- -------------------------------------------------------------
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: November 23, 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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<PAGE>
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: November 23, 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
<PAGE>
EXHIBIT 99
(DEERE LOGO)
Contact: Greg Derrick
Deere & Company
Moline, IL 61265
(309) 765-5290
DEERE POISED FOR IMPROVED PERFORMANCE IN SPITE OF LOWER '99
PROFITS
- -----------------------------------------------------------
FOR IMMEDIATE RELEASE NOVEMBER 23, 1999
MOLINE, IL -- Deere & Company today reported worldwide net
income of $239.2 million, or $1.02 per share, for the year ended
October 31, 1999, and a net loss of $29.5 million, or $.13 per
share, for the fourth quarter. This compares with net income of
$1.021 billion, or $4.16 per share, for the year 1998 and $162.1
million, or $.71 per share, for last year's fourth quarter.
Company operations would have been profitable in the most recent
quarter without the impact of a $40 million after-tax charge for
an early-retirement program.
The decline in profits was largely due to a continuation of
weak demand for agricultural equipment caused by depressed farm
commodity prices. Cash flow, however, was higher thanks to a
reduction in worldwide agricultural equipment receivables of
approximately $800 million, and a decline in construction
equipment receivables of some $200 million. During the year, and
especially in the fourth quarter, the company implemented
aggressive production-schedule reductions in order to help
balance receivables and inventories with forecasted levels of
demand.
Commented Hans W. Becherer, chairman and chief executive
officer, "The fact that Deere was profitable for the full year,
and actually would have had a profit in the fourth quarter
without the early-retirement cost, shows the strength of our non-
agricultural operations and the progress of our growth and
quality initiatives."
Worldwide net sales and revenues were $2.788 billion for the
1999 fourth quarter and $11.751 billion for the year, compared
with $3.212 billion and $13.822 billion, respectively, last year.
Net equipment sales were $2.282 billion for the quarter and
$9.701 billion for the year, compared with last year's $2.693
billion and $11.926 billion. Overseas net sales were $631 million
for the quarter and $2.678 billion for the year, compared with
$683 million and $3.049 billion in the comparable periods last
year. Overall, the company's physical volume of sales decreased
13 percent for the quarter and 18 percent for the year.
Worldwide equipment operations had an operating loss of $69
million for the fourth quarter of 1999, including a $64 million
pretax charge for the early-retirement program, and operating
profit of $272 million for the year. This compares with operating
profit of $207 million and $1.476 billion last year. Lower sales
and production volumes, an adverse sales mix and the cost of the
early-retirement program affected 1999 results. Largely due to
the reduction in agricultural and construction trade receivables,
equipment operations' assets ended the fiscal year at $8.702
billion, 4 percent below the previous year.
During the fourth quarter of 1999, the company adopted FASB
Statement No. 131, Disclosures about Segments of an Enterprise
and Related Information. Consequently, Deere's
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operating segments have been redefined to coincide with internal-
management reporting, and previously reported operating results
have been restated to reflect these definitions. The restatement
had no impact on consolidated results. Attached to this document
is a table showing the restated information for each segment.
. Worldwide agricultural equipment had operating losses of
$129 million for the fourth quarter of 1999 and $51 million for
the year, compared with operating profit of $102 million and $941
million, respectively, last year. Lower sales and production
volumes, especially of high-horsepower, high-margin agricultural
equipment, were primary reasons for the losses. Lower production
volumes, however, have helped achieve a substantial reduction in
trade receivables and improved cash flow. Results for the quarter
were also affected by the $64 million pretax cost of the
previously mentioned early-retirement program and by higher sales-
incentive costs, with an emphasis on used goods. The voluntary
retirement program was accepted by 917 employees at various
agricultural-equipment installations in North America. Overseas
operations, which experienced a more moderate decline in sales
than in North America, continued to be positive contributors to
the division's results. These operations, as well, are benefiting
from increased market shares and strong response to innovative
products.
. Worldwide construction equipment operating profit was $15
million for the quarter and $149 million for the year, compared
with $53 million and $326 million last year. Although retail
sales remained at favorable levels during the quarter, company
sales and production volumes declined as dealers continued to
reduce inventories. This reduction was largely due to the
division's Estimate to Cash order-fulfillment initiative, but it
also reflects a weaker outlook. Higher sales-incentive costs also
affected fourth-quarter results.
