PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 9, 2003)
U.S. $17,083,787,000
[CIT LOGO]
CIT GROUP INC.
1 CIT DRIVE
LIVINGSTON, NEW JERSEY 07039
GLOBAL MEDIUM-TERM NOTE PROGRAM
DUE 9 MONTHS OR MORE
FROM DATE OF ISSUE
TERMS OF NOTES
We may offer notes at one or more times up to an aggregate initial offering
price of U.S. $17,083,787,000 under our Global Medium-Term Note Program. A
pricing supplement will reflect the specific terms of the notes. The following
are the terms or possible terms of the notes.
The notes will mature 9 months or later from the date they are issued.
The notes may be issued as 'Senior Notes' or 'Senior Subordinated Notes.'
The interest rate on the notes may be fixed or floating. Floating rate
interest will be based on:
Federal Funds Rate
LIBOR
EURIBOR
Prime Rate
Treasury Rate
Any other rate specified in a pricing supplement
Adjustments to the rate by the Spread and/or Spread Multiplier
We may issue notes whose interest rate or interest rate formula may be
adjusted on specific dates.
Fixed rate interest is payable on January 15 and July 15, generally, accruing
from the date we issue the notes.
Floating rate interest is payable as stated in the pricing supplement.
Global securities are held by The Depository Trust Company, generally.
We may issue one or more notes that are denominated in a currency or currency
unit (the 'Specified Currency') other than U.S. dollars. For more details, see
'Foreign Currency Risks' and 'Special Provisions Relating to Foreign Currency
Notes.'
We may issue notes at a discount from the principal amount payable at the
maturity of the notes.
We may issue notes that do not pay periodic interest.
For more details, see 'Description of the Notes' in this prospectus
supplement, 'Description of Debt Securities' in the prospectus, and the
pricing or other supplements.
Pricing or other supplements may alter the note terms described above.
TERMS OF SALE
Unless the pricing supplement specifies otherwise, we would receive between
U.S. $16,955,658,597.50 and U.S. $17,078,661,863.90, or the equivalent
thereof in other currencies, of the proceeds from the sale of all of the
notes offered by this prospectus supplement, before expenses, after paying
the Agents commissions at rates ranging between 0.03% and 0.75% of the
principal amount of the notes sold (between U.S. $5,125,136.10 and U.S.
$128,128,402.50), or the equivalent thereof in other currencies. If the
maturity of the notes exceeds 30 years, the commission rate may be higher.
There is currently no established trading market for the notes and there is no
assurance that an established market will develop for the notes. We have
applied to have the notes listed under the program on the Luxembourg Stock
Exchange in accordance with the rules of the Luxembourg Stock Exchange. We
will specify in the applicable pricing supplement whether the notes will be
listed on the Luxembourg Stock Exchange or any other exchange.
We may sell the notes to one or more agents (each an 'Agent' and,
collectively, the 'Agents'), including the Agents listed below, as
principals for resale at varying or fixed offering prices or through one
or more Agents, using their reasonable best efforts to sell the notes on
our behalf.
We may also sell the notes using any Agents.
This prospectus supplement shall, for the purposes of notes listed on the
Luxembourg Stock Exchange, be updated annually. We may issue notes under this
prospectus supplement that are listed on the Luxembourg Stock Exchange for a
period of twelve months from the date of this prospectus supplement.
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.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE NOTES. NONE OF THOSE AUTHORITIES HAS DETERMINED THAT THE
PROSPECTUS, THIS SUPPLEMENT OR ANY PRICING OR OTHER SUPPLEMENT IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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.
LEHMAN BROTHERS
BANC OF AMERICA SECURITIES LLC
BARCLAYS CAPITAL
CITIGROUP
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
JPMORGAN
UBS WARBURG
The date of this Prospectus Supplement is May 9, 2003.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND THE PRICING
SUPPLEMENT. WE AND THE AGENTS HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU
WITH DIFFERENT OR ADDITIONAL INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE
NOTES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR THE
PRICING SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT
OF THAT DOCUMENT.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
About this Prospectus Supplement and the Pricing
Supplements............................................... S-3
Description of CIT Group Inc................................ S-4
Incorporation by Reference.................................. S-4
Selected Consolidated Financial Information of CIT Group
Inc....................................................... S-5
Directors and Principal Executive Officers of CIT Group
Inc....................................................... S-7
Description of the Notes.................................... S-8
Special Provisions Relating to Foreign Currency Notes....... S-26
Foreign Currency Risks...................................... S-29
Material United States Federal Income Tax Consequences...... S-31
Use of Proceeds............................................. S-38
Capitalization of CIT Group Inc............................. S-38
Plan of Distribution........................................ S-39
Offering Restrictions....................................... S-40
Legal Matters............................................... S-41
Experts..................................................... S-41
Luxembourg Listing and Other General Information............ S-41
Form of Applicable Pricing Supplement....................... S-43
PROSPECTUS
CIT Group Inc............................................... 3
Ratios of Earnings to Fixed Charges......................... 9
Special Note Regarding Forward-Looking Statements........... 10
Use of Proceeds............................................. 10
Description of Debt Securities.............................. 11
Plan of Distribution........................................ 16
Experts..................................................... 17
Legal Opinions.............................................. 17
Where You Can Find More Information......................... 17
S-2
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
Except as the context otherwise requires or as otherwise specified in the
prospectus or this prospectus supplement, as used in this prospectus supplement,
dated May 9, 2003 and the prospectus, dated May 9, 2003 the terms 'we,' 'our,'
'us,' and 'CIT' refer to CIT Group Inc. and its consolidated subsidiaries.
References in this prospectus supplement to 'U.S. dollars' or 'U.S. $' or '$'
are to the currency of the United States of America.
We may use this prospectus supplement, together with the prospectus and a
pricing supplement, to offer Senior Notes, or Senior Subordinated Notes, from
time to time. The total initial public offering price of notes that may be
offered by use of this prospectus supplement is $17,083,787,000 (or the
equivalent in foreign or composite currencies).
This prospectus supplement sets forth certain terms of the notes that we may
offer. It supplements the description of the notes contained in the prospectus,
where the notes are included in the defined term 'Debt Securities.' If
information in this prospectus supplement is inconsistent with the prospectus,
this prospectus supplement will apply and you should not rely on the information
in the prospectus.
Each time we issue notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the notes being offered and the terms of the offering. The
pricing supplement may also add, update or change information in this prospectus
supplement or the prospectus. Information in the pricing supplement will replace
any inconsistent information in this prospectus supplement, including any
changes in the method of calculating interest on any note.
When we refer to the prospectus, we mean the prospectus which accompanies
this prospectus supplement. When we refer to a pricing supplement, we mean the
pricing supplement we file with respect to a particular note.
You should read and consider all information contained in this prospectus
supplement, the prospectus and the pricing supplement in making your investment
decision.
S-3
DESCRIPTION OF CIT GROUP INC.
CIT is a leading global commercial and consumer finance company that was
founded in 1908. We are a source of financing and leasing capital for companies
in a wide variety of industries, including many of today's leading industries
and emerging businesses, offering vendor, equipment, commercial, factoring,
consumer, and structured financing capabilities. Our principal executive offices
are located at 1 CIT Drive, Livingston, New Jersey 07039 and our telephone
number is (973) 740-5000. CIT is a corporation of perpetual duration and is
governed under the laws of the State of Delaware. The original predecessor to
CIT commenced operations on February 11, 1908. CIT was incorporated on
March 12, 2001. We have a broad array of 'franchise' businesses that focus on
specific industries, asset types and markets, which are balanced by client,
industry and geographic diversification. Managed assets were $46.4 billion,
owned financing and leasing assets were $35.9 billion and stockholders' equity
was $4.9 billion at December 31, 2002.
On July 8, 2002, our former parent, Tyco International Ltd. ('Tyco'),
completed a sale of 100% of CIT's outstanding common stock in an initial public
offering. Immediately prior to the offering, a restructuring was effectuated
whereby our predecessor, CIT Group Inc., a Nevada corporation (which is referred
to in this prospectus supplement as CIT Group Inc. (Nevada)), was merged with
and into its parent Tyco Capital Holding, Inc. ('TCH'), a Nevada corporation,
and that combined entity was further merged with and into CIT Group Inc. (Del),
a Delaware corporation. In connection with the reorganization, CIT Group Inc.
(Del) was renamed CIT Group Inc. As a result of the reorganization, CIT is the
successor to CIT Group Inc. (Nevada)'s business, operations, obligations and SEC
registration.
INCORPORATION BY REFERENCE
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.
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:
1. Our Annual Report on Form 10-K for the fiscal year ended September 30,
2002.
2. Our Transition Report on Form 10-K for the transition period from
October 1, 2002 to December 31, 2002.
3. Our Current Reports on Form 8-K filed January 23, 2003, January 24, 2003,
February 28, 2003, March 5, 2003, March 12, 2003, April 11, 2003,
April 22, 2003 and April 25, 2003.
So long as the notes are listed on the Luxembourg Stock Exchange, you can
obtain these documents, free of charge, at the offices of BNP Paribas Securities
Services, Luxembourg Branch, CIT's Luxembourg listing and paying agent. 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.
S-4
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF CIT GROUP INC.
On June 1, 2001, CIT was acquired by TCH, a wholly-owned subsidiary of Tyco,
in a purchase business combination recorded under the 'push-down' method of
accounting, resulting in a new basis of accounting for the 'successor' period
beginning June 2, 2001. Information relating to all 'predecessor' periods prior
to the acquisition is presented using CIT's historical basis of accounting.
Following the Tyco acquisition, we adopted Tyco's fiscal year ending
September 30. To assist in the comparability of our financial results and
discussions, results of operations for the nine months ended September 30, 2001
include results for five months of the predecessor and four months of the
successor and are designated as 'combined.'
On July 8, 2002, our former parent, Tyco, completed a sale of 100% of CIT's
outstanding common stock in an initial public offering. Immediately prior to the
offering, CIT was merged with its parent TCH, a company used to acquire CIT. As
a result of the reorganization, the historical financial statements of TCH are
included in the historical consolidated CIT financial statements. Prior to the
offering on July 8, 2002, the activity of TCH consisted primarily of interest
expense to an affiliate of Tyco, and the TCH accumulated net deficit was
relieved via a capital contribution from Tyco. There was no TCH activity
subsequent to June 30, 2002. The results for both the periods ended
September 30, 2002 and September 30, 2001 include activity of TCH. Therefore,
certain previously reported CIT data may differ from the data presented below,
due primarily to the inter-company debt and related interest expense of TCH.
On November 5, 2002, the CIT board of directors approved returning to a
calendar year end from a September 30 fiscal year end. As a result, the three
months ended December 31, 2002 constitutes a transitional fiscal period.
The following tables set forth selected consolidated financial information
regarding CIT's results of operations and balance sheets. The financial data at
December 31, 2002, September 30, 2002 and September 30, 2001, and for the three
month period ended December 31, 2002, the year ended September 30, 2002, the
period from June 2, 2001 through September 30, 2001, the period from January 1,
2001 through June 1, 2001 and the year ended December 31, 2000, were derived
from the audited Consolidated Financial Statements of CIT incorporated by
reference in this prospectus supplement. The financial data at December 31,
2000, 1999 and 1998 and for each of the two years in the period ended
December 31, 1999 were derived from audited financial statements that are not
incorporated by reference in this prospectus supplement. To assist in the
comparability of our financial results the financial information in the
following tables combines the 'predecessor period' (January 1 through June 1,
2001) with the 'successor period' (June 2 through September 30, 2001) to present
'combined' results for the nine months ended September 30, 2001. You should read
the selected consolidated financial data below in conjunction with our
consolidated financial statements. See 'Where You Can Find More Information' in
the prospectus and 'Incorporation by Reference' in this prospectus supplement.
THREE MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
2002 2002 2001
($ IN MILLIONS, EXCEPT PER SHARE DATA) --------------- ---------------- ----------------
(SUCCESSOR) (SUCCESSOR) (COMBINED)
RESULTS OF OPERATIONS
Net finance margin.................... $ 354.4 $ 1,662.5 $ 1,318.8
Provision for credit losses........... 133.4 788.3 332.5
Operating margin...................... 478.1 1,806.5 1,558.9
Salaries and general operating
expenses............................. 242.1 946.4 794.5
Goodwill impairment................... -- 6,511.7 --
Goodwill amortization................. -- -- 97.6
Acquisition related costs............. -- -- 54.0
Interest expense -- TCH............... -- 662.6 98.8
Net income (loss)..................... 141.3 (6,698.7) 263.3
Net income (loss) per
share(1) -- basic and diluted........ 0.67 (31.66) 1.24
Dividends per share(1)................ 0.12 -- 0.25
YEARS ENDED DECEMBER 31,
---------------------------------------------
2000 1999 1998
($ IN MILLIONS, EXCEPT PER SHARE DATA) ------------- ------------- -------------
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
RESULTS OF OPERATIONS
Net finance margin................... $ 1,469.4 $ 917.4 $ 804.8
Provision for credit losses.......... 255.2 110.3 99.4
Operating margin..................... 2,126.2 1,157.9 960.8
Salaries and general operating
expenses............................ 1,035.2 516.0 407.7
Goodwill impairment.................. -- -- --
Goodwill amortization................ 86.3 25.7 10.1
Acquisition related costs............ -- -- --
Interest expense -- TCH.............. -- -- --
Net income (loss).................... 611.6 389.4 338.8
Net income (loss) per
share(1) -- basic and diluted....... 2.89 1.84 1.60
Dividends per share(1)............... 0.50 0.31 0.23
S-5
AT DECEMBER 31, AT SEPTEMBER 30, AT SEPTEMBER 30,
2002 2002 2001
($ IN MILLIONS) ---------------- ----------------- -----------------
(SUCCESSOR) (SUCCESSOR) (SUCCESSOR)
BALANCE SHEET DATA
Total finance
receivables............. $27,621.3 $28,459.0 $31,879.4
Reserve for credit
losses.................. 760.8 777.8 492.9
Operating lease
equipment, net.......... 6,704.6 6,567.4 6,402.8
Goodwill, net............ 384.4 384.4 6,547.5
Total assets............. 41,932.4 42,710.5 51,349.3
Commercial paper......... 4,974.6 4,654.2 8,869.2
Variable-rate bank credit
facilities.............. 2,118.0 4,037.4 --
Variable-rate senior
notes................... 4,906.9 5,379.0 9,614.6
Fixed-rate senior
notes................... 19,681.8 18,385.4 17,113.9
Subordinated fixed-rate
notes................... -- -- 100.0
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trust holding
solely debentures of the
Company................. 257.2 257.7 260.0
Stockholders' equity..... 4,870.7 4,757.8 5,947.6(2)
Tangible stockholders'
equity.................. 4,486.3 4,373.4 4,028.5(2)
AT DECEMBER 31,
---------------------------------------------
2000 1999 1998
($ IN MILLIONS) ------------- ------------- -------------
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
BALANCE SHEET DATA
Total finance
receivables............. $33,497.5 $31,007.1 $19,856.0
Reserve for credit
losses.................. 468.5 446.9 263.7
Operating lease
equipment, net.......... 7,190.6 6,125.9 2,774.1
Goodwill, net............ 1,964.6 1,850.5 216.5
Total assets............. 48,689.8 45,081.1 24,303.1
Commercial paper......... 9,603.5 8,974.0 6,144.1
Variable-rate bank credit
facilities.............. -- -- --
Variable-rate senior
notes................... 11,130.5 7,147.2 4,275.0
Fixed-rate senior
notes................... 17,571.1 19,052.3 8,032.3
Subordinated fixed-rate
notes................... 200.0 200.0 200.0
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trust holding
solely debentures of the
Company................. 250.0 250.0 250.0
Stockholders' equity..... 6,007.2 5,554.4 2,701.6
Tangible stockholders'
equity.................. 4,042.6 3,703.9 2,485.1
---------
(1) Net income (loss) and dividend per share calculations for
the periods preceding September 30, 2002 are based on the
number of common shares outstanding (basic and diluted of
211.6 million and 211.7 million, respectively) upon the
completion of the July 2002 initial public offering.
(2) Stockholders' equity and tangible stockholder's equity
excludes TCH results due to its temporary status as a Tyco
acquisition company with respect to CIT.
AT OR FOR THE AT OR FOR THE
THREE TWELVE AT OR FOR THE
MONTHS MONTHS NINE MONTHS AT OR FOR THE YEARS
ENDED ENDED ENDED ENDED DECEMBER 31,
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, -------------------------------------------
2002 2002 2001 2000 1999 1998
($ IN MILLIONS) ------------- -------------- -------------- ------------- ------------- -------------
(SUCCESSOR) (SUCCESSOR) (COMBINED) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
SELECTED DATA AND RATIOS
PROFITABILITY
Net finance margin as a
percentage of average earning
assets ('AEA')(1).............. 4.34% 4.64% 4.34% 3.61% 3.59% 3.93%
Ratio of earnings to fixed
charges(3)..................... 1.67x (8) 1.30x 1.39x 1.45x 1.49x
OTHER OPERATING RATIOS
Salaries and general operating
expenses (excluding goodwill
amortization) as a percentage
of average managed assets
('AMA')(4)..................... 2.18% 2.01% 2.09% 2.01% 1.75% 1.78%
Efficiency ratio(5)............. 39.6% 36.5% 42.0% 43.8% 41.3% 39.2%
CREDIT QUALITY
60+ days contractual delinquency
as a percentage of finance
receivables.................... 3.63% 3.76% 3.46% 2.98% 2.71% 1.75%
Non-accrual loans as a
percentage of finance
receivables.................... 3.43% 3.43% 2.67% 2.10% 1.65% 1.06%
Net credit losses as a
percentage of average finance
receivables.................... 2.32% 1.67% 1.20% 0.71% 0.42% 0.42%
Reserve for credit losses as a
percentage of finance
receivables.................... 2.75% 2.73% 1.55% 1.40% 1.44% 1.33%
LEVERAGE
Total debt (net of overnight
deposits) to tangible
stockholders' equity(2)(6)..... 6.22x 6.54x 8.20x 8.78x 8.75x 6.82x
Tangible stockholders' equity(2)
to managed assets(7)........... 10.4% 9.9% 8.6% 7.8% 7.7% 10.4%
OTHER
Total managed assets(7)......... $46,357.1 $47,622.3 $50,877.1 $54,900.9 $51,433.3 $26,216.3
Employees....................... 5,835 5,850 6,785 7,355 8,255 3,230
---------
(1) 'AEA' means average earning assets, which is the average of
finance receivables, operating lease equipment, finance
receivables held for sale and certain investments, less
credit balances of factoring clients.
(2) Tangible stockholders' equity excludes goodwill and other
intangible assets and excludes TCH results due to its
temporary status as a Tyco acquisition company with respect
to CIT. Tangible stockholders' equity also excludes certain
unrealized losses relating to derivative financial
instruments and other investments, as these losses are not
necessarily indicative of amounts which will be realized.
