FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of a Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month(s) of: March 31, 1999
NEWCOURT CREDIT GROUP INC.
Newcourt Centre, 207 Queens Quay West
Suite 700
Toronto, Ontario
Canada, M5J 1A7
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]
Form 20-F / / Form 40-F /X/
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.]
Yes / / No /X/
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b)]
82-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 5, 1999
NEWCOURT CREDIT GROUP INC.
By: John P. Stevenson
Corporate Secretary
News Release
For Immediate Release
Trading Symbol: NCT Media Contact: Rick Perkins
(416) 507-5437
Exchange Listing: Toronto Investor Contact: Geoff Ichii
Montreal (416) 507-6151
New York
Newcourt reports first quarter results with sharply reduced use of
securitization funding
Toronto, May 5, 1999 - Newcourt Credit Group today reported net income of
US$36.1 million (Cdn$54.8 million) for the three months ended March 31, 1999,
compared to US$27.3 million (Cdn$42.4 million) reported for the same period
last year. Earnings per share on a fully diluted basis were US$0.24
(Cdn$0.36) for the year compared to US$0.21 (Cdn$0.32) during the same period
last year. These results are below consensus analyst expectations due in
part to lower than planned use of securitization funding during the quarter.
During the quarter the Company reduced its use of securitization funding by
approximately US$1.1 billion from originally planned levels. As a result,
securitization fee income, which normally arises at the time loans are booked
and sold through the Company's securitization vehicles, is being deferred to
future reporting periods to be earned over time as net finance income.
Assets permanently funded on the balance sheet reduce net income by adding to
the provisions normally taken for owned versus managed assets.
During the period the Company also recorded a one-time pre-tax gain of
US$56.6 million (Cdn$85.9 million) arising from its unwinding of certain
currency hedges no longer required following the change in the Company's
reporting currency to US dollars from Canadian dollars.
"Despite reporting lower than expected first quarter earnings, our business
fundamentals are strong," noted Steven K. Hudson, Newcourt's CEO. "We
achieved record volumes in each of our two businesses, sales at our top
vendor customers ran ahead of plan, we exceeded our targets to lower
operating expenses, and our business backlogs increased. As was stated at the
time of the announcement of our planned merger with The CIT Group, the intent
is to reduce the combined company's reliance on securitization funding to
less than 15% by year 2000. Newcourt took this opportunity to accelerate the
shift in our funding mix in favour of on-balance sheet funding versus
securitization."
Newcourt originated new asset-based financings of US$4.9 billion (Cdn$7.4
billion) during the first three months of 1999, an increase of 68% from
US$2.9 billion (Cdn$4.5 billion) reported during the same period last year.
Of the US$4.90 billion in new financings, US$3.9 billion (Cdn$5.8 billion)
were generated from Newcourt Financial's activities in the commercial finance
market. The remaining volume of US$1.0 billion (Cdn$1.6 billion) was
originated by Newcourt Capital in the corporate finance market.
As a result of continued growth in the Company's loan originations and
increasing use of on-balance sheet funding, tangible leverage increased to
6.6:1 as at March 31, 1999 compared to the 5.9:1 as at December 31, 1998.
Total asset finance income for the three months ending March 31, 1999 rose
13% to US$236.7 million (Cdn$339.5 million) from US$209.2 million (Cdn$324.8
million) during the same period last year. Operating costs for the period,
excluding depreciation and amortization, amounted to US$158.4 million
(Cdn$240.5 million) compared to US$144.7 million ($224.7 million) for the
same period last year. Expressed as a percentage of owned and managed loans,
operating expenses on an annualized basis, excluding depreciation and
amortization, declined from 2.7% at December 31, 1998 to 2.6% as at March 31,
1999.
At a meeting of the Board of Directors held May 5, 1999, a quarterly dividend
of Cdn$0.06 per share was approved for payment on May 28, 1999 to
shareholders of record as of May 18, 1999.
On March 8, 1999, Newcourt announced that it had entered an agreement with
The CIT Group which would see the Company acquired by CIT in a share-for-
share exchange. Subject to the achievement of a number of conditions as well
as regulatory and shareholder approval, the transaction is scheduled to close
in the third quarter of 1999. "Management is confident that the various
conditions required to close the CIT/Newcourt merger will be met in
accordance with the agreement," added Hudson.
Newcourt Credit Group is one of the world's leading sources of asset-based
financing serving the corporate, commercial and institutional markets with
owned and managed assets of US$25.1 billion (Cdn$38.0 billion) and a global
capability in 26 countries.
