-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DCr96XVYAyl7Y3zh+nYCLk4ysGNoiZ8vrTqFuD0N4AxcRyEnsCLghuCU0Yupd3dU 5GD2XwnnGKClD3Ka8KNRbQ== 0000950144-06-004812.txt : 20060510 0000950144-06-004812.hdr.sgml : 20060510 20060510163321 ACCESSION NUMBER: 0000950144-06-004812 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060510 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060510 DATE AS OF CHANGE: 20060510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST ACCEPTANCE CORP /DE/ CENTRAL INDEX KEY: 0001017907 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 751328153 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12117 FILM NUMBER: 06826638 BUSINESS ADDRESS: STREET 1: 3813 GREEN HILLS VILLAGE DRIVE CITY: NASHVILLE STATE: TN ZIP: 37215 BUSINESS PHONE: 615-844-2800 MAIL ADDRESS: STREET 1: 3813 GREEN HILLS VILLAGE DRIVE CITY: NASHVILLE STATE: TN ZIP: 37215 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTE INVESTORS INC DATE OF NAME CHANGE: 19960701 8-K 1 g01452e8vk.htm FIRST ACCEPTANCE CORPORATION FIRST ACCEPTANCE CORPORATION
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 10, 2006 (May 10, 2006)
FIRST ACCEPTANCE CORPORATION
 
(Exact Name of Registrant as Specified in Charter)
         
Delaware   1-6802   75-1328153
         
(State or Other Jurisdiction   (Commission File Number)   (I.R.S. Employer
of Incorporation)       Identification No.)
     
3813 Green Hills Village Drive    
Nashville, Tennessee   37215
     
(Address of Principal Executive Offices)   (Zip Code)
(615) 844-2800
 
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
 
(Former Name or Former Address, if Changed Since Last Report)
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition.
Item 7.01. Regulation FD Disclosure.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
INDEX TO EXHIBITS
EX-99 PRESS RELEASE

Table of Contents

Item 2.02. Results of Operations and Financial Condition.
     On May 10, 2006, First Acceptance Corporation issued a press release announcing its results of operations for the third quarter ended March 31, 2006 of its fiscal year ending June 30, 2006. The text of the release is set forth in Exhibit 99.
Item 7.01. Regulation FD Disclosure.
     On May 10, 2006, First Acceptance Corporation issued a press release announcing its results of operations for the third quarter ended March 31, 2006 of its fiscal year ending June 30, 2006. The text of the release is set forth in Exhibit 99.
Item 9.01. Financial Statements and Exhibits.
     (d) Exhibits
         
  99    
Press release dated May 10, 2006

 

Table of Contents

SIGNATURE
     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, hereunto duly authorized.
         
  FIRST ACCEPTANCE CORPORATION
 		  
  By:   /s/ Stephen J. Harrison    
    Stephen J. Harrison   
    President and Chief Executive Officer   
 
Date: May 10, 2006

 

Table of Contents

INDEX TO EXHIBITS
         
Exhibit No.   Description
  99    
Press release dated May 10, 2006

 

