================================================================================
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549-1004
                                   -----------
                                    Form 10-K
                                   -----------
(Mark One)
     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  
          SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the fiscal year ended December 31, 1995

                                       OR

     [ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
`         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                                                         
          For the transition period from             to
                                   -----------
                          Commission file number 1-1861

                          The CIT Group Holdings, Inc.
             (Exact name of registrant as specified in its charter)

            Delaware                                          13-2994534
  (State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                          Identification No.)

1211 Avenue of the Americas, New York, New York                  10036
    (Address of principal executive offices)                   (Zip Code)

       Registrant's telephone number, including area code: (212) 536-1950
                                   -----------
           Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange on
       Title of each class                                 which registered
       -------------------                             ------------------------
8 3/4% Notes Due April 15, 1998....................      New York Stock Exchange
5 7/8% Notes Due October 15, 2008..................      New York Stock Exchange

                                   -----------
           Securities registered pursuant to Section 12(g) of the Act:

                                      None

     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 by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     State the aggregate market value of the voting stock held by  
     non-affiliates of the Registrant.

     None of the voting stock of the Registrant is held by  non-affiliates
     of the Registrant. 80% of the voting stock of the Registrant is owned
     by  The  Dai-Ichi  Kangyo  Bank,  Limited  and  20%  by  CBC  Holding
     (Delaware)  Inc.,  a  wholly-owned  subsidiary  of  Chemical  Banking
     Corporation.

     Indicate  the  number of  shares  outstanding  of each of the  Registrant's
classes of common stock, as of the latest practicable date.

                    March 1, 1996--Common Stock--1,000 Shares

     List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g.,  Part I, Part II,  etc.) into which the document is
incorporated:  (1) any  annual  report  to  security  holders;  (2) any proxy or
information  statement;  and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.

                                      None
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<PAGE>

                                TABLE OF CONTENTS

Form 10-K
 Item No.                         Name of Item                              Page
 --------                         ------------                              ----

                                     Part I

Item  1.  Business .......................................................     1
            General ......................................................     1
            Business and Services ........................................     1
            Industry Concentration .......................................     3
            Competition ..................................................     3
            Regulation ...................................................     3
Item  2.  Properties .....................................................     4
Item  3.  Legal Proceedings ..............................................     4
Item  4.  Submission of Matters to a Vote of Security Holders ............     4

                                    Part II

Item  5.  Market for Registrant's Common Equity and 
          Related Stockholder Matters ....................................     5
Item  6.  Selected Financial Data ........................................     6
Item  7.  Management's Discussion and Analysis of 
          Financial Condition and Results of
          Operations .....................................................    11
Item  8.  Financial Statements and Supplementary Data ....................    27
Item  9.  Changes in and Disagreements with Accountants 
          on Accounting and Financial Disclosure .........................    50

                                    Part III

Item  10. Directors and Executive Officers of the Registrant .............    51
Item  11. Executive Compensation .........................................    53
            Long-Term Incentive Plan .....................................    54
            Defined Benefit Plans ........................................    54
            Employment Agreements ........................................    56
            Termination and Change-in-Control Arrangements ...............    57
Item  12. Security Ownership of Certain Beneficial 
          Owners and Management ..........................................    58
Item  13. Certain Relationships and Related Transactions .................    58

                                     Part IV

Item  14. Exhibits, Financial Statement Schedule and 
          Reports on Form 8-K ............................................    59
<PAGE>

                                     PART I
Item 1.  Business

GENERAL

     The CIT Group Holdings,  Inc. (the "Corporation"),  a Delaware corporation,
is a successor to a company founded in St. Louis, Missouri on February 11, 1908.
It has its principal executive offices at 1211 Avenue of the Americas, New York,
New York 10036,  and its telephone  number is (212) 536-1950.  The  Corporation,
operating  directly or through its subsidiaries  primarily in the United States,
engages in  financial  services  activities  through a  nationwide  distribution
network.  The  Corporation  provides  financing  primarily on a secured basis to
commercial borrowers,  ranging from middle-market to larger companies,  and to a
lesser extent to consumers.  While these secured lending  activities  reduce the
risk of losses from extending credit,  the  Corporation's  results of operations
can also be affected by other factors,  including  general economic  conditions,
competitive   conditions,   the  level  and   volatility   of  interest   rates,
concentrations  of credit risk, and government  regulation and supervision.  The
Corporation  does not finance the development or construction of commercial real
estate.   The  Corporation  has  eight  strategic  business  units  which  offer
commercial  and  consumer  financing,  and  factoring  products  and services to
clients. The Corporation had 2,738 employees at December 31, 1995, up from 2,689
employees at December 31, 1994.

     The Dai-Ichi Kangyo Bank,  Limited ("DKB") owns eighty percent (80%) of the
issued and outstanding shares of common stock of the Corporation.  DKB purchased
a  sixty  percent  (60%)  common  stock   interest  in  the   Corporation   from
Manufacturers  Hanover  Corporation  ("MHC") at  year-end  1989 and  acquired an
additional  twenty  percent (20%) common stock  interest in the  Corporation  on
December  15,  1995 from CBC  Holding  (Delaware)  Inc.  (formerly  known as MHC
Holdings (Delaware) Inc.) ("CBC Holding"), a wholly owned subsidiary of Chemical
Banking  Corporation  ("CBC").  CBC  acquired  CBC Holding as part of the merger
between MHC and CBC on  December  31, 1991 and  continues  to own the  remaining
twenty  percent  (20%)  common  stock  interest in the  Corporation  through CBC
Holding. DKB has a five-year option, expiring December 15, 2000, to purchase the
remaining twenty percent (20%) common stock interest from CBC.

     In accordance with a stockholders agreement among DKB, CBC, as successor to
MHC,  and the  Corporation,  dated as of  December  29,  1989,  as amended by an
Amendment to Stockholders' Agreement, dated December 15, 1995 (the "Stockholders
Agreement"),  one nominee of the Board of  Directors is  designated  by CBC. The
Stockholders  Agreement also contains  restrictions with respect to the transfer
of the stock of the Corporation to third parties.

