=================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1997
Commission file no: 1-6458
___________________________
JOHN DEERE CAPITAL CORPORATION
Delaware 36-2386361
(State of incorporation) (IRS employer identification no.)
1 East First Street, Suite 600
Reno, Nevada 89501
(Address of principal executive offices)
Telephone Number: (702) 786-5527
_________________________________
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
At July 31, 1997, 2,500 shares of common stock, without par
value, of the registrant were outstanding, all of which were
owned by John Deere Credit Company, a wholly-owned subsidiary of
Deere & Company.
The registrant meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing
this Form with certain reduced disclosures as permitted by
General Instructions H(2).
=================================================================
Page 1 of 16 Pages
Index to Exhibits: Page 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Income
(Unaudited)
(in millions)
Three Months Nine Months
Ended Ended
July 31 July 31
------------------------------
1997 1996 1997 1996
Revenues ------ ------ ------ ------
Finance income earned
on retail notes $111.1 $ 89.4 $306.7 $277.1
Revolving charge account
income 26.6 24.9 71.2 67.6
Lease revenues 32.4 18.1 82.8 45.9
Finance income earned on
wholesale notes 12.3 9.8 36.0 26.0
Net gain on retail notes sold 7.4 .5 9.2 10.6
Interest income from
short-term investments 2.6 3.1 7.6 8.7
Securitization and servicing
fee income 5.9 11.0 23.5 31.9
Other income 2.0 1.9 5.9 9.2
- ----------------------------------------------------------------
Total revenues 200.3 158.7 542.9 477.0
- ----------------------------------------------------------------
Expenses
Interest expense:
On obligations to others 86.4 66.7 235.2 199.2
On notes payable to
Deere & Company .2 .1 1.5 1.5
- ----------------------------------------------------------------
Total interest expense 86.6 66.8 236.7 200.7
- ----------------------------------------------------------------
Operating expenses:
Administrative and
operating expenses 25.9 22.8 74.6 66.0
Provision for credit losses 8.8 8.5 25.0 24.4
Fees paid to Deere & Company 1.9 1.5 6.3 4.7
Depreciation of equipment on
operating leases 18.8 9.4 50.6 23.6
- ----------------------------------------------------------------
Total operating expenses 55.4 42.2 156.5 118.7
- ----------------------------------------------------------------
Total expenses 142.0 109.0 393.2 319.4
- ----------------------------------------------------------------
Income of consolidated group
before income taxes 58.3 49.7 149.7 157.6
Provision for income taxes 20.3 17.4 52.1 55.1
- ----------------------------------------------------------------
Income of consolidated group 38.0 32.3 97.6 102.5
Equity in loss of
unconsolidated affiliate (.2) --- (1.1) ---
- ----------------------------------------------------------------
Net income $ 37.8 $ 32.3 $ 96.5 $102.5
================================================================
See Notes to Interim Financial Statements.
Page 2
<PAGE>
John Deere Capital Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(dollars in millions)
July 31, October 31, July 31,
1997 1996 1996
Assets -------- -------- --------
Cash and cash equivalents $ 187.0 $ 171.0 $ 168.1
Receivables and leases:
Retail notes 4,499.0 4,069.6 3,982.7
Revolving charge accounts 613.2 571.1 552.0
Financing leases 208.2 181.5 162.7
Wholesale notes 522.7 524.5 443.0
- -----------------------------------------------------------------
Total receivables 5,843.1 5,346.7 5,140.4
Equipment on operating
leases -- net 459.8 276.8 240.8
- -----------------------------------------------------------------
Total receivables
and leases 6,302.9 5,623.5 5,381.2
Allowance for credit losses (89.3) (87.4) (84.1)
- -----------------------------------------------------------------
Total receivables
and leases -- net 6,213.6 5,536.1 5,297.1
- -----------------------------------------------------------------
Other receivables 144.4 189.9 172.3
Investment in
unconsolidated affiliate 8.4 6.3 ---
Other assets 72.1 67.8 66.3
- -----------------------------------------------------------------
Total Assets $6,625.5 $5,971.1 $5,703.8
=================================================================
Liabilities and Stockholder's Equity
Short-term borrowings:
Commercial paper $2,382.8 $1,689.9 $2,229.7
Deere & Company 123.6 544.8 192.5
Current maturities of
long-term borrowings 618.8 863.7 778.5
Other notes payable 1.8 --- ---
