<PAGE>
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 [ ] Transition
--------------
report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 to
for the transition period from __________ to __________
Commission file number 0-20405
---------------------------------------------------------
ALCO CAPITAL RESOURCE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2493042
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1738 Bass Road, Macon, Georgia 31210
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(912) 471-2300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 ___
---
* Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes ___ No ___
* Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1995.
Common Stock, $.01 par value per share 1,000 shares
Registered Debt Outstanding as of March 31, 1995 $308 million
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is, therefore, filing with the reduced disclosure format
contemplated thereby.
<PAGE>
INDEX
ALCO CAPITAL RESOURCE, INC.
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (Unaudited)
Balance Sheets--March 31, 1995 and
September 30, 1994
Statements of Income--Three months ended
March 31, 1995 and March 31, 1994; Six months
ended March 31, 1995 and March 31, 1994
Statements of Cash Flows--Six months ended
March 31, 1995 and March 31, 1994
Notes to Financial Statements--March 31, 1995
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- ----------
<PAGE>
PART I . FINANCIAL INFORMATION
------------------------------
ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)
- ----------------------------------------
ALCO CAPITAL RESOURCE, INC.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
ASSETS 1995 1994
-------------- -------------
<S> <C> <C>
Investments in leases:
Direct financing leases $646,691 $508,365
Less: Unearned income (100,511) (76,689)
-------------- -------------
546,180 431,676
Funded leases, net 133,706 103,797
-------------- -------------
679,886 535,473
Accounts receivable 20,293 17,700
Due from Alco Standard Corporation 2,190
Prepaid expenses and other assets 6,061 5,037
Leased equipment-operating rentals at cost
less accumulated depreciation of:
3/95 - $ 1,568 12,767
Property and equipment at cost, less
accumulated depreciation of:
3/95 - $ 1,595; 9/94 -$1,939 4,618 3,418
-------------- -------------
Total assets $725,815 $561,628
============== =============
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Accounts payable and accrued expenses $8,547 $6,438
Accrued interest 8,541 5,342
Due to Alco Standard Corporation 11,419
Income taxes payable 353
Notes payable to Banks 280,000 330,000
Medium Term Notes 308,000 105,000
Deferred income taxes 22,049 20,048
-------------- -------------
Total liabilities 627,137 478,600
Shareholder's equity:
Common Stock - $.01 par value, 1,000 shares
authorized, issued, and outstanding
Contributed capital 60,415 53,415
Retained earnings 38,263 29,613
-------------- -------------
Total Shareholder's equity 98,678 83,028
-------------- -------------
Total liabilities and shareholder's equity $725,815 $561,628
============== =============
</TABLE>
See notes to financial statements.
<PAGE>
ALCO CAPITAL RESOURCE, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31 MARCH 31
------------------ ------------------
1995 1994 1995 1994
--------- -------- --------- --------
<S> <C> <C> <C> <C>
REVENUES:
Lease finance income $17,247 $14,580 $33,115 $28,248
Rental income 1,267 1,834
Interest on Alco income tax deferrals 1,500 849 2,796 1,650
Other income 1,195 766 2,135 1,408
--------- -------- --------- --------
21,209 16,195 39,880 31,306
EXPENSES:
Interest 8,149 6,213 15,200 12,207
General and administrative 6,549 4,763 11,835 9,107
--------- -------- --------- --------
14,698 10,976 27,035 21,314
GAIN ON SALE OF LEASE RECEIVABLES 609 1,182
--------- -------- --------- --------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 7,120 5,219 14,027 9,992
PROVISION FOR INCOME TAXES 2,683 2,009 5,377 3,870
--------- -------- --------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 4,437 3,210 8,650 6,122
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES 140
--------- -------- --------- --------
NET INCOME $4,437 $3,210 $8,650 $6,262
========= ======== ========= ========
</TABLE>
See notes to financial statements.
