<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number: 28050
ONYX ACCEPTANCE CORPORATION
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Delaware 33-0577635
Onyx Acceptance Corporation
8001 Irvine Center Drive, Suite 500 Irvine, Ca. 92718
(714) 450-5500
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 May 1, 1996, there were 5,871,633 shares of registrant's Common
Stock, par value $.01 per share outstanding.
<PAGE> 2
ONYX ACCEPTANCE CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements Page
<S> <C>
Balance Sheets at March 31, 1996 (Unaudited) and December 31, 1995 ................................ 3
Consolidated Statements of Income for the three months ended
March 31, 1996 (Unaudited) and March 31, 1995...................................................... 4
Consolidated Statements of Shareholders' Equity for the three months
ended March 31, 1996 (Unaudited).................................................................. 5
Consolidated Statements of Cash Flows for the three months ended
March 31, 1996 (Unaudited), and March 31, 1995 (Unaudited)......................................... 6
Notes to Consolidated Financial Statements......................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................................... 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................................. 18
Item 5. Other Information................................................................................. 19
Item 6. Exhibits and Reports on Form 8-K................................................................... 19
SIGNATURES.................................................................................................. 24
</TABLE>
2
<PAGE> 3
<PAGE> 4
ONYX ACCEPTANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
(UNAUDITED)
ASSETS
<S> <C> <C>
CASH & CASH EQUIVALENTS .................................. $ 578,365 $ 1,622,713
TRUST RECEIVABLES ........................................ 6,403,340 6,208,617
LOANS HELD FOR SALE (Net of allowance) ................... 86,716,939 120,215,434
EXCESS SERVICING (Net of amortization) ................... 15,104,886 6,181,518
OTHER ASSETS ............................................ 2,281,814 1,848,559
------------- -------------
TOTAL ASSETS ................................ $ 111,085,344 $ 136,076,841
============= =============
LIABILITIES AND EQUITY
LIABILITIES
ACCOUNTS PAYABLE ...................................... 819,984 287,519
DEBT .................................................. 76,916,636 131,949,536
OTHER LIABILITIES ..................................... 2,523,724 2,356,334
------------- -------------
TOTAL LIABILITIES ........................... 80,260,344 134,593,389
REDEEMABLE PREFERRED STOCK SERIES A ................... 0 9,379,177
EQUITY
PREFERRED STOCK SERIES B .............................. 0 1,364
COMMON STOCK
Par value $.01 per share; authorized 4,373,178
shares; issued and outstanding 2,241,500 as of
December 31, 1995 and issued and outstanding
5,496,633 as of March 31, 1996 ............... 54,967 22,415
PAID IN CAPITAL ....................................... 35,141,060 803,109
RETAINED EARNINGS ..................................... (4,371,027) (8,722,613)
------------- -------------
TOTAL EQUITY ................................ 30,825,000 (7,895,725)
------------- -------------
TOTAL LIABILITIES AND EQUITY ................ $ 111,085,344 $ 136,076,841
============= =============
</TABLE>
3
<PAGE> 5
ONYX ACCEPTANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
Finance Revenue $ 2,135,353 $ 2,233,457
Interest Expense 1,790,268 1,290,357
----------- -----------
Net Finance Revenue 345,085 943,100
Provision for Credit Losses (74,894) 178,864
----------- -----------
Net Finance Revenue after Provision 419,978 764,236
Gain on Sale of Loans 5,324,711 0
Service Fee Income 1,104,894 243,456
Expenses:
Salaries and Benefits 1,795,696 1,075,083
Depreciation 170,398 158,247
Occupancy 122,123 81,870
General and administrative expenses 779,508 433,331
----------- -----------
Total Expenses 2,867,725 1,748,531
----------- -----------
Net Income (Loss) before Taxes 3,981,858 (740,839)
Income Taxes 782,100 0
----------- -----------
Net Income (Loss) after Taxes $ 3,199,758 ($ 740,839)
=========== ===========
Net Income (Loss) per share of Common Stock $ 0.87 ($ 0.21)
=========== ===========
Weighted average number of shares
of Common Stock and Common Stock
Equivalent outstanding 3,697,525 3,534,451
=========== ===========
</TABLE>
4
<PAGE> 6
ONYX ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
REDEEMABLE SERIES A
PREFERRED STOCK COMMON STOCK
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 8,227,349 $ 9,379,177 2,241,454 $ 22,415
Issuance of Common Stock 0 0 2,500,000 25,000
Conversion of Preferred Stock Series A (8,227,349) (9,379,177) 715,422 7,154
Conversion of Preferred Stock Series B 39,757 398
Issuance Costs
Net Income
---------------------------------------------------------------------------
Balance at March 31, 1996 0 $ 0 5,496,633 $ 54,967
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
SERIES B PREFERRED ADDITIONAL TOTAL
STOCK PAID IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 136,365 $ 1,364 $ 803,109 ($ 8,722,613) ($ 7,895,725)
Issuance of Common Stock 28,284,384 28,309,384
Conversion of Preferred Stock Series A 0 8,220,195 1,151,828 9,379,177
Conversion of Preferred Stock Series B (136,365) (1,364) 966
Issuance Costs (2,167,594) (2,167,594)
Net Income 3,199,758 3,199,758
-----------------------------------------------------------------------------
Balance at March 31, 1996 0 $ 0 $ 35,141,060 ($ 4,371,027) $ 30,825,000
=============================================================================
</TABLE>
5
<PAGE> 7
ONYX ACCEPTANCE CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
------- --------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 28,249,317 (36,032,328)
INVESTING ACTIVITIES:
PURCHASES OF PROPERTY AND EQUIPMENT (394,542) (97,072)
---------- ----------
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES (394,542) (97,072)
FINANCING ACTIVITIES:
PROCEEDS FROM ISSUANCE OF COMMON STOCK 26,328,502 2,836
PROCEEDS FROM EXERCISE OF WARRANT 1,320
PAYMENTS OF IPO RELATED CAPITALIZED FEES (166,031)
PROCEEDS FROM DRAWDOWNS ON WAREHOUSE LINE OF CREDIT 1,048,868
PAYMENTS ON CAPITAL LEASE OBLIGATIONS (Net of proceeds) (8,013) (110,060)
PROCEEDS FROM DRAWDOWNS ON EXCESS SERVICING LINE OF CREDIT 12,800,000
PAYOFF OF EXCESS SERVICE FEE LINE (12,800,000)
PAYOFF OF DEALER PARTICIPATION LINE OF CREDIT (10,817,786)
PAYDOWN OF COMMERCIAL PAPER RELATED TO SECURITIZATION (95,000,000)
PROCEEDS FROM ISSUANCE OF COMMERCIAL PAPER (Net of other Payments) 59,536,318 30,454,420
PAYOFF OF SUBORDINATED DEBT (10,000,000)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (28,899,122) 30,347,195
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (1,044,347) (4,782,204)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,622,713 10,251,870
----------- -----------
CASH AND CASH EQUIVALENTS AND END OF PERIOD $ 578,366 $ 5,469,666
=========== ===========
SUPPLEMENTAL DISCLOSURE
CASH PAID $ 2,512,856 $ 1,253,147
=========== ===========
</TABLE>
6
<PAGE> 8
ONYX ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1- BASIS OF PRESENTATION
The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and Securities and Exchange Commission regulations. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to regulations. In the opinion of management, the
financial statements reflect all adjustments (of a normal and recurring nature)
which are necessary to present fairly the financial position, results of
operations and cash flows for the interim periods. Operating results for the
three months ended March 31, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Prospectus which is included in its Registration Statement on Form
S-1 (No. 333-680)
NOTE 2 - EARNINGS PER SHARE
The weighted average number of common and common equivalent shares
outstanding for the purposes of computing net income (loss) per share were
3,697,525 and 3,534,451 for the three months ended March 31, 1996 and 1995
respectively. All share and EPS amounts have been given the effect of a reverse
share split of one share of Common Stock for 3.43 shares of Common Stock.
