15
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 April 30, 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 April 30, 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 those
instructions.
Page 1 of 15 Pages
Index to Exhibits: Page 13
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Income
(Unaudited)
(in millions)
Three Months Ended Six Months Ended
April 30 April 30
1997 1996 1997 1996
Revenues -------------------------------------
Finance income earned
on retail notes $103.4 $ 95.6 $195.6 $187.7
Revolving charge
account income 22.6 21.2 44.6 42.7
Lease revenues 27.7 15.1 50.4 27.8
Finance income earned
on wholesale notes 11.9 8.6 23.7 16.2
Net gain on retail
notes sold 1.1 9.8 1.8 10.1
Interest income from
short-term investments 2.4 2.8 5.0 5.6
Securitization and
servicing fee income 7.2 9.5 17.6 20.9
Other income 2.8 5.0 3.9 7.3
- - -----------------------------------------------------------------
Total revenues 179.1 167.6 342.6 318.3
- - -----------------------------------------------------------------
Expenses
Interest expense:
On obligations to others 78.0 67.6 148.8 132.5
On notes payable to
Deere & Company .6 --- 1.3 1.4
- - -----------------------------------------------------------------
Total interest expense 78.6 67.6 150.1 133.9
- - -----------------------------------------------------------------
Operating expenses:
Administrative and
operating expenses 26.0 22.9 48.7 43.2
Provision for credit
losses 9.7 10.0 16.2 15.9
Fees paid to Deere
& Company 2.2 1.3 4.4 3.2
Depreciation of equipment
on operating leases 17.5 7.6 31.8 14.2
- - -----------------------------------------------------------------
Total operating
expenses 55.4 41.8 101.1 76.5
- - -----------------------------------------------------------------
Total expenses 134.0 109.4 251.2 210.4
- - -----------------------------------------------------------------
Income of consolidated group
before income taxes 45.1 58.2 91.4 107.9
Provision for income taxes 15.8 20.3 31.9 37.7
- - -----------------------------------------------------------------
Income of consolidated group 29.3 37.9 59.5 70.2
Equity in loss of
unconsolidated affiliate (.3) --- (.8) ---
- - -----------------------------------------------------------------
Net income $29.0 $37.9 $58.7 $70.2
See Notes to Interim Financial Statements.
John Deere Capital Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(dollars in millions)
Apr 30, Oct 31, Apr 30,
1997 1996 1996
Assets -------------------------------
Cash and cash equivalents $ 167.9 $ 171.0 $ 168.1
Receivables and leases:
Retail notes 4,605.5 4,075.9 3,682.8
Revolving charge accounts 510.9 564.8 470.8
Financing leases 194.0 181.5 153.7
Wholesale notes 522.3 524.5 380.9
- - -----------------------------------------------------------------
Total receivables 5,832.7 5,346.7 4,688.2
Equipment on operating
leases -- net 402.6 276.8 199.5
- - -----------------------------------------------------------------
Total receivables
and leases 6,235.3 5,623.5 4,887.7
Allowance for credit
losses (89.2) (87.4) (82.1)
- - -----------------------------------------------------------------
Total receivables
and leases -- net 6,146.1 5,536.1 4,805.6
- - -----------------------------------------------------------------
Other receivables 126.1 189.9 183.4
Investment in unconsolidated
affiliate 5.4 6.3 ---
Other assets 75.4 67.8 64.7
- - -----------------------------------------------------------------
Total Assets $6,520.9 $5,971.1 $5,221.8
=================================================================
John Deere Capital Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(dollars in millions)
Apr 30, Oct 31, Apr 30,
1997 1996 1996
--------------------------------
Liabilities and Stockholder's Equity
Short-term borrowings:
Commercial paper $2,259.4 $1,689.9 $2,208.1
Deere & Company 57.7 544.8 33.5
Current maturities of
long-term borrowings 1,143.7 863.7 248.5
- - -----------------------------------------------------------------
Total short-term
borrowings 3,460.8 3,098.4 2,490.1
- - -----------------------------------------------------------------
Accounts payable and accrued
liabilities:
Accrued interest on
senior debt 36.1 35.9 27.7
Other payables 167.4 144.8 214.8
- - -----------------------------------------------------------------
Total accounts payable and
accrued liabilities 203.5 180.7 242.5
- - -----------------------------------------------------------------
Deposits withheld from dealers
and merchants 131.2 135.4 125.4
- - -----------------------------------------------------------------
Long-term borrowings:
Senior debt 1,799.6 1,649.5 1,320.6
Subordinated debt 150.0 150.0 300.0
- - -----------------------------------------------------------------
Total long-term borrowings 1,949.6 1,799.5 1,620.6
- - -----------------------------------------------------------------
Total liabilities 5,745.1 5,214.0 4,478.6
- - -----------------------------------------------------------------
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 663.1 644.4 630.4
Cumulative translation
adjustment (.1) (.1) ---
- - -----------------------------------------------------------------
Total stockholder's equity 775.8 757.1 743.2
- - -----------------------------------------------------------------
Total Liabilities and
Stockholder's Equity $6,520.9 $5,971.1 $5,221.8
=================================================================
See Notes to Interim Financial Statements.
