<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 13, 1998
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 third quarter
earnings in a news release dated October 13, 1998. A copy of the new release,
financial highlights and a quarterly financial supplement is attached as an
Exhibit hereto and incorporated by reference herein.
From time to time the Company sells finance receivables through securitization
transactions and retains servicing responsibilities. Finance charges,
interest expense and credit losses on the servicing portfolio are included in
investment and other income on the statement of earnings. The pro forma
managed basis financial information included in the attached quarterly
financial supplement reclassifies these items from investment and other income
into line items on the financial statements on the same basis as if the
receivables had not been sold. Management believes this presentation is
useful for evaluating the trends in financial information and key data.
Item 7. Financial Statements and Exhibits
( C ) Exhibits
20 - News release by Associates First Capital Corporation dated
October 13, 1998 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/ John F. Stillo
-------------------------------------
Senior Vice President and Comptroller
Date: October 13, 1998
<PAGE>
THE ASSOCIATES: ANOTHER RECORD QUARTER
Results based on execution of fundamentals
DALLAS, Oct. 13, 1998 Associates First Capital Corporation (NYSE:
AFS) today announced that it achieved records in net earnings and
earnings per share for the third quarter and the first nine months of
the year.
Net earnings for the quarter reached $317.6 million, or 91 cents
per share (diluted), the best single quarter in the company's history
and a 17 percent improvement over the third quarter of 1997. This was
the 95th consecutive quarter of improved earnings at The Associates.
For the year to date, net earnings were $891.5 million, or $2.56 per
share, up 18 percent over the prior year. Total managed assets
reached a record $70.6 billion, a year-to-year increase of 23 percent
driven primarily by strong receivables growth.
"Our ability to execute the fundamentals of our business, just as
we have done for more than two decades, has been the key factor in our
results for the quarter and the year," said Keith W. Hughes, chairman
and chief executive officer of The Associates. "The fundamentals are
balanced growth, conservative business practices and a strong balance
sheet. These elements, combined with our experienced management and
performance culture, are the keys to our track record of reliable,
predictable results.
"We do not deviate from these basic principles," Hughes continued.
"As a result, we have demonstrated our ability to be successful in a
variety of economic conditions. This ability distinguishes The
Associates and gives us confidence that we can achieve another year of
improved earnings."
-more-<PAGE>
Page 2
Highlighting the quarter's activity were announcements of
two major acquisitions.
The company has agreed to purchase the assets of Avco
Financial Services, Inc., a consumer finance company that will
bring The Associates approximately $8.9 billion in assets,
8,000 employees, 1,265 branches, 2.5 million customers and
operations in eight new countries. When completed, it will be
the largest acquisition in company history.
The Associates also announced its intention to purchase The Northland
Company, of Minneapolis, an insurance company with net written premiums of
$388 million and A+ ratings for all its insurance subsidiaries from A.M. Best.
Northland will complement the existing insurance business of The Associates
and add to the company's distribution system.
Associates First Capital Corporation is a leading
diversified finance company providing consumer and commercial
finance, leasing and related services worldwide.
Headquartered in Dallas, it is one of the nation's 100 largest
companies, based on total market capitalization.
This news release contains certain forward-looking statements. The factors
which may cause future results to differ materially from expectations are
discussed in the Form 10-K for the year ended December 31, 1997, filed with
the Securities and Exchange Commission.
# # #
Contact Information:
Media: (972) 652-4522
www.theassociates.com
Securities Analysts: (972) 652-7294
[email protected]
Shareholders: 1-888-NYSE:AFS
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended or at
($ millions - except earnings per share) 9/30/98 9/30/97 %Change
<S> <C> <C> <C>
Net earnings
Amount $ 317.6 $ 270.9 17
Return on average equity 18.68 % 18.34 %
Return on average adjusted equity 20.94 21.74
Return on average assets 1.97 2.01
Return on average managed assets 1.84 1.91
Net earnings per diluted share $ 0.91 $ 0.78 17
Key Data (Managed)
Total revenue $ 2,524.4 $ 2,167.6 16
Net interest margin (% avg. mgd. recs.) 8.90 % 9.02 %
Efficiency ratio 43.9 44.0
Credit quality
60+days contractual delinquency 2.39 % 2.28 %
Credit loss ratio (% avg. mgd. recs) 2.38 2.37
Balance Sheet Information
Stockholders' equity
Allowance for losses $ 1,865.0 $ 1,891.4
% of net receivables 3.24 % 3.59 %
Multiple to net losses <F1> 1.70 x 1.62 x
<FN>
<F1> The current year quarter reflects a multiple of annualized
second and third quarter losses. The prior year quarter
reflects a multiple of trailing 4 quarter losses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended or at
9/30/98 9/30/97 % Change
<S> <C> <C> <C>
Net earnings
Amount $ 891.5 $ 753.7 18
Return on average equity 18.05 % 17.65 %
Return on average adjusted equity 20.45 21.08
Return on average assets 1.93 1.94
Return on average managed assets 1.81 1.85
Net earnings per diluted share $ 2.56 $ 2.17 18
Managed receivables $ 66,153.4 $ 55,862.7 18
Total managed assets $ 70,649.8 $ 57,427.5 23
Key Data (Managed)
Total revenue $ 7,244.9 $ 6,229.6 16
Net interest margin (% avg. mgd. recs.) 8.88 % 9.12 %
Efficiency ratio 43.5 43.0
Credit quality
60+days contractual delinquency 2.39 % 2.28 %
Credit loss ratio (% avg.
