<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 11, 1998
Date of Earliest Event Reported: December 1, 1997
T & W FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON
(State or other jurisdiction of incorporation or organization)
0-23013 91-1844249
(Commission File Number) (I.R.S. Employer Identification No.)
6416 PACIFIC HIGHWAY EAST, TACOMA, WASHINGTON 98424
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (253) 922-5164
- ------------------------------------------------------------------------------
<PAGE> 2
This Current Report on Form 8-K/A1 amends the Current Report on Form 8-K filed
by T & W Financial Corporation on December 15, 1997 solely to add the financial
statements of the business acquired required by Item 7(a) and the pro forma
financial information required by Item 7(b).
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. The required
financial statements of the business acquired are set forth below.
(b) Pro Forma Financial Information. The required pro forma
financial information is set forth below.
(c) Exhibits.
None
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
T & W Financial Corporation
(Registrant)
Date: February 11, 1998 By: /s/ PAUL LUKE
----------------------------
Paul Luke
Senior Vice President, Chief Financial
Officer, Secretary, Treasurer and Director
Page 2
<PAGE> 3
FINANCIAL STATEMENTS
INDEX
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF T&W FINANCIAL
CORPORATION
<TABLE>
<S> <C>
Introduction.................................................................................... F-2
Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended
December 31, 1996 and nine months ended September 30, 1997.................................... F-3
Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 1997................... F-5
Notes to Unaudited Pro Forma Condensed Combined Financial Statements............................ F-6
FINANCIAL STATEMENTS OF SPECIALTY VEHICLE FINANCE DIVISION OF TRANSAMERICA COMMERCIAL
FINANCE CORPORATION
Report of Independent Certified Public Accountants.............................................. F-8
Balance Sheets as of December 31, 1995 and 1996
and September 30, 1997 (unaudited)............................................................ F-9
Statements of Income for the years ended December 31, 1995 and 1996
and for the nine months ended September 30, 1997 (unaudited).................................. F-10
Notes to Financial Statements................................................................... F-11
</TABLE>
F-1
<PAGE> 4
T&W FINANCIAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
INTRODUCTION
Effective December 1, 1997, T&W Financial Corporation, (the "Company") purchased
certain assets from Transamerica Commercial Finance Corporation (the "Seller")
for a purchase price of $58.6 million. The purchased assets represent the
Specialty Vehicle Finance Division (the "Division") of the Seller and primarily
include lease receivables, dealer floorplan receivables and dealer and
manufacturer contracts.
The Company will account for the acquisition utilizing the purchase method of
accounting. The assets acquired and liabilities assumed will be recorded at
their fair values, and the results of operations of the Division included in the
Company's financial statements from the date of acquisition.
The accompanying unaudited pro forma condensed combined financial statements
illustrate the effects of the acquisition on the Company's financial position
and results of operations. The pro forma condensed combined balance sheet as of
September 30, 1997 is based on the historical balance sheets of the Company and
the Acquired Division as of that date and assumes the acquisition took place on
that date. The pro forma condensed combined statements of operations for the
year ended December 31, 1996 and the nine months ended September 30, 1997 are
based on the historical statements of operations of the Company and the Acquired
Division for those periods. The pro forma condensed combined statements of
operations assume the acquisition took place on January 1, 1996 and 1997 for the
respective periods. The proforma condensed combined financial statements may not
be indicative of the actual results of the acquisition. In particular, the pro
forma condensed combined financial statements are based on management's current
estimate of the allocation of the purchase price, the actual allocation of which
may differ.
The accompanying condensed combined proforma financial statements should be read
in connection with the historical financial statements of the Company and the
Specialty Vehicle Finance Division of Transamerica Commercial Finance
Corporation.
