<PAGE 1>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 1 0 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1994
1-8175
________________________
(Commission file number)
IBM CREDIT CORPORATION
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 22-2351962
_______________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
290 Harbor Drive
P. O. Box 10399
Stamford, Connecticut
06904-2399
________________________________________
(Address of principal executive offices)
203-973-5100
____________________________________________________
(Registrant's telephone number, including area code)
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
___ ___
As of July 29, 1994, 750 shares of capital stock, par value $1.00
per share, were outstanding and held by International Business Machines
Corporation. Aggregate market value of voting stock held by
non-affiliates of registrant at July 29, 1994: NONE.
The registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with
the reduced disclosure format.
<PAGE 2>
INDEX
_____
Part I - Financial Information: Page
____
Item 1. Financial Statements:
Consolidated Statement of Financial Position
at June 30, 1994 and December 31, 1993 . . . . . . . . . . 1
Consolidated Statement of Earnings for the three
and six months ended June 30, 1994 and 1993 . . . . . . . 2
Consolidated Statement of Cash Flows
for the six months ended June 30, 1994 and 1993 . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations. . 5
Part II - Other Information . . . . . . . . . . . . . . . . . .12
<PAGE 3>
<TABLE>
IBM CREDIT CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands)
<CAPTION>
At At
June 30, December 31,
1994 1993
__________ ____________
<S> <C> <C>
ASSETS:
Cash and cash equivalents. . . . . . . . $ 532,522 $ 609,891
Net investment in capital leases . . . . 4,199,916 4,437,257
Equipment on operating leases, net . . . 1,587,343 1,753,121
Loans receivable . . . . . . . . . . . . 931,761 1,037,864
Working capital financing receivables. . 1,283,774 1,425,781
Investments and other assets . . . . . . 357,553 531,737
Due and deferred from receivable sales . 207,040 245,892
__________ ___________
Total Assets $9,099,909 $10,041,543
========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Liabilities:
Short-term debt. . . . . . . . . . . . . $3,937,781 $ 4,227,724
Short-term debt, IBM Corporation . . . . 300,000 -
Due to IBM Corporation and affiliates. . 826,952 1,259,547
Interest and other accruals. . . . . . . 400,761 312,464
Deferred income taxes. . . . . . . . . . 696,793 811,283
Long-term debt . . . . . . . . . . . . . 1,956,462 2,279,796
__________ ___________
Total liabilities. . . . . . . . . . . . 8,118,749 8,890,814
__________ ___________
Stockholder's equity:
Capital stock, par value $1 per share;
Shares authorized: 10,000;
Shares issued and outstanding: 750. . 438,811 438,811
Retained earnings. . . . . . . . . . . . 542,349 711,918
__________ ___________
Total stockholder's equity . . . . . . . 981,160 1,150,729
__________ ___________
Total Liabilities & Stockholder's Equity $9,099,909 $10,041,543
========== ===========
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
- 1 -
<PAGE 4>
<TABLE>
IBM CREDIT CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in thousands)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
________ ________ ________ ________
<S> <C> <C> <C> <C>
FINANCE AND OTHER INCOME:
Income from leases:
Capital leases . . . . . . $ 82,704 $116,711 $172,327 $241,761
Operating leases, net of
depreciation . . . . . . 35,161 35,547 73,949 70,553
________ ________ ________ ________
117,865 152,258 246,276 312,314
Income from loans . . . . . . 23,750 28,288 44,813 59,577
Income from working capital
financing . . . . . . . . . 29,690 23,869 60,178 46,849
Equipment sales . . . . . . . 161,320 150,109 311,850 314,855
Other income . . . . . . . . 50,395 28,096 80,037 54,682
________ ________ ________ ________
Total finance and other
income . . . . . . . . . 383,020 382,620 743,154 788,277
________ ________ ________ ________
COST AND EXPENSES:
Interest. . . . . . . . . . . 76,442 91,576 151,867 185,503
Cost of equipment sales . . . 145,440 134,655 283,526 282,798
Selling, general, and
administrative . . . . . . . 39,776 48,128 79,984 98,728