BUSINESS AND SERVICES

Business Credit

     The CIT  Group/Business  Credit offers  revolving and term loans secured by
accounts  receivable,  inventories  and fixed assets to medium and  larger-sized
companies.   Such  loans  are  used  by  clients   primarily  for  acquisitions,
refinancings,   debtor-in-possession   and   turnaround   financings.   The  CIT
Group/Business  Credit  sells  participation  interests  in such  loans to other
lenders and will  occasionally  purchase  participation  interests in such loans
originated  by other  lenders.  Business is  developed  through  direct  calling
efforts  and  through  other  sources  originated  by new  business  development
officers.  The CIT Group/Business Credit is headquartered in New York City, with
sales and customer service offices in New York,  Chicago,  Dallas,  Los Angeles,
Atlanta and Charlotte.

Capital Equipment Financing

      The  CIT  Group/Capital  Equipment  Financing  specializes  in  customized
secured  financing and leasing for  medium-sized  and large  corporations in the
form of single investor  leases,  debt and equity portions of leveraged  leases,
operating  leases,  direct  loans,  sale and leaseback  arrangements,  portfolio
acquisitions and project financings for major capital equipment and other income
producing assets.  Such business is developed  directly with large companies and
through third parties.  A business group within The CIT Group/Capital  Equipment

                                       1
<PAGE>

Financing  augments its marketing  efforts and provides services relating to its
area  of  expertise.   The  CIT   Group/Capital   Investments  is  a  registered
broker-dealer  and a member of the National  Association of Securities  Dealers,
Inc.  and acts as an  agent,  broker,  and  advisor  in  financing  and  leasing
transactions.  The CIT Group/Capital Equipment Financing is headquartered in New
York City, with sales offices in twenty cities,  including New York, Chicago and
Los Angeles.

Credit Finance

     The CIT  Group/Credit  Finance offers revolving and term loans to small and
medium-sized  companies secured by accounts receivable,  inventories,  and fixed
assets.  Such loans are used by clients for working  capital,  in  refinancings,
acquisitions, leveraged buyouts and reorganizations, restructurings, turnarounds
and Chapter 11 situations.  Business is developed through direct calling efforts
and through other sources developed by new business  development  officers.  The
CIT  Group/Credit  Finance is  headquartered  in New York  City,  with sales and
customer  service  offices  in New  York,  Chicago  and  Los  Angeles  and  loan
production offices in seven other cities.

Industrial Financing

     The CIT  Group/Industrial  Financing offers secured equipment financing and
leasing  products,  including direct secured loans,  leases,  revolving lines of
credit,  sale and  leaseback  arrangements,  vendor  financing  and  specialized
wholesale and retail  financing for distributors  and  manufacturers,  portfolio
acquisition,  business  aircraft  financing,  third party  financing and medical
equipment  financing.  The CIT  Group/Industrial  Financing is  headquartered in
Livingston,  New Jersey  with a  nationwide  network of local  offices and sales
offices in eighteen cities, including Berwyn,  Pennsylvania,  Tempe, Arizona and
Atlanta, Georgia, which also serve as regional and customer service offices.

Commercial Services

     The CIT  Group/Commercial  Services  offers a full  range of  domestic  and
international  customized credit protection and lending services. These services
include  factoring,  working  capital  and  term  loans,  receivable  management
outsourcing,  bulk purchases of accounts receivable, import and export financing
and  letter  of  credit   programs.   The  CIT   Group/Commercial   Services  is
headquartered  in New York City,  with full  service  offices  in New York,  Los
Angeles,  Dallas  and  Charlotte  and  sales  offices  in Miami  and Hong  Kong.
Bookkeeping  and  collection  functions  are  located  in a  service  center  in
Danville, Virginia.

Equity Investments and Venture Capital

      The CIT Group/Equity  Investments and its subsidiary The CIT Group/Venture
Capital  originate  and  participate  in merger  and  acquisition  transactions,
purchasing   private  equity  and  equity-related   securities,   and  arranging
transaction financing.  These units also invest in emerging growth opportunities
in selected  industries,  including the life sciences,  information  technology,
communications  and  consumer  products.  Business is developed  through  direct
solicitation,  or through  referrals from  investment  banking firms,  financial
intermediaries, or the Corporation's other business units. The CIT Group/Venture
Capital is a federal  licensee under the Small Business  Investment Act of 1958.
The  CIT  Group/Equity   Investments  and  The  CIT  Group/Venture  Capital  are
headquartered in Livingston, New Jersey.

Consumer Finance

      The CIT  Group/Consumer  Finance  offers loans  secured by first or second
mortgages on  residential  real estate and home equity lines of credit.  The CIT
Group/Consumer  Finance generates  business through brokers and direct marketing
efforts and also acquires "home equity"  portfolios  originated by others.  This
business unit is headquartered in Livingston,  New Jersey with 20 branch offices
serving 35 states,  three regional  business centers,  which originate  mortgage
loans as well as purchase mortgage loans from third parties, and a national home
equity  center,  which engages in  nationwide  direct  marketing.  Servicing and
collection  support is  provided by the Sales  Financing  asset  service  center
located in Oklahoma City, Oklahoma.

                                       2
<PAGE>

Sales Financing

     The CIT Group/Sales Financing,  working through dealers,  manufacturers and
brokers provides retail secured financing on a nationwide basis for the purchase
of recreational  vehicles,  manufactured housing and recreational boats. The CIT
Group/Sales  Financing  also  purchases  portfolios  of these assets from banks,
savings and loans,  investment banks and others,  offers to manufacturers retail
and wholesale  "private label" financing  programs,  and provides  servicing for
portfolios owned by other financial institutions,  U.S. government agencies, and
securitization  trusts.  The  CIT  Group/Sales  Financing  is  headquartered  in
Livingston,  New Jersey with an asset service center in Oklahoma City, Oklahoma,
and covers the United  States from five  regional  business  centers  located in
Atlanta, Boston, Kansas City, Sacramento and Seattle.

