1
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, 1996
( ) 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 201-397-3000
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
----- -----
At April 30, 1996, 46,979,425 shares of the registrant's common stock, par
value $.01 per share, were outstanding.
2
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, except per share amounts)
(Unaudited)
For the Three Months
Ended March 31,
1996 1995
------- -------
Revenues:
Finance revenue $ 47,252 $ 38,785
Capital lease revenue 162,370 135,432
Rental revenue on operating
leases (A) 158,079 132,961
Equipment sales 18,706 7,932
Other revenue, net 52,867 47,704
------- -------
Total Revenues 439,274 362,814
Expenses:
Interest 113,587 93,998
Operating and
administrative 122,368 113,481
Depreciation on operating
leases 102,391 85,253
Cost of equipment
sales 16,041 7,052
Provision for credit
losses 25,304 21,055
------- -------
Total Expenses 379,691 320,839
------- -------
Income before income taxes 59,583 41,975
Provision for income taxes 22,539 16,892
------- -------
Net Income $ 37,044 $ 25,083
======= =======
(Continued)
3
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Continued)
(Dollars in Thousands, except per share amounts)
(Unaudited)
For the Three Months
Ended March 31,
1996 1995
------ ------
Earnings per common
share (Note 2) $ .78 $ .53
====== ======
Weighted average shares
outstanding (thousands) 47,487 47,004
====== ======
(A) Includes $23,216 and $20,680 for the three months ended March 31, 1996 and
1995, respectively, from AT&T Corp.("AT&T") and its affiliates.
The accompanying notes are an integral part of these Consolidated Financial
Statements.
4
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1996 1995
(Unaudited)
----------- ---------
ASSETS:
Cash and cash equivalents $ 14,036 $ 3,961
Net investment in finance
receivables 1,847,984 1,800,636
Net investment in capital
leases 6,176,665 6,187,131
Net investment in operating
leases, net of accumulated
depreciation of $672,507 in
1996 and $642,728 in 1995 1,161,693 1,117,636
Deferred charges and other assets 407,388 431,895
--------- ---------
Total Assets $9,607,766 $9,541,259
========= =========
LIABILITIES AND SHAREOWNERS' EQUITY:
Liabilities:
Short-term notes, less
unamortized discounts of
$6,581 in 1996 and $9,698 in
1995 $1,693,437 $2,212,351
Deferred income taxes 546,870 555,296
Income taxes and other payables 540,035 581,000
Payables to AT&T and affiliates 297,079 360,429
Medium and long-term debt 5,380,702 4,716,058
Commitments and contingencies
--------- ---------
Total Liabilities $8,458,123 $8,425,134
--------- ---------
(Continued)
5
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(Dollars in Thousands)
March 31, December 31,
1996 1995
(Unaudited)
----------- ---------
Shareowners' Equity (Note 2):
Common stock, one cent par value:
Authorized 100,000,000 shares,
issued and outstanding, 46,977,706
shares in 1996 and 46,968,810 shares
in 1995 $ 470 $ 470
Additional paid-in capital 783,579 783,244
Recourse loans to senior executives (20,637) (20,512)
Foreign currency translation
adjustments (747) (2,173)
Retained earnings 386,978 355,096
--------- ---------
Total Shareowners' Equity 1,149,643 1,116,125
--------- ---------
Total Liabilities and
Shareowners' Equity $9,607,766 $9,541,259
========= =========
The accompanying notes are an integral part of these Consolidated Financial
Statements.
