<PAGE> 1
United States
Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31,1994
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 0-5467
THE FOOTHILL GROUP, INC.
- - ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-1663353
- - --------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11111 Santa Monica Boulevard
Los Angeles, California 90025
- - --------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(310) 996-7000
- - ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- - ------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since 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
--- ---
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of latest practicable date.
<TABLE>
<CAPTION>
Title of Each Class Number of Shares Outstanding
------------------- ----------------------------
<S> <C>
Class A Common Stock, No Par Value 16,592,016
(As of March 31,1994)
</TABLE>
<PAGE> 2
THE FOOTHILL GROUP, INC.
FORM 10-Q
INDEX
<TABLE>
<S> <C>
Part I - Financial Information Page No.
- - ------------------------------ --------
Item 1. Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . 4 to 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 6 to 12
Part II - Other Information
- - ---------------------------
Items 1 to 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
THE FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 AND DECEMBER 31, 1993
(Dollars in thousands)
ITEM 1
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
1994 1993
- - ------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 16,368 $ 50,907
Finance receivables:
Accounts receivable loans 335,586 326,373
Term loans 185,111 188,145
- - ------------------------------------------------------------------------------------------------------------------
Finance receivables 520,697 514,518
Allowance for credit losses 14,657 14,057
- - ------------------------------------------------------------------------------------------------------------------
Finance receivables, net 506,040 500,461
Repossessed assets, net - -
Equity, debt and partnership investments 32,715 32,842
Prepaid income taxes 9,196 9,009
Deferred fund and debt issuance costs, net 8,793 9,897
Property and equipment, at cost less accumulated depreciation and
amortization ($1,920 at March 31, 1994; $1,769 at December 31, 1993) 2,239 2,269
Other assets 4,732 1,122
- - ------------------------------------------------------------------------------------------------------------------
$580,083 $606,507
==================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $ 98,829 $148,283
Senior notes payable 236,806 237,404
Accounts payable and accrued liabilities 26,740 14,948
Subordinated notes and debentures 53,725 53,725
- - ------------------------------------------------------------------------------------------------------------------
Total liabilities 416,100 454,360
- - ------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Convertible preferred stock, $1.00 par value, $30.00 per share
preference, 9% cumulative, 100,000 shares issued and outstanding 2,900 2,900
Class A common stock, no par value, 16,592,016 shares
issued and outstanding (16,538,874 at December 31, 1993) 101,686 101,285
Unrealized gains, net of tax, on marketable debt and equity securities 20,561 19,672
Retained earnings 38,836 28,290
- - ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 163,983 152,147
- - ------------------------------------------------------------------------------------------------------------------
$580,083 $606,507
==================================================================================================================
</TABLE>
See accompanying notes.
1
<PAGE> 4
THE FOOTHILL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
1994 1993
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income $15,146 $12,984
Interest expense 5,177 4,940
- - --------------------------------------------------------------------------------------------------------------
Interest margin 9,969 8,044
Fees and other income 8,964 4,733
- - --------------------------------------------------------------------------------------------------------------
Total margin 18,933 12,777
Gain on investments, net 10,146 179
Provision for credit losses 2,415 3,403
General and administrative 6,590 4,357
- - --------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 20,074 5,196
Provision for income taxes - continuing operations 8,632 2,187
- - --------------------------------------------------------------------------------------------------------------
Income from continuing operations 11,442 3,009
Income from discontinued operations - 410
- - --------------------------------------------------------------------------------------------------------------
Net income $11,442 $ 3,419
==============================================================================================================
Per share data (shares in thousands):
Primary:
Income from continuing operations $ 0.67 $ 0.18
Discontinued operations - 0.02
- - --------------------------------------------------------------------------------------------------------------
Earnings per common and common equivalent share $ 0.67 $ 0.20
==============================================================================================================
Fully diluted:
Income from continuing operations $ 0.65 $ 0.18
Discontinued operations - 0.02
- - --------------------------------------------------------------------------------------------------------------
Earnings per common share assuming full dilution $ 0.65 $ 0.20
==============================================================================================================
Number of shares used in per share computations:
Primary 16,962 16,537
==============================================================================================================
Fully diluted 17,629 17,215
==============================================================================================================
</TABLE>
See accompanying notes.
2
<PAGE> 5
THE FOOTHILL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------
1994 1993
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Income from continuing operations $ 11,442 $ 3,009
Adjustments to reconcile income from continuing operations to
net cash provided by operating activities:
Provision for credit losses 2,415 3,403
Net gain on investments (10,146) (179)
Depreciation and amortization 150 132
Amortization of deferred fund and debt issuance costs 560 539
Increase in accounts payable and accrued liabilities 11,794 2,657
Income from discontinued operations - 410
Other (3,777) 1,437
- - ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 12,438 11,408
- - ---------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Proceeds from sales of investments and distributions from partnerships 12,278 2,321
Contributions made to partnerships and purchases of investments (1,116) (627)
Payments received from net finance receivables and sales of
repossessed assets 1,346,697 874,668
Disbursements made for net finance receivables and repossessed assets (1,354,690) (929,029)
Purchase of property and equipment (120) (114)
- - ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 3,049 (52,781)
- - ---------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Decrease (increase) in deferred fund and debt issuance costs 544 (711)
Proceeds from commercial paper sales 163,988 119,721
Payments on commercial paper maturities (213,442) (103,008)
Proceeds from senior notes payable and net bank borrowings - 3,200
Payments on senior notes payable and net bank borrowings (599) (3,496)
Payments on subordinated notes and debentures - (3,780)
Dividends paid per common share ($.05 in 1994) (826) -
Dividends paid on preferred stock - (68)
Issuance of common stock, net of related costs 309 57
- - ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (50,026) 11,915
- - ---------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (34,539) (29,458)
Cash and cash equivalents at beginning of period 50,907 39,765
- - ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 16,368 $ 10,307
===============================================================================================================
Cash paid during the period for:
Interest expense $ 2,343 $ 4,012
Income taxes $ 196 $ 261
===============================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 6
THE FOOTHILL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1994
NOTE 1. BASIS OF PRESENTATION
The interim Financial Statements included herein have been prepared by
The Foothill Group, Inc. ("Registrant"; the Registrant together with its wholly
owned subsidiary, Foothill Capital Corporation, or "Foothill Capital", is
referred to as the "Company") 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; nevertheless,
the Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's latest Annual Report. In the opinion of management,
all adjustments, including normal recurring adjustments necessary to present
fairly the financial position of the Company with respect to the interim
financial statements, and of the results of its operations for the three month
period ended March 31, 1994, have been included. Certain reclassifications
have been made to prior year amounts to conform to the 1994 presentation. The
results of operations for interim periods are not necessarily indicative of
results for the full year.
