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 12, 1999
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 12, 1999. A copy of the news release, financial
highlights and financial supplement 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 12, 1999 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
----------------------------------
Executive Vice President
and Comptroller
Date: October 12, 1999
THE ASSOCIATES
NEWS
FOR IMMEDIATE RELEASE
THE ASSOCIATES: THIRD QUARTER EARNINGS GROW 22%
Net Earnings $386.8 million, up 22%
Net Earnings Per Share 53 cents, up 16%
Managed Receivables $81.7 billion, up 24%
DALLAS (Oct. 12, 1999) - Associates First Capital Corporation
(NYSE:AFS) today reported that it set earnings records for the
third quarter and for the first nine months of the year, based on
balanced growth in earning assets across all its lines of
business.
"We are pleased to note that internal growth was strong for the
quarter, following the integration of our largest acquisition -
Avco Financial Services - and continued success in our other
lines of business," said Keith W. Hughes, chairman and chief
executive officer of The Associates.
Third quarter financial results included the following
highlights:
* Net earnings for the quarter reached $ 386.8 million, a 22%
increase over the third quarter of 1998. For the first nine
months of 1999, net earnings totaled $1.08 billion, a record for
the period and up 21% from 1998.
* Net earnings per share (diluted) for the quarter were $0.53,
16% greater than the prior year. For the first nine months, net
earnings per share reached $1.48, a 16% increase over 1998.
(more)
<PAGE>
The Associates 3Q Earnings
Oct. 12, 1999
Page Two
* Managed receivables at the end of the period were $81.7
billion, 24% greater than a year ago.
* Return on managed assets for the quarter was 1.71% , marking a
continued trend toward pre-Avco-acquisition levels.
"The integration activities related to our acquisitions are
substantially complete," Hughes added. "We have incorporated the
branches we acquired, integrated information systems, sold the
assets we identified for disposal and completed the other
elements of our capital plan. During the third quarter, our new
business operating platforms produced the results we had
projected for the period."
The international businesses continued their strong performance,
led by the operations in Japan, and the expanded international
presence provided by the Avco acquisition.
Commercial operations continued to focus on increasing margins
and enhancing credit quality during the quarter. Growth was led
by the transportation and equipment businesses, both of which
benefited from the continued strength of the key markets they
serve.
Domestic consumer lending activities were realigned into separate
home equity and consumer branch units during the quarter to take
advantage of the company's strength in each market and to allow
these units to focus on their most profitable products. In home
equity, the Associates Freedom Loan - an innovative consumer
lending product announced July 1 - contributed to record volume
in each month of the quarter.
<PAGE>
The Associates 3Q Earnings
Oct. 12, 1999
Page Three
During the quarter, the company announced an agreement to acquire
the Citgo private label card portfolio, strengthening the
company's position as the largest issuer of oil company private
label cards in the United States. The Associates also announced
an agreement to provide a private label credit card program to
Value America, a leading internet-based retailer.
Hughes said the third quarter highlighted the strengths that
distinguish The Associates -- balanced growth across a
diversified portfolio of businesses, outstanding domestic market
coverage with great prospects for continued international growth,
and a disciplined approach to acquisitions.
Associates First Capital Corporation, established in 1918, is a
leading diversified finance company providing consumer and
commercial finance, leasing, insurance and related services. The
Associates has operations in the United States and 13
international markets. Headquartered in Dallas, it is one of the
nation's 100 largest companies, based on total market
capitalization. For more information, visit The Associates Web
site at www.theassociates.com.
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 Dec. 31, 1998, filed with the Securities and Exchange
Commission.
