<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 14, 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 second quarter earnings in
a news release dated July 14, 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 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
July 14, 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: July 14, 1998
<PAGE>
<PAGE>
[LOGO] THE ASSOCIATES
Media: (972) 652-4522
Securities analysts: (972) 652-7294
[email protected]
Shareholders: 1-888-NYSE-AFS
THE ASSOCIATES 2Q98 EARNINGS:
RECORDS FOR QUARTER, FIRST HALF
DALLAS, July 14, 1998 Associates First Capital Corporation
(NYSE: AFS) today announced record second-quarter earnings of
$292.9 million, which represents $0.84 per share (diluted), a 19%
increase over the same period a year ago. For the first six
months of 1998, The Associates had record earnings of $573.9
million, or $1.65 per share (diluted), a 19% improvement over the
first half of 1997.
"These record earnings resulted from our ongoing focus on
certain basics, such as knowing our markets and customers,
providing value-added service and constantly measuring our
performance," said Keith W. Hughes, chairman and chief executive
officer of The Associates. "Our success depends on the execution
of these fundamentals, which was reflected in the performances of
each of our core businesses during the quarter."
At June 30, 1998, total managed receivables were $64.3
billion, which was 19% greater than the prior year.
"In the second quarter, we added quality growth in every
operating area. We balanced our strong internal growth with
strategic acquisitions that will be accretive in the first year
and become a platform for future growth," Mr. Hughes added. "The
company's year-to-date accomplishments reflect our firm
commitment to consistent and reliable results".
During the quarter, International Operations closed the
previously announced acquisition of DIC Finance in Japan, a
strong consumer lending franchise with significant brand identity
and branch presence throughout the country. The acquisition
brings the company's total Japanese presence to more than 600
locations with over 3,000 employees and approximately $4 billion
in net finance receivables. The company's other international
markets also showed good growth.
U.S. Consumer Operations reported strong gains in the real
estate loan portfolio, with each of our distribution channels
contributing to growth. Among the highlights was success in the
newly opened Texas home equity market. The company made more
than 5,700 new home equity loans in Texas during the second
quarter, and a total of more than 12,000 for the year to date.
U.S. Commercial Operations reported strong internal growth,
led by the transportation and manufactured housing finance units.
Transportation benefited from continued growth in its core
businesses, supported by strong sales during the quarter of
heavy-duty trucks and truck trailers. In addition to
contributing solid results, the manufactured housing unit
invested in infrastructure enhancements and the establishment of
several new strategic retail relationships during the quarter.
The Credit Card Operation announced an agreement to acquire
the assets of SPS Transaction Services, a leading provider of
private-label credit cards with $2.3 billion in receivables. The
acquisition should be completed later this year. Also during the
quarter, as part of a previously announced plan to diversify
funding sources and improve liquidity, the company sold $2
billion of credit card receivables in a private securitization
transaction.
Associates First Capital Corporation is a leading diversified finance company
providing consumer and commercial finance, leasing and related services
worldwide. Headquartered in Dallas, it is one of the nation's 100 largest
companies, based on total market capitalization.
This news release contains certain forward-looking statements, including
expectations relating to receivables growth and earnings. The factors, which
may cause future results to differ materially from expectations, are discussed
in the form 10-K for the year ended December 31,1997, filed with the
Securities and Exchange Commission.
<PAGE>
THE ASSOCIATES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended or at
($ millions - except earnings per
share) 6/30/98 6/30/97 %Change
------- -------
<S> <C> <C> <C>
Net earnings
Amount $ 292.9 $ 245.0 20
Return on average equity 17.82 % 17.22 %
Return on average
adjusted equity 20.16 20.53
Return on average assets 1.94 1.89
Return on average managed
assets 1.77 1.80
Net earnings per diluted
share $ 0.84 $ 0.71 19
Managed receivables
Total managed assets
Key Data (Managed)
Total revenue $ 2,432.2 $ 2,095.8 16
Net interest margin
(% avg. mgd recs.) 8.92 % 9.19 %
Efficiency ratio 43.4 42.7
Credit quality
60+days contractual
delinquency 2.29 % 2.17 %
Credit loss ratio (% avg.
