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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
Commission file no: 1-6458
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JOHN DEERE CAPITAL CORPORATION
DELAWARE 36-2386361
(State of incorporation) (IRS employer identification no.)
1 EAST FIRST STREET, SUITE 600
RENO, NEVADA 89501
(Address of principal executive offices)
Telephone Number: (702) 786-5527
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
----- -----
At July 31, 1996, 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.
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Page 1 of 18 Pages
Index to Exhibits: Page 16
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
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JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENT OF CONSOLIDATED INCOME
(UNAUDITED)
(IN MILLIONS OF DOLLARS)
THREE MONTHS NINE MONTHS
ENDED ENDED
JULY 31 JULY 31
--------------- --------------
1996 1995 1996 1995
------ ------ ------ ------
REVENUES:
Finance income earned on retail notes $ 89.4 $ 78.6 $277.1 $245.2
Revolving charge account income 24.9 22.2 67.6 59.1
Lease revenues 18.1 12.2 45.9 35.4
Finance income earned on wholesale notes 9.8 6.5 26.0 16.0
Net gain on retail notes sold .5 .3 10.6 11.1
Interest income from short-term investments 3.1 3.1 8.7 8.4
Securitization and servicing fee income 11.0 8.6 31.9 25.1
Other income 1.9 1.1 9.2 2.7
------ ------ ------ ------
TOTAL REVENUES 158.7 132.6 477.0 403.0
------ ------ ------ ------
------ ------ ------ ------
EXPENSES:
Interest expense 66.8 57.8 200.7 173.5
Administrative and operating expenses 22.8 18.3 66.0 55.1
Provision for credit losses 8.5 9.4 24.4 20.9
Fees paid to John Deere 1.5 1.0 4.7 3.6
Depreciation of equipment on operating
leases 9.4 5.6 23.6 16.0
------ ------ ------ ------
TOTAL EXPENSES 109.0 92.1 319.4 269.1
------ ------ ------ ------
------ ------ ------ ------
Income before Income Taxes 49.7 40.5 157.6 133.9
Provision for Income Taxes 17.4 14.2 55.1 46.9
------ ------ ------ ------
NET INCOME $ 32.3 $ 26.3 $102.5 $ 87.0
------ ------ ------ ------
------ ------ ------ ------
See Notes to Interim Financial Statements
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JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN MILLIONS OF DOLLARS EXCEPT NUMBER OF SHARES)
JUL 31 OCT 31 JUL 31
1996 1995 1995
------ ------ ------
ASSETS
CASH AND CASH EQUIVALENTS $ 168.1 $ 164.3 $ 153.5
RECEIVABLES AND LEASES:
Retail notes 3,988.3 3,824.9 3,411.0
Revolving charge accounts 546.4 510.2 482.9
Financing leases 162.7 149.3 143.9
Wholesale notes 443.0 298.1 251.1
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TOTAL RECEIVABLES 5,140.4 4,782.5 4,288.9
------- ------- -------
------- ------- -------
Equipment on operating leases 240.8 139.5 132.1
TOTAL RECEIVABLES AND LEASES 5,381.2 4,922.0 4,421.0
------- ------- -------
------- ------- -------
Allowance for credit losses (84.1) (84.2) (79.5)
TOTAL RECEIVABLES AND LEASES - NET 5,297.1 4,837.8 4,341.5
------- ------- -------
------- ------- -------
OTHER RECEIVABLES 172.3 183.4 178.7
OTHER ASSETS 66.3 65.3 64.4
------- ------- -------
TOTAL $5,703.8 $5,250.8 $4,738.1
------- ------- -------
------- ------- -------
LIABILITIES AND STOCKHOLDER'S EQUITY
SHORT-TERM BORROWINGS:
Commercial paper $2,229.7 $1,986.7 $2,041.2
John Deere 192.5 460.1 100.2
Current maturities of long-term borrowings 778.5 343.9 225.5
------- ------- -------
TOTAL SHORT-TERM BORROWINGS 3,200.7 2,790.7 2,366.9
------- ------- -------
------- ------- -------
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 146.2 154.4 136.6
DEPOSITS WITHHELD FROM DEALERS AND MERCHANTS 129.0 126.6 120.1
LONG-TERM BORROWINGS:
Notes and debentures 1,145.7 1,172.9 1,113.8
Subordinated debt 300.0 300.0 300.0
------- ------- -------
TOTAL LONG-TERM BORROWINGS 1,445.7 1,472.9 1,413.8
------- ------- -------
------- ------- -------
RETIREMENT BENEFIT ACCRUALS AND OTHER
LIABILITIES 21.6 13.1 14.7
STOCKHOLDER'S EQUITY:
Common stock, without par value (issued
and outstanding - 2,500 shares owned by
John Deere Credit Company) 112.8 112.8 112.8
Retained earnings 647.8 580.3 573.2
TOTAL STOCKHOLDER'S EQUITY 760.6 693.1 686.0
------- ------- -------
TOTAL $5,703.8 $5,250.8 $4,738.1
------- ------- -------
------- ------- -------
See Notes to Interim Financial Statements
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JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(IN MILLIONS OF DOLLARS)
