SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended
December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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)
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
7 3/4 % Senior Notes due June 15, 2001 New York Stock Exchange
7 1/2 % Senior Subordinated Notes due July 1, 1999 New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K:
Not applicable
The aggregate market value of Common Stock held by non-affiliates: None
As of February 28, 1995, there were 1,000 shares of Common Stock outstanding.
Documents incorporated by reference: None
Registrant meets the conditions set forth in General Instruction (J)(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the reduced disclosure
format.
<PAGE> 2
ARISTAR, INC.
ANNUAL REPORT ON FORM 10-K
Table of Contents
<TABLE>
<CAPTION>
Page
PART I
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 7
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . 8
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . . . 8
Item 7. Management's Analysis of the Results of Operations
for the Year Ended December 31, 1994. . . . . . . . 8
Item 8. Financial Statements and Supplementary Data. . . . . 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . 29
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . 29
</TABLE>
Note: Items 4, 6, 10, 11, 12 and 13 are not included as per
conditions met by Registrant set forth in General Instruction
J(1)(a) and (b) of Form 10-K.
<PAGE> 3
PART I
Item 1. Business
Aristar, Inc. (the "Company"), incorporated in Delaware in 1986 as a successor
to a company incorporated in 1927, is a holding company headquartered in Tampa,
Florida whose subsidiaries are engaged in the consumer finance business. All of
the Company's equity securities are owned indirectly by Great Western Financial
Corporation ("GWFC").
The operations of the Company consist principally of a network of 477 consumer
finance offices located in 22 states, which generally operate under the names
Blazer Financial Services and City Finance Company.
The Company makes direct consumer instalment loans and purchases retail
instalment contracts from local retail establishments. These consumer credit
transactions are primarily for personal, family or household purposes.
Instalment loans written in 1994 had original terms ranging from 12 to 180
months and averaged 48 months. For the year ended December 31, 1994, 85% of the
volume of all instalment loans was either unsecured or secured by guarantors,
luxury consumer goods, automobiles or other personal property, with the
remaining 15% being secured by real estate. While the interest yield on real
estate loans is generally lower than for other direct loans, such loans are
typically larger and the ratio of cost to amounts loaned is lower.
Additionally, credit loss experience on real estate loans has been significantly
lower than on other loan types.
Retail instalment sales contracts are generally acquired without recourse to the
originating merchant and provide a vehicle for developing future loan business.
Where these contracts result from the sale of consumer goods, payment is
generally secured by such goods, and, in some cases, a portion of the purchase
price is withheld from the merchant pending satisfactory payment of the
obligation. Contracts are typically written with original terms from 3 to 60
months and for 1994 had an average original term of 24 months.
At December 31, 1994, the average portfolio yield written by loan type was as
follows:
<TABLE>
<CAPTION>
Average Yield
<S> <C>
Real Estate Secured Loans 14.2%
Other Direct Loans 25.4%
Retail Instalment Sales Contracts 18.8%
</TABLE>
<PAGE> 4
Portfolio Composition
The following table provides an analysis by type of the Company's notes and
contracts receivable (net of unearned finance charges and deferred loan fees) at
the dates shown:
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Notes and Contracts Receivable $ 1,581,225 $1,492,232 $1,410,350
Type as a percent of
Total Receivables
Real Estate Secured Loans 27.0% 27.3% 30.1%
Other Direct Loans 54.3 53.4 52.2
Retail Instalment Sales Contracts 18.7 19.3 17.7
100.0% 100.0% 100.0%
</TABLE>
Notes and contracts written including balances renewed, but excluding bulk
purchases, for the years ended December 31, 1994, 1993 and 1992 totaled $1.75
billion, $1.60 billion and $1.42 billion, respectively.
Credit Loss Experience
The Company closely monitors portfolio delinquency in measuring the quality of
the portfolio and the potential for ultimate credit losses. Under the Company's
policy, non-real estate secured delinquent accounts are charged off based on the
number of days contractually delinquent (120 days for closed-end loans and 180
days for open-end loans). Collection efforts continue after an account has been
charged off until the customer obligation is satisfied or until it is determined
that the obligation is not collectible or that the cost of continuing collection
efforts will not be offset by the potential recovery.
<PAGE> 5
The following table sets forth the credit loss experience for the past three
years and the allowance for doubtful accounts at the end of each year:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Allowance for Doubtful Accounts
at End of Year $ 41,311 $39,094 $36,046
Percent of Year-End Net Receivables 2.6% 2.6% 2.6%
Provision for Credit Losses 38,334 35,131 38,601
Amounts Charged-Off Net of Recoveries:
Amount 37,137 33,570 38,219
Percent of Average Net Receivables(1) 2.5% 2.4% 2.8%
</TABLE>
(1) Average of notes and contracts receivable (net of unearned finance
charges) at each month end during the period.
Accounts past due 60 days and over, based on contract payments, were as follows
as of the end of each of the past three years:
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Amount $ 32,712 $ 31,883 $ 33,214
Percent of Year-End Gross Receivables 1.7% 1.8% 1.9%
</TABLE>
Interest Rate Spreads and Cost of Borrowed Funds
A relatively high ratio of borrowings to invested capital is customary in
consumer finance activities due to the liquidity of the assets employed by the
business. The spread between the revenues received from loans and interest
expense is a significant factor in determining the net income of the Company.
<PAGE> 6
The table below sets forth certain percentages relative to the spread between
interest the Company received on the loan portfolio and interest expense for
each of the last three years:
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Ratio to Average Net Receivables:
Interest and Fee Income 20.0% 21.0% 21.4%
Interest and Debt Expense 5.8 6.2 6.4
Gross Spread 14.2% 14.8% 15.0%
</TABLE>
Credit Insurance Operations
The Company makes available, at the option of its customers, credit life, credit
accident and health, and credit casualty insurance products. Credit life
insurance provides that the customer's credit obligation, to the extent of the
policy limits, is paid in the event of death. Credit accident and health
insurance provides for the payment of instalments due on the customer's credit
obligation in the event of disability resulting from illness or injury. Credit
casualty insurance insures payment, to the extent of the policy limits, of the
credit obligation or cost to repair certain property used as collateral for such
obligation in the event such property is destroyed or damaged.
