<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1994
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number 1-10522
PIONEER FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2479273
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1750 East Golf Road, Schaumburg, Illinois 60173
(Address of principal executive, offices) (Zip Code)
Registrant's telephone number, including area code (708) 995-0400
Indicate by a 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 number of shares of the registrant's common stock, $1.00 par
value per share, outstanding as of August 2, 1994 was 6,987,602.
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PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
(Unaudited)
ASSETS
<S> <C> <C>
Investments-Note 1 and 3
Securities available for sale
Fixed maturities, at fair value
(cost: $224,423) $ 216,571 $ -
Fixed maturities, at cost
(fair value: $263,263) - 257,717
Equity securities, at fair value
(cost: 1994-$10,678; 1993-$12,382) 15,267 17,436
Fixed maturities held to maturity, at amortized cost
(fair value: 1994-$350,538; 1993-$325,540) 379,984 326,512
Mortgage loans--at unpaid balance 2,517 3,201
Real estate--at cost, less accumulated depreciation 14,042 -
Policy loans--at unpaid balance 22,323 23,988
Short-term investments--at cost,
which approximates fair value 15,759 45,352
Total Investments 666,463 674,206
Cash 17,002 23,379
Premiums and other receivables, less
allowance for doubtful accounts 18,760 20,734
Amounts on deposit and due from reinsurers 78,300 74,366
Accrued investment income 8,723 8,482
Deferred policy acquisition costs 251,520 260,432
Land, building and equipment-at cost, less
accumulated depreciation 24,150 22,248
Deferred federal income taxes 6,461 3,922
Other 22,551 20,502
$1,093,930 $1,108,271
2
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June 30, December 31,
1994 1993
(Unaudited)
LIABILITIES, REDEEMABLE PREFERRED STOCK,
AND STOCKHOLDERS' EQUITY
Policy liabilities:
Future policy benefits $ 610,643 $ 610,734
Unearned premiums 81,778 87,945
Policy and contract claims 188,025 189,389
Other 13,138 15,037
893,584 903,105
General expenses and other liabilities 45,434 48,442
Short-term notes payable 3,873 5,575
Long-term notes payable 975 1,125
Convertible Subordinated Debentures 57,477 57,477
1,001,343 1,015,724
Redeemable Preferred Stock, no par value:
$2.125 cumulative convertible exchangeable
preferred stock
Authorized: 5,000,000 shares
Issued and outstanding:
(1994: 896,000 shares; 1993: 947,000 shares) 22,400 23,675
Stockholders' Equity
Common Stock, $1 par value:
Authorized: 20,000,000 shares
Issued, including shares in treasury
(1994-6,956,400; 1993-6,900,000) 6,956 6,900
Additional paid-in capital 29,176 28,814
Unrealized appreciation (depreciation) of
available-for-sale securities (2,121) 3,285
Retained earnings 42,097 34,645
Less treasury stock at cost (5,921) (4,772)
(1994 - 669,400 shares; 1993 - 556,000 shares)
Total Stockholders' Equity 70,187 68,872
$1,093,930 $1,108,271
See notes to condensed consolidated financial statements.
</TABLE>
3
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PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Income:
Premiums and policy charges $176,802 $154,189 349,700 $309,532
Net investment income 10,130 9,474 21,234 19,515
Other income and realized gains
and losses from investments 6,797 4,454 14,060 8,782
193,729 168,117 384,994 337,829
Benefits and expenses:
Benefits 117,694 102,222 238,763 209,280
Insurance and general expenses 46,723 41,123 88,869 79,771
Interest expense 1,396 498 2,543 972
Amortization of deferred policy
acquisition costs 21,450 20,259 41,430 40,315
187,263 164,102 371,605 330,338
INCOME BEFORE INCOME TAXES 6,466 4,015 13,389 7,491
Federal income taxes 2,064 1,388 4,487 2,569
NET INCOME 4,402 2,627 8,902 4,922
PREFERRED STOCK DIVIDENDS 493 507 996 1,014
INCOME APPLICABLE TO
COMMON STOCKHOLDERS $ 3,909 $ 2,120 $ 7,906 3,908
NET INCOME PER COMMON SHARE
Primary $ .59 $ .31 $ 1.19 $ .57
Fully Diluted $ .40 $ .31 $ .80 $ .57
DIVIDENDS DECLARED
PER COMMON SHARE $ .0375 $ -- $ .075 $ --
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary 6,597 6,840 6,649 6,811
Fully Diluted 12,922 8,462 12,974 8,491
See notes to condensed consolidated financial statements.
