-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IRHEz87LCoG5KzYE8a+ggVGRBcAxMrqpVYnVu0F6d2HNWRw3825UsmOyTmb+KZ/d V1NUORAmYXVx2Hh56W6DDQ== 0000912057-01-517464.txt : 20010627 0000912057-01-517464.hdr.sgml : 20010627 ACCESSION NUMBER: 0000912057-01-517464 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010524 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TYCO INTERNATIONAL LTD /BER/ CENTRAL INDEX KEY: 0000833444 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13836 FILM NUMBER: 1647257 BUSINESS ADDRESS: STREET 1: 90 PITTS BAY ROAD STREET 2: THE ZURICH CENTRE SECOND FLOOR CITY: PEMROKE HM 08 BERMU STATE: D0 BUSINESS PHONE: 4412928674 MAIL ADDRESS: STREET 1: C/O TYCO INTERNATIONAL (US) INC STREET 2: ONE TYCO PARK CITY: EXETER STATE: NH ZIP: 03833 FORMER COMPANY: FORMER CONFORMED NAME: ADT LIMITED DATE OF NAME CHANGE: 19930601 8-K 1 a2050138z8-k.txt FORM 8-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MAY 24, 2001 001-13836 (COMMISSION FILE NUMBER) ------------------------ TYCO INTERNATIONAL LTD. (Exact name of registrant as specified in its charter)
BERMUDA NOT APPLICABLE (Jurisdiction of Incorporation) (I.R.S. Employer Identification Number)
THE ZURICH CENTRE, SECOND FLOOR, 90 PITTS BAY ROAD, PEMBROKE, HM 08, BERMUDA (Address of registrant's principal executive office) 414-292-8674 (Registrant's telephone number) ------------------------ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 5. OTHER EVENTS On March 15, 2001, Tyco International Ltd. ("Tyco"), a Bermuda company, filed a Form 8-K which included as an exhibit a press release issued March 13, 2001 announcing that its wholly-owned subsidiary, Tyco Acquisition XIX (NV) ("Acquiror"), a Nevada corporation, and The CIT Group, Inc., a Delaware corporation ("CIT"), have entered into an Agreement and Plan of Merger dated as of March 12, 2001 (the "Merger Agreement"), pursuant to which Tyco will acquire CIT through the merger of CIT with and into Acquiror. A special meeting of CIT stockholders took place on May 23, 2001 and the merger agreement was approved. The transaction will close upon receipt of the requisite regulatory approvals, which is expected to occur by June 1, 2001. Tyco intends to account for this acquisition as a purchase. This Form 8-K includes as an exhibit (i) Unaudited Condensed Consolidated Financial Statements of The CIT Group, Inc. and subsidiaries as of March 31, 2001 and December 31, 2000 and for the three months ended March 31, 2001 and 2000, as filed in CIT's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 and (ii) Tyco and CIT unaudited pro forma combined condensed financial information for the six months ended March 31, 2001, for the year ended September 30, 2000 and as of March 31, 2001. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (C) EXHIBITS
EXHIBIT NUMBER TITLE - --------------------- ----- 99.1 Unaudited Condensed Consolidated Financial Statements of The CIT Group, Inc. and subsidiaries as of March 31, 2001 and December 31, 2000 and for the three months ended March 31, 2001 and 2000, as filed in CIT's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. 99.2 Tyco and CIT unaudited pro forma combined condensed financial information for the six months ended March 31, 2001, for the year ended September 30, 2000 and as of March 31, 2001.
1 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. TYCO INTERNATIONAL LTD. By: /s/ MARK H. SWARTZ ----------------------------------------- Mark H. Swartz EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
Date: May 24, 2001 2 EXHIBIT INDEX
EXHIBIT NUMBER ------- 99.1 Unaudited Condensed Consolidated Financial Statements of The CIT Group, Inc. and subsidiaries as of March 31, 2001 and December 31, 2000 and for the three months ended March 31, 2001 and 2000, as filed in CIT's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. 99.2 Tyco and CIT unaudited pro forma combined condensed financial information for the six months ended March 31, 2001, for the year ended September 30, 2000 and as of March 31, 2001.