Purchase of such insurance is not a condition to obtaining a loan, although the
Company may require casualty insurance covering collateral to be obtained from
unaffiliated sources by the customer. The Company does not sell insurance to
non-customers. Credit insurance sold by the Company is written by unaffiliated
insurance companies and is substantially all reinsured by the Company, which
earns reinsurance premiums thereon.
Ratio of Earnings to Fixed Charges
The Company's ratio of earnings to fixed charges, which represents the number of
times fixed charges were covered by earnings, was 2.02 in 1994, 1.89 in 1993,
1.83 in 1992, 1.77 in 1991 and 1.40 in 1990. For purposes of computing this
ratio, earnings consist of income from operations before income taxes and, in
1992, before the cumulative effect of a change in accounting method, plus fixed
charges. Fixed charges consist of interest and debt expense and an appropriate
portion of rentals.
The combination of increased pretax income and lower interest expense in 1994,
1993, 1992 and 1991 resulted in the improved ratios for those years, as
reflected above.
<PAGE> 7
Governmental Regulation
The Company's operations are, for the most part, regulated by federal and state
consumer finance laws or similar legislation. All of the states in which
finance subsidiaries of the Company are licensed to do business have laws, which
vary from state to state, regulating the consumer finance business. These laws,
among other things, typically limit the size of loans, set maximum interest
rates and maximum maturities and regulate certain lending and collection
activities. Although consumer finance laws have been in effect for many years,
amending and new legislation is frequently proposed. The Company is unable to
predict whether or when any such proposals might ultimately be enacted into law
or to assess the impact any such enactment might have on the Company.
The Company has been named as a defendant in several class action suits in
Alabama, in which various industry-wide practices arising from routine business
activities are being challenged and various damages are being sought. The
Company believes that its practices are permissible under state and federal laws
and will defend these suits accordingly. At this time, the Company is unable to
determine the probability of any adverse outcome or the effect, if any, of such
an outcome on the Company.
Competition
The consumer finance business is highly competitive. The Company's principal
competitors are other local, regional and national finance companies, banks,
credit unions, savings associations, and other similar financial institutions.
Based upon information published in the American Banker in December 1993, the
Company was ranked as the 25th largest among all finance companies in the United
States, as measured by size of capital funds (consisting of stockholder's equity
and subordinated debt).
Employees
The Company employs approximately 2,300 full-time employees. None of these
employees are represented by a union. Management considers relations with its
employees to be satisfactory.
Item 2. Properties
The Company completed the relocation of its headquarters from Memphis, Tennessee
to Tampa, Florida in the first quarter of 1994. In connection with this
relocation, the Company constructed a 71,000 square foot headquarters building
on 6 acres of land at a total cost of approximately $8 million. In Memphis,
Tennessee, the Company had leased approximately 62,000 square feet of office
space as its headquarters; this lease, which would have expired on October 31,
1994, was terminated in the first quarter of 1994.
The Company's consumer finance offices, located in 22 states, are leased
typically for terms of three to five years with options to renew. Typical
locations include shopping centers, office buildings and storefronts, generally
of relatively small size sufficient to accommodate a staff of four to eight
employees.
See Note 10 to the Consolidated Financial Statements for additional information
on rental expense and lease commitments.
<PAGE> 8
Item 3. Legal Proceedings
The Company and its subsidiaries are routinely involved in litigation incidental
to their businesses. It is management's opinion that the aggregate liability
arising from the disposition of all such pending litigation will not have a
material adverse effect on the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company is an indirect wholly-owned subsidiary of GWFC and the Company's
common stock is not traded on any national exchange or in any other established
market.
Payment of dividends is within the discretion of the Company's Board of
Directors; however, it is projected that quarterly dividends totalling $32.5
million will be paid in 1995. Provisions of certain of the Company's debt
agreements restrict the payment of dividends to a maximum prescribed proportion
of cumulative earnings and contributed capital and otherwise provide for the
maintenance of minimum levels of equity and maximum leverage ratios. The
Company declared and paid dividends on a quarterly basis, totalling $25 million
during 1994 and $20.5 million during 1993.
Item 7. Management's Analysis of the Results of Operations for the Year Ended
December 31, 1994
The Company's average net finance receivables grew $100.7 million in 1994,
while, as a reflection of interest rate and competitive pressures, the overall
portfolio yield decreased .97% as compared to the prior year. As a result, loan
interest and fee income increased $6.5 million, or 2.2%, for the year ended
December 31, 1994, as compared to the prior year. Income from investment
securities increased $164 thousand, with increases in the invested balances
being offset by reduced interest rates. As a result, total interest income
increased by $6.7 million. During the first half of 1994, the Company funded
its receivables growth primarily by issuing commercial paper at a 3.7% weighted
average interest rate for that period, substantially lower than available long-
term debt rates. This strategy resulted in a minimal increase in interest and
debt expense of $689 thousand, or .8%, for the year ended December 31, 1994, as
compared to 1993. These changes caused an increase in net interest income
before provision for credit losses of $6.0 million, or 2.8%.
In July, 1994, the Company issued $150 million of 7.75% senior notes maturing in
2001. The proceeds were used primarily to reduce outstanding commercial paper.
On September 1, 1994, the Company retired $50 million of 14.25% senior
debentures, which were due on that date. In December, 1994, the Company issued
$100 million of 8.125% senior notes maturing in 1997, using the proceeds to
reduce outstanding commercial paper.
The provision for credit losses for the year ended December 31, 1994 was 2.55%
as an annualized percentage of average net finance receivables for that period,
as compared to 2.50% for 1993. The increase in provision rate reflects
management's assessment of the quality of the Company's receivables portfolio at
this time.
