U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2000
--------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________________
Commission file number 1-14082
--------
SMART CHOICE AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-1469577
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5200 S. Washington Avenue, Titusville, Florida 32780
(Address of principal executive offices)
(Zip Code)
(321) 269-0834
(Registrant's telephone number, including area code)
----------------------
(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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
Indicate number or shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
As of November 30, 2000, 2,446,353 shares of the Registrant's Common Stock were
issued and outstanding.
<PAGE>
SMART CHOICE AUTOMOTIVE GROUP, INC.
Form 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Heading Page
------- ----
<S> <C>
PART I. FINANCIAL STATEMENTS
Item 1. Consolidated Financial Statements
Balance Sheets - October 31, 2000 and April 30, 2000.....................................3
Statements of Operations - Three and six months ended October 31, 2000 and 1999..........4
Statements of Cash Flows - Six months ended October 31, 2000 and 1999....................5
Notes to Consolidated Financial Statements.............................................6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................11-21
Item 3. Quantitative and Qualitative Disclosures about Market Risk..............................21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................21
Item 2. Changes in Securities...................................................................21
Item 4. Submission of Matters to a Vote of Security Holders...................................21-22
Item 6. Exhibits and Reports on Form 8-K........................................................22
SIGNATURES.........................................................................................22
</TABLE>
2
<PAGE>
PART I. FINANCIAL STATEMENTS
Item 1. Consolidated Financial Statements.
Smart Choice Automotive Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
October 31, 2000 April 30, 2000
---------------- --------------
(unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 588 $ 1,883
Other receivables 1,263 1,029
Finance receivables, net 146,954 132,855
Inventories 14,537 12,190
Property and equipment, net 12,263 11,487
Goodwill, net 5,911 6,034
Prepaid and other assets 1,023 577
Due from parent 528 528
Deferred tax asset, net 12,382 12,382
--------------- ---------------
$ 195,449 $ 178,965
=============== ===============
Liabilities and Stockholders' Equity
Liabilities:
Checks outstanding in excess of bank balance $ 591 $ -
Accounts payable and accrued expenses 12,416 13,857
Revolving credit facility 146,281 130,367
Other borrowings 9,973 10,773
Income taxes payable 2,417 3,133
Sales taxes payable 4,908 4,207
--------------- ---------------
Total liabilities 176,586 162,337
--------------- ---------------
Contingent redemption value of common stock put options 533 533
Stockholders' equity:
Series E convertible preferred stock $.01 par value; 2,000,000 shares
authorized; 1,469,551 shares issued and outstanding; liquidation value
of $1,469,551 15 15
Common stock, $.01 par value; 2,500,000 shares authorized; 2,446,353
shares issued and outstanding at October 31, 2000 and April 30, 2000 24 24
Additional paid-in capital 13,891 13,891
Retained earnings 4,400 2,165
--------------- ---------------
Total stockholders' equity 18,330 16,095
--------------- ---------------
$ 195,449 $ 178,965
=============== ===============
</TABLE>
The accompanying notes are an integral part of this financial statement.
Smart Choice Automotive Group, Inc. and Subsidiaries
3
<PAGE>
Smart Choice Automotive Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales of used cars $ 50,515 $ 16,815 $ 94,304 $ 36,322
Less: Cost of used cars sold 31,526 10,243 57,714 23,203
Provision for credit losses 11,446 3,021 22,038 5,654
---------------- ---------- ----------- ----------
7,543 3,551 14,552 7,465
Interest income
Interest income 9,525 2,828 18,898 5,699
Portfolio interest expense 4,539 1,469 8,737 2,820
---------------- ---------- ----------- ----------
4,986 1,359 10,161 2,879
---------------- ---------- ----------- ----------
Income before operating expenses 12,529 4,910 24,713 10,344
---------------- ---------- ----------- ----------
Operating expenses
Selling, general and administrative 10,841 4,445 20,607 9,460
Depreciation and amortization 395 73 774 165
Other income (63) - (256) -
---------------- ---------- ----------- ----------
11,173 4,518 21,125 9,625
---------------- ---------- ----------- ----------
Income before income taxes 1,356 392 3,588 719
Income tax expense 523 158 1,353 279
---------------- ---------- ----------- ----------
Net income $ 833 $ 234 $ 2,235 $ 440
================ ========== =========== ==========
Net income per common share
Basic $ 0.34 $ 32.67 $ 0.91 $ 61.43
Diluted $ 0.08 $ 0.03 $ 0.23 $ 0.06
Weighted average shares
Basic 2,446 7 2,446 7
Diluted 9,814 7,355 9,794 7,355
</TABLE>
4
<PAGE>
Smart Choice Automotive Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended October 31,
----------------------------
2000 1999
---- ----
<S> <C> <C>
Operating activities
Net income $ 2,235 $ 440
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for credit losses 22,038 5,654
Deferred income taxes - -
Depreciation and amortization 774 165
Accretion of purchase discount (523)
Deferred warranty contracts earned (296) -
Changes in assets and liabilities
Inventories (net of effects of reposessions) 11,777 7,471
Other receivables (234) 679
Prepaids and other assets (446) 113
Accounts payable and accrued
liabilities (443) (281)
Income tax payable/receivable (716) 381
---------------- -------------
Net cash provided by operating
activities 34,166 14,623
---------------- -------------
Investing activities
Finance receivable originations (90,218) (35,926)
Collections of finance receivables 40,479 17,862
Purchases of property and equipment (1,427) (1,397)
---------------- -------------
Net cash used in investing activities (51,166) (19,461)
---------------- -------------
Financing activities
Increase in checks outstanding in excess of bank balance 591 45
Proceeds from revolving credit facility, net 15,914 2,010
Net payments/advances on other borrowings (800) 2,720
---------------- -------------
Net cash provided by financing activities 15,705 4,775
---------------- -------------
Net decrease in cash and cash equivalents (1,295) (62)
Cash and cash equivalents at beginning of period 1,883 63
---------------- -------------
Cash and cash equivalents at end of period $ 588 $ 0
================ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Smart Choice Automotive Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Accounting Policies
Effective December 1, 1999, Smart Choice Automotive Group, Inc. ("Smart Choice"
or the "Company") acquired the stock of Paaco Automotive Group, Inc. and Premium
Auto Acceptance Corporation (collectively, "PAACO") in a reverse acquisition in
which PAACO 's stockholders acquired voting control of Smart Choice. The
acquisition was accomplished through the contribution of all of the outstanding
stock of PAACO by Crown Group, Inc. ("Crown"), an 85% majority stockholder,
along with all the shares of the minority stockholders, in exchange for
1,203,016 shares of Smart Choice Series E convertible preferred stock.
