<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event) October 15, 1996
ASSOCIATES FIRST CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-0876639
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
2-44197
(Commission File Number)
250 E. Carpenter Freeway, Irving, Texas 75062-2729
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 541-4000
<PAGE>
Item 5. Other Events.
Associates First Capital Corporation announced its third quarter
earnings in a news release dated October 15, 1996. A copy of the news
release is attached as an Exhibit hereto and incorporated by
reference herein.
Item 7. Financial Statements and Exhibits
(C) Exhibits
20 - News release by Associates First Capital Corporation
dated October 15, 1996 with supporting financial schedules.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSOCIATES FIRST CAPITAL CORPORATION
By: /s/C. D. Longenecker
C. D. Longenecker
Executive Vice President
Date: October 15, 1996<PAGE>
<PAGE>
Contact: Fred Stern FOR IMMEDIATE RELEASE
(972) 541-4522
[email protected]
ASSOCIATES FIRST CAPITAL CORPORATION
REPORTS BEST QUARTER EVER
DALLAS, October 15, 1996 -- Associates First Capital Corporation
reported its best quarter ever and achieved record earnings for the three
months ended September 30, 1996, Keith W. Hughes, chairman and chief executive
officer, announced today. Net earnings for the third quarter increased 17% to
$230.2 million, or $0.66 per share. This compares with $197.6 million and
$0.57 per share a year ago. Earnings before provision for income taxes
increased 16% to $381.3 million for the period, compared with $327.6 million
for the prior year.
Net earnings for the first nine months of 1996 were $622.7 million
($1.79 per share), an 18% increase over the $528.3 million ($1.52 per share)
for the prior year. Earnings before provision for income taxes were $1.0
billion, a 17% gain over the $873.5 million a year ago.
"We continue to build our customer base through strategic
acquisitions in new and existing markets, expansion of our delivery system and
the development of new products and services in our core business lines," said
Mr. Hughes. "This growth, along with improved margins, more than offset
increased losses in the third quarter. In addition, our efficiency ratio
continues to be among the best in the industry."
Total assets at September 30, 1996, were $47.6 billion, a record
high. Total revenue for the third quarter increased 18% to $1.8 billion,
compared with $1.6 billion for the same period last year. Total revenue for
the nine months increased 16% to $5.2 billion, compared with $4.5 billion in
1995. Net finance receivables outstanding at September 30, 1996, were $46.0
billion, compared with $38.3 billion last year, a 20% increase.
Consumer branch operations reported growth in residential real
estate-secured and personal loan portfolios. The company completed the
acquisition of certain consumer financial assets of Fleet Financial Group,
which added $1.2 billion in receivables and 77 offices to the consumer branch
network.
Credit card operations continued to expand through strategic
marketing alliances and acquisitions. In September, an expanded 10-year
agreement was reached with GTE to continue to provide co-branded credit card
services to their customers worldwide. The Associates and GTE have had a
credit card co-brand agreement since 1992.
Commercial operations were led by the financing of heavy-duty
trucks and trailers, industrial equipment and manufactured housing. In July,
the company completed the acquisition of US Fleet Services, a motor vehicle
fleet leasing and management services business. The addition of approximately
$700 million in receivables makes The Associates the third-largest commercial
fleet business in the country. In addition, the acquisition of Teletech
Financial Services, based in Montreal, was completed in September, expanding
the company's lending capabilities to the telecommunications industry.
International operations were paced by continued strength in
consumer lending in Japan. The company also expanded the number of lending
offices in the United Kingdom, Canada and Mexico.
During the quarter, the company securitized approximately $1.1
billion of manufactured housing and recreational vehicle finance receivables.
The securitization markets offer the company a new flexible funding mechanism.
In addition, the company sold $2.2 billion in public underwritten notes and
$186.7 million in medium term notes, the proceeds of which were used to reduce
commercial paper borrowings.
Consumer finance net receivables outstanding were $31.5 billion at
September 30, 1996, up 17% from the $26.9 billion reported last year.
Consumer finance receivables consist of residential real estate-secured
receivables, personal loans, sales financing of manufactured housing and
consumer durable goods, and credit card receivables.
Commercial finance net receivables outstanding were $14.5 billion
at September 30, 1996, up 27% from the $11.4 billion reported a year ago.
Commercial finance receivables result from the sales financing and leasing of
transportation, construction, communications and industrial equipment. The
company is also a significant provider of automobile club services and
mortgage and residential real estate services for corporations and their
employees.
Revenue from insurance premiums for the nine months was $297.6
million, a 7% increase over the $279.3 million reported last year. The
insurance operating group is principally engaged in underwriting credit life,
credit accident and health, and property and casualty insurance for customers
of the company's finance operations.
