<PAGE>
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, 1994
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. - Not Applicable
As of December 31, 1994, 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, 1994.
Unless the context otherwise requires, reference to First Capital or
Associates includes each parent company and all its subsidiaries.
At December 31, 1994, First Capital had 1,473 branch offices in the United
States and employed approximately 13,700 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, 1994, 77% of
the gross outstanding balance of residential real estate-secured receivables
was secured by first mortgages. At December 31, 1994, the gross consumer
finance receivables included credit card receivables ($4.0 billion) owned or
originated by Associates National Bank (Delaware), a subsidiary of First
Capital.
The interest rates currently earned on all types of consumer finance
receivables average approximately 17% simple interest per annum. At December
31, 1994, 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 89% 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 149 months and original maturities of other
consumer receivables, excluding credit card and manufactured housing
receivables, average 33 months. Original maturities of manufactured housing
receivables average 217 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 and
machinery used in various manufacturing and distribution processes. 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, 1994, the interest rates charged on approximately 14% 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 earned on all types of commercial finance receivables average
approximately 9% simple interest per annum. Original maturities of the
commercial receivables average 46 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 for the periods indicated:
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)
Year Ended December 31
1994 $6,283.3 $12,568.2 $12,274.7 $31,126.2
20% 40% 40% 100%
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%
(a) Included in 1994 are $60.8 million of warehouse loan facilities
purchased from First Collateral Services, Inc. and $416.0 million of
credit card receivables purchased from Amoco Oil Company ("Amoco").
Included in 1993 are $182.2 million of gross residential real estate-
secured and installment finance receivables attributable to the
acquisition of Allied Finance Company 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. Included in 1990 are $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 are $596.9 million of gross heavy-duty truck and
truck trailer finance receivables purchased from Mack Financial
Corporation. Included in 1992 are $56.7 million of gross industrial
equipment finance receivables attributable to the acquisition of
Trans-National Leasing, Inc. Included in 1991 are $930.9 million of
gross industrial equipment finance receivables attributable to the
acquisition of Chase Manhattan Leasing Company (Michigan), Inc.
(renamed "Clark Credit").
<PAGE>
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 (b)
Year Ended December 31
1994 Average Size $46,283 $ 975 $51,447
Number of Accounts 135,757 12,889,405(a) 122,542
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
(a) Includes 4.9 million accounts pertaining to the credit card receivables
purchased from Amoco, which accounts had lower average balances than the
remaining Associates receivables.
(b) Excludes wholesale receivables.
During the year ended December 31, 1994, 25% 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 $10,150 and the average additional
advance was $3,589.
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
1994 $12,002.7 $12,064.4 $10,878.4 $34,945.5
34% 35% 31% 100%
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%
<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
1994 Average Size $38,690 $1,528 $35,884
Number of Accounts 310,230 7,894,845* 303,157
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
* Includes 3.1 million accounts pertaining to the credit card receivables
purchased from Amoco.
The Company has geographically dispersed finance receivables portfolios
as further described in NOTE 3 to the consolidated financial statements. The
ten largest customer accounts at December 31, 1994, other than accounts with
affiliates (as described in NOTE 14 to the consolidated financial statements),
represented 0.9% of the total gross finance receivables outstanding. Of such
ten accounts (all of which were current at December 31, 1994), four were
secured by truck leasing arrangements, three were secured by construction
equipment, one was secured by a manufacturer's endorsement and related to
communications equipment, one was secured by manufactured housing and one was
secured by auto leasing arrangements. At December 31, 1994, the largest gross
balance outstanding in such accounts was $54.4 million and the average gross
balance was $30.5 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
1994 1993 1992 1991 1990
NET CREDIT LOSSES
Consumer Finance
Amount $455.9 $371.3 $382.9 $354.2 $254.2
% of Average Net Receivables 2.33% 2.19% 2.64% 2.84% 3.06%
% of Receivables Liquidated 3.09 3.41 4.57 5.65 5.51
Commercial Finance
Amount $ 8.4 $ 22.4 $ 41.8 $ 34.6 $ 23.4
% of Average Net Receivables .09% .30% .64% .60% .44%
% of Receivables Liquidated .08 .26 .61 .61 .41
Total Net Credit Losses
Amount $464.3 $393.7 $424.7 $388.8 $277.6
% of Average Net Receivables 1.62% 1.61% 2.02% 2.13% 2.03%
% of Receivables Liquidated 1.84 2.03 2.80 3.24 2.69
ALLOWANCE FOR LOSSES
Balance at End of Period $944.3 $808.9 $699.2 $590.9 $449.7
% of Net Receivables 3.03% 3.07% 3.06% 2.93% 3.02%
The Company maintains an allowance for losses on finance receivables at
an amount which it believes is sufficient to provide adequate protection
against future losses in the portfolios. The allowance is determined
principally on the basis of historical loss experience, and reflects
management's judgment of additional loss potential considering future economic
conditions and the nature and characteristics of the finance receivables.
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. Collateral held for
resale is not considered significant to total assets.
Finance receivables are charged to the allowance for losses when they are
deemed to be uncollectible. Additionally, Company policy generally provides
for charge-off of various types of accounts on a contractual basis (described
below). Consumer direct and other installment and credit card receivables are
charged to the allowance for losses when they become 180 days 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 one year delinquent. A delinquent account is
one on which the customer has not made payments as contractually agreed.
Extensions are granted on receivables from customers with satisfactory credit
and with prior approval of management. Recoveries on losses previously
charged to the allowance are credited to the allowance at the time the
recovery is collected.<PAGE>
The following table shows total gross balances
contractually delinquent 60 days and more by type of business at the dates
indicated (dollar amounts in millions):
<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
1994 $24,067.1 $442.9 1.84% $10,878.4 $ 31.0 .28% $34,945.5 $473.9 1.36%
1993 20,495.8 363.2 1.77 9,077.2 47.9 .53 29,573.0 411.1 1.39
1992 17,942.6 370.9 2.07 7,672.0 62.7 .82 25,614.6 433.6 1.69
1991 15,334.7 400.7 2.61 7,209.7 129.1 1.79 22,544.4 529.8 2.35
1990 10,136.6 300.1 2.96 6,310.2 130.1 2.06 16,446.8 430.2 2.62
</TABLE>
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 and 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, 1994, 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.
