SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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
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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 May 1, 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 10
Exhibit index located on sequential page number 8
<PAGE>
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, 1994.
<TABLE>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
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For the Periods Ended March 31, 1995 and 1994
(in millions)
<CAPTION>
First Quarter
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1995 1994
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(unaudited)
<S> <C> <C>
Revenues
Financing revenues $1,249 $1,042
Insurance premiums earned 166 174
Investment and other income 233 155
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Total revenues 1,648 1,371
Expenses
Interest expense 595 451
Operating and other expenses 422 364
Provision for credit losses 175 130
Insurance claims 97 111
Depreciation 49 48
Interest credited on annuity contracts 39 23
Amortization of policy acquisition costs 17 22
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Total expenses 1,394 1,149
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Income before income taxes 254 222
Provision for income taxes 96 83
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Income before minority interests 158 139
Minority interests in net loss
of subsidiaries (1) (1)
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Net income $ 159 $ 140
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</TABLE>
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<PAGE>
<TABLE>
Ford Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
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(in millions)
<CAPTION>
March 31, Dec. 31,
1995 1994
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(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,154 $ 968
Investments in securities 5,221 4,979
Finance receivables, net 30,634 29,362
Accounts and notes receivable 432 415
Receivables from Ford and affiliated companies 157 167
Investments in direct financing leases, net 4,402 4,404
Investments in operating leases, net 1,596 1,579
Goodwill 1,753 1,768
Deferred policy acquisition costs 296 253
Other assets 482 478
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Total assets $46,127 $44,373
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 486 $ 469
Payables to Ford and affiliated companies 125 187
Unpaid insurance claims 157 150
Annuity contracts 2,887 2,722
Unearned insurance premiums 922 914
Debt 35,016 33,820
Other liabilities and deferred income 1,275 1,096
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Total liabilities 40,868 39,358
Stockholders' equity
Preferred Stock, $1 par value 1,875 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 loss on investments in
securities, net of taxes, and other (44) (160)
Earnings retained for use in business 2,463 2,335
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Total stockholders' equity 5,259 5,015
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Total liabilities and stockholders' equity $46,127 $44,373
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- - - - - -
*Less than $50,000
</TABLE>
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<PAGE>
<TABLE>
Ford Holdings, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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For the Periods Ended March 31, 1995 and 1994
(in millions)
<CAPTION>
First Quarter
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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 458 331
Net sales of trading securities 324 25
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Net cash flows from operating activities 782 356
Cash flows from investing activities
Acquisitions of finance receivables (7,895) (6,163)
Collections of finance receivables 6,492 5,226
Purchases of securities (1,725) (3,407)
Sales and maturities of securities 1,277 3,290
Cost of equipment and lease receivables acquired (266) (187)
Recovery of equipment costs and residual interests 201 176
Other (28) 44
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Net cash used in investing activities (1,944) (1,021)
Cash flows from financing activities
Proceeds from issuance of long-term debt 1,847 852
Principal payments on long-term debt (586) (670)
Changes in short-term debt (65) 307
Dividends paid to shareholders (31) (21)
Receipts from annuity contracts, net 165 185
Other 18 29
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Net cash provided by financing activities 1,348 682
Net increase in cash and cash equivalents 186 17
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Cash and cash equivalents at March 31 $ 1,154 $ 840
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</TABLE>
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<PAGE>
Coopers & 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 March 31, 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 March 31, 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
April 19, 1995
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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 first quarter of 1995 was $159
million, up $19 million from the $140 million earned in the first
quarter of 1994. The increase resulted primarily from record
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: FIRST QUARTER 1995 COMPARED WITH FIRST
QUARTER 1994
The Associates earned a record $152 million in the first quarter
of 1995, compared with $128 million a year ago. The increase
reflected primarily higher levels of earning assets, offset
partially by lower net interest margins.