4
<PAGE>
ALCO CAPITAL RESOURCE, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $8,650 $6,262
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 1,849 171
Cumulative effect of change in accounting
principle (140)
Provision for deferred taxes 2,001 3,173
Gain on sale of Lease Receivables (1,182)
Changes in operating assets and liabilities:
Accounts receivable (2,593) (2,071)
Income taxes (353)
Prepaid expenses and other assets 158 (1,747)
Accounts payable and accrued expenses 2,109 2,166
Accrued interest 3,199 240
---------- ----------
Net cash provided 13,838 8,054
---------- ----------
INVESTING ACTIVITIES:
Purchases of equipment for rental, net (14,335)
Purchases of property and equipment (1,595) (711)
Disposal of equipment 114
Direct financing leases:
Additions (271,502) (179,632)
Cancellations 43,256 27,108
Collections 81,437 84,873
Proceeds from sale 38,335
Funded leases:
Additions (66,464) (21,794)
Cancellations 10,589 4,784
Collections 19,936 12,997
---------- ----------
Net cash used (160,229) (72,375)
---------- ----------
FINANCING ACTIVITIES:
Proceeds from bank borrowings 48,000
Payments on bank borrowings (50,000) (12,000)
Proceeds from issuance of medium term notes 203,000
Contributed capital 7,000 3,900
---------- ----------
Net cash provided 160,000 39,900
---------- ----------
DECREASE(INCREASE) IN AMOUNTS DUE TO ALCO 13,609 (24,421)
DUE (TO) FROM ALCO AT BEGINNING OF PERIOD (11,419) 552
---------- ----------
DUE FROM (TO) ALCO AT END OF PERIOD $2,190 ($23,869)
========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
ALCO CAPITAL RESOURCE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
Note 1: Basis of Presentation
---------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the financial statements and
footnotes thereto included in the Company's report on Form 10-K for the year
ended September 30, 1994.
Note 2: Medium Term Note Program
------------------------
Effective July 1994, the Company began offering to the public from time to
time medium term notes having an aggregate initial offering price not exceeding
$500 million or the equivalent thereof in foreign currency. These notes are
offered at varying maturities of nine months or more from their dates of issue
and may be subject to redemption at the option of the Company or repayment at
the option of the holder, in whole or in part, prior to the maturity date in
conjunction with meeting specified provisions. Interest rates are determined
based on market conditions at the time of issuance. As of March 31, 1995, $308
million of medium term notes were outstanding with a weighted average interest
rate of 7.4%.
Note 3: Asset Securitization
--------------------
Under an asset securitization agreement entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. The agreement, which expires in September 1995,
was structured as a revolving securitization so that as collections reduce
previously sold interests, new leases can be sold up to $125 million. During
the first six months of fiscal 1995, collections reduced previously sold
interests by $38.3 million. The Company sold an additional $38.3 million in net
eligible direct financing leases and recognized a $1,182,000 gain on the sale
($721,000, net of tax).
Note 4: Supplemental Information to Statements of Cash Flows
----------------------------------------------------
Interest paid was approximately $12,000,000 for the six months ended March
31, 1995 as well as the six months ended March 31, 1994. Cash paid for income
taxes was $4,323,000 and $2,153,000 for the six months ended March 31, 1995 and
1994, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Pursuant to General Instruction H(2)(a) of Form 10-Q, the following analysis of
the results of operations is presented in lieu of Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Three Months Ended March 31, 1995 Compared with the
Three Months Ended March 31, 1994
---------------------------------------------------
Comparative summarized results of operations for the three months ended March
31, 1995 and 1994 are set forth in the table below. This table also shows the
increase in the dollar amounts of major revenue and expense items between
periods, as well as the percentage increase.
<TABLE>
<CAPTION>
(dollars in thousands) Three Months
Ended March 31 Increase
-------------- --------
1995 1994 Amount Percent
---- ----- ------ -------
<S> <C> <C> <C> <C>
Revenues
Lease finance income $17,247 $14,580 $2,667 18.3%
Rental income 1,267 1,267
Interest on Alco income tax
deferral 1,500 849 651 76.7
Other income 1,195 766 429 56.0
------ ------ -----
21,209 16,195 5,014 31.0
Expenses
Interest 8,149 6,213 1,936 31.2
General and administrative 6,549 4,763 1,786 37.5
------ ------ -----
14,698 10,976 3,722 33.9
Gain on sale of lease receivables 609 609
------ ------ -----
Income before income taxes 7,120 5,219 1,901 36.4
Income taxes 2,683 2,009 674 33.5
------ ------ -----
Net income $ 4,437 $ 3,210 $1,227 38.2%
====== ====== =====
</TABLE>
Revenues
- --------
Total revenues increased $5 million or 31% from the three month period ended
March 31, 1994 to the three month period ended March 31, 1995. Approximately
53% of this increase in revenues was due to increased lease finance income
resulting from additional leases in the portfolio, which continues to experience
growth. During the twelve month period from March 1994 to March 1995, the
portfolio grew 25.1%, net of lease receivables that were sold in asset
securitization transactions. For the same period, the total portfolio,
including securitized assets, grew by 48%.
