SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1993 OR
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from to
Commission file number 0-18263
FORD HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 38-2890269
(State of incorporation) (I.R.S. Employer Identification No.)
The American Road, Dearborn, Michigan 48121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 313-322-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------------------------ ----------------------------
[S] [C]
Depositary Shares, each representing New York Stock Exchange
1/4,000 of a share of Series A Cumulative
Preferred Stock, as described below
Depositary Shares, each representing New York Stock Exchange
1/4,000 of a share of Series B Cumulative
Preferred Stock, as described below
Depositary Shares, each representing New York Stock Exchange
1/4,000 of a share of Series C Cumulative
Preferred Stock, as described below
[Cover page 1 of 2 pages]
<PAGE>
Securities registered pursuant to Section 12(g) of the Act:
Series A Cumulative Preferred Stock, par value $1.00 per share
(with an annual dividend rate of $8,000 per share
and a liquidation preference of $100,000 per share)
(Title of Class)
Series B Cumulative Preferred Stock, par value $1.00 per share
(with an annual dividend rate of $8,000 per share
and a liquidation preference of $100,000 per share)
(Title of Class)
Series C Cumulative Preferred Stock, par value $1.00 per share
(with an annual dividend rate of $7,120 per share
and a liquidation preference of $100,000 per share)
(Title of Class)
------------------
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
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
As of March 1, 1994, the Registrant had outstanding 1,099
shares of Common Stock, all of which were held, directly or
indirectly, by Ford Motor Company. The Registrant also had
outstanding 8,000 shares of Flexible Rate Auction Preferred Stock
(Exchange) having an aggregate liquidation preference of $800
million; 2,852.5882 shares of Series A Cumulative Preferred Stock
having an aggregate liquidation preference of $285 million,
1,729.2907 shares of Series B Cumulative Preferred Stock
having an aggregate liquidation preference of $173
million and 2,000.3835 shares of Series C Cumulative Preferred
Stock having an aggregate liquidation preference of
$200 million. None of the shares of preferred stock of the
Registrant is held, directly or indirectly, by Ford Motor Company.
[Cover page 2 of 2 pages]
<PAGE>
PART I
Item 1. Business
- -----------------
GENERAL
Ford Holdings, Inc. (the "Company" or "Ford Holdings") was
incorporated on September 1, 1989 for the principal purpose of
acquiring, owning and managing certain assets of Ford Motor Company
("Ford"). The Company's primary activities consist of consumer and
commercial financing operations, insurance underwriting and
equipment leasing. These activities are conducted through the
Company's wholly owned subsidiaries, Associates First Capital
Corporation and its subsidiaries ("The Associates"), The American
Road Insurance Company and its subsidiaries ("American Road"), USL
Capital Corporation (formerly United States Leasing International,
Inc.) and its subsidiaries ("USL Capital"), Ford Motor Land
Development Corporation and its subsidiaries ("Ford Land") and Ford
Leasing Development Company and its subsidiaries ("Ford Leasing").
The Associates, formerly a subsidiary of Paramount
Communications Inc., was acquired by the Company on October 31,
1989. The Associates' primary business activities are consumer
finance, commercial finance and insurance underwriting. The
Associates conducts its operations primarily through its principal
operating subsidiary, Associates Corporation of North America
("ACONA").
American Road is principally engaged in underwriting
insurance with respect to coverages for physical damage on vehicles
financed through Ford Motor Credit Company ("Ford Credit"), a
wholly owned subsidiary of Ford, credit life and credit disability
insurance in connection with retail vehicle financing, and extended
service plan products covering vehicle repairs on retail contracts.
In addition, Ford Life Insurance Company ("Ford Life"), a wholly
owned subsidiary of American Road, offers single premium deferred
annuities.
The principal business of USL Capital is the leasing and
financing of office and other business and commercial equipment,
the leasing and management of rail cars and commercial auto fleets,
the leasing and financing of commercial aircraft, industrial and
energy facilities, and equipment financing for state and local
governments.
Ford Land's principal business is real estate development and
Ford Leasing's principal business is the leasing of dealership
facilities to franchised Ford vehicle dealers.
All the outstanding Common Stock of the Company, representing
75% of the combined voting power of all classes of capital stock of
the Company, is owned, directly or indirectly, by Ford. The
balance of the capital stock, consisting of shares of Flexible Rate
Auction Preferred Stock (Exchange), Series A Cumulative Preferred
Stock, Series B Cumulative Preferred Stock and Series C Cumulative
Preferred Stock, accounts for the remaining 25% of the total voting
power; none of the preferred stock is held, directly or indirectly,
by Ford.
The principal executive offices of the Company are located at
The American Road, Dearborn, Michigan 48121, and its telephone
number is (313) 322-3000.
<PAGE>
Item 1. Business (Continued)
- -----------------------------
BUSINESS OF THE COMPANY
As indicated above, the Company is a holding company and
conducts its operations through its subsidiaries. The Company,
through its subsidiaries, operates in three business segments:
consumer finance, commercial finance and insurance underwriting.
The consumer finance segment (which includes certain operations of
The Associates) is principally engaged in making and investing in
residential real estate-secured receivables, making secured and
unsecured installment loans to individuals, purchasing consumer
retail installment obligations, investing in credit card
receivables, financing manufactured housing purchases and providing
other consumer financial services. The commercial finance segment
(which includes the operations of USL Capital, Ford Land and Ford
Leasing and certain operations of The Associates) is principally
engaged in financing sales of transportation and industrial
equipment, real estate development and leasing, and providing other
financial services, including automobile club and relocation
services. The insurance segment (which includes the operations of
American Road and certain operations of The Associates) is engaged
in, among other things, underwriting property, casualty, credit
life and disability insurance products, and offering single premium
deferred annuities.
The business of each of the Company's principal subsidiaries
is presented separately below. Segment information for the Company
is set forth in Note 18 of Notes to Financial Statements, included
on pages FH-19 and FH-20 of this Report.
THE ASSOCIATES
The Associates' foreign subsidiaries and Associates Federal
Savings and Loan Association (sometimes referred to herein,
collectively, as the "transferred operations") were transferred out
of The Associates prior to, and not included in, the acquisition of
The Associates by the Company. To provide comparative data for
periods prior to the transfer of these operations, certain
information included under this Item 1. "Business-The Associates"
has been reclassified with respect to the transferred operations.
The Associates has approximately 1,390 branch offices in the
United States and, as of December 31, 1993, employed approximately
12,400 persons. The Associates' primary business activities are
consumer finance, commercial finance and insurance underwriting.
The Associates conducts its operations primarily through ACONA, its
principal operating subsidiary.
-2-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
Selected Financial Data. The following table sets forth
selected financial information of The Associates (in millions):
<TABLE>
<CAPTION>
Year Ended or at December 31
---------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Income(a)
Revenues $ 3,706 $ 3,347 $ 3,187 $ 2,726 $ 2,292
Interest expense 1,340 1,281 1,348 1,217 1,066
Provision for losses on
finance receivables 477 513 434 310 229
Operating income 752 606 540 448 368
Net income 470 383(b) 347 288 279(c)
Consolidated Balance Sheet
Finance receivables
Consumer finance $20,496 $17,943 $15,335 $10,137 $ 7,943
Commercial finance 9,077 7,672 7,210 6,310 6,144
------- ------- ------- ------- -------
Total receivables 29,573 25,615 22,545 16,447 14,087
Unearned finance income 3,208 2,781 2,396 1,574 1,395
Allowance for losses on
finance receivables 809 699 591 450 390
Total assets 27,696 24,034 21,551 16,881 15,057
Total debt 23,809 20,790 18,551 14,579 12,861
Stockholder's equity 2,506 2,062 1,868 1,375 1,232
</TABLE>
(a) Excludes the results of the transferred operations, except as
noted; the Consolidated Statement of Income for the year ended
December 31, 1989 is unaudited.
(b) Includes net charge of $10 million representing the cumulative
effects of changes in accounting principles.
(c) Includes the after-tax operating results of the transferred
operations through October 30, 1989.
<PAGE>
Item 1. Business (Continued)
Segment Data. The following table sets forth information by
business segment of The Associates for the years ended December 31
(in millions):
<TABLE>
<CAPTION>
Business Segment
--------------------
Consumer Commercial
Finance Finance(c) Insurance Other Eliminations Consolidated
------- ---------- --------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1993
Revenues other than
intersegment $ 2,444 $ 991 $281 $ 15 $ (25) $ 3,706
Intersegment (a) 106 20 (126)
------- ------ ---- ---- ----- -------
Total revenues $ 2,550 $1,011 $281 $ 15 $(151) $ 3,706
======= ====== ==== ==== ===== =======
Operating income (b) $ 565 $ 277 $(90) $ 752
======= ====== ==== =======
Assets at December 31 $16,894 $9,851 $877 $ 74 $27,696
======= ====== ==== ==== =======
1992
Revenues other than
intersegment $ 2,200 $ 902 $252 $ 14 $( 21) $ 3,347
Intersegment (a) 95 33 (128)
------- ------ ---- ---- ----- -------
Total revenues $ 2,295 $ 935 $252 $ 14 $(149) $ 3,347
======= ====== ==== ==== ===== =======
Operating income (b) $ 450 $ 249 $(93) $ 606
======= ====== ==== =======
Assets at December 31 $15,109 $8,129 $736 $ 60 $24,034
======= ====== ==== ==== =======
1991
Revenues other than
intersegment $ 2,089 $ 863 $256 $ 30 $( 51) $ 3,187
Intersegment (a) 83 36 (119)
------- ------ ---- ---- ----- -------
Total revenues $ 2,172 $ 899 $256 $ 30 $(170) $ 3,187
======= ====== ==== ==== ===== =======
Operating income (b) $ 389 $ 240 $(89) $ 540
======= ====== ==== =======
Assets at December 31 $13,500 $7,319 $669 $ 63 $21,551
======= ====== ==== ==== =======
- -----------------
(a) Represents the gross profit of the insurance operation which is
attributable to the business segment which produced the
business.
(b) Operating income is earnings before provision for income taxes
and cumulative effects of changes in accounting principles.
Operating income produced by the finance operations from the
sale of the insurance operation's products is included in the
respective finance operation.
(c) Includes information pertaining to the financing of
manufactured housing purchases which are managed by the
commercial operation.
-4-
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Consumer Finance. Consumer finance consists of making and
investing in residential real estate-secured loans to individuals,
making secured and unsecured installment loans to individuals,
purchasing consumer retail installment obligations, investing in
credit card receivables, financing manufactured housing purchases,
and providing other consumer financial services. In addition, The
Associates offers insurance to its consumer finance customers.
Loans made to individuals are secured by mortgages on real
property, by liens on personal property (the realizable value of
which may be less than the amount of the loans secured) or are
unsecured. At December 31, 1993, 74% of the gross outstanding
balance of residential real estate-secured receivables was secured
by first mortgages. At December 31, 1993, the gross consumer
finance receivables included credit card receivables ($3.3 billion)
owned or originated by Associates National Bank (Delaware), a
subsidiary of The Associates.
The interest rates currently charged on all types of consumer
finance receivables average approximately 16% simple interest per
annum. At December 31, 1993, the interest rates charged on
approximately 38% of the net consumer finance receivables
outstanding varied during the term of the contract at specified
intervals in relation to a base rate established at the time the
loan was made. State laws establish maximum allowable finance
charges for certain consumer loans; approximately 91% of the
outstanding gross consumer finance receivables were either not
subject to such state maximums, or if subject, such maximum finance
charges did not, in most cases, materially restrict the interest
rates charged. Original maturities of residential real
estate-secured receivables average 147 months and original
maturities of other consumer receivables, excluding credit card and
manufactured housing receivables, average 35 months. Original
maturities of manufactured housing receivables average 240 months.
Commercial Finance. Commercial finance consists of the
purchase of time sales obligations and leases, direct leases and
secured direct loans, and sales of other financial services,
including automobile club, mortgage banking and relocation
services. In addition, The Associates offers insurance to its
commercial finance customers.
The types of equipment financed or leased are heavy-duty
trucks, truck trailers, autos and other transportation equipment,
construction equipment, machinery used in various manufacturing and
distribution processes and communications equipment. Except for
lease transactions in which The Associates owns the equipment,
liens on the equipment financed secure the receivables. In many
cases, The Associates obtains the endorsement or a full or limited
repurchase agreement of the seller or the manufacturer of the
goods, and in some cases, a portion of the purchase price of the
installment obligations is withheld as a reserve.
At December 31, 1993, the interest rates charged on
approximately 13% of the net commercial finance receivables were
established to vary during the term of the contract in relation to
a base rate. Commercial finance receivables are generally not
subject to maximum finance charges established by state law and,
where such restrictions apply, at the present time, they do not
materially restrict the interest rates charged. The interest rates
currently charged on all
-5-
<PAGE>
Item 1. Business (Continued)
- ---------------------------
types of commercial finance receivables average approximately 9%
simple interest per annum. Original maturities of the commercial
receivables average 36 months.
Volume of Financing. The following tables set forth the
gross volume of finance business by major categories and average
size and number of accounts based on gross finance receivables
volume (excluding wholesale receivables) (dollar amounts in
millions):
</TABLE>
<TABLE>
<CAPTION>
Gross Volume of Finance Receivables Purchased and Loans Made
------------------------------------------------------------
Consumer Finance Commercial Finance
----------------------------------- ------------------
Installment,
Residential Manf'd. Housing Heavy-Duty Truck
Real Estate- and Credit and Industrial
Secured Card Equipment Total
Receivables Receivables Receivables Gross
(a) (a) (b) Volume
----------- ------------- --------------- ------
<S> <C> <C> <C> <C>
Year Ended
December 31
1993 $4,518 $9,382 $9,955 $23,855
19% 39% 42% 100%
1992 $4,480 $6,940 $7,329 $18,749
24% 37% 39% 100%
1991 $5,194 $6,672 $6,697 $18,563
28% 36% 36% 100%
1990 $1,946 $5,153 $5,904 $13,003
15% 40% 45% 100%
1989 $1,713 $4,024 $6,134 $11,871
14% 34% 52% 100%
</TABLE>
- -----------------
(a) Included in 1993 are $182 million of gross residential real
estate-secured and installment finance receivables
attributable to the Allied Finance Company acquisition and
$216 million of credit card receivables purchased from Great
Western Financial Corporation. Included in 1992 are $305
million of gross residential real estate-secured and
installment finance receivables purchased from Signal
Financial Corporation and $795 million of gross residential
real estate-secured and installment finance receivables
attributable to the acquisition of First Family Financial
Services H.C., Inc. Included in 1991 are $2.7 billion of
gross residential real estate-secured finance receivables and
contracts for the purchase of manufactured housing purchased
from Ford Credit and $337 million of gross installment
finance receivables attributable to the acquisition of
Kentucky Finance Co., Inc. Included in 1990 are $606 million
in gross residential real estate-secured receivables and
installment finance receivables attributable to the
acquisition of Mellon Financial Services Corporation.
(b) Included in 1993 are $597 million of gross heavy-duty truck
and truck trailer finance receivables purchased from Mack
Financial Corp. Included in 1992 are $57 million of gross
industrial equipment finance receivables attributable to the
acquisition of Trans-National Leasing, Inc. Included in 1991
are $931 million of gross industrial equipment finance
receivables attributable to the acquisition of Chase
Manhattan Leasing Company (Michigan), Inc. (renamed "Clark
Credit").
-6-
<PAGE>
Item 1. Business (Continued)
- ---------------------------
<TABLE>
<CAPTION>
Average Size and Number of
Accounts Based on Gross Finance Receivables Volume
--------------------------------------------------
Consumer Finance Commercial Finance
--------------------------- ------------------
Residential Installment, Heavy-Duty Truck
Real Estate- Manf'd. Housing and Industrial
Secured & Credit Card Equipment
Receivables Receivables Receivables(a)
----------- -------------- ----------------
<S> <C> <C> <C>
Year Ended December 31
- ----------------------
1993 Average size $46,659 $1,527 $48,216
Number of accounts 96,833 6,141,881 113,766
1992 Average size $42,489 $1,511 $41,191
Number of accounts 105,436 4,594,106 105,533
1991 Average size $44,253 $1,588 $30,094
Number of accounts 117,365 4,201,643 140,962
1990 Average size $36,020 $1,647 $44,308
Number of accounts 54,029 3,129,480 80,197
1989 Average size $31,023 $1,428 $41,431
Number of accounts 55,222 2,817,470 80,513
</TABLE>
____________
(a) Excludes wholesale receivables
During 1993, 23% of the total gross volume of consumer loans,
excluding credit card receivables, was made to current creditworthy
customers that requested additional funds. The average balance
prior to making an additional advance was $9,115 and the average
additional advance was $3,112.
