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) July 13, 1994
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Commercial Credit Company
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(Exact name of registrant as specified in its charter)
Delaware 1-6594 52-0883351
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
300 Saint Paul Place, Baltimore, Maryland 21202
- - -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(410) 332-3000
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(Registrant's telephone number, including area code)
<PAGE>
COMMERCIAL CREDIT COMPANY
Current Report on Form 8-K
Item 5. Other Events
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Commercial Credit Company (the "Registrant") has filed registration
statements with the Securities and Exchange Commission, registering debt
securities that the Registrant may issue from time to time. In order to
update the information incorporated by reference into those registration
statements the Registrant is including in this Current Report on Form 8-K the
following information regarding legal proceedings, which otherwise would be
filed as part of the Registrant's Quarterly Report on Form 10-Q for the
second quarter of 1994, as well as certain information regarding the
Registrant's results of operations for the three-month and six-month periods
ended June 30, 1994.
In May and June 1994, three purported class action lawsuits were filed
against the Company and its subsidiaries Commercial Credit Corporation,
Voyager Guaranty Insurance Company and American Health and Life Insurance
Company. Two of such actions, Erkins v. First Franklin Financial Corp.,
et al. and Lawrence v. Commercial Credit Corp., et al., were filed in the
Circuit Court, Jefferson County, Alabama. The third action, Princess Nobels
v. Associates Corporation of North America, was filed in the U.S. District
Court for the Middle District of Alabama. The suits allege, among other
things, that the Company's subsidiaries charged excessive premiums on credit
life insurance, credit property insurance and nonfiling insurance, and that
as a result, the Company and its subsidiaries violated various federal and
state laws and regulations. The plaintiffs seek, among other things,
compensatory and punitive damages in an unspecified amount. The Company
believes it has meritorious defenses to these actions and intends to contest
the allegations.
Results of Operations
---------------------
The net income of Commercial Credit Company (the "Company") for the three
months and six months ended June 30, 1994 was $56.2 million and $108.8
million, respectively, compared to $62.7 million and $124.0 million,
respectively, in the corresponding 1993 periods. The Company's income before
income taxes, minority interest and cumulative effect of changes in
accounting principles for the three months and six months ended June 30, 1994
was $91.8 million and $179.0 million, respectively, compared to $100.6
million and $214.5 million, respectively, in the corresponding 1993 periods.
The Company's revenues for the three months and six months ended June 30,
1994 were $392.5 million and $776.8 million, respectively, compared to $378.8
million and $768.5 million, respectively, in the corresponding 1993 periods.
Net income for the six months ended June 30, 1993 includes an after-tax
charge of $2.4 million related to a change in accounting for post-retirement
benefits (FAS No. 106) and an after-tax charge of $3.4 million related to a
change in accounting for postemployment benefits (FAS No. 112) adopted during
the fourth quarter of 1993 with retroactive application to January 1, 1993.
At June 30, 1994 the Company had total debt consisting of savings accounts,
certificates and deposits of $70.3 million, short-term borrowings of $2,574.3
million and long-term debt of $3,726.0 million. In addition the Company's
total stockholder's equity at June 30, 1994 was $1,101.2.
2
<PAGE>
Ratio of Earnings to Fixed Charges
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The Company's ratio of earnings to fixed charges for the six months ended
June 30, 1994 was 1.86. This ratio has been computed by dividing earnings
available for fixed charges by fixed charges. For the purpose of this ratio
earnings available for fixed charges consist of pre-tax income from
continuing operations adjusted for undistributed equity earnings and minority
interest and fixed charges; and fixed charges consist of interest expense and
that portion of rentals deemed representative of the appropriate interest
factor.
