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 13, 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 second quarter earnings and
tentative agreement with respect to a securities issuance in a news release
dated July 13, 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
July 13, 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: July 13, 1999
NEWS
FOR IMMEDIATE RELEASE
THE ASSOCIATES: RECORD EARNINGS FOR QUARTER, FIRST HALF
AFS Reports 2nd Quarter Net Earnings Up 22%
DALLAS (July 13, 1999) - Associates First Capital Corporation
(NYSE:AFS) today reported record earnings for the second quarter
and the first six months of the year, as the company enjoyed
strong contributions from its core businesses supported by the
successful integration of its recent acquisition of Avco
Financial Services.
"The year's results demonstrate the strength of our core
franchises and our expertise at integrating acquisitions," said
Keith W. Hughes, chairman and chief executive officer of The
Associates. "We continue to build a solid foundation for the
future and view the rest of 1999 with great confidence."
Key financial highlights of the quarter include:
* Net earnings for the quarter reached $358.1 million, a 22%
increase over the same period a year earlier. For the first
half, net earnings were $694.9 million, up 21% from the prior
year.
* Net earnings per share (diluted) for the quarter were
$0.49, 16% greater than the prior year. For the first six
months, net earnings per share reached $0.95, a 15% increase over
1998.
* Managed receivables were $78.5 billion, 22% greater than a
year ago, and total managed assets reached $91.3 billion.
"During the first half of the year, we have focused closely
on the Avco integration and our efforts are being rewarded,"
Hughes added. "The integration is moving ahead on schedule and
Avco is performing as projected."
Announcement of the Avco acquisition was the highlight of a
record growth year for The Associates during 1998, and the
company is successfully executing the capital plan launched last
year to support that growth. The plan has involved a secondary
equity offering, term debt issues, divestiture of certain
business units and assets and a capital security offering that
was announced today (see attached).
"We have reached an agreement to issue a $500 million
capital security that protects the interests of debt-holders and
shareholders alike," said Roy A. Guthrie, the company's chief
financial officer. "The placement of this financial instrument
concludes the previously announced capital plan."
The Associates internal growth during the quarter was led by
the Commercial Operation's truck/truck-trailer, equipment and
manufactured housing product lines, along with the domestic
Consumer Operation's home equity and credit card files. The
International Operation also continued to make a strong
contribution. In addition, the company completed the acquisition
of Newcourt's Canadian and U.K. fleet leasing operations,
establishing a platform for expansion of its fleet leasing
business into those markets.
Other operational highlights in the quarter included
acquisition of the BP/Amoco private label credit card portfolio,
agreements to manage the roadside assistance programs for Exxon
and Budget Rent-A-Car, the success of the new Gateway Computer
relationship and the rapid growth of EnTerra Settlement Services,
the real estate title and appraisal services subsidiary.
"We also focused on technology initiatives in all our major
business lines during the first half of this year, investing in
technology - especially the Internet - targeted at improved
customer convenience and retention, processing efficiency and
growth," said Hughes. "We do not expect these efforts to show
immediate results. Rather, we see them as investments in the
future."
Hughes said the results in the first half give management
confidence that 1999 will be another successful year, and that
the company is well-positioned for continued growth in 2000 and
beyond. As an example, the innovative Associates Freedom Loan
program, announced July 1, is expected to boost home equity
volume and enhance retention. The Associates Freedom Loan sets a
new industry standard by allowing home equity customers to lower
their interest rate by as much as 2.25% if they make all their
payments on time for three consecutive years. The program also
is expected to improve credit quality and reduce servicing costs
in the home equity portfolio.
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 company's
Internet 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. The capital securities referred to in this press
release will not be registered under the Securities Act of 1933,
as amended, and may not be offered or sold in the United States
absent registration or an applicable exception from registration
requirements.
