-----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, MnAls2JWNBkY02xWuK/aqER+JfHKcmaJKilXOntHBesS7HBm9RSOIXQ+3nLqyvfP Y57opNiguHJ2lAujENkK6g== 0000315189-98-000011.txt : 19980610 0000315189-98-000011.hdr.sgml : 19980610 ACCESSION NUMBER: 0000315189-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980609 SROS: CSX SROS: NYSE 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: 98644847 BUSINESS ADDRESS: STREET 1: JOHN DEERE RD 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 April 30, 1998 -------------------------- 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 April 30, 1998, 244,854,197 shares of common stock, $1 par value, of the registrant were outstanding. - ----------------------------------------------------------------- Index to Exhibits: Page 29 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY CONSOLIDATED STATEMENT OF CONSOLIDATED INCOME (Deere & Company and Three Months Ended April 30 Consolidated Subsidiaries) Millions of dollars except per share amounts Three Months Ended (Unaudited) April 30, 1998 1997 Net Sales and Revenues Net sales of equipment $3,609.9 $3,107.6 Finance and interest income 239.1 205.7 Insurance and health care premiums 174.7 171.3 Investment income 16.5 16.9 Other income 29.4 19.6 Total 4,069.6 3,521.1 Costs and Expenses Cost of goods sold 2,737.2 2,319.4 Research and development expenses 114.2 106.6 Selling, administrative and general expenses 340.6 335.7 Interest expense 129.2 103.7 Insurance and health care claims and benefits 139.1 127.7 Other operating expenses 41.9 20.2 Total 3,502.2 3,013.3 Income of Consolidated Group Before Income Taxes 567.4 507.8 Provision for income taxes 205.2 188.7 Income of Consolidated Group 362.2 319.1 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit .2 (.3) Insurance Health care .1 Other 2.7 .7 Total 3.0 .4 Net Income $ 365.2 $ 319.5 Per Share: Net income $ 1.48 $ 1.25 Net income - diluted $ 1.45 $ 1.24 See Notes to Interim Financial Statements. Supplemental consolidating data are shown for the "Equipment Operations" and "Financial Services". Transactions between the "Equipment Operations" and "Financial Services" have been eliminated to arrive at the "Consolidated" data. Page 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY EQUIPMENT OPERATIONS STATEMENT OF CONSOLIDATED INCOME (Deere & Company with Three Months Ended April 30 Financial Services on the Equity Basis) Millions of dollars except per share amounts Three Months Ended (Unaudited) April 30, 1998 1997 Net Sales and Revenues Net sales of equipment $3,609.9 $3,107.6 Finance and interest income 30.6 25.0 Insurance and health care premiums Investment income Other income 9.4 8.7 Total 3,649.9 3,141.3 Costs and Expenses Cost of goods sold 2,741.9 2,322.0 Research and development expenses 114.2 106.6 Selling, administrative and general expenses 243.1 242.2 Interest expense 33.7 21.5 Insurance and health care claims and benefits Other operating expenses 13.6 3.4 Total 3,146.5 2,695.7 Income of Consolidated Group Before Income Taxes 503.4 445.6 Provision for income taxes 182.1 167.0 Income of Consolidated Group 321.3 278.6 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit 35.3 31.6 Insurance 4.3 8.2 Health care 1.6 .4 Other 2.7 .7 Total 43.9 40.9 Net Income $ 365.2 $ 319.5 Page 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY FINANCIAL SERVICES STATEMENT OF CONSOLIDATED INCOME Three Months Ended April 30 Millions of dollars except per share amounts Three Months Ended (Unaudited) April 30, 1998 1997 Net Sales and Revenues Net sales of equipment Finance and interest income $212.3 $181.4 Insurance and health care premiums 182.0 176.1 Investment income 16.5 16.9 Other income 21.0 12.0 Total 431.8 386.4 Costs and Expenses Cost of goods sold Research and development expenses Selling, administrative and general expenses 98.9 95.3 Interest expense 99.3 83.0 Insurance and health care claims and benefits 141.2 129.2 Other operating expenses 28.4 16.7 Total 367.8 324.2 Income of Consolidated Group Before Income Taxes 64.0 62.2 Provision for income taxes 23.1 21.7 Income of Consolidated Group 40.9 40.5 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit .2 (.3) Insurance Health care .1 Other Total .3 (.3) Net Income $ 41.2 $ 40.2 Page 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY CONSOLIDATED STATEMENT OF CONSOLIDATED INCOME (Deere & Company and Six Months Ended April 30 Consolidated Subsidiaries) Millions of dollars except per share amounts Six Months Ended (Unaudited) April 30, 1998 1997 Net Sales and Revenues Net sales of equipment $6,014.6 $5,110.2 Finance and interest income 472.4 398.2 Insurance and health care premiums 343.7 333.2 Investment income 33.5 31.9 Other income 51.5 43.6 Total 6,915.7 5,917.1 Costs and Expenses Cost of goods sold 4,603.7 3,849.0 Research and development expenses 208.8 193.0 Selling, administrative and general expenses 623.7 597.6 Interest expense 244.0 198.6 Insurance and health care claims and benefits 277.7 251.5 Other operating expenses 69.5 34.3 Total 6,027.4 5,124.0 Income of Consolidated Group Before Income Taxes 888.3 793.1 Provision for income taxes 323.0 294.8 Income of Consolidated Group 565.3 498.3 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit (.8) Insurance Health care .1 Other 3.1 (1.3) Total 3.2 (2.1) Net Income $ 568.5 $ 496.2 Per Share: Net income $ 2.29 $ 1.94 Net income - diluted $ 2.26 $ 1.92 See Notes to Interim Financial Statements. Supplemental consolidating data are shown for the "Equipment Operations" and "Financial Services". Transactions between the "Equipment Operations" and "Financial Services" have been eliminated to arrive at the "Consolidated" data. Page 5 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY EQUIPMENT OPERATIONS STATEMENT OF CONSOLIDATED INCOME (Deere & Company with Six Months Ended April 30 Financial Services on the Equity Basis) Millions of dollars except per share amounts Six Months Ended (Unaudited) April 30, 1998 1997 Net Sales and Revenues Net sales of equipment $6,014.6 $5,110.2 Finance and interest income 62.8 54.5 Insurance and health care premiums Investment income Other income 20.2 20.5 Total 6,097.6 5,185.2 Costs and Expenses Cost of goods sold 4,612.9 3,857.7 Research and development expenses 208.8 193.0 Selling, administrative and general expenses 437.7 425.6 Interest expense 55.4 42.0 Insurance and health care claims and benefits Other operating expenses 15.3 3.9 Total 5,330.1 4,522.2 Income of Consolidated Group Before Income Taxes 767.5 663.0 Provision for income taxes 279.3 249.0 Income of Consolidated Group 488.2 414.0 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit 68.1 64.6 Insurance 9.8 17.1 Health care (.7) 1.8 Other 3.1 (1.3) Total 80.3 82.2 Net Income $ 568.5 $ 496.2 Page 6 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY FINANCIAL SERVICES STATEMENT OF CONSOLIDATED INCOME Six Months Ended April 30 Millions of dollars except per share amounts Six Months Ended (Unaudited) April 30, 1998 1997 Net Sales and Revenues Net sales of equipment Finance and interest income $415.5 $345.8 Insurance and health care premiums 357.4 349.1 Investment income 33.5 31.9 Other income 33.5 25.1 Total 839.9 751.9 Costs and Expenses Cost of goods sold Research and development expenses Selling, administrative and general expenses 189.8 178.4 Interest expense 194.5 158.6 Insurance and health care claims and benefits 280.6 254.4 Other operating expenses 54.2 30.4 Total 719.1 621.8 Income of Consolidated Group Before Income Taxes 120.8 130.1 Provision for income taxes 43.7 45.8 Income of Consolidated Group 77.1 84.3 Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates Credit (.8) Insurance Health care .1 Other Total .1 (.8) Net Income $ 77.2 $ 83.5 Page 7 DEERE & COMPANY CONSOLIDATED CONDENSED CONSOLIDATED BALANCE SHEET (Deere & Company and Consolidated Subsidiaries) Apr 30, Oct 31, Apr 30, Millions of dollars (Unaudited) 1998 1997 1997 Assets Cash and short-term investments $ 334.4 $ 330.0 $ 267.6 Cash deposited with unconsolidated subsidiaries Cash and cash equivalents 334.4 330.0 267.6 Marketable securities 867.0 819.6 850.3 Receivables from unconsolidated subsidiaries and affiliates 31.3 14.6 26.3 Trade accounts and notes receivable - net 4,383.8 3,333.8 3,639.6 Financing receivables - net 6,880.6 6,404.7 6,438.7 Other receivables 364.7 412.7 411.0 Equipment on operating leases - net 988.8 774.6 564.9 Inventories 1,511.1 1,072.7 1,289.8 Property and equipment - net 1,554.1 1,524.1 1,334.0 Investments in unconsolidated subsidiaries and affiliates 154.6 149.9 129.9 Intangible assets - net 186.4 157.8 278.8 Prepaid pension costs 563.6 592.9 30.9 Deferred income taxes 529.6 543.6 648.1 Other assets and deferred charges 203.2 188.8 162.6 Total $18,553.2 $16,319.8 $16,072.5 Liabilities and Stockholders' Equity Short-term borrowings $ 5,993.3 $ 3,774.6 $ 4,257.7 Payables to unconsolidated subsidiaries and affiliates 33.9 48.7 49.0 Accounts payable and accrued expenses 2,704.4 2,839.7 2,609.5 Insurance and health care claims and reserves 392.6 414.7 411.7 Accrued taxes 229.4 117.5 160.4 Deferred income taxes 21.5 21.4 9.8 Long-term borrowings 2,517.0 2,622.8 2,548.9 Retirement benefit accruals and other liabilities 2,395.8 2,333.2 2,312.9 Total liabilities 14,287.9 12,172.6 12,359.9 Common stock, $1 par value (issued shares at April 30, 1998 - 263,849,669) 1,778.5 1,778.5 1,762.4 Retained earnings 3,502.7 3,048.4 2,694.0 Minimum pension liability adjustment (14.0) (14.0) (235.4) Cumulative translation adjustment (79.4) (57.4) (48.8) Unrealized gain on marketable securities 22.8 22.2 6.2 Unamortized restricted stock compensation (15.2) (17.4) (19.8) Common stock in treasury, at cost (930.1) (613.1) (446.0) Total stockholders' equity 4,265.3 4,147.2 3,712.6 Total $18,553.2 $16,319.8 $16,072.5 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. Page 8 DEERE & COMPANY EQUIPMENT OPERATIONS CONDENSED CONSOLIDATED BALANCE SHEET (Deere & Company with Financial Services on the Equity Basis) Apr 30, Oct 31, Apr 30, Millions of dollars (Unaudited) 1998 1997 1997 Assets Cash and short-term investments $ 91.3 $ 61.2 $ 66.6 Cash deposited with unconsoli- dated subsidiaries 222.7 350.0 57.7 Cash and cash equivalents 314.0 411.2 124.3 Marketable securities Receivables from unconsolidated subsidiaries and affiliates 281.5 57.3 128.4 Trade accounts and notes receivable - net 4,383.8 3,333.8 3,639.6 Financing receivables - net 79.7 83.5 82.3 Other receivables 2.1 Equipment on operating leases - net 194.7 193.9 162.3 Inventories 1,511.1 1,072.7 1,289.8 Property and equipment - net 1,508.6 1,479.1 1,283.7 Investments in unconsolidated subsidiaries and affiliates 1,539.3 1,494.7 1,448.1 Intangible assets - net 178.2 148.4 269.8 Prepaid pension costs 563.6 592.9 30.9 Deferred income taxes 485.5 490.8 592.7 Other assets and deferred charges 134.5 123.8 96.0 Total $11,174.5 $9,484.2 $9,147.9 Liabilities and Stockholders' Equity Short-term borrowings $ 1,741.5 $ 171.1 $ 410.8 Payables to unconsolidated subsidiaries and affiliates 33.9 54.8 49.0 Accounts payable and accrued expenses 1,979.0 2,134.1 1,923.0 Insurance and health care claims and reserves Accrued taxes 219.8 114.2 157.9 Deferred income taxes 21.1 21.4 9.5 Long-term borrowings 551.7 539.9 599.3 Retirement benefit accruals and other liabilities 2,362.2 2,301.5 2,285.8 Total liabilities 6,909.2 5,337.0 5,435.3 Common stock, $1 par value (issued shares at April 30, 1998 - 263,849,669) 1,778.5 1,778.5 1,762.4 Retained earnings 3,502.7 3,048.4 2,694.0 Minimum pension liability adjustment (14.0) (14.0) (235.4) Cumulative translation adjustment (79.4) (57.4) (48.8) Unrealized gain on marketable securities 22.8 22.2 6.2 Unamortized restricted stock compensation (15.2) (17.4) (19.8) Common stock in treasury, at cost (930.1) (613.1) (446.0) Total stockholders' equity 4,265.3 4,147.2 3,712.6 Total $11,174.5 $9,484.2 $9,147.9 Page 9 DEERE & COMPANY FINANCIAL SERVICES CONDENSED CONSOLIDATED BALANCE SHEET Apr 30, Oct 31, Apr 30, Millions of dollars (Unaudited) 1998 1997 1997 Assets Cash and short-term investments $ 243.2 $ 268.8 $ 201.0 Cash deposited with unconsolidated subsidiaries Cash and cash equivalents 243.2 268.8 201.0 Marketable securities 867.0 819.6 850.3 Receivables from unconsolidated subsidiaries and affiliates 6.1 Trade accounts and notes receivable - net Financing receivables - net 6,801.0 6,321.2 6,356.5 Other receivables 364.7 410.6 411.0 Equipment on operating leases - net 794.1 580.7 402.6 Inventories Property and equipment - net 45.5 45.0 50.3 Investments in unconsolidated subsidiaries and affiliates 17.6 13.0 5.4 Intangible assets - net 8.2 9.4 9.0 Prepaid pension costs Deferred income taxes 44.1 52.8 55.4 Other assets and deferred charges 68.6 65.0 66.6 Total $9,254.0 $8,592.2 $8,408.1 Liabilities and Stockholders' Equity Short-term borrowings $4,251.8 $3,603.5 $3,846.9 Payables to unconsolidated subsidiaries and affiliates 473.0 392.7 159.8 Accounts payable and accrued expenses 725.4 705.6 686.5 Insurance and health care claims and reserves 392.6 414.7 411.7 Accrued taxes 9.6 3.2 2.5 Deferred income taxes .4 .3 Long-term borrowings 1,965.3 2,082.9 1,949.6 Retirement benefit accruals and other liabilities 33.6 31.8 27.2 Total liabilities 7,851.7 7,234.4 7,084.5 Common stock, $1 par value (issued shares at April 30, 1998 - 263,849,669) 237.1 238.4 209.4 Retained earnings 1,150.2 1,104.5 1,113.9 Minimum pension liability adjustment Cumulative translation adjustment (7.8) (7.3) (5.9) Unrealized gain on marketable securities 22.8 22.2 6.2 Unamortized restricted stock compensation Common stock in treasury, at cost Total stockholders' equity 1,402.3 1,357.8 1,323.6 Total $9,254.0 $8,592.2 $8,408.1 Page 10 DEERE & COMPANY CONSOLIDATED CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS (Deere & Company and Six Months Ended April 30 Consolidated Subsidiaries Six Months Ended April 30, Millions of dollars (Unaudited) 1998 1997 Cash Flows from Operating Activities Net income $ 568.5 $ 496.2 Adjustments to reconcile net income to net cash provided by (used for) operating activities (1,210.9) (660.3) Net cash provided by (used for) operating activities (642.4) (164.1) Cash Flows from Investing Activities Collections and sales of financing receivables 3,130.8 2,811.4 Proceeds from maturities and sales of marketable securities 73.1 86.6 Cost of financing receivables acquired (3,603.1) (3,317.0) Purchases of marketable securities (117.3) (78.7) Purchases of property and equipment (161.2) (147.3) Cost of operating leases acquired (345.6) (217.6) Acquisitions of businesses (48.4) (8.7) Other 95.9 54.6 Net cash used for investing activities (975.8) (816.7) Cash Flows from Financing Activities Increase in short-term borrowings 1,659.7 849.1 Change in intercompany receivables/payables Proceeds from long-term borrowings 781.0 455.0 Principal payments on long-term borrowings (334.2) (39.0) Proceeds from issuance of common stock 20.7 10.9 Repurchases of common stock (346.8) (212.1) Dividends paid (157.5) (102.8) Other .9 (.6) Net cash provided by (used for) financing activities 1,623.8 960.5 Effect of Exchange Rate Changes on Cash (1.2) (3.6) Net Increase (Decrease) in Cash and Cash Equivalents 4.4 (23.9) Cash and Cash Equivalents at Beginning of Period 330.0 291.5 Cash and Cash Equivalents at End of Period $ 334.4 $ 267.6 See Notes to Interim Financial Statements. Supplemental consolidating data are shown for the "Equipment Operations" and "Financial Services". Transactions between the "Equipment Operations" and "Financial Services" have been eliminated to arrive at the Consolidated" data. Page 11 DEERE & COMPANY EQUIPMENT OPERATIONS CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS (Deere & Company Six Months Ended April 30 with Financial Services on Millions of dollars (Unaudited) the Equity Basis) Six Months Ended April 30, 1998 1997 Cash Flows from Operating Activities Net income $ 568.5 $ 496.2 Adjustments to reconcile net income to net cash provided by (used for) operating activities (1,344.6) (707.3) Net cash provided by (used for) operating activities (776.1) (211.1) Cash Flows from Investing Activities Collections and sales of financing receivables 15.3 30.5 Proceeds from maturities and sales of marketable securities Cost of financing receivables acquired (11.7) (10.5) Purchases of marketable securities Purchases of property and equipment (156.6) (142.2) Cost of operating leases acquired (37.5) (36.0) Acquisitions of businesses (43.7) (8.7) Other 43.3 20.5 Net cash used for investing activities (190.9) (146.4) Cash Flows from Financing Activities Increase in short-term borrowings 1,593.8 186.5 Change in intercompany receivables/payables (213.5) (9.9) Proceeds from long-term borrowings Principal payments on long-term borrowings (26.7) (11.5) Proceeds from issuance of common stock 20.7 10.9 Repurchases of common stock (346.8) (212.1) Dividends paid (157.5) (102.8) Other .9 (.6) Net cash provided by (used for) financing activities 870.9 (139.5) Effect of Exchange Rate Changes on Cash (1.1) (3.5) Net Increase (Decrease) in Cash and Cash Equivalents (97.2) (500.5) Cash and Cash Equivalents at Beginning of Period 411.2 624.8 Cash and Cash Equivalents at End of Period $ 314.0 $ 124.3 Page 12 DEERE & COMPANY FINANCIAL SERVICES CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS Six Months Ended April 30 Six Months Ended Millions of dollars (Unaudited April 30, 1998 1997 Cash Flows from Operating Activities Net income $ 77.2 $ 83.5 Adjustments to reconcile net income to net cash provided by (used for) operating activities 88.3 36.3 Net cash provided by (used for) operating activities 165.5 119.8 Cash Flows from Investing Activities Collections and sales of financing receivables 3,115.5 2,780.9 Proceeds from maturities and sales of marketable securities 73.1 86.6 Cost of financing receivables acquired (3,591.4) (3,306.5) Purchases of marketable securities (117.3) (78.7) Purchases of property and equipment (4.7) (5.1) Cost of operating leases acquired (308.2) (181.5) Acquisitions of businesses (4.6) Other 53.9 33.9 Net cash used for investing activities (783.7) (670.4) Cash Flows from Financing Activities Increase in short-term borrowings 65.9 662.6 Change in intercompany receivables/payables 86.3 (477.2) Proceeds from long-term borrowings 781.0 455.0 Principal payments on long-term borrowings (307.5) (27.5) Proceeds from issuance of common stock Repurchases of common stock Dividends paid (31.8) (72.8) Other (1.3) Net cash provided by (used for) financing activities 592.6 540.1 Effect of Exchange Rate Changes on Cash (.1) Net Increase (Decrease) in Cash and Cash Equivalents (25.6) (10.6) Cash and Cash Equivalents at Beginning of Period 268.8 211.6 Cash and Cash Equivalents at End of Period $ 243.2 $ 201.0 Page 13 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 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. Financial Services - These data include the Company's credit, insurance and health care subsidiaries. Consolidated - These data represent the consolidation of the Equipment Operations and Financial Services in conformity with Financial Accounting Standards Board (FASB) Statement No. 94. References to "Deere & Company" or "the Company" refer to the entire enterprise. 