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Cash Flows
(Unaudited)
(in millions)
Six Months Ended April 30
1997 1996
-------------------------
Cash Flows from Operating Activities:
Net income $ 58.7 $ 70.2
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 16.2 15.9
Provision for depreciation 31.7 15.2
Equity in loss of
unconsolidated affiliate .8 ---
Other (.3) (1.0)
- - ----------------------------------------------------------------
Net cash provided by operating
activities 107.1 100.3
- - ----------------------------------------------------------------
Cash Flows from Investing Activities:
Cost of receivables and leases
acquired (3,203.6) (2,607.1)
Collections of receivables 2,555.4 1,978.0
Proceeds from sales of receivables 29.1 610.3
Other 33.4 95.5
- - ----------------------------------------------------------------
Net cash provided by (used for)
investing activities (585.7) 76.7
- - ----------------------------------------------------------------
Cash Flows from Financing Activities:
Increase in commercial paper 569.5 221.4
Change in receivable/payable
with Deere & Company (481.5) (426.6)
Proceeds from issuance of
long-term borrowings 455.0 175.0
Principal payments on
long-term borrowings (27.5) (123.0)
Dividends paid (40.0) (20.0)
- - ----------------------------------------------------------------
Net cash provided by (used for)
financing activities 475.5 (173.2)
- - ----------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (3.1) 3.8
Cash and cash equivalents at the
beginning of period 171.0 164.3
- - ----------------------------------------------------------------
Cash and cash equivalents at the
end of period $ 167.9 $ 168.1
See Notes to Interim Financial Statements.
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 1.57
to 1 for the second quarter of 1997 compared with 1.85 to 1 for
the second quarter of 1996. The consolidated ratio of earnings
to fixed charges was 1.60 to 1 for the first six months of 1997
and 1.80 to 1 for the first six 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.
(4) 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.
(5) 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.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Net income was $29.0 million for the second quarter of 1997 and
$58.7 million for the first six months of 1997 compared with
$37.9 million and $70.2 million for the same periods last year,
primarily reflecting a gain from the sale of retail notes during
the second quarter of last year. Additionally, earnings
decreased this year due to narrower financing spreads and higher
expenditures associated with several growth initiatives, which
were partially offset by higher income from a 16 percent increase
in the average balance of Receivables and Leases financed during
the first six months.
Revenues totaled $179.1 million and $342.6 million for the second
quarter and for the first six months of 1997, respectively,
compared to $167.6 million and $318.3 million for the same
periods a year ago. Revenues increased due to a larger average
portfolio financed, particularly related to growth in both
operating leases and wholesale notes. Lease revenues increased
$22.6 million, to $50.4 million in the first six months of 1997,
from $27.8 million in the first six months of 1996, largely due
to a number of low-rate leasing initiatives related to John Deere
agricultural and construction equipment. Finance income earned
on wholesale notes increased $7.5 million to $23.7 million for
the first six months of 1997 from $16.2 million earned in the
first six months of 1996. The higher finance income earned on
wholesale notes was primarily a result of the continued growth in
the manufactured housing, construction floor planning and yacht
markets.
In April 1996, the Company securitized and sold approximately
$600 million in retail notes, resulting in a gain on notes sold
of $9.4 million. Although no sales of retail notes occurred in
the first six months of 1997, additional sales of retail notes
are expected to be made in the future.
Total interest expense for the second quarter increased from
$67.6 million in 1996 to $78.6 million in 1997. Interest expense
increased from $133.9 million for the first six months of 1996 to
$150.1 million for the first six months of 1997. These increases
in interest expense were the result of increased borrowings
required to finance the higher average portfolio of Receivables
and Leases. Total average borrowings during the first six months
of 1997 were $5.150 billion, compared to $4.389 billion in the
first six months of 1996.
