<PAGE>
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 (Date of earliest event) July 15, 1997
ASSOCIATES CORPORATION OF NORTH AMERICA
(Exact name of registrant as specified in its charter)
DELAWARE 74-1494554
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
1-6154
(Commission File Number)
250 E. Carpenter Freeway, Irving, Texas 75062-2729
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 652-4000<PAGE>
Item 5. Other Events.
Associates Corporation of North America (the "Company") recorded net earnings
for the three-month period ended June 30, 1997 of $225.7 million, compared
with $205.5 million a year earlier, a 10% increase. Net earnings for the
six-month period ended June 30, 1997 were $441.1 million, compared with $399.3
million the previous year, a 10% increase. Earnings before provision for
income taxes increased 11% to $358.6 million for the three-month period ended
June 30, 1997, compared with $324.3 million the prior-year. Earnings before
provision for income taxes for the six-month period ended June 30, 1997
increased 10% to $696.4 million, compared with $633.1 million in the prior
year.
Total revenue for the three-month period ended June 30, 1997 increased 18% to
$1.8 billion, compared with $1.5 billion in the prior year. Total revenue for
the six-month period ended June 30, 1997 increased 17% to $3.5 billion,
compared with $3.0 billion in the prior year. Total net finance receivables
at June 30, 1997 were $45.9 billion compared to $41.8 billion at December 31,
1996 and $39.5 billion at June 30, 1996.
Consumer finance net receivables were $31.4 billion at June 30, 1997, up from
$28.0 billion reported at December 31, 1996 and $27.0 billion at June 30,
1996. Consumer finance receivables consist of residential real estate-secured
receivables, personal loans, sales financing of consumer durable goods,
manufactured housing receivables and credit card participations in
receivables.
Commercial finance net receivables were $14.5 billion at June 30, 1997, up
from $13.8 billion reported at December 31, 1996 and $12.5 billion at June 30,
1996. Commercial finance receivables result from the financing and leasing
of transportation, construction, communications, material handling and
industrial equipment. The Company is also a significant provider of
automobile fleet leasing services and other products and services.
The Company's composite ratio of net credit losses to average net finance
receivables was 2.41% for the six-month period ended June 30, 1997, higher
than the 2.02% reported by the Company for the twelve months ended December
31, 1996 and 1.84% reported for the six months ended June 30, 1996. The
increase from both periods was principally driven by a shift in product mix
toward unsecured portfolios and increased losses. Unsecured portfolios
typically have higher loss ratios than secured portfolios. In both periods,
the loss ratios in the Company's personal loan and sales finance portfolio
and credit card participations increased. These increases were partially
offset by decreases in most of the Company's secured loan portfolios. The
allowance for losses to net finance receivables increased to 3.46% at June 30,
1997 compared to 3.28% at December 31, 1996, reflecting management's opinion
that net credit losses may continue to increase in 1997. Management believes
the allowance for losses at June 30, 1997 is sufficient to provide adequate
protection against losses in its portfolios.<PAGE>
<TABLE>
<CAPTION>
ASSOCIATES CORPORATION OF NORTH AMERICA
Certain unaudited financial information is as follows (dollar amounts in
millions):
Six Months Ended Three Months Ended
June 30 June 30
% %
1997 1996 Increase 1997 1996 Increase
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL REVENUE $3,460.9 $2,966.5 17% $1,781.4 $1,512.3 18%
EARNINGS BEFORE
PROVISION FOR
INCOME TAXES 696.4 633.1 10 358.6 324.3 11
NET EARNINGS 441.1 399.3 10 225.7 205.5 10
</TABLE>
<TABLE>
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
------- ----------- -------
<S> <C> <C> <C>
NET FINANCE RECEIVABLES
Consumer Finance $31,399.8 $27,997.1 $26,997.4
Commercial Finance 14,494.3 13,781.8 12,454.3
--------- --------- --------
Total Net Finance
Receivables $45,894.1 $41,778.9 $39,451.7
========= ========= =========
TOTAL ASSETS $46,731.9 $42,598.1 $40,186.1
TOTAL DEBT 40,355.9 36,531.3 34,630.6
STOCKHOLDERS' EQUITY 5,525.4 5,086.2 4,824.6
PORTFOLIO QUALITY
60+DAYS CONTRACTUAL
DELINQUENCY 2.36% 2.29% 1.83%
NET CREDIT LOSSES (as
a % of ANR) 2.41 2.02 1.84
ALLOWANCE FOR LOSSES ON
FINANCE RECEIVABLES
Amount $ 1,589.4 $ 1,371.4 $ 1,299.9
Percent of net finance
receivables 3.46% 3.28% 3.29%
/TABLE
<PAGE>
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.
ASSOCIATES CORPORATION OF NORTH AMERICA
By:/s/ KEVIN P. HEGARTY
Senior Vice President and Comptroller
Date: July 15, 1997
