From: Davies Todd E [DaviesToddE@JohnDeere.com]
Sent: Monday, August 26, 2002 3:59 PM
To: 'rule-comments@sec.gov'
Subject: File No. S7-22-02


 <<...OLE_Obj...>>
 <<...OLE_Obj...>> 
								 
 
22 August 2002

 
Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Release Nos. 33-8106, 34-46084; File No. S7-22-02

Dear Mr. Katz:

		We welcome the opportunity to comment on the issues raised
in the Securities and Exchange Commission's proposed rule, "Additional Form
8-K Disclosure Requirements and Acceleration of Filing Date."  Our company
manufactures and distributes agricultural equipment, equipment for
commercial and residential uses and machines used in construction,
earthmoving, material handling and timber harvesting.  We also operate a
credit segment that primarily finances sales and leases by our dealers of
new and used agricultural, commercial and consumer, and construction
equipment. 

	We strongly support the Commission's efforts to provide investors
with rapid and current disclosure of material corporate information.
However, while we agree with the underlying objectives, the proposed rule
raises a number of significant concerns.  We have addressed these concerns
in the following discussion, which we have segregated by item number, using
the item numbers of the proposed rule.  We have not addressed each proposed
item, but only those items for which we had concerns or suggestions for
improving the proposed item.

	In addition to the detailed comments for each proposed item
discussed below, we are generally concerned that:

	*	A thoughtful and accurate management's analysis cannot be
prepared and filed within two business days.  Several of the proposed items
require the preparation of a management's analysis of the effect of the
event being reported.  It would be very difficult for us to prepare and file
a thoughtful and accurate management's analysis in two business days as
required by the proposed rule because a large number of individuals and
groups (often including our external auditors and/or legal counsel) must
review, comment on and approve the disclosure.  This is particularly true
for events that occur without warning, for example in the case of some
ratings downgrades.  We believe that the legitimate goal of rapid and
current disclosure should not compromise the need for thoughtful and
accurate disclosure.  Accordingly, we believe that, in those proposed items
where a management's analysis is required, the filing deadline should be
five business days because a shorter period could compromise the quality of
the disclosure.

	*	 The proposed rule will require numerous Form 8-K filings.
We support many of the changes proposed by the Commission.  Nevertheless, we
are concerned that the Commission has significantly underestimated the
number of additional Form 8-Ks that many companies, including us, will be
required to file.  To help the Commission understand this point, we estimate
that, over the past two years, we and our wholly owned reporting subsidiary,
John Deere Capital Corporation ("JDCC"), would have been required to file
additional Form 8-Ks in connection with between 15 and 20 reportable events
under Items 1.01, 3.01, 3.03 and 5.02, if the Commission had adopted the
release as proposed.  While a few of these Form 8-Ks could have covered two
reportable events, we and JDCC would both have been required to file
significantly more than the two additional Form 8-Ks estimated by the
Commission.

	*	The loss of short-form eligibility for failing to timely
file a Form 8-K is too harsh a penalty.  We and JDCC rely to a significant
extent on Form S-3 to establish shelf programs to meet our financing needs.
Unlike Forms 10-K and 10-Q, which have specific filing deadlines that we can
plan for in advance (90 days after the end of the fiscal year for a Form
10-K and 45 days after the end of each of the first three fiscal quarters
for a Form 10-Q), the proposed rule mandates disclosure within two business
days after the occurrence of a disclosure triggering event.  As discussed in
the previous bullet, we expect numerous triggering events to occur each year
requiring the filing of a Form 8-K.  In addition, the disclosure triggering
event for a number of the proposed items is not well defined.  As a result,
even with adequate corporate procedures in place to assure compliance with
the proposed rule, we may inadvertently miss a filing deadline due to the
increased number of filings or because we may not identify a triggering
event until after two business days from its occurrence.  The loss of the
right to use Form S-3 under these circumstances seems excessively punitive,
in particular to those companies that rely to a significant extent on shelf
takedowns for their financing needs.  We recommend that a company's
short-form eligibility be conditioned instead on whether the company has
made all required Form 8-K filings, irrespective of whether or not the
filings were timely made.  We also recommend this change with respect to
Form S-8 eligibility and the ability to resell a company's securities under
Rule 144 of the Securities Act. 

