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: September 30,1999
NEWCOURT CREDIT GROUP INC.
Newcourt Centre, 207 Queens Quay West
Suite 700
Toronto, Ontario
Canada, M5J 1A7
[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: November 12, 1999
NEWCOURT CREDIT GROUP INC.
/__________________________/
By: Scott J. Moore
Executive Vice President, Legal
and General Counsel and Secretary
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
NEWCOURT CREDIT GROUP INC.
(Unaudited)
For the nine months ended September 30, 1999
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
[in thousands of United States dollars]
September 30, December 31,
1999 1998
$ $
<S> <C> <C>
ASSETS
Cash 47,614 998,807
Finance assets held for investment
[Notes 3 and 5] 9,717,536 8,611,705
Equipment under operating lease
[Notes 4 and 5] 2,225,688 2,173,514
Finance assets held for sale 1,976,528 1,542,769
Investment in affiliated companies 322,259 194,860
Accounts receivable, prepaids and other 398,623 310,948
Property and equipment, net [Note 6] 124,875 93,874
Goodwill [Note 7] 1,253,978 1,280,036
Future income tax asset 224,149 146,444
Total Assets 16,291,250 15,352,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities 524,456 727,468
Debt [Note 8] 12,631,581 11,607,184
Total Liabilities 13,156,037 12,334,652
Shareholders' Equity
Share capital [Note 11] 2,789,395 2,792,861
Retained earnings 345,818 225,444
Total Shareholders' Equity 3,135,213 3,018,305
Total Liabilities and Shareholders' Equity 16,291,250 15,352,957
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
[in thousands of United States dollars, except for per share amounts]
Nine Months Ended
September 30, September 30,
1999 1998
$ $
<S> <C> <C>
Asset finance income
Net finance and rental income 341,620 383,502
Securitization gains 128,360 163,003
Syndication fees 91,050 27,771
Management fees and other income
[Notes 9 and 10] 212,353 102,322
Total asset finance income 773,383 676,598
Salaries and wages 271,150 209,494
Operating and administrative 222,147 209,271
Depreciation and goodwill amortization
[Note 7] 55,498 59,893
Operating income before income taxes 224,588 197,940
Provision for income taxes 86,134 75,101
Net income for the period 138,454 122,839
Retained earnings, beginning of period 225,444 81,240
Premium on redemption of preferred securities - (28,570)
Dividends paid on common shares (18,080) (11,018)
Other - (227)
Retained earnings, end of period 345,818 164,264
Earnings per common share:
Basic $0.93 $0.87
Fully diluted $0.93 $0.87
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
[in thousands of United States dollars]
Nine Months Ended
September 30, September 30,
1999 1998
$ $
<S> <C> <C>
OPERATING ACTIVITIES
Net income for the period 138,454 122,839
Adjustments for:
Gain on sale of business units (34,276) -
Future income taxes (73,967) 18,786
Goodwill amortization, depreciation
and other expense 55,498 59,892
Cash flow from operations 85,709 201,517
Net change in non-cash assets and
Liabilities (218,397) (14,434)
Cash provided by (used in) operating
Activities (132,688) 187,083
INVESTING ACTIVITIES
Finance assets, underwritten and
Purchased (12,478,768) (9,297,109)
Finance assets, sold 7,248,948 4,617,551
Finance assets, repayments and others 3,198,341 2,841,794
Finance assets and assets held for sale (2,031,479) (1,837,764)
Business dispositions (acquisitions) 339,829 (1,059,892)
Investment in affiliated companies (128,141) (100,411)
Purchase of property and equipment (53,059) (20,097)
Cash used in investing activities (1,872,850) (3,018,164)
FINANCING ACTIVITIES
Issuance of debt 43,434,244 46,310,099
Repayment of debt (42,365,462) (44,554,301)
Redemption of preferred securities - (213,201)
Issue of common shares, net 3,643 1,468,701
Future tax on share issue costs - 21,720
Dividends paid on common shares (18,080) (11,018)
Cash provided by financing activities 1,054,345 3,022,000
Increase (decrease) in cash during the
Period (951,193) 190,919
Cash, beginning of period 998,807 4,776
Cash, end of period 47,614 195,695
See accompanying Notes
</TABLE>
<PAGE>
1. NATURE OF THE COMPANY'S OPERATIONS
Newcourt Credit Group Inc. (the "Company") is an independent, non-bank
financial services enterprise with operations primarily in the United
States, Canada and Europe. The Company also has supporting operations
in Latin America and Asia. The Company originates, invests in and
sells asset-based financings including secured loans, leases and
conditional sales contracts. For asset-based financings sold to
institutional investors the Company generally continues to manage
these financings on behalf of the investors for a fee. The Company's
origination activities focus on the commercial and corporate finance
segments of the asset-based financing market.
