<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: February 3, 1995
THE FOOTHILL GROUP, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-5467 94-1663353
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
11111 SANTA MONICA BOULEVARD
LOS ANGELES, CALIFORNIA 90025
(Address of principal executive office)
Registrant's telephone number: (310) 996-7000
<PAGE> 2
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 28 - Additional Exhibits
Press release announcing fourth quarter results.
Press release announcing completion of purchase of Flagship Financial.
Press release announcing an increase in commercial paper program and bank
credit facilities.
Press release announcing increase in quarterly dividend.
Press release announcing purchase of Flagship Financial.
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: February 3, 1995 THE FOOTHILL GROUP, INC.
By: /s/ HENRY K. JORDAN
-----------------------
Henry K. Jordan
Vice President and
Chief Financial Officer
<PAGE> 1
Contact: HENRY K. JORDAN THE FOOTHILL GROUP, INC.
Senior Vice President & 11111 Santa Monica Boulevard
Chief Financial Officer Los Angeles, California 90025
310-996-7000
[FOOTHILL GROUP LOGO]
NEWS
THE FOOTHILL GROUP, INC. REPORTS
FOURTH QUARTER AND RECORD YEAR END RESULTS
LOS ANGELES, CALIFORNIA, January 30, 1995 . . . The Foothill
Group, Inc. (NYSE-FGI) today reported a 66% increase in net income for the year
ended December 31, 1994 to a record $31,076,000, or $1.77 per fully diluted
share, compared with net income of $18,683,000, or $1.08 per fully diluted
share, for the year ended December 31, 1993. For the fourth quarter ended
December 31, 1994, net income grew to $7,312,000, or 42 cents per fully diluted
share, compared with net income of $3,532,000, or 20 cents per fully diluted
share, for the same period in 1993.
Henry K. Jordan, Senior Vice President and Chief Financial Officer,
said, "These fourth quarter and year end results reflect the strong
profitability of our asset-based lending operations and continued growth of the
asset-based loan portfolio. Finance receivables reached $659,356,000 as of
December 31, 1994, up 28% on an annualized basis from $514,518,000 as of
December 31, 1993.
"We are especially pleased that over 80% of our fourth quarter earnings
resulted from asset-based lending operations as compared to 54% in the 1993
fourth quarter. The credit quality of the Company's asset-based loan portfolio
continued to improve in the fourth quarter. Margins remained strong for both
the three months and year ended December 31, 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, as a percent of average
assets, was 9.11% for the year ended December 31, 1994 as compared with 8.74%
for the year ended December 31, 1993.
"Equity and purchased bank debt positions owned by the Company have
unrealized gains totaling $28,107,000 as of December 31, 1994, down from
$37,805,000 as of December 31, 1993.
<PAGE> 2
These unrealized gains are subject to daily market fluctuations. Subsequent to
December 31,1994, several of the Company's larger equity positions did
appreciate in value from their year end levels, thus improving the unrealized
gains noted above. In addition, investments of Foothill's managed partnerships
show substantial unrealized gains which, if realized, will contribute to future
earnings. The Company anticipates marketing a new fund, Foothill Partners III,
in the spring of 1995.
"Book value per common share was $10.32 as of December 31, 1994, up
from $9.02 as of December 31, 1993. Total stockholders' equity increased in the
1994 fourth quarter to a record $172 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 December 31, 1994, Foothill had total assets owned or under management of
more than $1.2 billion.
