PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 23, 1999)
U.S. $15,113,000,000
[GRAPHIC OMITTED]
The CIT Group, Inc.
1211 Avenue of the Americas
New York, New York 10036
Medium-Term Notes
TERMS OF NOTES
We may offer notes at one or more times up to an aggregate initial offering
price of U.S.$15,113,000,000. A pricing supplement will reflect the specific
terms of the notes. The following are the terms or possible terms of the notes.
o The notes will mature 9 months or later from the date they are issued.
o The notes may be issued as "Senior Notes" or "Senior Subordinated Notes."
o The interest rate on the notes may be fixed or floating. Floating rate
interest will be based on:
o CD Rate
o CMT Rate
o Commercial Paper Rate
o 11th District Cost of Funds Rate
o Federal Funds Rate
o LIBOR
o Prime Rate
o Treasury Rate
o Any other rate specified in a pricing supplement
o Adjustments to the rate by the Spread and/or Spread Multiplier
o We may issue notes whose interest rate or interest rate formula may be
adjusted on specific dates.
o Fixed rate interest is payable on January 15 and July 15, generally, accruing
from the date we issue the notes.
o Floating rate interest is payable as stated in the pricing supplement.
o Global securities are held by The Depository Trust Company, generally.
o We may issue one or more notes that are denominated in a currency or currency
unit (the "Specified Currency") other than U.S. dollars. These notes will
not be sold in, or to a resident of, the country of the particular specified
currency of a note. For more details, see "Foreign Currency Risks."
o We may issue notes at a discount from the principal amount payable at the
maturity of the notes.
o We may issue notes that do not pay periodic interest.
o For more details, see "Description of the Notes" in this prospectus
supplement, "Description of Debt Securities" in the prospectus, and the
pricing or other supplements.
o Pricing or other supplements may alter the note terms described above.
TERMS OF SALE
o Unless the pricing supplement specifies otherwise, we would receive between
U.S.$14,999,652,500 and U.S. $15,094,108,750, or the equivalent thereof in
other currencies, of the proceeds from the sale of all of the notes offered
by this prospectus supplement, before expenses, after paying the Agents
commissions at rates ranging between 0.125% and 0.750% of the principal
amount of the notes sold (between U.S.$18,891,250 and U.S.$113,347,500), or
the equivalent thereof in other currencies. If the maturity of the notes
exceeds 30 years, the commission rate may be higher.
o There is no established trading market for the notes and there is no
assurance that an established market will develop for the notes.
o We may sell the notes to one or more agents (each an "Agent" and,
collectively, the "Agents"), including the Agents listed below, as principals
for resale at varying or fixed offering prices or through one or more Agents,
using their reasonable best efforts to sell the notes on our behalf.
o We may also sell the notes without using any Agents.
Neither the SEC nor any state securities commission has approved or disapproved
the notes. None of those authorities has determined that the prospectus, this
supplement or any pricing or other supplement is accurate or complete. Any
representation to the contrary is a criminal offense.
Lehman Brothers
Chase Securities Inc.
Credit Suisse First Boston
J.P. Morgan & Co.
Merrill Lynch & Co.
Morgan Stanley Dean Witter
Salomon Smith Barney
Warburg Dillon Read LLC
The date of this Prospectus Supplement is November 2, 1999.
<PAGE>
You should rely only on the information incorporated by reference or provided in
this prospectus supplement, the prospectus and the pricing supplement. We and
the Agents have not authorized anyone else to provide you with different or
additional information. We are not making an offer of these notes in any
jurisdiction where the offer is not permitted. You should not assume that the
information in this prospectus supplement, the prospectus and the pricing
supplement is accurate as of any date other than the date on the front of that
document.
---------------
TABLE OF CONTENTS
Prospectus Supplement
Page
----
About this Prospectus Supplement and the Pricing Supplements ............ S-2
Description of the Notes ................................................ S-3
Special Provisions Relating to Foreign Currency Notes ................... S-18
Foreign Currency Risks .................................................. S-20
Material United States Federal Income Tax Consequences .................. S-21
Plan of Distribution .................................................... S-27
Prospectus
Where You Can Find More Information ..................................... 2
The CIT Group, Inc. ..................................................... 2
Summary of Financial Information ........................................ 9
Special Note Regarding Forward-Looking Statements ....................... 10
Use of Proceeds ......................................................... 10
Description of Debt Securities .......................................... 10
Plan of Distribution .................................................... 15
Experts ................................................................. 16
Legal Opinions .......................................................... 16
ABOUT THIS PROSPECTUS SUPPLEMENT and the PRICING SUPPLEMENTS
References in this prospectus supplement to "U.S. dollars" or "U.S. $" or "$"
are to the currency of the United States of America.
We may use this prospectus supplement, together with the prospectus and a
pricing supplement, to offer Senior Notes, or Senior Subordinated Notes, from
time to time. The total initial public offering price of notes that may be
offered by use of this prospectus supplement is $15,113,000,000 (or the
equivalent in foreign or composite currencies).
This prospectus supplement sets forth certain terms of the notes that we may
offer. It supplements the description of the notes contained in the prospectus,
where the notes are included in the defined term "Debt Securities." If
information in this prospectus supplement is inconsistent with the prospectus,
this prospectus supplement will apply and you should not rely on the information
in the prospectus.
Each time we issue notes, we will attach a pricing supplement to this prospectus
supplement. The pricing supplement will contain the specific description of the
notes being offered and the terms of the offering. The pricing supplement may
also add, update or change information in this prospectus supplement or the
prospectus. Information in the pricing supplement will replace any inconsistent
information in this prospectus supplement, including any changes in the method
of calculating interest on any note.
When we refer to the prospectus, we mean the prospectus which accompanies this
prospectus supplement. When we refer to a pricing supplement, we mean the
pricing supplement we file with respect to a particular note.
You should read and consider all information contained in this prospectus
supplement, the prospectus, and the pricing supplement in making your investment
decision.
S-2
<PAGE>
DESCRIPTION OF THE NOTES
General
In order to issue notes in the United States that will trade in the public
markets, an issuer must enter into an agreement, called an indenture, with a
banking institution or similar entity organized under the laws of the United
States or of any individual state. We have executed several indentures (each
called an "Indenture," and all together called the "Indentures"), in each case
with a banking institution or similar entity. The terms of an Indenture apply to
any notes that are issued under that Indenture.
This prospectus supplement summarizes certain terms of the notes. If you want to
know more of the terms of any note, you should refer to the Indenture under
which that note will be issued. We have attached copies of each Indenture as an
exhibit to our shelf registration statement (no. 333-63793). If we use a
capitalized term in this prospectus supplement that is not defined, that term
will have the same meaning as in the prospectus and/or the applicable Indenture.
Senior Notes; Senior Subordinated Notes. We will issue the Senior Notes as one
or more separate, unlimited series of debt securities constituting superior
indebtedness under one or more separate indentures (each, a "Senior Indenture",
and collectively, the "Senior Indentures"). Each of the Senior Indentures is
between us and a banking institution or similar entity (each, a "Senior
Trustee," and collectively, the "Senior Trustees"). The Senior Notes will be
"Senior Securities" as described in the prospectus. The Senior Notes will have
the same rank as all of our other Senior Securities. See "Description of Debt
Securities -- Senior Securities" in the prospectus.
We will issue the Senior Subordinated Notes as one or more separate, unlimited
series of Debt Securities constituting senior subordinated indebtedness under
one or more separate indentures (each, a "Senior Subordinated Indenture," and
collectively, the "Senior Subordinated Indentures").
Each of the Senior Subordinated Indentures is between us and a banking
institution or similar entity (each, a "Senior Subordinated Trustee", and
collectively, the "Senior Subordinated Trustees"). The Senior Subordinated Notes
will be "Senior Subordinated Securities" in the prospectus. The Senior
Subordinated Notes will have the same rank as all of our other Senior
Subordinated Securities, but will be subordinate to our Senior Notes. See
"Description of Debt Securities -- Subordinated Securities -- Subordination" in
the prospectus. The Senior Indentures and the Senior Subordinated Indentures are
collectively referred to herein as the "Indentures."
The Senior Trustees and Senior Subordinated Trustees are collectively referred
to herein as the "Trustees."
Unless the pricing supplement specifies to the contrary, with respect to each
separate series of notes issued under the Indentures, the Trustee will serve as
registrar, paying agent and authenticating agent (in each such capacity, the
"Registrar," "Paying Agent," and "Authenticating Agent"), and may act as
exchange rate agent (in such capacity, the "Exchange Rate Agent").
None of the Senior Indentures limits the amount of notes which may be issued
under it, but the Senior Subordinated Indentures may limit the amount of Debt
Securities which we may issue. See "Description of Debt Securities--Restrictive
Provisions" in the prospectus for a description of restrictions on our ability
to issue Senior Subordinated Notes.
Maturity. Each note will mature nine months or more from the date of issue, as
determined by agreement between the initial purchaser and us. We will specify
the maturity date of each note on the face of that note and in the pricing
supplement.
Interest Rates. The notes may bear interest at:
o a fixed rate;
o a floating rate, which may be based on one of the following rates (see
"Description of the Notes -- Interest Rates -- Floating Rate Notes"
for a further description of each of these floating rates):
o CD Rate (a note issued with this rate is a "CD Rate Note");
o CMT Rate (a note issued with this rate is a "CMT Rate Note");
o Commercial Paper Rate (a note issued with this rate is a "Commercial
Paper Rate Note");
o 11th District Rate (a note issued with this rate is an "11th District
Rate Note");
o Federal Funds Rate (a note issued with this rate is a "Federal Funds
Rate Note");
o LIBOR (a note issued with this rate is a "LIBOR Note");
o Prime Rate (a note issued with this rate is a "Prime Rate Note"); and
S-3
<PAGE>
o Treasury Rate (a note issued with this rate is a "Treasury Rate
Note");
o a rate as otherwise specified in the pricing supplement; or
o rates or rate bases or formulas which may be adjusted on specified dates
and which may permit the holder the option of prepayment or which may
permit us the option of redemption at certain times (a note issued with one
of these options is an "Extendible Note").
We will compute interest on floating rate notes by referring to an interest rate
index, often adjusted by a Spread or Spread Multiplier. Interest on floating
rate notes may be adjusted periodically with changes in the underlying interest
rate index. See "Interest Rates" below for definitions of "Spread" and "Spread
Multiplier."
We may issue notes at prices less than their stated principal amount. Certain of
these discounted notes will be considered Original Issue Discount Notes (as
defined below under "Description of the Notes -- Interest Rates"). Original
Issue Discount Notes may or may not bear periodic interest. For a discussion of
the United States federal income tax consequences relating to Original Issue
Discount Notes, see "Certain United States Federal Income Tax Consequences"
below.
Denomination; Book-Entry System; Calculations. Unless the pricing supplement
specifies otherwise, the notes will be denominated in U.S. dollars and we will
make all payments on the notes in U.S. dollars. Unless the pricing supplement
specifies otherwise, we will issue U.S. dollar notes in a minimum denomination
of U.S. $1,000 and integral multiples of U.S. $1,000 for higher amounts.
However, we may specify notes in the pricing supplement that we will denominate
in another currency or currency unit. We will offer the notes at an aggregate
initial offering price of up to U.S. $15,113,000,000 or the equivalent thereof
in other currency or currency units. See "Special Provisions Relating to Foreign
Currency Notes -- Payment Currency." For information on the exchange rate we
will use for non-U.S. dollar notes, see "Special Provisions Relating to Foreign
Currency notes -- Payment Currency."
Unless the pricing supplement specifies otherwise, we will issue each note in
fully registered form without coupons. Unless the pricing supplement specifies
otherwise and except for non-U.S. dollar notes, the notes will be represented by
one or more permanent global notes registered in the name of The Depository
Trust Company, New York, New York (the "Depositary"), or its nominee, as
described below. Subject to the Depositary's requirements, a single global note
will represent all notes issued on the same day and having the same terms. The
Paying Agent will make all payments on notes represented by a global note to the
Depositary. See "Description of the Notes -- Book-Entry System."
"Business Day" is a day other than a Saturday or Sunday and means:
o with respect to notes denominated in U.S. dollars (other than LIBOR Notes),
any day that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation (including any
executive order) to close in the City of New York;
o with respect to notes denominated in a currency other than U.S. dollars or
Euros, any day that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation (including any
executive order) to close in either the City of New York or the principal
financial center of the country of such currency;
o with respect to notes denominated in Euros, any day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer
(TARGET) System is open; and
o with respect to LIBOR Notes, any day that is neither a legal holiday nor a
day on which banking institutions are authorized or required by law or
regulation (including any executive order) to close in the City of New York
and that is also a London Business Day.
Unless the pricing supplement specifies otherwise, we are the "Calculation
Agent" with regard to the notes. As used in this prospectus supplement,
"Calculation Date" means, with respect to any floating rate note and, where
applicable, certain other notes, the earlier of:
o the Business Day immediately preceding the applicable day on which interest
is payable on the note, the date on which the note will mature (the
"Maturity Date") or the date of redemption or repayment, as the case may be;
or
o the fifth Business Day after an Interest Determination Date (as defined
below) relating to the note.
"Index Maturity" means the period to maturity used in the interest rate index on
which the interest rate for any floating rate note is based.
"Interest Determination Date" means, for any Interest Reset Date (as defined in
"Description of the Notes -- Interest Rates -- Floating Rate
S-4
<PAGE>
Notes") the date for determining the rate of interest that will take effect on
the Interest Reset Date.
"Interest Payment Date" means a day on which interest is payable on the note.
"Interest Rate" means, at any given time, the rate per annum at which the note
bears interest.
"London Business Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
Unless the pricing supplement specifies otherwise, we will round all percentages
resulting from any calculation of the rate of interest on floating rate notes,
if necessary, to the nearest one hundred thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655)). We will round all U.S.
dollar amounts used in or resulting from that calculation to the nearest cent
(with one-half cent being rounded upward). In the case of floating rate notes
denominated in currency or currency units other than U.S. dollars, we will round
all amounts used in or resulting from that calculation to the smallest whole
unit of that other currency or currency unit.
Pricing Supplement. The pricing supplement relating to each note will describe
or specify, among other things, the following terms:
o if the note is not denominated in U.S. dollars, the Specified Currency in
which the note is denominated;
o whether the note is a fixed rate note or a floating rate note;
o the price (which may be expressed as a percentage of the aggregate
principal amount thereof) at which we will issue the note;
o the Maturity Date;
o if the note is a fixed rate note, the Interest Rate, if any, for the note;
o if the note is a floating rate note, the Initial Interest Rate, the
Interest Determination Date, the Interest Reset Dates, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate and the Minimum
Interest Rate, if any, and the Spread and/or Spread Multiplier, if any, and
any other terms relating to the particular method of calculating the
Interest Rate for the note (see "Description of the Notes -- Interest
Rates" for an explanation of the terms relating to floating rate notes);
o any provisions relating to redemption or repayment of the note;
o whether the note is a Senior Note or a Senior Subordinated Note and, if a
Senior Subordinated Note, whether the holders or a Trustee of the note may
accelerate the maturity of the note only in the event of certain
circumstances related to our insolvency;
o any provisions relating to extensions of the note;
o the date on which the note will be issued (the "Issue Date");
o whether the note is a global note or a certificated note;
o the Trustee, Registrar, Paying Agent, and Authenticating Agent under the
Indenture pursuant to which the note is to be issued; and
o any other terms of the note not inconsistent with the provisions of the
Indenture.
Payment and Paying Agents
Unless the pricing supplement specifies otherwise, either we or the Paying Agent
will make all payments on each note which are to be made in U.S. dollars
(including payments which are to be made in U.S. dollars for Foreign Currency
Notes) in the manner described below. For a description of special provisions
relating to payments on a Foreign Currency Note to be made in a Specified
Currency, see "Special Provisions Relating to Foreign Currency Notes -- Payment
of Principal and Interest."
Unless the pricing supplement specifies otherwise, either we or the Paying Agent
will pay interest on fixed rate notes semi-annually on each Interest Payment
Date and at maturity (or, if applicable, upon redemption or repayment). Unless
the pricing supplement specifies otherwise, either we or the Paying Agent will
pay interest on the floating rate notes on the Interest Payment Dates set forth
below and at maturity (or, if applicable, upon redemption or repayment).
Either we or the Paying Agent will pay interest on each Interest Payment Date to
the person in whose name the note is registered on the registry books of the
Registrar at the close of business on the applicable record date (a "Record
Date") next preceding each Interest Payment Date. However, that either we or the
Paying Agent will pay interest at maturity (whether or not the maturity date is
an Interest Payment Date) or upon earlier redemption or repayment to the person
to whom principal shall be payable. Unless otherwise specified in an pricing
supplement, if a note is originally issued
S-5
<PAGE>
between a Record Date and an Interest Payment Date, then either we or the Paying
Agent will pay the first payment of interest on that note to the holder of
record for the first Interest Payment Date.
Either we or the Paying Agent will pay interest on each note (other than global
notes and Foreign Currency Notes and other than interest payable to the holder
thereof, if any, on the Maturity Date or upon earlier redemption or repayment)
by check mailed to the person in whose name the note is registered at the close
of business on the applicable Record Date. Except as provided below, either we
or the Paying Agent will make all payments due on the Maturity Date, or upon
earlier redemption or repayment, in immediately available funds upon surrender
of the note at the corporate trust office of the Paying Agent in the Borough of
Manhattan, the City of New York.
If the Paying Agent makes a payment on an Interest Payment Date (other than
interest payable to the holder thereof, if any, on the Maturity Date or upon
earlier redemption or repayment), and if the Paying Agent receives a written
request to make payment by wire transfer from a holder of U.S. $1,000,000 or
more (or its equivalent in the Specified Currency) in aggregate principal amount
of the notes not later than the close of business on the Record Date pertaining
to that Interest Payment Date, the Paying Agent will, subject to applicable laws
and regulations, until it receives notice to the contrary, make all U.S. dollar
payments to this holder by wire transfer to the account designated in such
written request.
