-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Kuj8YHv2GtQuDTUJ7H30UjMGlifrANH/bQwr/A2TWvI1Ixu6rISr2MJpJXvSVbXe UjkpmOPD62DmXrkPbmnQDA== 0000027673-94-000022.txt : 19940916 0000027673-94-000022.hdr.sgml : 19940916 ACCESSION NUMBER: 0000027673-94-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940731 FILED AS OF DATE: 19940914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEERE JOHN CAPITAL CORP CENTRAL INDEX KEY: 0000027673 STANDARD INDUSTRIAL CLASSIFICATION: 6159 IRS NUMBER: 362386361 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06458 FILM NUMBER: 94548923 BUSINESS ADDRESS: STREET 1: FIRST INTERSTATE BANK BLDG STREET 2: 1 E FIRST ST STE 600 CITY: RENO STATE: NV ZIP: 89501 BUSINESS PHONE: 7027865527 MAIL ADDRESS: STREET 1: JOHN DEERE RD CITY: MOLINE STATE: IL ZIP: 61265 FORMER COMPANY: FORMER CONFORMED NAME: DEERE JOHN CREDIT CO DATE OF NAME CHANGE: 19890130 10-Q 1 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 July 31, 1994 Commission file no: 1-6458 ______________________________ JOHN DEERE CAPITAL CORPORATION Delaware 36-2386361 (State of incorporation) (IRS employer identification no.) Suite 600 First Interstate Bank Building 1 East First Street Reno, Nevada 89501 (Address of principal executive offices) Telephone Number: (702) 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 July 31, 1994, 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 17 Pages. Index to Exhibits: Page 15. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES Condensed Statement of Consolidated Income (UNAUDITED) (In millions of dollars) Three Months Ended July 31 1994 1993 Revenues: Finance income earned on retail notes $ 75.8 $ 75.3 Revolving charge account income 18.1 15.1 Lease revenues 11.1 10.5 Finance income earned on wholesale notes 2.7 2.6 Net gain on retail notes sold (.4) 2.1 Interest income from short-term investments 1.4 1.9 Securitization and servicing fee income 5.6 6.1 Other income 1.0 .8 Total revenues 115.3 114.4 Expenses: Interest expense 43.7 40.7 Administrative and operating expenses 17.9 17.1 Provision for credit losses 7.3 6.3 Fees paid to Deere & Company 1.6 1.8 Depreciation of equipment on operating leases 5.2 5.2 Total expenses 75.7 71.1 Income before Income Taxes and Changes in Accounting 39.6 43.3 Provision for Income Taxes 13.8 14.7 Income Before Changes in Accounting 25.8 28.6 Changes in Accounting Net Income $ 25.8 $ 28.6 ______________ See Notes to Interim Financial Statements PART I. FINANCIAL INFORMATION Item 1. Financial Statements. JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES Condensed Statement of Consolidated Income (UNAUDITED) (In millions of dollars) Nine Months Ended July 31 1994 1993 Revenues: Finance income earned on retail notes $210.4 $241.4 Revolving charge account income 45.7 37.7 Lease revenues 32.0 29.2 Finance income earned on wholesale notes 8.1 7.9 Net gain on retail notes sold 1.7 8.1 Interest income from short-term investments 4.2 4.8 Securitization and servicing fee income 22.3 14.2 Other income 2.8 3.0 Total revenues 327.2 346.3 Expenses: Interest expense 116.0 127.1 Administrative and operating expenses 57.3 51.9 Provision for credit losses 18.8 22.5 Fees paid to Deere & Company 4.7 5.4 Depreciation of equipment on operating leases 15.6 14.1 Total expenses 212.4 221.0 Income before Income Taxes and Changes in Accounting 114.8 125.3 Provision for Income Taxes 40.1 42.5 Income Before Changes in Accounting 74.7 82.8 Changes in Accounting (3.8) Net Income $ 74.7 $ 79.0 ______________ See Notes to Interim Financial Statements JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheet (UNAUDITED) (In millions of dollars) Jul 31 Oct 31 Jul 31 1994 1993 1993 ASSETS Cash and Cash Equivalents $164.0 $165.2 $267.8 Receivables and Leases: Retail notes 3,468.0 2,791.7 3,164.5 Revolving charge accounts 401.0 331.1 319.6 Financing leases 103.0 84.9 78.2 Wholesale notes 112.7 109.6 113.1 Total receivables 4,084.7 3,317.3 3,675.4 Equipment on operating leases 128.5 119.3 118.9 Total receivables and leases 4,213.2 3,436.6 3,794.3 Allowance for credit losses (79.2) (77.5) (84.1) Total receivables and leases - net 4,134.0 3,359.1 3,710.2 Other Receivables 133.0 182.8 121.8 Other Assets 54.0 46.4 50.4 TOTAL $4,485.0 $3,753.5 $4,150.2 LIABILITIES AND STOCKHOLDER'S EQUITY Short-Term Borrowings: Commercial paper $1,919.8 $ 454.0 $1,096.0 Deere & Company 189.4 439.5 60.0 Current maturities of long-term borrowings 555.1 405.2 647.9 Total short-term borrowings 2,664.3 1,298.7 1,803.9 Accounts