# # #
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) 06/30/99 06/30/98 %Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
Amount $ 358.1 $ 292.9 22
Return on average equity 15.91 % 17.82 %
Return on average adjusted equity 17.56 20.16
Return on average assets 1.72 1.94
Return on average managed assets 1.62 1.77
Net earnings per diluted share (1) $ 0.49 $ 0.42 16
Managed receivables
Total managed assets
Key Data (Managed)
- ------------------
Total revenue $ 3,247.3 $ 2,432.2 34
Net interest margin (% avg. mgd. recs.) 9.14 % 8.92 %
Efficiency ratio 46.4 43.4
Credit quality
60+days contractual delinquency 2.68 % 2.29 %
Credit loss ratio (% avg. mgd. recs.) 2.78 2.37
Balance Sheet Information
- -------------------------
Stockholders' equity
Allowance for losses $ 2,139.4 $ 1,848.7
% of net receivables 3.14 % 3.32 %
Multiple to net losses (2) 1.63 x 1.51 x
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended or at
($ millions - except earnings per share) 06/30/99 06/30/98 %Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
Amount $ 694.9 $ 573.9 21
Return on average equity 15.70 % 17.72 %
Return on average adjusted equity 17.38 20.18
Return on average assets 1.68 1.93
Return on average managed assets 1.59 1.79
Net earnings per diluted share (1) $ 0.95 $ 0.82 15
Managed receivables $ 78,530.0 $ 64,311.8 22
Total managed assets $ 91,331.3 $ 68,132.1 34
Key Data (Managed)
- -----------------
Total revenue $ 6,432.8 $ 4,720.5 36
Net interest margin (% avg. mgd. recs.) 9.07 % 8.87 %
Efficiency ratio 47.1 43.3
Credit quality
60+days contractual delinquency 2.68 % 2.29 %
Credit loss ratio (% avg. mgd. recs.) 2.75 2.34
Balance Sheet Information
- -------------------------
Stockholders' equity $ 9,109.8 $ 6,680.0 36
Allowance for losses $ 2,139.4 $ 1,848.7
% of net receivables 3.14 % 3.32 %
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>
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Pro Forma Managed Basis Income Statement and Key Data Page 1
==============================================================================
Three Months Ended or at
($ millions) 06/30/99 12/31/98 06/30/98
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Finance charges $ 2,802.8 $ 2,503.5 $ 2,257.7
Insurance premiums 260.5 145.0 104.1
Investment and other income 184.0 136.1 70.4
---------- ----------- ----------
3,247.3 2,784.6 2,432.2
Expenses
Interest expense 1,036.1 925.6 855.4
Operating expenses 971.5 801.4 671.4
Provision for losses 551.5 481.9 410.0
Insurance benefits paid or provided 115.2 50.6 30.5
---------- ----------- ----------
2,674.3 2,259.5 1,967.3
---------- ----------- ----------
Earnings before provision for income taxes 573.0 525.1 464.9
Provision for income taxes 214.9 193.1 172.0
---------- ----------- ----------
Net earnings $ 358.1 $ 332.0 $ 292.9
========== =========== ==========
Net earnings per diluted share (whole $)(1) $ 0.49 $ 0.47 $ 0.42
Equivalent shares for diluted EPS
calculation (000's) (1) 732,738 708,240 697,180
Key Data ($ millions)
Net interest margin (% avg. mgd. recs.) 9.14 % 9.06 % 8.92 %
Efficiency ratio (managed) 46.4 44.3 43.4
Net credit losses (as a % of avg. mgd. recs.) 2.78 2.65 2.37
Delinquency ratio (% of mgd. gross recs.) 2.68 2.57 2.29
Managed Receivables
End of period $ 78,530.0 $ 71,364.3 $ 64,311.8
Average 77,355.4 69,687.6 62,890.0
Managed Assets
End of period 91,331.3 80,878.3 68,132.1
Average 88,301.5 77,613.4 66,245.3
</TABLE>
<TABLE>
<CAPTION>
Change from Prior Year
Amount Percent
--------- -------
<S> <S> <S>
Revenue
Finance charges $ 545.1 24.1 %
Insurance premiums 156.4 150.2
Investment and other income 113.6 N/M
----------
815.1 33.5
Expenses
Interest expense 180.7 21.1
Operating expenses 300.1 44.7
Provision for losses 141.5 34.5
Insurance benefits paid or provided 84.7 N/M
----------
707.0 35.9
----------
Earnings before provision for income taxes 108.1 23.3
Provision for income taxes 42.9 24.9
----------
Net earnings $ 65.2 22.3 %
==========
Net earnings per diluted share (whole $)(1) $ 0.07 16.3 %
Equivalent shares for diluted EPS
calculation (000's)(1) 35,558
Key Data ($ millions)
Managed Receivables
End of period $ 14,218.2 22.1 %
Average 14,465.4 23.0
Managed Assets
End of period 23,199.2 34.1
Average 22,056.2 33.3
(1) Adjusted to give a retroactive recognition to a two-for-one
stock split on December 23, 1998.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Managed Receivables ($ millions) Page 2
