EXHIBIT 99
(DEERE LOGO) Contact: Gregory T. Derrick
Deere & Company
Moline, IL 61265
(309) 765-5290
DEERE REPORTS LOWER SECOND-QUARTER EARNINGS
PRIMARILY DUE TO WEAK FARM CONDITIONS
- ------------------------------------------------------------
For Immediate Release May 18, 1999
MOLINE, IL --Deere & Company today reported worldwide net
income of $150.1 million, or $.65 per share (basic and
diluted), for the second quarter ended April 30, compared with
$365.2 million, or $1.48 per share ($1.45 diluted), in last
year's second quarter. Net income for the first six months of
1999 was $199.8 million, or $.86 per share (basic and
diluted), compared with $568.5 million, or $2.29 per share
($2.26 diluted), last year.
Farm equipment demand continued to decline during the
quarter as a result of depressed agricultural commodity
prices, which are reducing farm income. Most affected by the
downturn has been the high-horsepower, high-margin farm
machinery, the area in which Deere has a particularly strong
market position. Although demand has moved down, the company
is continuing to gain market share in many categories of
agricultural equipment.
"In spite of the impact of a sharp downturn in commodity
prices and continuing weakness in domestic farm income, Deere
has remained on a profitable course largely due to efforts to
expand our non-agricultural businesses and to strengthen our
international presence," noted Hans W. Becherer, chairman and
chief executive officer. At the same time, he said the
company's many process-excellence and supply management
initiatives are moving ahead and are expected to bring future
benefits in terms of quality improvement and cost efficiency.
Worldwide net sales and revenues were $3.468 billion for
the second quarter and $5.927 billion for the first six
months, compared with $4.070 billion and $6.916 billion,
respectively, last year. Net sales of the agricultural,
construction, and commercial and consumer equipment divisions
were $2.957 billion for the second quarter and $4.930 billion
for the first six months of 1999, compared with $3.610 billion
and $6.015 billion for the periods a year ago. Overseas sales
were down 13 percent for the quarter and 9 percent for the
first six months. Overall, the company's worldwide physical
volume of sales decreased 17 percent for both the quarterly
and six-month periods.
Equipment operations had net income of $102.8 million for
the second quarter and $109.5 million for the first six months
of 1999, compared with $321.3 million and $488.2 million,
respectively, last year. Worldwide equipment operating profit,
which excludes interest costs,
taxes and certain other corporate expenses, was $208 million
for the quarter and $259 million for six months, compared with
$551 million and $839 million last year.
. Worldwide agricultural equipment operating profit was $58
million for the second quarter and $82 million for the first
six months, compared with $364 million and $570 million last
year. Results continued to be adversely affected by lower
sales and production levels, especially of high-horsepower,
high-margin equipment, as well as by inefficiencies primarily
related to the production cutbacks. In addition, sales
incentive costs remained higher than last year with an
emphasis on used goods. Overseas operations, which continued
to benefit from many management initiatives, were again
primary contributors to the division's profit. Largely due to
the success of innovative new products, Deere's European
operations experienced strong performance and saw further
growth in market share.
. Worldwide construction equipment operating profit totaled
$54 million for the second quarter and $67 million for the
first six months of 1999, compared with $91 million and $155
million for the periods last year. Initial stages of the
company's Estimate to Cash order-fulfillment process resulted
in lower sales to dealers and had an adverse impact on
operating results. The process, launched earlier in the year,
is aimed at better matching product availability to customer
requirements while reducing field inventories. Also having a
negative effect on second-quarter results were higher growth
expenditures for the construction equipment division, as well
as lower sales and production volumes of the power-systems
operations.
. Worldwide commercial and consumer equipment operating
profit was $96 million for the quarter and $110 million for
six months, compared with $96 million and $114 million last
year. Current-year results were adversely affected by higher
costs for the development, promotion and introduction of new
products. This was partly offset by higher worldwide sales and
production volumes resulting from a continuation of strong
retail demand driven by the success of new products.
Trade receivables for agricultural and construction
equipment at April 30 were lower than a year ago, due to
agricultural-equipment production volumes trailing retail
demand and the impact on construction equipment of the
previously mentioned Estimate to Cash effort. Receivables
related to used agricultural equipment, although declining,
continued at high levels. Commercial and consumer equipment
trade receivables increased as a result of higher sales
volumes and seasonal requirements. Company-owned inventories
ended the quarter higher than a year ago due to the Estimate
to Cash program as well as the introduction of new products
and the start-up of new facilities for the manufacture of
commercial and consumer equipment.
