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) January 27, 2000
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 fourth quarter earnings in
a news release dated January 27, 2000. 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
January 27, 2000 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: January 27, 2000
THE ASSOCIATES
NEWS
FOR IMMEDIATE RELEASE
THE ASSOCIATES ACHIEVES RECORD 1999 RESULTS
DALLAS, Jan. 27, 2000 - Associates First Capital Corporation
(NYSE:AFS) achieved record earnings for the fourth quarter and
full year 1999, driven by record growth in earning assets,
according to Keith W. Hughes, chairman and chief executive
officer. Earnings per share grew 20 percent to $0.56, up from
$0.47 for the same quarter in the prior year. Full-year earnings
per share increased 17 percent over 1998 to $2.04. The company's
full-year net income of $1.49 billion marked its 25th consecutive
year of increased earnings. The Associates reported strong
receivables growth for the year across all of its lines of
business.
"We start 2000 at The Associates with pride in our past
achievements and a commitment to take full advantage of the
opportunities ahead," said Hughes.
Key financial highlights for the 1999 fourth quarter and
full year include:
* Fourth quarter net earnings reached $409 million, an
increase of $77 million, or 23 percent over the fourth
quarter of 1998.
* 1999 net earnings were $1.49 billion, an increase of $267
million, or 22 percent over 1998.
* Earnings per share (diluted) for the quarter were $0.56,
compared with $0.47 in the year-earlier period, and reached
$2.04 for the year, a 17 percent increase over last year's
$1.75.
* Managed receivables at year end totalled $84 billion, an
18 percent increase over 1998. Total managed assets reached
$95 billion.
"Growth in 1999 was strong, particularly in the second half
during which we initiated the repositioning of our business units
to focus our resources on high growth and return markets.
Customer focus and a performance-driven culture continue to be
the hallmarks of the company that will guide us into the future,"
said Hughes.
- - more -
The Associates Achieves Record 1999 Results
Jan. 27, 2000
Page 2
The Associates also announced today its intention to
discontinue the loan origination operations of its Associates
Housing Finance (AHF) unit as a result of its disappointing
operating performance. AHF originates and services loans for
manufactured homes. In connection with the discontinuation of
its manufactured housing finance and wholesale activities, the
company will take a special pre-tax charge against first quarter
2000 earnings of approximately $110 million. This charge covers
exit costs, including severance, noncancellable obligations and
related costs. It also includes a provision for increased losses
expected on the disposition of repossessions and fair-value
adjustments of related assets.
Business Unit Performance
- -------------------------
Commercial Operations - Strong growth in the company's core
commercial businesses in 1999 resulted in continued market
leadership in the heavy-duty truck and trailer market and the
construction equipment market. This month, the company announced
it has reorganized its Transportation Finance Operations into two
divisions to focus on origination and servicing. This new
structure - branch and centralized operations - provides a strong
focus on both delivery channels, while creating a more simplified
systems infrastructure for an e-commerce future.
Credit Card Operations - The Associates produced solid
receivables growth in its Credit Card Operations in 1999. During
the year, the company added to its existing oil card partnerships
and, as a result, now has relationships with 11 million oil card
consumers - 40 percent more than in 1998. The Associates
expanded its retail credit card business by adding relationships
with Gateway Computers and National Tire & Battery. Late in
1999, The Associates announced an agreement with KeyCorp, which
continues the company's strategy to grow its bank card business
through agent bank relationships. Credit Card Operations
continues to focus on initiatives to expand electronic
communications and refine targeted marketing.
- - more -
<PAGE>
The Associates Achieves Record 1999 Results
Jan. 27, 2000
Page 3
International Operations - The company had another strong
growth year in its International Operations in 1999 led by its
core markets in Japan, the United Kingdom and Canada. Expansion
into several new countries positions the company for future
international growth through its over 1,300 branches.
U.S. Consumer and Home Equity Operations - During the year,
The Associates realigned its consumer operations into separate
Home Equity and U.S. Consumer Operations to take advantage of the
company's strengths in each market and to allow these units to
focus their sales efforts on the most profitable products. While
The Associates remains committed to the full-service branch
system, it believes it now is better positioned to capitalize
fully on all its sales capabilities.
Associates First Capital Corporation, established in 1918,
is a leading diversified finance company providing consumer and
commercial finance, leasing, insurance and related services
worldwide. The Associates, headquartered in Dallas, has
operations in the United States and 14 international markets.
