<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____ to ____
Commission File Number 1-11237
AT&T CAPITAL CORPORATION
A DELAWARE I.R.S. EMPLOYER
CORPORATION NO. 22-3211453
44 Whippany Road, Morristown, New Jersey 07962-1983
Telephone Number 973-397-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
No voting stock of this registrant is held by any non-affiliates of the
registrant. At April 30, 1998, 90,337,379 shares of the registrant's Common
Stock, par value $.01 per share, were issued and outstanding to Newcourt Credit
Group USA Inc.
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited)
----------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 46,248 $ 8,317
Assets held for sale and inventory 439,921 478,213
Net investment in finance receivables 2,483,020 2,343,604
Net investment in capital leases 2,921,695 3,288,141
Net investment in operating
leases, net of accumulated
depreciation of $845,211
in 1998 and $772,437 in 1997 1,617,105 1,593,582
Deferred charges and other assets 739,728 832,892
Receivable from Affiliates (a) 720,742 --
Deferred income taxes 230,899 231,146
---------- ----------
Total Assets $9,199,358 $8,775,895
========== ==========
LIABILITIES, PREFERRED SECURITIES AND SHAREOWNERS' EQUITY:
LIABILITIES:
Short-term notes, less unamortized
discounts of $7,476 in 1998 and
$14,357 in 1997 $2,174,180 $1,868,585
Income taxes and other payables 520,636 714,122
Medium- and long-term debt 5,540,503 5,249,409
Commitments and contingencies
---------- ----------
Total Liabilities 8,235,319 7,832,116
---------- ----------
PREFERRED SECURITIES:
Company-obligated preferred
securities of subsidiary 200,000 200,000
</TABLE>
(continued)
2
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited)
----------- ------------
<S> <C> <C>
SHAREOWNERS'EQUITY:
Common stock, one cent par value:
Authorized 150,000,000 shares,
issued and outstanding, 90,337,379
shares in 1998 and 1997 903 903
Additional paid-in capital 651,552 651,552
Recourse loans to senior executives -- (15,471)
Foreign currency translation
adjustments (6,501) (4,032)
Retained earnings 118,085 110,827
----------- -----------
Total Shareowners' Equity 764,039 743,779
----------- -----------
Total Liabilities, Preferred Securities
and Shareowners' Equity $ 9,199,358 $ 8,775,895
=========== ===========
</TABLE>
(a) At March 31, 1998 "Affiliates" as defined herein are Newcourt Credit Group
Inc. and Newcourt Credit Group USA Inc.
The accompanying notes are an integral part of these Consolidated Financial
Statements.
3
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
--------- ---------
<S> <C> <C>
REVENUES:
Finance revenue $ 59,444 $ 54,309
Capital lease revenue 83,509 90,747
Rental revenue on operating
leases 217,977 196,723
Revenue from securitizations
and loan sales 17,416 13,032
Equipment sales 6,406 8,176
Other revenue, net 56,185 57,943
--------- ---------
Total Revenues 440,937 420,930
--------- ---------
EXPENSES:
Interest 115,212 105,318
Operating and administrative 135,868 136,284
Depreciation on operating leases 142,063 131,976
Cost of equipment sales 6,160 7,228
Provision for credit losses 25,258 23,279
--------- ---------
Total Expenses 424,561 404,085
--------- ---------
Distributions on Company-obligated
preferred securities of subsidiary 4,530 4,530
--------- ---------
Income before income taxes 11,846 12,315
Provision for income taxes 4,588 4,887
--------- ---------
NET INCOME 7,258 7,428
========= =========
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign Currency translation adjustment,
net of tax benefit of $1,560 in 1998 and
$268 in 1997 (2,469) (407)
--------- ---------
Total other comprehensive loss (2,469) (407)
--------- ---------
COMPREHENSIVE INCOME $ 4,789 $ 7,021
========= =========
</TABLE>
The accompanying notes are an integral part of these Consolidated
Financial Statements.
4
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997*
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,258 $ 7,428
Noncash items included in income:
Depreciation and amortization 154,985 146,202
Deferred taxes (7,212) (49,888)
Provision for credit losses 25,258 23,279
Revenue from securitizations and loan sales (17,416) (13,032)
Decrease in deferred charges and
other assets (79,576) (1,021)
Increase (decrease) in assets held for sale
and inventory 32,878 (12,559)
Increase (decrease) in income taxes and other
payables 17,585 (88,765)
Decrease in payables to
AT&T/Lucent/NCR (the "Former Affiliates") -- (27,033)
----------- -----------
Net cash provided (used) by Operating Activities 133,760 (15,389)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of finance asset portfolios (40,284) --
Financings and lease equipment purchases (1,204,182) (1,423,801)
Principal collections from customers,
net of amounts included in income 712,365 906,803
Cash proceeds from securitizations and
loan sales 399,160 421,667
Loans made to Affiliates (720,742) --
Proceeds from sale of subsidiary 14,283 --
----------- -----------
Net cash used for Investing Activities $ (839,400) $ (95,331)
----------- -----------
</TABLE>
(Continued)
5
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997*
----------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term notes, net $ 305,595 $ (74,409)
Additions to medium- and long-term debt 1,373,465 1,247,973
Repayments of medium- and long-term debt (950,960) (1,040,413)
Proceeds from repayment of recourse
loans to senior executives 15,471 --
----------- -----------
Net cash provided by Financing
Activities 743,571 133,151
----------- -----------
Net Increase in Cash and Cash Equivalents 37,931 22,431
Cash and Cash Equivalents at beginning of period 8,317 --
----------- -----------
Cash and Cash Equivalents at end of period $ 46,248 $ 22,431
=========== ===========
</TABLE>
Non-Cash Investing and Financing Activities:
In the first three months of 1998 and 1997, the Company entered into
capital lease obligations of $68,025 and $1,693, respectively, for equipment
that was subleased.
*Certain amounts have been reclassified to conform to the 1998
presentation.
The accompanying notes are an integral part of these Consolidated Financial
Statements.
6
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared by AT&T Capital Corporation and its subsidiaries ("AT&T Capital" or the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, reflect all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the results of operations, financial position and cash flows for each period
shown. The results for interim periods are not necessarily indicative of
financial results for the full year. These unaudited consolidated financial
statements should be read in conjunction with the audited Consolidated Financial
Statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
2. Recent Pronouncements
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures About
Segments of an Enterprise and Related Information". SFAS No. 131 establishes a
new model for segment reporting. The Statement requires reporting of financial
and descriptive information about a company's reportable operating segments.
Operating segments are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. It also requires reporting of certain information about products
and services, geographic areas of operation, and major customers. SFAS No. 131
is effective for financial statements for periods beginning after December 15,
1997. The Company will adopt this standard in its 1998 annual financial
statements. Comparative information for earlier years will be restated.
In February 1998, the FASB issued SFAS No. 132, "Employer's Disclosures
about Pensions and Other Post Retirement Benefits". SFAS No. 132 revises
employer's disclosures about pension and other post retirement benefit plans but
does not change the measurement or recognition of those plans. The Statement
standardizes the disclosure requirements to the extent practicable, requires
additional information changes in the benefit obligations and fair value of plan
assets that will facilitate financial analysis, and eliminates certain
disclosures that are no longer useful. SFAS No. 132 is effective for fiscal
years beginning after December 15, 1997. The Company will adopt this standard in
its 1998 annual financial statements. Comparative information for earlier years
will be restated, if readily available.
7
<PAGE>
<PAGE>
3. Subsidiary Debentures
The table below shows summarized consolidated financial information for
AT&T Capital Leasing Services, Inc. and AT&T Capital Services Corporation, both
wholly owned subsidiaries of the Company. The Company has guaranteed, on a
subordinated basis, payment on debentures issued by these subsidiaries (dollars
in thousands).
<TABLE>
<CAPTION>
AT&T Capital Leasing Services, Inc. For the three months ended
March 31,
--------------------------
(unaudited)
1998 1997
---- ----
<S> <C> <C>
Total revenues $ 38,317 $ 36,120
Interest expense 11,874 10,494
Operating and administrative expenses 17,604 20,617
Provision for credit losses 9,699 14,581
Loss before taxes (2,608) (10,315)
Net Income (loss)(a) 1,214 (3,121)
<CAPTION>
March 31, December 31,
1998 1997
(unaudited)
----------- ------------
<S> <C> <C>
Total assets 854,235 786,895
Total debt 746,562 675,420
Total liabilities 808,757 742,633
Total shareowner's equity $ 45,478 $ 44,262
<CAPTION>
AT&T Capital Services Corporation For the three months ended
March 31,
--------------------------
(unaudited)
1998 1997
---- ----
<S> <C> <C>
Total revenues $ 27,821 $ 29,845
Interest expense 1,843 1,618
Operating and administrative expenses 10,610 12,505
Provision for credit losses -- 337
Income before taxes 1,664 646
Net income 989 353
<CAPTION>
March 31, December 31,
1998 1997
(unaudited)
----------- ------------
<S> <C> <C>
Total assets 151,216 147,182
Total debt 115,797 108,794
Total liabilities 136,845 133,800
Total shareowner's equity $ 14,371 $ 13,382
</TABLE>
(a) 1998 Net Income and 1997 Net Loss includes a $3.8 million and $7.2 million
tax benefit, respectively, on a $9.9 million and $18.2 million tax loss,
respectively, which includes equity investment revenue not taxable to AT&T
Capital Leasing Services, Inc. The 1997 Net Loss has been restated to reflect
this benefit.
8
<PAGE>
<PAGE>
4. Securitizations
During the first quarter of 1998, the Company securitized approximately
$345.5 million of capital leases and loan receivables through a private conduit
facility. The Company retained an interest in the underlying cash flows. The
fair value of such retained interest was calculated using a fair market discount
rate of like cash flows of approximately 7.5%.
