SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-23309
LINC CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0850149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 East Wacker Drive, Suite 1000,
Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
(312) 946-1000
(Registrant's telephone number, including area code)
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 May 12, 1998, 5,183,688 shares of the Registrant's Common Stock
were outstanding.
<PAGE>
LINC CAPITAL, INC.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Operations-
Three months ended March 31, 1997 and 1998 (unaudited)....... 3
Consolidated Balance Sheets-
December 31, 1997 and March 31, 1998 (unaudited)............. 4
Consolidated Statements of Cash Flows-
Three months ended March 31, 1997 and 1998 (unaudited)....... 5
Notes to Consolidated Financial Statements....................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................. 14
SIGNATURES.................................................................. 14
<PAGE>
PART I - FINANCIAL INFORMATION
LINC Capital, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
March 31,
--------------------
1997 1998
------- ------
NET REVENUES:
Sales of equipment ........................... $ 5,511 5,720
Cost of equipment sold ....................... 4,483 4,700
------- -----
Gross profit from sales of equipment ......... 1,028 1,020
Rental and operating lease revenue ........... 1,424 2,456
Direct finance lease income .................. 1,069 2,108
Fee income ................................... 399 256
Gain on sale of lease financing receivables .. -- 697
Gain on remarketing of leased equipment ...... 189 247
Gain on equity participation rights .......... 74 2,068
Interest income .............................. 210 426
Other income ................................. 60 227
------- -----
Total net revenues ........................ 4,453 9,505
------- -----
Expenses:
Selling, general and administrative .......... 1,928 3,681
Interest ..................................... 818 1,670
Depreciation of equipment under rental
agreements and operating leases ............. 901 1,505
Provision for credit losses .................. 234 603
------- -----
Total expenses ............................ 3,881 7,459
------- -----
Income from continuing operations before income
taxes and minority interest .................. 572 2,046
Income tax expense ............................... 212 790
------- -----
Income from continuing operations before
minority interest ............................ 360 1,256
Minority interest ................................ (13) --
------- -----
Net income from continuing operations ............ 347 1,256
Discontinued operations:
Loss from discontinued operations, net of
income tax benefit for the three months
ended March 31, 1997 of $97 .................. (118) --
======= =====
Net income ...................................... $ 229 1,256
======= =====
Per common share:
Net income from continuing operations
Basic....................................... $ .12 .24
Diluted..................................... $ .11 .24
Net income
Basic....................................... $ .08 .24
Diluted..................................... $ .07 .24
See accompanying notes to consolidated financial statements.
<PAGE>
LINC Capital, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
December 31, March 31,
------------ ---------
ASSETS 1997 1998
------ ---- ----
(Audited) (Unaudited)
Net investment in direct finance leases ................... $58,285 91,401
Equipment held for rental and operating leases, net ....... 22,007 24,717
Notes receivable .......................................... 8,979 6,512
Accounts receivable ....................................... 6,741 8,673
Securitization residual interest .......................... 3,017 4,875
Other assets .............................................. 8,052 8,488
Goodwill .................................................. 1,896 4,660
Cash and cash equivalents ................................. -- 4,758
--------- --------
Total assets ....................................$ 108,977 154,084
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Senior credit facility and other senior notes payable ....$ 38,117 65,096
Recourse debt ............................................ 2,955 16,497
Nonrecourse debt ......................................... 17,951 15,219
Accounts payable ......................................... 3,834 6,931
Accrued expenses and customer holdbacks .................. 3,794 5,123
Subordinated debentures .................................. 5,386 5,459
Deferred income taxes .................................... 236 783
--------- --------
Total liabilities .................................$ 72,273 115,108
========= ========
Stockholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares
authorized; none outstanding ........................ -- --
Common stock, $0.001 par value, 15,000,000 shares
authorized; 5,199,591 and 5,249,591 shares issued;
5,133,688 and 5,183,688 shares outstanding .......... 5 5
Additional paid-in capital ........................... 28,840 29,567
Deferred compensation from issuance of options ....... (171) (146)
Stock note receivable ................................ (511) (182)
Treasury stock, at cost; 65,903 shares ............... (287) (287)
Retained earnings .................................... 7,902 9,158
Accumulated other comprehensive income ............... 926 861
--------- --------
Total stockholders' equity ........................ 36,704 38,976
========= ========
Total liabilities and stockholders' equity ........ $108,977 154,084
========= ========
See accompanying notes to consolidated financial statements.