EX-99 2 g01452exv99.txt EX-99 PRESS RELEASE EXHIBIT 99 PRESS RELEASE Source: First Acceptance Corporation Contact: Steve Harrison (615) 844-2885 FIRST ACCEPTANCE CORPORATION REPORTS THIRD QUARTER FINANCIAL RESULTS NASHVILLE, TN, May 10, 2006 /Businesswire-FirstCall/ -- First Acceptance Corporation (NYSE: FAC) today reported its financial results for the third quarter ended March 31, 2006 of its fiscal year ending June 30, 2006. Net income for the three months ended March 31, 2006 was $5.9 million, or $0.12 per share on a fully-diluted basis, compared to $4.4 million, or $0.09 per share on a fully-diluted basis, for the same period of fiscal 2005. Total revenues for the three months ended March 31, 2006 increased 54% from $45.4 million to $70.1 million, over the same period last year. Net income for the nine months ended March 31, 2006 was $13.4 million, or $0.27 per share on a fully-diluted basis, compared to $13.0 million, or $0.27 per share on a fully-diluted basis, for the same period of fiscal 2005. Total revenues for the nine months ended March 31, 2006 increased 49% from $117.0 million to $173.8 million, over the same period last year. Total weighted average diluted shares for the nine months ended March 31, 2006 increased due to the issuance on January 1, 2005 of 750,000 contingent shares pursuant to the USAuto acquisition and shares for both periods increased as a result of the increase in the dilutive effect of stock options when applying the Treasury Stock method. Net income per share for the three and nine months ended March 31, 2006 included gains on sales of foreclosed real estate held for sale of $0.04 and $0.05, respectively, on a fully-diluted basis as compared to $0.01 for the nine months ended March 31, 2005. INSURANCE OPERATIONS o KEY RATIOS -- The Company's loss ratio for the three months ended March 31, 2006 was 69.6%, compared with 66.2% for the same period last year and 67.9% for the quarter ended December 31, 2005. The Company's expense ratio for the three months ended March 31, 2006 was 19.3%, compared with 18.3% for the same period last year and 22.0% for the quarter ended December 31, 2005. As a result, the Company's combined ratio for the three months ended March 31, 2006 was 88.9%, compared with 84.5% for the same period last year and 89.9% for the quarter ended December 31, 2005. The loss ratio has increased primarily as a result of higher loss ratios in expansion states while the expense ratio has increased primarily as a result of costs incurred in opening, operating and developing new retail locations. o OFFICE EXPANSION -- During the three months ended March 31, 2006, the Company opened 28 additional offices, compared to 31 offices added to operations during the three months ended March 31, 2005 and 25 offices added to operations during the three months ended December 31, 2005. The Company also closed four offices during the three months ended March 31, 2006. In addition, the Company acquired 72 offices in Chicago on January 12, 2006. The total number of stores in operation increased from 208 as of March 31, 2005 and 351 as of December 31, 2005 to 447 as of March 31, 2006. o PREMIUM GROWTH -- Total gross premiums earned (before the effects of reinsurance) increased 39% to $55.2 million for the three months ended March 31, 2006 from $39.6 million for the same period last year. The number of insured policies in force serviced by the Company at March 31, 2006 increased 53% over the number of policies in force at March 31, 2005. Net premiums earned increased 45% over this same period as a result of the increase in gross premiums earned, and the increase in the assumed reinsurance percentage for business written in Alabama from 50% to 100% effective February 1, 2005. REAL ESTATE OPERATIONS The Company recognized a pre-tax gain of $2.8 million on the sale of foreclosed real estate held for sale during the three months ended March 31, 2006. Remaining real estate held for sale consists of two tracts of land in San Antonio, Texas. RECENT DEVELOPMENTS As disclosed on January 13, 2006, in order to gain a presence in the market, the Company acquired certain assets (principally the trade names, customer lists and relationships and the lease rights to 72 retail locations) of two non-standard automobile agencies under common control in Chicago, Illinois for $30.0 million in cash. In addition, in accordance with the terms of the acquisition, the Company must pay the agencies up to $4 million in additional consideration if certain financial targets relating to the acquired business for the twelve months ending January 31, 2007 are reached. As a result of this acquisition, the Company is now writing business through First Acceptance Insurance Company, Inc. from these locations. The Company did not acquire any policies in force as part of the transaction. However, the Company is under contract to receive a transaction service fee from the agencies as compensation for servicing the run-off of the policies previously written by the agencies through other insurance companies. The total contract is for $5.0 million of which $3.1 million was earned during the three months ended March 31, 2006. ABOUT FIRST ACCEPTANCE CORPORATION First Acceptance Corporation provides non-standard private passenger automobile insurance, primarily through employee-agents. As of May 1, 2006, the Company leased and operated 450 retail offices in 12 states. The Company's insurance company subsidiaries are licensed to do business in 24 states. This press release contains forward-looking statements. These statements, which have been included in reliance on the "safe harbor" provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth in the Company's Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Actual operations and results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. 