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 January 31, 1997
Commission file number 1-12006
FINANCIAL FEDERAL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88-0244792
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
400 Park Avenue, New York, NY 10022
(Address of principal executive offices)
(Zip code)
(212) 888-3344
(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
At March 7, 1997, 9,842,482 shares of the Registrant's common stock,
$.50 par value, were outstanding.
<PAGE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
Quarterly Report on Form 10-Q
for the quarter ended January 31, 1997
INDEX
Part I - Financial Information Page No.
Item 1 Financial Statements - FINANCIAL FEDERAL CORPORATION AND
SUBSIDIARIES
Consolidated Balance Sheet at January 31, 1997 (unaudited)
and July 31, 1996 (audited) 3
Consolidated Statement of Operations and Retained Earnings
for the three months and six months ended January 31, 1997
and 1996 (unaudited) 4
Consolidated Statement of Cash Flows for the six months
ended January 31, 1997 and 1996 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-8
Part II - Other Information
Item 4 Submission of matters to a vote of Security Holders 8-9
Item 6 Exhibits and Reports on Form 8-K 9
<PAGE>
<TABLE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
January 31, 1997
(Unaudited) July 31, 1996 *
------------ ------------
ASSETS
<S> <C> <C>
Cash $4,297,000 $2,426,000
Finance receivables 507,029,000 437,706,000
Less allowance for possible losses (9,008,000) (8,008,000)
------------ ------------
Finance receivables - net 498,021,000 429,698,000
Other assets 896,000 963,000
------------ ------------
TOTAL ASSETS $503,214,000 $433,087,000
============ ============
LIABILITIES
Senior debt :
Short - term $12,239,000 $830,000
Long - term ($11,444,000 at January 31, 1997 and
$9,376,000 at July 31, 1996 due to related parties) 370,000,000 310,000,000
Accrued interest, taxes and other liabilities 10,075,000 12,160,000
Subordinated debentures ($2,181,000 at January 31, 1997
and $3,178,000 at July 31, 1996 due to related parties) 2,290,000 6,957,000
Deferred income taxes 9,879,000 8,949,000
------------ ------------
Total liabilities 404,483,000 338,896,000
------------ ------------
STOCKHOLDERS' EQUITY
Common stock 4,921,000 4,980,000
Additional paid-in capital 57,245,000 58,289,000
Warrants 29,000 29,000
Retained earnings 36,536,000 30,893,000
------------ ------------
Total stockholders' equity 98,731,000 94,191,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $503,214,000 $433,087,000
============ ============
<FN>
<F1>
* Reproduced from balance sheet included in the 1996 Annual Report to Stockholders.
The notes to consolidated financial statements are made a part hereof.
</FN>
</TABLE>
<PAGE>
<TABLE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
AND RETAINED EARNINGS (UNAUDITED)
<CAPTION>
Three Months Ended January 31, Six Months Ended January 31,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Finance income $13,356,000 $10,741,000 $25,886,000 $20,916,000
Interest expense 5,609,000 4,920,000 10,756,000 9,691,000
------------ ------------ ------------ ------------
Finance income before provision for possible losses
on finance receivables 7,747,000 5,821,000 15,130,000 11,225,000
Provision for possible losses on finance receivables 625,000 410,000 1,150,000 820,000
------------ ------------ ------------ ------------
Net finance income 7,122,000 5,411,000 13,980,000 10,405,000
Salaries and other expenses 2,026,000 1,691,000 4,054,000 3,276,000
------------ ------------ ------------ ------------
Earnings before income taxes 5,096,000 3,720,000 9,926,000 7,129,000
Provision for income taxes 1,962,000 1,403,000 3,820,000 2,688,000
------------ ------------ ------------ ------------
NET EARNINGS 3,134,000 2,317,000 6,106,000 4,441,000
Retirements of treasury stock (219,000) (840,000) (463,000) (840,000)
Three-for-two stock split (1,372,000) (1,372,000)
Retained earnings - beginning of period 33,621,000 25,619,000 30,893,000 23,495,000
------------ ------------ ------------ ------------
RETAINED EARNINGS - END OF PERIOD $36,536,000 $25,724,000 $36,536,000 $25,724,000
============ ============ ============ ============
Earnings per common share:
Primary $0.29 $0.25 $0.57 $0.49
============ ============ ============ ============
Fully diluted $0.29 $0.25 $0.57 $0.49
============ ============ ============ ============
Average number of shares used:
Primary 10,728,201 9,095,177 10,730,309 9,067,752
============ ============ ============ ============
Fully diluted 10,755,636 9,156,477 10,780,867 9,153,294
============ ============ ============ ============
<FN>
<F1>
The notes to consolidated financial statements are made a part hereof.
