<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No.1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-11030
-------
First USA, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 75-2291060
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1601 Elm Street, 47th Floor, Dallas, Texas 75201
- -------------------------------------------------------------------------------
(address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code 214-849-2110
------------
N/A
- -------------------------------------------------------------------------------
Former Name, Former Address and former Fiscal Year, If Changed Since Last Report
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
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
- -------------------------------------- ---------------------------------
Common Stock, $.01 par value 121,817,590 shares*
6 1/4% Mandatory Convertible Preferred
Stock, $.01 par value 5,750,000 shares
* As adjusted to reflect the 100% common stock dividend paid by the Company on
November 12, 1996.
<PAGE>
EXPLANATORY NOTE
As described in Note A to the Company's consolidated financial statements, the
Company has restated its financial statements to properly reflect the two items
described below. The restatement did not affect the Company's net cash flows,
liquidity or regulatory capital compliance, nor did the restatement have an
effect on the Company's fiscal year 1996 and 1995 net income. The restatement
did however have an effect on previously reported quarterly results for the 1996
and 1995 fiscal years.
The Company has previously not recorded gains on securitization transactions
consistent with the Company's belief and common industry assumption that such
gains would not be significant due to the relatively short life of the
outstanding balances and the narrow spread between the account yield and the sum
of the cost of servicing these accounts and investor yield on the
securitizations. As a result of a more detailed analysis of gains on all
securitizations of credit card receivable balances in connection with the
preparation for the adoption of Statement of Financial Accounting Standards No.
125, which is effective January 1, 1997, the Company has restated its financial
statements to recognize gains in those periods where the gains were significant.
In addition, the Company has been deferring the costs to solicit new accounts.
These costs were deferred and matched with the future revenues from these new
accounts over a twelve-month period. The average life of these new accounts,
including all annual renewals, is expected to be seven years. During the course
of a review of the Company's accounting policies in connection with the
Company's pending merger with Banc One Corporation ("Banc One"), the Company
learned that, while its deferred costs were paid to independent third parties,
these costs were not eligible for deferral and that its accounting policy
regarding such solicitation costs did not conform with the accounting policy of
Banc One. As a result, the Company has restated its financial statements to
expense these costs in the period such costs were incurred.
These changes had no material effect on net income for the three months ended
September 30, 1996 and decreased net income by $7.1 million, or $0.05 per share
for the three months ended September 30, 1995.
This Amendment No.1 on Form 10-Q/A to the Quarterly Report on Form 10-Q of the
Company for the fiscal quarter ended September 30, 1996 contains restated
financial statements (Item 1) and management's discussion and analysis of
financial condition and results of operations (Item 2) resulting from the above
accounting changes. In addition, earnings per share, dividends per share and
outstanding share data in Items 1 and 2 has been restated to reflect the
November 1996 two-for-one split of the Company's common stock paid in the form
of a 100% stock dividend. Each of the items included herein has been restated
in full.
<PAGE>
FIRST USA, INC.
FORM 10-Q/A QUARTERLY REPORT
Amendment No.1
Table of Contents
-----------------
PART I. F I N A N C I A L I N F O R M A T I O N Page
----
ITEM 1. FINANCIAL STATEMENTS.
Condensed Consolidated Balance Sheets -
September 30, 1996 (Unaudited) and June 30, 1996............. 3
Condensed Consolidated Statements of Income (Unaudited) -
Three Months Ended September 30, 1996 and 1995............... 4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended September 30, 1996 and 1995............... 5
Notes to Interim Condensed Consolidated Financial
Statements (Unaudited)....................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................ 9
PART II. O T H E R I N F O R M A T I O N
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Index of Exhibits............................................ 19
Reports on Form 8-K.......................................... 20
SIGNATURES............................................................ 21
<PAGE>
P A R T I. F I N A N C I A L I N F O R M A T I O N
FIRST USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 127,463 $ 254,553
Short-term investments 105,097 40,701
Federal funds sold 159,000 97,450
----------- -----------
Cash and cash equivalents 391,560 392,704
Investments, at cost (market value of $3,174,032 and $2,875,309
at September 30, 1996 and June 30, 1996, respectively) 3,197,142 2,903,091
Loans 3,903,464 3,564,434
Allowance for possible credit losses (76,617) (74,163)
----------- -----------
Net loans 3,826,847 3,490,271
Premises and equipment, net 136,015 116,666
Accrued interest receivable 55,702 51,558
Due from securitizations 233,923 182,462
Customer base intangible, net 56,691 70,008
Purchased merchant portfolios and goodwill, net 298,743 88,894
Other assets 472,103 412,847
----------- -----------
$ 8,668,726 $ 7,708,501
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank notes and other borrowings $ 3,978,696 $ 3,356,506
Interest-bearing deposits 1,429,566 1,460,321
Federal funds purchased 1,359,685 1,308,460
Accrued interest payable 50,328 60,246
Accrued expenses and other liabilities 617,715 355,943
Minority interest 52,401 53,145
----------- -----------
7,488,391 6,594,621
----------- -----------
Stockholders' equity
6 1/4% mandatory convertible preferred stock, $.01 par value 58 58
Common stock, $.01 par value 1,218 1,210
Additional paid-in capital 579,564 568,840
Retained earnings 599,495 543,772
----------- -----------
1,180,335 1,113,880
----------- -----------
$ 8,668,726 $ 7,708,501
=========== ===========
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements.