Our detailed comments to the proposed items are as follows:

	Item 1.01.  Entry into a Material Agreement

	Item 1.01 would require disclosure whenever a company enters into an
agreement that is material to the company and not made in the ordinary
course of the company's business, including disclosure of letters of intent
and other non-binding agreements.  We are concerned that this proposed item
will require more disclosure than what is currently required by Item
601(b)(10) of Regulation S-K.  We believe that Item 1.01 should be
harmonized with Item 601(b)(10) of Regulation S-K, by requiring disclosure
of material agreements that are required to be filed as exhibits under Item
601(b)(10) of Regulation S-K.  This modification would establish a
standardized disclosure regime for all filings made under the Securities Act
and the Exchange Act while achieving the Commission's goal of rapid and
current disclosure of material corporate information.

	We are also concerned that Item 1.01 would require the disclosure of
financing agreements that our investors would not consider material but
will, nevertheless, have to be disclosed because of the size of the
transaction.  Because many large companies (including JDCC and us) regularly
issue a significant principal amount of debt securities (and/or refinance
large credit agreements), we might be required to file a number of Form 8-Ks
that provide little or no material information on our capital structure to
investors.  We believe that the instructions to the proposed item should be
modified to make clear that credit agreements, underwriting agreements,
indentures and the like, which are used in routine financings, are excluded
from the requirements of the proposed item.  

	Finally, we recommend that Item 1.01 be modified to exclude
disclosure of letters of intent or other non-binding agreements.  Disclosing
information on these agreements is premature, could provide companies with
disincentives to enter into these agreements, resulting in inefficiencies in
conducting transactions, and could cause us competitive harm by informing
our competitors of potential acquisitions or sales.  If the Commission
decides to maintain its current proposal, we believe the instructions to
this Item should make clear that only written non-binding agreements need to
be disclosed.

	Item 1.02.  Termination of a Material Agreement

	Item 1.02 is the converse of Item 1.01, requiring disclosure of the
termination of a material agreement not made in the ordinary course of
business to which the company is a party.  As discussed in our comments to
Item 1.01, we believe the disclosure requirements for material agreements
should be harmonized with Item 601(b)(10) of Regulation S-K.  Accordingly,
Item 1.02 should only require disclosure of the termination of a material
agreement that was required to be filed as an exhibit under Item 601(b)(10)
of Regulation S-K.  In addition, the proposed item should not require
disclosure when a previously disclosed material agreement expires by its
terms, because this information would not provide investors with any new
material corporate information.

	We also recommend that Item 1.02 exclude disclosure of the
termination or expiration of credit agreements or other similar agreements
used in routine financings if they have been replaced by new agreements,
facilities or arrangements.  It is common practice to replace an existing
credit facility, in particular a revolving or stand-by credit facility,
prior to the termination of the existing facility.  Disclosure of this
transaction on an expedited basis would not provide investors with any new
material information relating to our company.

	Item 2.03.  Creation of a Direct or Contingent Financial Obligation
That is Material to the 	Registrant

	Item 2.03 would require a company to disclose information whenever
it or a third party enters into a transaction or agreement that creates any
material direct or contingent financial obligation to which the company is
subject.  Although we agree with the Commission that rapid and current
disclosure of this type of information should be required, we believe that,
in addition to the carve out for commercial paper and other short term
borrowings as presently proposed, the proposed item should exclude
disclosure of all routine financings.  

	We and JDCC meet most of our external financing needs through the
issuance of commercial paper, underwritten shelf takedowns, agented and
non-agented sales of medium-term notes and various public and private ABS
transactions.  Because our individual financings are often for material
amounts, Item 2.03 might require disclosure of a number of these routine
transactions.  Rapid and current disclosure of these routine financings does
not provide our investors with material information on the capital structure
of our company and should be excluded.  This modification would be
consistent with the changes we have recommended for Items 1.01 and 1.02,
where we also proposed carve-outs for disclosure of routine financings.  One
possible approach would be to exclude routine financings by companies
eligible to use Form S-3.

	In those circumstances where information would have to be disclosed
under Item 2.03, it would be an added hardship with no discernable
disclosure value, if we were required to disclose the names of the lenders
in some of our non-underwritten financing transactions, such as non-agented
medium-term note sales and private ABS transactions.  Accordingly, we
recommend that Item 2.03(d) be deleted.

