INTERNATIONAL HARVESTER COMPANY FIFTY YEARS AGO, on August 1902^1952 12, 1902, Cyrus H. McCormick, then president of the McCormick Harvesting Machine Company and eldest son of the man who perfected the reaper, began a letter to sales agents: "We are about to dispose of our business in a way which we feel will have a permanent and beneficial influence upon the whole industry." Thus, the International Harvester Company came into being, with five large harvesting machinery manufacturers forming a single new company. Although it traces the origin of its business back to the perfection of the reaper in 1831, Harvester did not reach its 50th anniversary as a Company until 1952. In its 50 years, Harvester has weathered one major and three lesser business depressions. It has survived two world wars and their troublesome aftermaths. It has grown into a strong and useful business enterprise in the atmosphere of freedom in which America itself has grown great. There were reasons for its survival and growth. One such reason has been the great service which Harvester has rendered the United States in agricultural mechanization, in growth of motor truck transport, power equipment, and refrigeration. In this process America changed from a predominantly agricultural nation into the world's greatest industrial power. Another reason has been people. So, in the photographs in the 1952 annual report, the 50-year span of Harvester's history is illustrated in terms of people closely associated with it for all or the greater part of that period. These people, symbolic of thousands of others, emphasize again that the greatest asset of any successful business is its people.

••••ffil "THE PONY MIGHT THROW YOU, but this stock never will," L. L. Treat, Webster City, Iowa, businessman, said to his young daughter, Teresa, nearly 50 years ago when he handed her some shares of Harvester stock instead of the pony she so fondly desired. Today, Mrs. Teresa Treat Stearns, living at Friendship Haven, a home for retired people in Fort Dodge, Iowa, still owns that Harvester stock and additional shares she has since received. "As I grew up I began to realize that while this stock was increasing in value and paying dividends, the pony would have eaten his head off and would long since have been turned out to grass," Mrs. Stearns says. U~\l | HARVESTER FACTS AT A GLANCE 1952 and 1951

1952 1951

SALES $1,204,001,000 $1 ,277,320,000

TAXES—FEDERAL, STATE, AND LOCAL .. $ 87,476,000 $ 144,395,000

NET INCOME (after taxes): From sales* $ 44,760,000 $ 58,575,000 From dividends received from subsidiary companies 8,424,000 8,557,000 From adjustment of prior years' tax provisions 5,604,000 From miscellaneous charges and credits (net) 3,132,000 4,131,000 Total net income 55,656,000 $ 63,001,000 *Net income from each dollar of sales 3.7* 4M

DIVIDENDS .. $ 32,131,000 $ 31,788,000

NET INCOME RETAINED FOR USE IN THE BUSINESS .. $ 23,525,000 $ 31,213,000

PER SHARE OF COMMON STOCK: Net income .. $ 3.76 $ 4.36 Dividends declared 2.00 2.00

EXPENDITURES FOR LAND, BUILDINGS, MACHINERY AND EQUIPMENT .. $ 33,362,000 $ 43,403,000

SUMMARY OF EQUITY CAPITAL INVESTED: Current assets 680,686,000 $ 499,397,000 Current liabilities 185,217,000 2.57,4:77,000 Net current assets (working capital) .. $ 495,469,000 $ 241,980,000 Property (net) 303,288,000 296,403,000 Investment in subsidiary companies 97,129,000 103,866,000 Miscellaneous assets 9,541,000 9,795,000 Total capital invested $ 905,427,000 $ 652,044,000 Deduct funded debt 225,000,000 Equity capital invested .. $ 680,427,000 $ 652,044,000

BOOK VALUE PER SHARE OF COMMON STOCK .. $ 45.07 $ 43.43

APPROXIMATE NUMBER OF SHARE OWNERS 78,000 71,000

EMPLOYES: Average number during year 87,185 93,461

Total comnensation • • $ 372,856,000 $ 390,612,000 Total compensation in 1952 reflects the effect of prolonged strikes.

3 INTERNATIONAL HARVESTER COMPANY (A New Jersey Corporation) (As of October 31, 1952)

DIRECTORS

RALPH BUDD JAMES R. LEAVELL EDWARD L. RYERSON JOHN A. CHAPMAN JOHN L. MCCAFFREY FOREST D. SIEFKIN CHRIS L. CHRISTENSEN CHAUNCEY MCCORMICK JUDSON F. STONE CHRISTIAN E. JARCHOW FOWLER MCCORMICK JOHN STUART FRANK W. JENKS PETER V. MOULDER MERLE J. TREES ARNOLD B. KELLER JAMES L. PALMER JOHN P. WILSON

EXECUTIVE COMMITTEE

RALPH BUDD JUDSON F. STONE JAMES R. LEAVELL MERLE J. TREES JOHN L. MCCAFFREY JOHN P. WILSON FOWLER MCCORMICK CHAUNCEY MCCORMICK (1st Alternate) PETER V. MOULDER CHRISTIAN E. JARCHOW (2nd Alternate)

OFFICERS

JOHN L. MCCAFFREY President PETER V. MOULDER Executive Vice President ROBERT P. MESSENGER Executive Vice President CHRISTIAN E. JARCHOW Executive Vice President FRANK W. JENKS Vice President, Merchandising Services THEODORE B. HALE Vice President, General Sales FOREST D. SIEFKIN Vice President and General Counsel RALPH C. ARCHER Vice President, Manufacturing MERCER LEE Vice President, Supply and Inventory IVAN L. WILLIS Vice President, Industrial Relations WILLIAM R. ODELL, JR. Vice President and Treasurer EDWARD M. RYAN Vice President, Foreign Operations ARNOLD E. W. JOHNSON Vice President, Engineering GERARD J. EGER Secretary HAROLD B. MYERS Comptroller

GENERAL MANAGERS OF DIVISIONS

NEIL LOYNACHAN Fiber and Twine Division FIRST LEADERS of the International HARALD T. REISHUS Industrial Power Division Harvester Company were both sons EUGENE F. SCHNEIDER Farm Implement Division HARRY O. BERCHER Steel Division of men who had built large enter­ WILLIAM C. SCHUMACHER Motor Truck Division prises for the manufacture of grain MARK V. KEELER Farm Tractor Division harvesting machinery — Cyrus H. CHARLES D. HARRIS Refrigeration Division McCormick, left, who had been president of the McCormick Har­ TRANSFER AGENTS vesting Machine Company, and Charles Deering, right, who had been senior partner of the Deering Har­ Guaranty Trust Company of New York, New York vester Company. Together, they The First National Bank of Chicago, Chicago charted the early direction of the Company and established the solid REGISTRARS foundation on which future growth and progress could be built. The New York Trust Company, New York CYRUS H. McCORMICK became first president of the Company in Continental Illinois National Bank and Trust Company of Chicago, Chicago 1902. He served in that capacity until he became chairman of the Board of GENERAL OFFICES Directors in 1918. CHARLES DEERING became Harvester Building, 180 North Michigan Avenue, Chicago first chairman of the executive com­ mittee of the Board of Directors in 1902. Two years later, when the post 4 was created, he became first chairman of the board of the Company, and served until 1916. INTERNATIONAL HARVESTER COMPANY

The Board of Directors presents with its approval the management's report on operations for the fiscal year ended October 31, 1952, with certain information on important develop­ ments since that date. This report has been compiled for the information of share owners, employes, customers, and all others who have an interest in the business of International Harvester Company.

IN THE FIFTIETH YEAR of its corporate operation the Company experienced a number of difficulties, some of which had been foreseen and noted in the 1951 annual report. A strike by the United Farm Equipment and Metal Workers-UE union in eight plants lasted 12 weeks. A strike by the local union of the United Automobile Workers-CIO at the Melrose Park Works lasted ten weeks. Prior to these two strikes, nearly all our plants were shut down during most of the month of July because of a lack of steel brought about by a strike in the steel industry. Therefore, about half our productive facilities were idle for almost four months. Consequently, operating results in the last third of the year were seriously affected.

