================================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q
            (Mark One)
              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended JUNE 30, 1999
                                       OR
              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

                             Commission File Number
                                     1-1861
                                   ----------

                               THE CIT GROUP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          DELAWARE                                               13-2994534
--------------------------------------------------------------------------------
     (State or other jurisdiction of                          (IRS Employer
     incorporation or organization)                         Identification No.)

     1211 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK               10036
--------------------------------------------------------------------------------
 (Address of principal executive offices)                        (Zip Code)

                                 (212) 536-1390
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
         (Former name, former address and former fiscal year, if changed
           since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                               Yes  X            No____

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of August 2, 1999: Class A Common Stock - 161,604,093 shares.

================================================================================


<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
                                   (UNAUDITED)


     TABLE OF CONTENTS                                                     PAGE
                                                                           ----

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements
        Consolidated Balance Sheets - June 30, 1999 and
          December 31, 1998.                                                2
        Consolidated Income Statements for the three and six month
          periods ended June 30, 1999 and 1998.                             3
        Consolidated Statements of Changes in Stockholders' Equity for
          the six month periods ended June 30, 1999 and 1998.               4
        Consolidated Statements of Cash Flows for the six month
          periods ended June 30, 1999 and 1998.                             5
        Notes to Condensed Consolidated Financial Statements.               6-7

Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations                               8-28

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                                    29

Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Because such statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and uncertainties
include, but are not limited to, potential changes in interest rates,
competitive factors, and general economic conditions.

                          PART I. FINANCIAL INFORMATION

      Certain  information  and footnote  disclosures  normally  included in the
consolidated financial statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted  pursuant to the rules and
regulations  of the Securities and Exchange  Commission.  It is suggested  these
condensed  consolidated  financial  statements be read in  conjunction  with the
consolidated financial statements and notes thereto included in the December 31,
1998 Annual Report on Form 10-K and the March 31, 1999 quarterly  report on Form
10-Q for The CIT Group, Inc. ("we", "our", "us", "CIT", or the "Company").


                                       1
<PAGE>

<TABLE>
<CAPTION>
                      THE CIT GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                              (Amounts in Millions)

                                                                  June 30,    December 31,
Assets                                                              1999          1998
------                                                           ---------    ------------
                                                                (unaudited)
<S>                                                              <C>          <C>
Financing and leasing assets
Loans
  Commercial                                                     $12,482.2    $11,415.5
  Consumer                                                         4,176.4      4,266.9
Lease receivables                                                  4,239.0      4,173.6
                                                                 ---------    ---------
  Finance receivables                                             20,897.6     19,856.0
Reserve for credit losses                                           (276.8)      (263.7)
                                                                 ---------    ---------
  Net finance receivables                                         20,620.8     19,592.3
Operating lease equipment, net                                     3,433.2      2,774.1
Consumer finance receivables held for sale                           864.4        987.4
Cash and cash equivalents                                             92.9         73.6
Other assets                                                       1,133.0        875.7
                                                                 ---------    ---------
 Total assets                                                    $26,144.3    $24,303.1
                                                                 =========    =========

Liabilities and Stockholders' Equity
------------------------------------
Debt
Commercial paper                                                 $ 5,674.3    $ 6,144.1
Variable rate senior notes                                         5,349.7      4,275.0
Fixed rate senior notes                                            8,611.3      8,032.3
Subordinated fixed rate notes                                        200.0        200.0
                                                                 ---------    ---------
  Total debt                                                      19,835.3     18,651.4
Credit balances of factoring clients                               1,761.6      1,302.1
Accrued liabilities and payables                                     675.9        694.3
Deferred federal income taxes                                        775.1        703.7
                                                                 ---------    ---------
  Total liabilities                                               23,047.9     21,351.5
Company-obligated mandatorily redeemable
 preferred securities of subsidiary trust holding
 solely debentures of the Company                                    250.0        250.0
Stockholders' equity
Class A Common Stock, par value $0.01 per share;
 Authorized: 700,000,000 shares
 Issued: 163,186,543 shares in 1999 and 163,144,879
    shares in 1998
 Outstanding: 161,712,782 shares in 1999 and
    162,176,949 shares in 1998                                         1.7          1.7
Paid-in capital                                                      957.2        952.5
Retained earnings                                                  1,928.5      1,772.8
Treasury stock at cost (1,473,761 shares in 1999 and 967,930
   shares in 1998; Class A Common Stock)                             (41.0)       (25.4)
                                                                 ---------    ---------
Total stockholders' equity                                         2,846.4      2,701.6
                                                                 ---------    ---------
 Total liabilities and stockholders' equity                      $26,144.3    $24,303.1
                                                                 =========    =========
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                       2
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
               (Amounts in Millions, except Net Income per Share)


<TABLE>
<CAPTION>
                                                 For the Quarter       For the Six Months
                                                  Ended June 30,         Ended June 30,
                                                 ------------------   -------------------
                                                 1999        1998        1999       1998
                                                 ----        ----        ----       ----
                                                      (unaudited)         (unaudited)
<S>                                               <C>       <C>       <C>         <C>
Finance income                                    $ 554.4   $ 498.2   $ 1,095.9   $ 970.8
Interest expense                                    280.8     257.8       554.1     502.4
                                                  -------   -------   ---------   -------
  Net finance income                                273.6     240.4       541.8     468.4

Fees and other income                                74.8      60.7       139.5     127.1
                                                  -------   -------   ---------   -------
  Operating revenue                                 348.4     301.1       681.3     595.5
                                                  -------   -------   ---------   -------

Salaries and general operating expenses             113.0     104.0       222.0     205.7
Provision for credit losses                          23.8      21.9        45.7      44.4
Depreciation on operating lease equipment            59.2      40.4       115.3      78.7
Minority interest in subsidiary trust holding
 solely debentures of the Company                     4.8       4.8         9.6       9.6
                                                  -------   -------   ---------   -------
  Operating expenses                                200.8     171.1       392.6     338.4
                                                  -------   -------   ---------   -------

Income before provision for income taxes            147.6     130.0       288.7     257.1
Provision for income taxes                           51.3      46.3       100.5      91.7
                                                  -------   -------   ---------   -------
Net income                                        $  96.3   $  83.7   $   188.2   $ 165.4
                                                  =======   =======   =========   =======

Net income per basic share                        $  0.60   $  0.52   $    1.17  $   1.02
Net income per diluted share                      $  0.59   $  0.51   $    1.16  $   1.01
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                              (Amounts in Millions)


                                                            Six Months Ended
                                                                June 30,
                                                     --------------------------
                                                        1999              1998
                                                     ----------      ----------
                                                              (unaudited)
Balance, January 1                                   $  2,701.6      $  2,432.9
Net income                                                188.2           165.4
Dividends declared                                        (32.4)          (16.3)
Treasury stock purchased                                  (15.6)             --
Other                                                       4.6             2.7
                                                     ----------      ----------
Balance, June 30                                     $  2,846.4      $  2,584.7
                                                     ==========      ==========

