- -------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 17, 1999
(Date of earliest event reported)
D E E R E & C O M P A N Y
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-4121
(Commission File Number)
36-2382580
(IRS Employer Identification No.)
One John Deere Place
Moline, Illinois 61265
(Address of principal executive offices and zip code)
(309)765-8000
(Registrant's telephone number, including area code)
_______________________________________
(Former name or former address, if changed since last report.)
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<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
(99) Press release and additional information.
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Signature
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 hereto duly authorized.
DEERE & COMPANY
By: /s/ Michael A. Harring
-------------------------
Michael A. Harring,
Secretary
Dated: August 17, 1999
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Exhibit Index
Sequential
Number and Description of Exhibit Page Number
(99) Press release and additional information Pg. 5
Page 4
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EXHIBIT 99
(DEERE LOGO)
Contact: Greg Derrick
Deere & Company
Moline, IL 61265
(309) 765-5290
WEAK FARM CONDITIONS LEAD TO LOWER RESULTS AT DEERE
- -------------------------------------------------------------
For Immediate Release August 17, 1999
MOLINE, IL -- Deere & Company today reported net income of
$68.9 million, or $.29 per share, for the third quarter of
1999, compared with $290.8 million, or $1.19 per share, last
year. Nine-month net income was $268.7 million, or $1.15 per
share, compared with last year's $859.3 million, or $3.45 per
share.
According to Hans W. Becherer, chairman and chief
executive officer, demand for agricultural equipment in North
America, especially high-horsepower, high-margin tractors and
combines, continued to be adversely affected by depressed
agricultural commodity prices. In line with the company's
emphasis on cash-flow management, production schedules at
major North American agricultural-equipment factories have
been set below the anticipated level of retail sales. This
action facilitates the reduction of company and field
inventories.
"The positive contributions from the company's non-
agricultural businesses and our overseas agricultural
operations have kept the company on a profitable course
through this severe downturn in the farm economy," Becherer
stated. "In addition, we are continuing to focus on supply-
management, process-excellence and growth initiatives aimed at
improving profitability and strengthening our market
position." At the same time, he added that the company's
aggressive asset-management effort, designed to reduce
receivables, is resulting in improved cash flow and will allow
the company to operate at a more efficient level once the
inventory correction is complete.
Worldwide net sales and revenues were $3.036 billion for
the third quarter and $8.963 billion for nine months, compared
with $3.693 billion and $10.609 billion, respectively, last
year. Net equipment sales were $2.489 billion for the quarter
and $7.420 billion for nine months, compared with $3.218
billion and $9.233 billion last year. Overseas net sales were
$708 million for the quarter and $2.047 billion for the first
nine months, compared with $899 million and $2.366 billion in
the comparable periods last year.
Worldwide equipment operations had net income of $2.7
million for the third quarter and $112.3 million for the first
nine months of 1999, compared with $235.5 million and $723.6
million last year. Lower sales and production volumes, an
adverse product mix and a higher tax rate affected the 1999
results. Operating profit, which excludes interest costs,
taxes and certain other corporate expenses, was $82 million
for the quarter and $341 million for nine months, compared
with $431 million and $1,270 million last year.
. Worldwide agricultural equipment had an $8 million
operating loss for the third quarter and a $74 million
operating profit for the first nine months, compared with
operating profit of $282
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million and $852 million last year. Lower sales and production
volumes especially of high-horsepower, high-margin tractors
and combines continued to negatively affect results. The lower
production volumes have facilitated reductions in trade
receivables from year-ago levels. Receivables related to used
equipment, although declining, continue at high levels.
Results for the first nine months were also affected by higher
sales-incentive costs with an emphasis on used goods. Overseas
operations, which continue to be positive contributors to the
division's results, have experienced a more moderate decline
in sales than has been seen in North America. These
operations, as well, are benefiting from increased market
shares and a strong customer reception to innovative products.
. Operating profit for worldwide construction equipment
totaled $40 million for the third quarter and $107 million for
the first nine months, compared with $103 million and $258
million for the comparable periods last year. Despite healthy
retail demand, sales and production volumes have decreased as
anticipated, as dealers have reduced field inventories to
below year-ago levels primarily due to the division's Estimate
to Cash order-fulfillment initiative. The reduction is also in
response to a weaker business outlook. In addition, the
division's results were negatively affected by higher growth
expenditures, as well as by lower sales and production volumes
of the power-systems operations.
