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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, 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 333-11243
CAPITA PREFERRED FUNDING L.P.
A DELAWARE I.R.S. EMPLOYER IDENTIFICATION
LIMITED PARTNERSHIP No. 22-3467161
c/o AT&T Capital Corporation
44 Whippany Road, Morristown, New Jersey 07962-1983
Telephone Number 201-397-3000
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on
which registered
- ------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act: None
THE 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 PURSUANT TO GENERAL INSTRUCTION I(2).
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
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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
Portions of the Registration Statement on Form S-3 of this Registrant (No.
333-11243) are incorporated in Part I this report.
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TABLE OF CONTENTS
PART I
Item Description Page
1. Business 1
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 2
6. Selected Financial Data 2
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 2
8. Financial Statements and Supplementary Data 3
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 11
PART III
10. Directors and Executive Officers of the Registrant 11
11. Executive Compensation 11
12. Security Ownership of Certain Beneficial Owners and
Management 11
13. Certain Relationships and Related Transactions 11
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 11
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PART I
ITEM 1. BUSINESS
Capita Preferred Funding L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act, as amended (the "Partnership Act"), on August 29, 1996.
Pursuant to the certificate of limited partnership, as amended, and the Limited
Partnership Agreement, AT&T Capital Corporation, the parent company of the
Partnership (the "Parent"), is the sole general partner of the Partnership (in
such capacity the "General Partner"). Upon the issuance of approximately $206.2
million of Partnership Preferred Securities (the "Partnership Preferred
Securities"), which securities represent limited partner interests in the
Partnership, an affiliate, Capita Preferred Trust (the "Trust"), will be the
sole limited partner of the Partnership. Contemporaneous with the issuance of
the Partnership Preferred Securities, the General Partner contributed capital of
$36.4 million to the Partnership to establish its initial capital account at an
amount equal to at least 15% of the total capital of the Partnership.
The Partnership is managed by the General Partner and exists for the
sole purpose of (i) issuing its partnership interests, (ii) investing the
proceeds thereof in 20-year debentures of the Parent and two wholly-owned
subsidiaries of the Parent (the "Debentures") and, to a limited extent, certain
short-term investments and (iii) engaging in only those other activities
necessary or incidental thereto. To the extent that aggregate payments to the
Partnership on the Debentures and investments exceeds distributions payable with
respect to the Partnership Preferred Securities, the Partnership may at times
have excess funds which shall be allocated to and may, in the General Partner's
sole discretion, be distributed to the General Partner.
For additional information regarding the description of the Partnership,
see the Partnership's Prospectus dated October 22, 1996 (the "Prospectus")
comprising a portion of the Registration Statement on Form S-3 (No. 333-11243)
filed by the Registrant with the Securities and Exchange Commission, which is
incorporated by reference herein.
ITEM 2. PROPERTIES
The Partnership owns no physical properties.
ITEM 3. LEGAL PROCEEDINGS
The Partnership has no pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Omitted pursuant to General Instruction I of Form 10-K.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no established public trading market for the Partnership Preferred
Securities of the Partnership. As of April 14, 1997, there were 2 holders of
record.
ITEM 6. SELECTED FINANCIAL DATA
Omitted pursuant to General Instruction I of Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Results of Operations and Changes in Cash Flows
On October 25, 1996, Capita Preferred Funding L.P. (the "Partnership")
issued $206.2 million of Partnership Preferred Securities (the "Partnership
Preferred Securities") to an affiliate, Capita Preferred Trust (the "Trust").
The Partnership invested such proceeds and the $36.4 million capital
contribution from its parent and general partner, AT&T Capital Corporation (the
"Parent" or "General Partner") in $240.2 million of 20-year Debentures of the
Parent and two wholly-owned subsidiaries of the Parent (the "Debentures") and
$2.4 million in short term investments.
On December 31, 1996, the Partnership made its scheduled quarterly cash
distribution at an annual rate of 9.06% to the Trust. The Partnership also
received on December 31, 1996 its scheduled interest income payments on the
Debentures. The Partnership distributed the excess of the interest income
received on the Debentures of approximately $3.9 million over the cash
distributions made on the Partnership Preferred Securities of $3.4 million to
the General Partner.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CAPITA PREFERRED FUNDING L.P.
BALANCE SHEET
AT DECEMBER 31, 1996
(dollars in thousands)
ASSETS:
Debentures receivable from Affiliates $240,146
Other assets 2,426
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Total Assets 242,572
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PARTNERS' CAPITAL:
General Partner's Interest 36,386
Limited Partner's Interest 206,186
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Total Partners' Capital $242,572
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The accompanying notes are an integral part of these Financial Statements.
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CAPITA PREFERRED FUNDING L.P.
STATEMENT OF INCOME
FOR THE PERIOD AUGUST 29, 1996 (DATE OF FORMATION)
TO DECEMBER 31, 1996
(dollars in thousands)
REVENUES-Interest Income $ 3,931
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Net income $ 3,931
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The accompanying notes are an integral part of these Financial Statements.
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CAPITA PREFERRED FUNDING L.P.
