<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) January 20, 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<PAGE>
Item 5. Other Events.
Associates Corporation of North America (the "Company") recorded net earnings
for the year ended December 31, 1997 of $902.5 million, compared with $823.1
million a year earlier, a 10% increase. Earnings before provision for income
taxes increased 9% to $1.4 billion for the year ended December 31, 1997,
compared with $1.3 billion for the prior year. Management attributes the
increase in earnings to balanced growth in earning assets combined with stable
profitability.
Consumer finance net receivables were $31.8 billion at December 31, 1997, an
increase over the $28.0 billion at December 31, 1996. 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 were $16.1 billion at December 31, 1997,
an increase over the $13.8 billion at December 31, 1996. 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 2.43% for the year ended December 31, 1997, higher than the
2.02% reported by the Company for the year ended December 31, 1996. The
increase was primarily driven by increased losses and a shift in product mix
toward unsecured portfolios. Unsecured portfolios typically have higher loss
ratios than secured portfolios and have recently been affected by a rise in
consumer bankruptcy filings. The allowance for losses to net finance
receivables increased to 3.47% at December 31, 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
December 31, 1997 is sufficient to provide adequate protection against losses
in its portfolios.
<PAGE>
Certain unaudited financial information for the year ended December 31, 1997
for Associates Corporation of North America is as follows (dollar amounts in
millions):
<TABLE>
<CAPTION>
Year Ended or at
December 31 %
1997 1996 Increase
<S> <C> <C> <C>
TOTAL REVENUE $ 7,151.1 $ 6,221.4 15
EARNINGS BEFORE
PROVISION FOR
INCOME TAXES 1,427.0 1,305.1 9
NET EARNINGS 902.5 823.1 10
NET FINANCE RECEIVABLES
Consumer Finance $31,715.6 $27,997.1 13
Commercial Finance 16,138.9 13,781.8 17
Total Net Finance
Receivables $47,854.5 $41,778.9 15
TOTAL ASSETS $50,531.1 $42,598.1 19
TOTAL DEBT 43,522.0 36,531.3 19
STOCKHOLDERS' EQUITY 6,048.7 5,086.2 19
PORTFOLIO QUALITY
60+DAYS CONTRACTUAL
DELINQUENCY 2.35% 2.29%
NET CREDIT LOSSES (as
a % of ANR) 2.43 2.02
ALLOWANCE FOR LOSSES ON
FINANCE RECEIVABLES
Amount $ 1,661.9 $ 1,371.4 21
Percent of net finance
receivables 3.47% 3.28%
/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/ John F. Stillo
---------------------------
Senior Vice President and Comptroller
Date: January 20, 1998
