<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 16, 1994
THE FOOTHILL GROUP, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-5467 94-1663353
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
11111 Santa Monica Boulevard
Los Angeles, California 90025
(Address of principal executive office)
Registrant's telephone number: (310) 996-7000
<PAGE> 2
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 28 - Additional Exhibits
Press release announcing third quarter results.
Press release announcing receipt of Standard & Poor's rating for FCC.
Press release declaring quarterly dividend.
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, hereunto duly authorized.
Dated: November 16, 1994 THE FOOTHILL GROUP, INC.
By: /s/ HENRY K. JORDAN
-------------------
Henry K. Jordan
Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 28
[FOOTHILL LETTERHEAD]
==============================================================================
NEWS
==============================================================================
FOOTHILL GROUP SUBSIDIARY ANNOUNCES
RECEIPT OF STANDARD & POOR'S RATING
LOS ANGELES, CALIFORNIA, November 14, 1994 . . . The Foothill Group,
Inc. (NYSE-FGI) today announced that Foothill Capital Corporation, its
asset-based lending subsidiary, has received an additional investment grade
rating on its senior debt and commercial paper. Standard & Poor's Ratings
Group assigned a 'BBB' rating on Foothill Capital's senior debt and 'A-2' on
its commercial paper.
David C. Hilton, Executive Vice President, stated, "We are very
pleased to receive these investment grade ratings from Standard & Poor's. The
investor base for our commercial paper program, which totaled over $225 million
as of September 30, 1994, should expand as a result of the 'A-2' commercial
paper rating. In addition, Foothill Capital expects to establish a public
medium term note program of approximately $300 million in the first quarter of
1995. This program should significantly broaden the Company's access to the
capital markets. Historically, the term debt of Foothill Capital was issued
privately. We anticipate saving approximately 30 basis points on each public
medium term note issuance when compared to a private term debt issuance.
Foothill Capital anticipates issuing between $100 million and $150 million
annually in the public medium term note market in the next two years.
"Foothill Capital carries investment grade ratings of 'BBB+' on its
senior debt and 'Duff 2' on its commercial paper from Duff & Phelps Credit
Rating Co. Fitch Investors Service, Inc. maintains a 'BBB+' rating on
Foothill Capital's senior obligations and a "F-2' rating on the Company's
commercial paper."
<PAGE> 2
The Foothill Group, Inc. is a specialized financial services company
which operates two tightly linked businesses: commercial lending and money
management. Foothill Capital Corporation, its wholly owned subsidiary,
provides asset-based financing to businesses throughout the United States. The
parent company's money management operation conducts business through
institutional limited partnerships, seeking above average returns by investing
in debt instruments of companies in reorganization or in the process of
restructuring. As of September 30, 1994, Foothill had total assets owned or
under management of more than $1.2 billion.
<PAGE> 3
[FOOTHILL LETTERHEAD]
==============================================================================
NEWS
==============================================================================
THE FOOTHILL GROUP, INC. REPORTS
IMPROVED THIRD QUARTER RESULTS
LOS ANGELES, CALIFORNIA, October 17, 1994 . . . The Foothill Group,
Inc. (NYSE-FGI) today reported net income for the third quarter ended September
30, 1994 of $5,719,000, or 33 cents per fully diluted share, compared with net
income of $5,650,000, or 32 cents per fully diluted share, for the quarter
ended September 30, 1993. For the nine months ended September 30, 1994, net
income increased 57% to $23,764,000, or $1.35 per fully diluted share, compared
with net income of $15,151,000, or 88 cents per fully diluted share, for the
same period in 1993.
Henry K. Jordan, Senior Vice President and Chief Financial Officer,
said, "Third quarter results reflect strong profitability of our asset-based
lending operations and continued growth of the asset-based loan portfolio.
Finance receivables reached $675,759,000 as of September 30, 1994, up 42% on an
annualized basis from $514,518,000 as of December 31, 1993. Included in the
third quarter finance receivable growth were seasonal borrowings by several
clients who typically repay substantial portions of their borrowings as their
seasonal working capital positions strengthen.
"We are especially pleased that over 75% of our third quarter earnings
resulted from asset-based lending operations as compared to 49% in the 1993
third quarter. The credit quality of the Company's asset-based loan portfolio
continued to improve in the third quarter. Margins remained strong for both
the three and nine month periods ended September 30, 1994, due in part to
reductions in the Company's cost of funds. Volatility in the interest rate
environment has minimal impact on the Company's margins due to its
<PAGE> 4
policy of matching interest sensitive assets and liabilities. Net interest
revenue, as a percent of average assets, was 8.60% for the 1994 third quarter,
compared with 8.52% for the third quarter ended September 30, 1993.