NINE MONTHS ENDED
JULY 31
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1996 1995
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 102.5 $ 87.0
Adjustments to reconcile net income to net cash
provided by operating activities 53.4 24.8
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 155.9 111.8
------- -------
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of receivables and leases acquired (4,009.6) (3,290.8)
Collections of receivables 2,862.6 2,181.2
Proceeds from sales of receivables 622.6 726.3
Other 24.8 (12.6)
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NET CASH USED FOR INVESTING ACTIVITIES (499.6) (395.9)
------- -------
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in commercial paper 243.0 460.4
Change in receivable/payable with John Deere (267.5) (2.4)
Proceeds from long-term borrowings 550.0 515.0
Principal payments on long-term borrowings (143.0) (543.3)
Dividends paid (35.0) (35.0)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 347.5 394.7
------- -------
------- -------
Net increase in cash and cash equivalents 3.8 110.6
Cash and cash equivalents at beginning of period 164.3 42.9
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 168.1 $ 153.5
------- -------
------- -------
See Notes to Interim Financial Statements
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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), John
Deere Receivables, Inc. (JDRI), John Deere Funding Corporation (JDFC) and
Arrendadora John Deere, S.A. de C.V. (AJD) (collectively referred to as the
Company) have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted as permitted by such rules and
regulations. All adjustments, consisting of normal recurring adjustments,
have been included. Management believes that the disclosures are adequate
to present fairly the financial position, results of operations and cash
flows at the dates and for the periods presented. It is suggested that
these interim financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report on Form 10-K. Results for interim periods are not
necessarily indicative of those to be expected for the fiscal year.
(2) In June 1996, Deere & Company renamed its "Lawn & Grounds Care Division" to
"Commercial and Consumer Equipment Division." The Commercial and Consumer
Equipment Division consists of lawn and garden products, consumer products
(including the new Sabre-branded product line), commercial grounds care
products and commercial worksite products. The Company's lending divisions
are not strictly organized along the lines of the Deere equipment
manufacturing divisions, accordingly, the Company continues to identify
its lending divisions and markets as historically referenced.
(3) The principal business of the Company is providing and administering
financing for retail purchases of new and used John Deere agricultural,
industrial and lawn and grounds care (commercial and consumer) equipment.
The Company purchases retail installment sales and loan contracts (retail
notes) from Deere & Company and its wholly-owned subsidiaries (collectively
called John Deere). These retail notes are acquired by John Deere through
John Deere retail dealers in the United States. The Company also purchases
and finances certain agricultural and industrial retail notes unrelated to
John Deere. In addition, the Company purchases and finances recreational
vehicle and yacht retail notes acquired from independent dealers and marine
product mortgage service companies (recreational product retail notes).
The Company also leases equipment to retail customers, finances and
services revolving charge accounts acquired from and offered through
merchants in the agricultural, lawn and grounds care and marine retail
markets (revolving charge accounts), and provides financing for wholesale
inventories of recreational vehicles,
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manufactured housing units, yachts, John Deere engines and John Deere
industrial equipment owned by dealers of those products (wholesale notes).
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."
(4) The consolidated ratio of earnings to fixed charges was 1.74 to 1 for the
third quarter of 1996 compared with 1.69 to 1 in the same period last year.
The consolidated ratio of earnings to fixed charges was 1.78 to 1 and 1.76
to 1 during the first nine months of 1996 and 1995, respectively.
