SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
___________________
FORM 10-Q
___________________
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 30, 1994
Commission file no: 1-6458
______________________________
JOHN DEERE CAPITAL CORPORATION
Delaware 36-2386361
(State of incorporation) (IRS employer identification no.)
Suite 600
First Interstate Bank Building
1 East First Street
Reno, Nevada 89501
(Address of principal executive offices)
Telephone Number: (702) 786-5527
______________________________
Indicate by check mark whether the registrant (1) has filed
all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
At April 30, 1994, 2,500 shares of common stock, without par
value, of the
registrant were outstanding, all of which were owned by John
Deere Credit Company, a
wholly-owned subsidiary of Deere & Company.
The registrant meets the conditions set forth in General
Instruction H(1)(a) and (b)
of Form 10-Q and is therefore filing this Form with certain
reduced disclosures as
permitted by those instructions.
Page 1 of 17 Pages.
Index to Exhibits: Page 16.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
Condensed Statement of Consolidated Income
(UNAUDITED)
(In millions of dollars)
Three Months Ended
April 30
1994 1993
Revenues:
Finance income earned on retail notes $ 68.6 $ 81.2
Revolving charge account income 14.3 11.2
Lease revenues 10.8 10.0
Finance income earned on wholesale notes 2.8 2.8
Net gain on retail notes sold 1.0 3.6
Interest income from short-term investments 1.5 1.5
Securitization and servicing fee income 7.1 5.6
Other income 1.1 .8
Total revenues 107.2 116.7
Expenses:
Interest expense 36.3 42.8
Administrative and operating expenses 21.8 19.0
Provision for credit losses 2.4 7.6
Fees paid to Deere & Company 1.5 1.8
Depreciation of equipment on
operating leases 5.3 4.9
Total expenses 67.3 76.1
Income before Income Taxes and Changes
in Accounting 39.9 40.6
Provision for Income Taxes 14.0 13.8
Income Before Changes in Accounting 25.9 26.8
Changes in Accounting
Net Income $ 25.9 $ 26.8
______________
See Notes to Interim Financial Statements
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
Condensed Statement of Consolidated Income
(UNAUDITED)
(In millions of dollars)
Six Months Ended
April 30
1994 1993
Revenues:
Finance income earned on retail notes $134.5 $166.0
Revolving charge account income 27.7 22.6
Lease revenues 20.9 18.7
Finance income earned on wholesale notes 5.3 5.3
Net gain on retail notes sold 2.1 6.0
Interest income from short-term investments 3.0 3.3
Securitization and servicing fee income 16.7 8.1
Other income 1.7 1.8
Total revenues 211.9 231.8
Expenses:
Interest expense 72.3 86.4
Administrative and operating expenses 39.5 34.6
Provision for credit losses 11.5 16.2
Fees paid to Deere & Company 3.0 3.6
Depreciation of equipment on
operating leases 10.4 8.9
Total expenses 136.7 149.7
Income before Income Taxes and Changes
in Accounting 75.2 82.1
Provision for Income Taxes 26.3 27.8
Income Before Changes in Accounting 48.9 54.3
Changes in Accounting (3.8)
Net Income $ 48.9 $ 50.5
______________
See Notes to Interim Financial Statements
<PAGE>
JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(UNAUDITED)
(In millions of dollars)
Apr 30 Oct 31 Apr 30
1994 1993 1993
ASSETS
Cash and Cash Equivalents $ 152.2 $ 165.2 $ 268.4
Receivables and Leases:
Retail notes 3,158.4 2,791.7 2,965.2
Revolving charge accounts 328.1 331.1 255.2
Financing leases 92.8 84.9 75.4
Wholesale notes 122.4 109.6 131.2
Total receivables 3,701.7 3,317.3 3,427.0
Equipment on operating leases 130.1 119.3 117.7
Total receivables and leases 3,831.8 3,436.6 3,544.7
Allowance for credit losses (75.0) (77.5) (83.9)
Total receivables and
leases - net 3,756.8 3,359.1 3,460.8
Other Receivables 137.5 182.8 123.5
Other Assets 55.7 46.4 50.0
TOTAL $4,102.2 $3,753.5 $3,902.7
LIABILITIES AND STOCKHOLDER'S EQUITY
Short-Term Borrowings:
Commercial paper $1,512.0 $ 454.0 $ 612.9
Deere & Company 116.8 439.5 141.8
Current maturities of long-term
borrowings 631.6 405.2 714.4
Total short-term borrowings 2,260.4 1,298.7 1,469.1
Accounts Payable and Accrued
Liabilities 159.2 120.5 145.5
Deposits Withheld from Dealers and
Merchants 102.3 104.9 97.2
Long-Term Borrowings:
Notes and debentures 645.2 1,178.2 1,066.4
