Onyx Acceptance Corporation Announces 4Q Operating Results
26 January 1999
Onyx Acceptance Corporation Announces Fourth Quarter Operating Results, Opening of New Corporate Headquarters, and Restatement of Prior Period Results
FOOTHILL RANCH, Calif., Jan. 26 -- Onyx Acceptance
Corporation announced today net income of $2.5 million, or
$.39 per diluted share, for its fourth quarter ended December 31, 1998, versus
a restated loss of ($268,011), or ($.04) per share, for the quarter ended
December 31, 1997.
For the twelve months ended December 31, 1998, Onyx reported net income of
$6.1 million, or $.95 per diluted share, versus restated earnings of
$1.3 million, or $.21 per diluted share, for the twelve months ended December
31, 1997. On a comparative basis, net income increased 369% and earnings per
diluted share rose 352%.
In December of 1998, the Company relocated to its new corporate
headquarters in Foothill Ranch, California from its former location in Irvine,
California. The Company signed a ten year lease and will initially occupy
approximately 69,000 square feet of the new building. The move into this
building will accommodate the ever growing needs for space as the Company's
operations continue to expand and will enhance the servicing and
administrative capabilities of the Company over the next decade.
Contracts purchased were $304.2 million for the fourth quarter of 1998, an
increase of 67% over contracts purchased of $182.3 million for the fourth
quarter of 1997. For the twelve months ended December 31, 1998, contracts
purchased were $1.04 billion, compared to contracts purchased of
$605.9 million for the twelve months ended December 31, 1997, an increase of
72%. Onyx's servicing portfolio totaled $1.35 billion at December 31, 1998,
compared to a servicing portfolio of $757.3 million at December 31, 1997, an
increase of 78%.
Net charge-offs improved to 1.72% of average serviced contracts
outstanding for the year ended December 31, 1998, compared to 2.03% for the
year ended December 31, 1997.
Serviced contracts over thirty days delinquent were 2.83% of total
serviced contracts at December 31, 1998, compared to 2.51% at December 31,
1997.
The Company increased its off balance sheet reserves from 3.57% at
December 31, 1997 to 4.31% of securitized assets at December 31, 1998.
As required by the Financial Accounting Standards Board's (FASB) Special
Report, " A Guide to Implementation of Statement 125 on Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, Second Edition," dated December 1998, and related guidance set
forth in statements made by the staff of the Securities and Exchange
Commission (SEC) on December 8, 1998, the Company has retroactively changed
its practice of measuring and accounting for credit enhancement assets on its
securitization transactions to the cash-out method from the cash-in method.
As a result, Onyx announced a restatement of its financial statements for the
years ended December 31, 1997, and 1996, and for the first three quarters of
1998.
Initial deposits to restricted cash accounts, if any, and subsequent cash
flows received by securitization trusts sponsored by the Company accumulate as
credit enhancement assets until certain targeted levels are achieved, after
which cash is distributed to the Company on an unrestricted basis. Under the
cash-in method previously used by the Company, (i) the assumed discount period
for measuring the present value of credit enhancement assets ended when cash
flows were received by the securitization trusts and (ii) initial deposits to
restricted cash accounts were recorded at face value. Under the cash-out
method now required by the FASB and SEC, the assumed discount period for
measuring the present value of credit enhancement assets ends when cash,
including return of the initial deposits, if any, is distributed to the
Company on an unrestricted basis.
The change to the cash-out method results only in a difference in the
timing of revenue recognition from a securitization and has no effect on the
total cash flows of such transactions. While the total amount of revenue
recognized over the term of a securitization transaction is the same under
either method, the cash-out method results in (i) lower initial gains on the
sale of receivables due to the longer discount period and (ii) higher
subsequent servicing fee income from accretion of the additional cash-out
discount. Accordingly, the reductions in previously reported earnings
resulting from retroactive application of the change will generally be
recognized in subsequent period earnings as servicing fee income.
