<PAGE>
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): November 25, 1997
National Auto Finance Company, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-22067 65-0688619
(Commission File Number) (I.R.S. Employer
Identification Number)
621 N.W. 53rd Street, Suite 200
Boca Raton, Florida 33487
(Address of Principal Executive Offices) (Zip Code)
(800) 999-7535
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
Filed herewith and incorporated herein by reference is a copy of the
National Auto Finance Company, Inc. (the "Company") Press Release, dated
November 25, 1997, announcing its financial results, as revised, for the third
quarter and nine months ended September 30, 1997. The nature of the Company's
business is such that the results for any interim period are not necessarily
indicative of the results for a full year.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired:
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
(99) Press Release, dated November 25, 1997.
<PAGE>
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 hereto duly authorized.
Date: November 25, 1997 NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ Kevin G. Adams
Name: Kevin G. Adams
Title: Chief Financial Officer
<PAGE>
NATIONAL AUTO FINANCE COMPANY, INC.
FORM 8-K
CURRENT REPORT
Exhibit Index
Exhibit No. Description Page
----------- --------------- ----
(99) Press Release, dated November 25, 1997
<PAGE>
Contact: Roy E. Tipton Keith B. Stein
President Vice Chairman
(800) 999-7535 (800) 533-8573
NATIONAL AUTO FINANCE COMPANY, INC.
REVISES THIRD QUARTER AND NINE-MONTH RESULTS
BOCA RATON, Fla. (November 25, 1997) - National Auto Finance Company, Inc.
(Nasdaq/NM:NAFI) today revised its previously announced results for the third
quarter and nine months ended September 30, 1997. The revised results follow the
expensing by the Company of previously capitalized fees and costs associated
with its securitization transactions and a decision by the Company to increase
its non-cash reserves associated with its portfolio of non-prime automobile
retail installment sale contracts.
The expensing relates to certain previously capitalized fees and costs
incurred in connection with the prior securitization of the Company's portfolio
of loans (net of certain previously amortizing deferred interest income), in an
aggregate pre-tax amount of $1.389 million, or $.13 per share, after taxes.
The increase in reserves is the result of continued detailed review and
analysis, including extensive computer modeling, of factors affecting the
performance of the Company's loan portfolio and the related carrying value of
certain interest-only assets, specifically the excess spread receivable retained
by the Company in its securitized loan portfolio. This valuation adjustment
primarily is the result of an increased net loss estimate for the loan
portfolio, in the pre-tax amount of $611,000 (net of $660,000 of related
servicing income), or $.05 per share, after taxes.
As a result of these changes, revised revenues for the third quarter ended
September 30, 1997, increased 36% to $5.7 million compared with $4.2 million in
the third quarter of 1996. Revised net income after preferred stock dividends
was $389,000, or $.06 per share, for the third quarter of 1997 compared with pro
forma net income of $900,000, or $.13 per share, for the year-earlier period.
For the nine months ended September 30, 1997, revised revenues increased
80% to $17.8 million compared with $9.9 million for the same period in 1996.
Revised net income (before the effects of a one-time, non-cash, deferred income
tax charge of $4.5 million to reflect a deferred income tax liability arising
from the reorganization of the Company's business from a partnership form to a
taxable corporate form in connection with the Company's initial public offering
in January 1997) after preferred stock dividends rose to $2.4 million, or $.34
per share, compared with pro forma net income of $1.9 million, or $.29 per
share, for the year-earlier period. Including the one-time charge, the revised
net loss for the first nine months of 1997 was $2.1 million, or $.30 per share.
-MORE-
<PAGE>
NAFI Revised Third Quarter and Nine-Month Results
Page 2
November 25, 1997
- --------------------------------------------------------------------------------
Commenting on the revisions, Keith B. Stein, vice chairman and treasurer,
said, "We have been a leader in this industry with respect to the dissemination
of information to the public relating to portfolio performance and gain-on-sale
accounting. We firmly believe in the necessity of a credible and conservative
approach to these accounting and disclosure matters and will continually strive
to maintain that conservative approach. For example, we were one of the first
companies to disclose in public filings our static pool performance information.
The third quarter accounting adjustments are the result of our further
refinement of the extremely sophisticated computer model used to perform this
critical quarterly valuation analysis. Although the adoption of a more
conservative net loss estimate affects earnings now and in the future, the
valuation adjustment we are making today should help to ensure the Company of a
higher-quality earnings stream going forward."