Net income of the financial services operations was $45.5
million for the second quarter and $89.0 million for the first
six months, compared with respective year-earlier totals of
$41.2 million and $77.2 million. Quarterly results reflect
significant improvement in the company's credit operations,
partially offset by adverse underwriting results in the
insurance business. For the first six months, both credit and
health-care operations had higher earnings, which were partly
offset by adverse underwriting results in insurance.
MARKET CONDITIONS AND OUTLOOK
. AGRICULTURAL EQUIPMENT. Due to extremely depressed
agricultural commodity prices, the farm sector remains under
pressure. USDA estimates of net farm cash income deteriorated
during the quarter and farm real estate values have been
declining in many parts of the country. These trends reflect a
continued imbalance between rising worldwide supplies of grain
and oilseeds and soft demand for these commodities resulting
from the economic problems in Asia and other parts of the
world. Although there are indications that the Asian economies
have begun to stabilize, demand from that region for farm
commodities is not anticipated to increase this year.
Commodity prices are also suffering from a strong harvest in
key growing regions of South America. In addition, credit
availability for equipment purchases in emerging markets is
expected to remain limited. As a consequence of these factors,
retail demand for farm equipment is now projected to decline
by 25 to 30 percent in North America this year, with declines
of 5 to 15 percent expected in other major markets.
Accordingly, the company intends to proceed with further
reductions in factory schedules to bring down field
inventories.
. CONSTRUCTION EQUIPMENT. As a result of an environment of
low inflation and interest rates, housing starts are expected
to be near last year's levels. Nonresidential construction is
expected to show little growth this year, but public
construction, led by highway expenditures, is forecast to
increase by approximately 2 percent. However, company sales
will be negatively affected by the Estimate to Cash
initiative, which is resulting in reduced field inventories
and, in its initial phases, lower sales to dealers. In
addition, the construction-equipment market has experienced
increased discounting and become more competitive. These
factors are expected to lead to lower results for the
company's construction-equipment operations than previously
anticipated.
. COMMERCIAL AND CONSUMER EQUIPMENT. Retail demand for
Deere's commercial and consumer products is expected to remain
at strong levels this year, driven principally by positive
customer acceptance of the many innovative products recently
introduced. This outlook assumes a continuation of current
economic conditions and normal weather during the important
spring selling season.
. FINANCIAL SERVICES. A larger overall receivable and lease
portfolio should provide the basis for continued improvement
in the credit operations this year. Health care is also well
positioned for improved results, while Deere's insurance
operations face an increasingly challenging environment.
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. Third-
quarter physical volumes are also projected to be 18 to 20
percent lower than in the comparable 1998 period. As a result,
Deere's major U.S. agricultural-equipment manufacturing
facilities are scheduled to be shut down for approximately 25
percent of the working days during the second half of fiscal
1999, versus 11 percent in the first half of this year and 5
percent for the second half of 1998.
Even though the decline in physical volume is steeper than
had been anticipated in the first quarter, especially for
large, high-margin products, the company "remains committed to
balancing its receivables and inventories with the latest
estimates of demand," Becherer said.
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 $36.5 million
in the second quarter and $73.9 million for the first six
months of 1999, compared with $32.9 million and $63.5 million
for the same periods last year. The 1999 second quarter and
year-to-date results benefited from higher income on an 8
percent increase in the average balance of receivables and
leases financed during the first six months and a reduction in
leverage position, partially offset by higher operating
expenses. In addition, year-to-date results benefited from
higher gains on the sales of retail notes.
Net receivables and leases financed by John Deere Capital
Corporation were $7.690 billion at April 30, 1999, compared
with $6.812 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, pursuant to the
recently announced acquisition of a controlling interest. This
was partially offset by the previously mentioned retail note
sales during the same period
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. Statements herein which 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 (including the effect of conversion to the
euro); technological difficulties (including Year 2000
compliance); accounting standards and other risks and
uncertainties. Economic difficulties in Asia and other parts
of the world could continue to adversely affect North American
grain and meat exports. Retail sales of agricultural equipment
are especially affected by the weather in the summer, 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. 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.