NOTE 3 - SHAREHOLDERS' EQUITY
On March 29, 1996, the Company completed an offering of 2,500,000
shares of common stock (the "Offering"). The Offering represented approximately
41% ownership of the Company. Net proceeds of the Offering (of approximately
$25.6 million) were used to repay Senior Subordinated Notes and advances under
the Company's revolving credit facility. The balance of the proceeds were used
for general corporate purposes, including working capital. In conjunction with
the Offering, all Series A Preferred Stock was converted to 715,422 shares of
Common Stock. In addition, all Series B Preferred Stock was converted to 39,757
shares of Common Stock. For further information about the Offering, refer to the
Company's Registration Statement on Form S-1 (No. 333-680)
NOTE 4 - CONTRACTS HELD FOR SALE
Contracts held for sale consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
Contracts held for sale $ 112,545,407 $ 157,552,745
Less unearned interest 28,180,417 40,660,123
------------- -------------
84,364,990 116,892,622
Allowance for credit losses (419,551) (591,765)
------------- -------------
83,945,439 116,300,857
Dealer participation 2,771,500 3,914,577
------------- -------------
Total $ 86,716,939 $ 120,215,434
============= =============
</TABLE>
7
<PAGE> 9
NOTE 5 - EXCESS SERVICING RECEIVABLE
The following table presents the balances and activity for excess
servicing receivable:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Beginning balance $ 6,181,518 $ 2,060,738
Additions 10,980,000 8,718,596
Amortization (2,056,632) (4,597,816)
------------ ------------
Ending balance $ 15,104,886 $ 6,181,518
============ ============
</TABLE>
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
OVERVIEW
Onyx Acceptance Corporation (the "Company" or "Registrant") is a specialized
consumer finance company engaged in the purchase, securitization and servicing
of motor vehicle retail installment contracts ("Contracts") originated by
franchised and select independent automobile dealerships within California and
since April 1, 1996, Arizona. The Company focuses its efforts on acquiring
Contracts that are secured by late model used and, to a lesser extent, new
automobiles and entered into with purchasers whom the Company believes have a
favorable credit profile. As of March 31, 1996, the Company had acquired in
excess of $358.5 million in Contracts from 952 dealerships in California.
The following table illustrates the changes in the Company's Contract
acquisition volume, total revenue, securitization activity and servicing
portfolio during the past nine fiscal quarters:
Selected Quarterly Financial Information
For the Quarters Ended
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
March 31, June 30, Sept 30, Dec.31, March 31, June 30, Sept. 30, Dec.31, March 31,
1994 1994 1994 1994 1995 1995 1995 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contracts purchased during period . $ 8,208 $ 18,141 $ 25,858 $ 33,516 $ 38,964 $ 46,883 $ 52,940 $ 60,610 $ 73,300
Average monthly purchases during
period ............................ 2,736 6,047 8,619 11,172 12,988 15,628 17,646 20,203 24,433
Gain on Sale of Contracts ......... -- -- -- 515 -- 2,012 -- -- 5,325
Total revenue.(1) ................. 85 380 743 887 1,187 1,647 971 1,813 6,775
Contracts Securitized during period -- -- -- 38,601 -- 105,000 -- -- 100,500
Servicing Portfolio at period end . 8,088 24,510 46,898 74,581 104,895 140,198 177,532 218,207 266,251
</TABLE>
(1) Total revenue is comprised of Net Interest Income, servicing fee income and
Gain on Sale of Contract
Contracts Purchased and Servicing Portfolio.
The Company experienced significant growth in its purchased volume of
Contracts. Purchased Contract volume increased to $73.3 million for the first
quarter of 1996 from $39.0 million for the first quarter of 1995, representing
an increase of 88%. This growth in acquisition is attributable to the opening of
three additional Auto Finance Centers since the end of the first quarter of
1995 and the continued market penetration within the Company's existing
centers. The Company's servicing portfolio at March 31, 1996 was $266.3 million
compared to $104.9 at March 31, 1995, an increase of 154%. Total revenues
during the first quarter of 1996 were $6.8 million compared to $1.2 million for
the same period ended March 31, 1995.
9
<PAGE> 11
RESULTS OF OPERATIONS
Quarters ended March 31, 1996 and 1995
Net Interest Income. Net interest income decreased by 63% to $345,000 for the
quarter ended March 31, 1996 from $943,000 for the same period in 1995. The
decrease is primarily attributable to a decline in Contracts held for sale due
to the sale of Contracts valued at $100.5 million during the quarter ended March
31, 1996 compared to no sale during the quarter ended March 31, 1995.
Provisions for Credit Losses. During the quarter ended March 31, 1996, the
provision for credit losses totaled ($74,894) compared to $178,864 for the same
period ended in 1995, a decrease of 142%. This decrease is attributable to a
decrease in the Contracts held for sale. At March 31, 1996 Contracts held for
sale were $86.7 million compared to $120.2 million at March 31,1995.
Gain on Sale of Contracts. The Company completed a $100.5 million securitization
during the quarter ended March 31, 1996, resulting in a gain on sale of
Contracts of $5.3 million. The Company did not complete a securitization in the
first quarter of 1995.
Servicing Fee Income. Servicing fee income increased to $1,104,894 for the
quarter ended March 31, 1996 from $243,456 for the quarter ended March 31, 1995.