Commenting on operations, Roy E. Tipton, president of National Auto
Finance, said, "We have responded to the serious deficiencies in the servicing
and collection performance of our outside servicer, which has caused increased
delinquencies and losses, through the opening of our new Jacksonville, Florida,
servicing division in late-July and the assumption of all collections and
collateral recovery activities from our outside servicer on October 1. The
Company has absorbed, and will continue to absorb, duplicative and additional
costs associated with the transition to in-house servicing, including as much as
$1 million during the fourth quarter of 1997; however, since opening the new
in-house servicing division, we have experienced very positive trends in lower
loan delinquencies across the board and higher collateral recoveries. Based on
those leading indicators, we expect a continued improvement in portfolio
performance."
National Auto Finance Company is a specialized consumer finance company
engaged in the purchase, securitization and servicing of automobile loans
primarily originated by manufacturer-franchised automobile dealers for non-prime
consumers. The Company markets its products and services to dealers through the
efforts of its direct sales force and through strategic referral and marketing
alliances with financial and other institutions that have established
relationships with dealers, including an exclusive referral agreement with First
Union National Bank. The Company has contractual relationships with
approximately 2,140 dealers in 29 states.
This news release contains statements that are forward-looking statements
within the meaning of applicable federal securities laws and are based upon the
Company's current expectations and assumptions, which are subject to a number of
risks and uncertainties, which could cause actual results to differ materially
from those anticipated. Primary factors that could cause actual results to
differ include the availability of financing on terms and conditions acceptable
to the Company, the ability of the Company to securitize its finance contracts
in the asset-backed securities market on terms and conditions acceptable to the
Company, and changes in the quality or composition of the serviced loan
receivable portfolio. Certain of these as well as other factors are described in
more detail in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and in certain other reports filed by the Company with the
Securities and Exchange Commission in fiscal year 1997.
-MORE-
<PAGE>
NAFI Revised Third Quarter and Nine-Month Results
Page 3
November 25, 1997
- --------------------------------------------------------------------------------
NATIONAL AUTO FINANCE COMPANY, INC.
Unaudited Condensed Consolidated Statements of Income
(In thousands, except earnings per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
------ ------ ------- ------
Revenue:
Gain on sales of loans $3,596 $3,560 $13,431 $8,188
Finance charges earned -- -- 95 --
Other income 2,098 661 4,318 1,668
------ ------ ------- ------
5,694 4,221 17,844 9,856
Total expenses 4,996 2,787 13,800 6,754
------ ------ ------- ------
Income before income taxes 698 1,434 4,044 3,102
Income taxes 269 539(1) 1,557 1,167(1)
Income taxes from reorganization
of partnership -- -- 4,500(2) --
------ ------ ------- ------
Net income (loss) $ 429 -- $(2,013)(2) --
Pro forma net income -- $ 895 -- $1,935
Less preferred stock dividends 40 -- 107 --
------ ------ ------- ------
Net income (loss) available for
common shareholders $ 389 $ 895 $(2,120)(2) $1,935
====== ====== ======= ======
Earnings (loss) per share $ .06 -- $ (.30)(2) --
====== =======
Pro forma earnings per share -- $ 0.13 $ .34(3) $ 0.29
====== ======= ======
Weighted average shares and share
equivalents outstanding 7,026 -- 6,995 --
====== =======
Pro forma shares outstanding -- 6,726 -- 6,726
====== ======
(1) Pro forma income taxes for the three- and nine-month periods ended September
30, 1996, calculated as if the Company had operated as a "C" Corporation.
(2) Includes the effects of a one-time, non-cash charge for deferred income
taxes arising from the reorganization of the Company from a partnership form
to a taxable corporate form in connection with the Company's initial public
offering in January 1997.
(3) Excludes the effects of the charge noted in footnote 2.
-MORE-
<PAGE>
NAFI Revised Third Quarter and Nine-Month Results
Page 4
November 25, 1997
- --------------------------------------------------------------------------------
NATIONAL AUTO FINANCE COMPANY, INC.
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands)
September 30, December 31,
1997 1996
------------- ------------
ASSETS
Assets:
Cash and cash equivalents $ 326 $ 5,066
Investments and retained interest in securitizations 42,516 23,404
Fixed assets, net 1,393 515
Deferred financing costs 925 1,849
Other assets 1,410 367
------- -------
Total assets $46,570 $31,201
======= =======
LIABILITIES AND OWNERSHIP EQUITY
Liabilities:
Subordinated debt $14,007 $19,218
Other liabilities 8,155 2,432
------- -------
Total liabilities 22,162 21,650
Ownership and Stockholders' Equity:
Stockholders (partners) equity(1) 24,408 9,551
------- -------
Total Liabilities and Ownership Equity $46,570 $31,201
======= =======
(1) Equity for December 31, 1996, reflects partners capital of National Auto
Finance Company, L.P.
-END-