3
<PAGE>
<TABLE><CAPTION>
COMMERCIAL CREDIT COMPANY
SELECTED FINANCIAL DATA
(In millions of dollars)
Business Segment Data
---------------------
Three months ended Six months ended
June 30, June 30,
---------------------- ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Consumer Finance $ 302.5 $ 288.1 $ 601.8 $ 572.2
Insurance Services 78.5 74.8 153.5 161.0
Corporate and Other 11.5 15.9 21.5 35.3
------- ------- ------- -------
$ 392.5 $ 378.8 $ 776.8 $ 768.5
======= ======= ======= =======
Income before cumulative effect
of changes in accounting principles:
Consumer Finance $ 54.6 $ 51.0 $ 105.8 $ 99.0
Insurance Services
(after minority interest of
$3.8; $4.0; $7.5; $12.2) 4.4 3.9 8.7 11.8
Corporate and Other (2.8) 2.0 (5.7) 5.7
Equity in income of The
Travelers Corporation -. 5.8 -. 13.3
------- ------- ------- -------
56.2 62.7 108.8 129.8
Cumulative effect of changes in
accounting principles -. -. -. (5.8)
------- ------- ------- -------
Net income $ 56.2 $ 62.7 $ 108.8 $ 124.0
======= ======= ======= =======
Consumer Finance Operations
---------------------------
<CAPTION>
As of, and for, the As of, and for, the
Three months ended six months ended
June 30, June 30,
------------------------ ------------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net receivables
Real estate-secured loans $2,798.3 $2,663.9 $2,798.3 $2,663.9
Personal loans 2,687.0 2,417.7 2,687.0 2,417.7
Credit cards 697.2 543.0 697.2 543.0
Sales finance and other 431.7 264.4 431.7 264.4
------- ------- ------- -------
Consumer finance receivables,
net of unearned finance charges 6,614.2 5,889.0 6,614.2 5,889.0
Accrued interest receivable 38.1 38.0 38.1 38.0
Allowance for credit losses (174.8) (163.9) (174.8) (163.9)
------- ------- ------- -------
Consumer finance receivables, net $6,477.5 $5,763.1 $6,477.5 $5,763.1
======= ======= ======= =======
60+ days past due as % of
receivables 1.88% 2.19% 1.88% 2.19%
Charge-off rate 2.07% 2.34% 2.16% 2.48%
Average yield 15.28% 15.92% 15.25% 15.91%
Average net interest margin 8.62% 8.42% 8.57% 8.38%
Reserves as % of net receivables 2.64% 2.78% 2.64% 2.78%
</TABLE>
4
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
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and Exhibits.
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Exhibits:
Exhibit No. Description
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1.01 Terms Agreement, dated July 13, 1994, between the
Company and Lehman Brothers Inc., as Underwriter,
relating to the offer and sale of the Company's
7 7/8% Notes due July 15, 2004.
4.01 Form of Note for the Company's 7 7/8% Notes due
July 15, 2004.
5
<PAGE>
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 hereunto duly authorized.
Dated: July 19, 1994 COMMERCIAL CREDIT COMPANY
By /s/ William T. Bozarth
--------------------------
William T. Bozarth
Vice President
6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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1.01 Terms Agreement, dated July 13, 1994, between the
Company and Lehman Brothers Inc., as Underwriter,
relating to the offer and sale of the Company's
7 7/8% Notes due July 15, 2004.
4.01 Form of Note for the Company's 7 7/8% Notes due
July 15, 2004.
Exhibit 1.01
TERMS AGREEMENT
July 13, 1994
Commercial Credit Company
300 St. Paul Place
Baltimore, Maryland 21202
Attention: Chief Financial Officer
-----------------------
Dear Sirs:
We understand that Commercial Credit Company, a Delaware
corporation (the "Company"), proposes to issue and sell
$200,000,000 aggregate principal amount of its debt securities
(the "Securities"). Subject to the terms and conditions set
forth herein or incorporated by reference herein, we, as
underwriter (the "Underwriter"), offer to purchase the Securities
at 99.440% of the aggregate principal amount thereof, plus
accrued interest from July 15, 1994 to the date of payment and
delivery. The Closing Date shall be July 20, 1994, at 8:30 A.M.
at the offices of Dewey Ballantine, 1301 Avenue of the Americas,
New York, New York 10019-6092.
