MOLINE, Ill. -- Net income attributable to Deere & Company was $547.5 million, or $1.28 per share, for the second quarter ended April 30, compared with $472.3 million, or $1.11 per share, for the same period last year.

Affecting second quarter results was a tax charge of $129.5 million, or $0.30 per share, due to the previously announced impact of the enactment of U.S. health-care legislation. Without this item, earnings for the quarter would have been $677.0 million, or $1.58 per share.

For the first six months of the year, net income attributable to Deere & Company was $790.7 million, or $1.85 per share, compared with $676.2 million, or $1.60 per share, last year. Six-month results also were affected by the tax charge.

Worldwide net sales and revenues increased 6 percent, to $7.131 billion, for the second quarter and were up 1 percent to $11.966 billion for six months. Net sales of the equipment operations were $6.548 billion for the quarter and $10.785 billion for six months, compared with $6.187 billion and $10.747 billion for the corresponding periods last year.

"We're proud of John Deere's strong results, reflecting a disciplined approach to cost and asset management and the solid execution by employees of our business model," said Samuel R. Allen, chairman and chief executive officer. "These actions are helping us extend our competitive advantage and fully capitalize on improving business conditions." Sales of large farm machinery, particularly in the United States and Canada, are making a significant impact on the company's performance, Allen noted, while construction and forestry shipments are rebounding from historic lows.

Summary of Operations

Net sales of the worldwide equipment operations increased 6 percent for the quarter and were essentially unchanged for six months compared with a year ago. Sales included a favorable currency-translation effect of 4 percent for the quarter and 5 percent for six months and price increases of 2 percent for both periods. Equipment net sales in the United States and Canada increased 4 percent for the quarter and declined 1 percent year to date. Outside the U.S. and Canada, net sales were up 9 percent for the quarter and 2 percent for six months, with favorable currency-translation effects of 9 percent and 10 percent for these periods.

Deere's equipment operations reported operating profit of $988 million for the quarter and $1.303 billion for six months, compared with $628 million and $935 million last year.

Results were higher in the quarter primarily due to improved price realization, the impact of higher production volumes, the favorable effects of foreign exchange and lower raw-material costs, partially offset by higher postretirement benefit costs. Six-month results were higher due to lower raw-material costs, improved price realization and the favorable effects of foreign exchange, partially offset by higher postretirement benefit costs and the impact of lower shipment and production volumes.

Net income of the company's equipment operations was $454 million for the quarter and $623 million for six months, compared with $406 million and $560 million for the respective periods last year. The same operating factors mentioned above, along with a higher effective tax rate, affected both quarterly and six-month results. The higher tax rate was mainly due to the tax charge associated with the enactment of U.S. health-care legislation.

Company Outlook & Summary

Company equipment sales are projected to be up 11 to 13 percent for fiscal 2010 and up 21 to 23 percent for the third quarter compared with the same periods a year ago. Included is a favorable currency-translation impact of about 3 percent for the year and about 2 percent for the quarter. For the full year, net income attributable to Deere & Company is anticipated to be approximately $1.6 billion. This amount includes the tax charge of approximately $130 million related to U.S. health-care legislation.

According to Allen, a consistent investment in advanced new products and expanded global capacity is helping the company benefit from an improving economy and puts it on a strong footing for the future. "In our view, John Deere is exceptionally well-positioned to help meet the world's increasing need for farm commodities and other renewable resources as well as for shelter and infrastructure," Allen said. "We're confident these developments hold sustainable promise, which supported by our advanced new products, technologies and well-regarded distribution channel, should continue delivering value to our customers, investors and other stakeholders."

Market Conditions & Outlook

Agriculture & Turf. Worldwide sales of the company's agriculture and turf division are forecast to increase by 9 to 11 percent for full-year 2010, with a favorable currency-translation impact of about 3 percent. Deere's sales are benefiting in particular from strong demand for large tractors and combines.

With support from healthy farm cash receipts, solid commodity prices and low interest rates, industry farm-machinery sales in the United States and Canada now are forecast to be up 5 to 10 percent for the year. In other parts of the world, industry sales in Western Europe are forecast to decline 10 to 15 percent for the year due to general weakness in the livestock, dairy and grain sectors. High levels of used equipment also are weighing on Western European markets. Sales in Central Europe and the Commonwealth of Independent States are expected to remain under pressure as a result of challenging economic conditions. In South America, industry sales are projected to increase by about 25 percent due mainly to improvement in the key Brazilian and Argentinean markets. Conditions in Brazil are receiving support from favorable prices for soybeans and sugarcane and from attractive government-supported financing. The farm economy in Argentina is benefiting from commodity prices and a return to more normal weather conditions.

SOURCE: Deere.