3
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------------
1996 1995
As Restated
----------- -----------
<S> <C> <C>
INTEREST INCOME
Loans $ 87,829 $ 72,008
Investments 50,370 40,406
Federal funds sold 1,959 2,293
----------- -----------
Total Interest Income 140,158 114,707
INTEREST EXPENSE
Bank notes and other borrowings 55,052 43,234
Deposits 20,763 32,692
Federal funds purchased 20,113 15,115
----------- -----------
Total Interest Expense 95,928 91,041
----------- -----------
NET INTEREST INCOME 44,230 23,666
PROVISION FOR POSSIBLE CREDIT LOSSES 29,627 21,231
----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE CREDIT LOSSES 14,603 2,435
OTHER OPERATING INCOME
Securitization income 253,872 232,127
Interchange income 11,532 3,318
Fee income 6,448 6,481
Other 44,157 20,220
----------- -----------
Total Other Operating Income 316,009 262,146
OTHER OPERATING EXPENSE
Postage, shipping, stationery and supplies 49,947 59,760
Salaries and employee benefits 50,516 31,244
Data processing and communications 34,551 23,749
Occupancy and equipment 15,775 9,986
Amortization of intangibles 15,151 13,773
Other 64,174 50,061
----------- -----------
Total Other Operating Expense 230,114 188,573
----------- -----------
INCOME BEFORE INCOME TAXES 100,498 76,008
PROVISION FOR INCOME TAXES 36,442 28,204
----------- -----------
NET INCOME $ 64,056 $ 47,804
=========== ===========
Net income per share $ 0.47 $ 0.36
=========== ===========
Weighted average common and common
equivalent shares outstanding 135,523,634 132,749,286
=========== ===========
Cash dividends paid per common share $ 0.045 $ 0.03
=========== ===========
Cash dividends paid per preferred share $ 0.498 $ 0.498
=========== ===========
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements
4
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 64,056 $ 47,804
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for possible credit losses 29,627 21,231
Provision for depreciation and amortization 32,392 25,602
Gains on securitization transactions, net of amortization (2,445) (36,406)
Changes in operating assets and liabilities:
Accrued interest receivable (4,144) 3,450
Accrued interest payable (9,918) (15,828)
Accrued expenses and other liabilities 149,495 2,254
Other operating activities (89,792) 107,588
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 169,271 155,695
INVESTING ACTIVITIES
Proceeds from maturities of investments 219,625 132,310
Purchases of investments (516,728) (315,328)
Net increase in loans, excluding acquisitions and sales (1,431,113) (1,753,621)
Proceeds from sales of loans 1,062,434 1,627,288
Purchases of merchant portfolios, processing services and other acquisitions (188,118) (36,274)
Purchases of premises and equipment (28,000) (15,495)
Other investing activities 52 (10,688)
----------- -----------
NET CASH USED FOR INVESTING ACTIVITIES (881,848) (371,808)
FINANCING ACTIVITIES
Dividends paid to common stockholders (5,469) (3,424)
Dividends paid to preferred stockholders (2,864) (2,864)
Issuance of common stock, net 5,234 1,806
Net payments to trustees relating to securitizations (4,016) (131,290)
Net increase in bank notes and other borrowings 698,078 534,021
Net decrease in interest-bearing deposits (30,755) (238,677)
Net increase in federal funds purchased 51,225 190,370
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 711,433 349,942
----------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,144) 133,829
Cash and cash equivalents at beginning of period 392,704 236,778
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 391,560 $ 370,607
=========== ===========
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements
5
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
First USA, Inc. and its subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For purposes of comparability, certain prior period
amounts have been reclassified. 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 three months ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the fiscal year ending June 30, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
Amendment No. 1 on Form 10-K/A to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996.
On January 19, 1997, the Company and Banc One Corporation ("Banc One") entered
into an agreement and plan of merger pursuant to which the Company would merge
with and into Banc One and Banc One would be the surviving corporation. The
merger is subject to approvals by the Shareholders of the Company and Banc One,
the receipt of all required regulatory approvals and the making of all necessary
governmental filings.
The Company has restated its financial statements to properly reflect the two
items described below. The restatement did not affect the Company's net cash
flows, liquidity or regulatory capital compliance, nor did the restatement have
an effect on the Company's fiscal year 1996 and 1995 net income. The restatement
did however have an effect on previously reported quarterly results for the 1996
fiscal year.
The Company has previously not recorded gains on securitization transactions
consistent with the Company's belief and common industry assumption that such
gains would not be significant due to the relatively short life of the
outstanding balances and the narrow spread between the account yield and the sum
of the cost of servicing these accounts and investor yield on the
securitizations. As a result of a more detailed analysis of gains on all
securitizations of credit card receivable balances in connection with the
preparation of the adoption of Statement of Financial Accounting Standards No.
125, which is effective January 1, 1997, the Company has restated its financial
statements to recognize gains in those periods where the gains were significant.
In addition, the Company has been deferring the costs to solicit new accounts.
These costs were deferred and matched with the future revenues from these new
accounts over a twelve-month period. The average life of these new accounts,
including all annual renewals, is expected to be seven years. During the course
of a review of the Company's accounting policies in connection with the
Company's pending merger with Banc One, the Company learned that, while its
deferred costs were paid to independent third parties, these costs were not
eligible for deferral and that its accounting policy regarding such solicitation
costs did not conform with the accounting policy of Banc One. As a result, the
Company has restated its financial statements to expense these costs in the
period such costs were incurred.
These changes had no material effect on net income for the three months ended
September 30, 1996 and decreased net income by $7.1 million, or $0.05 per share
for the three months ended September 30, 1995.
On October 16, 1996, the Company's Board of Directors approved a two-for-one
common stock split and increased the quarterly cash dividend to $0.06 per share
on a post-split basis. The two-for-one common stock split was effected in the
form of a 100% stock dividend paid on November 12, 1996, to stockholders of
record on October 28, 1996. The financial statements presented reflect the
retroactive treatment of this stock split.
NOTE B - ALLOWANCE FOR POSSIBLE CREDIT LOSSES
The activity in the allowance for possible credit losses is as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
----------------------
1996 1995
-------- --------
(Dollars in thousands)
<S> <C> <C>
Beginning allowance for possible credit losses $ 74,163 $ 66,000
Provision for possible credit losses 29,627 21,231
Recoveries of loans previously charged off 16,804 1,602
Loans charged off (43,977) (20,833)
======== ========
Ending allowance for possible credit losses $ 76,617 $ 68,000
======== ========
Ending allowance as a % of total loans 2.0% 2.1%
======== ========
</TABLE>
NOTE C - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
At September 30, 1996 and June 30, 1996, the Company had interest rate swap
agreements with notional amounts totaling $2.2 billion and $2.1 billion,
respectively. The Company enters into interest rate swap agreements to convert
fixed rate liabilities to floating rate liabilities as an efficient alternative
to issuing floating rate funding sources.