At the start of the first quarter of fiscal 1995, the Company began offering a
new operating lease product to the Alco Office Products dealer network, whereby
office equipment rented to customers could be funded through the Company. At the
end of the first half of fiscal 1995, operating leases with equipment carried at
$12.8 million, net of accumulated depreciation, were outstanding. This new
product contributed rental income of $1,267,000 during the second quarter of
fiscal 1995. Management expects the use of operating leases to grow steadily
over time.
<PAGE>
The Company continues to charge Alco interest on the benefit Alco receives for
income tax deferrals associated with the Company's leasing transactions. For
fiscal 1993 and 1994, Alco paid interest on the deferred tax balances at a rate
of 6%. During the second quarter of fiscal 1995, Alco changed the method by
which the interest rate on deferred taxes is calculated, so that the Company
earns interest at a rate consistent with the Company's weighted average outside
borrowing rate of interest. This change was made retroactively to the start of
fiscal 1995 and resulted in an average interest rate of 6.4% for the first half
of fiscal 1995. In addition, the deferred tax base upon which these payments
are calculated increased from $62.4 million at March 31, 1994 to $90.5 million
at March 31, 1995. Due to these increases in the interest rate and the deferred
tax balances, interest income on the Alco income tax deferral rose $651,000 or
76.7% when comparing the three months ended March 31, 1994 to the three months
ended March 31, 1995.
Other income, which consists primarily of late payment charges and various
billing fees also increased because of the larger lease portfolio upon which
these fees are based. Overall, other income from these sources grew by $429,000
or 56%, when comparing the second quarter of fiscal 1994 to the second quarter
of fiscal 1995.
Expenses
- --------
Debt to fund the lease portfolio in the form of loans from major banks and the
issuance of medium term notes in the public markets rose by 36.4%, from a total
of $431 million outstanding at March 31, 1994 to $588 million at March 31, 1995.
Interest expense grew by $1,936,000 or 31.2% from the second quarter of fiscal
1994 to the second quarter of fiscal 1995, as a result of the increased
borrowings and an increase in interest rates. At March 31, 1995, the debt to
equity ratio was less than the required 6:1.
Total general and administrative expenses grew $1.8 million or 37.5% when
comparing the three months ended March 31, 1994 to the three months ended March
31, 1995. Included in the general and administrative expense category is the
dealer lease bonus program which represents special bonus subsidy payments to
Alco Office Products companies based on their new lease volume. For the three
months ended March 31, 1995, the lease bonus payments were 25.8% higher or
$2,486,000, as compared to $1,976,000 for the three months ended March 31, 1994.
At the start of fiscal 1995, the Company reduced the bonus subsidy payout to
approximately two-thirds of the fiscal 1994 level in anticipation of higher
borrowing costs to fund the portfolio.
In addition, general and administrative expenses for the three months ended
March 31, 1995 include $1,111,000 in depreciation expense on equipment funded as
operating rentals. As previously mentioned, the Company began the funding of
operating leases in October 1994; therefore, there is no comparable equipment
depreciation expense included in general and administrative expenses for the
second quarter of fiscal 1994.
<PAGE>
Excluding the effect of the lease bonus program and depreciation expense on
operating leases, remaining general and administrative expenses grew $165,000 or
5.9% when comparing the second quarter of fiscal 1994 to the second quarter of
fiscal 1995. The increase in general and administrative expenses is indicative
of the continued growth of the lease portfolio and the related rise in the
portfolio servicing costs of the Company.
Gain on Sale of Lease Receivables
- ---------------------------------
Under an asset securitization agreement entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. The agreement, which expires in September 1995,
was structured as a revolving securitization so that as collections reduce
previously sold interests, new leases can be sold up to $125 million. During
the second quarter of fiscal 1995, collections reduced previously sold interests
by $19.5 million. The Company sold an additional $19.5 million in net eligible
direct financing leases and recognized a $609,000 gain on the sale ($371,000,
net of tax).
