SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
___________________
FORM 10-Q
___________________
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 30, 1996
______________________________
Commission file no: 1-4121
______________________________
DEERE & COMPANY
Delaware 36-2382580
(State of incorporation) (IRS employer identification no.)
John Deere Road
Moline, Illinois 61265
(Address of principal executive offices)
Telephone Number: (309) 765-8000
______________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the
preceding 12 months (or for such shorter period
that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
At April 30, 1996, 260,860,535 shares of common stock, $1 par value,
of the
registrant were outstanding.
________________________________________________________________________
Page 1 of 24 Pages.
Index to Exhibits: Page 21.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
Three Months Ended April 30 Consolidated Subsidiaries)
Millions of dollars except per share amounts Three Months Ended April 30
(Unaudited) 1996 1995
Net Sales and Revenues
Net sales of equipment $2,699.7 $2,452.9
Finance and interest income 185.1 160.0
Insurance and health care premiums 162.3 152.4
Investment income 17.7 23.2
Other income 23.9 23.2
Total 3,088.7 2,811.7
Costs and Expenses
Cost of goods sold 2,045.0 1,862.9
Research and development expenses 97.1 82.3
Selling, administrative and general expenses 282.3 254.4
Interest expense 103.4 102.6
Insurance and health care claims and benefits 125.3 118.0
Other operating expenses 10.1 20.6
Total 2,663.2 2,440.8
Income of Consolidated Group Before Income Taxes 425.5 370.9
Provision for income taxes 155.8 136.9
Income of Consolidated Group 269.7 234.0
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit
Insurance
Health care
Other 3.0 3.0
Total 3.0 3.0
Net Income $ 272.7 $ 237.0
Net income per share, primary and fully diluted $ 1.04 $ .92
See Notes to Interim Financial Statements.
Supplemental consolidating data are shown for
the "Equipment Operations" and "Financial Services".
Transactions between the "Equipment
Operations" and "Financial Services" have been eliminated to
arrive at the "Consolidated" data.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATED INCOME (Deere & Company with
Financial
Three Months Ended April 30 Services on the Equity Basis)
Millions of dollars except per share amounts Three Months Ended April 30
(Unaudited) 1996 1995
Net Sales and Revenues
Net sales of equipment $2,699.7 $2,452.9
Finance and interest income 27.5 21.9
Insurance and health care premiums
Investment income
Other income 1.8 5.8
Total 2,729.0 2,480.6
Costs and Expenses
Cost of goods sold 2,051.0 1,867.6
Research and development expenses 97.1 82.3
Selling, administrative and general expenses 201.9 181.3
Interest expense 31.5 34.8
Insurance and health care claims and benefits
Other operating expenses 2.4 10.5
Total 2,383.9 2,176.5
Income of Consolidated Group Before Income Taxes 345.1 304.1
Provision for income taxes 127.8 112.5
Income of Consolidated Group 217.3 191.6
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit 40.0 34.4
Insurance 8.7 4.2
Health care 3.7 3.8
Other 3.0 3.0
Total 55.4 45.4
Net Income $ 272.7 $ 237.0
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
Three Months Ended April 30
Millions of dollars except per share amounts Three Months Ended April 30
(Unaudited) 1996 1995
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 160.2 $ 139.7
Insurance and health care premiums 171.2 163.8
Investment income 17.7 23.2
Other income 22.1 18.2
Total 371.2 344.9
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general expenses 82.4 75.8
Interest expense 74.2 69.4
Insurance and health care claims and benefits 126.6 122.8
Other operating expenses 7.6 10.2
Total 290.8 278.2
Income of Consolidated Group Before Income Taxes 80.4 66.7
Provision for income taxes 28.0 24.3
Income of Consolidated Group 52.4 42.4
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit
Insurance
Health care
Other
Total
Net Income $ 52.4 $ 42.4
<PAGE>
DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
Six Months Ended April 30 Consolidated Subsidiaries)
Millions of dollars except per share amounts Six Months Ended April 30
(Unaudited) 1996 1995
Net Sales and Revenues
Net sales of equipment $ 4,636.4 $4,183.4
Finance and interest income 365.3 313.6
Insurance and health care premiums 325.7 314.2
Investment income 34.2 49.0
Other income 44.6 39.0
Total 5,406.2 4,899.2
Costs and Expenses
Cost of goods sold 3,546.2 3,212.6
Research and development expenses 177.1 149.3
Selling, administrative and general expenses 520.7 476.0
Interest expense 202.2 190.9
Insurance and health care claims and benefits 252.6 246.5
Other operating expenses 23.6 31.6
Total 4,722.4 4,306.9
Income of Consolidated Group Before Income Taxes 683.8 592.3
Provision for income taxes 249.3 220.4
Income of Consolidated Group 434.5 371.9
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit
Insurance .7
Health care
Other 4.4 2.9
Total 4.4 3.6
Net Income $ 438.9 $ 375.5
Net income per share, primary and fully diluted $ 1.67 $ 1.45
<PAGE>
See Notes to Interim Financial Statements.
Supplemental consolidating data are shown for
the "Equipment Operations" and "Financial Services".
Transactions between the "Equipment
Operations" and "Financial Services" have been eliminated to arrive
at the "Consolidated"
data.