</TABLE>
4
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PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1994 1993
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,284 $ 20,679
INVESTING ACTIVITIES
Net decrease in short-term 29,593 22,380
investments
Purchases of investments (164,557) (108,922)
Sale of investments 92,714 33,638
Maturities of investments 44,966 52,474
Net purchase of property and equipment (3,903) (1,183)
NET CASH USED BY
INVESTING ACTIVITIES (1,187) (1,613)
FINANCING ACTIVITIES
Repayments of notes payable (1,852) (6,716)
Proceeds from sale of agent receivables 13,013 10,588
Transfer of collections on previously
sold agent receivables (14,394) (9,926)
Dividends paid (1,236) (1,016)
Stock options exercised 382 71
Purchase of treasury stock (1,149) (2,035)
Retirement of preferred stock (1,275) (155)
Other 37 --
NET CASH USED BY
FINANCING ACTIVITIES (6,474) (9,189)
INCREASE (DECREASE) IN CASH (6,377) 9,877
CASH AT BEGINNING OF PERIOD 23,379 18,686
CASH AT END OF PERIOD $ 17,002 $ 28,563
See notes to condensed consolidated financial statements.
</TABLE>
5
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PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1994
NOTE 1 -- ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles (GAAP) 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 of the
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 six month period
ended June 30, 1994 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1994. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Pioneer
Financial Services, Inc. ("Pioneer" or "the Company") Annual
Report on Form 10-K for the year ended December 31, 1993.
EARNINGS PER SHARE
Primary earnings per share of Common Stock are determined by
dividing net income for the period, less dividends on Preferred
Stock, by the weighted average number of common stock and common
stock equivalents (dilutive stock options) outstanding. Fully
diluted earnings per share assumes conversion of the Preferred
Stock outstanding and conversion of the Subordinated Debentures
with related tax-effected interest added back to net income.
Where the effect of the assumed conversion on net earnings would
be antidilutive, fully diluted earnings per share represents the
primary amount. (See discussion in Exhibit 11 on page 14).
NEW ACCOUNTING STANDARD
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards 115, "Accounting for
Certain Investments in Debt and Equity Securities". As of
January 1, 1994 the Company adopted the provisions of that
standard. The effect as of January 1, 1994 of adopting Statement
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115 increased stockholders equity by $3,605,000 (net of
adjustments to deferred income taxes) to reflect the net
unrealized holding gains on securities previously carried at
amortized cost; there was no effect on net income as a result of
the adoption of Statement 115. In the six month period ended
June 30, 1994 those net unrealized holding gains decreased by
$8,709,000 (net of adjustments to deferred income taxes). The
net unrealized depreciation was due primarily to increases in
interest rates during the period.
NOTE 2 -- STOCKHOLDERS' EQUITY
The statutory accounting practices prescribed for Pioneer's
insurance subsidiaries by regulatory authorities differ from
GAAP. The combined statutory-basis capital and surplus of
Pioneer's direct insurance subsidiaries was $107,263,000 and
$106,567,000 at June 30, 1994 and December 31, 1993,
respectively. Statutory net income of the insurance subsidiaries
amounted to $624,000 and $1,237,000 for the three month periods
ended June 30, 1994 and 1993, respectively, and $1,316,000 and
$2,271,000 for the six month periods ended June 30, 1994 and
1993, respectively.
