-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C+WSWca+OYB2TlMaSdBA3TV1tBDG1Hn5q8ua8q1VhV0pMjyN8ylDA5vz3IZjnaod RtkhmoNId5ckTSZw5VahOw== 0000315189-00-000012.txt : 20000314 0000315189-00-000012.hdr.sgml : 20000314 ACCESSION NUMBER: 0000315189-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEERE & CO CENTRAL INDEX KEY: 0000315189 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 362382580 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04121 FILM NUMBER: 568078 BUSINESS ADDRESS: STREET 1: ONE JOHN DEERE PLACE CITY: MOLINE STATE: IL ZIP: 61265 BUSINESS PHONE: 3097658000 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------ FORM 10-Q ------------------------ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended January 31, 2000 -------------------------- Commission file no: 1-4121 -------------------------- DEERE & COMPANY Delaware 36-2382580 (State of incorporation) (IRS employer identification no.) One John Deere Place Moline, Illinois 61265 (Address of principal executive offices) Telephone Number: (309) 765-8000 ---------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No At January 31, 2000, 234,039,275 shares of common stock, $1 par value, of the registrant were outstanding. - ---------------------------------------------------------------- Page 1 of 21 Pages. Index to Exhibits: Page 19 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY CONSOLIDATED STATEMENT OF CONSOLIDATED INCOME (Deere & Company and Consolidated Subsidiaries) Millions of dollars except per Three Months Ended share amounts January 31 (Unaudited) 2000 1999 Net Sales and Revenues Net sales of equipment $1,880.0 $1,973.2 Finance and interest income 303.4 259.0 Insurance and health care premiums 112.5 179.8 Investment income 9.1 18.7 Other income 34.3 27.8 Total 2,339.3 2,458.5 Costs and Expenses Cost of goods sold 1,552.5 1,653.8 Research and development expenses 102.6 95.9 Selling, administrative and general expenses 315.4 301.8 Interest expense 146.8 134.1 Insurance and health care claims and benefits 90.3 153.9 Other operating expenses 71.9 42.7 Total 2,279.5 2,382.2 Income of Consolidated Group Before Income Taxes 59.8 76.3 Provision for income taxes 20.8 26.5 Income of Consolidated Group 39.0 49.8 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit .1 .4 Other (1.4) (.5) Total (1.3) (.1) Net Income $ 37.7 $ 49.7 Per Share: Net income - basic $ .16 $ .21 Net income - diluted $ .16 $ .21 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 January 31 (Unaudited) 2000 1999 Net Sales and Revenues Net sales of equipment $1,880.0 $1,973.2 Finance and interest income 25.0 21.8 Insurance and health care premiums Investment income 6.6 Other income 22.5 15.5 Total 1,934.1 2,010.5 Costs and Expenses Cost of goods sold 1,556.8 1,658.5 Research and development expenses 102.6 95.9 Selling, administrative and general expenses 239.4 207.8 Interest expense 36.8 39.9 Insurance and health care claims and benefits Other operating expenses 7.6 (2.2) Total 1,943.2 1,999.9 Income of Consolidated Group Before Income Taxes (9.1) 10.6 Provision for income taxes (4.0) 3.8 Income of Consolidated Group (5.1) 6.8 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit 41.0 41.6 Other 1.8 1.3 Total 42.8 42.9 Net Income $ 37.7 $ 49.7 DEERE & COMPANY FINANCIAL SERVICES STATEMENT OF CONSOLIDATED INCOME Millions of dollars except per Three Months Ended share amounts January 31 (Unaudited) 1999 1998 Net Sales and Revenues Net sales of equipment Finance and interest income $ 282.9 $ 240.7 Insurance and health care premiums 117.6 186.6 Investment income 2.5 18.7 Other income 19.2 20.7 Total 422.2 466.7 Costs and Expenses Cost of goods sold Research and development expenses Selling, administrative and general expenses 76.9 95.2 Interest expense 114.5 97.6 Insurance and health care claims and benefits 90.3 155.7 Other operating expenses 71.6 52.5 Total 353.3 401.0 Income of Consolidated Group Before Income Taxes 68.9 65.7 Provision for income taxes 24.7 22.7 Income of Consolidated Group 44.2 43.0 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit .1 .4 Other .1 Total .2 .4 Net Income $ 44.4 $ 43.4 Page 2 DEERE & COMPANY CONSOLIDATED CONDENSED CONSOLIDATED (Deere & Company and BALANCE SHEET Consolidated Subsidiaries) Millions of dollars January 31 October 31 January 31 (Unaudited) 2000 1999 1999 Assets Cash and short-term investments $ 297.5 $ 295.5 $ 325.5 Cash deposited with unconsolidated subsidiaries Cash and cash equivalents 297.5 295.5 325.5 Marketable securities 115.5 315.5 870.8 Receivables from unconsolidated subsidiaries and affiliates 20.4 30.2 48.4 Trade accounts and notes receivable - net 3,180.1 3,251.1 3,828.8 Financing receivables - net 6,998.4 6,742.6 6,696.7 Other receivables 258.1 273.9 519.3 Equipment on operating leases - net 1,752.7 1,654.7 1,256.5 Inventories 1,781.0 1,294.3 1,614.7 Property and equipment - net 1,751.3 1,782.3 1,674.3 Investments in unconsolidated subsidiaries and affiliates 166.0 151.5 173.8 Intangible assets - net 294.1 295.1 212.0 Prepaid pension costs 621.4 619.9 662.3 Other assets 199.3 185.5 103.5 Deferred income taxes 625.8 598.1 400.2 Deferred charges 82.8 88.0 116.4 Total $18,144.4 $17,578.2 $18,503.2 Liabilities and Stockholders' Equity Short-term borrowings $ 5,493.0 $ 4,488.2 $ 5,871.2 Payables to unconsolidated subsidiaries and affiliates 31.5 15.5 31.9 Accounts payable and accrued expenses 2,327.7 2,432.8 2,359.5 Insurance and health care claims and reserves 60.7 55.4 402.9 Accrued taxes 120.0 144.8 141.7 Deferred income taxes 61.8 63.0 18.3 Long-term borrowings 3,457.2 3,806.2 3,275.7 Retirement benefit accruals and other liabilities 2,497.7 2,478.0 2,373.5 Total liabilities 14,049.6 13,483.9 14,474.7 Common stock, $1 par value (issued shares at January 31, 2000 - 265,878,758) 1,855.4 1,850.4 1,788.5 Common stock in treasury (1,460.4) (1,469.4) (1,479.9) Unamortized restricted stock compensation (21.5) (21.3) (25.1) Retained earnings 3,841.5 3,855.3 3,824.3 Total 4,215.0 4,215.0 4,107.8 Accumulated other comprehensive income (loss) (120.2) (120.7) (79.3) Stockholders' equity 4,094.8 4,094.3 4,028.5 Total $18,144.4 $17,578.2 $18,503.2 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 January 31 October 31 January 31 (Unaudited) 2000 1999 1999 Assets Cash and short-term investments $ 116.1 $ 111.7 $ 80.3 Cash deposited with 117.4 92.8 unconsolidated subsidiaries 116.1 229.1 173.1 Cash and cash equivalents 205.3 Marketable securities Receivables from unconsolidated subsidiaries and affiliates 280.6 266.0 227.4 Trade accounts and notes receivable - net 3,180.1 3,251.1 3,828.8 Financing receivables - net 89.2 118.4 83.4 Other receivables 122.8 129.4 42.2 Equipment on operating leases - net 1.8 2.6 Inventories 1,781.0 1,294.3 1,614.7 Property and equipment - net 1,706.2 1,738.8 1,625.7 Investments in unconsolidated subsidiaries and affiliates 1,431.6 1,362.8 1,693.9 Intangible assets - net 293.8 294.8 204.8 Prepaid pension costs 621.4 619.9 662.3 Other assets 104.0 95.7 73.9 Deferred income taxes 620.1 592.9 379.1 Deferred charges 76.3 80.8 85.5 Total $10,425.0 $10,281.9 $10,694.8 Liabilities and Stockholders' Equity Short-term borrowings $ 933.9 $ 642.2 $ 2,076.2 Payables to unconsolidated subsidiaries and affiliates 60.5 15.5 31.9 Accounts payable and accrued expenses 1,706.8 1,891.9 1,473.8 Insurance and health care claims and reserves Accrued taxes 105.7 138.1 136.3 Deferred income taxes 7.4 7.2 5.5 Long-term borrowings 1,040.9 1,036.1 601.2 Retirement benefit accruals and other liabilities 2,475.0 2,456.6 2,341.4 Total liabilities 6,330.2 6,187.6 6,666.3 Common stock, $1 par value (issued shares at January 31, 2000 - 265,878,758) 1,855.4 1,850.4 1,788.5 Common stock in treasury (1,460.4) (1,469.4) (1,479.9) Unamortized restricted stock compensation (21.5) (21.3) (25.1) Retained earnings 3,841.5 3,855.3 3,824.3 Total 4,215.0 4,215.0 4,107.8 Accumulated other comprehensive income (loss) (120.2) (120.7) (79.3) Stockholders' equity 4,094.8 4,094.3 4,028.5 Total $10,425.0 $10,281.9 $10,694.8 DEERE & COMPANY FINANCIAL SERVICES CONDENSED CONSOLIDATED BALANCE SHEET Millions of dollars January 31 October 31 January 31 (Unaudited) 2000 1999 1999 Assets Cash and short-term investments $ 181.4 $ 183.8 $ 245.2 Cash deposited with unconsolidated subsidiaries Cash and cash equivalents 181.4 183.8 245.2 Marketable securities 115.5 110.1 870.8 Receivables from unconsolidated subsidiaries and affiliates 29.1 4.8 6.7 Trade accounts and notes receivables - net Financing receivables - net 6,909.3 6,624.2 6,613.2 Other receivables 135.3 144.5 477.1 Equipment on operating leases - net 1,750.9 1,652.2 1,256.5 Inventories Property and equipment - net 45.1 43.5 48.6 Investments in unconsolidated subsidiaries and affiliates 11.1 9.9 20.9 Intangible assets - net .3 .3 7.2 Prepaid pension costs Other assets 95.2 89.8 29.6 Deferred income taxes 5.6 5.2 21.0 Deferred charges 6.6 7.2 30.9 Total $9,285.4 $8,875.5 $9,627.7 Liabilities and Stockholders' Equity Short-term borrowings $4,559.1 $3,846.0 $3,795.0 Payables to unconsolidated subsidiaries and affiliates 260.2 358.1 278.5 Accounts payable and accrued expenses 620.9 540.8 885.6 Insurance and health care claims and reserves 60.7 55.4 402.9 Accrued taxes 14.3 6.8 5.4 Deferred income taxes 54.4 55.8 12.8 Long-term borrowings 2,416.3 2,770.1 2,674.6 Retirement benefit accruals and other liabilities 22.7 21.3 32.1 Total liabilities 8,008.6 7,654.3 8,086.9 Common stock, $1 par value (issued shares at January 31, 2000 - 265,878,758) 241.4 229.1 247.5 Common stock in treasury Unamortized restricted stock compensation Retained earnings 1,045.1 1,005.6 1,284.5 Total 1,286.5 1,234.7 1,532.0 Accumulated other comprehensive income (loss) (9.7) (13.5) 8.8 Stockholders' equity 1,276.8 1,221.2 1,540.8 Total $9,285.4 $8,875.5 $9,627.7 Page 3 DEERE & COMPANY CONSOLIDATED CONDENSED STATEMENT OF (Deere & Company and CONSOLIDATED CASH FLOWS Consolidated Subsidiaries) Three Months Ended January 31 Millions of dollars (Unaudited) 2000 1999 Cash Flows from Operating Activities Net income $ 37.7 $ 49.7 Adjustments to reconcile net income to net cash provided by (used for) operating activities (454.3) (446.8) Net cash provided by (used for) operating activities (416.6) (397.1) Cash Flows from Investing Activities Collections of financing receivables 1,794.8 1,598.4 Proceeds from sales of financing receivables 71.3 102.1 Proceeds from maturities and sale of marketable securities 215.5 37.3 Proceeds from sales of equipment on operating leases 61.7 38.1 Cost of financing receivables acquired (2,007.8) (2,042.2) Purchases of marketable securities (19.4) (33.8) Purchases of property and equipment (37.3) (54.9) Cost of operating leases acquired (209.5) (125.2) Acquisitions of businesses, net of cash acquired (14.9) Other 69.1 71.8 Net cash provided by (used for) operating activities (76.5) (408.4) Cash Flows from Financing Activities Increase (decrease) in short-term borrowings 733.2 541.7 Change in intercompany receivables/payables Proceeds from long-term borrowings 162.7 675.0 Principal payments on long-term borrowings (353.5) (297.5) Proceeds from issuance of common stock 4.5 .4 Repurchases of common stock (46.1) Dividends paid (51.4) (51.7) Other Net cash provided by financing activities 495.5 821.8 Effect of Exchange Rate Changes on Cash (.4) (.5) Net Increase (Decrease) in Cash and Cash Equivalents 2.0 15.8 Cash and Cash Equivalents at Beginning of Period 295.5 309.7 Cash and Cash Equivalents at End of Period $ 297.5 $ 325.5 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) Three Months Ended January 31 Millions of dollars (Unaudited) 2000 1999 Cash Flows from Operating Activities Net income $ 37.7 $ 49.7 Adjustments to reconcile net income to net cash provided by (used for) operating activities (601.8) (566.4) Net cash provided by (used for) operating activities (564.1) (516.7) Cash Flows from Investing Activities Collections of financing receivables 30.0 7.5 Proceeds from sales of financing receivables Proceeds from maturities and sale of marketable securities 202.8 Proceeds from sales of equipment on operating leases .1 