UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1994
------------------
OR
( ) 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
1-1861
-----------------------
THE CIT GROUP HOLDINGS, INC.
- - ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-2994534
- - ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1211 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10036
- - ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 536-1950
- - ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NONE
- - ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report.)
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
------------- -------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 15, 1994: 1,000 shares.
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
(UNAUDITED)
TABLE OF CONTENTS PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1994 and
December 31, 1993. 2-3
Consolidated Income Statements for the three
month periods ended March 31, 1994 and 1993. 4
Consolidated Statements of Stockholders' Equity for
the three month periods ended March 31, 1994 and 1993. 5
Consolidated Statements of Cash Flows for the three
month periods ended March 31, 1994 and 1993. 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-18
PART II. OTHER INFORMATION
Item 2. Changes in Securities 19
6. Exhibits and Reports on Form 8-K 19
PART I. FINANCIAL INFORMATION
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. It is suggested that
these condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the December 31, 1993 Annual Report
on Form 10-K for The CIT Group Holdings, Inc. (the "Corporation").
The Corporation considers that all adjustments (all of which are normal
recurring accruals) necessary for a fair statement of the financial position
and results of operations for these periods have been made; however, results
for such interim periods are subject to year-end audit adjustments. Results
for such interim periods are not necessarily indicative of results for a full
year. Amounts for 1993 have been reclassified, where necessary, to conform to
1994 presentations.
-1-
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1994 1993
------------- -------------
ASSETS (AMOUNTS IN THOUSANDS)
FINANCING AND LEASING ASSETS
Finance receivables (net of unearned finance
income of $1,438,677 and $1,482,069)
CORPORATE FINANCE
Capital Equipment Financing $ 4,270,205 $ 4,394,528
Business Credit 1,228,345 1,282,133
Credit Finance 690,761 645,642
----------- -----------
6,189,311 6,322,303
DEALER AND MANUFACTURER FINANCING
Industrial Financing 3,900,134 3,880,991
Sales Financing and Consumer Finance 1,536,750 1,438,865
----------- -----------
5,436,884 5,319,856
FACTORING
Commercial Services 1,963,950 981,935
----------- -----------
Finance receivables 13,590,145 12,624,094
Reserve for credit losses (180,046) (169,378)
----------- -----------
Net finance receivables 13,410,099 12,454,716
Equipment under operating lease, net 738,733 751,901
----------- -----------
Net financing and leasing assets 14,148,832 13,206,617
CASH AND CASH EQUIVALENTS
Cash 49,153 101,554
Interest-bearing deposits 17,000 -
----------- -----------
Cash and cash equivalents 66,153 101,554
OTHER ASSETS 391,261 420,310
----------- -----------
TOTAL ASSETS $14,606,246 $13,728,481
=========== ===========
-2-
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1994 1993
------------ ------------
(AMOUNTS IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
DEBT
Commercial paper $ 6,202,936 $ 6,516,139
Variable rate term debt 2,187,500 1,686,500
Fixed rate term debt 2,385,000 2,392,500
Subordinated fixed rate term debt 300,000 200,000
----------- -----------
Total debt 11,075,436 10,795,139
Credit balances of factoring clients 1,009,940 521,728
Accrued liabilities and payables 410,370 324,520
Deferred Federal income taxes and investment
tax credits 394,826 394,859
----------- -----------
Total liabilities 12,890,572 12,036,246
STOCKHOLDERS' EQUITY
Common stock - authorized, issued and
outstanding - 1,000 shares 250,000 250,000
Paid-in capital 408,320 408,320
Retained earnings 1,057,354 1,033,915
----------- -----------
Total stockholders' equity 1,715,674 1,692,235
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,606,246 $13,728,481
=========== ===========
-3-
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED
March 31,
---------------------
1994 1993
---------------------
(AMOUNTS IN THOUSANDS)
Interest and fees earned $303,910 $287,681
Interest expense 128,840 124,686
-------- --------
Net interest revenue 175,070 162,995
-------- --------
Gains on asset sales 7,625 1,272
Salaries and employee benefits 43,250 37,774
