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 September 30, 1997
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 Identification No.)
incorporation or organization)
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, 1997 and 1996 3
Condensed Consolidated Statement of Financial Position -
September 30, 1997 (Unaudited) and December 31, 1996 4
Condensed Consolidated Statement of Cash Flows (Unaudited) -
Nine Months Ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements -
(Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
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>
Commercial Credit Company and Subsidiaries
Condensed Consolidated Statement of Income (Unaudited)
(In millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Finance related interest and other charges $372.0 $291.7 $998.7 $863.0
Insurance premiums 43.1 38.6 126.7 112.5
Net investment income 20.9 12.6 57.4 38.1
Other income 47.9 14.6 73.4 57.4
- -------------------------------------------------------------------------------------------
Total revenues 483.9 357.5 1,256.2 1,071.0
- -------------------------------------------------------------------------------------------
Expenses
Interest 152.2 119.6 410.8 352.8
Non-insurance compensation and benefits 58.9 46.6 160.7 137.9
Provision for consumer finance credit losses 63.7 60.6 208.3 188.4
Policyholder benefits and claims 14.8 13.7 43.9 35.1
Insurance underwriting, acquisition and
operating 6.6 7.1 19.6 20.7
Other operating 60.6 39.1 143.3 108.8
- -------------------------------------------------------------------------------------------
Total expenses 356.8 286.7 986.6 843.7
- -------------------------------------------------------------------------------------------
Income before income taxes 127.1 70.8 269.6 227.3
Provision for income taxes 45.6 24.2 94.6 78.0
- -------------------------------------------------------------------------------------------
Net income $ 81.5 $ 46.6 $175.0 $149.3
===========================================================================================
</TABLE>
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)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Assets (Unaudited)
Cash and cash equivalents $ 24.2 $ 11.4
Investments:
Fixed maturities, primarily available for sale, at
market value (amortized cost - $884.2 and $816.8) 888.2 809.1
Equity securities, at market value
(cost - $64.5 and $45.6) 68.1 46.4
Short-term and other 131.9 76.9
- ----------------------------------------------------------------------------------------
Total investments 1,088.2 932.4
- ----------------------------------------------------------------------------------------
Consumer finance receivables 10,726.4 8,123.8
Allowance for losses (325.1) (239.3)
- ----------------------------------------------------------------------------------------
Net consumer finance receivables 10,401.3 7,884.5
Other receivables 161.5 123.0
Deferred policy acquisition costs 3.8 9.3
Cost of acquired businesses in excess of net assets 496.7 106.6
Other assets 324.0 292.4
- ----------------------------------------------------------------------------------------
Total assets $ 12,499.7 $ 9,359.6
========================================================================================
Liabilities
Certificates of deposit $ 127.0 $ 102.3
Short-term borrowings 3,156.6 1,481.6
Long-term debt 6,300.0 5,750.0
- ----------------------------------------------------------------------------------------
Total debt 9,583.6 7,333.9
Insurance policy and claims reserves 420.4 402.9
Accounts payable and other liabilities 653.8 348.3
- ----------------------------------------------------------------------------------------
Total liabilities 10,657.8 8,085.1
- ----------------------------------------------------------------------------------------
Stockholder's equity
Common stock ($.01 par value; authorized: 1,000 shares;
issued: 1 share) -- --
Additional paid-in capital 684.9 164.1
Retained earnings 1,152.4 1,115.2
Unrealized gain (loss) on investments 4.9 (4.5)
Cumulative translation adjustments (.3) (.3)
- ----------------------------------------------------------------------------------------
Total stockholder's equity 1,841.9 1,274.5
- ----------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $ 12,499.7 $ 9,359.6
========================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
Commercial Credit Company and Subsidiaries
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In millions of dollars)
<TABLE>
<CAPTION>
Nine months ended September 30, 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Income before income taxes $ 269.6 $ 227.3
Adjustments to reconcile income before income taxes to
net cash provided by (used in) operating activities:
Amortization of deferred policy acquisition costs and value of
insurance in force 5.5 6.1
Additions to deferred policy acquisition costs -- (1.1)
Provision for consumer finance credit losses 208.3 188.4
Changes in:
Insurance policy and claims reserves 17.5 15.2
Other, net 69.4 (49.5)
- --------------------------------------------------------------------------------------------
Net cash provided by operations 570.3 386.4
Income taxes (paid) (77.8) (98.0)
- --------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 492.5 288.4
- --------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Net change in credit card receivables (278.4) (88.2)
Loans originated or purchased (3,551.7) (2,452.8)
Loans repaid or sold 2,233.3 1,898.2
Purchases of investments (286.6) (365.2)
Proceeds from sales of investments 148.2 242.4
Proceeds from maturities of investments 1.1 8.1
Sale of other assets 240.1 --
Business acquisition (1,617.6) --
Other, net -- 33.3
- --------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (3,111.6) (724.2)
- --------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Dividends paid (137.8) (65.0)
Capital contribution 520.0 --
Issuance of long-term debt 900.0 400.0
Payments of long-term debt (350.0) (300.0)
Net change in short-term borrowings 1,675.0 434.5
Net change in certificates of deposit 24.7 (45.2)
- --------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 2,631.9 424.3
- --------------------------------------------------------------------------------------------
Change in cash and cash equivalents 12.8 (11.5)
Cash and cash equivalents at beginning of period 11.4 30.1
- --------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 24.2 $ 18.6
- --------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 384.4 $ 344.7
============================================================================================
Supplemental disclosure of business acquisition: Assets and liabilities of
business acquired:
Net consumer finance receivables $1,155.6 --
Other assets 482.3 --
Other liabilities (20.3) --
============================================================================================
Cash payment related to business acquisition $ 1,617.6
============================================================================================
</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.
