<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
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 of Incorporation)
76-0394710
(I.R.S. Employer Identification No.)
233 Lake Ave., Racine, WI 53403
(Address of principal executive offices including Zip Code)
Registrant's telephone number, including area code: (262) 636-6011
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 the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Common Stock, par value $5.00 per share: 200 shares outstanding as of
September 30, 1999, all of which are owned by Case Capital Corporation.
The registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the
reduced disclosure format permitted by General Instruction H of Form 10-Q.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I--Financial Information
Case Credit Corporation and Subsidiaries
Consolidated Statements of Income........................................ 3
Consolidated Balance Sheets.............................................. 4
Consolidated Statements of Cash Flows.................................... 5
Consolidated Statements of Changes in Stockholder's Equity............... 6
Notes to Financial Statements............................................ 7
Management's Analysis of Results of Operations........................... 10
Part II--Other Information
Item 1. Legal Proceedings................................................ *
Item 2. Changes in Securities............................................ *
Item 3. Defaults Upon Senior Securities.................................. *
Item 4. Submission of Matters to a Vote of Security Holders.............. *
Item 5. Other Information................................................ *
Item 6. Exhibits and Reports on Form 8-K................................. 14
</TABLE>
- --------
* No response to this item is included herein for the reason that it is
inapplicable, is not required pursuant to General Instruction H of Form 10-
Q, or the answer to such item is negative.
2
<PAGE>
PART I--FINANCIAL INFORMATION
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues:
Finance income earned on retail and other notes
and finance leases.............................. $ 43 $ 36 $ 130 $ 98
Lease income on operating leases................. 26 20 74 46
Net gain on retail notes sold.................... 21 26 53 59
Securitization and servicing fee income.......... 13 12 37 34
Interest income from Case Corporation............ 11 7 33 17
Other income..................................... 6 7 19 10
------ ------ ------ ------
Total revenues............................... 120 108 346 264
Expenses:
Interest expense................................. 49 43 141 103
Operating expenses:
Depreciation of equipment on operating leases.. 18 12 51 28
Fees charged by Case Corporation............... 10 6 27 18
Administrative and operating expenses.......... 3 4 12 12
Provision for credit losses.................... 5 2 14 3
Other.......................................... 1 2 2 4
------ ------ ------ ------
Total operating expenses..................... 37 26 106 65
------ ------ ------ ------
Total expenses............................... 86 69 247 168
------ ------ ------ ------
Income before taxes................................ 34 39 99 96
Income tax provision............................... 12 14 36 34
------ ------ ------ ------
Net income......................................... $ 22 $ 25 $ 63 $ 62
====== ====== ====== ======
</TABLE>
The accompanying notes to financial statements are an integral part of these
Statements of Income.
3
<PAGE>
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(in millions, except share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents........................... $ 38 $ 35
Retail and other notes and finance leases........... 2,655 2,216
Due from Trusts..................................... 283 289
------ ------
Total receivables............................... 2,938 2,505
Allowance for credit losses......................... (32) (29)
------ ------
Total receivables-net........................... 2,906 2,476
Affiliated receivables.............................. 20 51
Equipment on operating leases, at cost.............. 627 531
Accumulated depreciation............................ (99) (63)
------ ------
Net equipment on operating leases............... 528 468
Property and equipment, at cost..................... 6 5
Accumulated depreciation............................ (2) (2)
------ ------
Net property and equipment...................... 4 3
Other investments................................... 176 98
Other assets........................................ 171 129
------ ------
Total........................................... $3,843 $3,260
====== ======
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
Short-term debt..................................... $ 429 $ 550
Accounts payable and other accrued liabilities...... 188 124
Deposits withheld from dealers...................... 14 17
Long-term debt...................................... 2,681 2,108
------ ------
Total liabilities............................... 3,312 2,799
------ ------
Minority interest................................... 2 2
Stockholder's equity:
Common Stock, $5 par value, 200 shares authorized,
issued and outstanding........................... -- --
Paid-in capital................................... 269 269
Accumulated other comprehensive income............ (17) (24)
Retained earnings................................. 277 214
------ ------
Total stockholder's equity...................... 529 459
------ ------
Total........................................... $3,843 $3,260
====== ======
</TABLE>
The accompanying notes to financial statements are an integral part of these
Balance Sheets.