F-2
<PAGE> 5
T&W FINANCIAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
SPECIALTY
T&W VEHICLE FINANCE PRO FORMA PRO FORMA
FINANCIAL DIVISION ADJUSTMENTS COMBINED
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Lease contract revenue $ 10,812 $ 3,789 $ (1,099)(2) $ 13,502
Gain on sale of leases 7,940 -- -- 7,940
Fee income 422 807 -- 1,229
Servicing and other income 906 56 -- 962
-------- -------- -------- --------
TOTAL REVENUES 20,080 4,652 (1,099) 23,633
EXPENSES
Interest expense 5,638 2,076 -- 7,714
Compensation and related expenses 3,240 409 16(3) 3,665
Amortization of initial direct costs 1,780 -- -- 1,780
Provision for credit losses 774 -- -- 774
Amortization of purchased
intangibles -- -- 30(4) 30
Other general and administrative
expenses 1,838 670 -- 2,508
-------- -------- -------- --------
TOTAL EXPENSES 13,270 3,155 46 16,471
-------- -------- -------- --------
NET INCOME, before minority interest
and taxes 6,810 1,497 (1,145) 7,162
-------- -------- -------- --------
MINORITY INTEREST (1,022) -- -- (1,022)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 5,788 1,497 (1,145) 6,140
PROVISION FOR INCOME TAXES (2,084) (565) 432(5) (2,217)
-------- -------- -------- --------
NET INCOME $ 3,704 $ 932 $ (713) $ 3,923
======== ======== ======== ========
NET INCOME PER SHARE $ .68
========
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING 5,800
========
</TABLE>
See accompanying notes to unaudited pro forma
condensed combined financial statements
F-3
<PAGE> 6
T&W FINANCIAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
SPECIALTY
T&W VEHICLE FINANCE PRO FORMA PRO FORMA
FINANCIAL DIVISION ADJUSTMENTS COMBINED
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Lease contract revenue $ 16,834 $ 3,961 $ (1,211)(2) $ 19,584
Gain on sale of leases -- -- -- --
Fee income 2,067 1,156 -- 3,223
Servicing and other income 595 113 -- 708
-------- -------- -------- --------
TOTAL REVENUES 19,496 5,230 (1,211) 23,515
EXPENSES
Interest expense 6,434 2,171 -- 8,605
Compensation and related expenses 2,859 518 28(3) 3,405
Amortization of initial direct costs 1,893 -- -- 1,893
Provision for credit losses 1,137 -- -- 1,137
Amortization of purchased
intangibles -- -- 40(4) 40
Other general and administrative
expenses 1,345 936 -- 2,281
-------- -------- -------- --------
TOTAL EXPENSES 13,668 3,625 68 17,361
-------- -------- -------- --------
NET INCOME, before minority interest
and taxes 5,828 1,605 (1,279) 6,154
-------- -------- -------- --------
MINORITY INTEREST -- -- --
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 5,828 1,605 (1,279) 6,154
PROVISION FOR INCOME TAXES -- (622) 496(5) (126)
-------- -------- -------- --------
NET INCOME $ 5,828 $ 983 $ (783) $ 6,028
======== ======== ======== ========
NET INCOME PER SHARE $ 1.04
========
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING 5,800
========
</TABLE>
See accompanying notes to unaudited pro forma
condensed combined financial statements
F-4
<PAGE> 7
T&W FINANCIAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
SPECIALTY
T&W VEHICLE FINANCE PRO FORMA PRO FORMA
FINANCIAL DIVISION ADJUSTMENTS COMBINED
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 9,247 $ 42 $ (42)(1) $ 9,247
Net investment in leases 105,978 51,354 656(1) 157,988
Securitization receivable 17,680 -- -- 17,680
Dealer floor plan receivable -- 7,501 -- 7,501
Intangible assets, net 2,265 -- 401 2,666
Other assets 2,637 105 -- 2,742
--------- --------- --------- ---------
TOTAL ASSETS $ 137,807 $ 59,002 $ 1,015 $ 197,824
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other accrued
liabilities $ 19,195 $ 436 $ (112)(1) $ 19,519
Notes payable 94,599 -- 58,607(1) 153,206
Advances due TCFC 54,117 (54,117)(1) --
Security deposits 8,301 280 -- 8,581
Dealer reserve -- 806 -- 806
