UNITED STATES 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 DECEMBER 31, 1996
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 33-21796
JHM ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 52-1472693
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8300 GREENSBORO DRIVE, SUITE 970, MCLEAN, VA 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, include area code: (703)749-8225
c/o EXECUTIVE OFFICES, INC., 42-C READ'S WAY, NEW CASTLE, DE 19720
(Former name, former address and former fiscal year if changed
from 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.
At February 6, 1997, the registrant had 7 shares of common stock
outstanding.
JHM ACCEPTANCE CORPORATION
INDEX TO FORM 10-Q
For Quarter Ended December 31, 1996
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets (unaudited) as of December 31, 1996
and March 31, 1996 4
Statements of Income (unaudited) for the three
months and nine months ended December 31, 1996
and December 31, 1995 5
Statements of Cash Flows (unaudited) for the nine
months ended December 31, 1996 and December 31, 1995 6
Notes to Financial Statements (unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements included herein have been prepared by
JHM Acceptance Corporation ("JMAC"), without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such SEC rules and regulations, although
JMAC believes that the disclosures are adequate to make the
information presented not misleading.In the opinion of Management,
all adjustments (consisting of normal recurring adjustments)
necessary to fairly present the financial position, results of
operations and cash flows at December 31, 1996, and for all the
periods presented have been made.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in JMAC's report on Form 10-K for the fiscal year
ended March 31, 1996.
JHM ACCEPTANCE CORPORATION
BALANCE SHEETS
(unaudited)
December 31,1996 March 31,1996
---------- ----------
ASSETS
Restricted Cash and
Marketable Securities $ 229,000 $ 211,000
Goodwill, net of accumulated
amortization of $1,400,000 and
$1,387,000, respectively 87,000 103,000
---------- ----------
Total Assets $ 316,000 $ 314,000
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Due to affiliates $ 228,000 $ 210,000
---------- ----------
Total Liabilities 228,000 210,000
---------- ----------
Stockholder's Equity:
Common stock - $10 par value,
10,000 shares authorized, 7 shares
issued and outstanding 1,000 1,000
Additional paid-in capital 3,127,000 3,127,000
Retained deficit (3,040,000) (3,024,000)
---------- ----------
Total Stockholder's Equity 88,000 104,000
---------- ----------
Total Liabilities and
Stockholder's Equity $ 316,000 $ 314,000
========== ==========
<FN>
The accompanying notes are an integral part of these balance sheets.
JHM ACCEPTANCE CORPORATION
STATEMENTS OF INCOME
(unaudited)
For the three For the nine
months ended months ended
December 31, December 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
REVENUES
Interest and other
income $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
Total Revenue 0 0 0 0
---------- ---------- ---------- ----------
EXPENSES
Goodwill amortization 3,000 6,000 16,000 114,000
Accounting, legal,
administrative and
other expenses 0 0 0 0
---------- ---------- ---------- ----------
Total Expenses 3,000 6,000 16,000 114,000
---------- ---------- ---------- ----------
Net Loss $ ( 3,000) $ ( 6,000) $ (16,000) $ (114.000)
========== ========== ========== ==========
<FN>
The accopmanying notes are an integral part of these statements.
JHM ACCEPTANCE CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
For the nine For the nine
months ended months ended
December 31, 1996 December 31, 1995
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (16,000) $ (108,000)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Goodwill amortization 16,000 107,000
Increase in due to affiliates 18,000 4,000
---------- ----------
Total Adjustments 34,000 111,000
---------- ----------
Net Cash Provided by Operating
Activities 18,000 3,000
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution 0 1,000
---------- ----------
Net Cash Provided by Financing
Activities 0 1,000
---------- ----------
Net increase in cash 18,000 4,000
Cash, beginning of period 211,000 200,000
---------- ----------
Cash, end of period $ 229,000 $ 204,000
========== ==========
<FN>
The accompanying notes are an integral part of these statements.
JHM ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
(unaudited)
Note 1. General
The accompanying financial statements reflect the accounts of JHM Acceptance
Corporation ("JMAC"). The unaudited statements as of December 31, 1996
and 1995, respectively, reflect, in the opinion of management, all
adjustments (normal recurring in nature) necessary to present fairly the
financial position as of December 31, 1996 and the results of operations and
cash flows for the nine months ended December 31, 1996 and 1995, respectively.