==================================================================
<S> <C> <C> <C>
Outstanding at End of Period (1) 06/30/99 12/31/98 06/30/98
- ------------------------------------------------------------------
Home equity $ 25,109.3 $ 22,622.3 $ 21,050.8
Personal loans / retail sales
finance 14,843.5 11,459.2 10,365.2
Truck and truck trailer 12,252.6 10,783.6 10,312.3
Credit card 10,667.8 10,296.8 7,887.8
Equipment 6,723.1 6,114.0 5,790.9
Manufactured housing 5,602.3 5,193.5 4,423.9
Fleet leasing 2,012.0 1,589.7 1,602.8
Recreational vehicles - 2,036.9 1,881.8
Warehouse and other 1,319.4 1,268.3 996.3
---------- ----------- ----------
Total $ 78,530.0 $ 71,364.3 $ 64,311.8
========== =========== ==========
- ------------------------------------------------------------------
Average Outstanding (1) 06/30/99 12/31/98 06/30/98
- ------------------------------------------------------------------
Home equity $ 24,964.2 $ 22,397.3 $ 20,480.9
Personal loans / retail sales
finance 15,036.5 11,172.0 10,067.5
Truck and truck trailer 11,818.1 10,617.8 10,160.3
Credit card 10,612.0 9,832.7 7,882.9
Equipment 6,409.5 5,895.8 5,701.8
Manufactured housing 5,520.7 5,016.4 4,197.9
Fleet leasing 1,595.2 1,588.8 1,593.4
Recreational vehicles - 2,020.5 1,841.7
Warehouse and other 1,399.2 1,146.3 963.6
---------- ----------- ----------
Total $ 77,355.4 $ 69,687.6 $ 62,890.0
========== =========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Change from Prior Year
Outstanding at End of Period (1) Amount Percent
- ----------------------------------------------------------------------------
<S> <C> <C>
Home equity $ 4,058.5 19.3 %
Personal loans / retail sales
finance 4,478.3 43.2
Truck and truck trailer 1,940.3 18.8
Credit card 2,780.0 35.2
Equipment 932.2 16.1
Manufactured housing 1,178.4 26.6
Fleet leasing 409.2 25.5
Recreational vehicles (1,881.8) N/M
Warehouse and other 323.1 32.4
----------
Total $ 14,218.2 22.1 %
==========
- ----------------------------------------------------------------------------
Change from Prior Year
Average Outstanding (1) Amount Percent
- ----------------------------------------------------------------------------
Home equity $ 4,483.3 21.9 %
Personal loans / retail sales
finance 4,969.0 49.4
Truck and truck trailer 1,657.8 16.3
Credit card 2,729.1 34.6
Equipment 707.7 12.4
Manufactured housing 1,322.8 31.5
Fleet leasing 1.8 0.1
Recreational vehicles (1,841.7) N/M
Warehouse and other 435.6 45.2
==========
Total $ 14,465.4 23.0 %
==========
(1) Includes servicing portfolio and receivables held for securitization.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Credit Quality Page 3
===========================================================================
60+Days Contractual Three Months Ended or at
Delinquency (as a % of Mgd. 06/30/99 12/31/98 06/30/98
Gross Receivables)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Home equity 3.05 % 2.74 % 2.40 %
Personal loans / retail sales finance 3.80 3.74 3.62
Truck and truck trailer 1.43 1.22 1.44
Credit card 4.13 4.73 4.09
Equipment 0.90 0.84 0.97
Manufactured housing 1.65 2.31 1.36
Fleet leasing 1.06 1.09 0.74
Recreational vehicles - 0.07 0.07
Total (managed) 2.68 % 2.57 % 2.29 %
Net Credit Losses (as a % of
Avg. Mgd. Receivables)
- ---------------------------------------------------------------------------
Home equity 1.28 % 1.19 % 1.07 %
Personal loans / retail sales finance 5.32 6.05 5.65
Truck and truck trailer 0.70 0.59 0.45
Credit card 7.55 7.52 7.63
Equipment 0.56 0.12 0.25
Manufactured housing 2.07 1.56 0.84
Fleet leasing 0.03 0.05 0.08
Recreational vehicles - 0.21 0.28
Total (managed) 2.78 % 2.65 % 2.37 %
Loss Coverage (on-balance sheet)
- ----------------------------------------------------------------------------
Allowance for losses $ 2,139.4 $ 1,978.7 $ 1,848.7
% of net finance receivables 3.14 % 3.25 % 3.32 %
Multiple to net losses (1) 1.63 x 1.74 x 1.51 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
<TABLE>
<CAPTION>
Income Statement and Balance Sheet Items Page 4
=============================================================================
Three Months Ended or at
Income Statement ($ millions) 06/30/99 12/31/98 06/30/98
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Finance charges $ 2,262.1 $ 2,053.0 $ 1,881.8
Insurance premiums 260.5 145.0 104.1
Investment and other income 466.8 347.9 309.2
------------ --------- ----------
2,989.4 2,545.9 2,295.1
Expenses
Interest expense 965.3 846.6 785.5
