UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
|x| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
| | TRANSITION REPORT PURSUANT TO 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 1-6594
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COMMERCIAL CREDIT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 52-0883351
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 St. Paul Place, Baltimore, Maryland 21202
(Address of principal executive offices) (Zip Code)
(410) 332-3000
(Registrant's telephone number, including area code)
--------------
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 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
--- ---
The registrant is an indirect wholly owned subsidiary of Travelers Group Inc. As
of the date hereof, one share of the registrant's Common Stock, $.01 par value,
was outstanding.
REDUCED DISCLOSURE FORMAT
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>
Commercial Credit Company and Subsidiaries
TABLE OF CONTENTS
-----------------
Part I - Financial Information
Item 1. Financial Statements: Page No.
--------
Condensed Consolidated Statement of Income (Unaudited) -
Three and Nine Months Ended September 30, 1996 and 1995 3
Condensed Consolidated Statement of Financial Position -
September 30, 1996 (Unaudited) and December 31, 1995 4
Condensed Consolidated Statement of Cash Flows (Unaudited) -
Nine Months Ended September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements - (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Exhibit Index 13
Signatures 14
2
<PAGE>
Commercial Credit Company and Subsidiaries
Condensed Consolidated Statement of Income (Unaudited)
(In millions of dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
- -------------------------------------------------------------------------------
Revenues
Finance related interest
and other charges $291.7 $284.5 $ 863.0 $ 833.0
Insurance premiums 38.6 35.8 112.5 99.2
Net investment income 12.6 12.7 38.1 37.2
Other income 14.6 22.7 57.4 66.8
- --------------------------------------------------------------------------------
Total revenues 357.5 355.7 1,071.0 1,036.2
- --------------------------------------------------------------------------------
Expenses
Interest 119.6 116.7 352.8 346.8
Non-insurance compensation and benefits 46.6 49.4 137.9 147.8
Provision for consumer finance
credit losses 60.6 41.1 188.4 121.9
Policyholder benefits and claims 13.7 12.6 35.1 36.8
Insurance underwriting,
acquisition and operating 7.1 7.2 20.7 20.5
Other operating 39.1 38.1 108.8 114.3
- --------------------------------------------------------------------------------
Total expenses 286.7 265.1 843.7 788.1
- --------------------------------------------------------------------------------
Income before income taxes 70.8 90.6 227.3 248.1
Provision for income taxes 24.2 29.7 78.0 85.9
- --------------------------------------------------------------------------------
Net income $ 46.6 $ 60.9 $149.3 $ 162.2
================================================================================
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
Commercial Credit Company and Subsidiaries
Condensed Consolidated Statement of Financial Position
(In millions of dollars, except per share amounts)
September 30, December 31,
1996 1995
- -------------------------------------------------------------------------------
Assets (Unaudited)
Cash and cash equivalents $ 18.6 $ 30.1
Investments:
Fixed maturities:
Available for sale, at market value
(amortized cost - $795.9 and $781.4) 781.3 802.9
Equity securities, at market value
(cost - $43.7 and $26.5) 43.4 28.4
Mortgage loans and real estate held for sale 136.1 185.3
Short-term and other 126.3 28.6
- -------------------------------------------------------------------------------
Total investments 1,087.1 1,045.2
- -------------------------------------------------------------------------------
Consumer finance receivables 7,784.9 7,285.0
Allowance for losses (225.7) (192.5)
- -------------------------------------------------------------------------------
Net consumer finance receivables 7,559.2 7,092.5
Other receivables 154.2 164.4
Deferred policy acquisition costs 11.0 16.1
Cost of acquired businesses in
excess of net assets 107.4 98.2
Other assets 331.9 188.0
- -------------------------------------------------------------------------------
Total assets $9,269.4 $8,634.5
===============================================================================
Liabilities
Certificates of deposit $ 125.6 $ 98.3
Short-term borrowings 1,828.7 1,394.2
Long-term debt 5,300.0 5,200.0
- -------------------------------------------------------------------------------
Total debt 7,254.3 6,692.5
Insurance policy and claims reserves 408.0 392.8
Accounts payable and other liabilities 384.5 386.3
- -------------------------------------------------------------------------------
Total liabilities 8,046.8 7,471.6
- -------------------------------------------------------------------------------
Stockholder's equity
Common stock ($.01 par value; authorized:
1,000 shares; issued: 1 share) -- --
Additional paid-in capital 163.9 163.5
Retained earnings 1,068.7 984.4
Unrealized gain (loss) on investments (9.7) 15.3
Cumulative translation adjustments (.3) (.3)
- -------------------------------------------------------------------------------
Total stockholder's equity 1,222.6 1,162.9
- -------------------------------------------------------------------------------
Total liabilities and stockholder's equity $9,269.4 $8,634.5
===============================================================================
See Notes to Condensed Consolidated Financial Statements.