Finance Receivables. The following tables set forth the amounts
of gross finance receivables by major categories and average size
and number of accounts (dollar amounts in millions):
<TABLE>
<CAPTION>
Gross Finance Receivables Held at End of Year
---------------------------------------------
Consumer Finance Commercial Finance
------------------------------ -------------------
Residential Installment, Heavy-Duty Truck Total
Real Estate- Manf'd. Housing and Industrial Gross
Secured & Credit Card Equipment Finance
Receivables Receivables Receivables Receivables
----------- --------------- ---------------- -----------
<S> <C> <C> <C> <C>
At December 31
- --------------
1993 $10,626 $9,870 $9,077 $29,573
36% 33% 31% 100%
1992 $ 9,820 $8,123 $7,672 $25,615
38% 32% 30% 100%
1991 $ 8,146 $7,188 $7,210 $22,544
36% 32% 32% 100%
1990 $ 4,901 $5,236 $6,310 $16,447
30% 32% 38% 100%
1989 $ 3,766 $4,177 $6,144 $14,087
27% 29% 44% 100%
</TABLE>
-7-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
<TABLE>
<CAPTION>
Average Size and Number of Accounts
Based on Gross Finance Receivables Held at End of Year
------------------------------------------------------
Consumer Finance Commercial Finance
--------------------------------------- ------------------
Residential Installment, Heavy-Duty Truck
Real Estate- Manf'd. Housing and Industrial
Secured & Credit Card Equipment
Receivables Receivables Receivables
----------- --------------- ----------------
<S> <C> <C> <C>
At December 31
- --------------
1993 Average size $37,787 $2,489 $31,218
Number of accounts 281,206 3,965,781 290,765
1992 Average size $36,725 $2,551 $27,792
Number of accounts 267,394 3,183,747 276,055
1991 Average size $33,829 $2,469 $27,506
Number of accounts 240,798 2,910,995 262,110
1990 Average size $33,928 $2,097 $28,002
Number of accounts 144,438 2,496,411 225,349
1989 Average size $32,310 $2,055 $28,357
Number of accounts 116,570 2,032,490 216,670
</TABLE>
The ten largest accounts at December 31, 1993, other than
accounts with affiliates, represented less than 8/10 of one percent
of the total gross finance receivables outstanding. Of such ten
accounts, five were secured by heavy-duty trucks or truck trailers,
two were secured by construction equipment, two were secured by a
manufacturer's endorsement and related to communications equipment
and one was secured by auto leasing arrangements. At December 31,
1993, the largest gross balance outstanding in such accounts was
$31 million and the average gross balance was $25 million.
-8-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
Credit Loss and Delinquency Experience. The credit loss
experience, net of recoveries, of the finance business is set forth
in the following table (dollar amounts in millions):
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<C> <C> <C> <C> <C>
NET CREDIT LOSSES
Consumer finance
Amount $372 $383 $354 $255 $186
% of average net receivables 2.19% 2.64% 2.84% 3.06% 2.59%
% of receivables liquidated 3.41 4.57 5.65 5.51 5.05
Commercial finance
Amount $ 22 $ 42 $ 35 $ 23 $ 12
% of average net receivables .30% .64% .60% .44% .22%
% of receivables liquidated .26 .61 .61 .41 .20
Total net credit losses
Amount $394 $425 $389 $278 $198
% of average net receivables 1.61% 2.02% 2.13% 2.03% 1.59%
% of receivables liquidated 2.03 2.80 3.24 2.69 2.09
ALLOWANCE FOR LOSSES
Balance at end of period $809 $699 $591 $450 $390
% of net receivables 3.07% 3.06% 2.93% 3.02% 3.07%
</TABLE>
An analysis of The Associates' allowance for losses on
finance receivables is as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Beginning balance $699 $591 $450
Additions 477 513 434
Recoveries 88 72 54
Losses (482) (497) (443)
Other adjustments, primarily
reserves of acquired businesses 27 20 96
---- ---- ----
Ending balance $809 $699 $591
==== ==== ====
</TABLE>
The allowance for losses on finance receivables is based on
percentages of net finance receivables established by management
for each major category of receivables based on historical loss
experience, plus an amount for possible adverse deviation from
historical experience. Additions to the allowance are charged to
the provision for losses on finance receivables.
-9-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
Finance receivables are charged to the allowance for losses
when they are deemed to be uncollectible. Additionally, The
Associates' policy provides for charge-off of various types of
accounts as follows: consumer direct installment receivables,
except those collateralized by residential real estate, are charged
to the allowance for losses when no cash payment has been received
for six months; credit card receivables are charged to the
allowance for losses when the receivable becomes contractually six
months delinquent; all other finance receivables are charged to the
allowance for losses when any of the following conditions occur:
(i) the related security has been converted or destroyed; (ii) the
related security has been repossessed and sold or held for sale for
one year; or (iii) the related security has not been repossessed
and the receivable has become contractually one year delinquent.
Recoveries on losses previously charged to the allowance are
credited to the allowance at the time the recovery is collected.
Delinquency on consumer residential real estate-secured and
direct installment and credit card receivables is determined by the
date of the last cash payment received from the customer (recency
of payment basis), a delinquent loan being one on which the
customer has paid no cash whatsoever for a period of time. It is
not The Associates' policy to accept token payments on delinquent
accounts. A delinquent account on all types of receivables, other
than consumer residential real estate-secured and direct
installment and credit card receivables, is one on which the
customer has not made payments as contractually agreed (contractual
payment basis). Extensions are granted on receivables from
customers with satisfactory credit and with prior approval of
management.
The following tables show (i) the gross account balances
delinquent 60 through 89 days, 90 days and more, and total gross
balances delinquent 60 days and more; and (ii) total gross balances
delinquent 60 days and more by type of business (dollar amounts in
millions):
<TABLE>
<CAPTION>
Gross Balances Delinquent
--------------------------------------------------------------------------------------------------
Total
60-89 days 90 days and more 60 days and more
---------------------------- ----------------------------- --------------------------------
% of % of % of
No. Out- No. Out- No. Out-
of stand- of stand- of stand-
Accts. Amt. ings Accts. Amt. ings Accts. Amt. ings
------ ----- ------ ------ ----- ------- ------ ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
At Dec. 31
1993 47,431 $191 .65% 51,956 $237 .80% 99,387 $428 1.45%
1992 47,621 184 .72 46,142 238 .93 93,763 422 1.65
1991 45,247 206 .91 55,985 315 1.40 101,232 521 2.31
1990 42,184 163 .99 49,391 250 1.52 91,575 413 2.51
1989 30,730 128 .91 40,129 220 1.56 70,859 348 2.47
</TABLE>
-10-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
<TABLE>
<CAPTION>
Gross Gross
Consumer Finance Commercial Finance Total Gross
------------------------------ ------------------------------- ----------------------------
Balances Balances Balances
Delinquent Delinquent Delinquent
60 days 60 days 60 days
and more and more and more
----------------- -------------- -----------------
Total % of Total % of % of
Out- Out- Out- Out- Out- Out-
stand- stand- stand- stand- stand- stand-
ings Amt. ings ings Amt. ings ings Amt. ings
----- ---- -------- ------ ----- ------- ------ ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
At Dec. 3l
- ----------
1993 $20,496 $380 1.85% $9,077 $ 48 .53% $29,573 $428 1.45%
1992 17,943 359 2.00 7,672 63 .82 25,615 422 1.65
1991 15,334 392 2.56 7,210 129 1.79 22,544 521 2.31
1990 10,137 283 2.79 6,310 130 2.06 16,447 413 2.51
1989 7,943 217 2.73 6,144 131 2.14 14,087 348 2.47
</TABLE>
Insurance Underwriting. The Associates is engaged in the
property and casualty and accidental death and dismemberment
insurance business through Associates Insurance Company ("AIC") and
in the credit life, credit accident and health insurance business
through Associates Financial Life Insurance Company ("AFLIC"),
principally for customers of the finance operations of The
Associates. At December 31, 1993, AIC was licensed to do business
in 50 states, the District of Columbia and Canada, and AFLIC was
licensed to do business in 49 states and the District of Columbia.
In addition, The Associates receives compensation for certain
insurance programs underwritten by other companies through
marketing arrangements in a number of states.
The operating income produced by the finance operations'
sale of insurance products is included in the respective finance
operations' operating income.
The following table sets forth the net property and casualty
insurance premiums written by major lines of business (in
millions):
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Automobile physical damage $ 98 $ 80 $ 69 $ 87 $ 85
Fire and extended coverage 41 28 16 31 31
Other liability(a) 20 25 24 17 14
---- ---- ---- ---- ----
Total net premiums written $159 $133 $109 $135 $130
==== ==== ==== ==== ====
- ------------------
(a) Includes contractual liability for auto club road service program.
</TABLE>
-11-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
The following table sets forth the aggregate premium
income relating to credit life, credit accident and health and
accidental death and dismemberment insurance for the years
indicated, and the life insurance in force (in millions):
<TABLE>
<CAPTION>
Premium Life Insurance
Income in Force
------- --------------
<S> <C> <C>
Year Ended or at December 31
- ----------------------------
1993 $111 $6,954
1992 93 6,110
1991 84 5,534
1990 80 4,770
1989 79 5,080
</TABLE>
The following table summarizes the revenue of the
insurance operation (in millions):
<TABLE>
<CAPTION>
Premium Investment Total
Revenue(a) Income Revenue
---------- ---------- -------
<S> <C> <C> <C>
Year Ended December 31
- ----------------------
1993 $242 $39 $281
1992 210 41 251
1991 203 53 256
1990 213 58 271
1989 197 56 253
</TABLE>
- ------------------
(a) Includes compensation for insurance programs underwritten
by other companies through marketing arrangements.
Competition and Regulation. The interest rates charged for
the various classes of receivables of The Associates' finance
business vary with the type of risk and maturity of the receivable
and generally are affected by competition, current interest rates
and, in some cases, governmental regulation. In addition to
competition with finance companies, competition exists with, among
others, commercial banks, thrift institutions, credit unions and
retailers.
Consumer finance operations are subject to detailed
supervision by state authorities under legislation and regulations
which generally require finance companies to be licensed and which,
in many states, govern interest rates and charges, maximum amounts
and maturities of credit and other terms and conditions of consumer
finance transactions, including disclosure to a debtor of certain
terms of each transaction. Licenses may be subject to revocation
for violations of such laws and regulations. In some states, the
commercial finance operations are subject to similar laws and
regulations. Customers may seek damages for violations of state
and Federal statutes and regulations governing lending practices,
interest rates and other charges. Federal legislation preempts
state interest rate ceilings on first mortgage loans and state laws
which restrict various types of alternative residential real
estate-secured receivables, except
-12-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
in those states which have specifically opted out of such
preemption. Certain Federal and state statutes and regulations,
among other things, require disclosure of the finance charges in
terms of an annual percentage rate, make credit discrimination
unlawful on a number of bases, require disclosure of a maximum rate
of interest on variable or adjustable rate mortgage loans, and
limit the types of security that may be taken in connection with
non-purchase money consumer loans. Federal and state legislation,
in addition to that mentioned above, has been, and from time to
time may be, introduced which seeks to regulate the maximum
interest rate and/or other charges on consumer finance receivables,
including credit cards.
Associates National Bank (Delaware) ("ANB") is under the
supervision of, and subject to examination by, the Office of the
Comptroller of the Currency. In addition, ANB is subject to the
rules and regulations of the Federal Reserve Board and the Federal
Deposit Insurance Corporation ("FDIC"). Associates Investment
Corporation is regulated by the FDIC and the Utah Department of
Financial Institutions. Areas subject to regulation by these
agencies include capital adequacy, loans, deposits, consumer
protection, the payment of dividends and other aspects of
operations.
The insurance business is subject to detailed regulation, and
premiums charged on certain lines of insurance are subject to
limitation by state authorities. Most states in which insurance
subsidiaries of The Associates are authorized to conduct business
have enacted insurance holding company legislation pertaining to
insurance companies and their affiliates. Generally, such laws
provide, among other things, limitations on the amount of dividends
payable by any insurance company and guidelines and standards with
respect to dealings between insurance companies and affiliates.
It is not possible to forecast the nature or the effect on
future earnings or otherwise of present and future legislation,
regulations and decisions with respect to the foregoing, or other
related matters.
AMERICAN ROAD
American Road was incorporated as a wholly owned subsidiary
of Ford Credit in 1959 and was transferred to Ford Holdings in
1989. It is licensed in 50 states and the District of Columbia and
in most provinces of Canada.
The operations of American Road consist primarily of
underwriting floor plan insurance related to substantially all new
vehicle inventories of dealers financed at wholesale by Ford Credit
in the United States and Canada, credit life and disability
insurance in connection with retail vehicle financing, and
insurance related to retail contracts sold by automobile dealers to
cover vehicle repairs. In addition, Ford Life, a wholly owned
subsidiary of American Road, offers single premium deferred
annuities which are sold primarily through banks and brokerage
firms. The obligations of Ford Life, including annuities, are
guaranteed by American Road.
In the second quarter of 1992, Ford Credit discontinued
purchasing collateral protection insurance ("CPI") from American
Road for vehicles financed at retail by Ford Credit. This action
continued to have a negative effect on
-13-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
1993 earnings. The principal subsidiaries of American Road are
Ford Life and Vista Life Insurance Company ("Vista Life"). Ford
Life primarily offers annuities, credit life and disability
insurance on vehicles and equipment financed at retail and Vista
Life writes group credit life insurance and credit disability
insurance on vehicles financed at retail. Vista Life Insurance
Company of Texas, a subsidiary of American Road, was dissolved in
April 1993.
Total premiums written by American Road and its subsidiaries
during the last five years were as follows (in millions): 1993:
$309; 1992: $235; 1991: $379; 1990: $437; and 1989: $913. The
decrease in premiums written after 1989 resulted primarily from (1)
the conversion in October 1989 of a significant portion of the
Extended Service Plan from an American Road insurance product to a
Ford service contract and (2) the discontinuance in the second
quarter of 1992 of Ford Credit's purchase of CPI insurance from
American Road. The 1993 increase in premiums written resulted
primarily from higher vehicle sales and higher premium rates for
floor plan insurance products.
<TABLE>
<CAPTION>
The following table summarizes the revenues and net income
of American Road (in millions):
Revenues
-----------------------------------------------
Premiums Investment Annuities and Net
Earned Income Other Income Total Income
-------- ---------- ------------- ----- --------
<S> <C> <C> <C> <C> <C>
1993 $465 $141 $130 $736 $ 79
1992 519 175 42 736 63(a)
1991 706 211 2 919 126
1990 764 149 4 917 103
1989 693 229 5 927 177
</TABLE>
______________
(a) Includes increase of $16 million resulting from cumulative
effect of adopting new accounting rules on income taxes.
The detail of premiums earned by American Road was as follows
(in millions):
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Extended service contracts $211 $217 $318 $355 $322
Physical damage 139 176 227 228 208
Credit life and
disability 115 126 161 181 163
---- ---- ---- ---- ----
Total $465 $519 $706 $764 $693
==== ==== ==== ==== ====
</TABLE>
The insurance industry is highly regulated by the states with
respect to premium rates, policy terms, dividends, investments and
many other aspects of the insurance business. American Road
competes with many insurance companies and is not a significant
factor in car and truck insurance underwriting. The principal
competitors of Ford Life and Vista Life are life insurance
companies that specialize in credit life and credit disability
insurance and insurance companies that offer single premium
deferred annuities.
-14-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
USL CAPITAL
USL Capital, a diversified commercial leasing and financing
organization, originally incorporated in 1956, was acquired by Ford
in 1987 and was transferred to Ford Holdings in 1989. In November
1993, the corporation's name was changed from United States Leasing
International, Inc. to USL Capital Corporation. USL Capital
provides financing to commercial and governmental entities
principally in the United States, including: (i) leasing and
financing of office, manufacturing, and other general-purpose
business equipment; (ii) leasing and management of commercial
fleets of automobiles, vans, and trucks; (iii) leasing and
financing of large-balance transportation equipment (principally
commercial aircraft, rail and marine equipment); (iv) acting as
owner-trustee for certain leveraged leases for other investors; (v)
first-mortgage, intermediate-term financing of commercial
properties; (vi) financing of essential-use equipment for state and
local governments; and (vii) purchase of industrial development,
private activity and housing bonds and investment in publicly
traded and privately placed preferred stocks and senior and
subordinated debt of public and private companies. Certain of
these financing transactions are carried on the books of Ford
affiliates. At December 31, 1993, USL Capital had 682 full-time
employees.
Key Data. The following table sets forth certain data with
respect to USL Capital's business for the periods ending on and as
of the dates indicated (dollar amounts in millions):
<TABLE>
<CAPTION>
December 31
------------------------------------------------------------
1993 1992 1991 1990 1989(c)
------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
Revenue $ 565 $ 501 $ 500 $ 503 $ 556
Income before taxes 122 89 86 51 32
Net income 77 57(b) 55 24 19
Additions to earning assets 2,045 1,831 1,655 1,073 987
Earning assets at December 31 4,607 3,585 2,727 1,983 1,764
Business unit earning
assets (% of total):
Business equipment
financing 32% 39% 48% 53% 53%
Fleet services 10 12 12 25 28
Transportation and
industrial financing 24 21 16 7 5
Rail services 9 9 6 6 6
Real estate financing 9 9 9 5 1
Municipal and
corporate financing 16 10 9 4 0
Other(a) 0 0 0 0 7
---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
</TABLE>
- ----------------
(a) Principally businesses sold prior to December 31, 1990.