3. An analysis of the Company's retained earnings follows in millions of dollars: Three Months Six Months Ended Ended April 30, April 30, 1998 1997 1998 1997 Balance, beginning of period $3,194.3 $2,425.2 $3,048.4 $2,299.5 Net income 365.2 319.5 568.5 496.2 Dividend declared (54.0) (50.7) (108.8) (101.7) Other (2.8) (5.4) Balance, end of period $3,502.7 $2,694.0 $3,502.7 $2,694.0 Page 14 4. An analysis of the cumulative translation adjustment follows in millions of dollars: Three Months Six Months Ended Ended April 30, April 30, 1998 1997 1998 1997 Balance, beginning of period $(87.5) $(29.2) $(57.4) $(14.0) Translation adjustment (.1) (16.8) (21.7) (29.2) Income taxes applicable to translation adjustments 8.2 (2.8) (.3) (5.6) Balance, end of period $(79.4) $(48.8) $(79.4) (48.8) 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) basis. If all of the Company's inventories had been valued on an approximate first-in, first- out (FIFO) basis, estimated inventories by major classification in millions of dollars would have been as follows: April 30, October 31, April 30, 1998 1997 1997 Raw materials and supplies $ 268 $ 228 $ 237 Work-in-process 516 427 467 Finished machines and parts 1,740 1,430 1,598 Total FIFO value 2,524 2,085 2,302 Adjustment to LIFO basis 1,013 1,012 1,012 Inventories $1,511 $1,073 $1,290 6. During the first six months of 1998, the Financial Services subsidiaries received proceeds from the sale of retail notes of $243 million. At April 30, 1998, the net unpaid balance of all retail notes previously sold by the Financial Services subsidiaries was $1,118 million and the Company's maximum exposure under all related recourse provisions was $158 million. At April 30, 1998, the Company had commitments of approximately $132 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 Six Months Ended April 30, April 30, 1998 1997 1998 1997 Dividends declared $.22 $.20 $.44 $.40 Dividends paid* $.44 $.20 $.64 $.40 * 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. Page 15 8. Worldwide net sales and revenues and operating profit in millions of dollars follow: Three Months Ended April 30, % 1998 1997 Change Net sales: Agricultural equipment $2,217 $1,949 +14 Construction equipment 715 591 +21 Commercial and consumer equipment 678 568 +19 Total net sales 3,610 3,108 +16 Financial Services revenues 424 381 +11 Other revenues 36 32 +13 Total net sales and revenues $4,070 $3,521 +16 United States and Canada: Equipment net sales $2,733 $2,221 +23 Financial Services revenues 424 381 +11 Total 3,157 2,602 +21 Overseas Net sales 877 887 - 1 Other revenues 36 32 +13 Total net sales and revenues $4,070 $3,521 +16 Operating profit**: Agricultural equipment $ 364 $ 339 + 7 Construction equipment 91 77 +18 Commercial and consumer equipment 96 58 +66 Equipment Operations* 551 474 +16 Financial Services 64 62 + 3 Total operating profit 615 536 +15 Interest and corporate expenses-net (45) (28) +61 Income taxes (205) (189) + 8 Net income $ 365 $ 319 +14 * Includes overseas operating profit as follows: $ 105 $ 112 - 6 ** Operating profit is income before interest expense, foreign exchange gains and losses, income taxes and certain corporate expenses. However, operating profit of Financial Services includes the effect of interest expense. Page 16 Six Months Ended April 30, % 1998 1997 Change Net sales: Agricultural equipment $3,668 $3,221 +14 Construction equipment 1,293 1,052 +23 Commercial and consumer equipment 1,054 837 +26 Total net sales 6,015 5,110 +18 Financial Services revenues 825 735 +12 Other revenues 76 72 + 6 Total net sales and revenues $6,916 $5,917 +17 United States and Canada: Equipment net sales $4,548 $3,635 +25 Financial Services revenues 825 735 +12 Total 5,373 4,370 +23 Overseas Net sales 1,467 1,475 - 1 Other revenues 76 72 + 6 Total net sales and revenues $6,916 $5,917 +17 Operating profit**: Agricultural equipment $ 570 $ 534 + 7 Construction equipment 155 115 +35 Commercial and consumer equipment 114 62 +84 Equipment Operations* 839 711 +18 Financial Services 121 129 - 6 Total operating profit 960 840 +14 Interest and corporate expenses-net (69) (49) +41 Income taxes (323) (295) + 9 Net income $ 568 $ 496 +15 * Includes overseas operating profit as follows: $ 162 $ 181 -10 ** Operating profit is income before interest expense, foreign exchange gains and losses, income taxes and certain corporate expenses. However, operating profit of Financial Services includes the effect of interest expense. Page 17 9. In the first quarter of 1998, the Company adopted FASB Statement No. 128, Earnings per Share. This Statement requires the presentation of basic and diluted net income per share, and a reconciliation between these two amounts. Diluted net income per share was restated for the prior period. A reconciliation of basic and diluted net income per share in millions, except per share amounts, follows: Six Months Ended April 30, 1998 1997 Net income $568.5 $496.2 Average shares outstanding 248.1 255.3 Basic net income per share $ 2.29 $ 1.94 Average shares outstanding 248.1 255.3 Effect of dilutive securities: Stock options 2.8 2.4 Other .2 .1 Total potential shares outstanding 251.1 257.8 Diluted net income per share $ 2.26 $ 1.92 Stock options to purchase .5 million shares during the first six months of 1998 and .1 million shares during the first six months of 1997 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 related periods. 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 matters and 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. In December 1997, the Company announced the extension of its stock repurchase program and authorized an additional $1 billion of such repurchases. At the Company's discretion, repurchases of common stock are being made from time to time in the open market and through privately negotiated transactions. During the first six months of 1998, the Company repurchased $269 million of common stock under the extended program and $78 million for ongoing stock option and restricted stock plans. Page 18 12. In December 1997, the Company invested $39 million for a 49 percent interest in Cameco Industries, Inc., primarily a manufacturer of sugarcane harvesters and forestry equipment located in Thibodaux, Louisiana. The initial goodwill acquired was $27 million, which will be amortized to expense over 10 years. The Company has also agreed to purchase the remaining 51 percent interest for $40 million within 12 months of the first investment. Cameco has been consolidated beginning in the first quarter of 1998 and the purchase did not have a material effect on the Company's operating results. Page 19 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Deere & Company achieved record worldwide net income of $365.2 million, or $1.48 per share, for the second quarter of 1998, an increase of 14 percent in net income and 18 percent in earnings per share compared with $319.5 million, or $1.25 per share, in the second quarter of 1997. Net income for the first six months was $568.5 million, or $2.29 per share, an increase of 15 percent in net income and 18 percent in earnings per share compared with $496.2 million, or $1.94 per share, for the same period last year. Earnings per share continued to benefit from the share repurchase program. Strong revenue growth, excellent customer response to new products and continuing progress in quality initiatives were the primary drivers of the Company's earnings performance. These results are particularly gratifying as the Company continues to make significant investments in quality and growth initiatives to help enhance its leadership in the global marketplace. Worldwide net sales and revenues for the second quarter rose 16 percent to $4,070 million and 17 percent to $6,916 million for the first six months of 1998 compared with $3,521 million and $5,917 million, respectively, for the same periods last year. Net sales of the agricultural, construction, and commercial and consumer equipment divisions increased 16 percent to $3,610 million for the quarter and 18 percent to $6,015 million for the first six months compared with $3,108 million and $5,110 million for the same periods a year ago. These increases were in response to strong retail demand for the Company's products. Export sales from the United States increased to $562 million for the second quarter and $1,014 million for the first six months compared with $547 million and $939 million, respectively, for the same periods last year. Overseas sales remained at favorable levels; however, they were affected by weaker foreign currencies and were slightly lower than last year for both the quarter and the year-to-date. Overseas physical volume of sales increased 6 percent for the year-to-date compared with last year. Overall, the Company's physical volume of sales increased 19 percent for the first six months of 1998 compared with the first half a year ago. Worldwide Equipment Operations, which exclude the Financial Services subsidiaries and unconsolidated affiliates, had record income of $321.3 million for the second quarter and $488.2 million for the first six months compared with $278.6 million and $414.0 million for the same periods last year. Worldwide equipment operating profit increased to $551 million for the quarter and to $839 million for the first six months of 1998 compared with $474 million for the quarter and $711 million for the first six months of last year. Operating profit as a percent of net sales was 15 percent for the quarter and 14 percent for the first six months, the same as last year. Progress in quality initiatives allowed the Company to maintain favorable margins despite increasingly competitive markets and continued spending on growth initiatives. - - Worldwide agricultural equipment operating profit increased 7 percent to $364 million for the quarter and 7 percent to $570 million for the first six months compared with $339 million and $534 million for the same periods last year. These increases resulted from higher sales and production volumes partially offset by higher sales incentive costs, higher expenses related to growth initiatives and a less favorable sales mix. Page 20 - - Worldwide construction equipment operating profit increased 18 percent to $91 million for the quarter and 35 percent to $155 million for the first six months, compared with $77 million and $115 million for the same periods last year, primarily reflecting higher sales and production volumes. Improved efficiencies helped to partially offset higher growth expenditures, higher sales incentive costs, and start-up expenses primarily at the new engine facility in Torreon, Mexico. - - Worldwide commercial and consumer equipment operating profit increased 66 percent to $96 million for the quarter and 84 percent to $114 million for the first six months compared with $58 million and $62 million for the same periods last year. This performance resulted from higher sales and production volumes driven by strong demand for the Company's products, as well as improved operating efficiencies. Results in 1998 included higher expenses related to new products and the start- up of manufacturing facilities. Last year's results were adversely affected by a write-off related to a Homelite product. The ratio of cost of goods sold to net sales of the Equipment Operations was 76.0 percent in the second quarter of 1998 compared to 74.7 percent in the same period of last year. During the first six months of 1998, the ratio of cost of goods sold to net sales was 76.7 percent compared to 75.5 percent in the first half of last year. The increased ratios were primarily due to the previously mentioned higher sales incentive costs, a less favorable sales mix and higher expenses related to growth initiatives. Additional information on business segments is presented in Note 8 to the interim financial statements. Net income of the Company's credit operations was $35.3 million in the second quarter of 1998 compared with $31.6 million in last year's second quarter. For the first six months of 1998, net income of these subsidiaries was $68.1 million compared with $64.6 million last year. The 1998 second quarter and year-to- date results benefited from gains of $10.3 million on sales of recreational vehicle retail notes and higher income from a larger average receivable and lease portfolio, partially offset by narrower financing spreads, higher write-offs of receivables and higher operating expenses. Total revenues of the credit operations increased 21 percent from $194 million in the second quarter of 1997 to $233 million in the current quarter and increased 21 percent in the first half from $371 million last year to $449 million this year. The average balance of receivables and leases financed was 14 percent higher in the second quarter and 13 percent higher in the first six months of 1998 compared with the same periods last year. Interest expense increased 19 percent in the current quarter and 22 percent in the first half of 1998 compared with 1997 as a result of an increase in average borrowings and higher borrowing rates this year. The credit subsidiaries' consolidated ratio of earnings to fixed charges was 1.55 to 1 for the second quarter this year compared with 1.59 to 1 in 1997. This ratio was 1.55 to 1 for the first six months this year compared with 1.64 to 1 in the same period of 1997. Net income from insurance operations was $4.3 million in the second quarter of 1998 compared with $8.2 million last year. For the first six months, net income from these operations was $9.8 million this year compared with $17.1 million in 1997. The decreases in income were primarily due to less favorable underwriting results, lower premium volumes due to competitive market conditions and lower investment income. For the second quarter, insurance premiums decreased 7 percent in 1998 compared with the same period last year, while total claims, benefits, and selling, administrative and general expenses decreased 1 percent this year. For the six month period, insurance premiums decreased 10 percent in 1998, while total claims, benefits, and Page 21 selling, administrative and general expense decreased 4 percent compared with last year. Net income from health care operations was $1.6 million in the second quarter of 1998 compared with $.4 million last year. In the first six months, the net loss incurred by these operations was $.7 million this year compared with net income of $1.8 million in 1997. Despite lower margins at the beginning of this year and competitive industry conditions affecting year-to-date results, significant progress is being made to improve the profitability of the business. For the second quarter, health care premiums and administrative services revenues increased 11 percent in 1998 compared with the same period last year, while total claims, benefits, and selling, administrative and general expenses increased 9 