Multi-National Marketing

     Supplementing  the  Corporation's   marketing  efforts,  the  Corporation's
Multi-National  Marketing  Group  promotes  the  services  of the  Corporation's
various business units to the U.S.  subsidiaries of foreign corporations in need
of asset-based  financing.  Business is developed through referrals from DKB and
through direct calling efforts. The Multi-National Marketing Group is located in
New York City.

INDUSTRY CONCENTRATION

     See the  "Industry  Composition"  and  "Commercial  Airlines"  sections  of
"Financing and Leasing Assets Concentrations" in Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations.

COMPETITION

     The business in which the Corporation engages is highly  competitive,  with
business developed primarily on the basis of customizing  transaction structure,
client service and relationships,  and payment terms. The Corporation is subject
to competition from many financial  institutions,  including finance  companies,
banks,  leasing  companies and investment  banks. The  Corporation's  Commercial
Services unit is one of the largest factoring operations in the United States.

     The interest rates charged by the  Corporation  for the various  classes of
financing  and leasing  assets  vary  depending  upon the credit  quality of the
borrower,  the amount and  maturity  of the loan,  the costs of  servicing,  the
income  tax  consequences  of the  transaction,  the  cost of  borrowing  to the
Corporation,  and, to a lesser degree,  state usury laws and other  governmental
regulations,  when applicable.  The Corporation's  finance receivables have both
variable  rates and fixed  rates of  interest.  Variable  rate loans  reprice in
accordance  with various agreed upon indices,  usually a published  reference or
prime interest rate.

REGULATION

     DKB is a bank  holding  company  within  the  meaning  of the Bank  Holding
Company  Act of 1956 (the  "Act"),  and is  registered  as such with the Federal
Reserve Board. As a result,  the Corporation is subject to certain provisions of
the Act.  In  general,  the Act limits the  activities  in which a bank  holding
company  and its  subsidiaries  may engage to those of banking  or  managing  or
controlling  banks  or  performing   services  for  their  subsidiaries  and  to
continuing  activities  which the Federal Reserve Board has determined to be "so
closely  related to banking or managing or  controlling  banks as to be a proper
incident  thereto." The  Corporation's  current  principal  business  activities
constitute permissible activities for a subsidiary of a bank holding company.

     The operations of the  Corporation  and its  subsidiaries  are subject,  in
certain instances, to supervision and regulation by governmental authorities and
may be  subject  to  various  laws and  judicial  and  administrative  decisions
imposing various  requirements and  restrictions,  including among other things,
regulating credit granting  activities,  establishing maximum interest rates and
finance  charges,   regulating   customers'   insurance   coverages,   requiring
disclosures  to  customers,   governing   secured   transactions,   and  setting
collection,  repossession,  and  claims  handling  procedures  and  other  trade
practices.  In most states the consumer  sales finance and loan business and the
consumer second  mortgage and home equity line of credit  businesses are subject
to licensing or regulation.  In some states the industrial  finance  business is
subject to similar licensing or regulation.  The consumer second mortgage,  home
equity line of credit,  sales  finance,  and loan  businesses,  including  those
conducted by the Corporation,  are also subject to a number of Federal statutes,
including the Federal  Consumer Credit  Protection  Act, which  requires,  among
other things,  disclosure of the finance charge in terms of an annual percentage
rate, as well as the total dollar cost.

                                       3
<PAGE>

     In the judgment of management,  existing  statutes and regulations have not
had a materially adverse effect on the business conducted by the Corporation and
its subsidiaries.  However,  it is not possible to forecast the nature of future
legislation,  regulations,  judicial decisions, orders, or interpretations,  nor
their impact upon the future business, earnings or otherwise, of the Corporation
and its subsidiaries.

Item 2.  Properties.

     The  operations  of the  Corporation  and its  subsidiaries  are  generally
conducted in leased office space located in numerous cities and towns throughout
the United  States.  Such leased  office  space is suitable and adequate for the
needs of the Corporation.  The Corporation  utilizes, or plans to utilize in the
foreseeable future,  substantially all of its leased office space. For a summary
of the Corporation's past rental expense and future minimum rentals, see Item 8.
Financial Statements and Supplementary Data, "Note 13--Lease Commitments."

Item 3.  Legal Proceedings.

     Various claims and actions  against the  Corporation  and its  subsidiaries
arise  from time to time in the  normal  course of  business.  A number of these
actions,  some of which purport to be class actions,  are now pending.  While no
prediction  can be made as to the  ultimate  outcome of any  particular  action,
management  believes that meritorious  defenses are generally  available and the
aggregate  liability,  if any,  likely to result  therefrom  will not materially
affect the consolidated financial condition of the Corporation.

Item 4.  Submission of Matters to a Vote of Security Holders.

     No matters were  submitted to a vote of security  holders during the fourth
quarter of 1995.

                                       4
<PAGE>

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

     The outstanding common stock of the Corporation is owned 80% by DKB and 20%
by CBC Holding.  There is no public trading market for the Corporation's  common
stock.

     The Corporation  operates under a policy requiring the payment of dividends
by the Corporation equal to and not exceeding 50% of net operating earnings on a
quarterly basis. Such dividends are paid to DKB and CBC Holding based upon their
respective  stock  ownership  in the  Corporation.  The  Corporation  intends to
continue to operate under the fifty-percent dividend policy.

    Below is a listing of the dividends paid during the past two years:

         Dividends Paid                                  1995             1994
         --------------                                  ----             ----
                                                          Amounts in Millions
       Regular Dividends
         First Quarter.............................    $ 26.2           $ 24.6
         Second Quarter............................      28.6             24.9 
         Third Quarter ............................      29.0             26.4
         Fourth Quarter ...........................      20.3             24.4
                                                       ------           ------
            Total  ................................    $104.1           $100.3
                                                       ======           ======

     The  fourth  quarter  dividend  is  usually  paid on the  basis  of  actual
operating  earnings  for October  and  November  and an  estimate  of  operating
earnings for December.  However, the dividend for the fourth quarter of 1995 was
paid on the basis of actual operating earnings for October and November only, in
order to make payment prior to the sale by CBC to DKB of a twenty  percent (20%)
common stock interest in the Corporation.  During the first quarter of 1996, the
Corporation  declared  and paid a  dividend  of $8.9  million  based  on  actual
earnings for December.

