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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 1998
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 333-34793
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-2
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A NEW YORK I.R.S. EMPLOYER IDENTIFICATION
COMMON LAW TRUST No. 13-7135550
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c/o AT&T Capital Corporation
2 Gatehall Drive, Parsippany, New Jersey 07054
Telephone Number (973) 606-3500
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of exchange on
which registered
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Receivable-Backed Notes None
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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 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. ( x )
State the aggregate market value of the voting stock held by non-affiliates of
registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of specified date within 60 days prior to the date of filing. Not
Applicable
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable
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TABLE OF CONTENTS
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PART I
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Item Description Page
2. Properties 1
3. Legal Proceedings 1
4. Submission of Matters to a Vote of Security-Holders 1
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 1
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 1
PART III
12. Security Ownership of Certain Beneficial Owners and
Management 2
13. Certain Relationships and Related Transactions 2
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 2
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PART I
ITEM 2. PROPERTIES
The Trust owns no physical properties.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter has been submitted to a vote of the holders of the Newcourt
Equipment Trust Securities 1998-2 (the "Trust") Receivable-Backed Notes
or Equity Certificate through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no established public trading market for the Equity
Certificate of the Trust. As of December 31, 1998, the number of
holders of record were as follows: Equity Certificate: 1. As of
December 31, 1998, no monthly distribution had been made to the holder
of the Equity Certificate.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
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PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not Applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a) Documents filed as a part of the report:
(3) Exhibits:
99(a) Report of Independent Public Accountants.
99(b) Management Assertion pursuant to Section 3.10 of the
Transfer and Servicing Agreement dated December 1, 1998
between Newcourt Equipment Trust Securities 1998-2, Antigua
Funding Corporation, AT&T Capital Corporation and The Bank
of New York.
b) Current Reports on Form 8-K:
None
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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.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-2
By: AT&T Capital Corporation, as Servicer
By: Glenn A. Votek
Glenn A. Votek
Executive Vice President and
Treasurer
March 31, 1999
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EXHIBIT INDEX
Exhibit No.
99(a) Report of Independent Public Accountants.
99(b) Management Assertion.
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Exhibit 99(a)
Form 10-K for 1998
File No. 333-34793
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
Newcourt Credit Group Inc.
We have examined management's assertion that AT&T Capital Corporation maintained
effective controls over servicing leases and loans subject to the Transfer and
Servicing Agreement dated as December 1, 1998 (the "Servicing Agreement") for
the Newcourt Equipment Trust Securities 1998-2 for the year ended December 31,
1998. This assertion is included in the accompanying report by management
titled, "Report of Management on the Effectiveness of AT&T Capital Corporation's
Controls Over the Servicing of Leases and Loans." Management is responsible for
its controls over its lease and loan servicing. Our responsibility is to express
an opinion on management's assertion based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the controls over AT&T Capital Corporation's lease
and loan servicing, testing and evaluating the design and operating
effectiveness of those controls, and such other procedures as we considered
necessary in the circumstances. We believe that our examination provides a
reasonable basis for our opinion.
Because of inherent limitations in any control, errors or fraud may occur and
not be detected. Also, projections of any evaluation of the controls over the
lease and loan servicing to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the controls may deteriorate.
In our opinion, management's assertion that AT&T Capital Corporation maintained
effective controls over lease and loan servicing as required under the Servicing
Agreement for the year ended December 31, 1998, is fairly stated in all material
respects, based upon the stated criteria set forth in Exhibit I "AT&T Capital
Corporation Stated Lease/Loan Servicing Control Criteria" of management's
report.
ERNST & YOUNG LLP
March 30, 1999
New York, New York
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Exhibit 99(b)
Form 10-K for 1998
File No. 333-34793
AT&T Capital Corporation
Management Assertion
In accordance with the terms of the Transfer and Servicing Agreement dated
as of December 1, 1998 ('Servicing Agreement') among AT&T Capital Corporation
(the 'Company') as Servicer, and in its individual capacity, Antigua Funding
Corporation as the Depositor and The Bank of New York as the Indenture Trustee
for the Newcourt Equipment Trust Securities 1998, the Company is responsible for
servicing the leases and loans that are the subject of the Servicing Agreement.
The Company is responsible for establishing and maintaining effective
controls over the servicing of leases and loans. The controls are designed to
provide reasonable assurance to the Company's management and board of directors
that leases and loans are serviced in accordance with the Company's policies and
procedures as well as its responsibilities under the Servicing Agreement.
There are inherent limitations in any control, including the possibility of
human error and the circumvention or overriding of the controls. Accordingly,
even effective controls can provide only reasonable assurance with respect to
the achievement of any objectives of controls. Further, because of changes in
conditions, the effectiveness of controls may vary over time.
The Company has determined the objectives of control with respect to its
servicing responsibilities. These stated control criteria are set forth in
Exhibit I. The Company has assessed its controls in relation to these criteria
for the year ended December 31, 1998. Based upon this assessment, the Company
believes that its controls over servicing loans and leases are effective in
providing reasonable assurance that the Company compiled with its policies and
procedures and responsibilities under the Servicing Agreement.
