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, 1995 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
- ------------------------------- ----------------------
(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 27, 1995, 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 9
<PAGE>
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, 1994.
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended June 30, 1995 and 1994
(in millions)
Second Quarter First Half
-------------------- -------------------------
1995 1994 1995 1994
------ ------ -------- ------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues
Financing revenues $1,316 $1,074 $2,565 $2,116
Investment and other income 251 152 484 307
Insurance premiums earned 167 169 333 343
------ ------ ------ ------
Total revenues 1,734 1,395 3,382 2,766
Expenses
Interest expense 625 476 1,220 927
Operating and other expenses 458 353 880 717
Provision for credit losses 182 153 357 283
Insurance claims 106 106 203 217
Depreciation 67 48 116 96
Interest credited on annuity contracts 43 25 82 48
Amortization of policy acquisition costs 15 21 32 43
------ ------ ------ ------
Total expenses 1,496 1,182 2,890 2,331
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Income before income taxes 238 213 492 435
Provision for income taxes 92 79 188 162
------ ------ ------ ------
Income before minority interests 146 134 304 273
Minority interests in net income/(loss)
of subsidiaries 8 (1) 7 (2)
------ ------ ------ ------
Net income $ 138 $ 135 $ 297 $ 275
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
June 30, Dec. 31,
1995 1994
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(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,036 $ 968
Investments in securities 5,694 4,979
Finance receivables, net 32,015 29,362
Accounts and notes receivable 391 415
Receivables from Ford and affiliated companies 432 167
Investments in direct financing leases, net 4,585 4,404
Investments in operating leases, net 1,616 1,579
Goodwill 1,739 1,768
Deferred policy acquisition costs 285 253
Other assets 467 478
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Total assets $48,260 $44,373
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 544 $ 469
Payables to Ford and affiliated companies 127 187
Unpaid insurance claims 150 150
Annuity contracts 2,969 2,722
Unearned insurance premiums 920 914
Debt 36,722 33,820
Other liabilities and deferred income 1,246 1,096
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Total liabilities 42,678 39,358
Stockholders' equity
Preferred Stock, $1 par value 1,976 1,875
Common Stock, $1 par value,
authorized - 10,000 shares;
issued and outstanding - 1,099 shares * *
Capital in excess of par value of stock 965 965
Unrealized gain/(loss) on investments in
securities, net of taxes, and other 61 (160)
Earnings retained for use in business 2,580 2,335
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Total stockholders' equity 5,582 5,015
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Total liabilities and stockholders' equity $48,260 $44,373
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</TABLE>
- - - - - -
*Less than $50,000
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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, 1995 and 1994
(in millions)
<TABLE>
<CAPTION>
First Half
------------------------
1995 1994
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(unaudited)
<S> <C> <C>
Cash and cash equivalents at January 1 $ 968 $ 823
Cash flows from operating activities before securities trading 617 422
Net sales of trading securities 285 167
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Net cash flows from operating activities 902 589
Cash flows from investing activities
Acquisitions of finance receivables (16,503) (13,397)
Collections of finance receivables 13,369 11,056
Purchases of securities (3,289) (6,209)
Sales and maturities of securities 2,609 5,829
Recovery of equipment costs and residual interests 471 395
Cost of equipment and lease receivables acquired (635) (493)
Other (9) 174
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Net cash used in investing activities (3,987) (2,645)
Cash flows from financing activities
Issuance of Preferred Stock 101 1
Proceeds from issuance of long-term debt 3,343 1,744
Principal payments on long-term debt (1,127) (1,099)
Changes in short-term debt 686 1,100
Dividends paid to shareholders (67) (45)
Receipts from annuity contracts, net 247 519
Other (30) 20
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Net cash provided by financing activities 3,153 2,240
Net increase in cash and cash equivalents 68 184
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Cash and cash equivalents at June 30 $ 1,036 $ 1,007
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</TABLE>
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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, 1995 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, 1995. 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, 1994 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 January 27, 1995, we
expressed an unqualified opinion on those consolidated financial
statements.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
July 19, 1995
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- ----------------------------------------------------------
OVERVIEW
The Company's net income in the second quarter of 1995 was $138
million, up $3 million from the $135 million earned in the second
quarter of 1994. 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 4
inclusive should be read as an integral part of this review.
RESULTS OF OPERATIONS: SECOND QUARTER 1995 COMPARED WITH SECOND
QUARTER 1994
The Associates earned a record $141 million in the second quarter
of 1995, compared with $121 million a year ago. The increase
reflected higher levels of earning assets and improved net
interest margins.
USL Capital earned a record $30 million in the second quarter of
1995, compared with $27 million a year ago. The increase
reflected higher levels of earning assets and higher gains on
asset sales.
