SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994 OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-18263
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Ford Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Incorporated in Delaware 38-2890269
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
The American Road, Dearborn, Michigan 48121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
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Indicate by checkmark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
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As of July 29, 1994, the Registrant had outstanding 1,099 shares
of Common Stock, all of which were held, directly or indirectly,
by Ford Motor Company.
Page 1 of 12
Exhibit index located on sequential page number 10
<PAGE>
FORD HOLDINGS, INC. AND SUBSIDIARIES
Part I. Financial Information
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Item 1. Financial Statements - The financial data presented
herein are unaudited, but in the opinion of management reflect
those adjustments necessary for a fair presentation of such
information. Results for interim periods should not be
considered indicative of results for a full year. Reference
should be made to the financial statements contained in the
Registrant's Annual Report on Form 10-K (the "10-K Report") for
the year ended December 31, 1993.
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended June 30, 1994 and 1993
(in millions)
<TABLE>
<CAPTION>
Second Quarter First Half
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1994 1993 1994 1993
------- ------- ------- ------
(unaudited) (unaudited)
<C> <S> <S> <S> <S>
Revenues
Financing revenues $1,074 $ 929 $2,116 $1,844
Insurance premiums earned 169 188 343 359
Investment and other income 152 184 307 357
------ ------ ------ ------
Total revenues 1,395 1,301 2,766 2,560
Expenses
Interest expense 476 433 927 862
Operating and other expenses 353 349 717 660
Provision for credit losses 153 119 283 239
Insurance claims 106 130 217 262
Depreciation 48 46 96 94
Interest credited on annuity contracts 25 16 48 29
Amortization of policy acquisition costs 21 31 43 50
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Total expenses 1,182 1,124 2,331 2,196
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Income before income taxes 213 177 435 364
Provision for income taxes 79 67 162 135
------ ------ ------ ------
Income before minority interests 134 110 273 229
Minority interests in net (loss)/
income of subsidiaries (1) 1 (2) 2
------ ------ ------ ------
Net income $ 135 $ 109 $ 275 $ 227
====== ====== ====== ======
</TABLE>
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The accompanying note is part of the financial statements.
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<PAGE>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
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(in millions)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1994 1993
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(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,007 $ 823
Investments in securities (Note 1) 4,288 4,277
Finance receivables, net 26,207 24,568
Accounts and notes receivable 691 607
Receivables from Ford and affiliated companies 287 292
Investments in direct financing leases, net 4,218 3,974
Investments in operating leases, net 1,474 1,441
Goodwill 1,797 1,830
Deferred policy acquisition costs 214 178
Other assets 460 609
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Total assets $40,643 $38,599
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 452 $ 622
Payables to Ford and affiliated companies 296 324
Unpaid insurance claims 139 136
Income taxes currently payable 58 79
Annuity contracts 2,117 1,598
Unearned insurance premiums 871 865
Debt 31,317 29,570
Other liabilities and deferred income 980 1,114
Minority interests in net assets of subsidiaries 13 -
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Total liabilities 36,243 34,308
Stockholders' equity
Preferred Stock, $1 par value 1,459 1,458
Common Stock, $1 par value,
authorized - 10,000 shares;
issued and outstanding - 1,099 shares * *
Paid-in surplus 976 976
Unrealized (loss)/gain on marketable
securities, net of taxes (81) 40
Foreign currency translation adjustments (4) (3)
Earnings retained for use in business 2,050 1,820
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Total stockholders' equity 4,400 4,291
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Total liabilities and stockholders' equity $40,643 $38,599
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</TABLE>
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*Less than $50,000
The accompanying note is part of the financial statements.