Payable and Accrued Liabilities 129.8 120.5 104.3 Deposits Withheld from Dealers and Merchants 106.3 104.9 100.3 Long-Term Borrowings: Notes and debentures 645.3 1,178.2 990.0 Subordinated debt 300.0 300.0 345.0 Total long-term borrowings 945.3 1,478.2 1,335.0 Retirement Benefit Accruals & Other Liabilities 15.5 12.1 13.8 Stockholder's Equity: Common stock, without par value (authorized, issued and outstanding - 2,500 shares owned by John Deere Credit Company) 112.8 112.8 112.8 Retained earnings 511.0 626.3 680.1 Total stockholder's equity 623.8 739.1 792.9 TOTAL $4,485.0 $3,753.5 $4,150.2 See Notes to Interim Financial Statements JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES Condensed Statement of Consolidated Cash Flows (UNAUDITED) (In millions of dollars) Nine Months Ended July 31 1994 1993 Cash Flows from Operating Activities: Net income $ 74.7 $ 79.0 Adjustments to reconcile net income to net cash provided by operating activities 45.4 41.4 Net cash provided by operating activities 120.1 120.4 Cash Flows from Investing Activities: Cost of receivables and leases acquired (2,798.6) (2,452.5) Collections of receivables 1,957.2 2,040.8 Proceeds from sales of receivables 61.4 590.2 Other 16.5 (5.3) Net cash provided by (used for) investing activities (763.5) 173.2 Cash Flows from Financing Activities: Increase (decrease) in notes payable to others 1,465.7 (390.6) Change in receivable/payable with Deere & Company (250.1) (5.8) Proceeds from the issuance of long-term borrowings 10.0 487.0 Principal payment on long-term borrowings (393.4) (207.5) Dividends paid (190.0) Net cash provided by (used for) financing activities 642.2 (116.9) Net increase (decrease) in cash and cash equivalents (1.2) 176.7 Cash and cash equivalents at beginning of period 165.2 91.1 Cash and cash equivalents at end of period $ 164.0 $ 267.8 _______________ See Notes to Interim Financial Statements Notes to Interim Financial Statements (1) The consolidated financial statements of John Deere Capital Corporation (Capital Corporation) and its wholly owned subsidiaries, Deere Credit, Inc. (DCI), Deere Credit Services, Inc. (DCS), Farm Plan Corporation (FPC) and John Deere Receivables, Inc. (JDRI), (collectively referred to as 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 condensed 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. (2) The principal business of the Capital Corporation is providing and administering financing for retail purchases of new and used John Deere agricultural, industrial and lawn and grounds care equipment. The Capital Corporation purchases retail installment sales and loan contracts (retail notes) from Deere & Company and its wholly owned subsidiaries (collectively called John Deere). These retail notes are acquired by John Deere through John Deere retail dealers in the United States. The Company also purchases and finances retail notes unrelated to John Deere, representing primarily recreational vehicle and recreational marine product notes acquired from independent dealers of those products and from marine mortgage service companies (recreational product retail notes). The Company also leases John Deere equipment to retail customers, finances and services unsecured revolving charge accounts acquired from merchants in the agricultural, lawn and grounds care and marine retail markets, and provides wholesale financing for recreational vehicles and John Deere engine inventories held by dealers of those products. Retail notes, revolving charge accounts, financing leases and wholesale notes receivable are collectively called "Receivables." Receivables and operating leases are collectively called "Receivables and Leases." (3) The consolidated ratio of earnings to fixed charges was 1.97 to 1 in both the first nine months of this year and the comparable period of 1993 and was 1.89 to 1 for the third quarter of 1994 compared with 2.05 to 1 in the same period last year. "Earnings" consist of income before income taxes and the cumulative effect of changes in accounting to which are added 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. (4) In the fourth quarter of 1993, the Company adopted Financial Accounting Standards Board (FASB) Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, and FASB Statement No. 112, Employers' Accounting for Postemployment Benefits, effective November 1, 1992. Previous quarters of 1993 were restated as required by these Statements. As a result, the first nine months of 1993 have been restated to reflect the cumulative