-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, cnuhG5I0g5Mm88S8860mmFTojxo0Ay1MI5Ebna4LK7ewhn5fBkyDOPeLT1rfP4l4 EQz5v0riLIum5H1muqJPww== 0000020388-94-000039.txt : 19940513 0000020388-94-000039.hdr.sgml : 19940513 ACCESSION NUMBER: 0000020388-94-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIT GROUP HOLDINGS INC /DE/ CENTRAL INDEX KEY: 0000020388 STANDARD INDUSTRIAL CLASSIFICATION: 6153 IRS NUMBER: 132994534 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01861 FILM NUMBER: 94525147 BUSINESS ADDRESS: STREET 1: 650 CIT DRIVE CITY: LIVINGSTON STATE: NJ ZIP: 07039 BUSINESS PHONE: 2122706000 MAIL ADDRESS: STREET 1: 1211 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: CIT FINANCIAL CORP/OLD/ DATE OF NAME CHANGE: 19860512 10-Q 1 FIRST QUARTER 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1994 ------------------ OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- ------- Commission File Number 1-1861 ----------------------- THE CIT GROUP HOLDINGS, INC. - - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 13-2994534 - - ------------------------------------------------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1211 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10036 - - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (212) 536-1950 - - ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) NONE - - ------------------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------------- ------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 15, 1994: 1,000 shares. THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES (UNAUDITED) TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1994 and December 31, 1993. 2-3 Consolidated Income Statements for the three month periods ended March 31, 1994 and 1993. 4 Consolidated Statements of Stockholders' Equity for the three month periods ended March 31, 1994 and 1993. 5 Consolidated Statements of Cash Flows for the three month periods ended March 31, 1994 and 1993. 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-18 PART II. OTHER INFORMATION Item 2. Changes in Securities 19 6. Exhibits and Reports on Form 8-K 19 PART I. FINANCIAL INFORMATION Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the December 31, 1993 Annual Report on Form 10-K for The CIT Group Holdings, Inc. (the "Corporation"). The Corporation considers that all adjustments (all of which are normal recurring accruals) necessary for a fair statement of the financial position and results of operations for these periods have been made; however, results for such interim periods are subject to year-end audit adjustments. Results for such interim periods are not necessarily indicative of results for a full year. Amounts for 1993 have been reclassified, where necessary, to conform to 1994 presentations. -1- THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, DECEMBER 31, 1994 1993 ------------- ------------- ASSETS (AMOUNTS IN THOUSANDS) FINANCING AND LEASING ASSETS Finance receivables (net of unearned finance income of $1,438,677 and $1,482,069) CORPORATE FINANCE Capital Equipment Financing $ 4,270,205 $ 4,394,528 Business Credit 1,228,345 1,282,133 Credit Finance 690,761 645,642 ----------- ----------- 6,189,311 6,322,303 DEALER AND MANUFACTURER FINANCING Industrial Financing 3,900,134 3,880,991 Sales Financing and Consumer Finance 1,536,750 1,438,865 ----------- ----------- 5,436,884 5,319,856 FACTORING Commercial Services 1,963,950 981,935 ----------- ----------- Finance receivables 13,590,145 12,624,094 Reserve for credit losses (180,046) (169,378) ----------- ----------- Net finance receivables 13,410,099 12,454,716 Equipment under operating lease, net 738,733 751,901 ----------- ----------- Net financing and leasing assets 14,148,832 13,206,617 CASH AND CASH EQUIVALENTS Cash 49,153 101,554 Interest-bearing deposits 17,000 - ----------- ----------- Cash and cash equivalents 66,153 101,554 OTHER ASSETS 391,261 420,310 ----------- ----------- TOTAL ASSETS $14,606,246 $13,728,481 =========== =========== -2- THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, DECEMBER 31, 1994 1993 ------------ ------------ (AMOUNTS IN THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY DEBT Commercial paper $ 6,202,936 $ 6,516,139 Variable rate term debt 2,187,500 1,686,500 Fixed rate term debt 2,385,000 2,392,500 Subordinated fixed rate term debt 300,000 200,000 ----------- ----------- Total debt 11,075,436 10,795,139 Credit balances of factoring clients 1,009,940 