4
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------
1999 1998
-------- --------
<S> <C> <C>
Operating activities:
Net income............................................... $ 63 $ 62
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization.......................... 51 29
Net gain on retail notes sold.......................... (53) (59)
Changes in components of working capital:
(Increase) decrease in other assets.................. (9) (33)
Increase (decrease) in accounts payables and other
accrued liabilities................................. 61 (47)
Other, net........................................... 7 (18)
-------- --------
Net cash provided (used) by operating activities... 120 (66)
-------- --------
Investing activities:
Cost of receivables acquired............................. (2,460) (2,290)
Proceeds from sales of receivables....................... 1,583 1,335
Collections of receivables............................... 531 648
Purchase of equipment on operating leases (net of
disposals).............................................. (109) (273)
Increase in investments and other assets................. (112) (75)
Expenditures for property and equipment.................. (1) --
-------- --------
Net cash provided (used) by investing activities... (568) (655)
-------- --------
Financing activities:
Proceeds from issuance of short-term debt................ 125 --
Proceeds from issuance of long-term debt................. 493 629
Net increase (decrease) in short-term debt and revolving
credit facilities....................................... (167) 48
-------- --------
Net cash provided (used) by financing activities... 451 677
-------- --------
Increase (decrease) in cash and cash equivalents........... 3 (44)
Cash and cash equivalents, beginning of period............. 35 67
-------- --------
Cash and cash equivalents, end of period................... $ 38 $ 23
======== ========
Cash paid during the period for interest................... $ 129 $ 89
======== ========
Cash paid during the period for taxes...................... $ 18 $ 28
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
Statements of Cash Flows.
5
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Paid-in Retained Comprehensive Comprehensive
Stock Capital Earnings Income Total Income
------ ------- -------- ------------- ----- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997....................................... $-- $244 $129 $(16) $357
Comprehensive income:
Net income..................................................... -- -- 85 -- 85 $85
Translation adjustment......................................... -- -- -- (8) (8) (8)
---
Total........................................................ $77
===
Capital contribution from Case Capital........................... -- 25 -- -- 25
---- ---- ---- ---- ----
Balance, December 31, 1998....................................... -- 269 214 (24) 459
Comprehensive income:
Net income..................................................... -- -- 63 -- 63 $63
Translation adjustment......................................... -- -- -- 7 7 7
---- ---- ---- ---- ---- ---
Total........................................................ $70
===
Balance, September 30, 1999...................................... $-- $269 $277 $(17) $529
- --------------------------------------------------
==== ==== ==== ==== ====
</TABLE>
The accompanying notes to financial statements are an integral part of these
Statements of Changes in Stockholder's Equity.
6
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying financial statements reflect the consolidated results of
Case Credit Corporation and its subsidiaries ("Case Credit" or the "Company").
All significant intercompany transactions have been eliminated in
consolidation.
In the opinion of management, the accompanying unaudited financial
statements of Case Credit contain all adjustments which are of a normal
recurring nature necessary to present fairly the financial position as of
September 30, 1999, and the results of operations, changes in shareholder's
equity and cash flows for the periods indicated. It is suggested that these
interim financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1998 Annual Report
on Form 10-K for the year ended December 31, 1998. Interim financial results
are not necessarily indicative of operating results for an entire year.
Certain reclassifications have been made to conform the prior years'
financial statements to the 1999 presentation.
(2) Accounting Pronouncements
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. This statement must
be adopted no later than January 1, 2001, although earlier application is
permitted. The Company is evaluating the impact of adopting SFAS No. 133.
Effective January 1, 1999, the Company adopted Statement of Position
("SOP") No. 98-5, "Reporting on the Costs of Start-Up Activities." The
Company's accounting for the costs of start-up activities is consistent with
the guidelines established in the SOP and, as a result, the adoption of this
statement had no effect on the Company's financial position or results of
operations.
(3) Asset-Backed Securitizations
During the first nine months of 1999, limited-purpose business trusts
organized by Case Credit issued $1,810 million of asset-backed securities to
outside investors. As of September 30, 1999, Case Credit had sold $1,635
million of retail notes to the trusts in connection with these issuances.