. Worldwide commercial and consumer equipment operating
profit was $50 million for the quarter and $160 million for
nine months, compared with $46 million and $160 million for
the same periods last year. The 1999 results benefited from
higher sales and production volumes driven by a continuation
of strong retail demand and the success of recently introduced
products. Partially offsetting these factors were higher costs
for the development, promotion and introduction of new
products. Trade receivables for the division declined during
the quarter but are higher than a year ago to support
increased retail sales.
Company-owned inventories declined significantly during
the quarter but are higher than last year due to the impact of
construction-equipment's Estimate to Cash program, as well as
the introduction of new products and start-up of new
facilities. Also contributing to higher inventory levels was
the financial consolidation of the company's agricultural-
equipment subsidiary in Brazil. Deere acquired the remaining
ownership interest of this operation during the quarter.
Net income of the financial services operations was $60.9
million for the quarter and $149.8 million for the first nine
months, compared with $46.9 million and $124.1 million for the
same periods last year. Results reflect significant
improvement in the company's credit operations primarily due
to higher gains on the sale of retail notes, and the sale of
the yacht retail-note portfolio and related intangibles. Also
benefiting credit's performance was higher income from a
larger average portfolio.
MARKET CONDITIONS AND OUTLOOK
. Agricultural Equipment. Worldwide demand for
agricultural equipment continued to decline during the quarter
as a result of very depressed grain and oilseed prices. In
addition, lower proceeds from agricultural exports and
prospects for another good crop in the U.S. are expected to
continue adversely affecting demand for agricultural
equipment. Particularly affected are high-horsepower, high-
margin tractors and combines, a sector in which the company
has a strong market position. Drought conditions in certain
North American areas
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and the uncertain outcome of additional U.S. governmental
financial assistance are not expected to significantly change
this year's outlook. As a result of these factors, retail
demand for farm equipment is now projected to decline by 30 to
35 percent in North America this fiscal year, with declines of
10 to 15 percent anticipated in other major markets. In light
of this situation, the division is aggressively implementing
previously announced production shutdowns in order to achieve
a further reduction in inventories. In addition, the
agricultural-equipment operation is initiating a voluntary
early-retirement program in the U.S. that will have an
estimated fourth-quarter pretax cost of $50 million to $80
million. Although forecasts for next year have not been
finalized, initial indications imply that North American
retail demand for farm machinery could be 5 to 10 percent
lower than in 1999. Resulting from a number of innovative
products being introduced in the coming months, the company is
expected to be well-positioned to achieve further market-share
gains.
. Construction Equipment. The outlook for North American
construction equipment has weakened during the quarter due to
less positive prospects for housing starts. Dealers are
reducing inventories in response to the more cautious housing
outlook and the company's Estimate to Cash order-fulfillment
initiative. In addition, the market for forestry equipment
remains under pressure as a result of low pulp prices. In this
environment, construction-equipment sales for the remainder of
this year are expected to be below last year's levels.
. Commercial and Consumer Equipment. Retail demand for
Deere's commercial and consumer products is expected to
maintain its strong momentum for the remainder of this year,
assuming normal weather patterns and a continuation of current
economic conditions. Retail sales for the division are
expected to continue benefiting from market-share growth and
positive customer response to a number of innovative new
products.
. Financial Services. Although the credit operations
should continue to benefit from a larger overall receivable
and lease portfolio, competitive market conditions and a
weakening farm economy are expected to keep pressure on
margins and portfolio growth. During the quarter, Deere
announced that it has agreed to sell the property and casualty
insurance operations of its financial-services division to
Sentry Insurance a Mutual Company, pending regulatory
approvals. In health care, Deere's operations are well-
positioned for continued improved results.
Based on these conditions, the company's worldwide
physical volume of sales is currently projected to decrease by
18 to 20 percent for the year, compared with 1998. Fourth-
quarter physical volumes are also projected to be 14 to 17
percent lower than in the comparable 1998 period. As a result,
Deere's major U.S. agricultural-equipment facilities are
scheduled to be shut down for approximately one-third of the
working days during the fourth quarter of 1999.