<PAGE>
LINC Capital, Inc. and Subsidiaries
Consolidated Cash Flow Statements (Unaudited)
(Dollars in thousands)
Three months ended
March 31,
----------------------
1997 1998
-------- --------
Cash flows from operating activities:
Net income.......................................... $ 229 1,256
Adjustments to reconcile net income
to net cash provided by continuing
operations:
Net loss from discontinued
operations .................................. 118 --
Depreciation and amortization ................. 903 1,595
Direct finance lease income ................... (1,069) (2,108)
Payments on direct finance leases ............. 4,360 7,153
Deferred income taxes ......................... 126 547
Provision for credit losses ................... 234 603
Gain on sale of lease financing
receivables ................................ -- (697)
Gain on equity participation rights ........... (74) (2,068)
Amortization of discount ...................... 61 73
Deferred compensation ......................... -- 25
Minority interest ............................. 202 --
Changes in assets and liabilities:
Increase in receivables ....................... (890) 939
Increase in securitization
residual interest .......................... -- (1,858)
Decrease (increase) in other assets............ 2,890 (2,859)
Increase in accounts payable .................. 893 704
Increase in accrued expenses and
customer holdbacks .......................... 393 807
-------- -------
Cash provided by continuing operations ............... 8,376 4,112
Cash flows from discontinued
operations ....................................... 3,970 --
-------- -------
Cash provided by operating
activities ......................................... 12,346 4,112
-------- -------
Cash flows from investing activities:
Cost of equipment acquired for lease
and rental ....................................... (11,596) (33,198)
Fixed assets purchased ............................. (396) (177)
Cash used in acquisitions, net of
cash acquired .................................... -- (2,699)
Proceeds from sale of investments .................. 74 2,068
-------- -------
Net cash used in investing activities ................ (11,918) (34,006)
-------- -------
See accompanying notes to consolidated financial statements.
<PAGE>
LINC Capital, Inc. and Subsidiaries
Consolidated Cash Flow Statements (Unaudited) - (Continued)
(Dollars in thousands)
Three months ended
March 31,
----------------------
1997 1998
-------- -------
Cash flows from financing activities:
Net increase in notes payable .................... 8,500 24,300
Proceeds from recourse and
nonrecourse debt ................................ -- 1,220
Repayment of recourse and nonrecourse
debt ............................................ (1,178) (7,363)
Proceeds from sales of lease
financing receivables, net of securitization
residual interest ............................... -- 16,166
Purchase of stock ................................ (17) --
Proceeds from stock notes receivable ............. -- 329
Payment of notes from discontinued
operations ...................................... (3,042) --
------ -------
Net cash provided by financing
activities ....................................... 4,263 34,652
------ -------
Net increase in cash ................................. 4,691 4,758
Cash at beginning of period .......................... -- --
====== =======
Cash at end of period ................................ 4,691 4,758
====== =======
Supplemental disclosures of cash flow information:
Interest paid .................................... 764 1,384
Income taxes paid ................................ 25 681
See accompanying notes to consolidated financial statements.
<PAGE>
LINC Capital Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
(1) The Company
LINC Capital, Inc. (the "Company") is a finance company specializing in the
origination, acquisition, securitization and servicing of equipment leases and
in the rental and distribution of analytical instruments. The Company's
principal businesses are (i) the direct origination of leases to emerging growth
companies primarily serving the healthcare and information technology industries
("Select Growth Leasing" activities), (ii) the acquisition and financing of
lease portfolios originated by other lessors and the acquisition of leasing
companies ("Portfolio Finance & Lessor Acquisition" activities) and (iii) the
rental and distribution of analytical instruments to companies serving the
environmental, chemical, pharmaceutical and biotechnology industries
("Instrument Rental and Distribution" activities).
