UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

[ ] 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 001-13973

UNICAPITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 65-0788314
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

10800 BISCAYNE BOULEVARD, SUITE 800, MIAMI, FLORIDA 33161
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (305) 899-5000

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Title of Each Class Name of Each Exchange on Which Registered
- - -------------------- ------------------------------------------

NONE NOT APPLICABLE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)

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 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of March 19, 1999, the aggregate market value of voting common stock
held by non-affiliates of the registrant, based upon the last reported sale
price for the registrant's Common Stock on the New York Stock Exchange on such
date, as reported in The Wall Street Journal, was $256,855,590 (calculated by
excluding shares owned beneficially by directors and executive officers as a
group from total outstanding shares solely for the purpose of this response).

The number of shares of the registrant's Common Stock outstanding as of the
close of business on March 19, 1999 was 52,505,323.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the definitive Proxy Statement of UniCapital
Corporation to be used in connection with the 1999 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated by reference into Part III
of this Annual Report on Form 10-K to the extent provided herein. Except as
specifically incorporated by reference herein, the Proxy Statement is not to be
deemed filed as part of this Annual Report on Form 10-K.
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PART I

ITEM 1. BUSINESS

Certain statements contained in this Annual Report on Form 10-K ("Form
10-K") constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"intend," "estimate," "anticipate," "believe," or "continue" or the negative
thereof or variations thereon or similar terminology. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from possible future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: general economic
and business conditions; changes in interest rates; changes in asset values;
inflation or deflation; changes in markets for financial products, including
securitized assets; changes in political, social and economic conditions and
local regulations; changes in, or failure to comply with, government
regulations; demographic changes; changes in the mix of sources of revenues;
competition; changes in business strategy or development plans; availability of
capital sufficient to meet the Company's need for capital or on terms or at
times acceptable to the Company; availability of qualified personnel; and
various other factors referenced in this Form 10-K. The Company assumes no
obligation to update any forward-looking statements to reflect actual results or
changes in the factors affecting such forward-looking statements.

Forward-looking statements contained in this Form 10-K address, among other
things: (a) absence of combined operating history; (b) expectations regarding
the availability and cost of capital; (c) the ability of the Company to effect
securitizations at any time or from time to time; (d) the availability of
trained management personnel at the operating subsidiary level; (e) expectations
regarding the Company's acquisition strategy, including the integration of
acquired businesses; (f) the availability of resources to carry out the
Company's planned acquisition program and the Company's business strategy; and
(g) expectations regarding the Company's intention to retain a greater portion
of the leases that it originates or acquires for its own portfolio. See "Factors
that May Affect Future Operating Results" beginning on page 9 for a more
detailed discussion of these and other factors which could cause actual results
to differ materially from those expressed or implied by any forward-looking
statements.

OVERVIEW

UniCapital was founded in October 1997 as a Delaware corporation. We
commenced operations in May 1998 in conjunction with the consummation of our
initial public offering and the acquisition of twelve equipment leasing,
specialty finance and related businesses. In June, July and August 1998, we
completed the acquisition of five additional equipment leasing, specialty
finance and related businesses. We engage in asset-based financing in
strategically diverse sectors of the equipment leasing industry. We originate,
acquire, sell and service equipment leases and arrange structured financings in
the big ticket, computer and telecommunications equipment, middle market and
small ticket areas of the equipment leasing and specialty finance industry. We
also provide lease administration and processing services for many of the leases
that we originate. Our leases and structured financing arrangements cover a
broad range of equipment, including aircraft and aircraft engines, computer and
telecommunications equipment, construction and manufacturing equipment, office
equipment, tractor trailers, printing equipment, car washes and petroleum retail
equipment and vending machines. We generally fund the acquisition or origination
of leases

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through warehouse credit facilities or through recourse or non-recourse
financing and we either retain the leases for our own account or sell them.

For the year ending December 31, 1998, we had four reportable operating
segments, which are based primarily on the nature of the products and services
provided by each segment. These operating segments are:

- Air Group;

- Aircraft Engine Group;

- Technology and Finance Group; and

- Business Credit Group.

We also have a Corporate Division, which consists of our corporate
operations and our lease administration and servicing operations. For
information about each segment's revenues, expenses and income, see Note 17 to
our consolidated financial statements for the year ended December 31, 1998,
included elsewhere in this Form 10-K.

BIG TICKET LEASING. Big ticket leases, which are customized financing
transactions, are typically for equipment with a purchase price in excess of
$5.0 million, such as aircraft, aircraft engines, and rail and other
transportation equipment. Our Big Ticket Division includes the UniCapital Air
Group, the UniCapital Aircraft Engine Group and the recently formed UniCapital
Rail Group.

UniCapital Air Group provides customized operating lease financing for
commercial passenger and cargo jet aircraft and offers brokerage, advisory and
remarketing services to domestic and foreign commercial airlines, aircraft
lessors and institutional investors. Specializing in 6- to 12-year-old
commercial jet aircraft, UniCapital Air Group's financing professionals have
more than 50 years of combined experience and have completed more than $3
billion in financing transactions.

UniCapital Aircraft Engine Group purchases, refurbishes, sells and leases
commercial aircraft engines and provides a broad range of engine management
services to airlines, financial institutions and other operating lessors.
UniCapital Aircraft Engine Group's management team has more than 45 years of
combined experience in the aircraft engine business.

UniCapital Rail Group, which was formed in December 1998, will purchase,
finance and remarket railcars, including tank and specialty freight cars,
intermodal equipment and low-, medium- and high-horsepower locomotives.
UniCapital Rail Group will also offer lease financing and sale-leasebacks to
Class I, regional and short-line railroads and private shippers in North
America.

TECHNOLOGY AND FINANCE GROUP. Our technology and finance group includes
middle market leasing and computer and telecommunications leasing. Middle market
leases generally include those leases for equipment with a purchase price
ranging from $250,000 to $5.0 million. We provide lease and secured financing
for a variety of equipment, including computer, communication and electronic
equipment, printing presses and other manufacturing equipment to businesses
throughout the United States. Our computer and telecommunications leasing
operations provide lease financing, and other value-added services, such as
installation and configuration, for computer and telecommunications equipment,
including leasing for mainframe, mid-range and personal computers, workstations,
servers, telephone systems, switches, networks, peripherals and related
high-technology equipment to Fortune 1000 companies and other large and middle
market companies, throughout the United States and Canada.

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Our Technology and Finance Group also arranges structured financing
primarily for community-based mental health/mental retardation facilities and
correctional facilities. Our subsidiary, Municipal Capital Markets Group, Inc.,
is a registered broker-dealer and places the bonds and leases that it arranges
primarily with institutional investors.

BUSINESS CREDIT GROUP. Our Business Credit Group provides small ticket
lease financing, which generally includes those leases for equipment with a
purchase price of less than $250,000. We provide lease financing for a variety
of equipment, including heavy machinery, computer systems and related office
technology equipment, petroleum retail equipment, including car washes, fuel
dispensers and convenience store operating equipment, and vending equipment to
lessees in a variety of businesses throughout the United States.

INDUSTRY OVERVIEW

The equipment leasing and specialty finance industry in the United States
has grown consistently during the last decade and includes a wide range of
entities that provide funding for the purchase or use of equipment. The
equipment leasing industry in the United States is a significant factor in
financing capital expenditures of businesses. According to estimates of the
Equipment Leasing Association (the "ELA"), from 1997 to 1998, equipment placed
on lease grew by approximately $4 billion from $180 billion to an estimated $184
billion. The 1997 investment in equipment placed on lease represents an increase
of approximately 90% from comparable 1986 data. The ELA estimates that 80% of
all U.S. businesses currently use leasing or financing to acquire capital
assets.

We believe that the equipment leasing industry is growing in part due to
(i) the consolidation of the banking industry, which has eliminated many of the
smaller community banks that traditionally provided equipment financing for
small to mid-size businesses, (ii) stricter lending requirements imposed by
commercial banks, (iii) a trend toward rapid credit approvals at the point of
sale made possible by improved technology, and (iv) the adoption of accounting
pronouncements concerning the accounting treatment of transactions with captive
finance company subsidiaries, which has caused a number of manufacturers to
eliminate their finance companies, resulting in an increased demand for
independent financing. According to the ELA, two primary factors contributing to
the favorable funding environment experienced by the commercial leasing industry
are a better understanding of the leasing business by bank regulators and a
growing understanding of the leasing industry by the investment community and
the rating agencies.

1998 ACQUISITIONS

At the time of the consummation of our initial public offering in May 1998,
and thereafter in June, July and August 1998, we acquired the following
businesses.

- AIR GROUP

Cauff Lippman Aviation, Inc., a big ticket leasing business with
headquarters in Miami, Florida, which was acquired on May 20, 1998, provides
operating lease financing for used commercial jet aircraft and jet aircraft
engines, as well as brokering, advisory and remarketing services to domestic and
foreign commercial airlines, aircraft lessors and institutional investors and
engages in the purchase and sale of aircraft for its own account.

Jumbo Jet (which includes Jumbo Jet Leasing LP, Jumbo Jet, Inc., CL
Aircraft Marketing LP and CL Aircraft Marketing, Inc.), a big ticket leasing
business with headquarters in Miami, Florida, which was acquired on June 30,
1998, provides lease financing for the acquisition of used commercial aircraft.

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The NSJ Group, Inc., a big ticket leasing business with headquarters in
Orlando, Florida, which was acquired on May 20, 1998, provides lease financing
for used commercial jet aircraft and jet aircraft engines to domestic and
foreign commercial airlines and engages in the purchase and sale of aircraft for
its own account.

- AIRCRAFT ENGINE GROUP

United States Turbine Engine Corp. (now UniCapital Aircraft Engine Group,
Inc.), a big ticket leasing business with headquarters in Norwalk, Connecticut,
which was acquired on July 27, 1998, engages in the purchase, refurbishment,
sale and lease of commercial aircraft engines and provides a broad range of
engine management services to airlines, financial institutions and other
operating lessors.

- TECHNOLOGY AND FINANCE GROUP

American Capital Resources, Inc., a middle market leasing business with
headquarters in Hackensack, New Jersey, which was acquired on May 20, 1998,
provides lease and secured financing for equipment, primarily printing presses,
to companies in the printing, packaging and paper converting industries.

Jacom Computer Services, Inc., a computer and telecommunications equipment
leasing business with headquarters in Northvale, New Jersey, which was acquired
on May 20, 1998, provides lease financing for computer and telecommunications
equipment to large and middle market companies, including financial
institutions, throughout the United States.

Matrix Funding Corporation, a middle market leasing business with
headquarters in Midvale, Utah, which was acquired on May 20, 1998, provides
lease financing for a variety of equipment, primarily computer, communication
and electronic equipment, to companies throughout the United States.

Municipal Capital Markets Group, Inc., a middle market leasing business
with headquarters in Dallas, Texas, which was acquired on May 20, 1998, arranges
structured financing, primarily for community-based mental health/mental
retardation facilities and correctional facilities.

Varilease Corporation, a computer and telecommunications equipment leasing
business with headquarters in Walled Lake, Michigan, which was acquired on May
20, 1998, provides lease financing for computer and telecommunications equipment
to Fortune 1000 companies and other businesses throughout the United States and
Canada.

The Walden Asset Group, Inc., a middle market leasing business with
headquarters in Wellesley, Massachusetts, which was acquired on May 20, 1998,
provides lease financing for a variety of equipment, including communications,
computer and manufacturing equipment, to Fortune 500 and other businesses
throughout the United States.

- BUSINESS CREDIT GROUP

Boulder Capital Group, Inc., a small ticket leasing business with
headquarters in Boulder, Colorado, which was acquired on May 20, 1998, provides
lease financing for petroleum retail equipment, including car washes, fuel
dispensers and convenience store operating equipment, to petroleum retail
businesses.

HLC Financial, Inc., a small ticket leasing business with headquarters in
Westlake Village, California, which was acquired on July 28, 1998, provides
lease financing primarily for computer systems and related office technology
equipment to customers in the automobile dealership and hospitality industries.

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K.L.C., Inc. d/b/a Keystone, a small ticket leasing business with
headquarters in West Hartford, Connecticut, which was acquired on May 20, 1998,
provides lease financing for a variety of equipment, primarily tractor trailers,
embroidery machines and construction equipment, to companies throughout the
United States.

Merrimac Financial Associates, a small ticket leasing business with
headquarters in Mendon, Massachusetts, which was acquired on May 20, 1998,
provides equipment financing to operating companies engaged in the
coin-operated, vending, amusement and coffee service businesses.

The Myerson Companies, d/b/a BSB Leasing, a small ticket leasing business
with headquarters in Denver, Colorado, which was acquired on August 7, 1998,
provides equipment lease financing to small to medium size companies throughout
the United States.

Saddleback Financial Corporation, a small ticket leasing business with
headquarters in Orange, California, which was acquired on July 28, 1998,
provides lease and equipment acquisition financing for a variety of equipment
utilized in various industries, including computers, machine tools, printing,
video, automotive diagnostic and electronic equipment.

- CORPORATE DIVISION

On May 19, 1998, we acquired Portfolio Financial Servicing Company, L.P.
(now UniCapital Operations Group, Inc.), a lease servicing business located in
Portland, Oregon, which provides lease administration and processing services,
including lease accounting for both financial reporting and federal income tax
purposes, lien searches, UCC filings, asset tracking, insurance tracking,
preparation of sales, use and property tax returns, invoicing and collections.

PRODUCTS AND SERVICES

We provide lease financing and related services to a broad range of
commercial customers. We originate direct financing leases, sales-type leases
and operating leases. In addition to financing equipment through leases, we sell
new equipment and provide lease-and equipment-related services, such as
servicing, brokering and remarketing, which is the sale or re-lease of equipment
that has come off lease.

SALES-TYPE LEASES. Sales-type leases, like direct financing leases,
transfer substantially all of the benefits and risks of equipment ownership to
the lessees. However, sales-type leases include profit at lease inception to the
extent the fair value of the equipment exceeds the carrying value. A lease is
classified as a sales-type lease if it includes such a profit at lease inception
and if the collection of the minimum lease payments is reasonably predictable,
no significant uncertainties exist relating to unreimbursable costs yet to be
incurred by the lessor under the lease and the lease meets one of the following
criteria: (i) ownership of the property is transferred to the lessee by the end
of the lease term; (ii) the lease contains a bargain purchase option; (iii) the
term of the lease equals 75% or more of the estimated
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economic life of the leased equipment; or (iv) the present value (at the
inception of the lease) of the minimum lease payments equals or exceeds 90% of
the fair value of the leased equipment.

OPERATING LEASES. All lease contracts which do not meet the criteria of
direct financing leases or sales-type leases are accounted for as operating
leases.

In general, our lease transactions are net leases with a specified
noncancelable lease term. The leases generally include a "hell-or-high-water"
provision which requires the lessee to make all lease payments under all
circumstances. A net lease requires the lessee to maintain the equipment, pay
all property, sales and use taxes and insure the equipment against casualty
loss.

RESIDUAL INTEREST IN EQUIPMENT

We retain a residual interest in the equipment covered by many of our
leases. We generally seek to determine the best remarketing plan for such
equipment prior to the expiration of the lease. In many cases, the remarketing
plan provides for the continuation of the lease or the negotiated sale of the
underlying equipment. In connection with our remarketing activities, we may
negotiate sales of the equipment prior to lease termination.

CREDIT POLICIES AND PROCEDURES

We employ underwriting policies and procedures that are intended to
minimize the risk of delinquencies and credit losses. We have a chief credit
policy officer and a credit committee that have established overall corporate
credit guidelines and individual guidelines tailored to each of the types of
credits to which we provide financing. These guidelines include varying
requirements based upon factors such as the type of asset, the creditworthiness
of the lessee and the implicit lease interest rate. The chief credit policy
officer periodically conducts field credit reviews, which include a review of a
sample of credit decisions made by credit officers in the field to ensure
compliance with corporate credit guidelines. During the field credit review, we
also assess the collectibility of the lease portfolio. The chief credit policy
officer also makes credit decisions for those transactions which fall outside of
the credit guidelines.

The credit approval process generally includes a review of financial
statements, a credit report and, depending upon the size of the proposed
transaction and the business, credit references and a review of the personal
credit of the principals of the business. The Company uses a credit scoring
model for approving credits on small ticket leases. Proposed transactions which
are not within authorized credit parameters must be reviewed by the chief credit
policy officer or the credit committee. For small ticket leases under $75,000,
our goal is to make rapid credit decisions, based upon an automated scoring and
approval system. For middle market leases, our goal is to establish and maintain
credit policies and procedures that allow us to make credit decisions within 48
hours.

SERVICING, COLLECTION AND ADMINISTRATION

We provide servicing, collection and administration services for certain of
the leases we originate. We have the capability to provide transaction
processing and management services for each lease contract, from the time it is
originated through its termination, including set-up, billing, cash posting,
customer service, accounting, collection, tax compliance and asset management.
Our service offerings include lien searches, UCC filings, asset tracking,
insurance tracking, preparation of sales, use and property tax returns,
invoicing and collections.

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SALES AND MARKETING

We employ approximately 156 sales representatives to originate leases.
Sales and marketing efforts are primarily conducted in the field on a one-on-one
basis with established accounts, through equipment manufacturers, brokers and
vendors and also through advertising, participation in trade associations and
telesales. Most of the salespersons are compensated on a commission basis or
through other incentive-based compensation programs.

PORTFOLIO ACQUISITIONS

From time to time, we acquire portfolios of equipment leases from other
finance companies. Prior to the acquisition of a portfolio of leases, we perform
due diligence procedures, including reviewing a sample of the lease files
included in the portfolio, loss and delinquency experience and other factors.

COMPETITION

The financing of equipment is highly competitive. We compete for customers
with a number of national, regional and local lease and finance companies. In
addition, our competitors include those equipment manufacturers that finance the
sale or lease of their products themselves and other traditional types of
financial services companies, such as commercial banks and savings and loan
associations, all of which provide financing for the purchase of equipment. Many
of our existing and potential competitors possess substantially greater
financial, marketing and operational resources and include many larger, more
established companies that may have a lower cost of funds and greater access to
capital markets and other funding sources than we have.

Competition in the equipment lease and specialty finance market is based
primarily on lease rates, terms, reliability in meeting commitments, customer
service and market presence. We will continue to encounter significant
competition, and we may not be able to compete effectively in our chosen market
segments or any new market segments that we enter.

EMPLOYEES

As of December 31, 1998, we had 568 full-time employees, including 156 who
are engaged in sales and marketing and 61 who are engaged in credit and
collection. We believe that our relationships with all of our employees are
good.

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EXECUTIVE OFFICERS

The following table sets forth certain information regarding our executive
officers.

NAME AGE POSITION WITH THE COMPANY
- - ---- --- ------------------------------------------------------

Robert J. New 34 Chairman and Chief Executive Officer
Theodore J. Rogenski 59 Chief Operating Officer and a Director
Stuart L. Cauff 52 President of the Company, President and Chief
Executive Officer of the Big Ticket Leasing Division,
Chairman of UniCapital Air Group and a Director
Bruce E. Kropschot 58 Vice Chairman -- Mergers & Acquisitions and a Director
Martin Kalb 55 Executive Vice President and General Counsel
Steven E. Hirsch 44 Executive Vice President -- Structured Finance
Edward A. Jaeckel 59 Executive Vice President and Chief Credit Policy
Officer
Jonathan New 38 Chief Financial Officer

ROBERT J. NEW co-founded UniCapital in October 1997 and has since served as
Chairman and Chief Executive Officer. From July 1996 until December 1997, Mr.
New served as an operating company president of and as acquisition consultant to
U.S. Office Products Company, a publicly-held supplier of a broad range of
office products and business services, where Mr. New participated in over 40
acquisitions. From March 1990 until August 1997, Mr. New served as Chief
Executive Officer of Prudential of Florida Leasing, Inc., a small ticket leasing
company. From December 1989 through July 1996, Mr. New served as President and
Chief Executive Officer of Prudential of Florida, Inc., an office services
company. Robert J. New is the brother of Jonathan New.