NOTE 2. INCOME TAXES
For the interim periods ended March 31, 1994 and 1993, the Company's
provision for income taxes was 43% and 42%, respectively, which is based on
combined state and federal statutory tax rates.
NOTE 3. EARNINGS PER COMMON SHARE
Primary earnings per common share were determined by dividing net
income applicable to common stock by the weighted average number of common
equivalent shares outstanding. Fully diluted earnings per share calculations
also reflect the additional dilution which would occur through the conversion
of the Company's Convertible Preferred Stock and the resultant increased
availability of earnings due to the elimination of the cumulative dividend on
this preferred stock.
NOTE 4. CONTINGENCIES
Litigation
There are several lawsuits and claims pending against the Company
which management considers incident to normal operations, some of which seek
substantial monetary damages. Management, after review, including consultation
with counsel, believes that any ultimate liability which could arise from these
lawsuits and claims would not materially affect the consolidated financial
position of the Company.
NOTE 5. EQUITY, DEBT AND PARTNERSHIP INVESTMENTS
Equity securities are generally received as a result of exchanges of
private debt instruments and discounted receivables for new securities of the
reorganized debtors. At December 31, 1993, the Company adopted the
requirements of FASB Statement No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," and classified its marketable debt and equity
securities as "available for sale." Accordingly, these securities have been
marked-to-market, with the increase in their carrying value net of income
taxes, included as a component of stockholder's equity. Current market values
of both equity securities and marketable debt securities are estimated by the
Company's management based on market quotations which may be available only
from a limited number of dealers (or, for some securities, are not available)
and may not represent firm bids of such dealers or prices for actual sales.
The Company has recorded valuation adjustments in cases where an "other than
temporary" impairment in estimated net realizable value below the Company's
cost basis in corporate marketable debt securities is believed to have
occurred.
4
<PAGE> 7
THE FOOTHILL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
MARCH 31, 1994
The Company has investments in four limited partnerships, The Foothill
Fund, Foothill Recovery Fund, Foothill Partners, L.P. and Foothill Partners II,
L.P. ("the Funds"), in which the Registrant is a general partner. The 1%
general partner interest in Foothill Partners, L.P. is owned 60% by the
Registrant and 40% by certain of its officers as individuals. The 1% general
partner interest in Foothill Partners II, L.P. is owned 48% by the Registrant
and 52% by certain of its officers as individuals. The 1% general partner
interest in The Foothill Fund and in Foothill Recovery Fund is wholly owned by
the Registrant. The general partners make all investment decisions on behalf
of the partnerships and manage their operations. Foothill Partners, L.P. and
Foothill Partners II, L.P. were established to invest in performing and
nonperforming senior bank loans of distressed companies. The Registrant is
also a limited partner in The Foothill Fund and Foothill Recovery Fund. The
Foothill Fund and Foothill Recovery Fund were established to invest, primarily,
in the debt of restructuring and reorganizing companies. The Foothill Fund and
Foothill Recovery Fund are in their final year of operation and are expected to
be fully liquidated by December 31, 1994. The Registrant's investments in the
Funds are accounted for on an equity basis.
Management fees from the Funds, net of amortization of deferred fund
issuance costs, totaled $1,538,000 and $1,704,000 for the three months ended
March 31, 1994 and 1993, respectively. Equity method earnings recognized by
the Registrant for its investments in the Funds for the three months ended
March 31, 1994 and 1993 totaled $4,007,000 and $211,000, respectively, and are
included in gain on investments.
Foothill Capital has agreements to jointly purchase loans with
Foothill Partners, L.P. and Foothill Partners II. L.P. At March 31, 1994,
loans outstanding which were purchased under these agreements by Foothill
Capital amounted to $39,376,000. Loan purchases, under both of these
agreements, are subject to Foothill Capital's normal due diligence and loan
approval process.
NOTE 6. FEES AND OTHER INCOME
Fees and other income consist primarily of fees and charges related to
finance receivables, gains and losses from sales or exchanges of finance
receivables and fees from asset management activities. Fees and charges
related to finance receivables arise from the Company's commercial lending
activities and include late charges, prepayment penalties, commitment and
guarantee fees, unused line of credit fees and other miscellaneous charges.
Although the relative amounts of the items included in the category of fees and
charges related to finance receivables typically vary from year to year, the
aggregate amount included in this category generally remains relatively stable.