5. Receivable from Affilitate
The Company has interest bearing intercompany receivables from
Newcourt Credit Group Inc., an Ontario, Canada corporation ("Newcourt") and
Newcourt Credit Group USA Inc., a wholly-owned subsidiary of Newcourt,
aggregating $720.7 million at March 31, 1998. The net interest income
associated with the intercompany receivables was not material for the three
months ended March 31, 1998.
6. Restructuring Charges
At year end, the Company recorded a reserve pursuant to a restructuring
plan. The following is a roll forward of such reserve (in thousands) and number
of employees to be terminated.
<TABLE>
<CAPTION>
At December 31, Activity through At March 31,
1997 March 31, 1998 1998
-------------------- -------------------- -----------------
<S> <C> <C> <C>
Severence and benefits
related cost $32,920 $13,918 $19,002
Facility closing costs 2,173 1,760 413
-------------------- -------------------- -----------------
Total $35,093 $15,678 $19,415
-------------------- -------------------- -----------------
Approximate number of
employees to be terminated 200 100 100
-------------------- -------------------- -----------------
</TABLE>
As of March 31, 1998, the Company has terminated approximately half of the
employees identified and believes the remaining reserve is adequate to cover the
costs to complete the plan of restructure. With regard to this plan, there has
been no adjustment to the reserve estimate on the estimated number of employees
to be terminated. In addition to the Company's restructure plan, the Company's
headcount decreased by approximately 350 during the first quarter of 1998
primarily due to redundancies in certain functions, resulting from the Newcourt
Acquisition (as defined below).
7. 1998 Sale of the Company and Related Transactions
On January 12, 1998, Newcourt consummated the purchase (the "Newcourt
Acquisition") of all of the outstanding shares of common stock of AT&T Capital,
pursuant to a Stock Purchase Agreement dated as of November 17, 1997 among the
Company, Newcourt, Hercules Holdings (Cayman) Limited and certain management
stockholders. In connection with the Newcourt Acquisition, the Company received
$15.5 million in settlement of recourse loans to senior executives. Also, in
connection with the Newcourt Acquisition, all of the outstanding shares of
common stock of AT&T Capital were transferred to Newcourt Holdings USA, Inc.,
a wholly-owned subsidiary of Newcourt, and are owned indirectly by Newcourt.
For further discussion regarding the Newcourt Acquisition, see Note 1 to the
Audited Consolidated Financial Statements included in the Company's 1997
Annual Report filed on Form 10-K.
9
<PAGE>
<PAGE>
On March 31, 1998 Newcourt Holdings USA, Inc. merged with and into
Newcourt Credit Group USA Inc., a wholly-owned subsidiary of Newcourt, with
Newcourt Credit Group USA Inc. being the surviving entity. Effective thereafter,
the surviving entity, including the Company, will file a consolidated tax return
for Federal income tax purposes.
Also on March 31, 1998, AT&T Capital Canada, Inc. (a wholly-owned
subsidiary of the Company), was sold at book value to Newcourt resulting in no
gain or loss. The total amount of assets sold at March 31, 1998 was $252.2
million.
On April 1, 1998, substantially all of the operations of the Company's
European businesses were sold to Newcourt. The assets were sold at book value,
and, therefore, no gain or loss resulted from such sale. The total amount of
assets relating to these businesses totaled $803.4 million at March 31, 1998.
10
<PAGE>
<PAGE>
Form 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FORWARD LOOKING STATEMENTS
When included in this Quarterly Report on Form 10-Q, the words, "will",
"should", "expects", "intends", "anticipates", "estimates" and similar
expressions, among others, identify forward looking statements for purposes of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"). Such statements, which include statements contained in this
Item 2, inherently are subject to a variety of risks and uncertainties that
could cause actual results to differ materially from those set forth in such
statements. Such risks and uncertainties include, among others, those described
under "Risk Factors" included in Item 7 of the Company's 1997 Annual Report on
Form 10-K, many of which are beyond the control of AT&T Capital Corporation
("AT&T Capital" or the "Company"). These forward looking statements are made
only as of the date of this Quarterly Report on Form 10-Q. The Company expressly
disclaims any obligation or undertaking to release any update or revision to any
forward looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any statement is based.
1998 SALE OF THE COMPANY AND RELATED TRANSACTIONS
On January 12, 1998, Newcourt Credit Group Inc., an Ontario corporation
("Newcourt"), consummated the purchase (the "Newcourt Acquisition") of all of
the outstanding shares of common stock of AT&T Capital, pursuant to a Stock
Purchase Agreement dated as of November 17, 1997 among AT&T Capital, Newcourt,
Hercules Holdings (Cayman) Limited and certain management stockholders. In
connection with the Newcourt Acquisition, all of the outstanding shares of
common stock of the Company were transferred to Newcourt Holdings USA, Inc., a
wholly-owned subsidiary of Newcourt, and are owned indirectly by Newcourt. For
further discussion regarding the Newcourt Acquisition, see Note 1 to the Audited
Consolidated Financial Statements included in the Company's 1997 Annual Report
filed on Form 10-K.
On March 31, 1998 Newcourt Holdings USA, Inc. merged with and into
Newcourt Credit Group USA Inc., a wholly-owned subsidiary of Newcourt ("Newcourt
USA"), with Newcourt USA being the surviving entity. Effective
thereafter, the surviving entity, including the Company, will file a
consolidated tax return for Federal income tax purposes.
Also on March 31, 1998, AT&T Capital Canada Inc. (a wholly-owned
subsidiary of the Company), was sold at book value to Newcourt resulting in no
gain or loss. The total amount of assets sold at March 31, 1998 was $252.2
million.
On April 1, substantially all of the operations of the Company's European
businesses were sold to Newcourt. The assets were sold at book value and,
therefore, no gain or loss resulted from such sale. The total amount of assets
relating to these businesses totaled $803.4 million at March 31, 1998.
11
<PAGE>
<PAGE>
RESULTS OF OPERATIONS
Unless otherwise indicated, all period to period comparisons represent activity
or balances at or for the three months ended March 31, 1998 versus March 31,
1997.
<TABLE>
<CAPTION>
Net Income
For the three months
ended March 31,
1998 1997
--------------------
(dollars in millions)
<S> <C> <C>
Net Income $7.3 $7.4
</TABLE>
Net income was relatively flat quarter over quarter. Increased
securitization revenue, finance revenue and operating lease margin was offset by
a decrease in capital lease revenue and an increase in interest expense.
Key financial operating statistics
The following table sets forth certain key financial operating statistics
of the Company's operations:
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
--------------------
(dollars in millions)
<S> <C> <C>
Finance revenue $59.4 $ 54.3
Capital lease revenue 83.5 90.7
Operating lease margin 76.0 64.8
----- -----
Net portfolio revenue 218.9 209.8
less: interest expense 115.2 105.3
----- -----
Net interest margin (a) 103.7 104.5
Average net portfolio assets $7,309.1 $7,241.8
Net interest margin percentage (a) 5.67% 5.79%
Finance receivables-average yield 9.91% 10.07%
Capital leases-average yield 10.21% 9.89%
Operating lease margin percentage 34.83% 32.91%
Total portfolio-average yield 11.98% 11.59%
Debt/equity plus Preferred
Securities 8.00x 7.21x
</TABLE>
a) Net interest margin is comprised of net portfolio revenue (finance revenue,
capital lease revenue and operating lease margin) less interest expense. Net
interest margin percentage equals the net interest margin divided by the
respective average net portfolio assets.
Finance revenue
Finance revenue increased $5.1 million or 9.5%. An 11.2% increase in
average net finance receivables to $2.4 billion accounted for $6.1 million of
the increase, while the decrease in the average yield partially offset
12
<PAGE>
<PAGE>
this increase by $1.0 million. The growth in the portfolio was due primarily to
increases in the asset based lending and SBA loan portfolios. The reduction in
average yield related to an increase in floating rate transactions in a lower
interest rate environment and an increase in nonearning accounts. See "Credit
Quality" for a discussion of these accounts.
Capital lease revenue
Capital lease revenue decreased $7.2 million or 8.0%. A 10.9% decrease in
the average net capital lease portfolio to $3.3 billion was responsible for
approximately $9.8 million of the decrease. The decrease in the average
portfolio was due primarily to the sale of the Company's North American fleet
automotive portfolio to a third party and certain assets of the Canadian
business unit to Newcourt which was slightly offset by increases in the
small and middle ticket portfolios. The slight increase in the average
yield of 32 basis points partially offset the decrease in revenue by
$2.6 million.
Operating lease margin
Rental revenue on operating leases of $218.0 million increased $21.3
million, or 10.8%. Depreciation expense on operating leases of $142.1 million
increased $10.1 million, or 7.6%. The revenue increase was generated by the
Company's enterprise server, telecommunications and international portfolios,
partially offset by the sale of the North American fleet automotive portfolio at
the end of 1997. The 192 basis point increase in operating lease margin
percentage to 34.83% resulted primarily from a higher proportion of renewal
revenue and an increase in small ticket, higher margin transactions.
Net interest margin
Net interest margin of $103.7 million was 5.67% of average net portfolio
assets compared with $104.5 million, or 5.79%. Net interest margin was
relatively flat, decreasing by $0.8 million, due to higher portfolio revenue
offset by higher interest expense associated with carrying a higher level of
debt. Average net portfolio assets of $7,309.1 million were $67.3 million, or
0.9% higher causing an increase in portfolio revenue of approximately $6.5
million. A slight increase in the overall portfolio yield to 11.98% from 11.59%,
increased revenue by approximately $2.6 million. The interest expense associated
with carrying a higher level of debt reduced the margin by approximately $7.8
million. The higher cost of debt added $2.1 million to the interest expense.
