UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------
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 JUNE 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 _______
--------------
COMMISSION FILE NUMBER 1-6594
--------------
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 Six Months Ended June 30, 1996 and 1995 3
Condensed Consolidated Statement of Financial Position -
June 30, 1996 (Unaudited) and December 31, 1995 4
Condensed Consolidated Statement of Cash Flows (Unaudited) -
Six Months Ended June 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 13
Item 6. Exhibits and Reports on Form 8-K 13
Exhibit Index 14
Signatures 16
2
<PAGE>
<TABLE>
Commercial Credit Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In millions of dollars)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Finance related interest and other
charges $287.8 $277.6 $571.3 $548.5
Insurance premiums 37.0 32.3 73.9 63.4
Net investment income 12.7 12.3 25.5 24.5
Other income 20.4 25.1 42.8 44.1
- -----------------------------------------------------------------------------------
Total revenues 357.9 347.3 713.5 680.5
- -----------------------------------------------------------------------------------
EXPENSES
Interest 117.1 116.7 233.2 230.1
Non-insurance compensation and benefits 45.6 49.0 91.3 98.4
Provision for credit losses 60.0 41.2 127.8 80.8
Policyholder benefits and claims 13.0 12.4 21.4 24.2
Insurance underwriting, acquisition
and operating 6.9 7.0 13.6 13.3
Other operating 33.0 36.8 69.7 76.2
- -----------------------------------------------------------------------------------
Total expenses 275.6 263.1 557.0 523.0
- -----------------------------------------------------------------------------------
Income before income taxes 82.3 84.2 156.5 157.5
Provision for income taxes 28.0 30.0 53.8 56.2
- -----------------------------------------------------------------------------------
Net income $ 54.3 $ 54.2 $102.7 $ 101.3
===================================================================================
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
Commercial Credit Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In millions of dollars, except per share amounts)
<CAPTION>
JUNE 30, 1996 December 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Unaudited)
Cash and cash equivalents $ 16.1 $ 30.1
Investments:
Fixed maturities:
Available for sale, at market value (COST - $783.9
AND $781.4) 766.9 802.9
Equity securities, at market value (COST - $45.2 AND $26.5) 45.5 28.4
Mortgage loans 191.6 185.3
Short-term and other 91.3 28.6
- ----------------------------------------------------------------------------------------
Total investments 1,095.3 1,045.2
- ----------------------------------------------------------------------------------------
Consumer finance receivables 7,507.9 7,285.0
Allowance for losses (217.6) (192.5)
- ----------------------------------------------------------------------------------------
Net consumer finance receivables 7,290.3 7,092.5
Other receivables 165.0 164.4
Deferred policy acquisition costs 13.1 16.1
Cost of acquired businesses in excess of net assets 111.5 98.2
Other assets 333.2 188.0
- ----------------------------------------------------------------------------------------
Total assets $9,024.5 $8,634.5
========================================================================================
LIABILITIES
Certificates of deposit $ 168.6 $ 98.3
Short-term borrowings 1,435.8 1,394.2
Long-term debt 5,400.0 5,200.0
- ----------------------------------------------------------------------------------------
Total debt 7,004.4 6,692.5
Insurance policy and claims reserves 385.4 392.8
Accounts payable and other liabilities 424.9 386.3
- ----------------------------------------------------------------------------------------
Total liabilities 7,814.7 7,471.6
- ----------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Common stock ($.01 par value; authorized shares: 1,000;
share issued: 1) - -
Additional paid-in capital 163.9 163.5
Retained earnings 1,057.1 984.4
Unrealized gain (loss) on investments (10.9) 15.3
Cumulative translation adjustments (.3) (.3)
- ----------------------------------------------------------------------------------------
Total stockholder's equity 1,209.8 1,162.9
- ----------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $9,024.5 $8,634.5
========================================================================================
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
Commercial Credit Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In millions of dollars)
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income taxes $ 156.5 $ 157.5
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 4.3 3.0
Additions to deferred policy acquisition costs (1.3) (6.4)
Provision for credit losses 127.8 80.8
Changes in:
Insurance policy and claims reserves (7.4) 2.1
Other, net (78.1) 47.9
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operations 201.8 284.9