If the Paying Agent makes a payment on the Maturity Date or the date of
redemption or repayment, if any, and if the Paying Agent receives a written
request to make payment by wire transfer from a holder of U.S. $1,000,000 or
more (or its equivalent in the Specified Currency, if other than U.S. dollars)
in aggregate principal amount of the notes not later than the close of business
on the fifteenth day prior to the Maturity Date or the date of redemption or
repayment, if any, the Paying Agent will make all U.S. dollar payments to the
holder by wire transfer to the account designated in the holder's written
request. However, the Paying Agent may only make these wire transfer payments
subject to applicable laws and regulations, and only after surrender of the note
or notes in the Borough of Manhattan, the City of New York, not later than one
Business Day prior to the Maturity Date or the date of redemption or repayment,
as the case may be.
The Paying Agent will make all payments on notes represented by a permanent
global note registered in the name of or held by the Depositary or its nominee
to the Depositary or its nominee, as the case may be, as the registered owner
and holder of the permanent global note representing the notes.
We may at any time designate additional Paying Agents or rescind the designation
of any Paying Agent or approve a change in the office through which any Paying
Agent acts.
Interest Rates
Each note, except Zero-Coupon Notes (as defined in "Fixed Rate Notes" below),
will bear interest from its Issue Date at the fixed rate per annum, or at the
floating rate per annum determined pursuant to the interest rate formula, stated
in the note and in the pricing supplement. We may change Interest Rates from
time to time, but no change will affect any notes theretofore issued or as to
which we have accepted an offer. Interest Rates we may offer with respect to the
notes may differ among different series of Debt Securities which we offer within
a short time frame depending upon, among other things, changes in overall
economic or market conditions or differences in the aggregate principal amount
of notes purchased by each investor in different series of Debt Securities.
The Interest Rate on the notes will in no event be higher than the maximum rate
permitted by New York law as the same may be modified by United States law of
general application. Under present New York law, the maximum rate of interest
which may be charged to a corporation is 25% per annum simple interest. This
limit does not apply to notes in a principal amount of U.S. $2,500,000 or more.
Fixed Rate Notes
Each fixed rate note, except Zero-Coupon Notes, will bear interest from the
Issue Date at the annual fixed interest rate stated in the note and in the
pricing supplement. Interest on the Fixed Rate Notes, except Zero-Coupon Notes,
will be payable on the Interest Payment Dates specified in the note and in the
pricing supplement. Unless the pricing supplement specifies otherwise, the
Interest Payment Dates for interest on the fixed rate notes will be January 15
and July 15 of each year and on the Maturity Date or upon earlier redemption or
repayment. Unless the pricing supplement specifies otherwise, the Record Dates
for the fixed rate notes will be the fifteenth calendar day next preceding each
Interest Payment Date.
S-6
<PAGE>
Unless the pricing supplement specifies otherwise, interest on Fixed Rate Notes
will be computed on the basis of a 360-day year of twelve 30-day months.
If an Interest Payment Date or the Maturity Date (or the date of redemption or
repayment) with respect to a fixed rate note falls on a day which is not a
Business Day, the payment will be made on the next Business Day as if it were
made on the date this payment was due, and no additional interest will accrue as
a result of this delayed payment.
Interest payments on each fixed rate note will include the amount of interest
accrued from and including the last Interest Payment Date to which interest has
been paid (or from and including the Issue Date if no interest has been paid
with respect to the note) to, but excluding, the applicable Interest Payment
Date, or Maturity Date, as the case may be.
We may issue notes at prices less than their stated principal amount
("Discounted Notes"). Certain of the Discounted Notes may bear no interest
("Zero-Coupon Notes"), and certain of the Discounted Notes may bear interest at
a rate which at the time of issuance is below market rates. Unless the pricing
supplement specifies otherwise, upon the redemption, repayment, or acceleration
of the maturity of these Discounted Notes, an amount less than the principal
amount of the Discounted Note will become due and payable. For United States
federal income tax purposes, certain of the Discounted Notes would be considered
original issue discount notes ("Original Issue Discount Notes"). Certain
information concerning United States federal income tax aspects of Zero-Coupon
Notes or Original Issue Discount Notes is set forth elsewhere in this prospectus
supplement and may be set forth in the pricing supplement.
Floating Rate Notes
Unless the pricing supplement specifies otherwise, we will issue floating rate
notes as described below. Each floating rate note will bear interest from the
Issue Date at the floating rate per annum determined pursuant to the interest
rate formula specified in the note and in the pricing supplement. Unless the
pricing supplement specifies otherwise, the Interest Rate on each floating rate
note will be equal to:
o an interest rate determined by reference to the interest rate index
specified in the pricing supplement plus or minus the Spread, if any, and/or
o an interest rate calculated by reference to the interest rate index
specified in the pricing supplement multiplied by the Spread Multiplier, if
any.
The "Spread" is the number of basis points (one one-hundredth of a percentage
point) specified in the pricing supplement as an adjustment to the Interest Rate
for a floating rate note. The "Spread Multiplier" is the factor specified in the
pricing supplement as an adjustment to the Interest Rate for a floating rate
note.
Any floating rate note may also have either or both of the following terms:
o a maximum limitation, or ceiling, on the rate of interest which may accrue
during any interest period (the "Maximum Interest Rate"); and
o a minimum limitation, or floor, on the rate of interest which may accrue
during any interest period (the "Minimum Interest Rate").
The pricing supplement for a floating rate note will specify the interest rate
index and the Spread or Spread Multiplier, if any, or other interest rate
formula and the Maximum or Minimum Interest Rate, if any.
Unless otherwise specified in the note and in the pricing supplement, either we
or the Paying Agent will pay interest on floating rate notes at maturity, upon
earlier redemption or repayment, if applicable, and on the following Interest
Payment Dates:
o in the case of notes with a daily, weekly or monthly Interest Reset Date, on
the third Wednesday of each month or on the third Wednesday of March, June,
September and December, as specified in the note and the pricing supplement;
o in the case of notes with a quarterly Interest Reset Date, on the third
Wednesday of March, June, September and December of each year;
o in the case of notes with a semiannual Interest Reset Date, on the third
Wednesday of the two months specified in the note and the pricing
supplement; and
o in the case of notes with an annual Interest Reset Date, on the third
Wednesday of the month specified in the note and the pricing supplement.
We will calculate interest payments on each floating rate note to include the
amount of interest accrued from and including the last Interest Payment Date to
which interest has been paid (or
S-7
<PAGE>
from and including the Issue Date if no interest has been paid with respect
to the note) to, but excluding, the applicable Interest Payment Date, or
Maturity Date, as the case may be.
The Record Dates for the floating rate notes shall be the fifteenth calendar day
next preceding each Interest Payment Date.
The Calculation Agent will compute interest on floating rate notes in the manner
set forth below.
If any Interest Payment Date for any floating rate note (other than the Maturity
Date or the date of redemption or repayment) would otherwise be a day that is
not a Business Day, then the Interest Payment Date will be postponed to the
following day which is a Business Day, except that in the case of a LIBOR Note,
if this Business Day falls in the next succeeding calendar month, then the
Interest Payment Date will be the immediately preceding Business Day. If the
Maturity Date (or the date of redemption or repayment) of a floating rate note
falls on a day which is not a Business Day, then we will make the required
payment of principal, premium, if any, and/or interest on the following day
which is a Business Day as if it were made on the date this payment was due, and
no interest shall accrue as a result of this delayed payment.
We will calculate accrued interest on a floating rate note by adding the
Interest Factors (as defined below) calculated for each day in the period for
which we are calculating accrued interest. We will compute the "Interest Factor"
for each day by multiplying the face amount of the floating rate note by the
Interest Rate applicable to the day and dividing the product thereof by 360, or,
in the case of any Treasury Rate Note or CMT Rate Note, by the actual number of
days in the year.
We will reset the rate of interest on each floating rate note daily, weekly,
monthly, quarterly, semi-annually or annually (the first date on which the reset
interest rate becomes effective, being an "Interest Reset Date"), as specified
in the note and the pricing supplement. Unless otherwise specified in the note
and the pricing supplement, the Interest Reset Date will be:
o in the case of floating rate notes which reset daily, each Business Day;
o in the case of floating rate notes which reset weekly (other than Treasury
Rate Notes), the Wednesday of each week;
o in the case of Treasury Rate Notes which reset weekly, the Tuesday of each
week;
o in the case of floating rate notes which reset monthly (other than 11th
District Rate Notes), the third Wednesday of each month;
o in the case of 11th District Rate Notes which reset monthly, the first
calendar day of the month;
o in the case of floating rate notes which reset quarterly, the third
Wednesday of March, June, September and December;
o in the case of floating rate notes which reset semiannually, the third
Wednesday of two months of each year; and
o in the case of floating rate notes which reset annually, the third
Wednesday of one month of each year.
If any Interest Reset Date for any floating rate note is not a Business Day, the
Interest Reset Date for that floating rate note shall be postponed to the next
succeeding Business Day, except that in the case of a LIBOR Note, if this
Business Day is in the next succeeding calendar month, that Interest Reset Date
will be the immediately preceding Business Day.
With respect to determining the Interest Determination Date, unless the pricing
supplement specifies to the contrary:
o the Interest Determination Date for a CD Rate Note, CMT Rate Note,
Commercial Paper Rate Note, Federal Funds Rate Note, or Prime Rate Note is
the second Business Day before the Interest Reset Date;
o the Interest Determination Date for a LIBOR Note is the second London
Business Day before the Interest Reset Date;
o the Interest Determination Date for an 11th District Rate Note is the last
working day of the month just before the Interest Reset Date on which the
FHLB of San Francisco publishes the relevant monthly 11th District Cost of
Funds Index; and
o the Interest Determination Date for a Treasury Rate Note is the day of the
week in which such Interest Reset Date falls on which direct obligations of
the United States ("Treasury Bills") would normally be auctioned. Treasury
Bills are usually sold at auction on Monday of each week, unless that day is
a legal holiday, in which case the auction is usually held on Tuesday. The
auction, however, may be held on the preceding Friday. If so, that Friday
will be the Interest Determination Date for the Interest Reset Date
occurring in the next week.
S-8
<PAGE>
If an auction date falls on any Interest Reset Date for a Treasury Rate
Note, then that Interest Reset Date will instead be the first Business Day
following the auction date.
Unless the pricing supplement specifies otherwise, the Interest Rate determined
with respect to any Interest Determination Date for any floating rate note will
become effective on and as of the next succeeding Interest Reset Date. However,
the Interest Rate in effect with respect to any floating rate note for the
period from the Issue Date to the first Interest Reset Date will be the "Initial
Interest Rate" as specified in the pricing supplement. The Interest Rate for a
floating rate note will be applicable from and including the Interest Reset Date
to which it relates to but not including the next Interest Reset Date or until
the Maturity Date, as the case may be.
The Calculation Agent will determine the Interest Rate for a floating rate note
on an Interest Determination Date in accordance with the provisions below. The
Calculation Agent will, upon the request of the holder of any floating rate note
and to the extent available, provide the Interest Rate then in effect for the
note and, if different, the Interest Rate to be in effect as a result of a
determination made on the most recent Interest Determination Date with respect
to the note.
LIBOR Notes. Each LIBOR Note will bear interest at a rate calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in
the note and in the pricing supplement.
Unless the pricing supplement specifies otherwise, the Calculation Agent will
determine LIBOR with respect to any Interest Reset Date according to the method
specified in the note and the pricing supplement, in accordance with the
following provisions:
o if "LIBOR Telerate" is specified as the reporting service in the pricing
supplement, LIBOR will be the rate for deposits in U.S. dollars having the
Index Maturity designated in the pricing supplement, commencing on the
second London Business Day immediately following the Interest Determination
Date, that appears on the Designated LIBOR Page as of 11:00 a.m., London
time, on that Interest Determination Date; and
o if "LIBOR Reuters" is specified as the reporting service in the pricing
supplement, LIBOR will be the arithmetic mean of the offered rates (unless
the Designated LIBOR Page by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in U.S. dollars
having the Index Maturity designated in the pricing supplement, commencing
on the second London Business Day immediately following such Interest
Determination Date, that appear (or, if only a single rate is required,
appears) on the Designated LIBOR Page as of 11:00 a.m., London time, on
that Interest Determination Date, provided that at least two such offered
rates appear.
If, the Rate Index is "LIBOR Reuters", and fewer than two offered rates appear,
or LIBORReuters is not available, or if the Rate Index is "LIBOR Telerate" and
no rate appears, or LIBOR Telerate is not available, then we will determine
LIBOR as follows:
o The Calculation Agent will select the principal London offices of four major
banks in the London interbank market, and will request each bank to provide
its offered quotation for deposits in U.S. dollars for the period of the
Index Maturity designated in the pricing supplement, commencing on the
second London Business Day immediately following the Interest Determination
Date, to prime banks in the London interbank market at approximately 11:00
a.m., London time, on the Interest Determination Date and in a principal
amount equal to an amount that is representative for a single transaction in
the Index Currency in the market at that time.
o If at least two of these banks provide a quotation, the Calculation Agent
will compute LIBOR on the Interest Determination Date as the arithmetic mean
of the quotations.
o If fewer than two of these banks provide a quotation, the Calculation Agent
will select three major banks in the City of New York to provide a rate
quote. The Calculation Agent will compute LIBOR on the Interest
Determination Date as the arithmetic mean of these quoted rates at
approximately 11:00 a.m., New York City time, on the Interest Determination
Date in U.S. dollars for loans to leading European banks, having the Index
Maturity designated in the pricing supplement commencing on the second
London Business Day immediately following the Interest Determination Date
and in a principal amount that is representative for a single transaction in
the market at that time.
S-9
<PAGE>
o If none of these banks provides a quotation as mentioned, the rate of
interest will be the same as that in effect on the Interest Determination
Date.
The "Designated LIBOR Page" means (a) if "LIBOR Telerate" is specified in the
pricing supplement, the display on Bridge Telerate, Inc. (or any successor
service) on the page specified in the pricing supplement (or any other page as
may replace this page on that service) for the purpose of displaying the London
interbank offered rates of major banks or (b) if "LIBOR Reuters" is specified in
the pricing supplement, the display on the Reuters Monitor Money Rates Service
(or any successor service) on the page specified in the pricing supplement (or
any other page as may replace this page on that service) for the purpose of
displaying the London interbank offered rates of major banks.
If neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
pricing supplement, LIBOR will be determined as if LIBOR Telerate had been
specified.
Treasury Rate Notes. Each Treasury Rate Note will bear interest at the rate
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, "Treasury Rate" means the
rate for the auction held on the Interest Determination Date of Treasury Bills
having the Index Maturity specified in the pricing supplement as that rate
appears on the display on Bridge Telerate, Inc. (or any successor service) on
page 56 (or any other page as may replace this page on that service) ("Telerate
Page 56") or page 57 (or any other page which replaces this page on that
service) ("Telerate Page 57") under the heading "AVGE INVEST YIELD."
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o If the rate is not published as described above by 9:00 a.m., New York City
time, on the Calculation Date, the Treasury Rate will be the auction
average rate of Treasury Bills (expressed as a bond equivalent on the basis
of a year of 365 or 366 days, as the case may be, and applied on a daily
basis) as otherwise announced by the United States Department of Treasury.
o In the event that the auction rate of Treasury Bills having the Index
Maturity specified in the pricing supplement is not published by 3:00 p.m.,
New York City time, on the Calculation Date, or if no auction is held, then
the Treasury Rate will be the rate (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as the case may be, and applied on a
daily basis) on the Interest Determination Date of Treasury Bills having
the Index Maturity specified in the pricing supplement as published in
H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Secondary Market" or, if not yet published by 3:00 p.m., New York
City time, on the Calculation Date, the rate on the Interest Determination
Date of Treasury Bills as published in H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying that rate,
under the caption "U.S. Government Securities/Treasury Bills/Secondary
Market."
o If the rate is not yet published in H.15(519), H.15 Daily Update or another
recognized electronic source, then the Treasury Rate will be calculated as a
yield to maturity (expressed as a bond equivalent, on the basis of a year of
365 or 366 days, as the case may be, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on the Interest Determination Date, of three
leading primary United States government securities dealers in the City of
New York selected by the Calculation Agent for the issue of Treasury Bills
with a remaining maturity closest to the applicable Index Maturity.
o If fewer than three of the dealers are quoting as mentioned, then the rate
of interest will be the same as that in effect on that Interest
Determination Date.
"H.15(519)" means "Statistical Release H.15(519), Selected Interest Rates," or
any successor publication as published weekly by the Board of Governors of the
Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through the
world wide web site of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
Commercial Paper Rate Notes. Each Commercial Paper Rate Note will bear interest
at the rate calculated with reference to the Commercial Paper Rate and the
Spread and/or Spread Multiplier, if any, specified in the note and pricing
supplement.
Unless the pricing supplement specifies otherwise, "Commercial Paper Rate"
means, for an Interest Determination Date, the Money Market Yield of the
S-10
<PAGE>
rate on that date for commercial paper having the Index Maturity specified in
the pricing supplement as published in H.15(519) under the heading "Commercial
Paper-- Nonfinancial."
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o If the rate is not published in H.15(519) by 9:00 a.m., New York City time,
on the Calculation Date, then the rate will be the Money Market Yield of the
rate on that Interest Determination Date for commercial paper having the
Index Maturity specified in the pricing supplement as published in the H.15
Daily Update, or such other recognized electronic source used for the
purpose of displaying this rate, under the heading "Commercial Paper --
Nonfinancial."
o If the rate is not published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 p.m., New York City time, on the
Calculation Date, then the Commercial Paper Rate for that Interest
Determination Date will be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, of three leading
dealers of commercial paper in the City of New York selected by the
Calculation Agent. The offered rates will be for commercial paper having the
Index Maturity specified in the pricing supplement placed for a nonfinancial
issuer whose bond rating is "AA," or the equivalent, from a nationally
recognized statistical rating organization.
o If fewer than three dealers are quoting as mentioned, then the rate of
interest will be the same as that in effect on that Interest Determination
Date.