Additionally, Crown purchased 150,000 shares of Smart Choice Series E
convertible preferred stock for $3 million in cash and acquired Smart Choice
debt with a face value of approximately $4.5 million for $2.3 million in cash.
The debt was converted by Crown into 116,535 shares of Smart Choice Series E
convertible preferred stock. Upon completing the transaction, Crown, the former
majority stockholder in PAACO, controlled approximately 70% of the voting rights
of the Company.
For financial reporting purposes, PAACO is deemed to be the acquiring entity.
The acquisition has been reflected in the accompanying consolidated financial
statements as (a) a recapitalization of PAACO whereby the issued and outstanding
stock of PAACO was converted into 1,203,016 shares of Series E convertible
preferred stock and (b) the issuance of the securities discussed in the
preceding paragraph by PAACO in exchange for all of the outstanding equity
securities of Smart Choice.
The following unaudited pro forma condensed results of operations of Smart
Choice for the six months and three months ended October 31, 2000 and 1999, give
effect to the acquisition of Smart Choice as if it had occurred on May 1, 1999.
The unaudited pro forma results of operations are not necessarily indicative of
future results or the results that would have occurred had the acquisition taken
place on the dates indicated.
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 60,040 $ 39,904 $ 113,202 $ 83,072
Net Income (loss) 833 89 2,235 (4,140)
Income (loss) per share
Basic $ 0.34 $ 0.04 $ 0.91 $ (1.69)
Diluted $ 0.08 $ 0.01 $ 0.23 $ (1.69)
</TABLE>
The accompanying consolidated financial statements include the results of PAACO
for all periods and the results of Smart Choice from the date of acquisition.
Note 2 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
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 six month period ended October 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
April 30, 2001. For further information, refer to consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended April 30, 2000.
6
<PAGE>
Note 3 - Finance Receivables
A summary of finance receivables, net, follows ($ in thousands):
<TABLE>
<CAPTION>
October 31, April 30,
2000 2000
---- ----
<S> <C> <C>
Contractual payments $ 214,220 $ 199,629
Unearned finance charges (31,885) (33,021)
---------- -----------
Principal balances 182,335 166,608
Allowance for credit losses (34,442) (32,291)
Finance receivable discount (939) (1,462)
---------- -----------
Finance receivables, net $ 146,954 $ 132,855
========== ===========
</TABLE>
Contractual payment balances increased from April 30, 2000 due to higher sales
levels during the six-month period, partially offset by runoff of older loans.
Unearned finance charges decreased during the same period due to our change in
policy made during the fourth quarter of the year ended April 30, 2000 to reduce
the average term of new loans.
Note 4 - Debt
A summary of our indebtedness at October 31, 2000 and April 30, 2000 is as
follows (in thousands):
<TABLE>
<CAPTION>
October 31, April 30,
2000 2000
---- ----
<S> <C> <C>
Revolving credit facility $ 146,281 $ 130,367
Subordinated notes payable 3,000 3,000
Mortgages and other notes payable 6,045 6,843
Other borrowings 928 930
------------- ------------
9,973 10,773
------------- ------------
Total $ 156,254 $ 141,140
============= ============
</TABLE>
In December 1999, as a result of the acquisition of Smart Choice, our revolving
credit facility was amended to provide for borrowings of up to $160 million, up
to $60 million for PAACO and up to $100 million for First Choice. During the
second quarter the revolving credit facility was further amended to provide up
to $62 million for PAACO and decrease First Choice borrowing capacity to $98
million. Crown guarantees the obligation for up to $5 million. The revolving
facility matures in November 2004 and accrues interest on borrowings at prime
plus 2.25% (11.75% at October 31, 2000). We had available capacity under the
facility at October 31, 2000 of $.8 million for First Choice. PAACO had borrowed
up to its limit of $62 million at October 31, 2000.
The advance rates on eligible finance receivables declines from 85% to 70% for
First Choice and 72.5% to 67.5% for PAACO over the term of the credit facility.
Concurrent with the decrease in the advance rate, the interest rate will
decrease to prime plus 1.75%.
Subordinated notes payable at October 31, 2000 represents $3 million payable to
Crown. The subordinated notes payable bear interest at 8.5% per annum, and
mature on March 26, 2002.
The mortgages payable consists of four notes, all collateralized by land and
certain buildings, to two financial institutions and an individual. The two
notes with one financial institution accrue interest at prime
7
<PAGE>
plus 2.25% and mature in December 2015. The other mortgage note payable to a
financial institution accrues interest at 8.25% and matures in May 2003. The
mortgage note payable to an individual accrues interest at 9.5% and matures in
May 2001.