See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                      THE CIT GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Amounts in Millions)

                                                                              Six Months Ended
                                                                                  June 30,
                                                                           ----------------------
                                                                             1999            1998
                                                                           ---------    ---------
                                                                                 (unaudited)
<S>                                                                        <C>          <C>
CASH FLOWS FROM OPERATIONS
Net income                                                                 $   188.2    $   165.4
Adjustments to reconcile net income to net cash flows from operations:
 Provision for credit losses                                                    45.7         44.4
 Depreciation and amortization                                                 131.6         91.4
 Provision for deferred federal income taxes                                    71.4         38.4
 Gains on asset and receivable sales                                           (41.2)       (37.5)
 (Decrease) increase in accrued liabilities and payables                       (27.0)        17.8
 Increase in other assets                                                     (131.3)       (46.3)
 Other                                                                          29.3          7.8
                                                                           ---------    ---------
  Net cash flows provided by operations                                        266.7        281.4
                                                                           ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Loans extended                                                             (16,879.7)   (17,171.3)
Collections on loans                                                        15,535.0     15,986.1
Proceeds from asset and receivable sales                                     1,663.0        518.2
Purchases of assets to be leased                                              (879.2)      (362.5)
Purchase of loan portfolios                                                   (452.7)      (314.5)
Net increase in short-term factoring receivables                              (269.1)      (190.0)
Proceeds from sales of assets received in satisfaction of loans                 19.8         23.6
Purchases of investment securities                                              (9.7)       (16.1)
Other                                                                          (11.0)       (18.9)
                                                                           ---------    ---------
  Net cash flows used for investing activities                              (1,283.6)    (1,545.4)
                                                                           ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of variable and fixed rate notes                  4,348.9      2,858.4
Repayments of variable and fixed rate notes                                 (2,695.3)    (2,110.4)
Net (decrease) increase in commercial paper                                   (469.8)       637.4
Repayments of nonrecourse leveraged lease debt                                 (99.6)       (82.5)
Proceeds from nonrecourse leveraged lease debt                                    --          6.4
Cash dividends paid                                                            (32.4)       (16.3)
Purchase of treasury stock                                                     (15.6)          --
                                                                           ---------    ---------
  Net cash flows provided by financing activities                            1,036.2      1,293.0
                                                                           ---------    ---------
Net increase in cash and cash equivalents                                       19.3         29.0
Cash and cash equivalents, beginning of period                                  73.6        140.4
                                                                           ---------    ---------
Cash and cash equivalents, end of period                                   $    92.9    $   169.4
                                                                           =========    =========

Supplemental disclosures
Interest paid                                                              $   552.5    $   501.7
Federal and state and local income taxes paid                              $    45.2    $    38.8
</TABLE>


See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1--Basis of Presentation

We  believe  all  adjustments  (all of  which  are  normal  recurring  accruals)
necessary for a fair  statement of financial  position and results of operations
for these  periods  have been made;  however,  results for  interim  periods are
subject to year-end  audit  adjustments.  Results  for  interim  periods are not
necessarily indicative of results for a full year.

Note 2--Earnings Per Share

The  reconciliation of the numerator and denominator of basic earnings per share
("EPS") with that of diluted EPS is presented below.


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                 For the Three Months Ended June 30,
                                        -----------------------------------------------------------------------------------------
                                                           1999                                            1998
                                        -------------------------------------------     -----------------------------------------
                                          Income            Shares        Per Share       Income           Shares       Per Share
                                        (Numerator)      (Denominator)      Amount      (Numerator)     (Denominator)     Amount
                                        -----------      -------------    ---------     -----------     -------------   ---------
                                                                         Dollar Amounts in Millions
                                                                         (except per share amounts)
<S>                                       <C>             <C>                <C>         <C>             <C>              <C>
Basic EPS:
 Income available to
  common shareholders                     $  96.3         160,879,207        $ 0.60      $  83.7         162,225,000      $ 0.52
Effect of Dilutive Securities:                                               ======                                       ======
 Restricted shares                             --             966,325                         --             942,375
 Stock options                                 --             274,351                         --             487,835
                                          -------         -----------                    -------         -----------
Diluted EPS                               $  96.3         162,119,883        $ 0.59      $  83.7         163,655,210      $ 0.51
                                          =======         ===========        ======      =======         ===========      ======

                                        -----------------------------------------------------------------------------------------
                                                                 For the Six Months Ended June 30,
                                        -----------------------------------------------------------------------------------------
                                                           1999                                            1998
                                        -------------------------------------------     -----------------------------------------
                                          Income            Shares       Per Share         Income           Shares      Per Share
                                        (Numerator)      (Denominator)    Amount         (Numerator)    (Denominator)     Amount
                                        -----------      -------------   ----------      -----------    -------------   ---------
                                                                         Dollar Amounts in Millions
                                                                         (except per share amounts)
<S>                                       <C>             <C>                <C>         <C>             <C>              <C>
Basic EPS:
 Income available to
  common shareholders                     $ 188.2         161,021,757        $ 1.17      $ 165.4         162,225,000      $ 1.02
Effect of Dilutive Securities:                                               ======                                       ======
 Restricted shares                             --             962,684                         --             945,012
 Stock options                                 --             283,500                         --             409,684
                                          -------         -----------                    -------         -----------

Diluted EPS                               $ 188.2         162,267,941        $ 1.16      $ 165.4         163,579,696      $ 1.01
                                          =======         ===========        ======      =======         ===========      ======
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

Note 3--Business Segment Information

The  following   table  presents   reportable   segment   information   and  the
reconciliation to the consolidated totals as of June 30, 1999 and 1998.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                          Equipment
                          Financing      Commercial                       Total         Corporate      Consolidated
                         and Leasing      Finance       Consumer        Segments        and Other          Total
                         -----------     ----------     --------        --------        ---------      ------------
<S>                       <C>            <C>            <C>              <C>             <C>            <C>
June 30, 1999                                               (Dollars in Millions)
Operating revenue         $   366.1      $  191.1       $  120.3         $ 677.5         $  3.8         $    681.3
Net income                    119.0          66.0           27.8           212.8          (24.6)             188.2
Total managed assets       14,170.4       5,984.0        8,149.4        28,303.8           91.7           28,395.5


June 30, 1998
Operating revenue             299.3         166.7          105.8           571.8           23.7              595.5
Net income                     96.7          59.4           21.6           177.7          (12.3)             165.4
Total managed assets       12,014.6       4,709.3        7,120.5        23,844.4           75.5           23,919.9
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Note 4--Pending Acquisition

On August 5, 1999 we announced that we had reached a new agreement with Newcourt
Credit  Group Inc.  ("Newcourt")  under  which CIT will  acquire  Newcourt in an
exchange  of .70  share  of CIT  stock  for  each  outstanding  common  share of
Newcourt.  This agreement amends and restates the original acquisition agreement
dated March 7, 1999.