Subordinated debt 300.0 300.0 345.0
Total long-term borrowings 945.2 1,478.2 1,411.4
Retirement Benefit Accruals &
Other Liabilities 17.1 12.1 15.2
Stockholder's Equity:
Common stock, without par value
(authorized, issued and
outstanding - 2,500 shares owned
by John Deere Credit Company) 112.8 112.8 112.8
Retained earnings 505.2 626.3 651.5
Total stockholder's equity 618.0 739.1 764.3
TOTAL $4,102.2 $3,753.5 $3,902.7
See Notes to Interim Financial Statements
<PAGE>
JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
Condensed Statement of Consolidated Cash Flows
(UNAUDITED)
(In millions of dollars)
Six Months Ended
April 30
1994 1993
Cash Flows from Operating Activities:
Net income $ 48.9 $ 50.5
Adjustments to reconcile net income
to net cash provided by
operating activities 27.8 36.7
Net cash provided by operating
activities 76.7 87.2
Cash Flows from Investing Activities:
Cost of receivables and leases
acquired (1,827.8) (1,608.6)
Collections of receivables 1,385.8 1,495.9
Proceeds from sales of
receivables 10.6 568.3
Other 83.3 8.8
Net cash provided by (used for)
investing activities (348.1) 464.4
Cash Flows from Financing Activities:
Increase (decrease) in notes
payable to others 1,058.0 (873.7)
Change in receivable/payable with
Deere & Company (322.7) 76.9
Proceeds from the issuance of
long-term borrowings 10.0 442.0
Principal payment on long-term
borrowings (316.9) (19.5)
Dividends paid (170.0)
Net cash provided by (used for)
financing activities 258.4 (374.3)
Net increase (decrease) in cash and
cash equivalents (13.0) 177.3
Cash and cash equivalents at beginning
of period 165.2 91.1
Cash and cash equivalents at end
of period $ 152.2 $ 268.4
_______________
See Notes to Interim Financial Statements
<PAGE>
Notes to Interim Financial Statements
(1) The consolidated financial statements of John Deere
Capital Corporation (Capital
Corporation) and its wholly owned subsidiaries, Deere
Credit, Inc. (DCI), Deere
Credit Services, Inc. (DCS), Farm Plan Corporation (FPC)
and John Deere
Receivables, Inc. (JDRI), (collectively referred to as
the Company) have been
prepared by the Company, without audit, pursuant to the
rules and regulations of
the Securities and Exchange Commission. Certain
information and footnote
disclosures normally included in annual financial
statements prepared in
accordance with generally accepted accounting principles
have been condensed
or omitted as permitted by such rules and regulations.
All adjustments, consisting
of normal recurring adjustments, have been included.
Management believes that
the disclosures are adequate to present fairly the
financial position, results of
operations and cash flows at the dates and for the
periods presented. It is
suggested that these condensed financial statements be
read in conjunction with
the financial statements and the notes thereto included
in the Company's latest
annual report on Form 10-K. Results for interim periods
are not necessarily
indicative of those to be expected for the fiscal year.
(2) The principal business of the Capital Corporation is
providing and administering
financing for retail purchases of new and used John Deere
agricultural, industrial
and lawn and grounds care equipment. The Capital
Corporation purchases retail
installment sales and loan contracts (retail notes) from
Deere & Company and its
wholly owned subsidiaries (collectively called John
Deere). These retail notes are
acquired by John Deere through John Deere retail dealers
in the United States.
The Company also purchases and finances retail notes
unrelated to John Deere,
representing primarily recreational vehicle and
recreational marine product notes
acquired from independent dealers of those products and
from marine mortgage
service companies (recreational product retail notes).
The Company also leases
John Deere equipment to retail customers, finances and
services unsecured
revolving charge accounts acquired from merchants in the
agricultural, lawn and
grounds care and marine retail markets, and provides
wholesale financing for
recreational vehicles and John Deere engine inventories
held by dealers of those
products. Retail notes, revolving charge accounts,
financing leases and wholesale
notes receivable are collectively called "Receivables."
