SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994 OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-18263
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Ford Holdings, Inc.
(Exact name of registrant as specified in its charter)
Incorporated in Delaware 38-2890269
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
The American Road, Dearborn, Michigan 48121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
Indicate by checkmark 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 May 13, 1994, the Registrant had outstanding 1,099 shares
of Common Stock, all of which were held, directly or indirectly,
by Ford Motor Company.
Page 1 of 11
Exhibit index located on sequential page number 9
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FORD HOLDINGS, INC. AND SUBSIDIARIES
Part I. Financial Information
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Item 1. Financial Statements - The financial data presented herein are
unaudited, but in the opinion of management reflect those adjustments
necessary for a fair presentation of such information. Results for
interim periods should not be considered indicative of results for a
full year. Reference should be made to the financial statements
contained in the Registrant's Annual Report on Form 10-K (the "10-K
Report") for the year ended December 31, 1993.
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Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
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For the Periods Ended March 31, 1994 and 1993
(in millions)
First Quarter
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1994 1993
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(unaudited)
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Revenues
Financing revenues $1,042 $ 915
Insurance premiums earned 174 171
Investment and other income 155 173
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Total revenues 1,371 1,259
Expenses
Interest expense 451 429
Operating and other expenses 364 311
Provision for credit losses 130 120
Insurance claims 111 132
Depreciation 48 48
Interest credited on annuity contracts 23 13
Amortization of policy acquisition costs 22 19
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Total expenses 1,149 1,072
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Income before income taxes 222 187
Provision for income taxes 83 68
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Income before minority interests 139 119
Minority interests in net (loss)/
income of subsidiaries (1) 1
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Net income $ 140 $ 118
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The accompanying note is part of the financial statements.
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Ford Holdings, Inc. and Subsidiaries
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CONSOLIDATED BALANCE SHEET
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(in millions)
March 31, Dec. 31,
1994 1993
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(unaudited)
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ASSETS
Cash and cash equivalents $ 840 $ 823
Investments in securities (Note 1) 4,277 4,277
Finance receivables, net 25,117 24,568
Accounts and notes receivable 553 607
Receivables from Ford and affiliated companies 262 292
Investments in direct financing leases, net 4,136 3,974
Investments in operating leases, net 1,471 1,441
Goodwill 1,815 1,830
Deferred policy acquisition costs 194 178
Other assets 591 609
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Total assets $39,256 $38,599
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 566 $ 622
Payables to Ford and affiliated companies 279 324
Unpaid insurance claims 145 136
Income taxes currently payable 129 79
Annuity contracts 1,783 1,598
Unearned insurance premiums 861 865
Debt 30,067 29,570
Other liabilities and deferred income 1,058 1,114
Minority interests in net assets of subsidiaries 17 -
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Total liabilities 34,905 34,308
Stockholders' equity
Preferred Stock, $1 par value 1,458 1,458
Common Stock, $1 par value,
authorized - 10,000 shares;
issued and outstanding - 1,099 shares * *
Paid-in surplus 976 976
Unrealized (loss)/gain on marketable
securities, net of taxes (17) 40
Foreign currency translation adjustments (4) (3)
Earnings retained for use in business 1,938 1,820
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Total stockholders' equity 4,351 4,291
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Total liabilities and stockholders' equity $39,256 $38,599
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*Less than $50,000
The accompanying note is part of the financial statements.
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Ford Holdings, Inc. and Subsidiaries
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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For the Periods Ended March 31, 1994 and 1993
(in millions)
First Quarter
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1994 1993
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(unaudited)
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Cash and cash equivalents at January 1 $ 823 $ 408
Cash flows from operating activities
before securities trading 331 636
Net sales of trading securities (Note 1) 25 -
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Net cash flows from operating activities 356 636
Cash flows from investing activities
Acquisitions of finance receivables (6,163) (4,522)
Collections of finance receivables 5,226 3,952
Purchases of securities (Note 1) (3,407) (3,556)
Sales of securities (Note 1) 3,290 3,183
Recovery of equipment costs and residual interests 176 183
Cost of equipment and lease receivables acquired (187) (398)
Other 44 51
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Net cash used in investing activities (1,021) (1,107)
Cash flows from financing activities
Issuance of Preferred Stock 0 173
Proceeds from issuance of long-term debt 852 1,334
Principal payments on long-term debt (670) (504)
Changes in short-term debt 307 (382)
Dividends paid to shareholders (21) (14)
Receipts from annuity contracts, net 185 221
Other 29 11
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Net cash provided by financing activities 682 839
Net increase in cash and cash equivalents 17 368
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Cash and cash equivalents at March 31 $ 840 $ 776
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The accompanying note is part of the financial statements.
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Ford Holdings, Inc. and Subsidiaries
NOTE TO FINANCIAL STATEMENTS
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NOTE 1. New Accounting Standard
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Effective January 1, 1994, Ford Holdings, Inc. and Subsidiaries
("the company") adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". Concurrent with the adoption, the
company classified most of its investments in securities at March
31, 1994 as available-for-sale or trading, and adjusted the
recorded value to fair value; the effect on the company's
financial statements was not material. In addition, the
purchases and sales of trading securities are included in cash
flows from operating activities. Financial statements for the
prior period were not restated.
