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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 1-4976
(COMPANY
LOGO) USL CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OF INCORPORATION)
733 Front Street
San Francisco, California
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
94-1360891
(I.R.S. EMPLOYER IDENTIFICATION NO.)
94111
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 627-9000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS
8 3/4% Senior Notes due 2001
NAME OF EACH EXCHANGE ON WHICH REGISTERED
American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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. NA
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
As of March 1, 1994, the Registrant had outstanding 10 shares of Common
Stock, all of which were owned by Ford Holdings, Inc.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
J(1)(a) AND (b), AND IS THEREFORE FILING THIS FORM 10-K WITH REDUCED DISCLOSURE
FORMAT.
PAGE 1 OF 111 SEQUENTIALLY
NUMBERED PAGES. EXHIBIT
INDEX ON PAGE 43.
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TABLE OF CONTENTS
PART I
PAGE
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Item 1. Business.................................................................... 3
Item 2. Properties.................................................................. 13
Item 3. Legal Proceedings........................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders*
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder Matters....... 14
Item 6. Selected Financial Data*
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 14
Item 8. Financial Statements and Supplementary Data................................. 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.................................................................. 15
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company*
Item 11. Executive Compensation*
Item 12. Security Ownership of Certain Beneficial Owners and Management*
Item 13. Certain Relationships and Related Transactions*
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............ 16
Signatures............................................................................ 19
Exhibits Index........................................................................ 43
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* Not required under General Instruction J to Form 10-K.
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USL CAPITAL CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
PART I
ITEM L. BUSINESS
USL Capital Corporation (formerly United States Leasing International,
Inc.) ("Company"), the Registrant, provides financing to commercial and
governmental entities principally in the United States, including:
-Business Equipment Financing--leasing and financing of office and
other business and commercial equipment directly with customers and
through vendor programs;
-Transportation and Industrial Financing--leasing and financing of
large-balance transportation equipment (principally commercial
aircraft) and industrial and energy facilities;
-Fleet Services--leasing and managing of commercial automobile, van,
and light truck fleets;
-Municipal and Corporate Financing--financing of essential-use
equipment for state and local governments, purchasing of industrial
development and housing bonds, and investing in publicly-traded and
privately-placed preferred stocks and senior and subordinated debt of
public and private companies;
-Real Estate Financing--mortgage financing of income-producing real
estate, including apartments, office buildings, shopping centers, and
warehouses; and
-Rail Services--full-service leasing to industrial shippers and
railroads.
The Company, a Delaware corporation, is a wholly owned subsidiary of Ford
Holdings, Inc. ("Ford Holdings") since October 1, 1989, on which date all of the
Company's capital stock was transferred by Ford Motor Company ("Ford") to Ford
Holdings, a then newly formed Delaware corporation. All of the outstanding
common stock of Ford Holdings is owned directly or indirectly by Ford. The
Company was originally organized as a California corporation on October 1, 1956,
and was purchased by Ford on November 18, 1987. The Company changed its name to
USL Capital Corporation on November 12, 1993.
The mailing address of the Company's executive offices is 733 Front Street,
San Francisco, California 94111. The telephone number of such offices is (415)
627-9000.
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KEY DATA
The following table sets forth certain data with respect to the Company's
business for the periods ending on and as of the dates indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Revenue.................................................... $ 564.5 $ 501.4 $ 500.2
Income before taxes........................................ 122.2 89.1 86.1
Net income................................................. 77.1 56.7 54.8
Additions to earning assets................................ 2,045.1 1,830.5 1,654.9
Total earning assets....................................... 4,606.6 3,584.5 2,727.2
Business unit earning assets (% of total)
Business Equipment Financing............................... 32% 39% 48%
Transportation and Industrial Financing.................... 24 21 16
Fleet Services............................................. 10 12 12
Municipal and Corporate Financing.......................... 16 10 9
Real Estate Financing...................................... 9 9 9
Rail Services.............................................. 9 9 6
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Total.............................................. 100% 100% 100%
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BUSINESS UNITS
The Company operates exclusively in the commercial finance segment of the
financial services industry. The Company serves its commercial customers though
six business units, each of which is described in greater detail below.
Business Equipment Financing
Through its Business Equipment Financing unit, the Company finances, under
finance leases, conditional sale agreements, operating leases, and
collateralized loans, the acquisition and use of equipment for business,
professional, industrial, and governmental users throughout the United States.
The types of equipment financed include computers and computer peripherals,
super-computers, office equipment, office furnishings, telecommunications,
medical, transportation, manufacturing, and other kinds of equipment. This
financing is sometimes offered in conjunction with the manufacturer of the
equipment, but in other cases is provided directly to the end user of the
equipment. Financing transactions generally cover equipment having an aggregate
cost between $250,000 and $5 million, with an average transaction size of
approximately $600,000. These financing services are marketed through 19 offices
located throughout the United States.
The Company does not manufacture or sell under its own label any of the
equipment which it leases. It only purchases equipment which a particular lessee
has committed to lease, and does not take order positions or make purchases in
advance of such a binding agreement by a lessee to lease the equipment. All
lessees are obligated to maintain the equipment and reimburse the Company for
any taxes paid thereon. Any casualty losses of equipment are covered either by
insurance carried by the lessee as required under the lease or by lessee
self-insurance when the Company deems the lessee's credit to be satisfactory.
Upon the expiration of leases, the Company either renews the leases with the
lessees, sells the leased equipment to the lessees, or remarkets the equipment.
The Company also acquires from manufacturers pools of leases and their
underlying equipment. The manufacturers may retain an economic interest in the
successful operation of each pool and, in exchange, the manufacturers maintain
the equipment, remarket it after the expiration of the initial term of the
leases, and manage the relationship with the lessees. In other transactions, the
lessee is obligated to maintain the equipment and the Company manages the
relationship with the lessees, bills and collects, and remarkets the equipment.
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5
The Company also acquires equipment and related leases originated by other
lessors and, to a lesser extent by brokers, although the purchase of
broker-originated business has declined significantly over the past few years.
On the majority of such acquired transactions, the Company bills and collects,
manages the relationships with the lessees and remarkets the equipment.
The following table sets forth certain data with respect to the Business
Equipment Financing unit for the periods ending on and as of the dates
indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Additions to earning assets................................ $ 622.2 $ 559.6 $ 685.5
Total earning assets....................................... 1,465.8 1,395.3 1,328.7
Type of earning assets (% of total)
Finance leases............................................. 83% 85% 75%
Operating leases........................................... 13 11 13
Other...................................................... 4 4 12
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Total.............................................. 100% 100% 100%
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Transportation and Industrial Financing
Through its Transportation and Industrial Financing unit, the Company at
the present time principally owns, leases, finances and remarkets commercial
aircraft, and to a lesser extent leases and finances other types of
transportation, energy and industrial equipment and facilities. Aircraft, other
equipment and facilities are leased and financed under single investor finance
leases, leveraged leases, operating leases and collateralized loans. Under all
leases the lessee is responsible for all taxes, maintenance and insurance. The
majority of this business is acquired through investment bankers and lessee
advisors, and the balance through direct lessee contact.
The Company owns a 23% interest in, and through a wholly-owned subsidiary
is the general partner of, Airlease Ltd., a California Limited Partnership
("Airlease Ltd."). Assets were $114.0 million at December 31, 1993 compared with
$112.3 million at December 31, 1992. The limited partnership units are listed on
the New York Stock Exchange. Airlease Ltd. engages in the ownership and leasing
of commercial aircraft to airlines and a freight carrier.
At December 31, 1993, the Company's aggregate commercial aircraft earning
assets in this unit (including its interest in those aircraft owned by Airlease
Ltd.) were $911.2 million. Of the aircraft leased and financed by the Company at
December 31, 1993, 50% of the Company's aircraft earning assets were leased to
or financed for commercial airlines, with the remainder leased primarily to a
freight carrier and aircraft manufacturers. One aircraft is on lease to a
bankrupt airline which expects to emerge from bankruptcy in the summer of 1994.
Approximately 98% of the aircraft owned or financed by the Company (measured by
their book value) were in compliance with Stage III noise regulations (the most
stringent level) of the Aviation Safety and Capacity Act of 1990.
This business unit also manages a portfolio of leveraged leases, single
investor leases and loans in which Ford Credit holds an interest. These managed
leases cover rail cars and locomotives, electric power generation and other
facilities, marine vessels, and other types of assets. The business unit also
acts as agent for Trust Company for USL, Inc., a wholly owned subsidiary, which
is owner trustee for a portfolio of leveraged leases it arranged for outside
institutional investors prior to 1985. As the remarketing agent for these
institutional investors and Ford Credit, the Company participates in the
residual proceeds from the disposition of the equipment at the termination of
some of these leases.
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The following table sets forth certain data with respect to the
Transportation and Industrial Financing business unit for the periods ending on
and as of the dates indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Additions to earning assets.................................. $ 320.7 $345.6 $270.9
Total earning assets......................................... 1,096.8 767.2 429.2
Type of Equipment (% of earning assets)
Stage III aircraft........................................... 81% 88% 83%
Stage II aircraft............................................ 1 3 6
Non-aircraft equipment....................................... 18 9 11
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Total................................................ 100% 100% 100%
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Fleet Services
Through its Fleet Services unit, the Company is engaged in the leasing of
automotive, van, and light truck fleets for commercial purposes. Fleet Services
also provides management services for a substantial portion of its leased
vehicles, and for certain of the vehicles owned by its customers. These leasing
and management services are marketed to commercial customers through 12 offices
located throughout the United States. On December 31, 1993, the Company sold its
20% equity interest in AT&T Automotive Services, Inc. to AT&T Capital
Corporation and terminated its joint venture with AT&T Capital Corporation.
However, Fleet Services entered into a new long-term agreement under which it
continues to provide fleet management services for subsidiaries and affiliates
of American Telephone and Telegraph Company. At December 31, 1993, there were
approximately 14,000 vehicles for which the Company provided such services.
At December 31, 1993, Fleet Services had (in addition to the vehicles it
services for AT&T Capital Corporation) an aggregate of approximately 71,600
vehicles in fleets which it leased and managed or managed only, as compared with
approximately 71,500 vehicles at December 31, 1992.
Certain of Fleet Services' vehicles are leased under "open-end finance"
leases in which the Company bears no risk (other than the lessee's credit) on
the resale price of the vehicles at the expiration of the lease. The majority of
the vehicles are leased under "modified open-end" leases, in which the Company,
although not assured of full recovery of the vehicle's cost from rental and
resale proceeds, is at risk for a relatively small portion of such cost, which
portion is expected to be substantially below anticipated resale proceeds. Other
vehicles are leased under "closed-end" leases, in which the Company's full
recovery of the vehicle's cost from rental and resale proceeds is dependent upon
the Company's realization of anticipated residual value. Additionally, certain
of the closed-end leases (less than 9% of all leased vehicles at December 31,
1993) contain maintenance provisions which require that the Company bear the
maintenance expense for the leased vehicle in consideration of a higher lease
rate.