13
<PAGE>
<PAGE>
Non-portfolio revenue
The following table summarizes the components of non-portfolio revenue
which includes revenue from securitizations and loan sales, equipment sales, and
other net revenue. In addition, equipment sales margin (equipment sales less
cost of equipment sales) and the equipment sales margin percentage (equipment
sales margin divided by equipment sales) are presented.
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
-------------------
(dollars in millions)
<S> <C> <C>
Revenue from securitizations
and loan sales $ 17.4 $13.0
Equipment sales 6.4 8.2
Cost of equipment sales (6.2) (7.2)
------ -----
Equipment sales margin $ 0.2 $ 1.0
Equipment sales margin
percentage 3.8% 11.6%
Other revenue, net $ 56.2 $57.9
Total non-portfolio revenue $ 80.0 $79.1
</TABLE>
Revenue from securitizations and loan sales
Revenue from securitizations and loan sales, including SBA loans, increased
$4.4 million. Securitization revenue increased $4.1 million due to an increased
spread between the average yield and the discount rate. Loan sales revenue
increased $0.3 million.
Expenses
<TABLE>
<CAPTION>
Interest expense
For the three months
ended March 31,
1998 1997
-------------------
(dollars in millions)
<S> <C> <C>
Interest expense $115.2 $105.3
Average borrowings outstanding $7,428.8 $6,914.6
Average cost of debt 6.20% 6.09%
</TABLE>
Interest expense increased $9.9 million, or 9.4%. As discussed in the net
interest margin section above, a $7.8 million increase in interest expense
resulted from carrying a higher level of debt and a higher average cost of debt
contributed $2.1 million. The increase in the average borrowings outstanding was
largely due to borrowings made by the Company on behalf of Newcourt USA.
The increase in the average cost of debt is attributable to the higher 1997
year-end rates associated with debt incepted in the fourth quarter of 1997 and
remaining outstanding during the first quarter of 1998 and from a wider spread
on the issuance of commercial paper in the first quarter of 1998. For the first
quarterof 1998, the Company issued medium- and long-term debt at an average rate
of 5.99%, compared to debt maturing having a slightly higher average rate
of 6.08%.
14
<PAGE>
<PAGE>
Distributions on Company-obligated preferred securities
During the first quarters of 1998 and 1997, $4.5 million of scheduled
distributions were paid to the Company-obligated preferred securities holders.
Operating and Administrative (O&A) Expenses
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
--------------------
(dollars in millions)
<S> <C> <C>
O&A expenses $135.9 $136.3
Total period-end owned and
managed assets $14,396.5 $12,943.0
O&A/period-end total owned and
managed assets 3.78% 4.21%
</TABLE>
The decrease in O&A expense of 0.3% was due primarily to an approximate 10%
reduction in headcount and other related expenses offset, in part, by an
increase in severance related expenses of $3.6 million and a cash out of vested
stock options of $10.1 million in connection with the Newcourt Acquisition. The
increase in total owned and managed assets of 11.2% at March 31, 1998 from March
31, 1997 and the improvement in the O&A ratio resulted from an increase in owned
assets of $1.2 billion. See "Financial Condition" below for a discussion
regarding asset growth.
Provision for credit losses
See "Credit Quality" below for a discussion of the provision for credit
losses.
Provision for income taxes
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
------------------
(dollars in millions)
<S> <C> <C>
Provision for income taxes $ 4.6 $ 4.9
Effective income tax rate 38.7% 39.7%
</TABLE>
The decrease in the 1998 effective rates resulted from a lower overall
provision for state taxes and lower non-deductible expenses, somewhat offset by
higher foreign taxes.
15
<PAGE>
<PAGE>
CREDIT QUALITY
The following table reflects the Company's key portfolio credit performance
indicators. Portfolio assets include the investment in finance receivables,
capital leases and operating leases.
<TABLE>
<CAPTION>
At or for the At or for the
three months ended year ended
March 31, December 31,
1998 1997 1997
--------------------------- ---------------------------
(dollars in millions) (dollars in millions)
<S> <C> <C> <C>
Portfolio assets
(gross of allowance) $7,196.4 $7,162.9 $7,403.9
Provision for credit losses $25.3 $23.3 $114.3
Allowance for credit losses $174.6 $163.8 $178.6
Allowance for credit
losses/portfolio assets 2.43% 2.29% 2.41%
Allowance for credit losses/non-
accrual assets 0.83x 1.02x 1.06x
Non-accrual assets $211.0 $160.2 $168.7
Non-accrual assets/portfolio assets 2.93% 2.24% 2.28%
Net charge-offs/portfolio assets 0.58% 1.17% 0.56%
Delinquency(a)-owned assets 3.42% 3.24% 3.08%
Delinquency(a)-owned and securitized 3.22% 2.76% 2.62%
</TABLE>
a) Delinquencies of two months or greater.
The increase in the ratio of the allowance for credit losses to portfolio
assets is reflective of the increase in delinquencies as well as the increase in
non-accrual assets.
The increase in the March 31, 1998 delinquencies of owned assets and owned
and securitized assets, is due to the sale of the Company's North American fleet
automotive portfolio, which had traditionally maintained a lower delinquency,
coupled with the sale of certain assets of the Company's Canadian business unit
at March 31, 1998 to Newcourt in which the Company retained certain delinquent
accounts. The Company's securitizations include current receivables, those
transactions that are not more than 60 days past due. Therefore, the
delinquency -owned assets reflects a higher proportion of delinquent receivables
as compared to the level of delinquency in the owned and securitized portfolio.
The increase in non-accrual assets to portfolio assets at March 31, 1998
is primarily due to two project finance transactions totaling $32.1 million,
suspended from income recognition in March, 1998.
FINANCIAL CONDITION
Sale of Businesses
During the first quarter of 1998, the Company sold AT&T Capital Canada
Inc. (a wholly-owned subsidiary of the Company) to Newcourt at book value.
Additionally, the Company continues to pursue the sale of its U.S. consumer
automotive business. The carrying value of these assets have been reduced to
fair value and are classified as Assets held for sale and inventory on the
balance sheet.
16
<PAGE>
<PAGE>
Net portfolio assets
The following table reflects components of the Company's net portfolio
assets.
<TABLE>
<CAPTION>
At: At:
March 31, December 31,
1998 1997
-----------------------------
(dollars in millions)
<S> <C> <C>
Net investment in finance receivables (a) $ 2,483.0 $2,343.6
Net investment in capital leases (a) 2,921.7 3,288.1
Net investment in operating leases (b) 1,617.1 1,593.6
--------- --------
Net owned portfolio assets (net of allowance) 7,021.8 7,225.3
Managed assets 5,197.1 5,136.3
Net investment in total owned and
managed assets $12,218.9 $12,361.6
</TABLE>
a) Generally represents the sum of the (i) the gross receivable, (ii) the
associated unearned income, (iii) the unguaranteed residual value (for
capital leases only), less (iv) the allowance for credit losses.
b) Generally represents the historical cost of the equipment less the
associated accumulated depreciation.
Net owned portfolio assets decreased $203.5 million or 2.8% during the
first quarter of 1998. Operating leases increased $23.5 million, or 1.5% during
the first quarter of 1998, primarily due to growth in the Company's enterprise
server portfolio. The net investment in finance receivables increased $139.4
million, or 6.0% during the first quarter of 1998, due primarily to an increase
in the asset based lending and SBA loan portfolios. The 11.1% reduction in
capital leases from December 31, 1997, is primarily due to the sale of certain
assets of the Company's Canadian business unit to Newcourt.
The Company's international assets (excluding cross border transactions)
represented 21.4% of total assets, down slightly from 24.6% at the end of 1997.
The sale of certain assets of the Canadian business unit impacted such
reduction.
LIQUIDITY AND CAPITAL RESOURCES
In response to the announcement of the Newcourt Acquisition, "S&P", Fitch,
and Moody's affirmed the Company's ratings and Duff & Phelps has upgraded the
Company's medium- and long-term debt and commercial paper ratings. The Company's
senior medium- and long-term debt and commercial paper are currently rated as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Rating Agency medium- and long-term debt commercial paper
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Duff & Phelps Credit Rating Co.
("Duff & Phelps") A- D-1-
Fitch Investor Services
("Fitch") BBB F-2
Moody's Investors Services
("Moody's") Baa3 P-3
Standard & Poors ("S&P") BBB A-2
</TABLE>
17
<PAGE>
<PAGE>
Cash flows
The table below includes key cash flows provided by and used for operating,
investing and financing activities.
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
--------------------
(dollars in millions)
<S> <C> <C>
Net Cash provided (used) by Operating Activities: $ 133.8 $ (15.4)
Investing Activities:
Increase in receivables from Affiliates (720.7) --
Principal collections from customers 712.4 906.8
Cash used for financings and lease
equipment purchases(a) (1,204.2) (1,423.8)
Cash proceeds from securitizations and loan
sales 399.2 421.7
Purchase of Finance asset portfolios (40.3) --
Proceeds from sale of subsidiary 14.3 --
Financing Activities:
Net proceeds (repayments) from issuance of
short-term notes (b) 305.6 (74.4)
Proceeds from the issuance of medium- and
long-term debt 1,373.5 1,248.0
Repayments of medium- and long-term debt (951.0) (1,040.4)
Proceeds from repayment of recourse loans
to senior executives 15.5 --
</TABLE>
(a) Includes purchases of finance asset portfolios and businesses.
(b) Short-term notes include primarily commercial paper.