Note 5 - Common Stock Equivalents
Net income per common share are based on the weighted average number of common
shares and common stock equivalents outstanding for the three and six-month
periods ended October 31, 2000 and 1999 as follows (in thousands, except share
and per share amounts):
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 833 $ 234 $ 2,235 $ 440
=========== ========= ========= =========
Basic earnings per share $ 0.34 $ 32.67 $ 0.91 $ 61.43
=========== ========= ========= =========
Diluted earnings per share $ 0.08 $ 0.03 $ 0.23 $ 0.06
=========== ========= ========= =========
Basic weighted average shares outstanding 2,446,353 7,163 2,446,353 7,163
Effect of dilutive securities:
Preferred stock 7,347,750 7,347,750 7,347,750 7,347,750
Stock options 19,726 - - -
----------- --------- --------- ---------
Dilutive weighted average shares outstanding 9,813,829 7,354,913 9,794,103 7,354,913
=========== ========= ========= =========
Warrants not included in dilutive shares since 82,084 - 82,084 -
=========== ========= ========= =========
antidilutive
Common stock options not included in dilutive
shares since antidilutive 302,876 - 322,602 -
=========== ========= ========= =========
</TABLE>
In connection with the acquisition of PAACO, all of PAACO's outstanding shares
of common stock were exchanged for the Company's preferred shares. Accordingly,
basic weighted-average shares outstanding for the three and six months ended
October 31, 1999 consists of PAACO's historical weighted-average common shares.
Consequently, basic earnings per share in 1999 is not meaningful.
8
<PAGE>
Note 6 - Business Segments
We sell and finance used vehicles in two major markets in the United States. The
First Choice market is based in Florida and the PAACO market is based in Texas.
Effective December 1, 1999, Smart Choice acquired the stock of PAACO in a
reverse acquisition in which PAACO's stockholders acquired voting control of
Smart Choice. For financial reporting and comparative purposes, PAACO is deemed
to be the acquiring entity. Accordingly, the financial statements include the
results of PAACO for all periods presented and the results of First Choice for
2000 only. Our business segment data for the three months ended October 31, 2000
and 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended October 31, PAACO First Choice Combined
------------------------------ ----- ------------ --------
2000
----
<S> <C> <C> <C>
Sales of used cars $ 26,879 $ 23,636 $ 50,515
Less: cost of cars sold 17,870 13,656 31,526
Provision for credit losses 3,694 7,752 11,446
---------------- ------------- --------------
5,315 2,228 7,543
Net interest income 2,036 2,950 4,986
---------------- ------------- --------------
Income before operating expenses 7,351 5,178 12,529
Operating expenses:
Selling, general and administrative 5,725 5,116 10,841
Depreciation and amortization 134 261 395
Other expense (income) (90) 27 (63)
---------------- ------------- --------------
5,769 5,404 11,173
---------------- ------------- --------------
Operating income $ 1,582 $ (226) $ 1,356
================ ============= ==============
Capital expenditures $ 229 $ 344 $ 573
================ ============= ==============
Total assets $ 89,045 $ 106,404 $ 195,449
================ ============= ==============
1999
----
Sales of used cars $ 16,815 $ - $ 16,815
Less: cost of cars sold 10,243 - 10,243
Provision for credit losses 3,021 - 3,021
---------------- ------------- --------------
3,551 - 3,551
Net interest income 1,359 - 1,359
---------------- ------------- --------------
Income before operating expenses 4,910 - 4,910
Operating expenses:
Selling, general and administrative 4,445 - 4,445
Depreciation and amortization 73 - 73
---------------- ------------- --------------
4,518 - 4,518
---------------- ------------- --------------
Operating income $ 392 $ - $ 392
================ ============= ==============
Capital expenditures $ 204 $ - $ 204
================ ============= ==============
Total assets $ 65,587 $ - $ 65,587
================ ============= ==============
</TABLE>
9
<PAGE>
Our business segment data for the six months ended October 31, 2000 and 1999 is
as follows (in thousands):
<TABLE>
<CAPTION>
Six months ended October 31, PAACO First Choice Combined
---------------------------- ----- ------------ --------
2000
----
<S> <C> <C> <C>
Sales of used cars $ 51,915 $ 42,389 $ 94,304
Less: cost of cars sold 33,307 24,407 57,714
Provision for credit losses 8,442 13,596 22,038
---------------- ------------- --------------
10,166 4,386 14,552
Net interest income 4,128 6,033 10,161
---------------- ------------- --------------
Income before operating expenses 14,294 10,419 24,713
Operating expenses:
Selling, general and administrative 11,000 9,607 20,607
Depreciation and amortization 260 514 774
Other income (150) (106) (256)
---------------- ------------- --------------
11,110 10,015 21,125
---------------- ------------- --------------
Operating income $ 3,184 $ 404 $ 3,588
================ ============= ==============
Capital expenditures $ 754 $ 673 $ 1,427
================ ============= ==============
Total assets $ 89,045 $ 106,404 $ 195,449
================ ============= ==============
1999
----
Sales of used cars $ 36,322 $ - $ 36,322
Less: cost of cars sold 23,203 - 23,203
Provision for credit losses 5,654 - 5,654
---------------- ------------- --------------
7,465 - 7,465
Net interest income 2,879 - 2,879
---------------- ------------- --------------
Income before operating expenses 10,344 - 10,344
Operating expenses:
Selling, general and administrative 9,460 - 9,460
Depreciation and amortization 165 - 165
---------------- ------------- --------------
9,625 - 9,625
---------------- ------------- --------------
Operating income $ 719 $ - $ 719
================ ============= ==============
Capital expenditures $ 1,397 $ - $ 1,397
================ ============= ==============
Total assets $ 65,587 $ - $ 65,587
================ ============= ==============
</TABLE>
10
<PAGE>
Item 2. - Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
We operate one of the largest chains of buy here-pay here car dealerships in the
United States. At October 31, 2000 we operated 25 dealerships located in major
markets in Texas and Florida. We have one line of business: to sell and finance
quality used vehicles to credit-impaired customers. In Texas, we operate
thirteen lots under the name PAACO, and in Florida we operate twelve lots under
the name First Choice.