<PAGE>
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATED INCOME (Deere & Company with
Financial
Six Months Ended April 30 Services on the Equity Basis)
Millions of dollars except per share amounts Six Months Ended April 30
(Unaudited) 1996 1995
Net Sales and Revenues
Net sales of equipment $ 4,636.4 $4,183.4
Finance and interest income 58.0 45.7
Insurance and health care premiums
Investment income
Other income 7.5 11.9
Total 4,701.9 4,241.0
Costs and Expenses
Cost of goods sold 3,558.7 3,220.8
Research and development expenses 177.1 149.3
Selling, administrative and general expenses 369.4 335.8
Interest expense 58.5 62.5
Insurance and health care claims and benefits
Other operating expenses 9.3 16.3
Total 4,173.0 3,784.7
Income of Consolidated Group Before Income Taxes 528.9 456.3
Provision for income taxes 195.5 168.9
Income of Consolidated Group 333.4 287.4
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit 74.5 64.1
Insurance 18.2 12.4
Health care 8.4 8.7
Other 4.4 2.9
Total 105.5 88.1
Net Income $ 438.9 $ 375.5
<PAGE>
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
Six Months Ended April 30
Millions of dollars except per share amounts Six Months Ended April 30
(Unaudited) 1996 1995
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 311.6 $ 270.9
Insurance and health care premiums 344.6 335.5
Investment income 34.2 49.0
Other income 38.4 28.7
Total 728.8 684.1
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general expenses 157.7 146.3
Interest expense 147.6 131.4
Insurance and health care claims and benefits 254.4 255.0
Other operating expenses 14.2 15.4
Total 573.9 548.1
Income of Consolidated Group Before Income Taxes 154.9 136.0
Provision for income taxes 53.8 51.5
Income of Consolidated Group 101.1 84.5
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit
Insurance .7
Health care
Other
Total .7
Net Income $ 101.1 $ 85.2
<PAGE>
DEERE & COMPANY CONSOLIDATED
CONDENSED CONSOLIDATED BALANCE SHEET (Deere & Company and
Consolidated Subsidiaries)
Millions of dollars except per share amount April 30 October 31 April 30
(Unaudited) 1996 1995 1995
Assets
Cash and short-term investments $ 278.1 $ 363.7 $ 520.8
Cash deposited with unconsolidated subsidiaries
Cash and cash equivalents 278.1 363.7 520.8
Marketable securities 850.1 829.7 1,135.1
Receivables from unconsolidated
subsidiaries and affiliates 8.8 2.3 3.0
Dealer accounts and notes receivable - net 3,830.7 3,259.7 3,588.5
Credit receivables - net 5,308.1 5,345.2 4,286.2
Other receivables 504.6 492.4 506.3
Equipment on operating leases - net 320.5 258.8 234.1
Inventories 1,066.7 720.8 996.3
Property and equipment - net 1,281.9 1,335.6 1,292.6
Investments in unconsolidated subsidiaries
and affiliates 174.4 115.2 154.2
Intangible assets - net 321.3 305.0 280.3
Deferred income taxes 631.4 639.8 679.8
Other assets and deferred charges 177.7 179.2 214.2
Total $14,754.3 $13,847.4 $13,891.4
Liabilities and Stockholders' Equity
Short-term borrowings $ 3,619.9 $ 3,139.8 $ 3,006.9
Payables to unconsolidated subsidiaries
and affiliates 32.3 27.5 30.8
Accounts payable and accrued expenses 2,528.1 2,533.0 2,395.4
Insurance and health care claims and reserves 451.4 470.3 783.9
Accrued taxes 101.7 72.8 143.9
Deferred income taxes 16.3 15.6 14.1
Long-term borrowings 2,311.8 2,175.8 2,341.4
Retirement benefit accruals and other
liabilities 2,349.9 2,327.2 2,318.1
Total liabilities 11,411.4 10,762.0 11,034.5
<PAGE>
Common stock, $1 par value (issued shares
at April 30, 1996 - 263,832,368) 1,757.3 1,728.7 1,502.6
Retained earnings 2,024.5 1,690.3 1,634.6
Minimum pension liability adjustment (300.4) (300.4) (248.4)
Cumulative translation adjustment (19.6) (11.6) (8.0)
Unrealized gain (loss) on marketable
securities 12.3 3.6 (1.5)
Unamortized restricted stock compensation (11.3) (12.1) (10.1)
Common stock in treasury, at cost (119.9) (13.1) (12.3)
Total stockholders' equity 3,342.9 3,085.4 2,856.9
Total $14,754.3 13,847.4 $13,891.4
See Notes to Interim Financial Statements.
Supplemental consolidating data are shown for
the "Equipment Operations" and "Financial Services".
Transactions between the "Equipment
Operations" and "Financial Services" have been eliminated to
arrive at the "Consolidated"
data.
<PAGE>
DEERE & COMPANY EQUIPMENT OPERATIONS
CONDENSED CONSOLIDATED BALANCE SHEET (Deere & Company with
Financial
Services on the Equity Basis)
Millions of dollars except per share amount April 30 October 31 April 30
(Unaudited) 1996 1995 1995
Assets
Cash and short-term investments $ 77.1 $ 71.0 $ 101.6
Cash deposited with unconsolidated subsidiaries
Cash and cash equivalents 460.1 328.4
Marketable securities 77.1 531.1 430.0
Receivables from unconsolidated
subsidiaries and affiliates 88.5 55.5 82.2
Dealer accounts and notes receivable - net 3,830.7 3,259.7 3,588.5
Credit receivables - net 97.9 118.3 107.3
Other receivables 7.3 3.2
Equipment on operating leases - net 121.1 119.3 106.0
Inventories 1,066.7 720.8 996.3
Property and equipment - net 1,233.6 1,295.0 1,256.7
Investments in unconsolidated subsidiaries
and affiliates 1,450.0 1,378.4 1,343.7
Intangible assets - net 312.2 295.4 264.9
Deferred income taxes 576.8 578.9 619.4
Other assets and deferred charges 110.6 108.5 115.8
Total $8,972.5 $8,464.1 $8,910.8
Liabilities and Stockholders' Equity
Short-term borrowings $ 652.5 $ 395.7 $ 872.6
Payables to unconsolidated subsidiaries
and affiliates 57.3 27.5 31.4
Accounts payable and accrued expenses 1,786.6 1,859.9 1,679.9
Insurance and health care claims and reserves
Accrued taxes 98.8 72.4 143.4
Deferred income taxes 16.3 15.6 14.1
Long-term borrowings 691.2 702.9 1,017.7
Retirement benefit accruals and other
liabilities 2,326.9 2,304.7 2,294.8
Total liabilities 5,629.6 5,378.7 6,053.9
<PAGE>
Common stock, $1 par value (issued shares
at April 30, 1996 - 263,832,368) 1,757.3 1,728.7 1,502.6
Retained earnings 2,024.5 1,690.3 1,634.6
Minimum pension liability adjustment (300.4) (300.4) (248.4)
Cumulative translation adjustment (19.6) (11.6) (8.0)
Unrealized gain (loss) on marketable securities 12.3 3.6 (1.5)
Unamortized restricted stock compensation (11.3) (12.1) (10.1)
Common stock in treasury, at cost (119.9) (13.1) (12.3)
Total stockholders' equity 3,342.9 3,085.4 2,856.9
Total $8,972.5 $8,464.1 $8,910.8
<PAGE>
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED CONSOLIDATED BALANCE SHEET
Millions of dollars except per share amount April 30 October 31 April 30
(Unaudited) 1996 1995 1995
Assets
Cash and short-term investments $ 201.0 $ 292.7 $ 419.2
Cash deposited with unconsolidated subsidiaries
Cash and cash equivalents 201.0 292.7 419.2
Marketable securities 850.1 829.7 1,135.1
Receivables from unconsolidated
subsidiaries and affiliates 25.0 .6
Dealer accounts and notes receivable - net
Credit receivables - net 5,210.3 5,226.9 4,178.9
Other receivables 498.3 490.2 507.3
Equipment on operating leases - net 199.4 139.5 128.1
Inventories