Receivables and operating
leases are collectively called "Receivables and Leases."
(3) The consolidated ratio of earnings before fixed charges
to fixed charges was 2.02
to 1 during the first six months this year compared with
1.94 to 1 in the
comparable period of 1993 and was 2.08 to 1 for the
second quarter of 1994
compared with 1.93 to 1 in the same period last year.
"Earnings" consist of
income before income taxes and the cumulative effect of
changes in accounting
to which are added fixed charges. "Fixed charges"
consist of interest on
indebtedness, amortization of debt discount and expense,
an estimated amount
of rental expense under capitalized leases which is
deemed to be representative
of the interest factor and rental expense under operating
leases.
(4) In the fourth quarter of 1993, the Company adopted
Financial Accounting
Standards Board (FASB) Statement No. 106, Employers'
Accounting for
Postretirement Benefits Other Than Pensions, and FASB
Statement No. 112,
Employers' Accounting for Postemployment Benefits,
effective November 1, 1992.
Previous quarters of 1993 were restated as required by
these Statements. As a
result, the first and second quarters of 1993 have been
restated to reflect the
cumulative pretax effect of these changes in accounting
of $5.7 million ($3.8 million
after income taxes) and an incremental pretax benefits
expense of $.1 million.
(5) Dividends declared and paid to John Deere Credit Company
which in turn were
declared and paid to Deere & Company, in the second
quarter and first six months
of 1994 were $20 and $170 million, respectively. There
were no dividends
declared or paid during the same periods in 1993.
(6) The Company is subject to various unresolved legal
actions which arise in the
normal course of its business. The most prevalent of
such actions relates to state
and federal regulations concerning retail credit. There
are various claims and
pending actions against the Company with respect to
commercial and consumer
financing matters. These matters include lawsuits
pending in federal and state
courts in Texas alleging that certain of the Company's
retail finance contracts for
recreational vehicles and boats violate certain technical
provisions of Texas
consumer credit statutes dealing with maximum rates,
licensing and disclosures.
The plaintiffs in Texas claim they are entitled to common
law and statutory
damages and penalties. On March 22, 1994, the United
States District Court for
the Northern District of Texas, Dallas Division, remanded
the federal class action
brought by Russel D. Durrett, individually and on behalf
of others, against John
Deere Company, to the 162nd Judicial District Court,
Dallas County, Texas. On
May 23, 1994, the 162nd District Court approved a
settlement of this lawsuit. The
estimated cost of this settlement has been fully accrued.
Although this settlement
resolved all claims arising from approximately 95 percent
of the contracts at issue,
certain cases related to the remaining five percent of
the contracts are still
pending. The 281st District Court for Harris County,
Texas, in a case named
Deere Credit, Inc. v. Shirley Y. Morgan, et al., filed
February 20, 1992, has certified
a class under the Texas Rules of Civil Procedure, of all
persons who opt out of the
Durrett class action. The Company believes that it has
substantial defenses and
intends to defend the Morgan and the other pending
actions vigorously. Although
it is not possible to predict with certainty the outcome
of these unresolved legal
actions or reasonably estimate the range of possible loss
and the amounts of
claimed damages and penalties are unspecified, the
Company believes that these
unresolved legal actions will not be material.
(7) Certain amounts for 1993 have been reclassified to
conform with 1994 financial
statement presentations.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations.
Results of Operations
During the first six months of 1994, the volume of retail notes
(face value less unearned
finance income) acquired by the Company totaled $1.230 billion,
an increase of 14
percent compared with acquisitions of $1.084 billion during the
same period last year.
Retail note acquisitions from John Deere increased by
approximately $114 million for the
six months ended April 30, 1994 compared with the same period
last year. Acquisitions
of agricultural equipment retail notes were up slightly, and
industrial equipment retail notes
were significantly higher in the first six months of 1994,
whereas acquisitions of lawn and
grounds care retail notes declined. The lower acquisitions of
lawn and grounds care retail
notes were more than offset by an increase in John Deere Credit
Revolving Plan
acquisitions, under which an increasing amount of lawn and
grounds care equipment is
being financed. Note acquisitions from John Deere continued to
represent a significant
proportion of the total United States retail sales of John Deere
equipment. Acquisitions
of recreational product retail notes were $32 million higher in
the first six months of 1994
as compared to the first six months of 1993. The increases
resulted primarily from more
competitive financing programs in both markets.