These financial statements have been prepared by JMAC, without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although JMAC believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that
these financial statements be read in conjunction with the financial
statements and notes thereto included in JMAC's report on Form 10-K for
the fiscal year ended March 31, 1996.
Note 2. Organization
JHM Acceptance Corporation was organized as a Delaware corporation on
March 31, 1986. Prior to March 7, 1988, JMAC was known as Oxford
Acceptance Corporation and from March 7, 1988 to May 24, 1988,
JMAC was known as Montgomery Acceptance Corporation.
JMAC was organized for the purpose of issuing and selling collateralized
mortgage obligations ("Bonds"), other notes and obligations, and acquiring,
owning, holding, and pledging Mortgage-Backed Certificates guaranteed by
the Government National Mortgage Association ("GNMA Certificates"),
Guaranteed Mortgage Pass-Through Certificates issued by the Federal National
Mortgage Association ("FNMA Certificates"), Mortgage Participation
Certificates issued by the Federal Home Loan Mortgage Corporation
("FHLMC Certificates") (collectively, the "Mortgage Certificates") and
obligations of others which are secured by the types of instruments
referred to above.
Note 3. Basis of Presentation
As of March 31, 1989, JMAC had sold the residual cash flows for all
outstanding series of Bonds. As a result, JMAC currently has no sources
of cash flow from operations. All cash flows from the Mortgage
Certificates are restricted and must be paid first to the bondholders and
then any excess (net of expenses) is distributed to the residual interest
holders. JMAC has no responsibility for expenses related to its remaining
three Series A, C, and E Bonds.
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that could affect the amounts represented in the financial statements and
accompanying notes. Actual results could differ from these estimates.
Note 4. Summary of Significant Accounting Policies
Goodwill
Goodwill represents the value attributed to the benefits of contracts for
bond administration services. An affiliate, performs the servicing and
records the related revenue. Goodwill is amortized using a level yield
method. The method adjusts goodwill amortization to reflect changes in
prepayment speeds on the Mortgage Certificates.
Income Taxes
In accordance with an informal tax sharing plan, JMAC files a consolidated
tax return with its parent, JDS Capital Corporation, formerly known as JHM
Capital Corporation. In accordance with the plan, JMAC receives no benefit
for net operating losses. No significant timing differences exist as of
December 31, 1996. No provision for taxes has been recorded for the nine
months ended December 31, 1996 and December 31, 1995 due to net operating
losses.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Capital Resources and Liquidity
JMAC's sources of funds with respect to its Bonds are receipts of principal
and interest on the Mortgage Certificates, pledged as collateral for each
series of Bonds, and the reinvestment income thereon. Management believes
that these sources of funds will be sufficient to pay the Bonds in
accordance with their terms. As of March 31, 1989, JMAC had sold the
residual cash flows for all of its outstanding series. As a result, JMAC
currently has (a) no sources of cash flows as all cash flows from the
Mortgage Certificates are restricated and must be paid first to the
bondholders and then any excess (net of expenses) is distributed to the
residual interest holders; and (b) no responsibilty for expenses related
to its three remaining series.
At December 31, 1996, JMAC had a remaining balance available for issuance of
additional bonds of $399,750,000 from previous shelf registrations.
A post-effective Amendment No. 2 to Form S-11 on Form S-3 was filed with
the Commission on October 17, 1990.
Results of Operations
JMAC issued its Series A Bonds in June, 1987, Series C Bonds in
October, 1987, and Series E Bonds in March, 1989. The prepayment
rates on the mortgage certificates securing certain of JMAC's bonds
affect the related goodwill amortization.
Goodwill amortization decreased to $16,000 for the nine months ended
ended December 31, 1996 compared to $114,000 for the nine months ended
December 31, 1995. The decrease is due to the redemption of JMAC's Series B
Bonds in 1995 and the resulting amortization of the related goodwill.
JHM ACCEPTANCE CORPORATION
FORM 10-Q
PART II. OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
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.
JHM ACCEPTANCE CORPORATION
(Registrant)
February 6, 1997 Stephen P. Gavula
Date Stephen P. Gavula
Chairman of the Board of Directors
and Chief Executive Officer
February 6, 1997 Arthur F. Trudel
Date Arthur F. Trudel
Senior Vice President
and Chief Financial and Accounting Officer