NOTE 3 -- INVESTMENTS
Realized investment losses for the three month period ended June
30, 1994 were $30,000 compared to realized gains of $135,000 for
the same period in 1993. Realized investment gains were $223,000
and $322,000 for the six month periods ended June 30, 1994 and
1993, respectively.
NOTE 4 -- CONTINGENCIES
Pioneer and its subsidiaries are named as defendants in various
legal actions, some claiming significant damages, arising
primarily from claims under insurance policies, disputes with
agents, and other items. On May 11, 1994 the California
Insurance Department filed complaints against a subsidiary of the
Company for alleged violations of California consumer protection
rules. Pioneer's management and its legal counsel are of the
opinion that the disposition of these actions will not have a
material adverse effect on Pioneer's financial position.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - Three and Six Month Periods ended June
30, 1994 compared to 1993.
Division Overview
The income (loss) before income taxes by division for the second
quarter and first six months of 1994 and 1993 respectively, are
as follows (in thousands):
Three Months Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
Health Insurance $ 1,866 $ 1,628 $ 5,493 $ 2,950
Life Insurance 1,878 2,403 4,320 4,606
Marketing 4,834 1,635 7,900 2,459
Managed Care 429 (321) 530 (260)
Corporate Expenses (2,541) (1,330) (4,854) (2,264)
Total $ 6,466 $ 4,015 $13,389 $ 7,491
Health Insurance
The increase in pre-tax income for the three and six month period
was primarily due to continued cost reduction programs which
reduced the general expense ratio approximately 1%. The accident
and health loss ratio increased to 66% from 65% for the three
month period and to 67% from 65% for the six month period in 1994
as compared to the same period in 1993. The higher loss ratios
were primarily due to the change in product mix from the August
1993 acquisition of Continental Life & Accident Company (CLAC).
The loss ratio on the existing block of business was consistent
with prior year levels. Improved loss ratios on the medicare
supplement products were offset by higher than projected claims
on the major hospital business.
Life Insurance
The results for the three and six month periods of 1994 were
consistent with prior year amounts. The unit cost per policy in-
force was relatively flat for the three and six month period in
1994 as compared to 1993. The mortality in the second quarter of
1994 was slightly higher than levels experienced in the same
period last year. The higher mortality is on a closed block of
universal life business. Despite the overall decline in the
Company's investment yields in 1994, the interest spread on life
8
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and annuity business continued to improve due to an aggressive
crediting rate strategy.
Marketing
The increase in pre-tax income in 1994 as compared to 1993 is due
to increases in revenue of 16% and 22% for the three and six
month periods coupled with cost reductions from the
consolidation of the division's career agent distribution system.
Managed Care
Managed care operations showed a small profit for the three and
six months ended June 30, 1994. The improvement compared to
losses experienced the last three quarters of 1993 was due to the
elimination of an unprofitable operating subsidiary in the fourth
quarter of 1993. The managed care division continued to expand
sales to unaffiliated clients with a $717,000 or 125% increase
for the three month period and a $909,000 or 74% increase for the
six month period in 1994 as compared to 1993.
Corporate Expenses and Interest
Interest expense increased in 1994 as compared to 1993 due to the
issuance of the convertible subordinated debentures in July 1993.
The corporate general expense also increased due to the Company's
increased investor relations programs.
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company reported consolidated net income of $4,402,000 for
the quarter ended June 30, 1994 as compared to $2,627,000 for the
comparable period in 1993.
Total premiums and policy charges increased $22,613,000 or 15%
for the three month period and $40,168,000 or 13% for the six
month period in 1994 as compared to 1993. Accident and health
premiums increased $20,043,000 or 14% for the three month period
and $36,751,000 or 13% for the six month period in 1994 compared
to 1993. The premium increase was primarily attributable to
increased premiums from major hospital products resulting
primarily from the acquisition of Continental Life & Accident
Company (CLAC) completed in August 1993. Total premiums
attributable to the remaining mix of Medicare supplement and
long-term care products decreased $4,794,000 or 8% and
$12,415,000 or 11% for the three and six month periods in 1994 as
compared to 1993.
