<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-80775-01
CASE CREDIT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
233 LAKE AVE., RACINE, WISCONSIN 53403
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
76-0394710
(I.R.S. EMPLOYER IDENTIFICATION NO.)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 636-6011
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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 [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. NOT APPLICABLE.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE.
COMMON STOCK, PAR VALUE $5.00 PER SHARE: 200 SHARES OUTSTANDING AS OF
DECEMBER 31, 1997, ALL OF WHICH ARE OWNED BY CASE CORPORATION.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(A)
AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT PERMITTED BY GENERAL INSTRUCTION I OF FORM 10-K.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
PART I
ITEM 1. BUSINESS..................................................... 1
ITEM 2. PROPERTIES................................................... 3
ITEM 3. LEGAL PROCEEDINGS............................................ 3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......... 3*
PART II
MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
ITEM 5. STOCKHOLDER MATTERS.......................................... 4
ITEM 6. SELECTED FINANCIAL DATA...................................... 4*
ITEM 7. MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS............... 4
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................. 7
Index to Financial Statements of Case Credit Corporation and
Consolidated Subsidiaries.................................... 7
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE..................................... 25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........... 25*
ITEM 11. EXECUTIVE COMPENSATION....................................... 25*
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
ITEM 12. MANAGEMENT................................................... 25*
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............... 25*
PART IV
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
ITEM 14. 8-K.......................................................... 25
Financial Statements Included in Item 8...................... 25
Index to Financial Statements and Schedule Included in Item
14........................................................... 25
Schedules Omitted as Not Required or Inapplicable............ 25
Exhibits..................................................... 26
Reports on Form 8-K.......................................... 26
</TABLE>
* No response to this item is included herein for the reason that it is
inapplicable, is not required pursuant to General Instruction I of Form 10-
K, or the answer to such item is negative.
i
<PAGE>
PART I.
ITEM 1. BUSINESS.
GENERAL
Case Credit Corporation is a wholly owned finance subsidiary of Case
Corporation ("Case"). Case Credit Corporation, its wholly owned operating
subsidiaries, Case Credit Ltd. (Canada) and Case Credit Australia Pty Ltd, and
Case Credit Corporation's joint ventures, Case Credit Europe S.A.S. and
UzCaseagroleasing (collectively "Case Credit" or the "Company"), provide and
administer financing for the retail purchase or lease of new and used Case
agricultural and construction equipment and other new and used agricultural
and construction equipment. Case Credit offers various types of retail
financing to end-use customers to facilitate the sale or lease of Case
products in the United States, Canada, Australia, Europe and Uzbekistan. The
Company's business principally involves purchasing retail installment sales
contracts from Case dealers. In addition, the Company facilitates and finances
the sale of insurance products to retail customers, provides financing for
Case dealers and Case rental equipment yards, and also provides other retail
financing programs in North America. In North America, Case Credit's private-
label credit card (issued by Nations Bank of Delaware, N.A.) is used by
customers to purchase parts, service, rentals and small wholegoods from Case
dealers. Case Credit also provides financing options to dealers for a variety
of purposes, including working capital, real estate acquisitions, construction
and remodeling, business acquisitions, dealer systems and service and
maintenance equipment.
The Company's business is highly dependent on the ability of Case and its
dealers to generate sales and leasing activity, the willingness of customers
to enter into financing transactions with the Company and the availability of
funds to the Company to finance such transactions. The ability of Case and its
dealers to sell agricultural and construction equipment and thereby generate
retail receivables is affected by numerous factors, including the general
level of activity in the agricultural and construction industries, the rate of
North American agricultural production and demand, weather conditions,
commodity prices, consumer confidence, government subsidies for the
agricultural sector, prevailing levels of construction (especially housing
starts), and levels of total industry capacity and equipment inventory. In
addition, the Company's business is affected by changes in market interest
rates, which in turn are related to general economic and capital market
conditions, demand for credit, inflation, governmental policies and other
factors.
The Company obtains funding for its operations primarily from the issuance
of commercial paper, bank revolving credit facilities, medium-term notes and
public debt, the issuance of securities in asset-backed securitization ("ABS")
transactions, earnings retained in the business, and advances and equity
capital from Case. The Company sells substantial amounts of retail receivables
in ABS transactions that typically involve the sale of a pool of retail
installment sales contracts to limited-purpose business trusts or similar
securitization entities ("Trusts"). The Company remains as servicer to such
receivables, for which it is paid a servicing fee.
The businesses in which the Company is engaged are highly competitive.
Competitors of Case Credit principally include banks and other finance and
leasing companies. The Company competes for customers based upon its customer
service and finance rates charged. A significant amount of Case equipment
retail sales and leases is financed by the Company. The Company emphasizes
convenient service to retail customers and offers flexible terms, such as
seasonal schedules of repayment and rentals, in its specialized markets. The
Company's finance rates and lease rental rates are generally believed to be in
the range of those of other financing and leasing companies, although not as
low as those of some banks and other lenders and lessors. Case Credit offers
various financing plans designed to meet customer requirements and increase
the potential for sales of Case products while generating financing income for
the Company.
The Company's strategy is to increase the size of its portfolio of managed
receivables, which includes receivables owned and receivables serviced for
Trusts and other entities in ABS transactions, and to increase its
profitability by focusing on the size and quality of its portfolio and on
financing, marketing and technology. The Company continues to expand its
financing business by providing retail and dealer financing in new geographic
1
<PAGE>
regions and for a broader range of equipment, and by offering new financing
products to Case dealers, end-use customers and others. During 1997, Case
Credit established Case Credit Europe S.A.S., a joint venture with
UFB LOCABAIL SA, a subsidiary of Compagnie Bancaire, to provide financing for
Case's European dealers and retail customers. Also during 1997, through an
agreement established with Cummins Engine Company, Inc. ("Cummins"), Case
Credit began to offer financing to qualified North American retail purchasers,
dealers and manufacturers of industrial equipment powered by Cummins engines.
Through UzCaseagroleasing, a joint venture with The Association of Banks of
Uzbekistan, Case Credit provides financing for the retail acquisition of new
and used Case agricultural equipment in Uzbekistan. Case Credit's portfolio of
managed receivables, which includes receivables owned and receivables serviced
for others, has grown from $4.3 billion at December 31, 1996, to $5.2 billion
at December 31, 1997.
Case Credit Corporation was incorporated in Delaware on January 26, 1993.
The principal offices of the Company are located at 233 Lake Avenue, Racine,
Wisconsin, 53403.
BUSINESS OF CASE CORPORATION
Case is a leading worldwide designer, manufacturer, marketer and distributor
of farm equipment and light- to medium-sized construction equipment. Case's
market position is particularly significant in several product categories
including loader/backhoes, skid steer loaders, large, high-horsepower farm
tractors and self-propelled combines.
In 1997, Case's sales of farm and construction equipment represented 79% of
total revenues, while sales of replacement parts represented 17% and financing
operations accounted for 4% of total revenues. In 1997, Case's sales of farm
equipment represented 63% of revenues from equipment sales, and sales of
construction equipment represented 37% of revenues from equipment sales.
RELATIONSHIP WITH CASE CORPORATION
Case provides the Company with certain operational and financial support
which is integral to the conduct of the Company's business.
Employee Benefits, Intercompany Services and Tax Sharing
The Company and Case either have or intend to enter into one or more
agreements relating to, among other things, various employee benefit plans
covering Company staff that are administered by Case, the Company's
reimbursement of Case for its staff and certain corporate services and tax
sharing arrangements between the Company and Case.
Special Marketing Programs
The Company, in conjunction with Case, Case dealers and other manufacturers
and their dealers, periodically offers, as part of its marketing strategy,
below-market interest rate and waived interest rate financing to customers.
When the Company acquires retail installment sales contracts and finance
leases subject to below-market interest rate and waived interest rate
financing, the Company is compensated for the difference between market rates
and the amounts received by the Company. The cost of this below-market
interest rate and waived interest rate financing is currently borne completely
by the manufacturers (and not by the Company) and is settled monthly. The
interest differential is recognized as income by Case Credit over the term of
the contracts. If such contract is subsequently sold, the interest
differential is recognized as part of the gain on retail notes sold.
Dividends
Case Credit paid dividends to Case of $40 million and $93 million, for the
years ended December 31, 1996 and 1995, respectively. Case Credit did not pay
dividends in 1997.