First Choice and PAACO participate in the sub-prime segment of the independent
used car sales and finance market. This segment is serviced primarily by buy
here-pay here dealerships, car dealerships that sell and finance sales of used
cars to credit-impaired borrowers. Buy here-pay here dealers typically offer
their customers certain advantages over more traditional financing sources, such
as:
(i) broader and more flexible underwriting guidelines;
(ii) flexible payment terms (including prorating customer payments
due within one month into several smaller payments and
scheduling payments to coincide with a customer's pay days);
and
(iii) the ability to make payments in person, an important feature
to many credit-impaired borrowers who may not have checking
accounts or are otherwise unable to make payments by the due
date through the mail.
Our operating strategy emphasizes the following points:
SELL RELIABLE, QUALITY CARS. We sell reliable quality used cars. We believe that
product failure is a leading cause of defaults on finance contracts in the
self-financed used car industry. We utilize guidelines in purchasing,
inspecting, reconditioning and servicing, to minimize defaults. At First Choice
we include a 24,000 mile/24-month warranty with the sale of most used cars, and
at PAACO we generally include a 6,000 mile/6-month warranty.
UTILIZE CENTRALIZED CREDIT APPROVAL WITH A BUY ROOM. We integrate the credit
approval function and sales process for used cars with a buy room that ensures
credit worthiness as well as proper deal structure such as overall gross profit,
term and interest rate. The credit underwriting process strictly adheres to
objective underwriting standards that have resulted in improved collection
experience. We regularly review our collection results to assess the
effectiveness of our underwriting standards.
APPLY RIGOROUS COLLECTION PRACTICES. We diligently and pro-actively pursue the
collection of our finance receivables while maintaining a professional,
customer-friendly atmosphere. Our collection policy includes telephoning a
borrower if the borrower's payment is one day late, and repossession procedures
generally begin when the customer is one payment past due. As of October 31,
2000, 92.7% of our finance receivables at PAACO were not more than one payment
past due and 96.6% of First Choice's finance receivables were not more than one
payment past due.
MAXIMIZE RECOVERY ON REPOSSESSIONS. We believe that we generally experience
lower losses on repossessions than other lenders in the self-financed used car
industry due to:
(i) the quality of the cars we sell;
(ii) the timeliness of our repossessions ("zero tolerance" policy
for nonpayment); and
(iii) our ability to re-market repossessions. We recondition and
re-market a majority of our repossessions through our
dealerships, rather than through auctions (where cars are
generally sold at lower prices).
INCREASE OPERATING EFFICIENCY. An ongoing effort has been made to increase
operating efficiency by combining administrative functions in order to reduce
costs. We have consolidated functions such as accounting and treasury, insurance
and employee benefits, and legal support, and in the coming year we
11
<PAGE>
believe we will continue to increase our operating efficiency in such areas as
reconditioning, purchasing and transporting inventory.
EMPLOY INTEGRATED MANAGEMENT INFORMATION SYSTEMS. All of our used car
dealerships are linked to an integrated computer-based management information
system (the "MIS") that allows the Company to obtain "real time" information on
its operations. We use the MIS to transmit data between our headquarters and our
various stores, to evaluate store performance daily, monitor inventory, sales,
costs, customer payments and facilitates the underwriting and collection of its
finance contracts.
PROMOTE PAACO AND FIRST CHOICE BRANDS. We believe that our PAACO and First
Choice brands are synonymous with quality cars and customer service. By seeking
to maintain continuity in the appearance of our store locations, we expect to
promote our name recognition. Further, we maintain a consistency between
facilities and marketing materials through the use of standardized logos.
AVOID THIRD PARTY FINANCE RECEIVABLES. As part of our operating philosophy, we
only originate and service finance receivables on used cars sold at our used car
stores. We do not intend to purchase third party finance receivables or purchase
other dealerships with existing finance receivables.
CONTROLLED GROWTH IN DEALERSHIP SITES. PAACO's business began in Texas in 1992
as a retail auto auction concern. PAACO entered the buy here-pay here market in
1993, grew modestly in the Dallas/Fort Worth area over the next few years, and
entered the Houston area in 1999. Effective December 1, 1999, our Florida
operations were acquired through the acquisition of PAACO by Smart Choice. In
the coming year we anticipate that, as we focus on maintaining sales at or near
our present monthly sales rate, we will not acquire any additional dealerships,
although PAACO and First Choice may each open a number of new lots.
In the following discussion and analysis, we explain the results of operations
and general financial condition of Smart Choice and its subsidiaries. In
particular we analyze and explain the changes in the results of operations for
the three and six-month periods ended October 31, 2000 and October 31, 1999.
Comparison of the results of operations for the three months ended October 31,
2000 to the three months ended October 31, 1999:
Sales of used cars and cost of used cars sold
<TABLE>
<CAPTION>
Three months ended
October 31,
------------------------------- Percentage
2000 1999 Change
---- ---- ------
(in thousands, except per car amounts)
<S> <C> <C> <C>
Number of used cars sold 4,193 1,416 196.1%
============ =========
Sales of used cars $ 50,515 $ 16,815 200.4%
Cost of used cars sold 31,526 10,243 207.8%
------------ ---------
Gross margin $ 18,989 $ 6,572 188.9%
============ =========
Gross margin % 37.6% 39.1%
Per car sold:
Sales $ 12,047 $ 11,875 1.5%
Cost of used cars sold 7,519 7,234 3.9%
------------ ---------
Gross margin $ 4,528 $ 4,641 -2.4%
============ =========
</TABLE>
12
<PAGE>
We increased sales by $33.7 million or 200.4% for the three months ended October
31, 2000 compared to the same period in 1999. The increase in sales reflects the
addition of 12 First Choice used car dealerships and increased sales per
dealership at existing PAACO used car dealerships along with the addition of one
lot at PAACO. In addition, sales per car sold increased by $172 for the three
months ended October 31, 2000 compared to the same period in 1999 through
efforts by management to offset higher acquisition costs per car.
