<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, 1995
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 1-3521
ARISTAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4128205
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8900 Grand Oak Circle, Tampa, FL 33637-1050
(Address of principal executive offices) (Zip Code)
(813) 632-4500
(Registrant's telephone number, including area code)
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 the latest practicable date.
As of April 30, 1995, there were 1,000 shares of Common Stock outstanding.
Registrant meets the conditions set forth in General Instruction (H)(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
<PAGE> 2
ARISTAR, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<S> <C>
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Financial Condition -
March 31, 1995, December 31, 1994 and
March 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations and Retained Earnings -
Three Months Ended March 31, 1995 and 1994. . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994. . . . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . . 6 - 7
Item 2. Management's Analysis of the
Results of Operations for the Three Months
Ended March 31, 1995. . . . . . . . . . . . . . . . . . . . . . . 8
Part II. Other Information:
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 10 - 11
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
</TABLE>
<PAGE> 3
Item 1. Financial Statements
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(Dollars in thousands) 1995 1994 1994
<S> <C> <C> <C>
ASSETS
Finance receivables, net $ 1,500,775 $ 1,539,914 $ 1,437,837
Investment securities 109,050 106,600 89,227
Cash and cash equivalents 7,664 9,668 16,918
Property and equipment, less accumulated
depreciation and amortization: 1995,
$20,919; 1994, $21,684 and $19,939 12,753 13,327 14,527
Deferred charges 12,035 12,605 12,891
Excess of cost over equity of
companies acquired, less
accumulated amortization: 1995,
$39,773; 1994, $38,021 and $32,766 67,238 68,990 74,245
Other assets 10,153 19,832 6,240
TOTAL ASSETS $ 1,719,668 $ 1,770,936 $ 1,651,885
LIABILITIES AND STOCKHOLDER'S
EQUITY
Liabilities
Short-term debt $ 121,082 $ 179,085 $ 280,059
Long-term debt 1,092,630 1,092,545 892,742
Total debt 1,213,712 1,271,630 1,172,801
Accounts payable and other
liabilities 36,427 45,636 35,070
Federal and state income taxes 7,639 421 13,168
Insurance claims and benefits
reserves 7,814 7,792 7,573
Unearned insurance premiums and
commissions 55,450 53,890 53,002
Total liabilities 1,321,042 1,379,369 1,281,614
Stockholder's equity
Common stock: $1.00 par value;
10,000 shares authorized; 1,000
shares issued and outstanding 1 1 1
Paid-in capital 44,894 44,894 44,894
Retained earnings 355,920 350,266 325,288
Net unrealized holding gain (loss)
on investment securities (2,189) (3,594) 88
Total stockholder's equity 398,626 391,567 370,271
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 1,719,668 $ 1,770,936 $ 1,651,885
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 4
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Operations and Retained Earnings
(Unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended March 31,
(Dollars in thousands) 1995 1994
<S> <C> <C>
Loan interest and fee income $ 76,984 $ 75,204
Investment securities income 1,747 1,206
Total interest income 78,731 76,410
Interest and debt expense 23,758 20,663
Net interest income before
provision for credit losses 54,973 55,747
Provision for credit losses 9,892 8,552
Net interest income 45,081 47,195
Other operating income
Net insurance operations
and other income 7,084 6,622
Other expenses
Personnel costs 16,260 16,327
Occupancy expense 2,249 2,155
Advertising expense 943 922
Amortization of excess cost over
equity of companies acquired 1,752 1,752
Other operating expenses 9,265 10,049
30,469 31,205
Income before income taxes 21,696 22,612
Provision for federal and state income taxes 8,542 8,143
Net income 13,154 14,469
Retained Earnings
Beginning of period 350,266 317,069
Dividends paid (7,500) (6,250)
End of period $ 355,920 $ 325,288
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 5
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended March 31,
(Dollars in thousands) 1995 1994
<S> <C> <C>
Cash flows from operating activities
Net income $ 13,154 $ 14,469
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 9,892 8,552
Depreciation and amortization 3,389 3,739
Deferred income taxes (503)
Increase (decrease) in
Accounts payable and other liabilities (9,209) (29,904)
Unearned insurance premiums and commissions
and insurance claims and benefits reserves 1,582 2,045
Currently payable income taxes 7,218
Decrease in other assets 9,679 2,087
Net cash provided by operating activities 35,202 988
Cash flows from investing activities
Investment securities purchased (6,690) (7,770)
Investment securities matured 6,076 10,674
Finance receivables originated or purchased (237,658) (255,104)
Finance receivables repaid or sold 266,982 261,923
Capital expenditures (178) (2,516)
Proceeds from sale of property and equipment 20
Other 277
Net cash provided by investing activities 28,532 7,504
Cash flows from financing activities
Net change in short-term debt (58,003) 452
Dividends paid (7,500) (6,250)
Other, net (235)
Net cash used in financing activities (65,738) (5,798)
Net increase (decrease) in cash and cash
equivalents (2,004) 2,694
Cash and cash equivalents
Beginning of period 9,668 14,224
End of period $ 7,664 $ 16,918
Supplemental disclosures of cash flow information
Interest paid $ 27,783 $ 31,793
Net intercompany payments (refunds) in lieu of
federal and state income taxes (1,112) 600
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 6
ARISTAR, INC. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 Basis of Presentation
The accompanying unaudited consolidated financial statements of Aristar, Inc.