Gains and losses from sales or exchanges of finance receivables occur
irregularly. The Company often does not control the timing of such exchanges,
which typically occur in connection with the restructuring of discounted
receivables held by the Company. Fees from asset management activities consist
of fees received from limited partnerships in which the Registrant is the
general partner. Asset management fees will increase or decrease depending on
the amount of assets under management. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
NOTE 7. FOOTHILL THRIFT SPIN-OFF
Effective December 23, 1993, the Registrant completed the spin-off of
its Foothill Thrift and Loan subsidiary to the Regristrant's stockholders. All
previously reported financial results of Foothill Thrift and Loan, through the
record date for the spin-off, are classified as discontinued operations.
5
<PAGE> 8
ITEM 2
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
The following tables illustrate selected financial data
(dollars in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------------------
1994 1993
------------------ ------------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA FOR THE FOOTHILL GROUP, INC.*:
Interest income $15,146 10.68% $12,984 11.77%
Interest expense 5,177 3.65% 4,940 4.48%
- - ------------------------------------------------------------------------------------------------------------
Interest margin 9,969 7.03% 8,044 7.29%
Fees and other income 8,964 6.32% 4,733 4.29%
- - ------------------------------------------------------------------------------------------------------------
Total margin 18,933 13.35% 12,777 11.58%
Gain on investments, net 10,146 7.16% 179 0.16%
Provision for credit losses 2,415 1.70% 3,403 3.08%
General and administrative expenses 6,590 4.65% 4,357 3.95%
- - ------------------------------------------------------------------------------------------------------------
Income from continuing operations before taxes 20,074 14.16% 5,196 4.71%
Provision for income taxes - continuing operations 8,632 6.09% 2,187 1.98%
- - ------------------------------------------------------------------------------------------------------------
Income from continuing operations 11,442 8.07% 3,009 2.73%
Income from discontinued operations - - 410 0.37%
- - ------------------------------------------------------------------------------------------------------------
Net income $11,442 8.07% $ 3,419 3.10%
============================================================================================================
</TABLE>
*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.
<TABLE>
<S> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $580,083 $495,565
Average assets** 567,013 457,695
Average assets of continuing operations** 567,013 441,376
Average stockholders' equity** 139,961 130,431
Average stockholders' equity in continuing operations** 139,961 114,112
Finance receivables 520,697 447,347
Average finance receivables** 520,821 415,887
===================================================================================================
Sources of funds employed:
Commercial paper and bank
borrowings $ 98,829 $ 84,828
Senior notes 236,806 218,923
Subordinated notes and debentures 53,725 45,160
Stockholders' equity 163,983 131,934
- - ---------------------------------------------------------------------------------------------------
Total funds employed $553,343 $480,845
===================================================================================================
</TABLE>
**Averages are for the three months ended. Average assets and average equity
exclude unrealized gains on marketable debt and equity securities.
6
<PAGE> 9
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
(Dollars in thousands)
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION:
<TABLE>
<CAPTION>
--------------------------------------
Three months ended March 31,
--------------------------------------
1994 1993
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest income $14,940 11.20% $12,853 11.80%
Interest expense 5,425 4.07% 5,222 4.79%
- - ---------------------------------------------------------------------------------------------------------------------------
Interest margin 9,515 7.13% 7,631 7.01%
Fees and other income 7,173 5.38% 3,013 2.77%
- - ---------------------------------------------------------------------------------------------------------------------------
Total margin 16,688 12.51% 10,644 9.78%
Gain on investments, net 5,017 3.76% - -
Provision for credit losses 2,415 1.81% 3,111 2.86%
General and administrative expenses 5,480 4.11% 3,823 3.51%
- - ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 13,810 10.35% 3,710 3.41%
Provision for income taxes 5,938 4.45% 1,558 1.43%
- - ---------------------------------------------------------------------------------------------------------------------------
Net income $ 7,872 5.90% $ 2,152 1.98%
===========================================================================================================================
</TABLE>
*Percentages are computed using average assets (excluding unrealized gains on
investments) and have been annualized.
<TABLE>
<S> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $538,292 $453,862
Average assets** 533,470 435,865
Finance receivables 513,563 442,504
Average finance receivables** 513,412 413,716
==================================================================================================================
Sources of funds employed:
Commercial paper and bank borrowings $ 98,829 $ 84,828
Senior notes 233,817 213,340
Subordinated notes and debentures 63,225 57,410
Stockholder's equity 121,424 85,279
- - ------------------------------------------------------------------------------------------------------------------
Total funds employed $517,295 $440,857
==================================================================================================================
</TABLE>
**Averages are for the three months ended. Average assets exclude unrealized
gains on marketable debt and equity securities.
<TABLE>
<S> <C> <C>
OTHER SELECTED DATA:
Nonperforming finance receivables
and repossessed assets*** $15,382 $18,481
Allowance for credit losses $14,457 $11,377
Actual writeoffs during the period $ 1,815 $ 2,261
Number of employees 111 101
==================================================================================================================
</TABLE>
***Includes repossessed assets and loans that have contractual installments
more than sixty days past due.
7
<PAGE> 10
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
FINANCE RECEIVABLES OUTSTANDING
Finance receivables increased $6,179,000 between December 31, 1993 and
March 31, 1994 from $514,518,000 to $520,697,000. This increase in outstanding
loans was primarily the result of new business at Foothill Capital, offset by
normal loan repayments, payoffs and liquidations during the three month period.
Included in finance receivables at March 31, 1994 and December 31,
1993 are purchased receivables totaling $41,808,000 and $44,262,000,
respectively. These loans have an estimated market value of $45,208,000 and
$49,480,000, which is $3,399,000 and $5,218,000 more than the carrying value at
March 31, 1994 and December 31, 1993, respectively.
