<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 1-6154
ASSOCIATES CORPORATION OF NORTH AMERICA
(Exact name of registrant as specified in its charter)
Delaware 74-1494554
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 East Carpenter Freeway, Irving, Texas 75062-2729
(Address of principal executive offices)
(Zip Code)
972-541-4000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
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.....
As of September 30, 1996, the registrant had 260 shares of Common Stock and
1,000,000 shares of Class B Common Stock issued and outstanding, all of
which were owned directly or indirectly by Associates First Capital
Corporation. The registrant meets the conditions set forth in General
Instruction H.(1)(a) and (b) to Form 10-Q and is therefore filing this Form
10-Q with the reduced disclosure format.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ASSOCIATES CORPORATION OF NORTH AMERICA
CONSOLIDATED STATEMENT OF EARNINGS
(In Millions)
Nine Months Ended Three Months Ended
September 30 September 30
1996 1995 1996 1995
REVENUE
Finance charges $4,102.3 $3,537.0 $1,439.8 $1,234.2
Insurance premiums 260.6 245.4 90.8 80.4
Investment and other
income 212.3 190.9 78.1 66.9
4,575.2 3,973.3 1,608.7 1,381.5
EXPENSES
Interest expense 1,627.4 1,460.7 581.4 507.5
Operating expenses 1,168.2 1,046.0 425.8 355.8
Provision for losses on
finance receivables 714.8 533.5 237.8 185.6
Insurance benefits paid
or provided 105.3 99.9 37.3 33.9
3,615.7 3,140.1 1,282.3 1,082.8
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 959.5 833.2 326.4 298.7
PROVISION FOR INCOME TAXES 353.1 306.3 119.3 110.5
NET EARNINGS $ 606.4 $ 526.9 $ 207.1 $ 188.2
See notes to consolidated financial statements.
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ASSOCIATES CORPORATION OF NORTH AMERICA
CONSOLIDATED BALANCE SHEET
(In Millions)
September 30 December 31
1996 1995
ASSETS
CASH AND CASH EQUIVALENTS $ 312.3 $ 309.2
INVESTMENTS IN DEBT AND EQUITY SECURITIES
- NOTE 3 990.4 884.7
FINANCE RECEIVABLES, net of unearned finance
income - NOTE 4
Consumer Finance 28,219.7 24,609.2
Commercial Finance 13,440.2 11,759.1
Total net finance receivables 41,659.9 36,368.3
ALLOWANCE FOR LOSSES ON FINANCE RECEIVABLES
- NOTE 5 (1,354.9) (1,109.2)
INSURANCE POLICY AND CLAIMS RESERVES (669.5) (602.8)
OTHER ASSETS - NOTE 6 1,519.4 1,173.5
Total assets $42,457.6 $37,023.7
LIABILITIES AND STOCKHOLDERS' EQUITY
NOTES PAYABLE, unsecured short-term
Commercial Paper $15,886.5 $12,732.7
Bank Loans 702.0
ACCOUNTS PAYABLE AND ACCRUALS 844.9 833.5
LONG-TERM DEBT, unsecured
Senior Notes 20,518.3 18,169.7
Subordinated and Capital Notes 125.5 141.8
20,643.8 18,311.5
STOCKHOLDERS' EQUITY
Class B Common Stock, $100 par value,
2,000,000 shares authorized, 1,000,000
shares issued and outstanding 100.0 100.0
Common Stock, no par value, 5,000 shares
authorized, 260 shares issued and
outstanding, at stated value 47.0 47.0
Paid-in Capital 1,612.7 1,530.6
Retained Earnings 3,327.9 2,754.2
Unrealized (Loss) Gain on Available-for-Sale
Securities - NOTE 3 (5.2) 12.2
Total stockholders' equity 5,082.4 4,444.0
Total liabilities and stockholders' equity $42,457.6 $37,023.7
See notes to consolidated financial statements.
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ASSOCIATES CORPORATION OF NORTH AMERICA
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Millions)
Nine Months Ended
September 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 606.4 $ 526.9
Adjustments to net earnings for noncash items:
Provision for losses on finance receivables 714.8 533.5
Depreciation and amortization 145.2 108.8
Increase in insurance policy and claims
reserves 66.7 49.1
Increase in accounts payable and accruals 52.2 195.7
Deferred income taxes (31.2) (19.7)
Unrealized gain on trading securities (0.3) (4.3)
Purchases of trading securities (5.8)
Sales and maturities of trading securities 3.3 39.3
Net cash provided from operating activities 1,557.1 1,423.5
CASH FLOWS FROM INVESTING ACTIVITIES
Finance receivables originated or purchased (29,376.6) (24,604.4)
Finance receivables liquidated 22,613.2 20,163.6
Finance receivables securitized 920.2
Acquisition of other finance business, net (116.1)
Excess of purchase price over historical value
of assets acquired from Ford affiliate (32.7)
Purchases of available-for-sale securities (245.7) (620.2)
Sales and maturities of available-for-sale
securities 109.9 357.6
Increase in real estate loans held for sale (21.1) (6.7)
Increase in other assets (387.4) (9.1)
Net cash used for investing activities (6,420.2) (4,835.3)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt 4,151.4 3,902.6
Retirement of long-term debt (1,819.1) (1,150.1)
Increase in notes payable 2,451.8 625.8
Capital contribution from parent 82.1
Net cash provided from financing activities 4,866.2 3,378.3
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3.1 (33.5)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 309.2 361.1
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 312.3 $ 327.6
CASH PAID FOR:
Interest $ 1,567.9 $ 1,372.9
Income taxes $ 354.9 $ 328.5
See notes to consolidated financial statements.