The Company originates leases and loans in the commercial finance
market predominantly through vendor finance programs. These
agreements are established with select equipment manufacturers,
dealers and distributors to provide equipment sales and inventory
financing. The Company also serves the corporate finance market
through financing services it delivers to major corporations, public
sector institutions and governments.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada, consistently
applied ("Canadian GAAP").
Effective January 1, 1999, the Company adopted the United States
dollar as its reporting currency to reflect the increased significance
of the U.S. currency in its operations following the acquisition of
AT&T Capital Corporation in 1998. Through a translation of
convenience, comparative amounts were restated from Canadian to U.S.
dollars using an exchange rate of $0.6443, the rate prevailing at
December 31, 1998.
The more significant accounting policies are summarized below:
Principles of consolidation
The consolidated financial statements of the Company include the
accounts of all its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated.
The Company accounts for its investment in foreign and domestic
affiliates in which it has significant influence using the equity
method.
<PAGE>
Finance assets held for investment
Net investment in finance assets is comprised of loans, capital lease
receivables and retained interest in receivables securitized net of an
allowance for credit losses. Income is recognized on finance assets
held for investment on an actuarial basis which produces a constant
rate of return on the investment in finance assets.
Recognition of finance income is generally suspended when, in
management's view, a loss is likely to occur but in no event later
than 90 days after an account has gone into arrears. Accrual is
resumed when the receivable becomes contractually current and
management believes there is no longer any significant probability of
loss.
Allowance for credit losses
Repossessed assets are specifically reserved for at their estimated
net realizable value based on estimated collateral values and
recoveries under third party guarantees and vendor support agreements.
Management also routinely assesses the portfolio on an item-by-item
basis and establishes specific allowances for those accounts
considered doubtful. General allowances are established for probable
losses on loans which cannot be determined on an item-by-item basis.
This provision is established by applying historical loss trends to
various segments of the portfolio according to external and internal
credit ratings.
Securitization gains
The Company sells certain of its asset-based finance assets to
securitization vehicles.
Securitization transactions are accounted for as sales of finance
assets. These sales are non-recourse to the Company except to the
extent of the Company's retained interest in these securitization
vehicles. These transactions result in the removal of the assets from
the Company's consolidated balance sheets, the recording of assets
received and a gain on sale when the significant risks and rewards of
ownership are transferred to the purchaser. The assets received are
generally cash and a retained interest in the cash flows of the
receivables sold. Such retained interest (or securitization
investments) is recorded at estimated fair value and may include cash
collateral accounts, excess spread assets, and securities backed by
the transferred assets. Proceeds on sale are computed as the
aggregate of the initial cash consideration and the present value of
any additional sale proceeds, net of a provision for anticipated
credit losses on the securitized assets and the amount of an arm's
length servicing fee.
Income is earned on the securitization investments on an accrual
basis. The carrying value of this asset is reduced, as required,
based on changes in the Company's share of the estimated credit losses
and the effects of changes in the payment rate on the securitized
<PAGE>
assets. The Company continues to manage the securitized assets and
recognizes income equal to an arm's length servicing fee over the term
of the securitized assets.
Syndication fees
Certain finance assets are underwritten and sold to institutional
investors for cash. These transactions generate syndication fees for
the Company. The Company generally continues to service these assets
on behalf of the investors for a fee. Fees received for syndicating
finance assets are included in income when the related transaction is
substantially complete provided the yield on any portion of the assets
retained by the Company is at least equal to the average yield earned
by the other participants involved.
Equipment under operating lease
Equipment under operating lease is generally depreciated over the
estimated useful life of the asset. Depreciation is generally
calculated on a straight-line basis over the term of the lease to the
estimated unguaranteed residual value at the end of the lease term.
Rental revenue is recognized on a straight-line basis over the related
lease term.