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
Securities Analysts: (972) 652-7294
[email protected]
Shareholders: 1-888-NYSE-AFS
<PAGE>
THE ASSOCIATES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended or at
($ millions - except earnings per share) 12/31/99 12/31/98 %Change
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
Amount $ 408.7 $ 332.0 23
Return on average equity 16.97 % 17.64 %
Return on average adjusted equity 18.83 19.85
Return on average assets 1.93 1.83
Return on average managed assets 1.76 1.71
Net earnings per diluted share $ 0.56 $ 0.47 20
Key Data (Managed)
Total revenue $ 3,508.0 $ 2,784.6 26
Net interest margin (% avg. mgd. recs.) 9.26 % 9.06 %
Efficiency ratio 43.7 44.3
Credit quality
60+days contractual delinquency 2.77 % 2.57 %
Credit loss ratio (% avg. mgd. recs.) 2.97 2.65
</TABLE>
<TABLE>
<CAPTION>
Twelve Months Ended or at
($ millions - except earnings per share) 12/31/99 12/31/98 %Change
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings
Amount $ 1,490.4 $ 1,223.5 22
Return on average equity 16.28 % 17.94 %
Return on average adjusted equity 18.03 20.30
Return on average assets 1.78 1.90
Return on average managed assets 1.66 1.78
Net earnings per diluted share $ 2.04 $ 1.75 17
Managed receivables $ 84,414.7 $ 71,364.3 18
Total managed assets $ 95,088.0 $ 80,878.3 18
Key Data (Managed)
Total revenue $ 13,251.0 $ 10,029.5 32
Net interest margin (% avg. mgd. recs.) 9.13 % 8.91 %
Efficiency ratio 45.6 43.7
Credit quality
60+days contractual delinquency 2.77 % 2.57 %
Credit loss ratio (% avg. mgd. recs.) 2.80 2.43
Balance Sheet Information
Stockholders' equity $ 9,800.5 $ 8,526.5 15
Allowance for losses $ 2,174.4 $ 1,978.7
% of net receivables 3.16 % 3.25 %
Multiple to net losses (1) 1.50 x 1.74 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>
<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) 12/31/99 09/30/99 12/31/98
-------- -------- --------
<S> <C> <C> <C>
Revenue
Finance charges $ 3,035.2 $ 2,897.3 $ 2,503.5
Insurance premiums 270.2 268.7 145.0
Investment and other income 202.6 144.2 136.1
-------- -------- --------
3,508.0 3,310.2 2,784.6
Expenses
Interest expense 1,116.1 1,074.8 925.6
Operating expenses 994.4 948.9 801.4
Provision for losses 634.3 556.6 481.9
Insurance benefits paid
or provided 116.8 111.3 50.6
-------- -------- --------
2,861.6 2,691.6 2,259.5
-------- -------- --------
Earnings before provision
for income taxes 646.4 618.6 525.1
Provision for income taxes 237.7 231.8 193.1
-------- -------- --------
Net earnings $ 408.7 $ 386.8 $ 332.0
======== ======== ========
Net earnings per diluted
share (whole $) $ 0.56 $ 0.53 $ 0.47
Equivalent shares for
diluted EPS calculation (000's) 729,711 731,586 708,240
Key Data ($ millions)
Net interest margin (% avg. mgd. recs.) 9.26 % 9.13 % 9.06 %
Efficiency ratio (managed) 43.7 44.7 44.3
Net credit losses
(as a % of avg. mgd. recs.) 2.97 2.73 2.65
Delinquency ratio (% of mgd. gross recs.) 2.77 2.81 2.57
Managed Receivables
End of period $ 84,414.7 $ 81,706.5 $ 71,364.3
Average 82,862.9 79,868.2 69,687.6
Managed Assets
End of period 95,088.0 92,342.4 80,878.3
Average 93,055.7 90,393.6 77,613.4
</TABLE>
<TABLE>
<CAPTION>
Change from Prior Year
($ millions) Amount Percent
----------- --------
<S> <C> <C>
Revenue
Finance charges $ 531.7 21.2 %
Insurance premiums 125.2 86.3
Investment and other income 66.5 48.9
-----
723.4 26.0
Expenses
Interest expense 190.5 20.6
Operating expenses 193.0 24.1
Provision for losses 152.4 31.6
Insurance benefits paid or provided 66.2 N/M
-----
602.1 26.6
-----
Earnings before provision for income taxes 121.3 23.1
Provision for income taxes 44.6 23.1
-----
Net earnings $ 76.7 23.1 %
=====
Net earnings per diluted share (whole $) $ 0.09 19.5 %
Equivalent shares for diluted EPS
calculation (000's) 21,471
Key Data ($ millions)
Managed Receivables
End of period $ 13,050.4 18.3 %
Average 13,175.3 18.9
Managed Assets
End of period 14,209.7 17.6
Average 15,442.3 19.9
</TABLE>
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 2
<TABLE>
<CAPTION>
Managed Receivables ($ millions)
Outstanding at End of Period (1) 12/31/99 09/30/99 12/31/98
-------- --------- --------
<S> <C> <C> <C
Home equity $ 27,480.3 $ 26,457.9 $ 22,622.3
Personal loans / retail
sales finance 16,012.4 15,498.6 11,459.2
Truck and truck trailer 13,130.3 12,870.9 10,783.6
Credit card 11,733.6 11,112.0 10,296.8
Equipment 6,977.3 6,863.6 6,114.0
Manufactured housing 5,494.8 5,500.4 5,193.5
Fleet leasing 2,070.1 2,050.9 1,589.7
Recreational vehicles - - 2,036.9
Warehouse and other 1,515.9 1,352.2 1,268.3
-------- --------- --------
Total $ 84,414.7 $ 81,706.5 $ 71,364.3
Total on-going operations(2) $ 78,919.9 $ 76,206.1 $ 64,133.9
======== ========= ========
Average Outstanding (1) 12/31/99 09/30/99 12/31/98
-------- --------- --------
Home equity $ 26,990.7 $ 25,681.8 $ 22,397.3
Personal loans / retail
sales finance 15,649.3 15,102.5 11,172.0
Truck and truck trailer 13,026.9 12,519.8 10,617.8
Credit card 11,336.2 10,882.5 9,832.7
Equipment 6,870.2 6,751.5 5,895.8
Manufactured housing 5,506.1 5,560.9 5,016.4
Fleet leasing 2,057.9 2,011.5 1,588.8
Recreational vehicles - - 2,020.5
Warehouse and other 1,425.6 1,357.7 1,146.3
-------- --------- --------
Total $ 82,862.9 $ 79,868.2 $ 69,687.6
Total on-going operations(2) $ 77,356.8 $ 74,307.3 $ 62,650.7
======== ========= ========
(1) Includes servicing portfolio and receivables held for securitization.
