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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 January 31, 2000
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: (775) 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 January 31, 2000, 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>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Income and Retained Earnings
(Unaudited)
(in millions)
Three Months Ended January 31,
------------------------------
2000 1999
---- ----
Revenues
Finance income earned on retail notes $87.6 $95.7
Lease revenues 88.9 58.9
Revolving charge account income 33.2 27.2
Finance income earned on wholesale notes 21.8 18.9
Securitization and servicing fee income 8.1 8.8
Net gain on retail notes sold 3.8 5.8
Interest income from short-term
Investments 2.5 2.6
Other income 5.2 3.3
- ----------------------------------------------------------
Total revenues 251.1 221.2
- ----------------------------------------------------------
Expenses
Interest expense 99.1 86.0
Operating expenses:
Administrative and operating expenses 33.3 28.4
Provision for credit losses 8.4 11.3
Fees paid to John Deere 3.1 3.1
Depreciation of equipment on operating
leases 52.0 35.2
- ----------------------------------------------------------
Total operating expenses 96.8 78.0
- ----------------------------------------------------------
Total expenses 195.9 164.0
- ----------------------------------------------------------
Income of consolidated group before income
taxes 55.2 57.2
Provision for income taxes 19.1 20.2
- ----------------------------------------------------------
Income of consolidated group 36.1 37.0
Equity in income of unconsolidated
affiliates .1 .4
- ----------------------------------------------------------
Net income 36.2 37.4
Cash dividends declared (5.0) (5.0)
Retained earnings at beginning of period 884.7 806.4
- ----------------------------------------------------------
Retained earnings at end of period $915.9 $838.8
==========================================================
See Notes to Interim Financial Statements.
Page 2
<PAGE>
John Deere Capital Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in millions)
January 31, October 31, January 31,
2000 1999 1999
----------- ----------- -----------
Assets
Cash and cash
equivalents $ 160.9 $ 149.4 $ 182.8
Receivables and
leases:
Retail notes 3,846.4 3,716.2 4,272.5
Revolving charge
accounts 774.0 900.6 609.4
Wholesale notes 1,033.4 957.2 831.2
Financing leases 429.4 402.2 242.5
- ------------------------------------------------------------
Total receivables 6,083.2 5,976.2 5,955.6
Equipment on
operating
leases - net 1,337.0 1,254.8 923.6
- ------------------------------------------------------------
Total receivables
and leases 7,420.2 7,231.0 6,879.2
Allowance for
credit losses (85.5) (83.6) (83.0)
- ------------------------------------------------------------
Total receivables
and leases -
net 7,334.7 7,147.4 6,796.2
- ------------------------------------------------------------
Other receivables 81.9 83.0 146.1
Notes receivable -
John Deere 33.7
Investment in
unconsolidated
affiliates 10.7 9.5 20.5
Other assets 104.9 116.0 155.2
- ------------------------------------------------------------
Total Assets $ 7,726.8 $ 7,505.3 $ 7,300.8
=============================================================
Liabilities and
Stockholder's Equity
Short-term borrowings:
Commercial paper $ 1,644.3 $ 1,264.7 $ 1,540.0
Extendible
commercial notes
and other notes
payable 56.5 6.4 7.2
John Deere 117.7 93.2
Current maturities
of long-term
borrowings 2,350.6 2,137.6 1,673.0
- ------------------------------------------------------------
Total short-term
borrowings 4,051.4 3,526.4 3,313.4
- ------------------------------------------------------------
Accounts payable and
accrued liabilities:
Accrued interest on
debt 66.1 33.1 64.4
Other payables 371.7 324.2 285.7
- ------------------------------------------------------------
Total accounts
payable and
accrued
liabilities 437.8 357.3 350.1
- ------------------------------------------------------------
Deposits withheld from
dealers and merchants 124.3 122.8 154.2
- ------------------------------------------------------------
Long-term borrowings:
Senior debt 1,934.9 2,351.1 2,382.3
Subordinated debt 150.0 150.0 150.0
- -----------------------------------------------------------
Total long-term
borrowings 2,084.9 2,501.1 2,532.3
- ------------------------------------------------------------
Total liabilities 6,698.4 6,507.6 6,350.0
- ------------------------------------------------------------
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 915.9 884.7 838.8
Accumulated other
comprehensive income
(loss) - cumulative
translation
adjustment (.3) .2 (.8)
- ------------------------------------------------------------
Total stockholder's
equity 1,028.4 997.7 950.8
- ------------------------------------------------------------
Total Liabilities and
Stockholder's Equity $ 7,726.8 $ 7,505.3 $ 7,300.8
=============================================================
See Notes to Interim Financial Statements.
