UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
UDS CAPITAL I
(Exact name of registrant as specified in its charter)
Commission File Number 333-28737-01
Delaware 74-6454974
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
6000 N. Loop 1604 W 78249-1112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 592-2000
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)
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.)
6000 N. Loop 1604 W 78249-1112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 592-2000
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 ____
UDS CAPITAL I AND UDS FUNDING I, L.P.
FORM 10-Q
September 30, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Financial statements (unaudited)
UDS CAPITAL I
Balance Sheet as of September 30, 1997 4
Statements of Income for the Three Months Ended
September 30, 1997 and the Period from June 5, 1997
(Inception) to September 30, 1997 5
Statement of Cash Flows for the Period from
June 5, 1997 (Inception) to September 30, 1997 6
Notes to Financial Statements 7
UDS FUNDING I, L.P.
Balance Sheet as of September 30, 1997 8
Statements of Income for the Three Months
Ended September 30, 1997 and the Period from
June 5, 1997 (Inception) to September 30, 1997 9
Statement of Cash Flows for the Period from
June 5, 1997 (Inception) to September 30, 1997 10
Notes to Financial Statements 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UDS CAPITAL I
BALANCE SHEET
(Unaudited)
September 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 these financial
statements.
UDS CAPITAL I
STATEMENTS OF INCOME
Three Months Ended September 30, 1997 and
the Period from June 5, 1997 (Inception) to September 30, 1997
(Unaudited)
The Period from
Three Months Ended June 5, 1997
Ended (Inception) to
September 30, 1997 September 30, 1997
(in millions)
Income on partnership
preferred securities $ 4.3 $ 4.5
The accompanying notes are an integral part of these financial
statements.
UDS CAPITAL I
STATEMENT OF CASH FLOWS
(Unaudited)
The Period from
June 5, 1997 (Inception) to
September 30, 1997
(in millions)
Cash flows provided by operating activities -
income on partnership preferred securities $ 4.5
Cash flows used in investing activities -
purchase of partnership preferred securities (206.2)
Cash flows from financing activities:
Issuance of Trust Originated Preferred Securities 200.0
Issuance of Trust Common Securities 6.2
Distributions on Preferred Securities (4.4)
Distributions on Common Securities (0.1)
Net cash provided by financing activities 201.7
Net Change in Cash -
Cash at Beginning of Period -
Cash at End of Period $ -
The accompanying notes are an integral part of these financial
statements.
UDS CAPITAL I
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
NOTE 1: Basis of Presentation
The accompanying unaudited financial statements have been prepared by
UDS Capital I (the "Trust"), in accordance with generally accepted
accounting principles for interim financial reporting and with
Securities and Exchange Commission rules and regulations for Form 10-Q.
In the opinion of the Trust's management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. These unaudited 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.
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.
UDS FUNDING I, L.P.
BALANCE SHEET
(Unaudited)
September 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 these financial
statements.
UDS FUNDING I, L.P.
STATEMENTS OF INCOME
Three Months Ended September 30, 1997 and
the Period from June 5, 1997 (Inception) to September 30, 1997
(Unaudited)
The Period from
Three Months June 5, 1997
Ended (Inception) to
September 30, 1997 September 30, 1997
(in millions)
Interest income:
Affiliate debentures $ 5.0 $ 5.3
Income $ 5.0 $ 5.3
The accompanying notes are an integral part of these financial
statements.
UDS FUNDING I, L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
The Period from
June 5, 1997 (Inception) to
September 30, 1997
(in millions)
Cash flows provided by operating
activities - income $ 5.3
Cash flows from investing activities:
Maturity of investment security 0.6
Purchase of investment securities (243.2)
Net cash used in investing activities (242.6)
Cash flows from financing activities:
Distributions to partners (5.3)
Issuance of partnership interests 242.6
Net cash provided by financing activities 237.3
Net Change in Cash -
Cash at Beginning of Period -
Cash at End of Period $ -
The accompanying notes are an integral part of these financial
statements.
UDS FUNDING I, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(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 generally
accepted accounting principles for interim financial reporting and with
Securities and Exchange Commission rules and regulations for Form 10-Q.
In the opinion of the Partnership's management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. These unaudited 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 of UDS Capital I dated June 20, 1997.
NOTE 2: Summary of Significant Accounting Policies
Investments
Investments are recorded at accreted cost. The carrying value of
investments approximates 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.
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
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
November 11, 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
November 11, 1997
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