9
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Net investment income increased $656,000 or 7% for the three
month period and $1,719,000 or 9% for the six month period in
1994 as compared to 1993. Annualized investment yields decreased
for the six month period from 6.7% to 6.3% in 1994 as compared to
1993. The decrease in the investment yield is due to the
shortening of the Company's average duration and the increased
emphasis on tax-exempt securities included in the Company's
portfolio.
Other income and realized investment gains increased $2,343,000
or 53% for the three month period and $5,278,000 or 60% for the
six month period in 1994 as compared to 1993. The increase in
other income was due to the acquisition of Healthcare Review
Corporation and CLAC. In addition, the Company realized
increased sales to unaffiliated customers in both the Marketing
and Managed Care Divisions. Realized investment gains as well as
the remaining other income generated by the Company's non-
insurance subsidiaries remained relatively unchanged.
Total benefits increased $15,472,000 or 15% for the three month
period and $29,483,000 or 14% for the six month period in 1994 as
compared to 1993. Accident and health benefits, which include
the change in unearned premiums, increased $14,479,000 or 16% for
the three month period and $28,611,000 or 15% for the six month
period in 1994 as compared to 1993. The increase for the period
was due primarily to the increased amount of collected premiums.
The accident and health loss ratio increased to 66% from 65% for
the three month period and to 67% from 65% for the six month
period in 1994 as compared to the same period in 1993. The
higher loss ratios were primarily due to the change in product
mix from the acquisition of CLAC. The loss ratio on the existing
block of business was consistent with prior year levels.
Improved loss ratios on the medicare supplement products were
offset by higher than projected claims on the major hospital
business. Life and annuity benefits increased $993,000 or 11%
for the three month period and $872,000 or 4% for the six month
period in 1994 as compared to 1993. The increase is due to
higher mortality on a closed block of universal life and an
increase in in-force business.
The general expenses as a percent of premiums decreased for the
three month period in 1994 as compared to the same period in 1993
due to the continued emphasis on cost reduction in the Health and
Life Insurance Units. However, insurance and general expenses
(which includes commission compensation to agents) increased
$5,600,000 or 14% for the three month period and $9,098,000 or
11% for the six month period in 1994 as compared to 1993 due
10
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primarily to the increase in premium and policy charges for the
three and six-month periods, primarily from the acquisition of
CLAC.
Amortization of deferred policy acquisition costs increased
$1,191,000 for the three month period and $1,115,000 for the six
month period in 1994 as compared to 1993. The Company continues
to monitor the profitability of its business on a quarterly
basis. Increased lapses or unprofitability on the business could
result in an increase in the amortization rate of deferred policy
acquisition costs, which would adversely impact future earnings.
The higher than projected loss ratios on the major hospital
business are an area of concern. Assumptions related to
administrative expenses and persistency of insurance contracts
are consistent with projected amounts.
The effective federal income tax rate decreased in the second
quarter of 1994 due to the increased investment in tax-exempt
securities included in the Company's portfolio.
The Company acquired the building containing its corporate
headquarters in Schaumburg, Illinois in January 1994 resulting in
the increase in investment real estate. Other assets increased
primarily due to an increase in federal income tax recoverables,
capitalized assessments, and certain investment receivables.
Amounts on deposit and due from reinsurers increased due to the
timing of payments due from reinsurers. The decrease in long-
term and short-term notes payable is consistent with their
scheduled maturities. The remaining balance sheet amounts
remained relatively consistent with the amounts at December 31,
1993. The decrease in cash provided by operating activities
decreased due primarily to a decrease in policy liabilities and
an increase in deferred federal income taxes.