percent this year. For the six month period, health care premiums and administrative services revenues increased 13 percent in 1998, while total claims, benefits, and selling, administrative and general expenses increased 15 percent compared with last year. Market Conditions and Outlook The Company's record results for the first six months were in line with expectations. Better than anticipated crops in the Southern hemisphere continued to put downward pressure on corn, wheat and soybean prices; however, consumption is rising and carryover stocks, although higher in the United States, are slightly below average on a worldwide basis. United States farm cash receipts are expected to be slightly below the high levels of the previous two years, but farmers' balance sheets are continuing to improve as a result of rising farmland prices and low interest rates. Overall fundamentals of the farm economy are sound, and the demand for farm equipment is expected to remain favorable. New products, low interest rates and solid economic growth continue to bolster construction equipment demand. Housing starts are expected to be slightly higher than last year's level, and expenditures for highways and streets should grow following the expected approval of pending federal highway legislation. Sales of commercial and consumer equipment should benefit from favorable customer response to the Company's line of new products, as well as high levels of consumer confidence and a strong housing market. The credit operations should benefit from the strong demand for John Deere products. The insurance operations continue to face competitive market conditions, and their results are expected to be below last year's. The health care operations' margins continue to be under pressure from a very competitive environment; however, improvement plans are on target and are expected to result in significantly improved financial results in the remainder of 1998 compared to a year ago. Based on these conditions, the Company's worldwide physical volume of sales is currently projected to increase by approximately 10 to 12 percent in 1998 compared with 1997. Third quarter physical volume of sales is projected to be 10 to 14 percent higher than the comparable level for the third quarter of 1997. The Company looks forward to a continued strong performance in fiscal 1998, reflecting gains from its quality improvement efforts and the strong demand throughout the world for its line of products. With investments in new facilities and new innovative products, the Company looks forward to market share growth and continued high levels of customer satisfaction. Page 22 Safe Harbor Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under the "Market Conditions and Outlook" heading, which relate to future operating periods, are subject to important risks and uncertainties that could cause actual results to differ materially. The Company's businesses include Equipment Operations (agricultural, construction, and commercial and consumer) and Financial Services (credit, insurance and health care). Forward-looking statements relating to these businesses involve certain factors that are subject to change, including: the many interrelated factors that affect farmers' confidence, including worldwide demand for agricultural products, world grain stocks, commodities prices, weather conditions such as El Nino, animal diseases, crop pests, harvest yields, real estate values and government farm programs; general economic conditions and housing starts; legislation, primarily legislation relating to agriculture, the environment, commerce and government spending on infrastructure; actions of competitors in the various industries in which the Company competes; the level of inventories in such industries; production difficulties, including capacity and supply constraints; dealer practices; labor relations; interest and currency exchange rates; accounting standards; and other risks and uncertainties. Dealers' retail sales of agricultural equipment are especially affected by the weather in the summer, while the number of housing starts are especially important to sales of construction equipment. Economic difficulties in Asia could affect North American grain and meat export prospects. The Company's outlook is based upon assumptions relating to the factors described above. These assumptions are sometimes based upon estimates and data prepared by government agencies. Such estimates and data may be subject to revision. 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 six months of 1998, negative cash flows from operating activities of $776 million resulted primarily from the normal seasonal increases in trade receivables and Company-owned inventories, and a decrease in accounts payable and accrued expenses. Partially offsetting these operating cash outflows were positive cash flows from net income and dividends received from the Financial Services operations. The resulting net cash requirement for operating activities, along with repurchases of common stock, an increase in receivables from Financial Services, payment of dividends and purchases of property and equipment were provided primarily from an increase in borrowings and a decrease in cash and cash equivalents. Negative cash flows from operating activities in the first six months of 1997 resulted primarily from the normal seasonal increases in dealer receivables and Company-owned inventories. Partially offsetting these operating cash outflows were positive cash flows from net income and dividends received from the Financial Services operations. The resulting net cash requirement for operating activities of $211 million, along with Page 23 cash required for repurchases of common stock, purchases of property and equipment and payment of dividends, were provided primarily from a decrease in cash and cash equivalents and an increase in borrowings. Purchases of property and equipment increased compared to 1996, primarily due to construction of new facilities for the production of engines and commercial and consumer equipment. Trade receivables and Company-owned inventories increased, as expected, due to the higher sales volume. Equipment Operations assets at April 30, 1998 were 77.6 percent of the last 12 months net sales, compared with 75.8 percent a year ago. The higher ratio is primarily due to increased prepaid pension cost assets. Net trade accounts and notes receivable result mainly from sales to dealers of equipment that is being carried in their inventories. Although trade receivables increased $744 million compared to one year ago and $1,050 million during the first six months, the ratios of worldwide net trade accounts and notes receivable to the last 12 months' net sales were 37 percent at April 30, 1998 compared to 36 percent at April 30, 1997 and 30 percent at October 31, 1997. In addition to the increase due to higher sales volume this year, trade receivables reflected a seasonal increase in the first six months. North American agricultural, and commercial and consumer equipment trade receivables increased approximately $520 million and $150 million, respectively, while construction equipment receivables decreased approximately $30 million compared with the levels 12 months earlier. Total overseas trade receivables were approximately $100 million higher than a year ago. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 4 percent at April 30, 1998, 5 percent at October 31, 1997 and 7 percent at April 30, 1997. Company-owned inventories at April 30, 1998 increased by $438 million compared with the end of the previous fiscal year and $221 million compared to one year ago, primarily reflecting a seasonal increase in the first six months and increased production and sales volumes from a year ago. 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 only 10 percent from a year ago compared to an increase in net sales of 18 percent during the same periods. Total interest-bearing debt of the Equipment Operations was $2,293 million at April 30, 1998 compared with $711 million at the end of fiscal year 1997 and $1,010 million at April 30, 1997. The ratio of total debt to total capital (total interest- bearing debt and stockholders' equity) was 35 percent, 15 percent and 21 percent at April 30, 1998, October 31, 1997 and April 30, 1997, respectively. During the first six months, Deere & Company retired $25 million of medium-term notes. Financial Services The Financial Services' credit subsidiaries rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Their primary sources of funds for this purpose are a combination of borrowings and equity capital. Additionally, the credit subsidiaries periodically sell substantial amounts of retail notes. The insurance and health care operations generate their funds through internal operations and intercompany loans. During the first six months of 1998, 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 $166 million in the first six months. Cash provided by financing activities totaled $593 million in the first half of 1998, primarily resulting from a $626 million increase in total borrowings, which was partially offset by payment of a $32 million dividend to the Equipment Operations. Cash used for investing activities totaled $784 million in the first six months, due to the cost of financing Page 24 receivables and leases exceeding collections and sales of financing receivables. Cash and cash equivalents decreased $26 million during the first half of 1998. In the first six months of 1997, the aggregate cash provided from operating and financing activities was used for investing activities. Cash provided from Financial Services operating activities was $120 million in the first six months of 1997. Cash provided by financing activities totaled $540 million in the first half of 1997, representing a $613 million increase in total borrowings, partially offset by payment of a $73 million dividend to the Equipment Operations. Investing activities used $670 million of cash in the first six months of 1997, primarily due to acquisitions of financing receivables and leases exceeding collections and sales of financing receivables by $707 million. Cash and cash equivalents decreased $11 million during the first half of 1997. Marketable securities consist primarily of debt securities held by the insurance and health care operations in support of their obligations to policyholders. During the first six months of 1998 and last 12 months, marketable securities increased $47 million and $17 million, respectively. The increase in the first six months was primarily due to the investment of the insurance operation's cash and cash equivalents held at the beginning of the year, while the increase from a year ago was mainly a result of an increase in unrealized gains. Financing receivables and leases increased by $693 million in the first six months of 1998 and $836 million during the past 12 months. These receivables and leases 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. The credit subsidiaries' receivables and leases increased during the last 12 months due to the cost of financing receivables and leases acquired exceeding collections, which was partially offset by the sale of retail notes during the same period. Total acquisitions of financing receivables and leases were 12 percent higher in the first six months of 1998 compared with the same period last year. At April 30, 1998, the levels of retail notes, wholesale receivables, leases and revolving charge accounts were all higher than one year ago. Financing receivables and leases administered by the credit subsidiaries, which include receivables previously sold, amounted to $8,713 million at April 30, 1998 compared with $8,416 million at October 31, 1997 and $7,615 million at April 30, 1997. At April 30, 1998, the unpaid balance of all retail notes previously sold was $1,118 million compared with $1,515 million at October 31, 1997 and $856 million at April 30, 1997. Total outside interest-bearing debt of the credit subsidiaries was $6,217 million at April 30, 1998 compared with $5,686 million at the end of fiscal year 1997 and $5,797 million at April 30, 1997. Total outside borrowings increased during the first six months of 1998 and the last 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 subsidiaries' ratio of total interest-bearing debt to stockholder's equity was 6.9 to 1 at April 30, 1998 compared with 6.6 to 1 at October 31, 1997 and 6.8 to 1 at April 30, 1997. During the first six months of 1998, John Deere Capital Corporation issued $200 million of 5.85% notes due in 2001 and retired $150 million of floating rate notes due in 1998. The Capital Corporation also issued $581 million and retired $158 million of medium-term notes during the first six months of 1998. Page 25 Consolidated The Company maintains unsecured lines of credit with various banks in North America and overseas. Some of the lines are available to both the Equipment Operations and certain credit subsidiaries. Worldwide lines of credit totaled $5,316 million at April 30, 1998, $934 million of which were unused. For the purpose of computing unused credit lines, total short-term borrowings, excluding the current portion of long-term borrowings, were considered to constitute utilization. Included in the total credit lines is a long-term credit agreement commitment totaling $3,500 million. Stockholders' equity was $4,265 million at April 30, 1998 compared with $4,147 million at October 31, 1997 and $3,713 million at April 30, 1997. The increase of $118 million in the first six months of 1998 resulted primarily from net income of $568 million, partially offset by an increase in common stock in treasury of $317 million related to the Company's stock repurchase and employee benefit programs, dividends declared of $109 million and a $22 million change in the cumulative translation adjustment. The Board of Directors at its meeting on May 27, 1998 declared a quarterly dividend of 22 cents per share payable August 3, 1998 to stockholders of record on June 30, 1998. 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 26 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 During the quarter, the Company issued 5,400 shares of restricted stock as compensation to the Company's nonemployee directors. These shares were not registered under the Securities Act of 1933 pursuant to an exemption from registration. 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 25, 1998, the following directors were elected for terms expiring at the annual meeting in 2001: Votes For Votes Withheld Hans W. Becherer 217,078,198 1,636,544 Antonio Madero B. 217,115,899 1,598,843 John R. Stafford 217,145,821 1,568,921 John R. Walter 217,115,247 1,599,495 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 1999. Leonard A. Hadley, Samuel C. Johnson, Arthur L. Kelly and William A. Schreyer continue to serve as directors of the Company for terms expiring at the annual meeting in 2000. 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 February 17, 1998 (Item 7). Page 27 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DEERE & COMPANY Date: June 8, 1998 By s/ Nathan J. Jones ------------------------- Nathan J. Jones Senior Vice President, Principal Financial Officer and Principal Accounting Officer Page 28 INDEX TO EXHIBITS Exhibit Number 2 Not applicable 3 Not applicable 4.1 Amended and restated credit agreements among the registrant, John Deere Capital Corporation, various financial institutions and The Chase Manhattan Bank, Bank of America National Trust and Savings Association, Deutsche Bank AG New York Branch, The Toronto-Dominion Bank, Morgan Guaranty Trust Company of New York, Nationsbank, N. A. and The First National Bank of Chicago as Managing Agents dated as of February 24, 1998. 4.2 Third Amending Agreements to Loan Agreements among John Deere Limited, John Deere Credit Inc., various financial institutions and The Toronto- Dominion Bank as agent, dated as of February 24, 1998. 