# # #
Contact information
News media: (972) 652-4522
[email protected]
Security Analysts: (972) 652-7294
[email protected]
Shareholders: 1-888-NYSE-AFS
THE ASSOCIATES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended or at
($ millions - except earnings per share) 09/30/99 09/30/98 %Change
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
Amount $ 386.8 $ 317.6 22
Return on average equity 16.67 % 18.68 %
Return on average adjusted equity 18.44 20.94
Return on average assets 1.83 1.97
Return on average managed assets 1.71 1.84
Net earnings per diluted share (1) $ 0.53 $ 0.46 16
Key Data (Managed)
Total revenue $ 3,310.3 $ 2,524.4 31
Net interest margin (% avg. mgd. recs.) 9.13 % 8.90 %
Efficiency ratio 44.7 43.9
Credit quality
60+days contractual delinquency 2.81 % 2.39 %
Credit loss ratio (% avg. mgd. recs.) 2.73 2.38
Balance Sheet Information
Stockholders' equity
Allowance for losses $ 2,170.9 $ 1,865.0
% of net receivables 3.20 % 3.24 %
Multiple to net losses (2) 1.63 x 1.70 x
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended or at
($ millions - except earnings per share) 09/30/99 09/30/98 %Change
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
Amount $ 1,081.7 $ 891.5 21
Return on average equity 16.03 % 18.05 %
Return on average adjusted equity 17.75 20.45
Return on average assets 1.73 1.93
Return on average managed assets 1.63 1.81
Net earnings per diluted share (1) $ 1.48 $ 1.28 16
Managed receivables $ 81,706.5 $ 66,153.4 24
Total managed assets $ 92,342.4 $ 70,649.8 31
Key Data (Managed)
Total revenue $ 9,743.1 $ 7,244.9 34
Net interest margin (% avg. mgd. recs.) 9.09 % 8.88 %
Efficiency ratio 46.3 43.5
Credit quality
60+days contractual delinquency 2.81 % 2.39 %
Credit loss ratio (% avg. mgd. recs.) 2.74 2.35
Balance Sheet Information
Stockholders' equity $ 9,471.9 $ 6,967.1 36
Allowance for losses $ 2,170.9 $ 1,865.0
% of net receivables 3.20 % 3.24 %
Multiple to net losses (2)
(1) Adjusted to give a retroactive recognition to a two-for-one
stock split on December 23, 1998.
(2) The multiple to net losses is calculated as a ratio of the allowance
for losses to related annualized or trailing net credit losses on
receivables owned at the end of the period.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 1
<TABLE>
Pro Forma Managed Basis Income Statement and Key Data
- -----------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended or at Change from Prior Year
($ millions) 09/30/99 06/30/99 09/30/98 Amount Percent
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,897.3 $ 2,802.8 $ 2,330.8 $ 566.5 24.3 %
Insurance premiums 268.7 260.5 110.0 158.7 144.3
Investment and other income 144.2 184.0 83.6 60.6 72.6
---------- ----------- ---------- -----------
3,310.2 3,247.3 2,524.4 785.8 31.1
Expenses
Interest expense 1,074.8 1,036.1 882.6 192.2 21.8
Operating expenses 948.9 971.5 705.2 243.7 34.6
Provision for losses 556.6 551.5 397.9 158.7 39.9
Insurance benefits paid or
provided 111.3 115.2 34.2 77.1 N/M
---------- ----------- ---------- -----------
2,691.6 2,674.3 2,019.9 671.7 33.3
---------- ----------- ---------- -----------
Earnings before provision for
income taxes 618.6 573.0 504.5 114.1 22.6
Provision for income taxes 231.8 214.9 186.9 44.9 24.1
---------- ----------- ---------- -----------
Net earnings $ 386.8 $ 358.1 $ 317.6 $ 69.2 21.8 %
========== =========== ========== ===========
Net earnings per diluted share
(whole $) (1) $ 0.53 $ 0.49 $ 0.46 $ 0.07 15.9 %
