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, 1997 or [ ] Transition
report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from _______ to ________
Commission file number 0-20405
IKON CAPITAL, 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, 1997.
Common Stock, $.01 par value per share 1,000 shares
Registered Debt Outstanding as of April 30, 1997 $1,353,750,000
The registrant, an indirect wholly owned subsidiary of IKON Office Solutions,
Inc ("IKON"), 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
IKON CAPITAL, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets--March 31, 1997 and
September 30, 1996
Statements of Income--Three months ended March 31,
1997 and March 31, 1996 and Six months ended March
31, 1997 and March 31, 1996
Statements of Cash Flows--Six months ended
March 31, 1997 and March 31, 1996
Notes to Financial Statements--March 31, 1997
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)
IKON CAPITAL, INC.
BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
Assets
<S> <C> <C>
Investment in leases:
Direct financing leases $1,444,772 $1,140,851
Less: Unearned income (253,413) (203,459)
----------- -----------
1,191,359 937,392
Funded leases, net 395,912 313,250
----------- -----------
1,587,271 1,250,642
Accounts receivable 53,176 48,334
Prepaid expenses and other assets 12,273 15,582
Leased equipment-operating rentals at cost
less accumulated depreciation of:
3/97 - $25,106 9/96 - $ 17,624 40,306 31,341
Property and equipment at cost, less
accumulated depreciation of:
3/97 - $2,926 9/96 - $ 2,536 9,581 6,889
=========== ===========
Total assets $1,702,607 $1,352,788
=========== ===========
Liabilities and shareholder's equity
Liabilities:
Accounts payable and accrued expenses $41,898 $42,538
Accrued interest 23,208 20,870
Due to IKON Office Solutions 10,630 24,330
Notes payable to Banks 25,000 58,000
Medium Term Notes 1,312,400 969,900
Deferred income taxes 59,650 45,750
----------- -----------
Total liabilities 1,472,786 1,161,388
Shareholder's equity:
Common Stock - $.01 par value, 1,000 shares
authorized, issued, and outstanding
Contributed capital 131,415 112,415
Retained earnings 98,406 78,985
----------- -----------
Total shareholder's equity 229,821 191,400
=========== ===========
Total liabilities and shareholder's equity $1,702,607 $1,352,788
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
IKON CAPITAL, INC.
STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $40,657 $28,180 $77,557 $53,540
Rental income 5,136 3,346 9,928 6,577
Interest on IKON tax deferrals 2,888 2,122 5,624 4,011
Other income 2,097 1,721 3,831 3,089
------- ------- ------- -------
50,778 35,369 96,940 67,217
Expenses:
Interest 19,602 13,696 37,228 27,113
General and administrative 15,113 10,487 28,072 18,796
------- ------- ------- -------
34,715 24,183 65,300 45,909
Gain on sale of investment in leases 664 277 1,277 589
------- ------- ------- -------
Income before income taxes 16,727 11,463 32,917 21,897
Provision for income taxes 6,858 4,700 13,496 8,978
------- ------- ------- -------
Net income $9,869 $6,763 $19,421 $12,919
======= ======= ======= =======
</TABLE>
See notes to financial statements.
<PAGE>
IKON CAPITAL, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1997 1996
<S> <C> <C>
Operating activities:
Net income $19,421 $12,919
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 7,872 6,532
Provision for deferred taxes 13,900 18,808
Gain on sale of investment in leases (1,277) (589)
Changes in operating assets and liabilities:
Accounts receivable (4,842) (5,616)
Prepaid expenses and other assets 4,586 (243)
Accounts payable and accrued expenses (640) 2,654
Accrued interest 2,338 4,336
--------- ---------
Net cash provided 41,358 38,801
--------- ---------
Investing activities:
Purchases of leased equipment, net (16,447) (9,132)
Purchases of property and equipment, net (3,082) (1,043)
Direct financing leases:
Additions (619,015) (365,156)
Cancellations 87,839 60,577
Collections 225,802 129,602
Proceeds from sale 51,407 26,454
Funded leases:
Additions (187,360) (163,217)
Cancellations 26,587 18,462
Collections 78,111 39,499
--------- ---------
Net cash used (356,158) (263,954)
--------- ---------
Financing activities:
Proceeds from bank borrowings 60,000
Payments on bank borrowings (33,000) (40,000)
Proceeds from issuance of medium term notes 385,500 169,500
Payments on medium term notes (43,000) (30,000)
Capital contributed by IKON 19,000 17,000
--------- ---------
Net cash provided 328,500 176,500
--------- ---------
Decrease (increase) in amounts due to IKON 13,700 (48,653)
Due (to) from IKON at beginning of period (24,330) 26,577
========= =========
Due (to) from IKON at end of period ($10,630) ($22,076)
========= =========
</TABLE>
See notes to financial statements.
