<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended December 31, 1995
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or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-4584
THE UNITED GROUP, INC.
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(Name of small business issuer specified in its charter)
56-0931793
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(I.R.S. Employer Id. No.)
Suite 203, 5960 Fairview Road
Charlotte, NC
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(address of principal executive offices)
NORTH CAROLINA
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(state or other jurisdiction of incorporation or organization)
28210 (704) 554-9280
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(Zip code) (Issuer's telephone number, including area code)
Not applicable
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(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common stock, No Par Value - 1,067,993 shares as of December 31, 1995
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INDEX
THE UNITED GROUP, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of December 31, 1995 and September 30,1995.
Consolidated Statements of Income for the three months ended December 31, 1995 and 1994.
Consolidated Statements of Cash Flows for the three months ended December 31, 1995 and 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
SIGNATURES
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THE UNITED GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
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ASSETS DECEMBER 31, SEPTEMBER 30,
1995 1995
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<S> <C> <C>
Cash $1,484,436 $1,646,501
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Marketable securities 1,842,565 1,843,814
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Finance receivables:
Cash loans and other contracts 37,228,573 36,589,554
Less:
Unearned insurance commissions 1,896,731 1,886,645
Allowance for credit losses 623,206 606,346
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2,519,937 2,492,991
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Net finance receivables 34,708,636 34,096,563
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Notes and finance receivables:
Due from affiliates 976,666 976,666
Other 669,422 637,389
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1,646,088 1,614,055
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Property and equipment at cost, less accumulated
depreciation and amortization 689,146 691,634
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Deferred loan costs and other intangible assets at cost,
less accumulated amortization 53,810 62,048
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Deferred income taxes 8,000 12,000
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Other assets 153,759 91,121
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$40,586,440 $40,057,736
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</TABLE>
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THE UNITED GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
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LIABILITIES AND STOCKHOLDERS' EQUITY December 31, September 30,
1995 1995
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<S> <C> <C>
Notes payable:
Notes payable to banks $29,596,607 $30,346,607
Mortgage loans payable 220,708 224,282
Other notes payable 3,058,323 3,008,216
Senior subordinated notes payable 300,000 300,000
Accounts payable and accrued expenses 2,752,614 2,051,702
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35,928,252 35,930,807
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Stockholders' equity:
Preferred stock, no par value, stated
value of $2 per share; 500,000 shares
authorized; no shares issued and
outstanding - -
Common stock, no par value, total
stated value of $100,000; 25,000,000
shares authorized; 1,067,993 issued
and outstanding 100,000 100,000
Additional paid-in capital 213,286 127,623
Retained earnings 4,656,725 4,211,129
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4,970,011 4,438,752
Less:
Cost of common stock held by subsidiary 311,823 311,823
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4,658,188 4,126,929
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$40,586,440 $40,057,736
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</TABLE>
4
<PAGE> 5
THIS UNITED GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
<TABLE>
<CAPTION>
=================================================================
1995 1994
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<S> <C> <C>
Credit income:
Interest and fees on loans $2,411,160 $2,087,333
Investment income and other interest 45,830 34,164
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2,456,990 2,121,497
Less:
Interest expense 811,501 742,698
Provision for credit losses 131,761 107,552
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Net credit income 1,513,728 1,271,247
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Insurance income:
Insurance commissions and premiums 543,760 509,787
Less, insurance losses and loss expenses 131,802 93,263
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Net insurance income 411,958 416,524
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Operating expenses:
Salaries and benefits 887,215 838,615
Other operating expenses 372,068 394,401
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Total operating expenses 1,259,283 1,233,016
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Income before provision for income taxes 666,403 454,755
Provision for income taxes 221,000 120,000
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Net income $ 445,403 $ 334,755
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Net income per common share $ 0.42 $ 0.32
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Weighted average shares outstanding 1,064,211 1,056,903
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</TABLE>
5
<PAGE> 6
THE UNITED GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
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1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Interest and fees on loans collected $ 2,390,259 $ 2,110,834
Investment income and other interest income received 46,713 42,752
Insurance commissions and premiums collected 744,953 441,477
Interest paid (526,923) (641,122)
Insurance expenses and losses paid (131,802) (93,263)
Cash paid to suppliers and employees (1,224,057) (1,255,378)
Income taxes paid - (185,637)
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1,299,143 419,663
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Cash flows from investing activities:
Cash proceeds of loans made (5,611,694) (4,718,420)
Cash received as repayment of loans 4,878,675 3,435,419
Purchase of marketable securities (14,772) (150,000)
