SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ x ] Annual report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the fiscal
year ended December 31, 1996
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File Number 33-5144-D
U.S. AUTOMOBILE ACCEPTANCE SNP-III, INC.
(Exact name of registrant as specified in its
charter)
Texas 75-2669147
(State or jurisdiction of (I.R.S. Employer
inorporation or organization) Identification No.)
1120 N.W. 63rd , Suite G-106
Oklahoma City, Oklahoma 73116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(405) 843-3135
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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
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[ ]
At December 31, 1996, an aggregate of 1,000 shares of the
registrant's Common Stock, par value $1.00 each (being the
registrant's only class of common stock), were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
Part I
Item 1. Business
General
U.S. Automobile Acceptance SNP-III, Inc. (the "Company") was
incorporated on June 7, 1996 as a Texas Corporation and a wholly
owned subsidiary of U.S. Automobile Acceptance Corporation,
formerly named Settlers Acceptance Corporation. The Company was
formed to purchase, collect and service retail installment sale
financing contracts created by the sale of used automobiles and
light trucks. The Company filed a Registration Statement in 1996
with the Securities and Exchange Commission and various state
security boards with respect to its offering of up to $24,000,000
of 11% Promissory Notes due December 31, 2001. The offering became
effective in 1996. Subscriptions of $1,739,000 had been received
at year end.
The Company is considered to be in the "development stage" as
substantially all of its efforts have been expended in establishing
the new business and planned principal operations have not
commenced.
Securitization Activities
The Company is offering on a "best efforts basis" up to $24,000,000
of 11% Promissory Notes due December 31, 2001. The Notes are
being offered through licensed broker-dealers and bear interest at
a stated rate of 11%, payable monthly. The broker-dealers will be
paid commissions equaling 7.0% of the proceeds of the Note sale.
Additionally, the Company will pay an additional 5% of the Note
proceeds to its Parent, U.S. Automobile Acceptance Corporation, as
reimbursement of registration, legal, accounting, printing,
marketing and other out-of-pocket fees and expenses and allocated
general and administrative overhead relating to the offering and
the organization of the Company which will be initially borne by the
Parent and for services provided by the Parent in connection with
the offering and organization of the Company (See Note C). The
remainder of the Note sale proceeds will be used to acquire retail
installment contracts, generally at a discount, secured by used
automobiles and light trucks (Contracts). The minimum subscription
amount of $100,000 was reached in November 1996, and $1,739,000 had
been subscribed by year end. However; contract purchases had not
begun and the company was still in a development stage.
The Notes are issued under the terms of an Indenture Agreement
between the Company and Texas Commerce Bank National Association,
as Trustee. The Notes are secured by the Contracts and proceeds
thereof.
The Company holds vehicle titles as collateral for all Contracts
until they are paid in full.
Use of proceeds of Contract collections is restricted to payments
on the notes, payment of certain allowed expenses of the Company
and the purchase of additional Contracts.
The stated maturity of the principal of the Notes is December
31, 2001. No principal payments will be made on the Notes until
the earlier of maturity or any redemption at the election of the
Company of the Notes in whole or in part, except in the event that
prior to one hundred eighty (180) days following the termination
date of the offering the Company has been unable to invest the
total net proceeds from the sale of the Notes in suitable Contracts
the uninvested net proceeds at such date will be utilized for a
mandatory partial redemption of the Notes within forty-five (45)
days following such date. In addition, Notes may be redeemed in
the event the Company is unable to purchase suitable Contracts
throughout the term of the Notes. In such a case, Notes will be
redeemed on a random basis, by lot.
Redemption of the Notes must occur at the option of the
Company on any Payment Date and may be in whole or from time to
time in part. Any redemption of Notes will be at 100% of the
principal amount thereof being redeemed, together with Interest
accrued to the Redemption Date, without any premium or penalty.
Notice will be mailed to all Noteholders setting forth (i) the
Redemption Date, (ii) the Redemption Price, (iii) the name and
address of the Paying Agent, (iv) a statement that the Notes must
be delivered to the Paying Agent, and (v) a statement that interest
on the Notes or portion thereof being redeemed, ceases to accrue on
and after the Redemption Date. In the case of notice to the holder
of any Note to be redeemed in part, a new Note or Notes in
principal amount equal to the unredeemed portion of such Note will
be issued. In the event of partial redemption of the Notes, the
Notes to be redeemed in whole or in part will be selected on a
random basis, by lot.