During the second quarter of 1994, total retail note acquisitions
increased 19 percent to
$639 million compared with $535 million in the same quarter of
1993. Retail note
acquisitions from John Deere increased by $74 million in the
second quarter of 1994.
Acquisitions of recreational product retail notes increased by
$30 million in the second
quarter of 1994 as compared to the same period in 1993.
At April 30, 1994, the amount of retail notes held by the Company
was $3.158 billion
compared with $2.792 billion at October 31, 1993 and $2.965
billion at April 30, 1993.
Within this category, recreational product notes totalled $788
million, $804 million and
$837 million at April 30, 1994, October 31, 1993 and April 30,
1993, respectively. The
balance of retail notes held increased during the first six
months of 1994 as retail note
acquisitions exceeded collections by $377 million.
The amount of retail notes administered by the Company, which
includes retail notes
previously sold, totaled $4.055 billion at April 30, 1994, $4.185
billion at October 31, 1993,
and $3.967 billion at April 30, 1993. At April 30, 1994, the
amount of retail notes
previously sold was $896 million compared with $1.394 billion at
October 31, 1993 and
$1.002 billion at April 30, 1993. On April 30, 1994, the Company
was contingently liable
for recourse in the maximum amount of $86 million on retail notes
previously sold.
Revolving charge accounts receivable totaled $328 million at
April 30,1994 compared with
$331 million at October 31, 1993 and $255 million at April 30,
1993. Acquisitions
increased 21 percent in the second quarter of 1994 and 23 percent
in the first six months
of 1994 compared with the same periods last year. The balance of
revolving charge
accounts receivable increased in the first six months of 1994 due
to the growth in both
Farm Plan and John Deere Credit Revolving Plan volumes. The
balance of revolving
charge accounts receivable at April 30, 1994 included $176
million of Farm Plan
receivables and $152 million of John Deere Credit Revolving Plan
receivables compared
with $136 million and $119 million, respectively, at April 30,
1993.
At April 30, 1994, the investment in financing and operating
leases on John Deere
equipment was $223 million compared with $204 million at October
31, 1993 and $193
million at April 30, 1993. However, lease acquisitions decreased
during the second
quarter of 1994 and the first six months of 1994 compared with
the same periods last year
reflecting the successful introduction in 1993 of a lease program
applicable to certain
models of John Deere tractors. The Company also administers
municipal leases owned
by Deere & Company, which totaled $41 million at April 30, 1994,
$43 million at October
31, 1993 and $44 million at April 30, 1993.
Wholesale notes receivable on recreational vehicle and John Deere
engine inventories
totaled $122 million at April 30, 1994, $110 million at October
31, 1993 and $131 million
at April 30, 1993. Wholesale note acquisitions increased nine
percent during the first six
months of 1994 primarily due to acquisitions related to
recreational vehicle inventories.
Total Receivables and Leases acquired were $1.828 billion during
the first six months of
1994, a 14 percent increase compared with acquisitions of $1.609
billion during the same
period of 1993.
Total Receivables and Leases financed by the Company were $3.832
billion at April 30,
1994, $3.437 billion at October 31, 1993 and $3.544 billion at
April 30, 1993. Total
Receivables and Leases administered by the Company on those dates
were $4.769
billion, $4.873 billion and $4.590 billion, respectively.
The balance (principal plus earned interest) of retail notes
outstanding with any installment
60 days or more past due was $28 million at April 30, 1994
compared with $33 million at
October 31, 1993 and $49 million at April 30, 1993. The amount
of retail note installments
60 days or more past due was $8 million at April 30, 1994, $7
million at October 31, 1993
and $10 million at April 30, 1993. These past-due installments
represented .25 percent
of the balance of retail notes held at April 30, 1994, .24
percent at October 31, 1993 and
.35 percent at April 30, 1993.
The total balance of revolving charge accounts past due 60 days
or more was $4.8
million, $5.3 million and $5.2 million at April 30, 1994, October
31, 1993 and April 30,
1993, respectively. These past-due amounts represented 1.46
percent, 1.62 percent and
2.07 percent of the revolving charge accounts receivable held at
those respective dates.