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7
The following table sets forth certain data with respect to the Fleet
Services business unit for the periods ending on and as of the dates indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Additions to earning assets.................................... $385.9 $389.3 $329.4
Total earning assets*.......................................... 443.7 426.0 327.2
Type of earning assets (% of total)
Modified open-end leases....................................... 60% 48% 48%
Open-end finance leases........................................ 17 22 17
Closed-end leases.............................................. 7 11 14
Other.......................................................... 16 19 21
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Total.................................................. 100% 100% 100%
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* During 1993, approximately $103 million in earning assets were securitized and
sold, which together with earning assets securitized and sold in 1991 and
1992, resulted in a balance of such securitized assets at December 31, 1993 of
approximately $172 million, which are not included in total earning assets.
See Borrowing and Other Sources of Funds on page 13.
The increase in modified open-end leases reflects the shift to a lease
structure that is more attractive to the customer. This "modified" structure
permits, for 2-year contracts, operating lease treatment for the customers and
finance lease treatment for the Company.
Under substantially all leases, the lessee is obligated to provide
insurance against public liability and property damage, to reimburse the Company
for all taxes relating to the vehicles or the lease and, except in leases with a
maintenance provision, to maintain, at the lessee's expense, the vehicles in
good operating condition.
Management services are generally computerized and provide monthly cost
analyses of each vehicle in service, allowing customers' fleet operating costs
to be closely controlled. Programs are tailored to meet special customer needs
and many options are offered including, for example, guaranteed maintenance
programs, assistance in selection of automobile units, and analysis of insurance
coverage.
Municipal and Corporate Financing
Through its Municipal and Corporate Financing business, the Company
arranges and carries on its books municipal financings for state and local
governments of essential-use equipment. This business also invests in
publicly-traded and privately-placed preferred stocks and senior and
subordinated debt of public and private companies, principally utilities and
manufacturing companies. These securities are purchased, after extensive due
diligence by the Company, through investment banking intermediaries, either at
the initial offering or on the open market. Approximately 70% of these corporate
securities are currently rated at investment grade.
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The following table sets forth certain data with respect to the Municipal
and Corporate Financing business unit for the periods ending on and as of the
dates indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Additions to earning assets.................................... $429.3 $291.4 $188.7
Total earning assets........................................... 743.0 363.1 242.2
Type of investments (% of earning assets)
Municipal
Bonds....................................................... 0% 0% 11%
Finance Leases.............................................. 9 10 7
Corporate
Preferred stock............................................. 65 69 67
Debt........................................................ 26 21 15
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Total.................................................. 100% 100% 100%
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Real Estate Financing
Through four loan origination offices in its Real Estate Financing unit,
the Company provides first mortgage financing of income-producing real estate
including apartments, office buildings, shopping centers, and warehouses. This
real estate is geographically diversified throughout the United States. No
financing is provided for motels, hotels, raw land, or specialty properties.
Substantially all transactions are financings of three to five years, and none
is a construction loan. The loans provide funds for acquisitions or
refinancings, or are "bridge" financings between construction and permanent
loans. Prior to August 1990, substantially all of the transactions arranged by
this business were funded by and carried on the books of Ford Credit; the
Company continues to manage these transactions for Ford Credit. At December 31,
1993, the Company had commitments to fund additional first mortgage loans of
approximately $7.1 million. At such date, it also held title to a single
foreclosed property at a book value of $3.8 million, which it recovered on a
defaulted loan and for which additional tenants are actively being sought.
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9
The following table sets forth certain data with respect to the Real Estate
Financing business unit for the periods ending on and as of the dates indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Additions to earning assets.................................... $143.6 $ 89.8 $132.0
Total earning assets........................................... 436.5 326.1 238.5
Type of property (% of earning assets)
Apartments..................................................... 53% 50% 53%
Offices........................................................ 29 30 29
Shopping Centers............................................... 16 17 18
Industrial..................................................... 2 3 0
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Total.................................................. 100% 100% 100%
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Location of property (% of earning assets)
Southwest...................................................... 37% 39% 26%
East........................................................... 26 20 25
West........................................................... 28 30 34
Midwest........................................................ 9 11 15
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Total.................................................. 100% 100% 100%
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Rail Services
Through its Rail Services unit, the Company leases to industrial shippers
and railroads approximately 17,700 rail cars. Approximately 92% of all of these
cars are owned by the Company or leased to it under long-term leases. Of the
cars in the Company's fleet at December 31, 1993, 44% were leased out to the
Company's customers for terms of less than one year, 46% for terms of between
one and five years, and 8% for terms of over five years. Under substantially all
leases, the Company maintains and repairs the cars at its expense. As provided
in the rules of the American Association of Railroads, if a car is damaged or
destroyed on the line of any particular railroad, that railroad is obligated
either to repair the car or, if the car is destroyed, pay the car owner an
amount which reflects the car's type and age. Rail Services also manages 1,492
cars for others, including 1,290 cars for Ford affiliates.
The following table sets forth certain data with respect to the Rail
Services business unit for the periods ending on and as of the dates indicated.
DECEMBER 31
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1993 1992 1991
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Summary financial data (millions)
Additions to earning assets.................................... $143.4 $154.5 $ 48.3
Total earning assets........................................... 421.8 301.7 156.3
Type of equipment (% of earning assets)
Hopper cars.................................................... 41% 46% 55%
Tank cars...................................................... 17 24 38
Flat cars...................................................... 14 1 1
Intermodal cars................................................ 9 14 3
Gondolas cars.................................................. 8 9 3
Box cars....................................................... 6 0 0
Other.......................................................... 5 6 0
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Total.................................................. 100% 100% 100%
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FINANCING ARRANGED AND MANAGED FOR FORD MOTOR CREDIT COMPANY
The Company manages certain commercial leasing and financing transactions
originated by and carried on the books of Ford Credit. In addition, a portion of
new Municipal and Corporate Financing and Transportation and Industrial
Financing transactions, including the major portion of leveraged leases, are
funded by and carried on the books of Ford Credit. Ford Credit reimburses the
Company for the Company's operating costs related to arranging and managing all
transactions funded by Ford Credit. All other transactions are funded by and
carried on the books of the Company.
MANAGEMENT OF FOREIGN AFFILIATES
The Company manages two affiliated corporations in the United Kingdom and
Australia that are owned by Ford. These two corporations are engaged in the
equipment financing business, which businesses are conducted substantially in
the same manner as the Company's businesses in the United States. These
affiliates fund their equipment acquisitions and pay their own operating
expenses. However, the Company guarantees the indebtedness of such affiliates,
which at December 31, 1993, was $77 million, of which $39 million, representing
the United Kingdom affiliate's indebtedness, was paid off in February 1994.
These corporations were wholly-owned subsidiaries of the Company prior to
October 1, 1989, on which date they were dividended to Ford. The company located
in the United Kingdom has entered into no new transactions since mid-1992 and is
being liquidated.
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GENERAL
Credit Loss Experience
The management of credit exposure is an important element of the Company's
business. The Company reviews the credit of all prospective customers, and
manages concentration exposures by customer, collateral type, and geographic
distribution. It establishes appropriate loss allowances based on the credit
characteristics and the loss experience for each type of business, and also
establishes additional reserves for specific transactions if it believes this
action is warranted. Delinquent receivables are reviewed by management monthly,
and are generally written down to expected realizable value when, in the opinion
of management, they become uncollectible or when they become more than 180 days
past due. Collection activities continue on accounts written off when management
believes such action is warranted.
The table below shows certain information on the Company's allowance for
doubtful accounts for the periods indicated.
DECEMBER 31
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1993 1992 1991
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Allowance for doubtful accounts (millions)
Beginning balance.......................................... $ 39.9 $ 29.8 $ 25.2
Additions.................................................. 25.1 19.5 10.7
Deductions................................................. (9.8) (9.4) (6.1)
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Ending balance............................................. $ 55.2 $ 39.9 $ 29.8
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Percent of earning assets.................................... 1.2% 1.1% 1.1%
Total balances of accounts receivable over 90 days past due
at year end (millions)..................................... $ 44.3 $ 48.5 $ 22.6
Percent of earning assets.................................... 1.0% 1.4% 0.8%
Total earning assets (millions)
Investment in finance leases--net.......................... $2,364.1 $2,074.8 $1,462.5
Investment in operating leases--net........................ 694.7 557.8 492.1
Investment in leveraged leases---net....................... 190.5 3.9 0.0
Notes receivable........................................... 721.3 502.1 416.0
Investment in securities................................... 562.9 329.0 236.1
Inventory held for sale or lease........................... 54.8 97.2 100.3
Investments in associated companies........................ 18.3 19.7 20.2
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Total.............................................. $4,606.6 $3,584.5 $2,727.2
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Additions to the allowance for doubtful accounts for 1993 increased by $5.6
million from 1992 primarily as a result of the increase in earning assets as
well as management's evaluation of the adequacy of the loss reserve. In
addition, write-offs (deductions) in 1993 increased $400,000 from 1992, the
largest single transaction being $2.7 million.
Additions to the allowance for doubtful accounts for 1992 increased by $8.8
million from 1991. This resulted primarily from a one-time reduction to the
allowance made in 1991 to recognize that the Business Equipment Financing unit
no longer engaged in small ticket leasing and unsecured lending, operations
which experienced higher credit losses. In addition, write-offs (deductions) in
1992 increased $3.3 million from 1991, the largest single transaction being $1.3
million.
Total balances of accounts receivable over 90 days past due at year end
1993 decreased $4.2 million over 1992, primarily because of improved collection
and workout activities as well as the write-down of several receivables which
were delinquent at December 31, 1992, and which management has since deemed to
be uncollectible. At December 31, 1993, accounts receivable over 90 days past
due consisted primarily of delinquent notes in the amount of $11.2 million and
$8.7 million, collateralized by an apartment complex and an office complex,
respectively, and a $6.0 million delinquent receivable from an airline,
collateralized by a DC-9-51 aircraft.
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Residual Policy
The establishment and realization of residual values on both finance and
operating leases are important elements of the Company's business. In general,
finance leases are non-cancelable leases in which the lease payments over the
term exceed the cost of the leased equipment plus financing and other expenses.
Operating leases are usually of a shorter term and the lease payments by
themselves are not sufficient to cover such cost and expenses. Full recovery of
equipment cost is dependent upon selling or re-leasing the equipment.
Residual values are established upon acquisition of the equipment based
upon the estimated value of the equipment at the time the Company expects to
dispose of the equipment under finance leases, and at the end of the equipment's
expected useful life under operating leases. Periodically, the Company reviews
its residual values, and if it determines there has been an other than temporary
impairment in value, adjustments are made which result in an immediate charge to
income and/or a reduction in earnings over the remaining term of the lease.
FINANCE LEASES. The following table shows, for each respective year, for
the Company's continuing businesses: (a) the aggregate sales proceeds and
renewal proceeds from sales of equipment subject to finance leases, and (b)
these proceeds as a percentage of the adjusted residual value of the equipment.
YEAR ENDING DECEMBER 31
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1993 1992 1991
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Business Equipment Financing
Amount (millions)................................................. $19.2 $49.2 $41.3
Percent........................................................... 138% 126% 132%
Transportation and Industrial Financing
Amount (millions)................................................. $11.1* $ 1.7 $ 6.2
Percent........................................................... 7,073%* 526% 906%
Total
Amount (millions)................................................. $30.3 $50.9 $47.5
Percent........................................................... 215% 129% 148%
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* These amounts reflect proceeds received under a residual sharing agreement
arranged in 1972. The residual was carried on the Company's books at a nominal
amount.