SECOND QUARTER 1999 PRESS RELEASE
Net sales and revenues:
(millions of dollars except per share amounts)
Three Months Ended
April 30
%
1999 1998 Change
Net sales:
Agricultural equipment $1,545 $2,217 -30
Construction equipment 617 715 -14
Commercial and consumer equipment 795 678 +17
Total net sales 2,957 3,610 -18
Financial Services revenues 480 424 +13
Other revenues 31 36 -14
Total net sales and revenues $3,468 $4,070 -15
United States and Canada:
Equipment net sales $2,190 $2,733 -20
Financial Services revenues 480 424 +13
Total 2,670 3,157 -15
Overseas net sales 767 877 -13
Other revenues 31 36 -14
Total net sales and revenues $3,468 $4,070 -15
Operating profit:
Agricultural equipment $ 58 $ 364 -84
Construction equipment 54 91 -41
Commercial and consumer equipment 96 96
Equipment Operations* 208 551 -62
Financial Services 70 64 + 9
Total operating profit 278 615 -55
Interest and corporate
expenses - net (45) (45)
Income taxes (83) (205) -60
Net income $ 150 $ 365 -59
Per Share:
Net income $ .65 $ 1.48 -56
Net income - diluted $ .65 $ 1.45 -55
* Includes overseas operating profit $ 99 $ 105 - 6
Net sales and revenues:
(millions of dollars except per share amounts)
Six Months Ended
April 30
%
1999 1998 Change
Net sales:
Agricultural equipment $2,667 $3,668 -27
Construction equipment 1,060 1,293 -18
Commercial and consumer equipment 1,203 1,054 +14
Total net sales 4,930 6,015 -18
Financial Services revenues 940 825 +14
Other revenues 57 76 -25
Total net sales and revenues $5,927 $6,916 -14
United States and Canada:
Equipment net sales $3,592 $4,548 -21
Financial Services revenues 940 825 +14
Total 4,532 5,373 -16
Overseas net sales 1,338 1,467 - 9
Other revenues 57 76 -25
Total net sales and revenues $5,927 $6,916 -14
Operating profit:
Agricultural equipment $ 82 $ 570 -86
Construction equipment 67 155 -57
Commercial and consumer equipment 110 114 - 4
Equipment Operations* 259 839 -69
Financial Services 136 121 +12
Total operating profit 395 960 -59
Interest and corporate
expenses - net (86) (69) +25
Income taxes (109) (323) -66
Net income $ 200 $ 568 -65
Per Share:
Net income $ .86 $ 2.29 -62
Net income - diluted $ .86 $ 2.26 -62
* Includes overseas operating profit $ 152 $ 162 - 6
Selected balance sheet data:
(millions of dollars and shares)
April 30 October 31 April 30
1999 1998 1998
Equipment Operations:
Trade accounts and notes
receivable - net $ 4,272 $4,059 $4,384
Inventories $ 1,584 $1,287 $1,511
Financial Services:
Financing receivables and
leases financed - net $ 8,846 $7,237 $7,595
Financing receivables and
leases administered -
net $10,393 $9,625 $8,713
Insurance companies'
assets $ 1,008 $ 995 $ 985
Health care companies'
assets $ 215 $ 234 $ 237
Average shares outstanding 232.2 243.3 248.1
DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
Consolidated
Subsidiaries)
Millions of dollars except per Three Months Ended
share amounts April 30
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $2,957.1 $3,609.9
Finance and interest income 274.9 239.1
Insurance and health care premiums 186.1 174.7
Investment income 16.0 16.5
Other income 34.3 29.4
Total 3,468.4 4,069.6
Costs and Expenses
Cost of goods sold 2,438.7 2,737.2
Research and development expenses 113.1 114.2
Selling, administrative and general
expenses 340.6 340.6
Interest expense 142.8 129.2
Insurance and health care claims
and benefits 152.3 139.1
Other operating expenses 50.1 41.9
Total 3,237.6 3,502.2
Income of Consolidated Group
Before Income Taxes 230.8 567.4
Provision for income taxes 82.7 205.2
Income of Consolidated Group 148.1 362.2
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit .2 .2
Insurance
