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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): January 24, 1995
________________________________________________________________________________
GFC FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-11011 86-0695381
________________________________________________________________________________
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
DIAL CORPORATE CENTER, PHOENIX, ARIZONA 85077
________________________________________________________________________________
(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 January 24, 1995 revenues, net
income and selected financial data and ratios for the fourth quarter
and year-ended December 31, 1994 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
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Exhibits Title
_________________ __________________________________________
<S> <C>
28 Press Release of GFC Financial Corporation
dated January 24, 1995
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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: January 24, 1995 By /s/ Bruno A. Marszowski
____________________________________________________
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.)
GFC FINANCIAL CORPORATION
ANNOUNCES INCREASES OF 37% IN 1994 FOURTH QUARTER
AND 63% IN FULL YEAR OPERATING EARNINGS PER SHARE
WITH A
24% INCREASE IN YEAR END AVERAGE SHARES OUTSTANDING
PHOENIX, Arizona, January 24, 1995 -- GFC Financial Corporation (NYSE:GFC)
today reported that income from continuing operations was $23.4 million ($0.82
per common share) for the fourth quarter of 1994 compared to $12.2 million
($0.60 per common share) for the fourth quarter of 1993, a 91% increase in
income from continuing operations and a 37% increase in earnings per share. In
the 1994 period, the Company had a significantly greater number of average
shares outstanding.
Income from continuing operations for 1994 rose 96% to $74.3 million
($2.94 per common share) from $37.8 million ($1.80 per common share) in 1993.
The results for 1994 include income from TriCon Capital ("TriCon") acquired on
April 30, 1994 and Ambassador Factors ("Ambassador") acquired on February 14,
1994.
Net income for the fourth quarter of 1994 was $23.4 million ($0.82 per
common share) compared to $7.5 million ($0.37 per common share) for the fourth
quarter of 1993. Earnings for
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the 1993 periods included losses from discontinued operations of $4.7 million
and $0.5 million for the fourth quarter and the year, respectively.
Sam Eichenfield, Chairman, President, and Chief Executive Officer of
GFC, said that 1994 results reflect the enhanced earnings power of the Company
created by acquisitions in 1993 and 1994 as well as outstanding performance
from the GFC charter lines of business. Eichenfield said that he was pleased
with the portfolio growth, which doubled to $5.7 billion in 1994 due to the
acquisitions and a record $1.8 billion of new business volume. The portfolio
grew at an annualized rate of 22% for the last half of the year. Fee based
business, primarily generated by Ambassador, grew in 1994 with factoring volume
exceeding $1.1 billion. The Company's portfolio growth was achieved with high
quality profitable assets, reflected in the fact that nonearnings continued to
decline to 2.9% (from 3.6% at December 31, 1993) of ending funds employed and
securitizations ("managed assets").
Interest margins earned continue to hold at 6.0% of average earning
assets. This measurement compares favorably to 5.4% for the 1993 period,
reflecting the contributions of the acquisitions made in 1994 as well as the
continuing strong returns of the charter financial operations.
In early 1995, the Company helped protect its margins on floating-rate
transactions by hedging an additional $750 million of floating-rate debt to
lock in the spread between the Company's lending and borrowing rates. With
this hedge, the Company protected its margins on $1.5 billion of floating-rate
transactions (or approximately 50% of its floating-rate liabilities). Growth in
interest margins more than offset the higher provisions for possible credit
losses and the higher selling, administrative and other operating expenses
("operating expenses") in the 1994 periods.
The Company increased its loss provisions in 1994 due to the dynamics
and loss experience of the businesses acquired. Reserves and accrued
liabilities for possible credit losses are adequate at December 31, 1994
representing 2.1% of managed assets, as well as 72.4% of nonearning assets.
The higher operating expenses are primarily attributable to the
additions of TriCon and Ambassador in 1994. The running rate of these
expenses, measured as a percent of interest margins earned, was 46.2% (for the
combined entities) in 1994 (45.4% for the fourth quarter of 1994), an
improvement over 46.6% in 1993.