The  acquisition,  which has been  approved by the Boards of  Directors  of both
companies, is expected to close during the fourth quarter of 1999. Completion of
this transaction is conditioned upon, among other things,  customary  regulatory
and shareholder approvals.


                                       7
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

OVERVIEW

Net income for the second  quarter  ended June 30, 1999 and 1998  totaled  $96.3
million and $83.7  million,  respectively.  Six month net income  totaled $188.2
million and $165.4 million for 1999 and 1998, respectively. Earnings per diluted
share for the  second  quarter  of 1999  increased  15.7% to $0.59 from $0.51 in
1998. Six month earnings per diluted share  increased 14.9% to $1.16 from $1.01.
The strong 1999 earnings were driven by higher portfolio growth,  notably a very
strong  year over year  increase in  commercial  financing  and leasing  assets,
continued high credit quality, and further improvements in operating efficiency.

Return on equity for the second  quarter of 1999 was 13.7% compared to 13.2% for
the same  period in 1998,  and 13.6% for the first six months of 1999,  improved
from 13.2% for the same period in 1998. Return on average earning assets ("AEA")
for the  second  quarter  of 1999 was 1.66%  compared  to 1.67%  for the  second
quarter of 1998.  Return on AEA for the six months ended June 30, 1999 was 1.64%
compared with 1.69% for the same period in 1998.

Managed assets,  comprised of financing and leasing assets and consumer  finance
receivables  previously securitized that we continue to manage, totaled a record
$28.4  billion at June 30, 1999, an increase of 18.7% from $23.9 billion at June
30, 1998 and up 8.3% from $26.2  billion at December  31,  1998.  Financing  and
leasing  assets  increased  17.7% to $25.3  billion at June 30,  1999 from $21.5
billion at June 30, 1998,  and increased 6.7% from $23.7 billion at December 31,
1998.

                                       8
<PAGE>


NET FINANCE INCOME

A comparison of 1999 and 1998 net finance income is set forth below.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                      Three Months Ended
                                           --------------------------------------------------------------------
                                                       June 30,                               Increase
                                           ------------------------------           ---------------------------
                                              1999                1998                Amount            Percent
                                           ----------          ----------           ---------           -------
                                                                      (Dollar Amounts in Millions)
<S>                                        <C>                 <C>                  <C>                   <C>
Finance income                             $    554.4          $    498.2           $    56.2             11.3%
Interest expense                                280.8               257.8                23.0              8.9%
                                           ----------          ----------           ---------           -------
Net finance income                         $    273.6          $    240.4           $    33.2             13.8%
                                           ==========          ==========           =========           =======
AEA                                        $ 23,166.2          $ 20,086.0           $ 3,080.2             15.3%
                                           ==========          ==========           =========           =======
Net finance income as a % of AEA                4.72%               4.79%
                                           ==========          ==========


                                                                      Six Months Ended
                                           --------------------------------------------------------------------
                                                       June 30,                               Increase
                                           ------------------------------           ---------------------------
                                              1999                1998                Amount            Percent
                                           ----------          ----------           ---------           -------
                                                                      (Dollar Amounts in Millions)
<S>                                        <C>                 <C>                  <C>                   <C>
Finance income                             $  1,095.9          $    970.8           $   125.1             12.9%
Interest expense                                554.1               502.4                51.7             10.3%
                                           ----------          ----------           ---------           -------
Net finance income                         $    541.8          $    468.4           $    73.4             15.7%
                                           ==========          ==========           =========           =======
AEA                                        $ 22,905.3          $ 19,578.9           $ 3,326.4             17.0%
                                           ==========          ==========           =========           =======
Net finance income as a % of AEA                4.73%               4.79%
                                           ==========          ==========
---------------------------------------------------------------------------------------------------------------
</TABLE>

Finance income for the three months ended June 30, 1999 increased  $56.2 million
or 11.3%  from the  comparable  1998  period.  Finance  income for the six month
period  ended  June 30,  1999  increased  $125.1  million or 12.9% from the same
period in 1998.  As a percentage  of AEA,  finance  income  (excluding  interest
income relating to short-term  interest-bearing deposits) was 9.45% for both the
quarter  and six  months  ended  June 30,  1999  compared  to 9.78% for the same
periods in 1998.  The  decline in yield was  primarily  due to lower  prevailing
market interest rates on average during 1999.


                                       9
<PAGE>

Interest  expense  for the three  months  ended June 30,  1999  increased  $23.0
million or 8.9% from the  comparable  1998 period,  and for the six month period
ended June 30,  1999  increased  $51.7  million or 10.3% from the same period in
1998. As a percentage  of AEA,  interest  expense  (excluding  interest  expense
relating to short-term  interest-bearing  deposits and dividends  related to the
Company's preferred capital securities) for the second quarter of 1999 decreased
to 4.73% from 4.99%, and to 4.72% from 4.99% for the six month period ended June
30, 1999 and 1998, respectively.  The decline from the comparable period of 1998
reflects lower market rates.

We seek to mitigate interest rate risk by matching the repricing characteristics
of our assets with our  liabilities.  This  strategy  is, in part,  accomplished
through the use of interest rate swaps.  A comparative  analysis of the weighted
average principal  outstanding and interest rates paid on our debt for the three
and six month  periods  ended June 30,  1999 and 1998,  before and after  giving
effect to interest rate swaps, is shown in the following table.

                                       10
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                             Three Months Ended June 30, 1999
                                                ----------------------------------------------------------
                                                        Before Swaps                   After Swaps
                                                ------------------------         -------------------------
                                                                (Dollar Amounts in Millions)
<S>                                             <C>                 <C>          <C>                 <C>
Commercial paper and variable rate senior
   notes                                        $ 10,860.1          4.93%        $  8,475.0          4.92%
Fixed rate senior and subordinated notes           8,844.0          6.18%          11,229.1          6.25%
                                                ----------                       ----------
Composite interest rate paid                    $ 19,704.1          5.49%        $ 19,704.1          5.68%
                                                ==========                       ==========

                                                             Three Months Ended June 30, 1998
                                                ----------------------------------------------------------
                                                        Before Swaps                   After Swaps
                                                ------------------------         -------------------------
                                                                (Dollar Amounts in Millions)
<S>                                             <C>                 <C>          <C>                 <C>
Commercial paper and variable rate senior
   notes                                        $  9,542.9          5.61%        $  6,879.1          5.55%
Fixed rate senior and subordinated notes           7,057.0          6.34%           9,720.8          6.42%
                                                ----------                       ----------
Composite interest rate paid                    $ 16,599.9          5.92%        $ 16,599.9          6.06%
                                                ==========                       ==========
----------------------------------------------------------------------------------------------------------

                                                             Six Months Ended June 30, 1999
                                                ----------------------------------------------------------

                                                        Before Swaps                   After Swaps
                                                ------------------------         -------------------------
                                                                (Dollar Amounts in Millions)
<S>                                             <C>                 <C>          <C>                 <C>
Commercial paper and variable rate senior
   notes                                        $ 10,767.0          4.97%        $  8,406.4          4.94%
Fixed rate senior and subordinated notes           8,670.4          6.19%          11,031.0          6.26%
                                                ----------                       ----------
Composite interest rate paid                    $ 19,437.4          5.51%        $ 19,437.4          5.69%
                                                ==========                       ==========


