UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
UDS CAPITAL I
(Exact name of registrant as specified in its charter)
Commission File Number x-xxxx
Delaware 74-6454974
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
9830 Colonnade Boulevard 78230
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 641-6800
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
8.32% Trust Originated New York Stock Exchange
Preferred Securities (TOPrS)
(and the related guarantee)
<PAGE>
UDS FUNDING I, L.P.
(Exact name of Registrant as specified in its
certificate of limited partnership)
Commission File No: x-xxxx-xx
Delaware 74-2835441
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
9830 Colonnade Boulevard 78230
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 641-6800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
8.32% Partnership New York Stock Exchange
Preferred Securities
(and the related guarantee)
Securities registered pursuant to Section 12(b) 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.
Yes X No ____
</PAGE>
<PAGE>
UDS CAPITAL I AND UDS FUNDING I, L.P.
FORM 10-Q
June 30, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements (Unaudited)
UDS CAPITAL I
Balance Sheet as of June 30, 1997
Statement of Income for the Period from
June 5, 1997 (Inception) to June 30, 1997
Statement of Cash Flows for the Period from
June 5, 1997 (Inception) to June 30, 1997
Notes to Financial Statements
UDS FUNDING I, L.P.
Balance Sheet as of June 30, 1997
Statement of Income for the Period from
June 5, 1997 (Inception) to June 30, 1997
Statement of Cash Flows for the Period from
June 5, 1997 (Inception) to June 30, 1997
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
</PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UDS CAPITAL I
BALANCE SHEET
(Unaudited)
June 30,
1997
(in millions)
Assets
Investment in partnership preferred securities $ 206.2
Total assets $ 206.2
Stockholders' Equity
Stockholders' equity:
Preferred securities (8.32% Trust Originated
Preferred Securities; 8,000,000 authorized,
issued and outstanding; $25 liquidation
amount per security) $ 200.0
Common securities (8.32% Trust
Common Securities; 247,440 authorized,
issued and outstanding; $25 liquidation
amount per security) 6.2
Total stockholders' equity $ 206.2
The accompanying notes are an integral part of this financial statement.
</PAGE>
<PAGE>
UDS CAPITAL I
STATEMENT OF INCOME
(Unaudited)
For the Period from
June 5, 1997 (Inception) to
June 30, 1997
(in millions)
Income on partnership preferred securities $ 0.2
The accompanying notes are an integral part of this financial statement.
</PAGE>
<PAGE>
UDS CAPITAL I
STATEMENT OF CASH FLOWS
(Unaudited)
For the Period from
June 5, 1997 (Inception) to
June 30,
(in millions)
Cash flows from operating activities:
Income on partnership preferred securities $ 0.2
Cash provided by operating activities 0.2
Cash flows from investing activities:
Purchase of partnership preferred securities (206.2)
Cash used in investing activities (206.2)
Cash flows from financing activities:
Issuance of Trust Originated Preferred Securities 200.0
Issuance of Trust Common Securities 6.2
Distributions (0.2)
Net cash provided by financing activities 206.0
Net Change in Cash 0.0
Cash at Beginning of Period 0.0
Cash at End of Period $ 0.0
The accompanying notes are an integral part of this financial statement.
</PAGE>
UDS CAPITAL I
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: Basis of Presentation
The accompanying unaudited financial statements have been prepared by UDS
Capital I (the "Trust") in accordance with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all
of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
Trust's management, the accompanying financial statements include all
adjustments necessary for a fair presentation. All such adjustments are
of a normal recurring nature. These financial statements should be read
in conjunction with the Trust's audited balance sheet as of June 5, 1997
(inception) and notes thereto, included in the Prospectus Supplement dated
June 20, 1997.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and disclosures of contingencies.
Actual results could differ from those estimates.
NOTE 2: Summary of Significant Accounting Policies
Investment
The investment in partnership preferred securities represents a limited
partnership interest in UDS Funding I., L.P. (the "Partnership"), and is
recorded at cost. The carrying value of the investment approximates its
fair value. Income on the investment is accrued when earned.
Income Taxes
The Trust is classified as a grantor trust for U.S. federal income tax
purposes. Accordingly, the Trust does not incur any income tax
liabilities. Such liabilities are incurred directly by the security
holders.
NOTE 3: Investment in Partnership Preferred Securities
The Trust holds 8,247,440 8.32% partnership preferred securities, $25
liquidation preference per security. The partnership preferred securities
are redeemable on or after June 30, 2002 at the option of the Partnership,
in whole or in part, at a redemption price equal to $25 per security. Upon
any redemption of the Partnership Preferred Securities, the Trust Preferred
Securities will be redeemed. The distribution payment dates of the
Partnership Preferred Securities correspond to the distribution payment
dates of the Trust Preferred Securities. Ultramar Diamond Shamrock
Corporation (the "Company") has guaranteed, on a subordinated basis, the
distributions due on the partnership preferred securities if and when
declared by the Partnership and the payments upon liquidation of the
Partnership or the redemption of the Partnership Preferred Securities to
the extent of funds legally available.