EX-99.1 2 a2050138zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN MILLIONS)
MARCH 31, DECEMBER 31, 2001 2000 ----------- ------------ (UNAUDITED) ASSETS Financing and leasing assets: Loans and leases: Commercial.............................................. $29,102.2 $29,304.0 Consumer................................................ 4,198.5 4,193.5 --------- --------- Finance receivables....................................... 33,300.7 33,497.5 Reserve for credit losses................................. (462.0) (468.5) --------- --------- Net finance receivables................................... 32,838.7 33,029.0 Operating lease equipment, net............................ 7,186.7 7,190.6 Finance receivables held for sale......................... 2,624.8 2,698.4 Cash and cash equivalents................................... 740.0 812.1 Goodwill.................................................... 1,942.1 1,964.6 Other assets................................................ 3,053.1 2,995.1 --------- --------- Total assets................................................ $48,385.4 $48,689.8 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Debt: Commercial paper.......................................... $ 9,662.9 $ 9,063.5 Variable rate senior notes................................ 10,798.3 11,130.5 Fixed rate senior notes................................... 17,157.0 17,571.1 Subordinated fixed rate notes............................. 100.0 200.0 --------- --------- Total debt.................................................. 37,718.2 37,965.1 Credit balances of factoring clients........................ 2,131.4 2,179.9 Accrued liabilities and payables............................ 1,691.4 1,640.8 Deferred federal income taxes............................... 623.8 646.8 --------- --------- Total liabilities........................................... 42,164.8 42,432.6 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company............................................ 250.0 250.0 Stockholders' equity: Common stock.............................................. 2.7 2.7 Paid-in capital........................................... 3,535.9 3,527.2 Retained earnings......................................... 2,736.9 2,603.3 Treasury stock, at cost................................... (133.1) (137.7) --------- --------- 6,142.4 5,995.5 Accumulated other comprehensive (loss) income............. (171.8) 11.7 --------- --------- Total stockholders' equity.................................. 5,970.6 6,007.2 --------- --------- Total liabilities and stockholders' equity.................. $48,385.4 $48,689.8 ========= =========
See accompanying notes to condensed consolidated financial statements. 1 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED MARCH 31, --------------------- 2001 2000 --------- --------- (UNAUDITED) Finance income.............................................. $1,376.8 $1,228.8 Interest expense............................................ 625.7 571.9 -------- -------- Net finance income.......................................... 751.1 656.9 Depreciation on operating lease equipment................... 346.4 307.8 -------- -------- Net finance margin.......................................... 404.7 349.1 Other revenue............................................... 211.6 238.2 -------- -------- Operating revenue........................................... 616.3 587.3 -------- -------- Salaries and general operating expenses..................... 263.5 268.2 Provision for credit losses................................. 68.3 61.6 Goodwill amortization....................................... 22.5 20.5 Minority interest in subsidiary trust holding solely debentures of the Company............................................ 4.8 4.8 -------- -------- Operating expenses.......................................... 359.1 355.1 -------- -------- Income before provision for income taxes.................... 257.2 232.2 Provision for income taxes.................................. 97.1 88.3 -------- -------- Net income.................................................. $ 160.1 $ 143.9 ======== ======== Basic net income per share.................................. $ 0.61 $ 0.55 Diluted net income per share................................ $ 0.61 $ 0.55
See accompanying notes to condensed consolidated financial statements. 2 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DOLLARS IN MILLIONS)
THREE MONTHS ENDED MARCH 31, ------------------- 2001 2000 -------- -------- (UNAUDITED) Balance, January 1.......................................... $6,007.2 $5,554.4 -------- -------- Net income.................................................. 160.1 143.9 Foreign currency translation adjustments.................... (18.2) (3.3) Unrealized (loss) gain on equity and securitization investments, net.......................................... (0.1) 0.6 Cumulative effect of adopting new accounting principle...... (146.5) -- Change in fair value of derivatives qualifying as cash flow hedges.................................................... (18.7) -- -------- -------- Total comprehensive (loss) income........................... (23.4) 141.2 Dividends declared.......................................... (26.4) (26.6) Treasury stock issued (purchased)........................... 4.6 (20.3) Other....................................................... 8.6 2.9 -------- -------- Balance, March 31........................................... $5,970.6 $5,651.6 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN MILLIONS)