Allocated income taxes -- 187 (187)(1) --
--------- --------- --------- ---------
TOTAL LIABILITIES 122,095 55,826 4,191 182,112
Shareholders' equity
Common stock and paid in capital 3,438 -- -- 3,438
Retained earnings 12,274 -- -- 12,274
Equity in net assets acquired -- 3,176 (3,176)(1) --
--------- --------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 15,712 3,176 (3,176) 15,712
--------- --------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 137,807 $ 59,002 $ 1,015 $ 197,824
========= ========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma
condensed combined financial statements
F-5
<PAGE> 8
T&W FINANCIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(IN THOUSANDS)
NOTE A - The pro forma adjustments to the condensed combined balance sheet are
as follows:
(1) To record the acquisition of the Specialty Vehicle Finance Division
of Transamerica Commercial Finance Corporation (the "Division") and
the allocation of the purchase price on the basis of the fair values
of the assets acquired and liabilities assumed. The components of
the purchase price and its allocation to the assets and liabilities
of the Division acquired are as follows:
<TABLE>
<S> <C>
Components of Purchase Price:
Cash payment to sellers $ 58,607
--------
Allocation of Purchase Price:
Equity in net assets acquired 3,176
Repay advances due TCFC 54,117
Increase in net investment in leases 677
Increase in allowance for uncollectible lease
receivables (21)
Items not purchased:
Accounts payable and other accrued liabilities 112
Cash (42)
Deferred taxes 187
--------
Total Net Assets Acquired 58,206
--------
Consideration in Excess of Net Assets Acquired $ 401
========
</TABLE>
F-6
<PAGE> 9
T&W FINANCIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(IN THOUSANDS)
NOTE B - The pro forma adjustments to the condensed combined statements of
operations are as follows:
(2) To reduce the yield on lease contracts from the Transamerica
effective rate to the T&W estimated yield. The adjustment amount
was computed as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------- -------
<S> <C> <C>
Net lease receivable at beginning of period $44,280 $29,057
Net lease receivable at end of period 51,354 44,280
------- -------
95,634 73,337
/ 2 / 2
------- -------
Average net lease receivable 47,817 36,669
Times estimated annual yield 7.5% 7.5%
Times month and period 9/12 12/12
------- -------
Proforma lease contract revenue 2,690 2,750
Lease contract revenue recorded 3,789 3,961
------- -------
Adjustment $(1,099) $(1,211)
======= =======
</TABLE>
(3) To adjust compensation and related expenses based on an
employment agreement between T&W and personnel retained by T&W
in connection with the acquisition of the Division.
(4) To record amortization over a 10-year period of the $401,000
excess of consideration paid over the fair value of net assets
acquired from the Division.
(5) To reverse taxes allocated to the SVFD net income.
F-7
<PAGE> 10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
T & W Financial Corporation and the
Specialty Vehicle Finance Division of
Transamerica Commercial Finance Corporation
We have audited the accompanying balance sheets the of Specialty Vehicle Finance
Division of Transamerica Commercial Finance Corporation (the "Company") as of
December 31, 1996 and 1995, and the related statements of income for each of the
two years then ended. 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 audits 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 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 the Specialty Vehicle Finance
Division of Transamerica Commercial Finance Corporation at December 31, 1996 and
1995, and the results of its operations for each of the two years then ended in
conformity with generally accepted accounting principles.