On February 20, 1998, the Company entered into an agreement whereby the
Company guarantees certain indebtedness and liquidity facilities of Newcourt and
Newcourt Credit Group USA Inc. (the "Newcourt Guarantee"). This debt is used by
Newcourt for general operating purposes. As of March 31, 1998, the Company's
guarantee of such debt was US$1.2 billion (C$1.7 billion).
Also, as a result of the Newcourt Acquisition, the Company renegotiated its
existing back-up facility in April, 1998 to support Newcourt's and the Company's
existing commercial paper programs and for general corporate purposes. The
Company increased its US facility to $2.3 billion with $1.535 billion having a
term of 364 days and $.765 billion having a term of 5 years (the "US facility").
In addition, Newcourt renegotiated a Canadian facility of C$1.2 billion with a
term of 364 days (the "Canadian facility"). The US facility is guaranteed by
Newcourt and Newcourt Credit Group USA Inc., and ranks pari passu with the
Canadian facility. The Canadian facility is guaranteed by the Company and
Newcourt Credit Group USA Inc. and ranks pari passu with the US facility. At
April 30, 1998 these facilities were unused. Under the most restrictive
provision of the Company's back-up facilities, the Company is required to
maintain an interest coverage ratio (the ratio of consolidated earnings before
interest and taxes, as defined, to consolidated interest expense) of 1.25 times.
The Company is in compliance with this and all other covenants of the
facilities. To meet local funding requirements, the Company's foreign operations
have total committed available lines of credit of approximately $340.1
18
<PAGE>
<PAGE>
million, of which approximately $93.7 million were unused at March 31, 1998.
These facilities are generally renewed annually.
During January 1997, the SEC declared effective a Company debt
registration statement of $4.0 billion. Subsequent to December 31, 1997, the
Company completed the full utilization of such debt available under the
registration statement.
In March 1998, the Company filed with the SEC a registration statement for
$5.0 billion in debt securities and warrants on Form S-3. In April 1998, a joint
registration statement (Form S-3/F-9) was filed with the SEC to register the
Company's $5.0 billion debt securities, currency warrants, index warrants and
interest rate warrants along with a guarantee by Newcourt for the payment of
principal, premium, if any, and interest, if any. Such guarantee will be an
unsecured obligation of Newcourt and will rank pari passu with all other
unsecured and unsubordinated indebtedness of Newcourt. This registration
statement was declared effective in May of 1998.
The Company considers its current financial resources, together with the
borrowings referred to above and estimated future cash flows, to be adequate to
fund the Company's planned future growth and operating requirements.
ASSET AND LIABILITY MANAGEMENT
The Company's asset and liability management process takes a coordinated
approach to the management of interest rate and foreign currency risks. The
Company's overall strategy is to match the duration and average cash flows of
its borrowings with the duration and average cash flows of its portfolio assets,
as well as the currency denominations of its borrowings with those of its
portfolio assets, in a manner intended to reduce the Company's interest rate and
foreign currency exposure. For a description of certain key elements of this
process, including the Company's use of derivatives to mitigate risk, see the
Company's 1997 Annual Report on Form 10-K.
The total notional amount of the Company's interest rate swaps was
$2,884.2 million and $2,287.0 million at March 31, 1998 and December 31, 1997,
respectively. The total notional amount of the Company's currency swaps was
$157.7 million and $240.1 million at March 31, 1998 and December 31, 1997,
respectively. The U.S. dollar equivalent of the Company's foreign currency
forward exchange contracts was $1,561.2 million and $1,511.5 million at March
31, 1998 and December 31, 1997, respectively.
Derivative credit risk
The notional amount of derivative contracts does not represent direct
credit exposure. Rather, credit exposure may be defined as the market value of
the derivative contract and the ability of the counterparty to perform its
payment obligation under the agreement. The majority of the Company's interest
rate swaps require the Company to pay a fixed rate and receive a floating rate.
Therefore, this risk is reduced in a declining interest rate environment as the
Company is generally in a payable position and is increased in a rising interest
rate environment as the Company is generally in a receivable position. The
Company seeks to control the credit risk of its interest rate swap agreements
through credit approvals, exposure limits and monitoring procedures. All swap
agreements are with major money center banks and intermediaries rated investment
grade by national rating agencies
19
<PAGE>
<PAGE>
with the majority of the Company's counterparties being rated "AA" or better.
The Company monitors its derivative positions using techniques including
market value, sensitivity analysis and a value at risk model. The value at risk
tests discussed below for exposure to interest rate and currency rate exposures
are based on a variance/co-variance model using a three-month horizon and a 95%
confidence level. The model assumes that financial returns are normally
distributed. The value at risk model takes into account correlations and
diversification across market factors, including currencies and interest rates.
Estimates of volatility and correlations of market factors are drawn from the
Reuters/JP Morgan RiskMetrics dataset as of March 31, 1998.
Based on the Company's overall interest rate exposure at March 31, 1998,
including derivatives and other interest rate sensitive instruments, a near-term
change in interest rates, within a 95% confidence level based on historical
interest rate movements, would not materially affect the consolidated financial
position on a fair value basis, results of operations or cash flows of the
Company.
Based on the Company's overall currency rate exposure at March 31, 1998,
including derivatives and other foreign currency sensitive instruments, a
near-term change in currency rates, within a 95% confidence level based on
historical currency rate movements, would not materially affect the consolidated
financial position on a fair value basis, results of operations or cash flows of
the Company.
There were no past due amounts or reserves for credit losses at March 31,
1998, related to derivative transactions. The Company has never experienced a
credit related charge-off associated with derivative transactions.
20
<PAGE>
<PAGE>
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit Number
10(a). Form of Guarantee dated as of April 1, 1998 made by
Newcourt Credit Group Inc. relating to the Notes.
10(b). Form of Guarantee dated as of April 1, 1998 made by
Newcourt Credit Group Inc. relating to the Warrants.
12. Computation of Ratio of Earnings to Fixed Charges
27. Financial Data Schedule
(b) Current reports on Form 8-K:
Report on Form 8-K, dated March 9, 1998 was filed pursuant to
Item 5 (Other Events).
Report on Form 8-K, dated March 4, 1998 was filed pursuant to
Item 4 (Changes in Registrant's Certifying Accountants).
Report on Form 8-K, dated February 20, 1998 was filed pursuant
to Item 5 (Other Events).
Report on Form 8-K, dated February 9, 1998 was filed pursuant to
Item 5 (Other Events).
Report on Form 8-K, dated January 12, 1998 was filed pursuant to
Item 1 (Changes in Control of the Registrant) and Item 5 (Other
Events).
Report on Form 8-K, dated January 5, 1998 was filed pursuant to
Item 5 (Other Events).
Report on Form 8-K/A, dated March 17, 1998 was filed amending
the Report on Form 8-K dated January 12, 1998.
Report on Form 8-K/A, dated February 18, 1998 was filed amending
the Report on Form 8-K dated February 9, 1998.
Report on Form 8-K/A, dated February 11, 1998 was filed amending
the Report on Form 8-K dated November 19, 1997.
21
<PAGE>
<PAGE>
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AT&T CAPITAL CORPORATION
DANIEL A. JAUERNIG
------------------
May 14, 1998 Daniel A. Jauernig
Group President and
Chief Financial Officer
22
<PAGE>
<PAGE>
FORM 10-Q
EXHIBIT INDEX
EXHIBITS
Exhibit Description
Number
10(a). Form of Guarantee dated as of April 1, 1998 made by Newcourt Credit
Group Inc. relating to the Notes.
10(b). Form of Guarantee dated as of April 1, 1998 made by Newcourt Credit
Group Inc. relating to the Warrants.
12. Computation of Ratio of Earnings to Fixed Charges
27. Financial Data Schedule
23
<PAGE>
<PAGE>
EXHIBIT 10(a)
Form 10-Q for the Quarter
Ended March 31, 1998
File No. 1-11237
GUARANTEE
Guarantee dated as of April 1, 1998, made by Newcourt Credit
Group Inc. (the "Guarantor"), a corporation incorporated under the laws of the
Province of Ontario, to and in favor of The Chase Manhattan Bank, as Trustee
(the "Trustee") under the Indenture (as defined herein), for the benefit of the
registered holders of the Securities (as defined herein) (collectively, the
"Holders").
WHEREAS the Guarantor is the owner of all the issued and
outstanding capital stock of AT&T Capital Corporation (the "Company");
AND WHEREAS the Company will issue from time to time debt
securities (the "Securities") pursuant to the Indenture dated as of April 1,
1998 by and among the Guarantor, the Company and the Chase Manhattan Bank, as
Trustee (the "Indenture").
NOW THEREFORE, in consideration of the foregoing premises, and
other good and valuable consideration given by the Holders and the Company to
the Guarantor, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees as follows:
SECTION 1. GUARANTEE. The Guarantor hereby, irrevocably and
unconditionally guarantees (as a guarantor and not as a surety) to the holders
of the Securities the due and punctual payment of the principal of, premium, if
any, and interest on such Securities when and as the same shall become due and
payable, whether at maturity, upon redemption or otherwise, according to the
terms of the Indenture; (the obligations set forth in this Section 1 being
herein called the "Guaranteed Obligations").
SECTION 2. ABSOLUTE LIABILITY. The Guarantor hereby guarantees
that the Guaranteed Obligations will be paid to the Holders strictly in
accordance with the terms and conditions hereof, and that the liability of the
Guarantor under this Guarantee shall be absolute and unconditional irrespective
of:
(a) the validity or enforceability of the the Securities or the
Indenture;
(b) any contest by the Company or any other person as to the amount
of the Guaranteed Obligations or the validity or enforceability
of the Securities or the Indenture;
(c) any defense, counter-claim or right of set-off available to the
Company;
(d) any extension of the time or times for payment of the Guaranteed
Obligations or any other indulgences which the Holders may grant
to the Company or any amendment to or alteration of the Indenture
or the Securities; and
(e) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Guarantor, the
Company or any other person in
<PAGE>
<PAGE>
respect of the Guaranteed Obligations or the Guarantor in respect of the
Guarantee.
