===============================================================
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, 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 April 30, 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 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 and Retained Earnings
(Unaudited)
(in millions)
Three Months Ended Six Months Ended
April 30, April 30,
2000 1999 2000 1999
-----------------------------------
Revenues
Finance income earned
on retail notes $ 97.7 $ 108.0 $ 185.3 $ 203.7
Lease revenues 94.7 64.0 183.6 122.9
Revolving charge account
income 30.2 26.5 63.4 53.7
Finance income earned on
wholesale notes 22.4 15.5 44.2 34.4
Securitization and
servicing fee income 7.1 6.8 15.2 15.6
Net gain on retail notes
sold 3.2 9.5 7.0 15.3
Interest income from
short-term investments 2.2 2.0 4.7 4.6
Other income 3.8 4.3 9.0 7.6
--------------------------------------------------------------
Total revenues 261.3 236.6 512.4 457.8
--------------------------------------------------------------
Expenses
Interest expense 103.4 92.4 202.6 178.4
Operating expenses:
Administrative and
operating expenses 35.9 32.7 69.2 61.1
Provision for credit
losses 17.4 14.6 25.8 25.9
Fees paid to John Deere 2.8 3.0 5.9 6.1
Depreciation of equipment
on operating leases 52.4 38.6 104.4 73.8
--------------------------------------------------------------
Total operating
expenses 108.5 88.9 205.3 166.9
--------------------------------------------------------------
Total expenses 211.9 181.3 407.9 345.3
--------------------------------------------------------------
Income of consolidated group
before income taxes 49.4 55.3 104.5 112.5
Provision for income taxes 17.1 19.0 36.2 39.2
--------------------------------------------------------------
Income of consolidated group 32.3 36.3 68.3 73.3
Equity in income of
unconsolidated affiliates .1 .2 .2 .6
--------------------------------------------------------------
Net income 32.4 36.5 68.5 73.9
Cash dividends declared (5.0) (5.0) (10.0) (10.0)
Retained earnings at
beginning of period 915.9 838.8 884.7 806.4
--------------------------------------------------------------
Retained earnings at
end of period $ 943.2 $ 870.3 $ 943.2 $ 870.3
==============================================================
See Notes to Interim Financial Statements.
Page 2
<PAGE>
John Deere Capital Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in millions)
April 30, October 31, April 30,
2000 1999 1999
------------------------------------
Assets
Cash and cash equivalents $ 187.5 $ 149.4 $ 196.3
Receivables and leases:
Retail notes 4,221.9 3,716.2 4,849.1
Revolving charge accounts 935.4 900.6 730.0
Wholesale notes 938.6 957.2 877.6
Financing leases 427.9 402.2 254.5
--------------------------------------------------------------
Total receivables 6,523.8 5,976.2 6,711.2
Equipment on operating
leases - net 1,415.0 1,254.8 1,066.2
--------------------------------------------------------------
Total receivables
and leases 7,938.8 7,231.0 7,777.4
Allowance for credit losses (91.2) (83.6) (87.8)
--------------------------------------------------------------
Total receivables and
leases - net 7,847.6 7,147.4 7,689.6
--------------------------------------------------------------
Notes receivable -
unconsolidated affiliates 92.7
Other receivables 75.2 83.0 87.5
Investment in unconsolidated
affiliates 10.9 9.5 9.8
Other assets 135.2 116.0 93.6
--------------------------------------------------------------
Total Assets $ 8,349.1 $ 7,505.3 $ 8,076.8
==============================================================
Liabilities and Stockholder's Equity
Short-term borrowings:
Commercial paper $ 2,129.1 $ 1,264.7 $ 1,891.4
Extendible commercial notes
and other notes payable 7.6 6.4
John Deere 125.8 117.7 34.2
Current maturities of
long-term borrowings 1,893.2 2,137.6 1,977.3
--------------------------------------------------------------
Total short-term
Borrowings 4,155.7 3,526.4 3.902.9
--------------------------------------------------------------
