DRAFT
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark
One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-80775-01
Case Credit Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
76-0394710
(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
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Each Class on which registered
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6 1/8% Notes due October 15, 2001 New York
Floating-Rate Notes due January 21, 2000 New York
Securities registered pursuant to Section 12(g) of the Act: None
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. [X] YES [_] 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
February 28, 1999, all of which are owned by Case Capital Corporation.
The registrant meets the conditions set forth in General Instruction
I(1)(a) and (b) of Form 10-K and is therefore filing this form with the
reduced disclosure format permitted by General Instruction I of Form 10-K.
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TABLE OF CONTENTS
Page
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PART I
Item 1. Business......................................................... 3
Item 2. Properties....................................................... 5
Item 3. Legal Proceedings................................................ 5
Item 4. Submission of Matters to a Vote of Security Holders.............. 5*
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.................................................................. 6
Item 6. Selected Financial Data.......................................... 6*
Item 7. Management's Analysis of Results of Operations................... 6
Item 8. Financial Statements and Supplementary Data...................... 10
Index to Financial Statements of Case Credit Corporation and
Consolidated Subsidiaries............................................ 10
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................... 30
PART III
Item 10. Directors and Executive Officers of the Registrant............... 30*
Item 11. Executive Compensation........................................... 30*
Item 12. Security Ownership of Certain Beneficial Owners and Management... 30*
Item 13. Certain Relationships and Related Transactions................... 30*
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.. 30
Financial Statements Included in Item 8................................ 30
Index to Financial Statements and Schedule Included in Item 14......... 30
Schedules Omitted as Not Required or Inapplicable...................... 30
Exhibits............................................................... 30
Reports on Form 8-K.................................................... 30
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* No response to this item is included herein for the reason that it is
inapplicable, is not required pursuant to General Instruction I of Form 10-
K, or the answer to such item is negative.
2
PART I.
Item 1. Business.
General
Case Credit(R) Corporation is a subsidiary of Case Capital Corporation
("Case Capital"). Case Capital, a wholly owned subsidiary of Case Corporation
("Case"), provides broad-based financial services for the global marketplace.
Case Credit Corporation, its wholly owned operating subsidiaries, Case Credit
Ltd. (Canada) and Case Credit Australia Pty Ltd, and Case Credit Corporation's
joint ventures, Case Credit Europe S.A.S. and UzCaseagroleasing (collectively,
"Case Credit" or the "Company") provide and administer financing for the
retail purchase or lease of new and used Case and other agricultural and
construction equipment. Case Credit offers various types of retail financing
to end-use customers to facilitate the sale or lease of Case products in the
United States, Canada, Australia, Europe, and Uzbekistan. The Company's
business principally involves purchasing retail installment sales contracts
from Case dealers. In addition, the Company facilitates and finances the sale
of insurance products to retail customers, provides financing for Case dealers
and Case rental equipment yards, and also provides other retail financing
programs in North America. In North America, Case Credit's private-label
credit card is used by customers to purchase parts, service, rentals,
implements and attachments from Case dealers. Case Credit also provides
financing options to dealers for a variety of purposes, including inventory,
working capital, real estate acquisitions, construction and remodeling,
business acquisitions, dealer systems, and service and maintenance equipment.
The Company's business is dependent on the ability of Case and its dealers
to generate sales and leasing activity, the willingness of customers to enter
into financing transactions with the Company and the availability of funds to
the Company to finance such transactions. The ability of Case and its dealers
to sell agricultural and construction equipment and thereby generate retail
receivables is affected by numerous factors, including:
. the general level of activity in the agricultural and construction
industries;
. the rate of North American agricultural production and demand;
. weather conditions;
. commodity prices;
. consumer confidence;
. government subsidies for the agricultural sector;
. prevailing levels of construction (especially housing starts); and
. levels of total industry capacity and equipment inventory.
In addition, the Company's business is affected by changes in market
interest rates, which in turn are related to general economic and capital
market conditions, demand for credit, inflation, governmental policies and
other factors.
The Company obtains funding for its operations from a variety of sources
including the issuance of commercial paper, medium-term notes and public debt;
the issuance of securities in asset-backed securitization ("ABS")
transactions; bank revolving credit facilities, earnings retained in the
business, and advances and equity capital from Case. The Company sells
substantial amounts of retail receivables in ABS transactions that typically
involve the sale of a pool of retail installment sales contracts to limited-
purpose business trusts or similar securitization entities. The Company
remains as servicer of these receivables, for which it is typically paid a
servicing fee.
The Company continues to expand its financing business by providing retail
and dealer financing in new geographic regions and for a broader range of
equipment, and by offering new financing products to Case dealers, end-use
customers and to others. The Company recently established Soris Financial
("Soris(TM)") as a brand name to serve the Company's diversified client base
in the agricultural, construction, industrial mobile and other equipment
industries. Soris offers a broad range of retail and wholesale financing
products including equipment and commercial loans and leases for North
American manufacturers, dealers, distributors, and their customers. Soris also
facilitates and finances the sale of insurance products to retail customers.
3
Case Credit Corporation was incorporated in Delaware on January 26, 1993.
The principal offices of the Company are located at 233 Lake Avenue, Racine,
Wisconsin, 53403.
Business of Case Corporation
Case is a leading worldwide designer, manufacturer, marketer and
distributor of farm equipment and light- to medium-sized construction
equipment, and offers a broad array of financial products and services through
Case Capital, Case's financial services business. Case's market position is
particularly significant in several product categories including
loader/backhoes, skid steer loaders, large, high-horsepower farm tractors and
self-propelled combines.
In 1998, Case's sales of farm and construction equipment represented 93% of
total revenues, and financing operations accounted for 7% of total revenues.
In 1998, Case's sales of farm equipment represented 62% of revenues from
equipment sales, and sales of construction equipment represented 38% of
revenues from equipment sales.
Relationship with Case Corporation
The Company's common stock is owned entirely by Case Capital. Case
Corporation contributed all the common stock of Case Credit to Case Capital in
exchange for all the common stock of Case Capital. Case Capital is a wholly
owned subsidiary of Case Corporation. Case provides Case Capital with certain
operational and financial support, which is integral to the conduct of the
Company's business.
Employee Benefits, Intercompany Services and Tax Sharing
The Company and Case have entered into agreements relating to, among other
things, various employee benefit plans covering Company staff that are
administered by Case, the Company's reimbursement of Case for its staff and
certain corporate services, and intend to enter into tax sharing arrangements
between the Company and Case.
Special Marketing Programs
The Company, in conjunction with Case, Case dealers and other manufacturers
and their dealers, periodically offers, as part of its marketing strategy,
below-market interest rate and waived interest rate financing to customers.
When the Company acquires retail installment sales contracts and finance
leases subject to below-market interest rate and waived interest rate
financing, the Company is compensated for the difference between market rates
and the amounts received by the Company (collectively, "financing subsidies").
The cost of these financing subsidies is currently borne completely by the
manufacturers (and not by the Company) and is settled monthly. The financing
subsidies are recognized as income by Case Credit over the term of the
contracts. If such contract is subsequently sold, the financing subsidy is
recognized as part of the gain on retail notes sold.
Dividends
Case Credit did not pay dividends in 1998 and 1997. Case Credit paid
dividends to Case of $40 million for the year ended December 31, 1996.
Support Agreement
The Company and Case have entered into a support agreement (the "Support
Agreement") which provides, among other things, that Case will remain,
directly or indirectly, the sole owner of all of the voting stock of the
Company, and will make quarterly payments to the Company to the extent
necessary to ensure that the Company's consolidated pre-tax earnings (as
defined) available for fixed charges equal at least 1.10 times its fixed
charges (as defined) in all periods composed of four consecutive fiscal
quarters. The Support Agreement
4
provides that Case is not directly or indirectly guaranteeing any
indebtedness, liability or obligation of the Company. The Support Agreement
may be modified or amended by the parties thereto or terminated by either
party upon thirty days' prior written notice to the other party, with copies
of such amendment or notice being sent to Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P"), and any other nationally
recognized statistical rating organizations then rating Case Credit debt, if
(1) Moody's and S&P confirm in writing that their ratings on Case Credit debt
then rated or capable of being rated by them would not be downgraded or
withdrawn as a result of such modification, amendment or termination, or (2)
the modification, amendment or notice of termination provides that the Support
Agreement will continue in effect with respect to debt of Case Credit
outstanding on the effective date of the modification, amendment or
termination, or (3) the holders of at least a majority of the aggregate unpaid
principal amount of all outstanding debt of Case Credit with an original
maturity in excess of 270 days consent in writing, so long as the holders of
debt of Case Credit having an original maturity of 270 days or less shall
continue to have the benefit of the Support Agreement until the maturity of
such debt. For purposes of the Support Agreement, no portion of any debt is
considered to be "outstanding" if such debt is deemed to be discharged and not
outstanding in accordance with the indenture or other governing instrument
defining the rights of the holders of such debt.
The calculation of pre-tax earnings available for fixed charges under the
Support Agreement differs from the calculation of the ratio of earnings to
fixed charges in accordance with the rules and regulations of the Securities
and Exchange Commission. Under the Support Agreement, all cash extraordinary,
non-recurring items of income or expense (other than cash debt defeasance
costs) are included, whereas under the Securities and Exchange Commission's
rules and regulations, such items are excluded. No payment has been required
by Case to meet the Support Agreement commitments.
