<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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 33-79328
_________________
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
36-7051620
(I.R.S. Employer Identification Number)
2201 Cooperative Way, Herndon, VA 20171-3025
(Address of principal executive offices)
Registrant's telephone number, including area code, is 703-709-6700)
___________________
Securities Registered pursuant to Section 12(b) of the Act: None.
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 Regulation S-K is not contained herein, and will not be contained
to the best of the registrant's knowledge in definitive proxy or
information statements incorporated by reference in Part
IV or this Form 10-K or any amendment to this Form 10-K.
Yes X No
The Registrant has no common or voting stock.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
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Part I
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
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Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
a) There is no established trading market for the certificates
representing ownership of the beneficial interest in the
Trust.
b) As of March 31, 1998 there was one record holder of
certificates representing ownership of the beneficial
interest in the Trust.
Item 8. Financial Statements and Supplementary Data
See attached audited financial statements.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
Part III
Item 13. Certain Relationships and Related Transactions
None.
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Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
a) The following documents are filed as part of this report:
1. Financial Statements
Report of Independent Public Accountants
Statements of Assets and Liabilities as of
December 31, 1997 and 1996
Statements of Income and Expenses, for the
Years Ended December 31, 1997, 1996 and 1995
Statements of Cash Flows, for the Years Ended
December 31, 1997, 1996 and 1995
Notes to Financial Statements
2. Financial Statement Schedules are omitted
because they are inapplicable.
3. Exhibits
Exhibit
Number Description of Exhibit
4.1 Form of Trust Agreement, including
the form of Rural Electric
Cooperative Grantor Trust Certificate
(incorporated by reference to Exhibit
4.1 to Registration Statement on
form S-1 [No. 33-79328].)
10.1 Loan Agreement (incorporated by
reference to Exhibit 10.1 to
Registration Statement on Form S-1
[No. 33-79328].)
10.2 Loan Guarantee and Servicing
Agreement (incorporated by
reference to Exhibit 10.2 to
Registration Statement on Form S-1
[No. 33-79328].)
27 Financial Data Schedule
b) Form 8-K dated September 15, 1997.
Semi-annual Report to Certificateholders
dated September 15, 1997.
Supplemental information to be furnished with reports filed pursuant to
Section 15(d) of the Act by Registrants which have not registered securities
pursuant to Section 12 of the Act.
No annual report, proxy statement, form of proxy or other proxy
soliciting material has been sent to Certificateholders, and the
Registrant does not presently contemplate sending any such material
subsequent to the filing of this report.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the
County of Fairfax, Commonwealth of Virginia on the 31st day of
March, 1998.
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RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993 B-2
By: NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION as Servicer
By: /s/ Sheldon C. Petersen
Sheldon C. Petersen, Governor and
Chief Executive Officer
<PAGE>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND)1993 B-2
Exhibit Index
Exhibit
Number Description of Exhibit
4.1 Form of Trust Agreement, including the form of
Rural Electric Cooperative Grantor Trust
Certificate (incorporated by reference to Exhibit
4.1 to Registration Statement on Form S-1 [No.33-79328].)
10.1 Loan Agreement (incorporated by reference to
Exhibit 10.1 to Registration Statement on Form S-1 [No. 33-79328].)
10.2 Loan Guarantee and Servicing Agreement
(incorporated by reference to Exhibit 10.2 to
Registration Statement on Form S-1 [No. 33-79328].)
27 Financial Data Schedules
<PAGE>
RURAL ELECTRIC COOPERATIVE GRANTOR
TRUST (SOYLAND) 1993-B2
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE>
Report of Independent Public Accountants
To the Trustee of
Rural Electric Cooperative Grantor Trust
(Soyland) 1993-B2, and
To the Board of Directors of
National Rural Utilities Cooperative
Finance Corporation
We have audited the accompanying statements of assets and liabilities of
Rural Electric Cooperative Grantor Trust (Soyland) 1993-B2 as of December
31, 1997 and 1996, and the related statements of income and expenses and
cash flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rural Electric Cooperative
Grantor Trust (Soyland) 1993-B2 as of December 31, 1997 and 1996, and the
results its operations and its cash flows for each of the three years in the
period ended December 31, 1997, 1996 and 1995, in conformity with generally
accepted accounting principles.
/S/ ARTHUR ANDERSEN LLP
March 6, 1998
Washington, D. C.