Income taxes (paid) (77.7) (50.5)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 124.1 234.4
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in credit card receivables (99.2) (22.1)
Loans originated or purchased (1,467.5) (1,360.2)
Loans repaid or sold 1,266.3 1,069.9
Purchases of investments (305.7) (225.9)
Proceeds from sales of investments 228.0 176.0
Proceeds from maturities of investments 4.9 3.4
Business acquisition 11.3 --
Other, net 14.4 17.7
- --------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (347.5) (341.2)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (30.0) (55.0)
Issuance of long-term debt 400.0 1,600.0
Payments of long-term debt (200.0) (510.0)
Net change in short-term borrowings 41.6 (923.4)
Net change in certificates of deposit (2.2) (7.7)
- --------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities 209.4 103.9
- --------------------------------------------------------------------------------------------------------------
Change in cash and cash equivalents (14.0) (2.9)
Cash and cash equivalents at beginning of period 30.1 23.6
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 16.1 $ 20.7
==============================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 228.8 $ 210.5
==============================================================================================================
</TABLE>
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 June
30, 1996 and for the three-month and six-month periods ended June 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.
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 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 $653.1
million and $690.2 million at June 30, 1996 and December 31, 1995,
respectively, consisted of the following:
(millions) JUNE 30, 1996 December 31, 1995
------------- -----------------
Real estate-secured loans $ 3,105.8 $ 2,957.1
Personal loans 3,038.2 3,051.0
Credit cards 849.5 761.8
Sales finance and other 469.7 468.2
---------- ----------
Consumer finance receivables 7,463.2 7,238.1
Accrued interest receivable 44.7 46.9
Allowance for credit losses (217.6) (192.5)
---------- ----------
Net consumer finance receivables $ 7,290.3 $ 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 June 30, 1996 and
December 31, 1995, short-term borrowings consisted of commercial paper
totaling $1,435.8 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 revolving
credit facility which expires in 2001. Currently, $475 million is
allocated to the Company.
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 June 30, 1996, the Company would have been
able to remit $272.6 million to the Parent under its most restrictive
covenants.
The Company completed the following long-term debt offerings during the
first six months of 1996 and, as of August 6, 1996, had $950 million
available for debt offerings under its shelf registration statement:
(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
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------------------------------------------
(In millions) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $357.9 $347.3 $713.5 $680.5
===== ===== ====== =====
Net income $ 54.3 $ 54.2 $102.7 $101.3
===== ===== ====== =====
</TABLE>
RESULTS OF OPERATIONS
The consolidated net income of Commercial Credit Company and subsidiaries (the
Company) for the quarter ended June 30, 1996 was $54.3 million compared to $54.2
million in the corresponding 1995 period. Revenues for the quarter ended June
30, 1996 were $357.9 million compared to $347.3 million in the corresponding
1995 period.
The net income of the Company for the six months ended June 30, 1996 was $102.7
million compared to $101.3 million in the corresponding 1995 period. Revenues
for the six months ended June 30, 1996 were $713.5 million compared to $680.5
million in the corresponding 1995 period.
The following discussion presents in more detail each segment's performance.
Segment Results for the Three Months Ended June 30, 1996 and 1995
-----------------------------------------------------------------
CONSUMER FINANCE SERVICES
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------------------------------------------------------
(In millions) 1996 1995
- -----------------------------------------------------------------------------------------------------------------
REVENUES NET INCOME Revenues Net income
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Finance Services(1) $347.9 $60.5 $337.1 $60.0
=================================================================================================================
</TABLE>
(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).
Earnings before the gain on the disposition of RCM for the second quarter of
1996 were even with the second quarter of 1995. The impact of a 5% higher level
of receivables and improved margins was offset by higher loan losses as well as
an increase in the loan loss reserve. At June 30, 1996, consumer finance
receivables totaled $7.463 billion.
