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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-80775-01
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CASE CREDIT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0394710
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
233 LAKE AVE., RACINE, WI 53403
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 636-6011
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common Stock, par value $5.00 per share: 200 shares outstanding as of June
30, 1996.
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 THE REDUCED
DISCLOSURE FORMAT PERMITTED BY GENERAL INSTRUCTION H OF FORM 10-Q.
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TABLE OF CONTENTS
PAGE
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Part I-Financial Information
Case Credit Corporation and Subsidiaries
Balance Sheets......................................................... 2
Statements of Income................................................... 3
Statements of Cash Flows............................................... 4
Statement of Changes in Shareholder's Equity........................... 5
Notes to Financial Statements.......................................... 6
Management's Analysis of Results of Operations......................... 7
Part II-Other Information
Item 1. Legal Proceedings................................................ *
Item 2. Changes in Securities............................................ *
Item 3. Defaults Upon Senior Securities.................................. *
Item 4. Submission of Matters to a Vote of Security Holders.............. *
Item 5. Other Information................................................ *
Item 6. Exhibits and Reports on Form 8-K................................. 8
*No response to this item is included herein for the reason that it is
inapplicable, is not required pursuant to General Instruction H of Form 10-Q,
or the answer to such item is negative.
PART I--FINANCIAL INFORMATION
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(IN MILLIONS, EXCEPT SHARE DATA)
(UNAUDITED)
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
------ -------- ------------
Cash and cash equivalents................................ $ 15 $ 15
Retail notes and finance leases.......................... 973 829
Due from Trusts.......................................... 277 262
------ ------
Total receivables.................................... 1,250 1,091
Allowance for credit losses.............................. (31) (32)
------ ------
Total receivables--net............................... 1,219 1,059
Other receivables........................................ 1 1
Affiliated receivables................................... 11 16
Equipment on operating leases............................ 64 36
Property and equipment, at cost.......................... 2 --
Accumulated depreciation............................... (1) --
------ ------
Net property and equipment............................... 1 --
Other assets............................................. 28 26
------ ------
Total................................................ $1,339 $1,153
====== ======
LIABILITIES AND EQUITY
----------------------
Short-term debt.......................................... $ 785 $ 908
Accounts payable and other accrued liabilities........... 37 33
Deposits withheld from dealers........................... 19 19
Long-term debt........................................... 278 --
------ ------
Total liabilities.................................... 1,119 960
------ ------
Shareholder's equity:
Common stock, $5 par value, 200 shares authorized,
issued and outstanding................................ -- --
Paid-in capital........................................ 199 199
Cumulative translation adjustment...................... (6) (8)
Retained earnings...................................... 27 2
------ ------
Total shareholder's equity........................... 220 193
------ ------
Total................................................ $1,339 $1,153
====== ======
The accompanying notes to financial statements are an integral part of these
Balance Sheets.
2
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(IN MILLIONS)
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------- -------------
1996 1995 1996 1995
------ ------ ------ ------
Revenues:
Finance income earned on retail notes and finance
leases.......................................... $14 $ 7 $ 26 $ 15
Interest income from Case Corporation............ 4 8 9 17
Net gain on retail notes sold.................... 16 28 45 46
Securitization and servicing fee income.......... 22 15 38 30
Lease income..................................... 3 1 6 1
Other income..................................... -- -- 1 1
--- --- ---- ----
Total revenues............................... 59 59 125 110
Expenses:
Interest expense:
On obligations to others....................... 13 8 30 18
On payables to affiliates...................... 1 1 1 1
--- --- ---- ----
Total interest expense....................... 14 9 31 19
Operating expenses:
Fees charged by Case Corporation............... 5 3 10 7
Administrative and operating expenses.......... 1 3 4 4
Provision (credit) for credit losses........... -- (1) (1) (1)
Depreciation of equipment on operating leases.. 3 -- 3 --
Other.......................................... 1 -- 1 1
--- --- ---- ----
Total operating expenses..................... 10 5 17 11
--- --- ---- ----
Total expenses............................... 24 14 48 30
--- --- ---- ----
Income before taxes................................ 35 45 77 80
Income tax provision............................... 16 21 32 35
--- --- ---- ----
Net income......................................... $19 $24 $ 45 $ 45
=== === ==== ====
The accompanying notes to financial statements are an integral part of these
Statements of Income.