Despite the severity of the agricultural downturn, the
company has made great progress bringing down receivables and
controlling asset levels, Becherer said. Such steps support
higher levels of cash flow and put Deere in good position to
return to more efficient volumes of production and sales even
under present market conditions. In addition, Becherer pointed
out that with relatively low inventories and a number of
innovative products being introduced, Deere is "poised to
achieve considerable growth once the farm economy starts
moving ahead."
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JOHN DEERE CAPITAL CORPORATION
The following is disclosed on behalf of the company's
credit subsidiary, John Deere Capital Corporation, in
connection with the disclosure requirements applicable to its
periodic issuance of debt securities in the public market.
John Deere Capital Corporation's net income was $50.2
million in the third quarter and $124.1 million for the first
nine months of 1999, compared with $39.9 million and $103.4
million for the same periods last year. The 1999 third quarter
and year-to-date results benefited from higher gains on the
sale of retail notes, the sale of the yacht retail note
portfolio and related intangibles, and higher income on a 6
percent increase in the average balance of receivables and
leases financed during the first nine months.
Net receivables and leases financed by John Deere Capital
Corporation were $7.170 billion at July 31, 1999, compared
with $6.952 billion one year ago. The increase resulted from
acquisitions exceeding collections during the last 12 months
and the consolidation of the portfolio of its subsidiary, John
Deere Credit Limited in Gloucester, England, due to the
acquisition of a controlling interest in 1999. This increase
was partially offset by the previously mentioned retail note
sales during the same period. Net receivables and leases
administered, which include receivables previously sold, were
$9.391 billion at July 31, 1999, compared with $8.381 billion
at July 31, 1998.
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. Statements herein that relate
to future operating periods, are subject to important risks
and uncertainties that could cause actual results to differ
materially. Forward-looking statements relating to the
company's 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 conditions, real estate values, animal diseases, crop
pests, harvest yields and government farm programs; general
economic conditions and housing starts; legislation, primarily
legislation relating to agriculture, the environment, commerce
and government spending on infrastructure; actions of
competitors in the various industries in which the company
competes; levels of new and used field inventories; production
difficulties, including capacity and supply constraints;
dealer practices; labor relations; interest and currency
exchange rates; technological difficulties (including Year
2000 compliance); accounting standards and other risks and
uncertainties. Economic difficulties in various parts of the
world could continue to adversely affect North American grain
and meat exports. The outlook for harvest prices especially
affects retail sales of agricultural equipment in the fall,
while the number of housing starts is especially important to
sales of construction equipment. 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 cost of the voluntary early-retirement
program in the U.S. is based upon estimates pertaining to the
number and category of employees accepting the company's
program. 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 quarterly report on Form 10-Q and
other filings with the Securities and Exchange Commission.
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THIRD QUARTER 1999 PRESS RELEASE
