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 September 30, 1994 OR
-------------------------
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
- -------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
The American Road, Dearborn, Michigan 48121
- -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
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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 .
------ ------
As of November 3, 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 13
Exhibit index located on sequential page number 10
<PAGE>
FORD HOLDINGS, INC. AND SUBSIDIARIES
Part I. Financial Information
-----------------------------
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.
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended September 30, 1994 and 1993
(in millions)
Third Quarter Nine Months
----------------------- ----------------------
1994 1993 1994 1993
------ ------ ------ ------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues
Financing revenues $1,141 $ 982 $3,257 $2,826
Insurance premiums earned 168 173 511 532
Investment and other income 220 210 527 567
------ ------ ------ ------
Total revenues 1,529 1,365 4,295 3,925
Expenses
Interest expense 512 442 1,439 1,304
Operating and other expenses 406 336 1,123 996
Provision for credit losses 153 129 436 368
Insurance claims 109 125 326 387
Depreciation 47 44 143 138
Interest credited on annuity contracts 32 20 80 49
Amortization of policy acquisition costs 20 34 63 84
------ ------ ------ ------
Total expenses 1,279 1,130 3,610 3,326
------ ------ ------ ------
Income before income taxes 250 235 685 599
Provision for income taxes 89 98 251 233
------ ------ ------ ------
Income before minority interests 161 137 434 366
Minority interests in net income/
(loss) of subsidiaries 1 1 (1) 3
------ ------ ------ ------
Net income $ 160 $ 136 $ 435 $ 363
====== ====== ====== ======
</TABLE>
- - - - - -
The accompanying note is part of the financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
Sept. 30, Dec. 31,
1994 1993
----------- --------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,005 $ 823
Investments in securities (Note 1) 4,835 4,277
Finance receivables, net 27,745 24,568
Accounts and notes receivable 753 607
Receivables from Ford and affiliated companies 186 292
Investments in direct financing leases, net 4,101 3,974
Investments in operating leases, net 1,536 1,441
Goodwill 1,783 1,830
Deferred policy acquisition costs 237 178
Other assets 455 609
------- -------
Total assets $42,636 $38,599
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 558 $ 622
Payables to Ford and affiliated companies 256 324
Unpaid insurance claims 146 136
Income taxes currently payable 73 79
Annuity contracts 2,473 1,598
Unearned insurance premiums 896 865
Debt 32,499 29,570
Other liabilities and deferred income 1,022 1,114
Minority interests in net assets of subsidiaries 19 0
------- -------
Total liabilities 37,942 34,308
Stockholders' equity
Preferred Stock, $1 par value 1,659 1,458
Common Stock, $1 par value,
authorized - 10,000 shares;
issued and outstanding - 1,099 shares * *
Capital in excess of par value of stock 969 976
Unrealized (loss)/gain on marketable
securities, net of taxes (120) 40
Foreign currency translation adjustments (3) (3)
Earnings retained for use in business 2,189 1,820
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Total stockholders' equity 4,694 4,291
------- -------
Total liabilities and stockholders' equity $42,636 $38,599
======= =======
</TABLE>
- - - - - -
*Less than $50,000
The accompanying note is part of the financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended September 30, 1994 and 1993
(in millions)
Nine Months
------------------------
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 1,025 1,126
Net purchases of trading securities (Note 1) (32) -
------- -------
Net cash flows from operating activities 993 1,126
Cash flows from investing activities
Acquisitions of finance receivables (20,464) (15,260)
Collections of finance receivables 16,939 12,856
Purchases of securities (Note 1) (9,296) (10,331)
Sales of securities (Note 1) 8,527 9,468
Recovery of equipment costs and residual interests 607 518
Cost of equipment and lease receivables acquired (776) (1,254)
Acquisitions of other companies (426) (300)
Other 100 (5)
------- -------
Net cash used in investing activities (4,789) (4,308)
Cash flows from financing activities
Issuance of Preferred Stock 201 375
Proceeds from issuance of long-term debt 2,926 3,749
Principal payments on long-term debt (1,442) (1,582)
Changes in short-term debt 1,445 422
Dividends paid to shareholders (66) (51)
Receipts from annuity contracts, net 875 629
Other 39 46
------- -------
Net cash provided by financing activities 3,978 3,588
Net increase in cash and cash equivalents 182 406
------- -------
Cash and cash equivalents at September 30 $ 1,005 $ 814
======= =======
</TABLE>
- - - - - -
The accompanying note is part of the financial statements.