Restructuring charges . . . . - 12,000 - 12,000
Provision for receivable
losses . . . . . . . . . . . 11,924 15,183 20,928 34,823
________ ________ ________ ________
Total cost and expenses. . 273,582 301,542 536,305 613,852
________ ________ ________ ________
EARNINGS BEFORE INCOME TAXES. . 109,438 81,078 206,849 174,425
Provision for income taxes . . 43,068 30,488 81,418 65,584
________ ________ ________ ________
NET EARNINGS . . . . . . . . . $ 66,370 $ 50,590 $125,431 $108,841
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
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<PAGE 5>
<TABLE>
IBM CREDIT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30:
(Dollars in thousands) 1994 1993
<CAPTION> __________ ___________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings . . . . . . . . . . . . . . . . . $ 125,431 $ 108,841
Adjustments to net earnings:
Depreciation and amortization . . . . . . . 313,495 318,471
Provision for receivable losses . . . . . . 20,928 34,823
Change in deferred income taxes . . . . . . (114,490) 301,184
Change in interest and other accruals . . . 88,297 (9,762)
Gross profit on equipment sales . . . . . . (28,324) (32,057)
Gain on sale of IBM Credit Investment
Management Corporation . . . . . . . . . . (13,324) -
Restructuring charges . . . . . . . . . . . - 12,000
__________ __________
Cash provided by net earnings . . . . . . . . . 392,013 733,500
Proceeds from equipment sales. . . . . . . . . 311,850 314,855
Decrease in due to IBM Corporation and
affiliates . . . . . . . . . . . . . . . . . (432,595) (306,803)
Decrease in due and deferred from receivable
sales . . . . . . . . . . . . . . . . . . . . 38,852 -
__________ __________
Cash provided by operating activities 310,120 741,552
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in capital leases . . . . . . . . . (516,770) (617,272)
Collection of capital leases, net of income
earned. . . . . . . . . . . . . . . . . . . . 527,103 750,181
Investment in equipment on operating leases. . (186,063) (300,719)
Investment in loans receivable . . . . . . . . (161,692) (204,361)
Collection of loans receivable, net of interest
earned. . . . . . . . . . . . . . . . . . . . 238,947 361,669
Investment in working capital financing
receivables, net of cash collected. . . . . . 139,779 (109,952)
Collection of notes receivable from
affiliates, net of interest earned. . . . . . 111,787 -
Proceeds from sale of IBM Credit Investment
Management Corporation. . . . . . . . . . . . 14,000 -
Other changes, net . . . . . . . . . . . . . . 50,216 (26,720)
__________ __________
Cash provided by (used in) investing activities 217,307 (147,174)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt . . . 333,815 573,800
Repayment of debt:
Original maturities of one year or more. . . (584,205) (339,198)
Original maturities within one year, net
of debt issued . . . . . . . . . . . . . . (59,406) (547,872)
Cash dividends paid to IBM Corporation . . . . (295,000) (175,000)
__________ __________
Cash used in financing activities . . . . . . . (604,796) (488,270)
__________ __________
Change in cash and cash equivalents . . . . . . (77,369) 106,108
Cash and cash equivalents at January 1 . . . . 609,891 598,557
__________ __________
Cash and cash equivalents at June 30 . . . . . $ 532,522 $ 704,665
========== ==========
TOTAL CASH PROVIDED BEFORE DIVIDENDS . . . . . $ 217,631 $ 281,108
========== ==========
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
- 3 -
<PAGE 6>
IBM CREDIT CORPORATION
Notes to Consolidated Financial Statements
1. In the opinion of the management of IBM Credit Corporation (the
Company), all adjustments necessary for a fair statement of the
unaudited results for the three- and six-month periods have
been made. In addition to the adjustments of a normal
recurring nature, the Company recorded pre-tax restructuring charges
of $12.0 million in the second quarter of 1993 which are further
discussed in Management's Discussion and Analysis of Financial
Condition and Results of Operations starting on page 5.
2. The ratio of earnings to fixed charges, calculated in accordance
with applicable Securities and Exchange Commission requirements,
was 2.35 and 1.93 for the six months ended June 30, 1994
and 1993, respectively.