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<PAGE>
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Cash Flows
(Unaudited)
(in millions)
Three Months Ended January 31,
------------------------------
2000 1999
---- ----
Cash Flows from Operating Activities:
Net income $ 36.2 $ 37.4
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 8.4 11.3
Provision for depreciation
and amortization 52.6 35.8
Equity in income of
unconsolidated affiliates (.1) (.4)
Other 47.4 8.8
- -------------------------------------------------------
Net cash provided by
operating activities 144.5 92.9
- -------------------------------------------------------
Cash Flows from Investing Activities:
Cost of receivables and
leases acquired (1,985.9)(1,977.2)
Collections of receivables 1,632.7 1,478.4
Proceeds from sales of receivables 71.3 102.2
Other 89.0 82.6
- -------------------------------------------------------
Net cash used for investing
activities (192.9) (314.0)
- -------------------------------------------------------
Cash Flows from Financing Activities:
Change in commercial paper 379.6 (132.0)
Change in extendible commercial
notes and other notes payable 50.1 .4
Change in receivable/payable
with John Deere (161.6) 21.9
Proceeds from issuance of
long-term borrowings 150.0 625.0
Principal payments on
long-term borrowings (353.2) (297.5)
Dividends paid (5.0) (5.0)
- -------------------------------------------------------
Net cash provided by
financing activities 59.9 212.8
- -------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 11.5 (8.3)
Cash and cash equivalents
at beginning of period 149.4 191.1
- -------------------------------------------------------
Cash and cash equivalents
at end of period $ 160.9 $ 182.8
=======================================================
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
(collectively called 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.
Based on the way the Company's operations are managed and
evaluated by management and materiality considerations, the
Company is viewed as one operating segment.
(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 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). John Deere
acquires these retail notes 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. In addition, the Company
purchases and finances recreational product retail notes
acquired from independent dealers (recreational product retail
notes). The Company also leases equipment to retail customers,
finances and services revolving charge accounts acquired from
and offered through merchants or farm input providers in the
agricultural, construction, and lawn and grounds care markets
as well as insured international export financing products
(revolving charge accounts), and provides wholesale financing
for inventories of recreational vehicles, manufactured housing
units, yachts, John Deere engines, and John Deere agricultural
and John Deere construction 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."
(3) The Company's ratio of earnings before fixed charges to
fixed charges was 1.55 to 1 for the first quarter of 2000
compared with 1.66 to 1 for the first quarter of 1999.
"Earnings before fixed charges" 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.
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<PAGE>
(4) Comprehensive income for the first three months of 2000
and 1999 consisted of the following in millions of dollars:
Three Months Ended
January 31,
------------------
2000 1999
------------------
Net income $ 36.2 $ 37.4
Change in cumulative
translation adjustment (0.5) --
------------------
Comprehensive income $ 35.7 $ 37.4
==================
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net income was $36.2 million for the first quarter of 2000,
compared with $37.4 million last year. First quarter results
were affected by higher operating expenses and lower income
from the sale of retail notes, partially offset by higher
income on a larger average Receivables and Lease portfolio
financed.
Revenues totaled $251.1 million for the first quarter of 2000
compared to $221.2 million for the same period last year.
Revenues increased primarily due to an 8 percent increase in
the average balance of Receivables and Leases financed. Finance
income earned on retail notes totaled $87.6 million for the
first three months of 2000, compared to $95.7 million for the
same period in 1999. This decrease was primarily due to a 71
percent decrease in the average balance of recreational product
installment notes financed. Lease revenues increased $30.0
million, to $88.9 million in the first three months of 2000,
from $58.9 million in the first three months of 1999, due to a
51 percent increase in the average balance of equipment on
operating leases and financing leases. Finance income earned on
wholesale notes increased $2.9 million, to $21.8 million for
the first three months of 2000, from $18.9 million in the first
three months of 1999. This increase was primarily the result of
continued growth in the financing for inventories of John Deere
construction equipment, John Deere agricultural equipment and
recreational vehicles. Revolving charge account income
increased $6.0 million, to $33.2 million for the first three
months of 2000, from $27.2 million in the first three months of
1999. This increase was primarily due to growth in the
agricultural operating loan portfolio.