(2) Excludes manufactured housing and recreational vehicles.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Managed Receivables ($ millions)
Change from Prior Year
Outstanding at End of Period (1) Amount Percent
------- ----------
<S> <C> <C>
Home equity $ 4,858.0 21.5 %
Personal loans / retail
sales finance 4,553.2 39.7
Truck and truck trailer 2,346.7 21.8
Credit card 1,436.8 14.0
Equipment 863.3 14.1
Manufactured housing 301.3 5.8
Fleet leasing 480.4 30.2
Recreational vehicles (2,036.9) N/M
Warehouse and other 247.6 19.5
--------
Total $ 13,050.4 18.3 %
Total on-going operations(2) $ 14,786.0 23.1 %
======== =========
Change from Prior Year
Average Outstanding (1) Amount Percent
------- ----------
Home equity $ 4,593.4 20.5 %
Personal loans / retail
sales finance 4,477.3 40.1
Truck and truck trailer 2,409.1 22.7
Credit card 1,503.5 15.3
Equipment 974.4 16.5
Manufactured housing 489.7 9.8
Fleet leasing 469.1 29.5
Recreational vehicles (2,020.5) N/M
Warehouse and other 279.3 24.4
--------
Total $ 13,175.3 18.9 %
Total on-going operations(2) $ 14,706.1 23.5 %
======== =========
(1) Includes servicing portfolio and receivables held for securitization.
(2) Excludes manufactured housing and recreational vehicles.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 3
<TABLE>
<CAPTION>
Credit Quality
60+Days Contractual Delinquency Three Months Ended or at
(as a % of Mgd. Gross Receivables) 12/31/99 09/30/99 12/31/98
-------- -------- --------
<S> <C> <C> <C>
Home equity 3.29% 3.10% 2.74%
Personal loans / retail sales
finance 3.84 3.91 3.74
Truck and truck trailer 1.48 1.50 1.22
Credit card 4.17 4.45 4.73
Equipment 0.89 1.24 0.84
Manufactured housing 1.66 1.77 2.31
Fleet leasing 0.39 0.75 1.09
Recreational vehicles - - 0.07
Total (managed) 2.77 % 2.81 % 2.57 %
Total on-going operations (managed)(2) 2.85 % 2.88 % 2.67%
Net Credit Losses (as a % of Avg. Mgd. Receivables)
Home equity 1.49 % 1.44 % 1.19 %
Personal loans / retail sales
finance 6.06 5.35 6.05
Truck and truck trailer 0.81 0.64 0.59
Credit card 6.66 6.83 7.52
Equipment 0.75 0.37 0.12
Manufactured housing 3.45 2.80 1.56
Fleet leasing 0.06 0.03 0.05
Recreational vehicles - - 0.21
Total (managed) 2.97 % 2.73 % 2.65 %
Total on-going operations (managed)(2) 2.93 % 2.73 % 2.81 %
Loss Coverage (on-balance sheet)
Allowance for losses $ 2,174.4 $ 2,170.9 $ 1,978.7
% of net finance receivables 3.16 % 3.20 % 3.25 %
Multiple to net losses (1) 1.50 x 1.63 x 1.74 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.
(2) Excludes manufactured housing and recreational vehicles.
</TABLE>
<PAGE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT - Page 4
<TABLE>
<CAPTION>
Income Statement and Balance Sheet Items
Three Months Ended or at
Income Statement ($ millions) 12/31/99 09/30/99 12/31/98
-------- -------- --------
<S> <C> <C> <C>
Revenue
Finance charges $ 2,318.8 $ 2,241.6 $ 2,053.0
Servicing related income 364.6 386.1 211.8
Insurance premiums 270.2 268.7 145.0
Investment and other income 202.6 144.2 136.1
-------- -------- --------
3,156.2 3,040.6 2,545.9
Expenses
Interest expense 988.7 992.5 846.6
Operating expenses 994.4 948.9 801.4
Provision for losses 409.9 369.3 322.2
Insurance benefits
paid or provided 116.8 111.3 50.6
-------- -------- --------
2,509.8 2,422.0 2,020.8
-------- -------- --------
Earnings before taxes 646.4 618.6 525.1
Provision for income taxes 237.7 231.8 193.1
-------- -------- --------
Net earnings $ 408.7 $ 386.8 $ 332.0
======== ======== ========
Net earnings per diluted
share (whole $) $ 0.56 $ 0.53 $ 0.47
Equivalent shares for diluted
EPS calculation (000's) 729,711 731,586 708,240
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 25,015.0 $ 26,334.0 $ 22,458.2
Personal loans / retail
sales finance 16,012.4 15,498.6 11,459.2
Truck and truck trailer 13,130.3 12,870.9 10,783.6
Credit card 2,247.1 2,263.2 3,138.1
Equipment 6,977.3 6,863.6 6,114.0
Manufactured housing 1,849.0 683.7 3,648.2
Fleet leasing 2,070.1 2,050.9 1,589.7
Recreational vehicles - - 479.7
Warehouse and other 1,515.9 1,352.2 1,268.3
-------- -------- --------
Total $ 68,817.1 $ 67,917.1 $ 60,939.0