OPERATING LEASES. The following table shows, for each respective year, for
the Company's continuing businesses: (a) the aggregate proceeds from sales of
equipment subject to operating leases, and (b) these proceeds as a percentage of
the net book value of the equipment sold.
YEAR ENDING DECEMBER 31
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1993 1992 1991
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Business Equipment Financing
Amount (millions)................................................. $ 6.9 $20.5 $ 9.6
Percent........................................................... 90% 111% 140%
Fleet Services
Amount (millions)................................................. $13.0 $16.4 $19.0
Percent........................................................... 116% 115% 105%
Other
Amount (millions)................................................. $ 4.1 $ 1.4 $ --
Percent........................................................... 196% 186% --
Total
Amount (millions)................................................. $24.0 $38.3 $28.6
Percent........................................................... 115% 115% 115%
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Employees
The Company had 682 full time employees at December 31, 1993.
Competition
In all of its financing programs, the Company competes with other leasing
and finance companies, banks, lease brokers and investment banking firms who
arrange for the financing and leasing of equipment, and manufacturers and
vendors who sell, finance and lease their own products to customers.
Borrowing and Other Sources of Funds
The funds required to operate the Company's business are generated
internally from loan and lease payments and equipment sales, and externally from
medium-term debt, commercial paper, securitized financings, and bank borrowings.
The Company raises short-term debt financing through its established
commercial paper programs and raises long-term debt in the public market through
periodic offerings of medium-term notes and underwritten debt offerings. The
Company has committed bank lines of $1.19 billion with 23 banks, consisting of
$995 million under multi-year (principally five-year) credit agreements and $195
million under one-year agreements. Neither Ford nor Ford Holdings guarantees the
debt of the Company, although the Company's existing credit lines require that
Ford maintain at least a 75% direct or indirect ownership interest in the
Company. At present, the Company's profitability is not significantly related to
the business outlook for Ford and this situation is not expected to change in
the future.
In 1991 the Company securitized and sold approximately $212 million of its
vehicle leases by transferring such leases, without recourse to the Company, to
a wholly-owned subsidiary, which, in turn, sold the leases to an unrelated
cooperative corporation. Such wholly-owned subsidiary is a separate entity from
its parent company, USL Capital Corporation, whose assets are available first
and foremost to satisfy the claims of its creditors. As it has since 1991, the
Company intends periodically to securitize additional leases under this
arrangement to replace the run-off of principal in the leases initially
securitized. See Note 2 of Notes to Consolidated Financial Statements on page
27.
On April 30, 1992, the Company securitized and sold approximately $94
million in principal amount of receivables under lease-purchase agreements with
various state and local governments. These lease-purchase agreements were
purchased by the Company from Ford Credit, for whom they had been managed by the
Company. The Company then immediately transferred them to tax-exempt grantor
trusts, which issued tax-exempt asset-backed certificates to investors in a
public offering registered under the Securities Act of 1993 (Registration
Statement No. 33-45596). See Note 2 of Notes to Consolidated Financial
Statements on page 27.
ITEM 2. PROPERTIES
The Company owns no significant real property and leases all of its
offices. See Note 10 of Notes to Consolidated Financial Statements on page 32
for information as to rental obligations.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company is a party or to
which its property is subject, nor are any such proceedings known to be
contemplated by governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information called for by this item has been omitted pursuant to
General Instruction J(2)(c).
13
14
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
All outstanding shares of the Company's Common Stock are owned by Ford
Holdings, and therefore there is no market for such shares. In the fourth
quarter of 1989, the Company dividended to Ford the Company's ownership
interests in its Australian, United Kingdom, Canadian and German operations in
the aggregate amount of $19.9 million. Since such dividend, the Company has paid
no dividend nor made any other distribution to Ford, Ford Holdings or any other
Ford affiliate. Ford Holdings made a $30 million, a $5 million and a $40 million
capital contribution to the Company in 1991, 1992 and 1993, respectively. The
Company and Ford Holdings will, from time to time, determine the appropriate
capitalization for the Company, which will, in part, affect any future payment
of dividends to Ford Holdings or capital contributions to the Company.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this item has been omitted pursuant to
General Instruction J(2)(a).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Pursuant to General Instruction J(2)(a), the following narrative analysis
of the results of operations is presented in lieu of Management's Discussion and
Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
REVENUES, EXPENSES AND OPERATING PROFIT
YEARS ENDED 1993 VS. 1992
DECEMBER 31 INCREASE/(DECREASE)
--------------------- ------------------
(IN THOUSANDS) 1993 1992 AMOUNT PERCENT
-------- -------- -------- -------
Revenues........................................... $564,472 $501,420 $ 63,052 13%
-------- -------- --------
Expenses
Sales, administrative and general................ 70,352 63,250 7,102 11
Interest......................................... 189,942 154,157 35,785 23
Depreciation..................................... 131,100 159,324 (28,224) (18)
Other............................................ 50,907 35,638 15,269 43
-------- -------- --------
Total expenses........................... 442,301 412,369 29,932 7
-------- -------- --------
Operating Profit................................... $122,171 $ 89,051 $ 33,120 37%
-------- -------- -------- -------
-------- -------- -------- -------
Revenues
Revenues increased $63.1 million, or 13% in 1993 compared with 1992
primarily as a result of a 30% increase in average earning assets partially
offset by a decrease in revenue yields relating to the general decline in
interest rates and a change in the mix of assets in the operating lease
portfolio. In addition, there was an increase of $10.1 million in the gain on
sale of residuals and equipment in the Transportation and Industrial Financing
business.
Expenses
Sales, administrative and general expenses increased $7.1 million, or 11%
in 1993, primarily reflecting the effects of the substantial increase in earning
assets.
Interest expense increased $35.8 million, or 23% in 1993, reflecting an
increase in average borrowings from $2.31 billion in 1992 to $3.15 billion in
1993 to finance earning assets. This increase was offset in part by a decline in
borrowing rates, which averaged 6.0% in 1993 compared with 6.6% in 1992.
14
15
Depreciation expense on operating lease equipment decreased $28.2 million,
or 18% in 1993, although the average investment in operating lease equipment
increased 30% or $151 million. This increase in equipment primarily reflects the
addition of approximately $200 million in the Rail Services business, with an
average life of 16 years. The reduction in depreciation expense is the result of
the shift to the longer depreciable life rail car assets.
Other expenses increased $15.3 million, or 43%, due primarily to an $8.8
million increase in maintenance expense incurred by the Rail Services business
as a result of routine maintenance on a significantly larger fleet. There was
also an increase of $5.3 million in the provision for losses (see page 11 for
discussion of credit loss experience).
Operating Profit
Operating profit improved $33.1 million or 37% compared with 1992. The
improvement in operating results reflects the impact of higher earning assets.
Taxes on Income
Income taxes were 36.9% on income before taxes in 1993 compared with 32.8%
in 1992. See Note 9 of Notes to Consolidated Financial Statements on page 31 for
the principal reasons for differences from the normal statutory rates.
New Acccounting Standards
In November 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 112, "Employers'
Accounting for Postemployment Benefits", which requires companies to account for
employee benefits on an accrual basis for periods when employees are no longer
actively employed but have not yet reached retirement. The effect on the
Company's financial statements was not material.
In May 1993, the FASB issued SFAS 114, "Accounting by Creditors for
Impairment of a Loan". The Standards requires that impaired loans be measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate. The Company does not plan to adopt this standard
until January 1, 1995 and the effect is not expected to be material.
In May 1993, the FASB issued SFAS 115, "Accounting for Certain Investments
in Debt and Equity Securities". The Standard establishes standards of financial
accounting and reporting for investments in equity securities (excluding those
accounted for under the equity method and investments in consolidated
subsidiaries) that have readily determinable fair values and for all investments
in debt securities. The Company has adopted this standard effective January 1,
1994, and the effect is not expected to be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this Item are
listed in Item 14 of Part IV on page 16, are set forth in detail at the end of
this report, and are filed as part hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
15
16
PART III
The information called for by Items 10, 11, 12 and 13 has been omitted
pursuant to General Instruction J(2)(c).
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The consolidated financial statements of the Company are included in
this report at the pages indicated.
PAGE
-----
Management's Responsibility for Financial Statements...................... 20
Report of Independent Accountants......................................... 21
Consolidated Statements of Income for the periods ended December 31, 1993,
1992, and 1991.......................................................... 22
Consolidated Balance Sheets at December 31, 1993 and 1992................. 23
Consolidated Statements of Cash Flows for the periods ended December 31,
1993, 1992 and 1991..................................................... 24
Consolidated Statements of Changes in Shareholder's Equity for the periods
ended December 31, 1993, 1992 and 1991.................................. 25
Notes to Consolidated Financial Statements................................ 26
(a) 2. Financial Statement Schedules
PAGE
-----
Schedule II --Amounts Receivable from Related Parties and Underwriters,
Promoters, and Employees other than Related Parties...... 37
Schedule V --Property, Plant and Equipment............................ 38
Schedule VI --Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment............................ 39
Schedule VIII --Valuation and Qualifying Accounts........................ 40
Schedule IX --Short-Term Notes Payable................................. 41
Schedule X --Supplementary Income Statement Information............... 42
Financial statements and schedules other than those listed above are
omitted because the required information is included in the financial
statements or the notes thereto or because of the absence of conditions
under which they are required.
(a) 3. Exhibits required by Item 601 of Regulation S-K:
(3)A. Certificate of Incorporation of United States Leasing International, Inc.,
a Delaware Corporation filed with the Secretary of State of the State of
Delaware on August 15, 1986.
16
17
B. Agreement of Merger pursuant to which United States Leasing International,
Inc., a California corporation, merged into United States Leasing
International, Inc., a Delaware corporation, filed with the Secretary of
State of the State of Delaware on October 27, 1986.
C. Certificate of Amendment of Certificate of Incorporation of United States
Leasing International, Inc., pursuant to which United States Leasing
International, Inc. changed its name to USL Capital Corporation filed with
the Secretary of State of the State of Delaware on November 12, 1993.
D. Copy of Bylaws, as amended, through January 13, 1992, filed as Exhibit
(3)D. to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 is incorporated herein by this reference.
(4)A. Copy of Indenture dated as of January 15, 1986, between the Company and
the Chase Manhattan Bank (National Association), Trustee, including forms
of Debt Security and Medium-Term Note, filed as Exhibit (4)A. to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991
is incorporated herein by this reference.
B. Supplemental Indenture dated as of October 27, 1986, between the Company
and the Chase Manhattan Bank (National Association), Trustee, filed on
November 22, 1988 as Exhibit 4.2 to the Company's Registration Statement
on Form S-3 (File No.33-25722).
C. Second Supplemental Indenture dated as of December 1, 1988 to Indenture
dated as of January 15, 1986, between the Company and the Chase Manhattan
Bank (National Association), Trustee, filed on November 22, 1988 as
Exhibit 4.3 to the Company's Registration Statement on Form S-3 (File
No.33-25722).
D. Copy of Indenture dated as of July 1, 1991, between the Company and The
First National Bank of Chicago, Trustee, including forms of Debt Security
and Medium Term Note, filed on July 15, 1991 as Exhibits 4.1, 4.2, 4.3
respectively, to the Company's Registration Statement on Form S-3 (File
No. 33-4165) is incorporated herein by this reference.