Property and equipment - net 48.2 40.6 35.9
Investments in unconsolidated subsidiaries
and affiliates 53.2
Intangible assets - net 9.1 9.6 15.4
Deferred income taxes 54.5 61.0 60.5
Other assets and deferred charges 67.4 70.6 98.4
Total $7,163.3 $7,160.8 $6,632.6
Liabilities and Stockholders' Equity
Short-term borrowings $2,967.3 $2,744.1 $2,134.3
Payables to unconsolidated subsidiaries
and affiliates 79.8 513.3 407.6
Accounts payable and accrued expenses 742.5 674.1 716.6
Insurance and health care claims and reserves 451.4 470.3 783.9
Accrued taxes 2.9 .3 .5
Deferred income taxes
Long-term borrowings 1,620.6 1,472.9 1,323.7
Retirement benefit accruals and other
liabilities 23.2 22.6 23.3
Total liabilities 5,887.7 5,897.6 5,389.9
<PAGE>
Common stock, $1 par value (issued shares
at April 30, 1996 - 263,832,368) 209.4 209.4 209.4
Retained earnings 1,057.5 1,054.3 1,038.2
Minimum pension liability adjustment
Cumulative translation adjustment (3.6) (4.1) (3.4)
Unrealized gain (loss) on marketable
securities 12.3 3.6 (1.5)
Unamortized restricted stock compensation
Common stock in treasury, at cost
Total stockholders' equity 1,275.6 1,263.2 1,242.7
Total $7,163.3 $7,160.8 $6,632.6
<PAGE>
DEERE & COMPANY CONSOLIDATED
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS (Deere & Company
Six Months Ended April 30 Consolidated Subsidiaries)
Six Months Ended April 30
Millions of dollars (Unaudited) 1996 1995
Cash Flows from Operating Activities
Net income $ 438.9 $ 375.5
Adjustments to reconcile net income to net cash
provided by (used for) operating activities (787.6) (739.5)
Net cash provided by (used for) operating
activities (348.7) (364.0)
Cash Flows from Investing Activities
Collections and sales of credit receivables 2,788.5 2,454.3
Proceeds from maturities and sales of marketable
securities 61.3 68.3
Cost of credit receivables acquired (2,756.0) (2,307.5)
Purchases of marketable securities (68.2) (74.6)
Purchases of property and equipment (101.5) (82.5)
Cost of operating leases acquired (128.1) (63.1)
Acquisitions of businesses (39.5)
Other 77.5 76.5
Net cash provided by (used for)
investing activities (166.0) 71.4
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings 600.0 797.5
Change in intercompany receivables/payables
Proceeds from long-term borrowings 175.0 405.0
Principal payments on long-term borrowings (156.8) (546.3)
Proceeds from issuance of common stock 29.4 9.6
Repurchases of common stock (112.1) (3.1)
Dividends paid (104.9) (95.1)
Other (.1) (1.8)
Net cash provided by (used for)
financing activities 430.5 565.8
Effect of Exchange Rate Changes on Cash (1.4) 2.2
Net Increase (Decrease) in Cash and Cash Equivalents (85.6) 275.4
Cash and Cash Equivalents at Beginning of Period 363.7 245.4
Cash and Cash Equivalents at End of Period $ 278.1 $ 520.8
See Notes to Interim Financial Statements.
Supplemental consolidating data are shown for
the "Equipment Operations" and "Financial Services".
Transactions between the "Equipment
operations" and "Financial Services" have been eliminated
to arrive at the "Consolidated"
data.
<PAGE>
DEERE & COMPANY EQUIPMENT OPERATIONS
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS (Deere & Company with Financial
Six Months Ended April 30 Services on the Equity Basis)
Six Months Ended April 30
Millions of dollars (Unaudited) 1996 1995
Cash Flows from Operating Activities
Net income $ 438.9 $ 375.5
Adjustments to reconcile net income to net cash
provided by (used for) operating activities (799.8) (810.6)
Net cash provided by (used for) operating
activities (360.9) (435.1)
Cash Flows from Investing Activities
Collections and sales of credit receivables 30.3 26.0
Proceeds from maturities and sales of marketable securities
Cost of credit receivables acquired (10.3) (17.4)
Purchases of marketable securities
Purchases of property and equipment (89.9) (75.7)
Cost of operating leases acquired (22.2) (38.7)
Acquisitions of businesses (39.5)
Other (20.7) 31.2
Net cash provided by (used for) investing
activities (152.3) (74.6)
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings 283.7 817.6
Change in intercompany receivables/payables (1.6) 109.4
Proceeds from long-term borrowings
Principal payments on long-term borrowings (33.8) (3.1)
Proceeds from issuance of common stock 29.4 9.6
Repurchases of common stock (112.1) (3.1)
Dividends paid (104.9) (95.1)
Other (.1) (1.8)
Net cash provided by (used for) financing
activities 60.6 833.5
Effect of Exchange Rate Changes on Cash (1.4) 2.2
Net Increase (Decrease) in Cash and Cash Equivalents (454.0) 326.0
Cash and Cash Equivalents at Beginning of Period 531.1 104.0
Cash and Cash Equivalents at End of Period $ 77.1 $ 430.0
<PAGE>
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
Six Months Ended April 30
Six Months Ended April 30
Millions of dollars (Unaudited) 1996 1995
Cash Flows from Operating Activities
Net income $ 101.1 $ 85.2
Adjustments to reconcile net income to net cash
provided by (used for) operating activities 9.0 13.2
Net cash provided by (used for) operating
activities 110.1 98.4
Cash Flows from Investing Activities
Collections and sales of credit receivables 2,758.2 2,428.3
Proceeds from maturities and sales of marketable
securities 61.3 68.3
Cost of credit receivables acquired (2,745.7) (2,290.1)
Purchases of marketable securities (68.2) (74.6)
Purchases of property and equipment (11.6) (6.8)
Cost of operating leases acquired (105.9) (24.4)
Acquisitions of businesses
Other 98.1 45.3
Net cash provided by (used for)
investing activities (13.8) 146.0
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings 316.4 (20.1)
Change in intercompany receivables/payables (458.5) 219.1
Proceeds from long-term borrowings 175.0 405.0
Principal payments on long-term borrowings (123.0) (543.3)
Proceeds from issuance of common stock
Repurchases of common stock
Dividends paid (97.9) (27.3)
Other
Net cash provided by (used for)
financing activities (188.0) 33.4
Effect of Exchange Rate Changes on Cash
Net Increase (Decrease) in Cash and Cash Equivalents (91.7) 277.8
Cash and Cash Equivalents at Beginning of Period 292.7 141.4
Cash and Cash Equivalents at End of Period $ 201.0 $ 419.2
<PAGE>
Notes to Interim Financial Statements
(1) The consolidated financial statements of Deere & Company and
consolidated subsidiaries have been prepared by the Company,
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as
permitted by such rules and regulations. All adjustments,
consisting of normal recurring adjustments, have been
included. Management believes that the disclosures are
adequate to present fairly the financial position, results
of operations and cash flows at the dates and for the
periods presented. It is suggested that these interim
financial statements be read in conjunction with the
financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K. Results for
interim periods are not necessarily indicative of those to
be expected for the fiscal year.
