10-Q 1 0001.txt =============================================================== 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, 2000 Commission file no: 1-6458 _________________________ JOHN DEERE CAPITAL CORPORATION Delaware 36-2386361 (State of incorporation) (IRS employer identification no.) 1 East First Street, Suite 600 Reno, Nevada 89501 (Address of principal executive offices) Telephone Number: (775) 786-5527 ________________________________ 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, 2000, 2,500 shares of common stock, without par value, of the registrant were outstanding, all of which were owned by John Deere Credit Company, a wholly-owned subsidiary of Deere & Company. The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with certain reduced disclosures as permitted by those instructions. =============================================================== Page 1 of 16 Pages Index to Exhibits: Page 14 PART I. FINANCIAL INFORMATION Item 1. Financial Statements John Deere Capital Corporation and Subsidiaries Statements of Consolidated Income and Retained Earnings (Unaudited) (in millions) Three Months Ended Six Months Ended April 30, April 30, 2000 1999 2000 1999 ----------------------------------- Revenues Finance income earned on retail notes $ 97.7 $ 108.0 $ 185.3 $ 203.7 Lease revenues 94.7 64.0 183.6 122.9 Revolving charge account income 30.2 26.5 63.4 53.7 Finance income earned on wholesale notes 22.4 15.5 44.2 34.4 Securitization and servicing fee income 7.1 6.8 15.2 15.6 Net gain on retail notes sold 3.2 9.5 7.0 15.3 Interest income from short-term investments 2.2 2.0 4.7 4.6 Other income 3.8 4.3 9.0 7.6 -------------------------------------------------------------- Total revenues 261.3 236.6 512.4 457.8 -------------------------------------------------------------- Expenses Interest expense 103.4 92.4 202.6 178.4 Operating expenses: Administrative and operating expenses 35.9 32.7 69.2 61.1 Provision for credit losses 17.4 14.6 25.8 25.9 Fees paid to John Deere 2.8 3.0 5.9 6.1 Depreciation of equipment on operating leases 52.4 38.6 104.4 73.8 -------------------------------------------------------------- Total operating expenses 108.5 88.9 205.3 166.9 -------------------------------------------------------------- Total expenses 211.9 181.3 407.9 345.3 -------------------------------------------------------------- Income of consolidated group before income taxes 49.4 55.3 104.5 112.5 Provision for income taxes 17.1 19.0 36.2 39.2 -------------------------------------------------------------- Income of consolidated group 32.3 36.3 68.3 73.3 Equity in income of unconsolidated affiliates .1 .2 .2 .6 -------------------------------------------------------------- Net income 32.4 36.5 68.5 73.9 Cash dividends declared (5.0) (5.0) (10.0) (10.0) Retained earnings at beginning of period 915.9 838.8 884.7 806.4 -------------------------------------------------------------- Retained earnings at end of period $ 943.2 $ 870.3 $ 943.2 $ 870.3 ============================================================== See Notes to Interim Financial Statements. Page 2 John Deere Capital Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (in millions) April 30, October 31, April 30, 2000 1999 1999 ------------------------------------ Assets Cash and cash equivalents $ 187.5 $ 149.4 $ 196.3 Receivables and leases: Retail notes 4,221.9 3,716.2 4,849.1 Revolving charge accounts 935.4 900.6 730.0 Wholesale notes 938.6 957.2 877.6 Financing leases 427.9 402.2 254.5 -------------------------------------------------------------- Total receivables 6,523.8 5,976.2 6,711.2 Equipment on operating leases - net 1,415.0 1,254.8 1,066.2 -------------------------------------------------------------- Total receivables and leases 7,938.8 7,231.0 7,777.4 Allowance for credit losses (91.2) (83.6) (87.8) -------------------------------------------------------------- Total receivables and leases - net 7,847.6 7,147.4 7,689.6 -------------------------------------------------------------- Notes receivable - unconsolidated affiliates 92.7 Other receivables 75.2 83.0 87.5 Investment in unconsolidated affiliates 10.9 9.5 9.8 Other assets 135.2 116.0 93.6 -------------------------------------------------------------- Total Assets $ 8,349.1 $ 7,505.3 $ 8,076.8 ============================================================== Liabilities and Stockholder's Equity Short-term borrowings: Commercial paper $ 2,129.1 $ 1,264.7 $ 1,891.4 Extendible commercial notes and other notes payable 7.6 6.4 John Deere 125.8 117.7 34.2 Current maturities of long-term borrowings 1,893.2 2,137.6 1,977.3 -------------------------------------------------------------- Total short-term Borrowings 4,155.7 3,526.4 3.902.9 -------------------------------------------------------------- Accounts