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<PAGE>
Ford Holdings, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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For the Periods Ended June 30, 1994 and 1993
(in millions)
<TABLE>
<CAPTION>
First Half
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1994 1993
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(unaudited)
<S> <C> <C>
Cash and cash equivalents at January 1 $ 823 $ 408
Cash flows from operating activities before securities trading 422 778
Net sales of trading securities (Note 1) 167 -
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Net cash flows from operating activities 589 778
Cash flows from investing activities
Acquisitions of finance receivables (13,397) (9,657)
Collections of finance receivables 11,056 8,291
Purchases of securities (Note 1) (6,209) (5,809)
Sales of securities (Note 1) 5,829 5,513
Recovery of equipment costs and residual interests 395 332
Cost of equipment and lease receivables acquired (493) (878)
Acquisitions of other companies - (85)
Other 174 59
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Net cash used in investing activities (2,645) (2,234)
Cash flows from financing activities
Issuance of Preferred Stock 1 174
Proceeds from issuance of long-term debt 1,744 2,456
Principal payments on long-term debt (1,099) (1,114)
Changes in short-term debt 1,100 88
Dividends paid to shareholders (45) (33)
Receipts from annuity contracts, net 519 446
Other 20 39
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Net cash provided by financing activities 2,240 2,056
Net increase in cash and cash equivalents 184 600
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Cash and cash equivalents at June 30 $ 1,007 $ 1,008
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</TABLE>
- - - - - -
The accompanying note is part of the financial statements.
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<PAGE>
Ford Holdings, Inc. and Subsidiaries
NOTE TO FINANCIAL STATEMENTS
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NOTE 1. Condensed Consolidated Statement of Cash Flows
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Effective January 1, 1994, Ford Holdings, Inc. and Subsidiaries
(the "Company") adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". Concurrent with the adoption, the
Company classified most of its investments in securities at June
30, 1994 as available-for-sale or trading, and adjusted the
recorded value to fair value; the effect on the Company's
financial statements was not material. In addition, the
purchases and sales of trading securities were included in cash
flows from operating activities. Financial statements for the
prior period were not restated.
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<PAGE>
Coopers
& Lybrand certified public accountants
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Holdings, Inc.
We have reviewed the consolidated balance sheet of Ford Holdings,
Inc. and Subsidiaries at June 30, 1994 and the related
consolidated statement of income and condensed consolidated
statement of cash flows for the periods set forth in Form 10-Q
for the quarter ended June 30, 1994. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet at December
31, 1993 and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated February 1, 1994, we
expressed an unqualified opinion on those consolidated financial
statements.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
July 27, 1994
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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OVERVIEW
The Company's net income in the second quarter of 1994 was $135
million, up $26 million from the $109 million earned in the
second quarter of 1993. The increase resulted primarily from
improved earnings at The Associates, USL Capital and Ford Land,
offset partially by lower earnings at American Road.
Consolidated results reflect the acquisition-related costs of
purchasing The Associates, including interest expense, goodwill,
and adjustments to record the fair value of net assets acquired.
These adjustments will vary over time as the acquired assets and
liabilities liquidate.
The consolidated financial statements on pages 2 through 5
inclusive should be read as an integral part of this review.
RESULTS OF OPERATIONS: SECOND QUARTER 1994 COMPARED WITH SECOND
QUARTER 1993
The Associates earned $121 million in the second quarter of 1994,
compared with $111 million a year ago. The increase reflected
higher levels of earning assets and improved net interest
margins.
USL Capital earned $27 million in the second quarter of 1994,
compared with $20 million a year ago. The improvement resulted
primarily from higher earning assets, lower operating costs and
improved net interest margins.
American Road earned $13 million in the second quarter of 1994,
compared with $16 million in the same period in 1993. The
decrease resulted primarily from reduced investment income,
partially offset by improved extended service plan results and
higher income on annuity contracts. Premiums written by American
Road were $85 million in the second quarter of 1994, compared
with $83 million a year ago.
Ford Land earned $7 million in the second quarter of 1994, up $7
million from the same period in 1993. The improvement resulted
primarily from a gain on sale of real estate development
property.
FIRST HALF 1994 COMPARED WITH FIRST HALF 1993
The Company's net income in the first half of 1994 was $275
million, up $48 million from the $227 million earned in the first
half of 1993. The increase resulted primarily from improved earnings
at The Associates, USL Capital and Ford Land, offset by lower
earnings at American Road.
The Associates earned $249 million in the first half of 1994,
compared with $222 million a year ago. The improvement reflected
primarily the same factors as those described in the discussion
of second quarter results of operations.
USL Capital's net income in the first half of 1994 was $48
million, compared with $37 million a year ago. The improvement
resulted primarily from higher earning assets and lower operating
costs.
