UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
Commission file numbers 33-21775, 33-25070 and 33-33261
PREMIER ACCEPTANCE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 41-1615279
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Piper Jaffray Tower, 222 South 9th Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-342-6673
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
1,000 Common shares were outstanding as of June 30, 1995, and were wholly owned
by Piper Jaffray Companies Inc.
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 with the reduced disclosure
format.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
TABLE OF CONTENTS
Page
Number
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Statements of Financial Condition 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II.OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
STATEMENTS OF FINANCIAL CONDITION
June 30, September 30,
1995 1994
ASSETS (Unaudited)
Cash $ 562,503 $ 16,762
Interest receivable 366,611 13,400
Investments pursuant to mortgage-backed bonds 52,351,699 1,575,444
Receivable from Parent -- 3,328,341
Unamortized bond issuance costs 2,039,234 168,803
Deferred tax asset 56,488 50,591
------------ ------------
$55,376,535 $ 5,153,341
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Mortgage-backed bonds payable $54,334,000 $ 1,600,916
Interest payable on bonds 648,669 26,513
Bond redemptions payable 65,000 1,244
Notes payable to Parent 82,088 --
Other liabilities 1,813 119
------------ ------------
55,131,570 1,628,792
Stockholder's equity:
Common stock, $1 par value, 1,000 shares
authorized, issued and outstanding 1,000 1,000
Additional paid-in capital 35,000 35,000
Retained earnings 208,965 3,488,549
------------ ------------
244,965 3,524,549
------------ ------------
$55,376,535 $ 5,153,341
============ ============
See accompanying notes to financial statements.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
REVENUE:
Interest income $1,110,121 $ 48,070 $2,313,606 $ 188,419
Interest expense 1,108,205 42,592 2,380,328 165,614
----------- ----------- ----------- -----------
Net interest income
(expense) 1,916 5,478 (66,722) 22,805
----------- ----------- ----------- -----------
Gain on accretion of
discount on investments 15,818 12,811 27,418 44,315
Gain on sale of
residual interest -- -- 205,632 --
Net gain related to bond call -- -- 51,014 --
----------- ----------- ----------- -----------
Total revenue 17,734 18,289 217,342 67,120
----------- ----------- ----------- -----------
EXPENSES:
Amortization of bond
issuance costs
on redemptions 2,313 11,764 5,223 40,026
General and administrative 8,580 15,585 140,863 60,313
----------- ----------- ----------- -----------
Total expenses 10,893 27,349 146,086 100,339
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES 6,841 (9,060) 71,256 (33,219)
INCOME TAXES (BENEFIT) 2,668 (3,533) 27,790 (12,955)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 4,173 $ (5,527) $ 43,466 $ (20,264)
=========== =========== =========== ===========
See accompanying notes to financial statements.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
1995 1994
OPERATING ACTIVITIES:
Net (loss) income $ 43,466 $ (20,264)
Adjustments to reconcile net (loss) income to
net cash provided (used) by operating activities:
Amortization of bond issuance costs 5,223 40,026
Recognition of discount on investments (26,394) (29,492)
Change in:
Interest receivable (353,211) 11,960
Deferred tax asset (5,897) (50,591)
Interest payable on bonds 622,156 (23,532)
Bond redemptions payable 63,756 26,565
Receivable from Parent 3,328,341 74,279
Other liabilities 1,694 (106)
----------- -----------
Net cash provided by operating activities 3,679,134 28,845
----------- -----------
FINANCING ACTIVITIES:
Issuance of mortgage-backed bonds 54,400,000 --
Mortgage-backed bonds called (1,481,022) --
Redemption of mortgage-backed bonds (185,894) (1,449,227)
Purchase of investments pursuant
to mortgage-backed bonds (52,827,183) --
Principal redemption on investments
pursuant to mortgage-backed bonds 604,056 1,435,134
Sale of investments pursuant to
mortgage-backed bonds 1,473,266 --
Bond issuance costs incurred (1,875,654) --
Net issuance of notes payable to Parent 82,088 --
Dividends paid to Parent (3,323,050) --
----------- -----------
Net cash used in financing activities (3,133,393) (14,093)
----------- -----------
INCREASE IN CASH 545,741 14,752
CASH AT BEGINNING OF PERIOD 16,762 109,824
----------- -----------
CASH AT END OF PERIOD $ 562,503 $ 124,576
=========== ===========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the six months for:
Interest $1,680,920 $ 189,146
Income taxes paid to Parent $ 39,905 $ 20,635
See accompanying notes to financial statements.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended June 30, 1995 and 1994
1. ORGANIZATION AND BUSINESS ACTIVITY
The Company is a wholly owned subsidiary of Piper Jaffray Companies Inc.