NOTE 4: Stockholders' Equity
Trust Preferred Securities
The Trust issued 8,000,000 8.32% Trust Preferred Securities, $25
liquidation amount per security, in an underwritten public offering on June
25, 1997. The Trust Preferred Securities are redeemable on or after June
30, 2002 at the option of the Trust, in whole or in part, at a redemption
price equal to $25 per security. Distributions on the Trust Preferred
Securities are cumulative from the date of original issue and are payable
quarterly if and when the Trust has funds available for payment. The
Company has guaranteed, on a subordinated basis, the payment of all
distributions and other payments on the Trust Preferred Securities to the
extent of funds legally available. This guarantee and the partnership
distribution guarantee are subordinated to all other liabilities of the
Company and rank pari passu with the most senior preferred stock of the
Company. Under certain circumstances, the Trust Preferred Securities have
preferential rights to payment relative to the Trust Common Securities.
Trust Common Securities
The Trust issued 247,440 8.32% Trust Common Securities, $25 liquidation
amount per security, to the Company on June 25, 1997. The Trust Common
Securities are redeemable on or after June 30, 2002 at the option of the
Trust, in whole or in part, at a redemption price equal to $25 per
security.
<PAGE>
UDS FUNDING I, L.P.
BALANCE SHEET
(Unaudited)
June 30,
1997
(in millions)
Assets
Investments:
Affiliates $ 240.2
Other 2.4
Total assets $ 242.6
Partners' Capital
Partners' capital:
Limited partnership interest $ 206.2
General partnership interest 36.4
Total partners' capital $ 242.6
The accompanying notes are an integral part of this financial statement.
</PAGE>
<PAGE>
UDS FUNDING I, L.P.
STATEMENT OF INCOME
(Unaudited)
For the Period from
June 5, 1997 (Inception) to
June 30, 1997
(in millions)
Interest income:
Affiliate debentures $ 0.3
Income $ 0.3
The accompanying notes are an integral part of this financial statement.
</PAGE>
<PAGE>
UDS FUNDING I, L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
For the Period from
June 5, 1997 (Inception) to
June 30, 1997
(in millions)
Cash flows from operating activities:
Income $ 0.3
Cash provided by operating activities $ 0.3
Cash flows from investing activities:
Purchase of investment securities (242.6)
Cash used in investing activities (242.6)
Cash flows from financing activities:
Distributions (0.3)
Issuance of partnership interests 242.6
Net cash provided by financing activities 242.3
Net Change in Cash 0.0
Cash at Beginning of Period 0.0
Cash at End of Period $ 0.0
The accompanying notes are an integral part of this financial statement.
</PAGE>
UDS FUNDING I, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: Basis of Presentation
The accompanying unaudited financial statements have been prepared by UDS
Funding I, L.P. (the "Partnership"), in accordance with the rules and
regulations of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and notes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the Partnership's management, the accompanying financial
statements include all adjustments necessary for a fair presentation. All
such adjustments are of a normal recurring nature. These financial
statements should be read in conjunction with the Partnership's audited
balance sheet as of June 5, 1997 (inception) and notes thereto, included
in the Prospectus Supplement dated June 20, 1997.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and disclosures of contingencies.
Actual results could differ from those estimates.
NOTE 2: Summary of Significant Accounting Policies
Investments
The investments are recorded at accreted cost. The carrying value of the
investments approximates their fair value. Income on the investments is
accrued when earned.
Income Taxes
The Partnership is classified as a partnership for U.S. federal income tax
purposes. Accordingly, the Partnership does not incur any income tax
liabilities. Such liabilities are incurred directly by the partners.
NOTE 3: Investment in Affiliate Debentures
The Partnership holds subordinated debentures of Ultramar Diamond Shamrock
Corporation ("the Company") and debentures of two wholly owned subsidiaries
of the Company (collectively, the "Debentures"). The Debentures have a
term of 20 years and bear interest at 8.32% per annum. The Debentures are
redeemable on or after June 30, 2002 at the option of the Company and its
subsidiaries, in whole or in part, at a redemption price equal to the
entire principal amount of the Debentures being so redeemed plus any
accrued and unpaid interest.. The interest payment dates correspond to the
distribution payment dates of the Partnership Preferred Securities.
Interest and redemption payments on the subsidiary debentures are
guaranteed by the Company on a subordinated basis.
