PROSPECTUS SUPPLEMENT
(To prospectus dated September 23, 1999)
$750,000,000
CIT [Logo]
The CIT Group, Inc.
$750,000,000 Floating Rate Senior Notes due July 16, 2001
------------------
We are offering and selling an aggregate of $750,000,000 floating rate
senior notes. The notes will mature onJuly 16, 2001. The interest rate on the
notes will be the Three-Month LIBOR Rate minus .085%. Interest on the noteswill
be payable quarterly on each of October 16, 2000, January 16, 2001, April 16,
2001 and at maturity.
We have applied to have the notes listed on the Luxembourg Stock Exchange
in accordance with the rules of that exchange.
You should refer to and read carefully the "Important Notice" on page S-3
of this prospectus supplement.
Settlement of the notes will be made according to the rules of The
Depository Trust Company, Clearstream Banking S.A. and the Euroclear System, as
the case may be.
CIT accepts full responsibility for the accuracy of the information
contained in this document and confirms, having made all reasonable inquiries,
that to the best of CIT's knowledge and belief there are no other facts the
omission of which would make any statement herein misleading in any material
respect.
------------------
<TABLE>
<CAPTION>
Public Offering Underwriting Proceeds, before
Price(1) Discount Expenses to us
--------------- ------------ ----------------
<S> <C> <C> <C>
Per note ................................ 100% 0% 100%
Total.................................... $750,000,000 $0 $750,000,000
</TABLE>
(1) Plus accrued interest from June 22, 2000, if settlement occurs after
that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters are offering the notes subject to various conditions. The
underwriters expect to deliver the notes, in book-entry form only, to purchasers
through The Depository Trust Company, Clearstream Banking S.A. and the Euroclear
System, as the case may be, on or about June 22, 2000.
------------------
Deutsche Banc Alex. Brown
The date of this prospectus supplement is June 15, 2000.
<PAGE>
You should rely only on the information incorporated by reference or provided in
this prospectus supplement or the prospectus. We have not authorized anyone else
to provide you with different or additional information. We are not making an
offer of these securities in any place where the offer is not permitted. The
information contained in this prospectus supplement, the prospectus, and any
documents incorporated by reference is accurate only as of the date on the front
of that document.
As used in this prospectus supplement and the prospectus, dated September 23,
1999, the terms "we," "our," "us," and "CIT" refer to The CIT Group, Inc. and
its consolidated subsidiaries. The term "notes," as used in this prospectus
supplement refers to the floating rate senior notes due July 16, 2001. Unless
otherwise indicated, any reference in this prospectus supplement or the
prospectus to "$" or "dollars" means United States dollars.
The Luxembourg Stock Exchange takes no responsibility for the contents of this
document, makes no representation as to its accuracy or completeness, and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this prospectus
supplement and the prospectus.
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TABLE OF CONTENTS
Prospectus Supplement
Page
----
Important Notice...................................................... S-3
Incorporation by Reference............................................ S-3
Description of The CIT Group, Inc..................................... S-3
Directors and Principal Executive Officers of The CIT Group, Inc...... S-4
Capitalization of The CIT Group, Inc.................................. S-5
Selected Consolidated Financial Information of The CIT Group, Inc..... S-5
Description of the Notes.............................................. S-6
Material United States Tax Considerations............................. S-14
Underwriting.......................................................... S-17
Offering Restrictions................................................. S-17
Legal Opinions........................................................ S-19
General Information................................................... S-19
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
S-2
<PAGE>
IMPORTANT NOTICE
Your attention is drawn specifically to the following:
As a purchaser of any of the notes, you will be deemed to have sufficient
knowledge and experience and to have received sufficient professional advice to
make (and to have made and continue to make) your own legal, financial, tax,
accounting, and other business evaluations of the merits and risks of an
investment in the notes. You will also be deemed not to be relying on CIT in
that regard.
There may be significant risks, including liquidity risks, associated with the
issuance of the notes that may be complex. CIT makes no representation as to the
existence of a market for the notes.
If we redeem notes upon a tax event, we will have discharged our obligations in
respect of these notes and shall have no other liability or obligation
whatsoever in respect thereof. See "Description of the Notes--Redemption Upon a
Tax Event."
It is your responsibility to ensure that any person to whom you sell your notes
is aware of the foregoing and that the notes are intended only for sophisticated
professional investors.
INCORPORATION BY REFERENCE
In addition to the items incorporated by reference into the prospectus and this
prospectus supplement as set forth in the prospectus, the following documents
shall be deemed to be incorporated in, and to form part of, this prospectus
supplement:
o the financial statements of The CIT Group, Inc. as of December 31, 1998 and
1999 as filed on the Form 10-K dated March 28, 2000.
o the financial statements of The CIT Group, Inc. as of March 31, 2000 and
1999 as filed on the Form 10-Q dated May 15, 2000.
So long as the notes are listed on the Luxembourg Stock Exchange, you can obtain
these documents, free of charge, at the offices of Banque Nationale de Paris
Luxembourg S.A.
DESCRIPTION OF THE CIT GROUP, INC.
CIT is a leading diversified commercial finance company with $53.1 billion of
managed assets and $5.7 billion of stockholders' equity at March 31, 2000. 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. CIT is a
corporation of perpetual duration and is governed under the laws of the State of
Delaware. We commenced operations on February 11, 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 size, scope and diversification was expanded significantly when we acquired
Newcourt Credit Group Inc. ("Newcourt") on November 15, 1999. As of the
transaction date, Newcourt had over $20.0 billion of managed assets. Newcourt,
headquartered in Toronto, Canada, is a non-bank financial services enterprise,
which originates, invests in and sells asset-based financing. Newcourt's
origination activities focus on the commercial and corporate finance segments of
the asset-based financing market through a global network of offices in 26
countries. This transaction combines the financial strength of CIT with
Newcourt's broad technology-based leasing business and international platform.
During 1999, we also acquired Heller Financial Corporation's domestic factoring
business and factoring assets from Congress Financial Corporation. These
businesses added in excess of $1.5 billion in finance assets. These purchases
further enhance our Commercial Services business unit's scale and market share
in the factoring industry.
Prior to the acquisition of Newcourt, CIT had three business segments, Equipment
Financing and Leasing, Commercial Finance and Consumer. During the first quarter
of 2000, CIT created two business segments from the Newcourt portfolio, Vendor
Technology Finance and Structured Finance.
As of March 31, 2000, CIT was organized into five business segments as follows:
o Equipment Financing and Leasing
o Vendor Technology Finance
o Commercial Finance
o Structured Finance
o Consumer
Certain segments conduct their operations through strategic business units that
market their products and services to satisfy the financing needs of specific
customers, industries, vendors/manufacturers, and markets.
S-3
<PAGE>
As of March 31, 2000, The Dai-Ichi Kangyo Bank, Limited owned approximately
27.0% of our outstanding common stock.
The principal wholly-owned subsidiaries which comprise The CIT Group, Inc. are:
The CIT Group/Equipment Financing, Inc.
The CIT Group/Capital Finance, Inc.
The CIT Group/Business Credit, Inc.
The CIT Group/Commercial Services, Inc.