The restatement resulted in the following changes to prior period
financial statements:
(Unaudited)
Quarters Ended Years Ended
September 30, June 30, March 31, December 31,
1998 1998 1998 1997 1996
Total Revenue:
Previous $16,778,867 $14,170,517 $11,925,319 $35,950,298 $25,220,504
As Restated $16,471,933 $13,727,267 $11,779,316 $33,812,085 $22,626,935
Net Income
Previous $1,928,778 $1,354,359 $827,771 $2,584,115 $7,671,826
As Restated $1,752,524 $1,095,058 $742,360 $1,302,271 $6,115,587
Earnings per Share
Previous $0.30 $0.21 $0.13 $0.40 $1.35
As Restated $0.27 $0.17 $0.12 $0.21 $1.09
Credit Enhancement
Assets (End of Period)
Previous $106,658,670 $94,767,231 $85,630,942 $76,467,434 $39,737,729
As Restated$101,030,700$89,446,195 $80,753,156 $71,735,651 $37,144,160
Shareholders' Equity
(End of Period)
Previous $44,699,382 $42,761,584 $41,387,818 $40,555,492 $37,913,816
As Restated$41,340,334 $39,578,790 $38,464,325 $37,717,413 $36,357,577
The Company will amend its quarterly reports on Form 10-Q for the quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998 in connection with
the restatement.
Onyx Acceptance Corporation is a specialized automobile finance company
based in Foothill Ranch, CA. Onyx provides financing to new and select used
car dealerships through its 14 Auto Finance Centers. The Centers are located
in prime automobile markets across the nation.
This news release contains forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. The most significant among these risks and
uncertainties are (a) the Company's level of delinquencies, gross charge-offs
and net losses, (b) the ability to achieve adequate interest rate spreads, (c)
the effects of economic factors on consumer debt, and (d) the continued
availability of liquidity sources. Other important factors are detailed in
the Company's annual report on Form 10-K for the year ended December 31, 1997
and its quarterly reports on Form 10-Q for the periods ended March 31, June
30, and September 30, 1998.
Please visit the Onyx Acceptance web site at http://www.onyxacceptance.com
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
(RESTATED)
December 31, December 31,
1998 1997
ASSETS
CASH & CASH EQUIVALENTS $1,928,991 $991,010
CONTRACTS HELD FOR SALE -
Net of Allowance(a) 152,760,781 64,342,309
CREDIT ENHANCEMENT ASSETS 112,953,193 71,735,651
OTHER ASSETS 7,778,759 4,767,494
TOTAL ASSETS $275,421,724 $141,836,464
LIABILITIES AND EQUITY
LIABILITIES
DEBT $209,600,061 $90,756,975
OTHER LIABILITIES 21,997,942 13,362,076
TOTAL LIABILITIES 231,598,003 104,119,051
TOTAL EQUITY 43,823,721 37,717,413
TOTAL LIABILITIES AND EQUITY $275,421,724 $141,836,464
(a)Net of Unearned Discounts
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 3l, December 3l,
(Restated) (Restated)
1998 1997 1998 1997
REVENUES:
Net Finance Revenue 1,260,232 1,210,556 7,311,676 5,036,686
Gain on Sale of Loans 10,506,120 6,805,828 36,417,216 19,586,291
Service Fee Income 6,647,475 847,354 16,663,450 9,189,108
Total Revenues 18,413,827 8,863,738 60,392,342 33,812,085
EXPENSES:
Provision for
credit losses 350,066 180,807 1,579,831 785,446
Operating Expenses 13,814,458 9,153,454 48,426,558 30,740,351
Total Expenses 14,164,524 9,334,261 50,006,389 31,525,797