February 11, 1998
F-8
<PAGE> 11
SPECIALTY VEHICLE FINANCE DIVISION
OF
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
--------------------- -------
1995 1996 1997
------- ------- -------
(unaudited)
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 1 $ 17 $ 42
DEALER FLOOR PLAN RECEIVABLE 8,764 8,323 7,501
NET INVESTMENT IN LEASES 29,057 44,280 51,354
OTHER ASSETS 166 109 105
------- ------- -------
TOTAL ASSETS $37,988 $52,729 $59,002
======= ======= =======
LIABILITIES
Accounts payable $ 116 $ 343 $ 2
Security deposits 410 265 280
Dealer reserves 871 1,087 806
Advances due TCFC 35,252 48,075 54,117
Allocated income taxes -- 622 187
Other liabilities 78 91 434
------- ------- -------
TOTAL LIABILITIES 36,727 50,483 55,826
------- ------- -------
DIVISIONAL EQUITY 1,261 2,246 3,176
------- ------- -------
TOTAL LIABILITIES AND DIVISIONAL EQUITY $37,988 $52,729 $59,002
======= ======= =======
</TABLE>
See accompanying notes to financial statements
F-9
<PAGE> 12
SPECIALTY VEHICLE FINANCE DIVISION
OF
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- -------
1995 1996 1997
------- ------- -------
(unaudited)
<S> <C> <C> <C>
REVENUES
Lease contract revenue $ 2,513 $ 3,961 $ 3,789
Finance charges 985 1,156
807
Other income 132 113 56
------- ------- -------
TOTAL REVENUES 3,630 5,230 4,652
EXPENSES
Selling, general and administrative
expenses 847 1,454 1,079
Interest expense 1,519 2,171 2,076
------- ------- -------
TOTAL EXPENSES 2,366 3,625 3,155
------- ------- -------
NET INCOME, before income taxes 1,264 1,605 1,497
INCOME TAXES (484) (622) (565)
------- ------- -------
NET INCOME $ 780 $ 983 $ 932
======= ======= =======
</TABLE>
See accompanying notes to financial statements
F-10
<PAGE> 13
SPECIALTY VEHICLE FINANCE DIVISION
OF
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Effective December 1, 1997, Transamerica Commercial Finance Corporation ("TCFC")
agreed to sell its Specialty Vehicle Finance Division ("SVFD" or "Division") to
T & W Financial Corporation of Tacoma, Washington. The assets to be sold with
the Division primarily include dealer floor plan receivables and lease
receivables. The Division is engaged in providing commercial financial services
to the funeral home industry primarily through dealer originated leases of
funeral cars and limousines. Additionally, the Division provides inventory
financing and floorplanning to select dealers and manufacturers. Furthermore,
during the last half of 1996 the Division commenced providing similar services
in the shuttle bus industry.
The Division's operations extend throughout the United States, with a
significant concentration in the South and Southeast regions of the United
States, which represents approximately one half of the Division's lease
origination activity and three-fourths of the Division's dealer floorplanning
activity. The Division's headquarters and administrative offices are maintained
in Schaumburg, Illinois.
BASIS OF PRESENTATION - The Division has no separate legal status, but is a part
of TCFC's operations. TCFC prepared separate divisional financial statements
from their historical accounting records. The divisional financial statements
include various allocated costs and expenses which may not necessarily be
indicative of the results that would have been attained if the Division had been
operated as a separate legal entity. In the statements of operations before
income taxes, selling, general and administrative expenses include allocations
of certain corporate expenses approximating $318,000, $720,000 and $476,000 for
the years ended December 31, 1995 and 1996 and the nine months ending September
30, 1997, respectively. All of the allocations and estimates reflected in the
divisional financial statements are based on assumptions such as square footage,
percentage of time devoted or of number of transaction types, and average net
investments that management believes are reasonable under the circumstances.
LEASE ACCOUNTING AND REVENUE RECOGNITION - The Division's leases are classified
and accounted for as direct financing leases. Under this accounting method,
total minimum lease rentals to be received and the estimated residual value of
equipment at lease end are recorded as assets. The excess of these assets over
the related equipment cost is recorded as unearned revenue, which is recognized
as lease contract revenue over the lease term utilizing the interest method of
accounting, such method resulting in a constant rate of return on the Division's
net investment in the lease. When a lease becomes greater than 60 days past due,
income recognition is discontinued and commences only when the past due balance
is collected.
CASH AND CASH EQUIVALENTS - The Division considers all short-term investments
with an original maturity of three months or less to be cash equivalents.
ALLOWANCE FOR UNCOLLECTIBLE LEASE RECEIVABLES - The allowance for uncollectible
lease receivables is maintained at a level sufficient to absorb probable losses.
Management determines the adequacy of the allowance based upon reviews of
individual leases, historical loss experience, current economic conditions, the
known and inherent risk characteristics of the various categories of leases and
other pertinent factors. Leases determined uncollectible are charged to the
allowance. Provisions for losses and recoveries on leases previously charged off
are added to the allowance.
F-11
<PAGE> 14
SPECIALTY VEHICLE FINANCE DIVISION
OF
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEALER FLOOR PLAN RECEIVABLE - The Division enters into inventory security
agreements with select dealers of limousines and funeral cars. These agreements
are secured primarily by dealer inventory, accounts receivable, equipment and
proceeds from equipment sales. Financed inventory is covered by manufacturer's
repurchase agreements.