(TRV). The condensed consolidated financial statements include the accounts
of the Company and its subsidiaries.
The accompanying condensed consolidated financial statements as of September
30, 1997 and for the three-month and nine-month periods ended September 30,
1997 and 1996 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, 1996.
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.
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
On July 31, 1997, the Company acquired Security Pacific Financial Services
from BankAmerica Corporation for a purchase price of approximately $1.6
billion. The purchase included approximately $1.2 billion of net consumer
finance receivables and approximately $70 million of other net assets. The
excess of the purchase price over the estimated fair value of net assets was
$395.2 million and is being amortized over 25 years. The purchase price for
the transaction was financed entirely by the Company, except for an equity
contribution by TRV of $520 million to the Company.
2. Changes in Accounting Principles and Accounting Standards Not Yet Adopted
Effective January 1, 1997 the Company adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (FAS No. 125). This
Statement establishes accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. These
standards are based on an approach that focuses on control. Under this
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 surrendered,
and derecognizes liabilities when extinguished. FAS No. 125 provides
standards for distinguishing transfers of financial assets that are sales
from transfers that are secured borrowings. The requirements of FAS No. 125
are effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and are to
be applied prospectively. However, in December 1996 the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards No.
127, "Deferral of the Effective Date of Certain Provisions of FASB Statement
No. 125," which delays until January 1, 1998 the effective date for certain
provisions. Earlier or retroactive application is not permitted. The adoption
of the provisions of this statement effective January 1, 1997 did not have a
material impact on results of operations, financial condition or liquidity
and the Company is currently evaluating the impact of the provisions whose
effective date has been delayed until January 1, 1998.
6
<PAGE>
Notes to Condensed Consolidated Financial Statements (continued)
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (FAS No. 130). FAS No. 130 established
standards for the reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. All items
that are required to be recognized under accounting standards as components
of comprehensive income are to be reported in a financial statement that is
displayed with the same prominence as other financial statements. This
Statement stipulates that comprehensive income reflect the change in equity
of an enterprise during a period from transactions and other events and
circumstances from nonowner sources. Comprehensive income will thus represent
the sum of net income and other comprehensive income, although FAS No. 130
does not require the use of the terms comprehensive income or other
comprehensive income. The accumulated balance of other comprehensive income
shall be displayed separately from retained earnings and additional paid-in
capital in the statement of financial position. This Statement is effective
for fiscal years beginning after December 15, 1997. The Company anticipates
that the adoption of FAS No. 130 will result primarily in reporting
unrealized gains and losses on investments in debt and equity securities in
comprehensive income.
In June 1997, the FASB also issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (FAS No. 131). FAS No. 131 establishes standards for the way
that public enterprises report information about operating segments in annual
financial statements and requires that selected information about those
operating segments be reported in interim financial statements. This
Statement supersedes Statement of Financial Accounting Standards No. 14,
"Financial Reporting for Segments of a Business Enterprise." FAS No. 131
requires that all public enterprises report financial and descriptive
information about its reportable operating segments. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decisionmaker in deciding how to allocate resources and in assessing
performance. This Statement is effective for fiscal years beginning after
December 15, 1997. The Company's reportable operating segments are not
expected to change as a result of the adoption of FAS No. 131.