USL Capital earned a record $26 million in the first quarter of
1995, compared with $21 million a year ago. The increase
reflected higher levels of earning assets and cost improvements.
American Road earned $5 million in the first quarter of 1995,
compared with $17 million in the same period in 1994. The
decrease reflected lower underwriting results in extended service
plan and floor plan products. Results for the annuity business
have also decreased as a result of investment portfolio
restructuring.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and investments in securities totaled $6.4
billion at March 31, 1995, up $428 million from December 31,
1994.
Net receivables and lease investments were $37.2 billion at March
31, 1995, up $1.3 billion from December 31, 1994. The increase
reflected continued growth in earning assets, primarily at The
Associates.
Total debt was $35 billion at March 31, 1995, up $1.2 billion
from December 31, 1994. The increase resulted primarily from
higher debt levels required to finance growth in earning assets
at The Associates.
The liability for annuity contracts was $2.9 billion at March 31,
1995, up $165 million from December 31, 1994.
Insurance premiums written by American Road were $73 million in
the first quarter of 1995, compared with $74 million a year ago.
At March 31, 1995, the Company had approximately $10.6 billion of
contractually committed support facilities; less than 1% 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 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
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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 8 for Exhibits
12, 15 and 27.
(b) Reports on Form 8-K
Current Report on Form 8-K dated December 12, 1994 and
filed January 3, 1995, included information relating to
the issue of 2,150 shares of the Company's Flexible Rate
Auction Preferred Stock, Series L, M and N.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FORD HOLDINGS, INC.
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(Registrant)
Date: May 11, 1995 By: /s/ Eric A. Law
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Eric A. Law
Vice President - Controller
(principal Accounting officer)
-7-
<PAGE>
<TABLE>
EXHIBIT INDEX
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<CAPTION>
Sequential
Page Number
Designation Description at Which Found
- ----------- --------------------------------------------------- --------------
<S> <C> <C>
Exhibit 12 Ford Holdings, Inc. and Subsidiaries 9
Calculation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
Exhibit 15 Letter of Coopers & Lybrand L.L.P., 10
Independent Public Accountants,
May 10, 1995, relating to Financial Information
Exhibit 27 Financial Data Schedule - Ford Holdings, Inc. (Not Included)
and Subsidiaries
</TABLE>
-8-
<PAGE>
Exhibit 12
<TABLE>
Ford Holdings, Inc. and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
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(in millions)
<CAPTION>
First Quarter
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1995 1994
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<S> <C> <C>
Earnings (a)
Income before income taxes $254 $222
Adjusted fixed charges (b) 662 493
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Total earnings $916 $715
==== ====
Combined Fixed Charges and
Preferred Stock Dividends (a)
Interest expense $638 $476
Interest portion of rental expense 8 6
Preferred stock dividend requirements (c) 50 35
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Total combined fixed charges and
preferred stock dividends $696 $517
==== ====
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.3 1.4
- - - - - -
(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.
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</TABLE>
EXHIBIT 15
Coopers & Lybrand L.L.P.
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 April 19, 1995 accompanying the unaudited
interim financial information of Ford Holdings, Inc. for the periods ended
March 31, 1995 and 1994 and included in Ford Holdings, Inc. Quarterly Report
on Form 10-Q for the quarter ended March 31, 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
May 10, 1995
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<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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,154
<SECURITIES> 5,221
<RECEIVABLES> 37,221
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 46,127
<CURRENT-LIABILITIES> 0
<BONDS> 35,016
<COMMON> 0
0
1,875
<OTHER-SE> 3,384
<TOTAL-LIABILITY-AND-EQUITY> 46,127
<SALES> 1,648
<TOTAL-REVENUES> 1,648
<CGS> 0
<TOTAL-COSTS> 1,394
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 175
<INTEREST-EXPENSE> 634
<INCOME-PRETAX> 254
<INCOME-TAX> 96
<INCOME-CONTINUING> 159
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 159
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
