<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-62861
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 15, 1998)
$1,000,000,000
[ASSOCIATES LOGO]
$500,000,000 5 1/2% SENIOR NOTES DUE FEBRUARY 15, 2002
$500,000,000 5 1/2% SENIOR NOTES DUE FEBRUARY 15, 2004
---------------------
The Company will pay interest on the 5 1/2% Senior Notes due February 15,
2002 (the "2002 Notes") and the 5 1/2% Senior Notes due February 15, 2004 (the
"2004 Notes", together with the 2002 Notes, the "Notes"), semiannually on
February 15 and August 15 of each year, starting August 15, 1999, and at
maturity. The Company may not redeem the Notes prior to maturity.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or determined if this
Prospectus Supplement or Prospectus to which it relates is truthful and
complete. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per 2002 Note..................... 99.958% 0.055% 99.903%
Total............................. $499,790,000 $275,000 $499,515,000
Per 2004 Note..................... 99.541% 0.106% 99.435%
Total............................. $497,705,000 $530,000 $497,175,000
</TABLE>
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(1) Plus accrued interest, if any, from February 9, 1999.
(2) Before deduction of expenses payable by the Company estimated at $600,000.
---------------------
Delivery of the Notes in book-entry form only will be made through The
Depository Trust Company on or about February 9, 1999, against payment in
immediately available funds.
---------------------
Joint Book Managers:
BEAR, STEARNS & CO. INC. WARBURG DILLON READ LLC
---------------------
CHASE SECURITIES INC.
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The date of this Prospectus Supplement is February 4, 1999.
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
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 1997 10-K Report and its Quarterly Report on Form
10-Q for the nine months ended September 30, 1998, available as described under
"Available Information" in the accompanying Prospectus, and is qualified in its
entirety by the detailed information and financial statements set forth therein.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEAR ENDED DECEMBER 31 ENDED SEPTEMBER 30
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN MILLIONS)
<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 $4,744.2 $4,436.6
Insurance premiums.............. 242.2 293.5 325.1 354.8 370.1 272.7 279.6
Investment and other income..... 196.7 227.7 254.0 286.3 352.5 270.0 611.5
-------- -------- -------- -------- -------- -------- --------
3,689.6 4,387.9 5,384.4 6,221.4 7,151.1 5,286.9 5,327.7
Expenses --
Interest expense................ 1,291.8 1,509.7 1,979.8 2,206.7 2,543.9 1,862.9 2,117.2
Operating expenses.............. 979.6 1,191.6 1,417.8 1,603.3 1,842.5 1,360.8 1,253.1
Provision for losses on finance
receivables................... 468.9 569.9 729.7 963.4 1,195.6 897.2 729.7
Insurance benefits paid or
provided...................... 114.9 144.1 135.7 142.9 142.1 104.9 105.2
-------- -------- -------- -------- -------- -------- --------
2,855.2 3,415.3 4,263.0 4,916.3 5,724.1 4,225.8 4,205.2
-------- -------- -------- -------- -------- -------- --------
Earnings Before Provision for
Income Taxes.................... 834.4 972.6 1,121.4 1,305.1 1,427.0 1,061.1 1,122.5
Provision for Income Taxes........ 310.7 369.1 413.3 482.0 524.5 390.0 410.6
-------- -------- -------- -------- -------- -------- --------
Net Earnings...................... $ 523.7 $ 603.5 $ 708.1 $ 823.1 $ 902.5 $ 671.1 $ 711.9
======== ======== ======== ======== ======== ======== ========
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, plus fixed charges.
"Fixed charges" represent interest expense and a portion of rentals
representative of an implicit interest factor for such rentals.