The CIT Group/Consumer Finance, Inc.
The CIT Group/Sales Financing, Inc.
The CIT Group/Equity Investments, Inc.
Newcourt Capital USA Inc.
CIT Lending Services Corporation
CIT Financial USA Inc.
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF THE CIT GROUP, INC.
Board of Directors
Present members of the Board of Directors and their principal occupations are:
Albert R. Gamper, Jr.
Chairman of the Board of Directors,
President, and Chief Executive Officer,
CIT
Daniel P. Amos
President and Chief Executive Officer,
AFLAC Incorporated and American
Family Life Assurance Company of
Columbus
Anthea Disney
Executive Vice President--Content,
News America Publishing Group
William A. Farlinger
Chairman, Ontario Hydro
Guy Hands
Managing Director, Principal Finance
Group, Nomura International PLC
Hon. Thomas H. Kean
President, Drew University and Former
Governor of New Jersey
Paul Morton
President, Security Investment Corp., Ltd.
Takastugu Murai
Senior Managing Director, DKB Tokyo
William M. O'Grady
Executive Vice President and Chief
Administrative Officer, CIT
Joseph A. Pollicino
Vice Chairman and Chief Risk
Officer, CIT
Paul N. Roth
Partner, Schulte Roth & Zabel LLP
Peter J. Tobin
Dean, College of Business
Administration, St. John's University
Keiji Torii
Director and General Manager,
New York Branch, DKB
Theodore V. Wells, Jr.
Partner, Paul, Weiss, Rifkind, Wharton &
Garrison
Alan F. White
Senior Associate Dean, Massachusetts
Institute of Technology, Alfred P. Sloan
School of Management
Principal Executive Officers
Current principal executive officers of CIT are:
Albert R. Gamper, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
Joseph M. Leone
Executive Vice President and Chief
Financial Officer
William O'Grady
Executive Vice President and Chief
Administrative Officer
Joseph A. Pollicino
Vice Chairman and Chief Risk Officer
Ernest D. Stein
Executive Vice President and General
Counsel
S-4
<PAGE>
CAPITALIZATION OF THE CIT GROUP, INC
The following table sets out our capitalization (unaudited) as of March 31, 2000
and as adjusted to reflect the issuance of the notes as if the issuance had
occurred as of March 31, 2000. You should read this table in conjunction with
the unaudited consolidated financial information. See "General Information" in
this prospectus supplement.
<TABLE>
<CAPTION>
March 31, 2000
March 31, 2000 (as adjusted)
-------------- -------------
(in millions of U.S. dollars)
(unaudited)
Debt:
<S> <C> <C>
Commercial paper ............................................. $10,618.1 $10,618.1
Variable-rate senior notes ................................... 7,914.7 7,914.7
Fixed-rate senior notes ...................................... 18,180.6 18,180.6
Floating-rate senior notes due July 16, 2001 ................. -- 750.0
Subordinated fixed-rate notes ................................ 200.0 200.0
--------- ---------
Total debt ................................................... 36,913.4 37,663.4
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures
of the Company .............................................. 250.0 250.0
Stockholders' Equity:
Common Stock, par value $.01 per share, 1,210,000,000 shares
authorized and 267,296,297* shares issued and 263,367,311*
shares outstanding at March 31, 2000 ...................... 2.7 2.7
Paid-in capital.............................................. 3,524.7 3,524.7
Retained earnings............................................ 2,214.9 2,214.9
Accumulated other comprehensive income ...................... 0.1 0.1
Treasury stock at cost (3,928,986 shares at March 31, 2000 of
Common Stock) ............................................. (90.8) (90.8)
--------- ---------
Total stockholders' equity ..................................... 5,651.6 5,651.6
--------- ---------
Total capitalization ........................................... $42,815.0 $43,565.0
========= =========
</TABLE>
----------------
* Includes 12,405,295 issued and outstanding exchangeable shares (par value $.01
per share) as of March 31, 2000 of CIT Exchangeco Inc. issued in connection
with the acquisition of Newcourt.
Other than as disclosed above, since March 31, 2000, there has been no material
change in the capitalization of CIT and its consolidated subsidiaries.
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE CIT GROUP, INC.
The summary results of operations and balance sheet data presented below as of
and for the three-month period ended March 31, 2000 have been derived from the
unaudited condensed consolidated financial statements of CIT as of and for the
three months ended March 31, 2000 included in the Report on Form 10-Q which is
referred to under "General Information" in this prospectus supplement. The
summary results of operation and balance sheet data presented below as of and
for the three-month period ended March 31, 1999 have been derived from the
unaudited condensed consolidated financial statements of CIT as of and for the
three-month period ended March 31, 1999 included in the Report on Form 10-Q
which is referred to under "Where You Can Find More Information" in the
prospectus. The summary results of operations and balance sheet data presented
below as of and for each of the years in the five-year period ended December 31,
1999, have been derived from the audited consolidated financial statements of
CIT as of and for the years ended December 31, 1999, 1998, 1997, 1996 and 1995.
All of the consolidated financial data have been prepared in accordance with
U.S. generally accepted accounting principles ("U.S. GAAP").
You should read the selected consolidated financial data below in conjunction
with our consolidated financial statements. See "Where Can You Find More
Information" in the prospectus and "General Information" in this prospectus
supplement.
S-5
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31,
------------------ -----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- ------- -------- -------- -------- -------- --------
(unaudited) (in millions of U.S. dollars, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net finance income ........... $ 656.9 $ 268.2 $ 1,272.5 $ 974.3 $ 887.5 $ 797.9 $ 697.7
Net finance margin ........... 349.1 212.1 917.4 804.8 740.7 676.2 618.0
Total operating revenue ...... 587.3 276.8 1,268.2 1,060.2 1,046.5(1) 920.3 802.7
Salaries and general operating
expenses ................... 268.2 105.8 516.0 407.7 420.0 385.3 338.3
Provision for credit losses .. 61.6 21.9 110.3 99.4 113.7 111.4 91.9
Goodwill amortization ........ 20.5 3.2 25.7 10.1 8.4 7.8 7.4
Net income ................... 143.9 91.9 389.4 338.8 310.1 260.1 225.3
Net income per diluted share . 0.55 0.57 2.22 2.08 1.95 1.64 1.43
</TABLE>
<TABLE>
<CAPTION>
At March 31, Years Ended December 31,
----------------- ------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- -----
(unaudited) (in millions of U.S. dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Finance Receivables
Commercial ....................... $29,211.9 $15,928.4 $27,119.2 $15,589.1 $14,054.9 $13,757.6 $13,451.5
Consumer ......................... 4,127.2 4,147.7 3,887.9 4,266.9 3,664.8 3,239.0 2,344.0
--------- --------- --------- --------- --------- --------- ---------
Total finance receivables ...... 33,339.1 20,076.1 31,007.1 19,856.0 17,719.7 16,996.6 15,795.5
Reserve for credit losses .......... 476.2 265.8 446.9 263.7 235.6 220.8 206.0
Operating lease equipment, net ..... 6,495.6 3,178.2 6,125.9 2,774.1 1,905.6 1,402.1 1,113.0
Goodwill ........................... 1,830.1 215.6 1,850.5 216.5 134.6 129.5 137.3
Total assets ....................... 46,650.3 25,068.6 45,081.1 24,303.1 20,464.1 18,932.5 17,420.3
Commercial paper ................... 10,618.1 5,809.3 8,974.0 6,144.1 5,559.6 5,827.0 6,105.6
Variable-rate senior notes ......... 7,914.7 4,426.1 7,147.2 4,275.0 2,861.5 3,717.5 3,827.5
Fixed-rate senior notes ............ 18,180.6 8,530.7 19,052.3 8,032.3 6,593.8 4,761.2 3,337.0
Subordinated fixed-rate notes ...... 200.0 200.0 200.0 200.0 300.0 300.0 300.0
Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely
debentures of the Company ........ 250.0 250.0 250.0 250.0 250.0 -- --
Stockholders' equity ............... 5,651.6 2,773.7 5,554.4 2,701.6 2,432.9 2,075.4 1,914.2
</TABLE>
------------
(1) Includes a 1997 gain of U.S. $58.0 million on the sale of an equity
interest acquired in connection with a loan workout.
