UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
(X) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 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 0-13084
WARRANTECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3178732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Atlantic Street, Stamford, CT 06901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 975-1100
(Former name, former address and former fiscal year,
if changed since last year)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at December 31, 1996
Common stock, par value $.007 per share 13,109,032 shares
<PAGE>
WARRANTECH CORPORATION AND SUBSIDIARIES
DECEMBER 31, 1996
(Unaudited)
I N D E X
Page No.
PART I - Financial Information:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet at December 31, 1996
(Unaudited) and March 31, 1996........................... 3
Condensed Consolidated Statement of Operations
For the Nine and Three Months Ended December 31, 1996
and 1995 (Unaudited) .................................... 4
Condensed Consolidated Statement of Cash Flows
For the Nine Months Ended December 31, 1996
and 1995 (Unaudited) .................................... 5
Notes to Condensed Consolidated Financial Statements .... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ......... 9
PART II - Other Information 12
Signatures ......................................................... 15
Page 2
<PAGE>
WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
A S S E T S
December 31, March 31,
1996 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $14,376,195 $11,859,487
Investments in marketable securities 265,687 824,648
Accounts receivable, (net of allowances of $292,328
and $450,092, respectively) 24,758,818 16,160,209
Other receivables, net 4,064,171 8,610,919
Prepaid expenses, prepaid income taxes and
other current assets 1,503,250 988,936
-------------- -------------
Total Current Assets 44,968,121 38,444,199
-------------- -------------
Property and Equipment, net 9,628,338 6,802,798
-------------- -------------
Other Assets:
Excess of cost over fair value of assets acquired,
( net of accumulated amortization of
$3,525,182 and $3,170,089, respectively) 3,763,450 4,118,544
Investment in and advances to joint venture - 1,885,674
Deferred income taxes 2,214,307 2,031,535
Investments in marketable securities 2,058,527 1,363,047
Certificates of deposit and cash trust fund - 800,000 700,000
restricted
Split dollar life insurance policies 855,548 683,893
Notes receivable - long-term 65,124 87,760
Collateral security fund 199,389 199,389
Other assets 212,108 296,871
-------------- -------------
Total Other Assets 10,168,453 11,366,713
-------------- -------------
Total Assets $64,764,912 $56,613,710
============== =============
.
Page 3
<PAGE>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
December 31, March 31,
1996 1996
------------- -------------
(Unaudited)
Current Liabilities:
Current maturities of long-term debt and capital lease $1,763,537 $648,650
obligations
Insurance premiums payable 18,702,774 16,247,247
Income taxes payable 2,112,942 1,795,018
Accounts and commissions payable 5,998,605 4,809,527
Accrued expenses and other current liabilities 2,762,579 1,722,545
------------- -------------
Total Current Liabilities 31,340,437 25,222,987
------------- -------------
Deferred Revenues 4,616,314 3,654,794
------------- -------------
Long-Term Debt and Capital Lease Obligations 2,599,240 1,124,015
------------- -------------
Deferred Rent Payable 718,862 534,620
------------- -------------
Convertible Exchangeable Preferred Stock- $.0007 par
Value
Authorized, 15,000,000 shares
Issued and outstanding -0- at December 31, 1996 and
3,234,697 shares at March 31, 1996
(Redemption value - $6,430,000) - 6,420,363
------------- -------------
Common Stockholders' Equity:
Common stock - $.007 par value
Authorized - 30,000,000 shares
Issued and outstanding - 13,109,032 shares
at December 31, 1996 and
13,082,181 shares at March 31,1996 90,263 89,375
Additional paid-in-capital 12,731,573 12,212,641
Net unrealized gain (loss) on investments, net of
income taxes of $2,661 and $4,389, respectively (4,162) (15,031)
Accumulated translation adjustments 42,976 (10,520)
Retained earnings 13,186,451 7,843,332
------------- -------------
26,047,101 20,119,797
Less: Deferred compensation (63,222) (70,116)
Treasury stock - at cost, 100,000 shares