(2) The Company's consolidated financial statements and some
information in the notes and related commentary are
presented in a format which includes data grouped as
follows:
Equipment Operations - These data include the Company's
agricultural equipment, industrial equipment and lawn and
grounds care equipment operations with Financial Services
reflected on the equity basis. Data relating to the above
equipment operations, including the consolidated group data
in the income statement, are also referred to as "Equipment
Operations" in this report.
Financial Services - These data include the Company's
credit, insurance and health care operations.
Consolidated - These data represent the consolidation of the
Equipment Operations and Financial Services in conformity
with Financial Accounting Standards Board (FASB) Statement
No. 94. References to "Deere & Company" or "the Company"
refer to the entire enterprise.
(3) An analysis of the Company's retained earnings follows in
millions of dollars:
Three Months Six Months
Ended Ended
April 30 April 30
1996 1995 1996 1995
Balance, beginning
of period........ $1,804.2 $1,444.9 $1,690.3 $1,353.9
Net income......... 272.7 237.0 438.9 375.5
Dividends declared. (52.4) (47.3) (104.7) (94.8)
Balance, end of
period........... $2,024.5 $1,634.6 $2,024.5 $1,634.6
(4) An analysis of the cumulative translation adjustment in
millions of dollars follows:
Three Months Six Months
Ended Ended
April 30 April 30
1996 1995 1996 1995
Balance, beginning
of period................ $(23.5) $(33.9) $(11.6) $(17.9)
Translation adjustments.... 4.3 26.4 (7.1) 10.4
Income taxes applicable to
translation adjustments.. (.4) (.5) (.9) (.5)
Balance, end of period..... $(19.6) $ (8.0) $(19.6) $ (8.0)
(5) Substantially all inventories owned by Deere & Company and its
United States equipment subsidiaries are valued at cost on the
"last-in, first-out" (LIFO) method. If all of the Company's
inventories had been valued on a "first-in, first-out" (FIFO)
method, estimated inventories by major classification in
millions of dollars would have been as follows:
April 30 October 31 April 30
1996 1995 1995
Raw materials and
supplies................ $ 222 $ 223 $ 229
Work-in-process........... 425 343 446
Finished machines and
parts................... 1,382 1,100 1,284
Total FIFO value.......... 2,029 1,666 1,959
Adjustment to LIFO
basis................... 962 945 963
Inventories............... $1,067 $ 721 $ 996
(6) During the first six months of 1996, the Financial Services
subsidiaries and the Equipment Operations received proceeds from
the sale of retail notes of $610 million. At April 30, 1996, the
net unpaid balance of all retail notes previously sold by the
Financial Services subsidiaries and the Equipment Operations was
$1,319 million. At April 30, 1996, the Company's maximum
exposure under all credit receivable recourse provisions was
$194 million for all retail notes sold.
Certain foreign subsidiaries have pledged assets with a
balance sheet value of $33 million as collateral for bank
borrowings as of April 30, 1996.
At April 30, 1996, the Company had commitments of approximately
$66 million for construction and acquisition of property and
equipment.
<PAGE>
(7) Worldwide net sales and revenues and operating profit in millions
of dollars follow:
Three Months Ended Six Months Ended
April 30 April 30
% %
1996 1995 Change 1996 1995 Change
Net sales:
Agricultural equipment..... $1,639 $1,434 +14 $2,825 $2,456 +15
Industrial equipment....... 515 500 + 3 958 908 + 6
Lawn and grounds care
equipment................ 546 519 + 5 853 819 + 4
Total net sales........ 2,700 2,453 +10 4,636 4,183 +11
Financial Services revenues.. 360 332 + 8 708 662 + 7
Other revenues............... 28 26 + 8 62 54 +15
Total net sales and
revenues............. $3,088 $2,811 +10 $5,406 $4,899 +10
United States and Canada:
Equipment net sales........ $1,962 $1,882 + 4 $3,358 $3,207 + 5
Financial Services
revenues................. 360 332 + 8 708 662 + 7
Total.................. 2,322 2,214 + 5 4,066 3,869 + 5
Overseas net sales........... 738 571 +29 1,278 976 +31
Other revenues............... 28 26 + 8 62 54 +15
Total net sales and
revenues............. $3,088 $2,811 +10 $5,406 $4,899 +10
Operating profit:
Agricultural equipment..... $ 255 $ 237 + 8 $ 403 $ 352 +14
Industrial equipment....... 48 55 -13 100 100
Lawn and grounds care
equipment................ 81 64 +27 102 92 +11
Financial Services*........ 80 67 +19 155 137 +13
Total operating profit. 464 423 +10 760 681 +12
Interest and corporate
expenses-net............... (35) (49) -29 (72) (86) -16
Income taxes................. (156) (137) +14 (249) (220) +13
Net income............. $ 273 $ 237 +15 $ 439 $ 375 +17
* Operating profit of Financial Services includes the effect of
interest expense.<PAGE>
(8) Dividends declared and paid on a per share
basis were as follows:
Three Months Six Months
Ended Ended
April 30 April 30
1996 1995 1996 1995
Dividends declared... $.20 $.18-1/3 $.40 $.36-2/3
Dividends paid....... $.20 $.18-1/3 $.40 $.36-2/3
(9) The calculation of primary net income per share is based on
the average number of shares outstanding during the six
months ended April 30, 1996 and 1995 of 262,199,000 and
259,515,000, respectively. The calculation of fully diluted
net income per share recognizes the dilutive effect of the
assumed exercise of stock options, stock appreciation rights
and conversion of convertible debentures. The effect of the
fully diluted calculation was immaterial.
(10) The Company is subject to various unresolved legal actions
which arise in the normal course of its business, the most
prevalent of which relate to product liability and retail
credit matters. Although it is not possible to predict with
certainty the outcome of these unresolved legal actions or
the range of possible loss, the Company believes these
unresolved legal actions will not have a material effect on
its financial position or results of operations.
(11) During the second quarter of 1993, the Company initiated
plans to downsize and rationalize its European operations.