"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.
(5) The Company is subject to various unresolved legal actions which arise in
the normal course of its business, the most prevalent of which relate to
state and federal regulations concerning retail credit. Although it is not
possible to predict with certainty the outcome of these unresolved legal
actions or the range of possible loss, the Company believes these
unresolved legal actions will not have a material effect on its financial
position or results of operations.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net income totaled $32.3 million during the third quarter of 1996 and $102.5
million for the first nine months of 1996 compared with $26.3 million and $87.0
million, respectively, for the same periods of 1995. Net income for both the
third quarter and the nine months ended July 31, 1996, were favorably affected
by a larger average portfolio financed. The average balance of receivables and
leases financed was 24 percent higher in the third quarter of 1996 and 21
percent higher in the first nine months ended July 31, 1996, compared with the
same periods in 1995.
Revenues totaled $158.7 million and $477.0 million for the third quarter and for
the nine months ended July 31, 1996, respectively, compared to $132.6 million
and $403.0 million for the same periods a year ago. Revenues continued to
increase due to the larger average portfolio financed and increased
securitization and servicing fee income.
Finance income earned on retail notes increased 14 percent to $89.4 million in
the third quarter and increased 13 percent to $277.1 million in the first nine
months of 1996, compared with $78.6 million and $245.2 million, respectively,
last year. Finance income earned on agricultural retail notes was significantly
higher in both the third quarter and the nine months ended July 31, 1996,
compared with the same periods in 1995, reflecting the impact of a higher
average portfolio over last year.
Revolving charge account income and lease revenues were higher in the third
quarter and the nine months ended July 31, 1996, compared with the same periods
in 1995, due primarily to the higher average portfolios of revolving charge
receivables and leases financed this year. Finance income earned on wholesale
notes was $3.3 million higher in the third quarter and $10.0 million higher
during the nine months ended July 31, 1996, compared to the same periods in
1995. Increases in finance income earned on wholesale notes were attributable
to the continued growth in the manufactured housing, industrial and yacht
markets.
Gains of $4.0 million on the sale of leased equipment contributed to an increase
in other income, from $2.7 million in the first nine months of 1995 to $9.2
million for the same period in 1996.
Interest expense for the third quarter was up from $57.8 million in 1995 to
$66.8 million in 1996. Interest expense for the first nine months of 1996 was
$200.7 million compared with $173.5 million in the same period of 1995. The
increase in interest expense in 1996 was the result of increased borrowings
required to finance the higher average portfolio of Receivables and Leases.
Total average borrowings during the third quarter and the first nine months of
1996 were $4.502 billion and $4.427 billion,
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respectively. Average borrowings totaled $3.614 billion during the third
quarter of 1995 and $3.606 billion for the nine months ended July 31, 1995.
Administrative and operating expenses increased to $22.8 million in the third
quarter of 1996, compared to $18.3 million for the same period in 1995. For the
nine months ended July 31, 1996, administrative and operating expenses totaled
$66.0 million, compared to the $55.1 million for the same period in 1995. These
increases were attributable to the costs associated with administering a larger
Receivable and Lease portfolio as well as the increasing level of new
acceptances.
During the third quarter of 1996, the provision for credit losses totaled $8.5
million compared with $9.4 million in the same period last year. For the nine
months ended July 31, 1996, the provision for credit losses totaled $24.4
million, an increase of 17 percent over the $20.9 million provision for credit
losses in 1995. The increase in the Company's provision on a year-to-date
basis, between 1996 and 1995, was due primarily to the growth in the portfolio
of Receivables and Leases.