THREE MONTHS ENDED MARCH 31, --------------------- 2001 2000 --------- --------- (UNAUDITED) CASH FLOWS FROM OPERATIONS Net income.................................................. $ 160.1 $ 143.9 Adjustments to reconcile net income to net cash flows from operations: Provision for credit losses............................... 68.3 61.6 Depreciation and amortization............................. 380.0 353.4 Provision for deferred federal income taxes............... 79.6 47.7 Gains on equipment, receivable and investment sales....... (91.9) (95.7) Decrease in accrued liabilities and payables.............. (335.1) (126.8) Decrease in other assets.................................. 104.0 32.7 Other..................................................... 26.1 4.1 --------- --------- Net cash flows provided by operations....................... 391.1 420.9 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Loans extended.............................................. (12,356.8) (11,658.2) Collections on loans........................................ 10,882.7 9,453.7 Proceeds from asset and receivable sales.................... 1,901.2 1,168.5 Purchases of assets to be leased............................ (391.1) (547.8) Net increase in short-term factoring receivables............ (173.3) (267.3) Purchase of finance receivable portfolios................... -- (706.0) Other....................................................... (9.7) 25.1 --------- --------- Net cash flows used for investing activities................ (147.0) (2,532.0) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Repayments of variable and fixed rate notes................. (2,914.9) (3,199.3) Proceeds from the issuance of variable and fixed rate notes..................................................... 2,068.6 3,095.1 Net increase in commercial paper............................ 599.4 1,644.1 Net repayments of non-recourse leveraged lease debt......... (44.1) (66.9) Cash dividends paid......................................... (26.4) (26.6) Treasury stock issued (purchased)........................... 4.6 (20.3) --------- --------- Net cash flows (used for) provided by financing activities................................................ (312.8) 1,426.1 --------- --------- Effect of exchange rate changes on cash..................... (3.4) 0.4 --------- --------- Net decrease in cash and cash equivalents................... (72.1) (684.6) Cash and cash equivalents, beginning of period.............. 812.1 1,073.4 --------- --------- Cash and cash equivalents, end of period.................... $ 740.0 $ 388.8 ========= ========= SUPPLEMENTAL DISCLOSURES Interest paid............................................... $ 647.7 $ 526.7 Federal, state and local and foreign income taxes paid...... $ 14.7 $ 4.2
See accompanying notes to condensed consolidated financial statements. 4 THE CIT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1--BASIS OF PRESENTATION We believe all adjustments (all of which are normal recurring accruals) necessary for a fair statement of financial position and results of operations for these periods have been made. Results for interim periods are not necessarily indicative of results for a full year and are subject to year-end audit adjustments. NOTE 2--EARNINGS PER SHARE The reconciliation of the numerator and denominator of basic earnings per share ("EPS") with that of diluted EPS is presented below.
FOR THE THREE MONTHS ENDED MARCH 31, --------------------------------------------------------------------------------- 2001 2000 --------------------------------------- --------------------------------------- INCOME SHARES PER SHARE INCOME SHARES PER SHARE (NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- --------- ----------- ------------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Basic EPS: Income available to common shareholders................ $160.1 260,628,793 $0.61 $143.9 262,931,435 $0.55 ===== ===== Effect of dilutive securities: Restricted shares............. -- 1,517,105 -- 660,570 Stock options................. -- 2,119,595 -- 28,097 ------ ----------- ------ ----------- Diluted EPS..................... $160.1 264,265,493 $0.61 $143.9 263,620,102 $0.55 ====== =========== ===== ====== =========== =====
NOTE 3--STOCKHOLDERS' EQUITY The following table summarizes the outstanding common stock, par value $.01 per share, with 1,210,000,000 shares authorized, and exchangeable shares at March 31, 2001 and December 31, 2000.
COMMON STOCK -------------------------------------- LESS EXCHANGEABLE ISSUED TREASURY OUTSTANDING SHARES ----------- ---------- ----------- ------------ Balance at March 31, 2001................... 257,648,978 (6,513,427) 251,135,551 11,123,122 =========== ========== =========== ========== Balance at December 31, 2000................ 256,952,578 (6,692,519) 250,260,059 11,637,709 =========== ========== =========== ==========
Exchangeable shares of CIT Exchangeco Inc., par value of $.01 per share, were issued in connection with the acquisition of Newcourt Credit Group Inc. The holders of Exchangeco shares have dividend, voting and other rights equivalent to those of CIT common stockholders. These shares may be exchanged at any time at the option of the holder on a one-for-one basis for CIT common stock, and in any event CIT may redeem these shares on a one-for-one basis on or before November 1, 2004. NOTE 4--DERIVATIVE FINANCIAL INSTRUMENTS The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," which became effective for CIT on January 1, 2001. SFAS No. 133 was amended by SFAS No. 137 and SFAS 5 THE CIT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4--DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) No. 138. Under SFAS No. 133, as amended, all derivative instruments are recognized in the balance sheet at their fair values and changes in fair value are recognized immediately in earnings, unless the derivatives qualify as hedges of future cash flows. For derivatives qualifying as hedges of future cash flows, the effective portion of changes in fair value is recorded temporarily in stockholders' equity and contractual cash flows, along with the related impact of the hedged items, continue to be recognized in earnings. Any ineffective portion of a hedge is reported in earnings as it occurs. The ineffective portion of changes in fair values of hedge positions, reported in first quarter earnings, amounted to $1.4 million before income taxes, or $0.8 million after taxes, and was recorded as an increase to interest expense. On January 1, 2001, CIT recorded a $146.5 million cumulative effect adjustment to Accumulated Other Comprehensive Loss, a separate component of stockholders' equity, for derivatives qualifying as hedges of future cash flows to reflect the new accounting standard for derivatives. The components of the adjustment to Accumulated Other Comprehensive Loss at January 1, 2001 and balances outstanding at March 31, 2001 are presented in the following table.