Item 2. Properties.
Case Credit Corporation does not own any real estate. Its principal
executive offices are located at 233 Lake Avenue, Racine, WI 53403.
As of December 31, 1998, the Company had additional offices in or near
Memphis, Tennessee; Dallas, Texas; Minneapolis, Minnesota; Columbus, Ohio;
Toronto, Ontario; Tashkent, Uzbekistan; and St. Mary's, Australia.
Item 3. Legal Proceedings.
The Company is party to various litigation matters and claims arising from
its operations. Management believes that the outcome of these proceedings,
individually and in the aggregate, will not have a material adverse effect on
Case Credit's financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
Information for this Item 4 is not required pursuant to General Instruction
I(2) of Form 10-K.
5
PART II.
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
As of December 31, 1998, all of the Company's common stock was owned by
Case Capital and was not publicly traded. Case Capital is a wholly owned
subsidiary of Case Corporation.
The Company did not pay dividends in 1998 or 1997. Case Credit paid
dividends to Case Corporation in the amount of $40 million in 1996.
Item 6. Selected Financial Data.
Information for this Item 6 is not required pursuant to General Instruction
I(2) of Form 10-K.
Item 7. Management's Analysis of Results of Operations.
1998 Compared to 1997
Net Income
Case Credit recorded net income of $85 million in 1998, as compared to net
income of $82 million in 1997. The $3 million increase in year-over-year
income is primarily due to higher earnings as a result of increased levels of
on-balance-sheet receivables, and improved margins resulting from the
declining interest rate environment. Additionally, higher lease income from
operating leases and higher realized gains from the sale of retail notes under
asset-backed securitization ("ABS") transactions also improved earnings. These
amounts were partially offset by an increase in the Company's credit loss
provision as a result of a higher loss-to-liquidation ratio in 1998, combined
with the significant growth in Case Credit's serviced portfolio. In addition,
1998 operating results reflect increased interest expense as a result of
higher average debt levels, as well as increased depreciation of equipment on
operating leases and a higher year-over-year tax rate.
Revenues
Case Credit reported total revenues of $377 million for 1998, an increase
of $105 million or 39% over the $272 million of revenues reported for 1997.
Finance income earned on retail and other notes and finance leases increased
to $140 million in 1998, as compared to $103 million for the same period in
1997, primarily due to increased levels of on-balance-sheet receivables.
Operating lease revenues increased $31 million to $64 million for 1998,
reflecting the growth in Case Credit's operating lease portfolio. These
revenue increases were compounded by increases in net gains on retail notes
sold, as well as higher securitization and servicing fee income. Case Credit
continues to implement its asset-management strategy of retaining a larger
percentage of assets on balance sheet, as opposed to selling those assets
through ABS transactions. The Company believes this strategy will generate a
more stable earnings performance for Case Credit.
Expenses
Operating expenses for Case Credit increased $51 million to a total of $103
million in 1998, as compared to $52 million in 1997. This increase primarily
resulted from a $21 million increase in depreciation expense for equipment on
operating leases relating to Case Credit's larger operating lease portfolio,
and a $14 million increase in Case Credit's provision for credit losses as a
result of a higher loss-to-liquidation ratio in 1998, combined with the
significant growth in Case Credit's serviced portfolio.
Case Credit's interest expense for 1998 was $143 million, up $45 million
from the $98 million reported in 1997. The increased interest expense resulted
from higher average debt levels during 1998, primarily due to the growth in
Case Credit's on-balance-sheet receivables and increased equipment on
operating leases.
Serviced Portfolio
As of December 31, 1998, Case Credit's serviced portfolio increased 31%
over the same period last year to a record $6.8 billion. Gross receivables
acquired in 1998 increased 31% for a total of $4.4 billion versus the
6
same period in 1997. Case Credit retained approximately $483 million of
additional retail and other notes and finance leases as compared to December
31, 1997, consistent with the Company's asset-management strategy. Case
Credit's portfolio losses increased to $15 million in 1998 as compared to $8
million in 1997, resulting in a loss-to-liquidation ratio of 0.55% in 1998 and
0.34% in 1997.
The growth in Case Credit's serviced portfolio reflects the increased
marketing and growth initiatives of Case Credit and the strong demand for both
new and used equipment. During 1998, the Company completed a series of
strategic moves designed to further grow and diversify its financial services
business. Case Capital, formed in June 1998, serves as a broad-based financial
services company for the global marketplace. It encompasses Case Credit, which
has been providing financial services through the Case dealer network since
1957, and Soris Financial, launched in late 1998 to serve Case Capital's
diversified client base in the agricultural, construction, industrial mobile
and other equipment industries. In 1998, the Company expanded its insurance
business and announced that it is offering business insurance for U.S.
equipment dealers through an alliance with Universal Underwriters Group, a
subsidiary of Zurich Insurance Company, and other insurance underwriters. In
addition, Case Credit established a strategic marketing alliance with GMAC
Commercial Mortgage Corporation that offers agricultural real estate financing
through the Case dealer network.
In early 1997, Case Credit broadened its product line with the introduction
of a commercial loan program in North America. Case Credit expanded its
geographic reach in 1997 through the establishment of a joint venture in
Europe, Case Credit Europe S.A.S., that provides financing for Case's European
dealers and retail customers. Also in 1997, Case Credit and Cummins Engine
Co., Inc. ("Cummins") entered into an agreement under which Case Credit offers
financing to all qualified North American retail purchasers, dealers and
manufacturers of industrial equipment powered by Cummins engines.
Case Credit sold $2.1 billion and $1.8 billion of retail notes in 1998 and
1997, respectively, to limited-purpose business trusts organized by Case in
the United States and Canada. These trusts were formed for the purpose of
purchasing receivables from Case Credit and the receivables were used as
collateral for the issuance of asset-backed securities to outside investors.
The proceeds from the sale of the retail notes were used to repay indebtedness
and to finance additional receivables.
Interest Rate Risk Management
Case Credit is exposed to interest rate risk and, as such, has implemented
an interest rate risk management program. The program is within the guidelines
and policies approved by the Board of Directors to limit exposure to rising
interest rates.
At December 31, 1998, the Company performed a sensitivity analysis for the
Company's derivatives and other financial instruments that have interest rate
risk. The Company calculated the pretax earnings effect on its interest
sensitive instruments, including total receivables and long-term debt
obligations. The fair value gains or losses in the table below represent the
changes in the financial instrument's fair values that would be caused by
increasing the Company's weighted-average interest rates by 10% at December
31, 1998, based on the discounted values of their related cash flows (in
millions):
Fair Value
Gains/(Losses)
--------------
Total receivables, net.................................... (13)
Long-term debt............................................ 15
Commodity Price and Foreign Currency Risk Management
The Company is not subject to significant foreign currency risk as its
foreign operations are funded locally. The company is not subject to commodity
price risk.
7
Year 2000
As used in this "Year 2000" disclosure, the "Company," or "Case" refers to
Case Corporation and its consolidated subsidiaries, including Case Credit
Corporation and its subsidiaries ("Case Credit"). In addition, all references
to "Case Industrial" reflect the consolidation of all majority-owned
subsidiaries, excluding Case Credit.
In July 1996, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board ("FASB") issued EITF 96-14, "Accounting for the
Costs Associated with Modifying Computer Software for the Year 2000," which
requires that costs associated with modifying computer software for the Year
2000 be expensed as incurred. Through Case's ongoing process of evaluating and
performing systems and software upgrades and enhancements, the Company has
been actively addressing Year 2000 issues since 1995.
Case Corporation understands that it is important to our customers and
stakeholders that Case's products, services and internal systems are not
adversely affected by the Year 2000. Case has implemented procedures that it
deems necessary to safeguard the Company from computer-related issues
associated with adverse effects as a result of improperly recognizing the
millennial date change. These procedures include, where necessary, the
inventorying/assessing, planning, constructing/testing, and
implementing/certifying of critical internal-use hardware and software
systems, as well as other embedded systems in the Company's manufacturing
plants, other buildings, equipment and other infrastructure. The Company
believes that these procedures will adequately address both the information
technology and non-information technology aspects of our business. Based upon
its review and efforts to date, the Company believes that future external and
internal costs to be incurred for the modification of internal-use software to
address Year 2000 issues will not have a material adverse effect on Case's
financial position, cash flows or results of operations.
The Company believes, based upon its review and efforts to date, that
external and internal remediation costs to be incurred for the modification of
internal-use software to address Year 2000 issues will, in the aggregate,
approximate $45 million to $50 million. As Case Industrial and Case Credit
share many technology resources and internal-use systems, all the remediation
costs to address Year 2000 issues will be borne by Case Industrial. As of
December 31, 1998, Case Industrial has incurred approximately $22 million of
costs for Year 2000 remediation, and the Company currently anticipates that
remaining Year 2000 remediation costs will approximate $22 million in 1999 and
$3 million in 2000. These cost estimates include the costs of external
contractors, non-capitalizable purchases of software and hardware, and the
direct cost of internal employees working on Year 2000 projects. Case
maintains a process that tracks the cost and time of external contractors.