The Securities shall have the following terms:
Title: 7-7/8% Notes Due July 15, 2004
Maturity: July 15, 2004
Interest Rate: 7-7/8% per annum
Interest Payment
Dates: January 15 and July 15, commencing
January 15, 1995
Initial Price to
Public: 99.691% of the principal amount
thereof, plus accrued interest from
July 15, 1994, to the date of payment
and delivery
Redemption
Provisions: The Securities are not redeemable by
the Company prior to maturity.
Additional terms: The Regular Record Dates are December
31 and June 30. The Securities shall
be issuable as Registered Securities
only. The Securities will be
initially represented by one or more
global Securities registered in the
name of The Depository Trust Company
("DTC") or its nominee. Beneficial
interests in the Securities will be
<PAGE>
shown on, and transfers thereof will
be effected only through, records
maintained by DTC and its
participants. Owners of beneficial
interests in Securities will be
entitled to physical delivery of
Securities in certificated form only
under the limited circumstances
described in the Company's Prospectus
Supplement dated July 13, 1994.
Principal and interest on the
Securities shall be payable in United
States dollars. The provisions of
Section 403 of the Indenture relating
to defeasance shall apply to the
Securities.
All the provisions contained in the document entitled
"Commercial Credit Company-Debt Securities-Underwriting Agreement
Basic Provisions" and dated November 28, 1989 (the "Basic
Provisions"), a copy of which you have previously received, are,
except as indicated below, herein incorporated by reference in
their entirety and shall be deemed to be a part of this Terms
Agreement to the same extent as if the Basic Provisions had been
set forth in full herein. Terms defined in the Basic Provisions
are used herein as therein defined.
Basic Provisions varied with respect to this Terms
Agreement: (a) Immediately prior to the first parenthesis in the
fourth sentence of the first paragraph, add the following: ", as
originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental
thereto"; (b) In the first line of Section 2(a), delete "(33-
28723), including a prospectus," and insert in lieu thereof "(33-
50513), including a prospectus (which prospectus also relates to
$350,000,000 aggregate principal amount of securities of the
Company previously registered on a registration statement on Form
S-3 (33-51814))," and any reference in the Basic Provisions to a
registration statement shall be deemed a reference to such
registration statements on Form S-3; (c) In the fifth line of the
third paragraph of Section 3, delete the phrase "New York
Clearing House (next day)" and insert in lieu thereof "federal or
other same day"; and (d) in the fourteenth line of the third
paragraph of Section 3, delete the word "definitive" and insert
in lieu thereof "global".
The Underwriter hereby agrees in connection with the
underwriting of the Securities to comply with the requirements
set forth in any applicable sections of Schedule E to the By-Laws
of the National Association of Securities Dealers, Inc.
Charles O. Prince, III, Esq. is counsel to the Company.
Dewey Ballantine is counsel to the Underwriter.
<PAGE>
The Securities will be made available for checking and
packaging at the designated office of Citibank, N.A. at least 24
hours prior to the Closing Date.
Please accept this offer no later than 9:00 o'clock P.M. on
July 13, 1994, by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us, or by
sending us a written acceptance in the following form:
"We hereby accept your offer, set forth in the Terms
Agreement, dated July 13, 1994, to purchase the Securities on the
terms set forth therein."
Very truly yours,
LEHMAN BROTHERS INC.