-4-<PAGE>
Ford Holdings, Inc. and Subsidiaries
NOTE TO FINANCIAL STATEMENTS
----------------------------
NOTE 1. Condensed Consolidated Statement of Cash Flows
- ------------------------------------------------------
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 September 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.
-5-
<PAGE>
Coopers certified public accountants
& Lybrand L.L.P.
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 September 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 September 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
October 26, 1994
-6-<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- ----------------------------------------------------------
OVERVIEW
The Company's net income in the third quarter of 1994 was $160
million, up $24 million from the $136 million earned in the third
quarter of 1993. The increase resulted primarily from improved
earnings at The Associates and USL Capital, offset partially by
lower earnings at American Road.
Consolidated results reflect the acquisition-related costs of
purchasing The Associates, including interest expense, goodwill,
and adjustments to record the fair value of net assets acquired.
These adjustments will vary over time as the acquired assets and
liabilities liquidate.
The consolidated financial statements on pages 2 through 5
inclusive should be read as an integral part of this review.
RESULTS OF OPERATIONS: THIRD QUARTER 1994 COMPARED WITH THIRD
QUARTER 1993
The Associates earned $151 million in the third quarter of 1994,
compared with $121 million a year ago. The increase reflected
higher levels of earning assets and improved net interest
margins.
USL Capital earned $27 million in the third quarter of 1994,
compared with $16 million a year ago. The increase reflected
primarily higher levels of earning assets and lower operating
costs. Results for USL Capital in the third quarter of 1993
include a $6 million one-time charge to the provision for income
taxes to reflect restatement of deferred tax balances resulting
from the August 1993 enactment of the Omnibus Budget
Reconciliation Act in the U.S.
American Road earned $14 million in the third quarter of 1994,
compared with $27 million in the same period in 1993. The
decrease reflected reduced investment income from capital gains.
Premiums written by American Road were $82 million in the third
quarter of 1994, compared with $83 million a year ago.
FIRST NINE MONTHS 1994 COMPARED WITH FIRST NINE MONTHS 1993
The Company's net income in the first nine months of 1994 was
$435 million, up $72 million from the $363 million earned in the
first nine months 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 $400 million in the first nine months of
1994, compared with $343 million a year ago. The increase
reflected higher levels of earning assets and improved net
interest margins.
USL Capital's net income in the first nine months of 1994 was $75
million, compared with $53 million a year ago. The increase
reflected higher levels of earning assets, lower operating
costs and the non-recurrence of the unfavorable one-time tax
adjustment in 1993 for increased U.S. tax rates.
American Road earned $44 million in the first nine months of
1994, compared with $67 million a year ago. The decrease
reflected reduced investment income from capital gains, partially
offset by improved underwriting experience in extended service
plans. Premiums written by American Road were $241 million in
the first nine months of 1994, compared with $228 million a year
ago.
Ford Land earned $8 million in the first nine months of 1994, up
$8 million from the same period in 1993. The improvement
resulted primarily from a gain on sale of real estate development
property.
-7-<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and investments in securities totaled $5.8
billion at September 30, 1994, up $740 million from December 31,
1993. The increase reflected primarily higher net receipts from
annuity contracts available for investment by American Road.
Net receivables and lease investments were $34.3 billion at
September 30, 1994, up $3.4 billion from December 31, 1993. The
increase reflected continued growth in earning assets at The
Associates. In September 1994, The Associates acquired the
credit card portfolio and certain other assets of Amoco Oil
Company. The fair value of assets acquired totaled $426 million.
The transaction was accounted for as a purchase.
Total debt was $32.5 billion at September 30, 1994, up $2.9
billion from December 31, 1993. The increase resulted primarily
from higher debt levels required to finance growth in earning
assets at The Associates.
The liability for annuity contracts was $2.5 billion at September
30, 1994, up $875 million from December 31, 1993. The increase
reflected continued growth in single premium deferred annuities
offered by Ford Life Insurance Company, a wholly owned subsidiary
of American Road. The volume of annuity contracts, which are
sold primarily through banks and brokerage firms, is expected to
continue to grow in the future.
In August 1994, Ford Holdings sold 2,000 shares of its Series D
Cumulative Preferred Stock having an aggregate liquidation
preference of $200 million.
