<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-39273
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 7, 1997)
$500,000,000
[ASSOCIATES LOGO]
$300,000,000 5 7/8% SENIOR NOTES DUE MAY 16, 2001
$200,000,000 6.20% SENIOR NOTES DUE MAY 16, 2005
------------------------
Interest on the 5 7/8% Senior Notes due May 16, 2001 (the "2001 Notes") and
the 6.20% Senior Notes due May 16, 2005 (the "2005 Notes"; together with the
2001 Notes, the "Notes") is payable on May 16 and November 16 of each year,
commencing November 16, 1998. The Notes will not be redeemable prior to their
respective maturities.
The Notes of each series will be represented by Global Securities
registered in the name of The Depository Trust Company (the "Depositary") or its
nominee. Interests in the Global Securities will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. Except as described herein, Notes in definitive form will not
be issued. See "Description of the Notes."
------------------------
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 TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
=================================================================================================================
<S> <C> <C> <C>
Per 2001 Note.................... 100% .283% 99.717%
- -----------------------------------------------------------------------------------------------------------------
Total............................ $300,000,000 $849,000 $299,151,000
- -----------------------------------------------------------------------------------------------------------------
Per 2005 Note.................... 100% .522% 99.478%
- -----------------------------------------------------------------------------------------------------------------
Total............................ $200,000,000 $1,044,000 $198,956,000
=================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from May 26, 1998 to date of delivery.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated to be $312,000.
------------------------
The Notes are offered by the Underwriter, subject to prior sale, when, as
and if delivered to and accepted by it, subject to approval of certain legal
matters by counsel for the Underwriter. The Underwriter reserves the right to
reject orders in whole or in part. It is expected that delivery of the Notes
will be made on or about May 26, 1998 through the facilities of the Depositary,
against payment therefor in immediately available funds.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is May 20, 1998.
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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 2005 NOTES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS, THE
PURCHASE OF NOTES TO COVER SHORT POSITIONS IN THE 2001 NOTES AND THE 2005 NOTES
MAINTAINED BY THE UNDERWRITER, AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
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, 1997 and its Quarterly Report on Form 10-Q for the three months
ended March 31, 1998, 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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<CAPTION>
FOR THE THREE
MONTHS
FOR THE YEAR ENDED DECEMBER 31 ENDED MARCH 31
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE AND EARNINGS
Revenue --
Finance charges................. $3,250.7 $3,866.7 $4,805.3 $5,580.3 $6,428.5 $1,517.2 $1,672.2
Insurance premiums.............. 242.2 293.5 325.1 354.8 370.1 87.6 98.2
Investment and other income..... 196.7 227.7 254.0 286.3 352.5 74.7 117.2
-------- -------- -------- -------- -------- -------- --------
3,689.6 4,387.9 5,384.4 6,221.4 7,151.1 1,679.5 1,887.6
Expenses --
Interest expense................ 1,291.8 1,509.7 1,979.8 2,206.7 2,543.9 584.1 692.2
Operating expenses.............. 979.6 1,191.6 1,417.8 1,603.3 1,842.5 426.6 460.6
Provision for losses on finance
receivables................... 468.9 569.9 729.7 963.4 1,195.6 295.6 326.1
Insurance benefits paid or
provided...................... 114.9 144.1 135.7 142.9 142.1 35.4 41.8
-------- -------- -------- -------- -------- -------- --------
2,855.2 3,415.3 4,263.0 4,916.3 5,724.1 1,341.7 1,520.7
-------- -------- -------- -------- -------- -------- --------
Earnings Before Provision for
Income Taxes.................... 834.4 972.6 1,121.4 1,305.1 1,427.0 337.8 366.9
Provision for Income Taxes........ 310.7 369.1 413.3 482.0 524.5 122.4 131.4
-------- -------- -------- -------- -------- -------- --------
Net Earnings...................... $ 523.7 $ 603.5 $ 708.1 $ 823.1 $ 902.5 $ 215.4 $ 235.5
======== ======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed
Charges(a)...................... 1.64 1.64 1.56 1.59 1.56 1.57 1.53
=== === === === === === ===
</TABLE>
- ---------------
(a) 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 MARCH 31
1997 1998
----------- -----------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA
Assets:
Cash and Cash Equivalents................................. $ 294.8 $ 472.7
Investments in Debt and Equity Securities
Bonds and Notes........................................ 1,022.5 967.8
Stocks................................................. 131.0 360.6
--------- ---------
Total Investments in Debt and Equity Securities... 1,153.5 1,328.4
Finance Receivables, net of unearned finance income
Consumer Finance....................................... 31,715.6 31,745.0
Commercial Finance..................................... 16,138.9 16,082.2
--------- ---------
Total Net Finance Receivables..................... 47,854.5 47,827.2
Allowance for Losses on Finance Receivables............... (1,661.9) (1,694.1)
Insurance Policy and Claims Reserves...................... (762.4) (768.9)
Other Assets.............................................. 3,652.6 4,968.2
--------- ---------
Total Assets...................................... $50,531.1 $52,133.5
========= =========
