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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from . . . . . . . . .to . . . . . . . . . .
Commission file number 1-3521
ARISTAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4128205
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8900 Grand Oak Circle, Tampa, FL 33637-1050
(Address of principal executive offices) (Zip Code)
(813) 632-4500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
7 % Senior Notes due June 15, 2001 New York Stock Exchange
71/2 % Senior Subordinated Notes due July 1, 1999New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K:
Not applicable
The aggregate market value of Common Stock held by non-affiliates: None
As of February 28, 1997, there were 1,000 shares of Common Stock outstanding.
Documents incorporated by reference: None
Registrant meets the conditions set forth in General Instruction (I)(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the reduced disclosure
format.
2
ARISTAR, INC.
ANNUAL REPORT ON FORM 10-K
Table of Contents
Page
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . .7
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . .8
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . . . .8
Item 7. Management's Analysis of the Results of Operations
for the Year Ended December 31, 1996. . . . . . . . .8
Item 8. Financial Statements and Supplementary Data. . . . . 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . 31
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . 31
Note: Items 4, 6, 10, 11, 12 and 13 are not included as per conditions
met by Registrant set forth in General Instruction I(1)(a) and (b) of
Form 10-K.
3
PART I
Item 1. Business
Aristar, Inc. (the "Company"), incorporated in Delaware in 1986 as a successor
to a company incorporated in 1927, is a holding company headquartered in Tampa,
Florida whose subsidiaries are engaged in the consumer financial services
business. All of the Company's equity securities are owned indirectly by Great
Western Financial Corporation ("GWFC").
The Company's operations consist principally of a network of approximately
500 branch offices located in 23 states, primarily in the Southeastern United
States and in California. These offices generally operate under the names
Blazer Financial Services, City Finance Company, and First Community
Financial Services.
The Company makes direct consumer instalment loans and purchases retail
instalment contracts from local retail establishments. These consumer credit
transactions are primarily for personal, family or household purposes. The
Company also engages in the industrial banking business through its
subsidiaries in Colorado and Utah. In addition to making direct consumer
instalment loans and purchasing retail instalment contracts, these
subsidiaries also take customers' savings deposits.
Instalment loans written in 1996 had original terms ranging from 12 to 360
months and averaged 72 months. For the year ended December 31, 1996, 59% of
the volume of all instalment loans was either unsecured or secured by
guarantors, luxury consumer goods, automobiles or other personal property,
with the remaining 41% being secured by real estate. While the interest yield
on real estate loans is generally lower than for other direct loans, such
loans are typically larger and the ratio of cost to amounts loaned is lower.
Additionally, credit loss experience on real estate loans has been
significantly lower than on other loan types.
Retail instalment sales contracts are generally acquired without recourse to
the originating merchant and provide a vehicle for developing future loan
business. Where these contracts result from the sale of consumer goods,
payment is generally secured by such goods, and, in some cases, a portion of
the purchase price is withheld from the merchant pending satisfactory payment
of the obligation. Contracts are typically written with original terms from 3
to 60 months and for 1996 had an average original term of 26 months.
At December 31, 1996, the average portfolio yield written by loan type was as
follows:
Average Yield
Real Estate Secured Loans 12.3%
Other Direct Loans 24.7%
Retail Instalment Sales Contracts 18.7%
4
Portfolio Composition
The following table provides an analysis by type of the Company's notes and
contracts receivable (net of unearned finance charges and deferred loan fees) at
the dates shown:
December 31,
(Dollars in thousands) 1996 1995 1994
Notes and Contracts Receivable $ 2,185,903 $2,133,065 $ 1,994,903
Type as a percent of
Total Receivables
Real Estate Secured Loans 40.7% 37.0% 36.4%
Other Direct Loans 42.6 46.1 46.3
Retail Instalment Sales Contracts 16.7 16.9 17.3
100.0% 100.0% 100.0%
Notes and contracts written including balances renewed, but excluding bulk
purchases, for the years ended December 31, 1996, 1995 and 1994 totaled $1.96
billion, $2.10 billion and $2.0 billion, respectively.
Credit Loss Experience
The Company closely monitors portfolio delinquency in measuring the quality of
the portfolio and the potential for ultimate credit losses. Under the Company's
policy, non-real estate secured delinquent accounts are charged off when they
become 180 days contractually delinquent (120 days prior to October 1, 1996).
Collection efforts continue after an account has been charged off until the
customer obligation is satisfied or until it is determined that the
obligation is not collectible or that the cost of continuing collection efforts
will not be offset by the potential recovery.
5
The following table sets forth the credit loss experience for the past three
years and the allowance for doubtful accounts at the end of each year:
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Allowance for Doubtful Accounts
at End of Year $ 70,045 $ 55,568 $ 53,217
Percent of Year-End Net Receivables 3.2% 2.6% 2.7%
Provision for Credit Losses 58,800 48,500 41,900
Amounts Charged-Off Net of Recoveries:
Amount 46,418 47,879 39,680
Percent of Average Net Receivables(1) 2.2% 2.4% 2.2%
(1) Average of notes and contracts receivable (net of unearned finance charges)
at each month end during the period.
Accounts past due 60 days and over, based on contract payments, were as follows
as of the end of each of the past three years:
December 31,
(Dollars in thousands) 1996 1995 1994
Amount $ 63,661 $ 42,921 $ 35,320
Percent of Year-End Gross
Receivables 2.5% 1.7% 1.5%
Interest Rate Spreads and Cost of Borrowed Funds
A relatively high ratio of borrowings to invested capital is customary in
consumer finance activities due to the liquidity of the assets employed by the
business. The spread between the revenues received from loans and interest
expense is a significant factor in determining the net income of the Company.
6
The table below sets forth certain percentages relative to the spread between
interest the Company received on the loan portfolio and interest expense for
each of the last three years:
Year Ended December 31,
1996 1995 1994
Ratio to Average Net Receivables:
Interest and Fee Income 17.7% 18.3% 18.5%
Interest and Debt Expense 5.8 5.8 5.5
Gross Spread 11.9% 12.5% 13.0%
Credit Insurance Operations
The Company makes available, at the option of its customers, credit life, credit
accident and health, and credit casualty insurance products. Credit life
insurance provides that the customer's credit obligation, to the extent of the
policy limits, is paid in the event of death. Credit accident and health
insurance provides for the payment of instalments due on the customer's credit
obligation in the event of disability resulting from illness or injury. Credit
casualty insurance insures payment, to the extent of the policy limits, of
the credit obligation or cost to repair certain property used as collateral
for such obligation in the event such property is destroyed or damaged.
