UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 2-44197
ASSOCIATES FIRST CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-0876639
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 East Carpenter Freeway, 75062-2729
Irving, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code
214-541-4000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes..X.. No.....
State the aggregate market value of the voting stock held by non-affiliates
of the registrant - None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ..X.. - Not Applicable
As of December 31, 1993, the registrant had 250 shares of no par value Common
Stock outstanding, which was the only class of Common Stock outstanding of
the issuer, all of which were owned by Ford Holdings, Inc. The registrant
meets the conditions set forth in General Instruction J.(1) (a) and (b) to
Form 10-K and is therefore filing this Form 10-K with the reduced disclosure
format.
<PAGE>
PART I
ITEM 1. BUSINESS.
The following description of business is provided in accordance with
General Instruction J.(2)(d).
Associates First Capital Corporation ("First Capital" or the "Company"),
a Delaware corporation, is an indirect subsidiary of Ford Motor Company
("Ford"). All the outstanding Common Stock of First Capital is owned by Ford
Holdings, Inc. ("Holdings"). First Capital's principal operating subsidiary
is Associates Corporation of North America ("Associates"), the second largest
independent finance company in the United States as of September 30, 1993.
Unless the context otherwise requires, reference to First Capital or
Associates includes each parent company and all its subsidiaries.
At December 31, 1993, First Capital had 1,390 branch offices in the
United States and employed approximately 12,400 persons. Corporate
headquarters are located in Irving, Texas.
First Capital's primary business activities are consumer finance,
commercial finance and insurance underwriting. See NOTE 17 to the
consolidated financial statements for financial information by business
segment.
Consumer Finance
Consumer finance consists of making and investing in residential real
estate-secured loans to individuals, making secured and unsecured installment
loans to individuals, purchasing consumer retail installment obligations,
investing in credit card receivables, financing manufactured housing ("MHO")
purchases, and providing other consumer financial services. In addition,
First Capital offers insurance to its consumer finance customers.
Loans made to individuals are secured by mortgages on real property, by
liens on personal property (the realizable value of which may be less than
the amount of the loans secured) or are unsecured. At December 31, 1993, 74%
of the gross outstanding balance of residential real estate-secured
receivables was secured by first mortgages. At December 31, 1993, the gross
consumer finance receivables included credit card receivables ($3.3 billion)
owned or originated by Associates National Bank (Delaware), a subsidiary of
First Capital.
The interest rates currently charged on all types of consumer finance
receivables average approximately 16% simple interest per annum. At December
31, 1993, the interest rates charged on approximately 38% of the net consumer
finance receivables outstanding varied during the term of the contract at
specified intervals in relation to a base rate established at the time the
loan was made. State laws establish maximum allowable finance charges for
certain consumer loans; approximately 91% of the outstanding gross consumer
finance receivables were either not subject to such state maximums, or if
subject, such maximum finance charges did not, in most cases, materially
restrict the interest rates charged. Original maturities of residential real
estate-secured receivables average 147 months and original maturities of
other consumer receivables, excluding credit card and manufactured housing
receivables, average 35 months. Original maturities of manufactured housing
receivables average 240 months.
<PAGE>
Commercial Finance
Commercial finance consists of the purchase of time sales obligations and
leases, direct leases and secured direct loans, and sales of other financial
services, including automobile club, mortgage banking and relocation
services. In addition, First Capital offers insurance to its commercial
finance customers.
The types of equipment financed or leased are heavy-duty trucks, truck
trailers, autos and other transportation equipment, construction equipment,
machinery used in various manufacturing and distribution processes and
communications equipment. Except for lease transactions in which First
Capital owns the equipment, liens on the equipment financed secure the
receivables. In many cases, First Capital obtains the endorsement or a full
or limited repurchase agreement of the seller or the manufacturer of the
goods, and in some cases, a portion of the purchase price of the installment
obligations is withheld as a reserve.
At December 31, 1993, the interest rates charged on approximately 13% of
the net commercial finance receivables were established to vary during the
term of the contract in relation to a base rate. Commercial finance
receivables are generally not subject to maximum finance charges established
by state law, and where such restrictions apply, at the present time, they
do not materially restrict the interest rates charged. The interest rates
currently charged on all types of commercial finance receivables average
approximately 9% simple interest per annum. Original maturities of the
commercial receivables average 36 months.
<PAGE>
Volume of Financing
The following tables set forth the gross volume of finance business by
major categories and average size and number of accounts based on gross
finance receivables volume (excluding wholesale receivables) for the periods
indicated:
<TABLE>
<CAPTION>
Gross Volume of Finance Receivables Purchased and Loans Made
Commercial
Finance
Consumer Finance Heavy-Duty
Residential Installment, Truck and
Real Estate- MHO and Industrial
Secured Credit Card Equipment Total
Receivables Receivables Receivables Gross
(a) (a) (b) Volume
(Dollar Amounts in Millions)
<S> <C> <C> <C> <C>
Year Ended December 31
1993 $4,518.2 $9,381.6 $9,955.1 $23,854.9
19% 39% 42% 100%
1992 $4,479.9 $6,939.6 $7,329.6 $18,749.1
24% 37% 39% 100%
1991 $5,193.8 $6,671.8 $6,697.3 $18,562.9
28% 36% 36% 100%
1990 $1,946.1 $5,153.0 $5,904.3 $13,003.4
15% 40% 45% 100%
1989 $1,713.2 $4,024.5 $6,133.6 $11,871.3
14% 34% 52% 100%
<FN>
(a) Included in 1993 are $182.2 million of gross residential real estate-
secured and installment finance receivables attributable to the Allied
Finance Company acquisition, and $215.9 million of credit card
receivables purchased from Great Western Financial Corporation; included
in 1992 are $304.5 million of gross residential real estate-secured and
installment finance receivables purchased from Signal Financial
Corporation and $795.4 million of gross residential real estate-secured
and installment finance receivables attributable to the acquisition of
First Family Financial Services H. C., Inc.; included in 1991 are $2.7
billion of gross residential real estate-secured receivables and
contracts for the purchase of manufactured housing purchased from Ford
Motor Credit Company ("Ford Credit"), and $336.5 million of gross
installment finance receivables attributable to the acquisition of
Kentucky Finance Co., Inc.; and included in 1990 is $605.7 million in
gross residential real estate-secured receivables and installment
finance receivables attributable to the acquisition of Mellon Financial
Services Corporation.
(b) Included in 1993 is $596.9 million of gross heavy-duty truck and truck
trailer finance receivables purchased from Mack Financial Corporation;
included in 1992 is $56.7 million of gross industrial equipment finance
receivables attributable to the acquisition of Trans-National Leasing,
Inc.; included in 1991 is $930.9 million of gross industrial equipment
finance receivables attributable to the acquisition of Chase Manhattan
Leasing Company (Michigan), Inc. (renamed "Clark Credit").
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Size and Number of Accounts
Based on Gross Finance Receivables Volume
Consumer Finance Commercial Finance
Residential Installment, Heavy-Duty Truck
Real Estate- MHO and and Industrial
Secured Credit Card Equipment
Receivables Receivables Receivables
<S> <C> <C> <C>
Year Ended December 31
1993 Average Size $46,659 $1,527 $48,216
Number of Accounts 96,833 6,141,881 113,766
1992 Average Size $42,489 $1,511 $41,191
Number of Accounts 105,436 4,594,106 105,533
1991 Average Size $44,253 $1,588 $30,094
Number of Accounts 117,365 4,201,643 140,962
1990 Average Size $36,020 $1,647 $44,308
Number of Accounts 54,029 3,129,480 80,197
1989 Average Size $31,023 $1,428 $41,431
Number of Accounts 55,222 2,817,470 80,513
</TABLE>
During the year ended December 31, 1993, 23% of the total gross volume
of consumer loans, excluding credit card receivables, was made to current
creditworthy customers that requested additional funds. The average balance
prior to making an additional advance was $9,115 and the average additional
advance was $3,112.
Finance Receivables
The following tables set forth the amounts of gross finance receivables
held at year end by major categories and average size and number of accounts
held at year end for the years indicated:
Gross Finance Receivables Held at End of Year
Consumer Finance Commercial Finance
Residential Installment, Heavy-Duty Truck Total
Real Estate- MHO and and Industrial Gross
Secured Credit Card Equipment Finance
Receivables Receivables Receivables Receivables
(Dollar Amounts in Millions)
At December 31
1993 $10,626.0 $9,869.8 $9,077.2 $29,573.0
36% 33% 31% 100%
1992 $ 9,820.0 $8,122.6 $7,672.0 $25,614.6
38% 32% 30% 100%
1991 $ 8,146.0 $7,188.7 $7,209.7 $22,544.4
36% 32% 32% 100%
1990 $ 4,900.5 $5,236.1 $6,310.2 $16,446.8
30% 32% 38% 100%
1989 $ 3,766.4 $4,176.6 $6,144.1 $14,087.1
27% 29% 44% 100%
<PAGE>
Average Size and Number of Accounts Based on
Gross Finance Receivables Held at End of Year
Consumer Finance Commercial Finance
Residential Installment, Heavy-Duty Truck
Real Estate- MHO and and Industrial
Secured Credit Card Equipment
Receivables Receivables Receivables
At December 31
1993 Average Size $37,787 $2,489 $31,218
Number of Accounts 281,206 3,965,781 290,765
1992 Average Size $36,725 $2,551 $27,792
Number of Accounts 267,394 3,183,747 276,055
1991 Average Size $33,829 $2,469 $27,506
Number of Accounts 240,798 2,910,995 262,110
1990 Average Size $33,928 $2,097 $28,002
Number of Accounts 144,438 2,496,411 225,349
1989 Average Size $32,310 $2,055 $28,357
Number of Accounts 116,570 2,032,490 216,670
The ten largest customer accounts at December 31, 1993, other than
accounts with affiliates (as described in NOTE 14 to the consolidated
financial statements), represented 0.8% of the total gross finance
receivables outstanding. Of such ten accounts, five were secured by heavy-
duty trucks or truck trailers, two were secured by construction equipment,
two were secured by a manufacturer's endorsement and related to
communications equipment and one was secured by auto leasing arrangements.
At December 31, 1993, the largest gross balance outstanding in such accounts
was $31.2 million and the average gross balance was $24.9 million.
<PAGE>
Credit Loss and Delinquency Experience
The credit loss experience, net of recoveries, of the finance business
for the years indicated is set forth in the following table (dollar amounts
in millions):
Year Ended or at December 31
1993 1992 1991 1990 1989
NET CREDIT LOSSES
Consumer Finance
Amount $371.3 $382.9 $354.2 $254.2 $186.1
% of Average Net Receivables 2.19% 2.64% 2.84% 3.06% 2.59%
% of Receivables Liquidated 3.41 4.57 5.65 5.51 5.05
Commercial Finance
Amount $ 22.4 $ 41.8 $ 34.6 $ 23.4 $ 11.7
% of Average Net Receivables .30% .64% .60% .44% .22%
% of Receivables Liquidated .26 .61 .61 .41 .20
Total Net Credit Losses
Amount $393.7 $424.7 $388.8 $277.6 $197.8
% of Average Net Receivables 1.61% 2.02% 2.13% 2.03% 1.59%
% of Receivables Liquidated 2.03 2.80 3.24 2.69 2.09
ALLOWANCE FOR LOSSES
Balance at End of Period $808.9 $699.2 $590.9 $449.7 $390.1
% of Net Receivables 3.07% 3.06% 2.93% 3.02% 3.07%
The allowance for losses on finance receivables is based on percentages
of net finance receivables established by management for each major category
of receivables based on historical loss experience, plus an amount for
possible adverse deviation from historical experience. Additions to the
allowance are charged to the provision for losses on finance receivables.