. Worldwide commercial and consumer equipment operating profit
was $62 million for the quarter and $213 million for the year,
compared with respective totals of $53 million and $213 million
last year. The 1999 results benefited from higher sales and
production volumes driven by strong retail demand and market-
share gains, offset by higher expenses for the development and
introduction of new products and the start-up of new facilities.
. Net income of the credit operations was $33.5 million for
the quarter and $174.9 million for the year, compared with $51.6
million and $162.8 million last year. Fourth-quarter results were
affected by lower gains on the sale of retail notes, lower
financing spreads and higher receivable write-offs, partially
offset by reduced leverage. On an annual basis, Credit's results
benefited from higher income on a larger average portfolio, a
reduction in leverage and a gain on the sale of the yacht retail-
note portfolio and related intangibles. Partially offsetting
these positive factors were higher receivable write-offs, lower
financing spreads and higher operating expenses.
. The company's other businesses had operating losses of $19
million for the quarter and $33 million for the year, compared
with an operating loss of $2 million in the fourth-quarter of
1998 and operating profit of $11 million for full-year 1998.
Results reflected start-up costs and goodwill amortization at the
newly formed John Deere Special Technologies Group, which
encompasses communications, electronics, software, and Internet-
related products and services. Additionally, losses were recorded
in the insurance subsidiaries. Partly offsetting
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these factors was higher income from the company's health-care
operations. During the quarter, Deere completed the sale of its
insurance subsidiaries.
MARKET CONDITIONS AND OUTLOOK
- -----------------------------
. AGRICULTURAL EQUIPMENT. As a result of continued weakness in
farm commodity prices, industry retail sales of farm machinery
in North America are currently expected to be off by 5 to 10
percent next year. Declines of a similar nature are expected in
other major markets. At the same time, farmers are in relatively
good financial condition due to higher government payments. In
light of this outlook, Deere has adopted a cautious approach,
expecting sales and production volumes to trail prior-year levels
early in 2000 but to be higher for the full year. The anticipated
rise in sales is due to production being increased to track more
closely with retail demand than in 1999. Sales are also expected
to benefit from positive customer response to several important
new products.
. CONSTRUCTION EQUIPMENT. Although higher interest rates are
expected to result in a moderate slowdown in industry sales next
year, Deere expects to have higher sales in year 2000 due largely
to an expanded product line. Company sales in the early part of
the year, however, are expected to be lower as a result of a
continuation of dealer-inventory adjustments. Made in conjunction
with the Estimate to Cash initiative, these reductions place
Deere in a favorable inventory position going into next year.
Industry inventory levels, however, are a source of concern with
respect to price realization.
. COMMERCIAL & CONSUMER EQUIPMENT. Following strong gains this
year, retail demand for Deere's commercial and consumer equipment
is expected to achieve further growth next year, assuming normal
weather patterns and a continuation of current economic
conditions. These operations are expected to benefit from market-
share growth, positive customer response to new products and
continued international expansion.
. CREDIT OPERATIONS. Credit should continue to benefit from a
larger receivable and lease portfolio next year. However, higher
growth expenditures, lower gains on the sale of retail notes and
a weakened agricultural economy are expected to keep pressure on
margins and bring about a sizable reduction in overall results.
Based on these conditions, the company's worldwide physical
volume of sales is currently expected to increase by
approximately 10 percent for the year 2000. First-quarter
physical volumes are expected to be slightly higher than in the
comparable 1999 period. However, the mix of sales is expected to
deteriorate and put significant downward pressure on profits for
the quarter.
Despite the lower 1999 results, Becherer said that Deere "has
put itself in position to benefit from an upturn in the farm
economy, whenever it occurs. At the same time, we remain on track
with our product-development plans, and numerous growth, quality,
technology and Internet-related initiatives. In addition, we
fulfilled our 1999 goal of generating strong cash flow and are
setting the stage for markedly better results once the
agricultural economy starts moving ahead and as other business
opportunities take shape."