Purchase of such insurance is not a condition to obtaining a loan, although the
Company may require casualty insurance covering collateral to be obtained
from unaffiliated sources by the customer. The Company does not sell
insurance to non-customers. Credit insurance sold by the Company is written
by unaffiliated insurance companies and is substantially all reinsured by the
Company, which earns reinsurance premiums thereon.
Ratio of Earnings to Fixed Charges
The Company's ratio of earnings to fixed charges, which represents the number of
times fixed charges were covered by earnings, was 1.80 in 1996, 1.91 in 1995,
1.96 in 1994, 1.90 in 1993 and 1.83 in 1992. For purposes of computing this
ratio, earnings consist of income from operations before income taxes and, in
1992, before the cumulative effect of a change in accounting method, plus
fixed charges. Fixed charges consist of interest and debt expense and an
appropriate portion of rentals.
7
Governmental Regulation
The Company's operations are, for the most part, regulated by federal and state
consumer finance laws or similar legislation. All of the states in which
finance subsidiaries of the Company are licensed to do business have laws,
which vary from state to state, regulating the consumer finance business.
These laws, among other things, typically limit the size of loans, set maximum
interest rates and maximum maturities and regulate certain lending and
collection activities. Although consumer finance laws have been in effect
for many years, amending and new legislation is frequently proposed. The
Company is unable to predict whether or when any such proposals might
ultimately be enacted into law or to assess the impact any such enactment might
have on the Company. In addition, as they accept customers' deposits, the
two banking subsidiaries are subject to regulation by the Federal Deposit
Insurance Corporation and the relevant state banking authorities.
The Company has been named as a defendant in a number of class action suits, in
which various industry-wide practices arising from routine business activities
are being challenged and various damages are being sought. The Company believes
that its practices are permissible under state and federal laws and will
defend these suits accordingly.
Competition
The consumer financial services business is highly competitive. The Company's
principal competitors are other local, regional and national finance
companies, banks, credit unions, savings associations, and other similar
financial institutions.
Employees
The Company employs approximately 2,400 full-time employees. None of these
employees are represented by a union. Management considers relations with its
employees to be satisfactory.
Item 2. Properties
The Company owns its 71,000 square foot headquarters building on 6 acres of
land, which it built in 1994 at a total cost of approximately $8 million.
The Company's branch offices, located in 23 states, are leased typically for
terms of three to five years with options to renew. Typical locations include
shopping centers, office buildings and storefronts, generally of relatively
small size sufficient to accommodate a staff of four to eight employees.
See Note 13 to the Consolidated Financial Statements for additional information
on rental expense and lease commitments.
8
Item 3. Legal Proceedings
The Company and its subsidiaries are involved in litigation incidental to their
businesses. It is management's opinion that the aggregate liability arising
from the disposition of all such pending litigation will not have a material
adverse effect on the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company is an indirect wholly-owned subsidiary of GWFC and the Company's
common stock is not traded on any national exchange or in any other established
market.
Payment of dividends is within the discretion of the Company's Board of
Directors. Provisions of certain of the Company's debt agreements restrict the
payment of dividends to a maximum prescribed proportion of cumulative earnings
and contributed capital and otherwise provide for the maintenance of minimum
levels of equity and maximum leverage ratios. The Company declared and paid
dividends on a quarterly basis, totaling $116.8 million during 1996 and $22.5
million during 1995.
Item 7. Management's Analysis of the Results of Operations for the Year Ended
December 31, 1996
The Company's average net finance receivables grew $98.5 million, or 5.0%, in
1996, while, as a reflection of interest rate and competitive pressures, the
overall portfolio yield decreased .54% as compared to the prior year. As a
result, loan interest and fee income increased $6.9 million, or 1.9%, for the
year ended December 31, 1996, as compared to the prior year. Income from
investment securities increased $382 thousand, or 4.3%, over the prior year.
As a result, total interest income increased by $7.2 million, or 2.0%, over
the prior year. Average debt outstanding increased $208.3 million, or 16.9%,
and the weighted average interest rate on such debt decreased by 94 basis
points, resulting in an increase in interest and debt expense of $5.8
million, or 5.1%, for the year ended December 31, 1996, as compared to 1995.
These factors resulted in an increase in net interest income before provision
for credit losses of $1.4 million, or 0.6%.
During 1996, the Company issued the following senior notes: in June, $100
million at 7.25% maturing in 2001; in July, $100 million at 6.75% maturing in
1999; in August, $100 million at 6.75% maturing in 2001; and, in December,
$150 million at 6.125% maturing in 2000. The respective proceeds were used
as follows: to reduce outstanding commercial paper issued to fund the
purchase price of the Company's acquisition of Great Western Financial Services
as described in Note 3 to the accompanying financial statements; to reduce
outstanding commercial paper issued to pay $100 million of 6.25% senior notes
at their July 15, 1996 maturity; to reduce outstanding commercial paper; and,
to fund the purchase price of the Company's acquisition of Blazer Financial
Corporation ("BFC") as described in Note 3 to the accompanying financial
statements, to repay approximately $69.6 million of outstanding intercompany
indebtedness owed by BFC and its subsidiaries to Great Western Bank, and for
general corporate purposes.
9
The provision for credit losses for the year ended December 31, 1996 was 2.81%
as an annualized percentage of average net finance receivables for that
period, as compared to 2.44% for 1995. The increase in provision rate
reflects management's assessment of the quality of the Company's receivables
portfolio at this time including current economic trends, loan portfolio agings,
historical loss experience and evaluation of collateral.
Personnel expenses were $3.8 million, or 5.6%, higher in 1996 as compared to
1995. This is primarily due to normal compensation increases.
Other operating expenses were $4.7 million, or 12.1%, lower in 1996 as compared
to 1995, primarily because of an $8.0 million insurance recovery resulting
from fraudulently over-billed marketing costs which had occurred over a
number of years. (See Note 4 to the accompanying financial statements.)