at December 31,1996 and March 31, 1996 (493,820) (392,750)
------------- -------------
Total Common Stockholders' Equity 25,490,059 19,656,931
------------- -------------
Total Liabilities and Common Stockholders' $64,764,912 $ 56,613,710
Equity ============= =============
See accompanying notes to condensed consolidated financial statements
</TABLE>
Page 4
<PAGE>
===============================================================================
===============================================================================
WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
-------------------------------------- -----------------------------------
1996 1995 1996 1995
------------------ ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Gross revenues $116,794,753 $78,764,862 $42,131,293 $34,830,265
Revenues deferred to future periods (1,305,692) (1,281,093) (455,889) (585,645)
Deferred revenues earned 347,451 324,909 119,657 152,225
------------------ --------------- ----------------- ---------------
Net revenues 115,836,512 77,808,678 41,795,061 34,396,845
Costs and expenses:
Direct costs 81,915,935 52,357,009 28,397,004 24,102,334
Service, selling, and general and administrative 25,940,313 18,700,520 9,916,149 7,230,661
Provision for bad debt expense 41,156 157,865 - 20,409
Depreciation and amortization 1,751,172 914,701 640,894 262,959
----------------- ---------------- ----------------- ------------
Total costs and expenses 109,648,576 72,130,095 38,954,047 31,616,363
------------------ ---------------- ----------------- --------------
Income from operations 6,187,936 5,678,583 2,841,014 2,780,482
------------------ ---------------- ----------------- --------------
Gain on sale of equity joint venture 1,876,480 - -
Other income, net 336,851 781,300 160,965 245,821
Equity in operations of joint venture ( 957,748) ( 10,155)
---------------- ------------------ ---------------- ---------------
Total other income (expenses) 2,213,331 ( 176,448) 160,965 235,666
------------------ ---------------- ----------------- ---------------
Income before provision for income taxes 8,401,267 5,502,135 3,001,979 3,016,148
Provision for income taxes 3,134,897 2,617,363 1,169,926 1,389,339
----------------- ---------------- ----------------- ---------------
Net income $ 5,266,370 $ 2,884,772 $ 1,832,053 $ 1,626,809
================== ================ ================= ===============
Earnings per share:
Primary $.35 $.18 $.12 $.10
Fully Diluted $.34 $.17 $.12 $.09
Weighted average number of shares outstanding:
Primary 15,085,776 15,724,944 15,587,366 15,770,697
Fully Diluted 15,528,601 16,941,129 15,606,166 16,943,919
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 5
<PAGE>
WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended December 31,
----------------------------------------------
1996 1995
<S> <C> <C>
Net cash provided by operating activities $ 7,779,544 $ 7,633,949
--------------------- ---------------------
Cash flows from investing activities:
Purchase of property and equipment ( 4,158,256) ( 3,854,521)
Investment in marketable securities ( 1,160,562) ( 948,602)
Proceeds from sale of marketable securities 927,763 1,730,612
Purchase of Home Guarantee Corporation Plc, net of cash
acquired - ( 680,923)
--------------------- ---------------------
Net cash used in investing activities ( 4,391,055) ( 3,753,434)
--------------------- ---------------------
Cash flows from financing activities:
Proceeds from borrowings - 805,821
Repayments of borrowings ( 1,290,167) ( 954,638)
Proceeds from sale/leaseback Of equipment 1,146,642
Decrease (increase) in notes receivable 22,636 ( 28,180)
Purchase of treasury stock ( 101,070) ( 80,530)
Issuance of common stock 496,820 62,500
--------------------- ---------------------
Net cash (used in) provided by financing activities ( 871,781) 951,615
--------------------- ---------------------
Net increase in cash and cash equivalents 2,516,708 4,832,130
Cash and cash equivalents at beginning of period 11,859,487 3,039,361
--------------------- ---------------------
Cash and cash equivalents at end of period $ 14,376,195 $ 7,871,491
===================== =====================
Supplemental Cash Flows Information:
Cash Payments for the Periods:
Interest $ 221,241 $ 39,763
===================== =====================
Income taxes $ 3,028,877 $ 1,570,450
===================== =====================