2
<PAGE>
Support Agreement
The Company and Case have entered into a support agreement (the "Support
Agreement") which provides, among other things, that Case will remain,
directly or indirectly, the sole owner of all of the voting stock of the
Company, and will make quarterly payments to the Company to the extent
necessary to ensure that the Company's consolidated pre-tax earnings (as
defined) available for fixed charges equal at least 1.10 times its fixed
charges (as defined) in all periods composed of four consecutive fiscal
quarters. The Support Agreement provides that Case is not directly or
indirectly guaranteeing any indebtedness, liability or obligation of the
Company. The Support Agreement may be modified or amended by the parties
thereto or terminated by either party upon thirty days' prior written notice
to the other party, with copies of such amendment or notice being sent to
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), and any other nationally recognized statistical rating organizations
then rating Case Credit debt, if (i) Moody's and S&P confirm in writing that
their ratings on Case Credit debt then rated or capable of being rated by them
would not be downgraded or withdrawn as a result of such modification,
amendment or termination, or (ii) the modification, amendment or notice of
termination provides that the Support Agreement will continue in effect with
respect to debt of Case Credit outstanding on the effective date of the
modification, amendment or termination, or (iii) the holders of at least a
majority of the aggregate unpaid principal amount of all outstanding debt of
Case Credit with an original maturity in excess of 270 days consent in
writing, so long as the holders of debt of Case Credit having an original
maturity of 270 days or less shall continue to have the benefit of the Support
Agreement until the maturity of such debt. For purposes of the Support
Agreement, no portion of any debt is considered to be "outstanding" if such
debt is deemed to be discharged and not outstanding in accordance with the
indenture or other governing instrument defining the rights of the holders of
such debt.
The calculation of pretax earnings available for fixed charges under the
Support Agreement differs from the calculation of the ratio of earnings to
fixed charges in accordance with the rules and regulations of the Securities
and Exchange Commission. Under the Support Agreement, all cash extraordinary
non-recurring items of income or expense (other than cash debt defeasance
costs) are included, whereas under the Securities and Exchange Commission's
rules and regulations, such items are excluded. No payment has been required
by Case to meet the Support Agreement commitments.
ITEM 2. PROPERTIES.
Case Credit Corporation does not own any real estate. Its principal
executive offices are located at 233 Lake Avenue, Racine, WI 53403.
As of December 31, 1997, the Company had additional offices in or near
Memphis, Tennessee; Dallas, Texas; Minneapolis, Minnesota; Columbus, Ohio;
Toronto, Canada, and St. Mary's, Australia.
ITEM 3. LEGAL PROCEEDINGS.
The Company is party to various litigation matters and claims arising from
its operations. Management believes that the outcome of these proceedings,
individually and in the aggregate, will not have a material adverse effect on
Case Credit's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Information for this Item 4 is not required pursuant to General Instruction
I(2) of Form 10-K.
3
<PAGE>
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is owned entirely by Case Corporation and is not
publicly traded.
The Company paid dividends to Case Corporation in the amount of $40 million
and $93 million in 1996 and 1995, respectively. The Company did not pay
dividends in 1997.
ITEM 6. SELECTED FINANCIAL DATA.
Information for this Item 6 is not required pursuant to General Instruction
I(2) of Form 10-K.
ITEM 7. MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS.
1997 Compared to 1996
Net Income
Case Credit recorded net income of $82 million in 1997, as compared to net
income, before extraordinary items, of $88 million in 1996. The $6 million
decrease in year-over-year income is primarily due to increased interest
expense, reduced margins on the sale of retail notes under asset-backed
securitizations, lower securitization and servicing fee income, as well as
increased depreciation of equipment on operating leases, largely offset by
higher earnings as a result of increased levels of on-balance-sheet
receivables. In the third quarter of 1996, Case Credit incurred a $3 million
extraordinary, after-tax charge to write-off unamortized bank fees in
conjunction with the refinancing of the Company's credit facilities. Case
Credit recorded net income of $85 million in 1996.
Revenues
Case Credit reported total revenues of $272 million for 1997, an increase of
$28 million or 11% over the $244 million of revenues reported for 1996.
Finance income earned on retail notes and finance leases increased to $103
million in 1997 as compared to $64 million for the same period in 1996,
primarily due to increased levels of on-balance-sheet receivables. Operating
lease revenues increased $17 million to $33 million for 1997, reflecting the
growth in Case Credit's operating lease portfolio. These revenue increases
were partially offset by decreases in net gains on retail notes sold, as well
as lower securitization and servicing fee income. Case Credit continues to
implement its asset-management strategy of retaining a larger percentage of
assets on balance sheet, as opposed to selling those assets through asset-
backed securitizations. Long term, the Company believes this strategy will
generate a more stable earnings performance for Case Credit. In the short
term, however, earnings growth may be constrained as Case Credit continues to
grow its on-balance-sheet portfolio.
Expenses
Operating expenses for Case Credit increased $13 million to a total of $52
million in 1997 as compared to 1996. This increase primarily resulted from a
$12 million increase in depreciation expense for equipment on operating leases
relating to Case Credit's larger operating lease portfolio.
Case Credit's interest expense for 1997 was $98 million, up $26 million from
the $72 million reported in 1996. The increased interest expense resulted from
higher average debt levels during 1997, primarily due to the growth in Case
Credit's on-balance-sheet receivables and increased equipment on operating
leases.
Serviced Portfolio
As of December 31, 1997, Case Credit's serviced portfolio increased 21% over
the same time last year to a record $5.2 billion. Gross receivables acquired
in 1997 increased 29% for a total of $3.4 billion versus the same
4
<PAGE>
period in 1996. Case Credit retained approximately $570 million of additional
retail notes and finance leases as compared to December 31, 1996, consistent
with the Company's asset-management strategy announced in early 1997. Case
Credit's portfolio losses were $8 million in 1997 as compared to $3 million in
1996, resulting in a loss-to-liquidation ratio of 0.34% in 1997 and 0.15% in
1996.
The growth in Case Credit's serviced portfolio reflects the increased
marketing and growth initiatives of Case Credit and the strong demand for both
new and used equipment. In early 1997, Case Credit broadened its product line
with the introduction of a commercial loan program in North America. Case
Credit expanded its geographic reach in 1997 through the establishment of a
joint venture in Europe, Case Credit Europe S.A.S., that provides financing
for Case's European dealers and retail customers. Also in 1997, Case Credit
and Cummins entered into an agreement under which Case Credit will offer
financing to qualified North American retail purchasers, dealers and
manufacturers of industrial equipment powered by Cummins engines.
Case Credit sold $1.8 billion and $1.6 billion of retail notes in 1997 and
1996, respectively, to limited-purpose business trusts organized by Case in
the United States and Canada. These trusts were formed for the purpose of
purchasing receivables from Case Credit and the receivables were used as
collateral for the issuance of asset-backed securities to outside investors.
The proceeds from the sale of the retail notes were used to repay indebtedness
and to finance additional receivables.
Interest Rate Risk Management
Case Credit is exposed to interest rate risk and as such has implemented an
interest rate risk management program. The program is within the guidelines
and policies approved by the Board of Directors to limit exposure to rising
interest rates.
At December 31, 1997, the Company performed a sensitivity analysis for the
Company's derivatives and other financial instruments that have interest rate
risk. The Company calculated the pretax earnings effect on its interest
sensitive instruments, including total receivables and long-term debt
obligations. The fair value gains or losses in the table below represent the
changes in the financial instrument's fair values that would be caused by
increasing the Company's weighted-average interest rates by 10% at December
31, 1997, based on the discounted values of their related cash flows (in
millions):
<TABLE>
<CAPTION>
FAIR VALUE
GAINS/(LOSSES)
--------------
<S> <C>
Total receivables, net...................................... $(11)
Long-term borrowings and related swaps:
Case Credit Long-term borrowings........................... (11)
Interest rate swaps........................................ 1
Treasury rate locks........................................ 1
----
Total................................................... $(20)
====
</TABLE>
Other Matters
In July 1996, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board issued EITF 96-14, "Accounting for the Costs
Associated with Modifying Computer Software for the Year 2000," which requires
that costs associated with modifying computer software for the year 2000 be
expensed as incurred. Through Case Credit's ongoing process of evaluating and
performing systems and software upgrades and enhancements, the Company has
actively been addressing year 2000 issues since 1995. During 1997, the Company
performed a thorough analysis of the impact of modifying computer software
that is not yet year 2000 compliant. The Company believes, based upon its
review, that future external and internal costs to be incurred for the
modification of internal-use software to address year 2000 issues will not
have a material effect on Case Credit's financial position, cash flows or
results of operations. The Company has also undertaken a program to ensure
that its suppliers are addressing year 2000 issues and, subject to the
Company's ongoing review of suppliers' year 2000 compliance, is not aware at
this time of any such issues that would have a material adverse effect on Case
Credit's financial position, cash flows or results of operations. As a result,
subject to the Company's ongoing compliance efforts, the costs and
uncertainties relating to timely resolution of year 2000 issues applicable to
the Company's business and operations are not reasonably expected by the
Company to have a material adverse effect on Case Credit's financial position,
cash flows or results of operations. The preceding three sentences are
forward-looking statements and the actual costs could differ materially from
the costs currently anticipated by the Company.