An analysis of changes in the allowance for losses is included in NOTE 4 to
the consolidated financial statements.
Finance receivables are charged to the allowance for losses when they are
deemed to be uncollectible. Additionally, Company policy provides for
charge-off of various types of accounts as follows: consumer direct
installment receivables, except those collateralized by residential real
estate, are charged to the allowance for losses when no cash payment has been
received for six months; credit card receivables are charged to the allowance
for losses when the receivable becomes contractually six months delinquent;
all other finance receivables are charged to the allowance for losses when
any of the following conditions occur: (i) the related security has been
converted or destroyed; (ii) the related security has been repossessed and
sold or held for sale for one year; or (iii) the related security has not
been repossessed and the receivable has become contractually one year
delinquent. Recoveries on losses previously charged to the allowance are
credited to the allowance at the time the recovery is collected.
Delinquency on consumer residential real estate-secured and direct
installment and credit card receivables is determined by the date of the last
cash payment received from the customer (recency of payment basis), a
delinquent loan being one on which the customer has paid no cash whatsoever
for a period of time. It is not First Capital's policy to accept token
payments on delinquent accounts. A delinquent account on all types of
receivables, other than consumer residential real estate-secured and direct
installment and credit card receivables, is one on which the customer has not
made payments as contractually agreed (contractual payment basis).
<PAGE>
Extensions are granted on receivables from customers with satisfactory credit
and with prior approval of management.
The following tables show (i) the gross account balances delinquent sixty
through eighty-nine days, ninety days and more, and total gross balances
delinquent sixty days and more; and (ii) total gross balances delinquent
sixty days and more by type of business at the dates indicated (dollar
amounts in millions):
<TABLE>
<CAPTION>
Gross Balances Delinquent
Total
60 through 89 days 90 days and more 60 days and more
% of % of % of
No. Out- No. Out- No. Out-
of stand- of stand- of stand-
Accts. Amt. ings Accts. Amt. ings Accts. Amt. ings
<S> <C> <C> <C> <C> <C> <C> <C> <C>
At Dec. 31
1993 47,431 $191.1 .65% 51,956 $236.9 .80% 99,387 $428.0 1.45%
1992 47,621 184.2 .72 46,142 237.4 .93 93,763 421.6 1.65
1991 45,247 205.7 .91 55,985 315.4 1.40 101,232 521.1 2.31
1990 42,184 162.8 .99 49,391 249.7 1.52 91,575 412.5 2.51
1989 30,730 128.0 .91 40,129 220.3 1.56 70,859 348.3 2.47
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Consumer Finance Commercial Finance Total Gross
Balances Balances Balances
Delinquent Delinquent Delinquent
60 days 60 days 60 days
and more and more and more
Total % of Total % of % of
Out- Out- Out- Out- Out- Out-
stand- stand- stand- stand- stand- stand-
ings Amt. ings ings Amt. ings ings Amt. ings
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
At Dec. 31
1993 $20,495.8 $380.1 1.85% $9,077.2 $ 47.9 .53% $29,573.0 $428.0 1.45%
1992 17,942.6 358.9 2.00 7,672.0 62.7 .82 25,614.6 421.6 1.65
1991 15,334.7 392.0 2.56 7,209.7 129.1 1.79 22,544.4 521.1 2.31
1990 10,136.6 282.4 2.79 6,310.2 130.1 2.06 16,446.8 412.5 2.51
1989 7,943.0 216.7 2.73 6,144.1 131.6 2.14 14,087.1 348.3 2.47
</TABLE>
<PAGE>
Insurance Underwriting
First Capital is engaged in the property and casualty and accidental
death and dismemberment insurance business through Associates Insurance
Company ("AIC") and in the credit life, credit accident and health insurance
business through Associates Financial Life Insurance Company ("AFLIC"),
principally for customers of the finance operations of First Capital. At
December 31, 1993, AIC was licensed to do business in 50 states, the District
of Columbia and Canada, and AFLIC was licensed to do business in 49 states
and the District of Columbia. In addition, First Capital receives
compensation for certain insurance programs underwritten by other companies
through marketing arrangements in a number of states.
The operating income produced by the finance operations' sale of
insurance products is included in the respective finance operations'
operating income.
The following table sets forth the net property and casualty insurance
premiums written by major lines of business for the years indicated (in
millions):
Year Ended December 31
1993 1992 1991 1990 1989
Automobile Physical Damage $ 97.6 $ 79.9 $ 69.2 $ 86.8 $ 85.0
Fire and Extended Coverage 41.3 27.8 15.8 31.2 30.7
Other Liability (a) 20.1 25.0 23.6 17.0 14.5
Total Net Premiums Written $159.0 $132.7 $108.6 $135.0 $130.2
(a) Includes contractual liability for auto club road service program.
The following table sets forth the aggregate premium income relating to
credit life, credit accident and health and accidental death and
dismemberment insurance for the years indicated, and the life insurance in
force at the end of each respective year (in millions):
<TABLE>
<CAPTION>
Year Ended or at December 31
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Premium Income $ 111.4 $ 92.6 $ 83.5 $ 79.7 $ 78.9
Life Insurance in Force 6,953.9 6,110.4 5,533.6 4,770.4 5,079.8
</TABLE>
The following table summarizes the revenue of the insurance operation for
the years indicated (in millions):
Year Ended December 31
1993 1992 1991 1990 1989
Premium Revenue (a) $242.2 $209.9 $202.5 $212.7 $196.9
Investment Income 38.4 41.5 53.3 58.4 56.3
Total Revenue $280.6 $251.4 $255.8 $271.1 $253.2
(a) Includes compensation for insurance programs underwritten by other
companies through marketing arrangements.
<PAGE>
Competition and Regulation
The interest rates charged for the various classes of receivables of
First Capital's finance business vary with the type of risk and maturity of
the receivable and are generally affected by competition, current interest
rates and, in some cases, governmental regulation. In addition to
competition with finance companies, competition exists with, among others,
commercial banks, thrift institutions, credit unions and retailers.
Consumer finance operations are subject to detailed supervision by state
authorities under legislation and regulations which generally require finance
companies to be licensed and which, in many states, govern interest rates and
charges, maximum amounts and maturities of credit and other terms and
conditions of consumer finance transactions, including disclosure to a debtor
of certain terms of each transaction. Licenses may be subject to revocation
for violations of such laws and regulations. In some states, the commercial
finance operations are subject to similar laws and regulations. Customers
may seek damages for violations of state and Federal statutes and regulations
governing lending practices, interest rates and other charges. Federal
legislation preempts state interest rate ceilings on first mortgage loans and
state laws which restrict various types of alternative residential real
estate-secured receivables, except in those states which have specifically
opted out of such preemption. Certain Federal and state statutes and
regulations, among other things, require disclosure of the finance charges
in terms of an annual percentage rate, make credit discrimination unlawful
on a number of bases, require disclosure of a maximum rate of interest on
variable or adjustable rate mortgage loans, and limit the types of security
that may be taken in connection with non-purchase money consumer loans.
Federal and state legislation in addition to that mentioned above has been,
and from time to time may be, introduced which seeks to regulate the maximum
interest rate and/or other charges on consumer finance receivables, including
credit cards.
Associates National Bank (Delaware) (the "Bank"), is under the
supervision of, and subject to examination by, the Office of the Comptroller
of the Currency. In addition, the Bank is subject to the rules and
regulations of the Federal Reserve Board and the Federal Deposit Insurance
Corporation ("FDIC"). Associates Investment Corporation is regulated by the
FDIC and the Utah Department of Financial Institutions. Areas subject to
regulation by these agencies include capital adequacy, loans, deposits,
consumer protection, the payment of dividends and other aspects of
operations.
The insurance business is subject to detailed regulation, and premiums
charged on certain lines of insurance are subject to limitation by state
authorities. Most states in which insurance subsidiaries of First Capital
are authorized to conduct business have enacted insurance holding company
legislation pertaining to insurance companies and their affiliates.
Generally, such laws provide, among other things, limitations on the amount
of dividends payable by any insurance company and guidelines and standards
with respect to dealings between insurance companies and affiliates.
It is not possible to forecast the nature or the effect on future
earnings or otherwise of present and future legislation, regulations and
decisions with respect to the foregoing, or other related matters.
ITEM 2. PROPERTIES.
The furniture, equipment and other physical property owned by First
Capital and its subsidiaries represent less than 1% of total assets at
December 31, 1993 and are therefore not significant in relation to total
assets. The branch finance operations are generally conducted on leased
premises under short-term operating leases normally not exceeding five years.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
Because the finance and insurance businesses involve the collection of
numerous accounts, the validity and priority of liens, and loss or damage
claims under many types of insurance policies, the finance and insurance
subsidiaries of First Capital are plaintiffs and defendants in numerous legal
proceedings, including class action lawsuits. Neither First Capital nor any
of its subsidiaries is a party to, nor is the property thereof the subject
of, any pending legal proceedings which depart from the ordinary routine
litigation incident to the kinds of business conducted by First Capital and
its subsidiaries or, if such proceedings constitute other than routine
litigation, in which there is a reasonable possibility of an adverse decision
which could have any material adverse effect upon the financial condition of
First Capital. There are no proceedings pending or, to the Company's
knowledge, threatened by or on behalf of any administrative board or
regulatory body which would materially affect or impair the right of First
Capital or any of its subsidiaries to carry on any of their respective
businesses.
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Omitted in accordance with General Instruction J.(2)(c) to Form 10-K.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
All of the outstanding Common Stock of First Capital is owned by Ford
Holdings, Inc. There is no market for First Capital stock.
Dividends on the Common Stock are paid when declared by the Board of
Directors. Annual Common Stock dividends of $226.0 million and $190.0
million were paid during the years ended December 31, 1993 and 1992,
respectively.
Associates, First Capital's principal operating subsidiary, is subject
to various limitations under the provisions of its outstanding debt and
revolving credit agreements, including limitations on the payment of
dividends. See Liquidity/Capital Resources under Item 7, herein, for a
description of such limitations.
ITEM 6. SELECTED FINANCIAL DATA.
The information that follows is being provided in lieu of the information
called for by Item 6 of Form 10-K, in accordance with General Instruction
J.(2)(a) to Form 10-K.