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 29 EX-4.1 2 EXHIBIT 4.1 _______________________________________________________________ DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION ______________________________ $3,500,000,000 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of February 24, 1998 (Amending and Restating the $3,500,000,000 Amended and Restated Credit Agreement, dated as of February 25, 1997) ______________________________ THE CHASE MANHATTAN BANK, as Administrative Agent, as Auction Agent and as a Managing Agent BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent and as a Managing Agent DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agent and as a Managing Agent THE TORONTO-DOMINION BANK, as Canadian Administrative Agent and as a Managing Agent _______________________________________________________________ AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 24, 1998 (amending and restating the $3,500,000,000 Amended and Restated Credit Agreement, dated as of February 25, 1997), among (a) DEERE & COMPANY, a Delaware corporation (the "Company"), (b) JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the "Capital Corporation"), (c) the several financial institutions parties hereto (collectively, the "Banks", and individually, a "Bank"), (d) THE CHASE MANHATTAN BANK, as administrative agent hereunder (in such capacity, the "Administrative Agent") and as auction agent hereunder (in such capacity, the "Auction Agent"), (e) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as documentation agent hereunder (in such capacity, the "Documentation Agent"), (f) DEUTSCHE BANK AG NEW YORK BRANCH (the successor to Deutsche Bank AG Chicago Branch), as syndication agent hereunder (in such capacity, the "Syndication Agent"), (g) THE TORONTO-DOMINION BANK, as Canadian administrative agent hereunder (in such capacity, the "Canadian Administrative Agent"), (h) THE CHASE MANHATTAN BANK, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, DEUTSCHE BANK AG NEW YORK BRANCH (the successor to Deutsche Bank AG Chicago Branch), THE TORONTO-DOMINION BANK, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, NATIONSBANK, N.A. and THE FIRST NATIONAL BANK OF CHICAGO as managing agents (collectively, the "Managing Agents"), and (i) the co-agents identified on the signature pages hereof (collectively, the "Co-Agents"). W I T N E S S E T H : WHEREAS, pursuant to the $3,500,000,000 Amended and Restated Credit Agreement, dated as of February 25, 1997 (the "Existing Credit Agreement"), among the Borrowers, the Banks, the Agents, the Managing Agents and the Co-Agents, the Banks parties thereto have agreed to extend credit to the Borrowers; WHEREAS, the Borrowers have requested that the Existing Credit Agreement be amended and restated as hereinafter provided; and WHEREAS, the Banks, the Agents, the Managing Agents and the Co-Agents are willing to agree to such amendment and restatement; NOW, THEREFORE, the parties hereto hereby agree that on the Second Amendment and Restatement Effective Date the Existing Credit Agreement will be amended and restated in its entirety as follows: SUBSECTIONS 1.1 THROUGH 10.7 Subsections 1.1 through 10.7 of the Existing Credit Agreement, in each case with their respective existing subsection and Section designations, are hereby incorporated herein by reference as if set forth in full herein, except that, for purposes of such incorporation by reference: Page 1 (a) Subsection 1.1 of the Existing Credit Agreement shall be deemed amended by (i) deleting the definitions of "Agreement" and "Termination Date" in their entirety and (ii) inserting the following definitions in correct alphabetical order: "`Agreement': this Amended and Restated Credit Agreement, dated as of February 24, 1998, as amended, supplemented or modified from time to time. `Second Amendment and Restatement Effective Date': the date on which each of the conditions precedent specified in subsection 4.4 shall have been satisfied. The Administrative Agent shall notify each Bank of the Second Amendment and Restatement Effective Date. `Termination Date': the fifth anniversary of the Second Amendment and Restatement Effective Date or such later date as shall be determined pursuant to the provisions of subsection 2.16 with respect to non-Objecting Banks." (b) Subsection 2.12(b)(i) of the Existing Credit Agreement shall be deemed amended by inserting immediately following the words "in respect of Committed Rate Loans" the following: "(subject to the provisions of subsection 2.21(e))". (c) Section 2 of the Existing Credit Agreement shall be deemed amended by adding thereto the following new subsection 2.21: "2.21 Commitment Increases. (a) At any time after the Second Amendment and Restatement Effective Date, provided that no Event of Default shall have occurred and be continuing, the Borrowers may request an increase of the aggregate Commitments by notice to the Administrative Agent in writing of the amount (the "Offered Increase Amount") of such proposed increase (such notice, a "Commitment Increase Notice"). Any such Commitment Increase Notice must offer each Bank the opportunity to subscribe for its pro rata share of the increased Commitments; provided, however, the Borrowers may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), without offering to each Bank the opportunity to subscribe for its pro rata share of the increased Commitments, offer to any bank or other financial institution that is not an existing Bank the opportunity to provide a new Commitment pursuant to paragraph (b) below if the aggregate amount of all Commitments made hereunder pursuant to this proviso which will be in effect when such new Commitment becomes effective does not exceed $875,000,000. If any portion of the increased Commitments offered to the Banks as contemplated in the immediately preceding sentence is not subscribed for by the Banks, the Borrowers may, with the consent of the Administrative Agent as to any bank or financial institution that is not at such time a Bank (which consent shall not be unreasonably withheld or delayed), offer to any existing Bank or to one or more additional banks or financial institutions the opportunity to provide all or a portion of such unsubscribed portion of the increased Commitments pursuant to paragraph (b) below. Page 2 (b) Any additional bank or financial institution that the Borrowers select to offer the opportunity to provide any portion of the increased Commitments, and that elects to become a party to this Agreement and provide a Commitment, shall execute a New Bank Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit N (a "New Bank Supplement"), whereupon such bank or financial institution (a "New Bank") shall become a Bank for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule II shall be deemed to be amended to add the name and Commitment of such New Bank, provided that the Commitment of any such New Bank shall be in an amount not less than $10,000,000. (c) Any Bank that accepts an offer to it by the Borrowers to increase its Commitment pursuant to this subsection 2.21 shall, in each case, execute a Commitment Increase Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit O (a "Commitment Increase Supplement"), whereupon such Bank (an "Increasing Bank") shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule II shall be deemed to be amended to so increase the Commitment of such Bank. (d) The effectiveness of any New Bank Supplement or Commitment Increase Supplement shall be contingent upon receipt by the Administrative Agent of such corporate resolutions of the Borrowers and legal opinions of counsel to the Borrowers as the Administrative Agent shall reasonably request with respect thereto and, if a New Bank Supplement indicates that the relevant New Bank shall be a Tranche B Bank or if the Increasing Bank is a Tranche B Bank, upon receipt by the Canadian Administrative Agent of such corporate resolutions of the Borrowers under the Linked Agreement (the "Linked Borrowers") and legal opinions of counsel to the Linked Borrowers as the Canadian Administrative Agent shall reasonably request with respect thereto. (e) (i) Except as otherwise provided in subparagraphs (ii) and (iii) of this paragraph (e), if any bank or financial institution becomes a New Bank pursuant to subsection 2.21(b) or any Bank's Commitment is increased pursuant to subsection 2.21(c), additional Committed Rate Loans made on or after the date of the effectiveness thereof (the "Re-Allocation Date") shall be made in accordance with the pro rata provisions of subsection 2.12(b) based on the Commitment Percentages in effect on and after such Re-Allocation Date (except to the extent that any such pro rata borrowings would result in any Bank making an aggregate principal amount of Committed Rate Loans in excess of its Commitment, in which case such excess amount will be allocated to, and made by, the relevant New Banks and Increasing Banks to the extent of, and in accordance with the pro rata provisions of subsection 2.12(b) based on, their respective Commitments). On each Re-Allocation Date, the Administrative Agent shall deliver a notice to each Bank of the adjusted Commitment Percentages after giving effect to any increase in the aggregate Commitments made pursuant to this Section 2.21 on such Re-Allocation Date. Page 3 (ii) In the event that on any such Re-Allocation Date there is an unpaid principal amount of ABR Loans, the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans, as the applicable Borrower shall determine, so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages. (iii) In the event that on any such Re-Allocation Date there is an unpaid principal amount of Eurodollar Loans, such Eurodollar Loans shall remain outstanding with the respective holders thereof until the expiration of their respective Interest Periods (unless the applicable Borrower elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and on the last day of the respective Interest Periods the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages. (f) Notwithstanding anything to the contrary in this subsection 2.21, (i) in no event shall any transaction effected pursuant to this subsection 2.21 cause the aggregate Commitments to exceed $4,900,000,000, (ii) the Commitment of an individual Bank shall not, as a result of providing a new Commitment or of increasing its existing Commitment pursuant to this subsection 2.21, exceed 15% of the aggregate Commitments on any Re- Allocation Date and (iii) no Bank shall have any obligation to increase its Commitment unless it agrees to do so in its sole discretion. (g) The Borrowers, at their own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Notes of any Bank, if any, new Notes to the order of such Bank, if requested, in an amount equal to the Commitment of such Bank after giving effect to any increase in such Bank's Commitment." (d) Section 3 of the Existing Credit Agreement shall be deemed amended by (i) deleting the date "October 31, 1996" contained in the first sentence of subsection 3.1 of the Existing Credit Agreement and substituting in lieu thereof the date "October 31, 1997" and (ii) adding thereto the following new subsection 3.12: "3.12 Representations and Warranties on Second Amendment and Restatement Effective Date. The representations and warranties made by such Borrower in subsections 3.1 through 3.10 are true and correct in all material respects on and as of the Second Amendment and Restatement Effective Date, as if made on and as of the Second Amendment and Restatement Effective Date, except to the extent such representations and warranties expressly relate to an earlier date." (e) Section 4 of the Existing Credit Agreement shall be deemed amended by deleting the introductory clause of subsection 4.2 of the Existing Credit Agreement and substituting in lieu thereof the following: Page 4 "Conditions of Loans. The obligation of each Bank to make any Loans (which shall include the initial Loan to be made by it hereunder but shall not include any Loan made pursuant to subsection 2.21(e)(ii) or (iii) if, after the making of such Loan and the application of the proceeds thereof, the aggregate outstanding principal amount of the Committed Rate Loans would not be increased) to be made by it hereunder is subject to the satisfaction of the following conditions precedent:" (f) Section 4 of the Existing Credit Agreement shall be deemed further amended by adding thereto the following new subsection 4.4: "4.4 Conditions to Second Amendment and Restatement Effective Date. The Second Amendment and Restatement Effective Date shall be the date of satisfaction of the following conditions precedent: (a) Counterparts. The Administrative Agent shall have received counterparts hereof, executed by all of the parties hereto. (b) Resolutions. The Administrative Agent shall have received, with a counterpart for each Bank, resolutions, certified by the Secretary or an Assistant Secretary of each Borrower, in form and substance satisfactory to the Administrative Agent, adopted by the Board of Directors of such Borrower authorizing the execution of this Agreement and the performance of its obligations hereunder and any borrowings hereunder from time to time. (c) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Bank, an opinion of Frank S. Cottrell, Esq., or his successor, as general counsel, or an associate general counsel, for each of the Borrowers, dated the Second Amendment and Restatement Effective Date and addressed to the Agents and the Banks, substantially in the form of the opinion of such counsel rendered on the Amendment and Restatement Effective Date with changes therein to reflect that such opinion is in respect of this Agreement and is rendered on the Second Amendment and Restatement Effective Date, and an opinion of Shearman & Sterling, special counsel to the Borrowers, dated the Second Amendment and Restatement Effective Date and addressed to the Agents and the Banks, substantially in the form of the opinion of such counsel rendered on the Amendment and Restatement Effective Date with changes therein to reflect that such opinion is in respect of this Agreement and is rendered on the Second Amendment and Restatement Effective Date. Such opinions shall also cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent shall reasonably require. (d) Incumbency Certificate. The Administrative Agent shall have received, with a counterpart for each Bank, a certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and true signatures of the officers of such Borrower authorized to sign this Agreement, together with evidence of the incumbency of such Secretary or Assistant Secretary. Page 5 (e) Repayment of Amounts Under Existing Credit Agreement. The Administrative Agent shall have received evidence satisfactory to it that (i) all principal of and interest on Loans, if any, outstanding under the Existing Agreement shall have been repaid in full and (ii) all other amounts payable under the Existing Credit Agreement to any Bank that is a party to the Existing Credit Agreement but is not a party to this Agreement shall have been paid in full. (f) Additional Matters. All other documents which the Administrative Agent may reasonably request in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel." (g) Subsection 10.5(d) of the Existing Credit Agreement shall be deemed amended by (i) inserting immediately following the words "("Purchasing Banks")," in the first sentence thereof the following: "all or" and (ii) inserting immediately following the words "sell any portion" in the last sentence thereof the following: "(less than 100%)". SUBSECTIONS 10.8 THROUGH 10.12 10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 10.9 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 10.10 Consent to Jurisdiction and Service of Process. All judicial proceedings brought against the Borrowers with respect to this Agreement may be brought in any state or federal court of competent jurisdiction in the State of New York, and, by execution and delivery of this Agreement, the Borrowers accept, for themselves and in connection with their properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and irrevocably agree to be bound by any final judgment rendered thereby in connection with this Agreement from which no appeal has been taken or is available. The Borrowers irrevocably agree that all process in any such proceedings in any such court may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to them at their addresses set forth in subsection 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto, such service being hereby acknowledged by the Borrowers to be effective and binding service in every respect. Page 6 Each of the Borrowers, the Agents and the Banks irrevocably waives any objection, including without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have to the bringing of any such action or proceeding in any such jurisdiction. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of any Agent or any Bank to bring proceedings against the Borrowers in the courts of any other jurisdiction. 10.11 Schedule I and Exhibits. Schedule I and Exhibits A through M of the Existing Credit Agreement are hereby incorporated by reference as Schedule I and Exhibits A through M hereto, respectively. For purposes of such incorporation by reference, such Exhibits shall be deemed modified to incorporate any modifications made pursuant to this Agreement. 