3. Sale of IBM Credit Investment Management Corporation:
During the second quarter of 1994, a Fleet Financial Group
subsidiary purchased 100 percent of the stock of IBM Credit
Investment Management Corporation (ICIM), a wholly owned
subsidiary of the Company. ICIM provided investment management
and administrative services for the IBM Mutual Funds. As a
result of this sale, the Company recognized a pre-tax gain of
$13.3 million, which is included in other income on the
Consolidated Statement of Earnings for the six months ended
June 30, 1994.
4. Related Party Transactions:
The Company provides capital equipment financing to International
Business Machines Corporation (IBM) and affiliated companies for
both IBM and non-IBM products. During the first six months
of 1994, the Company originated $82.3 million of such financing,
compared with $190.0 million for the first six months of 1993.
The assets financed are included primarily in the Company's
operating lease portfolio.
The Company borrowed $300.0 million from IBM in the first quarter
of 1994 at market terms and conditions. This debt was repaid on
July 21, 1994.
5. Subsequent Events:
In connection with the sale of ICIM described above in Note 3,
the IBM Money Market Account notes were redeemed in early
July, 1994. The IBM Money Market Account notes were a source of
short-term funding for the Company.
Effective August 3, 1994, the Company securitized and sold
$300.0 million of capital leases and loans. Adequate reserves
exist to cover potential losses. No material gain or loss
resulted from this transaction. The Company intends to use the
net proceeds from the sale of the financing receivables for
general corporate purposes, including the retirement of debt.
-4-
<PAGE 7>
Item 2.
IBM CREDIT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
For the six months ended June 30, 1994, the Company originated
financing for $4.3 billion of equipment, software and services.
Net earnings for the six months ended June 30, 1994 were $125.4
million, yielding an annualized return on average equity of
24.6 percent.
FINANCING ORIGINATED
The Company originated financing for $4.3 billion of equipment,
software and services in the first six months of 1994, compared
with $3.9 billion in the same 1993 period. In the first six months of
1994, compared with the same 1993 period, capital equipment financing
for end users decreased by 21 percent to $1,150.8 million. The decrease
in capital equipment financing originated is primarily the result of
reduced placements of IBM hardware, compared with the same 1993 period,
offset in part by an increase in the proportion of IBM products and
services financed by the Company. Working capital financing for
dealers and remarketers of information industry products increased
by 32 percent to $3,193.0 million. This growth reflects an
increase in the volumes of IBM's workstation products financed by
the Company throughout the first half of 1994, as well as increased
volumes of financing provided for non-IBM products for IBM-authorized
resellers.
At June 30, 1994, capital equipment financings for end users comprised
purchases of $684.9 million of information handling systems from IBM,
financing originated for installment receivables of $58.9 million,
other financing primarily for IBM software and services of $103.3
million, installment and lease financing for state and local government
customers of $105.4 million for the account of IBM, and other financing
of $198.3 million for equipment and services, as well as selected
complementary non-IBM equipment that meets IBM customers' total
solution requirements. The purchases of $684.9 million from IBM
consisted of $501.0 million for capital leases and $183.9 million for
operating leases.
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<PAGE 8>
REMARKETING ACTIVITIES
In addition to originating new financing, the Company remarkets used
IBM equipment. This equipment is primarily sourced from the termination
of lease transactions and is typically remarketed in cooperation with
the IBM sales force. The equipment is generally leased or sold to end
users. These transactions may be with existing lessees or, when
equipment is returned, with a new customer. At June 30, 1994, the
investment in remarketed equipment on capital and operating leases
totaled $587.0 million, a decrease of 5 percent from the 1993 year-end
investment of $619.8 million. Income from leases and gross profit on
equipment sales, net of write-downs in residual values of certain leased
equipment, are included in remarketing activities. For the three months
ended June 30, 1994, the remarketing contributions amounted to $40.0
million, an increase of 27 percent compared with $31.6 million for the
same 1993 period. The remarketing contributions amounted to $77.2
million for the first six months of 1994, an increase of 24 percent
compared with $62.4 million for the same 1993 period.
ASSETS
Total assets decreased to $9.1 billion at June 30, 1994, compared with
$10.0 billion at December 31, 1993. This decrease is primarily the
result of cash collections on capital lease investments, loans and
working capital financing receivables exceeding financings originated
during the first half of 1994.