3
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(IN MILLIONS)
(UNAUDITED)
SIX MONTHS
ENDED JUNE
30,
------------
1996 1995
----- -----
Operating activities:
Net income..................................................... $ 45 $ 45
Adjustments to reconcile net income to net cash provided by
operating activities:
Deferred income tax expense.................................. -- 1
Depreciation and amortization................................ 7 --
Net gain on retail notes sold................................ (45) (46)
Changes in components of working capital:
Decrease in other assets................................... 2 --
Increase in accounts payables and other accrued
liabilities............................................... 5 5
----- -----
Net cash provided by operating activities................ 14 5
----- -----
Investing activities:
Cost of receivables acquired................................... (962) (860)
Collections of receivables..................................... 117 116
Proceeds from sales of receivables............................. 736 724
Expenditures for property and equipment........................ (2) --
Purchase of equipment on operating leases...................... (31) (18)
----- -----
Net cash used by investing activities.................... (142) (38)
----- -----
Financing activities:
Proceeds from issuance of long-term debt....................... 200 --
Increase (decrease) in revolving credit facilities............. (52) 91
Dividends paid................................................. (20) (43)
Other, net..................................................... -- (5)
----- -----
Net cash provided by financing activities................ 128 43
----- -----
Increase in cash and cash equivalents............................ -- 10
Cash and cash equivalents, beginning of period................... 15 4
----- -----
Cash and cash equivalents, end of period......................... $ 15 $ 14
===== =====
Cash paid during the period for interest......................... $ 25 $ 18
===== =====
Cash paid during the period for taxes............................ $ 36 $ 29
===== =====
The accompanying notes to financial statements are an integral part of these
Statements of Cash Flows.
4
CASE CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(IN MILLIONS)
(UNAUDITED)
CUMULATIVE
COMMON PAID IN TRANSLATION RETAINED
STOCK CAPITAL ADJUSTMENT EARNINGS TOTAL
------ ------- ----------- -------- -----
Balance, December 31, 1994........... $-- $194 $(8) $ 1 $187
Net income......................... -- -- -- 94 94
Dividends declared................. -- -- -- (93) (93)
Capital contributions from Case
Corporation....................... -- 5 -- -- 5
---- ---- --- ---- ----
Balance, December 31, 1995........... -- 199 (8) 2 193
Net income......................... -- -- -- 45 45
Dividends declared................. -- -- -- (20) (20)
Translation adjustment............. -- -- 2 -- 2
---- ---- --- ---- ----
Balance, June 30, 1996............... $-- $199 $(6) $ 27 $220
==== ==== === ==== ====
The accompanying notes to financial statements are an integral part of these
Statements of Changes in Shareholder's Equity.
5
CASE CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1)--BASIS OF PRESENTATION
The accompanying financial statements reflect the consolidated results of
Case Credit Corporation and its subsidiaries ("Case Credit" or the "Company").
All significant intercompany transactions have been eliminated in
consolidation.
In the opinion of management, the accompanying unaudited financial
statements of Case Credit contain all adjustments which are of a normal
recurring nature necessary to present fairly the financial position as of June
30, 1996, and the results of operations, changes in shareholder's equity and
cash flows for the periods indicated. Interim financial results are not
necessarily indicative of operating results for an entire year.
Certain reclassifications have been made to conform the prior years'
financial statements to the 1996 presentation.
(2)--ASSET-BACKED SECURITIZATIONS
In the first six months of 1996, Case Credit Corporation completed a $625
million asset-backed securitization ("ABS") transaction, of which $234 million
was prefunded. The Company satisfied its prefunding obligations by selling
three installments of additional receivables to the limited-purpose business
trust in March, April and May for $95 million, $81 million and $58 million,
respectively. Proceeds and gains from the sale of receivables are recognized
by the Company when the receivables are sold to the trust. The proceeds from
the sale of the additional receivables were used to repay outstanding debt and
to finance additional receivables. In the first six months of 1995, the
Company completed a $600 million ABS transaction, of which $247 million was
prefunded. The prefunding was satisfied in April and May of 1995.
In the first six months of 1996, Case Credit Ltd., a wholly owned Canadian
subsidiary of Case Credit Corporation, completed a $146 million ABS
transaction in April, the proceeds of which were used to repay outstanding
debt and to finance additional receivables. During the first six months of
1995, $195 million of Canadian receivables were sold to trusts in conjunction
with ABS transactions.
(3)--LONG-TERM DEBT
A summary of long-term debt is set forth in the following table (in
millions):
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
Case Credit Corporation
Notes, payable in 2003, interest rate of 6.125%.. $ 200 $ --
Case Credit Australia Pty Limited
Long-term portion of borrowings under a line of
credit, average interest rate of 7.6%........... 78 --
----- -----
Total long-term debt........................... $ 278 $ --
===== =====
In the first quarter of 1996, the Company sold $200 million aggregate
principal amount of its 6.125% unsecured and unsubordinated notes due 2003
pursuant to a $300 million shelf registration statement filed with the
Securities and Exchange Commission in December 1995. The net proceeds from the
offering were used to repay indebtedness and finance Case Credit's growing
portfolio of receivables. Case Corporation has guaranteed the obligations of
the Company under these notes and Case Corporation will be released from its
obligations under the guarantee if, among other conditions, Case Credit debt
guaranteed by Case Corporation falls below $100 million.