The increase was attributable to a significant increase in the size of the
servicing portfolio. The size of the servicing portfolio at March 31, 1996
increased to $266.3 million from $104.9 million at March 31, 1995.
Salaries and Benefits Expense. The Company incurred salary and benefit expenses
of $1.8 million during the first quarter of 1996 compared with $1.1 million for
the first quarter of 1995, an increase of 64%. This is attributable in great
part to the growth of operations and the servicing portfolio and the fact that
the number of employees at the Company increased from 58 at March 31, 1995 to
123 at March 31, 1996.
Other Operating Expenses. Other operating expenses increased by 59% to
$1,072,030 for the Quarter ended March 31,1996 from $673,448 for the same period
ended March 31, 1995. The majority of the increases are due to growth of the
servicing portfolio and the opening of three new auto finance centers.
Net Income. The Company posted net income of $3.2 million for the first quarter
ended March 31, 1996 or $.87 per share compared to a net loss of ($740,839) or
($.21) per share for the same period of 1995. The higher earnings are the result
of the Company's continuing focus on its growth strategy within the western
United States, which enabled a sale of $100.5 million in Contracts and the
recording of a $5.3 million gain on the transaction. The Company's effective
income tax rate during the first quarter of 1996 was 19.64% due to utilization
of net operating loss carry forwards. Assuming a statutory effective income tax
rate of 41.6% and that the IPO shares had been outstanding the entire quarter,
net income and net income per share would be $2.3 million and $0.38
respectively.
10
<PAGE> 12
Asset Quality.
At March 31, 1996, delinquencies for the Servicing Portfolio represented 1.11%
of the amount of Contracts in the Company's Servicing Portfolio or $2.9 million
as compared to 0.39% at March 31, 1995 or $408,000. Loan losses for the
Servicing Portfolio as a percentage of average serviced loans outstanding
increased to 0.62% during the quarter compared to 0.05% for the first quarter of
1995. Management expects delinquencies and losses will increase with the
seasoning of the Servicing Portfolio. Management believes its underwriting and
servicing policies and procedures will enable these increases to be consistent
with its overall portfolio growth and business objectives.
DELINQUENCY EXPERIENCE OF SERVICING PORTFOLIO
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED MARCH 31,
--------------------------------
1996 1995
---- ----
AMOUNT NO. AMOUNT NO.
------ --- ------ ---
(Dollars in thousands)
<S> <C> <C> <C> <C>
Servicing portfolio ................................... $266,251 24,648 $104,895 9,722
Delinquencies(1)(2)
30-59 days ................................... $ 1,262 122 $ 165 18
60-89 days ................................... 566 55 171 15
90+ days ..................................... 1,116 88 72 7
Total delinquencies as a percent of Servicing Portfolio 1.11% 1.08% 0.39% 0.40%
</TABLE>
- --------
(1) Delinquencies include principal amounts only.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
LOAN LOSS EXPERIENCE OF SERVICING PORTFOLIO
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED MARCH 31,
--------------------------------
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
Period end contracts outstanding ...... 24,648 9,772
Average servicing portfolio(1) ........ $239,601 $ 88,776
Number of gross charge-offs ........... 141 1
Gross charge-offs ..................... $ 385 $ 12
Net charge-offs ....................... $ 371 $ 12
Annualized net charge-offs as a percent
of average servcing portfolio ......... 0.62% 0.05%
</TABLE>
- ------
(1) Average is based on daily balances.
(2) Net charge-offs are gross charge-offs minus recoveries of Contracts
previously charged off
11
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The Company requires substantial cash and capital resources to operate its
business. Its primary uses of cash include: (i) acquisition of Contracts; (ii)
payments of dealer participation; (iii) securitization costs, including cash
held in spread accounts; (iv) settlements of hedging transactions; (v) operating
expenses; and (vi) interest expense. The capital resources available to the
Company include: (i) net interest income during the warehousing period; (ii)
contractual servicing fees; (iii) future servicing cash flows; (iv) settlements
of hedging transactions; (v) sales of contracts in Securitizations; (vi) equity
investments; and (vii) borrowings under its credit facilities.
Cash provided by operating activities was $28.2 million for the quarter ended
March 31, 1996, compared to $35.0 million used in the quarter ended March 31,
1995. The principal reason for the increase in cash provided by the Company's
operating activities was the securitization of $100.5 million completed in the
first quarter of 1996. There was no securitization in the first quarter of 1995.
Cash used in investing activities was $394,542 for the quarter ended March 31,
1996 compared to $97,072 for the quarter ended March 31, 1995.
Cash used by financing activities was $28.9 million for the quarter ended March
31, 1996, compared to $30.3 million provided by financing activities for the
quarter ended March 31, 1995. Cash used during the quarter ended March 31, 1996
was used to pay down $95.0 million of the CP Facility due to the
securitization and sale of Contracts. In addition, the majority of the IPO
proceeds were used to retire the Company's subordinated debt and pay down the
Revolving Credit Facility.
The Company's wholly owned special purpose subsidiary, Onyx Acceptance Financial
Corporation ("OAFC"), is party to a $200 million auto loan warehouse program
(the"CP Facility") with Triple-A One Funding Corporation ("Triple-A"). Triple-A
is a commercial paper asset-backed conduit lender sponsored by Capital Markets
Assurance Corporation ("CapMAC") and is currently rated A-1/P-1 by Standard &
Poor's Ratings Group and Moody's Investor Services, Inc., respectively. This
facility provides funds to purchase Contracts. CapMAC credit provides credit
enhancement to Triple-A by issuing surety bonds covering all principal and
interest obligations owed by OAFC under a loan agreement with Triple-A. As of
March 31, 1996, the Company had availability of $123.1 million under the CP
Facility to acquire Contracts.
In February of 1996, the Company refinanced its $13.5 million revolving credit
facility with the Revolving Credit Facility under which the Company may
(subject to borrowing base availability) borrow up to $20 million for working
capital and expenditures for which the Company's $200 million CP Facility is
not otherwise available. By refinancing the Revolving Credit Facility, the
Company reduced the interest it pays under the Revolving Facility from a 30-day
LIBOR bases rate to a prime rate base. Under the two year term of the Revolving
Credit Facility, the available borrowings are based on the following collateral
based formula. The Company may borrow up to the lesser of 65% of the net book
value of the Company's excess servicing and trust receivables deemed eligible
by the lenders or 80% of the
12
<PAGE> 14
value of such excess servicing and trust receivables determined by such lenders
in accordance with their collateral valuation model.
The Revolving Credit Facility converts from revolving loans to fully-amortizing
two-year term loans on January 31, 1998 or if earlier,upon the occurrence of
certain "credit triggers". As of March 31, 1996 the Company had availability of
$14.0 million under the Revolving Facility for working capital and other
expenditures.