3. Consumer Finance Receivables
Consumer finance receivables, net of unearned finance charges of $707.8
million and $635.3 million at September 30, 1997 and December 31, 1996,
respectively, consisted of the following:
(millions) September 30, 1997 December 31, 1996
------------------ --------------------
Real estate-secured loans $ 4,911.6 $3,456.7
Personal loans 3,817.7 3,199.6
Credit cards 1,163.3 907.1
Sales finance and other 759.8 507.7
--------- --------
Consumer finance receivables,
net of unearned finance charges 10,652.4 8,071.1
Accrued interest receivable 74.0 52.7
Allowance for credit losses (325.1) (239.3)
--------- --------
Net consumer finance receivables $10,401.3 $7,884.5
========= ========
7
<PAGE>
Notes to Condensed Consolidated Financial Statements (continued)
4. 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, 1997 and
December 31, 1996, short-term borrowings consisted of commercial paper
totaling $3,156.6 million and $1,481.6 million, respectively. The Company may
borrow under its revolving credit facilities at various interest rate options
(LIBOR, CD, base rate or money market) and compensates the banks for the
facilities through commitment fees. TRV, 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 TRV, the
Company or TIC. The revolving credit facility consists of a five-year
facility that expires in June 2001. Currently, $450 million is allocated to
the Company. At September 30, 1997 there were no borrowings outstanding under
this facility.
The Company also has committed and available revolving credit facilities on a
stand-alone basis of $4.4 billion, of which $3.4 billion expires in 2002 and
$1.0 billion expires in 1998.
The Company is limited by covenants in its revolving credit agreements as to
the amount of dividends and advances that may be made to its parent or its
affiliated companies. At September 30, 1997, the Company would have been able
to remit $561.9 million to its parent under its most restrictive covenants.
5. Related Party Transactions
To facilitate cash management the Company has entered into an agreement with
TRV under which the Company or TRV 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.
In July 1997 the Company issued, at a premium, $50 million of 15% coupon debt
securities yielding 5.62% due July 10, 1998. Concurrently, the Company
entered into a $50 million notional amount swap transaction with Smith Barney
Capital Services Inc., an affiliated company, to receive fixed and to pay
variable interest. The swap is accounted for as a hedge of the related
liability and the periodic receipts or payments are accrued as adjustments to
interest expense. This swap contract terminates on July 10, 1998.
8
<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
(In millions) September 30, September 30,
-----------------------------------------------------------------------
1997 1996 1997 1996
-----------------------------------------------------------------------
Revenues $ 483.9 $ 357.5 $1,256.2 $1,071.0
=======================================================================
Net Income $ 81.5 $ 46.6 $ 175.0 $ 149.3
=======================================================================
Results of Operations
The consolidated net income of Commercial Credit Company and subsidiaries (the
Company) for the quarter ended September 30, 1997 was $81.5 million compared to
$46.6 million in the corresponding 1996 period. Revenues for the quarter ended
September 30, 1997 were $483.9 million compared to $357.5 million in the
corresponding 1996 period. Included in revenues and net income in the third
quarter of 1997 are portfolio gains of $27.0 million and $16.5 million,
respectively.
The net income of the Company for the nine months ended September 30, 1997 was
$175.0 million compared to $149.3 million in the corresponding 1996 period.
Revenues for the nine months ended September 30, 1997 were $1,256.2 million
compared to $1,071.0 million in the corresponding 1996 period.
On July 31, 1997, the Company acquired Security Pacific Financial Services from
BankAmerica Corporation for a purchase price of approximately $1.6 billion. The
purchase included approximately $1.2 billion of net consumer finance receivables
and approximately $70 million of other net assets. The excess of the purchase
price over the estimated fair value of net assets was $395.2 million and is
being amortized over 25 years. The purchase price for the transaction was
financed entirely by the Company, except for an equity contribution by Travelers
Group Inc. (TRV) of $520 million to the Company.
The following discussion presents in more detail each segment's performance.