<PAGE>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
STATEMENTS OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 1997 AND 1996
1997 1996
ASSETS
Interest receivable $ 1,225,439 $ 1,225,439
Note receivable 44,000,000 44,000,000
Total Assets $ 45,225,439 $ 45,225,439
LIABILITIES
Interest payable-
Grantor Trust $ 1,194,050 $ 1,194,050
Certificates
Servicer fees payable 31,389 31,389
Rural Electric Cooperative
Grantor Trust Certificates 44,000,000 44,000,000
Total Liabilities $ 45,225,439 $ 45,225,439
The accompanying notes are an integral
part of these financial statements.
<PAGE>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
STATEMENTS OF INCOME AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
INCOME:
Interest on note receivable $3,770,580 $3,770,580 $ 3,770,580
EXPENSES:
Interest on grantor
trust certificates 3,674,000 3,674,000 3,674,000
Servicer fees 96,580 96,580 96,580
Total expenses 3,770,580 3,770,580 3,770,580
Net income $ - $ - $ -
The accompanying notes are an integral
part of these financial statements.
<PAGE>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
CASH FLOWS
FROM OPERATING ACTIVITIES:
Interest received on note receivable $3,770,580 $3,770,580 $3,770,580
Interest paid to certificateholders (3,674,000) (3,674,000) (3,674,000)
Fees paid to servicer (96,580) (96,580) (96,580)
Net cash provided
by operating activities - - -
NET CHANGE IN CASH - - -
CASH, beginning of year - - -
CASH, end of year $ - $ - $ -
ACCRUAL TO CASH BASIS
RECONCILIATION:
Accrual basis income $ - $ - $ -
Change in accrual accounts:
Increase in interest receivable - - (337,028)
Increase in interest payable - - 328,395
Increase in servicer fees payable - - 8,633
Total change in accrual accounts - - -
Net cash provided by operating
activities $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for
interest expense $3,674,000 $3,674,000 $3,347,422
The accompanying notes are an integral
part of these financial statements.
<PAGE>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997, 1996 AND 1995
1. ORGANIZATION AND OPERATIONS
Rural Electric Cooperative Grantor Trust (Soyland) 1993-B2 (the "Trust") was
formed under a Trust Agreement dated October 1, 1993 among National Rural
Utilities Cooperative Finance Corporation ("CFC"), Soyland Power Cooperative,
Inc. (the "Cooperative") and The First National Bank of Chicago (the
"Trustee"). On that date, CFC made a loan to the Cooperative which
issued a note (the "Note"), evidencing the borrowing, to the Trust. The
Trust issued to CFC, Rural Electric Cooperative Grantor Trust (Soyland) 8.35%
Certificates, due 2009 (the "Certificates") in the amount
of $44,000,000. The Certificates are solely the obligations of the Trust
and are not insured or guaranteed by CFC, the Cooperative, the Trustee, the
Rural Utilities Service ("RUS") of the United States Department of Agriculture
("USDA") nor any other governmental agency. Each Certificate
represents an undivided fractional interest in the Trust. CFC is the
depositor of the Trust and acts as servicer of the Note. CFC filed, on
behalf of the Trust, a Registration Statement on Form S-1
(Registration No. 33-79328) which became effective on May 24, 1994,
and resold the Certificates thereunder. The offering of the Certificates
occurred on October 6, 1994.
The assets of the Trust consist primarily of the Note, bearing interest at
8.43% and maturing 2009, which is guaranteed (the "Guarantee") as to timely
payment of principal and interest by the United States of America, acting
through the Administrator of RUS. The amounts of principal and interest
payments on the Note held by the Trust are sufficient to cover the scheduled
principal and interest payments on the Certificates issued by the Trust and
the scheduled amounts of servicer fees. The General Counsel of the USDA has
issued an opinion that the Guarantee is supported by the full faith
and credit of the United States of America.
The Trust also receives a conversion fee of .1395% from Soyland. This
fee was derived when the note receivable from Soyland was converted from a
variable to a fixed interest rate. The fee is paid over the term of the
note as a yield adjustment. The conversion fee is passed through to the
servicer.
Debt service and servicer fee payments on the Note are made to the Trustee
semi-annually (March 4 and September 4) by the Cooperative. The Trustee
deposits all such receipts in the Trust account. The Trustee is authorized
by the Trust Agreement to invest all funds in the Trust account at the
direction of CFC in certain eligible investments that mature no later than
the business day next preceding the day (March 15 and September 15) such
amounts are to be distributed to the certificateholders and the servicer.