Securitizations. In February of 1996, the Company consummated, with a
pass-through rate of 5.40%, and a net interest rate spread inclusive of all
costs of 3.83%, a securitization in the amount of $100.5 million. As a result of
this securitization, the Company realized a gain on sale of approximately $5.3
million.
Interest Rate Exposure and Hedging. The Contracts originated and held by the
Company during the warehousing period are all fixed rate and accordingly, the
Company has exposure to changes in interest rates. The Company is able through
the use of varying maturities on advances from the CP Facility to lock in rates
during the warehousing period, when in management's judgment it is appropriate,
to limit interest rate exposure. Further the Company employs a hedging strategy
which primarily includes the use of two-year Treasury securities forward
agreements. These hedges are entered into by the Company in numbers and amounts
which generally correspond to the anticipated principal amount of the related
securitization. As of March 31, 1996, the Company had in effect an interest rate
hedge for $80 million which matures May 15, 1996 which the Company believes is
adequate to cover its next securitization. It also has placed several similar
hedges totaling $40 million to date to cover its planned third quarter
securitization.
13
<PAGE> 15
RISK FACTORS
Except for the historical information contained herein, the matters
discussed in this Quarterly Report are forward-looking statements which involve
risk and uncertainties, including but not limited to economic, competitive and
governmental factors affecting the Company's operations and other factors
discussed in the Company's filing with the Securities and Exchange Commission.
LIQUIDITY. The Company requires substantial cash to implement its business
strategy, including cash to: (i) acquire Contracts; (ii) pay dealer
participation; (iii) pay securitization costs including cash held in spread
accounts; (iv) settle hedge transactions; (v) satisfy working capital
requirements; (vi) pay operating expenses; and (vii) pay interest expense. These
cash requirements increase as the Company's volume of purchases of Contracts
increases. A substantial portion of the Company's revenues in any period is
represented by gain on sale of Contracts in such period but the cash underlying
such revenues is received over the life of the Contracts. In addition, cash paid
by the Company for dealer participation is not recovered at the time of
securitizations, but over the life of the Contract. The Company has operated and
expects to continue to operate on a negative cash flow basis as long as the
volume of Contract purchases continues to grow. The Company has historically
funded these negative operating cash flows principally through borrowings from
financial institutions, sales of equity securities and sales of subordinated
notes. No assurance can be given, however, that the Company will have access to
the capital markets in the future for equity or debt issuances or for
Securitizations, or that financing through borrowings or other means will be
available on acceptable terms to satisfy the Company's cash requirements to
implement its business strategy. The Company's inability to access the capital
markets or obtain acceptable financing could have a material adverse effect on
the Company's results of operations and financial condition.
DEPENDENCE ON WAREHOUSE FINANCING. The Company depends on warehousing
facilities with financial institutions to finance the purchase of Contracts
pending securitization. The Company participates in a $200 million asset-backed
commercial paper conduit program (the "CP Facility"), of which CapMAC is the
program manager, to finance 95% of the purchase price of Contracts. The CP
Facility expires in September 1999, subject to the requirement that the related
liquidity
14
<PAGE> 16
facility provided by certain banks be extended annually. The Company currently
has (subject to borrowing base availability) a $20 million secured revolving
credit facility (the "Revolving Facility") with an institutional lender for
working capital and expenditures for which the Company's $200 million CP
Facility is not otherwise available. The Revolving Facility converts on January
31, 1998 into fully-amortizing two-year term loans maturing in February 2000.
The Company's business strategy will require continued availability of financing
during the warehousing period. There can be no assurance that such financing
will be available to the Company on favorable terms. The inability of the
Company to arrange new warehousing credit facilities or to extend its existing
credit facilities when they expire would have a material adverse effect on the
Company's results of operations and financial condition.
The continued availability of the CP Facility is subject to, among other
things, maintenance of a target net yield, and compliance by the Company with
certain financial covenants contained in the sale and servicing agreement
between the Company, as seller, and OAFC, as purchaser. These covenants
include a minimum ratio of tangible net worth to total liabilities plus
tangible net worth, minimum operating cash flow, minimum amount of Contracts
serviced by the Company and minimum cash on hand. There can be no assurance,
however, that the Company will be able to comply with these covenants in the
future.
The continued availability of the Revolving Facility is subject to, among
other things, substantially similar financial covenants to those of the CP
Facility except that leverage is measured as the ratio of net worth plus
subordinated debt to total liabilities plus net worth, and is tested on the last
day of every month. Additionally, the Company is subject under the documentation
governing the Revolving Facility, to minimum net worth and subordinated debt
plus net worth tests, a limitation on quarterly operating losses and covenants
restricting delinquencies, losses and prepayments of Contracts included in a
Securitization.
DEPENDENCE ON SECURITIZATION PROGRAM. The Company relies significantly
upon securitizations to generate cash proceeds for repayment of its Credit
Facilities and to create availability to purchase additional Contracts. Further,
gain on sale of Contracts generated by the Company's securitizations represents
a significant portion of the Company's revenues. Several factors affect the
Company's ability to complete securitizations of its Contracts, including
conditions in the securities markets generally, conditions in the asset-backed
securities market specifically, the credit quality of the Company's portfolio of
Contracts and the Company's ability to obtain credit enhancement. If the Company
were unable to profitably securitize a sufficient number of its Contracts in a
particular financial reporting period, then the Company's revenues for such
period would decline and could result in lower income or a loss for such period.
In addition, unanticipated delays in closing a securitization could also
increase the Company's interest rate risk by increasing the warehousing period
for its Contracts.
DEPENDENCE ON CREDIT ENHANCEMENT. Each of the Company's securitizations
has utilized credit enhancement in the form of surety bonds issued by CapMAC in
order to achieve "AAA/Aaa" ratings. This form of credit enhancement reduces the
costs of the securitizations relative to alternative forms of credit
enhancements currently available to the Company. CapMAC is not required to
insure future securitizations nor is the Company restricted in its ability to
obtain credit enhancement from providers other than CapMAC or to use other forms
of credit enhancement. There can be no assurance that the Company will be able
to obtain credit enhancement in any form from CapMAC or any other provider of
credit enhancement on acceptable terms or that future securitizations will be
similarly rated. The Company also relies on CapMAC's surety bonds to reduce its
borrowing cost under the "A-1/P-1" rated CP Facility. A downgrading of CapMAC's
credit rating or CapMAC's withdrawal of credit enhancement could result in
higher interest costs for future Company securitizations and financing costs
during the warehousing period. Such events could have a material adverse effect
on the Company's results of operations and financial condition.
