<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: January 31, 1994
THE FOOTHILL GROUP, INC.
(Exact name of registrant as specified in charter)
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<S> <C> <C>
Delaware 0-5467 94-1663353
-------- ------ ----------
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
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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 fourth quarter earnings and record year end results.
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: January 31, 1994 THE FOOTHILL GROUP, INC.
By: C/HENRY K. JORDAN
Henry K. Jordan
Vice President and
Chief Financial Officer
<PAGE> 3
THE FOOTHILL GROUP, INC. REPORTS
1993 FOURTH QUARTER AND RECORD YEAR END RESULTS
LOS ANGELES, CALIFORNIA, January 31, 1994 . . . The Foothill
Group, Inc. (NYSE-FGI) today reported a 72% increase in income from
continuing operations for the year ended December 31, 1993 to a record
$20,823,000, or $1.20 per fully diluted share, compared with income from
continuing operations of $12,134,000, or 81 cents per fully diluted share,
for the year ended December 31, 1992. Foothill reported income from
continuing operations for the fourth quarter ended December 31, 1993 of
$5,329,000, or 30 cents per fully diluted share, compared with income from
continuing operations of $2,892,000, or 17 cents per fully diluted share, for
the 1992 fourth quarter. Previously reported financial information has
undergone certain reclassifications due to the spin-off of Foothill Thrift
and Loan to Foothill Group shareholders on December 23, 1993. All results of
Foothill Thrift and Loan through the record date for the spin-off are
classified as discontinued operations. Net income for 1993 totaled
$18,683,000 or $1.08 per fully diluted share as compared to $12,145,000 or 82
cents per fully diluted share for 1992.
Henry K. Jordan, Chief Financial Officer, said, "The
Company's return on average assets and average equity from continuing
operations for the year ended December 31, 1993 totaled 4.13% and 17.16%,
respectively, as compared to 2.80% and 13.78% for the year ended December 31,
1992. Fourth quarter income from continuing operations in 1993 exceeded
the 1992 fourth quarter due to improvements in interest margins, growth of
the asset-based loan portfolio and strong results from money management
activities. Interest margin, as a percent of average assets of continuing
<PAGE> 4
operations, grew to 6.96% for the 1993 fourth quarter, up from 5.92% for the
year ended December 31, 1992. Asset based loans reached $514,518,000 as of
December 31, 1993, up 30% from $394,895,000 as of December 31, 1992.
"The Company reported $4,334,000 in gains from sales of bank
loans during the 1993 fourth quarter versus $837,000 in the fourth quarter of
1992. Gain on investments, which include profits from managed partnerships,
were $79,000 in the 1993 fourth quarter versus $755,000 in the fourth quarter
of 1992. The Company's level of nonperforming finance receivables and
repossessed assets totaled $16,296,000, or 3.17% of finance receivables and
repossessed assets as of December 31, 1993, as compared to the $22,057,000 or
5.71% of finance receivables and repossessed assets as of December 31, 1992.
"We anticipate loan growth and profits from asset-based
lending activities at Foothill Capital Corporation in 1994 will remain
strong. We expect gains from the sale of bank loans and profits from managed
partnerships to be reported sporadically during 1994, as was the case during
1993. The Company anticipates 1994 earnings will be in excess of those
reported for 1993, but not on a consistent quarterly basis. Also, the
previously announced potential sale of the Company's holdings of equity and
debt securities of G. Heilman Brewing Company was completed on January 24,
1994. The Company's pretax gains from sales of these positions in G. Heilman
are in excess of $10 million and will be reflected in earnings in the first
quarter of 1994.
"Equity and purchased bank debt positions owned by the
Company have unrealized gains totaling $37,805,000 as of December 31, 1993,
up significantly from $13,743,000 as of December 31, 1992. In addition,
investments of Foothill's managed partnerships show substantial unrealized
gains which, if realized, will contribute to future earnings. Effective
December 31, 1993, the Company implemented Statement of Financial Accounting
Standards No. 115, which governs accounting for certain investments in debt
and equity securities. Under this Statement, unrealized gains, net of income
taxes, on the Company's equity and purchased bank debt positions are shown on
the attached balance sheet as a component of stockholders' equity and are
included in the carrying value of these investments.
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"Book value per common share was $9.02 as of December 31, 1993, up
from $7.78 as of December 31, 1992. Total stockholders' equity increased 18%
in 1993 to a record $152 million."
The Foothill Group, Inc. is a financial services company engaged in the
asset-based lending and asset management businesses. As of December 31, 1993,
Foothill had total assets owned or under management of more than $1.1 billion.