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
1994 1993 1992 1991 1990
Automobile Physical Damage $118.6 $ 97.6 $ 79.9 $ 69.2 $ 86.8
Fire and Extended Coverage 50.1 41.3 27.8 15.8 31.2
Other Casualty Coverage 35.5 20.1 25.0 23.6 17.0
Total Net Premiums Written $204.2 $159.0 $132.7 $108.6 $135.0
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):
Year Ended or at December 31
1994 1993 1992 1991 1990
Premium Income $ 136.1 $ 111.4 $ 92.6 $ 83.5 $ 79.7
Life Insurance in Force 8,306.3 7,133.9 6,110.4 5,533.6 4,770.4
The following table summarizes the revenue of the insurance operation from
all lines of business for the years indicated (in millions):
Year Ended December 31
1994 1993 1992 1991 1990
Premium Revenue* $293.5 $242.2 $209.9 $202.5 $212.7
Investment Income 44.9 38.4 41.5 53.3 58.4
Total Revenue $338.4 $280.6 $251.4 $255.8 $271.1
* Includes compensation for insurance programs underwritten by other
companies.
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, in the past 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, a Utah industrial loan company,
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, 1994 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.
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 $273.0 million and $226.0 million
were paid during the years ended December 31, 1994 and 1993, 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.
<PAGE>
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, 1994. 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):
Year Ended or at December 31 (a)
1994 1993 1992 1991 1990
Consolidated Statement
of Earnings Information
Revenue $ 4,405.3 $ 3,705.6 $ 3,346.6 $ 3,187.1 $ 2,725.5
Interest Expense 1,558.2 1,340.5 1,281.4 1,347.8 1,217.3
Provision for Losses on
Finance Receivables 577.5 476.1 512.6 434.2 309.6
Earnings Before
Provision for Income
Taxes 888.0 751.8 606.4 540.4 448.0
Net Earnings (b) 548.1 470.1 382.8 347.3 287.8
Ratio of Earnings to
Fixed Charges (c) 1.57 1.56 1.47 1.40 1.37
Consolidated Balance
Sheet Information
Finance Receivables
Consumer Finance $24,067.1 $20,495.8 $17,942.6 $15,334.7 $10,136.6
Commercial Finance 10,878.4 9,077.2 7,672.0 7,209.7 6,310.2
Total Receivables 34,945.5 29,573.0 25,614.6 22,544.4 16,446.8
Unearned Finance Income 3,769.5 3,208.2 2,781.0 2,395.5 1,574.4
Allowance for Losses on
Finance Receivables 944.3 808.9 699.2 590.9 449.7
Total Assets 32,247.0 27,695.6 24,034.3 21,551.3 16,880.5
Notes Payable 12,211.9 10,208.2 8,919.6 8,327.6 6,186.3
Long-term Debt 15,654.1 13,600.8 11,870.4 10,223.4 8,392.8
Stockholder's Equity 2,959.9 2,506.4 2,062.0 1,868.1 1,375.1
(a) During 1994, 1993 and 1992, the Company acquired gross finance receivables
approximating $0.5 billion, $1.0 billion and $1.2 billion, respectively.
See NOTE 3 to the consolidated financial statements. During 1991 and 1990,
the Company acquired gross finance receivables approximating $4.0 billion
and $0.6 billion, respectively.
(b) 1992 is net of a $10.4 million charge representing the cumulative effect of
changes in accounting principles.
(c) For purposes of computing the Ratio of Earnings to Fixed Charges, "Earnings"
represent earnings before provision for income taxes and cumulative
effect of changes in accounting principles, plus fixed charges. "Fixed
Charges" represent interest expense and a portion of rentals
representative of an implicit interest factor for such rentals.
<PAGE>
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.
Results of Operations
REVENUE - Total revenue for the year ended December 31, 1994 increased
$699.7 million (19%), compared with the year ended December 31, 1993. The
components of the increase were as follows:
Finance charges increased $621.9 million (19%), primarily caused by an
increase in average net finance receivables outstanding, and to a lesser
extent, an increase in average revenue rates. Average net finance receivables
outstanding were $28.6 billion and $24.4 billion for the years ended December
31, 1994 and 1993, respectively, a 17% increase. Total net finance
receivables increased by approximately $4.8 billion (18%) from December 31,
1993 to December 31, 1994. Of the total growth, 29% was in the residential
real estate-secured portfolio, 22% was in the direct installment and credit
card portfolios, 16% was in the manufactured housing and other portfolios, 12%
was in the heavy-duty truck portfolio and 21% was in the industrial equipment
portfolio. The growth was primarily generated from internal sources, but
included the acquisitions of net finance receivables of Amoco Oil Company
($416 million) in September 1994 and First Collateral Services, Inc. ($61
million) in December 1994, as described in NOTE 3 to the consolidated
financial statements. The average revenue rates on aggregate net receivables
were 13.6% and 13.4% for the years ended December 31, 1994 and 1993,
respectively.
Insurance premiums increased $51.3 million (21%) as a result of increased
sales of insurance products, primarily in the credit life, credit accident and
health, and casualty insurance products.
Investment and other income increased $26.5 million (14%), primarily due
to an increase in fee-based financial services revenue (i.e. auto club fees,
broker fees, affiliate guarantee fees, etc.), and an increase in interest
income, primarily from investments in marketable securities due to a general
increase in market rates. In June 1994, the Company sold its investment in
mortgage servicing rights. The effect of this sale on future earnings of the
Company will not be significant. Fees from mortgage servicing have been
included as a component of investment and other income.