STATEMENT OF PARTNERS' CAPITAL
FOR THE PERIOD AUGUST 29, 1996 (DATE OF FORMATION)
TO DECEMBER 31, 1996
(dollars in thousands)
General Partner's Interest:
Balance at beginning of period $ 0
Capital contribution 36,386
Net income 506
Distributions (506)
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Balance at end of period 36,386
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Limited Partner's Interest:
Balance at beginning of period 0
Capital contribution 206,186
Net income 3,425
Distributions (3,425)
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Balance at end of period 206,186
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Total Partners' Capital $242,572
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The accompanying notes are an integral part of these Financial Statements.
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CAPITA PREFERRED FUNDING L.P.
STATEMENT OF CASH FLOWS
FOR THE PERIOD AUGUST 29, 1996 (DATE OF
FORMATION) TO DECEMBER 31, 1996
(dollars in thousands)
Cash Flow from Operating Activities:
Net Income $ 3,931
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Net Cash provided from Operating Activities 3,931
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Cash Flow from Investing Activities:
Purchase of eligible debt securities (2,426)
Purchase of Debentures (240,146)
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Net Cash used for Investing Activities (242,572)
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Cash Flow from Financing Activities:
Issuance of Partnership Preferred Securities 206,186
Capital Contribution from General Partner 36,386
Distribution to Limited Partner (3,425)
Distribution to General Partner (506)
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Net Cash provided by Financing
activities 238,641
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Net change in cash and cash equivalents 0
Cash and cash equivalents at beginning
of period 0
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Cash and cash equivalents at end
of period $ 0
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The accompanying notes are an integral part of these financial statements.
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Notes to Financial Statements
1. Description of the Partnership
Capita Preferred Funding L.P. (the "Partnership") is a limited
partnership that was formed under the Delaware Revised Uniform Limited
Partnership Act, as amended (the "Partnership Act"), on August 29, 1996.
Pursuant to the certificate of limited partnership, as amended, and the Limited
Partnership Agreement, AT&T Capital Corporation, the parent company of the
Partnership (the "Parent"), is the sole general partner of the Partnership (in
such capacity the "General Partner").
On October 25, 1996 the Partnership issued $206.2 million of Partnership
Preferred Securities to an affiliate, Capita Preferred Trust ("the Trust"). The
Trust is the sole limited partner of the Partnership. The Trust and the
Partnership are consolidated subsidiaries of the Parent. The Partnership, in
turn, used proceeds from the issuance of the Partnership Preferred Securities
and a General Partner capital contribution of $36.4 million to invest primarily
in 20-year debentures of the Parent and two wholly-owned subsidiaries of the
Parent (the "Debentures"). Payments in respect to the Debentures issued by the
Parent's subsidiaries have been guaranteed, on a subordinated basis, by the
Parent.
2. Summary of Significant Accounting policies
Revenue Recognition
Interest income on the Debentures is recorded on the accompanying
Statement of Income when due from the Parent and its two wholly-owned
subsidiaries. Accrual of interest income on the Debentures would be suspended if
the Debentures became delinquent. The Debentures were not delinquent at December
31, 1996.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The Partnership's cash
is held by a New York money center bank, in a demand deposit account.
Use of 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 revenues and expenses during the period reported. Actual results
could differ from those estimates.
Administrative Costs
All costs and expenses of the Partnership are paid by the Parent.
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3. Administration of the Partnership
The Partnership is managed by the General Partner and exists for the
sole purpose of (i) issuing its partnership interest, (ii) investing the
proceeds thereof in Debentures and to a lesser extent, certain short-term
investments and (iii) engaging in only those other activities necessary or
incidental thereto. To the extent that aggregate payments to the Partnership on
the Debentures and investments exceeds distributions payable with respect to the
Partnership Preferred Securities, the Partnership may at times have excess funds
which shall be allocated to and may, in the General Partner's sole discretion,
be distributed to the General Partner.
For so long as the Partnership Preferred Securities remain outstanding,
the Parent covenants in the Limited Partnership Agreement (i) to remain the sole
general partner of the Partnership and to maintain directly 100% ownership of
the General Partner's interest in the Partnership, which interest will at all
times represent at least 1% of the total capital of the Partnership; (ii) to
cause the Partnership to remain a limited partnership and not to voluntarily
dissolve, liquidate, wind-up or be terminated, except as permitted by the
Limited Partnership Agreement, (iii) to use its commercially reasonable efforts
to ensure that the Partnership will not be an "investment company" for purposes
of the Investment Company Act of 1940 and (iv) to take no action which would be
reasonably likely to cause the Partnership to be classified as an association or
a publicly traded partnership taxable as a corporation for United States federal
income tax purposes. (See Note 4 for discussion of Income Taxes.)
4. Income Taxes
The Partnership is classified for United States federal income tax
purposes as a partnership and not as an association or publicly traded
partnership taxable as a corporation. Therefore, the Partnership is not a tax
paying entity.