                                                             Six Months Ended June 30, 1998
                                                ----------------------------------------------------------

                                                        Before Swaps                   After Swaps
                                                ------------------------         -------------------------
                                                                (Dollar Amounts in Millions)
<S>                                             <C>                 <C>          <C>                 <C>
Commercial paper and variable rate senior
   notes                                         $ 8,781.6          5.63%         $ 6,215.0          5.57%
Fixed rate senior and subordinated notes           7,056.7          6.37%           9,623.3          6.45%
                                                ----------                       ----------
Composite interest rate paid                    $ 15,838.3          5.96%        $ 15,838.3          6.11%
                                                ==========                       ==========
----------------------------------------------------------------------------------------------------------
</TABLE>

Our interest rate swaps principally convert floating rate debt to fixed interest
rates.  We do not enter into  derivative  financial  instruments  for trading or
speculative  purposes.  The weighted average composite interest rate after swaps
increased from the weighted average composite interest rate before swaps in each
period,  primarily  because a larger proportion of our debt, after giving effect
to interest  rate swaps,  was subject to a fixed  interest  rate.  However,  the
weighted


                                       11
<PAGE>

average  interest  rates  before swaps do not  necessarily  reflect the interest
expense that would have been incurred had we chosen to manage interest rate risk
without the use of such swaps.

FEES AND OTHER INCOME

For the three months ended June 30, 1999,  fees and other income  totaled  $74.8
million,  compared to $60.7 million for the second  quarter of 1998. For the six
months  ended  June 30,  1999 and 1998,  fees and other  income  totaled  $139.5
million  and $127.1  million,  respectively.  Strong  growth in  factoring  fees
resulted from a factoring acquisition.  Additionally,  increased lending fees in
our commercial finance and equipment financing businesses, and gains on sales of
leasing  equipment,  were  partially  offset by lower  gains on venture  capital
investments.  The  following  table sets forth the  components of fees and other
income.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                       Three Months Ended               Six Months Ended
                                                           June 30,                         June 30,
                                                    -----------------------         -----------------------
                                                      1999           1998             1999            1998
                                                    --------       --------         -------         -------
                                                                  (Dollar Amounts in Millions)
<S>                                                 <C>             <C>             <C>             <C>
Factoring commissions                               $ 29.0          $ 22.6          $  53.0         $  45.6
Fees and other income                                 20.4            22.1             51.3            44.2
Gains on sales of leasing equipment                   20.7             8.9             29.9            23.7
Gains on securitizations                               4.7             5.2              5.3             5.2
Gains on sales of venture capital investments           --             1.9               --             8.4
                                                    ------         -------          -------         -------

                                                    $ 74.8          $ 60.7          $ 139.5         $ 127.1
                                                    ======         =======          =======         =======
-----------------------------------------------------------------------------------------------------------
</TABLE>

SALARIES AND GENERAL OPERATING EXPENSES

Salaries  and general  operating  expenses  increased by $9.0 million or 8.7% to
$113.0  million  in the  second  quarter  of 1999  from  $104.0  million  in the
comparable 1998 period.  For the six month period ended June 30, 1999,  salaries
and general operating expenses increased $16.3 million or 7.9% to $222.0 million
from  $205.7  million  for the same  period in 1998.  The  increase  in expenses
reflects a factoring acquisition and continued portfolio growth and product


                                       12
<PAGE>

expansion in the commercial financing and leasing businesses,  incremental costs
relating to the restructuring of our sales finance business,  and normal expense
increases.

Management  monitors  productivity  via the  efficiency  ratio  and the ratio of
salaries and general operating expenses to average managed assets ("AMA"). These
ratios are set forth in the following table.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                               Three Months Ended         Six Months Ended
                                                     June 30,                  June 30,
                                              ---------------------     ---------------------
                                              1999            1998      1999            1998
                                              ----            ----      ----            ----
<S>                                           <C>             <C>       <C>             <C>
Efficiency ratio                              39.7%           40.6%     39.9%           40.6%

Salaries and general operating
   expenses as a percentage of AMA            1.74%           1.86%     1.73%           1.88%
---------------------------------------------------------------------------------------------
</TABLE>

The  improvement in the ratios  reflects the success of continuing  productivity
initiatives  and our ability to leverage our existing  operating  structure  and
investment technology.

RESERVE AND PROVISION FOR CREDIT LOSSES/CREDIT QUALITY

The reserve for credit losses is periodically  reviewed for adequacy considering
economic conditions,  collateral values and credit quality indicators, including
charge-off experience and levels of past due loans and nonperforming assets. The
reserve  increased  by  $13.1  million  to  $276.8  million  (1.32%  of  finance
receivables)  at June 30, 1999 from $263.7 million  (1.33%) at December 31, 1998
principally as a result of portfolio  growth.  A measure of reserve adequacy and
strength  used by us and in our  industry  is the  ratio  of the  balance  sheet
reserve  for credit  losses to trailing  twelve-month  net credit  losses.  This
ratio, 3.27 times at June 30, 1999, was relatively  unchanged from 3.35 times at
December 31, 1998. The relationship of the reserve for


                                       13
<PAGE>

credit  losses to  nonaccrual  finance  receivables  was 133.1% at June 30, 1999
compared to 124.7% at December 31, 1998.

The  provision  for  credit  losses  for the  second  quarter  of 1999 was $23.8
million,  up from  $21.9 million in the second quarter of 1998 and the six month
total of $45.7  million was up from $44.4  million for the six months ended June
30, 1998.

For the quarter ended June 30, 1999, net credit losses were $21.4 million (0.41%
of average  finance  receivables)  as compared to $16.4 million  (0.36%) for the
same period last year.  Net credit losses for the six months ended June 30, 1999
were $42.2 million (0.41%) compared to $36.4 million (0.41%) for the same period
of 1998.

The  following  table sets forth net credit  losses as a  percentage  of average
finance  receivables  (annualized),  excluding consumer finance receivables held
for sale.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                     Three Months Ended               Six Months Ended
                                                          June 30,                         June 30,
                                                    --------------------              ------------------
                                                     1999          1998               1999         1998
                                                    -----         -----               -----         ----
<S>                                                 <C>              <C>              <C>           <C>
Equipment Financing and Leasing                     0.15%         0.25 %              0.13%         0.28%
Commercial Finance                                  0.38%        (0.03)%              0.40%         0.07%
                                                    -----         ------              -----         -----
    Total Commercial Segments                       0.23%         0.19 %              0.22%         0.23%
Consumer Segment                                    1.14%         1.12 %              1.16%         1.15%
                                                    -----         ------              -----         -----
    Total                                           0.41%         0.36 %              0.41%         0.41%
                                                    =====         ======              =====         =====
------------------------------------------------------------------------------------------------------------
</TABLE>

Second quarter commercial net credit losses were 0.23% in 1999 compared to 0.19%
in 1998,  and consumer net credit losses were at 1.14% in 1999 compared to 1.12%
in 1998. Overall,  Equipment Financing and Leasing net credit losses declined on
continued good credit quality.