EXPENSES - Total expenses for the year ended December 31, 1994 increased
$563.5 million (19%), compared with the year ended December 31, 1993. The
components of the increase were as follows:
<PAGE>
Interest expense increased $217.7 million (16%). This change was
primarily caused by an increase in average outstanding debt, attributable to
higher net finance receivables outstanding. The annual average interest rates
on total debt, including amortization of discount and issuance expense, were
as follows:
For the Year Ended
December 31
1994 1993
Short-term Notes Payable 4.26% 3.11%
Long-term Debt 7.35 8.03
Total Debt 6.01 5.94
The net interest margin was 8.18% and 7.92% for the years ended December 31,
1994 and 1993, respectively. The increase was primarily due to the
aforementioned increase in average revenue rates.
Operating expenses increased $215.2 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 increased $101.4 million (21%), primarily
due to increased losses resulting from an increase in net finance receivables.
Net credit losses, measured as a percent of average net finance receivables,
were 1.62%, substantially unchanged from the prior year. The allowance for
losses increased $135.4 million (17%) to $944.3 million at December 31, 1994
from $808.9 million at December 31, 1993. The increase primarily relates to
the growth in net finance receivables. The allowance for losses, measured as
a percent of net finance receivables, was 3.03% at December 31, 1994 as
compared to 3.07% at December 31, 1993. The Company maintains an allowance
for losses on finance receivables at an amount which it believes is sufficient
to provide adequate protection against future losses in the portfolios. The
allowance is determined principally on the basis of historical loss
experience, and reflects management's judgment of additional loss potential
considering future economic conditions and the nature and characteristics of
the finance receivables.
Insurance benefits paid or provided increased $29.2 million (25%) in 1994,
primarily due to an increase in overall claims activity, and an increase in
the reserve for credit accident and health, and casualty insurance claims.
EARNINGS BEFORE PROVISION FOR INCOME TAXES - As a result of the
aforementioned changes, earnings before provision for income taxes increased
$136.2 million (18%) during 1994.
PROVISION FOR INCOME TAXES - The provision for income taxes represented
38.3% and 37.5% of earnings before provision for income taxes for the years
ended December 31, 1994 and 1993, respectively. The increase in the effective
tax rate is primarily related to an increase in state taxes as described in
NOTE 8 to the consolidated financial statements.
NET EARNINGS - As a result of the aforementioned changes, net earnings
increased $78.0 million (17%) during 1994.
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, 1994, $453.6 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, 1994, Associates tangible net worth was
approximately $3.4 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, 1994 and 1993, amounted to 1.0% and 1.5%, respectively,
of its aggregate gross receivables as of those dates.
At December 31, 1994, First Capital had contractually committed bank lines
of credit of $90.0 million, and revolving credit facilities of $250.0 million,
none of which was in use. During 1994, First Capital raised $321.4 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 1994 was 4.26%.
Associates issues intermediate-term debt publicly and privately in the
domestic and foreign markets. During the year ended December 31, 1994,
Associates raised $3.9 billion through public and private offerings at a
weighted average effective interest rate and a weighted average term of 7.13%
and 4.9 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, 1994, short-term bank lines and
revolving credit facilities with banks totaled $9.2 billion, none of which was
in use at that date. These facilities represented 76% of net short-term
borrowings outstanding at December 31, 1994. 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, 1994 and 1993, 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
The Financial Accounting Standards Board has issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" and SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan--Income Recognition and
Disclosures", both effective 1995. The American Institute of Certified Public
Accountants has issued Statement of Position 93-7, "Reporting on Advertising
Costs", which is effective in 1995. The 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 accompanying consolidated balance sheets of Associates
First Capital Corporation (an indirect subsidiary of Ford Motor Company) as
of December 31, 1994 and 1993, and the related consolidated statements of
earnings, changes in stockholder's equity, and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements 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, 1994 and 1993 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
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 L.L.P.
Dallas, Texas
January 27, 1995
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(In Millions)
Year Ended December 31
1994 1993 1992
REVENUE
Finance charges $3,898.2 $3,276.3 $2,960.3
Insurance premiums 293.5 242.2 209.9
Investment and other income 213.6 187.1 176.4
4,405.3 3,705.6 3,346.6
EXPENSES
Interest expense 1,558.2 1,340.5 1,281.4
Operating expenses 1,237.5 1,022.3 846.2
Provision for losses on finance
receivables - NOTE 4 577.5 476.1 512.6
Insurance benefits paid or provided 144.1 114.9 100.0
3,517.3 2,953.8 2,740.2
EARNINGS BEFORE PROVISION FOR INCOME
TAXES AND CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 888.0 751.8 606.4
PROVISION FOR INCOME TAXES - NOTE 8 339.9 281.7 213.2
EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 548.1 470.1 393.2
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES - NOTE 2 (10.4)
NET EARNINGS $ 548.1 $ 470.1 $ 382.8
See notes to consolidated financial statements.
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In Millions)
December 31
1994 1993
ASSETS
CASH AND CASH EQUIVALENTS $ 410.0 $ 290.3
INVESTMENTS IN MARKETABLE SECURITIES
- NOTE 16 605.1 633.7
FINANCE RECEIVABLES - NOTE 3
Consumer Finance 24,067.1 20,495.8
Commercial Finance 10,878.4 9,077.2
Total finance receivables 34,945.5 29,573.0
Less
Unearned finance income 3,769.5 3,208.2
Allowance for losses on finance
receivables - NOTE 4 944.3 808.9
30,231.7 25,555.9
OTHER ASSETS - NOTE 13 1,000.2 1,215.7
Total assets $32,247.0 $27,695.6
LIABILITIES AND STOCKHOLDER'S EQUITY
NOTES PAYABLE - NOTE 6
Commercial Paper $11,640.5 $ 9,735.8
Bank Loans 571.4 472.4
ACCOUNTS PAYABLE AND ACCRUALS 875.5 950.4
INSURANCE POLICY AND CLAIMS RESERVES 545.6 429.8
LONG-TERM DEBT - NOTES 7 and 9 15,654.1 13,600.8
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 1,104.4 904.4
Retained Earnings 1,826.1 1,551.0
Unrealized (Loss) Gain on Marketable
Securities - NOTES 2 and 16 (17.6) 4.0
Total stockholder's equity 2,959.9 2,506.4
Total liabilities and stockholder's
equity $32,247.0 $27,695.6
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 Total
Common Paid-in Retained Marketable Stockholder's
Stock Capital Earnings Securities Equity
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
Net Earnings 548.1 548.1
Contributions from
Parent - NOTE 14 200.0 200.0
Cash Dividends (273.0) (273.0)
Current Period
Adjustment (21.6) (21.6)
DECEMBER 31, 1994 $47.0 $1,104.4 $1,826.1 $(17.6) $2,959.9
See notes to consolidated financial statements.
