<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) July 16, 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 (214) 541-4000
<PAGE>
Item 5. Other Events.
Associates First Capital Corporation announced its second quarter
earnings in a news release dated July 16, 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 July 16, 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: July 16, 1996<PAGE>
<PAGE>
RECORD SECOND QUARTER EARNINGS REPORTED BY
ASSOCIATES FIRST CAPITAL CORPORATION
DALLAS, July 16, 1996 -- Associates First Capital Corporation
(NYSE: AFS) today reported record net earnings for the second quarter of
1996. Net earnings for the three-month period ended June 30, 1996, increased
23% to $200.2 million, or $0.58 per share. This compares with $162.4 million
and $0.47 per share a year ago.
Keith W. Hughes, chairman and chief executive officer, said: "We
continued to experience strong finance receivables growth in our diversified
portfolio from both internal sources and acquisitions. We completed the
quarter with more than $45 billion in assets, the most in our history. Our
record earnings reflect this higher level of earning assets, which along with
an improvement in operating efficiency, more than offset an increase in net
credit losses. Although credit losses in the industry have trended higher, we
continue to maintain a strong balance sheet and a reserve position that
recognizes our growth and historic loss experience."
The Associates reported net finance receivables outstandings of
$43.6 billion at June 30, a 17% increase over the $37.1 billion in the prior
year. The company said it grew $2.5 billion in the second quarter, with
approximately 40% of the growth due to major acquisitions in the credit card
and commercial finance portfolios. In addition, the company has previously
announced acquisitions of nearly $2 billion in the consumer branch system and
commercial finance portfolios that will close in the third quarter.
Consumer net receivables outstanding were $30.2 billion at June 30,
up 16% from the $26.0 billion reported last year. Commercial net receivables
outstanding were $13.4 billion at June 30, up 21% from the $11.1 billion for
the same period a year ago. The company's diversified receivables portfolio
primarily consists of home equity loans, personal loans, retail sales finance
contracts, credit cards and specialized financing for trucks, equipment and
manufactured housing.
Total revenue for the second quarter increased 13% to $1.7 billion,
compared with $1.5 billion for the same period last year. Net interest margin
for the quarter was 9.28%, excluding the one-time charges related to the
company's initial public offering in May. In the comparative quarter in 1995,
net interest margin was 9.25%. The company's efficiency ratio, operating
expenses as a percentage of gross margin, improved to 44.5% from 49.8% a year
ago.
Loans delinquent 60-days-or-more increased to 1.80% at June 30
compared to 1.78% for the first quarter of 1996 and 1.40% a year ago. The
increase in delinquency is reflective of the generally less favorable trends
in economic conditions that have affected most lenders. Losses were 1.95% of
average net receivables for the second quarter compared to 1.74% in the first
quarter and 1.54% a year ago. The company increased its allowance for losses
to 3.37% of net receivables, compared to 3.33% in the first quarter and 3.21%
a year ago.
Associates First Capital Corporation is the nation's largest
publicly-traded finance company and provides consumer and commercial finance,
leasing and related services through more than 2,000 offices in the U.S. and
internationally. Based in Dallas, it has assets of $45.1 billion. The
Associates is a majority-owned subsidiary of Ford Motor Company and part of
Ford's Financial Services Group.
(Table follows)
<PAGE>
ASSOCIATES FIRST CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
===============================================================================================
Three Months Ended or at Change from Prior Year
($ millions - except
earnings per share) 06/30/96 06/30/95 Amount Percent
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings before provision
for income taxes $ 327.6 $ 272.1 $ 55.5 20 %
Net earnings
Amount 200.2 162.4 37.8 23
Return on equity 19.55 % 13.64 %
Return on adjusted equity <F1> 25.45 18.49
Return on assets 1.83 1.71
Net earnings per share 0.58 0.47 0.11 23
Stockholders' equity 5,106.9 4,829.9 277.0 6
Net finance receivables
Consumer finance $ 30,165.8 $ 26,047.2 $ 4,118.6 16
Commercial finance 13,423.7 11,087.9 2,335.8 21
----------- ----------- ----------
Total net finance receivables $ 43,589.5 $ 37,135.1 $ 6,454.4 17
=========== =========== ==========
Total assets $ 45,116.4 $38,913.4 $ 6,203.0 16
Total revenue 1,717.0 1,514.7 202.3 13
Net interest margin (as a % of
avg net receivables)<F2> 9.28 % 9.25 % 0.03 pts.
