<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 15, 1997
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) 652-4000
<PAGE>
Item 5. Other Events.
Associates First Capital Corporation announced its second quarter
earnings in a news release dated July 15, 1997. 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 15, 1997 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/Kevin P. Hegarty
Senior Vice President
And Comptroller
Date: July 15, 1997<PAGE>
<PAGE>
Contact: Joe Stroop FOR IMMEDIATE RELEASE
972-652-4743
[email protected]
THE ASSOCIATES SECOND QUARTER EARNINGS:
HIGHEST-GROWTH QUARTER IN COMPANY HISTORY
DALLAS, July 15, 1997 -- Associates First Capital Corporation
(The Associates) reported record earnings and growth for the second
quarter of 1997. Receivables growth of more than $3.9 billion was the
best growth ever achieved during a single quarter in the company's
history.
Net earnings for the three-month period ended June 30, 1997
reached $245 million, or $0.71 per share, a 22% increase over the same
period in 1996. For the first six months of 1997, net earnings were
$482.8 million, or $1.39 per share, which is up 23% from the first
half of 1996.
"The excellent second quarter, coupled with a very strong first
quarter, resulted in the first half of 1997 being the best six-month
period in the company's history," said Keith W. Hughes, chairman and
chief executive officer of The Associates. "These results put us on
track for a strong performance in 1997."
The company's 90th consecutive quarter of year-to-year earnings
improvement came from growth in earning assets combined with improved
profitability. The profitability improvement was driven by stronger
margins somewhat offset by higher losses during the quarter.
"We are gratified to be able to report growth in all areas,
especially our credit card and international operations," Mr. Hughes
added. "Our goal is to generate predictable, sustainable growth as a
company, so that we can fulfill our commitments to shareholders,
employees, lenders and customers. The quality growth we have been
able to achieve in prior years is the foundation for this year's
earnings improvement. We have no more important goal than the
consistency of our performance."
Net finance receivables outstanding at quarter's end reached
$51.6 billion, an 18% increase over the same period a year ago. In
addition, the company services $2.5 billion in securitized finance
receivables, comprised entirely of manufactured housing and
recreational vehicle loans. Total assets managed by The Associates
at June 30, 1997 were $55.5 billion, a record.
At June 30, 1997, consumer net finance receivables reached $35.5
billion, an 18% increase over the prior year, and commercial net
finance receivables were $16.1 billion, a 20% improvement.
Operating Unit Highlights
+ The U.S. consumer branch operations reported record growth,
driven by internal growth, several acquisitions and
expansion of the nationwide 1,600-branch network.
+ Commercial operations had strong internal growth in all
areas,led by its core businesses of transportation and
equipment financing and leasing.
+ Credit card operations completed the previously announced
acquisitions of a bank credit card portfolio of JCPenney
and the private-label credit card operation of Texaco.
Together, these acquisitions added $1.4 billion in receivables.
+ The international operation continued to develop new markets,
opening a second consumer finance office in Costa Rica and its
20th office in Mexico. Consumer branch growth in Japan and
commercial growth in Canada also made significant contributions.
Company Description
Associates First Capital Corporation (NYSE: AFS) is a leading
diversified finance company providing consumer and commercial finance,
leasing and related services through 2,220 offices in the U.S. and
internationally. Based in Dallas, it is an indirect, majority-owned
subsidiary of Ford Motor Company.