NOTE D - ASSET SECURITIZATION
The Company had outstanding securitizations of credit card loans of $16.0
billion and $15.2 billion at September 30, 1996 and June 30, 1996, respectively.
These transactions have been recorded as sales and the Company recognized
gains based upon the present value of the net interest income and credit card
fees less estimated credit losses and servicing fees over the lives of the
securitized loans.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,"
which provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities based on an approach that
focuses on
6
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unuadited)
NOTE D - ASSET SECURITIZATION -- CONTINUED
control of the assets and extinguishment of the liabilities. In addition, the
statement provides standards for distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings and provides
implementation guidance for securitization transactions and repurchase
agreements. The statement is effective for transactions occurring subsequent to
December 31, 1996. The Company is currently evaluating the impact of this
statement.
NOTE E - BUSINESS COMBINATIONS AND MERCHANT PORTFOLIO PURCHASES
On August 19, 1996, First USA Paymentech, Inc. ("Paymentech") purchased for
approximately $170 million all of the outstanding stock of GENSAR Holdings Inc.
("GENSAR"). GENSAR is one of the nation's largest providers of third party
credit and debit authorization services, processing approximately 300 million
transactions during the twelve months ended June 30, 1996. The acquisition also
includes a merchant processing portfolio which has approximately $1 billion in
annual sales volume. The acquisition was accounted for as a purchase, and
accordingly, its results were included in Paymentech's results of operations
from the date of acquisition. The pro forma effects of this acquisition, as if
it had occurred at the beginning of the periods presented, were not material and
therefore have not been included.
NOTE F - NET INCOME PER SHARE
Net income per share is calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------
1996 1995
----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C>
Net income $ 64,056 $ 47,804
=========== ===========
Average common shares outstanding 121,478,312 117,894,384
Common stock equivalents:
Stock options 4,462,372 5,271,952
Mandatory convertible preferred stock 9,582,950 9,582,950
----------- -----------
Weighted average common and common
equivalent shares outstanding 135,523,634 132,749,286
=========== ===========
Net income per share $ 0.47 $ 0.36
=========== ===========
</TABLE>
7
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unuadited)
NOTE G - SUBSEQUENT EVENTS
In December 1996, Paymentech completed a public offering pursuant to which
the Company and Paymentech sold 4.4 million and 3.1 million shares of Paymentech
common stock, respectively, for $34 per share. As a result of the offerings, the
Company's ownership in Paymentech was reduced from 77% to 57%.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is one of the nation's largest providers of Visa and MasterCard
services through its principal operating subsidiaries, First USA Bank and First
USA Paymentech, Inc. ("Paymentech"). First USA Bank is an issuer of Visa and
MasterCard credit cards with approximately 15.1 million credit cards issued and
$19.8 billion in managed credit card loans outstanding at September 30, 1996.
First USA Bank's profitability is affected by loan growth, interest rate spread,
Cardmember usage, credit quality and marketing expenses. Paymentech, through its
wholly owned subsidiaries, is the third largest payment processor of bankcard
transactions in the United States, according to published industry sources, with
approximately $30.9 billion in sales volume processed and approximately 574.2
million bankcard transactions for the fiscal year ended June 30, 1996. In
addition, Paymentech markets and issues to businesses and other entities
commercial cards that facilitate business-to-business payment procedures and
reporting, replacing traditional direct payment methods.
The Company's newest operating subsidiary, First USA Federal Savings Bank
("FSB"), conducts its operations as a direct bank, offering customers banking
products via phone, mail and other electronic distribution channels. FSB's
current offerings of financial products include mortgages, limited testing of
auto and homeowners' insurance and unsecured installment loans and soon is
expected to include remote banking, retail certificates of deposit, auto loans
and other financial products.
RESULTS OF OPERATIONS
Net income for the quarter ended September 30, 1996, was $64.1 million, or
$0.47 per share. Included in net income for the quarter ended September 30,
1996 is a one-time merger, integration and impairment charge of $15.5 million,
recorded by Paymentech, related to the acquisition of GENSAR Holdings, Inc. This
one-time charge reduced net income by $7.4 million, or $0.06 per share. Income,
excluding the one-time charge, was $71.5 million, or $0.53 per share, compared
with net income of $47.8 million, or $0.36 per share, for the quarter ended
September 30, 1995. The increase in operating results is attributable to the
35.8% growth of average managed loans from $14.1 billion to $19.1 billion,
increased credit card charge volume, an increase in managed loan yield, a
decrease in cost of funds, an increase in gains recorded on securitization
transactions and increased payment processing volume. These increases were
partially offset by increased net credit losses and an increase in certain costs
incurred to solicit new accounts.
On-balance-sheet loans increased from $3.3 billion at September 30, 1995 to
$3.9 billion as of September 30, 1996, which reflects the results of the
Company's direct solicitations, partially offset by the Company's completion of
securitizations of $5.2 billion.
MANAGED PORTFOLIO REPORTING AND ANALYSIS
It is management's practice to analyze its financial performance on a
"managed" portfolio basis, in addition to analyzing information as reported
under generally accepted accounting principles. The effect of securitizing loans
is to remove these loans from the balance sheet and to record a gain based upon
the present value of net interest income and credit card fees less estimated
credit losses over the lives of the securitized loans. Managed loan statistics
include loans sold in securitization transactions and the Company's on-balance-
sheet loan portfolio. The Company's consolidated statements of income and
balance sheets are adjusted to eliminate the effect of securitizing loans to
analyze the data on a "managed" portfolio basis.
9
<PAGE>
The following table depicts the changes in the Company's key financial data as a
result of securitizing loans as of and for the three months ended September 30,
1996 and 1995. The As Reported information is derived from consolidated
financial statements which have been prepared in conformity with generally
accepted accounting principles. Managed loan data include loans sold in
securitization transactions and the Company's on-balance-sheet loan
portfolio.