(3) For purposes of determining the ratio of earnings to fixed
charges, earnings consist of income before income taxes and
fixed charges. Fixed charges consist of interest on
indebtedness, minority interest in subsidiary trust holding
solely debentures of the Company and one-third of rent
expense, which is deemed representative of an interest
factor.
(footnotes continued on next page)
S-6
(footnotes continued from previous page)
(4) 'AMA' means average managed assets, which is average earning
assets plus the average of finance receivables previously
securitized and still managed by us.
(5) Efficiency ratio is the ratio of salaries and general
operating expenses to operating margin, excluding the
provision for credit losses.
(6) Total debt excludes, and tangible stockholders' equity
includes, Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures of
the Company
(7) 'Managed assets' means assets previously securitized and
still managed by us and include (i) financing and leasing
assets, (ii) certain investments and (iii) off-balance sheet
finance receivables.
(8) Earnings were insufficient to cover fixed charges by
$6,331.1 million for the twelve months ended September 30,
2002. Earnings for the twelve months ended September 30,
2002 included a non-cash goodwill impairment charge of
$6,511.7 million in accordance with SFAS No. 142, 'Goodwill
and Other Intangible Assets.' The ratio of earnings to fixed
charges included fixed charges of $1,471.8 million and a
loss before provision for income taxes of $6,331.1 million
resulting in a total loss provision for income taxes and
fixed charges of $(4,859.3) million.
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF CIT GROUP INC.
BOARD OF DIRECTORS
Present members of the Board of Directors and their principal occupations are:
Albert R. Gamper, Jr.
Chairman, President and Chief Executive Officer of CIT
John S. Chen
Chairman, President and Chief Executive Officer of Sybase, Inc.
William A. Farlinger
Chairman of Ontario Power Generation Inc.
Hon. Thomas H. Kean
President, Drew University and Former Governor of New Jersey
Edward J. Kelly, III
President and Chief Executive Officer, Mercantile Bankshares Corporation
Marianne Miller Parrs
Executive Vice President of International Paper, Inc.
Peter J. Tobin
Dean, Peter J. Tobin College of Business, St. John's University
Lois M. Van Deusen
Partner, McCarter & English, LLP
PRINCIPAL EXECUTIVE OFFICERS
Current principal executive officers of CIT are:
Albert R. Gamper, Jr.
Chairman, President and Chief Executive Officer
Thomas L. Abbate
Executive Vice President and Chief Risk Officer
John D. Burr
Group Chief Executive Officer, Equipment Financing
Thomas B. Hallman
Group Chief Executive Officer, Specialty Finance
Robert J. Ingato
Executive Vice President, General Counsel and Secretary
Joseph M. Leone
Executive Vice President and Chief Financial Officer
Lawrence A. Marsiello
Group Chief Executive Officer, Commercial Finance
David D. McKerroll
Group Chief Executive Officer, Structured Finance
Nikita Zdanow
Group Chief Executive Officer, Capital Finance
S-7
DESCRIPTION OF THE NOTES
GENERAL
In order to issue notes in the United States public markets, an issuer must
enter into an agreement, called an indenture, with a banking institution or
similar entity organized under the laws of the United States or of any
individual state. We have executed several indentures, in each case with a
banking institution or similar entity. The terms of an indenture apply to any
notes that are issued under that indenture.
This prospectus supplement summarizes certain terms of the notes. If you
want to know more about the terms of any note, you should refer to the indenture
under which that note will be issued. We have attached copies or incorporated by
reference each indenture as an exhibit to our shelf registration statement (no.
333-103966). If we use a capitalized term in this prospectus supplement that is
not defined, that term will have the same meaning as in the prospectus and/or
the applicable indenture.
Status; Senior Notes; Senior Subordinated Notes. The notes will be unsecured
obligations of CIT and will be either senior debt or senior subordinated debt as
specified in the applicable pricing supplement. We will issue the Senior Notes
as one or more separate, unlimited series of debt securities constituting
superior indebtedness under one or more separate indentures (each, a 'Senior
Indenture,' and collectively, the 'Senior Indentures'). Each of the Senior
Indentures is between us and a banking institution or similar entity (each, a
'Senior Trustee,' and collectively, the 'Senior Trustees'). The Senior Notes
will be 'Senior Securities' as described in the prospectus. The Senior Notes
will have the same rank as all of our other Senior Securities. See 'Description
of Debt Securities -- Senior Securities' in the prospectus.
We will issue the Senior Subordinated Notes as one or more separate,
unlimited series of Debt Securities constituting senior subordinated
indebtedness under one or more separate indentures (each, a 'Senior Subordinated
Indenture,' and collectively, the 'Senior Subordinated Indentures').
Each of the Senior Subordinated Indentures is between us and a banking
institution or similar entity (each, a 'Senior Subordinated Trustee,' and
collectively, the 'Senior Subordinated Trustees'). The Senior Subordinated Notes
will be 'Senior Subordinated Securities' in the prospectus. The Senior
Subordinated Notes will have the same rank as all of our other Senior
Subordinated Securities, but will be subordinate to our Senior Notes. See
'Description of Debt Securities -- Subordinated Securities -- Subordination' in
the prospectus.
The Senior Indentures and the Senior Subordinated Indentures are
collectively referred to herein as the 'Indentures.'
The Senior Trustees and Senior Subordinated Trustees are collectively
referred to herein as the 'Trustees.'
Unless the pricing supplement specifies to the contrary, with respect to
each separate series of notes issued under the Indentures, the Trustee will
serve as registrar, paying agent and authenticating agent (in each such
capacity, the 'Registrar,' 'Paying Agent,' and 'Authenticating Agent'), and may
act as exchange rate agent (in such capacity, the 'Exchange Rate Agent').
None of the Senior Indentures limits the amount of notes which may be issued
under it, but the Senior Subordinated Indentures may limit the amount of Debt
Securities which we may issue. See 'Description of Debt
Securities -- Restrictive Provisions and Covenants' in the prospectus for a
description of restrictions on our ability to issue Senior Subordinated Notes.
Governing Law. 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.
Meeting of Noteholders. The Indentures contain 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 Indentures 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 Indentures. CIT or the holders of at least 10% in
aggregate principal amount of the notes then outstanding of any series or all
series may request that the Trustee call a meeting of the holders of the notes
of that series or all
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series, respectively. The quorum for any meeting of the holders of the notes is
the presence of the holders of notes who are entitled to vote a majority in
aggregate principal amount of each relevant series of notes at the time
outstanding. 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 Indentures, whether or not they are present at the
meeting.
Replacement of Notes. If any mutilated note is surrendered to the Trustee,
we will execute and the Trustee will authenticate and deliver in exchange for
such mutilated note a new note of the same series and principal amount. If the
Trustee and we receive evidence to our satisfaction of the destruction, loss or
theft of any note and such security or indemnity as may be required by them,
then we shall execute and the Trustee shall authenticate and deliver, in lieu of
such destroyed, lost or stolen note, a new note of the same series and principal
amount. All expenses (including counsel fees and expenses) associated with
issuing the new note shall be borne by the owner of the mutilated, destroyed,
lost or stolen note.
Prescription. Under New York's statute of limitations, any legal action to
enforce our payment obligations evidenced by the notes generally must be
commenced within six years after payment is due. Thereafter our payment
obligations will generally become unenforceable.
Notices. All notices to redeem notes and all other communications to holders
of notes that are registered with and held by The Depository Trust Company, New
York, New York (the 'Depositary') or its nominee will be sent to the Depositary
or its nominee and the Depositary will communicate such notices to its
participants in accordance with its standard procedures. In the case of notes
held by investors through Clearstream Banking, societe anonyme ('Clearstream')
or Euroclear S.A./N.V., as operator of the Euroclear System ('Euroclear'),
notices will be sent to Clearstream and Euroclear, as appropriate, for
communication with their participants in accordance with their standard
procedures.
In addition to the foregoing (for so long as the notes are listed on the
Luxembourg Stock Exchange and the rules of such stock exchange so require),
notices to redeem notes and all other communications to holders of notes will be
published in a leading daily newspaper with general circulation in Luxembourg
(which is expected to be the Luxemburger Wort).
Neither the failure to give notice nor any defect in any notice given to any
particular holder of a note will affect the sufficiency of any notice with
respect to other notes.
Reopening of Issue. We may, from time to time, without the consent of
existing note holders, reopen an issue of notes and issue additional notes with
the same terms (including maturity and interest payment terms) as notes issued
on an earlier date, except for the issue date, issue price and the first payment
of interest. After such additional notes are issued, they will be fungible with
the previously issued notes to the extent specified in the applicable pricing
supplement.
Maturity. Each note will mature nine months or more from the date of issue,
as determined by agreement between the Agents and us. We will specify the
maturity date of each note on the face of that note and in the pricing
supplement.
Interest Rates. The notes may bear interest at:
a fixed rate; or
a floating rate, which may be based on one of the following rates (see
'Description of the Notes -- Interest Rates -- Floating Rate Notes' for a
further description of each of these floating rates):
Federal Funds Rate (a note issued with this rate is a 'Federal Funds
Rate Note');
LIBOR (a note issued with this rate is a 'LIBOR Note');
EURIBOR (a note issued with this rate is a 'EURIBOR Note');
Prime Rate (a note issued with this rate is a 'Prime Rate Note');
Treasury Rate (a note issued with this rate is a 'Treasury Rate Note');
and
a rate as otherwise specified in the pricing supplement.
We will compute interest on floating rate notes by referring to an interest
rate index, often adjusted by a Spread or Spread Multiplier. Interest on
floating rate notes may be adjusted periodically with changes
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in the underlying interest rate index. See 'Interest Rates' below for
definitions of 'Spread' and 'Spread Multiplier.'
We may issue notes at prices less than their stated principal amount.
Certain of these discounted notes will be considered Original Issue Discount
Notes (as defined below under 'Description of the Notes -- Interest Rates').
Original Issue Discount Notes may or may not bear periodic interest. For a
discussion of the United States federal income tax consequences relating to
Original Issue Discount Notes, see 'Material United States Federal Income Tax
Consequences' below.
Denomination; Book-Entry System; Calculations. Unless the pricing supplement
specifies otherwise, the notes will be denominated in U.S. dollars and we will
make all payments on the notes in U.S. dollars. Unless the pricing supplement
specifies otherwise, we will issue U.S. dollar notes in a minimum denomination
of U.S. $1,000 and integral multiples of U.S. $1,000 for higher amounts.
However, we may specify notes in the pricing supplement that we will denominate
in another currency or currency unit. We will offer the notes at an aggregate
initial offering price of up to U.S. $17,083,787,000 or the equivalent thereof
in other currency or currency units. See 'Special Provisions Relating to Foreign
Currency Notes -- Payment Currency.' For information on the exchange rate we
will use for non-U.S. dollar notes, see 'Special Provisions Relating to Foreign
Currency Notes -- Payment Currency.'
Unless the pricing supplement specifies otherwise, we will issue each note
in fully registered form without coupons. We will not issue notes under this
prospectus supplement in bearer form. Unless the pricing supplement specifies
otherwise and except for non-U.S. dollar notes, the notes will be represented by
one or more permanent global notes registered in the name of the Depositary, or
its nominee, as described below. Subject to the Depositary's requirements, a
single global note will represent all notes issued on the same day and having
the same terms. The Paying Agent will make all payments on notes represented by
a global note to the Depositary. See 'Description of the Notes -- Book-Entry
System.'
'Business Day' is a day other than a Saturday or Sunday and means:
with respect to notes denominated in U.S. dollars (other than LIBOR Notes),
any day that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation (including any
executive order) to close in the City of New York;
with respect to notes denominated in a currency other than U.S. dollars or
Euros, any day that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation (including any
executive order) to close in either the City of New York or the principal
financial center of the country of such currency;
with respect to notes denominated in Euros and EURIBOR Notes, any day on
which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is open; and
with respect to LIBOR Notes, any day that is neither a legal holiday nor a
day on which banking institutions are authorized or required by law or
regulation (including any executive order) to close in the City of New York
and that is also a London Business Day.
Unless the pricing supplement specifies otherwise, the Trustee will be the
'Calculation Agent' with regard to the notes. As used in this prospectus
supplement, 'Calculation Date' means, with respect to any floating rate note
and, where applicable, certain other notes, the earlier of:
the Business Day immediately preceding the applicable day on which interest
is payable on the note, the date on which the note will mature (the
'Maturity Date') or the date of redemption or repayment, as the case may
be; or
the fifth Business Day after an Interest Determination Date (as defined
below) relating to the note.
'Index Maturity' means the period to maturity used in the interest rate
index on which the interest rate for any floating rate note is based.
'Interest Determination Date' means, for any Interest Reset Date (as defined
in 'Description of the Notes -- Interest Rates -- Floating Rate Notes') the date
for determining the rate of interest that will take effect on the Interest Reset
Date.
'Interest Payment Date' means a day on which interest is payable on the
note.
'Interest Rate' means, at any given time, the rate per annum at which the
note bears interest.
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'London Business Day' means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
Unless the pricing supplement specifies otherwise, we will round all
percentages resulting from any calculation of the rate of interest on floating
rate notes, if necessary, to the nearest one hundred thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)). We will round
all U.S. dollar amounts used in or resulting from that calculation to the
nearest cent (with one-half cent being rounded upward). In the case of floating
rate notes denominated in currency or currency units other than U.S. dollars, we
will round all amounts used in or resulting from that calculation to the
smallest whole unit of that other currency or currency unit.
Pricing Supplement. The pricing supplement relating to each note will
describe or specify, among other things, the following terms:
if the note is not denominated in U.S. dollars, the Specified Currency in
which the note is denominated;
whether the note is a fixed rate note or a floating rate note;
the price (which may be expressed as a percentage of the aggregate
principal amount thereof) at which we will issue the note;
the Maturity Date;
if the note is a fixed rate note, the Interest Rate, if any, for the note;
if the note is a floating rate note, the Initial Interest Rate, the
Interest Determination Date, the Interest Reset Dates, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate and the Minimum
Interest Rate, if any, and the Spread and/or Spread Multiplier, if any, and
any other terms relating to the particular method of calculating the
Interest Rate for the note (see 'Description of the Notes -- Interest
Rates' for an explanation of the terms relating to floating rate notes);
any provisions relating to redemption or repayment of the note not
otherwise described in this prospectus supplement;
whether the note is a Senior Note or a Senior Subordinated Note and, if a
Senior Subordinated Note, whether the holders or a Trustee of the note may
accelerate the maturity of the note only in the event of certain
circumstances related to our insolvency;
any provisions relating to extensions of the note;
the date on which the note will be issued (the 'Issue Date');
whether the note is a global note or a certificated note;
the Trustee, Registrar, Paying Agent and Authenticating Agent under the
Indenture pursuant to which the note is to be issued;
whether the notes will be listed on the Luxembourg Stock Exchange or on any
other exchange; and
any other terms of the note not inconsistent with the provisions of the
applicable Indenture.
PAYMENT AND PAYING AGENTS
Unless the pricing supplement specifies otherwise, either we or the Paying
Agent will make all payments on each note which are to be made in U.S. dollars
(including payments which are to be made in U.S. dollars for Foreign Currency
Notes) in the manner described below. For a description of special provisions
relating to payments on a Foreign Currency Note to be made in a Specified
Currency, see 'Special Provisions Relating to Foreign Currency Notes -- Payment
of Principal and Interest.'
Unless the pricing supplement specifies otherwise, either we or the Paying
Agent will pay interest on fixed rate notes semi-annually on each Interest
Payment Date and at maturity (or, if applicable, upon redemption or repayment).
Unless the pricing supplement specifies otherwise, either we or the Paying
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Agent will pay interest on the floating rate notes on the Interest Payment Dates
set forth below and at maturity (or, if applicable, upon redemption or
repayment).
Either we or the Paying Agent will pay interest on each Interest Payment
Date to the person in whose name the note is registered on the registry books of
the Registrar at the close of business on the applicable record date (a 'Record
Date') next preceding each Interest Payment Date. However, either we or the
Paying Agent will pay interest at maturity (whether or not the maturity date is
an Interest Payment Date) or upon earlier redemption or repayment to the person
to whom principal shall be payable. Unless otherwise specified in a pricing
supplement, if a note is originally issued between a Record Date and an Interest
Payment Date, then either we or the Paying Agent will pay the first payment of
interest on that note to the holder of record for the first Interest Payment
Date.
Either we or the Paying Agent will pay interest on each note (other than
global notes and Foreign Currency Notes and other than interest payable to the
holder thereof, if any, on the Maturity Date or upon earlier redemption or
repayment) by check mailed to the person in whose name the note is registered at
the close of business on the applicable Record Date. Except as provided below,
either we or the Paying Agent will make all payments due on the Maturity Date,
or upon earlier redemption or repayment, in immediately available funds upon
surrender of the note at the corporate trust office of the Paying Agent in the
Borough of Manhattan, the City of New York.
If the Paying Agent makes a payment on an Interest Payment Date (other than
interest payable to the holder thereof, if any, on the Maturity Date or upon
earlier redemption or repayment), and if the Paying Agent receives a written
request to make payment by wire transfer from a holder of U.S. $1,000,000 or
more (or its equivalent in the Specified Currency) in aggregate principal amount
of the notes not later than the close of business on the Record Date pertaining
to that Interest Payment Date, the Paying Agent will, subject to applicable laws
and regulations, until it receives notice to the contrary, make all U.S. dollar
payments to this holder by wire transfer to the account designated in such
written request.
If the Paying Agent makes a payment on the Maturity Date or the date of
redemption or repayment, if any, and if the Paying Agent receives a written
request to make payment by wire transfer from a holder of U.S. $1,000,000 or
more (or its equivalent in the Specified Currency, if other than U.S. dollars)
in aggregate principal amount of the notes not later than the close of business
on the fifteenth day prior to the Maturity Date or the date of redemption or
repayment, if any, the Paying Agent will make all U.S. dollar payments to the
holder by wire transfer to the account designated in the holder's written
request. However, the Paying Agent may only make these wire transfer payments
subject to applicable laws and regulations, and only after surrender of the note
or notes in the Borough of Manhattan, the City of New York, not later than one
Business Day prior to the Maturity Date or the date of redemption or repayment,
as the case may be.
Unless the pricing supplement specifies otherwise, the Paying Agent will
make all payments on notes represented by a permanent global note registered in
the name of or held by the Depositary or its nominee to the Depositary or its
nominee, as the case may be, as the registered owner and holder of the permanent
global note representing the notes.
We may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts.
INTEREST RATES
Each note, except Zero-Coupon Notes (as defined in ' -- Fixed Rate Notes'
below), will bear interest from its Issue Date at the fixed rate per annum, or
at the floating rate per annum determined pursuant to the interest rate formula,
stated in the note and in the pricing supplement. We may change Interest Rates
from time to time, but no change will affect any notes theretofore issued or as
to which we have accepted an offer. Interest Rates we may offer with respect to
the notes may differ among different series of Debt Securities which we offer
within a short time frame depending upon, among other things, changes in overall
economic or market conditions or differences in the aggregate principal amount
of notes purchased by each investor in different series of Debt Securities.