======== ======== ========
Average $ 69,131.3 $ 66,133.2 $ 60,191.3
Total Assets
End of period $ 82,956.8 $ 84,958.8 $ 75,175.4
Average 84,515.9 84,658.8 72,490.2
Debt 68,657.4 70,434.7 63,306.5
Stockholders' Equity
End of period $ 9,800.5 $ 9,471.9 $ 8,526.5
Per share (whole $) 13.46 13.01 11.72
Average 9,632.7 9,280.3 7,525.2
</TABLE>
<TABLE>
<CAPTION>
Change from Prior Year
Income Statement ($ millions) Amount Percent
--------- -------
<S> <C> <C>
Revenue
Finance charges $ 265.8 12.9%
Servicing related income 152.8 72.1
Insurance premiums 125.2 86.3
Investment and other income 66.5 48.9
---------
610.3 24.0
Expenses
Interest expense 142.1 16.8
Operating expenses 193.0 24.1
Provision for losses 87.7 27.2
Insurance benefits paid
or provided 66.2 N/M
---------
489.0 24.2
---------
Earnings before taxes 121.3 23.1
Provision for income taxes 44.6 23.1
---------
Net earnings $ 76.7 23.1 %
=========
Net earnings per diluted
share (whole $) $ 0.09 19.5 %
Equivalent shares for diluted
EPS calculation (000's) 21,471
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 2,556.8 11.4 %
Personal loans / retail
sales finance 4,553.2 39.7
Truck and truck trailer 2,346.7 21.8
Credit card (891.0) (28.4)
Equipment 863.3 14.1
Manufactured housing (1,799.2) (49.3)
Fleet leasing 480.4 30.2
Recreational vehicles (479.7) N/M
Warehouse and other 247.6 19.5
---------
Total $ 7,878.1 12.9 %
=========
Average $ 8,940.0 14.9 %
Total Assets
End of period $ 7,781.4 10.4 %
Average 12,025.7 16.6
Debt 5,350.9 8.5
</TABLE>
<PAGE>
THE ASSOCIATES
1998 - 1999 QUARTERLY FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1998
Three Months Ended or at Full
($ millions - except earnings per share) 3/31 6/30 9/30 12/31 Year
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net earnings
Amount $ 281.0 $ 292.9 $ 317.6 $ 332.0 $ 1,223.5
Return on average equity 17.61 % 17.82 % 18.68 % 17.64 % 17.94 %
Return on average adjusted equity 20.17 20.16 20.94 19.85 20.30
Return on average assets 1.91 1.94 1.97 1.83 1.90
Return on average managed assets 1.82 1.77 1.84 1.71 1.78
Net earnings per diluted share (1) $ 0.40 $ 0.42 $ 0.46 $ 0.47 $ 1.75
Managed receivables $ 61,048.8 $ 64,311.8 $ 66,153.4 $ 71,364.3 $ 71,364.3
Total managed assets $ 63,564.0 $ 68,132.1 $ 70,649.8 $ 80,878.3 $ 80,878.3
Key Data (Managed)
Total revenue $ 2,288.3 $ 2,432.2 $ 2,524.4 $ 2,784.6 $ 10,029.5
Net interest margin (% avg. mgd. recs.) 8.83 % 8.92 % 8.90 % 9.06 % 8.91 %
Efficiency ratio 43.1 43.4 43.9 44.3 43.7
Credit quality
60+days contractual delinquency 2.18 % 2.29 % 2.39 % 2.57 % 2.57 %
Credit loss ratio (% avg. mgd. recs.) 2.31 2.37 2.38 2.65 2.43
Balance Sheet Information
Stockholders' equity $ 6,503.4 $ 6,680.0 $ 6,967.1 $ 8,526.5 $ 8,526.5
Allowance for losses 2,014.9 1,848.7 1,865.0 1,978.7 1,978.7
% of net receivables 3.50 % 3.32 % 3.24 % 3.25 % 3.25 %
Multiple to net losses (2) 1.56 x 1.51 x 1.70 x 1.74 x 1.74 x
(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>
<TABLE>
<CAPTION>
1999
Three Months Ended or at Full
($ millions - except earnings per share) 3/31 6/30 9/30 12/31 Year
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net earnings
Amount $ 336.8 $ 358.1 $ 386.8 $ 408.7 $ 1,490.4
Return on average equity 15.47 % 15.91 % 16.67 % 16.97 % 16.28 %
Return on average adjusted equity 17.20 17.56 18.44 18.83 18.03
Return on average assets 1.65 1.72 1.83 1.93 1.78
Return on average managed assets 1.56 1.62 1.71 1.76 1.66
Net earnings per diluted share (1) $ 0.46 $ 0.49 $ 0.53 $ 0.56 $ 2.04
Managed receivables $ 76,612.5 $ 78,530.0 $ 81,706.5 $ 84,414.7 $ 84,414.7
Total managed assets $ 86,805.4 $ 91,331.3 $ 92,342.4 $ 95,088.0 $ 95,088.0
Key Data (Managed)
Total revenue $ 3,185.5 $ 3,247.3 $ 3,310.2 $ 3,508.0 $ 13,251.0
Net interest margin (% avg. mgd. recs.) 9.02 % 9.14 % 9.13 % 9.26 % 9.13 %
Efficiency ratio 47.8 46.4 44.7 43.7 45.6
Credit quality
60+days contractual delinquency 2.70 % 2.68 % 2.81 % 2.77 % 2.77 %
Credit loss ratio (% avg. mgd. recs.) 2.72 2.78 2.73 2.97 2.80
Balance Sheet Information
Stockholders' equity $ 8,860.1 $ 9,109.8 $ 9,471.9 $ 9,800.5 $ 9,800.5