HEALTHCARE REFORM
Many proposals have been introduced in Congress and various state
legislatures to reform the present healthcare system. Most of
these proposals are specifically directed at the small group
healthcare market, a significant portion of the Company's health
business. At the state level, a number of states have passed or
are considering legislation that would limit the differentials in
rates that carriers could charge between new business and renewal
business and with respect to similar demographic groups.
Legislation also has been adopted or is being considered that
would make health insurance available to all small groups by
requiring coverage of all employees and their dependents, by
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limiting the applicability of pre-existing conditions exclusions,
by requiring carriers to offer a basic plan exempt from certain
mandated benefits as well as a standard plan and by establishing
a mechanism to spread the risk of high risk employees to all
small group carriers.
At the federal level, the Clinton Administration proposal and
legislation introduced in Congress provide for insurance market
reforms to increase the availabiltiy of group health insurance to
small businesses and to require that all businesses offer health
insurance coverage to their employees. Several competing
proposals have been introduced in Congress. It is not possible
to predict which proposal, if any, will be adopted by Congress or
when such a proposal may be enacted.
The Company is monitoring developments concerning healthcare
reform and preparing its strategic responses to different
possible reform scenarios. In response to existing legislation
and in anticipation of future healthcare reform, the Company has
broadened its health insurance, life insurance and managed care
business and has continued to diversify products and services in
selected market areas that the Company believes will be
consistent with its targeted market focus and be less affected by
healthcare reform. It is likely that healthcare reform at the
federal and state levels will require the Company to make
significant changes to the way it conducts its health insurance
business, but it is not possible at this time to predict the
nature or effects of healthcare reform or how soon it will be
adopted and implemented, if at all. If state small group reform
continues to add restrictions to insurance business and the
federal government assumes responsibility for regulation and
payment of much of the healthcare that is not handled by the
private sector, this would significantly reduce or eliminate the
Company's group medical insurance business.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated liquidity requirements are created and
met primarily by operations of its insurance subsidiaries. The
insurance subsidiaries' primary sources of cash are premiums,
investment income, and investment sales and maturities. The
primary uses of cash are operating costs, policy acquisition
costs, payments to policyholders and investment purchases.
In addition, liquidity requirements of the Company are created by
the dividend requirements of the $2.125 Preferred Stock, common
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stock dividends, interest payments on the Convertible
Subordinated Debentures and other debt service requirements. The
Company's liquidity requirements are met primarily by dividends
declared by its subsidiaries. Payments of dividends by the
insurance subsidiaries to the Company is subject to certain
regulatory restrictions.
The Company's life and health insurance subsidiaries require
capital to fund acquisition costs incurred in the initial year of
policy issuance and to maintain adequate surplus levels for
regulatory purposes. These capital requirements have been met
principally from internally generated funds, including premiums
and investment income, and capital provided from reinsurance and
the financing or sale of agent debit balances.
The Company has offered agent commission financing to certain of
its agents and marketing organizations which consists primarily
of annualization of first year commissions. This means that when
the first year premium is paid in installments, the Company will
advance a percentage of the commissions that the agent would
otherwise receive over the course of the first policy year. On
October 31, 1990, the Company through a subsidiary entered into
an agreement with an unaffiliated corporation to provide
financing for its agent commission financing program through the
sale of agent receivables. Proceeds from such sales for the six
month period ended June 30, 1994 and 1993 were $13.0 million and
$10.6 million, respectively. This financing program was replaced
with an amended agreement which was executed on October 1, 1992,
to provide such subsidiary with the same type of financing.
Pursuant to this amended agreement the termination date of the
program is December 31, 1994, subject to extension or termination
as provided therein.
In July 1993 the Company issued $57.5 million of 8% convertible
subordinated debentures due 2000. Net proceeds from the offering
totaled approximately $54 million. The debentures are
convertible into the Company's common stock at any time prior to
maturity, unless previously redeemed, at a conversion price of
$11.75 per share.