Noncash Investing and Financing Activities:
Gain on sale of investment in joint venture $ 1,876,480 $ -
Purchase of preferred stock ( 6,420,363) -
Note issued in connection with purchase of preferred stock 2,395,960 -
Capital lease obligations incurred 1,484,319 18,765
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 6
<PAGE>
WARRANTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Unaudited)
1. THE COMPANY
Warrantech Corporation, ("Warrantech" or the "Company"), through its
wholly owned subsidiaries Warrantech Automotive, Inc., Warrantech Consumer
Product Services, Inc., Warrantech Direct, Inc., Warrantech Home Service
Company and Warrantech International, Inc,. markets and administers
service contract programs for retailers, distributors and manufacturers
of automobiles, recreational vehicles, automotive components, homes,
home appliances, home entertainment products, computers and peripherals, and
office and communication equipment in the United States, Puerto Rico, Latin
America, Mexico, Canada and the United Kingdom. Additionally, third-party
administrative services are provided to manufacturers of consumer and
automotive products and other business entities requiring such services. The
predominant terms of the contracts and manufacturer's warranties range from
twelve (12) to eighty-four (84) months.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for the quarter ended December 31, 1996 are not necessarily indicative of
the results that may be expected for the year ending March 31, 1997. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-K for the year ended
March 31, 1996.
3. JOINT VENTURE
In July, 1993, the Company and American International Group Inc. ("AIG")
formed a corporate joint venture, Techmark Services Ltd. ("Techmark" or the
"Joint Venture") owned fifty-one percent (51%) by AIG and forty-nine percent
(49%) by the Company.
Page 7
<PAGE>
In conjunction with the foregoing alliance, in October, 1993, AIG purchased,
for a price of $6,430,000, options and a special issue of preferred stock
which was convertible into an issue of new shares of common stock which,
subsequent to its issuance, would be equivalent to twenty percent (20%) of
the Company's issued and outstanding common stock. Under the terms of this
purchase agreement, AIG had the right to purchase an increased interest in
the Company, to a maximum of thirty percent (30%) of the Company's issued
and outstanding common stock, if certain operating goals were achieved by
the Company.
On April 18, 1996, the Company and AIG consummated an agreement for
the termination of the Techmark Joint Venture (the "Agreement"). Under the
terms of the Agreement, AIG agreed to purchase the Company's forty-nine (49%)
interest in the Joint Venture for $3,762,154 and the Company agreed to
repurchase the 3,234,697 shares of convertible preferred stock held by
AIG for its original redemption value of $6,430,000 and further relinquish
their rights to other options under the original agreement. As a result
of this transaction, the Company no longer has any investment in or
liability to the Joint Venture and will no longer record any equity in the
operations of the Joint Venture. The redemption value will be offset by the
amount due the Company from the sale of its investment, with the net amount
due AIG of $2,395,960 resulting in a three year, non-interest bearing note
payable in 11 equal quarterly installments of $205,000 commencing June 30,
1996 with a final installment of $140,960 due March, 1999. In the event o
default by the Company under the note payable, the Company would be required
to reissue to AIG preferred stock for the remaining amount due at the default
date.
At March 31, 1996, the Company's carrying value of its investment amounted
to $1,885,674 which resulted in a gain on the sale of the investment of
$1,876,480, recognized in the first quarter of fiscal 1997.
Also, as part of the agreement, AIG paid the Company $1,480,000 related
to amounts due the Company as of March 31, 1996, under its profit
sharing arrangement. In connection with this payment, the Company issued an
irrevocable letter of credit to the benefit of AIG through December 2002
which can be drawn upon by AIG in the event the ultimate profit sharing
amount due the Company is less than the amount previously paid. It is
anticipated at this time that no amounts will be due AIG under the letter of
credit.