pre-tax effect of these changes in accounting of $5.7 million ($3.8 million after income taxes) and an incremental pre-tax benefits expense of $.2 million. (5) Dividends declared and paid to John Deere Credit Company which in turn were declared and paid to Deere & Company, in the third quarter and first nine months of 1994, were $20 and $190 million, respectively. There were no dividends paid during the same periods in 1993. On September 2, 1994 the Company declared a dividend of $20 million to John Deere Credit Company, which in turn declared a dividend of $20 million to Deere & Company, each of which was paid on September 13, 1994. (6) The Company is subject to various unresolved legal actions which arise in the normal course of its business. The most prevalent of such actions relates to state and federal regulations concerning retail credit. There are various claims and pending actions against the Company with respect to commercial and consumer financing matters. These matters include lawsuits pending in federal and state courts in Texas alleging that certain of the Company's retail finance contracts for recreational vehicles and boats violate certain technical provisions of Texas consumer credit statutes dealing with maximum rates, licensing and disclosures (see the Company's most recent annual report on Form 10-K and the report on Form 10-Q for the prior quarter.) The plaintiffs in Texas claim they are entitled to common law and statutory damages and penalties. The Company obtained certification of a mandatory class in the 281st District Court for Harris County, Texas, in a case named Deere Credit, Inc. v. Shirley Y. Morgan, et al., filed February 20, 1992. The Company believes that it has substantial defenses and intends to defend the Morgan and the other pending actions vigorously. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or reasonably estimate the range of possible loss and the amounts of claimed damages and penalties are unspecified, the Company believes that these unresolved legal actions will not be material. (7) Certain amounts for 1993 have been reclassified to conform with 1994 financial statement presentations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations During the first nine months of 1994, the volume of retail notes (face value less unearned finance income) acquired by the Company totaled $1.780 billion, an increase of 14 percent, compared with net acquisitions of $1.568 billion during the same period last year. Retail note acquisitions from John Deere increased by approximately $161 million for the nine months ended July 31, 1994 compared with the same period last year. Acquisitions of agricultural equipment retail notes increased and industrial equipment retail note activity was significantly higher in the first nine months of 1994. Acquisitions of lawn and grounds care retail notes declined, however, the lower acquisitions of lawn and grounds care retail notes were more than offset by a corresponding increase in financings under the John Deere Credit Revolving Plan, under which lawn and grounds care equipment is also financed. Note acquisitions from John Deere continued to represent a significant proportion of the total United States retail sales of John Deere equipment. Acquisitions of recreational product retail notes were $51 million higher in the first nine months of 1994 as compared to the first nine months of 1993. The increases resulted primarily from more competitive financing programs in both the recreational vehicle and recreational marine product markets. During the third quarter of 1994, total retail note acquisitions increased 14 percent to $550 million compared with $484 million in the same quarter of 1993. Retail note acquisitions from John Deere increased by $47 million in the third quarter of 1994. Acquisitions of recreational product retail notes increased by $19 million in the third quarter of 1994 when compared to the same period in 1993. At July 31, 1994, the net amount of retail notes held by the Company was $3.468 billion compared with $2.792 billion at October 31, 1993 and $3.165 billion at July 31, 1993. Within this category, recreational product notes totalled $802 million, $804 million and $828 million at July 31, 1994, October 31, 1993 and July 31, 1993, respectively. The balance of retail notes increased during the first nine months of 1994 as retail note acquisitions exceeded collections by $689 million. The amount of retail notes administered by the Company, which includes