mgd. recs.) 2.37 2.37
Balance Sheet Information
Stockholders' equity
Allowance for losses $ 1,848.7 $ 1,849.5
% of net receivables 3.32 % 3.58 %
Multiple to net losses <F1> 1.51 x 1.70 x
<FN>
<F1> The current year quarter reflects a multiple of
annualized current quarter losses. The prior year
quarter reflects a multiple of trailing 4 quarter losses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended or at
($ millions - except earnings per
share) 6/30/98 6/30/97 % Change
------- -------
<S> <C> <C> <C>
Net earnings
Amount $ 573.9 $ 482.8 19
Return on average equity 17.72 % 17.28 %
Return on average adjusted
equity 20.18 20.73
Return on average assets 1.93 1.91
Return on average managed
assets 1.79 1.82
Net earnings per diluted
share $ 1.65 $ 1.39 19
Managed receivables $ 64,311.8 $ 54,083.9 19
Total managed assets $ 68,132.1 $ 55,507.9 23
Key Data (Managed)
Total revenue $ 4,720.5 $ 4,062.0 16
Net interest margin (% avg.
mgd recs.) 8.87 % 9.14 %
Efficiency ratio 43.3 42.5
Credit quality
60+days contractual
delinquency 2.29 % 2.17 %
Credit loss ratio
(% avg. mgd. recs.) 2.34 2.29
Balance Sheet Information
Stockholders' equity $ 6,680.0 $ 5,821.0 15
Allowance for losses $ 1,848.7 $ 1,849.5
% of net receivables 3.32 % 3.58 %
/TABLE
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
Pro Forma Managed Basis Financial Information and Key Data
<TABLE>
<CAPTION>
Three Months Ended or at Change from Prior Year
($ millions) 6/30/98 3/31/98 6/30/97 Amount Percent
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,257.7 $ 2,123.0 $ 1,938.3 $ 319.4 16.5 %
Insurance premiums 104.1 112.4 105.3 (1.2) (1.1)
Investment and other income 70.4 52.9 52.2 18.2 34.9
2,432.2 2,288.3 2,095.8 336.4 16.1
Expenses
Interest expense 855.4 806.6 721.5 133.9 18.6
Operating expenses 671.4 620.0 571.6 99.8 17.5
Provision for losses 410.0 372.9 377.0 33.0 8.8
Insurance benefits paid or provided 30.5 42.8 36.7 (6.2) (16.9)
1,967.3 1,842.3 1,706.8 260.5 15.3
Earnings before provision for income taxes 464.9 446.0 389.0 75.9 19.5
Provision for income taxes 172.0 165.0 144.0 28.0 19.4
Net earnings $ 292.9 $ 281.0 $ 245.0 $ 47.9 19.6 %
Net earnings per diluted share (whole $) $ 0.84 $ 0.81 $ 0.71 $ 0.13 19.2 %
Equivalent shares for diluted EPS
calculation (000's) 348,590 348,765 347,537 1,053 0.3
Key Data ($ in millions)
Net interest margin (% avg. mgd. recs.) 8.92 % 8.83 % 9.19 %
Efficiency ratio (managed) 43.4 43.1 42.7
Net credit losses (as a % of avg. mgd. rec) 2.37 2.31 2.37
Delinquency ratio (% of mgd. gross recs.) 2.29 2.18 2.17
Managed Receivables
End of period $64,311.8 $ 61,048.8 $ 54,083.9 $ 10,227.9 18.9 %
Average 62,890.0 59,614.0 52,948.8 9,941.2 18.8
Managed Assets
End of period 68,132.1 63,564.0 55,507.9 12,624.2 22.7
Average 66,245.3 61,801.4 54,507.6 11,737.7 21.5
</TABLE>
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
Managed Receivables ($ millions)
<TABLE>
<CAPTION>
Outstanding at End of Period (1) 6/30/98 3/31/98 6/30/97
<S> <C> <C> <C>
Home equity $ 21,050.9 $ 19,976.3 $ 17,547.2
Personal loans / retail sales
finance 10,365.1 9,224.5 8,385.4