payable and accrued liabilities: Accrued interest on debt 37.2 33.1 38.9 Other payables 405.1 324.2 287.4 -------------------------------------------------------------- Total accounts payable and accrued liabilities 442.3 357.3 326.3 -------------------------------------------------------------- Deposits withheld from dealers and merchants 122.2 122.8 123.3 -------------------------------------------------------------- Long-term borrowings: Senior debt 2,425.2 2,351.1 2,591.1 Subordinated debt 150.0 150.0 150.0 -------------------------------------------------------------- Total long-term borrowings 2,575.2 2,501.1 2,741.1 -------------------------------------------------------------- Total liabilities 7,295.4 6,507.6 7,093.6 -------------------------------------------------------------- Stockholder's equity: Common stock, without par value (issued and outstanding -- 2,500 shares owned by John Deere Credit Company) 112.8 112.8 112.8 Retained earnings 943.2 884.7 870.3 Accumulated other comprehensive income (loss) - cumulative translation adjustment (2.3) .2 .1 -------------------------------------------------------------- Total stockholder's equity 1,053.7 997.7 983.2 -------------------------------------------------------------- Total Liabilities and Stockholder's Equity $ 8,349.1 $ 7,505.3 $ 8,076.8 ============================================================== See Notes to Interim Financial Statements. Page 3 John Deere Capital Corporation and Subsidiaries Statements of Consolidated Cash Flows (Unaudited) (in millions) Six Months Ended April 30, 2000 1999 --------------------------- Cash Flows from Operating Activities: Net income $ 68.5 $ 73.9 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 25.8 25.9 Provision for depreciation and amortization 105.6 75.3 Equity in income of unconsolidated affiliates (.2) (.6) Other 61.0 (40.8) -------------------------------------------------------------- Net cash provided by operating activities 260.7 133.7 -------------------------------------------------------------- Cash Flows from Investing Activities: Cost of receivables and leases acquired (4,170.2) (4,010.4) Collections of receivables 3,074.6 2,847.0 Change in notes receivable - unconsolidated affiliates (87.8) (5.1) Proceeds from sales of receivables 154.1 297.4 Other 118.7 41.1 -------------------------------------------------------------- Net cash used for investing activities (910.6) (830.0) -------------------------------------------------------------- Cash Flows from Financing Activities: Change in commercial paper 864.4 166.5 Change in extendible commercial notes and other notes payable 1.2 (6.8) Change in receivable/payable with John Deere 2.8 (33.0) Proceeds from issuance of long-term borrowings 945.0 1,500.0 Principal payments on long-term borrowings (1,115.4) (915.2) Dividends paid (10.0) (10.0) -------------------------------------------------------------- Net cash provided by financing activities 688.0 701.5 -------------------------------------------------------------- Net increase in cash and cash equivalents 38.1 5.2 Cash and cash equivalents at beginning of period 149.4 191.1 -------------------------------------------------------------- Cash and cash equivalents at end of period $ 187.5 $ 196.3 ============================================================== See Notes to Interim Financial Statements. Page 4 John Deere Capital Corporation and Subsidiaries Notes to Interim Financial Statements (1) The consolidated financial statements of John Deere Capital Corporation (Capital Corporation) and its subsidiaries (collectively called the Company) 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. Based on the way the Company's operations are managed and evaluated by management, the Company is viewed as one operating segment. (2) During the second quarter of fiscal 2000, the Company expanded its operations by forming two additional entities, John Deere Bank S.A. (JDB) and John Deere Credit Compania Financiera S.A. (JDCCF). JDB, a wholly-owned subsidiary of the Capital Corporation located in Luxembourg, will act as the European Regional Headquarters for the Company as operations are expanded in that area. JDCCF is a wholly-owned subsidiary of Deere Credit Inc., which is wholly-owned by the Capital Corporation. The principal business of JDCCF is to support John Deere and John Deere retail dealers by offering financing products specific to the market in Argentina. Both entities are fully consolidated into the Company's results. (3) During the second quarter of fiscal 2000, the Company discontinued offering wholesale note financing for manufactured housing dealer inventory. The Company will continue to administer and service the existing portfolio until it is