MARCH 31, JANUARY 1, 2001 2001 --------- ---------- (DOLLARS IN MILLIONS) Adjustment to fair value of derivatives................. $266.5 $236.2 Income tax effects...................................... 101.3 89.7 ------ ------ Total unrealized loss................................... $165.2 $146.5 ====== ======
The unrealized losses presented in the preceding table reflect our use of interest rate swaps to convert variable-rate debt to fixed rates, and the fact that interest rates have declined since such contracts were executed. Accumulated Other Comprehensive Loss at March 31, 2001 reflects a $27.2 million additional unrealized loss, net of tax, on derivative contracts since December 31, 2000. In addition, during the first quarter of 2001, approximately $8.5 million, net of tax, was reflected in earnings for the interest differential on our interest rate swaps. Assuming no change in interest rates, we expect approximately $39.7 million, net of tax, of Accumulated Other Comprehensive Loss to be reclassified to earnings over the next twelve months. This amount will change as interest rates change in the future, nevertheless, prospective interest margin will continue to reflect interest costs at the contractual swap rates. The Accumulated Other Comprehensive Loss, (along with the corresponding swap liability) will be re-measured as market interest rates change over the remaining life of the swaps. CIT uses derivatives for hedging purposes only, and does not enter into derivative financial instruments for trading or speculative purposes. As part of managing the exposure to changes in market interest rates, CIT, as an end-user, enters into various interest rate swap transactions, all of which are transacted in over-the-counter markets, with other financial institutions acting as principal counterparties. To ensure both appropriate use as a hedge and hedge accounting treatment, all derivatives entered into are designated according to a hedge objective against a specified liability including senior notes and commercial paper. CIT's primary hedge objectives include the conversion of variable-rate liabilities to fixed-rates, and the conversion of fixed-rate liabilities to variable-rates. The notional amounts, rates, indices and maturities of CIT's derivatives are required to closely match the related terms of CIT's hedged liabilities. 6 THE CIT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4--DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) The following table presents the notional principal amounts of interest rate swaps by class and the corresponding hedged liability position at March 31, 2001.
NOTIONAL AMOUNT INTEREST RATE SWAPS IN MILLIONS COMMENTS - --------------------------------------- --------------- -------------------------------------------- Floating to fixed-rate swaps........... $8,841.5 Effectively converts the interest rate on an equivalent amount of commercial paper and variable-rate senior notes to a fixed-rate. Fixed to floating-rate swaps........... 1,044.8 Efectively converts the interest rate on an equivalent amount of fixed-rate senior notes to a variable-rate. -------- Total interest rate swaps.............. $9,886.3 ========
CIT also utilizes foreign exchange forward contracts and cross currency swaps to hedge its net investments in foreign operations. At March 31, 2001, CIT is party to cross-currency interest rate swaps with a notional principal amount of $1.0 billion. The swaps hedge foreign currency risk and have maturities ranging from 2001 to 2019. CIT also is party to foreign currency exchange contracts with notional amounts of $2.9 billion and maturities ranging from 2001 to 2004, to hedge foreign currency risk. NOTE 5--BUSINESS SEGMENT INFORMATION The following table presents reportable segment information and the reconciliation of segment balances to the consolidated financial statement totals and the consolidated managed assets total at or for the quarters ended March 31, 2001 and 2000. Goodwill amortization is allocated to Corporate for purposes of the table. In 2001, we continued to transfer various assets among our business units to better align core competencies, gain scale, raise efficiency and improve profitability. During the first quarter of 2001, we transferred approximately $637.4 million of finance receivables, $658.1 million of operating lease equipment and $329.3 million of securitized assets from Equipment Financing to Vendor Technology Finance. In addition, $729.7 million of finance receivables, $112.7 million of operating lease equipment and $926.2 million of securitized assets were transferred from Equipment Financing to Specialty Finance and $315.6 million of finance receivables and $32.5 million of operating lease equipment from Vendor Technology Finance to Specialty Finance. Prior year segment balances have not been restated to conform to the current year asset transfers as it is impractical to do so. Also, during the quarter, the "Consumer" segment was renamed "Specialty Finance", which includes all of the consumer related receivables as well as certain small ticket commercial financing and leasing assets.