Approximately 80 percent of the Company's total assets at June 30, 1994
related to the financing of IBM products and services.
LIABILITIES AND STOCKHOLDER'S EQUITY
The assets of the business were financed with $6,194.2 million
of debt at June 30, 1994. Total short-term and long-term debt
decreased by $313.3 million, from $6,507.5 million at
December 31, 1993. This decrease was primarily the result of
declines in IBM Money Market Account notes of $66.4 million
and long-term debt of $323.3 million, as well as a matured
$300.0 million bond, offset by increases in commercial paper
outstanding of $35.7 million, floating and fixed medium-term
notes of $40.7 million and short-term debt of $300.0 million.
The $300.0 million of short-term debt, payable to IBM at market
terms and conditions, was repaid on July 21, 1994.
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<PAGE 9>
The Company has available $1.3 billion of a shelf registration with
the Securities and Exchange Commission. This shelf registration allows
the Company rapid access to domestic financial markets. In addition,
a subsidiary of the Company has available $450.0 million of a separate
shelf registration for asset backed securities. The Company also has
a commercial paper program and a medium-term note program. As
described in Note 5 of Notes to Consolidated Financial Statements,
the Company redeemed the IBM Money Market Account notes in early
July, 1994. The Company is an authorized borrower of up to $1.6 billion
under a $10.0 billion IBM Global Credit Facility and has a liquidity
agreement with IBM for $500.0 million. The Company has no borrowings
outstanding under the credit facility or the liquidity agreement.
The Company also has the option, as approved by the Board of Directors
on July 29, 1993, to sell, assign, pledge or transfer assets to third
parties through December 31, 1994. The Company has $2.3 billion
remaining from the Board of Directors' initial approval. As described
in Note 5 of Notes to Consolidated Financial Statements, the Company
securitized and sold $300.0 million of financing receivables, effective
August 3, 1994. These financing sources, along with the Company's
internally generated cash and medium-term note and commercial paper
programs, provide flexibility to the Company to fund its lease and loan
portfolio and working capital requirements and to service debt.
The Company uses derivative products solely to hedge against interest
rate or currency risks associated with funding its business.
The Company routinely evaluates existing and potential counterparty
credit exposures associated with such derivative transactions to
ensure that these exposures remain within credit guidelines.
Due to IBM Corporation and affiliates decreased by $432.5 million
to $827.0 million at June 30, 1994, from $1,259.5 million at
December 31, 1993. This reduction was primarily attributable to
lower volume of capital equipment purchases from IBM in the second
quarter of 1994, compared with the fourth quarter of 1993, and the
payment of $294.0 million to IBM for a current tax liability in the
first half of 1994. Due to IBM Corporation and affiliates represents
trade payables arising from purchases of equipment for term leases
and installment receivables, working capital financing receivables
for dealers and remarketers, and software license fees, with payment
terms comparable to those offered to other IBM customers. Also
included in due to IBM Corporation and affiliates are income taxes
currently payable under the intercompany tax allocation agreement.
Total stockholder's equity at June 30, 1994 was $981.2 million,
down $169.6 million from year-end 1993. The decline in stockholder's
equity reflects the payment of $295.0 million in dividends to IBM
in the first half of 1994, offset by net earnings of $125.4 million
for the first half of 1994.
At June 30, 1994, the Company's debt to equity ratio was 6.3:1,
compared with 5.7:1 at year-end 1993, and 6.3:1 at June 30, 1993.
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<PAGE 10>
TOTAL CASH PROVIDED BEFORE DIVIDENDS
Total cash provided before dividends was $217.6 million for the six
months ended June 30, 1994, compared with $281.1 million for the same
1993 period. Total cash provided before dividends reflects $92.5
million of cash used in investing and financing activities before
dividends, offset by $310.1 million of cash provided by operating
activities for the first half of 1994.
Cash and cash equivalents at June 30, 1994 totaled $532.5 million, a
decrease of $77.4 million compared with the balance at
December 31, 1993.
