AT&T Capital reports first quarter net income of $7.4 million.

MORRISTOWN, N.J.--(BUSINESS WIRE)--May 13, 1997--AT&T Capital Corporation today announced first quarter 1997 net income of $7.4 million, down from the $37.0 million reported for the first quarter of 1996. A substantial drop in earnings was anticipated, and the reduction is, in significant part, a result of the company's recent merger and related securitization activity. The earnings performance should build as the company more fully transitions its securitization activities. First quarter 1997 earnings were negatively impacted by a lower level of capital leases as a result of recent merger-related securitization activity, higher interest expense relative to the smaller asset base and distributions on preferred securities issued in connection with the company's new capital structure. These factors reduced net income by approximately $35-40 million.

"Lower earnings for the first quarter of 1997 were expected by management, given that last October's planned securitization removed a large amount of earning assets from our balance sheet and we experienced certain costs relating to our new capital structure," said Tom Wajnert, Chairman and Chief Executive Officer. "Since our change in ownership in October 1996, we've been open about these short-term expectations along with our long-term enthusiasm for the company's strong business positioning. The following recent initiative is illustrative.

"Our position as a leading global provider of vendor finance was enhanced earlier this year when we entered into a 50/50 joint venture with Thermo Electron Corp., to create Thermo Capital Company LLC," Wajnert added. "The JV will provide leasing options to Thermo Electron customers seeking environmental monitoring and analysis instruments as well as other equipment. And, through the JV, AT&T Capital has the opportunity to strengthen its service capabilities in the 15 countries where Thermo Electron operates."

Total revenues were $420.9 million for the first three months of 1997, down 4.2 percent, compared to $439.3 million reported for the same 1996 period. Portfolio revenue (which includes finance revenue, capital lease revenue and rental revenue) for the first quarter of 1997 accounted for $341.8 million, or 81.2 percent of revenues, compared to $367.7 million or 83.7 percent of revenues in the similar prior year period.

As expected, lower portfolio revenue was caused by a decrease of capital lease revenue of 44.1 percent to $90.7 million compared to $162.4 million in the first quarter of 1996. This reduction is related, in substantial part, to the merger-related securitization of $2.8 billion of capital leases in October, 1996. First quarter finance revenue of $54.3 million grew 14.9 percent when compared to first quarter 1996. Rental revenue on operating leases of $196.7 million increased $38.6 million, or 24.4 percent over the prior year. Rental revenue less associated depreciation expense increased 16.3 percent to $64.7 million, up from $55.7 million for the similar 1996 quarter.

Non-portfolio revenue increased 10.6 percent to $79.2 million for the quarter due to greater securitization and loan sales revenue (an increase of 79.4 percent over the prior period), stronger other revenue, service revenue and gains on asset sales, which was partially offset by lower equipment sales.

For the first three months of 1997, interest expense was $105.3 million, down $8.3 million, or 7.3 percent over the similar 1996 period. The decrease was due to lower debt requirements consistent with carrying fewer assets (a result of the securitization) and a lower average cost of debt. However, the greater proportion of debt relative to on-balance sheet assets resulted in higher associated interest costs of $21.0 million.

The company's first quarter operating and administrative ("O&A") expenses annualized as a percent of total period-end owned and managed assets ("O&A ratio") increased to 4.21 percent from 4.14 percent for the three months ended March 31, 1997 and 1996, respectively. The slight increase in the O&A ratio reflects continuing business expansion efforts as well as systems investments.

The provision for credit losses was $23.3 million for the first three months of 1997, a decline of $2.0 million when compared to the similar 1996 period. The allowance for credit losses (which is adjusted by the provision for credit losses), as a percent of portfolio assets, was relatively constant at 2.29 percent at March 31, 1997 versus 2.30 percent at 1996 year-end.

Also impacting 1997's first quarter results, were distributions of $4.5 million on $200 million of company-obligated preferred securities, which were offered to the public in October, 1996 in conjunction with the financing of the merger.

