Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1996
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period
from _____ to _____
Commission File No. 0-27268
-------
ACC CONSUMER FINANCE CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
A Delaware Corporation 33-0682821
---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
12750 High Bluff Dr., Suite 320,
San Diego, California 92130
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(619) 793-6300
(No Change)
--------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past ninety days. Yes...X.. No......
Indicate the number of shares outstanding of each of the
issuer's classes of common stock: 8,292,478 $.001 par value
common stock as of July 31, 1996.
Exhibit Index on Page ___
Page 1 of 34 <PAGE>
<TABLE>
ACC Consumer Finance Corporation
Condensed Consolidated Balance Sheets
<CAPTION> June 30, 1996 December 31, 1995
------------- -----------------
(Unaudited)
<S> <C> <C>
Assets
Cash and Cash Equivalents $ 99,052 $ 120,672
Restricted Cash 1,113,743 1,032,683
Credit Enhancement Cash Reserve 6,143,649 4,052,524
Installment Contracts Held for Sale, net (2) 22,365,001 28,187,778
Installment Contracts Held for Investment, net(3) 220,830 509,388
Interest Receivable 294,575 386,673
Asset Backed Securities (4) 6,684,022 3,910,080
Excess Servicing Receivables (5) 9,365,618 5,590,878
Accounts Receivable 6,017,260 1,423,112
Fixed Assets, net 951,855 842,016
Repossessed Vehicles 139,475 211,619
Prepaid Expenses 227,582 427,456
Other Assets 320,316 214,059
------------- ----------------
Total Assets 53,942,978 46,908,938
============= ================
Liabilities and Shareholders' Equity
Repurchase Facility, net 23,598,232 29,708,252
Other Borrowings (6) 2,388,036 7,439,597
Amount Due to Bank 2,613,270 1,537,290
Tax Liability 1,208,723 123,909
Lease Liability 431,454 519,486
Accounts Payable and Accrued Liabilities 2,481,597 1,295,604
------------- ----------------
Total Liabilities 32,721,312 40,624,138
Page 2 of 34 <PAGE>
Redeemable Preferred Stock, $.001 Par Value,
Authorized 2,000,000 Shares (7)
Series A-162,831 Shares issued and Outstanding
at December 31, 1995
Series B-11,538 Shares issued and Outstanding
at December 31, 1995 -- 6,279,049
------------- ----------------
Total Redeemable Preferred Stock -- 6,279,049
Shareholders' Equity
Common Stock, $.001 Par Value, Authorized
18,000,000 Shares, 8,292,478 and 2,099,992
Shares Issued and Outstanding as of June 30,
1996 and December 31, 1995, Respectively 8,292 2,100
Additional Paid-in-Capital 19,976,534 117,464
Retained Earnings/(Accumulated Deficit) 1,236,840 (113,813)
------------- ----------------
Total Shareholders' Equity 21,221,666 5,751
Commitments and Contingencies
Total Liabilities and Shareholders' Equity $ 53,942,978 $ 46,908,938
============= ================
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 3 of 34 <PAGE>
<TABLE>
ACC Consumer Finance Corporation
Condensed Consolidated Statements of Operations
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest Income
Interest Income $ 2,260,024 $ 2,072,161 $ 4,284,417 $ 4,533,063
Interest Expense (1,156,888) (1,278,768) (2,249,813) (2,452,622)
------------- ------------- ------------- -------------
Net Interest Income 1,103,136 793,393 2,034,604 2,080,441
Contract Losses
(Provision for)/Reversal of
Contract Losses (3) (199,921) 211,377 (348,784) (10,348)
Net Interest Income after ------------- ------------- ------------- -------------
Provision for Contract
Losses 903,215 1,004,770 1,685,820 2,070,093
Other Income
Servicing and Ancillary
Fees (2) and (5) 962,868 469,974 1,811,747 500,717
Gain on Sale of
Contracts (2) and (5) 3,683,023 3,913,477 6,584,609 3,913,477
------------- ------------- ------------- -------------
Total Other Income 4,645,891 4,383,451 8,396,356 4,414,194
Total Income 5,549,106 5,388,221 10,082,176 6,484,287
Page 4 of 34 <PAGE>
Expenses
Personnel 1,987,799 1,606,792 3,841,537 2,590,344
General and Administrative 992,406 653,666 1,740,961 1,104,474
Servicing 377,203 112,245 758,109 164,234
Occupancy and Equipment 120,803 95,128 213,504 170,067
Depreciation and
Amortization 109,338 67,172 208,958 120,482
------------- ------------- ------------- -------------
Total Expenses 3,587,549 2,535,003 6,763,069 4,149,601
Income Before Taxes 1,961,557 2,853,218 3,319,107 2,334,686
Income Tax Expenses 824,000 35,000 1,394,000 35,000
------------- ------------- ------------- -------------
Net Income $ 1,137,557 $ 2,818,218 $ 1,925,107 $ 2,299,686
============= ============= ============= =============
Preferred Stock Dividends $ 43,490 $ 54,148 $ 116,818 $ 96,827
============= ============= ============= =============
Net Income Available to
Common Shareholders $ 1,094,067 $ 2,764,070 $ 1,808,289 $ 2,202,859
============= ============= ============= =============
Primary and Fully Diluted
Net Income per Common
Share and Common Share $ 0.16 $ 0.49 $ 0.29 $ 0.43
Equivalent ============= ============= ============= =============
Shares Used in Computing
Income per Common Share
and Common Share Equivalent 7,180,716 5,697,427 6,736,596 5,370,517
============= ============= ============= =============
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 5 of 34 <PAGE>
<TABLE> ACC Consumer Finance Corporation
Condensed Consolidated Statement of Cash Flows
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,925,107 $ 2,299,686
Adjustments to reconcile net income to net cash
used in operating activities:
Gain on Sale of Contracts (6,584,609) (3,913,477)
Amortization and Depreciation 2,543,055 648,917
Provision for Contract Losses 348,784 10,348
Net Cash Deposited into Restricted Accounts (2,172,185) (62,349)
Changes in operating assets:
Net Decrease in Contracts Held for Sale 1,697,296 8,439,015
Interest Receivable 92,098 223,308
Accounts Receivable (4,594,148) (1,200,829)
Other Assets (121,142) (27,005)
Prepaid Expenses 199,874 (23,295)
Changes in operating liabilities:
Accounts Payable and Accrued Liabilities 2,270,807 1,111,413
------------- -------------
Net cash (used in)/provided by
operating activities (4,395,063) 7,505,732
CASH FLOWS FROM INVESTING ACTIVITIES
Net Decrease/(Increase) in Contracts Held for