Estimated unguaranteed residual values
Estimated unguaranteed residual values are established upon
acquisition and leasing of the equipment based upon the estimated
value of the equipment at the end of the lease term. Values are
determined on the basis of studies prepared by the Company, historical
experience and industry data. Although it is reasonably possible that
a change in the unguaranteed residual values could occur in the near
term, the Company actively manages its residual values by
communicating with lessees and vendors during the lease term to
encourage lessees to extend their leases or upgrade and enhance their
leased equipment. Residual values are continually reviewed and
monitored by the Company. Declines in residual values for capital
leases are recognized as an immediate charge to income. Declines in
residual values for operating leases are recognized as adjustments to
depreciation expense over the shorter of the useful life of the asset
or the remaining term of the lease.
Deferred costs
Direct incremental costs of acquisition of finance assets and
operating leases are deferred and amortized over the shorter of the
term of the finance asset or operating lease and the expected period
of future benefit. As finance assets are securitized, the unamortized
portion of the acquisition costs related to the assets being
securitized is expensed. Costs incurred during the pre-operating
period of new business ventures are deferred and amortized over the
expected period of future benefit.
<PAGE>
Property and equipment
Property and equipment are recorded at cost less accumulated
depreciation. Depreciation is provided on a straight-line basis at
the following rates:
Buildings 20 years
Furniture and fixtures 10 years
Computers and office equipment 5 years
Goodwill
Goodwill is recorded at cost less accumulated amortization. The
Company's amortization periods for goodwill range from 20 to 35 years.
The valuation and amortization of goodwill is evaluated on an ongoing
basis and, if considered permanently impaired, goodwill is written
down. The determination as to whether there has been an impairment in
value is made by comparing the carrying value of the goodwill to the
projected undiscounted net revenue stream to be generated by the
related activity.
Foreign currency translation
The Company's foreign operations function financially and
operationally independent of the parent and therefore are considered,
for the purposes of foreign currency translation, to be self-
sustaining operations. As a result, the assets and liabilities of the
Canadian and non-United States foreign operations are translated into
United States dollars at rates in effect at the consolidated balance
sheet dates. Revenue and expenses are translated at the average
exchange rates prevailing during the period. Unrealized foreign
exchange currency translation gains and losses on these self-
sustaining operations are included in share capital.
Income taxes
The Company accounts for income taxes using the liability method of
income tax allocation.
Earnings per common share
Basic earnings per common share is computed based on the weighted
average number of common shares outstanding during the year. Fully
diluted earnings per common share has been computed based on the
weighted average number of common shares outstanding after giving
effect to the exercise of all outstanding dilutive options to acquire
common shares and any other dilutive items.
Derivative financial instruments
The Company uses derivative financial instruments in conjunction with
its interest rate and currency risk management strategies. Derivative
financial instruments are used to hedge exposure to interest rate and
foreign exchange rate risk arising during the normal course of
business. Contract and notional amounts associated with derivative
<PAGE>
financial instruments are not recorded as assets or liabilities on the
consolidated balance sheets. The most frequently used derivative
financial instruments are various types of interest rate swaps and
foreign exchange contracts. Currency swaps and bond forwards are also
used.
Swaps and forward contracts are accounted for on the accrual basis
when cash flows of the derivatives are matched to a specific on-
balance sheet position. Net accrued interest receivable/payable and
deferred losses/gains are recorded in accounts receivable, prepaids
and others or accounts payable and accrued liabilities, as
appropriate. Realized losses/gains on terminated contracts are
deferred and amortized over the remaining life of any applicable
corresponding position.
Foreign exchange contracts are used to hedge the Company's net
investment in certain of its self sustaining operations. Gains and
losses on these foreign exchange contracts are credited or charged to
the cumulative translation adjustment account.
When a derivative financial instrument is no longer designated as a
hedge, any gain or loss on the contract is recognized in income
immediately.
Use of estimates
The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and
the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.
Significant areas in which estimates are used include residual values,
income taxes, retained interests in securitized assets and related
reserves, allowance for credit losses, valuation of finance assets
held for sale, restructuring reserves and contingencies.
<PAGE>
<TABLE>
<CAPTION>
3. FINANCE ASSETS HELD FOR INVESTMENT
Finance assets held for investment consist of:
September 30, December 31,
1999 1998
$ $
<S> <C> <C>
Leases 4,180,109 3,963,620
Estimated unguaranteed residual values 1,020,009 883,194
Unearned Income (942,150) (954,496)
Net leases 4,257,968 3,892,318
Loans 4,874,540 4,304,369
Allowance for credit losses (203,035) (183,693)
Securitization investments 788,063 598,711
Finance assets held for investment 9,717,536 8,611,705
Substantially all of the finance assets held for investment bear
interest at varying levels of fixed rates of interest.