</FN>
</TABLE>
<PAGE>
<TABLE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended January 31,
-----------------------------
1997 1996
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $6,106,000 $4,441,000
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 105,000 88,000
Gain on sales of marketable securities (27,000)
Provision for possible losses on finance receivables 1,150,000 820,000
Amortization of deferred origination costs 1,986,000 1,629,000
Deferred income taxes 930,000 630,000
Decrease (increase) in other assets 84,000 (51,000)
Increase (decrease) in accrued interest, taxes and other
liabilities (2,085,000) 1,293,000
------------ ------------
Net cash provided by operating activities 8,249,000 8,850,000
------------ ------------
Cash flows from investing activities:
Finance receivables:
Originated (220,204,000) (155,526,000)
Collected 148,745,000 117,229,000
Investment in marketable securities (750,000)
Proceeds from sales of marketable securities 777,000
Payments for office furniture and equipment (122,000) (75,000)
------------ ------------
Net cash (used in) investing activities (71,554,000) (38,372,000)
------------ ------------
Cash flows from financing activities:
Commercial paper:
Maturities 90 days or less (net) 17,084,000 8,447,000
Maturities greater than 90 days:
Proceeds 83,712,000 5,392,000
Repayments (47,267,000) (9,404,000)
Notes payable - banks
Maturities 90 days or less (net) 12,880,000 84,720,000
Maturities greater than 90 days:
Proceeds 5,000,000
Repayments (45,000,000)
Repayment of senior subordinated note (15,000,000)
Repayments of subordinated debentures (4,667,000)
Acquisitions of treasury stock - 124,300 shares (1,630,000)
Proceeds from exercise of stock options 54,000 38,000
Tax benefit relating to stock options 10,000
------------ ------------
Net cash provided by financing activities 65,176,000 29,193,000
------------ ------------
NET INCREASE (DECREASE) IN CASH 1,871,000 (329,000)
Cash - beginning of period 2,426,000 3,090,000
------------ ------------
CASH - END OF PERIOD $4,297,000 $2,761,000
============ ============
Supplemental disclosures of cash flow information:
Interest paid $9,936,000 $9,272,000
============ ============
Income taxes paid $2,808,000 $1,745,000
============ ============
<FN>
<F1>
The notes to consolidated financial statements are made a part hereof.
</FN>
</TABLE>
<PAGE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
In the opinion of Financial Federal Corporation and Subsidiaries (the
"Company"), the accompanying consolidated financial statements contain
all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position as at January 31,
1997, and the results of operations and cash flows for the three and six
month periods ended January 31, 1997 and 1996.
These condensed financial statements should be read in conjunction with
the consolidated financial statements and footnote disclosures of
Financial Federal Corporation and Subsidiaries for the fiscal year ended
July 31, 1996 included in the Company's July 31, 1996 Annual Report on
Form 10-K.
The consolidated results of operations for the three and six month
periods ended January 31, 1997 and 1996 are not necessarily indicative
of the results for the respective full years.
NOTE 2 - EARNINGS PER COMMON SHARE
Earnings per common share is calculated by dividing net earnings by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Common stock equivalents
consist of dilutive stock options and warrants that are assumed to be
exercised for the calculation.
NOTE 3 - LONG-TERM DEBT
At January 31, 1997, the Company had $315.0 million of committed
unsecured revolving credit facilities from various banks expiring after
one year. Long-term debt at January 31, 1997 includes $310.0 million of
commercial paper and short-term bank borrowings which are supported by
these facilities, $5.0 million of long-term bank borrowings due in
February 1998 and $55.0 million of term notes payable in September 2001.
NOTE 4 - COMMON STOCK REPURCHASE PROGRAM
In August 1996, the Company established a program to repurchase its
common stock. Total repurchases are limited to $2,500,000 under the
program. As of February 28, 1997, 124,300 shares have been repurchased
for $1,630,000. Shares repurchased are retired.
NOTE 5 - RECENT PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation." This standard requires either the
recognition or disclosure of compensation expense based on the fair
value of equity instruments granted to employees. The Company has
elected to adopt the disclosure provisions of this standard commencing
in the fiscal year ending July 31, 1997.
