the Company
competes, particularly price discounting; dealer practices especially as to
levels of new and used field inventories; labor relations; changes to
accounting standards; changes in tax rates; the effects of, or response to,
terrorism; and changes in laws and regulations affecting the sectors in which
the Company operates.  The spread of major epidemics (including influenza,
SARS, fevers and other viruses) also could affect Company results.  Company
results are also affected by changes in the level of employee retirement
benefits, changes in market values of investment assets and the level of
interest rates, which impact retirement benefit costs, and significant changes
in health care costs.  Other factors that could affect results are changes in
Company declared dividends, acquisitions and divestitures of businesses, and
common stock issuances and repurchases.
    The Company's outlook is based upon assumptions relating to the factors
described above, which are sometimes based upon estimates and data prepared by
government agencies.  Such estimates and data are often revised.  The Company,
except as required by law, undertakes no obligation to update or revise its
outlook, whether as a result of new developments or otherwise.  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 most recent annual report on Form 10-K (including
the factors discussed in Item 1A. Risk Factors) and other filings with the
U.S. Securities and Exchange Commission.



    
                    Fourth Quarter and 2007 Press Release
                            (millions of dollars)
    

    
                              Three Months Ended       Twelve Months Ended
                                 October 31               October 31
                                           %                           %
                       2007      2006   Change    2007      2006     Change
    Net sales and
     revenues:
      Agricultural
       equipment net
       sales          $3,188    $2,370    +35   $12,121   $10,232     +18
      Commercial and
       consumer
       equipment net
       sales           1,027       758    +35     4,333     3,877     +12
      Construction
       and forestry
       net sales       1,208     1,358    -11     5,035     5,775     -13
          Total net
           sales *     5,423     4,486    +21    21,489    19,884      +8
      Credit revenues    567       502    +13     2,094     1,819     +15
      Other revenues     151       130    +16       499       445     +12
        Total net
         sales and
         revenues *   $6,141    $5,118    +20   $24,082   $22,148      +9
    

    
    Operating profit: **
      Agricultural
       equipment        $388      $143   +171    $1,443      $882     +64
      Commercial and
       consumer
       equipment         (11)       (3)  +267       304       221     +38
      Construction and
       forestry          134       136     -1       571       802     -29
      Credit             145       131    +11       548       520      +5
      Other                1        (2)               5         1    +400
        Total operating
         profit *        657       405    +62     2,871     2,426     +18
    Interest, corporate
     expenses and income
     taxes              (235)     (129)   +82    (1,049)     (973)     +8
    

    
    Income from
     continuing
     operations          422       276    +53     1,822     1,453     +25
    Income from
     discontinued
     operations                      1                        241
        Net income      $422      $277    +52    $1,822    $1,694      +8
    

    * Includes equipment operations outside the U.S. and Canada as follows:

    
         Net sales    $2,014    $1,530    +32    $7,660    $6,033     +27
         Operating
          profit        $217       $71   +206      $779      $460     +69
    

    
      The company views its operations as consisting of two geographic areas,
      the "U.S. and Canada", and "outside the U.S. and Canada".
    

    
    ** Operating profit is income from continuing operations before external
       interest expense, certain foreign exchange gains and losses, income
       taxes and corporate expenses.  However, operating profit of the credit
       segment includes the effect of interest expense and foreign exchange
       gains or losses.
    




For further information:

For further information: Ken Golden, Director, Strategic Public
Relations  of Deere & Company, +1-309-765-5678 Web Site: http://www.deere.com


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