"Money Market Yield" shall be a yield (expressed as a percentage) calculated in
accordance with the following formula:
D x 360
Money Market Yield = _________ x 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
CD Rate Notes. Each CD Rate Note will bear interest at the rate calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, the "CD Rate" means, for an
Interest Determination Date, the rate on that date for negotiable certificates
of deposit having the Index Maturity designated in the pricing supplement as
this rate is published in H.15(519) under the heading "CDs (Secondary Market)."
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o In the event the rate is not published by 9:00 a.m., New York City time, on
the Calculation Date, the CD Rate will be the rate on that Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity specified in the pricing supplement as published in the H.15 Daily
Update under the heading "CDs (Secondary Markets)."
o If the rate is not published in either H.15(519) or the H.15 Daily Update by
3:00 p.m., New York City time, on the Calculation Date, then the CD Rate
will be a rate equal to the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on that Interest Determination
Date, quoted by three leading non-bank dealers (selected by the Calculation
Agent) in negotiable U.S. dollar certificates of deposit in the City of New
York for negotiable certificates of deposit in the denomination of U.S.
$5,000,000 of major United States money center banks in the City of New York
with a remaining maturity closest to the Index Maturity specified in the
pricing supplement.
o If fewer than three dealers so selected by the Calculation Agent are quoting
as mentioned, then the rate will be the same as that in effect on such
Interest Determination Date.
Federal Funds Rate Notes. Each Federal Funds Rate Note will bear interest at the
rate calculated using the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, "Federal Funds Rate" means,
for an Interest Determination Date, the rate on that date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)," as this
rate is displayed on Bridge Telerate, Inc. (or any successor service) on page
120 (or any other page as may replace this page on that service) ("Telerate Page
120").
S-11
<PAGE>
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o If the rate does not appear on Telerate Page 120 or is not yet published by
9:00 a.m. New York City time, on the Calculation Date, then the Federal
Funds Rate will be the rate on the Interest Determination Date as published
in the H.15 Daily Update or another recognized electronic source used for
the purpose of displaying this rate under the heading "Federal
Funds/Effective rate."
o If the rate does not appear on Telerate Page 120 or is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
p.m., New York City time, on the Calculation Date, then the Federal Funds
Rate for the Interest Determination Date will be the arithmetic mean of the
rates, as of 9:00 a.m., New York City time, on that Interest Determination
Date, for the last transaction in overnight Federal Funds arranged by three
leading brokers of Federal Funds transactions in the City of New York
selected by the Calculation Agent.
o If fewer than three brokers are quoting as mentioned, then the rate of
interest will be the same as that in effect on that Interest Determination
Date.
Prime Rate Notes. Each Prime Rate Note will bear interest at the rate calculated
using the Prime Rate and the Spread and/or Spread Multiplier, if any, specified
in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, "Prime Rate" means, with
respect to an Interest Determination Date, the rate set forth on that date in
H.15(519) under the heading "Bank Prime Loan" or if not published by 3:00 p.m.,
New York City time, on the Calculation Date, the rate on the Interest
Determination Date as published in H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying this rate, under the
heading "Bank Prime Loan."
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o If the rate is not published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 p.m., New York City time, on the
Calculation Date, then the Prime Rate will be the arithmetic mean of the
rates of interest that appear on the Reuters Screen USPRIME 1 Page (as
defined below) as a bank's publicly announced prime rate or base lending
rate in effect as of 11:00 a.m., New York City time, for that Interest
Determination Date.
o If fewer than four rates appear on the Reuters Screen USPRIME 1 Page on that
date, then the Prime Rate will be the arithmetic mean of the prime rates or
base lending rates quoted by three major banks in the City of New York
selected by the Calculation Agent on the basis of the actual number of days
in the year divided by a 360-day year as of the close of business on the
Interest Determination Date.
o If fewer than three banks are quoting as mentioned, then the rate of
interest will be the same as that in effect on the Interest Determination
Date.
"Reuters Screen USPRIME 1 Page" means the display page designated as page
"USPRIME 1" on the Reuters Monitor Money Rates Service (or such other page as
may replace the USPRIME 1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
11th District Rate Notes. 11th District Rate Notes will bear interest at the
rates calculated with reference to the 11th District Rate and the Spread and/or
Spread Multiplier, if any, specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, the "11th District Rate"
means, for an Interest Determination Date, the rate equal to the monthly
weighted average cost of funds for the calendar month before that date, set
forth under the caption "11th District" on Telerate Page 7058 (as defined below)
as of 11:00 a.m., San Francisco time, on the Interest Determination Date.
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o If the rate does not appear on Telerate Page 7058 on that Interest
Determination Date, then the 11th District Rate rate will be the monthly
weighted average cost of funds paid by member institutions of the 11th
Federal Home Loan Bank District most recently announced by the FHLB of San
Francisco as the cost of funds for the calendar month before the date of
that announcement (the "FHLB Index").
o If the FHLB of San Francisco does not announce the rate as mentioned, then
the rate of
S-12
<PAGE>
interest will be the same as that in effect on that Interest Determination
Date.
"Telerate Page 7058" means the display page designated as page 7058 on Bridge
Telerate, Inc. (or another page as may replace page 7058 on that service for the
purpose of displaying the monthly weighted average cost of funds paid by member
institutions of the 11th Federal Home Loan Bank District).
CMT Rate Notes. Each CMT Rate Note will bear interest at an interest rate
calculated using the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, the "CMT Rate" means, for an
Interest Determination Date, the rate displayed on the Designated CMT Telerate
Page under the caption ". . . Treasury Constant Maturities . . . Federal Reserve
Board Release H.15 . . . Mondays Approximately 3:45 p.m.," under the column for
the Designated CMT Maturity Index for:
o that Interest Determination Date, if the Designated CMT Telerate Page is
7051; or
o the week, or the month, as set forth in the pricing supplement, ended
immediately preceding the week in which the related Interest Determination
Date occurs, if the Designated CMT Telerate Page is 7052.
If the rate cannot be set as described above, the Calculation Agent will use the
following methods in succession:
o If the rate is no longer displayed on the Designated CMT Telerate Page, or
if not displayed by 3:00 p.m., New York City time, on the Calculation Date,
then the CMT Rate will be the Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in H.15(519) for the Interest
Determination Date.
o If the rate is no longer published, or if not published in H.15 (519) by
3:00 p.m., New York City time, on the Calculation Date, then the CMT Rate
for that Interest Determination Date will be the Treasury Constant Maturity
rate for the Designated CMT Maturity Index (or other United States Treasury
Rate for the Designated CMT Maturity Index) for that Interest Determination
Date with respect to the Interest Reset Date then published by either the
Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines is
comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519).
o If that information is not available by 3:00 p.m., New York City time, on
the Calculation Date, then the Calculation Agent will calculate the CMT
Rate to be a yield to maturity, based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York
City time, on the Interest Determination Date reported, according to their
written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in the City of New York
selected by the Calculation Agent. The three Reference Dealers shall be
selected from five Reference Dealers selected by the Calculation Agent by
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining
term to maturity of not less than such Designated CMT Maturity Index minus
one year.
o If the Calculation Agent cannot obtain three Treasury Note quotations as
described above, the CMT Rate will be a rate with a yield to maturity based
on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination
Date of three Reference Dealers in the City of New York. The three
Reference Dealers shall be selected from five Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest), for Treasury Notes with an original
maturity of the number of years that is the next highest to the Designated
CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100 million. If
two of these Treasury Notes have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the Treasury Note with
the shorter remaining term to maturity will be used.
S-13
<PAGE>
o If fewer than five but more than two Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor lowest of those
quotes will be eliminated.
o If fewer than three Reference Dealers are quoting as described above, then
the rate will be the same as that in effect on that Interest Determination
Date.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc. (or
any successor service) on the page designated in the pricing supplement (or any
other page as may replace that page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
that page is not specified in the pricing supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
Treasury Notes (either 1, 2, 3, 5, 7, 10, 20, or 30 years) specified in the
pricing supplement with respect to which the CMT Rate will be calculated. If no
such maturity is specified in the pricing supplement, the Designated CMT
Maturity Index shall be 2 years.
Extendible Notes
Each Extendible Note will bear interest during the "Initial Interest Period" (as
defined below) at the initial interest rate as specified in the pricing
supplement. The initial interest rate may be a fixed rate or a floating rate
adjusted by a Spread and/or Spread Multiplier. Unless the pricing supplement
specifies otherwise, for any Extension Period (as defined below) we shall
establish, pursuant to the procedures specified in that note and pricing
supplement:
o the Interest Rate or the interest rate basis and formula for determining
the Interest Rate for that Extension Period in the case of Floating Rate
Notes;
o the length of that Extension Period;
o the duration of any Redemption Period (as defined below) during that
Extension Period; and
o the percentage or percentages of the principal amount at which the
Extendible Notes are subject to redemption during that Redemption Period.
An "Extension Period" will be a period of one or more whole calendar periods
(e.g., weeks, months, or years) commencing on the day following the last day of
the Initial Interest Period or any subsequent Extension Period.
The "Initial Interest Period" for an Extendible Note will be the period
commencing on the Issue Date of the note and ending on the Maturity Date.
Unless the pricing supplement specifies otherwise, the Extendible Notes will be
repayable in whole or in part on the day immediately following the end of the
Initial Interest Period and on the day immediately following the end of each
Extension Period, at the option of the holder, at 100% of the principal amount
to be repaid, in each case plus accrued interest, if any, to the repayment date.
We will specify in the pricing supplement the procedures that a holder must
follow in order to effect such a repayment.
Unless the pricing supplement specifies otherwise:
o the Extendible Notes will not be redeemable before the day immediately
following the end of the Initial Interest Period; and
o we, at our option, may redeem any or all of the Extendible Notes either in
whole or in part, upon not less than 30 nor more than 60 days' notice by
mail, on the day immediately following the end of the Initial Interest
Period at 100% of their principal amount and, during any Extension Period
thereafter, on any date during any period within the Extension Period in
which the Extendible Notes are redeemable our option (a "Redemption
Period") at the percentage or percentages of their principal amount as we
shall have established.
In each case of redemption, the amount we pay to redeem will include accrued
interest, if any, to the date fixed for redemption. We will specify the
procedures that must be followed in order to effect these redemptions.
Foreign Currency, Currency Indexed, and Other Indexed Notes
We may, from time to time, offer Foreign Currency Notes. See "Special Provisions
Relating to Foreign Currency Notes" and "Foreign Currency Risks."
We may, from time to time, offer notes ("Currency Indexed Notes") of which the
principal amount
S-14
<PAGE>
payable on the Maturity Date (or upon earlier redemption or repayment) and/or
interest thereon will be determined with reference to the exchange rate of a
Specified Currency relative to another currency or composite currency (the
"Indexed Currency") or to a currency index (the "Currency Index"). Holders of
these notes may receive a principal amount on the Maturity Date or upon earlier
redemption or repayment that is greater than or less than the face amount of
these notes depending upon the relative value at maturity of the Specified
Currency compared to the Indexed Currency or Currency Index.
The pricing supplement will describe the Foreign Currency Notes, the Currency
Indexed Notes and the Currency Index and will also provide:
o information as to the method for determining the amount of interest payable
and the principal amount payable on the Maturity Date or upon earlier
redemption or repayment;
o the relative value of the Specified Currency compared to the applicable
Indexed Currency or Currency Index;
o any exchange controls applicable to the Specified Currency or Indexed
Currency; and
o certain tax consequences to the holders of the Currency Indexed Notes.
For more information about Foreign Currency Notes and Currency Index Notes, see
"Special Provisions Relating to Foreign Currency Notes" and "Foreign Currency
Risks."
We may, from time to time, also offer indexed notes ("Indexed Notes") other than
Currency Indexed Notes. The principal amount of the Indexed Notes which is
payable on the Maturity Date or upon earlier redemption or repayment and/or
interest thereon will be determined by reference to a measure (the "Index"). The
Index will be:
o one or more equity or other indices and/or formulas;
o the price of one or more specified commodities; or
o such other methods or formulas we may specify in the pricing supplement.
The pricing supplement will describe the Indexed Notes and the Index and will
also provide,
o the method of determination of the amount of interest payable and the amount
of principal payable on the Maturity Date or upon earlier redemption or
repayment in respect of the Indexed Notes;
o certain tax consequences to holders of the Indexed Notes;
o certain risks associated with an investment in the Indexed Notes; and
o other information relating to the Indexed Notes.
Your investment in the Currency Indexed Notes or in other Indexed Notes, as to
principal or interest or both, entails significant risks that are not associated
with similar investments in a conventional fixed-rate debt security. The
interest rate on Currency Indexed Notes and other Indexed Notes may be less than
that payable on a conventional fixed-rate debt security issued at the same time.
The possibility exists that no interest will be paid or that negative interest
will accrue, and the principal amount of a Currency Indexed Note or some other
Indexed Note payable at maturity may be less than the original purchase price of
the note. The possibility exists that no principal will be paid at maturity if
the principal amount is utilized to net against accrued negative interest.
A number of factors affect the secondary market for Currency Indexed Notes and
other Indexed Notes, independent of our creditworthiness and the value of the
applicable Index, the time remaining to the maturity of the notes, the amount
outstanding of the notes and market interest rates. The value of the applicable
Index depends on a number of interrelated factors, including economic, financial
and political events, over which we have no control.
Additionally, if the formula used to determine the principal amount or interest
payable with respect to a Currency Index Note contains a multiple or leverage
factor, the effect of any change in the applicable Index will be increased. You
should not view the historical experience of the relevant Index as an indication
of future performance of the Index during the term of any Currency Indexed Note
or any other Indexed Note. Accordingly, you should consult your own financial
and legal advisors about the risk entailed by an investment in Currency Indexed
Notes and other Indexed Notes and the suitability of such notes in light of
their particular circumstances.
Unless the pricing supplement specifies otherwise:
o for the purpose of determining whether holders of the requisite principal
amount of Debt Securities outstanding under the applicable Indenture have
taken any action, the outstanding principal amount of Currency Indexed
Notes or of other Indexed Notes will be deemed to be the face amount of
those notes; and
S-15
<PAGE>
o in the event of an acceleration of the maturity of a Currency Indexed Note
or any other Indexed Note, the principal amount to be paid to the holder of
that note upon acceleration will be the principal amount determined by
reference to the formula by which the principal amount of that note would be
determined on the Maturity Date of that note, as if the date of acceleration
were the Maturity Date.
Redemption
Unless the pricing supplement specifies otherwise and except for Extendible
Notes, (a) the notes will not be redeemable prior to maturity and (b) the notes
will not be entitled to any sinking fund.
Prepayment at Option of Holder
Unless the pricing supplement specifies otherwise and except for Extendible
Notes, the holder of the note will not have the option to require prepayment of
a note prior to maturity.
Book-Entry System
Unless the pricing supplement specifies otherwise and except for Foreign
Currency Notes, the notes when issued will be represented by a permanent global
note or notes. Each permanent global note will be deposited with, or on behalf
of, the Depositary and registered in the name of a nominee of the Depositary.
Except under the limited circumstances described below, permanent global notes
will not be exchangeable for notes in certificated form and will not otherwise
be issuable in definitive form.
Ownership of beneficial interests in a permanent global note will be limited to
institutions which have accounts with the Depositary or its nominee (each a
"participant") or persons who may hold interests through participants. In
addition, ownership of beneficial interests by participants in that permanent
global note will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee for that permanent global note. Ownership of beneficial interests in
that permanent global note by persons who hold through participants will be
evidenced only by, and the transfer of that ownership interest within the
participant will be effected only through, records maintained by that
participant. The Depositary has no knowledge of the actual beneficial owners of
the notes. Beneficial owners will not receive written confirmation from the
Depositary of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participants through which the beneficial
owners entered the transaction. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of securities in
definitive form. These laws may impair your ability to transfer your beneficial
interests in that permanent global note.
We have been advised by the Depositary that upon the issuance of a permanent
global note and the deposit of that permanent global note with the Depositary,
the Depositary will immediately credit on its book-entry registration and
transfer system the respective principal amounts represented by that permanent
global note to the accounts of participants.
The Paying Agent will make all payments on notes represented by a permanent
global note registered in the name of or held by the Depositary or its nominee
to the Depositary or its nominee, as the case may be, as the registered owner
and holder of the permanent global note representing the notes. The Depositary
has advised us that upon receipt of any payment of principal of, or premium or
interest, if any, on a permanent global note, the Depositary will immediately
credit, on its book-entry registration and transfer system, accounts of
participants with payments in amounts proportionate to their respective
beneficial interests in the principal amount of that permanent global note as
shown in the records of the Depositary or its nominee. We expect that payments
by participants to owners of beneficial interests in a permanent global note
held through those participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name" (i.e., the name of a
securities broker or dealer), and will be the sole responsibility of those
participants, subject to any statutory or regulatory requirements as may be in
effect from time to time.
None of CIT, the Trustee, any agent of CIT, or any agent of the Trustee will be
responsible or liable for any aspect of the records relating to or payments made
on account of beneficial interests in a permanent global note or for
maintaining, supervising, or reviewing any of the records relating to such
beneficial interests.