THEODORE J. ROGENSKI has served as Chief Operating Officer since May 1998
and as a Director since July 1998. From February 1998 to May 1998, Mr. Rogenski
served as a consultant to UniCapital providing services consistent with the
duties and responsibilities of Chief Operating Officer. From December 1994 until
January 1997, Mr. Rogenski served as Chief Operating Officer of LINC Anthem
Corporation and its successor, Newcourt LINC Financial, Inc., a leasing company
specializing in small ticket leasing as well as financial products for the
health care industry, after which he was subject to a noncompetition agreement.
From 1990 until April 1992, Mr. Rogenski served as the President and Chief
Executive Officer of John Hancock Leasing Corporation, after which he pursued
personal interests. From 1981 until 1990, Mr. Rogenski served as President and
Chief Executive Officer of Wells Fargo Leasing Corporation.

STUART L. CAUFF has served as President of the Company since March 1999, as
Chairman of UniCapital Air Group since December 1998, as President and Chief
Executive Officer of the Big Ticket Leasing Division since May 1998 and as a
Director of the Company since July 1998. Mr. Cauff served as President of Cauff
Lippman Aviation, Inc. from 1981 until May 1998.

BRUCE E. KROPSCHOT has served as Vice Chairman -- Mergers & Acquisitions
since May 1998. From November 1997 to May 1998, Mr. Kropschot served as a
consultant to UniCapital providing services consistent with the duties and
responsibilities of Vice Chairman -- Mergers & Acquisitions. From 1987 through
December 1997, he was founder and President of Kropschot Financial Services, a
merger and acquisition advisor to equipment leasing companies, which has
arranged for the sale of over 100 equipment leasing and specialty finance
businesses. From 1980 to 1986, Mr. Kropschot served as President and Vice
Chairman of Master Lease Corporation, which is now known as Tokai Financial
Services, Inc.

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From 1972 to 1980, Mr. Kropschot served as Executive Vice President of HBE
Leasing Corporation and Vice President -- Finance, of its parent corporation,
HBE Corporation.

MARTIN KALB has served as Executive Vice President and General Counsel
since May 1998. From October 1997 to May 1998, Mr. Kalb served as a consultant
to UniCapital providing services consistent with the duties and responsibilities
of Executive Vice President and General Counsel of UniCapital. From 1987 until
November 1997, he was a senior partner in the Miami, Florida office of Greenberg
Traurig Hoffman Lipoff Rosen & Quentel, P.A. whose practice focused upon mergers
and acquisitions, income taxation and estate planning.

STEVEN E. HIRSCH has served as Executive Vice President -- Structured
Finance since May 1998. From January 1998 to May 1998, Mr. Hirsch served as a
consultant to UniCapital providing services consistent with the duties and
responsibilities of Executive Vice President -- Structured Finance of
UniCapital. From 1987 until January 1998, Mr. Hirsch was associated with Morgan
Stanley & Co. Incorporated, most recently as the Head of the Leasing Products
Group. From 1984 until 1987 Mr. Hirsch served as Senior Vice President of Matrix
Leasing International, Inc., an equipment leasing brokerage and packaging
concern and a wholly-owned subsidiary of First Bank Systems. From 1980 until
1983, Mr. Hirsch served as Vice President and Eastern Regional Manager of Wells
Fargo Leasing Corporation.

EDWARD A. JAECKEL has served as Chief Credit Policy Officer since May, 1998
and as Executive Vice President since February 1999. From March 1998 to May
1998, Mr. Jaeckel served as a consultant to UniCapital providing services
consistent with the duties and responsibilities of Chief Credit Policy Officer
of UniCapital. From 1991 until March, 1998, Mr. Jaeckel served as Vice President
and Chief Credit Officer for Bank of New York Leasing Corporation, the fourth
largest bank-owned leasing company in the United States, where he was
responsible for developing, implementing and supervising credit policies and
procedures.

JONATHAN NEW has served as the Chief Financial Officer of UniCapital since
October 1997. Mr. New served as Vice President and Controller of Delta Financial
Corporation, a securitizing mortgage bank, from August 1995 until December 1997.
From March 1993 until August 1995, Mr. New was the Controller of RAI Credit
Corporation, a securitizing private label credit card and data processing
business. Jonathan New is the brother of Robert J. New.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

Our future operating results may be affected by a number of factors,
including the matters discussed below.

ABSENCE OF COMBINED OPERATING HISTORY. UniCapital was founded in October
1997. We have conducted operations since the consummation of our initial public
offering and the acquisition of twelve equipment leasing, specialty finance and
related businesses in May 1998. Prior to our acquisition of these businesses and
the other businesses we have acquired, each of the businesses had been operating
independently. We may not be able to integrate these businesses successfully on
an economic basis. Until we finalize the establishment of centralized
accounting, finance and other administrative systems, we will rely upon the
separate systems of these businesses. Our success will depend, in part, upon our
ability to centralize these functions effectively and to integrate all of the
businesses that we acquire.

THERE ARE RISKS TO OUR INTERNAL GROWTH AND OPERATING STRATEGIES. A key
element of our business strategy is to improve the profitability of our
operating subsidiaries and any other

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businesses that we acquire. Our ability to improve profitability depends upon
various factors, including:

- our cost of and ability to obtain capital;

- our ability to achieve operating efficiencies;

- the level of continued demand by businesses for lease financing;

- our ability to expand the range of products and services that we offer;
and

- our ability to enter new markets successfully.

Many of these factors are beyond our control, and our operating strategies
may not be successful. Moreover, we may be unable to generate adequate cash flow
to fund our operations and to support internal growth.

In addition, we have a decentralized operating strategy which permits much
of the decision making for each operating subsidiary to be made by management at
the operating subsidiary. If we do not implement proper overall business
controls, this decentralized operating strategy could result in inconsistent
operating and financial practices at the operating subsidiaries, which could
materially and adversely affect our overall profitability, and ultimately our
business, financial condition and results of operations.

WE MIGHT NOT COMPLETE ANY SECURITIZATION TRANSACTIONS. We intend to
finance or sell a significant portion of the equipment leases that we acquire
and originate through the issuance of securities backed by such leases in
securitization transactions or through other structured finance products. In a
securitization transaction, we would pledge or sell a pool of leases to one or
more wholly-owned, special purpose subsidiaries. The special purpose subsidiary,
either directly or through a trust, issues beneficial interests in the leases in
the form of senior and subordinated securities and sells such securities through
public offerings and private placement transactions.

We intend to utilize securitizations for refinancing of amounts outstanding
under our warehouse loan facilities. To date, we have not completed any
securitizations. To the extent that any securitization transaction in which we
engage is treated as a financing transaction for accounting purposes, the
consummation of the securitization would not generate revenues. Factors that
will affect our ability to complete securitizations include:

- conditions in the securities markets generally;

- conditions in the asset-backed securities markets;

- the credit quality and performance of our lease portfolio;

- whether our leases comply with the eligibility requirements established
in connection with the securitizations;

- whether we can obtain third-party credit enhancement; and

- once we have completed one or more securitizations, the absence of any
material downgrading or withdrawal of ratings given to securities
previously issued in the Company's securitizations.

Any substantial reduction in the availability of the securitization market
for the Company's leases or any adverse change in the terms of such
securitizations could have a material adverse effect on the Company's business,
financial condition and results of operations.

WE MIGHT NOT BE ABLE TO CONTINUE TO INCREASE OUR VOLUME OF RECEIVABLES. A
component of our internal growth strategy is to retain for our own portfolio a
greater portion of the leases that we acquire or originate. Our ability to
sustain continued growth is dependent upon our capacity to attract, evaluate,
finance and service increasing volumes of

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leases of suitable yield and credit quality. If we do not market our products
effectively, maintain our portfolio quality, service our leases effectively or
obtain institutional financing at acceptable rates, we will not be able to
increase our volume of leases, which would have a material adverse effect on our
business, financial condition and results of operations.

WE WILL NEED ADDITIONAL CAPITAL. We expect to fund the majority of the
leases that we originate or acquire through loan facilities. The loan facilities
included in our "Senior Credit Facilities" and our "Aircraft Facility" (as
defined herein) that we use to finance leases have 364-day terms, which expire
in June, July and October of 1999. We will need to renew or replace these loan
facilities. In addition, to the extent that we retain for our own portfolio a
greater portion of the leases that we acquire or originate, we may require
additional sources of financing. We may require additional capital to fund our
operations, which may not be available, or may not be available on terms that
are acceptable to us. If we cannot renew or replace any of our loan facilities
or obtain additional capital when we need it, our business, financial condition
and results of operations will be materially and adversely affected.

OUR CREDIT FACILITIES LIMIT OUR ABILITY TO TAKE CERTAIN ACTIONS. Our
Senior Credit Facilities and Aircraft Facility:

- require us to pledge substantially all of our assets, including the stock
and assets of the operating subsidiaries, as security for borrowings
under the facilities;

- contain restrictions upon our ability to (among other things) incur
additional indebtedness, issue preferred stock, incur liens, pay
dividends or make certain other restricted payments, consummate certain
asset sales, enter into certain transactions with affiliates, merge or
consolidate with any other person without the consent of the lenders or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of our assets; and

- require us to maintain specified financial ratios and to satisfy certain
financial condition tests. Our ability to meet those financial ratios and
financial condition tests can be affected by events beyond our control,
and we may not be able to meet those tests.

If an event of default occurs under the Senior Credit Facilities or
Aircraft Facility, our lenders could declare all amounts outstanding, together
with accrued interest, to be immediately due and payable. If we could not repay
these amounts, our lenders could proceed against the collateral.

WE ARE SUBJECT TO INTEREST RATE RISKS. Our profitability is determined in
part by the difference between our cost of funds and the yield we obtain on the
leases that we originate or acquire. These leases generally are non-cancelable
and require payments to be made by the lessee for specified terms at fixed rates
based on interest rates prevailing in the market at the time the lease is
approved. Until we either sell or securitize the leases, we fund these leases
under warehouse or other loan facilities or from working capital. If interest
rates increase on our variable rate debt, and we cannot sell or securitize the
leases that we are holding, our operating margins could be adversely affected.
In addition, if interest rates increase and we increase the interest rate we
charge to our customers, demand for our leases could decline. To mitigate these
risks, we hedge certain risks of interest rate increases. Hedging activities
limit our ability to participate in the benefits of lower interest rates with
respect to the hedged portion of the debt. In addition, hedging does not protect
us from all interest rate-related risks.

WE ARE DEPENDENT ON THE CREDITWORTHINESS OF LESSEES. We acquire and
originate equipment leases with a wide range of purchase prices, many of which
involve small and mid-size commercial businesses located throughout the United
States and Canada, or large cyclical

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businesses such as airlines with operations in different regions around the
world. Small business leases and leases with highly cyclical businesses
generally entail a greater risk of non-performance and higher delinquencies and
losses than leases entered into with larger, more creditworthy lessees or
lessees in less cyclical businesses. If our lessees do not comply with the terms
of the leases, those leases cannot serve as collateral under our warehouse
facilities and in any securitizations that we undertake, which may have a
material adverse effect on our liquidity. Additionally, if we experience
delinquencies and defaults in excess of the levels we estimate when determining
allowances for credit losses, in addition to the adverse effects on our
profitability, we might not be able to obtain financing or complete
securitization transactions, which could have a material adverse effect on our
business, financial condition and results of operations.

RISKS ASSOCIATED WITH ACQUISITION STRATEGY. We intend to continue to make
selective acquisitions of equipment leasing, specialty finance and related
businesses. This strategy requires that we review and potentially reorganize
acquired business operations, corporate infrastructure and systems and financial
controls. This strategy may not be successful because, among other things:

- unforeseen expenses, difficulties, complications and delays frequently
encountered in connection with the rapid expansion of operations could
inhibit our growth;

- we may be unable to maintain or accelerate our growth or to anticipate
all of the changing demands that expanding operations will impose on
management personnel, operational and management information systems, and
financial systems;

- we may not be able to identify, acquire or manage profitably additional
businesses or integrate them without substantial costs, delays or other
operational or financial difficulties; or

- although we intend to finance future acquisitions by using shares of our
common stock and cash, if we decide not to use our common stock because
we believe its market price to be too low, or if potential acquisition
candidates are unwilling to accept our common stock, we may not have, or
be able to obtain, sufficient cash resources to complete any
acquisitions.

If our acquisition strategy is not successful, our business, financial
condition and results of operations could be materially and adversely affected.

RISK OF ECONOMIC DOWNTURN. An economic downturn could result in a decline
in the demand for some of the types of equipment which we finance, which could
lead to a decline in originations of leases. Such a downturn could also
adversely affect the Company's ability to obtain capital to fund lease
originations or to complete securitizations. In addition, such a downturn could
result in an increase in delinquencies and defaults by lessees, which could have
an adverse effect on our profitability and our ability to sell or securitize
leases. Moreover, an economic downturn, either generally or within a specific
industry, could have a material adverse effect on the value of the equipment
underlying the leases, which could in turn affect our ability to realize our
residual interest in such equipment. These results could have a material adverse
effect on our business, financial condition and results of operations.

FLUCTUATIONS IN QUARTERLY RESULTS. We could experience fluctuations in
quarterly operating results due to a number of factors including, among others,
the consummation of a transaction in a particular calendar quarter (or the
failure to complete such a transaction), variations in the volume of leases
originated and variations in interest rates. In addition, certain of our
operating subsidiaries may from time to time experience relatively large
transactions for one or a few customers or relatively large sales of equipment,
which may not

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recur or may not be followed by correspondingly large transactions in subsequent
periods. Moreover, to the extent that we retain for our own portfolio a greater
portion of the leases that we acquire or originate and the equipment that we
acquire, we will not generate revenue from gain on sale for the retained leases
or revenue from sales of the retained equipment. As a result of these
fluctuations, results for any one quarter, including historical results, should
not be relied upon as being indicative of performance in future quarters.

COMPETITION. The financing of equipment is highly competitive. We compete
for customers with:

- national, regional and local finance companies;

- equipment manufacturers that finance the sale or lease of their products
themselves; and

- other traditional types of financial services companies, such as
commercial banks and savings and loan associations, all of which provide
financing for the purchase of equipment.

Many of our existing and potential competitors possess substantially
greater financial, marketing and operational resources and include many larger,
more established companies that may have a lower cost of funds and greater
access to capital markets and other funding sources than we have.

RESIDUAL VALUE RISK. We retain a residual interest in the equipment
covered by certain leases. We estimate what the fair value of the equipment will
be at the end of the contract term of the lease and reflect that residual value,
if any, as an asset on our balance sheet. Our results of operations depend, to
some degree, upon our ability to realize the residual value of the equipment.
Our ability to realize the residual values depends upon many factors, several of
which are not within our control, including:

- general market conditions at the time of expiration of the lease;

- specific market conditions for that type of equipment at the time of
expiration of the lease;

- the condition of the equipment;

- whether the equipment is obsolete;

- the cost of comparable new equipment; and

- the effects of any additional or amended government regulations.

If, upon the expiration of a lease, we sell the underlying equipment and the
amount realized is less than the recorded value of our residual interest in that
equipment, we will recognize a loss.

RISKS OF YEAR 2000 NONCOMPLIANCE. The inability of our computer systems
and software programs, or those of entities that provide services to us, to
accept, store, interpret or display dates for the year 2000 and beyond could
materially impair our ability to originate, service and sell leases and manage
our financial and accounting functions and sales and marketing activities.

AMORTIZATION OF INTANGIBLE ASSETS. Approximately $613.6 million, or 36.8%,
of the Company's total assets as of December 31, 1998, consists of goodwill
arising from the acquisitions of the operating subsidiaries. Goodwill is an
intangible asset that represents the difference between the aggregate purchase
price for the net assets acquired and the amount of the purchase price that is
allocated to those net assets on our balance sheet. We are required to amortize
the goodwill arising from acquisitions (including goodwill associated with

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the payment of any earn-out consideration) over a period of time, with the
amount amortized in a particular period constituting an expense that reduces the
Company's net income for that period. The amount amortized, however, will not
give rise to a deduction for tax purposes. In addition, management continually
evaluates goodwill for potential impairment that may result from events or
changes in circumstances from time to time. A reduction in net income resulting
from the amortization or impairment of goodwill may have an adverse impact upon
the market price of our common stock.

DEPENDENCE ON KEY PERSONNEL. We believe that our success will depend to a
significant extent upon the efforts and abilities of Robert J. New, our
co-founder, Chairman and Chief Executive Officer, our other executive officers
and, due to our decentralized operating strategy, senior management and sales
personnel of our operating subsidiaries. Our operating subsidiaries will
continue to depend upon the retention of key sales personnel to maintain certain
customer relationships. In addition, we will depend upon the senior management
and sales personnel of any significant business we acquire in the future. If we
lose the services of one or more of these key employees before we retain
qualified replacement personnel, our business could be adversely affected.

POTENTIAL INFLUENCE OF EXECUTIVE OFFICERS AND DIRECTORS. As of March 19,
1999, the Company's executive officers and directors beneficially owned an
aggregate of approximately 17.9% of the outstanding shares of common stock. The
Company's executive officers and directors if acting together may be able to
influence the election of directors and matters requiring the approval of the
stockholders of the Company. This concentration of ownership may also have the
effect of delaying or preventing a change in control of the Company.

SHARES ELIGIBLE FOR FUTURE SALE. As of March 19, 1999, we had 52,505,323
shares of common stock outstanding. The 28,000,000 shares sold in our initial
public offering are freely tradeable without restriction or further registration
under the Securities Act, unless acquired by an "affiliate" of the Company, as
that term is defined in Rule 144 promulgated under the Securities Act ("Rule
144"); shares held by affiliates will be subject to the resale limitations of
Rule 144. Of the remaining outstanding shares of common stock, 21,251,569 shares
are available for resale at various dates, subject to compliance with Rule 144
as the holding provisions of Rule 144 are satisfied. In addition, 3,334,975
shares may be sold in accordance with the provisions of Rule 145 promulgated
under the Securities Act, subject to contractual lock-up periods contained in
the acquisition agreements pursuant to which such shares were issued. Further,
as of March 19, 1999, 5,256,146 shares of common stock were issuable upon the
exercise of stock options granted prior to or on such date and options to
purchase an additional 724,266 shares had been reserved for future grant under
the terms of acquisition agreements. We filed a registration statement on Form
S-8 with respect to the shares of common stock issuable upon exercise of such
options. Sales of substantial amounts of common stock, or the perception that
such sales could occur, could adversely affect prevailing market prices of our
common stock.

CERTAIN ANTITAKEOVER PROVISIONS. Certain provisions of our Amended and
Restated Certificate of Incorporation and Bylaws may make a change in the
control of the Company more difficult to effect, even if a change in control
were in the stockholders' interest. Pursuant to our Certificate of
Incorporation, our Board of Directors is divided into three classes of directors
elected for staggered three-year terms. Pursuant to our Certificate of
Incorporation and Bylaws, our Board of Directors may issue shares of preferred
stock of the Company, without stockholder approval, on such terms as the Board
of Directors may determine. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. Moreover,

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16

although the ability to issue preferred stock may provide flexibility in
connection with possible acquisitions and other corporate purposes, such
issuances may make it more difficult for a third party to acquire, or may
discourage a third party from acquiring, stock of the Company. In addition, we
are subject to the antitakeover provisions of Section 203 of the Delaware
General Corporation Law, which prohibit the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an "interested
stockholder," unless the business combination is approved in a prescribed
manner.

ITEM 2. PROPERTIES

Our corporate offices are located in leased space in Miami, Florida at
10800 Biscayne Boulevard, Suite 800, Miami, Florida 33161. Our telephone number
is (305) 899-5000.

Our servicing and administration center is located in leased space in
Portland, Oregon. We also lease office space for sales and operations in
Arizona, California, Colorado, Connecticut, Florida, Georgia, Maryland,
Massachusetts, Michigan, Missouri, New Jersey, New York, North Carolina, Ohio,
Texas, Utah and Virginia, and we lease warehouse space in Arizona, Connecticut
and Utah. We believe that our facilities are adequate for our current
operations.

