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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) October 14, 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
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Item 5. Other Events.
Associates Corporation of North America (the "Company") recorded net earnings
for the three-month period ended September 30, 1997 of $230.0 million,
compared with $207.1 million a year earlier, an 11% increase. Net earnings
for the nine-month period ended September 30, 1997 were $671.1 million,
compared with $606.4 million the previous year, an 11% increase. Earnings
before provision for income taxes increased 12% to $364.7 million for the
three-month period ended September 30, 1997, compared with $326.4 million the
prior-year. Earnings before provision for income taxes for the nine-month
period ended September 30, 1997 increased 11% to $1,061.1 million, compared
with $959.5 million in the prior year.
Total revenue for the three-month period ended September 30, 1997 increased
14% to $1.8 billion, compared with $1.6 billion in the prior year. Total
revenue for the nine-month period ended September 30, 1997 increased 16% to
$5.3 billion, compared with $4.6 billion in the prior year. Total net finance
receivables at September 30, 1997 were $46.9 billion compared to $41.8 billion
at December 31, 1996 and $41.7 billion at September 30, 1996.
Consumer finance net receivables were $32.0 billion at September 30, 1997, up
from $28.0 billion reported at December 31, 1996 and $28.2 billion at
September 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 $14.9 billion at September 30, 1997,
up from $13.8 billion reported at December 31, 1996 and $13.5 billion at
September 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 2.43% for the nine-month period ended September 30, 1997,
higher than the 2.02% reported by the Company for the twelve months ended
December 31, 1996 and 1.95% reported for the nine months ended September 30,
1996. In both periods, the loss ratios in the Company's personal loan and
sales finance portfolio and credit card participations increased. The increase
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 and have recently been driven by a rise in consumer
bankruptcy filings. The allowance for losses to net finance receivables
increased to 3.49% at September 30, 1997 compared to 3.28% at December 31,
1996, reflecting management's opinion that net credit losses may continue to
increase. Management believes the allowance for losses at September 30, 1997
is sufficient to provide adequate protection against losses in its portfolios.
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ASSOCIATES CORPORATION OF NORTH AMERICA
Certain unaudited financial information is as follows
(dollar amounts in millions):
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
----------------- ------------------
1997 1996 Increase 1997 1996 Increase
---- ----- -------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
TOTAL REVENUE $5,286.9 $4,575.2 16% $1,826.0 $1,608.7 14%
EARNINGS BEFORE
PROVISION FOR
INCOME TAXES 1,061.1 959.5 11 364.7 326.4 12
NET EARNINGS 671.1 606.4 11 230.0 207.1 11
</TABLE>
<TABLE>
<CAPTION>
September 30 December 31 September 30
1997 1996 1996
------------ ----------- ------------
<S> <C> <C> <C>
NET FINANCE RECEIVABLES
Consumer Finance $31,957.9 $27,997.1 $28,219.7
Commercial Finance 14,974.0 13,781.8 13,440.2
Total Net Finance
Receivables $46,931.9 $41,778.9 $41,659.9
TOTAL ASSETS $48,004.2 $42,598.1 $42,457.6
TOTAL DEBT 41,189.4 36,531.3 36,530.3
STOCKHOLDERS' EQUITY 5,760.0 5,086.2 5,082.4
PORTFOLIO QUALITY
60+DAYS CONTRACTUAL
DELINQUENCY 2.47% 2.29% 2.10%
NET CREDIT LOSSES (as
a % of ANR) 2.43 2.02 1.95
ALLOWANCE FOR LOSSES ON
FINANCE RECEIVABLES
Amount $ 1,637.1 $ 1,371.4 $ 1,354.9
Percent of net finance
receivables 3.49% 3.28% 3.25%
</TABLE>
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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.
ASSOCIATES CORPORATION OF NORTH AMERICA
By: /s/ JOHN F. STILLO
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Senior Vice President and Comptroller
Date: October 14, 1997