Total owned assets of $8.0 billion as of March 31, 1997, were down slightly from the $8.1 billion reported at December 31, 1996, reflecting securitization activity offset by new financing volume. Equipment and loans financed of $1.1 billion in the first three months of 1997 were in line with 1996 first quarter results.

AT&T Capital, formerly majority owned by AT&T, is a privately owned company that provides diversified equipment leasing, financing and related services to approximately 500,000 commercial customers of all sizes in more than 20 countries in North America, Latin America, Europe, Australia and Asia.

When included in this earnings release, 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, and Section 27A of the Securities Act of 1933, as amended. Such statements, which include statements contained in this earnings release, 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 1996 Annual Report on Form 10-K, many of which are beyond the control of AT&T Capital. These forward looking statements are made only as of the date of this earnings release. 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 AT&T Capital's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. -0- Note to Editors:

AT&T Capital will continuously replay a tape of its first quarter 1997 earnings conference call beginning Tuesday, May 13, at 2 p.m. EDT until Thursday evening, May 8. Chairman and Chief Executive Officer Thomas C. Wajnert and Chief Financial Officer Ray Oliu will discuss the company's first quarter financial results. The replay of the call is expected to run about 30 minutes.

Members of the financial community can access the replay by calling:

Within the United States  800-475-6701 code: 340581

Outside the United States 320-365-3844 code: 340581

Callers who have any questions after listening to the replay, or would like to request copies of the company's financial information, should call Investor Relations at 201-397-4444. -0-

                      AT&T Capital Corporation
                 Consolidated Statements of Income
                       (Dollars in thousands)
                            (Unaudited)

                                                 For the Three Months
                                                 Ended March 31, 1997

                                                                   %
                                                1997      1996   Change

REVENUES:

Finance revenue                             $ 54,309  $ 47,252    14.9
Capital lease revenue                         90,747   162,370   (44.1)
Rental revenue on operating leases           196,723   158,079    24.4
Revenue from securitizations and loan sales   13,032     7,265    79.4
Equipment sales                                8,176    18,706   (56.3)
Other revenue, net                            57,943    45,602    27.1
TOTAL REVENUES                              $420,930  $439,274    (4.2)

EXPENSES:
Interest                                    $105,318  $113,587    (7.3)
Operating and administrative expenses        136,284   122,368    11.4
Depreciation on operating leases             131,976   102,391    28.9
Cost of equipment sales                        7,228    16,041   (54.9)
Provision for credit losses                   23,279    25,304    (8.0)
TOTAL EXPENSES                              $404,085  $379,691     6.4

Distributions on Company-obligated
 preferred securities of subsidiary            4,530         -       -

Income Before Income Taxes                    12,315    59,583   (79.3)

Provision for Income Taxes                     4,887    22,539   (78.3)

NET INCOME                                 $   7,428  $ 37,044   (79.9)
-0-

OTHER KEY FINANCIAL STATISTICS
(Dollars in thousands)


                                          March 31,  December 31,   %
                                            1997        1996      Change

Allowance/Net Write-offs                    1.96        1.96
Allowance/Non-Accruals                      1.02        1.25
Allowance/Portfolio Assets                  2.29%       2.30%

Total Equity plus company-obligated
 preferred securities of subsidiary     $914,472      $907,307     0.8
Total Equity                             714,472       707,307     1.0
Total Allowance                          163,803       168,986    (3.0)

Net Portfolio Assets:
Net Investment in Finance Receivables  2,124,555     2,135,250    (0.5)
Net Investment in Capital Leases       3,467,178     3,648,731    (5.0)
Net Investment in Operating Leases     1,407,321     1,403,470     0.3
Total Net Portfolio Assets             6,999,054     7,187,451    (2.6)

Total Owned Assets                     8,027,310     8,092,512    (0.8)
Total Managed Assets                   4,915,680     4,790,972     2.6

Total Owned and Managed Assets       $12,942,990   $12,883,484    (0.5)

Debt to Equity plus company-obligated
 preferred securities of subsidiary         7.21          7.13

CONTACT: David P. Caouette

201-397-8724 (office)

201-435-3494 (home)