<PAGE> 3
THE FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND DECEMBER 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
DECEMBER 31,
--------------------------
1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 33,584 $ 50,907
Equity, debt and partnership investments 38,301 32,842
Finance receivables:
Revolving loans 481,063 326,373
Term loans 178,293 188,145
- ------------------------------------------------------------------------------------
Finance receivables 659,356 514,518
Allowance for credit losses 17,260 14,057
- ------------------------------------------------------------------------------------
Finance receivables, net 642,096 500,461
Repossessed assets, net 556 -
Prepaid income taxes 10,463 9,009
Deferred fund and debt issuance costs, net 7,598 9,897
Property and equipment, at cost
less accumulated depreciation and
amortization ($2,438 at December 31,
1994; $1,769 at December 31, 1993) 2,387 2,269
Other assets (principally monies due
from loan participants) 3,205 1,122
- ------------------------------------------------------------------------------------
$738,190 $606,507
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $214,897 $148,283
Other short term borrowings 10,000 -
Senior notes payable 268,829 237,404
Accounts payable and accrued liabilities 21,504 14,948
Subordinated notes and debentures 50,550 53,725
- ------------------------------------------------------------------------------------
Total liabilities 565,780 454,360
- ------------------------------------------------------------------------------------
Stockholders' equity:
Convertible preferred stock, $1.00 par
value, $30.00 per share liquidation
preference, 9% cumulative, 100,000
shares issued and outstanding 2,900 2,900
Class A common stock, no par value,
16,420,410 shares issued and
outstanding (16,538,874 at
December 31, 1993) 99,048 101,285
Unrealized gains, net of tax, on
marketable debt and equity securities 15,001 19,672
Retained earnings 55,461 28,290
- ------------------------------------------------------------------------------------
Total stockholders' equity 172,410 152,147
- ------------------------------------------------------------------------------------
$738,190 $606,507
====================================================================================
</TABLE>
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THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended December 31, Year ended December 31,
----------------------------------- -----------------------------------
1994 1993 1994 1993
SELECTED OPERATING DATA*: --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest and fees earned $27,905 15.11% $17,914 12.83 % $87,088 13.55% $65,125 12.92 %
Interest expense 9,720 5.26% 5,596 4.01 % 28,519 4.44% 21,064 4.18 %
- ----------------------------------------------------------------------------------------------------------------
Net interest revenue 18,185 9.85% 12,318 8.82 % 58,569 9.11% 44,061 8.74 %
Asset management fees 1,303 0.71% 1,319 0.94 % 5,460 0.85% 6,025 1.20 %
Gains from asset sales and managed
partnerships 2,104 1.14% 4,224 3.02 % 24,899 3.88% 18,260 3.62 %
Provision for credit losses 1,669 0.90% 3,050 2.18 % 9,658 1.50% 12,794 2.54 %
General and administrative
expenses 7,096 3.84% 5,612 4.02 % 24,751 3.85% 19,651 3.90 %
- ----------------------------------------------------------------------------------------------------------------
Income from continuing operations
before taxes 12,827 6.96% 9,199 6.58 % 54,519 8.49% 35,901 7.12 %
Provision for income taxes -
continuing operations 5,515 2.99% 3,870 2.77 % 23,443 3.65% 15,078 2.99 %
- ----------------------------------------------------------------------------------------------------------------
Income from continuing operations 7,312 3.97% 5,329 3.81 % 31,076 4.84% 20,823 4.13 %
Loss from discontinued operations - - (1,236) (0.88)% - - (1,579) (0.31)%
- ----------------------------------------------------------------------------------------------------------------
Income before extraordinary items 7,312 3.97% 4,093 2.93 % 31,076 4.84% 19,244 3.82 %
Extraordinay items - - (561) (0.40)% - - (561) (0.11)%
- ----------------------------------------------------------------------------------------------------------------
Net income $ 7,312 3.97% $ 3,532 2.53 % $31,076 4.84% $18,683 3.71 %
================================================================================================================
</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> <C> <C>
Per share data (shares in thousands):
Primary
Income from continuing
operations $0.43 $0.31 $1.83 $1.23
Discontinued operations - (0.07) - (0.09)
Extraordinary items (0.03) (0.03)
- ----------------------------------------------------------------------------------------------------------------
Earnings per common and
common equivalent share $0.43 $0.21 $1.83 $1.11
================================================================================================================
Fully diluted:
Income from continuing
operations $0.42 $0.30 $1.77 $1.20
Discontinued operations - (0.07) - (0.09)
Extraordinary items (0.03) (0.03)
- ----------------------------------------------------------------------------------------------------------------
Earnings per common share
assuming full dilution $0.42 $0.20 $1.77 $1.08
================================================================================================================
Number of shares used in per
share computations
Primary 16,727 16,821 16,854 16,683
================================================================================================================
Fully diluted 17,397 17,499 17,527 17,363
================================================================================================================
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $738,190 $606,507 $738,190 $606,507
Average assets** 738,844 574,060 642,479 520,105
Average assets of continuing
operations** 738,844 558,661 642,479 504,022
Average stockholders' equity** 153,884 145,288 147,425 137,448
Average stockholders' equity
in continuing operations** 153,884 129,889 147,425 121,365
Finance receivables 659,356 514,518 659,356 514,518
Average finance receivables** 691,327 532,916 591,263 480,353
================================================================================================================
Sources of funds employed:
Commercial paper $214,897 $148,283 $214,897 $148,283
Other short term borrowings 10,000 - 10,000 -
Senior notes 268,829 237,404 268,829 237,404
Subordinated notes and debentures 50,550 53,725 50,550 53,725
Stockholders' equity 172,410 152,147 172,410 152,147
- ----------------------------------------------------------------------------------------------------------------
Total funds employed $716,686 $591,559 $716,686 $591,559
================================================================================================================
</TABLE>
**Averages are for the three and twelve months ended. Average assets and average
equity exclude unrealized gains on marketable debt and equity securities.