The total balance of financing and operating lease payments 60
days or more past due
was $.7 million at April 30, 1994, $.5 million at October 31,
1993 and $1.0 million at April
30, 1993. These past-due payments represented .33 percent, .25
percent and .51
percent of the investment in financing and operating leases at
those respective dates.
The total Receivable and Lease amounts 60 days or more past-due
were $14.5 million
at April 30, 1994 compared with $12.7 million at October 31, 1993
and $17.1 million at
April 30, 1993. These past-due amounts represented .38 percent,
.37 percent and .49
percent of the total Receivables and Leases held at those dates.
Deposits withheld from dealers and merchants, representing mainly
the aggregate dealer
retail note and lease withholding accounts from individual John
Deere dealers to which
losses from retail notes and leases originating from the
respective dealers can be
charged, amounted to $102 million at April 30, 1994 compared with
$105 million at
October 31, 1993 and $97 million at April 30, 1993. The
Company's allowance for credit
losses on all Receivables and Leases financed, which totaled $75
million at April 30, 1994,
$77 million at October 31, 1993 and $84 million at April 30,
1993, also provides for
potential uncollectibility. As a percent of the unpaid balance
of total Receivables and
Leases financed, the allowance for credit losses represented 2.0
percent, 2.3 percent and
2.4 percent at April 30, 1994, October 31, 1993 and April 30,
1993, respectively.
During 1992 and 1993, the Company sold retail notes to three
limited-purpose business
trusts, which utilized the notes as collateral for the issuance
of asset- backed securities
to the public. At the time of the sales, "other receivables"
from the trusts were recorded
at present value. The receivables relate to deposits made
pursuant to recourse
provisions and other payments to be received under the sales
agreements. The
receivables are amortized to their value at maturity using the
interest method. The
Company is also compensated by the trusts for certain expenses
incurred in the
administration of these receivables.
Net income for the second quarter of 1994 was $25.9 million
compared with $26.8 million
in the same period last year. Net income for the first six
months of 1994 totaled $48.9
million, compared with income of $54.3 million in 1993, excluding
the cumulative effect of
accounting changes ($50.5 million after the accounting changes).
Compared with last
year, income for both the quarter and the year-to-date was
unfavorably affected by lower
margins from a smaller average Receivable and Lease portfolio
caused mainly by the
sales of retail notes in 1993. These lower margins were
partially offset by higher
securitization and servicing fee income from notes previously
sold but still administered.
Revenues totaled $107.2 million and $211.9 million for the second
quarter and for the first
six months of 1994, respectively, compared to $116.7 million and
$231.8 million for the
same periods a year ago. Revenues were affected by the sales of
receivables during
1993 and lower levels of interest rates resulting in lower
finance charges earned by the
Company in 1994. The decreases were partially offset by
increases in securitization and
servicing fee income from retail notes previously sold to $16.7
million in the first six
months of 1994 from $8.1 million in the first six months of 1993.
The average Receivable
and Lease portfolio financed was approximately seven percent
lower in the second
quarter and 10 percent lower during the first six months of 1994
compared with a year
ago.
Revolving charge account income and lease revenues were higher in
the second quarter
and the first half of 1994 compared with the same periods in
1993, due primarily to higher
average balances of revolving charge accounts and leases financed
this year. Finance
income earned on wholesale notes was flat in the second quarter
and during the first half
of 1994 compared to the same periods one year ago.
Interest expense for the second quarter was down from $42.8
million last year to $36.3
million in 1994. Interest expense for the first six months of
1994 was $72.3 million, a
decrease of 16 percent compared with $86.4 million incurred
during the first half of last
year. Interest expense decreased during the second quarter and
the first half of 1994 as
a result of the reduced borrowings required to finance the lower
average Receivable and
Lease portfolio and lower interest rates. Total average
borrowings during the second
quarter and the first half of 1994, were $3.092 billion and
$2.967 billion, respectively, a one
percent decrease from last year's second quarter average
borrowings of $3.137 billion
and a seven percent decrease from the first half of 1993 average
borrowings of $3.195
billion. The weighted average interest rate incurred on all
interest-bearing borrowings for
the second quarter and the first half of this year was 4.3
percent and 4.7 percent
compared to 5.1 percent during same periods last year.
Administrative and operating expenses increased by 15 percent and
14 percent,
respectively, during the second quarter and first half of 1994.