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ASSOCIATES CORPORATION OF NORTH AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
Associates Corporation of North America ("Associates" or the "Company"), a
Delaware corporation, is a wholly-owned principal operating subsidiary of
Associates First Capital Corporation ("First Capital"). First Capital is a
majority-owned subsidiary of Ford Motor Company ("Ford"). All the
outstanding Common Stock of Associates is owned by First Capital. All
shares of Class B Common Stock are owned by Associates World Capital
Corporation, a wholly-owned subsidiary of First Capital. Class B Common
Stock is redeemable only at the option of the issuer.
NOTE 2 - BASIS OF CONSOLIDATION
The accompanying consolidated financial statements consolidate Associates
and its subsidiaries. In the opinion of the management of Associates, all
adjustments necessary to present fairly the results of operations and
financial position have been made and are of a normal recurring nature.
The results of operations for any interim period are not necessarily
indicative of the results of operations for a full year. Certain prior
period financial statement amounts have been reclassified to conform to the
current period presentation.
NOTE 3 - INVESTMENTS IN DEBT AND EQUITY SECURITIES
DEBT SECURITIES
The Company invests in debt securities, principally bonds and notes held by
the Company's insurance subsidiaries, with the intention of holding them to
maturity. However, if market conditions change, the Company may sell these
securities prior to maturity. Accordingly, the Company classifies its
investments in debt securities as available-for-sale securities and adjusts
its recorded value to market. The estimated market value at September 30,
1996 and December 31, 1995 was $980.8 million and $872.1 million,
respectively. Amortized cost at September 30, 1996 and December 31, 1995
was $988.9 million and $853.4 million, respectively. Realized gains or
losses on sales are included in investment and other income. Unrealized
gains or losses are reported as a component of stockholders' equity, net of
tax.
EQUITY SECURITIES
Equity security investments are recorded at market value. The Company
classifies its investments in equity securities as trading securities and
includes in earnings unrealized gains or losses on such securities. The
estimated market value at September 30, 1996 and December 31, 1995 was $9.6
million and $12.6 million, respectively. Historical cost at September 30,
1996 and December 31, 1995 was $7.8 million and $8.5 million, respectively.
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NOTE 4 - NET FINANCE RECEIVABLES
At September 30, 1996 and December 31, 1995, net finance receivables
consisted of the following (in millions):
September 30 December 31
1996 1995
Consumer Finance
Home equity lending $15,502.5 $13,190.4
Personal lending and retail sales finance 5,708.2 4,752.7
Credit card 5,512.8 4,616.8
Manufactured housing 1,496.2 2,049.3
28,219.7 24,609.2
Commercial Finance
Truck and truck trailer 7,989.2 7,415.7
Equipment 4,171.6 3,959.4
Other 1,279.4 384.0
13,440.2 11,759.1
Net finance receivables $41,659.9 $36,368.3
In August 1996, Associates acquired $1.2 billion of net finance
receivables, principally home equity and personal lending receivables and
other assets and liabilities, from Fleet Financial Group. The fair market
value of total assets acquired and liabilities assumed was $1.3 billion and
$1.0 million, respectively.
In July 1996, Associates acquired $837.6 million of certain assets of USL
Capital, an affiliate and Ford subsidiary. Such assets acquired consisted
principally of vehicle fleet leasing receivables. The excess of purchase
price over the historical value of assets acquired was $32.7 million which
was recorded as an adjustment to stockholders' equity.
In January 1995, Associates acquired $116 million of net home equity
receivables and certain other assets from Ford Motor Credit Company, an
affiliate. The transaction was recorded at historical cost, which
approximated market.