521,728 Accrued liabilities and payables 410,370 324,520 Deferred Federal income taxes and investment tax credits 394,826 394,859 ----------- ----------- Total liabilities 12,890,572 12,036,246 STOCKHOLDERS' EQUITY Common stock - authorized, issued and outstanding - 1,000 shares 250,000 250,000 Paid-in capital 408,320 408,320 Retained earnings 1,057,354 1,033,915 ----------- ----------- Total stockholders' equity 1,715,674 1,692,235 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,606,246 $13,728,481 =========== =========== -3- THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS THREE MONTHS ENDED March 31, --------------------- 1994 1993 --------------------- (AMOUNTS IN THOUSANDS) Interest and fees earned $303,910 $287,681 Interest expense 128,840 124,686 -------- -------- Net interest revenue 175,070 162,995 -------- -------- Gains on asset sales 7,625 1,272 Salaries and employee benefits 43,250 37,774 Other operating expenses 37,299 29,896 -------- -------- Operating expenses before provision for credit losses 80,549 67,670 Provision for credit losses 24,881 24,301 -------- -------- Total operating expenses 105,430 91,971 -------- -------- Income before provision for income taxes 77,265 72,296 Provision for income taxes 29,230 28,764 -------- -------- Net income $ 48,035 $ 43,532 ======== ======== -4- THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (AMOUNTS IN THOUSANDS) THREE MONTHS ENDED March 31, --------------------------- 1994 1993 --------------------------- Balance, January 1 $1,692,235 $1,601,091 Net income 48,035 43,532 Dividends paid (24,596) (21,931) ---------- ---------- Balance, March 31 $1,715,674 $1,622,692 ========== ========== -5- THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, ------------------------ 1994 1993 ------------------------ (AMOUNTS IN THOUSANDS) CASH FLOWS FROM OPERATIONS Net income $ 48,035 $ 43,532 Adjustments to reconcile net income to net cash flows from operations: Provision for credit losses 24,881 24,301 Depreciation and amortization 17,251 10,090 Gains on asset sales (7,625) (1,272) Increase in accrued liabilities and payables 46,549 10,783 Decrease (increase) in other assets (1,594) 18,949 Other (5,202) (4,511) ----------- ----------- Net cash flows provided by operations 122,295 101,872 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Loans extended (5,111,186) (4,284,690) Collections on loans 5,061,096 4,099,106 Net (increase) in short-term factoring receivables (176,166) (61,674) Collections on lease receivables 159,523 123,177 Acquisition of Barclays Commercial Corporation (435,630) - Purchases of assets to be leased (66,106) (125,157) Proceeds from asset sales 198,643 13,672 Purchases of finance receivables portfolios (13,943) (82,886) Proceeds from sales of assets received in satisfaction of loans 13,925 9,187 Other (7,854) (5,456) ----------- ----------- Net cash flows used for investing activities (377,698) (314,721) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of variable rate term debt 801,000 300,000 Proceeds from the issuance of fixed rate term debt 300,000 175,000 Repayments of variable and fixed rate term debt (507,500) (114,000) Net (decrease) in commercial paper (313,203) (203,246) Repayments of nonrecourse leveraged lease debt (35,699) (18,830) Cash dividends paid (24,596) (21,931) ----------- ----------- Net cash flows from financing activities 220,002 116,993 ----------- ----------- Net (decrease) in cash and cash equivalents (35,401) (95,856) Cash and cash equivalents, beginning of year 101,554 699,793 ----------- ----------- Cash and cash equivalents, end of quarter $ 66,153 $ 603,937 =========== =========== -6- THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, -------------------------- 1994 1993 -------------------------- (AMOUNTS IN THOUSANDS) Supplemental disclosures Interest paid $ 145,171 $ 132,956 Federal and State and local taxes paid $ 2,758 5,789 Noncash transfers of financing and leasing assets to assets received in satisfaction of loans $ 21,643 $ 30,223 -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET INCOME Net income for the first quarter of 1994 totaled a record $48.0 million, an increase of $4.5 million (10.3%) from the $43.5 million reported in the first quarter of 1993. The record earnings were due to improved net interest and other revenue, reflecting excellent finance receivables growth over the past year. FINANCING AND LEASING ASSETS Financing and leasing assets increased from both year-end 1993 