DESCRIPTION OF THE NOTES
You should read the following description of the particular terms of the notes
in conjunction with the statements under "Description of Debt Securities" in the
prospectus dated September 23, 1999. To the extent that this summary differs in
any way from the "Description of Debt Securities" in the prospectus, you should
rely on this summary.
General
The notes constitute our direct, unsubordinated, and unsecured obligations and
rank pari passu without any preference among themselves and all other
unsubordinated and unsecured obligations we have issued or may in the future
issue.
The notes will be issued under an indenture, dated as of September 24, 1998 (the
"Indenture") between CIT and The Bank of New York, as trustee (the "Trustee"),
and constitute a separate series of Debt Securities under the Indenture. We will
issue the notes in fully registered form and in denominations of $1,000 and
integral multiples thereof. Interest on the notes will accrue from June 22,
2000.
The Indenture contains provisions permitting us and the Trustee to amend,
modify, or supplement the Indenture or any supplemental indenture governing the
notes. Generally, these changes require the consent of holders of at least
66 2/3%
S-6
<PAGE>
of the outstanding principal amount of the notes affected by the change.
Unanimous consent of the holders of the notes is necessary for any of the
following changes:
o extending the maturity of the notes, reducing the interest rate, extending
the time of payment of interest, or reducing any other payment due under the
terms of those notes;
o reducing the percentage of holders required to consent to any amendment or
modification for purposes of the notes; or
o modifying the rights, duties or immunities of the Trustee without the
consent of the Trustee.
The notes are governed by, and are to be construed in accordance with, the laws
of the State of New York and of the United States, applicable to agreements made
and to be performed wholly within those jurisdictions.
The Indenture contains provisions (which shall have effect as if incorporated in
the notes) for calling meetings of the holders of the notes and other debt
securities issued pursuant to the Indenture to consider matters affecting their
interests, including, without limitation, the modification of the terms of the
notes or the waiver of any default under the terms of the notes or the
Indenture. A resolution passed at a duly called and constituted meeting of debt
securityholders will be binding on the holders of all debt securities issued
pursuant to the Indenture, whether or not they are present at the meeting.
We may, with the consent of the Trustee, but without the consent of the
noteholders, enter into supplemental indentures in order to, among other things,
cure any ambiguity or correct or supplement any provision contained in the
Indenture which does not materially adversely affect the interests of the debt
securityholders.
We will pay interest to the persons in whose names the notes are registered at
the close of business on the fifteenth day preceding the respective interest
payment date, at the respective annual rates set forth in this prospectus
supplement.
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. As discussed below, payment
of principal of, and interest on, notes represented by a permanent global note
or notes registered in the name of or held by the Depositary or its nominee will
be made in immediately available funds to the Depositary or its nominee, as the
case may be, as the registered owner and holder of the permanent global note or
notes. See "Global Clearance and Settlement Procedures."
Interest on the notes
The notes will bear interest at a floating rate calculated with reference to the
Three-Month LIBOR Rate in effect for each day equal to the Three-Month LIBOR
Rate minus 8.5 basis points (.085%). We will pay interest on the notes at
maturity, upon earlier tax redemption, if applicable, and quarterly in arrears
on each of October 16, 2000, January 16, 2001, April 16, 2001 and at maturity.
We will compute the interest on the basis of the actual number of days during
the relevant interest period and a 360-day year.
We will compute interest on the notes on a daily basis from and including the
last interest payment date to which interest has been paid (or from and
including the date of issue if no interest has been paid with respect to the
notes) to, but excluding, the applicable interest payment date, or maturity
date, as the case may be.
If any interest payment date for the notes (other than the maturity date or the
date of a tax redemption) would otherwise be a day that is not a business day,
then the interest payment date will be postponed to the following date which is
a business day, except if that business day falls in the next succeeding
calendar month, in which case the interest payment date will be the immediately
preceding business day. If the maturity date (or the date of a tax redemption)
of the notes 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 the payment was due.
Interest will not accrue as a result of this delayed payment. The term "business
day" means any day, other than a Saturday or Sunday, that is neither a legal
holiday nor a day on which banking institutions are generally authorized or
required by law or regulation to close in The City of New York.
As calculation agent, we will reset the rate of interest on the notes quarterly
on each of October 16, 2000, January 16, 2001 and April 16, 2001. The initial
interest rate for the notes will be set on June 22, 2000, the first interest
reset date. If any of the interest reset dates for the notes is not a business
day, the interest reset date will be postponed to the next succeeding business
day, except that if that day is in the next succeeding calendar month, in which
case the interest reset date will be the immediately preceding business day. The
interest rate applicable to the notes will remain in effect
S-7
<PAGE>
during each interest period, which will be the period from and including the
interest reset date to but excluding the next interest reset date or until the
maturity date, as the case may be.
We will determine the interest rate applicable to the notes on the interest
determination date, which is the second London Business Day prior to the
interest reset date. The interest rate determined on an interest determination
date will become effective on and as of the next interest reset date. "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
As calculation agent, we will determine LIBOR according to the following
provisions:
LIBOR will be the rate for three-month deposits in U.S. dollars commencing on
the second London Business Day immediately following the interest determination
date that appears on Bridge Telerate, Inc. (or any successor service) on
Telerate Page 3750, for the purpose of displaying the London interbank offered
rates of major banks as of 11:00 A.M., London time, on that interest
determination date.
If the applicable LIBOR rate does not appear on Telerate Page 3750, or if
Telerate Page 3750 is unavailable, then, as the calculation agent, we will
determine LIBOR as follows:
o We will select the principal London offices of four major banks in the
London interbank market. We will request each bank to provide its offered
quotation for deposits in U.S. dollars for a three-month maturity,
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. These quotes will be for deposits of at least $1 million and in a
principal amount that is representative for a single transaction in U.S.
dollars in the market at that time.
o If at least two of these banks provide a quotation, we will compute LIBOR as
the arithmetic mean of the quotations.
o If fewer than two of these banks provide a quotation, we will request from
three major banks in the City of New York at approximately 11:00 a.m., New
York City time, on the interest determination date, quotations for
three-month loans in U.S. dollars to leading European banks, commencing on
the second London Business Day immediately following the interest
determination date. These quotes will be for loans of at least $1 million
and in a principal amount that is representative for a single transaction in
the market at that time. We will compute LIBOR as the arithmetic mean of the
quotations provided.
o If none of these banks provides a quotation as mentioned, the rate of
interest will be the interest rate then in effect.
