SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report(Date of earliest event reported): January 22, 1999
Onyx Acceptance Corporation
-------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Commission File Number
28050 (I.R.S. EmployerIdentification No.)
33-0577635
State or other jurisdiction of incorporation or organization
Delaware
Onyx Acceptance Corporation
27051 Towne Centre Drive
Foothill Ranch, CA 92610
949 465-3900
Item 5. Other Events
The Registrant files herewith the exhibit listed in 7(c) below.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The following exhibit is furnished in accordance with Item 601 of
Regulatin S-K
Exhibit
No. 99
Press Release of Onyx Acceptance Corporation dated January 22, 1999
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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.
Onyx Acceptance Financial Corporation
REGAN E. KELLY
By:_____________________________________________________
Regan E. Kelly Executive Vice President
Date: February 4, 1999
DON P. DUFFY
By:_____________________________________________________
Don P. Duffy Executive Vice President
Date: February 4, 1999
Exhibit 19
ONYX ACCEPTANCE CORPORATION ANNOUNCES FOURTH
QUARTER OPERATING RESULTS,
OPENING OF NEW CORPORATE HEADQUARTERS, AND
RESTATEMENT OF PRIOR PERIOD RESULTS
Foothill Ranch, CA -- Onyx Acceptance Corporation (NASDAQ:ONYX) announced today
net income of $2.5 million, or $.39 per diluted share, for its fourth quarter
ended December 31, 1998, versus a restated loss of ($268,011), or ($.04) per
share, for the quarter ended December 31, 1997.
For the twelve months ended December 31, 1998, Onyx reported net income of $6.1
million, or $.95 per diluted share, versus restated earnings of $1.3 million, or
$.21 per diluted share, for the twelve months ended December 31, 1997. On a
comparative basis, net income increased 369% and earnings per diluted share rose
352%.
In December of 1998, the Company relocated to its new corporate headquarters in
Foothill Ranch, California from its former location in Irvine, California. The
Company signed a ten year lease and will initially occupy approximately 69,000
square feet of the new building. The move into this building will accommodate
the ever growing needs for space as the Company's operations continue to expand
and will enhance the servicing and administrative capabilities of the Company
over the next decade.
Contracts purchased were $304.2 million for the fourth quarter of 1998, an
increase of 67% over contracts purchased of $182.3 million for the fourth
quarter of 1997. For the twelve months ended December 31, 1998, contracts
purchased were $1.04 billion, compared to contracts purchased of $605.9 million
for the twelve months ended December 31, 1997, an increase of 72%. Onyx's
servicing portfolio totaled $1.35 billion at December 31, 1998, compared to a
servicing portfolio of $757.3 million at December 31, 1997, an increase of 78%.
Net charge-offs improved to 1.72% of average serviced contracts outstanding for
the year ended December 31, 1998, compared to 2.03% for the year ended December
31, 1997.
Serviced contracts over thirty days delinquent were 2.83% of total serviced
contracts at December 31, 1998, compared to 2.51% at December 31, 1997.
The Company increased its off balance sheet reserves from 3.57% at December 31,
1997 to 4.31% of securitized assets at December 31, 1998.
As required by the Financial Accounting Standards Board's (FASB) Special Report,
" A Guide to Implementation of Statement 125 on Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, Second
Edition," dated December 1998, and related guidance set forth in statements made
by the staff of the Securities and Exchange Commission (SEC) on December 8,
1998, the Company has retroactively changed its practice of measuring and
accounting for credit enhancement assets on its securitization transactions to
the cash-out method from the cash-in method. As a result, Onyx announced a
restatement of its financial statements for the years ended December 31, 1997
and 1996, and for the first three quarters of 1998.
Initial deposits to restricted cash accounts, if any, and subsequent cash flows
received by securitization trusts sponsored by the Company accumulate as credit
enhancement assets until certain targeted levels are achieved, after which cash
is distributed to the Company on an unrestricted basis. Under the cash-in method
previously used by the Company, (i) the assumed discount period for measuring
the present value of credit enhancement assets ended when cash flows were
received by the securitization trusts and (ii) initial deposits to restricted
cash accounts were recorded at face value. Under the cash-out method now
required by the FASB and SEC, the assumed discount period for measuring the
present value of credit enhancement assets ends when cash, including return of
the initial deposits, if any, is distributed to the Company on an unrestricted
basis.
The change to the cash-out method results only in a difference in the timing of
revenue recognition from a securitization and has no effect on the total cash
flows of such transactions. While the total amount of revenue recognized over
the term of a securitization transaction is the same under either method, the
cash-out method results in (i) lower initial gains on the sale of receivables
due to the longer discount period and (ii) higher subsequent servicing fee
income from accretion of the additional cash-out discount. Accordingly, the
reductions in previously reported earnings resulting from retroactive
application of the change will generally be recognized in subsequent period
earnings as servicing fee income.