The average yield on the portfolio, at 15.40%, was lower than the 1995 second
quarter yield of 15.57%. Net interest margin, at 8.82%, was up 13 basis points
compared with the prior year's second quarter, because of lower funding costs.
Delinquencies in excess of 60 days were 2.18% as of June 30, 1996, slightly
lower than 2.21% at the end of the first quarter of 1996, but higher than the
1.86% level at the end of the 1995 second quarter.
8
<PAGE>
Despite the favorable delinquency rate comparison, the charge-off rate for the
second quarter of 1996 was 2.92%, up from 2.14% in the comparable 1995 period
and from 2.87% in the first quarter of 1996. In part, these trends reflect the
high level of personal bankruptcies affecting the credit industry. As a result
of the higher losses, reserves as a percentage of net receivables were increased
in the second quarter of 1996 to 2.92%, up from 2.88% at March 31, 1996 and
2.64% at June 30, 1995.
<TABLE>
As of, and for, the
Three Months Ended June 30,
---------------------------------------------------
1996 1995
---------------------------------------------------
<S> <C> <C>
Allowance for credit losses as a %
of net outstandings 2.92% 2.64%
Charge-off rate 2.92% 2.14%
60 + days past due on a contractual
basis as a % of gross consumer
finance receivables at quarter end 2.18% 1.86%
</TABLE>
The total number of offices at the end of the quarter stood at 860, which
includes the addition of 10 offices from the March 31, 1996 acquisition of
Hawaii-based Servco Financial Corp (Servco). During the quarter the Company
completed its initial conversion of 28 existing retail offices into
$.M.A.R.T.(SM) Solution Centers -- devoted exclusively to servicing the
Company's growing business of underwriting real estate loans for Primerica
Financial Services.
The Servco acquisition added approximately $70 million to net consumer finance
receivables and a like amount to deposit liabilities.
The Consumer Finance segment results for the second quarter of 1996 continued to
be influenced by a higher level of loan losses, which the Company now believes
should continue throughout this year, as a result of a higher level of personal
bankruptcies. Also, near-term earnings for this segment are expected to be
affected by a higher level of expenses, as the Company implements additional
investments in marketing, training and systems enhancements in order to
capitalize on future growth opportunities. Consequently, the segment's operating
earnings in the second half of 1996 could be 15% or more below comparable 1995
levels. The Company expects improvement in the second half of 1997 results,
however, which would make year-over-year, 1997 to 1998, comparisons favorable.
The statements contained in the foregoing paragraph may be deemed to be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements are typically identified by the words
"believe," "expect," "anticipate," "intend," "estimate," and similar
expressions. These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties, certain of
which are beyond the Company's control. Actual results could differ materially
from these forward-looking statements as a result of a number of factors,
including (i) changes in the consumer lending industry as a result of economic
or regulatory influences, (ii) changes in the interest rate environment and
general economic conditions, (iii) the composition of the Company's receivables
portfolio (i.e. product mix) and (iv) the level of business competition. The
Company undertakes no obligation to update publicly or revise any
forward-looking statements.
9
<PAGE>
CORPORATE AND OTHER
<TABLE>
<CAPTION>
Three Months Ended June 30,
------------------------------------------------------------------------------------
(In millions) 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
REVENUES NET INCOME Revenues Net income
(EXPENSE) (expense)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate and other $10.0 $(6.2) $10.2 $(5.8)
============================================================================================================================
</TABLE>
(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 second quarter of 1996 compared to the second quarter of 1995 is
primarily attributable to increases in interest costs borne at the corporate
level.
Segment Results for the Six Months Ended June 30, 1996 and 1995
---------------------------------------------------------------
The overall operating trends for the six months ended June 30, 1996 and 1995
were substantially the same as those of the second quarter periods except as
noted below.
CONSUMER FINANCE SERVICES
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------------------------
(In millions) 1996 1995
- -----------------------------------------------------------------------------------------------------------------
REVENUES NET INCOME Revenues Net income
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Finance Services(1) $695.4 $116.0 $660.4 $115.5
=================================================================================================================
</TABLE>
(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.