However, the Company does not separately track its own internal costs incurred
for the Year 2000 project. Internal costs are compiled principally from the
related payroll records for those personnel directly working on the Year 2000
effort. The Company's cost estimate does not include the cost of implementing
contingency plans, which are in the process of being developed, and also does
not include any potential litigation or warranty costs related to Year 2000
issues if the Company's remediation efforts are not successful.
Case has also undertaken a program to alert its suppliers and dealers of
Year 2000 issues. Based on its contacts with suppliers and dealers, the
Company believes that a majority of our most important suppliers are Year 2000
compliant, and the Company anticipates that most of its dealers will be Year
2000 compliant by mid-1999. Case will continue to work with its remaining
suppliers and its dealers throughout 1999 to secure Year 2000 compliance by
December 31, 1999. Based on third-party representations and internal testing,
and subject to the Company's ongoing compliance efforts, the costs and
uncertainties relating to timely resolution of Year 2000 issues applicable to
the Company's business and operations are not reasonably expected by the
Company to have a material adverse effect on Case's financial position, cash
flows or results of operations. For those suppliers and dealers that have not
adequately responded to our Year 2000 concerns, we are following up to
ultimately achieve an acceptable level of compliance within our supply chain.
As there can be no assurance that an acceptable level of Year 2000 compliance
will be achieved, Case is in the process of developing contingency plans to
address potential issues.
8
Case has completed all steps with regards to Year 2000 compliance that it
considers necessary regarding its agricultural and construction equipment and,
as a result, the Company has no information to suggest that its agricultural
and construction equipment is not Year 2000 compliant. The Company believes,
based on its review and testing, that products purchased from Case will
accurately determine chronological dates and accurately perform all
calculations and data manipulations based upon such dates.
Based upon Case's review and efforts to date, the Company currently
anticipates completion of critical Year 2000 compliance issues by mid-1999,
and the Company plans to continue integration testing throughout the balance
of 1999. If Case's Year 2000 compliance efforts, as well as the efforts of the
Company's suppliers and dealers, individually and in the aggregate, are not
successful, it could have a material adverse effect on the Company's financial
position, cash flows and results of operations. Factors that could cause
actual results to differ include unanticipated supplier or dealer failures,
disruption of utilities, transportation or telecommunications breakdowns,
foreign or domestic governmental failures, as well as unanticipated failures
on our part to address Year 2000 related issues. The Company's most reasonably
likely worst case scenario in light of these risks would involve a potential
loss in sales resulting from order, production and shipping delays throughout
the Company's supply chain caused by Year 2000 related disruptions. The degree
of sales loss impact would depend on the severity of the disruption, the time
required to correct it, whether the sales loss was temporary or permanent, and
the degree to which our primary competitors were also impacted by the
disruption. The Company is in the process of developing Year 2000 contingency
plans that will be designed to mitigate the impact on the Company in the event
that its Year 2000 compliance efforts are not successful. The targeted
completion date for the Company's contingency planning is mid-1999. Case's
contingency plans may include the use of alternative systems and non-
computerized approaches to our business including manual procedures for
machine operation, collecting and reporting of information, as well as
alternative sources of supply. At this time, the Company has not determined
whether it will be necessary to stockpile inventory or supplies as part of its
contingency planning.
The information included in this "Year 2000" section represents forward-
looking statements and involves risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements.
9
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS OF CASE CREDIT CORPORATIONAND CONSOLIDATED
SUBSIDIARIES
Page
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Report of independent public accountants.................................. 11
Statements of income for each of the three years in the period ended
December 31, 1998........................................................ 12
Balance sheets as of December 31, 1998 and 1997........................... 13
Statements of cash flows for each of the three years in the period ended
December 31, 1998........................................................ 14
Statements of changes in stockholder's equity for each of the three years
in the period ended December 31, 1998.................................... 15
Notes to financial statements............................................. 16
10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholder of Case Credit Corporation:
We have audited the accompanying consolidated balance sheets of Case Credit
Corporation (a Delaware Corporation) and subsidiaries, as of December 31, 1998
and 1997, and the related consolidated statements of income, cash flows, and
stockholder's equity, for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Case Credit Corporation
and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Milwaukee, Wisconsin
January 20, 1999
(except with respect to the matters
discussed in Note 12, as to which
the date is February 25, 1999)
11
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(in millions)
1998 1997 1996
---- ---- ----
Revenues:
Finance income earned on retail and other notes and finance
leases...................................................... $140 $103 $ 64
Net gain on retail notes sold................................ 82 71 85
Securitization and servicing fee income...................... 46 42 60
Lease income on operating leases............................. 64 33 16
Interest income from Case Corporation........................ 30 19 17
Other income................................................. 15 4 2
---- ---- ----
Total revenues............................................. 377 272 244
Expenses:
Interest expense.............................................. 143 98 72
Operating expenses:
Depreciation of equipment on operating leases................ 43 22 10
Fees charged by Case Corporation............................. 24 18 20
Administrative and operating expenses........................ 18 11 11
Provision (credit) for credit losses......................... 14 -- (3)
Other........................................................ 4 1 1
---- ---- ----
Total operating expenses................................... 103 52 39
---- ---- ----
Total expenses............................................. 246 150 111
---- ---- ----
Income before taxes and extraordinary items.................... 131 122 133
Income tax provision........................................... 46 40 45
---- ---- ----
Income before extraordinary items.............................. 85 82 88
Extraordinary items............................................ -- -- (3)
---- ---- ----
Net income..................................................... $ 85 $ 82 $ 85
==== ==== ====
The accompanying notes to financial statements are an integral part of these
Statements of Income.
12
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
(in millions, except share data)
ASSETS
------
1998 1997
------ ------
Cash and cash equivalents...................................... $ 35 $ 67
Retail and other notes and finance leases...................... 2,216 1,733
Due from Trusts................................................ 289 267
------ ------
Total receivables.......................................... 2,505 2,000
Allowance for credit losses.................................... (29) (22)
------ ------
Total receivables--net..................................... 2,476 1,978
Affiliated receivables......................................... 51 67
Equipment on operating leases, at cost......................... 531 209
Accumulated depreciation....................................... (63) (30)
------ ------
Net equipment on operating leases.......................... 468 179
Property and equipment, at cost................................ 5 4
Accumulated depreciation....................................... (2) (1)
------ ------
Net property and equipment................................. 3 3
Other assets................................................... 227 68
------ ------
Total...................................................... $3,260 $2,362
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt................................................ $ 550 $1,147
Accounts payable and other accrued liabilities................. 124 64
Affiliated payables............................................ -- 39
Deposits withheld from dealers................................. 17 18
Long-term debt................................................. 2,108 735
------ ------
Total liabilities.......................................... 2,799 2,003
------ ------
Commitments and Contingencies (Note 10)
Minority Interest.............................................. 2 2
Stockholder's equity:
Common Stock, $5 par value, 200 shares authorized, issued and
outstanding................................................. -- --
Paid-in capital.............................................. 269 244
Accumulated other comprehensive income....................... (24) (16)
Retained earnings............................................ 214 129
------ ------
Total stockholder's equity................................. 459 357
------ ------
Total...................................................... $3,260 $2,362
====== ======
The accompanying notes to financial statements are an integral part of these
Balance Sheets.
13
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(in millions)
1998 1997 1996
------- ------- -------
Operating activities:
Net income........................................ $ 85 $ 82 $ 85
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization................... 45 24 12
Deferred income tax expense..................... 24 18 1
Extraordinary items, after tax.................. -- -- 3
Net gain on retail notes sold................... (82) (71) (85)
Changes in components of working capital:
(Increase) decrease in other assets........... (19) (4) 5
Increase (decrease) in accounts payables and
other accrued liabilities.................... (6) 22 21
Other, net.................................... (7) (6) --
------- ------- -------
Net cash provided (used) by operating
activities................................. 40 65 42
------- ------- -------
Investing activities:
Cost of receivables acquired...................... (3,209) (2,791) (2,143)
Proceeds from sales of receivables................ 1,975 1,749 1,584
Collections of receivables........................ 834 489 296
Purchase of equipment on operating leases (net of
disposals)....................................... (333) (100) (71)
Increase in investments in other assets........... (142) (27) --
Investments in joint ventures..................... -- (16) --
Expenditures for property and equipment........... (1) (1) (2)
------- ------- -------
Net cash provided (used) by investing
activities................................. (876) (697) (336)
------- ------- -------
Financing activities:
Proceeds from issuance of long-term debt.......... 1,070 150 200
Net increase (decrease) in short-term debt and
revolving credit facilities...................... (291) 487 136
Dividends paid to Case Corporation................ -- -- (40)
Capital contributions............................. 25 45 --
------- ------- -------
Net cash provided (used) by financing
activities................................. 804 682 296
------- ------- -------
Increase (decrease) in cash and cash equivalents.... (32) 50 2
Cash and cash equivalents, beginning of period...... 67 17 15
------- ------- -------
Cash and cash equivalents, end of period............ $ 35 $ 67 $ 17
======= ======= =======
Cash paid during the period for interest............ $ 126 $ 101 $ 71
======= ======= =======
Cash paid during the period for taxes............... $ 26 $ 44 $ 47
======= ======= =======
The accompanying notes to financial statements are an integral part of these
Statements of Cash Flows.