<PAGE> 9
Income from insurance operations increased $1.7 million, or 8.4%, in 1994 as
compared to 1993, paralleling the growth in net finance receivables. Other
income in 1994 includes $1.2 million from a sale of a nonexclusive right to the
Company's proprietary computer software.
Personnel expenses were $2.5 million, or 4.0%, lower in 1994 as compared to
1993, primarily as a result of an increase in deferred direct loan costs.
Before such deferrals, personnel expenses reflect an increase of $1.9 million,
or 2.6%; while 1994 includes normal compensation increases, 1993 reflected
various one-time relocation incentives.
Advertising expense for 1994 increased $213 thousand, or 4.2%, over 1993
primarily due to various promotions aimed at increasing the balance of
outstanding consumer instalment loans.
Other operating expenses declined $3.4 million, or 8.5%, in 1994 compared to
1993, primarily as a result of an increase in deferred direct loan costs.
Before such deferrals, other operating expenses reflect a decrease of $1.1
million, or 2.6%, primarily because the cost of the Company's proprietary
computer software became fully amortized in 1994.
Productivity, defined as the ratio of operating and administrative expenses
(before deferral of direct loan costs) to average outstanding finance
receivables, improved to 8.5% in 1994 as compared to 9.1% in 1993.
The Company's effective tax rate was 36.5% for 1994 as compared to 35.8% for
1993. The increase is primarily because 1993 included a $2.5 million credit for
the effect of tax legislation changes regarding intangibles.
<PAGE> 10
Item 8. Financial Statements and Supplementary Data
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholder of
Aristar, Inc.
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of operations and retained earnings and
of cash flows present fairly, in all material respects, the financial position
of Aristar, Inc. and its subsidiaries at December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, in 1992 the
Company changed its method of accounting for postretirement benefits other than
pensions.
PRICE WATERHOUSE LLP
Tampa, Florida
January 17, 1995
<PAGE> 11
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
(Dollars in thousands) December 31, 1994 December 31, 1993
<S> <C> <C>
ASSETS
Finance receivables, net $ 1,539,914 $1,453,138
Investment securities 106,600 93,114
Cash 9,668 13,724
Property and equipment, less accumulated
depreciation and amortization: 1994,
$21,684; 1993, $19,205 13,327 12,936
Deferred charges 12,605 14,135
Excess of cost over equity of
companies acquired, less accumulated
amortization: 1994, $38,021; 1993, $31,014 68,990 75,997
Other assets 19,832 11,127
TOTAL ASSETS $ 1,770,936 $1,674,171
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Short-term debt $ 179,085 $ 279,607
Long-term debt 1,092,545 892,683
Total debt 1,271,630 1,172,290
Accounts payable and other liabilities 45,636 72,241
Federal and state income taxes 421 8,701
Insurance claims and benefits reserves 7,792 7,877
Unearned insurance premiums and
commissions 53,890 50,653
Total liabilities 1,379,369 1,311,762
Commitments and contingencies
(Notes 10 and 11)
Stockholder's equity
Common stock: $1.00 par value;
10,000 shares authorized: 1,000
shares issued and outstanding 1 1
Paid-in capital 44,894 44,894
Retained earnings 350,266 317,069
Net unrealized holding gain (loss) on
investment securities (3,594) 445
Total stockholder's equity 391,567 362,409
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 1,770,936 $ 1,674,171
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 12
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Operations and Retained Earnings
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Loan interest and fee income $ 300,969 $ 294,474 $ 296,342
Investment securities income 6,018 5,854 6,390
306,987 300,328 302,732
Interest and debt expense 87,074 86,385 89,005
Net interest income before
provision for credit losses 219,913 213,943 213,727
Provision for credit losses 38,334 35,131 38,601
Net interest income 181,579 178,812 175,126
Other operating income
Net insurance operations
and other income 28,679 25,816 24,925
Other expenses
Personnel expenses 61,353 63,882 62,341
Occupancy expense 8,504 9,075 8,739
Advertising expense 5,240 5,027 5,072
Amortization of excess cost over
equity of companies acquired 7,007 7,007 7,007
Other operating expenses 36,562 39,954 41,164
118,666 124,945 124,323
Income before income taxes
and cumulative effect of a
change in accounting method 91,592 79,683 75,728
Provision for federal and state income taxes 33,395 28,560 33,909
Income before cumulative effect
of a change in accounting method 58,197 51,123 41,819
Cumulative effect on prior years
(to December 31, 1991) of a change
in the method of recognizing post-
retirement benefits other than pensions,
net of income taxes of $5,660 (8,036)
Net Income 58,197 51,123 33,783
Retained earnings
Beginning of year 317,069 286,446 264,663
Dividends (25,000) (20,500) (12,000)
End of year $ 350,266 $ 317,069 $ 286,446
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 13
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 58,197 $ 51,123 $ 33,783
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 38,334 35,131 38,601
Depreciation and amortization 15,350 14,714 13,359
Deferred income taxes 600 (14,900) (9,180)
Increase (decrease) in
Accounts payable and other liabilities (26,605) 8,970 22,210
Unearned insurance premiums and
commissions and insurance claims
and benefits reserves 3,152 3,012 1,457
Currently payable income taxes (6,744) (7,212) 9,626
(Increase) decrease in other assets (8,705) 2,860 6,837
Net cash provided by operating activities 73,579 93,698 116,693
Cash flows from investing activities
Securities purchased (43,252) (51,257) (39,811)
Securities matured 23,278 51,153 21,391
Loans originated or purchased (1,166,986) (1,039,439) (914,768)
Loans repaid or sold 1,040,918 927,335 885,742
Capital expenditures, net (4,039) (5,967) (981)
Net cash used in investing activities (150,081) (118,175) (48,427)
Cash flows from financing activities
Net change in commercial paper and other
short-term borrowings (100,522) 76,515 (375,698)
Proceeds from issuance of long-term debt 249,625 149,769 398,782
Long-term debt issue costs (1,657) (1,095) (3,337)
Repayments of long-term debt (50,000) (175,000) (83,405)
Dividends paid (25,000) (20,500) (12,000)
Net cash provided by (used in) financing
activities 72,446 29,689 (75,658)
Net increase (decrease) in cash
and cash equivalents (4,056) 5,212 (7,392)
Cash and cash equivalents
Beginning of year 13,724 8,512 15,904
End of year $ 9,668 $ 13,724 $ 8,512
Supplemental disclosures of cash flow
information
Interest paid $88,612 $88,251 $ 80,010
Intercompany payments in lieu of
federal and state income taxes 40,734 53,473 28,099
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 14
ARISTAR, INC. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
Ownership. The Company is an indirect, wholly-owned subsidiary of Great Western
Financial Corporation ("GWFC").