                                       14
<PAGE>

The  increases  in  Commercial  Finance net credit  losses for both periods were
primarily due to large recoveries in 1998.

As a percentage of average  consumer managed finance  receivables,  consumer net
credit losses were 1.03% during the second quarter of 1999 compared to 0.91% for
the same  period in 1998,  and for the six months  ended June 30, 1999 and 1998,
1.00% and 0.91%, respectively.

PAST DUE AND NONPERFORMING ASSETS

The following table sets forth certain information concerning past due and total
nonperforming  assets (and the related  percentages of finance  receivables)  at
June 30, 1999 and December 31, 1998.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                 At June 30, 1999               At December 31, 1998
                                                            ------------------------         ------------------------
                                                                           (Dollar Amounts in Millions)
<S>                                                         <C>                <C>           <C>                <C>
Finance receivables, past due 60 days or more:
Equipment Financing and Leasing                             $ 148.3            1.38%         $ 149.9            1.41%
Commercial Finance                                             42.9            0.72%            32.1            0.64%
                                                            -------            ----          -------            ----
    Total Commercial Segments                                 191.2            1.14%           182.0            1.17%
                                                            -------            ----          -------            ----
Consumer Segment                                              152.1            3.64%           166.0            3.89%
                                                            -------            ----          -------            ----
    Total                                                   $ 343.3            1.64%         $ 348.0            1.75%
                                                            =======            ====          =======            ====

Total nonperforming assets:

Equipment Financing and Leasing                             $ 122.0            1.14%         $ 135.2            1.27%
Commercial Finance                                             17.7            0.30%            14.5            0.29%
                                                            -------            ----          -------            ----
    Total Commercial Segments                                 139.7            0.84%           149.7            0.96%
                                                            -------            ----          -------            ----
Consumer Segment                                              127.8            3.06%           129.0            3.02%
                                                            -------            ----          -------            ----
    Total                                                   $ 267.5            1.28%         $ 278.7            1.40%
                                                            =======            ====          =======            ====
---------------------------------------------------------------------------------------------------------------------
</TABLE>

Nonperforming  assets reflect both finance  receivables on nonaccrual status and
assets received in satisfaction of loans.

                                       15
<PAGE>

From time to time,  financial or operational  difficulties  may adversely affect
future payments  relating to certain  operating lease equipment.  Such operating
lease  equipment  is not  included in the totals for past due and  nonperforming
assets.  At June 30, 1999,  operations  at an oil refinery  were subject to such
difficulties. The aggregate carrying value of this asset was approximately $21.6
million.  We do not  believe  these  difficulties  will have a material  adverse
effect on our consolidated financial position or results of operations.

OPERATING LEASE EQUIPMENT

The operating  lease  equipment  portfolio was $3.4 billion at June 30, 1999, up
23.8% from December 31, 1998 and up 59.9% from June 30, 1998,  driven  primarily
by growth in rail transport,  commercial aircraft  equipment,  and construction.
Depreciation  for the  quarter  ended June 30, 1999 was $59.2  million,  up from
$40.4 million for the same period in 1998, and for the six months ended June 30,
1999,  depreciation  was $115.3 million up from $78.7 million in the same period
in 1998 due to growth in the portfolio.

INCOME TAXES

The  effective  income tax rates for the second  quarters  of 1999 and 1998 were
34.7% and 35.6%, and for the six month periods ended June 30, 1999 and 1998 were
34.8% and 35.7%,  respectively.  The decrease in the 1999 effective tax rate was
primarily the result of lower state and local income taxes.


                                       16
<PAGE>

FINANCING AND LEASING ASSETS

Managed  assets grew $2,179.2  million  (8.3%) to $28.4 billion during the first
six months of 1999, and financing and leasing assets increased  $1,587.5 million
(6.7%) to $25.3 billion, as presented in the following table.

<TABLE>
<CAPTION>
                                                        At June 30,     At December 31,              Change
                                                           1999              1998              Amount        Percent
                                                        -----------     --------------      -----------      -------
                                                                           (Dollar Amounts in Millions)
<S>                                                     <C>               <C>               <C>                 <C>
Equipment Financing:
  Finance receivables                                   $  8,787.4        $  8,497.6        $   289.8           3.4%
  Operating lease equipment, net                             822.0             765.1             56.9           7.4
                                                        ----------        ----------        ---------          ----
    Total                                                  9,609.4           9,262.7            346.7           3.7
                                                        ----------        ----------        ---------          ----
Capital Finance:
  Finance receivables                                      1,632.3           1,655.4            (23.1)         (1.4)
  Operating lease equipment, net(1)                        2,589.6           1,982.0            607.6          30.7
                                                        ----------        ----------        ---------          ----
                                                           4,221.9           3,637.4            584.5          16.1
  Liquidating portfolio(1)(2)                                339.1             466.9           (127.8)        (27.4)
                                                        ----------        ----------        ---------          ----
    Total                                                  4,561.0           4,104.3            456.7          11.1
                                                        ----------        ----------        ---------          ----

  Total Equipment Financing & Leasing                     14,170.4          13,367.0            803.4           6.0
                                                        ----------        ----------        ---------          ----
Commercial Services                                        3,215.0           2,481.8            733.2          29.5
Business Credit                                            1,674.1           1,477.9            196.2          13.3
Credit Finance                                             1,094.9           1,036.5             58.4           5.6
                                                        ----------        ----------        ---------          ----
  Total Commercial Finance                                 5,984.0           4,996.2            987.8          19.8
                                                        ----------        ----------        ---------          ----

  Total Commercial Segments                               20,154.4          18,363.2          1,791.2           9.8
                                                        ----------        ----------        ---------          ----
Other - Equity Investments                                    91.7              81.9              9.8          12.0
                                                        ----------        ----------        ---------          ----

Consumer Finance                                           2,432.4           2,244.4            188.0           8.4
Sales Financing                                            2,608.4           3,009.9           (401.5)        (13.3)
                                                        ----------        ----------        ---------          ----
  Total Consumer Segment                                   5,040.8           5,254.3           (213.5)         (4.1)
                                                        ----------        ----------        ---------          ----

  Total Financing and Leasing Assets                      25,286.9          23,699.4          1,587.5           6.7
                                                        ----------        ----------        ---------          ----
Finance receivables previously securitized:
  Consumer Finance                                           502.1             607.6           (105.5)        (17.4)
  Sales Financing                                          2,606.5           1,909.3            697.2          36.5
                                                        ----------        ----------        ---------          ----
      Total                                                3,108.6           2,516.9            591.7          23.5
                                                        ----------        ----------        ---------          ----

     Total Managed Assets - Consumer Segment               8,149.4           7,771.2            378.2           4.9
                                                        ----------        ----------        ---------          ----

    Total Managed Assets                                $ 28,395.5        $ 26,216.3        $ 2,179.2           8.3%
                                                        ==========        ==========        =========          ====
</TABLE>

(1)Operating  lease  equipment,  net, of $21.6  million and $27.0 million are
   included in the  liquidating  portfolios at June 30, 1999 and December 31,
   1998, respectively.