14
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(in millions)
Accumulated
Other
Common Paid-in Retained Comprehensive Comprehensive
Stock Capital Earnings Income Total Income
------ ------- -------- ------------- ----- -------------
Balance, December 31, 1995....................................... $-- $199 $ 2 $ (8) $193
Comprehensive income:
Net income..................................................... -- -- 85 -- 85 $ 85
Dividends declared............................................. -- -- (40) -- (40)
Translation adjustment......................................... -- -- -- 2 2 2
--- ---- ---- ---- ---- ----
Total........................................................ $ 87
====
Balance, December 31, 1996....................................... -- 199 47 (6) 240
Comprehensive income:
Net income..................................................... -- -- 82 -- 82 $ 82
Translation adjustment......................................... -- -- -- (10) (10) (10)
----
Total........................................................ $ 72
====
Capital contribution from Case Corporation....................... -- 45 -- -- 45
--- ---- ---- ---- ----
Balance, December 31, 1997....................................... -- 244 129 (16) 357
Comprehensive income:
Net income..................................................... -- -- 85 -- 85 $ 85
Translation adjustment......................................... -- -- -- (8) (8) (8)
----
Total........................................................ $ 77
====
Capital contribution from Case Capital........................... -- 25 -- -- 25
--- ---- ---- ---- ----
Balance, December 31, 1998....................................... $-- $269 $214 $(24) $459
- --------------------------------------------------
=== ==== ==== ==== ====
The accompanying notes to financial statements are an integral part of these
Statements of Changes in Stockholder's Equity.
15
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note 1: Nature of Operations
Case Credit Corporation is a subsidiary of Case Capital Corporation ("Case
Capital"). Case Capital, a wholly owned subsidiary of Case Corporation
("Case"), provides broad-based financial services for the global marketplace.
Case Credit Corporation, its wholly owned operating subsidiaries, Case Credit
Ltd. (Canada) and Case Credit Australia Pty Ltd, and Case Credit Corporation's
joint ventures, Case Credit Europe S.A.S. and UzCaseagroleasing (collectively,
"Case Credit" or the "Company") provide and administer financing for the
retail purchase or lease of new and used Case and other agricultural and
construction equipment. Case Credit offers various types of retail financing
to end-use customers to facilitate the sale or lease of Case products in the
United States, Canada, Australia, Europe and Uzbekistan. The Company's
business principally involves purchasing retail installment sales contracts
from Case dealers. In addition, the Company facilitates and finances the sale
of insurance products to retail customers, provides financing for Case dealers
and Case rental equipment yards, and also provides other retail financing
programs in North America. In North America, Case Credit's private-label
credit card is used by customers to purchase parts, service, rentals,
implements and attachments from Case dealers. Case Credit also provides
financing options to dealers for a variety of purposes, including inventory,
working capital, real estate acquisitions, construction and remodeling,
business acquisitions, dealer systems, and service and maintenance equipment.
Note 2: Summary of Significant Accounting Policies
Principles of Consolidation and Presentation
The accompanying financial statements reflect the consolidated results of
Case Credit Corporation and its consolidated subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
Certain reclassifications have been made to conform prior years' financial
statements to the 1998 presentation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
The assets and liabilities of foreign subsidiaries are translated into U.S.
dollars using year-end exchange rates. Revenue and expenses are translated at
average rates during the year. Adjustments resulting from this translation are
deferred and included in "Accumulated other comprehensive income" in the
accompanying Balance Sheets. Foreign exchange transaction gains/losses for the
years ended December 31, 1998, 1997 and 1996, were not material.
Recognition of Finance and Interest Income
Retail and Other Notes, Finance Leases and Operating Leases--The Company
records finance income earned on retail and other notes and finance leases
using the effective interest method. A portion of the earned finance income
arises from sales programs offered by Case and other manufacturers on which
finance charges are waived or low-rate financing programs are offered. When
the Company acquires retail installment sales contracts and finance leases
subject to below-market interest rate and waived interest rate financing, the
Company
16
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
is compensated for the difference between market rates and the amounts
received by the Company. Case Credit receives compensation from Case and other
manufacturers in an amount equal to the difference between the competitive
interest rate and the amount paid by the customer. This amount is initially
recognized as unearned finance charges and is recognized as interest income
over the term of the retail notes from sales programs offered by Case and
others. The amounts received from Case for below-market interest rate and
waived interest rate financing, are included in "Interest income from Case
Corporation" in the accompanying Statements of Income, and amounted to $20
million, $19 million and $17 million in 1998, 1997 and 1996, respectively. For
selected operating leases, the Company is also compensated from Case for the
difference between the market rental and the amount paid by the customer. The
amounts received were $4 million in 1998 and are included in "Interest income
from Case Corporation." The Company is also compensated for funding of various
receivables on behalf of Case. The amount earned was $6 million in 1998 and is
included in "Interest income from Case Corporation." Compensation received for
below-market interest rates and waived interest rate financing from other
manufacturers is included in "Finance income earned on retail and other notes
and finance leases" in the accompanying Statements of Income. When the
receivables are sold, the unrecognized portion of the unearned finance charges
is included in the calculation of the net gain on retail notes sold. The
Company included in its gain calculations income from Case amounting to $62
million, $63 million and $67 million in 1998, 1997 and 1996, respectively, as
part of the sale of retail notes. These amounts are included in "Net gain on
retail notes sold" in the accompanying Statements of Income. Recognition of
income on loans is generally suspended when an account becomes 120 days
delinquent or when management determines that collection of future income is
not probable. Accrual is resumed if the receivable becomes contractually
current and collection doubts are removed. Previously suspended income is
recognized at that time. The amount of loans and related finance charges for
which income recognition has been suspended is not material.
The Company offers retail and other notes with interest rates that float
with the prime rate, plus an applicable margin. At December 31, 1998 and 1997,
these notes amount to $325 million and $279 million, respectively.
Receivables Sold and Serviced
Retail notes receivable have been securitized and sold to limited-purpose
business trusts ("Trusts") with recourse up to specified amounts. For sales
occurring during 1998 and 1997, receivables, net of retained interests, are
removed from the balance sheet, and a gain or loss on sale is recognized in
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities." For sales of retail receivables between
June 1994 and December 1996, the retail notes receivable sold were removed
from the balance sheet, and a gain or loss on sale was recognized for the
difference between the carrying value of the receivables and the adjusted
sales proceeds. The adjusted sales proceeds were based on the proceeds
received from investors adjusted for normal servicing fees, the estimated
obligation pursuant to recourse provisions, and other factors, as appropriate.
For receivables sold prior to June 1994, Case Credit recognizes excess
servicing fees that represent the excess of the yield on the portfolio sold
over the yield paid to investors in the Trusts. These excess servicing fees
are recognized as the amounts are received from the Trusts rather than at the
time of sale, due to the uncertainty of the amount of fees that would
ultimately be collected. Case Credit did not receive any excess servicing fees
for 1998, but had servicing fees amounting to $3 million and $21 million in
1997 and 1996, respectively, which was included in "Securitization and
servicing fee income" in the accompanying Statements of Income. No servicing
asset or liability has been recorded under the provisions of SFAS No. 125 by
the Company as management believes that the servicing fee income received is
fair compensation for the services provided.
Case Credit is required to remit the cash collected on the serviced
portfolio to the Trusts within two business days. At December 31, 1998 and
1997, $20 million and $21 million, respectively, of unremitted cash payable to
the Trusts is included in "Accounts payable and other accrued liabilities" in
the accompanying Balance Sheets.
17
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
Accounting Pronouncements
Effective January 1, 1997, the Company adopted SFAS No. 125. The adoption of
this statement did not have a material effect on the Company's financial
position or results of operations.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement establishes standards for the reporting
and display of comprehensive income and its components. Components of
comprehensive income are net income and all other non-owner changes in equity.
SFAS No. 130 requires that an enterprise classify items of other comprehensive
income by their nature in a financial statement for the period in which they
are recognized. The Company has chosen to disclose comprehensive income in the
accompanying Consolidated Statements of Changes in Stockholder's Equity. As
disclosed in the accompanying Balance Sheets at December 31, 1998 and 1997,
"Accumulated other comprehensive income" is comprised solely of cumulative
foreign currency translation adjustments. The adoption of this statement did
not have an effect on the Company's financial position or results of
operations.
Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." The adoption of this
statement did not have an effect on the Company's financial position or results
of operations. See Note 11 "Segment and Geographical Information."
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement must be adopted no later than January 1,
2000, although earlier application is permitted. The Company is currently
evaluating the impact of adopting SFAS No. 133.
Effective January 1, 1998, the Company adopted Statement of Position ("SOP")
No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use." The Company's accounting for the costs of computer software
developed or obtained for internal use is consistent with the guidelines
established in the SOP and, as a result, the adoption of this statement had no
effect on the Company's financial position or results of operations.
Case Credit will adopt SOP No. 98-5, "Reporting on the Costs of Start-Up
Activities," effective January 1, 1999. The Company's accounting for the costs
of start-up activities is consistent with the guidelines established in the SOP
and, as a result, the adoption of this statement will have no effect on the
Company's financial position or results of operations.