Net gains on the sales of retail notes, including adjustments
to prior sales, totaled $3.8 million for the first quarter of
2000 compared to $5.8 million for the same period a year ago.
Additional sales of retail notes are expected to be made in the
future.
Interest expense totaled $99.1 million for the first quarter of
2000 compared to $86.0 million for the same period in 1999.
This increase was primarily due to an increase in the weighted
annual interest rate incurred on all borrowings from 5.9
percent for the first three months of 1999 to 6.3 percent for
the first three months of 2000. In addition, average borrowings
increased 8 percent to $6.144 billion in the first three months
of 2000 compared to $5.686 billion in the first three months of
1999.
Administrative and operating expenses increased 17 percent from
$28.4 million in the first quarter of 1999 to $33.3 million
for the same quarter in 2000. These increases were attributable
to the costs associated with administering a larger Receivable
and Lease portfolio as well as higher employment costs relating
to the increased level of new acquisition volumes. Depreciation
of equipment on operating leases increased to $52.0 million in
the first quarter of 2000 compared to $35.2 million for the
same periods in 1999, as a result of the increase in equipment
on operating leases financed.
During the first quarter of 2000, the provision for credit
losses totaled $8.4 million compared with $11.3 million for the
same period last year. This decrease in the provision for
credit losses for the first three months of 2000 was primarily
the result of less growth in the portfolio of Receivables and
Leases financed compared to the first quarter of fiscal 1999
and lower write-offs on the owned portfolio. The annualized
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<PAGE>
provision for credit losses, as a percentage of the total
average Receivable and Lease portfolio outstanding, was .47
percent for the first quarter of 2000 compared with .67 percent
for the same period last year.
Receivable and Lease acquisition volumes were as follows (in
millions of dollars):
Three Months
Ended January 31,
-----------------
2000 1999 $ Change % Change
--------------------------------------
Retail notes:
Agricultural equipment $670 $906 ($236) (26%)
Construction equipment 133 117 16 14
Lawn and grounds care
equipment 45 38 7 18
Recreational products 72 84 (12) (14)
--------------------------------------
Total 920 1,145 (225) (20)
Revolving charge
Accounts 420 321 99 31
Wholesale notes 450 394 56 14
Financing leases 31 27 4 15
Equipment on operating
Leases 165 90 75 83
--------------------------------------
Total $ 1,986 $ 1,977 $ 9 --
======================================
Retail note volumes decreased by $225 million for the first
three months of 2000 compared to the first three months of
1999, due to a decrease in United States agricultural equipment
retail note volumes. Revolving charge volumes increased due to
the strong demand for the Farm Plan and operating loans offered
to agricultural customers. Wholesale note volumes increased
significantly during the first three months of 2000 primarily
due to higher construction equipment floor planning notes and
recreational vehicle wholesale notes. Operating lease volumes
increased in the first three months over last year due to
agricultural low-rate and guaranteed residual value leasing
programs sponsored by the Company or John Deere.
Total Receivables and Leases held were as follows (in millions
of dollars):
January 31, October 31, January 31,
2000* 1999* 1999
------------------------------------
Retail notes:
Agricultural equipment $2,676 $2,602 $2,751
Construction equipment 671 611 722
Lawn and grounds care
Equipment 349 347 273
Recreational products 150 156 526
------------------------------------
Total 3,846 3,716 4,272
Revolving charge accounts 774 901 609
Wholesale notes 1,033 957 831
Financing leases 430 402 243
Equipment on operating
Leases 1,337 1,255 924
------------------------------------
Total $7,420 $7,231 $6,879
====================================
* - Includes the acquisition of John Deere Credit Limited
(JDCL), Farming and Agricultural Finance Limited (FAF) and
Senstar Capital Corporation (Senstar) installment, lease and
revolving charge balances. JDCL and FAF receivables were
acquired in the second quarter of fiscal 1999 and Senstar
receivables were acquired in the fourth quarter of fiscal 1999.