RECEIVABLE AND LEASE ACQUISITIONS
Receivable and Lease acquisitions by the Company during the third quarter and
for the nine months ended July 31, 1996 and 1995 are as follows (dollars in
millions):
Three Months
Ended July 31,
-------------------
1996 1995 $ Change % Change
--------------------------------------
Retail notes acquired:
Agricultural equipment $ 425 $ 418 $ 7 2%
Industrial equipment 110 78 32 41
Lawn and grounds care equipment 51 36 15 42
Recreational products 59 89 (30) (34)
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Total retail notes acquired 645 621 24 4
Revolving charge accounts 392 329 63 19
Financing leases 27 21 6 29
Wholesale notes 279 159 120 75
Equipment on operating leases 60 15 45 300
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Total Receivables and Leases
acquired $ 1,403 $ 1,145 $ 258 23
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Nine Months
Ended July 31,
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1996 1995 $ Change % Change
--------------------------------------
Retail notes acquired:
Agricultural equipment $ 1,616 $ 1,488 $ 128 9%
Industrial equipment 339 250 89 36
Lawn and grounds care equipment 86 75 11 15
Recreational products 190 223 (33) (15)
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Total retail notes acquired 2,231 2,036 195 10
Revolving charge accounts 866 735 131 18
Financing leases 66 67 (1) (1)
Wholesale notes 682 413 269 65
Equipment on operating leases 165 40 125 313
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Total Receivables and Leases
acquired $ 4,010 $ 3,291 $ 719 22
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------------------------------
For the quarter ended July 31, 1996, total retail notes acquired increased four
percent over the same period in 1995. Industrial equipment acquisitions
increased 41 percent, due to a low rate incentive program announced in May 1996.
Lawn and grounds care equipment acquisitions increased 42 percent, when compared
to the third quarter of 1995. As a result of late spring weather, lawn and
grounds care retail note acquisitions normally made in the second quarter were
delayed until the third quarter. Agricultural retail note acquisitions, for the
quarter ended July 31, 1996, increased slightly over agricultural retail notes
acquired for the same period in 1995. These increases were offset by a decrease
in recreational product retail notes acquired during the same period in 1995.
Recreational vehicle and marine product installment acquisitions have declined
in recent quarters due to the aggressive pricing environment that currently
exists in these credit markets. The Company intends to shift its emphasis
relating to marine products toward the yacht markets. Revolving charge
accounts, leases and wholesale notes acquired during the third quarter of 1996
also increased significantly, when compared to activity in 1995, due to a higher
demand for these products.
For the nine months ended July 31, 1996, total retail note acquisitions
increased $195 million, or 10 percent over the same period in 1995. The
largest percentage increase in retail notes acquired came from industrial
equipment retail notes, reflecting the impact of a low-rate equipment sales
incentive program. Lease acquisitions, increased from $107 million in 1995
to $231 million in the first nine months of 1996, and wholesale notes
increased 65 percent. The increase in lease acquisitions was primarily
attributable to the success of new agricultural and industrial leasing
programs. The increase in wholesale notes reflected significant growth in
acquisitions of wholesale notes related to recreational vehicles,
manufactured housing, and John Deere's new Sabre-branded product line. Retail
note acquisitions from John Deere dealers continued to represent a
significant portion of the total United States retail sales of Deere
equipment.
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Total Receivables and Leases held at July 31, 1996, October 31, 1995 and
July 31, 1995 were as follows (in millions):
July 31, October 31, July 31,
1996 1995 1995
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Retail notes held:
Agricultural equipment $ 2,364 $ 2,286 $ 1,936
Industrial equipment 596 511 451
Lawn and grounds care equipment 174 162 161
Recreational products 854 866 863
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Total retail notes held 3,988 3,825 3,411
Revolving charge accounts 546 510 483
Financing leases 163 149 144
Wholesale notes 443 298 251
Equipment on operating leases 241 140 132
---------------------------------
Total Receivables and Leases held $ 5,381 $ 4,922 $ 4,421
---------------------------------
---------------------------------
At July 31, 1996, the amount of retail notes held by the Company increased to
$3.988 billion compared with $3.825 billion at October 31, 1995 and $3.411
billion at July 31, 1995. The largest increase in retail notes came from
agricultural equipment notes, which increased $428 million between July 31,
1995 and July 31, 1996, while industrial equipment notes increased $145
million during the same period. Lawn and grounds care equipment and
recreational product retail notes remained relatively stable.
The amount of retail notes administered by the Company, which includes retail
notes previously sold, totaled $5.089 billion at July 31, 1996, $4.987
billion at October 31, 1995, and $4.713 billion at July 31, 1995. At July
31, 1996, the unpaid balance of retail notes previously sold was $1.101
billion compared with $1.162 billion at October 31, 1995 and $1.302 billion
at July 31, 1995. The Company's maximum exposure under all retail note
recourse provisions at July 31, 1996 was $167 million.