(10)A. Copy of Asset Purchase Agreement among USLI Fleet Financing, Inc., Asset
Securitization Cooperative Corporation, Canadian Imperial Bank of Commerce
and United States Leasing International, Inc., dated as of December 23,
1991, filed as Exhibit (10)A. to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991 is incorporated herein by this
reference.
B. Copy of Purchase Agreement between United States Leasing International,
Inc. and USLI Fleet Financing, Inc., dated as of December 23, 1991, filed
as Exhibit (10)B. to the Company's Annual Report on Form 10-K for the year
ended December 31, 1990 is incorporated herein by this reference.
C. First and Second Amendments to Asset Purchase Agreement among USLI Fleet
Financing, Inc., Asset Securitization Cooperative Corporation, Canadian
Imperial Bank of Commerce and United States Leasing International, Inc.,
dated as of December 23, 1991.
D. First Amendment to Purchase Agreement between United States Leasing
International, Inc. and USLI Fleet Financing, Inc., dated as of December
23, 1991.
E. Copy of Lease Purchase Agreement dated as of April 1, 1992, between the
Company and Ford Motor Credit Company, filed as Exhibit 10(C) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992,
is incorporated herein by this reference.
F. Copy of Insurance and Indemnity Agreement dated April 1, 1992, among the
Company, Municipal Bond Investors Assurance Corporation and The Chase
Manhattan Bank, N.A., filed as Exhibit 10(D) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992, is incorporated
herein by this reference.
17
18
G. Copy of Standard Terms and Conditions of Pooling and Servicing Agreement,
dated as of April 1, 1992, between the Company and The Chase Manhattan
Bank, N.A., filed as Exhibit 10(E) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992, is incorporated herein by this
reference.
H. Copies of Pooling and Servicing Agreements for Trusts A, B and C, dated as
of April 1, 1992, between the Company and The Chase Manhattan Bank, N.A.,
filed as Exhibit 10(F) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992, is incorporated herein by this reference.
I. Copy of Seller's Limited Guaranty dated April 30, 1992, executed by the
Company in favor of Municipal Bond Investors Assurance Corporation, filed
as Exhibit 10(G) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992, is incorporated herein by this reference.
(12) Computation of Ratio of Earnings to Fixed Charges.
(23) Consent of Independent Public Accountants (with respect to the Company's
current Registration Statement on Form S-3).
The Company agrees to furnish to the Commission upon request a copy of
each instrument with respect to issues of long-term debt of the Company,
the authorized principal amount of which does not exceed 10% of the
total assets of the Company.
(b) Report on Form 8-K.
None.
18
19
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT
OF 1934, THE COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED ON MARCH 28, 1994.
USL CAPITAL CORPORATION
(Registrant)
By: /s/ JAMES G. DUFF
James G. Duff,
Chairman and Chief Executive
Officer
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 COMPANY
AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- --------------------------------------------- ----------------------------
(a) Principal Executive Officer
/s/ JAMES G. DUFF Chairman and Chief Executive March 28, 1994
James G. Duff Officer
(b) Principal Financial Officer:
/s/ GEORGE F. STALLOS Executive Vice President and March 28, 1994
George F. Stallos Chief Financial Officer
(c) Principal Accounting Officer:
/s/ ROBERT A. KEYES, JR. Corporate Controller March 28, 1994
Robert A. Keyes, Jr.
(d) Directors:
/s/ JAMES G. DUFF March 28, 1994
James G. Duff
/s/ TERRANCE F. MARRS March 28, 1994
Terrance F. Marrs
/s/ GEORGE F. STALLOS March 28, 1994
George F. Stallos
/s/ KENNETH WHIPPLE March 28, 1994
Kenneth Whipple
19
20
Letterhead of USL Capital Corporation
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation of the Company's financial
statements and the other financial information in this report. This
responsibility includes maintaining the integrity and objectivity of the
financial records and the presentation of the Company's financial statements in
accordance with generally accepted accounting principles.
The Company maintains an internal control structure designed to provide,
among other things, reasonable assurance that its records include the
transactions of its operations in all material respects and to provide
protection against significant misuse or loss of Company assets. The internal
control structure is supported by careful selection and training of financial
management personnel, by written procedures that communicate the details of the
control structure to the Company's activities, by a staff of internal auditors
of Ford Motor Company who employ thorough auditing programs, and by the
Company's staff of operating control specialists who conduct reviews of
adherence to the Company's procedures and policies.
The Company's financial statements have been audited by Coopers & Lybrand,
independent certified public accountants. Their audit was conducted in
accordance with generally accepted auditing standards which include a review of
the Company's internal control structure to the extent deemed necessary for the
purposes of their audit. The Report of Independent Accountants appears on the
following page.
The Board of Directors is responsible for overseeing management's
fulfillment of its responsibilities in the preparation of financial statements
and the financial control of operations. The Board of Directors of Ford Motor
Company, through its Audit Committee, selects the independent accountants. The
independent accountants have full and free access to the Board to discuss their
audit work, the Company's internal controls, and financial reporting matters.
/s/ J.G. Duff
James G. Duff
Chairman & Chief Executive Officer
/s/ George F. Stallos
George F. Stallos
Executive Vice President
and Chief Financial Officer
20
21
LETTERHEAD OF COOPERS & LYBRAND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors,
USL Capital Corporation:
We have audited the consolidated financial statements and the financial
statement schedules of USL Capital Corporation and subsidiaries listed in Part
IV Item 14(a)1. and 2. of this Form 10-K. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of USL Capital
Corporation and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
/s/ Coopers & Lybrand
San Francisco, California
January 28, 1994
21
22
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
REVENUES................................................... $564,472 $501,420 $500,158
-------- -------- --------
EXPENSES
Sales, administrative and general........................ 70,352 63,250 65,959
Interest................................................. 189,942 154,157 147,027
Depreciation -- operating leases......................... 131,100 159,324 177,805
Other.................................................... 50,907 35,638 23,308
-------- -------- --------
Total expenses................................... 442,301 412,369 414,099
-------- -------- --------
Income before taxes on income and cumulative effect of
accounting change..................................... 122,171 89,051 86,059
Taxes on income.......................................... 45,119 29,228 31,270
-------- -------- --------
Income before cumulative effect of accounting change..... 77,052 59,823 54,789
Cumulative effect of accounting change................... -- (3,097) --
-------- -------- --------
NET INCOME............................................... $ 77,052 $ 56,726 $ 54,789
-------- -------- --------
-------- -------- --------
See notes to consolidated financial statements.
22
23
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
ASSETS
Cash and cash equivalents.......................................... $ 6,708 $ 5,001
Investment in finance leases -- net................................ 2,364,062 2,074,842
Notes receivable................................................... 721,257 502,103
Investment in operating leases -- net.............................. 694,737 557,813
Investment in leveraged leases..................................... 190,502 3,907
Investment in securities........................................... 562,873 329,044
Inventory held for sale or lease................................... 54,811 97,179
Other receivables.................................................. 18,296 22,241
Investment in associated companies................................. 18,357 19,659
Office equipment at cost less accumulated depreciation:
$17,125 and $14,877 at December 31, 1993 and 1992,
respectively..................................................... 8,386 7,643
Other assets....................................................... 21,981 24,785
Goodwill less accumulated amortization:
$36,176 and $30,632 at December 31, 1993 and 1992,
respectively..................................................... 189,239 195,082
------------ ------------
Total assets............................................. $4,851,209 $3,839,299
------------ ------------
------------ ------------
LIABILITIES
Short-term notes payable........................................... $ 985,277 $1,063,380
Accounts payable................................................... 65,643 82,712
Payable to Ford and affiliates..................................... 79,490 75,028
Accrued liabilities and lease deposits............................. 120,416 105,151
Deferred taxes on income........................................... 314,505 209,175
Long-term debt..................................................... 2,548,250 1,683,277
------------ ------------
Total liabilities........................................ 4,113,581 3,218,723
------------ ------------
Commitments (Note 10).............................................. -- --
SHAREHOLDER'S EQUITY
Common stock, $1 par value, authorized: 10,000 shares;
outstanding: 10 shares........................................... * *
Additional capital................................................. 521,425 481,425
Retained earnings.................................................. 216,203 139,151
------------ ------------
Total shareholder's equity............................... 737,628 620,576
------------ ------------
Total liabilities and shareholder's equity............... $4,851,209 $3,839,299
------------ ------------
------------ ------------
- ---------------
* Less than $1,000
See notes to consolidated financial statements.
23
24
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
-------------------------------------------
1993 1992 1991
----------- ----------- -----------
(IN THOUSANDS)
Net cash flow from operating activities:
Income from operations............................ $ 77,052 $ 56,726 $ 54,789
Noncash expenses, revenues, losses, and gains
included in income:
Cumulative effect of accounting change......... -- 5,002 --
Depreciation and amortization.................. 154,322 180,745 198,252
Deferred taxes on income....................... 112,719 57,273 62,097
Provision for losses........................... 24,752 19,439 9,034
Accrued interest income on notes receivable
added to the principal balance............... -- (565) --
Net increase in advances from Ford and
affiliates................................... 4,462 58,035 31,120
Increase/(decrease) in accounts payable........ (17,082) (6,182) 7,931
Increase in accrued liabilities and lease
deposits..................................... 8,773 18,541 517
(Increase)/decrease in other receivables....... (14,691) 741 (3,043)
Other.......................................... 1,357 1,776 2,816
----------- ----------- -----------
Net cash flow from operating activities... 351,664 391,531 363,513
----------- ----------- -----------
Cash flows from investing activities:
Recovery of equipment costs and residual
interests...................................... 622,364 488,165 451,677
Proceeds from sale of finance receivables......... 103,006 175,779 211,461
Cost of equipment acquired for lease.............. (1,446,217) (1,453,248) (1,245,298)
Notes receivable investments...................... (317,969) (212,678) (241,186)
Collections on notes receivable investments....... 121,238 63,045 57,019
Purchase of investment securities................. (280,812) (164,510) (168,317)
Sale of investment securities..................... 40,123 69,526 13,267
Increase in deferred initial direct costs......... (10,867) (17,418) (15,665)
Office equipment purchased........................ (5,118) (1,359) (2,262)
Investment in associated companies................ (73) (41) (52)
Other............................................. (1,896) (9,561) (11,105)
----------- ----------- -----------
Net cash used by investing activities..... (1,176,221) (1,062,300) (950,461)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from long-term borrowings................ 1,125,145 646,625 1,020,427
Long-term debt repaid............................. (260,778) (268,204) (245,024)
Net increase/(decrease) in short-term
borrowings..................................... (78,103) 273,096 (224,946)
Capital contribution from Ford Holdings........... 40,000 5,000 30,000
----------- ----------- -----------
Net cash provided by financing
activities.............................. 826,264 656,517 580,457
----------- ----------- -----------
Increase/(decrease) in cash and cash equivalents.... 1,707 (14,252) (6,491)
Cash and cash equivalents at beginning of period.... 5,001 19,253 25,744
----------- ----------- -----------
Cash and cash equivalents at end of period.......... $ 6,708 $ 5,001 $ 19,253
----------- ----------- -----------
----------- ----------- -----------
Supplemental schedule of cash flow information:
lnterest paid..................................... $ 356,829 $ 153,691 $ 138,208
Income taxes paid................................. 250 604 920
Supplemental schedule of noncash investing and financial activities:
During 1992, provisions of some notes receivable investments permitted accrued
interest in the amount of $565 to be added to the principal balance.