and subsidiaries (the "Company") have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. These statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
Certain amounts in prior periods have been reclassified to conform to the
current period's presentation.
Note 2 Ownership
The Company is an indirect, wholly-owned subsidiary of Great Western Financial
Corporation.
<PAGE> 7
ARISTAR, INC. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Note 3 Finance Receivables
Finance receivables consist of the following:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(Dollars in thousands) 1995 1994 1994
<S> <C> <C> <C>
Consumer finance receivables
Real estate secured loans $ 524,550 $ 518,757 $ 513,115
Other instalment loans 1,018,983 1,055,723 939,696
Retail instalment contracts 309,404 331,424 328,778
Gross finance receivables 1,852,937 1,905,904 1,781,589
Less: Unearned finance charges and
deferred loan fees (311,216) (324,679) (304,179)
Allowance for credit losses (40,946) (41,311) (39,573)
Finance receivables, net $ 1,500,775 $ 1,539,914 $ 1,437,837
</TABLE>
Activity in the Company's allowance for credit losses is as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
(Dollars in thousands) 1995 1994
<S> <C> <C>
Balance, beginning of period $ 41,311 $ 39,094
Provision for credit losses 9,892 8,552
Amounts charged off (14,195) (12,229)
Recoveries 3,938 3,904
Allowances on notes purchased 252
Balance, end of period $ 40,946 $ 39,573
</TABLE>
Note 4 Long-term Debt
Long-term debt at March 31, 1995 was comprised of:
(Dollars in thousands)
Senior Notes and Debentures $ 893,275
Senior Subordinated Notes
and Debentures 199,355
$1,092,630
<PAGE> 8
Item 2. MANAGEMENT'S ANALYSIS OF THE RESULTS OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 1995
The Company's average net finance receivables outstanding were $75.7 million
greater in the first quarter of 1995 as compared to the same period of 1994,
while, as a reflection of interest rate and competitive pressures, the overall
portfolio yield decreased .53%. As a result, loan interest and fee income
increased $1.8 million, or 2.4%, for the quarter ended March 31, 1995, over
the quarter ended March 31, 1994. Income from investment securities increased
$541 thousand, with both the total invested balances and the yield thereon
increasing over the first quarter of 1994. As a result, total interest income
increased by $2.3 million. On the other hand, average debt outstanding
increased $70.6 million, or 6.0%, and the weighted average interest rate grew
by 60 basis points, resulting in an increase in interest and debt expense of
$3.1 million, or 15.0%, for the quarter ended March 31, 1995, as compared to
the same 1994 period. These factors caused a decrease in net interest income
before provision for credit losses of $774 thousand, or 1.4%.
The provision for credit losses for the quarter ended March 31, 1995 was 2.54%
as an annualized percentage of average net finance receivables for that
period, as compared to 2.31% for the first quarter of 1994. The increase in
provision rate reflects management's assessment of the quality of the
Company's receivables portfolio at this time.
Personnel expenses were $67 thousand, or .4%, lower in the period ended March
31, 1995 as compared to the same 1994 period because, while 1995 includes
normal compensation increases, 1994 reflected various one-time charges related
to the relocation of the Company's headquarters.
Productivity, defined as the ratio of operating and administrative expenses
(before deferral of direct loan costs) to average outstanding finance
receivables, improved to 8.2% in the quarter ended March 31, 1995 as compared
to 8.5% in the first quarter of 1994. Contributing to this improvement is the
fact that the first quarter of 1994 included $513 thousand in amortization of
the cost of the Company's proprietary computer software, which became fully
amortized in the third quarter of 1994.