EQUIPMENT FINANCING VENDOR AND TECHNOLOGY COMMERCIAL STRUCTURED SPECIALTY TOTAL CONSOLIDATED LEASING FINANCE FINANCE FINANCE* FINANCE SEGMENTS CORPORATE TOTAL ---------- ---------- ----------- ---------- --------- --------- --------- ------------ (DOLLARS IN MILLIONS) MARCH 31, 2001 Operating revenue......... $ 218.8 $ 149.5 $ 125.8 $ 34.4 $ 94.4 $ 622.9 $ (6.6) $ 616.3 Net income................ 80.0 43.2 43.2 10.7 14.2 191.3 (31.2) 160.1 Total managed assets...... 22,026.8 11,857.3 7,995.3 2,871.3 9,242.7 53,993.4 -- 53,993.4
7 THE CIT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 5--BUSINESS SEGMENT INFORMATION (CONTINUED)
EQUIPMENT FINANCING VENDOR AND TECHNOLOGY COMMERCIAL STRUCTURED SPECIALTY TOTAL CONSOLIDATED LEASING FINANCE FINANCE FINANCE* FINANCE SEGMENTS CORPORATE* TOTAL ---------- ---------- ----------- ---------- --------- --------- ---------- ------------ (DOLLARS IN MILLIONS) MARCH 31, 2000 Operating revenue......... $ 165.8 $ 188.9 $ 117.0 $ 67.9 $ 57.5 $ 597.1 $ (9.8) $ 587.3 Net income................ 64.4 28.2 35.8 38.0 13.8 180.2 (36.3) 143.9 Total managed assets...... 19,892.0 16,067.8 7,585.8 2,203.9 7,400.0 53,149.5 -- 53,149.5
- ------------------------------ * The March 31, 2000 balances are conformed to include Equity Investments, which had been included with Corporate. NOTE 6--1999 RESTRUCTURING CHARGE The following table summarizes the activity in the restructuring liability, which resulted from the Newcourt acquisition.
SEVERANCE AND OTHER LEASEHOLD TRANSACTION TERMINATION TERMINATION AND OTHER COSTS COSTS COSTS TOTAL ------------- ----------- ----------- -------- (DOLLARS IN MILLIONS) Balance at November 15, 1999...................... $102.1 $24.5 $72.6 $199.2 Cash payments................................... (48.1) -- (38.0) (86.1) Transaction fees paid in CIT stock.............. -- -- (14.3) (14.3) Non-cash adjustments............................ -- -- (2.5) (2.5) ------ ----- ----- ------ Balance at December 31, 1999...................... 54.0 24.5 17.8 96.3 Cash payments................................... (60.7) (10.2) (8.1) (79.0) Additions....................................... 6.7 -- -- 6.7 Non-cash reductions............................. -- (2.4) (6.2) (8.6) ------ ----- ----- ------ Balance at December 31, 2000...................... -- 11.9 3.5 15.4 Cash payments................................... -- (3.5) (1.5) (5.0) ------ ----- ----- ------ Balance at March 31, 2001......................... $ -- $ 8.4 $ 2.0 $ 10.4 ====== ===== ===== ======
NOTE 7--SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARIES The following table shows summarized consolidated financial information for CIT Holdings LLC and its wholly owned subsidiary, Capita Corporation. CIT has guaranteed on a full and unconditional basis the existing registered debt securities and certain other indebtedness of these subsidiaries. Therefore, CIT has not presented related financial statements or other information for these subsidiaries on a stand-alone basis. 8 THE CIT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7--SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARIES (CONTINUED) The following summarized consolidated financial information reflects results as of and for the quarter ended March 31, 2001 and also the transfer of various subsidiaries to other CIT entities.
