-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JlOL3jwLM3+iELd6vaLbV/FbRLqOXexM7sRO6B8NDUYnBhMKU32ShOQY7F0OeCtl yhmLrNAnDVfk0Rv4xdr24Q== 0000027673-97-000024.txt : 19970618 0000027673-97-000024.hdr.sgml : 19970618 ACCESSION NUMBER: 0000027673-97-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970609 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEERE JOHN CAPITAL CORP CENTRAL INDEX KEY: 0000027673 STANDARD INDUSTRIAL CLASSIFICATION: 6153 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: 97621186 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 15 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, 1997 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: (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 April 30, 1997, 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 15 Pages Index to Exhibits: Page 13 PART I. FINANCIAL INFORMATION Item 1.Financial Statements John Deere Capital Corporation and Subsidiaries Statements of Consolidated Income (Unaudited) (in millions) Three Months Ended Six Months Ended April 30 April 30 1997 1996 1997 1996 Revenues ------------------------------------- Finance income earned on retail notes $103.4 $ 95.6 $195.6 $187.7 Revolving charge account income 22.6 21.2 44.6 42.7 Lease revenues 27.7 15.1 50.4 27.8 Finance income earned on wholesale notes 11.9 8.6 23.7 16.2 Net gain on retail notes sold 1.1 9.8 1.8 10.1 Interest income from short-term investments 2.4 2.8 5.0 5.6 Securitization and servicing fee income 7.2 9.5 17.6 20.9 Other income 2.8 5.0 3.9 7.3 - - ----------------------------------------------------------------- Total revenues 179.1 167.6 342.6 318.3 - - ----------------------------------------------------------------- Expenses Interest expense: On obligations to others 78.0 67.6 148.8 132.5 On notes payable to Deere & Company .6 --- 1.3 1.4 - - ----------------------------------------------------------------- Total interest expense 78.6 67.6 150.1 133.9 - - ----------------------------------------------------------------- Operating expenses: Administrative and operating expenses 26.0 22.9 48.7 43.2 Provision for credit losses 9.7 10.0 16.2 15.9 Fees paid to Deere & Company 2.2 1.3 4.4 3.2 Depreciation of equipment on operating leases 17.5 7.6 31.8 14.2 - - ----------------------------------------------------------------- Total operating expenses 55.4 41.8 101.1 76.5 - - ----------------------------------------------------------------- Total expenses 134.0 109.4 251.2 210.4 - - ----------------------------------------------------------------- Income of consolidated group before income taxes 45.1 58.2 91.4 107.9 Provision for income taxes 15.8 20.3 31.9 37.7 - - ----------------------------------------------------------------- Income of consolidated group 29.3 37.9 59.5 70.2 Equity in loss of unconsolidated affiliate (.3) --- (.8) --- - - ----------------------------------------------------------------- Net income $29.0 $37.9 $58.7 $70.2 See Notes to Interim Financial Statements. John Deere Capital Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in millions) Apr 30, Oct 31, Apr 30, 1997 1996 1996 Assets ------------------------------- Cash and cash equivalents $ 167.9 $ 171.0 $ 168.1 Receivables and leases: Retail notes 4,605.5 4,075.9 3,682.8 Revolving charge accounts 510.9 564.8 470.8 Financing leases 194.0 181.5 153.7 Wholesale notes 522.3 524.5 380.9 - - ----------------------------------------------------------------- Total receivables 5,832.7 5,346.7 4,688.2 Equipment on operating leases -- net 402.6 276.8 199.5 - - ----------------------------------------------------------------- Total receivables and leases 6,235.3 5,623.5 4,887.7 Allowance for credit losses (89.2) (87.4) (82.1) - - ----------------------------------------------------------------- Total receivables and leases -- net 6,146.1 5,536.1 4,805.6 - - ----------------------------------------------------------------- Other receivables 126.1 189.9 183.4 Investment in unconsolidated affiliate 5.4 6.3 --- Other assets 75.4 67.8 64.7 - - ----------------------------------------------------------------- Total Assets $6,520.9 $5,971.1 $5,221.8 ================================================================= John Deere Capital Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in millions) Apr 30, Oct 31, Apr 30, 1997 1996 1996 -------------------------------- Liabilities and Stockholder's Equity Short-term borrowings: Commercial paper $2,259.4 $1,689.9 $2,208.1 Deere & Company 57.7 544.8 33.5 Current maturities of long-term borrowings 1,143.7 863.7 248.5 - - ----------------------------------------------------------------- Total short-term borrowings 3,460.8 3,098.4 2,490.1 - - ----------------------------------------------------------------- Accounts payable and accrued liabilities: Accrued interest on senior debt 36.1 35.9 27.7 Other payables 167.4 144.8 214.8 - - ----------------------------------------------------------------- Total