(2) Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and the
rules and regulations of the Securities and Exchange Commission for interim
financial statements. Accordingly, the interim statements do not include all of
the information and disclosures required for annual financial statements. In the
opinion of the Company's management, all adjustments (consisting solely of
adjustments of a normal recurring nature) necessary for a fair presentation of
these interim results have been included. Inter-company accounts and
transactions have been eliminated. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. The results for
the three-month period ended March 31, 1998 are not necessarily indicative of
the results that may be expected for the full year ending December 31, 1998.
The balance sheet at December 31, 1997 has been derived from the audited
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
Earnings Per Share
Earnings per share amounts have been determined in accordance with the
provisions of SFAS No. 128 and reflect the application of Staff Accounting
Bulletin No. 98 issued by the Securities and Exchange Commission effective
February 3, 1998. SFAS No. 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes and dilutive
effect of options. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented and restated to conform to the SFAS No. 128
requirements. See note 9.
Comprehensive Income
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for the reporting and
presentation of comprehensive income and its components in financial statements
by requiring minimum pension liability adjustments, unrealized gains or losses
on available-for-sale securities and foreign currency translation adjustments,
which prior to adoption were reported separately in shareholders' equity, to be
included in other comprehensive earnings. See note 10.
(3) Acquisitions
Effective January 31, 1998, the Company purchased all of the outstanding
common stock of Comstock Leasing, Inc., a small-ticket lessor specializing in
office-based information technology. Additionally, effective March 31, 1998, the
Company acquired the assets of Monex Leasing, Ltd., a Texas-based lessor of
telecommunications, business, and other equipment. Both acquisitions have been
accounted for using the purchase method of accounting and the results of
operations of the acquired businesses have been included in the consolidated
financial statements since the dates of acquisition.
The aggregate consideration for the two acquisitions completed in the
quarter ended March 31, 1998 included $2,699,000 in cash payments, net of cash
acquired, $2,678,000 in installment notes, 50,000 shares of the Company's common
stock valued at approximately $725,000, and future contingent payments of up to
$3,900,000 in cash and 48,528 shares of the Company's common stock. The fair
value of assets purchased and liabilities assumed in the acquisitions were
$30,389,000 and $25,864,000, respectively.
<PAGE>
(4) Net Investment in Direct Finance Leases
Net investment in direct finance leases is as follows:
December 31, March 31,
1997 1998
------------- -----------
(In thousands)
Lease contracts receivable in installments $ 69,057 $ 107,567
Estimated residual value of leased
equipment ............................. 4,677 7,175
Unearned lease income .................... (13,276) (20,221)
Allowance for doubtful receivables ....... (2,173) (3,120)
-------- ---------
Net investment ........................... $ 58,285 $ 91,401
======== =========
At March 31, 1998 future lease contract payments to be received on direct
finance leases are as follows:
Amount
------------
(In thousands)
Year Ending December 31,
1998................................... $ 31,546
1999................................... 32,407
2000................................... 25,459
2001................................... 13,726
2002 and thereafter.................... 4,429
------------
Future lease contract payments.............. $ 107,567
============
At March 31, 1998 certain future lease contract payments have been assigned
to financial institutions (note 8).
<PAGE>
(5) Equipment Held for Rental and Operating Leases, Net
The net book value of equipment held for rental and operating leases is as
follows:
December 31, March 31,
------------- ----------
1997 1998
--------- --------
(In thousands)
Equipment under operating leases......... $ 6,649 $ 8,080
Equipment under rental agreements........ 15,358 16,637
-------- --------
Net book value........................... $22,007 $24,717
========= =========
The book values presented in the above table are net of accumulated
depreciation of $7,067,000, and $7,684,000 at December 31, 1997 and March 31,
1998, respectively. Equipment under rental agreements is comprised primarily of
analytical instruments.
At March 31, 1998 future contract payments to be received on operating
leases are as follows:
Amount
----------
(In thousands)
Year Ending December 31,
1998................................... $ 2,534
1999................................... 2,428
2000................................... 993
2001................................... 495
2002 and thereafter.................... 452
------------
Future contract lease payments to be received $ 6,902
============
At March 31, 1998 certain future contract payments have been assigned to
financial institutions (note 8).