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Receivables and Leases administered by the Company, which
include retail notes sold, were as follows in (millions of
dollars):
January 31, October 31, January 31,
2000 1999 1999
-------------------------------------
Receivables and Leases
administered:
Receivables and Leases
owned by the Company $7,420 $7,231 $6,879
Retail notes sold and
securitized (with
limited recourse)* 1,949 2,275 1,348
Retail notes sold
(without recourse)** 111 118 429
Receivables serviced
(without recourse)*** 38 46
-------------------------------------
Total Receivables
and Leases
administered $9,518 $9,670 $8,656
=====================================
* The Company's maximum exposure under all retail note recourse
provisions at January 31, 2000, October 31, 1999 and January
31, 1999 was $155 million, $161 million and $174 million,
respectively. In addition, the Company has guaranteed letters
of credit on behalf of John Deere Credit Inc., the John Deere
finance subsidiary in Canada, as part of two retail note sales.
At January 31, 2000, the maximum exposure under these
agreements was approximately $7 million.
** On recreational product retail note sales, the Company
continues to administer the portfolio outstanding for a fee
until the servicing rights are assumed by their owner. The
Company anticipates the servicing relationship will generally
terminate within twelve months from the date of sale.
*** On February 1, 1999, the Company began servicing a
receivable portfolio on behalf of FAF. These servicing rights
were obtained in conjunction with the Company's acquisition of
the remaining 50 percent interest in JDCL.
Total Receivable and Lease amounts 60 days or more past due, by
product and as a percentage of total balances held were as
follows (in millions of dollars):
January 31, October 31, January 31,
2000 1999 1999
---------------------------------------
Dollars % Dollars % Dollars %
---------------------------------------
Retail notes:
Agricultural
equipment $10.7 .40% $11.7 .45% $10.8 .39%
Construction
Equipment 2.1 .31 2.1 .34 2.8 .39
Lawn and grounds
care equipment .9 .26 .8 .23 .8 .29
Recreational products .2 .13 .1 .06 .2 .04
----- ----- -----
Total 13.9 .36 14.7 .40 14.6 .34
Revolving charge
Accounts 10.7 1.38 8.9 .99 9.7 1.59
Wholesale notes 1.6 .15 1.1 .11 1.0 .12
Leases 5.2 .29 5.2 .31 5.9 .51
----- ----- -----
Total $31.4 .42 $29.9 .41 $31.2 .45
===== ===== =====
The balance of retail notes held (principal plus accrued
interest) with any installment 60 days or more past due was $51
million, $54 million and $63 million at January 31, 2000,
October 31, 1999 and January 31, 1999, respectively. The
balance of retail notes held on which any installment is 60
days or more past due, expressed as a percentage of the ending
balance of retail notes receivable, was 1.33 percent, 1.45
percent and 1.47 percent at January 31, 2000, October 31, 1999
and January 31, 1999, respectively.
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During the first quarter of 2000, write-offs (net of
recoveries) of Receivables and Leases totaled $6.4 million
compared with $7.2 million in the same period last year.
Annualized write-offs, as a percentage of the total average
Receivables and Leases held, were .35 percent for the first
quarter of 2000 compared with .43 percent during the same
period last year. Write-offs relating to retail notes decreased
$.9 million in the first three months of 2000, when compared
with the first three months of 1999, primarily due to decreased
write-offs of recreational product retail notes. Lease write-
offs increased $.1 million in the first three months of 2000
when compared to last year primarily due to higher write-offs
on agricultural leases. Revolving charge account and wholesale
write-offs in the first three months of 2000 remained
relatively stable when compared to the same period last year.
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 $124 million at January 31,
2000, compared with $123 million at October 31, 1999 and $154
million at January 31, 1999. Effective February 1, 1999, the
U.S. John Deere agricultural dealer reserve program was
modified to evaluate and adjust reserves outstanding quarterly
rather than annually under the previous program. In addition,
the minimum required reserve for select dealers was adjusted
from 3 percent to 2 percent of the aggregate balance
outstanding on all installment contracts originated through
that dealer.