Investment (437,392) 261,876
Principal Paydowns of Asset Backed Securities 1,018,190 108,113
Proceeds from Liquidation of Repossessed 1,320,400 949,600
Automobiles
Purchases of Fixed Assets (303,911) (392,033)
------------- -------------
Net cash provided by investing activities 1,597,287 927,556
Page 6 of 34 <PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Net Decrease in Financing Facility Balance (6,171,990) (12,113,093)
Increase in Other Borrowing 1,948,439 2,520,548
Repayment of Other Borrowing (7,000,000) --
Net (Decrease)/Increase in Capital Leases (88,032) 299,526
Increase in Amount Due to Bank 1,075,980 578,326
Net Proceeds from Issuance of Common Stock 12,585,218 --
Net Proceeds from Issuance of Preferred Stock 1,000,995 749,970
Payment of Preferred Stock Dividends (574,454) --
------------- -------------
Net cash provided by/(used in) financing
activities 2,776,156 (7,964,723)
(Decrease)/Increase in cash and cash equivalents (21,620) 468,565
Cash and cash equivalents at beginning of period 120,672 143,833
------------- -------------
Cash and cash equivalents at end of period $ 99,052 $ 612,398
============= ==============
SUPPLEMENTAL DISCLOSURE
Interest Paid $ 2,087,757 $ 2,457,550
============= =============
Taxes Paid $ 349,831 $ --
============= =============
Non-cash Conversion of Preferred Stock $ 7,280,044 --
============= =============
Transfers of Contracts Held for Sale to
Asset Backed Securities $ 3,631,000 $ 2,266,572
============= =============
Transfers of Contracts Held for Investment
to Repossessed Automobiles $ 1,248,256 $ 1,007,872
============= =============
Page 7 of 34 <PAGE>
Transfers of Contracts Held for Investment
to Contracts Held for Sale $ 986,196 $ 38,862,581
============= =============
Transfers of Contracts Held for Sale to Contracts
Held for Investment $ 1,857,286 $ 1,937,922
============= =============
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 8 of 34 <PAGE>
ACC CONSUMER FINANCE CORPORATION
Notes to Consolidated Financial Statements
For The Three-Month and Six-Month Periods Ended
June 30, 1996 and 1995
-----------------------------------------------
(1) Basis of Presentation
--- ---------------------
The condensed consolidated financial statements include the
accounts of ACC Consumer Finance Corporation (ACC) and its
wholly-owned subsidiaries, OFL-A Receivables Corp. (OFL-A) and
ACC Receivables Corp. (Receivables) (collectively, the Company).
All material intercompany accounts and transactions have been
eliminated. The condensed consolidated financial statements as
of June 30, 1996, and for the three-month and six-month periods
ended June 30, 1996, and 1995, are unaudited and reflect all
adjustments (consisting of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results in
the interim periods. The condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended
December 31, 1995. The results of operations for the three-month
and six month periods ended June 30, 1996, are not necessarily
indicative of the results for the entire year ending December 31,
1996.
In May 1996, the Company sold in an initial public offering
2,000,000 shares of its Common Stock (the "Offering") which
generated net proceeds of approximately $12.6 million. The
proceeds were used to partially pay-down the NIM Facility
(included in Other Borrowings), temporarily reduce advances on
the Company's warehouse facility (Repurchase Facility), and for
other general corporate purposes. In addition, each share of the
Company's Redeemable Preferred Stock automatically converted into
23 shares of Common Stock upon consummation of the Offering.
Total cumulative dividends of $574,454 were paid to the holders
of the Redeemable Preferred Stock subsequent to conversion.
Page 9 of 34 <PAGE>
(2) Installment Contracts Held For Sale
--- -----------------------------------
Installment Contracts held for sale are summarized as
follows:
<TABLE>
<CAPTION>
June 30, 1996 Dec. 31, 1995
------------- -------------
<S> <C> <C>
Principal Balance $ 23,458,719 $ 29,517,717
Purchase Discount (1,494,332) (1,161,892)
Deferred Expenses/(Net Fees) 351,359 (392,889)
Unrealized Hedge Loss 49,255 224,842
------------ ------------
$ 22,365,001 $ 28,187,778
============ ============
</TABLE>
The Company maintains an ongoing hedging program to minimize
the impact of changing interest rates on the value of the
Contracts. The Company has hedged its interest rate risk by
either selling forward Treasury notes (as of December 31, 1995),
or the sale of futures contracts of Treasury securities (as of
June 30, 1996), with terms of approximately 1.5 years to
2.0 years. The duration of these securities is comparable to the
average duration of the Contracts. As of June 30, 1996, the
Company had two-year treasury futures contracts with a notional
amount of $20 million for sale in September 1996. As of
December 31, 1995, the Company had sold forward $25 million of
Treasury notes for delivery in January 1996.
The Company recognizes unrealized gains and losses on the
hedging transactions as an adjustment to the basis of the
Contracts. Gains and losses are recognized upon sale of the
Contracts. The Company recognized $20,000 of net gains on the
hedging program during the six-months ended June 30, 1996. The
Company recognized $682,000 of net losses on the hedging program
during the six-months ended June 30, 1995.
In addition to the Contracts owned by the Company, the
Company serviced $148 million and $87 million of Contracts for
others as of June 30, 1996, and December 31, 1995, respectively.
The Company services Contracts for borrowers residing in
approximately 40 states, with the largest concentrations of
Contracts in California, Texas, Florida and Pennsylvania. An
economic slowdown or recession or a change in the regulatory or
legal environment in one or more of these states could have a
Page 10 of 34 <PAGE>
material adverse effect on the performance of the Company's
existing servicing portfolio and on its Contract purchases.
(3) Installment Contracts Held For Investment
--- -----------------------------------------
Contracts held for investment represent Contracts that are
ineligible for sale primarily due to their delinquent status.