Liabilities and Stockholders' Equity:
Notes Payable, unsecured short-term
Commercial paper....................................... $17,184.5 $19,529.2
Bank loans............................................. 1,202.1 50.0
Long-Term Debt, unsecured due within one year
Senior................................................. 4,190.5 4,456.0
Subordinated........................................... -- --
Capital................................................ 0.1 0.1
Accounts Payable and Accruals............................. 960.4 1,095.9
Long-Term Debt, unsecured
Senior................................................. 20,519.5 20,295.7
Subordinated........................................... 425.0 425.0
Capital................................................ 0.3 0.3
--------- ---------
Total Long-Term Debt.............................. 20,944.8 20,721.0
Stockholders' Equity...................................... 6,048.7 6,281.3
--------- ---------
Total Liabilities and Stockholders' Equity........ $50,531.1 $52,133.5
========= =========
</TABLE>
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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
2005 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 $300,000,000
aggregate principal amount and will mature on May 16, 2001. The 2005 Notes will
be limited to $200,000,000 aggregate principal amount and will mature on May 16,
2005.
Each series of Notes will bear interest at the applicable rate per annum
shown on the cover page of this Prospectus Supplement from May 26, 1998 or from
the most recent Interest Payment Date to which interest has been paid or
provided for, payable semiannually on May 16 and November 16 of each year,
commencing on November 16, 1998, to the persons in whose names the Notes are
registered at the close of business on the May 1 and the November 1, 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
S-4
<PAGE> 5
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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<PAGE> 6
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 twenty-six 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.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated May 20, 1998, the Company has agreed to sell to Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Underwriter"), and the Underwriter has agreed
to purchase, the entire principal amount of the 2001 Notes and the 2005 Notes.
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to certain conditions precedent and that the Underwriter will be
obligated to purchase all of the 2001 Notes and the 2005 Notes if any of the
Notes are purchased.
The Company has been advised by the Underwriter that it proposes initially
to offer the Notes to the public at the respective public offering prices set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of .15% of the principal amount of
the 2001 Notes and not in excess of .25% of the principal amount of the 2005
Notes. The Underwriter may allow and such dealers may reallow a discount not in
excess of .10% of the principal amount of the 2001 Notes and not in excess of
.20% of the principal amount of the 2005 Notes to certain other dealers. After
the initial public offering of the Notes, the public offering prices,
concessions and discounts may be changed.
Until the distribution of the Notes is completed, rules of the Securities
and Exchange Commission may limit the ability of the Underwriter to bid for and
purchase the Notes. As an exception to these rules, the Underwriter is permitted
to engage in certain transactions that stabilize the prices of the 2001 Notes or
the 2005 Notes. Such transactions consist of bids or purchases for the purpose
of pegging, fixing or maintaining the prices of the 2001 Notes or the 2005
Notes.
If the Underwriter creates a short position in the 2001 Notes or the 2005
Notes in connection with the offering, i.e., if it sells more of a series of
Notes than are set forth on the cover page of this Prospectus Supplement, the
Underwriter may reduce that short position by purchasing such Notes in the open
market. The Underwriter also may impose a penalty bid, whereby selling
concessions allowed to broker-dealers in respect of the 2001 Notes or the 2005
Notes sold in the offering may be reclaimed by the Underwriter if such Notes are
repurchased by the Underwriter in stabilizing transactions.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the 2001 Notes or the 2005 Notes. In
addition, neither the Company nor the Underwriter makes any representation that
the
S-6
<PAGE> 7
Underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Company has been advised by the Underwriter that it currently intends
to make a market in the 2001 Notes and the 2005 Notes, but is not obligated to
do so and may discontinue such market making at any time without notice. No
assurance can be given as to the liquidity of any trading market for the 2001
Notes or the 2005 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.
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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 OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE 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
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary Financial Information........... S-2
Description of the Notes................ S-4
Underwriting............................ S-6
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
</TABLE>
======================================================
======================================================
$500,000,000
[ASSOCIATES CORP. OF NORTH AMERICA LOGO]
$300,000,000
5 7/8% SENIOR NOTES
DUE MAY 16, 2001
$200,000,000
6.20% SENIOR NOTES
DUE MAY 16, 2005
-------------------------
PROSPECTUS SUPPLEMENT
-------------------------
MERRILL LYNCH & CO.
MAY 20, 1998
======================================================