Equivalent shares for diluted
EPS calculation (000's) (1) 731,586 732,738 696,453 35,133
Key Data ($ millions)
- ------------------------------------------------------------------------------------------------
Net interest margin
(% avg. mgd. recs.) 9.13 % 9.14 % 8.90 %
Efficiency ratio (managed) 44.7 46.4 43.9
Net credit losses
(as a % of avg. mgd. recs.) 2.73 2.78 2.38
Delinquency ratio
(% of mgd. gross recs.) 2.81 2.68 2.39
Managed Receivables
End of period $ 81,706.5 $ 78,530.0 $ 66,153.4 $ 15,553.1 23.5 %
Average 79,868.2 77,355.4 65,108.9 14,759.3 22.7
Managed Assets
End of period 92,342.4 91,331.3 70,649.8 21,692.6 30.7
Average 90,393.6 88,301.5 69,149.0 21,244.6 30.7
(1) Adjusted to give a retroactive recognition to a two-for-one stock split on December 23, 1998.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 2
<TABLE>
Managed Receivables ($ millions)
- ------------------------------------------------------------------------------------------------
<CAPTION>
Change from Prior Year
Outstanding at End of Period (1) 09/30/99 06/30/99 09/30/98 Amount Percent
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Home equity $ 26,457.9 $ 25,109.3 $ 21,924.5 $ 4,533.4 20.7 %
Personal loans / retail
sales finance 15,498.6 14,843.5 10,499.4 4,999.2 47.6
Truck and truck trailer 12,870.9 12,252.6 10,470.5 2,400.4 22.9
Credit card 11,112.0 10,667.8 7,969.7 3,142.3 39.4
Equipment 6,863.6 6,723.1 5,813.8 1,049.8 18.1
Manufactured housing 5,500.4 5,602.3 4,822.0 678.4 14.1
Fleet leasing 2,050.9 2,012.0 1,584.0 466.9 29.5
Recreational vehicles - - 1,988.6 (1,988.6) N/M
Warehouse and other 1,352.2 1,319.4 1,080.9 271.3 25.1
---------- ----------- ---------- ----------
Total $ 81,706.5 $ 78,530.0 $ 66,153.4 $ 15,553.1 23.5 %
========== =========== ========== ==========
Change from Prior Year
Average Outstanding (1) 09/30/99 06/30/99 09/30/98 Amount Percent
- -----------------------------------------------------------------------------------------------
Home equity $ 25,681.8 $ 24,964.2 $ 21,442.0 $ 4,239.8 19.8 %
Personal loans / retail
sales finance 15,102.5 15,036.5 10,373.3 4,729.2 45.6
Truck and truck trailer 12,519.8 11,818.1 10,386.1 2,133.7 20.5
Credit card 10,882.5 10,612.0 7,931.2 2,951.3 37.2
Equipment 6,751.5 6,409.5 5,787.9 963.6 16.6
Manufactured housing 5,560.9 5,520.7 4,632.2 928.7 20.0
Fleet leasing 2,011.5 1,595.2 1,597.0 414.5 26.0
Recreational vehicles - - 1,933.5 (1,933.5) N/M
Warehouse and other 1,357.7 1,399.2 1,025.7 332.0 32.4
---------- ----------- ---------- ----------
Total $ 79,868.2 $ 77,355.4 $ 65,108.9 $ 14,759.3 22.7 %
========== =========== ========== ==========
(1) Includes servicing portfolio and receivables held for securitization.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 3
<TABLE>
Credit Quality
- ----------------------------------------------------------------------------------
<CAPTION>
60+Days Contractual Three Months Ended or at
Delinquency (as a % of Mgd. Gross Receivables) 09/30/99 06/30/99 09/30/98
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Home equity 3.10 % 3.05 % 2.63 %
Personal loans / retail sales finance 3.91 3.80 3.90
Truck and truck trailer 1.50 1.43 1.34
Credit card 4.45 4.13 4.29
Equipment 1.24 0.90 0.91
Manufactured housing 1.77 1.65 1.34
Fleet leasing 0.75 1.06 0.53
Recreational vehicles - - 0.06
Total (managed) 2.81 % 2.68 % 2.39 %
Net Credit Losses (as a % of Avg. Mgd. Receivables)