Efficiency ratio 44.5 % 49.8 % (5.3)pts.
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended or at Change from Prior
06/30/96 03/31/96 Quarter Year
----------------------------------------------------------
Credit Quality
<S> <C> <C> <C> <C>
60+Days contractual
delinquency 1.80 % 1.78 % 0.02pts. 0.40pts.
Credit losses (as a % of avg
net finance receivables) 1.95 % 1.74 % 0.21pts. 0.41pts.
Allowance for losses on finance
receivables
Amount $ 1,469.0 $ 1,368.8 $ 100.2 $ 276.7
Percent of net finance
receivables 3.37 % 3.33 % 0.04pts. 0.16pts
<FN>
<F1> Excludes push-down goodwill created by Ford's acquisition of foreign affiliates in 1989.
<F2> The first and second quarters of 1996 exclude one-time charges related to the company's
initial public offering of 14 bpts and 8 bpts, respectively.
</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) 06/30/96 03/31/96 06/30/95 Amount Percent
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 1,567.6 $ 1,505.0 $ 1,377.9 $ 189.7 13.8 %
Insurance premiums 100.5 93.1 94.9 5.6 5.9
Investment and other income 48.9 46.9 41.9 7.0 16.7
- -----------------------------------------------------------------------------------------
1,717.0 1,645.0 1,514.7 202.3 13.4
Expenses
Interest expense 593.5 580.5 540.3 53.2 9.8
Operating expenses 483.2 461.2 469.8 13.4 2.9
Provision for losses on
finance receivables 275.7 252.3 201.7 74.0 36.7
Insurance benefits paid or
provided 37.0 34.2 30.8 6.2 20.1
- -----------------------------------------------------------------------------------------
1,389.4 1,328.2 1,242.6 146.8 11.8
- -----------------------------------------------------------------------------------------
Earnings before provision
for income taxes 327.6 316.8 272.1 55.5 20.4
Provision for income taxes 127.4 124.5 109.7 17.7 16.1
- -----------------------------------------------------------------------------------------
Net earnings $ 200.2 $ 192.3 $ 162.4 $ 37.8 23.3 %
=========================================================================================
Net earnings per share $ 0.58 $ 0.55 $ 0.47 $ 0.11 23.4 %
Consolidated (% of average net receivables)
Revenue
Finance charges 14.81 % 14.91 % 15.21 %
Insurance premiums 0.95 0.92 1.05
Investment and other income 0.46 0.46 0.46
- -----------------------------------------------------------------------------------------
16.22 16.29 16.72
Expenses
Interest expense 5.61 5.75 5.96
Operating expenses 4.57 4.57 5.19
Provision for losses on
finance receivables 2.60 2.50 2.23
Insurance benefits paid or
provided 0.35 0.33 0.34
- -----------------------------------------------------------------------------------------
13.13 13.15 13.72
- -----------------------------------------------------------------------------------------
Earnings before provision
for income taxes 3.09 3.14 3.00
Provision for income taxes 1.20 1.23 1.21
- ------------------------------------------------------------------------------------------
Net earnings 1.89 % 1.91 % 1.79 %
==========================================================================================
Memo:
Net interest margin<F1> 9.28 % 9.30 % 9.25 %
Efficiency ratio 44.5 44.8 49.8
<FN>
<F1> The first and second quarters of 1996 exclude one-time charges related to the company's
initial public offering of 14 bpts and 8 bpts, respectively.