INCOME FROM LEASES
Income from leases decreased by 23 percent to $117.9 million
for the three months ended June 30, 1994, from $152.3 million
for the same 1993 period; for the six months ended June 30, 1994,
income from leases decreased by 21 percent to $246.3 million,
from $312.3 million for the same 1993 period. The decline was
primarily the result of the securitization and sale of financing
receivables during the fourth quarter of 1993 and a decrease in
capital equipment financing originated during 1993 and the first
six months of 1994.
Income from leases includes lease income resulting from remarketing
transactions. Lease income from remarketing transactions amounted
to $24.1 million and $48.9 million for the three- and six-month
periods of 1994, an increase of 9 percent and 13 percent from the
comparable 1993 periods, respectively.
On a periodic basis, the Company reassesses the future residual
values of its portfolio of leases. In accordance with generally
accepted accounting principles, anticipated increases in specific
future residual values may not be recognized before realization and
are thus a source of potential future profits. Anticipated decreases
in specific future residual values, considered to be other than
temporary, must be recognized currently.
A review of the Company's $642.5 million unguaranteed residual value
portfolio at June 30, 1994, indicated that the overall estimated future
value of the portfolio continues to be greater than the value currently
recorded. No material declines in the future residual values of leased
equipment were identified, nor reductions recorded, in the first half
of 1994. The Company recorded a $6.0 million reduction to income from
leases during the second quarter of 1993, for a total reduction of
$13.0 million during the first half of 1993.
INCOME FROM LOANS
Income from loans decreased by 16 percent to $23.8 million for the
three months ended June 30, 1994; for the first half of 1994, income
from loans decreased 25 percent to $44.8 million, compared with the
respective 1993 period. The decline was primarily the result of the
securitization and sale of financing receivables during the fourth
quarter of 1993 and a decrease in financing originated during 1993
and the first half of 1994.
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<PAGE 11>
INCOME FROM WORKING CAPITAL FINANCING
Income from working capital financing increased 24 percent to $29.7
million for the three months ended June 30, 1994; for the first half
of 1994, income from working capital financing increased 28 percent
to $60.2 million, compared with the respective 1993 periods. These
increases were primarily due to generally higher interest rates charged
and growth in the average working capital financing receivables
outstanding during the first six months of 1994, compared with
the same 1993 period, partially offset by the securitization and sale
of such receivables during the fourth quarter of 1993. The growth in
average working capital financing receivables outstanding primarily
reflects increased originations as discussed in the "Financing
Originated" section of Management's Discussion and Analysis of
Financial Condition and Results of Operations.
EQUIPMENT SALES
Equipment sales amounted to $161.3 million for the second quarter of
1994, compared with $150.1 million for the same period in 1993; for
the first six months of 1994, equipment sales amounted to $311.9
million, compared with $314.9 million for the comparable 1993 period.
Included in these amounts is revenue from outright sales and
sales-type leases of Company-owned equipment with either existing
lessees or, when equipment is returned, with a new customer.
Gross profit on equipment sales for the second quarter of 1994 was
$15.9 million, an increase of 3 percent compared with the same
1993 period. For the first six months of 1994, the gross profit on
equipment sales decreased 12 percent to $28.3 million compared with
$32.1 million for the same 1993 period. The gross profit margin for
the second quarter of 1994 was 9.8 percent, down from 10.3 percent
for the second quarter of 1993; for the first six months of 1994,
the gross profit margin decreased to 9.1 percent, compared with 10.2
percent for the same period in 1993.
OTHER INCOME
Other income increased by 79 percent to $50.4 million for the three
months ended June 30, 1994; for the six months ended June 30, 1994,
other income increased 46 percent to $80.0 million. The increase from
1993 primarily reflects the sale of IBM Credit Investment Management
Corporation during the second quarter of 1994 for a pre-tax gain of
$13.3 million (see Note 3 of Notes to Consolidated Financial Statements)
and fees recognized for the servicing of financing receivables
securitized and sold during the fourth quarter of 1993.
Also included in other income is interest income earned on cash and
cash equivalents and notes, as well as fees for managing IBM's state and
local government installment and lease financing receivables portfolio.