The Company has classified $78 million of borrowings on Case Credit
Australia Pty Limited's line of credit as long-term, as the lender does not
require payment within twelve months, nor does Case Credit Australia Pty
Limited intend to reduce the long-term portion of the revolver within twelve
months.
6
CASE CREDIT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS
Six Months Ended June 30, 1996 vs. Six Months Ended June 30, 1995
NET INCOME
Net income for the first six months of 1996 was $45 million, even with the
first six months of 1995. This reflects a 14% increase in revenues as compared
to the first six months of 1995, offset by higher interest and operating
expenses.
REVENUES
The Company reported total revenues of $125 million for the first six months
of 1996, a 14% increase over revenues of $110 million reported for the first
six months of 1995. Finance income earned on retail notes and leases increased
73% to $26 million in the first six months of 1996 as compared to the same
period in 1995. This increase was partially offset by a decrease in interest
income from Case Corporation. During the first six months of 1996, fewer
retail notes and finance leases had special financing terms offered by Case
Corporation as compared to the first six months of 1995. In addition, Case
Corporation paid lower subsidies to Case Credit in the first six months of
1996 as compared to the first six months of 1995. These factors led to less
interest income from Case Corporation. Securitization and servicing fee income
improved by $8 million to $38 million for the period. This was a result of a
$7 million increase in excess servicing fee income, which related primarily to
the termination of a pre-1995 ABS transaction. For receivables sold prior to
1995, the excess servicing fees are recognized as the amounts are received
from the trusts. For subsequent sales of receivables, excess servicing fees
are recognized at the time of sale. Lease income increased $5 million to a
total of $6 million for the first six months of 1996, reflecting the growth in
the Company's equipment leasing program.
EXPENSES
Interest expense for the first six months of 1996 was $31 million, a $12
million increase from the $19 million reported in the first six months of
1995. The increased interest expense resulted from higher average debt levels
during the first six months of 1996 as compared to the first six months of
1995, to support the Company's increased levels of retail notes and financing
leases, and equipment on operating leases.
Operating expenses increased $6 million to a total of $17 million in the
first six months of 1996 as compared to the first six months of 1995. This
increase resulted from $3 million of depreciation expense on equipment on
operating leases, relating to the Company's larger operating lease portfolio,
and an increase in administrative fees, primarily those charged to the Company
by Case Corporation.
SERVICED PORTFOLIO
In the first six months of 1996, Case Credit's serviced portfolio of
receivables increased 18% to a record $4 billion. New receivables acquired in
the first six months of 1996 increased 14% versus the same period in 1995.
Portfolio losses for the first six months of 1996 were $1.4 million versus
$1.3 million for the first six months of 1995. This represents a loss to
liquidation ratio of 0.15% in the first six months of 1996 versus 0.17% in
1995. Case Credit sold $771 million and $795 million of retail notes in ABS
transactions during the first six months of 1996 and 1995, respectively.
7
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
A list of the exhibits included as part of this Form 10-Q is set forth in
the Index to Exhibits that immediately precedes such exhibits, which is
incorporated herein by reference.
(b) Reports on Form 8-K.
Case Credit Corporation did not file any reports on Form 8-K during the
second quarter ended June 30, 1996.
8
SIGNATURE
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.
CASE CREDIT CORPORATION
/s/ Robert A. Wegner
By __________________________________
Robert A. Wegner
Vice President,
Chief Financial Officer
and Treasurer
(Principal Financial Officer and
Authorized Signatory for Case
Credit
Corporation)
Date: August 9, 1996
9
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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4.1 Indenture between Case Credit Corporation, Case Corporation and The
Bank of New York, dated as of February 1, 1996
4.2 6 1/8% Note Due 2003 of Case Credit Corporation issued pursuant to the
Indenture
4.3 Resolutions of the Board of Directors of Case Credit Corporation
authorizing the public offering of debt securities of Case Credit
Corporation in an aggregate principal amount of up to $300,000,000
(Incorporated by reference herein to the Company's Registration
Statement No. 33-80775)
4.4 Resolutions of the Board of Directors of Case Corporation authorizing
the Support Agreement and/or $300,000,000 Guarantee for Case Credit
Corporation debt offering (Incorporated by reference herein to the
Company's Registration Statement No. 33-80775)
4.5 Actions of Authorized Officers of Case Credit Corporation authorizing
the issuance of $200,000,000 aggregate principal amount of 6 1/8%
Notes Due 2003
4.6 Officers' Certificate and Company Order of Case Credit Corporation for
the issuance of $200,000,000 aggregate principal amount of 6 1/8%
Notes due 2003
4.7 Actions of Authorized Officers of Case Corporation authorizing the
Guarantee of $200,000,000 of 6 1/8% Notes Due 2003 of Case Credit
Corporation
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.