Other operating expenses 37,299 29,896
-------- --------
Operating expenses before provision for
credit losses 80,549 67,670
Provision for credit losses 24,881 24,301
-------- --------
Total operating expenses 105,430 91,971
-------- --------
Income before provision for income taxes 77,265 72,296
Provision for income taxes 29,230 28,764
-------- --------
Net income $ 48,035 $ 43,532
======== ========
-4-
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED
March 31,
---------------------------
1994 1993
---------------------------
Balance, January 1 $1,692,235 $1,601,091
Net income 48,035 43,532
Dividends paid (24,596) (21,931)
---------- ----------
Balance, March 31 $1,715,674 $1,622,692
========== ==========
-5-
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,
------------------------
1994 1993
------------------------
(AMOUNTS IN THOUSANDS)
CASH FLOWS FROM OPERATIONS
Net income $ 48,035 $ 43,532
Adjustments to reconcile net income to net cash
flows from operations:
Provision for credit losses 24,881 24,301
Depreciation and amortization 17,251 10,090
Gains on asset sales (7,625) (1,272)
Increase in accrued liabilities and payables 46,549 10,783
Decrease (increase) in other assets (1,594) 18,949
Other (5,202) (4,511)
----------- -----------
Net cash flows provided by operations 122,295 101,872
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans extended (5,111,186) (4,284,690)
Collections on loans 5,061,096 4,099,106
Net (increase) in short-term factoring receivables (176,166) (61,674)
Collections on lease receivables 159,523 123,177
Acquisition of Barclays Commercial Corporation (435,630) -
Purchases of assets to be leased (66,106) (125,157)
Proceeds from asset sales 198,643 13,672
Purchases of finance receivables portfolios (13,943) (82,886)
Proceeds from sales of assets received in
satisfaction of loans 13,925 9,187
Other (7,854) (5,456)
----------- -----------
Net cash flows used for investing activities (377,698) (314,721)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of variable rate term debt 801,000 300,000
Proceeds from the issuance of fixed rate term debt 300,000 175,000
Repayments of variable and fixed rate term debt (507,500) (114,000)
Net (decrease) in commercial paper (313,203) (203,246)
Repayments of nonrecourse leveraged lease debt (35,699) (18,830)
Cash dividends paid (24,596) (21,931)
----------- -----------
Net cash flows from financing activities 220,002 116,993
----------- -----------
Net (decrease) in cash and cash equivalents (35,401) (95,856)
Cash and cash equivalents, beginning of year 101,554 699,793
----------- -----------
Cash and cash equivalents, end of quarter $ 66,153 $ 603,937
=========== ===========
-6-
<PAGE>
THE CIT GROUP HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,
--------------------------
1994 1993
--------------------------
(AMOUNTS IN THOUSANDS)
Supplemental disclosures
Interest paid $ 145,171 $ 132,956
Federal and State and local taxes paid $ 2,758 5,789
Noncash transfers of financing and leasing assets
to assets received in satisfaction of loans $ 21,643 $ 30,223
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NET INCOME
Net income for the first quarter of 1994 totaled a record $48.0 million, an
increase of $4.5 million (10.3%) from the $43.5 million reported in the first
quarter of 1993. The record earnings were due to improved net interest and
other revenue, reflecting excellent finance receivables growth over the past
year.
FINANCING AND LEASING ASSETS
Financing and leasing assets increased from both year-end 1993 and March 31,
1993 as presented in the following table.
March 31, December 31, March 31,
Amounts in Millions 1994 1993 1993
- - -----------------------------------------------------------------------------
Finance receivables $13,590.1 $12,624.1 $12,149.3
Equipment under operating lease 738.7 751.9 470.8
- - -----------------------------------------------------------------------------
Financing and leasing assets $14,328.8 $13,376.0 $12,620.1
- - -----------------------------------------------------------------------------
The increase of $952.9 million (7.1%) from December 31, 1993 is primarily due
to the February 28, 1994 acquisition of Barclays Commercial Corporation
("BCC"), a major provider of factoring, commercial finance and credit related
services. BCC added $747.5 million to finance receivables at March 31, 1994;
otherwise, financing and leasing assets grew a modest $205.4 million (1.5%)
since year-end 1993. The gain of $1.71 billion (13.5%) from March 31, 1993
reflects strong 1993 growth in the Corporation's middle-market businesses,
complemented by the 1994 BCC acquisition.