The minimum subscription amount was reached in 1996. The
Company expects to begin contract purchases in the first quarter of
1997.
Item 2. Properties
The Company has no material physical properties.
Item 3. Legal Proceedings
There are no legal proceedings involving the Company or its
assets.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
There is no established public trading market for the
Company's common equity. All of the Company's outstanding common
stock is owned by Michael R. Marshall, President and sole
director of the Company.
Item 6. Selected Financial Data
Set forth below is a table of selected financial data for
the initial fiscal year ended December 31, 1996. Operation had
not commenced at December 31, 1996.
Balance Sheet Data:
Total
assets.....................................................................
$ 1,797,814
Notes
payable................................................................
$ 1,739,000
Total
liabilities...........................................................
$ 1,764,242
Shareholder's
equity...............................................................
$
33,572
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The Company was in a development stage at December 31, 1996.
Principal operations had not commenced.
Income and Loss Recognition
The Company purchases Contracts at discounts ranging from 5%
to 25% of the remaining net principal balance of each Contract.
The difference between the estimated future cash collections and
the cost of the Contract is unearned interest income and unearned
discount. Over the life of the receivable portfolio, this unearned
interest and unearned discounts are recognized as interest revenue.
Interest expense represents interest paid, or accrued on the
Company's borrowing during the life of the receivable portfolio.
The Company charges uncollectible receivable amounts to unearned
interest and discounts account as losses are incurred.
Because of automobile dealer Contract replacement agreements,
loss exposure is minimized on defaulted Contracts. The Company's
high yield from its Contracts is primarily a result of the
negotiated purchase discounts obtained at time of the purchase of
the Contract and the interest rates generally charged on the
Contracts, typically at the statutory ceiling rate for the state of
Texas.
General and Administrative Expenses
General and administrative expenses consist primarily of
servicing fees, bank, accounting, attorney, and trustee fees.
Servicing fees are paid to the Servicer monthly at the current rate
of $21.50 for each receivable that is not in default.
Tax Expense
The Company will account for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting For
Income Taxes".
The Company amortizes note offering costs over the term of the
notes payable for tax purposes and as notes payable are paid for
financial purposes. As a result, the Company has expenses deducted
from taxable income before they are recognized for financial
accounting purposes.
Item 8. Financial Statements and Supplementary Data
See index at page F-1.
Part III
Item 9. Directors and Executive Officers of the Registrant
The name, age, background and principal occupation of the
sole director and executive officer of the Company is set forth
below:
Mr. Michael R. Marshall, age 47, is Chairman of the Board
and President of the Company, and its Parent, U.S. Automobile
Acceptance Corporation. Mr. Marshall is Chairman of the board of
Directors, president, and the owner of all the outstanding common
stock of U.S. Automobile Acceptance SNP-1, Inc. ("SNP-1"), and,
beneficially, U.S. Automobile Acceptance 1995-1, Inc. ("USAA 1995-1"), both
limited purpose corporations with business activities
similar to the proposed activities of the Company. SNP-1 began
similar automobile finance contract purchasing activities in
September 1994. USAA 1995-1 began purchasing contracts in October
1995.
Mr. Marshall holds a Bachelor of Business Administration
Degree in Accounting which he obtained in 1971 from Texas A & M
University and is a Certified Public Accountant, licensed to
practice in the state of Texas. From 1971 through 1977 Mr.
Marshall was employed at Coopers & Lybrand, an international firm
of Certified Public Accountants, which he served in various
positions including general practice manager of its Oklahoma City
office. Mr. Marshall was self-employed from 1977 to 1982 as a
practicing Certified Public Accountant and as a corporate financial
consultant and since 1982 has been President and Chief Executive
Officer of Settlers Capital Corporation, an Oklahoma corporation,
which specializes in assisting companies in the placement of
private and public debt and equity finance transactions.
Additionally, from 1981 through 1988, Mr. Marshall was the
President of Settlers Energy Corporation, an independent oil and
gas company located in Oklahoma, which specialized in purchasing,
managing and liquidation of secured oil and gas loans of distressed
financial institutions.
Mr. Marshall has eighteen years experience as a participating
investor and originator of various secured commercial lending
transactions and has more than fifteen years experience in
structuring, monitoring, management and liquidation of secured
lending transactions. Mr. Marshall devotes substantially all of
his time to the automobile finance business, and may do similar
asset-backed note offerings in the future.