Net sales and revenues:
(millions of dollars except per share amounts)
Three Months Ended
July 31
%
1999 1998 Change
Net sales:
Agricultural equipment $1,199 $1,969 -39
Construction equipment 595 709 -16
Commercial and consumer equipment 695 540 +29
Total net sales 2,489 3,218 -23
Financial Services revenues 510 435 +17
Other revenues 37 40 - 8
Total net sales and revenues $3,036 $3,693 -18
United States and Canada:
Equipment net sales $1,781 $2,319 -23
Financial Services revenues 510 435 +17
Total 2,291 2,754 -17
Overseas net sales 708 899 -21
Other revenues 37 40 - 8
Total net sales and revenues $3,036 $3,693 -18
Operating profit:
Agricultural equipment $ (8) $ 282
Construction equipment 40 103 -61
Commercial and consumer equipment 50 46 + 9
Equipment Operations* 82 431 -81
Financial Services 92 70 +31
Total operating profit 174 501 -65
Interest and corporate
expenses - net (44) (55) -20
Income taxes (61) (155) -61
Net income $ 69 $ 291 -76
Per Share:
Net income $ .30 $ 1.20 -75
Net income - diluted $ .29 $ 1.19 -76
* Includes overseas operating profit $ 56 $ 106 -47
Net sales and revenues:
(millions of dollars except per share amounts)
Nine Months Ended
July 31
%
1999 1998 Change
Net sales:
Agricultural equipment $3,867 $ 5,638 -31
Construction equipment 1,655 2,001 -17
Commercial and consumer equipment 1,898 1,594 +19
Total net sales 7,420 9,233 -20
Financial Services revenues 1,450 1,261 +15
Other revenues 93 115 -19
Total net sales and revenues $8,963 $10,609 -16
United States and Canada:
Equipment net sales $5,373 $ 6,867 -22
Financial Services revenues 1,450 1,261 +15
Total 6,823 8,128 -16
Overseas net sales 2,047 2,366 -13
Other revenues 93 115 -19
Total net sales and revenues $8,963 $10,609 -16
Operating profit:
Agricultural equipment $ 74 $ 852 -91
Construction equipment 107 258 -59
Commercial and consumer equipment 160 160
Equipment Operations* 341 1,270 -73
Financial Services 228 191 +19
Total operating profit 569 1,461 -61
Interest and corporate
expenses - net (130) (124) + 5
Income taxes (170) (478) -64
Net income $ 269 $ 859 -69
Per Share:
Net income $ 1.16 $ 3.49 -67
Net income - diluted $ 1.15 $ 3.45 -67
* Includes overseas operating profit $ 208 $ 268 -22
Selected balance sheet data:
(millions of dollars and shares)
July 31 October 31 July 31
1999 1998 1998
Equipment Operations:
Trade accounts and notes
receivable - net $ 3,740 $4,059 $4,209
Inventories $ 1,428 $1,287 $1,337
Financial Services:
Financing receivables and
leases financed - net $ 8,186 $7,237 $7,786
Financing receivables and
leases administered -
net $10,727 $9,625 $9,325
Average shares outstanding 232.6 243.3 246.0
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DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
Consolidated
Subsidiaries)
Millions of dollars except per Three Months Ended
share amounts July 31
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $2,489.4 $3,218.3
Finance and interest income 280.1 263.2
Insurance and health care premiums 184.8 171.9
Investment income 14.2 15.9
Other income 67.1 24.1
Total 3,035.6 3,693.4
Costs and Expenses
Cost of goods sold 2,099.2 2,485.1
Research and development expenses 114.7 110.7
Selling, administrative and general
expenses 338.9 324.7
Interest expense 138.9 138.4
Insurance and health care claims
and benefits 153.1 143.9
Other operating expenses 66.0 53.6
Total 2,910.8 3,256.4
Income of Consolidated Group
Before Income Taxes 124.8 437.0
Provision for income taxes 61.0 154.8
Income of Consolidated Group 63.8 282.2
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit (.2) .1
Insurance
Health Care .1
Other 5.3 8.4
Total 5.1 8.6
Net Income $ 68.9 $ 290.8
Per Share:
Net income $ .30 $ 1.20
Net income - diluted $ .29 $ 1.19
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.