<PAGE>
PART I
Item 2
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Comparison of Three Months Ended January 31, 1997 to Three Months Ended
January 31, 1996
Finance income increased 24% to $13.4 million in the second quarter of
fiscal 1997 from $10.7 million in the second quarter of fiscal 1996.
The increase was primarily the result of the $115 million, or 31%,
increase in the amount of average finance receivables outstanding from
the second quarter of fiscal 1996 ($374 million) to the second quarter
of fiscal 1997 ($489 million) and was partially offset by decreased
finance rates charged by the Company on new financings and on variable
rate finance receivables as a result of the quarter to quarter decline
in market interest rates. Financings booked in the second quarter of
fiscal 1997 increased 44% to $112 million from $78 million in the second
quarter of fiscal 1996 primarily as a result of the expansion of the
Company's marketing efforts into new geographic areas and further
penetration into its existing areas. In November 1996, the Company
opened a new full service branch office in Mesa, Arizona.
Interest expense increased 14% to $5.6 million in the second quarter of
fiscal 1997 from $4.9 million in the second quarter of fiscal 1996. The
overall increase was mainly due to the 24% increase in average
borrowings during the second quarter of fiscal 1997 from the second
quarter of fiscal 1996, partially offset by decreases in costs of funds
and average market interest rates.
Finance income before provision for possible losses on finance
receivables increased by 33% to $7.7 million in the second quarter of
fiscal 1997 from $5.8 million in the second quarter of fiscal 1996.
Finance income before provision for possible losses, expressed as an
annual percentage of average finance receivables outstanding, increased
to 6.3% in the second quarter of fiscal 1997 from 6.2% in the second
quarter of fiscal 1996. The increase was primarily due to the interest
savings of approximately $400,000 on the debt repaid from the net
proceeds of the Company's 1.7 million share public offering of its
common stock in May 1996.
The provision for possible losses on finance receivables increased by
52% to $625,000 in the second quarter of fiscal 1997 from $410,000 in
the second quarter of fiscal 1996. The increase was primarily due to
the increase in finance receivables. The allowance for possible losses,
$9.0 million at January 31, 1997, expressed as a percentage of finance
receivables, was 1.8% at January 31, 1997 as compared to 1.9% at January
31, 1996. Management continually evaluates the allowance for possible
losses in light of past, current and projected economic, industry and
geographic conditions. Finance receivables on which the Company has
suspended the recognition of income, $5.4 million at January 31, 1997,
expressed as a percentage of total finance receivables, increased to
1.1% at January 31, 1997 from 0.9% at January 31, 1996.
Salaries and other expenses increased 20% to $2.0 million in the second
quarter of fiscal 1997 from $1.7 million in the second quarter of fiscal
1996. The increase was primarily due to increased marketing costs and
salary increases.
Net earnings increased by 35% to $3.1 million in the second quarter of
fiscal 1997 from $2.3 million in the second quarter of fiscal 1996.
Primary and fully diluted earnings per share increased by 16% to $0.29
per share in the second quarter of fiscal 1997 from $0.25 per share in
the second quarter of fiscal 1996. The increase in earnings per share
was lower than the increase in net earnings primarily due to the sale of
1.7 million shares of the Company's common stock in a public offering in
May 1996.
Comparison of Six Months Ended January 31, 1997 to Six Months Ended
January 31, 1996
Finance income increased 24% to $25.9 million in the first half of
fiscal 1997 from $20.9 million in the first half of fiscal 1996. The
increase was primarily the result of the $109 million, or 30%, increase
in the amount of average finance receivables outstanding from the first
half of fiscal 1996 ($363 million) to the first half of fiscal 1997
($472 million) and was partially offset by decreased finance rates
charged by the Company on new financings and on variable rate finance
receivables as a result of the half year to half year decline in market
interest rates. Financings booked in the first half of fiscal 1997
increased 42% to $218 million from $153 million in the first half of
fiscal 1996 primarily as a result of the expansion of the Company's
marketing efforts into new geographic areas and further penetration into
its existing areas. In November 1996, the Company opened a new full
service branch office in Mesa, Arizona.
Interest expense increased 11% to $10.8 million in the first half of
fiscal 1997 from $9.7 million in the first half of fiscal 1996. The
overall increase was mainly due to the 21% increase in average
borrowings during the first half of fiscal 1997 from the first half of
fiscal 1996, partially offset by decreases in costs of funds and average
market interest rates.