Cost of financing receivables acquired (.3) (9.0) Purchases of marketable securities Purchases of property and equipment (34.7) (50.9) Cost of operating leases acquired (.3) Acquisitions of businesses, net of cash acquired (13.8) Other 1.8 3.5 Net cash provided by (used for) investing activities 185.6 (48.9) Cash Flows from Financing Activities Increase (decrease) in short-term borrowings 276.6 561.2 Change in intercompany receivables/payables 36.4 17.6 Proceeds from long-term borrowings 50.0 Principal payments on long-term borrowings Proceeds from issuance of common stock 4.5 .4 Repurchases of common stock (46.1) Dividends paid (51.4) (51.7) Other (.1) Net cash provided by financing activities 266.1 531.3 Effect of Exchange Rate Changes on Cash (.6) (.5) Net Increase (Decrease) in Cash and Cash Equivalents (113.0) (34.8) Cash and Cash Equivalents at Beginning of Period 229.1 207.9 Cash and Cash Equivalents at End of Period $116.1 $173.1 DEERE & COMPANY FINANCIAL SERVICES CONDENSED STATEMENT OF Three Months Ended CONSOLIDATED CASH FLOWS January 31 Millions of dollars (Unaudited) 2000 1999 Cash Flows from Operating Activities Net income $ 44.4 $ 43.4 Adjustments to reconcile net income to net cash provided by (used for) operating activities 108.1 81.2 Net cash provided by (used for) operating activities 152.5 124.6 Cash Flows from Investing Activities Collections of financing receivables 1,764.8 1,590.8 Proceeds from sales of financing receivables 71.3 102.2 Proceeds from maturities and sale of marketable securities 12.7 37.3 Proceeds from sales of equipment on operating leases 61.6 38.1 Cost of financing receivables acquired (2,007.4) (2,033.2) Purchases of marketable securities (19.4) (33.8) Purchases of property and equipment (2.6) (4.0) Cost of operating leases acquired (209.2) (125.2) Acquisitions of businesses, net of cash acquired (1.1) Other 67.2 68.3 Net cash provided by (used for) investing activities (262.1) (359.5) Cash Flows from Financing Activities Increase (decrease) in short-term borrowings 456.6 (19.5) Change in intercompany receivables/payables (153.8) (64.4) Proceeds from long-term borrowings 162.7 625.0 Principal payments on long-term borrowings (353.5) (297.5) Proceeds from issuance of common stock Repurchases of common stock Dividends paid (5.0) (5.0) Other Net cash provided by financing activities 107.0 238.6 Effect of Exchange Rate Changes on Cash .2 Net Increase (Decrease) in Cash and Cash Equivalents (2.4) 3.7 Cash and Cash Equivalents at Beginning of Period 183.8 241.5 Cash and Cash Equivalents at End of Period $181.4 $245.2 Page 4 Notes to Interim Financial Statements (1) The consolidated financial statements of Deere & Company and consolidated subsidiaries have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates. (2) The Company's consolidated financial statements and some information in the notes and related commentary are presented in a format which includes data grouped as follows: EQUIPMENT OPERATIONS - These data include the Company's agricultural equipment, construction equipment, commercial and consumer equipment and special technologies operations with Financial Services reflected on the equity basis. Data relating to the above equipment operations, including the consolidated group data in the income statement, are also referred to as "Equipment Operations" in this report. FINANCIAL SERVICES - These data include the Company's credit, insurance and health care operations. The insurance operations were sold in the fourth quarter of 1999. CONSOLIDATED - These data represent the consolidation of the Equipment Operations and Financial Services. References to "Deere & Company" or "the Company" refer to the entire enterprise. (3) An analysis of the Company's retained earnings follows in millions of dollars: Three Months Ended January 31 2000 1999 Balance, beginning of period $3,855.3 $3,839.5 Net income 37.7 49.7 Dividends declared (51.5) (50.7) Other (14.2) Balance, end of period $3,841.5 $3,824.3 Page 5 (4) An analysis of the cumulative adjustment follows in millions of dollars: Three Months Ended January 31 2000 1999 Balance, beginning of period $(107.4) $(80.5) Translation adjustment 9.4 (7.4) Income taxes applicable to translation adjustments (4.0) (1.7) Balance, end of period $(102.0) $(89.6) (5) Substantially all inventories owned by Deere & Company and its United States equipment subsidiaries are valued at cost on the "last-in, first-out" (LIFO) method. If all of the Company's inventories had been valued on a "first-in, first-out" (FIFO) method, estimated inventories by major classification in millions of dollars would have been as follows: January 31 October 31 January 31 2000 1999 1999 Raw Materials and supplies $ 375 $ 257 $ 341 Work-in-process 459 370 555 Finished machines and parts 2,004 1,721 1,776 Total FIFO value 2,838 2,348 2,672 Adjustment to LIFO basis 1,057 1,054 1,057 Inventories $1,781 $1,294 $1,615 (6) At January 31, 2000, the net unpaid balance of all retail notes previously sold by the Financial Services operations was $2,348 million and the Company's maximum exposure under all related recourse provisions was $169 million. At January 31, 2000, the Company had commitments of approximately $84 million for construction and acquisition of property and equipment. (7) Dividends declared and paid on a per share basis were as follows: Three Months Ended January 31 2000 1999 Dividends declared $.22 $.22 Dividends paid $.22 $.22 Page 6 (8) Worldwide net sales and revenues, operating profit and identifiable assets by segment in millions of dollars follow: Three Months Ended January 31 % 2000 1999 Change Net sales: Agricultural equipment* $ 1,035 $ 1,157 - 11 Construction equipment 338 387 - 13 Commercial and consumer equipment 493 429 + 15 Other 14 Total net sales 1,880 1,973 - 5 Credit revenues 301 261 + 15 Other revenues 158 225 - 30 Total net sales and revenues** $ 2,339 $ 2,459 - 5 Operating profit***: Agricultural equipment $ 14 $ 18 - 22 Construction equipment 11 25 - 56 Commercial and consumer equipment 9 12 - 25 Credit 64 65 - 