Productivity, defined as the ratio of operating and administrative expenses
(before deferral of direct loan costs and the above described insurance
recovery) to average outstanding finance receivables, improved to 6.9% in
1996 as compared to 7.0% in 1995.
10
Item 8. Financial Statements and Supplementary Data
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholder of
Aristar, Inc.
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of operations and retained earnings and
of cash flows present fairly, in all material respects, the financial
position of Aristar, Inc. and its subsidiaries at December 31, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As described in Note 3, during 1996, the Company acquired two businesses from
affiliated companies. Both transactions were accounted for in a manner similar
to a pooling of interests, which gave retroactive effect to these acquisitions.
PRICE WATERHOUSE LLP
Tampa, Florida
January 17, 1997
1
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Financial Condition
(Dollars in thousands) December 31, 1996 December 31, 1995
ASSETS
Finance receivables, net $ 2,115,858 $ 2,077,497
Investment securities 137,072 140,240
Cash and cash equivalents 22,660 14,399
Property and equipment, less accumulated
depreciation and amortization: 1996,
$21,528; 1995, $19,961 10,338 11,484
Deferred charges 11,956 11,570
Excess of cost over equity of
companies acquired, less accumulated
amortization: 1996, $52,638; 1995, $45,575 56,655 63,718
Other assets 37,319 13,855
TOTAL ASSETS $ 2,391,858 $ 2,332,763
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Short-term debt $ 398,006 $ 312,876
Long-term debt 1,352,770 1,003,809
Total debt 1,750,776 1,316,685
Customer deposits 146,138 160,772
Accounts payable and other liabilities 46,366 67,679
Due to affiliate 237,576
Federal and state income taxes 13,836 11,602
Insurance claims and benefits reserves 7,702 7,900
Unearned insurance premiums and
commissions 57,800 56,865
Total liabilities 2,022,618 1,859,079
Commitments and contingencies
(Notes 13 and 14)
Stockholder's equity
Common stock: $1.00 par value;
10,000 shares authorized: 1,000
shares issued and outstanding 1 1
Paid-in capital 44,894 44,894
Retained earnings 323,969 428,273
Net unrealized holding gain on
investment securities 376 516
Total stockholder's equity 369,240 473,684
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 2,391,858 $ 2,332,763
See Notes to Consolidated Financial Statements.
12
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Operations and Retained Earnings
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Loan interest and fee income $ 370,314 $ 363,448 $ 342,329
Investment securities income 9,183 8,801 6,766
Total interest income 379,497 372,249 349,095
Interest and debt expense 120,758 114,917 102,224
Net interest income before
provision for credit losses 258,739 257,332 246,871
Provision for credit losses 58,800 48,500 41,900
Net interest income 199,939 208,832 204,971
Other operating income
Net insurance operations
and other income 27,205 29,235 28,640
Other expenses
Personnel expenses 71,724 67,938 68,633
Occupancy expense 9,919 10,681 10,182
Advertising expense 4,848 5,873 5,760
Amortization of excess cost over
equity of companies acquired 7,063 7,065 7,069
Other operating expenses 34,072 38,768 40,656
127,626 130,325 132,300
Income before income taxes 99,518 107,742 101,311
Provision for federal and
state income taxes 37,000 42,445 37,200
Net Income 62,518 65,297 64,111
Retained earnings
Beginning of year 428,273 385,476 346,365
Dividends (116,800) (22,500) (25,000)
Transfer to Great Western Bank,
A Federal Savings Bank (15,192)
Transfer to Great Western
Financial Corporation (34,830)
End of year $ 323,969 $ 428,273 $ 385,476
See Notes to Consolidated Financial Statements.
13
ARISTAR, INC. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Cash flows from operating activities
Net income $ 62,518 $ 65,297 $ 64,111
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for credit losses 58,800 48,500 41,900
Depreciation and amortization 13,523 13,148 15,466
Deferred income taxes (16,188) (13) (1,170)
Increase (decrease) in
Accounts payable and other liabilities (21,313) (30,432) (8,096)
Unearned insurance premiums and
commissions and insurance claims
and benefits reserves 737 2,900 3,171
Currently payable income taxes 18,455 4,511 (4,388)
(Increase) decrease in other assets (23,464) 10,021 (9,924)
Net cash provided by operating
activities 93,068 113,932 101,070
Cash flows from investing activities
Investment securities purchased (40,331) (55,884) (52,229)
Investment securities matured 43,317 43,223 31,838
Finance receivables originated
or purchased (1,407,334) (1,484,545) (1,418,656)
Finance receivables repaid or sold 1,308,184 1,299,233 1,212,149
Net change in property and equipment (665) (602) (4,041)
Net cash used in investing activities (96,829) (198,575) (230,939)
Cash flows from financing activities
Net change in commercial paper and other
short-term borrowings 85,130 133,791 (100,522)
Proceeds from issuance of long-term debt 453,539 99,909 249,625
Long-term debt issue costs (2,615) (1,162) (1,657)
Repayments of long-term debt (105,000) (189,000) (50,000)
Net change in customer deposits (14,634) 30,719 (10,264)
Net change in due to affiliate (237,576) 34,361 61,963
Dividends paid (116,800) (22,500) (25,000)
Transfer to Great Western Bank,
A Federal Savings Bank (15,192)
Transfer to Great Western
Financial Corporation (34,830)
Net cash provided by financing
activities 12,022 86,118 124,145
Net increase (decrease) in cash
and cash equivalents 8,261 1,475 (5,724)
Cash and cash equivalents
Beginning of year 14,399 12,924 18,648
End of year $ 22,660 $ 14,399 $ 12,924
Supplemental disclosures of
cash flow information
Interest paid $ 118,038 $ 113,665 $ 100,949
Intercompany payments in lieu of
federal and state income taxes 49,612 35,339 45,718
See Notes to Consolidated Financial Statements.
14
ARISTAR, INC. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Ownership and Operations
Aristar, Inc. is an indirect, wholly-owned subsidiary of Great Western Financial
Corporation ("GWFC"). Aristar, Inc. and its subsidiaries, all of which are
wholly-owned, are referred to hereinafter as the "Company."