SECTION 3. REMEDIES. The guarantee set forth in Section 1
constitutes a present and continuing guarantee of payment and performance and
not of collection. The Guarantor agrees that its obligations hereunder shall be
joint and several with any and all other guarantees given in connection with the
Guaranteed Obligations from time to time. The Guarantor agrees that the Holders
shall not be bound to exhaust their recourse against the Company or any other
person or to make demand upon the Company or to realize on any security they may
hold in respect of the Guaranteed Obligations before being entitled to payment
or performance hereunder. The Guarantor hereby waives the right to require the
Holders to join the Company in any action brought hereunder or to commence any
action against or obtain any judgment against the Company or to pursue any other
remedy or enforce any other right. The Guarantor further agrees that nothing
contained herein or otherwise shall prevent the Holders from pursuing
concurrently or successively all rights and remedies available to them at law
and/or in equity or under the Indenture, and the exercise of any of their rights
or the completion of any of their remedies shall not constitute a discharge of
any of Guarantor's obligations hereunder.
SECTION 4. PAYMENT ON DEMAND. The Guarantor shall make payment of
the amount of the Guaranteed Obligations and all other amounts payable by it to
the Holders hereunder forthwith after demand therefor is made in writing to it
and such demand shall be deemed to have been effectively made when either an
envelope containing such demand, addressed to it c/o Newcourt Credit Group, BCE
Place, 181 Bay Street, P.O. Box 827, Toronto, Ontario, M5J 2T3 for the attention
of President, is personally delivered to such address or a facsimile
transmission containing such demand is sent to the Guarantor, for the attention
of its President, at the following fax number: (416) 594-5248.
SECTION 5. SUBROGATION. Upon receipt by the Holders of any
payment or payments on account of liability under this Guarantee, the Guarantor
shall not be entitled to claim repayment against the Company until the claims of
the Holders against the Company in respect of the Guaranteed Obligations have
been repaid in full; and in the case of the liquidation, winding-up or
bankruptcy of the Company (whether voluntary or compulsory) or in the event that
the Company shall make a bulk sale of any of the Company's assets within the
provisions of any bulk sales legislation or makes an assignment for the benefit
of creditors or the assets of the Company are distributed to creditors for any
other reason, the Holders shall have the right to rank in priority to the
Guarantor for their full claims in respect of the Guaranteed Obligations and
receive all distributions and other payments in respect thereof until their
claims in respect of the Guaranteed Obligations have been paid in full, and the
Guarantor shall continue to be liable, less any payments made by or on behalf of
the Guarantor, for any balance which may be owing to the Holders by the Company.
If any amount shall be paid to the Guarantor on account of any subrogation
rights at any time when all the Guaranteed Obligations shall not have been paid
in full, such amount shall be held in trust for the benefit of the Holders and
shall forthwith be paid to the Holders.
2
<PAGE>
<PAGE>
SECTION 6. SUBORDINATION. All obligations, liabilities and
indebtedness of the Company to the Guarantor of any nature whatsoever (the
"Corporate Indebtedness") be subordinated to the payment in full of all
obligations owing by the Company to the Holders, and any payments received by
the Guarantor on account of such Corporate Indebtedness at a time when any
Default or Event of Default (as defined in the Indenture) exists shall be
collected and received by the Guarantor in trust and paid over to the Holders
without impairing or releasing any obligations of the Guarantor hereunder. The
Guarantor shall not assign the Corporate Indebtedness nor any part thereof to
any person other than to a subsidiary of the Company which has provided a
guarantee to the Holders in respect of the Guaranteed Obligations in the form
and substance of this Guarantee, without the prior written consent of the
Holders.
SECTION 7. SUSPENSION OF GUARANTOR RIGHTS. The Guarantor agrees
that so long as any obligations remain outstanding hereunder, whether present or
future, direct or indirect, absolute or contingent, matured or not, the
Guarantor shall not exercise any rights which the Guarantor may at any time have
by reason of the performance of any of its obligations hereunder:
i. to be indemnified by the Company;
ii. to claim contribution from any other guarantor of the
debts, liabilities or obligations of the Company; or
iii. to take the benefit (in whole or in part and whether by
way of subrogation or otherwise) of any rights of the
Holders under the Indenture.
SECTION 8. WAIVERS. The Guarantor hereby waives, to the extent
permitted by applicable law, (i) notice of acceptance of this Guarantee by the
Holders and any and all notices and demands of every kind which may be required
to be given by any statute, rule or law, (ii) any defense, right of set-off or
other claim which the Guarantor may have against the Company or which the
Guarantor or the Company may have against the Holders, (iii) presentment for
payment, demand for payment, notice of nonpayment or dishonor, protest and
notice of protest, diligence in collection and any and all formalities which
otherwise might be legally required to charge the Guarantor with liability,
except for demands or notices expressly provided for herein, (iv) any failure by
the Holders or the Trustee to inform the Guarantor of any facts the Holders or
the Trustee may now or hereafter know about the Company, the Securities or the
transactions contemplated by the Indenture, it being understood and agreed that
the Holders or the Trustee have no duty to so inform and that the Guarantor is
fully responsible for being and remaining informed by the Company of all
circumstances bearing on the existence or creation, or the risk of nonpayment or
nonperformance of the Guaranteed Obligations and (v) any and all right to cause
a marshalling of assets of the Company or any other action by any court or
governmental body with respect thereto. No modification or waiver of any of the
provisions of this Guarantee shall be binding upon the Holders except as
expressly set forth in a writing duly signed and delivered on behalf of the
Holders; provided, however, the Company, the Guarantor and the Trustee may amend
this Guarantee to cure any ambiguity, defect or inconsistency herein, provided
no such action shall adversely affect the rights of any Holder.
3
<PAGE>
<PAGE>
SECTION 9. CONTINUING GUARANTEE. The guarantee herein shall be a
continuing guarantee and shall extend to all present and future Guaranteed
Obligations and shall be binding as a continuing obligation of the Guarantor
until the earlier of (i) the date the Guarantor is released from any further
obligation hereunder in accordance with Article 8 of the Indenture; and (ii) the
date on which the Company or the Guarantor shall have performed and satisfied in
full the Guaranteed Obligations. This Guarantee shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be refunded by the Holders
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
regardless of whether the Holders contested the order requiring the return of
such payment, all as though such payment had not been made.
SECTION 10. INTEREST ACT (CANADA). The Guarantor acknowledges
that, for the purposes of the Interest Act (Canada), (i) whenever any interest
or fee applicable to the Guaranteed Obligations is calculated using a rate based
on a year of 360 days or 365 days, such rate determined pursuant to such
calculation, when expressed as an annual rate, is equivalent to (x) the
applicable rate based on a year of 360 days or 365 days, as the case may be, (y)
multiplied by the actual number of days in the calendar year in which the period
for which such interest or fee is payable (or compounded) ends, and (z) divided
by 360 or 365 as the case may be; (ii) the principle of deemed reinvestment of
interest does not apply to any interest calculation in respect of the Guaranteed
Obligations; and (ii) the rates of interest stipulated in respect of the
Guaranteed Obligations are intended to be nominal rates and not effective rates
or yields.
SECTION 11. SUCCESSORS OF THE COMPANY. Any change or changes in
the name of the Company or reorganization (whether by way of reconstruction,
consolidation, amalgamation, merger, transfer, sale, lease or otherwise) of the
Company or its business shall not affect or in any way limit or lessen the
liability of the Guarantor hereunder and this Guarantee shall extend to any
person, firm or Company acquiring or from time to time carrying on the business
of the Company.
SECTION 12. NO RECOURSE. Any right of subrogation acquired by the
Guarantor by reason of payment under or pursuant to this Guarantee shall not be
exercised until the Guaranteed Obligations and other amounts due to the Holders
hereunder have been paid or repaid in full and shall be no greater than the
right held by the Holders, and the Guarantor shall have no recourse against the
Holders for any irregularity or defect in the manner or procedure by which the
Holders make demand or pursue any rights or remedies they may have.
SECTION 13. REPRESENTATIONS AND WARRANTIES. The Guarantor
represents and warrants that:
(a) ORGANIZATION AND QUALIFICATION. It is a corporation duly
incorporated and validly existing under the laws of the
Province of Ontario.
4
<PAGE>
<PAGE>
(b) CORPORATE POWER. It has full corporate right, power and
authority to own its property and assets and to carry on its
business as now conducted and as contemplated to be conducted
and to enter into and perform this Guarantee.
(c) CONFLICT WITH OTHER INSTRUMENTS. Neither the execution and
delivery of this Guarantee nor the consummation of the
transactions herein contemplated nor compliance with the
terms, conditions and provisions hereof (i) conflicts with or
results in a breach of any of the terms, conditions or
provisions of (A) its charter documents or by-laws; (B) any
law, rule or regulation having the force of law; (C) any
material contractual restriction binding on or affecting it or
its properties; or (D) any writ, judgment, injunction,
determination or award which is binding on it; or (ii) results
in, or requires the creation or imposition of any lien upon or
security interest in or with respect to the properties now
owned or hereafter acquired by it under any contractual
provision binding on or affecting it.
(d) AUTHORIZATION, GOVERNMENTAL APPROVALS ETC. The execution and
delivery of this Guarantee and the consummation by it of the
transactions herein contemplated have been duly authorized by
all necessary corporate action and no authorization, consent,
approval, license or exemption under any applicable law, rule
or regulation having the force of law, and no registration,
qualification, designation, declaration, recording, or filing
with any official body, is or was necessary therefor or to
perfect the same or to preserve the benefit thereof to the
Holders, except such as are in full force and effect,
unamended, at the date hereof.