"Equity and purchased bank debt positions owned by the Company have
unrealized gains totaling $38,760,000 as of September 30, 1994, up from
$33,719,000 as of June 30, 1994. In addition, investments of Foothill's
managed partnerships show substantial unrealized gains which, if realized, may
contribute to future earnings. The Company anticipates marketing a new fund,
Foothill Partners III, in the spring of 1995. This newest fund will have a
capital subscription goal of $500 million and is expected to commence
operations in 1996. Foothill Partners III will continue the managed
partnerships focus of investing in distressed debt and other securities of
companies in reorganization or in the process of restructuring.
"Book value per common share was $10.21 as of September 30, 1994, up
from $9.02 as of December 31, 1993. The Company repurchased and retired
292,700 common shares during the 1994 third quarter under its previously
announced common stock repurchase program. Total stockholders' equity
increased in the 1994 third quarter to a record $170 million."
The Foothill Group, Inc. is a specialized financial services company
which operates two tightly linked businesses: commercial lending and money
management. Foothill Capital Corporation, its wholly-owned subsidiary,
provides asset-based financing to businesses throughout the United States. The
parent company's money management operation conducts business through
institutional limited partnerships, seeking above average returns by investing
in debt instruments of companies in reorganization or in the process of
restructuring. As of September 30, 1994, Foothill had total assets owned or
under management of more than $1.2 billion.
<PAGE> 5
THE FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1994 1993
- -----------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and cash equivalents $909 $50,907
Equity, debt and partnership investments 39,965 32,842
Finance receivables:
Revolving loans 488,487 326,373
Term loans 187,272 188,145
- ----------------------------------------------------------------------------------------------------------------
Finance receivables 675,759 514,518
Allowance for credit losses 16,960 14,057
- ----------------------------------------------------------------------------------------------------------------
Finance receivables, net 658,799 500,461
Repossessed assets, net 752 -
Prepaid income taxes 8,849 9,009
Deferred fund and debt issuance costs, net 7,877 9,897
Property and equipment, at cost less accumulated depreciation and
amortization ($2,174 at September 30, 1994; $1,769 at December 31, 1993) 2,156 2,269
Other assets (principally monies due from loan participants) 11,105 1,122
- ----------------------------------------------------------------------------------------------------------------
$730,412 $606,507
================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $229,990 $148,283
Other short term borrowings 10,100 -
Senior notes payable 245,444 237,404
Accounts payable and accrued liabilities 22,430 14,948
Subordinated notes and debentures 52,075 53,725
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 560,039 454,360
- ----------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Convertible preferred stock, $1.00 par value, $30.00 per share liquidation
preference, 9% cumulative, 100,000 shares issued and outstanding 2,900 2,900
Class A common stock, no par value, 16,404,391 shares
issued and outstanding (16,538,874 at December 31, 1993) 100,101 101,285
Unrealized gains, net of tax, on marketable debt and equity securities 19,473 19,672
Retained earnings 47,899 28,290
- ----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 170,373 152,147
- ----------------------------------------------------------------------------------------------------------------
$730,412 $606,507
================================================================================================================
</TABLE>
<PAGE> 6
THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended September 30,
-------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 22,149 13.14% $ 16,805 12.62%
Interest expense 7,649 4.54% 5,455 4.10%
- ---------------------------------------------------------------------------------------------------
Net interest revenue 14,500 8.60% 11,350 8.52%
Asset management fees 1,302 0.77% 1,479 1.11%
Gains from asset sales and managed partnerships 2,285 1.36% 5,063 3.80%
Provision for credit losses 3,061 1.82% 3,582 2.69%
General and administrative expenses 4,992 2.96% 4,384 3.29%
- ---------------------------------------------------------------------------------------------------
Income from continuing operations before taxes 10,034 5.95% 9,926 7.45%
Provision for income taxes - continuing operations 4,315 2.56% 4,152 3.12%
- ---------------------------------------------------------------------------------------------------
Income from continuing operations 5,719 3.39% 5,774 4.33%
Loss from discontinued operations - - (124) (0.09)%
- ---------------------------------------------------------------------------------------------------
Net income $ 5,719 3.39% $ 5,650 4.24%
===================================================================================================
<S> <C> <C>
Per share data (shares in thousands):
Primary
Income from continuing operations $0.34 $0.33
Discontinued operations - -
- ---------------------------------------------------------------------------------------------------
