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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C, 20549
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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 reported): October 18, 1994
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GFC FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-11011 86-0695381
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
DIAL CORPORATE CENTER, PHOENIX, ARIZONA 85077
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/207-6900
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Item 5. Other Events.
GFC Financial Corporation announced on October 18, 1994 revenues, net
income and selected financial data and ratios for the third quarter
and nine months ended September 30, 1994 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibits Title
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<S> <C>
28 Press Release of GFC Financial Corporation
dated October 18, 1994
</TABLE>
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SIGNATURES
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 thereunto duly authorized.
GFC FINANCIAL CORPORATION
(Registrant)
Dated: October 21, 1994 By: /s/ Bruno A. Marszowski
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Bruno A. Marszowski, Senior Vice President,
Chief Financial Officer and Controller
Principal Financial Officer/Authorized Officer
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EXHIBIT 28
Robert J. Fitzsimmons Embargo until
602/207-5759 8:00 a.m. (E.D.T)
10/18/94
GFC FINANCIAL CORPORATION
REPORTS SIGNIFICANT INCREASE IN EARNINGS
FOR THE THIRD QUARTER
PHOENIX, Arizona, October 18, 1994 -- GFC Financial Corporation (NYSE:GFC)
today reported strong results for the third quarter ended September 30, 1994
resulting from the addition of an acquisition for a full quarter, quality
portfolio growth and sustained net interest margins.
Net income was $22.3 million ($0.78 per common share) for the third
quarter of 1994 compared to $6.8 million ($0.32 per common share) for the third
quarter of 1993, a 228% increase in income from continuing operations and a
144% increase in earnings per share on a significantly increased number of
shares for the 1994 period. The results for the third quarter of 1994 include
income for a full quarter from TriCon Capital ("TriCon") acquired on April 30,
1994. Net income for the third quarter of 1993 included a $4.9 million ($0.24
per common share) adjustment for tax rate increases applicable to deferred
income taxes generated by the Company's leveraged lease portfolio. Excluding
this adjustment, net income for the third quarter of 1993 was $11.6 million
($0.56 per common share). The improvement in net income and earnings per
share over the third quarter of 1993, before including the adjustment for
deferred income taxes, was 92% and 39%, respectively.
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Sam Eichenfield, President, Chairman and Chief Executive Officer of
GFC, indicated that he was pleased with the strong performance for the third
quarter of 1994, which is the first full quarter with both Ambassador Factors
("Ambassador), the factoring and asset based lending company acquired in
February 1994, and TriCon. Eichenfield stated that "along with GFC's core
operations, the addition of Ambassador and TriCon has formed a solid foundation
for the Company's continued growth." He added that new business volume
continues strong, exceeding $1.1 billion for the nine months of 1994 and
portfolio quality continues to improve.
Nonearning assets as a percent of funds employed was 3.5% at September
30, 1994, an improvement from 3.7% at the end of the second quarter of 1994,
and as measured as a percent of funds employed and securitizations declined
further to 3.3% at September 30, 1994.
Interest margins earned continue to hold at 6.0% of average earning
assets. This measurement compares to 5.5% for the 1993 period and reflects the
contributions of the acquisitions made in 1994 as well as the continuing strong
returns of the core financial operations. The interest margins more than
offset the higher provisions for possible credit losses and the higher selling,
administrative and other operating expenses ("operating expenses").
The higher loss provisions are attributable to the operations of the
businesses acquired in 1994 and are consistent with the dynamics and expected
loss experience of those businesses.
The higher operating expenses are primarily attributable to the
acquisitions of TriCon and Ambassador in 1994. The running rate of these
expenses (measured as a percent of interest margins earned) was 46.6% (for the
combined entities) in 1994 an increase from 46.1% for GFC (which excluded
TriCon and Ambassador) in 1993, but an improvement over 47.2% for the second
quarter of 1994.
Earnings also benefited from strong portfolio growth. New business
volume was up by 90% to $1.1 billion for the first nine months of 1994, from
$591 million for the 1993 period.
Income taxes were higher in the third quarter of 1994 due to an
increase in income before income taxes and to a higher tax rate in effect
during the third quarter of 1994 (primarily attributable to foreign income
taxes provided).
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GFC Financial Corporation, with assets of $5.4 billion, is a
Phoenix-based major domestic commercial finance company providing secured
lending to middle-market companies, making loans from $500,000 to $35 million.