2 Other (9) (3) +200 Total operating profit** 89 117 - 24 Interest, corporate expenses-net and income taxes (51) (67) - 24 Net income $ 38 $ 50 - 24 Identifiable assets: Agricultural equipment $ 4,188 $ 4,921 - 15 Construction equipment 832 935 - 11 Commercial and consumer equipment 2,294 1,859 + 23 Credit 9,076 8,385 + 8 Other 320 1,252 - 74 Corporate 1,434 1,151 + 25 Total assets $18,144 $18,503 - 2 * Additional intersegment sales of agricultural equipment $ 21 $ 27 - 22 ** Includes overseas equipment operations as follows: Net sales $ 551 $ 572 - 4 Operating profit 33 54 - 39 *** Operating profit is income before interest expense, foreign exchange gains and losses, income taxes and certain corporate expenses. However, operating profit of the credit segment includes the effect of interest expense. Page 7 (9) A reconciliation of basic and diluted net income per share in millions, except per share amounts, follows: Three Months Ended January 31 2000 1999 Net income $37.7 $ 49.7 Average shares outstanding 233.9 231.7 Basic net income per share $ .16 $ .21 Average shares outstanding 233.9 231.7 Effect of dilutive securities: Stock options 2.4 .9 Other .1 Total potential shares outstanding 236.3 232.7 Diluted net income per share $ .16 $ .21 Stock options to purchase 2.9 million shares during the first quarter of 2000 and 4.3 million shares during the first quarter of 1999 were outstanding, but not included in the above diluted per share computation because the options' exercise prices were greater than the average market price of the Company's common stock during the period. (10) The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability, retail credit, software licensing, patent and trademark matters. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes these unresolved legal actions will not have a material effect on its financial position or results of operations. (11) Comprehensive income, which includes all changes in the Company's equity during the period except transactions with stockholders, was as follows in millions of dollars: Three Months Ended January 31 2000 1999 Net income $37.7 $49.7 Other comprehensive income (loss), net of tax: Change in cumulative translation adjustment 5.4 (9.1) Unrealized gain (loss) on marketable securities (4.9) 4.5 Comprehensive income $38.2 $45.1 Page 8 (12) In December 1999, the Company granted options to employees for the purchase of 5.2 million shares of common stock at an exercise price of $41.47 per share. At January 31, 2000, options for 17.0 million shares were outstanding at option prices in a range of $13.63 to $82.19 per share and a weighted-average exercise price of $39.56 per share. A total of 2.8 million shares remained available for the granting of future options. (13) On December 13, 1999, the Company announced an agreement to acquire Timberjack Group, headquartered in Helsinki, Finland for approximately $600 million. Subject to regulatory approvals, the transaction is expected to close in the year 2000. Timberjack Group, a leading manufacturer of forestry equipment, reported annual sales of $580 million in 1998. This acquisition will broaden the forestry product line and customer base for the company's construction equipment segment. (14) In the first quarter of 2000, the Company invested $21 million for a 41 percent interest in Nortrax, a joint venture to assist in the consolidation, development and management of the Company's construction equipment dealers. This acquisition did not have a material effect on the Company's financial position or results of operations. Page 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Deere & Company's first-quarter net income was $37.7 million, or $.16 per share, compared with $49.7 million, or $.21 per share, in last year's first quarter. Depressed agricultural commodity prices continued to severely affect demand for agricultural equipment during the period. Production schedules in agricultural and construction equipment were at planned low levels during the quarter, reflecting improved order-fulfillment processes in construction equipment and the balancing of agricultural equipment production with present levels of demand. In addition, the first quarter has historically been the seasonally weakest period for the industry. Worldwide net sales and revenues for the quarter decreased 5 percent, to $2,339 million, compared with $2,459 million last year. Net equipment sales were $1,880 million for the quarter, compared with $1,973 million last year. Overseas net sales for the quarter were $551 million, compared with $572 million the previous year. Excluding the impact of the stronger U.S. dollar, overseas sales for the quarter would have shown a 4 percent increase over last year. Overall, the Company's physical volume of sales decreased 3 percent for the period. Worldwide equipment operations had an operating profit of $20 million for the first quarter of 2000, compared with $51 million last year. Lower sales, an adverse sales mix and product development costs of the newly formed special technologies group, partially offset by lower pension costs, affected this year's results. . Operating profit of the worldwide agricultural equipment segment for the first quarter of 2000 was $14 million, compared with $18 million last year. Results for the quarter reflected the impact of lower sales, as well as cost reductions and improved efficiencies from the restructuring activities of these operations. Significantly, North American used goods receivables continued to decline during the quarter. Overseas agricultural equipment sales, excluding the impact of the stronger U.S. dollar for the quarter, were slightly higher than last year. The overseas operations continued to be positive contributors to the segment's results. . Operating profit of the worldwide construction equipment segment for the quarter was $11 million, compared with $25 million last year. Lower sales and production volumes affected this year's quarterly results, due to full implementation of the estimate-to-cash program, anticipated