     Stockholders' equity at December 31, 1995 was $1.9 billion.  Under the most
restrictive   provisions  of  agreements   relating  to  outstanding  debt,  the
Corporation  may not,  without the  consent of the holders of such debt,  permit
stockholders' equity to be less than $300.0 million.

                                       5
<PAGE>

Item 6.  Selected Financial Data.

      The following table sets forth selected consolidated financial information
regarding the Corporation's  results of operations.  This information  should be
read in  conjunction  with  Item 7.  Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations and Item 8. Financial  Statements
and Supplementary Data.

<TABLE>
<CAPTION>

                                                                                Years Ended December 31,
                                                     --------------------------------------------------------------------------
                                                      1995              1994              1993            1992             1991
                                                      ----              ----              ----            ----             ----
                                                                               Dollar Amounts in Millions

<S>                                                 <C>               <C>              <C>              <C>              <C>     
Finance income ...............................      $1,529.2          $1,263.8         $1,111.9         $1,091.5         $1,196.4
Interest expense .............................         831.5             614.0            508.0            552.0            709.4
                                                    --------          --------         --------         --------         --------
  Net finance income .........................         697.7             649.8            603.9            539.5            487.0
Fees and other income ........................         184.7             174.4            133.8            113.8            115.9
                                                    --------          --------         --------         --------         --------
  Operating revenue ..........................         882.4             824.2            737.7            653.3            602.9
  `                                                 --------          --------         --------         --------         --------
Salaries and employee benefits ...............         193.4             185.8            152.1            137.9            127.0
General operating expenses ...................         152.3             152.1            130.1            123.7            119.3
  `                                                 --------          --------         --------         --------         --------
Salaries and general operating                                           
  expenses ...................................         345.7             337.9            282.2            261.6            246.3
  `                                                 --------          --------         --------         --------         --------
Net credit losses ............................          77.2              84.2             94.4             98.3             95.2
Provision for finance
  receivables increase .......................          14.7              12.7             10.5              4.9              1.9
  `                                                 --------          --------         --------         --------         --------
Total provision for credit losses ............          91.9              96.9            104.9            103.2             97.1
  `                                                 --------          --------         --------         --------         --------
Depreciation on operating 
  lease equipment ............................          79.7              64.4             39.8             16.7              8.1
  `                                                 --------          --------         --------         --------         --------
Operating expenses ...........................         517.3             499.2            426.9            381.5            351.5
  `                                                 --------          --------         --------         --------         --------
Income before provision for income
  taxes and extraordinary item ...............         365.1             325.0            310.8            271.8            251.4
Provision for income taxes ...................         139.8             123.9            128.5            105.3            100.0
  `                                                 --------          --------         --------         --------         --------
Income before extraordinary item .............         225.3             201.1            182.3            166.5            151.4
Extraordinary item - loss on early
  extinguishment of  debt, net of
  income tax benefit .........................         --                --               --                (4.2)            (1.3)
  `                                                 --------          --------         --------         --------         --------
Net income ...................................      $  225.3          $  201.1         $  182.3         $  162.3         $  150.1
                                                    ========          ========         ========         ========         ========
Ratio of earnings to fixed charges ...........          1.44              1.52             1.60             1.49             1.35
</TABLE>

                                       6
<PAGE>

Statistical Data

     The following  table  presents the components of net income as a percentage
of average financing and leasing assets ("AEA").

<TABLE>
<CAPTION>

                                                                                Years Ended December 31,
                                                       --------------------------------------------------------------------------
                                                       1995              1994             1993             1992              1991
                                                       ----              ----             ----             ----              ----
                                                                               Dollar Amounts in Millions

<S>                                                     <C>              <C>              <C>              <C>             <C>   
Finance income (a) ............................         9.90%            9.19%            8.93%            9.40%           10.46%
Interest expense (a) ..........................         5.36             4.42             4.00             4.67             6.06
                                                   ---------        ---------        ---------        ---------        ---------
  Net finance income ..........................         4.54             4.77             4.93             4.73             4.40
Fees and other income .........................         1.20             1.28             1.09             1.00             1.05
                                                   ---------        ---------        ---------        ---------        ---------
  Operating revenue ...........................         5.74             6.05             6.02             5.73             5.45
                                                   ---------        ---------        ---------        ---------        ---------
Salaries and employee benefits ................         1.26             1.36             1.24             1.21             1.15
General operating expenses ....................         0.99             1.12             1.06             1.09             1.08
                                                   ---------        ---------        ---------        ---------        ---------
  Salaries and general operating
    expenses ..................................         2.25             2.48             2.30             2.30             2.23
                                                   ---------        ---------        ---------        ---------        ---------
Net credit losses (b) .........................         0.50             0.61             0.77             0.84             0.82
Provision for finance receivables
  increase ....................................         0.10             0.09             0.09             0.04             0.02
                                                   ---------        ---------        ---------        ---------        ---------
  Total provision for credit losses ...........         0.60             0.71             0.86             0.90             0.88
                                                   ---------        ---------        ---------        ---------        ---------
Depreciation on operating lease
  equipment ...................................         0.52             0.47             0.32             0.15             0.07
                                                   ---------        ---------        ---------        ---------        ---------
Income before provision for income
  taxes and extraordinary item ................         2.37             2.39             2.54             2.38             2.27
Provision for income taxes ....................         0.91             0.91             1.05             0.92             0.90
                                                   ---------        ---------        ---------        ---------        ---------
Income before extraordinary item ..............         1.46             1.48             1.49             1.46             1.37
Extraordinary item - loss on early
  extinguishment of debt, net of  
  income tax benefit ..........................          --               --               --             (0.04)           (0.01)
                                                   ---------        ---------        ---------        ---------        ---------
Net income ....................................         1.46%            1.48%            1.49%            1.42%            1.36%
                                                   =========        =========        =========        =========        =========
Average financing and leasing
  assets (c) ..................................    $15,377.5        $13,630.3        $12,262.9        $11,401.7        $11,062.6
Average finance receivables ...................    $15,397.8        $13,819.9        $12,266.1        $11,675.6        $11,540.1
Number of employees ...........................        2,738            2,689            2,424            2,355            2,346
</TABLE>

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

(b)  Percentage to average finance receivables.