15
<PAGE> 17
INTEREST RATE RISK. The Company's profitability is largely determined by the
difference, or "spread," between the effective rate of interest received by the
Company on the Contracts acquired by the Company and the interest rates payable
under its Credit Facilities during the warehousing period or for certificates
issued in securitizations. Several factors affect the Company's ability to
manage interest rate risk. First, the Contracts are purchased at fixed interest
rates, while amounts borrowed under certain of the Company's credit facilities
bear interest at variable rates that are subject to frequent adjustment to
reflect prevailing rates for short-term borrowings. The Company's policy is to
increase the buy rates it posts with dealerships for Contracts in response to
increases in its cost of funds during the Warehousing period. However, there is
generally a time lag before such increased borrowing costs can be offset by
increases in the buy rates for Contracts and, in certain instances, the rates
charged by its competitors may limit the Company's ability to pass through its
increased costs of warehousing financing. Second, the spread can be adversely
affected after a Contract is purchased and while it is held during the
warehousing period by increases in the prevailing rates in the commercial paper
markets. The CP Facility permits the Company to select maturities of up to 270
days for commercial paper issued under the CP Facility. Third, the interest rate
demanded by investors in securitizations is a function of prevailing market
rates for comparable transactions and the general interest rate environment.
Because the Contracts purchased by the Company have fixed rates, the Company
bears the risk of spreads narrowing because of interest-rate increases during
the period from the date the Contracts are purchased until the closing of its
securitization of such Contracts. The Company employs a hedging strategy that is
intended to minimize this risk which historically has involved the forward sale
of U.S. Treasury securities or use of a pre-funding structure for its
securitizations. There can be no assurance, however, that this strategy will
consistently or completely offset adverse interest-rate movements during the
warehousing period or that the Company will not sustain losses on hedging
transactions. The Company's hedging strategy requires estimates by management of
monthly Contract acquisition volume and timing of its securitizations. If such
estimates are materially inaccurate, then the Company's gains on sales of
Contracts and results of operations could be adversely affected. In addition,
the Company has some interest rate exposure to falling interest rates during the
pre-funding period to the extent that the interest rates charged on Contracts
sold in a securitization with a pre-funding structure decline below the rates
prevailing at the time that the securitization closed. Such a rate decline would
reduce the interest rate spread because the interest rate on the certificates
would remain fixed. This, in time, would negatively impact the Gains on Sale of
Contracts and the Company's results of operations.
DEFAULT AND PREPAYMENT RISK. The Company's results of operations,
financial condition and liquidity depend, to a material extent, on the
performance of Contracts purchased and warehoused by the Company. A portion of
the Contracts acquired by the Company may default or prepay during the
warehousing period. The Company bears the risk of losses resulting from payment
defaults during the warehousing period. In the event of a payment default, the
collateral value of the financed vehicle may not cover the outstanding Contract
balance and costs of recovery. The Company maintains an allowance for credit
losses on Contracts held during the warehousing period which reflects
management's estimates of anticipated credit losses during such period. If the
allowance is inadequate, then the Company would recognize as an expense the
losses in excess of such allowance and results of operations could be adversely
affected. In addition, under the terms of the CP Facility, the Company will not
be able to borrow against defaulted Contracts.
The Company's servicing income can also be adversely affected by prepayment
or default of Contracts in the servicing portfolio. The Company's contractual
servicing revenue is based on a percentage of the outstanding balance of such
Contracts. Thus, if Contracts are prepaid or charged-off, then the Company's
servicing revenue will decline to the extent of such prepaid or charged-off
Contracts.
16
<PAGE> 18
VARIABLE QUARTERLY EARNINGS. The Company's revenues and losses have fluctuated
in the past and are expected to fluctuate in the future principally as a result
of the timing and size of its securitizations. Several factors affecting the
Company's business can cause significant variations in its quarterly results of
operations. In particular, variations in the volume of the Company's Contract
acquisitions, the interest rate spreads between the Company's cost of funds and
the average interest rate of purchased Contracts, the effectiveness of the
Company's hedging strategies, the certificate rate for securitizations, and the
timing and size of securitizations, can result in significant increases or
decreases in the Company's revenues from quarter to quarter. Any significant
decrease in the Company's quarterly revenues could have a material adverse
effect on the Company's results of operations and its financial condition.
DEPENDENCE ON KEY PERSONNEL. The Company's future operating results depend
in significant part upon the continued service of its key senior management
personnel, none of whom is bound by an employment agreement. The Company's
future operating results also depend in part upon its ability to attract and
retain qualified management, technical, and sales and support personnel for its
operations. Competition for such personnel is intense, and there can be no
assurance that the Company will be successful in attracting or retaining such
personnel. The loss of any key employee, the failure of any key employee to
perform in his or her current position or the Company's inability to attract and
retain skilled employees, as needed, could materially adversely affect the
Company's results of operations and financial condition. The Company presently
maintains a key man life insurance policy on Brian Mac Innis in the amount of $3
million.
COMPETITION. Competition in the field of financing retail motor vehicles
sales is intense. The automobile finance market is highly fragmented and
historically has been serviced by a variety of financial entities including the
captive finance affiliates of major automotive manufacturers, banks, savings
associations, independent finance companies, credit unions and leasing
companies. Several of these competitors have greater financial resources than
the Company and may have a significantly lower cost of funds. Many of these
competitors also have long-standing relationships with automobile dealerships
and offer dealerships or their customers other forms of financing or services
not provided by the Company. Furthermore, during the past two years, a number of
automobile finance companies have completed public offerings of common stock,
the proceeds from which are to be used, at least in part, to fund expansion and
finance increased purchases of Contracts. The Company's ability to compete
successfully depends largely upon its relationships with dealerships and the
willingness of dealerships to offer those Contracts that meet the Company's
underwriting criteria to the Company for purchase. There can be no assurance
that the Company will be able to continue to compete successfully in the markets
it serves.
[GEOGRAPHIC CONCENTRATION. To date, the Company has purchased all of its
Contracts in California. Accordingly, adverse economic conditions or other
factors particularly affecting California could adversely affect the
delinquency, loan loss or repossession experience of the servicing portfolio.]
THE EFFECT OF ADVERSE ECONOMIC CONDITIONS. The Company is a motor vehicle
consumer auto finance company whose activities are dependent upon the sale of
motor vehicles. The ability of the Company to continue to acquire Contracts in
the markets in which it operates and to expand into additional markets is
dependent upon the overall level of sales of new and used motor vehicles in
those markets. A prolonged downturn in the sale of new and used motor vehicles,
whether nationwide or in the California markets, could have an adverse impact
upon the Company, the results of its operations and its ability to implement its
business strategy.