<PAGE>
IKON Capital, Inc.
Notes to Financial Statements
March 31, 1997
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 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, 1996.
Note 2: Medium Term Note Program
During the six months ended March 31, 1997, IKON Capital issued an
additional $385.5 million under its $1.5 billion medium term note program. At
March 31, 1997, $1,312.4 million of medium term notes remain outstanding with a
weighted average interest rate of 6.7%, leaving $114.6 million available under
this program.
Note 3: Asset Securitization
In September 1996, IKON Capital entered into a new agreement to sell,
under an asset securitization program, an undivided ownership interest in $150
million of eligible direct financing lease receivables. This is in addition to
an existing agreement for $125 million entered into in September 1994. Under
these agreements, the company sold $51.4 million in direct financing leases
during the first six months of fiscal 1997, replacing leases which had been
liquidated during the period and recognized a pretax gain of approximately $1.3
million. Under the terms of the sales agreements, the Company will continue to
service the lease portfolio.
<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, 1997 Compared
with the Three Months Ended March 31, 1996
Comparative summarized results of operations for the three months ended March
31, 1997 and 1996 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 related percentage increase.
<TABLE>
<CAPTION>
Three Months
(dollars in thousands) Ended March 31 Increase
1997 1996 Amount Percent
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $40,657 $28,180 $ 12,477 44.3%
Rental income 5,136 3,346 1,790 53.5%
Interest on IKON tax deferrals 2,888 2,122 766 36.1%
Other income 2,097 1,721 376 21.8%
--------- --------- ---------
50,778 35,369 15,409 43.6%
Expenses:
Interest 19,602 13,696 5,906 43.1%
General and administrative 15,113 10,487 4,626 44.1%
--------- --------- ---------
34,715 24,183 10,532 43.6%
Gain on sale of investment in leases 664 277 387 139.7%
--------- --------- ----------
Income before income taxes 16,727 11,463 5,264 45.9%
Provision for income taxes 6,858 4,700 2,158 45.9%
--------- --------- ---------
Net income $ 9,869 $ 6,763 $ 3,106 45.9%
========= ========= =========
</TABLE>
Revenues
Total revenues increased $15.4 million or 43.6% in the second quarter of fiscal
1997 compared to the second quarter of fiscal 1996. Approximately 81% or $12.5
million of this increase in revenues was a result of increased lease finance
income due to continued growth in the portfolio of direct financing and funded
leases. The lease portfolio, net of lease receivables that were sold in asset
securitization transactions, increased 41.1% from March 31, 1996 to March 31,
1997.
Office equipment placed on rental by the IKON dealers to customers, with
cancelable terms, may be funded by the Company. During the second quarters of
fiscal 1997 and 1996, IKON Capital funded $9.6 million and $1.6 million,
respectively. Operating leases contributed $5.1 million in rental income during
the second quarter of fiscal 1997, compared to $3.3 million in the second
quarter of 1996.
<PAGE>
The Company earns interest income on the deferred tax liabilities of the IKON
dealers resulting from leases funded through the Company at a rate consistent
with the Company's weighted average outside borrowing rate of interest. The
Company's average rate was 6.8% for both the second quarter of fiscal 1997 and
the second quarter of fiscal 1996. In addition, the deferred tax base upon which
these payments are calculated increased 36.8% to $185.5 million at March 31,
1997 from $135.6 million at March 31, 1996. As a result of the increased
deferred tax liabilities, interest income on deferred taxes rose $766,000 or
36.1% when comparing the three months ended March 31, 1997 to the three months
ended March 31, 1996.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1996. The growth in other income from fees is primarily due to the increased
size of the lease portfolio upon which these fees are based. Overall, fee income
from these sources grew by $376,000 or 21.8%, when comparing the second quarter
of fiscal 1997 to the same period of fiscal 1996.