# # #
(TABLE FOLLOWS)
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<TABLE>
<CAPTION>
ASSOCIATES FIRST CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
($ millions-except
earnings per share) Three Months Ended Six Months Ended
or at or at
6-30-97 6-30-96 % Change 6-30-97 6-30-96 % Change
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net earnings
Amount $ 245.0 $ 200.2 22 $ 482.8 $ 392.5 23
Return on average
equity <F1> 17.22% 16.38% 17.28% 16.48%
Return on average
adjusted equity <F1><F2> 20.53 20.58 20.73 20.58
Return on average
assets <F1><F3> 1.89 1.88 1.91 1.90
Net earnings per share $ 0.71 $ 0.58 22 $ 1.39 $ 1.13 23
Stockholders' equity $ 5,821.0 $ 5,106.9 14
Net finance receivables
Consumer finance $35,546.8 $30,165.8 18
Commercial finance 16,070.4 13,423.7 20
--------- ---------
Total net finance
receivables $51,617.2 $43,589.5 18
========= =========
Total assets $53,041.2 $45,116.4 18
Total managed assets $55,507.9 $45,834.4 21
Total revenue $ 2,049.5 $ 1,717.0 19 $ 3,976.2 $ 3,362.0 18
Net interest margin
(as a % of ANR) <F3> 9.47% 9.29% 9.46% 9.29%
Efficiency ratio 42.9 44.5 42.6 44.6
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
or at or at
6-30-97 3-31-97 6-30-97 6-30-96
---------------------------------------------------------
<S> <C> <C> <C> <C>
Credit Quality:
60+days contractual
delinquency 2.25% 2.25% 2.25% 1.80%
Credit losses (as a %
of ANR) 2.45 2.31 2.38 1.85
Allowance for losses on
finance receivables
Amount $1,849.5 $1,675.9 $1,849.5 $1,469.0
Percent of net finance
receivables 3.58% 3.51% 3.58% 3.37%
<FN>
<F1> The 1996 return on equity, return on adjusted equity and return on assets have been restated
to exclude a $1,850 million dividend related to the IPO. If included, these returns for the
three and six months ended June 30, 1996 would have been 19.57%, 25.56%, and 1.83%; and 18.87%,
24.59%, and 1.83%, respectively.
<F2> Excludes push-down goodwill created by Ford acquisition of foreign affiliates in 1989.
<F3> Adjusted to exclude IPO related charges in first and second quarter 1996.
ANR = Average Net Receivables
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATES FIRST CAPITAL CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT
Statement of Earnings
Three Months Ended Change from
Consolidated or at Prior Year
($ millions) 6-30-97 3-31-97 6-30-96 Amount Percent
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 1,872.4 $ 1,761.7 $ 1,567.6 $ 304.8 19.4%
Insurance premiums 105.3 99.1 100.5 4.8 4.8
Investment and other
income 71.8 65.9 48.9 22.9 46.8
--------- --------- --------- --------
2,049.5 1,926.7 1,717.0 332.5 19.4
Expenses
Interest expense 679.6 637.4 593.5 86.1 14.5
Operating expenses 571.6 531.2 483.2 88.4 18.3
Provision for losses
on finance receivables 372.6 344.5 275.7 96.9 35.1
Insurance benefits paid
or provided 36.7 36.1 37.0 (0.3) (0.8)
--------- --------- ---------- --------
1,660.5 1,549.2 1,389.4 271.1 19.5
--------- --------- ---------- --------
Earnings before provision
for income taxes 389.0 377.5 327.6 61.4 18.7
Provision for income taxes 144.0 139.7 127.4 16.6 13.0
--------- --------- ---------- --------
Net earnings $ 245.0 $ 237.8 $ 200.2 $ 44.8 22.4%
========= ========= ========== ========
Average Net Finance
Receivables $50,416.7 $47,555.6 $42,292.8 $8,123.9 19.2%
Balance Sheet Items
($ millions)
Total assets:
End of period $53,041.2 $49,210.8 $45,116.4 $7,924.8 17.6%
Average 51,963.6 49,153.6 43,814.5 8,149.1 18.6
Managed assets 55,507.9 51,809.0 45,834.4 9,673.5 21.1
Debt 45,579.4 41,916.7 38,615.8 6,963.6 18.0
Stockholders' equity:
End of period 5,821.0 5,558.7 5,106.9
Per share (whole $) 16.80 16.04 14.73
Average 5,690.0 5,479.4 4,093.3
Debt-to-equity 7.82x 7.54x 7.52x
Debt-to-adjusted
equity <F1> 9.10 8.73 9.07
Key Ratios
Net interest margin <F2> 9.47% 9.46% 9.29%
Efficiency ratio 42.9 42.4 44.5
Net earnings per share
(whole $) $ 0.71 $ 0.69 $ 0.58 $ 0.13 22.4%
Equivalent shares for EPS
calculation 346,411 346,654 346,654 (243) (0.1)
<FN>
<F1> Excludes push-down goodwill created by Ford acquisition of foreign affiliates in
1989.