fully liquidated. Acquisition volumes for this product totaled $103 million for the first six months of fiscal 2000 and the wholesale notes outstanding were $107 million at April 30, 2000. (4) The principal business of the Company is providing and administering financing for retail purchases of new and used equipment manufactured by Deere & Company's agricultural, construction and commercial and consumer equipment divisions. The Company purchases retail installment sales and loan contracts (retail notes) from Deere & Company and its wholly- owned subsidiaries (collectively called John Deere). John Deere acquires these retail notes through John Deere retail dealers. The Company also purchases and finances certain agricultural, construction and lawn and grounds care retail notes unrelated to John Deere. In addition, the Company purchases and finances recreational product retail notes acquired from dealers (recreational product retail notes). The Company also leases equipment to retail customers, finances and services revolving charge accounts acquired from and offered through merchants or farm input providers in the agricultural, construction, and lawn and grounds care markets as well as insured international export financing products (revolving charge accounts), and provides wholesale financing for inventories of recreational vehicles, yachts, John Deere engines, and John Deere agricultural and John Deere construction equipment owned by dealers of those products (wholesale notes). Retail notes, revolving charge accounts, financing leases and Page 5 wholesale notes receivable are collectively called "Receivables." Receivables and operating leases are collectively called "Receivables and Leases." (5) The Company's ratio of earnings before fixed charges to fixed charges was 1.46 to 1 for the second quarter of 2000 compared with 1.59 to 1 for the second quarter of 1999. The ratio of earnings before fixed charges to fixed charges was 1.51 to 1 for the first six months of 2000 and 1.62 to 1 for the first six months of 1999. "Earnings before fixed charges" consist of income before income taxes, the cumulative effect of changes in accounting and fixed charges. "Fixed charges" consist of interest on indebtedness, amortization of debt discount and expense, an estimated amount of rental expense under capitalized leases which is deemed to be representative of the interest factor and rental expense under operating leases. (6) Comprehensive income for the first six months of 2000 and 1999 consisted of the following in millions of dollars: Three Months Ended Six Months Ended April 30, April 30, 2000 1999 2000 1999 ------------------------------------ Net income $ 32.4 $ 36.5 $ 68.5 $ 73.9 Change in cumulative translation adjustment (2.0) .9 (2.5) .9 ------------------------------------ Comprehensive income $ 30.4 $37.4 $ 66.0 $ 74.8 ==================================== Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Net income was $32.4 million for the second quarter and $68.5 million for the first six months of 2000, compared with $36.5 million and $73.9 million, respectively, last year. The decrease is primarily due to lower gains from the sale of retail notes and higher operating expenses, partially offset by higher income on a larger average receivable and lease portfolio. Revenues totaled $261.3 million and $512.4 million for the second quarter and for the first six months, respectively, of 2000, compared to $236.6 million and $457.8 million for the same periods a year ago. Revenues increased primarily due to a 6 percent increase in the average balance of Receivables and Leases financed for the first six months of 2000 compared to the same period last year. Finance income earned on retail notes totaled $185.3 million for the first six months of 2000, compared to $203.7 million for the same period in 1999. This decrease was primarily due to significant sales of recreational product installment notes during the last six months of 1999 and a 7 percent decrease in the average balance of agricultural equipment notes financed. This decrease was partially offset by an increase in the yield on variable rate contracts. Lease revenues increased $60.7 million, to $183.6 million in the first six months of 2000, from $122.9 million in the first six months of 1999, due to a 48 percent increase in the average balance of equipment on operating leases and financing leases. Finance income earned on wholesale notes increased $9.8 million, to $44.2 million for the first six months of 2000, from $34.4 million in the first six months of 1999. This increase was primarily the result of continued growth in the financing for dealer inventories of John Deere construction equipment, John Deere agricultural equipment and recreational