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Millions)
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 548.1 $ 470.1 $ 382.8
Adjustments to net earnings for
noncash items:
Provision for losses on finance
receivables 577.5 476.1 512.6
Depreciation and amortization 151.9 214.5 105.6
Increase in insurance policy
and claims reserves 115.8 69.3 22.5
Increase in accounts payable
and accruals 33.1 195.0 28.4
Deferred income taxes (91.8) (75.9) (21.6)
Unrealized gain on trading
securities (1.6)
Purchases of trading securities (23.8)
Sales and maturities of trading
securities 17.4
Cumulative effect of changes in
accounting principles 10.4
Other (6.8) (5.0) (5.5)
Net cash provided from
operating activities 1,319.8 1,344.1 1,035.2
Cash Flows from Investing Activities
Finance receivables originated or
purchased (28,374.9) (21,344.1) (15,960.5)
Finance receivables liquidated 23,505.7 18,053.5 13,834.2
Proceeds from sale of investment
in mortgage servicing rights 97.1
Acquisitions of other finance
businesses, net (484.9) (293.0) (461.4)
Decrease (increase) in real estate
loans held for sale 51.9 0.8 (64.9)
Decrease (increase) on other assets 10.4 (79.9) 158.8
Purchases of securities available
for sale (274.1)
Sales and maturities of securities
available for sale 284.7
Purchases of marketable securities (639.6) (367.7)
Sales and maturities of marketable
securities 518.9 361.7
Net cash used for investing
activities (5,184.1) (3,783.4) (2,499.8)
Cash Flows from Financing Activities
Issuance of long-term debt 4,253.6 3,770.7 3,282.3
Increase in notes payable 2,003.7 820.9 592.0
Capital contributions 200.0 200.0
Cash dividends (273.0) (226.0) (190.0)
Retirement of long-term debt (2,200.3) (2,040.3) (2,219.2)
Net cash provided from
financing activities 3,984.0 2,525.3 1,465.1
Increase in cash and cash
equivalents 119.7 86.0 0.5
Cash and cash equivalents at
beginning of period 290.3 204.3 203.8
Cash and cash equivalents at end
of period $ 410.0 $ 290.3 $ 204.3
Cash paid for:
Interest $ 1,563.8 $ 1,338.3 $ 1,269.8
Income taxes $ 459.9 $ 371.7 $ 233.1
</TABLE>
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, 1994 and 1993,
net finance receivables on which revenue was not accrued approximated $424.0
million and $366.5 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 or losses on sales of debt securities are included in revenue when
realized. Unrealized gains or losses on debt securities are reported as a
component of stockholder's equity, net of tax. Realized and unrealized gains
or losses on equity securities are included in revenue as incurred. The cost
of debt and equity securities sold is determined by the specific
identification method.
ALLOWANCE FOR LOSSES ON FINANCE RECEIVABLES
The Company maintains an allowance for losses on finance receivables at an
amount which it believes is sufficient to provide adequate protection against
future losses in the portfolios. The allowance is determined principally on
the basis of historical loss experience, and reflects management's judgment
of additional loss potential considering future economic conditions and the
nature and characteristics of the finance receivables. 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 generally provides
for charge-off of various types of accounts on a contractual basis (described
below). Consumer direct and other installment and credit card receivables are
charged to the allowance for losses when they become 180 days 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 one year delinquent. A delinquent account is
one on which the customer has not made payments as contractually agreed.
Extensions are granted on receivables from customers with satisfactory credit
and with prior approval of management. Recoveries on losses previously
charged to the allowance are credited to the allowance at the time the
recovery is collected.
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.
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.
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 judgment. Changes in assumptions
could have a material impact on these estimates.
<PAGE>
DERIVATIVE FINANCIAL INSTRUMENTS
The Company does not hold or issue derivative financial instruments for
trading purposes. The Company's derivative activity is limited to currency
swap transactions designed to hedge its currency risk on specific foreign
currency-denominated loans to certain foreign affiliates denominated in
British Sterling, and one interest rate swap transaction assumed in 1993 as
a part of a business acquisition. Gains and losses on qualifying hedges are
deferred and are recognized in income or as adjustments of carrying amounts
when the hedged transaction occurs.
CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The adoption of this standard was not
significant to the Company's consolidated financial statements. See NOTE 16
to the consolidated financial statements for additional information.
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.
<PAGE>
NOTE 3 - FINANCE RECEIVABLES
COMPOSITION OF FINANCE RECEIVABLES
At December 31, 1994 and 1993, finance receivables consisted of the following
(in millions):
1994 1993
Consumer Finance
Residential real estate-secured
receivables $12,002.7 $10,626.0
Direct installment and credit card
receivables 7,200.4 6,060.2
Manufactured housing and other
installment receivables 4,864.0 3,809.6
24,067.1 20,495.8
Commercial Finance
Heavy-duty truck receivables 5,001.6 4,333.7
Other industrial equipment receivables 5,876.8 4,743.5
10,878.4 9,077.2
34,945.5 29,573.0
Unearned Finance Income (3,769.5) (3,208.2)
Net finance receivables $31,176.0 $26,364.8
The estimated maturities of gross finance receivables, at December 31, 1994,
during subsequent years were as follows (in millions):
Consumer Commercial
Year Due Finance Finance Total
1995 $ 3,842.8 $ 4,760.1 $ 8,602.9
1996 2,975.1 2,792.8 5,767.9
1997 2,539.0 1,873.0 4,412.0
1998 1,832.0 1,007.6 2,839.6
1999 and thereafter 12,878.2 444.9 13,323.1
$24,067.1 $10,878.4 $34,945.5
Estimated maturities are based on contractual terms and do not give effect to
possible prepayments.