The following table sets forth selected consolidated financial
information regarding the Company's financial position and operating results
which has been extracted from the Company's consolidated financial statements
for the five years ended December 31, 1993. The information should be read
in conjunction with the Management's Discussion and Analysis of Financial
Condition and Results of Operations and the consolidated financial
statements and accompanying footnotes included elsewhere in this report
(dollar amounts in millions):
<PAGE>
<TABLE>
<CAPTION>
Year Ended or at December 31
1993(a) 1992(a) 1991 1990 1989(b)
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Earnings Information
Revenue $ 3,705.6 $ 3,346.6 $ 3,187.1 $ 2,725.5 $ 2,291.5
Interest Expense 1,340.5 1,281.4 1,347.8 1,217.3 1,065.7
Provision for Losses on
Finance Receivables 476.1 512.6 434.2 309.6 228.6
Earnings from Domestic
Operations 751.8 606.4 540.4 448.0 368.4
Earnings from Foreign
Operations and AFSL (c) 67.6
Net Earnings (d) 470.1 382.8 347.3 287.8 279.2
Ratio of Earnings to
Fixed Charges (e) 1.56 1.47 1.40 1.37 1.34
Consolidated Balance Sheet
Information
Finance Receivables
Consumer Finance $20,495.8 $17,942.6 $15,334.7 $10,136.6 $ 7,943.0
Commercial Finance 9,077.2 7,672.0 7,209.7 6,310.2 6,144.1
Total Receivables 29,573.0 25,614.6 22,544.4 16,446.8 14,087.1
Unearned Finance Income 3,208.2 2,781.0 2,395.5 1,574.4 1,395.4
Allowance for Losses on
Finance Receivables 808.9 699.2 590.9 449.7 390.1
Total Assets 27,695.6 24,034.3 21,551.3 16,880.5 15,057.2
Notes Payable 10,208.2 8,919.6 8,327.6 6,186.3 5,821.0
Long-term Debt 13,600.8 11,870.4 10,223.4 8,392.8 7,040.4
Stockholder's Equity 2,506.4 2,062.0 1,868.1 1,375.1 1,232.4
<FN>
(a) During 1993 and 1992, the Company made a number of acquisitions. See
NOTE 3 to the consolidated financial statements.
(b) The Consolidated Balance Sheet at December 31, 1989 has been audited.
The Consolidated Statement of Earnings for the year ended December 31,
1989 has not been audited.
(c) The Company's foreign operations and Associates Federal Savings and Loan
("AFSL") were transferred out of the Company prior to Ford's acquisition
of First Capital on October 31, 1989. Net earnings for the period ended
December 31, 1989 include the after-tax operating results of the
transferred operations through the date of transfer (October 30, 1989).
(d) 1992 is net of $10.4 million representing the cumulative effect of
changes in accounting principles; 1989 includes the after-tax operating
results of the foreign operations and AFSL through October 30, 1989.
(e) For purposes of computing the Ratio of Earnings to Fixed Charges,
"Earnings" represent earnings from domestic operations before provision
for income taxes and cumulative effect of changes in accounting
principles, plus fixed charges. "Fixed Charges" (from domestic
operations) represent interest expense and a portion of rentals
representative of an implicit interest factor for such rentals.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following management's narrative analysis of the results of
operations is provided in lieu of management's discussion and analysis, in
accordance with General Instruction J.(2)(a) to Form 10-K.
<PAGE>
Results of Operations
REVENUE - Total revenue for the year ended December 31, 1993 increased
$359.0 million (11%), compared with the year ended December 31, 1992. The
components of the increase were as follows:
Finance charges increased $316.0 million (11%), primarily caused by an
increase in average net finance receivables outstanding, which was partially
offset by a decrease in average revenue rates. Average net finance
receivables outstanding were $24.4 billion and $21.0 billion for the years
ended December 31, 1993 and 1992, respectively, a 16% increase. Total net
finance receivables increased by approximately $3.5 billion (15%) from
December 31, 1992 to December 31, 1993. Of the total growth, 23% was in the
residential real estate-secured portfolio, 20% was in the direct installment
and credit card portfolios, 19% was in the manufactured housing and other
portfolios, 23% was in the heavy-duty truck portfolio and 15% was in the
industrial equipment portfolio. The growth was due, in part, to the
acquisitions of finance businesses or finance receivables of Allied Finance
Company (April 1993), and Mack Financial Corporation and Great Western
Financial Corporation (September 1993) as described in NOTE 3 to the
consolidated financial statements. The average revenue rates on aggregate
net receivables were 13.4% and 14.1% for the years ended December 31, 1993
and 1992, respectively. The decline in the average revenue rates was
principally due to changes in market conditions, including lower prevailing
market rates affecting yields on new business and variable and adjustable
rate loans, and a shift in the loan portfolio mix toward a higher percentage
of commercial loans, which generally have lower yields than consumer loans.
Insurance premiums increased $32.3 million (15%) as a result of increased
sales of insurance products, primarily in the credit life and credit accident
and health insurance programs.
Investment and other income increased $10.7 million (6%), due to an
increase in fee-based financial services revenue, which was partially offset
by a decrease in interest income from loans to former foreign subsidiaries
of First Capital as a result of decreased balances outstanding, and a general
decrease in the interest rates on investments.
EXPENSES - Total expenses for the year ended December 31, 1993 increased
$213.6 million (8%), compared with the year ended December 31, 1992. The
components of the increase were as follows:
Interest expense increased $59.1 million (5%). This change was caused
by an increase in average outstanding debt ($186.7 million) attributable to
higher net finance receivables outstanding, which was partially offset by a
decrease in average interest rates ($127.6 million). The annual average
interest rates on total debt, including amortization of discount and issuance
expense, were as follows:
Year Ended
December 31
1993 1992
Short-term Debt 3.11% 3.68%
Long-term Debt 8.03 8.78
Total Debt 5.94 6.55
The net interest margin was 7.92% and 7.98% for the years ended December 31,
1993 and 1992, respectively.
Operating expenses increased $176.1 million (21%), primarily as a result
of increased salaries, employment benefits and other operating expenses
generally related to increased volumes of business, including acquisitions.
The provision for loan losses decreased by $36.5 million (7%), primarily
due to decreased losses. Net credit losses, measured in dollars and as a
percent of average net finance receivables, declined during the twelve-month
period ended December 31, 1993, compared to the same period ended December
31, 1992. The allowance for losses increased $109.7 million (16%) to $808.9
million at December 31, 1993 from $699.2 million at December 31, 1992. The
increase primarily relates to the growth in net finance receivables. The
allowance for losses, measured as a percent of net finance receivables,
remained at a relatively constant level at December 31, 1993 (3.07%) compared
to December 31, 1992 (3.06%). The allowance for losses is maintained at a
level which considers, among other factors, historical loss experience,
possible deviations from historical loss experience and varying economic
conditions.
Insurance benefits paid or provided increased $14.9 million (15%) in
1993, primarily due to an increase in property and casualty insurance claims.
EARNINGS BEFORE PROVISION FOR INCOME TAXES AND CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES - As a result of the aforementioned changes,
earnings before provision for income taxes and cumulative effect of changes
in accounting principles increased $145.4 million (24%) during 1993.
PROVISION FOR INCOME TAXES - The provision for income taxes represented
37.5% and 35.2% of earnings before provision for income taxes for the years
ended December 31, 1993 and 1992, respectively. The increase in the
effective tax rate is primarily related to an increase in the Federal
statutory rate and the method of computing state taxes as described in NOTE
8 to the consolidated financial statements.
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES -
Earnings before cumulative effect of changes in accounting principles
increased $76.9 million (20%) during 1993.
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES - In 1992, the
Company recorded a one-time charge of $10.4 million relating to the adoption
of two new accounting standards. See NOTE 2 to the consolidated financial
statements for additional information.
NET EARNINGS - As a result of the aforementioned changes, net earnings
increased $87.3 million (23%) during 1993.
Liquidity/Capital Resources
The following sets forth liquidity and capital resources for First
Capital and its subsidiaries other than Associates and its subsidiaries.
First Capital's primary sources of funds have been (i) borrowings from
both commercial banks and the public and (ii) borrowings and dividends from
Associates. The amount of dividends which may be paid by Associates is
limited by certain provisions of its outstanding debt and revolving credit
agreements. A restriction contained in one series of debt securities
maturing August 1, 1996, generally limits payments of cash dividends on
Associates Common Stock in any one year to not more than 50% of Associates
consolidated net earnings for such year, subject to certain exceptions, plus
increases in contributed capital and extraordinary gains. Any such amounts
available for the payment of dividends in such fiscal year and not so paid,
may be paid in any one or more of the five subsequent fiscal years. In
accordance with this provision, at December 31, 1993, $221.9 million was
available for dividends. A restriction contained in certain revolving credit
agreements requires Associates to maintain a minimum tangible net worth, as
defined, of $1.5 billion. At December 31, 1993, Associates tangible net
worth was approximately $2.9 billion. A debt agreement of Associates limits
the total of all affiliate-related receivables, as defined, to 7% of the
aggregate gross receivables owned by Associates. An affiliate within the
meaning of affiliate-related receivables includes First Capital, its parent
corporation, and any corporation, other than Associates and its subsidiaries,
of which First Capital or its parent corporation owns or controls at least
50% of its stock. The net total of all affiliate-related receivables which
Associates owned at December 31, 1993 and 1992, amounted to 1.5% and 1.2%,
respectively, of its aggregate gross receivables as of those dates.
At December 31, 1993, First Capital had contractually committed bank
lines of credit of $75.0 million, and revolving credit facilities of $250.0
million, none of which was in use. During 1993, First Capital raised $209.3
million through public and private offerings of medium- and long-term debt.
The following sets forth liquidity and capital resources for Associates:
Associates endeavors to maximize its liquidity by diversifying its
sources of funds, which include: (i) its operations; (ii) the issuance of
commercial paper; (iii) the issuance of unsecured intermediate-term debt in
the public and private markets; (iv) borrowings available from short-term and
revolving credit facilities with commercial banks; and (v) receivables
purchase facilities.
Issuance of Short- and Intermediate-Term Debt
Commercial paper, with maturities ranging from 1 to 270 days, is the
primary source of short-term debt. The average commercial paper interest
rate incurred during 1993 was 3.11%.
Associates issues intermediate-term debt publicly and privately in the
domestic and foreign markets. During the year ended December 31, 1993,
Associates raised $3.6 billion through public and private offerings at a
weighted average effective interest rate and a weighted average term of 5.64%
and 6.5 years, respectively.
Credit Facilities and Related Borrowings
Associates policy is to maintain bank credit facilities in support of its
net short-term borrowings consistent with market conditions. Bank credit
facilities provide a means of refinancing maturing commercial paper
obligations as needed. At December 31, 1993, short-term bank lines and
revolving credit facilities with banks totaled $8.2 billion, none of which
was in use at that date. These facilities represented 80% of net short-term
borrowings outstanding at December 31, 1993. Bank lines and revolvers may
be withdrawn only under certain standard conditions. Associates pays fees
or maintains compensating balances or utilizes a combination of both to
maintain the availability of its bank credit facilities. Fees are .05% to
.25% of 1% per annum of the amount of the facilities.
At December 31, 1993 and 1992, Associates short-term debt, as defined,
as a percent of total debt was 52%. Short-term debt, for purposes of this
computation, includes the current portion of long-term debt but excludes
short-term investments. See NOTES 5, 6 and 7 to the consolidated financial
statements for a description of credit facilities, notes payable and long-
term debt, respectively.