SALES

Sales in 1952 totaled $1,204,001,000, exceeding natural resources in that country making it an the billion-dollar mark for the second successive especially favorable market for our products. year. Impact of the strikes upon sales cannot be While demand for nearly all our products was measured, but we know that a substantial volume good in the first half of the year, a definite buyers' was lost in certain lines of products. The dollar market developed about midyear. In the closing sales volume showed a decline of 5.7% from the months of the fiscal year, intensive selling was 1951 sales of $1,277,320,000. required to sustain large volume. Machines such Sales to subsidiary companies in 1952, almost as crawler tractors, cotton pickers, hay balers, entirely for export, were lower than in 1951, prin­ and corn pickers were in greatest demand. Motor cipally because of the lack of dollar exchange on trucks and refrigeration products also were in the part of most foreign countries, and the inability good demand. of the parent company to supply all of the prod­ Our 1952 sales would not have compared so ucts ordered by the subsidiaries because of the favorably with those of 1951 except for the in­ strikes in this country. The sales to subsidiaries crease in sales of defense products. Total defense totaled $145,179,000, as compared with $200,813,- sales were $173,713,000, compared with $86,357,- 000 in 1951. Sales to the Canadian subsidiary, 000 in 1951. Principal sources of such sales were while lower than in 1951, were on a relatively high the 5-ton military truck, which we have built level, the large program for the development of for the past two years, the armored personnel carrier, and related service parts. Production strikes occurred, all available manpower was con­ got under way on airplane wheels and brakes. centrated during the strikes on production of Defense sales accounted for 14.4% of the 1952 service parts. volume. Our parts depots enabled us to move parts Sales of service parts, including those for de­ promptly to users in the field, so that customers fense products, totaled $237,607,000, compared did not suffer from lack of service parts during with $224,567,000 in 1951. Our policy is to have the long strike period. an adequate supply of service parts on hand at The following table gives a comparison of 1952 all times for machines in use. In the plants where and 1951 sales:

Percent Percent 1952 of Total 1951 of Total Sales to dealers and users in the United States: Motor trucks, service, and service parts ... $ 320,006,000 26.6% $ 344,333,000 27.0% Farm implements and service parts 194,215,000 16.1 211,492,000 16.5 Farm tractors and service parts 180,466,000 15.0 224,100,000 17.5 Industrial equipment and service parts.... 81,940,000 6.8 95,331,000 7.5 Refrigeration equipment and service parts. 49,844,000 4.1 60,249,000 4.7 Steel, pig iron, and coke by-products 31,774,000 2.6 29,067,000 2.3 Binder and baler twine 24,664,000 2.1 23,554,000 1.8 Miscellaneous 2,200,000 .2 2,024,000 .2 Total $ 885,109,000 73.5% $ 990,150,000 77.5% Sales of defense products (regular, modified, and special products) and service parts, sold principally to the United States Government $ 173,713,000 14.4% $ 86,357,000 6.8% Sales to subsidiary companies: To IH Export Company (for export) $ 74,288,000 6.2% $ 120,527,000 9.4% To IH Company of Canada, Ltd 49,626,000 4.1 56,579,000 4.4 To all other subsidiary companies 21,265,000 1.8 23,707,000 1.9 Total $ 145,179,000 12.1% $ 200,813,000 15.7% Total sales $1,204,001,000 100.0% $1,277,320,000 100.0%

NET INCOME AND DIVIDENDS

A year ago we said we believed it would be "in­ with $63,001,000 in 1951. This was equivalent to creasingly difficult in 1952 to maintain a reason­ $3.76 per share of common stock, compared able margin of operating profit on our sales dollar." with $4.36 in 1951. Net income from each dollar That was borne out by 1952 developments. of sales amounted to 3.7 cents, compared with The loss sustained because of strikes was sub­ 4.6 cents in 1951. stantial. Wage and salary costs continued to ad­ The 1952 net income includes $5,604,000 repre­ vance. Our bill for materials, supplies, transporta­ senting the excess of tax provisions for the years tion, and services was higher. Government price 1942-1946 inclusive, determined by an audit for control, competition, and customer price resistance those years which was completed by the Bureau combined to create a situation in which it was not of Internal Revenue in 1952. possible to recover these increased costs through Dividends paid on common stock amounted to higher prices. We have reached a point of price $2.00 per share, the same as in 1951. Dividends resistance on a number of our product lines. paid on the preferred stock of the Company were The 1952 net income was $55,656,000, compared at the regular rate of $7.00 per share. IN 1902, WHEN HARVESTER WAS FORMED, the firm of Grigsby & Company of Bardstown, Kentucky, was already a thriving retail institution. Among other things, it acted as a dealer for the young Harvester Company. Today, 50 years later, it is still the dealer for Harvester's products in its community. About 100 other dealerships have a similar record in their communities. R. W. Grigsby, foreground in photograph, now 74, still visits the company's modern store building every work­ ing day. Lee W. Grigsby, rear in photograph, grandson of the founder of the business, is now manager of the dealership. Dividends paid share owners totaled $32,131,- Number of Share Owners 000, compared with $31,788,000 in 1951. The number of individuals and institutions own­ Net income retained for use in the business ing shares in the International Harvester Com­ amounted to $23,525,000, compared with $31,- pany has increased steadily during the life of the 213,000 in 1951. Company, and in the last ten years has more than doubled. During 1952 the number of share Working Capital owners of record increased by 7,000, from about 71,000 at the begmning of the year to 78,000 at The Company's working capital (cash resources, the end of the year. Including those share owners receivables and inventories, minus current liabili­ whose holdings are handled by fiduciary agencies, ties) increased by $253,489,000 in 1952. the total number of individuals who own shares is now believed to be about as great as the total Sources of the increase in funds were: number of employes, or about 87,000. Five-year loan $125,000,000 Under the Employes' Common Stock Subscrip­ Thirty-year loan 100,000,000 tion Plan, authorized by share owners in May, 1949, and which went into effect the following Payment of subordinated notes by July, a total of 546,454 shares has been sold to IH Credit Corporation 10,000,000 employes as of October 31, 1952. Of this total, 151,817 shares were sold to employes during the Sale of common stock to employes 4,858,000 1952 fiscal year. It is expected that approximately Adjustment of prior years' federal 86,000 more shares will be sold under this plan, income tax provisions 5,604,000 which terminates June 30,1953. More than 12,000 Income before provision for federal employes have participated in the plan. income taxes 109,652,000 Recovery of funds spent in previ­ Taxes ous years for buildings, machin­ ery and equipment—by means Because 1952 income before taxes was considera­ of charges for depreciation 25,051,000 bly less than in 1951, the federal income taxes payable thereon were much less than in 1951. Sale of land, buildings, machinery The provision for federal income taxes totaled and equipment, etc 1,426,000 $59,600,000 in 1952, compared with $114,500,000 Decrease in miscellaneous assets. . 254,000 in 1951. Total $381,845,000 The 1952 federal income tax bill was the equivalent of $4.49 per share of common stock. Other federal, state, and local taxes were higher From the above funds expenditures were made or than in 1951. are to be made as follows: The Company's taxes were as follows: For federal income taxes $ 59,600,000 1952 1951 For dividends to share owners. . . 32,131,000 Provision for federal income taxes $59,600,000 $114,500,000 For purchase of land, buildings, machinery and equipment 33,362,000 Adjustment of prior years' federal in­ For investment in subsidiary com­ come tax provisions 5,604,000 — panies 3,263,000 Federal insurance Total $128,356,000" contributions tax. . 4,475,000 4,849,000 Net increase in working capital $253,489,000 Unemployment taxes 3,230,000 3,900,000 Other federal, state, For statement of this increase of $253,489,000 in and local taxes 25,775,000 21,146,000 working capital, refer to the Summary of Changes in Net Assets, page 24. Total $87,476,000 $144,395,000

8 Finances which it then held, amounting to $146,353,000. The Credit Corporation used the funds thus Two major financing operations were carried out received to pay off short-term loans from banks in the 1952 fiscal year. The first was a five-year amounting to $122,800,000 and also the subordi­ term loan of $125,000,000 from a group of banks, nated notes amounting to $10,000,000 held by the completed January 25, 1952. The reasons for this parent company. The five-year term loan carries were fully discussed in our 1951 annual report. an interest rate of 3M% and may be prepaid with­ The second was a long-term loan of $100,000,000 out penalty. from The Prudential Insurance Company of The investment of the parent company in the America, completed on October 3, 1952, in order capital stock of the Credit Corporation was not to increase the Company's working capital. reduced and this capital, together with retained The five-year term loan of $125,000,000 was earnings, permitted the latter to continue to carry used early in 1952, together with other funds, to retail notes throughout the year without the ne­ purchase from International Harvester Credit cessity for borrowing. Corporation all of the wholesale notes receivable If and when the federal tax laws are changed