- -----------------------------------------------------------------
Total short-term
borrowings 3,127.0 3,098.4 3,200.7
- -----------------------------------------------------------------
Accounts payable and accrued
liabilities:
Accrued interest on
senior debt 51.4 35.9 41.4
Other payables 165.8 144.8 126.4
- -----------------------------------------------------------------
Total accounts payable
and accrued liabilities 217.2 180.7 167.8
- -----------------------------------------------------------------
Deposits withheld from
dealers and merchants 134.0 135.4 129.0
- -----------------------------------------------------------------
Long-term borrowings:
Senior debt 2,203.7 1,649.5 1,145.7
Subordinated debt 150.0 150.0 300.0
- -----------------------------------------------------------------
Total long-term borrowings 2,353.7 1,799.5 1,445.7
- -----------------------------------------------------------------
Total liabilities 5,831.9 5,214.0 4,943.2
- -----------------------------------------------------------------
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 680.9 644.4 647.8
Cumulative translation
adjustment (.1) (.1) ---
- -----------------------------------------------------------------
Total stockholder's equity 793.6 757.1 760.6
- -----------------------------------------------------------------
Total Liabilities and
Stockholder's Equity $6,625.5 $5,971.1 $5,703.8
=================================================================
See Notes to Interim Financial Statements.
Page 3
<PAGE>
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Cash Flows
(Unaudited)
(in millions)
Nine Months Ended July 31
-------------------------
1997 1996
-------------------------
Cash Flows from Operating Activities:
Net income $ 96.5 $ 102.5
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 25.0 24.4
Provision for depreciation 50.5 25.2
Equity in loss of unconsolidated
affiliate 1.1 ---
Other 24.4 3.8
- ----------------------------------------------------------------
Net cash provided by
operating activities 197.5 155.9
- ----------------------------------------------------------------
Cash Flows from Investing Activities:
Cost of receivables and
leases acquired (4,734.4) (4,009.6)
Collections of receivables 3,562.9 2,862.6
Proceeds from sales of receivables 433.0 622.6
Other 26.7 24.8
- ----------------------------------------------------------------
Net cash used for investing
activities (711.8) (499.6)
- ----------------------------------------------------------------
Cash Flows from Financing Activities:
Increase in commercial paper 692.9 243.0
Change in receivable/payable
with Deere & Company (411.9) (267.5)
Increase in other notes payable 1.8 ---
Proceeds from issuance of
long-term borrowings 885.0 550.0
Principal payments on
long-term borrowings (577.5) (143.0)
Dividends paid (60.0) (35.0)
- ----------------------------------------------------------------
Net cash provided by
financing activities 530.3 347.5
- ----------------------------------------------------------------
Net increase in cash and
cash equivalents 16.0 3.8
Cash and cash equivalents
at the beginning of period 171.0 164.3
- ----------------------------------------------------------------
Cash and cash equivalents
at the end of period $ 187.0 $ 168.1
================================================================
See Notes to Interim Financial Statements.
Page 4
<PAGE>
John Deere Capital Corporation and Subsidiaries
Notes to Interim Financial Statements
(1) The consolidated financial statements of John Deere Capital
Corporation (Capital Corporation) and its subsidiaries, Deere
Credit, Inc., Deere Credit Services, Inc., Farm Plan Corporation,
John Deere Receivables, Inc., John Deere Funding Corporation and
Arrendadora John Deere, S.A. de C.V. (collectively referred to as
the Company) have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted as permitted by such
rules and regulations. All adjustments, consisting of normal
recurring adjustments, have been included. Management believes
that the disclosures are adequate to present fairly the financial
position, results of operations and cash flows at the dates and
for the periods presented. It is suggested that these interim
financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest
annual report on Form 10-K. Results for interim periods are not
necessarily indicative of those to be expected for the fiscal
year.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
and related disclosures. Actual results could differ from those
estimates.