Allowance for losses 2,267.3 2,139.4 2,170.9 2,174.4 2,174.4
% of net receivables 3.32 % 3.14 % 3.20 % 3.16 % 3.16 %
Multiple to net losses (2) 1.65 x 1.63 x 1.63 x 1.50 x 1.50 x
(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
Pro Forma Managed Basis Income Statement and Key Data
<TABLE>
<CAPTION>
1998
Three Months Ended or at Full
($ millions) 3/31 6/30 9/30 12/31 Year
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,123.0 $ 2,257.7 $ 2,330.8 $ 2,503.5 $ 9,215.0
Insurance premiums 112.4 104.1 110.0 145.0 471.5
Investment and other income 52.9 70.4 83.6 136.1 343.0
---------- --------- --------- --------- ---------
2,288.3 2,432.2 2,524.4 2,784.6 10,029.5
Expenses
Interest expense 806.6 855.4 882.6 925.6 3,470.2
Operating expenses 620.0 671.4 705.2 801.4 2,798.0
Provision for losses 372.9 410.0 397.9 481.9 1,662.7
Insurance benefits paid or provided 42.8 30.5 34.2 50.6 158.1
---------- --------- --------- --------- ---------
1,842.3 1,967.3 2,019.9 2,259.5 8,089.0
---------- --------- --------- --------- ---------
Earnings before provision for income taxes 446.0 464.9 504.5 525.1 1,940.5
Provision for income taxes 165.0 172.0 186.9 193.1 717.0
---------- --------- --------- --------- ---------
Net earnings $ 281.0 $ 292.9 $ 317.6 $ 332.0 $ 1,223.5
========== ========= ========= ========= =========
Net earnings per diluted share (whole $)(1) $ 0.40 $ 0.42 $ 0.46 $ 0.47 $ 1.75
Equivalent shares for diluted EPS
calculation (000s)(1) 697,529 697,180 696,453 708,240 699,871
Key Data ($ millions)
Net interest margin (% avg. mgd. recs.) 8.83 % 8.92 % 8.90 % 9.06 % 8.91 %
Efficiency ratio (managed) 43.1 43.4 43.9 44.3 43.7
Net credit losses (as a % of avg. mgd. recs.) 2.31 2.37 2.38 2.65 2.43
Delinquency ratio (% of mgd. gross recs.) 2.18 2.29 2.39 2.57 2.57
<PAGE>
Managed Receivables
End of period $ 61,048.8 $ 64,311.8 $ 66,153.4 $ 71,364.3 $ 71,364.3
Average 59,614.0 62,890.0 65,108.9 69,687.6 64,505.8
Managed Assets
End of period 63,564.0 68,132.1 70,649.8 80,878.3 80,878.3
Average 61,801.4 66,245.3 69,149.0 77,613.4 68,836.8
(1) Adjusted to give a retroactive recognition to a two-for-one stock split on December 23, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999
Three Months Ended or at Full
($ millions) 3/31 6/30 9/30 12/31 Year
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,747.7 $ 2,802.8 $ 2,897.3 $ 3,035.2 $ 11,483.0
Insurance premiums 256.3 260.5 268.7 270.2 1,055.7
Investment and other income 181.5 184.0 144.2 202.6 712.3
---------- --------- --------- --------- ---------
3,185.5 3,247.3 3,310.2 3,508.0 13,251.0
Expenses
Interest expense 1,031.6 1,036.1 1,074.8 1,116.1 4,258.6
Operating expenses 979.6 971.5 948.9 994.4 3,894.4
Provision for losses 531.7 551.5 556.6 634.3 2,274.1
Insurance benefits paid or provided 103.7 115.2 111.3 116.8 447.0
---------- --------- --------- --------- ---------
2,646.6 2,674.3 2,691.6 2,861.6 10,874.1
---------- --------- --------- --------- ---------
Earnings before provision for income taxes 538.9 573.0 618.6 646.4 2,376.9
Provision for income taxes 202.1 214.9 231.8 237.7 886.5
---------- --------- --------- --------- ---------
Net earnings $ 336.8 $ 358.1 $ 386.8 $ 408.7 $ 1,490.4
========== ========= ========= ========= =========
Net earnings per diluted share (whole $)(1) $ 0.46 $ 0.49 $ 0.53 $ 0.56 $ 2.04
Equivalent shares for diluted EPS
calculation (000s)(2) 732,137 732,738 731,586 729,711 731,537
Key Data ($ millions)
Net interest margin (% avg. mgd. recs.) 9.02 % 9.14 % 9.13 % 9.26 % 9.13 %
Efficiency ratio (managed) 47.8 46.4 44.7 43.7 45.6
Net credit losses (as a % of avg. mgd. recs.) 2.72 2.78 2.73 2.97 2.80
Delinquency ratio (% of mgd. gross recs.) 2.70 2.68 2.81 2.77 2.77
<PAGE>
Managed Receivables
End of period $ 76,612.5 $ 78,530.0 $ 81,706.5 $ 84,414.7 $ 84,414.7
Average 76,113.2 77,355.4 79,868.2 82,862.9 79,088.6
Managed Assets
End of period 86,805.4 91,331.3 92,342.4 95,088.0 95,088.0
Average 86,475.0 88,301.5 90,393.6 93,055.7 89,575.4
(1) Adjusted to give a retroactive recognition to a two-for-one stock split on December 23, 1998.