The Company's Certificate of Incorporation limits the business activities in
which it may engage to activities in connection with or related to the issuance
of mortgage-backed bonds, as described in Note 3.
The Company's activities include the issuance and sale of securities
collateralized by certain mortgage related investments (certificates), directly
or through trusts formed by the Company, and the investment of the proceeds in
such certificates. The Company or such trusts purchase the certificates prior to
or simultaneously with the issuance of the mortgage-backed bonds.
The Company has filed Registration Statements under the Securities Act of
1933 (the Act) with the Securities and Exchange Commission, pursuant to which
$900,000,000 in aggregate principal amount of the Company's mortgage-backed
bonds were registered under the Act. The Company has issued thirty-four series
of bonds with an aggregate original principal amount of $529,950,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles and should be read in conjunction with
the Registrant's annual report on Form 10-K for the year ended September 30,
1994. The results of operations for the nine months ended June 30, 1995, are not
necessarily indicative of the results to be expected for the year ending
September 30, 1995.
The statement of financial condition as of June 30, 1995 and the
information for the periods ended June 30, 1995 and 1994, is unaudited, but
management of the Registrant believes that all adjustments (consisting only of
normal recurring accruals) necessary for a fair statement of the results of
operations for the periods have been included.
3. MORTGAGE-BACKED BONDS
The Company periodically issues mortgage-backed bonds (the bonds) which are
collateralized by GNMA or FNMA certificates and guaranteed as to payment of
principal and interest by the Government National Mortgage Association or the
Federal National Mortgage Association. The bonds are obligations solely of the
Company and bondholders' only recourse is to the underlying series' collateral.
The collateral, which has been purchased with the issuance proceeds, is held by
a trustee and is carried at par value less unaccreted discount. Principal and
interest payments on the collateral are used to meet the debt service of the
respective bonds.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
Bonds outstanding at June 30, 1995, have stated maturities ranging from
2019 through 2025 and stated interest rates ranging from 8% to 10%. The
collateral has contractual maturities ranging from 2019 through 2025 and stated
interest rates ranging from 8% to 10%.
At June 30, 1995 the market value of the underlying collateral for the
outstanding bonds was approximately $55,933,000.
The issuance of six series of bonds with an aggregate original principal
amount of $176,145,000 and the related purchase of collateral certificates has
been accounted for financial reporting purposes as a sale. Accordingly, the
assets, liabilities, interest income, and interest expense relating to these
series do not appear on the financial statements of the Company. At June 30,
1995, and September 30, 1994, the aggregate amount outstanding was approximately
$30,812,000 and $34,380,000, respectively.
4. RELATED PARTY TRANSACTIONS
The Company is charged for certain expenses by the Parent based on
specifically identified cost allocations. Such cost allocations are determined
through negotiations between the Company and the Parent. Management believes
that the method of allocation, as so determined, is reasonable. In addition, the
Company's affiliate, Piper Jaffray Inc.(PJI), provides the Company with
accounting and administrative services, including services of officers. For the
nine months ended June 30, 1995 and 1994, the Company was charged $16,000 and
$45,000, respectively, for such accounting services. During the nine months
ended June 30, 1995 the Company has paid a management fee of $101,463 to PJI for
additional services provided by officers of the Company. The Company's costs are
not necessarily indicative of the costs that would have been incurred had the
Company operated independently.