(e) EXECUTION AND BINDING OBLIGATION. This Guarantee has been duly
executed and delivered by it, and constitutes the legal, valid
and binding obligation of it enforceable against it in
accordance with its terms, subject to the effect of any
applicable bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights general and the effect of general principles
of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(f) ACTIONS. There is no pending or threatened action or
proceeding affecting it before any court, governmental agency
or arbitrator, which may materially adversely affect its
financial condition or operations.
(g) SHARES. The Guarantor is the registered and beneficial holder
of 100% of the issued and outstanding shares of the capital
stock of the Company.
SECTION 14. PAYMENT OF TAXES AND OTHER TAXES. The Guarantor
hereby agrees to obtain any necessary exchange control approvals, consents or
authorizations which may at
5
<PAGE>
<PAGE>
any time and from time to time be required by the laws of the Province of
Ontario or any state in the United States in connection with the making of
payments hereunder. Any and all payments by the Guarantor hereunder shall be
made and shall be free and clear of and without set-off or counterclaim and
without deduction for or on account of, or withholding for any and all present
or future income or other taxes, levies, imposts, dues, charges, fees,
deductions, withholdings or restrictions or conditions of any nature whatever
now or hereafter imposed, levied, collected or withheld or assessed by any
country (or by any political subdivision or taxing authority thereof or
therein), and all liabilities with respect thereto (all such taxes, levies,
imposts, duties, charges, fees, deductions, withholdings and liabilities being
hereinafter referred to as "Taxes") unless such Taxes are required by law or the
administration thereof to be deducted or withheld. If the Guarantor shall be
required by law to deduct or withhold any Taxes from or in respect of any amount
payable hereunder, subject as provided in the next following sentence, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions or withholdings (including deduction or withholding
applicable to additional amounts paid under this Section), the Holders receive
an amount equal to the sum they would have received if no deduction or
withholding had been made, (ii) the Guarantor shall make such deductions or
withholdings, and (iii) the Guarantor shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance with
applicable law.
(a) The Guarantor shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies (all such taxes, charges and levies being hereinafter referred to as
"Other Taxes") which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Guarantee.
(b) The Guarantor shall indemnify the Holders for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by the
Holders and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 30 days from the date the Holders make written demand therefor. A
certificate as to the amount of such Taxes or Other Taxes submitted to the
Guarantor by the Holders and evidence of payment thereof shall, in the absence
of manifest error, be prima facie evidence of the amount due by the Guarantor to
the Holders.
SECTION 15. GOVERNING LAW. (a) This Guarantee shall be governed
by and construed in accordance with the laws of the State of New York applicable
therein and shall be treated in all respects as a New York contract.
(b) The Guarantor hereby (i) irrevocably submits to the
jurisdiction of any court sitting in the State of New York over any suit, action
or proceeding arising out of or relating to this Guarantee or the Indenture;
(ii) irrevocably agrees that all claims in respect of any such action or
proceeding may be heard and determined in such court; (iii) irrevocably waives,
to the fullest extent permitted by law, any objection which it may have or
hereafter have to the laying of the venue of any such suit, action or preceding
brought in such a court and any claim that any such suit, action or
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proceeding brought in such a court has been brought in an inconvenient forum;
and (iv) irrevocably appoints Newcourt Credit Group USA, Inc. (the "Process
Agent"), with an office at the date hereof at 44 Whippany Road, Morristown, NJ
07960 (Fax No. 973/397-4435), its authorized agent to accept and acknowledge
service of any and all process which may be served in any suit, action or
proceeding. Such service may be made by delivering a copy of such process to the
Guarantor in care of the Process Agent at the Process Agent's above address and
the Guarantor hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf. As an alternative method of service, the
Guarantor also irrevocably consents to the service of any and all process in any
such action or proceeding by the delivery of copies of such process to the
Guarantor to: BCE Place, 181 Bay Street, P.O. Box 827, Toronto, Canada M5J2T3
for the attention of President. The Guarantor agrees that a final judgment in
any such action or proceeding may be enforced in any other manner provided by
law. Nothing in this Section shall affect the right of the Trustee or the
Holders to serve process in any manner permitted by law or limit the rights of
the Trustee or the Holders to bring proceedings against the Guarantor in the
courts of any other jurisdiction.
(c) Subject to Section 15(e), the Guarantor hereby consents in
respect of any legal action or proceedings arising out of or in connection with
this Guarantee for the payment and performance hereof to the giving of any
relief or the issue of any process in connection with such action or
proceedings, including, without limitation the making, enforcement or execution
against any property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such action or proceedings.
(d) To the extent that the Guarantor has or hereafter may acquire
any immunity from the jurisdiction of any court or from any legal process
(whether service of notice, attachment prior to judgment, attachment in the aid
of execution, execution or otherwise) with respect to itself or its property,
the Guarantor hereby irrevocably waives, to the fullest extent permitted by law,
such immunity in respect of its obligations under this Guarantee and any
security for the payment and performance hereof.
(e). Nothing in this Section shall constitute a waiver by the
Guarantor of any right to (i) appeal any order or judgment referred to herein;
(ii) seek any stay or reconsideration or review of any such order or judgment,
or (iii) seek any stay of execution or levy pending any appeal from, or suit,
action or proceeding for reconsideration or review of, any such order or
judgment.
(f) The Guarantor agrees that the Trustee or the Holders shall
have the right to proceed against the Guarantor or its property in a court in
any location to enable such person to (i) obtain personal jurisdiction over the
Guarantor, or (ii) to enforce a judgment or other court order entered in favor
of such person. The Guarantor agrees that it will not assert any permissive
counterclaims in any proceeding brought by such person to enforce a judgment or
other court order in favor of such person. The Guarantor waives any objection
that it may have to the location of the court in which such person has commenced
a proceeding described in this subsection.
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SECTION 16. HEADINGS, ETC. The division of this Guarantee into
sections and the insertion of headings are for convenience of reference only and
shall not affect the interpretation hereof.
SECTION 17. SEVERABILITY. Any provision of this Guarantee which
is invalid or not enforceable shall not affect any other provision and shall be
deemed to be severable.
SECTION 18. SUCCESSORS AND ASSIGNS. This Guarantee shall extend
to and inure to the benefit of the Trustee and the Holders and their respective
successors and assigns and shall be binding upon the Guarantor and its
successors and assigns. This Guarantee is assignable by the Holders to the
extent and in the same proportion that any underlying interest in the Securities
and applicable Indenture has been assigned and is assignable by the Trustee to
any successor Trustee under the Indenture.
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IN WITNESS WHEREOF, the Guarantor has duly executed this
Guarantee and affixed its corporate seal under the hand of its proper officer(s)
duly authorized in that behalf as of the day and year first above written.
NEWCOURT CREDIT GROUP INC.
Attest:
By:______________________________ By:______________________________
Glen J. DuMont Glenn A. Votek
Assistant Secretary Executive Vice President
and Treasurer
By:______________________________
DOCUMENT NUMBER: 313608.05
4-27-98/11:49pm
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EXHIBIT 10(b)
Form 10-Q for the Quarter
Ended March 31, 1998
File No. 1-11237
GUARANTEE
Guarantee dated as of April 1, 1998, made by Newcourt Credit
Group Inc. (the "Guarantor"), a corporation incorporated under the laws of the
Province of Ontario, to and in favor of _________________________ for the
benefit of the holders of the Securities (as defined herein) (collectively, the
"Holders").
WHEREAS the Guarantor is the owner of all the issued and
outstanding capital stock of AT&T Capital Corporation (the "Company");
AND WHEREAS the Company will issue from time to time (i) warrants
to purchase the Debt Securities ("Debt Warrants") pursuant to a Debt Warrant
Agreement substantially in the form attached hereto as Exhibit A (the "Debt
Warrant Agreement"); (ii) warrants entitling the holder thereof to receive from
the Company, upon exercise, an amount in cash equal to the cash value of the
right to purchase or to sell a certain amount of one currency for a certain
amount of a different currency ("Currency Warrants") pursuant to a Currency
Warrant Agreement substantially in the form attached hereto as Exhibit B (the
"Currency Warrant Agreement"); (iii) warrants entitling the holders thereof to
receive from the Company, upon exercise, an amount in cash determined by
reference to decreases or increases in the level of a specified index or
determined by reference between two specified indices ("Index Warrants")
pursuant to an Index Warrant Agreement substantially in the form attached hereto
as Exhibit C (the "Index Warrant Agreement"); and (iv) warrants entitling the
holders thereof to receive from the Company, upon exercise, an amount in cash
determined by reference to decreases or increases in the yield or closing price
of one or more specified debt instruments issued by either the United States
government or by a foreign government, in the interest rate or interest swap
rate established from time to time by one or more specified financial
institutions or in any specified combination thereof ("Interest Rate Warrants"
and together with the Debt Warrants, Currency Warrants and the Index Warrants,
the "Securities") pursuant to an Interest Rate Warrant Agreement substantially
in the form attached hereto as Exhibit D (the "Interest Rate Warrant Agreement"
and together with the Debt Warrant Agreement, Currency Warrant Agreement and
Index Warrant Agreement, the "Warrant Agreements").