10.12 Exiting Banks. Each Bank which after the Second Amendment and Restatement Effective Date no longer holds a Commitment (an "Exiting Bank") is executing this Agreement solely for the purpose of acknowledging that its Commitment will terminate on the Second Amendment and Restatement Effective Date upon repayment in full of all amounts owing to it under the Existing Credit Agreement on the Second Amendment and Restatement Effective Date. The modifications effected by this Agreement are being approved by Banks holding 100% of the Commitments after giving effect to termination of the Commitments of the Exiting Banks on the Second Amendment and Restatement Effective Date. On the Second Amendment and Restatement Effective Date, the Borrowers shall effect such borrowings and repayments among the Banks (which need not be pro rata among the Banks) so that, after giving effect thereto, the respective principal amounts of the Committed Rate Loans held by the Banks shall be pro rata according to their respective Commitment Percentages, as amended hereby, the Borrowers being obligated to pay any amounts due pursuant to subsection 2.14 of this Agreement in connection with such prepayments. Page 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DEERE & COMPANY Attested by: /s/ Melvin C. Short, Jr. By: /s/ Nathan J. Jones - -------------------------- ------------------------ Title: Assistant Secretary Title: Senior Vice President JOHN DEERE CAPITAL CORPORATION Attested by: /s/ Timur Gok By: /s/ Nathan J. Jones - -------------------------- ------------------------ Title: Assistant Secretary Title: Senior Vice President Page 8 THE CHASE MANHATTAN BANK, as Administrative Agent, as Auction Agent, as a Managing Agent and as a Bank By: /s/ Robert W. Matthews -------------------------- Title: Vice President BANK OF AMERICA NT & SA, as Documentation Agent, as a Managing Agent and as a Bank By: /s/ James E. Florczak -------------------------- Title: Managing Director DEUTSCHE BANK AG, NEW YORK BRANCH, as Syndication Agent and as a Managing Agent By: /s/ Stephan A. Wiedemann -------------------------- Title: Director By: /s/ Andreas Neumeier -------------------------- Title: Vice President DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCHES, as a Bank By: /s/ Stephan A. Wiedemann -------------------------- Title: Director By: /s/ Andreas Neumeier -------------------------- Title: Vice President Page 9 THE TORONTO-DOMINION BANK, as Canadian Administrative Agent and as a Managing Agent By: /s/ David G. Parker -------------------------- Title: Manager Credit Administration TORONTO DOMINION (TEXAS), INC., as a Bank By: /s/ Neva Nesbitt -------------------------- Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO, as a Managing Agent and as a Bank By: /s/ Barry Litwin -------------------------- Title: Senior Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Managing Agent and as a Bank By: /s/ Christopher C. Kunhardt -------------------------- Title: Vice President NATIONSBANK N.A., as a Managing Agent and as a Bank By: /s/ Mary Carol Daly -------------------------- Title: Vice President Page 10 ABN AMRO BANK N.V., as a Co-Agent and as a Bank By: /s/ John L. Church -------------------------- Title: Vice President By: /s/ Angela Reitz -------------------------- Title: Vice President THE BANK OF NEW YORK, as a Co-Agent and as a Bank By: /s/ William A. O'Daly -------------------------- Title: Vice President CREDIT AGRICOLE INDOSUEZ, as a Co-Agent and as a Bank By: /s/ Alain Butzbach -------------------------- Title: Executive Vice President Deputy General Manager - USA By: /s/ Dean Balice -------------------------- Title: Senior Vice President Branch Manager ROYAL BANK OF CANADA, as a Co-Agent and as a Bank By: /s/ Patrick K. Shields -------------------------- Title: Senior Manager Page 11 SOCIETE GENERALE, CHICAGO BRANCH, as a Co-Agent and as a Bank By: /s/ Eric E. O. Siebert, Jr. -------------------------- Title: Corporate Banking Manager - Midwest THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH By: /s/ Hajime Watanabe -------------------------- Title: Deputy General Manager BANQUE NATIONALE DE PARIS By: /s/ Frederick Moryl, Jr. -------------------------- Title: Senior Vice President CANADIAN IMPERIAL BANK OF COMMERCE By: /s/ Timothy Doyle -------------------------- Title: Managing Director CIBC Oppenheimer Corp. AS AGENT COMMONWEALTH BANK OF AUSTRALIA By: /s/ Shakil Hussain -------------------------- Title: Vice President Page 12 CREDIT SUISSE FIRST BOSTON By: /s/ David W. Kratovil -------------------------- Title: Director By: /s/ Lynn Allegaert -------------------------- Title: Vice President MELLON BANK NA By: /s/ Amy K. Marsh -------------------------- Title: First Vice President WACHOVIA BANK N.A. By: /s/ Todd J. Eagle -------------------------- Title: Vice President THE FUJI BANK, LIMITED By: /s/ Peter L. Chinnici -------------------------- Title: Joint General Manager LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ Richard E. Stahl -------------------------- Title: Executive Vice President Page 13 SCHEDULE II COMMITMENTS Bank Commitment - ---- ---------- PART A: - ------ The Chase Manhattan Bank $332,500,000 Bank of America National Trust and 262,500,000 Savings Association Deutsche Bank AG New York and/or 262,500,000 Cayman Islands Branches The First National Bank of Chicago 262,500,000 Morgan Guaranty Trust Company of New York 262,500,000 NationsBank, N.A. 262,500,000 ABN AMRO Bank N.V. 175,000,000 The Bank of New York 175,000,000 Credit Agricole Indosuez 175,000,000 Societe Generale 175,000,000 The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch 87,500,000 Banque Nationale de Paris, Chicago Branch 87,500,000 Commonwealth Bank of Australia 87,500,000 Credit Suisse First Boston 87,500,000 Mellon Bank, N.A. 87,500,000 Wachovia Bank, N.A. 87,500,000 The Fuji Bank, Limited 52,500,000 The Long Term Credit Bank of Japan, Ltd. 52,500,000 Total $2,974,500,000 Part B: - ------ Toronto Dominion (Texas), Inc. $262,500,000 Royal Bank of Canada 175,000,000 CIBC, Inc. 87,500,000 Total $525,000,000 SCHEDULE III ADDRESSES FOR NOTICES The Chase Manhattan Bank Attention: Peter Hayes 270 Park Avenue - 48th Floor New York, New York 10017 Telephone: (212) 270-5698 Facsimile: (212) 270-1629 Bank of America NT & SA Attention: Pamela Quebbeman 231 South LaSalle Street Chicago, Illinois 60697 Telephone: (312) 828-3586 Facsimile: (312) 974-9626 Deutsche Bank AG, New York and/or Cayman Islands Branches Attention: Robert Wood 31 West 52nd Street New York, New York 10019 Telephone: (212) 469-7839 Facsimile: (212) 469-8212 Toronto Dominion (Texas), Inc. Attention: David G. Parker 909 Fannin, Suite 1700 Houston, Texas 77010 Telephone: (713) 653-8248 Facsimile: (713) 951-9921 with a copy to: TD Securities (USA) Inc. Attention: Bill Evenson 31 West 52nd Street New York, New York 10019 Telephone: (212) 468-0593 Facsimile: (312) 262-1926 Page 1 The First National Bank of Chicago Attention: Cheryl McCabe One First National Plaza Suite 0088, 14th Floor Chicago, Illinois 60670 Telephone: (312) 732-1230 Facsimile: (312) 732-5161 Morgan Guaranty Trust Company of New York Attention: Patricia Merritt 60 Wall Street 22nd Floor New York, New York 10260 Telephone: (212) 648-6744 Facsimile: (212) 648-5336 NationsBank, N.A. Attention: Mary Carol Daly 233 South Wacker Drive, Suite 2800 Chicago, Illinois 60606 Telephone: (312) 234-5618 Facsimile: (312) 234-5601 ABN AMRO Bank N.V. Attention: Loan Administration 135 South LaSalle Street, Suite 625 Chicago, Illinois 60674-9135 Telephone: (312) 904-2961 Facsimile: (312) 606-8435 The Bank of New York Attention: Yvonne Forbes One Wall Street New York, New York 10286 Telephone: (212) 635-6691 Facsimile: (212) 635-7923 Page 2 Credit Agricole Indosuez Attention: Theodore D. Tice 55 East Monroe, Suite 4700 Chicago, Illinois 60603-5702 Telephone: (312) 917-7463 Facsimile: (312) 372-3455 Royal Bank of Canada Grand Cayman (North America No. 1 Branch) c/o New York Branch Financial Square, 23rd Floor 32 Old Slip New York, New York 10005-3531 for all matters except those related to Bid Loans and Negotiated Rate Loans: Attention: Manager, Loans Administration Telephone: (212) 428-6204 Facsimile: (212) 428-2372 for matters related to Bid Loans and Negotiated Rate Loans: Attention: Irene Wanamaker Telephone: (212) 428-6208 Facsimile: (212) 428-2310 with a copy to: Royal Bank of Canada Attention: P.K. Shields One North Franklin Street, Suite 700 Chicago, Illinois 60606 Telephone: (312) 551-1612 Facsimile: (312) 551-0805 Societe Generale Attention: Eric E.O. Siebert, Jr. 181 West Madison, Suite 3400 Chicago, Illinois 60602 Telephone: (312) 578-5003 Facsimile: (312) 578-5099 Page 3 The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch Attention: Laura Kozlowski Julie Galligan 227 West Monroe Street, Suite 2300 Chicago, Illinois 60606 Telephone: (312) 696-4709/4711 Facsimile: (312) 696-4532 Banque Nationale de Paris, Chicago Branch Attention: Frederick H. Moryl, Jr. 209 South LaSalle Street Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 CIBC Inc. Attention: Ken Auchter 2727 Paces Ferry Rd. Suite 1200 Atlanta, Georgia 30339 Telephone: (770) 319-4950 Facsimile: (770) 319-4841 Commonwealth Bank (New York) Attention: Ian Phillips 599 Lexington Avenue New York, New York 10022-6072 Telephone: (212) 848-9241 Facsimile: (212) 336-7772 Credit Suisse First Boston Attention: Hazel Leslie Risk Management 11 Madison Avenue New York, New York 10010-3629 Telephone: (212) 325-9049 Facsimile: (212) 325-8316 Mellon Bank, N.A. Attention: Ryan F. Busch 4355 One Mellon Bank Center Pittsburgh, Pennsylvania 15258 Telephone: (412) 234-0733 Facsimile: (412) 236-1914 Page 4 Wachovia Bank, N.A. Attention: Keith L. Burson 70 West Madison Street, Suite 2440 Chicago, Illinois 60602 Telephone: (312) 795-4346 Facsimile: (312) 853-0693 The Fuji Bank, Limited Attention: Jim Bell 225 West Wacker Drive Suite 2000 Chicago, Illinois 60606 Telephone: (312) 621-0526 Facsimile: (312) 621-0539 The Long-Term Credit Bank of Japan, Ltd. Attention: John Carley 190 South LaSalle Street Suite 800 Chicago, Illinois 60603 Telephone: (312) 853-9516 Facsimile: (312) 704-8505 Page 5 EXHIBIT N FORM OF NEW BANK SUPPLEMENT SUPPLEMENT, dated _______ __, to the $3,500,000,000 Amended and Restated Credit Agreement (as in effect on the date hereof, the "Credit Agreement") dated as of February 24, 1998, among Deere & Company (the "Company"), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a "Bank," and together the "Banks"), The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent") and as Auction Agent (in such capacity, the "Auction Agent") for the Banks, Bank of America National Trust and Savings Association, as Documentation Agent, Deutsche Bank AG New York Branch, as Syndication Agent, The Toronto-Dominion Bank, as Canadian Administrative Agent, the Managing Agents named therein and the Co-Agents named therein. Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Credit Agreement provides in Section 2.21 thereof that any bank or financial institution, although not originally a party thereto, may become a party to the Credit Agreement in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and WHEREAS, the undersigned was not an original party to the Credit Agreement but now desires to become a party thereto; NOW, THEREFORE, the undersigned hereby agrees as follows: 1. The undersigned agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date this Supplement is accepted by the Borrowers and the Administrative Agent, become a Tranche [A] [B] Bank for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $__________________. 2. The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon any Agent, Managing Agent or Co-Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints Page N-1 and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; (e) appoints and authorizes the Auction Agent to take such action as auction agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Auction Agent by the terms thereof, together with such powers as are incidental thereto; and (f) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank including, without limitation, its obligation pursuant to subsection 2.17(c) of the Credit Agreement. 3. The undersigned's address for notices for the purposes of the Credit Agreement is as follows: _______________________________ Attention:_____________________ _______________________________ _______________________________ Fax:___________________________ IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written. [NAME OF NEW BANK] By: _________________________ Title: Accepted this _____ day of ____________________, ____ DEERE & COMPANY By:_________________________ Title: Page N-2 JOHN DEERE CAPITAL CORPORATION By:_________________________ Title: Accepted this _____ day of ____________________, ____ THE CHASE MANHATTAN BANK, as Administrative Agent By:_________________________ Title: Page N-3 EXHIBIT O FORM OF COMMITMENT INCREASE SUPPLEMENT SUPPLEMENT, dated _______ __, to the $3,500,000,000 Amended and Restated Credit Agreement (as in effect on the date hereof, the "Credit Agreement") dated as of February 24, 1998, among Deere & Company (the "Company"), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a "Bank," and together the "Banks"), The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent") and as Auction Agent (in such capacity, the "Auction Agent") for the Banks, Bank of America National Trust and Savings Association, as Documentation Agent, Deutsche Bank AG New York Branch, as Syndication Agent, The Toronto-Dominion Bank, as Canadian Administrative Agent, the Managing Agents named therein and the Co-Agents named therein. Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement. W I T N E S S E T H: WHEREAS, pursuant to the provisions of Section 2.21 of the Credit Agreement, the undersigned may increase the amount of its Commitment in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement; NOW THEREFORE, the undersigned hereby agrees as follows: 1. The undersigned agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrowers and the Administrative Agent it shall have its Commitment increased by $______________, thereby making the amount of its Commitment $______________. IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written. [NAME OF NEW BANK] By: _________________________ Title: Page O-1 Accepted this _____ day of ____________________, ____ DEERE & COMPANY By:_________________________ Title: JOHN DEERE CAPITAL CORPORATION By:_________________________ Title: Accepted this _____ day of ____________________, ____ THE CHASE MANHATTAN BANK, as Administrative Agent By:_________________________ Title: Page O-2 _______________________________________________________________ DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION ______________________________ $1,500,000,000 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of February 24, 1998 (Amending and Restating the $500,000,000 Amended and Restated Credit Agreement, dated as of February 25, 1997) ______________________________ THE CHASE MANHATTAN BANK, as Administrative Agent, as Auction Agent and as a Managing Agent BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent and as a Managing Agent DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agent and as a Managing Agent THE TORONTO-DOMINION BANK, as Canadian Administrative Agent and as a Managing Agent _______________________________________________________________ AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 24, 1998 (amending and restating the $500,000,000 Amended and Restated Credit Agreement, dated as of February 25, 1997), among (a) DEERE & COMPANY, a Delaware corporation (the "Company"), (b) JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the "Capital Corporation"), (c) the several financial institutions parties hereto (collectively, the "Banks", and individually, a "Bank"), (d) THE CHASE MANHATTAN BANK, as administrative agent hereunder (in such capacity, the "Administrative Agent") and as auction agent hereunder (in such capacity, the "Auction Agent"), (e) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as documentation agent hereunder (in such capacity, the "Documentation Agent"), (f) DEUTSCHE BANK AG NEW YORK BRANCH (the successor to Deutsche Bank AG Chicago Branch), as syndication agent hereunder (in such capacity, the "Syndication Agent"), (g) THE TORONTO-DOMINION BANK, as Canadian administrative agent hereunder (in such capacity, the "Canadian Administrative Agent"), (h) THE CHASE MANHATTAN BANK, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, DEUTSCHE BANK AG NEW YORK BRANCH (the successor to Deutsche Bank AG Chicago Branch), THE TORONTO-DOMINION BANK, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, NATIONSBANK, N.A. and THE FIRST NATIONAL BANK OF CHICAGO as managing agents (collectively, the "Managing Agents"), and (i) the co-agents identified on the signature pages hereof (collectively, the "Co-Agents"). W I T N E S S E T H : WHEREAS, pursuant to the $500,000,000 Amended and Restated Credit Agreement, dated as of February 25, 1997 (the "Existing Credit Agreement"), among the Borrowers, the Banks, the Agents, the Managing Agents and the Co-Agents, the Banks parties thereto have agreed to extend credit to the Borrowers; WHEREAS, the Borrowers have requested that the Existing Credit Agreement be amended and restated as hereinafter provided; and WHEREAS, the Banks, the Agents, the Managing Agents and the Co-Agents are willing to agree to such amendment and restatement; NOW, THEREFORE, the parties hereto hereby agree that on the Second Amendment and Restatement Effective Date the Existing Credit Agreement will be amended and restated in