accounts payable and accrued liabilities 203.5 180.7 242.5 - - ----------------------------------------------------------------- Deposits withheld from dealers and merchants 131.2 135.4 125.4 - - ----------------------------------------------------------------- Long-term borrowings: Senior debt 1,799.6 1,649.5 1,320.6 Subordinated debt 150.0 150.0 300.0 - - ----------------------------------------------------------------- Total long-term borrowings 1,949.6 1,799.5 1,620.6 - - ----------------------------------------------------------------- Total liabilities 5,745.1 5,214.0 4,478.6 - - ----------------------------------------------------------------- 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 663.1 644.4 630.4 Cumulative translation adjustment (.1) (.1) --- - - ----------------------------------------------------------------- Total stockholder's equity 775.8 757.1 743.2 - - ----------------------------------------------------------------- Total Liabilities and Stockholder's Equity $6,520.9 $5,971.1 $5,221.8 ================================================================= See Notes to Interim Financial Statements. John Deere Capital Corporation and Subsidiaries Statements of Consolidated Cash Flows (Unaudited) (in millions) Six Months Ended April 30 1997 1996 ------------------------- Cash Flows from Operating Activities: Net income $ 58.7 $ 70.2 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 16.2 15.9 Provision for depreciation 31.7 15.2 Equity in loss of unconsolidated affiliate .8 --- Other (.3) (1.0) - - ---------------------------------------------------------------- Net cash provided by operating activities 107.1 100.3 - - ---------------------------------------------------------------- Cash Flows from Investing Activities: Cost of receivables and leases acquired (3,203.6) (2,607.1) Collections of receivables 2,555.4 1,978.0 Proceeds from sales of receivables 29.1 610.3 Other 33.4 95.5 - - ---------------------------------------------------------------- Net cash provided by (used for) investing activities (585.7) 76.7 - - ---------------------------------------------------------------- Cash Flows from Financing Activities: Increase in commercial paper 569.5 221.4 Change in receivable/payable with Deere & Company (481.5) (426.6) Proceeds from issuance of long-term borrowings 455.0 175.0 Principal payments on long-term borrowings (27.5) (123.0) Dividends paid (40.0) (20.0) - - ---------------------------------------------------------------- Net cash provided by (used for) financing activities 475.5 (173.2) - - ---------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (3.1) 3.8 Cash and cash equivalents at the beginning of period 171.0 164.3 - - ---------------------------------------------------------------- Cash and cash equivalents at the end of period $ 167.9 $ 168.1 See Notes to Interim Financial Statements. 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, Deere Credit, Inc., Deere Credit Services, Inc., Farm Plan Corporation, John Deere Receivables, Inc., John Deere Funding Corporation and Arrendadora John Deere, S.A. de C.V. (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 interim financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates. (2) The 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 (formerly known as industrial) 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). These retail notes are acquired by John Deere through independent John Deere retail dealers. The Company also purchases and finances certain agricultural, construction and lawn and grounds care retail notes unrelated to John Deere, primarily used equipment accepted by dealers in trade. In addition, the Company purchases and finances recreational product retail notes acquired from independent dealers and marine product mortgage service companies (recreational product retail notes). The Company also leases equipment to retail customers, finances and services revolving charge accounts acquired from and offered through merchants in the agricultural, lawn and grounds care and recreational product retail markets (revolving charge accounts), and provides wholesale financing for inventories of recreational vehicles, manufactured housing units, yachts, John Deere engines, John Deere construction equipment and the Sabre line of equipment owned by dealers of those products (wholesale notes). Retail notes, revolving charge accounts, direct 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 1.57 to 1 for the second quarter of 1997 compared with 1.85 to 1 for the second quarter of 1996. The consolidated ratio of earnings to fixed charges was 1.60 to 1 for the first six months of 1997 and 1.80 to 1 for the first six months of 1996. "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. (4) 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 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. (5) In the first quarter of 1997, the Company adopted the