2 FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ($000S EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ---------------------- ------------------------ 2006 2005 2006 2005 ------- ------- -------- -------- Revenues: Premiums earned ............................... $55,147 $37,979 $142,717 $ 90,735 Commissions and fees .......................... 7,311 6,290 20,340 19,283 Transaction service fee ....................... 3,100 -- 3,100 -- Ceding commissions from reinsurer ............. -- -- -- 3,603 Gains on sales of foreclosed real estate ...... 2,817 -- 3,638 755 Investment income ............................. 1,646 1,106 3,961 2,455 Other gains ................................... 47 20 51 191 ------- ------- -------- -------- Total revenues .............................. 70,068 45,395 173,807 117,022 ------- ------- -------- -------- Expenses: Losses and loss adjustment expenses ........... 38,374 25,130 97,303 58,877 Insurance operating expenses .................. 21,046 12,176 52,774 34,115 Other operating expenses ...................... 742 715 1,964 1,983 Stock-based compensation ...................... 72 84 418 236 Depreciation .................................. 225 243 604 829 Amortization of identifiable intangible assets 121 199 175 769 Interest expense .............................. 457 69 457 208 ------- ------- -------- -------- Total expenses .............................. 61,037 38,616 153,695 97,017 ------- ------- -------- -------- Income before income taxes ....................... 9,031 6,779 20,112 20,005 Income tax expense ............................... 3,167 2,374 6,735 7,050 ------- ------- -------- -------- Net income ....................................... $ 5,864 $ 4,405 $ 13,377 $ 12,955 ======= ======= ======== ======== Basic net income per share ....................... $ 0.12 $ 0.09 $ 0.28 $ 0.28 ======= ======= ======== ======== Diluted net income per share ..................... $ 0.12 $ 0.09 $ 0.27 $ 0.27 ======= ======= ======== ======== Weighted average basic shares .................... 47,510 47,444 47,474 46,926 ======= ======= ======== ======== Weighted average diluted shares .................. 49,570 49,350 49,541 48,834 ======= ======= ======== ========
3 FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - BY BUSINESS SEGMENT ($000S EXCEPT PER SHARE DATA) (UNAUDITED) INSURANCE OPERATIONS
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31, ---------------------------- ---------------------------- 2006 2005 2006 2005 ------- ------- -------- -------- REVENUES: Premiums earned $55,147 $37,979 $142,717 $ 90,735 Commissions and fees 7,311 6,290 20,340 19,283 Transaction service fee 3,100 -- 3,100 -- Ceding commissions from reinsurer -- -- -- 3,603 Investment income 1,271 676 3,262 1,531 Other gains 47 20 51 191 ------- ------- -------- -------- Total revenues 66,876 44,965 169,470 115,343 ------- ------- -------- -------- EXPENSES: Losses and loss adjustment expenses 38,374 25,130 97,303 58,877 Operating expenses 21,046 12,176 52,774 34,115 Depreciation and amortization 346 442 779 1,598 ------- ------- -------- -------- Total expenses 59,766 37,748 150,856 94,590 ------- ------- -------- -------- Income before income taxes $ 7,110 $ 7,217 $ 18,614 $ 20,753 ======= ======= ======== ========
REAL ESTATE AND CORPORATE (1)
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31, ---------------------------- --------------------------- 2006 2005 2006 2005 ------ ----- ------ ------- REVENUES: Gains on sales of foreclosed real estate $2,817 $ -- $3,638 $ 755 Investment income 375 430 699 924 ------ ----- ------ ------- Total revenues 3,192 430 4,337 1,679 ------ ----- ------ ------- EXPENSES: Operating expenses 742 715 1,964 1,983 Stock-based compensation 72 84 418 236 Interest expense 457 69 457 208 ------ ----- ------ ------- Total expenses 1,271 868 2,839 2,427 ------ ----- ------ ------- Income (loss) before income taxes $1,921 $(438) $1,498 $ (748) ====== ===== ====== =======
(1) Includes activities related to disposing of foreclosed real estate held for sale, interest expense associated with debt, and general corporate overhead. 4 FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000S EXCEPT PER SHARE DATA) (UNAUDITED)
