<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration Number 333-62875
Prospectus Supplement to Prospectus dated September 18, 1998.
15,000,000 Shares
[ASSOCIATES FIRST CAPITAL CORPORATION LOGO]
Class A Common Stock
----------------------
Associates First Capital Corporation is selling all of the 15,000,000
shares of Class A Common Stock (par value $0.01 per share) offered by this
Prospectus Supplement. Our Class A Common Stock is listed and traded on the New
York Stock Exchange under the symbol "AFS." The last reported sale price of our
Class A Common Stock on the New York Stock Exchange on November 23, 1998 was
$75.6875 per share.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial public offering price............................... $75.50 $1,132,500,000
Underwriting discount....................................... $2.07 $31,050,000
Proceeds, before expenses, to us............................ $73.43 $1,101,450,000
</TABLE>
The underwriters may, under certain circumstances, purchase up to an
additional 2,250,000 shares from us at the initial public offering price less
the underwriting discount.
----------------------
The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment in New York, New York
on November 30, 1998.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
MERRILL LYNCH & CO.
----------------------
Prospectus Supplement dated November 23, 1998.
<PAGE> 2
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the attached Prospectus (including
information included or incorporated by reference in this Prospectus Supplement
and the attached Prospectus) contain certain forward-looking statements
regarding our financial condition, results of operations, plans, objectives,
future performance and business. These forward-looking statements include
statements (1) relating to the cost savings and accretion to reported earnings
estimated to result from certain future acquisitions of assets and businesses,
(2) relating to future revenues estimated to result from any such acquisitions,
(3) relating to estimated earnings and (4) preceded by, followed by or that
include the words "believe," "expect," "anticipate," "intend," "aim," "will" and
similar words or expressions. These forward-looking statements involve certain
risks and uncertainties. Actual results may differ materially from those
contemplated by these forward-looking statements due to various factors,
including the following:
o Rapid changes in interest rates, limiting our ability to generate new
finance receivables and decreasing our net interest margins.
o Increases in non-performing loans and credit losses.
o Rapid changes in receivable prepayment rates.
o Our inability to access capital and financing on terms acceptable to
us.
o Changes in any domestic or foreign governmental regulation affecting
our ability to declare and pay dividends, the manner in which we
conduct business or the level of product pricing.
o Heightened competition, including the intensification of price
competition, the entry of new competitors and the introduction of new
products by new and existing competitors.
o Adverse publicity and news coverage about us or about any of our
proposed products or services.
o Adverse results in litigation matters in which we are involved.
o General economic and inflationary conditions affecting consumer debt
levels and credit losses and overall increases in the cost of doing
business.
o Changes in social and economic conditions such as increasing consumer
bankruptcies, inflation and monetary fluctuations and changes in tax
rates or tax laws.
o Changes in foreign currency exchange rates adversely affecting the
contribution of our foreign operations to our consolidated results of
operations.
o Changes in generally accepted accounting policies and practices, and
the application of such policies and practices to us.
o Loss or retirement of key executives, employees or technical personnel.
o The effect of changes within our organization or in compensation and
benefit plans and our ability to attract and retain experienced and
qualified management personnel.
o Natural events and acts of God such as earthquakes, fires or flood.
o Adverse changes, or any announcement relating to a possible or
contemplated adverse change, in the ratings obtained from any of the
independent rating agencies relating to our debt securities or other
financial instruments.
o Our ability and the ability of third parties with whom we have
relationships to become year 2000 compliant.
o Our ability to integrate the operations of future acquisitions into our
operations.
These forward-looking statements speak only as of the date on which they
were made. We do not intend to update any forward-looking statements to reflect
subsequent events.
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and consolidated financial statements included or
incorporated by reference in this Prospectus Supplement.
Securities Offered......... 15,000,000 shares of our Class A Common Stock,
assuming the underwriters do not exercise their
over-allotment option.
Over-allotment Option...... Up to 2,250,000 shares.
Shares of Class A Common
Stock to be Outstanding
After the Offering....... 361,324,266. This figure is based on the number of
shares outstanding as of September 30, 1998 and
assumes that the underwriters do not exercise their
over-allotment option.
Stock Exchange Listing..... Our Class A Common Stock is listed and traded on
the New York Stock Exchange under the Symbol "AFS."
Use of Proceeds............ We will use the net proceeds from this offering to
retire short-term debt currently outstanding. We
plan to fund the purchase price of our pending
acquisition (the "Avco Acquisition") of the assets
and assumption of the liabilities of Avco Financial
Services, Inc. ("Avco") from Textron Inc. through
working capital, by increasing the amount of
short-term debt outstanding or through a
combination thereof.
MANAGED BASIS REPORTING
This Prospectus Supplement and some of the documents incorporated by
reference present, where indicated, financial and statistical information
reported on a "Managed Basis." Until recently, we have reported financial and
statistical information exclusively on an "Owned Basis." For a discussion
regarding the presentation of our results of operations for the three and nine
months ended September 30, 1998 on an Owned Basis and a Managed Basis, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our September 30, 1998 Quarterly Report on Form 10-Q.