NET INCOME
The Company recorded net income of $11,442,000 for the three months
ended March 31, 1994 compared to $3,419,000 for the three months ended March
31, 1993. The increase in net income for the three months ended March 31, 1994
as compared to the three months ended March 31,1993 was primarily due to a
significant increase in the gain on investments, a significant increase in fees
and other income and a decrease in provision for credit losses offset by an
increase in general and administrative expenses and the provision for income
taxes. The previously reported January 1994 sale of the Company's debt and
equity positions in G. Heileman Brewing Company, Inc. was primarily responsible
for the significant increase in the gain on investments during the quarter
ended March 31, 1994. Quarterly results of operations are not necessarily
indicative of results of future quarters.
ANALYSIS OF INTEREST MARGIN
Interest margin is the difference between interest income and interest
expense. The Company calculates margin for these purposes without giving
effect to fees and other income.
Interest margin increased in dollars and decreased as a percentage of
average assets for the three months ended March 31, 1994 compared to three
months ended March 31, 1993. As a percentage of average assets, margin
decreased from 7.29% to 7.03%. This decrease was due to a) increased liquidity
at the Registrant, which was principally invested in lower yielding short term
instruments and b) a decrease in the yields over the prime rate on average
earning finance receivables at Foothill Capital offset by a reduction in cost
of funds at Foothill Capital due to increases in outstanding commercial paper
and the effect of swap agreements.
FEES AND OTHER INCOME
For the three months ended March 31, 1994 and 1993, the Company
recorded fees and other income of $8,964,000 and $4,733,000, respectively. The
increase for the three month period ended March 31, 1994 was due to a
significant increase in the level of gains on the sale and exchange of finance
receivables at Foothill Capital and a higher level of fees related to accounts
receivable lending at Foothill Capital offset by a slight decrease in asset
management fees. The previously reported January 1994 sale of the Company's
debt positions in G. Heileman Brewing Company, Inc. was primarily responsible
for the significant increase in the gain on sales of finance receivables during
the quarter ended March 31, 1994. The following table illustrates the
composition of fees and other income for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
(Dollars in thousands) 3/31/94 3/31/93
- - -------------------------------------------------------------------------------------------
<S> <C> <C>
Fees related to finance receivables $2,654 $1,833
Gains from sales and exchanges of finance receivables 4,718 1,126
Asset management fees, net 1,538 1,704
Other income 54 70
- - -------------------------------------------------------------------------------------------
Total fees and other income $8,964 $4,733
===========================================================================================
</TABLE>
8
<PAGE> 11
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
WRITEOFFS AND ALLOWANCE FOR CREDIT LOSSES
The Company maintains an allowance for credit losses at a level it
considers adequate to cover future potential losses on finance receivables.
The amount of the allowance is based on management's evaluation of numerous
factors, including historical loss experience and adequacy of collateral. The
level of the allowance is affected by the provision for losses charged to
expense, writeoffs and recoveries of amounts previously written off.
The provision for credit losses decreased from $3,403,000 for the
three months ended March 31, 1993 to $2,415,000 for the three months ended
March 31, 1994. As shown in the table below, the decrease in the provision was
primarily due to lower actual writeoffs recorded in the three months ending
March 31, 1994. The general allowance for credit losses as a percentage of
finance receivables plus repossessed assets was increased from 2.54% to 2.81%
at March 31, 1993 and 1994, respectively.
The following chart illustrates the level of the allowance, the
provision charged to expense and net credit losses:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------
(Dollars in thousands) 3/31/94 12/31/93 3/31/93
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finance receivables plus repossessed assets $520,697 $514,518 $447,347
Allowance for credit losses 14,657 14,057 11,377
Percent of such allowance to finance receivables plus repossessed 2.81% 2.73% 2.54%
Actual writeoffs during the period, net of recoveries 1,815 2,450 2,553
Provision for credit losses charged to income during the period 2,415 3,050 3,403
Percent of provision for credit losses to net writeoffs during the 133% 124% 133%
Percent of net writeoffs to finance receivables plus repossessed 0.35% 0.48% 0.57%
Annualized percent of net writeoffs to finance receivables plus
repossessed assets 1.39% 1.90% 2.28%
===================================================================================================================
</TABLE>
NONPERFORMING FINANCE RECEIVABLES AND REPOSSESSED ASSETS
The following table contains information concerning delinquencies on
loans under which installments are more than sixty days past due, loans which
are contractually in default, other than discounted finance receivables, and
for which legal proceedings have been initiated to repossess or liquidate the
underlying collateral, and repossessed assets, all of which are classified as
nonperforming assets. Nonperforming assets have a significant effect on
interest margin and general and administrative expense since the Company does
not recognize income on these accounts but does incur holding costs (primarily
interest expense). As the following table illustrates, the Company's
nonperforming assets as a percent of finance receivables plus repossessed
assets decreased from 3.17% at December 31, 1993 to 2.95% at March 31, 1994:
<TABLE>
<CAPTION>
(Dollars in thousands) 3/31/94 12/31/93 3/31/93
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finance receivables plus repossessed assets $520,697 $514,518 $447,347
Loans more than 60 days past due 15,382 16,296 18,860
Percent of above to finance receivables plus repossessed assets 2.95% 3.17% 4.22%
Repossessed assets, net - - -
Percent of above to finance receivables plus repossessed assets - - -
- - ---------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 15,382 $ 16,296 $ 18,860
===============================================================================================================
Percent of above to finance receivables plus repossessed assets 2.95% 3.17% 4.22%
===============================================================================================================
</TABLE>
9
<PAGE> 12
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
As shown in the preceding table, nonperforming assets have decreased
in both dollars and as a percentage of finance receivables plus repossessed
assets since December 31, 1993. Historically, such percentage of nonperforming
assets has generally ranged between 3% and 6% of finance receivables plus
repossessed assets and has fluctuated within this range from quarter to
quarter. The Company expects continued fluctuations in the amount of
nonperforming assets. The Company's finance receivable portfolio is well
diversified within various industries. This diversification should reduce the
risk that nonperforming assets will increase materially.