S-2
<PAGE> 3
SUMMARY FINANCIAL INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
1997 1998
----------- ------------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA
Assets:
Cash and Cash Equivalents................................. $ 294.8 $ 561.1
Investments in Debt and Equity Securities
Bonds and Notes........................................ 1,022.5 1,887.0
Stocks................................................. 131.0 17.1
--------- ---------
Total Investments in Debt and Equity Securities... 1,153.5 1,904.1
Finance Receivables, net of unearned finance income
Consumer Finance....................................... 31,715.6 28,038.6
Commercial Finance..................................... 16,138.9 16,805.6
--------- ---------
Total Net Finance Receivables..................... 47,854.5 44,844.2
Allowance for Losses on Finance Receivables............... (1,661.9) (1,370.3)
Insurance Policy and Claims Reserves...................... (762.4) (772.4)
Other Assets.............................................. 3,652.6 9,591.0
--------- ---------
Total Assets...................................... $50,531.1 $54,757.7
========= =========
Liabilities and Stockholders' Equity:
Notes Payable, unsecured short-term
Commercial paper....................................... $17,184.5 $19,106.4
Bank loans............................................. 1,202.1 --
Long-Term Debt, unsecured due within one year
Senior................................................. 4,190.5 5,893.5
Subordinated........................................... -- --
Capital................................................ 0.1 0.1
Accounts Payable and Accruals............................. 960.4 1,063.4
Long-Term Debt, unsecured
Senior................................................. 20,519.5 21,509.6
Subordinated........................................... 425.0 425.0
Capital................................................ 0.3 0.2
--------- ---------
Total Long-Term Debt.............................. 20,944.8 21,934.8
Stockholders' Equity...................................... 6,048.7 6,759.5
--------- ---------
Total Liabilities and Stockholders' Equity........ $50,531.1 $54,757.7
========= =========
</TABLE>
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On January 21, 1999, the Company reported results for the year ended
December 31, 1998. Such results, compared to results of operations for the prior
fiscal year, were as follows: Revenue -- $7.1 billion (1998), $7.2 billion
(1997); Earnings before Provision for Income Taxes -- $1,503.0 million (1998),
$1,427.0 million (1997); and Net Earnings -- $952.0 million (1998), $902.5
million (1997).
On January 6, 1999, Associates First Capital Corporation ("AFCC"), the
Company's parent, purchased the assets and assumed the liabilities of Avco
Financial Services, Inc. ("Avco"). In connection with the acquisition, AFCC
transferred substantially all of Avco's domestic finance operations to the
Company.
S-3
<PAGE> 4
DESCRIPTION OF THE NOTES
The following description of the specific terms of the Notes (referred to
in the attached Prospectus as "Debt Securities") supplements the more general
description of the Debt Securities contained in the Prospectus. If there are any
inconsistencies between the information in this section and the information in
the Prospectus, the information in this section controls. Investors should read
this section together with the section called "Description of Debt Securities"
in the Prospectus. Any capitalized terms that are defined in the Prospectus have
the same meanings in this section unless a different definition appears in this
section. The Company qualifies the description of the Notes by reference to the
Indenture.
GENERAL
The Notes:
- will be senior debt of the Company;
- will be issued as separate series under the Indenture between the Company
and the Trustee, The Chase Manhattan Bank ("Chase"), dated as of November
1, 1995;
- will be limited in aggregate principal amount to $500,000,000 (in the
case of the 2002 Notes) and $500,000,000 (in the case of the 2004 Notes)
(subject to increase by any further issues designated as part of the same
series);
- will mature and become due and payable, at 100% of their principal amount
together with any accrued and unpaid interest, on February 15, 2002 (in
the case of the 2002 Notes) and February 15, 2004 (in the case of the
2004 Notes); and
- will not be redeemable by the Company prior to maturity.
INTEREST
The Notes will bear interest at the rate of 5 1/2% per annum. Interest will
accrue from February 9, 1999 or from the most recent Interest Payment Date to
which interest has been paid or provided for. The Company will make interest
payments semiannually on February 15 and August 15 of each year, starting August
15, 1999 (each an "Interest Payment Date") and at maturity. The Company will
make interest payments to the person in whose name the Notes are registered at
the close of business on the January 31 and July 31 before the next Interest
Payment Date. If the Interest Payment Date is not a Business Day, payment of
interest will be made on the next day that is a Business Day. "Business Day"
means any day that is not a Saturday or Sunday, and that is not a day on which
banking institutions are generally authorized or obligated by law to close in
The City of New York.
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
S-4
<PAGE> 5
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 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.
S-5
<PAGE> 6
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. 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.