NOW THEREFORE, in consideration of the foregoing premises, and
other good and valuable consideration given by the Holders and the Company to
the Guarantor, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees as follows:
SECTION 1. GUARANTEE. The Guarantor hereby, irrevocably and
unconditionally guarantees (as a guarantor and not as a surety) (a) to the
holders of Currency Warrants, Index Warrants and Interest Rate Warrants the due
and punctual payment of all obligations of the Company when and as the same
shall become due and payable, whether upon exercise or otherwise, according to
the terms of the applicable Warrant Agreements; and (b) to the holders of the
Debt Warrants the punctual performance of the obligations of the Company
according to the terms of the Debt Warrant Agreement (the obligations set forth
in clauses (a)-(b) being herein called the "Guaranteed Obligations").
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SECTION 2. ABSOLUTE LIABILITY. The Guarantor hereby guarantees
that the Guaranteed Obligations will be paid to the Holders strictly in
accordance with the terms and conditions hereof, and that the liability of the
Guarantor under this Guarantee shall be absolute and unconditional irrespective
of:
(a) the validity or enforceability of the Securities or the
Warrant Agreements;
(b) any contest by the Company or any other person as to the
amount of the Guaranteed Obligations or the validity or
enforceability of the Securities or the Warrant
Agreements;
(c) any defense, counter-claim or right of set-off available
to the Company;
(d) any extension of the time or times for payment of the
Guaranteed Obligations or any other indulgences which
the Holders may grant to the Company or any amendment to
or alteration of the Warrant Agreements or the
Securities; and
(e) any other circumstances which might otherwise constitute
a defense available to, or a discharge of, the
Guarantor, the Company or any other person in respect of
the Guaranteed Obligations or the Guarantor in respect
of the Guarantee.
SECTION 3. REMEDIES. The guarantees set forth in Sections 1(a)
constitute present and continuing guarantees of payment and performance and not
of collection. The guarantee set forth in Section 1(b) constitutes a present and
continuing guarantee of performance. The Guarantor agrees that its obligations
hereunder shall be joint and several with any and all other guarantees given in
connection with the Guaranteed Obligations from time to time. The Guarantor
agrees that the Holders shall not be bound to exhaust their recourse against the
Company or any other person or to realize on any security they may hold in
respect of the Guaranteed Obligations before being entitled to payment or
performance hereunder. The Guarantor hereby waives the right to require the
Holders to join the Company in any action brought hereunder or to commence any
action against or obtain any judgment against the Company or to pursue any other
remedy or enforce any other right. The Guarantor further agrees that nothing
contained herein or otherwise shall prevent the Holders from pursuing
concurrently or successively all rights and remedies available to them at law
and/or in equity or under the Warrant Agreements, and the exercise of any of
their rights or the completion of any of their remedies shall not constitute a
discharge of any of Guarantor's obligations hereunder.
SECTION 4. PAYMENT ON DEMAND. The Guarantor shall make payment of
the amount of the Guaranteed Obligations and all other amounts payable by it (or
performance with respect to the Debt Warrants) to the Holders hereunder
forthwith after demand therefor is made in writing to it and such demand shall
be deemed to have been effectively made when an envelope containing such demand,
addressed to it c/o Newcourt Credit Group, BCE Place, 181 Bay Street,
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P.O. Box 827, Toronto, Ontario, M5J 2T3 for the attention of President, is
personally delivered to such address.
SECTION 5. SUBROGATION. Upon receipt by the Holders of any
payment or payments (or performance with respect to the Debt Warrants) on
account of liability under this Guarantee, the Guarantor shall not be entitled
to claim repayment against the Company until the claims of the Holders against
the Company in respect of the Guaranteed Obligations have been repaid (or
performed with respect to the Debt Warrants) in full; and in the case of the
liquidation, winding-up or bankruptcy of the Company (whether voluntary or
compulsory) or in the event that the Company shall make a bulk sale of any of
the Company's assets within the provisions of any bulk sales legislation or
makes an assignment for the benefit of creditors or the assets of the Company
are distributed to creditors for any other reason, the Holders shall have the
right to rank in priority to the Guarantor for their full claims in respect of
the Guaranteed Obligations and receive all distributions and other payments in
respect thereof until their claims in respect of the Guaranteed Obligations have
been paid in full, and the Guarantor shall continue to be liable, less any
payments made by or on behalf of the Guarantor, for any balance which may be
owing to the Holders by the Company. If any amount shall be paid to the
Guarantor on account of any subrogation rights at any time when all the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Holders and shall forthwith be paid to the
Holders.
SECTION 6. SUBORDINATION. All obligations, liabilities and
indebtedness of the Company to the Guarantor of any nature whatsoever (the
"Corporate Indebtedness") be subordinated to the payment in full of all
obligations owing by the Company to the Holders. The Guarantor shall not assign
the Corporate Indebtedness nor any part thereof to any person other than to a
subsidiary of the Company which has provided a guarantee to the Holders in
respect of the Guaranteed Obligations in the form and substance of this
Guarantee, without the prior written consent of the Holders.
SECTION 7. SUSPENSION OF GUARANTOR RIGHTS. The Guarantor agrees
that so long as any obligations remain outstanding hereunder, whether present or
future, direct or indirect, absolute or contingent, matured or not, the
Guarantor shall not exercise any rights which the Guarantor may at any time have
by reason of the performance of any of its obligations hereunder:
(i) to be indemnified by the Company;
(ii) to claim contribution from any other guarantor of the
debts, liabilities or obligations of the Company; or
(iii) to take the benefit (in whole or in part and whether by
way of subrogation or otherwise) of any rights of the
Holders under the Warrant Agreements.
SECTION 8. WAIVERS. The Guarantor hereby waives, to the extent
permitted by applicable law, (i) notice of acceptance of this Guarantee by the
Holders and any and all notices and
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demands of every kind which may be required to be given by any statute, rule or
law, (ii) any defense, right of set-off or other claim which the Guarantor may
have against the Company or which the Guarantor or the Company may have against
the Holders, (iii) presentment for payment, demand for payment, notice of
nonpayment or dishonor, protest and notice of protest, diligence in collection
and any and all formalities which otherwise might be legally required to charge
the Guarantor with liability, except for demands or notices expressly provided
for herein, (iv) any failure by the Holders to inform the Guarantor of any facts
the Holders may now or hereafter know about the Company, the Securities or the
transactions contemplated by the Warrant Agreements, it being understood and
agreed that the Holders have no duty to so inform and that the Guarantor is
fully responsible for being and remaining informed by the Company of all
circumstances bearing on the existence or creation, or the risk of nonpayment or
nonperformance of the Guaranteed Obligations and (v) any and all right to cause
a marshalling of assets of the Company or any other action by any court or
governmental body with respect thereto. No modification or waiver of any of the
provisions of this Guarantee shall be binding upon the Holders except as
expressly set forth in a writing duly signed and delivered on behalf of the
Holders; provided, however, the Company, the Guarantor and [ ] may amend this
Guarantee to cure any ambiguity, defect or inconsistency herein, provided no
such action shall adversely affect the rights of any Holder.
SECTION 9. CONTINUING GUARANTEE. The guarantee herein shall be a
continuing guarantee and shall extend to all present and future Guaranteed
Obligations and shall be binding as a continuing obligation of the Guarantor
until the earlier of (i) the Holders release the Guarantor from any further
obligation hereunder; and (ii) the date on which the Company or the Guarantor
shall have performed and satisfied in full the Guaranteed Obligations. This
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (or performance with respect to the Debt Warrants) of
any of the Guaranteed Obligations is rescinded or must otherwise be refunded by
the Holders upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, regardless of whether the Holders contested the order requiring the
return of such payment, all as though such payment had not been made.
SECTION 10. INTEREST ACT (CANADA). The Guarantor acknowledges
that, for the purposes of the Interest Act (Canada), (i) whenever any interest
or fee applicable to the Guaranteed Obligations is calculated using a rate based
on a year of 360 days or 365 days, such rate determined pursuant to such
calculation, when expressed as an annual rate, is equivalent to (x) the
applicable rate based on a year of 360 days or 365 days, as the case may be, (y)
multiplied by the actual number of days in the calendar year in which the period
for which such interest or fee is payable (or compounded) ends, and (z) divided
by 360 or 365 as the case may be; (ii) the principle of deemed reinvestment of
interest does not apply to any interest calculation in respect of the Guaranteed
Obligations; and (ii) the rates of interest stipulated in respect of the
Guaranteed Obligations are intended to be nominal rates and not effective rates
or yields.
SECTION 11. SUCCESSORS OF THE COMPANY. Any change or changes in
the name of the Company or reorganization (whether by way of reconstruction,
consolidation, amalgamation, merger, transfer, sale, lease or otherwise) of the
Company or its business shall not affect or in any
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way limit or lessen the liability of the Guarantor hereunder and this Guarantee
shall extend to any person, firm or Company acquiring or from time to time
carrying on the business of the Company.
SECTION 12. NO RECOURSE. Any right of subrogation acquired by the
Guarantor by reason of payment under or pursuant to this Guarantee shall not be
exercised until the Guaranteed Obligations and other amounts due to the Holders
hereunder have been paid or repaid in full and shall be no greater than the
right held by the Holders, and the Guarantor shall have no recourse against the
Holders for any irregularity or defect in the manner or procedure by which the
Holders make demand or pursue any rights or remedies they may have.
SECTION 13. REPRESENTATIONS AND WARRANTIES. The Guarantor
represents and warrants that:
(a) ORGANIZATION AND QUALIFICATION. It is a corporation duly
incorporated and validly existing under the laws of the
Province of Ontario.
(b) CORPORATE POWER. It has full corporate right, power and
authority to own its property and assets and to carry on
its business as now conducted and as contemplated to be
conducted and to enter into and perform this Guarantee.
