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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 TRUST
A DELAWARE I.R.S. EMPLOYER IDENTIFICATION
BUSINESS TRUST No. 22-3467159
c/o AT&T Capital Corporation
44 Whippany Road, Morristown, New Jersey 07962-1983
Telephone Number 201-397-3000
------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on
which registered
- ------------------- -------------------
Trust Preferred Securities New 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 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. of this report.
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TABLE OF CONTENTS
PART I
Item Description Page
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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 Trust (the "Trust") was established as a Delaware
statuatory business trust for the purpose of issuing 9.06% Trust Originated
Preferred Securities (the "Trust Preferred Securities"). On October 23, 1996,
the Trust issued $200 million of Trust Preferred Securities to the public (the
"Offering"). The Trust invested the proceeds received from the Offering and
additional proceeds received from the issuance of common securities to AT&T
Capital Corporation (the "Parent") in Partnership Preferred Securities of its
affiliate, Capita Preferred Funding L.P. (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 Parent capital contribution to invest primarily in 20-year debentures of
the Parent and two wholly-owned subsidiaries (the "Debentures"). Payments in
respect to the Debentures issued by the Parent's subsidiaries have been
guaranteed, on a subordinated basis, by the Parent.
Holders of the 8,000,000 outstanding shares of Trust Preferred
Securities are entitled to receive quarterly cash distributions at an annual
rate of 9.06% and a liquidation amount of $25 per share. Under the terms of the
Offering, the Parent issued an irrevocable guarantee, to the extent the Trust
has funds available therefor, on the distributions, redemption and liquidation
of the Trust Preferred Securities. Distributions will be made on the Trust
Preferred Securities to the extent that the Trust has funds available, which is
dependent on the payment of distributions on the Partnership Preferred
Securities by the Partnership to its limited partner, the Trust. Distributions
on the Partnership Preferred Securities will be declared and paid only as
determined in the sole discretion of the Parent in its capacity as the general
partner of the Partnership. The Partnership's ability to pay such distributions
to the Trust is dependent on the receipt of interest payments on the Debentures
from the Parent and its two subsidiaries.
For additional information regarding the description of the Trust, see
the Trust'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 Trust owns no physical properties.
ITEM 3. LEGAL PROCEEDINGS
The Trust has 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 Trust
Preferred Securities through the solicitation of proxies or otherwise.
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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 Trust Preferred
Securities. As of April 11, 1997, there were 95 holders of record.
ITEM 6. SELECTED FINANCIAL DATA
The Results of Operations Data for the period August 29, 1996 (Date of
Formation) to December 31, 1996 as well as the Balance Sheet Data at December
31, 1996 are derived from the Financial Statements of the Trust at such date and
for such period, which have been audited by Coopers & Lybrand L.L.P.,
independent accountants.
Results of Operations Data, for the period October 14, 1996 to December
31, 1996:
Total Revenues $ 3,425,000
Total Distributions $ 3,425,000
Balance Sheet Data at December 31, 1996:
Total Assets $206,186,000
Total Shareowners' Equity $206,186,000
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 Trust (the "Trust") issued $200
million of Trust Originated Preferred Securities (the "Trust Preferred
Securities") to the public (the "Offering"). The Trust invested the Offering
proceeds and $6.2 million of proceeds from the sale of Trust Common Securities
to AT&T Capital Corporation, the parent company of the Trust (the "Parent"), in
Partnership Preferred Securities of its affiliate, Capita Preferred Funding L.P.
(the "Partnership"). The Trust and the Partnership are consolidated subsidiaries
of the Parent. The Partnership, in turn, used proceeds from the issuance of
Partnership Preferred Securities to invest primarily in 20-year debentures of
the Parent and two wholly-owned subsidiaries of the Parent (the "Debentures").
On December 31, 1996, holders of the 8,000,000 shares outstanding of
Trust Preferred Securities were paid the required quarterly cash distribution at
an annual rate of 9.06%. On that same date, the Trust also received quarterly
distributions at an annual rate of 9.06% from the Partnership on the $206
million of Partnership Preferred Securities.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CAPITA PREFERRED TRUST
BALANCE SHEET
AT DECEMBER 31, 1996
(dollars in thousands)
ASSET - Limited partnership interest
in Partnership $206,186
--------
SHAREOWNERS' EQUITY:
Trust Preferred Securities -
authorized, issued and outstanding
8,000,000 shares, $25 liquidation
value 200,000
Trust Common Securities -
$25 liquidation value 6,186
Retained Earnings 0
--------
Total Shareowners' Equity $206,186
========
The accompanying notes are an integral part of these Financial Statements.