The Interest Rate on the notes will in no event be higher than the maximum
rate permitted by New York law as the same may be modified by United States law
of general application. Under present New
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York law, the maximum rate of interest which may be charged to a corporation is
25% per annum simple interest. This limit does not apply to notes in a principal
amount of U.S. $2,500,000 or more.
Fixed Rate Notes
Each fixed rate note, except Zero-Coupon Notes, will bear interest from the
Issue Date at the annual fixed interest rate stated in the note and in the
pricing supplement. Interest on the Fixed Rate Notes, except Zero-Coupon Notes,
will be payable on the Interest Payment Dates specified in the note and in the
pricing supplement. Unless the pricing supplement specifies otherwise, the
Interest Payment Dates for interest on the fixed rate notes will be January 15
and July 15 of each year and on the Maturity Date or upon earlier redemption or
repayment. Unless the pricing supplement specifies otherwise, the Record Dates
for the fixed rate notes will be the fifteenth calendar day next preceding each
Interest Payment Date.
Unless the pricing supplement specifies otherwise, interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
If an Interest Payment Date or the Maturity Date (or the date of redemption
or repayment) with respect to a fixed rate note falls on a day which is not a
Business Day, the payment will be made on the next Business Day as if it were
made on the date this payment was due, and no additional interest will accrue as
a result of this delayed payment.
Interest payments on each fixed rate note will include the amount of
interest accrued from and including the last Interest Payment Date to which
interest has been paid (or from and including the Issue Date if no interest has
been paid with respect to the note) to, but excluding, the applicable Interest
Payment Date, or Maturity Date, as the case may be.
We may issue notes at prices less than their stated principal amount
('Discounted Notes'). Certain of the Discounted Notes may bear no interest
('Zero-Coupon Notes'), and certain of the Discounted Notes may bear interest at
a rate which at the time of issuance is below market rates. Unless the pricing
supplement specifies otherwise, upon the redemption, repayment, or acceleration
of the maturity of these Discounted Notes, an amount less than the principal
amount of the Discounted Note will become due and payable. For United States
federal income tax purposes, certain of the Discounted Notes would be considered
original issue discount notes ('Original Issue Discount Notes'). Certain
information concerning United States federal income tax aspects of Zero-Coupon
Notes or Original Issue Discount Notes is set forth elsewhere in this prospectus
supplement and may be set forth in the pricing supplement.
Floating Rate Notes
Unless the pricing supplement specifies otherwise, we will issue floating
rate notes as described below. Each floating rate note will bear interest from
the Issue Date at the floating rate per annum determined pursuant to the
interest rate formula specified in the note and in the pricing supplement.
Unless the pricing supplement specifies otherwise, the Interest Rate on each
floating rate note will be equal to:
an interest rate determined by reference to the interest rate index
specified in the pricing supplement plus or minus the Spread, if any,
and/or
an interest rate calculated by reference to the interest rate index
specified in the pricing supplement multiplied by the Spread Multiplier, if
any.
The 'Spread' is the number of basis points (one one-hundredth of a
percentage point) specified in the pricing supplement as an adjustment to the
Interest Rate for a floating rate note. The 'Spread Multiplier' is the factor
specified in the pricing supplement as an adjustment to the Interest Rate for a
floating rate note.
Any floating rate note may also have either or both of the following terms:
a maximum limitation, or ceiling, on the rate of interest which may accrue
during any interest period (the 'Maximum Interest Rate'); and
a minimum limitation, or floor, on the rate of interest which may accrue
during any interest period (the 'Minimum Interest Rate').
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The pricing supplement for a floating rate note will specify the interest
rate index and the Spread or Spread Multiplier, if any, or other interest rate
formula and the Maximum or Minimum Interest Rate, if any.
Unless otherwise specified in the note and in the pricing supplement, either
we or the Paying Agent will pay interest on floating rate notes at maturity,
upon earlier redemption or repayment, if applicable, and on the following
Interest Payment Dates:
in the case of notes with a daily, weekly or monthly Interest Reset Date,
on the third Wednesday of each month or on the third Wednesday of March,
June, September and December, as specified in the note and the pricing
supplement;
in the case of notes with a quarterly Interest Reset Date, on the third
Wednesday of March, June, September and December of each year;
in the case of notes with a semiannual Interest Reset Date, on the third
Wednesday of the two months specified in the note and the pricing
supplement; and
in the case of notes with an annual Interest Reset Date, on the third
Wednesday of the month specified in the note and the pricing supplement.
We will calculate interest payments on each floating rate note to include
the amount of interest accrued from and including the last Interest Payment Date
to which interest has been paid (or from and including the Issue Date if no
interest has been paid with respect to the note) to, but excluding, the
applicable Interest Payment Date, or Maturity Date, as the case may be.
The Record Dates for the floating rate notes shall be the fifteenth calendar
day next preceding each Interest Payment Date.
The Calculation Agent will compute interest on floating rate notes in the
manner set forth below.
If any Interest Payment Date for any floating rate note (other than the
Maturity Date or the date of redemption or repayment) would otherwise be a day
that is not a Business Day, then the Interest Payment Date will be postponed to
the following day which is a Business Day, except that in the case of a LIBOR
Note, if this Business Day falls in the next succeeding calendar month, then the
Interest Payment Date will be the immediately preceding Business Day. If the
Maturity Date (or the date of redemption or repayment) of a floating rate note
falls on a day which is not a Business Day, then we will make the required
payment of principal, premium, if any, and/or interest on the following day
which is a Business Day as if it were made on the date this payment was due, and
no interest shall accrue as a result of this delayed payment.
We will calculate accrued interest on a floating rate note by adding the
Interest Factors (as defined below) calculated for each day in the period for
which we are calculating accrued interest. We will compute the 'Interest Factor'
for each day by multiplying the face amount of the floating rate note by the
Interest Rate applicable to the day and dividing the product thereof by 360, or,
in the case of any Treasury Rate Note, by the actual number of days in the year.
We will reset the rate of interest on each floating rate note daily, weekly,
monthly, quarterly, semi-annually or annually (the first date on which the reset
interest rate becomes effective, being an 'Interest Reset Date'), as specified
in the note and the pricing supplement. Unless otherwise specified in the note
and the pricing supplement, the Interest Reset Date will be:
in the case of floating rate notes which reset daily, each Business Day;
in the case of floating rate notes which reset weekly (other than Treasury
Rate Notes), the Wednesday of each week;
in the case of Treasury Rate Notes which reset weekly, the Tuesday of each
week;
in the case of floating rate notes which reset monthly, the third Wednesday
of each month;
in the case of floating rate notes which reset quarterly, the third
Wednesday of March, June, September and December;
in the case of floating rate notes which reset semiannually, the third
Wednesday of two months of each year; and
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in the case of floating rate notes which reset annually, the third
Wednesday of one month of each year.
If any Interest Reset Date for any floating rate note is not a Business Day,
the Interest Reset Date for that floating rate note shall be postponed to the
next succeeding Business Day, except that in the case of a LIBOR Note, if this
Business Day is in the next succeeding calendar month, that Interest Reset Date
will be the immediately preceding Business Day.
With respect to determining the Interest Determination Date, unless the
pricing supplement specifies to the contrary:
the Interest Determination Date for a Federal Funds Rate Note or Prime Rate
Note is the second Business Day before the Interest Reset Date;
the Interest Determination Date for a LIBOR Note is the second London
Business Day before the Interest Reset Date;
the Interest Determination Date for a EURIBOR Note is the second TARGET
Business Day before the Interest Reset Date; and
the Interest Determination Date for a Treasury Rate Note is the day of the
week in which such Interest Reset Date falls on which direct obligations of
the United States ('Treasury Bills') would normally be auctioned. Treasury
Bills are usually sold at auction on Monday of each week, unless that day
is a legal holiday, in which case the auction is usually held on Tuesday.
The auction, however, may be held on the preceding Friday. If so, that
Friday will be the Interest Determination Date for the Interest Reset Date
occurring in the next week.
Unless the pricing supplement specifies otherwise, the Interest Rate
determined with respect to any Interest Determination Date for any floating rate
note will become effective on and as of the next succeeding Interest Reset Date.
However, the Interest Rate in effect with respect to any floating rate note for
the period from the Issue Date to the first Interest Reset Date will be the
'Initial Interest Rate' as specified in the pricing supplement. The Interest
Rate for a floating rate note will be applicable from and including the Interest
Reset Date to which it relates to but not including the next Interest Reset Date
or until the Maturity Date, as the case may be.
The Calculation Agent will determine the Interest Rate for a floating rate
note on an Interest Determination Date in accordance with the provisions below.
The Calculation Agent will, upon the request of the holder of any floating rate
note and to the extent available, provide the Interest Rate then in effect for
the note and, if different, the Interest Rate to be in effect as a result of a
determination made on the most recent Interest Determination Date with respect
to the note. With respect to floating rate notes listed on the Luxembourg Stock
Exchange, promptly following each Interest Determination Date, the Calculation
Agent will notify the Luxembourg Stock Exchange of the Interest Rate for the
next succeeding interest period and the amount of interest payable on the next
Interest Payment Date.
LIBOR Notes. Each LIBOR Note will bear interest at a rate calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in
the note and in the pricing supplement.
Unless the pricing supplement specifies otherwise, the Calculation Agent
will determine LIBOR with respect to any Interest Reset Date according to the
method specified in the note and the pricing supplement, in accordance with the
following provisions:
if 'LIBOR Telerate' is specified as the reporting service in the pricing
supplement, LIBOR will be the rate for deposits in U.S. dollars having the
Index Maturity designated in the pricing supplement, commencing on the
second London Business Day immediately following the Interest Determination
Date, that appears on the Designated LIBOR Page as of 11:00 a.m., London
time, on that Interest Determination Date; and
if 'LIBOR Reuters' is specified as the reporting service in the pricing
supplement, LIBOR will be the arithmetic mean of the offered rates (unless
the Designated LIBOR Page by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in U.S. dollars
having the Index Maturity designated in the pricing supplement, commencing
on the second London Business Day immediately following such Interest
Determination Date, that appear (or, if
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only a single rate is required, appears) on the Designated LIBOR Page as of
11:00 a.m., London time, on that Interest Determination Date, provided that
at least two such offered rates appear.
If, the Rate Index is 'LIBOR Reuters,' and fewer than two offered rates
appear, or LIBOR Reuters is not available, or if the Rate Index is 'LIBOR
Telerate' and no rate appears, or LIBOR Telerate is not available, then we will
determine LIBOR as follows:
The Calculation Agent will select the principal London offices of four
major banks in the London interbank market, and will request each bank to
provide its offered quotation for deposits in U.S. dollars for the period
of the Index Maturity designated in the pricing supplement, commencing on
the second London Business Day immediately following the Interest
Determination Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on the Interest Determination Date
and in a principal amount equal to an amount that is representative for a
single transaction in the Index Currency in the market at that time.
If at least two of these banks provide a quotation, the Calculation Agent
will compute LIBOR on the Interest Determination Date as the arithmetic
mean of the quotations.
If fewer than two of these banks provide a quotation, the Calculation Agent
will select three major banks in the City of New York to provide a rate
quote. The Calculation Agent will compute LIBOR on the Interest
Determination Date as the arithmetic mean of these quoted rates at
approximately 3:00 p.m., New York City time, on the Interest Determination
Date in U.S. dollars for loans to leading European banks, having the Index
Maturity designated in the pricing supplement commencing on the second
London Business Day immediately following the Interest Determination Date
and in a principal amount that is representative for a single transaction
in the market at that time.
If none of these banks provides a quotation as mentioned, the rate of
interest will be the same as that in effect on the Interest Determination
Date.
The 'Designated LIBOR Page' means (a) if 'LIBOR Telerate' is specified in
the pricing supplement, the display on Moneyline Telerate (or any successor
service) on the page specified in the pricing supplement (or any other page as
may replace this page on that service) for the purpose of displaying the London
interbank offered rates of major banks or (b) if 'LIBOR Reuters' is specified in
the pricing supplement, the display on the Reuters Monitor Money Rates Service
(or any successor service) on the page specified in the pricing supplement (or
any other page as may replace this page on that service) for the purpose of
displaying the London interbank offered rates of major banks.
If neither 'LIBOR Reuters' nor 'LIBOR Telerate' is specified in the
applicable pricing supplement, LIBOR will be determined as if LIBOR Telerate had
been specified.
EURIBOR Notes. Each EURIBOR Note will bear interest at a rate calculated
with reference to EURIBOR and the Spread and/or Spread Multiplier, if any,
specified in the note and in the pricing supplement.
Unless the pricing supplement specifies otherwise, EURIBOR means with
respect to any Interest Reset Date, a base rate equal to the interest rate for
deposits in Euros designated as 'EURIBOR' and sponsored jointly by the Eurpoean
Banking Federation and ACI -- the Financial Market Association, or any company
established by the joint sponsors for purposes of compiling and publishing that
rate. EURIBOR will be determined in accordance with the following provisions:
EURIBOR will be the rate for deposits in Euros having the Index Maturity
designated in the pricing supplement, commencing on the second TARGET
Business Day immediately following the Interest Determination Date, that
appears on the display on Moneyline Telerate (or any successor service) on
page 248 (or any other page as may replace this page on that service)
('Telerate Page 248') as of 11:00 a.m., Brussels time, on that Interest
Determination Date.
If the rate described above does not appear on Telerate Page 248, then we
will determine EURIBOR as follows:
The Calculation Agent will select the principal Euro-zone offices of four
major banks in the Euro-zone interbank market, and will request each bank
to provide its offered quotation for deposits in Euros for the period of
the Index Maturity designated in the pricing supplement, commencing on
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the Interest Determination Date, to prime banks in the Euro-zone interbank
market at approximately 11:00 a.m., Brussels time, on the Interest
Determination Date and in a principal amount equal to an amount that is
representative for a single transaction in the Index Currency in the market
at that time.
If at least two of these banks provide a quotation, the Calculation Agent
will compute EURIBOR on the Interest Determination Date as the arithmetic
mean of the quotations.
If fewer than two of these banks provide a quotation, the Calculation Agent
will select three major banks in the Euro-zone to provide a rate quote. The
Calculation Agent will compute EURIBOR on the Interest Determination Date
as the arithmetic mean of these quoted rates at approximately 11:00 p.m.,
Brussels time, on the Interest Determination Date for loans of Euros,
having the Index Maturity designated in the pricing supplement commencing
on the Interest Determination Date and in a principal amount that is
representative for a single transaction in the market at that time.
If fewer than three of these banks provides a quotation as mentioned,
EURIBOR for the new interest period will be EURIBOR in effect for the prior
interest period. If the initial base rate has been in effect for the prior
interest period, however, it will remain in effect for the new interest
period.
Treasury Rate Notes. Each Treasury Rate Note will bear interest at the rate
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, 'Treasury Rate' means the
rate for the auction held on the Interest Determination Date of Treasury Bills
having the Index Maturity specified in the pricing supplement as that rate
appears on the display on Moneyline Telerate (or any successor service) on page
56 (or any other page as may replace this page on that service) ('Telerate Page
56') or page 57 (or any other page which replaces this page on that service)
('Telerate Page 57') under the heading 'INVESTMENT RATE.'
If the rate cannot be set as described above, the Calculation Agent will use
the following methods in succession:
If the rate is not published as described above by 3:00 p.m., New York City
time, on the Calculation Date, the Treasury Rate will be the auction
average rate of Treasury Bills (expressed as a bond equivalent on the basis
of a year of 365 or 366 days, as the case may be, and applied on a daily
basis) as otherwise announced by the United States Department of Treasury.
In the event that the auction rate of Treasury Bills having the Index
Maturity specified in the pricing supplement is not published by 3:00 p.m.,
New York City time, on the Calculation Date, or if no auction is held, then
the Treasury Rate will be the rate (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as the case may be, and applied on a
daily basis) on the Interest Determination Date of Treasury Bills having
the Index Maturity specified in the pricing supplement as published in
H.15(519) under the heading 'U.S. Government Securities/Treasury
Bills/Secondary Market' or, if not yet published by 3:00 p.m., New York
City time, on the Calculation Date, the rate on the Interest Determination
Date of Treasury Bills as published in H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying that rate,
under the caption 'U.S. Government Securities/Treasury Bills/Secondary
Market.'
If the rate is not yet published in H.15(519), H.15 Daily Update or another
recognized electronic source, then the Treasury Rate will be calculated as
a yield to maturity (expressed as a bond equivalent, on the basis of a year
of 365 or 366 days, as the case may be, and applied on a daily basis) of
the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on the Interest Determination Date, of three
leading primary United States government securities dealers in the City of
New York selected by the Calculation Agent for the issue of Treasury Bills
with a remaining maturity closest to the applicable Index Maturity.
If fewer than three of the dealers are quoting as mentioned, then the rate
of interest will be the same as that in effect on that Interest
Determination Date.
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'H.15(519)' means 'Statistical Release H.15(519), Selected Interest Rates,'
or any successor publication as published weekly by the Board of Governors of
the Federal Reserve System.
'H.15 Daily Update' means the daily update of H.15(519), available through
the world wide web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
Federal Funds Rate Notes. Each Federal Funds Rate Note will bear interest at
the rate calculated using the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, 'Federal Funds Rate'
means, for an Interest Determination Date, the rate on that date for Federal
Funds as published in H.15(519) under the heading 'Federal Funds (Effective),'
as this rate is displayed on Moneyline Telerate (or any successor service) on
page 120 (or any other page as may replace this page on that service) ('Telerate
Page 120').
If the rate cannot be set as described above, the Calculation Agent will use
the following methods in succession:
If the rate does not appear on Telerate Page 120 or is not yet published by
3:00 p.m. New York City time, on the Calculation Date, then the Federal
Funds Rate will be the rate on the Interest Determination Date as published
in the H.15 Daily Update or another recognized electronic source used for
the purpose of displaying this rate under the heading 'Federal Funds
(Effective).'
If the rate does not appear on Telerate Page 120 or is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source by
3:00 p.m., New York City time, on the Calculation Date, then the Federal
Funds Rate for the Interest Determination Date will be the arithmetic mean
of the rates, as of 3:00 p.m., New York City time, on that Interest
Determination Date, for the last transaction in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in the City
of New York selected by the Calculation Agent.
If fewer than three brokers are quoting as mentioned, then the rate of
interest will be the same as that in effect on that Interest Determination
Date.
Prime Rate Notes. Each Prime Rate Note will bear interest at the rate
calculated using the Prime Rate and the Spread and/or Spread Multiplier, if any,
specified in the note and the pricing supplement.
Unless the pricing supplement specifies otherwise, 'Prime Rate' means, with
respect to an Interest Determination Date, the rate set forth on that date in
H.15(519) under the heading 'Bank Prime Loan' or if not published by 3:00 p.m.,
New York City time, on the Calculation Date, the rate on the Interest
Determination Date as published in H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying this rate, under the
heading 'Bank Prime Loan.'