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATED INCOME (Deere & Company with
Financial Services
on the Equity Basis)
Millions of dollars except per Three Months Ended
share amounts July 31
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $2,489.4 $3,218.3
Finance and interest income 19.4 33.4
Insurance and health care premiums
Investment income
Other income 26.5 9.6
Total 2,535.3 3,261.3
Costs and Expenses
Cost of goods sold 2,103.1 2,490.3
Research and development expenses 114.7 110.7
Selling, administrative and general
expenses 235.1 235.6
Interest expense 38.0 37.6
Insurance and health care claims
and benefits
Other operating expenses 12.0 20.0
Total 2,502.9 2,894.2
Income of Consolidated Group
Before Income Taxes 32.4 367.1
Provision for income taxes 29.7 131.6
Income of Consolidated Group 2.7 235.5
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit 57.6 43.1
Insurance 1.1 2.0
Health Care 2.2 1.8
Other 5.3 8.4
Total 66.2 55.3
Net Income $ 68.9 $ 290.8
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
Millions of dollars except per Three Months Ended
share amounts July 31
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 264.4 $ 233.6
Insurance and health care premiums 193.0 179.1
Investment income 14.2 15.9
Other income 47.3 15.1
Total 518.9 443.7
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general
expenses 104.0 90.0
Interest expense 104.5 104.6
Insurance and health care claims
and benefits 156.5 145.6
Other operating expenses 61.5 33.7
Total 426.5 373.9
Income of Consolidated Group
Before Income Taxes 92.4 69.8
Provision for income taxes 31.3 23.1
Income of Consolidated Group 61.1 46.7
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit (.2) .1
Insurance
Health Care .1
Other
Total (.2) .2
Net Income $ 60.9 $ 46.9
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DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
Consolidated
Subsidiaries)
Millions of dollars except per Nine Months Ended
share amounts July 31
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $ 7,419.7 $ 9,232.9
Finance and interest income 814.1 735.6
Insurance and health care premiums 550.7 515.6
Investment income 48.9 49.4
Other income 129.1 75.6
Total 8,962.5 10,609.1
Costs and Expenses
Cost of goods sold 6,191.7 7,088.8
Research and development expenses 323.8 319.5
Selling, administrative and general
expenses 981.3 948.4
Interest expense 415.8 382.3
Insurance and health care claims
and benefits 459.3 421.5
Other operating expenses 158.7 123.3
Total 8,530.6 9,283.8
Income of Consolidated Group
Before Income Taxes 431.9 1,325.3
Provision for income taxes 170.1 477.8
Income of Consolidated Group 261.8 847.5
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit .2 .1
Insurance
Health Care .1 .1
Other 6.6 11.6
Total 6.9 11.8
Net Income $ 268.7 $ 859.3
Per Share:
Net income $ 1.16 $ 3.49
Net income - diluted $ 1.15 $ 3.45
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.
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATED INCOME (Deere & Company with
Financial Services
on the Equity Basis)
Millions of dollars except per Nine Months Ended
share amounts July 31
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $7,419.7 $9,232.9
Finance and interest income 65.1 96.2
Insurance and health care premiums
Investment income
Other income 59.3 29.8
Total 7,544.1 9,358.9
Costs and Expenses
Cost of goods sold 6,204.3 7,103.2
Research and development expenses 323.8 319.5
Selling, administrative and general
expenses 680.0 673.3
Interest expense 120.7 93.0
Insurance and health care claims
and benefits
Other operating expenses 11.2 35.3
Total 7,340.0 8,224.3
Income of Consolidated Group
Before Income Taxes 204.1 1,134.6
Provision for income taxes 91.8 411.0
Income of Consolidated Group 112.3 723.6