</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) 06/30/96 03/31/96 06/30/95 Amount Percent
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer
Home equity lending $ 15,145.5 $ 14,591.9 $ 13,736.0 $ 1,409.5 10.3 %
Personal lending and retail
sales finance 6,765.1 6,455.6 6,042.4 722.7 12.0
Credit card 5,979.5 5,399.7 4,402.2 1,577.3 35.8
Manufactured housing 2,275.7 2,148.6 1,866.6 409.1 21.9
- -----------------------------------------------------------------------------------------
Total Consumer 30,165.8 28,595.8 26,047.2 4,118.6 15.8
Commercial
Truck and truck trailer 8,241.4 7,910.2 7,238.7 1,002.7 13.9
Equipment 4,207.9 4,174.2 3,502.1 705.8 20.2
Other 974.4 390.9 347.1 627.3 180.7
- -----------------------------------------------------------------------------------------
Total Commercial 13,423.7 12,475.3 11,087.9 2,335.8 21.1
- -----------------------------------------------------------------------------------------
Total net finance
receivables $ 43,589.5 $ 41,071.1 $ 37,135.1 $ 6,454.4 17.4 %
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Receivables (% of portfolio)
- -----------------------------------------------------------------------------------------
Consumer
<S> <C> <C> <C>
Home equity lending 34.8 % 35.5 % 37.0 %
Personal lending and retail
sales finance 15.5 15.7 16.3
Credit card 13.7 13.2 11.8
Manufactured housing 5.2 5.2 5.0
- -----------------------------------------------------------------------------------------
Total Consumer 69.2 69.6 70.1
Commercial
Truck and truck trailer 18.9 19.2 19.5
Equipment 9.7 10.2 9.5
Other 2.2 1.0 0.9
- ------------------------------------------------------------------------------------------
Total Commercial 30.8 30.4 29.9
==========================================================================================
Total net finance
receivables 100.0 % 100.0 % 100.0 %
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Items
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net receivables $ 43,589.5 $ 41,071.1 $ 37,135.1 $ 6,454.4 17.4 %
Total assets 45,116.4 42,525.1 38,913.4 6,203.0 15.9
Debt 38,615.8 37,919.5 32,825.9 5,789.9 17.6
Stockholders' equity 5,106.9 3,088.9 4,829.9 277.0 5.7
Debt-to-equity 7.5 x 12.2 x 6.8 x
Debt-to-adjusted equity <F1> 9.1 17.1 8.8
<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) 06/30/96 03/31/96 06/30/95
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer
Home equity lending 1.82 % 1.92 % 1.55 %
Personal lending and retail sales finance 2.84 2.81 2.43
Credit card 3.40 3.29 2.84
Manufactured housing 0.74 0.64 0.53
Total Consumer 2.25 2.24 1.85
Commercial
Truck and truck trailer 0.93 0.74 0.35
Equipment 0.71 0.75 0.34
Total Commercial 0.80 0.73 0.34
Total 1.80 % 1.78 % 1.40 %
Net Credit Losses to ANR
- -----------------------------------------------------------------------------------------
Consumer
Home equity lending 0.97 % 0.88 % 0.93 %
Personal lending and retail 4.14 3.66 3.76
Credit card 6.08 5.72 4.19
Manufactured housing 0.87 0.78 0.82
Total Consumer 2.67 2.40 2.13
Commercial
Truck and truck trailer 0.29 0.28 0.24
Equipment 0.43 0.24 0.12
Total Commercial 0.32 0.25 0.16
Total 1.95 % 1.74 % 1.54 %
Credit Loss Reserves
- -----------------------------------------------------------------------------------------
Allowance for losses:
Balance at end of period $ 1,469.0 $ 1,368.8 $ 1,192.3
To net finance receivables 3.37 % 3.33 % 3.21 %
Multiple to net credit losses(YTD) 1.92 1.95 2.09
</TABLE>