(2) The principal business of the Company is providing and
administering financing for retail purchases of new and used
equipment manufactured by Deere & Company's agricultural,
construction (formerly known as industrial) and commercial and
consumer equipment divisions. The Company purchases retail
installment sales and loan contracts (retail notes) from Deere &
Company and its wholly-owned subsidiaries (collectively called
John Deere). These retail notes are acquired by John Deere
through independent John Deere retail dealers. The Company also
purchases and finances certain agricultural, construction and
lawn and grounds care retail notes unrelated to John Deere,
primarily used equipment accepted by dealers in trade. In
addition, the Company purchases and finances recreational product
retail notes acquired from independent dealers and marine product
mortgage service companies (recreational product retail notes).
The Company also leases equipment to retail customers, finances
and services revolving charge accounts acquired from and offered
through merchants in the agricultural, lawn and grounds care and
recreational product retail markets (revolving charge accounts),
and provides wholesale financing for inventories of recreational
vehicles, manufactured housing units, yachts, John Deere engines,
John Deere construction equipment and the Sabre line of equipment
owned by dealers of those products (wholesale notes). Retail
notes, revolving charge accounts, direct financing leases and
wholesale notes receivable are collectively called "Receivables."
Receivables and operating leases are collectively called
"Receivables and Leases."
(3) The consolidated ratio of earnings to fixed charges was 1.66
to 1 for the third quarter of 1997 compared with 1.74 to 1 for
the third quarter of 1996. The consolidated ratio of earnings to
fixed charges was 1.63 to 1 for the first nine months of 1997 and
1.78 to 1 for the first nine months of 1996. "Earnings" consist
of income before income taxes, the cumulative effect of changes
in accounting and fixed charges. "Fixed charges" consist of
interest on indebtedness, amortization of debt discount and
expense, an estimated amount of rental expense under capitalized
leases which is deemed to be representative of the interest
factor and rental expense under operating leases.
Page 5
<PAGE>
(4) During the first nine months of 1997, the Company received
proceeds from the sale of retail notes of $433.0 million. At
July 31, 1997, the net unpaid balance of all retail notes
previously sold was $1.040 billion. At July 31, 1997, the
Company's maximum exposure under all financing receivable
recourse provisions was $142.4 million for all retail notes sold.
(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.
(6) In the first quarter of 1997, the Company adopted the
Financial Accounting Standards Board (FASB) Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of. In the first quarter of 1997,
the Company also adopted FASB Statement No. 125, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. The adoption of these Statements had no effect
on the Company's financial position or results of operations.
Page 6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Net income was $37.8 million in the third quarter of 1997 and
$96.5 million for the first nine months of 1997 compared with
$32.3 million and $102.5 million for the same periods last year.
Third quarter earnings reflect higher income from a larger
average balance of receivables and leases financed and gains from
the sale of retail notes. Year-to-date results decreased
primarily due to narrower financing spreads, higher expenditures
associated with several growth initiatives and lower
securitization and servicing fee income, which were partially
offset by higher income from a 19 percent increase in the average
balance of Receivables and Leases financed during the first nine
months.
Revenues totaled $200.3 million and $542.9 million for the third
quarter and for the first nine months of 1997, respectively,
compared to $158.7 million and $477.0 million for the same
periods a year ago. Revenues increased due to a larger average
portfolio financed, particularly related to growth in retail
notes, operating leases and wholesale notes. Finance income
earned on retail notes totaled $111.1 million and $306.7 million
for the third quarter and for the first nine months of 1997,
respectively, compared to $89.4 million and $277.1 million for
the same periods in 1996. Lease revenues increased $36.9
million, to $82.8 million in the first nine months of 1997, from
$45.9 million in the first nine months of 1996, largely due to
low-rate leasing initiatives related to John Deere agricultural
equipment. Finance income earned on wholesale notes increased
$10.0 million to $36.0 million for the first nine months of 1997
from $26.0 million earned in the first nine months of 1996. The
higher finance income earned on wholesale notes was primarily a
result of the continued growth in the construction floor
planning, manufactured housing and yacht markets.