Included in other industrial equipment receivables are direct financing leases
as follows (in millions):
December 31
1994 1993
Minimum lease rentals $2,291.4 $1,882.1
Unguaranteed residual values 52.4 26.4
Future minimum lease rentals 2,343.8 1,908.5
Unearned finance income (328.7) (256.2)
Allowance for losses on finance receivables (46.8) (42.0)
Net investment in direct financing leases $1,968.3 $1,610.3
<PAGE>
Future minimum lease rentals on direct financing leases for each of the years
succeeding December 31, 1994 are as follows (in millions): 1995 - $730.2; 1996
- - $617.2; 1997 - $476.2; 1998 - $328.0; 1999 - $144.7 and 2000 and thereafter
- - $47.5.
ESTIMATED FAIR VALUE OF NET FINANCE RECEIVABLES
The estimated fair value of net finance receivables at December 31, 1994 and
1993 was approximately $33.4 billion and $27.8 billion, respectively. 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, 1994, the finance receivables were dispersed among 50 states,
with four percent or more of the receivables in the states of California
(11%), Florida (6%), Texas (6%), Georgia (5%), North Carolina (5%),
Pennsylvania (4%), New York (4%), Ohio (4%), Illinois (4%) and Tennessee (4%).
The ten largest customer accounts at December 31, 1994, other than accounts
with affiliates, represented 0.9% of the total gross finance receivables
outstanding. The largest gross balance outstanding in such accounts was $54.4
million and the average gross balance was $30.5 million.
ACQUISITIONS OF FINANCE BUSINESSES AND FINANCE RECEIVABLES
During the years ended December 31, 1994, 1993 and 1992, the Company made
acquisitions of finance businesses and finance receivables, the most
significant of which were as follows:
In September 1994, Associates acquired the credit card portfolio and
certain other assets of Amoco Oil Company. The fair market value of
assets acquired totaled $426 million. The transaction was accounted for
as a purchase.
In December 1994, Associates acquired the assets of First Collateral
Services, Inc., principally consisting of warehouse loan facilities
extended to mortgage brokers secured by mortgage contracts. The fair
market value of total assets acquired and liabilities assumed was $62
million and $3 million, respectively. The transaction was accounted for
as a purchase.
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.
<PAGE>
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.
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
1994 1993 1992
Balance at beginning of period $ 808.9 $ 699.2 $ 590.9
Provision for losses 577.5 476.1 512.6
Recoveries on receivables
charged off 101.0 88.5 72.6
Losses sustained (565.3) (482.2) (497.3)
Other adjustments, primarily
reserves of acquired businesses 22.2 27.3 20.4
Balance at end of period $ 944.3 $ 808.9 $ 699.2
<PAGE>
NOTE 5 - BANK CREDIT FACILITIES
First Capital had contractually committed bank lines of credit of $90.0
million at December 31, 1994. Additionally, at December 31, 1994, Associates,
the principal operating subsidiary of First Capital, had contractually
committed lines of credit at 119 banks, aggregating $3.8 billion, with various
maturities through December 31, 1995, none of which was utilized at December
31, 1994. Also at December 31, 1994, Associates had agreements with 105 banks
extending revolving credit facilities of $4.4 billion, with maturity dates
ranging from February 1, 1995 through January 1, 2000, and $1.0 billion of
receivables purchase facilities, $500.0 million of which is available through
April 30, 1995 and $500.0 million of which is available through April 15,
1997; none of these facilities was utilized as of December 31, 1994. At
December 31, 1994, First Capital had revolving credit facilities of $250.0
million. The aggregate credit facilities available to Associates as of
December 31, 1994 were $9.2 billion with 146 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 1994, 1993 and 1992 approximated $11.0 million, $9.6 million and $6.8
million, respectively, and are .05% to .25% of 1% per annum of the amount of
the facilities. At December 31, 1994, 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
Ending balance at December 31, 1994 $11,640.5 $571.4
Weighted average interest rate at
December 31, 1994 5.88% 6.79%
Ending balance at December 31, 1993 $ 9,735.8 $472.4
Weighted average interest rate at
December 31, 1993 3.25% 3.84%
Ending balance at December 31, 1992 $ 8,453.6 $466.0
Weighted average interest rate at
December 31, 1992 3.35% 3.51%
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):
Interest
Rate
Range Maturities 1994 1993
Senior:
Notes 4.06-13.75% 1995-2010 $15,157.7 $13,007.5
Investment notes 4.15-10.50 1995-1999 354.6 351.4
15,512.3 13,358.9
Subordinated and Capital:
Subordinated 7.63- 8.15 1998-2009 141.2 241.2
Capital 4.68- 9.00 1995-2002 0.6 0.7
141.8 241.9
Total long-term debt $15,654.1 $13,600.8
The weighted average interest rate for total long-term debt was 7.24% at
December 31, 1994 and 7.54% at December 31, 1993.
The estimated fair value of long-term debt at December 31, 1994 and 1993 was
$15.1 billion and $14.5 billion, respectively. 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: 1995, $2,132.6 million;
1996, $2,772.1 million; 1997, $3,171.1 million; 1998, $1,820.7 million; 1999,
$2,161.0 million and 2000 and thereafter, $3,596.6 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, 1994, 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.
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, 1994
Current: $ 400.1 $31.5 $ 431.6
Deferred:
Leasing transactions 29.2 29.2
Finance revenue (5.7) (5.7)
Provision for losses on finance
receivables and other (115.2) (115.2)
$ 308.4 $31.5 $ 339.9
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
At December 31, 1994 and 1993, the components of the Company's net deferred
tax asset were as follows (in millions):
1994 1993
Deferred tax assets:
Provision for losses on finance
receivables and other $ 517.2 $ 368.8
Postretirement and other employee
benefits 74.0 68.1
591.2 436.9
Deferred tax liabilities:
Leasing transactions (175.1) (145.9)
Finance revenue and other (214.3) (192.6)
(389.4) (338.5)
Net deferred tax asset $ 201.8 $ 98.4
Due to the Company's earnings level, 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
1994 1993 1992
Statutory tax rate 35.0% 35.0% 34.0%
State tax rate 2.3 1.8 1.0
Other 1.0 0.7 0.2
Effective tax rate 38.3% 37.5% 35.2%
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, 1994, $453.6 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, 1994, Associates tangible net worth was
approximately $3.4 billion.