By: /s/ Robert E. Keenan, III
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Name: Robert E. Keenan
Title: Managing Director
ACCEPTED:
COMMERCIAL CREDIT COMPANY
By: /s/ Firoz B. Tarapore
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Name: Firoz B. Tarapore
Title: Vice President
Exhibit 4.01
FORM OF NOTE
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LEGEND FOR BOOK-ENTRY NOTE:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR ONE OR
MORE NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, 55 WATER
STREET, NEW YORK, NEW YORK ("THE DEPOSITARY"), TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND UNLESS ANY NOTE ISSUED UPON SUCH TRANSFER OR
EXCHANGE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY SUCH PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
REGISTERED REGISTERED
CUSIP NO. 201615 CW 9
NO. R-___ U.S. $___________
COMMERCIAL CREDIT COMPANY
7 7/8% Note due July 15, 2004
COMMERCIAL CREDIT COMPANY, a corporation duly organized
and existing under the laws of Delaware (herein called the
"Company," which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to SPECIMEN
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, or registered assigns, the principal sum of
_________________________ Dollars ($______________) on July 15,
2004 and to pay interest thereon from July 15, 1994, or from the
most recent Interest Payment Date to which interest has been paid
or duly provided for, semi-annually on January 15 and July 15 in
each year, commencing January 15, 1995, at the rate of 7 7/8% per
annum, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the December 31 or June 30 (whether or not a
Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly
provided
<PAGE>
for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully
provided in the Indenture.
Payment of the principal of and interest on this
Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City
of New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option
of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further provisions of
this Security set forth after the Trustee's certificate of
authentication, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: July 20, 1994
COMMERCIAL CREDIT COMPANY
By: Specimen
-----------------------
Jerome T. Fadden
Vice President
and Treasurer
By: Specimen
-----------------------
Charles O. Prince, III
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By:___________________________
Authorized Officer
<PAGE>
COMMERCIAL CREDIT COMPANY
7 7/8% Notes due July 15, 2004
This Security is one of a duly authorized issue of
Securities of the Company (herein called the "Securities"),
issued and to be issued under an Indenture dated as of December
1, 1986, as supplemented by the First Supplemental Indenture
dated as of June 13, 1990 (as so supplemented, herein called the
"Indenture"), between the Company and Citibank, N.A. (herein
called the "Trustee," which term includes any successor trustee
under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders
of the Securities and of the terms upon which the Securities are,
and are to be, authenticated and delivered. This Security is one
of the series designated as set forth above, limited in aggregate
principal amount to $200,000,000.
The Securities of this series may not be redeemed prior
to the Stated Maturity of their principal amount.
If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of all
the Securities of this series may be declared due and payable in
the manner and with the effect provided in the Indenture.
The Securities of this series are subject to
satisfaction, discharge and defeasance as provided in Section 403
of the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the
Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66 2/3% in aggregate principal amount of
the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of
the Securities of each series at the time Outstanding, on behalf
of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and interest on this Security at the
times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of
the Company in the Borough of Manhattan, The City of New York,
duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new
Securities of this series, of authorized denominations and for
the same aggregate principal amount, will be issued to the
designated transferee or transferees.
<PAGE>
The Securities of this series are issuable only in
registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal
amount of Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name
this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
_______________________________________
The following abbreviations, when used in the
inscription on the first page of this instrument, shall be
construed as though they were written out in full according to
applicable laws or regulations.
UNIF GIFT MIN ACT --
________________________________________
(Cust)
as Custodian for
________________________________________
(Minor)
under Uniform Gifts to Minors Act of
________________________________________
(State)
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants in
common
Additional abbreviations may also be used though not in
the above list.
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
[Please Insert Social Security Number or Other Identifying Number
of Assignee:]
_________________________________________________________________
[PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE:]
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
the within Security of Commercial Credit Company and does hereby
irrevocably constitute and appoint
_________________________________________________________________
Attorney to transfer said Security on the books of said Company,
with full power of substitution in the premises.
Dated: ____________________
_______________________________
NOTICE: The signature to this
assignment must correspond
with the name as written upon
the first page of the within
Security in every particular,
without alteration or
enlargement or any change
whatever, and be guaranteed by
the endorser's bank or broker.