ITEM 3. LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET FOR THE COMPANY'S COMMON STOCK

The Company's Common Stock has been listed on the New York Stock Exchange
since May 15, 1998. On March 19, 1999, the last sale price for the Common Stock
was $5.8125 per share. As of March 19, 1999 there were approximately 185 holders
of record of the Company's Common Stock. The following table sets forth the
range of high and low sales prices for the Common Stock for the periods
indicated.

1998 HIGH LOW
- - ---- ------- --------

Second Quarter (May 15, 1998 to June 30, 1998)............ $19.625 $14.1875
Third Quarter............................................. $19.375 $ 4.0625
Fourth Quarter............................................ $9.4375 $ 3.875
1999
First Quarter (January 1, 1999 to March 19, 1999)......... $ 8.25 $ 5.50

RECENT SALES OF UNREGISTERED SECURITIES

Since January 3, 1998, the Company has sold the following shares of its
Common Stock. Each transaction was intended to be exempt from registration in
reliance upon Section 4(2) of the Securities Act.

NO. OF SHARES OF AGGREGATE
PURCHASER DATE COMMON STOCK CONSIDERATION
- - --------- ----------------- ---------------- -------------

Gaston Friedlander Irrevocable
Trust.............................. January 3, 1998 183,750 $551,250
Martin Kalb.......................... January 16, 1998 75,000 $225,000
Michael Rabinovitch.................. January 16, 1998 26,250 $ 78,750
Jonathan New......................... January 18, 1998 52,500 $157,500
Bruce E. Kropschot................... January 23, 1998 20,000 $ 60,000
Steven E. Hirsch..................... January 24, 1998 315,000 $945,000
The G&T Trust........................ January 25, 1998 210,000 $630,000
Jonathan J. Ledecky.................. January 29, 1998 75,000 $225,000
Robert J. New........................ January 29, 1998 75,000 $225,000
Martin Kalb.......................... January 29, 1998 75,000 $225,000
Jonathan New......................... January 29, 1998 25,000 $ 75,000
The G&T Trust........................ January 29, 1998 10,000 $ 30,000
Bruce E. Kropschot................... February 2, 1998 50,000 $150,000
Theodore J. Rogenski................. February 4, 1998 200,000 $600,000
Robert Seaman........................ February 5, 1998 50,000 $150,000
Robert J. New........................ February 17, 1998 40,000 $400,000
Jonathan J. Ledecky.................. February 17, 1998 40,000 $400,000

In addition, as of February 14, 1998, the Company entered into 10 Amended
and Restated Agreements and Plans of Contribution and two Amended and Restated
Purchase Agreements, pursuant to which the Company issued an aggregate of
13,340,901 shares of Common Stock. Each such share issuance was consummated in
May 1998. Each such transaction was intended to be exempt from registration in
reliance upon Section 4(2) of the Securities Act.

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ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected financial data of the Company as of
the dates and for the periods indicated. The selected financial data set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements of the Company and related notes thereto, included elsewhere herein.

PERIOD FROM
INCEPTION
(OCTOBER 9, 1997)
TO YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
------------------ ------------------
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Finance income from direct financing and
sales-type leases............................. $ -- $ 30,027
Rental income from operating leases............. -- 68,003
Sales of equipment.............................. -- 365,306
Gain on sale of leases.......................... -- 23,862
Fees, commissions and remarketing income........ -- 15,639
Interest and other income....................... -- 8,093
------- --------
Total revenues............................. -- 510,930
------- --------
Cost of operating leases........................ -- 27,841
Cost of equipment sold.......................... -- 318,383
Interest expense................................ -- 35,453
Selling, general and administrative expenses.... 2,137 63,347
Goodwill amortization........................... -- 10,119
------- --------
Total expenses............................. 2,137 455,143
------- --------
Income (loss) from operations................... (2,137) 55,787
Equity in income from minority-owned
affiliates.................................... -- 1,013
------- --------
Income (loss) before taxes...................... (2,137) 56,800
Provision for income taxes...................... -- 32,007
------- --------
Net income (loss)............................... $(2,137) $ 24,793
======= ========
Earnings (loss) per share, basic................ $ (1.62) $ .73
Earnings (loss) per share, diluted.............. $ (1.62) $ .72
Shares used in computing net income (loss) per
share--
Basic......................................... 1,319,063 33,841,448
Diluted....................................... 1,319,063 34,353,714

AS OF DECEMBER 31,
------------------
1997 1998
---- ----------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 30 $ 9,772
Net investment in direct financing and sales-type leases.... -- 373,113
Equipment under operating leases, net....................... -- 430,229
Total assets................................................ 631 1,669,523
Debt........................................................ -- 667,322
Stockholders' equity........................................ 276 817,288

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

UniCapital was founded in October 1997 as a Delaware corporation. We
commenced operations in May 1998 in conjunction with the consummation of our
initial public offering and the acquisition of twelve equipment leasing,
specialty finance and related businesses. In June, July and August 1998, we
completed the acquisition of five additional equipment leasing, specialty
finance and related businesses. We intend to integrate the businesses,
operations and administrative functions of the businesses that we acquired over
a period of time. Integration may present opportunities to reduce costs through
the elimination of duplicate functions and through economies of scale, and may
necessitate additional costs and expenditures for corporate management and
administration, corporate expenses related to being a public company, systems
integration, employee relocation and severance and facilities expansion. These
various costs and possible cost-savings make comparison of future operating
results with historical operating results difficult.

In 1998, we derived the majority of our revenue from lease payments on
leases originated and held by the Company, gains on sale of leases and sales of
equipment subject to leases. In addition, we derived revenue from sales of
equipment off-lease and the sale of new equipment, as well as from servicing
fees, late charges and administrative fees. We also received remarketing fees
for the sale of off-lease equipment on behalf of equity investors in leases and
we may obtain a premium for sales prices in excess of an agreed-upon amount. In
the future, we intend to retain a greater portion of the leases that we
originate or acquire for our own portfolio. In order to execute this strategy,
we must modify certain of the financial covenants in our Senior Credit and
Aircraft Facilities. We are currently negotiating with our lenders to obtain the
necessary modifications to our financial covenants. Even if we retain a greater
portion of the leases that we originate or acquire, we will continue to sell
aircraft engines and remarket or sell equipment at lease end, and we may
continue to sell leases and equipment subject to leases.

We expect to fund the majority of the leases that we originate through
credit facilities. We may sell leases to third parties or refinance them through
a securitization program or other structured finance products. To date, we have
not completed a securitization transaction. Should we be unable to sell or
securitize leases with fixed rates within a reasonable period of time after
funding, our operating margins could be adversely affected by any increase in
interest rates to the extent that we have not effectively hedged our interest
rate exposure on variable rate debt. Moreover, increases in interest rates which
cause us to raise the implicit interest rate charged to our customers could
decrease demand for our lease products.

The leases we acquire or originate generally are noncancelable for a
specified term during which we generally receive scheduled payments sufficient,
in the aggregate, to cover our borrowing costs and, when aggregated with the
residual, the costs of the underlying equipment. The noncancelable term of each
lease is generally equal to or less than the equipment's estimated economic
life. Initial terms of the leases in our portfolio generally range from 12 to 84
months. Certain of the leases we acquire or originate carry a $1.00 buy-out
provision upon maturity of the lease.

Our leases are collateralized by the equipment leased as well as, in some
cases, a personal guarantee provided by a principal of the lessee. We manage
credit risk through diversifying our business customer base, geographic location
of lessees and the type of

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business equipment leased. We believe that prepayment risks are mitigated by the
noncancelable, full payout structure of the majority of our leases.

CERTAIN ACCOUNTING CONSIDERATIONS

DIRECT FINANCING LEASES. Direct financing leases transfer substantially
all of the benefits and risks of equipment ownership to the lessees. A lease is
classified as a direct financing lease if the collection of the minimum lease
payments is reasonably predictable, no significant uncertainties exist relating
to unreimbursable costs yet to be incurred by the lessor under the lease and the
lease meets one of the following criteria: (i) ownership of the property is
transferred to the lessee by the end of the lease term; (ii) the lease contains
a bargain purchase option; (iii) the term of the lease equals 75% or more of the
estimated economic life of the leased equipment; or (iv) the present value (at
the inception of the lease) of the minimum lease payments equals or exceeds 90%
of the fair value of the leased equipment. With respect to our direct financing
leases, we record total lease rentals receivable, estimated unguaranteed
residual value and initial direct costs (which are those costs, including sales
commissions, incurred in connection with consummating the lease) as the gross
investment in the lease. The difference between the gross investment in the
lease and the cost of the leased equipment is defined as "unearned income."
Finance income is recognized over the term of the lease by amortizing the
unearned income using the interest method.

SALES-TYPE LEASES. Sales-type leases, like direct financing leases,
transfer substantially all of the benefits and risks of equipment ownership to
the lessee. However, sales-type leases include profit at lease inception to the
extent the fair value of the equipment exceeds the Company's carrying value.
Sales-type leases can arise in connection with new leases, or upon
classification of lease renewals at or near the end of the initial lease term. A
lease is classified as a sales-type lease if it includes such a profit at lease
inception and if the collection of the minimum lease payments is reasonably
predictable, no significant uncertainties exist relating to unreimbursable costs
yet to be incurred by the lessor under the lease and the lease meets one of the
following criteria: (i) ownership of the property is transferred to the lessee
by the end of the lease term; (ii) the lease contains a bargain purchase option;
(iii) the term of the lease equals 75% or more of the estimated economic life of
the leased equipment; or (iv) the present value (at the inception of the lease)
of the minimum lease payments equals or exceeds 90% of the fair value of the
leased equipment. With respect to sales-type leases, we record total lease
rentals receivable, estimated unguaranteed residual value as the gross
investment in the lease. The difference between gross investment in the lease
and the present value of the gross investment in the lease is defined as
"unearned income." The present value of the minimum lease payments computed at
the interest rate implicit in the lease is recorded as sales revenue. The cost
of the equipment less the present value of the unguaranteed residual value,
computed at the interest rate implicit in the lease, is reflected as the cost of
sale. Finance income is recognized over the term of the lease by amortizing the
unearned income using the interest method.

NET INVESTMENT IN DIRECT FINANCING AND SALES-TYPE LEASES. At December 31,
1998 the Company's net investment in direct financing and sales-type leases
totaled $373.1 million, or 46.4% of the Company's net investment in leases
(including net book value of equipment under operating leases).

OPERATING LEASES. At December 31, 1998, the net book value of equipment
under operating leases totaled $430.2 million, or 53.6% of the Company's net
investment in leases (including net book value of direct financing and
sales-type leases). All lease contracts which do not meet the criteria of direct
financing leases or sales-type leases are accounted for as

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operating leases. Monthly lease payments are recorded as income from operating
leases on a straight-line basis. Leased equipment is recorded, at the Company's
cost, as "Equipment under operating leases" and depreciated on a straight-line
basis over the estimated life of the equipment to its estimated salvage value.
When equipment is sold, the net proceeds realized in excess of the carrying
value are recorded as "Gain on sale of equipment;" if the net proceeds are less
than the carrying value, the amount by which the carrying value exceeds the net
proceeds is recorded as a loss.

GAIN ON SALE. We have also generated gain on sale income from the sale of
leases to third party financing sources for cash. In June 1996, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 125 ("SFAS 125"), "Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities." SFAS 125 is effective for
transactions occurring after December 31, 1996. Among other things, SFAS 125
requires that servicing assets and other retained interests in transferred
assets be measured by allocating the previous carrying amount between the assets
sold, if any, and retained interests, if any, based on relative fair values at
the date of transfer.

In the future, we intend to retain a greater portion of the leases that we
originate or acquire for our own portfolio. In order to execute this strategy,
we must modify certain of the financial covenants in our Senior Credit
Facilities and Aircraft Facility. We are currently negotiating with our lenders
to obtain the necessary modifications to our financial covenants. Even if we
retain a greater portion of the leases that we originate or acquire, we will
continue to sell aircraft engines and remarket or sell equipment at lease end,
and we may continue to sell leases and equipment subject to leases.

RESIDUAL VALUES. At the inception of a direct financing lease or a
sales-type lease, we estimate a residual value based upon the expected net
realizable value of the equipment at the end of the lease term. The salvage
value of equipment subject to operating lease is determined by, among other
factors, the estimated useful life of the equipment, the expected condition of
the equipment at the end of the lease term, and prevailing market demand for the
equipment. At the end of the initial term of a lease, the lease may be extended,
the equipment may be sold to the lessee or the equipment may be sold or leased
to another party. The original estimate of the residual value is adjusted
downward during the lease term if a decline in value is projected; however,
upward adjustments in residual estimates are not permitted.

NEW ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging Activities," which is
effective for fiscal years beginning after June 15, 1999. The Company plans to
adopt SFAS for the year beginning January 1, 2000. SFAS 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities and it requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value.

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RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the related notes thereto
appearing elsewhere in this Form 10-K.

YEAR ENDED
DECEMBER 31, 1998
-------------------
(DOLLARS IN
THOUSANDS)

Finance income from direct financing and sales-type
leases.................................................... $ 30,027 5.9%
Rental income from operating leases......................... 68,003 13.3
Sales of equipment.......................................... 365,306 71.5
Gain on sale of leases...................................... 23,862 4.7
Fees, commissions and remarketing income.................... 15,639 3.1
Interest and other income................................... 8,093 1.5
-------- -----
Total revenues......................................... 510,930 100.0
-------- -----
Cost of operating leases.................................... 27,841 5.4
Cost of equipment sold...................................... 318,383 62.3
Interest expense............................................ 35,453 6.9
Selling, general and administrative expenses................ 63,347 12.5
Goodwill amortization....................................... 10,119 2.0
-------- -----
Total expenses......................................... 455,143 89.1
-------- -----
Income from operations...................................... 55,787 10.9
Equity in income from minority-owned affiliates............. 1,013 0.2
-------- -----
Income before taxes......................................... 56,800 11.1
Provision for income taxes.................................. 32,007 6.2
-------- -----
Net income.................................................. $ 24,793 4.9%
======== =====

FINANCE INCOME FROM DIRECT FINANCING AND SALES-TYPE LEASES. Finance income
from direct financing and sales-type leases was $30.0 million, and 5.9% of total
revenues, for the year ended December 31, 1998. This amount represents interest
income on direct financing and sales-type leases, net of the amortization of
indirect costs.

RENTAL INCOME FROM OPERATING LEASES. Rental income from operating leases
was $68.0 million, and 13.3% of total revenues, for the year ended December 31,
1998. This amount represents rental income and contingent rent earned from
assets under operating leases.

SALES OF EQUIPMENT. Sales of equipment were $365.3 million, and 71.5% of
total revenues, for the year ended December 31, 1998. Included in sales of
equipment is the sales proceeds from the sale of aircraft and aircraft engines,
sales proceeds from the sale of new equipment and sales revenue generated
through sales-type leases.

GAIN ON SALE OF LEASES. Gain on sale of leases was $23.9 million, and 4.7%
of total revenues, for the year ended December 31, 1998. During the period, the
Company generated $5.1 million in gain on sale of leases through the sale of
$70.1 million of net investment in leases in third party sales. In addition, the
Company generated $18.8 million in gain on sale of leases through the placement
of $267.4 million in net investment in leases into the Company's Purchase
Facility.

FEES, COMMISSIONS AND REMARKETING INCOME. Fees, commissions and
remarketing income was $15.6 million, and 3.1% of total revenues, for the year
ended December 31, 1998.

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Included in this amount are (i) servicing fees on leases serviced by the
Company, including both third party leases and leases originated by the Company
that have been sold to third parties, (ii) commissions on arranging financing
for third parties and (iii) remarketing income from the sale of off-lease
equipment.

COST OF OPERATING LEASES. Cost of operating leases was $27.8 million, and
5.4% of total revenues, for the year ended December 31, 1998. Cost of operating
leases is primarily depreciation on operating leased assets; it also includes
the amortization of initial direct costs of originating operating leases.

COST OF EQUIPMENT SOLD. Cost of equipment sold was $318.4 million, and
62.3% of total revenues, for the year ended December 31, 1998. Cost of equipment
sold represents the net carrying value of equipment which is sold through sales
of equipment.

INTEREST EXPENSE. Interest expense was $35.5 million, and 6.9% of total
revenues, for the year ended December 31, 1998. The Company incurs interest
expense as a result of utilization of its various credit facilities.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $63.3 million, and 12.5% of total revenues, for the
year ended December 31, 1998. Included in this amount are salaries and benefits
of the Company's employees, selling and marketing expenses, occupancy costs,
travel related costs and provisions for bad debts. In addition, the Company
incurred a $17.3 million non-cash compensation charge for certain equity
issuances prior to its initial public offering.

EQUITY IN INCOME FROM MINORITY-OWNED AFFILIATES. Equity in income from
minority-owned affiliates was $1.0 million, and 0.2% of total revenues, for the
year ended December 31, 1998. This amount represents earnings from
unconsolidated subsidiaries, primarily aircraft operating entities. The earnings
in these entities typically are generated from aircraft leases and sales of
aircraft and aircraft equipment.

PERIOD FROM INCEPTION (OCTOBER 9, 1997) TO DECEMBER 31, 1997

We were incorporated in October 1997 and commenced operations in May 1998
in conjunction with the consummation of our initial public offering and the
acquisition of twelve equipment leasing, specialty finance and related
businesses. During the period from October 9, 1997 to December 31, 1997 we had a
net loss of $2.1 million, which consisted primarily of a non-cash stock
compensation charge.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998, we had cash and cash equivalents of approximately
$9.8 million. Our business is capital intensive and requires access to
substantial short-term and long-term credit to fund new equipment leases. We
will continue to require access to significant additional capital to maintain
and expand the volume of leases that we fund, as well as to fund any future
acquisitions of leasing and specialty finance companies or lease portfolios.

Our uses of cash include the origination of equipment leases, payment of
interest expenses, repayment of borrowings under our credit facilities,
operating and administrative expenses, income taxes and capital expenditures,
and may include payment of the cash portion of the earn-out arrangements with
the stockholders of certain of the acquired companies, as well as any future
acquisitions of companies or lease portfolios.

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24

On March 10, 1999, we entered into a letter of intent, which was amended on
March 25, 1999, to purchase a portfolio of nine commercial aircraft subject to
net operating leases for approximately $312 million. We intend to purchase these
aircraft with up to $39 million in cash and approximately $278 million in a
combination of seller financing and third-party financing for which we are
currently negotiating. The letter of intent is subject to satisfactory
completion of due diligence prior to April 9, 1999, and we expect the
transaction to close by June 30, 1999. After consummation of the transaction,
the seller is obligated to offer to sell us an additional $400 million in
commercial aircraft prior to the end of 1999.

On March 19, 1999, we entered into a binding letter of intent whereby we
would acquire the equity interest in a portfolio of 34 commercial aircraft
subject to net operating leases for approximately $36 million in net cash
investment, subject to the successful consummation of securitization financing
for the balance of the approximate $1.1 billion purchase price. This transaction
is expected to close by April 30, 1999.

In order to complete the transactions described above, we must obtain
additional financing or fund the necessary cash requirements from the sale of
assets or equipment subject to lease. We are currently negotiating to obtain the
necessary funding through financing or sales.

We believe that funds generated from operations and possible future sources
of borrowings, including the Senior Credit Facilities and Aircraft Facility,
will be sufficient to finance our current operations and planned capital
expenditure requirements at least for the next twelve months, assuming
satisfactory renewal or replacement of such facilities. If we are unable to
renew or replace our credit facilities, our business, financial condition and
results of operations would be materially and adversely affected. From
time-to-time we engage in discussions and conduct analyses with respect to
possible acquisitions of equipment, lease portfolios and businesses, some of
which may lead to and include negotiation and execution of letters of intent. In
order to consummate these transactions, we will need to issue additional equity
securities, incur additional indebtedness or obtain additional sources of
financing.

