August 23, 1999

Deere & Co. reports a drop in earnings

MOLINE, Ill. (AP) -- Farm and construction equipment maker Deere & Co. reported a 76 percent drop in third-quarter earnings Tuesday as depressed commodity prices continued to hold down demand for tractors and combines.

For the three months ended July 31, net income totaled $68.9 million, or 29 cents a share, compared to $290.8 million, or $1.19 a share, during the same period a year ago.

The earnings still exceeded Wall Street expectations of 25 cents a share, according to a survey of analysts by First Call/Thomson Financial.

Revenue fell 18 percent during the period to $3.03 billion from $3.69 billion during the same period in 1998.

Moline-based Deere reported that worldwide demand for agricultural equipment continued to decline because of depressed grain and oilseed prices. Adding to the decline in sales are drought conditions in parts of the United States and the uncertain prospects of additional government financial assistance to farmers.

Deere reports it expects retail demand for farm equipment will now decline by 30 percent to 35 percent in North America this year from last year's levels. The company had previously estimated that sales would decline by 18 percent to 20 percent.

As a result the company is cutting back production at its agricultural-equipment plants to reduce inventories. Deere also announced plans to initiate a voluntary early retirement program that it estimated will cost up to $80 million in the fourth quarter.

The company is estimating that North American retail demand for farm machinery next year will be 5 percent to 10 percent lower than in 1999.