FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of a Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month(s) of: July 29, 1998
NEWCOURT CREDIT GROUP INC.
BCE Place, 181 Bay Street
Suite 3500, P.O. Box 827
Toronto, Ontario
Canada, M5J 2T3
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]
Form 20-F / / Form 40-F /X/
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.]
Yes / / No /X/
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b)]
82-
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.
Date: July 29,1998
NEWCOURT CREDIT GROUP INC.
By: John P. Stevenson
Corporate Secretary
<PAGE>
News Release
For immediate release
Trading Symbol: NCT Contact: Robyn Matsumoto
Exchange Listings: Toronto Communications & Marketing
Montreal (416) 594-5308
New York
Newcourt improves financial quality with reduced
leverage and diversified revenue sources
Asset quality remains strong during 2nd
quarter with arrears and losses below
industry average
London, U.K., July 29, 1998 - Newcourt Credit
Group today reported net income for the six
months ended June 30, 1998, of $112.1 million
(US$78.0 million ) versus $65.0 million (US$47.3
million) for the combined operations of Newcourt
Credit Group and AT&T Capital during the same
period last year. Earnings for the second
quarter amounted to $69.8 million (US$48.3
million) compared to $42.4 million (US$29.6
million) in net income reported in the previous
quarter.
Based on an average of 137,616,640 shares
outstanding during the six month period, the
Company's fully diluted earnings per share were
$0.81 (US$0.56) and cash earnings per share
(earnings per share before goodwill amortization)
were $1.15 (US$0.80).
"The focus of Newcourt's new business activities
is centred on those geographic regions, industry
sectors and origination partners capable of
supporting the Company's quality objectives,"
noted CEO Steven K. Hudson. "Over the past six
months, as part of our integration plan, we have
reviewed the various business segments where the
Company has established a presence. This review
identified the core markets where Newcourt is
positioned as being one of the top three
providers. We have made it clear to our
stakeholders, our customers and our employees
that we are securing our leadership position in
these markets, deepening our financial quality,
and exiting those businesses which do not meet
these criteria. This focus on quality has not
been at the expense of earnings growth as
reflected in our 63% increase in quarter-over-
quarter earnings."
<PAGE>
This focus on asset quality is reflected in the
Company's arrears and loan losses expressed as a
percentage of owned assets of 1.0% and 0.65% for
the period. In addition, Newcourt maintains
better than average allowances for loan losses
with coverage at 2.72 times. These results
compare favourably to the industry average.
The quality of Newcourt's income statement was
also highlighted in the second quarter results.
Total asset finance income for the six months
ended June 30, 1998, rose by 26% to $678.0
million (US$471.7 million) from $537.7 million
(US$391.9 million) during the same period last
year on a consolidated basis.
An important shift has taken place over the past
12 months to improve the quality and diversity of
Newcourt's revenue sources. During the first six
months of 1998, over two-thirds (71%) of the
Company's revenue was derived from net finance
and rental income, and management and other fees
with the remainder (29%) attributable to revenue
on the sale of finance assets. During the same
period last year, net finance and rental income,
and management and other fees accounted for less
than half (45%) of the Company's revenue with the
majority (55%) attributable to revenue on the
sale of finance assets.
In addition, operating costs for the period,
excluding amortization and depreciation, amounted
to $432.6 million (US$300.9 million) compared to
$429.3 million (US$312.9 million) for the same
period last year on a consolidated basis.
Expressed as a percentage of owned and managed
loans, operating expenses on an annualized basis,
excluding amortization and depreciation, declined
from 3.0% as at December 31, 1997 to 2.7% as at
June 30,1998. "This improvement in Newcourt's
operating expense ratio is indicative of the
progress that the Company has made in moving
forward with our integration plan," noted Hudson.
The quality of Newcourt's balance sheet was
strengthened during the period with a US$400
million common equity placement with Janus
Capital Corporation. Part of the proceeds are to
be used to refinance preferred securities issued
by the former AT&T Capital Corporation. This
transaction, in part, resulted in a reduction in
the Company's tangible leverage from 7.1:1 as at
the end of the first quarter to 5.2:1 as at the
end of the second quarter (treating preferred
securities as debt).
<PAGE>
At a meeting of the Board of Directors held July
29, 1997, a quarterly dividend of $0.04 per share
was approved for payment on August 31, 1998 to
shareholders of record as of August 14, 1998.
Newcourt Credit Group is one of the world's
leading sources of asset-based financing serving
the corporate and commercial markets with owned
and managed assets of $34.0 billion (US$23.1
billion) and a global capability in 24 countries.
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit GroupInc.