Income taxes were higher in the fourth quarter of 1994 due to an
increase in income before income taxes and to a higher tax rate in effect
during the fourth quarter of 1994 (primarily
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attributable to foreign income taxes provided). Income taxes for the twelve
months of 1993 included a $4.9 million adjustment for increases in federal and
state income tax rates applicable to deferred taxes on leveraged leases.
GFC Financial Corporation, with assets of $5.8 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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GFC FINANCIAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUMMARY OF CONSOLIDATED INCOME
(UNAUDITED)
(Dollars in Thousands, except per share data)
Quarter Ended December 31, Year Ended December 31,
_______________________________ ________________________________
1994 1993 1994 1993
________ ________ ________ _________
<S> <C> <C> <C> <C>
Interest earned from
financing transactions $ 159,850 $ 66,810 $ 503,351 $ 255,216
Interest expense 69,538 31,074 222,200 123,853
Depreciation 15,111 2,178 36,737 6,516
----------- ----------- ----------- -----------
Interest margins earned 75,201 33,558 244,414 124,847
Provision for possible
credit losses 6,317 2,000 16,670 5,706
Gains on securitizations
and sale of assets 3,373 3,199 9,045 5,439
Selling, administrative and
other operating expenses 34,148 16,114 113,018 58,158
----------- ----------- ----------- -----------
Income before income taxes 38,109 18,643 123,771 66,422
Income taxes (1) 14,747 6,415 49,458 28,576
----------- ----------- ----------- -----------
Income from continuing
operations 23,362 12,228 74,313 37,846
Loss from discontinued
operations (4,707) (499)
----------- ----------- ----------- -----------
Net Income $ 23,362 $ 7,521 $ 74,313 $ 37,347
=========== =========== =========== ===========
Earnings per common
and equivalent share:
Income from continuing
operations $ 0.82 $ 0.60 $ 2.94 $ 1.86
Preferred dividends 0.06
----------- ----------- ----------- -----------
Income from continuing
operations after preferred
dividends 0.82 0.60 2.94 1.80
Loss from discontinued
operations (0.23) (0.03)
----------- ----------- ----------- -----------
Earnings per common
and equivalent share $ 0.82 $ 0.37 $ 2.94 $ 1.77
=========== =========== =========== ===========
Dividends declared per
common share $ 0.20 $ 0.18 $ 0.74 $ 0.68
=========== =========== =========== ===========
Average outstanding
common and equivalent
shares 28,341,000 20,281,000 25,307,000 20,332,000
=========== =========== =========== ===========
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(1) The results of operations for the year ended December 31, 1993 include an
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>
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GFC FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA AND RATIOS (UNAUDITED)
(Dollars in Thousands)
Year Ended or as of
December 31,
__________________________________
1994 (1) 1993 (4)
___________ ___________
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FINANCIAL DATA:
Average funds employed (AFE) and securitizations (2) $4,629,578 $2,637,547
Ending funds employed (EFE) 5,667,644 2,846,571
Securitizations (2) 253,386
Average earning assets (3) 4,064,971 2,321,359
Nonearning assets 168,761 102,607
Reserve and accrued liabilities for possible credit losses (5) 122,233 64,280
Total debt 4,574,962 2,082,350
Stockholders' equity 770,252 503,300
New business 1,799,331 1,007,794
Factoring volume 1,129,936
Backlog (includes lines of credit) 764,326 419,455
Write-offs:
Quarter 16,118 4,238
Year-to-date 35,127 12,575
RATIOS:
Write-offs as a % of AFE and securitizations 0.8% 0.5%
Nonearning assets as a % of EFE and securitizations 2.9% 3.6%
Reserve and accrued liabilities for possible credit losses as a % of:
Ending funds employed and securitizations 2.1% 2.3%
Nonearning assets 72.4% 62.6%
Interest margins earned as a % of average earning assets:
Quarter (annualized) 5.9% 5.5%
Year-to-date 6.0% 5.4%
Selling, administrative and other operating expenses as a %
of interest margins earned:
Quarter 45.4% 48.0%
Year-to-date 46.2% 46.6%
</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 $12,988 and are
classified as accrued liabilities in the balance sheet.
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