[CAPTION] UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
COMMISSION FILE NUMBER: 0-2616
CONSUMERS FINANCIAL CORPORATION
1200 CAMP HILL BY-PASS
CAMP HILL, PA 17011
PENNSYLVANIA 23-1666392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
filing such requirements for the past 90 days.
Yes XX No
Indicate the number of shares outstanding of each of the issuer s classes
of common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock May 1, 1998
$.01 Stated Value 2,595,617 shares
[CAPTION]
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 3
Consolidated Statements of Operations -
Three Months ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 5
Notes to Consolidated Financial Statements 6 - 11
Item 2. Management s Discussion and Analysis of Results of
Operations and Financial Condition 12 - 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15 - 16
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> March 31,1998 December 31,
(in thousands) (Unaudited) 1997
<S> <C> <C>
Assets
Investments:
Fixed maturities $4,076 $5,857
Mortgage loans on real estate 1,887 2,086
Other invested assets 261 295
Short-term investments 31,964 32,763
Total investments 38,188 41,001
Cash 289 641
Accrued investment income 188 268
Receivables 23,880 16,639
Prepaid reinsurance premiums 37,981 9,572
Deferred policy acquisition costs 25 13,570
Property and equipment 1,320 1,350
Other real estate 780 783
Other assets 731 1,211
$103,382 $85,035
Liabilities, Redeemable Preferred Stock and Shareholders
Equity
Liabilities:
Future policy benefits $17,649 $21,467
Unearned premiums 38,918 49,994
Other policy claims and benefits payable 4,047 2,539
Due to reinsurer on sale of credit insurance business 34,719
Other liabilities 1,664 4,556
Income taxes:
Current 415 430
Deferred (442) (445)
96,970 78,541
Redeemable preferred stock:
Series A, 8 1/2% cumulative convertible, net of 4,697 4,688
treasury stock
Shareholders equity:
Common stock 30 30
Capital in excess of stated value 7,989 7,989
Net unrealized appreciation of debt and equity 58 54
securities
Deficit (4,891) (4,796)
Treasury stock (1,471) (1,471)
1,715 1,806
$103,382 $85,035
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION> Three Months Ended
March 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1998 1997
<S> <C> <C>
Revenues:
Premiums written ($11)
Decrease in unearned premiums 103
Premium income 92
Net investment income $112 29
Net realized investment losses 24 (72)
Fees and other income 181 5
317 54
Benefits and expenses:
Death and other benefits 104
Amortization of deferred policy acquisition costs 2
Operating expenses 420 210
420 316
Loss from continuing operations before income tax benefit (103) (262)
Income tax benefit (15) (124)
Loss from continuing operations (88) (138)
Discontinued operations:
Loss from operations of discontinued businesses
(net of income taxes) (341)
Gain (loss) on disposal of discontinued businesses
(net of income taxes) 112 (131)
112 (472)
Net income (loss) $24 ($610)
Basic and diluted income (loss) per common share:
Loss from continuing operations ($0.08) ($0.10)
Discontinued operations 0.04 (0.18)
Net loss ($0.04) ($0.28)
Weighted average number of shares outstanding 2,596 2,609
Cash dividends declared per common share NONE NONE
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>(in thousands) 1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $24 ($610)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Deferred policy acquisition costs incurred (2,185)
Amortization of deferred policy acquisition costs 2,415
Other amortization and depreciation 24 63
Change in future policy benefits (697)
Change in unearned premiums (1,797)
Change in amounts due reinsurers (142) 182
Income taxes (15) (1,149)
Change in receivables 1,497 2,689
Change in other liabilities (376) (184)
Net assets transferred in sale of credit (3,647)
insurance business
Other (434) (143)
Total adjustments (3,093) (806)
Net cash used in operating activities (3,069) (1,416)
Cash flows from investing activities:
Purchase of investments (3) (5,046)
Maturity of investments 1,000 574
Sale of investments 1,829 5,970
Net cash provided by investing activities 2,826 1,498
Cash flows from financing activities:
Purchase of treasury stock (26)
Cash dividends to shareholders (109) (102)
Net cash used in financing activities (109) (128)
Net decrease in cash (352) (46)
Cash at beginning of period 641 556
Cash at end of period $289 $510
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
1. GENERAL:
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring items) necessary to present fairly the Company's consolidated
financial position as of March 31, 1998 and the consolidated results of
its operations and changes in its cash flows for the three months ended
March 31, 1998 and 1997. Certain prior year amounts have been reclassi
fied to conform with classifications used for 1998. Such reclassifi-
cations had no impact on operating results.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's 1997 Form 10-K.