4
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Commercial Credit Company and Subsidiaries
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In millions of dollars)
Nine months ended September 30, 1996 1995
- --------------------------------------------------------------------------------
Cash Flows From Operating Activities
Income before income taxes $ 227.3 $ 248.1
Adjustments to reconcile income before
income taxes and minority interest to
net cash provided by (used in) operating activities:
Amortization of deferred policy acquisition
costs and value of insurance in force 6.1 5.2
Additions to deferred policy acquisition costs (1.1) (9.1)
Provision for consumer finance credit losses 188.4 121.9
Changes in:
Insurance policy and claims reserves 15.2 3.8
Other, net (49.5) 148.2
- --------------------------------------------------------------------------------
Net cash provided by operations 386.4 518.1
Income taxes (paid) (98.0) (90.5)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 288.4 427.6
- --------------------------------------------------------------------------------
Cash Flows From Investing Activities
Net change in credit card receivables (88.2) (23.0)
Loans originated or purchased (2,452.8) (2,050.4)
Loans repaid or sold 1,898.2 1,656.8
Purchases of investments (365.2) (314.9)
Proceeds from sales of investments 242.4 255.8
Proceeds from maturities of investments 8.1 1.1
Business acquisition 11.3 --
Other, net 22.0 23.1
- --------------------------------------------------------------------------------
Net cash (used in) investing activities (724.2) (451.5)
- --------------------------------------------------------------------------------
Cash Flows From Financing Activities
Dividends paid (65.0) (110.0)
Issuance of long-term debt 400.0 1,800.0
Payments of long-term debt (300.0) (660.0)
Net change in short-term borrowings 434.5 (1,017.4)
Net change in certificates of deposit (45.2) 1.2
- --------------------------------------------------------------------------------
Net cash provided by financing activities 424.3 13.8
- --------------------------------------------------------------------------------
Change in cash and cash equivalents (11.5) (10.1)
Cash and cash equivalents at beginning of period 30.1 23.6
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 18.6 $ 13.5
================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 344.7 $ 323.8
================================================================================
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
Commercial Credit Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
---------------------
Commercial Credit Company (the Company) is a wholly owned subsidiary of CCC
Holdings, Inc., which is a wholly owned subsidiary of Travelers Group Inc.
(the Parent). The condensed consolidated financial statements include the
accounts of the Company and its subsidiaries.
The accompanying condensed consolidated financial statements as of
September 30, 1996 and for the three-month and nine-month periods ended
September 30, 1996 and 1995 are unaudited. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for
a fair presentation have been reflected. The accompanying condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Certain financial information that is normally included in annual financial
statements prepared in accordance with generally accepted accounting
principles, but is not required for interim reporting purposes, has been
condensed or omitted.
Accounting Change
FAS 121. Effective January 1, 1996 the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (FAS 121).
This statement establishes accounting standards for the impairment of
long-lived assets and certain identifiable intangibles to be disposed of.
This statement requires a write down to fair value when long-lived assets
to be held and used are impaired. The statement also requires that
long-lived assets to be disposed of (e.g. real estate held for sale) be
carried at the lower of cost or fair value less cost to sell, and does not
allow such assets to be depreciated. The adoption of this standard did not
have a material impact on the Company's financial condition, results of
operations or liquidity.