NOTE 5 - ALLOWANCE FOR LOSSES ON FINANCE RECEIVABLES
Changes in the allowance for losses on finance receivables during the
periods indicated were as follows (in millions):
Nine Months Ended Year Ended
September 30 December 31
1996 1995 1995
Balance at beginning of
period $1,109.2 $ 932.4 $ 932.4
Provision for losses 714.8 533.5 729.7
Recoveries on receivables
charged off 96.4 85.9 112.3
Losses sustained (663.7) (488.8) (670.0)
Reserves of acquired
businesses and other 98.2 2.4 4.8
Balance at end of period $1,354.9 $1,065.4 $1,109.2
<PAGE>
NOTE 6 - OTHER ASSETS
The components of Other Assets at September 30, 1996 and December 31, 1995
were as follows (in millions):
September 30 December 31
1996 1995
Balances with related parties $ 240.5 $ 256.3
Goodwill 356.0 345.7
Other 922.9 571.5
Total other assets $1,519.4 $1,173.5
NOTE 7 - DEBT RESTRICTIONS
Associates is subject to various limitations under the provisions of its
outstanding debt and revolving credit agreements. The most significant of
these limitations are summarized as follows:
LIMITATION ON PAYMENT OF DIVIDENDS
A restriction contained in one issue of debt securities which matures on
March 15, 1999, generally limits payments of cash dividends on the
Company's Common Stock in any year to not more than 50% of consolidated net
earnings for such year, subject to certain exceptions, plus increases in
contributed capital and extraordinary gains. Any such amounts available
for the payment of dividends in such fiscal year and not so paid, may be
paid in any one or more of the five subsequent fiscal years. In accordance
with this provision, $303.2 million was available for dividends at
September 30, 1996.
LIMITATION ON MINIMUM TANGIBLE NET WORTH
A restriction contained in certain revolving credit agreements requires
Associates to maintain a minimum tangible net worth, as defined, of $1.5
billion. At September 30, 1996, Associates tangible net worth was
approximately $4.7 billion.
NOTE 8 - RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of Associates for the nine months
ended September 30, 1996 and 1995 was 1.59 and 1.57, respectively. For
purposes of such computation, the term "earnings" represents Earnings
Before Provision for Income Taxes, plus fixed charges. The term "fixed
charges" represents interest expense and a portion of rentals
representative of an implicit interest factor for such rentals.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Nine- and Three-Month Periods Ended September 30, 1996 Compared to the
Nine- and Three-Month Periods Ended September 30, 1995.
Net earnings for the nine-month period ended September 30, 1996 were
$606.4 million, a 15% increase over the same period in the previous year.
Net earnings for the three months ended September 30, 1996 were $207.1
million, an increase of 10% over the same period in the previous year. The
increase in earnings in both comparative periods was principally due to
growth in net finance receivables, an increase in the net interest margin
and an increase in operating expense efficiency, all of which more than
offset an increase in net credit losses.
Finance charge revenue, on a dollar basis, increased for the nine and
three months ended September 30, 1996, compared to the same period in the
prior year, principally as a result of growth in average net finance
receivables outstanding. Finance charge revenue as a percentage of average
net finance receivables (the "Finance Charge Ratio") was 14.02% and 14.20%
for the nine months and three months ended September 30, 1996,
respectively. This compares to 14.28% and 14.34% for the comparable
periods in 1995, respectively. The period over period decline in the
finance charge ratio is principally due to declines in finance charge rates
on outstanding loans which vary with market rates, and to a lesser extent,
product mix.
Interest expense increased for the nine- and three-month periods ended
September 30, 1996 compared to the same periods in 1995, primarily due to
an increase in average debt outstanding for each of the comparative
periods, principally resulting from the aforementioned growth in average
net finance receivables. Debt is the primary source of funding to support
the Company's growth in net finance receivables. The increase, due to
growth in both comparative periods, was partially offset by declines in the
Company's average short- and long-term borrowing rates, principally due to
changes in market conditions. The Company's total average borrowing rates
for the nine- and three-month periods ended September 30, 1996 were 6.36%
and 6.54%, respectively, compared to 6.75% and 6.77% for the same periods
in the prior year.
As a result of the aforementioned changes in finance charge revenue and
interest expense, the Company's net interest margin increased to $2.5
billion and $858.4 million for the nine- and three-month periods ended
September 30, 1996, respectively, compared to $2.1 billion and $726.7
million for the comparable periods in the prior year. The Company's net
interest margin expressed as a ratio to average net finance receivables
also increased to 8.46% and 8.47% for the nine- and three-month periods
ended September 30, 1996, respectively, compared to 8.38% and 8.44% for the
same periods in the prior year. The principal cause of the increase in
each of the comparable periods was due to the aforementioned decrease in
average borrowing rates.
Nine- and three-month operating expenses as of September 30, 1996 were
greater than in the corresponding periods in 1995, reflecting growth in the
size of the Company. However, operating expense efficiency, measured as
the ratio of total operating expenses to total revenue net of interest
expense and insurance benefits paid or provided, improved to 41.1% and
43.0% for the nine- and three-month periods ended September 30, 1996,
respectively, compared to 43.4% and 42.4% for the same periods in the prior
year. The nine-month improvement principally reflects the benefit from
initiatives undertaken by the Company, which are designed to improve
operating efficiency.