The interest rate payable on the notes will not be higher than the maximum rate
permitted by New York law as that law may be modified by United States law of
general application.
So long as the notes are listed on the Luxembourg Stock Exchange, we will
communicate to that exchange no later than the first day of the relevant
interest period and publish in accordance with "Notices" below the interest
period, the floating rate interest payment date, the floating interest rate, and
the amount of interest to be paid on the notes for each interest period. Our
calculations will, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of the notes.
So long as notes are outstanding, there will at all times be a calculation
agent. We will appoint a bank, trust company, investment banking firm or other
financial institution to act as the calculation agent in the event that
o any acting calculation agent is unable or unwilling to act,
o any acting calculation agent fails duly to establish the floating interest
rate, or
o we propose to remove the calculation agent.
Redemption
Other than as discussed below under "Redemption Upon a Tax Event," the notes are
not redeemable prior to maturity and will not be entitled to any sinking fund.
We will redeem the notes at maturity at par.
Information Concerning the Trustee
From time to time, we may borrow from the Trustee. We and certain of our
subsidiaries may maintain deposit accounts and conduct other banking
transactions with the Trustee.
Book-Entry, Delivery and Form
Global Notes. The notes will be issued in the form of one or more fully
registered global notes which will be deposited with, or on behalf of, the
Depositary and registered in the name of Cede &
S-8
<PAGE>
Co., the Depositary's nominee. We do not expect to issue notes in definitive
form. Beneficial interests in the global notes will be represented through
book-entry accounts of financial institutions acting on behalf of beneficial
owners as direct and indirect participants in the Depositary. Investors may
elect to hold interests in the global notes through either the Depositary (in
the United States) or Clearstream Banking S.A. ("Clearstream") or Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear") (in Europe), if they are participants of those
systems, or indirectly through organizations which are participants in those
systems. Clearstream and Euroclear will hold interests on behalf of their
participants through customers' securities accounts in Clearstream's and
Euroclear's names on the books of their respective depositaries, which in turn
will hold the interests in customers' securities accounts in the depositaries'
names on the books of the Depositary. Citibank, N.A. will act as depositary for
Clearstream and The Chase Manhattan Bank will act as depositary for Euroclear
(in those capacities, the "U.S. Depositaries"). Beneficial interests in the
global notes will be held in denominations of $1,000 and integral multiples
thereof. Except as set forth below, the global notes may be transferred, in
whole and not in part, only to another nominee of the Depositary or to a
successor of the Depositary or its nominee.
So long as the Depositary or its nominee is the registered owner of the global
notes, the Depositary or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global notes for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in the global notes will not be entitled to have notes represented by
the global notes registered in their names, will not receive or be entitled to
receive physical delivery of notes in definitive form, and will not be
considered the owners or holders thereof under the Indenture.
Transfers and Notices. The Depositary agrees with and represents to the
Depositary participants that it will administer its book-entry system in
accordance with its rules and by-laws and requirements of law. If you are not a
direct participant or an indirect participant in the Depositary and you wish to
purchase, sell, or otherwise transfer ownership of, or other interests in,
notes, you must do so through a direct participant or an indirect participant.
The SEC has on file a set of the rules applicable to the Depositary and its
direct and indirect participants. Purchases of notes under the Depositary's
system must be made by or through direct or indirect participants, which will
receive a credit for the notes on the Depositary's records. The ownership
interest of each beneficial owner is in turn to be recorded on the records of
direct participants and indirect participants. 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 direct participants or indirect participants through which these
beneficial owners entered into the transaction. Transfers of ownership interests
in the notes are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners.
To facilitate subsequent transfers, all notes deposited with the Depositary are
registered in the name of the Depositary's nominee, Cede & Co. The deposit of
notes with the Depositary and their registration in the name of Cede & Co. does
not change the beneficial ownership. The Depositary has no knowledge of the
actual beneficial owners of the notes. The Depositary's records reflect only the
identity of the direct participants to whose accounts the notes are credited,
which may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.
The Depositary and the direct and indirect participants will send notices and
communications to direct and indirect participants and beneficial owners, as the
case may be, in accordance with the arrangements governing their relationships,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Principal and Interest Payments. Principal and interest payments on notes
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
global notes. None of CIT, the Trustee, any paying agent, or registrar for the
notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests in the global
notes or for maintaining, supervising, or reviewing any records relating to
those beneficial interests.
We expect that the Depositary or its nominee, upon receipt of any payment of
principal or interest, will credit the participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the global notes as shown on the records of the Depositary or its
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nominee. We also expect that payments by participants to owners of beneficial
interest in the global notes held through these 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." The participants are responsible for the standing instructions
and customary practices governing beneficial interests.
Issuance of Definitive Notes. We will issue notes in definitive form in exchange
for the global notes if:
o the Depositary is at any time unwilling or unable to continue as depositary
and we do not appoint a successor Depositary within 90 days;
o we at any time and in our sole discretion determine not to have the notes
represented by the global notes; 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 shall be exchangeable for definitive notes in
registered form.
In any of these instances, an owner of a beneficial interest in the global notes
will be entitled to physical delivery in definitive form of notes represented by
the global notes equal in principal amount to its beneficial interest and to
have those notes registered in its name. Notes issued in definitive form will be
issued as registered notes in denominations of $1,000 and integral multiples
thereof. You may transfer the definitive notes by presenting them for
registration to the registrar at its New York office or at the office of the
transfer agent in Luxembourg, as the case may be. If you transfer less than all
of your definitive notes, you will receive a definitive note or notes
representing the retained amount from the registrar at its New York office or at
the office of the transfer agent in Luxembourg, as the case may be, within 30
days of presentation for transfer. Notes presented for registration must be duly
endorsed by the holder or his attorney duly authorized in writing, or
accompanied by a written instrument or instruments of transfer in form
satisfactory to us or the Trustee duly executed by the holder or his attorney
duly authorized in writing. We may require you to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of definitive notes.
If we issue definitive notes,
o principal of and interest on the notes will be payable in the manner
described below,
o the transfer of the notes will be registrable, and
o the notes will be exchangeable for notes bearing identical terms and
provisions.
If we issue definitive notes, we will do so at the office of The Bank of New
York, the Paying Agent, including any successor paying agent and registrar for
the notes, currently located at 101 Barclay Street, 21st Floor, New York, New
York 10286 and at the office of Banque Nationale de Paris Luxembourg S.A., as
the Luxembourg paying agent (the "Luxembourg Paying Agent"), currently located
at 24 Boulevard Royal, L-2952, Luxembourg. We will maintain a Luxembourg
Transfer Agent and Luxembourg Paying Agent as long as the notes are listed on
the Luxembourg Stock Exchange.