(2)Consists primarily of oceangoing maritime and project finance.

                                       17
<PAGE>

Strong originations in rail,  commercial  aircraft  equipment,  and construction
resulted in 1999 growth in the Equipment  Financing and Leasing  operating lease
portfolios.  The growth in the Commercial  Finance  segment  resulted from solid
1999 new business generation, reduced liquidations and a factoring acquisition.

Consumer  managed  assets  increased  to $8.1 billion at June 30, 1999 from $7.8
billion at December 31, 1998, up 4.9%.

Financing and Leasing Assets Composition

Our ten largest  financing  and leasing  asset  accounts at June 30, 1999 in the
aggregate  accounted for 5.0% of the total financing and leasing assets,  all of
which are  commercial  accounts  secured by  equipment,  accounts  receivable or
inventories.

Geographic Composition

The following table presents financing and leasing assets by customer location.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                           At June 30, 1999               At December 31, 1998
                                                  ---------------------------        --------------------------
                                                    Amount          Percent            Amount           Percent
                                                  ----------        -------          ----------         -------
                                                                (Dollar Amounts in Millions)
<S>                                               <C>                 <C>            <C>                  <C>
United States
    West                                          $  5,792.8          22.9%          $  5,583.2           23.6%
    Northeast                                        5,483.5          21.7              5,143.9           21.7
    Midwest                                          5,367.6          21.2              4,895.3           20.7
    Southeast                                        3,618.9          14.3              3,492.3           14.7
    Southwest                                        3,212.7          12.7              2,993.3           12.6
Foreign (principally commercial aircraft)            1,811.4           7.2              1,591.4            6.7
                                                  ----------         -----           ----------          -----
    Total                                         $ 25,286.9         100.0%          $ 23,699.4          100.0%
                                                  ==========         =====           ==========          =====
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>

Our managed asset geographic  diversity does not differ  significantly  from our
owned asset geographic diversity.  Additionally, our financing and leasing asset
portfolio is diversified by state. At June 30, 1999,  only  California  (12.3%),
Texas (8.9%),  and New York (8.0%) accounted for more than 4.8% of financing and
leasing assets.

Industry Composition

The following  table  presents  financing and leasing  assets by major  industry
class.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                      At June 30, 1999                         At December 31, 1998
                                                ----------------------------             -----------------------------
                                                  Amount             Percent               Amount              Percent
                                                ----------          ---------            ----------           ---------
                                                                     (Dollar Amounts in Millions)
<S>                                              <C>                   <C>                <C>                    <C>
Manufacturing(1)                                 $ 5,575.9             22.1%             $  5,117.0              21.6%
Commercial airlines(2)                             2,537.9             10.0                 2,325.4               9.8
Home mortgage(3)                                   2,432.4              9.6                 2,244.4               9.5
Retail                                             2,400.2              9.5                 1,882.1               7.9
Construction equipment                             2,276.5              9.0                 1,947.4               8.2
Transportation(4)                                  2,122.8              8.4                 1,777.6               7.5
Manufactured housing(5)                            1,658.5              6.6                 1,417.5               6.0
Other(6)(7)                                        6,282.7             24.8                 6,988.0              29.5
                                                ----------            -----              ----------             -----
    Total                                       $ 25,286.9            100.0%             $ 23,699.4             100.0%
                                                ==========            =====              ==========             =====

(1)Includes various  categories of  manufacturers,  including steel and metal
   products,  textiles  and apparel,  printing  and paper  products and other
   industries. No individual category is greater than 4.1% of total financing
   and leasing assets.

(2)Commercial  airlines  were 8.9% of managed  assets at June 30,  1999.  See
   "--Concentrations"  below  for a  discussion  of  the  commercial  airline
   portfolio.

(3)On a managed asset basis, home mortgage  outstandings were $2.9 billion or
   10.3% of managed  assets at June 30, 1999 as compared with $2.9 billion or
   10.9% at December 31, 1998.

(4)Includes rail, bus, over-the-road trucking and business aircraft.

(5)On a managed  asset basis,  manufactured  housing  outstandings  were $1.9
   billion or 6.7% of managed  assets at June 30,  1999 as  compared  to $1.7
   billion or 6.5% at December 31, 1998.

(6)Includes various categories, none of which is greater than 4.3%.

(7)On a  managed  asset  basis,  recreation  vehicle  outstandings  were $1.9
   billion or 6.8% of managed  assets at June 30,  1999 as  compared  to $1.9
   billion  or  7.2%  at  December  31,  1998.  On  a  managed  asset  basis,
   recreational boat outstandings were $1.1 billion or 3.9% of managed assets
   at June 30, 1999 as compared to $1.0 billion or 4.0% of managed  assets at
   December 31, 1998.
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       19
<PAGE>

Concentrations

Commercial Airline Industry

Commercial  airline  financing and leasing assets totaled $2.5 billion (10.0% of
total  financing  and leasing  assets) at June 30,  1999,  up from $2.3  billion
(9.8%) at December  31,  1998.  These  financing  and leasing  assets  relate to
commercial  aircraft and ancillary  equipment.  Over the past few years, we have
been growing this portfolio,  and more recently we decided to expand our product
offerings to include newly manufactured  commercial aircraft.  During the second
quarter of 1999, we entered into agreements with both Airbus  Industries and the
Boeing  Company to  purchase  a total of 40  aircraft,  with  options to acquire
additional  units.  Deliveries of these new aircraft are scheduled to take place
over a five year period starting in the fourth quarter of 2000.

The following table presents  information about the commercial  airline industry
portfolio. See also "Operating Lease Equipment".

--------------------------------------------------------------------------------
                              At June 30, 1999              At December 31, 1998
                              ----------------              --------------------
                                      (Dollar Amounts in Millions)

Finance Receivables
  Amount outstanding(1)            $ 1,239.9                     $ 1,230.7
  Number of obligors                    53                            54
Operating Lease Equipment, net
  Net carrying value               $ 1,298.0                     $ 1,094.7
  Number of obligors                    36                            33

Total                              $ 2,537.9                     $ 2,325.4
Number of obligors(2)                   70                            65
Number of aircraft(3)                  195                           206

(1) Includes  accrued rents on operating leases that are classified as finance
    receivables in the Consolidated Balance Sheets.

(2) Certain obligors are obligors under both finance  receivable and operating
    lease transactions.