LIMITATION OF 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, 1994 and
1993, amounted to 1.0% and 1.5%, 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 initial term. Total rent expense for the years ended December
31, 1994, 1993 and 1992 was $48.7 million, $43.9 million, and $38.3 million,
respectively. Minimum rental commitments as of December 31, 1994 for all
noncancelable leases (primarily office leases) for the years ending December
31, 1995, 1996, 1997, 1998 and 1999 are $42.8 million, $34.8 million, $23.8
million, $16.2 million and $6.1 million, respectively, and $3.8 million
thereafter.
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
1994 1993 1992
Service cost $ 13.7 $ 10.0 $ 8.4
Interest cost 21.3 18.1 16.1
Actual return on Plan assets (0.4) (21.6) (10.0)
Net amortization (10.9) 7.4 (2.5)
Net periodic pension cost $ 23.7 $ 13.9 $ 12.0
Assumed discount rate, beginning of year 7.00% 8.00% 8.50%
The funded status of the Plan is as follows (in millions):
December 31
1994 1993
Qualified Nonqualified Qualified Nonqualified
Plan Plan Plan Plan
Actuarial present value
of benefit obligation:
Vested $187.6 $16.8 $197.9 $17.5
Nonvested 9.0 0.8 8.2 0.2
Accumulated benefit
obligation 196.6 17.6 206.1 17.7
Effect of projected
future salary
increases 50.4 6.2 62.4 4.0
Projected benefit
obligation 247.0 23.8 268.5 21.7
Plan assets at fair
market value 204.7 197.5
Excess of plan
obligation over plan
assets 42.3 23.8 71.0 21.7
Unamortized transition
obligation and
amendments (6.5) (4.3) (9.4) (0.7)
Unamortized net loss (13.3) (1.5) (42.5) (3.3)
Accrued pension
liability $ 22.5 $18.0 $ 19.1 $17.7
Assumed discount rate 8.25% 8.25% 7.00% 7.00%
Projected compensation
increases 6.00% 6.00% 6.00% 6.00%
Expected return 9.00% 9.00% 9.50% 9.50%
A determination of the Federal income tax status related to the qualified
Pension Plan has not been requested. An application is expected to be filed
in March 1995. If a favorable determination letter is not received, First
Capital has agreed to make any changes required to receive a favorable
determination letter.
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 ("IRS"). An application for determination is expected to be
filed with the IRS in March 1995. For the years ended December 31, 1994, 1993
and 1992, the Company's pretax contributions to the plan were $15.9 million,
$14.0 million and $12.1 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.
The amount paid for postretirement benefits for the years ended December 31,
1994, 1993 and 1992 was approximately $1.8 million, $1.5 million and $2.1
million, respectively.
Net periodic postretirement benefit cost for 1994 and 1993 includes the
following components (in millions)
December 31
1994 1993
Service cost $ 5.5 $ 4.2
Interest cost 6.3 6.3
Net amortization (1.0) (0.7)
Net periodic postretirement benefit cost $10.8 $ 9.8
Assumed discount rate, beginning of year 7.50% 8.50%
<PAGE>
Accrued postretirement benefit cost at December 31, 1994 and 1993 is composed
of the following (in millions):
December 31
1994 1993
Accumulated postretirement benefit
obligation ("APBO"):
Retired participants $33.9 $ 33.6
Fully eligible participants 18.6 21.1
Other active participants 29.5 30.7
Total APBO 82.0 85.4
Unamortized amendments 9.8 11.5
Unrecognized actuarial loss (2.7) (16.8)
Accrued postretirement benefit cost $89.1 $ 80.1
Assumed discount rate 8.75% 7.50%
For measurement purposes, a 12.10% and 12.50% weighted average annual rate of
increase in per capita cost of covered health care benefits was assumed for
1994 and 1993, respectively, decreasing gradually to 5.50% by the year 2009.
Increasing the assumed health care cost trend rate by one percentage point
each year would increase the APBO as of December 31, 1994 and 1993 by $6.0
million and $6.2 million, respectively, and the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost by
$0.9 million and $0.8 million, respectively.
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 consolidated
financial position or operations of First Capital.
NOTE 13 - OTHER ASSETS
The components of Other Assets at December 31, 1994 and 1993 were as follows
(in millions):
December 31
1994 1993
Balances with related parties - NOTE 14 $ 68.7 $ 170.4
Goodwill 362.0 382.2
Other 569.5 663.1
Total other assets $1,000.2 $1,215.7
NOTE 14 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
CAPITAL TRANSACTIONS
In both 1994 and 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, provides debt financing or advances to
certain of its former foreign subsidiaries. At December 31, 1994 and 1993,
amounts due from foreign affiliates totaled $68.7 million and $142.1 million,
respectively, and were included in Other Assets. These receivables or
advances bear fluctuating interest rates (as applicable) and are payable on
demand. Interest income related to these transactions was $14.4 million,
$21.3 million and $34.0 million for the years ended December 31, 1994, 1993
and 1992, respectively. The estimated fair value of these receivables was
$70.4 million and $150.2 million at December 31, 1994 and 1993, respectively.
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.
Services and usage are charged to the affiliates based on the nature of the
service. Fees for financial accommodations range from .25% to 1% of the
average outstanding debt guaranteed. Management believes such charges reflect
the market value for such services, usage and guarantees. The amounts paid
or accrued under these arrangements for the years ended December 31, 1994,
1993 and 1992 were $53.7 million, $40.1 million and $35.5 million,
respectively.
The Company provides certain auto club and relocation services to Ford.
Revenues related to these services were $19.4 million, $12.1 million and $6.7
million for the years ended December 31, 1994, 1993 and 1992, respectively.