This was primarily due to
an additional provision during the second quarter of 1994 related
to a legal settlement in
Texas. However, the estimated cost of this settlement is not
material to the financial
position of the Company.
During the second quarter of 1994, the provision for credit
losses totaled $2.4 million
compared with $7.6 million in the same period last year. The
provision for credit losses
decreased to $11.5 million in the first six months of 1994 from
$16.2 million in the first half
of 1993. The decreases for both the second quarter and the first
six months of 1994
were mainly due to a favorable $4.5 million adjustment related to
current and expected
losses on agricultural loans. Total write-offs of Receivables
and Leases financed totaled
$5.8 million during the second quarter of 1994 compared with $6.9
million last year, and
were $14.0 million during the first half of 1994 compared with
$15.3 million last year.
Write-offs of John Deere notes totaled $.6 million during the
second quarter of 1994
compared with $1.4 million last year, and totaled $2.0 million
during the first half of 1994
compared with $1.8 million for the same period last year.
Write-offs of recreational
product retail notes totaled $8.7 million in the first half of
1994 compared with $9.7 million
in the first six months of 1993.
Capital Resources and Liquidity
The Company relies on its ability to raise substantial amounts of
funds to finance its
Receivable and Lease portfolios. The Company's primary sources
of funds for this
purpose are a combination of borrowings and equity capital.
Additionally, the Company
periodically sells substantial amounts of retail notes in the
public market. The Company's
ability to obtain funds is affected by its debt ratings, which
are closely related to the
outlook for and the financial condition of Deere & Company, and
the nature and
availability of support facilities, such as its lines of credit.
For information regarding Deere
& Company and its business, see Exhibit 99.
The Company's ability to meet its debt obligations is supported
in a number of ways as
described below. All commercial paper issued is backed by bank
credit lines. The assets
of the Company are self-liquidating in nature. A strong equity
position is available to
absorb unusual losses on these assets. Liquidity is also
provided by the Company's
ability to sell or "securitize" these assets. Asset-liability
risk is also actively managed to
minimize exposure to interest rate fluctuations.
The Company's business is somewhat seasonal, with overall
acquisitions of Receivables
and Leases traditionally higher in the second half of the fiscal
year than in the first half,
and overall collections of Receivables and Leases traditionally
somewhat higher in the first
six months than in the last half of the fiscal year.
During the first six months of 1994, the aggregate cash provided
from operating and
financing activities was used primarily to acquire receivables.
Cash provided from the
Company's operating activities was $77 million during the first
six months of 1994.
Financing activities provided $258 million during the same
period, resulting from a $751
million increase in outside borrowings which was partially
offset by a $323 million
decrease in payables to Deere & Company and dividend payments
totaling $170 million.
Cash used for investing activities totaled $348 million in the
first six months of 1994,
primarily due to the cost of Receivables and Leases acquired
exceeding collections.
Other cash flows from investing activities increased in 1994
mainly due to collections on
receivables previously sold that were being held for payment to
the trusts. Cash and
cash equivalents decreased $13 million in the first six months of
1994.
During the first six months of 1993, the aggregate cash provided
from operating and
investing activities was used mainly to reduce outside borrowings
and increase cash and
cash equivalents. Cash provided from the Company's operating
activities was $87 million
during the first six months of 1993. Investing activities
provided $464 million of cash in
the first six months of 1993. Although the cost of Receivables
and Leases acquired
exceeded collections of credit receivables by $113 million, this
was more than offset by
proceeds received from the sale of receivables. Cash used for
financing activities totaled
$374 million during the first six months of 1993, representing a
decrease in outside
borrowings of $451 million, partially offset by a increase of
$77 million in obligations to
Deere & Company. Additionally, there was a $177 million increase
in cash and cash
equivalents during the first six months of 1993.
Total interest-bearing indebtedness amounted to $3.206 billion at
April 30, 1994 compared
with $2.777 billion at October 31, 1993 and $2.881 billion at
April 30, 1993. Total
borrowing levels increased during the first six months of 1994
and during the last twelve
months, generally corresponding with the level of Receivables
and Leases financed and
dividends paid. The ratio of total interest-bearing debt to
stockholder's equity was 5.2 to
1, 3.8 to 1 and 3.8 to 1 at April 30, 1994, October 31, 1993 and
April 30, 1993,
respectively.