The results of operations for the three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full
year.
2. DISCONTINUED OPERATIONS AND PLAN OF LIQUIDATION:
On December 30, 1997, the Company entered into an agreement with Life of
the South Corporation, a Georgia-based financial services holding company
(LOTS), pursuant to which the Company would (i) sell its credit insurance
and fee income accounts to LOTS effective October 1, 1997, (ii) sell its
September 30, 1997 inforce block of credit insurance business to American
Republic Insurance Company (American Republic), LOTS financial partner in
this transaction, effective January 1, 1998 and (iii) sell one of its
wholly-owned reinsurance subsidiaries to LOTS as of January 1, 1998. LOTS
and the Company have also agreed that, with respect to the Company s
principal insurance subsidiary, new credit insurance business produced by
that subsidiary s former customer accounts, which have now been
transferred to LOTS, will continue to be written on the policy or
certificate forms of the subsidiary until September 30, 1999, or an
earlier date which may be agreed to by the parties. This premium and the
related insurance risk will also be reinsured 100% to American Republic.
The sale of the inforce block of business referred to in (ii) above was
completed on May 13, 1998 (see Note 6), after the required approvals of
the Company s preferred and common shareholders and state insurance
regulators in the states of Delaware and Ohio were received. The sale of
the reinsurance subsidiary requires the approval of the insurance
regulators in the State of Arizona, which approval has not yet been
received.
The sale of the inforce block of business resulted in an after-tax loss
of approximately $3,800,000, of which $3,900,000 was reflected in the
Company s fourth quarter 1997 financial statements through a write-down
of deferred policy acquisition costs. The 1997 loss included an
$800,000 loss from operations from September 30, 1997 (the measurement
date) to December 31, 1997. An offsetting gain on disposal of $112,000,
which results from adjustments to certain estimates made in 1997, has
been included in the first quarter of 1998.
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
In addition to approving the sale of the inforce credit insurance
business, at the Special Meeting of Shareholders held on March 24, 1998,
the Company s shareholders also approved a Plan of Liquidation and
Dissolution, pursuant to which the Company intends to liquidate its
remaining assets, provide for all of its liabilities, redeem its pre-
ferred stock at par value ($10 per share) and distribute all remaining
cash to its common shareholders. Pursuant to the terms of its agreement
with LOTS, the Company will receive payments from LOTS over a five-year
period based on the amount of credit insurance premiums produced by the
customer accounts sold by the Company to LOTS.The Company may also
receive a payment from a contingency fund established
by the parties based on the claims experience on the inforce credit
insurance business from October 1, 1997 to September 30, 2002. As a
result, the final distribution to the Company s common shareholders will
not be made until late in 2002 when the amounts due from LOTS have been
received. The Company has made substantial reductions in its number of
employees during the past several years as a result of the discontinu-
ation of its various businesses. As of May 15, 1998, six people are
employed by the Company. During the liquidation period, the Company
intends to outsource most of the functions which will continue to be
required.
3. INCOME TAXES:
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax
purposes.