During the first nine months of 1998, limited-purpose business trusts
organized by Case Credit issued $1,379 million of asset-backed securities to
outside investors. As of September 30, 1998, Case Credit had sold $1,403
million of retail notes to the trusts in connection with these issuances. The
proceeds from the sale of retail notes during the first nine months of 1999
and 1998 were used to repay outstanding debt and to finance additional
receivables.
(4) Long-Term Debt
During the second quarter of 1999, Case Credit issued $125 million of its
medium-term notes pursuant to its $800 million shelf registration statement
filed with the Securities and Exchange Commission in January 1999. These
floating-rate notes mature in May 2000 and bear interest based on three-month
LIBOR plus an applicable margin. During the first quarter of 1999, Case Credit
issued an aggregate of $250 million of its medium-term notes pursuant to its
$1 billion shelf registration statement filed with the Securities and Exchange
Commission in May 1998. These fixed-rate notes have maturities that range
between two and three years and bear interest between 5.85% and 6.15%. The net
proceeds from these issuances were used to fund Case Credit's growth
initiatives and for other corporate purposes, including the repayment of
short-term indebtedness.
7
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
During the first quarter of 1999, Case Credit's Canadian subsidiary, Case
Credit Ltd., issued C$200 million of its medium-term notes pursuant to a
short-form prospectus and prospectus supplement filed with the Canadian
Securities Administrators. These notes mature in June 2001 and bear interest
at 6.30%. The net proceeds from this issuance were used to fund Case Credit
Ltd.'s growth initiatives and for other corporate purposes, including the
repayment of short-term indebtedness.
Also during the first quarter, Case Credit Australia Pty Ltd issued A$175
million of its medium-term notes pursuant to its medium-term note program.
These notes have maturities that range from twenty-four to thirty months and
bear interest based on BBSW for the floating rate notes, and 5.75% for the
fixed rate notes. The net proceeds from this issuance were used to fund Case
Credit Australia Pty Ltd's growth initiatives and for other corporate
purposes, including the repayment of short-term indebtedness.
(5) Income Taxes
Case Credit's effective income tax rate of 36% for the first nine months of
1999 was higher than the U.S. statutory tax rate of 35%, primarily due to
foreign income taxed at different rates and state income taxes. For the first
nine months of 1998, Case Credit's effective tax rate of 35% was equal to the
U.S. statutory rate.
(6) Comprehensive Income
Accumulated other comprehensive income of $(17) million and $(24) million
as of September 30, 1999 and December 31, 1998, respectively, consists solely
of cumulative translation adjustments.
(7) Agreement and Plan of Merger
As used in this "Agreement and Plan of Merger" disclosure, "Case
Corporation," or "Case" refers to Case Corporation and its subsidiaries,
including Case Credit Corporation and its subsidiaries.
On May 15, 1999, Case Corporation, a Delaware corporation ("Case"), Fiat
S.p.A., a company organized under the laws of Italy, New Holland N.V., a
company organized under the laws of the Netherlands ("New Holland"), and Fiat
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary
of Fiat ("Merger Sub"), entered into an Agreement and Plan of Merger whereby
Merger Sub will merge (the "Merger") with and into Case, with Case as the
surviving corporation in the Merger (the "Merger Agreement"). At the effective
time of the Merger, each share of Case Common Stock, par value $0.01 per
share, of Case outstanding immediately prior to the effective time of the
Merger will be converted into the right to receive $55 in cash. Consummation
of the Merger is subject to a number of conditions, including (i) the approval
and adoption of the Merger Agreement by the stockholders of Case entitled to
vote thereon, (ii) the expiration of all required regulatory waiting periods
applicable to the Merger, and (iii) certain other customary conditions.
A Special Meeting of Stockholders was held on August 17, 1999, for the
purpose of considering and voting on a proposal to approve and adopt the
Merger Agreement. The Stockholders of Case Corporation approved the proposal
to approve and adopt the Merger Agreement.