The Company also administers municipal leases owned by John Deere which totaled
$12 million at July 31, 1996, $21 million at October 31, 1995 and $25 million at
July 31, 1995. The Company has not sold any additional municipal leases to John
Deere since October 1994.
Receivable and Lease amounts 60 days or more past due were $19.8 million at July
31, 1996, compared to $14.1 million at October 31, 1995 and $11.6 million at
July 31, 1995. These past due amounts represent .37 percent, .29 percent and
.28 percent of the total Receivables and Leases held at those dates. While past
due amounts have increased in 1996, as a percentage of total Receivables and
Leases held, these amounts compare favorably with historical levels.
The balance of retail notes held (principal plus accrued interest) with any
installment 60 days or more past due was $49.8 million at July 31, 1996 compared
with $33.0 million at October 31, 1995 and $31.3 million at July 31, 1995. The
amount of retail note
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installments 60 days or more past due was $9.1 million at July 31, 1996, $6.1
million at October 31, 1995 and $6.2 million at July 31, 1995. These past-due
installments represented .23 percent of the unpaid balance of retail notes held
at July 31, 1996, .16 percent at October 31, 1995 and .18 percent at July 31,
1995.
The balance of revolving charge accounts 60 days or more past due was
$8.3 million, $7.1 million and $5.6 million at July 31, 1996, October 31, 1995
and July 31, 1995, respectively. These past-due amounts represented 1.52
percent, 1.40 percent and 1.14 percent of the revolving charge accounts
receivable held at those respective 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 $129 million at July 31, 1996
compared with $127 million at October 31, 1995 and $120 million at July 31,
1995. The Company's allowance for credit losses on all Receivables and Leases
financed totaled $84 million at July 31, 1996, $84 million at October 31, 1995
and $80 million at July 31, 1995. This allowance for credit losses represented
1.56 percent of the unpaid balance of Receivables and Leases financed at July
31, 1996, 1.71 percent at October 31, 1995, and 1.80 percent at July 31, 1995.
The Company's allowance for credit losses, as a percentage of total Receivables
and Leases, declined slightly due to an ongoing reevaluation of loss experience
and related adjustments to insure that the allowance for credit losses is
maintained at an adequate level.
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. 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 John
Deere, and the nature and availability of support facilities such as its lines
of credit. For information regarding John Deere 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
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the first half, and overall collections of Receivables and Leases traditionally
somewhat higher in the first half of the fiscal year.
During the first nine months of 1996, the aggregate cash provided by
operating and financing activities was used to increase credit receivables.
Cash provided by operating activities was $156 million in the first nine
months of 1996. Financing activities provided $348 million during the same
period, resulting from a $383 million increase in total borrowings which was
offset by dividend payments totaling $35 million to Deere & Company. Cash
used for investing activities totaled $500 million in the first nine months
of 1996, primarily due to acquisitions of Receivables and Leases exceeding
collections by $1.147 billion, which was partially offset by the $623 million
of proceeds from the sale of receivables. Cash and cash equivalents
increased $4 million during the first nine months of 1996.
During the first nine months of 1995, the aggregate cash provided by
operating and financing activities was used primarily to increase credit
receivables and cash and cash equivalents. Cash provided by operating
activities was $112 million in the first nine months of 1995. Financing
activities provided $395 million during the same period, resulting from a
$432 million increase in outside borrowings which was partially offset by
dividend payments totaling $35 million and a $2 million decrease in payables
to Deere & Company. Cash used for investing activities totaled $396 million
in the first nine months of 1995, primarily due to acquisitions of
Receivables and Leases exceeding collections by $1.110 billion which was
partially offset by the $726 million of proceeds from the sale of
receivables. Cash and cash equivalents increased $111 million during the
first nine months of 1995.
Total interest-bearing indebtedness amounted to $4.646 billion at July 31, 1996
compared with $4.264 billion at October 31, 1995 and $3.781 billion at July 31,
1995, generally corresponding with the level of Receivables and Leases financed
and the level of cash and cash equivalents. The ratio of total interest-bearing
debt to stockholder's equity was 6.1 to 1, 6.2 to 1 and 5.5 to 1 at July 31,
1996, October 31, 1995 and July 31, 1995, respectively.
During the first nine months of this year, the Company issued $550 million and
retired $143 million of medium-term notes.