See notes to consolidated financial statements.
24
25
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
TOTAL
COMMON ADDITIONAL RETAINED SHAREHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
-------- ---------- -------- -------------
(IN THOUSANDS)
Balance at January 1, 1991.................... $ * $ 446,425 $ 27,636 $ 474,061
Capital contributions....................... 30,000 30,000
Net income.................................. 54,789 54,789
-------- ---------- -------- -------------
Balance at December 31, 1991.................. * 476,425 82,425 558,850
Capital contributions....................... 5,000 5,000
Net income.................................. 56,726 56,726
-------- ---------- -------- -------------
Balance at December 31, 1992.................. * 481,425 139,151 620,576
Capital contributions....................... 40,000 40,000
Net income.................................. 77,052 77,052
-------- ---------- -------- -------------
Balance at December 31, 1993.................. $ * $ 521,425 $216,203 $ 737,628
-------- ---------- -------- -------------
-------- ---------- -------- -------------
- ---------------
* Less than $1,000
See notes to consolidated financial statements.
25
26
USL CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Consolidation -- The consolidated financial statements include USL Capital
Corporation ("Company") and all of its majority-owned subsidiaries. Investments
in partnerships and 50%-or-less owned associated companies are accounted for on
the equity method. Refer to Item 1. Business "Consolidation and Sale of
Subsidiaries." All material intercompany balances and transactions are
eliminated. Certain amounts have been reclassified to conform to the 1993
presentation.
In October 1989, all of the Company's outstanding capital stock was
acquired by Ford Holdings, Inc. ("Ford Holdings") from Ford Motor Company
("Ford"). The acquisition by Ford in 1987 was accounted for as a purchase. The
unamortized balance of the excess of the purchase price paid by Ford over the
fair value of identifiable net assets acquired is shown as goodwill on the
Company's books.
Cash and Cash Equivalents -- Cash and cash equivalents consist of highly
liquid investments with a maturity of three months or less at the time of
purchase. Outstanding checks ($21,582,000 at December 31, 1993 and $22,660,000
at December 31, 1992) are reclassified to Accounts Payable. For Cash and Cash
Equivalents, the carrying amount is stated at fair value.
Finance Leases -- At lease commencement, the Company records the lease
receivable, estimated residual value of the leased equipment, and unearned lease
income. Initial direct costs are deferred as part of the investment and
amortized over the lease term. Unearned lease income is recognized as revenue
over the lease term so as to approximate a level rate of return on the net
investment. Residual values, which are reviewed periodically, represent the
estimated amount to be received at lease termination from the disposition of
leased equipment.
Operating Leases -- Lease contracts that do not meet the criteria of
finance leases are accounted for as operating leases. Rental equipment is
recorded at cost and depreciated over its useful life or lease term to an
estimated salvage or residual value (10 to 30 years for railroad cars and 3 to 7
years for other equipment), primarily on a straight-line basis.
Leveraged Leases -- Leveraged lease assets acquired by the Company are
financed primarily through nonrecourse loans from third-party debt participants.
These loans are secured by the lessee's rental obligations and the leased
property. Unearned income is recognized over the lease term at a constant
after-tax rate of return on the net investment in the lease in those periods in
which the net investment is positive. Unguaranteed estimated residual values are
principally based on independent appraisals of the estimated values of the
assets remaining at the expiration of the lease.
Investment in Securities -- Investments in securities consist principally
of debt securities (preferred stock, corporate and Municipal bonds) which are
recorded at amortized cost because the Company has the ability to hold such
securities until maturity and presently has this intention. See Note 6 for
additional information on the fair value of securities.
Goodwill -- Goodwill, arising principally from the acquisition by Ford, is
being amortized on the straight-line method over 40 years (1993, $5,643,000;
1992, $5,643,000; 1991, $5,643,000).
Taxes on Income and Tax Credits -- Since the transfer of ownership of the
Company by Ford to Ford Holdings in 1989, the Company has been included in the
consolidated federal income tax return of Ford Holdings and continues to be
included in the combined state income tax returns of Ford, except in those
states where the Company is required to file separate returns. Income taxes,
including the federal alternative minimum tax, if any, are allocated by Ford
Holdings based on the Company's effect on taxes paid by the group. Deferred
income tax liabilities give effect to temporary differences between financial
statement and tax return amounts based upon enacted tax rates in effect for the
future periods when such differences are expected to reverse.
26
27
NOTE 2 -- INVESTMENT IN FINANCE LEASES
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS)
Receivable in installments........................ $3,264,170 $ 2,889,715
Residual value.................................... 297,139 261,622
Allowance for doubtful accounts................... (28,768) (22,361)
Unearned lease income............................. (1,191,499) (1,079,921)
Deferred initial direct costs..................... 23,020 25,787
------------ ------------
Net investment.................................... $2,364,062 $ 2,074,842
------------ ------------
------------ ------------
Finance lease receivables at December 31, 1993 are due in installments as
follows (in thousands): 1994, $751,956; 1995, $547,200; 1996, $327,429; 1997,
$228,880; 1998, $161,459 and thereafter, $1,247,246. Receivables of $6.9 million
serve as collateral to long-term debt.
In December 1991, U.S. Fleet Financing ("USFF") , a wholly owned subsidiary
of the Company, sold a portfolio of finance leases for proceeds of $211.5
million. During 1992 and 1993, additional leases were sold for proceeds of $79.9
million and $103.0 million, respectively, to replace the run-off of principal in
the leases initially securitized. The sale agreement provides recourse to the
assets of USFF, $35.7 million at December 31, 1993, for any uncollectible
receivables in the portfolio. USFF is a separate entity from its parent company,
USL Capital Corporation, and its assets will be available first and foremost to
satisfy the claims of its creditors. An allowance of $772,000 has been provided
on the books of USFF for estimated losses on the sold receivables. The agreement
provides that the Company will service the lease receivables for the purchaser.
At December 31, 1993, $171.6 million of net investment in the leases serviced by
the Company was outstanding.
In April 1992, the Company sold a portfolio of municipal finance leases for
proceeds of $95.1 million. The sale agreement provides the buyers with limited
recourse against the Company, $3.0 million at December 31, 1993, for any
uncollectible receivables in the portfolio. An allowance of $26,000 has been
provided for estimated losses on the sold receivables. The agreement provides
that the Company will service the lease receivables for the purchaser. At
December 31, 1993, $19.3 million of net investment in the leases serviced by the
Company was outstanding.
NOTE 3 -- INVESTMENT IN OPERATING LEASES
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS)
Equipment cost:
Automotive....................................... $ 155,600 $ 219,316
EDP, peripheral and word processing.............. 139,972 114,338
Copiers.......................................... 151,886 133,790
Rail............................................. 463,395 322,495
Aircraft......................................... 46,420 40,356
Office furniture................................. 24,440 15,773
Manufacturing and industrial equipment........... 24,423 8,493
Other............................................ 34,644 17,256
------------ ------------
Total equipment cost............................. 1,040,780 871,817
Accumulated depreciation........................... (352,516) (323,398)
Rentals receivable................................. 9,757 11,999
Allowance for doubtful accounts.................... (3,284) (2,605)
------------ ------------
Net investment..................................... $ 694,737 $ 557,813
------------ ------------
------------ ------------
27
28
NOTE 3 -- INVESTMENT IN OPERATING LEASES (CONTINUED)
Initial lease terms of rental equipment range from one month to 8.5 years.
Future minimum rentals on operating leases at December 31, 1993 are due in
installments as follows (in thousands): 1994, $182,026; 1995, $95,430; 1996,
$66,666; 1997, $27,137; 1998, $15,337 and thereafter, $25,358.
Minimum future rentals do not include contingent rentals that may be
received under certain rail car leases, because of use in excess of specified
amounts. Contingent rentals (in thousands) received were $8,170 in 1993, $2,454
in 1992 and $2,033 in 1991. The increase in 1993 is the result of the large
expansion of the Rail Services fleet (see Item 1. Business "Business Units").
NOTE 4 -- INVESTMENT IN LEVERAGED LEASES
DECEMBER 31, DECEMBER 31,
1993 1992
------------- -------------
(IN THOUSANDS)
Rentals receivable (net of principal and interest
on nonrecourse debt)............................ $ 259,243 $ 102
Estimated residual values......................... 69,837 4,598
Allowance for doubtful accounts................... (1,661) --
Unearned income................................... (137,331) (793)
Deferred initial direct costs..................... 414 --
------------- -------------
Investment in leveraged leases.................... 190,502 3,907
Less deferred income taxes arising from leveraged
leases.......................................... (23,571) (86)
------------- -------------
Net investment.................................... $ 166,931 $ 3,821
------------- -------------
------------- -------------
A summary of the components of income from leveraged leases were as
follows:
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992
------------- -------------
(IN THOUSANDS)
Income before taxes on income..................... $ 6,898 $ 110
Taxes on income................................... 2,692 42
------------- -------------
Income from leveraged leases...................... $ 4,206 $ 68
------------- -------------
------------- -------------
NOTE 5 -- NOTES RECEIVABLE
DECEMBER 31, DECEMBER 31,
1993 1992
------------- -------------
(IN THOUSANDS)
Principal......................................... $ 731,641 $ 502,748
Interest.......................................... 1,898 6,890
Deferred initial direct costs..................... 906 1,277
Allowance for doubtful accounts................... (13,188) (8,812)
------------- -------------
Net............................................... $ 721,257 $ 502,103
------------- -------------
------------- -------------
At December 31, 1993, $609.6 million of principal was collateralized by
equipment, real estate, and other assets. The weighted average interest rate at
December 31, 1993 was 8.1%. Notes receivable are due in subsequent years as
follows (in thousands): 1994, $96,792; 1995, $101,230; 1996, $114,867; 1997,
$98,383; 1998, $142,069; and thereafter, $178,300.
The fair value of loans is estimated by either discounting the future cash
flows using the current rates at which similar loans would be made to borrowers
with similar credit ratings and for the same remaining maturities, or dealer
quotes. At December 31, 1993, the estimated fair values of the Company's Notes
Receivable were $727.4 million.
28
29
NOTE 6 -- INVESTMENT IN SECURITIES
At December 31, 1993 and 1992 the amortized cost and estimated fair value
of investment in securities were as follows:
1993
-----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)
Debt Securities issued by the U.S. Government
and agencies.................................. $ 0 $ 0 $ 0 $ 0
Corporate Securities............................ 559,765 18,488 8,324 569,929
--------- ---------- ---------- ---------
Debt Securities................................. 559,765 18,488 8,324 569,929
Equity Securities............................... 10,736 0 0 10,736
--------- ---------- ---------- ---------
Total Securities................................ 570,501 $ 18,488 $ 8,324 $ 580,665
---------- ---------- ---------
---------- ---------- ---------
Allowance for doubtful accounts................. (7,628)
---------
Net Investment.................................. $ 562,873
---------
---------
1992
-----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)
Debt Securities issued by the U.S. Government
and agencies.................................. $ 113 $ 13 $ 0 $ 126
Corporate Securities............................ 322,818 9,458 4,237 328,039
--------- ---------- ---------- ---------
Debt Securities................................. 322,931 9,471 4,237 328,165
Equity Securities............................... 12,223 2,913 1,219 13,917
--------- ---------- ---------- ---------
Total Securities................................ 335,154 $ 12,384 $5,456 $ 342,082
---------- ---------- ---------
---------- ---------- ---------
Allowance for doubtful accounts................. (6,110)
---------
Net investment.................................. $ 329,044
---------
---------
The amortized cost and estimated fair value of debt securities at December
31, 1993 and 1992 by contractual maturity are shown below.