NOTE 4: Partners' Capital
The Partnership issued 8,247,440 8.32% Partnership Preferred Securities,
$25 liquidation preference per security, to UDS Capital I (the "Trust"),
the limited partner, on June 25, 1997. The Trust Preferred Securities are
redeemable on or after June 30, 2002 at the option of the Partnership, in
whole or in part, at a redemption price equal to $25 per security.
Distributions on the Partnership Preferred Securities are cumulative from
the date of original issue and are payable quarterly if and when declared
by the General Partner. The Company has guaranteed, on a subordinated
basis, the distributions due on the partnership preferred securities if and
when declared by the Partnership and the payments upon liquidation of the
Partnership or the redemption of the Partnership Preferred Securities to
the extent of funds legally available. Except as provided in certain
partnership agreements and as otherwise provided by law, the holders of the
Partnership Preferred Securities have no voting rights.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
UDS Capital I (the "Trust") is a statutory business trust formed under the
Delaware Business Trust Act on June 5, 1997. The Trust exists for the
exclusive purposes of (i) issuing 8.32% Trust Originated Preferred
Securities (the "TOPrS") and Trust Common Securities (collectively, the
"Trust Securities"), representing undivided beneficial ownership interests
in the assets of the Trust, (ii) investing the gross proceeds of the Trust
Securities in 8.32% Partnership Preferred Securities (the "Partnership
Preferred Securities") issued by UDS Funding I, L.P. (the "Partnership"),
and (iii) engaging in only those other activities necessary or incidental
thereto.
The Partnership is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, as amended, on June 5, 1997. Ultramar
Diamond Shamrock Corporation (the "Company") is the general partner of the
Partnership. The Partnership is managed by the general partner and exists
for the exclusive purposes of (i) issuing its partnership interests,
consisting of the Company's general partner interest and the Partnership
Preferred Securities, (ii) investing the proceeds thereof in certain
eligible securities of the Company and wholly owned subsidiaries of the
Company (the "Affiliate Debentures") and certain eligible debt securities,
and (iii) engaging in only those other activities necessary or incidental
thereto.
The Registrants' activities are limited to issuing securities and investing
the proceeds as described above. Since the Trust was organized on June 5,
1997, its activities, as specified in its declaration of trust, have been
limited to the issuance of the TOPrS and the Trust Common Securities, the
investing of the proceeds in the Partnership Preferred Securities, and the
payment of distributions on the TOPrS and the Trust Common Securities in
accordance with their terms. Since the Partnership was organized on June
5, 1997, its activities, as specified in its agreement of limited
partnership, have been limited to the issuance of the Partnership Preferred
Securities and the general partnership interest, the investment of the
proceeds in Affiliate Debentures and certain eligible debt securities, and
the payment of distributions on the Partnership Preferred Securities and
general partnership interest.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrants know of no material legal proceedings involving the Trust,
the Partnership, or the assets of either of them.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Certificate of Trust dated June 5, 1997, of the Trust
(incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-3 (No. 333-28737) ( the "Registra-
tion Statement"))
4.2 Amended and Restated Declaration of Trust dated June 25, 1997
(incorporated by reference to Current Report on Form 8-K dated
June 20, 1997, filed by the Company (the "Form 8-K"))
4.3 Certificate of Limited Partnership of the Partnership dated June
5, 1997 (incorporated by reference to the Registration
Statement)
4.4 Amended and Restated Agreement of Limited Partnership dated
June 25, 1997 (incorporated by reference to the Form 8-K)
4.3 Indenture for Subordinated Debt Securities dated June 25, 1997
(incorporated by reference to the Form 8-K)
4.5 Certificate Evidencing Trust Preferred Securities dated June 25,
1997 (incorporated by reference to the Form 8-K)
4.6 Certificate Evidencing Partnership Preferred Securities dated
June 25, 1997 (incorporated by reference to the Form 8-K)
4.7 Trust Preferred Securities Guarantee Agreement dated June 25,
1997 (incorporated by reference to the Form 8-K)
4.8 Partnership Preferred Securities Guarantee Agreement dated June
25, 1997 (incorporated by reference to the Form 8-K)
10.1 8.32% Subordinated Debenture Due 2017 dated June 25, 1997
(incorporated by reference to the Form 8-K)
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Registrants have made no Current Reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.
UDS CAPITAL I
By: /s/ H. Pete Smith
H. PETE SMITH
TRUSTEE
August 14, 1997
UDS FUNDING I, L.P.
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
GENERAL PARTNER
By: /s/ H. Pete Smith
H. PETE SMITH
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
August 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 206,200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
200,000
<COMMON> 6,200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 206,200
<SALES> 200
<TOTAL-REVENUES> 200
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 200
<INCOME-TAX> 0
<INCOME-CONTINUING> 200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