Income Before Taxes
- -------------------
Income before taxes grew by $1.9 million or 36.4%, when comparing pre-tax
earnings for the second quarters of fiscal 1995 and fiscal 1994. This increase
was essentially the net effect of higher earnings on a larger lease portfolio,
supplemented by strong growth in other income and a slower growth rate in
general and administrative expenses than was experienced in fiscal 1994.
Taxes on Income
- ---------------
The $674,000 or 33.5% increase in income taxes from the three month period ended
March 31, 1994 to the three month period ended March 31, 1995 is directly
attributable to the higher income before income taxes in the second quarter of
fiscal 1995 as compared to the first quarter of fiscal 1994. The effective tax
rate was 37.7% and 38.5% for the quarters ended March 31, 1995 and 1994,
respectively.
<PAGE>
Six Months Ended March 31, 1995 Compared with the
Six Months Ended March 31, 1994
-------------------------------------------------
Comparative summarized results of operations for the six months ended March 31,
1995 and 1994 are set forth in the table below. This table also shows the
increase/decrease in the dollar amounts of major revenue and expense items
between periods, as well as the percentage increase.
<TABLE>
<CAPTION>
(dollars in thousands) Six Months
Ended March 31 Increase/(Decrease)
-------------- -------------------
1995 1994 Amount Percent
---- ---- ------ -------
<S> <C> <C> <C> <C>
Revenues
Lease finance income $33,115 $28,248 $4,867 17.2%
Rental income 1,834 1,834
Interest on Alco income tax
deferral 2,796 1,650 1,146 69.5
Other income 2,135 1,408 727 51.6
------ ------ -----
39,880 31,306 8,574 27.4
Expenses
Interest 15,200 12,207 2,993 24.5
General and administrative 11,835 9,107 2,728 30.0
------ ------ -----
27,035 21,314 5,721 26.8
Gain on sale of lease receivables 1,182 1,182
------ ------ -----
Income before income taxes and
cumulative effect of change
in accounting principle 14,027 9,992 4,035 40.4
Income taxes 5,377 3,870 1,507 38.9
------ ------ -----
Income before cumulative effect
of change in accounting
principle 8,650 6,122 2,528 41.3
Cumulative effect of change
in accounting for
income taxes 140 (140)
------ ------ ------
Net income $ 8,650 $ 6,262 $2,388 38.1%
====== ====== =====
</TABLE>
Revenues
- --------
Total revenues increased $8.6 million or 27.4% from the six month period ended
March 31, 1994 to the six month period ended March 31, 1995. Approximately 57%
of this increase in revenues was due to increased lease finance income resulting
from additional leases in the portfolio, which continues to experience growth.
During the twelve month period from March 1994 to March 1995, the portfolio grew
25.1%, net of lease receivables that were sold in asset securitization
transactions. For the same period, the total portfolio, including securitized
assets, grew by 48%.
At the start of fiscal 1995, the Company began offering a new operating lease
product to the Alco Office Products dealer network, whereby office equipment
rented to customers could be funded through the Company. At the end of the
first half of fiscal 1995, operating leases with equipment carried at $12.8
million, net of accumulated depreciation, were outstanding. This new product
contributed rental income of $1,834,000 during the first half of fiscal 1995.
Management expects the use of operating leases to grow steadily over time.
<PAGE>
The Company continues to charge Alco interest on the benefit Alco receives for
income tax deferrals associated with the Company's leasing transactions. For
fiscal 1993 and 1994, Alco paid interest on the deferred tax balances at a rate
of 6%. During the second quarter of fiscal 1995, Alco changed the method by
which the interest rate on deferred taxes is calculated, so that the Company
earns interest at a rate consistent with the Company's weighted average outside
borrowing rate of interest. This change was made retroactively to the start of
fiscal 1995 and resulted in an average interest rate of 6.4% for the first half
of fiscal 1995. In addition, the deferred tax base upon which these payments
are calculated increased from $62.4 million at March 31, 1994 to $90.5 million
at March 31, 1995. Due to these increases in the interest rate and the deferred
tax balances, interest income on the Alco income tax deferral rose $1,146,000 or
69.5% when comparing the first half of fiscal 1994 to the first half of fiscal
1995.
Other income, which consists primarily of late payment charges and various
billing fees also increased because of the larger portfolio size upon which
these fees are based. Overall, other income from these sources grew by $727,000
or 51.6%.
Expenses
- --------
Debt to fund the lease portfolio in the form of loans from major banks and the
issuance of medium term notes in the public markets rose by 36.4%, from a total
of $431 million outstanding at March 31, 1994 to $588 million at March 31, 1995.
