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Filed Pursuant to Rule 424(b)2
Registration No. 033-63577
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 4, 1995)
$600,000,000
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[ASSOCIATES LOGO]
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$325,000,000 6.45% SENIOR NOTES DUE OCTOBER 15, 2001
$275,000,000 6 1/2% SENIOR NOTES DUE OCTOBER 15, 2002
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INTEREST ON THE 6.45% SENIOR NOTES DUE OCTOBER 15, 2001 (THE "2001 NOTES") AND
THE 6 1/2% SENIOR NOTES DUE OCTOBER 15, 2002 (THE "2002 NOTES"; TOGETHER WITH
THE 2001 NOTES, THE "NOTES") IS PAYABLE SEMIANNUALLY ON APRIL 15 AND OCTOBER 15
OF EACH YEAR, COMMENCING APRIL 15, 1998. THE NOTES WILL NOT BE REDEEMABLE PRIOR
TO THEIR RESPECTIVE MATURITIES.
---------------------
THE NOTES OFFERED HEREBY WILL BE ISSUED IN THE FORM OF GLOBAL SECURITIES
REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST
COMPANY, WHICH WILL ACT AS THE DEPOSITARY FOR THE NOTES (THE "DEPOSITARY").
INTERESTS IN THE NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED
ONLY THROUGH, RECORDS MAINTAINED BY THE DEPOSITARY (WITH RESPECT TO
PARTICIPANTS' INTERESTS) AND ITS PARTICIPANTS. EXCEPT AS DESCRIBED HEREIN,
OWNERS OF BENEFICIAL INTERESTS IN THE NOTES WILL NOT BE ENTITLED TO RECEIVE
PHYSICAL DELIVERY OF NOTES IN DEFINITIVE FORM. SEE "DESCRIPTION OF THE NOTES".
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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.
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PRICE OF 2001 NOTES 99.938% AND ACCRUED INTEREST, IF ANY
PRICE OF 2002 NOTES 99.855% AND ACCRUED INTEREST, IF ANY
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
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Per 2001 Note........................ 99.938% .131% 99.807%
Total................................ $324,798,500 $425,750 $324,372,750
Per 2002 Note........................ 99.855% .161% 99.694%
Total................................ $274,601,250 $442,750 $274,158,500
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(1) Plus accrued interest, if any, from October 27, 1997.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $580,000.
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The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriter and subject to approval of certain legal matters by LeBoeuf,
Lamb, Greene & MacRae, L.L.P., counsel for the Underwriter. It is expected that
delivery of the Notes will be made in book-entry form only through the
facilities of The Depository Trust Company, on or about October 27, 1997,
against payment therefor in immediately available funds.
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MORGAN STANLEY DEAN WITTER
October 22, 1997
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICES OF THE 2001 NOTES AND
THE 2002 NOTES. SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH
THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE 2001 NOTES AND THE 2002 NOTES
IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITER."
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, 1996 and its Quarterly Report on Form 10-Q for the six months ended
June 30, 1997, 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
---------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(DOLLAR AMOUNTS IN MILLIONS)
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REVENUE AND EARNINGS
Revenue --
Finance charges....................... $2,931.9 $3,250.7 $3,866.7 $4,805.3 $5,580.3 $2,662.5 $3,112.7
Insurance premiums.................... 209.9 242.2 293.5 325.1 354.8 169.8 180.5
Investment and other income........... 182.8 196.7 227.7 254.0 286.3 134.2 167.7
-------- -------- -------- -------- -------- -------- --------
3,324.6 3,689.6 4,387.9 5,384.4 6,221.4 2,966.5 3,460.9
Expenses --
Interest expense...................... 1,222.8 1,291.8 1,509.7 1,979.8 2,206.7 1,046.0 1,207.7
Operating expenses.................... 807.4 979.6 1,191.6 1,417.8 1,603.3 742.4 882.5
Provision for losses on finance
receivables......................... 504.0 468.9 569.9 729.7 963.4 477.0 603.1
Insurance benefits paid or provided... 100.0 114.9 144.1 135.7 142.9 68.0 71.2
-------- -------- -------- -------- -------- -------- --------
2,634.2 2,855.2 3,415.3 4,263.0 4,916.3 2,333.4 2,764.5
-------- -------- -------- -------- -------- -------- --------
Earnings Before Provision for Income
Taxes and Cumulative Effect of Changes
in Accounting Principles.............. 690.4 834.4 972.6 1,121.4 1,305.1 633.1 696.4
Provision for Income Taxes.............. 240.7 310.7 369.1 413.3 482.0 233.8 255.3
-------- -------- -------- -------- -------- -------- --------
Earnings Before Cumulative Effect of
Changes in Accounting Principles...... 449.7 523.7 603.5 708.1 823.1 399.3 441.1
Cumulative Effect of Changes in
Accounting Principles(a).............. (10.0) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Earnings............................ $ 439.7 $ 523.7 $ 603.5 $ 708.1 $ 823.1 $ 399.3 $ 441.1
======== ======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges(b)... 1.56 1.64 1.64 1.56 1.59 1.60 1.57
=== === === === === === ===
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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