Significant components of the Company's deferred tax liabilities and
assets are as follows (in 000's):
<TABLE>
<CAPTION> March 31, December 31,
1998 1997
<S> <C> <C>
Deferred tax liabilities:
Fixed maturities $30 $28
Deferred policy acquisition costs 9 4,614
Other 42 168
81 4,810
Deferred tax assets:
Future policy benefits and financial 118 5,252
reinsurance
Net operating loss carry forwards 2,172 2,011
Other 476 225
2,766 7,488
Valuation allowance for deferred tax (2,243) (2,233)
assets
523 5,255
Net deferred tax asset ($442) ($445)
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
3. INCOME TAXES (CONTINUED):
Significant components of the provision for income taxes for the three
months ended March 31, 1998 and 1997 are as follows (in 000's):
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Current:
Federal ($18) ($75)
State 2 29
Total current (16) (46)
Deferred 1 (78)
Income tax benefit related to continuing operations (15) (124)
Income tax benefit included with
discontinued operations:
Current (251)
Deferred (122)
0 (373)
Total income tax benefit ($15) ($497)
</TABLE>
A reconciliation of the provision for income taxes and the amount which
would have been provided at statutory rates is as follows (in 000's):
<TABLE>
<CAPTION> 1998 1997
<S> <C> <C>
Loss from continuing operations before income tax benefit ($103) ($262)
Income tax benefit at 34% statutory rate on pre-tax loss ($35) ($89)
Dividends received deduction (4) (3)
State income taxes 2 19
Items not includable for tax purposes 79 29
Other, net (57) (80)
Actual income tax benefit ($15) ($124)<PAGE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES:
In 1989, the Company entered into an agreement for the lease of office
space. The facility contains approximately 44,500 square feet of office
space. The term of the lease is ten years with an option to renew for one
additional term of five years. Until March 1994, monthly lease payments
were $35,000. In March 1994, the Company exercised its option to acquire
a 50% interest in this property at a price of $1,750,000. The Company
continues to lease the entire building, which is classified as an
operating lease, but at monthly rent of $17,000 through July 1999,
although the Company has subleased a portion of the office space which it
does not otherwise occupy. The Company has no other significant leases.
In August 1997, the Company received a notice of proposed adjustment from
the Internal Revenue Service as a result of a recently completed tax
examination for the years ended December 31, 1992 and 1993. The Company
is currently seeking to have the adjustment rescinded. Based on the
current status of the matter, the Company does not believe it is
probable that a material amount of additional taxes will be due.
In connection with the cancellation of a joint venture agreement in 1996,
the Company agreed to pay its former joint venture partner a pro rata
share of the proceeds, if any, it receives from the sale of its credit
insurance accounts. Accordingly, over the next five years the Company
will pay approximately 19% of any gross fee revenues received from LOTS
for the sale of its customer accounts.
Reinsured risks would give rise to liability to the insurance subsidi-
aries only in the event that the reinsuring company is unable to meet its
obligations under the reinsurance agreements in force.
In November 1997, the Company and a third party reinsurer were sued by a
former general agency with whom the Company had a partnership agreement.
The partnership agreement provided that the agency would market universal
life insurance business for the Company, pursuant to specific criteria
established by the Company, and would also be entitled to a share of the
profits, if any, which arose from the business produced. The claimant is
seeking monetary damages to compensate it for the Company s alleged
failure to share profits and for other alleged losses resulting from the
Company s rejection of policy applications involving unacceptable risks.
While management believes this claim is completely without merit and
intends to vigorously defend itself in this matter, the ultimate outcome
of this claim cannot be determined at this time.
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES (CONTINUED):
In connection with the sale of the business and related operating assets
of Interstate Auto Auction, Inc. in November 1996, the Company provided
the buyer with limited indemnifications with respect to certain potential
environmental liabilities asserted within two years from the closing date.
The Company does not believe that these limited indemnifications will
have a materially adverse effect on the Company s financial position or
results of operations.
Certain claims, suits and complaints arising in the ordinary course of
business have been filed or are pending against the Company or its
subsidiaries. In the opinion of management, based on opinions of legal
counsel, adequate reserves, if deemed necessary, have been established
for these matters and their outcome will not result in a significant
effect on the financial condition or future operating results of the
Company or its subsidiaries. The Company has taken certain income tax
positions in previous years that it believes are appropriate. If such
positions were to be successfully challenged by the Internal Revenue
Service, the Company could incur additional income taxes as well as
interest and penalties. Management believes that the ultimate outcome
of any such challenges will not have a material effect on the Company s
financial statements.