(c)  Average  financing and leasing  assets is calculated by adding  averages of
     finance receivables, operating lease equipment, and investments included in
     other assets in the  Consolidated  Balance Sheets and  subtracting  average
     credit balances of factoring clients.

                                       7
<PAGE>

     The following table sets forth selected consolidated  financial information
regarding the Corporation's  financial position. This information should be read
in conjunction  with Item 7.  Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Operations  and Item 8.  Financial  Statements  and
Supplementary Data.

<TABLE>
<CAPTION>

                                                                                   At December 31,
                                                   -----------------------------------------------------------------------------
                                                      1995             1994             1993             1992             1991
                                                   ---------        ---------        ---------        ---------        ---------
                                                                          Dollar Amounts in Millions
<S>                                                <C>              <C>              <C>              <C>              <C>      
Finance receivables ..........................     $15,795.5        $14,794.4        $12,624.1        $11,771.5        $11,521.6
Reserve for credit losses ....................        (206.0)          (192.4)          (169.4)          (158.5)          (155.1)
Net finance receivables ......................      15,589.5         14,602.0         12,454.7         11,613.0         11,366.5
Operating lease equipment ....................       1,113.0            867.9            751.9            462.8            148.0
Total  assets ................................      17,420.3         15,959.7         13,725.0         13,026.1         12,200.4

Capitalization:
  Commercial paper ...........................       6,105.6          5,660.2          6,516.1          6,173.5          5,476.5
  Variable rate senior notes .................       3,827.5          3,812.5          1,686.5          1,477.8          1,305.0
  Fixed rate senior notes ....................       3,337.0          2,619.4          2,389.0          2,476.6          2,406.4
  Subordinated fixed rate notes ..............         300.0            300.0            200.0            200.0            353.9
  Stockholders' equity .......................       1,914.2          1,793.0          1,692.2          1,601.1          1,519.8
Dividends paid-regular .......................         104.1            100.3             91.2             81.0             75.0
Dividends paid-special .......................          --               --               --              150.0             --
Ratio of total debt to stockholders'
  equity .....................................        7.09-1           6.91-1           6.38-1           6.45-1           6.28-1
</TABLE>

                                       8
<PAGE>

Reserve for Credit Losses and Nonperforming Assets

     The following tables set forth information as of the dates shown concerning
the reserve  for credit  losses and the  carrying  value of  nonaccrual  finance
receivables  and assets  received in  satisfaction  of loans.  This  information
should be read in conjunction with the discussions of "Provision and Reserve for
Credit  Losses"  and "Past Due and  Nonaccrual  Finance  Receivables  and Assets
Received  in  Satisfaction  of Loans"  in Item 7.  Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations and Item 8. Financial
Statements and Supplementary Data.
<TABLE>
<CAPTION>

                                                       1995             1994             1993             1992             1991
                                                      ------           ------           ------           ------           ------
                                                                            Dollar Amounts in Millions
<S>                                                  <C>              <C>              <C>              <C>              <C>   
Balance, January 1 ............................       $192.4           $169.4           $158.5           $155.1           $144.0
                                                      ------           ------           ------           ------           ------
Finance receivables charged-off                        (96.9)           (95.4)          (105.6)          (110.2)          (105.7)
Recoveries on finance receivables
  previously charged-off ......................         19.7             11.2             11.2             11.9             10.6
                                                      ------           ------           ------           ------           ------
  Net credit losses ...........................        (77.2)           (84.2)           (94.4)           (98.3)           (95.1)
                                                      ------           ------           ------           ------           ------
Provision for credit losses ...................         91.9             96.9            104.9            103.2             97.0
Portfolio acquisitions (dispositions), net ....         (1.1)            10.3               .4             (1.5)             9.2
                                                      ------           ------           ------           ------           ------
  Net addition to reserve for credit losses ...         90.8            107.2            105.3            101.7            106.2
                                                      ------           ------           ------           ------           ------
Balance, December 31 ..........................       $206.0           $192.4           $169.4           $158.5           $155.1
                                                      ======           ======           ======           ======           ======
Reserve for credit losses as a percentage of:
  Finance receivables .........................         1.30%            1.30%            1.34%            1.35%            1.35%
                                                      ======           ======           ======           ======           ======
  Finance receivables past due 60 or
     more days ................................         78.1%           108.8%            78.4%            47.2%            44.2%
                                                      ======           ======           ======           ======           ======
  Finance receivables on nonaccrual
     status ...................................        147.7%           174.6%           121.0%            67.7%            81.3%
                                                      ======           ======           ======           ======           ======
<CAPTION>

                                                                                    December 31,
                                                    ----------------------------------------------------------------------------
                                                      1995             1994             1993              1992            1991
                                                    -------           -------          -------           ------          -------
                                                                             Dollar Amounts in Millions
<S>                                                   <C>              <C>              <C>              <C>              <C>   
Nonaccrual finance receivables ................       $139.5           $110.2           $139.9           $234.2           $190.7
Nonaccrual finance receivables as a
  percentage of finance receivables ...........         0.88%            0.75%            1.11%            1.99%            1.66%
Assets received in satisfaction of loans ......       $ 42.0           $ 86.5           $ 87.0           $ 93.8           $140.2
Assets received in satisfaction of loans
  as a percentage of finance receivables ......         0.27%            0.58%            0.69%            0.80%            1.21%
Total nonperforming assets ....................       $181.5          $ 196.7           $226.9           $328.0           $330.9
Total nonperforming assets as a
  percentage of finance receivables ...........         1.15%            1.33%            1.80%            2.79%            2.87%
</TABLE>

                                       9
<PAGE>

Analysis of Past Due Finance Receivables and Net Credit Losses

     The following table sets forth information as of the dates shown concerning
finance  receivables  (net  of  unearned  finance  income),   past  due  finance
receivables  (including  those  on  nonaccrual  status)  and net  credit  losses
incurred.  This information should be read in conjunction with the discussion of
"Past Due and Nonaccrual Finance Receivables and Assets Received in Satisfaction
of Loans" in Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.