Credit card 7,887.8 7,890.3 8,240.4
Manufactured housing 4,423.9 3,972.4 2,960.9
Truck and truck trailer 10,312.3 10,043.5 8,970.6
Equipment 5,790.9 5,632.7 4,887.4
Recreational vehicles 1,881.8 1,790.0 1,488.3
Fleet leasing 1,602.8 1,577.0 1,160.2
Warehouse and other 996.3 942.1 443.5
Total $ 64,311.8 $ 61,048.8 $ 54,083.9
Average Outstanding <F1> 6/30/98 3/31/98 6/30/97
Home equity $ 20,480.9 $ 19,412.3 $ 17,198.0
Personal loans / retail sales
finance 10,067.5 8,883.9 7,943.7
Credit card 7,882.9 8,083.4 8,383.5
Manufactured housing 4,197.9 3,736.2 2,833.6
-
Truck and truck trailer 10,160.3 9,843.2 8,821.0
Equipment 5,701.8 5,504.9 4,770.8
Recreational vehicles 1,841.7 1,729.7 1,456.7
Fleet leasing 1,593.4 1,560.6 1,139.6
Warehouse and other 963.6 859.8 401.9
Total $ 62,890.0 $ 59,614.0 $ 52,948.8
<FN>
<F1> Includes servicing portfolio and receivables held for sale.
</FN>
/TABLE
<PAGE>
Managed Receivables ($ millions) (continued)
<TABLE>
<CAPTION>
Change from Prior Year
Outstanding at End of Period <F1> Amount Percent
<S> <C> <C>
Home equity $ 3,503.7 20.0 %
Personal loans / retail sales
finance 1,979.7 23.6
Credit card (352.6) (4.3)
Manufactured housing 1,463.0 49.4
Truck and truck trailer 1,341.7 15.0
Equipment 903.5 18.5
Recreational vehicles 393.5 26.4
Fleet leasing 442.6 38.1
Warehouse and other 552.8 124.6
Total $ 10,227.9 18.9 %
Change from Prior Year
Average Outstanding <F1> Amount Percent
Home equity $ 3,282.9 19.1 %
Personal loans / retail sales
finance 2,123.8 26.7
Credit card (500.6) (6.0)
Manufactured housing 1,364.3 48.1
Truck and truck trailer 1,339.3 15.2
Equipment 931.0 19.5
Recreational vehicles 385.0 26.4
Fleet leasing 453.8 39.8
Warehouse and other 561.7 139.8
Total $ 9,941.2 18.8 %
<FN>
<F1> Includes servicing portfolio and receivables held for sale.
</FN>
/TABLE
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Credit Quality
60+Days Contractual Delinquency Three Months Ended or at
(as a % of Mgd. Gross Receivables) 6/30/98 3/31/98 6/30/97
<S> <C> <C> <C>
Home equity 2.40 % 2.23 % 2.12 %
Personal loans / retail sales finance 3.62 3.53 3.34
Credit card 4.09 3.96 3.81
Manufactured housing 1.36 1.26 1.01
Truck and truck trailer 1.44 1.34 1.53
Equipment 0.97 1.12 0.94
Recreational vehicles 0.07 0.05 0.07
Fleet leasing 0.74 0.43 0.64
Total (managed) 2.29 % 2.18 % 2.17 %
Net Credit Losses (as a % of Avg. Mgd. Receivables)
Home equity 1.07 % 1.03 % 1.05 %
Personal loans / retail sales finance 5.65 5.71 5.29
Credit card 7.63 7.07 7.27
Manufactured housing 0.84 0.94 0.71
Truck and truck trailer 0.45 0.52 0.30
Equipment 0.25 0.11 0.36
Recreational vehicles 0.28 0.27 0.22
Fleet leasing 0.08 0.08 0.18
Total (managed) 2.37 % 2.31 % 2.37 %
Loss Coverage (on-balance sheeet)
Allowance for losses $ 1,848.7 $ 2,014.9 $ 1,849.5
% of net finance receivables 3.32 % 3.50 % 3.58 %
Multiple to net losses <F1> 1.51 x 1.56 x 1.70 x
<FN>
<F1> The current year quarter reflects a multiple of
annualized current quarter losses. The prior quarter
and prior year quarter reflect a multiple of trailing 4
quarter losses.