Segment Results for the Three Months Ended September 30, 1997 and 1996
Consumer Finance Services
Three Months Ended September 30,
----------------------------------------------
(In millions) 1997 1996
-------------------------------------------------------------------------
Revenues Net income Revenues Net income
-------------------------------------------------------------------------
Consumer Finance Services $447.3 $65.1 $350.4 $53.8
========================================================================
Earnings increased 21% to $65.1 million in the third quarter of 1997, from $53.8
million in the third quarter of 1996, reflecting strong receivables growth in
all major products, largely as a result of investments made over the last year
in marketing, training and systems enhancements. Net receivables
9
<PAGE>
reached a record $10.7 billion versus $7.7 billion a year ago. This increase
reflects strong internal growth as well as the July 31, 1997 acquisition of
Security Pacific Financial Services which contributed approximately $1.2 billion
in receivables. The Security Pacific acquisition did not have a material impact
on earnings during the third quarter, but is expected to be accretive beginning
in the final quarter of 1997. Integration of the new unit has proceeded rapidly,
with the conversion to the Company's proprietary systems and the closing of
approximately 100 of Security Pacific's original 297 branch offices. As of
September 30, 1997, the Company had 1,057 branches, making it the third largest
domestic branch network in the consumer finance industry.
Net receivables increased $1.6 billion, or 18%, during the third quarter of
1997, which included the addition of receivables from Security Pacific as well
as internal growth driven primarily by real estate loans generated through the
Company's branch network and through the sales efforts of Primerica Financial
Services (PFS) representatives.
The average yield, at 14.57%, was lower than the 1996 quarter's yield of 15.17%,
mainly because of a shift in the portfolio mix toward lower risk/lower margin
real estate loans. Sales of real estate-secured ($.M.A.R.T.SM) loans sold
exclusively through PFS continued at record levels during the quarter. Travelers
Bank credit card outstandings were $1.163 billion at September 30, 1997, up from
$832 million at September 30, 1996, as a result of strong credit card
originations.
Delinquencies in excess of 60 days were 2.17% at the end of the third quarter of
1997 compared to 2.14% at the end of the second quarter of 1997 and 2.31% a year
ago. The charge-off rate was 2.50% during the third quarter of 1997, lower than
the 2.82% rate during the second quarter of 1997 and the 2.91% rate during the
third quarter of 1996. Loan losses reflect a short-term benefit related to the
Security Pacific acquisition, largely from the transition of that portfolio to
the Company's charge-off policies. The acquisition also helped to increase the
reserves as a percentage of net receivables to 3.05% at September 30, 1997, up
from 2.91% in the second quarter of 1997 and 2.92% a year ago.
As of, or for, the
Three Months Ended September 30,
--------------------------------
1997 1996
--------------------------------
Allowance for credit losses as a %
of net outstandings 3.05% 2.92%
Charge-off rate 2.50% 2.91%
60 + days past due on a contractual
basis as a % of gross consumer
finance receivables at quarter end 2.17% 2.31%
Corporate and Other
Three Months Ended September 30,
--------------------------------------------
(In millions) 1997 1996
-------------------------------------------------------------------------
Net income Net income
Revenues (expense) Revenues (expense)
-------------------------------------------------------------------------
Corporate and Other (1) $36.6 $16.4 $7.1 $(7.2)
=========================================================================
(1) Revenues and net income in 1997 include reported portfolio gains of $27.0
million and $16.5 million, respectively.
10
<PAGE>
The favorable variance in Corporate and Other net expense (excluding reported
portfolio gains in 1997) for the third quarter of 1997 compared to the third
quarter of 1996 is primarily attributable to increased earnings on a corporate
investment and lower interest cost borne at the corporate level.
Segment Results for the Nine Months Ended September 30, 1997 and 1996
The overall operating trends for the nine months ended September 30, 1997 and
1996 were substantially the same as those of the third quarter periods except as
noted below.
Consumer Finance Services
Nine Months Ended September 30,
--------------------------------------------
(In millions) 1997 1996
- -------------------------------------------------------------------------------
Revenues Net income Revenues Net income
- -------------------------------------------------------------------------------
Consumer Finance Services (1) $1,202.5 $165.9 $1,045.8 $169.8
===============================================================================
(1) Revenues and net income in 1996 include a portion of the gain ($1.2
million and $.7 million, respectively) from the disposition of RCM Capital
Management, a California Limited Partnership (RCM).
During the first nine months of 1997 the average yield, at 14.55%, was lower
than the 15.33% in the first nine months of 1996, mainly because of a shift in
the portfolio mix toward lower risk/lower margin real estate loans. The
charge-off rate at 2.74% for the first nine months of 1997 was lower than the
comparable 1996 period's rate of 2.90%.