The Company's provision for losses increased from $533.5 million for
the first nine months of 1995 to $714.8 million for the same period in
1996. The provision for losses for the three-month period ended September
30, 1996 increased from $185.6 million in the prior year period to $237.8
million for the current period. In both cases, the provision increased
principally as a result of increased net credit losses. Total net credit
losses as a percentage of average net finance receivables (the "Loss
Ratio") were 1.94% and 2.16% for the nine- and three-month periods ended
September 30, 1996, respectively, compared to 1.63% and 1.74% for the same
periods in 1995. The Loss Ratio increased in most of the Company's
portfolios, the most significant increases of which were in the Company's
credit card and personal loan portfolios, primarily driven by increased
losses resulting from customer bankruptcies.
The provision for income taxes increased for both the nine- and three-month
periods ended September 30, 1996 principally as a result of an
increase in pretax earnings.
Financial Condition
Net finance receivables grew $5.3 billion and $2.2 billion during the
nine- and three-month periods ended September 30, 1996, respectively,
compared to $4.1 billion and $1.3 billion for the same period in 1995. Net
finance receivables at September 30, 1996 exclude approximately $920
million of securitized manufactured housing receivables. Growth, including
securitized receivables, for the nine months ended September 30, 1996 was
$6.2 billion. The Company had growth in substantially all of its
portfolios in both periods. Of the total growth for the nine months ended
September 30, 1996, including securitized receivables, approximately 51.6%
resulted from major acquisitions, principally of credit card, home equity
and other commercial portfolios and businesses.
Total 60+days contractual delinquency was 2.10% at September 30, 1996,
which was higher than the 1.83% reported at June 30, 1996 and 1.72% at
December 31, 1995. Consumer delinquency was 2.66% at September 30, 1996,
which was higher than the 2.29% and 2.24% reported at June 30, 1996 and
December 31, 1995, respectively. Commercial delinquency was 0.97% at
September 30, 1996 compared to 0.84% and 0.64% at June 30, 1996 and
December 31, 1995, respectively, also reflecting an increase. Although the
Company experienced increased delinquency in all of its portfolios, the
highest increase was in the credit card and personal lending portfolios.
The Company attributes the increased delinquency to generally less
favorable trends in economic conditions, including among other factors, the
increased leverage of consumer borrowers.
The Company's allowance for losses was 3.25% of net finance receivables
at September 30, 1996, compared to 3.29% at June 30, 1996 and 3.05% at
December 31, 1995. The allowance for losses to annualized net credit
losses was 1.79 times net credit losses (21 months coverage) at September
30, 1996, compared to 1.87 times net credit losses (22 months coverage) and
1.99 times net credit losses (24 months coverage) at June 30, 1996 and
December 31, 1995, respectively. Management believes the allowance for
losses at September 30, 1996, is sufficient to provide adequate protection
against losses in its portfolios.
During the nine and three months ended September 30, 1996,
stockholders' equity increased principally as a result of the
aforementioned increase in net earnings. Stockholders' equity was also
adjusted during the nine- and three-month periods by unrealized
(losses)/gains on its insurance subsidiaries' investments in marketable
debt securities of ($17.4) million and $1.3 million, respectively. As
referenced in NOTE 4 to these consolidated financial statements, the
Company recorded an adjustment to equity in the amount of $32.7 million
related to its acquisition of certain assets from a Ford affiliate. The
adjustment represents the difference between the purchase price and the
historical value of the net assets acquired. In September 1996, Associates
received a contribution of $82.1 million from its parent in the form of
shares of an affiliate, Financial Reassurance Company, Ltd., which
approximated its fair market value.
As a result of the aforementioned, the Company's return on average
assets, average equity and average tangible equity for the nine-month
period ended September 30, 1996 was 2.03%, 16.97% and 18.32%, respectively.
This compares to a return on average assets, average equity and average
tangible equity for the nine months ended September 30, 1995 of 2.08%,
17.30% and 18.96%, respectively.
LIQUIDITY
The principal sources of cash for the Company are proceeds from the
issuance of short- and senior and subordinated long-term debt and cash from
the Company's operations. The Company has historically issued debt
principally in the United States and, on a limited basis, in foreign
countries. However, as part of a strategy to further diversify its sources
of funds, it recently established a Euro medium-term note program, a Euro
commercial paper program and a securitization program. During the third
quarter, the Company securitized approximately $920.2 million in
manufactured housing finance receivables. Subsequent to September 30,
1996, the Company issued $600 million of senior debt under the Euro medium-term
note program in the Euro capital markets and $300 million of
subordinated debt in the United States. Management believes that the
Company has sufficient liquidity through its access to external borrowings
and from cash provided by operations to support its liquidity needs.
At September 30, 1996, the Company had short- and long-term debt
outstanding of $15.9 billion and $20.6 billion, respectively. Short-term
debt principally consists of commercial paper issued by the Company and
represents the Company's primary source of short-term liquidity. Long-term
debt principally consists of unsecured long-term debt issued publicly and
privately by the Company both in the United States and internationally.