</TABLE>
<PAGE>
THE ASSOCIATES
Managed Receivables ($ millions)
<TABLE>
<CAPTION>
1998
Three Months Ended or at Full
Outstanding at End of Period (1) 3/31 6/30 9/30 12/31 Year
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Home equity $ 19,976.3 $ 21,050.8 $ 21,924.5 $ 22,622.3 $ 22,622.3
Personal loans / retail
sales finance 9,224.5 10,365.2 10,499.4 11,459.2 11,459.2
Truck and truck trailer 10,043.5 10,312.3 10,470.5 10,783.6 10,783.6
Credit card 7,890.3 7,887.8 7,969.7 10,296.8 10,296.8
Equipment 5,632.7 5,790.9 5,813.8 6,114.0 6,114.0
Manufactured housing 3,972.4 4,423.9 4,822.0 5,193.5 5,193.5
Fleet leasing 1,577.0 1,602.8 1,584.0 1,589.7 1,589.7
Recreational vehicles 1,790.0 1,881.8 1,988.6 2,036.9 2,036.9
Warehouse and other 942.1 996.3 1,080.9 1,268.3 1,268.3
-------- -------- -------- -------- --------
Total $ 61,048.8 $ 64,311.8 $ 66,153.4 $ 71,364.3 $ 71,364.3
Total on-going operations (2)$ 55,286.4 $ 58,006.1 $ 59,342.8 $ 64,133.9 $ 64,133.9
======== ======== ======== ======== ========
Full
Average Outstanding (1) 3/31 6/30 9/30 12/31 Year
-------- -------- -------- -------- --------
Home equity $ 19,412.3 $ 20,480.9 $ 21,442.0 $ 22,397.3 $ 20,921.4
Personal loans / retail
sales finance 8,883.9 10,067.5 10,373.3 11,172.0 10,214.3
Truck and truck trailer 9,843.2 10,160.3 10,386.1 10,617.8 10,246.4
Credit card 8,083.4 7,882.9 7,931.2 9,832.7 8,551.7
Equipment 5,504.9 5,701.8 5,787.9 5,895.8 5,717.2
Manufactured housing 3,736.2 4,197.9 4,632.2 5,016.4 4,393.3
Fleet leasing 1,560.6 1,593.4 1,597.0 1,588.8 1,584.3
Recreational vehicles 1,729.7 1,841.7 1,933.5 2,020.5 1,880.1
Warehouse and other 859.8 963.6 1,025.7 1,146.3 997.1
-------- -------- -------- -------- --------
Total $ 59,614.0 $ 62,890.0 $ 65,108.9 $ 69,687.6 $ 64,505.8
Total on-going operations (2) $ 54,148.1 $ 56,850.4 $ 58,543.2 $ 62,650.7 $ 58,232.4
======== ======== ======== ======== ========
(1) Includes servicing portfolio and receivables held for securitization.
(2) Excludes manufactured housing and recreational vehicles
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999
Three Months Ended or at Full
Outstanding at End of Period (1) 3/31 6/30 9/30 12/31 Year
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Home equity $ 24,765.9 $ 25,109.3 $ 26,457.9 $ 27,480.3 $ 27,480.3
Personal loans / retail
sales finance 15,264.1 14,843.5 15,498.6 16,012.4 16,012.4
Truck and truck trailer 11,397.3 12,252.6 12,870.9 13,130.3 13,130.3
Credit card 10,519.7 10,667.8 11,112.0 11,733.6 11,733.6
Equipment 6,180.6 6,723.1 6,863.6 6,977.3 6,977.3
Manufactured housing 5,424.7 5,602.3 5,500.4 5,494.8 5,494.8
Fleet leasing 1,580.2 2,012.0 2,050.9 2,070.1 2,070.1
Recreational vehicles - - - - -
Warehouse and other 1,480.0 1,319.4 1,352.2 1,515.9 1,515.9
-------- -------- -------- -------- --------
Total $ 76,612.5 $ 78,530.0 $ 81,706.5 $ 84,414.7 $ 84,414.7
Total on-going operations (2) $ 71,187.8 $ 72,927.7 $ 76,206.1 $ 78,919.9 $ 78,919.9
======== ======== ======== ======== ========
Full
Average Outstanding (1) 3/31 6/30 9/30 12/31 Year
-------- -------- -------- -------- --------
Home equity $ 24,578.5 $ 24,964.2 $ 25,681.8 $ 26,990.7 $ 25,579.0
Personal loans / retail
sales finance 15,616.1 15,036.5 15,102.5 15,649.3 15,385.5
Truck and truck trailer 11,109.4 11,818.1 12,519.8 13,026.9 12,105.9
Credit card 10,456.9 10,612.0 10,882.5 11,336.2 10,834.7
Equipment 6,120.1 6,409.5 6,751.5 6,870.2 6,526.0
Manufactured housing 5,311.1 5,520.7 5,560.9 5,506.1 5,466.8
Fleet leasing 1,586.8 1,595.2 2,011.5 2,057.9 1,812.6
Recreational vehicles - - - - -
Warehouse and other 1,334.3 1,399.2 1,357.7 1,425.6 1,378.1
-------- -------- -------- -------- --------
Total $ 76,113.2 $ 77,355.4 $ 79,868.2 $ 82,862.9 $ 79,088.6
Total on-going operations (2) $ 70,802.1 $ 71,834.7 $ 74,307.3 $ 77,356.8 $ 73,621.8
======== ======== ======== ======== ========
(1) Includes servicing portfolio and receivables held for securitization.