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JOHN DEERE CAPITAL CORPORATION
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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. Net income of the credit
operations was $29.2 million for the quarter and $153.3 million
for the year, compared with $47.8 million and $151.2 million,
respectively, last year. The fourth quarter 1999 results were
affected by lower gains on sales of retail notes, lower financing
spreads and higher receivable write-offs, partially offset by a
reduction in leverage position. The 1999 annual results benefited
from higher income on a 5 percent increase in the average balance
of receivables and leases financed, a reduction in leverage
position and a gain on the sale of the yacht retail note
portfolio and related intangibles, partially offset by lower
financing spreads, higher receivable write-offs and higher
operating expenses.
Net receivables and leases financed by John Deere Capital
Corporation were $7.147 billion at October 31, 1999, compared
with $6.446 billion one year ago. The increase resulted from
acquisitions exceeding collections during the last 12 months, 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, and the acquisition of Senstar
Capital Corporation. The increase was partially offset by the
previously mentioned retail note sales during the same period.
Net receivables and leases administered, which include
receivables and leases previously sold, were $9.586 billion at
October 31, 1999, compared with $8.635 billion at October 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 readiness); 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 number of housing starts is
especially important to sales of construction equipment. Sales of
commercial and consumer equipment during the winter are affected
by the amount and timing of snowfall. 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.
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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FOURTH QUARTER AND 1999 PRESS RELEASE
(millions of dollars and shares except per share amounts)
Three Months Ended
October 31
%
1999 1998 Change
Net sales and revenues:
Agricultural equipment net sales $1,171 $1,640 - 29
Construction equipment net sales 403 508 - 21
Commercial and consumer equipment
net sales 690 545 + 27
Other net sales 18
Total net sales 2,282 2,693 - 15
Credit revenues 286 275 + 4
Other revenues 220 244 - 10
Total net sales and revenues* $2,788 $3,212 - 13
Operating profit (loss):
Agricultural equipment $ (129) $ 102
Construction equipment 15 53 - 72
Commercial and consumer equipment 62 53 + 17
Credit 54 81 - 33
Other (19) (2) +850
Total operating profit (loss)* (17) 287
Interest, corporate expenses
and income taxes (13) (125) - 90
Net income (loss) $ (30) $ 162
Per Share:
Net income (loss) - basic $ (.13) $ .71
Net income (loss) - diluted $ (.13) $ .71
* Includes overseas equipment operations:
Net sales $ 631 $ 683 - 8
Operating profit $ 16 $ 31 - 48
Twelve Months Ended
October 31
%
1999 1998 Change
Net sales and revenues:
Agricultural equipment net sales $ 5,138 $ 7,463 - 31
Construction equipment net sales 1,880 2,281 - 18
Commercial and consumer equipment
net sales 2,648 2,182 + 21
Other net sales 35
Total net sales $ 9,701 $11,926 - 19
Credit revenues 1,136 971 + 17
Other revenues 914 925 - 1
Total net sales and revenues* $11,751 $13,822 - 15
Operating profit (loss):
Agricultural equipment $ (51) $ 941
Construction equipment 149 326 - 54
Commercial and consumer equipment 213 213
Credit 274 256 + 7
Other (33) 11
Total operating profit (loss)* 552 1,747 - 68
Interest, corporate expenses
and income taxes (313) (726) - 57
Net income (loss) $ 239 $ 1,021 - 77
Per Share:
Net income (loss) - basic $ 1.03 $ 4.20 - 75
Net income (loss) - diluted $ 1.02 $ 4.16 - 75
* Includes overseas equipment operations:
Net sales $ 2,678 $ 3,049 - 12
Operating profit $ 224 $ 299 - 25