The held for investment Contracts are also subject to the terms
of the Repurchase Facility and are held by a custodian until they
are repurchased. The Contracts held for investment are comprised
of the following:
June 30, 1996 Dec. 31, 1995
------------- -------------
Principal Balance $ 640,000 $ 1,040,695
Purchase Discount (40,490) (40,727)
Deferred Expenses/ 9,520 (13,772)
(Net Fees)
Allowance for Losses (388,200) (476,808)
----------- -----------
$ 220,830 $ 509,388
=========== ===========
The Company maintains an allowance for Contract losses based on
the outstanding principal balance of Contracts held for
investment. A summary of the activity in the allowance for
Contract losses is as follows:
<TABLE>
<CAPTION>
Three-Month Period Six-Month Period
Ended June 30, Ended June 30,
-------------------- ----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Beginning Balance $ 371,008 $ 962,504 $ 476,808 $1,181,004
Provision/(Reversal) 199,921 (211,377) 348,784 10,348
Charge-Offs (251,929) (254,932) (578,415) (702,182)
Recoveries 69,200 6,250 141,023 13,275
--------- --------- --------- ----------
Ending Balance $ 388,200 $ 502,445 $ 388,200 $ 502,445
========= ========= ========= ==========
</TABLE>
Page 11 of 34 <PAGE>
(4) Asset-Backed Securities
--- -----------------------
In connection with the securitizations, the Company retained
asset-backed securities (Subordinated Securities) representing 5%
of the principal balance of the Contracts sold. The Subordinated
Securities from the 1995-A Transaction, the 1995-B Transaction,
the 1996-A Transaction, and the 1996-B Transaction have pass-
through rates of 6.70%, 6.40%, 5.95%, and 6.90%, respectively.
These securities are currently valued at a discount to yield
approximately 13% to 14%. The Subordinated Securities are as
follows:
<TABLE>
<CAPTION> June 30, 1996 December 31, 1995
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
ACC Auto Grantor Trust
1995-A (net of discount
of $131,239 and
$192,094 at June 30,
1996 and December 31,
1995, respectively) $1,414,501 $1,519,000 $1,804,770 $1,961,000
ACC Auto Grantor Trust
1995-B (net of discount
of $171,138 and
$237,770 at June 30,
1996 and December 31,
1995, respectively) 1,766,993 1,896,000 2,105,310 2,290,000
ACC Auto Grantor Trust
1996-A (net of discount
of $175,257 at June 30,
1996) 1,505,538 1,626,000 -- --
ACC Auto Grantor Trust
1996-B (net of discount
of $251,510 at June 30,
1996) 1,996,990 2,206,000 -- --
Total $6,684,022 $7,247,000 $3,910,080 $4,251,000
</TABLE>
Page 12 of 34 <PAGE>
(5) Excess Servicing Receivables
--- ----------------------------
The Company has created excess servicing rights (ESRs) as a
result of the sale of Contracts in the Asset-Backed Security
program. ESRs are determined by computing the present value of
the excess of the weighted average coupon on the Contracts sold
(ranging from 19.77% to 20.50%) over the sum of: (i) the coupon
on the senior bonds (ranging from 5.95% to 6.90%), (ii) a base
servicing fee paid to the Company (ranging from 3.00% to 3.15%)
and (iii) the charge-offs expected to be incurred on the
portfolio of Contracts sold. For purposes of the projection of
the excess servicing cash flows, the Company currently assumes
that the principal and interest of charge-offs on the sold
portfolios will cumulatively approximate 10% to 11% of the
original principal of the Contracts sold, over the life of the
portfolio. Further, the Company uses an estimated average
Contract life of 1.5 to 1.7 years. The cash flows expected to be
received by the Company, before expected losses, are then
discounted at a market interest rate that the Company believes an
unaffiliated third-party purchaser would require as a rate of
return on such a financial instrument. Expected losses are
discounted using a rate equivalent to the risk-free rate which is
equivalent to the rate earned on securities rated AAA or better
with a duration similar to the underlying Contracts. This
results in an effective overall discount rate of approximately
15%. The excess servicing cash flows are only available to the
Company to the extent that there is no impairment of the credit
enhancements established at the time the Contracts are sold.
ESRs are amortized using the interest method and are offset
against servicing and ancillary fees. To the extent that the
actual future performance results are different from the excess
cash flows the Company estimated, the Company's ESRs will be
adjusted quarterly with corresponding adjustments made to income
in that period.
In connection with the valuation of ESRs, the Company
projects losses in the pool of Contracts which effectively
represents the estimated undiscounted recourse loss allowance
offset with the ESRs. As of June 30, 1996, the estimated
undiscounted recourse loss allowance embedded in the ESRs,
excluding accrued interest, was $12.5 million. This recourse
loss allowance represents 8.45% of the Contracts serviced for
others.
Page 13 of 34 <PAGE>
A summary of the activity in ESRs is as follows:
<TABLE>
<CAPTION> Six-Months Ended Year Ended
June 30, 1996 Dec. 31, 1995
---------------- -------------
<S> <C> <C>
Beginning Balance $5,590,878 $ --
ACC Auto Grantor Trust 1995-A -- 3,716,807
ACC Auto Grantor Trust 1995-B -- 3,983,892
ACC Auto Grantor Trust 1996-A 2,968,000 --
ACC Auto Grantor Trust 1996-B 3,240,000 --
Amortization (2,433,260) (2,109,821)
----------- -----------
Ending Balance $9,365,618 $5,590,878
========== ==========
</TABLE>
(6) Other Borrowings
--- ----------------
In September 1995, the Company entered into a $10 million
Subordinated Certificate and Net Interest Margin Certificate Financing
Facility Agreement (NIM Facility) with Cargill Financial Services
Corporation (Cargill), which is collateralized by the Subordinated
Securities and the ESRs of the 1995-A, 1995-B and 1996-A Transactions.
The facility was increased to $15 million on May 22, 1996. As of June 30,
1996, the Company had drawn approximately $2.4 million under this
facility. As of December 31, 1995, the Company had drawn $7.4 million
under this facility. The interest rate on the NIM Facility is the
one-month LIBOR, plus 7%. The Company also pays an annual commitment fee
of $150,000, which is payable in four quarterly installments. The NIM
Facility has a contractual maturity date of May 1998.