During the nine- and three-month periods ended September 30, 1996, and
1995, the Company raised, through public and private offerings, debt
aggregating $4.2 billion and $2.3 billion, and $3.9 billion and $1.2
billion, respectively.
Substantial additional liquidity is available to the Company's
operations through established credit facilities in support of its net
short-term borrowings. Such credit facilities provide a means of
refinancing its maturing short-term obligations as needed. At September
30, 1996, short-term bank lines, revolving credit facilities and receivable
purchase facilities totaled $12.3 billion, none of which was in use at that
date. These facilities represented 75% of net short-term indebtedness
outstanding at September 30, 1996.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None to report
In accordance with General Instruction H.(2)(b), the following items have
been omitted: Item 2, Changes in Securities; Item 3, Defaults Upon Senior
Securities; and Item 4, Submission of Matters to a Vote of Security
Holders.
ITEM 5. OTHER INFORMATION.
None to report
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.2 By-laws.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K
During the third quarter ended September 30, 1996, Associates
filed Current Reports on Form 8-K dated July 16, 1996,
related to the release of second quarter earnings, and July
12, 1996, July 19, 1996, August 2, 1996, August 9, 1996,
September 5, 1996 and September 13, 1996, related to
issuances of debt securities pursuant to Rule 415.
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 thereunto duly authorized.
November 11, 1996
ASSOCIATES CORPORATION OF NORTH AMERICA
(registrant)
By/s/ Kevin P. Hegarty
Senior Vice President, Comptroller, and
Principal Accounting Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT
NUMBERED
NUMBER EXHIBIT PAGE
-----------------------------------------------------------------------------
<S> <C> <C>
3.2 -- By-laws of the Company
12 -- Computation of Ratio of Earnings to Fixed Charges
27 -- Financial Data Schedule
</TABLE>
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<PAGE>
01/10/90
Rev. 09/25/96
BY-LAWS
OF
ASSOCIATES CORPORATION OF NORTH AMERICA
(DELAWARE)
ARTICLE I
STOCKHOLDERS
Section 1. PLACE OF MEETING: Meetings of the stockholders (whether annual or
special) may be held at such place, within or without the State of Delaware, as
the board of directors shall from time to time designate, provided, however, in
the absence of such designation, meetings shall be held at the principal office
of the company in Irving, Texas.
Section 2. ANNUAL MEETING: The annual meeting of stockholders shall be held at
such time as may from time to time be fixed by resolution of the board of
directors. Should said day be a Saturday, Sunday or legal holiday, such annual
meeting shall be held on the preceding regular business day. If, for any
reason,the annual meeting be not held at the time aforesaid, the directors
shall fix another date for such meeting.
Section 3. NOTICE OF ANNUAL MEETING: The secretary shall mail, in the manner
provided in Section 2 of Article V of these by-laws, or shall deliver, a written
or printed notice of each annual meeting to each stockholder of record entitled
to vote thereat, at least ten (10) days before the date of such meeting.
Section 4. PURPOSE OF ANNUAL MEETING: Annual meetings of stockholders shall be
held for the purpose of receiving the reports of officers, electing directors
and transacting such other business as may be properly presented thereat.
Section 5. SPECIAL MEETINGS: Special Meetings of the stockholders may be held
at any time on call of the chairman of the board of directors, or of a vice
chairman of the board of directors, or of the board of directors, or of the
president, or of the stockholders holding not less than one-fourth (1/4) of the
outstanding shares entitled, by the Certificate of Incorporation and by the
General Corporation Law of the State of Delaware, to vote on the business
proposed to be transacted thereat.
Section 6. NOTICE OF SPECIAL MEETINGS: The person or persons calling a special
meeting, or the secretary at their direction, shall mail, in the manner provided
in Section 2 of Article V of these by-laws, or shall deliver, a written or
printed notice thereof to each holder of outstanding shares entitled, by the
Certificate of Incorporation and by the General Corporation Law of the State of
Delaware, to vote on the business proposed to be transacted at such meeting, at
least ten (10) days before the date of such meeting. Such notice shall specify
by whom such meeting was called and the time and place thereof and the purpose
or purposes for which such meeting was called.
Section 7. WAIVER OF NOTICE: Any stockholder may waive, in writing, notice of
any meeting of stockholders. Presence of a stockholder, in person or by proxy,
at any meeting of stockholders, and participation in such meeting, shall
constitute a waiver of notice thereof on the part of such stockholder.
Section 8. QUORUM: A majority of the shares of issued and outstanding capital
stock entitled, by the Certificate of Incorporation and by the General
Corporation Law of the State of Delaware, to vote on the business proposed to be
transacted at such meeting represented by the holders of record thereof, in
person or by proxy, shall constitute a quorum for the transaction of business.
Section 9. VOTING RIGHTS: Shares which have been transferred on the books of
the company after the record date of such meeting fixed by the board of
directors, or, if no such record date is fixed, within ten (10) days next
preceding the date of the meeting, shall not be entitled to vote at such
meeting.