56.0c 32.9c for Materials to Employes for Taxes for Dividends Retained Supplies and for Wages, to Share Owners for Use Other Expenses Salaries, etc le Business

Net sales $1,204,001,000 RECEIPTS Dividends from subsidiary companies 8,908,000 Interest 2,420,000 $1,215,329,000

Cost of materials, supplies, and other expenses $ 680,093,000 56.0% Wages, salaries, social security taxes, and employe plans . . . 399,809,000 32.9 DISTRIBUTION Taxes—federal, state, and local (not including social security) . 79,771,000 6.6 OF RECEIPTS Dividends to share owners 32,131,000 2.6 Retained for use in the business 23,525,000 1.9 $1,215,329,000 to remove the serious disadvantage that made it The addition and use of these new and improved advisable for International Harvester Company facilities has made possible new lines of products, to purchase the wholesale notes, it is expected enlarged and improved fines of old products, that the Credit Corporation will again be able to greatly enlarged and improved research and engi­ finance such notes and thereby supply the funds neering facilities, an increase in annual sales to to pay off the $125,000,000 five-year term loan. more than a billion dollars, and the addition of Local banks and other financing agencies are 20,000 employes. continuing to finance a major part of the time During 1952 a new twine mill was completed at sales of our products. New Orleans on land leased from the New Orleans Experience during 1952 indicated that, with Board of Port Commissioners. The new mill will return of a buyers' market, it might not be possible displace the McCormick Twine Mill in Chicago. to maintain all of the improvement in the rates of There will be important advantages in the pro­ turnover of receivables and inventories achieved duction of the Company's domestic output of during and since the end of World War II. Prior baler and binder twine at the new mill, including to the decline in our production resulting from the economies in the transportation of raw fiber to the strikes, both receivables and inventories had mill and in the distribution of the finished twine. increased sharply above the previous year-end A large, new motor truck engineering, test and figures. Under these circumstances it seemed de­ research building was completed and occupied at sirable to strengthen the working capital of the Fort Wayne, Indiana, which gives the Company Company. the finest facilities of that type in the motor Accordingly, arrangements were made to bor­ truck industry. row $100,000,000 from The Prudential Insurance New parts depots were completed at Broadview, Company of America for a long term. The loan Illinois, a suburb of Chicago, and at Denver, bears an interest rate of 3H%, and extends for Colorado, making 11 such units in operation. 30 years, with repayments starting in the eleventh A normal program of improvements was carried year, and with favorable provisions for prepayment. on at our manufacturing plants. This addition to working capital made it un­ In today's highly competitive business, where necessary to continue the bank V-Credit of $75,- technology moves ahead at a rapid rate, the 000,000 which the Company had had in effect Company must continue to make substantial im­ since April, 1951. Accordingly, this credit was provements and additions to its production and terminated October 24, 1952. distribution facilities in order to hold and advance All of the Company's short-term bank loans its position. were repaid before the end of the fiscal year, and the Company's total borrowings now consist of Operations of Subsidiaries the $125,000,000 five-year term loan for financing International Harvester Company sales to sub­ ol receivables and the $100,000,000 long-term loan. sidiary companies in 1952 were $145,179,000 as compared to $200,813,000 in 1951. This decrease Property Additions of $55,634,000 was caused in part by the inability The Company completed a number of major con­ of the parent company to supply all of the prod­ struction projects during 1952. Additions to ucts ordered by the subsidiaries because of the properties amounted to $33,362,000, compared strikes in this country, and in part by a shortage with $43,403,000 in 1951. Of the 1952 total, of dollar exchange in many foreign countries. $27,530,000 was expended for production facilities But despite this decrease in purchases from the and $5,832,000 for sales, service, distribution and parent company by the subsidiary companies, other facilities. their own sales were substantially greater than During the seven years, 1946 through 1952, the in 1951, exceeding $400,000,000. This was due Company has expended a total of $332,190,000 principally to a continuing good demand in for additions to its land, buildings, machinery and many countries for the products of foreign manu­ equipment. As a consequence, our production, facturing subsidiaries, increased production result­ research, engineering, and distribution facilities ing from new plants abroad being put into oper­ are now more up to date and efficient than ever ation, enlargement of old plants, and trade before. advantages held by some products of foreign

10 MANY CUSTOMERS OF HARVESTER have bought and used its products for the entire 50 years of its corporate life. One such is Thomas Milton Greer, 92, of Nelson County, Kentucky, who has been a customer of Grigsby & Com­ pany, Harvester dealer at Bardstown, Kentucky, for the past 50 years. In fact, Greer began buying from Grigsby 72 years ago. In this photo Mr. Greer sits beside his two sons and grandson who still farm 600 acres where the family originally settled. Corn and livestock are their main farming interests. Farmall tractors and McCormick farm machines work their fertile, rolling acres. Left to right, in the photograph: Thomas Milton Greer; Richard, grandson; Marvin and Milton, sons.

• •-».. /•*%

V

*'; TT-T PRTPTr'S Chart comparing increases in International Har­ iri xrxvxox^o vester October, 1952 prices over the level of Prices of January, 1941, with corresponding increases in wage rates, cost of FARM PRODUCTS materials, and prices of metal products and farm products.

LABOR UP Hourly 144% earnings of MATERIALS non-salaried (As measured by INDUSTRIAL factory employes all commodities POWER except farm products and foods) PRODUCTS

UP FARM UP MACHINES 95% 99% UP UP 85% 83%

IH COSTS SELLING PRICES OF IH PRODUCTS HE EH JANUARY 1941 LEVEL Prices of materials, metals and metal products, and farm products are based on the published figures of the United States Bureau of Labor Statistics, the comparison being between January, 1941 and October, 1952.

manufacture over those exported from the United $6,737,000 is largely accounted for by the decrease States. of $10,000,000 in the investment in the Inter­ The following table shows a comparison of sales national Harvester Credit Corporation, through of subsidiary companies after elimination of inter­ the repayment of that amount of subordinated company sales. Companies are grouped according notes to the parent company; and by the invest­ to areas in which they operate. ment of $2,792,000 made by the parent company in the capital stock of International Harvester 1952 1951 Company of Great Britain, Limited. Canada $124,747,000 $105,032,000 In November, 1952, the parent company pur­ Latin America 90,195,000 91,715,000 chased for $7,790,000 the capital stock of The Europe 87,379,000 80,075,000 Frank G. Hough Company of Libertyville, Illi­ Africa and Middle East 22,973,000 28,066,000 nois, which manufactures a line of earth-moving, Pacific area 75,172,000 54,921,000 excavating, and material-handling equipment. Its United States 8,987,000 11,980,000 principal product is widely and favorably known Total $409,453,000 $371,789,000 as the "Payloader." The Hough Company will be operated as a wholly-owned subsidiary. Sales of subsidiary companies have more than During the seven years, 1946-1952, a total of tripled since the end of World War II, totaling only $56,230,000 was expended by foreign subsidiaries $118,446,000 in 1946, compared with the $409,- for land, buildings, machinery and equipment. 453,000 in 1952. During this time approximately $16,000,000 was Cash dividends received by the parent company made available to them through investments in from subsidiaries in 1952 were slightly less than in their capital stock by the parent company. The 1951. These dividends totaled $9,799,000, com­ balance of their requirements for fixed properties, pared with $9,985,000 in 1951. The cash dividends as well as for increased working capital, was from subsidiaries are before deduction for with­ afforded by their retained earnings, supplemented holding taxes, etc., which amounted to $891,000 in some cases by local borrowings. in 1952 and $855,000 in 1951. The substantial additions to production facilities of foreign subsidiaries, during the same period when large additions were being made to the Investment in Subsidiaries properties of the parent company, account for At October 31, 1952, the Company had $97,129,- much of the increase in sales of the foreign sub­ 000 invested in subsidiaries, compared with $103,- sidiaries since the end of World War II. 866,000 at October 31, 1951. The decrease of In England, during 1952, the first of three new