Cost of used cars sold increased by $21.3 million or 207.8%. The increase in
cost of used cars sold is primarily due to the addition of First Choice used car
dealerships acquired through merger in December 1999. Cost of used cars sold, as
a percent of sales, was 62.4% for the three months ended October 31, 2000
compared to 60.9% for the same period in 1999. Cost per car sold was $7,519 for
three months ended October 31, 2000 compared to $7,234 for three months ended
October 31, 1999. This increase reflects higher average acquisition costs for
trucks and SUV's that comprised a greater percentage of sales for the three
months ended October 31, 2000 compared to the same period in 1999.
Gross margin was $19.0 million for the three months ended October 31, 2000
compared to $6.6 million for the same period in 1999 an increase of $12.4
million or 188.9%. Gross margin was 37.6% or $4,528 per car for the three months
ended October 31, 2000 as compared to 39.1% or $4,641 per car for the same
period in 1999. The decrease in gross margin percentage for the three months
ended October 31, 2000 as compared to the same period in 1999 reflects the
addition of First Choice which generally has lower gross margin per car than
that of PAACO and higher average acquisition costs per vehicle as explained
above.
Provision for Credit Losses
The following is a summary of the provision for credit losses:
<TABLE>
<CAPTION>
Three months ended
October 31,
------------------------------ Percentage
2000 1999 Change
---- ---- ------
<S> <C> <C> <C>
Provision for credit losses (in thousands) $ 11,446 $ 3,021 278.9%
============ =========
Provision per loan originated $ 2,730 $ 2,133 28.0%
============ =========
Provision as a percentage of principal
balances originated 22.7% 18.0%
============ =========
</TABLE>
The provision for credit losses was $11.4 million for the three months ended
October 31, 2000 compared to $3.0 million for the same period in 1999. The
provision as a percent of principal balances originated was 22.7% for the three
months ended October 31, 2000 and 18.0% for the same period in 1999. The
increase in provision reflects the addition of 12 First Choice used car
dealerships and management's expectations of future credit losses on current
sales. Management believes along with increases in gross profit on each unit
sold comes a corresponding increase in credit loss. This expectation is based on
stable to declining repossession rates with lower net recovery rates for each
vehicle repossessed. Further, management has adopted new credit policies which
include a "no tolerance" policy on payment delinquency and reduced average terms
on new loans.
13
<PAGE>
Net Interest Income
<TABLE>
<CAPTION>
Three months ended
October 31,
--------------------------- Percentage
2000 1999 Change
---- ---- ------
($ in thousands)
<S> <C> <C> <C>
Interest income $ 9,525 $ 2,828 236.8%
Portfolio interest expense $ 4,539 $ 1,469 209.0%
---------- --------
Net interest income $ 4,986 $ 1,359 266.9%
========== ========
Average effective yield 20.7% 17.5% 18.6%
Average borrowing cost 11.5% 11.3% 1.8%
</TABLE>
Interest earned on financed receivables was $9.5 million for the three months
ended October 31, 2000 compared to $2.8 million for the three months ended
October 31, 1999 which reflects an increase of $6.7 million or 236.8%. The
increase is due primarily to the acquisition of First Choice's portfolio which
had a higher yield than PAACO's and continued growth in financed used car sales.
Portfolio interest expense increased by $3.0 million or 209.0% to $4.5 million
for the three months ended October 31, 2000 from $1.5 million for the same
period in 1999. The increase is due to the acquisition of First Choice and an
increase in the prime interest rate during the periods reported along with an
offsetting lower overall cost of capital obtained in the revised credit
facility.
Income before Operating Expenses
Our income before operating expenses was $12.5 million compared to $4.9 million
for the same period in 1999. The increase in income before operating expenses
reflects the increase in sales of used cars and interest income and the addition
of Smart Choice's operations December 1, 1999.
Operating Expenses
<TABLE>
<CAPTION>
Three months ended
October 31,
------------------------------- Percentage
2000 1999 Change
---- ---- ------
<S> <C> <C> <C>
Operating expenses (in thousands) $ 11,173 $ 4,518 147.3%
========== ========
Per car sold $ 2,665 $ 3,191 -16.5%
========== ========
As % of total revenue 18.6% 23.0%
---------- --------
</TABLE>
Operating expenses were $11.2 million for the three months ended October 31,
2000 compared to $4.5 million for the same period in 1999, reflecting an
increase of $6.7 million or 147.3%. The increase is primarily due to the
addition of Smart Choice's operations. Operating expenses were $2,665 per car
sold for the three months ended October 31, 2000 compared to $3,191 per car sold
in the same period in 1999. The decrease reflects our commitment to controlling
operating expenses and the success of certain cost-cutting measures initiated in
the third quarter of fiscal 2000.
14
<PAGE>
Interest Expense
Our interest expense totaled $4.5 million for the three months ended October 31,
2000 versus $1.5 million for the three months ended October 31, 1999. The
increase is a result of the merger with Smart Choice and an increase in
borrowing under the Finova revolving credit facility.
Comparison of the results of operations for the six months ended October 31,
2000 to the six months ended October 31, 1999:
Sales of used cars and cost of used cars sold
<TABLE>
<CAPTION>
Six months ended
October 31,
------------------------------- Percentage
2000 1999 Change
---- ---- ------
(in thousands, except per car amounts)
<S> <C> <C> <C>
Number of used cars sold 7,847 2,996 161.9%
=============== =========
Sales of used cars $ 94,304 $ 36,322 159.6%
Cost of used cars sold 57,714 23,203 148.7%
--------------- ---------
Gross margin $ 36,590 $ 13,119 178.9%
=============== =========
Gross margin % 38.8% 36.1%
Per car sold:
Sales $ 12,018 $ 12,123 -0.9%
Cost of used cars sold 7,355 7,745 -5.0%
--------------- ---------
Gross margin $ 4,663 $ 4,378 6.5%
=============== =========
</TABLE>
We increased sales by $58.0 million or 159.6% for the six months ended October
31, 2000 compared to the same period in 1999. The increase in sales reflects the
addition of 12 First Choice used car dealerships and increased sales per
dealership at existing PAACO used car dealerships. Sales per vehicle sold
decreased $105 reflecting the average lower sales price per vehicle for First
Choice as compared to PAACO.