Finance income before provision for possible losses on finance
receivables increased by 35% to $15.1 million in the first half of
fiscal 1997 from $11.2 million in the first half of fiscal 1996.
Finance income before provision for possible losses, expressed as an
annual percentage of average finance receivables outstanding, increased
to 6.4% in the first half of fiscal 1997 from 6.2% in the first half of
fiscal 1996. The increase was primarily due to the interest savings of
approximately $800,000 on the debt repaid from the net proceeds of the
Company's 1.7 million share public offering of its common stock in May
1996.
The provision for possible losses on finance receivables increased by
40% to $1.2 million in the first half of fiscal 1997 from $820,000 in
the first half of fiscal 1996. The increase was primarily due to the
increase in finance receivables.
Salaries and other expenses increased 24% to $4.1 million in the first
half of fiscal 1997 from $3.3 million in the first half of fiscal 1996.
The increase was primarily due to increased marketing costs and salary
increases.
Net earnings increased by 37% to $6.1 million in the first half of
fiscal 1997 from $4.4 million in the first half of fiscal 1996. Primary
and fully diluted earnings per share increased by 16% to $0.57 per share
in the first half of fiscal 1997 from $0.49 per share in the first half
of fiscal 1996. The increase in earnings per share was lower than the
increase in net earnings primarily due to the sale of 1.7 million shares
of the Company's common stock in a public offering in May 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company endeavors to maximize its liquidity by diversifying its
sources of funds, which include cash flows from operations, dealer
placed and direct issuance of commercial paper, borrowings under long-
term and short-term revolving credit facilities with banks, placements
of term debt and sales of additional equity.
The Company issues investment grade commercial paper directly and
through a $250.0 million program with recognized commercial paper
dealers. Commercial paper outstanding at January 31, 1997 was $243.5
million. All of the Company's commercial paper is unsecured and matures
within 270 days. Increases in commercial paper are generally offset by
decreases in bank borrowings, and vice versa. The Company's policy is
to maintain unused committed revolving credit facilities from banks
greater than the amount of commercial paper outstanding.
At January 31, 1997, the Company had $315.0 million of long-term
committed unsecured revolving credit facilities with various banks under
which $83.7 million was outstanding and $70.0 million of short-term
committed unsecured revolving credit facilities with various banks which
were fully available.
At January 31, 1997, the Company also had $55.0 million of institutional
term notes payable on September 1, 2001.
<PAGE>
PART II
Item 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on December 10,
1996, the following nominees (followed by the total number of votes for
and votes withheld) were elected to the Board of Directors: Lawrence B.
Fisher, 9,263,118, 74,450; William C. MacMillen, Jr., 9,271,018, 66,550;
Bernard G. Palitz, 9,261,518, 76,050; Clarence Y. Palitz, Jr.,
9,261,518, 76,050; Michael C. Palitz, 9,261,918, 75,650 and Paul
Sinsheimer, 9,263,118, 74,450.
The proposal for the appointment of Eisner & Lubin LLP as independent
auditors of the Company and its subsidiaries for the fiscal year ending
July 31, 1997 was ratified at the Annual Meeting. A total of 9,257,618
shares were voted for the ratification of the appointment of Eisner &
Lubin LLP; 74,550 shares voted against; and 5,400 shares abstained.
PART II
Item 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10 - Deferred Compensation Agreement
11 - Computation of Earnings Per Share
27 - Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the quarter
ended January 31, 1997.
<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.
FINANCIAL FEDERAL CORPORATION
(Registrant)
By: /s/ Michael C. Palitz
Executive Vice President
and Treasurer
By: /s/ David H. Hamm
Controller and
Assistant Treasurer
March 10, 1997
(Date)
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
10.23 Deferred Compensation Agreement dated December 30, 1996
between Clarence Y. Palitz, Jr. and Financial Federal
Corporation 11
11 Computation of Earnings Per Share 15
27 Financial Data Schedule (EDGAR version only)
Exhibit No. 10.23
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of the 30th day of December, 1996, by and
between Financial Federal Corporation (the "Company") and Clarence Y.
Palitz, Jr.(the "Employee");
W I T N E S S E T H :
WHEREAS, Employee is an employee of the Company; and
WHEREAS, the Employee and the Company desire to set forth in writing
herein the terms and conditions of their agreement with respect to the
payment to Employee, on a deferred basis, of some of the Employee's
salary for his services to the Company for the months of January, 1997
through December, 1997.