Finance receivables as reported on an Owned Basis reflects finance
receivables that we own, but not finance receivables that we have sold and
continue to service or finance receivables held for sale. The statement of
earnings information reported on an Owned Basis reflects finance charges,
interest expense and credit losses related to finance receivables held for sale
and finance receivables that we have sold but continue to service in investment
and other income.
Finance receivables as reported on a Managed Basis reflects finance
receivables that we own, finance receivables held for sale and finance
receivables that we have sold and continue to service. The statement of earnings
information reported on a pro forma Managed Basis reclassifies out of investment
and other income finance charges, interest expense and credit losses related to
finance receivables either sold or held for sale as if they were neither sold
nor held for sale.
Because we retain an economic interest in finance receivables that we have
sold but continue to service or that are held for sale, we believe the Managed
Basis information is useful in evaluating our financial position and operating
performance.
Unless specifically identified as managed or Managed Basis, the information
in this Prospectus Supplement is stated on an Owned Basis consistent with our
historical financial statements and generally accepted accounting principles.
See our September 30, 1998 Quarterly Report on Form 10-Q and our Current Report
on Form 8-K dated June 18, 1998 for additional information about our Managed
Basis reporting.
S-3
<PAGE> 4
THE COMPANY
We are a leading, diversified consumer and commercial finance organization,
which provides finance, leasing and related services to individual consumers and
businesses through direct and indirect, wholly-owned subsidiaries in the United
States and internationally. Our principal U.S.-based operating subsidiary is
Associates Corporation of North America ("ACONA"). Our principal foreign-based
operating subsidiaries are AIC Corporation, with operations in Japan, and
Associates Capital Corporation of Canada.
Through various economic conditions and interest rate environments, we have
produced growth in pre-tax earnings for twenty-three consecutive years, as shown
in the graph on page S-5. Over this period pre-tax earnings have grown at a
compound annual rate of 22% to $1.6 billion for the year ended December 31,
1997. Such growth resulted principally from internal expansion (through, among
other things, branch openings, new lines of business and geographic expansion)
as well as selective acquisitions.
At or for the nine months ended September 30, 1998, we had aggregate
managed finance receivables of $66.2 billion, total managed assets of $70.6
billion, net earnings of $891.5 million and stockholders' equity of $7.0
billion. Our return on average adjusted equity for the nine months ended
September 30, 1998 was 20.45%, and our return on average managed assets was
1.81%.
We provide finance, leasing and related services to approximately 20
million individual consumers and businesses in the United States and
internationally. Our operations outside the United States are conducted
principally in Japan ($2.7 billion of net finance receivables at December 31,
1997) and Canada ($1.2 billion of net finance receivables at December 31, 1997),
but also include operations in the United Kingdom, Puerto Rico, Mexico, Costa
Rica and Taiwan. We have geographically dispersed finance receivables. At
December 31, 1997, approximately 91% of our receivables were dispersed across
the United States and the remaining 9% were in foreign countries. Of the total
receivables, 11% were in California, 6% in Florida, 6% in Texas, 5% in Japan, 4%
in Georgia, 4% in North Carolina, 4% in New York, 4% in Pennsylvania, 4% in
Illinois and 4% in Ohio; no other individual state or foreign country had 4% or
more.
At December 31, 1997, we had approximately 2,265 offices worldwide and
employed approximately 22,600 persons. Our company was incorporated in Delaware
on December 22, 1971 and is the successor to the business of Associates
Investment Company, an Indiana corporation incorporated in 1918. Our principal
executive offices are located at 250 East Carpenter Freeway, Irving, Texas
75062-2729, USA.
STRATEGY
We believe that our consistent growth in profits has resulted from the
balanced pursuit of asset and revenue growth and risk and expense control. We
attempt to increase our managed finance receivables by emphasizing customer
service and convenient product delivery and expanding our relationships with
existing customers. We also seek to develop products and services for new
markets believed to have strong profit potential.
We believe that the following operating disciplines have been key to our
success: (i) focusing employees on growth and profitability through incentives,
(ii) maintaining strict credit underwriting standards and collection policies to
reduce losses, (iii) controlling operating expenses and (iv) sourcing funds on a
cost effective basis. We believe that adherence to these disciplines has created
a receivables portfolio that is diversified by market, geography, customer,
maturity and product. As a result, we believe that we have been able to reduce
our exposure to adverse economic developments in any particular market or
region. We have also developed flexible branch and centralized delivery systems
that we believe allow us best to serve the
S-4
<PAGE> 5
diversified nature of our business activities and customer base.
To raise capital on a cost effective basis, we seek to maintain strong
credit ratings and a conservative capital structure, access selected global
markets and manage our asset/liability and interest rate exposures.