In July 1997, the Company securitized and sold approximately $400
million in retail notes, resulting in an initial gain on notes
sold of $5.7 million. Securitization and servicing fee income
declined $8.4 million, from $31.9 million during the first nine
months of 1996 to $23.5 million during the first nine months of
1997. The decrease in securitization and servicing fee income
was primarily the result of a 15 percent decrease in the average
balance of retail notes previously sold.
Total interest expense for the third quarter increased from $66.8
million in 1996 to $86.6 million in 1997. Interest expense
increased from $200.7 million for the first nine months of 1996
to $236.7 million for the first nine months of 1997. These
increases in interest expense were primarily the result of
increased borrowings required to finance the higher average
portfolio of Receivables and Leases. Total average borrowings
during the first nine months of 1997 were $5.310 billion,
compared to $4.427 billion in the first nine months of 1996. The
weighted average interest rate on total borrowings for the nine
months ended July 31, 1997 and 1996 were 6.03 percent and 5.96
percent, respectively.
Administrative and operating expenses were $25.9 million in the
third quarter of 1997 and $74.6 million for the first nine months
of 1997, compared with $22.8 million and $66.0 million for the
same periods in 1996. These increases were the result of higher
employment costs associated with administering a larger
Receivable and Lease portfolio and certain expenses relating to
several growth initiatives. The growth initiatives include
expansion of international retail financing, a focus on golf and
turf financing, and continued efforts related to agricultural-
business finance opportunities, such as farmer operating loans.
Operating expenses were also affected by higher depreciation of
equipment on operating leases, which totaled $18.8 million in the
third quarter of 1997 and $50.6 million in the first nine months
of 1997, compared to $9.4 million and $23.6 million for the same
periods in 1996, a result of the increase in operating leases
financed.
During the third quarter and the first nine months of 1997, the
provision for credit losses totaled $8.8 million and $25.0
million, respectively, compared with $8.5 million and $24.4
million in the same periods last year. The annualized provision
for credit losses, as a percentage of the total average portfolio
outstanding, was .55 percent for the third quarter of 1997 and
.56 percent for the first nine months of 1997, compared with .67
percent and .65 percent for the same periods last year.
Page 7
<PAGE>
In October 1996, the Capital Corporation entered into a joint
venture, John Deere Credit Limited (JDCL), to offer equipment
financing products in the United Kingdom. Through July 31, 1997,
the Capital Corporation's share of JDCL's losses was $1.1
million, representing primarily fixed administrative and
operating expenses associated with this new affiliate.
Receivable and Lease acquisition volumes were as follows (dollars
in millions):
Three Months
Ended July 31,
----------------
1997 1996 $ Chng % Chng
-------------------------------------
Retail notes volumes:
Agricultural equipment $ 459 $ 425 $ 34 8%
Construction equipment 92 110 (18) (16)
Lawn and grounds care
equipment 53 51 2 4
Recreational products 60 59 1 2
---------------------------
Total retail note
volumes 664 645 19 3
Revolving charge accounts 463 392 71 18
Wholesale notes 279 279 -- --
Leases 125 87 38 44
---------------------------
Total Receivable and
Lease volumes $1,531 $1,403 $ 128 9
===========================
Nine months
Ended July 31,
----------------
1997 1996 $ Chng % Chng
-------------------------------------
Retail notes volumes:
Agricultural equipment $1,909 $1,616 $ 293 18%
Construction equipment 277 339 (62) (18)
Lawn and grounds care
equipment 111 86 25 29
Recreational products 270 190 80 42
---------------------------
Total retail note
volumes 2,567 2,231 336 15
Revolving charge accounts 1,018 866 152 18
Wholesale notes 791 682 109 16
Leases 359 231 128 55
---------------------------
Total Receivable and
Lease volumes $ 4,735 $ 4,010 $ 725 18
============================
Receivable and Lease volumes increased nine percent for the
quarter and 18 percent for the first nine months of 1997 compared
to a year ago primarily due to the increased sales of John Deere
agricultural equipment. Agricultural retail note volumes
increased eight percent in the third quarter and 18 percent in
the first nine months of 1997 compared to the same periods in
1996. Construction retail note volumes decreased, while
construction leasing volumes increased during the first nine
months of 1997, primarily due to the marketing and promotion of
the Company's construction equipment leasing programs. Lawn and
grounds care retail note volumes also increased as a result of
John Deere's promotional efforts, including low-rate incentive
programs during the first nine months of 1997. Revolving charge
account volumes increased based on continued strong demand for
these products. Wholesale note volumes were higher in the nine-
month period primarily as a result of increases in construction
floor planning and manufactured housing.