Financial Accounting Standards Board (FASB) Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of. In the first quarter of 1997, the Company also adopted FASB Statement No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The adoption of these Statements had no effect on the Company's financial position or results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Net income was $29.0 million for the second quarter of 1997 and $58.7 million for the first six months of 1997 compared with $37.9 million and $70.2 million for the same periods last year, primarily reflecting a gain from the sale of retail notes during the second quarter of last year. Additionally, earnings decreased this year due to narrower financing spreads and higher expenditures associated with several growth initiatives, which were partially offset by higher income from a 16 percent increase in the average balance of Receivables and Leases financed during the first six months. Revenues totaled $179.1 million and $342.6 million for the second quarter and for the first six months of 1997, respectively, compared to $167.6 million and $318.3 million for the same periods a year ago. Revenues increased due to a larger average portfolio financed, particularly related to growth in both operating leases and wholesale notes. Lease revenues increased $22.6 million, to $50.4 million in the first six months of 1997, from $27.8 million in the first six months of 1996, largely due to a number of low-rate leasing initiatives related to John Deere agricultural and construction equipment. Finance income earned on wholesale notes increased $7.5 million to $23.7 million for the first six months of 1997 from $16.2 million earned in the first six months of 1996. The higher finance income earned on wholesale notes was primarily a result of the continued growth in the manufactured housing, construction floor planning and yacht markets. In April 1996, the Company securitized and sold approximately $600 million in retail notes, resulting in a gain on notes sold of $9.4 million. Although no sales of retail notes occurred in the first six months of 1997, additional sales of retail notes are expected to be made in the future. Total interest expense for the second quarter increased from $67.6 million in 1996 to $78.6 million in 1997. Interest expense increased from $133.9 million for the first six months of 1996 to $150.1 million for the first six months of 1997. These increases in interest expense were the result of increased borrowings required to finance the higher average portfolio of Receivables and Leases. Total average borrowings during the first six months of 1997 were $5.150 billion, compared to $4.389 billion in the first six months of 1996. Administrative and operating expenses were $26.0 million in the second quarter of 1997 and $48.7 million for the first six months of 1997, compared with $22.9 million and $43.2 million for the same periods in 1996. These increases were the result of higher employment costs associated with administering a larger Receivable and Lease portfolio and certain expenses relating to several growth initiatives. The growth initiatives include expansion of international retail financing, a focus on golf and turf financing, and continued efforts related to business finance opportunities, such as farmer operating loans. Operating expenses were also affected by higher depreciation of equipment on operating leases, which totaled $17.5 million in the second quarter of 1997 and $31.8 million in the first six months of 1997, compared to $7.6 million and $14.2 million for the same periods in 1996, a result of the increase in operating leases financed. During the second quarter and the first six months of 1997, the provision for credit losses totaled $9.7 million and $16.2 million, respectively, compared with $10.0 million and $15.9 million in the same periods last year. The annualized provision for credit losses, as a percentage of the total average portfolio outstanding, was .65 percent for the second quarter of 1997 and .57 percent for the first six months of 1997, compared with .79 percent and .64 percent for the same periods last year. In October 1996, the Capital Corporation entered into an unconsolidated joint venture, John Deere Credit Limited (JDCL), to offer equipment financing products in the United Kingdom. Through April 30, 1997, the Capital Corporation's equity loss in JDCL was $.8 million, representing primarily fixed administrative and operating expenses associated with this new affiliate. Receivables and Leases Receivable and Lease acquisition volumes were as follows (dollars in millions): Three Months Ended April 30, 1997 1996 $ % Change Change - - ----------------------------------------------------------------- Retail notes volumes: Agricultural equipment $ 610 $ 548 $ 62 11% Construction equipment 85 108 (23) (21) Lawn and grounds care equipment 35 21 14 67 Recreational products 146 73 