Mail Stop 0408
August 19, 2005
By U.S. Mail and Facsimile to (404) 806-3801
Vance R. Martin
President
The Money Tree Inc.
114 South Broad Street
Bainbridge, Georgia 39817
Re: The Money Tree Inc.
Amendment No. 3 to Registration Statement on Form S-1
Filed August 8, 2005
File No. 333-122531
Amendment No. 3 to Registration Statement on Form S-1
Filed August 8, 2005
Form No. 333-122533
Dear Mr. Martin:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
General
1. Please incorporate all corresponding changes requested below
into
the Form S-1, file no. 333-122533, as appropriate.
2. We note your response to our prior comment no. 1. However, we
continue to believe that in order to fit within the limits of the
Xerox no-action letter, the interest rate must change according to
a
formula. Otherwise, we might view the post-interest-rate-
adjustment
debentures as a new security.
3. Please include updated interim financial statements as required
by
Rule 3-12 of Regulation S-X.
4. Please update your management`s discussion and analysis as a
result of the inclusion of these interim financial statements.
Refer
to Item 303(b) of Regulation S-K.
Management`s Discussion and Analysis
Overview, page 18
5. In response to our prior comment no. 3 you state that the
inconsistencies between the presentation in your first amendment
and
that in your second amendment is due to reclassification errors
between your direct consumer loans and consumer sales finance
contracts categories. This response fails to address the fact
that
the total volume of loans and contracts made for all three
categories
combined does not reconcile between the two amendments. In fiscal
year ending September 25, 2004 this difference is approximately $5
million. Please explain to us the reasons for the change in this
disclosure.
6. In response to our prior comment no. 5 you revised the lead-in
paragraph on page 20 to state that refinancings represent the
amount
of the pay off of loans refinanced and, along with collections,
reflect cash receipts in the form of repayments made on your
loans.
It is unclear from this revised disclosure whether the entire
amount
of refinancings should be included in your Consolidated Statements
of
Cash Flows. Please provide us with a hypothetical journal entry
depicting a receivable that is refinanced with a portion of the
proceeds being advanced to the customer. In doing so, please
explain
where the individual debits and credits of the journal entry would
be
reflected in your Consolidated Statements of Cash Flows.
7. We note your revised disclosure in response to our prior
comment
no. 6. Please revise to further explain rebates / other
adjustments.
In doing so, please provide an enhanced discussion of rebates of
interest as they relate to the Rule of 78`s. Alternatively,
reference the reader to page F-9 so the reader can better
understand
the nature of these rebates. In addition, please tell us how the
loans refinanced portion of the other adjustments differs from the
separate line item of your reconciliation labeled refinancings.
Analysis of Allowance for Credit Losses, page 24
8. Your response to our prior comment no. 7 indicates that you do
not
recover any portion of Consumer Sales Finance Contracts or Motor
Vehicle Sales Contracts. On page 7 you state that you continually
monitor the delinquency status of your finance receivables and
promptly institute collection efforts. Please revise your
disclosure
on page 25 and your Summary of Significant Accounting Policies on
page F-8 to explain your process for collecting delinquent amounts
related to these receivables.
9. Your revised disclosure in response to our prior comment no. 8
focuses on the termination of the relationship with your former
non-
file insurance carrier and the discovery that more of your
contracts
deemed uncollectible are eligible for recovery. We are unclear
how
this explains the significant increase in charge-offs. Please
revise
to describe the changes in asset quality and other underlying
reasons
for the significant changes in charge-off experience for each year
presented.
Audited Financial Statements
Note 2 - Summary of Significant Accounting Policies - Finance
Receivables, page F-8
10. Your revised disclosure in response to our prior comment no.
14
focuses on underwriting guidelines as a key component in
determining
whether a refinancing should be treated as a new loan. Please
revise
to address whether the terms of the new loan resulting from the
refinancing are at least as favorable to the lender as the terms
for
comparable loans to other customers with similar collection risks
who
are not refinancing. Also address the comparison of the effective
yield between refinancings treated as new loans and loans to other
customers with similar collection risks who are not refinancing.
Refer to paragraphs 12-13 of SFAS 91.
Note 2 - Summary of Significant Accounting Policies - Non-file
insurance, page F-12
11. Your response to our prior comment no. 7 states that you only
file non-file insurance claims relating to direct consumer loans.
Please revise your footnote as well as other relevant sections of
your Form S-1 to indicate how non-file insurance relates to each
type
of finance receivable.
* * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Benjamin Phippen, Staff Accountant, at (202)
551-3697 or Joyce Sweeney, Accounting Branch Chief at (202) 551-
3449
if you have questions regarding comments on the financial
statements
and related matters. Please contact Gregory Dundas at (202) 551-
3436
or me at (202) 551-3698 with any other questions.
Sincerely,
Mark Webb
Legal Branch Chief
cc: Michael K. Rafter, Esq.
Schiff Hardin LLP
1230 Peachtree Street, 18th Floor
Atlanta, Georgia 30309
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Vance R. Martin
The Money Tree
August 19, 2005
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