At all meetings of the holders of common stock, each share of stock shall
be entitled to one (1) vote.
Section 10. PROXIES: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy executed in writing by the
stockholder or any authorized attorney in fact. All proxies shall be delivered
to the secretary at or before the time of such meeting. No proxy shall be valid
after eleven (11) months from the date of its execution unless a longer time is
expressly provided therein.
Section 11. ORDER OF BUSINESS: The order of business at the annual meeting
and,so far as practical, at all other meetings shall be as follows:
1. Determination of shares present.
2. Reading and disposal of any unapproved minutes.
3. Reports of officers and committees.
4. Election of directors.
5. Unfinished business.
6. New business.
ARTICLE II
DIRECTORS
Section 1. NUMBER AND ELECTION: The number of directors of this company shall
be not less than three (3) nor more than twenty-five (25). Hereafter, the
number of directors shall be such number between three (3) and twenty-five (25),
inclusive, as may be elected from time to time by resolution of the board of
directors adopted by the vote of a majority of the then number of directors, or
by resolution of the stockholders adopted by the vote of a majority of the
shares entitled to vote thereon. Each director shall be elected each year by
a majority vote of the stockholders present in person or by proxy at the
annual meeting of stockholders and shall hold office until his successor is
elected and qualified or until his earlier death, resignation or removal.
Any vacancy occurring in the board of directors caused by death, resignation,
increase in number of directors or otherwise may be filled by a majority
vote of the remaining members of the board, and any director so elected
shall hold office until the next annual meeting of stockholders and until
his successor is elected and qualified.
Section 2. PLACE OF MEETING: Meetings of the board of directors may be held at
such place, either within or without the State of Delaware, as may from time
to time be designated by the chairman of the board of directors, or by a vice
chairman of the board of directors, or by the president, or by resolution of the
board of directors or as may be specified in the call of any meeting. In the
absence of any such designation, the meetings shall be held at the principal
office of the company in Irving, Texas.
Section 3. REGULAR MEETINGS: Regular meetings of the board of directors shall
be held immediately after each annual meeting of stockholders and at such other
times as may from time to time be fixed by resolution of the board of directors.
Notice need not be given of regular meetings of the board of directors.
Section 4. SPECIAL MEETINGS: Special meetings of the board of directors may be
held at any time on the call of the chairman of the board of directors, or of a
vice chairman of the board of directors, or of the president, or of the board of
directors, or of the executive committee. Special meetings may be held at any
time or place without notice if all the directors are present or if those not
present waive notice of the meeting in writing.
Section 5. NOTICE OF SPECIAL MEETINGS: The person or persons calling a special
meeting, or the secretary, at their discretion, shall do so by oral, telegraphic
or written notice duly delivered to each director not less than one day before
such meeting. Notice of any special meeting need not specify the purpose
thereof.
Section 6. WAIVER OF NOTICE: Any director may waive, in writing, notice of any
meeting of directors. The presence of a director at any meeting of the board
and his participation in such meeting shall constitute a waiver of notice
thereof on the part of such director.
Section 7. QUORUM: A majority of the duly elected and qualified directors then
holding such positions shall constitute a quorum for the transaction of
business.
Section 8. COMPENSATION OF DIRECTORS: Each director who is not an officer or
employee of this company or of the parent company of this company or of any
affiliate of either shall (1) be paid a fee of Twelve Thousand Five Hundred
Dollars ($12,500.00) per annum, (2) be paid a fee of One Thousand Two Hundred
Fifty Dollars ($1,250.00) per meeting of the board of directors attended, (3) be
paid a fee of Five Hundred Dollars ($500.00) per meeting of committees of the
board of directors attended, and (4) be reimbursed for travel expenses incurred
in attending any meetings held outside the county of his residence.
Section 9. ORDER OF BUSINESS: The regular order of business of the meetings of
directors, so far as practical, shall be as follows:
1. Reading and disposal of unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
Section 10. EXECUTIVE COMMITTEE: The board of directors may, by resolution
adopted by a majority of the whole board, designate three (3) or more of their
number to constitute an executive committee, which committee shall have and
exercise all of the authority of the board of directors in the management of the
company, including but not limited to the power and authority to declare regular
or special dividends and to authorize the issuance of stock. The committee
shall appoint a secretary who need not be a member of the committee.
He shall keep minutes of all meetings which minutes shall be read at the
following meeting of the board of directors. The committee shall from time
to time make such rules as it deems proper for the convening and conducting
of its meetings.
Section 11. OTHER COMMITTEES: The board of directors may, by resolution
adopted by a majority of the whole board, designate from time to time such
standing and special committees as may be necessary or desirable to manage
the affairs of the company, fix the number of members thereof, and specify
the duties thereof.