Page 8
<PAGE>
4. LITIGATION
(i) In 1989, a lawsuit was filed in an Illinois court against a
subsidiary of the Company by a former agent alleging breach of
contract. While the complaint does not specify the dollar amounts of
its alleged damages, the Plaintiff retained an expert witness who
estimates the Plaintiff's damages in excess of $9 million. Recently,
the District Court ruled that the report from Plaintiff's damage
expert was not admissible at trial. This ruling would preclud
Plaintiff's expert from offering trial testimony based on legal
theories contained in his report. The Company has retained its own
economic expert who will directly refute the magnitude of the
Plaintiff's damages. The Company's expert has concluded that the
maximum amount recoverable by the Plaintiff, if any, is less than
$1 million after allowances of all appropriate offsets. The Company
intends to vigorously defend this lawsuit. No trial date has been
set as yet.
In February 1996, the Plaintiff in this matter filed another
lawsuit in an Illinois court against a subsidiary of the Company,
the parent Company, the parent Company's Chairman and the
parent Company's President alleging that the Defendants tortuously
interfered with the Plaintiff's business relationships after the
Plaintiff was terminated as an agent. The Plaintiff seeks to
recover commissions that it contends it would have earned if the
Defendants had not precluded the Plaintiff from servicing certain
accounts after the Plaintiff's termination. In the Complaint the
Plaintiff is seeking $8 million in compensatory damages. The
Plaintiff also seeks to recover punitive damages in the amount of
$24 million. All of the Defendants deny and dispute Plaintiff's
claims against them in this case, and they intend to vigorously
defend and oppose those claims.
On October 10, 1996, WDBS requested permission from the Court to
file a counterclaim against the Oak companies, as well as James
Nerad and John Peterson, the majority shareholders and principal
officers of the Oak companies. WDBS' counterclaims include
claims for (i) civil conspiracy, (ii) breach of contract, and
(iii) tortuous interference with WDBS' contractual relationships.
On October 16, 1996, WDBS filed a motion to consolidate this case
with the lawsuit Oak previously filed against Warrantech
Corporation, Joel San Antonio, and William Tweed. Hearings on all
of these motions are scheduled for November 6, 1996. In defense of
the lawsuit filed by the Oak companies against the Company and the
individual defendants, each of the defendants has set forth numerous
legal defenses to the Oak companies' claims. The Court has ordered
that all discovery in each of these actions must be completed
by February 28, 1997 and set the date of trial for April 7, 1997.
(ii) In December 1993, a lawsuit was filed by a former officer and
director of the Company, David Robertson, against the Company and one
of its subsidiaries in a Texas Court. The matter is currently pending
before the American Arbitration Association in Connecticut.
Robertson has alleged that the Company wrongfully terminated an
employment agreement between Robertson and WDBS, and that the Company
engaged in tortuous interference and fraud. Robertson has requested
damages ranging from $450,000 to $5 million which includes his
request for punitive damages. The Company has denied all material
allegations in the claims. The Company has asserted a counterclaim
in the amount of approximately $340,000 for reimbursement of
attorneys' fees advanced by it on behalf of Robertson in connection
with certain other actions. Management intends to vigorously defend
against Robertson's claims and to vigorously prosecute its
counterclaims. No hearings in this matter have begun and the case is
proceeding.
Management believes that the ultimate outcome of these matters
will not have a substantial impact on the operations of the Company.
Page 9
<PAGE>
WARRANTECH CORPORATION AND SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Gross revenues for the nine month and three month periods ended
December 31, 1996 amounted to $116,794,753 and $42,131,293, respectively
as compared with $78,764,862 and $34,830,265 for the same periods a year ago
representing a 48% and 21% increase for those periods, respectively. The
increases in the nine and three month periods are directly attributable to
approximately $21 million and $6 million, respectively, related to new
customers in both the consumer product and automotive programs and
approximately $17 million and $1 million, respectively, related to
volume increases with existing customers and renewals.
Included in the nine and three month periods last year is one time revenue
of approximately $3.0 million and 1.8 million respectively related to
the acquisition of a portfolio of business from a new customer.