6
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
For The Three Months
Ended March 31,
1996 1995*
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 37,044 $ 25,083
Noncash items included in income:
Depreciation and amortization 103,868 98,038
Deferred taxes (5,825) 20,809
Provision for credit losses 25,304 21,055
Gain on receivables securitizations (5,041) -
Gain on SBA and other loan sales (3,150) (1,860)
Decrease in deferred charges and
other assets 17,099 54,189
Decrease in income taxes and
other payables (20,439) (45,171)
Increase (decrease) in payables to AT&T and
affiliates 953 (2,881)
--------- ---------
Net Cash Provided by Operating Activities 149,813 169,262
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of fixed assets, net (1,406) (2,595)
Purchase of businesses, net of cash acquired - (73,773)
Purchase of finance asset portfolios - (13,122)
Financings and lease equipment purchases (1,382,125) (1,243,336)
Principal collections from customers,
net of amounts included in income 984,602 975,802
Cash proceeds from receivables
securitizations 85,770 60,347
Cash proceeds from SBA and other loan sales 40,419 25,611
--------- ---------
Net Cash Used for Investing Activities $(272,740) $(271,066)
--------- ---------
(Continued)
7
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Dollars in Thousands)
(Unaudited)
For The Three Months
Ended March 31,
1996 1995*
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term notes, net $(518,914) $(654,816)
Additions to medium and long-term debt 953,423 999,507
Repayments of medium and long-term debt (278,099) (328,270)
(Decrease) increase in payables to AT&T
and affiliates (18,246) 35,611
Dividends paid (5,162) (4,692)
-------- --------
Net Cash Provided by Financing
Activities 133,002 47,340
-------- -------
Net Increase (decrease) in Cash and Cash
Equivalents 10,075 (54,464)
Cash and Cash Equivalents at Beginning of Period 3,961 54,464
-------- --------
Cash and Cash Equivalents at End of Period $ 14,036 $ -
======== ========
Non-Cash Investing and Financing Activities:
In the first three months of 1996 and 1995, the Company entered into capital
lease obligations of $2,431 and $8,413, respectively, for equipment that was
subleased.
In the first three months of 1995, the Company assumed debt of $431,171 in
conjunction with acquisitions.
* Certain 1995 amounts have been restated to conform to the 1996
presentation.
The accompanying notes are an integral part of these Consolidated Financial
Statements.
8
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, 1995.
2. Shareowners' Equity and Earnings Per Share
The computation of earnings per share is based upon the weighted average
number of common shares outstanding plus common share equivalents arising from
the effect of dilutive stock options using the treasury stock method. Fully
dilutive earnings per common share are not presented since the dilution is less
than 3%.
On April 19, 1996 the Company's Board of Directors declared a first quarter
dividend of $.11 per share. The dividend is payable May 31, 1996 to shareowners
of record as of the close of business on May 10, 1996.
3. Recent Pronouncements
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation". This
statement establishes financial accounting and reporting standards for
stock-based employee compensation plans. It allows companies to choose either 1)
a fair value method of valuing stock-based compensation plans which will affect
reported net income, or 2) to continue to follow the existing accounting rules
for stock option accounting but disclose what the impacts would have been had
the fair value method been adopted. The Company adopted the disclosure
alternative which requires annual disclosure of the pro forma net income and
earnings per share amounts assuming the fair value method was adopted on January
1, 1995. As a result, the adoption of this standard did not have any impact on
the Company's consolidated financial statements.
FORM 10-Q
4. Recent Events
On September 20, 1995, AT&T announced a plan to pursue the public or
private sale of its remaining 86% interest in AT&T Capital. As noted in AT&T's
1995 Annual Report on Form 10-K, AT&T has stated that it cannot predict the
timing or terms of any such transaction. On such date, AT&T
9
also announced a plan to separate (the "Separation") into three publicly-held
stand-alone global businesses. The Separation is targeted by AT&T to be
completed by the end of 1996, subject to certain conditions. For a more detailed
discussion of AT&T's restructuring plans and their potential impacts on the
Company, see Note 16 to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
In the second quarter of 1996, the Company executed an Operating Agreement
with each of Lucent Technologies Inc. ("Lucent") and NCR Corporation ("NCR"),
and entered into letter agreements with each of Lucent and NCR regarding the
applicability to each of Lucent and NCR of specified provisions of the License
Agreement and the Intercompany Agreement between the Company and AT&T. The full
texts of the Operating Agreements and letter agreements with Lucent and NCR are
filed as Exhibits to this Quarterly Report on Form 10-Q. Based on periodic
discussions with representatives of Lucent, the Company has paid a sales
assistance fee to Lucent, which fee is related to the volume of the Company's
Lucent-related business. (Under the terms of its Operating Agreement with the
Company, Lucent is prohibited from accepting a sales assistance fee from any
other provider of leasing services.) The Company is negotiating with Lucent to
put in place a formal arrangement with respect to the sales assistance fee for
the balance of the initial term of the Operating Agreement. The current proposal
would result in sales assistance fee payments generally comparable to those paid
in 1995 (which were substantially in excess of the sales assistance fee payments
in earlier years), and with increases tied to increases in the Company's volume
of Lucent-related business.
