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PROSPECTUS SUPPLEMENT
(To Prospectus dated December 4, 1995)
[ASSOCIATES CORP. OF NORTH AMERICA LOGO]
- --------------------------------------------------------------------------------
$400,000,000
6.68% SENIOR NOTES DUE SEPTEMBER 17, 1999
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Interest on the Notes is payable semiannually on March 17 and September 17 of
each year, beginning March 17, 1997. The Notes are not redeemable prior to
maturity.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Underwriter has agreed to purchase the Notes from the Company at 99.855%
of their principal amount ($399,420,000 aggregate proceeds to the Company,
before deducting expenses payable by the Company estimated at $387,000), plus
accrued interest, if any, from September 17, 1996, subject to the terms and
conditions set forth in the Underwriting Agreement.
The Underwriter proposes to offer the Notes from time to time for sale in one
or more negotiated transactions, or otherwise, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. For further information with respect to the plan of
distribution and any discounts, commissions or profits on resale that may be
deemed underwriting discounts or commissions, see "Underwriting" herein.
The Notes are offered by the Underwriter, subject to prior sale, when, as and
if delivered to and accepted by it, and subject to the approval of certain
legal matters by counsel and certain other conditions. The Underwriter
reserves the right to withdraw, cancel or modify such offer and to reject
orders in whole or in part. It is expected that delivery of the Notes will be
made in New York, New York on or about September 17, 1996, against payment in
immediately available funds.
DEUTSCHE MORGAN GRENFELL
The date of this Prospectus Supplement is September 12, 1996
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SUMMARY FINANCIAL INFORMATION
The following summary of certain financial information of the Company and
its consolidated subsidiaries has been derived principally from information
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and its Quarterly Report on Form 10-Q for the six months ended
June 30, 1996, available as described under "Documents Incorporated by
Reference", and is qualified in its entirety by the detailed information and
financial statements set forth therein.
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FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31 ENDED JUNE 30
-------------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
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REVENUE AND EARNINGS
Revenue --
Finance charges............ $2,753.2 $2,931.9 $3,250.7 $3,866.7 $4,805.3 $2,302.8 $2,662.5
Insurance premiums......... 202.5 209.9 242.2 293.5 325.1 165.0 169.8
Investment and other
income................... 163.3 182.8 196.7 227.7 254.0 124.0 134.2
-------- -------- -------- -------- -------- -------- --------
3,119.0 3,324.6 3,689.6 4,387.9 5,384.4 2,591.8 2,966.5
Expenses --
Interest expense........... 1,278.5 1,222.8 1,291.8 1,509.7 1,979.8 953.2 1,046.0
Operating expenses......... 705.4 807.4 979.6 1,191.6 1,417.8 690.2 742.4
Provision for losses on
finance receivables..... 423.7 504.0 468.9 569.9 729.7 347.9 477.0
Insurance benefits paid or
provided................ 91.1 100.0 114.9 144.1 135.7 66.0 68.0
-------- -------- -------- -------- -------- -------- --------
2,498.7 2,634.2 2,855.2 3,415.3 4,263.0 2,057.3 2,333.4
-------- -------- -------- -------- -------- -------- --------
Earnings Before Provision for
Income Taxes and Cumulative
Effect of Changes in
Accounting Principles...... 620.3 690.4 834.4 972.6 1,121.4 534.5 633.1
Provision for Income Taxes... 219.6 240.7 310.7 369.1 413.3 195.8 233.8
-------- -------- -------- -------- -------- -------- --------
Earnings Before Cumulative
Effect of Changes in
Accounting Principles...... 400.7 449.7 523.7 603.5 708.1 338.7 399.3
Cumulative Effect of Changes
in Accounting
Principles(a).............. -- (10.0) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Earnings................. $ 400.7 $ 439.7 $ 523.7 $ 603.5 $ 708.1 $ 338.7 $ 399.3
======== ======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed
Charges(b)................. 1.48 1.56 1.64 1.64 1.56 1.56 1.60
======== ======== ======== ======== ======== ======== ========
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(a) The Company recorded a one-time cumulative effect of changes in accounting
principles related to the adoption, effective January 1, 1992, of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions", and SFAS No. 109, "Accounting for Income Taxes".
(b) For purposes of computing the Ratio of Earnings to Fixed Charges, "earnings"
represent earnings before provision for income taxes and cumulative effect
of changes in accounting principles, plus fixed charges. "Fixed charges"
represent interest expense and a portion of rentals representative of an
implicit interest factor for such rentals.