Page 14 of 34 <PAGE>
(7) Redeemable Preferred Stock
--- --------------------------
The changes in Redeemable Preferred Stock are as follows:
<TABLE>
<CAPTION>
Series A Series B Series C
Preferred Stock Preferred Stock Preferred Stock Total
----------------- --------------- --------------- -----
Shares Amount Shares Amount Shares Amount Amount
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 162,831 $5,529,079 11,538 $749,970 -- $ -- $6,279,049
1995
Issuance of Series C -- -- -- -- 7,913 1,000,995 1,000,995
Preferred Stock
Conversion to Common (162,831) (5,529,079) (11,538) (749,970) (7,913) (1,000,995) (7,280,044)
Stock
Balance of June 30, -- $-- -- $ -- -- $ -- $ --
1996 ========= =========== ======== ========= ======= =========== ===========
</TABLE>
Page 15 of 34 <PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
----------------------------------------------------------------
From the inception of the Company on July 15, 1993, through
April 30, 1995, the primary source of revenue for the Company was
net interest income on the Contracts owned by the Company. In
May 1995, the Company initiated an asset-backed securitization
program by which the Company sells its Contracts and retains
subordinate asset-backed securities (Subordinated Securities) and
excess servicing receivables (ESRs). The first securitization,
ACC Auto Grantor Trust 1995-A (the 1995-A Transaction), was
completed effective May 1, 1995, and involved the sale of
$51 million of Contracts. ACC Auto Grantor Trust 1995-B (the
1995-B Transaction) was completed effective September 1, 1995,
and involved the sale of $50 million of Contracts in two
installments. ACC Auto Grantor Trust 1996-A (the 1996-A
Transaction) was completed effective March 1, 1996 and involved
the sale of $36 million of Contracts. ACC Auto Grantor Trust
1996-B (the 1996-B Transaction) was completed effective June 1,
1996, and involved the sale of $46 million of Contracts. Since
initiation of the asset-backed securitization program, the
Company's earnings have been increasingly attributable to the
gains recognized on the sale of the Contracts. In addition,
servicing revenues are expected to comprise a greater percent of
the Company's revenues as a result of the growth of the servicing
portfolio. In contrast, interest income is expected to be a
declining portion of total revenues.
In May 1996, the Company sold in an initial public offering
2,000,000 shares of its Common Stock (the Offering) which
generated net proceeds of approximately $12.6 million. The
proceeds were used to partially pay-down the Subordinated
Certificate and Net Interest Margin Certificate Financing
Facility (NIM Facility), temporarily reduce advances on the
Company's warehouse facility (Repurchase Facility), and for other
general corporate purposes. In addition, each share of the
Company's Redeemable Preferred Stock automatically converted into
23 shares of Common Stock upon consummation of the offering.
Total cumulative dividends of $574,454 were paid to the holders
of the Redeemable Preferred Stock subsequent to conversion.
Results of Operations
---------------------
The Three Months Ended June 30, 1996, Compared to the Three
Months Ended June 30, 1995
-----------------------------------------------------------------
The Company reported net income of $1.1 million during the three-
month period ended June 30, 1996, compared to $2.8 million for
the three-month period ended June 30, 1995. Net income declined
from the comparable period primarily due to (i) a $1.1 million
increase in operating expenses, (ii) a $789,000 increase in the
Page 16 of 34 <PAGE>
provision for income taxes as a result of the reversal of the
valuation allowance on gross deferred tax assets during fiscal
year 1995, and (iii) a $411,000 increase in the provision for
Contract losses due to a $400,000 one-time recapture of allowance
for Contract losses in the three-month period ended June 30,
1995. These factors were partially offset by a $493,000 increase
in servicing income. During the current quarter, the gain on
sale of Contracts decreased by $230,000 to $3.7 million because
the Company sold fewer Contracts through asset-backed securities
than it sold during the comparable quarter. The Company
initiated its asset-backed securitization program during the
three-month period ended June 30,1995. During the quarter ended
June 30, 1996, the Company acquired $45 million of Contracts and
serviced an average of $156 million of Contracts (including
Contracts owned and Contracts sold and serviced) compared to $25
million and $68 million in the same quarter in 1995.
NET INTEREST INCOME. The Company generated approximately
$1.1 million of net interest income during the three-month period
ended June 30, 1996, compared to $793,000 in the three-month
period ended June 30, 1995. The principal source of the
Company's net interest income was the net yield on Contracts
(yield on the Contracts less the cost of the Repurchase
Facility). The net yield on Contracts increased to $882,000
during the three-month period ended June 30, 1996, from $423,000
for the three-month period ended June 30, 1995. This increase
was attributable primarily to three factors: (i) the average
balance of the Repurchase Facility was lower, primarily because
the period between the effective transfer date and the cash
settlement date for Contracts sold in the 1996-B Transaction was
shorter than that of the 1995-A Transaction; (ii) the yield on
Contracts increased to 21.7% from 19.5%; and (iii) the average
interest rate on the Repurchase Facility decreased to 8.7% from
9.2%. The Company also earned interest income of $331,000 on the
Subordinated Securities and cash balances held in restricted
accounts and recognized interest expense on Other Borrowings and
Leases of $267,000 in the three-month period ended June 30, 1996,
compared to $94,000 and $40,000, respectively, in the three-
month period ended June 30, 1995. In addition, during the period
between the effective transfer date and the cash settlement date
of an asset-backed transaction, the Company effectively owns, and
earns interest on, the senior security of the transaction. The
Company earned interest on these securities of $157,000 during
the three-month period ended June 30, 1996 compared to $316,000
in the three-month period ended June 30, 1996. The senior
security interest earned in 1995 is much higher than that in 1996
as a result of the longer period between the effective transfer
date and the cash settlement date of the 1995-A Transaction as
compared to the 1996-A Transaction.
GAIN ON THE SALE OF CONTRACTS. In the three-month period
ended June 30, 1996, the Company recognized a gain on sale of
$3.7 million, representing 8.0% of the $46 million of Contracts
Page 17 of 34 <PAGE>
sold in connection with the 1996-B Transaction. In the three-
month period ended June 30, 1995, the Company recognized a gain
of $3.9 million, representing 7.7% of the $51 million of
Contracts sold in connection with the 1995-A Transaction. See
note 5 of the Notes to Condensed Consolidated Financial
Statements for the methodology for calculating the gain on sale.