A permanent global note is exchangeable for definitive notes registered in the
name of, and a transfer of a permanent global note may be registered to, any
person other than the Depositary or its nominee, only if:
S-16
<PAGE>
o the Depositary notifies us that it is unwilling or unable to continue as
Depositary for that permanent global note or if at any time the Depositary
ceases to be a clearing agency registered under the Securities Exchange Act
of 1934;
o we, in our sole discretion, determine that the permanent global note will be
exchangeable for definitive notes in registered form; or
o an event of default under the applicable Indenture shall have occurred and
be continuing, as described in the prospectus, and we, the applicable
Trustee, or the applicable Registrar and Paying Agent notify the Depositary
that the global note will be exchangeable for definitive notes in registered
form.
Any permanent global note which is exchangeable will be exchangeable in whole
for definitive notes in registered form, of like tenor and of an equal aggregate
principal amount as the permanent global note, in denominations of $1,000 and
integral multiples thereof. Those definitive notes will be registered in the
name or names of such person or persons as the Depositary shall instruct the
Trustee. We expect that those instructions may be based upon directions received
by the Depositary from its participants with respect to ownership of beneficial
interests in the permanent global note.
Except as provided above, owners of beneficial interests in a permanent global
note will not be entitled to receive physical delivery of notes in definitive
form and will not be considered the holders of these notes for any purpose under
the Indenture, and no permanent global note will be exchangeable, except for
another permanent global note of like denomination and tenor to be registered in
the name of the Depositary or its nominee. So, each person owning a beneficial
interest in a permanent global note must rely on the procedures of the
Depositary and, if that person is not a participant, on the procedures of the
participant through which that person owns its interest, to exercise any rights
of a holder under the Indenture.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a
permanent global note desires to give or take any action which a holder is
entitled to give or take under the Indenture, the Depositary would authorize the
participants holding the relevant beneficial interests to give or take this
action, and the participants would authorize beneficial owners owning through
participants to give or take this action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depositary has advised us that it is a limited-purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered under the Exchange Act. The
Depositary was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
in securities through electronic book-entry changes in accounts of the
participants. By doing so, the Depositary eliminates the need for physical
movement of securities certificates. The Depositary's participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. The Depositary is owned by a number of its
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the Depositary's book-entry system is also available to others, such as
banks, brokers, dealers, and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. The
rules applicable to the Depositary and its participants are on file with the
Securities and Exchange Commission.
The Depositary's management is aware that some computer applications, systems,
and the like for processing data ("Systems") that are dependent upon calendar
dates, including dates before, on and after January 1, 2000, may encounter "Year
2000 problems." The Depositary has informed its participants and other members
of the financial community that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within the Depositary, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, the Depositary's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, the Depositary's ability to perform its services properly is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from
S-17
<PAGE>
whom the Depositary licenses software and hardware, and third party vendors on
whom the Depositary relies for information or the provision of services,
including telecommunications and electrical utility service providers, among
others. The Depositary has informed the financial community that it is
contacting, and will continue to contact, third party vendors from whom the
Depositary acquires services to impress upon them the importance of such
services being Year 2000 complaint, and to determine the extent of their efforts
for Year 2000 remediation and, as appropriate, testing of their services. In
addition, the Depositary is in the process of developing such contingency plans
as it deems appropriate.
We believe that the sources from which the information in this section
concerning the Depositary and the Depositary's system has been obtained are
reliable, but we take no responsibility for the accuracy of the information.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
Terms of the Notes
Unless the pricing supplement specifies otherwise, we will denominate the notes
in U.S. dollars and we will make all payments on the notes in U.S. dollars.
Unless the pricing supplement specifies otherwise, the following provisions
shall apply to Foreign Currency Notes. The following specific provisions
supplement the description of general terms of the notes set forth in the
prospectus and elsewhere in this prospectus supplement and, if the description
of the general terms of the notes is inconsistent, these provisions override and
replace them:
o we will issue Foreign Currency Notes in registered form only, without
coupons.
o we will pay the purchase price of Foreign Currency Notes in immediately
available funds.
o we will issue Foreign Currency Notes only in certificated form.
Currencies
Unless the pricing supplement specifies otherwise, you must pay for Foreign
Currency Notes in the Specified Currency. At present, limited facilities are
available in the United States for conversion of U.S. dollars into the Specified
Currencies and vice versa. Banks offer non-U.S. dollar checking or savings
account facilities in the United States only on a limited basis. However, if you
make a request five Business Days or more before the date of delivery of the
notes, or by any other day determined by the applicable Exchange Rate Agent, the
Exchange Rate Agent will arrange for the conversion of U.S. dollars into the
Specified Currency set forth in the pricing supplement to enable you to pay for
the Foreign Currency Notes. The Exchange Rate Agent will make conversions on
terms and subject to the conditions, limitations, and charges as the Exchange
Rate Agent may from time to time establish in accordance with its regular
foreign exchange practices. You will bear all costs of exchange of the Foreign
Currency Notes.
We will include in the pricing supplement specific information about the
currency or currency units in which a particular Foreign Currency Note is
denominated, including:
o historical exchange rates;
o a description of the currency; and
o any exchange controls.
Any information concerning exchange rates included in the pricing supplement is
for informational purposes only. You should not regard the information as
indicative of the range of or trends in fluctuations in currency exchange rates
which may occur in the future.
Payment of Principal and Interest
We will make all payments on Foreign Currency Notes in the Specified Currency.
However, except as provided below, you will receive all payments on Foreign
Currency Notes in U.S. dollars as converted by the Exchange Rate Agent we
appoint. However, unless the pricing supplement specifies to the contrary, you
may elect to receive payments in the Specified Currency under the circumstances
described below.
The Exchange Rate Agent will base the U.S. dollar amount, if any, you may
receive on a Foreign Currency Note on the highest bid quotation received by the
Exchange Rate Agent at approximately 11:00 a.m., New York City time, on the
second Business Day preceding the applicable Interest Payment Date. The Exchange
Rate Agent must receive bids from three recognized foreign exchange dealers (one
of which may be the Exchange Rate Agent) for the purchase by the quoting dealer
of the Specified Currency for U.S. dollars for settlement on the applicable
payment date, in an amount equal to the aggregate amount of the Specified
Currency payable to all holders of notes not electing to receive the Specified
Currency on the payment date and at which the applicable dealer commits to
execute a contract. If three bid
S-18
<PAGE>
quotations are not available, payments will be made in the Specified Currency.
You will bear all currency exchange costs and we will deduct the costs incurred
from payments made to you.
Unless the pricing supplement specifies otherwise, you may elect to receive
payments on the Foreign Currency Notes in the Specified Currency by transmitting
a written request to the principal offices of the Paying Agent:
o prior to the Record Date immediately preceding any Interest Payment Date or
o at least fifteen days prior to the maturity date or the date of redemption
or repayment, if any, in the case of payments to be made on the maturity
date or upon earlier redemption or repayment.
You may mail or hand deliver your written request or deliver it by cable, telex,
or other form of facsimile transmission. You may elect to receive payment in the
Specified Currency for all payments and need not file a separate election for
each payment. Your election will remain in effect until revoked by written
notice to the Paying Agent, but written notice of any revocation must be
received by the Paying Agent:
o on or prior to the Record Date in the case of any payment of interest or
o at least fifteen days prior to the maturity date or the date of redemption
or repayment, if any, in the case of the payment of principal and premium,
if any.
If you hold Foreign Currency Notes in the name of a broker or nominee, you
should contact your broker or nominee to determine whether and how you may elect
to receive payments in the Specified Currency.
Unless the pricing supplement specifies otherwise, we will make payments on each
Foreign Currency Note in U.S. dollars in the manner specified under "Description
of the Notes -- Payment and Paying Agents." Unless the pricing supplement
specifies to the contrary, if you elect to receive payments on Foreign Currency
Notes in the Specified Currency, we will make payments to you as follows:
o we will pay interest (other than interest payable, on the maturity date or
upon earlier redemption or repayment) to you in the Specified Currency by
bank draft mailed to you or your nominee or other registered holder at the
close of business on the applicable Record Date.
o we will pay the principal of and premium, if any, on the Foreign Currency
Note and any interest payable to you when due by bank draft upon surrender
of the note at the corporate trust office of the Paying Agent in the
Borough of Manhattan, City of New York.
o we will draw the drafts denominated in a Specified Currency on a bank
office located outside the United States.
If the Paying Agent receives a written request to be paid by wire transfer from
a holder of the equivalent of U.S. $1,000,000 or more in aggregate principal
amount of the Foreign Currency Notes not later than the close of business on a
Record Date for an interest payment or the fifteenth day prior to the maturity
date or the date of redemption or repayment, if any, the Paying Agent will,
subject to applicable laws and regulations, until it receives notice to the
contrary (but, in the case of payments to be made on the maturity date or
earlier redemption or repayment, only after the surrender of the note or notes
in the Borough of Manhattan, City of New York, not later than one Business Day
prior to the maturity date or the date of redemption or repayment, as the case
may be), make all payments denominated in the Specified Currency to the
requesting holder by wire transfer to an account designated in the written
request and maintained in the country of the Specified Currency.
Outstanding Foreign Currency Notes
For purposes of calculating the principal amount of any Foreign Currency Note
payable in a Specified Currency for any purpose under the Indentures, we will
deem the principal amount of the Foreign Currency Note at any time outstanding
to be the U.S. dollar equivalent, determined as of the date of the original
issuance of the Foreign Currency Note.
Payment Currency
If a Specified Currency is not available for any payment on a Foreign Currency
Note due to circumstances beyond our control, we will be entitled to meet our
obligations to you by making payment in U.S. dollars. Any payment in U.S.
dollars will be on the basis of the noon buying rate in the City of New York for
cable transfers of the Specified Currency as certified for customs purposes by
the Federal Reserve Bank of New York (the "Market Exchange Rate") on the second
day prior to any payment, or if the Market Exchange Rate is not then available,
on the basis of the most recently available Market Exchange Rate or as the
pricing supplement otherwise specifies. Under these circumstances, any payment
made in U.S. dollars where required payment is in a Specified Currency will not
constitute a default under the Indentures.
S-19
<PAGE>
If we are required to make payments on a Foreign Currency Note in Euros, and
Euros are unavailable due to circumstances beyond our control, we will make all
payments due on that date with respect to the Foreign Currency Notes in U.S.
dollars. The Exchange Rate Agent will convert the amount payable in Euros on any
date into U.S. dollars, at a rate determined by the Exchange Rate Agent as of
the second Business Day prior to the date on which payment is due on the
following basis: The equivalent of Euros in U.S. dollars will be calculated by
aggregating the U.S. dollar equivalents of the Components. The Paying Agent will
determine the U.S. dollar equivalent of each of the Components on the basis of
the most recently available Market Exchange Rate, or as otherwise specified in
the applicable pricing supplement. The "Components" for this purpose will be the
currency amounts that were components of the Euro as of the latest date on which
Euros were used in the European Monetary System.
If the official unit of any component currency is altered by way of combination
or subdivision, the Exchange Rate Agent or the Paying Agent, as the case may be,
will multiply or divide the number of units of that currency as a Component in
the same proportion. If two or more component currencies are consolidated into a
single currency, the Exchange Rate Agent or Paying Agent, as the case may be,
will replace the amounts of those currencies as Components by an amount in such
single currency equal to the sum of the amounts of the consolidated component
currencies expressed in the consolidated currency. If any component currency is
divided into two or more currencies, the Exchange Rate Agent or Paying Agent, as
the case may be, will replace the amount of that currency as a Component with
amounts of those currencies, each of which shall have a value on the date of
division equal to the amount of the former component currency divided by the
number of currencies into which that currency was divided.
All determinations referred to above by the Exchange Rate Agent or Paying Agent
shall be at its sole discretion (except to the extent expressly provided in this
prospectus supplement that any determination is subject to our approval) and, in
the absence of manifest error, shall be conclusive for all purposes and binding
on you. The Exchange Rate Agent or Paying Agent, as the case may be, shall have
no liability for the determination. Any payment made in U.S. dollars in the
circumstances set forth above where required payment is in a Specified Currency
will not constitute a default under the Indentures.
FOREIGN CURRENCY RISKS
This prospectus supplement, the prospectus and the pricing supplement do not
describe all the risks of an investment in notes that are indexed to or
denominated in other than U.S. dollars as those risks exist at the date of this
prospectus supplement or as those risks may change from time to time. You should
consult your own financial, tax, and legal advisors as to the risks entailed by
an investment in the notes. The notes are not an appropriate investment for
investors who are unsophisticated with respect to foreign currency, currency
unit, or indexed transactions.
Exchange Rates and Exchange Controls
The Foreign Currency Notes have significantly more risk than a similar
investment in a security denominated in U.S. dollars. Similarly, Currency
Indexed Notes have significantly more risk than a similar investment in a
non-Currency Indexed Note. Some of these risks are:
o the possibility of significant changes in rates of exchange between the
U.S. dollar and the Specified Currency and
o the possibility of the imposition or modification of foreign exchange
controls by either the U.S. or foreign governments.
These risks generally depend on economic and political events over which we have
no control. In recent years, rates of exchange between the U.S. dollar and some
foreign currencies have been highly volatile and you should expect volatility in
the future. The exchange rate between the U.S. dollar and a foreign currency or
currency unit is in most cases established principally by the supply of and
demand for those currencies. Changes in the exchange rate result over time from
the interaction of many factors, including:
o rates of inflation;
o interest rate levels;
o balances of payments; and
o the extent of governmental surpluses or deficits in the countries issuing
currencies.
These factors are in turn sensitive to, among other things, the monetary,
fiscal, and trade policies pursued by governments and those of other countries
important to international trade and
S-20
<PAGE>
finance. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative of fluctuations in the exchange rate that
may occur during the term of any note. You may receive a yield on U.S.
dollar-equivalent Foreign Currency Notes below their coupon rate, and, in some
circumstances, you could suffer a loss if the Specified Currency depreciates
against the U.S. dollar. Similarly, if the Specified Currency depreciates
against the Indexed Currency you may receive a return of principal in an amount
less than the face amount of a Currency Indexed Note, which would also result in
an effective yield below the stated interest rate.
Foreign exchange rates can either be fixed by sovereign governments or float.
Exchange rates of most economically developed nations are permitted to fluctuate
in value relative to the U.S. dollar. National governments generally do not
allow their currencies to float freely at all times. Sovereign governments use a
variety of techniques to affect the exchange rate of their currencies including:
o intervention by a country's central bank;
o imposition of regulatory controls or taxes;
o issuance of a new currency to replace an existing currency; or
o alteration of the exchange rate or relative exchange characteristics by
devaluation or revaluation of a currency.
As a result, your U.S. dollar equivalent yields could be affected by
governmental actions, which could change or interfere with previously freely
determined currency valuations, fluctuations in response to other market forces,
and the movement of currencies across borders. We will not adjust or change the
terms of any notes in the event that exchange rates become fixed, or in the
event of any devaluation or revaluation or imposition of exchange or other
regulatory controls or taxes, or in the event of other developments, affecting
the U.S. dollar or any applicable currency or currency unit.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at a note's maturity. Even if there are no
actual exchange controls, it is possible that the Specified Currency for any
particular note that would otherwise be payable in the Specified Currency would
not be available at the note's maturity. In that event, we will make required
payments in U.S. dollars on the basis of the Market Exchange Rate on the second
day prior to the payment, or if the current Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate. See
"Special Provisions Relating to Foreign Currency Notes--Payment Currency."
Unless the pricing supplement specifies to the contrary, notes denominated in
foreign currencies will not be sold in, or to residents of, the country issuing
those currencies. The information set forth in this prospectus supplement is
directed to prospective purchasers who are United States residents. We disclaim
any responsibility to advise prospective purchasers who are residents of
countries other than the United States with respect to any matters that may
affect the purchase, holding, or receipt of payments of principal of and premium
and interest, if any, on the notes. You should consult your own counsel with
regard to these matters.
Judgments
Courts in the United States generally would grant or enforce a judgment relating
to an action based on Foreign Currency Notes and Currency Indexed Notes only in
U.S. dollars, and the date used to determine the rate of conversion of foreign
currencies into U.S. dollars will depend on various factors, including which
court rendered the judgment. Section 27 of the Judiciary Law of the State of New
York provides that a New York State court would be required to enter a judgment
in the Specified Currency of the underlying obligation. This judgment would then
be converted into U.S. dollars at the rate of exchange prevailing on the date of
entry of the judgment.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary, which was prepared by Schulte Roth & Zabel LLP, counsel
to CIT, describes material United States federal income tax consequences of the
ownership of notes as of the date of this prospectus supplement. Except where
indicated, it deals only with notes held by initial purchasers as capital assets
and does not deal with special situations, such as those of dealers in
securities or financial institutions, life insurance companies, United States
Holders whose "functional currency" is not the U.S. dollar, or persons actually
or constructively owning ten percent or more of the combined voting power of all
classes of voting stock of CIT. In addition, with
S-21
<PAGE>
respect to a particular series of notes, the discussion below must be read with
the discussion of material federal income tax consequences that may appear in
the pricing supplement for that series. The discussion below also is based upon
the provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations ("Treasury Regulations"), rulings, and judicial decisions
thereunder as of the date of this prospectus supplement. Those authorities may
be repealed, revoked, modified, or otherwise changed so as to result in federal
income tax consequences different from those discussed below. Persons
considering the purchase, ownership, or disposition of notes should consult
their own tax advisors concerning the federal income tax consequences in light
of their particular situations as well as any consequences arising under the
laws of any other taxing jurisdiction.
United States Holders
A "United States Holder" of a note means a holder that is:
o a citizen or resident of the United States;
o a corporation, partnership, or other entity created or organized in or
under the laws of the United States, any state of the United States, or the
District of Columbia;
o an estate the income of which is subject to United States federal income
taxation regardless of its source; or
o a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.
A "Non-United States Holder" is a holder that is not a United States Holder.
Payments of Interest. Except as set forth below, interest on a note will
generally be taxable to a United States Holder as ordinary income from domestic
sources at the time it is paid or accrued in accordance with the United States
Holder's method of accounting for tax purposes.