The net increase in deferred revenues for the nine month period ended
December 31, 1996 as compared with the same period a year ago is directly a
ttributable to the increased number of service contracts sold during that
period of time with a service period greater than one year, offset in
part by amounts earned on expiring contracts during the same period. The
net change in deferred revenues for the three month period ended
December 31, 1996, compared with the same period a year ago, is
attributable to the mix and volume of contracts for the three month periods.
Direct costs are those costs directly related to the production and
acquisition of service contracts. Direct costs were $81,915,935 and
$28,397,004 for the nine and three month periods ended December 31, 1996,
respectively, as compared with $52,357,009 and $24,102,334 for the
comparable period in fiscal 1996. The increase is directly attributable to
the volume increases in contracts sold and a higher level of premium
reflecting improved coverage on selected programs.
Service, selling and general and administrative expenses for the nine and
three month periods ended December 31, 1996 were $25,940,313 and
$9,916,149 respectively, as compared with $18,700,520 and $7,230,661 for the
nine and three month periods ended December 31, 1995. These increases are
related to payroll, payroll related costs and training costs arising from
an increase in headcount to meet the service requirements associated with the
increased number of service contracts being sold as compared with the same
periods a year ago and office facilities expense associated with additional
office space. In addition, service, selling, and general and administrative
expenses include approximately $1,179,127 and $468,848 for the nine month
and three month periods ended December 31, 1996 as compared with $637,318
and $411,696 for the nine and three month periods ended December 31, 1995
related to Warrantech Europe which was acquired in July of 1995. As a
percentage of gross revenues service, selling, general and administrative
expenses have decreased approximately 2% for the three month period ended
December 31, 1996, which is indicative of management's efforts to contain its
overhead costs while maintaining the highest quality of service levels to
its customers during a time of rapid expansion.
Page 10
<PAGE>
The increase in depreciation and amortization for the nine month and three
month periods ended December 31, 1996 over the comparable periods a year
ago is the result of increased depreciation resulting from capital additions
related to the Company's ongoing upgrade of its computer systems and the
additional equipment requirements resulting from the service level increases.
In April 1996, the Company and its international joint venture partner,
AIG, agreed to terminate the joint venture, Techmark Services Ltd., effective
January 1, 1996. Under the terms of the agreement, AIG agreed to purchase
the Company's forty-nine percent (49%) investment in the joint venture for
$3,762,154. As of March 31, 1996, the Company's carrying value of the joint
venture investment amounted to $1,885,674 which resulted in a pre-tax gain
recognized in the three month period ended June 30, 1996 amounting to
$1,876,480. The equity loss from the joint venture recognized in the nine
and three month periods ended December 31, 1995 amounted to $957,748 and
$10,155, respectively, and represents the Company's share of the joint
venture losses for those periods.
The provision for income taxes is based on the Company's projection of
its estimated effective tax rate for the fiscal year. The higher effective
tax rate for the nine and three month periods ended December 31, 1995
reflects the non-deductibility of the foreign losses for U.S. purposes at that
time.
Net income for the nine and three month periods ended December 31, 1996
was $5,266,370 or $.35 per share and $1,832,053 or $.12 per share,
respectively, as compared with $2,884,772 or $.18 per share and
$1,626,809 or $.10 per share, respectively, calculated on the same basis a
year ago. The earnings per share for the nine month period ended December
31, 1996 includes the effect of the gain on the sale of the Company's joint
venture in the first quarter of fiscal 1997 of $.08 per share (refer to
footnote 3 ). Included in the nine and three months results ended December
1995, were after tax gains of approximately $1.8 million or $0.11 per share
and $1.0 million or $0.06 per share, respectively, related to the
acquisition of a portfolio of business from a new customer.
Liquidity and Financial Resources
The Company believes that internally generated funds will be sufficient
to finance its current operations for at least the next twelve months.
Cash provided by operations during the nine month period ended
December 31, 1996 amounted to $7,779,544 which is principally attributable
to new accounts as compared with comparable levels of accounts receivable at
December 31, 1995.
The Company has a line of credit with a bank which provides for a
maximum aggregate borrowing up to $10 million. The line of credit is secured
by certain accounts receivable and has been renewed and now expires on August
31, 1997. At December 31, 1996, the Company did not have any borrowings
outstanding under the line of credit.