2. Consumer Finance Receivables
----------------------------
Consumer finance receivables, net of unearned finance charges of $637.6
million and $690.2 million at September 30, 1996 and December 31, 1995,
respectively, consisted of the following:
(millions) September 30, 1996 December 31, 1995
------------------ -----------------
Real estate-secured loans $3,306.7 $2,957.1
Personal loans 3,120.7 3,051.0
Credit cards 832.2 761.8
Sales finance and other 478.7 468.2
-------- --------
Consumer finance receivables,
net of unearned finance charges 7,738.3 7,238.1
Accrued interest receivable 46.6 46.9
Allowance for credit losses (225.7) (192.5)
-------- -------
Net consumer finance receivables $7,559.2 $7,092.5
======== ========
6
<PAGE>
Notes to Condensed Consolidated Financial Statements (continued)
3. Debt
----
The Company issues commercial paper directly to investors and maintains
unused credit availability under its bank lines of credit at least equal to
the amount of its outstanding commercial paper. At September 30, 1996 and
December 31, 1995, short-term borrowings consisted of commercial paper
totaling $1,828.7 million and $1,394.2 million, respectively. The Company
may borrow under its revolving credit facilities at various interest rate
options and compensates the banks for the facilities through commitment
fees. The Parent, the Company and The Travelers Insurance Company (TIC)
have an agreement with a syndicate of banks to provide $1.0 billion of
revolving credit, to be allocated to any of the Parent, the Company or TIC.
The revolving credit facility consists of a five-year facility which
expires in 2001. Currently, $650 million is allocated to the Company. At
September 30, 1996 there were no borrowings outstanding under this
facility.
The Company also has a committed and available revolving credit facility on
a stand-alone basis of $1.5 billion that expires in 2001.
The Company is limited by covenants in its revolving credit agreements as
to the amount of dividends and advances that may be made to the Parent or
its affiliated companies. At September 30, 1996, the Company would have
been able to remit $272.7 million to the Parent under its most restrictive
covenants.
The Company completed the following long-term debt offerings during the
first nine months of 1996:
(millions)
o 5 7/8% Notes due January 15, 2003........ $200
o 5.55% Notes due February 15, 2001........ $200
4. Related Party Transactions
--------------------------
To facilitate cash management the Company has entered into an agreement
with the Parent under which the Company or the Parent may borrow from the
other party at any time an amount up to the greater of $50.0 million or 1%
of the Company's consolidated assets up to a maximum of $100.0 million. The
agreement may be terminated by either party at any time. The interest rate
to be charged on borrowings outstanding will be equivalent to an
appropriate market rate.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL CONDITION
and RESULTS of OPERATIONS
Consolidated Results of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------------
(In millions) 1996 1995 1996 1995
--------------------------------------------------------------------------
Revenues $357.5 $355.7 $1,071.0 $1,036.2
====== ====== ======== ========
Net income $ 46.6 $ 60.9 $ 149.3 $ 162.2
====== ====== ======== ========
Results of Operations
The consolidated net income of Commercial Credit Company and subsidiaries (the
Company) for the quarter ended September 30, 1996 was $46.6 million compared to
$60.9 million in the corresponding 1995 period. Revenues for the quarter ended
September 30, 1996 were $357.5 million compared to $355.7 million in the
corresponding 1995 period.
The net income of the Company for the nine months ended September 30, 1996 was
$149.3 million compared to $162.2 million in the corresponding 1995 period.
Revenues for the nine months ended September 30, 1996 were $1,071.0 million
compared to $1,036.2 million in the corresponding 1995 period.
The following discussion presents in more detail each segment's performance.
Segment Results for the Three Months Ended September 30, 1996 and 1995
----------------------------------------------------------------------
Consumer Finance Services
Three Months Ended September 30,
-----------------------------------------------
(In millions) 1996 1995
---------------------------------------------------------------------------
Revenues Net income Revenues Net income
---------------------------------------------------------------------------
Consumer Finance Services $350.4 $53.8 $343.0 $65.1
===========================================================================
Earnings in the third quarter of 1996 were lower than the comparable period in
1995, as expected --driven by a higher provision for loan losses.