(b) Includes reduction of $3 million resulting from cumulative
effect of adopting the new accounting standard on health care
costs.
(c) Includes foreign operations of USL Capital (transferred to
Ford subsidiaries in October 1989) through September 30,
1989.
-15-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
Credit Loss Experience. The management of credit exposure is
an important element of USL Capital's business. USL Capital
reviews the credit of all prospective customers, and manages
concentration exposure by customer, collateral type and geographic
distribution. It establishes appropriate loss allowances based on
the credit characteristics and the loss experience for each type of
business, and also establishes additional reserves for specific
transactions if it believes this action is warranted. Delinquent
receivables are reviewed by management monthly, and are generally
written down to expected realizable value when, in the opinion of
management, they become uncollectible or when they become more than
180 days past due. Collection activities continue on accounts
written off when management believes such action is warranted.
The table below summarizes certain information on USL
Capital's allowance for doubtful accounts at December 31 of the
years indicated (dollar amounts in millions):
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>
Allowance for doubtful accounts
Beginning balance $ 40 $ 30 $ 25
Additions 25 19 11
Deductions (10) (9) (6)
------ ------ ------
Ending balance $ 55 $ 40 $ 30
====== ====== ======
Percent of earning assets 1.2% 1.1% 1.1%
Total balances of accounts
receivable over 90 days
past due at year end $ 44 $ 49 $ 23
Percent of earning assets 1.0% 1.4% 0.8%
Total earning assets
Investments in
finance leases - net $2,364 $2,075 $1,463
Investments in
operating leases - net 695 558 492
Investments in leveraged
leases - net 191 4 -
Notes receivable 721 502 416
Investments in securities 563 329 236
Inventory held for sale
or lease 55 97 100
Investments in associated
companies 18 20 20
------ ------ ------
Total earning assets $4,607 $3,585 $2,727
====== ====== ======
</TABLE>
Additions to the allowance for doubtful accounts for 1993
increased by $6 million from 1992, primarily as a result of the
increase in earning assets as well as management's evaluation of
the adequacy of the loss reserve. In addition, deductions in 1993
increased $1 million from 1992, the largest single transaction
being less than $3 million.
-16-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
Total balances of accounts receivable over 90 days past due
at year end 1993 decreased $5 million over 1992 primarily because
of improved collection and workout activities as well as the write-
down of several receivables which were delinquent at December 31,
1992, and which management has since deemed to be uncollectible.
Residual Policy. The establishment and realization of
residual values on both finance and operating leases are important
elements of USL Capital's business. In general, finance leases are
non-cancelable leases in which the lease payments over the term
exceed the cost of the leased equipment plus financing and other
expenses. Operating leases are usually of a shorter term and the
lease payments by themselves are not sufficient to cover such cost
and expenses. Full recovery of equipment cost is dependent upon
selling or re-leasing the equipment.
Residual values are established upon acquisition of the
equipment based upon the estimated value of the equipment at the
time USL Capital expects to dispose of the equipment under finance
leases, and at the end of the equipment's expected useful life
under operating leases. Periodically, USL Capital reviews its
residual values, and if it determines there has been an other than
temporary impairment in value, adjustments are made which result in
an immediate charge to income and/or a reduction in earnings over
the remaining term of the lease. Proceeds as a percentage of the
adjusted residual values for finance leases were 215% in 1993,
129% in 1992, and 148% in 1991. Proceeds as a percentage of the
adjusted residual values for operating leases were 115% in 1993,
1992 and 1991.
Competition. In all of its financing programs, USL Capital
competes with other leasing and finance companies, banks, lease
brokers and investment banking firms who arrange for the financing
and leasing of equipment, and manufacturers and vendors who sell,
finance and lease their own products to customers.
FORD LAND
Ford Land was formed by Ford in 1970 to implement a master
plan for the development of 2,360 acres of vacant land in Dearborn,
Michigan. Since then, Ford Land has expanded its activities to
include non-automotive real estate development, management and
development of land and facilities related to Ford operations. See
Item 2. "Properties" for a description of Ford Land's real estate
holdings.
The assets employed in, and revenues derived from, Ford Land
are not significant in relation to the Company's consolidated
operations.
-17-
<PAGE>
Item 1. Business (Continued)
- ----------------------------
FORD LEASING
Ford Leasing, which was incorporated by Ford in 1960,
acquires real property by purchase or lease and constructs
facilities on such property for lease to franchised Ford car and
truck dealers where private capital funding is unavailable. Ford
Leasing provides dealers with facilities in key markets at
affordable rental rates. It sells certain of those dealership
facilities to the dealers, and sells to third parties property and
facilities which are no longer needed for automobile dealerships.
The assets employed in, and revenues derived from, Ford
Leasing are not significant in relation to the Company's
consolidated operations.
Item 2. Properties
- -------------------
The furniture, equipment and other physical property owned by
the Company and its subsidiaries are not significant in relation to
total assets. Ford Land and its wholly owned subsidiaries own or
lease real property consisting of 3,745 acres of land and 6.4
million square feet of improvements having a net book value of $476
million. Of the real property owned or leased by Ford Land and its
subsidiaries, 872 acres of land and 3.7 million square feet of
improvements are located within the Fairlane Development, a
commercial, residential and recreational community being developed
by Ford Land in Dearborn and Allen Park, Michigan. The balance of
the properties are located in California, Colorado, New Jersey,
Massachusetts, Ohio and Virginia. The finance operations of the
Company's subsidiaries generally are conducted on leased premises
under short-term operating leases normally not exceeding five
years.
Item 3. Legal Proceedings
- --------------------------
Because the finance and insurance businesses involve the
collection of numerous accounts, the validity and priority of
liens, and loss or damage claims under many types of insurance
policies, the finance and insurance subsidiaries of the Company are
plaintiffs and defendants in numerous legal proceedings, including
class action lawsuits. Neither the Company nor any of its
subsidiaries is a party to, nor is the property thereof the subject
of, any pending legal proceedings other than (i) ordinary routine
litigation or (ii) litigation which should not have a material
adverse impact on the consolidated financial position of the
Company. There are no proceedings pending or, to the Company's
knowledge, threatened by or on behalf of any administrative board
or regulatory body which would materially affect or impair the
right of the Company or any of its subsidiaries to carry on any of
their respective businesses.
-18-
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
At the Annual Meeting of Stockholders of the Company held on
November 23, 1993 (the "Annual Meeting"), the holders of the
outstanding shares of the Company's Common Stock elected the
following nominees as directors of the Company: Wayland F. Blood,
Malcolm S. Macdonald, Terrence F. Marrs, David N. McCammon, Stanley
A. Seneker and Kenneth Whipple. Each such person received 1,099
votes; no votes were cast against or withheld from the election of
such directors and there were no broker nonvotes.
Also at the Annual Meeting, the holders of the outstanding
shares of the Company's Flexible Rate Auction Preferred Stock
(Exchange), Series A Cumulative Preferred Stock, Series B
Cumulative Preferred Stock and Series C Cumulative Preferred Stock
elected the following nominees as directors of the Company by the
following votes:
<TABLE>
<CAPTION>
Votes Votes Votes Broker
Nominee For Against Withheld Nonvotes
- ------- --- ------- -------- --------
<S> <C> <C> <C> <C>
Dean E. Richardson 9,808.779 0 39.888 0
H. James Toffey, Jr. 9,808.719 0 39.948 0
</TABLE>
Also at the Annual Meeting, the holders of the Company's Common
Stock, Flexible Rate Auction Preferred Stock (Exchange), Series A
Cumulative Preferred Stock, Series B Cumulative Preferred Stock and
Series C Cumulative Preferred Stock ratified the selection of
Cooper's & Lybrand to audit the Company's books of account and
other corporate records for the year 1993 by the following votes:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Nonvotes
--- ------- ----------- --------
<S> <C> <C> <C> <C>
Common Stock(a) 1,099.000 0 0 0
Flexible Rate
Auction Preferred
Stock (Exchange)(b) 120.719 0.377 0 0
Series A Cumulative
Preferred Stock(b) 54.859 0.165 1.762 0
Series B Cumulative
Preferred Stock(b) 32.742 0.069 0.434 0
Series C Cumulative
Preferred Stock(b) 35.892 0.169 0.401 0
</TABLE>
______________
(a) Holders of the outstanding shares of Common Stock had 75% of
the combined voting power of all classes of capital stock.
(b) Holders of the outstanding shares of the Flexible Rate
Auction Preferred Stock (Exchange), Series A Cumulative
Preferred Stock, Series B Cumulative Preferred Stock and
Series C Cumulative Preferred Stock together had the
remaining 25% of the combined voting power of all classes of
capital stock.
-19-
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
- ----------------------------------------------------------
All of the outstanding Common Stock of the Company is owned
directly or indirectly by Ford as of March 1, 1994. There is no
market for the Company's Common Stock.
Dividends on the Common Stock will be paid when declared by
the Board of Directors. No dividends have been paid to date.
Item 6. Selected Financial Data
- --------------------------------
The following table sets forth selected consolidated
financial information regarding the operating results and financial
position of the Company and its subsidiaries. The amounts shown
for the years ended December 31, 1989 through 1993 represent the
consolidated operating results and financial position of the
subsidiaries of the Company then owned, directly or indirectly, by
Ford. The reorganizations of these subsidiaries, which occurred in
October 1989, have been accounted for at historical cost in a
manner similar to a pooling-of-interests combination. This table
includes The Associates' results for the two-month period ended
December 31, 1989 and the full-years ended December 31, 1990
through 1993. The unaudited pro forma adjustments for 1989 reflect
the estimated interest expense, net of related income taxes, that
the Company would have incurred on the zero-coupon note issued in
connection with the transfer from Ford to the Company of USL
Capital's domestic operations as if such transfer had occurred on
November 1, 1987, the date USL Capital was acquired by Ford. The
unaudited pro forma net income for 1989 does not purport to
represent what the Company's net income actually would have been
had the zero coupon note in fact been issued on November 1, 1987.
The information should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the audited consolidated financial
statements and accompanying notes to financial statements included
in this Report.
-20-
<PAGE>
Item 6. Selected Financial Data (Continued)
- --------------------------------------------
<TABLE>
<CAPTION>
Year Ended or at December 31
------------------------------------------------------------------
1993 1992 1991 1990 1989
------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
(in millions)
Consolidated Statement
of Income
- ----------------------
Total revenues $ 5,292 $ 4,817 $ 4,814 $ 4,361 $ 2,018
Interest expense 1,751 1,658 1,718 1,563 383
Insurance claims 498 567 664 672 530
Other expenses 2,212 2,004 1,840 1,670 819
------- ------- ------- ------- -------
Income before income taxes
and cumulative effects of
changes in accounting
principles 831 588 592 456 286
Provision for income
taxes and minority
interest in net income/
(loss) of subsidiaries 320 231 208 186 88
------- ------- ------ ------- -------
Net income before
cumulative effects of
changes in accounting
principles 511 357 384 270 198
Cumulative effects of
changes in accounting
principles - 26 - - -
------- ------- ------- ------- -------
Net income $ 511 $ 383 $ 384 $ 270 $ 198
======= ======= ======= ======= =======
Pro forma adjustments
(Unaudited)
Interest on zero coupon
note 25
Related taxes 8
------
Pro forma net income
(Unaudited) $ 181
======
Dividends paid on
Preferred Stock $ 73 $ 48 $ 48 $ 59 $ 2
Consolidated Balance Sheet
- --------------------------
Cash and securities $ 5,100 $ 3,659 $ 2,981 $ 3,016 $ 3,110
Finance receivables, net 24,568 20,750 18,362 13,465 11,461
Investments in leases, net 5,415 4,607 3,718 3,161 2,929
Total assets 38,599 32,731 28,780 23,564 21,757
Unearned insurance
premiums 865 936 1,190 1,529 1,820
Debt 29,570 25,767 22,930 18,215 16,077
Stockholders' equity 4,291 3,498 2,897 2,289 2,103
-21-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- ----------------------------------------------------------
Overview
The Company's net income in 1993 was $511 million, up $128
million from the $383 million earned in 1992. The increase
reflected higher levels of earning assets and lower credit and
insurance losses.
In 1992, the Company adopted major new accounting standards
for postretirement benefits (principally retiree health care) and
income taxes that resulted in a one-time increase in net income in
1992 for prior years of $26 million. Excluding the one-time
effects of these accounting changes, the Company earned $357
million in 1992.
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 following discussion of the results of operations
excludes the one-time effects associated with accounting changes in
1992 discussed above. The consolidated financial statements on
pages FH-1 through FH-20 should be read as an integral part of this
review.
Results of Operations: 1993 Compared With 1992
The Associates earned $470 million in 1993, up $77 million
from 1992. The increase resulted primarily from improved credit
loss performance and higher levels of earning assets, partially
offset by higher operating costs incurred to service higher
receivables levels. During 1993 and 1992, The Associates made
acquisitions of finance businesses and finance receivables, the
most significant of which are described in Note 5 of the
consolidated financial statements.
American Road earned $79 million in 1993, compared with $47
million in 1992. The increase resulted primarily from improved
underwriting experience in extended service plan and floor plan
products, offset partially by lower investment income. Premiums
written by American Road were $309 million in 1993, compared with
$235 million a year ago. The increase in premiums written
reflected higher vehicle sales and higher premium rates for
floorplan insurance products.
USL Capital earned $77 million in 1993, up $17 million from
1992. The improvement resulted primarily from higher earning
assets and continued operating cost reductions.
Ford Land and Ford Leasing, on a combined basis, earned $11
million in 1993, compared with a loss of $3 million in 1992.
-22-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
- ----------------------------------------------------------
Historical Reference: 1992 Compared With 1991
The Company's net income in 1992 was $357 million, compared
with $384 million in 1991. As noted previously, these results
exclude the one-time effects of accounting changes adopted in 1992.
The decrease in 1992 resulted from declines in insurance
underwriting and investment income, offset in part by higher
receivables levels and improved net interest margins.
The Associates earned $393 million in 1992, up $46 million
from 1991. The improvement resulted primarily from higher levels
of receivables and improved net interest margins. A significant
portion of the increase in receivables in 1992 resulted from
purchases of assets from other finance companies.
American Road earned $47 million in 1992, compared with $126
million in 1991. The decline resulted primarily from Ford Credit's
discontinuance of the purchase of collateral protection insurance
("CPI") from American Road relating to vehicles financed at retail
by Ford Credit. Lower investment income, reflecting primarily a
smaller investment portfolio, also contributed to the decrease in
American Road's earnings in 1992. Income on annuity contracts,
which were first offered in October 1991, was a partial offset to
these reductions. Premiums written by American Road were $235
million in 1992, down $144 million from 1991, reflecting lower CPI
premiums.
USL Capital earned $60 million in 1992, up $5 million from
1991. The improvement primarily resulted from an increase in
average earning assets and operating cost efficiencies.
Ford Land and Ford Leasing, on a combined basis, lost $3
million in 1992, compared with a loss of $5 million in 1991.
Liquidity and Capital Resources
Ford Holdings (Excluding Subsidiaries)
- --------------------------------------
At December 31, 1993, Ford Holdings had outstanding debt of
$1.9 billion, all of which was long-term. All of the Ford Holdings
debt held by nonaffiliated persons is guaranteed by Ford. Ford
Holdings had no contractually committed lines of credit at December
31, 1993. At December 31, 1993, Ford Holdings had outstanding 8,000
shares of its Flexible Rate Auction Preferred Stock (Exchange),
Series A through K, having an aggregate liquidation preference of
$800 million, 2,849 shares of its Series A Cumulative Preferred
Stock having an aggregate liquidation preference of $285 million,
1,728 shares of its Series B Cumulative Preferred Stock having
an aggregate liquidation preference of $173 million, and 2,000
shares of its Series C Cumulative Preferred Stock having an
aggregate liquidation preference of $200 million. The latter two
series of Preferred Stock were issued during 1993.
-23-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
- --------------------------------------------------------------------
Operating Subsidiaries of the Company
- -------------------------------------
The Associates' primary sources of funds include sales of
commercial paper, issuance of unsecured intermediate-term debt in
the public and private markets, and credit facilities with
commercial banks. At December 31, 1993, The Associates had
contractually committed lines of credit with banks of $3.1 billion,
with various maturities ranging from January 30, 1994 to December
31, 1994, none of which was utilized at December 31, 1993. Also,
at December 31, 1993, The Associates had $4.1 billion of
contractually committed revolving credit facilities with banks,
with maturity dates ranging from February 1, 1994 through October
1, 1997, and $1.0 billion of contractually committed receivables
sale facilities, $500 million of which are available through April
15, 1994 and $500 million of which are available through April 30,
1995; none of these facilities was in use at December 31, 1993.
Neither Ford nor Ford Holdings guarantees the debt of The
Associates. Payment of dividends by ACONA, the primary operating
subsidiary of The Associates, is restricted under the provisions of
certain debt agreements. (See Note 14 of the consolidated
financial statements for additional information regarding dividend
restrictions applicable to The Associates.) The Associates'
profitability is not related to the business outlook for Ford and
this situation is not expected to change in the future.