Earnings per common and common equivalent share $0.34 $0.33
===================================================================================================
Fully diluted:
Income from continuing operations $0.33 $0.33
Discontinued operations -- (0.01)
- ---------------------------------------------------------------------------------------------------
Earnings per common share assuming full dilution $0.33 $0.32
===================================================================================================
Number of shares used in per share computations
Primary 16,794 16,748
===================================================================================================
Fully diluted 17,481 17,441
===================================================================================================
SELECTED BALANCE SHEET DATA:
Total assets $730,412 $585,596
Average assets** 674,402 548,747
Average assets of continuing operations** 674,402 532,626
Average stockholders' equity** 149,760 139,829
Average stockholders' equity in continuing operations** 149,760 123,708
Finance receivables 675,759 529,778
Average finance receivables** 615,699 507,930
===================================================================================================
Sources of funds employed:
Commercial paper $229,990 $171,240
Other short term borrowings 10,100 -
Senior notes 245,444 212,359
Subordinated notes and debentures 52,075 44,910
Stockholders' equity 170,373 142,736
- ---------------------------------------------------------------------------------------------------
Total funds employed $707,982 $571,245
===================================================================================================
Nine months ended September 30,
--------------------------------------
1994 1993
---------------- -----------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 59,182 12.92% $ 47,211 12.92%
Interest expense 18,799 4.10% 15,468 4.23%
- ---------------------------------------------------------------------------------------------------
Net interest revenue 40,383 8.82% 31,743 8.69%
Asset management fees 4,157 0.91% 4,706 1.29%
Gains from asset sales and managed partnerships 22,795 4.98% 14,036 3.84%
Provision for credit losses 7,989 1.74% 9,744 2.67%
General and administrative expenses 17,654 3.85% 14,039 3.84%
- ---------------------------------------------------------------------------------------------------
Income from continuing operations before taxes 41,692 9.12% 26,702 7.31%
Provision for income taxes - continuing operations 17,928 3.91% 11,208 3.07%
- ---------------------------------------------------------------------------------------------------
Income from continuing operations 23,764 5.21% 15,494 4.24%
Loss from discontinued operations - - (343) (0.09)%
- ---------------------------------------------------------------------------------------------------
Net income $ 23,764 5.21% $ 15,151 4.15%
===================================================================================================
<S> <C> <C>
Per share data (shares in thousands):
Primary
Income from continuing operations $1.39 $0.92
Discontinued operations - (0.02)
- ---------------------------------------------------------------------------------------------------
Earnings per common and common equivalent share $1.39 $0.90
===================================================================================================
Fully diluted:
Income from continuing operations $1.35 $0.90
Discontinued operations - (0.02)
- ---------------------------------------------------------------------------------------------------
Earnings per common share assuming full dilution $1.35 $0.88
===================================================================================================
Number of shares used in per share computations
Primary 16,900 16,637
===================================================================================================
Fully diluted 17,574 17,318
===================================================================================================
SELECTED BALANCE SHEET DATA:
Total assets $730,412 $585,596
Average assets** 610,778 503,792
Average assets of continuing operations** 610,778 487,385
Average stockholders' equity** 145,185 134,763
Average stockholders' equity in continuing operations** 145,185 118,356
Finance receivables 675,759 529,778
Average finance receivables** 559,688 464,971
===================================================================================================
Sources of funds employed:
Commercial paper $229,990 $171,240
Other short term borrowings 10,100 -
Senior notes 245,444 212,359
Subordinated notes and debentures 52,075 44,910
Stockholders' equity 170,373 142,736
- ---------------------------------------------------------------------------------------------------
Total funds employed $707,982 $571,245
===================================================================================================
*Percentages are computed using average assets of continuing operations (excluding unrealized gains
on investments) and have been annualized. Discontinued operations are those of Foothill Thrift
and Loan which was spun off to stockholders on December 23, 1993.
**Averages are for the three and nine months ended. Average assets and average equity exclude
unrealized gains on marketable debt and equity securities.