Operating expenses 971.5 801.4 671.4
Provision for losses 364.4 322.2 342.8
Insurance benefits paid or provided 115.2 50.6 30.5
------------ ---------- ----------
2,416.4 2,020.8 1,830.2
------------ ---------- ----------
Earnings before taxes 573.0 525.1 464.9
Provision for income taxes 214.9 193.1 172.0
------------ ---------- ----------
Net earnings $ 358.1 $ 332.0 $ 292.9
============ ========== ==========
Net earnings per diluted share (whole $)(1) $ 0.49 $ 0.47 $ 0.42
Equivalent shares for diluted EPS
calculation (000's) (1) 732,738 708,240 697,180
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended or at
06/30/99 12/31/98 06/30/98
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 24,972.0 $ 22,458.2 $ 20,850.3
Personal loans / retail sales finance 14,843.5 11,459.2 10,365.2
Truck and truck trailer 12,252.6 10,783.6 10,312.3
Equipment 6,723.1 6,114.0 5,790.9
Manufactured housing 4,201.0 3,648.2 2,714.8
Credit card 1,803.4 3,138.1 2,632.5
Fleet leasing 2,012.0 1,589.7 1,602.8
Recreational vehicles - 479.7 430.7
Warehouse and other 1,319.4 1,268.3 996.3
------------ ---------- ----------
Total $ 68,127.0 $ 60,939.0 $ 55,695.8
============ ========== ==========
Average $ 67,039.1 $ 60,191.3 $ 54,177.1
Total Assets
End of period $ 85,894.1 $ 75,175.4 $ 63,410.1
Average 83,473.6 72,490.2 60,531.3
Debt 72,471.2 63,306.5 54,605.3
Stockholders' Equity
End of period $ 9,109.8 $ 8,526.5 $ 6,680.0
Per share (whole $) (1) 12.51 11.72 9.65
Average 9,003.4 7,525.2 6,576.9
Debt-to-equity 7.66 x 7.40 x 8.17 x
Debt-to-adjusted equity 8.31 8.12 9.06
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Change from Prior Year
Amount Percent
Income Statement ($ millions)
- ------------------------------------------------------------------------------
<S> <C> <C>
Revenue
Finance charges $ 380.3 20.2 %
Insurance premiums 156.4 150.2
Investment and other income 157.6 N/M
------------
694.3 30.3
Expenses
Interest expense 179.8 22.9
Operating expenses 300.1 44.7
Provision for losses 21.6 6.3
Insurance benefits paid or provided 84.7 N/M
------------
586.2 32.0
------------
Earnings before taxes 108.1 23.3
Provision for income taxes 42.9 24.9
------------
Net earnings $ 65.2 22.3 %
============
Net earnings per diluted share (whole $)(1) $ 0.07 16.3 %
Equivalent shares for diluted EPS
calculation (000's) (1) 35,558
<PAGE>
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 4,121.7 19.8 %
Personal loans / retail sales finance 4,478.3 43.2
Truck and truck trailer 1,940.3 18.8
Equipment 932.2 16.1
Manufactured housing 1,486.2 54.7
Credit card (829.1) (31.5)
Fleet leasing 409.2 25.5
Recreational vehicles (430.7) N/M
Warehouse and other 323.1 32.4
------------
Total $ 12,431.2 22.3 %
============
Average $ 12,862.0 23.7 %
Total Assets
End of period $ 22,484.0 35.5 %
Average 22,942.3 37.9
Debt 17,865.9 32.7
(1) Adjusted to give a retroactive recognition to a two-for-one
stock split on December 23, 1998.
</TABLE>
<PAGE>
[LOGO]
ASSOCIATES FIRST CAPITAL CORPORATION
ATTACHMENT TO SECOND QUARTER 1999 EARNINGS RELEASE
The company also announced today that it has reached
tentative agreement with a specified underwriter that the company
may designate such underwriter sell up to $500 million in Class A
Common Stock within three years. If the company has not made
such designation by two months before the expiration of such time
period, the underwriter may do so. Upon such designation, the
underwriter and the company will use their reasonable best
efforts to negotiate the terms of a firm commitment underwriting
agreement to issue the Class A Common Stock.
In addition, the company has reached a separate tentative
agreement to have its principal operating subsidiary, Associates
Corporation of North America ("ACONA") issue $500 million in
capital securities. Under the terms of the transaction, ACONA
will issue $500 million in senior notes to a trust (the "Senior
Notes") sponsored by ACONA, which will then issue $500 million in
preferred securities (the "Trust Securities") to an institutional
investor in a private transaction. The coupon on these
securities will be set at market rate. The Trust Securities and
the Senior Notes will mature 39 months from the date of issuance,
and the Trust Securities may be remarketed during that period by
their holder.
The Trust Securities and the Senior Notes will not be
registered under the Securities Act of 1933, as amended, and may
not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.
# # #