-8-
<PAGE>
Changes in financing and leasing assets from December 31, 1993 are discussed
below for each business unit.
Corporate Finance
- Capital Equipment Financing - Customized secured equipment financing and
leasing for major capital equipment. Finance receivables were
$4.27 billion at March 31, 1994 down $124.3 million (2.8%) from
$4.39 billion at December 31, 1993, principally due to customer
prepayments and continued weak demand for equipment financing with larger
companies in certain sectors of the market, including commercial airlines.
Equipment under operating lease totaled $550.2 million at March 31, 1994,
a decrease of $15.5 million (2.7%) from $565.7 million at December 31,
1993.
- Business Credit - Revolving and term loans, including debtor-in-possession
and workout financing, to medium and larger-sized companies secured by
accounts receivable, inventory and fixed assets. Finance receivables
totaled $1.23 billion at March 31, 1994, a decrease of $53.8 million
(4.2%) from the $1.28 billion reported at December 31, 1993, as customer
paydowns exceeded new borrowings.
- Credit Finance - Revolving and term loans, including restructurings, to
small and medium-sized companies secured by accounts receivable, inventory
and fixed assets. Receivables growth continued during the current quarter
with finance receivables reaching $690.8 million at March 31, 1994, an
increase of $45.1 million (7.0%), compared with $645.6 million at
December 31, 1993, as improving economic conditions for middle-market
clients contributed to their need for financing.
-9-
<PAGE>
Dealer and Manufacturer Financing
- Industrial Financing - Secured equipment financing and leasing for medium-
sized companies, including dealer and manufacturer financing. Finance
receivables were $3.90 billion at March 31, 1994, an increase of
$19.1 million (0.5%), compared with $3.88 billion at December 31, 1993.
The increase was modest in spite of record first quarter funding volume
with middle-market companies, which was essentially offset by higher than
normal liquidations. Equipment under operating lease was relatively
unchanged at $188.6 million at March 31, 1994, compared with
$186.2 million at December 31, 1993.
- Sales Financing - Retail secured financing of recreation vehicles,
recreation boats, and manufactured housing, through dealers and
manufacturers. Finance receivables were $1.34 billion at March 31, 1994,
an increase of $37.2 million (2.8%), compared with $1.31 billion at
December 31, 1993, as the volume of new business remained consistent with
recent quarters.
- Consumer Finance - Loans secured by first or second mortgages on
residential real estate, generated primarily through direct marketing.
Finance receivables grew to $192.0 million at March 31, 1994, an increase
of $60.7 million (46.2%), compared with $131.3 million at December 31,
1993, reflecting increased levels of origination activity, including new
loans generated by 18 additional branches opened in late 1993.
-10-
<PAGE>
Factoring
- Commercial Services - Factoring of accounts receivables, including credit
protection, bookkeeping and collection activities. Finance receivables
reached $1.96 billion at March 31, 1994, doubling the $981.9 million
reported at December 31, 1993, largely as a result of the aforementioned
BCC acquisition. A seasonal increase in traditional factoring activity
and volume with new clients in non-traditional industries also contributed
to the growth in finance receivables from year-end 1993.
Commercial Airline Industry
Commercial airline finance receivables and equipment under operating lease
totaled $1.85 billion or 12.9% of total financing and leasing assets (before
the reserve for credit losses) at March 31, 1994, compared with $1.89 billion
(14.2%) at December 31, 1993. The portfolio is secured by commercial aircraft
and related equipment and is further described in the following table.