and March 31, 1993 as presented in the following table. March 31, December 31, March 31, Amounts in Millions 1994 1993 1993 - - ----------------------------------------------------------------------------- Finance receivables $13,590.1 $12,624.1 $12,149.3 Equipment under operating lease 738.7 751.9 470.8 - - ----------------------------------------------------------------------------- Financing and leasing assets $14,328.8 $13,376.0 $12,620.1 - - ----------------------------------------------------------------------------- The increase of $952.9 million (7.1%) from December 31, 1993 is primarily due to the February 28, 1994 acquisition of Barclays Commercial Corporation ("BCC"), a major provider of factoring, commercial finance and credit related services. BCC added $747.5 million to finance receivables at March 31, 1994; otherwise, financing and leasing assets grew a modest $205.4 million (1.5%) since year-end 1993. The gain of $1.71 billion (13.5%) from March 31, 1993 reflects strong 1993 growth in the Corporation's middle-market businesses, complemented by the 1994 BCC acquisition. -8- Changes in financing and leasing assets from December 31, 1993 are discussed below for each business unit. Corporate Finance - Capital Equipment Financing - Customized secured equipment financing and leasing for major capital equipment. Finance receivables were $4.27 billion at March 31, 1994 down $124.3 million (2.8%) from $4.39 billion at December 31, 1993, principally due to customer prepayments and continued weak demand for equipment financing with larger companies in certain sectors of the market, including commercial airlines. Equipment under operating lease totaled $550.2 million at March 31, 1994, a decrease of $15.5 million (2.7%) from $565.7 million at December 31, 1993. - Business Credit - Revolving and term loans, including debtor-in-possession and workout financing, to medium and larger-sized companies secured by accounts receivable, inventory and fixed assets. Finance receivables totaled $1.23 billion at March 31, 1994, a decrease of $53.8 million (4.2%) from the $1.28 billion reported at December 31, 1993, as customer paydowns exceeded new borrowings. - Credit Finance - Revolving and term loans, including restructurings, to small and medium-sized companies secured by accounts receivable, inventory and fixed assets. Receivables growth continued during the current quarter with finance receivables reaching $690.8 million at March 31, 1994, an increase of $45.1 million (7.0%), compared with $645.6 million at December 31, 1993, as improving economic conditions for middle-market clients contributed to their need for financing. -9- Dealer and Manufacturer Financing - Industrial Financing - Secured equipment financing and leasing for medium- sized companies, including dealer and manufacturer financing. Finance receivables were $3.90 billion at March 31, 1994, an increase of $19.1 million (0.5%), compared with $3.88 billion at December 31, 1993. The increase was modest in spite of record first quarter funding volume with middle-market companies, which was essentially offset by higher than normal liquidations. Equipment under operating lease was relatively unchanged at $188.6 million at March 31, 1994, compared with $186.2 million at December 31, 1993. - Sales Financing - Retail secured financing of recreation vehicles, recreation boats, and manufactured housing, through dealers and manufacturers. Finance receivables were $1.34 billion at March 31, 1994, an increase of $37.2 million (2.8%), compared with $1.31 billion at December 31, 1993, as the volume of new business remained consistent with recent quarters. - Consumer Finance - Loans secured by first or second mortgages on residential real estate, generated primarily through direct marketing. Finance receivables grew to $192.0 million at March 31, 1994, an increase of $60.7 million (46.2%), compared with $131.3 million at December 31, 1993, reflecting increased levels of origination activity, including new loans generated by 18 additional branches opened in late 1993. -10- Factoring - Commercial Services - Factoring of accounts receivables, including credit protection, bookkeeping and collection activities. Finance receivables reached $1.96 billion at March 31, 1994, doubling the $981.9 million reported at December 31, 1993, largely as a result of the aforementioned BCC acquisition. A seasonal increase in traditional factoring activity and volume with new clients in non-traditional