<F2> Excludes IPO related charges in first and second quarter 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATES FIRST CAPITAL CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT
Receivables/Servicing Portfolios
Change From
Prior Year
Receivables ($ millions) 6-30-97 3-31-97 6-30-96 Amount Percent
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer
Home equity lending $17,547.2 $16,965.5 $15,145.5 $ 2,401.7 15.9 %
Personal lending and
retail sales finance 8,385.4 7,677.1 6,765.1 1,620.3 24.0
Credit card 8,240.4 6,691.3 5,979.5 2,260.9 37.8
Manufactured housing 1,373.8 1,066.9 2,275.7 (901.9) (39.6)
--------- --------- --------- ---------
35,546.8 32,400.8 $30,165.8 5,381.0 17.8
--------- --------- --------- ---------
Commercial
Truck and truck trailer 8,970.6 8,687.3 8,241.4 729.2 8.8 %
Equipment 4,887.4 4,679.7 4,207.9 679.4 16.1
Other 2,212.4 1,933.3 974.4 1,238.1 N/M
--------- --------- --------- ---------
16,070.4 15,300.3 13,423.7 2,646.7 19.7
--------- --------- --------- ---------
Net finance
receivables $51,617.2 $47,701.1 $43,589.5 $ 8,027.7 18.4 %
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Change From
Servicing Portfolios or at Prior Year
($ millions) 6-30-97 3-31-97 6-30-96 Amount Percent
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Manufactured Housing
- --------------------
Outstanding net
receivables:
End of period $ 1,587.1 $ 1,645.4 $ - $ 1,587.1 - %
Average 1,616.3 1,466.6 - 1,616.3 -
Finance charge yield 11.27% 11.26% -% - pts.
60+days contractual
delinquency 1.05 0.71 - -
Credit losses (as a %
of ANR) 0.76 0.68 - -
Recreational Vehicles
- ---------------------
Outstanding net
receivables:
End of period $ 879.6 $ 952.8 $718.0 $ 161.6 22.5 %
Average 928.1 891.1 755.2 172.9 22.9
Finance charge yield 9.48% 9.49% 9.50% (0.02) pts.
60+days contractual
delinquency 0.07 0.07 0.06 0.01
Credit losses (as a %
of ANR) 0.34 0.30 0.25 0.09
Total Servicing Portfolios
- --------------------------
Outstanding net
receivables:
End of period $2,466.7 $ 2,598.2 $718.0 $1,748.7 N/M
Average 2,544.4 2,357.7 755.2 1,789.2 N/M
Finance charge yield 10.62% 10.59% 9.50% 1.12 pts.
60+days contractual
delinquency 0.70 0.47 0.06 0.64
Credit losses (as a %
of ANR) 0.60 0.54 0.25 0.35
</TABLE>
<TABLE>
<CAPTION>
Credit Quality/Credit Loss Reserves
Three Months Ended
or at
60+Days Contractual Delinquency 6-30-97 3-31-97 6-30-96
- ------------------------------- ------------------------------
<S> <C> <C> <C>
Consumer
Home equity lending 2.12% 2.15% 1.82%
Personal lending and retail sales
finance 3.34 3.32 2.84
Credit card 3.81 3.83 3.40
Manufactured housing 1.00 1.41 0.74
Total Consumer 2.75 2.75 2.25
Commercial
Truck and truck trailer 1.53 1.58 0.93
Equipment 0.94 0.92 0.71
Total Commercial 1.20 1.23 0.80
Total 2.25% 2.25% 1.80%
Net Credit Losses to ANR
- ------------------------
Consumer
Home equity lending 1.05% 1.08% 0.97%
Personal lending and retail sales
finance 5.29 4.60 4.16
Credit card 7.27 7.73 6.09
Manufactured housing 0.46 0.71 0.87
Total Consumer 3.50 3.29 2.67
Commercial
Truck and truck trailer 0.30 0.31 0.28
Equipment 0.36 0.23 0.42
Total Commercial 0.30 0.24 0.32
Total 2.45% 2.31% 1.95%
Credit Loss Reserves
- --------------------
Allowance for losses:
Balance at end of period $1,849.5 $1,675.9 $1,469.0
To net finance receivables 3.58% 3.51% 3.37%
Multiple to net credit losses
(Trailing 4 Qtrs.) 1.70x 1.70x 2.04x
</TABLE>