(8) Subsequent Events
As used in this "Subsequent Event" disclosure, "Case" refers to Case
Corporation and its subsidiaries including Case Credit Corporation and its
subsidiaries.
As of November 4, 1999, both the European Commission and the U.S.
Department of Justice had approved the merger of Case and New Holland as
described in footnote 7 above. In approving the merger, the European
8
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Concluded)
Commission and the U.S. Department of Justice identified a number of
competitive concerns related to the combined operations of Case and New
Holland in specified product lines and markets. These competitive concerns
have been addressed and Case and New Holland have committed to a number of
actions, including divestiture of the following product lines and facilities:
(a) Case's CX and MXC product lines and the Doncaster, United Kingdom,
plant in which they are assembled;
(b) New Holland's Laverda combine harvester product line (excluding
hillside models) and the Breganze, Italy, facility in which they are
made;
(c) Case's large square balers assembled in Neustadt, Germany;
(d) Case's Fermec brand loader/backhoe and industrial tractor product lines
and the Fermec manufacturing plant in Manchester, United Kingdom;
(e) Case's ownership interest in Hay & Forage Industries in Hesston,
Kansas, a 50/50 joint venture with Agco Corporation that produces hay
and forage implements; and
(f) New Holland's Versatile four-wheel drive tractor line and Genesis two-
wheel drive tractor line, along with the Winnepeg, Canada, plant in
which they are made.
In addition, to address specific market issues in Austria, the parties have
agreed to license or build the Steyr model M-948 and M-958 (and equivalent
Case IH models) for sale by a third party.
The impact of the above-mentioned divestitures represents, on a pro forma
basis, approximately 6% of the combined 1998 revenues of Case and New Holland.
As all conditions of the Merger Agreement have been met, Case and New
Holland have announced that the closing date of the merger is anticipated to
be Friday, November 12, 1999. Also see footnote 7, "Agreement and Plan of
Merger."
9
<PAGE>
CASE CREDIT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS
Nine Months Ended September 30, 1999 vs. Nine Months Ended September 30, 1998
Net Income
Net income for the first nine months of 1999 was $63 million, up slightly
as compared to $62 million for the first nine months of 1998. The improvement
in net income is attributed to higher finance income from strong growth in
receivables and finance leases, as well as increased operating lease income.
These increases were partially offset by higher operating expenses in support
of Case Capital's growth initiatives, lower gains on asset-backed
securitizations due to a rising interest rate environment and competitive
market conditions, and additional provisions for loan losses. The increased
loan loss provisions support the significant growth in Case Capital's serviced
portfolio, as well as higher losses resulting from the weakening agricultural
market. In addition, operating results for the first nine months of 1999
reflected increased interest expense due to higher average on-balance-sheet
receivables and increased equipment on operating leases, as well as, higher
operating expenses in support of Case Capital's growth initiatives.
Revenues
Case Credit reported total revenues of $346 million for the first nine
months of 1999, up $82 million from prior year levels. Finance income earned
on retail and other notes and finance leases increased to $130 million in the
first nine months of 1999 as compared to $98 million for the same period in
1998, primarily due to increased levels of on-balance-sheet receivables. In
addition, operating lease income increased $28 million to a total of $74
million for the first nine months of 1999, reflecting the growth in Case
Credit's operating lease portfolio. These increases were partially offset by
lower gains on asset-backed securitizations due to a rising interest rate
environment and competitive market conditions.
Expenses
Interest expense for the first nine months of 1999 was $141 million, up $38
million from the $103 million reported in the first nine months of 1998. The
increase in interest expense resulted from higher average debt levels during
the first nine months of 1999 as compared to the first nine months of 1998,
primarily due to the growth in Case Credit's on-balance-sheet receivables,
increased equipment on operating leases and a rising interest rate
environment.
Operating expenses increased $41 million to a total of $106 million in the
first nine months of 1999 as compared to the comparable period of 1998. This
increase primarily resulted from a $23 million increase in depreciation
expense for equipment on operating leases relating to the Company's larger
operating lease portfolio, and an $11 million increase in Case Credit's loss
provision as a result of the significant growth in its serviced portfolio as
well as higher losses resulting from the weakening agricultural market.