American Road's principal sources of funds are insurance
premiums, annuity deposits and investment income. American Road
had no debt or credit lines at December 31, 1993. From an
operating standpoint, American Road's profitability is closely
related to the business conditions affecting Ford and Ford Credit
and the level of insurance premiums generated by American Road
depends, to a large extent, on the level of Ford vehicle sales and
the extent to which Ford Credit finances these sales. (See Note 14
of the consolidated financial statements for additional information
regarding dividend restrictions applicable to American Road.)
USL Capital's principal sources of funds include sales of
commercial paper and issuance of unsecured medium-term debt. At
December 31, 1993, USL Capital had $1.4 billion of contractually
committed credit facilities, 70% of which are available through
September 1998. These facilities included $200 million of
contractually committed receivables sale facilities, of which about
86% were in use at December 31, 1993. Neither Ford nor Ford
Holdings guarantees the debt of USL Capital, although USL Capital's
existing credit lines require that Ford maintain at least a 75%
direct or indirect ownership interest in USL Capital. At present,
USL Capital's profitability is not significantly related to the
business outlook for Ford and this situation is not expected to
change in the future.
Ford Land is capitalized principally through a combination of
unsecured long-term debt and mortgages. Ford Holdings has
guaranteed substantially all of Ford Land's unsecured long-term
debt. The mortgages are collateralized by land and buildings. A
majority of Ford Land's completed real estate projects were
unmortgaged as of December 31, 1993. Ford Land's primary business
is real estate development, which is not directly related to the
business of Ford, although Ford activities are among the tenants of
Ford Land's developed properties.
-24-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
- ----------------------------------------------------------
Ford Leasing is capitalized principally through a combination
of short-term notes payable to Ford and long-term debt. Either
Ford or Ford Holdings has guaranteed substantially all of Ford
Leasing's long-term debt. Ford Leasing's primary business is
leasing dealership facilities to Ford dealers. Under an agreement
with Ford, Ford Leasing is reimbursed for certain expenses and any
loss incurred in dealership facility operations.
New Accounting Standards
In November 1992, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 112, "Employers' Accounting for Postemployment
Benefits", which requires companies to account for employee
benefits on an accrual basis for periods when employees are no
longer actively employed but have not yet reached retirement. The
effect on the Company's financial statements was not material.
In May 1993, the FASB issued SFAS 114, "Accounting by
Creditors for Impairment of a Loan". The standard requires that
impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate.
The Company does not plan to adopt this standard until January 1,
1995, and the effect is not expected to be material.
In May 1993, the FASB issued SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities". The standard
establishes financial accounting and reporting requirements for
investments in equity securities (excluding those accounted for
under the equity method and investments in consolidated
subsidiaries) that have readily determinable fair values and for
all investments in debt securities. The Company has adopted this
standard effective January 1, 1994, and the effect is not expected
to be material.
-25-
<PAGE>
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
- ---------------------------------------------------------
Not required.
PART III
Item 10. Directors and Executive Officers
- ------------------------------------------
The following table sets forth certain information as of
March 15, 1994, regarding the directors and executive officers of
the Company:
</TABLE>
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
S. A. Seneker 62 Chairman of the Board, Director
K. Whipple 59 President, Director
W. F. Blood 63 Vice President, Director
M. S. Macdonald 53 Vice President-Treasurer, Director
T. F. Marrs 48 Vice President-Controller, Director
D. N. McCammon 59 Vice President, Director
D. E. Richardson 66 Director
H. J. Toffey, Jr. 63 Director
F. B. Kulp 54 Vice President-General Counsel
J. M. Rintamaki 52 Secretary
</TABLE>
Each of the above-named persons has held the position with the
Company set forth opposite his name since October 1989, except that
Mr. T. F. Marrs has held his position since March 1990, Mr. W. F.
Blood has held his position as Vice President since November 1992
and was elected a director effective May 1, 1993 and Mr. J. M.
Rintamaki has held his position since July 1993.
Except for Messrs. Toffey and Richardson, all of the above
officers and directors have been employed by Ford or its
subsidiaries in one or more executive capacities during the past
five years. H. J. Toffey, Jr. was a Managing Director of First
Boston, Inc. until his retirement in 1986. Mr. Toffey also serves
as a director of Sterling Energy Corp. D. E. Richardson was the
Chairman of the Board of Directors of Manufacturers National
Corporation from October 1973 until his retirement in April 1990.
Mr. Richardson serves as a director of Comerica Incorporated, The
Detroit Edison Company, Tecumseh Products Company and the
Automobile Club of Michigan.
Mr. Seneker serves as a director of Ford. Mr. Whipple serves
as a director of CMS Energy Corporation; Consumers Power Company;
First Nationwide Bank, A Federal Savings Bank; First Nationwide
Financial Corporation; Ford Credit; and USL Capital. Mr. Blood
serves as a director of First Nationwide Bank, A Federal Savings
Bank and First Nationwide Financial Corporation. Mr. Macdonald
serves as a director of The Hertz Corporation. Mr. Marrs serves as
a director of USL Capital and The Hertz Corporation. Mr. McCammon
serves as a director of Ford Credit and The Hertz Corporation.
Based on Company records and other information, the Company
believes that all SEC filing requirements applicable to its
directors and officers with respect to the Company's fiscal year
ended December 31, 1993 were complied with except that Mr. D. E.
Richardson had one late report of one transaction.
-26-
<PAGE>
Item 11. Executive Compensation
- --------------------------------
The directors and executive officers of the Company do not and
will not receive any compensation from the Company except that
directors of the Company who are not otherwise employed by Ford or
another affiliate of the Company will be entitled to director fees
in amounts established from time to time by the Board. Currently,
each director who is not an employee of Ford or another affiliate
of the Company is paid an annual fee of $15,000. Thus in 1993,
Messrs. Richardson and Toffee each received annual fees of $15,000.
None of the other directors received an annual fee in 1993. All
directors and officers are reimbursed for expenses reasonably
incurred in connection with their services on behalf of the
Company. None of the directors and executive officers of the
Company receives or will receive any additional compensation from
Ford or any of its affiliates for services rendered on behalf of
the Company. The Company compensates Ford for the time during
which any salaried officer or employee of Ford performs services
for the Company. See Item 13.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
(a) Security ownership of certain beneficial owners.
<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
- --------------- ------------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock, Ford Motor Credit Company 495 shares 45%
par value $1.00 The American Road
Dearborn, MI 48121-1699
Common Stock, Ford Motor Company 604 shares 55%
par value $1.00 The American Road
Dearborn, MI 48121-1899
</TABLE>
(b) Security ownership of management.
None of the Company's or any of its parents or
subsidiaries equity securities is beneficially owned by
the Company's directors (and nominees) or officers, except
as shown below:
<TABLE>
<CAPTION>
Title of Name Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
- ------------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Series A Cumulative D. E. Richardson 1 share(a) *
Preferred Stock,
par value $1.00 (with
an annual dividend rate
of $8,000 per share and
a liquidation preference
of $100,000 per share)
</TABLE>
_________________
(*) Amount owned is less than 0.1% of class.
(a) Mr. Richardson owns 4,000 Depositary Shares,
each representing 1/4,000 of a share of Series
A Cumulative Preferred Stock.
-27-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners
and Management (Continued)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Title of Name Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
- ------------------ ------------------- -------------------- --------
<S> <C> <C> <C>
Ford Motor Company D. E. Richardson 500 shares *
Common Stock, par
value $1.00
H. J. Toffey, Jr. 10,000 shares *
S. A. Seneker 51,707 shares *
K. Whipple 128,294 shares *
(75,750)(a)
W. F. Blood 3,399 shares *
(2)(a)
M. S. Macdonald 25,235 shares *
(7,700)(a)
T. F. Marrs 1,934 shares *
(463)(a)
D. N. McCammon 156,022 shares *
(73,750)(a)
All Directors and
Officers as a
Group 391,138 shares *
(163,540)(a)
Ford Motor Company M. S. Macdonald 1 share(b) *
Series A Cumulative
Convertible Preferred All Directors and
Stock, par value $1.00 Officers as a 1.2 shares *
per share, with an annual Group
dividend rate of
$4,200 per share and
and a liquidation
preference of $50,000
per share
</TABLE>
______________
(*) Amount owned is less than 0.1% of class.
(a) Indicates the number of shares listed with respect to which
such person(s) has the right to acquire beneficial ownership
within 60 days.
(b) Mr. Macdonald owns 1,000 Depositary Shares, each representing
1/1,000 of a share at Ford Motor Company Series A Cumulative
Convertible Preferred Stock. Each Depositary Share is
convertible into 1.6327 shares of Ford Motor Company Common
Stock.
-28-
<PAGE>
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Ford is the direct or indirect beneficial owner of all of the
outstanding shares of Common Stock of the Company, which represent
75% of the total voting power of the outstanding capital stock of
the Company. As majority stockholder, Ford is in a position to
cause the election of a majority of the Board of Directors of the
Company and to control the Company's affairs.
The Company, Ford and Ford Credit also maintain a number of
financial and administrative arrangements and regularly engage in
transactions with each other. These arrangements include
management services agreements between the Company and Ford and the
Company and Ford Credit ("Management Services Agreements") pursuant
to which, upon the reasonable request of the Company, certain
employees of Ford and Ford Credit work on the affairs of the
Company and its subsidiaries, so as to enable the Company to
continue to conduct and operate the business and affairs of the
Company and to provide other services required by the Company. The
services provided for under the Management Services Agreements
include, but are not necessarily limited to, accounting,
bookkeeping, finance, treasury, systems, credit, personnel
(including administration of pension and other benefit plans),
purchasing, engineering, legal, tax, and other technical and
professional support, including Ford employees who serve as
executive officers of the Company and/or its subsidiaries.
Under the Management Services Agreements, the Company
reimburses Ford or Ford Credit, as appropriate, for the costs of
the services provided to the Company or its subsidiaries by Ford or
Ford Credit, as the case may be. Presently, such costs include an
allocation of the total compensation (including benefits) and
overhead charges related to such employees, based on the time spent
in rendering services under the Management Services Agreements, and
in cases where the services are provided for purposes other than to
enable the Company to provide, in turn, a service to Ford or Ford
Credit, a reasonable markup on such costs. Out-of-pocket expenses
incurred by Ford or Ford Credit under the Management Services
Agreements also are reimbursed by the Company. The Associates also
has similar services agreements with the various Ford subsidiaries
that acquired The Associates' former foreign subsidiaries.
Certain of the arrangements and agreements between the Company
(and/or its subsidiaries) and Ford (and its subsidiaries) were
established by Ford prior to the Company's formation and thus were
not the result of direct negotiations between Ford and the Company.
The Company believes, however, that all such arrangements and
agreements are fair and reasonable.
-29-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- --------------------------------------------------------------------------
(a) 1. Financial Statements
Ford Holdings, Inc. and Subsidiaries
------------------------------------
Report of Independent Accountants.
Consolidated Statement of Income, for the years ended December
31, 1993, 1992 and 1991.
Consolidated Balance Sheet, December 31, 1993 and 1992.
Consolidated Statement of Cash Flows, for the years ended
December 31, 1993, 1992 and 1991.
Consolidated Statement of Stockholders' Equity, for the years
ended December 31, 1993, 1992 and 1991.
Notes to Financial Statements.
The Report of Independent Accountants, Financial Statements
and Notes to Financial Statements listed above are filed as part of
this Report and are as set forth on pages FH-1 through FH-20
immediately following the signature pages of this Report.
(a) 2. Financial Statement Schedules
Designation Description
- ----------- ------------
Schedule III Condensed Financial Information
of the Registrant
(Parent Company)
Schedule IV Indebtedness of and to Related Parties
Schedule IX Short-Term Borrowings
The Financial Statement Schedules listed above are filed as
part of this Report and are as set forth on pages FSS-1 through
FSS-4 immediately following page FH-20. The schedules not filed
are omitted because the information required to be contained
therein is disclosed elsewhere in the financial statements or the
amounts involved are not sufficient to require submission.
-30-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K (Continued)
- -----------------------------------------------------------------
(a) 3. Exhibits
- ----------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 3-A Certificate of Incorporation Filed as Exhibit 3-A to
dated August 30, 1989. the Registrant's Annual
Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 3-B By-Laws of the Registrant, as Filed as Exhibit 3-B to
amended through October 20, the Registrant's Annual
1989 Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 3-C By-Laws of the Registrant, as Filed as Exhibit 3-C to the
amended through May 22, 1992. Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1992. File
0-18263.*
Exhibit 4-A Certificate of Designation Filed as Exhibit 4-A to
of Flexible Rate Auction the Registrant's Annual
Preferred Stock. Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 4-A-1 Certificate of Designation Filed as Exhibit 4-A-1 to
of Flexible Rate Auction the Registrant's Annual
Preferred Stock (Exchange). Report on Form 10-K for
the year ended December 31,
1990. File O-18263.*
Exhibit 4-A-2 Certificate of Amendment to Filed as Exhibit 4-A-2 to the
the Certificate of Desig- Registrant's Annual Report on
nation of Flexible Rate Form 10-K for the year ended
Auction Preferred Stock December 31, 1991. File
(Exchange) filed 0-18263.*
December 27, 1991.
Exhibit 4-A-3 Certificate of Elimination of Filed as Exhibit 4-A-3 to the
Flexible Rate Auction Pre- Registrant's Annual Report on
ferred Stock (as referred to Form 10-K for the year ended
in Exhibit 4-A). December 31, 1992. File
0-18263.*
Exhibit 4-A-4 Certificate of Amendment to Filed as Exhibit 4-A-4 to the
the Certificate of Designation Registrant's Annual Report on
of the Flexible Rate Auction Form 10-K for the year ended
Preferred Stock (Exchange) December 31, 1992. File
filed June 1, 1992. 0-18263.*
</TABLE>
-31-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K (Continued)
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 4-A-5 Certificate of Designation of Filed as Exhibit 4-A-5 to the
Series A Cumulative Registrant's Annual Report on
Preferred Stock. Form 10-K for the year ended
December 31, 1992. File
0-18263.*
Exhibit 4-A-6 Certificate of Designation of Filed as Exhibit 4-A-6 to the
Series B Cumulative Registrant's Annual Report on
Preferred Stock. Form 10-K for the year ended
December 31, 1992. File
0-18263.*
Exhibit 4-A-7 Form of Certificate of Filed as Exhibit 2.7 to the
Designation of Series C Registrant's Registration
Cumulative Preferred Stock. Statement on Form 8-A dated
August 24, 1993. File
0-18263.*
Exhibit 4-B Indenture dated as of Filed as Exhibit 4-A to
February 1, 1990 among the the Registrant's Regis-
Registrant, Ford and Manu- tration Statement No.
facturers Hanover Trust 33-32641.*
Company.
Exhibit 4-C-1 Deposit Agreement dated as of Filed as Exhibit 4-C-1 to the
June 4, 1992, among Registrant, Registrant's Annual Report on
Chemical Bank, as depositary, Form 10-K for the year ended
and the holders from time to time December 31, 1992. File
of Depositary Shares, each 0-18263.*
representing 1/4,000 of a share
of Series A Cumulative
Preferred Stock.
Exhibit 4-C-2 Deposit Agreement dated as of Filed as Exhibit 1-B
January 26, 1993, among to Registrant's Report on
Registrant, Chemical Bank, Form 8-K dated January 19,
as depositary and the holders 1993. File No. 0-18263.*
from time to time of Depositary
Shares, each representing
1/4,000 of a share of Series B
Cumulative Preferred Stock.
Exhibit 4-C-3 Deposit Agreement dated as of Filed as Exhibit 2.8 to the
August 30, 1993, among Reg- Registrant's Registration
istrant, Chemical Bank, as Statement on Form 8-A dated
depositary and the holders August 24, 1993. File
from time to time of Depositary 0-18263.*
Shares, each representing 1/4000
of a share of Series C Cumulative
Preferred Stock.
</TABLE>
-32-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K (Continued)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 10-A Agreement dated as of Filed as Exhibit 10-A to
October 27, 1989 between the Registrant's Annual
the Registrant and Ford. Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 10-B Agreement dated as of Filed as Exhibit 10-B to
October 27, 1989 between the Registrant's Annual
the Registrant and Ford Report on Form 10-K for
Credit. the year ended December 31,
1989. File 0-18263.*
Exhibit 12 Computation of Ratio of Filed with this Report.
Earnings to Fixed Charges.
Exhibit 21 Subsidiaries of the Registrant Filed with this Report
as of December 31, 1993.
Exhibit 23 Consent of Independent Filed with this Report.
Certified Public Accountants.
Exhibit 24 Powers of Attorney. Filed with this Report.
</TABLE>
* Incorporated by reference as an exhibit hereto.
(b) Reports on Form 8-K
The Registrant did not file any Current Reports on
Form 8-K during the quarter ended December 31, 1993.