vehicles. Revolving charge account income increased $9.7 million, to $63.4 million for the first six months of 2000, from $53.7 million in the first six months of 1999. This increase was primarily due to growth in the agricultural operating loan portfolio. Net gains on the sales of retail notes, including adjustments to prior sales, totaled $3.2 million and $7.0 million for the second quarter and for the first six months of 2000, respectively, compared to $9.5 million and $15.3 million for the same periods a year ago. The lower net gain on retail notes sold for the first six Page 6 months of 2000 was primarily the result of lower recreational product retail note sales compared to the same period last year. Additional sales of retail notes are expected to be made in the future. Interest expense totaled $103.4 million for the second quarter of 1999 and $202.6 million for the first six months of 2000, compared to $92.4 million and $178.4 million for the same periods in 1999. This increase was primarily due to an increase in the weighted annual interest rate incurred on all borrowings from 5.9 percent for the first six months of 1999 to 6.3 percent for the first six months of 2000. In addition, average borrowings increased 4 percent to $6.311 billion in the first six months of 2000 compared to $6.040 billion in the first six months of 1999. Administrative and operating expenses were $35.9 million in the second quarter of 2000 and $69.2 million for the first six months of 2000, compared with $32.7 million and $61.1 million for the same periods in 1999. These increases were attributable to the higher costs associated with administering a larger Receivable and Lease portfolio as well as increased international organization start up costs. Depreciation of equipment on operating leases increased to $52.4 million in the second quarter of 2000 and $104.4 million for the first six months of 2000, compared to $38.6 million and $73.8 million for the same periods in 1999, as a result of the increase in operating leases financed. During the second quarter and the first six months of 2000, the provision for credit losses totaled $17.4 million and $25.8 million, respectively, compared with $14.6 million and $25.9 million in the same periods last year. The annualized provision for credit losses, as a percentage of the total average portfolio outstanding, was .92 percent for the second quarter of 2000 and .70 percent for the first six months of 2000, compared with .79 percent and .73 percent for the same periods last year. Receivable and Lease acquisition volumes were as follows (in millions of dollars): Three Months Ended April 30, 2000 1999 $ Change % Change ---------------------------------- Retail notes: Agricultural equipment $ 639 $ 601 $ 38 6% Construction equipment 185 112 73 65 Lawn and grounds care Equipment 85 60 25 42 Recreational products 72 95 (23) (24) ---------------------------------- Total 981 868 113 13 ---------------------------------- Revolving charge accounts 625 492 133 27 Wholesale notes* 411 416 (5) (1) Financing leases 52 29 23 79 Equipment on operating leases 213 228 (15) (7) ---------------------------------- Total $2,282 $2,033 $ 249 12 ================================== *Wholesale note volumes exclude $16 million for the three months ended April 30, 2000 representing wholesale note volumes from unconsolidated affiliates. Page 7 Six Months Ended April 30, 2000 1999 $ Change % Change ---------------------------------- Retail notes: Agricultural equipment $1,309 $1,507 ($198) (13%) Construction equipment 318 229 89 39 Lawn and grounds care Equipment 130 98 32 33 Recreational products 144 179 (35) (20) ---------------------------------- Total 1,901 2,013 (112) (6) ---------------------------------- Revolving charge accounts 1,045 813 232 29 Wholesale notes* 763 810 (47) 6 Financing leases 83 56 27 48 Equipment on operating leases 378 318 60 19 ---------------------------------- Total $4,170 $4,010 $160 4 *Wholesale note volumes exclude $114 million for the six months ended April 30, 2000 representing wholesale note volumes from unconsolidated affiliates. Retail note volumes decreased by $112 million for the first six months of 2000 compared to the first six months of 1999, due to a decrease in United States agricultural equipment and recreational product retail note volumes. Revolving charge volumes increased due to the strong demand for the Farm Plan and operating loans offered to agricultural customers. Operating lease volumes increased in the first six months over last year due to agricultural low-rate and guaranteed residual value leasing programs sponsored by the Company or John Deere. Total Receivables and Leases held were as follows (in millions of dollars): April 30, October 31, April 30, 2000* 1999* 