Associates First Capital Corporation (NYSE: AFS) is a leading
diversified finance company providing consumer and commercial finance, leasing
and related services through more than 2,100 offices in the U.S. and
internationally. Based in Dallas, it is an indirect, majority-owned
subsidiary of Ford Motor Company.
(TABLE FOLLOWS)
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
===============================================================================================
Three Months Ended or at Change from Prior Year
($ millions - except
earnings per share) 09/30/96 09/30/95 Amount Percent
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings before provision
for income taxes $ 381.3 $ 327.6 $ 53.7 16 %
Net earnings
Amount 230.2 197.6 32.6 17
Return on equity 17.77 % 16.96 %
Return on adjusted equity <F1> 21.64 22.48
Return on assets 1.99 2.00
Net earnings per share 0.66 0.57 0.09 16
Stockholders' equity 5,254.7 4,489.4 765.3 17
Net finance receivables
Consumer finance $ 31,534.7 $ 26,880.7 $ 4,654.0 17
Commercial finance 14,490.4 11,421.3 3,069.1 27
----------- ----------- ----------
Total net finance receivables $ 46,025.1 $ 38,302.0 $ 7,723.1 20
=========== =========== ==========
Total assets $ 47,550.6 $ 39,956.4 $ 7,594.2 19
Total revenue 1,843.6 1,565.6 278.0 18
Net interest margin (as a % of
avg net receivables) 9.31 % 9.22 % 0.09 pts.
Efficiency ratio 44.4 % 44.6 % (0.2)pts.
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended or at Change from Prior
09/30/96 06/30/96 Quarter Year
----------------------------------------------------------
Credit Quality
<S> <C> <C> <C> <C>
60+Days contractual 2.05 % 1.80 % 0.25pts. 0.44pts.
Credit losses (as a % of avg
net finance receivables) 2.16 % 1.95 % 0.21pts. 0.38pts.
Allowance for losses on finance
receivables
Amount $ 1,535.1 $ 1,469.0 $ 66.1 $ 315.0
Percent of net finance
receivables 3.34 % 3.37 % (0.03)pts. 0.15pts
<FN>
<F1> Excludes push-down goodwill created by Ford's acquisition of foreign affiliates in 1989.
</FN>
/TABLE
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Statement of Earnings Page 1
=========================================================================================
Three Months Ended Change from Prior Year
Consolidated ($ millions) 09/30/96 06/30/96 09/30/95 Amount Percent
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 1,680.7 $ 1,567.6 $ 1,426.6 $ 254.1 17.8 %
Insurance premiums 104.0 100.5 91.9 12.1 13.2
Investment and other income 58.9 48.9 47.1 11.8 24.9
- -----------------------------------------------------------------------------------------
1, 843.6 1,717.0 1,565.6 278.0 17.8
Expenses
Interest expense 637.7 593.5 557.5 80.2 14.4
Operating expenses 518.5 483.2 433.6 84.9 19.6
Provision for losses on
finance receivables 267.4 275.7 210.8 56.6 26.8
Insurance benefits paid or
provided 38.7 37.0 36.1 2.6 6.9
- -----------------------------------------------------------------------------------------
1,462.3 1,389.4 1,238.0 224.3 18.1
- -----------------------------------------------------------------------------------------
Earnings before provision
for income taxes 381.3 327.6 327.6 53.7 16.4
Provision for income taxes 151.1 127.4 130.0 21.1 16.2
- -----------------------------------------------------------------------------------------
Net earnings $ 230.2 $ 200.2 $ 197.6 $ 32.6 16.5 %
=========================================================================================
Net earnings per share $ 0.66 $ 0.58 $ 0.57 $ 0.09 15.8 %
Equivalent Shares for
EPS calculation 347,189 346,654 346,654 535 0.2
Consolidated (% of average net receivables)
Revenue
Finance charges 15.00 % 14.81 % 15.13 %
Insurance premiums 0.93 0.95 0.97
Investment and other income 0.53 0.46 0.50
- -----------------------------------------------------------------------------------------
16.46 16.22 16.60
Expenses
Interest expense 5.69 5.61 5.91
Operating expenses 4.63 4.57 4.60
Provision for losses on
finance receivables 2.39 2.60 2.24
Insurance benefits paid or
provided 0.35 0.35 0.38
- -----------------------------------------------------------------------------------------
13.06 13.13 13.13
- -----------------------------------------------------------------------------------------
Earnings before provision
for income taxes 3.40 3.09 3.47
Provision for income taxes 1.35 1.20 1.38
- ------------------------------------------------------------------------------------------
Net earnings 2.05 % 1.89 % 2.09 %
==========================================================================================
Memo:
Net interest margin<F1> 9.31 % 9.28 % 9.22 %
Efficiency ratio 44.4 44.5 44.6
<FN>
<F1> The second quarter of 1996 excludes one-time charges related to the company's
initial public offering of 8 bpts.