-33-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
By: /s/Terrence F. Marrs*
(Terrence F. Marrs)
Vice President-Controller
Date: March 28, 1994
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director and March 28, 1994
Chairman of the Board
of Directors and
Chief Executive Officer
Stanley A. Seneker* (principal executive officer)
(Stanley A. Seneker)
Director and March 28, 1994
President and Chief
Kenneth Whipple* Operating Officer
(Kenneth Whipple)
Director and March 28, 1994
David N. McCammon* Vice President
(David N. McCammon)
Director and March 28, 1994
Vice President - Treasurer
Malcolm S. Macdonald* (principal financial officer)
(Malcolm S. Macdonald)
Director and March 28, 1994
Wayland F. Blood* Vice President
(Wayland F. Blood)
</TABLE>
-34-
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director and March 28, 1994
Vice President - Controller
Terrence F. Marrs* (principal accounting officer)
(Terrence F. Marrs)
Dean E. Richardson* Director March 28, 1994
(Dean E. Richardson)
H. James Toffey, Jr.* Director March 28. 1994
(H. James Toffey, Jr.)
*By: /s/John M. Rintamaki
(John M. Rintamaki, Attorney-in-Fact)
</TABLE>
J:\10K\FHI93.be
<PAGE>
Coopers & Lybrand Certified Public Accountants
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Holdings, Inc.
We have audited the consolidated balance sheet of Ford Holdings,
Inc. and Subsidiaries at December 31, 1993 and 1992, and the
related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended
December 31, 1993, and the financial statement schedules listed
in Item 14(a) of this Form 10-K. These financial statements and
financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit 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 that
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 consolidated
financial position of Ford Holdings, Inc. and Subsidiaries at
December 31, 1993 and 1992, and the consolidated results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally
accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered
in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information
required to be included therein.
As discussed in Notes 10 and 12 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes and postretirement benefits other than pensions in
1992.
/s/Coopers & Lybrand
Coopers & Lybrand
400 Renaissance Center
Detroit, Michigan 48243
313-446-7100
February 1, 1994
FH-1
<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Years Ended December 31, 1993, 1992, and 1991
(in millions)
1993 1992 1991
------ ------ ------
Revenues
<S> <C> <C> <C>
Financing revenues (Note 1) $3,839 $3,461 $3,287
Investment and other income (Note 2) 747 627 622
Insurance premiums earned (Note 1) 706 729 905
------ ------ ------
Total revenues 5,292 4,817 4,814
Expenses
Interest expense 1,751 1,658 1,718
Operating and other expenses 1,332 1,135 1,039
Provision for credit losses (Note 8) 501 532 443
Insurance claims (Note 1) 498 567 664
Depreciation 186 211 229
Amortization of policy acquisition costs (Note 9) 123 102 129
Interest credited on annuity contracts (Note 1) 70 24 -
------ ------ ------
Total expenses 4,461 4,229 4,222
------ ------ ------
Income before income taxes and cumulative
effects of changes in accounting principles 831 588 592
Provision for income taxes (Note 10) 325 222 213
------ ------ ------
Income before minority interests and
cumulative effects of changes in
accounting principles 506 366 379
Minority interests in net (loss)/income
of subsidiaries (5) 9 (5)
------ ------ ------
Income before cumulative effects of
changes in accounting principles 511 357 384
Cumulative effects of changes in accounting
principles (Notes 10 and 12) - 26 -
------ ------ ------
Net income $ 511 $ 383 $ 384
====== ====== ======
</TABLE>
The accompanying notes are part of the financial statements.
FH-2
<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
December 31
-----------------------
1993 1992
------- -------
ASSETS
<S> <C> <C>
Cash and cash equivalents (Note 1) $ 823 $ 408
Investments in securities (Note 4)
Debt securities, at amortized cost 4,056 2,918
Marketable equity securities, at market 221 333
------- -------
Total investments in securities 4,277 3,251
Finance receivables, net (Note 5) 24,568 20,750
Accounts and notes receivable 607 797
Receivables from Ford and affiliated companies 292 320
Investments in direct financing leases, net (Note 6) 3,974 3,466
Investments in operating leases, net (Note 7) 1,441 1,141
Goodwill (Note 1) 1,830 1,895
Deferred policy acquisition costs (Note 9) 178 148
Other assets 609 555
------- -------
Total assets $38,599 $32,731
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 622 $ 409
Payables to Ford and affiliated companies 324 315
Unpaid insurance claims (Note 1) 136 133
Income taxes currently payable (Note 10) 79 15
Annuity contracts (Note 1) 1,598 777
Unearned insurance premiums (Note 1) 865 936
Debt (Note 11) 29,570 25,767
Other liabilities and deferred income 1,114 864
Minority interests in net assets of subsidiaries - 17
------- -------
Total liabilities 34,308 29,233
Stockholders' equity
Preferred Stock, $1 par value (Note 13) 1,458 1,083
Common Stock, $1 par value, authorized - 10,000 shares;
issued and outstanding - 1,099 shares (Note 13) * *
Paid-in surplus 976 989
Unrealized gain on marketable equity securities,
net of taxes (Note 4) 40 45
Foreign currency translation adjustments (3) (1)
Earnings retained for use in business (Note 14) 1,820 1,382
------- -------
Total stockholders' equity 4,291 3,498
------- -------
Total liabilities and stockholders' equity $38,599 $32,731
======= =======
- - - - - -
*Less than $50,000
</TABLE>
The accompanying notes are part of the financial statements.
FH-3
<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
For the Years Ended December 31, 1993, 1992, and 1991
(in millions)
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash and cash equivalents at January 1 $ 408 $ 521 $ 558
Cash flows from operating activities
Net income 511 383 384
Adjustments to reconcile net income to
cash flows from operating activities:
Cumulative effects of changes in
accounting principles - (26) -
Depreciation 186 211 229
Deferred income taxes 18 51 74
Provision for credit losses 501 532 443
Gain on sales of real estate and investments (136) (93) (73)
Changes in assets and liabilities:
Accounts and notes receivable 190 (47) (118)
Deferred policy acquisition costs (30) (10) 49
Accounts payable and other liabilities 539 23 193
Unearned insurance premiums (71) (254) (292)
Other (93) 202 528
------- ------ -------
Net cash provided by operating activities 1,615 972 1,417
Cash flows from investing activities
Acquisitions of finance receivables (21,524) (15,989) (14,920)
Collections of finance receivables 18,081 13,839 10,538
Purchases of securities (12,507) (10,950) (10,790)
Sales of securities 11,581 10,243 11,153
Recovery of equipment costs and residual interests 744 550 522
Cost of equipment and lease receivables acquired (1,764) (1,666) (1,615)
Acquisitions of other companies, net (299) (461) (860)
Capital expenditures (30) (36) (33)
Other 27 118 258
------- ------- -------
Net cash used in investing activities (5,691) (4,352) (5,747)
Cash flows from financing activities
Capital contribution received - - 54
Issuance of Preferred Stock 375 283 -
Proceeds from issuance of long-term debt 4,897 3,936 4,230
Principal payments on long-term debt (2,307) (2,536) (1,672)
Net repayments to affiliated companies - - (192)
Changes in short-term debt 743 865 1,916
Dividends paid to shareholders (73) (48) (48)
Receipts from annuity contracts, net 821 731 46
Other 35 36 (41)
-------- -------- --------
Net cash provided by financing activities 4,491 3,267 4,293
Net increase/(decrease)in cash and cash equivalents 415 (113) (37)
-------- -------- --------
Cash and cash equivalents at December 31 $ 823 $ 408 $ 521
======== ======== ========
Supplementary cash flow information
Interest paid $ 1,737 $ 1,639 $ 1,594
Taxes paid 235 184 131
</TABLE>
The accompanying notes are part of the financial statements.
Certain amounts for 1992 and 1991 have been reclassified to conform with
presentations adopted in 1993.
FH-4
<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
For the Years Ended December 31, 1993, 1992, and 1991
(in millions)
1993 1992 1991
------ ------ ------
Preferred Stock (Note 13)
<S> <C> <C> <C>
Balance at beginning of year $1,083 $ 800 $ 800
Issuance of Preferred Stock 375 283 -
------ ------ ------
Balance at end of year 1,458 1,083 800
Common Stock (Note 13)
Issued at beginning and end of year * * *
Paid-in surplus
Balance at beginning of year 989 998 782
Additional capital contribution (Note 16) - - 216
Issuance cost on Preferred Stock (13) (9) -
------ ------ ------
Balance at end of year 976 989 998
Unrealized gain on marketable equity securities,
net of taxes (Note 4)
Balance at beginning of year 45 50 (6)
(Loss)/gain during year (5) (5) 56
------ ------ ------
Balance at end of year 40 45 50
Foreign currency translation adjustments
Balance at beginning of year (1) 2 2
Translation adjustments during year (2) (3) -
------ ------ ------
Balance at end of year (3) (1) 2
Earnings retained for use in business (Note 14)
Balance at beginning of year 1,382 1,047 711
Net income 511 383 384
Cash dividends on Preferred Stock (73) (48) (48)
------ ------ ------
Balance at end of year 1,820 1,382 1,047
------ ------ ------
Total stockholders' equity $4,291 $3,498 $2,897
====== ====== ======
</TABLE>
- - - - - -
*Less than $50,000
The accompanying notes are part of the financial statements.
FH-5
<PAGE>
Ford Holdings, Inc. and Subsidiaries
Notes to Financial Statements
NOTE 1. Accounting Policies
- ----------------------------
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of
Ford Holdings and all majority-owned subsidiaries (the
"company"). On September 1, 1989, Ford Holdings, Inc. ("Ford
Holdings") was formed as a wholly-owned subsidiary of Ford Motor
Company ("Ford"). The company's wholly-owned subsidiaries
include Associates First Capital Corporation and its subsidiaries
("The Associates"), The American Road Insurance Company and its
subsidiaries ("American Road"), USL Capital Corporation (formerly
United States Leasing International, Inc.) and its subsidiaries
("USL Capital"), Ford Motor Land Development Corporation and its
subsidiaries ("Ford Land") and Ford Leasing Development Company
and its subsidiaries ("Ford Leasing"). Investments in certain
partnerships and affiliates that are 50% or less owned are
included in the consolidated financial statements on an equity
basis.
Revenue Recognition
- -------------------
Finance revenues on loans and direct financing leases are
recognized in income over the term of the related contract using
the interest method. Rental income on operating leases is
recognized ratably over the lease term.
Insurance premiums are recorded as unearned premiums when written
and are subsequently recognized in income over the term of the
related insurance contracts. The methods of recognizing premium
revenue are related to amounts at risk and include historical
loss experience, pro rata, and sum-of-the-digits bases.
Goodwill
- --------
Goodwill, arising primarily from the acquisitions of The
Associates by Ford Holdings and of USL Capital by Ford, is being
amortized using the straight-line method over 40 years.
Insurance Claims
- ----------------
A liability is provided for reported claims and for claims that
have been incurred but not reported. The estimate of the
liability for claims that have been incurred but not reported is
based on prior experience and insurance in-force.
Annuity Contracts
- -----------------
The liability for annuity contracts reflects deposits received
and interest credited, less related withdrawals. The weighted-
average interest rate on annuity contracts outstanding at
December 31, 1993 and 1992 was 6.2% and 7.3%, respectively.
Interest rates offered are initially guaranteed for periods of
either one or five years. Interest credited to annuity account
balances is recognized as expense; surrender charges are
recognized as a reduction of interest credited to annuitants.
The fair value of annuity contracts at December 31, 1993 and 1992
approximated book value because the contractual interest rate due
holders is reset annually for more than 97% of contracts
outstanding.
Cash Equivalents
- ----------------
The company considers all highly-liquid investments purchased
with a maturity of three months or less to be cash equivalents.
The book value of these investments approximates fair value
because of the short maturity.
FH-6
<PAGE>
NOTE 2. Investment and Other Income
- ------------------------------------
Investment and other income consisted of the following (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Rental income on real estate $235 $206 $194
Interest and dividends on debt securities 242 175 185
Dividends on marketable equity securities 9 11 17
Gains/(losses) on sales of:
Debt securities 92 62 58
Marketable equity securities 33 34 14
Real estate 1 - (1)
Other 135 139 155
---- ---- ----
Total investment and other income $747 $627 $622
==== ==== ====
</TABLE>
NOTE 3. Reinsurance Activity
- -----------------------------
A portion of the physical damage and credit life and disability
insurance business of the company relates to reinsurance
agreements with unaffiliated insurance companies. Amounts added
to or deducted from accounts in connection with insurance assumed
or ceded were as follows (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Added to
Insurance premiums earned $92 $41 $53
Insurance claims 62 46 52
Deducted from
Insurance premiums earned 52 37 38
Insurance claims 25 24 18
</TABLE>
The company remains contingently liable with respect to insurance
ceded should the reinsurer be unable to meet the obligation
assumed under the reinsurance agreement. Amounts recoverable
from reinsurers were $7 million in 1993 and $8 million in 1992.
NOTE 4. Investments in Securities
- ----------------------------------
Investments in debt securities are recorded at amortized cost
because of the ability to hold such securities until maturity and
the intent to hold them for the foreseeable future. If market
conditions change, however, certain of these securities may be
sold prior to maturity with the realized gain or loss included in
investment and other income. The cost of investments sold
generally is determined on a specific security basis.
Marketable equity securities are recorded at fair value with
unrealized gains or losses, net of applicable income taxes,
recorded directly to stockholders' equity; realized gains and
losses are included in investment and other income. The cost of
investments sold generally is determined on a first-in, first-out
basis.
FH-7
<PAGE>
NOTE 4. Investments in Securities (Cont'd)
- ----------------------------------
Investments in debt securities at December 31 were as follows (in
millions):
<TABLE>
<CAPTION>
1993
---------------------------------------------
Gross Gross
Unrealized Unrealized
Book Value Gains Losses Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Debt securities issued by the U.S.
government and agencies $ 766 $26 $ 1 $ 791
Municipal securities 114 3 1 116
Debt securities issued by foreign governments 88 4 1 91
Corporate securities 1,779 48 19 1,808
Mortgage-backed securities (including derivatives) 684 12 2 694
Other debt securities 625 0 0 625
------ --- --- ------
Total $4,056 $93 $24 $4,125
====== === === ======
</TABLE>
<TABLE>
<CAPTION>
1992
---------------------------------------------
Gross Gross
Unrealized Unrealized
Book Value Gains Losses Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Debt securities issued by the U.S.
government and agencies $ 741 $16 $ 1 $ 756
Municipal securities 23 1 0 24
Debt securities issued by foreign governments 35 1 0 36
Corporate securities 1,078 28 10 1,096
Mortgage-backed securities (including derivatives) 477 9 1 485
Other debt securities 564 0 0 564
------ --- --- ------
Total $2,918 $55 $12 $2,961
====== === === ======
</TABLE>
The fair value of most securities was estimated based on quoted
market prices for those securities. For those securities for
which there were no quoted market prices, the estimate of fair
value was based on similar types of securities that are traded in
the market.
The book value and fair value of investments in debt securities
at December 31, by contractual maturity, are shown below (in
millions). Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without penalty.
<TABLE>
<CAPTION>
1993 1992
---------------------- -----------------------
Book Value Fair Value Book Value Fair Value
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 498 $ 498 $ 647 $ 647
Due after one year through five years 808 818 651 660
Due after five years through ten years 596 613 438 448
Due after ten years 1,470 1,502 705 721
Mortgage-backed securities
(including derivatives) 684 694 477 485
------ ------ ------ ------
Total $4,056 $4,125 $2,918 $2,961
====== ====== ====== ======
</TABLE>
Proceeds from sales of investments in debt securities were $11.1
billion in 1993, $9.9 billion in 1992, and $11.2 billion in 1991.
In 1993, gross gains of $112 million and gross losses of $20
million were realized on those sales; gross gains of $90 million
and gross losses of $28 million were realized in 1992, and gross
gains of $75 million and gross losses of $17 million were
realized in 1991.
The cost of marketable equity securities at December 31, 1993 and
1992 was $160 million and $262 million, respectively. In 1993,
gross unrealized gains totaled $66 million and gross unrealized
losses totaled $5 million; in 1992, gross unrealized gains and
gross unrealized losses totaled $82 million and $11 million,
respectively.
FH-8
<PAGE>
NOTE 5. Finance Receivables
- ----------------------------
Finance receivables at December 31 were as follows (in millions):
<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Consumer finance
Residential real estate-secured receivables $10,626 $ 9,820
Direct installment and credit card receivables 6,060 5,277
Other consumer installment receivables 3,812 2,849
------- -------
Total consumer finance 20,498 17,946
Commercial finance
Heavy-duty truck equipment receivables 4,663 3,500
Other industrial installment receivables 3,277 2,517
------- -------
Total commercial finance 7,940 6,017
Total finance receivables 28,438 23,963
Unearned finance income (3,089) (2,550)
Allowance for credit losses (781) (663)
------- -------
Net finance receivables $24,568 $20,750
======= =======
Fair value $26,019 $21,913
</TABLE>
The estimated maturities of finance receivables outstanding at
December 31, 1993 were as follows (in millions):
<TABLE>
<CAPTION>
After
1994 1995 1996 1996 Total
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Consumer finance $3,194 $2,561 $2,194 $12,549 $20,498
Commercial finance 3,506 1,980 1,271 1,183 7,940
------ ------ ------ ------- -------
Total $6,700 $4,541 $3,465 $13,732 $28,438
====== ====== ====== ======= =======
</TABLE>
Estimated maturities were based on contractual terms and do not
give effect to possible prepayments or renewals.