retail notes previously sold, totaled $4.241 billion at July 31, 1994, $4.185 billion at October 31, 1993, and $4.082 billion at July 31, 1993. At July 31, 1994, the amount of retail notes previously sold was $773 million compared with $1.394 billion at October 31, 1993 and $918 million at July 31, 1993. On July 31, 1994, the Company was contingently liable for recourse in the maximum amount of $75 million on retail notes previously sold. Revolving charge accounts receivable totaled $401 million at July 31, 1994 compared with $331 million at October 31, 1993 and $320 million at July 31, 1993. Acquisitions increased 17 percent in the third quarter of 1994 and 21 percent in the first nine months of 1994 compared with the same periods last year. The balance of revolving charge accounts receivable increased in the first nine months of 1994 due to the growth in both Farm Plan and John Deere Credit Revolving Plan volumes. The balance of revolving charge accounts receivable at July 31, 1994 included $201 million of Farm Plan receivables and $200 million of John Deere Credit Revolving Plan receivables compared with $161 million and $159 million, respectively, at July 31, 1993. At July 31, 1994, the net investment in financing and operating leases on John Deere equipment was $232 million compared with $204 million at October 31, 1993 and $197 million at July 31, 1993. While lease acquisitions increased 13 percent during the third quarter compared to the same period last year, year-to-date lease acquisitions were lower during the first nine months of 1994 compared with the same period last year. This decline reflects the particularly strong leasing activity during the first half of 1993 due to the introduction of a lease program applicable to certain models of John Deere tractors. The Company also administers municipal leases owned by Deere & Company, which totaled $40 million at July 31, 1994, $43 million at October 31, 1993, and $42 million at July 31, 1993. Wholesale notes receivable on recreational vehicle and John Deere engine inventories totaled $113 million at July 31, 1994, $110 million at October 31, 1993 and $113 million at July 31, 1993. Wholesale note acquisitions increased 12 percent during the first nine months of 1994 primarily due to acquisitions related to recreational vehicle inventories. Total Receivables and Leases acquired totaled $2.799 billion during the first nine months of 1994, a 14 percent increase compared with acquisitions of $2.452 billion during the same period of 1993. Total Receivables and Leases financed by the Company were $4.213 billion at July 31, 1994, $3.437 billion at October 31, 1993 and $3.794 billion at July 31, 1993. Total Receivables and Leases administered by the Company on those same dates were $5.027 billion, $4.873 billion and $4.754 billion, respectively. The balance (principal plus earned interest) of retail notes outstanding with any installment 60 days or more past due was $23 million at July 31, 1994 compared with $33 million at October 31, 1993 and $28 million at July 31, 1993. The amount of retail note installments 60 days or more past due was $6 million at July 31, 1994, $7 million at October 31, 1993 and $6 million at July 31, 1993. These past-due installments represented .17 percent of the unpaid balance of retail notes held at July 31, 1994, .24 percent at October 31, 1993 and .18 percent at July 31, 1993. The total balance of revolving charge accounts past due 60 days or more was $4.9 million, $5.3 million and $3.8 million at July 31, 1994, October 31, 1993 and July 31, 1993, respectively. These past-due amounts represented 1.22 percent, 1.62 percent and 1.17 percent of the revolving charge accounts receivable held at those respective dates. The total balance of financing and operating lease payments 60 days or more past due was $.6 million at July 31, 1994, $.5 million at October 31, 1993 and $ .7 million at July 31, 1993. These past-due installments represented .26 percent, .25 percent and .35 percent of the investment in financing and operating leases at those respective dates. The total balance of wholesale notes receivable 60 days or more past due was $.1 million at July 31, 1994, October 31, 1993 and July 31, 1993, respectively. These past-due amounts represented .10 percent, .11 percent and .12 percent of the wholesale notes receivable held at those respective dates. The total Receivable and Lease amounts 60 days or more past-due were $11.6 million at July 31, 1994 compared with $12.7 million at