What was the primary driver for the significant increase in net income in the third quarter?

The primary driver for the significant increase in net income was the favorable customer response to new products, especially in Europe, coupled with a strong emphasis on expense and asset control. This led to a substantial increase in overseas agricultural equipment sales and improved operating profit in the Equipment Operations segment.

How did the performance of different business segments compare?

The Agricultural Equipment segment saw strong operating profit growth, largely due to overseas sales. The Commercial and Consumer Equipment segment also improved operating profit, benefiting from higher sales and the absence of losses from divested businesses. However, the Construction and Forestry segment experienced operating losses. The Credit Operations segment showed improved profitability.

What is the company's outlook for the agricultural equipment market, particularly in North America?

The company's outlook for the North American agricultural equipment market is cautious. While rising farm commodity prices and new legislation are supportive factors, dry weather is hampering current sales. The company forecasts industry retail sales in the U.S. and Canada to be flat to down 5% for the year. However, Western Europe's market is expected to grow by 5%.

Are there any significant non-operational factors impacting the company's financial results?

Yes, several non-operational factors are impacting results. These include costs associated with closing a factory, investments in the Nortrax venture, higher postretirement benefit costs, and compensation paid to the credit operations for financing dealer receivables. Additionally, the company anticipates recording a significant minimum pension liability adjustment in the fourth quarter due to declining equity markets.

DE 10-Q Quarterly Report Q3 FY2002 — Revenue, Net Income, EPS

Summary

Deere & Company reported a significant profit increase for the third quarter of fiscal year 2002, with net income more than doubling to $147.6 million ($0.61 per share) compared to $71.8 million ($0.30 per share) in the prior year. This strong performance was driven by a favorable customer response to new products, particularly in Europe, and a continued focus on expense and asset management. Despite challenging market conditions in North America for agricultural and construction equipment, worldwide net sales and revenues increased to $3,969 million for the quarter, up from $3,618 million in the previous year. For the first nine months of fiscal 2002, net income was slightly lower year-over-year at $251.2 million ($1.04 per share) versus $256.1 million ($1.08 per share) in 2001. This was impacted by first-quarter production cutbacks, manufacturing inefficiencies, and various charges. However, the Equipment Operations segment showed substantial improvement in operating profit for the quarter, largely due to increased overseas agricultural equipment sales, improved pricing, and the elimination of losses from divested consumer products. The company anticipates that favorable factors such as rising commodity prices and new legislation will support a recovery in the U.S. farm economy in the near future.

Key Highlights

1Third quarter net income more than doubled to $147.6 million ($0.61/share) from $71.8 million ($0.30/share) in the prior year.
2Worldwide net sales and revenues for the third quarter increased to $3,969 million from $3,618 million year-over-year.
3Overseas sales of agricultural equipment, especially in Europe, were a key driver of revenue growth, increasing 41% for the quarter.
4Equipment Operations reported a significant rebound in operating profit for the quarter, reaching $247 million compared to $128 million in the prior year.
5The company is experiencing a favorable customer response to new products, particularly in Europe.
6Despite overall profit improvement, North American sales for farm machinery and construction/forestry equipment remain challenged.
7The company's credit operations showed increased profitability, with operating profit rising to $88 million for the quarter from $64 million in the prior year.

DEERE & CO Quarterly Report for Q3 Ended Sep 10, 2002

Summary

Key Highlights

Frequently Asked Questions