U.S. Automobile Acceptance Corporation (formerly Settlers
Acceptance Corporation), a Texas corporation (the "Parent") was
formed in January 1995 to begin to consolidate ownership,
management, and operations of Michael R. Marshall's automobile
asset-backed finance activities. The Company changed its name from
Settlers Acceptance Corporation to U.S. Automobile Acceptance
Corporation in June 1996.
U.S. Automobile Acceptance Corporation willserve as servicer
pursuant to the Servicing Agreement. USAAC will provide the
staffing, administration and overhead necessary to administrate and
collect automobile finance contracts for the Company. Among the
specific functions USAAC will provide are accounting,
administration of collections of payments, dealer selection and
supervision, enforcement of dealer recourse, and, if necessary,
overseeing the repossession and sale of repossessed vehicles.
USAAC intends to subcontract a portion of the required services to
qualified Automobile Dealers.
Item 10. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information, as of
December 31, 1996, relating to the beneficial ownership of the
Company's capital stock by any person or "group", as that term is
used in Section 13(d)(3) of the Securities and Exchange Act of 1934
(the "Exchange Act"), known to the Company to own beneficially five
percent (5%) or more of the outstanding shares of Common Stock, and
known to the Company to be owned by each director of the Company
and by all officers and directors of the Company as a group.
Except as otherwise noted, each of the persons namved below is
believed by the Company to possess sole voting and investment power
with respect to the shares of Common Stock beneficially owned by
each person.
Name and Address
of
Beneficial Owner
Number
of Shares
Amount and Nature of
Beneficial
Ownership Percentage
of
Class Outstanding (1)
U.S. Automobile Acceptance Corporation (2)
1120 N.W. 63rd, Suite G-106
Oklahoma City, OK 73116
1,000
100%
Mr. Michael R. Marshall
1120 N.W. 63rd, Suite G-106
Oklahoma City, OK 73116
-0-(3)
Mr. Robert P. Billy
1120 N.W. 63rd, Suite G-106
Oklahoma City, OK 73116
-0-
(1) The information as to beneficial ownership of Common
Stock has been furnished by the Parent of the Company and
the sole director and officer of the Company
(2) The directors of U.S. Automobile Acceptance Corporation
("USAAC"), a privately-held corporation, could be deemed to
share voting investments powers over the shares owned of
record by USAAC. The directors of USAAC are Michael R.
Marshall and Robert P. Billy.
(3) Mr. Marshall owns 100% of the outstanding common stock
of USAAC.
Part IV
Item 11. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) Financial Statements and Schedules:
The financial statements listed in the Index to
Financial Statements are filed as part of this
annual report. No financial statement schedules
are required to be filed as part of this annual
report because all information otherwise included
in schedules has been incorporated into the Notes
to Financial Statements.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed in the three
month period ended December 31, 1996.
(c) Exhibits:
Exhibit
Number
Exhibit
3.1 Articles of Incorporation of U.S. Automobile Acceptance SNP-III, Inc.(1)
3.2 Bylaws of U.S. Automobile Acceptance SNP-III, Inc. (1)
4.1 Indenture Agreement between U.S. Automobile Acceptance SNP-III, Inc. and
Texas Commerce Bank National Association, as
Trustee, with respect to the 11% Automobile Contract Notes
due December 31, 1997(1)
4.2 Form of 11% Automobile Contract Note due December 31,
2001 (1)
10.2 Servicing Agreement between U.S. Automobile Acceptance
SNP-III, Inc. and U.S. Automobile Service Corporation
(1)
(d) Financial Statements excluded by Rule 14a-3(b): None.
(1) Incorporated by reference to the Company's Form S-1
Registration Statement (File No. 33-66804)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 21, 1997
U.S. AUTOMOBILE ACCEPTANCE SNP-III, INC.
By: __________________________________
Michael R. Marshall, President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
person on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
By: _____________ President and Director March 21, 1997
ichael R. Marshall (Principal Executive Officer
and Principal Financial Officer)
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have
Not Registered Securities Pursuant to Section 12 of the Act.
The registrant hereby undertakes to file with the Commission
four copies of any annual report to its security holders when it
is sent to such security holders.
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<PERIOD-END> DEC-31-1996
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<TOTAL-ASSETS> 1,797,814
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0
0
<COMMON> 1,000
<OTHER-SE> 32,572
<TOTAL-LIABILITY-AND-EQUITY> 1,797,814
<SALES> 0
<TOTAL-REVENUES> 195
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,020
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,603
<INCOME-PRETAX> (16,428)
<INCOME-TAX> (16,428)
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