(6) Securitization Facility
Under the Company's securitization facility, the Company sells and
transfers a pool of leases to a wholly-owned, bankruptcy remote, special purpose
subsidiary established for the purpose of purchasing the Company's leases. This
subsidiary in turn simultaneously sells and transfers its interest in the leases
to a bank conduit facility which issues securities to investors. The securities
are collateralized by an undivided interest in the leases, the leased equipment,
and certain collateral accounts. A securitization is treated as a sale and a
gain on sale of lease financing receivables is recognized upon the
securitization. The difference between the aggregate principal balance and the
proceeds received, net of an allowance for doubtful receivables, is reflected on
the balance sheet as the securitization residual interest. A portion of the
proceeds from the sale of leases is required to be held in a separate restricted
account as collateral for the leases sold. This amount is recorded as restricted
cash and included in other assets on the balance sheet at March 31, 1998.
During March 1998, the Company securitized leases with a net book value of
$17,650,000. The securitization was treated as a sale and a gain on sale of
lease financing receivables of $697,000 was recognized.
(7) Loss and Holdback Reserves
The following table sets forth the loss reserves provided for on the Gross
Contract Balance as well as holdback reserves on portfolio acquisitions as of
December 31, 1997 and March 31, 1998.
December 31, March 31,
1997 1998
------------ ----------
Allowance for doubtful receivables
included in:
Net investment in direct finance leases $2,173 $3,120
Securitization residual interest 328 516
Holdback reserves on portfolio
acquisitions 603 1,739
---------- ----------
Total allowance and holdbacks $3,104 $5,375
---------- ----------
<PAGE>
(8) Debt
Notes Payable
Notes payable to banks and others were as follows:
December 31, March 31,
1997 1998
------------ ----------
(In thousands)
Senior credit facility.................. $35,850 60,150
Other................................... 2,267 4,946
-------- --------
$38,117 65,096
Total.............................. ======== ========
At December 31, 1997 and March 31, 1998, the Company along with its
divisions LINC Quantum Analytics, Inc. and LINC Capital Partners, ("the
Borrowers"), had available a senior credit facility in the amount of
$100,000,000, of which $35,850,000, and $60,150,000 at December 31, 1997 and
March 31, 1998, respectively, was outstanding. The weighted-average interest
rate on the senior credit facility at December 31, 1997 and March 31, 1998 was
7.32% and 7.00%, respectively. The facility, as amended, provides for interest
at LIBOR plus 1.25% to 1.75% or, at the Company's option, prime plus up to 0.25%
with the precise rate dependent on certain leverage tests. Additionally, the
facility calls for the Company to pay a quarterly commitment fee of 0.25% on the
unused daily balance below $25,000,000 and 0.50% on the unused daily balance
above $25,000,000. The facility is secured by substantially all of the assets of
the borrowers and is used by the borrowers to finance acquisition of equipment
pending completion of permanent financing and for normal working capital
purposes. The facility matures October 31, 1998 at which point in time the
remaining balance of the facility may be converted to a term loan maturing
October 31, 2000.
Recourse and Nonrecourse Debt
The Company permanently finances leases with financial institutions, on
either a nonrecourse and/or partial recourse basis. In connection with these
financings, the Company receives a cash payment equal to the discounted value of
the future rentals less, in certain cases, a holdback or cash reserve. In the
event of default by a lessee under a lease which has been assigned to a lender
under these financings, the lender has recourse to the lessee and to the
underlying leased equipment but no recourse to the Company except to the extent
of the recourse portion of the financing.
At March 31, 1998 the future principal maturities of recourse and
nonrecourse debt are as follows:
Amount
-------------
(In
thousands)
Year Ending December 31,
1998................................... $ 12,258
1999................................... 10,307
2000................................... 5,870
2001................................... 2,527
2002 and thereafter.................... 754
-------------
Total recourse and nonrecourse
discounted lease rentals................. $ 31,716
=============
<PAGE>
(9) Earnings per Share
The following table sets forth the computation of basic and diluted
earnings per share from continuing operations.