mgd. recs.) 2.35 2.32
Balance Sheet Information
Stockholders' equity $ 6,967.1 $ 6,016.6 16
Allowance for losses $ 1,865.0 $ 1,891.4
% of net receivables 3.24 % 3.59 %
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
Pro Forma Managed Basis Income Statement and Key Data
<TABLE>
<CAPTION>
Three Months Ended or at Change from Prior Year
($ millions) 9/30/98 6/30/98 9/30/97 Amount Percent
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,330.8 $ 2,257.7 $ 2,004.5 $ 326.3 16.3 %
Insurance premiums 110.0 104.1 105.5 4.5 4.3
Investment and other income 83.6 70.4 57.6 26.0 45.1
2,524.4 2,432.2 2,167.6 356.8 16.5
Expenses
Interest expense 882.6 855.4 761.7 120.9 15.9
Operating expenses 705.2 671.4 603.0 102.2 16.9
Provision for losses 397.9 410.0 335.1 62.8 18.7
Insurance benefits paid
or provided 34.2 30.5 34.7 (0.5) (1.4)
2,019.9 1,967.3 1,734.5 285.4 16.5
Earnings before provision for
income taxes 504.5 464.9 433.1 71.4 16.5
Provision for income taxes 186.9 172.0 162.2 24.7 15.2
Net earnings $ 317.6 $ 292.9 $ 270.9 $ 46.7 17.2 %
Net earnings per diluted share
(whole $) $ 0.91 $ 0.84 $ 0.78 $ 0.13 17.3 %
Equivalent shares for diluted
EPS calculation (000's) 348,224 348,590 348,170 54
Key Data ($ millions)
Net interest margin (% avg.
mgd. recs.) 8.90 % 8.92 % 9.02 %
Efficiency ratio (managed) 43.9 43.4 44.0
Net credit losses (as a % of avg.
mgd. recs.) 2.38 2.37 2.37
Delinquency ratio (% of mgd. gross
recs.) 2.39 2.29 2.28
Managed Receivables
End of period $ 66,153.4 $ 64,311.8 $ 55,862.7 $ 10,290.7 18.4 %
Average 65,108.9 62,890.0 55,128.9 9,980.0 18.1
Managed Assets
End of period 70,649.8 68,132.1 57,427.5 13,222.3 23.0
Average 69,149.0 66,245.3 56,636.0 12,513.0 22.1
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
Managed Receivables ($ millions)
<TABLE>
<CAPTION>
Change from Prior Year
Outstanding at End of Period (1) 9/30/98 6/30/98 9/30/97 Amount Percent
<S> <C> <C> <C> <C> <C>
Home equity $ 21,924.5 $ 21,050.8 $ 18,255.4 $ 3,669.1 20.1 %
Personal loans / retail
sales finance 10,499.4 10,365.2 8,581.2 1,918.2 22.4
Credit card 7,969.7 7,887.8 8,206.7 (237.0) (2.9)
Manufactured housing 4,822.0 4,423.9 3,174.2 1,647.8 51.9
Truck and truck trailer 10,470.5 10,312.3 9,200.5 1,270.0 13.8
Equipment 5,813.8 5,790.9 5,027.9 785.9 15.6
Recreational vehicles 1,988.6 1,881.8 1,592.7 395.9 24.9
Fleet leasing 1,584.0 1,602.8 1,158.4 425.6 36.7
Warehouse and other 1,080.9 996.3 665.7 415.2 62.4
Total $ 66,153.4 $ 64,311.8 $ 55,862.7 $ 10,290.7 18.4 %
Change from Prior Year
Average Outstanding <F1> 9/30/98 6/30/98 9/30/97 Amount Percent
Home equity $ 21,442.0 $ 20,480.9 $ 17,890.6 $ 3,551.4 19.9 %
Personal loans / retail
sales finance 10,373.3 10,067.5 8,448.4 1,924.9 22.8
Credit card 7,931.2 7,882.9 8,224.7 (293.5) (3.6)
Manufactured housing 4,632.2 4,197.9 3,158.7 1,473.5 46.6
Truck and truck trailer 10,386.1 10,160.3 9,120.2 1,265.9 13.9
Equipment 5,787.9 5,701.8 4,972.2 815.7 16.4
Recreational vehicles 1,933.5 1,841.7 1,615.4 318.1 19.7
Fleet leasing 1,597.0 1,593.4 1,165.4 431.6 37.0
Warehouse and other 1,025.7 963.6 533.3 492.4 92.3
Total $ 65,108.9 $ 62,890.0 $ 55,128.9 $ 9,980.0 18.1 %
<FN>
<F1> Includes servicing portfolio and receivables held for sale.