In connection with the Company's ongoing upgrade of its information systems,
the Company has financed additional equipment during the nine and three
month periods ended December 31, 1996 through capital lease transactions
amounting to $1,484,319 and $566,993 respectively.
Page 11
<PAGE>
In connection with the sale of the Company's joint venture interest to AIG,
the Company agreed to repurchase 3,234,697 shares of convertible
exchangeable preferred stock held by AIG at their redemption value of
$6,430,000. This amount was offset by the amount due the Company for the sale
of its investment, with the net amount due AIG of $2,395,960 resulting
in a three year, non-interest bearing note payable. The note is payable in 11
equal quarterly installments of $205,000 commencing June 30, 1996, with a
final installment of $140,960 due March 1999. Also, as part of the
agreement, AIG agreed to pay the Company $1,480,000 related to amounts
due the Company under its profit sharing arrangement. In connection with
this payment, the Company issued an irrevocable letter of credit to the
benefit of AIG through December 31, 2002 which can be drawn against by AIG in
the event that the ultimate profit sharing amount due the Company is less
than the amount paid. It is anticipated at this time that no amounts will be
due AIG under this letter of credit.
The effect of inflation has not been significant to the Company since
its formation.
Page 12
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
A. No material developments regarding litigation have occurred
during the period.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Page 13
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on November
25, 1996, the shareholders' elected the following to serve as
directors until the next Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
For Withheld
Joel San Antonio 11,213,596 28,129
William Tweed 11,213,596 28,129
Jeffrey J. White 11,213,596 28,129
Michael J. Salpeter 11,213,596 28,129
Lawrence Richenstein 11,208,596 33,129
In addition, the shareholders approved an amendment to the
Company's 1988 Employee Incentive stock Option Plan to increase
the maximum aggregate number of shares which may be issued under
options under the Plan from 300,000 shares of Common Stock to
600,000 shares of Common Stock by a vote of 10,498,089 for,
688,200 against and 48,436 withheld.
Page 14
<PAGE>
Item 5. Other Information
Not applicable.
Item 6 (a) Exhibits
(11) Statement re: computation of per share earnings.
(22) Financial Data Schedule
Item 6 (b) Reports on 8-K
None.
Page 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.
WARRANTECH CORPORATION
S/N/S Joel San Antonio
Joel San Antonio - Chairman of the Board
(Chief Executive Officer)
Date: February 14, 1997
S/N/S Bernard J. White
Bernard J. White
(Chief Financial Officer)
Date: February 14, 1997
Page 16
<PAGE>
WARRANTECH CORPORATION AND SUBSIDIARIES
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
----------------- -- ------------------- ----------------- -- ----------------
1996 1995 1996 1995
----------------- ------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Earnings:
Net income $ 5,266,370 $ 2,884,772 $ 1,832,053 $ 1,626,809
================= =================== ================= ================
Weighted average shares outstanding:
Primary:
Common shares 13,014,242 13,000,142 13,064,092 13,002,932
Assumed exercise of stock options 2,071,534 755,389 2,523,274 773,129
Assumed conversion of preferred stock - 1,969,413 - 1,994,636
================= =================== ================= ================
15,085,776 15,724,944 15,587,366 15,770,697
================= =================== ================= ================
Fully diluted::
Common shares 13,014,242 13,000,142 13,064,092 13,002,932
Assumed exercise of stock options 2,514,359 1,992,868 2,542,074 1,992,868
Assumed conversion of preferred - 1,948,119 - 1,948,119
stock
================= =================== ================= ================
15,528,601 16,941,129 15,606,166 16,943,919
================= =================== ================= ================
Earnings Per Common Share:
Primary:
Net income $.35 $.18 $.12 $.10
================= =================== ================= ================
Fully diluted
Net income $.34 $.17 $.12 $.09
================= =================== ================= ================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 14,376,196
<SECURITIES> 265,687
<RECEIVABLES> 24,758,818
<ALLOWANCES> 292,328
<INVENTORY> 0
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0
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