MARCH 31, DECEMBER 31,
1994 1993
------------ ------------
(DOLLAR AMOUNTS IN MILLIONS)
Finance Receivables
Amount outstanding (a) $1,399.0 $ 1,437.3
Number of obligors 43 43
Operating Leases
Net carrying value $ 451.3 $ 457.6
Number of obligors 20 21
- - ------------------------------------------------------------------------------
Total $1,850.3 $ 1,894.9
- - ------------------------------------------------------------------------------
Number of obligors (b) 57 58
- - ------------------------------------------------------------------------------
Number of aircraft 274 276
- - ------------------------------------------------------------------------------
(a) Includes accrued rents on operating leases of $0.6 million and $1.0
million at March 31, 1994 and December 31, 1993, respectively, which are
classified in finance receivables in the Consolidated Balance Sheets.
(b) Certain obligors have both finance receivable and operating lease
transactions.
One commercial airline obligor, with outstandings of $63.6 million at
March 31, 1994 ($64.2 million at December 31, 1993), was subject to
proceedings under Chapter 11 of the Bankruptcy Reform Act of 1978, as amended.
-11-
<PAGE>
However, this obligor was current on its contractual obligations with the
Corporation at March 31, 1994.
Highly Leveraged Transactions
Highly leveraged transactions ("HLTs") totaled $369.7 million (2.6% of
financing and leasing assets before the reserve for credit losses) at
March 31, 1994, down from $476.6 million (3.6%) at December 31, 1993, as a
result of delisting various transactions which satisfied the HLT delisting
criteria, as set forth by certain federal supervisory agencies.
The Corporation's HLT outstandings are generally secured by collateral, as
distinguished from HLTs that rely primarily on cash flow from operations. At
March 31, 1994, the portfolio consisted of 25 obligors in 11 industry groups,
located throughout the United States, with the largest regional concentration,
26.5%, in the Northeast. The nonaccrual status of the three accounts so
classified at December 31, 1993 was unchanged at March 31, 1994. However, the
total outstandings declined to $21.5 million at March 31, 1994 from
$34.7 million at year-end 1993.
Unfunded commitments to lend in secured HLT situations were $83.2 million at
March 31, 1994, compared with $123.1 million at December 31, 1993.
NET INTEREST REVENUE
During the 1994 first quarter, average financing and leasing assets ("AEA")
were $13.02 billion, an increase of 10.0%, compared with $11.84 billion for
the comparable 1993 period. Net interest revenue (interest and fees earned
less interest expense) increased to $175.1 million for the 1994 first quarter,
up $12.1 million (7.4%) from $163.0 million for the comparable 1993 period.
-12-
<PAGE>
As a percentage of AEA, net interest revenue was 5.37% for the 1994 first
quarter, compared with 5.51% in the 1993 first quarter, as interest rates
earned on financing and leasing assets decreased more rapidly than interest
rates paid on funds borrowed by the Corporation.
Interest and fees earned rose to $303.9 million for the first quarter of 1994,
a $16.2 million (5.6%) improvement over the $287.7 million reported in the
first quarter of 1993, and interest expense totaled $128.8 million for the
1994 first quarter, $4.2 million (3.3%) higher than the $124.7 million
reported in the 1993 period.
Fluctuations in market interest rates can affect net interest revenue through
changes in the spread between interest charged on interest-earning assets and
interest rates paid on interest-bearing liabilities. As the level of market
interest rates and the relationship between short-term and long-term market
interest rates change, there is exposure to potential increases or decreases
in net interest revenue.
A comparative analysis of the weighted average interest rates paid on the
Corporation's debt, after giving effect to interest rate swaps, is set forth
below.
THREE MONTHS ENDED
MARCH 31,
1994 1993
- - ----------------------------------------------------------------------------
Floating rate debt 3.46% 3.41%
Fixed rate debt 6.70% 7.55%
Composite interest rate 4.70% 4.94%
- - ----------------------------------------------------------------------------
Interest rate swap transactions are generally entered into by the Corporation
as a hedge against market interest rate fluctuations and are not entered into
for trading or speculative purposes.