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit 141.4 111.2
Insurance 1.7 11.8
Health Care 6.7 1.1
Other 6.6 11.6
Total 156.4 135.7
Net Income $ 268.7 $ 859.3
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
Millions of dollars except per Nine Months Ended
share amounts July 31
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 760.2 $ 649.2
Insurance and health care premiums 572.1 536.5
Investment income 48.9 49.4
Other income 91.2 48.6
Total 1,472.4 1,283.7
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general
expenses 304.0 279.8
Interest expense 306.4 299.1
Insurance and health care claims
and benefits 465.9 426.2
Other operating expenses 168.3 87.9
Total 1,244.6 1,093.0
Income of Consolidated Group
Before Income Taxes 227.8 190.7
Provision for income taxes 78.3 66.8
Income of Consolidated Group 149.5 123.9
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit .2 .1
Insurance
Health Care .1 .1
Other
Total .3 .2
Net Income $ 149.8 $ 124.1
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DEERE & COMPANY CONSOLIDATED
CONDENSED CONSOLIDATED (Deere & Company and
BALANCE SHEET Consolidated Subsidiaries)
Millions of dollars July 31 October 31 July 31
(Unaudited) 1999 1998 1998
Assets
Cash and short-term
investments $ 352.3 $ 309.7 $ 331.1
Cash deposited with
unconsolidated subsidiaries
Cash and cash equivalents 352.3 309.7 331.1
Marketable securities 845.4 867.3 868.0
Receivables from
unconsolidated subsidiaries
and affiliates 37.7 36.2 39.9
Trade accounts and notes
receivable - net 3,739.5 4,059.2 4,209.3
Financing receivables - net 6,781.5 6,332.7 6,985.6
Other receivables 396.6 536.8 397.4
Equipment on operating
leases - net 1,499.6 1,209.2 1,123.4
Inventories 1,428.0 1,286.7 1,337.3
Property and equipment - net 1,735.3 1,700.3 1,566.6
Investments in unconsolidated
subsidiaries and affiliates 145.5 172.0 163.9
Intangible assets - net 300.9 217.6 191.3
Prepaid pension costs 637.0 674.3 689.1
Deferred income taxes 568.9 396.3 534.2
Other assets and
deferred charges 262.4 203.2 188.8
Total $18,730.6 $18,001.5 $18,625.9
Liabilities and Stockholders'
Equity
Short-term borrowings $ 5,358.9 $ 5,322.1 $ 6,569.4
Payables to unconsolidated
subsidiaries and affiliates 22.3 31.1 49.4
Accounts payable and
accrued expenses 2,548.5 2,853.2 2,705.0
Insurance and health care
claims and reserves 402.5 411.3 403.6
Accrued taxes 158.3 144.9 109.5
Deferred income taxes 19.0 19.7 20.3
Long-term borrowings 3,627.9 2,791.7 2,287.0
Retirement benefit accruals
and other liabilities 2,408.7 2,347.7 2,318.2
Total liabilities 14,546.1 13,921.7 14,462.4
Stockholders' equity 4,184.5 4,079.8 4,163.5
Total $18,730.6 $18,001.5 $18,625.9
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.
DEERE & COMPANY EQUIPMENT OPERATIONS
CONDENSED CONSOLIDATED (Deere & Company with Financial
BALANCE SHEET Services on the Equity Basis)
Millions of dollars July 31 October 31 July 31
(Unaudited) 1999 1998 1998
Assets
Cash and short-term
investments $ 138.3 $ 68.3 $ 58.4
Cash deposited with
unconsolidated subsidiaries 75.1 139.6 282.4
Cash and cash equivalents 213.4 207.9 340.8
Marketable securities
Receivables from
unconsolidated subsidiaries
and affiliates 252.1 95.5 136.2
Trade accounts and notes
receivable - net 3,739.5 4,059.2 4,209.3
Financing receivables - net 95.6 85.8 113.7
Other receivables 15.3 139.4
Equipment on operating
leases - net 218.6 209.6
Inventories 1,428.0 1,286.7 1,337.3
Property and equipment - net 1,687.5 1,653.9 1,520.1
Investments in unconsolidated
subsidiaries and affiliates 1,758.7 1,620.4 1,579.0
Intangible assets - net 294.2 210.1 183.4
Prepaid pension costs 637.0 674.3 689.1
Deferred income taxes 540.9 372.6 490.1
Other assets and
deferred charges 149.3 141.6 128.7