5
<PAGE>
In February 1998, limited-purpose business trusts organized by Case Credit
issued $614 million of asset-backed securities to outside investors, of which
$300 million was prefunded and will be sold to the trusts as receivables are
generated. The proceeds from this securitization will be used to repay
outstanding debt and to fund Case Credit's growing portfolio of receivables.
6
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS OF CASE CREDIT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Report of independent public accountants.................................. 8
Statements of income for each of the three years in the period ended De-
cember 31, 1997.......................................................... 9
Balance sheets as of December 31, 1997 and 1996........................... 10
Statements of cash flows for each of the three years in the period ended
December 31, 1997........................................................ 11
Statements of changes in stockholder's equity for each of the three years
in the period ended December 31, 1997.................................... 12
Notes to financial statements............................................. 13
</TABLE>
7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholder of Case Credit Corporation:
We have audited the accompanying consolidated balance sheets of Case Credit
Corporation (a Delaware corporation) and subsidiaries, as of December 31, 1997
and 1996, and the related consolidated statements of income, shareholder's
equity and cash flows, for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Case Credit Corporation
and subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 20, 1998
(except with respect to the matters discussed
in Note 12, as to which the date is
February 24, 1998)
8
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenues:
Finance income earned on retail notes and finance leases..... $103 $ 64 $ 31
Interest income from Case Corporation........................ 19 17 29
Net gain on retail notes sold................................ 71 85 92
Securitization and servicing fee income...................... 42 60 59
Lease income on operating leases............................. 33 16 4
Other income................................................. 4 2 2
---- ---- ----
Total revenues........................................... 272 244 217
Expenses:
Interest expense............................................. 98 72 42
Operating expenses:
Fees charged by Case Corporation........................... 18 20 19
Administrative and operating expenses...................... 11 11 7
Provision (credit) for credit losses....................... -- (3) (3)
Depreciation of equipment on operating leases.............. 22 10 3
Other...................................................... 1 1 2
---- ---- ----
Total operating expenses................................. 52 39 28
---- ---- ----
Total expenses........................................... 150 111 70
---- ---- ----
Income before taxes and extraordinary items.................. 122 133 147
Income tax provision......................................... 40 45 53
---- ---- ----
Income before extraordinary items............................ 82 88 94
Extraordinary items.......................................... -- (3) --
---- ---- ----
Net income..................................................... $ 82 $ 85 $ 94
==== ==== ====
</TABLE>
The accompanying notes to financial statements are an integral part of these
Statements of Income.
9
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
------
1997 1996
------ ------
<S> <C> <C>
Cash and cash equivalents...................................... $ 67 $ 17
Retail notes and finance leases................................ 1,733 1,163
Due from Trusts................................................ 267 268
------ ------
Total receivables.......................................... 2,000 1,431
Allowance for credit losses.................................... (22) (23)
------ ------
Total receivables--net..................................... 1,978 1,408
Affiliated receivables......................................... 67 13
Equipment on operating leases, at cost......................... 209 110
Accumulated depreciation....................................... (30) (13)
------ ------
Net equipment on operating leases.......................... 179 97
------ ------
Property and equipment, at cost................................ 4 3
Accumulated depreciation....................................... (1) (1)
------ ------
Net property and equipment................................. 3 2
Other assets................................................... 68 20
------ ------
Total...................................................... $2,362 $1,557
====== ======
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C>
Short-term debt................................................ $1,147 $ 829
Accounts payable and other accrued liabilities................. 64 54
Affiliated payables............................................ 39 --
Deposits withheld from dealers................................. 18 19
Long-term debt................................................. 735 415
------ ------
Total liabilities.......................................... 2,003 1,317
------ ------
Commitments and Contingencies (Note 9)
Minority Interest.............................................. 2 --
Stockholder's equity:
Common Stock, $5 par value, 200 shares authorized, issued and
outstanding................................................. -- --
Paid-in capital.............................................. 244 199
Cumulative translation adjustment............................ (16) (6)
Retained earnings............................................ 129 47
------ ------
Total stockholder's equity................................. 357 240
------ ------
Total...................................................... $2,362 $1,557
====== ======
</TABLE>
The accompanying notes to financial statements are an integral part of these
Balance Sheets.
10
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................................ $ 82 $ 85 $ 94
Adjustments to reconcile net income to net cash pro-
vided (used)
by operating activities:
Depreciation and amortization........................ 24 12 3
Deferred income tax expense.......................... 18 1 (9)
Extraordinary items, after tax....................... -- 3 --
Net gain on retail notes sold........................ (71) (85) (92)
Changes in components of working capital:
(Increase) decrease in other assets................. (31) 5 (23)
Increase (decrease) in accounts payables and other
accrued liabilities................................ 22 21 8
Other, net........................................... (6) -- 1
------ ------ ------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES... 38 42 (18)
------ ------ ------
INVESTING ACTIVITIES:
Cost of receivables acquired.......................... (2,791) (2,143) (1,949)
Collections of receivables............................ 489 296 157
Proceeds from sales of receivables.................... 1,749 1,584 1,374
Purchase of equipment on operating leases............. (100) (71) (36)
Investments in joint ventures......................... (16) -- --
Expenditures for property and equipment............... (1) (2) --
------ ------ ------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES... (670) (336) (454)
------ ------ ------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.............. 150 200 --
Payment of long-term debt............................. -- -- (5)
Increase in short-term debt and revolving credit fa-
cilities............................................. 487 136 576
Dividends paid to Case Corporation.................... -- (40) (93)
Capital contributions from Case Corporation........... 45 -- 5
------ ------ ------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES... 682 296 483
------ ------ ------
INCREASE IN CASH AND CASH EQUIVALENTS.................. 50 2 11
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......... 17 15 4
------ ------ ------
CASH AND CASH EQUIVALENTS, END OF PERIOD............... $ 67 $ 17 $ 15
====== ====== ======
CASH PAID DURING THE PERIOD FOR INTEREST............... $ 101 $ 71 $ 40
====== ====== ======
CASH PAID DURING THE PERIOD FOR TAXES.................. $ 44 $ 47 $ 56
====== ====== ======
</TABLE>
The accompanying notes to financial statements are an integral part of these
Statements of Cash Flows.
11
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
CUMULATIVE
COMMON PAID-IN TRANSLATION RETAINED
STOCK CAPITAL ADJUSTMENT EARNINGS TOTAL
------ ------- ----------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994........... $-- $ 94 $ (8) $ 1 $187
Net income......................... -- -- -- 94 94
Dividends declared................. -- -- -- (93) (93)
Capital contributions from Case
Corporation....................... -- 5 -- -- 5
---- ---- ---- ---- ----
Balance, December 31, 1995........... -- 199 (8) 2 193
Net income......................... -- -- -- 85 85
Dividends declared................. -- -- -- (40) (40)
Translation adjustment............. -- -- 2 -- 2
---- ---- ---- ---- ----
Balance, December 31, 1996........... -- 199 (6) 47 240
Net income......................... -- -- -- 82 82
Translation adjustment............. -- -- (10) -- (10)
Capital contributions from Case
Corporation....................... -- 45 -- -- 45
---- ---- ---- ---- ----
Balance, December 31, 1997........... $-- $244 $(16) $129 $357
==== ==== ==== ==== ====
</TABLE>
The accompanying notes to financial statements are an integral part of these
Statements of Changes in Stockholder's Equity.
12
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1: NATURE OF OPERATIONS
Case Credit Corporation is a wholly owned finance subsidiary of Case
Corporation ("Case"). Case Credit Corporation, its wholly owned operating
subsidiaries, Case Credit Ltd. (Canada) and Case Credit Australia Pty Ltd, and
Case Credit Corporation's joint ventures, Case Credit Europe S.A.S. and
UzCaseagroleasing (collectively "Case Credit" or the "Company"), provide and
administer financing for the retail purchase or lease of new and used Case
agricultural and construction equipment and other new and used agricultural
and construction equipment. Case Credit offers various types of retail
financing to end-use customers to facilitate the sale or lease of Case
products in the United States, Canada, Australia, Europe and Uzbekistan. The
Company's business principally involves purchasing retail installment sales
contracts from Case dealers. In addition, the Company facilitates and finances
the sale of insurance products to retail customers, provides financing for
Case dealers and Case rental equipment yards, and provides other retail
financing programs in North America. In North America, Case Credit's private-
label credit card is used by customers to purchase parts, service, rentals and
small wholegoods from Case dealers. Case Credit also provides various
financing options to dealers for a variety of purposes including working
capital, real estate acquisitions, construction and remodeling, business
acquisitions, dealer systems and service and maintenance equipment.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
The accompanying financial statements reflect the consolidated results of
Case Credit Corporation and its subsidiaries. All significant intercompany
transactions have been eliminated in consolidation.