Principles of Consolidation. The consolidated financial statements include the
accounts of Aristar, Inc. and its wholly-owned subsidiaries (the "Company")
after elimination of all material intercompany balances and transactions.
Certain amounts in prior years have been reclassified to conform to the current
year's presentation.
Income Recognition from Finance Operations. Unearned finance charges on all
types of consumer notes and contracts receivable are recognized on an accrual
basis, using the interest method. Accrual generally is suspended when payments
are more than three months contractually overdue. Loan fees and directly
related lending costs are deferred and amortized using the interest method over
the contractual life of the related loans.
Provision and Allowance for Credit Losses. The Company provides, through
charges to income, an allowance for losses which, based upon management's
evaluation of numerous factors, including current economic trends, loan
portfolio agings, historical loss experience and evaluation of collateral, is
deemed adequate to cover reasonably expected losses on outstanding loans.
Losses on loans are charged to the allowance for credit losses based upon the
number of days delinquent or when collectibility becomes questionable and the
underlying collateral, if any, is considered insufficient to liquidate the loan
balance (see Note 2). Recoveries on previously written-off loans are credited
to the allowance.
Investment Securities. As of December 31, 1993, investments classified as
available for sale are accounted for according to Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" ("FAS 115"). This statement requires that debt and equity
securities classified as available for sale be reported at fair value, with
unrealized gains and losses excluded from earnings and reported, net of taxes,
as a separate component of stockholder's equity. The adoption of FAS 115
resulted in the Company recording, at December 31, 1993, a net unrealized
holding gain of $445,000 as a separate component of stockholder's equity and a
deferred tax liability of $324,000.
Property, Equipment and Leasehold Improvements. Property, equipment and
leasehold improvements are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization are provided principally on the
straight-line method over the estimated useful life or, if less, the term of the
lease.
Deferred Charges. Expenditures that are deferred are amortized over the period
benefited. Amortization is computed principally using the straight-line method.
Excess of Cost Over Equity of Companies Acquired. The excess of cost over the
fair value of net assets of companies acquired is amortized on a straight-line
basis, generally over periods of up to 25 years.
<PAGE> 15
Insurance Premiums and Acquisition Costs. Insurance premiums are deferred and
subsequently amortized into revenue over the terms of the related insurance
contracts. The methods of amortization used are pro rata, sum-of-the-digits and
a combination thereof. Policy acquisition costs (principally ceding commissions
and premium taxes) are deferred and charged to expense over the terms of the
related policies in proportion to premium recognition.
Insurance Claims and Benefits Reserves. Reserves for reported claims on credit
life and health insurance are established based upon standard actuarial
assumptions used in the insurance business for such purposes. Claims reserves
for reported property and casualty insurance claims are based upon estimates of
costs and expenses to settle each claim. Additional amounts of reserves, based
upon prior experience and insurance in force, are provided for each class of
insurance for claims which have been incurred but not reported as of the balance
sheet date.
Income Taxes. The Company is included in the consolidated Federal income tax
return filed by GWFC. Currently payable Federal income taxes will be paid to
GWFC. Federal income taxes are allocated between GWFC and its subsidiaries in
proportion to the respective contribution to consolidated income or loss.
Beginning in 1993, allocations for state income taxes approximate the amount the
Company would have paid on a separate entity basis. Prior to 1993, state income
taxes were allocated using a combined GWFC effective tax rate. Deferred income
taxes are provided on elements of income or expense that are recognized in
different periods for financial and tax reporting purposes.
Taxes on income are determined by using the liability method as prescribed by
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("FAS 109"). This approach requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, FAS 109 requires the consideration of all
expected future events other than enactments of changes in the tax law or rates.
Statement of Cash Flows. For purposes of reporting cash flows, the Company
considers all highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
<PAGE> 16
Accounting Changes. The Company adopted Statement of Financial Accounting
Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ("FAS 106") as of January 1, 1992. FAS 106 requires that the expected
cost of postretirement benefits other than pensions be charged to expense during
the period over which eligible employees render active service.
The unfunded benefit obligation as of January 1, 1992 reflected in liabilities
on the Consolidated Statements of Financial Condition and shown as an accounting
change on the Consolidated Statements of Operations follows:
<TABLE>
<CAPTION>
(Dollars in thousands) January 1, 1992
<S> <C>
Accumulated postretirement benefits obligation
Retirees $ 6,971
Active plan participants 6,725
13,696
Income tax benefit 5,660
$ 8,036
</TABLE>
In 1992, the Company also adopted FAS 109, which supersedes Statement No. 96
"Accounting for Income Taxes," which was adopted by the Company in 1987. The
adoption of FAS 109 did not have a significant impact on the financial
statements for 1992.
Market Value Disclosures. The Company adopted Statement of Financial
Accounting Standards No. 107 "Disclosures about Fair Value of Financial
Instruments" ("FAS 107") in December 1992. FAS 107 requires disclosures about
fair value for all financial instruments, whether recognized or not in the body
of the financial statements or in the accompanying notes, and the methods and
significant assumptions used to estimate their fair value.