October 31, 1993 and $10.1 million at July 31, 1993. These past-due amounts represent .28 percent, .37 percent and .27 percent of the total Receivables and Leases held at those respective dates. Deposits withheld from dealers and merchants, representing mainly the aggregate 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 $106 million at July 31, 1994 compared with $105 million at October 31, 1993 and $100 million at July 31, 1993. The Company's allowance for credit losses on all Receivables and Leases financed, which totaled $79 million at July 31, 1994, $77 million at October 31, 1993 and $84 million at July 31, 1993, also provides for potential uncollectibility. As a percent of the unpaid balance of total Receivables and Leases financed, the allowance for credit losses represented 1.9 percent, 2.3 percent and 2.2 percent at July 31, 1994, October 31, 1993 and July 31, 1993, respectively. Net income for the third quarter of 1994 was $25.8 million compared with $28.6 million in the same period last year. The decrease in income reflects unfavorable adjustments related to notes previously sold and slightly lower financing margins due to a competitive market place. Net income for the first nine months of 1994 totaled $74.7 million, compared with income of $82.8 million in 1993, excluding the cumulative effect of accounting changes ($79.0 million after the accounting changes). Compared with last year, net income for the first nine months of 1994 was unfavorably affected by the impact of a smaller average Receivable and Lease portfolio caused mainly by the sales of retail notes in 1993, and lower gains related to notes previously sold. This decrease was partially offset by higher securitization and servicing fee income from notes previously sold but still administered and a lower provision for credit losses. Total revenues of $115.3 million in the third quarter of 1994 were slightly higher compared with revenues of $114.4 million during the third quarter last year, due primarily to the nine percent higher average receivable and lease portfolio financed, partially offset by lower finance yields during the quarter and lower gains related to notes previously sold. Revenues for the first nine months of 1994 totaled $327.2 million compared to $346.3 for the same period last year. The average Receivable and Lease portfolio financed was approximately four percent lower during the first nine months of 1994 compared with a year ago, primarily contributing to the lower year-to-date revenues. This decrease was also due to lower gains from the sale of retail notes and lower levels of interest rates resulting in lower finance charges earned by the Company in 1994. The decrease in revenues was partially offset by the previously mentioned increase in securitization and servicing fee income. Revolving charge account income and lease revenues were higher in the third quarter and the first nine months of 1994 compared with the same periods in 1993, due primarily to higher average balances of revolving charge accounts and leases financed this year. Finance income earned on wholesale notes was also slightly higher in the third quarter and during the first nine months of 1994 compared to the same periods one year ago. Interest expense for the third quarter of 1994 was $43.7 million, an increase of seven percent compared with $40.7 million incurred during the same period last year due to an increase in average borrowings. Interest expense for the first nine months of the year was down from $127.1 million last year to $116.0 million in 1994. Interest expense decreased during the first nine months of 1994 as a result of the reduced borrowings required to finance the lower average Receivable and Lease portfolio and lower interest rates. Total average borrowings during the third quarter and the first nine months of 1994, were $3.449 billion and $3.128 billion, respectively, a 12 percent increase from last year's third quarter average borrowings of $3.078 billion and a one percent decrease from the average borrowings of $3.156 billion during the first nine months of 1993. The weighted average interest rate incurred on all interest-bearing borrowings for the third quarter and the first nine months of this year was 5.0 percent and 4.8 percent, respectively, compared to 5.2 and 5.1 percent during the same periods last year. Administrative and operating expenses increased by ten percent during the first nine months of 1994 primarily due to an additional provision during the second