Serviced Portfolio
During the first nine months of 1999, Case Credit's serviced portfolio of
receivables increased 19% over the same time last year to a record $7.5
billion. Diversified originations, generated primarily through Soris
Financial, and sustained geographic growth in Europe and Australia contributed
to the year-over-year growth in the Company's serviced portfolio, offsetting
the impact of weak retail demand in the agricultural equipment market. Gross
receivables originated in the first nine months of 1999 increased 4% for a
total of $3.3 billion versus the same period in 1998.
During the first nine months of 1999, limited-purpose business trusts
organized by Case Credit issued $1,810 million of asset-backed securities to
outside investors. As of September 30, 1999, Case Credit had sold $1,635
million of retail notes to the trusts in connection with these issuances.
During the first nine months of 1998, limited-purpose business trusts
organized by Case Credit issued $1,379 million of asset-backed securities to
outside investors. As of September 30, 1998, Case Credit had sold $1,403
million of retail notes to the trusts
10
<PAGE>
in connection with these issuances. The proceeds from the sale of retail notes
were used to repay outstanding debt and to finance additional receivables.
Year 2000
As used in this "Year 2000" disclosure, the "Company," or "Case" refers to
Case Corporation and its consolidated subsidiaries, including Case Credit
Corporation and its subsidiaries ("Case Credit"). In addition, all references
to Case Industrial reflect the consolidation of all majority-owned
subsidiaries, excluding Case Credit.
Case Corporation understands that it is important to our customers and
stakeholders that Case's products, services and internal systems are not
adversely affected by the Year 2000. Case has implemented procedures that it
deems necessary to safeguard the Company from computer-related issues
associated with adverse effects as a result of improperly recognizing the
millennial date change. These procedures include, where necessary, the
inventorying/assessing, planning, constructing/testing, and
implementing/certifying of critical internal-use hardware and software
systems, as well as other embedded systems in the Company's manufacturing
plants, other buildings, equipment and other infrastructure. The Company
believes that these procedures will adequately address both the information
technology and non-information technology aspects of our business. Based upon
its review and efforts to date, the Company believes 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 adverse effect on Case's
financial position, cash flows or results of operations.
The Company believes, based upon its review and efforts to date, that
external and internal remediation costs to be incurred for the modification of
internal-use software to address Year 2000 issues will, in the aggregate,
approximate $40 million to $45 million. As Case Industrial and Case Credit
share many technology resources and internal-use systems, all the remediation
costs to address Year 2000 issues will be borne by Case Industrial. As of
September 30, 1999, the Case Industrial has incurred approximately $34 million
in costs for Year 2000 remediation, and the Company currently anticipates that
remaining Year 2000 remediation costs will approximate $6 million for the
balance of 1999 and $3 million in 2000. These cost estimates include the costs
of external contractors, non-capitalizable purchases of software and hardware,
and the direct cost of internal employees working on Year 2000 projects. Case
maintains a process that tracks the cost and time of external contractors,
however, the Company does not separately track its own internal costs incurred
for the Year 2000 project. Internal costs are compiled principally from the
related payroll records for those personnel directly working on the Year 2000
effort. The Company's cost estimate does not include the cost of implementing
contingency plans or any potential litigation or warranty costs related to
Year 2000 issues if the Company's remediation efforts are not successful.
Case has also undertaken a program to alert its suppliers and dealers of
Year 2000 issues. Based on its contacts with suppliers and dealers, the
Company believes that a majority of its dealers and suppliers are Year 2000
compliant. Case will continue to work with its remaining suppliers and its
dealers throughout 1999 to secure Year 2000 compliance by December 31, 1999.
Based on third-party representations and internal testing, and 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's financial position, cash flows or results of
operations. For those suppliers and dealers that have not adequately responded
to our Year 2000 concerns, we are following up to ultimately achieve an
acceptable level of compliance within our supply chain. As there can be no
assurance that an acceptable level of Year 2000 compliance will be achieved,
Case's initial contingency plans will address potential issues.
Case has completed all steps with regards to Year 2000 compliance that it
considers necessary regarding its agricultural and construction equipment and,
as a result, the Company has no information to suggest that its agricultural
and construction equipment is not Year 2000 compliant. The Company believes,
based on its review and testing, that products purchased from Case will
accurately determine chronological dates and accurately perform all
calculations and data manipulations based upon such dates.