Administrative and operating expenses were $26.0 million in the
second quarter of 1997 and $48.7 million for the first six months
of 1997, compared with $22.9 million and $43.2 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 business finance
opportunities, such as farmer operating loans. Operating
expenses were also affected by higher depreciation of equipment
on operating leases, which totaled $17.5 million in the second
quarter of 1997 and $31.8 million in the first six months of
1997, compared to $7.6 million and $14.2 million for the same
periods in 1996, a result of the increase in operating leases
financed.
During the second quarter and the first six months of 1997, the
provision for credit losses totaled $9.7 million and $16.2
million, respectively, compared with $10.0 million and $15.9
million in the same periods last year. The annualized provision
for credit losses, as a percentage of the total average portfolio
outstanding, was .65 percent for the second quarter of 1997 and
.57 percent for the first six months of 1997, compared with .79
percent and .64 percent for the same periods last year.
In October 1996, the Capital Corporation entered into an
unconsolidated joint venture, John Deere Credit Limited (JDCL),
to offer equipment financing products in the United Kingdom.
Through April 30, 1997, the Capital Corporation's equity loss in
JDCL was $.8 million, representing primarily fixed administrative
and operating expenses associated with this new affiliate.
Receivables and Leases
Receivable and Lease acquisition volumes were as follows (dollars
in millions):
Three Months
Ended April 30,
1997 1996 $ %
Change Change
- - -----------------------------------------------------------------
Retail notes volumes:
Agricultural equipment $ 610 $ 548 $ 62 11%
Construction equipment 85 108 (23) (21)
Lawn and grounds care
equipment 35 21 14 67
Recreational products 146 73 73 100
- - -----------------------------------------------------------------
Total retail note volumes 876 750 126 17
- - -----------------------------------------------------------------
Revolving charge accounts 324 279 45 16
Wholesale notes 260 241 19 8
Leases 139 95 44 46
- - -----------------------------------------------------------------
Total Receivable and
Lease volumes $ 1,599 $ 1,365 $ 234 17
=================================================================
Six Months
Ended April 30,
1997 1996 $ %
Change Change
- - -----------------------------------------------------------------
Retail notes volumes:
Agricultural equipment $ 1,449 $ 1,189 $ 260 22%
Construction equipment 185 229 (44) (19)
Lawn and grounds care
equipment 58 35 23 66
Recreational products 210 131 79 60
- - -----------------------------------------------------------------
Total retail note volumes 1,902 1,584 318 20
- - -----------------------------------------------------------------
Revolving charge accounts 556 475 81 17
Wholesale notes 512 403 109 27
Leases 234 145 89 61
- - -----------------------------------------------------------------
Total Receivable and
Lease volumes $ 3,204 $ 2,607 $ 597 23
=================================================================
Total Receivables and Leases held were as follows (in millions):
Apr 30, Oct 31, Apr 30,
1997 1996 1996
----------------------------
Retail notes held:
Agricultural equipment $2,870 $2,424 $2,094
Construction equipment 639 629 576
Lawn and grounds care equipment 185 183 150
Recreational products 911 840 863
- - -----------------------------------------------------------------
Total retail notes held 4,605 4,076 3,683
- - -----------------------------------------------------------------
Revolving charge accounts 511 565 471
Wholesale notes 522 524 381
Leases 597 459 353
- - -----------------------------------------------------------------
Total Receivables and
Leases held $6,235 $5,624 $4,888
=================================================================
Agricultural retail note volumes increased in the second quarter
and first six months of 1997 compared to 1996, primarily due to
higher retail sales of John Deere equipment. Construction retail
note volumes decreased, while construction leasing volumes
increased during the first six months of 1997, primarily due to
the promotion of a low-rate leasing program sponsored by John
Deere and the Company. John Deere also sponsored low-rate
incentive programs which resulted in increases of lawn and
grounds care retail note volumes. Recreational note volumes and
revolving charge account volumes increased based on continued
strong demand for these products. In addition, the Company
acquired approximately $17 million in yacht installment notes
from an unrelated third party. Wholesale note volumes were
driven higher by increases in manufactured housing and
construction floor planning.
The amount of retail notes administered by the Company, which
includes retail notes previously sold, totaled $5.326 billion at
April 30, 1997, $5.253 billion at October 31, 1996, and $4.907
billion at April 30, 1996. At April 30, 1997, the balance of
retail notes previously sold was $720 million compared with
$1.177 billion at October 31, 1996 and $1.224 billion at April
30, 1996. The Company's maximum exposure under all retail note
recourse provisions at April 30, 1997 was $123 million.
