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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) -
July 27, 1998
ARISTAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-3521 95-4128205
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
8900 GRAND OAK CIRCLE, TAMPA, FLORIDA 33637-1050
(Address of principal executive offices)
Registrant's telephone number, including area code -
(813) 632-4500
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This Amendment No. 1 on Form 8-K/A amends the Registrant's
Current Report on Form 8-K filed July 29, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
99 Materials used in connection with a telephone conference
with prospective investors on July 27, 1998, as amended.
</TABLE>
2
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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 hereunto duly authorized.
ARISTAR, INC.
By: /s/ FAY L. CHAPMAN
------------------------------------
Fay L. Chapman
Executive Vice President
Date: September 9, 1998
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
99 Materials used in connection with a telephone conference
with prospective investors on July 27, 1998, as amended.
</TABLE>
4
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EXHIBIT 99
[LOGO] ARISTAR
1998 Strategic Plan
Craig Chapman
July 1998
Slide One
1
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[LOGO] ARISTAR
Operating Guidelines
To become a premier financial services company that provides a superior return
to its shareholders by:
* Focusing on our high margin growth businesses
* Becoming the low cost producer
* Having ownership in everything we do
* Superior execution
Slide Two
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[LOGO] ARISTAR
Measures of Success
<TABLE>
<CAPTION>
WMI ARISTAR
--- -------
<S> <C> <C>
* ROE > 18.0% > 18.0%
* EPS Growth 15.0% 15.0%
* Efficiency Ratio < 50.0% 40.0%
* NPA/Total Assets < 1.0% n.a.
* Net Charge-Off n.a. 2.8%
</TABLE>
Slide Three
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[LOGO] ARISTAR
Best in Class Comparison
<TABLE>
<CAPTION>
Best in Multi-Year Average 1997 Aristar
Class '97(1) Best in Class(1) Aristar(2) Target
--------- ------------- ------- ------
<S> <C> <C> <C> <C>
ROE(3) 16.60% *(22.25%) 20.02% *(27.62%) 12.03% 18.0%
ROA(3) 3.15% 3.02% *(3.73%) 1.96% 3.0%
Efficiency Ratio(4) 42.25% 43.09% 48.01% 40.0%
Net Charge-Offs as a Percentage 2.34% 1.74% 3.00% 2.8%
of Average Receivables Owned(3)
</TABLE>
(1) The class members are Norwest Financial, Inc. ("Norwest"), Avco Financial
Services, Inc., Commercial Credit Company, Associates Corporation of North
America, American General Finance Corporation, Household Finance
Corporation and Aristar, Inc.
(2) Adjusted to reflect charged-off interest and fee income in the pre-tax
amount of $4.2 million, resulting from the revision of Aristar's estimate
of interest earnings on "same as cash" sales finance contracts and to
reflect an aggregate net pre-tax credit of $0.5 million resulting from a
change in post-retirement benefits related to the merger of Great Western
Financial Corporation, formerly Aristar's ultimate parent, into a wholly-
owned subsidiary of Washingon Mutual, Inc., in July 1997.
(3) As reported in "Finance Companies: Credit Opinions" published by Moody's
Investors Service for the American Financial Services Association Finance
Investors Conference held May 11-13, 1998.
(4) As reported in the class members' periodic reports filed with the
Securities and Exchange Commission via the EDGAR System.
*Excludes Norwest due to third party servicing income
Slide Four
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[LOGO] ARISTAR
Sub-Prime/Consumer Finance Market Environment
* A- through C customers
* Market growing at 16-20%
* Consolidations of both large and small firms
* Smaller players have limited access to capital
Slide Five
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[LOGO] ARISTAR
Sub-Prime/Consumer Finance Market Environment (continued)
* Non-traditional entrants; Fannie Mae, Freddie Mac and Banks
* Pressure on margins due to competition
* Regulatory pressure on predatory sales practices
Slide Six
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[LOGO] ARISTAR
Competitive Advantages
* "The Franchise" - Customer Relationship
* Number one position in small to mid-size markets
* Speed of service
* Flexibility of packaging
Slide Seven
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[LOGO] ARISTAR
Strategy
* Build a national "Franchise"
* Grow the receivable base at or above market averages
* Diversify distribution beyond retail branch network
* Pursue acquisitions
Slide Eight
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[LOGO] ARISTAR
Strategy (continued)
* Institute a sales culture
* Become the low-cost producer
* Develop credit risk capabilities
Slide Nine
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[LOGO] ARISTAR
Strategy - Grow the Business
* Exploit existing customer base by;
- focusing on core products
- up-selling and cross-selling
* Reinforce our dominant position in small to mid-size markets
* Rationalize branch network
* Expand branch network to new markets
Slide 10
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[LOGO] ARISTAR
Strategy - Grow the Business (continued)
* WAMU turndowns, cross-sells and checking customers
* Eliminate unprofitable ancillary products
* Develop segmentation and target marketing capabilities
* Manage business mix
* Take on our competition in primary markets
Slide Eleven
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[LOGO] ARISTAR
Map of United States showing states in which offices of Aristar, Inc., and its
subsidiaries are located.
Aristar locations - Oregon, Idaho, California, Utah, Colorado, New Mexico,
Kansas, Oklahoma, Texas, Louisiana, Mississippi, Alabama, Georgia, Florida,
South Carolina, North Carolina, Tennessee, Kentucky, Illinois, Virginia, West
Virginia, Pennsylvania, New Jersey Delaware and Maryland.