At July 31, 1996, the Company and John Deere, jointly, maintained $4.208 billion
unsecured lines of credit with various banks in North America and overseas,
$1.131 billion of which were unused. For the purpose of computing unused credit
lines, the total short-term borrowings, excluding the current portion of long-
term borrowings, of the Company and John Deere were considered to constitute
utilization. Included in the total credit lines is a long-term credit agreement
commitment for $3.675 billion. An annual facility fee on the credit agreement
is charged to the Company based on utilization.
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The Capital Corporation paid a cash dividend to John Deere Credit Company of $20
million in the first quarter of 1996. During the third quarter of 1996, the
Capital Corporation paid a second dividend of $15 million to John Deere Credit
Company. On August 30, 1996, the Capital Corporation declared a third dividend
of $35 million to be paid to John Deere Credit Company, which, in turn, declared
a dividend of $35 million to Deere & Company. The fourth quarter dividend will
be paid in two installments, with $17.5 million payable on September 12, 1996,
and $17.5 million payable on October 15, 1996.
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
See Note (5) to the Interim Financial Statements.
Item 2. CHANGES IN SECURITIES.
Omitted pursuant to instruction H(2).
Item 3. DEFAULTS UPON SENIOR SECURITIES.
Omitted pursuant to instruction H(2).
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Omitted pursuant to instruction H(2).
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
See the index to exhibits immediately preceding the exhibits filed
with this report.
Certain instruments relating to long-term debt, constituting less
than 10% of the registrant's total assets, are not filed as
exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation
S-K. The registrant will file copies of such instruments upon
request of the Commission.
(b) Reports on Form 8-K.
Current report on Form 8-K dated May 14, 1996 (items 5 and 7).
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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: 30 August 1996 By: /s/ Robert W. Lane
---------------------------- -------------------------------
Robert W. Lane
Vice President
(Principal Financial Officer)
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INDEX TO EXHIBITS
EXHIBIT PAGE NO.
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(12) Computation of ratio of earnings to fixed charges. 17
(27) Financial data schedule. 18
(99) Part I of Deere & Company Form 10-Q for the quarter ended
July 31, 1996 (Securities and Exchange Commission file
number 1-4121).*
--------------------------
* Incorporated by reference. Copies of these exhibits are available from
the Company upon request.
-16-
<PAGE>
EXHIBIT 12
JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
JULY 31 OCTOBER 31
1996 1995 1995 1994 1993 1992 1991
----------------------- --------------------------------------------------------------------
Earnings:
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income
taxes and changes
in accounting $157,567 $133,912 $175,360 $161,809 $169,339 $142,920 $110,820
Fixed charges 202,866 175,298 240,913 168,507 170,226 191,930 230,901
----------------------- --------------------------------------------------------------------
Total earnings $360,433 $309,210 $416,273 $330,316 $339,565 $334,850 $341,721
----------------------- --------------------------------------------------------------------
----------------------- --------------------------------------------------------------------
Fixed charges:
Interest expense $200,728 $173,472 $238,445 $166,591 $167,787 $189,288 $228,308
Rent expense 2,138 1,826 2,468 1,916 2,439 2,642 2,593
----------------------- --------------------------------------------------------------------
Total fixed charges $202,866 $175,298 $240,913 $168,507 $170,226 $191,930 $230,901
----------------------- --------------------------------------------------------------------
----------------------- --------------------------------------------------------------------
Ratio of earnings to
fixed charges * 1.78 1.76 1.73 1.96 1.99 1.74 1.48
</TABLE>
"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.
-17-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form
10-Q and is qualified in its entirety by reference to such financial
information.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 168
<SECURITIES> 0
<RECEIVABLES> 5312
<ALLOWANCES> 81
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 17
<DEPRECIATION> 11
<TOTAL-ASSETS> 5704
<CURRENT-LIABILITIES> 0
<BONDS> 1446
0
0
<COMMON> 113
<OTHER-SE> 648
<TOTAL-LIABILITY-AND-EQUITY> 5704
<SALES> 0
<TOTAL-REVENUES> 477
<CGS> 0
<TOTAL-COSTS> 24
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 24
<INTEREST-EXPENSE> 201
<INCOME-PRETAX> 158
<INCOME-TAX> 55
<INCOME-CONTINUING> 103
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