Certain reclassifications have been made to conform prior years' financial
statements to the 1997 presentation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
The assets and liabilities of foreign subsidiaries are translated into U.S.
dollars using year-end exchange rates. Revenue and expenses are translated at
average rates during the year. Adjustments resulting from this translation are
deferred and reflected as a separate component of Stockholder's Equity.
Foreign exchange transaction gains/losses for the years ended December 31,
1997, 1996 and 1995, were not material.
Recognition of Finance and Interest Income
Retail Notes and Finance Leases--The Company records finance income earned
on retail notes and finance leases using the effective interest method. A
portion of the earned finance income arises from sales programs offered by
Case and other manufacturers on which finance charges are waived or low-rate
financing programs are offered. When the Company acquires retail installment
sales contracts and finance leases subject to below-market interest rate and
waived interest rate financing, the Company is compensated for the difference
between market rates and the amounts received by the Company. Case Credit
receives compensation from Case and other manufacturers in an amount equal to
the difference between the competitive interest rate and the amount paid by
13
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
the customer. This amount is initially recognized as unearned finance charges
and is recognized as interest income from Case over the term of the retail
notes from sales programs offered by Case. The amounts earned from Case for
below-market interest rate and waived interest rate financing are included in
"Interest income from Case Corporation" in the accompanying Statements of
Income, and amounted to $19 million, $17 million and $29 million in 1997, 1996
and 1995, respectively. Compensation received for below-market interest rates
and waived interest rate financing from other manufacturers is included in
"Finance income earned on retail notes and finance leases" in the accompanying
Statements of Income. When the receivables are sold, the unrecognized portion
of the unearned finance charges is included in the calculation of the net gain
on retail notes sold. The Company included in its gain calculations income
from Case amounting to $63 million, $67 million and $98 million in 1997, 1996
and 1995, respectively, as part of the sale of retail notes. These amounts are
included in "Net gain on retail notes sold" in the accompanying Statements of
Income. Recognition of income on loans is generally suspended when an account
becomes 120 days delinquent or when management determines that collection of
future income is not probable. Accrual is resumed if the receivable becomes
contractually current and collection doubts are removed. Previously suspended
income is recognized at that time. The amount of loans and related finance
charges for which income recognition has been suspended is not material.
The Company offers retail notes with interest rates that float with the
prime rate, plus an applicable margin. At December 31, 1997 and 1996, these
notes amount to $279 million and $190 million, respectively.
Receivables Sold and Serviced
Certain retail notes receivable have been securitized and sold to limited-
purpose business trusts ("Trusts") with recourse up to certain specified
amounts. For sales occurring during 1997, receivables, net of retained
interests, are removed from the balance sheet and a gain or loss on sale is
recognized in accordance with the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities." For sales of retail
receivables between June 1994 and December 1996, the retail notes receivable
sold were removed from the balance sheet and a gain or loss on sale was
recognized for the difference between the carrying value of the receivables
and the adjusted sales proceeds. The adjusted sales proceeds were based on the
proceeds received from investors adjusted for normal servicing fees, the
estimated obligation pursuant to recourse provisions, and other factors, as
appropriate. For receivables sold prior to June 1994, Case Credit recognizes
excess servicing fees that represent the excess of the yield on the portfolio
sold over the yield paid to investors in the Trusts. These excess servicing
fees are recognized as the amounts are received from the Trusts rather than at
the time of sale, due to the uncertainty of the amount of fees that would
ultimately be collected. During 1997, 1996 and 1995, Case Credit received
excess servicing fees amounting to $3 million, $21 million and $21 million,
respectively, which is included in "Securitization and servicing fee income"
in the accompanying Statements of Income. At December 31, 1997, the excess
servicing fee asset is not material. No servicing asset or liability has been
recorded under the provisions of SFAS No. 125 by the Company, as management
believes that the servicing fee income received is fair compensation for the
services provided.
Case Credit is required to remit the cash collected on the serviced
portfolio to the Trusts within two business days. At December 31, 1997 and
1996, $21 million and $27 million, respectively, of unremitted cash payable to
the Trusts is included in "Accounts payable and other accrued liabilities" in
the accompanying Balance Sheets.
Accounting Pronouncements
Effective January 1, 1995, Case Credit adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," that requires companies to value impaired
loans based on the present value of expected future cash
14
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
flows or other practical measures as outlined in the statement. The adoption
of this statement did not have a material effect on the Company's financial
position or results of operations.
Effective January 1, 1997, Case Credit adopted SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities." The adoption of this statement did not have a material effect on
the Company's financial position or results of operations.
Case Credit will adopt SFAS No. 130, "Reporting Comprehensive Income," and
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," effective January 1, 1998. The adoption of these statements will
have no effect on the Company's financial position or results of operations.
Cash and Cash Equivalents
Cash equivalents are comprised of all highly liquid investments with an
original maturity of three months or less.
Equipment on Operating Leases
Case Credit purchases equipment that is leased to retail customers under
operating leases from Case dealers. Income from operating leases is recognized
over the term of the lease. The equipment is generally depreciated over
periods of up to five years.
Deposits Withheld from Dealers
These deposits represent amounts withheld from dealers relating to retail
sales financed using retail notes and finance leases. Any subsequent losses on
retail notes or finance leases that were acquired with limited recourse are
charged against the amounts withheld from the dealer. To the extent that a
loss on a retail note or finance lease exceeds the dealers' reserves, the
amount is charged against the Company's allowance for credit losses. Annually,
the balance of each dealer's withholding account, in excess of certain minimum
levels, is remitted to the dealer.
Derivatives
The Company uses derivative financial instruments to manage its interest
rate exposures. Case Credit does not hold or issue such instruments for
trading purposes. Amounts to be received or paid under these instruments are
recognized in the results of operations as interest expense or are recorded as
part of the gain on sale of receivables, as appropriate, in the periods to
which they relate.
Reference is made to Note 7, "Financial Instruments," for further
information regarding the Company's use of derivative financial instruments.
Extraordinary Items
During 1996, the Company recorded a $3 million extraordinary, after-tax
charge to write-off unamortized bank fees in conjunction with the refinancing
of the Company's credit facilities.
15
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3: RECEIVABLES
A summary of receivables is as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1997 1996
------ ------
<S> <C> <C>
Retail notes.............................................. $1,417 $ 930
Finance leases............................................ 491 385
Due from Trusts........................................... 267 268
------ ------
Gross receivables..................................... 2,175 1,583
Less--Unearned finance charges............................ (175) (152)
Less--Allowance for credit losses......................... (22) (23)
------ ------
Total receivables, net................................ $1,978 $1,408
====== ======
</TABLE>
Retail Notes and Finance Leases
The terms of retail notes and finance leases generally range from two to six
years. The average effective yield on retail notes and finance leases held by
the Company was approximately 9.1% and 9.5% at December 31, 1997 and 1996,
respectively.
Maturities of retail notes and finance leases as of December 31, 1997 are as
follows (in millions):
<TABLE>
<CAPTION>
Years ending December 31,
-------------------------
<S> <C>
1998............................................................ $ 752
1999............................................................ 503
2000............................................................ 311
2001............................................................ 199
2002............................................................ 114
2003 and thereafter............................................. 29
------
Total retail notes and finance leases--gross.................. 1,908
Less--Unearned finance charges.................................... (175)
------
Total retail notes and finance leases, net of unearned finance
charges...................................................... $1,733
======
</TABLE>
The terms of the retail notes and finance leases allow for prepayment at any
time without penalty.
Changes in the allowance for credit losses are as follows (in millions):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year.............................. $23 $25 $26
Provision (credit) for credit losses.................... -- (3) (3)
Write-offs, net of recoveries........................... (1) 1 2
--- --- ---
Balance, end of year.................................... $22 $23 $25
=== === ===
</TABLE>
The allowance for credit losses is established to cover potential losses for
receivables owned by the Company. During 1997, the Company reclassified a
portion of its allowance for credit losses that related to the receivables
sold to Trusts as a direct reduction of the "Due from Trusts" receivable
balance in the accompanying Balance Sheets. Similar reclassifications were
made to prior year balances to conform to the 1997 presentation.
