UNITED STATES SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Under Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED September 30,1997
Commission File No. 0-19564
FGIC SECURITIES PURCHASE, INC.
A Delaware Corporation
IRS Employer Identification No. 13-3633082
115 Broadway, New York, New York 10006
Telephone - (212) 312-3000
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
____ _____
Shares Outstanding
Title of Class at November 6, 1997
_______________ _____________________
Common Stock (voting), $10.00 par value 10
Registrant meets the conditions set forth in general instruction H91)(a)
and (b) of Form 10-Q and is therefore filing this Form 10-Q with the
reduced disclosure format.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Unaudited Interim Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
Item 1 - Item 6 9
Signatures 10
<PAGE>
Item 1. Financial Statements and Supplementary Data.
FGIC Securities Purchase, Inc.
(a wholly-owned subsidiary of FGIC Holdings, Inc.)
Balance Sheets
[CAPTION]
<TABLE>
<S> <C> <C>
ASSETS September 30, December 31,
1997 1996
______________ ________________
(Unaudited)
Short-term investments $ 117,390 $ 109,277
Liquidity fees receivable 1,183,792 1,905,938
Due from affiliates 17,046,032 13,284,308
Deferred tax asset 1,953,773 1,377,427
Other assets 161,074 322,079
______________ ______________
Total assets $ 20,462,061 $ 16,999,029
_______________ ______________
_______________ ______________
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Deferred liquidity fee income $ 217,065 $ 347,223
Commitment fees payable to GE Capital 780,112 643,741
Accounts payable and accrued expenses 420,259 412,619
Taxes payable 7,394,075 8,094,410
__________________ ________________
Total liabilities $ 8,811,511 $ 9,497,993
__________________ ________________
Stockholder's Equity:
Common stock, par value $10.00 per share;
10 shares authorized, issued and outstanding 100 100
Retained earnings 11,650,450 7,500,936
---------------- ---------------
Total stockholder's equity 11,650,550 7,501,036
---------------- ---------------
Total liabilities and stockholder's equity $ 20,462,061 $ 16,999,029
---------------- ---------------
---------------- ---------------
</TABLE>
See accompanying notes to interim financial statements.
FGIC Securities Purchase, Inc.
(a wholly-owned subsidiary of FGIC Holdings, Inc.)
Statements of Operations
(Unaudited)
[CAPTION]
<TABLE>
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
____ ____ ____ ____
Liquidity fee Income $1,625,073 $2,981,297 $7,525,523 $8,991,230
Investment Income 8,113 - 8,113 1,414
___________ ___________ ___________ ___________
Total Revenues 1,633,186 2,981,297 7,533,636 8,992,644
General and administrative expenses 320,905 103,569 632,158 258,218
----------- ----------- ----------- ------------
Income before provision for
income taxes 1,312,281 2,877,728 6,901,478 8,734,426
------------ ----------- ------------ ----------
Provisions for income taxes
Federal 424,853 931,665 2,234,354 2,827,771
State and Local 98,421 215,830 517,610 655,082
------------ ------------ ----------- ---------
Total provisions for income taxes 523,272 1,147,495 2,751,964 3,482,853
------------- ------------- ----------- ----------
Net income $ 789,009 $1,730,233 $4,149,514 $5,251,573
------------- ------------- ----------- ----------
------------- ------------- ----------- ----------
</TABLE>
See accompanying notes to interim financial statements
<PAGE>
FGIC Securities Purchase, Inc.
(a wholly-owned subsidiary of FGIC Holdings, Inc.)
Statements of Cash Flows
(Unaudited)
[CAPTION]
<TABLE>
For the Nine Months Ended
September 30,
<S> <C> <C>
1997 1996
---- ----
Operating activities:
Net income $4,149,514 $5,251,573
Adjustments to reconcile net
income to net cash provided by
operating activities:
Deferred income tax expense (576,346) (270,518)
Change in taxes payable (700,335) 3,753,372
Change in due from affiliates (3,761,724) (8,608,367)
Change in due to affiliates - 113,763
Change in other assets 161,005 -
Change in liquidity fees receivable 722,146 (430,137)
Change in deferred liquidity fee income (130,158) 47,524
Change in accounts payable and accrued expenses 7,640 26,377
Change in commitment fees payable to GE Capital 136,371 117,827
------------ -------------
Cash provided by operating activities 8,113 1,414
------------ -------------
Financing activities:
Dividends paid - -
------------ --------------
Cash used by financing activities - -
------------- -------------
Net change in cash and cash equivalents 8,113 1,414
------------- -------------
Cash and cash equivalents at beginning of period 109,277 107,863
------------ ------------
Cash and cash equivalents at end of period $117,390 $109,277
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to interim financial statements.