	Finally, because Item 2.03 addresses financial obligations, we
believe it would be more appropriate to tie the proposed disclosure to a
financial standard.  We recommend 10% of consolidated assets.

	Item 2.05.  Exit Activities Including Material Write-Offs and
Restructuring Charges

	Item 2.05 would require disclosure when the board of directors or
the company's officer or officers who are authorized to take such action, if
board approval is not required, definitively commits the company to a course
of action, including a plan to terminate or exit an activity, under which
the company will incur a material write-off or restructuring charge under
generally accepted accounting principles.  We believe that the triggering
event for this proposed item needs to be modified to take into account
current market practice.

	From time to time, we decide to close facilities or exit activities,
which may be material and require disclosure under the proposed item.  In
these cases, there are usually two separate steps that we need to take:

		1.	We need to decide to close the facility or exit the
activity.  This decision requires input or sign-off from a large number of
individuals and groups, including outside auditors and counsel.

		2.	After the decision to close or exit is made, we
often conclude that it is in our interest (and in some cases that we might
be required) to provide notification to or review with other interested
constituencies on a confidential basis.  These constituencies may include
unions, selected employees and state and local governmental officials.

	We feel strongly that no disclosure under Item 2.05 should be
required until both of the foregoing steps are concluded.  As noted in point
2 above, requiring disclosure prior to notification to or review with other
interested constituencies may cause us to breach agreements and could have
an unnecessary adverse effect on our business.  Accordingly, we recommend
that the trigger for Item 2.05 be modified to delay disclosure until the
closing or exit has been reviewed with all interested constituencies, if
any.

	As with Item 2.03, we believe a bright line test is appropriate for
Item 2.05.  We would recommend the lesser of 5% of stockholders' equity or
5% of total assets as the threshold for the proposed item.

	Item 2.06.  Material Impairments

	Item 2.06 would require disclosure when a company's board of
directors or the company's officer or officers authorized to make the
relevant decision, if board approval is not required, concludes that the
company is required to record a material charge for impairment to one or
more of its assets under generally accepted accounting principles.  Although
we strongly support the Commission's goal of providing rapid and current
disclosure of material corporate information, and generally support the
disclosure requirements of the proposed rule, we believe that disclosure
relating to material impairments should not be required to be disclosed
under the proposed rule because the triggering event for an impairment is
almost impossible for a company to identify.

	If the Commission decides to retain Item 2.06, we feel strongly that
no disclosure should be required until the decision to take the charge has
been decided and any notification to or review with interested
constituencies has been concluded.  This disclosure trigger would be
consistent with the disclosure trigger that we recommended for Item 2.05.
As in the case of a decision to exit an activity or close a facility, the
decision to take a material charge for impairment requires input and
sign-off from a large number of internal and external individuals and
groups, including outside auditors and, in many cases, outside legal
counsel.  In some cases, depending on the event, confidential notification
to or review with other constituencies, such as unions, selected employees
and state and local governmental officials, is in our interest or even
required.  

	We also believe a bright line test is appropriate for Item 2.06, if
retained.  We would recommend the lesser of 5% of stockholders' equity or 5%
of total assets as the threshold for the proposed item.

	Item 3.01.  Rating Agency Decisions

	Item 3.01 would require a company to file a Form-8-K when it
receives a notice or other communication from any rating agency to whom the
company provides information relating to certain matters, including a change
in the credit rating assigned to any class of the company's securities by
the rating agency.  We believe that the disclosure trigger for the proposed
item needs to be modified to be consistent with market practice on rating
agency notifications and that Item 3.01(a)(2) needs to be clarified to
exclude disclosure of certain transactions.

	We feel that the disclosure requirements of Item 3.01 should not be
triggered until the rating agency has publicly issued its press release.  In
some cases, the rating agency will provide a courtesy call to a company to
warn them that a downgrade is coming.  This call may well relay a "final"
decision.  At that time, the rating agency advises the company that it will
be issuing a press release and asks the company not to make any announcement
until it has issued its press release.  The press release is usually issued
immediately (same day), but even in cases where there is a delay, the Form
8-K filing requirement should not be triggered until the rating agency's
press release is issued.