Original Issue Discount. The following is a summary of the principal United
States federal income tax consequences of the ownership of Original Issue
Discount Notes by United States Holders. Additional rules applicable to Original
Issue Discount Notes that are denominated in or determined by reference to a
Specified Currency are described under "Foreign Currency Notes" below.
A note may be issued for an amount that is less than its stated redemption price
at maturity (i.e., the sum of all payments to be made on the note other than
"qualified stated interest" payments). The difference between the stated
redemption price at maturity of the note and its "issue price," if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity, will be "original issue
discount" ("OID"). The "issue price" of each note will be the initial offering
price to the public at which a substantial amount of the particular offering is
sold. A "qualified stated interest" payment is stated interest that is
unconditionally payable at least annually at a single fixed rate or, generally,
at a rate (a "Variable Rate") that varies among payment periods:
o if that rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds or
o that is based upon the changes in the yield or price of certain actively
traded personal property.
Interest is payable at a single fixed rate only if the rate appropriately takes
into account the length of the interval between payments. Notes that may be
redeemed prior to their maturity date at the option of the issuer will be
treated from the time of issuance as having a maturity date for federal income
tax purposes on such redemption date if such redemption would result in a lower
yield to maturity. Notes that may be redeemed prior to their maturity date at
the option of the holder will be treated from the time of issuance as having a
maturity date for federal income tax purposes on such redemption date if such
redemption would result in a higher yield to maturity. The pricing supplement
will specify if we issue notes that are redeemable prior to maturity and if we
determine that the notes will be deemed to have a maturity date for federal
income tax purposes prior to their maturity date.
In certain cases (such as where interest payments are deemed not to be qualified
stated interest payments), notes that bear interest from a non-tax standpoint
may be deemed instead to be Original Issue Discount Notes for federal income tax
purposes. As a result, the inclusion of interest in income for federal income
tax purposes may vary from the actual cash payments of interest made on those
notes, generally accelerating income for cash method taxpayers. For those
purposes, the Treasury
S-22
<PAGE>
Regulations provide rules for determining whether payments pursuant to a note
with a Variable Rate will be treated as payments of qualified stated interest.
The pricing supplement for any series of notes will specify whether they are
Original Issue Discount Notes and, in the case of notes with a Variable Rate,
will describe the applicable rules for inclusion of OID in income of a United
States Holder.
United States Holders of Original Issue Discount Notes having a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the "daily portions" of OID with respect to
the note for each day during the taxable year in which such United States Holder
held such note ("accrued OID"). The daily portion is determined by allocating to
each day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. The accrual period for an Original Issue Discount Note may be of
any length and may vary in length over the term of the note provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs at the beginning or the end of an accrual period.
The amount of OID allocable to any accrual period is an amount equal to the
excess (if any) of:
o the product of the note's "adjusted issue price" at the beginning of such
accrual period and its yield to maturity, as determined on the basis of
compounding at the close of each accrual period and properly adjusted for
the length of the accrual period, over
o the sum of any qualified stated interest payments allocable to the accrual
period.
The following rules apply to determine OID allocable to an accrual period:
o if an interval between payments of qualified stated interest contains more
than one accrual period, the amount of qualified stated interest payable at
the end of the interval is allocated on a pro rata basis to each accrual
period in the interval and the adjusted issue price at the beginning of
each accrual period in the interval must be increased by the amount of any
qualified stated interest that has accrued prior to the beginning of the
first day of the accrual period but is not payable until the end of the
interval;
o if the accrual period is the final accrual period, the amount of OID
allocable to the final accrual period is the difference between the amount
payable at maturity (other than a payment of qualified stated interest) and
the adjusted issue price of the note at the beginning of the final accrual
period; and
o if all accrual periods are of equal length, except for an initial short
accrual period, the amount of OID allocable to the initial short accrual
period may be computed under any reasonable method.
The adjusted issue price of the note at the start of any accrual period is equal
to its issue price, increased by the accrued OID for each prior accrual period,
and reduced by any prior payments with respect to that note that were not
qualified stated interest payments. Under these rules, a United States Holder
generally will have to include in income increasingly greater amounts of OID in
successive accrual periods. We are required to report to the IRS the amount of
OID accrued on notes held of record by persons other than corporations and other
exempt holders.
In the case of Original Issue Discount Notes having a term of one year or less
("Short-Term Original Issue Discount Notes"), OID is included in income
currently either on a straight-line basis or, if the United States Holder so
elects, under the constant yield method used generally for OID as described
above. However, United States Holders that are individuals or other cash method
taxpayers are not required to include accrued OID on Short-Term Original Issue
Discount Notes in their income currently unless they elect to do so. If such a
United States Holder that does not elect to currently include the OID in income
subsequently recognizes a gain upon the disposition of the note, such gain will
be treated as ordinary interest income to the extent of the accrued OID.
Furthermore, a non-electing United States Holder of a Short-Term Original Issue
Discount Note may be required to defer deductions for a portion of the United
States Holder's interest expense with respect to any indebtedness incurred or
maintained to purchase or carry the note.
Amortization of Premium. A note may be considered to have been issued at a
"premium" to the extent that the United States Holder's tax basis in the note
exceeds the note's outstanding stated redemption price at maturity. A United
States Holder generally may elect to amortize any premium on a note by
offsetting payments of qualified stated interest on the note with the premium
allocable to the accrual period or periods to which the qualified stated
interest relates. The offset occurs at the time the holder of the note
S-23
<PAGE>
includes the qualified stated interest in its income in accordance with its
regular method of tax accounting. The amount of premium allocable to each
accrual period is determined using a constant yield method. In the case of
instruments that provide for alternative payment schedules, the amount of
premium is generally determined by assuming that the holder will exercise or not
exercise options in a manner that maximizes the holder's yield and we will
exercise or not exercise options in a manner that minimizes the holder's yield
(except that we will be assumed to exercise call options in a manner that
maximizes the holder's yield). Any election would apply to all debt securities
(other than debt securities the interest on which is excludable from gross
income) held or subsequently acquired by the United States Holder on or after
the first day of the first taxable year to which the election applies and is
irrevocable without the consent of the IRS.
Election to Treat All Interest as OID. United States Holders may elect to treat
all interest on any note as OID and calculate the amount includible in gross
income under the constant yield method described above. For the purposes of this
election, interest includes stated interest, acquisition discount, OID, de
minimis OID, market discount, de minimis market discount, and unstated interest,
as adjusted by any amortizable bond premium or acquisition premium. If a United
States Holder makes this election for a note with amortizable bond premium, the
election is treated as an election under the amortizable bond premium provisions
described above and the electing United States Holder will be required to
amortize bond premium for all of the holder's other debt instruments with
amortizable bond premium. The United States Holder must make the election for
the taxable year in which it acquires the note, and the election may not be
revoked without the consent of the IRS. United States Holders should consult
with their own tax advisors about this election.
Sale, Exchange, and Retirement of Notes. A United States Holder's tax basis in a
note will, in general, be the United States Holder's cost therefor, increased by
all accrued OID and reduced by any amortized premium and any cash payments on
the note other than qualified stated interest payments. Upon the sale, exchange,
or retirement of a note, a United States Holder will recognize gain or loss
equal to the difference between the amount realized upon the sale, exchange, or
retirement and the adjusted tax basis of the note. Except as described above
with respect to certain Short-Term Original Issue Discount Notes, and except
with respect to gain or loss attributable to changes in exchange rates as
described below with respect to certain Foreign Currency Notes, such gain or
loss will be capital gain or loss and will be long-term capital gain or loss if
at the time of sale, exchange, or retirement the note has been held for more
than one year. Under current law, net capital gains are, under certain
circumstances, taxed at lower rates than ordinary income. The deductibility of
capital losses is subject to limitations.
Extendible Notes. A note may provide that we have the option to reset the
interest rate, in the case of a fixed rate note, or the Spread or Spread
Multiplier, in the case of a floating rate note, on an Interest Reset Date or to
extend the maturity of a note on the maturity date. The treatment of a United
States Holder of notes with respect to which such a reset option has been
exercised who does not elect repayment of the affected notes on the applicable
Optional Reset Date or Original Stated Maturity will depend on the terms
established for those notes by CIT pursuant to the exercise of the option (the
"Revised Terms"). A holder may be treated for federal income tax purposes as
having exchanged those notes (the "Old Notes") for new notes with Revised Terms
(the "New Notes"). If the holder is treated as having exchanged Old Notes for
New Notes, the exchange may be treated as either a taxable exchange or a
tax-free recapitalization, with the following consequences:
o if our exercise of the option is not treated as an exchange of Old Notes
for New Notes, no gain or loss would be recognized by a United States
Holder as a result thereof;
o if the exercise of the option is treated as a taxable exchange of Old Notes
for New Notes, a United States Holder would recognize gain or loss equal to
the difference between the issue price of the New Notes and the holder's
adjusted tax basis in the Old Notes; and
o if the exercise of the option is treated as a tax-free recapitalization, no
loss would be recognized by a United States Holder as a result thereof and
gain, if any, would be recognized to the extent of the fair market value of
the excess, if any, of the principal amount of securities received over the
principal amount of securities surrendered.
Although, in this regard, the meaning of the term "principal amount" is not
clear, the term could be interpreted to mean "issue price" with respect to
securities that are received and "adjusted issue price" with respect to
securities that are surrendered. The presence of these options may also affect
the calculation of OID, among other
S-24
<PAGE>
things. Persons considering the purchase of Extendible Notes should carefully
examine the pricing supplement and should consult their own tax advisors
regarding the United States federal income tax consequences of the holding and
disposition of those notes.
Foreign Currency Notes. The following is a summary of the principal United
States federal income tax consequences to a United States Holder of the
ownership of a note denominated in a Specified Currency other than the U.S.
dollar and deals only with Foreign Currency Notes that are not treated, for
federal income tax purposes, as an integrated economic transaction in
conjunction with one or more spot contracts, futures contracts or similar
financial instruments. Persons considering the purchase of Foreign Currency
Notes should consult their own tax advisors with regard to the application of
the United States federal income tax laws to their particular situations, as
well as any consequences arising under the laws of any other taxing
jurisdiction.
If interest payments are made in a Specified Currency to a United States Holder
who is not required to accrue such interest prior to its receipt, the holder
will be required to include in income the U.S. dollar value of the amount
received (determined by translating the Specified Currency received at the "spot
rate" for the Specified Currency on the date that payment is received),
regardless of whether the payment is in fact converted into U.S. dollars. The
holder does not recognize any exchange gain or loss with respect to the receipt
of payment.
A United States Holder who is required to accrue interest on a Foreign Currency
Note prior to receipt of interest will be required to include in income for each
taxable year the U.S. dollar value of the interest that has accrued during each
year, determined by translating interest at the average rate of exchange for the
period or periods during which interest accrued. The average rate of exchange
for an interest accrual period is generally the simple average of the exchange
rates for each business day of the application period (or other average that is
reasonably derived and consistently applied by the holder). An accrual basis
holder may, however, elect to translate interest income at the spot rate on the
last day of the accrual period (or last day of the taxable year in the case of
an accrual period that straddles the holder's taxable year) or on the date the
interest payment is received if that date is within five business days of the
end of the accrual period. Any election would apply to all debt securities held
or subsequently acquired by the United States Holder on or after the first day
of the first taxable year to which the election applies and is irrevocable
without the consent of the IRS. Upon receipt of an interest payment on a note,
the holder will recognize exchange gain or loss in an amount equal to the
difference between the U.S. dollar value of the payment (determined by
translating any Specified Currency received at the spot rate for such Specified
Currency on the date received) and the U.S. dollar value of the interest income
that holder has previously included in income with respect to the payment. Any
gain or loss generally will not be treated as interest income or expense, except
to the extent provided in Treasury Regulations or administrative pronouncements
of the IRS.
OID on a Foreign Currency Note will be determined for any accrual period in the
applicable Specified Currency and then translated into U.S. dollars in the same
manner as interest income accrued by a United States Holder on the accrual
basis, as described above. Likewise, a United States Holder will recognize
exchange gain or loss when the OID is paid to the extent of the difference
between the U.S. dollar value of the accrued OID (determined in the same manner
as for accrued interest) and the U.S. dollar value of the payment (determined by
translating any Specified Currency received at the spot rate for the Specified
Currency on the date of payment). For this purpose, all receipts on a note will
be viewed:
o first as the receipt of any periodic interest payments called for under the
terms of the note;
o second as receipts of previously accrued OID (to the extent of such OID),
with payments considered made for the earliest accrual periods first; and
o thereafter as the receipt of principal.
A United States Holder's tax basis in a Foreign Currency Note will be the U.S.
dollar value of the Specified Currency amount paid for that Foreign Currency
Note determined at the time of purchase. In the case of a note that is
denominated in a foreign currency and is traded on an established securities
market, a cash basis taxpayer (or, if it elects, an accrual basis taxpayer) will
determine the U.S. dollar value of the cost of the note by translating the
amount paid at the spot rate of exchange on the settlement date of the purchase.
A United States Holder who purchases a note with the applicable previously owned
Specified Currency will recognize exchange gain or loss at the time of purchase
attributable to the difference at the time of purchase, if any, between the tax
basis
S-25
<PAGE>
in the Specified Currency and the fair market value of the note in U.S.
dollars on the date of purchase. The gain or loss will be ordinary income or
loss.
For purposes of determining the amount of any gain or loss recognized by a
United States Holder on the sale, exchange, or retirement of a Foreign Currency
Note, the amount realized will be the U.S. dollar value of the amount realized
in the Specified Currency (other than amounts attributable to accrued but unpaid
interest not previously included in the holder's income), determined at the time
of the sale, exchange, or retirement and in accordance with the applicable
method of accounting. In the case of a note which is denominated in a foreign
currency and is traded on an established securities market, a cash basis
taxpayer (or, if it elects, an accrual basis taxpayer) will determine the U.S.
dollar value of the amount realized by translating that amount at the spot rate
of exchange on the settlement date of the sale.
A United States Holder will recognize exchange gain or loss attributable to the
movement in exchange rates between the time of purchase and the time of
disposition (including the sale, exchange, or retirement) of a Foreign Currency
Note. This gain or loss will be treated as ordinary income or loss. This gain or
loss may be required to be netted against any non-exchange gain or loss in
calculating overall gain or loss on a note. Under proposed Treasury Regulations
issued on March 17, 1992, which could differ materially from the final Treasury
Regulations, if a Foreign Currency Note is denominated in one of certain
hyperinflationary currencies, generally exchange gain or loss would be realized
with respect to movements in the exchange rate between the beginning and end of
each taxable year (or such shorter period) that the note was held and the
exchange gain or loss would be treated as an addition or offset, respectively,
to the accrued interest income on (and an adjustment to the holder's tax basis
in) the Foreign Currency Note.
A United States Holder's tax basis in any Specified Currency received as
interest on (or OID with respect to), or received on the sale or retirement of,
a Foreign Currency Note will be the U.S. dollar value thereof at the spot rate
at the time the holder received the Specified Currency. Any gain or loss
recognized by a United States Holder on a sale, exchange, or other disposition
of Specified Currency will be ordinary income or loss and will not be treated as
interest income or expense, except to the extent provided in Treasury
Regulations or administrative pronouncements of the IRS.
Indexed Notes
The tax treatment of a United States Holder of an Indexed Note will depend on
factors including the specific index or indices used to determine indexed
payments on the note and the amount and timing of any contingent payments of
principal and interest. You should carefully examine the pricing supplement and
should consult your own tax advisors regarding the United States federal income
tax consequences of the holding and disposition of such notes before deciding to
purchase an Indexed Note.
Non-United States Holders
Non-United States Holders generally will not be subject to United States federal
withholding tax on the interest income (including any OID and income with
respect to Foreign Currency Notes) on any note, provided that:
o the beneficial owner does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of CIT entitled to
vote;
o the beneficial owner is not a controlled foreign corporation related to CIT
through stock ownership; and
o the beneficial owner provides the correct certification of Non-United
States Holder status, which may generally be satisfied by providing an IRS
Form W-8, W-8BEN or any successor form certifying that the beneficial owner
is not a United States Holder and providing the name and address of the
beneficial owner.
A Non-United States Holder generally will not be subject to United States
federal income tax on gain realized from the sale, exchange or retirement of a
note, unless:
o the gain is effectively connected with the conduct of a trade or business
in the United States;
o the Non-United States Holder is an individual who is present in the United
States for 183 days or more in the taxable year of disposition and certain
other conditions are satisfied; or
o the Non-United States Holder is an individual who is subject to tax
pursuant to the provisions of the Code applicable to certain United States
expatriates.
A note held by an individual who is not a citizen or resident of the United
States at the time of the holder's death will not be subject to United States
federal estate tax, provided that any interest received on the note, if received
by the holder at the time of the holder's death, would not be effectively
S-26
<PAGE>
connected with the conduct of a trade or business in the United States and the
individual does not own, actually or constructively, at the date of death, 10%
or more of the total combined voting power of all classes of stock of CIT
entitled to vote.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to certain payments of
principal, interest, OID, and premium made on a note and to the proceeds of sale
of a note made to United States Holders other than certain exempt recipients
(such as corporations). A 31% backup withholding tax will apply to those
payments if the United States Holder fails to provide a correct taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
Information reporting and backup withholding do not apply to payments made on a
note to a Non-United States Holder if the correct certification described above
under "Non-United States Holders" is received, provided the payor does not have
actual knowledge that the certifications are incorrect. Special rules may apply
with respect to the payment of the proceeds from the sale of a note to or
through foreign offices of certain brokers. The backup withholding tax is not an
additional tax and may be credited against a holder's regular United States
federal income tax liability or refunded by the IRS where applicable.