CONTRACT LOSS PROVISION. The Company recorded a provision
for Contract losses of $200,000 for the three-month period ended
June 30, 1996, compared to a net reversal of $211,000 for the
three-month period ended June 30, 1995. This net reversal
includes a provision for Contract losses of $189,000 and a one-
time recapture of $400,000 of allowance for Contract losses
provided for in a previous period for Contracts sold in
conjunction with the 1995-A transaction. The Company's entire
portfolio was still deemed held for investment until the prior
quarter and, as such, had required this allowance. The allowance
for Contract losses is maintained at a level deemed by management
to be adequate to provide for losses in the held for investment
portfolio
SERVICING REVENUES. The Company recorded $963,000 of
servicing and ancillary fees during the three-month period ended
June 30, 1996, compared to $470,000 for the three-month period
ended June 30, 1995. The substantial increase in servicing
revenues was a result of the 1995-B, 1996-A and 1996-B
Transactions, which were completed after June 30, 1995. The
average outstanding servicing portfolio (excluding Contracts
owned) was $122 million during the three-month period ended June
30, 1996, compared to $33 million in the three-month period ended
June 30, 1995. Future servicing revenues could be impacted by
increased levels of charge-offs and prepayments, relative to the
Company's estimates of charge-offs and prepayments at the time of
sale of the Contracts.
OPERATING EXPENSES. The Company reported operating expenses
of $3.6 million during the three-month period ended June 30,
1996, compared to $2.5 million for the three-month period ended
June 30, 1995. These expenses consisted primarily of personnel,
occupancy, collection, telecommunications and travel expenses.
The increase in expenses reflected the growth in the amount of
Contracts purchased and serviced by the Company. The operating
expense ratio (annualized operating expenses as a percentage of
the average Contracts owned and serviced) improved to 9.2% for
the three-month period ended June 30, 1996, from 14.9% for the
three-month period ended June 30, 1995.
Personnel expenses for the three-month period ended June 30,
1996, were $2.0 million, compared to $1.6 million during the
three-month period ended June 30, 1995. Personnel expenses
consisted primarily of salaries and wages, performance
incentives, employee benefits and payroll taxes. Personnel
expenses before performance incentive accruals were $1.7 million
Page 18 of 34 <PAGE>
for the three-months ended June 30, 1996 compared to $1.0 million
in the same period a year earlier. The overall increase in
personnel expenses is a result of an increase in the Company's
full-time employees to 175 from 98 as of June 30, 1996 and
June 30, 1995, respectively.
The Company's general and administrative expenses increased
to $992,000 for the three-month period ended June 30, 1996, from
$654,000 for the three-month period ended June 30, 1995. These
expenses consisted primarily of telecommunications, travel,
marketing, professional fees, insurance, credit inquiry and
management information systems expenses. The increase in general
and administration expenses reflected the substantial expansion
of the Company's operations.
Servicing expenses increased to $377,000 for the three-
month period ended June 30, 1996, compared to $112,000 for the
three-month period ended June 30, 1995. These expenses consisted
primarily of out-of-pocket collection, repossession and
liquidation expenses. The increase in servicing expenses is due
to the substantial growth of the Company's total average
servicing portfolio (including owned contracts and contracts sold
in securitizations) to $156 million during the quarter ended
June 30, 1996 from $68 million during the quarter ended June 30,
1995.
Occupancy and equipment expenses increased to $121,000 for
the three-month period ended June 30, 1996, from $95,000 for the
three-month period ended June 30, 1995. The increase in
occupancy and equipment expenses generally reflected the growth
in the operations of the Company. More specifically, the
Company has significantly expanded its headquarters office space
and its regional operations since June 30, 1995. The Company
expects its occupancy and equipment expenses to increase as the
Company expands its headquarters facility to accommodate growth
in servicing.
INCOME TAXES. For the three-month period ended June 30,
1996, the effective tax rate was 42% on $2.0 million of net
income before taxes. The effective tax rate was less than 2% on
$2.9 million of net income before taxes for the three-month
period ended June 30, 1995. The low effective tax rate in the
quarter a year earlier was primarily due to the reversal of the
valuation allowance on gross deferred tax assets during fiscal
year 1995.
The Six-Months Ended June 30, 1996, Compared to the Six Months
Ended June 30, 1995
--------------------------------------------------------------
During the six-months ended June 30, 1996 income before
taxes increased to $3.3 million compared to $2.3 million for the
same period in the prior year. This increase is primarily due to
an increase in the gain on sale of Contracts of $2.7 million
Page 19 of 34 <PAGE>
which is the result of the sale of $82 million of Contracts in
the six-months ended June 30, 1996, compared to $51 million
during the same period in 1995. Partially offsetting the
increase in the gain on sale was an increase in operating
expenses of $2.6 million as a result of the Company's expanded
purchasing and servicing operations. The Company reported net
income of $1.9 million during the six-month period ended June 30,
1996, compared to $2.3 million for the six-month period ended
June 30, 1995. The decrease in net income resulted from an
increase in the Company's effective tax rate which was 42% during
the first six months of 1996, compared to a nominal 1.5% in the
same period a year earlier.
NET INTEREST INCOME. The Company generated approximately
$2.0 million of net interest income during the six-month period
ended June 30, 1996, compared to $2.1 million in the six-month
period ended June 30, 1995. The principal source of the
Company's net interest income was the net yield on Contracts
(yield on Contracts less the cost of the Repurchase Facility)
which amounted to $1.8 million during the six-month period ended
June 30, 1996, compared to $1.7 million during the six-month
period ended June 30, 1995. This marginal increase is a result
of a lower average balance of Contracts owned offset by higher
net yield in the six-month period ended June 30, 1996 as compared
to the same period in 1995. The yield on Contracts increased to
21.6% from 19.9% and the average rate on the Repurchase Facility
decreased to 8.8% from 9.5% in the six-month periods ending June
30, 1996 as compared to the six-month period ending June 30,
1995, respectively. In addition, during the six-month period
ended June 30, 1996, the Company earned interest income of
$785,000 on the Subordinated Securities, Senior Securities and
cash balances held in restricted accounts, compared to $431,000
in the six-month period ended June 30, 1995. The Company
recognized interest expense on Other Borrowings and Leases of
$586,000 in the six-month period ended June 30, 1996 compared to
$55,000 in the six-month period a year earlier.