Consumer finance receivables, net of unearned finance charges grew $275.1
million during the third quarter of 1996. This growth occurred primarily in real
estate and personal loans, and benefited from a $95 million bulk acquisition of
real estate loans as well as an increase in real estate loan volume of $111
million over last year's levels in the Company's 862 branch office network and
through Primerica Financial Services.
Personal loan volume in the 1996 third quarter was up substantially over the
prior year period and the 1996 second quarter. Travelers Bank credit card
outstandings declined $17.3 million, resulting from the sale of a non-strategic
portfolio, partially offset by strong credit card originations. At September 30,
1996, net receivables totaled a record $7.74 billion, an 8.3% increase over
September 30, 1995. While
8
<PAGE>
total interest margin increased from the 1995 period due to the increase in the
portfolio, average net interest margin declined 27 basis points reflecting a
decline to 15.17% from 15.77% in the average yield mainly due to the normal run
off of older, higher yielding real estate loans and growth in lower yielding
first mortgage and other higher quality real estate loans, partially offset by a
decrease in cost of funds.
Delinquencies in excess of 60 days were 2.31% as of September 30, 1996 -- higher
than 2.18% at the end of the 1996 second quarter, and 1.97% at the end of the
third quarter of 1995. The charge-off rate remained relatively flat at 2.91%,
compared to the 1996 second quarter, but was higher than in the comparable 1995
period. This reflects a continued high level of personal bankruptcies throughout
the credit industry, a trend that has shown no indication of reversing itself.
Reserves as a percentage of net receivables remained at 2.92%, unchanged from
the 1996 second quarter.
As of, and for, the
Three Months Ended September 30,
----------------------------------
1996 1995
----------------------------------
Allowance for credit losses as a %
of net outstandings 2.92% 2.64%
Charge-off rate 2.91% 2.24%
60 + days past due on a contractual
basis as a % of gross consumer
finance receivables at quarter end 2.31% 1.97%
Corporate and Other
Three Months Ended September 30,
----------------------------------------------------
(In millions) 1996 1995
------------------------------------------------------------------------------
Revenues Net income Revenues Net income
(expense) (expense)
------------------------------------------------------------------------------
Corporate and other $7.1 $(7.2) $12.7 $(4.2)
==============================================================================
The increase in Corporate and Other net expense for the third quarter of 1996
compared to the third quarter of 1995 is primarily attributable to increases in
interest costs borne at the corporate level.
Segment Results for the Nine Months Ended September 30, 1996 and 1995
---------------------------------------------------------------------
The overall operating trends for the nine months ended September 30, 1996 and
1995 were substantially the same as those of the third quarter periods except as
noted below.
9
<PAGE>
Consumer Finance Services
Nine Months Ended September 30,
----------------------------------------------
(In millions) 1996 1995
-----------------------------------------------------------------------------
Revenues Net income Revenues Net income
-----------------------------------------------------------------------------
Consumer Finance Services(1) $1,045.8 $169.8 $1,003.4 $180.6
=============================================================================
(1) Revenues and net income in 1996 includes a portion of the gain ($1.2
million and $.7 million, respectively) from the disposition of RCM Capital
Management, a California Limited Partnership (RCM).
The average yield on the portfolio for the first nine months of 1996 was 15.33%,
compared to 15.59% in the comparable 1995 period. Net interest margin, at 8.72%,
was about even with the prior year's first nine months. The charge-off rate was
2.90% for the first nine months of 1996, compared to 2.18% for the first nine
months of 1995.
Corporate and Other
Nine Months Ended September 30,
----------------------------------------------------
(In millions) 1996 1995
-----------------------------------------------------------------------------
Revenues Net income Revenues Net income
(expense) (expense)
-----------------------------------------------------------------------------
Corporate and other(1) $25.2 $(20.5) $32.8 $(18.4)
=============================================================================
(1) Revenues and net income in 1996 includes a portion of the gain ($1.6
million and $1.2 million, respectively) from the disposition of RCM.