We may pay interest on definitive notes, other than interest at maturity or upon
redemption, by mailing a check to the address of the person entitled to the
interest as it appears on the security register at the close of business on the
regular record date corresponding to the relevant interest payment date. The
term "record date," as used in the prospectus supplement, means the close of
business on the fifteenth day preceding any interest payment date.
Notwithstanding the foregoing, the Depositary, as holder of the notes, or a
holder of more than $1 million in aggregate principal amount of notes in
definitive form, may require the Paying Agent to make payments of interest,
other than interest due at maturity or upon redemption, by wire transfer of
immediately available funds into an account maintained by the holder in the
United States, by sending appropriate wire transfer instructions. The Paying
Agent must receive these instructions not less than ten days prior to the
applicable interest payment date.
The Paying Agent or the Luxembourg Paying Agent, as the case may be, will pay
the principal and interest payable at maturity or upon redemption by wire
transfer of immediately available funds against presentation of a note at the
office of the Paying Agent or the Luxembourg Paying Agent, as the case may be.
The Depository Trust Company. The Depositary has advised us that it is a
limited-purpose trust company organized under the laws of the State of
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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 Securities Exchange Act of 1934. The Depositary holds
securities deposited with it by its participants and facilitates the settlement
of transactions among its participants in those securities through electronic
computerized book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
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.
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. The information regarding the Depositary consists of extracts from or
summaries of information publicly available. To the best of our knowledge and
belief, this information is the latest available. We accept responsibility for
accurately reproducing those extracts or summaries, but we do not accept any
further responsibility for the accuracy of the information.
Clearstream. Clearstream advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream holds securities for its
participating organizations ("Clearstream Participants") and facilitates the
clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates. Clearstream provides to Clearstream Participants, among other
things, services for safekeeping, administration, clearance, and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a
professional depositary, Clearstream is subject to regulation by the Luxembourg
Monetary Institute. Clearstream Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations and may include the Underwriters. Indirect access to Clearstream
is also available to others, such as banks, brokers, dealers, and trust
companies that clear through or maintain a custodial relationship with a
Clearstream Participant either directly or indirectly.
Distributions with respect to the notes held beneficially through Clearstream
will be credited to cash accounts of Clearstream Participants in accordance with
its rules and procedures, to the extent received by the U.S. Depositary for
Clearstream.
Euroclear. Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers, and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking corporation
which is a member bank of the Federal Reserve System. As such, it is regulated
and examined by the Board of Governors of the Federal Reserve System and the New
York State Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator are
governed by the
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Terms and Conditions Governing Use of Euroclear, the related Operating
Procedures of the Euroclear System, and applicable Belgian law (collectively,
the "Terms and Conditions"). The Terms and Conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to each series of notes held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available funds.
Secondary market trading between participants in the Depositary will occur in
the ordinary way in accordance with the Depositary's rules and will be settled
in immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Clearstream Participants and/or
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Clearstream and Euroclear and will
be settled using the procedures applicable to conventional eurobonds in
immediately available funds.
Cross-market transfers between persons holding directly or indirectly through
the Depositary on the one hand, and directly or indirectly through Clearstream
or Euroclear Participants, on the other, will be effected in the Depositary in
accordance with the depositary rules on behalf of the relevant European
international clearing system by its U.S. Depositary. However, these
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in that system in
accordance with its rules and procedures and within its established deadlines
(European time). If the transaction meets the settlement requirements, the
relevant European international clearing system will deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving notes in the Depositary and making or receiving payment
in accordance with normal procedures for same-day funds settlement applicable to
the Depositary. Clearstream Participants and Euroclear Participants may not
deliver instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of notes received in Clearstream or
Euroclear as a result of a transaction with a participant in the Depositary will
be made during subsequent securities settlement processing and dated the
business day following the Depositary settlement date. Credits or any
transactions in notes settled during this processing will be reported to the
relevant Euroclear or Clearstream Participants on that following business day.
Cash received in Clearstream or Euroclear as a result of sales of notes by or
through a Clearstream Participant or a Euroclear Participant to a participant in
the Depositary will be received with value on the Depositary settlement date but
will be available in the relevant Clearstream or Euroclear cash account only as
of the business day following settlement in the Depositary.
Although the Depositary, Clearstream, and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of the
Depositary, Clearstream, and Euroclear, they are under no obligation to perform
or continue to perform these procedures and these procedures may be discontinued
at any time.
Payment Of Additional Amounts
We expect that all amounts payable with respect to principal of, interest on, or
otherwise with respect to the notes will be paid free and clear of and without
withholding or deduction for or on account of any present or future taxes,
assessments or governmental charges imposed or levied by or on behalf of the
United States or any political subdivision thereof or any authority or agency
therein or thereof having power to tax, unless the withholding or deduction of
such taxes, assessments or governmental charges is required by law.
Any reference in the prospectus supplement to the payment of "principal" and/or
"interest" in respect of the notes shall be deemed also to refer to any
additional amounts which may be payable as described under this heading
"Description of the Notes--Payment of Additional Amounts."
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Subject to the exceptions and limitations set forth below, we will pay as
additional interest on the notes additional amounts so that the net payment of
the principal of and interest on the notes to a person that is not a United
States Holder, after deduction for any present or future tax, assessment, or
governmental charge of the United States or a political subdivision or taxing
authority thereof or therein, imposed by withholding with respect to the
payment, will not be less than the amount that would have been payable had no
withholding or deduction been required.
Our obligation to pay additional amounts shall not apply:
(1) to a tax, assessment, or governmental charge that is imposed or
withheld solely because the holder, or a fiduciary, settlor, beneficiary,
member, or shareholder of the holder if the holder is an estate, trust,
partnership, or corporation, or a person holding a power over an estate or
trust administered by a fiduciary holder:
(a) is or was present or engaged in trade or business in the
United States or has or had a permanent establishment in the United
States;
(b) has a current or former relationship with the United
States, including a relationship as a citizen or resident thereof;
(c) is or has been a foreign or domestic personal holding
company, a passive foreign investment company, or a controlled
foreign corporation with respect to the United States or a
corporation that has accumulated earnings to avoid United States
federal income tax or a private foundation or other tax-exempt
organization; or
(d) is or was a "10-percent shareholder" of CIT as defined in
section 871(h)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor provision;
(2) to any holder that is not the sole beneficial owner of the
notes, or a portion thereof, or that is a fiduciary or partnership, but
only to the extent that the beneficial owner, a beneficiary or settlor
with respect to the fiduciary, or a member of the partnership would not
have been entitled to the payment of an additional amount had the
beneficial owner, beneficiary, settlor, or member received directly its
beneficial or distributive share of the payment;
(3) to a tax, assessment, or governmental charge that is imposed or
withheld solely because the holder or any other person failed to comply
with certification, identification, or information reporting requirements
concerning the nationality, residence, identity, or connection with the
United States of the holder or beneficial owner of the notes, if, without
regard to any tax treaty, compliance is required by statute or by
regulation of the United States Treasury Department as a precondition to
exemption from any tax, assessment, or other governmental charge;
(4) to a tax, assessment, or governmental charge that is imposed
other than by withholding by CIT or a paying agent from the payment;
(5) to a tax, assessment, or governmental charge that is imposed or
withheld solely because of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer,
wealth, or personal property tax or a similar tax, assessment, or
governmental charge;
(7) to any tax, assessment, or other governmental charge any paying
agent must withhold from any payment of principal of or interest on any
note, if the payment can be made without that withholding by any other
paying agent; or
(8) in the case of any combination of the above items.