If the rate cannot be set as described above, the Calculation Agent will use
the following methods in succession:
If the rate is not published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 p.m., New York City time, on the
Calculation Date, then the Prime Rate will be the arithmetic mean of the
rates of interest that appear on the Reuters Screen USPRIME 1 Page (as
defined below) as a bank's publicly announced prime rate or base lending
rate in effect as of 3:00 p.m., New York City time, for that Interest
Determination Date.
If fewer than four rates appear on the Reuters Screen USPRIME 1 Page on
that date, then the Prime Rate will be the arithmetic mean of the prime
rates or base lending rates quoted by three major banks in the City of New
York selected by the Calculation Agent on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business on
the Interest Determination Date.
If fewer than three banks are quoting as mentioned, then the rate of
interest will be the same as that in effect on the Interest Determination
Date.
'Reuters Screen USPRIME 1 Page' means the display page designated as page
'USPRIME 1' on the Reuters Monitor Money Rates Service (or such other page as
may replace the USPRIME 1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
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FOREIGN CURRENCY, CURRENCY INDEXED AND OTHER INDEXED NOTES
We may, from time to time, offer Foreign Currency Notes. See 'Special
Provisions Relating to Foreign Currency Notes' and 'Foreign Currency Risks.'
We may, from time to time, offer notes ('Currency Indexed Notes') of which
the principal amount payable on the Maturity Date (or upon earlier redemption or
repayment) and/or interest thereon will be determined with reference to the
exchange rate of a Specified Currency relative to another currency or composite
currency (the 'Indexed Currency') or to a currency index (the 'Currency Index').
Holders of these notes may receive a principal amount on the Maturity Date or
upon earlier redemption or repayment that is greater than or less than the face
amount of these notes depending upon the relative value at maturity of the
Specified Currency compared to the Indexed Currency or Currency Index.
The pricing supplement will describe the Foreign Currency Notes, the
Currency Indexed Notes and the Currency Index and, when appropriate, will also
provide:
information as to the method for determining the amount of interest payable
and the principal amount payable on the Maturity Date or upon earlier
redemption or repayment;
the relative value of the Specified Currency compared to the applicable
Indexed Currency or Currency Index;
any exchange controls applicable to the Specified Currency or Indexed
Currency; and
certain tax consequences to the holders of the Currency Indexed Notes.
For more information about Foreign Currency Notes and Currency Indexed
Notes, see 'Special Provisions Relating to Foreign Currency Notes' and 'Foreign
Currency Risks.'
We may, from time to time, also offer indexed notes ('Indexed Notes') other
than Currency Indexed Notes. The principal amount of the Indexed Notes which is
payable on the Maturity Date or upon earlier redemption or repayment and/or
interest thereon will be determined by reference to a measure (the 'Index'). The
Index will be:
one or more equity or other indices and/or formulas;
the price of one or more specified commodities; or
such other methods or formulas we may specify in the pricing supplement.
The pricing supplement will describe the Indexed Notes and the Index and
will also provide,
the method of determination of the amount of interest payable and the
amount of principal payable on the Maturity Date or upon earlier redemption
or repayment in respect of the Indexed Notes;
certain tax consequences to holders of the Indexed Notes;
certain risks associated with an investment in the Indexed Notes; and
other information relating to the Indexed Notes.
Your investment in the Currency Indexed Notes or in other Indexed Notes, as
to principal or interest or both, entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
The interest rate on Currency Indexed Notes and other Indexed Notes may be less
than that payable on a conventional fixed-rate debt security issued at the same
time.
The possibility exists that no interest will be paid or that negative
interest will accrue, and the principal amount of a Currency Indexed Note or
some other Indexed Note payable at maturity may be less than the original
purchase price of the note. The possibility exists that no principal will be
paid at maturity if the principal amount is utilized to net against accrued
negative interest.
A number of factors affect the secondary market for Currency Indexed Notes
and other Indexed Notes, independent of our creditworthiness and the value of
the applicable Index, the time remaining to the maturity of the notes, the
amount outstanding of the notes and market interest rates. The value of the
applicable Index depends on a number of interrelated factors, including
economic, financial and political events, over which we have no control.
Additionally, if the formula used to determine the principal amount or
interest payable with respect to a Currency Indexed Note contains a multiple or
leverage factor, the effect of any change in the applicable
S-19
Index will be increased. You should not view the historical experience of the
relevant Index as an indication of future performance of the Index during the
term of any Currency Indexed Note or any other Indexed Note. Accordingly, you
should consult your own financial and legal advisors about the risk entailed by
an investment in Currency Indexed Notes and other Indexed Notes and the
suitability of such notes in light of their particular circumstances.
Unless the pricing supplement specifies otherwise:
for the purpose of determining whether holders of the requisite principal
amount of Debt Securities outstanding under the applicable Indenture have
taken any action, the outstanding principal amount of Currency Indexed
Notes or of other Indexed Notes will be deemed to be the face amount of
those notes; and
in the event of an acceleration of the maturity of a Currency Indexed Note
or any other Indexed Note, the principal amount to be paid to the holder of
that note upon acceleration will be the principal amount determined by
reference to the formula by which the principal amount of that note would
be determined on the Maturity Date of that note, as if the date of
acceleration were the Maturity Date.
REDEMPTION
Unless the pricing supplement specifies otherwise and except as set forth in
'Redemption Upon a Tax Event,' (a) the notes will not be redeemable prior to
maturity and (b) the notes will not be entitled to any sinking fund.
PREPAYMENT AT OPTION OF HOLDER
Unless the pricing supplement specifies otherwise, the holder of the note
will not have the option to require prepayment of a note prior to maturity.
BOOK-ENTRY SYSTEM
Unless the pricing supplement specifies otherwise and except for Foreign
Currency Notes, the notes when issued will be represented by a permanent global
note or notes. Each permanent global note will be deposited with, or on behalf
of, the Depositary and registered in the name of a nominee of the Depositary.
Investors may elect to hold interests in the global notes through either the
Depositary (in the United States) or Clearstream or Euroclear (outside of the
United States), 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'). Except under the limited circumstances described below,
permanent global notes will not be exchangeable for notes in definitive form and
will not otherwise be issuable in definitive form.
Ownership of beneficial interests in a permanent global note will be limited
to institutions which have accounts with the Depositary or its nominee (each a
'participant') or persons who may hold interests through participants. In
addition, ownership of beneficial interests by participants in that permanent
global note will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee for that permanent global note. Ownership of beneficial interests in
that permanent global note by persons who hold through participants will be
evidenced only by, and the transfer of that ownership interest within the
participant will be effected only through, records maintained by that
participant. The Depositary has no knowledge of the actual beneficial owners of
the notes. Beneficial owners will not receive written confirmation from the
Depositary of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participants through which the beneficial
owners entered the transaction. The laws of some jurisdictions require that
certain purchasers of
S-20
securities take physical delivery of securities in definitive form. These laws
may impair your ability to transfer your beneficial interests in that permanent
global note.
We have been advised by the Depositary that upon the issuance of a permanent
global note and the deposit of that permanent global note with the Depositary,
the Depositary will immediately credit on its book-entry registration and
transfer system the respective principal amounts represented by that permanent
global note to the accounts of participants.
The Paying Agent will make all payments on notes represented by a permanent
global note registered in the name of or held by the Depositary or its nominee
to the Depositary or its nominee, as the case may be, as the registered owner
and holder of the permanent global note representing the notes. The Depositary
has advised us that upon receipt of any payment of principal of, or premium or
interest, if any, on a permanent global note, the Depositary will immediately
credit, on its book-entry registration and transfer system, accounts of
participants with payments in amounts proportionate to their respective
beneficial interests in the principal amount of that permanent global note as
shown in the records of the Depositary or its nominee. We expect that payments
by participants to owners of beneficial interests in a permanent global note
held through those participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in 'street name' (i.e., the name of a
securities broker or dealer), and will be the sole responsibility of those
participants, subject to any statutory or regulatory requirements as may be in
effect from time to time.
None of CIT, the Trustee, any agent of CIT, or any agent of the Trustee will
be responsible or liable for any aspect of the records relating to or payments
made on account of beneficial interests in a permanent global note or for
maintaining, supervising, or reviewing any of the records relating to such
beneficial interests.
A permanent global note is exchangeable for definitive notes registered in
the name of, and a transfer of a permanent global note may be registered to, any
person other than the Depositary or its nominee, only if:
the Depositary notifies us that it is unwilling or unable to continue as
Depositary for that permanent global note or if at any time the Depositary
ceases to be a clearing agency registered under the Securities Exchange Act
of 1934 and we do not appoint a successor Depositary within 90 days;
we, in our sole discretion, determine that the permanent global note will
be exchangeable for definitive notes in registered form; or
an event of default under the applicable Indenture shall have occurred and
be continuing, as described in the prospectus, and we, the applicable
Trustee, or the applicable Registrar and Paying Agent notify the Depositary
that the global note will be exchangeable for definitive notes in
registered form.
Any permanent global note which is exchangeable will be exchangeable in
whole for definitive notes in registered form, of like tenor and of an equal
aggregate principal amount as the permanent global note, in denominations of
$1,000 and integral multiples thereof. Those definitive notes will be registered
in the name or names of such person or persons as the Depositary shall instruct
the Trustee. We expect that those instructions may be based upon directions
received by the Depositary from its participants with respect to ownership of
beneficial interests in the permanent global note.
In the event definitive notes are issued, 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 (in the case of
notes listed on the Luxembourg Stock Exchange), 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 (in the case of
notes listed on the Luxembourg Stock Exchange), 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. You can obtain a form of written instrument of
transfer from the registrar at its New York office
S-21
or at the office of the transfer agent in Luxembourg (in the case of notes
listed on the Luxembourg Stock Exchange), as the case may be. 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, but otherwise transfers will be without charge. If we issue
definitive notes,
principal of and interest on the notes will be payable in the manner
described below,
the transfer of the notes will be registrable, and
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 Paying
Agent, including any successor Paying Agent and Registrar for the notes,
currently located at One Bank One Plaza, Suite 0286, Chicago, Illinois 60670 (in
the case of Senior Notes) and 101 Barclay Street, New York, New York 10286 (in
the case of Senior Subordinated Notes) and at the office of BNP Paribas
Securities Services, Luxembourg Branch, as the Luxembourg paying agent (the
'Luxembourg Paying Agent'), in the case of notes listed on the Luxembourg Stock
Exchange, currently located at 23 Avenue de la Porte Neuve, L-2085, Luxembourg.
We will maintain a Luxembourg Transfer Agent and Luxembourg Paying Agent as long
as 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, in the case of notes listed on the Luxembourg Stock
Exchange, 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, in the case of notes listed on the Luxembourg Stock
Exchange, the Luxembourg Paying Agent, as the case may be. We will maintain a
Luxembourg Transfer Agent and Luxembourg Paying Agent as long as notes are
listed on the Luxembourg Stock Exchange. So long as notes are listed on the
Luxembourg Stock Exchange, we will publish notice of any change in the
Luxembourg Transfer Agent or Luxembourg Paying Agent or its address in a leading
daily newspaper with general circulation in Luxembourg (which is expected to be
the Luxemburger Wort).
Except as provided above, owners of beneficial interests in a permanent
global note will not be entitled to receive physical delivery of notes in
definitive form and will not be considered the holders of these notes for any
purpose under the applicable Indenture, and no permanent global note will be
exchangeable, except for another permanent global note of like denomination and
tenor to be registered in the name of the Depositary or its nominee. So, each
person owning a beneficial interest in a permanent global note must rely on the
procedures of the Depositary and, if that person is not a participant, on the
procedures of the participant through which that person owns its interest, to
exercise any rights of a holder under the applicable Indenture.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a
permanent global note desires to give or take any action which a holder is
entitled to give or take under the applicable Indenture, the Depositary would
authorize the participants holding the relevant beneficial interests to give or
take this action, and the participants would authorize beneficial owners owning
through participants to give or take this action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depository Trust Company. The Depositary has advised us that it is a
limited-purpose trust company organized under the laws of the State of New York,
a 'banking organization' within the
S-22
meaning of the New York Banking Law, a member of the Federal Reserve System, a
'clearing corporation' within the meaning of the New York Uniform Commercial
Code, and a 'clearing agency' registered under the Exchange Act. The Depositary
was created to hold securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
securities through electronic book-entry changes in accounts of the
participants. By doing so, the Depositary eliminates the need for physical
movement of securities certificates. The Depositary's participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. The Depositary is owned by a number of its
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the Depositary's book-entry system is also available to others, such as
banks, brokers, dealers, and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. The
rules applicable to the Depositary and its participants are on file with the
Securities and Exchange Commission.
We believe that the sources from which the information in this section
concerning the Depositary and the Depositary's system has been obtained are
reliable, but we take no responsibility for the accuracy of the information.
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 Agents, securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations
and may include the Agents. 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 Euroclear S.A./N.V. (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 Agents. 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.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the 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
S-23
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 the 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 or any pricing 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 (as defined in 'Material United States Federal Income Tax
Consequences'), 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;
(8) to any tax, assessment, or other governmental charge that is imposed
or withheld on a payment to an individual that is required pursuant to any
European Union Directive on the taxation of savings implementing the
conclusions of the Council Meeting of the EU Council of Economic and Finance
Ministers ('ECOFIN') Meeting of November 26-27, 2000 or any law implementing
or complying with, or introduced in order to conform to, such directive;
(9) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of the principal of, or any
premium or interest on, any note, if that payment
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can be made without such withholding by at least one other paying agent,
including by presenting the note to another paying agent in a member state
of the European Union; or
(10) 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.
REDEMPTION UPON A TAX EVENT
If:
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 amendment 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
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.
PROPOSED EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
On January 21, 2003, ECOFIN provisionally agreed on proposals under which,
effective January 1, 2004, each of the member states of the European Union
(each, a 'Member State,' and together, 'Member States') will be required to
provide to the tax authorities of another Member State details of payments of
interest (or similar income) paid by a person within its jurisdiction to an
individual resident in that other Member State, except that, for a transitional
period, Belgium, Luxembourg and Austria will instead be required to operate a
withholding system in relation to such payments (the ending of such transitional
period being dependent upon the conclusion of certain other agreements relating
to information exchange with certain other countries). Additionally, it was
agreed by ECOFIN that the adoption of the proposals by the European Union would
require certain other non-Member State countries to adopt a similar withholding
system in relation to such payments.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
TERMS OF THE NOTES
Unless the pricing supplement specifies otherwise, we will denominate the
notes in U.S. dollars and we will make all payments on the notes in U.S.
dollars. Unless the pricing supplement specifies otherwise,
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the following provisions shall apply to Foreign Currency Notes. The following
specific provisions supplement the description of general terms of the notes set
forth in the prospectus and elsewhere in this prospectus supplement and, if the
description of the general terms of the notes is inconsistent, these provisions
override and replace them. We will issue Foreign Currency Notes in registered
form only, without coupons.
CURRENCIES
Unless the pricing supplement specifies otherwise, you must pay for Foreign
Currency Notes in the Specified Currency. At present, limited facilities are
available in the United States for conversion of U.S. dollars into the Specified
Currencies and vice versa. Banks offer non-U.S. dollar checking or savings
account facilities in the United States only on a limited basis. However, if you
make a request five Business Days or more before the date of delivery of the
notes, or by any other day determined by the applicable Exchange Rate Agent, the
Exchange Rate Agent will arrange for the conversion of U.S. dollars into the
Specified Currency set forth in the pricing supplement to enable you to pay for
the Foreign Currency Notes. The Exchange Rate Agent will make conversions on
terms and subject to the conditions, limitations, and charges as the Exchange
Rate Agent may from time to time establish in accordance with its regular
foreign exchange practices. You will bear all costs of exchange of the Foreign
Currency Notes.
DISTRIBUTION OF FOREIGN CURRENCY NOTES
Unless otherwise specified in the applicable pricing supplement, foreign
currency notes will be issued in global form to the London Paying Agent or its
nominee who will hold such notes as common depositary for Clearstream and
Euroclear. Unless otherwise specified in the applicable pricing supplement,
investors will hold book-entry interests in a foreign currency global note
through organizations that participate, directly or indirectly, in Clearstream
and Euroclear systems, as applicable. Book-entry interests in foreign currency
notes and all transfers relating to foreign currency notes will be reflected
only in the book-entry records of Euroclear and Clearstream.
PAYMENT OF PRINCIPAL AND INTEREST
We will make all payments on Foreign Currency Notes in the Specified
Currency. However, except as provided below or as otherwise specified in the
pricing supplement, you will receive all payments on Foreign Currency Notes in
U.S. dollars as converted by the Exchange Rate Agent we appoint. However, unless
the pricing supplement specifies to the contrary, you may elect to receive
payments in the Specified Currency under the circumstances described below.
The Exchange Rate Agent will base the U.S. dollar amount, if any, you may
receive on a Foreign Currency Note on the highest bid quotation received by the
Exchange Rate Agent at approximately 11:00 a.m., New York City time, on the
second Business Day preceding the applicable Interest Payment Date. The Exchange
Rate Agent must receive bids from three recognized foreign exchange dealers (one
of which may be the Exchange Rate Agent) for the purchase by the quoting dealer
of the Specified Currency for U.S. dollars for settlement on the applicable
payment date, in an amount equal to the aggregate amount of the Specified
Currency payable to all holders of notes not electing to receive the Specified
Currency on the payment date and at which the applicable dealer commits to
execute a contract. If three bid quotations are not available, payments will be
made in the Specified Currency. You will bear all currency exchange costs and we
will deduct the costs incurred from payments made to you.
Unless the pricing supplement specifies otherwise, you may elect to receive
payments on the Foreign Currency Notes in the Specified Currency by transmitting
a written request to the principal offices of the Paying Agent:
prior to the Record Date immediately preceding any Interest Payment Date or
at least fifteen days prior to the maturity date or the date of redemption
or repayment, if any, in the case of payments to be made on the maturity
date or upon earlier redemption or repayment.
You may mail or hand deliver your written request or deliver it by cable,
telex, or other form of facsimile transmission. You may elect to receive payment
in the Specified Currency for all payments and need not file a separate election
for each payment. Your election will remain in effect until revoked by
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written notice to the Paying Agent, but written notice of any revocation must be
received by the Paying Agent:
on or prior to the Record Date in the case of any payment of interest or
at least fifteen days prior to the maturity date or the date of redemption
or repayment, if any, in the case of the payment of principal and premium,
if any.
If you hold Foreign Currency Notes in the name of a broker or nominee, you
should contact your broker or nominee to determine whether and how you may elect
to receive payments in the Specified Currency.