This resulted in a restructuring charge of $80 million after
income taxes or $.34 per share ($107 million before income
taxes). The charge mainly represented the cost of
employment reductions to be implemented during 1993 and the
next few years. As of April 30, 1996, the expected
employment reductions and the disbursement of the $107
million accrual were both approximately 90 percent complete.
(12) During November 1995, in concurrence with the adoption of "A
Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities -
Questions and Answers," the Company transferred all its
held-to-maturity debt securities to the available-for-sale
category. Held-to-maturity debt securities are carried at
amortized cost. Available-for-sale securities are carried
at fair value with unrealized gains and losses after income
taxes shown as a separate component of stockholders' equity.
The amortized cost of these debt securities at the time of
transfer was $484 million and the unrealized gain was $29
million ($19 million after income taxes). Although the
Company's intention to hold a majority of its debt
securities to maturity has not changed, the transfer was
made to increase flexibility in responding to future changes
in investment needs.
(13) In the first quarter of 1996, Deere & Company purchased 40
percent of Sunstate Equipment Company, which is a regional
rental equipment company based in Phoenix, Arizona. Deere &
Company also made an additional investment in its
unconsolidated affiliate in Brazil.
(14) On February 28, 1996, the stockholders approved an amendment
to the 1991 John Deere Stock Option Plan which extends the
period for grants to eligible employees under the stock
option plan to December 31, 2000 and increased by 10,500,000
the number of shares for which stock options and stock
appreciation rights may be granted under this plan. At
April 30, 1996, 16,222,143 shares remained available for
award under the stock option plan. The stockholders also
approved an amendment to the 1989 John Deere Restricted
Stock Plan, which extends the period for grants under this
restricted stock plan for up to an additional 10 years by
extending the allowable ending date for restriction periods
to October 31, 2009.
(15) On February 28, 1996, the Company announced its intention to
repurchase up to $500 million of Deere & Company common
stock. At the Company's discretion, repurchases of common
stock will be made from time to time in the open market and
through privately negotiated transactions. The purpose of
the stock repurchase program is to enhance shareholder
value. During the first six months of 1996, the Company
repurchased $75 million of common stock related to this
program and $37 million of common stock for ongoing stock
option and restricted stock plans.
(16) On February 29, 1996, the Company announced that it will
build a new facility for the production of off-highway
diesel engines in Torreon, State of Coahuila, Mexico. The
factory is being built to expand production capacity for the
Company's 300-series diesel engines to meet future growth
opportunities. The size of the new facility is estimated to
be approximately 400,000 to 500,000 square feet.
Construction began in April 1996 and initial engine
production is scheduled for late 1997.
(17) On April 23, 1996, the Company announced a $187 million
future sale of agricultural equipment to the Ukraine. The
deal includes the sale of 1,049 self-propelled combines and
related parts and attachments to assist in improving the
country's grain production and export earnings.
Approximately 60 percent of the combines are expected to be
delivered in 1996, and the balance early next year. The
Export-Import Bank of the United States is providing loan
guarantees to the Ukraine to support the transaction.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Deere & Company achieved record second quarter net income of
$272.7 million or $1.04 per share, an increase of 15 percent
compared with 1995 second quarter net income of $237.0 million or
$.92 per share. Year-to-date net income totaled $438.9 million
or $1.67 per share compared with $375.5 million or $1.45 per
share for the first six months of 1995. Both the quarterly and
six month earnings results represent new Company earnings
records, which reflect the continued strong retail demand in most
of the Company's major markets. Results of both the Equipment
and Financial Services Operations contributed to these record
earnings.
Worldwide net sales and revenues increased 10 percent to $3,088
million in the second quarter and increased 10 percent to $5,406
million for the first six months of 1996 compared with $2,811
million and $4,899 million, respectively, last year. Net sales
to dealers of agricultural, industrial and lawn and grounds care
equipment were $2,700 million in the second quarter and $4,636
million year-to-date this year compared with $2,453 million and
$4,183 million, respectively, last year. Export sales from the
United States continued to strengthen and totaled $723 million
for the first six months, a gain of 12 percent over last year's
export sales of $645 million. Additionally, third quarter export
sales will benefit from the recently announced sale of self-
propelled combines to the Ukraine. The first phase of the $187
million sale will be completed during the third quarter.
Overseas year-to-date net sales and physical volume of sales also
continued to increase, rising by 31 percent and 26 percent,
respectively, compared with a year ago. Overall, the Company's
worldwide physical volume of sales increased eight percent for
both the quarter and year-to-date compared with last year.
The Company's worldwide Equipment Operations, which exclude the
Financial Services subsidiaries and unconsolidated affiliates,
had income of $217.3 million in the second quarter and $333.4
million year-to-date in 1996 compared with $191.6 million and
$287.4 million, respectively, last year. Worldwide agricultural
and lawn and grounds care equipment operating profits were higher
compared with last year for both the quarter and year-to-date,
primarily due to increased production and sales volumes.
Worldwide industrial equipment operating profits were lower for
the quarter and were approximately the same on a year-to-date
basis compared with last year, reflecting higher engine
development expenses which offset the impact of higher production
and sales volumes. Overseas results continued to improve
significantly, reflecting higher production and sales volumes as
well as continued cost improvements and a favorable sales mix.
The ratio of cost of goods sold to net sales of the Equipment
Operations decreased from 76.1 percent in the second quarter of
1995 to 76.0 percent in the same period this year. During the
first six months of 1996, the ratio of cost of goods sold to net
sales was 76.8 percent compared with 77.0 percent in the first
half of last year. Operating profit is defined as income before
interest expense, foreign exchange gains and losses, income taxes
and certain corporate expenses, except for the operating profit
of the credit segment which includes the effect of interest
expense. Additional information on business segments is
presented in Note 7 to the interim financial statements.
Net income of the Company's credit operations was $40.0 million
in the second quarter of 1996 compared with $34.4 million in last
year's second quarter. For the first six months of 1996, net
income of these subsidiaries was $74.5 million compared with
$64.1 million last year. The increases in income resulted
primarily from a larger average receivable and lease portfolio
financed, partially offset by lower financing spreads. Total
revenues of the credit operations increased 15 percent from $158
million in the second quarter of 1995 to $182 million in the
current quarter and increased 16 percent in the first half from
$300 million last year to $348 million this year. The average
balance of receivables and leases financed was 20 percent higher
in the second quarter and 19 percent higher in the first six
months of 1996 compared with the same periods last year. The
resulting increase in average borrowings this year resulted in an
eight percent increase in interest expense in the current quarter
and a 13 percent increase in the first half of 1996 compared with
1995. The credit subsidiaries' consolidated ratio of earnings to
fixed charges was 1.83 to 1 for the second quarter this year
compared with 1.78 to 1 in 1995. This ratio was 1.78 to 1 for
the first six months this year compared with 1.76 to 1 in the
comparable period of 1995.