PLAN OF DISTRIBUTION
We are offering the notes on a continuing basis for sale directly by us in those
jurisdictions where we are authorized to do so. In addition, subject to the
terms and conditions set forth in the Selling Agency Agreement, dated November
2, 1999, we may offer the notes through any of the Agents who have separately
agreed to use their reasonable best efforts to solicit offers to purchase the
notes. We may also sell notes to any Agent, as principal, at a discount for
resale to one or more investors or other purchasers at varying prices related to
prevailing market prices at the time of resale, as determined by that Agent or,
if so agreed, on a fixed public offering price basis. Unless otherwise specified
in the pricing supplement, we will pay each Agent a commission, in the form of a
discount which, depending on the maturity of the notes placed by such Agent,
will range from .125% to .750% of the principal amount of the notes, except that
the commission we may pay to the Agents with respect to notes with maturities of
greater than thirty years will be negotiated at the time we issue those notes.
We will not pay a commission to the Agents on the notes we sell directly to
purchasers. Payment of the purchase price of the notes will be required to be
made in immediately available funds.
The Agents may offer the notes they have purchased as principal to other
dealers. The Agents may sell notes to any dealer at a discount and, unless the
pricing supplement specifies to the contrary, a discount allowed to any dealer
will not be in excess of the discount we allow the Agent. Unless the pricing
supplement specifies to the contrary, an Agent purchasing a note as principal
will pay a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to any agency sale of a note of identical
maturity, and the Agent may resell this note to investors and other purchasers
as described above. After the initial public offering of notes to be resold to
investors and other purchasers, the public offering price (in the case of a
fixed price public offering), concession and discount may change.
We will have the sole right to accept offers to purchase notes and may, in our
absolute discretion, reject any proposed purchase of notes in whole or in part.
Each Agent will have the right, in its discretion reasonably exercised, to
reject in whole or in part any offer to purchase the notes.
If one or more Agents purchase notes in an offering as principal on a fixed
price basis, the Agent or Agents may engage in certain transactions that
stabilize the price of those notes. Those transactions may consist of bids or
purchases for the purpose of pegging, fixing, or maintaining the price of those
notes. If the Agent or Agents create a short position in those notes (i.e., if
it sells notes in an aggregate principal amount exceeding that set forth in the
pricing supplement), that Agent or Agents may reduce that short position by
purchasing notes in the open market.
In general, the purchase of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might otherwise be in the absence of those purchases.
S-27
<PAGE>
We and the Agents make no representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the notes. In addition, we and the Agents make no representations that
anyone will engage in such transactions or that those transactions, once
commenced, will continue.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933. We have agreed to indemnify each Agent against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments each Agent may be required to make in respect thereof.
The notes are a new issue of securities with no established trading market and
will not be listed on any securities exchange. We have been advised by the
Agents that each of the Agents may from time to time purchase and sell notes in
the secondary market, but is not obligated to do so and may discontinue making a
market in the notes at any time without notice. No assurance can be given as to
the existence or liquidity of any secondary market for the notes.
Some of the Agents or their affiliates may from time to time provide investment
banking services to us and may from time to time engage in transactions with and
perform other services for us in the ordinary course of business.
S-28
<PAGE>
Prospectus
The CIT Group, Inc.
Debt Securities
----------------
We may issue up to an aggregate of $16,613,000,000 of debt securities in one or
more series with the same or different terms.
When we offer specific debt securities, we will disclose the terms of those debt
securities in a prospectus supplement that accompanies this prospectus. The
prospectus supplement may also add, update and modify information contained or
incorporated in this prospectus. Before you make your investment decision, we
urge you to carefully read this prospectus and the prospectus supplement
describing the specific terms of any offering, together with additional
information described under the heading "Where You Can Find More Information."
These debt securities may be either senior or senior subordinated in priority of
payment and will be direct unsecured obligations.
The terms of any debt securities offered to the public will depend on market
conditions at the time of sale. We reserve the sole right to accept or reject,
in whole or in part, any proposed purchase of the debt securities that we offer.
You should rely only on the information contained or incorporated by reference
in this prospectus. We have authorized no one to provide you with different
information.
We are not making an offer of these securities in any location where the offer
is not permitted.
You should not assume that the information in this prospectus, including
information incorporated by reference, is accurate as of any date other than the
date on the front of the prospectus.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is September 23, 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
information with the SEC. We have also filed with the SEC a Registration
Statement on Form S-3 to register the debt securities being offered in this
prospectus. This prospectus, which forms part of the registration statement,
does not contain all of the information included in the registration statement.
For further information about us and the debt securities offered in this
prospectus, you should refer to the registration statement and its exhibits.
The SEC allows us to "incorporate by reference" the information we file with
them, which means we can disclose important information to you by referring you
to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes older information. We have previously filed the following documents
with the SEC and are incorporating them by reference into this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998;
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999; and
3. Our Current Reports on Form 8-K dated January 28, 1999, February 22, 1999,
March 8, 1999, March 22, 1999, April 27, 1999, May 10, 1999, May 17, 1999, June
14, 1999, July 30, 1999, August 5, 1999, August 18, 1999, and September 22,
1999.
Until we have sold all of the debt securities which we are offering for sale
under this prospectus, we will also incorporate by reference all documents which
we may file in the future pursuant to Section 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934.
We will provide without charge to each person who receives a prospectus,
including any beneficial owner, a copy of the information that has been
incorporated by reference in this prospectus. If you would like to obtain this
information from us, please direct your request, either in writing or by
telephone, to Jeffrey Simon, Senior Vice President-Investor Relations, The CIT
Group, Inc., 1211 Avenue of the Americas, New York, New York 10036, telephone
(212) 536-1390.
THE CIT GROUP, INC.
CIT is a leading diversified finance organization. We offer secured commercial
and consumer financing primarily in the United States to smaller, middle-market,
and larger businesses and to individuals through a nationwide distribution
network. We commenced operations in 1908 and have developed a broad array of
"franchise" businesses that focus on specific industries, asset types and
markets, which are balanced by client, industry, and geographic diversification.
Our principal executive offices are located at 1211 Avenue of the Americas, New
York, New York 10036 and our telephone number is (212) 536-1390.
The Dai-Ichi Kangyo Bank, Limited holds approximately 43.9% of the voting power
and economic interest of our outstanding common stock.
Our business focus is commercial and consumer finance. We offer a broad array of
products to our customers, including loans and leases. We operate through three
business segments:
o Equipment Financing and Leasing
o Commercial Finance
o Consumer
Each segment conducts its operations through strategic business units which
market its products and services to satisfy the financing needs of specific
customers, industries, and markets.
Commercial Segments
Our commercial operations provide a wide range of financing and leasing products
to small, midsize, and larger companies across a wide variety of industries,
including aerospace, retailing, construction, rail, machine tool, business
aircraft, apparel, textiles, electronics and technology, chemicals,
manufacturing, and transportation. The secured lending, leasing, and factoring
products of our commercial operations include direct loans and leases, operating
leases, leveraged and single investor leases, secured revolving lines of credit
and term loans, credit protection, accounts receivable collection, import and
export financing and factoring, debtor-in-possession and turnaround financing,
and acquisition and expansion financing.
2
<PAGE>
Equipment Financing and Leasing
We conduct our Equipment Financing and Leasing operations through two strategic
business units:
o The CIT Group/Equipment Financing offers secured equipment financing and
leasing and focuses on the broad distribution of its products through
manufacturers, dealers/distributors, intermediaries, and direct calling
efforts primarily with the construction, transportation, and machine tool
industries.
o The CIT Group/Capital Finance offers secured equipment financing and
leasing and focuses on the direct marketing of customized transactions,
particularly operating leases, relating primarily to commercial aircraft
and rail equipment.
Equipment Financing and Capital Finance personnel have extensive expertise in
managing equipment over its full life cycle, including purchases of new
equipment, maintenance and repairs, residual value estimation, and remarketing
via releasing or sale. Equipment Financing's and Capital Finance's equipment and
industry expertise enable them to evaluate effectively residual value risk. For
example, Capital Finance can repossess commercial aircraft, if necessary, obtain
any required maintenance and repairs for repossessed aircraft, and recertify
repossessed aircraft with appropriate authorities. We manage the equipment,
residual value, and the risk of equipment remaining idle for extended periods of
time or in amounts that could materially impact profitability by locating
alternative equipment users or purchasers.
Equipment Financing
Equipment Financing is the largest of our strategic business units with total
financing and leasing assets of $9.6 billion at June 30, 1999, representing
38.0% of our total financing and leasing assets. Equipment Financing offers
secured equipment financing and leasing products, including direct secured
loans, leases, revolving lines of credit, operating leases, sale and leaseback
arrangements, vendor financing, and specialized wholesale and retail financing
for distributors and manufacturers.
Equipment Financing is a leading nationwide asset-based equipment lender. At
June 30, 1999, its portfolio included significant outstandings to customers in a
number of different industries, with manufacturing being the largest as a
percentage of financing and leasing assets, followed by construction and
transportation. The Equipment Financing portfolio at June 30, 1999 included many
different types of equipment, including construction, transportation,
manufacturing equipment and business aircraft.
Equipment Financing originates business through direct calling on customers and
through relationships with manufacturers, dealers/distributors, and
intermediaries which have leading or significant marketing positions in their
respective industries. This provides Equipment Financing with efficient access
to equipment end-users in many industries across a variety of equipment types.
Capital Finance
Capital Finance had financing and leasing assets of $4.6 billion at June 30,
1999, which represented 18.0% of our total financing and leasing assets. Capital
Finance specializes in customized leasing and secured financing, including
operating leases, single investor leases, equity portions of leveraged leases,
sale and leaseback arrangements, as well as loans secured by equipment relating
primarily to end-users of commercial aircraft and railcars. Typical Capital
Finance customers are middle-market to larger-sized companies.
Capital Finance has provided financing to commercial airlines for over 30 years.
The Capital Finance aerospace portfolio includes most of the leading U.S. and
foreign commercial airlines. Capital Finance has developed strong relationships
with most major airlines and all major aircraft and aircraft engine
manufacturers. This provides Capital Finance with access to technical
information, which supports customer service and provides opportunities to
finance new business.
Capital Finance has over 25 years experience in financing the rail industry,
contributing to its knowledge of asset values, industry trends, product
structuring, and customer needs. To strengthen its position in the rail
financing market, Capital Finance:
o formed a dedicated rail equipment group in 1994;
o currently maintains relationships with several leading railcar
manufacturers; and
o has a significant direct calling effort on all railroads and rail shipping
in the United States.
The Capital Finance rail portfolio includes all of the U.S. and Canadian Class I
railroads and numerous shippers. The Capital Finance operating lease fleet
includes primarily:
3
<PAGE>
o covered hopper cars used to ship grain and agricultural products, plastic
pellets and cement;
o gondola cars for coal, steel coil and mill service;
o open hopper cars for coal and aggregates;
o center beam flat cars for lumber; and
o boxcars for paper and auto parts.
Capital Finance also has a fleet of locomotives on lease to U.S. railroads.
Capital Finance generates new business through:
o direct calling efforts with equipment end-users and borrowers, including
major airlines, railroads, and shippers;
o relationships with aerospace, railcar, and other manufacturers; and
o intermediaries and other referral sources.
Commercial Finance
At June 30, 1999, the financing and leasing assets of our Commercial Finance
segment totaled $6.0 billion, representing 23.7% of total financing and leasing
assets. We conduct our Commercial Finance operations through three strategic
business units, all of which focus on accounts receivable and inventories as the
primary source of security for their lending transactions.
o The CIT Group/Business Credit, which provides secured financing primarily
to middle-market to larger-sized borrowers.
o The CIT Group/Credit Finance, which provides secured financing primarily to
smaller-sized to middle-market borrowers.
o The CIT Group/Commercial Services, which provides secured financing as well
as factoring and receivable/collection management products to companies in
apparel, textile, furniture, home furnishings, and other industries.
Business Credit
Financing and leasing assets of Business Credit totaled $1.7 billion at June 30,
1999 and represented 6.6% of our total financing and leasing assets. Business
Credit offers senior revolving and term loans secured by accounts receivable,
inventories, and fixed assets to middle-market and larger-sized companies.
Clients use these loans primarily for growth, expansion, acquisitions,
refinancings, and debtor-in-possession and turnaround financings. Business
Credit sells and purchases participation interests in these loans to and from
other lenders.
Through its variable interest rate, senior revolving, and term loan products,
Business Credit meets its customers' financing needs for working capital,
growth, acquisition, and other financing situations otherwise not met through
bank or other unsecured financing alternatives. Business Credit typically
structures financings on a fully secured basis, though, from time to time, it
may look to a customer's cash flow to support a portion of the credit facility.
Revolving and term loans are made on a variable interest rate basis based on
published indexes such as LIBOR or a prime rate of interest.
Business Credit originates business through direct calling efforts and
intermediary and referral sources. Business Credit has focused on increasing the
proportion of direct business origination to improve its ability to capture or
retain refinancing opportunities and to enhance finance income.
Credit Finance
Financing and leasing assets of Credit Finance totaled $1.1 billion at June 30,
1999 and represented 4.3% of our total financing and leasing assets. Credit
Finance offers revolving and term loans to smaller-sized and middle-market
companies secured by accounts receivable, inventories, and fixed assets. These
loans are used by clients for working capital, refinancings, acquisitions,
leveraged buyouts, reorganizations, restructurings, turnarounds, and Chapter 11
financing and confirmation plans. Credit Finance sells participation interests
in these loans to other lenders and purchases participation interests in similar
loans originated by other lenders. Credit Finance borrowers are generally
smaller and cover a wider range of credit quality than those of Business Credit.
While both Business Credit and Credit Finance offer financing secured by
accounts receivable, inventories, and fixed assets, Credit Finance places a
higher degree of reliance on collateral and is generally more focused on credit
monitoring in its business.
Credit Finance originates business through the sales and regional offices as
well as through intermediaries and referral relationships and through direct
calling efforts. Credit Finance has developed long-term relationships with
selected finance companies, banks, and other lenders and with many diversified
referral sources.
4
<PAGE>
Commercial Services
Commercial Services had total financing and leasing assets of $3.2 billion at
June 30, 1999, which represented 12.7% of our total financing and leasing
assets. Commercial Services offers a full range of domestic and international
customized credit protection, lending, and outsourcing services that include
working capital and term loans, factoring, receivable management outsourcing,
bulk purchases of accounts receivable, import and export financing, and letter
of credit programs.
Commercial Services provides financing to clients through the purchase of
accounts receivables owed to clients by their customers as well as by
guaranteeing amounts due under letters of credit issued to the clients'
suppliers, which are collateralized by accounts receivable and other assets. The
purchase of accounts receivable is traditionally known as "factoring." A
factoring client who sells a receivable pays a factoring fee which is
commensurate with the underlying degree of credit risk and recourse. This
factoring fee is generally a percentage of the factored sales volume. When
Commercial Services "factors" (i.e., purchases) a customer invoice from a
client, it records the customer receivable as an asset and also establishes a
liability for the funds due to the client ("credit balances of factoring
clients"). Commercial Services also may advance funds to its clients prior to
collection of receivables, typically in an amount up to 80% of eligible accounts
receivable (as defined for that transaction), charging interest on those
advances (in addition to any factoring fees) and satisfying any advances from
receivables collections.
Clients use Commercial Services' products and services for various purposes,
including improving cash flow, mitigating or reducing the risk of bad debt
charge-offs, increasing sales, improving management information, and converting
the high fixed cost of operating a credit and collection department into a lower
and variable expense based on sales volume.
Commercial Services generates business regionally from a variety of sources,
including direct calling and referrals from existing clients and other sources.
Consumer
Our consumer business is focused primarily on home equity lending and on retail
sales financing secured by recreation vehicles, manufactured housing and
recreational boats. The CIT Group/Consumer Finance business unit offers home
equity loans. The CIT Group/Sales Financing business unit offers sale financing
for consumer products sold through dealers. Sales Financing also provides
contract servicing for securitization trusts and other third parties through a
centralized Asset Service Center. Additionally, in the ordinary course of
business, Consumer Finance and Sales Financing purchase loans and portfolios of
loans from banks, thrifts, and other originators of consumer loans.
Consumer Finance
The financing and leasing assets of Consumer Finance aggregated $2.4 billion at
June 30, 1999 and represented 9.6% of our total financing and leasing assets.
The managed assets of Consumer Finance were $2.9 billion at June 30, 1999, or
10.3% of total managed assets. Consumer Finance commenced operations in December
1992. Its products include both fixed and variable rate closed-end loans and
variable rate lines of credit. Consumer Finance primarily originates, purchases,
and sells loans secured by first or second liens on detached, single family
residential properties. Customers borrow for the purpose of consolidating debts,
refinancing an existing mortgage, funding home improvements, paying education
expenses, and, to a lesser extent, purchasing a home, among other reasons.
Consumer Finance primarily originates loans through brokers, as well as on a
direct marketing basis and through correspondents.
We believe that the network of Consumer Finance offices, located in most major
U.S. markets, enables us to provide a competitive, extensive product offering
complemented by high levels of service delivery. Through experienced lending
professionals and automation, Consumer Finance provides rapid turnaround time
from application to loan funding. Rapid turnaround time is critical to brokers
with whom Consumer Finance has business relationships.
Sales Financing
The financing and leasing assets of Sales Financing aggregated $2.6 billion at
June 30, 1999 and represented 10.3% of our total financing and leasing assets.
The managed assets of Sales Financing were $5.2 billion at June 30, 1999, or
18.4% of total managed assets. Sales Financing provides nationwide retail
financing for the purchase of new and used recreation vehicles, manufactured
housing, and recreational boats. Sales Financing began providing wholesale
inventory financing to manufactured housing and recreational
5
<PAGE>
boat dealers utilizing its dealer and manufacturer relationships in 1997 and to
recreation vehicle dealers in 1998. Sales Financing originates loans
predominately through recreation vehicle, manufactured housing, and recreational
boat dealer, manufacturer, and broker relationships.
