Date: Thu, 18 Dec 1997 08:38:57 GMT Server: Apache/1.2.1 Last-Modified: Mon, 20 May 1996 22:36:57 GMT ETag: "bfc5f-226d-31a0f409" Content-Length: 8813 Accept-Ranges: bytes Connection: close Content-Type: text/html KBK - Independent Auditor's Report KBK CAPITAL CORPORATION AND SUBSIDIARY
INDEPENDENT AUDITORS' REPORT

The Board of Directors
KBK Capital Corporation:

We have audited the accompanying consolidated balance sheets of KBK Capital Corporation and subsidiary (the Company) as of December 31, 1995 and 1994, and the related consolidated statements of income, changes in stockholders' equity and cash flows for years then ended. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements, based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of KBK Capital Corporation and subsidiary at December 31, 1995 and 1994, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.

As discussed in notes 1 and 3, the Company changed its method of accounting for impairment of loans receivable to adopt the provisions of the Statement of Financial Accounting Standards Board's No. 114 "Accounting by Creditors for Impairment of a Loan," as amended by Statement of Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures" on January 1, 1995.

Fort Worth, Texas
January 19, 1996
KPMG Peat Marwick LLP

KBK CAPITAL CORPORATION AND SUBSIDIARY
QUARTERLY SUMMARY RESULTS (Unaudited)
(dollars in thousands except per share amounts)

YTD 1995 YTD 1994
1995 4TH QTR 3RD QTR 2ND QTR 1ST QTR 1994 4TH QTR 3RD QTR 2ND QTR 1ST QTR
VOLUME $ 377,920 $ 104,480 $ 98,465 $ 87,800 $ 87,174 $ 267,150 $ 86,161 $ 58,731 $ 63,782 $ 58,476
Revenue $ 10,945 $ 3,143 $ 2,890 $ 2,541 $ 2,371 $ 6,896 $ 1,966 $ 1,571 $ 1,680 $ 1,679
Interest Expense 1,653 396 378 402 477 806 252 114 233 208
Operating Expenses 5,667 1,614 1,409 1,296 1,348 3,531 996 916 866 753
Operating profit 3,625 1,133 1,103 843 546 2,559 718 541 581 718
Provision for credit losses 600 105 370 100 25 65 50 - 10 5
Pretax Income 3,025 1,028 733 743 521 2,494 668 541 571 713
Taxes 1,177 389 288 300 200 864 222 187 202 251
Net Consolidated Income $ 1,848 $ 639 $ 445 $ 443 $ 321 $ 1,630 $ 446 $ 354 $ 369 $ 462
PRIMARY EPS $ 0.51 $ 0.18 $ 0.12 $ 0.12 $ 0.09 $ 0.56 $ 0.14 $ 0.11 $ 0.14 $ 0.19
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