(3) Regulations established by the Federal Aviation Administration (the "FAA")
    limit the  maximum  permitted  noise an  aircraft  may  make.  A Stage III
    aircraft meets a more  restrictive  noise level reqirement than a Stage II
    aircraft.  The FAA has  issued  rules  that  phase out the use of Stage II
    aircraft  in the United  States by the year 2001.  At June 30,  1999,  the
    portfolio  consisted of Stage III aircraft of $2,479.3 million (97.7%) and
    Stage II aircraft of $38.6  million  (1.5%),  versus Stage III aircraft of
    $2,246.0  million (96.6%) and Stage II aircraft of $55.9 million (2.4%) at
    year-end 1998.
--------------------------------------------------------------------------------

                                       20
<PAGE>

We continue to reduce our Stage II commercial aircraft exposure and increase our
Stage III  exposure  because FAA rules phase out the use of Stage II aircraft by
the year 2000 in the United States.  At June 30, 1999, Stage II aircraft totaled
1.5% of our commercial  aircraft  portfolio,  two-thirds of which are collateral
for full pay out debt  obligations  and the  remaining are aircraft on operating
lease.

Foreign Outstandings

We are primarily a domestic lender, with foreign exposures limited mainly to the
commercial  airline  industry.  Financing and leasing assets to foreign obligors
are U.S.  dollar  denominated and totaled $1.8 billion at June 30, 1999 and $1.6
billion at December  31,  1998.  The largest  exposures at June 30, 1999 were to
obligors in England,  $181.2  million  (0.72% of financing and leasing  assets),
Belgium, $140.4 million (0.55%),  France, $133.4 million (0.53%), Canada, $131.5
million (0.52%), Ireland, $101.7 million (0.40%), Brazil, $95.0 million (0.38%),
and  Germany,   $94.4  million  (0.37%).  The  remaining  foreign  exposure  was
geographically dispersed, with no other individual country exposure greater than
$90 million.

Highly Leveraged Transactions ("HLTs")

We use the following criteria to classify a buyout financing or recapitalization
which equals or exceeds $20 million as an HLT:

      o     The  transaction  at least doubles the  borrower's  liabilities  and
            results in a leverage ratio (as defined) higher than 50%, or

      o     The transaction results in a leverage ratio higher than 75%, or

      o     The transaction is designated as an HLT by a syndication agent.


                                       21
<PAGE>

HLTs that we originated  and in which we  participated  totaled  $650.7  million
(2.6% of  financing  and leasing  assets) at June 30, 1999 as compared to $561.1
million (2.4%) at December 31, 1998. The increase in HLT outstandings during the
first six months of 1999 was due to new  originations.  Our HLT outstandings are
generally secured by collateral,  as distinguished from HLTs that rely primarily
on cash flows  from  operations.  Unfunded  commitments  to lend in secured  HLT
situations were $338.2 million at June 30, 1999, compared with $287.6 million at
year-end 1998.

LIQUIDITY

We manage  liquidity  risk by monitoring  the relative  maturities of assets and
liabilities  and by borrowing  funds,  primarily  in the U.S.  money and capital
markets.  We use such cash to fund asset growth  (including the bulk purchase of
finance receivables and the acquisition of other finance-related businesses) and
to meet debt  obligations and other  commitments on a timely and  cost-effective
basis.  The  primary  sources  of  funding  are  commercial  paper   borrowings,
medium-term notes, and other term debt securities,  supplemented by asset-backed
securitizations.

During the first six months of 1999,  commercial paper outstanding  decreased by
$469.8  million  from $6.1  billion at December 31, 1998 to $5.7 billion at June
30, 1999.  During this period, we issued $3.0 billion of variable rate term debt
and $1.4  billion of fixed  rate term  debt.  Repayments  of debt  totaled  $2.7
billion  for the first six months of 1999.  At June 30,  1999,  $5.5  billion of
registered,  but  unissued,  debt  securities  remained  available  under  shelf
registration statements, including $2.0 billion of European Medium-Term Notes.


                                       22
<PAGE>

At June 30, 1999,  commercial paper borrowings were supported by $5.5 billion of
committed  revolving  credit-line  facilities,  representing  96.3% of operating
commercial  paper  outstanding  (commercial  paper  outstanding  less short-term
interest-bearing deposits).

As  part  of  our  continuing  program  of  accessing  the  public  and  private
asset-backed  securitization  markets as an additional  liquidity  source,  $1.0
billion of recreation  vehicle and  recreational  boat finance  receivables were
securitized  during the first six months of 1999,  including  $565.5  million of
recreation vehicle finance  receivables in the second quarter. At June 30, 1999,
$2.1 billion of registered, but unissued,  securities were available under shelf
registration statements relating to our asset-backed securitization program.

CAPITALIZATION

The following table presents information regarding our capital structure.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                           At June 30,        At December 31,
                                                                              1999                 1998
                                                                          ------------        ---------------
                                                                              (Dollar Amounts in Millions)
<S>                                                                       <C>                   <C>
Commercial paper                                                          $   5,674.3           $   6,144.1
Term debt                                                                    14,161.0              12,507.3
                                                                          -----------           -----------
   Total debt                                                                19,835.3              18,651.4
Company-obligated mandatorily redeemable preferred
 securities of subsidiary trust holding solely debentures
 of the Company                                                                 250.0                 250.0
Stockholders' equity                                                          2,846.4               2,701.6
                                                                          -----------           -----------
   Total capitalization                                                   $  22,931.7           $  21,603.0
                                                                          ===========           ===========
Total debt to stockholders' equity and Company-
 obligated mandatorily redeemable preferred securities of
 subsidiary trust holding solely debentures of the Company                      6.41x                 6.32x

Total debt and Company-obligated mandatorily
 redeemable preferred securities of subsidiary trust holding
 solely debentures of the Company to stockholders' equity                       7.06x                 7.00x
-------------------------------------------------------------------------------------------------------------
</TABLE>

                                       23
<PAGE>

We believe we are well capitalized and that our capital structure is adequate to
support current operations and anticipated growth.

The Board of Directors of CIT has  authorized  the repurchase of up to 2 million
shares of CIT's common stock to provide for the employee  stock option plan, the
employee  share  purchase  plan and for  other  corporate  purposes.  The  stock
repurchase program is authorized to take place over the next 12 months from time
to time in the open market or in privately negotiated transactions. This program
is an extension to the one-year  program  approved in August 1998.  Through June
30,  1999,  CIT has  purchased  1.6 million of the 2 million  shares  previously
authorized.

YEAR 2000 COMPLIANCE

Institutions around the world are reviewing and modifying their computer systems
to ensure they are Year 2000  compliant.  The issue,  in general terms,  is that
many  existing  computer  systems,  both  information   technology  systems  and
non-information  technology systems, contain date-based functions which use only
two digits to  identify a year in the date  field with the  assumption  that the
first two digits of the year are always "19". Consequently,  on January 1, 2000,
systems that are not Year 2000 compliant may read the year as 1900. Systems that
calculate, compare or sort using the incorrect date may malfunction.