1993 1992
----------------------- -----------------------
ESTIMATED ESTIMATED
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- --------- --------- ---------
(IN THOUSANDS)
Due in one year or less $ 6,866 $ 6,854 $ 6,811 $ 6,855
Due after one year through five years 66,403 69,071 55,032 56,920
Due after five years through ten years 133,328 139,131 148,007 148,683
Due after ten years 353,168 354,873 113,081 115,707
--------- --------- --------- ---------
Total $ 559,765 $ 569,929 $ 322,931 $ 328,165
--------- --------- --------- ---------
--------- --------- --------- ---------
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or pre-pay obligations with or without call
or pre-payment penalties, and the Company may have the option to redeem or
convert securities prior to redemption.
In 1993 proceeds from the sale of investments in debt securities (in
thousands) were $58,251, resulting in a gross gain of $4,888. In 1992, proceeds
(in thousands) were $44,253, resulting in a gross gain of $2,195.
The fair value of the investment in debt and equity securities is estimated
primarily by market and dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
securities. Debt securities are also valued using the discounted future cash
flows based upon current rates of similar debt instruments traded, when a market
quote or market quote of a similar investment is not available.
29
30
NOTE 7 -- SHORT-TERM NOTES PAYABLE
Short-term notes payable consist entirely of commercial paper. The balance
outstanding at December 31, 1993 had an average maturity of 10 days. The Company
has committed credit lines, wherein it may borrow up to $1.19 billion at
floating rates which approximate prime. A commitment fee of 1/8% to 1/4% is
paid on the unused portion of these credit lines. These lines contain certain
provisions related to (a) continuing Ford ownership; (b) limitations on liens;
and (c) limitations on activities and indebtedness of subsidiaries. There were
no borrowings outstanding on these lines at December 31, 1993.
For short-term notes payable, the carrying amount approximates fair value
because of the short maturity of these instruments.
NOTE 8 -- LONG-TERM DEBT
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS)
Collateralized:
6.3% to 8.3% due through 1994.................... $ 6,957
6.6% to 9.5% due through 1994.................... $ 7,622
Capital lease obligations.......................... -- 209
Senior:
3.3% to 9.9% due through 2011.................... 2,541,293
3.4% to 9.9% due through 2011.................... 1,675,446
------------ ------------
Total.................................... $2,548,250 $1,683,277
------------ ------------
------------ ------------
Payments required on long-term debt are (in thousands): 1994, $386,422;
1995, $323,165; 1996, $357,310; 1997, $197,351; 1998, $192,393; and thereafter,
$1,091,609. Average interest rates on collateralized and senior debt outstanding
at December 31, 1993 were 6.3% and 6.7%, respectively.
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt. At
December 31, 1993, the estimated fair value of the Company's long-term debt,
collateralized and senior, was $2.451 billion.
It is the Company's policy to follow a strategy of match funding all
financing, and as such, the Company believes that the change in the fair market
value of its debt would be off-set by a corresponding increase in the estimated
fair value of its investment in leases. See Note 13 for information concerning
interest rate swap agreements.
30
31
NOTE 9 -- TAXES ON INCOME
The Company uses the liability method of accounting for income taxes
pursuant to SFAS No. 109. The Company adopted the liability method in 1987 in
accordance with SFAS No. 96, which was subsequently superseded by SFAS No. 109.
The adoption of SFAS No. 109 at the beginning of 1992 had no effect on net
income in that year.
The provision for taxes on income includes:
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
Deferred:
United States............................ $ 95,891 $ 60,484 $ 48,679
State.................................... 16,828 (3,211) 13,418
Foreign.................................. -- -- --
-------- -------- --------
Total deferred................... 112,719 57,273 62,097
-------- -------- --------
Current:
United States............................ (58,858) (37,682) (22,910)
State.................................... (8,927) 7,216 (7,917)
Foreign.................................. 185 516 --
-------- -------- --------
Total current.................... (67,600) (29,950) (30,827)
-------- -------- --------
Total............................ $ 45,119 $ 27,323 $ 31,270
-------- -------- --------
-------- -------- --------
Shown as:
Taxes on income.......................... $ 45,119 $ 29,228 $ 31,270
Cumulative effect of accounting change... -- (1,905) --
-------- -------- --------
$ 45,119 $ 27,323 $ 31,270
-------- -------- --------
-------- -------- --------
Deferred income taxes, on a SFAS No. 109 basis, reflect the estimated
future tax effect of temporary differences between the amount of assets and
liabilities for financial reporting purposes and such amounts as measured by tax
laws and regulations. The components of deferred income tax assets and
liabilities as of December 31, 1993 and 1992 were as follows:
1993 1992
-------- --------
(IN THOUSANDS)
Deferred tax liability
Leasing transactions................................. $276,710 $175,655
Notes payable........................................ 79,107 67,925
Other................................................ 5,436 1,974
-------- --------
361,253 245,554
-------- --------
Deferred tax asset
Allowance for credit losses.......................... 17,290 15,316
Employee benefit plans............................... 6,802 7,798
State Net Operating Loss carry forwards.............. 21,773 12,887
Other................................................ 883 378
-------- --------
46,748 36,379
-------- --------
Net deferred taxes..................................... $314,505 $209,175
-------- --------
-------- --------
State Net Operating Loss carry forwards will be recovered in future periods
as an offset to future state tax liabilities in accordance with the Company's
tax sharing agreement with Ford Holdings.
31
32
NOTE 9 -- TAXES ON INCOME (CONTINUED)
Deferred income taxes for 1991 were derived using the guidelines in SFAS
No. 96. Under SFAS No. 96, deferred income taxes are the result of temporary
differences in the financial reporting and tax bases of assets and liabilities.
The source of the changes in deferred taxes were as follows:
YEAR ENDED
DECEMBER 31, 1991
------------------
(IN THOUSANDS)
Temporary differences in recognizing revenue and depreciation
expense on leases............................................. $ 50,803
Temporary differences in recognizing sales, administrative and
general expenses.............................................. 30
State tax provision in excess of current state taxes............ 11,264
----------
Total................................................. $ 62,097
----------
----------
The provision for taxes on income differs from the normal statutory rate
for the following reasons:
YEARS ENDED
DECEMBER 31,
----------------------
1993 1992 1991
---- ---- ----
Normal U.S. tax rate....................................... 35.0% 34.0% 34.0%
State taxes, less U.S. tax benefit......................... 6.5 3.9 4.2
Goodwill................................................... 4.6 2.1 2.2
Income taxed at reduced rates.............................. (9.3) (7.8) (3.5)
Other -- net............................................... .1 .6 (.6)
---- ---- ----
Provision for taxes........................................ 36.9% 32.8% 36.3%
---- ---- ----
---- ---- ----
The deferred tax assets and liabilities were restated effective January 1,
1993 to reflect the increase of the U.S. Corporate Tax Rate to 35% from 34%,
resulting in additional tax provision of $5.6 million.
At December 31, 1993, investment tax credit carry forwards of approximately
$600,000 are available to reduce future federal income tax liabilities and
expire between 1997 and 1999 if not utilized.
Federal income taxes payable to Ford Holdings (in thousands) were: $15,466
at December 31, 1993 and $2,700 at December 31, 1992.
NOTE 10 -- COMMITMENTS
The Company leases office facilities and equipment under operating leases.
The equipment leased by the Company is for sublease to end-user lessees under
operating leases of various terms. New leases are arranged when the equipment is
returned to the Company. Rental expense (in thousands) for all operating leases
was $11,574 in 1993, $12,626 in 1992, and $14,353 in 1991; and sublease income
was $6,129, $6,169 and $8,859, respectively. Future minimum rentals (excluding
executory costs) and related sublease income under operating leases that have
non-cancelable lease terms in excess of one year as of December 31, 1993 are:
OFFICE RENTAL SUBLEASE NET
FACILITIES EQUIPMENT INCOME RENTALS
---------- --------- -------- -------
(IN THOUSANDS)
1994............................................... $ 3,300 $ 4,415 $ 4,474 $ 3,241
1995............................................... 2,904 4,405 2,712 4,597
1996............................................... 2,511 4,412 2,317 4,606
1997............................................... 2,467 3,980 1,390 5,057
1998............................................... 2,337 3,980 965 5,352
Thereafter......................................... 14,410 2,422 175 16,657
---------- --------- -------- -------
Total.................................... $ 27,929 $23,614 $ 12,033 $39,510
---------- --------- -------- -------
---------- --------- -------- -------
32
33
NOTE 11 -- PENSIONS
The Company sponsors a defined contribution retirement plan comprising a
profit sharing part and a deferred compensation part which covers substantially
all of its employees. Under the profit sharing part, contributions are
determined as a percent (12.6%) of each covered participant's qualified
earnings, minus the Old Age, Survivors, and Disability Insurance portion of
social security taxes paid for the participant by the Company. Profit sharing
cost represents contributions minus the unvested amounts of terminated
participants. Under the deferred compensation part, contributions (cost) are
determined as 75 cents per dollar of deferred compensation for the first 3
percent of a participant's compensation and 25 cents per dollar for the next 3
percent, up to 6 percent of a participant's compensation. The total cost of the
retirement plan (in thousands) amounted to $3,500 in 1993, $3,700 in 1992, and
$4,400 in 1991.
NOTE 12 -- TRANSACTIONS WITH AFFILIATED COMPANIES
The Company provides administrative services for Ford Credit and other Ford
affiliates, for which the Company is reimbursed. Ford also provides
administrative services to the Company, for which Ford is reimbursed. The
Company believes that these arrangements, which are not covered by any formal
agreement between the Company, Ford Credit and Ford or its affiliates, are
mutually beneficial. Assessments for services by the Company to Ford Credit and
other affiliates were (in thousands): 1993, $12,423; 1992, $11,781; 1991,
$13,553; and assessments by Ford to the Company were $2,280, $2,776, and $2,566,
respectively.
In 1989, the Company leased office space from Ford Motor Land Development
Corporation, a subsidiary of Ford. The lease, with a term of five years plus an
extension of an additional five years, is classified as an operating lease. The
base rent (in thousands) for the initial five year lease term amounts to $2,204,
plus 22% of the operating expenses and property taxes related to the building.
Rent expense (in thousands) amounted to $701 in 1993, $731 in 1992, and $823 in
1991. Beginning in 1991, a portion of the leased office space was subleased to
several divisions of Ford Motor Company. Sublease income, which includes amounts
for leasehold improvements and furniture and fixtures, (in thousands) amounted
to $1,013 in 1993, $716 in 1992 and $438 in 1991.
In 1992, the Company purchased equipment and the remaining payments under
an existing operating lease agreement due from Ford. The revenue earned during
the remaining operating lease term in 1992 amounted to $8.1 million. The
corresponding depreciation of the asset during the period was $7.5 million. In
December 1992 the lease with Ford was renewed with upgraded equipment, purchased
for $28.2 million, and classified as a finance lease with an initial lease term
of 42 months. The revenue earned under the finance lease was $2.2 million in
1993 and $198,000 in 1992.