Recent Accounting Pronouncements
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 112, "Employers' Accounting for
Postretirement Benefits" and SFAS No. 113, "Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts". The adoption of
these standards was not significant to the Company's consolidated financial
statements.
<PAGE>
The Financial Accounting Standards Board has issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" effective 1995, SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities"
effective 1994, and SFAS No. 116, "Accounting for Contributions Received and
Contributions Made" effective 1995. Adoption of these pronouncements is not
expected to be significant to the Company's consolidated financial
statements.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Associates First Capital Corporation
We have audited the consolidated financial statements and the financial
statement schedule listed in Item 14(a) of this Form 10-K of Associates First
Capital Corporation (an indirect subsidiary of Ford Motor Company). These
financial statements and financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Associates First Capital Corporation as of December 31, 1993 and 1992 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
As discussed in NOTE 2 to the consolidated financial statements,
effective January 1, 1992, the Company changed its methods of accounting for
postretirement benefit costs other than pensions and income taxes.
COOPERS & LYBRAND
Dallas, Texas
February 1, 1994
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(In Millions)
Year Ended December 31
1993 1992 1991
REVENUE
Finance charges $3,276.3 $2,960.3 $2,786.9
Insurance premiums 242.2 209.9 202.5
Investment and other income 187.1 176.4 197.7
3,705.6 3,346.6 3,187.1
EXPENSES
Interest expense 1,340.5 1,281.4 1,347.8
Operating expenses 1,022.3 846.2 773.6
Provision for losses on finance
receivables - NOTE 4 476.1 512.6 434.2
Insurance benefits paid or provided 114.9 100.0 91.1
2,953.8 2,740.2 2,646.7
EARNINGS BEFORE PROVISION FOR INCOME
TAXES AND CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 751.8 606.4 540.4
PROVISION FOR INCOME TAXES - NOTE 8 281.7 213.2 193.1
EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 470.1 393.2 347.3
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES - NOTE 2 (10.4)
NET EARNINGS $ 470.1 $ 382.8 $ 347.3
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In Millions)
December 31
1993 1992
ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 290.3 $ 204.3
INVESTMENTS IN MARKETABLE SECURITIES - NOTE 16 633.7 507.3
FINANCE RECEIVABLES - NOTE 3
Consumer Finance 20,495.8 17,942.6
Commercial Finance 9,077.2 7,672.0
Total finance receivables 29,573.0 25,614.6
Less
Unearned finance income 3,208.2 2,781.0
Allowance for losses on finance receivables - NOTE 4 808.9 699.2
25,555.9 22,134.4
OTHER ASSETS - NOTE 13 1,215.7 1,188.3
Total assets $27,695.6 $24,034.3
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
NOTES PAYABLE - NOTE 6
Commercial Paper $ 9,735.8 $ 8,453.6
Bank Loans 472.4 466.0
ACCOUNTS PAYABLE AND ACCRUALS 950.4 821.8
INSURANCE POLICY AND CLAIMS RESERVES 429.8 360.5
LONG-TERM DEBT - NOTES 7 and 9 13,600.8 11,870.4
STOCKHOLDER'S EQUITY
Common Stock, no par value, 250 shares authorized,
issued and outstanding, at stated value 47.0 47.0
Paid-in Capital - NOTE 14 904.4 704.4
Retained Earnings 1,551.0 1,306.9
Unrealized Gain on Marketable Equity Securities 4.0 3.7
Total stockholder's equity 2,506.4 2,062.0
Total liabilities and stockholder's equity $27,695.6 $24,034.3
<FN>
See notes to consolidated financial statements.
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(In Millions)
Unrealized
(Loss)
Gain on
Marketable Total
Common Paid-in Retained Equity Stockholder's
Stock Capital Earnings Securities Equity
DECEMBER 31, 1990 $47.0 $388.4 $ 939.8 $(0.1) $1,375.1
Net Earnings 347.3 347.3
Contributions from
Parent 316.0 316.0
Cash Dividends (173.0) (173.0)
Current Period
Adjustment 2.7 2.7
DECEMBER 31, 1991 47.0 704.4 1,114.1 2.6 1,868.1
Net Earnings 382.8 382.8
Cash Dividends (190.0) (190.0)
Current Period
Adjustment 1.1 1.1
DECEMBER 31, 1992 47.0 704.4 1,306.9 3.7 2,062.0
Net Earnings 470.1 470.1
Contributions from
Parent - NOTE 14 200.0 200.0
Cash Dividends (226.0) (226.0)
Current Period
Adjustment 0.3 0.3
DECEMBER 31, 1993 $47.0 $904.4 $1,551.0 $ 4.0 $2,506.4
See notes to consolidated financial statements.
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Millions)
Year Ended December 31
1993 1992 1991
Cash Flows from Operating Activities
Net earnings $ 470.1 $ 382.8 $ 347.3
Adjustments to net earnings for
noncash items:
Provision for losses on finance
receivables 476.1 512.6 434.2
Depreciation and amortization 214.5 105.6 93.6
Increase in accounts payable
and accruals 195.0 28.4 168.1
Increase (decrease) in insurance
policy and claims reserves 69.3 22.5 (8.6)
Deferred income taxes (75.9) (21.6) 4.0
Cumulative effect of changes in
accounting principles 10.4
Other 0.3 1.1 2.7
Net cash provided from
operating activities 1,349.4 1,041.8 1,041.3
Cash Flows from Investing Activities
Finance receivables originated or
purchased (21,344.1) (15,960.5) (14,895.3)
Finance receivables liquidated 18,053.5 13,834.2 10,536.5
Acquisitions of other finance
businesses, net (293.0) (461.4) (860.3)
Securities purchased (579.9) (382.1) (179.1)
Securities sold and matured 453.9 369.5 184.8
(Increase) decrease in other assets (79.9) 158.8 270.0
Decrease (increase) in real estate
loans held for sale 0.8 (64.9) 33.4
Net cash used for investing
activities (3,788.7) (2,506.4) (4,910.0)
Cash Flows from Financing Activities
Issuance of long-term debt 3,770.7 3,282.3 2,995.0
Increase in notes payable 820.9 592.0 2,141.3
Cash dividends (226.0) (190.0) (173.0)
Retirement of long-term debt (2,040.3) (2,219.2) (1,418.9)
Capital contributions 200.0 154.0
Net cash provided from
financing activities 2,525.3 1,465.1 3,698.4
Increase (decrease) in cash and
cash equivalents 86.0 0.5 (170.3)
Cash and cash equivalents at
beginning of period 204.3 203.8 374.1
Cash and cash equivalents at end
of period $ 290.3 $ 204.3 $ 203.8
Cash paid for:
Interest $ 1,338.3 $ 1,269.8 $ 1,290.6
Income taxes $ 371.7 $ 233.1 $ 175.1
See notes to consolidated financial statements.
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
Associates First Capital Corporation ("First Capital" or the "Company"), a
Delaware corporation, is an indirect subsidiary of Ford Motor Company
("Ford"). All the outstanding Common Stock of First Capital is owned by Ford
Holdings, Inc. ("Holdings"). Associates Corporation of North America
("Associates") is the principal operating subsidiary of First Capital.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements consolidate First Capital
and its subsidiaries. Amounts of goodwill relating to acquisitions are being
amortized by the straight-line method over periods not exceeding forty years.
All significant intercompany balances and transactions have been eliminated
in consolidation. Certain prior period financial statement amounts have been
reclassified to conform to the current year presentation.
REVENUE RECOGNITION
Finance charges on receivables are recognized as revenue using the interest
(actuarial) method. Premiums and discounts on purchased receivables are
considered as yield adjustments. The unamortized balance is included in
finance receivables and the associated amortization is included in finance
charge revenue. Finance charge accruals are generally suspended on accounts
more than 30 days contractually delinquent. At December 31, 1993 and 1992,
net finance receivables on which revenue was not accrued approximated $366.5
million and $385.9 million, respectively.
Insurance premiums are recorded as unearned premiums when collected or when
written and are subsequently amortized into income based on the nature and
term of the underlying insurance contracts. The methods of amortization used
are pro rata, sum-of-the-years-digits and a combination thereof.
Gains and losses on investments in marketable securities are included in
revenue when realized. The cost of such securities sold is determined by the
specific identification method. Investment income is recorded as revenue
when earned.
ALLOWANCE FOR LOSSES ON FINANCE RECEIVABLES
The allowance for losses on finance receivables is based on percentages of
net finance receivables established by management for each major category of
receivables based on historical loss experience, plus an amount for possible
adverse deviation from historical experience. Additions to the allowance are
charged to the provision for losses on finance receivables.
Finance receivables are charged to the allowance for losses when they are
deemed to be uncollectible. Additionally, Company policy provides for
charge-off of various types of accounts as follows: consumer direct
installment receivables, except those collateralized by residential real
estate, are charged to the allowance for losses when no cash payment has been
received for six months; credit card receivables are charged to the allowance
for losses when the receivable becomes contractually six months delinquent;
all other finance receivables are charged to the allowance for losses when
any of the following conditions occur: (i) the related security has been
converted or destroyed; (ii) the related security has been repossessed and
sold or held for sale for one year; or (iii) the related security has not
been repossessed, and the receivable has become contractually one year
delinquent.
INSURANCE RESERVES
The reserves for future benefits and refunds upon cancellation of credit life
and health insurance and property and casualty insurance are provided for in
the unearned premium reserve for such business. In addition, reserves for
reported claims on credit accident and health insurance are established based
on standard morbidity tables used in the insurance business for such
purposes. Claim reserves for reported property and casualty insurance claims
are based on estimates of costs and expenses to settle each claim.
Additional amounts of reserves, based on prior experience and insurance in
force, are provided for each class of insurance for claims which have been
incurred but not reported as of the balance sheet date.
FEDERAL INCOME TAXES
First Capital and its subsidiaries are included in the consolidated Federal
income tax return of Holdings. The provision for income taxes is computed
on a separate return basis. Deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse.
Prior to 1992, the provision for income taxes was based on income and
expenses included in the accompanying consolidated financial statements.
Differences between taxes so computed and taxes payable are classified as
deferred taxes arising from timing differences.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. The amounts reported
in the Consolidated Balance Sheet approximate fair value.
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The consolidated financial statements present the information required by
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
about Fair Value of Financial Instruments". Amounts disclosed represent
estimates of fair values at a particular point in time. Significant
assumptions regarding economic conditions, loss experience and risk
characteristics associated with particular financial instruments and other
factors were used for purposes of this disclosure. These assumptions are
subjective in nature and involve matters of judgement. Changes in
assumptions could have a material impact on these estimates.
CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits" and SFAS No. 113, "Accounting and
Reporting for Reinsurance of Short-Duration and Long-Duration Contracts".
The adoption of these standards was not significant to the Company's
consolidated financial statements.
Effective January 1, 1992, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", and SFAS No.
109, "Accounting for Income Taxes". The Company recorded a one-time
cumulative effect of changes in accounting principles of $10.4 million
consisting of a $40.2 million after-tax charge relating to SFAS 106 and a
$29.8 million benefit relating to SFAS 109. See NOTES 11 and 8 to the
consolidated financial statements for additional information.