-13-
<PAGE>
GAINS ON ASSET SALES
Gains on asset sales for the first quarter of 1994 were $7.6 million, compared
with $1.3 million in the comparable 1993 quarter. The increase is
attributable to securitizing $150 million of recreation vehicle receivables in
January 1994 and to the sale of equipment previously on lease.
OPERATING EXPENSES
Operating expenses before the provision for credit losses totaled
$80.5 million for the 1994 first quarter, an increase of $12.9 million (19.0%)
from $67.7 million for the 1993 first quarter. As a percentage of AEA,
operating expenses were 2.47% in 1994, compared with 2.29% in 1993. The
increases are primarily attributable to several unrelated factors, including
the operating expenses associated with the acquired BCC factoring business,
the continued expansion of Consumer Finance, and nonrecurring items
(principally charges associated with consolidating Sales Financing's 12
business acquisition centers into five regional business centers). Excluding
the BCC expenses and the nonrecurring items, operating expenses as a
percentage of AEA were 2.31% for the first quarter of 1994.
The aforementioned factors resulted in salaries and employee benefits rising
to $43.3 million for the first quarter of 1994, an increase of $5.5 million
(14.5%), from $37.8 million in the 1993 first quarter, and in other operating
expenses increasing to $37.3 million for the 1994 first quarter, an increase
of $7.4 million (24.8%), compared with the $29.9 million reported in the 1993
first quarter.
-14-
<PAGE>
The following table presents components of net income as a percentage of
AEA, along with other selected financial data:
THREE MONTHS ENDED
MARCH 31,
-------------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1994 1993
-------------------------
Interest and fees earned* 9.23% 9.55%
Interest expense* 3.86 4.04
----------- -----------
Net interest revenue 5.37 5.51
Gains on asset sales .24 .04
Operating expenses before
provision for credit losses 2.47 2.29
Net charge-offs** .80 .75
Loss reserve increase/(decrease) (.03) .06
Income before provision for income taxes 2.37 2.44
Provision for income taxes .89 .97
----------- -----------
Net income 1.48% 1.47%
=========== ===========
AEA $13,024,231 $11,837,338
=========== ===========
Average finance receivables $12,850,556 $11,891,369
=========== ===========
Ratio of earnings to fixed charges 1.59 1.57
* Percentage calculated excluding interest income and interest expense
relating to short-term interest-bearing deposits.
** Percentage of average finance receivables.
-15-
<PAGE>
PROVISION AND RESERVE FOR CREDIT LOSSES
The total provision for credit losses was $24.9 million for the first quarter
of 1994, compared with $24.3 million for the comparable 1993 period. Net
charge-offs totaled $25.8 million, .80% (annualized) of average finance
receivables for the current quarter, compared with $22.4 million, .75%
(annualized) of average finance receivables for the 1993 first quarter.
The reserve for credit losses at March 31, 1994 was $180.0 million, 1.32% of
finance receivables, compared with $169.4 million, 1.34% of finance
receivables, at year-end 1993. The increase from year-end 1993 is
attributable to credit loss reserves acquired as part of the BCC acquisition.
PAST DUE AND NONACCRUAL FINANCE RECEIVABLES,
AND ASSETS RECEIVED IN SATISFACTION OF LOANS
Finance receivables past due 60 days or more were $198.2 million (1.46% of
finance receivables) at March 31, 1994, down from $216.1 million (1.71%) at
December 31, 1993 and $317.9 million (2.62%) at March 31, 1993. Past due
receivables on nonaccrual status declined to $105.6 million (0.78% of finance
receivables) at March 31, 1994, from $139.9 million (1.11%) at December 31,
1993 and $220.4 million (1.81%) at March 31, 1993. Excluding past due loans
in Industrial Financing that have dealer or manufacturer recourse provisions,
the percentage of finance receivables past due 60 days or more was 1.16% at
March 31, 1994, down from 1.47% at December 31, 1993 and 2.30% at March 31,
1993.