The interest earned on the investments is distributed to the
Cooperative. Any funds that are not so invested must be held by the
Trustee in the Trust account. The Trustee may not reinvest any returns of
principal or investment earnings on eligible investments and the
Trustee may not sell any eligible investment prior to its maturity except,
at the direction of CFC, to preserve the value of the corpus of the Trust.
<PAGE>
On or before five business days after each date on which payments are made
on the Certificates, the Trustee is obligated to supply the holders of such
Certificates a report provided by the servicer, which includes certain
pertinent information as to how the payment is to be allocated to principal,
interest, servicer fees and premium, if any, as well as the principal
balance outstanding after such payment.
The fiscal year of the Trust is the calendar year. Within the prescribed
period of time for tax reporting purposes, after the end of each calendar year
during the term of the Trust Agreement, the Trustee is obligated to prepare
and mail to each certificateholder of record for the Trust, at any time
during such year, a report setting forth the information as is reasonably
necessary for the preparation of such certificateholder's Federal income
tax return.
Payments of principal on the Certificates are scheduled to be repaid over
a period of eleven years, beginning in 1999. The principal payment over
the next five years and thereafter are as follows:
1998 $ 0
1999 2,450,000
2000 2,680,000
2001 2,930,000
2002 3,210,000
Thereafter 32,730,000
Total $ 44,000,000
The Certificates are not subject to redemption prior to September 15, 2003.
Thereafter, such Certificates are subject to optional redemption, in whole
and without premium, upon redemption or purchase of the related Note. The
Trust Agreement will terminate after payment in full has been made on the
Certificates issued thereunder.
2. TAX STATUS OF THE TRUST
Milbank, Tweed, Hadley & McCloy, Counsel to CFC, has advised CFC with respect
to the Trust that, in its opinion, (i) the Trust will not be classified as an
association taxable as a corporation, but will be classified as a grantor
trust and (ii) each certificateholder will be treated for Federal income
tax purposes as the owner of an undivided fractional interest in each of the
assets held by the Trust.
It is expected that the Trust will not have any liability for Federal or
state income taxes for the current or future years.
3. INTEREST AND SERVICER FEE ACCOUNTING
The Trust records interest income as it is earned and accrues interest
expense and servicer fees as they are incurred. Servicer fees represent
eight basis points of the outstanding principal balance of the Certificates
and the Note and recognition of conversion fees over the life of the loan.
<PAGE>
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
Use Of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of
expenses during the reported period. The estimates involve judgments
with respect to, among other things, various future factors which are
difficult to predict and are beyond the control of the Trust.
With regards to the fair values below, actual amounts could differ from
these estimates.
The following disclosure of the estimated fair value of financial instruments
is made in accordance with FASB Statement No. 107, "Disclosure about Fair
Value of Financial Instruments." Whenever possible, the estimated fair value
amounts have been determined using quoted market information as
of December 31, 1997 and 1996, along with other valuation methodologies
which are summarized below. Below is a summary of significant
methodologies used in estimating fair value amounts and a schedule of fair
values at December 31, 1997 and 1996.
The carrying amounts reported for Interest receivable, Interest payable -
Grantor Trust Certificates, and Servicer fees payable approximate fair
values due to the short-term maturity of these instruments.
Note Receivable
Fair value is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
Rural Electric Cooperative Grantor Trust Certificates
The fair value of the Certificates is estimated using quoted market
prices for similar notes over the same remaining maturities.
The carrying and estimated fair values of the Trust's financial
instruments as of December 31, 1997 and 1996 are as follows:
1997 1996
Carrying Fair Carrying Fair
Value Value Value Value
Assets:
Interest receivable $ 1,225,439 $ 1,225,439 $ 1,225,439 $ 1,225,439
Note receivable 44,000,000 51,316,708 44,000,000 50,258,150
Liabilities:
Interest payable -
Grantor Trust Certificates 1,194,050 1,194,050 1,194,050 1,194,050
Servicer fees payable 31,389 31,389 31,389 31,389
Rural Electric Cooperative
Grantor Trust Certificates 44,000,000 51,401,795 44,000,000 50,335,389
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the December
31, 1997, Form 10-K and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 45,225
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,225
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,225
<CURRENT-LIABILITIES> 1,225
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 45,225
<SALES> 0
<TOTAL-REVENUES> 3,771
<CGS> 0
<TOTAL-COSTS> 3,771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-PRIMARY> 0
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</TABLE>