The Company is engaged primarily in the consumer financial services business and
its operations consist principally of a network of approximately 500 branch
offices located in 23 states, primarily in the Southeastern United States and in
California. These offices generally operate under the names Blazer Financial
Services, City Finance Company, and First Community Financial Services. The
Company makes direct consumer instalment loans and purchases retail
instalment contracts from local retail establishments. These consumer credit
transactions are primarily for personal, family or household purposes. The
Company also engages in the industrial banking business through its
subsidiaries in Colorado and Utah. In addition to making direct consumer
instalment loans and purchasing retail instalment contracts, these subsidiaries
also take customers' savings deposits.
Note 2 Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the
accounts of Aristar, Inc. and its subsidiaries, all of which are wholly-owned,
after elimination of all material intercompany balances and transactions.
Certain amounts in prior years have been reclassified to conform to the current
year's presentation.
Estimates. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Income Recognition from Finance Operations. Unearned finance charges on all
types of consumer notes and contracts receivable are recognized on an accrual
basis, using the interest method. Accrual generally is suspended when payments
are more than three months contractually overdue. Loan fees and directly
related lending costs are deferred and amortized using the interest method over
the contractual life of the related loans.
Provision and Allowance for Credit Losses. The Company provides, through
charges to income, an allowance for losses which, based upon management's
evaluation of numerous factors, including current economic trends, loan
portfolio agings, historical loss experience and evaluation of collateral,
is deemed adequate to cover reasonably expected losses on outstanding loans.
15
Losses on loans are charged to the allowance for credit losses based upon the
number of days delinquent or when collectibility becomes questionable and the
underlying collateral, if any, is considered insufficient to liquidate the loan
balance (see Note 5). Non-real estate secured delinquent loans are generally
charged off when they are 180 days contractually delinquent (120 days prior
to October 1, 1996). Recoveries on previously written-off loans are credited to
the allowance.
Investment Securities. Debt and equity securities are classified as available
for sale and are reported at fair value, with unrealized gains and losses
excluded from earnings and reported, net of taxes, as a separate component of
stockholder's equity. Gains and losses on investment securities are recorded
when realized on a specific identity basis. Investment security transactions
are recorded using trade date accounting.
Property, Equipment and Leasehold Improvements. Property, equipment and
leasehold improvements are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization are provided principally on the
straight-line method over the estimated useful life or, if less, the term of
the lease.
Deferred Charges. Expenditures that are deferred are amortized over the period
benefited. Amortization is computed principally using the straight-line method.
Excess of Cost Over Equity of Companies Acquired. The excess of cost over the
fair value of net assets of companies acquired is amortized on a straight-line
basis, generally over periods of up to 25 years.
Insurance Premiums and Acquisition Costs. Insurance premiums are deferred and
subsequently amortized into revenue over the terms of the related insurance
contracts. The methods of amortization used are pro rata, sum-of-the-digits and
a combination thereof. Policy acquisition costs (principally ceding
commissions and premium taxes) are deferred and charged to expense over the
terms of the related policies in proportion to premium recognition.
Insurance Claims and Benefits Reserves. Reserves for reported claims on credit
life and health insurance are established based upon standard actuarial
assumptions used in the insurance business for such purposes. Claims reserves
for reported property and casualty insurance claims are based upon estimates of
costs and expenses to settle each claim. Additional amounts of reserves, based
upon prior experience and insurance in force, are provided for each class of
insurance for claims which have been incurred but not reported as of the balance
sheet date.
Income Taxes. The Company is included in the consolidated Federal income tax
return filed by GWFC. Currently payable Federal income taxes will be paid to
GWFC. Federal income taxes are allocated between GWFC and its subsidiaries in
proportion to the respective contribution to consolidated income or loss.
Allocations for state income taxes approximate the amount the Company would have
paid on a separate entity basis. Deferred income taxes are provided on
elements of income or expense that are recognized in different periods for
financial and tax reporting purposes.
16
Taxes on income are determined by using the liability method as prescribed by
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("FAS 109"). This approach requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, FAS 109 requires the
consideration of all expected future events other than enactments of changes
in the tax law or rates.
Statement of Cash Flows. For purposes of reporting cash flows, the Company
considers all highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
Fair Value Disclosures. Quoted market prices are used, where available, to
estimate the fair value of the Company's financial instruments. Because no
quoted market prices exist for a significant portion of the Company's financial
instruments, fair value is estimated using comparable market prices for similar
instruments or using management's estimates of appropriate discount rates and
cash flows for the underlying asset or liability. A change in management's
assumptions could significantly affect these estimates; accordingly, the
Company's fair value estimates are not necessarily indicative of the value which
would be realized upon disposition of the financial instruments.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Finance receivables. The approximate fair value of finance receivables is
estimated by discounting the future cash flows using current rates at which
similar loans would be made with similar maturities to borrowers with similar
credit ratings. The fair value is not adjusted for the value of potential
loan renewals from existing borrowers.
Investment securities. Fair values for investment securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.
Debt. The carrying amount reported in the statement of financial condition
for short-term debt approximates its fair value given its brief maximum term.
The approximate fair value of long-term debt is estimated using rates currently
available to the Company for debt with similar terms and remaining maturities.
Deposit liabilities. The fair values disclosed for fixed-rate savings
certificates of deposit are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on certificates to a
schedule of aggregated expected maturities on time deposits. The fair
values disclosed for savings and money market accounts are, by definition,
equal to the amount payable on demand at the reporting date.
17
Note 3 Transfers from Related Parties
On April 30, 1996, Great Western Bank, a Federal Savings Bank ("GWB"), also a
wholly owned subsidiary of GWFC, transferred to the Company a portion of its
consumer finance business, hereinafter referred to as Great Western Financial
Services ("GWFS"). GWFS was comprised primarily of approximately $242 million
in net consumer finance receivables. The Company paid fair value (as
determined by independent appraisal) of approximately $252 million in cash
raised through the issuance of commercial paper. The Company accounted for the
approximate $10 million premium as a dividend to GWFC. Additionally, at the
purchase date, the Company recorded a transfer to GWB of approximately $15
million, representing the accumulated earnings of GWFS at that date.