Health Care .1
Other 1.8 2.7
Total 2.0 3.0
Net Income $ 150.1 $ 365.2
Per Share:
Net income $ .65 $ 1.48
Net income - diluted $ .65 $ 1.45
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 Three Months Ended
share amounts April 30
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $2,957.1 $3,609.9
Finance and interest income 24.0 30.6
Insurance and health care premiums
Investment income
Other income 17.2 9.4
Total 2,998.3 3,649.9
Costs and Expenses
Cost of goods sold 2,442.8 2,741.9
Research and development expenses 113.1 114.2
Selling, administrative and general
expenses 237.1 243.1
Interest expense 42.7 33.7
Insurance and health care claims
and benefits
Other operating expenses 1.5 13.6
Total 2,837.2 3,146.5
Income of Consolidated Group
Before Income Taxes 161.1 503.4
Provision for income taxes 58.3 182.1
Income of Consolidated Group 102.8 321.3
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit 42.3 35.3
Insurance 1.6 4.3
Health Care 1.6 1.6
Other 1.8 2.7
Total 47.3 43.9
Net Income $ 150.1 $ 365.2
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
Millions of dollars except per Three Months Ended
share amounts April 30
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 255.1 $ 212.3
Insurance and health care premiums 192.5 182.0
Investment income 16.0 16.5
Other income 23.2 21.0
Total 486.8 431.8
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general
expenses 104.9 98.9
Interest expense 104.3 99.3
Insurance and health care claims
and benefits 153.7 141.2
Other operating expenses 54.3 28.4
Total 417.2 367.8
Income of Consolidated Group
Before Income Taxes 69.6 64.0
Provision for income taxes 24.3 23.1
Income of Consolidated Group 45.3 40.9
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit .2 .2
Insurance
Health Care .1
Other
Total .2 .3
Net Income $ 45.5 $ 41.2
DEERE & COMPANY CONSOLIDATED
STATEMENT OF CONSOLIDATED INCOME (Deere & Company and
Consolidated
Subsidiaries)
Millions of dollars except per Six Months Ended
share amounts April 30
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $4,930.3 $6,014.6
Finance and interest income 534.0 472.4
Insurance and health care premiums 365.9 343.7
Investment income 34.7 33.5
Other income 62.1 51.5
Total 5,927.0 6,915.7
Costs and Expenses
Cost of goods sold 4,092.5 4,603.7
Research and development expenses 209.0 208.8
Selling, administrative and general
expenses 642.5 623.7
Interest expense 276.9 244.0
Insurance and health care claims
and benefits 306.2 277.7
Other operating expenses 92.8 69.5
Total 5,619.9 6,027.4
Income of Consolidated Group
Before Income Taxes 307.1 888.3
Provision for income taxes 109.2 323.0
Income of Consolidated Group 197.9 565.3
Equity in Income of Unconsolidated
Subsidiaries and Affiliates
Credit .5
Insurance
Health Care .1 .1
Other 1.3 3.1
Total 1.9 3.2
Net Income $ 199.8 $ 568.5
Per Share:
Net income $ .86 $ 2.29
Net income - diluted $ .86 $ 2.26
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 Six Months Ended
share amounts April 30
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment $4,930.3 $6,014.6
Finance and interest income 45.8 62.8
Insurance and health care premiums
Investment income
Other income 32.7 20.2
Total 5,008.8 6,097.6
Costs and Expenses
Cost of goods sold 4,101.2 4,612.9
Research and development expenses 209.0 208.8
Selling, administrative and general
expenses 444.9 437.7
Interest expense 82.7 55.4
Insurance and health care claims
and benefits
Other operating expenses (.7) 15.3
Total 4,837.1 5,330.1
Income of Consolidated Group
Before Income Taxes 171.7 767.5
Provision for income taxes 62.2 279.3
Income of Consolidated Group 109.5 488.2