In addition, on April 30, 1996, the Company issued a press release which
stated, in pertinent part, as follows:
"AT&T Capital Corporation announced that AT&T Corp. (AT&T), its 86%
shareowner, delivered a letter to it today requesting it to effect the
registration of 30,879,656 shares of the Company's common stock for sale by
AT&T, as selling stockholder. After the consummation of any such offering, AT&T
would own 9,370,344 shares of the Company's common stock, which represents
approximately 20 percent of AT&T Capital's currently outstanding common stock.
The request was made under terms of a Registration Rights Agreement
that the Company entered into with AT&T in June 1993. AT&T said in its letter
that it `wishes to complete the offering as soon as possible'. The Company
expects that it will be in a position to file a registration statement with the
SEC by the end of May. The timing of any filing or offering would be subject to
market conditions. AT&T also noted that it would be appropriate for AT&T Capital
to continue to explore private sale alternatives."
In response to this letter, the Company is in the process of preparing
a registration statement, and is also continuing to explore private sale
alternatives.
10
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Three months ended March 31, 1996 vs. March 31, 1995
Unless otherwise indicated, all period to period comparisons represent
activity or balances at or for the three months ended March 31, 1996 versus
March 31, 1995.
Net income of $37.0 million increased $12.0 million, or 47.7%. Earnings per
share were $.78, a 47.2% increase over the $.53 reported in 1995. The respective
increases in net income and earnings per share were generated principally
through increased portfolio revenues resulting from a higher level of average
net portfolio assets, a gain on a $75.2 million lease receivables
securitization, a lower effective tax rate and increased computer trading
activity. Partially offsetting the increased portfolio revenues were higher
interest expense and operating and administrative expenses associated with a
higher level of portfolio assets, as well as a higher provision for credit
losses.
Finance revenue of $47.3 million increased $8.5 million, or 21.8%. An 18.2%
increase in the average net finance receivables accounted for $7.1 million of
the finance revenue increase. The increase in average yield to 10.38% from
10.07% contributed the remaining $1.4 million. The improved yield is primarily
due to the increased level of higher yielding products in the Company's
large-ticket specialty and structured finance portfolios.
Capital lease revenue of $162.4 million increased $26.9 million, or 19.9%,
due primarily to a 16.5% increase in the average net capital lease portfolio.
The increase in the capital lease portfolio was experienced primarily in the
Company's small ticket leasing portfolios and non-U.S. businesses. The overall
yield increased to 10.40% from 10.19% relative to the comparable prior year
period.
Rental revenue on operating leases of $158.1 million increased $25.1
million, or 18.9%. Depreciation expense on operating leases of $102.4 million
increased $17.1 million, or 20.1%. Rental revenue less associated depreciation
("operating lease margin") was $55.7 million, or 35.2% of rental revenue,
compared with $47.7 million, or 35.9% of rental revenue for the comparable prior
year period. The decreased operating lease margin percent in 1996 relates
primarily to increased depreciation on certain computer-related assets offset,
in part, by continued higher margins in the testing and diagnostic equipment
portfolio.
11
FORM 10-Q
Net interest margin (finance revenue, capital lease revenue and rental
revenue, less depreciation on operating leases and interest expense) of $151.7
million or 6.57% of average net portfolio assets was relatively consistent with
the comparable prior year period. The net interest margin percentage was
adversely impacted by the increase in the Company's average cost of debt to
6.52% from 6.39% and the increase in the debt to equity ratio to 6.15 from 5.90.
However, these effects were offset by an increase in total portfolio yield to
11.54% from 11.42% a year ago.
Revenue from sales of equipment of $18.7 million increased from $7.9
million. Similarly, cost of equipment sales of $16.0 million increased from $7.1
million. Equipment sales revenue less associated cost of equipment sales
("equipment sales margin") was $2.7 million, or 14.2% of equipment sales revenue
this quarter and $.9 million, or 11.1% the prior year quarter. The Company is
experiencing higher equipment sales and equipment sales margin generally due to
a heightened demand for IBM mainframes, as well as trading activity in a higher
margin mid-range computer business which was acquired last June.
Other revenue of $52.9 million increased $5.2 million, or 10.8%. The
increase resulted primarily from a $5.0 million pre-tax gain relating to a
securitization of $75.2 million of lease receivables in 1996. No lease
receivables were securitized during the first quarter of 1995. The Company
anticipates that quarterly securitizations will continue to be a source of
financing depending on the Company's debt to equity ratio, market conditions
and other factors.