(c) CONFLICT WITH OTHER INSTRUMENTS. Neither the execution and
delivery of this Guarantee nor the consummation of the
transactions herein contemplated nor compliance with the
terms, conditions and provisions hereof (i) conflicts with
or results in a breach of any of the terms, conditions or
provisions of (A) its charter documents or by-laws; (B)
any law, rule or regulation having the force of law; (C)
any material contractual restriction binding on or
affecting it or its properties; or (D) any writ, judgment,
injunction, determination or award which is binding on it;
or (ii) results in, or requires the creation or imposition
of any lien upon or security interest in or with respect
to the properties now owned or hereafter acquired by it
under any contractual provision binding on or affecting
it.
(d) AUTHORIZATION, GOVERNMENTAL APPROVALS ETC. The execution
and delivery of this Guarantee and the consummation by it
of the transactions herein contemplated have been duly
authorized by all necessary corporate action and no
authorization, consent, approval, license or exemption
under any applicable law, rule or regulation having the
force of law, and no registration, qualification,
designation, declaration, recording, or filing with any
official body, is or was necessary therefor or to perfect
the same or to preserve the benefit thereof to the
Holders, except such as are in full force and effect,
unamended, at the date hereof.
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(e) EXECUTION AND BINDING OBLIGATION. This Guarantee has been
duly executed and delivered by it, and constitutes the
legal, valid and binding obligation of it enforceable
against it in accordance with its terms, subject to the
effect of any applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights general and the
effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding
in equity or at law).
(f) ACTIONS. There is no pending or threatened action or
proceeding affecting it before any court, governmental
agency or arbitrator, which may materially adversely
affect its financial condition or operations.
(g) SHARES. The Guarantor is the registered and beneficial
holder of 100% of the issued and outstanding shares of the
capital stock of the Company.
SECTION 14. PAYMENT OF TAXES AND OTHER TAXES. (a) The Guarantor
hereby agrees to obtain any necessary exchange control approvals, consents or
authorizations which may at any time and from time to time be required by the
laws of the Province of Ontario or any state in the United States in connection
with the making of payments hereunder. Any and all payments by the Guarantor
hereunder shall be made and shall be free and clear of and without set-off or
counterclaim and without deduction for or on account of, or withholding for any
and all present or future income or other taxes, levies, imposts, dues, charges,
fees, deductions, withholdings or restrictions or conditions of any nature
whatever now or hereafter imposed, levied, collected or withheld or assessed by
any country (or by any political subdivision or taxing authority thereof or
therein), and all liabilities with respect thereto (all such taxes, levies,
imposts, duties, charges, fees, deductions, withholdings and liabilities being
hereinafter referred to as "Taxes") unless such Taxes are required by law or the
administration thereof to be deducted or withheld. If the Guarantor shall be
required by law to deduct or withhold any Taxes from or in respect of any amount
payable hereunder, subject as provided in the next following sentence, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions or withholdings (including deduction or withholding
applicable to additional amounts paid under this Section), the Holders receive
an amount equal to the sum they would have received if no deduction or
withholding had been made, (ii) the Guarantor shall make such deductions or
withholdings, and (iii) the Guarantor shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance with
applicable law.
(b) The Guarantor shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies (all such taxes, charges and levies being hereinafter referred to as
"Other Taxes") which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Guarantee.
(c) The Guarantor shall indemnify the Holders for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by the
Holders and any liability (including penalties, interest
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and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date the Holders make
written demand therefor. A certificate as to the amount of such Taxes or Other
Taxes submitted to the Guarantor by the Holders and evidence of payment thereof
shall, in the absence of manifest error, be prima facie evidence of the amount
due by the Guarantor to the Holders.
SECTION 15. GOVERNING LAW. (a) This Guarantee shall be governed
by and construed in accordance with the laws of the State of New York applicable
therein and shall be treated in all respects as a New York contract.
(b) The Guarantor hereby (i) irrevocably submits to the
jurisdiction of any court sitting in the State of New York over any suit, action
or proceeding arising out of or relating to this Guarantee or the Warrant
Agreements; (ii) irrevocably agrees that all claims in respect of any such
action or proceeding may be heard and determined in such court; (iii)
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have or hereafter have to the laying of the venue of any such suit,
action or preceding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an inconvenient
forum; and (iv) irrevocably appoints Newcourt Credit Group USA, Inc. (the
"Process Agent"), with an office at the date hereof at 44 Whippany Road,
Morristown, NJ 07960 (Fax No. 973/397-4435), its authorized agent to accept and
acknowledge service of any and all process which may be served in any suit,
action or proceeding. Such service may be made by delivering a copy of such
process to the Guarantor in care of the Process Agent at the Process Agent's
above address and the Guarantor hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf. As an alternative method of
service, the Guarantor also irrevocably consents to the service of any and all
process in any such action or proceeding by the delivery of copies of such
process to the Guarantor to: BCE Place, 181 Bay Street, P.O. Box 827, Toronto,
Canada M5J2T3 for the attention of President. The Guarantor agrees that a final
judgment in any such action or proceeding may be enforced in any other manner
provided by law. Nothing in this Section shall affect the right of the Holders
to serve process in any manner permitted by law or limit the rights of the
Holders to bring proceedings against the Guarantor in the courts of any other
jurisdiction.
(c) Subject to Section ___, the Guarantor hereby consents in
respect of any legal action or proceedings arising out of or in connection with
this Guarantee for the payment and performance hereof to the giving of any
relief or the issue of any process in connection with such action or
proceedings, including, without limitation the making, enforcement or execution
against any property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such action or proceedings.
(d) To the extent that the Guarantor has or hereafter may acquire
any immunity from the jurisdiction of any court or from any legal process
(whether service of notice, attachment prior to judgment, attachment in the aid
of execution, execution or otherwise) with respect to itself or its property,
the Guarantor hereby irrevocably waives, to the fullest extent permitted by law,
such
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immunity in respect of its obligations under this Guarantee and any security for
the payment and performance hereof.
(e) Nothing in this Section shall constitute a waiver by the
Guarantor of any right to (i) appeal any order or judgment referred to herein;
(ii) seek any stay or reconsideration or review of any such order or judgment,
or (iii) seek any stay of execution or levy pending any appeal from, or suit,
action or proceeding for reconsideration or review of, any such order or
judgment.
(f) The Guarantor agrees that the Holders shall have the right to
proceed against the Guarantor or its property in a court in any location to
enable such person to (i) obtain personal jurisdiction over the Guarantor, or
(ii) to enforce a judgment or other court order entered in favor of such person.
The Guarantor agrees that it will not assert any permissive counterclaims in any
proceeding brought by such person to enforce a judgment or other court order in
favor of such person. The Guarantor waives any objection that it may have to the
location of the court in which such person has commenced a proceeding described
in this subsection.
SECTION 16. HEADINGS, ETC. The division of this Guarantee into
sections and the insertion of headings are for convenience of reference only and
shall not affect the interpretation hereof.
SECTION 17. SEVERABILITY. Any provision of this Guarantee which
is invalid or not enforceable shall not affect any other provision and shall be
deemed to be severable.
SECTION 18. SUCCESSORS AND ASSIGNS. This Guarantee shall extend
to and inure to the benefit of [ ] and the Holders and their respective
successors and assigns and shall be binding upon the Guarantor and its
successors and assigns. This Guarantee is assignable by the Holders to the
extent and in the same proportion that any underlying interest in the Securities
and applicable Warrant Agreements has been assigned.
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IN WITNESS WHEREOF, the Guarantor has duly executed this
Guarantee and affixed its corporate seal under the hand of its proper officer(s)
duly authorized in that behalf as of the day and year first above written.
NEWCOURT CREDIT GROUP INC.
Attest:
By:_______________________________ By:_______________________________
Glen J. DuMont Glenn A. Votek
Assistant Secretary Executive Vice President
and Treasurer
By:_______________________________
DOCUMENT NUMBER: 0318536.02
4-27-98/11:58pm
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EXHIBIT 12
FORM 10-Q for the Quarter
Ended March 31, 1998
File No. 1-11237
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES*
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the
three months ended
March 31, 1998
------------------
<S> <C>
Earnings from continuing operations:
Income before income taxes $ 11,846
Add: Fixed charges included in income before
income taxes 117,467
--------
Total earnings from continuing operations, as adjusted 129,313
--------
Total fixed charges* $117,467
=======
Ratio of earnings to fixed charges 1.10
=======
</TABLE>
* Fixed charges include interest on indebtedness and a portion of rentals
representative of the interest factor. Fixed charges do not include
distributions on Company-obligated preferred securities of the Company's
subsidiaries.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information primarily extracted from
AT&T Capital Corporation's unaudited consolidated income statement and balance
sheet as of and for the three months ended March 31, 1998 and is qualified in
its entirety by reference to such unaudited consolidated financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 46,248
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> (174,622)
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> (845,211)<F1>
<TOTAL-ASSETS> 9,199,358
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 5,740,503<F3>
903
0
<COMMON> 0
<OTHER-SE> 763,136
<TOTAL-LIABILITY-AND-EQUITY> 9,199,358<F3>
<SALES> 6,406
<TOTAL-REVENUES> 440,937
<CGS> 6,160
<TOTAL-COSTS> 148,223
<OTHER-EXPENSES> 135,868
<LOSS-PROVISION> 25,258
<INTEREST-EXPENSE> 115,212
<INCOME-PRETAX> 11,846
<INCOME-TAX> 4,588
<INCOME-CONTINUING> 7,258
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,258
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
* In accordance with Regulation S-K item 601(c) 2, inapplicable or immaterial
financial data is reflected as zero value.
<F1> - Accumulated depreciation relates to equipment under operating leases.
<F2> - This item is not applicable since the Company does not prepare a
classified balance sheet.
<F3> - Includes Company-obligated preferred securities of subsidiary.
</FN>
</TABLE>