Our long-term debt and commercial paper and that of ACONA are rated by
Moody's Investors Service, Inc. ("Moody's"), Standard and Poor's Corporation
("Standard and Poor's"), Fitch IBCA, Inc. ("Fitch"), and Duff and Phelps Credit
Rating Co. ("Duff and Phelps"). Associates present credit ratings for senior
long-term debt and commercial paper and those of ACONA are as follows:
<TABLE>
<CAPTION>
SENIOR LONG TERM COMMERCIAL PAPER
------------------- -------------------
ASSOCIATES ACONA ASSOCIATES ACONA
---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Moody's.............................. A1 Aa3 P-1 P-1
Standard and Poor's.................. A+ AA- A-1 A-1+
Fitch................................ A+ AA F-1+ F-1+
Duff and Phelps...................... A+ AA- D-1 D-1+
</TABLE>
On August 11, 1998, following the announcement of our agreement to acquire
the assets and assume the liabilities of Avco, Moody's and Fitch placed our
long-term debt ratings and those of ACONA under review for possible downgrade.
In addition, Fitch placed our commercial paper rating under review for possible
downgrade. On November 10, 1998, Moody's confirmed our long-term debt ratings
and those of ACONA. The ratings outlook for both was changed to negative. See
"Recent Developments."
The following graph shows our twenty-three consecutive years of pre-tax
earnings growth:
PRE-TAX EARNINGS TREND(1)
(DOLLARS IN MILLIONS)
LOGO
(1) 1990 and 1991 pre-tax earnings exclude non-recurring
interest expense on debt owed to our then parent
corporation, Ford Motor Company. The debt, which was
incurred in 1990, was converted to equity in 1991. If the
interest expense on the debt were included, pre-tax
earnings in 1990 would have been substantially unchanged
from 1989.
S-5
<PAGE> 6
COMPANY OVERVIEW
We offer a wide variety of specialized consumer and commercial financing
products and services along with related insurance products through various
domestic and international delivery systems. Our products, delivery systems and
major markets are shown in the following chart:
S-6
LOGO
<PAGE> 7
FINANCE PRODUCTS
Our consumer finance products include home equity lending, personal
lending, retail sales financing and credit cards. Our commercial finance
products include retail financing, leasing and wholesale financing for
heavy-duty and medium-duty trucks and truck trailers, construction, material
handling and other industrial and communications equipment, manufactured
housing, recreational vehicle and auto fleet leasing.
The following table shows our managed finance receivables outstanding
attributable to our financing products. This information was derived from
information contained in our Quarterly Report on Form 10-Q for the period ended
September 30, 1998, our Current Report on Form 8-K dated June 18, 1998 and our
Annual Report on Form 10-K for the year ended December 31, 1997. This
information is only a summary, and you should read our financial statements and
other information we have filed with the Securities and Exchange Commission (the
"SEC"). See "Available Information" in the accompanying Prospectus.
MANAGED FINANCE RECEIVABLES OUTSTANDING
<TABLE>
<CAPTION>
AT DECEMBER 31
AT SEPTEMBER 30 ---------------------------------
1998 1997 1996 1995(1)
--------------- --------- --------- ---------
<S> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C> <C>
Home Equity Lending...................... $21,924.5 $18,796.0 $16,691.4 $14,316.3
Personal Lending/Sales Finance........... 10,499.4 8,731.6 7,425.1 6,225.1
Credit Card.............................. 7,969.7 8,323.7 6,023.8 4,984.6
Manufactured Housing..................... 4,822.0 3,526.9 2,547.5 2,049.3
Truck and Truck Trailer.................. 10,470.5 9,688.9 8,598.3 7,724.0
Equipment................................ 5,813.8 5,300.5 4,571.8 3,781.7
Recreational Vehicles.................... 1,988.6 1,665.4 1,315.6 --
Auto Fleet Leasing....................... 1,584.0 1,551.1 1,090.8 330.8
Warehouse Lending and Other.............. 1,080.9 822.4 358.5 290.7
--------- --------- --------- ---------
Total.......................... $66,153.4 $58,406.5 $48,622.8 $39,702.5
========= ========= ========= =========
</TABLE>
- ------------
(1) Prior to 1996, we had not completed any securitization transactions;
accordingly, managed and owned finance receivables amounts were the same for
this period.
RELATED INSURANCE
We make available various credit and non-credit insurance products to our
finance customers. Insurance products we offer to consumer finance customers
include credit life, credit accident and health, accidental death and
dismemberment, involuntary unemployment and personal property insurance.
Insurance products we offer to our commercial finance customers include
commercial auto and dealers' open lot physical damage, credit life and motor
truck cargo insurance. We offer these insurance products through certain
subsidiaries and other unaffiliated insurance providers. We receive compensation
for certain insurance programs other companies underwrite. Finally, we also
underwrite liability insurance in certain states for our commercial auto
physical damage customers.