The notes are subject in all cases to any tax, fiscal, or other law or
regulation or administrative or judicial interpretation applicable. Except as
specifically provided under this heading "Payment of Additional Amounts" and
under the heading "-- Redemption Upon a Tax Event," we do not have to make any
payment with respect to any tax, assessment, or governmental charge imposed by
any government or a political subdivision or taxing authority.
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Redemption Upon A Tax Event
If:
o we become or will become obligated to pay additional amounts as described
under the heading "-- Payment of Additional Amounts" as a result of any
change in, or amendment to, the laws (or any regulations or rulings
promulgated thereunder) of the United States (or any political subdivision
or taxing authority thereof or therein), or any change in, or amendments to,
any official position regarding the application or interpretation of those
laws, regulations, or rulings, which change or amendment is announced or
becomes effective on or after the date of this prospectus supplement, or
o a taxing authority of the United States takes an action on or after the date
of this prospectus supplement, whether or not with respect to us or any of
our affiliates, that results in a substantial probability that we will or
may be required to pay additional amounts,
then we may, at our option, redeem as a whole, but not in part, the notes on any
interest payment date on not less than 30 nor more than 60 calendar days' prior
notice, at a redemption price equal to 100% of their principal amount, together
with interest accrued thereon to the date fixed for redemption; provided that we
determine, in our business judgment, that the obligation to pay additional
amounts cannot be avoided by the use of reasonable measures available to us, not
including substitution of the obligor under the notes.
A redemption under the second bullet point above may not be made unless we shall
have received an opinion of independent counsel to the effect that an act taken
by a taxing authority of the United States results in a substantial probability
that we will or may be required to pay the additional amounts described herein
under the heading "-- Payment of Additional Amounts" and we shall have delivered
to the Trustee a certificate, signed by a duly authorized officer, stating that
based on that opinion we are entitled to redeem the notes pursuant to their
terms.
Notices
Notices to holders of the notes will be published in authorized newspapers in
the City of New York, in London, and, so long as the notes are listed on the
Luxembourg Stock Exchange, in Luxembourg. It is expected that publication will
be made in the City of New York in The Wall Street Journal, in London in the
Financial Times, and in Luxembourg in a daily published newspaper, expected to
be the Luxemburger Wort. Any published notice shall be deemed to have been given
on the date of its publication or, if published more than once, on the date of
the first publication.
MATERIAL UNITED STATES TAX CONSIDERATIONS
Our counsel, Schulte Roth & Zabel LLP, has prepared the following summary which
describes the material United States federal income tax consequences of the
ownership and disposition of notes to initial holders of the notes purchasing
the notes at the public offering price set forth on the cover page of this
prospectus supplement. The discussion below is based on the Code, administrative
pronouncements, judicial decisions, and existing and proposed Treasury
regulations, and interpretations of the foregoing, changes to any of which
subsequent to the date of this prospectus supplement may affect the tax
consequences described herein. These statements address only the tax
consequences to initial holders holding notes as capital assets within the
meaning of section 1221 of the Code. They do not discuss all of the tax
consequences that may be relevant to holders in light of their particular
circumstances or to holders subject to special rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
United States Holders whose functional currency (as defined in Code section 985)
is not the U.S. dollar, persons holding notes in connection with a hedging
transaction, "straddle," conversion transaction, or other integrated
transaction, traders in securities that elect to mark to market, or holders
liable for alternative minimum tax. Persons considering the purchase of the
notes should consult their tax advisors concerning the application of United
States federal income tax laws, as well as the laws of any state, local, or
foreign taxing jurisdictions, to their particular situations.
As used herein, a "United States Holder" of a note means a beneficial owner that
is for United States federal income tax purposes:
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 or of any political subdivision thereof,
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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 or the trust has a valid election in effect under applicable
Treasury regulations to be treated as a United States person.
As used herein, the term "United States Alien Holder" means a beneficial owner
of a note that is, for United States federal income tax purposes,
o a nonresident alien individual,
o a foreign corporation,
o a nonresident alien fiduciary of a foreign estate or trust, or
o a foreign partnership one or more of the members of which is a nonresident
alien individual, a foreign corporation, or a nonresident alien fiduciary of
a foreign estate or trust.
Tax Consequences to United States Holders
Payments of Interest. Interest on a note will generally be taxable to a United
States Holder as ordinary interest income at the time it accrues or is received
in accordance with the United States Holder's method of accounting for federal
income tax purposes.
Sale, Exchange or Retirement. 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 on the sale, exchange, or retirement of the note and the
holder's adjusted tax basis in the note. A United States Holder's adjusted tax
basis in a note will generally equal the cost of the note to the holder. The
amount realized excludes any amounts attributable to interest accrued between
interest payment dates which will be includible in income as interest in
accordance with the United States Holder's method of accounting if not
previously included in income. Any gain or loss will be capital gain or loss and
will be long-term capital gain or loss if at the time of the sale, exchange, or
retirement the note has been held for more than one year. Under current law, the
excess of net long-term capital gains over net short-term capital losses is
taxed at a lower rate than ordinary income for certain non-corporate taxpayers.
The distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, the limitations on the
deductibility of capital losses.
Tax Consequences to United States Alien Holders
Under present United States federal tax law, and subject to the discussion below
concerning backup withholding:
(a) payments of principal, interest and premium on the notes by CIT
or our paying agent to any United States Alien Holder will be exempt from
the 30% United States federal withholding tax, provided that:
o the holder does not own, actually or constructively, 10% or more of the
total combined voting power of all classes of stock of CIT entitled to
vote;
o the holder is not a controlled foreign corporation related, directly or
indirectly, to CIT through stock ownership; and
o the statement requirement set forth in section 871(h) or section 881(c)
of the Code has been fulfilled with respect to the beneficial owner, as
discussed below;
(b) a United States Alien Holder of a note will not be subject to
United States federal income tax on gain realized on the sale, exchange,
or retirement of the note, unless:
o the holder is an individual who is present in the United States for 183
days or more in the taxable year of the disposition and certain other
conditions are met; or
o the gain is effectively connected with the holder's conduct of a trade
or business in the United States; and
(c) a note held by an individual who is not, for United States
estate tax purposes, a resident or citizen of the United States at the
time of his death will not be subject to United States federal estate tax,
provided that the individual does not own, actually or constructively, 10%
or more of the total combined voting power of all classes of stock of CIT
entitled to vote and, at the time of the individual's death, payments with
respect to the note would not have been effectively connected to the
conduct by the individual of a trade or business in the United States.