SENIOR CREDIT FACILITIES

We have entered into credit arrangements with NationsBank, N.A.,
("NationsBank"), as administrative agent, and NationsBanc Montgomery Securities
LLC, as arranger and syndication agent, to provide $1.2 billion in credit
facilities (the "Senior Credit Facilities") which consist of the following
sub-facilities: (i) a $300.0 million Corporate Revolving Credit Facility
primarily to finance acquisitions and working capital (the "Revolving
Facility"); (ii) a $300.0 million Special Purpose Entity Large Ticket Warehouse
Facility primarily to finance the purchase and leasing of aircraft and aircraft
engines (the "Warehouse Facility"); and (iii) two asset-backed commercial paper
facilities totaling $600.0 million to finance small ticket and middle market
leases, consisting of an Equipment Lease Receivable Purchase Facility (the
"Purchase Facility") and an Equipment Lease Receivable Financing Facility (the
"Financing Facility").

REVOLVING FACILITY. Under the Revolving Facility, we may borrow up to
$300.0 million with a $50.0 million sublimit for letters of credit and a $15.0
million swingline sublimit. The proceeds of the Revolving Facility may be used
to finance the cash portion of permitted acquisitions and for general corporate
purposes, subject to certain limitations. Amounts outstanding under the
Revolving Facility bear interest, at our option, at NationsBank's base rate plus
an applicable margin, or a Eurodollar rate plus an applicable margin. Our
obligations under the Revolving Facility are guaranteed by all of our
subsidiaries other than certain special

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25

purpose entities which are not participating in the Warehouse Facility. The
Revolving Facility is secured by a pledge of all of the capital stock of our
domestic guaranteeing subsidiaries (and a pledge of 65% of the capital stock of
each international guaranteeing subsidiary) and a security interest in all other
assets and properties of the Company and those subsidiaries guaranteeing the
Revolving Facility, other than assets financed on a non-recourse basis by the
Company and any assets subject to liens granted in connection with certain
permitted indebtedness (including securitizations). Borrowings under the
Revolving Facility are subject to certain conditions, including but not limited
to absence of material adverse effect and absence of material litigation. In
addition, the Revolving Facility contains covenants, including but not limited
to limitations on liens other than permitted liens, investments, dividends and
other restricted payments, incurrence of recourse indebtedness, transactions
with affiliates, acquisitions other than permitted acquisitions (as defined in
the Revolving Facility) as well as various financial covenants, including ratios
of debt with recourse or limited recourse to cash flow, total debt to net worth
and cash flow to fixed charges, and maintenance at all times of a minimum net
worth. The Revolving Facility, which was entered into in June 1998, has a three-
year term. We pay a quarterly fee equal to a percentage of the unused portion of
the Revolving Facility. As of December 31, 1998, the Company had borrowings of
$163.1 million outstanding under the Revolving Facility with a weighted average
interest rate of 7.08%.

WAREHOUSE FACILITY. Under the Warehouse Facility, special purpose entities
wholly-owned by the Company (each a "SPE Borrower" and collectively, the "SPE
Borrowers") may borrow up to an aggregate of $300.0 million. The proceeds of the
Warehouse Facility may be used to finance the purchase of eligible aircraft and
eligible aircraft engines. Amounts outstanding under the Warehouse Facility bear
interest, at our option, at NationsBank's base rate plus an applicable margin or
a Eurodollar rate plus an applicable margin. The SPE Borrowers' obligations
under the Warehouse Facility are guaranteed by all present and future
subsidiaries of the SPE Borrowers (including any trusts with respect to which
each SPE Borrower has a beneficial interest) for so long as such SPE Borrowers
are borrowers under the Warehouse Facility. The Warehouse Facility is
nonrecourse to the Company, and is secured by a first priority perfected pledge
of all of the common stock of each SPE Borrower and each domestic subsidiary
(direct or indirect) of each SPE Borrower, and a first priority perfected
security interest in all present and future assets and properties of each SPE
Borrower and each of its subsidiaries. Borrowings under the Warehouse Facility
are subject to certain conditions, including but not limited to absence of
material adverse effect and absence of material litigation. In addition, the
Warehouse Facility contains certain covenants, including but not limited to
limitations on liens, investments, dividends and other restricted payments,
capital expenditures, transactions with affiliates, acquisitions, incurrence of
debt, as well as requirements related to annual appraisals of eligible aircraft
and aircraft engines, annual review of the approved lessees and obligors and
aircraft and engine types and interest rate protection acceptable to
NationsBank, and various financial covenants customary for transactions of this
type, including a ratio of cash flow to interest. We pay a quarterly fee equal
to a percentage of the unused portion of the Warehouse Facility. The revolving
term of the Warehouse Facility, which was entered into in June 1998, is 364
days. In the event the revolving term of the Warehouse Facility is not extended,
we have the option to convert the outstanding balance into a one-year term loan.
As of December 31, 1998, the Company had borrowings of $52.0 million outstanding
under the Warehouse Facility with a weighted average interest rate of 7.29%.

PURCHASE FACILITY. We have established the Purchase Facility with
NationsBank, as administrative agent, pursuant to which a commercial paper
conduit (the "CP Conduit") or, if the CP Conduit does not buy them, one or more
bank investors, which will include

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26

NationsBank (the "Bank Investors"), will purchase beneficial interests (the "Net
Investment") in an amount of up to $350.0 million, (the "Facility Limit") from a
qualifying special purpose entity, collateralized by small ticket and middle
market leases meeting certain eligibility requirements. Two indirect,
bankruptcy-remote subsidiaries of the Company (the "Transferors") will purchase
the Company's interest in certain financing leases and related leased equipment
originated or purchased by the Company or eligible subsidiaries of the Company.
The CP Conduit (or, upon the occurrence of certain events, the Bank Investors)
will purchases leases from the Transferors at an amount equal to a percentage of
the present value of the remaining lease receivables. Collections on the leases
will generally be applied first to pay any amounts due under the Purchase
Facility and certain other specified facilities, and then to the Transferors. We
plan to reduce the Net Investment under the Purchase Facility periodically
through securitizations to an amount significantly less than the Facility Limit.
To date, we have not completed any securitizations. The Purchase Facility
contains certain restrictions, including limitations on liens on the leases,
indebtedness, certain lease modifications and changes in credit and collection
practices. The Purchase Facility requires payment by the Transferor of program
fees, facility fees, administration fees and commercial paper dealer fees. The
term of the Purchase Facility, which was entered into in June 1998, is 364 days.
As of December 31, 1998, the amount outstanding under the Purchase Facility was
$251.3 million.

FINANCING FACILITY. We have established the Financing Facility with
NationsBank, as administrative agent, pursuant to which the CP Conduit or the
Bank Investors will advance an amount up to $250.0 million. A subsidiary (the
"Financing SPE") will finance the Company's interest in certain operating and
financing leases and certain leased equipment originated or purchased by the
Company or any subsidiaries of the Company. The CP Conduit (or, under certain
limited circumstances, the Bank Investors) will lend funds to the Financing SPE
in an amount equal to a percentage of the present value of the remaining lease
receivables. Such borrowings are secured by an interest in the Financing SPE's
leases and certain leased equipment. The Financing Facility contains certain
restrictions and requires the payment of various fees, generally on terms
substantially equivalent to those in the Purchase Facility. We have guaranteed
the amounts borrowed under the Financing Facility. The term of the Financing
Facility, which was entered into in July 1998, is 364 days. As of December 31,
1998, the amount outstanding under the Financing Facility was $32.8 million with
a weighted average interest rate of 6.16%.

The Company paid a financing fee in connection with entering into the
Senior Credit Facilities, which will be amortized as a yield adjustment over the
terms of the Senior Credit Facilities using the interest method, and will pay an
annual administration fee equal to a percentage of the total amount of the
Senior Credit Facilities. We expect that the aggregate fees and expenses to be
paid in connection with entering into the Senior Credit Facilities will be paid
from borrowings under the Revolving Facility.

AIRCRAFT FACILITY. In October 1998, we entered into a warehouse facility
(the "Aircraft Facility"), primarily to finance the purchase and leasing of
aircraft. Under the Aircraft Facility, we may borrow up to $500.0 million. The
Aircraft Facility is nonrecourse to the Company and is secured by a first
priority perfected pledge of all of the common stock of each SPE Borrower and
each domestic subsidiary of each SPE Borrower, and a first priority perfected
security interest in all present and future assets and properties of each SPE
Borrower and each of its subsidiaries. Borrowings under the Aircraft Facility
are subject to certain conditions, including but not limited to absence of
material adverse effect and absence of material litigation. In addition, the
Aircraft Facility contains certain covenants, including but not limited to
limitations on liens, dividends and other restricted payments, capital
expenditures, acquisitions, incurrence of debt, as well as requirements related
to annual appraisals of eligible

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27

aircraft, approved aircraft and aircraft engine types and interest rate
protection acceptable to the lender, and various financial covenants customary
for transactions of this type, including a ratio of cash flow to interest. As of
December 31, 1998, the Company had borrowings of $134.0 million outstanding
under the Aircraft Facility with a weighted average interest rate of 7.32%.

HEDGING STRATEGY

When we borrow funds, we are exposed to a certain degree of risk caused by
interest rate fluctuations. Although our equipment loans are generally
structured and permanently funded on a fixed interest rate basis, we may
initially fund the lease by borrowing on a floating rate basis. To manage
certain interest rate risks, we expect to use derivative financial instruments,
such as forward rate agreements and Treasury locks and interest rate swaps, caps
and collars. Our hedging techniques may not protect us from interest
rate-related risks in all interest rate environments.

FLUCTUATIONS IN QUARTERLY RESULTS

We could experience fluctuations in quarterly operating results due to a
number of factors including, among others, the consummation of a transaction in
a particular calendar quarter (or the failure to complete such a transaction),
variations in the volume of leases originated and variations in interest rates.
In addition, certain of our operating subsidiaries may from time to time
experience relatively large transactions for one or a few customers or
relatively large sales of equipment, which may not recur or may not be followed
by correspondingly large transactions in subsequent periods. Moreover, to the
extent that we retain leases that we acquire or originate and the equipment that
we acquire, we will not generate revenue from gain on sale for the retained
leases or revenue from sales of the retained equipment. As a result of these
fluctuations, results for any one quarter should not be relied upon as being
indicative of performance in future quarters.

YEAR 2000 READINESS

As many computer systems and other equipment with embedded chips or
processors (collectively, "Business Systems") use only two digits to represent
the year, they may be unable to process accurately certain data before, during
or after the year 2000. As a result, business and governmental entities are at
risk for possible miscalculations or systems failures causing disruptions in
their business operations. This is commonly known as the Year 2000 ("Y2K")
issue.

We are in the process of implementing a Y2K readiness program with the
objective of having all of our significant Business Systems functioning properly
with respect to the Y2K issue before January 1, 2000. The program is divided
into three major sections -- Infrastructure, Applications Software, and
third-party suppliers and customers ("External Agents"). The phases common to
all sections are: (1) inventorying Y2K items and assigning priorities; (2)
assessing the Y2K compliance of those items; (3) repairing, retiring or
replacing the items that are determined not to be Y2K compliant, beginning with
the items considered most critical to the Company's operations; (4) testing
those items; (5) implementing necessary changes; and (6) designing and
implementing contingency plans.

INFRASTRUCTURE. This section consists of hardware and systems software
other than Applications Software. We estimate that approximately 50 percent of
the activities related to this section were completed by December 31, 1998. The
testing phase is ongoing as hardware

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or system software is remediated, upgraded or replaced. All Infrastructure
activities are expected to be completed by the end of 1999.

APPLICATIONS SOFTWARE. This section includes the remediation, retirement
or replacement of applications software that is not Y2K compliant. We are using
both internal and external resources to complete this process. As of December
31, 1998, approximately 70 percent of the applications software was remediated
or replaced, and tested. The implementation of these is scheduled to be
completed by May 31, 1999. The remaining applications are expected to be
remediated or replaced by June 30, 1999, tested by October 31, 1999, and
implemented by the end of 1999.

EXTERNAL AGENTS. This section includes the process of identifying and
prioritizing service providers, vendors, suppliers, customers and governmental
entities that we believe will be critical to our business operations after
January 1, 2000. We could be adversely affected if these critical business
partners failed to provide essential services. We are sending questionnaires,
conducting interviews, browsing websites and using other available means to
attempt to ascertain the Y2K readiness of our critical business partners. We
expect to complete this process by June 30, 1999.

We are developing contingency plans intended to mitigate possible
disruptions in business operations that may result from the Y2K issue and we are
developing cost estimates for these plans. If our Y2K readiness program is
unsuccessful, we may, as a contingency plan, contract with third party lease
portfolio service providers to meet the servicing needs of our daily operations.
Contingency plans and related cost estimates will be continually refined, as
additional information becomes available.

We estimate that the aggregate cost of our Y2K efforts will be
approximately $1.3 million, of which approximately $900 thousand has been spent.
The costs of remediation are being expensed as they are incurred and are being
funded through operating cash flow. The costs associated with the replacement of
computerized systems, hardware or equipment (currently estimated to be
approximately $500 thousand), substantially all of which has been capitalized,
are included in the above estimates.

Our Y2K readiness program is an ongoing process and the estimates of costs
and completion dates for various components of the Y2K readiness program
described above are subject to change. The failure to correct a Y2K issue could
result in a failure of certain normal business activities or operations, which
could adversely affect the Company's results of operations, liquidity and
financial condition.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

We incur debt to fund the origination and acquisition of leases, equipment,
lease portfolios and equipment leasing businesses and for general corporate
purposes. The interest rates charged on the debt are generally determined based
on variable measures of interest rates such as the U.S. Federal Reserve Prime
rate ("Prime") or the London Interbank Offered Rate ("LIBOR"). For information
regarding contractual interest rates on the debt and amounts outstanding and
weighted average interest rate at December 31, 1998, see Note 10 to our
consolidated financial statements for the year ended December 31, 1998, included
elsewhere in this Form 10-K.

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We continually monitor interest rates in order to mitigate exposure to
unfavorable variations. Our objectives in managing this risk include:

- achieving certain ratios of fixed-rate debt to variable-rate debt; and

- achieving certain levels of our aggregate cost of funds.

As a result, from time to time we utilize interest rate swaps. Interest
rate swaps synthetically alter the repricing characteristics of variable-rate
debt obligations, effectively allowing us to pay a fixed interest rate on a
portion of the debt, which reduces our exposure to unfavorable variations in
Prime or LIBOR. There are risks associated with the use of these instruments,
including:

- the possible inability of the counterparties to meet the terms of their
contracts; and

- market movements in values and interest rates.

We do not enter into interest rate swap agreements for trading purposes.

At December 31, 1998, we were a party to one interest rate swap agreement,
which we entered into in November 1998. Under the agreement, we pay a fixed
interest rate on the notional amount to the counterparty and the counterparty
pays us a variable rate on the notional amount based on the 3-month LIBOR rate.
Net settlement with the counterparty occurs quarterly and the agreement expires
in November 2002. The fair market value of this agreement at December 31, 1998
was $22,000, as quoted by a major financial institution.

THE FOLLOWING TABLE PRESENTS, AS OF DECEMBER 31, 1998: (i) the notional
amount of the agreement, (ii) the fixed interest rate to be paid by the Company
and (iii) the variable rate to be paid by the counterparty under the agreement.

EFFECTIVE PERIOD OF INTEREST RATE SWAP

YEAR ENDING 11 MONTHS
DECEMBER 31, ENDING
----------------------------------------- NOVEMBER 30,
1999 2000 2001 2002
----------- ----------- ----------- ------------

Notional amount.............. $75,000,000 $75,000,000 $75,000,000 $75,000,000
Rate to be paid by the
Company.................... 5.125% 5.125% 5.125% 5.125%
Rate to be received by the 3-month 3-month 3-month 3-month
Company.................... LIBOR LIBOR LIBOR LIBOR

FOREIGN CURRENCY RISK

We enter into transactions from time to time under which we agree to pay or
receive a fixed amount of money denominated in a currency other than the U.S.
Dollar. In certain transactions, we agree to pay or receive that amount of money
at a designated future time. The applicable foreign currency exchange rate may
change between the date the agreement is entered into and the date of
settlement. The potential change in the exchange rate creates a foreign currency
exchange rate risk. In order to mitigate the risk of unfavorable changes in the
foreign currency exchange rate, we may enter into forward foreign currency
exchange agreements. In a forward foreign currency exchange agreement, the
counterparty agrees to

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exchange a foreign currency for U.S. Dollars at a fixed exchange rate at a
designated time in the future. There are risks associated with the use of these
instruments, including:

- the possible inability of the counterparties to meet the terms of their
contracts; and

- market movements in foreign currency exchange markets.

We do not enter into foreign currency exchange agreements for trading
purposes.

At December 31, 1998 we were a party to one forward foreign currency
exchange agreement. Under this agreement, we received a commitment from a
financial institution to exchange Canadian Dollars ("CAD") for U.S. Dollars
("USD") at a fixed exchange rate. The fair value of the agreement at December
31, 1998, based on the applicable closing exchange rate on that date, was
$56,800. The following table presents (i) the settlement date, (ii) the amount
we paid in Canadian dollars, and (iii) the contract exchange rate.

Settlement Date............................................. February 5, 1999
Amount the Company paid in Canadian Dollars................. $8,500,000
Exchange rate per agreement at date of maturity............. $1.52255 CAD per USD

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SELECTED QUARTERLY FINANCIAL DATA

4TH QUARTER 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
1997 1998 1998 1998 1998
----------- ----------- ----------- ----------- -----------
UNAUDITED

Total revenues......... $ -- $ -- $54,390 $133,362 $323,178
Income (loss) before
taxes................ (2,137) (17,315) 15,932 26,007 32,176
Net income (loss)...... (2,137) (17,315) 9,254 14,568 18,286
Earnings (loss) per
common share, basic.. (1.62) (2.72) 0.36 0.29 0.36
Earnings (loss) per
common share,
diluted.............. (1.62) (2.68) 0.36 0.29 0.35

FINANCIAL STATEMENTS

The information set forth under the caption "Financial Statements" in Item
14 of Part IV of this Form 10-K is incorporated herein by reference in response
to this Item 8.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information set forth under the captions "Election of Directors" and
"Other Matters" in the Proxy Statement, and the information set forth in Item 1,
"Business--Executive Officers" is incorporated herein by reference in response
to this Item 10.

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ITEM 11. EXECUTIVE COMPENSATION

The information set forth under the caption "Executive Compensation,"
"Compensation Committee Report on Executive Compensation" and "Performance
Graph" in the Proxy Statement is incorporated herein by reference in response to
this Item 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference in response to this Item 12.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the subcaption "Executive
Compensation--Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Party Transactions" in the Proxy Statement is
incorporated herein by reference in response to this Item 13.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) FINANCIAL STATEMENTS. The following consolidated financial statements of
the Company are filed with this Form 10-K:

The consolidated financial statements of UniCapital Corporation and
Subsidiaries as of December 31, 1998 and 1997 and for the year ended
December 31, 1998 and for the period from inception (October 9, 1997) to
December 31, 1997.

(a)(2) FINANCIAL STATEMENT SCHEDULES. All financial statement schedules are
omitted because they are not applicable or the required information is shown in
the financial statements or notes thereto listed above in Item 14(a)(1).

(a)(3) EXHIBITS. The Exhibits listed below are filed or incorporated by
reference as part of this Form 10-K. Where so indicated by footnote, exhibits
which were previously filed are incorporated by reference.

EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------

2.01 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, ACR Acquisition Corp.,
American Capital Resources, Inc. and Michael B. Pandolfelli
and Gerald P. Ennella, dated as of February 14, 1998. (1)
2.02 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, BCG Acquisition Corp.,
Boulder Capital Group, Inc., Roy L. Burger and Carl M.
Williams, dated as of February 14, 1998. (1)
2.03 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, CLA Acquisition Corp.,
Stuart L. Cauff, The 1998 Cauff Family Trust, Wayne D.
Lippman and The 1998 Lippman Family Trust, dated as of
February 14, 1998. (1)
2.04 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, JCS Acquisition Corp.,
Jacom Computer Services, Inc. and John L. Alfano, dated as
of February 14, 1998. (1)
2.05 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, KSTN Acquisition Corp.,
K.L.C., Inc. and Alan H. Kaufman and Edgar W. Lee, dated as
of February 14, 1998. (1)
2.06 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, XFC Acquisition Corp.,
Matrix Funding Corporation, and Richard C. Emery, J. Robert
Bonnemort, David A. DiCesaris, Jack S. and Judith F. Emery,
Trustees for Jack S. Emery Trust, Alvin W. and Lila E.
Emery, Trustees for Alvin W. and Lila E. Emery Trust, JSE
Partners, Ltd., a Utah Limited Partnership, LBK Limited
Partnership, a Utah Limited Partnership, John I. Kasteler,
Jr., Craig C. Mortensen, Shanni Staker and Christian F.
Emery, dated as of February 14, 1998. (1)
2.07 Amended and Restated Purchase Agreement by and among
UniCapital Corporation, MFA Acquisition Corp., Merrimac
Financial Associates and Allan Z. Gilbert, Jordan L. Shatz
and Mark F. Cignoli, dated as of February 14, 1998. (1)

31
33

EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------

2.08 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, MCMG Acquisition Corp.,
Municipal Capital Markets Group, Inc., and the Stockholders
Named Therein, dated as of February 14, 1998. (1)
2.09 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, NSJ Acquisition Corp., W.
Jeptha Thornton, Richard C. Giles, Samuel J. Thornton, The
1998 Giles Family Trust and The 1998 Thornton Family Trust,
dated as of February 14, 1998. (1)
2.10 Amended and Restated Purchase Agreement by and among PFSC
Acquisition Corp., PFSC Limited Acquisition Corp., Portfolio
Financial Servicing Company, L.P. and The Partners Listed on
the Signature Page, dated as of February 14, 1998. (1)
2.11 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, VC Acquisition Corp.,
Varilease Corporation, and the Stockholders of such company
listed on the Signature Page, dated as of February 14, 1998.
(1)
2.12 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, WAG Acquisition Corp., The
Walden Asset Group, Inc. and the Stockholders of such
company listed on the Signature Page, dated as of February
14, 1998. (1)
2.13 Agreement and Plan of Merger by and among UniCapital
Corporation, USTEC Acquisition Corp., United States Turbine
Engine Corp., James K. Neff, Carmit P. Neff and Randall P.
Fiorenza, dated as of July 27, 1998. (2)
2.14 Agreement and Plan of Reorganization by and among UniCapital
Corporation, SFC Acquisition Corp., Saddleback Financial
Corporation, Warren E. Emard and Stuart Kennedy, dated as of
July 28, 1998. (3)
2.15 Agreement and Plan of Reorganization by and among UniCapital
Corporation, JRI Acquisition Corp., HLC Financial, Inc.,
Lawrence P. Ciuffitelli and Soron Litman, dated as of July
28, 1998. (4)
2.16 Agreement and Plan of Reorganization by and among UniCapital
Corporation, MYC Acquisition Corp., The Myerson Companies,
Inc., Donald A. Myerson and Virginia Milke, dated as of
August 7, 1998. (5)
3.01 Certificate of Incorporation of UniCapital Corporation, as
amended. (1)
3.02 Bylaws of UniCapital Corporation. (1)
4.01 Credit Agreement by and among UniCapital Corporation,
NationsBank, National Association and the Lenders party
thereto, dated as of June 10, 1998. (6)
4.02 Transfer and Administration Agreement among Kitty Hawk
Funding Corporation, UCP Qualifying SPE 1998-1 Limited
Partnership, UCP Operating SPE 1998-1 Limited Partnership,
Portfolio Financial Servicing Company, L.P. and NationsBank,
N.A. dated as of July 20, 1998. (6)
4.03 Loan and Security Agreement among Kitty Hawk Funding
Corporation, UCP Borrowing SPE 1998-1 Limited Partnership,
Portfolio Financial Servicing Company, L.P. and Nations
Bank, N.A. dated as of July 10, 1998. (6)
4.04 Credit Agreement by and among UniCapital Corporation, First
Security Bank, National Association, as Trustee,
NationsBank, National Association, as Agent and as Lender,
and the Lenders party thereto, dated as of June 10, 1998. *

32
34

EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------

4.05 Credit Agreement by and among UniCapital Corporation, First
Security Bank, National Association, as Trustee, Lehman
Commercial Paper Inc., as Agent and as Lender, and the
Lenders party thereto, dated as of October 6, 1998. *
10.01 Employment Agreement between UniCapital Corporation and
Theodore J. Rogenski, effective as of May 20, 1998. +(7)
10.02 Employment Agreement between UniCapital Corporation and
Bruce E. Kropschot, effective as of May 20, 1998. +(7)
10.03 Employment Agreement between UniCapital Corporation and
Martin Kalb, effective as of May 20, 1998. +(7)
10.04 Employment Agreement between UniCapital Corporation and
Steven E. Hirsch, effective as of May 20, 1998. +(7)
10.05 UniCapital Corporation 1997 Executive Non-Qualified Stock
Option Plan. (1)
10.06 Employment Agreement between UniCapital Corporation and
Edward A. Jaeckel, effective as of February 1, 1999. +*
10.07 UniCapital Corporation 1998 Long-Term Incentive Plan. +(1)
10.08 UniCapital Corporation 1998 Non-Employee Directors' Stock
Plan. +(1)
10.09 UniCapital Corporation 1998 Employee Stock Purchase Plan.
(1)
10.10 Employment Agreement between UniCapital Corporation and
Robert J. New, effective as of May 20, 1998. +(7)
10.11 Employment Agreement between UniCapital Corporation and
Jonathan New, effective as of May 20, 1998. +(7)
10.11(a) First Amendment to Employment Agreement between UniCapital
Corporation and Jonathan New, dated September 16, 1998. +*
10.12 Employment Agreement between UniCapital Corporation and
Stuart L. Cauff, effective as of May 20, 1998. +(7)
21.01 Subsidiaries.*
23.01 Consent of PricewaterhouseCoopers LLP.*

- - -------------------------
+ Management contract or compensatory plan or arrangement.
* Filed herewith.
(1) Incorporated by reference to exhibit with corresponding number filed with
Amendment No. 1 to the registrant's Registration Statement on Form S-1 (File
No. 333-46603), as filed with the Commission on April 3, 1998.
(2) Incorporated by reference to Exhibit 2.01 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(3) Incorporated by reference to Exhibit 2.02 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(4) Incorporated by reference to Exhibit 2.03 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(5) Incorporated by reference to Exhibit 2.04 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(6) Incorporated by reference to exhibit with corresponding number filed with
the Company's Form 10-Q as filed with the Commission on August 14, 1998.

33
35

(7) Incorporated by reference to the exhibit with corresponding number filed
with Amendment No. 1 to the Company's Registration Statement on Form S-1
(File. No. 333-53779), as filed with the Commission on June 9, 1998.

(B) REPORTS ON FORM 8-K

The Company did not file any Reports on Form 8-K during the quarter ended
December 31, 1998.

34
36

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 in the City of Miami,
State of Florida on March 31, 1999.

UNICAPITAL CORPORATION

By: /s/ JONATHAN NEW
------------------------------------
Jonathan New
Chief Financial Officer

Each person whose signature appears below hereby appoints Robert J. New and
Jonathan New and both of them, either of whom may act without the joinder of the
other, as such person's true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
to this Annual Report on Form 10-K, and to file the same, with all exhibits
thereto and all other documents in connection therewith, with the Commission,
granting unto said attorneys-in-fact and agents full power and authority to
perform each and every act and thing appropriate or necessary to be done, as
fully and for all intents and purposes as such person might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes may lawfully do or cause to de done by
virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

SIGNATURE CAPACITY DATE
--------- -------- ----

/s/ ROBERT J. NEW Chairman and Chief Executive March 31, 1999
- - ---------------------------------- Officer and a Director (Principal
Robert J. New Executive Officer)

/s/ JONATHAN NEW Chief Financial Officer March 31, 1999
- - ---------------------------------- (Principal Financial Officer)
Jonathan New

/s/ STUART L. CAUFF Director March 31, 1999
- - ----------------------------------
Stuart L. Cauff

/s/ BRUCE E. KROPSCHOT Director March 31, 1999
- - ----------------------------------
Bruce E. Kropschot

/s/ THEODORE J. ROGENSKI Director March 31, 1999
- - ----------------------------------
Theodore J. Rogenski

/s/ ROY L. BURGER Director March 31, 1999
- - ----------------------------------
Roy L. Burger

35
37

SIGNATURE CAPACITY DATE
--------- -------- ----

/s/ VINCENT W. EADES Director March 31, 1999
- - ----------------------------------
Vincent W. Eades

/s/ RICHARD C. EMERY Director March 31, 1999
- - ----------------------------------
Richard C. Emery

/s/ ROBERT F. KOPP Director March 31, 1999
- - ----------------------------------
Robert F. Kopp

/s/ JONATHAN J. LEDECKY Director March 31, 1999
- - ----------------------------------
Jonathan J. Ledecky

/s/ ANTHONY K. SHRIVER Director March 31, 1999
- - ----------------------------------
Anthony K. Shriver

/s/ ROBERT W. VANHELLEMONT Director March 31, 1999
- - ----------------------------------
Robert W. VanHellemont

36
38

UNICAPITAL CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Cash Flows....................... F-5
Consolidated Statements of Stockholders' Equity............. F-7
Notes to Consolidated Financial Statements.................. F-8

F-1
39

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Stockholders of UniCapital Corporation

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of UniCapital
Corporation and its subsidiaries at December 31, 1998 and 1997, and the results
of their operations and their cash flows for the year ended December 31, 1998
and the period from inception (October 9, 1997) to December 31, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP

Ft. Lauderdale, Florida
February 3, 1999

F-2
40

UNICAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
---------------------
1998 1997
---------- -------
(DOLLARS IN
THOUSANDS, EXCEPT
SHARE DATA)

ASSETS
Cash and cash equivalents................................... $ 9,772 $ 30
Accounts receivable......................................... 41,987 --
Notes receivable............................................ 9,647 --
Net investment in direct financing and sales-type leases.... 373,113 --
Equipment under operating leases, net....................... 430,229 --
Equipment held for sale or lease............................ 79,897 --
Investments................................................. 29,548 --
Property and equipment, net................................. 8,433 --
Goodwill, net of accumulated amortization of $10,119........ 613,646 --
Deposits and other assets................................... 73,251 601
---------- -------
Total assets............................................ $1,669,523 $ 631
========== =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Recourse debt............................................... $ 196,279 $ --
Non-recourse and limited recourse debt...................... 471,043 --
Accounts payable and accrued expenses....................... 84,967 355
Security and other deposits................................. 24,473 --
Income taxes payable........................................ 6,353 --
Deferred income taxes....................................... 66,522 --
Other liabilities........................................... 2,598 --
---------- -------
Total liabilities....................................... 852,235 355
---------- -------
Commitments and contingencies (Notes 19 and 22)............. -- --
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 20,000,000 shares
authorized, no shares issued and outstanding.............. -- --
Common stock, $.001 par value, 200,000,000 shares
authorized, 51,433,539 and 5,276,250 shares issued and
outstanding, respectively................................. 51 5
Additional paid-in capital.................................. 796,960 2,537
Stock subscription notes receivable......................... (3,443) (129)
Accumulated other comprehensive income...................... 1,064 --
Retained earnings (deficit)................................. 22,656 (2,137)
---------- -------
Total stockholders' equity.............................. 817,288 276
---------- -------
Total liabilities and stockholders' equity.............. $1,669,523 $ 631
========== =======

The accompanying notes are an integral part of these consolidated financial
statements.
F-3
41

UNICAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

PERIOD FROM
INCEPTION
YEAR ENDED (OCTOBER 9, 1997)
DECEMBER 31, 1998 TO DECEMBER 31, 1997
----------------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

Finance income from direct financing and
sales-type leases............................. $ 30,027 $ --
Rental income from operating leases............. 68,003 --
Sales of equipment.............................. 365,306 --
Gain on sale of leases.......................... 23,862 --
Fees, commissions and remarketing income........ 15,639 --
Interest and other income....................... 8,093 --
----------- ----------
Total revenues............................. 510,930 --
----------- ----------
Cost of operating leases........................ 27,841 --
Cost of equipment sold.......................... 318,383 --
Interest expense................................ 35,453 --
Selling, general and administrative expenses.... 63,347 2,137
Goodwill amortization........................... 10,119 --
----------- ----------
Total expenses............................. 455,143 2,137
----------- ----------
Income (loss) from operations................... 55,787 (2,137)
Equity in income from minority-owned
affiliates.................................... 1,013 --
----------- ----------
Income (loss) before taxes...................... 56,800 (2,137)
Provision for income taxes...................... 32,007 --
----------- ----------
Net income (loss)..................... $ 24,793 $ (2,137)
=========== ==========
Earnings (loss) per common share, basic......... $ 0.73 $ (1.62)
Earnings (loss) per common share, diluted....... $ 0.72 $ (1.62)
Weighted average shares outstanding, basic...... 33,841,448 1,319,063
Weighted average shares outstanding, diluted.... 34,353,714 1,319,063

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
42

UNICAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM
INCEPTION
(OCTOBER 9, 1997)
YEAR ENDED TO
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -----------------
(DOLLARS IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ 24,793 $(2,137)
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation and amortization............................. 43,864 --
Deferred income tax expense............................... 22,123 --
Provision for credit losses............................... 814 --
Compensation expenses related to equity issuances......... 17,308 2,133
Gain on sale of lease financing receivables............... (23,862) --
Gain on sale of equipment................................. (46,923) --
Equity in net earnings of minority-owned affiliates....... (1,013) --
Changes in other assets and liabilities:
Current notes and accounts receivable................... (36,686) --
Deposits and other assets............................... (21,165) (601)
Accounts payable and accrued expenses................... 12,732 355
Security and other deposits............................. 4,724 --
Income taxes payable.................................... 2,187 --
Other liabilities....................................... (27,186) --
----------- -------
Net cash used in operating activities.............. (28,290) (250)
----------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................ (6,796) --
Cash paid for acquisitions, net of cash acquired............ (393,731) --
Proceeds from sale of lease financing receivables........... 350,205 --
Proceeds from sale of equipment............................. 308,004 --
Collection of direct financing and sales-type leases, net of
finance income earned..................................... 138,103 --
Investment in direct financing and sales-type leases and
purchases of equipment for sale or lease.................. (1,106,173) --
Increase in investments, net................................ (9,325) --
----------- -------
Net cash used in investing activities.............. (719,713) --
----------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from recourse debt................................. 543,884 --
Repayment of recourse debt.................................. (496,311) --
Proceeds from non-recourse and limited recourse debt........ 483,866 --
Repayment of non-recourse and limited recourse debt......... (262,139) --
Proceeds from issuance of common stock, net of offering
costs of $11,439.......................................... 489,931 280
Repayment of subordinated debt assumed in acquisitions...... (2,002) --
Proceeds received on subscription notes receivable.......... 516 --
----------- -------
Net cash provided by financing activities.......... 757,745 280
----------- -------
Increase in cash and cash equivalents....................... 9,742 30
Cash and cash equivalents at beginning of period............ 30 --
----------- -------
Cash and cash equivalents at end of period.................. $ 9,772 $ 30
=========== =======

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
43

UNICAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

PERIOD FROM
INCEPTION
YEAR ENDED (OCTOBER 9, 1997) TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------ --------------------
(DOLLARS IN THOUSANDS)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest........................ $28,709 $ --
======= ====
Cash paid for income taxes.................... $ 5,422 $ --
======= ====
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
FOR NON-CASH ITEMS:
Stock subscription notes receivable received
as consideration for issuance of common
stock...................................... $ 3,830 $129
======= ====
Notes received as partial consideration on
sales of aircraft and aircraft engines..... $11,492 $ --
======= ====
Debt assumed by buyers as partial
consideration on sales of aircraft and
aircraft engines........................... $39,558 $ --
======= ====

The accompanying notes are an integral part of these consolidated financial
statements.
F-6
44

UNICAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

STOCK ACCUMULATED
ADDITIONAL SUBSCRIPTION OTHER RETAINED
COMMON PAID-IN NOTES COMPREHENSIVE EARNINGS COMPREHENSIVE
STOCK CAPITAL RECEIVABLE INCOME (DEFICIT) INCOME TOTAL
------ ---------- ---------------- ------------- --------- ------------- --------
(DOLLARS IN THOUSANDS)

BALANCE AT INCEPTION (OCTOBER 9,
1997)........................... $-- $ -- $ -- $ -- $ --
Issuance of 5,276,250 shares of
common stock ($2,133 of
compensation expense
recorded)....................... 5 2,537 (129) -- -- 2,413
Comprehensive income:
Net loss........................ -- -- -- -- (2,137) $(2,137) (2,137)
-------
Total comprehensive
income.................... $(2,137)
--- -------- ------- ------ ------- ======= --------
BALANCE AT DECEMBER 31, 1997...... 5 2,537 (129) -- (2,137) 276
Issuance of 1,522,500 shares of
common stock ($15,248 of
compensation expense
recorded)....................... 2 20,367 (3,830) -- -- 16,539
Issuance of options ($2,060 of
compensation expense
recorded)....................... -- 2,060 -- -- -- 2,060
Issuance of 28,000,000 shares of
common stock, net of
underwriters discounts and
offering costs.................. 28 488,613 -- -- -- 488,641
Issuance of 13,340,901 shares of
common stock to Founding
Companies in connection with
mergers......................... 13 228,119 -- -- -- 228,132
Issuance of 3,293,888 shares of
common stock for additional
acquisitions.................... 3 55,264 -- -- -- 55,267
Payments received................. -- -- 516 -- -- 516
COMPREHENSIVE INCOME:
Net income...................... -- -- -- -- 24,793 $24,793 24,793
Other comprehensive income:
Net unrealized gain on
securities, net of deferred
taxes of $653................. -- -- -- 1,064 -- 1,064 1,064
-------
Total comprehensive
income.................... $25,857
=======
--- -------- ------- ------ ------- --------
BALANCE AT DECEMBER 31, 1998...... $51 $796,960 $(3,443) $1,064 $22,656 $817,288
=== ======== ======= ====== ======= ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
45

UNICAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION AND NATURE OF BUSINESS

UniCapital Corporation, incorporated in Delaware, was founded in October
1997 to create a national operator and integrator of equipment leasing and
specialty finance businesses serving the commercial market. UniCapital
Corporation acquired twelve equipment leasing, specialty finance and related
businesses (the "Founding Companies") upon consummation of an initial public
offering (the "Offering") of its common stock ("Common Stock") in May 1998.
Subsequent to the Offering, UniCapital Corporation acquired, through merger or
purchase, five additional companies, continuing the expansion of its national
operations. UniCapital Corporation, the Founding Companies and the subsequently
acquired companies are referred to collectively as the "Company".

The Company originates, acquires, sells and services equipment leases and
arranges structured financing in the computer and telecommunications equipment,
large ticket and structured finance, middle market and small ticket areas of the
equipment leasing industry. In addition, the Company provides lease
administration and processing services, which include the servicing of certain
leases sold to third parties. The Company's leases and structured financing
arrangements cover a broad range of equipment, including aircraft and aircraft
equipment, computer and telecommunications equipment, construction and
manufacturing equipment, office equipment, tractor trailers, printing equipment,
car washes, petroleum retail equipment and vending machines.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of UniCapital
Corporation and its wholly owned subsidiaries, as well as the results of
operations of the Company's investments accounted for under the equity method.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles.

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 and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. While management believes that the estimates and related
assumptions used in the preparation of these financial statements are
appropriate, actual results could differ from those estimates. Estimates are
made in the assessment of collectibility of receivables and financing leases,
recovery of estimated unguaranteed residual values of leased equipment,
depreciable lives, impairment of goodwill and other intangible assets, and the
related estimated lives of such assets, and estimates of expected maintenance
and overhaul costs in connection with certain leases of aircraft.

Comprehensive Income

The Company adopted the provisions of Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income", for the year ended December
31, 1998. The Company has elected to present comprehensive income in the
consolidated statements of

F-8
46

stockholders' equity, with the accumulated balance of other comprehensive income
reported as a separate component of stockholders' equity in the consolidated
balance sheets.

Cash and Cash Equivalents

The Company classifies highly liquid investments with original maturities
of three months or less from the date of purchase as cash equivalents.