Loans more than 60 days past due can vary based on borrowers'
timeliness in servicing their obligations. Foreclosure proceedings can
commence at any time, but generally commence when payments are past due 91 days
or more. Repossession occurs when the Company has taken physical possession
and title to the chattel or other property.
Repossessed assets and loans more than 60 days past due have been
written down to estimated realizable values. These values are based on
management's evaluation of numerous factors, including costs and length of time
held prior to ultimate disposition, appraisals, sales of comparable assets and
estimated market conditions at projected disposal dates.
GENERAL AND ADMINISTRATIVE EXPENSES
The following table sets forth major items of general and
administrative expenses for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
(Dollars in thousands) 3/31/94 3/31/93
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Employee related $4,992 $3,027
Occupancy and office 540 441
Professional services 81 122
Data processing and communications 202 175
Credit, collection and commissions 417 360
Advertising 108 74
Other 250 158
- - --------------------------------------------------------------------------------------------------------------
Total general and administrative expenses $6,590 $4,357
==============================================================================================================
</TABLE>
General and administrative expenses increased from $4,357,000 for the
three months ended March 31, 1993 to $6,590,000 for the three months ended
March 31, 1994. As a percent of average assets, general and administrative
expenses increased from 3.95% to 4.65% for the three months ended March 31,
1993 and 1994, respectively.
The increase in dollars for the three months ended March 31, 1994 over
the comparable period in the preceding year was primarily due to increases in
employee compensation and incentive accrual levels and related expenses at
Foothill Capital and the Registrant.
PROVISION FOR INCOME TAXES
For the three months ended March 31, 1994 and 1993, the Company's
provision for income taxes was 43% and 42%, respectively, which is based on
combined state and federal statutory tax rates.
CAPITAL RESOURCES AND LIQUIDITY
Growth of the Company's assets is dependent, in part, on its ability
to increase capital funds (common and/or preferred stock, retained earnings and
subordinated debt). Liquidity is the ability to meet cash requirements such as
payment of maturing debt obligations or availability of funds for existing or
new customers' borrowing needs.
10
<PAGE> 13
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
Foothill Capital maintains short-term assets in excess of short-term
liabilities and finances its growth by increasing its bank line and issuing
term debt and commercial paper. The primary source of Foothill Capital's short
term funding is commercial paper borrowings. During the three months ended
March 31, 1994, commercial paper borrowings decreased $49,454,000 to
$98,829,000. Commercial paper borrowings are supported by a committed bank
credit facility with 15 banks, which totaled $245,000,000 as of March 31, 1994.
As of April 1, 1994, the credit facility was increased to $250,000,000 due to
the addition of one bank. The bank credit facility is renewable annually to
maintain a two year term. The bank credit facility was renewed and extended in
the second quarter of 1993, and currently expires on June 30, 1995. As of
March 31, 1994, Foothill Capital had $146,741,000 in availability (total amount
of credit facilities minus outstanding commercial paper and bank borrowings)
under its bank credit facility. During 1993, Foothill Capital issued
$60,000,000 of senior fixed rate notes to several institutional lenders with
maturities ranging from three to seven years and $25,000,000 in senior
subordinated notes with a final maturity of ten years. Proceeds from the
issuance were used to prepay approximately $29,000,000 of higher coupon senior
and subordinated debt, repay maturities and fund growth in Foothill Capital's
finance receivable portfolio. Foothill Capital also issued $10,000,000 in
variable rate notes with maturities of one year to two bank lenders in 1993.
Foothill Capital has numerous interest rate swap agreements with
financial institutions with notional amounts aggregating $285,000,000 as of
March 31, 1994. The purpose of these agreements is to manage Foothill
Capital's exposure to interest rate fluctuations and match the interest rate
sensitivity of its assets and liabilities. Foothill Capital's commercial paper
is rated "Duff 2" by Duff & Phelps Credit Rating Company and "F-2" by Fitch
Investor's Service, Inc. Privately placed senior debt is rated "BBB" and
"BBB+" by Duff & Phelps and Fitch, respectively. Foothill Capital's senior
debt, senior subordinated debt and junior subordinated debt have investment
grade ratings of "2" from the National Association of Insurance Commissioners.
The major cash outflows of the Registrant consist primarily of
expenditures for general and administrative costs, payment of fees due
placement agents involved in its partnership activities, tax payments and
payment of preferred and common stock dividends. These expenditures are funded
largely through management fees and profits earned in its asset management
operations and by management fees and loan repayments from Foothill Capital.
Management believes these potential sources of liquidity should be sufficient
to meet its obligations for the foreseeable future.
There have been no other significant changes in the Company's capital
resources and liquidity from those discussed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
December 31, 1993 Annual Report to Stockholders.
PARTICIPATION IN HIGHLY LEVERAGED TRANSACTIONS
Since its inception, the Registrant and Foothill Capital have been in
the commercial finance business. This business includes accounts receivable
and term lending on a secured basis. Such business has historically been
perceived to contain a higher degree of credit risk than unsecured or partially
secured commercial lending.
Since 1972, Foothill Capital's portfolio of finance receivables has
included loans made to highly leveraged borrowers and loans made in conjunction
with corporate recapitalizations and bankruptcy reorganizations. Foothill
Capital has historically extended credit lines up to $70,000,000 by
participating portions of these lines with other commercial finance lenders.