The certification requirement referred to in subparagraph (a) will be fulfilled
if the beneficial owner of a note certifies on Internal Revenue Service ("IRS")
Form W-8, Form W-8BEN, or other successor form, under penalties of perjury, that
it is not a United States person and provides its
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name and address, and (i) the beneficial owner files IRS Form W-8, Form W-8BEN,
or other successor form with the withholding agent or (ii) in the case of a note
held on behalf of the beneficial owner by a securities clearing organization,
bank, or other financial institution holding customers' securities in the
ordinary course of its trade or business, the financial institution files with
the withholding agent a statement that it has received the IRS Form W-8, Form
W-8BEN, or other successor form from the holder and furnishes the withholding
agent with a copy thereof. With respect to notes held by a foreign partnership,
under current law, the IRS Form W-8 may be provided by the foreign partnership.
However, unless a foreign partnership has entered into a withholding agreement
with the IRS, for interest and disposition proceeds paid with respect to a note
after December 31, 2000, the foreign partnership will generally be required (and
may be permitted earlier), in addition to providing an intermediary IRS Form
W-8IMY or other successor form, to associate with such form an appropriate
certification or other appropriate documentation from each partner. Prospective
investors, including foreign partnerships and their partners, should consult
their tax advisers regarding possible additional reporting requirements.
If a United States Alien Holder of a note is engaged in a trade or business in
the United States, and if interest on the note (or gain realized on its sale,
exchange, or other disposition) is effectively connected with the conduct of its
trade or business, the United States Alien Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, will be subject to
regular United States income tax on its effectively connected income, generally
in the same manner as if it were a United States Holder. See "Tax Consequences
to United States Holders" above. In lieu of the certificate described in the
preceding paragraph, a holder will be required to provide to the withholding
agent a properly executed IRS Form 4224, Form W-8ECI, or other successor form to
claim an exemption from withholding tax. In addition, if a United States Alien
Holder is a foreign corporation, it may be subject to a 30% branch profits tax
(unless reduced or eliminated by an applicable treaty) on its earnings and
profits for the taxable year attributable to its effectively connected income,
subject to certain adjustments.
Backup Withholding and Information Reporting
Under current United States federal income tax law, information reporting
requirements apply to certain payments of principal, premium, and interest made
to, and to the proceeds of sales before maturity by, non-corporate United States
Holders. In addition, a 31% backup withholding tax will apply if the
non-corporate United States Holder (i) fails to furnish its Taxpayer
Identification Number ("TIN") which, for an individual, is his Social Security
Number, (ii) furnishes an incorrect TIN, (iii) is notified by the IRS that it
has failed to properly report payments of interest and dividends, or (iv) under
certain circumstances, fails to certify, under penalty of perjury, that it has
furnished a correct TIN and has not been notified by the IRS that it is subject
to backup withholding for failure to report interest and dividend payments.
Holders should consult their tax advisers regarding their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption if applicable.
Information reporting and backup withholding will not apply to payments made on
a note to United States Alien Holders if the certifications required by Code
sections 871(h) and 881(c) as described above are received, provided that CIT or
our paying agent, as the case may be, does not have actual knowledge that the
payee is a United States person.
Under current Treasury regulations, payments on the sale, exchange, or other
disposition of a note made to or through a foreign office of a broker generally
will not be subject to information reporting or backup withholding. However, if
the broker is (i) a United States person, (ii) a controlled foreign corporation
for United States federal income tax purposes, (iii) a foreign person 50% or
more of whose gross income is effectively connected with a United States trade
or business for a specified three-year period, or (iv) in the case of payments
made after December 31, 2000, a foreign partnership with certain connections to
the United States, then information reporting will be required unless the broker
has in its records documentary evidence that the beneficial owner is not a
United States person and certain other conditions are met or the beneficial
owner otherwise establishes an exemption. Backup withholding may apply to any
payment that the broker is required to report if the broker has actual knowledge
that the payee is a United States person. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the beneficial owner certifies, under penalties of perjury,
that it is not a United States person or otherwise establishes an exemption.
Treasury regulations issued by the IRS, which are generally effective for
payments after December 31, 2000, make certain modifications to the
certification procedures applicable to a United
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States Alien Holder. United States Alien Holders of notes should consult their
tax advisers regarding the application of information reporting and backup
withholding in their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining an exemption, if available. Any
amounts withheld under the backup withholding rules will be allowed as a credit
against the holder's United States federal income tax liability and may entitle
that holder to a refund, provided that the required information is furnished to
the IRS.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement,
dated as of June 15, 2000 (the "Underwriting Agreement"), among CIT and Deutsche
Bank Securities Inc. (the "Underwriter"), we have agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase an aggregate of
$750,000,000 of the notes. See "Plan of Distribution" in the prospectus.
We have been advised by the Underwriter that it proposes to offer the notes for
sale from time to time in one or more transactions (which may include block
transactions) in negotiated transactions or a combination of each, at market
prices prevailing at the time of sale, at prices related to those prevailing
market prices or at negotiated prices. The Underwriter has advised us that it
may sell the notes to or through dealers who may receive compensation in the
form of underwriting discounts, concessions or commissions from the Underwriter
and/or the purchasers of the notes. The Underwriter also may receive commissions
from the purchasers of the notes. The Underwriter and any dealers that
participate in the distribution of the notes may be considered underwriters and
any discounts or commissions received by them and any profit on the resale of
the notes may be deemed underwriting discounts and commissions.
Although application has been made to list the notes on the Luxembourg Stock
Exchange, the notes are a new issue of securities with no established trading
market. The Underwriter has advised us that it intends to make a market in the
notes, but the Underwriter is not obligated to do so and may discontinue any
market making at any time without notice. The trading market for the notes may
not be liquid.
The Underwriting Agreement provides that the obligations of the Underwriter are
subject to certain conditions precedent and that the Underwriter will purchase
all the notes if any are purchased.
In connection with this offering, the Underwriter and its affiliates may engage
in transactions that stabilize, maintain, or otherwise affect the market price
of the notes. Those transactions may include stabilization transactions effected
in accordance with Rule 104 of Regulation M under the Securities Exchange Act of
1934, pursuant to which the Underwriter and its affiliates may bid for or
purchase notes for the purpose of stabilizing the market price. The Underwriter
also may create a short position for the account of the Underwriter by selling
more notes in connection with this offering than they are committed to purchase
from us. In that case, the Underwriter may purchase notes in the open market
following completion of this offering to cover their short position. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the notes at a level above that which might otherwise prevail in the
open market. None of the transactions described in this paragraph is required,
and, if they are undertaken, they may be discontinued at any time.
We expect that delivery of the notes will be made against payment therefor on or
about June 22, 2000, which is the fifth business day following the date hereof
(this settlement cycle being herein referred to as "T+5"). You should note that
the ability to settle secondary market trades of the notes effected on the date
of pricing and the next succeeding business day may be affected by the T+5
settlement.
The Underwriter or its affiliates have provided and will in the future continue
to provide banking and other financial services to CIT and its subsidiaries.
The Underwriting Agreement provides that CIT will indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act of
1933, or contribute to payments the Underwriter may be required to make in
respect thereof.
OFFERING RESTRICTIONS
The notes are offered for sale in the United States and in jurisdictions outside
the United States, subject to applicable law.