The loans included in finance assets held for investment
are collateralized.
4. EQUIPMENT UNDER OPERATING LEASE
Equipment under operating lease consists of:
September 30, December 31,
1999 1998
$ $
<S> <C> <C>
Original equipment cost:
Information technology 1,477,499 1,452,677
Telecommunications 667,757 531,572
Transportation 371,285 581,655
Manufacturing 430,315 348,801
Healthcare 41,591 30,450
General equipment and other 507,953 289,596
3,496,400 3,234,751
Less: accumulated depreciation (1,314,670) (1,117,993)
Rental receivables, net 43,958 56,756
Equipment under operating lease 2,225,688 2,173,514
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
5. ALLOWANCE FOR CREDIT LOSSES
An analysis of the Company's allowance for credit losses is as follows:
September 30, December 31,
1999 1998
$ $
<S> <C> <C>
Finance assets held for investment and
equipment under operating lease 11,943,224 10,785,219
Allowance for credit losses, beginning of period 183,693 24,846
Provision for credit losses during the period 93,886 96,141
Provision for credit losses from acquisition,
net of sales - 132,022
Write-offs, net of recoveries (74,544) (69,316)
Allowance for credit losses, end of period 203,035 183,693
Allowance as a percentage of investment assets 1.7% 1.7%
Investment assets in arrears (90 days and over) 201,320 143,620
Arrears as a percentage of investment assets 1.7% 1.3%
Assets in repossession, at estimated net realizable
Value 161,105 84,540
6. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
September 30, 1999 December 31, 1998
Accumulated Accumulated
Cost depreciation Cost depreciation
$ $ $ $
<S> <C> <C> <C> <C>
Land and buildings 37,306 16,889 28,842 16,309
Furniture and fixtures 62,723 27,605 55,070 26,702
Computers and office
Equipment 121,040 54,800 103,231 53,420
Other 4,017 917 3,910 748
225,086 100,211 191,053 97,179
Net book value 124,875 93,874
</TABLE>
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<TABLE>
<CAPTION>
7. GOODWILL
Goodwill amortization during the period was $34,771 (1998 - $47,475)
8. DEBT
Debt consists of the following:
September 30, December 31,
1999 1998
$ $
<S> <C> <C>
Fixed Rate Debt
U.S. senior notes, bearing interest at rates
varying from 6.84% to 8.26%, maturing in the
years 2000 to 2005 1,499,297 503,504
Medium term notes, bearing interest at rates
varying from 5.10% to 9.34%, maturing in the
years 1999 to 2007 540,683 581,004
U.S. medium term notes, bearing interest
at rates varying from 5.61% to 8.25%, maturing
in the years 1999 to 2028 6,529,552 6,126,500
7.625% debenture, maturing in June, 2001 85,082 80,446
6.45% debenture, maturing in June, 2002 102,089 96,535
Collateralized borrowings related to securitized
assets, 5.50%, maturing in 2003 97,484 122,873
Collateralized borrowings related to securitized
assets, 6.99%, maturing in 2005 64,170 -
Capital lease obligations, discounted at rates
varying from 5.70% to 13.50%, maturing in the
years 1999 to 2004 212,688 258,602
Other fixed rate debt 311,889 338,321
Floating Rate Debt
Floating rate U.S. medium term notes, interest
rate ranges from 5.17% to 6.75%, maturing
in the years 1999 to 2002 990,250 1,350,322
Collateralized borrowings relating to
securitized assets, based upon one month LIBOR
plus 0.125%, maturing in 2001 38,292 65,674
Floating rate medium term notes, interest
periodically reprices based upon CDOR index,
maturing in the year 2000 68,120 64,430
Commercial paper and other short-term
Borrowings 2,091,985 2,018,973
Total debt 12,631,581 11,607,184
Interest expense on the debt outstanding during the period
was $616,506 [1998 - $457,281].
</TABLE>
<PAGE>
The Company renegotiated its various bank facilities in April 1998 to
support the existing commercial paper programs and for general
corporate purposes. The U.S. bank facility was increased to $2.3
billion with $1.535 billion having a term of 364 days and $765 million
having a term of five years. In addition, the Canadian bank facility
was increased to Cdn. $1.2 billion with a term of 364 days. The
amount of unused Canadian and U.S. bank facilities are Cdn. $1.0
billion [1998 - Cdn. $0.3 billion] and $2.3 billion [1998 - $2.3
billion], respectively.