In August 1993 a subsidiary of the Company borrowed $1.5 million
to finance the acquisition of Healthcare Review Corporation.
Interest on the note is payable quarterly at six percent. The
note requires principal repayments of $75,000 per quarter through
July 31, 1998.
The Company has a line of credit arrangement for short-term
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borrowings with three banks amounting to $20 million through
April 1996, all of which was unused at June 30, 1994. The line
of credit arrangement can be terminated, in accordance with the
agreement, at the Company's option.
In March and June 1994, the Company's Board of Directors
announced a quarterly Common Stock dividend of 3.75 cents per
share, with an expectation of a total of 15 cents per share to be
paid for 1994.
Management believes that the diversity of the Company's
investment portfolio and the liquidity attributable to the large
concentration of investments in highly liquid United States
government agency securities provide sufficient liquidity to meet
foreseeable cash requirements. Because the Company's insurance
subsidiaries experience strong positive cash flows, including
monthly cash flows from mortgage-backed securities, the Company
does not expect its insurance subsidiaries to be forced to sell
the held to maturity investments prior to their maturities and
realize material losses or gains. However, if the Company
experiences changes in credit risk, it may be required to sell
assets whose fair value is less than carrying value and incur
losses.
Life insurance and annuity liabilities are generally long term in
nature although subject to earlier surrender as a result of the
policyholder's ability to withdraw funds or surrender the policy,
subject to surrender and withdrawal penalties. The Company
believes its policyholder liabilities should be backed by an
investment portfolio that generates predictable investment
returns. The Company seeks to limit exposure to risks associated
with interest rate fluctuations by concentrating its invested
assets principally in high quality, readily marketable debt
securities of intermediate duration and by attempting to balance
the duration of its invested assets with the estimated duration
of benefit payments arising from contract liabilities.
Although the Company is engaged in on-going preliminary
discussions and evaluations of potential acquisitions and
investment opportunities, there are no existing agreements with
respect to significant acquisitions or significant investments.
The Company has no material commitments for capital expenditures
at the present time.
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PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Statement of Computation
of Per Share Earnings
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the second
quarter of 1994.
15
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EXHIBIT 11
PIONEER FINANCIAL SERVICES, INC.
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net income $ 4,402 $ 2,627 $ 8,902 $ 4,922
Average shares outstanding 6,338 6,737 6,358 6,766
Common Stock equivalents from
dilutive stock options,
based on the treasury stock
method using average market
price 259 103 291 45
TOTAL-PRIMARY 6,597 6,840 6,649 6,811
Common Stock equivalents from
dilutive stock options, based
on the treasury stock method
using closing market price -- 97 -- 155
Additional shares assuming
conversion of
Preferred Stock 1,433 1,525 1,433 1,525
Additional shares assuming
conversion of
Subordinated Debentures 4,892 -- 4,892 --
TOTAL-FULLY DILUTED 12,922 8,462 12,974 8,491
Net income per share-
Primary* $ .59 $ .31 $ 1.19 $ .57
Net income per share-
Fully Diluted** $ .40 $ .31 $ .80 $ .57
* Primary net income per share was calculated after deducting
dividends on Preferred Stock of $493,000 for the three month
period and $996,000 for the six month period ended June 30, 1994,
and $507,000 for the three month period and $1,014,000 for the
six month period ended June 30, 1993.
** Fully diluted net income per share was calculated after adding
tax effected interest on Subordinated Debentures of $747,000 for
the three month period and $1,494,000 for the six month period
ending June 30, 1994. Fully diluted net income per share for the
three month period and six month period ending June 30, 1993 is
equivalent to primary net income per share because conversion of
the Preferred Stock was antidilutive.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Pioneer Financial Services, Inc.
August 12, 1994 /s/ Peter W. Nauert
Date Peter W. Nauert
Chairman and Chief Executive Officer
August 12, 1994 /s/ David I. Vickers
Date David I. Vickers
Treasurer and Chief Financial Officer
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