Equipment Operations:
Trade accounts and notes
receivable - net $ 3,251 $ 4,059
Inventories $ 1,294 $ 1,287
Financial Services:
Financing receivables and
leases financed - net $ 8,276 $ 7,237
Financing receivables and leases
administered - net $10,992 $ 9,625
Average shares outstanding 232.9 243.3
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DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
THREE MONTHS ENDED OCTOBER 31 Consolidated
Subsidiaries)
(In millions of dollars except per Three Months Ended
share amounts) October 31
1999 1998
Net Sales and Revenues
Net sales of equipment $2,281.5 $2,692.9
Finance and interest income 290.4 271.5
Insurance and health care premiums 165.3 177.3
Investment income 12.5 23.7
Other income 38.7 47.0
Total 2,788.4 3,212.4
Costs and Expenses
Cost of goods sold 1,985.8 2,144.9
Research and development expenses 134.7 124.9
Selling, administrative and general
expenses 380.8 361.0
Interest expense 140.8 137.0
Insurance and health care claims
and benefits 135.6 157.5
Other operating expenses 77.5 52.4
Total 2,855.2 2,977.7
Income (Loss) of Consolidated Group
Before Income Taxes (66.8) 234.7
Provision (credit) for income taxes (35.4) 76.1
Income (Loss) of Consolidated Group (31.4) 158.6
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit (.5)
Other 2.4 3.5
Total 1.9 3.5
Net Income (Loss) $ (29.5) $ 162.1
Per Share:
Net income (loss) - basic $ (.13) $ .71
Net income (loss) - diluted $ (.13) $ .71
<PAGE>
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATED INCOME (Deere & Company with
THREE MONTHS ENDED OCTOBER 31 Financial Services
on the Equity Basis)
(In millions of dollars except per Three Months Ended
share amounts) October 31
1999 1998
Net Sales and Revenues
Net sales of equipment $2,281.5 $2,692.9
Finance and interest income 27.3 34.9
Insurance and health care premiums
Investment income 1.1
Other income 26.8 10.7
Total 2,336.7 2,738.5
Costs and Expenses
Cost of goods sold 1,988.7 2,149.5
Research and development expenses 134.7 124.9
Selling, administrative and general
expenses 273.5 259.2
Interest expense 41.2 35.0
Insurance and health care claims
and benefits
Other operating expenses 17.4 15.2
Total 2,455.5 2,583.8
Income (Loss) of Consolidated Group
Before Income Taxes (118.8) 154.7
Provision (credit) for income taxes (49.7) 47.1
Income (Loss) of Consolidated Group (69.1) 107.6
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit 33.5 51.6
Other 6.1 2.9
Total 39.6 54.5
Net Income (Loss) $ (29.5) $ 162.1
<PAGE>
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
THREE MONTHS ENDED OCTOBER 31
(In millions of dollars except per Three Months Ended
share amounts) October 31
1999 1998
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 266.9 $ 237.8
Insurance and health care premiums 169.7 184.3
Investment income 11.5 23.7
Other income 18.9 37.3
Total 467.0 483.1
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general
expenses 107.3 103.0
Interest expense 103.5 103.2
Insurance and health care claims
and benefits 136.9 159.7
Other operating expenses 67.3 37.2
Total 415.0 403.1
Income (Loss) of Consolidated Group
Before Income Taxes 52.0 80.0
Provision (credit) for income taxes 14.3 29.0
Income (Loss) of Consolidated Group 37.7 51.0
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit (.5)
Other .1
Total (.5) .1
Net Income (Loss) $ 37.2 $ 51.1
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DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
YEAR ENDED OCTOBER 31 Consolidated
Subsidiaries)
(In millions of dollars except per Year Ended
share amounts) October 31
1999 1998
Net Sales and Revenues
Net sales of equipment $ 9,701.2 $11,925.8
Finance and interest income 1,104.4 1,007.1
Insurance and health care premiums 716.1 692.9
Investment income 61.4 73.1
Other income 167.8 122.6
Total 11,750.9 13,821.5
Costs and Expenses
Cost of goods sold 8,177.5 9,233.7
Research and development expenses 458.4 444.4