quarter of 1994 related to a legal settlement in Texas. During the third quarter of 1994, the provision for credit losses totaled $7.3 million compared with $6.3 million in the same period last year. The increase was due primarily to growth in the overall portfolio. The provision for credit losses decreased from $22.5 million to $18.8 million primarily reflecting a favorable $4.5 million adjustment made in the second quarter of 1994 related to current and expected losses on agricultural loans. Total write-offs of Receivables and Leases financed were $3.1 million during the third quarter of 1994 compared with $6.2 million last year, and were $17.1 million during the first nine months of 1994 compared with $21.5 million last year. Net of recoveries, there were no write-offs of John Deere notes financed during the third quarter of 1994 compared with $.8 million last year, while write-offs of John Deere notes financed totaled $2.0 million during the first nine months of 1994 compared with $2.6 million for the same period last year. Write-offs of recreational product retail notes totaled $10.7 million in the first nine months of 1994 compared with $13.2 million in the first nine months of 1993. Capital Resources and Liquidity The Company relies on its ability to raise substantial amounts of funds to finance its Receivable and Lease portfolios. 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. 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 as described below. 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 or "securitize" these assets. Asset-liability risk is also actively managed to minimize exposure to interest rate fluctuations. The Company's business is somewhat seasonal, with overall acquisitions 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 half of the fiscal year. During the first nine months of 1994, the aggregate cash provided from operating and financing activities was used primarily to acquire Receivables and Leases. Cash provided from the Company's operating activities was $120 million during the first nine months of 1994. Financing activities provided $642 million during the same period, resulting from a $1.082 billion increase in outside borrowings which was partially offset by a $250 million decrease in payables to Deere & Company and dividend payments totaling $190 million. Cash used for investing activities totaled $764 million in the first nine months of 1994, primarily due to the cost of Receivables and Leases acquired exceeding collections. Other cash flows from investing activities increased in 1994 mainly due to the collection activity on receivables previously sold that were being held for payment to the trusts. Cash and cash equivalents decreased $1 million in the first nine months of 1994. During the first nine months of 1993, the aggregate cash provided from operating and investing activities was used mainly to reduce outside borrowings and increase cash and cash equivalents. Cash provided from the Company's operating activities was $120 million during the first nine months of 1993. Investing activities provided $173 million of cash in the first nine months of 1993, resulting primarily from $577 million of net proceeds received from the sale of securitized retail notes. As a partial offset of these receivable sales proceeds, funds used for Receivable and Lease acquisitions exceeded collections by $412 million in the nine month period last year. Cash used for financing activities totaled $117 million during the first nine months of 1993, representing a net decrease in outside borrowings of $111 million and a decrease of $6 million in obligations to Deere & Company. Additionally, there was a $177 million increase in cash and cash equivalents during the first nine months of 1993. Total interest-bearing indebtedness amounted to $3.610 billion at July 31, 1994 compared with $2.777 billion at October 31, 1993 and $3.139 billion at July 31, 1993. Total borrowing levels increased during the first nine months of 1994 and during the last twelve months, generally corresponding with the level of Receivables and Leases financed and dividends paid. The ratio of total interest-bearing debt to stockholder's equity was 5.8 to 1, 3.8 to 1 and 4.0 to 1 at July 31, 1994, October 31, 1993 and July 31, 1993, respectively. In January 1994, the Company redeemed the $40 million balance of its outstanding 9.35% subordinated debentures due in 2003. During the first nine months of this year, the Company issued $10 million and retired $343 million of medium-term notes. At July 31, 1994, the Capital Corporation and Deere & Company, jointly, had unsecured lines of credit with various banks in North America and overseas totaling $2.508 billion which included a long-term credit agreement totaling $1.675 billion. In addition, the Capital Corporation, Deere & Company, John Deere Limited (Canada) and John Deere Finance Limited (Canada), jointly, had a long-term credit agreement with various banks in North America and overseas totaling $741 million. In total, the Capital Corporation had $3.249 billion in aggregate lines of credit available at July 31, 1994 of which $824 million were unused. For the purpose of computing unused credit lines, the aggregate of total short-term borrowings, excluding the current portion of long-term borrowings, of the Capital Corporation, Deere & Company, John Deere Limited (Canada) and John Deere Finance Limited (Canada) were considered to constitute utilization. Annual facility fees on the credit agreements are charged to the Capital Corporation based on utilization. Stockholder's equity was $624 million at July 31, 1994 compared with $739 million at October 31, 1993 and $793 million at July 31, 1993. The decrease of $115 million in the first nine months of 1994 resulted from dividends declared of $190 million offset by net income of $74.7 million. On September 2, 1994 the Company declared a dividend of $20 million to John Deere Credit Company, which in turn declared a dividend of $20 million to Deere & Company, each of which was paid on September 13, 1994. PART II. OTHER INFORMATION Item 1. Legal Proceedings. See Note (6) to the Interim Financial Statements. Item 2. Changes in Securities. None. 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. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. See the index to exhibits immediately preceding the exhibits filed with this report. Certain instruments relating to long-term debt, constituting less than 10 percent 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 May 24, 1994 (Items 5 and 7). 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: 13 September 1994 By: /s/ P. E. Leroy Vice President and Treasurer (Chief Financial Officer) EXHIBIT INDEX Exhibit Page No. (12) Computation of ratio of earnings to 16 fixed charges. (27) Financial Data Schedule 17 (99) Part I of Deere & Company Form 10-Q for the quarter ended July 31, 1994.* _______________________ *Incorporated by reference. Copies of these exhibits are available from the Company upon request. EX-12 2 Exhibit 12 JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS) Nine Months Ended 31 July 1994 1993 Earnings: Income before income taxes and changes in accounting $114,788 $125,314 Fixed charges 117,883 128,980 Total earnings $232,671 $254,294 Fixed charges: Interest expense $115,967 $127,104 Rent expense 1,916 1,876 Total fixed charges $117,883 $128,980 Ratio of earnings to fixed charges* 1.97 1.97 Year Ended October 31 Earnings: 1993 1992 1991 Income before income taxes and changes in accounting $169,339 $142,920 $110,820 Fixed charges 170,226 191,930 $230,901 Total earnings $339,565 $334,850 $341,721 Fixed charges: Interest expense $167,787 $189,288 $228,308 Rent expense 2,439 2,642 2,593 Total fixed charges $170,226 $191,930 $230,901 Ratio of earnings to fixed charges* 1.99 1.74 1.48 Year Ended 31 October Earnings: 1990 1989 Income before income taxes and changes in accounting $ 99,366 $ 99,971 Fixed charges 216,985 214,038 Total earnings $316,351 $314,009 Fixed charges: Interest expense $214,707 $212,144 Rent expense 2,278 1,894 Total fixed charges $216,985 $214,038 Ratio of earnings to fixed charges* 1.46 1.47 _____ "Earnings" 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. * The Company has not issued preferred stock. Therefore, the ratios of earnings to combined fixed charges and preferred stock dividends are the same as the ratios presented above. EX-27 3 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. EXHIBIT 27 JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES FINANCIAL DATA SCHEDULE (In millions of dollars except per share amounts)
5 This schedule contains summary financial information extracted from Form 10-Q and is qualified in its entirety by reference to such financial statements. 0000027673 JOHDDEERECAPITALCORP 1,000,000 U.S. DOLLARS 9-MOS OCT-31-1994 NOV-01-1993 JUL-31-1994 1 164 0 4085 79 0 0 14 9 4485 0 945 113 0 0 511 4485 0 327 0 16 0 19 116 115 40 75 0 0 0 75 0 0
-----END PRIVACY-ENHANCED MESSAGE-----