NET INCOME BEFORE
INCOME TAXES 4,249,303 (470,523) 10,385,953 2,286,288
INCOME TAXES 1,763,460 (202,512) 4,310,169 984,017
NET INCOME $2,485,843 ($268,011) $6,075,784 $1,302,271
NET INCOME PER
SHARE - BASIC $0.40 ($0.04) $0.99 $0.22
NET INCOME PER
SHARE - DILUTED $0.39 ($0.04) $0.95 $0.21
BASIC SHARES
OUTSTANDING 6,169,884 6,017,635 6,112,370 6,000,431
DILUTED SHARES
OUTSTANDING 6,363,599 6,017,635 6,424,959 6,294,071
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
DELINQUENCY AND LOSS RATES
(UNAUDITED)
(In Thousands)
Three Months Ended
December 31,
1998 1997
Contracts Purchased $304,200 $182,311
Twelve Months Ended
December 3l,
1998 1997
Contracts Purchased $1,038,535 $605,905
Number of Number of
Delinquency Experience Contracts $ Contracts $
Servicing Portfolio 131,862 $1,345,961 73,502 $757,277
Serviced Delinquency
31 to 59 days 2,766 $26,410 1,211 $11,902
60 to 89 days 691 6,876 346 3,370
90 days or more 455 4,790 316 3,743
Total 3,912 $38,076 1,873 $19,015
Delinquency as
a percentage of number
and amount of contracts 2.97% 2.83% 2.55% 2.51%
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
Loss Experience
Average Contracts Serviced
during the period $1,257,716 $696,677 $1,023,237 $563,343
Gross Charge-offs $5,812.6 $4,088.8 $20,639.9 $13,076.1
Recoveries $769.8 $535.9 $3,021.5 $1,642.2
Net Charge-offs $5,042.8 $3,552.9 $17,618.4 $11,433.9
Net Charge-offs as a percentage
of contracts outstanding during
the period 1.60% 2.04% 1.72% 2.03%
Onyx Acceptance Corporation
Static Pool Information through December 1998
Month 96-1 96-2 96-3 96-4
1 0.00% 0.01% 0.00% 0.00%
2 0.03% 0.07% 0.02% 0.02%
3 0.05% 0.20% 0.07% 0.05%
4 0.11% 0.33% 0.16% 0.14%
5 0.23% 0.46% 0.43% 0.24%
6 0.40% 0.78% 0.54% 0.38%
7 0.69% 0.98% 0.74% 0.53%
8 0.82% 1.15% 0.97% 0.81%
9 0.93% 1.39% 1.13% 0.98%
10 1.15% 1.52% 1.32% 1.18%
11 1.25% 1.69% 1.47% 1.43%
12 1.47% 1.94% 1.60% 1.63%
13 1.65% 2.08% 1.77% 1.73%
14 1.79% 2.34% 1.94% 1.87%
15 2.02% 2.52% 2.09% 2.07%
16 2.25% 2.76% 2.27% 2.23%
17 2.43% 2.89% 2.42% 2.33%
18 2.59% 3.10% 2.57% 2.49%
19 2.77% 3.14% 2.70% 2.62%
20 2.93% 3.30% 2.83% 2.73%
21 3.06% 3.47% 2.94% 2.84%
22 3.15% 3.60% 3.00% 2.93%
23 3.21% 3.70% 3.08% 3.02%
24 3.28% 3.81% 3.17% 3.10%
25 3.40% 3.93% 3.28% 3.22%
26 3.43% 4.06% 3.38%
27 3.55% 4.13% 3.43%
28 3.60% 4.22% 3.54%
29 3.73% 4.23%
30 3.75% 4.29%
31 3.79% 4.31%
32 3.85% 4.33%
33 3.88%
34 3.90%
35 3.94%
36 3.94%
Month 97-1 97-2 97-3 97-4
1 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00% 0.00%
3 0.03% 0.02% 0.02% 0.01%
4 0.06% 0.07% 0.09% 0.04%
5 0.13% 0.22% 0.13% 0.11%
6 0.26% 0.32% 0.24% 0.20%
7 0.37% 0.59% 0.36% 0.28%
8 0.52% 0.80% 0.47% 0.43%
9 0.60% 0.91% 0.62% 0.55%
10 0.76% 1.07% 0.73% 0.72%
11 0.92% 1.26% 0.81% 0.87%
12 1.02% 1.42% 0.94% 0.95%
13 1.13% 1.58% 1.10% 1.08%
14 1.23% 1.68% 1.23%
15 1.40% 1.80% 1.38%
16 1.56% 1.97% 1.58%
17 1.68% 2.10%
18 1.75% 2.23%
19 1.85% 2.35%
20 1.92%
21 1.98%
22 2.09%
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Month 98-1 98-A 98-B 98-C
1 0.00% 0.00% 0.00% 0.00%
2 0.01% 0.01% 0.00% 0.02%
3 0.02% 0.03% 0.02%
4 0.08% 0.07% 0.08%
5 0.14% 0.14%
6 0.24% 0.23%
7 0.40% 0.37%
8 0.53%
9 0.68%
10 0.85%
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36