SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.1)
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Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted
by Rule 14a-6(e)(2)).
[ ] Definitive proxy statement.
[x] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
Allstate Financial Corporation
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(Name of the Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the appropriate box):
[x] No fee required.
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number, or
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4. Date Filed:
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[Allstate Financial Corporation letterhead]
May 8, 1998
Dear Shareholder:
Attached is a copy of a letter I sent to the "committee" today.
I believe it may of interest to you.
Also attached is a copy of our earnings release for the first quarter
of 1998 which was disseminated earlier today.
Sincerely,
/s/Craig Fishman
Craig Fishman
President and Chief Executive Officer
<PAGE>
[Allstate Financial Corporation letterhead]
May 8, 1998
William H. Savage
David W. Campbell
Edward A. McNally
C. Scott Bartlett, Jr.
Lindsay B. Trittipoe
Timothy G. Ewing
Value Partners, Ltd.
2200 Ross Avenue
Suite 4660 West
Dallas, Texas 75201
Gentlemen:
I believe that your letter dated May 6, 1998 to shareholders of Allstate
Financial Corporation contains a series of statements which are false and
misleading and represent a continuing pattern by you during this election
contest to provide to shareholders disclosure which is incomplete, selective and
simply untrue.
I also believe that your most recent letter makes clear the fact that you
still have no concrete plans for the future of Allstate, no concrete program as
to how you would run the Company and no people who have the capacity to manage
the Company. In addition, I am of the view that your efforts to take credit for
improvements at the Company over the last two years are misleading and
fundamentally untrue.
Your unjustified innuendo that we are withholding the announcement of our
first quarter results belies the fact that this is the week when we
traditionally announce first quarter earnings. More importantly, however, as you
can see from the press release of the first quarter earnings released earlier
today, we achieved our seventh consecutive quarter of profitability.
* You state that your nominees proposed hiring outside sales executives to
reduce reliance on Lee Fishman.
-- This statement is false. Management initiated this proposal because of
the fact that Lee Fishman is currently responsible for generating more
than 50% of the Company's business. How do you propose to replace that
business?
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* You state that the committee's nominees proposed a national search for a
national sales manager, which in turn led to the formation of Allstate
Factors.
-- This is a complete fabrication. The search you describe was in fact
discontinued when Peter Matthy assumed the role of National Sales and
Marketing Director. Allstate Factors was formed as a result of
management recruiting a person who has extensive experience in the
factoring business and recommending to the Board that the Company
establish Allstate Factors. The committee's nominees had nothing to do
with initiating or implementing this business opportunity -- other
than to approve it in their capacity as board members.
* You take credit for proposing our "graduate program" to retain customers.
-- Again, a total fabrication by the committee. The customer retention
program you describe was solely management's idea.
* You talk about Lindsay Trittipoe's "business plan."
-- You fail to mention that the mainstay of Mr. Trittipoe's business plan
would be the purchase of accounts receivable from businesses who clean
up gasoline station sites for states. Management rejected this
suggestion because of the numerous collection and regulatory issues.
-- You also fail to acknowledge that one of your nominees -- Mr. Savage
-- stated that this was a "bad idea."
-- You will also recall that Mr. Trittipoe was the proponent of the
concept that the Company consider investing in Russian municipal debt
and that management did not embrace that idea.
* You state that your members have referred prospective new clients and
sources of business to the Company.
-- You fail to state that the sum total of the prospective new clients
amounted to two referrals, both of which were deemed by management to
be totally unsuitable.
-- You also fail to state that you have not introduced any sources of
business to the Company.
2
<PAGE>
In addition to the above, you also make numerous other false and misleading
statements in your letter --
* The purported problem pertaining to compliance with NASDAQ listing
requirements which you trumpet as having recently discovered (and try to
take credit in a prior letter for resolving) was nothing more than a
momentary misunderstanding by NASDAQ which I clarified and rectified with
one telephone call last fall.
* You state that I failed to provide the Audit Committee with an opportunity
to meet with the Company's independent auditors in connection with the 1997
audit.
-- You fail to mention that historically those meetings take place in May
after management receives the annual "management letter" and that we
have not yet received the 1997 "management letter."
-- Also, you know that if any member of the Audit Committee had ever
requested to meet with the Company's auditors, management would have
arranged for the auditors to be made available promptly.
* You take issue with the extension in 1997 of stock options held by me and
Mr. Winkler.
-- You fail to note that the full Board, including four of your nominees
(Messrs. Savage, Campbell, McNally and Trittipoe) approved the
extension of those options, which represent options to acquire a mere
2,500 shares and 1,500 shares, respectively.
3
<PAGE>
* You note that Lee Fishman's employment arrangement entitles him to a
percentage of Allstate's total income.
-- You fail to note that Lee Fishman is entitled to incentive
compensation only with respect to any income in excess of $5,903,000
for a six month period in any calendar year and to date has never been
paid anything pursuant to this incentive arrangement!
-- You further fail to note that this incentive arrangement represents a
percentage which is less than half of what we agree to pay
unaffiliated sales agents (who do not have a minimum performance
threshold) on transactions which they find and which are funded.
-- Finally, you fail to note that this arrangement was approved by the
Board as being in the best interests of the Company.
* You note that you have no confidence in me.
-- However, you fail to note that even though you have no confidence in
me, you asked me to be a member of your slate and your nominees
approved the extension of my employment contract. Query: Does Ewing
have a similar lack of confidence in other members of his slate or
does he have confidence in them because they are willing to serve on
his slate?