5. PER SHARE INFORMATION
The following table sets forth the computation of basic and diluted per
share data.
</TABLE>
<TABLE>
<CAPTION> Three Months Ended
March 31,
(in thousands, except per share amounts) 1998 1997
<S> <C> <C>
Loss from continuing operations ($88) ($138)
Preferred stock dividends (109) (102)
Accretion of carrying value of preferred stock (9) (9)
Numerator for basic loss per share -
loss attributable to common shareholders (206) (249)
Effect of dilutive securities 0 0
Numerator for diluted loss per share ($206) ($249)
Denominator for basic loss per share -
weighted average shares 2,596 2,609
Effect of dilutive securities 0 0
Denominator for diluted loss per share 2,596 2,609
Basic and diluted loss per common share ($0.04) ($0.10)
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
6. SUBSEQUENT EVENTS:
As discussed in Note 2, effective January 1, 1998, the Company reinsured
its September 30, 1997 inforce block of credit insurance business and 100%
of the credit insurance premiums written and processed in the fourth
quarter of 1997 to American Republic, a financial partner of LOTS in this
transaction.
On May 13, 1998, closing on the reinsurance transaction was completed,
resulting in the transfer to American Republic of approximately
$29,700,000 in cash, short-term investments and receivables. An additional
$3,000,000 will also be transferred to American Republic from the cash
proceeds the Company receives from LOTS for the sale of one of the
Company s insurance subsidiaries to LOTS. That transaction is awaiting the
approval of the Arizona insurance regulators.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
A review of the significant factors which affected the Company s 1998 operating
performance as well as its financial position at March 31, 1998 is presented
below. Information relating to 1997 is also presented for comparative purposes.
This analysis should be read in conjunction with the Consolidated Financial
Statements and the related Notes appearing elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
The Company reported net income of $24,000 (a loss of $.04 per share) in the
first quarter of 1998 compared to a $610,000 loss ($.28 per share) in the same
period of 1997. Virtually all of the improvement results from the
discontinuation in 1997 of the Company s Automotive Resource Division, as
discussed more fully below.
In December 1997, the Company entered into an agreement to sell the remaining
business operations in its Automotive Resource Division to Life of the South
Corporation (LOTS), following the sale of its auto auction business in 1996 and
the sale in early 1997 of the rest of its individual life insurance business.
Consequently, all of these businesses have been presented in the Consolidated
Financial Statements appearing elsewhere in this Form 10-Q as discontinued
operations. The Company s continuing operations now consist principally of (i)
earned premiums and related acquisition and claims costs associated with a very
small closed block of extended service contract business, (ii) investment
income on existing assets, (iii) fee income from the sale of the Company s
credit insurance customer accounts and (iv) overhead expenses. A discussion of
the material factors which affected the Company s results from continuing
operations and, where applicable, the results from its discontinued operations
is presented below.
CONTINUING OPERATIONS
The Company s pre-tax loss from continuing operations decreased from $262,000
in the first quarter of 1997 to $103,000 in 1998. Fee income of $150,000
received from LOTS from the sale of the Company s credit insurance accounts
was the principal reason for the improvement. Such fee payments are based on
the credit insurance premiums produced by those accounts and will be paid to
the Company on a quarterly basis over a five-year period. Investment income
and realized investment gains were also higher in 1998, but these improvements
were more than offset by an increase in corporate expenses.
DISCONTINUED OPERATIONS - AUTOMOTIVE RESOURCE DIVISION
Effective January 1, 1998, the Company reinsured its September 30, 1997 inforce
block of credit insurance business and 100% of the credit insurance premiums
written and processed in the fourth quarter of 1997 to American Republic
Insurance Company (American Republic), a financial partner of LOTS in this sale
transaction. LOTS and the Company have also agreed that, with respect to the
Company s principal insurance subsidiary, new credit insurance business
produced by that subsidiary s former customer accounts, which have now been
transferred to LOTS, will continue to be written on the policy or certificate
forms of the subsidiary until September 30, 1999, or an earlier date which may
be agreed to by the parties. This premium and the related insurance risk will
also be reinsured 100% to American Republic.