Cash and Cash Equivalents
Cash equivalents are comprised of all highly liquid investments with an
original maturity of three months or less.
Deposits Withheld from Dealers
These deposits represent amounts withheld from dealers relating to retail
sales financed using retail and other notes and finance leases. Any subsequent
losses on retail and other notes or finance leases that were acquired with
limited recourse are charged against the amounts withheld from the dealer. To
the extent that a loss on a retail or other note or finance lease exceeds the
dealers' reserves, the amount is charged against the Company's allowance for
credit losses. Annually, the balance of each dealer's withholding account, in
excess of minimum levels, is remitted to the dealer.
Derivatives
The Company uses derivative financial instruments to manage its interest
rate exposures. Case Credit does not hold or issue such instruments for trading
purposes. Amounts to be received or paid under these instruments
18
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
are recognized in the results of operations as interest expense or are
recorded as part of the gain on sale of receivables, as appropriate, in the
periods to which they relate.
Reference is made to Note 8, "Financial Instruments," for further
information regarding the Company's use of derivative financial instruments.
Extraordinary Items
During 1996, the Company recorded a $3 million extraordinary, after-tax
charge to write-off unamortized bank fees in conjunction with the refinancing
of the Company's credit facilities.
Note 3: Receivables
A summary of receivables is as follows (in millions):
December 31,
--------------
1998 1997
------ ------
Retail and other notes.................................... $1,822 $1,417
Finance leases............................................ 648 491
Due from Trusts........................................... 289 267
------ ------
Gross receivables..................................... 2,759 2,175
Less--Unearned finance charges............................ (254) (175)
Less--Allowance for credit losses......................... (29) (22)
------ ------
Total receivables, net................................ $2,476 $1,978
====== ======
Retail and Other Notes and Finance Leases
The terms of retail and other notes and finance leases generally range from
two to six years and allow for prepayment at any time without penalty. The
average effective yield on retail and other notes and finance leases held by
the Company was approximately 9.1% at December 31, 1998 and 1997.
Maturities of retail and other notes and finance leases as of December 31,
1998, are as follows (in millions):
Years ending December 31,
1999............................................................ $ 980
2000............................................................ 614
2001............................................................ 425
2002............................................................ 262
2003............................................................ 153
2004 and thereafter............................................. 36
------
Total retail and other notes and finance leases--gross.......... 2,470
Less--Unearned finance charges.................................. (254)
------
Total retail and other notes and finance leases, net of
unearned finance charges..................................... $2,216
======
The allowance for credit losses is established to cover potential losses
for receivables owned by the Company. Changes in the allowance for credit
losses are as follows (in millions):
1998 1997
---- ----
Balance, beginning of year.................................... $22 $23
Provision for credit losses................................... 14 --
Write-offs, net of recoveries................................. (7) (1)
--- ---
Balance, end of year.......................................... $29 $22
=== ===
19
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
The preceding table reflects the Company's provision for credit losses, but
does not include losses charged to dealers or those absorbed by the Trusts.
Total losses incurred on the Company's serviced portfolio were $15 million in
1998 and $8 million in 1997.
Case Credit sold $2.1 billion and $1.8 billion of retail notes (net of
unearned finance charges) in 1998 and 1997, respectively, to Trusts in the
United States and Canada. The Trusts were formed for the purpose of purchasing
Case Credit receivables and the receivables were used as collateral for the
issuance of asset-backed securitization ("ABS") transactions to outside
investors. The proceeds received from the sales of notes were reduced by $56
million and $55 million in 1998 and 1997, respectively, pursuant to recourse
provisions in the sale agreements. These reductions in cash proceeds are held
in escrow by the Trusts to provide security in the event of uncollectible notes
and are released to the Company when the notes are collected. Escrow amounts
held by the Trusts of $170 million and $154 million at December 31, 1998 and
1997, respectively, are recorded in "Due from Trusts" on the accompanying
Balance Sheets. Case Credit has established reserves for the estimated losses
on amounts held in escrow, and these reserves are also included in "Due from
Trusts" on the accompanying Balance Sheets. A security interest in the
equipment financed by the retail notes is maintained such that in the event of
non-performance, the related equipment can be repossessed to minimize losses.
As these Trusts are controlled by third parties and meet minimum equity
capitalization standards, the assets of the Trust are not included in the
consolidated financial statements of the Company.
Case Credit's portfolio of managed receivables, including receivables owned
and receivables serviced for others, has grown from $5.2 billion at December
31, 1997, to $6.8 billion at December 31, 1998. Case's serviced portfolio at
December 31, 1998, included $5.6 billion of retail and other notes (net of
unearned finance charges), of which $3.1 billion (net of unearned finance
charges) were owned by Trusts in the United States and Canada. At December 31,
1997, Case Credit serviced a portfolio of $4.6 billion of managed receivables
(net of unearned finance charges), including retail and other notes amounting
to $2.7 billion (net of unearned finance charges) that were owned by Trusts in
the United States and Canada. Case Credit also serviced $18 million and $88
million of retail notes (net of unearned finance charges) at December 31, 1998
and 1997, respectively, that were owned by an unaffiliated third party.
At December 31, 1998 and 1997, approximately $74 million and $56 million,
respectively, of retail notes receivable (net of unearned finance charges) have
been pledged as collateral under the Company's three-year, $750 million, U.S.
asset-backed commercial paper liquidity facility.
Retail and other notes receivable and serviced receivables have significant
concentrations of credit risk in the farm and construction business sectors. On
a geographic basis, there is not a disproportionate concentration of credit in
any area of the United States, Canada or Australia.
Note 4: Equipment on Operating Leases
A summary of equipment on operating leases, is as follows (in millions):
December
31,
----------
1998 1997
---- ----
Equipment on operating leases................................. $531 $209
Accumulated depreciation...................................... (63) (30)
---- ----
Net equipment on operating leases......................... $468 $179
==== ====
20
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
Lease payments owed to Case Credit for equipment under non-cancelable
operating leases as of December 31, 1998, are as follows (in millions):
1999................................. $81
2000................................. 66
2001................................. 29
2002................................. 16
2003................................. 4
2004 and thereafter.................. 1
Case Credit purchases equipment that is leased to retail customers under
operating leases from dealers. Income from operating leases is recognized over
the term of the lease. The Company's investment in operating leases is based on
estimated residual values of the leased equipment, which are calculated at the
lease inception date. Realization of the residual values is dependent on the
Company's future ability to market the equipment under the then prevailing
market conditions. Although realization is not assured, management believes
that it is more likely than not that the estimated residual values will be
realized. Each of these assets is depreciated on a straight-line basis over a
period of time consistent with the lease term. Depreciation expense totaled $43
million, $22 million and $10 million for the years ended December 31, 1998,
1997 and 1996, respectively. Expenditures for maintenance and repairs are the
responsibility of the lessee.
Note 5: Short-Term Debt
The Company has various lines of credit and liquidity facilities that
include borrowings under both committed credit facilities and uncommitted lines
of credit and similar arrangements. The Company also has the ability to issue
commercial paper in the United States, Canada and Australia. Under the terms of
the Company's commercial paper programs, the principal amount of the commercial
paper outstanding, combined with the amounts outstanding under the applicable
revolving credit facility mentioned above, cannot exceed the total amount
available under the revolving credit facility.
Case Credit established the following credit facilities in August 1996: (1)
a five-year, $1.2 billion revolving credit facility; (2) a three-year, $750
million U.S. asset-backed commercial paper liquidity facility (the "Liquidity
Facility"); and (3) a five-year, C$500 million revolving credit facility. In
October 1997, Case Credit's Australian subsidiary, Case Credit Australia Pty
Ltd, established a A$400 million revolving credit facility comprised of a five-
year, A$300 million revolving credit facility and a 364-day, A$100 million
revolving credit facility.
A summary of short-term debt is set forth in the following table (in
millions):
December
31,
-----------
1998 1997
---- ------
Credit agreements (a)........................................ $ 88 $ --
Commercial paper............................................. 389 1,112
Commercial paper liquidity facility.......................... 73 35
---- ------
Total short-term debt.................................... $550 $1,147
==== ======
- --------
(a) The credit agreements include borrowings under both committed credit
facilities and uncommitted lines of credit and similar arrangements.
The weighted-average interest rates on total short-term debt outstanding at
December 31, 1998 and 1997, were 5.6% and 5.9%, respectively. At December 31,
1998, the unused portion of the combined committed credit
21
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
facilities and the commercial paper program was $764 million, and the unused
portion of the asset-backed commercial paper liquidity facility was $691
million. At December 31, 1997, the unused portion of the combined committed
credit facilities and the commercial paper program was $438 million, and the
unused portion of the asset-backed commercial paper liquidity facility was
$715 million.
At the option of the Company, borrowings under the revolving credit
facilities bear interest at: (1) prime rate; (2) LIBOR, plus an applicable
margin; or (3) banker's bills of acceptance rates, plus an applicable margin.