The preceding table reflects losses incurred by the Company and does not
include losses charged to dealers or those absorbed by the Trusts. Total
losses incurred on the Company's serviced portfolio were $8 million in
16
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1997 and $3 million in 1996 and 1995. In 1996 and 1995, the Company reversed
$3 million of the allowance for credit losses, as the allowance was deemed to
be excessive.
Case Credit sold $1.8 billion, $1.6 billion and $1.5 billion of retail notes
(net of unearned finance charges) in 1997, 1996 and 1995, respectively, to
Trusts in the United States and Canada. The Trusts were formed for the purpose
of purchasing Case Credit receivables and the receivables were used as
collateral for the issuance of asset-backed securities (asset-backed
securitizations) to outside investors. The cash proceeds received from the
sales of notes were reduced by $55 million, $73 million and $90 million, in
1997, 1996 and 1995, respectively, pursuant to certain recourse provisions in
the sale agreements. These reductions in cash proceeds are held in escrow by
the Trusts to provide security in the event of uncollectible notes and are
released to the Company when the notes are collected. Escrow amounts held by
the Trusts, of $154 million and $171 million at December 31, 1997 and 1996 are
recorded in "Due from Trusts" in the accompanying Balance Sheets. Case Credit
has established reserves for the estimated losses on amounts held in escrow,
and these reserves are recorded in from "Due from Trusts" on the accompanying
Balance Sheets. A security interest in the equipment financed by the retail
notes is maintained such that in the event of non-performance, the related
equipment can be repossessed to minimize losses. As these Trusts are
controlled by third parties and meet minimum equity capitalization standards,
they are not included in the consolidated financial statements of the Company.
Case Credit's portfolio of managed receivables, including receivables owned
and receivables serviced for others, has grown from $4.3 billion at December
31, 1996, to $5.2 billion at December 31, 1997. Case's serviced portfolio at
December 31, 1997, included $4.6 billion of retail notes (net of unearned
finance charges), of which $2.7 billion (net of unearned finance charges) were
owned by Trusts in the United States and Canada. At December 31, 1996, Case
Credit serviced a portfolio of $3.8 billion of managed receivables (net of
unearned finance charges), including retail notes amounting to $2.3 billion
(net of unearned finance charges) that were owned by Trusts in the United
States and Canada. Case Credit also serviced $88 million and $235 million of
retail notes (net of unearned finance charges) at December 31, 1997 and 1996,
respectively, that were owned by an unaffiliated third party.
At December 31, 1997 and 1996, approximately $56 million and $115 million,
respectively, of retail notes receivable (net of unearned finance charges)
have been pledged as collateral under the Company's three-year, $750 million
U.S. asset-backed commercial paper liquidity facility.
Retail notes receivable and serviced receivables sold with limited recourse
have significant concentrations of credit risk in the farm and construction
business sectors. On a geographic basis, there is not a disproportionate
concentration of credit in any area of the United States, Canada or Australia.
NOTE 4: SHORT-TERM DEBT
The Company has various lines of credit and liquidity facilities that
include borrowings under both committed credit facilities and uncommitted
lines of credit and similar arrangements. Case Credit established the
following credit facilities in August 1996: (i) a five-year, $1.2 billion
revolving credit facility; (ii) a three-year, $750 million U.S. asset-backed
commercial paper liquidity facility ("Liquidity Facility"); and (iii) a five-
year, C$500 million revolving credit facility. In October 1997, Case Credit's
Australian subsidiary, Case Credit Australia Pty Ltd, established a A$400
million revolving credit facility comprised of a five-year, A$300 million
revolving credit facility and a 364-day, A$100 million revolving credit
facility. Case Credit also has commercial paper programs of $1.2 billion,
C$500 million and A$400 million. Under the terms of these programs, the
principal amount of the commercial paper outstanding, combined with the
amounts outstanding under the applicable revolving credit facility mentioned
above, cannot exceed the total amount available under the revolving credit
facility.
17
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Case Credit has other lines of credit available for working capital
expenditures and other general purposes. In addition, Case Credit has a $550
million medium-term note program that was established in the United States
pursuant to a shelf registration statement filed with the Securities and
Exchange Commission in September 1997, and Case Credit Australia Pty Ltd has a
A$600 million medium-term note program that was established in October 1997.
A summary of short-term debt is set forth in the following table (in
millions):
<TABLE>
<CAPTION>
DECEMBER
31,
-----------
1997 1996
------ ----
<S> <C> <C>
Credit agreements (a)........................................ $ -- $438
Commercial paper............................................. 1,112 299
Commercial paper liquidity facility.......................... 35 92
------ ----
Total short-term debt.................................... $1,147 $829
====== ====
</TABLE>
- --------
(a) The credit agreements include borrowings under both committed credit
facilities and uncommitted lines of credit and similar arrangements.
The weighted-average interest rates on total short-term debt outstanding at
December 31, 1997 and 1996, were 5.9% and 5.4%, respectively. At December 31,
1997, the unused portion of the combined committed credit facilities and the
commercial paper program was $438 million, and the unused portion of the
asset-backed commercial paper liquidity facility was $715 million. At December
31, 1996, the unused portion of the combined committed credit facilities and
the commercial paper program was $882 million, and the unused portion of the
asset-backed commercial paper liquidity facility was $658 million.
At the option of the Company, borrowings under the revolving credit
facilities bear interest at: (i) prime rate; (ii) LIBOR, plus an applicable
margin; or (iii) banker's bills of acceptance rates, plus an applicable
margin. Borrowings may be obtained in U.S. dollars and certain other foreign
currencies. Borrowings under the Liquidity Facility bear interest at
prevailing commercial paper rates at the date of the borrowing. Case Credit's
revolving credit facilities (other than the Liquidity Facility) contain
restrictive covenants that require that Case Credit maintain certain financial
conditions including a maximum ratio of debt to net worth and a minimum fixed-
charge coverage ratio. The revolving credit facilities (other than the
Liquidity Facility) also impose certain restrictions on certain indebtedness,
liens on Company assets and ownership of certain subsidiaries. Pursuant to a
support agreement, Case Corporation has agreed to maintain its ownership in,
and provide financial backing for, Case Credit. At December 31, 1997, the
Company was in compliance with all debt covenants.
Due to the availability of financing under the Company's credit facilities,
Case Credit has classified $125 million, $65 million and $70 million of
borrowings under the commercial paper facilities of Case Credit Corporation,
Case Credit Australia Pty Ltd, and Case Credit Ltd. (Canada), respectively, as
long term. The Company has also classified $125 million of borrowings under
uncommitted revolving credit facilities of Case Credit Corporation as long
term.
The credit facilities generally provide for facility fees on the total
commitment, whether used or unused, and also provide for annual agency fees to
the administrative agents for the facilities.
18
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5: LONG-TERM DEBT
A summary of long-term debt is set forth in the following table (in
millions):
<TABLE>
<CAPTION>
DECEMBER
31,
---------
1997 1996
---- ----
<S> <C> <C>
Case Credit Corporation
Notes, payable in 2003, interest rate of 6.125%.............. $200 $200
Notes, payable in 2007, interest rate of 6.75%............... 150 --
Long-term portion of borrowings under revolving credit facil-
ities,
average interest rate of 6.1%............................... -- 100
Long-term portion of borrowings under commercial paper facil-
ities,
average interest rate of 6.4%............................... 125 --
Long-term portion of borrowings under uncommitted revolving
credit facilities, average interest rate of 6.9%............ 125 --
Case Credit Australia Pty Ltd
Long-term portion of borrowings under revolving credit facil-
ities,
average interest rate of 6.3%............................... -- 79
Long-term portion of borrowings under commercial paper facil-
ities,
average interest rate of 5.1%............................... 65 --
Case Credit Ltd. (Canada)
Long-term portion of borrowings under revolving credit facil-
ities,
average interest rate of 6.2%............................... -- 36
Long-term portion of borrowings under commercial paper facil-
ities,
average interest rate of 4.3%............................... 70 --
---- ----
Total long-term debt....................................... $735 $415
==== ====
</TABLE>
On September 17, 1997, Case Credit filed a registration statement with the
Securities and Exchange Commission for the issuance of up to $700 million of
unsecured and unsubordinated debt securities. During the fourth quarter, Case
Credit sold $150 million aggregate principal amount of its 6.75% notes due
2007 and established a $550 million medium-term note program pursuant to this
registration statement. Case Credit commenced to offer securities under the
medium-term note program in January 1998, see Note 12 to the Case Credit
Financial Statements.