Selling, administrative and general
expenses 1,362.1 1,309.4
Interest expense 556.6 519.4
Insurance and health care claims
and benefits 594.9 579.0
Other operating expenses 236.3 175.6
Total 11,385.8 12,261.5
Income of Consolidated Group
Before Income Taxes 365.1 1,560.0
Provision for income taxes 134.7 553.9
Income of Consolidated Group 230.4 1,006.1
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit (.3) .1
Other 9.1 15.2
Total 8.8 15.3
Net Income $ 239.2 $ 1,021.4
Per Share:
Net income - basic $ 1.03 $ 4.20
Net income - diluted $ 1.02 $ 4.16
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATED INCOME (Deere & Company with
YEAR ENDED OCTOBER 31 Financial Services
on the Equity Basis)
(In millions of dollars except per Year Ended
share amounts) October 31
1999 1998
Net Sales and Revenues
Net sales of equipment $ 9,701.2 $11,925.8
Finance and interest income 92.5 131.1
Insurance and health care premiums
Investment income 1.1
Other income 86.1 40.4
Total 9,880.9 12,097.3
Costs and Expenses
Cost of goods sold 8,193.1 9,252.7
Research and development expenses 458.4 444.4
Selling, administrative and general
expenses 953.6 932.5
Interest expense 161.9 128.0
Insurance and health care claims
and benefits
Other operating expenses 28.6 50.4
Total 9,795.6 10,808.0
Income of Consolidated Group
Before Income Taxes 85.3 1,289.3
Provision for income taxes 42.1 458.1
Income of Consolidated Group 43.2 831.2
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit 174.9 162.8
Other 21.1 27.4
Total 196.0 190.2
Net Income $ 239.2 $ 1,021.4
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
YEAR ENDED OCTOBER 31
(In millions of dollars except per Year Ended
share amounts) October 31
1999 1998
Net Sales and Revenues
Net sales of equipment
Finance and interest income $1,027.1 $ 887.0
Insurance and health care premiums 741.9 720.8
Investment income 60.3 73.1
Other income 110.2 85.9
Total 1,939.5 1,766.8
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general
expenses 411.4 382.8
Interest expense 409.9 402.3
Insurance and health care claims
and benefits 602.8 585.8
Other operating expenses 235.6 125.2
Total 1,659.7 1,496.1
Income of Consolidated Group
Before Income Taxes 279.8 270.7
Provision for income taxes 92.6 95.8
Income of Consolidated Group 187.2 174.9
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit (.3) .1
Other .1 .2
Total (.2) .3
Net Income $ 187.0 $ 175.2
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DEERE & COMPANY CONSOLIDATED
CONDENSED CONSOLIDATED (Deere & Company and
BALANCE SHEET Consolidated Subs.)
(In millions of dollars) October 31 October 31
1999 1998
Assets
Cash and short-term
investments $ 295.5 $ 309.7
Cash deposited with
unconsolidated subsidiaries
Cash and cash equivalents 295.5 309.7
Marketable securities 315.5 867.3
Receivables from
unconsolidated subsidiaries
and affiliates 30.2 36.2
Trade accounts and notes
receivable - net 3,251.1 4,059.2
Financing receivables - net 6,742.6 6,332.7
Other receivables 273.9 536.8
Equipment on operating
leases - net 1,654.7 1,209.2
Inventories 1,294.3 1,286.7
Property and equipment - net 1,782.3 1,700.3
Investments in unconsolidated
subsidiaries and affiliates 151.5 172.0
Intangible assets - net 295.1 217.6
Prepaid pension costs 619.9 674.3
Other assets 185.5 109.7
Deferred income taxes 598.1 396.3
Deferred charges 88.0 93.5
Total $17,578.2 $18,001.5
Liabilities and Stockholders'
Equity
Short-term borrowings $ 4,488.2 $ 5,322.1
Payables to unconsolidated
subsidiaries and affiliates 15.5 31.1
Accounts payable and
accrued expenses 2,432.8 2,853.2
Insurance and health care
claims and reserves 55.4 411.3
Accrued taxes 144.8 144.9
Deferred income taxes 63.0 19.7
Long-term borrowings 3,806.2 2,791.7
Retirement benefit accruals
and other liabilities 2,478.0 2,347.7
Total liabilities 13,483.9 13,921.7
Stockholders' equity 4,094.3 4,079.8
Total $17,578.2 $18,001.5
DEERE & COMPANY EQUIPMENT OPERATIONS
CONDENSED CONSOLIDATED (Deere & Company with
