Deere Reports Second-Quarter Earnings of $472 Million



    
    - Company remains solidly profitable in face of global economic slowdown.

    - U.S. market for agricultural equipment continues on strong pace.

    - Focus on rigorous asset management yields positive results.

    - Strong liquidity position and access to capital markets maintained.

    
    MOLINE, Ill., May 20 /PRNewswire-FirstCall/ -- Deere & Company today
announced worldwide net income of $472.3 million, or $1.11 per share, for the
second quarter ended April 30, compared with $763.5 million, or $1.74 per
share, for the same period last year. For the first six months of the year,
net income was $676.2 million, or $1.60 per share, compared with $1.133
billion, or $2.56 per share, last year.

    Worldwide net sales and revenues declined 17 percent, to $6.748 billion,
for the second quarter and were down 11 percent to $11.894 billion for six
months compared with a year ago. Net sales of the equipment operations were
$6.187 billion for the quarter and $10.747 billion for six months, compared
with $7.469 billion and $11.999 billion last year.

    "John Deere has completed a profitable quarter and is successfully
executing plans to maintain solid performance in today's difficult economic
environment," said Robert W. Lane, chairman and chief executive officer. "We
are benefiting from a strong market for large farm machinery in the United
States and from our continued focus on balancing production with retail
activity." At the same time, the global recession and volatile foreign
exchange rates have put pressure on overall results. "Clearly, operations
dependent on construction activity and consumer spending are feeling the full
impact of the sharp downturn," Lane said. Also of note, the company has
continued to benefit from a strong liquidity position and access to global
capital markets on a competitive basis.
    

    Summary of Operations

    
    Net sales of the worldwide equipment operations decreased 17 percent for
the quarter and 10 percent for six months. Sales for both periods included
price increases of 6 percent offset by an unfavorable currency-translation
effect of 6 percent. Equipment net sales in the United States and Canada
decreased 8 percent for the quarter and 5 percent year to date. Net sales
outside the United States and Canada decreased 30 percent for the quarter and
18 percent for six months with an unfavorable currency-translation effect of
13 percent for both periods.

    Deere's equipment operations reported operating profit of $628 million
for the quarter and $935 million for six months, compared with $1.102 billion
and $1.559 billion last year. The deterioration in both periods primarily was
due to lower shipment and production volumes, higher raw-material costs and
the unfavorable effects of foreign exchange, partially offset by improved
price realization.

    Equipment operations reported net income of $406 million for the quarter
and $560 million for six months, compared with $666 million and $930 million
last year. The same operating factors mentioned above, along with a lower
effective tax rate, affected both quarterly and six-month results.

    The company's focus on asset management continued to produce improved
results. Trade receivables and inventories at the end of the quarter were
$7.924 billion, or 32 percent of previous 12-month sales, compared with $8.200
billion, or 35 percent of sales, a year ago.

    Financial services reported net income of $68.9 million for the quarter
and $115.8 million for six months compared with $86.4 million and $184.1
million last year. Results were lower for both periods largely due to a higher
provision for credit losses, lower commissions from crop insurance and
narrower financing spreads. Benefits from investment tax credits related to
wind energy projects partially offset these factors.
    

    Company Outlook & Summary

    
    The outlook for market conditions over the remainder of the year remains
highly uncertain and the impact on the company's sales and earnings is
difficult to assess.

    Company equipment sales are projected to be down about 19 percent for the
full year and down about 26 percent for the third quarter, including a
negative currency-translation impact of about 5 percent for the year and about
6 percent for the quarter. Deere's net income is expected to be about $1.1
billion for 2009, with more risk on the downside.

    "Although financial results are forecast to be lower in 2009, Deere will
continue rigorously managing its businesses with an objective of driving
improved performance throughout the cycle,"  Lane said. "In this regard, we
are successfully executing longstanding plans to manage costs and assets
effectively in all types of market conditions." Recent company actions to
improve results and respond to economic challenges include selective workforce
reductions, aggressive factory-schedule adjustments, and a continued emphasis
on process and efficiency enhancements across the enterprise. Said Lane, "John
Deere employees throughout the world are working to create a cost and asset
structure that helps the company produce solid financial results while at the
same time serving customers through a relentless focus on innovative products
and services."


    
                                        * * *

    Equipment Division Performance

    
    Agricultural. Sales decreased 4 percent for the quarter largely due to
the unfavorable effects of currency translation and lower shipment volumes,
partially offset by improved price realization. Division sales were up 4
percent for six months. Operating profit was $635 million for the quarter and
$983 million year to date, compared with $782 million and $1.114 billion for
the respective periods last year. Operating profit was lower in the quarter
primarily due to lower shipment and production volumes, higher raw-material
costs, unfavorable impacts of foreign exchange and higher research and
development expenses, partially offset by improved price realization.
Six-month operating profit was lower largely due to higher raw-material costs,
unfavorable foreign-exchange effects and higher research and development
expenses, partially offset by improved price realization.