<TABLE>
<CAPTION>
Three Months Ended September 30,
-------------------------------------------------------
1996 1995
------------------------ --------------------------
As Reported Managed As Reported Managed
----------- ----------- ----------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Income Statement Statistics:
- ---------------------------
Net interest income $ 44,230 $ 391,153 $ 23,666 $ 229,109
Other operating income:
Securitization income 253,872 -- 232,127 --
Interchange income 11,532 56,848 3,318 43,448
Fee income 6,448 53,324 6,481 38,798
Other 44,157 44,157 20,220 20,220
----------- ----------- ----------- -----------
Total other operating income 316,009 154,329 262,146 102,466
Provision for possible credit losses 29,627 217,315 21,231 103,400
----------- ----------- ----------- -----------
Net revenue after provision for
possible credit losses $ 330,612 $ 328,167 $ 264,581 $ 228,175
=========== =========== =========== ===========
Balance Sheet and Other Statistics:
- ----------------------------------
Average loans $ 3,783,819 $19,141,915 $ 3,372,780 $14,099,158
End of period loans 3,903,464 19,929,764 3,303,924 15,034,832
Securitizations -- 16,026,300 -- 11,730,908
Loan yield 9.28% 13.87% 8.54% 12.69%
Cost of funds 5.84 5.89 6.38 6.31
Delinquency rate 3.35 5.03 2.55 3.29
Net credit loss rate 2.87 4.49 2.28 2.88
</TABLE>
NET INTEREST INCOME
For the three months ended September 30, 1996, net interest income was $44.2
million, an increase of 86.9% from net interest income of $23.7 million for the
three months ended September 30, 1995. This increase was due to an increase in
loan interest income of $15.8 million primarily due to growth in on-balance-
sheet loans and increased yield. Interest income from investments, excluding
interest income from cash equivalents, increased $9.6 million due to an increase
in average investments from $2.3 billion to $3.0 billion, partially offset by a
decrease in yield from 6.76% to 6.55% for the three months ended September 30,
1995 and 1996, respectively. Interest expense increased $4.9 million due to an
increase in average interest-bearing liabilities from $5.7 billion to $6.5
billion, to supplement the funding of loan growth, which is primarily funded by
securitizations. This increase was partially offset by a decrease in cost of
funds from 6.38% to 5.84% for the three months ended September 30, 1995 and
1996, respectively.
Net interest margin on a managed basis was 7.00% for the three months ended
September 30, 1996, compared with 5.51% for the three months ended September 30,
1995. The increase is due to managed loan interest yield increasing from 12.69%
for the three months ended September 30, 1995 to 13.87% for
10
<PAGE>
NET INTEREST INCOME -- CONTINUED
the three months ended September 30, 1996, reflecting changes in the overall
pricing distribution of the credit card loan portfolio. In addition, cost of
funds decreased from 6.31% for the three months ended September 30, 1995 to
5.89% for the three months ended September 30, 1996.
The table provides an analysis of net interest income, average balance sheet
data, net interest margin and interest rate spread for the three month periods
ended September 30, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------------------------------------------------------------
1996 1995
------------------------------------- -------------------------------------------
Average Average Average Average
Balance Rate Interest Balance Rate Interest
------------- ------- --------- ----------- ------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets
Cash equivalents $ 101,967 7.07% $ 1,817 $ 59,202 9.64% $ 1,438
Federal funds sold 143,050 5.43 1,959 153,943 5.91 2,293
Investments 2,963,192 6.55 48,553 2,307,608 6.76 38,968
Loans 3,783,819 9.28 87,829 3,372,780 8.54 72,008
------------ ----- -------- ------------ ----- ---------
Total earning assets 6,992,028 8.02% $140,158 5,893,533 7.79% $ 114,707
Other assets 1,191,319 933,562
------------ ------------
Total assets $ 8,183,347 $ 6,827,095
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities
Bank notes and other borrowings $ 3,640,018 6.00% $ 55,052 $ 2,669,317 6.43% $ 43,234
Interest-bearing deposits 1,416,847 5.81 20,763 1,985,475 6.53 32,692
Federal funds purchased 1,457,526 5.47 20,113 1,006,645 5.96 15,115
------------ ----- -------- ------------ ----- ---------
Total interest-bearing
liabilities 6,514,391 5.84% $ 95,928 5,661,437 6.38% $ 91,041
Other liabilities 527,513 380,841
------------ ------------
Total liabilities 7,041,904 6,042,278
Stockholders' equity 1,141,443 784,817
------------ ------------
Total liabilities and
stockholders' equity $ 8,183,347 $ 6,827,095
============ ===========
----- --------- ----- ---------
Net interest margin and net
interest income (a) 2.53% $ 44,230 1.61% $ 23,666
====== ========== ===== ==========
Interest rate spread (b) 2.18% 1.41%
====== ======
OFF-BALANCE-SHEET TRANSACTIONS
Average securitized credit card loans $15,358,096 15.00% $ 575,809 $10,726,378 13.99% $ 375,174
Securitized loans cost of funds 15,358,096 5.91 228,886 10,726,378 6.28 169,731
----- -------- ----- ---------
Securitized loans net interest
rate spread 9.09% $ 346,923 7.71% $ 205,443
====== ========= ====== =========
INCLUDING SECURITIZED
CREDIT CARD LOANS
Total earning assets $22,350,124 12.81% $ 715,967 $16,619,911 11.79% $ 489,881
Interest-bearing liabilities 21,872,487 5.89 324,814 16,387,815 6.31 260,772
----- -------- ----- ---------
Net interest margin and net interest
income (a) 7.00% $ 391,153 5.51% $ 229,109
====== ========= ====== ==========
Interest rate spread (b) 6.92% 5.48%
====== ======
</TABLE>
- ------------------------
(a) Net interest margin is computed by dividing net interest income by average
total earning assets.
(b) Interest rate spread is the average earning assets rate minus the average
interest-bearing liabilities rate.
11
<PAGE>
OTHER OPERATING INCOME
Other operating income was $316.0 million for the three months ended September
30, 1996 compared with $262.1 million for the three months ended September 30,
1995. The three months ended September 30, 1996 included a $21.7 million
increase in securitization income, due to gains associated with the 43.2%
increase in average securitized loans, partially offset by a slight reduction in
the net interest rate spread used to calculate gains on the securitized loans,
and a $23.9 million increase in other operating income resulting primarily from
increased payment processing volume.