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5. Distributions
Holders of Partnership Preferred Securities are entitled to receive
cumulative cash distributions, if, as and when declared by the General Partner
in its sole discretion out of assets of the Partnership legally available for
payment. The distributions payable on each Partnership Preferred Security will
be fixed at a rate per annum of 9.06% of the stated liquidation preference of
$25 per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly at the rate per annum equal
to 9.06%. The amount of distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
The Partnership's earnings available for distribution to the holders of
the Partnership Preferred Securities will be limited primarily to interest
received on the Debentures and certain short-term investments. To the extent
that the issuers (including, where applicable, the Parent, as guarantor) of the
securities in which the Partnership invests fail to make any payment in respect
of such securities (or, if applicable, such guarantees), the Partnership will
not have sufficient funds to pay and will not declare or pay distributions on
the Partnership Preferred Securities, in which event the Partnership Guarantee
will not apply to such distributions until the Partnership has sufficient funds
available therefor. In addition, distributions on the Partnership Preferred
Securities may be declared and paid only as determined in the sole discretion of
the General Partner.
6. Debentures receivable from Affiliate
The Partnership invested the contributions received from the Trust and
General Partner in the Debentures. The Debentures, which have a term of 20
years, bear interest at 8.88% per annum, and are guaranteed by the Parent, are
all due from related parties of the Partnership. Of the Debentures purchased,
approximately $206.2 million are obligations of the Parent, AT&T Capital
Corporation, approximately $29.0 million are obligations of an affiliate, AT&T
Leasing Services, Inc. and the remainder of $5.0 million are obligations of
another affiliate, AT&T Capital Services, Inc.
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REPORT OF INDEPENDENT ACCOUNTANTS
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To the Partnership Preferred Security Holders and Trustees of Capita Preferred
Funding L.P.:
We have audited the balance sheet of Capita Preferred Funding L.P. (the
"Partnership") at December 31, 1996, and the related statements of income,
partners' capital and cash flows for the period August 29, 1996 (Date of
formation) to December 31, 1996. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Partnership at December
31, 1996, and the results of its operations and its cash flows for the period
August 29, 1996 to December 31, 1996, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
1301 Avenue of the Americas
New York, New York
April 14, 1997
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On February 12, 1997, the Audit Committee of the Board of Directors
(with the concurrence of the Board of Directors) of the Parent dismissed Coopers
& Lybrand L.L.P. as the Parent's and Partnership's independent public
accountants and appointed Arthur Andersen LLP to serve as the Parent's and
Partnership's independent accountants for the year 1997. Coopers & Lybrand
L.L.P. will continue to serve as the Parent's and Partnership's independent
public accountants for 1996. There have been no disagreements with independent
accountants on any accounting or financial disclosure during the past two years.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Omitted pursuant to General Instruction I of Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Omitted pursuant to General Instruction I of Form 10-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Omitted pursuant to General Instruction I of Form 10-K.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Omitted pursuant to General Instruction I of Form 10-K.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a) Documents filed as a part of the report:
(1) Financial Statements:
- Balance Sheet
- Statement of Income
- Statement of Partners' Capital
- Statement of Cash Flows
- Notes to the Consolidated Financial Statements
- Report of Independent Accountants
(2) Financial statement schedules are omitted because the required
information is included in the financial statements or notes
thereto or because of the absence of condition under which
they are required.
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(3) Exhibits:
Exhibit Number
4.1 Certificate of Limited Partnership, dated as of August
28, 1996, is incorporated by reference to Exhibit 4.3
of the registrant's Registration Statement on Form S-3
(No. 333-11243) filed with the Securities and Exchange
Commission.
4.2 Amended and Restated Certificate of Limited
Partnership, dated as of October 2, 1996 is
incorporated by reference to Exhibit 4.4 of the
registrant's Registration Statement on Form S-3 (No.
333-11243) filed with the Securities and Exchange
Commission.
4.3 Form of Amended and Restated Certificate of Limited
Partnership is incorporated by reference to Exhibit
4.5 of the registrant's Registration Statement on Form
S-3 (No. 333-11243) filed with the Securities and
Exchange Commission.
4.4 Form of Partnership Preferred Securities Guarantee
Agreement is incorporated by reference to Exhibit 4.7
of the registrant's Registration Statement on Form S-3
(No. 333-11243) filed with the Securities and Exchange
Commission.
10(a) AT&T Capital Corporation, Capita Preferred Funding
L.P., Capita Preferred Trust Prospectus dated October
22, 1996 is incorporated by reference to the
Registration Statement on Form S-3 (No. 333-11243)
dated October 21, 1996 filed with the Securities and
Exchange Commission.
27 Financial Data Schedule
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.
CAPITA PREFERRED FUNDING L.P.
By: AT&T Capital Corporation
General Partner
EDWARD M. DWYER
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By: Edward M. Dwyer
Senior Vice President,
Chief Financial Officer
and Risk Management Officer
of AT&T Capital Corporation
April 14, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER<F1>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 2,426
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 242,572
<CURRENT-LIABILITIES> 0
<BONDS> 240,146
<COMMON> 0
0
0
<OTHER-SE> 242,572
<TOTAL-LIABILITY-AND-EQUITY> 242,572
<SALES> 0
<TOTAL-REVENUES> 3,931
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,931
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,931
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>The period covered is August 29, 1996 through December 31, 1996.
</FN>
</TABLE>