Three months ended March 31
---------------------------
1997 1998
---- ----
(in thousands, except per share data)
Numerator for basic and diluted earnings per
share from continuing operations
Net income from continuing operations $ 347 1,256
---------- -----
Denominator for basic earnings per share--
Weighted average shares 2,949,457 5,133,688
Effect of dilutive stock options 176,154 198,052
------- -------
Denominator for diluted earnings per share
adjusted weighted average shares 3,125,611 5,331,740
--------- ---------
Net income from continuing operations:
Basic earnings per share $ .12 .24
========== =========
Diluted earnings per share $ .11 .24
========== =========
(10) Comprehensive Income
The components of comprehensive income, net of related tax, for the three
months ended March 31, 1997 and 1998 are as follows:
Three months ended March 31
------------------------------
1997 1998
---------- ----------
(In thousands)
Net income .............................. $229 1,256
Other comprehensive income, net of tax:
Unrealized holding loss arising
during period net of reclassification
adjustment for gains included
in net income ........................ -- (65)
---- ------
Comprehensive income .................... $229 1,191
==== ======
Accumulated other comprehensive income, net of tax, at December 31, 1997
and March 31, 1998 consist of unrealized gains on securities of $926,000 and
$861,000, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Net Income
Net income from continuing operations ("net income") for the three months
ended March 31, 1998 was $1.3 million, or $0.24 per diluted common share
compared to $0.3 million, or $ 0.11 per diluted common share for the comparable
period in 1997. The increase in net income for the three months ended March 31,
1998 compared to the earlier period is primarily due to increased earnings from
the completion of a securitization and a significant gain recognized on equity
participation rights. While new lease originations grew substantially, interest
expense increased as a result of an increase in borrowings to fund new lease
originations and selling, general, and administrative expenses increased as a
result of building the Company's sales and operations organization.
Results of Continuing Operations
Three Months ended March 31, 1997 Compared to Three Months ended March 31,
1998
Income before taxes and minority interest for the Company's Select Growth
Leasing and Portfolio Finance & Lessor Acquisition activities increased for the
three months ended March 31, 1997 from $0.5 million to $1.8 million for March
31, 1998. Income before taxes and minority interest for the Company's Instrument
Rental & Distribution activities was $0.1 million as compared to $0.2 million
for the three months ended March 31, 1998.
Sales of analytical instruments and costs of analytical instruments sold
increased modestly. Net margins on sales of analytical instruments declined from
18.7% to 17.8% due to increased equipment turnover, resulting in the purchase of
newer and higher priced equipment for sale.
Rental and operating lease revenue increased from $1.4 million to $2.5
million primarily due to acquisitions of portfolios of operating leases upon the
Company's re-entry into the Portfolio Finance & Lessor Acquisition activities
after the expiration of a non-compete agreement in September 1997.
Direct finance lease income increased from $1.1 million to $2.1 million due
to a substantially higher level of finance lease receivables outstanding
resulting from an increase in lease originations and the acquisition of Comstock
Leasing. The average finance lease receivables outstanding increased 97%.
As a consequence of the decline in the number of leases serviced by the
Company for unrelated parties due to a non-compete agreement, which expired in
September 1997, fee income, for the three-month period, declined from $0.4
million to $0.3 million.
During the first quarter of 1998, the Company completed a securitization
realizing a gain on the sale of lease financing receivables of $0.7 million. No
securitization occurred in the first quarter of 1997.
Gains on remarketing of leased equipment of $0.2 million were up modestly
from the comparable period in the prior year. Gains on remarketing of leased
equipment fluctuate based on the maturity of leases.
During the first quarter, the Company experienced a run-up in the value of
certain warrants held by the Company and consequently elected to sell a portion
of these warrants realizing a gain of $2.1 million. For the same period of 1997,
the Company sold certain equity participation rights realizing a gain of $0.1
million.
Interest income increased from $0.2 million to $0.4 million primarily due
to an increase in interest-bearing notes receivable held by the Company.
Other income, which consists primarily of interim rents received and fees
earned in connection with Select Growth Leasing commitments, increased from $0.1
million to $0.2 million primarily due to the increase in the volume of Select
Growth leases originated by the Company.
Net selling, general and administrative expenses increased to $3.7 million
from $1.9 million primarily as a result of additional operations, marketing and
sales personnel associated with the Company's re-entry into Portfolio Finance &
Lessor Acquisition activities, increased business activity and an acquisition
completed in February 1998.
Interest expense increased from $0.8 million to $1.7 million due primarily
to an increase in average borrowings. The increase in average borrowings
resulted from increased lease originations and an acquisition.