Unless the pricing supplement specifies otherwise, we will make payments on
each Foreign Currency Note in U.S. dollars in the manner specified under
'Description of the Notes -- Payment and Paying Agents.' Unless the pricing
supplement specifies to the contrary, if you elect to receive payments on
Foreign Currency Notes in the Specified Currency, we will make payments to you
as follows:
we will pay interest (other than interest payable, on the maturity date or
upon earlier redemption or repayment) to you in the Specified Currency by
bank draft mailed to you or your nominee or other registered holder at the
close of business on the applicable Record Date.
we will pay the principal of and premium, if any, on the Foreign Currency
Note and any interest payable to you when due by bank draft upon surrender
of the note at the corporate trust office of the Paying Agent in the
Borough of Manhattan, City of New York.
we will draw the drafts denominated in a Specified Currency on a bank
office located outside the United States.
If the Paying Agent receives a written request to be paid by wire transfer
from a holder of the equivalent of U.S. $1,000,000 or more in aggregate
principal amount of the Foreign Currency Notes not later than the close of
business on a Record Date for an interest payment or the fifteenth day prior to
the maturity date or the date of redemption or repayment, if any, the Paying
Agent will, subject to applicable laws and regulations, until it receives notice
to the contrary (but, in the case of payments to be made on the maturity date or
earlier redemption or repayment, only after the surrender of the note or notes
in the Borough of Manhattan, City of New York, not later than one Business Day
prior to the maturity date or the date of redemption or repayment, as the case
may be), make all payments denominated in the Specified Currency to the
requesting holder by wire transfer to an account designated in the written
request and maintained in the country of the Specified Currency.
OUTSTANDING FOREIGN CURRENCY NOTES
Unless the pricing supplement specifies otherwise, for purposes of
calculating the principal amount of any Foreign Currency Note payable in a
Specified Currency for any purpose under the Indentures, we will deem the
principal amount of the Foreign Currency Note at any time outstanding to be the
U.S. dollar equivalent, determined as of the date of the original issuance of
the Foreign Currency Note.
PAYMENT CURRENCY
If a Specified Currency is not available for any payment on a Foreign
Currency Note due to circumstances beyond our control, we will be entitled to
meet our obligations to you by making payment in U.S. dollars. Any payment in
U.S. dollars will be on the basis of the noon buying rate in the City of New
York for cable transfers of the Specified Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the 'Market Exchange Rate') on
the second day prior to any payment, or if the Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate or
as the pricing supplement otherwise specifies. Under these circumstances, any
payment made in U.S. dollars where required payment is in a Specified Currency
will not constitute a default under the Indentures.
If we are required to make payments on a Foreign Currency Note in Euros, and
Euros are unavailable due to circumstances beyond our control, we will make all
payments due on that date with respect to the Foreign Currency Notes in U.S.
dollars. The Exchange Rate Agent will convert the amount payable in Euros on any
date into U.S. dollars, at a rate determined by the Exchange Rate Agent as of
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the second Business Day prior to the date on which payment is due on the
following basis: The equivalent of Euros in U.S. dollars will be calculated by
aggregating the U.S. dollar equivalents of the Components. The Paying Agent will
determine the U.S. dollar equivalent of each of the Components on the basis of
the most recently available Market Exchange Rate, or as otherwise specified in
the applicable pricing supplement. The 'Components' for this purpose will be the
currency amounts that were components of the Euro as of the latest date on which
Euros were used in the European Monetary System.
If the official unit of any component currency is altered by way of
combination or subdivision, the Exchange Rate Agent or the Paying Agent, as the
case may be, will multiply or divide the number of units of that currency as a
Component in the same proportion. If two or more component currencies are
consolidated into a single currency, the Exchange Rate Agent or Paying Agent, as
the case may be, will replace the amounts of those currencies as Components by
an amount in such single currency equal to the sum of the amounts of the
consolidated component currencies expressed in the consolidated currency. If any
component currency is divided into two or more currencies, the Exchange Rate
Agent or Paying Agent, as the case may be, will replace the amount of that
currency as a Component with amounts of those currencies, each of which shall
have a value on the date of division equal to the amount of the former component
currency divided by the number of currencies into which that currency was
divided.
All determinations referred to above by the Exchange Rate Agent or Paying
Agent shall be at its sole discretion (except to the extent expressly provided
in this prospectus supplement that any determination is subject to our approval)
and, in the absence of manifest error, shall be conclusive for all purposes and
binding on you. The Exchange Rate Agent or Paying Agent, as the case may be,
shall have no liability for the determination. Any payment made in U.S. dollars
in the circumstances set forth above where required payment is in a Specified
Currency will not constitute a default under the Indentures.
FOREIGN CURRENCY RISKS
This prospectus supplement, the prospectus and the pricing supplement do not
describe all the risks of an investment in notes that are indexed to or
denominated in other than U.S. dollars as those risks exist at the date of this
prospectus supplement or as those risks may change from time to time. You should
consult your own financial, tax, and legal advisors as to the risks entailed by
an investment in the notes. The notes are not an appropriate investment for
investors who are unsophisticated with respect to foreign currency, currency
unit or indexed transactions.
EXCHANGE RATES AND EXCHANGE CONTROLS
The Foreign Currency Notes have significantly more risk to United States
residents than a similar investment in a security denominated in U.S. dollars.
Similarly, Currency Indexed Notes have significantly more risk to United States
residents than a similar investment in a non-Currency Indexed Note. Some of
these risks are:
the possibility of significant changes in rates of exchange between the
U.S. dollar and the Specified Currency; and
the possibility of the imposition or modification of foreign exchange
controls by either the U.S. or foreign governments.
These risks generally depend on economic and political events over which we
have no control. In recent years, rates of exchange between the U.S. dollar and
some foreign currencies have been highly volatile and you should expect
volatility in the future. The exchange rate between the U.S. dollar and a
foreign currency or currency unit is in most cases established principally by
the supply of and demand for those currencies. Changes in the exchange rate
result over time from the interaction of many factors, including:
rates of inflation;
interest rate levels;
balances of payments; and
the extent of governmental surpluses or deficits in the countries issuing
currencies.
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These factors are in turn sensitive to, among other things, the monetary,
fiscal and trade policies pursued by governments and those of other countries
important to international trade and finance. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative of
fluctuations in the exchange rate that may occur during the term of any note.
You may receive a yield on U.S. dollar-equivalent Foreign Currency Notes below
their coupon rate, and, in some circumstances, you could suffer a loss if the
Specified Currency depreciates against the U.S. dollar. Similarly, if the
Specified Currency depreciates against the Indexed Currency you may receive a
return of principal in an amount less than the face amount of a Currency Indexed
Note, which would also result in an effective yield below the stated interest
rate.
Foreign exchange rates can either be fixed by sovereign governments or
float. Exchange rates of most economically developed nations are permitted to
fluctuate in value relative to the U.S. dollar. National governments generally
do not allow their currencies to float freely at all times. Sovereign
governments use a variety of techniques to affect the exchange rate of their
currencies including:
intervention by a country's central bank;
imposition of regulatory controls or taxes;
issuance of a new currency to replace an existing currency; or
alteration of the exchange rate or relative exchange characteristics by
devaluation or revaluation of a currency.
As a result, your U.S. dollar equivalent yields could be affected by
governmental actions, which could change or interfere with previously freely
determined currency valuations, fluctuations in response to other market forces,
and the movement of currencies across borders. We will not adjust or change the
terms of any notes in the event that exchange rates become fixed, or in the
event of any devaluation or revaluation or imposition of exchange or other
regulatory controls or taxes, or in the event of other developments, affecting
the U.S. dollar or any applicable currency or currency unit.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at a note's maturity. Even if there are no
actual exchange controls, it is possible that the Specified Currency for any
particular note that would otherwise be payable in the Specified Currency would
not be available at the note's maturity. In that event, we will make required
payments in U.S. dollars on the basis of the Market Exchange Rate on the second
day prior to the payment, or if the current Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate. See
'Special Provisions Relating to Foreign Currency Notes -- Payment Currency.'
The information set forth in this section of the prospectus supplement is
directed primarily to prospective purchasers who are United States residents. We
disclaim any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding, or receipt of payments of principal of and premium
and interest, if any, on the notes. You should consult your own counsel with
regard to these matters.
JUDGMENTS
Courts in the United States generally would grant or enforce a judgment
relating to an action based on Foreign Currency Notes and Currency Indexed Notes
only in U.S. dollars, and the date used to determine the rate of conversion of
foreign currencies into U.S. dollars will depend on various factors, including
which court rendered the judgment. Section 27 of the Judiciary Law of the State
of New York provides that a New York State court would be required to enter a
judgment in the Specified Currency of the underlying obligation. This judgment
would then be converted into U.S. dollars at the rate of exchange prevailing on
the date of entry of the judgment.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary, which was prepared by Schulte Roth & Zabel LLP,
counsel to CIT, describes material United States federal income tax consequences
of the ownership of notes as of the date of this prospectus supplement. Except
where indicated, it deals only with notes held by initial purchasers as capital
assets and does not deal with special situations, such as those of banks or
dealers in securities or financial institutions, life insurance companies,
United States Holders whose 'functional currency' 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 the alternative minimum tax.
In addition, with respect to a particular series of notes, the discussion below
must be read with the discussion of material federal income tax consequences
that may appear in the pricing supplement for that series. The discussion below
also is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the 'Code'), and the regulations ('Treasury Regulations'), rulings, and
judicial decisions thereunder as of the date of this prospectus supplement.
Those authorities may be repealed, revoked, modified, or otherwise changed so as
to result in federal income tax consequences different from those discussed
below. Persons considering the purchase, ownership, or disposition of notes
should consult their own tax advisors concerning the federal income tax
consequences in light of their particular situations as well as any consequences
arising under the laws of any other taxing jurisdiction.
UNITED STATES HOLDERS
A 'United States Holder' is a beneficial owner of a note, as defined for
U.S. federal income tax purposes, that is:
a citizen or resident of the United States;
a corporation, partnership or other entity created or
organized in or under the laws of the United States, any
state of the United States, or the District of Columbia;
an estate the income of which is subject to United States
federal income taxation regardless of its source; or
a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
A 'Non-United States Holder' is a beneficial owner of a note, as defined for
U.S. federal income tax purposes, that is not a United States Holder.
If a note is held by an entity that is a flow-through entity for U.S.
federal income tax purposes (e.g., a partnership or disregarded entity), the
beneficial owner of the note is generally the owner of an interest in the
flow-through entity (unless such owner is itself a flow-through entity). The
treatment of the owner of an interest in a flow-through entity will generally
depend upon the status of the owner and upon the activities of the flow-through
entity. Holders of notes who are flow-through entities for U.S. tax purposes,
and owners of interests in such flow-through entities, should consult their tax
advisors about the U.S. federal income tax consequences of holding and disposing
of notes.
Payments of Interest. Except as set forth below, interest on a note will
generally be taxable to a United States Holder as ordinary income from domestic
sources at the time it is paid or accrued in accordance with the United States
Holder's method of accounting for tax purposes.
Original Issue Discount. The following is a summary of the principal United
States federal income tax consequences of the ownership of Original Issue
Discount Notes by United States Holders. Additional rules applicable to Original
Issue Discount Notes that are denominated in or determined by reference to a
Specified Currency are described under 'Foreign Currency Notes' below.
A note may be issued for an amount that is less than its stated redemption
price at maturity (i.e., the sum of all payments to be made on the note other
than 'qualified stated interest' payments). The difference between the stated
redemption price at maturity of the note and its 'issue price,' if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity, will be 'original issue
discount' ('OID'). The 'issue price' of each note will
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be the initial offering price to the public at which a substantial amount of the
particular offering is sold. A 'qualified stated interest' payment is stated
interest that is unconditionally payable at least annually at a single fixed
rate or, generally, at a rate (a 'Variable Rate') that varies among payment
periods:
if that rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed
funds or
that is based upon the changes in the yield or price of
certain actively traded personal property.
Interest is payable at a single fixed rate only if the rate appropriately
takes into account the length of the interval between payments. Notes that may
be redeemed prior to their maturity date at the option of the issuer will be
treated from the time of issuance as having a maturity date for federal income
tax purposes on such redemption date if such redemption would result in a lower
yield to maturity. Notes that may be redeemed prior to their maturity date at
the option of the holder will be treated from the time of issuance as having a
maturity date for federal income tax purposes on such redemption date if such
redemption would result in a higher yield to maturity. The pricing supplement
will specify if we issue notes that are redeemable prior to maturity and if we
determine that the notes will be deemed to have a maturity date for federal
income tax purposes prior to their maturity date.
In certain cases (such as where interest payments are deemed not to be
qualified stated interest payments), notes that bear interest from a non-tax
standpoint may be deemed instead to be Original Issue Discount Notes for federal
income tax purposes. As a result, the inclusion of interest in income for
federal income tax purposes may vary from the actual cash payments of interest
made on those notes, generally accelerating the recognition of income for cash
method taxpayers. For those purposes, the Treasury Regulations provide rules for
determining whether payments pursuant to a note with a Variable Rate will be
treated as payments of qualified stated interest. The pricing supplement for any
series of notes will specify whether they are Original Issue Discount Notes and,
in the case of notes with a Variable Rate, will describe the applicable rules
for inclusion of OID in income of a United States Holder.
United States Holders of Original Issue Discount Notes having a maturity
upon issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the 'daily portions' of OID with respect to
the note for each day during the taxable year in which such United States Holder
held such note ('accrued OID'). The daily portion is determined by allocating to
each day in any 'accrual period' a pro rata portion of the OID allocable to that
accrual period. The accrual period for an Original Issue Discount Note may be of
any length and may vary in length over the term of the note provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs at the beginning or the end of an accrual period.
The amount of OID allocable to any accrual period is an amount equal to the
excess (if any) of:
the product of the note's 'adjusted issue price' at the
beginning of such accrual period and its yield to maturity,
as determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of
the accrual period, over
the sum of any qualified stated interest payments allocable
to the accrual period.
The following rules apply to determine OID allocable to an accrual period:
if an interval between payments of qualified stated interest
contains more than one accrual period, the amount of
qualified stated interest payable at the end of the interval
is allocated on a pro rata basis to each accrual period in
the interval and the adjusted issue price at the beginning
of each accrual period in the interval must be increased by
the amount of any qualified stated interest that has accrued
prior to the beginning of the first day of the accrual
period but is not payable until the end of the interval;
if the accrual period is the final accrual period, the
amount of OID allocable to the final accrual period is the
difference between the amount payable at maturity (other
than a payment of qualified stated interest) and the
adjusted issue price of the note at the beginning of the
final accrual period; and
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if all accrual periods are of equal length, except for an
initial short accrual period, the amount of OID allocable to
the initial short accrual period may be computed under any
reasonable method.
The adjusted issue price of the note at the start of any accrual period is
equal to its issue price, increased by the accrued OID for each prior accrual
period, and reduced by any prior payments with respect to that note that were
not qualified stated interest payments. Under these rules, a United States
Holder generally will have to include in income increasingly greater amounts of
OID in successive accrual periods. We are required to report to the IRS the
amount of OID accrued on notes held of record by persons other than corporations
and other exempt holders.
If a United States Holder acquires a note for an amount greater than the
note's adjusted issue price but less than the sum of all amounts (other than
qualified stated interest) payable with respect to the note after the date of
acquisition, the note will be treated as acquired at an acquisition premium. If
a United States Holder acquires a note at an acquisition premium, the United
States Holder's daily portions of OID with respect to the note will be reduced
by an allocable portion of the amount by which the price paid by such holder
exceeds the note's adjusted issue price.
In the case of Original Issue Discount Notes having a term of one year or
less ('Short-Term Original Issue Discount Notes'), OID is included in income
currently either on a straight-line basis or, if the United States Holder so
elects, under the constant yield method used generally for OID as described
above. However, United States Holders that are individuals or other cash method
taxpayers are not required to include accrued OID on Short-Term Original Issue
Discount Notes in their income currently unless they elect to do so. If such a
United States Holder that does not elect to currently include the OID in income
subsequently recognizes a gain upon the disposition of the note, such gain will
be treated as ordinary interest income to the extent of the accrued OID.
Furthermore, a non-electing United States Holder of a Short-Term Original Issue
Discount Note may be required to defer deductions for a portion of the United
States Holder's interest expense with respect to any indebtedness incurred or
maintained to purchase or carry the note.
Market Discount. If a United States Holder acquires a note, other than in an
original issue, at a greater than de minimis market discount and thereafter
recognizes gain upon a disposition, or makes a gift, of the note, the lesser of:
such gain or, in the case of a gift, appreciation, or
the portion of the market discount which accrued on a
straight line basis, or, if the United States Holder so
elects, on a constant yield basis, while the note was held
by such United States Holder,
will be treated as ordinary income at the time of the disposition or gift.
For these purposes, market discount means the amount by which the
purchaser's basis in the note immediately after its acquisition
is exceeded by the sum of all amounts (other than qualified
stated interest) payable with respect to the note after the
date of acquisition, or
in the case of an Original Issue Discount Note, is exceeded
by the adjusted issue price of the note at the time of its
acquisition by the United States Holder.
Market discount is considered de minimis if it is less than 0.25 percent,
multiplied by the number of remaining complete years to maturity, and multiplied
by the sum of all amounts (other than qualified interest) payable with respect
to the note (or, in the case of an Original Issue Discount Note, the adjusted
issue price). The market discount rules do not apply to a note with a maturity
of one year or less.
A United States Holder may elect to include accrued market discount in
income currently, which would correspondingly increase the United States
Holder's basis in the notes, rather than upon disposition of the notes. This
election once made applies to all market discount obligations acquired on or
after the first taxable year to which the election applies, and may not be
revoked without the consent of the IRS.
A United States Holder of notes acquired at a market discount generally will
be required to defer the deduction of a portion of the interest on any
indebtedness incurred or maintained to purchase or carry such notes until the
market discount is recognized upon a subsequent disposition of such notes. Such
a deferral is not required, however, if the United States Holder elects to
include accrued market discount in income currently.
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Amortization of Premium. A note may be considered to have been issued at a
'premium' to the extent that the United States Holder's tax basis in the note
exceeds the note's outstanding stated redemption price at maturity. A United
States Holder generally may elect to amortize any premium on a note by
offsetting payments of qualified stated interest on the note with the premium
allocable to the accrual period or periods to which the qualified stated
interest relates. The offset occurs at the time the holder of the note includes
the qualified stated interest in its income in accordance with its regular
method of tax accounting. The amount of premium allocable to each accrual period
is determined using a constant yield method. In the case of instruments that
provide for alternative payment schedules, the amount of premium is generally
determined by assuming that the holder will exercise or not exercise options in
a manner that maximizes the holder's yield and we will exercise or not exercise
options in a manner that minimizes the holder's yield (except that we will be
assumed to exercise call options in a manner that maximizes the holder's yield).
Any election would apply to all debt securities (other than debt securities the
interest on which is excludable from gross income) held or subsequently acquired
by the United States Holder on or after the first day of the first taxable year
to which the election applies and is irrevocable without the consent of the IRS.