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The restatement resulted in the following changes to prior period financial
statements:
(Unaudited)
Quarters Ended Years Ended
September 30, June 30, March 31, December 31,
1998 1998 1998 1997 1996
Total Revenue:
Previous $16,778,867 $14,170,517 $11,925,319 $35,950,298 $25,220,504
As $16,471,933 $13,727,267 $11,779,316 $33,812,085 $22,626,935
Restated
Net Income
Previous $1,928,778 $1,354,359 $827,771 $2,584,115 $7,671,826
As $1,752,524 $1,095,058 $742,360 $1,302,271 $6,115,587
Restated
Earnings per
Share
Previous $0.30 $0.21 $0.13 $0.40 $1.35
As $0.27 $0.17 $0.12 $0.21 $1.09
Restated
Credit
Enhancement
Assets (End of
Period)
Previous $106,658,670 $94,767,231 $85,630,942 $76,467,434 $39,737,729
As $101,030,700 $89,446,195 $80,753,156 $71,735,651 $37,144,160
Restated
Shareholders'
Equity (End of
Period)
Previous $44,699,382 $42,761,584 $41,387,818 $40,555,492 $37,913,816
As $41,340,334 $39,578,790 $38,464,325 $37,717,413 $36,357,577
Restated
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The Company will amend its quarterly reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998 in connection with the
restatement.
Onyx Acceptance Corporation is a specialized automobile finance company based in
Foothill Ranch, CA. Onyx provides financing to new and select used car
dealerships through its 14 Auto Finance Centers. The Centers are located in
prime automobile markets across the nation.
This news release contains forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. The most significant among these risks and
uncertainties are (a) the Company's level of delinquencies, gross charge-offs
and net losses, (b) the ability to achieve adequate interest rate spreads, (c)
the effects of economic factors on consumer debt, and (d) the continued
availability of liquidity sources. Other important factors are detailed in the
Company's annual report on Form 10-K for the year ended December 31, 1997 and
its quarterly reports on Form 10-Q for the periods ended March 31, June 30, and
September 30, 1998.
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ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
(RESTATED)
December 31, December 31,
1998 1997
---------------- ----------------
ASSETS
CASH & CASH EQUIVALENTS $1,928,991 $991,010
CONTRACTS HELD FOR SALE - Net of Allowance (1) 152,760,781 64,342,309
CREDIT ENHANCEMENT ASSETS 112,953,193 71,735,651
OTHER ASSETS 7,778,759 4,767,494
---------------- ----------------
TOTAL ASSETS $275,421,724 $141,836,464
================ ================
LIABILITIES AND EQUITY
LIABILITIES
DEBT $209,600,061 $90,756,975
OTHER LIABILITIES 21,997,942 13,362,076
---------------- ----------------
TOTAL LIABILITIES 231,598,003 104,119,051
TOTAL EQUITY 43,823,721 37,717,413
---------------- ----------------
TOTAL LIABILITIES AND EQUITY $275,421,724 $141,836,464
================ ================
(1) Net of Unearned Discounts
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ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
(Restated) (Restated)
1998 1997 1998 1997
--------------- --------------- ---------------- ----------------
REVENUES:
Net Finance Revenue 1,260,232 1,210,556 7,311,676 5,036,686
Gain on Sale of Loans 10,506,120 6,805,828 36,417,216 19,586,291
Service Fee Income 6,647,475 847,354 16,663,450 9,189,108
--------------- --------------- ---------------- ----------------
Total Revenues 18,413,827 8,863,738 60,392,342 33,812,085
EXPENSES:
Provision for credit losses 350,066 180,807 1,579,831 785,446
Operating Expenses 13,814,458 9,153,454 48,426,558 30,740,351
--------------- --------------- ---------------- ----------------
Total Expenses 14,164,524 9,334,261 50,006,389 31,525,797
--------------- --------------- ---------------- ----------------
NET INCOME BEFORE INCOME TAXES 4,249,303 (470,523) 10,385,953 2,286,288
INCOME TAXES 1,763,460 (202,512) 4,310,169 984,017
--------------- --------------- ---------------- ----------------
NET INCOME $2,485,843 ($268,011) $6,075,784 $1,302,271
=============== =============== ================ ================
NET INCOME PER SHARE - BASIC $0.40 ($0.04) $0.99 $0.22
NET INCOME PER SHARE - DILUTED $0.39 ($0.04) $0.95 $0.21
BASIC SHARES OUTSTANDING 6,169,884 6,017,635 6,112,370 6,000,431
DILUTED SHARES OUTSTANDING 6,363,599 6,017,635 6,424,959 6,294,071
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ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
DELINQUENCY AND LOSS RATES
(UNAUDITED)
(In Thousands)
Three Months Ended
December 31,
1998 1997
===================== =========================
Contracts Purchased $304,200 $182,311
Twelve Months Ended
December 31,
1998 1997
===================== =========================
Contracts Purchased $1,038,535 $605,905
Number of Number of
Delinquency Experience Contracts $ Contracts $
Servicing Portfolio 131,862 $1,345,961 73,502 $757,277
Serviced Delinquency
31 to 59 days 2,766 $26,410 1,211 $11,902
60 to 89 days 691 6,876 346 3,370
90 days or more 455 4,790 316 3,743
Total 3,912 $38,076 1,873 $19,015
Delinquency as a percentage
of number and amount of contracts 2.97% 2.83% 2.55% 2.51%
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Three Months Ended Twelve Months Ended
December 31, December 31,
===============================================================================
1998 1997 1998 1997
Loss Experience
Average Contracts Serviced
during the period $1,257,716 $696,677 $1,023,237 $563,343
Gross Charge-offs $5,812.6 $4,088.8 $20,639.9 $13,076.1
Recoveries $769.8 $535.9 $3,021.5 $1,642.2
Net Charge-offs $5,042.7 $3,552.9 $17,618.4 $11,433.9
Net Charge-offs as a percentage 1.60% 2.04% 1.72% 2.03%
of contracts outstanding during
the period
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