</FN>
/TABLE
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Receivables/Balance Sheet Items Page 2
=========================================================================================
Three Months Ended Change from Prior Year
Receivables ($ millions) 09/30/96 06/30/96 09/30/95 Amount Percent
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer
Home equity lending $ 16,743.2 $ 15,145.5 $ 14,103.3 $ 2,639.9 18.7 %
Personal lending and retail
sales finance 7,324.7 6,765.1 6,029.0 1,295.7 21.6
Credit card 5,970.6 5,979.5 4,800.6 1,170.0 24.4
Manufactured housing 1,496.2 2,275.7 1,947.8 (451.6) (23.2)
- -----------------------------------------------------------------------------------------
Total Consumer 31,534.7 30,165.8 26,880.7 4,654.0 17.3
Commercial
Truck and truck trailer 8,449.2 8,241.4 7,431.0 1,018.2 13.7
Equipment 4,434.6 4,207.9 3,641.1 793.5 21.8
Other 1,606.6 974.4 349.2 1,257.4 360.1
- -----------------------------------------------------------------------------------------
Total Commercial 14,490.4 13,423.7 11,421.3 3,069.1 26.9
- -----------------------------------------------------------------------------------------
Total net finance
receivables $ 46,025.1 $ 43,589.5 $ 38,302.0 $ 7,723.1 20.2 %
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Receivables (% of portfolio)
- -----------------------------------------------------------------------------------------
Consumer
<S> <C> <C> <C>
Home equity lending 36.3 % 34.8 % 36.8 %
Personal lending and retail
sales finance 15.9 15.5 15.8
Credit card 13.0 13.7 12.5
Manufactured housing 3.3 5.2 5.1
- -----------------------------------------------------------------------------------------
Total Consumer 68.5 69.2 70.2
Commercial
Truck and truck trailer 18.4 18.9 19.4
Equipment 9.6 9.7 9.5
Other 3.5 2.2 0.9
- ------------------------------------------------------------------------------------------
Total Commercial 31.5 30.8 29.8
==========================================================================================
Total net finance
receivables 100.0 % 100.0 % 100.0 %
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Items
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net receivables $ 46,025.1 $ 43,589.5 $ 38,302.0 $ 7,723.1 20.2 %
Total assets 47,550.6 45,116.4 39,956.4 7,594.2 19.0
Debt 40,790.0 38,615.8 34,043.0 6,747.0 19.8
Stockholders' equity 5,254.7 5,106.9 4,489.4 765.3 17.0
Debt-to-equity 7.75 x 7.52 x 7.56 x
Debt-to-adjusted equity <F1> 9.27 9.07 9.63
<FN>
<F1> Excludes push-down goodwill created by Ford's acquisition of foreign affiliates in 1989.
</FN>
</TABLE>
ASSOCIATES FIRST CAPITAL CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Credit Quality/Credit Loss Reserves Page 3
=========================================================================================
Three Months Ended or at
60+ Days Contractual Delinquency ($ millions) 09/30/96 06/30/96 09/30/95
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer
Home equity lending 1.95 % 1.82 % 1.78 %
Personal lending and retail sales finance 3.05 2.84 2.73
Credit card 4.18 3.40 3.05
Manufactured housing 1.24 0.74 0.66
Total Consumer 2.58 2.25 2.09
Commercial
Truck and truck trailer 1.17 0.93 0.47
Equipment 0.76 0.71 0.52
Total Commercial 0.93 0.80 0.48
Total 2.05 % 1.80 % 1.61 %
Net Credit Losses to ANR
- -----------------------------------------------------------------------------------------
Consumer
Home equity lending 0.89 % 0.97 % 1.11 %
Personal lending and retail 5.15 4.14 4.00
Credit card 6.65 6.08 5.26
Manufactured housing 1.09 0.87 0.75
Total Consumer 2.99 2.67 2.47
Commercial
Truck and truck trailer 0.35 0.29 0.12
Equipment 0.42 0.43 0.18
Total Commercial 0.33 0.32 0.16
Total 2.16 % 1.95 % 1.78 %
Credit Loss Reserves
- -----------------------------------------------------------------------------------------
Allowance for losses:
Balance at end of period $ 1,535.1 $ 1,469.0 $ 1,220.1
To net finance receivables 3.34 % 3.37 % 3.19 %
Multiple to net credit losses(YTD) 1.84 1.92 2.02
</TABLE>
