<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: August 18, 1994
THE FOOTHILL GROUP, INC.
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
Delaware 0-5467 94-1663353
-------- ------ ----------
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
</TABLE>
11111 Santa Monica Boulevard
Los Angeles, California 90025
-----------------------------
(Address of principal executive office)
Registrant's telephone number: (310) 996-7000
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Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 28 - Additional Exhibits
Press release announcing second quarter results.
Press release announcing opening of Foothill Capital Chicago office.
Press release announcing increase in 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: August 18, 1994 THE FOOTHILL GROUP, INC.
By: /s/ HENRY K. JORDAN
-----------------------
Henry K. Jordan
Vice President and
Chief Financial Officer
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[FOOTHILL LETTERHEAD]
THE FOOTHILL GROUP, INC. REPORTS
STRONG SECOND QUARTER RESULTS
LOS ANGELES, CALIFORNIA, July 18, 1994 . . . The Foothill
Group, Inc. (NYSE-FGI) today reported net income for the second quarter ended
June 30, 1994 of $6,604,000, or 37 cents per fully diluted share, compared
with net income of $6,083,000, or 35 cents per fully diluted share, for the
quarter ended June 30, 1993. For the six months ended June 30, 1994, net
income increased 90% to $18,045,000, or $1.02 per fully diluted share,
compared with net income of $9,502,000, or 56 cents per fully diluted share,
for the same period in 1993.
Henry K. Jordan, Senior Vice President and Chief Financial
Officer, said, "Second quarter results reflect strong profitability due to
improved margins and significant growth in the asset-based loan portfolio of
Foothill Capital Corporation. Finance receivables reached $582,994,000 as of
June 30, 1994, up 27% on an annualized basis from $514,518,000 as of December
31, 1993. Foothill Capital Corporation continues to expand its national
market presence and recently opened a marketing office in Chicago to better
serve the midwest market. We anticipate continued portfolio growth for the
balance of 1994.
"The credit quality of the Company's asset-based loan
portfolio improved to a near record level as of June 30, 1994. Margins
expanded for both the three and six month periods ended June 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 policy of matching interest sensitive assets and liabilities. Net
interest revenue,
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<PAGE>
as a percent of average assets, was 8.99% for the 1994 second quarter,
compared with 8.64% for the second quarter ended June 30, 1993.
"Equity and purchased bank debt positions owned by the Company
have unrealized gains totaling $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.
"Book value per common share was $9.88 as of June 30, 1994, up
from $9.02 as of December 31, 1993. Total stockholders' equity increased in
the 1994 second quarter to a record $167 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 June 30, 1994, Foothill had total assets
owned or under management of more than $1.2 billion.
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THE FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1994 and December 31, 1993
(Dollars in thousands)
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<CAPTION> June 30, December 31,
1994 1993
---------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 32,718 $ 50,907
Finance receivables:
Accounts receivable loans 400,683 326,373
Term loans 182,311 188,145
-------- --------
Finance receivables 582,994 514,518
Allowance for credit losses 15,556 14,057
-------- --------
Finance receivables, net 567,438 500,461
Repossessed assets, net 236 --
Equity, debt and partnership investments 36,050 32,842
Prepaid income taxes 8,105 9,009
Deferred fund and debt issuance costs, net 8,816 9,897
Property and equipment, at cost less accumulated depreciation and
amortization ($2,064 at June 30, 1994; $1,769
at December 31, 1993) 2,198 2,269
Other assets 9,452 1,122
-------- --------
$665,013 $606,507
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $201,111 $148,283
Senior notes payable 226,042 237,404