Servicing
The Asset Service Center centrally services and collects substantially all of
our consumer finance receivables, including loans originated or purchased by
Sales Financing or Consumer Finance as well as loans originated or purchased and
subsequently securitized with servicing retained. The servicing portfolio also
includes loans owned by third parties that are serviced by Sales Financing for a
fee on a "contract" basis. At June 30, 1999, the consumer finance servicing
portfolio included $0.8 billion of finance receivables serviced for third
parties.
Securitization Program
We generally fund our operations through offerings of commercial paper and
medium-term and longer term notes in the capital markets. In an effort to
broaden funding sources and to provide an additional source of liquidity, we
established a securitization program in 1992 to access periodically the public
and private asset backed securitization markets. Our securitization program
currently includes consumer loans secured by recreation vehicles, recreational
boats, and residential real estate. We have sold $5.2 billion of finance
receivables since we began the asset backed securitization program, and the
remaining pool balance at June 30, 1999 was $3.1 billion, or 10.9% of our total
managed assets.
Under a typical asset backed securitization, we sell a "pool" of secured loans
to a special purpose entity. The special purpose entity, in turn, issues
certificates and/or notes which are collateralized by the loan pool and which
entitle the holders thereof to participate in certain loan pool cash flows. We
retain the servicing of the securitized loans, for which we earn a servicing
fee. We also participate in certain "residual" loan pool cash flows (cash flows
after payment of principal and interest to certificate and/or note holders and
after losses). At the date of securitization, we estimate the "residual" cash
flows to be received over the life of the securitization, record the present
value of these cash flows as an interest-only receivable (a retained interest in
the securitization), and recognize a gain. The interest-only receivable is then
amortized through earnings over the estimated life of the related loan pool.
In estimating residual cash flows and the value of the related interest-only
receivables, we make a variety of financial assumptions, including loan pool
credit losses, prepayment speeds, and discount rates. These assumptions are
empirically supported by both our historical experience and anticipated trends
relative to the particular products securitized. After recording the
interest-only receivables, we regularly review these assets to determine if the
valuations are impaired. These reviews are performed on a disaggregated basis.
We calculate fair values of interest-only receivables by using current and
anticipated credit losses, prepayment speeds, and discount rates, which we then
compare to our carrying values. Our interest-only receivables had a carrying
value at June 30, 1999 of $187.5 million, which approximated fair value.
Equity Investments
The CIT Group/Equity Investments, our capital investing unit, originates and
participates in merger and acquisition transactions, purchases private equity
and equity-related securities, and arranges transaction financing. Equity
Investments also invests in emerging growth opportunities in selected
industries, including the life sciences, information technology, communications,
and consumer products industries. Equity Investments made its first investment
in 1991 and had total investments of $91.7 million at June 30, 1999.
Competition
Our markets are highly competitive and are characterized by competitive factors
that vary based upon product and geographic region. Competitors include captive
and independent finance companies, commercial banks and thrift institutions,
industrial banks, leasing companies, manufacturers, and vendors. Insurance
companies and bank holding companies have formed substantial national financial
services networks that compete with us. On a local level, community banks,
smaller independent finance companies, and mortgage companies are competitive
forces. Some competitors have substantial local market positions. Many of our
competitors are large companies that have substantial capital, technological,
and marketing resources. Some of these competitors are larger than us and may
have access to capital at a lower cost than we do. Also, our competitors include
businesses that are not related to bank holding companies. These competitors may
engage in activities such as short-term equipment rental and servicing, which
are not permitted activities for us. Competition has been enhanced in recent
years
6
<PAGE>
by a strong economy and growing marketplace liquidity. The markets for most of
our products are characterized by a large number of competitors. However, with
respect to some of our products, competition is more concentrated.
We compete primarily on the basis of pricing, terms, and structure. From time to
time, our competitors seek to compete aggressively on the basis of these
factors, and we may lose market share to the extent we are unwilling to match
competitor pricing and terms in order to maintain interest margins and/or credit
standards.
Other primary competitive factors include industry experience and client service
and relationships. In addition, demand for our products with respect to certain
industries, such as the commercial airline industry, will be affected by demand
for that industry's services and products and by industry regulations.
Regulation
The Dai-Ichi Kangyo Bank, Limited, or "DKB," is a bank holding company within
the meaning of the Bank Holding Company Act of 1956. DKB is registered as a bank
holding company with the Federal Reserve. Since DKB owns approximately 43.9% of
our common stock, we are subject to certain provisions of the Bank Holding
Company Act and are subject to examination by the Federal Reserve. In general,
the Bank Holding Company Act limits the activities in which a bank holding
company and its subsidiaries may engage to those of banking or managing or
controlling banks or performing services for their subsidiaries and to
continuing activities which the Federal Reserve has determined to be "so closely
related to banking or managing or controlling banks as to be a proper incident
thereto." Our current principal business activities constitute permissible
activities for a nonbank subsidiary of a bank holding company. We cannot engage
in new activities or acquire securities or assets of another company unless:
o the new activity or the activity of the other company is one that the
Federal Reserve has determined to be closely related to banking; and
o we have obtained the approval of the Federal Reserve to engage in that
activity or to acquire the securities or assets of the other company.
To obtain the Federal Reserve's approval, we or DKB must submit an application
to the Federal Reserve that provides information both about the proposed
activity or acquisition and about the financial condition and operations of DKB
and CIT.
In addition to the Bank Holding Company Act, Japanese banking laws and
regulations also affect our permissible activities because of DKB's ownership of
our common stock.
We have entered into a regulatory agreement with DKB in order to facilitate
DKB's compliance with applicable U.S. and Japanese banking laws and regulations.
This regulatory agreement prohibits us from engaging in any new activity or
entering into any transaction for which prior approval, notice, or filing is
required under these laws and regulations, unless we or DKB obtains the required
approval, we or DKB gives prior notice, or we or DKB makes the required filings.
This regulatory agreement also prohibits us from engaging in any activity that
would cause DKB, CIT or any affiliate of DKB or CIT to violate any of these laws
or regulations. If, at any time, DKB determines that any of our activities are
prohibited by these laws and regulations, we are required to take all reasonable
steps to cease those activities.
Two of our subsidiaries are investment companies organized under Article XII of
the New York Banking Law. New York's banking laws govern the activities of these
subsidiaries and state banking regulators examine these subsidiaries. New York's
banking laws also require that any person or entity seeking to purchase
"control" of us would be required to apply for and obtain the prior approval of
the New York Superintendent of Banks. "Control" is presumed to exist if a person
or entity would, directly or indirectly, own, control, or hold (with power to
vote) 10% or more of our voting stock.
Our operations are subject, in certain instances, to supervision and regulation
by state and federal governmental authorities and may be subject to various laws
and judicial and administrative decisions imposing various requirements and
restrictions. Among other things, these laws, regulations, and decisions:
o regulate credit granting activities;
o establish maximum interest rates, finance charges, and other charges;
o regulate customers' insurance coverages;
o require disclosures to customers;
o govern secured transactions; and
o set collection, foreclosure, repossession, and claims handling procedures
and other trade practices.
Our consumer finance business is subject to detailed enforcement and supervision
by state
7
<PAGE>
authorities under legislation and regulations which generally require
licensing of the lender. Licenses are renewable and may be subject to suspension
or revocation for violations of laws and regulations. Applicable state laws
generally regulate interest rates and other charges and require certain
disclosures. In addition, most states have other laws, public policies, and
general principles of equity relating to the protection of consumers, unfair and
deceptive practices, and practices that may apply to the origination, servicing,
and collection of consumer finance loans. Depending on the provision of the
applicable law and the specific facts and circumstances involved, violations of
these state laws, policies, and principles may limit our ability to collect all
or part of the principal of or interest on consumer finance loans, may entitle
the borrower to a refund of amounts previously paid, and, in addition, could
subject us to damages and administrative sanctions.
Federal laws preempt state usury ceilings on first mortgage loans and state laws
which restrict various types of alternative dwelling secured receivables, except
in those states which have specifically opted out, in whole or in part, of
federal preemption. Loans may also be subject to other federal laws, including:
o the Federal Truth-in-Lending Act and the related Federal Reserve Regulation
Z, which require certain disclosures to borrowers and other parties
regarding loan terms and regulate certain practices with respect to those
loans;
o the Real Estate Settlement Procedures Act and the related Housing and Urban
Development Regulation X, which require certain disclosures to borrowers
and other parties regarding certain loan terms and regulate certain
practices with respect to these loans;
o the Equal Credit Opportunity Act and the related Federal Reserve Regulation
B, which prohibit discrimination in the extension of credit and
administration of loans on the basis of age, race, color, sex, religion,
marital status, national origin, receipt of public assistance, or the
exercise of any right under the Consumer Credit Protection Act;
o the Fair Credit Reporting Act, which regulates the use and reporting of
information related to a borrower's credit experience; and
o the Fair Housing Act, which prohibits discrimination on the basis of, among
other things, familial status or handicap.
Depending on the provisions of the applicable law and the specific facts and
circumstances involved, violations of these federal laws may limit our ability
to collect all or part of the principal of or interest on applicable loans, may
entitle the borrower to rescind the loan and any mortgage, or to obtain a refund
of amounts previously paid and, in addition, could subject us to damages and
administrative sanctions.
This federal and state regulation is primarily for the benefit and protection of
our customers and not for the benefit of investors. This regulation could limit
our discretion in operating our businesses. For example, state laws often
establish maximum allowable finance charges for certain consumer and commercial
loans. Noncompliance with applicable statutes or regulations could result in the
suspension or revocation of any license or registration at issue, as well as the
imposition of civil fines and criminal penalties. No assurance can be given that
applicable laws or regulations will not be amended or construed differently,
that new laws and regulations will not be adopted, or that interest rates we
charge will not rise to state maximum levels, any of which could adversely
affect our business or results of operations. The Federal Reserve has the
authority to restrict our ability to engage in new activities or to acquire
additional businesses or to acquire assets outside of the normal course of
business.
8
<PAGE>
SUMMARY OF FINANCIAL INFORMATION
The following is a summary of certain financial information of CIT and its
subsidiaries. The data for the years ended December 31, 1998, 1997 and 1996 were
obtained from CIT's audited consolidated financial statements contained in CIT's
1998 Annual Report on Form 10-K. The data for the years ended December 31, 1995
and 1994 were obtained from audited consolidated statements of CIT that are not
incorporated by reference in this prospectus. The data for the six months ended
June 30, 1999 and 1998 were obtained from CIT's unaudited condensed consolidated
financial statements contained in CIT's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999. This summary should be read in conjunction with the
financial information of CIT included in the reports referred to under "Where
You Can Find More Information." Results for the six month period ended June 30,
1999 are not necessarily indicative of operating results that may be expected
for a full year.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
----------------- --------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------- ------- -------- ------- -------
(Dollar Amounts in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Finance income $1,095.9 $ 970.8 $2,015.1 $1,824.7 $1,646.2 $1,529.2 $1,263.8
Interest expense 554.1 502.4 1,040.8 937.2 848.3 831.5 614.0
-------- ------- -------- -------- -------- -------- -------
Net finance income 541.8 468.4 974.3 887.5 797.9 697.7 649.8
Fees and other income 139.5 127.1 255.4 247.8 244.1 184.7 174.4
Gain on sale of equity interest
acquired in loan workout -- -- -- 58.0 -- -- --
-------- ------- -------- -------- -------- -------- -------
Operating revenue 681.3 595.5 1,229.7 1,193.3 1,042.0 882.4 824.2
-------- ------- -------- -------- -------- -------- -------
Salaries and employee benefits 133.3 121.8 245.4 253.5 223.0 193.4 185.8
General operating expenses 88.7 83.9 172.4 174.9 170.1 152.3 152.1
-------- ------- -------- -------- -------- -------- -------
Salaries and general operating
expenses 222.0 205.7 417.8 428.4 393.1 345.7 337.9
Provision for credit losses 45.7 44.4 99.4 113.7 111.4 91.9 96.9
Depreciation on operating lease
equipment 115.3 78.7 169.5 146.8 121.7 79.7 64.4
Minority interest in subsidiary trust
holding solely debentures of
the Company 9.6 9.6 19.2 16.3 -- -- --
-------- ------- -------- -------- -------- -------- -------
Operating expenses 392.6 338.4 705.9 705.2 626.2 517.3 499.2
-------- ------- -------- -------- -------- -------- -------
Income before provision for
income taxes 288.7 257.1 523.8 488.1 415.8 365.1 325.0
Provision for income taxes 100.5 91.7 185.0 178.0 155.7 139.8 123.9
-------- ------- -------- -------- -------- -------- -------
Net income $ 188.2 $ 165.4 $ 338.8 $ 310.1 $ 260.1 $ 225.3 $ 201.1
======== ======= ======== ======== ======== ======== ========
</TABLE>
The following table sets forth the ratio of earnings to fixed charges for each
of the periods indicated.
Ratios of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
------------------ ------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges 1.51x 1.50x 1.49x 1.51x 1.49x 1.44x 1.52x
</TABLE>
We have computed the ratios of earnings to fixed charges in accordance with
requirements of the SEC's Regulation S-K. Earnings consist of income from
continuing operations before income taxes and fixed charges. Fixed charges
consist of interest on indebtedness, minority interest in a subsidiary trust
holding solely debentures of CIT, and the portion of rentals considered to
represent an appropriate interest factor.
9
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus and any supplements are "forward-looking,"
in that they do not discuss historical fact but instead note future
expectations, projections, intentions, or other items relating to the future.
These forward-looking statements include those made in documents incorporated in
this prospectus by reference.
Forward-looking statements are subject to known and unknown risks,
uncertainties, and other factors that may cause our actual results or
performance to differ materially from those contemplated by the forward-looking
statements. Many of those factors are noted in conjunction with the
forward-looking statements in the text. Other important factors that could cause
actual results to differ include:
o The results of our efforts to implement our business strategy. Failure to
fully implement our business strategy might result in decreased market
penetration, adverse effects on results of operations, and other adverse
results.
o The effect of economic conditions and the performance of our borrowers.
Economic conditions in general or in particular market segments could
impact the ability of our borrowers to operate or expand their businesses,
which might result in decreased performance or repayment of their
obligations or reduced demand for additional financing needs.
o Actions of our competitors and our ability to respond to those actions. We
seek to remain competitive without sacrificing prudent lending standards.
Doing business under those standards becomes more difficult, however, when
competitors offer financing with less stringent criteria. We seek to
maintain credit quality at the risk of growth in assets, if necessary.
o The cost of our capital. That cost depends on many factors, some of which
are beyond our control, such as our portfolio quality, ratings, prospects,
and outlook.
o Changes in government regulations, tax rates, and similar matters. For
example, government regulations could significantly increase the cost of
doing business or could eliminate certain tax advantages of some of our
financing products.
o Necessary technological changes, including those addressing "Year 2000"
data systems issues, may be more difficult, expensive or time consuming
than anticipated.
o Costs or difficulties related to integration of acquisitions.
o Other risks detailed in our other SEC reports or filings.
We do not intend to update forward-looking information to reflect actual results
or changes in assumptions or other factors that could affect those statements.
We cannot predict your risk in relying on forward-looking statements in light of
the many factors that could affect their accuracy.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of any debt securities to
provide additional working funds for us and our subsidiaries. Initially, we will
use the proceeds to reduce short-term borrowings (currently represented by
commercial paper). Generally, we use the proceeds of our short-term borrowings
primarily to originate and purchase receivables in the ordinary course of our
business. We have not yet determined the amounts which we may use in connection
with our business or which we may furnish to our subsidiaries. From time to
time, we may also use the proceeds to finance the bulk purchase of receivables
and/or the acquisition of other finance-related businesses.
DESCRIPTION OF DEBT SECURITIES
General
Any debt securities that we issue will be issued in fully registered form. This
prospectus and the prospectus supplement will describe the terms of the debt
securities.
The debt securities that we issue will constitute either Superior Indebtedness
or Senior Subordinated Indebtedness. From time to time, we may issue senior debt
securities (the "Senior Securities") in one or more separate series of debt
securities. We will issue each series of Senior Securities under separate
indentures, each substantially in the form of a global indenture (each of these
indentures or supplemental indentures is referred to as a "Senior Indenture" and
collectively as the "Senior Indentures"). We will enter into each Senior
Indenture with a banking institution organized under the laws of the United
States or one of the states thereof (a "Senior Trustee").
10
<PAGE>
From time to time, we may also issue senior subordinated debt securities (the
"Senior Subordinated Securities") as one or more separate series of debt
securities. We will issue each series of Senior Subordinated Securities under
one or more separate indentures, each substantially in the form of a global
indenture (each of these indentures and supplemental indentures is referred to
as a "Senior Subordinated Indenture" and collectively as the "Senior
Subordinated Indentures"). We will enter into each Senior Subordinated Indenture
with a banking institution organized under the laws of the United States or one
of the states thereof (a "Senior Subordinated Trustee").
From time to time, we may issue Senior Subordinated Securities which are
intended to qualify as "Tier II Capital" under the rules and regulations of the
Ministry of Finance of Japan and the risk-based capital guidelines of the
Federal Reserve Board.
We sometimes refer to the Senior Indentures and the Senior Subordinated
Indentures as the "Indentures," and the Senior Trustees and the Senior
Subordinated Trustees as the "Trustees."
Our Indentures. We have filed a form of global Senior Indenture and a form of
global Senior Subordinated Indenture as exhibits to the registration statement
of which this prospectus is a part. You should refer to particular provisions of
an Indenture for its defined terms. In order to understand our disclosure
concerning the Indentures, you should refer to the detailed provisions of each
Indenture.
