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: March 31, 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: May 5,1999
NEWCOURT CREDIT GROUP INC.
By: John P. Stevenson
Corporate Secretary
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
NEWCOURT CREDIT GROUP INC.
(Unaudited)
For the three months ended March 31, 1999
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
[in thousands of United States dollars]
March 31, December 31,
1999 1998
$ $
<S> <C> <C>
ASSETS
Cash 440,355 98,807
Finance assets held for investment [Note 3] 8,900,429 8,611,705
Equipment under operating lease 2,265,632 2,173,514
Finance assets held for sale 2,061,763 1,542,769
Investment in affiliated companies 256,142 194,860
Accounts receivable, prepaids and other 402,434 310,948
Property and equipment, net [Note 4] 100,244 93,874
Goodwill [Note 5] 1,275,188 1,280,036
Future income tax asset 180,965 146,444
Total Assets 15,883,152 15,352,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities 686,256 727,468
Debt [Note 6] 12,148,897 11,607,184
Total Liabilities 12,835,153 12,334,652
Shareholders' Equity
Share capital [Note 8] 2,792,137 2,792,861
Retained earnings 255,862 225,444
Total Shareholders' Equity 3,047,999 3,018,305
Total Liabilities and Shareholders' Equity 15,883,152 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]
Three Months Ended
March 31, March 31,
1999 1998
$ $
<S> <C> <C>
Asset finance income
Net finance and rental income 94,676 122,494
Gain on sale of finance assets 49,257 55,509
Management fees and other income [Note 7] 92,786 31,243
Total asset finance income 236,719 209,246
Salaries and wages 88,930 75,243
Operating and administrative 69,463 69,504
Depreciation and goodwill amortization
[Note 5] 17,930 18,437
Operating income before income taxes 60,396 46,062
Provision for income taxes 24,339 18,751
Net income for the period 36,057 27,311
Retained earnings, beginning of period 225,444 81,240
Dividends paid on common shares (5,639) (3,596)
Retained earnings, end of period 255,862 104,955
Earnings per common share:
Basic $0.24 $0.21
Fully diluted $0.24 $0.21
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Newcourt Credit Group Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
[in thousands of United States dollars]
Three Months ended
March 31,
1999 1998
$ $
<S> <C> <C>
OPERATING ACTIVITIES
Net income for the period 36,057 27,311
Add items not requiring an outlay of cash:
Future income taxes (38,575) 7,508
Goodwill amortization, depreciation and
other expense 17,930 18,437
Cash flow from operations 15,412 53,256
Net change in non-cash assets and liabilities(135,599) (39,329)
Cash (used in)/provided by operating
Activities (120,187) 13,927
INVESTING ACTIVITIES
Finance assets, underwritten and purchased (4,206,145) (2,529,156)
Finance assets, sold 2,027,660 1,056,135
Finance assets, repayments and others 1,274,343 880,543
Finance assets and assets held for sale (904,142) (592,478)
Business acquisitions 0 (1,059,892)
Investment in affiliated companies (61,365) 1,284
Purchase of property and equipment (12,915) (3,761)
Cash used in investing activities (978,422) (1,654,847)
FINANCING ACTIVITIES
Issuance of debt 12,375,299 25,974,628
Repayment of debt (11,829,630) (25,399,764)
Issue of common shares, net 126 1,103,856
Future tax on share issue costs 0 17,200
Dividends paid on common shares (5,638) (3,596)
Cash provided by/(used in) financing
Activities 540,157 1,692,324
Increase (decrease) in cash during the period(558,452) 51,404
Cash, beginning of period 998,807 4,776
Cash, end of period 440,355 56,180
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.
<PAGE>
The Company accounts for its investment in foreign and domestic
affiliates in which it has significant influence using the equity
method.
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.
Gain on sale of finance assets
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
<PAGE>
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 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.
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
<PAGE>
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.
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.
<PAGE>
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 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,
<PAGE>
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. ALLOWANCE FOR CREDIT LOSSES
An analysis of the Company's allowance for credit losses is as
follows:
March 31, December 31,
1999 1998
$ $
<S> <C> <C>
Finance assets held for investment and equipment under
operating lease 11,166,061 10,785,219
Allowance for credit losses, beginning of period 183,693 24,846
Provision for credit losses during the period 24,026 96,141
Provision for credit losses from acquisition, net of sales 0 132,022
Write-offs, net of recoveries (19,652) (69,316)
Allowance for credit losses, end of period 188,067 183,693
Allowance as a percentage of investment assets 1.7% 1.7%
Investment assets in arrears (90 days and over) 165,278 143,620
Arrears as a percentage of investment assets 1.5% 1.3%
Assets in repossession, at estimated net realizable value 153,451 84,540
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
March 31, 1999 December 31,
1998
Accumulated Accumulated
Cost depreciation Cost depreciation
$ $ $ $
<S> <C> <C> <C> <C>
Land and buildings 31,512 16,881 28,842 16,309
Furniture and fixtures 57,979 27,400 55,070 26,702
Computers and office
Equipment 107,105 55,178 103,231 53,420
Other 3,870 763 3,910 748
200,466 100,222 191,053 97,179
Net book value 100,244 93,874
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
5. GOODWILL
Goodwill amortization during the period was $11,360 [1998 -
$14,215].