- ------------------------------------------------------------------------------------
Home equity 1.44 % 1.28 % 1.11 %
Personal loans / retail sales finance 5.35 5.32 5.43
Truck and truck trailer 0.64 0.70 0.37
Credit card 6.83 7.55 7.62
Equipment 0.37 0.56 0.33
Manufactured housing 2.80 2.07 1.39
Fleet leasing 0.03 0.03 0.05
Recreational vehicles - - 0.19
Total (managed) 2.73 % 2.78 % 2.38 %
Loss Coverage (on-balance sheet)
- ------------------------------------------------------------------------------------
Allowance for losses $ 2,170.9 $ 2,139.4 $ 1,865.0
% of net finance receivables 3.20 % 3.14 % 3.24 %
Multiple to net losses (1) 1.63 x 1.63 x 1.70 x
(1) The multiple to net losses is calculated as a ratio of the allowance for losses
to related annualized or trailing net credit losses on receivables owned at the
end of the period.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 4
<TABLE>
Income Statement and Balance Sheet Items
- ----------------------------------------------------------------------------------------------
CAPTION>
Three Months Ended or at Change from Prior Year
Income Statement ($ millions) 09/30/99 06/30/99 09/30/98 Amount Percent
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,241.6 $ 2,262.1 $ 1,930.6 $ 311.0 16.1%
Insurance premiums 268.7 260.5 110.0 158.7 144.3
Investment and other
income 530.3 466.8 264.1 266.2 100.8
------------ ---------- ---------- ----------
3,040.6 2,989.4 2,304.7 735.9 31.9
Expenses
Interest expense 992.5 965.3 807.3 185.2 22.9
Operating expenses 948.9 971.5 705.2 243.7 34.6
Provision for losses 369.3 364.4 253.5 115.8 45.7
Insurance benefits paid
or provided 111.3 115.2 34.2 77.1 N/M
------------ ---------- ---------- ----------
2,422.0 2,416.4 1,800.2 621.8 34.5
Earnings before taxes 618.6 573.0 504.5 114.1 22.6
Provision for income taxes 231.8 214.9 186.9 44.9 24.1
------------ ---------- ---------- ----------
Net earnings $ 386.8 $ 358.1 $ 317.6 $ 69.2 21.8 %
Net earnings per diluted ============ ========== ========== ==========
share(whole $) $ 0.53 $ 0.49 $ 0.46 $ 0.07 15.9 %
Equivalent shares for
diluted EPS calculation
(000's) (1) 731,586 732,738 696,453 35,133
<PAGE>
Balance Sheet Items ($ millions)
- ------------------------------------------------------------------------------------------------
Net Receivables
End of period
Home equity $ 26,334.0 $ 24,972.0 $ 21,745.3 $ 4,588.7 21.1 %
Personal loans / retail
sales finance 15,498.6 14,843.5 10,499.4 4,999.2 47.6
Truck and truck trailer 12,870.9 12,252.6 10,470.5 2,400.4 22.9
Equipment 6,863.6 6,723.1 5,813.8 1,049.8 18.1
Manufactured housing 683.7 4,201.0 3,194.9 (2,511.2) (78.6)
Credit card 2,263.2 1,803.4 2,749.7 (486.5) (17.7)
Fleet leasing 2,050.9 2,012.0 1,584.0 466.9 29.5
Recreational vehicles - - 411.9 (411.9) N/M
Warehouse and other 1,352.2 1,319.4 1,080.9 271.3 25.1
------------ ---------- ---------- ----------
Total $ 67,917.1 $ 68,127.0 $ 57,550.4 $ 10,366.7 18.0 %
============ ========== ========== ==========
Average $ 66,133.2 $ 67,039.1 $ 56,502.2 $ 9,631.0 17.0 %
Total Assets
End of period $ 84,958.8 $ 85,894.1 $ 66,105.3 $ 18,853.5 28.5 %
Average 84,658.8 83,473.6 64,515.5 20,143.3 31.2
Debt 70,434.7 72,471.2 56,844.2 13,590.5 23.9
Stockholders' Equity
End of period $ 9,471.9 $ 9,109.8 $ 6,967.1
Per share
(whole $) (1) 13.01 12.51 20.12
Average 9,280.3 9,003.4 6,802.9
(1) Adjusted to give a retroactive recognition to a two-for-one stock split on December 23, 1998.
</TABLE>