lower demand and a reversal of sales and cost of sales related to Company equipment held in inventory by a recently established joint venture. . Operating profit of the worldwide commercial and consumer equipment segment for the quarter was $9 million, compared with $12 million last year. Although the segment's sales continued to increase, operations were adversely affected by higher selling and administrative costs related to growth, as well as by inefficiencies and costs related to the relocation of the handheld product operations. . Net income of the Company's credit operations was $41 million in the first quarter of 2000, compared with $42 million in last year's first quarter. This quarter's results were affected by higher operating costs and lower income from the sale of retail notes, partially offset by higher income from a larger average receivable and lease portfolio. Total revenues of the credit operations increased 16 percent from $261 Page 10 million in the first quarter of 1999 to $302 million in the current quarter. The average balance of receivables and leases financed was 10 percent higher in the first quarter, compared with the same period last year. Interest expense increased 18 percent in the current quarter, compared with 1999, as a result of an increase in average borrowings and higher borrowing rates. The credit operations' consolidated ratio of earnings to fixed charges was 1.55 to 1 for the first quarter this year, compared with 1.63 to 1 in 1999. . The Company's other businesses had operating losses of $9 million for the first quarter, compared with operating losses of $3 million last year. Current-year results reflected goodwill amortization and higher costs related to the development of new products of the special technologies group. Partially offsetting these factors was higher operating profit of the health care operations. Additional information on business segments is presented in Note 8 to the interim financial statements. Insurance and health care premiums have decreased to $113 million in the first quarter this year, compared to $180 million in the same period last year, while corresponding claims and benefits expenses have also decreased to $90 million this year, compared to $154 million last year, due to the sale of the insurance subsidiaries in the fourth quarter of 1999. Other operating expenses have increased to $72 million this year, compared to $43 million last year, primarily as a result of an increase in the depreciation of equipment on operating leases due to the growth in the credit operations' portfolio. MARKET CONDITIONS AND OUTLOOK . AGRICULTURAL EQUIPMENT. In January, the USDA lowered its estimates of carryover stocks, following a change in the assessment of the size of the 1999 corn crop and increased usage. Although grain and oilseed prices have improved slightly on this news and on concerns about dryness in certain areas of the United States, prices remain at low levels and demand for farm equipment remains very weak. At this time, the Company continues to expect that industry retail sales of farm machinery in North America will be off approximately 5 to 10 percent this year, compared with 1999 levels. Similar declines are expected in other major markets. . CONSTRUCTION EQUIPMENT. The market for these products remains extremely competitive. In addition, the Federal Reserve continues its efforts to slow the economy through a series of increases in short-term interest rates. In this environment, the Company continues to expect construction industry sales to be down 5 to 10 percent for the year. Retail sales of the Company's products, however, are expected to be higher in the remainder of the year due to an expanded product line. Additionally, production for the year 2000 is expected to benefit from tracking more closely with retail demand than was the case in 1999 when dealers were reducing their inventories. . COMMERCIAL AND CONSUMER EQUIPMENT. Continuing a trend of strong gains, retail demand for the Company's commercial and consumer equipment is expected to achieve further growth this year, assuming normal weather patterns and a continuation of current economic conditions. These operations should continue to benefit from market share growth, positive customer response to recently introduced products and international expansion. . CREDIT OPERATIONS. Credit is expected to continue benefiting from a larger receivable and lease portfolio this year. However, higher growth expenditures, lower gains on the sale of retail notes and continued weakness in the agricultural economy are expected to keep pressure on margins and have an adverse effect on this year's results. Page 11 Based on these conditions, the Company continues to expect its worldwide physical volume of sales to increase by approximately 10 percent for the year 2000. Second-quarter physical volumes are expected to be about 15 percent higher than in the comparable 1999 period. The Company's results are clearly benefiting from an aggressive and timely response to market conditions, as well as from the pursuit of its growth and quality initiatives. In spite of a market that continues to be challenging, the Company is on track to achieve improved results this year. YEAR 2000 No public infrastructure problems or any facilities related problems were encountered by John Deere locations during the rollover to the year 2000. After extensive system verification and testing, the Company's systems are operating normally. The Company is not aware of any significant issues related to the Year 2000 problem. The total cost of the modifications and upgrades to date has been approximately $46 million since the beginning of 1997 and the future costs are not expected to be significant. These costs were expensed as incurred and did not include the cost of scheduled replacement software. Other major systems projects were not deferred due to the Year 2000 compliance projects. EURO CONVERSION The Company is well advanced in the process of identification, implementation and testing of its systems to