Election to Treat All Interest as OID. United States Holders may elect to
treat all interest on any note as OID and calculate the amount includible in
gross income under the constant yield method described above. For the purposes
of this election, interest includes stated interest, acquisition discount, OID,
de minimis OID, market discount, de minimis market discount, and unstated
interest, as adjusted by any amortizable bond premium or acquisition premium. If
a United States Holder makes this election for a note with amortizable bond
premium, the election is treated as an election under the amortizable bond
premium provisions described above and the electing United States Holder will be
required to amortize bond premium for all of the holder's other debt instruments
with amortizable bond premium. The United States Holder must make the election
for the taxable year in which it acquires the note, and the election may not be
revoked without the consent of the IRS. United States Holders should consult
with their own tax advisors about this election.
Sale, Exchange, and Retirement of Notes. A United States Holder's tax basis
in a note will, in general, be the United States Holder's cost therefor,
increased by all accrued OID or market discount previously included in income
and reduced by any amortized premium and any cash payments on the note other
than qualified stated interest payments. Upon the sale, exchange, or retirement
of a note, a United States Holder will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, or retirement
and the adjusted tax basis of the note. Except as described above with respect
to certain Short-Term Original Issue Discount Notes and notes with market
discount, and except with respect to gain or loss attributable to changes in
exchange rates as described below with respect to certain Foreign Currency
Notes, such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if at the time of sale, exchange, or retirement the note
has been held for more than one year. For individual United States Holders,
long-term capital gains are, under certain circumstances, taxed at lower rates
than ordinary income. The deductibility of capital losses is subject to
limitations.
Foreign Currency Notes. The following is a summary of the principal United
States federal income tax consequences to a United States Holder of the
ownership of a note denominated in a Specified Currency other than the U.S.
dollar and deals only with Foreign Currency Notes that are not treated, for
federal income tax purposes, as an integrated economic transaction in
conjunction with one or more spot contracts, futures contracts or similar
financial instruments. Persons considering the purchase of Foreign Currency
Notes should consult their own tax advisors with regard to the application of
the United States federal income tax laws to their particular situations, as
well as any consequences arising under the laws of any other taxing
jurisdiction.
If interest payments are made in a Specified Currency to a United States
Holder who is not required to accrue such interest prior to its receipt, the
holder will be required to include in income the U.S. dollar value of the amount
received (determined by translating the Specified Currency received at the 'spot
rate' for the Specified Currency on the date that payment is received),
regardless of whether the payment is in fact converted into U.S. dollars. The
holder does not recognize any exchange gain or loss with respect to the receipt
of payment.
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A United States Holder who is required to accrue interest on a Foreign
Currency Note prior to receipt of interest will be required to include in income
for each taxable year the U.S. dollar value of the interest that has accrued
during each year, determined by translating interest at the average rate of
exchange for the period or periods during which interest accrued. The average
rate of exchange for an interest accrual period is generally the simple average
of the exchange rates for each business day of the application period (or other
average that is reasonably derived and consistently applied by the holder). An
accrual basis holder may, however, elect to translate interest income at the
spot rate on the last day of the accrual period (or last day of the taxable year
in the case of an accrual period that straddles the holder's taxable year) or on
the date the interest payment is received if that date is within five business
days of the end of the accrual period. Any election would apply to all debt
securities held or subsequently acquired by the United States Holder on or after
the first day of the first taxable year to which the election applies and is
irrevocable without the consent of the IRS. Upon receipt of an interest payment
on a note, the holder will recognize exchange gain or loss in an amount equal to
the difference between the U.S. dollar value of the payment (determined by
translating any Specified Currency received at the spot rate for such Specified
Currency on the date received) and the U.S. dollar value of the interest income
that holder has previously included in income with respect to the payment. Any
gain or loss generally will not be treated as interest income or expense, except
to the extent provided in Treasury Regulations or administrative pronouncements
of the IRS.
OID on a Foreign Currency Note will be determined for any accrual period in
the applicable Specified Currency and then translated into U.S. dollars in the
same manner as interest income accrued by a United States Holder on the accrual
basis, as described above. Likewise, a United States Holder will recognize
exchange gain or loss when the OID is paid to the extent of the difference
between the U.S. dollar value of the accrued OID (determined in the same manner
as for accrued interest) and the U.S. dollar value of the payment (determined by
translating any Specified Currency received at the spot rate for the Specified
Currency on the date of payment). For this purpose, all receipts on a note will
be viewed:
first as the receipt of any periodic interest payments
called for under the terms of the note;
second as receipts of previously accrued OID (to the extent
of such OID), with payments considered made for the earliest
accrual periods first; and
thereafter as the receipt of principal.
A United States Holder's tax basis in a Foreign Currency Note will be the
U.S. dollar value of the Specified Currency amount paid for that Foreign
Currency Note determined at the time of purchase. In the case of a note that is
denominated in a foreign currency and is traded on an established securities
market, a cash basis taxpayer (or, if it elects, an accrual basis taxpayer) will
determine the U.S. dollar value of the cost of the note by translating the
amount paid at the spot rate of exchange on the settlement date of the purchase.
A United States Holder who purchases a note with the applicable previously owned
Specified Currency will recognize exchange gain or loss at the time of purchase
attributable to the difference at the time of purchase, if any, between the tax
basis in the Specified Currency and the fair market value of the note in U.S.
dollars on the date of purchase. The gain or loss will be ordinary income or
loss.
For purposes of determining the amount of any gain or loss recognized by a
United States Holder on the sale, exchange, or retirement of a Foreign Currency
Note, the amount realized will be the U.S. dollar value of the amount realized
in the Specified Currency (other than amounts attributable to accrued but unpaid
interest not previously included in the holder's income), determined at the time
of the sale, exchange, or retirement and in accordance with the applicable
method of accounting. In the case of a note which is denominated in a foreign
currency and is traded on an established securities market, a cash basis
taxpayer (or, if it elects, an accrual basis taxpayer) will determine the U.S.
dollar value of the amount realized by translating that amount at the spot rate
of exchange on the settlement date of the sale.
A United States Holder will recognize exchange gain or loss attributable to
the movement in exchange rates between the time of purchase and the time of
disposition (including the sale, exchange, or retirement) of a Foreign Currency
Note. This gain or loss will be treated as ordinary income or loss. This gain or
loss may be required to be netted against any non-exchange gain or loss in
calculating overall gain or loss on a note. If a Foreign Currency Note is
denominated in one of certain hyperinflationary currencies, generally exchange
gain or loss would be realized with respect to movements in the exchange
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rate between the beginning and end of each taxable year (or such shorter period)
that the note was held and the exchange gain or loss would be treated as an
addition or offset, respectively, to the accrued interest income on (and an
adjustment to the holder's tax basis in) the Foreign Currency Note.
A United States Holder's tax basis in any Specified Currency received as
interest on (or OID with respect to), or received on the sale or retirement of,
a Foreign Currency Note will be the U.S. dollar value thereof at the spot rate
at the time the holder received the Specified Currency. Any gain or loss
recognized by a United States Holder on a sale, exchange, or other disposition
of Specified Currency will be ordinary income or loss and will not be treated as
interest income or expense, except to the extent provided in Treasury
Regulations or administrative pronouncements of the IRS.
Indexed Notes. The tax treatment of a United States Holder of an Indexed
Note will depend on factors including the specific index or indices used to
determine indexed payments on the note and the amount and timing of any
contingent payments of principal and interest. You should carefully examine the
pricing supplement and should consult your own tax advisors regarding the United
States federal income tax consequences of the holding and disposition of such
notes before deciding to purchase an Indexed Note.
NON-UNITED STATES HOLDERS
Under present United States federal tax law, and subject to the discussion
below concerning backup withholding:
(a) payments of principal, interest (including OID, if any) and premium
on the notes by CIT or our paying agent to any Non-United States Holder will
be exempt from the 30% United States federal withholding tax, provided that:
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;
the holder is not a controlled foreign corporation related,
directly or indirectly, to CIT through stock ownership or a
bank receiving interest described in section 881(c)(3)(A) of
the Code; and
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 Non-United States 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:
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
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-8BEN or other successor form, under penalties of perjury,
that it is not a United States person and provides its name and address, and (i)
the beneficial owner files IRS 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-8BEN or other successor form from the holder
and furnishes the withholding agent with a copy thereof; provided that a foreign
financial institution will fulfill the certification requirement by filing IRS
Form W-8IMY if it has entered into an agreement with the IRS to be treated as a
qualified intermediary.
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With respect to notes held by a foreign partnership, unless the foreign
partnership has entered into a withholding agreement with the IRS, the foreign
partnership will generally be required to provide an IRS Form W-8IMY or other
successor form and 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 Non-United States Holder of a note is engaged in a trade or business in
the United States, and if premium (if any) or interest (including OID) 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 Non-United
States 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 'United States Holders' above. In lieu of the
certificates described in the preceding paragraph, a holder will be required to
provide to the withholding agent a properly executed IRS Form W-8ECI or other
successor form to claim an exemption from withholding tax. In addition, if a
Non-United States 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 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. The backup withholding
rate is 30% (subject to periodic reductions through 2006). 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 Non-United States Holders if the certifications required by the
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 non-United States 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) 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. Payment 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.
Non-United States 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.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the notes to provide
additional working funds for us and our subsidiaries. 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 bulk purchases of receivables and/or the acquisition of other
finance-related businesses.
CAPITALIZATION OF CIT GROUP INC.
The following table sets forth our capitalization as of December 31, 2002.
This table should be read in conjunction with 'Selected Consolidated Financial
Information of CIT Group Inc.,' which is included elsewhere in this prospectus
supplement.
DECEMBER 31, 2002
(IN MILLIONS OF
U.S. DOLLARS)
-----------------
Commercial paper............................................ $ 4,974.6
Bank credit facilities...................................... 2,118.0
Term debt................................................... 24,588.7
CIT obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely debentures of CIT
('Preferred Capital Securities').......................... 257.2
Stockholders' equity:
Preferred stock, $0.01 par value, 100,000,000
authorized; none issued and outstanding............... --
Common stock, $0.01 par value, 600,000,000 authorized;
211,573,200 issued and outstanding.................... 2.1
Additional paid in capital.............................. 10,676.2
Accumulated deficit..................................... (5,606.9)
Accumulated other comprehensive loss.................... (200.7)
---------
Total stockholders' equity.............................. 4,870.7
---------
Total capitalization........................................ 36,809.2
Goodwill.................................................... (384.4)
---------
Total tangible capitalization............................... $36,424.8
---------
---------
Total tangible stockholders' equity......................... $ 4,486.3
---------
---------
Other than as disclosed or contemplated in this prospectus supplement or in
the documents incorporated in this prospectus supplement by reference, since
December 31, 2002, there has been no material change in the capitalization of
CIT and its consolidated subsidiaries.
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PLAN OF DISTRIBUTION
We are offering the notes on a continuing basis for sale directly by us in
those jurisdictions where we are authorized to do so. In addition, subject to
the terms and conditions set forth in the Global Selling Agency Agreement, dated
May 9, 2003, we may offer the notes through any of the Agents, Lehman Brothers
Inc., Banc of America Securities LLC, Barclays Capital Inc., Citigroup Global
Markets Inc., Credit Suisse First Boston LLC, Deutsche Bank Securities Inc.,
Goldman, Sachs & Co., J.P. Morgan Securities Inc., UBS Warburg LLC or one or
more other Agents we appoint from time to time, who have separately agreed to
use their reasonable best efforts to solicit offers to purchase the notes. We
may also sell notes to any Agent, as principal, at a discount for resale to one
or more investors or other purchasers at varying prices related to prevailing
market prices at the time of resale, as determined by that Agent or, if so
agreed, on a fixed public offering price basis. Unless otherwise specified in
the pricing supplement, we will pay each Agent a commission, in the form of a
discount which, depending on the maturity of the notes placed by such Agent,
will range from .03% to .75% of the principal amount of the notes, except that
the commission we may pay to the Agents with respect to notes with maturities of
greater than thirty years will be negotiated at the time we issue those notes.
We will not pay a commission to the Agents on the notes we sell directly to
purchasers. Payment of the purchase price of the notes will be required to be
made in immediately available funds.
The Agents may offer the notes they have purchased as principal to other
dealers. The Agents may sell notes to any dealer at a discount and, unless the
pricing supplement specifies to the contrary, a discount allowed to any dealer
will not be in excess of the discount we allow the Agent. Unless the pricing
supplement specifies to the contrary, an Agent purchasing a note as principal
will pay a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to any agency sale of a note of identical
maturity, and the Agent may resell this note to investors and other purchasers
as described above. After the initial public offering of notes to be resold to
investors and other purchasers, the public offering price (in the case of a
fixed price public offering), concession and discount may change.
We will have the sole right to accept offers to purchase notes and may, in
our absolute discretion, reject any proposed purchase of notes in whole or in
part. Each Agent will have the right, in its discretion reasonably exercised, to
reject in whole or in part any offer to purchase the notes.
If one or more Agents purchase notes in an offering as principal on a fixed
price basis, the Agent or Agents may engage in certain transactions that
stabilize the price of those notes. Those transactions may consist of bids or
purchases for the purpose of pegging, fixing, or maintaining the price of those
notes. If the Agent or Agents create a short position in those notes (i.e., if
it sells notes in an aggregate principal amount exceeding that set forth in the
pricing supplement), that Agent or Agents may reduce that short position by
purchasing notes in the open market.
In general, the purchase of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might otherwise be in the absence of those purchases.
We and the Agents make no representation or prediction as to the direction
or magnitude of any effect that the transactions described above may have on the
price of the notes. In addition, we and the Agents make no representations that
anyone will engage in such transactions or that those transactions, once
commenced, will continue.
Each Agent may be deemed to be an 'underwriter' within the meaning of the
Securities Act of 1933. We have agreed to indemnify each Agent against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments each Agent may be required to make in respect thereof.
We have been advised by the Agents that each of the Agents may from time to
time purchase and sell notes in the secondary market, but is not obligated to do
so and may discontinue making a market in the notes at any time without notice.
No assurance can be given as to the existence or liquidity of any secondary
market for the notes.
Some of the Agents or their affiliates may from time to time provide
investment banking and/or commercial banking services to us and may from time to
time engage in transactions with and/or perform other services for us in the
ordinary course of business.
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OFFERING RESTRICTIONS
The notes will be offered for sale in the United States and, from time to
time, in jurisdictions outside the United States, subject to applicable law.
Each Agent has agreed that it will not offer, sell, or deliver any of the
notes, directly or indirectly, or distribute this prospectus supplement, the
prospectus, any pricing supplement or any other offering material relating to
the notes, in or from any jurisdiction except under circumstances that will, to
the best of the Agent'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 Global Selling Agency 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 prices set forth on the cover
page.
UNITED KINGDOM
Each Agent has represented and agreed that:
1. No offer to public: with respect to notes which have a maturity of one
year or more and which are not to be admitted to the Official List of the UK
Listing Authority, it has not offered or sold and prior to the expiry of a
period of six months from the issue date of such notes will not offer or sell
any such 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;
2. Financial Promotion: it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act of 2000 (the 'FSMA'))
received by it in connection with the issue or sale of any notes in
circumstances in which Section 21(1) of the FSMA does not, or in the case of
CIT, would not, if it was not an authorised institution, apply to CIT; and
3. General compliance: it has complied and will comply with all applicable
provisions of Part VI of the FSMA with respect to anything done by it in
relation to any notes in, from or otherwise involving the United Kingdom.
GERMANY
No selling prospectus (Verkaufsprospekt) has been or will be published in
respect of the notes and each Agent will be required to comply with the German
Securities Selling Prospectus Act (Wertpapier-Verkaufsprospektgesetz) of
December 13, 1990, as amended.
THE NETHERLANDS
Each Agent represents and agrees that it has not, directly or indirectly,
offered or sold and will not, directly or indirectly, offer or sell in The
Netherlands any notes with a denomination of less than e 50,000 (or its foreign
currency equivalent) other than to persons who trade or invest in securities in
the conduct of a profession or business (which includes banks, stockbrokers,
insurance companies, pension funds, other institutional investors and finance
companies and treasury departments of large enterprises) unless one of the other
exemptions or exceptions to the prohibition contained in Article 3 of the Dutch
Securities Transactions Supervision Act 1995 ('Wet toezicht effectenverkeer
1995') is applicable and the conditions attached to such exemption or exception
are complied with.
THE REPUBLIC OF FRANCE
The notes will be issued outside the Republic of France and each Agent has
represented and agreed that, in connection with any distribution of the notes,
it has not offered or sold any 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
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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
No series of notes has been nor will be registered under the Securities and
Exchange Law of Japan and each of the Agents has represented and agreed that it
and its affiliates have not offered or sold, and will not offer or sell,
directly or indirectly, any of the notes by it 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 of Japan available thereunder
and otherwise in compliance with the Securities and Exchange Law of Japan and
the other relevant laws, regulations and guidelines of Japan.
HONG KONG
Each Agent 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).
LEGAL MATTERS
The validity of the notes offered will be passed upon for us by Schulte Roth
& Zabel LLP, New York, New York. Certain legal matters in connection with the
notes will be passed upon for the agents by Wilmer, Cutler & Pickering,
Washington, D.C.
EXPERTS
The consolidated balance sheets of CIT Group Inc. and its subsidiaries as of
December 31, 2002, September 30, 2002 and September 30, 2001 and the related
consolidated statements of income, stockholders' equity and cash flows for the
three months ended December 31, 2002, the year ended September 30, 2002, the
period from June 2, 2001 through September 30, 2001 and the period from January
1, 2001 through June 1, 2001, incorporated by reference herein and in the
registration statement of which this prospectus supplement and the accompanying
prospectus form a part, have been so incorporated by reference in reliance on
the reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated statements of income, changes in shareholders' equity and
cash flows of The CIT Group, Inc. and subsidiaries for the year ended December
31, 2000, have been incorporated by reference herein and in the registration
statement of which this prospectus supplement and the accompanying prospectus
form a part, in reliance on the report of KPMG LLP, independent accountants,
also incorporated by reference herein, and upon the authority of KPMG LLP as
experts in accounting and auditing.
LUXEMBOURG LISTING AND OTHER GENERAL INFORMATION
We have applied to list the notes under the program on the Luxembourg Stock
Exchange in accordance with the rules of 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 the Chief Registrar of the District Court in
Luxembourg (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 BNP Paribas
Securities Services, Luxembourg Branch, copies of these documents, this
prospectus supplement, the prospectus, the Indentures, and our current annual
and quarterly reports, as well as all future annual reports and quarterly
reports, all of which will be available for collection, except the Indentures,
which will be available for inspection. We will prepare our next annual report,
which will
S-41
cover a twelve-month period ending December 31, 2003, within 75 days of December
31, 2003. The financial information in this report will reflect the
restructuring of CIT and its separation from Tyco as described under 'Selected
Consolidated Financial Information of CIT Group Inc.' BNP Paribas Securities
Services, Luxembourg Branch 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.