Quoted market prices are used, where available, to estimate the market value of
financial instruments. Because no quoted market prices exist for a significant
portion of the Company's financial instruments, market value is estimated using
comparable market prices for similar instruments or using management's estimates
of appropriate discount rates and cash flows for the underlying asset or
liability. A change in management's assumptions could significantly affect
these estimates; accordingly, the Company's market value estimates are not
necessarily indicative of the value which would be realized upon disposition of
the financial instruments.
<PAGE> 17
Note 2 Finance Receivables
Finance receivables at December 31, 1994 and 1993 are summarized as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
Consumer finance receivables
Real estate secured loans $ 518,757 $ 510,229
Other consumer finance instalment loans 1,055,723 971,532
Retail instalment contracts 331,424 328,042
Gross consumer finance receivables 1,905,904 1,809,803
Less: Unearned finance charges and
deferred loan fees (324,679) (317,571)
Allowance for credit losses (41,311) (39,094)
Net consumer finance receivables $1,539,914 $1,453,138
</TABLE>
The amount of gross nonaccruing receivables included above was approximately
$19.8 million and $19.3 million at December 31, 1994 and 1993, respectively.
Contractual maturities, net of unearned finance charges and deferred loan fees,
at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Over 1
But
Within Within Over
1 year 5 years 5 years Total
(Dollars in thousands)
<S> <C> <C> <C> <C>
Real estate secured loans $ 51,063 $ 164,278 $ 210,893 $ 426,234
Other consumer finance
instalment loans 344,356 514,119 506 858,981
Retail instalment contracts 135,063 160,269 678 296,010
$ 530,482 $ 838,666 $ 212,077 $1,581,225
</TABLE>
Consumer finance receivables have maximum terms of 180 months, while retail
contracts have maximum terms of 60 months. The weighted average contractual
term of all loans and contracts written during the years ended December 31, 1994
and 1993 was 41 months. Experience has shown that a substantial portion of the
receivables will be renewed or repaid prior to contractual maturity. Therefore,
the tabulation of contractual payments should not be regarded as a forecast of
future cash collections. During the years ended December 31, 1994 and 1993, the
ratio of principal cash collections to average net consumer finance receivables
outstanding was 69% and 66%, respectively. Additionally, the majority of loans
provide for a fixed rate of interest over the contractual life of the loan.
<PAGE> 18
The approximate fair value of the Company's net finance receivables as of
December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
Approximate Approximate
Net Book Fair Net Book Fair
Value Value Value Value
<S> <C> <C> <C> <C>
Real estate secured loans $ 426,234 $ 417,456 $ 407,416 $ 418,641
Other consumer finance
instalment loans 858,981 855,318 796,357 794,704
Retail instalment contracts 296,010 296,010 288,459 288,459
$1,581,225 $1,568,784 $1,492,232 $1,501,804
</TABLE>
The approximate fair value of finance receivables is estimated by discounting
the future cash flows using current rates at which similar loans would be made
with similar maturities to borrowers with similar credit ratings. The current
rates for finance receivables approximate the weighted average rates of the
portfolio at December 31, 1994 and 1993; therefore, there is no significant
difference between the estimated fair value of the loan portfolio and its net
book value. The fair value is not adjusted for the value of potential loan
renewals from existing borrowers.
Because the Company primarily lends to consumers, it did not have receivables
from any industry group that comprised 10 percent or more of total consumer
finance receivables at December 31, 1994.
Activity in the Company's allowance for credit losses is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Balance, January 1 $ 39,094 $ 36,046 $ 35,114
Provision for credit losses 38,334 35,131 38,601
Amounts charged off (52,197) (48,635) (52,200)
Recoveries 15,060 15,065 13,981
Allowances on notes purchased 1,020 1,487 550
Balance, December 31 $ 41,311 $ 39,094 $ 36,046
</TABLE>
<PAGE> 19
Note 3 Investment Securities
Investment securities as of December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) December 31, 1994
Approximate
Original Amortized Gross Unrealized Fair
Cost Cost Gains Losses Value
<S> <C> <C> <C> <C> <C>
Government obligations $ 18,357 $ 18,352 $ 2 $ 1,487 $ 16,867
Corporate obligations 89,763 89,237 107 4,023 85,321
Certificates of deposit
and other 4,525 4,540 37 165 4,412
$112,645 $112,129 $ 146 $ 5,675 $ 106,600
</TABLE>
<TABLE>
<CAPTION>
(Dollars in thousands) December 31, 1993
Approximate
Original Amortized Gross Unrealized Fair
Cost Cost Gains Losses Value
<S> <C> <C> <C> <C> <C>
Government obligations $ 18,261 $ 18,179 $ 89 $ 49 $ 18,219
Corporate obligations 69,197 68,827 1,389 415 69,801
Certificates of deposit
and other 5,265 5,339 1 246 5,094
$ 92,723 $ 92,345 $1,479 $ 710 $ 93,114
</TABLE>
There were no significant realized gains or losses during 1994 or 1993.
The following table presents the maturity of the investment securities at
December 31, 1994:
<TABLE>
<CAPTION>
(Dollars in thousands)
Approximate
Amortized Fair
Cost Value
<S> <C> <C>
Due in one year or less $ 17,249 $ 17,078
Due after one year through five years 65,162 62,508
Due after five years through ten years 26,036 23,439
Due after ten years 3,682 3,575
$112,129 $106,600
</TABLE>
<PAGE> 20
Note 4 Deferred Charges
Deferred charges, net of amortization, as of December 31, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
Long-term debt issuance costs $ 3,838 $ 3,449
Premiums on purchased accounts 8,767 9,308
System development costs 1,378
$12,605 $14,135
</TABLE>
Amortization of these deferred charges for each of the last three years is as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Long-term debt issuance costs $1,268 $1,581 $1,499
Premiums on purchased accounts 3,385 3,667 3,805
System development costs 1,378 2,052 2,052
</TABLE>
Note 5 Short-term Debt
Short-term debt at December 31, 1994 and 1993 consisted of commercial paper
notes issued in the minimum amount of $500,000 with original terms to 92 days.