Proceeds from sale or maturity of marketable securities 16,021 100,000
Cash paid to purchase property and equipment (27,848) (77,478)
Proceeds from sale of equipment - 38,014
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(759,618) (1,372,465)
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Cash flow from financing activities:
Notes payable to banks:
Borrowings 250,000 1,370,000
Repayments 000,000) (200,000)
Repayment of mortgage loans (3,574) (2,930)
Other notes:
Borrowings 110,945 192,044
Repayments (60,838) (222,219)
Common stock activity:
Proceeds from issuance of stock 1,876 -
Payments to acquire outstanding stock - (44,581)
(701,591) 1,092,314
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Net increase (decrease) in cash (162,066) 139,512
Cash at beginning of period 1,646,501 1,507,360
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Cash at end of period $ 1,484,435 $ 1,646,872
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</TABLE>
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THE UNITED GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE SIX MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
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1995 1994
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<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income $ 445,403 $ 334,755
Adjustments to reconcile net income to net cash provided:
Depreciation and amortization 38,574 43,497
Provision for credit losses 131,761 107,552
Provision for stock bonus plan 83,979 -
Provision for deferred income taxes 4,000 58,000
Change in unearned interest charges (20,901) 23,501
Change in accrued investment income 883 8,588
Change in unearned insurance commissions and premiums 10,086 42,399
Change in accounts receivable (32,916) (204,881)
Change in accounts payable 199,334 23,212
Change in income taxes payable 217,000 (123,637)
Change in interest payable 284,578 101,576
Change in other assets (62,638) 5,101
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Total adjustments 853,740 84,908
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Net cash provided by operating activities $1,299,143 $ 419,663
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</TABLE>
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Net income for the three months ended December 31, 1995 was $445,403 compared
to $334,755 for the same period ending December 31, 1994. Interest income is
up by 15.5% for the three months due to an increase in average finance
receivables as shown in the table below. Net insurance income declined by
1.1% for the three months. Insurance commissions and premiums increased by
6.6%. However, this increase was more than offset by an increase in losses
from $93,263 in 1994 to $131,802 in 1995. The increase in commissions and
premiums can be also attributed to the increae in finance receivables. Average
net receivables for the three months are as follows:
<TABLE>
Percentage
1995 1994 Increase
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<S> <C> <C> <C>
Three months ended December 31 34,370,385 30,352,834 13.2%
</TABLE>
Salaries and benefits have increased by 5.8 for the three months ended December
31,1995 compared to 1994. Most of this increase is the result of opening one
new branch and growth in positions required due to new branch openings in the
previous year as well as other new positions required to accommodate growth.
To offset some of these expenses, extensive cost control measures has been
initiated which have resulted in an actual decrease in other operating expenses
of 5.7% for the three months ended December 31,1995 compared to 1994.
Management expects these efforts to continue to show positive results.
Interest expense has increased by $68,803 for the three months ended December
31,1995 compared to 1994. All of this increase can be attributed to rate
increases experienced since December of 1994. These, however, has been
moderated by the fact that the Company is currently able to utilize a LIBOR
based rate in its bank borrowings. The Company believes that this resulted in
savings of more than $50,000 during the current quarter in interest expense.
At December 31,1995, the Company had a line of credit with its banks totaling
$35,500,000 of which $29,596,606 was being used, leaving $5,903,393 available
for loan portfolio growth. In addition, the management believes that an
increae in the line of credit could be obtained. Also, internally generated
cash flow continues to be strong with total cash flow generated by operations
of $1,299,143 for the three months ended December 31,1995. These resources are
anticipated to adequately fund the cash needs of the Company.
The Company continues to adhere to its conservative lending policies. The
benefits of these policies are demonstrated in continued low charge-off and
delinquency ratios. The provision for credit losses was .38% of average
receivables for the three months ended December 31,1995 and .35% for the same
period in 1994. Total delinquency stood at 1.9% of receivables at December
31,1995. These ratios are significantly better than accepted industry ratios.
PART II. OTHER INFORMATION
Item 1. Legal proceedings:
From time to time the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. The Company
believes that it is not presently a party to any pending legal proceedings that
would have a material adverse effect on its financial condition.
<TABLE>
<S> <C>
Item 2. Changes in securities: None
Item 3. Defaults upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other information: None
Item 6. Exhibits: 27 - Financial Data Schedule (for SEC use only)
and reports of Form 8-K: The Company did not file any
reports on Form 8-K during the three months ended December 31, 1995.
</TABLE>
8
<PAGE> 9
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.
THE UNITED GROUP, INC.
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(Registrant)
Date February 15, 1996 /s/ Kenneth M. O'Connell
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Kenneth M. O'Connell, Treasurer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE UNITED GROUP, INC. FOR THE THREE MONTHS ENDED
DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,484,436
<SECURITIES> 1,842,565
<RECEIVABLES> 37,228,573
<ALLOWANCES> 623,206
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,352,622
<DEPRECIATION> 663,476
<TOTAL-ASSETS> 40,586,440
<CURRENT-LIABILITIES> 0
<BONDS> 220,708
0
0
<COMMON> 100,000
<OTHER-SE> 4,558,440
<TOTAL-LIABILITY-AND-EQUITY> 40,586,440
<SALES> 3,000,750
<TOTAL-REVENUES> 3,000,750
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,391,085
<LOSS-PROVISION> 131,761
<INTEREST-EXPENSE> 811,501
<INCOME-PRETAX> 666,403
<INCOME-TAX> 221,000
<INCOME-CONTINUING> 445,403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 445,403
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