industries also contributed to the growth in finance receivables from year-end 1993. Commercial Airline Industry Commercial airline finance receivables and equipment under operating lease totaled $1.85 billion or 12.9% of total financing and leasing assets (before the reserve for credit losses) at March 31, 1994, compared with $1.89 billion (14.2%) at December 31, 1993. The portfolio is secured by commercial aircraft and related equipment and is further described in the following table. MARCH 31, DECEMBER 31, 1994 1993 ------------ ------------ (DOLLAR AMOUNTS IN MILLIONS) Finance Receivables Amount outstanding (a) $1,399.0 $ 1,437.3 Number of obligors 43 43 Operating Leases Net carrying value $ 451.3 $ 457.6 Number of obligors 20 21 - - ------------------------------------------------------------------------------ Total $1,850.3 $ 1,894.9 - - ------------------------------------------------------------------------------ Number of obligors (b) 57 58 - - ------------------------------------------------------------------------------ Number of aircraft 274 276 - - ------------------------------------------------------------------------------ (a) Includes accrued rents on operating leases of $0.6 million and $1.0 million at March 31, 1994 and December 31, 1993, respectively, which are classified in finance receivables in the Consolidated Balance Sheets. (b) Certain obligors have both finance receivable and operating lease transactions. One commercial airline obligor, with outstandings of $63.6 million at March 31, 1994 ($64.2 million at December 31, 1993), was subject to proceedings under Chapter 11 of the Bankruptcy Reform Act of 1978, as amended. -11- However, this obligor was current on its contractual obligations with the Corporation at March 31, 1994. Highly Leveraged Transactions Highly leveraged transactions ("HLTs") totaled $369.7 million (2.6% of financing and leasing assets before the reserve for credit losses) at March 31, 1994, down from $476.6 million (3.6%) at December 31, 1993, as a result of delisting various transactions which satisfied the HLT delisting criteria, as set forth by certain federal supervisory agencies. The Corporation's HLT outstandings are generally secured by collateral, as distinguished from HLTs that rely primarily on cash flow from operations. At March 31, 1994, the portfolio consisted of 25 obligors in 11 industry groups, located throughout the United States, with the largest regional concentration, 26.5%, in the Northeast. The nonaccrual status of the three accounts so classified at December 31, 1993 was unchanged at March 31, 1994. However, the total outstandings declined to $21.5 million at March 31, 1994 from $34.7 million at year-end 1993. Unfunded commitments to lend in secured HLT situations were $83.2 million at March 31, 1994, compared with $123.1 million at December 31, 1993. NET INTEREST REVENUE During the 1994 first quarter, average financing and leasing assets ("AEA") were $13.02 billion, an increase of 10.0%, compared with $11.84 billion for the comparable 1993 period. Net interest revenue (interest and fees earned less interest expense) increased to $175.1 million for the 1994 first quarter, up $12.1 million (7.4%) from $163.0 million for the comparable 1993 period. -12- As a percentage of AEA, net interest revenue was 5.37% for the 1994 first quarter, compared with 5.51% in the 1993 first quarter, as interest rates earned on financing and leasing assets decreased more rapidly than interest rates paid on funds borrowed by the Corporation. Interest and fees earned rose to $303.9 million for the first quarter of 1994, a $16.2 million (5.6%) improvement over the $287.7 million reported in the first quarter of 1993, and interest expense totaled $128.8 million for the 1994 first quarter, $4.2 million (3.3%) higher than the $124.7 million reported in the 1993 period. Fluctuations in market interest rates can affect net interest revenue through changes in the spread between interest charged on interest-earning assets and interest rates paid on interest-bearing liabilities. As the level of market interest rates and the relationship between short-term and long-term market interest rates change, there is exposure to potential increases or decreases in net interest revenue. A comparative analysis of the weighted average interest rates paid on the Corporation's debt, after giving effect to interest rate swaps, is set forth below. THREE MONTHS ENDED MARCH 31, 1994 1993 - - ---------------------------------------------------------------------------- Floating rate debt 3.46% 3.41% Fixed rate debt 6.70% 7.55% Composite interest rate 4.70% 4.94% - - ---------------------------------------------------------------------------- Interest rate swap transactions are generally entered into by the Corporation as a hedge against market interest rate fluctuations and are not entered into for trading or speculative purposes. -13- GAINS ON ASSET SALES Gains on asset sales for the first quarter of 1994 were $7.6 million, compared with $1.3 million in the comparable 1993 quarter. The increase is attributable to securitizing $150 million of recreation vehicle receivables in January 1994 and to the sale of equipment previously on lease. OPERATING EXPENSES Operating expenses before the provision for credit losses totaled $80.5 million for the 1994 first quarter, an increase of $12.9 million (19.0%) from $67.7 million for the 1993 first quarter. As a percentage of AEA, operating expenses were 2.47% in 1994, compared with 2.29% in 1993. The increases are primarily attributable to several unrelated factors, including the operating expenses associated with the acquired BCC factoring business, the continued expansion of Consumer Finance, and nonrecurring items (principally charges associated with consolidating Sales Financing's 12 business acquisition centers into five regional business centers). Excluding the BCC expenses and the nonrecurring items, operating expenses as a percentage of AEA were 2.31% for the first quarter of 1994. The aforementioned factors resulted in salaries and employee benefits rising to $43.3 million for the first quarter of 1994, an increase of $5.5 million (14.5%), from $37.8 million in the 1993 first quarter, and in other operating expenses increasing to $37.3 million for the 1994 first quarter, an increase of $7.4 million (24.8%), compared with the $29.9 million reported in the 1993 first quarter. -14- The following table presents components of net income as a percentage of AEA, along with other selected financial data: THREE MONTHS ENDED MARCH 31, ------------------------- (DOLLAR AMOUNTS IN THOUSANDS) 1994 1993 ------------------------- Interest and fees earned* 9.23% 9.55% Interest expense* 3.86 4.04 ----------- ----------- Net interest revenue 5.37 5.51 Gains on asset sales .24 .04 Operating expenses before provision for credit losses 2.47 2.29 Net charge-offs** .80 .75 Loss reserve increase/(decrease) (.03) .06 Income before provision for income taxes 2.37 2.44 Provision for income taxes .89 .97 ----------- ----------- Net income 1.48% 1.47% =========== =========== AEA $13,024,231 $11,837,338 =========== =========== Average finance receivables $12,850,556 $11,891,369 =========== =========== Ratio of earnings to fixed charges 1.59 1.57 * Percentage calculated excluding interest income and interest expense relating to short-term interest-bearing deposits. ** Percentage of average finance receivables. -15- PROVISION AND RESERVE FOR CREDIT LOSSES The total provision for credit losses was $24.9 million for the first quarter of 1994, compared with $24.3 million for the comparable 1993 period. Net charge-offs totaled $25.8 million, .80% (annualized) of average finance receivables for the current quarter, compared with $22.4 million, .75% (annualized) of average finance receivables for the 1993 first quarter. The reserve for credit losses at March 31, 1994 was $180.0 million, 1.32% of finance receivables, compared with $169.4 million, 1.34% of finance receivables, at year-end 1993. The increase from year-end 1993 is attributable to credit loss reserves acquired as part of the BCC acquisition. PAST DUE AND NONACCRUAL FINANCE RECEIVABLES, AND ASSETS RECEIVED IN SATISFACTION OF LOANS Finance receivables past due 60 days or more were $198.2 million (1.46% of finance receivables) at March 31, 1994, down from $216.1 million (1.71%) at December 31, 1993 and $317.9 million (2.62%) at March 31, 1993. Past due receivables on nonaccrual status declined to $105.6 million (0.78% of finance receivables) at March 31, 1994, from $139.9 million (1.11%) at December 31, 1993 and $220.4 million (1.81%) at March 31, 1993. Excluding past due loans in Industrial Financing that have dealer or manufacturer recourse provisions, the percentage of finance receivables past due 60 days or more was 1.16% at March 31, 1994, down from 1.47% at December 31, 1993 and 2.30% at March 31, 1993. Assets received in satisfaction of loans were $79.5 million at March 