CONTRACT LOSS PROVISION. The Company recorded a provision
for Contract losses of $349,000 for the six-month period ended
June 30, 1996, compared to $10,000 for the six-month period ended
June 30, 1995. The 1995 provision includes a provision for
Contract losses of $410,000 and a one-time recapture of $400,000
of allowance for Contract losses provided for in a prior period
for Contracts sold in conjunction with 1995-A Transaction. The
allowance for Contract losses is maintained at a level deemed by
management to be adequate to provide for losses in the held for
investment portfolio.
SERVICING REVENUES. The Company recorded $1.8 million of
servicing and ancillary fees for the six-month period ended
June 30, 1996, compared to $501,000 for the six-month period
ended June 30, 1995. This substantial increase in servicing
revenues arose from an increase in the average size of the
Page 20 of 34 <PAGE>
portfolio of Contracts serviced for others to $107 million during
the six-month period ended June 30, 1996, from $17 million during
the same period in 1995. During six-months ended June 30, 1995,
the Company serviced only owned Contracts until the completion of
the 1995-A Transaction in May 1995.
GAIN ON THE SALE OF CONTRACTS. The Company recognized a
gain of $6.6 million on the sale of $82 million of Contracts in
connection with the 1996-A and 1996-B Transactions for the six-
month period ended June 30, 1996, compared to $3.9 million on the
sale of $51 million of Contracts in connection with the 1995-A
transaction in the six-month period ended June 30, 1995. See
note 5 of the Notes to Condensed Consolidated Financial
Statements for the methodology for calculating the gain.
OPERATING EXPENSES. The Company reported operating expenses
of $6.8 million during the six-month period ended June 30, 1996,
compared to $4.2 million for the six-month period ended June 30,
1995. The increase in expenses reflected the growth in the
amount of Contracts purchased and serviced by the Company. The
operating expense ratio improved to 9.4% for the six-month period
ended June 30, 1996 from 13.9% during the six-month period ended
June 30, 1995.
INCOME TAXES. For the six-month period ended June 30, 1996,
the effective tax rate was 42%, compared to 1.5% for the six-
month period ended June 30, 1995. The low effective tax rate for
the six-month period ended June 30, 1995, was due to the reversal
of the valuation allowance on gross deferred tax assets during
fiscal year 1995.
CREDIT PERFORMANCE AND RESERVES
-------------------------------
The following table provide the Company's historic
delinquency experience and amounts in repossession with respect
to its gross servicing portfolio, which includes Contracts owned
by the Company and Contracts sold in asset-backed securities, at
the dates indicated.
Page 21 of 34 <PAGE>
<TABLE>
<CAPTION> Delinquency Experience <F1>
---------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1996 1996 1995 1995 1995
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Gross Servicing $172,562 $139,969 $117,539 $100,028 $78,118
Portfolio (000's)
Period of
Delinquency
(000's)<F2>
31-60 days 4,827 2,256 3,217 2,620 1,504
61-90 days 1,347 1,010 1,171 838 363
91+ days 662 561 608 652 309
-------- -------- -------- -------- -------
Total $ 6,836 $ 3,827 $ 4,996 $ 4,110 $ 2,176
Delinquencies ======== ======== ======== ======== =======
(000's)
Total 3.96% 2.73% 4.25% 4.11% 2.79%
Delinquencies as
a Percentage of
Servicing
Portfolio
Amount in $ 1,369 $ 1,130 $ 861 $ 755 $ 571
Repossession <F3>
Amount in .79% 0.81% 0.73% 0.75% 0.73%
Repossession as a
Percentage of
Servicing
Portfolio
<F1> All amounts and percentages are based on the full amount
remaining to be repaid on each Contract, net of any unearned
finance charges.
<F2> The Company considers a Contract delinquent when an obligor fails
to make at least 90% of the contractual payment by the stated due
date. The period of delinquency is based upon the number of days
payments are contractually past due. Contracts not yet 31 days
past due are not considered to be delinquent.
<F3> Amount in Repossession represents the outstanding principal on
Contracts for which vehicles have been repossessed, but not yet
liquidated.
</TABLE>
Page 22 of 34 <PAGE>
The table below provides the Company's historic net charge-
off experience with respect to its average gross servicing
portfolio, which includes Contracts owned by the Company and
Contracts sold in asset-backed securities, during the periods
indicated.
<TABLE>
<CAPTION> Net Charge-Off Experience <F1>
Three Months Ended
------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1996 1996 1995 1995 1995
------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Average Servicing $ 156,266 $ 128,754 $ 108,784 $ 89,073 $ 68,057
Portfolio
Outstanding
(000's)<F2>
Net Charge-Offs $ 1,329 $ 1,417 $ 1,233 $ 851 $ 455
(000's) <F3> <F4>
Annualized Net 3.40% 4.40% 4.53% 3.82% 2.67%
Charge-Offs as a
Percentage of
Average Servicing
Portfolio
</TABLE>
<F1> All amounts and percentages are based on the full amount
remaining to be repaid on each Contract, net of any unearned
finance charges.
<F2> Average of receivables outstanding as of the beginning and
the end of the period.
<F3> Charge-off amounts exclude the effect of accrued interest,
discounts paid by the dealers, and potential recoveries from
legal proceedings against borrowers.
<F4> Net charge-offs are net of recoveries and include the
remaining Contract balance at the time of charge-off. In
the case of repossession, net charge-offs include the
remaining Contract balance at the time of the repossession
less liquidation proceeds (for disposed vehicles), NADA
wholesale value (for vehicles repossessed but not sold) or
claims receivable under the Company's vendor single interest
insurance policy. Net charge-offs do not include
repossessions that are less than 120 days delinquent and are
not yet charged-off.