Direct Financing Leases

Net investment in direct financing leases includes gross rentals
receivable, estimates of unguaranteed equipment residual values and unamortized
initial direct costs less the unamortized portion of unearned finance income,
and is reflected net of the allowance for credit losses. Unearned finance income
represents the excess of the gross rentals receivable plus the estimated
unguaranteed equipment residual value over the cost of the equipment acquired.
Initial direct costs are capitalized and amortized over the lease term under the
interest method.

Revenue from direct financing leases is recognized over the lease term
under the interest method which results in a level rate of return on the net
investment in the lease.

Sales-type Leases

Net investment in sales-type leases includes gross rentals receivable and
estimates of unguaranteed equipment residual values less unearned finance
income, and is reflected net of the allowance for credit losses. Unearned
finance income represents the excess of the gross rentals receivable plus the
estimated unguaranteed equipment residual value over the present value of these
two components.

Revenue under sales-type leases consists of the present value of the total
contractual lease payments which is recognized at lease inception. Cost
recognized at lease inception consists of the equipment's net book value at
lease inception, less the present value of the equipment's estimated
unguaranteed equipment residual value, and related initial direct costs.
Unearned finance income is recognized as revenue over the term of the lease
under the interest method.

Operating Leases

Equipment under operating leases is recorded at cost and depreciated on a
straight-line basis over the equipment's estimated useful life to its estimated
salvage value. Generally, aircraft and aircraft equipment are depreciated over
estimated useful lives of 30 years from the date of manufacture to a 15%
estimated salvage value. Technology equipment is generally depreciated over an
estimated useful life of 3 to 7 years. In estimating the equipment's salvage
value for all types of equipment, the Company relies on historical experience by
equipment type and manufacturer and, where available, valuations by independent
appraisers, adjusted for known trends. The Company's estimates are reviewed
continuously to ensure continued appropriateness; however, the amounts the
Company will ultimately realize could differ from those estimates.

Revenue under operating leases is recognized as rental income on a
straight-line basis over the lease term. In addition, certain contingent rental
payments based on measures of usage of certain types of equipment are recognized
as rental income as received. Costs of operating leases include principally
depreciation of the leased equipment.

Equipment Held for Sale or Lease

Equipment held for sale or lease includes equipment purchased for lease and
equipment off-lease and is stated at the lower of cost or market.

F-9
47

Investments

All investments in securities are classified as available-for-sale in
accordance with Statement of Financial Accounting Standards No. 115 ("SFAS
115"), "Accounting for Certain Investments in Debt and Equity Securities".
Available-for-sale securities are recorded at fair value with unrealized holding
gains or losses, net of the related tax effects, reported as a component of
accumulated other comprehensive income in a separate component of stockholders'
equity. Realized gains and losses from the sale of available-for-sale securities
are determined on a specific identification basis and included in the
consolidated statements of operations.

Derivatives

Derivative financial instruments, as defined in Statement of Financial
Accounting Standards No. 119, "Disclosure about Derivative Financial Instruments
and Fair Value of Financial Instruments", used by the Company primarily include
interest rate swaps and forward foreign exchange contracts. These derivative
financial instruments are used as hedges on specific transactions to
synthetically alter the repricing characteristics of the related assets and
liabilities. Risks arise from the use of such instruments from the possible
inability of the counterparties to meet the terms of their contracts and from
market movements in values and interest rates. Management believes, however,
that the potential losses from such risks related to derivative instruments held
at December 31, 1998 are not significant.

In accounting for interest rate swaps, the net differential to be paid or
received on the interest rate swap is recognized as a yield adjustment to the
related asset or liability over the life of the swap agreement. If the related
asset or liability is disposed of, the swap agreement is marked to market.
Thereafter, the interest rate swap is accounted for in the consolidated
financial statements at its fair value with any unrealized gains and losses
recognized in the period incurred. If the interest rate swap agreement is
terminated, the gain or loss is deferred and amortized over the remaining life
of the related asset or liability.

Forward foreign exchange contracts are accounted for according to Statement
of Financial Accounting Standards No. 52 ("SFAS 52"), "Foreign Currency
Translation". In accordance with SFAS 52, unrealized gains or losses on forward
foreign exchange contracts that are intended to hedge an identifiable foreign
currency commitment are deferred and included in the measurement of the related
foreign currency transaction.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.
Depreciation on property and equipment is recognized on a straight-line basis
over the estimated useful lives of the assets which generally range from 3 to 7
years.

Goodwill

Goodwill represents the excess of purchase price over fair value of
identifiable tangible and intangible assets and liabilities acquired.
Amortization of goodwill is recognized on a straight-line basis over the
expected periods to be benefited, generally 15 to 40 years. The Company
periodically reviews goodwill for impairment whenever events or changes in
circumstances indicate that it may not be recoverable. In such an event,
goodwill in excess of expected operating cash flows is considered to be impaired
and is written down to fair value, which is determined based on discounted
future cash flows. There was no impairment at December 31, 1998.

F-10
48

Income Taxes

Income taxes are accounted for using the asset and liability method under
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are provided to reduce deferred taxes to
the amount expected to be realized.

Transfers of Lease Financing Receivables

The Company accounts for transfers of lease financing receivables in
accordance with Statement of Financial Accounting Standards No. 125 ("SFAS
125"), "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." Under SFAS 125, upon a transfer of financial
assets, the Company recognizes the financial and servicing assets it controls
and the liabilities it has incurred, derecognizes financial assets when control
has been surrendered and derecognizes liabilities when extinguished. In
addition, the Company initially measures retained interests in the transferred
assets by allocating the lease financing receivables carrying amount to
interests retained and sold based on relative fair values at the date of
transfer.

Retained interests in certain cash flows acquired in connection with a
transfer of lease receivables, if any, are initially recorded based upon the
relative fair value approach noted above and are subsequently accounted for as
available-for-sale securities in accordance with SFAS 115.

Earnings Per Common Share

Earnings per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share". SFAS 128
requires a dual presentation of basic and diluted earnings per share.

Basic earnings per share is computed by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
for the period. This calculation excludes any potential dilution from securities
or other contracts to issue common stock.

Diluted earnings per share reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock. Diluted earnings per share is calculated as net
income available to common stockholders divided by the weighted average of
common shares outstanding for the period plus the effect of dilutive shares as
determined using the treasury stock method.

Stock Options

Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock Based Compensation", allows entities to choose between a
fair value based method of accounting for employee stock options or similar
equity instruments and the intrinsic value based method of accounting prescribed
by Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for
Stock Issued to Employees". Entities electing to account for employee stock
options or similar equity instruments under APB No. 25 must make pro forma
disclosures of net income and earnings per share as if the fair value method of
accounting

F-11
49

under SFAS 123 had been applied. The Company has elected to apply the provisions
of APB Opinion No. 25 in the preparation of its consolidated financial
statements and provide pro forma disclosure of net income and earnings per share
as required under SFAS 123 in the notes to the consolidated financial
statements.

Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Values of Financial Instruments", requires disclosure of the fair value of
financial instruments, both assets and liabilities recognized and not recognized
on the balance sheet, for which it is practicable to estimate fair value. The
carrying values of the Company's financial instruments at December 31, 1998
approximate fair value due to their short-term maturity and variable-interest
rate characteristics.

NOTE 3--ACQUISITIONS

During 1998, UniCapital Corporation acquired twelve equipment leasing,
specialty finance and related businesses in connection with the Offering, and
subsequent to the Offering, acquired five additional companies continuing the
expansion of its national operations. Each of these acquisitions has been
accounted for using the purchase method of accounting. Under the purchase method
of accounting, the results of operations of acquired businesses are included in
the Company's results from their respective acquisition dates, with unaudited
pro forma financial information presented in the notes to the consolidated
financial statements to reflect the pro forma results of operations as if the
acquisitions had occurred at the beginning of the period (see Note 4). The
purchase price of each acquisition has been allocated to the fair values of
identifiable tangible and intangible assets and liabilities acquired, with the
excess unallocated purchase price recorded as goodwill.

F-12
50

The following table presents the aggregate consideration paid in connection
with the Company's acquisitions during 1998:

SHARES OF VALUE OF GOODWILL
COMMON COMMON TOTAL DATE OF AMORTIZATION
CASH STOCK STOCK CONSIDERATION ACQUISITION PERIOD
------ ---------- -------- ------------- ----------- ------------
(IN MILLIONS, EXCEPT SHARE DATA) (IN YEARS)

AIR GROUP:
Cauff Lippman Aviation, Inc............ $ 51.5 1,684,210 $ 28.8 $ 80.3 5/20/98 40
Jumbo Jet (and related entities)....... 15.4 -- -- 15.4 6/30/98 40
The NSJ Group, Inc..................... 16.0 561,978 9.6 25.6 5/20/98 40
AIRCRAFT ENGINE GROUP:
United States Turbine Engine Corp...... 50.0 2,739,726 46.0 96.0 7/27/98 20
TECHNOLOGY AND FINANCE GROUP:
American Capital Resources, Inc........ 20.4 1,071,051 18.3 38.7 5/20/98 40
Jacom Computer Services, Inc........... 128.0 3,368,368 57.6 185.6 5/20/98 40
Matrix Funding Corporation............. 19.4 1,035,811 17.7 37.1 5/20/98 40
Municipal Capital Markets Group,
Inc.................................. 7.0 370,656 6.3 13.3 5/20/98 20
Varilease Corporation.................. 36.8 1,934,371 33.1 69.9 5/20/98 40
The Walden Asset Group, Inc............ 21.0 1,105,182 18.9 39.9 5/20/98 40
BUSINESS CREDIT GROUP:
Boulder Capital Group, Inc............. 7.1 371,053 6.3 13.4 5/20/98 40
HLC Financial, Inc..................... 4.3 224,096 3.8 8.1 7/28/98 40
K.L.C., Inc. (d/b/a Keystone).......... 27.9 1,468,420 25.1 53.0 5/20/98 40
Merrimac Financial Associates.......... -- 178,750 3.1 3.1 5/20/98 40
The Myerson Companies, Inc. (d/b/a BSB
Leasing)............................. 3.1 167,740 2.9 6.0 8/7/98 40
Saddleback Financial Corporation....... 3.0 162,326 2.7 5.7 7/28/98 40
CORPORATE DIVISION:
Portfolio Financial Servicing Company,
L.P.................................. -- 191,051 3.2 3.2 5/19/98 15
------ ---------- ------ ------
$410.9 16,634,789 $283.4 $694.3
====== ========== ====== ======

In addition to the consideration presented in the table above, the selling
shareholders of each acquired company, excluding Portfolio Financial Servicing
Company, L.P. and Jumbo Jet (and related entities), may, pursuant to certain
earnout arrangements, receive additional consideration based on targeted levels
of earnings. The earnout arrangements are generally effective for a two year
period, except for Cauff Lippman Aviation, Inc., The NSJ Group, Inc., United
States Turbine Engine Corp. and HLC Financial, Inc., which will be effective
over a three year period. Contingent consideration, if earned, will be paid in a
combination of cash and the Company's Common Stock and recorded as additional
purchase price. As of December 31, 1998, the Company estimated that certain of
the acquired companies had earned, in the aggregate, approximately $21.2 million
in contingent consideration for the year ended December 31, 1998 to be paid in a
combination of $12.4 million in cash and Common Stock valued at $8.8 million.
The determination of diluted earnings per share for the year ended December 31,
1998 includes the dilutive effect of the contingent shares expected to be issued
pursuant to the earnout arrangements.

F-13
51

The following table presents the fair value of assets acquired, fair value
of liabilities assumed, common stock issued and the net cash paid, in the
aggregate, for acquisitions in 1998 (in thousands):

Fair value of assets acquired............................ $1,312,949
Fair value of liabilities assumed........................ (618,616)
Common stock issued...................................... (283,399)
----------
Cash paid for acquisitions............................... 410,934
Cash and cash equivalents acquired....................... (17,203)
----------
Total cash paid for acquisitions, net of cash
acquired.......................................... $ 393,731
==========

Following is management's brief description of each company acquired during
1998:

Air Group:

Cauff Lippman Aviation, Inc. provides operating lease financing for used
commercial jet aircraft and jet aircraft engines, as well as brokering, advisory
and remarketing services to domestic and foreign commercial airlines, aircraft
lessors and institutional investors and engages in the purchase and sale of
aircraft for its own account.

Jumbo Jet (which includes Jumbo Jet Leasing LP, Jumbo Jet, Inc., CL
Aircraft Marketing LP and CL Aircraft Marketing, Inc.) provides lease financing
for the acquisition of used commercial aircraft.

The NSJ Group, Inc. provides lease financing for used commercial jet
aircraft and jet aircraft engines to domestic and foreign commercial airlines
and engages in the purchase and sale of aircraft for its own account.

Aircraft Engine Group:

United States Turbine Engine Corp. engages in the purchase, refurbishment,
sales and lease of commercial aircraft engines and provides a broad range of
engine management services to airlines, financial institutions and other
operating lessors.

Technology and Finance Group:

American Capital Resources, Inc. provides lease and secured financing for
equipment, primarily printing presses, to companies in the printing, packaging
and paper converting industries.

Jacom Computer Services, Inc. provides lease financing for computer and
telecommunications equipment to large and middle market companies, including
financial institutions, throughout the United States.

Matrix Funding Corporation provides lease financing for a variety of
equipment, primarily computer, communication and electronic equipment, to
companies throughout the United States.

Municipal Capital Markets Group, Inc. arranges structured financing,
primarily for community-based mental health/mental retardation facilities and
correctional facilities.

Varilease Corporation provides lease financing for computer and
telecommunications equipment to Fortune 1000 companies and other businesses
throughout the United States and Canada.

The Walden Asset Group, Inc. provides lease financing for a variety of
equipment, including communications, computer and manufacturing equipment, to
Fortune 500 and other businesses throughout the United States.

F-14
52

Business Credit Group:

Boulder Capital Group, Inc. provides lease financing for petroleum retail
equipment, including car washes, fuel dispensers and convenience store operating
equipment, to petroleum retail businesses.

HLC Financial, Inc. provides lease financing primarily for computer systems
and related office technology equipment to customers in the automobile
dealership and hospitality industries.

K.L.C., Inc., d/b/a Keystone, provides lease financing for a variety of
equipment, primarily tractor trailers, embroidery machines and construction
equipment, to companies throughout the United States.

Merrimac Financial Associates provides equipment financing to operating
companies engaged in the coin-operated, vending, amusement and coffee service
businesses.

Myerson Companies, Inc., d/b/a/ BSB Leasing, provides equipment lease
financing to small to medium size companies throughout the United States.

Saddleback Financial Corporation provides lease and equipment acquisition
financing for a variety of equipment utilized in various industries, including
computers, machine tools, printing, video, automotive diagnostic and electronic
equipment.

Corporate Division:

Portfolio Financial Servicing Company, L.P. provides lease administration
and processing services, including lease accounting for both financial reporting
and federal income tax purposes, lien searches, UCC filings, asset tracking,
insurance tracking, preparation of sales, use and property tax returns,
invoicing and collections.

NOTE 4--UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma financial information for the year ended December
31, 1998 and 1997 includes the results of UniCapital Corporation combined with
the Founding Companies and subsequent acquisitions as if all acquisitions had
occurred at January 1, 1997. This unaudited pro forma financial information
includes the effects of (a) the acquisition of the Founding Companies; (b) the
Offering; (c) the subsequent acquisitions; (d) certain reductions in salaries,
bonuses and benefits to the stockholders and managers of the Founding Companies
and the subsequent acquisitions to which they have contractually agreed
prospectively; (e) amortization of goodwill; (f) the incremental provision for
federal and state income taxes assuming all entities were subject to corporate
federal and state income taxes; and (g) the incremental costs of being a public
company.

The unaudited pro forma financial information may not be comparable to and
may not be indicative of the Company's results of operations subsequent to the
acquisitions because the Founding Companies and the subsequent acquisitions were
not under common control or management and had different tax and capital
structures during the periods presented.

F-15
53

YEAR ENDED DECEMBER 31,
------------------------
1998 1997
---- ----
(IN THOUSANDS, EXCEPT
SHARE DATA)

Total revenues................................... $672,081 $267,705
Income before taxes.............................. $100,413 $ 49,422
Net income....................................... $ 55,372 $ 24,150
Earnings per common share, basic................. $ 1.10 $ 0.48
Earnings per common share, diluted............... $ 1.08 $ 0.48

NOTE 5--LEASE FINANCING RECEIVABLES

The Company's balance of net investment in direct financing and sales-type
leases was comprised of the following components at December 31, 1998 (in
thousands):

Future minimum lease rentals receivable.................... $369,249
Estimated unguaranteed residual values..................... 64,804
Initial direct costs....................................... 3,438
Unearned finance income.................................... (59,540)
Allowance for credit losses................................ (4,838)
--------
Net investment in direct financing and sales-type leases... $373,113
========

At December 31, 1998, future scheduled minimum lease rentals receivable on
direct financing and sales-type leases were as follows (in thousands):

1999....................................................... $152,441
2000....................................................... 106,925
2001....................................................... 61,465
2002....................................................... 28,821
2003....................................................... 13,543
Thereafter................................................. 6,054
--------
Total................................................. $369,249
========

The following table sets forth the Company's allowance for credit losses on
direct financing and sales-type lease receivables for the year ended December
31, 1998 (in thousands):

Balance at December 31, 1997................................ $ --
Allowances related to leases acquired through business
combinations.............................................. 5,641
Provision for credit losses................................. 814
Charge-offs, net of recoveries.............................. (1,617)
-------
Balance at December 31, 1998................................ $ 4,838
=======

F-16
54

NOTE 6--EQUIPMENT UNDER OPERATING LEASES

The cost and accumulated depreciation of equipment under operating leases
at December 31, 1998 are as follows (in thousands):

Aircraft................................................... $364,851
Aircraft engines........................................... 6,500
Technology................................................. 81,748
Other...................................................... 1,071
--------
454,170
Accumulated depreciation................................... (23,941)
--------
$430,229
========

At December 31, 1998, future scheduled minimum lease contract payments to
be received under operating leases were as follows (in thousands):

1999....................................................... $ 70,869
2000....................................................... 46,264
2001....................................................... 32,305
2002....................................................... 19,338
2003....................................................... 15,557
Thereafter................................................. 1,558
--------
Total................................................. $185,891
========

Included in income for the year ended December 31, 1998 was $13.3 million
of contingent rentals. Depreciation expense related to equipment under operating
leases recorded during the year ended December 31, 1998 was $23.9 million.

NOTE 7--EQUIPMENT HELD FOR SALE OR LEASE

The following is a summary of equipment held for sale or lease at December
31, 1998 (in thousands):

Aircraft.................................................... $14,556
Aircraft engines............................................ 26,310
Technology.................................................. 32,637
Other....................................................... 6,614
-------
80,117
Accumulated depreciation.................................... (220)
-------
$79,897
=======

NOTE 8--INVESTMENTS

The following is a summary of investments at December 31, 1998 (in
thousands):

Available-for-sale securities............................... $16,058
Investment in joint ventures and minority-owned
affiliates................................................ 13,490
-------
Total.................................................. $29,548
=======

F-17
55

Available-for-sale Securities

The following is a summary of available-for-sale securities held at
December 31, 1998 (in thousands):

GROSS GROSS
UNREALIZED UNREALIZED FAIR EXPECTED
COST GAINS LOSSES VALUE MATURITY
------- ---------- ---------- ------- ---------------------

Retained Certificates (Note
11).......................... $11,189 $1,452 $ -- $12,641 January 1, 1999 to
December 31, 2008
Municipal debt securities...... 1,898 163 -- 2,061 December 31, 2023
Equity securities, with no
maturity..................... 1,254 129 (27) 1,356
------- ------ ---- -------
$14,341 $1,744 $(27) $16,058
======= ====== ==== =======

There were no sales of available-for-sale securities during the year ended
December 31, 1998.

Investment in Joint Ventures and Minority-owned Affiliates

Joint ventures and minority-owned affiliates represent companies in the
same line of business as the Company and are accounted for under the equity
method.