Slide Twelve
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[LOGO] ARISTAR
Diversification Opportunities
* Acquire customers through Washington Mutual in both branch and mortgage
business
* Wholesale and retail sub-prime
* Strategic Alliances
* Re-position Visa to centrally acquire new sub-prime customers (low
income/good credit)
* New customer acquisitions via direct mail and telemarketing
Slide Thirteen
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[LOGO] ARISTAR
Strategy - Sales Culture
* Focus on sales:
- Establish individual sales quotas by product
* Upgrade sales personnel
* Re-design compensation plan
* Lead management system
* Remove non-sales activities
Slide Fourteen
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[LOGO] ARISTAR
Strategy - Low Cost Producer
* Centralize Backroom -
Legal, bankrupts, payments, 120+ and BD recoveries
* Centralize sales finance processing
* Eliminate unprofitable ancillary products
* Reduce non-earning assets
Slide Fifteen
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[LOGO] ARISTAR
Strategy - Low Cost Producer (continued)
* Rationalize process flows and implement productivity standards and
capacity models
* Examine corporate structure
* Match assets to legal entity
Slide Sixteen
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[LOGO] ARISTAR
Strategy - Develop Credit Risk Capabilities
* New application scoring
* Adaptive control system
* Automated application processing
* Integrate with Washington Mutual
Slide Seventeen
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[LOGO] ARISTAR
Finance Receivables at quarter-end (dollars in millions)
<TABLE>
<CAPTION>
YTD 98
06/30/98 03/31/98 12/31/97 Change
<S> <C> <C> <C> <C>
Real estate secured loans 1,039 1,002 978 61
Other installment loans 1,005 998 1,025 (20)
Retail installment contracts 275 289 325 (50)
-------------------------------------------------------------------------------------
Consumer finance receivables
net of unearned finance charges
and deferred loan fees 2,319 2,289 2,328 (9)
Allowance for credit losses (76) (74) (74) (2)
-------------------------------------------------------------------------------------
Net consumer finance receivables 2,243 2,215 2,254 (11)
=====================================================================================
</TABLE>
[Since Aristar originally filed the Form 8-K to which this Form 8-K/A is
Amendment No. 1, certain amounts in prior periods have been reclassified to
conform to the current period's presentation as reported in Aristar's Form 10-Q
for the period ended June 30, 1998.]
Slide Eighteen
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[LOGO] ARISTAR
Income Statement (dollars in millions)
<TABLE>
<CAPTION>
YTD YTD
--- ---
Q2'98 Q2'97 6/30/98 6/30/97
----- ----- ------- -------
<S> <C> <C> <C> <C>
Net Interest Income 68.0 61.4 134.9 122.3
Other Income 5.7 7.0 12.3 13.1
-----------------------------------------------------------------------------------
Net Margin 73.7 68.4 147.2 135.4
Provision for loan losses 18.3 15.6 36.3 31.0
G & A Expense 32.9 31.2 66.9 64.8
-----------------------------------------------------------------------------------
Net Income before taxes 22.5 21.6 44.0 39.6
Provision for income taxes 8.9 8.5 17.4 15.6
-----------------------------------------------------------------------------------
Net Income 13.6 13.1 26.6 24.0
===================================================================================
</TABLE>
Slide Nineteen
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[LOGO] ARISTAR
Income Statement (as a percentage of average assets)
<TABLE>
<CAPTION>
YTD YTD
--- ---
Q2'98 Q2'97 6/30/98 6/30/97
----- ----- ------- -------
<S> <C> <C> <C> <C>
Net Interest Income 10.80 10.51 10.74 11.16
Other Income 0.92 1.20 0.98 1.19
-----------------------------------------------------------------------------------
Net Margin 11.72 11.71 11.71 12.35
Provision for loan losses 2.91 2.67 2.89 2.83
G & A Expense 5.23 5.34 5.32 5.91
-----------------------------------------------------------------------------------
Net Income before taxes 3.58 3.70 3.50 3.61
Provision for income taxes 1.41 1.46 1.39 1.42
-----------------------------------------------------------------------------------
Net Income 2.17 2.24 2.12 2.19
===================================================================================
</TABLE>
Slide Twenty
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[LOGO] ARISTAR
60+ days Delinquencies as a % of Gross Receivables, as determined on the last
day of the month.
(Graph)
<TABLE>
<S> <C>
Dec. '96 2.56%
Jan. '97 2.54%
Feb. '97 2.57%
Mar. '97 2.55%
Apr. '97 2.53%
May '97 2.53%
Jun. '97 2.55%
Jul. '97 2.54%
Aug. '97 2.59%
Sep. '97 2.69%
Oct. '97 2.65%
Nov. '97 2.73%
Dec. '97 2.73%
Jan. '98 2.76%
Feb. '98 2.74%
Mar. '98 2.63%
Apr. '98 2.64%
May '98 2.66%
Jun. '98 2.68%
</TABLE>
Slide Twenty-one
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[LOGO] ARISTAR
Net Charge-Offs for the month as a % of Net Receivables on the last day of the
month.
(Graph)
<TABLE>
<S> <C>
Dec. '96 2.56%
Jan. '97 2.79%
Feb. '97 2.80%
Mar. '97 2.92%
Apr. '97 2.88%
May '97 2.89%
Jun. '97 2.86%
Jul. '97 2.85%
Aug. '97 2.95%
Sep. '97 2.99%
Oct. '97 3.02%
Nov. '97 3.11%
Dec. '97 3.31%
Jan. '98 3.10%
Feb. '98 3.12%
Mar. '98 3.15%
Apr. '98 3.26%
May '98 2.65%*
Jun. '98 3.00%
</TABLE>
*Includes recovery of $600,000 on sale of Charged-Off receivables
Slide Twenty-two
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