Average borrowings outstanding increased 18.3%, or $1.1 billion, to $7.0
billion primarily due to growth in the Company's portfolio assets and an
increase in the debt to equity ratio to 6.15 from 5.90. Interest expense of
$113.6 million increased 20.8%, or $19.6 million of which $17.2 million is due
to higher average borrowings. The remaining increase resulted from a higher
average cost of debt in 1996. The Company's average 1996 interest rate on
borrowings was 6.52% as compared to 6.39% for 1995. The increase in the
Company's 1996 average cost of debt is consistent with the trend experienced
during fiscal 1995 when the Company issued new debt at higher average rates than
the debt that matured.
12
FORM 10-Q
Operating and administrative expenses of $122.4 million increased $8.9
million, or 7.8%, in 1996, from the comparable prior year period. Higher
expenses are primarily due to managing a higher level of portfolio assets. At
March 31, 1996, annualized operating and administrative expenses to total
quarter end assets decreased to 5.09% from the comparable prior year period rate
of 5.36%. This decrease can be attributed to some of the Company's businesses
more fully utilizing their infrastructure, increased operating efficiencies and
increases in assets financed. The Company's goal is to reach 4.5% or lower
within the next couple of years.
See "Credit Quality" below for a discussion of the provision for credit
losses.
The effective income tax rate was 37.8% and 40.2% for 1996 and 1995,
respectively. The decrease in the overall effective tax rate is due to several
factors, including a lower impact of both state and foreign taxes, a decrease in
the effect of non-tax deductible goodwill and other factors.
The Company's non-AT&T businesses continue to make improved contributions.
For the 1996 first quarter, non-AT&T businesses represented 65.7%, 60.8% and
29.0% of the Company's total assets, revenues and net income, respectively. That
compares favorably to 63.0%, 55.4% and a loss of (1.5%), of the Company's
total assets, revenues and net income, respectively, for the 1995 first quarter.
The increase in the net income percentage was due to growth in certain
small-ticket, large-ticket specialty and structured finance and automobile
portfolios, as well as a securitization of lease receivables in 1996. Without
such securitization, the non-AT&T businesses would have contributed 23% of the
total Company's net income for the first quarter of 1996.
CREDIT QUALITY
The active management of credit losses is an important element of the
Company's business. The Company seeks to minimize its credit risk through
diversification of its portfolio assets by customer, industry segment,
geographic location and maturity. The Company's financing activities have been
spread across a wide range of equipment types (e.g., telecommunications, general
equipment (such as general office, manufacturing and medical equipment),
information technology and transportation) and real estate and a large number of
customers located throughout the United States and, to a lesser extent, abroad.
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FORM 10-Q
The following chart (dollars in millions) reflects the Company's portfolio
credit performance indicators:
At At
March 31, December 31,
1996 1995 1995
- ------------------------------------------------------------------------------
Allowance for credit losses $230.5 $194.0 $223.2
Nonaccrual assets $130.2 $124.1 $118.5
Net charge-offs*/Portfolio assets .54% .64% .50%
Allowance for credit losses/Portfolio assets 2.45% 2.35% 2.39%
Nonaccrual assets/Portfolio assets 1.38% 1.50% 1.27%
Delinquency (two months or greater) 1.92% 1.57% 1.46%
(*) Net charge-offs are based upon the twelve months ended March 31, 1996 and
1995 and December 31, 1995.
The 1996 first quarter provision for credit losses of $25.3 million
increased $4.3 million, or 20.2% compared to the 1995 first quarter. This
increase is reflective of the higher dollar amount of nonaccrual assets and
delinquencies. These increases are due primarily to a large financing and
increased retail industry-related accounts.
Subsequent to March 31, 1996, the Company placed a $24.0 million loan on
nonaccrual status as a result of information received after the quarter end. If
this loan had been placed on nonaccrual status at March 31, 1996, the Nonaccrual
assets/Portfolio assets ratio at such date would have been 1.72%. Based on the
terms and conditions of the loan and the underlying collateral value, management
believes that the Company will recover its investment.
The Company maintains an allowance for credit losses at a level management
believes is adequate to cover estimated losses in the portfolio based on a
review of historical loss experience, a detailed analysis of delinquencies and
problem portfolio assets, and an assessment of probable losses in the portfolio,
as a whole, given its diversification. Management also takes into consideration
the potential impact of existing and anticipated economic conditions.