BALANCE SHEET Financial
Services on the Equity
Basis)
(In millions of dollars) Oct 31 Oct 31
1999 1998
Assets
Cash and short-term
investments $ 111.7 $ 68.3
Cash deposited with
unconsolidated subsidiaries 117.4 139.6
Cash and cash equivalents 229.1 207.9
Marketable securities 205.3
Receivables from
unconsolidated subsidiaries
and affiliates 266.0 95.5
Trade accounts and notes
receivable - net 3,251.1 4,059.2
Financing receivables - net 118.4 85.8
Other receivables 129.4 139.4
Equipment on operating
leases - net 2.6 218.6
Inventories 1,294.3 1,286.7
Property and equipment - net 1,738.8 1,653.9
Investments in unconsolidated
subsidiaries and affiliates 1,362.8 1,620.4
Intangible assets - net 294.8 210.1
Prepaid pension costs 619.9 674.3
Other assets 95.7 78.3
Deferred income taxes 592.9 372.6
Deferred charges 80.8 63.3
Total $10,281.9 $10,766.0
Liabilities and Stockholders'
Equity
Short-term borrowings $ 642.2 $ 1,512.4
Payables to unconsolidated
subsidiaries and affiliates 15.5 43.0
Accounts payable and
accrued expenses 1,891.9 2,098.1
Insurance and health care
claims and reserves
Accrued taxes 138.1 142.1
Deferred income taxes 7.2 19.7
Long-term borrowings 1,036.1 552.9
Retirement benefit accruals
and other liabilities 2,456.6 2,318.0
Total liabilities 6,187.6 6,686.2
Stockholders' equity 4,094.3 4,079.8
Total $10,281.9 $10,766.0
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED CONSOLIDATED
BALANCE SHEET
(In millions of dollars) Oct 31 Oct 31
1999 1998
Assets
Cash and short-term
investments $ 183.8 $ 241.5
Cash deposited with
unconsolidated subsidiaries
Cash and cash equivalents 183.8 241.5
Marketable securities 110.1 867.3
Receivables from
unconsolidated subsidiaries
and affiliates 4.8
Trade accounts and notes
receivables - net
Financing receivables - net 6,624.2 6,246.9
Other receivables 144.5 397.3
Equipment on operating
leases - net 1,652.2 990.6
Inventories
Property and equipment - net 43.5 46.4
Investments in unconsolidated
subsidiaries and affiliates 9.9 20.3
Intangible assets - net .3 7.6
Prepaid pension costs
Other assets 89.8 31.4
Deferred income taxes 5.2 23.7
Deferred charges 7.2 30.1
Total $8,875.5 $8,903.1
Liabilities and Stockholders'
Equity
Short-term borrowings $3,846.0 $3,809.7
Payables to unconsolidated
subsidiaries and affiliates 358.1 187.0
Accounts payable and
accrued expenses 540.8 755.1
Insurance and health care
claims and reserves 55.4 411.3
Accrued taxes 6.8 2.8
Deferred income taxes 55.8
Long-term borrowings 2,770.1 2,238.8
Retirement benefit accruals
and other liabilities 21.3 29.7
Total liabilities 7,654.3 7,434.4
Stockholders' equity 1,221.2 1,468.7
Total $8,875.5 $8,903.1
Page 12
<PAGE>
DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED CASH FLOWS (Deere & Company and
YEAR ENDED OCTOBER 31 Consolidated Subs.)
Year Ended
October 31
(In millions of dollars) 1999 1998
Cash Flows from Operating Activities
Net income $ 239.2 $1,021.4
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for doubtful receivables 73.5 57.0
Provision for depreciation 513.3 418.0
Undistributed earnings of
unconsolidated subsidiaries
and affiliates (3.7) (9.7)
Provision (credit) for deferred
income taxes (66.1) 141.9
Changes in assets and liabilities:
Receivables 802.3 (724.6)
Inventories 50.7 (192.6)
Accounts payable and accrued
expenses (170.8) (40.7)
Insurance and health care claims
and reserves (8.5) (3.5)
Retirement benefit accruals 215.7 (84.9)
Other (211.1) (165.4)
Net cash provided by operating
activities 1,434.5 416.9
Cash Flows from Investing Activities
Collections of financing receivables 6,017.1 5,685.3
Proceeds from sales of financing
receivables 2,481.6 1,859.9
Proceeds from maturities and sales
of marketable securities 115.4 187.3
Proceeds from sales of equipment on
operating leases 191.3 154.5
Proceeds from sale of business 179.1
Cost of financing receivables
acquired (8,186.2) (7,521.5)
Purchases of marketable securities (92.9) (224.9)