GFC also offers financing programs to manufacturers, distributors, vendors and
franchisors to facilitate the sale of their products to end-users.
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<TABLE>
GFC FINANCIAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUMMARY OF CONSOLIDATED INCOME
(UNAUDITED)
(Dollars in Thousands, except per share data)
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
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1994 1993 1994 1993
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<S> <C> <C> <C> <C>
Interest earned from
financing transactions $ 147,649 $ 64,944 $ 343,501 $ 188,406
Interest expense 65,881 30,788 152,662 92,779
Operating lease depreciation 11,345 1,494 21,626 4,338
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Interest margins earned 70,423 32,662 169,213 91,289
Provision for possible
credit losses 2,215 178 10,353 3,706
Gains on securitizations
and sale of assets 1,169 5,672 2,240
Selling, administrative and
other operating expenses 32,253 14,211 78,870 42,044
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Income before income taxes 37,124 18,273 85,662 47,779
Income taxes (1) 14,867 11,523 34,711 22,161
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Income from continuing
operations 22,257 6,750 50,951 25,618
Income from discontinued
operations 4,208
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Net Income $ 22,257 $ 6,750 $ 50,951 $ 29,826
========== ========== ========== ==========
Earnings per common
and equivalent share:
Income from continuing
operations $ 0.78 $ 0.33 $ 2.10 $ 1.26
Preferred dividends 0.01 0.07
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Income from continuing
operations after preferred
dividends 0.78 0.32 2.10 1.19
Income from discontinued
operations 0.21
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Earnings per common
and equivalent share $ 0.78 $ 0.32 $ 2.10 $ 1.40
========== ========== ========== ==========
Dividends declared per
common share $ 0.18 $ 0.18 $ 0.54 $ 0.50
========== ========== ========== ==========
Average outstanding
common and equivalent
shares 28,620,000 20,359,000 24,284,000 20,390,000
========== ========== ========== ==========
</TABLE>
(1) The results of operations for the quarter and nine months ended September
30, 1993 include a one time adjustment of $4,857,000 ($0.24 per common
share) representing the effect of federal tax increases and state income
taxes primarily applicable to deferred income taxes generated by the
company's leveraged lease portfolio.
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<TABLE>
GFC FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA AND RATIOS (UNAUDITED)
(Dollars in Thousands)
<CAPTION>
Nine Months Ended Year Ended or at
or at September 30, December 31,
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1994 (1) 1993 (4) 1993 (4)
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<S> <C> <C> <C>
FINANCIAL DATA:
Average funds employed (AFE) and
securitizations (2) $4,289,404 $2,541,694 $ 2,637,547
Ending funds employed (EFE) 5,294,099 2,654,865 2,846,571
Securitizations (2) 307,459
Average earning assets (3) 3,759,107 2,226,670 2,321,359
Nonearning assets 186,016 101,753 102,607
Reserve and accrued liabilities for
possible credit losses (5) 130,727 66,339 64,280
Total debt 4,165,016 1,939,504 2,082,350
Stockholders' equity 771,643 498,732 503,300
New business 1,120,927 591,215 1,007,794
Factoring volume 594,132
Write-offs:
Quarter 7,098 1,665
Year-to-date 19,009 8,337 12,575
RATIOS:
Write-offs (annualized) as a % of AFE
and securitizations 0.6% 0.4% 0.5%
Nonearning assets as a % of EFE and
securitizations (2) 3.3% 3.8% 3.6%
Reserve and accrued liabilities for possible
credit losses as a % of:
Ending funds employed and securitizations
(2) (5) 2.3% 2.5% 2.3%
Nonearning assets 70.3% 65.2% 62.6%
Interest margins earned (annualized) as a %
of average earning assets (3) 6.0% 5.5% 5.4%
Selling, administrative and other operating
expenses as a % of interest margins earned 46.6% 46.1% 46.6%
Total debt to equity 5.4 3.9 4.1
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</TABLE>
(1) Includes financial results from the acquisitions of Ambassador (February
14, 1994) and TriCon (April 30, 1994).
(2) Securitizations are assets sold under securitization agreements and
managed by the Company.
(3) Average earning assets are net of average deferred taxes on leveraged
leases and average nonaccruing assets for the periods presented.
(4) The 1993 periods exclude TriCon and Ambassador.
(5) Loss reserves for securitized transactions total $15,496 and are
classified as accrued liabilities in the balance sheet.
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