At December 31, 1994 and 1993, the Company was a guarantor on debt and related
accrued interest of its foreign affiliates in Canada and Puerto Rico amounting
to $339.9 million and $256.7 million, respectively.
At December 31, 1994 and 1993, First Capital's current income taxes payable
to Holdings amounted to $30.4 million and $40.2 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.
Amounts under currency and interest rate swap contracts at December 31, 1994
were approximately $95.7 million. The Company is at market and interest rate
risk for any currency and/or interest rate differential should a counterparty
to these contracts fail to meet the terms of the contracts. At December 31,
1994, the Company estimates its exposure to loss resulting from currency
and/or interest rate differentials, in the event of nonperformance by certain
counterparties, was $0.2 million; the Company estimates its benefit resulting
from currency differentials in the event of nonperformance by certain
counterparties, was $0.9 million. The estimated fair value of amounts under
contract approximated $0.7 million. Such value was determined based on the
foreign currency exchange rates/interest rate for similar transactions in
effect at the balance sheet date. It is the Company's policy that each
counterparty's debt rating must be rated Aa3, AA- or better by at least two
nationally recognized rating agencies at the time any such contract is entered
into. The Company monitors such ratings on an ongoing basis.
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, 1994 and 1993
approximated $9.0 billion and $8.2 billion, respectively. 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, 1994 and 1993, the unused portion of these lines
aggregated approximately $455.2 million and $712.4 million, respectively. 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, 1994 and
1993, the unused portion of these lines aggregated approximately $849.7
million and $684.6 million, respectively. The potential risk associated with,
and the estimated fair value of, the unused credit lines are not considered
to be significant.
NOTE 16 - INVESTMENTS IN MARKETABLE SECURITIES
DEBT SECURITIES
The Company invests in debt securities, principally bonds and notes, with the
intention of holding them to maturity. However, if market conditions change,
the Company may sell these securities prior to maturity. Accordingly,
concurrent with the adoption of SFAS No. 115, the Company classified its
investments in debt securities as available for sale and adjusted its recorded
value to market. Prior to adoption of this standard, the Company carried
these investments at amortized cost. The estimated market value at December
31, 1994 and 1993 was $563.2 million and $612.0 million, respectively.
Amortized cost at December 31, 1994 and 1993 was $590.3 million and $598.7
million, respectively. During 1994, realized gains and losses on sales
amounted to $2.1 million and $0.3 million, respectively. Unrealized gains or
losses are reported as a component of stockholder's equity, net of tax. The
following table sets forth, by type of security issuer, the amortized cost,
gross unrealized holding gains, gross unrealized holding losses, and estimated
market value at December 31, 1994 (in millions):
Gross Gross
Unrealized Unrealized Estimated
Amortized Holding Holding Market
Cost Gains Losses Value
U.S. Government obligations $422.4 $0.7 $(25.2) $397.9
Corporate obligations 66.8 0.2 (0.5) 66.5
Mortgage-backed 96.3 (2.3) 94.0
Other 4.8 4.8
Total debt securities $590.3 $0.9 $(28.0) $563.2
<PAGE>
The amortized cost and estimated market value of debt securities at December
31, 1994, by contractual maturity, are shown below (in millions):
Estimated
Amortized Market
Cost Value
Due in one year or less $ 93.2 $ 92.1
Due after one year through five years 384.3 369.6
Due after five years through ten years 110.8 99.6
Due after ten years 2.0 1.9
$590.3 $563.2
EQUITY SECURITIES
Equity security investments, principally common stock held by the Company's
insurance subsidiaries, are recorded at market value. Concurrent with the
adoption of SFAS No. 115, the Company classified its investments in equity
securities as trading securities and included in earnings unrealized gains or
losses on such securities. Prior to adoption, unrealized gains or losses were
reported as a component of stockholder's equity, net of tax. The estimated
market value at December 31, 1994 and 1993 was $41.9 million and $35.0
million, respectively. Historical cost at December 31, 1994 and 1993 was
$38.9 million and $28.9 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, credit accident and health, property and
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> <C>
Year Ended or at December 31, 1994
Revenue other than intersegment $ 2,949.2 $ 1,134.2 $ 338.4 $ 16.2 $ (32.7) $ 4,405.3
Intersegment (a) 131.3 22.0 (153.3)
Total revenue $ 3,080.5 $ 1,156.2 $ 338.4 $ 16.2 $(186.0) $ 4,405.3
Operating income (b) $ 675.0 $ 307.5 $(94.5) $ 888.0
Total assets $19,576.1 $11,554.6 $1,030.3 $ 86.0 $32,247.0
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
<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.
</TABLE>
Capital expenditures and depreciation and amortization expense are not
significant.
<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, 1994, 1993 and 1992 were
as follows (in millions):
CONDENSED STATEMENT OF EARNINGS
Year Ended December 31
1994 1993 1992
Revenue
Interest and other income $ 8.7 $ 6.7 $ 6.1
Dividends from subsidiaries 270.5 242.7 191.6
279.2 249.4 197.7
Expenses
Interest expense 54.8 51.1 56.5
Operating expenses 16.2 15.3 15.2
71.0 66.4 71.7
Income before credit for Federal income
taxes and equity in net earnings of
subsidiaries 208.2 183.0 126.0
Credit for Federal income taxes resulting
from tax agreements with subsidiaries 21.7 21.2 21.7
Earnings before equity in undistributed
earnings of subsidiaries 229.9 204.2 147.4
Equity in undistributed earnings of
subsidiaries 318.2 265.9 235.1
Net earnings $548.1 $470.1 $382.8
See notes to condensed financial information.