12 buildings to be erected at Doncaster Works of the Diesel farm tractors is about ready for production. British subsidiary was begun. The program for In Australia, the new motor truck plant at enlarging that plant calls for doubling the area Dandenong began operation in June, 1952. Four devoted to tractor manufacture and increasing sizes of trucks, ranging from a light-duty utility the capacity of the mechanized foundry. The plans truck up to a medium-heavy-duty model, are built call for a sizable increase in British Farmall tractor there for the Australian market. The 10,000th production and the manufacture of crawler trac­ tractor was produced at Geelong Works in Sep­ tors. Production of a small harvester-thresher will tember, 1952. begin at Doncaster in 1953. The number of employes of subsidiary com­ In France, production of a similar harvester- panies was down slightly in 1952, totaling 25,500. thresher was started in 1952 by converting the The approximate number of employes in various facilities at Ris Orangis for this purpose. Addi­ foreign countries is as follows: France, 6,700; tions to Montataire Works will permit greater Canada, 5,900; Australia, 3,500; Germany, 2,500; quantities of farm implements to be built there Great Britain, 2,200; Sweden, 800; and Brazil, 700. to match the increased tractor manufacture at The Company's equity in the annual net income the new tractor plant at St. Dizier. of subsidiaries in 1952, as usual, substantially In Germany, the subsidiary company is making exceeded the cash dividends received from them real progress toward reestablishing its former vol­ during the year. The Company's equity in the net ume of production and sales. The rebuilt plant at assets of subsidiaries at the close of their 1952 Neuss is now in excellent condition, and produc­ fiscal years exceeded the Company's investment tion is being increased steadily. A new line of in subsidiaries by more than $124,000,000.

The following tabulation gives a comparison of the Company's equity in the 1952 net income of sub­ sidiaries, and the cash dividends received from them. It also shows a comparison of the Company's investment in subsidiaries at October 31, 1952, with its equity in their net assets.

Cash Equity in Equity in Dividends Investment Net Assets of the 1952 Received in Subsidiaries Net Income from Subsidiaries at Close of Areas in Which of Subsidiaries at Their 1952 Subsidiaries Operate Subsidiaries in 1952 Oct. 31, 1952 Fiscal Years Canada $ 9,295,000 $2,053,000 $15,000,000 $ 45,650,000 Latin America 10,099,000 551,000 16,324,000 45,947,000 Europe 9,203,000 1;907,000 17,961,000 52,128,000 Africa 719,000 323,000 880,000 5,040,000 Australia, New Zealand, and Philippines. 4,747,000 1,707,000 12,515,000 28,043,000 IH Export Company (A) 1,920,000 3,000,000 10,000,000 13,139,000 United States 2,351,000 258,000 24,449,000 31,863,000 Total $38,334,000 $9,799,000(B) $97,129,000 $221,810,000(0

(A) The International Harvester Export Company derives most of its income from sales to the parent company's foreign subsidiaries and to its own jobbers. (B) Cash dividends are before deduction for withholding taxes, etc., amounting to $891,000. (C) Of this $221,810,000 equity, $48,692,000 was invested in fixed property, and $173,118,000 in working capital. For further information concerning the investment and equities in subsidiary companies, see page 26.

Engineering and Research uct, improved quality, more efficient production, and then, through market research, to learn We continued to emphasize research and advanced about customers' desires. engineering in 1952. We must look to these func­ We are convinced that the best insurance we tions to show us the way to better design of prod­ can have for future sales volume is to have the

13 greatest possible number of designs for improved Employe Relations products all the way from the drawing boards on through experimental design, experimental pro­ As recounted elsewhere, employe relations were duction and test to final commercial production. seriously disturbed by the strikes in the second The future success of our business will move along half of 1952. that course. We must know where we are in our The Company's management was convinced present design, what we expect to accomplish in before the FE-UE strike began that any new con­ the immediate future, and we must have the largest tract with that union should contain provisions possible number of alternative courses to choose which would establish a basis by which union from in the more distant future. responsibility could be enforced in the same man­ An example of this kind of forward planning ner that Company responsibility has been en­ may be found in our new engineering, test and forced. The more than 1,000 strikes and wildcat research laboratory of the Motor Truck Division work stoppages by that union between October 1, at Fort Wayne. There, for the first time, nearly 1944, and October 31, 1951, are testimony to the all the Company's motor truck engineers have need for such union responsibility. been brought together. They have the finest Simply stated, the over-all objective of the Com­ possible equipment and facilities with which to pany, from the time negotiations began with the carry on every phase of motor truck engineering union until the bitter strike was ended, was to and testing. establish a sound basis for a friendly and harmoni­ ous relationship with our employes represented by An example of the valuable assistance given to that union. In our opinion, the new three-year the operating divisions of the Company by our contract eliminates the worst abuses formerly Manufacturing Research organization is to be practiced by the union, and should enable the found in its experimental work with what we call Company to operate its plants in an orderly manner. the Contour molding method of producing found­ ry castings. After long and careful investigation New contracts were negotiated during 1952 with both the FE-UE and the UAW-CIO covering and much development in its research foundry, health and welfare plans for employes. These this new process has been turned over by Manu­ carried certain liberalizations and improvements. facturing Research for use wherever it promises Wages of employes advanced ten cents per hour substantial economies. The first installation is during 1952 under the automatic provisions of being made in the foundry at Indianapolis Works. existing contracts. One of these provisions calls This method permits castings of much closer tol­ for automatic cost-of-living adjustments upward erances to be achieved in the molding process, or downward, based on the Consumers' Price thereby obtaining possibilities of great economies Index of the United States Department of Labor. in later machining operations, and advantages in The other provides for a four-cents-per-hour in­ improved product. crease each year, based on the historical record of Manufacturing Research has also developed increased productivity in American industry be­ and turned over to our operating divisions proc­ cause of technological advances. esses for the making of nodular iron in foundry Average hourly straight-time earnings of factory castings. This metal is expected to be an excellent employes for October, 1952, were $2.09, compared substitute in many cases for both forgings and with $1.98 one year earlier. steel castings. Several of our foundries will begin Approximately 4,800 Harvester employes are producing it in 1953, and its development may now in the military services. Thirty-one have died prove a highly valuable forward step in metallurgy in service, including twenty who were killed and foundry practice. in action in Korea. Fifteen more are missing in ac­ Advanced engineering, as well as product engi­ tion. A large number of employes have completed neering, is a constant effort to forward new their military duty and have been welcomed back designs and improve old ones. In order to bring to their jobs. about better coordination between all the engi­ A total of 757 employes retired during 1952 neering groups in the Company, an Engineering under retirement plans in effect. There were 4,364 Council has been formed under the guidance of retired employes at the end of the fiscal year, the vice president in charge of engineering. compared with 3,924 at the beginning of the year.