At September 30, 1994, the Company had approximately $10.3
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 L.L.P., 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 L.L.P. did not express an opinion
on the aforementioned data. The financial data include any
material adjustments or disclosures proposed by Coopers & Lybrand
L.L.P. as a result of their review.
-8-
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
Please refer to the Exhibit Index on page 10 for Exhibit's 12, 15 and 27.
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ---------------------------------------------- ---------------------------------
<S> <C> <C>
4-A Certificate of Designations of Series D Filed as Exhibit 2.8 to the
Cumulative Preferred Stock Company's Registration Statement
on Form 8-A dated August 3, 1994,
File No. 1-11146
4-B Deposit Agreement dated August 10, 1994 Filed as Exhibit 2.9 to the
among the Company, Chemical Bank, as Company's Registration Statement
depositary, and holders from time to time on Form 8-A dated August 3, 1994,
of depositary shares, each representing File No. 1-11146
1/4,000 of a share of Series D Cumulative
Preferred Stock
</TABLE>
(b) Reports on Form 8-K
Current Report on Form 8-K dated August 3, 1994 included
information relating to the issue of 2,000 shares of the
Company's Series D Cumulative Preferred Stock, par value $1
per share, and related depositary shares, each representing
1/4,000 of a share of Series D Cumulative Preferred Stock,
pursuant to Rule 415 under the Securities Act of 1993.
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.
----------------------------
(Registrant)
Date: November 3, 1994 By: /s/ Terrence F. Marrs
----------------- ------------------------
Terrence F. Marrs
Vice President - Controller
(principal Accounting officer)
-9-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Sequential
Page Number
Designation Description at Which Found
- ----------- -------------------------------------------- --------------
<S> <C> <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 L.L.P., Independent 12
Public Accountants, November 3, 1994,
relating to Financial Information
Exhibit 27 Financial Data Schedule - Ford Holdings, Inc. 13
and Subsidiaries
-10-
</TABLE>
Exhibit 12
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------------------------------
(in millions)
Nine Months
-----------------------
1994 1993
------- -------
<S> <C> <C>
Earnings (a)
- --------
Income before income taxes $ 685 $ 599
Adjusted fixed charges 1,580 1,405
------ ------
Total earnings $2,265 $2,004
====== ======
Combined Fixed Charges and
Preferred Stock Dividends (a)
- --------------------------
Interest expense $1,527 $1,359
Interest portion of rental expense 19 18
Preferred stock dividend requirements (b) 110 88
------ ------
Total combined fixed charges and
preferred stock dividends $1,656 $1,465
====== ======
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.4 1.4
</TABLE>
- - - - - -
(a) For purposes of computing the ratio of earnings to combined
fixed charges and preferred stock dividends, "earnings"
include earnings before income taxes plus adjusted fixed
charges. "Combined fixed charges and preferred stock
dividends" consist of interest on borrowed funds,
amortization of debt discount, premium, and issuance
expense, one-third of all rental expense (the portion deemed
representative of the interest factor) 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 Ford
Holdings' effective income tax rates for the respective
periods.
-11-
Coopers certified public accountants
& Lybrand L.L.P.
Exhibit 15
Ford Holdings, Inc.
The American Road
Dearborn, Michigan
Re: Ford Holdings, Inc. Registration Statement Nos. 33-48743,
33-60232 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 October 26, 1994 accompanying
the unaudited interim financial information of Ford Holdings,
Inc. for the periods ended September 30, 1994 and 1993 and
included in Ford Holdings, Inc. Quarterly Report on Form 10-Q for
the quarter ended September 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
November 3, 1994
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Ford Holdings, Inc. - Financial Data Schedule
</LEGEND>
<CIK> 0000857775
<NAME> FORD HOLDINGS, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 1,005
<SECURITIES> 4,835
<RECEIVABLES> 34,321
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,636
<CURRENT-LIABILITIES> 0
<BONDS> 32,499
<COMMON> 0
0
1,659
<OTHER-SE> 3,035
<TOTAL-LIABILITY-AND-EQUITY> 42,636
<SALES> 4,295
<TOTAL-REVENUES> 4,295
<CGS> 0
<TOTAL-COSTS> 3,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 436
<INTEREST-EXPENSE> 1,519
<INCOME-PRETAX> 685
<INCOME-TAX> 251
<INCOME-CONTINUING> 435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 435
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