<TABLE>
<CAPTION>

                                                                          Balance Past Due                                % to      
                                                                          60 Days or More                                 Average
                                                   Finance           -------------------------             Net            Finance
                                                 Receivables          Amount            Percent       Credit Losses     Receivables
                                                 -----------          ------            -------       -------------     -----------
                                                                      Dollar Amounts in Millions
<S>                                                <C>                 <C>                <C>            <C>                <C>  
December 31, 1995
Business Credit .............................      $ 1,471.0           $ 41.3             2.81%          $ 29.1             1.82%
Capital Equipment Financing .................        4,548.7             83.9             1.84              6.6             0.15
Credit Finance ..............................          758.7               .5             0.07              2.8             0.36
Industrial Financing ........................        4,929.9             70.1             1.42             15.8             0.35
Commercial Services .........................        1,743.3             32.9             1.89             12.8             0.72
Consumer Finance ............................        1,039.0             16.8             1.61              1.4             0.18
Sales Financing .............................        1,304.9             18.4             1.42              8.7             0.58
                                                   ---------           ------             ----          -------             ---- 
  Total .....................................      $15,795.5           $263.9             1.67%         $  77.2             0.50%
                                                   =========           ======             ====          =======             ==== 
December 31, 1994
Business Credit .............................      $ 1,442.1           $ 79.7             5.53%          $ 26.5             1.95%
Capital Equipment Financing .................        4,493.5              --               --              11.5             0.26
Credit Finance ..............................          719.6              3.3             0.46              3.3             0.46
Industrial Financing ........................        4,269.7             56.8             1.33             18.5             0.46
Commercial Services .........................        1,896.2             27.0             1.42             15.0             0.85
Consumer Finance ............................          570.8              1.1             0.20              0.1             0.02
Sales Financing .............................        1,402.5              9.0             0.64              9.3             0.68
                                                   ---------           ------             ----          -------             ---- 
    Total ...................................      $14,794.4           $176.9             1.20%         $  84.2             0.61%
                                                   =========           ======             ====          =======             ==== 
December 31, 1993
Business Credit .............................      $ 1,282.1           $ 36.9             2.88%            22.8             1.70%
Capital Equipment Financing .................        4,394.5             18.4             0.42             15.9             0.36
Credit Finance ..............................          645.7               .8             0.12              1.9             0.32
Industrial Financing ........................        3,881.0             96.2             2.48             16.2             0.48
Commercial Services .........................          981.9             47.5             4.84             26.1             2.29
Consumer Finance ............................          131.3              --              0.02              0.1             0.11
Sales Financing .............................        1,307.6             16.3             1.25             11.4             0.80
                                                   ---------           ------             ----          -------             ---- 
    Total ...................................      $12,624.1           $216.1             1.71%          $ 94.4             0.77%
                                                   =========           ======             ====           ======             ==== 
December 31, 1992
Business Credit .............................      $ 1,281.3           $ 32.4             2.53%          $ 13.2             1.00%
Capital Equipment Financing .................        4,429.1             99.7             2.25             32.4             0.74
Credit Finance ..............................          545.0             --               --                --               --
Industrial Financing ........................        3,094.1            125.3             4.05             16.6             0.56
Commercial Services .........................        1,010.2             60.6             6.00             23.5             2.14
Consumer Finance(a) .........................         --                 --               --                --               --
Sales Financing .............................        1,411.8             17.8             1.26             12.6             0.91
                                                   ---------           ------             ----          -------             ---- 
    Total ...................................      $11,771.5           $335.8             2.85%         $  98.3             0.84%
                                                   =========           ======             ====          =======             ==== 
December 31, 1991
Business Credit .............................      $ 1,194.9           $ 54.5             4.56%          $ 11.5             0.95%
Capital Equipment Financing .................        4,390.0             72.9             1.66             32.0             0.71
Credit Finance(b) ...........................          493.8               .1             0.02              --               --
Industrial Financing ........................        2,990.0            178.8             5.98             21.1             0.73
Commercial Services .........................        1,027.9             23.2             2.26             12.6             1.18
Sales Financing .............................        1,425.0             21.6             1.52             17.9             1.24
                                                   ---------           ------             ----          -------             ---- 
  Total .....................................      $11,521.6           $351.1             3.05%          $ 95.1             0.82%
                                                   =========           ======             ====           ======             ==== 
</TABLE>

------------
(a) Started de novo in December 1992.
(b) Acquired February 1991.

                                       10
<PAGE>

Item 7.  Management's  Discussion and Analysis of Financial Condition and 
         Results of Operations.

1995 vs. 1994

Highlights

     For the year ended December  31,1995 net income totaled $225.3 million,  an
increase of 12.0 percent from the $201.1 million for 1994, and  represented  the
eighth consecutive increase in annual earnings and the fifth consecutive year of
record earnings.  The current results reflect finance income from a higher level
of financing and leasing  assets,  improved  other income,  and lower net credit
losses, offset by an increase in borrowing costs.

     Financing  and  leasing  assets,  which  include  finance  receivables  and
operating lease equipment,  totaled a record $16.91 billion,  an increase of 8.0
percent over 1994.  Manufactured housing and recreational vehicle receivables of
$723.2 million were securitized during 1995 compared to $198.7 million in 1994.