14 There are approximately 85,000 employes who elected vice president of engineering, having been are members of the Company's three health and director of engineering. welfare plans—group life insurance, group hospi­ Harold B. Myers, formerly an assistant comp­ talization, and health and disability. In addition, troller, was elected comptroller, Mr. Jarchow about 150,000 dependents of employes are covered having relinquished that office in order to devote by the group hospitalization plan. full time to his duties as executive vice president. Cost to the Company during 1952 of all its pen­ sion, health and welfare plans exceeded $18,000,000. Outlook

Most American businesses, if they look only at Organization Changes the difficulties which they face, can easily become overly impressed by them. Of course, there will Cyrus McCormick, who became a member of the be the usual number of such difficulties in our Board of Directors in 1928, resigned in February, business in 1953. 1952, because of ill health. There will be a competitive, highly selective Frank W. Jenks, vice president, was elected to buyers' market. In order to maintain adequate fill the vacancy on the Board created by Mr. profits on our sales dollar, there is a real necessity McCormick's resignation. for economy and efficiency. A number of important changes occurred during Many people still need the goods we produce, 1952 in the Company's top management group. and most of them have either the cash or the On March 1, Levin H. Campbell, Jr., retired as credit to buy the goods. But they are no longer executive vice president. He joined the Company standing in line to make purchases. They will at the close of World War II, having been army have to be sold in 1953. chief of ordnance for the greater part of the war. Our own sales organization is fully conscious of Serving first as vice president, he later was ad­ the big selling job to be done. Even with our large vanced to the position of executive vice president. and excellent dealers' organization, it is, of course, Robert P. Messenger, executive vice president, a continuing task to keep them all conscious of the who had been giving executive supervision to fact that we are now in a buyers' market. foreign operations, relinquished that relationship The Board of Directors joins me in expressing and assumed similar duties for manufacturing and to Harvester people all thanks and appreciation engineering which General Campbell had directed. for a good job in 1952. I am confident that Christian E. Jarchow, then vice president and Harvester people, working together, will bring us comptroller, was elected an executive vice presi­ another good year in 1953. dent. He continued to hold the office of comp­ troller until later in the year. On May 15, Ralph C. Archer, vice president formerly in charge of the Farm Implement Divi­ <7v e sion, was elected vice president in charge of Q*JUJ'y manufacturing, taking over duties formerly as­ <^y signed to Michael J. Graham, whose untimely PRESIDENT death ended a long career of useful service. Approved by the Board of Directors Eugene F. Schneider, former general manager January 19, 1953 of the Farm Tractor Division, succeeded Mr. Archer as general manager of the Farm Imple­ ment Division. Mark V. Keeler, former general manager of the Refrigeration Division, succeeded Mr. Schneider as general manager of the Farm Tractor Division. The next annual meeting of share owners will be held Charles D. Harris, former manager of engineer­ at 10:00 a.m., Thursday, May 14, 1953, in Chicago. Proxies will be requested for this meeting. It is ing of the Refrigeration Division, succeeded Mr. expected that a proxy statement and form of proxy Keeler as general manager of that division. will be mailed to each share owner on or about On October 16, Arnold E. W. Johnson was April 1, 1953.

15 IN 1902, WHEN THE HARVESTER Company began operations, it had approximately 20,000 employes, nearly all of whom had been employes of the five harvesting machinery companies which formed the new company. They were scattered, of course, in all parts of the country. Fifty years later, 26 of those 20,000 employes had em­ ployment service that spanned the entire corporate life of the Company. In November they were brought together for a dinner, honoring their unique service. This very special group of Harvester employes is shown above. For their names, see the opposite page. HARVESTER'S 50-YEAR MEN. All are from McCormick William F. Wallmuth, John J. Zich and John Polacz. Works unless otherwise identified, and are shown, left Third row: Joseph Jablonski, Tractor Works; to right, above: Joseph Hebel, Tractor Works; Mike Chojnowski, Front row: Joseph Paulelli, Frank L. Sequens, Tractor Works; Charles Mielke, Joseph A. Wilamowski, Joseph F. Bilek, Ernest S. Peterson, General Office; Walter D. Nebergall, Canton Works; Louis Dezetter, George Gentili, Thomas C. Johnson, General Office; McCormick Twine Mills; John Jankowski, and Martin and John DeBoer. L. Kuklinski. Second row: Michael F. McCarty, Chicago Motor Truck Sales; Robert N. Gilson, Farmall Works; Fifty-year men absent at the time the photo was Thomas A. Duffy, Springfield Works; John W. Welzien, taken were Joseph D. Russell and Joseph E. Kasper, George Burger, Milwaukee Works; Charles H. Vallee, both of McCormick Works. EVERY LARGE-SCALE BUSINESS enterprise must depend upon a great many other businesses for materials and services. Today Harvester buys materials, parts and services from at least 30,000 suppliers. A considerable number of these have supplied Harvester for the entire 50 years of its corporate existence. One such is the Russell, Burdsall & Ward Bolt and Nut Company, which celebrated its 100th anniversary in 1945. With factories in Port Chester, New York, Coraopolis, Pennsylvania, and Rock Falls, Illinois, it has grown and progressed as a leader in its industry. In this photo, Evans Ward, grandson of one of the company's founders, and now president of the company, observes operations in its Rock Falls plant.

^ • STATEMENT OF INCOME II For the Years Ended October 31,1952 and 1951

1952 1951 Net sales: To dealers and users in the United States $ 885,108,819 $ 990,149,861 Defense products 173,713,443 86,357,108 To subsidiary companies 145,178,587 200,812,545 Total $1,204,000,849 $1,277,319,514

Deduct: Cost of goods sold (Note 1) $ 988,607,337 $1,004,190,753 Selling, collection, and administrative expenses 110,029,882 97,588,682 Total $1,098,637,219 $1,101,779,435

Net revenue from sales $ 105,363,630 $ 175,540,079

Other income credits and charges: Dividends received from subsidiary companies (less taxes withheld at source) $ 8,908,134 $ 9,129,972 Interest earned 2,420,224 502,209 Interest charges 4,455,986 167,421 Discount on wholesale notes sold to IH Credit Corporation 919,399 2,635,431 Excess of stated value at date of issue (approximate market value) over the subscription price of common stock sold to employes. 1,821,804 2,354,904 Kansas-Missouri flood loss 39,907 1,852,447 Miscellaneous (net) 197,007 661,024 Total $ 4,288,269 $ 1,960,954

Income before provision for federal income taxes $ 109,651,899 $ 177,501,033

Provision for federal income taxes (including excess profits tax: 1952—$4,370,000; 1951—$28,140,000) 59,600,000 114,500,000

Adjustment of federal income taxes arising from settlement completed in 1952 for the years 1942 through 1946 5,604,289 —

NET INCOME $ 55,656,188 $ 63,001,033

The notes appearing on page 22 are an integral part of the financial statements.

19 II STATEMENT OF FINANCIAL COI*

NET ASSETS IN WHICH CAPITAL WAS INVESTED

1952 1951 CURRENT ASSETS: Cash $ 89,739,001 $ 90,515,242 United States Government short-term securities at cost $123,798,051 $ 57,864,312 Receivables: Wholesale notes (Note 2) $112,991,766 $ — Accounts of dealers and users (Note 3) 55,824,306 67,708,757 Total $168,816,072 $ 67,708,757 Deduct reserve for discounts and losses 7,100,000 3,915,771 Total $161,716,072 $ 63,792,986 Trade accounts with subsidiary companies $ 10,522,645 $ 11,228,898 Inventories (Note 1) $294,910,641 $275,995,249 Total current assets $680,686,410 $499,396,687

LESS CURRENT LIABILITIES: Current invoices, payrolls, etc $ 95,257,899 $ 96,702,493 Accrued taxes 80,852,386 144,233,984 Dividends payable 8,070,647 7,994,676 Trade accounts with subsidiary companies 1,036,051 8,485,407 Total current liabilities $185,216,983 $257,416,560 Net current assets $495,469,427 $241,980,127

PROPERTY: Buildings, machinery and equipment $481,170,152 $462,837,631 Deduct reserve for depreciation 192,432,182 180,671,613 Net depreciable property $288,737,970 $282,166,018 Land 14,550,075 14,237,145 Net property $303,288,045 $296,403,163

INVESTMENT IN SUBSIDIARY COMPANIES (Note 4) $ 97,129,359 $103,865,919

OTHER ASSETS $ 3,776,955 $ 3,718,912

PREPAID EXPENSES AND DEFERRED CHARGES $ 5,763,467 $ 6,076,068

TOTAL NET ASSETS IN WHICH CAPITAL WAS INVESTED $905,427,253 $652,044,189

The notes appearing on page 22 are an integral part of the financial statements.