The fair value of most receivables was estimated by discounting
future cash flows using an estimated discount rate which
reflected the credit, interest rate and prepayment risks
associated with similar types of instruments. For receivables
with short maturities, the book value approximated fair value.
Acquisitions
- ------------
During 1993, 1992 and 1991, the company made acquisitions of
finance businesses and finance receivables, the most significant
of which were as follows:
In September 1993, The Associates acquired the credit card
portfolio of Great Western Financial Corporation. The
outstanding balances totaled $216 million.
In September 1993, The Associates purchased the assets of Mack
Financial Corporation, the financing division of Mack Trucks,
Inc., consisting of $552 million of net commercial finance
receivables, principally secured by heavy-duty trucks and truck
trailers. The fair value of assets acquired and liabilities
assumed was $587 million and $380 million, respectively. The
transaction was accounted for as a purchase.
In April 1993, The Associates purchased the stock of Allied
Finance Company, with assets primarily consisting of $146 million
of net consumer finance receivables, principally comprised of
residential real estate-secured, direct installment and indirect installment
receivables. The fair value of assets acquired and liabilities
assumed was $197 million and $112 million, respectively. The
transaction was accounted for as a purchase.
FH-9
<PAGE>
NOTE 5. Finance Receivables (Cont'd)
- ----------------------------
In December 1992, The Associates purchased the stock of Trans-
National Leasing, Inc. Approximately $48 million of net
commercial finance receivables relating to the financing of fleet
vehicles was acquired in the transaction. The fair value of
assets acquired and liabilities assumed was $52 million and $45
million, respectively. The transaction was accounted for as a
purchase.
In November 1992, The Associates purchased substantially all of
the assets of First Family Financial Services H. C., Inc.,
including $546 million of net consumer finance receivables,
principally residential real estate-secured and direct
installment receivables. The fair value of assets acquired and
liabilities assumed was $697 million and $543 million,
respectively. The transaction was accounted for as a purchase.
In April 1992, The Associates purchased from Signal Financial
Corporation $290 million of net consumer finance receivables,
consisting primarily of direct installment and residential real
estate-secured receivables. The fair value of assets acquired
and liabilities assumed was $303 million and $2 million,
respectively. The transaction was accounted for as a purchase.
In the third quarter of 1991, The Associates acquired Kentucky
Finance Co., Inc. and Chase Manhattan Leasing Company (Michigan),
Inc. in separate transactions. The transactions involved
approximately $1,076 million of net consumer and commercial
finance receivables. The fair values of assets acquired and
liabilities assumed in the aggregate were $1,184 million and $294
million, respectively. Both transactions were accounted for as
purchases.
In January 1991, The Associates acquired from Ford Credit
approximately $2.2 billion of net consumer finance receivables
for a like amount of cash. The purchase price represented the
net book value of the receivables, which also approximated fair
value. The Associates funded the purchase through the issuance
of short-term debt.
NOTE 6. Investments in Direct Financing Leases
- -----------------------------------------------
<TABLE>
<CAPTION>
Investments in direct financing leases at December 31 were as
follows (in millions):
1993 1992
------- -------
<S> <C> <C>
Minimum lease rentals $ 5,146 $ 4,520
Estimated residual values 324 291
Lease origination costs 23 26
Unearned finance income (1,448) (1,312)
Allowance for credit losses (71) (59)
------- -------
Net investments in direct financing leases $ 3,974 $ 3,466
======= =======
</TABLE>
Minimum direct financing lease rentals are as follows (in millions):
1994 - $1,375; 1995 - $1,054; 1996 - $703; 1997 - $460; thereafter - $1,554.
The estimated residual values represent proceeds expected to be
received from the sale of equipment leased under direct financing
leases.
FH-10
<PAGE>
NOTE 7. Investments in Operating Leases
- ----------------------------------------
<TABLE>
<CAPTION>
Investments in equipment operating leases at December 31 were as
follows (in millions):
1993 1992
------ ------
<S> <C> <C>
Equipment cost:
Automotive $ 155 $ 219
Business equipment 382 290
Rail 463 323
Aircraft 40 40
------ ------
Total equipment cost 1,040 872
Rentals receivable 10 12
Accumulated depreciation (352) (324)
Allowance for credit losses (3) (2)
------ ------
Net investments in equipment operating leases $ 695 $ 558
====== ======
</TABLE>
Minimum equipment operating lease rentals are as follows (in
millions): 1994 - $95; 1995 - $67; 1996 - $27; 1997 - $15;
thereafter - $51. Revenues from equipment operating leases,
included in financing revenues, were as follows (in millions):
1993 - $189; 1992 - $168; 1991 - $202. The cost of equipment
under operating leases is capitalized and depreciated over the
lease term, primarily on a straight-line basis. Depreciation
expense on these operating leases was as follows (in millions):
1993 - $131; 1992 - $159; 1991- $178.
Investments in real estate operating leases at December 31 were
as follows (in millions):
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Properties at cost:
Land $ 206 $ 135
Buildings and land improvements 581 492
Leasehold improvements 10 10
Machinery, equipment, and office furniture 60 57
Construction in progress 82 18
Accumulated depreciation (193) (174)
Other real estate investments - 45
----- -----
Net investments in real estate operating leases $ 746 $ 583
===== =====
Minimum real estate operating lease rentals are as follows (in
millions): 1994 - $62; 1995 - $57; 1996 - $50; 1997 - $45;
thereafter - $123. Revenues from real estate operating leases
are included in investment and other income. The cost of real
estate operating leases is capitalized and depreciated on a
straight-line basis over the useful life of the real estate
asset. Depreciation expense on these operating leases was as
follows (in millions): 1993 - $23; 1992 - $23; 1991 - $23.
The company, as lessee, leases certain office facilities,
equipment, land, and dealership facilities under operating leases
for subsequent sublease. Rental expense and sublease income,
respectively, for all operating leases were as follows (in
millions): 1993 - $58 and $56; 1992 - $57 and $54; 1991 - $62
and $60.
NOTE 8. Allowances for Credit Losses
- -------------------------------------
Allowances for credit losses are established as required based on
historical experience. Other factors that affect collectibility
also are evaluated, and additional amounts may be provided.
Finance receivables and lease investments are charged to the
allowances for credit losses when an account is deemed to be
uncollectible, taking into consideration the financial condition
of the borrower, the value of the collateral, recourse to
guarantors and other factors. In addition, company policy
provides for charge-off of various types of accounts as follows:
consumer direct installment receivables, except those
collateralized by real estate, are charged to the allowance for
losses when no cash payment has been received for six months;
credit card receivables are charged to the allowance for losses
when the receivable becomes contractually six months delinquent;
all other
FH-11
<PAGE>
NOTE 8. Allowances for Credit Losses (Cont'd)
- -------------------------------------
finance receivables and lease investments are charged to the
allowances for losses when any of the following conditions occur:
(i) the related security has been converted or destroyed;
(ii) the related security has been repossessed and sold or held
for sale for one year; or (iii) the related security has not been
repossessed, and the receivable has become contractually
delinquent at dates ranging from 180 days to one year.
Recoveries on finance receivables and lease investments
previously charged off as uncollectible are credited to the
allowances for credit losses.
Changes in the allowances for credit losses were as follows (in
millions):
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Beginning balance $ 724 $ 617 $ 471
Provision for losses 501 532 443
Net losses (404) (436) (395)
Other changes 34 11 98
----- ----- -----
Ending balance $ 855 $ 724 $ 617
===== ===== =====
</TABLE>
NOTE 9. Deferred Policy Acquisition Costs
- ------------------------------------------
Certain costs of acquiring insurance contracts are deferred and
amortized over the terms of the related contracts on the same
bases on which the premiums are earned. Changes in deferred
policy acquisition costs were as follows (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Beginning balance $ 148 $ 138 $ 187
Commissions 134 90 48
Insurance tracking costs 1 11 20
Origination costs, affiliated company 12 6 5
Premium taxes 6 5 7
Amortization of policy acquisition costs (123) (102) (129)
----- ----- -----
Ending balance $ 178 $ 148 $ 138
===== ===== =====
</TABLE>
NOTE 10. Income Taxes
- ----------------------
The provision for income taxes was as follows (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Currently payable
U.S. federal $284 $149 $139
State and local 23 22 -
---- ---- ----
Total currently payable 307 171 139
Deferred, principally U.S.
federal and state 18 51 74
---- ---- ----
Total provision for income taxes $325 $222* $213
==== ==== ====
</TABLE>
- - - - - -
*Excludes cumulative effects of changes in accounting principles
The company adopted Statement of Financial Accounting Standards
No. 109 ("SFAS 109"), "Accounting for Income Taxes," as of
January 1, 1992. The cumulative effect of this change in
accounting principle increased 1992 net income by $51 million.
Financial statements for prior years were not restated to apply
the provisions of SFAS 109. The adoption of SFAS 109 changes the
method of accounting for income taxes from the deferred method
using Accounting Principles Board Opinion No. 11 ("APB 11") to an
asset and liability approach.
Under SFAS 109, deferred income taxes reflect the estimated tax
effect of temporary differences between assets and liabilities
for financial reporting purposes and those amounts as measured by
tax laws and regulations.
FH-12
<PAGE>
NOTE 10. Income Taxes (Cont'd)
- ----------------------
The components of deferred income tax assets and liabilities at
December 31 were as follows (in millions):
<TABLE>
<CAPTION>
1993 1992
---------------------------- ----------------------------
Deferred Tax Deferred Tax Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Allowance for credit losses $273 $ - $228 $ -
Employee benefit plans 75 - 54 -
Unearned premium reserve 76 - 49 -
Leasing transactions - 421 - 396
Deferred acquisition costs - 49 - 41
Unrealized gains - 20 - 21
Depreciation and amortization
(excludes leasing transactions) - 22 - 24
All other - 142 10 70
---- ---- ---- ---
Subtotal 424 654 341 552
Valuation allowances (9) - (8) -
---- ---- ---- ----
Total deferred taxes $415 $654 $333 $552
==== ==== ==== ====
</TABLE>
Deferred income taxes for 1991 were derived using the guidelines
in APB 11. Under APB 11, deferred income taxes result from
timing differences in the recognition of revenues and expenses
between financial statements and tax returns. The principal
sources of these differences and the related effect of each on
the provision for income taxes were as follows (in millions):
<TABLE>
<CAPTION>
1991
----
<S> <C>
Leasing transactions $ 65
Finance revenue 17
Insurance premiums 15
Provision for losses on finance receivables (17)
Policy acquisition costs (16)
Depreciation expense -
Other 10
----
Total $ 74
====
</TABLE>
A reconciliation of the provision for income taxes compared with the amounts
at the U.S. statutory tax rate is shown below (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C>
Tax provision at U.S. statutory rate of 35%
for 1993 and 34% for 1992 and 1991 $291 $200 $201
Effect of:
Goodwill and acquisition adjustments 20 20 19
State and local income taxes 19 7 7
Investment income not subject to tax or
subject to tax at reduced rates (16) (9) (11)
Other 11 4 (3)
---- ---- ----
Provision for income taxes $325 $222* $213
==== ==== ====
Effective Tax Rate 39.1% 37.8% 36.0%
- - - - - -
*Excludes cumulative effects of changes in accounting principles
</TABLE>
FH-13
NOTE 11. Debt
- --------------
Debt at December 31 was as follows (in millions):
<TABLE>
<CAPTION>
1993
------------------------------
Weighted Average Book Value
Interest Rate Maturity 1993 1992
------------------------------ ------- -------
<S> <C> <C> <C> <C>
Debt payable within one year
Commercial paper $10,721 $ 9,517
Bank borrowings 472 466
------- -------
Total short-term debt 11,193 9,983
Senior and subordinated notes and
debentures payable within one year 2,609 2,273
------- -------
Total debt payable within one year 13,802 12,256
Long-term debt
Unsecured senior indebtedness 7.5% 1995-2020 15,518 13,161
Secured notes 6.4% 1995-2005 101 101
Capital lease obligations 7.8% 1995-2021 7 7
Unsecured subordinated notes 8.1% 1995-2009 142 242
------- -------
Total long-term debt 15,768 13,511 1
------- -------
Total debt $29,570 $25,767
======= =======
Fair value $30,909 $26,524
</TABLE>
The fair value of debt was estimated based on quoted market
prices or current rates for similar debt with the same remaining
maturities.
The average remaining term of commercial paper was 24 days and 32
days at December 31, 1993 and 1992, respectively.
Long-term debt at December 31, 1993, including amounts payable
within one year, matures as follows (in millions): 1994 -
$2,609; 1995 - $2,479; 1996 - $2,955; 1997 - $3,069; 1998 -
$1,513; thereafter - $5,752. The interest portion of capital
lease obligations was $1 million at December 31, 1993.
Secured indebtedness is collateralized by mortgages on land and
buildings of approximately $99 million and by rentals receivable and
rental equipment of approximately $7 million, which are included in
investments in leases. At December 31, 1993, warrants were outstanding to
purchase $155 million aggregate principal amount of senior notes
at specified dates between 1994 and 1999.
At December 31, 1993, Ford guaranteed all of Ford Holdings' debt
held by nonaffiliated persons, totaling $1,862 million, and
$46 million of Ford Leasing's debt.
At December 31, 1993, the company had contractually committed
revolving credit facilities with banks of $5.3 billion. These
facilities were unused at December 31, 1993. Maturity dates for
these facilities ranged from February 1994 through September
1998. Also, at December 31, 1993, the company had contractually
committed lines of credit with banks of $3.1 billion, none of
which were utilized. In addition, the company had $1.2 billion
of contractually committed receivables sale facilities, of which
about 14% were in use at December 31, 1993. Some of these
agreements contain certain provisions related to the continuation
of Ford's direct or indirect ownership in the company.
FH-14
<PAGE>
NOTE 12. Employee Retirement Benefits
- --------------------------------------
Employee Retirement Plans
- -------------------------
The Associates sponsors various defined benefit pension plans,
which together cover substantially all permanent employees who
meet certain eligibility requirements.
The Associates' pension expense reflected the following (in
millions):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Benefits attributed to employee's service $ 10 $ 8 $ 7
Interest on projected benefit obligations 18 16 14
Actual return on assets (gain) (21) (10) (29)
Net amortization 7 (2) 19
---- ---- ----
Net pension expense $ 14 $ 12 $ 11
==== ==== ====
</TABLE>
The status of these plans for The Associates at December 31
was as follows (in millions):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Plan assets at fair value $197 $179
Actuarial present value of:
Vested benefits $215 $167
Accumulated benefits 223 173
Projected benefits 290 227
Plan assets (less than) projected benefits $(93) $(48)
Unamortized net transition obligation
and amendments 10 12
Unamortized net losses 46 10
---- ----
Prepaid pension (liability) recognized
in the balance sheet $(37) $(26)
==== ====
Plan assets (less than)/in excess of
accumulated benefits $(26) $ 6
Assumptions:
Discount rate 7.0% 8.0%
Average rate of increase in compensation 6.0% 6.0%
Long-term rate of return on assets 9.5% 9.5%
</TABLE>
USL Capital sponsors a defined contribution retirement plan which
covers substantially all of its employees. Under the profit
sharing part, contributions are determined as a percent (6.9%) of
each covered participant's salary, minus the Old Age, Survivors,
and Disability Insurance portion of social security taxes paid
for the participant by USL Capital. Profit sharing cost
represents contributions minus the unvested amounts of terminated
participants. Under the deferred compensation part,
contributions (cost) are determined as 75 cents per dollar for
the first 3% and 25 cents per dollar on the next 3% of deferred
compensation up to a maximum of 6% of a participant's compensa-
tion. The amount charged to operating expenses related to USL Capital's
retirement plan was as follows (in millions): 1993 - $4;
1992 - $4; 1991 - $4.
Other subsidiaries of the company do not have employees but
purchase technical and administrative services from Ford, the
cost of which includes retirement benefits. Retirement costs
included in such service fee billings from Ford were not sig-
nificant.
Postretirement Health Care and Life Insurance Benefits
- ------------------------------------------------------
The Associates sponsors unfunded plans that provide selected
health care and life insurance benefits to substantially all
retired employees who have met certain eligibility requirements;
however, the benefits of the plan may be modified or terminated
at the discretion of The Associates.
FH-15
<PAGE>
NOTE 12. Employee Retirement Benefits (Cont'd)
- --------------------------------------
USL Capital sponsors unfunded plans that provide selected health
care and life insurance benefits to retired employees, the cost
of which is shared between USL Capital and the retiree. The
accounting for the health care plan anticipates future cost-
sharing changes that are consistent with USL Capital's past
practice. USL Capital defines a maximum amount (or "cap") that
it will contribute toward the health benefits of each retiree.