DEALER RESERVES - The Division establishes a minimum required yield for lease
contracts, to the extent that the implicit rate on the lease exceeds such
minimum required yield, the dealer which sourced the lease may participate on
the rate differential. The entire payment of such participation amount is
deferred at the inception of the lease and a dealer reserve is established.
Dealer reserve is earned over the life of the lease and payments are made on a
periodic basis subject to certain limitations. Pursuant to terms of the dealer
arrangements, the reserve can be used by the Division to protect against
potential credit losses.
ESTIMATES - 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,
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.
ALLOCATED INCOME TAXES - TCFC allocates income taxes to the Division as if the
Division were to file a separate tax return.
CONCENTRATION OF CREDIT AND FINANCIAL INSTRUMENT RISK - The Company controls its
credit risk through credit standards, limits on exposure, and by monitoring the
financial condition of its lessees. The Company uses a credit scoring system as
a guide in evaluating the credit risk of applicants. The Company generally
requires the leased assets to serve as collateral for the leases and requires
all lessees to provide adequate collateral protection and liability insurance
throughout the base contract term. Additionally, the Company controls its credit
exposure to any one client or industry by monitoring and limiting such exposure
through additional credit enhancement. Inherent to leasing is the residual value
risk associated with lease contracts. The Company manages this residual risk
through adherence to a residual valuation procedure at lease inception.
F-12
<PAGE> 15
SPECIALTY VEHICLE FINANCE DIVISION
OF
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS - Recently issued accounting
standards having relevant applicability to the Division consist primarily of
Statement of Financial Accounting Standards No. 125 ("FASB No. 125") "Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities," which is to be effective for transactions occurring after December
31, 1996, and is to be applied prospectively. Earlier or retroactive application
is not permitted. In November 1997, an exposure draft was issued proposing to
defer, for one year, the effective date of certain provisions of FASB No. 125.
The Division does not expect the adoption of FASB No. 125 to have a material
effect on the Division's financial condition or results of operation.
Other recently issued accounting standards including FASB No. 128, 129, 130 and
131 are not expected to have any material effect on the Division's financial
condition or results of operation.
INTERIM FINANCIAL INFORMATION - The financial data as of September 30, 1997 for
the nine month periods ended September 30, 1997 is unaudited but includes all
adjustments (consisting only of normal recurring accruals) that management
considers necessary for a fair presentation of the financial position at such
date and the results of operations for that period. Operating results for the
nine months ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the entire fiscal year ended December 31, 1997.
CASH FLOWS - Divisonal cash flows are not presented herein as a separate
allocation of TCFC cash flows to the Division is not considered meaningful due
to its arbitrary nature.
F-13
<PAGE> 16
SPECIALTY VEHICLE FINANCE DIVISION
OF
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - NET INVESTMENT IN LEASES
Net investment in leases consists of the following:
<TABLE>
<CAPTION>
December 31, September 30,
------------------------ --------
1995 1996 1997
-------- -------- --------
(unaudited)
<S> <C> <C> <C>
Minimum lease payments receivable $ 29,668 $ 41,910 $ 46,554
Estimated residual value of leased equipment 6,755 12,830 16,144
Unearned lease revenue (7,151) (10,245) (11,129)
Allowance for uncollectible lease receivables (215) (215) (215)
-------- -------- --------
Net Investment in Leases $ 29,057 $ 44,280 $ 51,354
======== ======== ========
</TABLE>
At December 31, 1996 future minimum annual lease payments receivable, excluding
guaranteed residual values, are as follows (in thousands):
<TABLE>
<S> <C>
1997 $12,921
1998 11,371
1999 9,470
2000 5,960
2001 and thereafter 2,188
-------
$41,910
=======
</TABLE>
NOTE 3 - INTERCOMPANY DEBT/INTEREST EXPENSE
Interest expense is determined at the corporate level based on the average daily
balance of accumulated intercompany transactions. Management believes the
allocations are reasonable, but not necessarily indicative of the costs that
would have been incurred if the division had been a separate company.
NOTE 4 - SUBSEQUENT EVENTS
Effective December 1, 1997, T&W Financial Corporation, a public company,
purchased certain assets and assumed certain liabilities of the Company for
total consideration of $58.6 million.
F-14