Assets received in satisfaction of loans were $79.5 million at March 31, 1994,
down from $87.0 million at year-end 1993 and $106.0 million at March 31, 1993.
-16-
<PAGE>
INCOME TAXES
The effective income tax rate for the 1994 first quarter was 37.8%, versus
39.8% in the comparable prior year period.
LIQUIDITY
The Corporation relies upon cash flow from operations to provide liquidity,
but is also dependent upon issuing commercial paper and variable rate and
fixed rate term debt to satisfy its financing needs.
At March 31, 1994, commercial paper borrowings were supported by $4.31 billion
of credit line facilities, representing 70% of operating commercial paper
(commercial paper outstanding less the amount funding short-term interest-
bearing deposits). No borrowings have been made under credit lines since
1970.
CAPITALIZATION
The following table presents information regarding the Corporation's capital
structure.
MARCH 31, DECEMBER 31,
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS)
Debt $11,075,436 $10,795,139
Stockholders' equity 1,715,674 1,692,235
----------- -----------
Total Capitalization $12,791,110 $12,487,374
=========== ===========
Debt-to-equity ratio 6.45 to 1 6.38 to 1
-17-
<PAGE>
Since year-end 1993, commercial paper borrowings decreased $313.2 million to
$6.20 billion at March 31, 1994. Repayments of term debt totaled
$507.5 million in the 1994 first quarter consisting of $300.0 million of
variable rate and $207.5 million of fixed rate term debt. During the quarter,
the Corporation issued $801.0 million of variable rate and $300.0 million of
fixed rate term debt.
At March 31, 1994, $1.77 billion of registered but unissued debt securities
remained available under shelf registration statements. A shelf registration
statement for an additional $4.0 billion of debt securities was filed with,
but not yet declared effective by, the Securities and Exchange Commission.
INVESTMENTS IN DEBT AND EQUITY SECURITIES
The Corporation adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115") effective January 1, 1994. SFAS 115 requires equity
securities with readily determinable fair values and all debt securities be
classified as either held-to-maturity, available-for-sale or trading; and that
unrealized gains and losses be reported as a separate component of
stockholders' equity, for available-for-sale securities, or included in
earnings, for trading securities. At March 31, 1994, the total carrying value
of investments subject to the provisions of SFAS 115 and the related
unrealized gains and losses were immaterial. Additionally, none of the
investments were classified as trading securities and, accordingly, no
unrealized gains or losses are included in income for the quarter ended
March 31, 1994.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Under the most restrictive provisions of agreements relating to
outstanding term debt, the Corporation may not, without the consent of the
holders of such term debt, permit stockholders' equity to be less than
$300,000,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 12 - Computation of Ratios of Earnings to Fixed Charges.
(b) A Form 8-K report dated January 13, 1994 was filed with the
Commission reporting the Corporation's announcement of results for
the year ended December 31, 1993.
(c) A Form 8-K report dated February 28, 1994 was filed with the
Commission reporting that the Corporation had completed the
acquisition of Barclays Commercial Corporation.
-19-
<PAGE>
EXHIBIT 12
THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
--------------------------
1994 1993
--------------------------
Net Income $ 48,035 $ 43,532
Provision for income taxes 29,230 28,764
-------- --------
Earnings before provision for income taxes 77,265 72,296
-------- --------
Fixed charges:
Interest and debt expense on indebtedness 128,840 124,686
Interest factor - one third of rentals on
real and personal properties 1,903 1,907
-------- --------
Total fixed charges 130,743 126,593
-------- --------
Total earnings before provision for income
taxes and fixed charges $208,008 $198,889
======== ========
Ratio of earnings to fixed charges 1.59 1.57
-20-
<PAGE>
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.
The CIT Group Holdings, Inc.
----------------------------
(Registrant)
BY /s/ J. J. Carroll
----------------------------
J. J. Carroll
Executive Vice President and
Chief Financial Officer
(duly authorized and principal
accounting officer)
DATE: April 29, 1994
-21-
<PAGE>