Depreciation of equipment, increased from $0.9 million to $1.5 million.
Such increase was attributable to a 73% increase in equipment held for rental
and operating leases primarily resulting from the acquisitions of portfolios of
operating leases referred to above.
The provision for credit losses increased from $0.2 million to $0.6 million
due to the volume of new leases originated. Such provisions remained at 0.6% of
direct finance lease receivables at the end of the respective periods.
The Company's effective tax rate was 38.6% for the three month period ended
March 31, 1998 compared to 37.1% in the same period of 1997. The increase
results from the reduction in deferred taxes for prior periods recognized in
1997.
Liquidity and Capital Resources
General
The Company's activities are capital intensive and require access to a
substantial amount of credit to fund new equipment leases. The Company funds its
operations primarily through cash flow from operations, borrowings under the
Senior Credit Facility, non-recourse and recourse loans, and proceeds from
securitizations. The Company will continue to require access to significant
additional capital to maintain and expand its volume of leases originated and
portfolio of rental equipment as well as fund its Portfolio Finance & Lessor
Acquisition activities. The Company believes that cash flow from its operations,
the net proceeds from securitization transactions and other borrowings and
amounts available under its Senior Credit Facility will be sufficient to fund
the Company's operations for the forseeable future.
Cash Flow
Cash flows from operating and financing activities provided by continuing
operations are generated primarily from receipts on direct finance leases and
rentals of analytical instruments, gross profit on the sale of analytical
instruments, realization of residual values, the financing of new lease
originations and rental inventory, and securitizations. Cash flows from such
activities for the three months ended March 31, 1997 and 1998 were $15.7 million
and $38.4 million, respectively. The period to period increase results primarily
from the growth in the Company's Portfolio Finance & Lessor Acquisition
activities and the securitization completed in the first quarter of 1998.
Credit Facilities
As of March 31, 1998, the Company had $100 million available for borrowing
under its Senior Credit Facility of which $60.2 million was outstanding. The
facility, provides for interest at LIBOR plus 1.25% to 1.75% or the prime rate
plus up to 0.25% depending on certain leverage tests, and matures on October 31,
1998.
In 1997, the Company entered into a Securitization Facility in an initial
amount of $60 million and which may be increased to $100 million at the
Company's option based on certain conditions. The Securitization Facility
provides for an interest rate which is 0.55% in excess of 30 day LIBOR and may
be converted into an amortizing term facility at any time. The terms of the
facility permits the securitization of substantially all of the leases
originated in the Company's Portfolio Finance & Lessor Acquisition activities
and Instrument Rental & Distribution activities as well as the substantial
majority of the leases originated in the Company's Select Growth Leasing
activities.
Recently Issued Accounting Pronouncements
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," will affect the disclosure requirements for the Company's 1998
financial statements. The Company does not expect that adoption of the
disclosure requirements of this pronouncement will have a material impact on its
financial statements.
Note on Forward Looking Information
Certain statements in this Form 10-Q and in the future filings by the
Company with the Securities and Exchange Commission and in the Company's written
and oral statements made by or with the approval of an authorized executive
officer constitute "forward looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, and the Company intends that such forward-looking statements be subject
to the safe harbors created thereby. The words "believe", "expect" and
"anticipate" and similar expressions identify forward-looking statements. These
forward-looking statements reflect the Company's current view with respect to
future events and financial performance, but are subject to many uncertainties
and factors relating to the Company's operations and business environment which
may cause the actual results of the Company to be materially different from any
future results expressed or implied by such forward-looking statements. Examples
of such uncertainties, include, but are not limited to, the volume of new leases
originated, the backlog of unfunded leases and the adequacy of financial
resources. The Company undertakes no obligation to publicly update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit
Number Document Description
27.1 Financial Data Schedule
Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended March 31, 1998.
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.
LINC CAPITAL, INC.
Dated: May 14, 1998
By: /s/ Martin E. Zimmerman
-----------------------
Martin E. Zimmerman
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
By: /s/ Allen P. Palles
-------------------
Allen P. Palles
Executive Vice President and
Chief Financial Officer
(Principal Financial
and Accounting Officer)
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