The automobile industry generally is sensitive to adverse economic
conditions both nationwide and regionally in California and the western United
States. Periods of rising interest rates, reduced economic activity or higher
rates of unemployment generally result in a reduction in the rate of sales of
motor vehicles and higher default rates on motor vehicle loans. There can be no
assurance that such economic conditions will not occur, or that such conditions
will not result in such severe reductions in the Company's revenues or cash
flows available to the Company to permit the Company to remain current on its
credit facilities.
REGULATION. The Company's business is subject to numerous federal and
state consumer protection laws and regulations, which, among other things: (i)
require the Company to obtain and maintain certain licenses and qualifications;
(ii) limit the interest rates, fees and other charges the Company is allowed to
charge;
17
<PAGE> 19
(iii) limit or prescribe certain other terms of the Company's Contracts; (iv)
require specific disclosures; and (v) define the Company's rights to repossess
and sell collateral. The Company believes it is in compliance in all material
respects with all such laws and regulations, and that such laws and regulations
have had no material adverse effect on the Company's ability to operate its
business. However, the Company's failure to comply with applicable laws and
regulations, changes in existing laws or regulations, or in the interpretation
thereof, or the promulgation of any additional laws or regulations could have a
material adverse effect on the Company's results of operations and financial
condition.
NO PRIOR PUBLIC MARKET FOR COMMON STOCK AND POSSIBLE VOLATILITY OF STOCK
PRICE. Prior to the Common Stock offering, there has been no public market for
the Common Stock, and there can be no assurance that an active trading market
will be sustained or that the market price of the Common Stock will not decline
below the initial public offering price. The market price of the Common Stock
could be subject to significant fluctuations in response to variations in
financial results or announcements of material events by the Company or its
competitors; in addition, changes in the general conditions of the economy or
financial markets could adversely affect the market price of the Common Stock.
POTENTIAL MARKET IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE. Sales of
substantial amounts of Common Stock on the public market could adversely affect
the market price of the Common Stock.
18
<PAGE> 20
ITEM 5. OTHER INFORMATION.
A. DIRECTOR RESIGNATION. Effective April 16, 1996, Stephen M. Jenks
resigned from the Company's Board of Directors. Mr. Jenks, a partner of the
General Partner of Capital Resource Lenders, II L.P., one of the Company's
former subordinated lenders, served on the Board of Directors as the
representative of the Company's subordinated lenders. Mr. Jenk's resignation
followed pay-off of the subordinated indebtedness with proceeds from the
Company's initial public offering.
B. NEW CHAIRMAN NAMED. Effective May 2, 1996, Thomas C. Stickel was
named Chairman of the Board of Onyx Acceptance Corporation, succeeding G. Brian
Mac Innis who remained as Chief Executive Officer. Mr. Stickel has been a
member of the Company's Board of Directors since April 1995. In addition to
serving as chair of the Onyx Acceptance Corporation Board of Directors, Mr.
Stickel serves as a director of two New York Stock Exchange Companies, Enova
Corporation (holding company of San Diego Gas and Electric) and Catellus
Development Corporation. Mr. Stickel is also Chairman and founder of American
Partners Capital Group, a privately-owned company specializing in pension fund
investment, design and development.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) Exhibits
<TABLE>
<C> <S>
*3.1 Restated Articles of Incorporation of the Company.
*3.2 Bylaws of the Company.
*3.3 Amended and Restated Articles of Incorporation of the Company.
*3.4 Form of Certificate of Incorporation of the Company, a Delaware corporation.
*3.5 Form of Bylaws of the Company, a Delaware corporation.
*3.6 Form of Agreement and Plan of Merger of the Company, a Delaware corporation, and
the Company, a California corporation.
*4.1 Specimen certificate representing shares of Common Stock of the Company.
*10.1 Form of Indemnification Agreement of the Company, a Delaware corporation.
*10.2 Second Amended and Restated 1994 Stock Option Plan.
*10.3 Form of Notice of Grant of Stock Option under Second Amended and Restated 1994
Stock Option Plan.
*10.4 Form of Stock Option Agreement under Second Amended and Restated 1994 Stock
Option Plan.
*10.5 Form of Stock Purchase Agreement under Second Amended and Restated 1994 Stock
Option Plan.
*10.6 1994 Special Performance Option Grant Plan.
*10.7 Form of Notice of Grant of Stock Option under 1994 Special Performance Option
Grant Plan.
*10.8 Form of Stock Option Agreement under 1994 Special Performance Option Grant Plan.
*10.9 Form of Stock Purchase Agreement under 1994 Special Performance Option Grant
Plan.
*10.10 Second Amended and Restated Loan and Security Agreement between Onyx Acceptance
Corporation and ContiTrade Services Corporation dated as of April 17, 1995.
*10.11 Letter Agreement between Onyx Acceptance Corporation and ContiTrade Services
Corporation regarding extension of the Dealer Participation Note Purchase
Facility and the Spread Account Deposit Note Purchase Facility dated August 7,
1995.
*10.12 Letter Agreement between Onyx Acceptance Corporation and ContiTrade Services
L.L.C. regarding extension of Contract Purchase Facility dated as of November 22,
1995.
</TABLE>
19
<PAGE> 21
<TABLE>
<C> <S>
*10.13 Third Amendment to Amended and Restated Investors' Rights Agreement between and
among Onyx Acceptance Corporation and the Investors identified therein dated as
of November 27, 1995.
*10.14 Warrant to purchase Common Stock in favor of ContiTrade Services Corporation from
Onyx Acceptance Corporation dated as of February 1, 1994.
*10.15 First Amendment to Co-Sale and First Refusal Agreement between and among Onyx
Acceptance Corporation, ContiFinancial Services Corporation, the Investors and
Managers, as defined therein, dated as of February 1, 1994.
*10.16 First Amendment to and Waiver of Certain Provisions of Investors' Rights
Agreement between Onyx Acceptance Corporation, ContiFinancial Services
Corporation, the Investors and the Management Holders, as defined therein, dated
as of February 1, 1994.
*10.17 Senior Subordinated Note and Warrant Purchase Agreement between and among Onyx
Acceptance Corporation, Capital Resource Lenders II, L.P. and Dominion Fund III,
L.P., dated as of November 17, 1994.
*10.18 Senior Subordinated Note due 1999 in favor of Capital Resource Lenders II, L.P.
from Onyx Acceptance Corporation dated as of November 17, 1994.
*10.19 Senior Subordinated Note due 1999 in favor of Dominion Fund III, L.P. from Onyx
Acceptance Corporation dated as of November 17, 1994.
*10.20 Warrant to purchase Common Stock in favor of Capital Resource Lenders II, L.P.
from Onyx Acceptance Corporation dated as of November 17, 1994.
*10.21 Warrant to purchase Common Stock in favor of Dominion Fund III, L.P. from Onyx
Acceptance Corporation dated as of November 17, 1994.