Summary of Quarterly Financial Statistics
For the period ended June 30, 1998 <fn1>
Basic Earnings per Share (common and special)
Average Shares Outstanding during the Period
Number of Common and Special Shares as at January 1, 1998
83,070,958
Shares issued during the year: June 30, 1998
Weighted
Date # shares # days o/s Average
<S> <C> <C> <C> <C>
Issue to Nomura 1/12/98 17,633,857 171 / 182 16,581,690
Exchange for sub
rights 1/12/98 38,500,000 171 / 182 36,202,803
Private placement 6/4/98 8,668,446 28 / 182 1,321,537
Other 471,136 169 / 182 439,652
65,273,439 54,545,682 54,545,682
Weighted average shares outstanding, June 30, 1998 137,616,640
Net income for the year to date $112,143,800
Basic earnings per share $0.81
II. Comparative Earnings Per Share Summary:
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic $.49 $.31 $.81 $.54
Fully Diluted .49 .31 .81 .54
Cash Basis .67 .32 1.15 .56
Dividends per share .04 .035 .08 .07
III. Balance Sheet Highlights ($ millions)
As at As at
June 30, 1998 March 31, 1998
<S> <C> <C>
Owned and managed assets 33,952 31,876
Tangible Equity 2,635 1,973
Tangible Leverage<fn2> 5.2:1 7.1:1
IV. Income Statement Highlights ($000)
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Income 69,755 40,921 112,144 65,001
New originations 5,911,759 3,771,886 10,447,749 6,712,148
Originations
U.S. & Canada 89.7%
U.K. / Europe 6.7%
Asia Pacific 2.6%
Latin America 1.0%
100.0%
V. Margin Analysis Summary
(i) Securitization
Three Months Ended
June 30 March 31
1998 1998
<S> <C> <C>
Securitization Fees 97,274 76,028
Assets Securitized 3,300,804 1,639,197
Securitization Margin 2.95% 4.64%
(ii) Syndication
Three Months Ended
June 30 March 31
1998 1998
<S> <C> <C>
Syndication Fees 14,847 10,125
Assets Syndicated 1,182,206 859,007
Syndication Margin 1.26% 1.18%
(iii) Net Finance Income
Financed Assets held for
investment 11,704,833 11,516,392
Operating leases held for
investment and sale 3,103,490 2,874,492
Financed assets held for sale 1,634,739 1,597,878
Total owned assets 16,443,062 15,988,762
Net Finance and Rental Income 184,785 190,119
Net Finance Income Margin 4.56% 4.83%
Interest Expense 236,057 218,741
OPEX / Owned and Managed Assets 2.7% 2.8%
<fn1> All $ expressed in C$ unless otherwise specified
</fn1>
<fn2>Preferred securities treated as debt
</fn2>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
[in thousands of Canadian dollars]
June 30, December 31,
1998 1997
$ $
<S> <C> <C>
ASSETS
Cash and cash held in escrow 0 1,778,413
Finance assets held for investment 11,704,833 2,185,568
Operating leases held for investment and sale 3,103,490 275,833
Finance assets held for sale 1,634,739 1,091,398
Investment in affiliated companies 240,732 173,918
Accounts receivable, prepaids and other 427,950 181,736
Future income tax receivable 283,990 0
Fixed assets 128,914 87,396
Goodwill 1,875,643 408,754
Total Assets 19,400,291 6,183,016
LIABILITIES, PREFERRED SECURITIES AND
SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities 1,245,773 303,968
Debt 13,359,745 2,789,816
Future income tax liability 0 27,739
Total Liabilities 14,605,518 3,121,523
Preferred Securities 284,560 0
Shareholders' Equity
Share capital 4,283,354 2,935,402
Retained earnings 226,859 126,091
Total Shareholders Equity 4,510,213 3,061,493
Total Liabilities, Preferred Securities and
Shareholders' Equity 19,400,291 6,183,016
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS
(Unaudited)
[in thousands of Canadian dollars, except for per share amounts]
Six Months Ended
June 30, June 30,
1998 1997
$ $
<S> <C> <C>
Asset finance income
Revenue on sale of finance assets 198,275 61,605
Management and other fees 104,805 18,106
Net finance and rental income 374,904 31,842
Total asset finance income 677,984 111,553
Operating expenses
Salaries and wages 220,192 30,737
Operating and administrative 212,374 32,258
Depreciation and amortization 58,594 5,544
Operating income before taxes 186,824 43,014
Provision for income taxes 74,680 9,023
Net income for the period 112,144 33,991
Retained earnings, beginning of period 126,091 100,774
Dividends paid on common shares (11,166) (4,391)
Options purchased (210) (1,044)
Retained earnings, end of period 226,859 129,330
Earnings per common share:
Basic $0.81 $0.54
Fully diluted $0.81 $0.54
</TABLE>
