<PAGE> 1
UNITED STATES
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, 1998
-------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(The Registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the
reduced disclosure format.)
Commission file number 0-6119
----------------------------------------------------------
AVCO FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2530491
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 Anton Blvd., P.O. Box 5011, Costa Mesa, California 92628-5011
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 435-1200
-----------------------------
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 [ ]
At June 30, 1998, the Registrant had 500,000 shares of common stock ($1 par
value per share) outstanding, all of which are owned by Textron Inc.
<PAGE> 2
AVCO FINANCIAL SERVICES, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
- -------------------------------- ----
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet at June 30, 1998
and December 31, 1997........................................................1
Consolidated Statement of Income for the three and six months ended
June 30, 1998 and 1997.......................................................2
Consolidated Statement of Changes in Stockholder's Equity
for the six months ended June 30, 1998.......................................2
Consolidated Statement of Cash Flows for the six months ended
June 30, 1998 and 1997.......................................................3
Note to Consolidated Financial Statements.......................................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................5
Item 3. Quantitative and Qualitative Disclosure about Market Risk.......................7
PART II. OTHER INFORMATION
- ----------------------------
Item 1. Legal Proceedings...............................................................8
Item 2. Changes in Securities and Use of Proceeds.......................................8
Item 3. Defaults Upon Senior Securities.................................................8
Item 4. Submission of Matters to a Vote of Security Holders.............................8
Item 6. Exhibits and Reports on Form 8-K................................................8
SIGNATURE ................................................................................9
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
- --------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
AVCO FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(Thousands of dollars)
<S> <C> <C>
ASSETS
Finance receivables ..................................... $ 7,845,366 $ 7,742,641
Allowance for losses .................................. (265,133) (237,809)
Insurance reserves and claims ......................... (303,580) (271,271)
----------- -----------
7,276,653 7,233,561
Investments ............................................. 1,035,362 996,407
Property and equipment .................................. 86,160 89,982
Insurance policy acquisition costs ...................... 57,340 60,863
Goodwill ................................................ 75,666 78,406
Cash .................................................... 34,266 44,958
Other ................................................... 318,976 305,721
----------- -----------
TOTAL ASSETS ...................................... $ 8,884,423 $ 8,809,898
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Senior debt
Commercial paper ...................................... $ 3,267,151 $ 2,956,719
Banks ................................................. 193,685 217,471
Savings deposits ...................................... 4,771 6,070
Notes ................................................. 3,604,891 3,735,022
----------- -----------
7,070,498 6,915,282
Senior subordinated debt ................................ 500 500
----------- -----------
Total debt ........................................ 7,070,998 6,915,782
Accounts payable and accrued liabilities ................ 345,004 347,796
Insurance reserves and claims
Unearned insurance premiums ........................... 167,288 215,968
Losses and adjustment expenses ........................ 61,760 64,879
Income taxes ............................................ 60,591 54,958
----------- -----------
Total liabilities ................................. 7,705,641 7,599,383
----------- -----------
Stockholder's equity
Common stock ($1 par value, 500,000 shares
authorized; 500,000 shares outstanding) ............... 500 500
Additional paid-in capital .............................. 257,453 257,453
Retained earnings ....................................... 1,074,312 1,089,859
Accumulated other comprehensive income/(loss)
Securities valuation adjustment ....................... 12,136 13,056
Currency translation adjustment ....................... (165,619) (150,353)
----------- -----------
Total accumulated other comprehensive income/(loss) (153,483) (137,297)
----------- -----------
Total stockholder's equity ........................ 1,178,782 1,210,515
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ........ $ 8,884,423 $ 8,809,898
=========== ===========
</TABLE>
See accompanying note.