NOTE 9--PROPERTY AND EQUIPMENT

The following is a summary of property and equipment at December 31, 1998
(in thousands):

ESTIMATED
LIFE
---------

Furniture and fixtures........................ $2,718 7 years
Computer and office equipment................. 4,389 3-5 years
Leasehold improvements and other.............. 2,234 3-5 years
------
9,341
Accumulated depreciation...................... (908)
------
$8,433
======

Depreciation expense related to property and equipment recorded during the
year ended December 31, 1998 was $0.9 million.

NOTE 10--DEBT

Credit Facilities

During June 1998, the Company secured a commitment from a commercial bank
to provide $1.2 billion in credit facilities ("Senior Credit Facilities") which
consist of the following sub-facilities: (i) a $300 million revolving credit
facility, which matures in June 2001, primarily to finance acquisitions and
provide working capital, subject to certain limitations, ("Revolving Facility");
(ii) a $300 million large ticket warehouse facility, with a term of 364 days,
primarily to finance the purchase and leasing of aircraft and aircraft engines
("Warehouse Facility"); and (iii) two asset-backed commercial paper facilities
totaling $600 million to finance small ticket and middle market leases,
consisting of a $250 million equipment lease receivable financing facility, with
a term of 364 days, ("Financing Facility"), and a $350 million equipment lease
receivable purchase facility ("Purchase Facility"). As discussed in Note 11, the
transfer of financing lease receivables into the Purchase Facility is treated as
a sale under the provisions

F-18
56

of SFAS 125 and, accordingly, is not recorded as debt. In the event the
revolving term of the Warehouse Facility is not extended, the outstanding
balance will convert into a one-year fixed-rate term loan at prevailing rates.
Management expects to renew or extend these facilities upon expiration.

During October 1998, the Company also secured a commitment from another
financial institution to provide a $500 million credit facility ("Aircraft
Facility"), with a term of 364 days, primarily to finance the purchase and
leasing of aircraft. Management expects to renew or extend this facility upon
expiration.

Substantially all of the Company's assets, including receivables under
direct financing and sales type leases and equipment under operating leases, are
pledged against the Company's obligations under the credit facilities discussed
above. In addition, the credit facilities contain covenants, including, but not
limited to, limitations on liens, investments, dividends and other restricted
payments, incurrence of recourse indebtedness, transactions with affiliates and
acquisitions, as well as various financial covenants customary for transactions
of this type, including ratios of debt with recourse or limited recourse to cash
flow, total debt to net worth and cash flow to fixed charges, and maintenance at
all times of a minimum net worth. The amount of dividends that the Company may
declare must be approved by the financial institution providing the Senior
Credit Facilities. The Company was in compliance with the covenants under these
facilities at December 31, 1998.

Other Debt

The Company, from time to time, obtains non-recourse debt financing for the
acquisition of equipment with various third parties in which the underlying
equipment serves as collateral for the debt. At December 31, 1998, the Company's
balance of non-recourse debt under such arrangements included debt related to
the acquisition of aircraft and aircraft engines.

In addition, the Company, from time to time, transfers lease financing
receivables to third parties in the normal course of business. These
transactions are accounted for under the provisions of SFAS 125. Those transfers
that are accounted for as sale transactions are discussed in Note 11. Under SFAS
125, those transfers which do not meet the derecognition criteria are accounted
for as financing transactions and are included in the table below as discounted
lease receivables. Under such an arrangement, the principal and interest
obligations of the related debt are funded by the cash flows from collections on
the underlying leases which are generally collected directly by the creditor. In
the event of default by the lessee, the Company is not contractually obligated
to repay the outstanding balance of the related debt. Creditors may, however,
have recourse to the Company's retained interest, if any, in the equipment's
residual value. In addition, certain transfers contain limited-recourse
provisions (see Note 19).

F-19
57

The following table summarizes the credit facilities and other debt
discussed above as of December 31, 1998 (in thousands, except interest rate
data):

WEIGHTED AVERAGE
BALANCE AT INTEREST RATE AT
DECEMBER 31, 1998 DECEMBER 31, 1998 CONTRACTUAL INTEREST RATE
----------------- ----------------- -----------------------------

CREDIT FACILITIES:
Senior Credit Facilities:
Revolving
Facility........ $163,120 7.08% Prime plus 50 basis points or
LIBOR plus 150 basis points
Warehouse
Facility........ 52,040 7.29% Prime plus 75 basis points or
LIBOR plus 175 basis points
Financing
Facility........ 32,844 6.16% Commercial paper plus 82
basis points
Aircraft
Facility........ 134,030 7.32% Prime plus 75 basis points or
LIBOR plus 175 basis points
OTHER DEBT:
Non-recourse debt
related to
acquisition of
aircraft and
aircraft engines... 60,564 9.39% 7.53% to 11.18%
Discounted lease
receivables........ 222,399 8.02% 7.41% to 8.52%
Other notes
payable............ 2,010 6.00% 6.00%
Other recourse
debt............... 315 8.04% 8.00% to 8.25%
--------
Total........... $667,322
========

The following table presents scheduled principal maturities of non-recourse
debt related to the acquisition of aircraft and aircraft engines and discounted
lease receivables outstanding at December 31, 1998 for each of the next five
years and thereafter:

NON-RECOURSE DEBT
RELATED TO DISCOUNTED
AIRCRAFT AND LEASE
AIRCRAFT ENGINES RECEIVABLES OTHER DEBT TOTAL
------------------ ------------ ---------- --------

1999............................ $18,938 $101,594 $2,325 $122,857
2000............................ 18,880 65,895 -- 84,775
2001............................ 8,873 33,494 -- 42,367
2002............................ 2,389 16,150 -- 18,539
2003............................ 1,999 4,749 -- 6,748
Thereafter...................... 9,485 517 -- 10,002
------- -------- ------ --------
Total...................... $60,564 $222,399 $2,325 $285,288
======= ======== ====== ========

At December 31, 1998, included in deposits and other assets in the
accompanying consolidated balance sheets are $17.5 million of deferred loan
costs incurred to secure the Senior Credit Facilities and the Aircraft Facility
discussed above. These costs are amortized over the contractual terms of those
facilities. Total amortization expense of deferred loan costs for the year ended
December 31, 1998 was $4.5 million.

F-20
58

NOTE 11--SALES OF LEASE FINANCING RECEIVABLES

The Company transfers lease financing receivables to third parties in the
normal course of business, which are accounted for as sales of lease receivables
under the provisions of SFAS 125. In these transactions, the Company records a
gain on the sale of leases, and may additionally retain servicing rights and
retain certain interests in the residual cash flows of the underlying
receivables.

Under the terms of the Purchase Facility discussed in Note 10, the Company
may transfer lease financing receivables (the "Net Investment") of up to $350
million of small ticket and middle market lease receivables meeting certain
eligibility requirements. In a transfer of lease receivables to the Purchase
Facility, the Company transfers a pool of leases to a wholly-owned, bankruptcy
remote, qualifying special purpose entity. This entity then issues, for cash,
beneficial interests in the form of senior and subordinated securities, which
are collateralized by the lease receivables. The Company generally (i) retains
the right to receive any excess cash flows of the entity ("Retained
Certificate"), (ii) retains the right to service the leases transferred in
exchange for a servicing fee, and (iii) records a gain on sale. The Purchase
Facility contains restrictions customary for facilities of this type, including
limitations on liens on the leases, indebtedness, certain lease modifications
and changes in credit and collection practices. At December 31, 1998, the
Purchase Facility had an outstanding balance of $251.3 million.

Gain on Sale

Under the provisions of SFAS 125, gain on sale of lease receivables is
calculated as the difference between the proceeds received, net of related
selling expenses, and the allocable carrying amount of the related lease
receivables, determined using the fair value approach.

During the year ended December 31, 1998, the Company transferred lease
receivables with a net book value of $267.4 million to the Purchase Facility,
recognizing a gain of $18.8 million. Under these transactions, the Company
received $275 million in cash and recorded Retained Certificates of $12.6
million (see Note 8).

In addition, during the year ended December 31, 1998, the Company
transferred lease receivables with a net book value of $70.1 million to third
parties in sales transactions, receiving cash of $75.2 million and recognizing a
gain of $5.1 million.

Retained Certificates

For purposes of calculating the estimated fair value of the Retained
Certificates, management has used a discount rate of 14%. Management has also
used a range of expected losses arising from defaults, net of recoveries, of
0.40% to 2.50% per annum. Other factors, such as prepayments, generally do not
have a significant impact on the gain on sale calculation due to the
non-cancelable and full-payout nature of most of the underlying leases.

The cash flows ultimately available to the Retained Certificates are
largely dependent upon the actual default rates and recoveries experienced on
the leases held by the special purpose entity. Increases in default rates above,
or reduction in recoveries below, the Company's estimates could reduce the cash
flows available to the Retained Certificates. To the extent events occur which
cause actual Retained Certificates cash flows to be materially below those
originally estimated, the Company would record an impairment in the carrying
amount of its Retained Certificates through a charge to earnings in the period
in which the impairment occurred or became known to management. There was no
impairment at December 31, 1998.

F-21
59

NOTE 12--DERIVATIVE INSTRUMENTS

Interest Rate Swaps

The Company from time to time utilizes interest rate swaps which
synthetically alter the repricing characteristics of variable-rate debt interest
obligations, effectively allowing the Company to pay a fixed interest rate on a
portion of its debt, reducing its exposure to unfavorable variations in the
Prime or LIBOR rates charged on its debt.

At December 31, 1998, the Company was a party to one interest rate swap
agreement which it entered into in November 1998. Under the agreement, the
Company will pay a fixed rate of interest on the notional amount to the
counterparty and, in turn, the counterparty will pay the Company a rate of
interest on the notional amount based on a 3-month LIBOR rate. Net settlement
with the counterparty occurs quarterly and the swap arrangement expires in
November 2002. The fair value of this agreement at December 31, 1998 was
$22,000, as quoted by a major financial institution.

The following table presents, as of December 31, 1998, 1) the notional
amount of the agreement, 2) the fixed interest rate to be paid by the Company
and 3) the variable rate to be paid by the counterparty under the agreement (in
millions, except interest rate data):

EFFECTIVE PERIOD OF INTEREST RATE SWAP
----------------------------------------------
ELEVEN MONTHS
YEAR ENDING DECEMBER 31, ENDING
------------------------------ NOVEMBER 30,
1999 2000 2001 2002
---- ---- ---- -------------

Notional amount............................ $75 $75 $75 $75
Rate to be paid by the Company............. 5.125% 5.125% 5.125% 5.125%
3-month 3-month 3-month 3-month
Rate to be received by the Company......... LIBOR LIBOR LIBOR LIBOR

Forward Foreign Currency Exchange Agreements

The Company enters into transactions from time to time under which it
agrees to pay or receive amounts denominated in a currency other than the U.S.
Dollar. In order to mitigate the risk of unfavorable changes in the foreign
currency exchange rate, the Company may enter into forward foreign currency
exchange agreements.

At December 31, 1998, the Company was a party to one forward foreign
currency exchange agreement. Under the agreement, the Company received a
commitment from a U.S. financial institution under which the Company will
exchange Canadian dollars ("CAD") for U.S. Dollars ("USD") at a fixed exchange
rate. The fair value of the agreement at December 31, 1998, based on the
applicable closing exchange rate on that date, was $56,800. The following table
presents 1) the settlement date, 2) the amount the Company will pay in Canadian
dollars and 3) the contract exchange rate (in millions, except exchange rate
data):

FORWARD FOREIGN CURRENCY EXCHANGE AGREEMENT TO PAY CANADIAN DOLLARS
AND RECEIVE U.S. DOLLARS

Settlement date....................................... February 5, 1999
Amount the Company will pay in Canadian dollars....... $8.5
Exchange rate per agreement at date of maturity....... 1.52255 CAD per USD

F-22
60

NOTE 13--INCOME TAXES

The Company's provision for income taxes for the year ended December 31,
1998 consisted of the following (in thousands):

Current:
Federal................................................... $ 7,798
State..................................................... 2,086
-------
Total current.......................................... 9,884
-------
Deferred:
Federal................................................... 19,998
State..................................................... 2,125
-------
Total deferred......................................... 22,123
-------
Total provision for income taxes............................ $32,007
=======

Due to operating losses, the Company did not record a provision for income
taxes for the period from inception (October 9, 1997) to December 31, 1997.

The effective tax rate for the year ended December 31, 1998 differed from
the federal statutory rate as follows (dollars in thousands):

Tax provision computed at statutory rate.................... $19,880 35%
State taxes, net of federal benefit......................... 2,737 5
Compensation expenses related to equity issuances........... 6,060 11
Goodwill amortization....................................... 3,525 5
Other....................................................... (195) --
------- ---
Total tax expense...................................... $32,007 56%
======= ===

The principal components of deferred taxes at December 31, 1998 were as
follows (in thousands):

Deferred tax assets:
Allowance for credit losses............................... $ 731
Alternative minimum tax credit carryforward............... 2,605
Loss carryforwards........................................ 3,494
Other..................................................... 439
--------
Total deferred tax assets.............................. 7,269
--------
Deferred tax liabilities:
Lease revenue and related depreciation.................... (60,130)
Transfers of certain financing lease receivables not
recognized for tax purposes............................ (7,394)
Other..................................................... (6,267)
--------
Total deferred tax liabilities......................... (73,791)
--------
Net deferred tax liability............................. $(66,522)
========

The Company's ability to utilize net operating loss carryforwards and
alternative minimum tax credit carryforwards are subject to limitations under
Federal tax law. The Company's net operating loss carryforward of $9.2 million
at December 31, 1998 is due to expire at various dates through the year 2018.
Utilization of net operating loss carryforwards may be limited under certain
circumstances. The Company's alternative minimum tax credit carryforward of $2.6
million has no expiration date.

F-23
61

NOTE 14--STOCKHOLDERS' EQUITY

Common Stock

In connection with the organization and initial capitalization of
UniCapital Corporation, on October 9, 1997, the Company issued 4,000,000 shares
of Common Stock at $.05 per share to certain individuals who assisted the
Company in their capacity as consultants for aggregate consideration of
$200,000. In addition, the Company sold 1,276,250 additional shares of Common
Stock for prices ranging from $.05 to $3 per share between October 9, 1997 and
December 31, 1997 to consultants and investors for aggregate consideration of
$208,750, of which $128,750 was in the form of stock subscription notes
receivable. In connection with the sale of these shares, the Company recorded a
non-cash compensation charge of $2.1 million during 1997, representing the
excess of the estimated fair value of the shares issued over the consideration
received.

During 1998, prior to the Offering, the Company issued an additional
1,522,500 shares of Common Stock at prices ranging from $3 to $10 per share to
individuals serving as consultants to the Company, each of whom became an
employee of the Company upon consummation of the Offering, and certain other
stockholders, for aggregate consideration of $5.1 million, of which $3.8 million
was in the form of stock subscription notes receivable, and recorded a non-cash
compensation charge of $15.2 million representing the excess of the estimated
fair value of the shares issued over the consideration received. In addition,
the Company issued an option to a consultant to the Company, who became an
employee of the Company upon consummation of the Offering, to purchase 200,000
shares of Common Stock at $3 per share, which expires on January 31, 2008. As a
result, the Company recorded a non-cash compensation charge in the amount of
$2.1 million reflecting the compensatory value of the option.

In May 1998, in connection with the Offering, the Company sold 28,000,000
shares of Common Stock to the public at $19 per share. The net proceeds to the
Company from the Offering, after deducting underwriting commissions and other
offering costs, were $488.6 million. The Company also issued 13,340,901 shares
of Common Stock, valued at $228.1 million, to the former stockholders of the
Founding Companies. Subsequent to the Offering, in connection with the
acquisition of five additional companies, the Company issued 3,293,888 shares of
Common Stock valued at $55.3 million.

Preferred Stock

The Company's Board of Directors is authorized to issue up to 20,000,000
shares of Preferred Stock without stockholder approval. At the time of issuance,
the Board of Directors would establish, subject to any limitations prescribed by
law, the rights, privileges and restrictions associated with the Preferred
Stock, including voting rights, dividend rights, conversion rights, redemption
privileges and liquidation preferences. At December 31, 1998, no shares of
Preferred Stock had been issued.

Stock Repurchase Program

During 1998, the Company's Board of Directors authorized a stock repurchase
program, under which the Company may purchase up to 5 million shares of its
outstanding Common Stock. Such purchases may be made at the Company's option
from time to time in open market transactions at prevailing prices or through
privately negotiated transactions. As of December 31, 1998, the Company had not
purchased any of its shares under the stock repurchase program.

F-24
62

Dividend Restrictions

Under the Senior Credit Facilities agreements discussed in Note 10 and Note
11, the amount of dividends that the Company may declare must be approved by the
financial institution providing those credit facilities.

NOTE 15--STOCK OPTIONS AND INCENTIVE COMPENSATION

The Company may, from time to time, grant stock options under three stock
option plans. Vesting periods and exercise prices for stock option grants are
determined at the discretion of management. Generally, stock options vest
ratably over 4 years from the date of grant, expire 10 years from the date of
grant and carry an exercise price equal to the market value of the Company's
Common Stock at the date of grant. During 1998, management issued certain stock
options which were immediately exercisable and issued stock options with
exercise prices less than the market value of the Common Stock at the date of
grant.

1998 Long-Term Incentive Plan

Under the 1998 Long-Term Incentive Plan, options to acquire shares of
Common Stock may be granted to employees, directors (other than non-employee
directors), consultants and advisors of the Company. The maximum number of
shares of Common Stock which may be awarded under this plan is 15% of the total
number of shares of Common Stock outstanding from time to time.

1997 Executive Non-Qualified Stock Option Plan

Under the 1997 Executive Non-Qualified Stock Option Plan, options to
acquire shares of Common Stock may be granted to employees, directors,
consultants and advisors of the Company. The maximum number of shares of Common
Stock which may be awarded under the plan is 500,000.

1998 Non-Employee Directors' Stock Plan

Under the 1998 Non-Employee Directors' Stock Plan, the Company may grant
options to acquire shares of Common Stock to non-employee directors of the
Company. The maximum number of shares of Common Stock which may be awarded under
the plan is 500,000.

Stock Option Data

The table below presents the number of options and the weighted-average
exercise price of options outstanding at the beginning and end of the year and
options granted, exercised and forfeited during the year ended December 31,
1998.

WEIGHTED-
AVERAGE
EXERCISE
SHARES PRICE
--------- ---------

Outstanding at the beginning of the period.............. -- $ --
Granted during the period with an exercise price equal
to market price at the date of grant.................. 5,037,396 15.54
Granted during the period with an exercise price less
than market price at the date of grant................ 200,000 3.00
Exercised during the period............................. -- --
Forfeited during the period............................. (6,250) 19.00
--------- ------
Outstanding at the end of the period.................... 5,231,146 $15.06
========= ======

F-25
63

During 1998, the Company granted 1,445,500 options that were immediately
exercisable. All remaining options vest ratably over 4 years from the date of
grant. All options expire 10 years from the date of grant.

The table below presents the weighted-average fair value at grant date of
options granted during the year ended December 31, 1998. Fair values are
presented separately for options with exercise prices equal to the stock's
market price at the date of grant and options with exercise prices less than the
stock's market price at the date of grant. The following weighted-average
assumptions were used in calculating fair values at grant date using the
Black-Scholes option pricing model: dividend yield of 0%, expected volatility of
40%, risk free interest rate of 5.70% and an expected life of 4 years.

OPTIONS WITH OPTIONS WITH
EXERCISE PRICE EXERCISE PRICE
EQUAL TO LESS THAN
MARKET AT DATE MARKET AT DATE
OF GRANT OF GRANT
-------------- --------------

Weighted-average fair value at grant date of an
option granted during the year................. $6.04 $10.92
===== ======

The following table presents the number of options, weighted-average
remaining contractual life and weighted-average exercise price of all options
outstanding at December 31, 1998. In addition, the table presents the number of
options and the weighted-average exercise price of options that were exercisable
at December 31, 1998. In order to facilitate an assessment of the number and
timing of additional shares of Common Stock that may be issued, options in the
table have been segregated based on ranges of exercise prices.