<PAGE> 6
THE FOOTHILL GROUP, INC.
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended December 31, Year ended December 31,
---------------------------------- ----------------------------------
1994 1993 1994 1993
SELECTED OPERATING DATA*: --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest and fees earned $27,497 15.28% $17,447 12.75 % $85,713 14.08% $63,951 12.91 %
Interest expense 9,953 5.53% 5,877 4.30 % 29,494 4.84% 22,218 4.48 %
- -------------------------------------------------------------------------------------------------------
Net interest revenue 17,544 9.75% 11,570 8.45 % 56,219 9.24% 41,733 8.43 %
Gains from asset sales 1,028 0.57% 4,190 3.06 % 14,549 2.39% 13,179 2.66 %
Provision for credit losses 1,669 0.93% 2,950 2.16 % 9,554 1.57% 12,254 2.47 %
General and administrative
expenses 6,208 3.45% 4,643 3.39 % 21,264 3.49% 16,565 3.34 %
- -------------------------------------------------------------------------------------------------------
Income before income taxes 10,695 5.94% 8,167 5.96 % 39,950 6.57% 26,093 5.28 %
Provision for income taxes 4,598 2.55% 3,430 2.51 % 17,178 2.82% 10,959 2.21 %
- -------------------------------------------------------------------------------------------------------
Income before extraordinary
items 6,097 3.39% 4,737 3.45 % 22,772 3.75% 15,134 3.07 %
Extraordinary items - - (561) (0.41)% - - (561) (0.11)%
- -------------------------------------------------------------------------------------------------------
Net income $ 6,097 3.39% $ 4,176 3.04 % $22,772 3.75% $14,573 2.96 %
=======================================================================================================
</TABLE>
*Percentages are computed using average assets (excluding unrealized gains on
investments) and have been annualized.
<TABLE>
<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $701,421 $572,630 $701,421 $572,630
Average assets** 720,050 547,265 608,856 495,501
Finance receivables 648,763 506,673 648,763 506,673
Average finance receivables** 679,132 525,421 581,315 476,382
=======================================================================================================
Sources of funds employed:
Commercial paper $214,897 $148,283 $214,897 $148,283
Other short term borrowings 10,000 - 10,000 -
Senior notes 267,633 233,817 267,633 233,817
Subordinated notes and
debentures 59,300 64,225 59,300 64,225
Stockholders' equity 132,309 114,133 132,309 114,133
- -------------------------------------------------------------------------------------------------------
Total funds employed $684,139 $560,458 $684,139 $560,458
=======================================================================================================
</TABLE>
**Averages are for the three and twelve months ended. Average assets exclude
unrealized gains on marketable debt and equity securities.
<TABLE>
<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Nonperforming finance
receivables and
repossessed assets*** $ 6,891 $ 16,296 $ 6,891 $ 16,296
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
Allowance for credit losses $ 16,957 $ 13,857 $ 16,957 $ 13,857
Actual writeoffs during the
period $ 1,369 $ 2,450 $ 6,454 $ 8,924
Number of employees 114 108 114 108
=======================================================================================================
</TABLE>
***Includes repossessed assets and loans that have contractual installments more
than sixty days past due.
<PAGE> 8
Contact: HENRY K. JORDAN THE FOOTHILL GROUP, INC.
Senior Vice President 11111 Santa Monica Boulevard
& Chief Financial Officer Los Angeles, California 90025
310-996-7000
[FOOTHILL GROUP LOGO]
NEWS
FOOTHILL GROUP SUBSIDIARY COMPLETES
PURCHASE OF FLAGSHIP FINANCIAL ASSETS
LOS ANGELES, CALIFORNIA, January 31, 1995 . . . The Foothill Group,
Inc. (NYSE-FGI) today announced that Foothill Capital Corporation, its
asset-based lending subsidiary, has completed the cash purchase of the assets of
Flagship Financial Corporation. Final closing of the previously announced asset
purchase was subject to approval by the Federal Trade Commission which was
received on January 30, 1995. Flagship Financial Corporation is an asset-based
lender with approximately $20 million in loans outstanding and is headquartered
in Richmond, Virginia. Flagship has additional business development offices in
Columbia, Maryland and Charlotte, North Carolina.