1996 1997
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(UNAUDITED)
(IN MILLIONS)
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BALANCE SHEET DATA
Assets:
Cash and Cash Equivalents................................. $ 278.4 $ 74.7
Investments in Debt and Equity Securities
Bonds and Notes........................................ 1,034.1 1,143.9
Stocks................................................. 10.3 6.5
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Total Investments in Debt and Equity Securities... 1,044.4 1,150.4
Finance Receivables, net of unearned finance income
Consumer Finance....................................... 27,997.1 31,399.8
Commercial Finance..................................... 13,781.8 14,494.3
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Total Net Finance Receivables..................... 41,778.9 45,894.1
Allowance for Losses on Finance Receivables............... (1,371.4) (1,589.4)
Insurance Policy and Claims Reserves...................... (693.0) (728.0)
Other Assets.............................................. 1,560.8 1,930.1
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Total Assets...................................... $42,598.1 $46,731.9
========= =========
Liabilities and Stockholders' Equity:
Notes Payable, unsecured short-term
Commercial paper....................................... $14,712.6 $17,568.3
Bank loans............................................. 1,001.8 21.8
Long-Term Debt, unsecured due within one year
Senior................................................. 3,080.4 3,680.5
Subordinated........................................... -- --
Capital................................................ 0.1 --
Accounts Payable and Accruals............................. 980.6 850.6
Long-Term Debt, unsecured
Senior................................................. 17,311.0 18,659.9
Subordinated........................................... 425.0 425.0
Capital................................................ 0.4 0.4
--------- ---------
Total Long-Term Debt.............................. 17,736.4 19,085.3
Stockholders' Equity...................................... 5,086.2 5,525.4
--------- ---------
Total Liabilities and Stockholders' Equity........ $42,598.1 $46,731.9
========= =========
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On October 14, 1997, the Company announced unaudited results for the nine
months ended September 30, 1997. Such results, compared to the unaudited results
of operations for the similar period of the prior fiscal year, were as follows:
Revenue -- $5.3 billion (1997), $4.6 billion (1996); Earnings Before Provision
for Income Taxes -- $1,061.1 million (1997). $959.5 million (1996); and Net
Earnings -- $671.1 million (1997), $606.4 million (1996).
RECENT DEVELOPMENT
On October 8, 1997, Ford Motor Company ("Ford") announced its intention to
distribute to its stockholders all of its shares in Associates First Capital
Corporation, the immediate parent of the Company, subject to receipt of a
favorable ruling from the Internal Revenue Service. Upon consummation of such
spinoff, the Company will no longer be an indirect subsidiary of Ford.
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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. The 2001 Notes and
2002 Notes will be issued as separate series under an indenture dated as of
November 1, 1995 (the "Indenture") between the Company and The Chase Manhattan
Bank ("Chase"), as Trustee. The 2001 Notes will be limited to $325,000,000
aggregate principal amount and will mature on October 15, 2001. The 2002 Notes
will be limited to $275,000,000 aggregate principal amount and will mature on
October 15, 2002.
Each series of Notes will bear interest at the applicable rate per annum
shown on the cover page of this Prospectus Supplement from October 27, 1997 or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semiannually on April 15 and October 15 of each year,
commencing on April 15, 1998, to the persons in whose names the Notes are
registered at the close of business on the March 31 and the September 30, as the
case may be, next preceding such Interest Payment Date.
REDEMPTION
Neither series of Notes is redeemable prior to its maturity.
BOOK-ENTRY SYSTEM
Upon issuance, each series of Notes will be represented by Global
Securities registered in the name of Cede & Co., as nominee of The Depository
Trust Company, which will act as the depositary for the Notes (the
"Depositary"). The Depositary has advised the Company as follows: the Depositary
is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. The Depositary holds securities that its participants ("Participants")
deposit with the Depositary. The Depositary also facilitates the settlement
among Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants" include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. The Depositary is owned by a number of its Direct Participants
and by The New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the Depositary's
system is also available to others, such as securities brokers and dealers,
banks and trust companies, that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants are
on file with the Securities and Exchange Commission.