On December 31, 1996, GWFC transferred to the Company a portion of its consumer
banking business, hereinafter referred to as Blazer Financial Corporation
("BFC"). BFC was comprised primarily of approximately $229 million in net
consumer finance receivables and $147 million in customer deposits. The
Company recorded, at the purchase date, a transfer to GWFC of approximately
$35 million, representing the accumulated earnings of BFC at that date.
In accordance with Interpretation Number 39, "Transfers and Exchanges of
Companies under Common Control," to Accounting Principles Opinion Number 16,
"Business Combinations," both of the above-described acquisitions have been
accounted for in a manner similar to a pooling of interests. Accordingly,
the assets acquired and liabilities assumed have been recorded at historical
cost and prior period financial statements of the Company have been restated for
the acquisitions. Eliminations have been made for material intercompany
transactions between the combined entities.
In connection with the GWFS transaction, the Company previously restated its
financial statements to give retroactive effect to the pooling. The following
table summarizes the impact of the BFC transaction on the Company's net interest
income, income before income taxes and net income.
Net Interest Income Before Net
Income Income Taxes Income
1995
Aristar, as restated for
the GWFS transaction $ 194,768 $ 99,108 $ 59,982
BFC, net of eliminations 14,064 8,634 5,315
Aristar, as restated $ 208,832 $ 107,742 $ 65,297
1994
Aristar, as restated for
the GWFS transaction $ 192,403 $ 93,806 $ 59,502
BFC, net of eliminations 12,568 7,505 4,609
Aristar, as restated $ 204,971 $ 101,311 $ 64,111
18
The following table summarizes the impact of the BFC transaction on the
Company's previously reported retained earnings at January 1:
Retained Earnings, beginning of period
1996 1995 1994
Aristar, as restated for
the GWFS transaction $ 398,364 $ 360,882 $ 326,380
BFC, net of eliminations 29,909 24,594 19,985
Aristar, as restated $ 428,273 $ 385,476 $ 346,365
Note 4 Insurance Recovery
In May 1996, the Company filed a fidelity bond claim, subsequently paid by the
insurer, in the amount of $8.0 million for the recovery of fraudulently
over-billed marketing costs which had occurred over a number of years. The $8.0
million recovery has been reflected as a reduction of other operating expenses
in the accompanying statement of operations and retained earnings for the
year ended December 31, 1996.
19
Note 5 Finance Receivables
Finance receivables at December 31, 1996 and 1995 are summarized as follows:
(Dollars in thousands) 1996 1995
Consumer finance receivables
Real estate secured loans $ 994,097 $ 891,092
Other consumer finance instalment loans 1,109,143 1,182,891
Retail instalment contracts 400,530 397,977
Gross consumer finance receivables 2,503,770 2,471,960
Less: Unearned finance charges and
deferred loan fees (317,867) (338,895)
Allowance for credit losses (70,045) (55,568)
Net consumer finance receivables $ 2,115,858 $ 2,077,497
The amount of gross nonaccruing receivables included above was approximately
$45.6 million and $25.8 million at December 31, 1996 and 1995, respectively.
Contractual maturities, net of unearned finance charges and deferred loan fees,
at December 31, 1996 are as follows:
Over 1
But
Within Within Over
1 year 5 years 5 years Total
(Dollars in thousands)
Real estate secured loans $ 134,226 $ 346,148 $ 409,596 $ 889,970
Other consumer finance
instalment loans 443,148 486,371 458 929,977
Retail instalment contracts 129,970 235,777 209 365,956
$ 707,344 $1,068,296 $ 410,263 $2,185,903
Consumer finance receivables have maximum terms of 360 months, while retail
contracts have maximum terms of 60 months. The weighted average contractual
term of all loans and contracts written during the years ended December 31, 1996
and 1995 was 50 months and 46 months, respectively. Experience has shown that
a substantial portion of the receivables will be renewed or repaid prior to
contractual maturity. Therefore, the tabulation of contractual payments should
not be regarded as a forecast of future cash collections. During the years
ended December 31, 1996 and 1995, the ratio of principal cash collections to
average net consumer finance receivables outstanding was 63% and 65%,
respectively. The majority of loans provide for a fixed rate of interest over
the contractual life of the loan.
20
The approximate fair value of the Company's finance receivables (net of
unearned finance charges and deferred loan fees) as of December 31, 1996 and
1995 follows:
(Dollars in thousands) 1996 1995
Approximate Approximate
Net Book Fair Net Book Fair
Value Value Value Value
Real estate secured loans $ 889,970 $ 874,959 $ 788,947 $ 792,849
Other consumer finance
installment loans 929,977 908,762 984,228 980,249
Retail instalment contracts 365,956 365,956 359,890 359,890
$2,185,903 $2,149,677 $ 2,133,065 $ 2,132,988
Because the Company primarily lends to consumers, it did not have receivables
from any industry group that comprised 10 percent or more of total consumer
finance receivables at December 31, 1996.
Activity in the Company's allowance for credit losses is as follows:
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Balance, January 1 $ 55,568 $ 53,217 $ 49,790
Provision for credit losses 58,800 48,500 41,900
Amounts charged off (62,615) (63,936) (55,249)
Recoveries 16,197 16,057 15,569
Allowances on notes purchased 2,095 1,730 1,207
Balance, December 31 $ 70,045 $ 55,568 $ 53,217
21
Note 6 Investment Securities
Investment securities as of December 31, 1996 and 1995 are as follows:
(Dollars in thousands) December 31, 1996
Approximate
Original Amortized Gross Unrealized Fair
Cost Cost Gains Losses Value
Government obligations $19,628 $ 19,513 $ 110 $ 175 $ 19,448
Corporate obligations 86,339 86,255 1,060 352 86,963
Certificates of deposit
and other 30,579 30,622 171 132 30,661
$136,546 $136,390 $1,341 $ 659 $137,072
(Dollars in thousands) December 31, 1995
Approximate
Original Amortized Gross Unrealized Fair
Cost Cost Gains Losses Value
Government obligations $20,621 $ 20,630 $ 53 $ 209 $ 20,474
Corporate obligations 94,739 94,351 984 24 95,311
Certificates of deposit
and other 24,652 24,405 168 118 24,455
$ 140,012 $139,386 $1,205 $ 351 $ 140,240
There were no significant realized gains or losses during 1996 or 1995.