Accounts payable and accrued
liabilities:
Accrued interest on debt 37.2 33.1 38.9
Other payables 405.1 324.2 287.4
--------------------------------------------------------------
Total accounts payable and
accrued liabilities 442.3 357.3 326.3
--------------------------------------------------------------
Deposits withheld from dealers
and merchants 122.2 122.8 123.3
--------------------------------------------------------------
Long-term borrowings:
Senior debt 2,425.2 2,351.1 2,591.1
Subordinated debt 150.0 150.0 150.0
--------------------------------------------------------------
Total long-term borrowings 2,575.2 2,501.1 2,741.1
--------------------------------------------------------------
Total liabilities 7,295.4 6,507.6 7,093.6
--------------------------------------------------------------
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 943.2 884.7 870.3
Accumulated other comprehensive
income (loss) - cumulative
translation adjustment (2.3) .2 .1
--------------------------------------------------------------
Total stockholder's equity 1,053.7 997.7 983.2
--------------------------------------------------------------
Total Liabilities and
Stockholder's Equity $ 8,349.1 $ 7,505.3 $ 8,076.8
==============================================================
See Notes to Interim Financial Statements.
Page 3
<PAGE>
John Deere Capital Corporation and Subsidiaries
Statements of Consolidated Cash Flows
(Unaudited)
(in millions)
Six Months Ended April 30,
2000 1999
---------------------------
Cash Flows from Operating Activities:
Net income $ 68.5 $ 73.9
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 25.8 25.9
Provision for depreciation
and amortization 105.6 75.3
Equity in income of
unconsolidated affiliates (.2) (.6)
Other 61.0 (40.8)
--------------------------------------------------------------
Net cash provided by
operating activities 260.7 133.7
--------------------------------------------------------------
Cash Flows from Investing Activities:
Cost of receivables and leases
acquired (4,170.2) (4,010.4)
Collections of receivables 3,074.6 2,847.0
Change in notes receivable -
unconsolidated affiliates (87.8) (5.1)
Proceeds from sales of receivables 154.1 297.4
Other 118.7 41.1
--------------------------------------------------------------
Net cash used for
investing activities (910.6) (830.0)
--------------------------------------------------------------
Cash Flows from Financing Activities:
Change in commercial paper 864.4 166.5
Change in extendible commercial
notes and other notes payable 1.2 (6.8)
Change in receivable/payable
with John Deere 2.8 (33.0)
Proceeds from issuance of long-term
borrowings 945.0 1,500.0
Principal payments on long-term
borrowings (1,115.4) (915.2)
Dividends paid (10.0) (10.0)
--------------------------------------------------------------
Net cash provided by
financing activities 688.0 701.5
--------------------------------------------------------------
Net increase in cash and cash
equivalents 38.1 5.2
Cash and cash equivalents at
beginning of period 149.4 191.1
--------------------------------------------------------------
Cash and cash equivalents at
end of period $ 187.5 $ 196.3
==============================================================
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, the Company is viewed as one operating
segment.
(2) During the second quarter of fiscal 2000, the Company
expanded its operations by forming two additional entities,
John Deere Bank S.A. (JDB) and John Deere Credit Compania
Financiera S.A. (JDCCF). JDB, a wholly-owned subsidiary of the
Capital Corporation located in Luxembourg, will act as the
European Regional Headquarters for the Company as operations
are expanded in that area. JDCCF is a wholly-owned subsidiary
of Deere Credit Inc., which is wholly-owned by the Capital
Corporation. The principal business of JDCCF is to support John
Deere and John Deere retail dealers by offering financing
products specific to the market in Argentina. Both entities
are fully consolidated into the Company's results.