Purchases of property and
equipment (315.5) (434.8)
Cost of operating leases acquired (833.5) (752.3)
Acquisitions of businesses (215.8) (103.0)
Other 7.6 27.6
Net cash used for investing
activities (651.8) (1,121.9)
Cash Flows from Financing Activities
Increase (decrease) in short-term
borrowings (1,650.7) 802.3
Change in intercompany
receivables/payables
Proceeds from long-term borrowings 2,902.1 2,067.6
Principal payments on long-term
borrowings (1,796.2) (1,106.4)
Proceeds from issuance of
common stock 4.2 22.7
Repurchases of common stock (49.0) (885.9)
Dividends paid (205.4) (212.4)
Other (.1) (1.2)
Net cash provided by (used for)
financing activities (795.1) 686.7
Effect of Exchange Rate
Changes on Cash (1.8) (2.0)
Net Increase (Decrease) in Cash
and Cash Equivalents (14.2) (20.3)
Cash and Cash Equivalents at
Beginning of Period 309.7 330.0
Cash and Cash Equivalents at
End of Period $ 295.5 $ 309.7
DEERE & COMPANY EQUIPMENT OPERATIONS
STATEMENT OF CONSOLIDATE CASH FLOWS (Deere & Company with
YEAR ENDED OCTOBER 31 Financial Services on
the Equity Basis)
Year Ended
October 31
(In millions of dollars) 1999 1998
Cash Flows from Operating Activities
Net income $ 239.2 $1,021.4
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for doubtful receivables 5.6 6.4
Provision for depreciation 269.9 282.6
Undistributed earnings of
unconsolidated subsidiaries
and affiliates (115.3) (127.9)
Provision (credit) for deferred
income taxes (106.9) 115.3
Changes in assets and liabilities:
Receivables 802.4 (739.1)
Inventories 50.7 (192.6)
Accounts payable and accrued
expenses (172.1) (70.0)
Insurance and health care claims
and reserves
Retirement benefit accruals 222.0 (82.9)
Other (120.4) (101.3)
Net cash provided by operating
activities 1,075.1 111.9
Cash Flows from Investing Activities
Collections of financing receivables 23.0 36.1
Proceeds from sales of financing
receivables
Proceeds from maturities and sales
of marketable securities
Proceeds from sales of equipment on
operating leases 65.7
Proceeds from sale of business 179.1
Cost of financing receivables
acquired (50.8) (41.0)
Purchases of marketable securities
Purchases of property and
equipment (304.4) (421.6)
Cost of operating leases acquired (2.7) (123.5)
Acquisitions of businesses (151.9) (95.9)
Other 19.7 13.3
Net cash used for investing
activities (288.0) (566.9)
Cash Flows from Financing Activities
Increase (decrease) in short-term
borrowings (961.9) 1,184.8
Change in intercompany
receivables/payables (32.5) (15.0)
Proceeds from long-term borrowings 499.8 199.4
Principal payments on long-term
borrowings (19.1) (38.9)
Proceeds from issuance of
common stock 4.2 22.7
Repurchases of common stock (49.0) (885.9)
Dividends paid (205.4) (212.4)
Other (.2) (1.1)
Net cash provided by (used for)
financing activities (764.1) 253.6
Effect of Exchange Rate
Changes on Cash (1.8) (1.9)
Net Increase (Decrease) in Cash
and Cash Equivalents 21.2 (203.3)
Cash and Cash Equivalents at
Beginning of Period 207.9 411.2
Cash and Cash Equivalents at
End of Period $ 229.1 $ 207.9
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED CASH FLOWS
YEAR ENDED OCTOBER 31 October 31
(In millions of dollars) 1999 1998
Cash Flows from Operating Activities
Net income $ 187.0 $ 175.2
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for doubtful receivables 67.9 50.6
Provision for depreciation 243.4 135.4
Undistributed earnings of
unconsolidated subsidiaries
and affiliates (.4) (.2)
Provision (credit) for deferred
income taxes 40.8 26.6
Changes in assets and liabilities:
Receivables 14.4
Inventories
Accounts payable and accrued
expenses 1.3 29.3
Insurance and health care claims
and reserves (8.5) (3.5)
Retirement benefit accruals (6.3) (2.1)
Other (90.7) (63.9)
Net cash provided by
operating activities 434.5 361.8
Cash Flows from Investing Activities
Collections of financing receivables 5,994.1 5,649.2
Proceeds from sales of financing
receivables 2,481.6 1,859.9