	On occasion, we or other companies explore, on a confidential basis,
the rating that would be obtained for a possible new structure or
transaction.  Often in these situations, we and/or the underwriters will be
unwilling to proceed with the offering unless a specified minimum rating(s)
can be obtained for one or more tranches of the securities.  Item 3.01(a)(2)
should be clarified to make it clear that, whatever the outcome of this
process (i.e., the company receives a lower rating than requested or
terminates discussions with the agency or the agency refuses to issue a
rating), no Form 8-K disclosure is required.

	Finally, as we discussed in our general concerns to the proposed
rule, we believe that a thoughtful and accurate management's analysis
generally cannot be prepared and filed within two business days.  Item 3.01
is a particularly strong candidate to permit the filing of a Form 8-K in
five business days instead of the proposed two business days.  Since the
rating agency's press release is widely disseminated by the rating agency,
investors will be aware of the ratings change.  As a result, we believe the
most useful disclosure under Item 3.01 will be management's analysis of the
effect of the change in rating.  However, depending on the particular facts
and the amount of notice the company had, this can be an extremely difficult
analysis to prepare, in particular for unexpected ratings changes.
Accordingly, we recommend that Form 8-K filings under Item 3.01 be made
within five business days.

	Item 3.03.  Unregistered Sale of Equity Securities

	Item 3.03 would require a company to accelerate the disclosure of
information regarding the company's sale of equity securities in a
transaction that is not registered under the Securities Act.  These
transactions are currently required to be disclosed under Forms 10-Q and
10-K.  Although we believe that acceleration of this disclosure may be
appropriate, several changes should be made to the proposed item.

	We believe that a threshold trigger should be included in the
proposed item.  Investors believe that information relating to large sales
of unregistered equity securities is important, but not immaterial sales.
Accordingly, a threshold for disclosure under Item 3.03 should be included.
We recommend 1% or more of the company's total outstanding shares.  In
addition, the proposed item should exclude the disclosure of exercises of
previously disclosed convertible securities since investors will already be
aware of the convertibility feature of these securities.

	We also believe that the meaning of "sells in a transaction" needs
to be clarified.  It is unclear whether this term covers, for example,
grants of restricted shares to executives or non-employee directors under
non-registered compensation plans.  We routinely make these types of
restricted stock grants.  This disclosure would require a large number of
Form 8-Ks to be filed without providing investors with any meaningful
information.  Accordingly, we recommend that the meaning of "sells in a
transaction" be clarified to exclude sales under non-registered compensation
plans.

	If the changes we have recommended to Item 3.03 were made, we would
support retaining the current disclosure requirement in Forms 10-Q and 10-K
in order to pick up, quarterly, summary information on excluded sales of
equity securities that were not picked up by Form 8-K filings.

	Item 5.02.  Departure of Directors or Principal Officers; Election
of Directors; 	Appointment of Principal Officers

	Item 5.02(a)(3) would require a company to, among other things,
request that certain former directors furnish the company as soon as
possible with a letter addressed to the Commission stating whether he/she
agrees with the Company's disclosure regarding the director's resignation or
removal and, if not, stating the respects in which he/she does not agree
with the disclosure.  Since we cannot obligate the director to provide us
with the response letter, we feel that the instructions to Item 5.02(a)(3)
should state that a company would only be required to file the response
letter if this letter is delivered to it.  In addition, the instructions
should state that a company would not be liable for any false or misleading
statements made by the former director in the response letter.

	Item 5.02(b)(2) would require disclosure of the reasons for the
resignation or removal of any of the top five executive officers of the
company.  It is current market practice not to disclose the reasons for the
departure of an executive officer or, if disclosure is made, to issue a
press release with general statements as to the officer's departure.  Common
reasons cited are: (1) the pursuit of other interests, (2) the desire to
spend more time with the family and (3) health concerns.  The Commission
should allow current market practice to continue and should only mandate
disclosure of the reasons for the departure of an executive officer under
Item 5.02(b)(2) when the officer has committed fraud or some other similar
act against the company, which results in harm to the company's
stockholders.

	
	*     *     *

		We very much appreciate the Commission's consideration of
our concerns and recommendations on the proposed rule and welcome the
opportunity to discuss any and all issues with the Commission at its
convenience.  If the Commission or the staff has any questions regarding
this letter, please call Michael A. Harring at (309) 765-5799.

Very truly yours,

DEERE & COMPANY


By:  /s/ Michael A. Harring
Title:  Corporate Secretary and
	Associate General Counsel