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit 83.9 68.1
Insurance .6 9.8
Health Care 4.5 (.7)
Other 1.3 3.1
Total 90.3 80.3
Net Income $ 199.8 $ 568.5
DEERE & COMPANY FINANCIAL SERVICES
STATEMENT OF CONSOLIDATED INCOME
Millions of dollars except per Six Months Ended
share amounts April 30
(Unaudited) 1999 1998
Net Sales and Revenues
Net sales of equipment
Finance and interest income $ 495.8 $ 415.5
Insurance and health care premiums 379.1 357.4
Investment income 34.7 33.5
Other income 44.0 33.5
Total 953.6 839.9
Costs and Expenses
Cost of goods sold
Research and development expenses
Selling, administrative and general
expenses 200.1 189.8
Interest expense 201.9 194.5
Insurance and health care claims
and benefits 309.4 280.6
Other operating expenses 106.8 54.2
Total 818.2 719.1
Income of Consolidated Group
Before Income Taxes 135.4 120.8
Provision for income taxes 47.0 43.7
Income of Consolidated Group 88.4 77.1
Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates
Credit .5
Insurance
Health Care .1 .1
Other
Total .6 .1
Net Income $ 89.0 $ 77.2
DEERE & COMPANY CONSOLIDATED
CONDENSED CONSOLIDATED (Deere & Company and
BALANCE SHEET Consolidated Subsidiaries)
Millions of dollars April 30 October 31 April 30
(Unaudited) 1999 1998 1998
Assets
Cash and short-term
investments $ 295.3 $ 309.7 $ 334.4
Cash deposited with
unconsolidated subsidiaries
Cash and cash equivalents 295.3 309.7 334.4
Marketable securities 858.0 867.3 867.0
Receivables from
unconsolidated subsidiaries
and affiliates 42.7 36.2 31.3
Trade accounts and notes
receivable - net 4,271.8 4,059.2 4,383.8
Financing receivables - net 7,521.6 6,332.7 6,880.6
Other receivables 407.0 536.8 364.7
Equipment on operating
leases - net 1,417.5 1,209.2 988.8
Inventories 1,584.4 1,286.7 1,511.1
Property and equipment - net 1,672.7 1,700.3 1,554.1
Investments in unconsolidated
subsidiaries and affiliates 181.4 172.0 154.6
Intangible assets - net 273.9 217.6 186.4
Prepaid pension costs 651.7 674.3 563.6
Deferred income taxes 456.8 396.3 529.6
Other assets and
deferred charges 224.5 203.2 203.2
Total $19,859.3 $18,001.5 $18,553.2
Liabilities and Stockholders'
Equity
Short-term borrowings $ 6,648.9 $ 5,322.1 $ 5,993.3
Payables to unconsolidated
subsidiaries and affiliates 51.1 31.1 33.9
Accounts payable and
accrued expenses 2,586.6 2,853.2 2,704.4
Insurance and health care
claims and reserves 405.8 411.3 392.6
Accrued taxes 94.5 144.9 229.4
Deferred income taxes 18.4 19.7 21.5
Long-term borrowings 3,485.1 2,791.7 2,517.0
Retirement benefit accruals
and other liabilities 2,394.3 2,347.7 2,395.8
Total liabilities 15,684.7 13,921.7 14,287.9
Stockholders' equity 4,174.6 4,079.8 4,265.3
Total $19,859.3 $18,001.5 $18,553.2
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 April 30 October 31 April 30
(Unaudited) 1999 1998 1998
Assets
Cash and short-term
investments $ 61.1 $ 68.3 $ 91.3
Cash deposited with
unconsolidated subsidiaries 68.1 139.6 222.7
Cash and cash equivalents 129.2 207.9 314.0
Marketable securities
Receivables from
unconsolidated subsidiaries
and affiliates 242.2 95.5 281.5
Trade accounts and notes
receivable - net 4,271.8 4,059.2 4,383.8
Financing receivables - net 93.5 85.8 79.7
Other receivables 43.8 139.4
Equipment on operating
leases - net 218.6 194.7
Inventories 1,584.4 1,286.7 1,511.1
Property and equipment - net 1,624.4 1,653.9 1,508.6
Investments in unconsolidated
subsidiaries and affiliates 1,756.1 1,620.4 1,539.3
Intangible assets - net 267.0 210.1 178.2
Prepaid pension costs 651.7 674.3 563.6
Deferred income taxes 435.7 372.6 485.5
Other assets and
deferred charges 147.5 141.6 134.5
Total $11,247.3 $10,766.0 $11,174.5