73 100 - - ----------------------------------------------------------------- Total retail note volumes 876 750 126 17 - - ----------------------------------------------------------------- Revolving charge accounts 324 279 45 16 Wholesale notes 260 241 19 8 Leases 139 95 44 46 - - ----------------------------------------------------------------- Total Receivable and Lease volumes $ 1,599 $ 1,365 $ 234 17 ================================================================= Six Months Ended April 30, 1997 1996 $ % Change Change - - ----------------------------------------------------------------- Retail notes volumes: Agricultural equipment $ 1,449 $ 1,189 $ 260 22% Construction equipment 185 229 (44) (19) Lawn and grounds care equipment 58 35 23 66 Recreational products 210 131 79 60 - - ----------------------------------------------------------------- Total retail note volumes 1,902 1,584 318 20 - - ----------------------------------------------------------------- Revolving charge accounts 556 475 81 17 Wholesale notes 512 403 109 27 Leases 234 145 89 61 - - ----------------------------------------------------------------- Total Receivable and Lease volumes $ 3,204 $ 2,607 $ 597 23 ================================================================= Total Receivables and Leases held were as follows (in millions): Apr 30, Oct 31, Apr 30, 1997 1996 1996 ---------------------------- Retail notes held: Agricultural equipment $2,870 $2,424 $2,094 Construction equipment 639 629 576 Lawn and grounds care equipment 185 183 150 Recreational products 911 840 863 - - ----------------------------------------------------------------- Total retail notes held 4,605 4,076 3,683 - - ----------------------------------------------------------------- Revolving charge accounts 511 565 471 Wholesale notes 522 524 381 Leases 597 459 353 - - ----------------------------------------------------------------- Total Receivables and Leases held $6,235 $5,624 $4,888 ================================================================= Agricultural retail note volumes increased in the second quarter and first six months of 1997 compared to 1996, primarily due to higher retail sales of John Deere equipment. Construction retail note volumes decreased, while construction leasing volumes increased during the first six months of 1997, primarily due to the promotion of a low-rate leasing program sponsored by John Deere and the Company. John Deere also sponsored low-rate incentive programs which resulted in increases of lawn and grounds care retail note volumes. Recreational note volumes and revolving charge account volumes increased based on continued strong demand for these products. In addition, the Company acquired approximately $17 million in yacht installment notes from an unrelated third party. Wholesale note volumes were driven higher by increases in manufactured housing and construction floor planning. The amount of retail notes administered by the Company, which includes retail notes previously sold, totaled $5.326 billion at April 30, 1997, $5.253 billion at October 31, 1996, and $4.907 billion at April 30, 1996. At April 30, 1997, the balance of retail notes previously sold was $720 million compared with $1.177 billion at October 31, 1996 and $1.224 billion at April 30, 1996. The Company's maximum exposure under all retail note recourse provisions at April 30, 1997 was $123 million. Total Receivables and Lease amounts 60 days or more past due, by product and as a percentage of total balances held were as follows (dollars in millions): Apr 30, Oct 31, Apr 30, 1997 1996 1996 $ % $ % $ % - - ----------------------------------------------------------------- Retail notes: Agricultural equipment $ 9.6 .33% $ 4.4 .18% $ 8.6 .41% Construction equipment 2.1 .33 2.5 .39 2.0 .36 Lawn and grounds care equipment .8 .41 .7 .38 .8 .52 Recreational products .1 .02 .3 .03 .3 .03 - - ----------------------------------------------------------------- Total retail notes 12.6 .27 7.9 .19 11.7 .32 - - ----------------------------------------------------------------- Revolving charge accounts 9.9 1.98 8.9 1.58 10.2 2.17 Wholesale notes 1.6 .31 1.0 .17 .1 .04 Leases 3.2 .53 1.7 .38 1.5 .44 - - ----------------------------------------------------------------- Total Receivables and Leases $27.3 .44 $19.5 .35 $23.5 .48 ================================================================= The balance of retail notes held (principal plus accrued interest) with any installment 60 days or more past due was $57.6 million, $47.2 million and $53.0 million at April 30, 1997, October 31, 1996 and April 30, 1996, respectively. The balance of retail notes held on which any installment is 60 days or more past due as a percentage of ending retail notes receivable was 1.25 percent, 1.16 percent and 1.44 percent at April 30, 1997, October 31, 1996 and April 30, 1996, respectively. During the second quarter and the first six months of 1997, write- offs (net of