The management of the Company believes that the payment
practices of non-prime borrowers are partially a function of the
time of year. Since non-prime borrowers typically have low
Page 23 of 34 <PAGE>
disposable incomes, they tend with more frequency to fall behind
in payments on their Contracts during the early winter months
when the holiday season generates competing demands for their
limited disposable income and when these borrowers encounter
weather-related work slow-downs. Delinquencies tend to improve
in the late winter months then increase again in the summer
months. Due to the 60 to 120 day lag between initial delinquency
and charge-off, management expects these seasonal factors to
cause charge-offs to be highest in the fourth and first calendar
quarters and to improve in the second and third calendar
quarters. The improvement in charge-offs and the increase in
delinquencies for the quarter ended June 30, 1996 compared to the
quarter ended March 31, 1996 follows these seasonal trends.
The Company maintains an allowance for losses on Contracts
that are held for investment. The Company determines an allowance
for Contract losses based on an estimate of the losses inherent
in the held for investment portfolio, including estimates of the
frequency of defaults for various delinquency ranges and the
expected average severity of losses on these defaults. The
allowances for Contract losses as of June 30, 1996, was $388,000,
or 61% of the Contracts held for investment. As of December 31,
1995, the allowance for Contract losses was $477,000, or 46% of
the Contracts held for investment.
In connection with the valuation of ESRs, the Company
projects losses in the pool of Contracts which effectively
represents the estimated undiscounted recourse loss allowance
offset with the ESRs. As of June 30, 1996, the estimated
undiscounted recourse loss allowance embedded in the ESRs was
$12.5 million. The combined allowance for losses on Contracts
held for investment and the recourse loss allowance embedded in
the ESRs was 7.5% of the gross Contracts serviced as of June 30,
1996.
Since January 1, 1995, the Company has maintained, at its
own expense, supplemental vendor single interest ("VSI")
insurance that protects the Company's interest in the collateral
against uninsured physical damage (including total loss) and
skips. During the period from January 1, 1995, through June 30,
1996 the Company's recoveries on its VSI insurance reduced its
net charge-offs by $846,000 and the total premiums paid by the
Company were $554,000.
Financial Condition and Liquidity
---------------------------------
The Company's financing needs are primarily driven by two
factors. First, the Company requires working capital to fund its
operating expenses because the net interest income earned on the
Contracts owned by the Company is restricted and not available
for general operating purposes. Second, the securitization
program is capital intensive as the Company must fund credit
enhancement and securitization expenses. The Company expects to
Page 24 of 34 <PAGE>
have an ongoing need for funds to support the securitization
program, and expects this need will exceed the amount of the
proceeds of the offering. The Company expects to borrow under
the NIM Facility to fund these credit enhancements and
securitization expenses, among other things.
The Company reported total assets of $54 million as of
June 30, 1996, compared to $47 million as of December 31, 1995.
As of June 30, 1996, and December 31, 1995, these assets
consisted primarily of Contracts held for sale, Subordinated
Securities and ESRs.
The Company had $99,000 of cash and cash equivalents as of
June 30, 1996, compared to $121,000 as of December 31, 1995. The
Company also had $7.3 million in cash balances held in restricted
bank accounts and as credit enhancements as of June 30, 1996,
compared to $5.1 million as of December 31, 1995.
The Company owned net Contracts of $23 million as of
June 30, 1996, compared to $29 million as of December 31, 1995.
During the six-month period ended June 30, 1996, the Company
acquired $79 million of Contracts and sold $82 million of
Contracts in the 1996-A and 1996-B Transactions. The average
discount and weighted average coupon on the Contracts acquired
during the six-months ended June 30, 1996, was 5.0% and 20.7%,
respectively.
As of June 30, 1996, the Company owned $9.4 million of ESRs
and $6.7 million of Subordinated Securities, compared to
$5.6 million and $3.9 million, respectively, as of December 31,
1995. These assets represented 29.8% and 20.3% of the total
assets of the Company as of June 30, 1996 and December 31, 1995,
respectively. The value of these assets would be reduced in the
event of a material increase in the charge-off and prepayment
experience relative to the Company's estimates at the time of
sale.
As of June 30, 1996, the Company owed a principal amount of
$19 million under the Repurchase Facility and had Contract
shipments in process of $4.9 million, compared to $29 million and
$626,000, respectively, as of December 31, 1995. The Repurchase
Facility balance was collateralized by $24 million of Contracts
as of June 30, 1996.
During the six-month period ended June 30, 1996, the Company
used net cash for operations of $4.4 million, compared to net
cash provided by operations of $7.5 million during the six-month
period ended June 30, 1995. This decrease in cash provided by
operations was primarily due to a net decrease in cash from the
acquisition and sales of Contracts held for sale of $6.7 million,
and a net increase in accounts receivable of $3.4 million. The
Company sold $82 million and acquired $79 million of Contracts
and temporarily used corporate cash to fund the acquisition of
Page 25 of 34 <PAGE>
approximately $5.1 million of Contracts in the six-month period
ended June 30, 1996, compared to the six-month period a year
earlier in which the Company sold $51 million and acquired $44
million of Contracts and relied on outside financing for all its
Contract acquisitions. Additionally, the Company deposited $2.2
million into restricted cash accounts and as credit enhancement
reserves during the six-month period ended June 30, 1996 as
compared to $62,000 during the same period in 1995.
The net cash provided by investing activities was $1.6
million during the six-month period ended June 30, 1996, compared
to $928,000 in the six-month period ended June 30, 1995. This
increase in cash provided was primarily due to collections
associated with a larger balance of Subordinated Securities, net
of an increased balance of Contracts held for investment (non-
performing delinquent Contracts) owned by the Company as of
June 30, 1996.
The net cash provided by financing activities was
$2.8 million for the six-month period ended June 30, 1996,
compared to net cash used of $8.0 million for the six-month
period ended June 30, 1995. The increase in cash provided by
financing activities was primarily due to net cash of $12.6
million raised in the Company's initial public offering and $1.0
million from the issuance of Preferred Stock, net of $7.0 million
used to partially pay-down the outstanding balance of the NIM
facility. Additionally, the Company reduced the balance of the
Repurchase Facility by $6.2 million in the six-month period ended
June 30, 1996 compared to $12.1 million in the same period a year
earlier.
The Company has financed its acquisition of Contracts
primarily through the Repurchase Facility. Cargill finances 100%
of the purchase price of the Contracts under the Repurchase
Facility. The Company has also used the proceeds of the NIM
Facility to finance credit enhancement and securitization
expenses arising from the issuance of asset-backed securities and
for working capital. A breach under either the Repurchase
Facility or the NIM Facility could prohibit the Company from
obtaining financing under both of the facilities and would
require the Company to obtain an alternative source of financing
or limit its purchase of Contracts.