Page 8
<PAGE>
Total Receivables and Leases held were as follows (in millions):
July 31, October 31, July 31,
1997 1996 1996
-------------------------------
Retail notes held:
Agricultural equipment $ 2,736 $ 2,418 $ 2,359
Construction equipment 637 629 596
Lawn and grounds care
equipment 207 183 174
Recreational products 919 840 854
------------------------------
Total retail notes
held 4,499 4,070 3,983
Revolving charge accounts 613 571 552
Wholesale notes 523 524 443
Leases 668 459 403
------------------------------
Total Receivables and
Leases held $ 6,303 $ 5,624 $ 5,381
==============================
Retail notes administered by the Company, which include retail
notes previously sold, totaled $5.539 billion at July 31, 1997,
$5.253 billion at October 31, 1996, and $5.084 billion at July
31, 1996. At July 31, 1997, the balance of retail notes
previously sold was $1.040 billion compared with $1.177 billion
at October 31, 1996 and $1.101 billion at July 31, 1996. The
Company's maximum exposure under all retail note recourse
provisions at July 31, 1997 was $142.4 million.
Total Receivable and Lease amounts 60 days or more past due, by
product and as a percentage of total balances held were as
follows (dollars in millions):
July 31, October 31, July 31,
1997 1996 1996
-----------------------------------------
Dollars % Dollars % Dollars %
-----------------------------------------
Retail notes:
Agricultural
equipment $ 7.2 .26% $ 4.4 .18% $ 5.8 .24%
Construction
equipment 2.4 .38 2.5 .39 2.3 .39
Lawn and grounds
care equipment .7 .33 .7 .38 .7 .40
Recreational products .1 .01 .3 .03 .3 .03
----- ----- -----
Total retail notes 10.4 .23 7.9 .19 9.1 .23
Revolving charge
accounts 9.4 1.54 8.9 1.58 8.3 1.52
Wholesale notes 1.2 .23 1.0 .17 .4 .09
Leases 2.3 .35 1.7 .38 2.0 .50
----- ----- -----
Total Receivables
and Leases $23.3 .37 $19.5 .35 $19.8 .37
===== ===== =====
The balance of retail notes held (principal plus accrued
interest) with any installment 60 days or more past due was $54.3
million, $47.2 million and $49.8 million at July 31, 1997,
October 31, 1996 and July 31, 1996, respectively. The balance of
retail notes held on which any installment is 60 days or more
past due as a percentage of ending retail notes receivable was
1.21 percent, 1.16 percent and 1.25 percent at July 31, 1997,
October 31, 1996 and July 31, 1996, respectively.
During the third quarter and the first nine months of 1997, write-
offs (net of recoveries) of Receivables and Leases totaled $6.2
million and $20.6 million, respectively, compared with $6.5
million and $19.9 million in the same periods last year.
Annualized write-offs, as a percentage of the total average
portfolio outstanding, were .39 percent for the third quarter of
1997 and .46 percent for the first nine months of 1997, compared
with .51 percent and .53 percent, respectively, during the same
periods last year. Write-offs relating to retail notes declined
19 percent in the first nine months of 1997, when compared with
the first nine months of 1996, primarily due to lower write-offs
of recreational product retail notes and construction retail
notes. Revolving charge account, commercial wholesale and
leasing write-offs increased during the first nine months of
1997, compared to the first nine months of 1996, primarily due to
volume increases.