31, 1994, down from $87.0 million at year-end 1993 and $106.0 million at March 31, 1993. -16- INCOME TAXES The effective income tax rate for the 1994 first quarter was 37.8%, versus 39.8% in the comparable prior year period. LIQUIDITY The Corporation relies upon cash flow from operations to provide liquidity, but is also dependent upon issuing commercial paper and variable rate and fixed rate term debt to satisfy its financing needs. At March 31, 1994, commercial paper borrowings were supported by $4.31 billion of credit line facilities, representing 70% of operating commercial paper (commercial paper outstanding less the amount funding short-term interest- bearing deposits). No borrowings have been made under credit lines since 1970. CAPITALIZATION The following table presents information regarding the Corporation's capital structure. MARCH 31, DECEMBER 31, 1994 1993 ----------- ----------- (DOLLARS IN THOUSANDS) Debt $11,075,436 $10,795,139 Stockholders' equity 1,715,674 1,692,235 ----------- ----------- Total Capitalization $12,791,110 $12,487,374 =========== =========== Debt-to-equity ratio 6.45 to 1 6.38 to 1 -17- Since year-end 1993, commercial paper borrowings decreased $313.2 million to $6.20 billion at March 31, 1994. Repayments of term debt totaled $507.5 million in the 1994 first quarter consisting of $300.0 million of variable rate and $207.5 million of fixed rate term debt. During the quarter, the Corporation issued $801.0 million of variable rate and $300.0 million of fixed rate term debt. At March 31, 1994, $1.77 billion of registered but unissued debt securities remained available under shelf registration statements. A shelf registration statement for an additional $4.0 billion of debt securities was filed with, but not yet declared effective by, the Securities and Exchange Commission. INVESTMENTS IN DEBT AND EQUITY SECURITIES The Corporation adopted the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115") effective January 1, 1994. SFAS 115 requires equity securities with readily determinable fair values and all debt securities be classified as either held-to-maturity, available-for-sale or trading; and that unrealized gains and losses be reported as a separate component of stockholders' equity, for available-for-sale securities, or included in earnings, for trading securities. At March 31, 1994, the total carrying value of investments subject to the provisions of SFAS 115 and the related unrealized gains and losses were immaterial. Additionally, none of the investments were classified as trading securities and, accordingly, no unrealized gains or losses are included in income for the quarter ended March 31, 1994. -18- PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES Under the most restrictive provisions of agreements relating to outstanding term debt, the Corporation may not, without the consent of the holders of such term debt, permit stockholders' equity to be less than $300,000,000. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit 12 - Computation of Ratios of Earnings to Fixed Charges. (b) A Form 8-K report dated January 13, 1994 was filed with the Commission reporting the Corporation's announcement of results for the year ended December 31, 1993. (c) A Form 8-K report dated February 28, 1994 was filed with the Commission reporting that the Corporation had completed the acquisition of Barclays Commercial Corporation. -19- EXHIBIT 12 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (DOLLAR AMOUNTS IN THOUSANDS) THREE MONTHS ENDED MARCH 31, -------------------------- 1994 1993 -------------------------- Net Income $ 48,035 $ 43,532 Provision for income taxes 29,230 28,764 -------- -------- Earnings before provision for income taxes 77,265 72,296 -------- -------- Fixed charges: Interest and debt expense on indebtedness 128,840 124,686 Interest factor - one third of rentals on real and personal properties 1,903 1,907 -------- -------- Total fixed charges 130,743 126,593 -------- -------- Total earnings before provision for income taxes and fixed charges $208,008 $198,889 ======== ======== Ratio of earnings to fixed charges 1.59 1.57 -20- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The CIT Group Holdings, Inc. ---------------------------- (Registrant) BY /s/ J. J. Carroll ---------------------------- J. J. Carroll Executive Vice President and Chief Financial Officer (duly authorized and principal accounting officer) DATE: April 29, 1994 -21- -----END PRIVACY-ENHANCED MESSAGE-----