1999 ----------------------------------- Retail notes: Agricultural equipment $ 2,925 $ 2,602 $ 3,423 Construction equipment 781 611 732 Lawn and grounds care equipment 380 347 292 Recreational products 136 156 402 ----------------------------------- Total 4,222 3,716 4,849 ----------------------------------- Revolving charge accounts 935 901 730 Wholesale notes** 939 957 878 Financing leases 428 402 254 Equipment on operating Leases 1,415 1,255 1,066 ----------------------------------- Total $ 7,939 $ 7,231 $ 7,777 =================================== * Includes the acquisition of Senstar Capital Corporation (Senstar) installment, lease and revolving charge balances which were acquired in the fourth quarter of fiscal 1999. ** Wholesale notes exclude $93 million at April 30, 2000 of notes from unconsolidated affiliates, which are included on a separate line on the consolidated balance sheets. Page 8 Receivables and Leases administered by the Company, which include retail notes sold, were as follows in (millions of dollars): April 30, October 31, April 30, 2000 1999 1999 ----------------------------------- Receivables and Leases administered: Receivables and Leases owned by the Company $ 7,939 $ 7,231 $7,777 Retail notes sold and securitized(with limited recourse)* 1,611 2,275 1,027 Retail notes sold (without recourse)** 104 118 308 Receivables serviced (without recourse)*** 32 46 61 ----------------------------------- Total Receivables and Leases administered $9,686 $9,670 $9,173 =================================== * The Company's maximum exposure under all retail note recourse provisions at April 30, 2000, October 31, 1999 and April 30, 1999 was $144 million, $161 million and $123 million, respectively. In addition, the Company has guaranteed letters of credit on behalf of John Deere Credit Inc., the John Deere finance subsidiary in Canada, as part of two retail note sales. At April 30, 2000, the maximum exposure under these agreements was approximately $10 million. ** On recreational product retail note sales, the Company continues to administer the portfolio outstanding for a fee until the servicing rights are assumed by their owner. *** On February 1, 1999, the Company began servicing a receivable portfolio on behalf of Farming and Agricultural Financing Limited. These servicing rights were obtained in conjunction with the Company's acquisition of the remaining 50 percent interest in John Deere Credit Limited. Total Receivable and Lease amounts 60 days or more past due, by product and as a percentage of total balances held, were as follows (in millions of dollars): April 30, October 31, April 30, 2000 1999 1999 $ % $ % $ % ------------------------------------ Retail notes: Agricultural equipment $12.0 .41% $11.7 .45% $12.9 .38% Construction equipment 2.2 .28 2.1 .34 2.1 .29 Lawn and grounds care Equipment .9 .24 .8 .23 .8 .27 Recreational products .1 .07 .1 .06 .1 .02 ------------------------------------ Total 15.2 .36 14.7 .40 15.9 .33 ------------------------------------ Revolving charge accounts 16.0 1.71 8.9 .99 9.6 1.32 Wholesale notes 1.2 .13 1.1 .11 1.2 .14 Leases 5.8 .31 5.2 .31 6.0 .45 ------------------------------------ Total $38.2 .48 $29.9 .41 $32.7 .42 ==================================== The balance of retail notes held (principal plus accrued interest) with any installment 60 days or more past due was $55 million, $54 million and $59 million at April 30, 2000, October 31, 1999 and April 30, 1999, respectively. The balance of retail notes held on which any installment is 60 days or more past due as a percentage of retail notes held represented 1.30 percent, 1.45 percent and 1.21 percent of the ending retail notes receivable at April 30, 2000, October 31, 1999 and April 30, 1999, respectively. Page 9 During the second quarter and the first six months of 2000, write-offs (net of recoveries) of Receivables and Leases totaled $10.1 million and $16.5 million, respectively, compared with $8.7 million and $15.9 million in the same periods last year. Annualized write-offs, as a percentage of the average total receivables and leases held, were .53 percent for the second quarter of 2000 and .45 percent for the first six months of 1999, compared with .47 percent and .45 percent for the same periods last year. Write-offs relating to retail notes decreased $1.0 million in the first six months of 2000, when compared with the first six months of 1999, primarily due to decreased write-offs of recreational product retail notes. Lease write-offs increased $1.0 million in the first six months of 2000 when compared to last year primarily due to higher write-offs on agricultural leases. Revolving charge account and wholesale write-offs increased $.6 million in the first six months of 2000 when compared to