A summary of the minimum annual repayments of long-term debt as of December
31, 1997, is as follows (in millions):
<TABLE>
<S> <C>
1999.................................................................. $--
2000.................................................................. --
2001.................................................................. 195
2002.................................................................. --
2003 and thereafter................................................... 540
----
Total............................................................... $735
====
</TABLE>
NOTE 6: INCOME TAXES
The income and expenses of Case Credit and its domestic subsidiaries are
included in the consolidated income tax return of Case Corporation. The
Company's Canadian subsidiaries file separate income tax returns. In addition,
Case Credit's Australian subsidiaries are permitted income tax relief with
Case Corporation's Australian subsidiaries. Provisions for income taxes for
all periods are made as if Case Credit filed a separate
19
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
income tax return. Any liability incurred by Case resulting from the inclusion
of Case Credit in its income tax returns was reimbursed to or paid by Case
Credit or the appropriate subsidiary.
Accrued taxes amounted to $(18) million and $10 million at December 31, 1997
and 1996, respectively, and are included in "Accounts payable and accrued
liabilities" in the accompanying Balance Sheets.
The sources of income before taxes and extraordinary items were as follows
(in millions):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
U.S. sources................................... $ 94 $ 105 $ 126
Foreign sources................................ 28 28 21
-------- -------- --------
Income before taxes and extraordinary items.... $ 122 $ 133 $ 147
======== ======== ========
</TABLE>
The provision (benefit) for income taxes is as follows (in millions):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current:
United States............................ $ 13 $ 30 $ 47
Foreign.................................. 10 10 7
State.................................... (1) 4 8
-------- -------- --------
Total current.......................... 22 44 62
-------- -------- --------
Deferred:
United States............................ 17 2 (7)
Foreign.................................. -- (2) (1)
State.................................... 1 1 (1)
-------- -------- --------
Total deferred......................... 18 1 (9)
-------- -------- --------
Total tax provision.................... $ 40 $ 45 $ 53
======== ======== ========
</TABLE>
Following is a reconciliation of income taxes computed at the U.S. Federal
income tax rate to the tax provision reflected in the accompanying Statements
of Income (in millions):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Tax provision at U.S. Federal income tax
rate................................... $ 43 $ 47 $ 51
State taxes, net of Federal benefit..... -- 3 6
U.S. tax on foreign subsidiaries earn-
ings................................... -- 1 3
Reduction in valuation allowance........ (2) (2) (9)
Other................................... (1) (4) 2
-------- -------- --------
Total tax provision................. $ 40 $ 45 $ 53
======== ======== ========
</TABLE>
Case Credit had previously established valuation allowances for deferred tax
assets for which realization was uncertain. Case Credit has not recorded
valuation allowances against deferred tax assets in tax jurisdictions where
Case and Case Credit have been profitable as management believes it is more
likely than not that such assets will be realizable. Deferred tax assets are
included in "Other assets" on the accompanying Balance Sheets.
20
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company had valuation allowances in certain tax jurisdictions where future
profitability was uncertain. During 1995 and 1996, Case Credit reversed a
portion of the valuation allowance as Case Credit affiliates generated income
to support such a reduction. In 1997, the remaining valuation allowances were
reversed in full.
The components of the net deferred tax assets (liabilities) are as follows
(in millions):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------
1997 1996
------ ------
<S> <C> <C>
Deferred tax assets (liabilities):
Allowance for credit losses........................... $ 10 $ 12
Deferred gains on receivables......................... (16) 1
Accrued expenses...................................... 2 2
Valuation allowance................................... -- (3)
Leasing adjustments................................... 4 5
Depreciation.......................................... (4) (4)
Other................................................. 1 2
------ ------
Net deferred tax assets (liabilities)............... $ (3) $15
====== ======
</TABLE>
NOTE 7: FINANCIAL INSTRUMENTS
Fair Market Value of Financial Instruments
The estimated fair market values of financial instruments which do not
approximate the carrying values in the financial statements are as follows (in
millions):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1997 1996
--------------- ---------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Total receivables, net................... $1,978 $1,982 $1,408 $1,440
Long-term debt........................... 735 735 415 408
</TABLE>
The fair value of the retail notes and finance leases component of total
receivables was based on discounting the estimated future payments at
prevailing market rates. The fair value of the interest only strip component
of "Due from Trusts" included in total receivables was based on loss,
prepayment and interest rate assumptions approximating those currently
experienced by the Company. The fair value of fixed-rate, long-term debt was
based on the market value of debt with similar maturities and interest rates;
the carrying amount of floating-rate, long-term debt was assumed to
approximate its fair value. The fair value and carrying value of interest rate
swaps was not material.
Derivatives
The Company uses derivative financial instruments to manage its interest
rate exposures. Case Credit does not hold or issue such instruments for
trading purposes. The notional amounts of these contracts do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
risk. The net amounts exchanged are calculated on the basis of the notional
amounts and other terms of the contracts, such as interest rates, and only
represent a small portion of the notional amounts. The credit and market risk
under these agreements is minimized through diversification among
counterparties with high credit ratings.
Depending on the item being hedged, gains and losses on derivative financial
instruments are either recognized in the results of operations as they accrue
or are deferred until the hedged transaction occurs. Derivatives used as
hedges are effective at reducing the risk associated with the exposure being
hedged and are designated as a hedge at the inception of the derivative
contract. Accordingly, changes in the market value of the
21
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
derivative are highly correlated with changes in the market value of the
underlying hedged item at the inception of the hedge and over the life of the
hedge contract.
Interest Rate Swaps
Case Credit enters into interest rate swaps to stabilize funding costs by
minimizing the effect of potential interest rate increases on floating-rate
debt in a rising interest rate environment. Under these agreements, the
Company contracts with a counterparty to exchange the difference between a
fixed rate and a floating rate applied to the notional amount of the swap.
Swap contracts are principally between one and four years in duration. The
differential to be paid or received on interest rate swap agreements is
accrued as interest rates change and is recognized in net income as an
adjustment to interest expense.
Gains and losses resulting from terminated interest rate swap agreements are
deferred and recognized in net income over the shorter term of the remaining
contractual life of the swap agreement or the remaining term of the debt
underlying the swap agreement. If swap agreements are terminated due to the
underlying debt being extinguished, any resulting gain or loss is recognized
in net income as an adjustment to interest expense at the time of the
termination.
The weighted-average pay and receive rates for the swaps outstanding at
December 31, 1997, were 5.99% and 4.76%, respectively. The weighted-average
pay and receive rates for the swaps outstanding at December 31, 1996, were
6.22% and 4.49%, respectively.
Back-to-Back Interest Rate Caps
The Liquidity Facility requires a subsidiary of Case Credit to have interest
rate cap agreements in place. Due to the relatively high expense of obtaining
such an instrument, Case Credit sells an identical cap, concurrent with the
cap purchase, to the same counterparty. This effectively minimizes the overall
expense to Case Credit, meets the requirements of the Liquidity Facility and
eliminates any risk of financial loss on the purchased cap. The defined term
of the cap is approximately 48 months.
Premiums paid for interest rate cap agreements purchased and sold are
included in "Other assets" and "Accounts payable and other accrued
liabilities," respectively, in the accompanying Balance Sheets, and are
amortized to interest expense over the terms of the agreements. Amounts
receivable or payable under cap agreements are recognized in net income as
adjustments to interest expense over the term of the related debt. If interest
rate cap agreements are terminated due to the underlying debt being
extinguished, any resulting gain or loss is recognized in net income as a
component of "Net gain on retail notes sold" at the time of the termination.
At December 31, 1997, Case Credit had a back-to-back cap at a rate of 7.00%,
at a notional amount of approximately $61 million. At December 31, 1996, Case
Credit had a back-to-back cap at a rate of 7.00%, at a notional amount of
approximately $98 million.
Treasury Rate Locks
A Treasury rate lock is a commitment to either purchase or sell the
designated financial instrument at a future date (the determination date) for
a specified price (the reference yield). The purpose of this instrument is to
protect fixed-rate debt from fluctuations in the yield of the Treasury Note
that forms the basis of pricing the debt. As of December 31, 1997, Case Credit
had entered into Treasury rate locks with a notional value of $150 million
based on two- and three-year Treasury Notes at a weighted-average yield of
5.75%. Case Credit did not have any Treasury rate locks outstanding at
December 31, 1996.