The increase in Corporate and Other net expense (before the gain on disposition
of RCM) for the first nine months of 1996 compared to the first nine months of
1995 is primarily attributable to increases in interest costs borne at the
corporate level.
Liquidity and Capital Resources
The Company issues commercial paper directly to investors and maintains unused
credit availability under committed revolving credit agreements at least equal
to the amount of commercial paper outstanding. The Company may borrow under its
revolving credit facilities at various interest rate options and compensates the
banks for the facilities through commitment fees.
Travelers Group Inc. (the Parent), the Company and The Travelers Insurance
Company (TIC) have an agreement with a syndicate of banks to provide $1.0
billion of revolving credit, to be allocated to any of the Parent, the Company
or TIC. The revolving credit facility consists of a five-year facility which
expires in 2001. Currently, $650 million is allocated to the Company. In
addition, the Company has a committed and available revolving credit facility on
a stand-alone basis of $1.5 billion that expires in 2001.
The Company currently has unused credit availability of $2.15 billion under
five-year revolving credit facilities.
10
<PAGE>
The Company completed the following long-term debt offerings in 1996 and, as of
November 5, 1996, had $950 million available for debt offerings and $400 million
available for trust preferred security offerings under its shelf registration
statements:
o 5 7/8% Notes due January 15, 2003....... $200 million
o 5.55% Notes due February 15, 2001....... $200 million
In addition to the long-term debt offerings above, in October 1996 the Company,
through a private placement, issued $200 million of 6.45% Notes due October 18,
2006 which by their terms can be put to the Company at par on October 18, 1999.
The Company is limited by covenants in its revolving credit agreements as to the
amount of dividends and advances that may be made to the Parent or its
affiliated companies. At September 30, 1996, the Company would have been able to
remit $272.7 million to the Parent under its most restrictive covenants.
Future Application of Accounting Standards
Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
(FAS 123), is effective for 1996 reporting. This statement addresses the
accounting for the cost of stock-based compensation, such as stock options and
restricted stock. FAS 123 permits either expensing the value of stock-based
compensation over the period earned or disclosing in the financial statement
footnotes the pro forma impact to net income as if the value of stock-based
compensation awards had been expensed. The value of awards would be measured at
the grant date based upon estimated fair value, using option pricing models. The
Company along with affiliated companies participates in stock option and other
stock-based incentive plans sponsored by the Parent. The Company has selected
the disclosure alternative that requires such pro forma disclosures to be
included in annual financial statements.
In June 1996, the Financial Accounting Standards Board (FASB) issued statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (FAS 125). FAS
125 provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. These standards are based
on consistent application of a financial-components approach that focuses on
control. Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been surrended, and
derecognizes liabilities when extinguished. FAS 125 provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. The requirements of FAS 125 would be
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996, and is to be applied
prospectively; however, the FASB has announced its intention to delay until
January 1, 1998 the effective date for certain provisions. Earlier or
retroactive application is not permitted. The Company is currently evaluating
the impact of this statement.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
For information concerning purported class action lawsuits filed
against the Company and certain of its subsidiaries alleging, inter alia, that
such subsidiaries charged excessive premiums on nonfiling insurance, see the
descriptions that appear in the second paragraph on page 2 of the Company's
Current Report on Form 8-K, dated July 13, 1994, the first paragraph on page 14
of the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1995, the fourth paragraph on page 9 of the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and the first paragraph on page 13 of
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996,
which descriptions are incorporated by reference herein. A copy of the pertinent
paragraphs of such filings is included as an exhibit to this Form 10-Q. In
Keckler v. Commercial Credit Corporation, defendant's motion to dismiss was
granted in part and denied in part. In October 1996, an additional purported
class action was filed in the Circuit Court of Perry County, Alabama, entitled
Washington v. Commercial Credit Corporation, et al., with allegations, and
seeking damages, similar to those in the earlier cases referred to above. The
Company believes it has meritorious defenses to this action and intends to
contest the allegations.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
See Exhibit Index.