S-7
<PAGE> 8
SUMMARY FINANCIAL DATA
We have selected certain consolidated financial information regarding our
financial position and operating results from our consolidated financial
statements for the nine-month periods ended September 30, 1998 and 1997
contained in our most recent Quarterly Report on Form 10-Q, the Managed Basis
financial information contained in our Current Report on Form 8-K dated June 18,
1998 and the consolidated financial statements for the five years ended December
31, 1997 contained in our most recent Annual Report on Form 10-K. Information
presented below is presented on a Managed Basis where indicated. This
information is only a summary, and you should read our financial statements and
other information we have filed with the SEC. See "Available Information" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OR AT SEPTEMBER 30 YEAR ENDED OR AT DECEMBER 31
--------------------- ---------------------------------------------------------
1998 1997 1997 1996 1995(1) 1994(1) 1993(1)
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Managed Basis
Results of Operations
Total revenue.................. $ 7,244.9 $ 6,229.6 $ 8,470.5 $ 7,160.3 $ 6,107.2 $ 4,925.8 $ 4,114.8
Finance charge revenue......... 6,711.5 5,764.3 7,832.2 6,578.1 5,560.8 4,445.2 3,709.7
Interest expense............... 2,544.6 2,157.2 2,946.2 2,514.8 2,177.9 1,657.3 1,421.7
Net interest margin............ 4,166.9 3,607.1 4,886.0 4,063.3 3,382.9 2,787.9 2,288.0
Operating expenses............. 1,996.6 1,705.8 2,339.6 2,002.9 1,754.7 1,456.1 1,216.8
Provision for losses........... 1,180.8 1,059.5 1,399.0 1,089.8 834.0 647.1 536.1
Insurance benefits paid........ 107.5 107.5 145.7 148.2 142.5 147.9 118.9
Earnings before provision for
income taxes................. 1,415.4 1,199.6 1,640.0 1,404.6 1,198.1 1,017.4 821.3
Provision for income taxes..... 523.9 445.9 608.3 547.6 475.0 414.1 327.3
Net earnings................... 891.5 753.7 1,031.7 857.0 723.1 603.3 494.0
Basic earnings per share(2).... 2.57 2.18 2.98 2.47 2.09 nm nm
Diluted earnings per
share(2)..................... 2.56 2.17 2.97 2.47 2.09 nm nm
Selected Balance Sheet Data and
Ratios (Owned Basis)
Finance receivables, net of
unearned finance income...... $57,550.4 $52,677.8 $55,215.6 $46,512.9 $39,702.5 $33,685.7 $28,294.7
Allowance for losses........... 1,865.0 1,891.4 1,949.9 1,563.1 1,268.6 1,061.6 892.3
Total assets................... 66,105.3 54,354.6 57,232.7 48,268.4 41,303.9 35,283.5 30,039.6
Short-term debt (notes
payable)..................... 24,587.0 20,019.1 20,970.6 17,075.2 13,747.3 12,431.9 10,385.9
Long-term debt(3).............. 32,257.2 26,565.2 28,228.0 24,029.5 21,372.6 17,306.2 14,826.8
Stockholders' equity........... 6,967.1 6,016.6 6,268.6 5,437.5 4,801.1 4,436.8 3,774.3
Stockholders' equity per
share(2)(4).................. 20.12 17.37 18.09 15.69 13.85 nm nm
Total debt to equity........... 8.1:1 7.7:1 7.8:1 7.5:1 7.2:1 6.6:1 6.6:1
Total debt to adjusted
equity(5).................... 9.0:1 8.8:1 8.8:1 8.8:1 9.0:1 8.5:1 8.7:1
Return on average equity(6).... 18.05% 17.65% 17.78% 17.09% 15.66% 14.70% 14.10%
Return on average adjusted
equity(5)(6)................. 20.45 21.08 21.10 20.94 20.26 19.66 19.25
Allowance for losses to net
finance receivables.......... 3.24 3.59 3.53 3.36 3.20 3.15 3.15
Allowance for losses to net
credit losses(7)............. 1.70x 1.62x 1.59x 1.77x 2.03x 2.09x 2.02x
</TABLE>
S-8
<PAGE> 9
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OR AT SEPTEMBER 30 YEAR ENDED OR AT DECEMBER 31
--------------------- ---------------------------------------------------------
1998 1997 1997 1996 1995(1) 1994(1) 1993(1)
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Managed Basis Data and
Ratios
Managed finance receivables.... $66,153.4 $55,862.7 $58,406.5 $48,622.8 $39,702.5 $33,685.7 $28,294.7
Net interest margin as a
percentage of average managed
finance receivables(6)....... 8.88% 9.12% 9.06% 9.20% 9.22% 9.00% 8.69%
Return on average managed
assets(6).................... 1.81 1.85 1.86 1.89 1.89 1.85 1.76
60+days contractual
delinquency.................. 2.39 2.28 2.15 2.11 1.71 1.35 1.43
Net credit losses to average
managed finance receivables.. 2.35 2.32 2.32 2.00 1.70 1.64 1.68
Number of employees............ 24,728 22,431 22,582 18,984 16,647 15,318 13,933
Number of consumer and
commercial branch offices
Domestic..................... 1,486 1,676 1,568 1,634 1,543 1,472 1,378
International................ 1,021 667 697 499 404 329 278
--------- --------- --------- --------- --------- --------- ---------
Total.................... 2,507 2,343 2,265 2,133 1,947 1,801 1,656
========= ========= ========= ========= ========= ========= =========
</TABLE>
- ------------
(1) Prior to 1996, we had not completed any securitization transactions;
accordingly, managed and owned finance receivables amounts were the same for
these periods.
(2) Due to the change in our capital structure as a result of the initial public
offering of our Class A Common Stock in May 1996 (the "IPO"), share and per
share data for 1994 and 1993 are not comparable to, or meaningful in the
context of, later periods.