Under the terms of its various borrowing agreements, Foothill Capital's largest
allowable loan (net of participations) at March 31, 1994 was $27,697,000.
Foothill Capital's largest loan (net of participations) to any borrower and its
affiliates was $15,428,000 and $18,500,000 at March 31, 1994 and 1993,
respectively. Loans in this portfolio are made in numerous industries
throughout the United States.
The Company has been involved with highly leveraged transactions since
inception and presently intends to continue its involvement in transactions of
this nature.
11
<PAGE> 14
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
INVESTMENTS
The Company had $32,715,000 and $32,842,000 at March 31, 1994 and
December 31, 1993, respectively, in its investment portfolio, including some
investments which are in unrated or less than investment grade corporate
securities. This portfolio includes several debt and equity security positions
as well as partnership investment positions held by the Company. Some of these
investments are in companies undergoing reorganization or restructuring.
Unrealized market appreciation as of March 31, 1994 and December 31, 1993,
before income taxes, was $37,553,000 ($21,405,000 net of tax) and $32,587,000
($18,575,000 net of tax), respectively.
The Registrant is a general and/or limited partner in four limited
partnerships, The Foothill Fund, Foothill Recovery Fund, Foothill Partners,
L.P. and Foothill Partners II, L.P. ("the Funds"). The Foothill Fund and
Foothill Recovery Fund were established to invest, primarily, in the debt of
restructuring and reorganizing companies. Foothill Partners, L.P. and Foothill
Partners II, L.P. were established to invest in performing and nonperforming
senior bank debt of distressed companies. The Registrant's investments in the
Funds are accounted for on an equity basis.
Investments in unrated or less than investment grade corporate
securities have different risks than investments in corporate securities rated
investment grade. Risk of loss upon default by the borrower is significantly
greater with respect to such corporate securities than with other corporate
securities because these securities are generally unsecured and are often
subordinated to other creditors of the issuer. These issuers also usually have
higher levels of indebtedness and are more sensitive to adverse economic
conditions, such as recession or increasing interest rates, than are investment
grade issuers. There is only a thinly traded market for some of these
securities and market quotes are generally available only from a limited number
of dealers which may not represent firm bids of such dealers or prices for
actual sales.
12
<PAGE> 15
PART II - OTHER INFORMATION
ITEMS 1 TO 5 NOT APPLICABLE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10.25(a) - Supplement dated January 1, 1994
to the Amended and Restated Loan Agreement dated as
of June 30, 1993 among Foothill Capital Corporation,
National Westminster Bank USA and Bank of America
NT&SA, as Co-Agents, and the other banks named in the
loan agreement.
Exhibit 10.25(b) - Supplement dated April 1, 1994 to
the Amended and Restated Loan Agreement dated as of
June 30, 1993 among Foothill Capital Corporation,
National Westminster Bank USA and Bank of America
NT&SA, as Co-Agents, and the other banks named in the
loan agreement.
Exhibit 10.26(a) - First Amendment dated of March 1,
1994 among Foothill Capital Corporation, Bank of
America NT&SA, as Agent and as Issuing Bank and other
banks named in the agreement.
(b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Item(s) Financial Statements
Date of Report Reported Filed
-------------- -------- --------------------
<S> <C> <C>
4/27/94 7 None
</TABLE>
13
<PAGE> 16
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.
THE FOOTHILL GROUP, INC.
Date: May 4, 1994 s/David C. Hilton
---------------------- -------------------------------
David C. Hilton
Executive Vice President
Date: May 4, 1994 s/Henry K. Jordan
---------------------- -------------------------------
Henry K. Jordan
Senior Vice President;
Chief Financial Officer and
Corporate Secretary
14
<PAGE> 1
Exhibit 10.25(a)
This SUPPLEMENT, dated January 1, 1994, to the Amended and Restated
Loan Agreement dated as of June 30, 1993 (as amended or supplemented from time
to time, the "Loan Agreement"), among FOOTHILL CAPITAL CORPORATION (the
"Borrower"), the banks parties thereto (individually a "Bank" and collectively,
the "banks"), NATIONAL WESTMINSTER BANK USA, as Documentation Agent, and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent
(collectively, the "Co-Agents");
WITNESSETH:
WHEREAS, Section 2.1(f) of the Loan Agreement provides that any financial
institution, although not originally a party thereto, may become a party of the
Loan Agreement with the consent of the Borrower and the Co-Agents by executing
and delivering to the Borrower and the Co-Agents a supplement to the Loan
Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned was not an original party to the Loan Agreement
but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees to be bound by the provisions of the
Loan Agreement, and agrees that it shall on the date this Supplement is
accepted by the Borrower and consented to by the Co-Agents become a Bank for
all purposes of the Loan Agreement.
2. The amount of the Commitment of the undersigned shall be
$10,000,000.
3. Capitalized terms used in this Supplement and not otherwise
defined shall have the respective meanings ascribed thereto in the Loan
Agreement.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to
be executed and delivered by a duly authorized officer on the date first above
written.