Page 9
<PAGE>
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 $134.0 million at July 31, 1997, compared
with $135.4 million at October 31, 1996 and $129.0 million at
July 31, 1996. The Company's allowance for credit losses on all
Receivables and Leases financed totaled $89.3 million at July 31,
1997, $87.4 million at October 31, 1996 and $84.1 million at July
31, 1996. Allowance for credit losses represented 1.42 percent
of the balance of Receivables and Leases financed at July 31,
1997, 1.55 percent at October 31, 1996, and 1.56 percent at July
31, 1996. The Company's allowance for credit losses, as a
percentage of total Receivables and Leases, has declined during
the last twelve months due to an ongoing reevaluation of loss
experience and related adjustments to ensure that the allowance
for credit losses is maintained at an adequate level. Management
believes the allowance for credit losses at July 31, 1997 is
sufficient to provide adequate protection against losses.
Capital Resources and Liquidity
The Company relies on its ability to raise substantial amounts of
funds to finance its Receivable and Lease portfolios. The
Company's primary sources of funds for this purpose are a
combination of borrowings and equity capital. Additionally, the
Company periodically sells substantial amounts of retail notes in
the public market and in private sales. The Company's ability to
obtain funds is affected by its debt ratings, which are closely
related to the outlook for and the financial condition of Deere &
Company, and the nature and availability of support facilities,
such as its lines of credit. For information regarding Deere &
Company and its business, see Exhibit 99.
The Company's ability to meet its debt obligations is supported
in a number of ways as described below. All commercial paper
issued is backed by bank credit lines. The assets of the Company
are self-liquidating in nature. A strong equity position is
available to absorb unusual losses on these assets. Liquidity is
also provided by the Company's ability to sell and securitize
these assets. Asset-liability risk is also actively managed to
minimize exposure to interest rate fluctuations.
Total interest-bearing indebtedness amounted to $5.481 billion at
July 31, 1997, compared with $4.898 billion at October 31, 1996
and $4.646 billion at July 31, 1996, generally corresponding with
the level of Receivables and Leases financed. Total short-term
indebtedness amounted to $3.127 billion at July 31, 1997,
compared with $3.098 billion at October 31, 1996 and $3.201
billion at July 31, 1996. Total long-term indebtedness amounted
to $2.354 billion, $1.800 billion and $1.445 billion at July 31
1997, October 31, 1996 and July 31, 1996, respectively. The
ratio of total interest-bearing debt to stockholder's equity was
6.9 to 1, 6.5 to 1 and 6.1 to 1 at July 31, 1997, October 31,
1996 and July 31, 1996, respectively. During the first nine
months of 1997, the Capital Corporation issued $200 million of 6%
notes and $200 million of 6.30% notes, both due in 1999, and
retired $100 million of 7.20% notes due in 1997. Additionally,
the Capital Corporation issued $485 million and retired $478
million of medium-term notes during the first nine months of
1997.
At July 31, 1997, the Capital Corporation, Deere & Company, John
Deere Limited (Canada) and John Deere Credit Inc. (Canada),
jointly, maintained $4.008 billion of unsecured lines of credit
with various banks in North America and overseas, $917 million of
which was unused. For the purpose of computing unused credit
lines, 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 Credit Inc.
(Canada), were considered to constitute utilization. Included in
the total credit lines is a long-term credit agreement commitment
for $3.500 billion. An annual facility fee on the credit
agreement is charged to the Capital Corporation based on
utilization.
Page 10
<PAGE>
The Company's business is somewhat seasonal, with overall
acquisitions of Receivables and Leases traditionally higher in
the second half of the fiscal year than in the first half, and
overall collections of Receivables and Leases traditionally
somewhat higher in the first half of the fiscal year.
During the first nine months of 1997, the aggregate net cash
provided by operating and financing activities was primarily used
to increase Receivables and Leases. Net cash provided by
operating activities was $198 million in the first nine months of
1997. Financing activities provided $530 million during the same
period, resulting from a $590 million net increase in total
borrowings, which was offset by $60 million in dividend payments
to John Deere Credit Company. Net cash used for investing
activities totaled $712 million in 1997, primarily due to
Receivable and Lease acquisitions exceeding collections by $1.172
billion, partially offset by the $433 million in proceeds from
the sale of receivables. Cash and cash equivalents increased $16
million during the first nine months of 1997.