The book value of short-term debt at December 31, 1994 approximates its
estimated fair value.
Additional information concerning total short-term borrowings is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Outstanding during the year
Maximum amount at any month end $ 287,793 $ 279,607 $ 581,556
Average amount 235,682 170,852 298,531
Weighted average interest rate 4.2% 3.6% 4.3%
Balance at end of year
Amount $ 179,085 $ 279,607 $ 203,092
Weighted average interest rate 6.0% 3.8% 4.1%
</TABLE>
Weighted average interest rates include the effect of commitment fees.
<PAGE> 21
Short-term notes totalling $74 million and $65 million were issued in December,
1994 and 1993, respectively. The proceeds of these notes were used to purchase
investment securities and were repaid through liquidation of these securities in
the January following issuance. This short-term debt has been reflected net of
the securities balances in the accompanying Consolidated Statements of Financial
Condition.
In 1994, the Company entered into a $450 million revolving credit agreement with
several domestic and foreign banks. The agreement, which replaced previous
revolving credit agreements of $120 million and $200 million, has a four-year
term with repayment in full of any balance outstanding in October, 1998.
There were no borrowings under any revolving credit agreements in 1994 or 1993.
<PAGE> 22
Note 6 Long-term Debt
Long-term debt at December 31, 1994 and 1993 was comprised of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
Senior Debentures and Notes
14.25%, due September 1, 1994 $ $ 50,000
9.47%, due April 6, 1995 50,000 50,000
8.55%, due June 1, 1995 100,000 100,000
9.5%, due July 30, 1995 21,000 21,000
6.25%, due July 15, 1996 99,986 99,977
7.375%, due February 15, 1997 99,953 99,932
8.125%, due December 1, 1997 99,722
5.75%, due July 15, 1998 149,830 149,787
7.875%, due February 15, 1999 99,827 99,792
7.75%, due June 15, 2001 149,905
Medium Term Notes, Series C, due through
1996, at interest rates of 8.75% to 8.90% 10,000 10,000
Medium Term Notes, Series D, due through
1995, at interest rate of 9.72% 13,000 13,000
Total Senior Debt 893,223 693,488
Senior Subordinated Notes and Debentures
8.875%, due August 15, 1998 99,894 99,869
7.5%, due July 1, 1999 99,428 99,326
Total Senior Subordinated Debt 199,322 199,195
Total Long-term Debt $1,092,545 $ 892,683
</TABLE>
<PAGE> 23
Aggregate maturities and sinking fund requirements at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
Senior
Senior Subordinated
Debt Notes Total
<C> <C> <C> <C>
1995 $ 189,000 $ 189,000
1996 104,986 104,986
1997 199,675 199,675
1998 149,830 $ 99,894 249,724
1999 99,827 99,428 199,255
Thereafter 149,905 149,905
$ 893,223 $199,322 $1,092,545
</TABLE>
The approximate fair value of the Company's long-term debt as of December 31,
1994 and 1993 is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993
Book Approximate Book Approximate
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
Senior debt $ 893,223 $ 869,781 $ 693,488 $ 724,100
Senior subordinated
notes 199,322 196,035 199,195 217,700
$1,092,545 $1,065,816 $ 892,683 $ 941,800
</TABLE>
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate the approximate fair value of existing
debt.
In March, 1992, the Company filed a $600 million shelf registration statement.
Under this registration statement, the Company issued in July, 1992, $100
million of 6.25% senior notes maturing July 15, 1996 and $100 million of 7.5%
senior subordinated notes maturing July 1, 1999; in July, 1993, $150 million of
5.75% senior notes maturing July 15, 1998; in July, 1994, $150 million of 7.75%
senior notes maturing June 15, 2001; and in December, 1994, $100 million of
8.125% senior notes maturing December 1, 1997. The proceeds of each of these
issues were used principally to reduce outstanding commercial paper.
<PAGE> 24
Note 7 Income Taxes
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Currently payable
Federal $ 27,562 $ 37,270 $ 26,284
State 5,233 6,190 11,145
Deferred 600 (14,900) (3,520)
33,395 28,560 33,909
Adjustment to deferred tax for
cumulative effect of change in
accounting method (5,660)
$ 33,395 $ 28,560 $ 28,249
</TABLE>
Deferred taxes result from temporary differences in the recognition of certain
items for tax and financial reporting purposes. Deferred tax liabilities
(assets) are comprised of the following:
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1994 1993
<S> <C> <C>
Amortization of intangibles $ 19,649 $ 21,991
Employee benefits accruals 1,613 2,389
Depreciation 1,175 1,197
Loan interest and fee income 272
Other deferred income items 91 223
Total deferred tax liabilities 22,800 25,800
Credit loss reserves (12,852) (14,826)
Unearned insurance commissions (2,833) (4,909)
Loan interest and fee income (382)
Other miscellaneous accruals (2,392) (2,619)
State taxes (4,898) (4,166)
Other deferred deduction items (2,025) (1,698)
Total deferred tax assets (25,000) (28,600)
Net deferred tax asset $ (2,200) $ (2,800)
</TABLE>
<PAGE> 25
The provisions for income taxes differ from the amounts determined by multiply-
ing pretax income by the statutory Federal income tax rate of 35% for 1994 and
1993 and 34% for 1992. A reconciliation between these amounts is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Income taxes at statutory rates $ 32,057 $ 27,889 $ 25,748
Increase (reduction) in taxes
resulting from:
State income taxes, net of
Federal benefit 3,467 3,024 6,253
Other (2,129) (2,353) 1,908
$ 33,395 $ 28,560 $ 33,909
</TABLE>
Note 8 Stockholder's Equity
Provisions of certain of the Company's debt agreements restrict the payment of
dividends to a maximum prescribed proportion of cumulative earnings and
contributed capital and provide for the maintenance of minimum levels of equity
and maximum leverage ratios. At December 31, 1994, approximately $82 million
was available under the debt agreement restriction for future dividends.