Accounts payable and accrued liabilities 18,492 14,948
Subordinated notes and debentures 52,075 53,725
-------- --------
Total liabilities 497,720 454,360
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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, 16,635,397 shares
issued and outstanding (16,538,874 at December 31, 1993) 101,994 101,285
Unrealized gains, net of tax, on marketable debt and
equity securities 17,860 19,672
Retained earnings 44,539 28,290
-------- --------
Total stockholders' equity 167,293 152,147
-------- --------
$665,013 $606,507
======== ========
</TABLE>
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THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA
-----------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------------- -------------------------------------
1994 1993 1994 1993
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 19,177 13.06% $ 15,619 12.80% $ 37,033 12.78% $ 30,408 12.99%
Interest expense 5,973 4.07% 5,073 4.16% 11,150 3.85% 10,013 4.28%
-------- ------ -------- ------ -------- ------ -------- ------
Net interest revenue 13,204 8.99% 10,546 8.64% 25,883 8.93% 20,395 8.71%
Asset management fees 1,316 0.90% 1,523 1.25% 2,855 0.99% 3,227 1.38%
Gains from asset sales and managed partnerships 5,650 3.85% 7,676 6.29% 20,510 7.08% 9,079 3.88%
Provision for credit losses 2,513 1.71% 2,759 2.26% 4,928 1.70% 6,162 2.63%
General and administrative expenses 6,072 4.14% 5,404 4.43% 12,662 4.37% 9,761 4.17%
-------- ------ -------- ------ -------- ------ -------- ------
Income from continuing operations before taxes 11,585 7.89% 11,582 9.49% 31,658 10.93% 16,778 7.17%
Provision for income taxes - continuing operations 4,981 3.39% 4,870 3.99% 13,613 4.70% 7,057 3.02%
-------- ------ -------- ------ -------- ------ -------- ------
Income from continuing operations 6,604 4.50% 6,712 5.50% 18,045 6.23% 9,721 4.15%
Loss from discontinued operations - - (629) (0.52)% - - (219) (0.09)%
-------- ------ -------- ------ -------- ------ -------- ------
Net income $ 6,604 4.50% $ 6,803 4.98% $ 18,045 6.23% $ 9,502 4.06%
======== ====== ======== ====== ======== ====== ======== ======
*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.
Per share data (shares in thousands):
Primary
Income from continuing operations $ 0.39 $ 0.41 $ 1.06 $ 0.59
Discontinued operations - (0.04) - (0.02)
-------- ------ -------- ------ -------- ------ -------- ------
Earnings per common and common equivalent share $ 0.39 $ 0.37 $ 1.06 $ 0.57
======== ====== ======== ====== ======== ====== ======== ======
Fully diluted:
Income from continuing operations $ 0.37 $ 0.39 $ 1.02 $ 0.57
Discontinued operations - (0.04) - (0.01)
-------- ------ -------- ------ -------- ------ -------- ------
Earnings per common share assuming full
dilution $ 0.37 $ 0.35 $ 1.02 $ 0.56
======== ====== ======== ====== ======== ====== ======== ======
Number of shares used in per share computations
Primary 16,946 16,624 16,954 16,580
-------- ------ -------- ------ -------- ------ -------- ------
Fully diluted 17,614 17,304 17,621 17,260
======== ====== ======== ====== ======== ====== ======== ======
SELECTED BALANCE SHEET DATA:
Total assets $665,013 $547,065 $665,013 $547,065
Average assets** 587,200 504,648 579,618 484,525
Average assets of continuing operations** 587,200 487,961 579,618 467,996
Average stockholders' equity** 146,456 134,212 143,178 132,592
Average stockholders' equity in continuing
operations** 146,456 117,525 143,178 116,062
Finance receivables 582,994 483,444 582,994 483,444
Average finance receivables** 538,621 469,564 531,010 446,560
======== ====== ======== ====== ======== ====== ======== ======
Sources of funds employed:
Commercial paper and bank
borrowings $201,111 $142,053 $201,111 $142,053
Senior notes 226,042 202,957 226,042 202,957
Subordinated notes and debentures 52,075 44,910 52,075 44,910
Stockholders' equity 167,293 137,547 167,293 137,547
-------- ------ -------- ------ -------- ------ -------- ------
Total funds employed $646,521 $527,467 $646,521 $527,467
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
**Averages are for the three and six months ended. Average assets and average
equity exclude unrealized gains on marketable debt and equity securities.