MARCH 31, JUNE 30, 2006 2005 -------- -------- ASSETS Fixed maturities, available-for-sale, at market value $105,131 $ 74,840 Investment in mutual fund, at market value 241 10,920 Cash and cash equivalents 46,514 24,762 Premiums and fees receivable 65,813 42,908 Reinsurance recoverables 2,094 4,490 Deferred tax asset 41,936 48,106 Other assets 15,570 11,031 Foreclosed real estate held for sale 87 961 Goodwill and identifiable intangible assets 142,360 112,704 -------- -------- TOTAL $419,746 $330,722 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Total policy liabilities 135,610 90,649 Notes payable to banks 30,000 -- Other liabilities 14,415 11,744 -------- -------- Total liabilities 180,025 102,393 Total stockholders' equity 239,721 228,329 -------- -------- TOTAL $419,746 $330,722 ======== ======== Book value per share $ 5.04 $ 4.81
5 FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES SUPPLEMENTAL DATA ($000S EXCEPT PER SHARE DATA) (UNAUDITED) GROSS PREMIUMS EARNED BY STATE
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ------------------------- --------------------------- 2006 2005 2006 2005 -------- -------- --------- --------- Gross premiums earned: Georgia ................... $ 17,409 $ 17,756 $ 51,481 $ 51,977 Florida ................... 8,028 187 15,241 187 Alabama ................... 7,426 6,897 21,357 19,484 Tennessee ................. 6,082 6,688 18,293 19,495 Texas ..................... 5,025 2,161 10,327 2,161 Ohio ...................... 3,613 2,930 10,184 7,364 Illinois .................. 2,196 36 2,574 47 Indiana ................... 1,689 623 4,217 1,091 Missouri .................. 1,409 1,124 3,866 2,954 Mississippi ............... 1,355 1,210 3,833 3,184 Pennsylvania .............. 612 -- 1,055 -- South Carolina ............ 331 -- 365 -- -------- -------- --------- --------- Total gross premiums earned 55,175 39,612 142,793 107,944 Premiums ceded ............ (28) (43) (76) (8,422) Premiums not assumed ...... -- (1,590) -- (8,787) -------- -------- --------- --------- Total net premiums earned .... $ 55,147 $ 37,979 $ 142,717 $ 90,735 ======== ======== ========= =========
GAAP COMBINED RATIOS (INSURANCE COMPANIES)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, --------------------- --------------------- 2006 2005 2006 2005 ---- ---- ---- ---- Loss and loss adjustment expense 69.6% 66.2% 68.2% 64.9% Expense(1) ..................... 19.3% 18.3% 20.6% 15.8% ---- ---- ---- ---- Combined ratio ................. 88.9% 84.5% 88.8% 80.7% ==== ==== ==== ====
(1) Insurance operating expenses are reduced by fee income from insureds, ceding commissions received from our quota-share reinsurer and the transaction service fee received from the Chicago agencies whose business we acquired. POLICIES IN FORCE
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, -------------------------- -------------------------- 2006 2005 2006 2005 ------- ------- ------- ------- Policies in force -- beginning of period 132,861 94,273 119,422 91,385 Acquired -- 6,473 -- 6,473 Net increase during period 54,187 21,617 67,626 24,505 ------- ------- ------- ------- Policies in force -- end of period 187,048 122,363 187,048 122,363 ======= ======= ======= =======
6 FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES SUPPLEMENTAL DATA (CONTINUED) (UNAUDITED) NUMBER OF RETAIL LOCATIONS Retail location counts are based upon the date that a location commenced writing business. We had previously reported this information based upon the date that a location was leased and first incurred operating expenses. Count information for all prior periods presented has been restated to conform to the current period's method of presentation. Under the prior basis of presentation, we would have reported a total of 463 locations leased at March 31, 2006.
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, -------------------- --------------------- 2006 2005 2006 2005 ---- ---- ---- ---- Retail locations - beginning of period 351 162 248 133 Opened 28 31 132 61 Acquired 72 15 72 15 Closed (4) -- (5) (1) ---- --- ---- ---- Retail locations - end of period 447 208 447 208 ==== === ==== ====
RETAIL LOCATIONS BY STATE
CHANGE IN LOCATIONS DURING RETAIL LOCATIONS AS OF RETAIL LOCATIONS AS OF THE THREE MONTHS ENDED MARCH 31, DECEMBER 31, MARCH 31, ---------------------- ----------------------- ---------------------- 2006 2005 2005 2004 2006 2005 ---- ---- ---- ---- ---- ---- Alabama 25 24 25 23 -- 1 Florida 40 14 35 1 5 13 Georgia 63 62 63 60 -- 2 Illinois 86 3 15 1 71 2 Indiana 25 21 26 11 (1) 10 Mississippi 8 8 8 6 -- 2 Missouri 20 14 19 14 1 -- Ohio 30 28 30 27 -- 1 Pennsylvania 20 -- 18 -- 2 -- South Carolina 12 -- 4 -- 8 -- Tennessee 20 20 20 19 -- 1 Texas 98 14 88 -- 10 14 --- --- --- --- --- -- Total 447 208 351 162 96 46 === === === === === ==
CHANGE IN LOCATIONS DURING RETAIL LOCATIONS AS OF RETAIL LOCATIONS AS OF THE NINE MONTHS ENDED MARCH 31, JUNE 30, MARCH 31, ---------------------- ----------------------- --------------------------- 2006 2005 2005 2004 2006 2005 ---- ---- ---- ---- ---- ---- Alabama 25 24 25 21 -- 3 Florida 40 14 20 -- 20 14 Georgia 63 62 62 54 1 8 Illinois 86 3 5 -- 81 3 Indiana 25 21 21 4 4 17 Mississippi 8 8 8 5 -- 3 Missouri 20 14 14 10 6 4 Ohio 30 28 29 23 1 5 Pennsylvania 20 -- 7 -- 13 -- South Carolina 12 -- -- -- 12 -- Tennessee 20 20 20 16 -- 4 Texas 98 14 37 -- 61 14 --- --- --- --- --- -- Total 447 208 248 133 199 75 === === === === === ==
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