(b) Reports on Form 8-K:
On July 17, 1996, the Company filed a Current Report on Form 8-K,
dated July 15, 1996, reporting under Item 5 thereof the results of its
operations for the three months and six months ended June 30, 1996, and certain
other selected financial data.
On July 19, 1996, the Company filed a Current Report on Form 8-K,
dated July 18, 1996, filing certain exhibits under Item 7 thereof relating to
the offer and sale of the Company's Medium Term Notes, Seventh Series, due nine
months or more from the date of issue.
No other reports on Form 8-K have been filed by the Company
during the quarter ended September 30, 1996; however, on October 15, 1996, the
Company filed a Current Report on Form 8-K, dated October 14, 1996, reporting
under Item 5 thereof the results of its operations for the three months and nine
months ended September 30, 1996, and certain other selected financial data.
12
<PAGE>
EXHIBIT INDEX
Exhibit Filing
Number Description of Exhibit Method
- ------ ---------------------- ------
3.01 Restated Certificate of Incorporation of Commercial
Credit Company (the "Company"), included in
Certificate of Merger of CCC Merger Company into the
Company; Certificate of Ownership and Merger merging
CCCH Acquisition Corporation into the Company; and
Certificate of Ownership and Merger merging RDI
Service Corporation into the Company, incorporated by
reference to Exhibit 3.01 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-6594).
3.02 By-Laws of the Company, as amended May 14, 1990,
incorporated by reference to Exhibit 3.02.2 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990 (File No. 1-6594).
4.01.1 Indenture, dated as of December 1, 1986 (the
"Indenture"), between the Company and Citibank, N.A.,
relating to the Company's debt securities,
incorporated by reference to Exhibit 4.01 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 (File No. 1-6594).
4.01.2 First Supplemental Indenture, dated as of June 13,
1990, to the Indenture, incorporated by reference to
Exhibit 1 to the Company's Current Report on Form
8-K, dated June 13, 1990 (File No. 1-6594).
12.01 Computation of Ratio of Earnings to Fixed Charges. Electronic
27.01 Financial Data Schedule. Electronic
99.01 The second paragraph on page 2 of the Company's Electronic
Current Report on Form 8-K, dated July 13,
1994 (File No. 1-6594), the first paragraph on page
14 of the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1995 (File No.
1-6594), the fourth paragraph on page 9 of the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 (File No. 1-6594) and
the first paragraph on page 13 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1996 (File No. 1-6594).
The total amount of securities authorized pursuant to any
other instrument defining rights of holders of long-term
debt of the Company does not exceed 10% of the total assets
of the Company and its consolidated subsidiaries. The
Company will furnish copies of any such instrument to the
Securities and Exchange Commission upon request.
13
<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 thereunto duly authorized.
Commercial Credit Company
Date: November 12, 1996 By /s/ William R. Hofmann
------------------------------
William R. Hofmann
Vice President
(Principal Financial Officer)
Date: November 12, 1996 By /s/ Irwin Ettinger
------------------------------
Irwin Ettinger
Executive Vice President
(Chief Accounting Officer)
14
<PAGE>
EXHIBIT INDEX
Exhibit Filing
Number Description of Exhibit Method
- ------ ---------------------- ------
3.01 Restated Certificate of Incorporation of Commercial
Credit Company (the "Company"), included in
Certificate of Merger of CCC Merger Company into the
Company; Certificate of Ownership and Merger merging
CCCH Acquisition Corporation into the Company; and
Certificate of Ownership and Merger merging RDI
Service Corporation into the Company, incorporated by
reference to Exhibit 3.01 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-6594).
3.02 By-Laws of the Company, as amended May 14, 1990,
incorporated by reference to Exhibit 3.02.2 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990 (File No. 1-6594).