NOTE 3 - FINANCE RECEIVABLES
COMPOSITION OF FINANCE RECEIVABLES
At December 31, 1993 and 1992, finance receivables consisted of the following
(in millions):
1993 1992
Consumer Finance
Residential real estate-secured
receivables $10,626.0 $ 9,820.0
Direct installment and credit card
receivables 6,060.2 5,276.8
Manufactured housing and other
installment receivables 3,809.6 2,845.8
20,495.8 17,942.6
Commercial Finance
Heavy-duty truck receivables 4,333.7 3,500.2
Other industrial equipment receivables 4,743.5 4,171.8
9,077.2 7,672.0
29,573.0 25,614.6
Unearned Finance Income (3,208.2) (2,781.0)
Net finance receivables $26,364.8 $22,833.6
The estimated maturities of gross finance receivables, at December 31, 1993,
during subsequent years were as follows (in millions):
Consumer Commercial
Year Due Finance Finance Total
1994 $ 3,193.6 $4,040.6 $ 7,234.2
1995 2,561.1 2,395.4 4,956.5
1996 2,194.0 1,540.0 3,734.0
1997 1,590.1 780.2 2,370.3
1998 and thereafter 10,957.0 321.0 11,278.0
$20,495.8 $9,077.2 $29,573.0
Estimated maturities are based on contractual terms and do not give effect
to possible prepayments.
<PAGE>
Included in other industrial equipment receivables are direct financing
leases as follows (in millions):
December 31
1993 1992
Minimum lease rentals $1,882.1 $1,630.1
Unguaranteed residual values 26.4 24.8
Future minimum lease rentals 1,908.5 1,654.9
Unearned finance income (256.2) (230.9)
Allowance for losses on finance receivables (42.0) (36.5)
Net investment in direct financing leases $1,610.3 $1,387.5
Future minimum lease rentals on direct financing leases for each of the years
succeeding December 31, 1993 are as follows (in millions): 1994 - $632.1;
1995 - $513.7; 1996 - $380.8; 1997 - $234.1; 1998 - $108.9; 1999 and
thereafter - $38.9.
ESTIMATED FAIR VALUE OF NET FINANCE RECEIVABLES
The estimated fair value of net finance receivables at December 31, 1993 was
approximately $27.8 billion. In order to determine the fair values of loans,
the loan portfolio was segmented based on loan type, credit quality and
repricing characteristics. The fair value was estimated by discounting the
expected cash flows from such loans at discount rates which approximate gross
finance charge rates that would achieve an expected return on assets with
similar risk characteristics. The estimated fair value of the credit card
receivables was based on the Company's experience in pricing similar
portfolios for acquisition purposes.
DISPERSION OF FINANCE RECEIVABLES
The Company has geographically dispersed finance receivables portfolios. At
December 31, 1993, the finance receivables were dispersed among 50 states,
with four percent or more of the receivables in the states of California
(11%), Florida (7%), Texas (6%), Georgia (5%), Illinois (4%), North Carolina
(4%), New York (4%) and Pennsylvania (4%). The ten largest customer accounts
at December 31, 1993, other than accounts with affiliates, represented 0.8%
of the total gross finance receivables outstanding. The largest gross
balance outstanding in such accounts was $31.2 million and the average gross
balance was $24.9 million.
ACQUISITIONS OF FINANCE BUSINESSES AND FINANCE RECEIVABLES
During the year ended December 31, 1993, the Company made acquisitions of
finance businesses and finance receivables, the most significant of which
were as follows:
In April 1993, Associates purchased the stock of Allied Finance Company,
with assets primarily consisting of $146 million of net consumer finance
receivables, principally comprised of residential real estate-secured,
direct installment and indirect installment receivables. The fair market
value of total assets acquired and liabilities assumed was $197 million and
$112 million, respectively. The transaction was accounted for as a
purchase.
In September 1993, Associates purchased the assets of Mack Financial
Corporation, the financing division of Mack Trucks, Inc., consisting of
$552 million of net commercial finance receivables, principally secured by
heavy-duty trucks and truck trailers. The fair market value of total
assets acquired and liabilities assumed was $587 million and $380 million,
respectively. The transaction was accounted for as a purchase.
In September 1993, Associates acquired the credit card portfolio of Great
Western Financial Corporation. The outstanding balances totaled $216
million.
During the year ended December 31, 1992, the Company made acquisitions of
finance businesses, the most significant of which were as follows:
In April 1992, Associates purchased from Signal Financial Corporation $290
million of net consumer finance receivables. The receivables consisted
primarily of direct installment and residential real estate-secured loans.
The fair market value of total assets acquired and liabilities assumed was
$303 million and $2 million, respectively. The transaction was accounted
for as a purchase.
In November 1992, Associates purchased substantially all the assets of
First Family Financial Services H.C., Inc. Such assets included $546
million of net consumer finance receivables, principally residential real
estate-secured and direct installment loans. The fair market value of
total assets acquired and liabilities assumed was $697 million and $543
million, respectively. The transaction was accounted for as a purchase.
In December 1992, First Capital purchased the stock of Trans-National
Leasing, Inc. Approximately $48 million of net commercial finance
receivables relating to the financing of fleet vehicles was acquired in the
transaction. The fair market value of assets acquired and liabilities
assumed was $52 million and $45 million, respectively. The transaction was
accounted for as a purchase. Trans-National Leasing, Inc. was subsequently
merged with an affiliate and contributed by First Capital to Associates in
December 1992. See NOTE 14 to the consolidated financial statements for
additional information.
NOTE 4 - ALLOWANCE FOR LOSSES ON FINANCE RECEIVABLES
Changes in the allowance for losses on finance receivables during the periods
indicated were as follows (in millions):
Year Ended December 31
1993 1992 1991
Balance at beginning of period $ 699.2 $ 590.9 $ 449.7
Provision for losses 476.1 512.6 434.2
Recoveries on receivables
charged off 88.5 72.6 53.7
Losses sustained (482.2) (497.3) (442.5)
Other adjustments, primarily
reserves of acquired businesses 27.3 20.4 95.8
Balance at end of period $ 808.9 $ 699.2 $ 590.9
NOTE 5 - BANK CREDIT FACILITIES
First Capital had contractually committed bank lines of credit of $75.0
million at December 31, 1993. Additionally, at December 31, 1993,
Associates, the principal operating subsidiary of First Capital, had
contractually committed lines of credit at 112 banks, aggregating $3.1
billion, with various maturities through December 31, 1994, none of which was
utilized at December 31, 1993. Also at December 31, 1993, Associates had
agreements with 101 banks extending revolving credit facilities of $4.1
billion, with maturity dates ranging from February 1, 1994 through October
1, 1997, and $1.0 billion of receivables purchase facilities, $500.0 million
of which is available through April 15, 1994 and $500.0 million of which is
available through April 30, 1995; none of these facilities was utilized as
of December 31, 1993. At December 31, 1993, First Capital had revolving
credit facilities of $250.0 million. The aggregate credit facilities
available to Associates as of December 31, 1993 were $8.2 billion with 141
banks. Bank lines and revolvers may be withdrawn only under certain standard
conditions. Associates pays fees or maintains compensating balances or
utilizes a combination of both to maintain the availability of its bank
credit facilities. Bank fees incurred during 1993, 1992 and 1991
approximated $9.6 million, $6.8 million and $5.1 million, respectively, and
are .05% to .25% of 1% per annum of the amount of the facilities. At
December 31, 1993, the Company had outstanding debt agreements that required
compensating balances totaling $1.6 million.
NOTE 6 - NOTES PAYABLE
Commercial paper notes are issued by Associates in the minimum amount of
$100,000 with terms from 1 to 270 days. Bank loan terms range from 4 to 7
days. Information pertaining to the Company's commercial paper notes and
bank loans is set forth below for the periods indicated (dollar amounts in
millions):
Commercial Bank
Paper Notes Loans
Year Ended or at December 31, 1993
Ending Balance $ 9,735.8 $472.4
Highest month-end balance 10,018.7 472.4
Average daily balance 9,271.8 11.9
Weighted average interest rate
Month ended 3.13% 3.84%
Twelve months ended 3.11 3.51
Year Ended or at December 31, 1992
Ending Balance $ 8,453.6 $466.0
Highest month-end balance 9,043.1 466.0
Average daily balance 8,231.4 20.5
Weighted average interest rate
Month ended 3.22% 3.51%
Twelve months ended 3.68 3.46
Year Ended or at December 31, 1991
Ending Balance $ 7,959.2 $368.4
Highest month-end balance 8,146.0 368.4
Average daily balance 7,596.9 2.2
Weighted average interest rate
Month ended 4.79% 5.42%
Twelve months ended 5.90 6.38
The amounts reported in the Consolidated Balance Sheet approximate fair
value.
<PAGE>
NOTE 7 - LONG-TERM DEBT
Outstanding balances of long-term debt at December 31 were as follows (in
millions):
</TABLE>
<TABLE>
<CAPTION>
Interest
Rate
Range Maturities 1993 1992
<S> <C> <C> <C> <C>
Senior:
Notes 4.06-15.00% 1994-2010 $13,007.5 $11,250.9
Investment notes 4.00-10.50 1994-1998 351.4 377.5
13,358.9 11,628.4
Subordinated and Capital:
Subordinated 7.63-12.75 1994-2009 241.2 241.2
Capital 4.68- 9.00 1994-2002 0.7 0.8
241.9 242.0
Total long-term debt $13,600.8 $11,870.4
</TABLE>
The weighted average interest rate for total long-term debt was 7.54% for
1993 and 8.33% for 1992.
The estimated fair value of long-term debt at December 31, 1993 was $14.5
billion. The fair value was determined by discounting expected cash flows
at discount rates currently available to the Company for debt with similar
terms and remaining maturities.
Long-term borrowing maturities during the next five years, including the
current portion of notes payable after one year are: 1994, $2,203.1 million;
1995, $2,097.6 million; 1996, $2,334.4 million; 1997, $2,029.6 million; 1998,
$1,316.1 million; and 1999 and thereafter $3,620.0 million.
Certain debt issues contain call provisions or may be subject to repayment
provisions at the option of the holder on specified dates prior to the
maturity date. At December 31, 1993, approximately 3,500 warrants were
outstanding to purchase $154.8 million aggregate principal amount of senior
notes at par with interest rates ranging from 7.00% to 10.50%. The warrants
are exercisable at various dates through October 1, 1999 at prices ranging
from $1,000 to $25,000,000 per warrant. All of the above issues are
unsecured except for a $50 million, 8.25% Senior Note due August 15, 2001,
which is collateralized by First Capital's corporate offices.
NOTE 8 - PROVISION FOR INCOME TAXES
On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 (the "Act")
was enacted. Among other changes, the Act increased the Federal income tax
rate for corporations by one percentage point to 35% effective January 1,
1993. Net income for 1993 included a reduction of $2.1 million in the
provision for income taxes as a result of restating deferred tax balances.
The favorable effect reflects the higher tax rate applied to the Company's
net deferred tax assets.