Section 12. TEMPORARY COMMITTEE MEMBERS: In the absence or disqualification of
a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of directors to
serve on such committee until the next regular meeting of the board of
directors.
ARTICLE III
OFFICERS
Section 1. OFFICERS: The officers of the company shall consist of the chairman
of the board of directors, one or more vice chairmen of the board of directors,
the president, the secretary, the treasurer, the comptroller, the general
counsel and such vice presidents, assistant vice presidents, assistant
secretaries,assistant treasurers and other officers as may from time to time
be elected by the board of directors or appointed by the chairman of the
board of directors or the president as provided in Section 3 hereof. Any
two or more offices may be held by the same person, excepting that the
duties of the president and secretary shall not be performed by one person.
Section 2. ELECTION: At the first meeting after their election the directors
shall elect annually the officers enumerated in Section 1 of this Article to
hold office until the regular meeting of directors following the next annual
meeting of the stockholders and until others are elected and shall have
qualified in their stead, excepting as in this Article otherwise provided.
Section 3. APPOINTMENT: The chairman of the board or the president may, from
time to time, designate and appoint one or more senior executive vice
presidents, one or more executive vice presidents, one or more senior vice
presidents, one or more vice president, a treasurer, a comptroller, a general
counsel, one or more assistant vice presidents, one or more assistant
treasurers, one or more assistant
comptrollers, one or more assistant general counsels, one or more assistant
secretaries, and the chairman of the board or president may elect or appoint
such other officers as such officer may deem necessary, or desirable,
each of whom shall have such authority, shall perform such duties and shall
hold office until the regular meeting of the board of directors following
the next annual meeting of the stockholders, excepting as in this Article
otherwise provided.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS: The chairman of the board of
directors shall be a director. He shall preside at all meetings of stockholders
and at all meetings of the directors and of the executive committee thereof. As
chief executive officer he shall have general supervision of the affairs of the
company. He is charged with the responsibility for the prudential affairs of
the company and for the maintenance of harmony and accord and may at his
discretion discharge subordinate officers, employees, clerks and agents
under his supervision, excepting officers who are also directors, and
appoint their successors who shall hold office until the next annual meeting
of directors. He shall also perform all such other duties as are incidental
to his office or properly required of him by the board of directors.
Section 5. VICE CHAIRMAN OF THE BOARD OF DIRECTORS: Each vice chairman of the
board of directors shall be a director and shall be assigned specific areas of
responsibility by the chairman of the board of directors. He shall have general
supervision of those affairs of the corporation designated by the chairman for
his attention and may employ and discharge subordinate officers, employees,
clerks and agents under his supervision, excepting officers who are also
directors. He shall perform such duties as are incidental to his office or
properly required of him by the chairman of the board of directors.
Section 6. PRESIDENT: The president shall be a director. In the absence of
the chairman of the board of directors he shall preside at all meetings of
stockholders and at meetings of the board of directors. As chief operating
officer the president shall have general supervision of the affairs of the
corporation designated by the chairman for his attention and may employ and
discharge subordinate officers, employees, clerks and agents under his
supervision, excepting officers who are also directors. He shall perform all
such duties as are incidental to his office or properly required of him by
the chairman of the board of directors.
Section 7. VICE PRESIDENTS: Each vice president shall have general supervision
of those affairs of the company designated for his attention by the chairman of
the board of directors and such other officer to whom he is directly responsible
and may employ and discharge subordinate officers, employees, clerks and agents
under his supervision. Each vice president shall perform all such duties as are
incidental to his office or properly required of him by the chairman of the
board of directors and such other officer or officers to whom he is directly
responsible.
Section 8. SECRETARY: The secretary shall keep full and accurate minutes of
the meetings of stockholders and of directors in the proper record book of
the company provided therefor, give due notice of all annual meetings of
stockholders and of all special meetings of stockholders and directors on
proper call therefor being filed with him. He shall have custody of the
seal of the company and shall perform all such duties as are incidental
to his office or properly required of him by the chairman of the board
of directors and such other officer or officers to whom he is directly
responsible.
Section 9. TREASURER: The treasurer shall perform all such duties as are
incidental to his office or properly required of him by the chairman of the
board of directors and such other officer or officers to whom he is directly
responsible.
Section 10. COMPTROLLER: The comptroller shall keep and maintain the books of
account of the company in such manner that they fairly present the financial
condition of the company and its subsidiaries. The comptroller shall perform
all such duties as are incidental to his office or properly required of him
by the chairman of the board of directors and such other officer or officers
to whom he is directly responsible.
Section 11. GENERAL COUNSEL: The general counsel shall have general
supervision of the legal affairs and litigation of the company. He shall
perform all such duties as are incidental to this office or are properly
required of him by the chairman of the board of directors and such other
officer or officers to whom he is directly responsible.