6. DEBT
Debt consists of the following:
March 31, 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 1,502,162 503,504
Medium term notes, bearing interest at rates varying from
5.00% to 9.34%, maturing in the years 1999 to 2007 582,201 581,004
U.S. medium term notes, bearing interest at rates varying
from 5.61% to 8.25%, maturing in the years 1999 to 2028 6,198,099 6,126,500
7.625% debenture, maturing in June, 2001 82,603 80,446
6.45% debenture, maturing in June, 2002 99,121 96,535
Collateralized borrowings related to securitized
assets, 5.50%, maturing in 2003 112,439 122,873
Capital lease obligations, discounted at rates varying from
5.70% to 13.50%, maturing in 2004 132,952 258,602
Other fixed rate debt 441,256 338,321
Floating Rate Debt
Floating rate U.S. medium term notes, interest rate ranges
from 4.89% to 6.81%, maturing in the years 1999 to 2002 815,250 1,350,322
Collateralized borrowings relating to securitized assets,
based upon one month LIBOR plus 0.125%, maturing in 2001 57,025 65,674
Floating rate medium term notes, interest
periodically reprices
based upon CDOR index, maturing in the year 2000 66,150 64,430
Commercial paper and other short-term borrowings 2,059,639 2,018,973
Total debt 12,148,897 11,607,184
</TABLE>
<PAGE>
Interest expense on the debt outstanding during the period was
$199,944 [1998 - $140,935].
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 March 31, 1999 is 5.23% [1998 - 4.91%], for the Canadian
commercial paper program, 5.32% [1998 - 6.02%] for the U.S.
commercial paper program and 5.01% [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.
7. OTHER INCOME
During the first quarter, the Company recorded a pre-tax gain of
$56,582 [1998 - nil] (after-tax gain of $31,120 [1998-nil])
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
<PAGE>
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. This change in
hedging strategy was completed during the first quarter. 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>
<TABLE>
<CAPTION>
8. 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.
Outstanding -
The following is a summary of the changes in share capital during
the period:
March 31, December 31,
1999 1998
# $ # $
<S> <C> <C> <C> <C>
Subscription rights
Outstanding, beginning of period 0 0 38,500,000 1,132,997
Exchange for common shares 0 0 (38,500,000) (1,132,997)
Outstanding, end of period 0 0 0 0
Common shares
Outstanding, beginning
of period 148,312,634 2,751,233 83,070,958 758,282
Shares issued for
subscription rights 0 0 38,500,000 1,111,974
Shares issued for warrants 0 0 8,668,446 368,929
Issued on acquisition 0 0 17,633,857 508,995
Stock options exercised 11,475 126 417,492 2,152
Others 0 0 21,881 901
Outstanding, end of period 148,324,109 2,751,359 148,312,634 2,751,233
Total 148,324,109 2,751,359 148,312,634 2,751,233
Unrealized foreign
currency translation adjustment 0 40,778 0 41,628
Total share capital 148,324,109 2,792,137 148,312,634 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.
9. 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.
Finance assets under management are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
$ $
<S> <C> <C>
Securitized finance assets 9,584,464 9,000,658
Syndicated finance assets 1,658,666 1,396,230
Syndicated finance assets of
affiliated companies 416,453 416,265
Total 11,659,583 10,813,153
</TABLE>
<PAGE>
10. 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.
Three months ended March 31,
1999 1998
$ $
[S] [C] [C]
Total asset finance income 110,881 150,470
Operating expenses 87,394 130,156
Operating income before taxes 23,487 20,314
Net income for the period 14,954 12,153
March 31, December 31,
1999 1998
$ $
[S] [C] [C]
ASSETS
Cash 266,105 1,011,409
Finance assets held for investment 4,671,938 4,759,564
Equipment under operating lease 1,583,035 1,565,379
Finance assets held for sale 0 177,049
Receivables from affiliates and
other assets 3,968,901 3,276,167
Total Assets 10,489,979 10,789,568
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Debt 9,135,736 9,280,639
Accrued liabilities 414,984 582,122
Total Liabilities 9,550,720 9,862,761
Total Shareholder's Equity 939,259 926,807
Total Liabilities and Shareholder's Equity 10,489,979 10,789,568
<PAGE>
Included in first quarter 1999 total asset finance income is $38.1
million (1998 - $2.9 million) of interest income related to
intercompany receivables due from certain subsidiaries of the
Company.
Total asset finance income decreased in the first quarter 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 first quarter 1999 receivables from affiliates and
other assets is $3.2 billion (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.
11. 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.
The transaction is expected to close during the third quarter of
1999, and is conditional upon, among other things, 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.
12. 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
<PAGE>
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.
13. FOREIGN EXCHANGE RATES
The following Canadian to U.S. dollars exchange rates were used
during the period:
December 31, 1998 0.6443
March 31, 1999 0.6615
Average for first quarter 1999 0.6585
14. 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.
Newcourt Credit Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
[in thousands of United States dollars, unless otherwise indicated]
