<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 15, 1997
WFS FINANCIAL INC
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-93068 33-0291646
(State or other jurisdiction Commission File IRS Employer
of incorporation) Number Identification Number
23 PASTEUR 92618-3816
IRVINE, CALIFORNIA
(Address of principal executive offices) (Zip Code)
714-727-1000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 7: Financial Statements and Exhibits.
a. List of documents filed as a part of this report: Exhibit 99.1 -
WFS Financial Inc's News Release of July 14, 1997
WFS FINANCIAL INC
a California Corporation
Dated: July 15, 1997 /s/ LEE A. WHATCOTT
-----------------------------
Lee A. Whatcott
Executive Vice President,
WFS Financial Inc
<PAGE> 1
EXHIBIT 99.1
[NEWS RELEASE LETTERHEAD]
RELEASE DATE: July 14, 1997
CONTACT: Joy Schaefer
(714) 727-1065
Cecilia A. Wilkinson
Pondel Parsons & Wilkinson
(310) 207-9300
WFS FINANCIAL REPORTS SECOND QUARTER RESULTS
Irvine, California -- WFS Financial Inc (Nasdaq:WFSI), a leading
national automobile finance company, today announced net income for the second
quarter ended June 30, 1997 of $9.9 million, or $0.39 per share, compared with
$9.7 million, or $0.38 per share, a year earlier. For the first half of 1997,
WFS' net income totaled $18.6 million, or $0.72 per share, compared with $19.0
million, or $0.74 per share, for the first six months of 1996.
Loss experience for the 1997 second quarter was 2.66% of serviced
contracts compared with 1.68% a year earlier, but lower than the 3.04% reported
for the first quarter of 1997. Contracts 30 days or more delinquent declined to
1.55% from 1.80% at December 31, 1996.
"This marks the second consecutive quarter WFS has achieved improvement
in asset quality, and indications are that this trend should continue," said Joy
Schaefer, president and chief operating officer. "WFS continues to maintain
strong reserve levels for both on- and off-balance sheet portfolios that provide
our company an important additional measure of financial strength." At June 30,
1997, off-balance sheet reserves as a percent of sold contracts were 7.3%.
Revenues for the quarter increased 26% to $62.9 million from $49.9
million in the corresponding prior year quarter. Through the six months,
revenues totaled $121.8 million, 25% higher than the $97.4 million of revenues
of a year earlier.
<PAGE> 2
July 14, 1997
WFS Financial Inc Second Quarter Results
Page 2
Servicing income, which is earned as WFS services contracts that have
been securitized and sold, increased to $42.6 million for the 1997 second
quarter from $26.7 million for the same period a year earlier. For the current
six months, servicing income rose to $81.2 million, up from $50.2 million a year
ago.
Net interest income, which is earned before loans are securitized,
totaled $13.9 million for the 1997 second quarter compared with $13.8 million
for the 1996 second quarter. For the first half of 1997, net interest income
reached $26.7 million, compared with $25.5 million a year earlier.
WFS securitized $590 million of automobile contracts during the second
quarter, bringing the year to date total to $1.1 billion. As a result, the
company recorded gain on sale of contracts of $6.5 million for the second
quarter and $13.8 million for the first half of the year, compared with $9.4
million and $21.7 million last year, respectively. Gain on sale of contracts
represented 11% of WFS' total revenues for the first half of 1997. The locked-in
gross interest spread on the 1997 second quarter securitization rose to 8.96%
from 8.71% for the securitization in the second quarter of 1996. Since 1985, WFS
has securitized $8.9 billion of automobile contracts.
Originations of automobile contracts in the second quarter of 1997 rose
17% to $613 million compared with $524 million a year ago, reflecting the
benefits of the company's nationwide expansion program. As a result, WFS'
portfolio of serviced contracts increased to $3.4 billion at June 30, 1997 from
$3.0 billion at December 31, 1996.
For the current second quarter, total operating expenses increased to
$44.4 million from $32.3 million a year ago. For the first six months of this
year, total operating expenses were $84.9 million compared with $58.5 million
for the comparable period in 1996. Operating expenses for the quarter continued
to rise as WFS moved forward on its ongoing automation and centralization
programs and as a result of its nationwide expansion.
<PAGE> 3
July 14, 1997
WFS Financial Inc Second Quarter Results
Page 3
"We anticipate operating expenses will level off now that our
nationwide expansion and our automation programs are nearing completion,"
Schaefer said. "These important initiatives are giving our company the necessary
tools, systems and controls to assure profitable future growth."
WFS is a consumer finance company specializing in the purchase,
securitization and service of prime and non-prime credit quality automobile
contracts. WFS currently purchases contracts in California and 34 other states
from 143 office locations.
This news release contains forward-looking statements including, but
not limited to, estimates of the impact of future losses and operating costs to
future periods that are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected, including that
the systems and initiatives that the company is undertaking do not achieve their
intended results. Additional risks that may affect the company's future
performance are detailed under the caption "Forward-looking Statements" in the
business section of the company's annual report on Form 10-K and quarterly
reports on Form 10-Q as filed with the Securities and Exchange Commission.