adopt the euro currency in its operations affected by this change. The Company's affected suppliers, distribution network and financial institutions have been contacted and the Company does not believe the currency change will significantly impact these relationships. As a result, the Company expects to have its systems ready to process the euro conversion during the transition period from January 1, 1999 through January 1, 2002. The cost of information systems modifications, effects on product pricing and purchase contracts, and the impact on foreign currency financial instruments, including derivatives, are not expected to be material. SAFE HARBOR STATEMENT SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Statements under the "Market Conditions and Outlook" and "Euro Conversion" headings and other 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; accounting standards; and other risks and uncertainties. The impact and timing of the previously announced Timberjack acquisition is uncertain, including the impact of post-merger integration costs and the amortization of intangibles. Page 12 The number of housing starts is especially important to sales of construction equipment. Sales of commercial and consumer equipment during the spring are affected by the severity and timing of spring weather patterns. 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. These 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 annual report on Form 10-K and other filings with the Securities and Exchange Commission. CAPITAL RESOURCES AND LIQUIDITY The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the Company's Equipment Operations, Financial Services operations and the consolidated totals. EQUIPMENT OPERATIONS The Company's equipment businesses are capital intensive and are subject to large seasonal variations in financing requirements for trade receivables from dealers and inventories. Accordingly, to the extent necessary, funds provided from operations are supplemented from external borrowing sources. In the first three months of 2000, negative cash flows from operating activities of $564 million resulted primarily from an increase in Company-owned inventories and a decrease in accounts payable and accrued expenses. Partially offsetting these operating cash outflows were positive cash flows from a decrease in trade receivables and from net income. The resulting net cash requirement for operating activities, along with payment of dividends and purchases of property and equipment, were provided primarily from an increase in borrowings and sales of marketable securities. Negative cash flows from operating activities in the first three months of 1999 of $517 million resulted primarily from a decrease in accounts payable and accrued expenses and an increase in Company-owned inventories. Partially offsetting these operating cash outflows were positive cash flows from a decrease in trade receivables and from net income. The resulting net cash requirement for operating activities, along with payment of dividends, purchases of property and equipment and repurchases of common stock, were provided primarily from an increase in borrowings. Trade accounts and notes receivable result mainly from sales to dealers of equipment that is being carried in their inventories. Trade receivables decreased $71 million during the first three months of 2000 and $649 million, compared to one year ago. Trade receivables for agricultural equipment declined from a year ago primarily due to production schedules being set below the levels of retail demand, and construction equipment receivables were lower as dealers reduced their inventories. Commercial and consumer equipment trade receivables were higher than a year ago primarily due to higher sales volumes. North American agricultural equipment and construction equipment trade receivables decreased $700 million and $136 million, respectively, compared to a year ago. North American commercial and consumer equipment receivables increased $179 million and other equipment receivables increased $12 million, compared with the levels 12 months earlier. Total overseas trade receivables were $4 million lower than a year ago due to the impact of weaker foreign currency exchange rates. The ratios of worldwide trade accounts and notes receivable to the last 12 months' net sales were 33 percent at January 31, 2000, compared to 34 percent at October 31, 1999 and 33 percent at January 31, 1999. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 11 percent, 12 percent and 7 percent at January 31, 2000, October 31, 1999 and January 31, 1999, respectively. Page 13 Company inventories at January 31, 2000 increased by $487 million during the first three months and $166 million during the past 12 months, primarily reflecting a seasonal increase in the first quarter and the higher sales volumes and start-up of new facilities of the commercial and consumer equipment segment. Also contributing to a higher inventory level was the financial consolidation of the Company's agricultural equipment operations in Brazil during the third quarter of 1999. Most of the Company's inventories are valued on the last-in, first-out (LIFO) basis. Inventories valued on an approximate current cost basis increased by 6 percent from a year ago. Total interest-bearing debt of the Equipment Operations was $1,975 million at January 31, 2000, compared with $1,678 million at the end of fiscal year 1999, and $2,677 million at January 31, 1999. The ratio of total debt to total capital (total interest- bearing debt and stockholders' equity) was 33 percent, 29 percent and 40 percent at January 31, 2000, October 31, 1999 and January 31, 1999, respectively. FINANCIAL SERVICES The Financial Services' credit operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Their primary sources of funds for this purpose are a combination of borrowings and equity capital. Additionally, the credit operations periodically sell substantial amounts of retail notes. During the first quarter of 2000, the aggregate cash provided from