Liabilities and Stockholders'
Equity
Short-term borrowings $ 2,191.7 $ 1,512.4 $ 1,741.5
Payables to unconsolidated
subsidiaries and affiliates 51.1 43.0 33.9
Accounts payable and
accrued expenses 1,781.6 2,098.1 1,979.0
Insurance and health care
claims and reserves
Accrued taxes 86.4 142.1 219.8
Deferred income taxes 5.0 19.7 21.1
Long-term borrowings 596.5 552.9 551.7
Retirement benefit accruals
and other liabilities 2,360.4 2,318.0 2,362.2
Total liabilities 7,072.7 6,686.2 6,909.2
Stockholders' equity 4,174.6 4,079.8 4,265.3
Total $11,247.3 $10,766.0 $11,174.5
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED CONSOLIDATED
BALANCE SHEET
Millions of dollars April 30 October 31 April 30
(Unaudited) 1999 1998 1998
Assets
Cash and short-term
investments $ 234.1 $ 241.5 $ 243.2
Cash deposited with
unconsolidated subsidiaries
Cash and cash equivalents 234.1 241.5 243.2
Marketable securities 858.0 867.3 867.0
Receivables from
unconsolidated subsidiaries
and affiliates 5.1
Trade accounts and notes
receivables - net
Financing receivables - net 7,428.1 6,246.9 6,801.0
Other receivables 363.2 397.3 364.7
Equipment on operating
leases - net 1,417.5 990.6 794.1
Inventories
Property and equipment - net 48.3 46.4 45.5
Investments in unconsolidated
subsidiaries and affiliates 10.2 20.3 17.6
Intangible assets - net 6.9 7.6 8.2
Prepaid pension costs
Deferred income taxes 21.1 23.7 44.1
Other assets and
deferred charges 77.0 61.5 68.6
Total $10,469.5 $8,903.1 $9,254.0
Liabilities and Stockholders'
Equity
Short-term borrowings $ 4,457.2 $3,809.7 $4,251.8
Payables to unconsolidated
subsidiaries and affiliates 272.7 187.0 473.0
Accounts payable and
accrued expenses 804.9 755.1 725.4
Insurance and health care
claims and reserves 405.8 411.3 392.6
Accrued taxes 8.1 2.8 9.6
Deferred income taxes 13.4 .4
Long-term borrowings 2,888.6 2,238.8 1,965.3
Retirement benefit accruals
and other liabilities 33.9 29.7 33.6
Total liabilities 8,884.6 7,434.4 7,851.7
Stockholders' equity 1,584.9 1,468.7 1,402.3
Total $10,469.5 $8,903.1 $9,254.0
DEERE & COMPANY CONSOLIDATED
CONDENSED STATEMENT OF (Deere & Company and
CONSOLIDATED CASH FLOWS Consolidated Subsidiaries)
Six Months Ended
April 30
Millions of dollars (Unaudited) 1999 1998
Cash Flows from Operating Activities
Net income $ 199.8 $ 568.5
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities (527.4) (1,210.9)
Net cash provided by (used for)
operating activities (327.6) (642.4)
Cash Flows from Investing Activities
Collections and sales of
financing receivables 3,378.8 3,130.8
Proceeds from maturities and
sales of marketable securities 76.6 73.1
Cost of financing receivables
acquired (4,007.1) (3,603.1)
Purchases of marketable securities (62.5) (117.3)
Purchases of property and
equipment (116.5) (161.2)
Cost of operating leases acquired (389.6) (345.6)
Acquisitions of businesses (62.2) (48.4)
Other 105.6 95.9
Net cash used for investing
activities (1,076.9) (975.8)
Cash Flows from Financing Activities
Increase in short-term
borrowings 904.2 1,659.7
Change in intercompany
receivables/payables
Proceeds from long-term borrowings 1,548.9 781.0
Principal payments on long-term
borrowings (915.2) (334.2)
Proceeds from issuance of
common stock 3.1 20.7
Repurchases of common stock (46.1) (346.8)
Dividends paid (102.7) (157.5)
Other (1.2) .9
Net cash provided by
financing activities 1,391.0 1,623.8
Effect of Exchange Rate
Changes on Cash (.9) (1.2)
Net Increase (Decrease) in Cash
and Cash Equivalents (14.4) 4.4
Cash and Cash Equivalents at
Beginning of Period 309.7 330.0
Cash and Cash Equivalents at
End of Period $ 295.3 $ 334.4
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.