A 1991 agreement with Ford provides for payments by Ford to the Company of
broker fees for the negotiation and arrangement of leases for Ford. Such fees
(in thousands) were $2,546 in 1993, $1,514 in 1992 and $1,794 in 1991.
The Company receives fees for the management of rail cars for Ford Credit.
Such fees (in thousands) were $294 in 1993, $145 in 1992, and $130 in 1991.
In 1993 and 1992, Ford Holdings made capital contributions to the Company
of $40 million and $5 million, respectively.
The Company acts as general partner to a limited partnership, in which it
has a 23% equity interest. In addition, the Company had a nominal investment
interest and acted as general partner to three limited partnerships which were
liquidated in 1991. In accordance with the limited partnership agreements, the
Company receives fees and other compensation for services provided. Such amounts
earned were as follows (in thousands): 1993, $774; 1992, $770; and 1991, $1,042.
33
34
NOTE 12 -- TRANSACTIONS WITH AFFILIATED COMPANIES (CONTINUED)
The Company, in partnership with AT&T Capital Corporation, leased vehicles
to subsidiaries and affiliates of American Telephone and Telegraph Company. In
such arrangements, the Company provided the services of accounting, purchasing,
collections and fleet management, as well as providing loans to an affiliate.
Fees received (in thousands) were $326 in 1993, $276 in 1992, and $326 in 1991.
Notes receivable and interest income, respectively, (in thousands) were: 1993,
$0 and $407; 1992, $11,060 and $409; and 1991, $11,281 and $728. The Company
sold its equity interest in the partnership in December, 1993, but continues to
provide operational services.
NOTE 13 -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into certain transactions that can give rise to
financial instruments with off-balance-sheet risk. The following information
pertains to those financial instruments held at December 31, 1993.
The Company has entered into arrangements to manage exposure to
fluctuations in interest rates. These arrangements primarily include interest
rate swap agreements. Interest rate swap agreements involve the exchange of
interest obligations on fixed and floating interest rate debt without the
exchange of the underlying principal amounts. The agreements generally mature at
the time the related debt matures. The differential paid or received on interest
rate swap agreements is recognized as an adjustment to interest expense over the
life of the agreements. Notional amounts are used to express the volume of
interest rate swap agreements. The notional amounts do not represent cash flows
and are not subject to risk of loss. In the unlikely event that a counterparty
fails to meet the terms of an interest rate swap agreement, the Company's
exposure is limited to the interest rate differential. The fair value of
interest rate swaps (used for hedging purposes) is the estimated amount that the
Company would receive or pay to terminate the swap agreements at the reporting
date, taking into account current interest rates and current credit-worthiness
of the swap counterparties. At December 31, 1993, the Company had 95 interest
rates swaps, of which 22 swaps were in a net receivable position with a notional
principal amount of $629.9 million and 73 swaps in a net payable position with a
notional principal amount of $1.3 billion. It would cost the Company $43.6
million to terminate the swaps in a net payable position and the Company would
receive $45.3 million to terminate the swaps in a net receivable position.
The Company has issued financial guarantees in support of lines of credit
and lease/sublease transactions entered into by two affiliates of Ford. These
affiliates, located in the United Kingdom and Australia, were previously
subsidiaries of the Company, which retains management responsibility for their
operations. The lines of credit have various expiration dates through 1994, and
the sublease transactions extend through 1994. At December 31, 1993, the
financial guarantees issued totaled $197 million for the United Kingdom, and $61
million for Australia. At December 31, 1993, the outstanding balances subject to
such guarantees were $39 million for the United Kingdom, and $38 million for
Australia. The disclosed amount of the guarantees is a reasonable estimate of
the market value as it represents the cost to satisfy the guarantees. (See Item
1. Business "Management of Foreign Affiliates".)
Additionally, under several of the Company's domestic lease transactions,
it guaranteed under certain conditions that the lessor or lender will receive
additional rents of specified amounts after the original lease terms expire. The
expiration dates are between 1996 and 2001. At December 31, 1993, such
guarantees totaled $17 million. The Company has not provided collateral or other
security to support financial instruments with credit risk.
The Company has also entered into several commitment agreements with third
parties contemplating possible first mortgage loans and equipment leases. The
interest rates on the first mortgage loan commitments average prime or Libor
plus 3.98% and they have various expiration dates through 1998. At December 31,
1993, such commitments totaled approximately $95 million. The disclosed amount
of the commitments is a reasonable estimate of the market value, as all
financing rates are floating until funding.
The Company has entered into a variety of other financial agreements which
contain potential risk of loss. These agreements include interest rate swap
spread contracts and revolving loan commitments. Neither the amounts of these
agreements, fair value, nor the potential risk of loss was considered to be
significant at December 31, 1993.
34
35
NOTE 14 -- CONCENTRATIONS OF CREDIT RISK
The Company controls its credit risk through credit standards, limits on
exposure, and monitoring the financial condition of other parties. The lease,
note and investment portfolios are well diversified, consisting of more than 75
industries.
A significant portion of the Company's business activity is with customers
and businesses located in California. As of December 31, 1993, the Company's net
finance and operating leases, notes receivable and investments in California
totaled approximately $700 million. There were no other significant regional,
industrial or group concentrations at December 31, 1993.
The Company generally requires the leased asset to serve as collateral for
the lease. The collateral consists principally of autos, computers and
peripherals, office furnishings, copiers, rail cars and aircraft. Notes
receivable are collateralized by first mortgages on real estate or equipment.
Investments are not collateralized.
NOTE 15 -- POSTRETIREMENT BENEFITS
The Company sponsors defined benefit postretirement health care plans that
provide medical and life insurance coverage to retirees and their dependents.
The cost of retiree and dependent medical coverage is shared between the Company
and the retiree. The life insurance plan is noncontributory. The accounting for
the health care plan anticipates future cost-sharing changes to the written plan
that are consistent with the Company's past practice. The Company defines a
maximum amount (or "cap") that it will contribute toward the health benefits of
each retiree. This cap is redetermined annually, and is based on the individual
retiree's number of dependents. The Company has a history of increasing this
cap. Over the last seven years the aggregate increase in the cap approximates
the average increase in the underlying premium costs of the program. This
valuation assumed that in future years the Company will continue to increase the
cap at the average rate of increase of the underlying cost of the retiree
benefit program. However, benefits and eligibility rules may be modified by the
Company from time to time.
The following table sets forth the plans' combined funded status reconciled
with the amount shown in the Company's statement of financial position at
December 31:
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION
1993 1992
------- -------
(IN THOUSANDS)
Retirees................................................. $(2,167) $(1,822)
Fully eligible plan participants......................... (572) (411)
Other active plan participants........................... (3,119) (3,542)
------- -------
(5,858) (5,775)
Plan assets at fair value................................ 0 0
------- -------
Accumulated postretirement benefit obligation in excess
of plan assets......................................... (5,858) (5,775)
Unrecognized net (gain)/loss from past experience
different from that assumed and from changes in
assumptions............................................ (694) 23
------- -------
(Accrued)/prepaid postretirement benefit cost............ $(6,552) $(5,752)
------- -------
------- -------
The Company's postretirement plans are underfunded; the accumulated
postretirement benefit obligation and plan assets for the plan at December 31,
1993 (in thousands) are $5,858 and $0, respectively.
35
36
NOTE 15 -- POSTRETIREMENT BENEFITS (CONTINUED)
NET PERIODIC POSTRETIREMENT BENEFIT COST INCLUDED THE FOLLOWING COMPONENTS:
1993 1992
---- ------
(IN THOUSANDS)
Service cost -- benefits attributed to service during the
period.................................................... $429 $ 429
Interest cost on accumulated postretirement benefit
obligation................................................ 484 444
Actual return on plan assets................................ 0 0
Net amortization and deferral............................... 0 0
Recognition of transition obligation........................ -- 5,002
---- ------
Net periodic postretirement benefit cost.................... $913 $5,875
---- ------
---- ------
Assumption: Discount rate at year-end....................... 7.5% 8.5%
For measurement purposes, 12 percent and 8 percent annual rates of increase
in the per capita cost of postretirement medical benefits were assumed for 1993
for the under age 65 indemnity and HMO and over age 65 indemnity plans,
respectively; the rates were assumed to decrease gradually to 5.5 percent for
2006 and remain at that level thereafter. The comparable rates assumed for 1992
were 14 percent and 9 percent for the under age 65 indemnity and HMO and over
age 65 indemnity plans, respectively. The health care cost trend rate assumption
has a significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of December 31,
1993 by $477,000 and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by $159,000.
36
37
SCHEDULE II
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
COLUMN A COLUMN B COLUMN C COLUMN D(1) COLUMN E
BALANCE BALANCE RECEIVABLE
RECEIVABLE AT END OF PERIOD
AT BEGINNING DEDUCTIONS -- -----------------------
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTIONS CURRENT NOT CURRENT
- ---------------------------------------------- ------------ ----------- ------------ ------- -----------
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
James G. Duff, President & CEO,
USL Capital Corporation*.................... $153 $153 $ 0
John Hause, Vice President, Treasurer,
USL Capital Corporation*.................... 120 120 0
John Pettipher, President,
Transportation and Industrial Financing*.... 100 75 25
Floyd Robinson, President,
Business Equipment Financing*............... 100 100
Raymond L. Smith, President,
Fleet Services*............................. $ 160 160
George F. Stallos, Executive Vice President &
CFO,
USL Capital Corporation*.................... 274 274
Eugene Wojciechowski, Director,
Information Systems,
USL Capital Corporation*.................... 131 131
YEAR ENDED DECEMBER 31, 1992
James G. Duff, Chairman & CEO,
USL Capital Corporation*.................... $200 $ 153 $200 $ 153
David Ellis, Vice President,
Transportation & Industrial Financing*...... 104 104 0
John Hause,Vice President, Treasurer,
USL Capital Corporation*.................... 120 120
Peter Jones, President,
Rail Services*.............................. 108 13 95
John Pettipher, President,
Transportation & Industrial Financing*...... 170 70 100
Floyd Robinson, President,
Business Equipment Financing*............... 100 100
Joseph M.Willett, Jr., Retired Executive
Vice President,
USL Capital Corporation*.................... 235 235 0
YEAR ENDED DECEMBER 31, 1991
William Burke, Executive Vice President,
Business Equipment Financing*............... $ 164 $ 164
James G. Duff, Chairman & CEO,
USL Capital Corporation*.................... $200 200
David Ellis, Senior Vice President,
Portfolio, Management*...................... 104 104
Peter Jones, Managing Director,
U.S. Leasing, Ltd.*......................... 107 150 $149 108
John Pettipher, President,
Transportation & Industrial Financing*...... 170 170
Joseph M.Willett, Jr., Executive Vice
President,
USL Capital Corporation*.................... 235 235
- ---------------
* Real estate loans for relocated employees, collateralized by first mortgages.
Amounts are due 1996-1998 and carry interest at 5.41% to 9.65%.
Column D(2) has been omitted as the answer is "none."