OTHER OPERATING EXPENSES
Other operating expenses, excluding amortization of intangibles, increased
23.0% to $215.0 million for the three months ended September 30, 1996, versus
$174.8 million for the three months ended September 30, 1995. Data processing
and communications increased $10.8 million due primarily to increased marketing
costs associated with loan solicitations and increased accounts, transaction
volumes and balances, resulting primarily from the 35.8% increase in average
managed loans. Other expenses increased $14.1 million due primarily to the
Paymentech one-time charge. These increases were offset by a decrease in
postage, shipping, stationery and supplies due to the high level of mail
solicitations which occurred during the quarter ended September 30, 1995.
Salaries and employee benefits increased $19.3 million primarily due to the
increase in number of employees. Occupancy and equipment expenses increased $5.8
million primarily due to facility expansions.
INTANGIBLES
The Company's consolidated balance sheets include a customer base intangible
which represents the excess of allocable amounts paid over the stated amount of
the credit card loans acquired, primarily those acquired when the Company was
acquired by a management-led investor group in 1989. The customer base
intangible is amortized over the estimated periods to be benefited (generally
seven to eleven years) on a straight-line basis based on independent portfolio
valuation studies. The amortization of the customer base intangible is
primarily a tax deductible item for which the Company realizes a reduction in
federal tax payments. The examination division of the Internal Revenue Service
("IRS") has completed an examination for fiscal years 1990, 1991 and 1992 and
proposed to limit the Company's intangible tax deductions. The Company
disagreed with the proposal and is pursuing a resolution of the matter through
the IRS appeals process and may pursue it further through litigation, if
necessary. At the present time, if it impossible to predict the outcome
concerning the Company's amortization of its intangible; however, the Company
believes it has strong arguments in support of its position and expects that
this challenge will not have a material impact on the Company.
The balance sheet also includes purchased merchant portfolios and goodwill,
resulting primarily from acquisitions by Paymentech. Purchased merchant
portfolios and goodwill increased from $88.9 million at June 30, 1996 to $298.7
million at September 30, 1996, due primarily to the acquisition of GENSAR
Holdings, Inc. ("GENSAR") during the three months ended September 30, 1996.
ASSET QUALITY
The Company's delinquency and net credit loss rates at any time reflect, among
other factors, the quality of the credit card loans, the average seasoning of
the Company's accounts, the success of the Company's collection efforts and
general economic conditions.
As a result of a slower rate of growth, intense competition and the overall
softening in consumer credit, delinquency and net credit loss rates for the
Company trended higher during the quarter. Over the past year, new unseasoned
loans have become a smaller percentage of managed credit card loans, which has
contributed to the increase in managed delinquency and managed credit card loss
rates. In light of these conditions, the Company continued to tighten and
refine credit underwriting. The Company believes that delinquency and net
credit loss rates will trend consistent with industry levels. The managed
delinquency rate at September 30, 1996, was 5.03%, and the managed net credit
loss rate for the first quarter of fiscal year 1997 was 4.49%. The Company's
focus continues to be to optimize the profitability of each account within the
context of acceptable risk characteristics. The Company has
12
<PAGE>
ASSET QUALITY -- CONTINUED
developed a credit process through the experience of numerous marketing, credit
and risk management tests which provides the Company with a reliable basis for
predicting the asset quality of new accounts. The Company also believes that
its frequent and early contact with delinquent customers, as well as active
portfolio management, has a significant impact on predicting delinquency trends
and managing net credit losses.
Delinquencies
The following table represents the delinquency trends of the Company's loans
as reported for financial purposes and for managed loans. An account is
contractually delinquent if the minimum payment is not received by the billing
date. It is the Company's policy to accrue interest and fee income on all
credit card accounts, except as specified below, until the account is charged
off. In certain situations where an account becomes delinquent and a legitimate
hardship exists, a loan may qualify to be placed on nonaccrual status, provided
that the account is closed and the credit card is returned. All hardship
situations result in either a charge off of the account or a re-establishment to
reliable paying status. The Company has stringent policies governing the
placement of accounts into hardship and the ultimate disposition of these
accounts.
<TABLE>
<CAPTION>
At September 30, 1996 At June 30, 1996
------------------------- --------------------------
Percent of Percent of
Loans Total Loans Loans Total Loans
----------- ----------- ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Managed Loans
- -------------
Loans outstanding $19,929,764 100.00% $18,727,825 100.00%
=========== ====== =========== ======
Loans delinquent
35 to 64 days $ 344,079 1.72% $ 272,496 1.46%
65 to 94 days 202,435 1.02 159,814 0.85
95 or more days 456,438 2.29 378,193 2.02
----------- ------ ----------- ------
Total $ 1,002,952 5.03% $ 810,503 4.33%
=========== ====== =========== ======
As Reported
- -----------
Loans outstanding $ 3,903,464 100.00% $ 3,564,434 100.00%
=========== ====== =========== ======
Loans delinquent
35 to 64 days $ 45,041 1.15% $ 37,221 1.04%
65 to 94 days 26,370 0.68 21,182 0.60
95 or more days 59,348 1.52 50,497 1.42
----------- ------ ----------- ------
Total $ 130,759 3.35% $ 108,900 3.06%
=========== ====== =========== ======
</TABLE>
Net Credit Losses
Net credit losses include the principal amount (excluding accrued
finance charges and fees) of losses resulting from Cardmembers unwilling or
unable to pay, as well as bankrupt and deceased accounts, less current period
recoveries. Loans are charged off prior to the end of the seventh billing cycle
after having become contractually past due unless a payment has been received
sufficient to bring the account into a different delinquency category or bring
the account current.