(3) Includes current portion of long-term debt.
(4) Based on 346.5 million shares outstanding in 1997 and 346.7 million shares
outstanding in 1996 and 1995.
(5) Excludes the push-down goodwill created by Ford Motor Company's acquisition
of our foreign affiliates in 1989.
(6) During the first quarter of 1996, we paid a dividend to our then parent
corporation, Ford Motor Company, totaling $1.85 billion, of which $1.75
billion was in the form of an intercompany interest bearing note. We repaid
the $1.75 billion intercompany note during the second quarter of 1996 and
received $1.85 billion as a result of the IPO. The amounts presented for
1996 exclude the effect of these transactions.
(7) The nine-month period ended September 30, 1998 reflects annualized 1998
second and third quarter Owned Basis losses. All other periods reflect
trailing four quarter Owned Basis losses. This calculation was changed for
the 1998 period to reflect the lower Owned Basis loss levels recorded after
the securitization and sale of approximately $5.2 billion of credit card
receivables in the second quarter of 1998.
S-9
<PAGE> 10
RECENT DEVELOPMENTS
On August 11, 1998, we announced that we had entered into an agreement to
acquire the assets and assume the liabilities of Avco. We expect the Avco
Acquisition to be completed in late 1998 or early 1999, subject to regulatory
approvals and other customary conditions. Following the announcement, Fitch and
Moody's placed the ratings of our long-term debt and that of ACONA under review
for possible downgrade, and Fitch placed our commercial paper rating on watch
for possible downgrade, due to the possible effect of the Avco Acquisition on
us. Moody's reaffirmed our commercial paper rating and that of ACONA while
Standard & Poor's and Duff & Phelps reaffirmed our commercial paper and
long-term debt ratings and those of ACONA. On November 10, 1998, Moody's
confirmed our long-term debt ratings and those of ACONA. The ratings outlook for
both was changed to negative.
On August 31, 1998, we announced we had entered into an agreement to
acquire the Northland Company, headquartered in Minneapolis, Minnesota. The
Northland Company provides insurance products through Jupiter Holdings, Inc.,
and mortgage banking, real estate management, brokerage and related services
through various other subsidiaries. We will acquire the insurance-related
businesses only, and Northland will divest the other businesses prior to
closing. The acquisition is subject to regulatory approval and approval by
Northland's stockholders. We expect to complete the acquisition of the Northland
Company in late 1998.
We announced on October 19, 1998 that we had completed our previously
announced acquisition of the assets of SPS Transaction Services, Inc. ("SPS").
The transaction was completed October 16, 1998. SPS is primarily a provider of
private-label credit card management services.
At September 30, 1998, we reported managed assets of $70.6 billion, an
increase of $10.5 billion, or 17%, from December 31, 1997. Net earnings per
share for the nine months ended September 30, 1998 was $2.57 (basic) and $2.56
(diluted), an increase of $0.39 (basic) and $0.39 (diluted), or 18% for both,
for the same period in 1997. Our return on average adjusted equity for the nine
months ended September 30, 1998 was 20.45%, and was 21.08% for the same period
in 1997. See "Summary Financial Data."
On October 6, 1998, we announced that we would increase our quarterly cash
dividend by 10% from $0.10 to $0.11 per share. In addition, we announced a
2-for-1 stock split, in the form of a 1-for-1 dividend of the Class A Common
Stock. The stock dividend will be paid on December 23, 1998, to holders of
record as of December 9, 1998.
USE OF PROCEEDS
The proceeds from the offering of the Class A Common Stock, net of
underwriting discounts and commissions, will be approximately $1,101,450,000
(approximately $1,266,667,500 if the underwriters' over-allotment option is
exercised in full). We intend to use the net proceeds to retire short-term debt
currently outstanding. As of September 30, 1998, our short-term debt had an
annual weighted average interest rate of 5.23%. We plan to fund the purchase
price of the pending Avco Acquisition through working capital, by increasing the
amount of short-term debt outstanding or through a combination thereof.
S-10
<PAGE> 11
COMMON STOCK DIVIDENDS AND PRICE RANGE
We have paid cash dividends on our Class A Common Stock since we became a
public corporation in May 1996. On October 6, 1998, we announced that we would
increase our quarterly cash dividend by 10% from $0.10 to $0.11 per share. Upon
payment of the stock dividend on December 23, 1998, the cash dividend will
decrease to $0.055 per share. See "Recent Developments." The amount of dividends
in the future, if any, will depend on future earnings, our financial condition
and other factors. Our Board of Directors has the right to change the amount of
dividends paid at any time.