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain amounts of salary earned by the Employee for each of the
months of January 1997 through December 1997, shall be deferred and, in
lieu of current payment thereof, the Company shall pay to the Employee
the sum of $50,000.00 on each January 31 commencing in 1999 and
terminating in 2005, and $15,905.30 on January 31, 2006. The amounts so
deferred are shown on Exhibit 1 to this Agreement. In the event the
Employee's employment is terminated for any reason whatsoever during
this period, the amount payable to the Employee pursuant to this
paragraph shall be proportionately reduced (in the same proportion as
the number of days or portions thereof from the date of such termination
of employment to the end of this period bears to the entire period), and
any payment provided for in paragraphs "2", "3", "5" or "7" of this
Agreement shall be further discounted as described in paragraph "4" of
this Agreement.
2. In the event of i). Employee's death, ii). Employee's retirement
from the Company and its affiliates (and employment is not obtained with
another company in substantially the same types of business as the
Company is engaged) or iii). Employee's leave of absence owing to a bona
fide disability (which shall be defined as the incapacity to perform any
employment which would be appropriate given the prior physical status,
intellectual ability and experience of the Employee, due to a mental or
physical disability which shall have been certified by an independent
physician and which has lasted or can be expected to last for a
continuous period of not less than twelve months), then, in the
Company's sole discretion, either a). the Company shall pay the amount
specified in paragraph "1" on the date there specified or b). all
amounts payable pursuant to paragraph "1" of this Agreement shall be re-
computed as described in paragraph "4" of this Agreement and shall be
paid in total on the first day of the first month 30 days after the date
of the death, retirement or disability. Payments of amounts due
pursuant to the terms of this paragraph shall be made first to the
Employee, if living, then to the Employee's Beneficiary, Anka K. Palitz,
the Employee's wife, or if she is not then alive, to the Employee's
Estate.
3. Except for the events specified in paragraph "2" of this Agreement,
in the event of termination of Employee's employment by the Company for
any other reason whatsoever (other than a transfer to employment with an
affiliate of the Company), or in the event the Employee terminates his
employment with the Company and its affiliates then, in either such
event, the amount payable pursuant to paragraph "1" of this Agreement
shall be paid to Employee on the first day of the first month following
such termination of employment in an amount calculated as set forth in
paragraph "4" of this Agreement.
4. If, pursuant to paragraphs "2", "3", "5" or "7" of this Agreement,
payment of any amount provided for in paragraph "1" of this Agreement is
to be made earlier than the due date set forth in such paragraph "1",
the amount to be paid is the amount as provided in paragraph "1" of this
Agreement, discounted at the rate of 6.13% per annum, compounded
monthly, from the date any such payments would have been due (as set
forth in paragraph "1" of the Agreement) to the actual date of payment.
For purposes of illustration, a payment of $500.00 would be due with
respect to a $638.54 payment which would have been due and payable
forty-eight (48) months later.
5. If any federal, state or other tax law or regulation or any
determination by any taxing authority with respect to the Employee would
cause any amounts due pursuant to this Agreement to become taxable to
the Employee before payment thereof, except for taxes owing due to FICA,
FUTA,or other employment taxes, then the Employee, irrespective and
notwithstanding any other provisions of this Agreement, shall have the
right, upon written notice to the Company, to require payment of any of
the installments or portions thereof specified in paragraph "1" of this
Agreement. The notice shall specify a date within ninety (90) days of
such notice when payment is to be made. The payment shall be made in an
amount calculated as set forth in paragraph "4" of this Agreement.
6. Employee shall have no right to pledge, hypothecate, assign or
otherwise dispose of any amounts due or to become due hereunder.
Employee's right to receive payments under this Agreement shall be no
greater than those of any other unsecured creditor of the Company.
7. Should, at any time, more than 50 percent of the combined voting
power of the Company's then outstanding voting securities be held by any
person, entity or group of persons, directly or indirectly, within the
meaning of section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended ("Act"), other than those persons, entities or groups
of persons owning over 14 percent of the combined voting power as of the
date hereof, or a liquidation or dissolution of the Company or of the
sale of all or substantially all of the Company's assets, then a). the
Company may, upon 30 days notice, pay to Employee the amount payable
pursuant to paragraph "1" of this Agreement on the first day of the
first month following such notice in an amount calculated as set forth
in paragraph "4" of this Agreement, OR b). Employee may, upon 30 days
notice, require that the Company pay to Employee the amount payable
pursuant to paragraph "1" of this Agreement on the first day of the
first month following such notice in an amount calculated as set forth
in paragraph "4" of this Agreement.