its entirety as follows: SUBSECTIONS 1.1 THROUGH 10.7 Subsections 1.1 through 10.7 of the Existing Credit Agreement, in each case with their respective existing subsection and Section designations, are hereby incorporated herein by reference as if set forth in full herein, except that, for purposes of such incorporation by reference: Page 1 (a) Subsection 1.1 of the Existing Credit Agreement shall be deemed amended by (i) deleting the definitions of "Agreement" and "Termination Date" in their entirety and (ii) inserting the following definitions in correct alphabetical order: "`Agreement': this Amended and Restated Credit Agreement, dated as of February 24, 1998, as amended, supplemented or modified from time to time. `Second Amendment and Restatement Effective Date': the date on which each of the conditions precedent specified in subsection 4.4 shall have been satisfied. The Administrative Agent shall notify each Bank of the Second Amendment and Restatement Effective Date. `Termination Date': the date which is 364 days after the Second Amendment and Restatement Effective Date or such later date as shall be determined pursuant to the provisions of subsection 2.16 with respect to non-Objecting Banks." (b) Subsection 2.12(b)(i) of the Existing Credit Agreement shall be deemed amended by inserting immediately following the words "in respect of Committed Rate Loans" the following: "(subject to the provisions of subsection 2.21(e))". (c) Section 2 of the Existing Credit Agreement shall be deemed amended by adding thereto the following new subsection 2.21: "2.21 Commitment Increases. (a) At any time after the Second Amendment and Restatement Effective Date, provided that no Event of Default shall have occurred and be continuing, the Borrowers may request an increase of the aggregate Commitments by notice to the Administrative Agent in writing of the amount (the "Offered Increase Amount") of such proposed increase (such notice, a "Commitment Increase Notice"). Any such Commitment Increase Notice must offer each Bank the opportunity to subscribe for its pro rata share of the increased Commitments; provided, however, the Borrowers may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), without offering to each Bank the opportunity to subscribe for its pro rata share of the increased Commitments, offer to any bank or other financial institution that is not an existing Bank the opportunity to provide a new Commitment pursuant to paragraph (b) below if the aggregate amount of all Commitments made hereunder pursuant to this proviso which will be in effect when such new Commitment becomes effective does not exceed $375,000,000. If any portion of the increased Commitments offered to the Banks as contemplated in the immediately preceding sentence is not subscribed for by the Banks, the Borrowers may, with the consent of the Administrative Agent as to any bank or financial institution that is not at such time a Bank (which consent shall not be unreasonably withheld or delayed), offer to any existing Bank or to one or more additional banks or financial institutions the opportunity to provide all or a portion of such unsubscribed portion of the increased Commitments pursuant to paragraph (b) below. Page 2 (b) Any additional bank or financial institution that the Borrowers select to offer the opportunity to provide any portion of the increased Commitments, and that elects to become a party to this Agreement and provide a Commitment, shall execute a New Bank Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit N (a "New Bank Supplement"), whereupon such bank or financial institution (a "New Bank") shall become a Bank for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule II shall be deemed to be amended to add the name and Commitment of such New Bank, provided that the Commitment of any such New Bank shall be in an amount not less than $10,000,000. (c) Any Bank that accepts an offer to it by the Borrowers to increase its Commitment pursuant to this subsection 2.21 shall, in each case, execute a Commitment Increase Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit O (a "Commitment Increase Supplement"), whereupon such Bank (an "Increasing Bank") shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule II shall be deemed to be amended to so increase the Commitment of such Bank. (d) The effectiveness of any New Bank Supplement or Commitment Increase Supplement shall be contingent upon receipt by the Administrative Agent of such corporate resolutions of the Borrowers and legal opinions of counsel to the Borrowers as the Administrative Agent shall reasonably request with respect thereto and, if a New Bank Supplement indicates that the relevant New Bank shall be a Tranche B Bank or if the Increasing Bank is a Tranche B Bank, upon receipt by the Canadian Administrative Agent of such corporate resolutions of the Borrowers under the Linked Agreement (the "Linked Borrowers") and legal opinions of counsel to the Linked Borrowers as the Canadian Administrative Agent shall reasonably request with respect thereto. (e) (i) Except as otherwise provided in subparagraphs (ii) and (iii) of this paragraph (e), if any bank or financial institution becomes a New Bank pursuant to subsection 2.21(b) or any Bank's Commitment is increased pursuant to subsection 2.21(c), additional Committed Rate Loans made on or after the date of the effectiveness thereof (the "Re-Allocation Date") shall be made in accordance with the pro rata provisions of subsection 2.12(b) based on the Commitment Percentages in effect on and after such Re-Allocation Date (except to the extent that any such pro rata borrowings would result in any Bank making an aggregate principal amount of Committed Rate Loans in excess of its Commitment, in which case such excess amount will be allocated to, and made by, the relevant New Banks and Increasing Banks to the extent of, and in accordance with the pro rata provisions of subsection 2.12(b) based on, their respective Commitments). On each Re-Allocation Date, the Administrative Agent shall deliver a notice to each Bank of the adjusted Commitment Percentages after giving effect to any increase in the aggregate Commitments made pursuant to this Section 2.21 on such Re-Allocation Date. Page 3 (ii) In the event that on any such Re-Allocation Date there is an unpaid principal amount of ABR Loans, the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans, as the applicable Borrower shall determine, so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages. (iii) In the event that on any such Re-Allocation Date there is an unpaid principal amount of Eurodollar Loans, such Eurodollar Loans shall remain outstanding with the respective holders thereof until the expiration of their respective Interest Periods (unless the applicable Borrower elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and on the last day of the respective Interest Periods the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages. (f) Notwithstanding anything to the contrary in this subsection 2.21, (i) in no event shall any transaction effected pursuant to this subsection 2.21 cause the aggregate Commitments to exceed $2,100,000,000, (ii) the Commitment of an individual Bank shall not, as a result of providing a new Commitment or of increasing its existing Commitment pursuant to this subsection 2.21, exceed 15% of the aggregate Commitments on any Re- Allocation Date and (iii) no Bank shall have any obligation to increase its Commitment unless it agrees to do so in its sole discretion. (g) The Borrowers, at their own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Notes of any Bank, if any, new Notes to the order of such Bank, if requested, in an amount equal to the Commitment of such Bank after giving effect to any increase in such Bank's Commitment." (d) Section 3 of the Existing Credit Agreement shall be deemed amended by (i) deleting the date "October 31, 1996" contained in the first sentence of subsection 3.1 of the Existing Credit Agreement and substituting in lieu thereof the date "October 31, 1997" and (ii) adding thereto the following new subsection 3.12: "3.12 Representations and Warranties on Second Amendment and Restatement Effective Date. The representations and warranties made by such Borrower in subsections 3.1 through 3.10 are true and correct in all material respects on and as of the Second Amendment and Restatement Effective Date, as if made on and as of the Second Amendment and Restatement Effective Date, except to the extent such representations and warranties expressly relate to an earlier date." (e) Section 4 of the Existing Credit Agreement shall be deemed amended by deleting the introductory clause of subsection 4.2 of the Existing Credit Agreement and substituting in lieu thereof the following: Page 4 "Conditions of Loans. The obligation of each Bank to make any Loans (which shall include the initial Loan to be made by it hereunder but shall not include any Loan made pursuant to subsection 2.21(e)(ii) or (iii) if, after the making of such Loan and the application of the proceeds thereof, the aggregate outstanding principal amount of the Committed Rate Loans would not be increased) to be made by it hereunder is subject to the satisfaction of the following conditions precedent:" (f) Section 4 of the Existing Credit Agreement shall be deemed further amended by adding thereto the following new subsection 4.4: "4.4 Conditions to Second Amendment and Restatement Effective Date. The Second Amendment and Restatement Effective Date shall be the date of satisfaction of the following conditions precedent: (a) Counterparts. The Administrative Agent shall have received counterparts hereof, executed by all of the parties hereto. (b) Resolutions. The Administrative Agent shall have received, with a counterpart for each Bank, resolutions, certified by the Secretary or an Assistant Secretary of each Borrower, in form and substance satisfactory to the Administrative Agent, adopted by the Board of Directors of such Borrower authorizing the execution of this Agreement and the performance of its obligations hereunder and any borrowings hereunder from time to time. (c) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Bank, an opinion of Frank S. Cottrell, Esq., or his successor, as general counsel, or an associate general counsel, for each of the Borrowers, dated the Second Amendment and Restatement Effective Date and addressed to the Agents and the Banks, substantially in the form of the opinion of such counsel rendered on the Amendment and Restatement Effective Date with changes therein to reflect that such opinion is in respect of this Agreement and is rendered on the Second Amendment and Restatement Effective Date, and an opinion of Shearman & Sterling, special counsel to the Borrowers, dated the Second Amendment and Restatement Effective Date and addressed to the Agents and the Banks, substantially in the form of the opinion of such counsel rendered on the Amendment and Restatement Effective Date with changes therein to reflect that such opinion is in respect of this Agreement and is rendered on the Second Amendment and Restatement Effective Date. Such opinions shall also cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent shall reasonably require. (d) Incumbency Certificate. The Administrative Agent shall have received, with a counterpart for each Bank, a certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and true signatures of the officers of such Borrower authorized to sign this Agreement, together with evidence of the incumbency of such Secretary or Assistant Secretary. Page 5 (e) Repayment of Amounts Under Existing Credit Agreement. The Administrative Agent shall have received evidence satisfactory to it that (i) all principal of and interest on Loans, if any, outstanding under the Existing Agreement shall have been repaid in full and (ii) all other amounts payable under the Existing Credit Agreement to any Bank that is a party to the Existing Credit Agreement but is not a party to this Agreement shall have been paid in full. (f) Additional Matters. All other documents which the Administrative Agent may reasonably request in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel." (g) Subsection 10.5(d) of the Existing Credit Agreement shall be deemed amended by (i) inserting immediately following the words "("Purchasing Banks")," in the first sentence thereof the following: "all or" and (ii) inserting immediately following the words "sell any portion" in the last sentence thereof the following: "(less than 100%)". SUBSECTIONS 10.8 THROUGH 10.12 10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 10.9 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 10.10 Consent to Jurisdiction and Service of Process. All judicial proceedings brought against the Borrowers with respect to this Agreement may be brought in any state or federal court of competent jurisdiction in the State of New York, and, by execution and delivery of this Agreement, the Borrowers accept, for themselves and in connection with their properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and irrevocably agree to be bound by any final judgment rendered thereby in connection with this Agreement from which no appeal has been taken or is available. The Borrowers irrevocably agree that all process in any such proceedings in any such court may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to them at their addresses set forth in subsection 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto, such service being hereby acknowledged by the Borrowers to be effective and binding service in every respect. Page 6 Each of the Borrowers, the Agents and the Banks irrevocably waives any objection, including without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have to the bringing of any such action or proceeding in any such jurisdiction. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of any Agent or any Bank to bring proceedings against the Borrowers in the courts of any other jurisdiction. 10.11 Schedule I and Exhibits. Schedule I and Exhibits A through M of the Existing Credit Agreement are hereby incorporated by reference as Schedule I and Exhibits A through M hereto, respectively. For purposes of such incorporation by reference, such Exhibits shall be deemed modified to incorporate any modifications made pursuant to this Agreement. 10.12 Exiting Banks. Each Bank which after the Second Amendment and Restatement Effective Date no longer holds a Commitment (an "Exiting Bank") is executing this Agreement solely for the purpose of acknowledging that its Commitment will terminate on the Second Amendment and Restatement Effective Date upon repayment in full of all amounts owing to it under the Existing Credit Agreement on the Second Amendment and Restatement Effective Date. The modifications effected by this Agreement are being approved by Banks holding 100% of the Commitments after giving effect to termination of the Commitments of the Exiting Banks on the Second Amendment and Restatement Effective Date. On the Second Amendment and Restatement Effective Date, the Borrowers shall effect such borrowings and repayments among the Banks (which need not be pro rata among the Banks) so that, after giving effect thereto, the respective principal amounts of the Committed Rate Loans held by the Banks shall be pro rata according to their respective Commitment Percentages, as amended hereby, the Borrowers being obligated to pay any amounts due pursuant to subsection 2.14 of this Agreement in connection with such prepayments. Page 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DEERE & COMPANY Attested by: /s/ Melvin C. Short, Jr. By: /s/ Nathan J. Jones - -------------------------- ------------------------ Title: Assistant Secretary Title: Senior Vice President JOHN DEERE CAPITAL CORPORATION Attested by: /s/ Timur Gok By: /s/ Nathan J. Jones - -------------------------- ------------------------ Title: Assistant Secretary Title: Senior Vice President Page 8 THE CHASE MANHATTAN BANK, as Administrative Agent, as Auction Agent, as a Managing Agent and as a Bank By: /s/ Robert W. Matthews -------------------------- Title: Vice President BANK OF AMERICA NT & SA, as Documentation Agent, as a Managing Agent and as a Bank By: /s/ James E. Florczak -------------------------- Title: Managing Director DEUTSCHE BANK AG, NEW YORK BRANCH, as Syndication Agent and as a Managing Agent By: /s/ Stephan A. Wiedemann -------------------------- Title: Director By: /s/ Andreas Neumeier -------------------------- Title: Vice President DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCHES, as a Bank By: /s/ Stephan A. Wiedemann -------------------------- Title: Director By: /s/ Andreas Neumeier -------------------------- Title: Vice President Page 9 THE TORONTO-DOMINION BANK, as Canadian Administrative Agent and as a Managing Agent By: /s/ David G. Parker -------------------------- Title: Manager Credit Administration TORONTO DOMINION (TEXAS), INC., as a Bank By: /s/ Neva Nesbitt -------------------------- Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO, as a Managing Agent and as a Bank By: /s/ Barry Litwin -------------------------- Title: Senior Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Managing Agent and as a Bank By: /s/ Christopher C. Kunhardt -------------------------- Title: Vice President NATIONSBANK N.A., as a Managing Agent and as a Bank By: /s/ Mary Carol Daly -------------------------- Title: Vice President Page 10 ABN AMRO BANK N.V., as a Co-Agent and as a Bank By: /s/ John L. Church -------------------------- Title: Vice President By: /s/ Angela Reitz -------------------------- Title: Vice President THE BANK OF NEW YORK, as a Co-Agent and as a Bank By: /s/ William A. O'Daly -------------------------- Title: Vice President CREDIT AGRICOLE INDOSUEZ, as a Co-Agent and as a Bank By: /s/ Alain Butzbach -------------------------- Title: Executive Vice President Deputy General Manager - USA By: /s/ Dean Balice -------------------------- Title: Senior Vice President Branch Manager ROYAL BANK OF CANADA, as a Co-Agent and as a Bank By: /s/ Patrick K. Shields -------------------------- Title: Senior Manager Page 11 SOCIETE GENERALE, CHICAGO BRANCH, as a Co-Agent and as a Bank By: /s/ Eric E. O. Siebert, Jr. -------------------------- Title: Corporate Banking Manager - Midwest THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH By: /s/ Hajime Watanabe -------------------------- Title: Deputy General Manager BANQUE NATIONALE DE PARIS By: /s/ Frederick Moryl, Jr. -------------------------- Title: Senior Vice President CANADIAN IMPERIAL BANK OF COMMERCE By: /s/ Timothy Doyle -------------------------- Title: Managing Director CIBC Oppenheimer Corp. AS AGENT COMMONWEALTH BANK OF AUSTRALIA By: /s/ Shakil Hussain -------------------------- Title: Vice President Page 12 CREDIT SUISSE FIRST BOSTON By: /s/ David W. Kratovil -------------------------- Title: Director By: /s/ Lynn Allegaert -------------------------- Title: Vice President MELLON BANK NA By: /s/ Amy K. Marsh -------------------------- Title: First Vice President WACHOVIA BANK N.A. By: /s/ Todd J. Eagle -------------------------- Title: Vice President THE FUJI BANK, LIMITED By: /s/ Peter L. Chinnici -------------------------- Title: Joint General Manager LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ Richard E. Stahl -------------------------- Title: Executive Vice President Page 13 SCHEDULE II COMMITMENTS Bank Commitment - ---- ---------- PART A: - ------ The Chase Manhattan Bank $142,500,000 Bank of America National Trust and 112,500,000 Savings Association Deutsche Bank AG New York and/or 112,500,000 Cayman Islands Branches The First National Bank of Chicago 112,500,000 Morgan Guaranty Trust Company of New York 112,500,000 NationsBank, N.A. 112,500,000 ABN AMRO Bank N.V. 75,000,000 The Bank of New York 75,000,000 Credit Agricole Indosuez 75,000,000 Societe Generale 75,000,000 The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch 37,500,000 Banque Nationale de Paris, Chicago Branch 37,500,000 Commonwealth Bank of Australia 37,500,000 Credit Suisse First Boston 37,500,000 Mellon Bank, N.A. 37,500,000 Wachovia Bank, N.A. 37,500,000 The Fuji Bank, Limited 22,500,000 The Long Term Credit Bank of Japan, Ltd. 22,500,000 Total $1,275,000,000 Part B: - ------ Toronto Dominion (Texas), Inc. $112,500,000 Royal Bank of Canada 75,000,000 CIBC, Inc. 37,500,000 Total $225,000,000 SCHEDULE III ADDRESSES FOR NOTICES The Chase Manhattan Bank Attention: Peter Hayes 270 Park Avenue - 48th Floor New York, New York 10017 Telephone: (212) 270-5698 Facsimile: (212) 270-1629 Bank of America NT & SA Attention: Pamela Quebbeman 231 South LaSalle Street Chicago, Illinois 60697 Telephone: (312) 828-3586 Facsimile: (312) 974-9626 Deutsche Bank AG, New York and/or Cayman Islands Branches Attention: Robert Wood 31 West 52nd Street New York, New York 10019 Telephone: (212) 469-7839 Facsimile: (212) 469-8212 Toronto Dominion (Texas), Inc. Attention: David G. Parker 909 Fannin, Suite 1700 Houston, Texas 77010 Telephone: (713) 653-8248 Facsimile: (713) 951-9921 with a copy to: TD Securities (USA) Inc. Attention: Bill Evenson 31 West 52nd Street New York, New York 10019 Telephone: (212) 468-0593 Facsimile: (312) 262-1926 Page 1 The First National Bank of Chicago Attention: Cheryl McCabe One First National Plaza Suite 0088, 14th Floor Chicago, Illinois 60670 Telephone: (312) 732-1230 Facsimile: (312) 732-5161 Morgan Guaranty Trust Company of New York Attention: Patricia Merritt 60 Wall Street 22nd Floor New York, New York 10260 Telephone: (212) 648-6744 Facsimile: (212) 648-5336 NationsBank, N.A. Attention: Mary Carol Daly 233 South Wacker Drive, Suite 2800 Chicago, Illinois 60606 Telephone: (312) 234-5618 Facsimile: (312) 234-5601 ABN AMRO Bank N.V. Attention: Loan Administration 135 South LaSalle Street, Suite 625 Chicago, Illinois 60674-9135 Telephone: (312) 904-2961 Facsimile: (312) 606-8435 The Bank of New York Attention: Yvonne Forbes One Wall Street New York, New York 10286 Telephone: (212) 635-6691 Facsimile: (212) 635-7923 Page 2 Credit Agricole Indosuez Attention: Theodore D. Tice 55 East Monroe, Suite 4700 Chicago, Illinois 60603-5702 Telephone: (312) 917-7463 Facsimile: (312) 372-3455 Royal Bank of Canada New York Branch Financial Square, 23rd Floor 32 Old Slip New York, New York 10005-3531 for all matters except those related to Bid Loans and Negotiated Rate Loans: Attention: Manager, Loans Administration Telephone: (212) 428-6204 Facsimile: (212) 428-2372 for matters related to Bid Loans and Negotiated Rate Loans: Attention: Irene Wanamaker Telephone: (212) 428-6208 Facsimile: (212) 428-2310 with a copy to: Royal Bank of Canada Attention: P.K. Shields One North Franklin Street, Suite 700 Chicago, Illinois 60606 Telephone: (312) 551-1612 Facsimile: (312) 551-0805 Societe Generale Attention: Eric E.O. Siebert, Jr. 181 West Madison, Suite 3400 Chicago, Illinois 60602 Telephone: (312) 578-5003 Facsimile: (312) 578-5099 Page 3 The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch Attention: Laura Kozlowski Julie Galligan 227 West Monroe Street, Suite 2300 Chicago, Illinois 60606 Telephone: (312) 696-4709/4711 Facsimile: (312) 696-4532 Banque Nationale de Paris, Chicago Branch Attention: Frederick H. Moryl, Jr. 209 South LaSalle Street Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 CIBC Inc. Attention: Ken Auchter 2727 Paces Ferry Rd. Suite 1200 Atlanta, Georgia 30339 Telephone: (770) 319-4950 Facsimile: (770) 319-4841 Commonwealth Bank (New York) Attention: Ian Phillips 599 Lexington Avenue New York, New York 10022-6072 Telephone: (212) 848-9241 Facsimile: (212) 336-7772 Credit Suisse First Boston Attention: Hazel Leslie Risk Management 11 Madison Avenue New York, New York 10010-3629 Telephone: (212) 325-9049 Facsimile: (212) 325-8316 Mellon Bank, N.A. Attention: Ryan F. Busch 4355 One Mellon Bank Center Pittsburgh, Pennsylvania 15258 Telephone: (412) 234-0733 Facsimile: (412) 236-1914 Page 4 Wachovia Bank, N.A. Attention: Keith L. Burson 70 West Madison Street, Suite 2440 Chicago, Illinois 60602 Telephone: (312) 795-4346 Facsimile: (312) 853-0693 The Fuji Bank, Limited Attention: Jim Bell 225 West Wacker Drive Suite 2000 Chicago, Illinois 60606 Telephone: (312) 621-0526 Facsimile: (312) 621-0539 The Long-Term Credit Bank of Japan, Ltd. Attention: John Carley 190 South LaSalle Street Suite 800 Chicago, Illinois 60603 Telephone: (312) 853-9516 Facsimile: (312) 704-8505 Page 5 EXHIBIT N FORM OF NEW BANK SUPPLEMENT SUPPLEMENT, dated _______ __, to the $1,500,000,000 Amended and Restated Credit Agreement (as in effect on the date hereof, the "Credit Agreement") dated as of February 24, 1998, among Deere & Company (the "Company"), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a "Bank," and together the "Banks"), The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent") and as Auction Agent (in such capacity, the "Auction Agent") for the Banks, Bank of America National Trust and Savings Association, as Documentation Agent, Deutsche Bank AG New York Branch, as Syndication Agent, The Toronto-Dominion Bank, as Canadian Administrative Agent, the Managing Agents named therein and the Co-Agents named therein. Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Credit Agreement provides in Section 2.21 thereof that any bank or financial institution, although not originally a party thereto, may become a party to the Credit Agreement in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and WHEREAS, the undersigned was not an original party to the Credit Agreement but now desires to become a party thereto; NOW, THEREFORE, the undersigned hereby agrees as follows: 1. The undersigned agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date this Supplement is accepted by the Borrowers and the Administrative Agent, become a Tranche [A] [B] Bank for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $__________________. 2. The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon any Agent, Managing Agent or Co-Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints Page N-1 and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; (e) appoints and authorizes the Auction Agent to take such action as auction agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Auction Agent by the terms thereof, together with such powers as are incidental thereto; and (f) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank including, without limitation, its obligation pursuant to subsection 2.17(c) of the Credit Agreement. 3. The undersigned's address for notices for the purposes of the Credit Agreement is as follows: _______________________________ Attention:_____________________ _______________________________ _______________________________ Fax:___________________________ IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written. [NAME OF NEW BANK] By: _________________________ Title: Accepted this _____ day of ____________________, ____ DEERE & COMPANY By:_________________________ Title: Page N-2 JOHN DEERE CAPITAL CORPORATION By:_________________________ Title: Accepted this _____ day of ____________________, ____ THE CHASE MANHATTAN BANK, as Administrative Agent By:_________________________ Title: Page N-3 EXHIBIT O FORM OF COMMITMENT INCREASE SUPPLEMENT SUPPLEMENT, dated _______ __, to the $1,500,000,000 Amended and Restated Credit Agreement (as in effect on the date hereof, the "Credit Agreement") dated as of February 24, 1998, among Deere & Company (the "Company"), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a "Bank," and together the "Banks"), The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent") and as Auction Agent (in such capacity, the "Auction Agent") for the Banks, Bank of America National Trust and Savings Association, as Documentation Agent, Deutsche Bank AG New York Branch, as Syndication Agent, The Toronto-Dominion Bank, as Canadian Administrative Agent, the Managing Agents named therein and the Co-Agents named therein. Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement. W I T N E S S E T H: WHEREAS, pursuant to the provisions of Section 2.21 of the Credit Agreement, the undersigned may increase the amount of its Commitment in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement; NOW THEREFORE, the undersigned hereby agrees as follows: 1. The undersigned agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrowers and the Administrative Agent it shall have its Commitment increased by $______________, thereby making the amount of its Commitment $______________. IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written. [NAME OF BANK] By: _________________________ Title: Page O-1 Accepted this _____ day of ____________________, ____ DEERE & COMPANY By:_________________________ Title: JOHN DEERE CAPITAL CORPORATION By:_________________________ Title: Accepted this _____ day of ____________________, ____ THE CHASE MANHATTAN BANK, as Administrative Agent By:_________________________ Title: Page O-2 EX-4.2 3 EXHIBIT 4.2 THIRD AMENDING AGREEMENT This Amending Agreement made as of the 24th day of February, 1998 B E T W E E N : JOHN DEERE LIMITED, a corporation incorporated under the laws of Canada, ("Deere Canada") OF THE FIRST PART and - JOHN DEERE CREDIT INC., a corporation amalgamated under the laws of Canada, ("Deere Credit") OF THE SECOND PART and - DEERE & COMPANY, a corporation incorporated under the laws of the State of Delaware, ("Deere") OF THE THIRD PART CANADIAN IMPERIAL BANK OF COMMERCE, ROYAL BANK OF CANADA and THE TORONTO-DOMINION BANK, (collectively, the "Lenders") OF THE FOURTH PART and - THE TORONTO-DOMINION BANK, (the "Agent") OF THE FIFTH PART WHEREAS pursuant to the U.S.$612,500,000 loan agreement dated as of April 5, 1995, as amended by a First Amending Agreement made as of the 27th day of February, 1996 and by a Second Amending Agreement made as of the 25th day of February, 1997 (the "Loan Agreement"), between Deere Canada, Deere Credit (a successor to John Deere Finance Limited), the Lenders and the Agent, the Lenders agreed to make and have made Loans to the Borrowers; AND WHEREAS the Borrowers have requested that certain provisions of the Loan Agreement be modified in the manner provided for in this Agreement and the Lenders are willing to agree to such modifications as provided for in this Agreement; AND WHEREAS each of Deere Canada and Deere Credit has guaranteed the obligations of the other under the Loan Agreement pursuant to Guarantees dated as of April 5, 1995 in favour of the Lenders and the Agent and the Lenders have required as a condition of entering into this Agreement that Deere Canada and Deere Credit confirm that such Guarantees are in full force and effect, unamended; AND WHEREAS Deere subordinated debts owing to it by Deere Canada in favour of the Lenders pursuant to a Subordination Agreement dated April 5, 1995 and the Lenders have required as a condition of entering into this Agreement that Deere and Deere Canada confirm that such Subordination Agreement is in full force and effect, unamended; NOW THEREFORE in consideration of the premises and in consideration of other valuable consideration and the sum of $1.00 now paid by each of the parties hereto to the others, the receipt and sufficiency whereof is hereby acknowledged, the parties agree as follows: 1. Defined Terms All capitalized terms used and not defined herein have the meanings ascribed to them in the Loan Agreement. 2. Certain Amendments to Loan Agreement (a) The Loan Agreement is hereby amended by deleting the reference to "U.S.$612,500,000" from the cover page thereof and by deleting from the first recital thereto the words "U.S.$612,500,000" and substituting in their place in the first recital the words "the Credit Facility Amount"; (b) Section 1.1 of the Loan Agreement is hereby amended by: (i) inserting the following definition in correct alphabetical order: " "Third Amendment Effectiveness Date" means the date on which the Third Amending Agreement made as of February 24, 1998 becomes effective;"; Page 2 (ii) deleting the definition of "Credit Facility" and inserting the following in its place: " "Credit Facility" means the credit facility in the maximum principal amount equal to the aggregate Commitments, which on the date hereof is U.S.$525,000,000, as the same may be increased from time to time pursuant to section 2.21 of the USD Agreement, which is being extended by the Lenders to the Borrowers hereunder;"; (iii) deleting the definition of "Credit Facility Amount" and inserting the following in its place: " "Credit Facility Amount" means at any time the aggregate amount of the Commitments at such time (which at the date hereof is U.S.$525,000,000), as the same may be increased from time to time pursuant to section 2.21 of the USD Agreement;"; and (c) Section 2.1 of the Loan Agreement is hereby amended by deleting the reference to "U.S.$612,500,000" and substituting in its place the words "the Credit Facility Amount" and inserting immediately thereafter the words "as the same may be increased from time to time pursuant to section 2.21 of the USD Agreement". 