(2) Excludes manufactured housing and recreational vehicles
</TABLE>
THE ASSOCIATES
Credit Quality
<TABLE>
<CAPTION>
1998
60+Days Contractual Three Months Ended or at Full
Delinquency (as a % of Mgd. Gross Receivables) 3/31 6/30 9/30 12/31 Year
---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C>
Home equity 2.23 % 2.40 % 2.63 % 2.74 % 2.74 %
Personal loans / retail sales finance 3.53 3.62 3.90 3.74 3.74
Truck and truck trailer 1.34 1.44 1.34 1.22 1.22
Credit card 3.96 4.09 4.29 4.73 4.73
Equipment 1.12 0.97 0.91 0.84 0.84
Manufactured housing 1.26 1.36 1.34 2.31 2.31
Fleet leasing 0.43 0.74 0.53 1.09 1.09
Recreational vehicles 0.05 0.07 0.06 0.07 0.07
Total (managed) 2.18 % 2.29 % 2.39 % 2.57 % 2.57 %
Total on-going operations (2) 2.31 % 2.43 % 2.55 % 2.67 % 2.67 %
Net Credit Losses (as a % of Avg. Mgd. Receivables)
Home equity 1.03 % 1.07 % 1.11 % 1.19 % 1.10 %
Personal loans / retail sales finance 5.71 5.65 5.43 6.05 5.67
Truck and truck trailer 0.52 0.45 0.37 0.59 0.48
Credit card 7.15 7.63 7.62 7.52 7.38
Equipment 0.11 0.25 0.33 0.12 0.20
Manufactured housing 0.94 0.84 1.39 1.56 1.21
Fleet leasing 0.08 0.08 0.05 0.05 0.07
Recreational vehicles 0.27 0.28 0.19 0.21 0.24
Total (managed) 2.31 % 2.37 % 2.38 % 2.65 % 2.43 %
Total on-going operations (2) 2.47 % 2.55 % 2.53 % 2.81 % 2.59 %
Loss Coverage (on-balance sheet)
Allowance for losses $ 2,014.9 $ 1,848.7 $ 1,865.0 $ 1,978.7 1,978.7
% of net finance receivables 3.50 % 3.32 % 3.24 % 3.25 % 3.25 %
Multiple to net losses (1) 1.56 x 1.51 x 1.70 x 1.74 x 1.74 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.
(2) Excludes manufactured housing and recreational vehicles
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999
60+Days Contractual Three Months Ended or at Full
Delinquency (as a % of Mgd. Gross Receivables) 3/31 6/30 9/30 12/31 Year
---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C>
Home equity 2.98 % 3.05 % 3.10 % 3.29 % 3.29 %
Personal loans / retail sales finance 3.49 3.80 3.91 3.84 3.84
Truck and truck trailer 1.39 1.43 1.50 1.48 1.48
Credit card 4.49 4.13 4.45 4.17 4.17
Equipment 1.15 0.90 1.24 0.89 0.89
Manufactured housing 1.88 1.65 1.77 1.66 1.66
Fleet leasing 1.13 1.06 0.75 0.39 0.39
Recreational vehicles - - - - -
Total (managed) 2.70 % 2.68 % 2.81 % 2.77 % 2.77 %
Total on-going operations (2) 2.76 % 2.76 % 2.88 % 2.85 % 2.85 %
Net Credit Losses (as a % of Avg. Mgd. Receivables)
Home equity 1.04 % 1.28 % 1.44 % 1.49 % 1.32 %
Personal loans / retail sales finance 5.57 5.32 5.35 6.06 5.57
Truck and truck trailer 0.50 0.70 0.64 0.81 0.67
Credit card 7.31 7.55 6.83 6.66 7.07
Equipment 0.25 0.56 0.37 0.75 0.49
Manufactured housing 1.96 2.07 2.80 3.45 2.58
Fleet leasing 0.03 0.03 0.03 0.06 0.04
Recreational vehicles - - - - -
Total (managed) 2.72 % 2.78 % 2.73 % 2.97 % 2.80 %
Total on-going operations (2) 2.78 % 2.84 % 2.73 % 2.93 % 2.82 %
<PAGE>
Loss Coverage (on-balance sheet)
Allowance for losses 2,267.3 $ 2,139.4 $ 2,170.9 $ 2,174.4 $ 2,174.4
% of net finance receivables 3.32 % 3.14 % 3.20 % 3.16 % 3.16 %
Multiple to net losses (1) 1.65 x 1.63 x 1.63 x 1.50 x 1.50 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.
(2) Excludes manufactured housing and recreational vehicles.