The following table presents the maturity of the investment securities at
December 31, 1996:
(Dollars in thousands)
Approximate
Amortized Fair
Cost Value
Due in one year or less $ 31,869 $ 31,751
Due after one year through five years 60,317 60,519
Due after five years through ten years 37,818 38,435
Due after ten years 6,386 6,367
$ 136,390 $ 137,072
22
Note 7 Deferred Charges
Deferred charges, net of amortization, as of December 31, 1996 and 1995 are as
follows:
(Dollars in thousands) 1996 1995
Long-term debt issuance costs $ 4,711 $ 3,712
Premiums on purchased accounts 7,245 7,858
$ 11,956 $ 11,570
Amortization of deferred charges for each of the last three years is as
follows:
(Dollars in thousands) 1996 1995 1994
Long-term debt issuance costs $ 1,616 $ 1,287 $ 1,268
Premiums on purchased accounts 3,495 3,198 3,444
System development costs 1,378
Note 8 Short-term Debt
Short-term debt at December 31, 1996 and 1995 consisted of commercial paper
notes. Such debt outstanding at December 31, 1996 had been issued in the
minimum amount of $456,000 and with a maximum original term of 97 days.
The book value of short-term debt at December 31, 1996 approximates its
estimated fair value.
Additional information concerning total short-term borrowings is as follows:
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Outstanding during the year
Maximum amount at any month end $ 578,743 $ 312,876 $ 287,793
Average amount 391,936 210,684 235,682
Weighted average interest rate 5.2% 6.0% 4.2%
Balance at end of year
Amount $ 398,006 $ 312,876 $ 179,085
Weighted average interest rate 5.7% 5.9% 6.0%
Weighted average interest rates include the effect of commitment fees.
23
Short-term notes totaling $66 million and $75 million were issued in December,
1996 and 1995, respectively. The proceeds of these notes were used to purchase
investment securities and were repaid through liquidation of these securities
in the month following issuance. This short-term debt has been reflected net
of the securities balances in the accompanying Consolidated Statements of
Financial Condition.
In 1996, the Company entered into a $550 million revolving credit agreement with
several domestic and foreign banks. The agreement, which replaced the previous
revolving credit agreement of $450 million, has a four-year term with repayment
in full of any balance outstanding in August, 2000. This revolving credit
agreement has restrictive covenants as described further in Note 9.
There were no borrowings under any of the above-described revolving credit
agreements in 1996 or 1995.
On August 16, 1996, the Company obtained a revolving credit line of $2,685,000
from the Federal Home Loan Bank ("FHLB"). Under the revolving credit line,
which expires August 15, 1997, interest is payable monthly at FHLB's cash
management rate (7.20% at December 31, 1996). At December 31, 1996, there were
no outstanding borrowings under the line of credit. Interest expense in 1996
related to the borrowings on the revolving credit line was approximately
$14,000.
24
Note 9 Long-term Debt
Long-term debt at December 31, 1996 and 1995 was comprised of the following:
(Dollars in thousands) 1996 1995
Senior Debentures and Notes
6.25%, due July 15, 1996 $ 99,995
7.375%, due February 15, 1997 $ 99,997 99,974
8.125%, due December 1, 1997 99,909 99,812
5.75%, due July 15, 1998 149,922 149,875
7.875%, due February 15, 1999 99,904 99,864
6.75%, due May 15, 1999 99,986
6.3%, due July 15, 2000 99,931 99,913
6.125%, due December 1, 2000 149,610
7.75%, due June 15, 2001 149,930 149,917
7.25%, due June 15, 2001 99,857
6.75%, due August 15, 2001 99,917
Medium Term Notes, Series C, due through
1996, at interest rates of 8.75% to 8.90% 5,000
Total Senior Debt 1,148,963 804,350
Senior Subordinated Notes and Debentures
8.875%, due August 15, 1998 99,948 99,920
7.5%, due July 1, 1999 99,659 99,539
Total Senior Subordinated Debt 199,607 199,459
Federal Home Loan Bank Notes
4.98%, due December 3, 2001 4,200
Total Federal Home Loan Bank Notes 4,200
Total Long-term Debt $ 1,352,770 $ 1,003,809
25
Aggregate maturities at December 31, 1996 are as follows:
(Dollars in thousands)
Senior Federal
Senior Subordinated Home Loan
Debt Notes Bank Notes Total
1997 $ 199,906 $ 199,906
1998 149,922 $ 99,948 249,870
1999 199,890 99,659 299,549
2000 249,541 249,541
2001 349,704 $ 4,200 353,904
$ 1,148,963 $ 199,607 $ 4,200 $1,352,770
The approximate fair value of the Company's long-term debt as of December 31,
1996 and 1995 is as follows:
(Dollars in thousands)
1996 1995
Book Approximate Book Approximate
Value Fair Value Value Fair Value
Senior debt $ 1,148,963 $ 1,192,141 $ 804,350 $ 834,130
Senior subordinated
notes 199,607 215,083 199,459 213,600
Federal Home Loan
Bank notes 4,200 4,207
$ 1,352,770 $ 1,411,431 $1,003,809 $1,047,730
The Company has a note payable to the FHLB of Seattle in the amount of
$4,200,000. On a specified day each quarter, upon giving the Company a five
business day written notice, FHLB has the option to terminate the advance at
par. Under the credit agreement, which matures December 3, 2001, interest is
payable monthly and determined using a fixed annual interest rate of 4.98%.
Interest expense in 1996 related to the above debt was approximately $15,000.
26
In March, 1995, the Company filed a $600 million shelf registration statement.
Under this registration statement, the Company issued in July, 1995, $100
million of 6.3% senior notes maturing July 15, 2000; in June, 1996, the Company
issued $100 million of 7.25% senior notes maturing June 15, 2001; in July, 1996,
the Company issued $100 million of 6.75% senior notes maturing May 15, 1999;
in August, 1996, the Company issued $100 million of 6.75% senior notes
maturing August 15, 2001; and in December, 1996, the Company issued $150 million
of 6.125% senior notes maturing December 1, 2000. The respective proceeds of
these issues were used as follows: to reduce outstanding commercial paper issued
to pay $100 million of 8.55% senior notes at their June 1, 1995 maturity; to
reduce outstanding commercial paper issued to fund the purchase price of the
Company's acquisition of GWFS as described in Note 3; to reduce outstanding
commercial paper issued to pay $100 million of 6.25% senior notes at their
July 15, 1996 maturity; to reduce outstanding commercial paper; and, to fund
the purchase price of the Company's acquisition of BFC as described in Note 3,
to repay approximately $69.6 million of outstanding intercompany indebtedness
owed by BFC and its subsidiaries to GWB, and for general corporate purposes.