the same period last year. Deposits withheld from dealers and merchants, representing mainly the aggregate dealer retail note and lease withholding accounts from individual John Deere dealers to which losses from retail notes and leases originating from the respective dealers can be charged, amounted to $122 million at April 30, 2000, compared with $123 million at October 31, 1999 and $123 million at April 30, 1999. The Company's allowance for credit losses on all Receivables and Leases held totaled $91 million at April 30, 2000, $84 million at October 31, 1999 and $88 million at April 30, 1999. The allowance for credit losses represented 1.15 percent of the total Receivables and Leases held at April 30, 2000, 1.16 percent at October 31, 1999 and 1.13 percent at April 30, 1999. The allowance is subject to an ongoing evaluation based on loss experience and related estimates to ensure the allowance for credit losses is maintained at an adequate level. Management believes the allowance for credit losses at April 30, 2000 is sufficient to provide adequate protection against losses. SAFE HARBOR STATEMENT Statements herein that relate to future operating periods are subject to important risks and uncertainties that could cause actual results to differ materially. Interest rate changes by the Federal Reserve Board may affect the cost of financing the Company and the rates it is able to offer. Further information, including factors that potentially could materially affect the Company's and John Deere's financial results, is included in the most recent Deere & Company Form 10-Q and other John Deere and Capital Corporation filings with the Securities and Exchange Commission CAPITAL RESOURCES AND LIQUIDITY The Company relies on its ability to raise substantial amounts of funds to finance its Receivables and Leases. The Company's primary sources of funds for this purpose are a combination of borrowings and equity capital. Additionally, the Company periodically sells substantial amounts of retail notes in the public market and in private sales. The Company's ability to obtain funds is affected by its debt ratings, which are closely related to the outlook for and the financial condition of Deere & Company, and the nature and availability of support facilities, such as its lines of credit. For information regarding Deere & Company and its business, see Exhibit 99. The Company's ability to meet its debt obligations is supported in a number of ways. All commercial paper issued is backed by bank credit lines. The assets of the Company are self- liquidating in nature. A strong equity position is available to absorb unusual losses on these assets. Liquidity is also provided by the Company's ability to sell these assets. The Company's business is somewhat seasonal, with overall acquisition volumes of Receivables and Leases traditionally higher in the second half of the fiscal year than in the first half, and overall collections of Receivables and Leases traditionally somewhat higher in the first six months than in the last six months of the fiscal year. Page 10 During the first six months of 2000, the aggregate net cash provided by operating and financing activities was primarily used to increase Receivables and Leases. Net cash provided by operating activities was $261 million in the first six months of 2000. Financing activities provided $688 million during the same period, resulting from a $698 million net increase in total borrowings, which was partially offset by a $10 million dividend payment to John Deere Credit Company. Net cash used for investing activities totaled $911 million in the first six months of 2000, primarily due to Receivable and Lease acquisitions exceeding collections by $1,096 million, which was partially offset by the $154 million in proceeds from the sale of receivables. Cash and cash equivalents increased $38 million during the first six months of 2000. During the first six months of 1999, the aggregate net cash provided by operating and financing activities was primarily used to increase Receivables and Leases. Net cash provided by operating activities was $134 million in the first six months of 1999. Financing activities provided $702 million during the same period, resulting from a $712 million net increase in total borrowings, which was partially offset by $10 million in dividend payments to John Deere Credit Company. Net cash used for investing activities totaled $830 million in the first six months of 1999, primarily due to Receivable and Lease acquisitions exceeding collections by $1,170 million. Cash and cash equivalents increased $5 million during the first six months of 1999. Total interest-bearing indebtedness amounted to $6.731 billion at April 30, 2000, compared with $6.028 billion at