The results from discontinued operations also improved from a $472,000 loss in
the first quarter of 1997 to a profit of $112,000 in 1998. The 1997 loss
includes a $341,000 operating loss from the Automotive Resource Division and a
$126,000 charge representing an adjustment to the loss reported in 1996 on the
disposal of the Company s remaining individual life insurance business. The
$112,000 gain in 1998 represents a reduction in the $3.1 million loss on
disposal of the Automotive Resource Division reported in the fourth quarter of
1997 due to adjustments in certain estimates made in the 1997 financial
statements.
FINANCIAL CONDITION
A discussion of the important elements affecting the Company s financial
position at March 31, 1998 and December 31, 1997 is presented below.
<TABLE>
<CAPTION> March 31, December 31,
(in thousands, except per share amounts) 1998 1997
<S> <C> <C>
Invested assets $38,188 $41,001
Total assets $103,382 $85,035
Total debt $0 $0
Total shareholders' equity and
redeemable preferred stock $6,412 $6,494
Shareholders' equity per common share $0.66 $0.70
</TABLE>
INVESTED ASSETS
Total investments declined from $41 million at the end of 1997 to $38.2 million
at March 31, 1998. The decrease is attributable to a $3.6 million advance
payment made to American Republic in connection with the sale of the Company s
credit insurance business. This payment reduced the amount otherwise due to
American Republic at the closing of the transaction, which occurred on May 13,
1998 (see Note 6 of the Notes to Consolidated Financial Statements appearing
elsewhere in this Form 10-Q). At that time, the Company transferred $29.7
million in cash, short-term investments and receivables and will transfer an
additional $3 million to American Republic from the cash proceeds which will be
received from LOTS for the sale of one of the Company s insurance subsidiaries.
That transaction will be completed following the approval of the insurance
regulators in the State of Arizona.
LIQUIDITY
The Company s subsidiaries have historically met most of their cash
requirements from funds generated from operations, while the Company has
generally relied on its operating subsidiaries to provide it with sufficient
cash funds to maintain an adequate liquidity position. As a result of the
Company s decision to sell its remaining operations, liquidate all of its net
assets and distribute cash to its shareholders, the Company s principal
sources of cash funds are the fee income to be received from LOTS, investment
income on existing assets and<PAGE>
proceeds from the sale of all non-liquid
assets. These funds must be used to settle all remaining liabilities, to pay
operating expenses until the Company is dissolved and to pay dividends to
preferred shareholders until the Company s preferred stock is redeemed. The
adequacy of the Company s liquidity position in the future will be principally
dependent on its ability to sell its real estate investments and other non-
liquid assets and the timing of such sales, as well as on the level of
operating expenses it must incur during the liquidation period.
CAPITAL RESOURCES
The Company s total equity declined $82,000 in the first three months of 1998,
as preferred dividends of $109,000 more than offset net income for the period.
Total equity, including redeemable preferred stock, was $6.4 million at March
31, 1998.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except for the matters discussed in Note 3 to the Notes to Consolidated
Financial Statements included elsewhere in this Form 10-Q, neither the
registrant nor its subsidiaries are involved in any pending legal
proceedings other than routine litigation incidental to the normal
conduct of its business during the three months ended March 31, 1998.