Effective January 1, 1992, the Company adopted SFAS No. 109, "Accounting for
Income Taxes". The cumulative effect of the accounting change was recognized
in the December 31, 1992 Consolidated Statement of Earnings as a one-time
increase to net earnings in the amount of $29.8 million.
<PAGE>
The following table sets forth the components of the provision for U.S.
Federal and State income taxes and deferred income tax (benefit) for the
periods indicated (in millions):
Federal State Total
Year ended December 31, 1993
Current $337.1 $20.5 $357.6
Deferred:
Leasing transactions 3.6 3.6
Finance revenue 3.9 3.9
Provision for losses on finance
receivables and other (83.4) (83.4)
$261.2 $20.5 $281.7
Year ended December 31, 1992
Current $226.0 $ 8.8 $234.8
Deferred:
Leasing transactions 13.6 13.6
Finance revenue 12.9 12.9
Provision for losses on finance
receivables and other (48.1) (48.1)
$204.4 $ 8.8 $213.2
Year ended December 31, 1991
Current $182.7 $ 6.4 $189.1
Deferred:
Leasing transactions 15.1 15.1
Finance revenue 16.8 16.8
Provision for losses on finance
receivables and other (27.9) (27.9)
$186.7 $ 6.4 $193.1
In 1993, the Company entered into a tax-sharing agreement with Ford whereby
state income taxes are provided on a separate-return basis. Prior to 1993,
state income taxes were provided on a consolidated-return basis.
At December 31, 1993 and 1992, the components of the Company's net deferred
tax asset were as follows (in millions):
1993 1992
Deferred tax assets:
Provision for losses on finance
receivables and other $ 368.8 $ 301.7
Postretirement and other employee
benefits 68.1 45.8
436.9 347.5
Deferred tax liabilities:
Leasing transactions (145.9) (143.4)
Finance revenue and other (192.6) (182.6)
(338.5) (326.0)
Net deferred tax asset $ 98.4 $ 21.5
Due to the Company's earnings levels, no valuation allowance related to the
deferred tax asset has been recorded.
<PAGE>
The effective tax rate differed from the statutory U.S. Federal income tax
rate as follows:
% of Pretax Income
Year Ended December 31
1993 1992 1991
Statutory tax rate 35.0% 34.0% 34.0%
State and other 2.5 1.2 1.7
Effective tax rate 37.5% 35.2% 35.7%
NOTE 9 - DEBT RESTRICTIONS
Associates, First Capital's principal operating subsidiary, is subject to
various limitations under the provisions of its outstanding debt and
revolving credit agreements. The most significant of these limitations are
summarized as follows:
LIMITATION ON PAYMENT OF DIVIDENDS
A restriction contained in one series of debt securities maturing August 1,
1996, generally limits payments of cash dividends on Associates Common Stock
in any year to not more than 50% of Associates consolidated net earnings for
such year, subject to certain exceptions, plus increases in contributed
capital and extraordinary gains. Any such amounts available for the payment
of dividends in such fiscal year and not so paid, may be paid in any one or
more of the five subsequent fiscal years. In accordance with this provision,
at December 31, 1993, $221.9 million was available for dividends.
LIMITATION ON MINIMUM TANGIBLE NET WORTH
A restriction contained in certain revolving credit agreements requires
Associates to maintain a minimum tangible net worth, as defined, of $1.5
billion. At December 31, 1993, Associates tangible net worth was
approximately $2.9 billion.
LIMITATION ON AFFILIATE RECEIVABLES
A debt agreement of Associates limits the total of all affiliate-related
receivables, as defined, to 7% of the aggregate gross receivables owned by
Associates. An affiliate within the meaning of affiliate-related receivables
includes First Capital, its parent corporation, and any corporation, other
than Associates and its subsidiaries, of which First Capital or its parent
corporation owns or controls at least 50% of its stock. The net total of all
affiliate-related receivables which Associates owned at December 31, 1993 and
1992, amounted to 1.5% and 1.2%, respectively, of its aggregate gross
receivables as of those dates.
NOTE 10 - LEASE COMMITMENTS
Leases are primarily short-term and generally provide for renewal options not
exceeding the original term. Total rent expense for the years ended December
31, 1993, 1992 and 1991 was $43.9 million, $38.3 million, and $34.5 million,
respectively. Minimum rental commitments as of December 31, 1993 for all
noncancelable leases (primarily office leases) for the years ending December
31, 1994, 1995, 1996, 1997 and 1998, are $37.0 million, $29.8 million, $22.2
million, $11.4 million and $5.1 million, respectively, and $4.6 million
thereafter.
<PAGE>
NOTE 11 - EMPLOYEE BENEFITS
DEFINED BENEFIT PLANS
The Company sponsors various qualified and nonqualified pension plans (the
"Plan" or "Plans"), which together cover substantially all permanent
employees who meet certain eligibility requirements.
Net periodic pension cost for the years indicated includes the following
components (in millions):
December 31 (a)
1993 1992 1991
Service cost $ 10.0 $ 8.4 $ 6.6
Interest cost 18.1 16.1 13.9
Actual return on Plan assets (21.6) (10.0) (28.4)
Net amortization 7.4 (2.5) 19.0
Net periodic pension cost $ 13.9 $ 12.0 $ 11.1
The funded status of the Plans is as follows (in millions):
<TABLE>
<CAPTION>
December 31 (a)
1993 1992
Qualified Nonqualified Qualified Nonqualified
Plan Plan Plan Plan
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligation:
Vested $197.9 $17.5 $152.5 $14.2
Nonvested 8.2 0.2 6.4 0.1
Accumulated benefit obligation 206.1 17.7 158.9 14.3
Effect of projected future
salary increases 62.4 4.0 50.9 3.2
Projected benefit obligation 268.5 21.7 209.8 17.5
Plan assets at fair market
value 197.5 179.0
Excess of plan obligation over
plan assets 71.0 21.7 30.8 17.5
Unamortized transition obliga-
tion and amendments (9.4) (0.7) (9.7) (2.7)
Unamortized net loss (42.5) (3.3) (9.1) (0.6)
Accrued pension liability $ 19.1 $17.7 $ 12.0 $14.2
</TABLE>
The projected benefit obligation at December 31, 1993 and 1992 was determined
using a discount rate of 7.0% and 8.0%, respectively, projected compensation
increases of 6.0% and expected return on plan assets of 9.5%.
A determination of the Federal income tax status related to the qualified
Pension Plan has not been requested because the Internal Revenue Service has
only recently begun accepting certain qualified pension plan applications.
An application is expected to be filed during 1994. If a favorable
determination letter is not received, First Capital has agreed to make any
changes required to receive a favorable determination letter.
<PAGE>
RETIREMENT SAVINGS AND PROFIT SHARING PLAN
The Company sponsors a defined contribution plan intended to provide
assistance in accumulating personal savings for retirement and is designed
to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code.
The savings plan has not been submitted to the Internal Revenue Service for
approval as a qualified tax-exempt plan. Consequently, the plan provisions
are subject to issuance of a favorable determination letter by the Internal
Revenue Service. For the years ended December 31, 1993, 1992 and 1991, the
Company's pretax contributions to the plan were $14.0 million, $12.1 million
and $9.9 million, respectively.
EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides certain postretirement benefits through unfunded plans
sponsored by First Capital. These benefits are currently provided to
substantially all permanent employees who meet certain eligibility
requirements. The benefits or the plan can be modified or terminated at the
discretion of the Company. The Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" in 1992. As of
January 1, 1992, the Company recorded a one-time charge to net earnings of
approximately $40.2 million, which represents the estimated accumulated
postretirement benefit obligation on that date of $64.9 million, net of
deferred income taxes of approximately $20.7 million and amounts recorded as
purchase accounting adjustments of approximately $4.0 million. This amount
has been reflected in the Consolidated Statement of Earnings as a component
of the cumulative effect of changes in accounting principles.
Prior to 1992, the cost of providing these benefits was recognized as a charge
to income as claims were paid. The amount paid for postretirement benefits
for the years ended December 31, 1993, 1992 and 1991 was approximately $1.5
million, $2.1 million and $1.2 million, respectively.
Net periodic postretirement benefit cost for 1993 and 1992 includes the
following components (in millions):
December 31
1993 1992
Service cost $ 4.2 $3.2
Interest cost 6.3 5.8
Net amortization (0.7)
Net periodic postretirement benefit cost $ 9.8 $9.0
Accrued postretirement benefit cost at December 31, 1993 and 1992 is composed
of the following (in millions):
December 31
1993 1992
Accumulated postretirement benefit
obligation ("APBO"):
Retired participants $ 33.6 $27.8
Fully eligible participants 21.1 15.6
Other active participants 30.7 32.8
total APBO 85.4 76.2
Unamortized amendments 11.5
Unrecognized actuarial loss (16.8) (4.4)
Accrued postretirement benefit cost $ 80.1 $71.8
For measurement purposes, a 12.50% and 13.32% weighted average annual rate
of increase in per capita cost of covered health care benefits was assumed
for 1993 and 1992, respectively, decreasing gradually to 5.50% by the year
2009. Discount rates of 7.50% and 8.50% were used in measuring the APBO at
December 31, 1993 and 1992, respectively. Increasing the assumed health care
cost trend rate by one percentage point each year would increase the APBO as
of December 31, 1993 and 1992 by $6.2 million and $5.1 million, respectively,
and the aggregate of the service and interest cost components of the net
periodic postretirement benefit cost for each year then ended by $0.8
million.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
First Capital and its subsidiaries are defendants in various legal
proceedings which arose in the normal course of business. In management's
judgment (based upon the advice of counsel) the ultimate liabilities, if any,
from such legal proceedings will not have a material adverse effect on the
financial position of First Capital.
NOTE 13 - OTHER ASSETS
The components of Other Assets at December 31, 1993 and 1992 were as follows
(in millions):
December 31
1993 1992
Balances with related parties - NOTE 14 $ 167.5 $ 193.2
Goodwill 382.2 405.2
Other 666.0 589.9
Total other assets $1,215.7 $1,188.3
Other assets include residential real estate-secured receivables held for
sale by Associates National Mortgage Corporation, a subsidiary of the
Company. At December 31, 1993, the aggregate book value was $77.6 million,
which approximates estimated fair value. The estimated fair value was
determined by discounting expected cash flows from such receivables at
current market rates.
NOTE 14 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
CAPITAL TRANSACTIONS
Effective as of December 15, 1993, First Capital received from Ford Holdings
a capital contribution of $200.0 million in the form of cash.
OTHER TRANSACTIONS AND BALANCES
First Capital, through Associates, provided debt financing to certain of its
former foreign subsidiaries. At December 31, 1993 and 1992, amounts due from
foreign affiliates totaled $167.5 million and $193.2 million, respectively,
and were included in Other Assets. These receivables bear fluctuating
interest rates and are payable on demand. Interest income related to these
transactions was $21.3 million, $34.0 million and $47.5 million for the years
ended December 31, 1993, 1992 and 1991, respectively. The estimated fair
value of these receivables was $175.6 million at December 31, 1993.