20 DITION OCTOBER 31, 1952 AND 1951

SOURCES FROM WHICH CAPITAL WAS OBTAINED

1952 1951 FUNDED DEBT: Notes payable (Note 5): 5-year loan, 3M%, dated January 25, 1952 $125,000,000 30-year loan, 3H%, dated October 3, 1952 100,000,000 Total funded debt $225,000,000

EQUITY CAPITAL: Preferred stock $ 81,672,400 $ 81,672,400 Authorized 1,000,000 shares, 7% cumulative, $100 par value. Issued 823,325, less 6,601 in treasury. Common stock 425,073,632 420,215,488 Authorized 18,000,000 shares, no par value; stated value per share—$32. 1952—Issued 13,774,009, less 490,458 in treasury. 1951—Issued 13,622,192, less 490,458 in treasury. Net income retained for use in the business (Note 6) 173,681,221 150,156,301 Total equity capital $680,427,253 $652,044,189 TOTAL CAPITAL INVESTED $905,427,253 $652,044,189

SUMMARY OF NET INCOME RETAINED FOR USE IN THE BUSINESS YEARS ENDED OCTOBER 31, 1952 AND 1951

1952 1951

Balance at beginning of year $150,156,301 $118,943,215 Net income for year (Page 19) 55,656,188 63,001,033 Cash dividends: Preferred stock $7.00 per share 5,717,068 5,717,068 Common stock $2.00 per share 26,414,200 26,070,879 Balance at end of year $173,681,221 $150,156,301

The notes appearing on page 22 are an integral part of the financial statements.

21 NOTES TO FINANCIAL STATEMENTS

1 Inventories and tost of goods sold: Inventories, except inventories for special defense contracts, were adjusted on a consistent basis to the lower of cost or market, market having been considered generally as replacement values; such replacement values with respect to labor and overhead were based on estimated normal operating conditions. Inventories for special defense contracts were stated at cost. Cost of goods sold was computed generally on a "first-in, first-out" basis. In 1952 cost of goods sold includes the maintenance and other overhead costs incurred at various works during the periods they were shut down because of strikes. O Wholesale notes: As of October 31, 1951, International Harvester Company had no wholesale notes in its possession, as these notes were then financed by International Harvester Credit Corporation. On January 26, 1952, International Harvester Company purchased from International Harvester Credit Corporation all the wholesale notes which it held on that date, and since then has directly financed all such notes (see informa­ tion under "Finances", page 9 of this report). O Accounts of dealers and users: Included in accounts of dealers and users were employes' net receivables of $668,570 at October 31, 1952, and $256,192 at October 31, 1951. Included in these accounts receivable were amounts owing by the U. S. Government of $14,066,804 at October 31, 1952, and $10,566,658 at October 31, 1951. Investment in subsidiary companies: A schedule of the Company's investment in subsidiary companies and in­ 4 formation with respect to its equities in their net income and net assets appear on page 26. C Notes payable: The 5-year loan dated January 25, 1952, was used to purchase from International Harvester Credit Corporation all the wholesale notes which it then held (see Note 2). The 30-year loan dated October 3, 1952, was made to increase the Company's working capital. £L Net income retained for use in the business: The balance in this account reflects the reductions caused by transfers made in previous years to common stock account as stock dividends or otherwise. Of the net income retained for use in the business $7,199,660 was possibly restricted as of October 31, 1952, under the laws of the State of New Jersey, and if so was not available for the payment of dividends. This amount represented the cost of 6,601 shares of preferred stock of $100 par value, and 490,458 shares of common stock without nominal or par value held in the treasury as of that date minus a portion thereof previously charged to net income retained for use in the business. On November 1, 1952, these shares were canceled, thereby removing any restriction on net income retained for use in the business, for the purpose of paying dividends.

•J Contingencies: (a) Renegotiation and price redetermination: Profits resulting from defense contracts with the Government are subject to the provisions of the renegotiation act. Some defense contracts are subject to price redetermination. Renegotiation of defense sales amounting to $173,713,000 in the fiscal year 1952 and $84,145,000 in the fiscal year 1951 has not been completed. Of these defense sales $157,134,000 were subject to price redetermination as of October 31, 1952. The effects of such renegotiation and price redetermination, if any, on the financial statements for the year ended October 31, 1952, cannot be determined presently. (b) Retirement plans: The Company's pension plan that was initiated in 1908, and under which no additional pensions have been earned by service subsequent to 1936 (subsequent to 1939 for a small group of employes of advanced age), has been approximately fully funded through contributions to a pension trust fund by the Company in prior years. Any additional contribution that may be required is expected to be insignificant. Under the various non-contributory plans initiated during 1950, the Company made contributions to a trustee during the 1952 fiscal year in amounts sufficient, as actuarially determined, to cover the normal costs accruing during the year and to cover the past service costs on the basis of funding them annually over a 25- year period. As of October 31, 1952, the current funding obligations under all these plans were fully covered by the Company's contributions. (c) Guaranties: At October 31, 1952, the Company was contingently liable as a guarantor of bank borrowings of certain foreign subsidiaries amounting to approximately $6,337,000. (d) Litigation: On September 9, 1948, the United States Government filed suit against the Company charg­ ing that the Company interfered with competition by selling its goods to dealers on condition that they sell only Harvester products. On April 22, 1952, this suit was dismissed on motion of the Government attorneys. At this time there are no legal proceedings affecting the Company, other than ordinary routine litigation incident to the type of business conducted by it. 22 A NUMBER OF BANKING institutions have served the Har­ vester Company for the full 50 years of its operation. Indicative of such banks is The Second National Bank of Richmond, Indiana. For many years Harvester had a sales branch in Richmond, and for the past three decades has operated a farm implement manufacturing plant there. The Second National Bank celebrated its own 75th anniversary in 1947. It began operations in modest rented quarters. D. N. Elmer, president of the bank shown in the foreground of the accompanying photo­ graph, began as a bookkeeper and is now in his 50th year of service with the institution.

1 ••^0 .WW' 1 mi

• PROPERTY

Land, Buildings, Machinery and Equipment

Sales and General Production Service •Office Facilities Facilities and Other Total

Balance October 31, 1951 $423,892,727 $46,603,809 $6,578,240 $477,074,776 Additions 1952 27,529,771 5,020,234 812,152 33,362,157 Sold, scrapped, etc. 1952 13,273,569 574,414 868,723 14,716,706 Balance October 31, 1952 $438,148,929 $51,049,629 $6,521,669 $495,720,227

Reserve for Depreciation

Balance October 31, 1951 $168,542,086 $ 9,793,929 $2,335,598 $180,671,613 Provision 1952 23,093,842 1,710,866 246,003 25,050,711 Charges for property sold, scrapped, etc. 1952 12,683,698 266,113 340,331 13,290,142 Balance October 31, 1952 $178,952,230 $11,238,682 $2,241,270 $192,432,182

SUMMARY OF CHANGES IN NET ASSETS

Increase or 1952 1951 Decrease

Cash and U. S. Government securities $213,537,052 $148,379,554 $ 65,157,498 Receivables (net) 161,716,072 63,792,986 97,923,086 Trade accounts with subsidiary companies 10,522,645 11,228,898 706,253 Inventories 294,910,641 275,995,249 18,915,392 Total current assets $680,686,410 $499,396,687 $181,289,723 Less current liabilities 185,216,983 257,416,560 72,199,577 Net current assets (working capital) $495,469,427 $241,980,127 $253,489,300 Property (net) 303,288,045 296,403,163 6,884,882 Investment in subsidiary companies 97,129,359 103,865,919 6,736,560 Miscellaneous assets 9,540,422 9,794,980 254,558 Net assets in which total capital was invested $905,427,253 $652,044,189 $253,383,064

The increase in capital invested was derived from the following sources: Net income $ 55,656,188 Less cash dividends 32,131,268 $ 23,524,920 Common stock sold to employes 4,858,144 Funded debt 225,000,000 Increase in total capital invested $253,383,064

24 SPRINGFIELD, OHIO, is one of hundreds of American com­ munities in which Harvester factories, sales branches, parts depots and other operations have been located. The relationship between the Company and many of the communities has lasted 50 years. In this photograph, John H. Horstman, left, president of the Springfield City Commission and mayor ex-ofHcio, looks over plans for a plant project with L. E. Drum, works manager of Springfield Works. Commissioner Horstman's family has been closely identified with Har­ vester, going back to the days when Springfield Works built harvesting machinery instead of motor trucks. Harvester accepts citizenship responsibilities in the com­ munities where it operates. INVESTMENT IN SUBSIDIARY COMPANIES