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 December 31, 1994, Foothill had total assets owned or under management of
more than $1.2 billion.
<PAGE> 9
Contact: HENRY K. JORDAN THE FOOTHILL GROUP, INC.
Senior Vice President 11111 Santa Monica Boulevard
& Chief Financial Officer Los Angeles, California 90025
310-996-7000
[FOOTHILL GROUP LOGO]
NEWS
FOOTHILL GROUP SUBSIDIARY INCREASES
COMMERCIAL PAPER PROGRAM AND BANK CREDIT FACILITIES
TO $375 MILLION
LOS ANGELES, CALIFORNIA, February 1, 1995 . . . The Foothill Group,
Inc. (NYSE-FGI) announced today that its subsidiary, Foothill Capital
Corporation, has increased its commercial paper program and its bank credit
facilities to $375 million from their present level of $345 million. In
addition, the commitment fees on the facilities were significantly reduced and
three new banks were added to the group. Pretax savings from this fee reduction
are forecasted to be approximately $300,000 annually. Foothill Capital's
commercial paper is rated "A-2" by Standard & Poor's Ratings Group, "D-2" by
Duff & Phelps Credit Rating Company and "F-2" by Fitch Investor's Service, Inc.
The bank credit facilities, with 26 banks, are used primarily to support
Foothill Capital's outstanding commercial paper.
Kent W. Dahl, Vice President and Treasurer of Foothill Capital, stated,
"Foothill Capital is pleased to announce the increases to our commercial paper
program and bank credit facilities which will be used to fund the continued
growth of our asset-based lending business. We continue to have strong support
from the banking and investment communities for our business strategy."
The Foothill Group, Inc. is a specialty 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 the debt
instruments of companies in reorganization or in the process of restructuring.
At December 31, 1994, Foothill had total assets owned or under management of
over $1.2 billion.
<PAGE> 10
Contact: HENRY K. JORDAN THE FOOTHILL GROUP, INC.
Senior Vice President 11111 Santa Monica Boulevard
& Chief Financial Officer Los Angeles, California 90025
310-996-7000
[FOOTHILL GROUP LOGO]
NEWS
THE FOOTHILL GROUP, INC. INCREASES
QUARTERLY DIVIDEND
LOS ANGELES, CALIFORNIA, January 19, 1995 . . . The Foothill Group,
Inc. (NYSE-FGI) Board of Directors today declared a $.08 quarterly cash dividend
on its Class A common stock. This represents a 33% increase from the previous
$.06 quarterly cash dividend. The dividend is payable on April 20, 1995, to
shareholders of record on March 20, 1995.
The Foothill Group, Inc. is a specialized financial services company
which operates two tightly linked businesses: commercial lending and money
management. Foothill Capital Corporation, its wholly owned subsidiary, provides
asset-based financing to businesses throughout the United States. The parent
company's money management operation conducts business through institutional
limited partnerships, seeking above average returns by investing in debt
instruments of companies in reorganization or in the process of restructuring.
As of September 30, 1994, Foothill had total assets owned or under management of
more than $1.2 billion.
<PAGE> 11
Contact: HENRY K. JORDAN THE FOOTHILL GROUP, INC.
Senior Vice President 11111 Santa Monica Boulevard
& Chief Financial Officer Los Angeles, California 90025
310-996-7000
[FOOTHILL GROUP LOGO]
NEWS
THE FOOTHILL GROUP SUBSIDIARY COMPLETES
PURCHASE OF FLAGSHIP FINANCIAL ASSETS
LOS ANGELES, CALIFORNIA, January 31, 1995 . . . The Foothill Group,
Inc. (NYSE-FGI) today announced that Foothill Capital Corporation, its
asset-based lending subsidiary, has completed the cash purchase of the assets
of Flagship Financial Corporation. Final closing of the previously announced
asset purchase was subject to approval by the Federal Trade Commission which
was received on January 30, 1995. Flagship Financial Corporation is an
asset-based lender with approximately $20 million in loans outstanding and is
headquartered in Richmond, Virginia. Flagship has additional business
development offices in Columbia, Maryland and Charlotte, North Carolina.
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 December 31, 1994, Foothill had total assets owned or under management of
more than $1.2 billion.