The average yield on the portfolio for the first half of 1996 was 15.41%, lower
than the 1995 yield of 15.50%. Net interest margin, at 8.78%, was up 11 basis
points compared with the prior year's first half, because of lower funding
costs. The charge-off rate was 2.89% for the first half of 1996, compared to
2.15% for the first half of 1995.
CORPORATE AND OTHER
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------------------------------------------------------
(In millions) 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
REVENUES NET INCOME Revenues Net income
(EXPENSE) (expense)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate and other $18.1 $(13.3) $20.1 $(14.2)
============================================================================================================================
</TABLE>
(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.
10
<PAGE>
The increase in Corporate and Other net expense (before the gain on disposition
of RCM) for the first half of 1996 compared to the first half 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 revolving credit
facility which expires in 2001. Currently, $475 million is allocated to the
Company. In addition, 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 currently has unused credit availability of $1.975 billion under
five-year revolving credit facilities.
The Company completed the following long-term debt offerings in 1996 and, as of
August 6, 1996, had $950 million available for debt offerings under its shelf
registration statement:
o 5 7/8% Notes due January 15, 2003............$200 million
o 5.55% Notes due February 15, 2001............$200 million
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 June 30, 1996, the Company would have been able to
remit $272.6 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 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
11
<PAGE>
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. Earlier or retroactive application is
not permitted. The Company is currently evaluating the impact of this statement.
12
<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 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.
In August 1996, a purported class action, entitled Rosa Anderson
v. Commercial Credit Corporation, was filed in the Circuit Court for Sumter
County, Alabama containing allegations substantially similar to allegations
contained in certain individual actions currently pending, including, among
other things, that plaintiffs were mislead or induced to refinance existing
loans which carried excessive and/or unnecessary fees and charges that were not
fully disclosed to them. The plaintiffs seek, among other things, compensatory
damages in an unspecified amount. 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:
No reports on form 8-K were filed by the Company during
the quarter ended June 30, 1996; however, 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, and 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.
13
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER DESCRIPTION OF EXHIBIT METHOD
- ------ ---------------------- -------
<S> <C> <C>
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).
10.01 Five Year Credit Agreement dated as of December 16, 1994 among the
Company, the Banks party thereto and Morgan Guaranty Trust Company
of New York, as Agent, incorporated by reference to Exhibit 10.01 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-6594).
10.02 Amended and Restated Credit Agreement dated as of June 28, 1996 among Electronic
the Company, the Banks party thereto and Morgan Guaranty Trust
Company of New York, as Agent.
12.01 Computation of Ratio of Earnings to Fixed Charges. Electronic
27.01 Financial Data Schedule. Electronic
99.01 The second paragraph of page 2 of the Company's Current Report on Electronic
Form 8-K dated July 13, 1994 (File No. 1-6594).
14
<PAGE>
<CAPTION>
EXHIBIT FILING
NUMBER DESCRIPTION OF EXHIBIT METHOD
- ------ ---------------------- -------
<S> <C> <C>
99.02 The first paragraph of page 14 of the Company's Quarterly Report on Electronic
Form 10-Q for the quarter ended September 30, 1995 (File No. 1-6594).
</TABLE>
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.
15
<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: August 13, 1996 By /s/ William R. Hofmann
------------------------
William R. Hofmann
Vice President
(Principal Financial Officer)
Date: August 13, 1996 By /s/ Irwin Ettinger
--------------------------
Irwin Ettinger
Executive Vice President
(Chief Accounting Officer)
16
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER DESCRIPTION OF EXHIBIT METHOD
- ------ ---------------------- -------
<S> <C> <C>
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).
10.01 Five Year Credit Agreement dated as of December 16, 1994 among the
Company, the Banks party thereto and Morgan Guaranty Trust Company
of New York, as Agent, incorporated by reference to Exhibit 10.01 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 1-6594).