This cap is determined annually and is based on the individual
retiree's number of dependents. Over the last six years the
aggregate increase in the cap approximates the average increase
in the underlying premium costs of the program. This valuation
assumed that in future years USL Capital will continue to
increase the cap at the average rate of increase of the
underlying cost of the retiree benefit program. Benefits and
eligibility rules, however, may be modified by USL Capital from
time to time.
Prior to 1992, the expense recognized for postretirement health
care benefits was based on actual expenditures for the year.
Beginning in 1992, the estimated cost of postretirement health
care benefits is accrued on an actuarially determined basis, in
accordance with the requirements of Statement of Financial
Accounting Standards No. 106 ("SFAS 106"), "Employer's Accounting
for Postretirement Benefits Other Than Pensions". Implementation
of SFAS 106 has not increased the company's cash expenditures for
postretirement benefits. As of January 1, 1992, The Associates
recorded a one-time charge to net income of $40 million, which
represented the estimated accumulated postretirement benefit
obligation of $65 million, net of deferred income taxes of $21
million and amounts recorded as purchase accounting adjustments
of $4 million. In addition, the unamortized amount ($19 million)
of the postretirement benefit liability recorded by Ford Holdings
at the time The Associates was acquired was reversed with the
adoption of the new standard by The Associates. As of January 1,
1992, USL Capital recorded a one-time charge to net income of $3
million, which represented the estimated accumulated
postretirement benefit obligation of $5 million, net of deferred
income taxes of $2 million. These amounts have been reflected in
the Consolidated Statement of Income as a component of the
cumulative effects of changes in accounting principles.
The combined amount paid by The Associates and USL Capital for
postretirement benefits in 1993, 1992 and 1991 was $2 million, $2
million and $1 million, respectively.
The combined net postretirement benefit expense for The
Associates and USL Capital included the following (in millions):
<TABLE>
<CAPTION>
1993 1992
----- ----
<S> <C> <C>
Benefits attributed to employee's service $ 4 $ 3
Interest on accumulated benefit obligation 8 7
Net amortization (1) -
--- ---
Net postretirement benefit expense $11 $10
=== ===
</TABLE>
<TABLE>
<CAPTION>
The combined accrued postretirement benefit cost for The Associates
and USL Capital at December 31 included the following (in millions):
1993 1992
---- ----
<S> <C> <C>
Retirees $ 36 $30
Active employees eligible to retire 22 15
Other active employees 34 37
---- ---
Total accumulated obligation 92 82
Unamortized amendments 11 -
Unrecognized net (loss) (17) (4)
---- ---
Accrued postretirement benefit cost $ 86 $78
==== ===
Assumption: Discount rate at year-end 7.5% 8.5%
</TABLE>
For measurement purposes, The Associates assumed 12.5% and 13.32%
weighted average annual rates of increase in per capita cost of
covered health care benefits for 1993 and 1992, respectively,
decreasing gradually to 5.5% by 2009.
FH-16
<PAGE>
NOTE 12. Employee Retirement Benefits (Cont'd)
- --------------------------------------
For measurement purposes, USL Capital assumed 12% and 8% annual
rates of increase in per capita cost of postretirement medical
benefits for 1993 for the under age 65 indemnity and HMO and over
age 65 indemnity plans, respectively; the rates were assumed to
decrease gradually to 5.5% by 2006 and remain at that level
thereafter. The comparable rates assumed for 1992 were 14% and
9% for the under age 65 indemnity and HMO and over age 65
indemnity plans, respectively.
Changing the assumed health care cost trend rate by one
percentage point would change the aggregate of the service and
interest cost components of net periodic postretirement benefit
cost of The Associates and USL Capital, on a combined basis, for
1993 and 1992 by $1 million each year, and the accumulated
postretirement benefit obligation at December 31, 1993 and 1992
by $7 million and $6 million, respectively.
NOTE 13. Capital Stock
- -----------------------
The authorized capital stock of Ford Holdings consists of Common
Stock and Preferred Stock. Holders of Preferred Stock generally
are entitled to elect not less than 25 percent of the directors
of the company. On all matters other than the election of
directors as to which stockholders generally have a vote, holders
of Common Stock, as a class, are entitled to 75%, and holders of
Preferred Stock, as a class, are entitled to 25%, of the total
number of votes of all the capital stock of Ford Holdings. At
December 31, 1993, the Preferred Stock consisted of $800 million
of Cumulative Flexible Rate Auction Preferred Stock (Exchange)
("Flex-APS"); $285 million of fixed-rate Series A Cumulative
Preferred Stock; $173 million of fixed-rate Series B Cumulative
Preferred Stock; and $200 million of fixed-rate Series C
Cumulative Preferred Stock.
Dividends on the Flex-APS generally are determined through
auction procedures. The maximum applicable dividend rate is a
function of the 60-day "AA" Composite Commercial Paper rate or
the applicable reference rate. The average dividend rate in
effect on the Flex-APS in 1993 was 4.38%; the weighted average
dividend rate was 4.43% on December 31, 1993. Accumulated and
unpaid dividends on the Flex-APS amounted to $4 million at
December 31, 1993.
The fixed-rate Series A Cumulative Preferred Stock dividend rate
is 8% ($2.00 per depository share) per year; accumulated and
unpaid dividends were $2 million at December 31, 1993. The
fixed-rate Series B Cumulative Preferred Stock dividend rate is
8% ($2.00 per depository share) per year; accumulated and unpaid
dividends were $1 million at December 31, 1993. The fixed-rate
Series C Cumulative Preferred Stock dividend rate is 7.12% ($1.78
per depository share) per year; accumulated and unpaid dividends
were $1 million at December 31, 1993.
NOTE 14. Dividend Restrictions
- -------------------------------
Payment of dividends by American Road is restricted by insurance
regulatory requirements of the State of Michigan. Based on these
restrictions at December 31, 1993, management has determined the
maximum dividend that may be paid in 1994 to Ford Holdings
without regulatory approval is approximately $11 million.
Payment of dividends by certain subsidiaries of The Associates is
restricted under the provisions of certain debt and revolving
credit agreements. At December 31, 1993, $222 million was
available for the payment of dividends.
FH-17
<PAGE>
NOTE 15. Litigation and Claims
- -------------------------------
Various legal actions, governmental investigations and
proceedings, and claims are pending or may be instituted or
asserted in the future against Ford Holdings and its
subsidiaries. Certain of the pending legal actions are, or
purport to be, class actions. Some of the foregoing matters
involve or may involve compensatory, punitive, or antitrust or
other treble damage claims in very large amounts, sanctions, or
other relief which, if granted, would require very large
expenditures.
Litigation is subject to many uncertainties, the outcome of
individual litigated matters is not predictable with assurance,
and it is reasonably possible that some of the foregoing matters
could be decided unfavorably to Ford Holdings or the subsidiary
involved. Although the amount of the ultimate liability at
December 31, 1993 with respect to these matters cannot be
ascertained, the company believes that any resulting liability
should not materially affect the consolidated financial position
of the company at December 31, 1993.
NOTE 16. Transactions With Affiliated Companies
- ------------------------------------------------
The company receives technical and administrative advice and
services from Ford and utilizes data processing facilities
maintained by Ford. The cost of these services is allocated to
the company based on actual costs incurred by Ford in performing
these services. The company believes this allocation is a
reasonable approximation of the costs it would have incurred on a
stand-alone basis. Payments to Ford for such services were as
follows (in millions): 1993 - $31; 1992 - $41; 1991 - $48.
The company provides insurance and other services to Ford and
other affiliated companies. Amounts included in revenues for
these services were as follows (in millions):
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C>
Physical damage premiums on vehicles
and equipment financed at wholesale $ 85 $ 63 $ 64
Reimbursements for administrative and
technical services 55 47 39
Rental of office space and parking facilities 57 39 30
</TABLE>
Net interest income under various financing arrangements between
the company and Ford was as follows (in millions): 1993 - $16;
1992 - $33; 1991 - $37.
In 1991, Ford Holdings received a capital contribution from Ford
Credit of $216 million in the form of cash and stock of certain
consumer finance subsidiaries formerly owned by Ford Credit in
exchange for additional shares of Ford Holdings' Common Stock.
The cash and stock of the consumer finance subsidiaries were then
contributed by Ford Holdings to The Associates.
NOTE 17. Commitments and Contingencies
- ---------------------------------------
The company has entered into foreign exchange agreements to
manage exposure to foreign exchange rate fluctuations. These
exchange agreements hedge primarily debt, firm commitments
and dividends that are denominated in foreign currencies.
Agreements entered into to manage these exposures are comprised
primarily of foreign currency swaps. Gains or losses on the various
agreements are either recognized during the period or included in the
bases of the related transactions.
FH-18
<PAGE>
NOTE 17. Commitments and Contingencies (Cont'd)
- ---------------------------------------
The fair value of these foreign exchange agreements generally was
estimated using current market prices provided by outside
quotation services. The fair value was estimated to be net
receivable of $12 million at December 31, 1993 and a net
payable of $47 million at December 31, 1992. In the unlikely
event that a counterparty fails to meet the terms of a foreign
exchange agreement, the company's market risk is limited to the
currency rate differential. In the case of currency swaps, the
company's market risk also may include an interest rate
differential. At December 31, 1993 and 1992, the total amount of
the company's foreign currency swaps outstanding was $281 million and
$398 million, respectively, maturing primarily through 1996.
The company has entered into arrangements to manage exposure to
fluctuations in interest rates. These arrangements are comprised
primarily of interest-rate swap agreements. The differential
paid or received on interest-rate swap agreements is recognized as an
adjustment to interest expense.
The fair value of interest-rate swaps is the estimated amount the
company would receive or pay to terminate the swap agreement.
The fair value is calculated using information provided by
outside quotation services, taking into account current interest
rates and the current credit-worthiness of the swap counterparties.
The fair value was estimated to be a net receivable of $7 million at
December 31, 1993 and a net payable of $7 million at December 31,
1992. In the unlikely event that a counterparty fails to meet the terms of
an interest-rate swap agreement, the company's exposure
is limited to the interest rate differential. The underlying
principal amounts on which the company has interest-rate swap agreements
and futures contracts outstanding aggregated $2.1 billion at December 31,
1993 and $1.9 billion at December 31, 1992.
Certain Ford Holdings' subsidiaries make credit lines available
to holders of their credit cards. At December 31, 1993 and 1992,
the unused portion of available credit was approximately $9.6
billion and $5.5 billion, respectively, and is revocable under
specified conditions. The fair value of unused credit lines and
the potential risk of loss was not considered to be significant.
In addition, the company has entered into a variety of other
financial agreements which contain potential risk of loss. These
agreements include financial guarantees and interest rate caps
and floors. The fair value of these agreements and the potential
risk of loss was not considered to be significant.
NOTE 18. Segment Information
- -----------------------------
The company operates in three business segments: consumer
finance, commercial finance, and insurance. The consumer finance
segment is engaged primarily in making and investing in direct
installment and revolving credit receivables, including credit
card receivables, purchasing consumer-related installment
obligations, and providing other consumer financial services.
The commercial finance segment is engaged primarily in financing
sales of transportation and industrial equipment, leasing of
equipment either through equipment vendors or directly to end
users, and the construction and operation of commercial real
estate developments. The insurance segment is engaged primarily
in the issuance of single premium deferred annuities, property
and casualty insurance relating to extended service plan
contracts, credit life and credit disability insurance, and
physical damage insurance. These insurance products are provided
primarily to purchasers of vehicles financed by Ford subsidiaries
and to customers of the finance operations of The Associates.
Corporate expenses consist primarily of interest on acquisition-
related debt. Acquisition-related goodwill has been allocated to
the operating segments.
FH-19
<PAGE>
NOTE 18. Segment Information (Cont'd)
- -----------------------------
<TABLE>
<CAPTION>
Financial information segregated by business segment is as
follows (in millions):
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Revenues
Consumer finance $ 2,461 $ 2,206 $ 2,080
Commercial finance 1,788 1,617 1,564
Insurance 1,006 978 1,164
Corporate 37 16 6
------- ------- -------
Total $ 5,292 $ 4,817 $ 4,814
======= ======= =======
Income/(loss) before income taxes and cumulative
effects of changes in accounting principles
Consumer finance $ 493 $ 367 $ 313
Commercial finance 380 285 270
Insurance 117 91 175
Corporate (159) (155) (166)
------- ------- -------
Total $ 831 $ 588 $ 592
======= ======= =======
Assets
Consumer finance $17,682 $15,902 $14,314
Commercial finance 16,167 13,200 11,565
Insurance 3,806 2,933 2,685
Corporate 944 696 215
------- ------- -------
Total $38,599 $32,731 $28,779
======= ======= =======
Capital expenditures
Consumer finance $ 7 $ 16 $ 15
Commercial finance 23 20 18
------- ------- -------
Total $ 30 $ 36 $ 33
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
NOTE 19. Summary Quarterly Financial Data (Unaudited)
- ------------------------------------------------------
(in millions)
1993 1992
------------------------------- -------------------------------
First Second Third Fourth First Second Third Fourth
Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $1,259 $1,301 $1,365 $1,367 $1,205 $1,228 $1,198 $1,186
Income before income taxes and
cumulative effects of changes
in accounting principles $ 187 $ 177 $ 235 $ 232 $ 151 $ 162 $ 168 $ 107
Cumulative effects of changes in
accounting principles $ - $ - $ - $ - $ 26 $ - $ - $ -
Net income $ 118 $ 109 $ 136 $ 148 $ 125 $ 97 $ 106 $ 55
FH-20
<PAGE>
Schedule III
Ford Holdings, Inc. and Subsidiaries
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT)
Statement of Income
----------------------------------------------------
For the Years Ended December 31, 1993 and 1992
(in millions)
1993 1992
------ ------
Revenues
Dividends from American Road
and The Associates $ 376 $ 440
Investments and other income 36 16
------ ------
Total revenues 412 456
Expenses
Interest expense 183 182
Amortization of goodwill 36 36
Other expense (2) (9)
------ ------
Total expenses 217 209
Income before income taxes and
equity in undistributed earnings
of subsidiaries 195 247
Credit for income taxes (55) (53)
------ ------
Income before equity in undistributed
earnings of subsidiaries 250 300
Equity in undistributed earnings
of subsidiaries 261 83
------ ------
Net income $ 511 $ 383
====== ======
Balance Sheet
-----------------------------
At December 31, 1993 and 1992
(in millions)
1993 1992
------ ------
Assets
- ------
Cash and cash equivalents $ 326 $ 137
Investments in securities 621 560
Receivables from affiliates
and others 166 51
Equity in net assets of subsidiaries 5,207 4,736
------ ------
Total assets $6,320 $5,484
====== ======
Liabilities and Stockholders' Equity
- ------------------------------------
Payable to Ford 80 82
Other liabilities 75 47
Debt 1,874 1,858
------ ------
Total liabilities 2,029 1,987
Stockholders' equity 4,291 3,497
------ ------
Total liabilities and stockholders'
equity $6,320 $5,484
====== ======
FSS-1
<PAGE>
Schedule III
Ford Holdings, Inc. and Subsidiaries
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT)
------------------------------------------------------
Statement of Cash Flows
----------------------------------------------
For the Years Ended December 31, 1993 and 1992
(in millions)
1993 1992
---- ----
Cash and cash equivalents at January 1 $137 $221
Cash flows from operating activities
Net income 511 383
Equity in undistributed earnings of subsidiaries (261) (83)
Other (62) (54)
---- ----
Net cash provided by operating activities 188 246
Cash flows from investing activities
Sales and purchases of securities, net (61) (560)
Capital contributions (240) (5)
---- ----
Net cash used in investing activities (301) (565)
Cash flows from financing activities
Dividends paid to preferred stockholders (73) (48)
Issuance of Preferred Stock 375 283
---- ----
Net cash provided by financing activities 302 235
Net increase/(decrease) in cash and cash
equivalents 189 (84)
---- ----
Cash and cash equivalents at December 31 $326 $137
==== ====
FSS-2
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Schedule IV
FORD HOLDINGS, INC. AND SUBSIDIARIES
INDEBTEDNESS OF AND TO RELATED PARTIES
--------------------------------------
For the Years Ended December 31, 1993, 1992 and 1991
Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I
- -------------- ---------- --------- ---------- ------- ------ --------- ---------- -------
Indebtedness of Indebtedness to
--------------------------------------------- ----------------------------------------------
Balance at Balance Balance at Balance
Name of Person Beginning Additions Deductions at End Beginning Additions Deductions at End
- -------------- ---------- --------- ---------- ------- ---------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the Year
Ended December
31, 1993
- --------------
ACONA B.V. $163 $ - $ (26) $137 $24 $ 4 $ - $ 28
Ford Motor 16 53(a) (5) 64 190 6 (20) 176
Other Ford
Subsidiaries 141 2 (52) 91 101 23 (4) 120
---- --- ---- ---- ---- ---- ----- ----
Total $320 $55 $(83) $292 $315 $ 33 $ 24 $324
For the Year
Ended December
31, 1992
- --------------
ACONA B.V. $228 $ - $ (65) $163 $ 21 $ 3 $ - $ 24
Ford Motor 31 (15) 16 167 36(c) (13) 190
Other Ford
Subsidiaries 105 51(b) (15) 141 92 9 - 101
---- --- ----- ---- ---- ---- ----- ----
Total $364 $51 $ (95) $320 $280 $ 48 $ (13) $315
For the Year
Ended December
31, 1991
- --------------
ACONA B.V. $440 $ - $(212) $228 $ 17 $ 4 $ - $ 21
Ford Motor 38 1 (8) 31 330 42(d) (205) 167
Other Ford
Subsidiaries 173 8 (76) 105 34 58(e) - 92
---- --- ----- ---- ---- ---- ----- ----
Total $651 $ 9 $(296) $364 $381 $104 $(205) $280
</TABLE>
(a) Primarily an increase in Ford Land notes receivable from Ford
(b) Primarily an increase in receivables at American Road for insurance
premiums collected by Ford Credit
(c) Primarily higher payables at Ford Land and an increase in State taxes
payable at Ford Holdings
(d) Primarily interest accrual on Ford Holdings zero-coupon note to Ford and
increase in American Road accounts payable to Ford
(e) Primarily increases in accounts payables at USL Capital and The
Associates with Ford Credit
FSS-3
<PAGE>
Schedule IX
FORD HOLDINGS, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
---------------------
For the Years Ended December 31, 1993, 1992 and 1991
(dollar amounts in millions)
<TABLE>
<CAPTION>
Col.A Col. B Col. C Col. D Col. E Col. F
- --------------- ------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Weighted Weighted
Average Maximum Average Average
Interest Amount Amount Interest
Category of Balance Rate at Outstanding Outstanding Rate
Aggregate Short- At End End of During The During The During The
Term Borrowings Of Year Year Year Year(a) Year(b)
- ---------------- ------- -------- ----------- ----------- ----------
For the Year
Ended December 31,
1993(c)
- ------------------
Commercial Paper $10,721 3.3% $11,124 $10,373 3.2%
Bank & Other Debt $ 472 3.8% $ 472 $ 12 3.5%
For the year
Ended December 31,
1992(c)
- ------------------
Commercial Paper $ 9,517 3.4% $ 9,517 $ 9,213 3.4%
Bank & Other Debt $ 466 3.5% $ 466 $ 21 3.5%
For the Year
Ended December 31,
1991
- ------------------
Commercial Paper $ 8,749 5.0% $ 9,000 $ 8,866 5.0%
Bank & Other Debt $ 368 5.4% $ 368 $ 2 5.5%
</TABLE>
- -------------------------
(a) The average amount outstanding during the period was computed using the
amounts outstanding at the end of each month, including the amount at
the beginning of the period.