    Commercial & Consumer. Sales for the commercial and consumer equipment
division declined 24 percent for both the quarter and the first half of the
year. Operating profit was $68 million for the quarter and $10 million for six
months, compared with $154 million and $162 million a year ago. The
operating-profit decline in both periods primarily was due to lower shipment
and production volumes, the unfavorable effects of foreign exchange and higher
raw-material costs, partially offset by improved price realization and lower
selling, administrative and general expenses.

    Construction & Forestry. Construction and forestry sales were down 55
percent for the quarter and 44 percent for six months. The division had an
operating loss of $75 million in the quarter and $58 million year to date,
compared with an operating profit of $166 million and $283 million last year.
The profit decrease for both periods was primarily due to significantly lower
shipment and production volumes and higher raw-material costs, partially
offset by improved price realization and lower selling, administrative and
general expenses.
    

    Market Conditions & Outlook

    
    As previously cited, the outlook for the remainder of the year remains
highly uncertain considering present global economic conditions.

    Agriculture & Turf.  Full-year sales of the agriculture and turf division
are forecast to decrease by about 14 percent, including a negative
currency-translation impact of about 6 percent. The division was created
earlier this month by combining the operations of the worldwide agricultural
equipment and commercial and consumer equipment divisions. Voluntary employee
separations related to the new organizational structure are currently expected
to result in pretax charges of approximately $50 million in the second half of
2009. Savings from the separation program of about the same amount are
expected to be realized in 2010.

    On an industry basis, farm-machinery sales in the United States and
Canada are forecast to be flat to down slightly for the year, with support
from an increase in four-wheel-drive tractors, combines, sprayers and seeding
equipment. In other parts of the world, industry farm-machinery sales in
Western Europe are forecast to be down 10 to 15 percent for the year. Markets
have continued to deteriorate in Central Europe and the CIS (Commonwealth of
Independent States) countries, where sales are expected to be sharply lower.
In South America, industry sales are projected to decrease by 20 to 30 percent
for the year. North American industry sales of turf equipment and compact
utility tractors are expected to be down about 20 percent.

    Construction & Forestry. Deere's worldwide sales of construction and
forestry equipment are forecast to decline by about 42 percent for the year,
largely as a consequence of a slumping global economy and historically low
levels of construction activity in the United States.

    Credit. Full-year 2009 net income for Deere's credit operations is
forecast to be approximately $250 million. The forecast decrease from 2008
primarily is due to narrower financing spreads, a higher provision for credit
losses and lower commissions from crop insurance, partially offset by benefits
from investment tax credits related to wind energy projects.
    

    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 $33.9 million for the second quarter and $69.0
million year to date, compared with net income of $77.3 million and $154.5
million for the respective periods last year. Results were lower for both
periods primarily due to a higher provision for credit losses, lower
commissions from crop insurance and narrower financing spreads.

    Net receivables and leases financed by JDCC were $19.292 billion at April
30, 2009, compared with $19.296 billion last year. Net receivables and leases
administered, which include receivables administered but not owned, totaled
$19.455 billion at April 30, 2009, compared with $19.452 billion a year ago.
    

    Safe Harbor Statement

    
    Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995:  Statements under "Company Outlook and 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 the many
interrelated factors that affect farmers' confidence.  These factors include
worldwide economic conditions, demand for agricultural products, world grain
stocks, weather conditions, soil conditions, harvest yields, prices for
commodities and livestock, crop and livestock 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 and policies (including those
in the U.S. and Brazil), international reaction to such programs, global trade
agreements, animal diseases and their effects on poultry and beef consumption
and prices (including avian flu and bovine spongiform encephalopathy, commonly
known as "mad cow" disease), crop pests and diseases (including Asian rust),
and the level of farm product exports (including concerns about genetically
modified organisms).

    Factors affecting the outlook for the Company's turf and utility
equipment include general economic conditions, consumer confidence, weather
conditions, customer profitability, consumer borrowing patterns, consumer
purchasing preferences, housing starts, infrastructure investment, spending by
municipalities and golf courses, and consumable input costs.