10.02 Amended and Restated Credit Agreement dated as of June 28, 1996 among Electronic
the Company, the Banks party thereto and Morgan Guaranty Trust
Company of New York, as Agent.
12.01 Computation of Ratio of Earnings to Fixed Charges. Electronic
27.01 Financial Data Schedule. Electronic
99.01 The second paragraph of page 2 of the Company's Current Report on Electronic
Form 8-K dated July 13, 1994 (File No. 1-6594).
<PAGE>
<CAPTION>
EXHIBIT FILING
NUMBER DESCRIPTION OF EXHIBIT METHOD
- ------ ---------------------- -------
<S> <C> <C>
99.02 The first paragraph of page 14 of the Company's Quarterly Report on Electronic
Form 10-Q for the quarter ended September 30, 1995 (File No. 1-6594).
</TABLE>
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 10.02
CONFORMED COPY
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 28, 1996 among
COMMERCIAL CREDIT COMPANY (the "Borrower"), the BANKS listed on the signature
pages hereof (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent (the "Agent").
W I T N E S S E T H :
WHEREAS, certain of the parties hereto have heretofore entered into a
Five-Year Credit Agreement dated as of December 16, 1994 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend such Agreement as set forth
herein and to restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
-----------------------
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended and restated hereby. The term "Notes" defined in the
Agreement shall include from and after the date hereof the New Notes (as defined
below).
<PAGE>
SECTION 2. Amendment of Termination Date. The definition of
-----------------------------
"Termination Date" in Section 1.01 of the Agreement is amended to read in its
entirety as follows:
"Termination Date" means June 28, 2001, or, if such day is not a Euro-
Dollar Business Day, the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar Business Day.
SECTION 2. Amendment of Section 3.02 of the Agreement. Section 3.02(d)
------------------------------------------
of the Agreement is amended by inserting immediately after the text "Section
4.04(c)" the text "and Section 4.05(i)".
SECTION 3. Changes in Commitments. With effect from and including the
----------------------
date this Amendment and Restatement becomes effective in accordance with Section
7 hereof, (i) each Person listed on the signature pages hereof which is not a
party to the Agreement (a "New Bank") shall become a Bank party to the Agreement
and (ii) the Commitment of each Bank shall be the amount set forth opposite the
name of such Bank on the signature pages hereof. Any Bank whose Commitment is
changed to zero shall upon such effectiveness cease to be a Bank party to the
Agreement, and all accrued fees and other amounts payable under the Agreement
for the account of such Bank shall be due and payable on such date; provided
--------
that the provisions of Sections 8.03 and 9.03 of the Agreement shall continue to
inure to the benefit of each such Bank.
SECTION 4. Representations and Warranties. The Borrower hereby
------------------------------
represents and warrants that as of the date hereof and after giving effect
thereto:
(a) no Default has occurred and is continuing;
(b) each representation and warranty of the Borrower set forth in the
Agreement is true and correct as though made on and as of this date; and
(c) since March 31, 1996 there has been no material adverse change in
the business, financial position or result of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
2
<PAGE>
SECTION 5. Amendment of Pricing Schedule. The Pricing Schedule is
-----------------------------
amended to read in its entirety as set forth in Exhibit I to this Amendment and
Restatement.