This report may contain forward looking statements about the operations,
objectives and strategies of Newcourt. These statements are subject to
risks and uncertainties. Actual results may differ materially due to a
variety of factors including competition, technological change, issues
relating to Year 2000 readiness, the global capital markets and general
economic conditions in the U.S., Canada, or internationally. These and
other factors should be considered carefully and readers should not place
undue reliance on Newcourt's forward looking statements.
Newcourt Credit Group Inc.
Summary of Quarterly Financial Statistics
for the period ended March 31, 1999,<fn1>
(all amounts in United States dollars unless otherwise stated)
I. Basic Earnings per Share (common and special)
Average shares outstanding during the period
Number of Common and Special Shares as at January 1, 1999 148,312,634
# shares # days o/s
Shares issued during the quarter ended March 31, 1999 11,475 53 / 90 6,766
Weighted average shares outstanding, March 31, 1999 148,319,400
Net income for the year to date $36,057<fn3>
II. Comparative Earnings Per Share Summary
Three Months Ended
March 31
1999 1998<fn2>
Basic $0.24<fn3> $0.21
Fully Diluted 0.24<fn3> 0.21
Cash Basis 0.32<fn3> 0.31
Dividends per share (Canadian dollars) 0.06 0.04
III. Balance Sheet Highlights ($ millions)
As at March 31
1999 1998<fn2>
Owned and managed assets 25,144 20,538
Tangible Equity 1,773 1,455
Tangible Leverage 6.6:1 6.1:1
IV. Income Statement Highlights (US$000)
Three Months Ended
March 31
1999 1998<fn2>
Operating income before taxes 60,396<fn3> 46,062
New originations 4,899,397 2,922,538
Originations
U.S. & Canada 87.0%
U.K. / Europe 9.7%
Asia Pacific 2.6%
Latin America 0.7%
100%
V. Margin Analysis Summary (US$000)
(i) Securitization Three Months Ended
March 31
1999 1998<fn2>
Securitization Fees 32,437 48,985
Assets Securitized 1,040,174 1,056,135
Securitization Margin 3.12% 4.64%
(ii) Syndication
Syndication Fees 16,820 6,524
Assets Syndicated 1,038,952 553,500
Syndication Margin 1.62% 1.18%
(iii) Net Finance Income
Finance assets held for
investment 8,900,429 7,420,011
Equipment under operating lease 2,265,632 1,852,035
Finance assets held for sale 2,061,763 1,029,513
Total owned assets 13,227,824 10,301,559
Average total owned assets 12,777,906 10,065,100
Net Finance and Rental Income 94,676 122,494
Net Finance Income Margin 2.96% 4.87%
Interest Expense 199,944 140,935
OPEX / Owned and Managed
Assets 2.6% 2.8%
<fn1> All figures expressed in United States dollars unless otherwise stated
</fn1>
<fn2> 1998 financial figures have been translated from Canadian to US using a rate of 0.6443
</fn2>
<fn3> Includes a pre-tax gain of $56,582 attributed to unwind of net investments hedges
</fn3>
Newcourt Credit Group Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
[in thousands of United States dollars]
March 31, December 31,
1999 1998
$ $
ASSETS
Cash 440,355 998,807
Finance assets held for investment 8,900,429 8,611,705
Equipment under operating lease 2,265,632 2,173,514
Finance assets held for sale 2,061,763 1,542,769
Investment in affiliated companies 256,142 194,860
Accounts receivable, prepaids and other 402,434 310,948
Property and equipment, net 100,244 93,874
Goodwill 1,275,188 1,280,036
Future income tax asset 180,965 146,444
Total Assets 15,883,152 15,352,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities 686,256 727,468
Debt 12,148,897 11,607,184
Total Liabilities 12,835,153 12,334,652
Shareholders' Equity
Share capital 2,792,137 2,792,861
Retained earnings 255,862 225,444
Total Shareholders' Equity 3,047,999 3,018,305
Total Liabilities and Shareholders' Equity 15,883,152 15,352,957
Newcourt Credit Group Inc.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
[in thousands of United States dollars, except for per share amounts]
Three Months Ended
March 31, March 31,
1999 1998
$ $
Asset finance income
Net finance and rental income 94,676 122,494
Gain on sale of finance assets 49,257 55,509
Management fees and other income 92,786 31,243
Total asset finance income 236,719 209,246
Salaries and wages 88,930 75,243
Operating and administrative 69,463 69,504
Depreciation and goodwill amortization 17,930 18,437
Operating income before income taxes 60,396 46,062
Provision for income taxes 24,339 18,751
Net income for the period 36,057 27,311
Retained earnings, beginning of period 225,444 81,240
Dividends paid on common shares (5,639) (3,596)
Retained earnings, end of period 255,862 104,955
Earnings per common share:
Basic $0.24 $0.21
Fully diluted $0.24 $0.21