In April 1999, the Company renewed its various bank facilities to
support the existing commercial paper programs and for general
corporate purposes. The terms and conditions remained unchanged with
the exception of the Canadian facility, which was renewed at Cdn. $1.0
billion with a term of 364 days.
The weighted average interest on commercial paper outstanding as at
September 30, 1999 is 4.92% [1998 - 5.44%] for the Canadian commercial
paper program, 5.92% [1998 - 5.90%] for the U.S. commercial paper
program and 5.21% [1998 - nil] for the Australian program.
In connection with the purchase of AT&T Capital, the Company
unconditionally guarantees the debt and liquidity facilities of AT&T
Capital as to payment of principal and interest, when and as this debt
shall become due and payable, whether at maturity or otherwise. Also,
AT&T Capital entered into an agreement whereby it guarantees certain
indebtedness and liquidity facilities of the Company.
9. OTHER INCOME
During the first quarter, the Company recorded a pre-tax gain of
$56,582 (after-tax gain of $31,120) resulting from the extinguishment
of certain derivative financial instruments. During 1998, the Company
had derivative financial instruments in place to hedge the Company's
net investment in certain of its foreign self-sustaining operations to
Canadian dollars (the "1998 Derivatives"), its reporting currency in
1998. Effective January 1, 1999, the Company adopted the United
States dollar as its reporting currency. Accordingly, on that date,
the Company determined that all non-U.S. dollar functional self-
sustaining operations would be hedged to the U.S. currency and that
the 1998 Derivatives would be terminated. The 1998 Derivatives were
unwound over several weeks in early 1999 to minimize the Company's
liability or maximize its receivables from counterparties without
exposing the Company to undue risk. Since the 1998 Derivatives were
no longer designated as hedges during 1999, any gains or losses must
be immediately recognized in earnings.
<PAGE>
10. SALE OF AUTOMOTIVE LEASING UNITS
During the second quarter the Company disposed of two automotive
leasing units, based in Canada and the United Kingdom. Under the
terms of the sales, the total consideration was $339,829 cash. Total
assets sold were $337,493 and total liabilities sold were $31,940
resulting in a gain of $34,276 ($15,451 after tax).
11. SHARE CAPITAL
Authorized -
The Company's authorized share capital consists of the following:
[i] Unlimited common shares with voting rights;
[ii] Unlimited special shares without voting rights convertible into
common shares on a share-for-share basis; and
[iii] Unlimited Class A preference shares issuable in series.
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<TABLE>
<CAPTION>
Outstanding -
The following is a summary of the changes in share capital during the
period:
September 30, December 31,
1999 1998
# $ # $
<S> <C> <C> <C> <C>
Subscription rights
Outstanding, beginning of period - - 38,500,000 1,132,997
Exchange for common shares - - (38,500,000) (1,132,997)
Outstanding, end of period - - - -
Common shares
Outstanding, beginning
of Period 148,312,634 2,751,233 83,070,958 758,282
Shares issued for
subscription rights - - 38,500,000 1,111,974
Shares issued for warrants - - 8,668,446 368,929
Issued on acquisition - - 17,633,857 508,995
Stock options exercised 112,762 1,078 417,492 2,152
Others 82,933 2,565 21,881 901
Outstanding, end of
Period 148,508,329 2,754,876 148,312,634 2,751,233
Total 148,508,329 2,754,876 148,312,634 2,751,233
Unrealized foreign
currency translation
adjustment - 34,519 - 41,628
Total share capital 148,508,329 2,789,395 148,312,634 2,792,861
</TABLE>
<PAGE>
Public Offerings
On January 12, 1998, the subscription rights were exchanged for
38,500,000 common shares at Cdn. $46.00 per share.
On June 4, 1998, all of the special warrants outstanding were
exercised without additional payment.
Treasury Issue
On January 12, 1998, the Company completed a private placement of
17,633,857 common shares at $31.19 per share for proceeds of $550,000.
On May 20, 1998, the Company completed a private placement of
8,668,446 special warrants at $46.14 per warrant. Each special
warrant entitled the holder thereof to acquire one common share of the
Company.
12. FINANCE ASSETS UNDER MANAGEMENT
Included in finance assets under management are finance assets which
have been securitized or syndicated by the Company and are not
reflected on the consolidated balance sheets.
Securitized finance assets are described in Note 2. Syndicated
finance assets are assets which have been sold to investors without
recourse or credit enhancement.