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Coopers certified public accountants
& Lybrand
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Holdings, Inc.
We have reviewed the consolidated balance sheet of Ford Holdings,
Inc. and Subsidiaries at March 31, 1994 and the related
consolidated statement of income and condensed consolidated statement
of cash flows for the periods set forth in Form 10-Q for the quarter
ended March 31, 1994. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet at December
31, 1993 and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated February 1, 1994, we
expressed an unqualified opinion on those consolidated financial
statements.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
April 27, 1994
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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OVERVIEW
The Company's net income in the first quarter of 1994 was $140
million, up $22 million from the $118 million earned in the first
quarter of 1993. The increase resulted primarily from improved
earnings at The Associates and USL Capital, offset partially
by lower earnings at American Road.
Consolidated results reflect the acquisition-related costs of
purchasing The Associates, including interest expense, goodwill,
and adjustments to record the fair value of net assets acquired.
These adjustments will vary over time as the acquired assets and
liabilities liquidate.
The consolidated financial statements on pages 2 through 5
inclusive should be read as an integral part of this review.
RESULTS OF OPERATIONS: FIRST QUARTER 1994 COMPARED WITH FIRST
QUARTER 1993
The Associates earned $128 million in the first quarter of 1994,
up $17 million from the first quarter of 1993. The improvement
resulted primarily from higher levels of earning assets and
improved net interest margins.
American Road earned $17 million in the first quarter of 1994,
compared with $24 million in the first quarter of 1993. The
decrease resulted primarily from lower investment income,
partially offset by improved underwriting experience in extended
service plan, floorplan and dealer plan products. Premiums
written by American Road were $74 million in the first quarter of
1994, compared with $62 million a year ago. The increase in premiums
written reflects higher vehicle sales and higher premium rates for
floorplan insurance products.
USL Capital earned $21 million in the first quarter of 1994,
compared with $17 million a year ago. The improvement resulted
primarily from higher earning assets and continued operating cost
reductions.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1994, the Company's cash and
investments in securities increased by $17 million to $5.1 billion,
receivables and lease investments increased by $657 million to
$31.5 billion, and total debt increased by $497 million to $30.1 billion.
At March 31, 1994, Ford Holdings and its subsidiaries had
approximately $9.5 billion of support facilities, all of which
were contractually committed; less than 2% of these facilities
were in use at that date.
OTHER FINANCIAL INFORMATION
Coopers & Lybrand, the Company's independent public accountants,
performed a limited review of the financial data presented on
pages 2 through 5 inclusive. The review was performed in
accordance with standards for such reviews established by the
American Institute of Certified Public Accountants. The review
did not constitute an audit; accordingly, Coopers & Lybrand did
not express an opinion on the aforementioned data. The financial
data include any material adjustments or disclosures proposed by
Coopers & Lybrand as a result of their review.
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Part II. Other Information
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Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
Please refer to the Exhibit Index on page 9.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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.
FORD HOLDINGS, INC.
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(Registrant)
Date: May 13, 1994 By: /s/ Terrence F. Marrs
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Terrence F. Marrs
Vice President - Controller
(principal Accounting officer)
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EXHIBIT INDEX
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Sequential
Page Number
Designation Description at Which Found
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Exhibit 12 Ford Holdings, Inc. and 10
Subsidiaries Calculation of
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends
Exhibit 15 Letter of Coopers & Lybrand, 11
Independent Public Accountants,
dated May 11, 1994, relating
to Financial Information
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Exhibit 12
Ford Holdings, Inc. and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
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(in millions)
First Quarter
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1994 1993
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Earnings (a)
Income before income taxes $222 $187
Fixed charges 493 450
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Total earnings before fixed charges $715 $637
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Combined Fixed Charges and
Preferred Stock Dividends (a)
Interest expense $476 $430
Interest portion of rental expense 6 6
Preferred stock dividend requirements (b) 35 23
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Total combined fixed charges and preferred
stock dividends $517 $459
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Ratio of earnings to combined fixed
charges and preferred stock dividends 1.4 1.4
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(a) For purposes of computing the ratio of earnings to combined
fixed charges and preferred stock dividends, "earnings"
represent income before income taxes plus fixed charges.
"Combined fixed charges and preferred stock dividends"
represent interest expense, amortization of debt expense
and discount or premium relating to any indebtedness, a
portion of rentals representative of an implicit interest
factor for such rentals, and dividends paid on preferred stock.
(b) Preferred stock dividend requirements have been increased to
an amount representing the pre-tax earnings which would be
required to cover such dividend requirements based on the
effective income tax rates for the respective periods.
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Coopers certified public accountants
& Lybrand
Exhibit 15
Ford Holdings, Inc.
The American Road
Dearborn, Michigan
Re: Ford Holdings, Inc. Registration Statement Nos. 33-48743,
33-60232, 33-63116 and 33-50419 on Form S-3 and Ford
Holdings, Inc. and Ford Motor Company Registration
Statement Nos. 33-32641 and 33-55474 on Form S-3
We are aware that our report dated April 27, 1994 accompanying
the unaudited interim financial information of Ford Holdings,
Inc. for the periods ended March 31, 1994 and 1993 and included
in Ford Holdings, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 will be incorporated by reference in
the Registration Statements. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a
part of the Registration Statements prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
May 11, 1994
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