- 1 -
<PAGE> 4
AVCO FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
PERIODS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
1998 1997 1998 1997
-------- -------- -------- --------
(Thousands of dollars)
<S> <C> <C> <C> <C>
REVENUES
Interest, discount and service charges ......... $332,556 $334,056 $662,612 $658,597
Credit life, credit disability and casualty
insurance premiums .......................... 100,856 100,789 206,657 203,853
Investment and other income (including net
realized investment gains and losses) ....... 35,192 22,792 65,070 41,276
-------- -------- -------- --------
Total revenues .......................... 468,604 457,637 934,339 903,726
-------- -------- -------- --------
EXPENSES
Interest and debt expense ...................... 109,689 108,543 222,832 212,105
Provision for losses on collection of finance
receivables ................................. 58,864 56,597 116,817 114,807
Credit life, credit disability and casualty
insurance losses and adjustment expenses, less
recoveries ................................... 43,025 44,320 90,739 90,651
Amortization of insurance policy acquisition
costs ........................................ 23,167 22,331 48,793 46,317
Other operating expenses ....................... 152,566 149,771 299,815 288,226
-------- -------- -------- --------
Total expenses .......................... 387,311 381,562 778,996 752,106
-------- -------- -------- --------
Income before income taxes ....................... 81,293 76,075 155,343 151,620
Income taxes ..................................... 29,756 28,067 56,340 56,284
-------- -------- -------- --------
NET INCOME ....................................... $ 51,537 $ 48,008 $ 99,003 $ 95,336
======== ======== ======== ========
</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income/(Loss)
-----------------------
Securities Currency
Common Paid-in Retained Valuation Translation
Stock Capital Earnings Adjustment Adjustment Total
----- ------- -------- ---------- ---------- -----
(Thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997....... $500 $257,453 $1,089,859 $13,056 $(150,353) $1,210,515
Net income....................... 99,003 99,003
Change in valuation adjustment... (920) (920)
Change in translation adjustment. (15,266) (15,266)
---- -------- ---------- ------- --------- ----------
Comprehensive income/(loss)...... 99,003 (920) (15,266) 82,817
Cash dividends................... (114,550) (114,550)
---- -------- ---------- ------- --------- ----------
Balance at June 30, 1998........... $500 $257,453 $1,074,312 $12,136 $(165,619) $1,178,782
==== ======== ========== ======= ========= ==========
</TABLE>
See accompanying note.
- 2 -
<PAGE> 5
AVCO FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(Thousands of dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................... $ 99,003 $ 95,336
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for losses on collection of finance receivables 116,817 114,807
Depreciation ............................................. 11,196 10,054
Gain on sales of investments ............................. (7,334) (4,115)
Increase in unamortized insurance policy
acquisition costs ...................................... 3,791 363
Increase/(decrease) in unearned insurance premiums and
reserves for insurance losses and adjustment expenses .. (17,392) 6,499
Increase/(decrease) in accounts payable and accrued
liabilities ............................................ 962 (11,280)
Increase in income taxes ................................. 9,888 7,280
Other, net ............................................... 8,030 (11,531)
----------- -----------
Net cash provided by operating activities .............. 224,961 207,413
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Finance receivables originated or purchased .................. (3,444,783) (2,497,422)
Finance receivables repaid or sold ........................... 3,144,601 2,196,624
Purchases of investments available for sale .................. (264,354) (125,256)
Proceeds from sales of investments available for sale ........ 156,611 66,102
Proceeds from maturities and calls of investments
available for sale ......................................... 66,781 33,950
Capital expenditures ......................................... (11,538) (14,876)
Cash used in acquisitions, net of cash acquired .............. (42,960)
----------- -----------
Net cash used by investing activities ........................ (352,682) (383,838)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term debt .................................. 316,707 94,416
Proceeds from issuance of notes .............................. 719,095 451,336
Principal payments on notes .................................. (802,986) (292,281)
Decrease in savings deposits ................................. (1,237) (1,806)
Dividends paid ............................................... (114,550) (50,000)
----------- -----------
Net cash provided by financing activities .................... 117,029 201,665
----------- -----------
Net increase/(decrease) in cash .................................. (10,692) 25,240
Cash at beginning of period ...................................... 44,958 15,562
----------- -----------
Cash at end of period ............................................ $ 34,266 $ 40,802
=========== ===========
</TABLE>
See accompanying note.
- 3 -
<PAGE> 6
AVCO FINANCIAL SERVICES, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
- -------
The consolidated financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods.