We  continue  to address  the Year 2000 issue as it relates to our  systems  and
business.  We have developed a comprehensive  Year 2000 project to remediate our
information  technology  ("IT")  systems and to address  Year 2000 issues in our
non-IT systems. The process of remediation includes the following phases:


                                       24
<PAGE>

      o     Planning

      o     Assessing

      o     Designing (as necessary)

      o     Programming (as necessary)

      o     Testing and validation

We have categorized our IT systems as high,  medium or low priority with respect
to our ability to conduct  business.  As of June 30, 1999,  we had  successfully
completed:

      o     the  planning,  assessing  and  designing  phases  for all of our IT
            systems

      o     the  programming  phase for all of our high and medium  priority  IT
            systems and 99% of all our IT systems

      o     the  testing  and  validation  phase for all of our high and  medium
            priority IT systems and 99% of all our IT systems.

We believe that, at June 30, 1999,  our Year 2000 project was 100% completed for
our high and medium  priority IT systems and 99%  completed  with respect to all
our IT systems. Our Year 2000 project is substantially completed.

A  majority  of the  software  used in our IT  systems  is  provided  by outside
vendors.  As of June 30, 1999 for our high and medium priority  systems,  all of
our vendor  provided  software or software  upgrades have been designated by the
software vendors as Year 2000 compliant.


                                       25
<PAGE>

We continue to formulate a  contingency  plan for business  continuation  in the
event of Year 2000 systems failures.  This contingency plan formulation is based
upon  our  existing  disaster  recovery  and  business   continuity  plans  with
modifications  for Year 2000 risks. We expect to complete our Business Year 2000
contingency plans by August 31, 1999, and to test these contingency plans in the
third quarter.

Our non-IT systems used to conduct business at our facilities  consist primarily
of office equipment (other than computer and communications equipment) and other
equipment  at our  leased  office  facilities.  We have  inventoried  our non-IT
systems and have sent Year 2000  questionnaires  to our office equipment vendors
and landlords to determine the status of their Year 2000 readiness.

Since 1997, we have been actively  communicating  with third parties  concerning
the status of their Year 2000 readiness by, among other things,  sending written
Year 2000 inquiries. These third parties include our borrowers, obligors, banks,
investment banks, investors, vendors, manufacturers,  landlords and suppliers of
telecommunication  services  and  other  utilities.  As part of the  process  of
evaluating our options and attempting to mitigate third party risks, we continue
to collect  and analyze  information  from third  parties.  It is  difficult  to
predict the effect of any such third party non-readiness on our business.

Significant Year 2000 failures in our systems or in the systems of third parties
(or third parties upon whom they depend) could have a material adverse effect on
our  financial  condition  and  results  of  operations.  We  believe  that  our
reasonably  likely worst case Year 2000  scenario is (i) a material  increase in
our credit losses due to Year 2000 problems for our borrowers and


                                       26
<PAGE>

obligors and (ii) disruption in financial  markets causing  liquidity  stress to
us.  The amount of these  potential  credit  losses or the degree of  disruption
cannot be determined at this time.

The total  cost of our Year 2000  project is  expected  to be  approximately  $7
million,  of which approximately $6.2 million has been incurred through June 30,
1999.  This amount  includes  the costs of  additional  hardware,  software  and
technology  consultants,  as  well  as the  cost  of our  systems  professionals
dedicated to achieving Year 2000 compliance for IT systems. We have included the
cost of the Year 2000 project in our annual budgets for information  technology.
We have postponed some non-Year 2000 IT expenditures and initiatives until after
2000 in order to concentrate  resources on the Year 2000 issue. We do not expect
that this will have a material  adverse  effect on our  financial  condition and
results of operations.

All Year 2000 information provided herein is a "Year 2000 Readiness  Disclosure"
as defined in the Year 2000  Information  and  Readiness  Disclosure  Act and is
subject to the terms thereof. This Year 2000 information is provided pursuant to
securities  law  requirements  and it may not be  taken  as a form of  covenant,
warranty, representation or guarantee of any kind.


                                       27
<PAGE>

STATISTICAL DATA

The following  table  presents  components of net income as a percentage of AEA,
along with other selected financial data.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                                     Six Months Ending
                                                                                         June 30,
                                                                            ---------------------------------
                                                                               1999                    1998
                                                                            ---------               ---------
<S>                                                                              <C>                     <C>
Finance income(1)                                                                9.45%                   9.78%
Interest expense(1)                                                              4.72                    4.99
                                                                            ---------               ---------
  Net finance income                                                             4.73                    4.79
Fees and other income                                                            1.22                    1.29
                                                                            ---------               ---------
  Operating revenue                                                              5.95                    6.08
                                                                            ---------               ---------
Salaries and general operating expenses                                          1.94                    2.10
Provision for credit losses                                                      0.40                    0.45
Depreciation on operating lease equipment                                        1.01                    0.80
Minority interest in subsidiary trust holding solely
 debentures of the Company                                                       0.08                    0.10
                                                                            ---------               ---------
  Operating expenses                                                             3.43                    3.45
                                                                            ---------               ---------
Income before provision for income taxes                                         2.52                    2.63
Provision for income taxes                                                       0.88                    0.94
                                                                            ---------               ---------
  Net income                                                                     1.64%                   1.69%
                                                                            =========               =========
Average earning assets (in millions)                                        $22,905.3               $19,578.9
                                                                            =========               =========
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1)Excludes interest income and interest expense relating to short-term
   interest-bearing deposits.

                                       28
<PAGE>

                           PART II. OTHER INFORMATION
                           --------------------------

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

        (a) Exhibit 12 - Computation of Ratios of Earnings to Fixed Charges.

        (b) Exhibit 27 - Financial Data Schedule.

        (c) A Form 8-K report dated April 27, 1999 was filed with the Commission
            reporting the Company's  announcement  of financial  results for the
            quarter  ended March 31, 1999 and the  declaration  of the Company's
            regular quarterly dividend.

            A Form 8-K report  dated May 10, 1999 was filed with the  Commission
            reporting  certain  computational  materials related to CIT RV Trust
            1999-A.

            A Form 8-K report  dated May 17, 1999 was filed with the  Commission
            setting  forth a Form T-1 Statement of  Eligibility  for The Bank of
            New York, as trustee for CIT RV Trust 1999-A.

            A Form 8-K report dated June 14, 1999 was filed with the  Commission
            reporting a joint press release of the Company,  and Newcourt Credit
            Group Inc.  ("Newcourt")  announcing a Letter Agreement,  dated June
            14, 1999,  amending the Agreement and Plan of Reorganization,  dated
            as of March 7, 1999, between the Company and Newcourt and announcing
            that  CIT  and  Newcourt  had  initiated   discussions  to  reassess
            Newcourt's  earnings  expectations  and the exchange ratio under the
            Agreement and Plan of Reorganization.


                                       29
<PAGE>

                                   SIGNATURES
                                   ----------


      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                                  The CIT Group, Inc.
                                                  -------------------
                                                  (Registrant)


                                              BY /s/ J. M. Leone
                                                 ---------------
                                                  J. M. Leone
                                                  Executive Vice President and
                                                  Chief Financial Officer
                                                  (duly authorized and principal
                                                  accounting officer)


DATE: August 11, 1999


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