The Luxembourg Stock Exchange has allocated to the Global Medium Term Note
Program the number 12845 for listing purposes.
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 December
31, 2002.
Other than as disclosed or contemplated in this prospectus supplement or in
the documents incorporated in this prospectus supplement by reference, 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 authorizing the issuance and
sale of the notes on January 21, 2003. We undertake that each issuance of notes
from time to time under this prospectus supplement will be authorized by all
necessary corporate action on our part.
The notes, the Indentures, and the Global Selling Agency 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.
This prospectus supplement and the accompanying prospectus may be used only
for the purposes for which they were published. This prospectus supplement and
the accompanying prospectus together represent an offer to sell the notes but
only under circumstances and in jurisdictions where it is lawful to do so.
We will identify in the applicable pricing supplement whether the notes have
been accepted for clearance through the Depositary, Euroclear and Clearstream
systems. The CUSIP, Common Code, the International Securities Identification
Number (ISIN) or the identification number for any other relevant clearing
system for each series of notes will be set out in the relevant pricing
supplement.
We have undertaken, in connection with the listing of the notes, that if,
while notes are outstanding and listed on the Luxembourg Stock Exchange, there
shall occur any adverse change in our business or financial position that is
material in the context of the issuance of the notes which is not reflected in
this prospectus supplement (or any of the documents incorporated by reference in
this prospectus supplement) and if so required by the Luxembourg Stock Exchange,
we will prepare or procure the preparation of an amendment or supplement of this
prospectus supplement or, as the case may be, publish a new prospectus
supplement for use in connection with any subsequent offering by us of notes to
be listed on the Luxembourg Stock Exchange. Because the prospectus supplement
supersedes the attached prospectus to the extent that they are inconsistent, we
undertake to revise the attached prospectus only where changes in our business
or financial condition cannot be addressed through amendments to this prospectus
supplement.
S-42
FORM OF APPLICABLE PRICING SUPPLEMENT
Set out below is substantially the form of pricing supplement which is
expected to be completed for each series of notes listed on the Luxembourg Stock
Exchange and offered and sold pursuant to this prospectus supplement and the
accompanying prospectus. The notes may be issued in one or more series as we may
authorize from time to time. Prospective investors should refer to this
prospectus supplement and the accompanying prospectus for a description of the
specific terms and conditions of the particular series of notes.
RULE 424(b)(3)
REGISTRATION STATEMENT NOS. 333-98743 AND 333-103966
CUSIP
PRICING SUPPLEMENT NO.
DATED , TO
PROSPECTUS, DATED MAY 9, 2003 AND
PROSPECTUS SUPPLEMENT, DATED MAY 9, 2003
CIT GROUP INC.
GLOBAL MEDIUM-TERM [FIXED] [FLOATING] RATE NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
( ) Senior Note ( ) Senior Subordinated Note
Principal Amount: [ %]
Proceeds to Corporation: [ %] or [$ ].
Discounts and Commissions: [ %] or [$ ].
Issue Price: [ ].
Original Issue Date: [ ].
Maturity Date: [ ].
Interest Rate Basis (if floating rate note): [ ].
Index Maturity (if floating rate note): [ ].
Spread (if floating rate note): [ ].
Interest Rate Calculation (if floating rate note): [ ].
Interest Rate (if fixed rate note): [ ].
Initial Interest Rate (if floating rate note): [ ].
Specified Currency: [ ]
It is expected that the Notes will be ready for delivery in book-entry form on
or about , .
S-43
[NAMES OF AGENTS]
Form: Global Note.
Interest Reset Date (if floating rate note): [ ].
Rate Cut-Off Date (if floating rate note): [ ].
Interest Payment Dates: [ ].
Accrual of Interest: [ ].
Interest Determination Date (if floating rate note): [ ].
Calculation Date (if floating rate note): [ ].
Maximum Interest Rate (if floating rate note): Maximum Rate permitted by New
York law.
Minimum Interest Rate (if floating rate note): 0.0%.
Calculation Agent (if floating rate note): [ ].
Exchange Listing: [ ].
Other Provisions: [ ].
Trustee, Registrar, Authenticating and Paying Agent: [ ].
Agents: [ ].
Additional Paying Agents: [ ].
CUSIP: [ ].
Common Code: [ ].
ISIN: [ ].
Depositaries: [ ].
Responsibility
We accept responsibility for the information contained in this pricing
supplement.
Signed on behalf of CIT Group Inc.:
By: ______________________________
Duly Authorized
S-44
PROSPECTUS
[CIT LOGO]
CIT GROUP INC.
DEBT SECURITIES
-------------------
We may issue up to an aggregate of $17,083,787,000 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 by reference 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.
-------------------
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.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS MAY 9, 2003
TABLE OF CONTENTS
PAGE
----
CIT GROUP INC. ............................................. 3
RATIOS OF EARNINGS TO FIXED CHARGES......................... 9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 10
USE OF PROCEEDS............................................. 10
DESCRIPTION OF DEBT SECURITIES.............................. 11
PLAN OF DISTRIBUTION........................................ 16
EXPERTS..................................................... 17
LEGAL OPINIONS.............................................. 17
WHERE YOU CAN FIND MORE INFORMATION......................... 17
2
CIT GROUP INC.
GENERAL
CIT is a leading global commercial and consumer finance company that was
founded in 1908. We are a source of financing and leasing capital for companies
in a wide variety of industries, including many of today's leading industries
and emerging businesses, offering vendor, equipment, commercial, factoring,
consumer, and structured financing capabilities.
On July 8, 2002, our former parent, Tyco International Ltd. ('Tyco'),
completed a sale of 100% of CIT's outstanding common stock in an initial public
offering. Immediately prior to the offering, a restructuring was effectuated
whereby our predecessor, CIT Group Inc., a Nevada corporation (which is referred
to in this prospectus as CIT Group Inc. (Nevada)), was merged with and into its
parent Tyco Capital Holding, Inc. ('TCH'), a Nevada corporation, and that
combined entity was further merged with and into CIT Group Inc. (Del), a
Delaware corporation. In connection with the reorganization, CIT Group Inc.
(Del) was renamed CIT Group Inc. As a result of the reorganization, CIT is the
successor to CIT Group Inc. (Nevada)'s business, operations, obligations and SEC
registration.
On June 1, 2001, The CIT Group, Inc., a predecessor of CIT, was acquired by
TCH, a wholly-owned subsidiary of Tyco, in a purchase business combination
recorded under the 'push-down' method of accounting, resulting in a new basis of
accounting for the 'successor' periods beginning June 2, 2001. Information
relating to all 'predecessor' periods prior to the acquisition is presented
using CIT's historical basis of accounting.
Following the acquisition by Tyco, we changed our fiscal year end from
December 31 to September 30 to conform to Tyco's. On November 5, 2002, our board
of directors approved returning to a calendar year end for financial reporting.
We have a broad array of 'franchise' businesses that focus on specific
industries, asset types and markets, which are balanced by client, industry and
geographic diversification. Managed assets were $46.4 billion, owned financing
and leasing assets were $35.9 billion and stockholders' equity was $4.9 billion
at December 31, 2002.
We provide a wide range of financing and leasing products to small, midsize
and larger companies across a wide variety of industries, including
manufacturing, retailing, transportation, aerospace, construction, technology,
communication and various service-related industries. The secured lending,
leasing and factoring products of our 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, debtor-in-possession and turnaround
financing, and acquisition and expansion financing. Consumer lending is
conducted in our Specialty Finance segment and consists primarily of home equity
lending to consumers originated largely through a network of brokers and
correspondents.
Transactions are generated through direct calling efforts with borrowers,
lessees, equipment end-users, vendors, manufacturers and distributors and
through referral sources and other intermediaries. In addition, our strategic
business units jointly structure certain transactions and refer transactions to
other CIT units to best meet our customers' overall financing needs. We also buy
and sell participations in and syndications of finance receivables and/or lines
of credit. From time to time, in the normal course of business, we purchase
finance receivables on a wholesale basis to supplement our originated finance
receivables and sell select finance receivables and equipment under operating
leases for risk and other balance sheet management purposes, or to improve
profitability.
We conduct our operations through strategic business units that market
products and services to satisfy the financing needs of specific customers,
industries, vendors/manufacturers, and markets. Our four business segments are
as follows:
Equipment Financing and Leasing
Specialty Finance
Commercial Finance
Structured Finance
3
EQUIPMENT FINANCING AND LEASING SEGMENT
Equipment Financing and Leasing had total financing and leasing assets of
$14.2 billion at December 31, 2002, representing 39.6% of total financing and
leasing assets. Total Equipment Financing and Leasing managed assets were $18.1
billion or 39.1% of total managed assets. We conduct our Equipment Financing and
Leasing operations through two strategic business units:
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 in
manufacturing, construction, food services/stores,
transportation and other industries.
Capital Finance offers secured equipment financing and
leasing by directly marketing customized transactions of
commercial aircraft and rail cars and locomotives.
Equipment Financing and Capital Finance personnel have extensive expertise
in managing equipment over its full life cycle, including purchasing new
equipment, maintaining and repairing equipment, estimating residual values and
re-marketing via re-leasing or selling equipment. Equipment Financing's and
Capital Finance's equipment and industry expertise enables them to effectively
manage residual value risk. For example, Capital Finance can repossess
commercial aircraft, if necessary, obtain any required maintenance and repairs
for such aircraft, and recertify such aircraft with appropriate authorities. We
manage the equipment, the residual value, and the risk of equipment remaining
idle for extended periods of time and, where appropriate, we locate alternative
equipment users or purchasers.
EQUIPMENT FINANCING
Equipment Financing had total financing and leasing assets of $8.1 billion
at December 31, 2002, representing 22.7% of our total financing and leasing
assets. On a managed asset basis, Equipment Financing represented $12.1 billion
or 26.1% of total managed assets at December 31, 2002. Equipment Financing
offers secured equipment financing and leasing products, including loans,
leases, wholesale and retail financing for distributors and manufacturers, loans
guaranteed by the U.S. Small Business Administration, operating leases, sale and
leaseback arrangements, portfolio acquisitions, revolving lines of credit and
in-house syndication capabilities. In connection with our acquisition by Tyco,
in fiscal 2002 Equipment Financing ceased origination of, and placed in
liquidation status, the trucking and franchise finance portfolios. The
portfolios approximated $0.5 billion at December 31, 2002.
Equipment Financing is a diversified, middle-market, secured equipment
lender with a global presence and strong North American marketing coverage. At
December 31, 2002, its portfolio included significant financing and leasing
assets 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, including business aircraft.
Products are originated through direct calling on customers and through
relationships with manufacturers, dealers, distributors and intermediaries that
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 $6.1 billion at December
31, 2002, which represented 16.9% of our total financing and leasing assets and
13.1% of managed assets. Capital Finance specializes in providing customized
leasing and secured financing primarily to end-users of commercial aircraft and
railcars, including operating leases, single investor leases, equity portions of
leveraged leases, and sale and leaseback arrangements, as well as loans secured
by equipment. Typical customers are major domestic and international airlines,
North American railroad companies and middle-market to larger-sized companies.
New business is generated through direct calling efforts supplemented with
transactions introduced by intermediaries and other referral sources. Capital
Finance utilizes special purpose entities (SPE's) to record certain structured
leasing transactions, primarily aerospace leveraged leases. These SPE's are
consolidated in CIT's financial statements.
4
Capital Finance has provided financing to commercial airlines for over
thirty years, and the commercial aerospace portfolio includes most of the
leading U.S. and foreign commercial airlines. As of December 31, 2002, the
commercial aerospace financing and leasing asset balance was $4.1 billion,
consisting of 78 accounts and 194 aircraft with an average age of approximately
6.9 years, and all comply with Stage III noise regulations.
Capital Finance has developed strong direct relationships with most major
airlines and major aircraft and aircraft engine manufacturers. This provides
Capital Finance with access to technical information, which enhances customer
service, and provides opportunities to finance new business. As of December 31,
2002, commitments to purchase commercial aircraft from both Airbus Industrie and
The Boeing Company totaled 79 units through 2007 at an approximate value of
$3,796.0 million. Additionally, in some cases CIT has the flexibility to delay
or terminate certain positions. As of December 31, 2002, all delivered aircraft
have been placed in service. Total deliveries for calendar year 2003 are 19, of
which twelve have customers in place as of December 31, 2002.
Capital Finance has over 25 years of experience in financing the rail
industry, contributing to its knowledge of asset values, industry trends,
product structuring and customer needs. Capital Finance has a dedicated rail
equipment group, maintains relationships with several leading railcar
manufacturers and has a significant direct calling effort on railroads and rail
shippers in the United States. The Capital Finance rail portfolio includes
leases to all of the U.S. and Canadian Class I railroads (which are railroads
with annual revenues of at least $250 million) and numerous shippers. The
operating lease fleet includes primarily covered hopper cars used to ship grain
and agricultural products, plastic pellets and cement; gondola cars for coal,
steel coil and mill service; open hopper cars for coal and aggregates; center
beam flat cars for lumber; and boxcars for paper and auto parts. The owned
operating lease railcar fleet is relatively young, with approximately 80% (based
upon net investment) built in 1994 or later. The Capital Finance rail owned and
serviced fleet totals in excess of 47,000 railcars and approximately 500
locomotives.
SPECIALTY FINANCE SEGMENT
At December 31, 2002, Specialty Finance financing and leasing assets totaled
$10.3 billion, representing 28.8% of total financing and leasing assets.
Specialty Finance managed assets were $16.9 billion, representing 36.4% of total
managed assets. These assets include small ticket commercial financing and
leasing assets, vendor programs and consumer home equity loans. Also included in
the owned financing and leasing assets are liquidating portfolios, which include
manufactured housing, recreational vehicles, recreational marine and wholesale
inventory finance.
Specialty Finance forms relationships with industry-leading equipment
vendors, including manufacturers, dealers and distributors, to deliver
customized asset-based sales and financing solutions in a wide array of vendor
programs. These alliances allow our vendor partners to better utilize core
competencies, reduce capital needs and drive incremental sales volume. As a part
of these programs, we offer (i) credit financing to the manufacturer's customers
for the purchase or lease of the manufacturer's products, and (ii) enhanced
sales tools to manufacturers and vendors, such as asset management services,
efficient loan processing and real-time credit adjudication. Higher-level
partnership programs provide integration with the vendor's business planning
process and product offering systems to improve execution and reduce cycle
times. Specialty Finance has significant vendor programs in information
technology and telecommunications equipment and serves many other industries
through its global network.
These vendor alliances feature traditional vendor finance programs, joint
ventures, profit sharing and other transaction structures with large,
sales-oriented corporate vendor partners. In the case of joint ventures,
Specialty Finance and the vendor combine financing activities through a distinct
legal entity that is jointly owned. Generally, Specialty Finance accounts for
these arrangements on an equity basis, with profits and losses distributed
according to the joint venture agreement, and purchases qualified finance
receivables originated by the joint venture. Specialty Finance also utilizes
'virtual joint ventures,' whereby the assets are originated on Specialty
Finance's balance sheet, while profits and losses are shared with the vendor.
These types of strategic alliances are a key source of business for Specialty
Finance. New vendor alliance business is also generated through intermediaries
and other referral sources, as well as through direct end-user relationships.
5
The Specialty Finance small-ticket commercial loan business is engaged
mainly in the leasing of office products, computers, point-of-sale equipment and
other technology products in the United States and Canada. Products are
originated through direct calling on customers and through relationships with
manufacturers, dealers, distributors and other intermediaries.
Home equity products include both fixed and variable-rate closed-end loans
and variable-rate lines of credit. This unit primarily originates, purchases and
services 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.
Specialty Finance primarily originates loans through brokers and correspondents
with a high proportion of home equity applications processed electronically over
the internet via BrokerEdgeSM using proprietary systems. Through experienced
lending professionals and automation, Specialty Finance provides rapid
turnaround time from application to loan funding, which is critical to broker
relationships.
Specialty Finance sells individual loans and portfolios of loans to banks,
thrifts and other originators of consumer loans to maximize the value of its
origination network and to improve overall profitability. Contract servicing for
securitization trusts and other third parties is provided through a centralized
consumer Asset Service Center. Commercial assets are serviced via several
centers in the United States, Canada and internationally. Our Asset Service
Center centrally services and collects substantially all of our consumer
receivables, including loans originated or purchased by our Specialty Finance
segment, 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 our Specialty Finance segment for a fee on a
'contract' basis. These third-party portfolios totaled $2.2 billion at December
31, 2002.
COMMERCIAL FINANCE SEGMENT
At December 31, 2002, the financing and leasing assets of our Commercial
Finance Segment totaled $8.0 billion, representing 22.4% of total financing and
leasing assets and 17.3% of managed assets. We conduct our Commercial Finance
operations through two strategic business units, both of which focus on accounts
receivable and inventories as the primary source of security for their lending
transactions.
Commercial Services provides factoring and
receivable/collection management products and secured
financing to companies in apparel, textile, furniture, home
furnishings and other industries.
Business Credit provides secured financing, including term
and revolving loans based on asset values, as well as cash
flow and enterprise value structures to a full range of
borrowers from small to larger-sized companies.
Commercial Services
Commercial Services had total financing and leasing assets of $4.4 billion
at December 31, 2002, which represented 12.2% of our total financing and leasing
assets and 9.5% of managed 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.
Financing is provided to clients through the purchase of accounts receivable
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' and results in the payment by the client of a
factoring fee which is commensurate with the underlying degree of credit risk
and recourse, and which is generally a percentage of the factored receivables or
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 such
advances (in addition to any factoring fees) and satisfying such advances from
receivables collections. The operating
6
systems of the clients and Commercial Services are integrated in order to
facilitate the factoring relationship.
Clients use Commercial Services' products and services for various purposes,
including improving cash flow, mitigating or reducing the risk of charge-offs,
increasing sales and improving management information. Further, with the
TotalSourceSM product, clients can outsource bookkeeping, collection and other
receivable processing activities. These services are attractive to industries
outside the typical factoring markets, providing growth opportunities for
Commercial Services.
Commercial Services generates business regionally from a variety of sources,
including direct calling efforts and referrals from existing clients and other
referral sources. Accounts receivable, operations and other administrative
functions are centralized.
Business Credit
Financing and leasing assets of Business Credit totaled $3.6 billion at
December 31, 2002 and represented 10.2% of our total financing and leasing
assets and 7.9% of managed assets. Business Credit offers loan structures
ranging from asset-based revolving and term loans secured by accounts
receivable, inventories and fixed assets to loans based on earnings performance
and enterprise valuations to mid through larger-sized companies. Clients use
such loans primarily for working capital, growth, acquisitions,
debtor-in-possession financing and debt restructurings. Business Credit sells
and purchases participation interests in such loans to and from other lenders.