ITEM 2. CHANGES IN SECURITIES
During the three months ended March 31, 1998, there have been no
limitations or qualifications, through charter documents, loan agreements
or otherwise, placed upon the holders of the registrant's common or
preferred stock to receive dividends.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The registrant has not defaulted in the payment of principal, interest or
in any other manner on any indebtedness and is current with all its
accounts. There is no arrearage in the payment of dividends on the
registrant's preferred stock.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Shareholders held on March 24, 1998, the
registrant s common and preferred shareholders, each voting separately as
a class, approved (i) the sale of the Company s inforce block of credit
insurance business and the related transfer of certain assets to Life of
the South Corporation (LOTS) and (ii) a Plan of Liquidation and
Dissolution pursuant to which the Company will be voluntarily liquidated
and dissolved.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
None
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED):
(b) Reports on Form 8-K:
On January 13, 1998, the Company filed a Form 8-K with respect to
(i) the Asset Purchase Agreement entered into by and among the
Company, two of its subsidiaries and LOTS, involving the sale to
LOTS of the Company s inforce block of credit insurance business,
its credit insurance and fee income accounts and all of the
outstanding common stock of one of the Company s subsidiaries, and
(ii) the approval by the Company s Board of Directors of a Plan of
Liquidation and Dissolution in conjunction with the LOTS
transaction.
On March 13, 1998, the Company filed a Form 8-K to report that it
had received notices from NASDAQ stating that the Company s
preferred and common stock were not in compliance with certain NASD
Marketplace Rules. The notices further stated that the preferred
and common stock were scheduled to be delisted from the NASDAQ
National Market effective March 16, 1998 and May 28, 1998,
respectively. The Company reported that because of its present
plans to liquidate, it does not intend to take any steps to come
into compliance with the Marketplace Rules or to seek inclusion on
the NASDAQ Small Cap Market.
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.
CONSUMERS FINANCIAL CORPORATION
Registrant
Date May 20, 1998 By /S/ James C. Robertson
James C. Robertson, President
(Chief Executive Officer)
Date May 20, 1998 By /S/ R. Fredric Zullinger
R. Fredric Zullinger
Senior Vice President,
Chief Financial Officer
and Treasurer
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1997 DEC-12-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997 DEC-12-1997
<DEBT-HELD-FOR-SALE> 4,075,710 0 5,856,835
<DEBT-CARRYING-VALUE> 0 0 0
<DEBT-MARKET-VALUE> 0 0 0
<EQUITIES> 0 0 0
<MORTGAGE> 1,886,850 0 2,085,760
<REAL-ESTATE> 0 0 0
<TOTAL-INVEST> 38,187,866 0 41,000,598
<CASH> 289,019 0 641,234
<RECOVER-REINSURE> 0 0 0
<DEFERRED-ACQUISITION> 25,075 0 13,569,943
<TOTAL-ASSETS> 103,382,322 0 85,035,320
<POLICY-LOSSES> 17,648,768 0 21,466,953
<UNEARNED-PREMIUMS> 38,918,063 0 49,994,397
<POLICY-OTHER> 4,047,113 0 2,538,593
<POLICY-HOLDER-FUNDS> 0 0 0
<NOTES-PAYABLE> 0 0 0
0 0 0
4,696,905 0 4,687,913
<COMMON> 30,191 0 30,191
<OTHER-SE> 1,685,183 0 1,775,167
<TOTAL-LIABILITY-AND-EQUITY> 103,382,322 0 85,035,320
0 92,500 0
<INVESTMENT-INCOME> 111,997 28,614 0
<INVESTMENT-GAINS> 23,510 (72,505) 0
<OTHER-INCOME> 181,382 5,012 0
<BENEFITS> 0 103,570 0
<UNDERWRITING-AMORTIZATION> 0 2,590 0
<UNDERWRITING-OTHER> 420,227 209,512 0
<INCOME-PRETAX> (103,338) (262,051) 0
<INCOME-TAX> (15,106) (123,982) 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 112,652 (472,399) 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 24,420 (610,468) 0
<EPS-PRIMARY> (.04) (.28) 0
<EPS-DILUTED> 0 0 0
<RESERVE-OPEN> 0 0 0
<PROVISION-CURRENT> 0 0 0
<PROVISION-PRIOR> 0 0 0
<PAYMENTS-CURRENT> 0 0 0
<PAYMENTS-PRIOR> 0 0 0
<RESERVE-CLOSE> 0 0 0
<CUMULATIVE-DEFICIENCY> 0 0 0
</TABLE>