SANWA BANK CALIFORNIA
By _________________________
Kevin D. Kelly
Title Vice President
Accepted this 1st day of
January 1994
FOOTHILL CAPITAL CORPORATION
By ____________________________________
Title Vice President/Treasurer
Consented to this ____ day of January 1994
NATIONAL WESTMINSTER BANK USA
By ____________________________________
Title
Consented to this 3rd day of
January 1994
BANK OF AMERICA NATIONAL TRUST AND SAVINGS BANK
By ___________________________________
Title Vice President
<PAGE> 1
Exhibit 10.25(b)
This SUPPLEMENT, dated April 1, 1994, to the Amended and Restated Loan
Agreement dated as of June 30, 1993 (as amended or supplemented from time to
time, the "Loan Agreement"), among FOOTHILL CAPITAL CORPORATION (the
"Borrower"), the banks parties thereto (individually a "Bank" and collectively,
the "Banks"), NATIONAL WESTMINSTER BANK USA, as Documentation Agent, and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent
(collectively, the "CoAgents");
WITNESSETH:
WHEREAS, Section 2.1 (f) of the Loan Agreement provides that any
financial institution, although not originally a party thereto, may become a
party of the Loan Agreement with the consent of the Borrower and the Co-Agents
by executing and delivering to the Borrower and the Co-Agents a supplement to
the Loan Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned was not an original party to the Loan
Agreement but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees to be bound by the provisions of the
Loan Agreement, and agrees that it shall on the date this Supplement is
accepted by the Borrower and consented to by the Co-Agents become a Bank for
all purposes of the Loan Agreement.
2. The amount of the Commitment of the undersigned shall be
$5,000,000.
3. Capitalized terms used in this Supplement and not otherwise
defined shall have the respective meanings ascribed thereto in the Loan
Agreement.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
WESTDEUTSCHE LANDESBANK GIROZENTRALE
New York and Cayman Islands Branches
By ________________________________
Title Vice President/Associate
Accepted this 1st day of
April 1994
FOOTHILL CAPITAL CORPORATION
BY _______________________________
Title Vice President/Treasurer
Consented to this 1st day of
April 1994
NATIONAL WESTMINSTER BANK USA,
as Documentation Agent
By _______________________________
Title Vice President
Consented to this 1st day of
April 1994
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
By _______________________________
Title Vice President
<PAGE> 1
Exhibit 10.26(a)
FIRST AMENDMENT
This FIRST AMENDMENT (the "Amendment") is dated as of March 1,
1994 among FOOTHILL CAPITAL CORPORATION (the "Company"), the Banks party to the
Letter of Credit Agreement as defined and referred to below, and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent (the "Agent") for such
Banks and the Issuing Bank under such Letter of Credit Agreement.
PRELIMINARY STATEMENTS. 1. The Company has entered into the
Amended and Restated Letter of Credit and Guaranty Agreement dated as of August
6, 1993 (the "Letter of Credit Agreement", the terms defined therein being used
herein as therein defined unless otherwise defined herein) with the Issuing
Bank, the Banks party thereto and the Agent;
2. First Bank National Association ("First Bank") has
agreed to become a Bank with a commitment amount of $5,000,000 under the Letter
of Credit Agreement, and the Issuing Bank has agreed to allow First Bank to
join the Letter of Credit Agreement, and the Company, the Agent and the other
Banks have agreed to consent thereto, each on the terms and conditions set
forth below;
3. PNC Bank, National Association ("PNC") has agreed to
become a Bank with a commitment amount of $5,000,000 under the Letter of Credit
Agreement, and the Issuing Bank has agreed to allow PNC to join the Letter of
Credit Agreement, and the Company, the Agent and the other Banks have agreed to
consent thereto, each on the terms and conditions set forth below;
4. Shawmut Bank Connecticut, N.A. ("Shawmut") has
agreed to become a Bank with a commitment amount of $5,000,000 under the Letter
of Credit Agreement, and the Issuing Bank has agreed to allow Shawmut to join
the Letter of Credit Agreement, and the Company, the Agent and the other Banks
have agreed to consent thereto, each on the terms and conditions set forth
below; and
5. United States National Bank of Oregon ("U.S. Bank")
has agreed to become a Bank with a commitment amount of $5,000,000 under the
Letter of Credit Agreement, and the Issuing Bank has agreed to allow U.S. Bank
to join the Letter of Credit Agreement, and the Company, the Agent and the
other Banks have agreed to consent thereto, each on the terms and conditions
set forth below.
<PAGE> 2
2
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments to Letter of Credit Agreement. The
Letter of Credit Agreement is, effective as of the date hereof and subject to
the satisfaction of the conditions set forth in Section 4 hereof, hereby
amended as follows:
(a) The definition of "Letter of Credit
Commitment" set forth in Section 1.01 is amended by deleting the
figure "$30,000,000" therein and substituting for such figure the
figure "$50,000,000".
(b) The Letter of Credit Agreement and the
signature pages thereof are amended by adding First Bank, PNC, Shawmut
and U.S. Bank as Banks and adding commitment amounts of $5,000,000 set
opposite each of the names of First Bank, PNC, Shawmut and U.S. Bank
on such signature pages.
SECTION 2. Assumption and Release. (a) Effective as of the
date hereof and subject to the satisfaction of the conditions set forth in
Section 4 hereof, First Bank, PNC, Shawmut and U.S. Bank (collectively, the
"Purchasing Banks") each shall be deemed to purchase and assume, and Bank of
America National Trust and Savings Association ("BOA") as well as National
Westminster Bank USA ("NatWest") as well as The Bank of New York ("BNY") as
well as Sanwa Bank California ("Sanwa") shall each be deemed to sell and assign
to the Purchasing Banks, 10% of the amount of the undivided interest and
participation deemed owned by each of BOA, NatWest, BNY and Sanwa as of the
date hereof, pursuant to Section 2.03 of the Letter of Credit Agreement, in (i)
each of the Letters of Credit listed on Schedule A to this Amendment (the
"Designated Letters of Credit"), and (ii) all Letter of Credit Liability
relating to each such Designated Letter of Credit, with the result that the
Purchasing Banks shall be deemed to have irrevocably and unconditionally
purchased and received an undivided interest and participation, to the extent
of the Purchasing Bank's Percentage in effect under and as defined in the
Letter of Credit Agreement as amended hereby, in each Designated Letter of
Credit and all Letter of Credit Liability relating thereto and shall have all
the obligations and rights pertaining to such undivided interests and
participations set forth in the Letter of Credit Agreement, including, without
limitation, Section 2.03 thereof.