SECTION 6. Governing Law. This Amendment and Restatement shall be
-------------
governed by and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts; Effectiveness. This Amendment and Restatement
---------------------------
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment and Restatement shall become effective as of the
date when (i) the Agent shall have received duly executed counterparts hereof
signed by each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, the Agent shall have
received telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party); (ii) the Agent shall have
received a duly executed Note for each of the New Banks (a "New Note"), dated on
or before the date of effectiveness hereof and otherwise in compliance with
Section 2.05 of the Agreement; (iii) the Agent shall have received an opinion of
the General Counsel of the Borrower, substantially in the form of Exhibit E to
the Agreement with reference to the New Notes, this Amendment and Restatement
and the Agreement as amended and restated hereby; and (iv) the Agent shall have
received all documents it may reasonably request relating to the existence of
the Borrower, the corporate authority for and the validity of the Agreement as
amended and restated hereby, the New Notes and any other matters relevant
hereto, all in form and substance satisfactory to the Agent.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
COMMERCIAL CREDIT COMPANY
By: /s/ Heidi G. Miller
Title: Acting Treasurer
By: /s/ Daniel E. Rubenstein
Title: Vice President and
Acting Treasurer
4
<PAGE>
Commitments
- -----------
$65,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:/s/ Jerry J. Fall
--------------------------
Title: Vice President
$50,000,000 BANK OF AMERICA ILLINOIS
By:/s/ Gary R. Peet
---------------------------
Title: Senior Vice
President
$50,000,000 BANK OF MONTREAL
By:/s/ Soren K. Christensen
---------------------------
Title: Senior Vice
President
$50,000,000 THE BANK OF NEW YORK
By:/s/ Lizanne T. Eberle
--------------------------
Title: Vice President
$50,000,000 THE CHASE MANHATTAN BANK, N.A.
By:/s/ Susan F. Herzog
--------------------------
Title: Vice President
5
<PAGE>
$50,000,000 CIBC INC.
By:/s/ Stephen D. Reynolds
---------------------------
Title: Authorized
Signatory
$50,000,000 DEUTSCHE BANK, AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By:/s/ Gayma Z. Shivnarain
---------------------------
Title: Vice President
By:/s/ Eckhard Osenberg
---------------------------
Title: Assistant Vice
President
$50,000,000 FLEET NATIONAL BANK
By:/s/ Jane C. Lee
---------------------------
Title: Vice President
$50,000,000 MELLON BANK, N.A.
By:/s/ Thomas E. Foley
---------------------------
Title: Assistant Vice
President
$50,000,000 THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By:/s/ Hiroaki Fuchida
---------------------------
Title: Senior Vice
President &
Manager
6
<PAGE>
$50,000,000 NATIONSBANK N.A. SOUTH
By:/s/ Robert F. Clayton
---------------------------
Title: Executive Vice
President
$50,000,000 THE SAKURA BANK, LIMITED
By:/s/ Yoshikazu Nagura
---------------------------
Title: Vice President &
Manager
$50,000,000 UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By:/s/ Mark T. Lancaster
---------------------------
Title: Vice President
By:/s/ Richard W. Fortney
---------------------------
Title: Managing Director
$50,000,000 WELLS FARGO BANK, N.A.
By:/s/ Edward Suave
---------------------------
Title: Vice President
By:/s/ Jonathan David
---------------------------
Title: Assistant Vice
President
7
<PAGE>
$35,000,000 CITIBANK, N.A.
By:/s/ David A. Dodge
---------------------------
Title: Vice President
$35,000,000 CREDIT LYONNAIS NEW YORK
BRANCH
By:/s/ Renard d'Herbes
--------------------------
Title: Senior Vice
President
$35,000,000 THE DAI-ICHI KANGYO BANK,
LTD., NEW YORK BRANCH
By:/s/ Matthew G. Murphy
--------------------------
Title: Vice President
$35,000,000 FIRST UNION NATIONAL BANK
By:/s/ Alan Lilienthal
--------------------------
Title: Vice Presient
$35,000,000 FIRST NATIONAL BANK OF CHICAGO
By:/s/ Thomas J. Collimore
---------------------------
Title: Vice President
8
<PAGE>
$35,000,000 FIRST NATIONAL BANK OF
MARYLAND
By:/s/ Stewart T. Shettle
---------------------------
Title: Vice President
$35,000,000 THE FUJI BANK, LIMITED, NEW
YORK RANCH
By:/s/ Gina M. Kearan