The results of operations for interim periods are not necessarily indicative of
the results to be expected for a full year.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements included in the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997.
- 4 -
<PAGE> 7
PART I. FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE
SIX MONTHS ENDED JUNE 30, 1997.
Revenues for the six months ended June 30, 1998 were $934 million compared to
$904 million for the six months ended June 30, 1997, an increase of $30 million
(3%). Income before income taxes for the six months ended June 30,1998 was $155
million compared to $152 million for the like period in 1997, an increase of $3
million (2%).
Financial Services and Related Insurance
REVENUES of this segment increased $22 million (3%) to $790 million, due
primarily to: (i) an increase in average finance receivables to $7.646 billion
for the first six months in 1998 compared to $7.322 billion for the like period
in 1997, primarily resulting from growth in the Registrant's international
commercial finance operations; (ii) an increase in gains on the sale of
underperforming branches ($8 million for the six months ended June 30, 1998
compared to $3 million for the like period in 1997); and (iii) a $10 million
gain on the sale of centralized real estate receivables. These increases to
revenues were partially offset by: (i) a decrease of approximately $18 million
due to a decrease in annualized finance receivable yields to 17.33% for the
first six months in 1998 compared to 17.99% for the like period in 1997
(reflecting decreases in yields in both the consumer and commercial finance
portfolios, as well as the impact of an increase in commercial receivables,
which have lower yields than the Registrant's consumer finance portfolio); (ii)
a decrease in investment income due to lower yields and a decrease in capital
gains; and (iii) a decrease of approximately $30 million due to the impact of
changes in foreign exchange rates.
INCOME BEFORE INCOME TAXES of this segment increased $3 million (2%) to $139
million, due primarily to: (i) an increase in average finance receivables; (ii)
an increase in gains on the sale of underperforming branches and the gain on the
sale of centralized real estate receivables; and (iii) a slight decrease in the
cost of borrowed funds. Partially offsetting these increases to income were: (i)
a decrease in annualized finance receivable yields; (ii) an increase in the
provision for losses associated with the growth in finance receivables,
partially offset by a decline in the ratio of net credit losses to average
finance receivables to 2.78% for the first six months in 1998 from 2.98% for the
like period in 1997 (reflecting growth in the commercial receivables, which have
a lower loss ratio than the Registrant's consumer finance portfolio), (iii) a
decrease in investment income, due both to lower yields on investments and a
decrease in capital gains; and (iv) a decrease of approximately $7 million due
to the impact of changes in foreign exchange rates.
The proliferation of credit cards continues to provide the consumer with an
alternative source of funds, and as a result, the increase in consumer debt has
continued to burden the consumer finance customer, resulting in higher than
historical delinquencies and charge-offs. This has been particularly true in the
U.S. where the ratio of net charge-offs to average finance receivables is higher
than recent historical levels and receivables growth has decreased. In order to
make better use of its capital resources, the Registrant has been conducting a
strategic review of its U.S. branch operations. This review started in June 1997
and should be completed by year-end 1998. Each branch is being reviewed and if
it is determined that a branch will not meet certain profitability standards, it
will be sold. The Registrant does not anticipate these actions to result in any
losses. To date, this strategic review has resulted in the sale of 67 branches;
47 branches in 1997 and 20 branches in the first six months of 1998.
- 5 -
<PAGE> 8
PART I. FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------
Nonrelated Insurance
REVENUES of this segment increased $8 million (6%) to $144 million, due
primarily to: (i) a higher level of earned premiums and (ii) an increase in
investment income resulting from a higher level of invested assets and an
increase of $4 million in capital gains.
INCOME BEFORE INCOME TAXES of this segment increased $1 million (4%) to $16
million, due primarily to: (i) a higher level of earned premiums and (ii) an
increase in investment income resulting from a higher level of invested assets
and increased capital gains. Partially offsetting these increases were an
increase in underwriting expenses (primarily insurance losses) and a decrease in
investment yields.
RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 1997.