Corporate and Other
Nine Months Ended September 30,
---------------------------------------------
(In millions) 1997 1996
- -------------------------------------------------------------------------------
Net income Net income
Revenues (expense) Revenues (expense)
- -------------------------------------------------------------------------------
Corporate and Other (1) $53.7 $9.1 $25.2 $(20.5)
===============================================================================
(1) Revenues and net income in 1997 include reported portfolio gains of $27.0
million and $16.5 million, respectively. Revenues and net income in 1996
include a portion of the gain ($1.6 million and $1.2 million,
respectively) from the disposition of RCM.
The favorable variance in Corporate and Other net expense (excluding reported
portfolio gains in 1997 and the RCM gain in 1996) for the first nine months of
1997 compared to the first nine months of 1996 is primarily attributable to
increased earnings on a corporate investment and lower interest cost 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
11
<PAGE>
Company may borrow under its revolving credit facilities at various interest
rate options (LIBOR, CD, base rate or money market) and compensates the banks
for the facilities through commitment fees.
TRV, 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 TRV, the Company or TIC. The revolving credit facility
consists of a five-year facility which expires in June 2001. Currently, $450
million is allocated to the Company. In addition, the Company has committed and
available revolving credit facilities on a stand-alone basis of $4.4 billion of
which $3.4 billion expires in 2002 and $1.0 billion expires in 1998.
The Company has unused credit availability of $4.850 billion under the revolving
credit facilities referred to above.
The Company is limited by covenants in its revolving credit agreements as to the
amount of dividends and advances that may be made to its parent or its
affiliated companies. At September 30, 1997, the Company would have been able to
remit $561.9 million to its parent under its most restrictive covenants.
The Company completed the following long-term debt offerings in 1997 and, as of
November 7, 1997 had $650 million available for debt offerings and $400 million
available for trust preferred security offerings under its shelf registration
statements:
o 6.45% Notes due July 1, 2002.................$300 million
o 6.75% Notes due July 1, 2007.................$300 million
o 6.50% Notes due August 1, 2004...............$250 million
Future Application of Accounting Standards
See Note 2 of Notes to Condensed Consolidated Financial Statements for a
discussion of recently issued accounting pronouncements.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
For information concerning purported class action lawsuits filed
against the Company and certain subsidiaries alleging, inter alia, that such
subsidiaries charged excessive premiums on certain lines of 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, and the fourth paragraph on
page 9 of the Company's Annual Report on Form 10-K for the year ended December
31, 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 May 1997, a class was certified by the U.S. District Court for the
Middle District of Alabama in McCurdy v. American General Finance.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
See Exhibit Index.
(b) Reports on Form 8-K:
On July 1, 1997, the Company filed a Current Report on Form 8-K,
dated June 27, 1997, filing certain exhibits under Item 7 thereof relating to
the offer and sale of the Company's 15% Notes due July 10, 1998.
On July 9, 1997, the Company filed a Current Report on Form 8-K,
dated July 7, 1997, filing certain exhibits under Item 7 thereof relating to the
offer and sale of the Company's 6.45% Notes due July 1, 2002 and the Company's
6.75% Notes due July 1, 2007.
On July 30, 1997, the Company filed a Current Report on Form 8-K,
dated July 30, 1997, reporting under Item 5 thereof the results of operations
for the three months and six months ended June 30, 1997.
On August 1, 1997, the Company filed a Current Report on Form 8-K,
dated July 30, 1997, filing certain exhibits under Item 7 thereof relating to
the offer and sale of the Company's 6 1/2% Notes due August 1, 2004. The Company
also reported under Item 5 thereof the acquisition by the Company of all of the
capital stock of Security Pacific Finance System Incorporated on July 31, 1997.
On August 21, 1997, the Company filed a Current Report on Form 8-K,
dated August 21, 1997, filing certain exhibits under Item 7 thereof relating to
commencement of the program for the Company's Medium-Term Notes, Eighth Series,
Due Nine Months or More from Date of Issue.
No other reports on Form 8-K have been filed by the Company during
the quarter ended September 30, 1997; however, on October 14, 1997, the Company
filed a Current Report on Form 8-K, dated October 13, 1997, reporting under Item
5 thereof the results of operations for the three months and nine months ended
September 30, 1997.
13
<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).
10.01.1 Amended and Restated Credit Agreement dated as of
June 28, 1996 among the Company, the Banks party
thereto and Morgan Guaranty Trust Company of New
York, as Agent, incorporated by reference to
Exhibit 10.02 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1996 (File No. 1-6594).