(3) During the second quarter of fiscal 2000, the Company
discontinued offering wholesale note financing for manufactured
housing dealer inventory. The Company will continue to
administer and service the existing portfolio until it is fully
liquidated. Acquisition volumes for this product totaled $103
million for the first six months of fiscal 2000 and the
wholesale notes outstanding were $107 million at April 30,
2000.
(4) 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 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 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, 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
Page 5
<PAGE>
wholesale notes receivable are collectively called
"Receivables." Receivables and operating leases are
collectively called "Receivables and Leases."
(5) The Company's ratio of earnings before fixed charges to
fixed charges was 1.46 to 1 for the second quarter of 2000
compared with 1.59 to 1 for the second quarter of 1999. The
ratio of earnings before fixed charges to fixed charges was
1.51 to 1 for the first six months of 2000 and 1.62 to 1 for
the first six months 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.
(6) Comprehensive income for the first six months of 2000
and 1999 consisted of the following in millions of dollars:
Three Months Ended Six Months Ended
April 30, April 30,
2000 1999 2000 1999
------------------------------------
Net income $ 32.4 $ 36.5 $ 68.5 $ 73.9
Change in cumulative
translation adjustment (2.0) .9 (2.5) .9
------------------------------------
Comprehensive income $ 30.4 $37.4 $ 66.0 $ 74.8
====================================
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Net income was $32.4 million for the second quarter and $68.5
million for the first six months of 2000, compared with $36.5
million and $73.9 million, respectively, last year. The
decrease is primarily due to lower gains from the sale of
retail notes and higher operating expenses, partially offset by
higher income on a larger average receivable and lease
portfolio.
Revenues totaled $261.3 million and $512.4 million for the
second quarter and for the first six months, respectively, of
2000, compared to $236.6 million and $457.8 million for the
same periods a year ago. Revenues increased primarily due to a
6 percent increase in the average balance of Receivables and
Leases financed for the first six months of 2000 compared to
the same period last year. Finance income earned on retail
notes totaled $185.3 million for the first six months of 2000,
compared to $203.7 million for the same period in 1999. This
decrease was primarily due to significant sales of recreational
product installment notes during the last six months of 1999
and a 7 percent decrease in the average balance of agricultural
equipment notes financed. This decrease was partially offset
by an increase in the yield on variable rate contracts. Lease
revenues increased $60.7 million, to $183.6 million in the
first six months of 2000, from $122.9 million in the first six
months of 1999, due to a 48 percent increase in the average
balance of equipment on operating leases and financing leases.
Finance income earned on wholesale notes increased $9.8
million, to $44.2 million for the first six months of 2000,
from $34.4 million in the first six months of 1999. This
increase was primarily the result of continued growth in the
financing for dealer inventories of John Deere construction
equipment, John Deere agricultural equipment and recreational
vehicles. Revolving charge account income increased $9.7
million, to $63.4 million for the first six months of 2000,
from $53.7 million in the first six 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 $3.2 million and $7.0 million for the
second quarter and for the first six months of 2000,
respectively, compared to $9.5 million and $15.3 million for
the same periods a year ago. The lower net gain on retail
notes sold for the first six
Page 6
<PAGE>
months of 2000 was primarily the
result of lower recreational product retail note sales compared
to the same period last year. Additional sales of retail
notes are expected to be made in the future.
Interest expense totaled $103.4 million for the second quarter
of 1999 and $202.6 million for the first six months of 2000,
compared to $92.4 million and $178.4 million for the same
periods 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 six months of 1999 to
6.3 percent for the first six months of 2000. In addition,
average borrowings increased 4 percent to $6.311 billion in the
first six months of 2000 compared to $6.040 billion in the
first six months of 1999.
Administrative and operating expenses were $35.9 million in the
second quarter of 2000 and $69.2 million for the first six
months of 2000, compared with $32.7 million and $61.1 million
for the same periods in 1999. These increases were
attributable to the higher costs associated with administering
a larger Receivable and Lease portfolio as well as increased
international organization start up costs. Depreciation of
equipment on operating leases increased to $52.4 million in the
second quarter of 2000 and $104.4 million for the first six
months of 2000, compared to $38.6 million and $73.8 million for
the same periods in 1999, as a result of the increase in
operating leases financed.