Limitations on Indebtedness. The terms of the Senior Indentures do not limit the
amount of debt securities or other unsecured Superior Indebtedness which we may
issue. The terms of the Senior Indentures also do not limit the amount of
subordinated debt, secured or unsecured, which we may issue. The terms of some
of the Senior Subordinated Indentures may limit the amount of debt securities or
other unsecured Senior Subordinated Indebtedness which we may issue or limit the
amount of Junior Subordinated Indebtedness which we may issue. For a description
of these limitations, see "Description of Debt Securities-Restrictive
Provisions" at page 18. At June 30, 1999, approximately $200 million of Senior
Subordinated Indebtedness was issued and outstanding. At June 30, 1999, under
the most restrictive provisions of the Senior Subordinated Indentures, we could
issue up to approximately $2.6 billion of additional Senior Subordinated
Indebtedness.
Separate Series. We may issue the debt securities in one or more separate series
of Senior Securities or Senior Subordinated Securities. Debt securities in a
particular series may have different maturities or different purchase prices.
Original Issue Discount. Debt securities bearing no interest or a below market
interest rate when issued are known as original issue discount securities. We
will offer any original issue discount securities which we issue at a discount
(which may be substantial) below their stated principal amount. You should refer
to the prospectus supplement for a description of federal income tax
consequences and other special considerations applicable to original issue
discount securities.
Particular Terms of Offered Debt Securities. You should refer to the prospectus
supplement for a description of the particular terms of any debt securities that
we offer for sale. The following are some of the terms of these debt securities
that we will describe in the prospectus supplement:
o designation, total principal amount and authorized denominations;
o percentage of principal amount at which debt securities will be issued;
o maturity date or dates;
o interest rate or rates (which may be fixed or variable) per annum, the
method of determining the interest rate or rates, and any original issue
discount;
o payment dates for interest and principal and the provisions for accrual of
interest;
o provisions for any sinking, purchase, or other comparable fund;
o any redemption terms;
o designation of the place where registered holders of debt securities may be
paid, or may transfer or redeem debt securities;
o designation of any foreign currency (including composite currencies) in
which the debt securities may be issued or paid and any terms under which a
holder of debt securities may elect to be paid in a different currency than
the currency of the debt securities;
o any index which may be used to determine the amounts of principal,
interest, or any other payment due on the debt securities; and
o designation of the debt securities as Senior Securities or Senior
Subordinated Securities.
11
<PAGE>
Payment. We will make all payments due on debt securities, less any applicable
withholding taxes, at the office of CIT or its agent maintained for this purpose
in New York, New York. However, at our option, we may pay interest, less any
applicable withholding taxes, by mailing a check to the address of the person
entitled to the interest as their name and address appear on our register. (See
Section 2.04 of the Indentures).
Transfer of Debt Securities. A registered holder of debt securities, or a
properly authorized attorney of the holder, may transfer these debt securities
at our office or our agent's office. The prospectus supplement will describe the
location of these offices. We will not charge the holder a fee for any transfer
or exchange of debt securities. But we may require the holder to pay a sum
sufficient to cover any tax or other governmental charge in connection with a
transfer or exchange. (See Section 2.06 of the Indentures).
Certain Defined Terms.
"Indebtedness" in the definition of the terms "Superior Indebtedness," "Senior
Subordinated Indebtedness," and "Junior Subordinated Indebtedness" means all
obligations which in accordance with generally accepted accounting principles
should be classified as liabilities on a balance sheet and in any event includes
all debt and other similar monetary obligations, whether direct or guaranteed.
"Superior Indebtedness" means all of our Indebtedness that is not by its terms
subordinate or junior to any of our other indebtedness. The Senior Securities
will constitute Superior Indebtedness.
"Senior Subordinated Indebtedness" means all of our Indebtedness that is
subordinate only to Superior Indebtedness. The Senior Subordinated Securities
will constitute Senior Subordinated Indebtedness.
"Junior Subordinated Indebtedness" means all Indebtedness of CIT that is
subordinate to both Superior Indebtedness and Senior Subordinated Indebtedness.
Senior Securities
The Senior Securities will be direct, unsecured obligations of CIT. Senior
Securities will constitute Superior Indebtedness issued with equal priority to
the other Superior Indebtedness. At June 30, 1999, CIT's consolidated unaudited
balance sheet reflected approximately $14.0 billion of outstanding Superior
Indebtedness.
The Senior Securities will be senior to all Senior Subordinated Indebtedness,
including the Senior Subordinated Securities. At June 30, 1999, CIT's
consolidated balance sheet reflected $200 million outstanding Senior
Subordinated Indebtedness and no outstanding Junior Subordinated Indebtedness.
Senior Subordinated Securities
The Senior Subordinated Securities will be direct, unsecured obligations of CIT.
CIT will pay principal, premium, if any, and interest on the Senior Subordinated
Securities only after the prior payment in full of all Superior Indebtedness of
CIT, including the Senior Securities.
In the event of any insolvency, bankruptcy, or similar proceedings, the holders
of Superior Indebtedness will be paid in full before any payment is made on the
Senior Subordinated Securities. An event of default under or acceleration of
Superior Indebtedness does not in itself trigger the payment subordination
provisions applicable to Senior Subordinated Securities. However, if the Senior
Subordinated Securities are declared due and payable before maturity due to a
default, the holders of the Senior Subordinated Securities will be entitled to
payment only after Superior Indebtedness is paid in full.
Due to these subordination provisions, if we become insolvent, the holders of
Superior Indebtedness may recover a higher percentage of their investment than
the holders of the Senior Subordinated Securities. We intend that any Senior
Subordinated Securities will be in all respects equal in right of payment with
the other Senior Subordinated Indebtedness, including CIT's outstanding Senior
Subordinated Securities. We also intend that all Senior Subordinated Securities
will be superior in right of payment to all Junior Subordinated Indebtedness and
to all outstanding capital stock.
Senior Subordinated Securities of certain series may meet the requirements
necessary for that series to be considered "Tier II Capital" under the rules and
regulations of the Ministry of Finance of Japan and the risk-based capital
guidelines of the Federal Reserve Board. If we propose to issue Senior
Subordinated Securities which will qualify as Tier II Capital, then we will
disclose this in the prospectus supplement.
Restrictive Provisions
Negative Pledge. Generally, the Indentures do not limit the amount of other
securities which we or
12
<PAGE>
our subsidiaries may issue. But each Indenture contains a provision that we will
not pledge or otherwise subject to any lien any of our property or assets to
secure indebtedness for money borrowed, incurred, issued, assumed, or guaranteed
by us, subject to certain exceptions (the "Negative Pledge"). (See Section 6.04
of the Indentures).
Under the terms of the Negative Pledge, we are permitted to create the following
liens:
o liens in favor of any of our subsidiaries;
o purchase money liens;
o liens existing at the time of any acquisition that we may make;
o liens in favor of the United States, any state, or governmental agency or
department to secure obligations under contracts or statutes;
o liens securing the performance of letters of credit, bids, tenders, sales
contracts, purchase agreements, repurchase agreements, reverse repurchase
agreements, bankers' acceptances, leases, surety and performance bonds, and
other similar obligations incurred in the ordinary course of business;
o liens upon any real property acquired or constructed by us primarily for
use in the conduct of our business;
o arrangements providing for our leasing of assets, which we have sold or
transferred with the intention that we will lease back these assets, if the
lease obligations would not be included as liabilities on our consolidated
balance sheet;
o liens to secure non-recourse debt in connection with our leveraged or
single-investor or other lease transactions;
o consensual liens created in our ordinary course of business that secure
indebtedness that would not be included in total liabilities as shown on
our consolidated balance sheet;
o liens created by us in connection with any transaction that we intend to be
a sale of our property or assets;
o liens on property or assets financed through tax-exempt municipal
obligations;
o liens arising out of any extension, renewal, or replacement, in whole or in
part, of any financing permitted under the Negative Pledge, so long as the
lien extends only to the property or assets, with improvements, which
originally secured the lien; and
o liens that secure certain other indebtedness which, in an aggregate
principal amount then outstanding, does not exceed 10% of our consolidated
net worth.
See Section 6.04 of the Indentures for the provisions of the Negative Pledge.
In addition, in the Senior Subordinated Indentures, we have agreed not to
permit:
o the aggregate amount of Senior Subordinated Indebtedness outstanding at any
time to exceed 100% of the aggregate amount of the par value of the capital
stock plus our consolidated surplus (including retained earnings); or
o the aggregate amount of Senior Subordinated Indebtedness and Junior
Subordinated Indebtedness outstanding at any time to exceed 150% of the
aggregate amount of the par value of the capital stock plus our
consolidated surplus (including retained earnings).
(See Senior Subordinated Indenture Section 6.05). Under the more restrictive of
these tests, as of June 30, 1999, we could issue up to approximately $2.6
billion of additional Senior Subordinated Indebtedness.
Restrictions on Mergers and Asset Sales. Subject to the provisions of the
Negative Pledge, the Indentures will not prevent us from consolidating or
merging with any other corporation or selling our assets as, or substantially
as, an entirety. However, if we are not the surviving corporation in a merger,
the surviving corporation must expressly assume our obligations under the
Indentures. Similarly, if we were to sell our assets as, or substantially as, an
entirety to another party, the purchaser must also assume our obligations under
the Indentures. (See Senior Indenture Section 15.01, Senior Subordinated
Indenture Section 16.01). The holders of at least a majority in principal amount
of the outstanding debt securities of any series may waive compliance with the
restrictions of the Negative Pledge. This waiver of compliance will bind all of
the holders of that series of debt securities. (See Senior Indenture Section
6.06, Senior Subordinated Indenture Section 6.07).
Other than these restrictions, the Indentures contain no additional provisions
limiting our ability to enter into a highly leveraged transaction.
Modification of Indenture
Each Indenture contains provisions permitting us and the Trustee to amend,
modify, or supplement the Indenture or any supplemental indenture as to any
series of debt securities. Generally, these
13
<PAGE>
changes require the consent of the holders of at least 66 2/3% of the
outstanding principal amount of each series of debt securities affected by the
change.
Unanimous consent of the holders of a series of debt securities is required for
any of the following changes:
o extending the maturity of that series of debt security, reducing the rate,
extending the time of payment of interest, or reducing any other payment
due under that series of debt security;
o reducing the percentage of holders required to consent to any amendment or
modification for purposes of that series of debt security; or
o modifying the rights, duties or immunities of the Trustee without the
consent of the Trustee.
(See Section 14.02 of the Indentures).
Computations for Outstanding Debt Securities
In computing whether the holders of the requisite principal amount of
outstanding debt securities have taken action under an Indenture,
o for an original issue discount security, we will use the amount of the
principal which would be due and payable as of that date, as if the
maturity of the debt had been accelerated due to a default; or
o for a debt security denominated in a foreign currency or currencies, we
will use the U.S. dollar equivalent of the outstanding principal amount as
of that date, using the exchange rate in effect on the date of original
issuance of the debt security.
(See Section 1.02 of the Indentures).
Events of Default
Each Indenture defines an "event of default" with respect to any series of debt
securities. An event of default under an Indenture is any one of the following
events which occurs with respect to a series of debt securities:
o nonpayment for thirty days of any payment of interest when due;
o nonpayment of any payment of principal of, and premium, if any, when due;
o nonpayment of any sinking fund installment when due;
o failure, after thirty days' appropriate notice, to perform any other
covenant in the Indenture (other than a covenant included in the Indenture
solely for the benefit of another series of debt securities);
o certain events in bankruptcy, insolvency, or reorganization; or
o nonpayment of interest on our indebtedness, including guaranteed
indebtedness (other than indebtedness which is subordinate), or nonpayment
of any principal on any of our indebtedness, after appropriate notice and
expiration of any applicable grace period.
(See Section 7.01 of the Indentures).
The Trustee may withhold notice of any default (except in the payment of
principal of, premium, if any, or interest, if any, on any series of debt
securities) if the Trustee considers that withholding notice is in the interests
of the holders of that series of debt securities. (See Section 11.03 of the
Indentures).
Generally, each Indenture provides that upon an event of default, the Trustee or
the holders of not less than 25% in principal amount of any series of debt
securities then outstanding may declare the principal of all debt securities of
that series to be due and payable. (See Section 7.02 of the Indentures).
However, with respect to any series of Senior Subordinated Securities considered
"Tier II," only certain events in bankruptcy, insolvency, or reorganization
would permit acceleration of the maturity of the indebtedness. The prospectus
supplement will indicate if the series of Senior Subordinated Securities covered
by that prospectus supplement will be "Tier II."
You should refer to the prospectus supplement for any original issue discount
securities for disclosure of the particular provisions relating to acceleration
of the maturity of indebtedness upon the occurrence of an event of default.
Within 120 days after the close of each fiscal year, we are required to file
with each Trustee a statement, signed by specified officers, stating whether or
not the specified officers have knowledge of any default, and, if so, specifying
each default, the nature of the default and what action, if any, has been taken
to cure the default. (See Senior Indenture Section 6.05, Senior Subordinated
Indenture Section 6.06).
Except in cases of default and acceleration, the Trustee is not under any
obligation to exercise any of its rights or powers under an Indenture at the
14
<PAGE>
request of holders of debt securities, unless these holders offer the Trustee a
reasonable indemnity. (See Section 11.01 of the Indentures). As long as the
Trustee has this indemnity, the holders of a majority in principal amount of any
series of debt securities outstanding may direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee under the
Indenture or of exercising any trust or power conferred upon the Trustee. (See
Section 7.08 of the Indentures).
Defeasance of the Indenture and Debt Securities
We may, at any time, satisfy our obligations with respect to payments on any
series of debt securities by irrevocably depositing in trust with the Trustee
cash or U.S. Government Obligations (as defined in the Indenture) or a
combination thereof sufficient to make payments on the debt securities when due.
If we make this deposit in a sufficient amount, properly verified, then we would
discharge all of our obligations with respect to that series of debt securities
and the Indenture insofar as it relates to that series of debt securities
(except as otherwise provided in the Indenture). In the event of this
defeasance, holders of that series of debt securities would be able to look only
to the trust fund for payment on that series of debt securities until the date
of maturity or redemption. Our ability to defease debt securities of any series
using this trust fund is subject to certain tax, legal, and stock exchange
requirements. (See Sections 12.01, 12.02 and 12.03 of the Indentures).
Information Concerning the Trustees
We may periodically borrow funds from any of the Trustees. We and our
subsidiaries may maintain deposit accounts and conduct other banking
transactions with any of the Trustees. A Trustee under a Senior Indenture or a
Senior Subordinated Indenture may act as trustee under any of CIT's other
indentures.
PLAN OF DISTRIBUTION
We may sell the debt securities being offered hereby:
o directly to purchasers;
o through agents;
o to dealers; or
o through an underwriter or a group of underwriters.
We may directly solicit offers to purchase debt securities. We may also solicit
offers through our agents. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a best efforts basis for the period of
its appointment (ordinarily five business days or less). Under our agreements
with agents, we may indemnify agents against certain civil liabilities,
including liabilities under the Securities Act of 1933.
We may also sell debt securities through a dealer as principal. The dealer may
then resell the debt securities to the public at varying prices to be determined
by the dealer at the time of resale. Under our agreements with dealers, we may
indemnify dealers against certain civil liabilities, including liabilities under
the Securities Act.
We may also use one or more underwriters to sell debt securities. Under our
agreements with underwriters, we may indemnify underwriters against certain
liabilities, including liabilities under the Securities Act. The names of the
underwriters and the terms of the debt securities will be set forth in the
prospectus supplement. When reselling debt securities to the public, the
underwriters will deliver the prospectus supplement and this prospectus to
purchasers of debt securities.
The underwriters, dealers, and agents may be deemed to be underwriters under the
Securities Act. Any discounts, commissions, or concessions that they receive
from us or any profit they make on the resale of debt securities may be deemed
to be underwriting discounts and commissions under the Securities Act. We will
disclose in the prospectus supplement any person who may be deemed to be an
underwriter and any compensation that we have paid to any underwriter. We may
have various other commercial relationships with our underwriters, dealers, and
agents.
If disclosed in the prospectus supplement, we may authorize underwriters and
agents to solicit offers by certain institutions to purchase offered debt
securities from us at the public offering price set forth in the prospectus
supplement pursuant to contracts providing for payment and delivery on the date
stated in the prospectus supplement. Each contract will be for an amount not
less than, and unless we otherwise agree the aggregate principal amount of
offered debt securities sold pursuant to contracts will be not less nor more
than, the amounts stated in the prospectus supplement. We may authorize
underwriters and agents to enter into contracts with institutions including
commercial
15
<PAGE>
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions, and other institutions, all subject to
our approval. Contracts will not be subject to any conditions except that any
purchase of debt securities by an institution pursuant to a contract must be
permitted under applicable laws. We will disclose in the prospectus supplement
any commission that we pay to underwriters and agents who sell debt securities
pursuant to contracts. Underwriters and agents will have no responsibility in
respect of the delivery or performance of contracts.
The place and time of delivery for the debt securities will be set forth in the
prospectus supplement.
EXPERTS
Our consolidated balance sheets as of December 31, 1998 and 1997 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1998
have been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
also incorporated by reference herein, and upon the authority of KPMG LLP as
experts in accounting and auditing.
LEGAL OPINIONS
Our counsel, Schulte Roth & Zabel LLP, New York, New York is passing for us on
the validity of the debt securities to which this prospectus relates. Paul N.
Roth, a founding a partner of Schulte Roth & Zabel LLP, is one of our directors.
16
<PAGE>
================================================================================
U.S. $15,113,000,000
[GRAPHIC OMITTED]
The CIT Group, Inc.
Medium-Term Notes
Due 9 Months or More
From Date of Issue
- --------------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
November 2, 1999
- --------------------------------------------------------------------------------
Lehman Brothers
Chase Securities Inc.
Credit Suisse First Boston
J.P. Morgan & Co.
Merrill Lynch & Co.
Morgan Stanley Dean Witter
Salomon Smith Barney
Warburg Dillon Read LLC
================================================================================