Note 9 Retirement and Savings Plans
GWFC's non-contributory defined benefit pension plan covers substantially all of
the Company's employees. Accumulated plan benefits and annual pension expense
are derived from an allocation formula based on the Company's total participants
and the Plan's total participants.
Pension expense for the Company's participants for the years ended December 31,
1994, 1993 and 1992 was $1,740,000, $1,515,000 and $1,200,000, respectively. Due
to the Company's participation in a multiemployer defined benefit plan,
information as to separate Company participant assets and vested benefits is not
presented.
The Company's employees also participate in GWFC's employee savings plan, which
allows employees to defer part of their pretax compensation until retirement.
Company contributions equal 50% of the contributions made by employees up to 6%
plus annual discretionary amounts, if any, as determined by management. The
Company's cost is based on the actual contribution related to its participating
employees. Total expense was $1,277,000, $1,342,000 and $1,388,000 for the
years ended December 31, 1994, 1993 and 1992, respectively.
The Company's employees also participate in GWFC's defined benefit post-
retirement plans which provide medical and life insurance coverage to eligible
employees and dependents based on age and length of service. Medical coverage
options are the same as available to active employees. The accumulated post-
retirement benefit obligation and related expense are derived from an allocation
formula based on the Company's total participants and the Plan's total
participants.
<PAGE> 26
The net postretirement medical and life insurance expense allocated to the
Company for the years ended December 31, 1994, 1993 and 1992 were $737,000,
$1,300,000 and $1,216,000, respectively.
Note 10 Leases
At December 31, 1994, the Company was lessee of office space, principally for
loan offices, computer and other office equipment and automobiles, generally for
terms of five or fewer years. The lease for the Company's former headquarters
was terminated in the first quarter of 1994 due to the purchase of its new
headquarters in Tampa, Florida.
The Company has no material capital leases. Under operating leases that have
initial or remaining noncancelable lease terms in excess of one year,
approximate aggregate annual minimum rentals are $5,300,000 in 1995;
$4,300,000 in 1996; $3,200,000 in 1997; $1,800,000 in 1998; and $900,000 in
1999. Rent expense for the years ended December 31, 1994, 1993 and 1992 was
$7,687,000, $8,560,000, and $8,007,000, respectively.
Note 11 Contingencies
The Company is routinely involved in litigation incidental to its businesses.
It is management's opinion that the aggregate liability arising from the
disposition of all such pending litigation will not have a material adverse
effect on the Company.
Note 12 Transactions with Related Parties
During 1991, the Company borrowed $264,130,000 from a subsidiary of GWFC under
a short-term master note, which was repaid in July, 1992, the proceeds of which
were used primarily to reduce commercial paper and other nonaffiliated debt.
Interest expense related to this debt was $2.5 million in 1992.
<PAGE> 27
Other transactions with GWFC or its subsidiaries are identified as follows:
* The Company provides supervisory and administrative services to
affiliates engaged in industrial banking and other consumer finance
activities at no cost to such affiliates. The Company also provides
data processing services to such affiliates, and revenue from these
services totalled approximately $757,000 in 1994, $768,000 in 1993, and
$699,000 in 1992. From time to time, the Company advances funds to
these operations. At December 31, 1994 and 1993, there were
outstanding advances of $7,981,000 and $855,000, respectively.
* A subsidiary of GWFC provides the Company with certain administrative
services, including human resources and cash management. The Company
paid this affiliate management fees of $1,365,000 in 1994, $1,239,000
in 1993, and $1,163,000 in 1992.
* The Company makes payments to GWFC in accordance with GWFC's tax
allocation policy and in connection with the retirement and savings
plans.
Note 13 Approximate Fair Values of Financial Instruments
A summary of the approximate fair values of the Company's financial instruments,
as compared to their carrying values, is set forth in the following table:
<TABLE>
<CAPTION>
(Dollars in thousands)
December 31, 1994 December 31, 1993
Carrying Approximate Carrying Approximate
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C> <C>
Finance receivables Note 2 $1,581,225 $1,568,784 $1,492,232 $1,501,804
Investment securities Note 3 106,600 106,600 93,114 93,114
Short-term debt Note 5 179,085 179,085 279,607 279,607
Long-term debt Note 6 1,092,545 1,065,816 892,683 941,800
</TABLE>
See the referenced Notes for additional information.
Note 14 Business Segments
The Company is engaged primarily in the consumer finance business.
<PAGE> 28
Note 15 Selected Quarterly Financial Data (Unaudited)
A summary of the quarterly results of operations for the years ended December
31, 1994 and 1993 is set forth below:
<TABLE>
<CAPTION>
Quarter Ended
March 31, June 30, September 30, December 31,
(Dollars in Thousands) 1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $83,032 $80,811 $82,062 $80,167 $83,400 $81,966 $87,172 $83,200
Interest and other
expenses 51,868 52,853 51,775 52,212 51,853 54,062(1) 50,244 52,203
Provision for credit
losses 8,552 8,928 7,621 8,315 9,513 8,335 12,648 9,553
Total expenses 60,420 61,781 59,396 60,527 61,366 62,397 62,892 61,756
Income before taxes 22,612 19,030 22,666 19,640 22,034 19,569 24,280 21,444
Income tax provision 8,143 8,014 8,183 8,375 7,695 5,311(2) 9,374 6,860(3)
Net income $14,469 $11,016 $14,483 $11,265 $14,339 $14,258 $14,906 $14,584
</TABLE>
(1) Includes approximately $1.2 million associated with the relocation of the
Company's headquarters from Memphis, Tennessee to Tampa, Florida.
(2) Reflects a decrease in the Company's effective tax rate primarily
attributable to the increased deductibility of current and prior year's
amortization of intangible assets resulting from the Omnibus Budget
Reconciliation Act of 1993.
(3) Reflects a change in GWFC's income tax allocation policy, which provides
that the Company's state income taxes will be charged or credited in
amounts approximating such taxes as computed on a separate entity basis.