Net income from insurance operations was $8.7 million in the
second quarter of 1996 compared with $4.2 million last year. For
the first six months, net income from these operations was $18.2
million this year compared with $12.4 million in 1995. The
increases in income were due to improved underwriting results and
a lower effective tax rate this year. Additionally, last year's
results were affected by a small loss on the sale of the
division's life insurance subsidiary. These increases were
partially offset by lower investment income in 1996. For the
second quarter, insurance premiums increased one percent in 1996
compared with the same period last year, while total claims,
benefits, and selling, administrative and general expenses
decreased six percent this year. For the six month period,
insurance premiums increased three percent in 1996, while total
claims, benefits, and selling, administrative and general expense
decreased three percent compared with last year.
Net income from health care operations was $3.7 million in the
first quarter of 1996 compared with $3.8 million last year. In
the first six months, net income from these operations was $8.4
million this year compared with $8.7 million in 1995. Although
managed care membership grew by 15 percent from a year ago,
health care premiums and administrative services revenues
increased only eight percent in the second quarter and two
percent in the first six months of 1996 compared with the same
periods last year primarily due to a shift in types of coverages
being offered and lower overall price realization. Total claims,
benefits, and selling, administrative and general expenses
increased 10 percent in the second quarter and three percent in
the first six months this year compared to the same periods last
year.
Outlook
The improved level of both North American and overseas
agricultural equipment retail sales in the first six months of
1996 continues to provide a solid base for operations during the
remainder of the year. Growing worldwide demand for agricultural
commodities and last year's low harvest yields have resulted in
strong price levels for grains. World grain stocks, relative to
use, remain at very low levels. Additionally, passage of the new
'freedom to farm' bill has further improved the United States
farm outlook by establishing substantial transition payments to
participating farmers while dropping annual acreage reduction
programs. These favorable factors should result in continuing
high levels of confidence among farmers, despite marginal winter
wheat harvest yields in several areas, and continued relatively
low cattle prices. In Europe, the consolidation into fewer but
larger farms is expected to continue. This positive environment
is expected to result in strong retail demand for new and used
agricultural equipment.
North American demand for John Deere industrial equipment, lawn
and grounds care equipment, and financial services products also
remains good in 1996. Although late spring weather conditions
throughout the country have reduced the purchase of lawn and
grounds care equipment year-to-date, overall retail demand during
the remainder of the year is expected to improve, assuming
continued moderate economic growth and a return to more normal
weather conditions. Additionally, we expect demand for John
Deere products will benefit from the introduction of the
Company's new 'Sabre by John Deere' product line. The outlook
for industrial equipment also continues to be favorable,
primarily due to the high level of new housing starts.
In response to this outlook, the Company's worldwide physical
volume of sales to dealers is expected to increase by
approximately seven percent compared with 1995, in both the third
quarter and fiscal year.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Statements under the "Outlook" heading that
relate to future operating periods are subject to important risks
and uncertainties that could cause actual results to differ
materially. The Company's businesses include Equipment
Operations (agricultural, industrial and lawn and grounds care)
and Financial Services (credit, insurance and health care).
Forward-looking statements relating to these businesses involve
certain factors that are subject to change, including: the many
interrelated factors that affect farmers' confidence, including
worldwide demand for agricultural products, world grain stocks,
commodities prices, weather, animal diseases, crop pests, harvest
yields, real estate values and government farm programs; general
economic conditions and housing starts; legislation, primarily
legislation relating to agriculture, the environment, commerce
and infrastructure; actions of competitors in the various
industries in which the Company competes; production
difficulties, including capacity and supply constraints; labor
relations; interest and currency exchange rates; accounting
standards; and other risks and uncertainties. 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 filings with the
Securities and Exchange Commission.
CAPITAL RESOURCES AND LIQUIDITY
The discussion of capital resources and liquidity has been
organized to review separately, where appropriate, the Company's
Equipment Operations, Financial Services operations and the
consolidated totals.
Equipment Operations
The Company's equipment businesses are capital intensive and are
subject to large seasonal variations in financing requirements
for receivables from dealers and inventories. Accordingly, to
the extent necessary, funds provided from operations are
supplemented from external sources.
Negative cash flows from operating activities in the first six
months of 1996 resulted from the normal seasonal increases in
dealer receivables and Company-owned inventories, and annual
volume discount program payments made to dealers. Partially
offsetting these operating cash outflows were positive cash flows
from net income and dividends received from the Financial
Services operations. The resulting net cash requirement for
operating activities of $361 million, along with repurchases of
common stock, payment of dividends, purchases of property and
equipment and acquisitions of businesses were provided primarily
from a decrease in cash and cash equivalents and an increase in
borrowings.
In the first half of 1995, negative cash flows from operating
activities resulted from the normal seasonal increases in dealer
receivables and Company-owned inventories, and annual volume
discount program payments made to dealers. Partially offsetting
these operating cash outflows were positive cash flows from net
income and dividends received from the Financial Services
operations. The resulting net cash requirement for operating
activities of $435 million, along with cash required for
increases in cash and cash equivalents, payment of dividends and
purchases of property and equipment were provided primarily from
an increase in borrowings and a decrease in receivables from the
Financial Services operations.
Net dealer accounts and notes receivable, which largely represent
dealers' inventories financed by the Company, have increased $571
million since October 31, 1995 and $242 million from a year ago,
reflecting a normal seasonal increase, a higher level of retail
demand and higher dealer inventories of used equipment. The
ratios of these receivables to the last 12 months net sales were
41 percent at April 30, 1996, 37 percent at October 31, 1995 and
43 percent at April 30, 1995. North American agricultural
equipment and lawn and grounds care equipment dealer receivables
increased approximately $160 million and $80 million,
respectively, compared with the levels 12 months earlier, while
industrial equipment dealer receivables decreased approximately
$55 million compared to a year ago. Total overseas dealer
receivables were approximately $55 million higher than a year
ago. The percentage of total worldwide dealer receivables
outstanding for periods exceeding 12 months was eight percent at
April 30, 1996, eight percent at October 31, 1995 and
seven percent at April 30, 1995.
Company-owned inventories at April 30, 1996 have increased by
$346 million compared with the end of the previous fiscal year
and $70 million compared to one year ago, reflecting a normal
seasonal increase, increased sales and production volumes, and
current inventory associated with the future sale of combines to
the Ukraine.