Provisions of certain of the Company's debt agreements restrict the payment of
dividends to a maximum prescribed proportion of cumulative earnings and
contributed capital and provide for the maintenance of minimum levels of equity
and maximum leverage ratios. At December 31, 1996, approximately $16 million
was available under the debt agreement restriction for future dividends.
Note 10 Customer Deposits
The net book value and approximate fair value of the Company's customer deposits
as of December 31, 1996 and 1995 are as follows:
(Dollars in thousands) 1996 1995
Book Approximate Book Approximate
Value Fair Value Value Fair Value
Certificates of deposit
$100,000 and over $ 10,674 $ 10,714 $ 10,136 $ 10,243
Certificates of deposit
under $100,000 117,588 117,943 131,100 132,168
Savings accounts 1,534 1,534 1,675 1,675
Money market accounts 16,342 16,342 17,861 17,861
$ 146,138 $ 146,533 $ 160,772 $ 161,947
Maturities of time deposits are $85,855,000 in 1997, $28,891,000 in 1998,
$6,753,000 in 1999 and $6,763,000 thereafter.
27
Note 11 Income Taxes
The components of income tax expense are as follows:
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Currently payable
Federal $ 44,871 $ 35,739 $ 32,607
State 8,317 6,719 5,763
Deferred (16,188) (13) (1,170)
$ 37,000 $ 42,445 $ 37,200
Deferred taxes result from temporary differences in the recognition of certain
items for tax and financial reporting purposes. Deferred tax liabilities
(assets) are comprised of the following:
December 31,
(Dollars in thousands) 1996 1995
Amortization of intangibles $ 11,606 $ 17,837
Employee benefits accruals 2,335 1,599
Depreciation 426 678
Loan interest and fee income 3,374 3,087
Other deferred income items 378 399
Total deferred tax liabilities 18,119 23,600
Credit loss reserves (24,788) (16,031)
Unearned insurance commissions (3,956) (2,980)
Other miscellaneous accruals (2,598) (2,415)
State taxes (4,076) (3,162)
Other deferred deduction items (3,181) (2,982)
Total deferred tax assets (38,599) (27,570)
Net deferred tax asset $ (20,480) $ (3,970)
28
The provisions for income taxes differ from the amounts determined by
multiplying pretax income by the statutory Federal income tax rate of 35% for
1996, 1995 and 1994. A reconciliation between these amounts is as follows:
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994
Income taxes at statutory rates $ 34,831 $ 37,709 $ 35,459
Increase (reduction) in taxes
resulting from:
State income taxes, net of
Federal benefit 5,406 4,367 3,746
Other (3,237) 369 (2,005)
$ 37,000 $ 42,445 $ 37,200
Note 12 Retirement and Savings Plans
GWFC's non-contributory defined benefit pension plan covers substantially all
of the Company's employees. Accumulated plan benefits and annual pension cost
are derived from an allocation formula based on the Company's total participants
and the Plan's total participants.
Pension cost for the Company's participants for the years ended December 31,
1996, 1995, and 1994 was $490,000, $1,455,000 and $1,717,000, respectively.
Due to the Company's participation in a multi-employer defined benefit plan,
information as to separate Company participant assets and vested benefits is
not presented.
The Company's employees also participate in GWFC's employee savings plan, which
allows employees to defer part of their pretax compensation until retirement.
Company contributions equal 50% of the contributions made by employees up to 6%
plus annual discretionary amounts, if any, as determined by management. The
Company's cost is based on the actual contribution related to its
participating employees. Total expense was $1,360,000, $1,161,000 and
$1,325,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
The Company's employees also participate in GWFC's defined benefit
postretirement plans which provide medical and life insurance coverage to
eligible employees and dependents based on age and length of service.
Medical coverage options are the same as available to active employees. The
accumulated postretirement benefit obligation and related expense are derived
from an allocation formula based on the Company's total participants and the
Plan's total participants.
The net postretirement medical and life insurance expense allocated to the
Company for the years ended December 31, 1996, 1995 and 1994 were $521,000,
$532,000 and $737,000, respectively.
29
Note 13 Leases
At December 31, 1996, the Company was lessee of office space, principally for
loan offices, computer and other office equipment and automobiles, generally
for terms of five or fewer years.
The Company has no material capital leases. Under operating leases that have
initial or remaining noncancelable lease terms in excess of one year,
approximate aggregate annual minimum rentals are $7,004,000 in 1997; $5,084,000
in 1998; $2,767,000 in 1999; $1,446,000 in 2000; and $627,000 in 2001. Rent
expense for the years ended December 31, 1996, 1995 and 1994 was $9,975,000,
$9,274,000, and $8,247,000, respectively.
Note 14 Contingencies
The Company is involved in litigation incidental to its businesses. It is
management's opinion that the aggregate liability arising from the disposition
of all such pending litigation will not have a material adverse effect on the
Company.
Note 15 Transactions with Related Parties
Significant transactions with GWFC or its subsidiaries in addition to those
described in Note 3 are identified as follows:
GWB provides the Company with certain administrative services, including
human resources and cash management, for which the Company paid
management fees of $1,770,000 in 1996, $1,358,000 in 1995 and $1,365,000
in 1994.
The Company makes payments to GWFC in accordance with GWFC's tax
allocation policy and in connection with the retirement and savings plans.
Note 16 Approximate Fair Values of Financial Instruments
A summary of the approximate fair values of the Company's financial instruments,
as compared to their carrying values, is set forth in the following table:
(Dollars in thousands)
December 31, 1996 December 31, 1995
Carrying Approximate Carrying Approximate
Value Fair Value Value Fair Value
Finance receivables Note 5 $ 2,185,903 $ 2,149,677 $ 2,133,065 $ 2,132,988
Investment securities Note 6 137,072 137,072 140,240 140,240
Short-term debt Note 8 398,006 398,006 312,876 312,876
Long-term debt Note 9 1,352,770 1,411,431 1,003,809 1,047,730
Customer deposits Note 10 147,080 147,475 161,679 162,854
See Note 1 and the referenced Notes for additional information.