</TABLE>
<PAGE> 7
THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended September 30,
------------------------------------------
1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 21,828 13.62% $ 16,596 12.69%
Interest expense 7,898 4.93% 5,759 4.40%
- ----------------------------------------------------------------------------------
Net interest revenue 13,930 8.69% 10,837 8.29%
Gains on asset sales 271 0.17% 3,010 2.30%
Provision for credit losses 2,957 1.84% 3,482 2.66%
General and administrative expenses 4,319 2.69% 3,725 2.85%
- ----------------------------------------------------------------------------------
Income before income taxes 6,925 4.33% 6,640 5.08%
Provision for income taxes 2,978 1.86% 2,789 2.13%
- ----------------------------------------------------------------------------------
Net income $ 3,947 2.47% $ 3,851 2.95%
==================================================================================
SELECTED BALANCE SHEET DATA:
Total assets $693,696 $543,057
Average assets** 641,112 522,966
Finance receivables 663,366 524,164
Average finance receivables** 602,397 505,471
==================================================================================
Sources of funds employed:
Commercial paper $229,990 $171,240
Other short term borrowings 10,100 -
Senior notes 243,650 208,173
Subordinated notes and debentures 61,575 57,160
Stockholder's equity 129,691 93,524
- ----------------------------------------------------------------------------------
Total funds employed $675,006 $530,097
==================================================================================
OTHER SELECTED DATA:
Nonperforming finance receivables
and repossessed assets*** $ 6,698 $ 14,500
Allowance for credit losses $ 16,657 $ 13,357
Actual writeoffs during the period $ 1,657 $ 2,502
Number of employees 115 108
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------------------
1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 58,216 13.45% $ 46,503 12.93%
Interest expense 19,541 4.51% 16,341 4.54%
- ----------------------------------------------------------------------------------
Net interest revenue 38,675 8.94% 30,162 8.39%
Gains on asset sales 13,521 3.12% 8,989 2.50%
Provision for credit losses 7,885 1.82% 9,304 2.59%
General and administrative expenses 15,056 3.48% 11,921 3.31%
- ----------------------------------------------------------------------------------
Income before income taxes 29,255 6.76% 17,926 4.99%
Provision for income taxes 12,580 2.91% 7,529 2.09%
- ----------------------------------------------------------------------------------
Net income $ 16,675 3.85% $ 10,397 2.90%
==================================================================================
SELECTED BALANCE SHEET DATA:
Total assets $693,696 $543,057
Average assets** 577,110 479,551
Finance receivables 663,366 524,164
Average finance receivables** 550,393 461,545
=================================================================================
Sources of funds employed:
Commercial paper $229,990 $171,240
Other short term borrowings 10,100 -
Senior notes 243,650 208,173
Subordinated notes and debentures 61,575 57,160
Stockholder's equity 129,691 93,524
- ---------------------------------------------------------------------------------
Total funds employed $675,006 $530,097
=================================================================================
OTHER SELECTED DATA:
Nonperforming finance receivables
and repossessed assets*** $ 6,698 $ 14,500
Allowance for credit losses $ 16,657 $ 13,357
Actual writeoffs during the period $ 5,085 $ 6,474
Number of employees 115 108
=================================================================================
*Percentages are computed using average assets (excluding unrealized gains
on investments) and have been annualized.
**Averages are for the three and nine months ended. Average assets exclude
unrealized gains on marketable debt and equity securities.
***Includes repossessed assets and loans that have contractual installments
more than sixty days past due.
</TABLE>
<PAGE> 8
[FOOTHILL LETTERHEAD]
==============================================================================
NEWS
==============================================================================
THE FOOTHILL GROUP, INC. DECLARES
QUARTERLY DIVIDEND
LOS ANGELES, CALIFORNIA, October 18, 1994 . . . The Foothill Group,
Inc. (NYSE-FGI) Board of Directors today declared a $.06 quarterly cash
dividend on its Class A common stock. The dividend is payable on January 20,
1995, to shareholders of record on December 20, 1994.
The Foothill Group, Inc. is a specialized financial services company
which operates two tightly linked businesses: commercial lending and money
management. Foothill Capital Corporation, its wholly owned subsidiary,
provides asset-based financing to businesses throughout the United States. The
parent company's money management operation conducts business through
institutional limited partnerships, seeking above average returns by investing
in debt instruments of companies in reorganization or in the process of
restructuring. As of September 30, 1994, Foothill had total assets owned or
under management of more than $1.2 billion.