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THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------------------ ------------------------------------------
1994 1993 1994 1993
------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 18,861 13.67% $ 15,249 12.71% $ 36,388 13.34% $ 29,907 13.05%
Interest expense 6,218 4.51% 5,360 4.47% 11,643 4.27% 10,582 4.62%
-------- ------ -------- ------ -------- ------ -------- ------
Net interest revenue 12,643 9.16% 9,889 8.24% 24,745 9.07% 19,325 8.43%
Gains on asset sales 3,647 2.64% 4,838 4.03% 13,250 4.86% 6,046 2.64%
Provision for credit losses 2,513 1.82% 2,711 2.26% 4,928 1.81% 5,822 2.54%
General and administrative expenses 5,257 3.81% 4,440 3.70% 10,737 3.94% 8,263 3.60%
-------- ------ -------- ------ -------- ------ -------- ------
Income before income taxes 8,520 6.17% 7,576 6.31% 22,330 8.18% 11,286 4.93%
Provision for income taxes 3,664 2.66% 3,182 2.65% 9,602 3.52% 4,740 2.07%
-------- ------ -------- ------ -------- ------ -------- ------
Net income $ 4,856 3.51% $ 4,394 3.66% $ 12,728 4.66% $ 6,546 2.86%
======== ====== ======== ====== ======== ====== ======== ======
*Percentages are computed using average assets (excluding unrealized gains on investments) and have been annualized.
SELECTED BALANCE SHEET DATA:
Total assets $625,954 $505,310 $625,954 $505,310
Average assets** 551,780 479,839 545,509 458,422
Finance receivables 566,660 481,087 566,660 481,087
Average finance receivables** 530,229 465,573 523,000 439,236
======== ====== ======== ====== ======== ====== ========
Sources of funds employed:
Commercial paper and bank
borrowings $201,111 $142,053 $201,111 $142,053
Senior notes 223,650 198,173 223,650 198,173
Subordinated notes and debentures 61,575 57,160 61,575 57,160
Stockholder's equity 124,466 89,673 124,466 89,673
-------- ------ -------- ------ -------- ------ --------
Total funds employed $610,802 $487,059 $610,802 $487,059
======== ====== ======== ====== ======== ====== ========
**Averages are for the three and six months ended. Average assets exclude unrealized gains on marketable debt and equity
securities.
OTHER SELECTED DATA:
Nonperforming finance receivables
and repossessed assets*** $ 14,072 $ 14,048 $ 14,072 $ 14,048
Allowance for credit losses $ 15,356 $ 12,377 $ 15,356 $ 12,377
Actual writeoffs during the period $ 1,613 $ 1,711 $ 3,428 $ 3,972
Number of employees 112 103 112 103
======== ====== ======== ====== ======== ====== ========
</TABLE>
***Includes repossessed assets and loans that have contractual installments
more than sixty days past due.
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[FOOTHILL LETTERHEAD]
THE FOOTHILL GROUP, INC. INCREASES
QUARTERLY DIVIDEND
LOS ANGELES, CALIFORNIA, July 29, 1994 . . . The Foothill
Group, Inc. (NYSE-FGI) Board of Directors today declared a $.06 quarterly
cash dividend on its Class A common stock. This represents a 20% annualized
increase from the previous $.05 quarterly cash dividend. The dividend is
payable on October 20, 1994, to shareholders of record on September 20, 1994.
Commenting on the increase, Don L. Gevirtz, Chairman of the
Board, said, "We felt this increased dividend was appropriate given the
continued growth and strength of our asset-based lending and money management
operations. We will consider further dividend increases on a semiannual
basis."
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 June 30, 1994, Foothill had total assets
owned or under management of more than $1.2 billion.
<PAGE> 9
[FOOTHILL LETTERHEAD]
FOOTHILL CAPITAL CORPORATION ANNOUNCES
THE OPENING OF A CHICAGO OFFICE
LOS ANGELES, CALIFORNIA, July 27, 1994 . . . Foothill Capital
Corporation, a subsidiary of The Foothill Group, Inc. (NYSE-FGI) announced
today that it has expanded by opening an office in Chicago, Illinois. The
new office will focus on providing financing for companies in the Midwest
with credit needs between $5 million and $100 million, and will be staffed by
Ms. Terri Detmers and Mr. Michael Sadilek.
Peter Schwab, President of Foothill Capital commented that "We
are very excited about the prospects of increasing our market presence in the
Midwest and are committed to providing the same exceptional service to
customers in the Midwest as we have in the rest of the country. We think our
flexible and responsive approach to lending will be well received in the
Midwest market."
Mr. Sadilek joins Foothill after spending the prior six years
at Congress Financial in Chicago, while Ms. Detmers has been with Foothill
Capital for six years and will relocate from Los Angeles.
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
<PAGE> 10
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 June 30, 1994, Foothill had total assets owned or
under management of more than $1.2 billion.