Interest expense grew by $2,993,000 or 24.5% from the first half of fiscal 1994
to the first half of fiscal 1995, as a result of the increased borrowings and an
increase in interest rates. At March 31, 1995, the debt to equity ratio was
less than the required 6:1.
Total general and administrative expenses grew $2.7 million or 30% from the
first half of fiscal 1994 as compared to the first half of fiscal 1995.
Included in the general and administrative expense category is the dealer lease
bonus program which represents special bonus subsidy payments to Alco Office
Products companies based on their new lease volume. For the first six months of
fiscal 1995, the lease bonus payments were 15.2% higher or $4,147,000, as
compared to $3,600,000 for the first six months of fiscal 1994. At the start of
fiscal 1995, the Company reduced the bonus subsidy payout to approximately two-
thirds of the fiscal 1994 level in anticipation of higher borrowing costs to
fund the portfolio.
In addition, general and administrative expenses for the first half of fiscal
1995 include $1,568,000 in depreciation expense on equipment funded as operating
rentals. As previously mentioned, the Company began the funding of operating
leases in October 1994; therefore, there is no comparable equipment depreciation
expense included in general and administrative expenses in the first half of
fiscal 1994.
<PAGE>
Excluding the effect of the lease bonus program and depreciation expense on
operating leases, general and administrative expenses grew $613,000 or 11.1%
when comparing the first half of fiscal 1994 to the first half of fiscal 1995.
The increase in general and administrative expenses is indicative of the
continued growth of the lease portfolio and the related rise in the portfolio
servicing costs of the Company.
Gain on Sale of Lease Receivables
- ---------------------------------
Under an asset securitization agreement entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. The agreement, which expires in September 1995,
was structured as a revolving securitization so that as collections reduce
previously sold interests, new leases can be sold up to $125 million. During
the first half of fiscal 1995, collections reduced previously sold interests by
$38.3 million. The Company sold an additional $38.3 million in net eligible
direct financing leases and recognized a $1,182,000 gain on the sale ($721,000,
net of tax).
Income Before Taxes
- -------------------
Income before taxes grew by $4 million or 40.4%, when comparing pre-tax earnings
for the first six months of fiscal 1995 and fiscal 1994. This increase was
essentially the net effect of higher earnings on a larger lease portfolio,
supplemented by strong growth in other income and a slower growth rate in
general and administrative expenses than was experienced in fiscal 1994.
Taxes on Income
- ---------------
The $1.5 million or 38.9% increase in income taxes from the six month period
ended March 31, 1994 to the six month period ended March 31, 1995 is directly
attributable to the higher income before income taxes in the first half of
fiscal 1995 as compared to the first half of fiscal 1994. The effective tax
rate was 38.3% and 38.7% for the six months ended March 31, 1995 and 1994,
respectively.
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) The following Exhibits are furnished pursuant to
Item 601 of Regulation S-K:
Exhibit No. (27) Financial Data Schedule
<PAGE>
SIGNATURES
----------
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. This report has also been signed by the
undersigned in his capacity as the chief accounting officer of the Registrant.
ALCO CAPITAL RESOURCE, INC.
Date May 5, 1995 /s/Robert M. Kearns II
--------------------- -----------------------------------
Robert M. Kearns II
Vice President
(Chief Accounting Officer)
<PAGE>
Index to Exhibits
-----------------
Exhibit Number
--------------
(27) Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Alco Capital Resource, Inc. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 700,179,000<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,548,000<F2>
<DEPRECIATION> 3,163,000<F2>
<TOTAL-ASSETS> 725,815,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 10
0
0
<OTHER-SE> 98,677,990
<TOTAL-LIABILITY-AND-EQUITY> 725,815,000
<SALES> 0
<TOTAL-REVENUES> 39,880,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,835,000<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,200,000
<INCOME-PRETAX> 14,027,000
<INCOME-TAX> 5,377,000
<INCOME-CONTINUING> 8,650,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,650,000
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
<F1>Includes net investments in leases of $679,886,000 and other accounts
receivable.
<F2>Includes leased equipment of: cost - $14,335,000; accumulated depreciation -
$1,568,000.
<F3>Represents general and administrative expenses.
<F4>Not required as the registrant is a wholly-owned subsidiary.
</FN>
</TABLE>