37
38
SCHEDULE V
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
PROPERTY, PLANT, AND EQUIPMENT
COLUMN B COLUMN E COLUMN F
------------ COLUMN C ---------- ----------
COLUMN A BALANCE --------- COLUMN D OTHER BALANCE
- -------------------------------------- AT BEGINNING ADDITIONS ----------- ADD- AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS (DEDUCT) OF PERIOD
- -------------------------------------- ------------ --------- ----------- ---------- ----------
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Office Equipment -- Owned............. $ 21,830 $ 5,118 $ 2,127 $ 24,821
Rental Equipment -- Owned............. 921,416 309,095 186,084 $694(1) 1,045,121
Office Equipment -- Capital Leases.... 690 690
YEAR ENDED DECEMBER 31, 1992
Office Equipment -- Owned............. $ 21,448 $ 1,359 $ 977 $ 21,830
Rental Equipment -- Owned............. 859,967 294,551 234,006 $800(1) 921,416
104(2)
Office Equipment -- Capital Leases.... 989 299 690
YEAR ENDED DECEMBER 31, 1991
Office Equipment -- Owned............. $ 19,713 $ 2,262 $ 538 $ 11(2) $ 21,448
Rental Equipment -- Owned............. 897,614 210,830 248,963 427(1) 859,967
59(2)
Office Equipment -- Capital Leases.... 989 989
- ---------------
(1) Increase (decrease) in initial direct costs.
(2) Transfer or reclassifications.
38
39
SCHEDULE VI
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT, AND
EQUIPMENT
COLUMN B COLUMN C
---------- ---------- COLUMN E COLUMN F
BALANCE ADDITIONS -------- ---------
COLUMN A AT CHARGED TO COLUMN D OTHER- BALANCE
- ------------------------------------ BEGINNING COST AND ----------- ADD AT END
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) OF PERIOD
- ------------------------------------ ---------- ---------- ----------- -------- ---------
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Office Equipment -- Owned........... $ 14,273 $ 4,273 $ 2,111 $ 16,435
Rental Equipment -- Owned........... 362,578 131,100 136,762 $(2,084 )(1) 354,832
Office Equipment -- Capital
Leases............................ 604 86 690
YEAR ENDED DECEMBER 31, 1992
Office Equipment -- Owned........... $ 11,741 $ 3,485 $ 953 $ 14,273
Rental Equipment -- Owned........... 367,240 159,324 164,159 $ 173 (1) 362,578
Office Equipment -- Capital
Leases............................ 785 117 298 604
YEAR ENDED DECEMBER 31, 1991
Office Equipment -- Owned........... $ 8,666 $ 3,488 $ 411 $ (2 )(1) $ 11,741
Rental Equipment -- Owned........... 348,021 177,805 158,584 (2 )(1) 367,240
Office Equipment -- Capital
Leases............................ 622 163 785
- ---------------
(1) Transfer or reclassifications.
39
40
SCHEDULE VIII
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
VALUATIONS AND QUALIFYING ACCOUNTS
COLUMN C
-------------------
COLUMN B ADDITIONS COLUMN E
------------ CHARGED TO ---------
COLUMN A BALANCE ------------------- COLUMN D BALANCE
- ------------------------------------------- AT BEGINNING COST AND OTHER ------------ AT END
CLASSIFICATION OF PERIOD EXPENSE ACCOUNTS (DEDUCTIONS) OF PERIOD
- ------------------------------------------- ------------ -------- -------- ------------ ---------
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Allowance for Doubtful Accounts............ $ 39,888 $24,752 $384(1) $9,813(2) $55,211
Allowance for Losses(3).................... 359 51 308
YEAR ENDED DECEMBER 31, 1992
Allowance for Doubtful Accounts............ $ 29,799 $19,375 $163(5) $9,449(2) $39,888
Allowance for Losses(3).................... 1,182 64 887(2) 359
Allowance for Unrealizable Residuals(4).... 210 210(2) 0
YEAR ENDED DECEMBER 31, 1991
Allowance for Doubtful Accounts............ $ 25,182 $10,394 $273(5) $6,050(2) $29,799
Allowance for Losses(3).................... 2,622 (1,360 ) 80(2) 1,182
Allowance for Unrealizable Residuals(4).... 335 125(2) 210
- ---------------
(1) Reclassification
(2) Write-offs, net of recoveries.
(3) Principally included in "Other receivables" caption on the balance sheet.
(4) Included in "Residual value" caption on the balance sheet, the purpose for
which relates to equipment casualties and lessee defaults.
(5) Represents balance of purchased portfolio.
40
41
SCHEDULE IX
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
SHORT-TERM NOTES PAYABLE
COLUMN D COLUMN E COLUMN F
COLUMN C ----------- ----------- ----------
COLUMN B -------- MAXIMUM AVERAGE WEIGHTED
COLUMN A ---------- WEIGHTED AMOUNT AMOUNT AVERAGE
- ---------------------------------------- BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS OF PERIOD RATE(1) PERIOD PERIOD(2) PERIOD(3)
- ---------------------------------------- ---------- -------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Bank and Other Borrowings............... $ -- -- $ -- $ -- --
Commercial Paper........................ 985,277 4.6% 1,259,391 1,101,556 4.1%
----------
Total......................... $ 985,277
----------
----------
YEAR ENDED DECEMBER 31, 1992
Bank and Other Borrowings............... $ -- -- $ -- $ -- --
Commercial Paper........................ 1,063,380 4.9% 1,160,953 981,789 4.6%
----------
Total......................... $1,063,380
----------
----------
YEAR ENDED DECEMBER 31, 1991
Bank and Other Borrowings............... $ -- -- $ 358 $ 55 8.8%
Commercial Paper........................ 790,137 6.8% 1,017,803 909,155 7.2%
----------
Total......................... $ 790,137
----------
----------
- ---------------
(1) The weighted average interest rate was based on rates and borrowings at the
end of the period after giving effect to interest rate exchange agreements.
These agreements, which expire through 2005, had the effect of fixing
interest rates on $292.1 million of debt at rates ranging from 5.66% to
9.46%.
(2) The average amount outstanding was based on the balances at the beginning of
the period and each month-end divided by 13.
(3) The weighted average interest rate during the period was computed by
dividing actual interest expense by the average short-term debt outstanding
during the period and after giving effect to interest rate exchange
agreements.
41
42
SCHEDULE X
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
COLUMN B
--------------------------
CHARGED TO COST AND
EXPENSES
--------------------------
COLUMN A YEARS ENDED DECEMBER 31
- ------------------------------------------------------------------- --------------------------
ITEM 1993 1992 1991
------- ------- ------
(IN THOUSANDS)
Maintenance and repairs............................................ $21,071 $10,445 $7,086
Depreciation and amortization of intangible assets, pre-operating
costs and similar deferrals...................................... 6,503 6,413 6,433
Taxes, other than payroll and income taxes......................... * * *
Royalties.......................................................... * * *
Advertising costs.................................................. * * *
- ---------------
* Less than 1% of total revenues.
42
43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 1-4976
USL CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OF INCORPORATION)
733 Front Street
San Francisco, California
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
94-1360891
(I.R.S. EMPLOYER IDENTIFICATION NO.)
94111
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 627-9000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
47
44
EXHIBITS INDEX
PAGE
-----
(3)A. Certificate of Incorporation of United States Leasing International,
Inc., a Delaware Corporation filed with the Secretary of State of
the State of Delaware on August 15, 1986............................ 48
B. Agreement of Merger pursuant to which United States Leasing
International, Inc., a California corporation, merged into United
States Leasing International, Inc., a Delaware corporation filed
with the Secretary of State of the State of Delaware on October 27,
1986................................................................ 62
C. Certificate of Amendment of Certificate of Incorporation of United
States Leasing International, Inc., pursuant to which United States
Leasing International, Inc. changed its name to USL Capital
Corporation filed with the Secretary of State of the State of
Delaware on November 12, 1993....................................... 71
D. Copy of Bylaws, as amended, through January 13, 1992, filed as
Exhibit (3)D. to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 is incorporated herein by this
reference........................................................... *
(4)A. Copy of Indenture dated as of January 15, 1986, between the Company
and the Chase Manhattan Bank (National Association), Trustee,
including forms of Debt Security and Medium Term Note, filed as
Exhibit (4)A. to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 is incorporated herein by this
reference........................................................... *
B. Supplemental Indenture dated as of October 27, 1986, between the
Company and the Chase Manhattan Bank (National Association),
Trustee, filed on November 22, 1988 as Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (File No.33-25722)............... 73
C. Second Supplemental Indenture dated as of December 1, 1988 to
Indenture dated as of January 15, 1986, between the Company and the
Chase Manhattan Bank (National Association), Trustee, filed on
November 22, 1988 as Exhibit 4.3 to the Company's Registration
Statement on Form S-3 (File No.33-25722)............................ 76
D. Copy of Indenture dated as of July 1, 1991, between the Company and
The First National Bank of Chicago, Trustee, including forms of Debt
Security and Medium Term Note, filed on July 15, 1991 as Exhibits
4.1, 4.2, 4.3 respectively, to the Company's Registration Statement
on Form S-3 (File No. 33-4165) is incorporated herein by this
reference........................................................... *
(10)A. Copy of Asset Purchase Agreement among USLI Fleet Financing, Inc.,
Asset Securitization Cooperative Corporation, Canadian Imperial Bank
of Commerce and United States Leasing International, Inc., dated as
of December 23, 1991, filed as Exhibit 10(A). to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991 is
incorporated herein by this reference............................... *
B. Copy of Purchase Agreement between United States Leasing
International, Inc. and USLI Fleet Financing, Inc., dated as of
December 23, 1991, filed as Exhibit 10(B). to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991 is
incorporated herein by this reference............................... *
C. First and Second Amendments to Asset Purchase Agreement among USLI
Fleet Financing, Inc., Asset Securitization Cooperative Corporation,
Canadian Imperial Bank of Commerce and United States Leasing
International, Inc., dated as of December 23, 1991.................. 88
D. First Amendment to Purchase Agreement between United States Leasing
International, Inc. and USLI Fleet Financing, Inc., dated as of
December 23, 1991................................................... 110
43
45
PAGE
-----
E. Copy of Lease Purchase Agreement dated as of April 1, 1992, between
the Company and Ford Motor Credit Company, filed as Exhibit 10(C) to
the Company's Annual Report on Form 10-K for the year ended December
31, 1992, is incorporated herein by this reference.................. *
F. Copy of Insurance and Indemnity Agreement dated April 1, 1992, among
the Company, Municipal Bond Investors Assurance Corporation and The
Chase Manhattan Bank, N.A., filed as Exhibit 10(D) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992, is
incorporated herein by this reference............................... *
G. Copy of Standard Terms and Conditions of Pooling and Servicing
Agreement, dated as of April 1, 1992, between the Company and The
Chase Manhattan Bank, N.A., filed as Exhibit 10(E) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992, is
incorporated herein by this reference............................... *
H. Copies of Pooling and Servicing Agreements for Trusts A, B and C,
dated as of April 1, 1992, between the Company and The Chase
Manhattan Bank, N.A., filed as Exhibit 10(F) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992, is
incorporated herein by this reference............................... *
I. Copy of Seller's Limited Guaranty dated April 30, 1992, executed by
the Company in favor of Municipal Bond Investors Assurance
Corporation, filed as Exhibit 10(G) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, is incorporated
herein by this reference............................................ *
(12) Computation of Ratio of Earnings to Fixed Charges................... 45
(23) Consent of Independent Public Accountants (with respect to the
Company's current Registration Statement on Form S-3)............... 46
- ------------
* Incorporated by Reference.
44