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 December 31, 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, Minnesota55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-342-6000
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 December 31, 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
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
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
December 31, Sept. 30,
1995 1995
ASSETS (Unaudited)
Cash ........................................ $ 1,448,739 $ 1,047,239
Interest receivable ......................... 350,228 360,943
Investments, classified as available for sale
carried at market value .................. 54,443,853 55,364,807
Receivable from Parent ...................... 92,746 62,487
Unamortized bond issuance costs ............. 1,973,900 2,024,297
----------- -----------
$58,309,466 $58,859,773
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Mortgage-backed bonds payable ............... $52,463,000 $53,908,000
Interest payable on bonds ................... 713,336 729,610
Bond redemptions payable .................... 426,000 169,000
Deferred tax liability ...................... 1,804,733 1,523,110
Other liabilities ........................... 1,763 1,803
----------- -----------
55,408,832 56,331,523
----------- -----------
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
Unrealized holding gain on investment
securities available for sale ............ 2,658,214 2,293,501
Retained earnings ......................... 206,420 198,749
----------- -----------
2,900,634 2,528,250
----------- -----------
$58,309,466 $58,859,773
=========== ===========
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
December 31,
1995 1994
REVENUES:
Interest income .............. $ 1,071,643 $ 40,398
Interest expense ............. 1,075,731 38,216
----------- -----------
Net interest (expense) income (4,088) 2,182
Gain on accretion of discount
on investments .............. 78,501 3,108
----------- -----------
Total revenue ................ 74,413 5,290
----------- -----------
EXPENSES:
Amortization of bond issuance
costs on redemptions ........ 50,397 2,854
General and administrative ... 11,440 10,599
----------- -----------
Total expense ................ 61,837 13,453
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 12,576 (8,163)
INCOME TAX EXPENSE (BENEFIT) .... 4,905 (3,184)
----------- -----------
NET INCOME (LOSS) ............... $ 7,671 $ (4,979)
=========== ===========
See accompanying notes to financial statements.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1995 1994
OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) ................................ $ 7,671 $ (4,979)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Amortization of bond issuance costs ........... 50,397 2,854
Recognition of discount on investments ........ 78,501 (2,103)
Change in:
Interest receivable .......................... 10,715 (201,320)
Deferred tax liability ....................... 38,482 --
Interest payable on bonds .................... (16,274) (1,663)
Bond redemptions payable ..................... 257,000 (29)
Receivable from Parent ....................... (30,259) 3,328,341
Other liabilities ............................ (40) 28,329
------------ ------------
Net cash provided by operating activities .. 396,193 3,149,430
------------ ------------
FINANCING ACTIVITIES:
Issuance of mortgage-backed bonds ................ -- 40,400,000
Redemption of mortgage-backed bonds .............. (1,445,000) (103,321)
Purchase of investments pursuant to
mortgage-backed bonds ........................... -- (39,310,380)
Principal redemption on investments
pursuant to mortgage-backed bonds ............... 1,450,307 102,317
Bond issuance costs incurred ..................... -- (1,396,966)
Net issuance of notes payable to Parent .......... -- 481,130
Dividends paid to Parent ......................... -- (3,323,050)
------------ ------------
Net cash provided (used) in
financing activities ...................... 5,307 (3,150,270)
------------ ------------
INCREASE (DECREASE) IN CASH ........................ 401,500 (840)
CASH AT BEGINNING OF PERIOD ........................ 1,047,239 16,762
------------ ------------
CASH AT END OF PERIOD .............................. $ 1,448,739 $ 15,922
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the three months ended for:
Interest ........................................ $ 1,092,005 $ 39,879
Income taxes paid to Parent ..................... $ 33,577 $ (3,184)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PREMIER ACCEPTANCE CORPORATION
(a wholly owned subsidiary of Piper Jaffray Companies Inc.)
NOTES TO FINANCIAL STATEMENTS
Three Months Ended December 31, 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 Company's annual report on Form 10-K for the year ended September 30, 1995.
The results of operations for the three months ended December 31, 1995, are not
necessarily indicative of the results to be expected for the year ending
September 30, 1996.
The statement of financial condition as of December 31, 1995 and the information
for the periods ended December 31, 1995 and 1994, is unaudited, but management
of the Company 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 market value. Principal and interest payments on the
collateral are used to meet the debt service of the respective bonds.
Bonds outstanding at December 31, 1995, have stated maturities through 2025 and
interest rates ranging from 8% to 8.15%. The actual maturities may be shortened
by prepayments on related collateral.
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 December 31, 1995, and
September 30, 1995, the aggregate amount outstanding was approximately
$27,944,000 and $29,574,000, respectively.
4. RELATED PARTY TRANSACTIONS
The Company has entered into an agreement with the Parent, stating that Premier
may advance excess cash to the Parent for a specified period of time and the
Parent shall pay interest to Premier at the stated rate of one-half of one
percent over the broker call rate. During the three months ended December 31,
1995 the Company received $1,177 in interest income from the Parent. At December
31, 1995 and September 30, 1995, $92,746 and $62,487, respectively, was
receivable from the Parent.
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 Parent
provides the Company with accounting and administrative services, including
services of officers. For the three months ended December 31, 1995 and 1994, the
Company was charged $4,750 and $10,000, respectively, for such accounting
services. The Company's costs are not necessarily indicative of the costs that
would have been incurred had the Company operated independently.
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. During fiscal 1995, the Company
issued three series of mortgage-backed bonds with an aggregate original
principal amount of $54,400,000.
The Company recorded net interest expense of $4,088 for the three months ended
December 31, 1995, due primarily to residual interest payments on one series of
mortgage-backed bonds, made to a third party owner.
<PAGE>
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
27 Financial Data Schedule (transmitted electronically)
(b). Reports on Form 8-K
The Company was not required to file any reports on Form 8-K to the
Securities and Exchange Commission during the quarter ended
December 31, 1995.
<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 February 8, 1996 /s/ DEBORAH K. ROESLER
DEBORAH K. ROESLER
Treasurer (Principal Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS OF PREMIER ACCEPTANCE CORPORATION AS OF AND FOR
THE PERIODS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 1448739
<SECURITIES> 54443853
<RECEIVABLES> 442974
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 58309466
<CURRENT-LIABILITIES> 1139336
<BONDS> 52463000
0
0
<COMMON> 1000
<OTHER-SE> 2899634
<TOTAL-LIABILITY-AND-EQUITY> 58309466
<SALES> 0 <F2>
<TOTAL-REVENUES> 1150144
<CGS> 0 <F3>
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 61837
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1075731
<INCOME-PRETAX> 12576
<INCOME-TAX> 4905
<INCOME-CONTINUING> 7671
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7671
<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 - THE COMPANY DOES NOT COMPUTE EARNINGS PER SHARE
</FN>
</TABLE>