13
<PAGE>
Net Credit Losses -- continued
The following table presents the Company's net credit losses for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------
1996 1995
----------- -----------
(Dollars in Thousands)
<S> <C> <C>
Managed Loans
- -------------
Average loans outstanding $19,141,915 $14,099,158
Net credit losses $ 214,861 $ 101,400
Net credit losses as a percentage
of average loans outstanding 4.49% 2.88%
As Reported
- -----------
Average loans outstanding $ 3,783,819 $ 3,372,780
Net credit losses $ 27,173 $ 19,231
Net credit losses as a percentage
of average loans outstanding 2.87% 2.28%
</TABLE>
PROVISION AND ALLOWANCE FOR POSSIBLE CREDIT LOSSES
The provision for possible credit losses includes current period credit losses
and an amount which, in the judgment of management, is necessary to maintain the
allowance for possible credit losses at a level that reflects known and inherent
risks in the loan portfolio. For the three months ended September 30, 1996, the
Company's provision for possible credit losses was $29.6 million, which included
charges of $2.5 million to increase the allowance for possible credit losses.
On an annualized basis, this provision was 3.13% of average loans outstanding.
This compared to a provision of $21.2 million for the three months ended
September 30, 1995, which on an annualized basis was 2.52% of average credit
card loans outstanding.
FIRST USA PAYMENTECH, INC.
Paymentech recorded a net loss of $3.3 million, or $0.10 per share, for the
quarter ended September 30, 1996. Paymentech's results of operations for the
quarter ended September 30, 1996, include a one-time, merger, integration and
impairment charge of $15.5 million, related to the acquisition of GENSAR
Holdings, Inc. This one-time charge reduced Paymentech's net income by $9.7
million, or $0.30 per share. Excluding the effects of the one-time charge,
Paymentech's net income increased 827.4% to $6.4 million, or $0.20 per share,
for the quarter ended September 30, 1996, compared with net income of $0.7
million, or $0.03 per share, for the quarter ended September 30, 1995. Net
revenue increased 66.4% to $39.6 million compared with $23.8 million for the
prior year period. During the September 1996 quarter, Paymentech processed
approximately $9.0 billion in sales volume in approximately 263.6 million total
transactions.
On August 19, 1996, Paymentech purchased for approximately $170 million all of
the outstanding stock of GENSAR. GENSAR is one of the nation's largest
providers of third party credit and debit authorization services, processing
approximately 300 million transactions during the twelve months ended June 30,
1996. The acquisition also included a merchant processing portfolio which has
approximately $1 billion in annual sales volume. The acquisition was accounted
for as a purchase, and accordingly, its results were included in Paymentech's
results of operations from the effective date of the acquisition.
14
<PAGE>
FIRST USA PAYMENTECH, INC. -- CONTINUED
Paymentech funded the GENSAR purchase and subsequent payoff of GENSAR's debt
with proceeds from its initial public offering ($75 million), a loan from the
Company ($25 million) and non-interest-bearing notes payable to the previous
shareholders of GENSAR ($100 million) due October 18, 1996.
In March 1996, Paymentech completed initial public offerings of 7.3 million
shares of its common stock. At September 30, 1996, Paymentech had 31.7 million
shares outstanding of which the Company owned 24.4 million shares, or
approximately 77%.
In December 1996, Paymentech completed a public offering pursuant to which the
Company and Paymentech sold 4.4 million and 3.1 million shares of Paymentech
common stock, respectively, for $34 per share. As a result of the offerings, the
Company's ownership in Paymentech was reduced from 77% to 57%.
In February 1996, Paymentech entered into a $100 million revolving credit
facility payable to a bank syndicate. The Paymentech credit facility bears
interest based on LIBOR plus 0.35% to 0.90% and commitment fees ranging from
0.15% to 0.30% on the unused portion, based on Paymentech's debt to
capitalization ratio, payable quarterly. The Paymentech credit facility expires
in February 1999, with the option of two one-year extensions. First USA
Financial, Inc., a wholly owned subsidiary, is a guarantor to the Paymentech
credit facility. The Paymentech credit facility provides Paymentech and the
Company a source of additional liquidity to manage cash flow, provide capital to
subsidiaries for expansion and for other corporate uses. Under the Paymentech
credit facility, Paymentech loans to the Company cannot exceed $25 million. At
September 30, 1996, there were no borrowings under the Paymentech credit
facility, and none of the covenants would have had the effect of restricting
Paymentech's ability to pay dividends. In October 1996, Paymentech refinanced
the $100 million note payable to the former shareholders of GENSAR through the
Paymentech credit facility, and subsequently increased the line of credit
available under the Paymentech credit facility to $200 million.
FUNDING AND LIQUIDITY
Traditional asset liquidity is provided by cash, cash equivalents and
investments. These items represented 41.4%, 42.8%, and 40.0% of the Company's
assets as of September 30, 1996, June 30, 1996, and September 30, 1995,
respectively.
The Company had securitized loans of $16.0 billion, $15.2 billion and $11.7
billion at September 30, 1996, June 30, 1996, and September 30, 1995,
respectively. During the three months ended September 30, 1996, the Company
completed securitizations of approximately $602.4 million. At September 30,
1996, securitized loans had a weighted average remaining life of 3.4 years and a
weighted average cost of funds of approximately 5.78%. The market for
securities backed by receivables is a reliable, efficient and cost-effective
source of funds, which the Company plans to continue to use as a source of
funding.
When securitized loans amortize, First USA Bank's funding requirements
increase accordingly. The Company plans to fund the amortization of
securitizations in the future through securitization of additional loans,
issuance of bank and deposit notes, acceptance of additional deposits and the
use of other bank liabilities.
The Company had $1.9 billion in bank notes outstanding at September 30, 1996
and June 30, 1996. At September 30, 1996, bank notes had average maturities of
1.8 years and an average cost of 5.95%. In addition, the Company had
approximately $1.2 billion and $1.0 billion of term federal funds purchased at
September 30, 1996 and June 30, 1996, respectively. The average maturities of
the term federal funds purchased were four months at September 30, 1996 with an
average cost of 5.69%.
15
<PAGE>
FUNDING AND LIQUIDITY -- CONTINUED
Interest-bearing deposits, which primarily represent brokered and directly
placed deposits, totaled $1.4 billion at September 30, 1996 and $1.5 billion at
June 30, 1996. At September 30, 1996, interest-bearing deposits had an average
cost of 5.77%. Interest-bearing deposits of less than $100,000 were issued by
Financial Services. The maturity distribution for interest-bearing deposits is
set forth in the following table.