Net Finance Income

      A comparison of the  components of 1995 and 1994 net finance income is set
forth below.

<TABLE>
<CAPTION>

                                                                        Years Ended December 31,                     Increase
                                                                   ---------------------------------         ----------------------
                                                                       1995                 1994               Amount        Percent
                                                                   ------------         ------------         ----------        ---- 
                                                                                        Dollar Amounts in Millions
<S>                                                                <C>                  <C>                  <C>               <C>  
Finance income ..........................................          $    1,529.2         $    1,263.8         $    265.4        21.0%
Interest expense ........................................                 831.5                614.0              217.5        35.4%
                                                                   ------------         ------------         ----------        ---- 
Net finance income ......................................          $      697.7         $      649.8         $     47.9         7.4%
                                                                   ============         ============         ==========        ==== 
Average financing & leasing assets (AEA) ................          $   15,377.5         $   13,630.3         $  1,747.2        12.8%
                                                                   ============         ============         ==========        ==== 
Net finance income as a % of AEA ........................                  4.54%                4.77%
                                                                   ============         ============          
</TABLE>

     Finance income totaled $1,529.2 million in 1995, up $265.4 million or 21.0%
over 1994. As a percentage of AEA, 1995 finance  income  increased to 9.90% from
9.19% in 1994.  Interest  expense  totaled  $831.5  million  in 1995,  up $217.5
million  or 35.4% over 1994.  As a  percentage  of AEA,  1995  interest  expense
increased to 5.36% from 4.42% in 1994.

     Net finance income (finance income less interest  expense)  increased $47.9
million  or 7.4% in 1995,  trailing  the  growth in AEA of 12.8% as higher  1995
market interest rates increased borrowing costs more rapidly than lending yields
due to heightened pricing competition, particularly from banks.

Fees and Other Income

     Fees and other income  improved $10.3 million to $184.7 million during 1995
due  to  higher  gains  from   securitizations   of  manufactured   housing  and
recreational vehicle receivables,  offset by lower factoring  commissions due to
the weak retailing environment.

                                       11
<PAGE>

Provision and Reserve for Credit Losses

     Net credit losses were $77.2 million in 1995, down $7.0 million (8.3%) from
$84.2 million in 1994 reflecting a higher level of recoveries  during 1995. As a
percentage of average finance  receivables,  net credit losses improved to 0.50%
in 1995 from 0.61% in 1994. Information concerning the provision and reserve for
credit losses is summarized in the following table.

                                               
                                                Years ended December 31,
                                               --------------------------
                                                 1995               1994
                                               -------            -------
                                                Dollar Amounts in Millions

Net credit losses ...........................  $   77.2          $   84.2
Provision for finance receivables increase ..      14.7              12.7
                                                -------           -------       
Total provision for credit losses ...........   $  91.9           $  96.9
                                                =======           =======
Net credit losses as a percentage of
   average finance receivables ..............      0.50%             0.61%
                                                =======           =======
Reserve for credit losses ...................   $ 206.0           $ 192.4
                                                =======           =======

     The reserve for credit losses is  periodically  reviewed for adequacy based
on the nature and  characteristics  of the  obligors,  economic  conditions  and
trends, charge-off experience,  delinquencies and value of underlying collateral
and  guarantees  (including  recourse  to  dealers  and  manufacturers).  It  is
management's  judgment that the reserve for credit losses is adequate to provide
for potential credit losses. The finance  receivables are reviewed  periodically
to  determine  the  probability  of  loss  on  individual  finance  receivables.
Charge-offs are taken after considering such factors as the obligor's  financial
condition and the value of underlying  collateral  and  guarantees.  Because the
reserve for credit  losses is intended  to provide for future  events,  which by
their nature are  uncertain,  changes in economic  conditions or other  discrete
events  adversely  affecting  specific  obligors or industries  may  necessitate
additions to the reserve for credit losses.

Salaries and General Operating Expenses

     Salaries  and general  operating  expenses  increased  $7.8  million or 2.3
percent  to $345.7  million  in 1995 from  $337.9  million  in 1994,  reflecting
significant productivity achievements during a year of 8.0 percent financing and
leasing asset growth.  Salaries and employee  benefits rose $7.6 million  (4.0%)
and general  operating  expenses  increased $0.2 million during 1995.  Personnel
increased to 2,738 at December 31, 1995 from 2,689 at December 31, 1994.

     Management  monitors  productivity  via the  relationship  of salaries  and
general  operating  expenses to AEA, a measure of operating  expense  efficiency
based upon owned assets.  Management also monitors the  relationship of salaries
and general operating expense to average managed assets ("AMA"),  which includes
both owned assets and receivables serviced for others, including those that have
been  securitized by the Corporation.  Productivity  improved in 1995 under both
measures. Changes in the relationship of salaries and general operating expenses
to AEA and AMA are set forth below:
                                                        1995          1994
                                                        ----          ----
Average earning assets ..........................       2.25%         2.48%    
Average managed assets ..........................       2.13%         2.40%
                                                 
      The  Corporation  manages  expenditures  using a  comprehensive  budgetary
process.  Expenses are  monitored  closely by business unit  management  and are
reviewed monthly with senior  management of the  Corporation.  To ensure overall
project cost control,  a review and approval procedure is in place for all major
capital  expenditures,  such as  purchases  of computer  equipment,  including a
post-implementation  analysis of the actual project costs and the realization of
projected benefits.


                                       12
<PAGE>

Income Taxes

     The provision  for Federal and state and local income taxes totaled  $139.8
million in 1995 compared with $123.9 million in 1994.  The effective  income tax
rate for 1995 was 38.3% compared to 38.1% in 1994.

Financing and Leasing Assets

     Financing  and  leasing  assets  (comprised  of  finance   receivables  and
operating  lease  equipment) rose $1.25 billion (8.0%) to $16.91 billion in 1995
as presented by business unit in the following table.