American Road earned $30 million in the first half of 1994,
compared with $39 million a year ago. The decrease resulted
primarily from reduced investment income, partially offset by
improved underwriting experience in extended service plan, floor
plan and dealer plan products. Premiums written by American Road
were $159 million in the first half of 1994, compared with $145
million a year ago.
Ford Land earned $9 million in the first half of 1994, compared
with a loss of $2 million in the same period in 1993. The
improvement resulted primarily from a gain on sale of real estate
development property.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the first half of 1994, the Company's cash and investments
in securities increased by $195 million to $5.3 billion. Net
receivables and lease investments increased by $2 billion to
$32.9 billion, reflecting continued growth in earning assets at
The Associates. Total debt increased by $1.7 billion to $31.3
billion, resulting from higher debt levels required to finance
growth in earning assets at The Associates.
At June 30, 1994, the Company had approximately $9.8 billion of
support facilities, all of which were contractually committed;
less than 2% of these facilities were in use at that date.
OTHER FINANCIAL INFORMATION
Coopers & Lybrand, the Company's independent public accountants,
performed a limited review of the financial data presented on
pages 2 through 5 inclusive. The review was performed in
accordance with standards for such reviews established by the
American Institute of Certified Public Accountants. The review
did not constitute an audit; accordingly, Coopers & Lybrand did
not express an opinion on the aforementioned data. The financial
data include any material adjustments or disclosures proposed by
Coopers & Lybrand as a result of their review.
-8-
<PAGE>
Part II. Other Information
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Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
Please refer to the Exhibit Index on page 10.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto
duly authorized.
FORD HOLDINGS, INC.
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(Registrant)
Date: July 29, 1994 By: /s/ Terrence F. Marrs
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Terrence F. Marrs
Vice President - Controller
(principal Accounting officer)
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page Number
Designation Description at Which Found
- ----------- -------------------------------------------- --------------
<S> <S> <C>
Exhibit 12 Ford Holdings, Inc. and Subsidiaries 11
Calculation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
Exhibit 15 Letter of Coopers & Lybrand, Independent 12
Public Accountants, July 29, 1994,
relating to Financial Information
</TABLE>
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Exhibit 12
Ford Holdings, Inc. and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
--------------------------------------------------
(in millions)
<TABLE>
<CAPTION>
First Half
-----------------------
1994 1993
------- -------
<S> <C> <C>
Earnings (a)
- --------
Income before income taxes $ 435 $ 364
Fixed charges 1,014 909
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Total earnings before fixed charges $1,449 $1,273
====== ======
Combined Fixed Charges and
Preferred Stock Dividends (a)
- -------------------------
Interest expense $ 982 $ 863
Interest portion of rental expense 12 12
Preferred stock dividend requirements (b) 71 55
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Total combined fixed charges and preferred
stock dividends $1,065 $ 930
====== ======
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.4 1.4
</TABLE>
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(a) For purposes of computing the ratio of earnings to combined
fixed charges and preferred stock dividends, "earnings"
represent income before income taxes plus fixed charges.
"Combined fixed charges and preferred stock dividends"
represent interest expense, amortization of debt expense and
discount or premium relating to any indebtedness, a portion
of rentals representative of an implicit interest factor for
such rentals, and dividends paid on preferred stock.
(b) Preferred stock dividend requirements have been increased to
an amount representing the pre-tax earnings which would be
required to cover such dividend requirements based on the
effective income tax rates for the respective periods.
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<PAGE>
Exhibit 15
Coopers certified public accountants
& Lybrand
Ford Holdings, Inc.
The American Road
Dearborn, Michigan
Re: Ford Holdings, Inc. Registration Statement Nos. 33-48743,
33-60232, 33-63116 and 33-50419 on Form S-3 and Ford
Holdings, Inc. and Ford Motor Company Registration Statement
Nos. 33-32641 and 33-55474 on Form S-3
We are aware that our report dated July 27, 1994 accompanying the unaudited
interim financial information of Ford Holdings, Inc. for the periods ended
June 30, 1994 and 1993 and included in Ford Holdings, Inc. Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994 will be incorporated by
reference in the Registration Statements. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
Registration Statements prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
July 29, 1994
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<PAGE>