The following table shows the high and low closing sales prices of our
Class A Common Stock as reported by the New York Stock Exchange on the composite
tape in The Wall Street Journal and cash dividends paid during the periods
shown:
<TABLE>
<CAPTION>
CASH
YEAR HIGH LOW DIVIDENDS
- ---- ---- --- ---------
<S> <C> <C> <C>
1996
Second Quarter.............................................. $39 1/8 $33 1/8 --
Third Quarter............................................... 41 5/8 34 3/4 $0.10
Fourth Quarter.............................................. 48 1/2 40 3/4 0.10
1997
First Quarter............................................... $52 5/8 $42 1/2 $0.10
Second Quarter.............................................. 59 3/8 42 1/8 0.10
Third Quarter............................................... 66 1/4 55 1/4 0.10
Fourth Quarter.............................................. 72 9/16 58 3/4 0.10
1998
First Quarter............................................... $82 9/16 $65 3/4 $0.10
Second Quarter.............................................. 85 1/2 71 3/8 0.10
Third Quarter............................................... 86 3/4 56 3/16 0.10
Fourth Quarter (through November 23, 1998).................. 76 1/2 48 --
</TABLE>
The last reported sale price of the Class A Common Stock on the New York
Stock Exchange on November 23, 1998 was 75 11/16 per share.
S-11
<PAGE> 12
CAPITALIZATION
The following table shows our unaudited consolidated capitalization at
September 30, 1998. The "As Adjusted" column reflects our capitalization after
giving effect to this offering of Class A Common Stock and the application of
the proceeds of the sale of the Class A Common Stock (net of underwriting
discounts and commissions) to the reduction of commercial paper, bank and other
borrowings. The following does not reflect financings to fund the purchase price
of the pending Avco Acquisition.
You should read this information along with our financial statements
contained in our Quarterly Report on Form 10-Q for the period ended September
30, 1998. See "Available Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN MILLIONS)
<S> <C> <C>
Commercial paper, bank and other borrowings(1).............. $31,494.5 $ 30,393.1
Senior and senior subordinated debt (with maturities over
one year)................................................. 25,349.7 25,349.7
--------- ----------
Total debt........................................ 56,844.2 55,742.8
Common shareholders' equity:
Class A Common Stock 1,150,000,000 shares authorized,
346,833,904 shares issued (361,833,904 shares issued,
as adjusted)........................................... 3.5 3.6
Additional paid-in capital.................................. 4,006.0 5,107.3
Retained earnings........................................... 2,884.9 2,884.9
Foreign currency translation adjustments.................... 111.4 111.4
Unrealized gain on investments, net......................... 3.4 3.4
Less Class A Common Stock in treasury, 509,638 shares, at
cost...................................................... (42.1) (42.1)
--------- ----------
Total common shareholders' equity................. 6,967.1 8,068.5
--------- ----------
Total capitalization.............................. $63,811.3 $ 63,811.3
========= ==========
</TABLE>
- ------------
(1) Includes $6.9 billion of long-term debt due within one year.
S-12
<PAGE> 13
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of our Class
A Common Stock by a Non-U.S. Holder. For this purpose, a "Non-U.S. Holder" is
any person who is, for United States federal income tax purposes, a foreign
corporation, a non-resident alien individual, a foreign partnership or a foreign
estate or trust. This discussion does not address all aspects of United States
federal income and estate taxes and does not deal with foreign, state and local
consequences that may be relevant to such Non-U.S. Holders in light of their
personal circumstances. Furthermore, this discussion is based on provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed regulations promulgated thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change (possibly with retroactive effect). EACH PROSPECTIVE PURCHASER OF OUR
CLASS A COMMON STOCK IS ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT
AND POSSIBLE FUTURE TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF OUR
CLASS A COMMON STOCK AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE
LAWS OF ANY U.S. STATE, MUNICIPALITY OR OTHER TAXING JURISDICTION.
An individual may, subject to certain exceptions, be deemed to be a
resident alien (as opposed to a non-resident alien) by virtue of being present
in the United States on at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the current
year, one-third of the days present in the immediately preceding year, and
one-sixth of the days present in the second preceding year). Resident aliens are
subject to U.S. federal tax as if they were U.S. citizens.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of our Class A Common Stock generally
will be subject to withholding of United States federal income tax either at a
rate of 30% of the gross amount of the dividends or at such lower rate as may be
specified by an applicable income tax treaty. However, dividends that are
effectively connected with the conduct of a trade or business by the Non-U.S.
Holder within the United States and, where a tax treaty applies, are
attributable to a United States permanent establishment of the Non-U.S. Holder,
are not subject to the withholding tax (provided the Non-U.S. Holder files
appropriate documentation with the payor of the dividend), but instead are
subject to United States federal income tax on a net income basis at applicable
graduated individual or corporate rates. Any such effectively connected
dividends received by a foreign corporation may, under certain circumstances, be
subject to an additional "branch profits tax" at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty.
Under current law, dividends paid to an address outside the United States
are presumed to be paid to a resident of such country (unless the payer has
knowledge to the contrary) for purposes of the withholding tax discussed above
and, under the current interpretation of United States Treasury regulations, for
purposes of determining the applicability of a tax treaty rate. Under recently
finalized United States Treasury regulations (the "Final Regulations"), a Non-
U.S. Holder of our Class A Common Stock who wishes to claim the benefit of an
applicable treaty rate (and avoid back-up withholding as discussed below) for
dividends paid after December 31, 1999, will be required to satisfy applicable
certification and other requirements.
A Non-U.S. Holder of our Class A Common Stock eligible for a reduced rate
of United States withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the Internal Revenue Service (the "IRS").