Total Receivables 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):
Apr 30, Oct 31, Apr 30,
1997 1996 1996
$ % $ % $ %
- - -----------------------------------------------------------------
Retail notes:
Agricultural equipment $ 9.6 .33% $ 4.4 .18% $ 8.6 .41%
Construction equipment 2.1 .33 2.5 .39 2.0 .36
Lawn and grounds care
equipment .8 .41 .7 .38 .8 .52
Recreational products .1 .02 .3 .03 .3 .03
- - -----------------------------------------------------------------
Total retail notes 12.6 .27 7.9 .19 11.7 .32
- - -----------------------------------------------------------------
Revolving charge accounts 9.9 1.98 8.9 1.58 10.2 2.17
Wholesale notes 1.6 .31 1.0 .17 .1 .04
Leases 3.2 .53 1.7 .38 1.5 .44
- - -----------------------------------------------------------------
Total Receivables
and Leases $27.3 .44 $19.5 .35 $23.5 .48
=================================================================
The balance of retail notes held (principal plus accrued
interest) with any installment 60 days or more past due was $57.6
million, $47.2 million and $53.0 million at April 30, 1997,
October 31, 1996 and April 30, 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
1.25 percent, 1.16 percent and 1.44 percent at April 30, 1997,
October 31, 1996 and April 30, 1996, respectively.
During the second quarter and the first six months of 1997, write-
offs (net of recoveries) of Receivables and Leases totaled $8.9
million and $14.4 million, respectively, compared with $7.7
million and $13.4 million in the same periods last year.
Annualized write-offs, as a percentage of the total average
portfolio outstanding, were .60 percent for the second quarter of
1997 and .50 percent for the first six months of 1997, compared
with .61 percent and .54 percent for the same periods last year.
Write-offs relating to retail notes declined 12 percent in the
first six months of 1997, when compared with the first six months
of 1996, primarily due to lower write-offs of lawn and grounds
care and recreational product retail notes. Revolving charge
account and leasing write-offs increased during the first six
months of 1997, compared to the first six months of 1996,
primarily due to increases in revolving charge account and lease
volumes.
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 $131.2 million at April 30, 1997, compared
with $135.4 million at October 31, 1996 and $125.4 million at
April 30, 1996. The Company's allowance for credit losses on all
Receivables and Leases financed totaled $89.2 million at April
30, 1997, $87.4 million at October 31, 1996 and $82.1 million at
April 30, 1996. Allowance for credit losses represented 1.43
percent of the balance of Receivables and Leases financed at
April 30, 1997, 1.55 percent at October 31, 1996, and 1.68
percent at April 30, 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
April 30, 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 $5.411 billion at
April 30, 1997, compared with $4.898 billion at October 31, 1996
and $4.111 billion at April 30, 1996, generally corresponding
with the level of Receivables and Leases financed. Total short-
term indebtedness amounted to $3.461 billion at April 30, 1997,
compared with $3.098 billion at October 31, 1996 and $2.490
billion at April 30, 1996. Total long-term indebtedness amounted
to $1.950 billion, $1.800 billion and $1.621 billion at April 30
1997, October 31, 1996 and April 30, 1996, respectively. The
ratio of total interest-bearing debt to stockholder's equity was
7.0 to 1, 6.5 to 1 and 5.5 to 1 at April 30, 1997, October 31,
1996 and April 30, 1996, respectively. During the first six
months of 1997, the Capital Corporation issued $200 million of 6%
Notes, due in 1999. During this same period, the Capital
Corporation issued $255 million and retired $28 million of medium-
term notes.
At April 30, 1997, the Capital Corporation, Deere & Company and
John Deere Credit Inc. (Canada), jointly, maintained $4.008
billion of unsecured lines of credit with various banks in North
America and overseas, $1.012 billion of which was unused. For
the purpose of computing unused credit lines, the total short-
term borrowings, excluding the current portion of long-term
borrowings, of the Capital Corporation, Deere & Company and John
Deere Credit Inc. (Canada), were considered to constitute
utilization. Included in the total credit lines is a long-term
credit agreement expiring on February 27, 2001, for $3.500
billion. An annual facility fee on the credit agreement is
charged to the Capital Corporation based on utilization.
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 six 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 $107 million in the first six months of
1997. Financing activities provided $476 million during the same
period, resulting from a $516 million net increase in total
borrowings, which was offset by $40 million in dividend payments
to John Deere Credit Company. Net cash used for investing
activities totaled $586 million in 1997, primarily due to
Receivable and Lease acquisitions exceeding collections by $648
million. Cash and cash equivalents decreased $3 million during
the first six months of 1997.