Oct. 31,1952 Oct. 31,1951 International Harvester Company Argentina $ 10,000,000 $ 10,000,000 International Harvester Company of Australia, Proprietary Limited.... 10,269,629 10,269,405 International Harvester Company of Belgium, S.A 658,895 658,895 International Harvester Maquinas, S.A. (Brazil) 3,008,542 3,008,542 International Harvester Company of Canada, Limited 15,000,000 15,000,000 Aktieselskabet International Harvester Company (Denmark) 406,960 407,105 International Harvester Company of East Africa, Limited 400,008 400,008 Compagnie Internationale des Machines Agricoles, McCormick-Deering (France) 7,988,082 7,332,045 International Harvester Company, m.b.H. (Germany) 480,000 480,000 International Harvester Company of Great Britain, Limited 6,633,323 3,841,758 International Harvester Company of Mexico, S.A. de C.V 2,240,678 2,240,678 International Harvester Company of New Zealand, Limited 1,440,000 1,440,000 International Harvester Company of Philippines 500,000 500,000 Macleod and Company of Philippines 290,529 432,791 International Harvester Company (S.A.) Proprietary Limited (South Africa) 480,000 480,000 Aktiebolaget International Harvester Company (Sweden) 1,577,895 1,578,088 International Harvester Company of Uruguay, S.A 983,636 983,636 International Harvester Credit Corporation 22,500,000 32,500,000 International Harvester Export Company* 10,000,000 10,000,000 The Metropolitan Body Company 1,499,360 1,499,360 Miscellaneous: Companies operating in foreign countries 321,822 363,608 Companies operating in the United States 450,000 450,000 Total $ 97,129,359 $103,865,919 *Exports from the United States to subsidiary companies and jobbers.

NOTES: A. The total investment of $97,129,359 as of October The Company's equity in the 1952 net income of 31, 1952, consisted of investments in capital stock the above subsidiaries was $38,333,503. The cash of $96,540,935 and advances of $588,424. As of dividends paid to the Company by the subsidiaries October 31, 1951, the investments in capital stock in 1952 were $9,799,000 before deduction of with­ were $91,667,021, advances were $2,198,898, and holding taxes, etc., amounting to $890,866. notes owing by International Harvester Credit Corporation were $10,000,000. C. Foreign net current assets have been converted B. The Company's subsidiaries have fiscal years end­ generally at the official or controlled exchange ing October 31, except for five Southern Hemi­ rates prevailing at the close of the subsidiaries' sphere subsidiaries which have fiscal years ending fiscal years, except inventories of goods of Com­ June 30, and one domestic subsidiary which has a pany manufacture held by foreign subsidiaries fiscal year ending March 31. which are stated generally on the basis of the The Company's equity in the subsidiaries' net United States dollar cost to them. Plant property assets at the close of their 1952 fiscal years was and related reserves have been converted generally $221,810,293, or $124,680,934 in excess of the carry­ at rates of exchange prevailing at dates of con­ ing value of the Company's investment in the struction or acquisition. Exchange rates and trans­ subsidiaries. This excess represents accumulated actions involving foreign exchange are subject to net profits of subsidiaries less distributions. the control of the various foreign governments.

26 WHEN HARVESTER WAS FORMED in 1902 it had a considerable number of agents and jobbers in overseas countries. A number of these firms are still in existence as distributors of our products. An example is the S. A. Macchine Ing. Colorni of Milan, Italy, of which Dr. M. L. Colorni is president. Today the Colorni Company has sales agencies at Milan, Foggia and Rome. Although these properties were almost destroyed dur­ ing World War II, the Colorni Company has restored its operations throughout the northern half of Italy, and carries on a substantial business in Harvester products. This photo shows the Colorni sales office at Milan, with the inset showing Dr. Colorni at his desk. INTERNATIONAL HARVESTER CREDIT CORPORATION

STATEMENT OF FINANCIAL CONDITION OCTOBER 31, 1952

ASSETS

CURRENT ASSETS: Cash $ 364,114 United States Government short-term securities at cost 9,490,744 Notes receivable—retail (maturities after October 31,1953—$6,956,965) $ 25,187,752 Repossessions 99,213 $ 25,286,965 Less: Unearned finance charges $ 1,976,561 Reserve for losses 2,244,627 4,221,188 21,065,777 Account receivable—International Harvester Company 155,282 Total current assets $ 31,075,917

LIABILITIES AND SHARE OWNER'S EQUITY

CURRENT LIABILITIES: Accounts payable (owed to dealers $303,673; others $223,287) $ 526,960 Accrued taxes (income, franchise and personal property) 2,176,769 Total current liabilities $ 2,703,729

SHARE OWNER'S EQUITY: Common stock—authorized 250,000 shares, no par value; stated value per share—$100; issued and outstanding 225,000 shares $ 22,500,000 Net income retained for use in the business 5,872,188 28,372,188 Total $ 31,075,917

NOTE: Since January 26, 1952, the Corporation has financed retail receivables only. Wholesale receivables owned by the Corporation as of the close of business on January 25, 1952, amounting to $146,353,000, were sold to Inter­ national Harvester Company. Funds received therefor were used to pay off short-term loans from banks amounting to $122,800,000 and subordinated notes held by the parent company amounting to $10,000,000.

28 m FIFTY YEARS OF GROWTH

1902-1939 INTERNATIONAt HARVESTER COMPANY AND SUBSIDIARY COMPANIES 1940-1952 INTERNATIONAt HARVESTER COMPANY ONLY

MILLIONS

1902 1912 1922 1932 1942 1952 1902 1912 1922 1932 1942 1952 lul. STATEMENT OF INCOI 1952 1951 1950 1949 Net sales $1,204,000,849 $1,277,319,514 $942,601,961 $908,910,4 Deduct: Cost of goods sold $ 988,607,337 $1,004,190,753 $741,492,283 $750,364,70 Selling, collection, and administrative expenses 110,029,882 97,588,682 91,575,930 77,500,7C Total $1,098,637,219 $1,101,779,435 $833,068,213 $827,865,41 Net revenue from sales $ 105,363,630 $ 175,540,079 $109,533,748 $ 81,045,00 Dividends from subsidiary companies 8,908,134 9,129,972 7,777,368 10,987,80 Interest earned 2,420,224 502,209 359,213 76,94 Other credits and charges (net) 7,040,089 7,671^27 2,455,613 1,483,51 Provision for federal income and excess profits taxes. . 53,995,711 114,500,000 48,500,000 31,125,00 Net income from operations $ 55,656,188 $ 63,001,033 $ 66,714,716 $ 59,501,24 Reserve adjustments (net) 1,769,19 Net income $ 55,656,188 $ 63,001,033 $ 66,714,716 $ 61,270,43 Cash dividends: Preferred stock 5,717,068 5,717,068 $ 5,717,068 5,717,06 Common stock 26,414200 26,070,879 25,734,336 22,926,30 Total dividends $ 32,131^68 $ 31,787,947 $ 31,451,404 $ 28,643,36 Net income for year retained for use in the business. . $ 23,524,920 $ 31,213,086 $ 35,263,312 $ 32,627,06i Net income per share of common stock (see note) $3.76 $4.36 $4.72 $4.3 Cash dividends per share of common stock (see note). 2.00 2.00 2.00 1.8 Percent of net income to equity capital invested 8.54% 10.25% 11.62% 11.317 Net income from each dollar of sales 3.7£ 4.6f! 6.5(! 5.5 H STATEMENT OF FINANCIAL CO 1952 1951 1950 1949 Net assets in which capital was invested: Current assets: Cash 89,739,001 $ 90,515,242 $ 77,204,294 $ 96,721,907 Marketable securities 123,798,051 57,864,312 37,434,484 Receivables (net) 172,238,717 75,021,884 33,494,732 35,290,404 Inventories 294,910,641 275,995,249 218,756,293 210,471,626 Total current assets 680,686,410 $ 499,396,687 $366,889,803 $342,483,937 Less current liabilities 185,216,983 257,416,560 134,718,998 113,064,679 Net current assets 495,469,427 $ 241,980,127 $232,170,805 $229,419,258 Property (net) 303,288,045 296,403,163 278,748,201 268,350,072 Investment in subsidiary companies 97,129,359 103,865,919 95,678,333 81,669,158 Miscellaneous assets less deferred credits 9,540,422 9,794,980 7,954,020 7,917,184 Notes payable to subsidiary company 13,000,000 Total net assets in which capital was invested. $ 905,427,253 $ 652,044,189 $614,551,359 $574,355,672 Sources from which capital was obtained: Funded debt 225,000,000 $ - Preferred stock 81,672,400 81,672,400 81,672,400 81,672,400 Common stock 425,073,632 420,215,488 413,935,744 318,454,925 Net income retained for use in the business 173,681,221 150,156,301 118,943,215 174,228,347 Total capital invested $ 905,427,253 $ 652,044,189 $614,551,359 $574,355,672 Book value per share of common stock (see note). . $45.07 $43.43 $41.20 $38.68 NOTE: Adjusted for 3-for-l common stock split effective May 14, 1948.