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CAPITA PREFERRED TRUST
STATEMENT OF INCOME
FOR THE PERIOD AUGUST 29, 1996 (DATE OF FORMATION)
TO DECEMBER 31, 1996
(dollars in thousands)
REVENUES - Distributions on Partnership
Preferred Securities $ 3,425
--------
Net income $ 3,425
========
The accompanying notes are an integral part of these Financial Statements.
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CAPITA PREFERRED TRUST
STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY
FOR THE PERIOD AUGUST 29, 1996 (DATE OF FORMATION)
TO DECEMBER 31, 1996
(dollars in thousands)
PREFERRED SECURITIES:
Balance at beginning of period $ 0
Securities issued 200,000
--------
Balance at end of period 200,000
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COMMON SECURITIES:
Balance at beginning of period 0
Securities issued 6,186
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Balance at end of period 6,186
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RETAINED EARNINGS:
Balance at beginning of period 0
Net Income 3,425
Less:
Preferred distributions (3,322)
Common distributions (103)
--------
Total distributions (3,425)
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Balance at end of period 0
--------
Total Shareowners' equity $206,186
========
The accompanying notes are an integral part of these Financial Statements.
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CAPITA PREFERRED TRUST
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 $ 3,425
---------
Net Cash provided by Operating activities 3,425
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Limited Partnership Preferred
Securities (206,186)
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Net Cash used for Investing Activities (206,186)
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CASH FLOW FROM FINANCING ACTIVITIES:
Payment of distributions (3,425)
Issuance of Trust Preferred Securities 200,000
Issuance of Trust Common Securities 6,186
---------
Net Cash provided by Financing
activities 202,761
---------
Net change in cash and cash equivalents 0
Cash and cash equivalents at beginning
of period 0
---------
Cash and cash equivalents at end
of period $ 0
==========
The accompanying notes are an integral part of these financial statements.
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Notes to Financial Statements
1. Description of the Trust
Capita Preferred Trust (the "Trust") was established as a Delaware
statuatory business trust for the purpose of issuing 9.06% Trust Originated
Preferred Securities (the "Trust Preferred Securities"). On October 25, 1996 the
Trust issued $200 million of Trust Preferred Securities to the public (the
"Offering"). The Trust invested the proceeds received from the Offering and the
issuance of $6.2 million common securities to AT&T Capital Corporation (the
"Parent") (the "Trust Common Securities") in exchange for Partnership Preferred
Securities of its affiliate, Capita Preferred Funding L.P. (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 Parent capital contribution 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
Principles of Consolidation
The Trust, as the limited partner of the Partnership, accounts for its
investment in the Partnership under the equity method of accounting.
Revenue Recognition
Revenue from Partnership distributions are recorded on the accrual basis.
Distributions recorded on the accompanying Statement of Income reflect the
scheduled quarterly distribution payable on the Partnership Preferred Securities
at a rate per annum of 9.06%.
Cash and Cash Equivalents
The Trust considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents. The Trust'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 Cost
All costs and expenses of the Trust are paid by the Parent.
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3. Administration of the Trust
Pursuant to the Trust's declaration of trust (the "Declaration of
Trust"), there are five trustees (the "Trustees"). Three of the Trustees (the
"Regular Trustees") are individuals who are employees or officers of or who are
affiliated with the Parent. The fourth trustee, The First National Bank of
Chicago, N.A., is indenture trustee for purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). The fifth
trustee, First Chicago Delaware Inc., maintains its principal place of business
in the State of Delaware (the "Delaware Trustee"). For purposes of compliance
with the Trust Indenture Act, The First National Bank of Chicago, N.A. also acts
as trustee under the Trust Guarantee (the "Trust Guarantee").
The Property Trustee holds title to the Partnership Preferred Securities
for the benefit of the holders of the Trust Securities, and the Property Trustee
has the power to exercise all rights, powers and privileges with respect to the
Partnership Preferred Securities under the Amended and Restated Agreement of
Limited Partnership dated August 29, 1996 to be entered into by the Company and
the Trust (the "Limited Partnership Agreement") as the holder of the Partnership
Preferred Securities. In addition, the Property Trustee maintains exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made in respect of the Partnership Preferred
Securities for the benefit of the holders of the Trust Preferred Securities. The
Trust Guarantee trustee holds the Trust Guarantee for the benefit of the holders
of the Trust Preferred Securities. The Parent, as the holder of all the Trust
Common Securities, has the right to appoint, remove or replace any of the
Trustees and to increase or decrease the number of trustees, provided that the
number of trustees shall be at least three; provided further that at least one
trustee shall be a Delaware Trustee, at least one trustee shall be the Property
Trustee and at least one Trustee shall be a Regular Trustee. The Parent has paid
or will pay all fees and expenses related to the organization and operations of
the Trust and the Offering and be responsible for all debts and obligations of
the Trust (other than with respect to the Trust Preferred Securities).