Revenues for the three months ended June 30, 1998 were $469 million compared to
$458 million for the three months ended June 30, 1997, an increase of $11
million (2%). Income before income taxes for the three months ended June 30,
1998 was $81 million compared to $76 million for the like period in 1997, an
increase of $5 million (7%).
Financial Services and Related Insurance
REVENUES of this segment increased $11 million (3%) to $401 million, due
primarily to: (i) an increase in average finance receivables to $7.659 billion
for the three months ended June 30, 1998 from $7.467 billion for the like period
in 1997, primarily resulting from growth in the Registrant's international
commercial finance operations; (ii) an increase in gains on the sale of
underperforming branches ($4 million for the three months ended June 30, 1998
compared to $3 million for the like period in 1997); and (iii) a $10 million
gain on the sale of centralized real estate receivables. These increases to
revenues were partially offset by: (i) a decrease in annualized finance
receivable yields to 17.37% for the three months ended June 30, 1998 from 17.89%
for the like period in 1997 (reflecting decreases in yields in both the consumer
and commercial finance portfolios, as well as the impact of an increase in
commercial receivables, which have lower yields than the Registrant's consumer
finance portfolio); (ii) a decrease in investment income due to lower yields on
investments and a decrease in capital gains; and (iii) a decrease of
approximately $16 million due to the impact of changes in foreign exchange
rates.
INCOME BEFORE INCOME TAXES of this segment increased $8 million (12%) to $75
million, due primarily to: (i) an increase in average finance receivables; (ii)
an increase in gains on the sale of underperforming branches and the gain on the
sale of centralized real estate receivables; (iii) a decrease in the annualized
cost of borrowed funds; and (iv) a decrease in the ratio of insurance losses to
earned premiums. Partially offsetting these increases to income were: (i) a
decrease in annualized finance receivable yields; (ii) an increase in the
provision for losses associated with the growth in finance receivables,
partially offset by a decline in the ratio of net credit losses to average
finance receivables for both the consumer and commercial finance portfolios; and
(iii) a decrease in investment income, due to lower yields on investments and a
decrease in capital gains.
Nonrelated Insurance
REVENUES of this segment remained unchanged at $67 million, both in the level of
premiums earned and in investment income.
- 6 -
<PAGE> 9
PART I. FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------
INCOME BEFORE INCOME TAXES of this segment decreased $3 million (31%) to $6
million due primarily to an increase in underwriting expenses (primarily
insurance losses). Partially offsetting this decrease to income were minor
increases in earned premiums and investment income.
FINANCIAL CONDITION
The Registrant utilizes a broad base of financial sources for its liquidity and
capital requirements. Cash is provided from both operations and several
different sources of borrowings, including unsecured borrowings under bank lines
of credit, the issuance of commercial paper and sales of medium- and long-term
debt in the U.S. and foreign financial markets.
Under certain interest rate exchange agreements, the Registrant makes periodic
fixed payments in exchange for periodic variable payments. The Registrant enters
into such agreements to mitigate its exposure to increases in interest rates on
a portion of its variable rate debt. During the first six months of 1998, the
Registrant had $196.3 million of these agreements go into effect. These
agreements have a weighted average original term of 2.9 years and expire through
2003.
In the three months ended June 30, 1998, the Registrant also entered into
several short-duration agreements to exchange Hong Kong dollars for U.S. dollars
at specified exchange rates during the three months ended September 30, 1998.
These foreign exchange forward contracts were entered into as a hedge against
currency fluctuations on a HK$1.0 billion intercompany loan from the
Registrant's U.S. operation to its Hong Kong subsidiary. The intercompany loans
are expected to remain outstanding during the period over which the forward
contracts are in effect.
In the second quarter of 1998, Textron announced that it is reviewing its
strategic alternatives for the Registrant. This review will include evaluation
of a sale, spin-off, or other disposition of the Registrant, and is targeted for
completion in the third quarter of 1998.