(b) The weighted average interest rate during the period was computed by
dividing actual interest expense on short-term borrowings by the
average short-term debt outstanding during the period.
(c) The increase in debt in 1993, 1992 and 1991 resulted principally from
the growth in receivables at The Associates.
FSS-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 3-A Certificate of Incorporation Filed as Exhibit 3-A to
dated August 30, 1989. the Registrant's Annual
Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 3-B By-Laws of the Registrant, as Filed as Exhibit 3-B to
amended through October 20, the Registrant's Annual
1989 Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 3-C By-Laws of the Registrant, as Filed as Exhibit 3-C to the
amended through May 22, 1992. Registrant's Annual Report on
Form 10-K for the year
ended December 31, 1992. File
0-18263.*
Exhibit 4-A Certificate of Designation Filed as Exhibit 4-A to
of Flexible Rate Auction the Registrant's Annual
Preferred Stock. Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 4-A-1 Certificate of Designation Filed as Exhibit 4-A-1 to
of Flexible Rate Auction the Registrant's Annual
Preferred Stock (Exchange). Report on Form 10-K for
the year ended December 31,
1990. File O-18263.*
Exhibit 4-A-2 Certificate of Amendment to Filed as Exhibit 4-A-2 to the
the Certificate of Desig- Registrant's Annual Report on
nation of Flexible Rate Form 10-K for the year ended
Auction Preferred Stock December 31, 1991. File
(Exchange) filed 0-18263.*
December 27, 1991.
Exhibit 4-A-3 Certificate of Elimination of Filed as Exhibit 4-A-3 to the
Flexible Rate Auction Pre- Registrant's Annual Report on
ferred Stock (as referred to Form 10-K for the year ended
in Exhibit 4-A). December 31, 1992. File
0-18263.*
</TABLE>
<PAGE>
EXHIBIT INDEX (continued)
-------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 4-A-4 Certificate of Amendment to the Filed as Exhibit 4-A-4 to the
Certificate of Designation Registrant's Annual Report on
of the Flexible Rate Auction Form 10-K for the year ended
Preferred Stock (Exchange) December 31, 1992. File
filed June 1, 1992. 0-18263.*
Exhibit 4-A-5 Certificate of Designation of Filed as Exhibit 4-A-5 to the
Series A Cumulative Registrant's Annual Report on
Preferred Stock. Form 10-K for the year ended
December 31, 1992. File
0-18263.*
Exhibit 4-A-6 Certificate of Designation of Filed as Exhibit 4-A-6 to the
Series B Cumulative Registrant's Annual Report on
Preferred Stock. Form 10-K for the year ended
December 31, 1992. File
0-18263.*
Exhibit 4-A-7 Form of Certificate of Filed as Exhibit 2.7 to the
Designation of Series C Registrant's Registration
Cumulative Preferred Stock. Statement on Form 8-A dated
August 24, 1993. File
0-18263.*
Exhibit 4-B Indenture dated as of Filed as Exhibit 4-A to
February 1, 1990 among the the Registrant's Regis-
Registrant, Ford and Manu- tration Statement No.
facturers Hanover Trust 33-32641.*
Company.
Exhibit 4-C-1 Deposit Agreement dated as of Filed as Exhibit 4-C-1 to the
June 4, 1992, among Registrant, Registrant's Annual Report on
Chemical Bank, as depositary, Form 10-K for the year ended
and the holders from time to time December 31, 1992. File
of Depositary Shares, each 0-18263.*
representing 1/4,000 of a share
of Series A Cumulative
Preferred Stock.
Exhibit 4-C-2 Deposit Agreement dated as of Filed as Exhibit 1-B
January 26, 1993, among to Registrant's Report on
Registrant, Chemical Bank, Form 8-K dated January 19,
as depositary and the holders 1993. File No. 0-18263.*
from time to time of Depositary
Shares, each representing
1/4,000 of a share of Series B
Cumulative Preferred Stock.
</TABLE>
-2-
<PAGE>
EXHIBIT INDEX (continued)
-------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 4-C-3 Deposit Agreement dated as of Filed as Exhibit 2.8 to the
August 30, 1993, among Reg- Registrant's Registration
istrant, Chemical Bank, as Statement on Form 8-A dated
depositary and the holders August 24, 1993. File
from time to time of Depositary 0-18263.*
Shares, each representing 1/4000
of a share of Series C Cumulative
Preferred Stock.
Exhibit 10-A Agreement dated as of Filed as Exhibit 10-A to
October 27, 1989 between the Registrant's Annual
the Registrant and Ford. Report on Form 10-K for
the year ended December 31,
1989. File 0-18263.*
Exhibit 10-B Agreement dated as of Filed as Exhibit 10-B to
October 27, 1989 between the Registrant's Annual
the Registrant and Ford Report on Form 10-K for
Credit. the year ended December 31,
1989. File 0-18263.*
Exhibit 12 Computation of Ratio of Filed with this Report.
Earnings to Fixed Charges.
Exhibit 21 Subsidiaries of the Registrant Filed with this Report
as of December 31, 1993.
Exhibit 23 Consent of Independent Filed with this Report.
Certified Public Accountants.
Exhibit 24 Powers of Attorney. Filed with this Report.
-3-
</TABLE>
j:\10k\exindfh.93
EXHIBIT 12
Ford Holdings, Inc. and Subsidiaries
CALCULATION OF RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
-------------------------------------------------------
(in millions)
<TABLE>
<CAPTION>
For the Years Ended December 31
-----------------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ----
<S> <C> <C> <C> <C> <C>
Earnings (a)
Income before income taxes
and cumulative effects of
changes in accounting
principles $ 831 $ 588 $ 592 $ 455 $286
Fixed charges 1,895 1,731 1,790 1,648 417
------ ------ ------ ------ ----
Total earnings $2,726 $2,319 $2,382 $2,103 $703
====== ====== ====== ====== ====
Combined Fixed Charges and
Preferred Stock Dividends (a)
Interest expense $1,832 $1,659 $1,718 $1,569 $388
Interest portion of
rental expense 24 24 24 28 24
Preferred stock dividend
requirements (b) 123 78 74 89 15
------ ------ ------ ------ ----
Total combined fixed charges
and preferred stock dividends $1,979 $1,761 $1,816 $1,686 $427
====== ====== ====== ====== ====
Ratio of earnings to combined
fixed charges and preferred
stock dividends 1.4 1.3 1.3 1.2 1.6
Pro forma
Pro forma (unaudited) interest
on zero coupon note 25
----
Pro forma total fixed charges $452
====
Pro forma ratio of earnings to
combined fixed charges and
preferred stock dividends 1.6
</TABLE>
- ---------------------
(a) For purposes of computing the ratio of earnings to combined
fixed charges and preferred stock dividends, "earnings"
represent earnings before income taxes and cumulative effects
of changes in accounting principles, plus fixed charges.
"Combined fixed charges and preferred stock dividends"
represent interest expense, a portion of rentals
representative of an implicit interest factor for such
rentals, and dividends paid on preferred stock.
(b) Preferred stock dividend requirements increased to an amount
representing the pre-tax earnings which would be required to
cover such dividend requirements based on effective income tax
rates for the respective periods.
J:\holdings\ex12.3
EXHIBIT 21
PRINCIPAL SUBSIDIARIES OF THE COMPANY
(All subsidiaries are wholly owned except as indicated)
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
---------------
<S> <C>
ASSOCIATES FIRST CAPITAL CORPORATION Delaware
Associates National Bank (Delaware) United States
Associates Bancorp Inc. Delaware
Associates Credit Card Services, Inc. California
Associates Credit Card Services of Delaware, Inc. Delaware
Associates World Capital Corporation Delaware
Associates Corporation of North America Delaware
Associates Corporation of North America
(A Texas Corporation) Texas
AFC Securities Inc. Delaware
Associates Commercial Corporation of Delaware Delaware
Associates Investment Corporation Utah
Associates Insurance Group, Inc. Delaware
Associates Life Insurance Group, Inc. Delaware
Alinco Life Insurance Company Indiana
Associates Financial Life Insurance Company Tennessee
Associates Management Corporation Delaware
Associates Real Estate Financial Services
Company, Inc. Delaware
The Associates Payroll Management Service
Company, Inc. Delaware
Associates Investment Company Delaware
Associates Diversified Services, Inc. Delaware
Associates Financial Services Company, Inc. Delaware
Associates Commercial Corporation Delaware
USL CAPITAL CORPORATION Delaware
Airlease Management Services, Inc. Delaware
United States Airlease Holding, Inc. California
Trust Company for USL, Inc. Illinois
THE AMERICAN ROAD INSURANCE COMPANY Michigan
Ford Life Insurance Company Michigan
Vista Insurance Company Michigan
Vista Life Insurance Company Michigan
Fairlane Life Insurance Company Arizona
American Renaissance Insurance Company Arizona
Dobco Life Insurance Company Arizona
FORD MOTOR LAND DEVELOPMENT CORPORATION Delaware
FORD LEASING DEVELOPMENT COMPANY Delaware
</TABLE>
J:\10k\Exbt21
EXHIBIT 23
Coopers & Lybrand Certified Public Accountants
CONSENT OF COOPERS & LYBRAND
Ford Holdings, Inc.
The American Road
Dearborn, Michigan 48121
We consent to the incorporation by reference in the registration
statements of Ford Holdings, Inc. on Form S-3 (No. 33-39129, 33-
48743, 33-60232, 33-63116 and 33-50419) and of Ford Holdings, Inc. and Ford
Motor Company on Form S-3 (No. 33-32641 and 33-55474) of our
report dated February 1, 1994, on our audits of the consolidated
financial statements and financial statement schedules of Ford
Holdings, Inc. and Subsidiaries as of December 31, 1993 and 1992,
and for the years ended December 31, 1993, 1992 and 1991, which
report is included in this Annual Report on Form 10-K.
/s/Coopers & Lybrand
Coopers & Lybrand
Detroit, Michigan
March 25, 1994
EXHIBIT 24
FORD HOLDINGS, INC.
Certificate of an Assistant Secretary
-------------------------------------
The undersigned, P. J. Sherry, Jr., an Assistant Secretary of
FORD HOLDINGS, INC., a Delaware corporation (the "Company"), DOES
HEREBY CERTIFY that the following are true and correct copies of
resolutions adopted by the Board of Directors of the Company by
unanimous written consent dated as of March 2, 1994 and the same
are in full force and effect on the date hereof:
RESOLVED, That preparation of an Annual Report of
the Company on Form 10-K for the year ended December 31,
1993 (the "10-K Report"), including exhibits and other
documents, to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities
Exchange Act of 1934, as amended, be and hereby is in all
respects authorized and approved; that the draft 10-K
Report attached hereto be and hereby is approved in all
respects; that the directors and appropriate officers of
the Company, and each of them, be and hereby are
authorized to sign and execute in their own behalf, or in
the name and on behalf of the Company, or both, as the
case may be, the 10-K Report, and any and all amendments
thereto, with such changes therein as such directors and
officers may deem necessary, appropriate or desirable, as
conclusively evidenced by their execution thereof; and
that the appropriate officers of the Company, and each of
them, be and hereby are authorized to cause the 10-K
Report and any such amendments, so executed, to be filed
with the Commission.
RESOLVED, That each officer and director who may be
required to sign and execute the 10-K Report or any
amendment thereto or document in connection therewith
(whether in the name and on behalf of the Company, or as
an officer or director of the Company, or otherwise), be
and hereby is authorized to execute a power of attorney
appointing S. A. Seneker, T. F. Marrs, J. M.
Rintamaki, T. J. DeZure, L. J. Ghilardi and P. J. Sherry,
Jr., and each of them, severally, his true and lawful
attorney or attorneys to sign in his name, place and
stead in any such capacity the 10-K Report and any and
all amendments thereto and documents in connection
therewith, and to file the same with the Commission, each
of said attorneys to have power to act with or without
the other, and to have full power and authority to do and
perform in the name and on behalf of each of said
officers and directors who shall have executed such power
of attorney, every act whatsoever which such attorneys,
or any of them, may deem necessary, appropriate or
desirable to be done in connection therewith as fully and
to all intents and purposes as such officers or directors
might or could do in person.
WITNESS MY HAND this 23rd day of March, 1994.
/s/P. J. Sherry, Jr.
P. J. Sherry, Jr.
Assistant Secretary
j:\10k\seccert.93
<PAGE>
POWER OF ATTORNEY WITH RESPECT TO
ANNUAL REPORT OF FORD HOLDINGS, INC.
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1993
-------------------------------------------------
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned,
an officer and/or director of FORD HOLDINGS, INC. does hereby
constitute and appoint S. A. Seneker, T. F. Marrs, J. M. Rintamaki,
T. J. DeZure, L. J. Ghilardi and P. J. Sherry, Jr., and each of
them, severally, his true and lawful attorney and agent at any time
and from time to time to do any and all acts and things and
execute, in his name (whether on behalf of FORD HOLDINGS, INC., or
as an officer or director of FORD HOLDINGS, INC., or otherwise) any
and all instruments which said attorney and agent may deem
necessary or advisable in order to enable FORD HOLDINGS, INC. to
comply with the Securities Exchange Act of 1934, as amended, and
any requirements of the Securities and Exchange Commission in
respect thereof, in connection with the Annual Report of FORD
HOLDINGS, INC. on Form 10-K for the year ended December 31, 1993
and any and all amendments thereto, as authorized by unanimous
written consent of the Board of Directors of FORD HOLDINGS, INC.
dated as of March 2, 1994, including specifically but without
limitation thereto, power and authority to sign his or her name
(whether on behalf of FORD HOLDINGS, INC., or as an officer or
director of FORD HOLDINGS, INC., or otherwise) to such Annual
Report and to any such amendments to be filed with the Securities
and Exchange Commission, or any of the exhibits or financial
statements and schedules filed therewith, and to file the same with
the Securities and Exchange Commission; and the undersigned does
hereby ratify and confirm all that said attorneys and agents, and
each of them, shall do or cause to be done by virtue hereof. Any
one of said attorneys and agents shall have, and may exercise, all
the powers hereby conferred.
IN WITNESS WHEREOF, each of the undersigned has signed his
name hereto as of the 2nd day of March 1994.
/s/Wayland F. Blood /s/Dean E. Richardson
Wayland F. Blood Dean E. Richardson
/s/Malcolm S. Macdonald /s/Stanley A. Seneker
Malcolm S. Macdonald Stanley A. Seneker
/s/Terrence F. Marrs /s/H. James Toffey, Jr.
Terrence F. Marrs H. James Toffey, Jr.
/s/David N. McCammon /s/Kenneth Whipple
David N. McCammon Kenneth Whipple
j:\holdings\poa10k.93