30 for years ended October 31

1948 1947 1946 1945 1944 1943 1942 1941 $945,486,182 $741,251,816 $482,327,755 $622,010,679 $640,468,169 $459,579,726 $364,526,600 $364,635,058

$801,446,766 $613,325,069 $414,804,752 $540,238,857 $550,257,420 $383,600,389 $282,592,964 $277,477,507 69,764,654 61,366,362 47,256,160 41,181,114 36,736,986 29,842,719 29,698,323 39,871,911 $871,211,420 $674,691,431 $462,060,912 $581,419,971 $586,994,406 $413,443,108 $312,291,287 $317,349,418 $ 74,274,762 $ 66,560,385 $ 20,266,843 $ 40,590,708 $ 53,473,763 $ 46,136,618 $ 52,235,313 $ 47,285,640 10,816,381 7,142,778 7,759,408 2,472,876 1,008,601 3,679,021 3,710,749 4,036,471 135,093 454,155 987,468 615,275 599,222 939,697 2,275,554 4,123,962 353,101 261,948 175,462 6,701,649 1,787,877 2,012,392 595,521 3,622,919 29,900,000 25,950,000 6,512,000 12,500,000 27#97,000 24,550,000 30,879,543 17,421,008 $ 55,679,337 $ 48,469,266 $ 22,326,257 $ 24,477,210 $ 25,296,709 $ 24,192,944 $ 26,746,552 $ 34,402,146 1,500,000 3,767,558 $ 55,679,337 $ 48,469,266 $ 22,326,257 $ 24,477,210 $ 25,296,709 $ 25,692,944 $ 26,746,552 $ 30,634,588

$ 5,717,068 $ 5,717,068 $ 5,717,068 $ 5,717,068 $ 5,717,068 $ 5,717,068 5,717,068 5,717,068 21,438,554 21^26263 12,735,753 12,735,746 12,735,735 10,613,109 10,613,103 13,160,242 $ 27,155,622 $ 26,943,331 $ 18,452,821 $ 18,452,814 $ 18,452,803 $ 16,330,177 $ 16,330,171 $ 18,877,310 $ 28,523,715 $ 21,525,935 $ 3,873,436 $ 6,024,396 $ 6,843,906 $ 9,362,767 $ 10,416,381 $ 11,757,278 $3.92 $3.36 $1.30 $1.47 $1.54 $1.57 $1.65 $1.96 1.68 1.67 1.00 1.00 1.00 .83 .83 1.03 .85% 9.87% 4.58% 5.18% 5.65% 5.89% 6.53% 7.65% 4.7* 5.5* 2.9* 4.2* 3.9* 4.6* 6.4* 8.3*

DITION as of October 31

1948 1947 1946 1945 1944 1943 1942 1941

$ 78,306,222 $ 71,392,052 $ 98,142,108 $ 79,905,402 $ 54,540,281 $ 51,485,640 $ 26,928,958 $ 58,713,346 891,094 39,420,650 53,424,805 106,610,240 130,050,941 122,207,323 135,288,880 28,574,077 47,677,567 33,660,353 34,276,268 65,096,836 69,443,199 72,955,588 78,685,837 110,271,417 228,249,543 201,416,604 155,576,507 139,366,019 151,378,843 142,151,208 125,943,839 133,114,427 $355,124,426 $345,889,659 $341,419,688 $390,978,497 $405,413,264 $388,799,759 $366,847,514 $330,673,267 112,110,926 106,941,579 68,809,282 71,437,034 94,061,693 87,214,859 80,360,312 73,477,149 $243,013,500 $238,948,080 $272,610,406 $319,541,463 $311,351,571 $301,584,900 $286,487,202 $257,196,118 245,385,852 206,187,801 156,567,860 107,218,697 104,107,557 92,238,531 97,842,543 101,614,193 63,821,507 61,005,837 57,083,395 56,977,386 50,462,770 50,712,770 49,937,312 50,437,313 7,480,248 7,035,674 4,889,796 3,540,715 6,793,735 3,616,968 1,739,394 106,695 18,000,000 — — — — — — — $541,701,107 $513,177,392 $491,151,457 $487,278,261 $472,715,633 $448,153,169 $436,006,451 $409,354,319

$ 81,672,400 $ 81,672,400 $ 81,672,400 $ 81,672,400 $ 81,672,400 $ 81,672,400 $ 81,672,400 $ 81,672,400 318,427,425 318,427,425 254,741,940 254,742,180 254,742,300 169,828,360 169,828,600 169,828,840 141,601,282 113,077,567 154,737,117 150,863,681 136,300,933 196,652,409 184,505,451 157,853,079 $541,701,107 $513,177,392 $491,151,457 $487,278,261 $472,715,633 $448,153,169 $436,006,451 $409,354,319 $36.12 $33.88 $32.15 $31.84 $30.70 $28.77 $27.82 $25.73

31 30 BROAD STREET HASKINS & SELLS have audited the NEW YORK. accounts of International Harvester

LONDON. EC Company since its inception in 3o BO«.«MM«"«TI»KT PITTSBURGH August, 1902, and their certificates

ST. LOUIS w1lllM.»OK •«' relating to such audits have been CHICAGO included in the published reports to share owners for the entire 50- The Board of Directors, year period. Irternational Harvester Company,

Chicago, Illinois. o£ ^ tntemat;onal Harvestei

Report of Certified Public Accountants

HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS BOARD OF TRADE BUILDING CHICAGO 4

International Harvester Company:

We have examined the Statement of Financial Condition of International Harvester Company as of October 31, 1952, the related Statement of Income and Summary of Net Income Retained for Use in the Business for the year then ended, and the supplemental schedules appearing on pages 24 and 26 herein. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the Company's accounting records and such other auditing procedures as we considered necessary in the circumstances.

We have made a similar examination with respect to subsidiary companies having approximately 92% and 93%, respectively, of the aggre­ gate net assets and the aggregate 1952 net income of all subsidiaries set forth in Note B to the schedule of Investment in Subsidiary Com­ panies. The amounts included therein for subsidiaries not examined by us are based on reports of other accountants.

In our opinion, the Statement of Financial Condition, Statement of Income, Summary of Net Income Retained for Use in the Business, and the supplemental schedules, appearing on pages 19 to 26 inclusive, present fairly the financial position of the Company at October 31, 1952, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

HASKINS & SELLS

January 19, 1953.

PRINTED IN UNITED STATES OF AMERICA MANY FAMILIES have had members employed at Interna­ tional Harvester through two or more generations, some as many as four. The Gentili family of Chicago is one such Harvester four-generation family. Traiano Gentili, Italian immigrant, worked at McCormick Works for 25 years until pensioned in 1922. He died, aged 84, in 1940. His son, George Gentili, shown at right in photo, has worked at McCormick Works 50 years. He has served many years as night general superintendent. Two of George's sons, George T. and Robert, left and center in the photo, also work for Harvester. George T. is a general foreman at Tractor Works, and Robert is in the pattern shop at McCormick Works. A fourth-generation Gentili, George Richard, has worked summers at McCormick Works while attending Notre Dame University. AUTUMN LANDSCAPE

When the frost has laid its hands alike upon the hillsides and the oaks and willows of the valleys, rural America is at its loveliest. Then is when the color camera catches the flaming oaks and the pastel-hued maples in unforgettable patterns of color. Picturesque southwestern Wisconsin furnished the locale for Photographer Albert G. Westelin's 1952 cover subject.