<TABLE>
<CAPTION>
Finance assets under management are as follows:
September 30, December 31,
1999 1998
$ $
<S> <C> <C>
Securitized finance assets 8,559,918 9,000,658
Syndicated finance assets 1,744,540 1,396,230
Syndicated finance assets of affiliated
Companies 411,720 416,265
Total 10,716,178 10,813,153
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
13. SUMMARIZED FINANCIAL INFORMATION OF AT&T CAPITAL CORPORATION
The table below shows summarized consolidated financial information for AT&T
Capital, an indirect wholly-owned subsidiary of the Company. The Company has
guaranteed ("Guarantee") on a full and unconditional basis the existing
registered debt securities and certain other indebtedness of AT&T Capital. The
Company has not disclosed financial statements or other information regarding
AT&T Capital on a stand-alone basis since management does not believe that it
is material to debt holders due to the Guarantee.
The following summarized consolidated financial information for AT&T Capital
has been prepared in accordance with accounting principles generally accepted
in Canada.
Nine months ended
September 30, 1999 September 30, 1998
$ $
<S> <C> <C>
Total asset finance income 330,464 413,097
Operating expenses 259,574 335,548
Operating income before taxes 70,890 77,549
Net income for the period 43,952 42,858
September 30, 1999 December 31, 1998
$ $
<S> <C> <C>
ASSETS
Cash 127,847 1,011,409
Finance assets held for investment 3,961,790 4,759,564
Equipment under operating lease 1,650,313 1,565,379
Finance assets held for sale 214,313 177,049
Receivables from affiliates and
other assets 4,943,894 3,276,167
Total Assets 10,898,157 10,789,568
LIABILITIES AND SHAREHOLDER'S
EQUITY
Liabilities
Debt 9,809,564 9,280,639
Accrued liabilities 128,134 582,122
Total Liabilities 9,937,698 9,862,761
Total Shareholder's Equity 960,459 926,807
Total Liabilities and Shareholder's
Equity 10,898,157 10,789,568
</TABLE>
<PAGE>
Included in the first nine months of 1999 total asset finance income
is $126.7 million (1998 - $33.2 million) of interest income related to
intercompany receivables due from certain subsidiaries of the Company.
Total asset finance income decreased in the first nine months of 1999
compared to the same period in 1998 due mainly to the sale of various
portions of the international businesses of AT&T Capital to the
Company at their approximate book value. The assets relating to these
businesses approximated $1,178.4 million. Increased securitization
volume in the second half of 1998 also contributed to the decrease in
finance revenue.
Included in receivables from affiliates and other assets is $4.5
billion as at September 30, 1999 (1998 - $2.9 billion) of intercompany
receivables due from certain subsidiaries of the Company.
The purchase price the Company paid for AT&T Capital has not been
"pushed down" to AT&T Capital's stand-alone financial statements;
however, these statements reflect the adoption of the accounting
policies and procedures of the Company.
14. MERGER WITH THE CIT GROUP INC.
On March 8, 1999, the Company announced that it would be acquired by
The CIT Group Inc. ("CIT") through an exchange of common stock. Under
the terms of the transaction each outstanding share of the Company's
common stock will be exchanged for 0.92 shares of CIT. Under an
amended and restated agreement and plan of reorganization dated August
5, 1999, the Company and CIT reached agreement that the Company's
common stock would be exchanged for 0.70 shares of CIT as well as the
elimination of certain closing conditions. The transaction is
expected to close during the fourth quarter of 1999, and is
conditional upon regulatory and shareholder approval. CIT is
headquartered in Livingston, New Jersey, USA. CIT is a leading
diversified finance organization offering secured commercial and
consumer financing primarily in the United States.
15. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems
may recognize the Year 2000 as 1900 or some other date, resulting in
errors when information using Year 2000 dates is processed. In
addition, similar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date. The effects
of the Year 2000 Issue may be experienced before, on, or after January
1, 2000 and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the Company, including those related to the
efforts of customers, suppliers, or other third parties, will be fully
resolved.
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16. FOREIGN EXCHANGE RATES
The following Canadian to U.S. dollars exchange rates were used during
the period:
December 31, 1998 0.6443
September 30, 1999 0.6812
Average for the first nine months of 1999 0.6712
17. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS
The comparative consolidated financial statements have been
reclassified from statements previously presented to conform to the
presentation of the 1999 consolidated financial statements.