<PAGE>
FGIC Securities Purchase, Inc.
(a wholly-owned subsidiary of FGIC Holdings, Inc.)
Notes to Interim Financial Statements
September 30,1997
(Unaudited)
(1) Business
--------
FGIC Securities Purchase, Inc. ("FGIC-SPI") is a wholly-owned subsidiary of
FGIC Holdings, Inc. (the "Parent") which, in turn, is wholly-owned by General
Electric Capital Corporation ("GE Capital"). FGIC-SPI provides liquidity for
certain floating rate municipal securities whereby FGIC-SPI will, under
certain circumstances, purchase such securities in the event they are
tendered by the holders thereof as permitted under the terms of the
respective bond indentures. As of September 30,1997, FGIC-SPI had
approximately $2.9 billion (par and interest) of potential obligations
under such arrangements. In order to obtain funds to purchase the securities,
FGIC-SPI has entered into standby loan agreements with GE Capital totaling
$4.0 billion at September 30,1997, under which GE Capital will be
irrevocably obligated to lend funds as needed for FGIC-SPI to purchase the
securities.
(2) Significant Accounting Policies
-------------------------------
The interim financial statements of FGIC-SPI in this report reflect all
normal recurring adjustments necessary, in the opinion of management, for a
fair statement of (a) results of operations for nine months ending September
30, 1997 and 1996, (b) the financial position at September 30,1997 and
December 31, 1996, and (c) cash flows for the nine months ended September
30, 1997 and 1996.
These interim financial statements should be read in conjunction with the
financial statements and related notes included in the 1996 audited financial
statements.
Significant accounting policies are as follows:
Short Term Investments
Short-term investments are carried at cost which approximates market value.
For purposes of the statements of cash flows, FGIC-SPI considers all highly
liquid investments with original maturities of six months or less to be
cash equivalents.
Revenue Recognition
Fees are paid up-front and in installments. Up-front fees are earned on a
straight-line basis over the life of the liquidity commitment, and
installment fees are earned straight-line over the installment period.
Fair Values of Financial Instruments
The carrying amounts of FGIC-SPI's financial instruments, relating
primarily to short term investments and liquidity fees, approximate
their fair values.
SEC Registration Fees
SEC Registration fees are recognized as prepaid assets and are
expensed as FGIC-SPI is reimbursed for such fees by issuers
as transactions are consummated.
Reserve for Losses
It is management's policy to establish a reserve for losses based
upon its estimate of the ultimate aggregate losses relative to
its obligations under the liquidity facility arrangements written.
At September 30,1997, management does not anticipate any losses
relative to such arrangements.
(3) Income Taxes
Under an intercompany tax-sharing agreement with its parent, FGIC-SPI is
included in the consolidated Federal income tax returns filed by GE Capital.
FGIC-SPI provides for taxes as if it filed a separate tax return in accordance
with SFAS No. 109.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity fees are received up-front at the inception of the contract
and in installments over the life of the contract. Up-front fees are earned
on a straight-line basis over the life of the liquidity commitment, and
installment fees are earned straight-line over the installment period.
For the nine months ended September 30, 1997, FGIC-SPI earned liquidity
fees of $7,525,523 compared to $8,991,230 for the nine months ended 1996.
FGIC-SPI incurred $632,157 and $258,218 of general and administrative
expenses for the nine months ended September 30,1997 and 1996, respectively.
The increase in general and administrative expenses is primarily due to an
increase in the number of facilities. The expenses incurred primarily
include fees associated with establishing the liquidity facilities.
Liquidity fees are received up-front at the inception of the contract and in
installments over the life of the contract. Up-front fees are earned
on a straight-line basis over the life of the liquidity commitment,
and installment fees are earned straight-line over the installment period.
For the third quarter of 1997, FGIC-SPI earned liquidity fees of $1,625,073
compared to $2,981,297 for the three months ended September 30, 1996.
FGIC-SPI incurred $320,905 and $103,569 of general and administrative expenses
for the three months ended September 30, 1997 and 1996, respectively. The
increase in general and administrative expenses is primarily due to an
increase in the number of facilities. The expenses incurred primarily
include fees associated with establishing the liquidity facilities.
PART II - Other Information
Item 1. Legal Proceedings
FGIC-SPI is not involved in any pending legal proceedings.
Item 2. Changes in Securities
Omitted.
Item 3. Defaults on Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
Omitted.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None.
b) Reports on Form 8-K
None.
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.
FGIC SECURITIES PURCHASE, INC.
------------------------------
(Registrant)
Date:____________________ ______________________________
Ann C. Stern
President (principal
executive officer)
Date:____________________ ______________________________
Christopher Jacobs
Treasurer (principal
financial and
accounting officer)