FURTHER ISSUES
The Company may from time to time, without notice to or the consent of the
registered holders of the Notes of either series, create and issue further notes
of such series ranking pari passu with the Notes of such series in all respects
(or in all respects except for the payment of interest accruing prior to the
issue date of such further notes or except for the first payment of interest
following the issue date of such further notes) and so that such further notes
may be consolidated and form a single series with the Notes of such series and
have the same terms as to status or otherwise as the Notes of such series.
CONCERNING THE TRUSTEE
Chase is the trustee for various other series of debt securities which the
Company has issued under the Indenture. Additionally, Chase is the trustee for
other debt securities which the Company issued under indentures originally
executed by Manufacturers Hanover Trust Company and Chemical Bank. The Company
also uses Chase for other banking services in the normal course of its business.
Chase is an affiliate of Chase Securities Inc., one of the Underwriters.
S-6
<PAGE> 7
UNDERWRITING
The Company and the Underwriters named below have entered into an
underwriting agreement dated February 4, 1999. Under the underwriting agreement,
the Company has agreed to sell, and each Underwriter has agreed to purchase, the
amount of the Notes set forth opposite its name.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITERS OF 2002 NOTES OF 2004 NOTES
- ------------ ---------------- ----------------
<S> <C> <C>
Bear, Stearns & Co. Inc............................... $225,000,000 $225,000,000
Warburg Dillon Read LLC............................... 225,000,000 225,000,000
Chase Securities Inc.................................. 50,000,000 50,000,000
------------ ------------
Totals...................................... $500,000,000 $500,000,000
============ ============
</TABLE>
Bear, Stearns & Co. Inc. and Warburg Dillon Read LLC are acting as joint
book managers in connection with the offering of the Notes.
The obligations of the Underwriters to purchase the Notes are subject to
certain conditions. If any of the Notes are purchased, the Underwriters will be
obligated to purchase the entire principal amount of Notes.
The Underwriters have advised the Company that they initially propose to
offer the Notes to the public at the prices stated on the cover page of this
Prospectus Supplement and to certain dealers at a price less a concession of no
more than .05% (in the case of the 2002 Notes) and .10% (in the case of the 2004
Notes) of the principal amount of the Notes. The Underwriters may allow, and
such dealers may reallow, a discount of no more than .025% (in the case of the
2002 Notes) and .05% (in the case of the 2004 Notes) of the principal amount of
the Notes to certain other dealers. After the initial offering of the Notes, the
Underwriters may change the public offering price, the concession to selected
dealers and the allowance to other dealers.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments which the Underwriters may be required to make in respect thereof.
Certain of the Underwriters and their affiliates have provided investment
and commercial banking services to the Company. The Underwriters and their
affiliates may provide such services in the future.
The Underwriters have advised the Company that they presently intend to
make a market in the Notes as permitted by applicable laws and regulations. The
Underwriters are not obligated to make a market in the Notes and they may
discontinue such market making at any time in their sole discretion.
Accordingly, there may not be adequate liquidity or adequate trading markets for
the Notes.
To facilitate this offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes.
Specifically, the Underwriters may over-allot in connection with the offering,
creating a short position in the Notes for their own account. In addition, to
cover over-allotments or to stabilize the price of the Notes, the Underwriters
may bid for, and purchase Notes in the open market. Finally, the Underwriters
may reclaim selling concessions allowed to broker-dealers if the Underwriters
previously distributed the Notes in transactions to cover short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Notes above independent market levels. The
Underwriters are not required to engage in these activities and may end any of
these activities at any time.
The Underwriters are offering the Notes subject to prior sale and their
acceptance of the Notes from the Company. The Underwriters reserve the right to
reject any order in whole or in part.
S-7
<PAGE> 8
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Summary Financial Information......... S-2
Description of the Notes.............. S-4
Underwriting.......................... S-7
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>
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$1,000,000,000
[ASSOCIATES LOGO]
$500,000,000
5 1/2% SENIOR NOTES
DUE FEBRUARY 15, 2002
$500,000,000
5 1/2% SENIOR NOTES
DUE FEBRUARY 15, 2004
PROSPECTUS SUPPLEMENT
BEAR, STEARNS & CO. INC.
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
FEBRUARY 4, 1999
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