<PAGE> 29
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Index of Documents filed as a part of this Report:
1. Financial Statements
Included in Part II of this Report:
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants. . . . . . . 10
Aristar, Inc. and Subsidiaries:
Consolidated Statements of Financial Condition
at December 31, 1994 and 1993. . . . . . . . . . . . . . . . . 11
Consolidated Statements of Operations and Retained Earnings
for the Years Ended December 31, 1994, 1993 and 1992 . . . . . 12
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1994, 1993 and 1992 . . . . . 13
Notes to Consolidated Financial Statements . . . . . . . . . . 14
</TABLE>
2. Financial Statement Schedules
All schedules are omitted because of the absence of the
conditions under which they are required or because the
required information is set forth in the financial statements
or related notes.
3. Exhibits
Included in Part IV of this Report:
Exhibit
Number
(3) (a) Certificate of Incorporation of Aristar, Inc. as presently
in effect. (1)
(b) By-Laws of Aristar, Inc. as presently in effect. (1)
(4) (a) Indenture dated as of July 15, 1984, between Aristar, Inc.
and Bank of Montreal Trust Company, as trustee. (2)
(b) First supplemental indenture to Exhibit (4)(a) dated as of
June 1, 1987. (2)
<PAGE> 30
(c) Indenture dated as of August 15, 1988, between Aristar, Inc.
and Bank of Montreal Trust Company, as trustee. (3)
(d) Indenture dated as of May 1, 1991 between Aristar, Inc. and
Security Pacific National Bank, as trustee. (4)
(e) Indenture dated as of May 1, 1991 between Aristar, Inc. and
The First National Bank of Boston, as trustee. (4)
(f) Indenture dated as of July 1, 1992 between Aristar, Inc. and
The Chase Manhattan Bank, N.A., as trustee. (5)
(g) Indenture dated as of July 1, 1992 between Aristar, Inc. and
Citibank, N.A., as trustee. (5)
(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 and
its consolidated subsidiaries.
(10)(a) Great Western Financial Corporation Income Tax Allocation
Policy. (6)
(b) Amendment Number 1 to Great Western Financial Corporation
Income Tax Allocation Policy. (6)
(c) Amendment Number 2 to Great Western Financial Corporation
Income Tax Allocation Policy. (7)
(12) Statement Re: Computation of Ratios.
(23) Consent of Independent Certified Public Accountants.
(24) Power of Attorney included on Page 32 of the Form 10-K.
(27) Financial Data Schedule.
<PAGE> 31
(1) Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1987,
Commission file number 1-3521.
(2) Incorporated by reference to Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993,
Commission file number 1-3521.
(3) Incorporated by reference to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1988,
Commission file number 1-3521.
(4) Incorporated by reference to Registrant's Current Report on
Form 8-K dated May 29, 1991, Commission file number 1-3521.
(5) Incorporated by reference to Registrant's Current Report on
Form 8-K dated June 24, 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, 1992, Commission
file number 1-3521.
(7) 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
On December 12, 1994, the Company filed a Current Report on
Form 8-K dated December 5, 1994, disclosing, under Item 7,
the terms of the issuance of $100,000,000 of 8.125% senior
notes maturing December 1, 1997.
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ James A. Bare March 23, 1995
James A. Bare, Senior Vice President Date
and Chief Financial Officer (and Principal
Accounting Officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes James A. Bare as
attorney-in-fact to sign on his behalf as an individual and in every capacity
stated below, and to file all amendments to the registrant's Form 10-K, and the
registrant hereby confers like authority to sign and file in its behalf.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 23, 1995.
/s/ Michael M. Pappas
Michael M. Pappas, President and Director
(Principal Executive Officer)
/s/ James A. Bare
James A. Bare, Director
/s/ Carl F. Geuther
Carl F. Geuther, Director
/s/ J. Lance Erikson
J. Lance Erikson, Director
Exhibit 12
ARISTAR, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in Thousands) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income from operations before
income taxes and cumulative
effect of a change in
accounting principle $ 91,592 $ 79,683 $ 75,728 $ 63,430 $ 37,480
Fixed charges:
Interest and debt
expense on all
indebtedness 87,074 86,385 89,005 80,261 92,154
Appropriate portion
of rentals (33%) 2,537 2,825 2,358 2,157 2,062
Total fixed charges 89,611 89,210 91,363 82,418 94,216
Earnings available for
fixed charges $181,203 $168,893 $167,091 $145,848 $131,696
Ratio of earnings to
fixed charges 2.02 1.89 1.83 1.77 1.40
</TABLE>
Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectus
constituting part of the Registration Statements on Form S-3 (No. 33-23185)
of Aristar, Inc. and subsidiaries of our report dated January 17, 1995
appearing on page 10 of this Form 10-K.
PRICE WATERHOUSE LLP
Tampa, Florida
March 23, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This Schedule contains summary financial information extracted from the
Company's financial statements filed as part of its Annual Report on Form 10-K
for the year ended December 31, 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,668
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 106,600
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,581,225<F1>
<ALLOWANCE> (41,311)
<TOTAL-ASSETS> 1,770,936
<DEPOSITS> 0
<SHORT-TERM> 179,085
<LIABILITIES-OTHER> 45,636
<LONG-TERM> 1,092,545
<COMMON> 1
0
0
<OTHER-SE> 346,672
<TOTAL-LIABILITIES-AND-EQUITY> 1,770,936
<INTEREST-LOAN> 300,969
<INTEREST-INVEST> 6,018
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 306,987
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 87,074
<INTEREST-INCOME-NET> 219,913
<LOAN-LOSSES> 38,334
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 118,666
<INCOME-PRETAX> 91,592
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,197
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 11.28
<LOANS-NON> 19,842
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 39,094
<CHARGE-OFFS> (52,197)
<RECOVERIES> 15,060
<ALLOWANCE-CLOSE> 41,311
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 41,311
<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 year ended December 31, 1994 using
the Article 9 format.
</FN>
</TABLE>