    General economic conditions, consumer spending patterns, real estate and
housing prices, the number of housing starts and interest rates are especially
important to sales of the Company's construction and forestry 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, especially material changes in
economic activity in these markets; customer confidence in the general
economic conditions; foreign currency exchange rates, especially fluctuations
in the value of the U.S. dollar, interest rates and inflation and deflation
rates; capital market disruptions; significant changes in capital market
liquidity, access to capital and associated funding costs; delays or
disruptions in the Company's supply chain due to weather, natural disasters or
financial hardship or the loss of liquidity by suppliers (including common
suppliers with the automotive industry); changes in and the impact of
governmental banking, monetary and fiscal policies and governmental programs
in particular jurisdictions or for the benefit of certain sectors; actions by
rating agencies; customer access to capital for purchases of the Company's 
products and borrowing and repayment practices, the number and size of
customer loan delinquencies and defaults, and the sub-prime credit market
crises; changes in the market values of investment assets; production, design
and technological difficulties, including capacity and supply constraints and
prices; the availability and prices of strategically sourced materials,
components and whole goods; 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; the availability and cost of freight;
trade, monetary and fiscal policies of various countries (including
protectionist policies that disrupt international commerce); 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, health and safety regulatory
agencies, including those related to engine emissions (in particular Tier 4
emission requirements), noise and the risk of climate change; actions by other
regulatory bodies; 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 and
regulations; changes to accounting standards; changes in tax rates and
regulations; 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 H1N1 and other influenzas, SARS, fevers
and other viruses) also could affect Company results.  Changes in weather
patterns could impact customer operations and 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 acquisitions
and divestitures of businesses, the integration of new businesses, the
implementation of organizational changes such as combining of the agricultural
and commercial and consumer equipment divisions, changes in Company declared
dividends and common stock issuances and repurchases.

    With respect to the current global economic downturn, changes in
governmental banking, monetary and fiscal policies to restore liquidity and
increase the availability of credit may not be effective and could have a
material impact on the Company's customers and markets.  Recent significant
changes in market liquidity conditions could impact access to funding and
associated funding costs, which could reduce the Company's earnings and cash
flows.  The Company's investment management operations could be impaired by
changes in the equity and bond markets, which would negatively affect
earnings.

    General economic conditions can affect the demand for the Company's
equipment as well. Current negative economic conditions and outlook have
dampened demand for certain equipment.  Furthermore, governmental programs
providing assistance to certain industries or sectors could negatively impact
the Company's competitive position.

    The current economic downturn and market volatility have adversely
affected the financial industry in which John Deere Capital Corporation and
other credit subsidiaries (Credit) operate.  Credit's liquidity and ongoing
profitability depend largely on timely access to capital to meet future cash
flow requirements and fund operations and the costs associated with engaging
in diversified funding activities and to fund purchases of the Company's
products.  If current levels of market disruption and volatility continue or
worsen or access to governmental liquidity programs decreases, funding could
be unavailable or insufficient.  Additionally, under current market conditions
customer confidence levels may result in declines in credit applications and
increases in delinquencies and default rates, which could materially impact
Credit's write-offs and provisions for credit losses.

    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.




    
                         Second Quarter 2009 Press Release
                               (millions of dollars)
                                     Unaudited
    

    
                        Three Months Ended         Six Months Ended
                             April 30                 April 30
                                         %                             %
                       2009    2008    Change   2009      2008       Change
    Net sales and
     revenues:
       Agricultural
        equipment net
        sales         $4,498  $4,700      -4   $7,759    $7,458        +4
       Commercial
        and consumer
        equipment net
        sales          1,089   1,424     -24    1,647     2,166       -24
       Construction
        and forestry
        net sales        600   1,345     -55    1,341     2,375       -44
    

    
              Total
               Net
               sales * 6,187   7,469     -17   10,747    11,999       -10
       Credit revenues   458     533     -14      931     1,083       -14
       Other revenues    103      95      +8      216       216
    

    
         Total net
          sales and
          revenues *  $6,748  $8,097     -17  $11,894   $13,298       -11
    

    
    Operating profit
     (loss): **
       Agricultural
        equipment       $635    $782     -19     $983    $1,114       -12
       Commercial and
        Consumer
         equipment        68     154     -56       10       162       -94
       Construction
        and forestry     (75)    166              (58)      283
       Credit             58     133     -56      111       265       -58
       Other                       3                4         7       -43
    

    
         Total operating
          profit *       686   1,238     -45    1,050     1,831       -43
    Interest, corporate
     expenses and
     income taxes       (214)   (475)    -55     (374)     (698)      -46
    

    Net income     $472    $763     -38     $676    $1,133       -40

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



    
     Net sales        $2,155  $3,062     -30   $3,972    $4,870       -18
     Operating
      Profit             $88    $383     -77     $166      $593       -72
    



    
    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 (loss) 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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