The Underwriter has agreed that it will not offer, sell, or deliver any of the
notes, directly or indirectly, or distribute this prospectus supplement
S-17
<PAGE>
or prospectus or any other offering material relating to the notes, in or from
any jurisdiction except under circumstances that will, to the best of the
Underwriter's knowledge and belief, result in compliance with the applicable
laws and regulations and which will not impose any obligations on us except as
set forth in the Underwriting Agreement.
You may be required to pay stamp taxes and other charges in accordance with the
laws and practices of the country in which you purchase the notes. These taxes
and charges are in addition to the issue price set forth on the cover page.
United Kingdom
The Underwriter has represented and agreed that it and each of its affiliates:
o has not offered or sold and, prior to the expiry of the period of six months
from the time to closing, will not offer or sell any of the notes to persons
in the United Kingdom except to persons whose ordinary activities involve
them in acquiring, holding, managing, or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995;
o has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
notes in, from or otherwise involving the United Kingdom; and
o has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom those documents may otherwise lawfully be
issued or passed on.
Germany
No selling prospectus (Verkaufsprospekt) has been or will be published in
respect of the notes and the Underwriter will be required to comply with the
German Securities Selling Prospectus Act (Wertpapier-Verkaufsprospektgesetz) of
December 13, 1990, as amended.
The Netherlands
The notes are being issued under the Euro-securities exemption pursuant to
Article 6 of the Exemption Regulation (Vrijstellinsregeling Wet Toezicht
Effectenverkeer) of December 21, 1995, as amended, of The Netherlands'
Securities Market Supervision Act 1995 (Wet Toezicht Effectenverkeer) and
accordingly the Underwriter has represented and agreed that it has not publicly
promoted and will not publicly promote the offer or sale of the notes by
conducting a generalized advertising or cold-calling campaign within or outside
The Netherlands.
The Republic of France
The notes are being issued outside the Republic of France and the Underwriter
has represented and agreed that, in connection with their initial distribution,
it has not offered or sold and will not offer or sell, directly or indirectly,
any of the notes to the public in the Republic of France and that it has not
distributed and will not distribute or cause to be distributed to the public in
the Republic of France this prospectus supplement or any other offering material
relating to the notes.
Japan
The notes have not been and will not be registered under the Securities and
Exchange Law of Japan and the Underwriter and its affiliates have represented
and agreed that they have not offered or sold, and they will not offer or sell,
directly or indirectly, any of the notes in or to residents of Japan or to any
persons for reoffering or resale, directly or indirectly, in Japan or to any
resident of Japan, except pursuant to an exemption from the registration
requirements of the Securities and Exchange Law available thereunder and in
compliance with the other relevant laws and regulations of Japan.
Hong Kong
The Underwriter and its affiliates have represented and agreed that they have
not offered or sold, and they will not offer or sell, the notes by means of any
document to persons in Hong Kong other than persons whose ordinary business it
is to buy or sell shares or debentures, whether as principal or agent, or
otherwise in circumstances which do not constitute an offer to the public within
the meaning of the Hong Kong Companies Ordinance (Chapter 32 of the Laws of Hong
Kong).
S-18
<PAGE>
LEGAL OPINIONS
The validity of the notes will be passed on for us by Schulte Roth & Zabel LLP,
New York, New York and for the Underwriters by Simpson Thacher & Bartlett, New
York, New York. Paul N. Roth, a founding partner of Schulte Roth & Zabel LLP, is
one of our directors.
GENERAL INFORMATION
We have applied to list the notes on the Luxembourg Stock Exchange. In
connection with the listing application, we have deposited the Certificate of
Incorporation and the By-laws of CIT and a legal notice relating to the issuance
of the notes prior to listing with Greffier en Chef du Tribunal d'Arrondissement
de et a Luxembourg, where you may obtain copies of these documents upon request.
So long as any of the notes are outstanding, we will make available, at the
office of Banque Nationale de Paris Luxembourg S.A. in Luxembourg, copies of
these documents, this prospectus supplement, the prospectus, the Indenture, and
our current annual and quarterly reports, as well as all future annual reports
and quarterly reports. Banque Nationale de Paris Luxembourg S.A. will act as
intermediary between CIT and the holders of the notes. In addition, you may
obtain free copies of the annual reports and quarterly reports of CIT at this
office.
Other than as disclosed or contemplated in this prospectus supplement or in the
documents incorporated in this prospectus supplement by reference, there has
been no material adverse change in the financial position of CIT since March 31,
2000.
Neither CIT nor any of its subsidiaries is involved in, or aware of any pending
or threatened, litigation, arbitration, or administrative proceedings relating
to claims or amounts that are material in the context of the issuance of the
notes.
CIT's board of directors adopted resolutions relating to the issuance and sale
of the notes on September 8, 1999.
The notes, the Indenture, and the Underwriting Agreement are governed by, and
are to be construed in accordance with, the laws of the State of New York and of
the United States, applicable to agreements made and to be performed wholly
within those jurisdictions.
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
supplement. 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 supplement:
1. Our Annual Report on Form 10-K and on Form 10-K/A for the year
ended December 31, 1999;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000; and
3. Our Current Reports on Form 8-K dated February 3, 2000 and on
Form 8-K/A dated January 31, 2000, April 27, 2000 and June 6, 2000.
Until we have sold all of the debt securities which we are offering for sale
under this prospectus supplement and the 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 intend to use the net proceeds from the sale of the notes 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.
The notes have been accepted for clearance through Euroclear and Clearstream.
The notes have been assigned the following identification numbers:
S-19
<PAGE>
<TABLE>
<CAPTION>
International
Security
Euroclear and Clearstream Identification
Common Code No. Number (ISIN) CUSIP
---------------- --------------- -----
<S> <C> <C> <C>
Floating rate senior notes due
July 16, 2001 ........................ 011329519 US 125577HA56 125577AJ5
</TABLE>
S-20
<PAGE>
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<PAGE>
PROSPECTUS
CIT [Logo]
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.
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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
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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.
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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
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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.
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<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").
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<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.
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<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
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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
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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.
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Registered Office of the Issuer
The CIT Group, Inc.
1211 Avenue of the Americas
New York, New York 10036
Auditors of the Issuer
KPMG LLP
150 JFK Parkway
Short Hills, New Jersey 07078
Trustee, Paying Agent, and Registrar
The Bank of New York
101 Barclay Street
New York, New York 10286
Legal Advisers
To the Issuer To the Underwriters as to United States law
Ernest D. Stein, Esq. Simpson Thacher & Bartlett
1211 Avenue of the Americas 425 Lexington Avenue
New York, New York 10036 New York, New York 10017
To the Issuer as to United States law and United States tax law
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Luxembourg Listing Agent, Luxembourg Paying Agent, and Luxembourg Transfer Agent
Banque Nationale de Paris Luxembourg S.A.
24 Boulevard Royal
L-2952, Luxembourg
<PAGE>
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$750,000,000
CIT [Logo]
The CIT Group, Inc.
$750,000,000 Floating Rate Senior Notes due July 16, 2001
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PROSPECTUS SUPPLEMENT
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Deutsche Banc Alex. Brown
June 15, 2000
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