Cost of used cars sold increased by $34.5 million or 148.7%. The increase in
cost of used cars sold is primarily due to the addition of First Choice used car
dealerships acquired through merger in December 1999. Cost of used cars sold, as
a percent of sales, was 61.2% for the six months ended October 31, 2000 compared
to 63.9% for the same period in 1999. Cost per car sold was $7,355 for six
months ended October 31, 2000 compared to $7,745 for six months ended October
31, 1999. The decrease reflects the lower average cost per car purchased by
First Choice as compared to PAACO and management's efforts in lowering
reconditioning and acquisition costs at PAACO.
Gross margin was $36.6 million for the six months ended October 31, 2000
compared to $13.1 million for the same period in 1999 an increase of $23.5
million or 178.9%. Gross margin was 38.8% or $4,663 per car for the six months
ended October 31, 2000 as compared to 36.1% or $4,378 per car for the same
period in 1999. The increase in gross margin reflects lower reconditioning and
acquisition costs at PAACO along with higher sales price per car at First
Choice.
15
<PAGE>
Provision for Credit Losses
<TABLE>
<CAPTION>
Six months ended
October 31,
-------------------------------- Percentage
2000 1999 Change
---- ---- ------
<S> <C> <C> <C>
Provision for credit losses (in thousands) $ 22,038 $ 5,654 289.8%
============ =========
Provision per loan originated $ 2,808 $ 1,887 48.8%
============ =========
Provision as a percentage of principal
balances originated 23.4% 15.6%
============ =========
</TABLE>
The provision for credit losses was $22.0 million for the six months ended
October 31, 2000 compared to $5.7 million for the same period in 1999. The
provision as a percent of principal balances originated was 23.4% for the six
months ended October 31, 2000 and 15.6% for the same period in 1999. The
increase in provision reflects the addition of 12 First Choice used car
dealerships and management's expectations of future credit losses on current
sales. Management believes along with increases in gross profit on each unit
sold comes a corresponding increase in credit loss. This expectation is based on
stable to declining repossession rates with lower net recovery rates for each
vehicle repossessed. Further, management has adopted new credit policies which
include a "no tolerance" policy on payment delinquency and reduced average terms
on new loans.
Net Interest Income
<TABLE>
<CAPTION>
Six months ended
October 31,
--------------------------------- Percentage
2000 1999 Change
---- ---- ------
($ in thousands)
<S> <C> <C> <C>
Interest income $ 18,898 $ 5,699 231.6%
Portfolio interest expense $ 8,737 $ 2,820
------------- --------- 209.8%
Net interest income $ 10,161 $ 2,879 255.9%
============= =========
Average effective yield 20.6% 17.6% 16.8%
Average borrowing cost 11.1% 10.9%
2.1%
</TABLE>
Interest earned on financed receivables was $18.9 million for the six months
ended October 31, 2000 compared to $5.7 million for the six months ended October
31, 1999 which reflects an increase of $13.2 million or 231.6%. The increase is
due primarily to the acquisition of First Choice's portfolio which had a higher
yield than PAACO's and continued growth in financed used car sales.
Portfolio interest expense increased by $5.9 million or 210.7% to $8.7 million
for the six months ended October 31, 2000 from $2.8 million for the same period
in 1999. The increase is due to the acquisition of First Choice and an increase
in the prime interest rate during the periods reported along with an offsetting
lower overall cost of capital obtained in the revised credit facility.
Income before Operating Expenses
Our income before operating expenses was $24.7 million compared to $10.3 million
for the same period in 1999. The increase in income before operating expenses
reflects the increase in sales of used cars and interest income and the addition
of Smart Choice's operations December 1, 1999.
16
<PAGE>
Operating Expenses
<TABLE>
<CAPTION>
Six months ended
October 31,
----------------------------- Percentage
2000 1999 Change
---- ---- ------
<S> <C> <C> <C>
Operating expenses (in thousands) $ 21,125 $ 9,625 119.5%
=========== ========
Per car sold $ 2,692 $ 3,213 -16.2%
=========== ========
As % of total revenue 18.7% 22.9%
=========== ========
</TABLE>
Operating expenses were $21.1 million for the six months ended October 31, 2000
compared to $9.6 million for the same period in 1999, reflecting an increase of
$11.5 million or 119.8%. The increase is primarily due to the addition of Smart
Choice's operations. Operating expenses were $2,714 per car sold for the six
months ended October 31, 2000 compared to $3,213 per car sold in the same period
in 1999. The decrease reflects our commitment to controlling operating expenses
and the success of certain cost-cutting measures initiated in the third quarter
of fiscal 2000.