22
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8: RELATED PARTY TRANSACTIONS
Case Credit receives compensation from Case for retail contracts that were
created under certain low-rate financing programs and interest waiver programs
offered by Case. The amount of such compensation not yet paid by Case as of
December 31, 1997 and 1996, was $10 million and $9 million, respectively, and
is included in "Affiliated receivables" on the accompanying Balance Sheets.
Operating expenses include charges from Case for administrative expenses
related to employees who perform specific functions for Case Credit. Such
charges amounted to $18 million, $20 million, and $19 million for the years
ended December 31, 1997, 1996 and 1995, respectively. Management believes that
these charges reasonably reflect the actual costs of services provided.
NOTE 9: COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is party to various litigation matters and claims arising from
its operations. Management believes that the outcome of these proceedings,
individually and in the aggregate, will not have a material adverse effect on
Case Credit's financial position or results of operations.
Commitments
Commitments under capital and operating leases are not significant to the
financial statements. Total rental expense for operating leases was minimal
for the years ended December 31, 1997, 1996 and 1995.
NOTE 10: GEOGRAPHICAL INFORMATION
Although the majority of its business is done in the United States, the
Company also conducts its operations through various foreign subsidiaries and
joint ventures. Total assets, revenues, and net income before extraordinary
items applicable to operations by geographic segments were as follows (in
millions):
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
ASSETS:
United States...................................... $1,733 $1,064 $ 857
Canada............................................. 383 308 180
Australia.......................................... 225 185 116
Other.............................................. 21 -- --
------ ------ ------
Total............................................ $2,362 $1,557 $1,153
====== ====== ======
REVENUES:
United States...................................... $ 219 $ 196 $ 185
Canada............................................. 36 36 31
Australia.......................................... 17 12 1
------ ------ ------
Total............................................ $ 272 $ 244 $217
====== ====== ======
NET INCOME BEFORE EXTRAORDINARY ITEMS:
United States...................................... $ 64 $ 69 $ 79
Canada............................................. 15 17 15
Australia.......................................... 3 2 --
------ ------ ------
Total ........................................... $ 82 $ 88 $ 94
====== ====== ======
</TABLE>
23
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11: OTHER MATTERS
During the third quarter of 1997, Case Credit invested $16 million in a 50%,
unconsolidated joint venture with UFB LOCABAIL SA, a subsidiary of Compagnie
Bancaire, to provide financing for Case's European dealers and retail
customers. The formation of this new venture, Case Credit Europe S.A.S.,
establishes the first pan-European finance organization to serve both the
agricultural and construction equipment markets in that region.
Also during the third quarter of 1997, Case Credit, through an agreement
established with Cummins Engine Company, Inc. ("Cummins"), began to offer
financing to qualified North American retail purchasers, dealers and
manufacturers of industrial equipment powered by Cummins engines.
NOTE 12: SUBSEQUENT EVENTS
In January and February 1998, Case Credit issued an aggregate of $279
million of its medium-term notes, with maturities of two to three years and
interest rates ranging from 5.84% to 6.0%, as part of the Company's $550
million medium-term note program. Case Credit established this medium-term
note program during the fourth quarter of 1997 pursuant to a shelf
registration statement filed with the Securities and Exchange Commission on
September 17, 1997. The net proceeds from the offerings will be used to fund
Case Credit's growth initiatives and for other corporate purposes, including
the repayment of indebtedness.
In February 1998, limited-purpose business trusts organized by Case Credit
issued $614 million of asset-backed securities to outside investors, of which
$300 million was prefunded and will be sold to the trusts as receivables are
generated. The proceeds from this securitization will be used to repay
outstanding debt and to fund Case Credit's growing portfolio of receivables.
24
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Item 10, "Directors and Executive Officers of the Registrant," Item 11,
"Executive Compensation," Item 12, "Security Ownership of Certain Beneficial
Owners and Management," and Item 13, "Certain Relationships and Related
Transactions," are not required pursuant to General Instruction I (2) of Form
10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
FINANCIAL STATEMENTS INCLUDED IN ITEM 8
See "Index to Financial Statements of Case Credit Corporation and
Consolidated Subsidiaries" set forth in Item 8, "Financial Statements and
Supplementary Data."
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE INCLUDED IN ITEM 14
SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE
Schedule I--Condensed financial information of registrant
Schedule II--Valuation and qualifying accounts
Schedule III--Real estate and accumulated depreciation
Schedule IV--Mortgage loans on real estate
Schedule V--Supplemental Information Concerning Property
--Casualty Insurance Operations
25
<PAGE>
EXHIBITS
A list of the exhibits included as part of this Form 10-K is set forth in
the Index to Exhibits that immediately precedes such exhibits, which is
incorporated herein by reference.
REPORTS ON FORM 8-K
For the fiscal quarter ended December 31, 1997, Case Credit Corporation
filed a Current Report on Form 8-K dated December 19, 1997, event date
December 8, 1997, for the purpose of filing certain exhibits in connection
with Case Credit Corporation's commencement of a program for the issuance of
its Medium-Term Notes, Series A, due from nine months to thirty years from the
date of issuance.
26
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Case Credit Corporation
/s/ Kenneth R. Gangl
By___________________________________
Kenneth R. Gangl President and
Chief Executive Officer
Date: March 13, 1998
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Kenneth R. Gangl
- -------------------------------------------
Kenneth R. Gangl President, Chief Executive Officer and
Director (Principal Executive Officer)
/s/ Robert A. Wegner
- -------------------------------------------
Robert A. Wegner Vice President and Chief Financial Officer
(Principal Financial and Accounting
Officer)
/s/ Theodore R. French
- -------------------------------------------
Theodore R. French Chairman of the Board and Director
/s/ Jean-Pierre Rosso
- -------------------------------------------
Jean-Pierre Rosso Director
</TABLE>
Date: March 13, 1998
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No annual report to security holders covering the registrant's fiscal year
ended December 31, 1997, or any proxy material has been sent to the
registrant's security holders.
27
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBERS
------- ---------------------- ----------
<C> <S> <C>
3(a) Certificate of Incorporation of Case Credit
Corporation, dated January 26, 1993. (Filed as Exhibit
3(a) to the Company's Registration Statement No. 33-
80775, and incorporated herein by reference.)
3(b) By-Laws of Case Credit Corporation, adopted January 26,
1993. (Filed as Exhibit 3(b) to the Company's
Registration Statement No. 33-80775, and incorporated
herein by reference.)
4(a)(1) Indenture between Case Credit Corporation, Case
Corporation and The Bank of New York, dated as of
February 1, 1996. (Filed as Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, and incorporated herein by
reference.)
4(a)(2) 6 1/8% Note due 2003 of Case Credit Corporation issued
pursuant to the Indenture, dated as of February 1,
1996, between Case Credit Corporation, Case Corporation
and The Bank of New York. (Filed as Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, and incorporated herein by
reference.)
4(a)(3) Resolutions of the Board of Directors of Case Credit
Corporation authorizing the public offering of debt
securities of Case Credit Corporation in an aggregate
principal amount of up to $300,000,000. (Filed as
Exhibit 4(c) to the Company's Registration Statement
No. 33-80775, and incorporated herein by reference.)
4(a)(4) Resolutions of the Board of Directors of Case
Corporation authorizing the Support Agreement and/or
$300,000,000 Guarantee for Case Credit Corporation Debt
Offering. (Filed as Exhibit 4(d) to the Company's
Registration Statement No. 33-80775, and incorporated
herein by reference.)
4(a)(5) Actions of the Authorized Officers of Case Credit
Corporation authorizing the issuance of $200,000,000
aggregate principal amount of 6 1/8% Notes Due 2003.
(Filed as Exhibit 4.5 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, and
incorporated herein by reference.)
4(a)(6) Officers' Certificate and Company Order of Case Credit
Corporation for the issuance of $200,000,000 aggregate
principal amount of 6 1/8% Notes Due 2003. (Filed as
Exhibit 4.6 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, and
incorporated herein by reference.)
4(a)(7) Actions of Authorized Officers of Case Corporation
authorizing the Guarantee of $200,000,000 of 6 1/8%
Notes Due 2003 of Case Credit Corporation. (Filed as
Exhibit 4.7 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, and
incorporated herein by reference.)
4(b)(1) Indenture between Case Credit Corporation and The Bank
of New York, dated as of October 1, 1997 (Filed as
Exhibit 4(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, and
incorporated herein by reference).
4(6)(2) 6 3/4% Note due October 21, 2007 issued pursuant to the
Indenture between Case Credit Corporation and The Bank
of New York, dated as of October 1, 1997 (Filed as
Exhibit 4(b) to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, and
incorporated herein by reference).