4.01.1 Indenture, dated as of December 1, 1986 (the
"Indenture"), between the Company and Citibank, N.A.,
relating to the Company's debt securities,
incorporated by reference to Exhibit 4.01 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 (File No. 1-6594).
4.01.2 First Supplemental Indenture, dated as of June 13,
1990, to the Indenture, incorporated by reference to
Exhibit 1 to the Company's Current Report on Form
8-K, dated June 13, 1990 (File No. 1-6594).
12.01 Computation of Ratio of Earnings to Fixed Charges. Electronic
27.01 Financial Data Schedule. Electronic
99.01 The second paragraph on page 2 of the Company's Electronic
Current Report on Form 8-K, dated July 13,
1994 (File No. 1-6594), the first paragraph on page
14 of the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1995 (File No.
1-6594), the fourth paragraph on page 9 of the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 (File No. 1-6594) and
the first paragraph on page 13 of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1996 (File No. 1-6594).
The total amount of securities authorized pursuant to any
other instrument defining rights of holders of long-term
debt of the Company does not exceed 10% of the total assets
of the Company and its consolidated subsidiaries. The
Company will furnish copies of any such instrument to the
Securities and Exchange Commission upon request.
Exhibit 12.01
Commercial Credit Company and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(In millions of dollars, except for ratio)
Nine months ended September 30,
-------------------------------
1996 1995
------ ------
Income before income taxes $227.3 $ 248.1
Elimination of undistributed equity earnings (0.7) (1.0)
Interest 352.8 346.8
Portion of rentals deemed to be interest 7.0 7.2
------ ------
Earnings available for fixed charges $586.4 $601.1
====== ======
Fixed charges
- -------------
Interest $352.8 $346.8
Portion of rentals deemed to be interest 7.0 7.2
----- -----
Fixed charges $359.8 $354.0
====== ======
Ratio of earnings to fixed charges 1.63x 1.70x
====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27.01
Commercial Credit Company
Financial Data Schedule
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1996 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF COMMERCIAL
CREDIT COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 18,600
<SECURITIES> 1,087,100 <F1>
<RECEIVABLES> 7,939,100 <F2>
<ALLOWANCES> (225,700)
<INVENTORY> 0 <F3>
<CURRENT-ASSETS> 0 <F3>
<PP&E> 0 <F3>
<DEPRECIATION> 0 <F3>
<TOTAL-ASSETS> 9,269,400
<CURRENT-LIABILITIES> 0 <F3>
<BONDS> 7,254,300 <F4>
0 <F3>
0
<COMMON> 0
<OTHER-SE> 1,222,600 <F5>
<TOTAL-LIABILITY-AND-EQUITY> 9,269,400
<SALES> 0 <F3>
<TOTAL-REVENUES> 1,071,000
<CGS> 0 <F3>
<TOTAL-COSTS> 843,700
<OTHER-EXPENSES> 0 <F3>
<LOSS-PROVISION> 188,400 <F6>
<INTEREST-EXPENSE> 352,800 <F6>
<INCOME-PRETAX> 227,300
<INCOME-TAX> 78,000
<INCOME-CONTINUING> 149,300
<DISCONTINUED> 0 <F3>
<EXTRAORDINARY> 0 <F3>
<CHANGES> 0 <F3>
<NET-INCOME> 149,300
<EPS-PRIMARY> 0 <F3>
<EPS-DILUTED> 0 <F3>
<FN>
<F1> Includes the following items from the financial statements: total
investments $1,087,100.
<F2> Includes the following items from the financial statements: consumer
finance receivables $7,784,900 and other receivables $154,200.
<F3> Items which are inapplicable relative to the underlying financial
statements are indicated with a zero as required.
<F4> Includes the following items from the financial statements: certificates of
deposit $125,600; short-term borrowings $1,828,700 and long-term debt
$5,300,000.
<F5> Includes the following items from the financial statements: additional
paid-in capital $163,900; retained earnings $1,068,700; unrealized gain
(loss) on investments $(9,700); and cumulative translation adjustment
$(300).
<F6> Included in total costs and expenses applicable to sales and revenues.