</FN>
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Credit Quality
60+Days Contractual Delinquency Three Months Ended or at
(as a % of Mgd. Gross Receivables) 9/30/98 6/30/98 9/30/97
<S> <C> <C> <C>
Home equity 2.63 % 2.40 % 2.28 %
Personal loans / retail
sales finance 3.90 3.62 3.40
Credit card 4.29 4.09 3.99
Manufactured housing 1.34 1.36 1.21
Truck and truck trailer 1.34 1.44 1.50
Equipment 0.91 0.97 1.30
Recreational vehicles 0.06 0.07 0.06
Fleet leasing 0.53 0.74 0.70
Total (managed) 2.39 % 2.29 % 2.28 %
Net Credit Losses (as a % of Avg. Mgd. Receivables)
Home equity 1.11 % 1.07 % 1.02 %
Personal loans / retail
sales finance 5.43 5.65 5.47
Credit card 7.62 7.63 7.04
Manufactured housing 1.39 0.84 1.00
Truck and truck trailer 0.37 0.45 0.33
Equipment 0.33 0.25 0.36
Recreational vehicles 0.19 0.28 0.34
Fleet leasing 0.05 0.08 0.22
Total (managed) 2.38 % 2.37 % 2.37 %
Loss Coverage (on-balance sheet)
Allowance for loss $ 1,865.0 $ 1,848.7 $ 1,891.4
% of net finance receivables 3.24 % 3.32 % 3.59 %
Multiple to net losses (1) 1.70 x 1.51 x 1.62 x
(1) The current year quarter reflects a multiple of annualized
second and third quarter losses. The prior quarter reflects
a multiple of annualized second quarter losses and the
prior year quarter reflects a multiple of trailing 4 quarter losses.
</TABLE>
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
Income Statement and Balance Sheet Items
<TABLE>
<CAPTION>
Three Months Ended or at Change from Prior Year
Income Statement ($ millions) 9/30/98 6/30/98 9/30/97 Amount Percent
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 1,930.6 $ 1,881.8 $ 1,935.3 $ (4.7) (0.2)%
Insurance premiums 110.0 104.1 105.5 4.5 4.3
Investment and other income 264.1 309.2 77.3 186.8 N/M
2,304.7 2,295.1 2,118.1 186.6 8.8
Expenses
Interest expense 807.3 785.5 718.8 88.5 12.3
Operating expenses 705.2 671.4 603.0 102.2 16.9
Provision for losses 253.5 342.8 328.5 (75.0) (22.8)
Insurance benefits paid or provided 34.2 30.5 34.7 (0.5) (1.4)
1,800.2 1,830.2 1,685.0 115.2 6.8
Earnings before taxes 504.5 464.9 433.1 71.4 16.5
Provision for income taxes 186.9 172.0 162.2 24.7 15.2
Net earnings $ 317.6 $ 292.9 $ 270.9 $ 46.7 17.2 %
Net earnings per diluted share
(whole $) $ 0.91 $ 0.84 $ 0.78 $ 0.13 17.3 %
Equivalent shares for diluted
EPS calculation (000's) 348,224 348,590 348,170 54
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 21,745.3 $ 20,850.3 $ 18,255.4 $ 3,489.9 19.1 %
Personal loans / retail
sales finance 10,499.4 10,365.2 8,581.2 1,918.2 22.4
Credit card 2,749.7 2,632.5 8,094.7 (5,345.0) (66.0)
Manufactured housing 3,194.9 2,714.8 1,246.9 1,948.0 156.2
Truck and truck trailer 10,470.5 10,312.3 9,200.5 1,270.0 13.8
Equipment 5,813.8 5,790.9 5,027.9 785.9 15.6
Recreational vehicles 411.9 430.7 447.1 (35.2) (7.9)
Fleet leasing 1,584.0 1,602.8 1,158.4 425.6 36.7
Warehouse and other 1,080.9 996.3 665.7 415.2 62.4
Total $ 57,550.4 $ 55,695.8 $ 52,677.8 $ 4,872.6 9.2 %
Average $ 56,502.2 $ 54,177.1 $ 52,334.4 $ 4,167.8 8.0 %
Total Assets
End of period $ 66,105.3 $ 63,410.1 $ 54,354.6 $ 11,750.7 21.6
Average 64,515.5 60,531.3 53,914.5 10,601.0 19.7
Debt 56,844.2 54,605.3 46,584.3 10,259.9 22.0
Stockholders' Equity
End of period $ 6,967.1 $ 6,680.0 $ 6,016.6
Per share (whole $) 20.12 19.29 17.37
Average 6,802.9 6,576.9 5,906.4
Debt-to-equity 8.15 x 8.17 x 7.74 x
Debt-to-adjusted equity 9.01 9.06 8.85
</TABLE>