*10.22 Amended and Restated Co-Sale and First Refusal Agreement between and among Onyx
Acceptance Corporation and the Shareholders identified therein dated as of
November 17, 1994.
*10.23 Amended and Restated Investors' Rights Agreement between and among Onyx
Acceptance Corporation, the Investors and the Management Holders identified
therein dated as of November 17, 1994.
*10.24 Amended and Restated Voting Agreement between and among Onyx Acceptance
Corporation and the Shareholders identified therein dated as of November 17,
1994.
*10.25 Preferred Stock Subordination Agreement between and among Onyx Acceptance
Corporation, Capital Resource Lenders II, L.P., Dominion Fund III, L.P. and
certain holders of Preferred Stock identified therein dated as of November 17,
1994.
*10.26 Subordination and Intercreditor Agreement between and among Onyx Acceptance
Corporation, ContiTrade Services Corporation, Capital Resource Lenders II, L.P.,
Dominion Fund III, L.P., dated as of November 17, 1994.
*10.27 Amendment of Subordination and Intercreditor Agreement dated as of April 17,
1995, between and among Onyx Acceptance Corporation, Capital Resource Lenders II,
L.P., Dominion Fund III, L.P. and ContiTrade Services Corporation.
*10.28 ISDA Master Agreement between Onyx Acceptance Financial Corporation and Dai-Ichi
Kangyo Bank, Ltd. dated as of September 8, 1994.
*10.29 Side Letter to ISDA Master Agreement between Onyx Acceptance Corporation and
Dai-Ichi Kangyo Bank, Ltd. dated as of September 12, 1994.
*10.30 Sale and Servicing Agreement between Onyx Acceptance Corporation and Onyx
Acceptance Financial Corporation dated as of September 8, 1994.
*10.31 Triple-A One Funding Corporation Credit Agreement between and among Onyx
Acceptance Financial Corporation, Triple-A One Funding Corporation, CapMAC
Financial Services, Inc. and Capital Markets Assurance Corporation dated as of
September 8, 1994.
*10.32 Triple-A One Funding Corporation Note in favor of Onyx Acceptance Financial
Corporation from Triple-A One Funding Corporation dated as of September 12, 1994.
*10.33 Triple-A One Funding Corporation Security Agreement between and among Onyx
Acceptance Financial Corporation, Triple-A One Funding Corporation and Capital
Markets Assurance Corporation dated as of September 8, 1994.
*10.34 Subordinated Security Agreement between Onyx Acceptance Corporation and Onyx
Acceptance Financial Corporation dated as of September 8, 1994.
</TABLE>
20
<PAGE> 22
<TABLE>
<C> <S>
*10.35 Insurance and Indemnity Agreement between and among Onyx Acceptance Corporation,
Capital Markets Assurance Corporation, Onyx Acceptance Financial Corporation and
Triple-A One Funding Corporation dated as of September 8, 1994.
*10.36 Seller Note in favor of Onyx Acceptance Corporation from Onyx Acceptance
Financial Corporation dated September 12, 1994.
*10.37 Subordinated Note in favor of Onyx Acceptance Corporation from Onyx Acceptance
Financial Corporation dated September 12, 1994.
*10.38 Sublease and Administrative Services Agreement between Onyx Acceptance
Corporation and Onyx Acceptance Financial Corporation dated as of September 8,
1994.
*10.39 Tax Allocation Agreement between Onyx Acceptance Corporation and Onyx Acceptance
Financial Corporation dated as of September 1, 1994.
*10.40 Corporate Separateness Agreement between Onyx Acceptance Corporation and Onyx
Acceptance Financial Corporation dated September 8, 1994.
*10.41 Amendment Number One to Security Agreement, Subordinated Security Agreement, Sale
and Servicing Agreement and Definitions List between and among Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation, Triple-A One Funding
Corporation and Capital Markets Assurance Corporation dated March 1, 1995.
*10.42 Series B Preferred Stock Purchase Agreement between Onyx Acceptance Corporation
and Comdisco, Inc. dated as of November 26, 1994.
*10.43 Series B Preferred Stock Purchase Agreement between Onyx Acceptance Corporation
and Jack Slevin dated as of November 26, 1994.
*10.44 Series B Preferred Stock Purchase Agreement between Onyx Acceptance Corporation
and Individuals' Venture Fund dated as of November 30, 1994.
*10.45 First Amendment to Amended and Restated Investors' Rights Agreement between and
among Onyx Acceptance Corporation and certain Investors identified therein dated
as of December 15, 1994.
*10.46 Pooling & Servicing Agreement between and among Onyx Acceptance Corporation, Onyx
Acceptance Financial Corporation and Bankers Trust Company dated as of September
1, 1994.
*10.47 Indemnification Agreement between and among Onyx Acceptance Corporation, Onyx
Acceptance Financial Corporation, Capital Markets Assurance Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated dated as of September 27,
1994.
*10.48 Indemnification Agreement between Onyx Acceptance Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated dated as of September 28, 194.
*10.49 Underwriting Agreement between and among Onyx Acceptance Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated dated as of September 28, 1994.
*10.50 Pooling & Servicing Agreement between and among Onyx Acceptance Corporation, Onyx
Acceptance Financial Corporation and Bankers Trust Company dated as of April 1,
1995.
*10.51 Indemnification Agreement between and among Onyx Acceptance Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated dated as of April 11, 1995.
*10.52 Indemnification Agreement between and among Onyx Acceptance Corporation, Onyx
Acceptance Financial Corporation, Capital Markets Assurance Corporation,
ContiFinancial Services Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated dated as of April 11, 1995.
*10.53 Underwriting Agreement between Onyx Acceptance Financial Corporation and Onyx
Acceptance Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated
dated as of April 11, 1995.
*10.54 Master Lease Agreement between Onyx Acceptance Corporation and Comdisco, Inc.
dated January 7, 1994.
*10.55 Warrant to purchase Series A Preferred Stock in favor of Comdisco, Inc. from Onyx
Acceptance Corporation dated as of January 7, 1994.
*10.56 Warrant to purchase Common Stock in favor of Lighthouse Capital Partners from
Onyx Acceptance Corporation dated November 3, 1995.
</TABLE>
21
<PAGE> 23
<TABLE>
<C> <S>
*10.57 Master Lease Agreement between Lighthouse Capital Partners and Onyx Acceptance
Corporation dated November 3, 1995.
*10.58 Second Amendment to Amended and Restated Investors' Rights Agreement between and
among Onyx Acceptance Corporation and the Investors identified therein dated as
of November 3, 1995.
*10.59 Agreement for On-Line Services between On-Line Computer Systems, Inc. and Onyx
Acceptance Corporation dated as of November 19, 1993.