AT&T Capital Corporation, as Servicer
By:
Glenn A Votek
Executive Vice President and
Treasurer
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EXHIBIT I
AT&T Capital Corporation
Stated Lease/Loan Servicing Control Criteria
I. SEGREGATION OF SERVICED PORTFOLIO
The Company's systems segregate leases and loans between those owned by the
Company and those managed by the Company for each relevant owner by each managed
pool.
II. LEASE/LOAN PAYMENTS
Lease and loan payments, including scheduled interest and principal,
prepayments, liquidation proceeds, late fees, etc. (collectively, remittances)
are applied to the respective customer account on a daily basis, based on an
established payment hierarchy.
III. ACCOUNTING
The Company maintains financial records for the serviced portfolios which are
periodically reconciled to the Company's subsidiary records.
IV. DELINQUENCIES
The Company maintains and implements policies and procedures which govern the
collection efforts, monitoring and reporting for delinquent accounts.
V. TRUSTEE DISBURSEMENTS
Remittances received by the Company are transferred to the Trustee by the
Company's Treasury Group on a daily and monthly basis in accordance with the
time frame established within the Servicing Agreement.
VI. TRUSTEE ACCOUNTING AND REPORTING
The Company's Treasury Group generates a monthly servicing report to the Trustee
and investors which provides the cash activity, delinquency, and defaults
relating to the serviced portfolio. Information on this report which is compiled
by the Corporate Systems Group and the Treasury Group is reconciled to the
records of the Company's various servicing entities.
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AT&T Capital Corporation
Stated Lease/Loan Servicing Control Procedures
I. SEGREGATION OF SERVICED PORTFOLIO
The Company's systems segregate leases and loans between those owned by the
Company and those managed by the Company for each relevant owner by each managed
pool. Selected control procedures include:
a. Transactions which have been securitized are identified with a special code
(flagged) within the servicing entity's lease accounting system to
segregate the cash activity and reporting relating to these transactions.
b. System security policies and procedures have been established and
implemented to restrict modifications to securitization codes by users.
c. A formal or, at a minimum, an informal monthly lease and loan count
reconciliation of the securitized contracts is performed by the Portfolio
Accounting Group to ensure that all non-active securitized transactions are
accounted for.
d. For one accounting system, serviced portfolio transactional reports are
reviewed and reconciled to control totals generated from the data
transmission to the Treasury Group. Monthly journal entries recorded for
the month are compared to the net investment components of the system
lease/loan master file for both the owned and managed portfolios.
e. The Company generates daily cash reports which segregate cash among owned
and managed portfolios based upon the systems codes that flag the
contracts.
f. The Company's system automatically modifies the status indicator on a
managed transaction from active to its new status (default, prepaid,
rebook, maturity, or ineligible) upon the appropriate change to the lease
record.
g. Modifications of contracts are processed in accordance with the company's
schedule of authorization which is applicable to both owned and managed
contracts.
II. LEASE/LOAN PAYMENTS
Lease and loan payments, including scheduled interest and principal,
prepayments, liquidation proceeds, late fees, etc. (collectively, remittances)
are applied to the respective customer accounts on a daily basis, based on an
established payment hierarchy. Selected control procedures include:
a. Billing statements are prepared on a basis consistent with the terms of the
lease or loan and sent to customers based upon the records in the servicing
system.
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b. Customers are directed to forward their remittances to the Company's
lockboxes as indicated on their respective invoices.
c. Payments received at the lockbox electronically feed to the Company's lease
and loan accounting system on a daily basis and are posted to customer
records by the morning of the subsequent day in accordance with the
Company's established payment hierarchy.
d. A formal or, at a minimum, an informal daily cash reconciliation is
performed by the servicing entities of the cash received at the lockboxes
to ensure a complete accounting of all cash (owned and managed.)
e. System security policies and procedures have been established and
implemented to restrict modifications to the system controlled payment
hierarchy.
f. Segregation of duties have been established between the personnel
responsible for the posting of payments (Application Systems for electronic
transmissions and the Operations Group for manual adjustments) and
reconciling the cash activity to the general ledger (Portfolio Accounting
Group).
g. Suspense cash systems modules are utilized to monitor cash not
systematically applied to customer accounts.
h. Operations personnel review the clearing of suspense cash activity to
ensure timely application of such activity.
i. A monthly cash reconciliation between the summary of daily cash transferred
for the securitized contracts and the monthly servicing data file received
by Corporate Systems Group is prepared by Treasury and reviewed by the
Portfolio Accountanting Group.
j. Lease and loan remittances received by the Company are separately
identified and transferred to the securitization Trust on a daily and
monthly basis.
k. The Company generates daily cash reports which segregate cash among owned
and managed portfolios based upon the systems codes that flag the
contracts.
l. The Company flags lease and loan contracts where all the contract principal
balance sold has been remitted to the Trust.
III. ACCOUNTING
The Company maintains financial records for the managed portfolios which are
periodically reconciled to the Company's systems. Selected control procedures
include:
a. Segregation of duties have been established between the personnel
responsible for record maintenance on the lease and loan accounting systems
(the Operations Group) and reconciling lease and loan activity to the
general ledger (Portfolio Accounting Group).