FINANCIAL CONDITION
Net portfolio assets increased $.1 billion to $9.2 billion at March 31,
1996 compared to December 31, 1995. All of the first quarter growth was
internally generated as no portfolios or businesses were purchased. In addition,
the growth was slightly offset by a $75.2 million securitization of lease
receivables as well as the sale of Small Business Administration (SBA) and other
loans. Both the composition of the portfolio assets by financing product as well
as by type of equipment or asset financed remained relatively consistent with
December 31, 1995. In addition, the increase was shared approximately evenly
between U.S. and foreign businesses.
14
FORM 10-Q
At March 31, 1996, the total portfolio assets managed by the Company on
behalf of others (including assets formerly owned by the Company and that were
previously securitized) was $2.2 billion, approximately the same as at December
31, 1995. The addition of lease receivables securitized in the first quarter
were offset by the normal run-off. Of the total assets managed by the Company on
behalf of others, 68.7% at March 31, 1996 and 68.0% at December 31, 1995 were
assets managed on behalf of AT&T and its affiliates.
LIQUIDITY AND CAPITAL RESOURCES
In the first three months of 1996, the Company issued commercial paper of
$5.8 billion and made repayments of $6.3 billion, and issued medium and
long-term debt of $1.0 billion and repaid $.3 billion. In the first three months
of 1995, the Company issued commercial paper of $6.6 billion and made repayments
of $7.2 billion and issued medium and long-term debt of $1.0 billion and repaid
$.3 billion.
During the three month periods ended March 31, 1996 and 1995, principal
collections from customers, proceeds from securitized receivables and proceeds
from SBA and other loan sales of $1.1 billion were received. These receipts were
primarily used for finance receivables and lease equipment purchases (including
purchases of finance asset portfolios and businesses in 1995) of $1.4 billion
and $1.3 billion in the first quarter of 1996 and 1995, respectively.
On February 29, 1996 the Company paid a dividend of eleven cents per share
to shareowners of record as of February 9, 1996. In addition, on April 19, 1996,
the Company's Board of Directors declared a first quarter dividend of eleven
cents per share. The dividend will be payable on May 31, 1996 to shareowners of
record at close of business on May 10, 1996.
In September 1995, the Company registered with the SEC $3.0 billion of debt
securities (including medium-term notes) and warrants to purchase debt
securities, currency warrants, index warrants and interest rate warrants. At
March 31, 1996 $2.0 billion of medium-term debt was outstanding under such debt
registration.
In June 1995, the Company renewed its back-up credit facility of $2.0
billion. This facility, negotiated with a consortium of 35 lending institutions,
supports the commercial paper issued by the Company. At March 31, 1996, this
facility was unused. The Company also has available local lines of credit to
meet local funding requirements in Europe, the Asia/Pacific Region and Canada of
approximately $1.0 billion, of which approximately $.6 billion was unused at
March 31, 1996.
The Company has, from time to time, borrowed funds directly from AT&T,
including on an interest-free basis pursuant to tax agreements. These
interest-free loans amounted to $248.9 million at March 31, 1996. These sources
of funds would not be available and outstanding loans would need to be repaid if
the Company were to cease being a member of AT&T's consolidated group for
federal income tax purposes as would happen upon the sale by AT&T of its
interest in the Company (see Note 4 to the unaudited consolidated financial
statements). Management believes the Company has sufficient financial resources
to repay these loans.
15
FORM 10-Q
The Company anticipates obtaining necessary external financing through
issuances of commercial paper and medium and long-term notes, available lines of
credit for certain foreign operations and, to a lesser extent, asset-backed
financings (or securitizations).
Future financing is contemplated to be arranged as necessary to meet the
Company's capital and other requirements with the timing of issue, principal
amount and form depending on the Company's needs and prevailing market and
general economic conditions.
The Company considers its current financial resources, together with the
debt facilities referred to above and estimated future cash flows, to be
adequate to fund the Company's future growth and operating requirements.
ASSET AND LIABILITY MANAGEMENT
AT&T Capital'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 discussion describing certain key elements of
this process, including AT&T Capital's use of derivatives to mitigate risk, see
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
At March 31, 1996, the total notional amount of the Company's interest rate
and currency swaps was $1.8 billion and $.5 billion, respectively, as compared
to $2.2 billion and $.3 billion, respectively, as of December 31, 1995. The U.S.
dollar equivalent of the Company's foreign currency forward exchange contracts
was $.7 billion at March 31, 1996 and December 31, 1995.
There were no past due amounts or reserves for credit losses at March 31,
1996 related to derivative transactions. The Company has never experienced a
credit related charge-off associated with derivative transactions.
RECENT PRONOUNCEMENTS
See Note 3 to the unaudited consolidated financial statements.
