<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) April 14, 1998
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 March 31, 1998 of $235.5 million, compared
with $215.4 million a year earlier, a 9% increase. Earnings before provision
for income taxes increased 9% to $366.9 million for the period, compared with
$337.8 million for the prior year.
Consumer finance net receivables increased from $28.9 billion at March 31,
1997 to $31.7 billion at March 31, 1998. The growth in consumer finance
receivables in the first quarter of 1998 was offset by a reduction in the
receivable balance due to the securitization of approximately $235 million of
home equity lending receivables in March of 1998. No net gain or loss was
recorded on this transaction. Consumer finance receivables primarily consist
of residential real estate-secured receivables, personal loans, sales
financing of consumer durable goods, and participations in credit card
receivables, and other products and services.
Commercial finance net receivables increased from $14.0 billion at March 31,
1997 to $16.1 billion at March 31, 1998. In March 1998, approximately $650
million of equipment finance receivables were sold at book value to the
Company's parent, Associates First Capital Corporation. The growth in
commercial finance net receivables during the first quarter of 1998 was offset
by the sale of such receivables. Commercial finance receivables primarily
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 2.47% for the three-month period ended March 31, 1998,
slightly higher than the 2.43% reported by the Company for the year-ended
December 31, 1997, and 2.34% reported for the prior year period. The increase
was primarily driven by increased losses, primarily in consumer portfolios.
Consumer portfolios continue to be affected by the rise in consumer bankruptcy
filings. The allowance for losses to net finance receivables increased to
3.54% at March 31, 1998, compared to 3.47% at December 31, 1997. Management
believes the allowance for losses at March 31, 1998 is sufficient to provide
adequate protection against losses in its portfolios.
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Certain unaudited financial information for the three months ended or at March
31, 1998 for Associates Corporation of North America is as follows (dollar
amounts in millions):
<TABLE>
<CAPTION>
Three Months Ended
March 31 %
1998 1997 Increase
----- ---- --------
<S> <C> <C> <C>
TOTAL REVENUE $ 1,887.6 $ 1,679.5 12%
EARNINGS BEFORE
PROVISION FOR
INCOME TAXES 366.9 337.8 9
NET EARNINGS 235.5 215.4 9
</TABLE>
<TABLE>
<CAPTION>
March 31 December 31 March 31
1998 1997 1997
-------- ----------- --------
<S> <C> <C> <C>
NET FINANCE RECEIVABLES
Consumer Finance $31,745.0 $31,715.6 $28,876.2
Commercial Finance 16,082.2 16,138.9 13,970.4
--------- ---------- ---------
Total Net Finance
Receivables $47,827.2 $47,854.5 $42,846.6
========= ========= =========
TOTAL ASSETS $52,133.5 $50,531.1 $43,728.2
TOTAL DEBT 44,756.3 43,522.0 37,398.8
STOCKHOLDERS' EQUITY 6,281.3 6,048.7 5,291.2
PORTFOLIO QUALITY
60+DAYS CONTRACTUAL
DELINQUENCY 2.41% 2.35% 2.33%
NET CREDIT LOSSES (as
a % of ANR) 2.47 2.43 2.34
ALLOWANCE FOR LOSSES ON
FINANCE RECEIVABLES
Amount $ 1,694.1 $ 1,661.9 $ 1,468.4
Percent of net finance
receivables 3.54% 3.47% 3.43%
</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
Senior Vice President and Comptroller
Date: April 14, 1998