The Company's allowance for credit losses on all Receivables
and Leases held totaled $86 million at January 31, 2000, $84
million at October 31, 1999 and $83 million at January 31,
1999. The allowance for credit losses represented 1.15 percent
of the total Receivables and Leases held at January 31, 2000,
1.16 percent at October 31, 1999 and 1.21 percent at January
31, 1999. The allowance is subject to an ongoing evaluation
based on loss experience and related estimates to ensure the
allowance for credit losses is maintained at an adequate level.
Management believes the allowance for credit losses at January
31, 2000 is sufficient to provide adequate protection against
losses.
YEAR 2000
No public infrastructure problems or any facilities related
problems were encountered by the Company's locations during the
rollover to the year 2000. After extensive system verification
and testing, the Company's systems are operating normally. The
Company is not aware of any significant issues related to the
Year 2000 problem. The total cost of the modifications and
upgrades to date has been $6 million since the beginning of
1997 and the future costs are not expected to be significant.
These costs were expensed as incurred and did not include the
cost of scheduled replacement software. Other major systems
projects were not deferred due to the Year 2000 compliance
projects.
EURO CONVERSION
The Company is well advanced in the process of identification,
implementation and testing of its systems to adopt the euro
currency in its operations affected by this change. The
Company's affected suppliers, distribution network and
financial institutions have been contacted and the Company does
not believe the currency change will significantly impact these
relationships. As a result, the Company expects to have its
systems ready to process the euro conversion during the
transition period from January 1, 1999 through January 1, 2002.
The cost of information systems modifications, effects on
product pricing and purchase contracts, and the impact on
foreign currency financial instruments, including derivatives,
are not expected to be material.
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SAFE HARBOR STATEMENT
Statements under the "Euro Conversion" heading and other
statements herein that relate to future operating periods are
subject to important risks and uncertainties that could cause
actual results to differ materially. Further information,
including factors that potentially could materially affect the
Company's and John Deere's financial results, is included in
the most recent Deere & Company Form 10-K and other John Deere
and Capital Corporation filings with the Securities and
Exchange Commission
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. 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 these assets.
The Company's business is somewhat seasonal, with overall
acquisition volumes of Receivables and Leases traditionally
higher in the second half of the fiscal year than in the first
half, and overall collections of Receivables and Leases
traditionally somewhat higher in the first six months than in
the last six months of the fiscal year.
During the first three months of 2000, 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 $145 million in the first three months
of 2000. Financing activities provided $60 million during the
same period, resulting from a $65 million net increase in total
borrowings, which was partially offset by a $5 million dividend
payment to John Deere Credit Company. During the quarter, the
change in the Company's borrowings was affected by a $162
million change in the receivable payable to John Deere. Net
cash used for investing activities totaled $193 million in the
first three months of 2000, primarily due to Receivable and
Lease acquisitions exceeding collections by $353 million, which
was partially offset by the $71 million in proceeds from the
sale of receivables. Cash and cash equivalents increased $12
million during the first three months of 2000.
During the first three months of 1999, 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 $93 million in the first three months
of 1999. Financing activities provided $213 million during the
same period, resulting from a $218 million net increase in
total borrowings, which was partially offset by a $5 million
dividend payment to John Deere Credit Company. Net cash used
for investing activities totaled $314 million in the first
three months of 1999, primarily due to Receivable and Lease
acquisitions exceeding collections by $499 million, which was
partially offset by the $102 million in proceeds from the sale
of receivables. Cash and cash equivalents decreased $8 million
during the first three months of 1999.
Total interest-bearing indebtedness amounted to $6.136 billion
at January 31, 2000, compared with $6.028 billion at October
31, 1999 and $5.846 billion at January 31, 1999, generally
corresponding with the level of Receivables and Leases financed
and the level of cash and cash equivalents. Total short-term
indebtedness amounted to $4.051 billion at January 31, 2000,
compared with $3.526 billion at October 31, 1999 and $3.313
billion at January 31, 1999. Total long-term indebtedness
amounted to $2.085 billion,
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$2.501 billion and $2.532 billion at January 31, 2000, October
31, 1999 and January 31, 1999, respectively. The ratio of total
interest-bearing debt to stockholder's equity was 6.0 to 1, 6.0
to 1 and 6.1 to 1 at January 31, 2000, October 31, 1999 and
January 31, 1999, respectively.