<TABLE>
<CAPTION>
At September 30, 1996
-----------------------------
Amount Percent
---------- ---------
(Dollars in Thousands)
<S> <C> <C>
Equal to or more than $100,000
- ------------------------------
Less than three months $ 191,146 13.44%
Three to six months 255,852 17.98
Six to twelve months 499,258 35.09
More than twelve months 476,471 33.49
---------- ------
1,422,727 100.00
Less than $100,000
- ------------------
Less than three months 189 2.76
Three to six months 2,973 43.47
Six to twelve months 3,083 45.08
More than twelve months 594 8.69
---------- ------
6,839 100.00
Total
- -----
Less than three months 191,335 13.38
Three to six months 258,825 18.11
Six to twelve months 502,341 35.14
More than twelve months 477,065 33.37
---------- ------
$1,429,566 100.00%
========== ======
</TABLE>
In December 1995, First USA Financial, Inc. entered into a $300 million, five-
year, unsecured revolving credit facility with a bank syndicate. The credit
facility bears interest based on LIBOR plus 0.25% to 0.65% and commitment fees
ranging from 0.125% to 0.25% on the unused portion based on First USA Financial,
Inc.'s debt to capitalization ratio. The revolving credit facility provides a
source of additional liquidity to manage cash flow, provide capital to
subsidiaries for expansion and for other corporate uses. At September 30, 1996,
borrowings under the credit facility were $32.0 million and the applicable rates
were 5.69% and 0.125%, respectively.
At September 30, 1996, the Company had interest rate swap agreements with
commercial banks having a total notional principal amount of $2.2 billion. The
Company enters into interest rate swap agreements to convert fixed rate
liabilities to floating rate liabilities as an efficient alternative to issuing
floating rate funding sources.
The Company implemented a Dividend Reinvestment and Stock Purchase Plan (the
"DRIP Plan") in December 1995, pursuant to which participants may purchase
shares of the Company's common stock by automatically reinvesting quarterly cash
dividends or by making optional cash investments, and pursuant to which
participants may also sell or otherwise dispose of common stock acquired under
the DRIP Plan. As of September 30, 1996, approximately 388,000 shares of common
stock had been issued by the Company pursuant to the DRIP Plan, which generated
net proceeds of approximately $21.3 million. From the inception of the DRIP
Plan through September 30, 1996, in excess of 90% of such
16
<PAGE>
FUNDING AND LIQUIDITY -- CONTINUED
common stock purchases were made by financial intermediaries, who may have
resold such shares of common stock shortly before or after acquiring them
(including coverage of short positions). The Company has not extended to any
such purchasers any rights or privileges other than those to which they would
otherwise be entitled as participants or prospective participants in the DRIP
Plan, nor has the Company entered into any agreements with any such persons
regarding their purchases of such shares or any resales or distributions
thereof.
INVESTMENTS
The Company's investments, which totaled $3.2 billion and $2.9 billion at
September 30, 1996 and June 30, 1996, respectively, consist primarily of
variable rate U.S. government agency mortgage-backed securities which enhance
yield and provide a source of secondary liquidity through repurchase agreements
and are primarily classified as held-to-maturity. The average maturity based on
historical payment rates of the investment portfolio at September 30, 1996 was
approximately 6.5 years.
The following table presents maturities of the investment portfolio at
September 30, 1996 and reflects scheduled payments and expected prepayments
based on historical payment rates.
<TABLE>
<CAPTION>
Amount Percentage Yield
---------- ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C>
Within 1 year $ 418,160 13.08% 6.56%
1 - 5 years 1,238,188 38.73 6.58
5 - 10 years 803,780 25.14 6.59
After 10 years 737,014 23.05 6.54
---------- ------ ----
Total carrying value $3,197,142 100.00% 6.57%
========== ====== ====
</TABLE>
CAPITAL ADEQUACY
The Company's stockholders' equity increased to $1.2 billion at September
30, 1996, compared with $1.1 billion at June 30, 1996, primarily as a
result of retained earnings. The Company's tangible equity decreased to $824.9
billion at September 30, 1996, from $955.0 million at June 30, 1996 due
primarily to the addition of intangible assets of approximately $210 million as
a result of Paymentech's acquisitions.
First USA Bank's stockholder's equity increased from $908.0 million at June
30, 1996 to $969.0 million at September 30, 1996, primarily as a result of
retained earnings, partially offset by dividends paid to the Company. First USA
Bank is subject to the capital adequacy guidelines adopted by the Federal
Deposit Insurance Corporation. At September 30, 1996, First USA Bank's risk-
based total capital ratio was 25.21%, its tier 1 capital ratio was 20.64%, and
its leverage ratio was 12.19%. At September 30, 1996, First USA Bank met the
requirements of a "well capitalized" institution.
INCOME TAXES
The Company's consolidated provision for income taxes includes state and
federal income tax components. The Company's effective income tax rate was
36.3% for the three months ended September 30, 1996, compared with 36.9% for the
three months ended September 30, 1995.
17
<PAGE>
CAPITAL EXPENDITURES
The Company spent $77.1 million and $28.0 million for capital expenditures for
fiscal 1996 and the three months ended September 30, 1996, respectively.
Capital expenditures are made generally to accommodate growth in loans and
payment processing volume, provide for increased operating efficiencies and
support future growth in the commercial card market. In addition, the Company
has incurred capital expenditures related to facility expansions and additions.
SELECTED RATIOS
The following table presents certain financial ratios, as restated, for the
Company and First USA Bank for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------
1996 1995
------ ------
<S> <C> <C>
First USA, Inc.
Return on assets (a) 3.50% 2.80%
Return on stockholders' equity (a) 25.06 24.36
Average stockholders' equity to average assets 13.95 11.50
First USA Bank
Return on assets 4.11% 3.29%
Return on stockholder's equity 34.04 33.50
Average stockholder's equity to average assets 12.07 9.83
Net interest margin 2.43 1.58
Net interest margin (managed) 7.00 5.51
</TABLE>
(a) Excludes the Paymentech one-time merger, integration and impairment charge
of $15.5 million primarily related to the acquisition of GENSAR. This
one-time charge reduced the Company's net income by $7.4 million or $0.06
per share.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
INDEX OF EXHIBITS
-----------------
a. Exhibits
The following exhibits are incorporated by reference or filed herewith:
Exhibit Number Description
- -------------- ----------------------------------------
3.1 Restated Certificate of Incorporation
of the Company, filed as Exhibit 3.1.1
to the Company's Annual Report on Form
10-K for the Company's Fiscal Year
Ended June 30, 1992 and incorporated by
reference herein.