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING CONTRACTUAL LIFE PRICE OUTSTANDING PRICE
-------- ----------- ----------------- --------- ----------- ---------

$3.00 to $5.31 379,430 9.40 years $ 4.00 207,500 $ 3.08
$6.13 to $6.94 1,018,193 9.69 years 6.28 -- --
$7.31 to $10.38 47,500 9.90 years 8.26 -- --
$15.88 to $18.81 619,500 9.38 years 16.64 50,000 16.00
$19.00 3,166,523 9.30 years 19.00 1,188,000 19.00
--------- ---------
$3.00 to $19.00 5,231,146 9.40 years $15.06 1,445,500 $16.61
========= =========

SFAS 123 Pro Forma Disclosure

The Company has elected the intrinsic value method under APB Opinion No. 25
to account for its employee stock options and similar equity instruments. Had
compensation expense for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method

F-26
64

prescribed in SFAS 123, the Company's net income and earnings per share for the
year ended December 31, 1998 would have been reduced to the pro forma amounts
indicated below:

Net income
As reported............................................... $24,793
Pro forma................................................. $17,186
Basic earnings per share
As reported............................................... $ 0.73
Pro forma................................................. $ 0.51
Diluted earnings per share
As reported............................................... $ 0.72
Pro forma................................................. $ 0.50

For purposes of calculating compensation expense in accordance with SFAS
123 for option grants during the year ended December 31, 1998, the fair value of
each option grant was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions: dividend
yield of 0%, expected volatility of 40%, risk free interest rate of 5.70% and an
expected life of 4 years.

NOTE 16--EARNINGS PER SHARE

The following table presents a reconciliation of the numerators and the
denominators of the basic and diluted earnings (loss) per share computations for
the years ended December 31, 1998 and 1997 (in thousands, except share data):

YEAR ENDED DECEMBER 31, 1998
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------

Basic EPS:
Income available to common stockholders... $24,793 33,841,448 $ 0.73
======
Effect of dilutive securities:
Stock options............................. 175,767
Contingently issuable shares.............. 336,499
------- ----------
Diluted EPS:
Income available to common stockholders... $24,793 34,353,714 $ 0.72
======= ========== ======

YEAR ENDED DECEMBER 31, 1997
---------------------------------------
LOSS SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------

Basic EPS:
Loss available to common stockholders..... $(2,137) 1,319,063 $(1.62)
======
Effect of dilutive securities:
Stock options............................. --
Contingently issuable shares.............. --
------- ----------
Diluted EPS:
Loss available to common stockholders..... $(2,137) 1,319,063 $(1.62)
======= ========== ======

F-27
65

The following table presents the number and the weighted average exercise
price of anti-dilutive options that were excluded from the calculation of
diluted earnings per share for the year ended December 31, 1998:

1998
----

Number of options........................................... 3,810,507
Weighted average exercise price............................. $18.57

NOTE 17--SEGMENT INFORMATION

Operating Segments

In accordance with Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information", the Company has four reportable operating segments, which have
been defined by management based primarily on the nature of the products and
services of each segment. The first segment includes those operating companies
that provide leasing and structured financing for the acquisition of commercial
aircraft, or the "Air Group". The second segment includes the Company's
subsidiary that provides leasing and financing services for the acquisition of
commercial aircraft engines, or the "Aircraft Engine Group". The third segment
includes the operating companies that provide leasing and financing for
equipment generally with fair values over $250 thousand, or the "Technology and
Finance Group". The fourth segment includes the operating companies that provide
leasing and financing for equipment generally valued at $250 thousand or less,
or the "Business Credit Group". Equipment leased or financed by subsidiaries in
the Technology and Finance Group and the Business Credit Group includes computer
and telecommunications equipment, construction and manufacturing equipment,
office equipment, tractor trailers, printing equipment, car washes, petroleum
retail equipment and vending machines.

Corporate Division

The Company maintains a corporate headquarters and a lease servicing
subsidiary which are combined within the "Corporate Division". The Corporate
Division does not generate any significant revenues or maintain any significant
assets. Expenses recorded by the Corporate Division relate primarily to
administrative and management costs incurred in supporting and managing
subsidiary activities and costs incurred in providing lease servicing for leases
acquired, originated or sold by the Company's subsidiaries. Additional Corporate
Division expenses reflect the costs of public reporting and investor relations.

Certain expenses initially recorded by the Corporate Division, such as
interest expense, bank fees and payroll service fees, are allocated to its
operating segments based on management's estimates of certain utilization
factors such as credit facility utilization, compensation burdens, etc. The
revenue and expense balances for the Corporate Division in the tables presented
below reflect public company costs and revenue and expense items recorded by the
lease servicing subsidiary that relate to transactions with third parties. In
addition, selling, general and administrative expense presented in the table
below for the Corporate Division for the year ended December 31, 1998 includes
non-cash compensation charges recorded by the Company totaling $17.3 million as
discussed in Note 14.

Segment Financial Information

The accounting policies of the Air Group, Aircraft Engine Group, Technology
and Finance Group, Business Credit Group and the Corporate Division are the same
as those described in the summary of significant accounting policies in Note 2.
Additionally, the segment

F-28
66

information below reflects the elimination of significant intercompany accounts
and transactions.

The following table presents selected financial information for the
Company's reporting segments for the year ended December 31, 1998 (in
thousands):

TECHNOLOGY
AIRCRAFT AND BUSINESS
AIR ENGINE FINANCE CREDIT CORPORATE
GROUP GROUP GROUP GROUP DIVISION CONSOLIDATED
-------- -------- ---------- -------- --------- ------------

Finance income from
direct financing and
sales-type leases...... $ -- $ -- $ 23,312 $ 6,715 $ -- $ 30,027
Rental income from
operating leases....... 39,070 439 28,106 388 -- 68,003
Sales of equipment....... 267,120 36,320 59,261 2,605 -- 365,306
Gain on sale of leases... -- -- 10,032 13,830 -- 23,862
Fees, commissions and
remarketing income..... 1,285 -- 11,993 1,585 776 15,639
Interest and other
income................. 4,205 7 1,904 969 1,008 8,093
-------- -------- -------- -------- -------- ----------
Total revenues...... 311,680 36,766 134,608 26,092 1,784 510,930
Cost of operating
leases................. 11,773 112 15,818 138 -- 27,841
Cost of equipment sold... 250,526 19,441 46,221 2,195 -- 318,383
Interest expense......... 14,842 681 14,276 2,924 2,730 35,453
Selling, general and
administrative
expenses............... 5,704 1,326 26,483 8,626 21,208 63,347
Goodwill amortization.... 1,568 1,994 5,344 1,038 175 10,119
-------- -------- -------- -------- -------- ----------
Total expenses...... 284,413 23,554 108,142 14,921 24,113 455,143
Income (loss) from
operations............. 27,267 13,212 26,466 11,171 (22,329) 55,787
Equity in income from
minority-owned
affiliates............. 1,013 -- -- -- -- 1,013
-------- -------- -------- -------- -------- ----------
Income (loss) before
taxes.................. $ 28,280 $ 13,212 $ 26,466 $ 11,171 $(22,329) $ 56,800
======== ======== ======== ======== ======== ==========
Net investment in direct
financing and
sales-type leases...... $ -- $ -- $310,771 $ 60,148 $ 2,194 $ 373,113
======== ======== ======== ======== ======== ==========
Equipment under operating
leases, net............ $358,699 $ 6,401 $ 64,841 $ 288 $ -- $ 430,229
======== ======== ======== ======== ======== ==========
Investment in equity
method investees....... $ 6,886 $ -- $ 6,604 $ -- $ -- $ 13,490
======== ======== ======== ======== ======== ==========
Total assets............. $542,879 $141,796 $782,977 $150,699 $ 51,172 $1,669,523
======== ======== ======== ======== ======== ==========
Total debt............... $248,642 $ -- $201,828 $ 20,888 $195,964 $ 667,322
======== ======== ======== ======== ======== ==========

Financial information for the period from inception (October 9, 1997) to
December 31, 1997 includes certain organizational costs incurred by the
Corporate Division. The net loss reported by the Company for the period from
inception to December 31, 1997 was $2.1 million, which was comprised of non-cash
compensation charges for certain equity issuances as discussed in Note 14.

Long-lived assets, other than investments, goodwill and deferred tax
assets, include equipment under operating leases, equipment held for sale or
lease and property and

F-29
67

equipment. The following table presents a summary of expenditures for long-lived
assets by segment for the year ended December 31, 1998 (in thousands):

TECHNOLOGY
AIRCRAFT AND BUSINESS
AIR ENGINE FINANCE CREDIT CORPORATE
GROUP GROUP GROUP GROUP DIVISION CONSOLIDATED
-------- -------- ---------- -------- --------- ------------

Expenditures for long-lived
assets.................... $565,253 $38,167 $165,455 $10,545 $5,378 $784,798
======== ======= ======== ======= ====== ========

Enterprise-Wide Disclosures

In addition to the segment information provided above, SFAS 131 requires
disclosure of the following: (a) revenues for each product and service or each
group of similar products and services, (b) revenues and long-lived assets
segregated by country of domicile and all foreign countries, and (c) certain
information regarding external customers which represent a source of 10% or more
of total revenues. With regard to item (a), the Company's management believes
that the operating segment information provided above reflects the presentation
of revenue for the Company's groups of similar products and services. With
regard to item (b), total long-lived assets, which includes equipment under
operating leases, utilized outside of the United States totaled $279.6 million
at December 31, 1998 and total revenue recorded during 1998 from sources outside
of the United States totaled $126.3 million. Equipment under operating leases
utilized, and revenue derived from sources, outside of the United States relate
primarily to leasing and sales of aircraft. No significant portion of these
assets or revenues are attributable to any individual foreign country. With
regard to item (c), the Air Group recorded revenues of approximately $137
million in connection with sales of equipment during 1998 to a single customer
domiciled in the United States.

NOTE 18--NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities", which is effective for fiscal years
beginning after June 15, 1999. The Company plans to adopt SFAS 133 beginning in
the year 2000. SFAS 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities and it requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The accounting
for changes in the fair value of such derivatives will vary based on the
intended use of the derivative. Adoption of SFAS 133 is not expected to have a
significant impact on the Company's results of operations, cash flows or
financial position.

NOTE 19--COMMITMENTS AND CONTINGENCIES

Recourse Provisions

The Company finances certain lease originations through limited recourse
and non-recourse debt. As part of the limited recourse arrangements, the Company
has provided limited guarantee provisions to certain lenders providing recourse
up to predetermined limits. The Company estimates that its maximum recourse
exposure to credit risk under these contracts was not significant at December
31, 1998.

The Company from time to time transfers financing lease receivables to
unrelated third parties in transactions accounted for as sales under SFAS 125.
In connection with certain transfers, the Company provides recourse to the
transferee for certain lessee defaults up to an amount not exceeding 10% of the
transfer price, which declines over the term of the leases

F-30
68

transferred. Management considers this recourse exposure in the measurement of
the sale transaction and in the periodic determination of the adequacy of the
allowance for credit losses. At December 31, 1998, the Company estimates the
maximum aggregate recourse under these arrangements to be approximately $20.7
million.

Commitments to Extend Credit

The Company, from time to time, may commit to extend credit to its
customers in the normal course of business. Commitments to extend credit are
agreements to lend to a customer, as long as there is no violation of any
condition established in the contract or lease, and generally have fixed
expiration dates or other termination clauses. Such commitments may also provide
for the payment of a fee to the Company. The amount of collateral obtained by
the Company upon extension of credit is based on management's credit evaluations
of the counterparty. The Company evaluates each customer's creditworthiness on a
case by case basis. At such time as a commitment is made, the collateral value
supporting such commitment is generally at least equal to or greater than the
value of the commitment.

Commitments are generally expected to be drawn upon and, accordingly,
represent future cash requirements. The Company generally expects to fund any
such commitments from its unused credit lines, the sale of receivables or
working capital. Collateral obtained includes the equipment financed and may
include other property, plant and equipment, as well as personal guarantees.

Litigation

The Company is involved in various legal actions from time to time arising
out of activities conducted in the normal course of business. In the opinion of
the Company's management in consultation with legal counsel, the resolution of
these matters will not have a significant effect on the Company's financial
condition, results of operations or cash flows.

Operating Leases

The Company has entered into various operating lease agreements, primarily
for office space. Rent expense under all operating leases for the year ended
December 31, 1998 was $2.0 million. As of December 31, 1998, future minimum
annual lease payments under non-cancelable operating leases were as follows (in
thousands):

YEAR ENDED DECEMBER 31,
- - -----------------------

1999................................................ $ 3,595
2000................................................ 3,314
2001................................................ 3,154
2002................................................ 2,988
2003................................................ 2,693
Thereafter.......................................... 4,662
-------
Total.......................................... $20,406
=======

NOTE 20--RELATED PARTY TRANSACTIONS

During 1998, in connection with certain acquisitions, the Company acquired
options to purchase additional entities owned by former stockholders of the
Company's subsidiaries. In June 1998, the Company acquired Jumbo Jet (and
related entities) (see Note 3) under such an option from a former stockholder of
one of the Founding Companies that became a member of the Company's executive
management prior to the acquisition. At December 31, 1998, the Company held
similar options to purchase other entities from former stockholders of its
subsidiaries.

F-31
69

Two of the Company's subsidiaries rent office space from the former
stockholders of those subsidiaries. One of the former stockholders served as a
director of the Company during 1998 and both former stockholders currently hold
shares of the Company's Common Stock. Management believes that the terms of the
leases are no less favorable than those the Company could have obtained from an
unaffiliated third party. Rent expense recorded under these leases during the
year ended December 31, 1998 was not significant.

At December 31, 1998, certain former stockholders of the Company's
subsidiaries were under employment agreements with the Company. These employment
agreements ranged from 2 years to 3 years.

NOTE 21--CONCENTRATION OF CREDIT RISK

A substantial portion of the Company's leases are concentrated in certain
industries, including the commercial aircraft, data processing and
telecommunications industries. To the extent that the economic or regulatory
conditions prevalent in such industries change, the lessees' ability to honor
their lease obligations may be adversely impacted. Such risk is mitigated, in
part, through the Company's deposit and collateral requirements under lease
arrangements and its continuous monitoring of exposure to credit losses.

NOTE 22--SUBSEQUENT EVENTS (UNAUDITED)

On March 10, 1999, the Company entered into a letter of intent, which was
amended on March 25, 1999, to purchase a portfolio of nine commercial aircraft
subject to net operating leases for approximately $312 million. The Company
intends to purchase these aircraft with approximately $39 million in cash and
approximately $278 million in a combination of seller financing and third-party
financing for which the Company is currently negotiating. The letter of intent
is subject to satisfactory completion of due diligence procedures prior to April
9, 1999. This transaction is expected to close by June 30, 1999. Upon
consummation of this transaction, the seller is obligated to offer to sell an
additional $400 million in commercial aircraft to the Company prior to the end
of 1999.

On March 19, 1999, the Company entered into a binding letter of intent
whereby the Company would acquire the equity interest in a portfolio of 34
commercial aircraft subject to net operating leases for approximately $36
million in net cash investment, subject to the successful consummation of
securitization financing for the balance of the approximate $1.1 billion
purchase price. This transaction is expected to close by April 30, 1999.

F-32
70

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------

2.11 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, VC Acquisition Corp.,
Varilease Corporation, and the Stockholders of such company
listed on the Signature Page, dated as of February 14, 1998.
(1)
2.12 Amended and Restated Agreement and Plan of Contribution by
and among UniCapital Corporation, WAG Acquisition Corp., The
Walden Asset Group, Inc. and the Stockholders of such
company listed on the Signature Page, dated as of February
14, 1998. (1)
2.13 Agreement and Plan of Merger by and among UniCapital
Corporation, USTEC Acquisition Corp., United States Turbine
Engine Corp., James K. Neff, Carmit P. Neff and Randall P.
Fiorenza, dated as of July 27, 1998. (2)
2.14 Agreement and Plan of Reorganization by and among UniCapital
Corporation, SFC Acquisition Corp., Saddleback Financial
Corporation, Warren E. Emard and Stuart Kennedy, dated as of
July 28, 1998. (3)
2.15 Agreement and Plan of Reorganization by and among UniCapital
Corporation, JRI Acquisition Corp., HLC Financial, Inc.,
Lawrence P. Ciuffitelli and Soron Litman, dated as of July
28, 1998. (4)
2.16 Agreement and Plan of Reorganization by and among UniCapital
Corporation, MYC Acquisition Corp., The Myerson Companies,
Inc., Donald A. Myerson and Virginia Milke, dated as of
August 7, 1998. (5)
3.01 Certificate of Incorporation of UniCapital Corporation, as
amended. (1)
3.02 Bylaws of UniCapital Corporation. (1)
4.01 Credit Agreement by and among UniCapital Corporation,
NationsBank, National Association and the Lenders party
thereto, dated as of June 10, 1998. (6)
4.02 Transfer and Administration Agreement among Kitty Hawk
Funding Corporation, UCP Qualifying SPE 1998-1 Limited
Partnership, UCP Operating SPE 1998-1 Limited Partnership,
Portfolio Financial Servicing Company, L.P. and NationsBank,
N.A. dated as of July 20, 1998. (6)
4.03 Loan and Security Agreement among Kitty Hawk Funding
Corporation, UCP Borrowing SPE 1998-1 Limited Partnership,
Portfolio Financial Servicing Company, L.P. and Nations
Bank, N.A. dated as of July 10, 1998. (6)
4.04 Credit Agreement by and among UniCapital Corporation, First
Security Bank, National Association, as Trustee,
NationsBank, National Association, as Agent and as Lender,
and the Lenders party thereto, dated as of June 10, 1998. *
4.05 Credit Agreement by and among UniCapital Corporation, First
Security Bank, National Association, as Trustee, Lehman
Commercial Paper Inc., as Agent and as Lender, and the
Lenders party thereto, dated as of October 6, 1998. *
10.01 Employment Agreement between UniCapital Corporation and
Theodore J. Rogenski, effective as of May 20, 1998. (7)
10.02 Employment Agreement between UniCapital Corporation and
Bruce E. Kropschot, effective as of May 20, 1998. (7)
10.03 Employment Agreement between UniCapital Corporation and
Martin Kalb, effective as of May 20, 1998. (7)
10.04 Employment Agreement between UniCapital Corporation and
Steven E. Hirsch, effective as of May 20, 1998. (7)

EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------

10.05 UniCapital Corporation 1997 Executive Non-Qualified Stock
Option Plan. (1)
10.06 Employment Agreement between UniCapital Corporation and
Edward A. Jaeckel, effective as of February 1, 1999. *
10.07 UniCapital Corporation 1998 Long-Term Incentive Plan. (1)
10.08 UniCapital Corporation 1998 Non-Employee Directors' Stock
Plan. (1)
10.09 UniCapital Corporation 1998 Employee Stock Purchase Plan.
(1)
10.10 Employment Agreement between UniCapital Corporation and
Robert J. New, effective as of May 20, 1998. (7)
10.11 Employment Agreement between UniCapital Corporation and
Jonathan New, effective as of May 20, 1998. (7)
10.11(a) First Amendment to Employment Agreement between UniCapital
Corporation and Jonathan New, dated September 16, 1998. *
10.12 Employment Agreement between UniCapital Corporation and
Stuart L. Cauff, effective as of May 20, 1998. (7)
21.01 Subsidiaries.*
23.01 Consent of PricewaterhouseCoopers LLP.*

- - -------------------------
* Filed herewith.
(1) Incorporated by reference to exhibit with corresponding number filed with
Amendment No. 1 to the registrant's Registration Statement on Form S-1 (File
No. 333-46603), as filed with the Commission on April 3, 1998.
(2) Incorporated by reference to Exhibit 2.01 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(3) Incorporated by reference to Exhibit 2.02 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(4) Incorporated by reference to Exhibit 2.03 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(5) Incorporated by reference to Exhibit 2.04 to the Company's Current Report on
Form 8-K dated July 27, 1998 (File No. 001-13973).
(6) Incorporated by reference to exhibit with corresponding number filed with
the Company's Form 10-Q as filed with the Commission on August 14, 1998.
(7) Incorporated by reference to the exhibit with corresponding number filed
with Amendment No. 1 to the Company's Registration Statement on Form S-1
(File. No. 333-53779), as filed with the Commission on June 9, 1998.