recoveries) of Receivables and Leases totaled $8.9 million and $14.4 million, respectively, compared with $7.7 million and $13.4 million in the same periods last year. Annualized write-offs, as a percentage of the total average portfolio outstanding, were .60 percent for the second quarter of 1997 and .50 percent for the first six months of 1997, compared with .61 percent and .54 percent for the same periods last year. Write-offs relating to retail notes declined 12 percent in the first six months of 1997, when compared with the first six months of 1996, primarily due to lower write-offs of lawn and grounds care and recreational product retail notes. Revolving charge account and leasing write-offs increased during the first six months of 1997, compared to the first six months of 1996, primarily due to increases in revolving charge account and lease volumes. 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 $131.2 million at April 30, 1997, compared with $135.4 million at October 31, 1996 and $125.4 million at April 30, 1996. The Company's allowance for credit losses on all Receivables and Leases financed totaled $89.2 million at April 30, 1997, $87.4 million at October 31, 1996 and $82.1 million at April 30, 1996. Allowance for credit losses represented 1.43 percent of the balance of Receivables and Leases financed at April 30, 1997, 1.55 percent at October 31, 1996, and 1.68 percent at April 30, 1996. The Company's allowance for credit losses, as a percentage of total Receivables and Leases, has declined during the last twelve months due to an ongoing reevaluation of loss experience and related adjustments to ensure that the allowance for credit losses is maintained at an adequate level. Management believes the allowance for credit losses at April 30, 1997, is sufficient to provide adequate protection against losses. 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 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 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 and securitize these assets. Asset-liability risk is also actively managed to minimize exposure to interest rate fluctuations. Total interest-bearing indebtedness amounted to $5.411 billion at April 30, 1997, compared with $4.898 billion at October 31, 1996 and $4.111 billion at April 30, 1996, generally corresponding with the level of Receivables and Leases financed. Total short- term indebtedness amounted to $3.461 billion at April 30, 1997, compared with $3.098 billion at October 31, 1996 and $2.490 billion at April 30, 1996. Total long-term indebtedness amounted to $1.950 billion, $1.800 billion and $1.621 billion at April 30 1997, October 31, 1996 and April 30, 1996, respectively. The ratio of total interest-bearing debt to stockholder's equity was 7.0 to 1, 6.5 to 1 and 5.5 to 1 at April 30, 1997, October 31, 1996 and April 30, 1996, respectively. During the first six months of 1997, the Capital Corporation issued $200 million of 6% Notes, due in 1999. During this same period, the Capital Corporation issued $255 million and retired $28 million of medium- term notes. At April 30, 1997, the Capital Corporation, Deere & Company and John Deere Credit Inc. (Canada), jointly, maintained $4.008 billion of unsecured lines of credit with various banks in North America and overseas, $1.012 billion of which was unused. For the purpose of computing unused credit lines, the total short- term borrowings, excluding the current portion of long-term borrowings, of the Capital Corporation, Deere & Company and John Deere Credit Inc. (Canada), were considered to constitute utilization. Included in the total credit lines is a long-term credit agreement expiring on February 27, 2001, for $3.500 billion. An annual facility fee on the credit agreement is charged to the Capital Corporation based on utilization. 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 half of the fiscal year. During the first six months of 1997, 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 $107 million in the first six months of 1997. Financing activities provided $476 million during the same period, resulting from a $516 million net increase in total borrowings, which was offset by $40 million in dividend payments to John Deere Credit Company. Net cash used for investing activities totaled $586 million in 1997, primarily due to Receivable and Lease acquisitions exceeding collections by $648 million. Cash and cash equivalents decreased $3 million during the first six months of 1997. During the first six months of 1996, $100 million of cash provided by operating activities and $77 million provided by investing activities were primarily used for financing activities. The $77 million provided from investing activities was due to the $610 million of proceeds from the sale of retail notes and $96 million from other investing activities mainly due to collections on receivables previously sold that were temporarily being held for payment