<PAGE> 9
PART II. OTHER INFORMATION
Item 5. Other Information
The calculation of the Company's ratio of earnings to fixed charges as of
the dates indicated is shown below:
<TABLE>
<CAPTION>
Three Months Year Three Months
Ended Ended Ended
March 31, December 31, March 31,
1995 1994 1994
<S> <C> <C> <C>
Income before income taxes $ 21,696 $ 91,592 $ 22,612
Fixed charges:
Interest and debt expense on
all indebtedness 23,758 87,074 20,663
Appropriate portion of
rentals (33%) 666 2,537 662
Total fixed charges 24,424 89,611 21,325
Earnings available for
fixed charges $ 46,120 $ 181,203 $ 43,937
Ratio of earnings
to fixed charges 1.89 2.02 2.06
</TABLE>
<PAGE> 10
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(4) (a) Indenture dated as of July 15, 1984,
between Aristar, Inc. and Bank of
Montreal Trust Company, as trustee.
(1)
(b) First supplemental indenture to Exhibit
(4) (a) dated as of June 1, 1987. (1)
(c) Indenture dated as of August 15, 1988,
between Aristar, Inc. and Bank of
Montreal Trust Company, as trustee. (2)
(d) Indenture dated as of May 1, 1991
between Aristar, Inc. and Security
Pacific National Bank, as trustee. (3)
(e) Indenture dated as of May 1, 1991
between Aristar, Inc. and The First
National Bank of Boston, as trustee.
(3)
(f) Indenture dated as of July 1, 1992
between Aristar, Inc. and The Chase
Manhattan Bank, N.A., as trustee. (4)
(g) Indenture dated as of July 1, 1992
between Aristar, Inc. and Citibank,
N.A., as trustee. (4)
(h) The registrant hereby agrees to furnish
the Securities and Exchange Commission
upon request with copies of all
instruments defining rights of holders
of long-term debt of Aristar, Inc. and
its consolidated subsidiaries.
(10) (a) Great Western Financial Corporation Income
Tax Allocation Policy. (5)
(b) Amendment Number 1 to Great Western
Financial Corporation Income Tax Allocation
Policy. (5)
(c) Amendment Number 2 to Great Western
Financial Corporation Income Tax Allocation
Policy. (6)
(27) Financial Data Schedule.
(1) Incorporated by reference to Registrant's
Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993, Commission
file number 1-3521.
(2) Incorporated by reference to Registrant's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1988,
Commission file number 1-3521.
(3) Incorporated by reference to Registrant's
Current Report on Form 8-K dated May 29,
1991, Commission file number 1-3521.
(4) Incorporated by reference to Registrant's
Current Report on Form 8-K dated June 24,
1992, Commission file number 1-3521.
<PAGE> 11
(5) Incorporated by reference to Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1992, Commission file
number 1-3521.
(6) Incorporated by reference to Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1993, Commission file
number 1-3521.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period covered by this
Report.
<PAGE> 12
SIGNATURE
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.
ARISTAR, INC.
Date: May 12, 1995 By: /s/ James A. Bare
James A. Bare
Senior Vice President and
Chief Financial Officer
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This Schedule contains summary financial information extracted from the
Company's financial statements filed as part of its Report on Form 10-Q for the
three months ended March 31, 1995 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 7,664
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 109,050
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,541,721<F1>
<ALLOWANCE> (40,946)
<TOTAL-ASSETS> 1,719,668
<DEPOSITS> 0
<SHORT-TERM> 121,082
<LIABILITIES-OTHER> 36,427
<LONG-TERM> 1,092,630
<COMMON> 1
0
0
<OTHER-SE> 353,731
<TOTAL-LIABILITIES-AND-EQUITY> 1,719,668
<INTEREST-LOAN> 76,984
<INTEREST-INVEST> 1,747
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 78,731
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 23,758
<INTEREST-INCOME-NET> 54,973
<LOAN-LOSSES> 9,892
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 30,469
<INCOME-PRETAX> 21,696
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,154
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 10.79
<LOANS-NON> 18,986
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 41,311
<CHARGE-OFFS> (14,195)
<RECOVERIES> 3,938
<ALLOWANCE-CLOSE> 40,946
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 40,946
<FN>
<F1>Aristar, Inc. is technically a Commercial and Industrial Company subject to
Article 5 of Regulation S-X. However, as its primary business is consumer
finance, the Company, although not a bank holding company, is engaged in
similar lending activities. Therefore, in accordance with Staff Accounting
Bulletin Topic 11-K, "Application of Article 9 and Guide 3," the Company has
prepared its Financial Data Schedule for the three months ended March 31, 1995
using the Article 9 format.
</FN>
</TABLE>