<PAGE> 4
WFS FINANCIAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Short term investments $ 82,390,297 $ 109,237,133
Contracts receivable (1) 37,404,905 53,287,645
Contracts held for sale (1) 230,019,310 186,302,823
Allowance for credit losses (7,512,675) (7,647,986)
------------- -------------
Contracts receivable, net 259,911,540 231,942,482
Amounts due from trusts 255,124,970 191,469,153
Retained interest in securitized assets 159,487,367 121,597,461
Property, plant and equipment 19,597,314 16,904,239
Accrued interest receivable 1,429,114 1,517,682
Other assets 3,682,293 2,903,507
------------- -------------
$ 781,622,895 $ 675,571,657
============= =============
LIABILITIES
Senior note payable - parent $ 125,000,000 $ 125,000,000
Amounts held on behalf of trustee 471,029,818 393,449,007
Other liabilities 19,355,221 9,431,124
------------- -------------
615,385,039 527,880,131
SHAREHOLDERS' EQUITY
Common stock, no par value; authorized 50,000,000 shares;
issued and outstanding 25,684,168 shares in 1997 and 1996 73,123,054 73,123,054
Additional paid-in capital 4,000,000 4,000,000
Retained earnings 89,150,128 70,568,472
Unrealized loss on retained interest in securitized assets,
net of tax (35,326)
------------- -------------
166,237,856 147,691,526
------------- -------------
$ 781,622,895 $ 675,571,657
============= =============
</TABLE>
(1) Net of unearned discount
<PAGE> 5
WFS FINANCIAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Servicing income $ 42,582,326 $ 26,653,634 $ 81,229,301 $ 50,244,374
Net interest income 13,867,312 13,833,524 26,694,663 25,474,429
Gain on sale of contracts 6,490,811 9,416,823 13,834,998 21,704,185
------------ ------------ ------------ ------------
TOTAL REVENUES 62,940,449 49,903,981 121,758,962 97,422,988
EXPENSES:
Provision for credit losses 1,233,356 827,622 4,537,378 6,014,623
Operating expenses 44,392,780 32,336,831 84,898,032 58,513,424
------------ ------------ ------------ ------------
TOTAL EXPENSES 45,626,136 33,164,453 89,435,410 64,528,047
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 17,314,313 16,739,528 32,323,552 32,894,941
Income taxes 7,364,347 7,026,505 13,741,896 13,862,296
------------ ------------ ------------ ------------
NET INCOME $ 9,949,966 $ 9,713,023 $ 18,581,656 $ 19,032,645
============ ============ ============ ============
NET INCOME PER COMMON SHARE $ 0.39 $ 0.38 $ 0.72 $ 0.74
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 25,684,168 25,684,168 25,684,168 25,684,168
============ ============ ============ ============
</TABLE>
<PAGE> 6
WFS FINANCIAL INC AND SUBSIDIARIES
OTHER SELECTED FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CONTRACT ORIGINATIONS $ 613,288,527 $ 523,878,235 $1,165,594,410 $1,028,000,691
============== ============== ============== ==============
CONTRACT SECURITIZATIONS $ 590,000,000 $ 525,000,000 $1,090,000,000 $1,010,000,000
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
SERVICED DELINQUENCY JUNE 30, 1997 DECEMBER 31, 1996
-------------------------------- --------------------------------
NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Serviced Portfolio (1) 378,610 $3,421,213,459 341,486 $3,046,584,858
============== ============== ============== ==============
Period of delinquency
31-59 days 4,125 $ 35,179,485 4,511 $ 38,173,395
60-89 days 1,390 12,555,957 1,305 11,469,637
90 days or more 631 5,421,157 567 5,144,451
-------------- -------------- -------------- --------------
Total contracts delinquent 6,146 $ 53,156,599 6,383 $ 54,787,483
============== ============== ============== ==============
Delinquencies as a percentage of
number and amount of contracts
outstanding 1.62% 1.55% 1.87% 1.80%
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
SERVICED CONTRACT LOSS THREE MONTHS ENDED SIX MONTHS ENDED
EXPERIENCE JUNE 30, JUNE 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Average contracts serviced during the
period $3,303,619,391 $2,518,379,322 $3,207,650,853 $2,407,984,806
============== ============== ============== ==============
Gross chargeoffs $ 30,486,400 $ 16,980,925 $ 61,908,363 $ 35,405,591
Recoveries 8,481,798 6,416,707 16,279,964 12,359,479
-------------- -------------- -------------- --------------
Net chargeoffs $ 22,004,602 $ 10,564,218 $ 45,628,399 $ 23,046,112
============== ============== ============== ==============
Net chargeoffs as a percentage of
contracts outstanding during period 2.66% 1.68% 2.84% 1.91%
============== ============== ============== ==============
</TABLE>
(1) At end of period, net of unearned discount and includes contracts held
for sale.