The Company has notes payable to the Parent which bear interest at a rate
of one-half of one percent over the broker call rate and mature over the life of
the bonds.
In connection with the issuance of the mortgage-backed bonds recorded on
the financial statements, PJI, acting as underwriter, received underwriting
discounts of $468,337 for the nine months ended June 30, 1995. These costs are
capitalized on the Company's statement of financial condition as unamortized
bond issuance costs.
The Company sold the collateral related to the called bonds for Series
1989-A through PJI during the second quarter of fiscal 1995. The subsequent sale
of the securities resulted in a gain of approximately $15,000 for PJI.
During the nine months ended June 30, 1995, the Company paid brokerage
commissions of $6,000 to PJI relating to the sale, to a non-affiliated third
party, of the residual interest holdings from Series 27.
On December 12, 1994, the Board of Directors declared and paid a dividend
to the Parent of $3,323,050, eliminating the balance of the receivable from
parent.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Resources and Liquidity
The Company's source of funds with respect to the mortgage-backed bonds is
the receipt of payments of principal and interest, including prepayments, on the
certificates securing the bonds, together with the reinvestment income thereon.
The Company expects that, at all times, the aggregate future receipts of
principal and interest on the certificates, together with reinvestment income
thereon, will exceed the aggregate of future amounts due as payments of
principal and interest on the mortgage-backed bonds, as well as payments of
other liabilities.
The deferred bond issuance costs and original issue discounts on the
collateral are amortized as bonds are redeemed.
Results of Operations
The Company's interest income and interest expense are directly related to
the issuance and sale of mortgage-backed bonds and have increased significantly
over fiscal 1994 due to the issuance of $54,400,000 in bonds during fiscal year
1995.
General and administrative expenses include a management fee paid to PJI
during the second quarter upon sale of the Series 27 residual interest (see Note
4 to the financial statements). Excluding this transaction, expenses decreased
approximately 35% for the nine months ended June 30, 1995 compared to the same
period in the previous year. This decrease was primarily due to a reassessment
of the charges for accounting and administrative services provided to the
Company, including services of officers of the Company's affiliate PJI. These
charges are subject to periodic reevaluation based on the number of outstanding
series of bonds.
<PAGE>
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
27 - Financial Data Schedule (filed electronically)
(b). Reports on Form 8-K-none
<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.
PREMIER ACCEPTANCE CORPORATION
(Registrant)
Dated August 14, 1995 /s/ DEBORAH K. ROESLER
-------------------------------------
DEBORAH K. ROESLER
Treasurer (Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PREMIER ACCEPTANCE CORPORATION AS OF AND FOR THE PERIODS
ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 562,503
<SECURITIES> 52,351,699
<RECEIVABLES> 366,611
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 55,376,535
<CURRENT-LIABILITIES> 713,669<F1>
<BONDS> 54,334,000
<COMMON> 1,000
0
0
<OTHER-SE> 243,965
<TOTAL-LIABILITY-AND-EQUITY> 55,376,535
<SALES> 0<F2>
<TOTAL-REVENUES> 2,597,670
<CGS> 0<F3>
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 146,086
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,380,328
<INCOME-PRETAX> 71,256
<INCOME-TAX> 27,790
<INCOME-CONTINUING> 43,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,466
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
<F1>NOT APPLICABLE - COMPANY DOES NOT HAVE A CLASSIFIED BALANCE SHEET
<F2>REVENUES CONSIST OF INTEREST INCOME ONLY
<F3>NOT APPLICABLE - THE COMPANY HAS NO SALES, ONLY INTEREST INCOME AS REVENUE
<F4>NOT APPLICABLE - COMPANY DOES NOT COMPUTE EARNINGS PER SHARE
</FN>
</TABLE>