Foothill Capital Corporation, its wholly-owned subsidiary, provides asset-based
financing secured by accounts receivable, inventory, equipment and other assets
to businesses nationwide. The parent company's asset management operation
manages institutional limited partnerships which invest in the debt of
companies which are in reorganization or in the process of restructuring.
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THE FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND DECEMBER 31, 1992
(Dollars in thousands)
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<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 50,907 $ 39,765
Finance receivables:
Accounts receivable loans 326,373 186,422
Term loans 188,145 208,473
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Finance receivables 514,518 394,895
Allowance for credit losses 14,057 10,527
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Finance receivables, net 500,461 384,368
Net assets of discontinued operation - 15,830
Repossessed assets, net - 1,782
Equity, debt and partnership investments 32,842 13,992
Prepaid income taxes 9,009 8,035
Deferred fund and debt issuance costs, net 9,897 7,692
Property and equipment, at cost less accumulated depreciation and
amortization ($1,769 at December 31, 1993; $1,392 at 2,269 1,552
December 31, 1992)
Other assets 1,122 1,367
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$606,507 $474,383
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $148,283 $ 64,915
Senior notes payable 237,404 216,560
Accounts payable and accrued liabilities 14,948 14,956
Subordinated notes and debentures 53,725 48,940
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Total liabilities 454,360 345,371
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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, 16,538,874 shares
issued and outstanding (16,203,523 at December 31, 1992) 101,285 99,009
Unrealized gains, net of tax, on marketable debt and equity securities 19,672 -
Retained earnings 28,290 27,103
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Total stockholders' equity 152,147 129,012
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$606,507 $474,383
========= =========
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<TABLE>
<CAPTION>
THE FOOTHILL GROUP, INC.
(DOLLARS IN THOUSANDS)
Three months ended December 31, Year ended December 31,
------------------------------------ -----------------------------------
1993 1992 1993 1992
---------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest income $15,319 10.97% $11,107 10.23% $ 7,536 11.42% $49,915 11.52%
Interest expense 5,596 4.01% 4,974 4.58% 21,064 4.18% 24,268 5.60%
------- ------ ------- ------ ------- ------ ------- ------
Interest margin 9,723 6.96% 6,133 5.65% 36,472 7.24% 25,647 5.92%
Fees and other income 8,332 5.97% 3,058 2.82% 27,288 5.41% 16,820 3.88%
------- ------ ------- ------ ------- ------ ------- ------
Total margin 18,055 12.93% 9,191 8.47% 63,760 12.65% 42,467 9.80%
Gain on investments, net 79 0.06% 755 0.70% 5,257 1.04% 3,373 0.78%
Provision for credit losses 3,050 2.18% 880 0.81% 12,794 2.54% 8,671 2.00%
General and administrative expenses 5,885 4.21% 4,264 3.93% 20,322 4.03% 16,414 3.79%
------- ------ ------- ------ ------- ------ ------- ------
Income from continuing operations before 9,199 6.60% 4,802 4.43% 35,901 7.12% 20,755 4.79%
taxes
Provision for income taxes - continuing
operations 3,870 2.77% 1,910 1.76% 15,078 2.99% 8,621 1.99%
------- ------ ------- ------ ------- ------ ------- ------
Income from continuing operations 5,329 3.83% 2,892 2.67% 20,823 4.13% 12,134 2.80%
Income (loss) from discontinued
operations (1,236) (0.88)% (209) (0.19)% (1,579) (0.31)% 563 0.13%
------- ------ ------- ------ ------- ------ ------- ------
Income before extraordinary items 4,093 2.95% 2,683 2.48% 19,244 3.82% 12,697 2.93%
Extraordinary items (561) (0.40)% (42) (0.04)% (561) (0.11)% (552) (0.13)%
------- ------ ------- ------ ------- ------ ------- ------
Net income $ 3,532 2.55% $ 2,641 2.44% $18,683 3.71% $12,145 2.80%
======= ====== ======= ====== ======= ====== ======= ======
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*Percentages are computed using average assets of continuing operations and
have been annualized.