11
<PAGE>
Based upon Case's review and efforts to date, the Company currently has
completed a majority of its critical Year 2000 compliance issues, and the
Company plans to continue integration testing throughout the balance of 1999.
If Case's Year 2000 compliance efforts, as well as the efforts of the
Company's suppliers and dealers, individually and in the aggregate, are not
successful, it could have a material adverse effect on the Company's financial
position, cash flows and results of operations. Factors that could cause
actual results to differ include unanticipated supplier or dealer failures,
disruption of utilities, transportation or telecommunications breakdowns,
foreign or domestic governmental failures, as well as unanticipated failures
on our part to address Year 2000 related issues. The Company's most reasonably
likely worst case scenario in light of these risks would involve a potential
loss in sales resulting from order, production and shipping delays throughout
the Company's supply chain caused by Year 2000 related disruptions. The degree
of sales loss impact would depend on the severity of the disruption, the time
required to correct it, whether the sales loss was temporary or permanent, and
the degree to which our primary competitors were also impacted by the
disruption. The Company has completed its initial Year 2000 contingency plans
that are designed to mitigate the impact on the Company if its Year 2000
compliance efforts are not successful. The Company will continue, through-out
the remaining months in 1999, to work on developing and implementing Rapid
Response Teams along with implementing plan preparation activities and plan
testing. Case's contingency plans include the use of alternative systems and
non-computerized approaches to our business, including manual procedures for
machine operation, collecting and reporting of its business information, as
well as alternative sources of supply. At this time, the Company does not
believe that it will be necessary to stockpile inventory or supplies as part
of its contingency plans.
The information included in this "Year 2000" section represents forward-
looking statements and involves risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements.
Interest Rate Risk Management
The Company uses derivative financial instruments to manage its interest
rate exposures. Case Credit does not hold or issue financial instruments for
trading purposes. For information regarding Case Credit's interest rate risk
management, reference is made to Item 7 and Note 8 to the Case Credit
Financial Statements in the Company's 1998 Annual Report on Form 10-K. There
has been no material change in the Company's market risk exposures that affect
the quantitative and qualitative disclosures as presented as of December 31,
1998.
Agreement and Plan of Merger
As used in this "Agreement and Plan of Merger" disclosure, "Case
Corporation," or "Case" refers to Case Corporation and its subsidiaries,
including Case Credit Corporation and its subsidiaries.
On May 15, 1999, Case Corporation, a Delaware corporation ("Case"), Fiat
S.p.A., a company organized under the laws of Italy, New Holland N.V., a
company organized under the laws of the Netherlands ("New Holland"), and Fiat
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary
of Fiat ("Merger Sub"), entered into an Agreement and Plan of Merger whereby
Merger Sub will merge (the "Merger") with and into Case, with Case as the
surviving corporation in the Merger (the "Merger Agreement"). At the effective
time of the Merger, each share of Case Common Stock, par value $0.01 per
share, of Case outstanding immediately prior to the effective time of the
Merger will be converted into the right to receive $55 in cash. Consummation
of the Merger is subject to a number of conditions, including (i) the approval
and adoption of the Merger Agreement by the stockholders of Case entitled to
vote thereon, (ii) the expiration of all required regulatory waiting periods
applicable to the Merger, and (iii) certain other customary conditions.
A Special Meeting of Stockholders was held on August 17, 1999, for the
purpose of considering and voting on a proposal to approve and adopt the
Merger Agreement. The Stockholders of Case Corporation approved the proposal
to approve and adopt the Merger Agreement.
12
<PAGE>
Subsequent Events
As used in this "Subsequent Events" disclosure, "Case" refers to Case
Corporation and its subsidiaries, including Case Credit Corporation and its
subsidiaries.
As of November 4, 1999, both the European Commission and the U.S.