Expenses
Debt to fund the lease portfolio in the form of loans from banks and the
issuance of medium term notes in the public market increased by 43.1%, to
$1,337.4 million outstanding at March 31, 1997. The Company paid a weighted
average interest rate on all borrowings for the second quarters of fiscal 1997
and fiscal 1996 of 6.8%. As a result of the increased borrowings, interest
expense grew by $5.9 million or 43.1%, when comparing the second quarter of
fiscal 1997 to fiscal 1996. At March 31, 1997, the Company's debt to equity
ratio, including intercompany amounts owed to IKON was 5.9 to 1.
Total general and administrative expenses for the quarter ended March 31, 1997
increased by $4.6 million or 44.1%, over the quarter ended March 31, 1996. The
general and administrative expense category in the second quarter of fiscal 1997
includes depreciation expense on leased equipment totaling $3.7 million,
compared to $3.2 million for the second quarter of fiscal 1996. In addition, the
general and administrative expense category includes lease bonus subsidy
payments to either IKON or directly to the IKON dealers, based on the level of
dealer participation in the Company's leasing programs or for the funding of
targeted new lease volume. During the second quarter of fiscal 1997, lease bonus
subsidy payments totaled $3.5 million as compared to $2.1 million during the
second quarter of fiscal 1996.
Excluding the effects of depreciation expense on operating leases and lease
bonus subsidy payments, remaining general and administrative expenses grew by
$2.8 million or 54.5%, when comparing the second quarter of fiscal 1997 to the
second quarter of fiscal 1996.
Gain on Sale of Investment in Leases
In September 1996, the Company entered into an asset securitization transaction
whereby the Company sold an undivided ownership interest in $150 million in
eligible direct financing lease receivables. This agreement was structured as a
revolving securitization so that as collections reduce previously sold
interests, additional leases can be sold up to $150 million.
Under an asset securitization program entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. This agreement was also structured as a revolving
securitization. Under this program, new leases can be sold up to $125 million as
collections reduce previously sold lease receivables.
During the three months ended March 31, 1997, collections reduced previously
sold interests under these two agreements by approximately $26.0 million. The
Company sold an additional $26.0 million in net eligible direct financing leases
during the second quarter of fiscal 1997 and recognized pretax gains of
$664,000.
<PAGE>
Income Before Taxes
Income before taxes for the second quarter of fiscal 1997 increased by $5.3
million or 45.9% over the second quarter of fiscal 1996. This increase in income
before taxes was essentially the effect of higher earnings on a larger lease
portfolio base, partially offset by higher borrowing costs due to the increased
debt to fund the lease portfolio.
Provision for Income Taxes
Income taxes for the second quarter of fiscal 1997 increased by $2.2 million or
45.9% over the second quarter of fiscal 1996. This increase in income taxes is
directly attributable to the increase in income before taxes in the second
quarter of fiscal 1997 as compared to the second quarter of fiscal 1996. The
effective tax rate was 41% for both the second quarter of fiscal 1997 and 1996.
Six Months Ended March 31, 1997 Compared
with the Six Months Ended March 31, 1996
Comparative summarized results of operations for the six months ended March 31,
1997 and 1996 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 related percentage increase.
<TABLE>
<CAPTION>
Six Months
(dollars in thousands) Ended March 31 Increase
1997 1996 Amount Percent
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $77,557 $53,540 $ 24,017 44.9%
Rental income 9,928 6,577 3,351 51.0%
Interest on IKON tax deferrals 5,624 4,011 1,613 40.2%
Other income 3,831 3,089 742 24.0%
--------- --------- ----------
96,940 67,217 29,723 44.2%
Expenses:
Interest 37,228 27,113 10,115 37.3%
General and administrative 28,072 18,796 9,276 49.4%
--------- --------- ---------
65,300 45,909 19,391 42.2%
Gain on sale of investment in leases 1,277 589 688 116.8%
--------- ---------- ---------
Income before income taxes 32,917 21,897 11,020 50.3%
Provision for income taxes 13,496 8,978 4,518 50.3%
--------- --------- ----------
Net income $ 19,421 $ 12,919 $ 6,502 50.3%
========= ========= ==========
</TABLE>
Revenues
Total revenues increased $29.7 million or 44.2% in the first six months of
fiscal 1997 compared to the first six months of fiscal 1996. Approximately 80.8%
or $24.0 million of this increase in revenues was a result of increased lease
finance income due to continued growth in the portfolio of direct financing and
funded leases. The lease portfolio, net of lease receivables that were sold in
asset securitization transactions, increased 41.1% from March 31, 1996 to March
31, 1997.