S-13
<PAGE> 14
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder will generally not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of our
Class A Common Stock unless (i) the gain is effectively connected with a trade
or business of the Non-U.S. Holder in the United States, and, where a tax treaty
applies, is attributable to a United States permanent establishment of the
Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder who is an individual and
holds our Class A Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the sale or other
disposition and certain other conditions are met or (iii) the Company is or has
been a "U.S. real property holding corporation" for United States federal income
tax purposes. The Company believes it is not and does not anticipate becoming a
"U.S. real property holding corporation" for United States federal income tax
purposes.
If an individual Non-U.S. Holder falls under clause (i) above, he will be
taxed on his net gain derived from the sale under regular graduated United
States federal income tax rates. If an individual Non-U.S. Holder falls under
clause (ii) above, he will be subject to a flat 30% tax on the gain derived from
the sale, which may be offset by certain United States capital losses.
If a Non-U.S. Holder that is a foreign corporation falls under clause (i)
above, it will be taxed on its gain under regular graduated United States
federal income tax rates and may be subject to an additional branch profits tax
at a 30% rate, unless it qualifies for a lower rate under an applicable income
tax treaty.
Special Rules may apply to certain Non-U.S. Holders, such as "controlled
foreign corporations," "passive foreign investment companies" and "foreign
personal holding companies" that are subject to special treatment under the
Code. Such entities should consult their own tax advisors to determine the U.S.
federal, state, local and other tax consequences that may be relevant to them.
FEDERAL ESTATE TAX
Class A Common Stock held by an individual Non-U.S. Holder at the time of
death will be included in such holder's gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
We must report annually to the IRS and to each Non-U.S. Holder the amount
of dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
A backup withholding tax is imposed at the rate of 31% on certain payments
to persons that fail to furnish certain identifying information to the payor.
Under current law, backup withholding generally will not apply to dividends paid
to a Non-U.S. Holder at an address outside the United States (unless the payer
has knowledge that the payee is a U.S. person). Under the Final Regulations,
however, a Non-U.S. Holder will be subject to back-up withholding unless
applicable certification requirements are met.
Payment of the proceeds of a sale of our Class A Common Stock by or through
a United States office of a broker is subject to both backup withholding and
information reporting unless the beneficial owner certifies under penalties of
perjury that it is a Non-U.S. Holder, or otherwise establishes an exemption. In
general, backup withholding and information reporting will not apply to a
payment of the proceeds of a sale of our Class A Common Stock by or through a
foreign office of a broker. If, however, such broker is, for United States
federal income tax purposes a U.S. person, a controlled foreign corporation or a
foreign person that derives 50% or more of its gross income for certain periods
from the conduct of a trade or business in the United States or, for taxable
years beginning after December 31, 1999, a
S-14
<PAGE> 15
foreign partnership, in which one or more United States persons, in the
aggregate, own more than 50% of the income or capital interests in the
partnership or if the partnership is engaged in a trade or business in the
United States, such payments will not be subject to backup withholding, but will
be subject to information reporting, unless (1) such broker has documentary
evidence in its records that the beneficial owner is a Non-U.S. Holder and
certain other conditions are met or (2) the beneficial owner otherwise
establishes an exemption.
Any amounts withheld under the backup withholding rules generally will be
allowed as a refund or a credit against such holder's U.S. federal income tax
liability provided the required information is furnished in a timely manner to
the IRS.
S-15
<PAGE> 16
UNDERWRITING
We and the underwriters for this offering (the "Underwriters") named below
have entered into an underwriting agreement with respect to the shares being
offered. Subject to certain conditions, the Underwriters have severally agreed
to purchase the number of shares indicated in the following table.
Goldman, Sachs & Co., Credit Suisse First Boston Corporation, J.P. Morgan
Securities Inc., Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated
are the representatives of the Underwriters.
<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Goldman, Sachs & Co. ....................................... 2,666,667
Credit Suisse First Boston Corporation...................... 2,666,667
J.P. Morgan Securities Inc. ................................ 2,666,667
Bear, Stearns & Co. Inc..................................... 1,333,333
Donaldson, Lufkin & Jenrette Securities Corporation......... 1,333,333
Merrill Lynch, Pierce, Fenner & Smith Incorporated......... 1,333,333
ABN AMRO Incorporated ...................................... 176,000
Banque Nationale de Paris................................... 176,000
CIBC Oppenheimer Corp. ..................................... 176,000
Chase Securities Inc. ...................................... 176,000
Commerzbank Capital Markets Corporation..................... 176,000
Deutsche Bank Securities Inc. .............................. 176,000
Dresdner Kleinwort Benson North America LLC................. 176,000
Keefe, Bruyette & Woods, Inc. .............................. 176,000
Lehman Brothers Inc. ....................................... 176,000
Morgan Stanley & Co. Incorporated........................... 176,000
NationsBanc Montgomery Securities LLC ...................... 176,000
Salomon Smith Barney Inc. .................................. 176,000
Warburg Dillon Read LLC..................................... 176,000
William Blair & Company, L.L.C. ............................ 89,000
BNY Capital Markets, Inc. .................................. 89,000
First Chicago Capital Markets, Inc. ........................ 89,000
Fox-Pitt, Kelton Inc. ...................................... 89,000
Nesbitt Burns Securities Inc. .............................. 89,000
Piper Jaffray Inc. ......................................... 89,000
RBC Dominion Securities Corporation......................... 89,000
Stephens Inc. .............................................. 89,000
----------
Total............................................. 15,000,000
==========
</TABLE>
----------------------
If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
2,250,000 shares from us to cover such sales. They may exercise that option for
30 days. If any shares are purchased pursuant to this option, the Underwriters
will severally purchase shares in approximately the same proportion as set forth
in the table above.