Interest Rate Risk Management
-----------------------------
The Company's hedging plan includes the sale of futures
contracts of two-year Treasury securities. These sales are made
by the Company in amounts which generally correspond to the
principal amount of expected sales of asset-backed securities.
The market value of future contracts responds inversely to
changes in the value of the Contracts. Gains and losses relative
to these hedging transactions are deferred and recognized at the
time of securitization as an adjustment to the gain or loss on
Page 26 of 34 <PAGE>
sale. The Company recognized net gains on the hedging program of
$20,000 during the six-month period ended June 30, 1996 as
compared to net losses of $682,000 during the six-month period
ended June 30, 1995. As of June 30, 1996, the Company had
unrealized losses under the hedging program of $49,000.
At any point in time, the portfolio may be partially or
fully hedged. As of June 30, 1996, the Company owned $24 million
of Contracts and maintained a $20 million hedge position.
Current Accounting Issues
-------------------------
In June of 1996, the Financial Accounting Standards Board
issued Statement of Accounting Standards No. 125, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities (SFAS 125). SFAS 125 provides accounting and
reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities These standards are
based on consistent application of a financial components
approach that focuses on control. Under that approach, after a
transfer of financial assets, an entity recognizes the financial
and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished.
SFAS 125 provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that
are secured borrowings. SFAS 125 requires that liabilities and
derivatives incurred or obtained by transferors as part of a
transfer of financial assets be initially measured at fair value,
if practicable. It also requires that servicing assets and other
retained interests in the transferred assets be measured by
allocating the previous carrying amount between the assets sold,
if any, and retained interest, if any, based on their relative
fair values at the date of the transfers. SFAS 125 includes
specific provisions to deal with servicing assets or liabilities.
SFAS 125 will be effective for transactions occurring after
December 31, 1996. It is not anticipated that the financial
impact of this statement will have material effect on the
Company.
Page 27 of 34 <PAGE>
INDEX
ACC CONSUMER FINANCE CORPORATION
Page
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)
Condensed consolidated balance sheets as of
June 30, 1996 and December 31, 1995
Condensed consolidated statements of
operations for the three months
and six months ended
June 30, 1996 and June 30, 1995
Condensed consolidated statements of
cash flows for the six months ended
June 30, 1996 and June 30, 1995
Notes to condensed consolidated financial
statements
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PART II - OTHER INFORMATION
---------------------------
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed during the
quarter ended June 30, 1996.
b. Exhibits
--------
Exhibit 11 - Computation of Weighted Average Shares
Outstanding
Exhibit 27 - Financial Data Schedule
Page 28 of 34 <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
ACC CONSUMER FINANCE CORPORATION
Date: August 2, 1996 By /s/ Rocco Fabiano
-----------------------------
Rocco Fabiano
Chief Executive Officer
Date: August 2, 1996 By /s/ Rellen Stewart
-----------------------------
Rellen Stewart
Chief Financial Officer
Date: August 2, 1996 By /s/ Shaemus Garland
-----------------------------
Shaemus Garland
Controller
Page 29 of 34 <PAGE>
No. Description Page
-----------------------------------------------------------------
11 Computation of Weighted Average Shares
Outstanding 31
27 Financial Data Schedule 34
Page 30 of 34 <PAGE>
<TABLE>
<CAPTION>
Exhibit 11
ACC Consumer Finance Corporation
Computation of Weighted Shares Outstanding
Three Months Ended June 30,
1996 1995
------------------------------------------------------------
Issue Fully Fully
Date Primary Diluted Primary Diluted
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Shares
Outstanding at
Beginning of
Period $6,292,478 $6,292,478 $5,298,717 $5,298,717
Convertible
Preferred Stock
Warrants
Treasury Stock
Method 7/15/93 -- -- 398,710 398,710
Common Stock 5/22/96 857,143 857,143 -- --
Employee Stock
Options
Treasury Stock
Method 11/30/96 -- 20,685 -- --
Subsequent
Options
Treasury Stock
Method 1/23/96 7,777 10,410 -- --
---------- ---------- ---------- ----------
Page 31 of 34 <PAGE>
Weighted Average
Shares at End of
Period
7,157,398 7,180,716 5,697,427 5,697,427
========== ========== ========== ==========
Six Months Ended June 30,
1996 1995
------------------------------------------------------------
Shares
Outstanding at
Beginning of
Period $6,110,479 $6,110,479 $5,033,343 $5,033,343
Series B
Preferred Stock
As if Converted
date of
Issuance
3/28/95 -- -- 137,819 137,819
Convertible
Preferred Stock
Warrants
Treasury Stock
Method 7/15/93 -- -- 199,355 199,355
Series C
Preferred Stock
As if converted
from Beginning
of all Periods
Presented (SAB
No. 83) 1/15/96 181,999 181,999 -- --
Common Stock 5/22/96 428,571 428,571 -- --
Page 32 of 34 <PAGE>
Employee Stock
Options
Treasury Stock
Method 11/30/96 -- 10,342 -- --
Subsequent
Options
Treasury Stock
Method 1/23/96 3,889 5,205 -- --
---------- ---------- ---------- ----------
Weighted Average
Shares at End of
Period
6,724,938 6,736,596 5,370,517 5,370,517
========== ========== ========== ==========
</TABLE>
Page 33 of 34 <PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,356,444
<SECURITIES> 6,684,022
<RECEIVABLES> 6,311,835
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,273,204
<PP&E> 1,537,517
<DEPRECIATION> (585,662)
<TOTAL-ASSETS> 53,942,978
<CURRENT-LIABILITIES> 32,721,312
<BONDS> 0
0
0
<COMMON> 19,984,826
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 53,942,978
<SALES> 0
<TOTAL-REVENUES> 12,680,773
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (6,763,069)
<LOSS-PROVISION> (348,784)
<INTEREST-EXPENSE> (2,249,813)
<INCOME-PRETAX> 3,319,107
<INCOME-TAX> (1,394,000)
<INCOME-CONTINUING> 1,925,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,925,107
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