Total $10,811.5 $10,766.0 $10,937.3
Liabilities and Stockholders'
Equity
Short-term borrowings $ 1,337.5 $ 1,512.4 $ 2,017.1
Payables to unconsolidated
subsidiaries and affiliates 22.3 43.0 49.4
Accounts payable and
accrued expenses 1,707.3 2,098.1 1,950.4
Insurance and health care
claims and reserves
Accrued taxes 141.8 142.1 101.1
Deferred income taxes 6.3 19.7 19.9
Long-term borrowings 1,039.2 552.9 353.3
Retirement benefit accruals
and other liabilities 2,372.6 2,318.0 2,282.6
Total liabilities 6,627.0 6,686.2 6,773.8
Stockholders' equity 4,184.5 4,079.8 4,163.5
Total $10,811.5 $10,766.0 $10,937.3
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED CONSOLIDATED
BALANCE SHEET
Millions of dollars July 31 October 31 July 31
(Unaudited) 1999 1998 1998
Assets
Cash and short-term
investments $ 213.9 $ 241.5 $ 272.7
Cash deposited with
unconsolidated subsidiaries
Cash and cash equivalents 213.9 241.5 272.7
Marketable securities 845.4 867.3 868.0
Receivables from
unconsolidated subsidiaries
and affiliates 5.2
Trade accounts and notes
receivables - net
Financing receivables - net 6,685.9 6,246.9 6,871.9
Other receivables 381.3 397.3 397.4
Equipment on operating
leases - net 1,499.6 990.6 913.8
Inventories
Property and equipment - net 47.8 46.4 46.4
Investments in unconsolidated
subsidiaries and affiliates 9.9 20.3 19.1
Intangible assets - net 6.7 7.6 7.9
Prepaid pension costs
Deferred income taxes 28.0 23.7 44.0
Other assets and
deferred charges 113.1 61.5 60.3
Total $9,836.8 $8,903.1 $9,501.5
Liabilities and Stockholders'
Equity
Short-term borrowings $4,021.4 $3,809.7 $4,552.3
Payables to unconsolidated
subsidiaries and affiliates 294.5 187.0 378.7
Accounts payable and
accrued expenses 841.3 755.1 754.6
Insurance and health care
claims and reserves 402.5 411.3 403.6
Accrued taxes 16.5 2.8 8.3
Deferred income taxes 12.7 .4
Long-term borrowings 2,588.7 2,238.8 1,933.7
Retirement benefit accruals
and other liabilities 36.1 29.7 35.7
Total liabilities 8,213.7 7,434.4 8,067.3
Stockholders' equity 1,623.1 1,468.7 1,434.2
Total $9,836.8 $8,903.1 $9,501.5
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DEERE & COMPANY CONSOLIDATED
CONDENSED STATEMENT OF (Deere & Company and
CONSOLIDATED CASH FLOWS Consolidated Subsidiaries)
Nine Months Ended
July 31
Millions of dollars (Unaudited) 1999 1998
Cash Flows from Operating Activities
Net income $ 268.7 $ 859.3
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities 344.6 (1,117.7)
Net cash provided by (used for)
operating activities 613.3 (258.4)
Cash Flows from Investing Activities
Collections and sales of
financing receivables 6,085.1 5,000.8
Proceeds from maturities and
sales of marketable securities 98.0 115.0
Cost of financing receivables
acquired (6,043.2) (5,636.5)
Purchases of marketable securities (91.0) (157.8)
Purchases of property and
equipment (181.0) (250.8)
Cost of operating leases acquired (594.9) (567.4)
Acquisitions of businesses (167.3) (51.7)
Other 168.4 117.1
Net cash used for investing
activities (725.9) (1,431.3)
Cash Flows from Financing Activities
Increase (decrease) in short-term
borrowings (523.1) 1,861.0
Change in intercompany
receivables/payables
Proceeds from long-term borrowings 2,249.8 996.0
Principal payments on long-term
borrowings (1,372.3) (358.9)
Proceeds from issuance of
common stock 3.5 22.4
Repurchases of common stock (46.2) (668.3)
Dividends paid (154.0) (159.3)
Other (1.6) .8
Net cash provided by
financing activities 156.1 1,693.7
Effect of Exchange Rate
Changes on Cash (.9) (2.9)
Net Increase (Decrease) in Cash
and Cash Equivalents 42.6 1.1
Cash and Cash Equivalents at
Beginning of Period 309.7 330.0
Cash and Cash Equivalents at
End of Period $ 352.3 $ 331.1
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.