30
Note 17 Selected Quarterly Financial Data (Unaudited)
A summary of the quarterly results of operations for the years ended December
31, 1996 and 1995 is set forth below:
Quarter Ended
March 31, June 30, September 30, December 31,
(Dollars in thousands) 1996 1995 1996 1995 1996 1995 1996 1995
Revenue $102,688 $97,934 $99,806 $98,697 $99,605 $100,338 $104,603 $104,515
Interest and other
expenses 64,756 63,238 53,931 61,983 63,314 60,340 66,383 59,681
Provision for
credit losses 14,500 10,600 13,600 9,200 15,300 11,600 15,400 17,100
Total expenses 79,256 73,838 67,531 71,183 78,614 71,940 81,783 76,781
Income before taxes 23,432 24,096 32,275 27,514 20,991 28,398 22,820 27,734
Income tax provision 9,200 9,500 12,800 10,974 8,200 11,236 6,800 10,735
Net income $ 14,232 $14,596 $ 19,475 $16,540 $12,791 $ 17,162 $ 16,020 $ 16,999
The variances between the above quarterly data and the information reported
in the Company's previously filed Forms 10-Q result from the acquisition of
BFC as discussed in Note 3.
31
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Index of Documents filed as a part of this Report:
1. Financial Statements
Included in Part II of this Report:
PAGE
Report of Independent Certified Public Accountants. . . . . .10
Aristar, Inc. and Subsidiaries:
Consolidated Statements of Financial Condition
at December 31, 1996 and 1995. . . . . . . . . . . . . . . .11
Consolidated Statements of Operations and Retained Earnings
for the Years Ended December 31, 1996, 1995 and 1994 . . . 12
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1996, 1995 and 1994 . . . 13
Notes to Consolidated Financial Statements . . . . . . . . .14
2. Financial Statement Schedules
All schedules are omitted because of the absence of the conditions under
which they are required or because the required information is set forth
in the financial statements or related notes.
3. Exhibits
Included in Part IV of this Report:
Exhibit
Number
(2) (a) Agreement dated as of April 30, 1996, between Great
Western Bank and First Community Financial Services, Inc. (1)
(b) Amendment to Exhibit (2) (a) dated as of August 31, 1996. (2)
(c) Agreement dated as of April 30, 1996, between Great Western
Bank and Blazer Financial Services, Inc. (1)
(d) Amendment to Exhibit (2) (c) dated as of August 31, 1996. (2)
(e) Agreement dated as of April 30, 1996, between Great Western
Bank and Blazer Financial Services, Inc. of Florida. (1)
(f) Amendment to Exhibit (2) (e) dated as of August 31, 1996.(2)
32
(g) Agreement dated as of December 31, 1996, between Great Western
Financial Corporation and Aristar, Inc. (3)
(3) (a) Certificate of Incorporation of Aristar, Inc. as presently in
effect.(4)
(b) By-Laws of Aristar, Inc. as presently in effect. (4)
(4) (a) Indenture dated as of May 1, 1991 between Aristar, Inc. and
Security Pacific National Bank, as trustee. (5)
(b) Indenture dated as of May 1, 1991 between Aristar, Inc. and
The First National Bank of Boston, as trustee. (5)
(c) Indenture dated as of July 1, 1992 between Aristar, Inc. and
The Chase Manhattan Bank, N.A., as trustee. (6)
(d) Indenture dated as of July 1, 1992 between Aristar, Inc. and
Citibank, N.A., as trustee. (6)
(e) Indenture dated as of July 1, 1995 between Aristar, Inc. and
The Bank of New York, as trustee. (7)
(f) The registrant hereby agrees to furnish the Securities and
Exchange Commission upon request with copies of all
instruments defining rights of holders of long-term debt of
Aristar and its consolidated subsidiaries.
(10) Income Tax Allocation Agreement dated as of December 15, 1995
between Aristar, Inc. and Great Western Financial Corporation.(8)
(12) Statement Re: Computation of Ratios.
(23) Consent of Independent Certified Public Accountants.
(24) Power of Attorney included on Page 34 of the Form 10-K.
(27) Financial Data Schedule.
33
(1) Incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996,
Commission file number 1-3521.
(2) Incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996,
Commission file number 1-3521.
(3) Incorporated by reference to Registrant's Current Report on
Form 8-K dated December 31, 1996, Commission file
number 1-3521.
(4) Incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987,
Commission file number 1-3521.
(5) Incorporated by reference to Registrant's Current Report on
Form 8-K dated May 29, 1991, Commission file number
1-3521.
(6) Incorporated by reference to Registrant's Current Report on
Form 8-K dated June 24, 1992, Commission file number
1-3521.
(7) Incorporated by reference to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, Commission
file number 1-3521.
(8) Incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995,
Commission file number 1-3521.
(b) Reports on Form 8-K
On December 3, 1996, the Company filed a Current Report on Form 8-K,
dated December 3, 1996, disclosing, under item (5) thereof, the pending
acquisition of Blazer Financial Corporation.
On December 5, 1996, the Company filed a Current Report on Form 8-K,
dated December 3, 1996, disclosing, under item (7) thereof, the terms of
the issuance of $150,000,000 aggregate principal amount of its 6.125%
senior notes maturing December 1, 2000.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ARISTAR, INC.
By /s/ James A. Bare March 12, 1997
James A. Bare, Executive Vice President Date
and Chief Financial Officer (and Principal
Accounting Officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes James A. Bare as
attorney-in-fact to sign on his behalf as an individual and in every capacity
stated below, and to file all amendments to the registrant's Form 10-K, and
the registrant hereby confers like authority to sign and file in its behalf.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 12, 1997.
/s/ Michael M. Pappas
Michael M. Pappas, President and Director
(Principal Executive Officer)
/s/ Carl F. Geuther
Carl F. Geuther, Director
/s/ J. Lance Erikson
J. Lance Erikson, Director
/s/ John F. Maher
John F. Maher, Director
/s/ A. William Schenck
A. William Schenck, III, Director
36