Total interest-bearing debt of the Equipment Operations was
$1,344 million at April 30, 1996 compared with $1,099 million at
the end of fiscal year 1995 and $1,890 million at April 30, 1995.
The ratio of total debt to total capital (total interest-bearing
debt and stockholders' equity) was 29 percent, 26 percent and 40
percent at April 30, 1996, October 31, 1995 and April 30, 1995,
respectively.
Financial Services
The Financial Services' credit subsidiaries rely on their ability
to raise substantial amounts of funds to finance their receivable
and lease portfolios. Their primary sources of funds for this
purpose are a combination of borrowings and equity capital.
Additionally, the credit subsidiaries periodically sell
substantial amounts of retail notes. The insurance and health
care operations generate their funds through internal operations
and have no external borrowings.
During the first six months of 1996, $110 million of cash
provided from operating activities and $92 million of cash and
cash equivalents were used for financing and investing
activities. Cash used for financing activities totaled $188
million in 1996, representing a $458 million decrease in payables
to the Equipment Operations and payment of a $98 million dividend
to the Equipment Operations, partially offset by a $368 million
increase in outside borrowings. Investing activities used $14
million of cash in the first six months, primarily due to the
acquisitions of credit receivables and leases exceeding
collections by $704 million, which was partially offset by $610
million of proceeds from the sale of retail notes.
In the first six months of 1995, the aggregate cash provided from
operating, investing and financing activities increased cash and
cash equivalents. Cash provided from Financial Services
operating activities was $98 million in the first six months of
last year. Investing activities provided $146 million of cash in
the first six months of 1995, primarily due to proceeds of $723
million received from the sale of retail notes in the public
market, which was partially offset by the acquisitions of credit
receivables exceeding collections by $585 million. Cash provided
by financing activities totaled $33 million in 1995, representing
a $219 million temporary increase in payables to the Equipment
Operations, partially offset by a $158 million decrease in
outside borrowings and payment of a $27 million dividend to the
Equipment Operations. Cash and cash equivalents increased $278
million during the first half of 1995.
Marketable securities consist primarily of debt securities held
by the insurance and health care operations in support of their
obligations to policyholders. During the first six months of
1996, marketable securities increased $20 million due to the
recognition of market values in the transfer of debt securities
from the held-to-maturity category to the available-for-sale
category in November 1995 (see note 12), and purchases of
marketable securities exceeding maturities and sales. During the
past 12 months, marketable securities have decreased $285 million
primarily from the sale of the John Deere Life Insurance Company
in 1995.
Credit receivables decreased by $17 million in the first six
months of 1996 and increased by $1,031 million during the past 12
months. These receivables consist of retail notes originating in
connection with retail sales of new and used equipment by dealers
of John Deere products, retail notes from non-Deere-related
customers, revolving charge accounts, financing leases and
wholesale notes receivable.
The credit subsidiaries' receivables decreased slightly during
the first six months of 1996 due to the sale of retail notes for
proceeds of $610 million, which was mostly offset by the
acquisitions of credit receivables exceeding collections. Total
acquisitions of credit receivables were 20 percent higher in the
first six months of 1996 compared with the same period last year.
This significant increase resulted mainly from increased
acquisitions of retail notes, revolving charge accounts and
wholesale receivables. The sale of retail notes during the past
12 months for proceeds of $724 million, partially offset the
increase in credit receivables from acquisitions exceeding
collections in the same period. The levels of retail notes,
revolving charge accounts, wholesale receivables and financing
leases were higher than one year ago. Credit receivables
administered by the credit subsidiaries, which include
receivables previously sold, amounted to $6,544 million at April
30, 1996 compared with $6,526 million at October 31, 1995 and
$5,677 million at April 30, 1995. At April 30, 1996, the unpaid
balance of all retail notes previously sold was $1,319 million
compared with $1,278 million at October 31, 1995 and $1,468
million at April 30, 1995. Additional sales of retail notes may
be made in the future.
Total outside interest-bearing debt of the credit subsidiaries
was $4,588 million at April 30, 1996 compared with $4,217 million
at the end of fiscal year 1995 and $3,458 million at April 30,
1995. Total outside borrowings increased during the first six
months of 1996 and the past 12 months, generally corresponding
with the levels of the credit receivable and lease portfolio
financed, the level of cash and cash equivalents and the change
in the amounts of payables owed to the Equipment Operations. The
credit subsidiaries' ratio of total interest-bearing debt to
stockholder's equity was 5.7 to 1 at April 30, 1996 compared with
6.1 to 1 at October 31, 1995 and 5.1 to 1 at April 30, 1995.
The Capital Corporation issued $175 million and retired $123
million of medium-term notes during the first six months of 1996.
Consolidated
The Company maintains unsecured lines of credit with various
banks in North America and overseas. Some of the lines are
available to both the Equipment Operations and certain credit
subsidiaries. Worldwide lines of credit totaled $4,400 million
at April 30, 1996, $1,326 million of which were unused. For the
purpose of computing unused credit lines, total short-term
borrowings, excluding the current portion of long-term
borrowings, were considered to constitute utilization. Included
in the total credit lines is a long-term credit agreement
commitment for $3,675 million.
Stockholders' equity was $3,343 million at April 30, 1996
compared with $3,085 million at October 31, 1995 and $2,857
million at April 30, 1995. The increase of $258 million in the
first six months of 1996 resulted primarily from net income of
$439 million, partially offset by an increase in common stock in
treasury of $107 million and dividends declared of $105 million.
The Board of Directors at its meeting on May 29, 1996 declared a
quarterly dividend of 20 cents per share payable August 1, 1996
to stockholders of record on June 30, 1996.<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note (10) to the Interim Financial Statements.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a,b,c) At the annual meeting of stockholders held
February 28, 1996 the following directors were
elected:
Votes For Votes Withheld
John R. Block 218,048,298 1,886,610
Regina E. Herzlinger 218,090,638 1,844,270
Arnold R. Weber 218,078,968 1,855,940
Leonard A. Hadley, Samuel C. Johnson, Arthur L. Kelly
and William A. Schreyer continue to serve as directors
of the Company for terms expiring at the annual
meeting in 1997. Hans W. Becherer, Agustin
Santamarina V., David H. Stowe, Jr., and John R.
Walter continue to serve as directors of the Company
for terms expiring at the annual meeting in 1998.
At the annual meeting on February 28, 1996,
stockholders also approved amendments to the 1991 John
Deere Stock Option Plan and the John Deere Restricted
Stock Plan with votes cast as follows:
Votes Broker
Votes For Against Abstentions Non-Votes
1991 John
Deere Stock
Option Plan 193,148,203 10,909,373 1,091,817 14,785,515
John Deere
Restricted
Stock Plan 194,997,238 8,992,985 1,159,171 14,785,514
Item 5. Other Information
None
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See the index to exhibits immediately preceding the
exhibits filed with this report.