3. Conditions to Effectiveness This Agreement shall become effective on the date on which all of the following conditions precedent have been satisfied or waived: (a) execution and delivery of this Agreement by each Borrower, each Guarantor, Deere, each Lender and the Agent; (b) receipt by the Agent, with a counterpart for each Lender, of a certificate of any Vice-President, the Secretary or Assistant Secretary of each Borrower, each Guarantor and Deere, dated the Third Amendment Effectiveness Date, certifying the names and true signatures of the officers of such Borrowers, Guarantors and Deere authorized to sign this Agreement, together with evidence of the incumbency of such Vice-President, Secretary or Assistant Secretary; (c) receipt by the Agent, with a counterpart for each Lender, of a copy of the resolutions in form and substance satisfactory to the Agent, of the board of directors of each of the Borrowers and the Guarantors authorizing the execution, delivery and performance of this Agreement, certified by their respective Secretary or Assistant Secretary as of the Third Amendment Effectiveness Date, which certificate shall state that the resolutions therein certified have not been amended, modified, revoked or rescinded as of the date of such certificate; and Page 3 (d) receipt by the Agent, with a counterpart for each Lender, of an opinion of Fasken Campbell Godfrey, special counsel to the Borrowers, and an opinion of Frank S. Cottrell, Esq., or his successors, as general counsel, or an associate general counsel, of Deere, each dated the Third Amendment Effectiveness Date and addressed to the Lenders and the Agent, substantially in the forms of the opinions of such counsel dated April 5, 1995 with changes therein to reflect that such opinions are in respect of this Agreement and are rendered on the Third Amendment Effectiveness Date. Such opinions shall also cover such other matters incidental to the transactions contemplated by this Agreement as the Agent shall reasonably require. 4. Amendment and Confirmation of Representations and Warranties (a) Section 8.1 of the Loan Agreement is hereby amended by deleting the reference therein to "John Deere Insurance Company of Canada" and to "Homelite Canada Limited" and inserting in their place the names "John Deere Foundation of Canada" and "John Deere Consumer Products Limited". (b) Section 8.7 of the Loan Agreement is hereby deemed amended by deleting the date "October 31, 1996" in the third line and by substituting in lieu thereof the date "October 31, 1997". (c) The representations and warranties made by each of the Borrowers in the Loan Agreement, as amended by this Agreement, are true and correct in all material respects on and as of the Third Amendment Effectiveness Date, before and after giving effect to the effectiveness of this Agreement as if made on and as of the Third Amendment Effectiveness Date except as otherwise disclosed in writing to the Agent or to the extent such representations and warranties expressly relate to an earlier date. 5. USD Agreement Each of the parties hereto confirms that the USD Agreement referred to in the Loan Agreement is the U.S.$3,500,000,000 Amended and Restated Credit Agreement dated as of the date hereof among the USD Borrowers, certain financial institutions, The Chase Manhattan Bank, as USD Agent, and other agents as the same may be further amended, restated, supplemented or replaced from time to time. 6. Confirmation by Guarantors Each Guarantor hereby consents to the terms and conditions of this Agreement. Deere Canada hereby confirms that the Guarantee executed by it dated as of April 5, 1995 has not been released, discharged, waived or varied by this Agreement, is in full force and effect, and constitutes a legal, valid and binding obligation of it. Deere Credit hereby confirms that the Guarantee assumed by it pursuant to the terms of the Assumption Agreement (as defined in the Second Amending Agreement made as of the 25th day of February, 1997) has not been released, discharged, waived or varied by this Agreement, is in full force and effect and constitutes a legal, valid and binding obligation of it. Page 4 7. Confirmation by Deere and Deere Canada Deere hereby consents to the terms and conditions of this Agreement and each of Deere and Deere Canada hereby confirms that the Subordination Agreement executed by it dated April 5, 1995 has not been released, discharged, waived or varied by this Agreement, is in full force and effect and constitutes a legal, valid and binding obligation of it. Deere is a party to this Agreement solely for the purposes of the confirmation contained in this paragraph. 8. Confirmation Except as expressly amended, modified and supplemented hereby, the parties hereto confirm the terms and conditions of the Loan Agreement and that they are and shall remain in full force and effect. 9. Governing Law; Counterparts (a) This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the Province of Ontario. (b) This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Agreement may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first written above. JOHN DEERE LIMITED, as Borrower By: ____________________ Name: Title: By: ____________________ Name: Title: Page 5 JOHN DEERE LIMITED, as Guarantor By: ____________________ Name: Title: By: ____________________ Name: Title: JOHN DEERE CREDIT INC. as Borrower By: ____________________ Name: Title: By: ____________________ Name: Title: JOHN DEERE CREDIT INC., as Guarantor By: ____________________ Name: Title: By: ____________________ Name: Title: Attested by: DEERE & COMPANY ____________________ By: ____________________ Name: Name: Title: Title: By: ____________________ Name: Title: Page 6 CANADIAN IMPERIAL BANK OF COMMERCE By: ____________________ Name: Title: By: ____________________ Name: Title: ROYAL BANK OF CANADA By: ____________________ Name: Title: THE TORONTO-DOMINION BANK as a Lender By: ____________________ Name: Title: By: ____________________ Name: Title: THE TORONTO-DOMINION BANK as Agent By: ____________________ Name: Title: Page 7 THIRD AMENDING AGREEMENT This Amending Agreement made as of the 24th day of February, 1998 B E T W E E N : JOHN DEERE LIMITED, a corporation incorporated under the laws of Canada, ("Deere Canada") OF THE FIRST PART and - JOHN DEERE CREDIT INC., a corporation amalgamated under the laws of Canada, ("Deere Credit") OF THE SECOND PART and - DEERE & COMPANY, a corporation incorporated under the laws of the State of Delaware, ("Deere") OF THE THIRD PART CANADIAN IMPERIAL BANK OF COMMERCE, ROYAL BANK OF CANADA and THE TORONTO-DOMINION BANK, (collectively, the "Lenders") OF THE FOURTH PART and - THE TORONTO-DOMINION BANK, (the "Agent") OF THE FIFTH PART WHEREAS pursuant to the U.S.$87,500,000 loan agreement dated as of April 5, 1995, as amended by a First Amending Agreement made as of the 27th day of February, 1996 and by a Second Amending Agreement made as of the 25th day of February, 1997 (the "Loan Agreement"), between Deere Canada, Deere Credit (a successor to John Deere Finance Limited), the Lenders and the Agent, the Lenders agreed to make and have made Loans to the Borrowers; AND WHEREAS the Borrowers have requested that certain provisions of the Loan Agreement be modified in the manner provided for in this Agreement and the Lenders are willing to agree to such modifications as provided for in this Agreement; AND WHEREAS each of Deere Canada and Deere Credit has guaranteed the obligations of the other under the Loan Agreement pursuant to Guarantees dated as of April 5, 1995 in favour of the Lenders and the Agent and the Lenders have required as a condition of entering into this Agreement that Deere Canada and Deere Credit confirm that such Guarantees are in full force and effect, unamended; AND WHEREAS Deere subordinated debts owing to it by Deere Canada in favour of the Lenders pursuant to a Subordination Agreement dated April 5, 1995 and the Lenders have required as a condition of entering into this Agreement that Deere and Deere Canada confirm that such Subordination Agreement is in full force and effect, unamended; NOW THEREFORE in consideration of the premises and in consideration of other valuable consideration and the sum of $1.00 now paid by each of the parties hereto to the others, the receipt and sufficiency whereof is hereby acknowledged, the parties agree as follows: 1. Defined Terms All capitalized terms used and not defined herein have the meanings ascribed to them in the Loan Agreement. 2. Certain Amendments to Loan Agreement (a) The Loan Agreement is hereby amended by deleting the reference to "U.S.$87,500,000" from the cover page thereof and by deleting from the first recital thereto the words "U.S.$87,500,000" and substituting in their place in the first recital the words "the Credit Facility Amount"; (b) Section 1.1 of the Loan Agreement is hereby amended by: (i) inserting the following definition in correct alphabetical order: " "Third Amendment Effectiveness Date" means the date on which the Third Amending Agreement made as of February 24, 1998 becomes effective;"; Page 2 (ii) deleting the definition of "Credit Facility" and inserting the following in its place: " "Credit Facility" means the credit facility in the maximum principal amount equal to the aggregate Commitments, which on the date hereof is U.S.$225,000,000, as the same may be increased from time to time pursuant to section 2.21 of the USD Agreement, which is being extended by the Lenders to the Borrowers hereunder;"; (iii) deleting the definition of "Credit Facility Amount" and inserting the following in its place: " "Credit Facility Amount" means at any time the aggregate amount of the Commitments at such time (which at the date hereof is U.S.$225,000,000), as the same may be increased from time to time pursuant to section 2.21 of the USD Agreement;"; and (c) Section 2.1 of the Loan Agreement is hereby amended by deleting the reference to "U.S.$87,500,000" and substituting in its place the words "the Credit Facility Amount" and inserting immediately thereafter the words "as the same may be increased from time to time pursuant to section 2.21 of the USD Agreement". 3. Conditions to Effectiveness This Agreement shall become effective on the date on which all of the following conditions precedent have been satisfied or waived: (a) execution and delivery of this Agreement by each Borrower, each Guarantor, Deere, each Lender and the Agent; (b) receipt by the Agent, with a counterpart for each Lender, of a certificate of any Vice-President, the Secretary or Assistant Secretary of each Borrower, each Guarantor and Deere, dated the Third Amendment Effectiveness Date, certifying the names and true signatures of the officers of such Borrowers, Guarantors and Deere authorized to sign this Agreement, together with evidence of the incumbency of such Vice-President, Secretary or Assistant Secretary; (c) receipt by the Agent, with a counterpart for each Lender, of a copy of the resolutions in form and substance satisfactory to the Agent, of the board of directors of each of the Borrowers and the Guarantors authorizing the execution, delivery and performance of this Agreement, certified by their respective Secretary or Assistant Secretary as of the Third Amendment Effectiveness Date, which certificate shall state that the resolutions therein certified have not been amended, modified, revoked or rescinded as of the date of such certificate; and Page 3 (d) receipt by the Agent, with a counterpart for each Lender, of an opinion of Fasken Campbell Godfrey, special counsel to the Borrowers, and an opinion of Frank S. Cottrell, Esq., or his successors, as general counsel, or an associate general counsel, of Deere, each dated the Third Amendment Effectiveness Date and addressed to the Lenders and the Agent, substantially in the forms of the opinions of such counsel dated April 5, 1995 with changes therein to reflect that such opinions are in respect of this Agreement and are rendered on the Third Amendment Effectiveness Date. Such opinions shall also cover such other matters incidental to the transactions contemplated by this Agreement as the Agent shall reasonably require. 4. Amendment and Confirmation of Representations and Warranties (a) Section 8.1 of the Loan Agreement is hereby amended by deleting the reference therein to "John Deere Insurance Company of Canada" and to "Homelite Canada Limited" and inserting in their place the names "John Deere Foundation of Canada" and "John Deere Consumer Products Limited". (b) Subsection 8.7 of the Loan Agreement is hereby deemed amended by deleting the date "October 31, 1996" in the third line and by substituting in lieu thereof the date "October 31, 1997". (c) The representations and warranties made by each of the Borrowers in the Loan Agreement, as amended by this Agreement, are true and correct in all material respects on and as of the Third Amendment Effectiveness Date, before and after giving effect to the effectiveness of this Agreement as if made on and as of the Third Amendment Effectiveness Date except as otherwise disclosed in writing to the Agent or to the extent such representations and warranties expressly relate to an earlier date. 5. USD Agreement Each of the parties hereto confirms that the USD Agreement referred to in the Loan Agreement is the U.S.$1,500,000,000 Amended and Restated Credit Agreement dated as of the date hereof among the USD Borrowers, certain financial institutions, The Chase Manhattan Bank, as USD Agent, and other agents as the same may be further amended, restated, supplemented or replaced from time to time. 6. Confirmation by Guarantors Each Guarantor hereby consents to the terms and conditions of this Agreement. Deere Canada hereby confirms that the Guarantee executed by it dated as of April 5, 1995 has not been released, discharged, waived or varied by this Agreement, is in full force and effect, and constitutes a legal, valid and binding obligation of it. Deere Credit hereby confirms that the Guarantee assumed by it pursuant to the terms of the Assumption Agreement (as defined in the Second Amending Agreement made as of the 25th day of February, 1997) has not been released, discharged, waived or varied by this Agreement, is in full force and effect and constitutes a legal, valid and binding obligation of it. Page 4 7. Confirmation by Deere and Deere Canada Deere hereby consents to the terms and conditions of this Agreement and each of Deere and Deere Canada hereby confirms that the Subordination Agreement executed by it dated April 5, 1995 has not been released, discharged, waived or varied by this Agreement, is in full force and effect and constitutes a legal, valid and binding obligation of it. Deere is a party to this Agreement solely for the purposes of the confirmation contained in this paragraph. 8. Confirmation Except as expressly amended, modified and supplemented hereby, the parties hereto confirm the terms and conditions of the Loan Agreement and that they are and shall remain in full force and effect. 9. Governing Law; Counterparts (a) This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the Province of Ontario. (b) This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Agreement may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first written above. JOHN DEERE LIMITED, as Borrower By: ____________________ Name: Title: By: ____________________ Name: Title: Page 5 JOHN DEERE LIMITED, as Guarantor By: ____________________ Name: Title: By: ____________________ Name: Title: JOHN DEERE CREDIT INC. as Borrower By: ____________________ Name: Title: By: ____________________ Name: Title: JOHN DEERE CREDIT INC., as Guarantor By: ____________________ Name: Title: By: ____________________ Name: Title: Attested by: DEERE & COMPANY ____________________ By: ____________________ Name: Name: Title: Title: By: ____________________ Name: Title: Page 6 CANADIAN IMPERIAL BANK OF COMMERCE By: ____________________ Name: Title: By: ____________________ Name: Title: ROYAL BANK OF CANADA By: ____________________ Name: Title: THE TORONTO-DOMINION BANK as a Lender By: ____________________ Name: Title: By: ____________________ Name: Title: THE TORONTO-DOMINION BANK as Agent By: ____________________ Name: Title: Page 7 EX-12 4 EXHIBIT 12 DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Six Months Year Ended Ended April 30, October 31, 1998 1997 1997 (In thousands of dollars) Earnings: Income of consolidated group before income taxes and changes in accounting $ 888,258 $793,079 $1,507,070 Dividends received from less- than-fifty percent owned affiliates 2,073 2,948 3,591 Fixed charges excluding capitalized interest 250,336 202,856 433,673 Total earnings $1,140,667 $998,883 $1,944,334 Fixed charges: Interest expense of con- solidated group including capitalized interest $ 245,867 $198,661 $ 422,588 Portion of rental charges deemed to be interest 6,368 4,298 11,497 Total fixed charges $ 252,235 $202,959 $ 434,085 Ratio of earnings to fixed charges* 4.52 4.92 4.48 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. Page 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 Page DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended October 31, 1994 1993 (In thousands of dollars) Earnings: Income of consolidated group before income taxes and changes in accounting $ 920,920 $ 272,345 Dividends received from less- than-fifty percent owned affiliates 2,329 1,706 Fixed charges excluding capitalized interest 310,047 375,238 Total earnings $1,233,296 $649,289 Fixed charges: Interest expense of con- solidated group including capitalized interest $ 303,080 $369,325 Portion of rental charges deemed to be interest 7,008 6,127 Total fixed charges $ 310,088 $375,452 Ratio of earnings to fixed charges* 3.98 1.73 EX-27 5
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 6-MOS OCT-31-1998 NOV-01-1997 APR-30-1998 1 334 867 11,783 123 1,511 0 4,473 2,919 18,553 0 2,517 0 0 1,779 2,487 18,553 6,015 6,916 4,604 5,160 0 27 244 888 323 568 0 0 0 568 2.29 2.26
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