Business Segment Information
We report our operations based on two operating segments. These segments are
reported as PAACO and First Choice. Operating expenses for our business segments
for the three and six-month periods ended October 31, 2000 and 1999 are as
follows:
PAACO operations consist of our used car lots in Texas. A summary of PAACO
operating expenses follows ($ in thousands except per car sold data):
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
----------------- Percentage ---------------- Percentage
2000 1999 Change 2000 1999 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
PAACO operations:
Selling, general and administrative $ 5,725 $ 4,445 28.8% $ 11,000 $ 9,460 16.3%
Depreciation and amortization 134 73 83.6% 260 165 57.6%
Other expense (income) (90) - (150) -
---------- -------- -------- --------
$ 5,769 $ 4,518 27.7% $ 11,110 $ 9,625 15.4%
========== ======== ======== ========
Per car sold:
Selling, general and administrative $ 2,763 $ 3,139 -12.0% $ 2,726 $ 3,158 -13.7%
Depreciation and amortization 65 52 25.4% 64 55 17.0%
Other expense (income) (43) - (37) -
---------- -------- -------- --------
$ 2,785 $ 3,191 -12.7% $ 2,753 $ 3,213 -14.3%
========== ======== ======== ========
</TABLE>
17
<PAGE>
First Choice operations consist of our used car lots in Florida. A summary of
First Choice operating expenses follows ($ in thousands except per car sold
data):
Three months Six months
ended ended
October 31, October 31,
----------- -----------
2000 2000
---- ----
First Choice operations:
Selling, general and administrative $ 5,116 $ 9,607
Depreciation and amortization 261 514
Other expense (income) 27 (106)
---------- --------
$ 5,404 $ 10,015
========== ========
Per car sold:
Selling, general and administrative $ 2,412 $ 2,520
Depreciation and amortization 123 135
Other expense (income) 13 (28)
---------- --------
$ 2,548 $ 2,627
========== ========
The financial statements include the results of PAACO for all periods presented
and the results of First Choice for the first six months of fiscal year 2001
only. Accordingly, comparisons to the three and six-months ended October 31,
1999 are not included.
Financial Position
The following table represents key components of our financial position ($ in
thousands):
October 31, April 30,
2000 2000
---- ----
Finance receivables, net $ 146,954 $ 132,855
Inventory 14,537 12,190
Total assets 195,449 178,965
Total debt 156,254 141,140
Revolving credit facility 146,281 130,367
Other borrowings 9,973 10,773
Total liabilities 176,586 162,337
Total stockholders' equity $ 18,330 $ 16,095
The increase in finance receivables, net was primarily due to increased used car
sales and financing, partially offset by the principal balance runoff of loans
originated in prior periods and higher allowance for credit losses. Used car
sales totaled 7,847 for the six months ended October 31, 2000 versus sales of
2,996 used cars during the same six month period of the prior year.
18
<PAGE>
The following table reflects activity in the allowance for credit losses for the
three and six-month periods ended October 31, 2000 and 1999 ($ in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Allowance activity:
Balance, beginning of period $ 34,627 $ 8,179 $ 32,291 $ 7,587
Provision for credit losses 11,446 3,021 22,038 5,654
Other allowance activity - - - -
Net charge offs (11,631) (1,511) (19,887) (3,552)
-------- ------- -------- -------
Balance, end of period $ 34,442 $ 9,689 $ 34,442 $ 9,689
======== ======= ======== =======
Allowance as a percent of period end balances 19.0% 15.1%
======== =======
</TABLE>
The allowance for credit losses is maintained at a level that in management's
judgement is adequate to provide for estimated probable credit losses inherent
in our retail portfolio.
The following table sets forth the principal balances delinquent as a percentage
of total outstanding contract principal balances from dealership operations.
October 31, April 30,
2000 2000
---- ----
Days delinquent:
Current 69.1% 71.4%
1-30 days 25.9% 25.2%
31-60 days 3.5% 2.0%
61-90 days 1.5% 1.4%
------ ------
Total portfolio 100.0% 100.0%
====== ======
Delinquencies have increased as of October 31, 2000 versus April 30, 2000. The
primary reason for the increase is due to seasonal fluctuations and is typically
experienced during this period. The increase is not as significant for the six
months ended October 31, 2000 as we have adopted a "no tolerance" policy towards
delinquent accounts. This policy results in quicker repossessions and higher
recoveries as a percent of principal balance charged off.
Liquidity and capital resources
In recent periods, our needs for additional capital resources have increased in
connection with the growth of our business. We require capital for:
* increases in our loan portfolio * purchase of inventories
* working capital and general * the purchase of property and equipment
corporate purposes
We fund our capital requirements primarily through:
* operating cash flow * our revolving facility with Finova
* supplemental borrowings Capital Corp.
While to date we have met our liquidity requirements as needed, there can be no
assurance that we will be able to continue to do so in the future.
19
<PAGE>
Operating cash flow
Net cash provided by operating activities increased by $19.6 million in the six
months ended October 31, 2000 to $34.2 million compared to cash generated of
$14.6 million for the six months ended October 31, 1999. The increase is due to
the addition of First Choice lots and increased sales at PAACO lots.
Net cash used by investing activities increased by $31.7 million for the six
months ended October 31, 2000 to $51.2 million versus cash used of $19.5 million
for the same period of the previous year. Net cash used by finance receivable
originations increased by $54.3 million for the six months ended October 31,
2000 compared to the same period in 1999. The increase is due to the addition of
First Choice lots and increased sales at PAACO lots. Collections of financed
receivables increased $22.6 million also due to the addition of First Choice
lots and higher portfolio principal balances as a result of increased sales.
Financing activities generated an increase of $10.9 million for the six months
ended October 31, 2000 to $15.7 million as compared to $4.8 million generated in
the same period of 1999. Proceeds from the Finova revolving credit facility
generated $13.9 million which was used primarily to fund purchases of vehicles
for resale. Other debt was paid down by $.8 million during the six months ended
October 31, 2000.
Financing resources
Under the Finova Loan and Security Agreement (the "Finova Revolving Facility"),
we may borrow the lesser of (i) the Revolving line of $160 million or (ii) the
advance rate of the available balance of eligible finance contracts and
inventory. The Finova Revolving Facility is collateralized by all of our finance
receivables and used car inventory. The Finova Revolving Facility bears interest
at the prime rate plus 2.25% (11.75% as of October 31, 2000). The interest rate
declines to prime rate plus 2.00% and prime rate plus 1.75% as the advance rate
declines through the life of the note. The Finova Revolving Facility expires on
November 30, 2004, at which time its renewal will be subject to renegotiations.