During the first six months of 1996, $100 million of cash
provided by operating activities and $77 million provided by
investing activities were primarily used for financing
activities. The $77 million provided from investing activities
was due to the $610 million of proceeds from the sale of retail
notes and $96 million from other investing activities mainly due
to collections on receivables previously sold that were
temporarily being held for payment to the owners. Investing cash
inflows were partially offset by the acquisitions of Receivables
and Leases exceeding collections by $629 million. Financing
activities used $173 million during the first six months of 1996,
resulting from a $153 million net decrease in total borrowings
and a $20 million dividend payment to John Deere Credit Company.
Cash and cash equivalents increased $4 million during the first
six months of 1996.
The Capital Corporation paid a cash dividend to John Deere Credit
Company of $20 million in each of the first two quarters of 1997.
John Deere Credit Company paid comparable dividends to Deere &
Company. On May 30, 1997, the Capital Corporation declared a
cash dividend of $20 million to John Deere Credit Company, which
in turn, declared a cash dividend of $20 million to Deere &
Company, each payable on June 10, 1997.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
See Note (4) to the Interim Financial Statements.
Item 2. Changes in Securities.
Omitted pursuant to instruction H(2).
Item 3. Defaults Upon Senior Securities.
Omitted pursuant to instruction H(2).
Item 4. Submission of Matters to a Vote of Security Holders.
Omitted pursuant to instruction H(2).
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
See the index to exhibits immediately preceding
the exhibits filed with this report.
Certain instruments relating to long-term debt,
constituting less than 10% of the registrant's
total assets, are not filed as exhibits herewith
pursuant to Item 601(b)(4)(iii)(A) of Regulation
S-K. The registrant will file copies of such
instruments upon request of the Commission.
(b) Reports on Form 8-K.
Current report on Form 8-K dated February 11, 1997
(items 5 and 7).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JOHN DEERE CAPITAL CORPORATION
Date: June 9, 1997 By: /s/ R. W. Lane
----------------------------
R. W. Lane
Vice President
(Principal Financial Officer)
INDEX TO EXHIBITS
Exhibit Page No.
(12) Computation of ratio of earnings to fixed charges 14
(27) Financial data schedule 15
(99) Part I of Deere & Company Form 10-Q for the quarter
ended April 30, 1997( Securities and Exchange
Commission file number 1-4121*).
- - -----------------------
* Incorporated by reference. Copies of these exhibits are
available from the Company upon request.
Exhibit 12
John Deere Capital Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
Six Months Ended
30 April
1997 1996
Earnings: ===================
Income before income
taxes and changes
in accounting. . . . . . . . . . . . . . .$ 91,472 $107,821
Fixed charges. . . . . . . . . . . . . . . . 151,854 135,264
-------- --------
Total earnings . . . . . . . . . . . . .$243,326 $243,085
======== ========
Fixed charges:
Interest expense . . . . . . . . . . . . .$150,046 $133,888
Rent expense . . . . . . . . . . . . . . . 1,808 1,376
-------- --------
Total fixed charges. . . . . . . . . . .$151,854 $135,264
======== ========
Ratio of earnings to
fixed charges *. . . . . . . . . . . . . . 1.60 1.80
======== ========
For the Years Ended October 31
1996 1995 1994
Earnings: ==============================
Income before income
taxes and changes
in accounting . . . . . . . . $206,588 $175,360 $161,809
Fixed charges. . . . . . . . . . 276,726 240,913 168,507
-------- -------- --------
Total earnings . . . . . . . $483,314 $416,273 $330,316
======== ======== ========
Fixed charges:
Interest expense . . . . . . . $273,748 $238,445 $166,591
Rent expense . . . . . . . . . 2,978 2,468 1,916
-------- -------- --------
Total fixed charges. . . . . $276,726 $240,913 $168,507
======== ======== ========
Ratio of earnings to
fixed charges *. . . . . . . . 1.75 1.73 1.96
======== ======== ========
Exhibit 12
John Deere Capital Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
For the Years Ended
October 31
1993 1992
Earnings: ===================
Income before income
taxes and changes
in accounting. . . . . . . . . . . . . . .$169,339 $142,920
Fixed charges. . . . . . . . . . . . . . . . 170,226 191,930
-------- --------
Total earnings . . . . . . . . . . . . .$339,565 $334,850
======== ========
Fixed charges:
Interest expense . . . . . . . . . . . . .$167,787 $189,288
Rent expense . . . . . . . . . . . . . . . 2,439 2,642
-------- --------
Total fixed charges. . . . . . . . . . .$170,226 $191,930
======== ========
Ratio of earnings to
fixed charges *. . . . . . . . . . . . . . 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.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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This schedule contains summary financial information
extracted from Form 10-Q and is qualified in its entirety by
reference to such financial information.
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