The Capital Corporation's subsidiary, John Deere Credit Limited
in Gloucester, England, retired $61 million of long-term debt
due in 2000. The Capital Corporation issued $150 million and
retired $292 million of medium-term notes during the first
quarter.
At January 31, 2000, the Capital Corporation, Deere & Company,
John Deere Limited (Canada) and John Deere Credit Inc.
(Canada), jointly, maintained $5.534 billion of unsecured lines
of credit with various banks in North America and overseas,
$2.817 billion of which was unused. For the purpose of
computing unused credit lines, commercial paper and short-term
bank 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. On February 22, 2000, the
Capital Corporation and Deere & Company jointly terminated
agreements for $5.5 billion in unsecured lines of credit
(including the lines available to John Deere Limited (Canada)
and John Deere Credit Inc. (Canada)) and entered into new
agreements. The new agreements provide Deere & Company and the
Capital Corporation with $4.5 billion in unsecured lines of
credit with various banks in North America and overseas. These
agreements include a $2.250 billion long-term commitment of the
banks expiring on February 22, 2005. The facility fees payable
under these credit agreements are divided between Deere &
Company and the Capital Corporation based on the proportion of
their respective commercial paper outstanding.
The Capital Corporation declared and paid a cash dividend of $5
million to John Deere Credit Company during the first quarter
of 2000. John Deere Credit Company paid a comparable dividend
to Deere & Company. On February 25, 2000, the Capital
Corporation declared a cash dividend of $5 million to John
Deere Credit Company, which in turn declared a cash dividend of
$5 million to Deere & Company, each payable on March 7, 2000.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
See the information under "Management's Discussion and
Analysis," Note 13 "Financial Instruments" and "Supplemental
Information (Unaudited)" in the Company's most recent annual
report filed on Form 10-K. There has been no material change in
this information.
Page 11
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
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 laws and
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.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
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 November 23, 1999
(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: March 13, 2000
By: /s/ Nathan J. Jones
---------------------------
Nathan J. Jones
Senior Vice President and
Principal Financial Officer
Page 13
<PAGE>
INDEX TO EXHIBITS
Exhibit
- ---------
(12) Computation of ratio of earnings to fixed charges
(27) Financial data schedule
(99) Part I of Deere & Company Form 10-Q for the quarter ended
January 31, 2000 (Securities and Exchange Commission
file number 1-4121*)
__________________________
*Incorporated by reference. Copies of these exhibits are
available from the Company upon request.
Page 14
Exhibit 12
John Deere Capital Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(thousands of dollars)
Three Months Ended January 31,
------------------------------
2000 1999
----------- -----------
Earnings:
Income before income
taxes and changes
in accounting $ 55,245 $ 57,129
Fixed charges 100,739 87,120
----------- -----------
Total Earnings $155,984 $144,249
Fixed charges:
Interest expense $ 99,111 $ 85,983
Rent Expense 1,628 1,137
----------- -----------
Total fixed
Charges $100,739 $ 87,120
=========== ===========
Ratio of earnings to
Fixed charges* 1.55 1.66
=========== ===========
For the Years Ended October 31,
--------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Earnings:
Income before
income taxes
and changes
in accounting $235,760 $233,534 $211,251 $206,588 $175,360
Fixed charges 366,102 373,237 330,648 276,726 240,913
-------- -------- -------- -------- --------
Total Earnings $601,862 $606,771 $541,899 $483,314 $416,273
======== ======== ======== ======== ========
Fixed charges:
Interest expense $360,925 $368,381 $326,867 $273,748 $238,445
Rent Expense 5,177 4,856 3,782 2,978 2,468
-------- -------- -------- -------- --------
Total fixed
charges $366,102 $373,237 $330,649 $276,726 $240,913
======== ======== ======== ======== ========
Ratio of earnings
to fixed
charges* 1.64 1.63 1.64 1.75 1.73
======== ======== ======== ======== ========
_______
"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.
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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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<NAME> JOHNDEERECAPITALCORP
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