Purchases of the Notes under the Depositary's system must be made by or
through Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser of a Note
(a "Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depositary of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial
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Owner entered into the transaction. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Global Securities, except in the event
that use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants
with the Depositary are registered in the name of the Depositary's partnership
nominee, Cede & Co. The deposit of Notes with the Depositary and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
The Depositary has no knowledge of the actual Beneficial Owners of the Notes;
the Depositary's records reflect only the identity of the Direct Participants to
whose accounts the Notes are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
As long as the Notes are held by the Depositary or its nominee and the
Depositary continues to make its same-day funds settlement system available to
the Company, all payments of principal of and interest on the Notes will be made
by the Company in immediately available funds to the Depositary. The Company has
been advised that the Depositary's practice is to credit Direct Participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason to
believe that it will not receive payment on such date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of the Depositary, the Trustee or the Company, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to the Depositary is the responsibility
of the Company or the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of the Depositary and disbursement of
such payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in the Depositary's Same-Day Funds Settlement system. Accordingly,
the Depositary will require that secondary trading activity in the Notes settle
in immediately available funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on trading activity in the
Notes.
The Company expects that conveyance of notices and other communications by
the Depositary to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. In addition,
neither the Depositary nor Cede & Co. will consent or vote with respect to the
Notes; the Company has been advised that the Depositary's usual procedure is to
mail an omnibus proxy to the Company as soon as possible after the record date
with respect to such consent or vote. The omnibus proxy would assign Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Notes are credited on such record date (identified in a listing attached to
the omnibus proxy).
The Depositary may discontinue providing its services as securities
depositary with respect to the Notes at any time by giving reasonable notice to
the Company or the Trustee. Under such circumstances, if a successor depositary
is not appointed by the Company within 90 days, the Company will issue
individual definitive Notes in exchange for all the Global Securities
representing such Notes. In addition, the Company may at any time and in its
sole discretion determine not to have the Notes represented by Global Securities
and, in such event, will issue individual definitive Notes in exchange for all
the Global Securities representing the Notes.
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Individual definitive Notes so issued will be issued in denominations of $1,000
and any larger amount that is an integral multiple of $1,000 and registered in
such names as the Depositary shall direct.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
CONCERNING THE TRUSTEE
Chase serves as trustee with respect to nineteen 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.
UNDERWRITER
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated October 22, 1997, Morgan Stanley & Co. Incorporated (the
"Underwriter") has agreed to purchase from the Company the entire principal
amount of the 2001 Notes and the 2002 Notes if any of the Notes are purchased.
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to, among other things, the approval of certain legal matters by its
counsel and to certain other conditions.
The Company has been advised by the Underwriter that it proposes to offer
part of the Notes directly to the public initially at the respective prices to
the public set forth on the front cover page of this Prospectus Supplement and
part of the Notes to certain dealers at a price which represents a concession
not in excess of .125% of the principal amount of the 2001 Notes and not in
excess of .150% of the principal amount of the 2002 Notes. The Underwriter may
allow and such dealers may reallow to certain other dealers a concession, not in
excess of .100% of the principal amount of both the 2001 Notes and 2002 Notes.
After the initial public offering of the Notes, the offering prices and other
selling terms may be changed by the Underwriter.
The Company has been advised by the Underwriter that it currently intends
to make a market in the Notes, but may discontinue such market making at any
time without notice. The Company cannot predict the liquidity of any trading
market for the Notes.
The Company has agreed to indemnify the Underwriter against certain
liabilities and contribute to payments the Underwriter may be required to make
in respect thereof, including liabilities under the Securities Act of 1933.
In order to facilitate the offering of the Notes, the Underwriter may
engage in transactions that stabilize, maintain or otherwise affect the prices
of the Notes. Specifically, the Underwriter may overallot in connection with the
offering, creating a short position in the 2001 Notes or the 2002 Notes for its
own account. In addition, to cover overallotments or to stabilize the price of
the Notes, the Underwriter may bid for, and purchase, the 2001 Notes or the 2002
Notes in the open market. Finally, the Underwriter may reclaim selling
concessions allowed to a dealer for distributing the Notes in the offering, if
the Underwriter repurchases previously distributed Notes in transactions to
cover short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market prices of the 2001 Notes or the
2002 Notes above independent market levels. The Underwriter is not required to
engage in these activities, and may end any of these activities at any time.
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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.
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