---------------------------
Title: Vice President &
Manager
$35,000,000 PNC BANK, NATIONAL ASSOCIATION
By:/s/ Catherine E. Garrity
---------------------------
Title: Vice President
$35,000,000 ROYAL BANK OF CANADA
By:/s/ Gary R. Overton
---------------------------
Title: Senior Manager
$35,000,000 THE SUMITOMO BANK, LIMITED
By:/s/ Yoshinori Kawamura
--------------------------
Title: Joint General
Manager
9
<PAGE>
$34,000,000 ABN AMRO BANK N.V., NEW YORK
BRANCH
By:/s/ Victor Fennon
---------------------------
Title: Vice President
By:/s/ David W. Eastep
---------------------------
Title: Assistant Vice
President
$25,000,000 THE FIRST NATIONAL BANK OF
BOSTON
By:/s/ Charles Garrity
---------------------------
Title: Vice President
$25,000,000 BANK OF HAWAII
By:/s/ Alison J. Sierens
---------------------------
Title: Assistant Vice
President
$25,000,000 THE BANK OF NOVA SCOTIA
By:/s/ Terry Fryett
---------------------------
Title: Senior Relationship
Manager
10
<PAGE>
$25,000,000 BANQUE NATIONALE DE PARIS
By:/s/ Phil Truesdale
--------------------------
Title: Vice President
By:/s/ John McGill
--------------------------
Title: Vice President
$25,000,000 FIRST HAWAIIAN BANK
By:/s/ Kathryn A. Plumb
---------------------------
Title: Vice President
$25,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:/s/ Takeski Kawano
---------------------------
Title: Senior Vice
President
$25,000,000 THE NORTHERN TRUST COMPANY
By:/s/ James C. McCall III
---------------------------
Title: Vice President
$25,000,000 THE SANWA BANK LIMITED
By:/s/ Deadra Gibbons
---------------------------
Title: Assistant Vice
President
11
<PAGE>
$25,000,000 TORONTO DOMINION (NEW YORK),
INC.
By:/s/ Jorge A. Garcia
---------------------------
Title: Vice President
$20,000,000 BARNETT BANK OF JACKSONVILLE,
N.A.
By:/s/ E. Bradley Jones
--------------------------
Title: Vice President
$20,000,000 CORESTATES BANK, N.A.
By:/s/ Kevin P. O'Rourke
---------------------------
Title: Commercial Officer
$20,000,000 BANCA MONTE DEI PASCHI DI
SIENA SPA
By:/s/ G. Natalicchi
---------------------------
Title: Senior Vice
President and
General Manager
By:/s/ Brian R. Landy
---------------------------
Title: Vice President
$20,000,000 SOCIETE GENERALE
By:/s/ Lillian Snower
---------------------------
Title: Vice President
12
<PAGE>
$20,000,000 THE TOKAI BANK, LIMITED
By:/s/ Stewart M. Schulman
---------------------------
Title: Senior Vice
President
$20,000,000 UNITED STATES NATIONAL BANK OF
OREGON
By:/s/ Fiza Noordin
---------------------------
Title: Corporate Banking
Officer
$20,000,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK
BRANCH
By:/s/ Cynthia M. Niesen
---------------------------
Title: Managing Director
By:/s/ Laura Spichiger
---------------------------
Title: Associate
$20,000,000 THE YASUDA TRUST & BANKING
CO., LTD.
By:/s/ Patrick J. Owens
--------------------------
Title: First Vice
President
$16,000,000 AMSOUTH BANK OF ALABAMA F/K/A
AMSOUTH BANK N.A.
By:/s/ R. Mark Graf
---------------------------
Title: Vice President
13
<PAGE>
$0 CREDIT SUISSE
By:/s/ Christopher J. Eldin
---------------------------
Title: Member of Senior
Management
By:/s/ Thomas G. Muoio
---------------------------
Title: Associate
$0 SWISS BANK CORPORATION, NEW
YORK BRANCH
By:/s/ Susan N. Isquith
---------------------------
Title: Director, Credit
Risk Management
By:/s/ Gary Riddell
---------------------------
Title: Director, Credit
Risk Management
_____________________
Total Commitments
$1,500,000,000
=====================
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By:/s/ Jerry J. Fall
---------------------------
Title: Vice President
14
<PAGE>
EXHIBIT I
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin" and "Facility Fee Rate" for any
day are the respective percentages set forth below in the applicable row under
the column corresponding to the Status that exists on such day:
Level Level Level Level Level
Status I II III IV V
Euro-Dollar
Margin .1275% .13% .21% .225% .325%
CD Margin .2525% .255% .335% .35% .45%
Facility Fee
Rate .06% .07% .09% .125% .1750%
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any date if, at such date, the Borrower's
long-term debt is rated AA- or higher by S&P or Aa3 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated A or higher by S&P or A2 or higher by Moody's
and (ii) Level I Status does not exist.