During the second quarter and the first six months of 2000, the
provision for credit losses totaled $17.4 million and $25.8
million, respectively, compared with $14.6 million and $25.9
million in the same periods last year. The annualized provision
for credit losses, as a percentage of the total average
portfolio outstanding, was .92 percent for the second quarter
of 2000 and .70 percent for the first six months of 2000,
compared with .79 percent and .73 percent for the same periods
last year.
Receivable and Lease acquisition volumes were as follows (in
millions of dollars):
Three Months
Ended April 30,
2000 1999 $ Change % Change
----------------------------------
Retail notes:
Agricultural equipment $ 639 $ 601 $ 38 6%
Construction equipment 185 112 73 65
Lawn and grounds care
Equipment 85 60 25 42
Recreational products 72 95 (23) (24)
----------------------------------
Total 981 868 113 13
----------------------------------
Revolving charge accounts 625 492 133 27
Wholesale notes* 411 416 (5) (1)
Financing leases 52 29 23 79
Equipment on operating leases 213 228 (15) (7)
----------------------------------
Total $2,282 $2,033 $ 249 12
==================================
*Wholesale note volumes exclude $16 million for the three
months ended April 30, 2000 representing wholesale note volumes
from unconsolidated affiliates.
Page 7
<PAGE>
Six Months
Ended April 30,
2000 1999 $ Change % Change
----------------------------------
Retail notes:
Agricultural equipment $1,309 $1,507 ($198) (13%)
Construction equipment 318 229 89 39
Lawn and grounds care
Equipment 130 98 32 33
Recreational products 144 179 (35) (20)
----------------------------------
Total 1,901 2,013 (112) (6)
----------------------------------
Revolving charge accounts 1,045 813 232 29
Wholesale notes* 763 810 (47) 6
Financing leases 83 56 27 48
Equipment on operating leases 378 318 60 19
----------------------------------
Total $4,170 $4,010 $160 4
*Wholesale note volumes exclude $114 million for the six months
ended April 30, 2000 representing wholesale note volumes from
unconsolidated affiliates.
Retail note volumes decreased by $112 million for the first six
months of 2000 compared to the first six months of 1999, due to
a decrease in United States agricultural equipment and
recreational product retail note volumes. Revolving charge
volumes increased due to the strong demand for the Farm Plan and
operating loans offered to agricultural customers. Operating
lease volumes increased in the first six 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):
April 30, October 31, April 30,
2000* 1999* 1999
-----------------------------------
Retail notes:
Agricultural equipment $ 2,925 $ 2,602 $ 3,423
Construction equipment 781 611 732
Lawn and grounds care
equipment 380 347 292
Recreational products 136 156 402
-----------------------------------
Total 4,222 3,716 4,849
-----------------------------------
Revolving charge accounts 935 901 730
Wholesale notes** 939 957 878
Financing leases 428 402 254
Equipment on operating
Leases 1,415 1,255 1,066
-----------------------------------
Total $ 7,939 $ 7,231 $ 7,777
===================================
* Includes the acquisition of Senstar Capital Corporation
(Senstar) installment, lease and revolving charge balances which
were acquired in the fourth quarter of fiscal 1999.
** Wholesale notes exclude $93 million at April 30, 2000 of
notes from unconsolidated affiliates, which are included on a
separate line on the consolidated balance sheets.