THREE MONTHS ENDED MARCH 31, 2001 -------------------------- CIT HOLDINGS CAPITA LLC CORPORATION ------------ ----------- (DOLLARS IN MILLIONS) Operating revenue........................................... $ 164.3 $ 107.3 Operating expenses.......................................... 106.5 73.8 -------- -------- Income before provision for income taxes.................... $ 57.8 $ 33.5 -------- -------- Net income.................................................. $ 32.5 $ 19.5 -------- -------- AT MARCH 31, 2001 -------------------------- ASSETS Cash and cash equivalents................................... $ 200.6 $ 145.1 Financing and leasing assets................................ 6,676.8 4,922.3 Receivables from affiliates and other assets................ 853.5 190.0 -------- -------- Total assets................................................ $7,730.9 $5,257.4 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Debt...................................................... $4,108.0 $3,641.1 Other..................................................... 336.9 232.7 -------- -------- Total liabilities........................................... 4,444.9 3,873.8 Total shareholders' equity.................................. 3,286.0 1,383.6 -------- -------- Total liabilities and shareholders' equity.................. $7,730.9 $5,257.4 ======== ========
NOTE 8--RECENT ACCOUNTING PRONOUNCEMENTS During September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities--a replacement of FASB Statement No. 125." SFAS No. 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. We do not expect the adoption of this standard to affect the accounting for, or the structure of, our securitization transactions. In November 2000, the Emerging Issues Task Force of the FASB reached a consensus on impairment accounting for retained beneficial interests ("EITF 99-20"). Under this consensus, impairment on certain beneficial interests in securitized assets must be recognized when the asset's fair value is below its carrying value, and it is probable that there has been an adverse change in estimated cash flows. Previously, impairment on such assets was recognized when the asset's carrying value exceeded estimated cash flows discounted at a risk free rate of return. There was no impact on earnings of adopting EITF 99-20 on January 1, 2001. 9 THE CIT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9--PENDING MERGER On March 13, 2001, Tyco International Ltd. (NYSE: TYC), a diversified manufacturing and service company, and CIT announced a definitive agreement whereby Tyco will acquire CIT. As part of this transaction, Tyco has entered into a purchase agreement with The Dai-Ichi Kangyo Bank, Limited for their approximate 27% interest, or 71 million shares, at a price of $35.02, in cash, per CIT share. The remaining shareholders will receive 0.6907 Tyco shares for each share of CIT in a tax-free, stock-for-stock exchange. The transaction was valued at $35.02 per share to CIT shareholders, or approximately $9.2 billion, based on Tyco's March 12, 2001 closing stock price, and is subject to approval from various regulatory agencies and CIT's shareholders. A special meeting of CIT shareholders is scheduled for May 23, 2001 to vote on the adoption of the merger agreement. The expected date of closing is June 1, 2001. Thereafter, CIT will continue to file with the Securities and Exchange Commission as a separate registrant with respect to its public debt. 10 EX-99.2 3 a2050138zex-99_2.txt EXHIBIT 99.2 EXHIBIT 99.2 TYCO AND CIT UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION The accompanying unaudited pro forma combined condensed financial information relates to the proposed merger of The CIT Group, Inc. with and into Tyco Acquisition Corp. XIX (NV), a wholly-owned subsidiary of Tyco International Ltd. In the merger, each share of CIT common stock, other than shares owned by The Dai-Ichi Kangyo Bank Ltd., will be exchanged for 0.6907 of a Tyco common share. Shares of CIT common stock owned by Dai-Ichi (which constitute 71 million of the outstanding shares) will be purchased by Tyco Acquisition immediately prior to the merger for $35.02 per share in cash. In addition to the CIT common stock, there are outstanding shares of exchangeable stock issued by CIT Exchangeco Inc., an indirect subsidiary of CIT. Each exchangeable share presently outstanding is exchangeable for one share of CIT common stock. Each exchangeable share outstanding following the merger will be exchangeable for 0.6907 of a Tyco common share. The merger is to be accounted for in accordance with the purchase method of accounting pursuant to APB Opinion No. 16. Accordingly, the accompanying unaudited pro forma combined condensed financial information gives effect to the transaction in accordance with the purchase method of accounting. Pursuant to Rule 11-02 of Regulation S-X, the unaudited pro forma combined condensed financial information excludes extraordinary items and cumulative effect of accounting changes. The unaudited pro forma combined condensed financial information should be read in conjunction with: 1. Tyco's audited Consolidated Financial Statements, including the accounting policies and notes thereto, included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2000, 2. Tyco's unaudited Consolidated Financial Statements and notes thereto included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001, 3. CIT's audited Consolidated Financial Statements, including the notes thereto, included in its Annual Report on Form 10-K for the year ended December 31, 2000, and 4. CIT's unaudited Condensed Consolidated Financial Statements and notes thereto included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001. The following unaudited pro forma combined condensed financial information sets forth the combined results of operations for the fiscal year ended September 30, 2000 and the six months ended March 31, 2001, as if the merger had occurred at the beginning of fiscal 2000, and the financial position as of March 31, 2001, as if the merger had occurred as of that date. CIT has a December 31 year end, which differs from Tyco's September 30 fiscal year end. The unaudited pro forma combined condensed statements of continuing operations for the fiscal year ended September 30, 2000 and the six months ended March 31, 2001 include the historical results of operations for CIT for the year ended December 31, 2000 and the six months ended March 31, 2001, respectively. Accordingly, the results for the quarter ended December 31, 2000 for CIT have been included in the operating results for the year ended September 30, 2000 and in the operating results for the six months ended March 31, 2001. The unaudited pro forma combined condensed balance sheet includes the financial position of CIT as of March 31, 2001. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have actually occurred if the acquisition had been consummated on October 1, 1999, nor is it necessarily indicative of future operating results. 1 UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF CONTINUING OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2001 (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA PRO FORMA TYCO CIT ADJUSTMENTS(2) COMBINED --------- -------- -------------- --------- Net revenue..................................... $16,918.7 $3,196.9 $ -- $20,115.6 Cost of revenue................................. 10,488.6 694.8 -- 11,183.4 Selling, general and administrative expenses.... 3,170.4 709.5 69.4 (3) 3,939.7 (9.6) Merger, restructuring and other non-recurring credits, net.................................. (34.7) -- -- (34.7) Write-off of purchased in-process research and development................................... 184.3 -- -- 184.3 Charge for the impairment of long-lived 25.1 -- -- 25.1 assets........................................ Net gain on sale of businesses and (406.5) -- -- (406.5) investments................................... Interest expense, net........................... 395.4 1,277.9 81.4 (4) 1,754.7 --------- -------- ------- --------- Income from continuing operations before income taxes and minority interest................... 3,096.1 514.7 (141.2) 3,469.6 Income taxes.................................... (915.4) (194.5) 24.9 (5) (1,085.0) Minority interest............................... (24.2) -- (6.0) (30.2) --------- -------- ------- --------- Income from continuing operations............... $ 2,156.5 $ 320.2 $(122.3) $ 2,354.4 ========= ======== ======= ========= Income from continuing operations per common share(1): Basic......................................... $ 1.24 $ 1.23 $ 1.26 Diluted....................................... $ 1.22 $ 1.22 $ 1.24 Weighted average number of common shares(1): Basic......................................... 1,742.0 260.3 1,874.1 Diluted....................................... 1,768.0 263.4 1,900.1
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION. 2 UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF CONTINUING OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000 (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA PRO FORMA TYCO CIT ADJUSTMENTS(2) COMBINED --------- -------- -------------- --------- Net revenue..................................... $28,931.9 $6,160.4 $ -- $35,092.3 Cost of revenue................................. 17,931.2 1,281.3 -- 19,212.5 Selling, general and administrative expenses.... 5,252.0 1,395.9 138.8 (3) 6,767.5 (19.2) Merger, restructuring and other non-recurring charges, net.................................. 175.3 -- -- 175.3 Charge for the impairment of long-lived 99.0 -- 99.0 assets........................................ Interest expense, net........................... 769.6 2,497.7 160.8 (4) 3,428.1 Gain on issuance of common shares by (1,760.0) -- -- (1,760.0) subsidiary.................................... --------- -------- ------- --------- Income from continuing operations before income taxes and minority interest................... 6,464.8 985.5 (280.4) 7,169.9 Income taxes.................................... (1,926.0) (373.9) 49.0 (5) (2,250.9) Minority interest............................... (18.7) -- (11.9) (30.6) --------- -------- ------- --------- Income from continuing operations............... $ 4,520.1 $ 611.6 $(243.3) $ 4,888.4 ========= ======== ======= ========= Income from continuing operations per common share(1): Basic......................................... $ 2.68 $ 2.34 $ 2.69 Diluted....................................... $ 2.64 $ 2.33 $ 2.65 Weighted average number of common shares(1): Basic......................................... 1,688.0 261.1 1,820.1 Diluted....................................... 1,713.2 262.7 1,845.3
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION. 3 UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEETS AT MARCH 31, 2001 (IN MILLIONS)
PRO FORMA PRO FORMA TYCO CIT ADJUSTMENTS(2) COMBINED --------- ---------- -------------- ---------- ASSETS Current assets: Cash and cash equivalents................... $ 2,227.7 $ 740.0 $ -- $ 2,967.7 Accounts receivable, net.................... 6,400.5 -- -- 6,400.5 Inventories................................. 5,130.9 -- -- 5,130.9 Current portion of financing receivables, net of reserve for credit losses.......... -- 13,890.8 -- 13,890.8 Other current assets........................ 2,278.2 2,624.8 970.1 5,873.1 --------- ---------- ---------- ---------- Total current assets...................... 16,037.3 17,255.6 970.1 34,263.0 Long-term financing receivables, net of reserve for credit losses................... -- 18,947.9 -- 18,947.9 Construction in progress -- TyCom Global Network..................................... 873.4 -- -- 873.4 Property, plant and equipment (including operating lease equipment), net............. 9,210.4 7,186.7 179.6 16,576.7 Goodwill and other intangibles, net........... 24,939.8 1,942.1 3,470.6 (6) 30,352.5 Other assets.................................. 