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBERS
------- ---------------------- ----------
<C> <S> <C>
4(b)(3) Resolutions to the Board of Directors of Case Credit
Corporation authorizing the public offering of debt
securities of Case Credit Corporation in an aggregate
principal amount of up to $700,000,000 (Filed as
Exhibit 4(c) to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, and
incorporated herein by reference.
4(b)(4) Actions of the Authorized Officers of Case Credit
Corporation authorizing the issuance of $150,000,000
aggregate principal amount of 6 3/4% Notes Due October
21, 2007 (Filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by
reference).
4(b)(5) Officers' Certificate and Company Order of Case Credit
Corporation for the issuance of $150,000,000 aggregate
principal amount of 6 3/4% Notes Due October 21, 2007
(Filed as Exhibit 4(e) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1997, and incorporated herein by reference).
4(b)(6) Form of Medium-Term Note, Series A (Fixed Rate) due
from 9 months to 30 years from the date of issue
(Filed as Exhibit 4.1 to the Form 8-K dated December
19, 1997, and incorporated herein by reference).
4(b)(7) Form of Medium-Term Note, Series A (Floating Rate) due
from 9 months to 30 years from the date of issue
(Filed as Exhibit 4.2 to the Form 8-K dated December
19, 1997, and incorporated herein by reference).
4(b)(8) Action of Authorized Officers of Case Credit
Corporation, dated December 8, 1997, establishing the
Medium-Term Notes, Series A (Filed as Exhibit 4.3 to
the Form 8-K dated December 19, 1997, and incorporated
herein by reference).
4(b)(9) Officers' Certificate and Company Order of Case Credit
Corporation, dated December 8, 1997, related to the
Medium-Term Notes, Series A (Filed as Exhibit 4.4 to
the Form 8-K dated December 19, 1997 and incorporated
herein by reference).
4(b)(10) Calculation Agency Agreement, dated as of December 8,
1997, between Case Credit Corporation and The Bank of
New York (Filed as Exhibit 4.5 to the Form 8-K dated
December 19, 1997 and incorporated herein by
reference).
10(a) Support Agreement, dated January 10, 1996, between
Case Corporation and Case Credit Corporation. (Filed
as Exhibit 10(a) to the Company's Registration
Statement No. 33-80775, and incorporated herein by
reference.)
10(b)(1) Revolving Credit and Guarantee Agreement, dated as of
August 23, 1996, among Case Credit Corporation,
certain Foreign Subsidiary Borrowers from time to time
parties thereto, the Lenders parties thereto, the Co-
Agents and Lead Managers named therein, and The Chase
Manhattan Bank, as Administrative Agent. (Filed as
Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996,
and incorporated herein by reference.)
10(b)(2) First Amendment, dated as of November 21, 1996, to the
Revolving Credit and Guarantee Agreement dated as of
August 23, 1996, among Case Credit Corporation,
certain Foreign Subsidiary Borrowers from time to time
parties thereto, the Lenders parties thereto, the Co-
Agents and Lead Managers named therein, and The Chase
Manhattan Bank, as Administrative Agent. (Filed as
Exhibit 10(c) to the Company's Annual Report for the
year ended December 31, 1996, and incorporated herein
by reference).
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBERS
------- ---------------------- ----------
<C> <S> <C>
10(b)(3) Second Amendment, dated as of August 25, 1997, to the
Revolving Credit and Guarantee Agreement, dated as of
August 23, 1996 among Case Credit Corporation, certain
foreign Subsidiaries from time to time parties thereto,
the Lenders parties thereto, the Co-Agents and Lead
Managers named therein, and The Chase Manhattan Bank,
as Administrative Agent (Filed as Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, and incorporated herein by
reference).
10(c)(1) Revolving Credit Agreement, dated as of August 23,
1996, among Case Credit Ltd., the Lenders parties
thereto, the Canadian Imperial Bank of Commerce, as Co-
Agent, and The Bank of Nova Scotia, as Agent (Filed as
Exhibit 10(b) to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, and
incorporated herein by reference.)
10(c)(2) First Amendment, dated as of November 21, 1992, to the
Revolving Credit Agreement, dated as of August 23,
1996, among Case Credit Ltd., the Lenders parties
thereto, the Canadian Imperial Bank of Commerce, as Co-
Agent, and The Bank of Nova Scotia, as Administrative
Agent. (Filed as Exhibit 10(e) to the Company's Annual
Report for the year ended December 31, 1996, and
incorporated herein by reference).
10(c)(3) Second Amendment, dated as of August 25, 1997, to the
Revolving Credit Agreement, dated as of August 23,
1996, among Case Credit Ltd., the Lenders parties
thereto, Canadian Imperial Bank of Commerce, as Co-
Agent, and The Bank of Nova Scotia, as Administrative
Agent (Filed as Exhibit 10(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by
reference).
10(d)(1) Deed of Guarantee and Negative Pledge, dated October
17, 1997, executed by Case Credit Corporation pursuant
to which Case Credit Corporation guarantees certain
indebtedness of Case Credit Australia Pty Limited
(Filed as Exhibit 10(c) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1997, and incorporated herein by reference).
10(d)(2) Bill Facility Agreement, dated October 17, 1997,
between Case Credit Australia Pty Limited, the lenders
parties thereto, and National Australia Bank Limited,
as Agent (Filed as Exhibit 10(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by
reference).
10(d)(3) Deed Poll, dated October 17, 1997, executed by Case
Credit Australia Pty Limited, pursuant to which Case
Credit Australia Pty Limited may from time to time
issue medium term notes (Filed as Exhibit 10(e) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, and incorporated herein by
reference).
10(e)(1) Liquidity Agreement dated as of June 23, 1994, among
Case Equipment Loan Trust 1994-B, the Lenders named
therein, the Co-Agents named therein, and Chemical
Bank, as U.S. Agent. (Filed as Exhibit 10(a)(3) of Case
Corporation's Registration Statement No. 33-82158, and
incorporated herein by reference.)
10(e)(2) Second Amendment and Consent, dated as of August 28,
1996, among Case Equipment Loan Trust 1994-B, the
Lenders parties thereto, the Co-Agents named therein
and The Chase Manhattan Bank, as Administrative Agent,
amending the Liquidity Agreement, dated as of June 23,
1994, as previously amended, among Case Equipment Loan
Trust 1994-B, the Lenders parties thereto, and The
Chase Manhattan Bank (f/k/a Chemical Bank), as
Administrative Agent. (Filed as Exhibit 10(c) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by
reference.)
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBERS
------- ---------------------- ----------
<C> <S> <C>
12 Computation of Ratio of Earnings to Fixed Charges.
23 The consent of Arthur Andersen LLP, Independent Public
Accountants for Case Credit Corporation (Milwaukee,
Wisconsin).
</TABLE>
31
<PAGE>
EXHIBIT 12
CASE CREDIT CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net Income.......................................... $ 82 $ 85 $ 94
Add:
Interest expense.................................. 98 72 42
Amortization of capitalized debt expense.......... 1 2 2
Portion of rentals representative of interest fac-
tor.............................................. -- -- --
Income tax expense and other taxes on income...... 40 45 53
Fixed charges of unconsolidated subsidiaries...... -- -- --
Extraordinary items............................... -- 3 --
-------- -------- --------
Earnings as defined............................. $ 221 $ 207 $ 191
======== ======== ========
Interest expense.................................... $ 98 $ 72 $ 42
Amortization of capitalized debt expense............ 1 2 2
Portion of rentals representative of interest fac-
tor................................................ -- -- --
Fixed charges of unconsolidated subsidiaries........ -- -- --
-------- -------- --------
Fixed charges as defined........................ $ 99 $ 74 $ 44
======== ======== ========
Ratio of earnings to fixed charges.................. 2.23x 2.80x 4.34x
======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K, into the Company's previously filed
Registration Statement File Nos. 33-80775, and 333-35815.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
March 13, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS INFORMATION CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 67
<SECURITIES> 0
<RECEIVABLES> 2,067<F1>
<ALLOWANCES> 22<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4
<DEPRECIATION> 1
<TOTAL-ASSETS> 2,362
<CURRENT-LIABILITIES> 0
<BONDS> 735
0
0
<COMMON> 0
<OTHER-SE> 357
<TOTAL-LIABILITY-AND-EQUITY> 2,362
<SALES> 0
<TOTAL-REVENUES> 272
<CGS> 0
<TOTAL-COSTS> 51
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 122
<INCOME-TAX> 40
<INCOME-CONTINUING> 82
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> THE BALANCE SHEET PRESENTED BY CASE CREDIT CORPORATION
IS UNCLASSIFIED
</FN>
</TABLE>