<PAGE>
Office equipment placed on rental by the IKON dealers to customers, with
cancelable terms, may be funded by the Company. During the first six months of
fiscal 1997 and 1996, IKON Capital funded $16.4 million and $9.1 million,
respectively. Operating leases contributed $9.9 million in rental income during
the first six months of fiscal 1997, compared to $6.6 million in the first six
months of fiscal 1996.
The Company earns interest income on the deferred tax liabilities of the IKON
dealers resulting from leases funded through the Company at a rate consistent
with the Company's weighted average outside borrowing rate of interest. The
Company's average rate was 6.8% for the both the first six months of fiscal 1997
and fiscal 1996. In addition, the deferred tax base upon which these payments
are calculated increased 36.8% to $185.5 million at March 31, 1997 from $135.6
million at March 31, 1996. As a result of the increased deferred tax
liabilities, interest income on deferred taxes rose $1.6 million or 40.2% when
comparing the six months ended March 31, 1997 to the six months ended March 31,
1996.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1996. The growth in other income from fees is primarily due to the increased
size of the lease portfolio upon which these fees are based. Overall, fee income
from these sources grew by $742,000 or 24.0%, when comparing the first six
months of fiscal 1997 to the same period of fiscal 1996.
Expenses
Debt to fund the lease portfolio in the form of loans from banks and the
issuance of medium term notes in the public market increased by 43.1%, to
$1,337.4 million outstanding at March 31, 1997. The Company paid a weighted
average interest rate on all borrowings for the first half of both fiscal 1997
and fiscal 1996 of 6.8%. As a result of the increased borrowings, interest
expense grew by $10.1 million or 37.3%, when comparing the first half of fiscal
1997 to the first half of fiscal 1996. At March 31, 1997, the Company's debt to
equity ratio, including intercompany amounts owed to IKON, was 5.9 to 1.
Total general and administrative expenses for the six months ended March 31,
1997 increased by $9.3 million or 49.4%, over the six months ended March 31,
1996. The general and administrative expense category in the first six months of
fiscal 1997 includes depreciation expense on leased equipment totaling $7.9
million, compared to $6.2 million for the first six months of fiscal 1996. In
addition, the general and administrative expense category includes lease bonus
subsidy payments to either IKON or directly to the IKON dealers, based on the
level of dealer participation in the Company's leasing programs or for the
funding of targeted new lease volume. During the first six months of fiscal
1997, lease bonus subsidy payments totaled $5.6 million as compared to $2.6
million during the first six months of fiscal 1996.
Excluding the effects of depreciation expense on operating leases and lease
bonus subsidy payments, remaining general and administrative expenses grew by
$4.6 million or 46.0%, when comparing the first six months of fiscal 1997 to the
first six months of fiscal 1996.
Gain on Sale of Investment in Leases
In September 1996, the Company entered into an asset securitization transaction
whereby the Company sold an undivided ownership interest in $150 million in
eligible direct financing lease receivables. This agreement was structured as a
revolving securitization so that as collections reduce previously sold
interests, additional leases can be sold up to $150 million.
Under an asset securitization program entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. This agreement was also structured as a revolving
securitization. Under this program, new leases can be sold up to $125 million as
collections reduce previously sold lease receivables.
<PAGE>
During the six months ended March 31, 1997, collections reduced previously sold
interests under these two agreements by approximately $51.4 million. The Company
sold an additional $51.4 million in net eligible direct financing leases during
the first half of fiscal 1997 and recognized pretax gains of approximately $1.3
million.