-9-
<PAGE 12>
TOTAL FINANCE AND OTHER INCOME
For the three months ended June 30, 1994, total finance and other
income remained essentially flat at $383.0 million, and the
six-month results showed a decrease of 6 percent to $743.2 million,
compared with the same 1993 periods. The decline was largely due to
reductions in income from leases and income from loans, partially offset
by increases in income from working capital financing and other income.
INTEREST EXPENSE
Interest expense declined due to reductions in the Company's average
outstanding debt balances and the average cost of debt. Interest
expense decreased by 17 percent to $76.4 million for the three
months ended June 30, 1994, compared with $91.6 million for the
same period in 1993. Interest expense decreased 18 percent to
$151.9 million for the six months ended June 30, 1994, from $185.5
million for the same period in 1993. The Company's year-to-date
average cost of debt through June 30, 1994, decreased to 4.76
percent from 5.09 percent for the same period in 1993.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses were $39.8 million for
the second quarter of 1994, a decrease of 17 percent compared with the
same 1993 period. For the first six months of 1994, selling, general,
and administrative expenses decreased to $80.0 million from $98.7
million for the same period in 1993. The decrease is a result of
the continuing efforts to manage expenses and reflects savings realized
from the Company's actions in the second quarter of 1993 to reduce
its infrastructure and bring its resources in line with current market
conditions.
PROVISION FOR RECEIVABLE LOSSES
The Company's portfolio of capital equipment leases and loans is
predominantly with investment grade customers. The Company
generally takes a security interest in any underlying equipment
financed. The portfolio is diversified by geography, industry
and individual unaffiliated customer. Working capital financing
receivables are generally secured by the underlying inventory and
accounts receivable financed. The provision for receivable losses
decreased to $11.9 million for the quarter ended June 30, 1994,
compared with $15.2 million for the same period in 1993. For the
six months ended June 30, 1994, the provision for receivable losses
decreased to $20.9 million, compared with $34.8 million for the
comparable period in 1993. These decreases reflect the reduction
in the amount of capital equipment financed for the first half
of 1994 and an improved economic environment.
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<PAGE 13>
NET EARNINGS
Net earnings increased to $66.4 million for the second
quarter of 1994, compared with $50.6 million for the same
period in 1993.
Net earnings for the six months ended June 30, 1994 were
$125.4 million, an increase of 15 percent from the same period
in 1993.
The Company's expanding working capital financing business,
large and profitable capital equipment remarketing operations,
credit risk management, lower average cost of borrowing and
the containment of operating expenses contributed to the favorable
performance during the second quarter and first half of 1994.
In addition, as a result of the sale of IBM Credit Investment
Management Corporation, the Company recognized a one-time pre-tax
gain of $13.3 million which contributed to a strong performance
during the second quarter of 1994.
To recognize the cost of the Company's actions to reduce its
infrastructure and bring its resources in line with current market
conditions, pre-tax restructuring charges of $12.0 million were recorded
in the second quarter of 1993.
RETURN ON AVERAGE EQUITY
The results for the first six months of 1994 yielded an
annualized return on average equity of 24.6 percent, compared
with 18.7 percent for the comparable 1993 period.
NEW ACCOUNTING STANDARD
In May 1993, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards 115,
"Accounting for Certain Investments in Debt and Equity
Securities," which prescribes the accounting for debt and
equity securities held as assets. This statement is effective
for fiscal years beginning after December 15, 1993.
The Company implemented this statement, effective January 1, 1994.
The implementation had no material impact to the Company's
financial position and results of operations.
CLOSING DISCUSSION
The Company's resources continue to be sufficient to enable
it to carry out its mission of supporting customers in their
acquisition of IBM products and services by providing competitive
financing, and contributing to the growth and stability of IBM
earnings.
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<PAGE 14>
[SIGNATURE]
Part II - Other Information
___________________________
Item 1. Legal Proceedings
__________________________
None material.
Item 6(b). Reports on Form 8-K
_______________________________
No reports on Form 8-K have been filed during the first six months
of 1994.
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.
IBM CREDIT CORPORATION
______________________
(Registrant)
Date: August 11, 1994 By: A. R. Schleicher
_________________ ______________________
A. R. Schleicher
Vice President &
Assistant General Manager,
Finance & Risk Management
and Chief Financial Officer
-12-