10.01.2 Amended and Restated Credit Agreement dated as of
May 6, 1997 among the Company, the Banks party
thereto and Morgan Guaranty Trust Company of New
York, as Agent, incorporated by reference to
Exhibit 10.01.3 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31,
1997 (file No. 1-6594).
10.01.3 Amendment dated as of September 19, 1997 to the Electronic
Amended and Restated Credit Agreements dated as of
June 28, 1996 and May 6, 1997 among the Company,
the Banks party thereto and Morgan Guaranty Trust
Company of New York, as Agent.
14
<PAGE>
10.01.4 Five-Year Credit Agreement dated as of July 18,
1997 among the Company, the Banks party thereto and
Morgan Guaranty Trust Company of New York, as
Agent, incorporated by reference to Exhibit 10.01.3
to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1997 (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,
and the fourth paragraph on page 9 of the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
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: November 12, 1997 By /s/ Barbara A. Yastine
-------------------------
Barbara A. Yastine
Executive Vice President
(Principal Financial Officer)
Date: November 12, 1997 By /s/ Irwin Ettinger
-------------------------
Irwin Ettinger
Executive Vice President
(Chief Accounting Officer)
16
<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).
10.01.1 Amended and Restated Credit Agreement dated as of
June 28, 1996 among the Company, the Banks party
thereto and Morgan Guaranty Trust Company of New
York, as Agent, incorporated by reference to
Exhibit 10.02 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1996 (File No. 1-6594).
10.01.2 Amended and Restated Credit Agreement dated as of
May 6, 1997 among the Company, the Banks party
thereto and Morgan Guaranty Trust Company of New
York, as Agent, incorporated by reference to
Exhibit 10.01.3 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31,
1997 (file No. 1-6594).
10.01.3 Amendment dated as of September 19, 1997 to the Electronic
Amended and Restated Credit Agreements dated as of
June 28, 1996 and May 6, 1997 among the Company,
the Banks party thereto and Morgan Guaranty Trust
Company of New York, as Agent.
17
<PAGE>
10.01.4 Five-Year Credit Agreement dated as of July 18,
1997 among the Company, the Banks party thereto and
Morgan Guaranty Trust Company of New York, as
Agent, incorporated by reference to Exhibit 10.01.3
to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1997 (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,
and the fourth paragraph on page 9 of the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
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.
18
CONFORMED COPY
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of September 19, 1997 to the Five-Year Credit Agreement
dated as of December 16, 1994 (as amended and restated by the Amended and
Restated Credit Agreement dated as of June 28, 1996 and the Amended and Restated
Credit Agreement dated as of May 6, 1997, the "Credit Agreement") among
Commercial Credit Company (the "Borrower"), the BANKS party thereto (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, the parties hereto desire to amend the financial covenant
contained in the Credit Agreement in the manner set forth below:
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit 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 Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
SECTION 2. Amendment to Section 5.07 of the Credit Agreement. Section 5.07
of the Credit Agreement is amended in its entirety to read as follows:
Section 5.07. Adjusted Consolidated Net Worth. Adjusted Consolidated
Net Worth will not at any date be less than $1,275,000,000.
"Adjusted Consolidated Net Worth" at any date means stockholder's
equity of the Borrower and its Consolidated Subsidiaries, determined at
such date (excluding (i) after-tax gains or losses from extraordinary
items which are disclosed on the Borrower's consolidated financial
statements, and (ii) the cumulative non-cash effect of any changes in net
income caused by the Borrower's adoption after March 31, 1997 of any
accounting standards required by the Financial Accounting Standards Board,
the Securities and Exchange Commission or other
<PAGE>
governing body that sets accounting standards, and (iii) unrealized gains
or losses on investment securities (including Series Y preferred stock of
Travelers owned by the Borrower) which are reflected in stockholders'
equity) plus the amount of Qualified Subsidiary Preferred Stock at such
date.
"Qualified Subsidiary Preferred Stock" means a preferred equity
security issued by a Consolidated Subsidiary as to which the issuer of
such security is a special purpose entity substantially all the assets of
which consist directly or indirectly of debt claims on the Borrower, which
claims are subordinated to the Borrower's obligations hereunder and under
the Notes; provided that securities meeting the foregoing criteria shall
not constitute Qualified Subsidiary Preferred Stock at any date to the
extent the amount thereof exceeds 15% of Total Capital at such date. For
this purpose, "Total Capital" means the sum, without duplication, of the
Debt, preferred and common stockholders' equity (including redeemable
preferred stock of the Borrower) and Qualified Subsidiary Preferred Stock
of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis.