Income Before Taxes
Income before taxes for the first half of fiscal 1997 increased by $11.0 million
or 50.3% over the first half of fiscal 1996. This increase in income before
taxes was essentially the effect of higher earnings on a larger lease portfolio
base, partially offset by higher borrowing costs due to the increased debt to
fund the lease portfolio.
Provision for Income Taxes
Income taxes for the first six months of fiscal 1997 increased by $4.5 million
or 50.3% over the first six months of fiscal 1996. This increase in income taxes
is directly attributable to the increase in income before taxes in the first
half of fiscal 1997 as compared to the first half of fiscal 1996. The effective
tax rate was 41% for both the first half of fiscal 1997 and 1996.
Forward-looking Information
This document contains, and other materials filed or to be filed by the Company
with the Commission which are incorporated by reference herein, as well as
information included in oral statements or other written statements made or to
be made by the Company, contain or will contain or include, disclosures which
are forward-looking statements relating to the Company or its parent, IKON,
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the 1934 Act. Such forward-looking
statements address, among other things, strategic initiatives (including plans
for enhancing the Company's or IKON's business through new acquisitions,
information technology systems, sales strategies, market growth plans, margin
enhancement initiatives, capital expenditure requirements and financing
sources). Such forward-looking information is based upon management's current
plans or expectations and is subject to a number of uncertainties and risks that
could significantly affect the Company's and/or IKON's current plans,
anticipated actions and future financial condition and results. These
uncertainties and risks include, but are not limited to, those relating to
IKON's successful management of an aggressive program to acquire and integrate
new companies, including companies with technical services and products that are
relatively new to IKON, and also including companies outside the United States,
which present additional risks relating to international operations; risks and
uncertainties (applicable to both the Company and IKON) relating to conducting
operations in a competitive environment; delays, difficulties, technological
changes and employment issues (applicable to both the Company and IKON)
associated in a large-scale transformation project; debt service requirements
(applicable to both the Company and IKON) including sensitivity to fluctuations
in interest rates; and general economic conditions. As a consequence, current
plans, anticipated actions and future financial condition and results may differ
from those expressed in any forward-looking statements made by or on behalf of
the Company or IKON.
<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
(b) Reports on Form 8-K
On April 18, 1997, the registrant filed a Current Report on Form
8-K to file, under Item 5 of the form, the earnings of its parent,
IKON Office Solutions, Inc. for the fiscal quarter ended March 31,
1997 and the announcement of certain management changes, and the
announcement that it may repurchase from time to time as much as 5
percent of its outstanding shares in open market transactions.
On April 23, 1997, the registrant filed a Current Report on Form
8-K to file, under Item 5 of the form, a Press Release issued by
the Registrant's parent, IKON Office Solutions, Inc., stating that
it was unaware of any reason its stock, which recently had traded
down sharply, should be under pressure. The Press Release also
stated that IKON knows of no material developments concerning its
business or financial statements which have not been publicly
disclosed.
<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.
IKON CAPITAL, INC.
Date May 15, 1997 /s/ Harry G. Kozee
Harry G. Kozee
Vice President-Finance
(Chief Accounting Officer)
<PAGE>
Index to Exhibits
Exhibit Number
(27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of IKON Capital, Inc. and is qualified in its entirity by
reference to such financial statments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,640,447,000<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 77,919,000<F2>
<DEPRECIATION> 28,032,000<F2>
<TOTAL-ASSETS> 1,702,607,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,337,400,000
0
0
<COMMON> 0<F3>
<OTHER-SE> 229,821,000
<TOTAL-LIABILITY-AND-EQUITY> 1,702,607,000
<SALES> 0
<TOTAL-REVENUES> 96,940,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,072,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,228,000
<INCOME-PRETAX> 32,917,000
<INCOME-TAX> 13,496,000
<INCOME-CONTINUING> 19,421,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,421,000
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
<F1>Includes net investments in leases of $1,587,271,000 and other accounts
receivable.
<F2>Included leased equipment of: cost - $65,412,000; accumulated depreciation -
$25,106,000.
<F3>Common stock, $.01 par value, 1,000 shares outstanding. Since total is less
than $1,000, zero is reported.
<F4>Not required as the registrant is a wholly-owned subsidiary.
</FN>
</TABLE>