<PAGE>
CONDENSED BALANCE SHEET
December 31
1994 1993
Assets
Investment in and advances to subsidiaries,
eliminated in consolidation, and other $3,829.4 $3,198.9
Total assets $3,829.4 $3,198.9
Liabilities and Stockholder's Equity
Accounts payable and accruals $ 33.0 $ 19.9
Notes payable and long-term debt (2) 836.5 672.7
Stockholder's equity (1) 2,959.9 2,506.3
Total liabilities and stockholder's equity $3,829.4 $3,198.9
The estimated fair value of notes payable and long-term debt at December 31,
1994 and 1993 was $829.4 million and $685.3 million, respectively. 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
1994 1993 1992
Cash Flows from Operating Activities
Net earnings $ 548.1 $ 470.1 $ 382.8
Adjustments to net earnings for noncash items:
Amortization and depreciation 0.1 0.1 0.1
Increase (decrease) in accounts payable and
accruals 13.1 (6.5) (13.7)
Equity in undistributed earnings of
subsidiaries (318.2) (265.9) (235.1)
Other (20.9) (0.6) 1.0
Net cash provided from operating activities 222.2 197.2 135.1
Cash Flows from Investing Activities
Cash dividends from subsidiaries (1) 270.5 242.7 191.6
Increase in investments in and advances to
subsidiaries (583.7) (402.7) (151.7)
Net cash (used for) provided from investing
activities (313.2) (160.0) 39.9
Cash Flows from Financing Activities
Increase in notes payable and long-term
debt (2) 352.7 231.6 241.8
Capital contribution from parent 200.0 200.0
Cash dividends paid (273.0) (226.0) (190.0)
Retirement of long-term debt (188.9) (244.2) (228.4)
Net cash provided from (used for)
financing activities 90.8 (38.6) (176.6)
Decrease in cash and cash equivalents (0.2) (1.4) (1.6)
Cash and cash equivalents at beginning of period (0.9) 0.5 2.1
Cash and cash equivalents at end of period $ (1.1) $ (0.9) $ 0.5
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 4.15% to
13.75%. The estimated maturities of the notes outstanding, at December
31, 1994, during subsequent years were as follows (in millions):
1995 $351.1
1996 220.2
1997 151.0
1998 73.9
1999 40.3
$836.5
<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 STATEMENTS AND REPORTS ON FORM 8-K.
(a) Financial Statements Page
Report of Independent Accountants 15
Consolidated Statement of Earnings for the years
ended December 31, 1994, 1993 and 1992 16
Consolidated Balance Sheet at December 31, 1994
and 1993 17
Consolidated Statement of Changes in Stockholder's
Equity for the years ended December 31, 1994,
1993 and 1992 18
Consolidated Statement of Cash Flows for the years
ended December 31, 1994, 1993 and 1992 19
Notes to consolidated financial statements 20
(b) Reports on Form 8-K.
During the quarter ended December 31, 1994, 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.
(21) Subsidiaries of the registrant. Omitted in accordance with
General Instruction J.(2)(b) to Form 10-K.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27) Financial Data Schedule.
<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 21, 1995
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
KEITH W. HUGHES* Chairman of the Board,
(Keith W. Hughes) Principal Executive Officer
and Director
JAMES E. JACK* Senior Executive Vice President,
(James E. Jack) Principal Financial Officer
and Director
ROY A. GUTHRIE* Senior Vice President, March 21, 1995
(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>
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 its request.
(12) Computation of Ratio of Earnings to Fixed Charges.
(21) Subsidiaries of the registrant. Omitted in
accordance with General Instruction J.(2)(b) to Form
10-K.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27) Financial Data Schedule.
<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
1994 1993 1992 1991 1990
Fixed Charges (a)
Interest expense $1,558.2 $1,340.5 $1,281.4 $1,347.8 $1,217.3
Implicit interest in
rent 8.3 8.0 7.8 7.4 7.9
Total fixed charges $1,566.5 $1,348.5 $1,289.2 $1,355.2 $1,225.2
Earnings (b) $ 888.0 $ 751.8 $ 606.4 $ 540.4 $ 448.0
Fixed charges 1,566.5 1,348.5 1,289.2 1,355.2 1,225.2
Earnings, as defined $2,454.5 $2,100.3 $1,895.6 $1,895.6 $1,673.2
Ratio of Earnings to
Fixed Charges 1.57 1.56 1.47 1.40 1.37
(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. Prior year implicit interest amounts
have been restated to conform to current calculation methodology.
(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 23
<PAGE>
EXHIBIT 23
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 January 27, 1995, on our audits of the consolidated financial
statements of Associates First Capital Corporation as of December 31, 1994 and
1993, and for the years ended December 31, 1994, 1993, and 1992, which report
is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
March 21, 1995
<PAGE>
EXHIBIT 24
<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 AND CHESTER D. LONGENECKER, 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,
1994, 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 AND CHESTER
D. LONGENECKER, 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 AND CHESTER D. LONGENECKER, 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 10th day of
February, 1995.
SIGNATURE:/s/ Keith W. Hughes
Keith W. Hughes
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, 1994, 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 13th day of
January, 1995.
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, 1994, 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 13th day of
January, 1995.
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, 1994, 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 13th day of
January, 1995.
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, 1994, 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 13th day of
January, 1995.
SIGNATURE:/s/ Roy A. Guthrie
Roy A. Guthrie
OFFICE: Senior Vice President, Comptroller
and Principal Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> 0 MEANS NOT APPLICABLE OR NOT SEPARATELY DISCLOSED.
This schedule contains summary financial information
extracted from the Company's audited consolidated
financial statements as of December 31, 1994 and the
year then ended and is qualified in its entirety by
reference to such consolidated financial statements.
</LEGEND>
<CIK> 0000007974
<NAME> ASSOCIATES FIRST CAPITAL CORPORATION
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 410
<SECURITIES> 605
<RECEIVABLES> 31,176
<ALLOWANCES> 944
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,247
<CURRENT-LIABILITIES> 0
<BONDS> 27,866
<COMMON> 47
0
0
<OTHER-SE> 2,913
<TOTAL-LIABILITY-AND-EQUITY> 32,247
<SALES> 4,405
<TOTAL-REVENUES> 4,405
<CGS> 0
<TOTAL-COSTS> 3,517
<OTHER-EXPENSES> 1,382
<LOSS-PROVISION> 577
<INTEREST-EXPENSE> 1,558
<INCOME-PRETAX> 888
<INCOME-TAX> 340
<INCOME-CONTINUING> 548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 548
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