Section 12. ASSISTANT VICE PRESIDENTS; ASSISTANT SECRETARIES; ASSISTANT
TREASURERS AND OTHER SUBORDINATE OFFICERS: Each assistant vice president,
assistant secretary, assistant treasurer and other subordinate officers shall
perform such duties as may be incidental to his office or properly required of
him by the chairman of the board and such other officer or officers to whom
he is directly responsible.
Section 13. VACANCIES: A vacancy in any office filled by election of the board
of directors existing at the time of any meeting of the board of directors or of
the executive committee of the board of directors may be filled by the board of
directors or by the executive committee of the board of directors by the
election of a new officer who shall hold office, subject to the provisions
of this Article, until the regular meeting of directors following the next
annual meeting of stockholders and until his successor is elected.
Section 14. REMOVAL OR DISCHARGE: Any officer may be removed or discharged by
the chairman of the board of directors at any time excepting an officer who is
also a director. Any officer who is a director may be discharged at any time by
the board of directors.
ARTICLE IV
CAPITAL STOCK
Section 1. CERTIFICATE OF STOCK: Each stockholder of the company whose
stock has been paid in full shall be entitled to a certificate or
certificates showing the amount of stock of the company standing on the
books in his or her name. Each certificate of stock shall be numbered and
bear the manual or facsimile signatures
of the chairman of the board of directors, a vice chairman of the board of
directors, the president, or vice president and secretary or assistant
secretary.
Section 2. FORM OF CERTIFICATE: The form of stock certificates shall be as
prescribed from time to time by resolution of the board of directors.
Section 3. RECORD HOLDER OF SHARES: The company shall be entitled to treat the
holder of record of any share or shares as the holder in fact thereof, and
accordingly shall not be bound to recognize any equitable or other claims to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the General
Corporation Law of the State of Delaware. The company shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner.
Section 4. LOST STOCK CERTIFICATE: In case of loss or destruction of a
certificate of stock, a new certificate shall be issued upon satisfactory proof
of such loss or destruction and the giving of security by bond, or the giving of
security otherwise satisfactory to the board of directors, the chairman of the
board of directors, a vice chairman of the board of directors, the executive
committee or the president.
ARTICLE V
MISCELLANEOUS
Section 1. FISCAL YEAR: The fiscal year of the company shall be the calendar
year.
Section 2. MAILING OF NOTICES: Mailing of notices to stockholders or directors
shall be by depositing the same in a post office or letter box in a postpaid
sealed wrapper, addressed to such stockholder or director at his, her or its
address, as the same appears on the books of the company. Such notice shall be
deemed to be given at the time when the same shall be thus mailed.
Section 3. CORPORATE SEAL: The corporate seal of the company shall be in such
form as the board of directors shall from time to time prescribe.
ARTICLE VI
AMENDMENTS
These by-laws may be amended or repealed at any meeting of the board of
directors by a vote of a majority of all members of the board of directors
then elected and qualified; provided, however, that such power, having been
conferred upon the board of directors, shall not divest the stockholders of
the power to adopt, amend, or repeal by-laws.
<PAGE>
EXHIBIT 12
ASSOCIATES CORPORATION OF NORTH AMERICA
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Millions)
Nine Months Ended
September 30
1996 1995
Fixed Charges (a)
Interest expense $1,627.4 $1,460.7
Implicit interest in rent 11.3 10.0
Total fixed charges $1,638.7 $1,470.7
Earnings (b)
Earnings before provision for income
taxes $ 959.5 $ 833.2
Fixed charges 1,638.7 1,470.7
Earnings, as defined $2,598.2 $2,303.9
Ratio of Earnings to Fixed Charges 1.59 1.57
(a) For purposes of such computation, the term "fixed charges" represents
interest
expense and a portion of rentals representative of an implicit interest
factor
for such rentals.
(b) For purposes of such computation, the term "earnings" represents earnings
before
provision for income taxes, plus fixed charges.
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
0 MEANS NOT APPLICABLE OR NOT SEPARATELY DISCLOSED. This schedule contains
summary
financial information extracted from the Company's unaudited consolidated
financial
statements as of September 30, 1996 and the nine months then ended and is
qualified
in its entirety by reference to such consolidated financial statements.
</LEGEND>
<CIK> 0000007973
<NAME> ASSOCIATES CORPORATION OF NORTH AMERICA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 312
<SECURITIES> 990
<RECEIVABLES> 41,660
<ALLOWANCES> 1,355
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,458
<CURRENT-LIABILITIES> 0
<BONDS> 36,530
<COMMON> 147
0
0
<OTHER-SE> 4,935
<TOTAL-LIABILITY-AND-EQUITY> 42,458
<SALES> 4,575
<TOTAL-REVENUES> 4,575
<CGS> 0
<TOTAL-COSTS> 3,616
<OTHER-EXPENSES> 1,274
<LOSS-PROVISION> 715
<INTEREST-EXPENSE> 1,627
<INCOME-PRETAX> 959
<INCOME-TAX> 353
<INCOME-CONTINUING> 606
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 606
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