At December 31, 1992, the gross consumer finance receivables included a
participation in consumer receivables of $142.0 million of First Nationwide
Bank, FSB, an affiliate of First Capital. This balance was included in
Finance Receivables.
The Company provides certain services of an administrative nature, use of
certain tangible and intangible assets, including trademarks, guarantees of
debt and related interest, and other management services to certain of its
foreign affiliates in Japan, Canada, Puerto Rico and the United Kingdom.
Such services and usage are charged to the affiliates based on the nature of
the service. Fees for such guarantees range from .25% to 1% of the average
outstanding debt guaranteed. Management believes the percentages represent
fair value. The amounts paid or accrued under these arrangements for the
years ended December 31, 1993, 1992 and 1991 were $40.1 million, $35.5
million and $25.3 million, respectively.
At December 31, 1993 and 1992, the Company was a guarantor on debt and
related accrued interest of its foreign affiliates in Canada and Puerto Rico
amounting to $256.7 million and $154.5 million, respectively.
At December 31, 1993 and 1992, First Capital's current income taxes payable
to Holdings amounted to $40.2 million and $45.1 million, respectively.
NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISKS
The Company maintains cash, cash equivalents, investments, and certain other
financial instruments with various major financial institutions. To the
extent such deposits exceed maximum insurance levels, they are uninsured.
Currency swap contracts are entered into as part of the Company's funding
strategy. The Company has an interest rate swap contract acquired as part
of a business acquisition. Amounts under currency and interest rate swap
contracts at December 31, 1993 were approximately $202.9 million. Should a
counterparty to these contracts fail to meet the terms of the contracts, the
Company could be at market risk for any currency and/or interest rate
differentials. At December 31, 1993, the Company estimated its exposure to
loss resulting from currency and interest rate differentials, in event of
non-performance by all counterparties, was $14.0 million, which also
approximated the estimated fair value of amounts under contract.
Associates National Bank (Delaware) a subsidiary of First Capital, makes
available credit lines to holders of their credit cards. The unused portion
of the available credit is revocable by the bank under specified conditions.
The unused portion of the available credit at December 31, 1993 approximated
$8.2 billion. The potential risk associated with, and the estimated fair
value of, the unused credit lines are not considered to be significant.
The consumer operation grants revolving lines of credit to certain of its
customers. At December 31, 1993, the unused portion of these lines
aggregated approximately $712.4 million. The potential risk associated with,
and the estimated fair value of, the unused credit lines are not considered
to be significant.
The commercial operation grants lines of credit to certain dealers of truck,
construction equipment and manufactured housing. At December 31, 1993, the
unused portion of these lines aggregated approximately $684.6 million. The
potential risk associated with, and the estimated fair value of, the unused
credit lines are not considered to be significant.
<PAGE>
NOTE 16 - INVESTMENTS IN MARKETABLE SECURITIES
DEBT SECURITIES
Debt security investments, principally bonds and notes, are intended to be
held for the foreseeable future and are carried at amortized cost. However,
if market conditions or other factors subsequently change, such securities
may be sold prior to maturity with the realized gain or loss included in
investment and other income. Amortized cost at December 31, 1993 and 1992 was
$598.7 million and $480.0 million, respectively. The following table sets
forth, by type of security issuer, the amortized cost, gross unrealized
gains and estimated market value at December 31, 1993 (in millions):
Gross Estimated
Amortized Unrealized Market
Cost Gains Value
U.S. Government obligations $456.5 $12.4 $468.9
Corporate obligations 58.0 0.8 58.8
Mortgage-backed and other obligations 84.2 0.1 84.3
Total debt securities $598.7 $13.3 $612.0
The amortized cost and estimated market value of debt securities at December
31, 1993, by contractual maturity, are shown below (in millions):
Estimated
Amortized Market
Cost Value
Due in one year or less $ 52.3 $ 52.4
Due after one year through five years 370.1 378.2
Due after five years through ten years 168.5 172.9
Due after ten years 7.8 8.5
$598.7 $612.0
EQUITY SECURITIES
Equity security investments, principally common stock held by the Company's
insurance subsidiaries, are recorded at market value. Market value at
December 31, 1993 and 1992 was $35.0 million and $27.3 million, respectively.
Historical cost of these investments at December 31, 1993 and 1992 was $28.9
million and $21.8 million, respectively.
Estimated market values of debt and equity securities are based on quoted
market prices.
<PAGE>
NOTE 17 - BUSINESS SEGMENT INFORMATION
First Capital's primary business activities are consumer finance, commercial
finance and insurance underwriting. The consumer finance operation is
engaged in making and investing in residential real estate-secured
receivables, consumer direct installment and revolving credit receivables,
including credit card receivables, primarily through a wholly-owned credit
card bank, purchasing consumer retail installment obligations, and providing
other consumer financial services. The commercial finance operation is
principally engaged in financing sales of transportation and industrial
equipment and leasing, and sales of other financial services, including
automobile club, mortgage banking and relocation services. The insurance
operation is engaged in underwriting credit life and credit accident and
health, property, casualty and accidental death and dismemberment insurance,
principally for customers of the finance operations, and such sales are the
principal amounts included in the intersegment revenue shown below. The
following table sets forth information by business segment (in millions):
<TABLE>
<CAPTION>
Business Segment Corporate
Consumer Commercial and
Finance Finance(c) Insurance Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Year Ended or at December 31, 1993
Revenue other than intersegment $ 2,444.8 $ 991.1 $280.6 $ 14.6 $ (25.5) $ 3,705.6
Intersegment (a) 105.6 20.2 (125.8)
Total revenue $ 2,550.4 $1,011.3 $280.6 $ 14.6 $(151.3) $ 3,705.6
Operating income (b) $ 564.8 $ 277.4 $(90.4) $ 751.8
Total assets $16,894.0 $9,850.6 $877.4 $ 73.6 $27,695.6
Year Ended or at December 31, 1992
Revenue other than intersegment $ 2,200.0 $ 901.7 $251.4 $ 14.4 $ (20.9) $ 3,346.6
Intersegment (a) 94.9 33.4 (128.3)
Total revenue $ 2,294.9 $ 935.1 $251.4 $ 14.4 $(149.2) $ 3,346.6
Operating income (b) $ 449.6 $ 249.8 $(93.0) $ 606.4
Total assets $15,109.3 $8,129.3 $735.7 $ 60.0 $24,034.3
Year Ended or at December 31, 1991
Revenue other than intersegment $ 2,089.1 $ 862.8 $255.8 $ 30.5 $ (51.1) $ 3,187.1
Intersegment (a) 82.6 36.5 (119.1)
Total revenue $ 2,171.7 $ 899.3 $255.8 $ 30.5 $(170.2) $ 3,187.1
Operating income (b) $ 389.0 $ 240.6 $(89.2) $ 540.4
Total assets $13,500.0 $7,319.4 $668.5 $ 63.4 $21,551.3
<FN>
(a) Represents the gross profit of the insurance operation which is
attributable to the business segment which produced the business.
(b) Operating income is earnings before provision for income taxes and
cumulative effect of changes in accounting principles. For all years
presented, the operating income produced by the finance operations from
the sale of the insurance operation's products is included in the
respective finance operation.
(c) Includes information pertaining to the financing of manufactured housing
purchases which are managed by the commercial operation.
Capital expenditures and depreciation and amortization expense are not
significant.
</TABLE>
<PAGE>
NOTE 18 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
Condensed unconsolidated financial information of Associates First Capital
Corporation as of or for the years ended December 31, 1993, 1992 and 1991
were as follows (in millions):
CONDENSED STATEMENT OF EARNINGS
Year Ended December 31
1993 1992 1991
Revenue
Interest and other income $ 6.7 $ 6.1 $ 20.9
Dividends from subsidiaries 242.7 191.6 201.3
249.4 197.7 222.2
Expenses
Interest expense 51.1 56.5 78.5
Operating expenses 15.3 15.2 10.3
66.4 71.7 88.8
Income before credit for Federal income
taxes and equity in net earnings of
subsidiaries 183.0 126.0 133.4
Credit for Federal income taxes resulting
from tax agreements with subsidiaries 21.2 21.7 23.1
Earnings before equity in undistributed
earnings of subsidiaries 204.2 147.7 156.5
Equity in undistributed earnings of
subsidiaries 265.9 235.1 190.8
Net earnings $470.1 $382.8 $347.3
CONDENSED BALANCE SHEET
December 31
1993 1992
Assets
Investment in and advances to subsidiaries, eliminated
in consolidation, and other $3,198.9 $2,773.7
Total assets $3,198.9 $2,773.7
Liabilities and Stockholder's Equity
Accounts payable and accruals $ 19.9 $ 26.4
Notes payable and long-term debt (1) 672.7 685.4
Stockholder's equity (2) 2,506.3 2,061.9
Total liabilities and stockholder's equity $3,198.9 $2,773.7
The estimated fair value of notes payable and long-term debt at December 31,
1993 was $685.3 million. Fair values were estimated by discounting expected
cash flows at discount rates currently available to the Company for debt with
similar terms and remaining maturities.
See notes to condensed financial information.
<PAGE>
CONDENSED STATEMENT OF CASH FLOWS
(In Millions)
Year Ended December 31
1993 1992 1991
Cash Flows from Operating Activities
Net earnings $ 470.1 $ 382.8 $ 347.3
Adjustments to net earnings for noncash items:
Amortization and depreciation 0.1 0.1 0.1
(Decrease) increase in accounts payable and
accruals (6.5) (13.7) 6.4
Equity in undistributed earnings of
subsidiaries (265.9) (235.1) (190.8)
Other (0.6) 1.0 2.9
Net cash provided from operating activities 197.2 135.1 165.9
Cash Flows from Investing Activities
Cash dividends from subsidiaries (1) 242.7 191.6 201.3
Increase in investments in and advances to
subsidiaries (402.7) (151.7) (96.2)
Net cash provided from (used for) investing
activities (160.0) 39.9 105.1
Cash Flows from Financing Activities
Increase in notes payable and long-term
debt (2) 231.6 241.8 23.2
Cash dividends paid (226.0) (190.0) (173.0)
Retirement of long-term debt (244.2) (228.4) (271.0)
Capital contribution from parent 200.0 154.0
Net cash used for financing activities (38.6) (176.6) (266.8)
(Decrease) increase in cash and cash equivalents (1.4) (1.6) 4.2
Cash and cash equivalents at beginning of period 0.5 2.1 (2.1)
Cash and cash equivalents at end of period $ (0.9) $ 0.5 $ 2.1
NOTES TO CONDENSED FINANCIAL INFORMATION:
(1) The ability of the Company's subsidiaries to transfer funds to the
Company in the form of cash dividends is restricted pursuant to the
terms of certain debt agreements entered into by the Company's principal
operating subsidiary, Associates Corporation of North America. See NOTE
9 to the consolidated financial statements for a summary of the most
significant of these restrictions.