Through its variable rate, senior revolving and term products, Business
Credit meets its customer financing needs that are unfulfilled by other sources
of senior debt. Business Credit primarily structures financings on a secured
basis and, through its Corporate Finance unit, extends loans based upon the
sustainability of a customer's operating cash flow and ongoing enterprise
valuations. Revolving and term loans are made on a variable interest-rate basis
based upon published indices such as LIBOR or the prime rate of interest.
Business is originated regionally via solicitation activities focused upon
various types of intermediaries and referral sources. Business Credit has
increased its focus upon acquisition financings to compliment its debt
restructuring activities. Business Credit maintains long term relationships with
selected banks, finance companies, and other lenders to both source and
diversify senior debt exposures.
STRUCTURED FINANCE SEGMENT
Structured Finance had financing and leasing assets of $3.3 billion,
comprising 9.2% of our total financing and leasing assets and 7.2% of managed
assets at December 31, 2002. Structured Finance operates internationally through
operations in the United States, Canada and Europe. Structured Finance provides
specialized investment banking services to the international corporate finance
and institutional finance markets by providing asset-based financing for large
ticket asset acquisitions and project financing and related advisory services to
equipment manufacturers, corporate clients, regional airlines, governments and
public sector agencies. Communications (including telecommunication and media),
transportation, and the power and utilities sectors are among the industries
that Structured Finance serves.
Structured Finance also serves as an origination conduit to its lending
partners by seeking out and creating investment opportunities. Structured
Finance has established relationships with insurance companies and institutional
investors and can arrange financing opportunities that meet asset class, yield,
duration and credit quality requirements. Accordingly, syndication capability
and fee generation are key characteristics of Structured Finance's business.
Structured Finance utilizes SPE's to record certain structured leasing
transactions, including leveraged leases. These SPE's are generally consolidated
in our financial statements.
The segment had direct and private fund venture capital equity investments
totaling $335.4 million at December 31, 2002. In 2001, we ceased making new
venture capital investments beyond existing commitments, which totaled
approximately $164.9 million at December 31, 2002. In December 2002, we retained
a private equity firm, consisting of former CIT employees, to manage the
existing portfolio.
7
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
with global reach. Substantial financial services operations with global reach
have been formed by bank holding, leasing, finance and insurance companies that
compete with us. On a local level, community banks and smaller independent
finance and mortgage companies are a competitive force. 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 we are and may have access to capital at a
lower cost than we do, particularly following the recent disruption to our
funding base. Competition had been enhanced by a strong economy and growing
marketplace liquidity prior to 2001, although, during 2002 and 2001, the economy
has slowed and marketplace liquidity has tightened. The markets for most of our
products are characterized by a large number of competitors, although the number
of competitors has fallen in recent years as a consequence of continued
consolidation in the industry.
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, client
service and relationships. In addition, demand for our products with respect to
certain industries will be affected by demand for such industry's services and
products and by industry regulations.
REGULATION
Our operations are subject, in certain instances, to supervision and
regulation by state, federal and various foreign governmental authorities and
may be subject to various laws and judicial and administrative decisions
imposing various requirements and restrictions, which, among other things,
(i) regulate credit granting activities, including establishing licensing
requirements, if any, in applicable jurisdictions, (ii) establish maximum
interest rates, finance charges and other charges, (iii) regulate customers'
insurance coverages, (iv) require disclosures to customers, (v) govern secured
transactions, (vi) set collection, foreclosure, repossession and claims handling
procedures and other trade practices, (vii) prohibit discrimination in the
extension of credit and administration of loans, (viii) regulate the use and
reporting of information related to a borrower's credit experience and other
data collection. In addition, (i) CIT Bank, a Utah industrial loan corporation
wholly owned by CIT, is subject to regulation and examination by the Federal
Deposit Insurance Corporation and the Utah Department of Financial Institutions,
(ii) CIT Small Business Lending Corporation, a Delaware corporation wholly owned
by CIT, is licensed by and subject to regulation and examination by the U.S.
Small Business Administration, (iii) The Equipment Insurance Company, a Vermont
corporation wholly owned by CIT, and Highlands Insurance Company Limited, a
Barbados company wholly owned by CIT, are each licensed to enter into insurance
contracts and are regulated by the Departments of Insurance in Vermont and
Barbados, respectively, (iv) various banking corporations wholly owned by CIT in
France, Italy, Belgium and Sweden, are each subject to regulation and
examination by banking regulators in its home country, and (v) various
broker-dealer entities wholly owned by CIT in Canada, the United Kingdom, and
the United States are each subject to regulation and examination by securities
regulators in its home country.
EMPLOYEES
CIT employed approximately 5,835 people at December 31, 2002, of which
approximately 4,405 were employed in the United States and 1,430 were outside
the United States.
FACILITIES
CIT conducts its operations in the United States, Canada, Europe, Latin
America, Australia and the Asia-Pacific region. CIT occupies approximately 2.5
million square feet of office space, substantially all of
8
which is leased. Such office space is suitable and adequate for our needs and we
utilize, or plan to utilize, substantially all of our leased office space. We
are currently in negotiations to purchase our Livingston facility during 2003 at
a price that will result in expense levels that are comparable to the current
lease expenses.
LEGAL PROCEEDINGS
Except as set forth in our filings with the SEC, we are a defendant in
various lawsuits arising in the ordinary course of our business. We aggressively
manage our litigation and evaluate appropriate responses to our lawsuits in
light of a number of factors, including the potential impact of the actions on
the conduct of our operations. In the opinion of management, none of the pending
matters is expected to have a material adverse effect on our financial
condition, results of operations or liquidity. However, there can be no
assurance that an adverse decision in one or more of such lawsuits will not have
a material adverse effect.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of CIT
for each of the periods indicated.
THREE MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED YEARS ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
------------ ------------- ------------- ---------------------
2002 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
(SUCCESSOR) (COMBINED) (PREDECESSOR)
Ratios of Earnings to Fixed 1.67x (1) 1.30x 1.39x 1.45x 1.49x
Charges
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 one-third of rent expense which is deemed
representative of an interest factor.
(1) Earnings were insufficient to cover fixed charges by $6,331.1 million for
the twelve months ended September 30, 2002. Earnings for the twelve months
ended September 30, 2002 included a non-cash goodwill impairment charge of
$6,511.7 million in accordance with SFAS No. 142, 'Goodwill and Other
Intangible Assets.' The ratio of earnings to fixed charges included fixed
charges of $1,471.8 million and a loss before provision for income taxes of
$6,331.1 million resulting in a total loss provision for income taxes and
fixed charges of $(4,859.3) million.
9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and the documents
incorporated by reference are 'forward-looking statements' within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. All statements
contained herein that are not clearly historical in nature are forward-looking
and the words 'anticipate,' 'believe,' 'expect,' 'estimate' and similar
expressions are generally intended to identify forward-looking statements. Any
forward-looking statements contained herein, in press releases, written
statements or other documents filed with the Securities and Exchange Commission
(SEC) or in communications and discussions with investors and analysts in the
normal course of business through meetings, webcasts, phone calls and conference
calls, concerning our operations, economic performance and financial condition
are subject to known and unknown risks, uncertainties and contingencies.
Forward-looking statements are included, for example, in the discussions about:
our liquidity risk management,
our credit risk management,
our asset/liability risk management,
our capital, leverage and credit ratings,
our operational and legal risks,
our commitments to extend credit or purchase equipment, and
how we may be affected by legal proceedings.
All forward-looking statements involve risks and uncertainties, many of
which are beyond our control, which may cause actual results, performance or
achievements to differ materially from anticipated results, performance or
achievements. Also, forward-looking statements are based upon management's
estimates of fair values and of future costs, using currently available
information. Therefore, actual results may differ materially from those
expressed or implied in those statements. Factors that could cause such
differences include, but are not limited to:
risks of economic slowdown, downturn or recession,
industry cycles and trends,
risks inherent in changes in market interest rates and quality spreads,
funding opportunities and borrowing costs,
changes in funding markets, including commercial paper, term debt and the
asset-backed securitization markets,
uncertainties associated with risk management, including credit,
prepayment, asset/liability, interest rate and currency risks,
adequacy of reserves for credit losses,
risks associated with the value and recoverability of leased equipment and
lease residual values,
changes in laws or regulations governing our business and operations,
changes in competitive factors, and
future acquisitions and dispositions of businesses or asset portfolios.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of any debt securities
offered under this prospectus to provide additional working funds for us and our
subsidiaries. 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 that we may use in connection
with our business or that 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.
10
DESCRIPTION OF DEBT SECURITIES
The debt securities offered by this prospectus will be unsecured obligations
of CIT and will be either senior debt or senior subordinated debt. Senior debt
will be issued under a senior debt indenture. Senior subordinated debt will be
issued under a senior subordinated debt indenture. The senior debt indenture and
the senior subordinated debt indenture are sometimes referred to in this
prospectus individually as an 'indenture' and collectively as the 'indentures.'
We have filed forms of the global senior indenture and subordinated indenture as
exhibits to the registration statement on Form S-3 (No. 333-103966) under the
Securities Act of 1933, of which this prospectus is a part. The terms of the
indentures are also governed by the applicable provisions of the Trust Indenture
Act of 1939.
The following briefly summarizes the material provisions of the indentures
and the debt securities, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the more detailed provisions
of the applicable indenture, including the defined terms, for provisions that
may be important to you. You should also read the particular terms of a series
of debt securities, which will be described in more detail in the applicable
prospectus supplement. Copies of the indentures may be obtained from CIT or the
applicable trustee. So that you may easily locate the more detailed provisions,
the numbers in parentheses below refer to sections in the applicable indenture
or, if no indenture is specified, to sections in each of the indentures.
Wherever particular sections or defined terms of the applicable indenture are
referred to, these sections or defined terms are incorporated into this
prospectus by reference and the statements in this prospectus are qualified by
that reference.
GENERAL
The indentures provide that any debt securities that we issue will be issued
in fully registered form. We may issue the debt securities in one or more
separate series of senior or senior subordinated securities. Debt securities in
a particular series may have different maturities or different purchase prices.
(See Section 2.01 of the indentures.)
The debt securities that we issue will constitute either 'superior
indebtedness' or 'senior subordinated indebtedness,' as those terms are defined
below. From time to time, we may issue senior debt securities or '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 senior indenture filed with the SEC. 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. We refer to this banking institution
as a 'senior trustee.'
From time to time, we may also issue senior subordinated debt 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 senior subordinated global indenture filed with
the SEC. 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. We refer to this banking institution as 'senior subordinated trustee.'
Limitations on Indebtedness. The terms of the senior indentures do not limit
the amount of debt securities or other unsecured superior indebtedness that we
may issue. The terms of the senior indentures also do not limit the amount of
subordinated debt, secured or unsecured, that 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 that we may issue or limit the
amount of junior subordinated indebtedness that we may issue. For a description
of these limitations, see 'Description of Debt Securities -- Restrictive
Provisions and Covenants' on pages 13-14. At December 31, 2002, there was no
senior subordinated indebtedness issued and outstanding. At December 31, 2002,
under the most restrictive provisions of the senior subordinated indentures, we
could issue up to approximately $4.5 billion of additional senior subordinated
indebtedness.
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
11
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:
title, designation, total principal amount and authorized
denominations;
percentage of principal amount at which debt securities will
be issued;
maturity date or dates;
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;
payment dates for interest and principal and the provisions
for accrual of interest;
provisions for any sinking, purchase or other comparable
fund;
any redemption terms;
designation of the place where registered holders of debt
securities may be paid or may transfer or redeem debt
securities;
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;
any index that may be used to determine the amounts of
principal, interest or any other payment due on the debt
securities; and
designation of the debt securities as senior securities or
senior subordinated securities. (See Section 2.01 of the
indentures.)
Payment. Unless otherwise specified in the prospectus supplement, 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 December 31, 2002,
12
CIT Group Inc.'s consolidated unaudited balance sheet reflected approximately
$24.6 billion of outstanding superior indebtedness.
The senior securities will be senior to all senior subordinated
indebtedness, including the senior subordinated securities. At December 31,
2002, CIT Group Inc.'s consolidated balance sheet reflected no 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.
RESTRICTIVE PROVISIONS AND COVENANTS
Negative Pledge. Generally, the indentures do not limit the amount of other
securities that we or our subsidiaries may issue. But each indenture contains a
provision, the 'Negative Pledge,' 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. (See Section 6.04 of the indentures.)
Under the terms of the Negative Pledge, we are permitted to create the
following liens:
liens in favor of any of our subsidiaries;
purchase money liens;
liens existing at the time of any acquisition that we may
make;
liens in favor of the United States, any state or
governmental agency or department to secure obligations
under contracts or statutes;
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;
liens upon any real property acquired or constructed by us
primarily for use in the conduct of our business;
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;
liens to secure non-recourse debt in connection with our
leveraged or single-investor or other lease transactions;
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;
13
liens created by us in connection with any transaction that
we intend to be a sale of our property or assets;
liens on property or assets financed through tax-exempt
municipal obligations;
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, that originally
secured the lien; and
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:
the aggregate amount of senior subordinated indebtedness
outstanding at any time to exceed 100% of the aggregate
amount of the par value of our capital stock plus our
consolidated surplus (including retained earnings); or
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). Under the more restrictive of these
tests, as of December 31, 2002, we could issue up to
approximately $4.5 billion of additional senior subordinated
indebtedness.
(See senior subordinated indenture Section 6.05.)
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 Section 15.01 of the senior indenture, Section 16.01 of the
senior subordinated indenture.)
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 Section 6.06 of the senior indenture,
Section 6.07 of the senior subordinated indenture.)
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 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:
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; or
reducing the percentage of holders required to consent to
any amendment or modification for purposes of that series of
debt security.
The rights, duties or immunities of the trustee cannot be modified without
the consent of the trustee.
(See Section 14.02 of the indentures.)
14
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:
for an original issue discount security, we will use the
amount of the principal that would be due and payable as of
that date, as if the maturity of the debt had been
accelerated due to a default; or
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 that occurs with respect to a series of debt securities:
nonpayment for thirty days of any interest when due;
nonpayment of any principal or premium, if any, when due;
nonpayment of any sinking fund installment when due;
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);
certain events in bankruptcy, insolvency or reorganization;
nonpayment of interest on our indebtedness, including
guaranteed indebtedness (other than indebtedness that is
subordinate) or nonpayment of any principal on any of our
indebtedness, in an aggregate amount exceeding $25 million,
as a result of which such indebtedness shall have been
accelerated and such acceleration shall not have been
annulled or rescinded within thirty days after written
notice thereof; or
any other event of default included in any indenture or
supplemental indenture.
(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.)
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 Section 6.05 of the senior indenture, Section 6.06 of
the senior subordinated indenture.)
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
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
15
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 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:
directly to purchasers;
through agents;
to dealers; or
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, as required by applicable law.
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
16
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 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
The consolidated balance sheets of CIT Group Inc. and its subsidiaries as of
December 31, 2002, September 30, 2002 and September 30, 2001 and the related
consolidated statements of income, stockholders' equity and cash flows for the
three months ended December 31, 2002, the year ended September 30, 2002, the
period from June 2, 2001 through September 30, 2001 and the period from January
1, 2001 through June 1, 2001, incorporated by reference herein and in the
registration statement of which this prospectus forms a part, have been so
incorporated by reference in reliance on the reports of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated statements of income, changes in shareholders' equity and
cash flows of The CIT Group, Inc. and subsidiaries for the year ended December
31, 2000, have been incorporated by reference herein and in the registration
statement of which this prospectus forms a part, in reliance on the report of
KPMG LLP, independent accountants, also incorporated by reference herein, and
upon the authority of KPMG LLP as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the debt securities offered will be passed upon for us by
Schulte Roth & Zabel LLP.
WHERE YOU CAN FIND MORE INFORMATION
We have 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 securities offered in this prospectus, you should refer to the
registration statement and its exhibits. You may read and copy any document that
CIT files at the SEC's Public Reference Rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can also request copies of the documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. These SEC filings are also available to
the public from the SEC's web site at http://www.sec.gov. Certain of our
securities are listed on the New York Stock Exchange and reports and other
information concerning us can also be inspected at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005. You can also obtain
more information about us by visiting our web site at http://www.cit.com.
The SEC allows us to 'incorporate by reference' the information we file with
the SEC and information our predecessors filed in the past with the SEC, 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.
17
We are incorporating by reference into this prospectus the following
documents previously filed with the SEC:
1. Our Annual Report on Form 10-K for the fiscal year ended September 30,
2002.
2. Our Transition Report on Form 10-K for the transition period from October
1, 2002 to December 31, 2002.
3. Our Current Reports on Form 8-K filed January 23, 2003, January 24, 2003,
February 28, 2003, March 5, 2003, March 12, 2003, April 11, 2003,
April 22, 2003 and April 25, 2003.
Until we have sold all of the debt securities that we are offering for sale
under this prospectus, we also incorporate by reference all documents that we
will file in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
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 Glenn Votek, Executive Vice President and Treasurer, CIT Group
Inc., 1 CIT Drive, Livingston, New Jersey 07039, telephone (973) 740-5000.
You should rely only on the information provided in this prospectus and the
prospectus supplement, as well as the information incorporated by reference. CIT
has not authorized anyone to provide you with different information. CIT is not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus, the
prospectus supplement or any documents incorporated by reference is accurate as
of any date other than the date on the front of the applicable document.
18
REGISTERED OFFICE OF THE ISSUER
CIT Group Inc.
1 CIT Drive
Livingston, New Jersey 07039
AUDITORS OF THE ISSUER
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10019
TRUSTEES, PAYING AGENTS, AND REGISTRARS
The Bank of New York
101 Barclay Street
New York, New York 10286
Bank One Trust Company, N.A.
One Bank One Plaza, Suite 0286
Chicago, Illinois 60670-0286
LONDON PAYING AGENT
Bank One NA, London Branch
27 Leadenhall Street
London EC3A 1AA
LEGAL ADVISERS
To the Issuer To the Agents as to United States law
Robert J. Ingato, Esq. Wilmer, Cutler & Pickering
1 CIT Drive 2445 M Street, N.W.
Livingston, New Jersey 07039 Washington, D.C. 20037
To the Issuer as to United States law and United States tax law
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
LUXEMBOURG LISTING AGENT, LUXEMBOURG PAYING AGENT, AND LUXEMBOURG TRANSFER AGENT
BNP PARIBAS SECURITIES SERVICES, LUXEMBOURG BRANCH
23, Avenue de la Porte Neuve
L-2085, Luxembourg
U.S. $17,083,787,000
[CIT LOGO]
CIT GROUP INC.
1 CIT DRIVE
LIVINGSTON, NEW JERSEY 07039
GLOBAL MEDIUM-TERM NOTE PROGRAM
DUE 9 MONTHS OR MORE
FROM DATE OF ISSUE
------------------------
PROSPECTUS SUPPLEMENT
MAY 9, 2003
------------------------
LEHMAN BROTHERS
BANC OF AMERICA SECURITIES LLC
BARCLAYS CAPITAL
CITIGROUP
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
JPMORGAN
UBS WARBURG