-- Now with four business days to go before the meeting you admit you
need to find someone else to run the business because none of your
people are qualified to do the job.
* You claim that it was the committee that first suggested a compromise
slate.
-- This statement is absolutely false.
* You make much of the fact that four of management's nominees have not
purchased a single share of Allstate's stock.
-- You should be aware of the fact when those four nominees are elected
they will purchase shares of Allstate. They are obviously reluctant to
do so while the specter of your possible election hangs over the
Company.
4
<PAGE>
* You observe that, by excluding a one time $600,000 recovery in 1997,
Allstate's pre-tax income would be significantly reduced.
-- I believe if any of you possessed any fundamental understanding of
Allstate's business, you would know that our reported income
frequently includes items of a one time nature which have a
significant positive impact on our revenue.
* You note that the $8.5 million of non-accruing assets on the Company's
books at the end of 1997 was nearly 40% higher than the $6.1 million at the
end of 1995.
-- You fail to disclose the fact that the 1997 figure is a 21.3%
reduction in the total of $10.8 million in non-accruing assets which
the Company carried on its books at the end of 1996. Moreover, you
also fail to note that the 1997 figure represents a more conservative
approach, which I implemented with the approval of the full Board
(including all of your nominees then on the Board), the thrust of
which was to put assets on non-accrual status more quickly. In 1995,
that more conservative approach had not yet been implemented.
* You state the allowance for credit losses was only 32% of the total
non-accruing assets at December 31, 1997.
-- You fail to note that this represents a 50% increase from the 23.8%
allowance at 1996 year end and that the 1997 allowance was reviewed
and unanimously approved by the Audit Committee of which Messrs.
Campbell and Trittipoe were members.
* You seem to be criticizing both the existence of Allstate's subsidiary --
Lifetime Options -- and the manner in which its business was discontinued.
-- You fail to mention that during the years 1993 - 1996, Lifetime
Options recorded net income before taxes in the amounts of $257,000;
$271,000; $555,000 and $212,000, respectively.
-- You also fail to note that the entire Board supported the decision to
curtail the operations of Lifetime Options because of changing
conditions in the viatical settlement business and the fact that the
risk reward ratio in this business was no longer attractive.
5
<PAGE>
In my view, the platform on which the committee purports to stand for
election is nothing more than a tissue of incomplete and selective statements
and false and misleading disclosures.
Very truly yours,
/s/Craig Fishman
Craig Fishman
President and Chief Executive Officer
6
<PAGE>
[LOGO]
For immediate release
Contact: Craig Fishman, President and CEO
Phone: (703) 931-2274
ALLSTATE FINANCIAL CORPORATION
REPORTS SEVENTH CONSECUTIVE PROFITABLE QUARTER:
Arlington, VA, May 8, 1998 - Allstate Financial Corporation (NASDAQ: ASFN)
today announced results for the first quarter ended March 31, 1998, its seventh
consecutive quarter of profitability.
Total revenue for the first quarter of 1998 was $2,963,482, an increase of
8.5%, compared with total revenue of $2,732,106 reported for the same period in
1997.
Earnings for the first quarter of 1998 were $131,729 or $.06 per diluted
share versus $257,872 or $.11 per diluted share for the comparable period in
1997.
Excluding one-time, non-recurring charges of approximately $178,000
incurred for the current proxy contest and the litigation preceding it, earnings
for the first quarter of 1998 were approximately $244,000 or $.11 per share.
Also included in earnings for the first quarter of 1998 are the results of
Allstate Factors. Excluding the aforementioned non-recurring charges and the
results of Allstate Factors, earnings for the first quarter of 1998 were
approximately $317,000 or $.14 per share, a 23% increase over earnings for the
first quarter of 1997.
Craig Fishman, President and Chief Executive Officer, commented: "We are
pleased to extend our uninterrupted string of profitable quarters to seven. Our
23% earnings increase discussed above is the result of our business plan which
emphasizes risk management, expense control, client retention and the
diversification of our product mix and the overall risk profile of our
portfolio. Unfortunately, the current proxy contest and the litigation preceding
it adversely affected our results in the first quarter of 1998 and will do so in
the second quarter of 1998, as well."
Page 1 of 2
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Mr. Fishman continued, "We look forward to the conclusion of the proxy
contest and re-doubling our efforts to execute our business plan successfully."
Allstate Financial Corporation provides funding to small- and medium-sized
companies by purchasing and monitoring portions of their accounts receivable and
by making asset-based loans secured by accounts receivable, inventory, equipment
and other assets. Allstate Factors, a division of Allstate Financial
Corporation, is engaged in traditional non-recourse factoring of accounts
receivable.
ALLSTATE FINANCIAL CORPORATION
Financial Highlights
<TABLE>
<CAPTION>
At or for the Three
Months Ended,
March 31
<S> <C> <C>
1998 1997
Total Revenue $ 2,963,482 $ 2,732,106
Net Income $ 131,729 $ 257,872
Earnings Per Share - Basic $ 0.06 $ 0.11
Net Income Adjusted for $ 317,000 $ 257,872
Non-Recurring Charges
and Allstate Factors
Adjusted Earnings Per Share $ 0.14 $ 0.11
Shares Equity $23,703,384 $22,784,409
Book Value Per Share $ 10.22 $ 9.83
Weighted Average Shares
Outstanding - Basic 2,318,878 2,317,919
</TABLE>
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