* * * * *
Forward-looking Information: Certain statements in this Form 10-Q are
forward-looking statements, including those that discuss strategies, goals,
outlook, projected revenues, income, return and other financial measures, and
other non-historical statements. These forward-looking statements are subject to
risk and uncertainties that may cause actual results to differ materially from
those contained in the statements, including the following: (i) continued market
demand for the types of financial services offered by the Registrant; (ii)
increased contractual delinquencies or credit losses; (iii) ability of the
Registrant to utilize a broad base of financial sources for liquidity and
capital requirements; (iv) changes in laws or regulations governing the
Registrant's finance operations or insurance operations; (v) increased
competition; and (vi) changes in worldwide economic and political conditions and
the associated impact on interest and foreign exchange rates and consumer
bankruptcies and delinquencies. In addition, the words "believe," "expect,"
"anticipate," "intend," "aim," "will" and similar words identify forward-looking
statements in this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
See the Registrant's most recent annual report filed on Form 10-K
(Management's Discussion and Analysis on pages 12 through 15).
There has been no material change in this information.
- 7 -
<PAGE> 10
PART II. OTHER INFORMATION
- -------------------------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
Because the business of the Registrant involves the collection of
numerous accounts, the validity of liens, accident and other
damage or loss claims under many types of insurance, and
compliance with state and federal consumer laws, the Registrant
and its subsidiaries are plaintiffs and defendants in numerous
legal proceedings, including individual and class action
proceedings which seek compensatory, treble or punitive damages in
substantial amounts. The outcome of specific legal proceedings
could be unfavorable to the Registrant or any subsidiaries. It is
the opinion of the Registrant's management, based upon the advice
of its counsel, that the aggregate liability from pending or
threatened litigation will not have a material effect on the
Registrant's net income or financial condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
Omitted in accordance with General Instruction H(2)(b).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Omitted in accordance with General Instruction H(2)(b).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Omitted in accordance with General Instruction H(2)(b).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
*(12) Statement of Computation of Number of Times Fixed
Charges Earned.
*(27) Financial Data Schedule.
-------------
*Filed herewith.
(b) Reports on Form 8-K
No Report on Form 8-K has been filed during the quarter for
which this report is filed.
- 8 -
<PAGE> 11
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.
AVCO FINANCIAL SERVICES, INC.
---------------------------------------------
(Registrant)
Date: August 10, 1998 By /s/ GARY L. FITE
---------------- ---------------------------------------------
GARY L. FITE
Executive Vice President & Controller
(Chief Accounting Officer)
- 9 -
<PAGE> 12
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<C> <S>
*(12) Statement of Computation of Number of Times Fixed Charges Earned.
*(27) Financial Data Schedule.
</TABLE>
- -------------
*Filed herewith.
<PAGE> 1
EXHIBIT 12
AVCO FINANCIAL SERVICES, INC.
STATEMENT OF COMPUTATION OF NUMBER OF TIMES
FIXED CHARGES EARNED
SIX MONTHS ENDED JUNE 30, 1998
(Thousands of dollars)
<TABLE>
<S> <C>
Income
Income before income taxes................................................... $155,343
--------
Fixed charges to be added back to income -
Interest and debt expense.................................................. 222,832
Rentals (one-third of all rent and related costs
charged to income)...................................................... 7,383
--------
Total fixed charges................................................... 230,215
Income before income taxes and fixed charges................................... $385,558
========
Ratio
Number of times fixed charges covered by income
before income taxes and fixed charges..................................... 1.7
========
</TABLE>
S-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AFS
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998 AND CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 34,266
<SECURITIES> 0
<RECEIVABLES> 7,845,366
<ALLOWANCES> 265,133
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 86,160
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,884,423
<CURRENT-LIABILITIES> 0
<BONDS> 3,609,662
0
0
<COMMON> 500
<OTHER-SE> 1,178,782
<TOTAL-LIABILITY-AND-EQUITY> 8,884,423
<SALES> 0
<TOTAL-REVENUES> 934,339
<CGS> 0
<TOTAL-COSTS> 139,532
<OTHER-EXPENSES> 299,815
<LOSS-PROVISION> 116,817
<INTEREST-EXPENSE> 222,832
<INCOME-PRETAX> 155,343
<INCOME-TAX> 56,340
<INCOME-CONTINUING> 99,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,003
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