(2) Notes payable and long-term debt bear interest at rates from 4.00% to
13.75%. The estimated maturities of the notes outstanding, at December
31, 1993, during subsequent years were as follows (in millions):
1994 $356.0
1995 120.5
1996 89.5
1997 60.3
1998 46.4
$672.7
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Items 10-13 has been omitted in accordance with
General Instruction J.(2)(c) to Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements Page
Report of Independent Accountants 16
Consolidated Statement of Earnings for the years
ended December 31, 1993, 1992 and 1991 17
Consolidated Balance Sheet at December 31, 1993 and 1992 18
Consolidated Statement of Changes in Stockholder's
Equity for the years ended December 31, 1993, 1992 and
1991 19
Consolidated Statement of Cash Flows for the years ended
December 31, 1993, 1992 and 1991 20
Notes to consolidated financial statements 21
(2) Financial Statement Schedules
II - Amounts Receivable from Related Parties and Underwriters,
Promoters and Employees Other than Related Parties.
All other schedules are omitted because either they are not
applicable or the information required to be included therein is
provided in the consolidated financial statements or related notes.
(b) Reports on Form 8-K.
During the quarter ended December 31, 1993, First Capital filed no
Current Reports on Form 8-K.
<PAGE>
(c) Exhibits
(3) (a) Certificate of Incorporation. Incorporated by reference to
Exhibit 3(a) to the Company's Form 10-K for the fiscal year
ended October 31, 1986.
(b) By-laws. Incorporated by reference to Exhibit 3 to the
Company's Form 10-K for the year ended December 31, 1990.
(4) Instruments with respect to issues of long-term debt have not
been filed as exhibits to this annual report on Form 10-K as the
authorized principal amount of any one of such issues does not
exceed 10% of the total assets of the registrant and its
consolidated subsidiaries. Registrant agrees to furnish to the
Commission a copy of each such instrument upon its request.
(12) Computation of Ratio of Earnings to Fixed Charges.
(22) Subsidiaries of the registrant. Omitted in accordance with
General Instruction J.(2)(b) to Form 10-K.
(24) Consent of Independent Accountants.
(25) Powers of Attorney.
<PAGE>
SIGNATURES
No annual report to security holders or proxy material has been or will
be sent to security holders. Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ASSOCIATES FIRST CAPITAL CORPORATION
By /s/ ROY A. GUTHRIE
Senior Vice President and Comptroller
March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
REECE A. OVERCASH, JR.* Chairman of the Board,
(Reece A. Overcash, Jr.) Principal Executive Officer
and Director
KEITH W. HUGHES* President, Chief Operating
(Keith W. Hughes) Officer and Director
JAMES E. JACK* Senior Executive Vice President and
(James E. Jack) Principal Financial Officer
ROY A. GUTHRIE* Senior Vice President, March 25, 1994
(Roy A. Guthrie) Comptroller and Principal
Accounting Officer
HAROLD D. MARSHALL* Director
(Harold D. Marshall)
JOSEPH M. McQUILLAN* Director
(Joseph M. McQuillan)
By signing his name hereto, Roy A. Guthrie signs this document on behalf
of himself and each of the other persons indicated above pursuant to powers
of attorney duly executed by such persons.
*By /s/ ROY A. GUTHRIE
Attorney-in-fact
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
ASSOCIATES FIRST CAPITAL CORPORATION
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
(In Millions)
Balance at Balance
Beginning Amounts at End
Name of Debtor Collateral of Period (1) Additions Collected of Period (1)
<S> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1993
ACONA B.V. Unsecured $162.7 $ 25.9 $136.8
Associates Financial Services
Company of Puerto Rico, Inc. Unsecured 2.1 1.8 0.3
Associates Financial Corporation
Limited Unsecured 28.4 $2.0 30.4
$193.2 $2.0 $ 27.7 $167.5
AT DECEMBER 31, 1992
ACONA B.V. Unsecured $227.6 $ 64.9 $162.7
Associates Financial Services
Company of Puerto Rico, Inc. Unsecured 2.3 0.2 2.1
Associates Financial Corporation
Limited Unsecured 35.4 7.0 28.4
$265.3 $ 72.1 $193.2
AT DECEMBER 31, 1991
ACONA B.V. Unsecured $439.8 $212.2 $227.6
Associates Financial Services
Company of Puerto Rico, Inc. Unsecured 55.0 52.7 2.3
Associates Financial Corporation
Limited Unsecured 56.1 20.7 35.4
$550.9 $285.6 $265.3
<FN>
(1) The receivables bear fluctuating interest rates and are payable on
demand.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
(3) (a) Certificate of Incorporation. Incorporated by
reference to Exhibit 3(a) to the Company's Form
10-K for the fiscal year ended October 31, 1986.
(b) By-laws. Incorporated by reference to Exhibit
3 to the Company's Form 10-K for the year ended
December 31, 1990.
(4) Instruments with respect to issues of long-term debt
have not been filed as exhibits to this annual report
on Form 10-K as the authorized principal amount of
any one of such issues does not exceed 10% of the
total assets of the registrant and its consolidated
subsidiaries. Registrant agrees to furnish to the
Commission a copy of each such instrument upon
request.
(12) Computation of Ratio of Earnings to Fixed Charges.
(22) Subsidiaries of the registrant. Omitted in
accordance with General Instruction J.(2)(b) to Form
10-K.
(24) Consent of Independent Accounts.
(25) Powers of Attorney.
<PAGE>
EXHIBIT 12
<PAGE>
EXHIBIT 12
ASSOCIATES FIRST CAPITAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollar Amounts In Millions)
Year Ended December 31
1993 1992 1991
Fixed Charges (a)
Interest expense $1,340.5 $1,281.4 $1,347.8
Implicit interest in
rent 1.9 1.6 2.2
Total fixed charges $1,342.4 $1,283.0 $1,350.0
Earnings (b) $ 751.8 $ 606.4 $ 540.4
Fixed charges 1,342.4 1,283.0 1,350.0
Earnings, as defined $2,094.2 $1,889.4 $1,890.4
Ratio of Earnings to
Fixed Charges 1.56 1.47 1.40
(a) For purposes of such computation, the term "Fixed Charges" represents
interest expense and a portion of rentals representative of an implicit
interest factor for such rentals.
(b) For purposes of such computation, the term "Earnings" represents
earnings before provision for income taxes and cumulative effect of
changes in accounting principles, plus fixed charges.
<PAGE>
EXHIBIT 24
<PAGE>
EXHIBIT 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Associates First Capital Corporation on Form S-3 (No. 33-65752)
of our report dated February 1, 1994, on our audits of the consolidated
financial statements and financial statement schedule of Associates First
Capital Corporation as of December 31, 1993 and 1992, and for the years ended
December 31, 1993, 1992, and 1991, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND
Dallas, Texas
March 25, 1994
<PAGE>
EXHIBIT 25
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
a director of ASSOCIATES FIRST CAPITAL CORPORATION (the "Company"), has made,
constituted and appointed and by these presents does hereby make, constitute
and appoint THOMAS E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE
A. OVERCASH, JR., and each of them, his true and lawful attorneys, for him
and in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and any and all amendments thereto and
any and all other documents to be signed and filed with the Securities and
Exchange Commission in connection therewith, hereby granting to said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
and each of them, full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in the premises,
as fully, to all intents and purposes, as he might or could do if personally
present, hereby ratifying and confirming in all respects all that said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
or any of them, as said attorneys, may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 28th day of
February, 1994.
SIGNATURE:/s/ Reece A. Overcash, Jr.
Reece A. Overcash, Jr.
OFFICE: Chairman of the Board, Principal
Executive Officer and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
a director of ASSOCIATES FIRST CAPITAL CORPORATION (the "Company"), has made,
constituted and appointed and by these presents does hereby make, constitute
and appoint THOMAS E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE
A. OVERCASH, JR., and each of them, his true and lawful attorneys, for him
and in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and any and all amendments thereto and
any and all other documents to be signed and filed with the Securities and
Exchange Commission in connection therewith, hereby granting to said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
and each of them, full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in the premises,
as fully, to all intents and purposes, as he might or could do if personally
present, hereby ratifying and confirming in all respects all that said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
or any of them, as said attorneys, may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 28th day of
February, 1994.
SIGNATURE:/s/ Keith W. Hughes
Keith W. Hughes
OFFICE: President, Chief Operating Officer
and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
a director of ASSOCIATES FIRST CAPITAL CORPORATION (the "Company"), has made,
constituted and appointed and by these presents does hereby make, constitute
and appoint THOMAS E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE
A. OVERCASH, JR., and each of them, his true and lawful attorneys, for him
and in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and any and all amendments thereto and
any and all other documents to be signed and filed with the Securities and
Exchange Commission in connection therewith, hereby granting to said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
and each of them, full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in the premises,
as fully, to all intents and purposes, as he might or could do if personally
present, hereby ratifying and confirming in all respects all that said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
or any of them, as said attorneys, may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 28th day of
February, 1994.
SIGNATURE:/s/ Harold D. Marshall
Harold D. Marshall
OFFICE: Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
a director of ASSOCIATES FIRST CAPITAL CORPORATION (the "Company"), has made,
constituted and appointed and by these presents does hereby make, constitute
and appoint THOMAS E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE
A. OVERCASH, JR., and each of them, his true and lawful attorneys, for him
and in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and any and all amendments thereto and
any and all other documents to be signed and filed with the Securities and
Exchange Commission in connection therewith, hereby granting to said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
and each of them, full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in the premises,
as fully, to all intents and purposes, as he might or could do if personally
present, hereby ratifying and confirming in all respects all that said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
or any of them, as said attorneys, may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 28th day of
February, 1994.
SIGNATURE:/s/ Joseph M. McQuillan
Joseph M. McQuillan
OFFICE: Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
a director of ASSOCIATES FIRST CAPITAL CORPORATION (the "Company"), has made,
constituted and appointed and by these presents does hereby make, constitute
and appoint THOMAS E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE
A. OVERCASH, JR., and each of them, his true and lawful attorneys, for him
and in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and any and all amendments thereto and
any and all other documents to be signed and filed with the Securities and
Exchange Commission in connection therewith, hereby granting to said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
and each of them, full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in the premises,
as fully, to all intents and purposes, as he might or could do if personally
present, hereby ratifying and confirming in all respects all that said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
or any of them, as said attorneys, may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 28th day of
February, 1994.
SIGNATURE:/s/ James E. Jack
James E. Jack
OFFICE: Senior Executive Vice President,
Principal Financial Officer and
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
a director of ASSOCIATES FIRST CAPITAL CORPORATION (the "Company"), has made,
constituted and appointed and by these presents does hereby make, constitute
and appoint THOMAS E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE
A. OVERCASH, JR., and each of them, his true and lawful attorneys, for him
and in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and any and all amendments thereto and
any and all other documents to be signed and filed with the Securities and
Exchange Commission in connection therewith, hereby granting to said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
and each of them, full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in the premises,
as fully, to all intents and purposes, as he might or could do if personally
present, hereby ratifying and confirming in all respects all that said THOMAS
E. DALE, ROY A. GUTHRIE, CHESTER D. LONGENECKER and REECE A. OVERCASH, JR.,
or any of them, as said attorneys, may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 28th day of
February, 1994.
SIGNATURE:/s/ Roy A. Guthrie
Roy A. Guthrie
OFFICE: Senior Vice President, Comptroller
and Principal Accounting Officer