Certain instruments relating to long-term debt constituting
less than 10% of the registrant's total assets are not
filed as exhibits herewith pursuant to Item 601(b)(4)(iii)
(A) of Regulation S-K. The registrant will file copies of
such instruments upon request of the Commission.
(b) Reports on Form 8-K
Current Report on Form 8-K dated February 28, 1996 (Item
5). Current Report on Form 8-K dated February 15, 1996
(Item 7). <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DEERE & COMPANY
Date: June 5, 1996 By s/ R. W. Lane
R. W. Lane
Senior Vice President,
Principal Financial Officer
and Principal Accounting Officer
<PAGE>
INDEX TO EXHIBITS
Number Page
2 Not applicable -
3 Not applicable -
4 Not applicable -
10(a) 1991 John Deere Stock Option Plan, as amended
(Appendixed to Notice and Proxy Statement of
registrant for the annual shareholder meeting on
February 28, 1996 as filed with the
Commission*)** -
10(b) John Deere Restricted Stock Plan, as amended
(Appendixed to Notice and Proxy Statement of
registrant for the annual shareholder meeting on
February 28, 1996 as filed with the
Commission*)** -
11 Computation of net income per share 22
12 Computation of ratio of earnings to
fixed charges 23
15 Not applicable -
18 Not applicable -
19 Not applicable -
22 Not applicable -
23 Not applicable -
24 Not applicable -
27 Financial data schedule 24
99 Not applicable -
* Incorporated by reference. Copies of these exhibits are
available from the Company upon request.
** Compensatory plan or arrangement filed as an exhibit pursuant
to Item 6(a) of Form 10-Q.<PAGE>
Exhibit 11
DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
(Shares and dollars in thousands except per share amounts)
For the Six Months Ended
April 30
1996 1995
1. Net income ............................... $438,907 $375,457
2. Adjustment - Interest expense, after tax
benefit, applicable to convertible
debentures outstanding.................. 10 11
3. Net income applicable to common stock -
before interest applicable to
convertible debentures.................. $438,917 $375,468
PRIMARY NET INCOME PER COMMON SHARE:
Shares:
4. Weighted average number of common
shares outstanding.................... 262,199 259,515
5. Incremental shares:
Dilutive common stock options......... 2,848 2,192
Dilutive stock appreciation rights.... 51 55
Total incremental shares............ 2,899 2,247
6. Primary net income per common share
(1 divided by 4)........................ $ 1.67* $ 1.45*
FULLY DILUTED NET INCOME PER COMMON SHARE:
Shares:
7. Weighted average number of common
shares outstanding.................... 262,199 259,515
8. Incremental shares:
Dilutive common stock options......... 2,954 2,410
Dilutive stock appreciation rights.... 53 62
9. Common equivalent shares from assumed
conversion of convertible debentures:
5-1/2% debentures due 2001.......... 51 57
10. Total............................... 265,257 262,044
11. Fully diluted net income per common
share (3 divided by 10)............... $ 1.67* $ 1.45*
____________
* Net income per common share outstanding was used in the designated
calculations since the dilutive effects of common stock options,
stock appreciation rights and assumed conversion of convertible
debentures were immaterial.
EXHIBIT 12
DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Six Months Ended
April 30 Year Ended October 31
1996 1995 1995 1994
(In thousands of dollars)
Earnings:
Income (loss) of consolidated
group before income taxes and
changes in accounting $683,775 $592,296 $1,092,751 $920,920
Dividends received from
less than fifty percent
owned affiliates 6,660 1,399 2,023 2,329
Fixed charges net of
capitalized interest 205,509 194,434 399,056 310,047
Total earnings $895,944 788,129 $1,493,830 $1,233,296
Fixed charges:
Interest expense of con-
solidated group (includes
capitalized interest) $202,178 $190,943 $ 392,408 $303,080
Portion of rental charges
deemed to be interest 3,331 3,504 6,661 7,008
Total fixed charges $205,509 $194,447 $ 399,069 $310,088
Ratio of earnings to
fixed charges ** 4.36 4.05 3.74 3.98
<PAGE>
The computation of the ratio of earnings to fixed charges is
based on applicable
amounts of the Company and its consolidated subsidiaries
plus dividends received from
less-than fifty percent owned affiliates. "Earnings"
consist of income before income
taxes, the cumulative effect of changes in accounting and
fixed charges excluding
capitalized interest. "Fixed charges" consist of interest on indebtedness,
amortization of debt discount and expense, an estimated amount of rental
expense which
is deemed to be representative of the interest factor, and capitalized
interest.
* For the year ended October 31, 1991, earnings available for
fixed charges coverage
were $22 million less than the amount required for a ratio of earnings to
fixed charges of 1.0.
** The Company has not issued preferred stock.
Therefore, the ratios of earnings to
combined fixed charges and preferred stock dividends are the same as the
ratios presented above.
<PAGE>
EXHIBIT 12
DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended October 31
1993 1992 1991
(In thousands of dollars)
Earnings:
Income (loss) of consolidated
group before income taxes and
changes in accounting $272,345 $ 43,488 $(26,176)
Dividends received from
less than fifty percent
owned affiliates 1,706 2,325 6,229
Fixed charges net of
capitalized interest 375,238 420,133 454,092
Total earnings $649,289 $465,946 $434,145
Fixed charges:
Interest expense of con-
solidated group (includes
capitalized interest) $369,325 $415,205 $451,936
Portion of rental charges
deemed to be interest 6,127 6,720 4,088
Total fixed charges $375,452 $421,925 $456,024
Ratio of earnings to
fixed charges ** 1.73 1.10 *
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000315189
<NAME> DEERE & COMPANY
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<EXCHANGE-RATE> 1
<CASH> 278
<SECURITIES> 850
<RECEIVABLES> 9,764
<ALLOWANCES> 112
<INVENTORY> 1,067
<CURRENT-ASSETS> 0
<PP&E> 4,192
<DEPRECIATION> 2,910
<TOTAL-ASSETS> 14,754
<CURRENT-LIABILITIES> 0
<BONDS> 2,312
1,757
0
<COMMON> 0
<OTHER-SE> 1,586
<TOTAL-LIABILITY-AND-EQUITY> 14,754
<SALES> 4,636
<TOTAL-REVENUES> 5,406
<CGS> 3,546
<TOTAL-COSTS> 4,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 202
<INCOME-PRETAX> 684
<INCOME-TAX> 249
<INCOME-CONTINUING> 439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 439
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
</TABLE>