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b. The Company maintains an automated or manual interface between the lease
and loan accounting systems and the general ledger.
c. Monthly reconciliations between the lease and loan accounting systems and
the general ledger for the owned portfolio are performed.
d. A system reconciliation at the lease and loan level is performed between
the contract principal balance and the required payoff amount calculated by
the Corporate Systems Group to the corresponding figures provided by the
respective servicing entity.
e. A monthly reconciliation is performed by the Company from its general
ledger cash activity to the Treasury Group cash records.
f. For one accounting system, serviced portfolio transactional reports are
reviewed and reconciled to control totals generated from the data
transmission to the Treasury Group. Monthly journal entries recorded for
the month are compared to the net investment components of the system
lease/loan master file for both the owned and managed portfolios.
g. For portfolios residing on the CCLAS II lease accounting system, special
reports are run for the securitized portfolio to capture the rents due for
leases terminated prior to the billing cycle date. These special reports
are required as a result of a system constraint which does not capture the
rent amount due in the current month when a lease terminates prior to the
billing cycle date. This is included as an adjustment on the Servicer
Report.
IV. DELINQUENCIES
The Company maintains and implements policies and procedures which govern the
collection efforts, monitoring and reporting for delinquent accounts. Selected
control procedures include:
a. Policies and procedures exist for the periodic reviews of delinquent
transactions, generation of delinquency reports and collection efforts.
b. Account delinquency status is system calculated and generated.
c. The Arrears Management Group performs periodic reviews of the delinquency
reporting and collection activity at the servicing entities. Periodic
reviews are conducted to test the accuracy and timeliness of collection
efforts and delinquency reporting.
d. Collection effort information such as phone calls, correspondence, and
follow-up activity is maintained on-line by customer service
representatives and monitored by supervisors.
e. Delinquency reporting is reviewed by the servicing entities' Credit Head,
the Portfolio Quality Leader and the Operations Manager.
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f. Customer account monitoring is system driven based on delinquency and
follow up action required. Management reviews performance levels of the
Collectors.
g. Delinquency status for the monthly servicing report is calculated by the
system from delinquency status codes provided by the respective servicing
entities.
h. The Corporate Systems Group executes a system edit to verify the
delinquency status codes. The Treasury Group reviews month over month
changes for unusual trends.
i. Write-offsgenerated from the servicing entity's system are reconciled
monthly to the write-offs reported in the servicer report by the Treasury
Group.
V. TRUSTEE DISBURSEMENTS
Remittances received by the Company are transferred to the Trustee by the
Company's Treasury Group on a daily and monthly basis in accordance with the
time frame established within the Servicing Agreement. Selected control
procedures include:
a. The Company has written policies and procedures for the transfer of funds
to the Trustee on a daily and monthly basis.
b. Appropriate approvals in writing are required to initiate a wire transfer
of funds to the Trustee account.
c. The wire transfer of funds to the Trustee is restricted to the Treasury
Group.
d. Wire transfer activity is recorded on a timely basis by the Treasury Group
to the on-line cash system.
e. A monthly reconciliation of cash activity is performed by the servicing
entity from its general ledger to the Treasury Group's cash system. The
servicing entities periodically review the cash transfers recorded by the
Treasury Group in the cash management system.
g. Informal bank reconciliations are performed periodically at the servicing
entities.
h. A monthly cash reconciliation is performed between the Treasury Group's
cash records and the monthly servicing report produced by the Treasury
Securitization Group.
VI. TRUSTEE ACCOUNTING AND REPORTING
The Company's Treasury Group generates a monthly servicing report to the
Trustee and investors which provides the cash activity, delinquency, and
defaults relating to the serviced portfolio. Information on this report which
is compiled by the Corporate Systems Group and the Treasury Group is reconciled
to the records of the Company's various servicing entities. Selected control
procedures include:
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a. Monthly data extract files at a lease and the level are transmitted
electronically from the servicing entity to the Corporate Systems Group
where edits are performed to ensure a complete accountability of the
securitized portfolio as well as to check for errors in various data
elements by performing recalculations of amounts provided by the
servicing entities.
b. Through the system edit process, reports and files are generated for the
exception reporting which is provided to the respective servicing entity
for investigation and subsequent corrections.
c. A system reconciliation at the lease and loan level is performed between
the contract principal balance and the required payoff amount calculated by
the Corporate Systems Group to the corresponding figures provided by the
respective servicing entity.
d. System programs are utilized for compiling and calculating data relating to
the securitized portfolio.
e. A monthly cash reconciliation is performed between the Corporate Treasury
Group cash records and the monthly servicing report produced by the
Treasury Group.
f. Adequate system security and back up is maintained over the Corporate
System applications used for securitization.
g. The Treasury Group's management performs an informal analytical review on
the monthly servicing report.
h. The servicing entities are provided with workpapers supporting the servicer
report for their review and approval before submission by the Treasury
Group to the Trustee.
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