Page 8
<PAGE>
Receivables and Leases administered by the Company, which
include retail notes sold, were as follows in (millions of
dollars):
April 30, October 31, April 30,
2000 1999 1999
-----------------------------------
Receivables and Leases administered:
Receivables and Leases
owned by the Company $ 7,939 $ 7,231 $7,777
Retail notes sold and
securitized(with
limited recourse)* 1,611 2,275 1,027
Retail notes sold
(without recourse)** 104 118 308
Receivables serviced
(without recourse)*** 32 46 61
-----------------------------------
Total Receivables and
Leases administered $9,686 $9,670 $9,173
===================================
* The Company's maximum exposure under all retail note
recourse provisions at April 30, 2000, October 31, 1999 and
April 30, 1999 was $144 million, $161 million and $123 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 April 30, 2000, the maximum exposure under these agreements
was approximately $10 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.
*** On February 1, 1999, the Company began servicing a
receivable portfolio on behalf of Farming and Agricultural
Financing Limited. These servicing rights were obtained in
conjunction with the Company's acquisition of the remaining 50
percent interest in John Deere Credit Limited.
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):
April 30, October 31, April 30,
2000 1999 1999
$ % $ % $ %
------------------------------------
Retail notes:
Agricultural equipment $12.0 .41% $11.7 .45% $12.9 .38%
Construction equipment 2.2 .28 2.1 .34 2.1 .29
Lawn and grounds care
Equipment .9 .24 .8 .23 .8 .27
Recreational products .1 .07 .1 .06 .1 .02
------------------------------------
Total 15.2 .36 14.7 .40 15.9 .33
------------------------------------
Revolving charge accounts 16.0 1.71 8.9 .99 9.6 1.32
Wholesale notes 1.2 .13 1.1 .11 1.2 .14
Leases 5.8 .31 5.2 .31 6.0 .45
------------------------------------
Total $38.2 .48 $29.9 .41 $32.7 .42
====================================
The balance of retail notes held (principal plus accrued
interest) with any installment 60 days or more past due was $55
million, $54 million and $59 million at April 30, 2000, October
31, 1999 and April 30, 1999, respectively. The balance of
retail notes held on which any installment is 60 days or more
past due as a percentage of retail notes held represented 1.30
percent, 1.45 percent and 1.21 percent of the ending retail
notes receivable at April 30, 2000, October 31, 1999 and April
30, 1999, respectively.
Page 9
<PAGE>
During the second quarter and the first six months of 2000,
write-offs (net of recoveries) of Receivables and Leases
totaled $10.1 million and $16.5 million, respectively, compared
with $8.7 million and $15.9 million in the same periods last
year. Annualized write-offs, as a percentage of the average
total receivables and leases held, were .53 percent for the
second quarter of 2000 and .45 percent for the first six months
of 1999, compared with .47 percent and .45 percent for the same
periods last year. Write-offs relating to retail notes
decreased $1.0 million in the first six months of 2000, when
compared with the first six months of 1999, primarily due to
decreased write-offs of recreational product retail notes.
Lease write-offs increased $1.0 million in the first six months
of 2000 when compared to last year primarily due to higher
write-offs on agricultural leases. Revolving charge account
and wholesale write-offs increased $.6 million in the first six
months of 2000 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 $122 million at April 30,
2000, compared with $123 million at October 31, 1999 and $123
million at April 30, 1999.
The Company's allowance for credit losses on all Receivables
and Leases held totaled $91 million at April 30, 2000, $84
million at October 31, 1999 and $88 million at April 30, 1999.
The allowance for credit losses represented 1.15 percent of the
total Receivables and Leases held at April 30, 2000, 1.16
percent at October 31, 1999 and 1.13 percent at April 30, 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 April 30, 2000 is
sufficient to provide adequate protection against losses.
SAFE HARBOR STATEMENT
Statements herein that relate to future operating periods are
subject to important risks and uncertainties that could cause
actual results to differ materially. Interest rate changes by
the Federal Reserve Board may affect the cost of financing the
Company and the rates it is able to offer. 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-Q 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 Receivables and Leases. 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.