operating and financing activities was used primarily to increase financing receivables and leases. Cash provided from Financial Services operating activities was $153 million in the current quarter. Cash provided by financing activities totaled $107 million in the first three months of 2000, primarily resulting from $112 million of proceeds from total borrowings, which was partially offset by payment of a $5 million dividend to the Equipment Operations. Cash used for investing activities totaled $262 million in the current quarter, primarily due to the cost of financing receivables and leases acquired exceeding collections of financing receivables, sales of retail notes and sales of equipment on operating leases. In the first quarter of 1999, the aggregate cash provided from operating and financing activities was used primarily to increase financing receivables and leases. Cash provided from Financial Services operating activities was $125 million in the first quarter of 1999. Cash provided by financing activities totaled $239 million in the first three months of 1999, primarily resulting from $244 million of proceeds from total borrowings, which was partially offset by payment of a $5 million dividend to the Equipment Operations. Cash used for investing activities totaled $360 million in the first quarter of 1999, primarily due to the cost of financing receivables and leases acquired exceeding collections of financing receivables and sales of retail notes. Marketable securities held by Financial Services have decreased $755 million, compared to a year ago. The insurance subsidiaries, including their investment portfolio, were sold in the fourth quarter of 1999. In addition, the marketable securities transferred from the insurance subsidiaries to Deere & Company before the sale were liquidated during the first quarter of 2000. The remaining marketable securities consist of those held by the health care subsidiaries. Financing receivables and leases held by the credit operations consist of retail notes originating in connection with retail sales of new and used equipment by dealers of John Deere products, retail notes from non-Deere-related customers, revolving charge accounts, wholesale notes receivable, and financing and operating leases. These receivables and leases increased by $384 million in the first three months of 2000 and $791 million during the past 12 months due to the cost of financing receivables and leases acquired exceeding collections Page 14 and sales of retail notes, and the acquisitions of certain credit operations during these periods. Total acquisitions of financing receivables and leases were 3 percent higher in the first three months of 2000, compared with the same period last year. Acquisition volumes of leases, revolving charge accounts and wholesale notes were all higher in the first three months of 2000, compared to the same period last year. Financing receivables and leases administered by the credit operations, which include receivables previously sold, amounted to $11,008 million at January 31, 2000, compared with $10,992 million at October 31, 1999 and $9,820 million at January 31, 1999. At January 31, 2000, the unpaid balance of all retail notes previously sold was $2,348 million, compared with $2,716 million at October 31, 1999 and $1,951 million at January 31, 1999. Total outside interest-bearing debt of the credit operations was $6,975 million at January 31, 2000, compared with $6,616 million at the end of fiscal year 1999 and $6,470 million at January 31, 1999. Total outside borrowings increased during the first three months of 2000 and the past 12 months, generally corresponding with the level of the financing receivable and lease portfolio, the level of cash and cash equivalents and the change in payables owed to the Equipment Operations. The credit operations' ratio of total interest-bearing debt to stockholder's equity was 6.0 to 1 at January 31, 2000, compared with 6.0 to 1 at October 31, 1999 and 6.2 to 1 at January 31, 1999. During the first quarter of 2000, the credit operations issued $150 million and retired $292 million medium-term notes. The credit operations also issued $13 million and retired $62 million of other miscellaneous long-term debt. CONSOLIDATED The Company maintains unsecured lines of credit with various banks in North America and overseas. Some of the lines are available to both the Equipment Operations and certain credit operations. Worldwide lines of credit totaled $6,054 million at January 31, 2000, $3,189 million of which were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings, excluding the current portion of long- term borrowings, were considered to constitute utilization. Included in the total credit lines is a long-term credit agreement commitment totaling $3,500 million. Stockholder's equity was $4,095 million at January 31, 2000, compared with $4,094 million at October 31, 1999 and $4,029 million at January 31, 1999. During the first quarter of 2000, the net income and other minor changes in equity were mostly offset by dividends declared. The Board of Directors at its meeting on February 23, 2000 declared a quarterly dividend of 22 cents per share payable May 1, 2000 to stockholders of record on March 31, 2000. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See the Company's most recent annual report filed on Form 10-K (Item 7A). There has been no material change in this information. Page 15 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See Note (10) to the Interim Financial Statements. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS The Company issued 118,088 shares of stock during the quarter in connection with an acquisition. These shares were not registered under the Securities Act of 1933 (the "Securities Act") in reliance upon the exemption provided by Section 4 (2) of the Securities Act for transactions by an issuer not involving a public offering. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual meeting of stockholders held February 23, 2000: a. the following directors were elected for terms expiring at the annual meeting in 2003: Votes Votes For Withheld --------- -------- Crandall C. Bowles 194,844,740 3,590,070 Leonard A. Hadley 194,841,204 3,593,606 Arthur L. Kelly 194,870,703 3,564,107 Thomas H. Patrick 194,857,431 3,577,379 John R. Block, Regina E. Herzlinger and Arnold R. Weber continue to serve as directors of the Company for terms expiring at the annual meeting in 2002. Hans W. Becherer, Antonio Madero B., John R. Stafford and John R. Walter continue to serve as directors of the Company for terms expiring at the annual meeting in 2001. b. pursuant to a nomination from the floor, Steve Baugher received 372 votes for his election as a director. c. the John Deere Omnibus Equity and Incentive Plan was approved: Shares Voted Shares Voted Against Shares Broker For Proposal Proposal Abstaining Non-Votes ------------ ------------ ---------- --------- 162,597,146 13,281,348 1,132,012 21,424,304 Page 16 d. the performance goals under the John Deere Performance Bonus Plan were re-approved: Shares Voted For Shares Voted Against Shares Proposal Proposal Abstaining ---------------- -------------------- ---------- 190,720,572 6,595,615 1,118,623 e. the performance goals under the John Deere Equity Incentive Plan were re-approved: Shares Voted For Shares Voted Against Shares Proposal Proposal Abstaining ---------------- -------------------- ---------- 192,512,267 4,772,171 1,150,372 f. a stockholder proposal from the floor to establish a committee to review situations involving dissatisfied customers was not approved: Shares Voted For Shares Voted Against Shares Proposal Proposal Abstaining ---------------- -------------------- ---------- 632 198,434,178 0 ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits See the index to exhibits immediately preceding the exhibits filed with this report. Certain instruments relating to long-term debt constituting less than 10% of the registrant's total assets are not filed as exhibits herewith pursuant to Item 601 (b) (4) (iii) (A) of Regulation S-K. The registrant will file copies of such instruments upon request of the Commission. (b) Reports on Form 8-K Current Report on Form 8-K dated November 24, 1998 (Item 7). Current Report on Form 8-K dated December 13, 1999 (Item 7). Page 17 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 thereunto duly authorized. DEERE & COMPANY Date: March 13, 2000 By: s/ NATHAN J. JONES Nathan J. Jones Senior Vice President Principal Financial Officer and Principal Accounting Officer Page 18 INDEX TO EXHIBITS Number - ------ 2 Not applicable 3 Not applicable 4 Not applicable 10 Not applicable 11 Not applicable 12 Computation of ratio of earnings to fixed charges 15 Not applicable 18 Not applicable 19 Not applicable 22 Not applicable 23 Not applicable 24 Not applicable 27 Financial data schedule 99 Not applicable Page 19 EX-12 2 EXHIBIT 12 DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Three Months Year Ended Ended January 31, October 31, 2000 1999 1999 (In thousands of dollars) Earnings: Income of consolidated group before income taxes and changes in accounting $ 59,761 $ 76,315 $365,135 Dividends received from less- than-fifty percent owned affiliates 394 5,734 Fixed charges excluding capitalized interest 150,617 137,187 571,949 Total earnings $210,378 $213,896 $942,818 Fixed charges: Interest expense of con- solidated group including capitalized interest $146,780 $134,497 $557,740 Portion of rental charges deemed to be interest 3,837 3,113 15,347 Total fixed charges $150,617 $137,610 $573,087 Ratio of earnings to fixed charges* 1.40 1.55 1.65 The computation of the ratio of earnings to fixed charges is based on applicable amounts of the Company and its consolidated subsidiaries plus dividends received from less-than-fifty percent owned affiliates. "Earnings" consist of income before income taxes, the cumulative effect of changes in accounting and fixed charges excluding capitalized interest. "Fixed charges" consist of interest on indebtedness, amortization of debt discount and expense, an estimated amount of rental expense which is deemed to be representative of the interest factor, and capitalized interest. * The Company has not issued preferred stock. Therefore, the ratios of earnings to combined fixed charges and preferred stock dividends are the same as the ratios presented above. DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended October 31, 1998 1997 (In thousands of dollars) Earnings: Income of consolidated group before income taxes and changes in accounting $1,560,032 $1,507,070 Dividends received from less- than-fifty percent owned affiliates 5,555 3,591 Fixed charges excluding capitalized interest 531,817 433,673 Total earnings $2,097,404 $1,944,334 Fixed charges: Interest expense of con- solidated group including capitalized interest $ 521,418 $ 422,588 Portion of rental charges deemed to be interest 12,451 11,497 Total fixed charges $ 533,869 $ 434,085 Ratio of earnings to fixed charges* 3.93 4.48 DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended October 31, 1996 1995 (In thousands of dollars) Earnings: Income of consolidated group before income taxes and changes in accounting $1,286,634 $1,092,751 Dividends received from less- than-fifty percent owned affiliates 7,937 2,023 Fixed charges excluding capitalized interest 410,764 399,056 Total earnings $1,705,335 $1,493,830 Fixed charges: Interest expense of con- solidated group including capitalized interest $ 402,168 $ 392,408 Portion of rental charges deemed to be interest 8,596 6,661 Total fixed charges $ 410,764 $ 399,069 Ratio of earnings to fixed charges* 4.15 3.74 EX-27 3
5 This schedule contains summary financial information extracted from Form 10-Q and is qualified in its entirety by reference to such financial statements. 0000315189 DEERE&COMPANY 1,000,000 U.S. DOLLARS 3-MOS OCT-31-2000 NOV-01-1999 JAN-31-2000 1.0 298 116 10,587 130 1,781 0 4,890 3,139 18,144 0 3,457 0 0 1,855 2,239 18,144 1,880 2,339 1,553 1,817 0 11 147 60 21 38 0 0 0 38 .16 .16
-----END PRIVACY-ENHANCED MESSAGE-----