The following table shows the per share and total underwriting discounts
and commissions to be paid to the Underwriters by us. Such amounts are shown
assuming both no exercise and full exercise of the
S-16
<PAGE> 17
Underwriters' option to purchase additional shares.
<TABLE>
<CAPTION>
Paid by the Company
-------------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share............ $2.07 $2.07
Total................ $31,050,000 $35,707,500
</TABLE>
Shares sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. Any shares sold by the Underwriters to securities dealers may be
sold at a discount of up to $1.24 per share from the initial public offering
price. Any such securities dealers may resell any shares purchased from the
Underwriters to certain other brokers or dealers at a discount of up to $0.10
per share from the initial public offering price. If all the shares are not sold
at the initial offering price, the representatives may change the offering price
and the other selling terms.
We have agreed with the Underwriters not to dispose of, or grant or sell
options, rights or warrants with respect to, our Class A Common Stock (or other
securities substantially similar to our Class A Common Stock) or to dispose of
securities convertible into or exchangeable or exercisable for shares of our
Class A Common Stock (or other securities substantially similar to our Class A
Common Stock) during the period from the date of this Prospectus Supplement
continuing through the date 60 days after the date of this Prospectus
Supplement, except under our employee benefit plans or with the prior written
consent of the representatives. Our executive officers and directors have agreed
to similar restrictions with respect to their shares of Class A Common Stock.
In connection with this offering, the Underwriters may purchase and sell
shares of our Class A Common Stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the Underwriters of a
greater number of shares than they are required to purchase in this offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of our Class A
Common Stock while this offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of our Class A Common Stock. As a result, the price of
our Class A Common Stock may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
by the Underwriters at any time. These transactions may be effected on the NYSE,
in the over-the-counter market or otherwise.
We estimate that our share of the total expenses of this offering,
excluding underwriting discounts and commissions, will be approximately
$581,350.
The Underwriters or their affiliates have provided from time to time, and
may provide in the future, investment banking, commercial banking and other
financial services to us or our affiliates. In the ordinary course of business,
the Underwriters or their affiliates may actively trade in our debt and equity
securities for their own account or for accounts of customers and, accordingly,
they may at any time hold long or short positions in such securities. Banque
Nationale de Paris will only offer shares of Class A Common Stock outside of the
United States. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. were each
retained by Textron Inc. to act as its financial advisor in connection with the
Avco Acquisition. In addition, a managing director of Goldman, Sachs & Co. is
one of our directors.
S-17
<PAGE> 18
LEGAL MATTERS
Simpson Thacher & Bartlett will pass upon the validity of the Class A
Common Stock offered by this Prospectus Supplement for us. Shearman & Sterling
will pass upon the validity of the Class A Common Stock offered by this
Prospectus Supplement for the Underwriters.
S-18
<PAGE> 19
- ---------------------------------------------------------
- ---------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements................... S-2
Prospectus Supplement Summary................ S-3
Managed Basis Reporting...................... S-3
The Company.................................. S-4
Summary Financial Data....................... S-8
Recent Developments.......................... S-10
Use of Proceeds.............................. S-10
Common Stock Dividends and Price Range....... S-11
Capitalization............................... S-12
Certain United States Tax Consequences to
Non-United States Holders.................. S-13
Underwriting................................. S-16
Legal Matters................................ S-18
Prospectus
Available Information........................ 3
Documents Incorporated by Reference.......... 4
The Company.................................. 5
The Associates Trusts........................ 6
Application of Proceeds...................... 7
Description of the Debt Securities........... 7
Description of the Warrants to Purchase Debt
Securities................................. 15
Description of the Preferred Stock........... 16
Description of Depositary Shares............. 18
Description of the Common Stock.............. 21
Certain Matters that May Have an Anti-
Takeover Effect............................ 23
Description of the Warrants to Purchase Class
A Common Stock or Preferred Stock.......... 27
Description of Preferred Securities.......... 28
Description of Guarantees.................... 38
Relationship Among the Preferred Securities,
the Corresponding Junior Subordinated Debt
Securities and the Guarantees.............. 41
Description of Stock Purchase Contracts and
Stock Purchase Units....................... 43
Book-Entry Issuance.......................... 43
Plan of Distribution......................... 45
Validity of Securities....................... 46
Experts...................................... 46
</TABLE>
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
15,000,000 Shares
[ASSOCIATES FIRST CAPITAL CORPORATION LOGO]
Class A Common Stock
------------------
PROSPECTUS SUPPLEMENT
------------------
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
MERRILL LYNCH & CO.
Representatives of the Underwriters
- ---------------------------------------------------------
- ---------------------------------------------------------