2,379.8 3,053.1 (525.8) 4,907.1 --------- ---------- ---------- ---------- Total assets............................ $53,440.7 $ 48,385.4 $ 4,094.5 $105,920.6 ========= ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Loans payable and current portion of long-term debt............................ $ 1,400.1 $ 19,048.3 $ -- $ 20,448.4 Accounts payable............................ 3,694.7 -- 450.1 4,144.8 Accrued expenses and other current liabilities............................... 5,236.0 4,446.6 164.6 9,922.2 75.0 (7) Contracts in process -- billings in excess of cost................................... 660.3 -- -- 660.3 Income taxes payable........................ 1,929.1 -- 9.2 1,938.3 --------- ---------- ---------- ---------- Total current liabilities................. 12,920.2 23,494.9 698.9 37,114.0 Long-term debt................................ 16,859.8 18,669.9 2,486.4 (4) 38,016.1 Other long-term liabilities................... 2,766.6 -- -- 2,766.6 --------- ---------- ---------- ---------- Total liabilities....................... 32,546.6 42,164.8 3,185.3 77,896.7 Mandatorily redeemable preference shares...... -- 250.0 -- 250.0 Minority interest............................. 317.8 -- -- 317.8 Shareholders' Equity: Retained earnings........................... 10,500.3 2,736.9 (2,736.9)(8) 10,500.3 Other shareholders' equity.................. 10,076.0 3,233.7 (3,233.7)(8) 16,955.8 6,879.8 (9) --------- ---------- ---------- ---------- Total shareholders' equity.............. 20,576.3 5,970.6 909.2 27,456.1 --------- ---------- ---------- ---------- Total liabilities and shareholders' equity.................................. $53,440.7 $ 48,385.4 $ 4,094.5 $105,920.6 ========= ========== ========== ==========
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION. 4 NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (1) The unaudited pro forma combined per share amounts are based on the pro forma combined weighted average number of common shares which equals Tyco's weighted average number of common shares outstanding for the period plus the total number of Tyco common shares that will be delivered to CIT stockholders in the merger and upon the exchange of CIT's exchangeable shares. CIT Exchangeco exchangeable shares are exchangeable for shares of CIT common stock on a 1:1 basis. The number of shares to be delivered in the merger and upon the exchange of the exchangeable shares is based on the CIT stockholders and holders of the exchangeable shares receiving 0.6907 Tyco common shares for each share of CIT common stock or exchangeable share held. Immediately prior to the consummation of the merger, a subsidiary of Tyco will purchase 71 million shares of CIT from Dai-Ichi Kangyo Bank Ltd. for $35.02 per share in cash. For purposes of the unaudited pro forma combined condensed financial information, the number of shares of CIT common stock on March 12, 2001 of 191,213,263 was used. This amount includes 179,926,113 outstanding common shares, and 11,287,150 exchangeable shares, and excludes the 71 million shares to be purchased for cash. (2) There were no material transactions between Tyco and CIT during any of the periods presented. Certain reclassifications, none of which affects income from continuing operations, have been made to CIT's statements of operations and balance sheet in the unaudited pro forma combined condensed financial statements to reclassify minority interest, other current assets, property, plant and equipment, other assets, accounts payable and income taxes payable on a basis consistent with Tyco's financial statements. Accrued purchase liabilities and adjustments related to the integration of operations are expected to be recorded in connection with the merger with CIT, but such amounts are not determinable at this time, and are not, therefore, included as pro forma adjustments in the unaudited pro forma combined condensed financial information. (3) The allocation of the purchase price to the fair value of assets and liabilities of CIT has not yet been determined. Therefore, for purposes of the unaudited pro forma combined condensed financial information, the excess of the purchase price over the book value of net assets acquired of CIT is being recorded as goodwill and amortized over an estimated composite 25 year life to selling, general and administrative expenses. (4) The increase in long-term debt and the related interest expense reflects the purchase of 71 million shares for $35.02 per share funded with Tyco's commercial paper program. (5) The income tax benefit relates to the assumed increase in interest expense, slightly offset by the tax effect of the minority interest reclassification. (6) Represents the excess of the purchase price over the net assets acquired of CIT. See (3) above for further discussion. The purchase price of $9,366.2 million was determined based upon the sum of the following: the six day average, three days before and after the announcement of the merger, of the daily volume weighted selling prices per Tyco common share on the New York Stock Exchange, as reported by Bloomberg Financial Markets, multiplied by 132,071,001 shares, which is the total number of Tyco common shares that will be delivered in the merger and to the holders of exchangeable shares (see (1) above for further discussion); the 71 million shares of CIT multiplied by $35.02 per share to be paid in cash; the preliminary estimate of the fair value of options to be exchanged in the merger; and estimated direct transaction costs related to the merger. (7) Represents the increase in accrued expenses for estimated direct transaction costs related to the merger. (8) Represents the elimination of CIT's equity accounts. (9) The increase in shareholders' equity reflects the value of 132,071,001 Tyco common shares to be issued in the merger and upon exchange of the exchangeable shares plus the preliminary estimate of the fair value of options to be exchanged in the merger. 5 -----END PRIVACY-ENHANCED MESSAGE-----