Page 10
<PAGE>
During the first six 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 $261 million in the first six months
of 2000. Financing activities provided $688 million during the
same period, resulting from a $698 million net increase in
total borrowings, which was partially offset by a $10 million
dividend payment to John Deere Credit Company. Net cash used
for investing activities totaled $911 million in the first six
months of 2000, primarily due to Receivable and Lease
acquisitions exceeding collections by $1,096 million, which was
partially offset by the $154 million in proceeds from the sale
of receivables. Cash and cash equivalents increased $38
million during the first six months of 2000.
During the first six 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 $134 million in the first six months
of 1999. Financing activities provided $702 million during the
same period, resulting from a $712 million net increase in
total borrowings, which was partially offset by $10 million in
dividend payments to John Deere Credit Company. Net cash used
for investing activities totaled $830 million in the first six
months of 1999, primarily due to Receivable and Lease
acquisitions exceeding collections by $1,170 million. Cash and
cash equivalents increased $5 million during the first six
months of 1999.
Total interest-bearing indebtedness amounted to $6.731 billion
at April 30, 2000, compared with $6.028 billion at October 31,
1999 and $6.644 billion at April 30, 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 $4.156 billion at April 30, 2000,
compared with $3.526 billion at October 31, 1999 and $3.903
billion at April 30, 1999. Total long-term indebtedness
amounted to $2.575 billion, $2.501 billion and $2.741 billion
at April 30, 2000, October 31, 1999 and April 30, 1999,
respectively. The ratio of total interest-bearing debt to
stockholder's equity was 6.4 to 1, 6.0 to 1 and 6.8 to 1 at
April 30, 2000, October 31, 1999 and April 30, 1999,
respectively.
The Capital Corporation's subsidiary, John Deere Credit Limited
in Gloucester, England, retired $101 million of long-term debt
due in 2000. The Capital Corporation issued $795 million and
retired $723 million of medium-term notes during the second
quarter.
At April 30, 2000, the Capital Corporation and Deere & Company
jointly maintained $4.536 billion of unsecured lines of credit
with various banks in North America and overseas, $563 million
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. 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 cash dividends of $10
million to John Deere Credit Company during the first six
months of 2000. John Deere Credit Company paid a comparable
dividend to Deere & Company. On June 2, 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 June 13, 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.
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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.
As part of a planned leadership transition, on June 2, 2000,
Robert W. Lane was elected Chairman and Chief Executive Officer
of the Company. Hans W. Becherer, former Chairman, continues
as director.
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 15,
2000(Items 5 and 7).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
JOHN DEERE CAPITAL CORPORATION
Date: June 8, 2000 By: /s/ Nathan J. Jones
-------------------------------
Nathan J. Jones
Senior Vice President and
Principal Financial Officer
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INDEX TO EXHIBITS
Exhibit Page No.
(4.1) Credit Agreement among registrant, Deere & Company,
various financial institutions, The Chase Manhattan Bank, as
administrative agent, Bank of America, N.A. and Bank One, NA as
documentation agents, and Deutsche Bank AG, New York Branch as
syndication agent, et al, dated as of February 22, 2000.
(Exhibit 4.1 to Form 10-Q of Deere & Company for the quarter
ended April 30, 2000, Securities and Exchange Commission file
number 1-4121*)
(4.2) 364-Day Credit Agreement among registrant, Deere &
Company, various financial institutions, The Chase Manhattan
Bank, as administrative agent, Bank of America, N.A. and Bank
One, NA as documentation agents, and Deutsche Bank AG, New York
Branch as syndication agent, et al, dated as of February 22,
2000. (Exhibit 4.2 to Form 10-Q of Deere & Company for the
quarter ended April 30, 2000, Securities and Exchange
Commission file number 1-4121*)
(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 April 30, 2000 (Securities and Exchange Commission
file number 1-4121*).
__________________________
*Incorporated by reference. Copies of these exhibits are
available from the Company upon request.
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