SECTION 3. Reresentations and Warranties. The Company
represents and warrants to the Issuing Bank, the Banks and the Agent that the
obligations of the Company under the Letter of Credit Agreement, as amended by
this Amendment, constitute and will constitute "Superior Indebtedness" within
the meaning ascribed to such terms in the Foothill Group Subordination
Agreement and are entitled to the benefits of said Foothill Group Subordination
Agreement as Superior Indebtedness. The Company confirms that all of the
representations and warranties contained in Article V of the Letter of Credit
Agreement are correct on and as of the date of this Amendment. The Company
<PAGE> 3
3
also confirms that no event has occurred and is continuing which would
constitute an Event of Default or Default.
SECTION 4. Conditions of Effectiveness. This Amendment shall
become effective as of the date hereof when:
(a) counterparts hereof shall have been executed by the
Company, the Issuing Bank, the Banks and the Agent;
(b) a certificate of the Company signed by the Secretary
of the Company shall have been delivered to the Agent certifying as to
(A) the corporate action taken by the Company relative to this
Amendment and (B) the incumbency of the officers of the Company
authorized to sign on its behalf this Amendment and any other
documents, instruments or certificates required hereby, together with
the true signatures of such officers; and
(c) the Company shall have furnished to the Agent,
together with sufficient signed copies to provide one for each of the
Banks, the opinion of Buchalter, Nemer, Fields & Younger, counsel for
the Company, substantially in the form of Exhibit I hereto.
SECTION 5. Consent with respect to Assumption: Reference to
and Effect of the Letter of Credit Agreement. (a) Without limiting the effect
of any other provision of this Amendment, the Company, the Agent and each of
the Banks consent to the addition of First Bank, PNC, Shawmut and U.S. Bank as
set forth in Section 2 hereof.
(b) First Bank, PNC, Shawmut and U.S. Bank, each
individually, (i) confirms that it has received a copy of the Letter of Credit
Agreement and such other Loan Documents and other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into the Letter of Credit Agreement and this Amendment; (ii) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Letter of Credit Agreement and the other Loan Documents
as are delegated to the Agent by the terms thereof and (iii) agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of the Letter of Credit Agreement are required to be performed by it as a
Bank.
(c) On and after the date of, and upon the effectiveness
of, this Amendment, each reference in the Letter of Credit Agreement to "this
Agreement", "hereunder," "hereof" or words of like import referring to the
Letter of Credit Agreement shall mean and be a reference to the Letter of
Credit Agreement as amended by this Amendment.
<PAGE> 4
4
(d) Except as specifically amended above, the Letter of
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed.
SECTION 6. Costs, Expenses and Taxes. The Company agrees to
pay all reasonable costs and expenses of the Agent in connection with the
preparation, execution and delivery of this Amendment and the other instruments
and documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel (including in-house
counsel) for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities hereunder and thereunder.
SECTION 7. Execution in Counterparts. This Amendment may be
executed in counterparts, each of which when so executed an delivered shall be
deemed to be an original and both of which taken together shall constitute but
one and the same instrument.
SECTION 8. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of California.
<PAGE> 5
5
IN WITNESS WHEREOF, the parties hereto have executed or caused
this Amendment to be executed as of the date first above written.
FOOTHILL CAPITAL CORPORATION
By: ________________________________
Title: Vice President/Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Agent
By: ________________________________
Title:
BANKS
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Issuing Bank and as a Bank
By: ________________________________
Title:
By: ________________________________
Title:
NATIONAL WESTMINSTER BANK USA
By: ________________________________
Title:
THE BANK OF NEW YORK
By: ________________________________
Title:
FIRST BANK NATIONAL ASSOCIATION
By: ________________________________
Title:
<PAGE> 1
THE FOOTHILL GROUP, INC. Exhibit 11
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollars and shares in thousands,except per share data)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------
1994 1993
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PRIMARY:
Income from continuing operations $11,442 $ 3,009
Discontinued operations - 410
Less preferred stock dividends (68) (68)
- - -------------------------------------------------------------------------------------------------------------
Net income for primary calculation $11,374 $ 3,351
=============================================================================================================
Weighted average number of common shares outstanding 16,555 16,205
Effect of dilutive stock options 407 332
- - -------------------------------------------------------------------------------------------------------------
Number of common shares used in computation 16,962 16,537
=============================================================================================================
Per share data:
Income from continuing operations $0.67 $0.18
Discontinued operations - 0.02
- - -------------------------------------------------------------------------------------------------------------
Earnings per common and common equivalent share $0.67 $0.20
=============================================================================================================
FULLY DILUTED:
Income from continuing operations $11,442 $ 3,009
Discontinued operations - 410
- - -------------------------------------------------------------------------------------------------------------
Income for fully diluted calculation $11,442 $ 3,419
=============================================================================================================
Weighted average number of shares outstanding 16,555 16,205
Effect of dilutive stock options 407 343
Shares issued upon assumed conversion of convertible preferred stock 667 667
- - -------------------------------------------------------------------------------------------------------------
Number of shares used in computation 17,629 17,215
=============================================================================================================
Per share data:
Income from continuing operations $0.65 $0.18
Discontinued operations - 0.02
- - -------------------------------------------------------------------------------------------------------------
Earnings per common and common equivalent share $0.65 $0.20
=============================================================================================================
</TABLE>