Department of Justice had approved the merger of Case and New Holland as
described in "Agreement and Plan of Merger." In approving the merger, the
European Commission and the U.S. Department of Justice identified a number of
competitive concerns related to the combined operations of Case and New
Holland in specified product lines and markets. These competitive concerns
have been addressed and Case and New Holland have committed to a number of
actions, including divestiture of the following product lines and facilities:
(a) Case's CX and MXC product lines and the Doncaster, United Kingdom,
plant in which they are assembled;
(b) New Holland's Laverda combine harvester product line (excluding
hillside models) and the Breganze, Italy, facility in which they are
made;
(c) Case's large square balers assembled in Neustadt, Germany;
(d) Case's Fermec brand loader/backhoe and industrial tractor product lines
and the Fermec manufacturing plant in Manchester, United Kingdom;
(e) Case's ownership interest in Hay & Forage Industries in Hesston,
Kansas, a 50/50 joint venture with Agco Corporation that produces hay
and forage implements; and
(f) New Holland's Versatile four-wheel drive tractor line and Genesis two-
wheel drive tractor line, along with the Winnepeg, Canada, plant in
which they are made.
In addition, to address specific market issues in Austria, the parties have
agreed to license or build the Steyr model M-948 and M-958 (and equivalent
Case IH models) for sale by a third party.
The impact of the above-mentioned divestitures represents, on a pro forma
basis, approximately 6% of the combined 1998 revenues of Case and New Holland.
As all conditions of the Merger Agreement have been met, Case and New
Holland have announced that the closing date of the merger is anticipated to
be Friday, November 12, 1999. Also see "Agreement and Plan of Merger."
13
<PAGE>
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
A list of the exhibits included as part of this Form 10-Q is set forth in
the Index to Exhibits that immediately precedes such exhibits, which is
incorporated herein by reference.
(b) Reports on Form 8-K.
In a Current Report on Form 8-K dated July 20, 1999, the Company reported
the issuance of a press release disclosing, among other things, its unaudited
financial results for the quarter ended June 30, 1999.
In a Current Report on Form 8-K dated August 17, 1999, the Company reported
the issuance of a press release by Case Corporation disclosing, among other
things, the approval by Case Corporation's stockholders of the Agreement and
Plan of Merger, dated as of May 15, 1999, by and among the registrant, Fiat
S.p.A., New Holland N.V., and Fiat Acquisition Corporation, and the
transactions contemplated by that agreement. The financial services business
of Case Corporation is provided through Case Capital Corporation, including
its wholly-owned subsidiary, Case Credit Corporation, and their subsidiaries
and joint ventures (collectively, "Case Capital").
14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASE CREDIT CORPORATION
By /s/ Robert A. Wegner
-------------------------------------
Robert A. Wegner
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer and
Authorized Signatory for Case
Credit
Corporation)
Date: November 10, 1999
15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description of Exhibit Numbers
------- ---------------------- ----------
<C> <S> <C>
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
16
<PAGE>
EXHIBIT 12
CASE CREDIT CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<TABLE>
<CAPTION>
Nine
Months
Ended
September
30,
----------
1999 1998
---- ----
<S> <C> <C>
Net income.......................................................... $ 63 $ 62
Add:
Interest expense.................................................. 141 103
Amortization of capitalized debt expense.......................... 2 1
Income tax expense and other taxes on income...................... 36 34
---- ----
Earnings as defined............................................. $242 $200
==== ====
Interest expense.................................................... $141 $103
Amortization of capitalized debt expense............................ 2 1
---- ----
Fixed charges as defined........................................ $143 $104
==== ====
Ratio of earnings to fixed charges.................................. 1.69x 1.92x
==== ====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the Company's 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 38
<SECURITIES> 0
<RECEIVABLES> 2,938
<ALLOWANCES> 32
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6
<DEPRECIATION> 2
<TOTAL-ASSETS> 3,843
<CURRENT-LIABILITIES> 0
<BONDS> 2,681
0
0
<COMMON> 0
<OTHER-SE> 529
<TOTAL-LIABILITY-AND-EQUITY> 3,843
<SALES> 0
<TOTAL-REVENUES> 346
<CGS> 0
<TOTAL-COSTS> 78
<OTHER-EXPENSES> 14
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 141
<INCOME-PRETAX> 100
<INCOME-TAX> 0
<INCOME-CONTINUING> 63
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