</FN>
</TABLE>
Exhibit 99.01
Company's Form 8-K
July 13, 1994
Page 2
Item 5. Other Events
------------
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.
<PAGE>
Company's Form 10-Q
September 30, 1995
Page 14
Item 1. Legal Proceedings.
For information concerning certain purported class action lawsuits filed
against the Company and certain of its subsidiaries in May and June 1994, see
the description that appears in the second paragraph of page 2 of the Company's
filing on Form 8-K dated July 13, 1994, which description is incorporated by
reference herein. A copy of the pertinent paragraph of such filing is included
as an exhibit to this Form 10-Q. The Lawrence case was stayed pending a decision
by the Supreme Court of Alabama in a case raising similar issues regarding
credit life insurance. In October, 1995 the Supreme Court of Alabama reversed
the dismissal of that case and, as such, the Company anticipates that the stay
will be lifted. The Erkins case was dismissed without prejudice in March 1995,
and claims relating only to nonfiling insurance have been restated in an amended
complaint filed in March 1995 in the Nobels action. On September 22, 1995, an
additional purported class action lawsuit was filed against subsidiaries of the
Company in Alabama. The case, entitled Royster v. Commercial Credit Corporation
and American Health and Life Insurance Company, was filed in the Circuit Court
for Walker County on behalf of borrowers who purchased credit life insurance in
connection with installment purchase contracts and other personal loans.
Plaintiffs, who seek unspecified compensatory and punitive damages, declaratory
relief, voiding excess premium charges, and injuctive relief, assert claims for
breach of contract, fraud, outrage and unconscionability. The Company believes
it has meritorious defenses and intends to contest the allegations.
<PAGE>
Company's Form 10-K
December 31, 1995
Page 9
Item 3. LEGAL PROCEEDINGS
For information concerning certain purported class action lawsuits filed
against the Company and certain of its subsidiaries in May and June 1994 and in
September 1995, see the descriptions that appear in the second paragraph of page
2 of the Company's filing on Form 8-K dated July 13, 1994, and the first
paragraph of page 14 of the Company's filing on Form 10-Q for the third quarter
ended September 30, 1995, which descriptions are incorporated by reference
herein. A copy of the pertinent paragraphs of such filings is included as an
exhibit to this Form 10-K. In October 1995 and February 1996, two additional
purported class actions, entitled McCurdy v. American General Finance and
McMahon v. Commercial Credit Corporation, were filed in the U.S. District Court
for the Middle District of Alabama and the Circuit Court for Shelby County,
Alabama, respectively, on behalf of borrowers who purchased credit life and/or
credit property insurance from subsidiaries of the Company, among others, with
allegations similar to those in the earlier cases referred to above. Plaintiffs
seek unspecified compensatory and punitive damages, among other things. The
Company believes it has meritorious defenses to these actions and intends to
contest the allegations.
<PAGE>
Company's Form 10-Q
June 30, 1996
Page 13
ITEM 1. Legal Proceedings.
For information concerning purported class action lawsuits filed against
the Company and certain of its subsidiaries alleging, inter alia, that such
subsidiaries charged excessive premiums on nonfiling insurance, see the
descriptions that appear in the second paragraph of page 2 of the Company's
filing on Form 8-K dated July 13, 1994, and the first paragraph of page 14 of
the Company's filing on Form 10-Q for the third quarter ended September 30,
1995, which descriptions are incorporated by reference herein. A copy of the
pertinent paragraphs of such filings is included as an exhibit to this Form
10-Q. In the Nobels case, a class of plaintiffs residing in Alabama was
certified in April 1996 for certain of the claims and class certification was
denied for certain other claims. In May 1996, an additional purported class
action, entitled Keckler v. Commercial Credit Corporation, was filed in the U.S.
District Court for the Northern District of Florida with allegations similar to
those in the Nobels case. The plaintiffs seek, among other things, compensatory
and punitive damages in an unspecified amount. The Company believes it has
meritorious defenses to this action and intends to contest the allegations.