</FN>
/TABLE
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
Income Statement and Balance Sheet Items
<TABLE>
<CAPTION>
Three Months Ended or at
Income Statement ($ millions) 6/30/98 3/31/98 6/30/97
<S> <C> <C> <C>
Revenue
Finance charges $ 1,881.8 $ 2,045.0 $ 1,872.4
Insurance premiums 104.1 112.4 105.3
Investment and other income 309.2 73.7 71.8
2,295.1 2,231.1 2,049.5
Expenses
Interest expense 785.5 757.3 679.6
Operating expenses 671.4 620.0 571.6
Provision for losses 342.8 365.0 372.6
Insurance benefits paid or provided 30.5 42.8 36.7
1,830.2 1,785.1 1,660.5
Earnings before taxes 464.9 446.0 389.0
Provision for income taxes 172.0 165.0 144.0
Net earnings $ 292.9 $ 281.0 $ 245.0
Net earnings per diluted share
(whole $) $ 0.84 $ 0.81 $ 0.71
Equivalent shares for diluted EPS
calculation (000's) 348,590 348,765 347,537
Balance Sheet Items ($ in millions)
Net Receivables
End of period
Home equity $ 20,850.3 $ 19,755.0 $ 17,547.2
Personal loans / retail sales
finance 10,365.2 9,224.5 8,385.4
Credit card 2,632.5 7,787.7 8,240.4
Manufactured housing 2,714.8 2,185.0 1,373.8
Truck and truck trailer 10,312.3 10,043.5 8,970.6
Equipment 5,790.9 5,632.7 4,887.4
Recreational vehicles 430.7 483.8 608.7
Fleet leasing 1,602.8 1,577.0 1,160.2
Warehouse and other 996.3 942.1 443.5
Total $ 55,695.8 $ 57,631.3 $ 51,617.2
Average $ 54,177.1 $ 56,307.3 $ 50,416.7
Total Assets
End of period $ 63,410.1 $ 60,568.0 $ 53,041.2
Average 60,531.3 58,835.4 51,963.6
Debt 54,605.3 51,994.8 45,579.4
Stockholders' Equity
End of period $ 6,680.0 $ 6,503.4 $ 5,821.0
Per share (whole $) 19.29 18.77 16.80
Average 6,576.9 6,381.6 5,690.0
Debt-to-equity 8.17 x 7.99 x 7.82 x
Debt-to-adjusted equity 9.06 8.95 9.10
</TABLE>
Income Statement and Balance Sheet Items (continued)
<TABLE>
<CAPTION>
Change from Prior Year
Income Statement ($ millions) Amount Percent
<S> <C> <C>
Revenue
Finance charges $ 9.4 0.5 %
Insurance premiums (1.2) (1.1)
Investment and other income 237.4 330.7
----------
245.6 12.0
Expenses
Interest expense 105.9 15.6
Operating expenses 99.8 17.5
Provision for losses (29.8) (8.0)
Insurance benefits paid or provided (6.2) (16.9)
----------
169.7 10.2
Earnings before taxes 75.9 19.5
Provision for income taxes 28.0 19.4
----------
Net earnings $ 47.9 19.6 %
Net earnings per diluted share
(whole $) $ 0.13 19.2 %
Equivalent shares for diluted EPS
calculation (000's) 1,053 0.3
Balance Sheet Items ($ in millions)
Net Receivables
End of period
Home equity $ 3,303.1 18.8 %
Personal loans / retail sales
finance 1,979.8 23.6
Credit card (5,607.9) (68.1)
Manufactured housing 1,341.0 97.6
Truck and truck trailer 1,341.7 15.0
Equipment 903.5 18.5
Recreational vehicles (178.0) (29.2)
Fleet leasing 442.6 38.1
Warehouse and other 552.8 124.6
Total $ 4,078.6 7.9 %
Average $ 3,760.4 7.5 %
Total Assets
End of period $ 10,368.9 19.5 %
Average 8,567.7 16.5
Debt 9,025.9 19.8
</TABLE>