Borrowings may be obtained in U.S. dollars and certain other foreign
currencies. Borrowings under the Liquidity Facility bear interest at
prevailing commercial paper rates at the date of the borrowing. Case Credit's
revolving credit facilities (other than the Liquidity Facility) contain
restrictive covenants that require that Case Credit maintain certain financial
conditions including a maximum ratio of debt to net worth and a minimum fixed-
charge coverage ratio. The revolving credit facilities (other than the
Liquidity Facility) also impose certain restrictions on certain indebtedness,
liens on Company assets and ownership of certain subsidiaries. Pursuant to a
support agreement, Case has agreed to maintain a direct or indirect ownership
in, and provide financial backing for, Case Credit. At December 31, 1998, the
Company was in compliance with all debt covenants.
Due to the availability of financing under the Company's credit facilities,
Case Credit has classified $341 million, $105 million and $245 million of
borrowings under the commercial paper facilities of Case Credit Corporation,
Case Credit Australia Pty Ltd, and Case Credit Ltd., respectively, as long
term at December 31, 1998.
The credit facilities generally provide for facility fees on the total
commitment, whether used or unused, and also provide for annual agency fees to
the administrative agents for the facilities.
Note 6: Long-Term Debt
In 1998, Case Credit issued $785 million, net of $3 million discount, of
floating- and fixed-rate, medium-term notes in the United States. The
floating-rate notes have maturities that range between 18 and 36 months and
bear interest based on three-month LIBOR; the fixed-rate notes have maturities
of two to three years and interest rates ranging from 5.8% to 6.2%. Case
Credit also issued $100 million principal amount of 6.125% notes due October
15, 2001, and $100 million principal amount of floating-rate notes due January
21, 2000, with an initial rate of 5.91%. These note issuances were offered
pursuant to the Company's shelf registration statements as filed with the
Securities and Exchange Commission in May 1998 and September 1997. The net
proceeds from these issuances were used to fund Case Credit's growth
initiatives and for other corporate purposes, including the repayment of
short-term indebtedness.
In the fourth quarter of 1998, Case Credit's Canadian subsidiary, Case
Credit Ltd., established a C$750 million medium-term note program pursuant to
a short-form prospectus and prospectus supplement filed with the Canadian
Securities Administrators. In the fourth quarter, Case Credit Ltd. issued
C$125 million of its medium-term notes in Canada, with a maturity of two years
and an interest rate of 6.20%, pursuant to this prospectus and prospectus
supplement. The net proceeds from this issuance were used to fund Case Credit
Ltd.'s growth initiatives and for other corporate purposes, including the
repayment of short-term indebtedness. In 1997, Case Credit Australia Pty Ltd
established a A$600 million medium-term note program; no amounts were
outstanding under this program at December 31, 1998.
22
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
A summary of long-term debt is set forth in the following table (in
millions):
December
31,
-----------
1998 1997
------ ----
Case Credit Corporation
Notes, payable in 2000, floating interest rate of 5.91%.......... $ 100 $--
Notes, payable in 2001, interest rate of 6.125%.................. 100 --
Notes, payable in 2003, interest rate of 6.125%.................. 200 200
Notes, payable in 2007, interest rate of 6.75%................... 150 150
Fixed-rate, medium-term notes, net of $3 discount, maturities
through 2001, weighted-average interest rate of 6.04%........... 645 --
Floating-rate, medium-term notes, maturities through 2001,
weighted-average interest rate of 5.48%......................... 140 --
Long-term portion of borrowings under commercial paper
facilities, average interest rate of 6.0% and 6.4%.............. 341 250
Case Credit Australia Pty Ltd
Long-term portion of borrowings under commercial paper
facilities, average interest rate of 5.1% in both years......... 105 65
Case Credit Ltd. (Canada)
Medium-term notes, payable in 2000, interest rate of 6.2%........ 82 --
Long-term portion of borrowings under commercial paper
facilities, average interest rate of 5.4% and 4.3%.............. 245 70
------ ----
Total long-term debt........................................... $2,108 $735
====== ====
A summary of the minimum annual repayments of long-term debt as of December
31, 1998, is as follows (in millions):
2000.............................. $ 488
2001.............................. 578
2002.............................. --
2003.............................. 200
2004 and thereafter............... 842
------
Total........................... $2,108
======
Note 7: Income Taxes
The income and expenses of Case Credit and its domestic subsidiaries are
included in the consolidated income tax return of Case. The Company's Canadian
subsidiaries file separate income tax returns. In addition, Case Credit's
Australian subsidiaries are permitted income tax relief with Case's Australian
subsidiaries. Provisions for income taxes for all periods are made as if Case
Credit filed a separate income tax return. Any liability incurred by Case
resulting from the inclusion of Case Credit in its income tax returns was
reimbursed to or paid by Case Credit or the appropriate subsidiary.
At December 31, 1998 and 1997, the Company has current taxes receivable of
$25 million and $18 million, respectively, which are included in "Affiliated
receivables" on the accompanying Balance Sheets.
23
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
The sources of income before taxes and extraordinary items were as follows
(in millions):
Years Ended
December 31,
--------------
1998 1997 1996
---- ---- ----
U.S. sources.............................................. $112 $ 94 $105
Foreign sources........................................... 19 28 28
---- ---- ----
Income before taxes and extraordinary items............... $131 $122 $133
==== ==== ====
The provision (benefit) for income taxes is as follows (in millions):
Years Ended
December 31,
---------------
1998 1997 1996
---- ---- ----
Current:
United States........................................... $13 $13 $30
Foreign................................................. 8 10 10
State................................................... 1 (1) 4
--- --- ---
Total current......................................... 22 22 44
--- --- ---
Deferred:
United States........................................... 22 17 2
Foreign................................................. 1 -- (2)
State................................................... 1 1 1
--- --- ---
Total deferred........................................ 24 18 1
--- --- ---
Total tax provision................................... $46 $40 $45
=== === ===
Following is a reconciliation of income taxes computed at the U.S. Federal
income tax rate to the tax provision reflected in the accompanying Statements
of Income (in millions):
Years Ended
December 31,
----------------
1998 1997 1996
---- ---- ----
Tax provision at U.S. Federal income tax rate........... $46 $43 $47
State taxes, net of Federal benefit..................... 1 -- 3
U.S. tax on foreign subsidiaries earnings............... -- -- 1
Reduction in valuation allowance........................ -- (2) (2)
Other................................................... (1) (1) (4)
--- --- ---
Total tax provision................................. $46 $40 $45
=== === ===
Case Credit had previously established valuation allowances for deferred tax
assets for which realization was uncertain. Case Credit has not recorded
valuation allowances against deferred tax assets in tax jurisdictions where
Case and Case Credit have been profitable as management believes it is more
likely than not that such assets will be realizable. Deferred tax assets are
included in "Other assets" on the accompanying Balance Sheets. The Company had
valuation allowances in certain tax jurisdictions where future profitability
was uncertain. During 1996, Case Credit reversed a portion of the valuation
allowance as Case Credit affiliates generated income to support such a
reduction. In 1997, the remaining valuation allowances were reversed in full.
24
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
The components of the net deferred tax assets/(liabilities) are as follows
(in millions):
Years Ended
December 31,
--------------
1998 1997
------ ------
Deferred tax assets/(liabilities):
Allowance for credit losses............................ $ 12 $ 10
Deferred gains on receivables.......................... (34) (16)
Accrued expenses....................................... 3 2
Leasing adjustments.................................... 5 4
Depreciation........................................... (18) (4)
Other.................................................. (1) 1
------ ------
Net deferred tax liabilities......................... $ (33) $ (3)
====== ======
Note 8: Financial Instruments
Fair Market Value of Financial Instruments
The estimated fair market values of financial instruments that do not
approximate the carrying values in the financial statements are as follows (in
millions):
December 31,
-------------------------------
1998 1997
--------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------ -------- ------
Notes receivable.......................... $2,476 $2,494 $1,978 $1,982
Long-term debt............................ 2,108 2,106 735 735
The fair value of notes receivable was based on discounting the estimated
future payments of fixed-rate receivables at prevailing market rates. The fair
value of the interest only strip component of the "Due from Trusts" included
in total receivables was based on loss, prepayment and interest rate
assumptions approximating those currently experienced by the Company. The
carrying amount of floating-rate receivables was assumed to approximate its
fair market value. The fair value of fixed-rate, long-term debt was based on
the market value of debt with similar maturities and interest rates; the
carrying amount of floating-rate, long-term debt was assumed to approximate
its fair value. The carrying amount and fair value of derivatives was not
material.
Derivatives
The Company uses derivative financial instruments to manage its interest
rate exposures. Case Credit does not hold or issue such instruments for
trading purposes. The notional amounts of these contracts do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
risk. The net amounts exchanged are calculated on the basis of the notional
amounts and other terms of the contracts, such as interest rates, and only
represent a small portion of the notional amounts. The credit and market risk
under these agreements is minimized through diversification among
counterparties with high credit ratings.
Depending on the item being hedged, gains and losses on derivative
financial instruments are either recognized in the results of operations as
they accrue or are deferred until the hedged transaction occurs. Derivatives
used as hedges are effective at reducing the risk associated with the exposure
being hedged and are designated as a hedge at the inception of the derivative
contract. Accordingly, changes in the market value of the derivative are
highly correlated with changes in the market value of the underlying hedged
item at the inception of the hedge and over the life of the hedge contract.
25
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
Interest Rate Swaps
Case Credit enters into interest rate swaps to stabilize funding costs by
minimizing the effect of potential interest rate increases on floating-rate
debt in a rising interest rate environment. Under these agreements, the
Company contracts with a counterparty to exchange the difference between a
fixed rate and a floating rate applied to the notional amount of the swap.