SECTION 3. Representations of Borrower. The Borrower represents and
warrants that (i) the representations and warranties of the Borrower set forth
in Article IV of the Credit Agreement will be true on and as of the date hereof
and (ii) no Default will have occurred and be continuing on such date.
SECTION 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. Counterparts. This Amendment 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.
SECTION 6. Effectiveness. This Amendment shall become effective as of the
date hereof when the Agent shall have received duly executed counterparts hereof
signed by the Borrower and the Required Banks (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).
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
COMMERCIAL CREDIT COMPANY
By: /s/ Robert Matza
------------------------------
Title: Vice President
By: /s/ Daniel E. Rubenstein
------------------------------
Title: Vice President
3
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Jerry J. Fall
------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Elizabeth W.F. Bishop
------------------------------
Title: Vice President
BANK OF MONTREAL
By: /s/ K. Daniel Streiff
------------------------------
Title: Managing Director
THE BANK OF NEW YORK
By: /s/ Lizanne T. Eberle
------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Todd S. Meller
------------------------------
Title: Senior Relationship Manager
4
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ John E. Beckwith
------------------------------
Title: Vice President
BANKBOSTON N.A.
By: /s/ C.A. Garrity
------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Christine M. Herrick
------------------------------
Title: Vice President
CIBC, INC.
By: /s/ Gerald J. Girardi
------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
CITIBANK, N.A.
By: /s/ David Dodge
------------------------------
Title: Managing Director
Attorney-in-fact
5
<PAGE>
CORESTATES BANK, N.A.
By: /s/ Daniel R. Coll, Jr.
------------------------------
Title: Vice President
DEUTSCHE BANK AG
NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES
By: /s/ Gayma Z. Shivnarain
------------------------------
Title: Vice President
By: /s/ John S. McGill
------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Samuel W. Bridges
------------------------------
Title: First Vice President
FLEET NATIONAL BANK
By: /s/ Kenneth G. Ahrens
------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ Henry J. Voorhees
------------------------------
Title: First Vice President
6
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By: /s/ Elizabeth Kurilecz
------------------------------
Title: Senior Vice President
ROYAL BANK OF CANADA
By: /s/ Michelle Rutigliano
------------------------------
Title: Manager
THE SAKURA BANK, LIMITED
By: /s/ Yasumasa Kikuchi
------------------------------
Title: Senior Vice President
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By: /s/ Charles Griggs
------------------------------
Title: Director
By: /s/ Margaret Kaminski
------------------------------
Title: Assistant Vice President
7
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/ Edward J. Suave
------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
By: /s/ Phil Truesdale
------------------------------
Title: Vice President
By: /s/ Fran Melville
------------------------------
Title: Assistant Treasurer
THE FIRST NATIONAL BANK OF
MARYLAND
By: /s/ Stewart T. Shettle
------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK
formerly First Union National Bank
of North Carolina
By: /s/ Gail Golightly
------------------------------
Title: Senior Vice President
8
<PAGE>
NATIONAL AUSTRALIA BANK, LIMITED
NEW YORK BRANCH
By: /s/ Michael G. McHugh
------------------------------
Title: Vice President
BANK OF HAWAII
By: /s/ Donna R. Parker
------------------------------
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ Jay Chall
------------------------------
Title: Director
By: /s/ Anthony Giordano
------------------------------
Title: Vice President
FIRST HAWAIIAN BANK
By: /s/ Scott Nahme
------------------------------
Title: Assistant Vice President
KEYBANK, NATIONAL ASSOCIATION
By: /s/ Karen A. Lee
------------------------------
Title: Vice President
9
<PAGE>
THE NORTHERN TRUST COMPANY
By: /s/ Marcia P. Saper
------------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Robert E. Bjorhus, Jr.
------------------------------
Title: Vice President
TORONTO DOMINION (NEW YORK),
INC.
By: /s/ Jorge A. Garcia
------------------------------
Title: Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By: /s/ Fiza Noordin
------------------------------
Title: Assistant Vice President
10
<PAGE>
ABN AMRO BANK N.V., NEW YORK
BRANCH
By: /s/ Victor J. Fennon
------------------------------
Title: Vice President
By: /s/ Joshua H. Landau
------------------------------
Title: Corporate Banking Officer
BANCA MONTE DEI PASCHI DI
SIENA S.P.A.