to the owners. Investing cash inflows were partially offset by the acquisitions of Receivables and Leases exceeding collections by $629 million. Financing activities used $173 million during the first six months of 1996, resulting from a $153 million net decrease in total borrowings and a $20 million dividend payment to John Deere Credit Company. Cash and cash equivalents increased $4 million during the first six months of 1996. The Capital Corporation paid a cash dividend to John Deere Credit Company of $20 million in each of the first two quarters of 1997. John Deere Credit Company paid comparable dividends to Deere & Company. On May 30, 1997, the Capital Corporation declared a cash dividend of $20 million to John Deere Credit Company, which in turn, declared a cash dividend of $20 million to Deere & Company, each payable on June 10, 1997. PART II. OTHER INFORMATION Item 1. Legal Proceedings. See Note (4) to the Interim Financial Statements. Item 2. Changes in Securities. Omitted pursuant to instruction H(2). Item 3. Defaults Upon Senior Securities. Omitted pursuant to instruction H(2). Item 4. Submission of Matters to a Vote of Security Holders. Omitted pursuant to instruction H(2). Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. See the index to exhibits immediately preceding the exhibits filed with this report. Certain instruments relating to long-term debt, constituting less than 10% of the registrant's total assets, are not filed as exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will file copies of such instruments upon request of the Commission. (b) Reports on Form 8-K. Current report on Form 8-K dated February 11, 1997 (items 5 and 7). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JOHN DEERE CAPITAL CORPORATION Date: June 9, 1997 By: /s/ R. W. Lane ---------------------------- R. W. Lane Vice President (Principal Financial Officer) INDEX TO EXHIBITS Exhibit Page No. (12) Computation of ratio of earnings to fixed charges 14 (27) Financial data schedule 15 (99) Part I of Deere & Company Form 10-Q for the quarter ended April 30, 1997( Securities and Exchange Commission file number 1-4121*). - - ----------------------- * Incorporated by reference. Copies of these exhibits are available from the Company upon request. EX-12 2 Exhibit 12 John Deere Capital Corporation and Subsidiaries Computation of Ratio of Earnings to Fixed Charges (dollars in thousands) Six Months Ended 30 April 1997 1996 Earnings: =================== Income before income taxes and changes in accounting. . . . . . . . . . . . . . .$ 91,472 $107,821 Fixed charges. . . . . . . . . . . . . . . . 151,854 135,264 -------- -------- Total earnings . . . . . . . . . . . . .$243,326 $243,085 ======== ======== Fixed charges: Interest expense . . . . . . . . . . . . .$150,046 $133,888 Rent expense . . . . . . . . . . . . . . . 1,808 1,376 -------- -------- Total fixed charges. . . . . . . . . . .$151,854 $135,264 ======== ======== Ratio of earnings to fixed charges *. . . . . . . . . . . . . . 1.60 1.80 ======== ======== For the Years Ended October 31 1996 1995 1994 Earnings: ============================== Income before income taxes and changes in accounting . . . . . . . . $206,588 $175,360 $161,809 Fixed charges. . . . . . . . . . 276,726 240,913 168,507 -------- -------- -------- Total earnings . . . . . . . $483,314 $416,273 $330,316 ======== ======== ======== Fixed charges: Interest expense . . . . . . . $273,748 $238,445 $166,591 Rent expense . . . . . . . . . 2,978 2,468 1,916 -------- -------- -------- Total fixed charges. . . . . $276,726 $240,913 $168,507 ======== ======== ======== Ratio of earnings to fixed charges *. . . . . . . . 1.75 1.73 1.96 ======== ======== ======== Exhibit 12 John Deere Capital Corporation and Subsidiaries Computation of Ratio of Earnings to Fixed Charges (dollars in thousands) For the Years Ended October 31 1993 1992 Earnings: =================== Income before income taxes and changes in accounting. . . . . . . . . . . . . . .$169,339 $142,920 Fixed charges. . . . . . . . . . . . . . . . 170,226 191,930 -------- -------- Total earnings . . . . . . . . . . . . .$339,565 $334,850 ======== ======== Fixed charges: Interest expense . . . . . . . . . . . . .$167,787 $189,288 Rent expense . . . . . . . . . . . . . . . 2,439 2,642 -------- -------- Total fixed charges. . . . . . . . . . .$170,226 $191,930 ======== ======== Ratio of earnings to fixed charges *. . . . . . . . . . . . . . 1.99 1.74 ======== ======== _______ "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.
5 This schedule contains summary financial information extracted from Form 10-Q and is qualified in its entirety by reference to such financial information. 0000027673 JOHNDEERECAPITALCORP 1000000 U.S. DOLLARS 6-MOS OCT-31-1997 NOV-01-1996 PR-30-1997 1 168 0 5959 89 0 0 20 13 6521 0 1950 113 0 0 663 6521 0 343 0 32 0 16 150 91 32 59 0 0 0 59 0 0
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