DEERE & COMPANY EQUIPMENT OPERATIONS
CONDENSED STATEMENT OF (Deere & Company with
CONSOLIDATED CASH FLOWS Financial Services on the
Equity Basis)
Six Months Ended
April 30
Millions of dollars (Unaudited) 1999 1998
Cash Flows from Operating Activities
Net income $ 199.8 $ 568.5
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities (658.4) (1,344.6)
Net cash provided by (used for)
operating activities (458.6) (776.1)
Cash Flows from Investing Activities
Collections and sales of
financing receivables 12.3 15.3
Proceeds from maturities and
sales of marketable securities
Cost of financing receivables
acquired (22.2) (11.7)
Purchases of marketable securities
Purchases of property and
equipment (110.2) (156.6)
Cost of operating leases acquired (37.5)
Acquisitions of businesses (41.5) (43.7)
Other 4.7 43.3
Net cash used for investing
activities (156.9) (190.9)
Cash Flows from Financing Activities
Increase in short-term
borrowings 637.9 1,593.8
Change in intercompany
receivables/payables (2.3) (213.5)
Proceeds from long-term borrowings 48.9
Principal payments on long-term
borrowings (26.7)
Proceeds from issuance of
common stock 3.1 20.7
Repurchases of common stock (46.1) (346.8)
Dividends paid (102.7) (157.5)
Other (1.1) .9
Net cash provided by
financing activities 537.7 870.9
Effect of Exchange Rate
Changes on Cash (.9) (1.1)
Net Increase (Decrease) in Cash
and Cash Equivalents (78.7) (97.2)
Cash and Cash Equivalents at
Beginning of Period 207.9 411.2
Cash and Cash Equivalents at
End of Period $ 129.2 $ 314.0
DEERE & COMPANY FINANCIAL SERVICES
CONDENSED STATEMENT OF Six Months Ended
CONSOLIDATED CASH FLOWS April 30
Millions of dollars (Unaudited) 1999 1998
Cash Flows from Operating Activities
Net income $ 89.0 $ 77.2
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities 51.9 88.3
Net cash provided by (used for)
operating activities 140.9 165.5
Cash Flows from Investing Activities
Collections and sales of
financing receivables 3,366.5 3,115.5
Proceeds from maturities and
sales of marketable securities 76.6 73.1
Cost of financing receivables
acquired (3,984.9) (3,591.4)
Purchases of marketable securities (62.5) (117.3)
Purchases of property and
equipment (6.3) (4.7)
Cost of operating leases acquired (389.6) (308.2)
Acquisitions of businesses (20.7) (4.6)
Other 100.8 53.9
Net cash used for investing
activities (920.1) (783.7)
Cash Flows from Financing Activities
Increase in short-term
borrowings 266.3 65.9
Change in intercompany
receivables/payables (69.3) 86.3
Proceeds from long-term borrowings 1,500.0 781.0
Principal payments on long-term
borrowings (915.2) (307.5)
Proceeds from issuance of
common stock
Repurchases of common stock
Dividends paid (10.0) (31.8)
Other (1.3)
Net cash provided by
financing activities 771.8 592.6
Effect of Exchange Rate
Changes on Cash
Net Increase (Decrease) in Cash
and Cash Equivalents (7.4) (25.6)
Cash and Cash Equivalents at
Beginning of Period 241.5 268.8
Cash and Cash Equivalents at End
of Period $234.1 $243.2
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 Six Months Ended
April 30 April 30
1999 1998 1999 1998
Dividends declared $.22 $.22 $.44 $.44
Dividends paid * $.22 $.44 $.44 $.64
* In 1998, the payment dates for the dividends declared
in the first and second quarters were both included in
the second quarter. Each dividend was $.22 per share.
3. The calculation of primary net income per share is based
on the average number of shares outstanding during the six
months ended April 30, 1999 and 1998 of 232.2 million and
248.1 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 Six Months
Ended April 30 Ended April 30
1999 1998 1999 1998
Net income $150.1 $365.2 $199.8 $568.5
Other comprehensive income:
Change in cumulative
translation adjustment (2.4) 8.1 (11.5) (22.0)
Unrealized gain (loss) on
marketable securities (2.3) (3.8) 2.2 .6
Comprehensive income $145.4 $369.5 $190.5 $547.1