"Level III Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated A- or higher by S&P or A3 by Moody's and (ii)
neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BBB+ or higher by S&P or Baa1 or higher by
Moody's and (ii) neither Level I Status, Level II Status nor Level III Status
exists.
<PAGE>
"Level V Status" exists at any date if, at such date, no other Status
exists.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status or Level V Status exists at any
date.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement, and any rating assigned to any other
debt security of the Borrower shall be disregarded. The rating in effect at any
date is that in effect at the close of business on such date.
2
Exhibit 12.01
Commercial Credit Company and Subsidiaries
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions of dollars, except for ratio)
Six months ended June 30,
--------------------------
1996 1995
---- ----
Income before income taxes $156.5 $ 157.5
Elimination of undistributed equity earnings (0.3) (0.6)
Interest 233.2 230.1
Portion of rentals deemed to be interest 4.7 4.7
----- -----
Earnings available for fixed charges $394.1 $391.7
===== =====
Fixed charges
- -------------
Interest $233.2 $230.1
Portion of rentals deemed to be interest 4.7 4.7
----- -----
Fixed charges $237.9 $234.8
===== =====
Ratio of earnings to fixed charges 1.66X 1.67x
==== ====
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
Exhibit 27.01
Commercial Credit Company
Financial Data Schedule
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE JUNE 30, 1996 CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS OF COMMERCIAL CREDIT COMPANY AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> $ 16,100
<SECURITIES> 1,095,300<F1>
<RECEIVABLES> 7,455,300<F2>
<ALLOWANCES> (217,600)
<INVENTORY> 0<F3>
<CURRENT-ASSETS> 0<F3>
<PP&E> 0<F3>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 9,024,500
<CURRENT-LIABILITIES> 0<F3>
<BONDS> 7,004,400<F4>
0<F3>
0
<COMMON> 0
<OTHER-SE> 1,209,800<F5>
<TOTAL-LIABILITY-AND-EQUITY> 9,024,500
<SALES> 0<F3>
<TOTAL-REVENUES> 713,500
<CGS> 0<F3>
<TOTAL-COSTS> 557,000
<OTHER-EXPENSES> 0<F3>
<LOSS-PROVISION> 127,800<F6>
<INTEREST-EXPENSE> 233,200<F6>
<INCOME-PRETAX> 156,500
<INCOME-TAX> 53,800
<INCOME-CONTINUING> 102,700
<DISCONTINUED> 0<F3>
<EXTRAORDINARY> 0<F3>
<CHANGES> 0<F3>
<NET-INCOME> 102,700
<EPS-PRIMARY> 0<F3>
<EPS-DILUTED> 0<F3>
<FN>
<F1> Includes the following items from the financial statements: total
investments $1,095,300.
<F2> Includes the following items from the financial statements: consumer
finance receivables $7,290,300 and other receivables $165,000.
<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 $168,600; short-term borrowings $1,435,800 and long-term debt
$5,400,000.
<F5> Includes the following items from the financial statements: additional
paid-in capital $163,900; retained earnings $1,057,100; unrealized gain
(loss) on investments $(10,900); 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.
Exhibit 99.02
Company's Form 10-Q
September 30, 1995
Page 14
Item 1. Legal Processings.
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 injunctive relief, assert claims for breach of
contract, fraud, outrage and unconscionability. The Company believes it has
meritorious defenses and intends to contest the allegations.