8. During the term of this Agreement, the Company shall furnish to
Employee, no later than the 30th day of each fiscal year, a schedule
setting forth in reasonable detail the changes occurring during the
preceding year and the balance as at the end of the preceding year with
respect to the amount accrued by the Company on account of all sums
payable hereunder to Employee.
9. Employee shall have the right at any time, by written notice to the
Company, to change the Beneficiary named in paragraph "2" hereof, with
such notice acknowledged in writing by the Company.
10. This Agreement contains the entire understanding of the parties
hereto relating to the payments described herein; however, this
Agreement shall not affect any other salary nor any other benefit that
Employee may be or may become entitled to, except as required by law.
This written agreement represents the entire final agreement between the
parties relating to the payments described herein and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements
between the parties. This agreement cannot be amended, modified or
changed except by a writing signed by both parties. Only an officer of
the Company with the title of Senior Vice President or a more senior
officer may accept this agreement or agree to any amendments,
modifications or changes.
11. This Agreement shall be governed and construed in accordance with
the laws of the State of New York. If any provision of this Agreement
is rendered or declared invalid, illegal or ineffective by any existing
or subsequently enacted legislation or decision of a court of competent
jurisdiction, such legislation or decision shall only invalidate such
provision to the extent so rendered or declared invalid, illegal or
ineffective in such jurisdiction only and shall not impair, invalidate
or nullify the remainder of this Agreement which shall remain in full
force and effect.
12. Any controversy or claim arising out of or relating to this
Agreement or any alleged breach thereof shall be settled by arbitration
in New York City in accordance with the rules of the American
Arbitration Association governing contract disputes and judgment upon
the award rendered by any arbitrator(s) may be entered in any court of
appropriate jurisdiction; the Federal Arbitration Act and the applicable
laws of the State of New York shall govern.
IN WITNESS WHEREOF, Company has caused this Agreement to be executed by
its duly authorized officers and Employee has hereunto set his hand on
the day and year first above written.
FINANCIAL FEDERAL CORPORATION
BY:
(Title)
EMPLOYEE:
_____________________
EXHIBIT 1 to Deferred Compensation Agreement
For every payroll period beginning after December 31, 1996 until
December 31, 1997, $11,458.33 shall be deferred, per the Agreement
between Financial Federal Corporation and Clarence Y. Palitz, Jr. (the
"Employee") dated December 30, 1996.
Exhibit 11
<TABLE>
FINANCIAL FEDERAL CORPORATION & SUBSIDIARIES
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Three months ended January 31, Six months ended January 31,
------------------------------ ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Primary
<S> <C> <C> <C> <C>
Net earnings for primary per share
amounts $3,134,000 $2,317,000 $6,106,000 $4,441,000
========== ========== ========== ==========
Weighted average number of common
shares outstanding 9,847,441 8,231,837 9,872,673 8,229,293
Add - common equivalent shares
(determined using the
"treasury stock" method) 880,760 863,340 857,636 838,459
------- ------- ------- -------
Weighted average number of shares
used in calculation of primary net
earnings per common share 10,728,201 9,095,177 10,730,309 9,067,752
========== ========== ========== ==========
Primary net earnings per common share $0.29 $0.25 $0.57 $0.49
===== ===== ===== =====
Fully Diluted
Net earnings for fully diluted per share
amounts $3,134,000 $2,317,000 $6,106,000 $4,441,000
========== ========== ========== ==========
Weighted average number of shares
used in calculation of fully diluted
net earnings per common share 10,755,636 9,156,477 10,780,867 9,153,294
========== ========== ========== ==========
Fully diluted net earnings per common
share $0.29 $0.25 $0.57 $0.49
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES AS
OF JANUARY 31, 1997 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS AND
RETAINED EARNINGS FOR THE SIX MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 4297
<SECURITIES> 0
<RECEIVABLES> 507059
<ALLOWANCES> 9008
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 503214
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 4921
<OTHER-SE> 93810
<TOTAL-LIABILITY-AND-EQUITY> 503214
<SALES> 0
<TOTAL-REVENUES> 25886
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1150
<INTEREST-EXPENSE> 10756
<INCOME-PRETAX> 9926
<INCOME-TAX> 3820
<INCOME-CONTINUING> 6106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6106
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
<FN>
<F1>THE FINANCIAL STATEMENTS INCLUDE A NONCLASSIFIED BALANCE SHEET
</FN>
</TABLE>