American Road incurred a loss of $9 million in the second quarter
of 1995, compared with earnings of $13 million in the same period
in 1994. The decrease was more than explained by lower
underwriting results in floor plan products, the dissolution of
an operating subsidiary, and the restructuring of the annuity
investment portfolio, partially offset by improved investment
income from other portfolios.
FIRST HALF 1995 COMPARED WITH FIRST HALF 1994
The Company's net income in the first half of 1995 was $297
million, up $22 million from the $275 million earned in the first
half of 1994. The increase resulted primarily from improved
earnings at The Associates and USL Capital, offset by lower
earnings at American Road.
The Associates earned a record $293 million in the first half of
1995, compared with $249 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 1995 was a record
$56 million, compared with $48 million a year ago. The
improvement reflected the same factors as those described in the
discussion of second quarter results of operations.
American Road incurred a loss of $4 million in the first half of
1995, compared with earnings of $30 million a year ago. The
decrease reflected the same factors as those described in the
discussion of second quarter results of operations.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and investments in securities totaled $6.7
billion at June 30, 1995, up $783 million from December 31, 1994.
Net receivables and lease investments were $39 billion at
June 30, 1995, up $3.1 billion from December 31, 1994. The
increase reflected continued growth in earning assets at The
Associates and USL Capital.
Total debt was $36.7 billion at June 30, 1995, up $2.9 billion
from December 31, 1994. The increase resulted primarily from
higher debt levels required to finance growth in earning assets
at The Associates and USL Capital.
The liability for annuity contracts was $3 billion at June 30,
1995, up $247 million from December 31, 1994.
Insurance premiums written by American Road were $151 million
during the first half of 1995, compared with $159 million a year
ago.
At June 30, 1995, the Company had approximately $11.4 billion of
support facilities, all of which were contractually committed.
Less than 1% of these facilities were in use at that date.
In June 1995, Ford Holdings sold 500 shares of its Series O and
500 shares of its Series P Flexible Rate Auction Preferred Stock
having an aggregate liquidation preference of $100 million.
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 4 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.
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<PAGE>
Part II. Other Information
---------------------------
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
Please refer to the Exhibit Index on page 9 for Exhibits 12,
15, and 27.
(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.
---------------------------------
(Registrant)
Date: July 27, 1995 By: /s/ Eric A. Law
--------------- -------------------------------
Eric A. Law
Vice President - Controller
(principal Accounting officer)
-8-
<PAGE>
EXHIBIT INDEX
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<TABLE>
<CAPTION>
Sequential
Page Number
Designation Description at Which Found
- ----------- ----------------------------------------------- --------------
<S> <C> <C>
Exhibit 12 Ford Holdings, Inc. and Subsidiaries 10
Calculation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
Exhibit 15 Letter of Coopers & Lybrand L.L.P., Independent 11
Public Accountants, July 27, 1995,
relating to Financial Information
Exhibit 27 Financial Data Schedule -- Ford Holdings, Inc. 12
and Subsidiaries
</TABLE>
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Exhibit 12
<TABLE>
<CAPTION>
Ford Holdings, Inc. and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
- ----------------------------------------------------------------------------------------
(in millions)
First Half
----------------------
1995 1994
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Earnings (a)
- --------
<S> <C> <C>
Income before income taxes $ 492 $ 435
Adjusted fixed charges (b) 1,358 1,014
------ ------
Total earnings $1,850 $1,449
====== ======
Combined Fixed Charges and
Preferred Stock Dividends (a)
- -------------------------
Interest expense $1,309 $ 982
Interest portion of rental expense 17 12
Preferred stock dividend requirements (c) 101 71
------ ------
Total combined fixed charges and preferred
stock dividends $1,427 $1,065
====== ======
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.3 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 preferred stock dividend requirements.
(b) Adjusted fixed charges exclude the amount of interest
capitalized during the period and preferred stock
dividend requirements.
(c) 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.
-10-
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, 33-50419, 33-56335, and 33-56747 on Form S-3 and
Ford Holdings, Inc. and Ford Motor Company Registration
Statement Nos. 33-32641, 33-55474, and 33-55171 on Form S-3
We are aware that our report dated July 19, 1995 accompanying the
unaudited interim financial information of Ford Holdings, Inc.
for the periods ended June 30, 1995 and 1994 and included in Ford
Holdings, Inc. Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 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
July 27, 1995
-11-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,036
<SECURITIES> 5,694
<RECEIVABLES> 39,039
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,260
<CURRENT-LIABILITIES> 0
<BONDS> 36,722
<COMMON> 0
0
1,976
<OTHER-SE> 3,606
<TOTAL-LIABILITY-AND-EQUITY> 48,260
<SALES> 3,382
<TOTAL-REVENUES> 3,382
<CGS> 0
<TOTAL-COSTS> 2,890
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 357
<INTEREST-EXPENSE> 1,302
<INCOME-PRETAX> 492
<INCOME-TAX> 188
<INCOME-CONTINUING> 297
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
-12-
</TABLE>