DEERE & COMPANY EQUIPMENT OPERATIONS
CONDENSED STATEMENT OF (Deere & Company with
CONSOLIDATED CASH FLOWS Financial Services on the
Equity Basis)
Nine Months Ended
July 31
Millions of dollars (Unaudited) 1999 1998
Cash Flows from Operating Activities
Net income $ 268.7 $ 859.3
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities 26.4 (1,370.9)
Net cash provided by (used for)
operating activities 295.1 (511.6)
Cash Flows from Investing Activities
Collections and sales of
financing receivables 17.1 23.1
Proceeds from maturities and
sales of marketable securities
Cost of financing receivables
acquired (22.7) (55.5)
Purchases of marketable securities
Purchases of property and
equipment (172.0) (242.8)
Cost of operating leases acquired (77.8)
Acquisitions of businesses (146.5) (45.7)
Other 26.0 55.0
Net cash used for investing
activities (298.1) (343.7)
Cash Flows from Financing Activities
Increase (decrease) in short-term
borrowings (263.1) 1,678.1
Change in intercompany
receivables/payables (10.4) (59.9)
Proceeds from long-term borrowings 499.8
Principal payments on long-term
borrowings (18.6) (26.4)
Proceeds from issuance of
common stock 3.5 22.4
Repurchases of common stock (46.2) (668.3)
Dividends paid (154.0) (159.3)
Other (1.6) .7
Net cash provided by
financing activities 9.4 787.3
Effect of Exchange Rate
Changes on Cash (.9) (2.4)
Net Increase (Decrease) in Cash
and Cash Equivalents 5.5 (70.4)
Cash and Cash Equivalents at
Beginning of Period 207.9 411.2
Cash and Cash Equivalents at
End of Period $ 213.4 $ 340.8
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED STATEMENT OF Nine Months Ended
CONSOLIDATED CASH FLOWS July 31
Millions of dollars (Unaudited) 1999 1998
Cash Flows from Operating Activities
Net income $ 149.8 $ 124.1
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities 183.5 173.4
Net cash provided by (used for)
operating activities 333.3 297.5
Cash Flows from Investing Activities
Collections and sales of
financing receivables 6,068.0 4,977.8
Proceeds from maturities and
sales of marketable securities 98.0 115.0
Cost of financing receivables
acquired (6,020.5) (5,581.0)
Purchases of marketable securities (91.0) (157.8)
Purchases of property and
equipment (9.0) (8.0)
Cost of operating leases acquired (594.9) (489.6)
Acquisitions of businesses (20.7) (6.0)
Other 142.1 63.2
Net cash used for investing
activities (428.0) (1,086.4)
Cash Flows from Financing Activities
Increase (decrease) in short-term
borrowings (260.0) 183.0
Change in intercompany
receivables/payables (54.2) (7.6)
Proceeds from long-term borrowings 1,750.0 996.0
Principal payments on long-term
borrowings (1,353.7) (332.5)
Proceeds from issuance of
common stock
Repurchases of common stock
Dividends paid (15.0) (44.3)
Other (1.3)
Net cash provided by
financing activities 67.1 793.3
Effect of Exchange Rate
Changes on Cash (.5)
Net Increase (Decrease) in Cash
and Cash Equivalents (27.6) 3.9
Cash and Cash Equivalents at
Beginning of Period 241.5 268.8
Cash and Cash Equivalents at End
of Period $213.9 $272.7
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NOTES TO INTERIM FINANCIAL STATEMENTS
1. The "Consolidated" (Deere & Company and Consolidated
Subsidiaries) data in each of the financial statements conform
with the requirements of Financial Accounting Standards Board
(FASB) Statement No. 94. In the supplemental consolidating
data in each of the financial statements, "Equipment
Operations" (Deere & Company with Financial Services on the
Equity Basis) include the Company's agricultural equipment,
construction equipment and commercial and consumer 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.
The supplemental "Financial Services" consolidating data in
each of the financial statements include Deere & Company's
credit, insurance and health care operations.
2. Dividends declared and paid on a per share basis were as
follows:
Three Months Ended Nine Months Ended
July 31 July 31
1999 1998 1999 1998
Dividends declared $.22 $.22 $.66 $.66
Dividends paid $.22 $ * $.66 $.64
* In 1998, the payment date for the dividend normally
paid in the third quarter was included in the second
quarter.
3. The calculation of primary net income per share is based
on the average number of shares outstanding during the nine
months ended July 31, 1999 and 1998 of 232.6 million and 246.0
million, respectively. The calculation of diluted net income
per share recognizes primarily the dilutive effect of the
assumed exercise of stock options.
4. In the first quarter of 1999, the Company adopted FASB
Statement No. 130, Reporting Comprehensive Income.
Comprehensive income includes all changes in the Company's
equity during the period, except transactions with
stockholders of the Company. Comprehensive income consisted
of the following in millions of dollars:
Three Months Nine Months
Ended July 31 Ended July 31
1999 1998 1999 1998
Net income $68.9 $290.8 $268.7 $859.3
Other comprehensive income:
Change in cumulative
translation adjustment (9.9) (20.3) (21.4) (42.3)
Unrealized gain (loss) on
marketable securities (12.7) 2.9 (10.5) 3.5
Comprehensive income $46.3 $273.4 $236.8 $820.5
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