UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549 - 1004
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) December 2, 1996
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GREAT WESTERN FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-4075 95-1913457
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number) No.)
9200 Oakdale Avenue, Chatsworth, California 91311
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 775-3411
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Not Applicable
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(Former name or former address, if changed since last report.)
Item 5. Other Events
On December 2, 1996, Great Western Financial Corporation announced a series
of steps to reengineer its mortgage origination business, to reduce its
premises, and to install new technology. As a consequence, the company will
take a pre-tax restructuring charge of between $65 million to $70 million
in the fourth quarter 1996.
In addition to the restructuring charge, the company announced several
other actions, including the planned sale of approximately $300 million of
nonperforming assets. The sale of nonperforming assets is expected to
result in a pre-tax charge to fourth quarter earnings of between $50
million to $60 million. These nonperforming assets consist primarily of
single-family real estate loans in the company's portfolio, the majority of
which were originated in California during the years 1989-1992.
A previously announced tender offer to purchase two issues of Great Western
Bank's subordinated notes with a total amount outstanding of $280 million
will result in a pre-tax charge of approximately $21 million. The
purchase will be financed through a combination of short-term fundings and
available cash.
The previously announced agreement to sell the company's student lending
business to Crestar Bank will result in a pre-tax gain of approximately $23
million. The company is divesting its student loan operation and has also
announced that it is exploring the sale or joint venture of Sierra Capital
Management, its mutual fund subsidiary, as part of an effort to focus the
company's retail operations on those lines of business expected to generate
the highest levels of return for the company.
The largest component of the pre-tax restructuring charge is approximately
$26 million related to a comprehensive project to overhaul Great Western's
mortgage origination business. The charge includes severance costs, the
write-off of existing technology, and premises consolidation related to the
reengineering of the mortgage origination operation. The reengineering of
the mortgage origination business is expected initially to reduce the cost
of originating a mortgage loan at Great Western by 20 percent.
The pre-tax restructuring charge also includes approximately $20 million
that will be taken to consolidate the company's premises under a plan to
reduce existing headquarters office space in Chatsworth, California, with
the goal of shrinking the total space occupied by almost 25 percent. A
portion of this restructuring charge also involves reducing excess office
space by consolidating or relocating ten high-cost retail bank branches.
Another element of the pre-tax restructuring charge is approximately $15
million to write-off computer technology in order to install new equipment
that will improve Great Western's data processing capabilities.
This Form 8-K contains forward-looking statements which refer to "expected"
results and a "goal." Actual results could differ materially from such
statements due to a variety of factors including: (1) inability to enter
into or delay in entering into satisfactory transactions in connection with
the disposal of nonperforming assets and excess facilities; (2) adverse
revenue impact from the company's sales and marketing efforts due to
employee reductions or consolidation of mortgage origination offices and
retail banking branches; (3) delay in implementing any of the restructuring
programs; or (4) changing economic, market or business conditions.
SIGNATURE
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 hereunto duly authorized.
GREAT WESTERN FINANCIAL CORPORATION
By /s/ Barry R. Barkley
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BARRY R. BARKLEY
SENIOR VICE PRESIDENT AND CONTROLLER
Date: December 4, 1996