Swap contracts are principally between one and four years in duration. The
differential to be paid or received on interest rate swap agreements is
accrued as interest rates change and is recognized in net income as an
adjustment to interest expense.
Gains and losses resulting from terminated interest rate swap agreements
are deferred and recognized in net income over the shorter term of the
remaining contractual life of the swap agreement or the remaining term of the
debt underlying the swap agreement. If swap agreements are terminated due to
the underlying debt being extinguished, any resulting gain or loss is
recognized in net income as an adjustment to interest expense at the time of
the termination.
The weighted-average pay and receive rates for the swaps outstanding at
December 31, 1998, were 5.55% and 5.10%, respectively, at a notional amount of
approximately $347 million. The weighted-average pay and receive rates for the
swaps outstanding at December 31, 1997, were 5.99% and 4.76%, respectively.
Back-to-Back Interest Rate Caps
The Liquidity Facility requires a subsidiary of Case Credit to have
interest rate cap agreements in place. Due to the relatively high expense of
obtaining such an instrument, Case Credit sells an identical cap, concurrent
with the cap purchase, to the same counterparty. This effectively minimizes
the overall expense to Case Credit, meets the requirements of the Liquidity
Facility and eliminates any risk of financial loss on the purchased cap. The
defined term of the cap is approximately 48 months.
Premiums paid for interest rate cap agreements purchased and sold are
included in "Other assets" and "Accounts payable and other accrued
liabilities," respectively, in the accompanying Balance Sheets, and are
amortized to interest expense over the terms of the agreements. Amounts
receivable or payable under cap agreements are recognized in net income as
adjustments to interest expense over the term of the related debt. If interest
rate cap agreements are terminated due to the underlying debt being
extinguished, in conjunction with an ABS transaction, any resulting gain or
loss is recognized in net income as a component of "Net gain on retail notes
sold" at the time of the termination.
At December 31, 1998, Case Credit had a back-to-back cap at a rate of
7.00%, at a notional amount of approximately $55 million. At December 31,
1997, Case Credit had a back-to-back cap at a rate of 7.00%, at a notional
amount of approximately $57 million.
Treasury Rate Lock Agreements
A Treasury rate lock is a commitment to either purchase or sell the
designated financial instrument at a future date (the determination date) for
a specified price (the reference yield). The purpose of this instrument is to
protect fixed-rate debt from fluctuations in the yield of the Treasury Note
that forms the basis of pricing the debt. As of December 31, 1998, Case Credit
had entered into $125 million of Treasury rate locks based on two-year
Treasury Notes at a weighted-average yield of 4.59%. At December 31, 1997,
Case Credit had Treasury Rate locks with a notional value of $150 million,
based on two- and three-year Treasury Notes, at a weighted-average yield of
5.75%.
Note 9: Related Party Transactions
Case Credit receives compensation from Case for retail contracts that were
created under certain low-rate financing programs and interest waiver programs
offered by Case. The amount of such compensation not yet
26
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
paid by Case as of December 31, 1998 and 1997, was $10 million, and is
included in "Affiliated receivables" on the accompanying Balance Sheets.
Operating expenses include charges from Case for administrative expenses
related to employees who perform specific functions for Case Credit. Such
charges amounted to $24 million, $18 million, and $20 million for the years
ended December 31, 1998, 1997 and 1996, respectively. Management believes that
these charges reasonably reflect the actual costs of services provided.
Note 10: Commitments and Contingencies
Legal Matters
The Company is party to various litigation matters and claims arising from
its operations. Management believes that the outcome of these proceedings,
individually and in the aggregate, will not have a material adverse effect on
Case Credit's financial position or results of operations.
Commitments
Commitments under capital and operating leases are not significant to the
financial statements. Total rental expense for operating leases was minimal
for the years ended December 31, 1998, 1997 and 1996.
Note 11: Segment and Geographical Information
The Company's reportable segments are strategic business units that are
organized around differences in geographic areas. Each segment is managed
separately as they require different knowledge of regulatory environments and
marketing strategies.
Each of Case Credit's segments provides financing for retail installment
sales contracts and leases. These financing arrangements are established in
conjunction with the purchase or lease of new and used Case farm and
construction equipment and other new and used products to end-use customers.
The North American segments also include commercial lending within the
equipment industry, multiple lines of insurance products and private-label
credit cards.
The accounting policies of the segments are described in Note 2, "Summary
of Significant Accounting Policies." Case Credit evaluates segment performance
based on segment profit, defined as segment net income before extraordinary
items. Transfers between segments are accounted for at market value.
27
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
A summary of Case Credit's reportable segment and geographical information
is set forth in the following table (in millions):
Years Ended December
31,
--------------------
1998 1997 1996
------ ------ ------
Revenues:
United States..................................... $ 315 $ 219 $ 196
Canada............................................ 42 36 36
Australia......................................... 20 17 12
------ ------ ------
Total........................................... $ 377 $ 272 $ 244
====== ====== ======
Interest expense:
United States..................................... $ 113 $ 75 $ 54
Canada............................................ 21 12 10
Australia......................................... 9 11 8
------ ------ ------
Total........................................... $ 143 $ 98 $ 72
====== ====== ======
Segment profit:
United States..................................... $ 75 $ 64 $ 69
Canada............................................ 6 15 17
Australia......................................... 4 3 2
------ ------ ------
Total........................................... $ 85 $ 82 $ 88
====== ====== ======
Depreciation and amortization:
United States..................................... $ 42 $ 22 $ 11
Canada............................................ 3 2 1
------ ------ ------
Total........................................... $ 45 $ 24 $ 12
====== ====== ======
Expenditures for additions to long-lived assets*:
United States..................................... $ 321 $ 92 $ 67
Canada............................................ 13 9 6
------ ------ ------
Total........................................... $ 334 $ 101 $ 73
====== ====== ======
Segment assets (at the end of the year):
United States..................................... $2,220 $1,733 $1,064
Canada............................................ 543 383 308
Australia......................................... 488 225 185
Other............................................. 9 21 --
------ ------ ------
Total........................................... $3,260 $2,362 $1,557
====== ====== ======
Long-lived assets* (at the end of the year):
United States..................................... $ 448 $ 169 $ 93
Canada............................................ 23 13 6
------ ------ ------
Total........................................... $ 471 $ 182 $ 99
====== ====== ======
- --------
* Includes equipment on operating leases and property, plant, and equipment.
28
CASE CREDIT CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Concluded)
Note 12: Subsequent Events
In January 1999, Case Credit filed a shelf registration statement with the
Securities and Exchange Commission, pursuant to which it may issue up to $800
million of debt securities.
In February 1999, Case Credit's Australian subsidiary, Case Credit
Australia Pty Ltd, issued A$175 million of floating- and fixed-rate medium-
term notes under its A$600 million medium-term note program that was
established in October 1997. The floating-rate notes have a maturity of two
years and bear interest based on the three-month Australian Bank Bill Swap
Reference Rate. The fixed-rate notes have a maturity of 30 months and an
interest rate of 5.75%.
In February 1999, Case Credit issued an aggregate of $250 million of its
fixed-rate, medium-term notes, with maturities of two to three years and
interest rates ranging from 5.85% to 6.15% pursuant to the Company's shelf
registration statements filed with the Securities and Exchange Commission in
May 1998 and September 1997.
29
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10, "Directors and Executive Officers of the Registrant," Item 11,
"Executive Compensation," Item 12, "Security Ownership of Certain Beneficial
Owners and Management," and Item 13, "Certain Relationships and Related
Transactions," are not required pursuant to General Instruction I (2) of Form
10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
FINANCIAL STATEMENTS INCLUDED IN ITEM 8
See "Index to Financial Statements of Case Credit Corporation and
Consolidated Subsidiaries" set forth in Item 8, "Financial Statements and
Supplementary Data."
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE INCLUDED IN ITEM 14
SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE
Schedule I Condensed financial information of registrant
Schedule II Valuation and qualifying accounts
Schedule III Real estate and accumulated depreciation
Schedule IV Mortgage loans on real estate
Schedule V Supplemental Information Concerning Property
Casualty Insurance Operations
EXHIBITS
A list of the exhibits included as part of this Form 10-K is set forth in
the Index to Exhibits that immediately precedes such exhibits, which is
incorporated herein by reference.
REPORTS ON FORM 8-K
For the fiscal quarter ended December 31, 1998, Case Credit Corporation
filed a Current Report on Form 8-K dated October 21, 1998, for the purpose of
announcing its unaudited financial results for the quarter ended September 30,
1998.
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/Andrew E. Graves
By: _________________________________
Andrew E. Graves
President and Chief Executive
Officer
Date: March 1, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title
--------- -----
/s/ Andrew E. Graves Principal Executive Officer and Director
___________________________________________
Andrew E. Graves
/s/ Robert A. Wegner Principal Financial and Accounting Officer
___________________________________________ and Director
Robert A. Wegner
/s/ Theodore R. French Director
___________________________________________
Theodore R. French
Date: March 1, 1999
Supplemental Information To Be Furnished With Reports Filed Pursuant to
Section 15(d) Of The Act By Registrants Which Have Not Registered Securities
Pursuant To Section 12 Of The Act.