As of October 31, 2000, the principal amount outstanding under the Finova
Revolving Facility was $146.3 million, up from a balance of $130.4 million as of
April 30, 2000. On October 31, 2000 we had availability of approximately $.8
million under the Finova Revolving Facility. There can be no assurance that we
will be able to raise additional capital as needed or that we will be able to
generate sufficient cash flow to pay down the revolving credit facility as the
advance rates decline at First Choice from 85% to 70% and from 72% to 67.5% at
PAACO over the term of the facility.
Accounting matters
In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities" (SFAS No. 138). SFAS No. 138 amends
a limited number of issues causing implementation difficulties for entities that
apply SFAS No. 133. SFAS No. 138 is effective for fiscal years beginning after
June 15, 2000, and is not expected to have a material effect on us.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133). The adoption of SFAS No. 133 was delayed
by the issuance of SFAS No. 137. The statement requires all derivatives to be
recorded on the balance sheet at fair value and establishes new accounting rules
for hedging instruments. In June 1999, the FASB deferred the effective date of
SFAS No. 133 for one year until fiscal years beginning after June 15, 2000. We
do not expect the adoption of SFAS No. 133 to have a material impact on us.
We make forward looking statements
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The words "believe", "expect", "anticipate", "estimate", "project", and
similar expressions identify forward looking statements. These statements may
include, but are not limited to, projections of revenues, income or loss,
estimates of capital expenditures, plans for future operations, products or
services, and financing needs or plans, as well as assumptions relating to these
matters. Forward-looking statements speak only as of the date the statements
were made. They are inherently subject to risks and uncertainties, some of which
we cannot predict or quantify. Future events and actual results could differ
materially from the forward-looking statements. You should keep in mind the risk
factors and cautionary statements found throughout this Form 10-Q and
specifically those
20
<PAGE>
found below. We are not obligated to publicly update or revise any forward
looking statements, whether as a result of new information, future events, or
for any other reason.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are exposed to market risks associated with our financial instruments from
changes in interest rates. We do not use financial instruments for trading
purposes or to manage interest rate risks. Our earnings are impacted by our net
interest income, which is the difference between the income earned on
interest-bearing assets and the interest paid on interest-bearing notes payable.
Increases in market interest rates could have an adverse effect on
profitability. Financial instruments consist of fixed-rate finance receivables
and fixed and variable rate notes payable. Our finance receivables generally
bear interest at fixed rates ranging from 17% to 26%. These finance receivables
have scheduled maturities from one to 42 months. The majority of our notes
payable contain variable interest rates that fluctuate with market rates.
Therefore, an increase in market interest rates would decrease our net interest
income and profitability. A one percent increase in our borrowing costs on
variable rate debt would decrease our pretax income by approximately $1.5
million over a period of twelve months.
We believe that our market risk has not changed materially from April 30, 2000.
Part II. Other information
Item 1. Legal proceedings
There have been no material developments in any legal proceedings we described
in our Annual Report on Form 10-K for the year ended April 30, 2000.
Item 2. Changes in Securities and Use of Proceeds.
On October 26, 2000, Smart Choice effected a 1-for-20 reverse split of its
common stock. The reverse stock split has been retroactively reflected in our
balance sheet and statement of stockholders' equity as of April 30, 2000.
21
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
Our 2000 Annual Meeting of Shareholders was held on October 19, 2000. At the
Annual Meeting the following persons were elected as Class II directors to serve
for a term of three years and until their successors are elected and qualified:
Edward R. McMurphy and J. Edward Ernst.
The results of voting with respect to the election of Class II directors were as
follows:
Votes Votes
FOR WITHHELD
--- --------
Edward R. McMurphy 9,120,147 6,776
J. Edward Ernst 9,120,147 6,776
The following persons were elected as Class III directors to serve for a term of
two years and until their successors are elected and qualified: Larry W. Lange
and T.J. Falgout, III.
The results of voting with respect to the election of Class III directors were
as follows:
Votes Votes
FOR WITHHELD
--- --------
Larry W. Lange 9,120,147 6,776
J. Edward Ernst 9,120,147 6,776
The following persons did not stand for reelection to the Board at the Annual
Meeting as their term of office continued after the Annual Meeting: Robert J.
Abrahams and Gary R. Smith.
At the Annual Meeting the shareholders voted on an amendment to our Bylaws to
declassify the Board of Directors so that the term of each of our six directors
will expire at the next Annual Meeting of Shareholders. The results of voting
with respect to the amendment to the Bylaws to declassify the Board of Directors
was as follows:
Votes Votes Votes
FOR AGAINST ABSTAINED
--------- ------- ---------
8,740,999 61,702 318
In addition, the shareholders voted at the Annual Meeting to approve the
adoption of Amended and Restated Articles of Incorporation of Smart Choice
Automotive Group. The results of the voting with respect to the approval of the
adoption of Amended and Restated Articles of Incorporation was as follows:
Votes Votes Votes
FOR AGAINST ABSTAINED
--------- ------- ---------
8,736,095 65,503 1,421
The shareholders further voted at the Annual Meeting to approve an amendment to
the Smart Choice Automotive Group 1998 Executive Compensation Plan to increase
the number of shares of common stock available for grant thereunder from 37,500
to 1,500,000. The results of voting with respect to the approval of the
amendment to the Smart Choice Automotive Group 1998 Executive Compensation Plan
was as follows:
Votes Votes Votes
FOR AGAINST ABSTAINED
--------- ------- ---------
8,734,070 67,131 1,818
No other matters were presented or voted for at the Annual Meeting.
22
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibit is filed with this Report:
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K. No report on Form 8-K was filed during the
quarter ended October 31, 2000.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SMART CHOICE AUTOMOTIVE GROUP, INC.
Date: December 15, 2000 By: /s/ James E. Ernst
----------------------------------
James E. Ernst
President and Chief Executive Officer
Date: December 15, 2000 By: /s/ Joe Cavalier
-----------------------
Joe Cavalier
Chief Financial Officer
(principal financial and accounting officer)
23