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SUMMARY FINANCIAL INFORMATION -- (CONTINUED)
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DECEMBER 31 JUNE 30
1995 1996
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(UNAUDITED)
(IN MILLIONS)
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BALANCE SHEET DATA
Assets:
Cash and Cash Equivalents........................................... $ 309.2 $ 273.6
Investments in Debt and Equity Securities
Bonds and Notes.................................................. 872.1 946.0
Stocks........................................................... 12.6 12.0
--------- ---------
Total Investments in Debt and Equity Securities............. 884.7 958.0
Finance Receivables, net of unearned finance income
Consumer Finance................................................. 24,609.2 26,997.4
Commercial Finance............................................... 11,759.1 12,454.3
--------- ---------
Total Net Finance Receivables............................... 36,368.3 39,451.7
Allowance for Losses on Finance Receivables......................... (1,109.2) (1,299.9)
Insurance Policy and Claims Reserves................................ (602.8) (634.9)
Other Assets........................................................ 1,173.5 1,437.6
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Total Assets................................................ $37,023.7 $40,186.1
========= =========
Liabilities and Stockholders' Equity:
Notes Payable, unsecured short-term
Commercial paper................................................. $12,732.7 $15,898.3
Bank loans....................................................... 702.0 --
Long-Term Debt, unsecured due within one year
Senior........................................................... 2,611.3 2,851.6
Subordinated..................................................... -- --
Capital.......................................................... 0.1 0.1
Accounts Payable and Accruals....................................... 833.5 730.9
Long-Term Debt, unsecured
Senior........................................................... 15,558.4 15,755.2
Subordinated..................................................... 141.2 125.0
Capital.......................................................... 0.5 0.4
--------- ---------
Total Long-Term Debt........................................ 15,700.1 15,880.6
Stockholders' Equity................................................ 4,444.0 4,824.6
--------- ---------
Total Liabilities and Stockholders' Equity.................. $37,023.7 $40,186.1
========= =========
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S-3
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements the description of the general terms and provisions of the
Debt Securities set forth in the Prospectus, to which description reference is
hereby made.
GENERAL
The Notes will constitute senior debt of the Company, will be issued under
an indenture dated as of November 1, 1995 (the "Indenture") between the Company
and The Chase Manhattan Bank, as Trustee ("Chase"), will be limited to
$400,000,000 aggregate principal amount and will mature on September 17, 1999.
The Notes will bear interest at the rate per annum shown on the cover page of
this Prospectus Supplement from September 17, 1996 or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semiannually on March 17 and September 17 of each year, commencing on March 17,
1997, to the persons in whose names the Notes are registered at the close of
business on the March 2 and the September 2, as the case may be, next preceding
such Interest Payment Date. Payment of interest will be made by check mailed to
the persons entitled thereto; provided, however, that such payment of interest
will be made by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by Chase at its Corporate
Trust Office not later than five business days prior to the record date for the
applicable Interest Payment Date. Payment of principal at maturity will be made
in immediately available funds upon surrender of a Note.
The Notes may be presented for payment or for transfer or exchange at the
Corporate Trust Office of Chase, presently located at 450 West 33rd Street, 15th
Floor, New York, New York 10001 or, at the option of the holder, at Chase's
corporate trust facility in the Borough of Manhattan, The City of New York,
presently located at Chase Institutional Trust Window, 1 Chase Manhattan Plaza,
1B, New York, New York 10081, or at any other office or agency maintained by the
Company for such purpose. The Company may from time to time vary the location of
any such offices but will at all times maintain an office or agency in the
Borough of Manhattan for presentation for payment or for transfer or exchange.
Wire transfer instructions shall be provided to Chase at either of the
aforementioned offices.
The Notes are to be issued only in registered form without coupons in
denominations of $1,000 and any multiple of $1,000.
REDEMPTION
The Notes are not redeemable prior to maturity.
CONCERNING THE TRUSTEE
Chase serves as trustee with respect to ten other series of Debt Securities
previously issued under the Indenture. In addition, Chase acts as trustee with
respect to various debt securities issued under indentures originally executed
by Manufacturers Hanover Trust Company and Chemical Bank, respectively. Chase
acts as depository for funds of, extends credit to, and performs other banking
services for, the Company in the normal course of business.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to Deutsche Morgan Grenfell/C. J.
Lawrence Inc. (the "Underwriter"), and the Underwriter has agreed to purchase,
all of the Notes if any are purchased.
The Underwriter has advised the Company that it proposes to offer the Notes
from time to time for sale in one or more negotiated transactions, or otherwise,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Underwriter may effect
such transactions by selling the Notes to or through dealers, and such dealers
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter and/or the purchasers of the Notes for whom
they may act as agent. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the Notes may be deemed to be underwriters,
and any discounts or commissions received by them and any profit on the resale
of the Notes by them may be deemed to be underwriting discounts or commissions,
under the Securities Act of 1933.
The Company has been advised by the Underwriter that the Underwriter
currently intends to make a market in the Notes, but is not obligated to do so
and may discontinue any market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Notes.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriter
may be required to make in respect thereof.
An affiliate of the Underwriter extends credit to and performs other
banking services for, the Company and its affiliates in the normal course of its
business.
LEGAL OPINIONS
The legality of the Notes will be passed upon for the Company by its
Assistant General Counsel, Timothy M. Hayes, 250 Carpenter Freeway, Irving, TX
75062-2729, and for the Underwriter by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a
limited liability partnership including professional corporations, 125 West 55th
Street, New York, New York 10019. Mr. Hayes owns shares of Class A Common Stock
of the Company's parent, Associates First Capital Corporation, and has options
to purchase additional shares of such Class A Common Stock.
S-5
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUPPLEMENT
Summary Financial Information........ S-2
Description of the Notes............. S-4
Underwriting......................... S-5
Legal Opinions....................... S-5
PROSPECTUS
Available Information................ 2
Documents Incorporated by
Reference.......................... 2
The Company.......................... 3
Application of Proceeds.............. 3
Description of Debt Securities....... 4
Description of Warrants.............. 8
Plan of Distribution................. 9
Legal Opinions....................... 10
Experts.............................. 10
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$400,000,000
[ASSOCIATES CORPORATION
OF NORTH AMERICA LOGO]
6.68% SENIOR NOTES
DUE SEPTEMBER 17, 1999
DEUTSCHE MORGAN GRENFELL
PROSPECTUS SUPPLEMENT
SEPTEMBER 12, 1996