No annual report to security holders covering the registrant's fiscal year
ended December 31, 1998, or any proxy material has been sent to the
registrant's security holders.
31
EXHIBIT INDEX
Sequential
Exhibit Page
Number Description of Exhibit Numbers
------- ---------------------- ----------
3(a) Certificate of Incorporation of Case Credit
Corporation, dated January 26, 1993. (Filed as
Exhibit 3(a) to the Company's Registration Statement
No. 33-80775, and incorporated herein by reference.)
3(b) By-Laws of Case Credit Corporation, adopted January
26, 1993. (Filed as Exhibit 3(b) to the Company's
Registration Statement No. 33-80775, and incorporated
herein by reference.)
4(a)(1) Indenture between Case Credit Corporation, Case
Corporation and The Bank of New York, dated as of
February 1, 1996. (Filed as Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, and incorporated herein
by reference.)
4(a)(2) 6 1/8% Note due 2003 of Case Credit Corporation
issued pursuant to the Indenture, dated as of
February 1, 1996, between Case Credit Corporation,
Case Corporation and The Bank of New York. (Filed as
Exhibit 4.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, and
incorporated herein by reference.)
4(a)(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. (Filed as
Exhibit 4(c) to the Company's Registration Statement
No. 33-80775, and incorporated herein by reference.)
4(a)(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. (Filed as Exhibit 4(d) to the
Company's Registration Statement No. 33-80775, and
incorporated herein by reference.)
4(b)(1) Indenture between Case Credit Corporation and The
Bank of New York, dated as of October 1, 1997. (Filed
as Exhibit 4(a) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997,
and incorporated herein by reference.)
4(b)(2) Resolutions to 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 $700,000,000. (Filed as
Exhibit 4(c) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997,
and incorporated herein by reference.)
4(b)(3) Form of Medium-Term Note, Series A (Fixed Rate) due
from 9 months to 30 years from the date of issue.
(Filed as Exhibit 4.1 to the Form 8-K dated December
19, 1997, and incorporated herein by reference.)
4(b)(4) Form of Medium-Term Note, Series A (Floating Rate)
due from 9 months to 30 years from date of issue.
(Filed as Exhibit 4.2 to the Form 8-K dated December
19, 1997, and incorporated herein by reference.)
4(b)(5) Action of Authorized Officers of Case Credit
Corporation, dated December 8, 1997, establishing the
Medium-Term Notes, Series A. (Filed as Exhibit 4.3 to
the Form 8-K dated December 19, 1997, and
incorporated herein by reference.)
4(b)(6) Officers' Certificate and Company Order of Case
Credit Corporation, dated December 8, 1997, related
to the Medium-Term Notes, Series A. (Filed as Exhibit
4.4 to the Form 8-K dated December 19, 1997 and
incorporated herein by reference.)
32
Sequential
Exhibit Page
Number Description of Exhibit Numbers
------- ---------------------- ----------
4(c)(1) 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 $1,000,000,000. (Filed as
Exhibit 4(a) to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998, and
incorporated herein by reference.)
4(c)(2) Form of Medium-Term Note, Series B (Fixed Rate) due
from 9 months to 30 years from the date of issue.
(Filed as Exhibit 4(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1998, and incorporated herein by reference.)
4(c)(3) Form of Medium-Term Note, Series B (Floating Rate)
due from 9 months to 30 years from the date of issue.
(Filed as Exhibit 4(c) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1998, and incorporated herein by reference.)
4(c)(4) Action of Authorized Officers of Case Credit
Corporation, dated July 27, 1998, establishing the
Medium-Term Notes, Series B. (Filed as Exhibit 4(d)
to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998, and incorporated
herein by reference.)
4(c)(5) Officers' Certificate and Company Order of Case
Credit Corporation, dated July 27, 1998, related to
the Medium-Term Notes, Series B. (Filed as Exhibit
4(e) to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998, and incorporated
herein by reference.)
4(d) Indenture, dated as of November 10, 1998, among Case
Credit Ltd., Case Credit Corporation, as guarantor,
and Montreal Trust Company, as trustee, as
supplemented by the First Supplemental Indenture,
dated as of November 10, 1998.
4(e) Case Credit hereby agrees to furnish to the
Securities Exchange Commission, upon its request, the
instruments with respect to certain indebtedness
issued by it and its subsidiaries, which indebtedness
does not exceed 10% of Case Credit's total
consolidated assets.
10(a) Support Agreement, dated January 10, 1996, between
Case Corporation and Case Credit Corporation. (Filed
as Exhibit 10(a) to the Company's Registration
Statement No. 33-80775, and incorporated herein by
reference.)
10(b)(1) Revolving Credit and Guarantee Agreement, dated as of
August 23, 1996, among Case Credit Corporation,
certain Foreign Subsidiary Borrowers from time to
time parties thereto, the Lenders parties thereto,
the Co-Agents and Lead Managers named therein, and
The Chase Manhattan Bank, as Administrative Agent.
(Filed as Exhibit 10(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1996, and incorporated herein by reference.)
10(b)(2) First Amendment, dated as of November 21, 1996, to
the Revolving Credit and Guarantee Agreement dated as
of August 23, 1996, among Case Credit Corporation,
certain Foreign Subsidiary Borrowers from time to
time parties thereto, the Lenders parties thereto,
the Co-Agents and Lead Managers named therein, and
The Chase Manhattan Bank, as Administrative Agent.
(Filed as Exhibit 10(c) to the Company's Annual
Report for the year ended December 31, 1996, and
incorporated herein by reference.)
10(b)(3) Second Amendment, dated as of August 25, 1997, to the
Revolving Credit and Guarantee Agreement, dated as of
August 23, 1996 among Case Credit Corporation,
certain foreign Subsidiaries from time to time
parties thereto, the Lenders parties thereto, the Co-
Agents and Lead Managers named therein, and The Chase
Manhattan Bank, as Administrative Agent. (Filed as
Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997,
and incorporated herein by reference.)
33
Sequential
Exhibit Page
Number Description of Exhibit Numbers
------- ---------------------- ----------
10(c)(1) Revolving Credit Agreement, dated as of August 23,
1996, among Case Credit Ltd., the Lenders parties
thereto, the Canadian Imperial Bank of Commerce, as
Co-Agent, and The Bank of Nova Scotia, as Agent.
(Filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1996, and incorporated herein by reference.)
10(c)(2) First Amendment, dated as of November 21, 1992, to
the Revolving Credit Agreement, dated as of August
23, 1996, among Case Credit Ltd., the Lenders parties
thereto, the Canadian Imperial Bank of Commerce, as
Co-Agent, and The Bank of Nova Scotia, as
Administrative Agent. (Filed as Exhibit 10(e) to the
Company's Annual Report for the year ended December
31, 1996, and incorporated herein by reference.)
10(c)(3) Second Amendment, dated as of August 25, 1997, to the
Revolving Credit Agreement, dated as of August 23,
1996, among Case Credit Ltd., the Lenders parties
thereto, Canadian Imperial Bank of Commerce, as Co-
Agent, and The Bank of Nova Scotia, as Administrative
Agent (Filed as Exhibit 10(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by
reference.)
10(d)(1) Deed of Guarantee and Negative Pledge, dated October
17, 1997, executed by Case Credit Corporation
pursuant to which Case Credit Corporation guarantees
certain indebtedness of Case Credit Australia Pty Ltd
(Filed as Exhibit 10(c) to the Company's Quarterly
Report on Form 10-Q for the Quarter ended September
30, 1997, and incorporated herein by reference.)
10(d)(2) Bill Facility Agreement, dated October 17, 1997,
between Case Credit Australia Pty Ltd, the lenders
parties thereto, and National Australia Bank Limited,
as Agent (Filed as Exhibit 10(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, and incorporated herein by
reference.)
10(d)(3) Deed Poll, dated October 17, 1997, executed by Case
Credit Australia Pty Ltd, pursuant to which Case
Credit Australia Pty Ltd may from time to time issue
medium term notes (Filed as Exhibit 10(e) to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, and incorporated
herein by reference.)
10(e)(1) Liquidity Agreement dated as of June 23, 1994, among
Case Equipment Loan Trust 1994-B, the Lenders named
therein, the Co-Agents named therein, and Chemical
Bank, as U.S. Agent. (Filed as Exhibit 10(a)(3) of
Case Corporation's Registration Statement No. 33-
82158, and incorporated herein by reference.)
10(e)(2) Second Amendment and Consent, dated as of August 28,
1996, among Case Equipment Loan Trust 1994-B, the
Lenders parties thereto, the Co-Agents named therein
and The Chase Manhattan Bank, as Administrative
Agent, amending the Liquidity Agreement, dated as of
June 23, 1994, as previously amended, among Case
Equipment Loan Trust 1994-B, the Lenders parties
thereto, and The Chase Manhattan Bank (f/k/a Chemical
Bank), as Administrative Agent. (Filed as Exhibit
10(c) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, and
incorporated herein by reference.)
12 Computation of Ratio of Earnings to Fixed Charges.
23 The consent of Arthur Andersen LLP, Independent
Public Accountants for Case Credit Corporation
(Milwaukee, Wisconsin).
34