For so long as the Trust Preferred Securities remain outstanding, the
Parent covenants (i) to maintain directly 100% ownership of the Trust Common
Securities, (ii) to cause the Trust to remain a statutory business trust and not
to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration of the Trust, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an "investment company"
for purposes of the Investment Company Act of 1940, as amended, and (iv) to take
no action which would be reasonably likely to cause the Trust 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 a discussion of Income
Taxes.
-8-
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4. Income Taxes
The Trust is classified for United States (U.S.) federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
Therefore, the Trust is not a tax paying entity. Accordingly, for U.S. federal
income tax purposes, each holder of Trust Preferred Securities will be
considered the owner of an individual interest in the Partnership Preferred
Securities held by the Trust, and each holder will be required to include in its
gross income its distributive share of income attributable to the Partnership,
which generally will be equal to such holder's allocable share of amounts
accrued on the Partnership Preferred Securities. No amount included in income
with respect to the Trust Preferred Securities will be eligible for the
corporate dividends-received deduction.
5. Distributions
Holders of the 8,000,000 outstanding shares of Trust Preferred
Securities are entitled to receive quarterly cash distributions in arrears at an
annual rate of 9.06% and a liquidation amount of $25 per share. Under the terms
of the Offering, the Parent issued an irrevocable guarantee, to the extent the
Trust has funds available therefor, on the distributions, redemption and
liquidation of the Trust Preferred Securities. Distribution will be made on the
Trust Preferred Securities to the extent that the Trust has funds available,
which is dependent on the payment of distributions on the Partnership Preferred
Securities by the Partnership to its limited partner, the Trust. Distributions
on the Partnership Preferred Securities will be declared and paid only as
determined in the sole discretion of the Parent in its capacity as the general
partner of the Partnership. The Partnership's ability to pay such distributions
to the Trust is dependent on the receipt of interest payments on the Debentures
from the Parent and its two subsidiaries.
6. Financial information of the Partnership
Summarized financial information for the Partnership, accounted for by the
equity method is as follows (dollars in thousands):
At December 31, 1996:
Current assets $ 2,426
Noncurrent assets 240,146
Partners' Capital $242,572
For the period August 29, 1996 to December 31, 1996:
Revenues $ 3,931
Net Income $ 3,931
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REPORT OF INDEPENDENT ACCOUNTANTS
------------------------------
To the Trust Preferred Security Holders and Trustees of Capita Preferred Trust:
We have audited the balance sheet of Capita Preferred Trust (the "Trust")
at December 31, 1996, and the related statements of income, changes in
shareowners' equity and cash flows for the period August 29, 1996
(Date of Formation) to December 31, 1996. These financial statements are the
responsibility of the Trust'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 Trust 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 Trust's independent public accountants and
appointed Arthur Andersen LLP to serve as the Parent's and Trust's independent
accountants for the year 1997. Coopers & Lybrand L.L.P. will continue to serve
as the Parent's and Trust'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.
Not applicable as there are no employees of the Trust. The Parent pays
all fees and expenses related to the organization and operations of the Trust.
ITEM 11. EXECUTIVE COMPENSATION.
Not applicable as there are no employees of the Trust. The Parent pays
all fees and expenses related to the organization and operations of the Trust.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not Applicable.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None, other than as set forth in Items 1, 10 and 11.
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 Changes in Shareowners' Equity
- 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 Trust of the registrant is incorporated
by reference to Exhibit 4.1 of the registrant's
Registration Statement on Form S-3 [No. 333-1143]
filed with the Securities and Exchange Commission.
4.2 Form of Amended and Restated Declaration of Trust of
the registrant is incorporated by reference to Exhibit
4.2 of the registrant's Registration Statement on Form
S-3 [No. 333-1143] filed with the Securities and
Exchange Commission.
4.3 Form of Trust Preferred Securities Guarantee Agreement
between AT&T Capital Corporation and The First
National Bank of Chicago, N.A., as guarantee trustee
incorporated by reference to Exhibit 4.6 of the
registrant's Registration Statement on Form S-3 [No.
333-1143] 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 TRUST
EDWARD M. DWYER
---------------
By: Edward M. Dwyer
Regular Trustee
April 14, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER <F1>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 206,186
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 6,186
200,000
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 206,186
<SALES> 0
<TOTAL-REVENUES> 3,425
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,425
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,425
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> The period covered is August 29, 1996 through December 31, 1996
</FN>
</TABLE>