By: /s/ S.M. Sondak
------------------------------
Title: First Vice President and Department
General Manager
By: /s/ Brian R. Landy
------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ Sebastian Rocco
------------------------------
Title: First Vice President
11
<PAGE>
THE DAI-ICHI KANGYO BANK,
LTD., NEW YORK BRANCH
By:
------------------------------
Title:
THE SUMITOMO BANK, LIMITED
By: /s/ John C. Kissinger
------------------------------
Title: Joint General Manager
AMSOUTH BANK OF ALABAMA
By: /s/ Bryan Grantham
------------------------------
Title: Commercial Banking Officer
BANCA POPOLARE DI MILANO
By: /s/ Patrick F. Dillon
------------------------------
Title: Vice President and Chief Credit
Officer
By: /s/ Esperanza Quintero
------------------------------
Title: Vice President
BARNETT BANK, N.A.
By:
------------------------------
Title:
12
<PAGE>
THE HUNTINGTON NATIONAL BANK
By: /s/ Leigh S. Connors
------------------------------
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By: /s/ Masahiro Ito
------------------------------
Title: Senior Vice President
ISTITUTO BANCARIO SAN PAOLO DI
TORINA S.P.A.
By: /s/ Wendell Jones
------------------------------
Title: Vice President
By: /s/ Ettore Viazzo
------------------------------
Title: Vice President
MERCANTILE SAFE DEPOSIT &
TRUST COMPANY
By: /s/ Nicholas C. Richardson
------------------------------
Title: Assistant Vice President
13
<PAGE>
NATIONAL CITY BANK OF
COLUMBUS
By: /s/ Teresa M. Halsell
------------------------------
Title: Assistant Vice President
THE SANWA BANK, LIMITED
NEW YORK BRANCH
By: /s/ Jean-Michel Fatovic
------------------------------
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ F.L. Wickham, III
------------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK
BRANCH
By: /s/ Raymond K. Miller
------------------------------
Title: Vice President
By: /s/ Laura Spichiger
------------------------------
Title: Associate
14
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,
-------------------------------
1997 1996
------ ------
Income before income taxes $269.6 $227.3
Elimination of undistributed equity earnings (0.7) (0.7)
Interest 410.8 352.8
Portion of rentals deemed to be interest 7.1 7.0
------ ------
Earnings available for fixed charges $686.8 $586.4
====== ======
Fixed charges
Interest $410.8 $352.8
Portion of rentals deemed to be interest 7.1 7.0
------ ------
Fixed charges $417.9 $359.8
====== ======
Ratio of earnings to fixed charges 1.64x 1.63x
====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1997 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 24,200
<SECURITIES> 1,088,200 <F1>
<RECEIVABLES> 10,887,900 <F2>
<ALLOWANCES> (325,100)
<INVENTORY> 0 <F3>
<CURRENT-ASSETS> 0 <F3>
<PP&E> 0 <F3>
<DEPRECIATION> 0 <F3>
<TOTAL-ASSETS> 12,499,700
<CURRENT-LIABILITIES> 0 <F3>
<BONDS> 9,583,600 <F4>
0 <F3>
0
<COMMON> 0
<OTHER-SE> 1,841,900 <F2>
<TOTAL-LIABILITY-AND-EQUITY> 12,499,700
<SALES> 0 <F3>
<TOTAL-REVENUES> 1,256,200
<CGS> 0 <F3>
<TOTAL-COSTS> 986,600
<OTHER-EXPENSES> 0 <F3>
<LOSS-PROVISION> 208,300 <F6>
<INTEREST-EXPENSE> 410,800 <F6>
<INCOME-PRETAX> 269,600
<INCOME-TAX> 94,600
<INCOME-CONTINUING> 175,000
<DISCONTINUED> 0 <F3>
<EXTRAORDINARY> 0 <F3>
<CHANGES> 0 <F3>
<NET-INCOME> 175,000
<EPS-PRIMARY> 0 <F3>
<EPS-DILUTED> 0 <F3>
<FN>
<F1> Includes the following items from the financial statements: total
investments $1,088,200.
<F2> Includes the following items from the financial statements: consumer
finance receivables $10,726,400 and other receivables $161,500.
<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 $127,000; short-term borrowings $3,156,600 and long-term debt
$6,300,000.
<F5> Includes the following items from the financial statements: additional
paid-in capital $684,900 retained earnings $1,152,400; unrealized gain
(loss) on investments $4,900; 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.
<PAGE>
Company's Form 10-K
December 31, 1995
Page 9
Item 3. LEGAL PROCEEDINGS
For information concerning certain purported class actin 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.