RECENT EVENTS
See Note 4 to the unaudited consolidated financial statements.
16
FORM 10-Q
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders of the registrant was held
on April 19, 1996.
(b) Holders of common shares voted at this meeting on the following
matters, which were set forth in full in the registrant's proxy
statement dated March 19, 1996:
(i) Election of Directors:
Nominee For Withheld
---------- --------
Thomas C. Wajnert 45,517,572 64,666
John P. Clancey 45,539,365 42,873
James P. Kelly 45,537,684 44,554
Gerald M. Lowrie 45,518,050 64,188
William B. Marx, Jr. 45,516,422 65,816
Joseph J. Melone 45,538,975 43,263
Richard W. Miller 45,517,275 64,963
S. Lawrence Prendergast 45,517,275 64,963
Maureen B. Tart 45,517,075 65,163
Brooks Walker, Jr. 45,537,850 44,388
Marilyn J. Wasser 45,515,975 66,263
For Against Abstain
---------- ------- -------
(ii) Appointment of Auditors: 45,537,916 36,923 7,399
Appointment of the firm
of Coopers & Lybrand L.L.P.
as the independent auditors
to examine the Company's
accounts for 1996.
For Against Abstain
---------- ------- -------
(iii) Plan Amendment: 44,752,312 767,311 62,615
The reapproval of the Company's 1993 Long Term Incentive Plan, as
amended to (a) increase the number of shares of common stock
reserved for issuance thereunder by 1.5 million shares to an
aggregate of 3.5 million shares and (b) establish a limit on the
total number of shares of the Company's common stock with respect
to which stock options and stock appreciation rights may be granted
to any participant in any calendar year equal to 300,000 shares.
17
FORM 10-Q
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit Number
10(a). Lucent Technologies Operating Agreement dated as of
April 2, 1996 between the Company and Lucent
Technologies Inc.
10(b). NCR Operating Agreement dated as of May 6, 1996 between
the Company and NCR Corporation
10(c). Letter Agreement dated April 2, 1996 between Lucent
Technologies Inc. and the Company regarding the
applicability of the Intercompany Agreement to Lucent
Technologies Inc.
10(d). Letter Agreement dated April 2, 1996 between Lucent
Technologies Inc. and the Company regarding the
License to Use Lucent Name and Mark
10(e). Letter Agreement dated April 18, 1996 between NCR
Corporation and the Company regarding the applicability
of the Intercompany Agreement to NCR Corporation
10(f). Letter Agreement dated April 18, 1996 between NCR
Corporation and the Company regarding the License to
Use NCR Name and Mark
10(g). AT&T Capital Corporation 1993 Long Term Incentive Plan,
as amended is incorporated by reference to the
Company's Proxy Statement dated March 19, 1996
11. Computation of Primary and Fully Diluted Earnings Per
Share
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 April 12, 1996, was filed pursuant to
Item 5 (Other Events) and Item 7 (Financial Statements and
Exhibits).
Report on Form 8-K, dated April 30, 1996, was filed pursuant to
Item 5.
18
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
May 15, 1996
By Ramon Oliu, Jr.
------------------------
Ramon Oliu, Jr.
Controller
Chief Accounting Officer
19
FORM 10-Q
EXHIBIT INDEX
EXHIBITS
Exhibit Description
Number
10(a). Lucent Technologies Operating Agreement dated as of April 2, 1996
between the Company and Lucent Technologies Inc.
10(b). NCR Operating Agreement dated as of May 6, 1996 between the
Company and NCR Corporation
10(c). Letter Agreement dated April 2, 1996 between Lucent
Technologies Inc. and the Company regarding the
applicability of the Intercompany Agreement to Lucent
Technologies Inc.
10(d). Letter Agreement dated April 2, 1996 between Lucent
Technologies Inc. and the Company regarding the
License to Use Lucent Name and Mark
10(e). Letter Agreement dated April 18, 1996 between NCR
Corporation and the Company regarding the applicability
of the Intercompany Agreement to NCR Corporation
10(f). Letter Agreement dated April 18, 1996 between NCR
Corporation and the Company regarding the License to
Use NCR Name and Mark
10(g). AT&T Capital Corporation 1993 Long Term Incentive Plan, as amended is
incorporated by reference to the Company's Proxy Statement dated March
19, 1996.
11. Computation of Primary and Fully Diluted Earnings Per Share
12. Computation of Ratio of Earnings to Fixed Charges
27. Financial Data Schedule