In January 1994, the Company redeemed the $40 million balance of
its outstanding
9.35% subordinated debentures due in 2003. During the first six
months of this year, the
Company issued $10 million and retired $267 million of
medium-term notes.
At April 30, 1994, the Capital Corporation and Deere & Company,
jointly, had unsecured
lines of credit with various banks in North America and overseas
totaling $2.509 billion
which included a long-term credit agreement totaling $1.675
billion. In addition, the
Capital Corporation, Deere & Company, John Deere Limited (Canada)
and John Deere
Finance Limited (Canada), jointly, had a long-term credit
agreement with various banks
in North America and overseas totaling $742 million. In total,
the Capital Corporation had
$3.251 billion in aggregate lines of credit available at April
30, 1994 of which $1.001 billion
were unused. For the purpose of computing unused credit lines,
the aggregate of total
short-term borrowings, excluding the current portion of long-term
borrowings, of the
Capital Corporation, Deere & Company, John Deere Limited (Canada)
and John Deere
Finance Limited (Canada) were considered to constitute
utilization. Annual facility fees
on the credit agreements are charged to the Capital Corporation
based on utilization.
Stockholder's equity was $618 million at April 30, 1994 compared
with $739 million at
October 31, 1993 and $764 million at April 30, 1993. The
decrease of $121 million in the
first six months of 1994 resulted from dividends declared of $170
million partially offset by
net income of $49 million.
On May 27 1994, the Company declared a dividend of $20 million to
John Deere Credit
Company, which in turn declared a dividend of $20 million to
Deere & Company, each of
which was paid on June 7, 1994.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
See Note (6) to the Interim Financial Statements.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
Omitted pursuant to instruction H(2).
Item 4. Submission of Matters to a Vote of Security Holders.
Omitted pursuant to instruction H(2).
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
See the index to exhibits immediately preceding the
exhibits filed
with this report.
Certain instruments relating to long-term debt,
constituting less
than 10% of the registrant's total assets, are not
filed as exhibits
herewith pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K. The
registrant will file copies of such instruments
upon request of the
Commission.
(b) Reports on Form 8-K.
Current report on Form 8-K dated February 22, 1994
(items 5 and
7).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto
duly authorized.
JOHN DEERE CAPITAL CORPORATION
Date: 10 June 1994 By: /s/ P. E. Leroy
Vice President
(Chief Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Page No.
(12) Computation of ratio of earnings
to fixed charges. 17
(99) Part I of Deere & Company Form 10-Q for the quarter
ended April 30, 1994.*
_______________________
*Incorporated by reference. Copies of these exhibits are
available from the Company
upon request.
Exhibit 12
JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
Six Months Ended 30 April
1994 1993
Earnings:
Income before income
taxes and changes
in accounting $ 75,165 $ 82,050
Fixed charges 73,520 87,698
Total earnings $148,685 $169,748
Fixed charges:
Interest expense $72,259 $86,397
Rent expense 1,261 1,301
Total fixed charges $73,520 $87,698
Ratio of earnings to
fixed charges* 2.02 1.94
Year Ended 31 October
Earnings: 1993 1992 1991
Income before income
taxes and changes
in accounting $169,339 $142,920 $110,820
Fixed charges 170,226 191,930 $230,901
Total earnings $339,565 $334,850 $341,721
Fixed charges:
Interest expense $167,787 $189,288 $228,308
Rent expense 2,439 2,642 2,593
Total fixed charges $170,226 $191,930 $230,901
Ratio of earnings to
fixed charges* 1.99 1.74 1.48
Year Ended 31 October
Earnings: 1990 1989
Income before income
taxes and changes
in accounting $ 99,366 $ 99,971
Fixed charges 216,985 214,038
Total earnings $316,351 $314,009
Fixed charges:
Interest expense $214,707 $212,144
Rent expense 2,278 1,894
Total fixed charges $216,985 $214,038
Ratio of earnings to
fixed charges* 1.46 1.47
_____
"Earnings" consist of income before income taxes, the cumulative
effect of changes in accounting and fixed charges. "Fixed charges"
consist of interest on indebtedness, amortization of debt discount
and expense, an estimated amount of rental expense under
capitalized leases which is deemed to be representative of the
interest factor and rental expense under operating leases.
* The Company has not issued preferred stock. Therefore, the
ratios of earnings to combined fixed charges and preferred
stock dividends are the same as the ratios presented above.