*10.60 Agreement for On-Line Service between On-Line Computer Systems, Inc. and Onyx
Acceptance Financial Corporation dated as of September 7, 1994.
*10.61 Option Agreement between Onyx Acceptance Corporation and John W. Hall dated as of
December 20, 1994.
*10.62 Promissory Note in favor of Onyx Acceptance Corporation from John Hall dated as
of December 20, 1994.
*10.63 Option Agreement between Onyx Acceptance Corporation and Brian Mac Innis dated as
of December 20, 1994.
*10.64 Promissory Note in favor of Onyx Acceptance Corporation from Brian Mac Innis
dated as of December 20, 1994.
*10.65 Stock Purchase Agreement between and among Brian Mac Innis and certain Investors
identified therein dated as of June 7, 1995.
*10.66 Stock Purchase Agreement between and among John W. Hall and certain Investors
identified therein dated as of June 7, 1995.
*10.67 Sublease Agreement between Onyx Acceptance Corporation and AT&T Resource
Management Corporation dated as of August 31, 1993.
*10.68 Office Space Lease (Master Lease) between and among The Irvine Company and
American Telephone and Telegraph Company dated as of April 29, 1987.
*10.69 First Amendment To Sublease between and among AT&T Resource Management
Corporation and Onyx Acceptance Corporation dated as of September 1, 1993.
*10.70 Onyx Acceptance Corporation 401(k) Plan dated January 1, 1994.
*10.71 Pooling and Servicing Agreement between Onyx Acceptance Financial Corporation,
Onyx Acceptance Corporation and Bankers Trust Company dated as of January 1,
1996.
*10.72 Underwriting Agreement between Onyx Acceptance Financial Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated dated January 31, 1996.
*10.73 Indemnification Agreement by and among Capital Markets Assurance Corporation,
Onyx Acceptance Corporation, Onyx Acceptance Financial Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated dated January 31, 1996.
*10.74 Indemnification Agreement by and between Onyx Acceptance Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated dated as of January 31, 1996.
*10.75 Excess Servicing and Trust Receivable Revolving Credit and Term Loan Agreement
among Onyx Acceptance Corporation, State Street Bank and Trust Company and The
First National Bank of Boston dated as of January 31, 1996.
*10.76 Pledge and Security Agreement by and among Onyx Acceptance Corporation, State
Street Bank and Trust Company and The First National Bank of Boston dated as of
January 31, 1996.
*10.77 Subordination and Intercreditor Agreement by and among State Street Bank and
Trust Company, The First National Bank of Boston, Capital Resource Lenders II,
L.P., Dominion Fund III and Onyx Acceptance Corporation dated as of January 31,
1996.
*10.78 1996-1 Spread Account Trust Agreement between Onyx Acceptance Financial
Corporation and Bankers Trust (Delaware) dated as of February 6, 1996.
*10.79 1995-1 Spread Account Trust Agreement between Onyx Acceptance Financial
Corporation and Bankers Trust (Delaware) dated as of February 6, 1996.
*10.80 1995-1 Purchase Agreement between Onyx Acceptance Corporation and Onyx Acceptance
Financial Corporation dated as of February 6, 1996.
*10.81 1994-1 Spread Account Trust Agreement between Onyx Acceptance Financial
Corporation and Bankers Trust (Delaware) dated as of February 6, 1996.
</TABLE>
22
<PAGE> 24
<TABLE>
<C> <S>
*10.82 1994-1 Purchase Agreement between Onyx Acceptance Corporation and Onyx Acceptance
Financial Corporation dated as of February 6, 1996.
*10.83 Form of Dealer Agreement Non-Recourse (U) between Dealership and Onyx Acceptance
Corporation.
*10.84 Form of Dealer Agreement Non-Recourse (N) between Dealership and Onyx Acceptance
Corporation.
*10.85 1996 Stock Option/Stock Issuance Plan.
11.1 Computation of Earnings per Share.
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* Incorporated by reference from the Company's Registration Statement on Form
S-1 (Registration No. 333-680).
(b) Reports on Form 8-K
Form 8-K dated January 30, 1996. Item 5 providing the Distribution Date
Statement for Distribution Date of January 16, 1996. No financial statements.
Form 8-K dated February 22, 1996. Item 5 providing the Distribution
Date Statement for Distribution Date of February 15, 1996. No financial
statements.
Form 8-K dated March 19, 1996. Item 5 providing the Distribution Date
Statement for Distribution Date of March 15, 1996. No financial statements.
23
<PAGE> 25
SIGNATURE
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.
ONYX ACCEPTANCE CORPORATION
Date: May 13, 1996
By:_____________________________________________________
John W. Hall
President
Date: May 13, 1996
By:_____________________________________________________
Don P. Duffy
Executive Vice President and
Principal Financial Officer
24
<PAGE> 26
EXHIBIT INDEX
Exhibit No. Description Page
---------- ----------- ----
11.1 Computation of Earnings Per Share 27
27.1 Financial Data Schedule
25
<PAGE> 1
ONYX ACCEPTANCE CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Exhibit 11.1
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
----------- -----------
PRIMARY:
<S> <C> <C>
Net Income (loss) $ 3,199,758 $ (740,839)
=========== ===========
Shares as adjusted:
Weighted average common shares
outstanding 3,079,050 2,241,454
Assumed conversion of Series A and
B convertable preferred stock 755,179
Assumed conversion of common
stock warrants 248,384 253,378
Incremental shares from outstanding
stock options as determined under
the treasury stock method 370,090 284,440
Shares as adjusted 3,697,524 3,534,451
=========== ===========
Net income (loss) per share $ .87 (.21)
=========== ===========
FULLY DILUTED:
Net Income (loss) $ 3,199,758 $ (740,839)
=========== ===========
Shares as adjusted:
Weighted average common shares
outstanding 3,079,050 2,241,454
Assumed conversion of Series A and
B convertable preferred stock 755,179
Assumed conversion of common
stock warrants 248,384 253,378
Incremental shares from outstanding
stock options as determined under
the treasury stock method 370,090 284,440
----------- -----------
Shares as adjusted 3,697,525 3,534,451
=========== ===========
Net income (loss) per share $ .87 (.21)
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 578,365
<SECURITIES> 0
<RECEIVABLES> 87,136,490
<ALLOWANCES> 419,551
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 111,085,344
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 54,967
<OTHER-SE> 30,770,033
<TOTAL-LIABILITY-AND-EQUITY> 111,085,344
<SALES> 0
<TOTAL-REVENUES> 6,849,583
<CGS> 0
<TOTAL-COSTS> 2,867,725
<OTHER-EXPENSES> 0
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</TABLE>
