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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 reported): July 19, 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 July 19, 1994 revenues, net
income and selected financial data and ratios for the second quarter
and six months ended June 30, 1994 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
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Exhibits Title
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<S> <C>
28 Press Release of GFC Financial Corporation
dated July 19, 1994
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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: July 20, 1994 By /s/ Bruno A. Marszowski
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Bruno A. Marszowski, Vice President - Controller
Principal Financial Officer/Authorized Officer
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<CAPTION>
GFC FINANCIAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUMMARY OF CONSOLIDATED INCOME
(UNAUDITED)
(Dollars in Thousands, except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
---------------------------------- ---------------------------------
1994 1993 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest earned from
financing transactions $ 113,567 $ 62,356 $ 185,571 $ 120,618
Interest expense 53,648 31,423 86,781 61,991
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Interest margins earned 59,919 30,933 98,790 58,627
Provision for possible
credit losses 4,888 827 8,138 3,528
Gains on securitizations
and sale of assets 4,500 179 4,503 2,240
Selling, administrative and
other operating expenses 29,314 14,195 46,617 27,833
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Income before income
taxes 30,217 16,090 48,538 29,506
Income taxes 12,912 5,767 19,844 10,638
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Income from continuing
operations 17,305 10,323 28,694 18,868
Income from discontinued
operations 2,870 4,208
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Net Income $ 17,305 $ 13,193 $ 28,694 $ 23,076
============= ============= ============= =============
Earnings per common
and equivalent share:
Income from continuing
operations $ 0.73 $ 0.51 $ 1.30 $ 0.92
Preferred dividends 0.03 0.06
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Income from continuing
operations after preferred
dividends 0.73 0.48 1.30 0.86
Income from discontinued
operations 0.14 0.21
------------- ------------- ------------- -------------
Earnings per common
and equivalent share $ 0.73 $ 0.62 $ 1.30 $ 1.07
============= ============= ============= =============
Dividends declared per
common share $ 0.18 $ 0.16 $ 0.36 $ 0.32
============= ============= ============= =============
Average outstanding
common and equivalent
shares 23,744,000 20,387,000 22,080,000 20,437,000
============= ============= ============= =============
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<TABLE>
<CAPTION>
GFC FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA AND RATIOS (UNAUDITED)
(Dollars in Thousands)
Six Months Ended Year Ended or at
or at June 30, December 31,
----------------------------------- ---------------------
1994 (1) 1993 (4) 1993 (4)
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<S> <C> <C> <C>
FINANCIAL DATA:
Average funds employed (AFE) and
securitizations (2) $ 3,760,512 $ 2,491,185 $ 2,637,547
Ending funds employed (EFE) 5,113,805 2,553,846 2,846,571
Securitizations (2) 345,752
Average earning assets (3) 3,316,497 2,183,194 2,321,359
Nonaccruing assets 187,044 101,384 102,607
Reserve and accrued liabilities for
possible credit losses 134,185 67,512 64,280
Total debt 3,966,411 2,012,407 2,082,350
Stockholders' equity 752,681 499,463 503,300
New business 698,658 351,656 1,007,794
Factoring volume 367,604
Write-offs:
Quarter 6,915 3,735
Year-to-date 12,021 6,672 12,575
RATIOS:
Write-offs (annualized) as a % of AFE
and securitizations 0.6% 0.5% 0.5%
Nonaccruing assets as a % of EFE and
securitizations (2) 3.4% 4.0% 3.6%
Reserve and accrued liabilities for possible
credit losses as a % of:
Ending funds employed and securitizations (2) 2.5% 2.6% 2.3%
Nonaccruing assets 71.7% 66.6% 62.6%
Interest margins earned (annualized) as a %
of average earning assets (3) 6.0% 5.4% 5.4%
Selling, administrative and other operating
expenses as a % of interest margins earned 47.2% 47.5% 46.6%
Total debt to equity 5.3 4.0 4.1
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(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 TriCon.
(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.
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EXHIBIT 28
Robert E. Radway Embargo until
602/ 207-5794 8:00 a.m. (E.D.T.)
7/19/94
GFC FINANCIAL CORPORATION
REPORTS SIGNIFICANT INCREASE IN EARNINGS
FOR THE SECOND QUARTER
PHOENIX, Arizona, July 19, 1994 -- GFC Financial Corporation (NYSE:GFC) today
reported results for the second quarter and six months ended June 30, 1994.
Income from continuing operations was $17.3 million ($0.73 per common
share) compared to $10.3 million ($0.48 per common share) for the second
quarter of 1993, a 68% increase in income from continuing operations and a 52%
increase in earnings per common share. The 1994 results include income for a
full quarter from Ambassador Factors ("Ambassador"), the factoring and asset
based lending company acquired on February 14, 1994, and two months of income
from TriCon Capital ("TriCon"), which was acquired on April 30, 1994.
Net income for the second quarter of 1994 was $17.3 million ($0.73 per
common share) compared with $13.2 million ($0.62 per common share) for the
comparable period in 1993, an increase of 31% in net income and 18% in earnings
per common share. The 1993 results included $2.9 million of income ($0.14 per
common share) from Verex Assurance, Inc., the discontinued mortgage insurance
subsidiary that was sold in July 1993.
Sam Eichenfield, Chairman and Chief Executive Officer of GFC, said:
"The Company's operations have expanded significantly with the acquisitions of
Ambassador and TriCon in 1994 and the improved results for the second quarter
reflect the contribution of these two operations. Additionally, we expect our
recently announced cost saving initiatives at TriCon, which are expected to
result in personnel reductions of at least 10% over the next several months,
to contribute to the future performance of the Company."
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Although average outstanding shares for the period were 23.7 million
due to a May 1994 secondary stock offering, Eichenfield went on to state that
he considered it most appropriate to view the quarterly earnings in the context
of having 28.4 million outstanding shares, the actual amount at June 30, 1994.
(Using this base, GFC's earnings were $0.61 per share, an increase of 27% over
the year-earlier period). "Obviously, we are pleased by this strong per share
increase which comes just after increasing our outstanding shares by 40%."
Portfolio quality, (nonearning assets as a percent of funds employed)
continues to remain at historic levels and was 3.7% of funds employed at June
30, 1994, an improvement from 3.8% at the end of the first quarter of 1994.
Nonearnings, measured as a percent of funds employed and securitizations,
declined further to 3.4% at June 30, 1994.
Interest margins earned, which drive GFC's performance, were strong at
6.0% of average earning assets. This measurement compares to 5.4% 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 strong
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
acquisitions made in 1994 and are consistent with the dynamics and loss
experience of the businesses acquired.
The higher operating expenses are attributable primarily to the
acquisitions of TriCon and Ambassador in 1994. The running rate of these
expenses (measured as a percent of interest margins earned) declined to 47.2%
(for the combined entities) in 1994 from 47.5% for GFC (which excluded TriCon
and Ambassador) in 1993. The recently announced cost saving initiatives are
expected to reduce this running rate for expenses even further in the future.
Earnings also benefited from strong portfolio growth (new business
volume was up by 99% to $699 million for the first six months of 1994 from $352
million for the 1993 period) and securitization gains of $4.0 million ($2.4
million after-tax) generated by TriCon in the second quarter.
Income taxes were higher due to higher tax rates in effect during the
second quarter of 1994 and to higher income before taxes.
GFC Financial Corporation, with assets in excess of $5.0 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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