</TABLE>
THE ASSOCIATES
QUARTERLY FINANCIAL SUPPLEMENT
<TABLE>
<CAPTION>
Income Statement and Balance Sheet Items
1998
Three Months Ended or at Full
Income Statement ($ millions) 3/31 6/30 9/30 12/31 Year
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,045.0 $ 1,881.8 $ 1,930.6 $ 2,053.0 $ 7,910.4
Servicing related income 20.8 238.8 180.5 211.8 651.9
Insurance premiums 112.4 104.1 110.0 145.0 471.5
Investment and other income 52.9 70.4 83.6 136.1 343.0
-------- -------- -------- -------- --------
2,231.1 2,295.1 2,304.7 2,545.9 9,376.8
Expenses
Interest expense 757.3 785.5 807.3 846.6 3,196.7
Operating expenses 620.0 671.4 705.2 801.4 2,798.0
Provision for losses 365.0 342.8 253.5 322.2 1,283.5
Insurance benefits paid or provided 42.8 30.5 34.2 50.6 158.1
-------- -------- -------- -------- --------
1,785.1 1,830.2 1,800.2 2,020.8 7,436.3
-------- -------- -------- -------- --------
Earnings before taxes 446.0 464.9 504.5 525.1 1,940.5
Provision for income taxes 165.0 172.0 186.9 193.1 717.0
-------- -------- -------- -------- --------
Net earnings $ 281.0 $ 292.9 $ 317.6 $ 332.0 $ 1,223.5
======== ======== ======== ======== ========
Net earnings per diluted share (whole $)(1) $ 0.40 $ 0.42 $ 0.46 $ 0.47 $ 1.75
Equivalent shares for diluted EPS
calculation (000's) (1) 697,529 697,180 696,453 708,240 699,871
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 19,755.0 $ 20,850.3 $ 21,745.3 $ 22,458.2 $ 22,458.2
Personal loans / retail
sales finance 9,224.5 10,365.2 10,499.4 11,459.2 11,459.2
Truck and truck trailer 10,043.5 10,312.3 10,470.5 10,783.6 10,783.6
Credit card 7,787.7 2,632.5 2,749.7 3,138.1 3,138.1
Equipment 5,632.7 5,790.9 5,813.8 6,114.0 6,114.0
Manufactured housing 2,185.0 2,714.8 3,194.9 3,648.2 3,648.2
Fleet leasing 1,577.0 1,602.8 1,584.0 1,589.7 1,589.7
Recreational vehicles 483.8 430.7 411.9 479.7 479.7
Warehouse and other 942.1 996.3 1,080.9 1,268.3 1,268.3
-------- -------- -------- -------- --------
Total $ 57,631.3 $ 55,695.8 $ 57,550.4 $ 60,939.0 $ 60,939.0
======== ======== ======== ======== ========
Average $ 56,307.3 $ 54,177.1 $ 56,502.2 $ 60,191.3 $ 57,253.1
Total Assets
End of period $ 60,568.0 $ 63,410.1 $ 66,105.3 $ 75,175.4 $ 75,175.4
Average 58,835.4 60,531.3 64,515.5 72,490.2 64,529.6
Debt 51,994.8 54,605.3 56,844.2 63,306.5 63,306.5
Stockholders' Equity
End of period $ 6,503.4 $ 6,680.0 $ 6,967.1 $ 8,526.5 $ 8,526.5
Per share (whole $) (1) 9.38 9.65 10.06 11.72 11.72
Average 6,381.6 6,576.9 6,802.9 7,525.2 6,821.5
(1) Adjusted to give a retroactive recognition to a two-for-one stock split on December 23, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999
Three Months Ended or at Full
Income Statement ($ millions) 3/31 6/30 9/30 12/31 Year
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue
Finance charges $ 2,283.9 $ 2,262.1 $ 2,241.6 $ 2,318.8 $ 9,106.4
Servicing related income 223.3 282.8 386.1 364.6 1,256.8
Insurance premiums 256.3 260.5 268.7 270.2 1,055.7
Investment and other income 181.5 184.0 144.2 202.6 712.3
-------- -------- -------- -------- --------
2,945.0 2,989.4 3,040.6 3,156.2 12,131.2
Expenses
Interest expense 960.0 965.3 992.5 988.7 3,906.5
Operating expenses 979.6 971.5 948.9 994.4 3,894.4
Provision for losses 362.8 364.4 369.3 409.9 1,506.4
Insurance benefits paid or provided 103.7 115.2 111.3 116.8 447.0
-------- -------- -------- -------- --------
2,406.1 2,416.4 2,422.0 2,509.8 9,754.3
-------- -------- -------- -------- --------
Earnings before taxes 538.9 573.0 618.6 646.4 2,376.9
Provision for income taxes 202.1 214.9 231.8 237.7 886.5
-------- -------- -------- -------- --------
Net earnings $ 336.8 $ 358.1 $ 386.8 $ 408.7 $ 1,490.4
======== ======== ======== ======== ========
Net earnings per diluted share (whole $)(1) $ 0.46 $ 0.49 $ 0.53 $ 0.56 $ 2.04
Equivalent shares for diluted EPS
calculation (000's) (1) 732,137 732,738 731,586 729,711 731,537
Balance Sheet Items ($ millions)
Net Receivables
End of period
Home equity $ 24,614.2 $ 24,972.0 $ 26,334.0 $ 25,015.0 $ 25,015.0
Personal loans / retail sales finance 15,264.1 14,843.5 15,498.6 16,012.4 16,012.4
Truck and truck trailer 11,397.3 12,252.6 12,870.9 13,130.3 13,130.3
Credit card 3,728.0 1,803.4 2,263.2 2,247.1 2,247.1
Equipment 6,180.6 6,723.1 6,863.6 6,977.3 6,977.3
Manufactured housing 3,955.4 4,201.0 683.7 1,849.0 1,849.0
Fleet leasing 1,580.2 2,012.0 2,050.9 2,070.1 2,070.1
Recreational vehicles - - - - -
Warehouse and other 1,480.0 1,319.4 1,352.2 1,515.9 1,515.9
-------- -------- -------- -------- --------
Total $ 68,199.8 $ 68,127.0 $ 67,917.1 $ 68,817.1 $ 68,817.1
======== ======== ======== ======== ========
Average $ 67,475.6 $ 67,039.1 $ 66,133.2 $ 69,131.3 $ 67,328.9
Total Assets
End of period $ 81,935.9 $ 85,894.1 $ 84,958.8 $ 82,956.8 $ 82,956.8
Average 81,560.4 83,473.6 84,658.8 84,515.9 83,496.4
Debt 69,137.5 72,471.2 70,434.7 68,657.4 68,657.4
Stockholders' Equity
End of period $ 8,860.1 $ 9,109.8 $ 9,471.9 $ 9,800.5 $ 9,800.5
Per share (whole $) (1) 12.17 12.51 13.01 13.46 13.46
Average 8,705.3 9,003.4 9,280.3 9,632.7 9,157.3
(1) Adjusted to give a retroactive recognition to a two-for-one stock split on December 23, 1998.
</TABLE>