October 31, 1999 and $6.644 billion at April 30, 1999, generally corresponding with the level of Receivables and Leases financed and the level of cash and cash equivalents. Total short-term indebtedness amounted to $4.156 billion at April 30, 2000, compared with $3.526 billion at October 31, 1999 and $3.903 billion at April 30, 1999. Total long-term indebtedness amounted to $2.575 billion, $2.501 billion and $2.741 billion at April 30, 2000, October 31, 1999 and April 30, 1999, respectively. The ratio of total interest-bearing debt to stockholder's equity was 6.4 to 1, 6.0 to 1 and 6.8 to 1 at April 30, 2000, October 31, 1999 and April 30, 1999, respectively. The Capital Corporation's subsidiary, John Deere Credit Limited in Gloucester, England, retired $101 million of long-term debt due in 2000. The Capital Corporation issued $795 million and retired $723 million of medium-term notes during the second quarter. At April 30, 2000, the Capital Corporation and Deere & Company jointly maintained $4.536 billion of unsecured lines of credit with various banks in North America and overseas, $563 million of which was unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings, excluding the current portion of long-term borrowings, of the Capital Corporation, Deere & Company, John Deere Limited (Canada) and John Deere Credit Inc. (Canada) were considered to constitute utilization. These agreements include a $2.250 billion long-term commitment of the banks expiring on February 22, 2005. The facility fees payable under these credit agreements are divided between Deere & Company and the Capital Corporation based on the proportion of their respective commercial paper outstanding. The Capital Corporation declared and paid cash dividends of $10 million to John Deere Credit Company during the first six months of 2000. John Deere Credit Company paid a comparable dividend to Deere & Company. On June 2, 2000, the Capital Corporation declared a cash dividend of $5 million to John Deere Credit Company, which in turn declared a cash dividend of $5 million to Deere & Company, each payable on June 13, 2000. Item 3. Quantitative and Qualitative Disclosures About Market Risk. See the information under "Management's Discussion and Analysis," Note 13 "Financial Instruments" and "Supplemental Information (Unaudited)" in the Company's most recent annual report filed on Form 10-K. There has been no material change in this information. Page 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings. 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 state and federal laws and regulations concerning retail credit. 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. Item 2. Changes in Securities and Use of Proceeds. Omitted pursuant to instruction H(2). Item 3. Defaults Upon Senior Securities. Omitted pursuant to instruction H(2). Item 4. Submission of Matters to a Vote of Security Holders. Omitted pursuant to instruction H(2). Item 5. Other Information. As part of a planned leadership transition, on June 2, 2000, Robert W. Lane was elected Chairman and Chief Executive Officer of the Company. Hans W. Becherer, former Chairman, continues as director. 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 15, 2000(Items 5 and 7). Page 12 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. JOHN DEERE CAPITAL CORPORATION Date: June 8, 2000 By: /s/ Nathan J. Jones ------------------------------- Nathan J. Jones Senior Vice President and Principal Financial Officer Page 13 INDEX TO EXHIBITS Exhibit Page No. (4.1) Credit Agreement among registrant, Deere & Company, various financial institutions, The Chase Manhattan Bank, as administrative agent, Bank of America, N.A. and Bank One, NA as documentation agents, and Deutsche Bank AG, New York Branch as syndication agent, et al, dated as of February 22, 2000. (Exhibit 4.1 to Form 10-Q of Deere & Company for the quarter ended April 30, 2000, Securities and Exchange Commission file number 1-4121*) (4.2) 364-Day Credit Agreement among registrant, Deere & Company, various financial institutions, The Chase Manhattan Bank, as administrative agent, Bank of America, N.A. and Bank One, NA as documentation agents, and Deutsche Bank AG, New York Branch as syndication agent, et al, dated as of February 22, 2000. (Exhibit 4.2 to Form 10-Q of Deere & Company for the quarter ended April 30, 2000, Securities and Exchange Commission file number 1-4121*) (12) Computation of ratio of earnings to fixed charges 15 (27) Financial data schedule 16 (99) Part I of Deere & Company Form 10-Q for the quarter --- ended April 30, 2000 (Securities and Exchange Commission file number 1-4121*). __________________________ *Incorporated by reference. Copies of these exhibits are available from the Company upon request. Page 14