3.1.1 Certificate of Correction of the
Restated Certificate of Incorporation
of the Company, filed as Exhibit 3.1.1
to the Company's Quarterly Report on
Form 10-Q for the Fiscal Quarter ended
September 30, 1993 and incorporated by
reference herein.
3.1.2 Certificate of Amendment to the
Restated Certificate of Incorporation
of the Company, filed as Exhibit 3.1.2
to the Company's Quarterly Report on
Form 10-Q for the Fiscal Quarter ended
September 30, 1993 and incorporated by
reference herein.
3.2 By-Laws of the Company, filed as
Exhibit 3.2 to the Company's
Registration Statement on Form
S-1 (No. 33-45110) and incorporated by
reference herein.
4.1 Certificate of the Powers,
Designations, Preferences and Rights of
the 6 1/4% PRIDES, Mandatory
Convertible Preferred Stock, filed as
Exhibit 4.1 to the Company's Annual
Report on Form 10-K for the fiscal year
ended June 30, 1996 and incorporated by
reference herein.
4.2 Form of Global Bank Note, Floating
Rate, filed as Exhibit 4.3 to the
Company's Quarterly Report on Form 10-Q
for the Fiscal Quarter ended December
31, 1995 and incorporated by reference
herein.
4.3 Form of Global Bank Note, Fixed Rate,
filed as Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the
Fiscal Quarter ended December 31, 1995
and incorporated by reference herein.
4.4 Form of Global Deposit Note, Floating
Rate, filed as Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q
for the Fiscal Quarter ended December
31, 1995 and incorporated by reference
herein.
19
<PAGE>
4.5 Form of Global Deposit Note, Fixed
Rate, filed as Exhibit 4.6 to the
Company's Quarterly Report on Form 10-Q
for the Fiscal Quarter ended December
31, 1995 and incorporated by reference
herein.
10.11.4 Fourth Amendment to the 1991 Stock Option
Plan, effective October 16, 1996, filed as
Exhibit 10.11.4 to the Company's Quarterly
Report on Form 10-Q for the Fiscal Quarter
ended September 30, 1996 and incorporated
by reference herein.
10.16.26 Series 1996-4 Supplement, dated as of
August 6, 1996 between First USA Bank
and The Bank of New York (Delaware), as
trustee, with respect to the First USA
Credit Card Master Trust, Floating Rate
Asset Backed Certificates, Series
1996-4, filed as Exhibit 99 to the
Company's Current Report on Form 8-K,
filed on August 21, 1996 and
incorporated by reference herein.
11* Computation of Net Income per Share.
27* Financial Data Schedule
- -------------------------
* Filed herewith.
b. Reports on Form 8-K filed during the quarter ended September 30, 1996:
Form 8-K filed August 21, 1996:
Item 5. Other Events - Securitization of credit card receivables
Item 7. Financial Information and Exhibits
20
<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.
Date: April 24, 1997
FIRST USA, INC.
By: /s/ Jack M. Antonini
-----------------------------------------------
Jack M. Antonini
Vice Chairman and Chief Financial Officer
(Principal Financial Officer and Duly Authorized
Officer)
21
<PAGE>
INDEX OF EXHIBITS
-----------------
Sequentially
Exhibit Number Description of Exhibit Numbered Page
- -------------- ---------------------- -------------
11 Computation of Net Income Per Share.
27 Financial Data Schedule.
22
<PAGE>
EXHIBIT 11
FIRST USA, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
THREE MONTHS ENDED SEPTEMBER, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Primary
- -------
Net income $ 64,056 $ 47,804
=========== ===========
Weighted average common and common
equivalent shares outstanding
Average common shares outstanding 121,478,312 117,894,384
Common stock equivalents:
Stock options 4,462,372 5,271,952
Mandatory convertible preferred stock 9,582,950 9,582,950
----------- -----------
Weighted average common and common
equivalent shares 135,523,634 132,749,286
=========== ===========
Net income per share $ 0.47 $ 0.36
=========== ===========
Fully diluted
- -------------
Net income $ 64,056 $ 47,804
=========== ===========
Weighted average common and common
equivalent shares outstanding
Average common shares outstanding 121,478,312 117,894,384
Common stock equivalents:
Stock options 4,772,636 5,834,512
Mandatory convertible preferred stock 9,582,950 9,582,950
----------- -----------
Weighted average common and common
equivalent shares 135,833,898 133,311,846
=========== ===========
Net income per share assuming full dilution $ 0.47 $ 0.36
=========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANT'S QUARTERLY REPORT
ON FORM 10-Q/A AMENDMENT NO. 1 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 391,560
<SECURITIES> 3,197,142
<RECEIVABLES> 3,903,464
<ALLOWANCES> 76,617
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 191,073
<DEPRECIATION> 55,058
<TOTAL-ASSETS> 8,668,726
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,408,262
0
58
<COMMON> 1,218
<OTHER-SE> 1,179,059
<TOTAL-LIABILITY-AND-EQUITY> 8,668,726
<SALES> 0
<TOTAL-REVENUES> 456,167
<CGS> 0
<TOTAL-COSTS> 326,042
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 29,627
<INTEREST-EXPENSE> 0<F2>
<INCOME-PRETAX> 100,498
<INCOME-TAX> 36,422
<INCOME-CONTINUING> 64,056
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,056
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0<F3>
<FN>
<F1> The consolidated balance sheet included in the Registrant's quarterly
report on Form 10-Q/A Amendment No. 1 is unclassified.
<F2> Interest expense is considered an operating expense for the Registrant
as the Registrant's primary source of income is interest earned on credit card
loans.
<F3> EPS on a fully diluted basis is not presented.
</FN>
</TABLE>