Proceeds from maturities and sales
of marketable securities 115.4 187.3
Proceeds from sales of equipment on
operating leases 191.3 88.8
Proceeds from sale of business
Cost of financing receivables
acquired (8,135.4) (7,480.5)
Purchases of marketable securities (92.9) (224.9)
Purchases of property and
equipment (11.1) (13.1)
Cost of operating leases acquired (830.8) (628.8)
Acquisitions of businesses (63.9) (7.2)
Other (12.2) 15.6
Net cash used for investing
activities (363.9) (553.7)
Cash Flows from Financing Activities
Increase (decrease) in short-term
borrowings (688.8) (382.5)
Change in intercompany
receivables/payables 10.2 (195.4)
Proceeds from long-term borrowings 2,402.3 1,868.2
Principal payments on long-term
borrowings (1,777.0) (1,067.5)
Proceeds from issuance of
common stock
Repurchases of common stock
Dividends paid (75.0) (56.8)
Other (1.3)
Net cash provided by (used for)
financing activities (128.3) 164.7
Effect of Exchange Rate
Changes on Cash (.1)
Net Increase (Decrease) in Cash
and Cash Equivalents (57.7) (27.3)
Cash and Cash Equivalents at
Beginning of Period 241.5 268.8
Cash and Cash Equivalents at End
of Period $ 183.8 $ 241.5
Page 13
<PAGE>
<TABLE>
Business Segment Data Restated to Reflect the Adoption of FAS 131
In Millions of Dollars
Three Months Ended Twelve
Months Ended
----------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Apr Jul Oct Jan Apr Jul Oct Oct
1998 1998 1998 1998 1999 1999 1999 1997 1998
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Sales and
Revenues:
- -------------
Agricultural
equipment
net sales 1,504 2,282 2,037 1,640 1,157 1,581 1,229 7,289 7,463
Construction
equipment
net sales 512 634 627 508 387 559 531 1,998 2,281
Commercial and
consumer
equipment
net sales 389 694 554 545 429 812 717 1,795 2,182
Other net sales 5 12
----- ----- ----- ----- ----- ----- ----- ----- -----
Total net
sales 2,405 3,610 3,218 2,693 1,973 2,957 2,489 11,082 11,926
Credit revenues 215 233 248 275 261 278 311 818 971
Other revenues 226 227 228 244 225 233 236 891 925
----- ----- ----- ----- ----- ----- ----- ----- -----
Total net
sales and
revenues 2,846 4,070 3,694 3,212 2,459 3,468 3,036 12,791 13,822
===== ===== ===== ===== ===== ===== ===== ====== ======
Operating
Profit:
- ---------
Agricultural
equipment 201 360 278 102 18 61 (1) 1,048 941
Construction
equipment 71 95 107 53 25 63 46 245 326
Commercial and
consumer
equipment 18 96 46 53 12 89 50 115 213
Credit 52 55 68 81 65 65 90 232 256
Other 2 9 2 (2) (3) (11) (24) 11
----- ----- ----- ----- ----- ----- ----- ----- -----
Total
operating
profit 344 615 501 287 117 278 174 1,616 1,747
===== ===== ===== ===== ===== ===== ===== ====== ======
31 Oct 31 Oct
1997 1998
Assets: ------ ------
- -------
Agricultural
equipment 4,369 5,324
Construction
equipment 956 950
Commercial and
consumer
equipment 1,253 1,574
Credit 7,365 7,674
Other 1,235 1,236
Corporate 1,142 1,244
------ ------
Total assets 16,320 18,002
====== ======
Note: During the fourth quarter of 1999, the company adopted FASB Statement No.
131, Disclosures about Segments of an Enterprise and Related Information.
Consequently, the operating segments have been redefined to coincide with
internal management reporting. The manufacture and distribution of engines and
drivetrain components for the original equipment manufacturer market, previously
included in the construction equipment segment, are now allocated to all three
major equipment segments. In addition, the operations of certain units involved
in the development and marketing of special technologies, which were previously
included in the agricultural equipment and the commercial and consumer equipment
segments, have been aggregated and included with the health care and insurance
operations in the "Other" category as they do not meet the materiality threshold
of FASB Statement No. 131. This table shows the restated results of the newly
defined business segments.
</TABLE>