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Per share data (shares in thousands):
Primary
Income from continuing operations $ 0.31 $ 0.17 $ 1.23 $ 0.89
Discontinued operations (0.07) (0.01) (0.09) 0.04
Extraordinary items (0.03) - (0.03) (0.04)
------ ------ ------ ------
Earnings per common and common equivalent
share $ 0.21 $ 0.16 $ 1.11 $ 0.89
====== ====== ====== ======
Fully diluted:
Income from continuing $ 0.30 $ 0.17 $ 1.20 $ 0.81
operations
Discontinued operations (0.07) (0.01) (0.09) 0.04
Extraordinary items (0.03) - (0.03) (0.03)
------ ------ ------ ------
Earnings per common share assuming full
dilution $ 0.20 $ 0.16 $ 1.08 $ 0.82
====== ====== ====== ======
Number of shares used in per share computations
Primary 16,821 16,389 16,683 13,730
====== ====== ====== ======
Fully diluted 17,499 17,063 17,363 15,650
====== ====== ====== ======
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<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $606,507 $474,383 $606,507 $474,383
Average assets** 574,060 450,176 520,105 448,941
Average assets of continuing 558,661 434,221 504,022 433,158
operations**
Average stockholders' equity** 145,288 126,879 137,448 103,823
Average stockholders' equity in
continuing operations** 129,889 110,924 121,365 88,040
Finance receivables 514,518 394,895 514,518 394,895
Average finance receivables** 532,916 414,094 480,353 413,067
======== ======== ======== ========
Sources of funds employed:
Commercial paper and bank
borrowings $148,283 $ 64,915 $148,283 $ 64,915
Senior notes 237,404 216,560 237,404 216,560
Subordinated notes and debentures 53,725 48,940 53,725 48,940
Stockholders' equity 152,147 129,012 152,147 129,012
-------- -------- -------- --------
Total funds employed $591,559 $459,427 $591,559 $459,427
======== ======== ======== ========
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**Averages are for the three and twelve months ended, as
applicable.
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THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION
(UNAUDITED)
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION:
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<CAPTION>
Three months ended December 31, Year ended December 31,
------------------------------------- ---------------------------------------
(Dollars in thousands) 1993 1992 1993 1992
----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest income $ 15,026 10.98% $ 11,025 10.17% $ 56,636 11.43% $ 49,543 11.49%
Interest expense 5,877 4.30% 5,295 4.88% 22,218 4.48% 23,113 5.36%
-------- ------ -------- ------ -------- ------ -------- ------
Interest margin 9,149 6.68% 5,730 5.29% 34,418 6.95% 26,430 6.13%
Fees and other income 6,783 4.96% 2,277 2.10% 20,916 4.22% 13,485 3.13%
-------- ------ -------- ------ -------- ------ -------- ------
Total margin 15,932 11.64% 8,007 7.39% 55,334 11.17% 39,915 9.26%
Provision for credit losses 2,950 2.16% 879 0.81% 12,254 2.47% 8,641 2.00%
General and administrative
expenses 4,815 3.52% 3,762 3.47% 16,987 3.43% 14,967 3.47%
-------- ------ -------- ------ -------- ------ -------- ------
Income before income taxes 8,167 5.96% 3,366 3.11% 26,093 5.27% 16,307 3.79%
Provision for income taxes 3,430 2.51% 1,414 1.30% 10,959 2.21% 6,849 1.59%
-------- ------ -------- ------ -------- ------ -------- ------
Income before extraordinary items 4,737 3.45% 1,952 1.81% 15,134 3.06% 9,458 2.20%
Extraordinary items (561) (0.41)% - - (561) (0.11)% - -
-------- ------ -------- ------ -------- ------ -------- ------
Net income $ 4,176 3.04% $ 1,952 1.81% $ 14,573 2.95% $ 9,458 2.20%
======== ====== ======== ====== ======== ====== ======== ======
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*Percentages are computed using average assets and have been
annualized.
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<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $572,630 $437,867 $572,630 $437,867
Average assets** 547,265 433,660 495,501 431,120
Finance receivables 506,673 393,530 506,673 393,530
Average finance receivables** 525,421 413,029 476,382 412,203
======== ======== ======== ========
Sources of funds employed:
Commercial paper and bank
borrowings $148,283 $ 64,915 $148,283 $ 64,915
Senior notes 233,817 216,560 233,817 216,560
Subordinated notes and
debentures 64,225 62,190 64,225 62,190
Stockholder's equity 114,133 83,127 114,133 83,127
-------- -------- -------- --------
Total funds employed $560,458 $426,792 $560,458 $426,792
======== ======== ======== ========
</TABLE>
**Averages are for the three and twelve months ended,
as applicable.
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<S> <C> <C> <C> <C>
OTHER SELECTED DATA:
Nonperforming finance
receivables
and repossessed assets*** $ 16,296 $ 22,057 $ 16,296 $ 22,057
Allowance for credit losses $ 13,857 $ 10,527 $ 13,857 $ 10,527
Actual writeoffs during the
period $ 2,450 $ 880 $ 8,924 $ 6,161
Number of employees 108 100 108 100
========= ========= ========= =========
</TABLE>
***Includes loans in process of foreclosure, repossessed assets and loans that
have contractual installments more than sixty days past due.