During the first nine months of 1996, the aggregate net cash
provided by operating and financing activities was primarily used
to increase Receivables and Leases. Net cash provided by
operating activities was $156 million in the first nine months of
1996. Financing activities provided $348 million during the same
period, resulting from a $383 million net increase in total
borrowings, which was offset by $35 million in dividend payments
to John Deere Credit Company. Net cash used for investing
activities totaled $500 million in 1996, primarily due to
Receivable and Lease acquisitions exceeding collections by $1.147
billion, partially offset by the $623 million in proceeds from
the sale of receivables. Cash and cash equivalents increased $4
million during the first nine months of 1997.
The Capital Corporation paid a cash dividend to John Deere Credit
Company of $20 million in each of the first three quarters of
1997. John Deere Credit Company paid comparable dividends to
Deere & Company. On August 29, 1997, the Capital Corporation
declared a cash dividend of $15 million to John Deere Credit
Company, which in turn declared a cash dividend of $15 million to
Deere & Company, each payable on September 9, 1997.
Page 11
<PAGE>
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 13, 1997
(items 5 and 7).
Page 12
<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: September 4, 1997 By: /s/ R. W. Lane
--------------------------
R. W. Lane
Vice President
(Principal Financial Officer)
Page 13
<PAGE>
INDEX TO EXHIBITS
Exhibit Page No.
- ------- --------
(12) Computation of ratio of earnings to fixed charges 15
(27) Financial data schedule 16
(99) Part I of Deere & Company Form 10-Q for the
quarter ended July 31, 1997 (Securities and
Exchange Commission file number 1-4121*).
- ------------------------------
* Incorporated by reference. Copies of these exhibits are
available from the Company upon request.
Page 14
<PAGE>
Exhibit 12
John Deere Capital Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
Nine Months Ended 31 July
-------------------------
1997 1996
----------- ------------
Earnings:
Income before income
taxes and changes
in accounting $149,742 $157,567
Fixed charges 239,501 202,866
-------- --------
Total earnings $389,243 $360,433
======== ========
Fixed charges:
Interest expense $236,734 $200,728
Rent expense 2,767 2,138
-------- --------
Total fixed
charges $239,501 $202,866
======== ========
Ratio of earnings to
fixed charges * 1.63 1.78
======== ========
For the Years Ended October 31
--------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Earnings:
Income before income
taxes and changes
in accounting $206,588 $175,360 $161,809 $169,339 $142,920
Fixed charges 276,726 240,913 168,507 170,226 191,930
-------- -------- -------- -------- --------
Total earnings $483,314 $416,273 $330,316 $339,565 $334,850
======== ======== ======== ======== ========
Fixed charges:
Interest expense $273,748 $238,445 $166,591 $167,787 $189,288
Rent expense 2,978 2,468 1,916 2,439 2,642
-------- -------- -------- -------- --------
Total fixed
charges $276,726 $240,913 $168,507 $170,226 $191,930
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges * 1.75 1.73 1.96 1.99 1.74
======== ======== ======== ======== ========
- ---------
"Earnings" consist of income before income taxes, the cumulative
effect of changes in accounting and fixed charges. "Fixed
charges" consist of interest on indebtedness, amortization of
debt discount and expense, an estimated amount of rental expense
under capitalized leases which is deemed to be representative of
the interest factor and rental expense under operating leases.
* The Company has not issued preferred stock. Therefore, the
ratios of earnings to combined fixed charges and preferred
stock dividends are the same as the ratios presented above.
Page 15
<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>
<CIK> 0000027673
<NAME> JOHNDEERECAPITALCORP
<MULTIPLIER> 1000000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JUL-31-1997
<EXCHANGE-RATE> 1
<CASH> 187
<SECURITIES> 0
<RECEIVABLES> 5988
<ALLOWANCES> 89
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 21
<DEPRECIATION> 14
<TOTAL-ASSETS> 6626
<CURRENT-LIABILITIES> 0
<BONDS> 2354
0
0
<COMMON> 113
<OTHER-SE> 681
<TOTAL-LIABILITY-AND-EQUITY> 6626
<SALES> 0
<TOTAL-REVENUES> 543
<CGS> 0
<TOTAL-COSTS> 51
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 25
<INTEREST-EXPENSE> 237
<INCOME-PRETAX> 150
<INCOME-TAX> 52
<INCOME-CONTINUING> 97
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