<TABLE>
<CAPTION>

                                                    December 31,               Increase (Decrease)
                                             ------------------------         ---------------------
                                               1995          1994               Amount      Percent
                                             --------      ----------         ---------     -------
                                                            Dollar Amounts in Millions    
<S>                                          <C>           <C>                <C>             <C> 
Finance Receivables 
  Business Credit .........................  $ 1,471.0     $ 1,442.1          $    28.9       2.0%
  Capital Equipment Financing .............    4,548.7       4,493.5               55.2       1.2
  Credit Finance ..........................      758.7         719.6               39.1       5.4
  Industrial Financing ....................    4,929.9       4,269.7              660.2      15.4
  Commercial Services .....................    1,743.3       1,896.2             (152.9)     (8.1)
  Consumer Finance ........................    1,039.0         570.8              468.2      82.0
  Sales Financing .........................    1,304.9       1,402.5              (97.6)     (6.9)
                                             ---------     ---------          ---------      ----
    Total Finance Receivables .............   15,795.5      14,794.4            1,001.1       6.8
                                             ---------     ---------          ---------      ----
Operating Lease Equipment
  Capital Equipment Financing .............      750.0         648.7              101.3      15.6
  Industrial Financing ....................      363.0         219.2              143.8      65.6
                                             ---------     ---------          ---------      ----
    Total Operating Lease Equipment .......    1,113.0         867.9              245.1      28.2
                                             ---------     ---------           --------      ----
    Total Financing and Leasing Assets ....  $16,908.5     $15,662.3           $1,246.2       8.0%
                                             =========     =========           ========      ====
</TABLE>

     The following  table  presents new business  originations  of financing and
leasing assets by business unit.

<TABLE>
<CAPTION>

                                              Years Ended December 31,         Increase (Decrease)
                                             -------------------------        --------------------- 
                                                1995          1994             Amount       Percent
                                             ----------     ----------        ---------     -------
                                                            Dollar Amounts in Millions
<S>                                          <C>            <C>                <C>           <C>  
Business Credit (a) .......................  $   543.3     $   422.7           $  120.6      28.5%
Capital Equipment Financing ...............    1,151.3       1,148.9                2.4       --
Credit Finance (a) ........................      180.2         196.5              (16.3)     (8.3)
Industrial Financing ......................    2,724.1       2,156.3              567.8      26.3
Consumer Finance ..........................      617.1         481.2              135.9      28.2
Sales Financing ...........................      964.4         681.1              283.3      41.5
                                             ---------     ---------           --------      ----
                                             $ 6,180.4     $ 5,086.7            1,093.7      21.5%
                                             =========     =========           ========      ====
Commercial Services(b) ....................  $12,611.7     $12,853.0           $ (241.3)     (1.9)%
                                             =========     =========           ========      ====
</TABLE>

------------------
(a) Initial borrowings under new lines of credit.

(b) Factored accounts receivable.

     The changes in the two preceding tables are discussed below.

     o Business Credit--Revolving and term loans, including debtor-in-possession
and workout financing, for medium and larger-sized companies secured by accounts
receivable,  inventory and fixed assets.  Record new business volume was largely
offset  by high  customer  paydowns  and  terminations  as  customers  access to
alternative  financing sources increased,  resulting in modest growth of 2.0% to
$1.47 billion at December 31, 1995.

     o Capital Equipment  Financing--Customized  secured equipment financing and
leasing  of major  capital  equipment  for medium  and  larger-sized  companies.
Finance  receivables  and volume rose  modestly  during  1995 due to  heightened
pricing competition from other financial  institutions.  Growth in the operating
lease  equipment  portfolio  is  primarily  in railcar and other  transportation
equipment categories.

                                       13
<PAGE>

     o Credit Finance--Revolving and term loans, including  restructurings,  for
small and medium-sized  companies secured by accounts receivable,  inventory and
fixed assets.  Finance  receivables in this unit continued  their steady growth,
rising 5.4% in 1995 to $758.7 million.

     o  Industrial   Financing--Secured  equipment  financing  and  leasing  for
medium-sized  companies,  including dealer and manufacturer  financing.  Another
record year of new business  originations  resulted in finance receivable growth
of 15.4%.  Operating  lease  equipment  grew $143.8  million  with  increases in
various  collateral  types including  tractors,  trailers and buses and business
aircraft.

     o Commercial Services--Factoring of accounts receivables,  including credit
protection,  bookkeeping and collection activities and revolving and term loans.
Finance  receivables  decreased  8.1% to $1.74  billion at December  31, 1995 as
factoring volume declined 1.9% from 1994 on weakness in retail sales.

     o  Consumer   Finance--Loans  secured  by  first  or  second  mortgages  on
residential  real  estate  and home  equity  lines of credit  generated  through
brokers and direct  marketing.  New business volume grew 28.2% to $617.1 million
in this unit's third full year of  operations,  increasing  receivables  to over
$1.0 billion.

     o Sales  Financing--Retail  secured  financing  of  recreational  vehicles,
recreational boats, and manufactured  housing through dealers and manufacturers.
Higher originations in recreational vehicle and manufactured housing resulted in
record  new  business  volume of $964.4  million,  up 41.5%,  offset by  finance
receivable  securitizations  of $723.2  million  (of  which  $68.7  million  was
classified   as  assets   held  for  sale  at   December   31,   1994)  and  the
reclassification of an additional $112.0 million of recreational vehicle finance
receivables  to  assets  held for sale at  December  1995.  In  addition  to its
portfolio  of  $1.30  billion,  Sales  Financing  also  provides  servicing  for
portfolios owned by other financial institutions and securitization trusts which
totaled $1.25 billion at December 31, 1995 ($498.1 million in 1994).

Financing and Leasing Assets Composition

     Financing and leasing assets are composed of loans and direct financing and
leveraged leases with commercial and consumer  customers located  principally in
the United States and operating lease  equipment,  largely  commercial  aircraft
(44.9% of the operating lease portfolio),  placed with lessees both domestically
and internationally.

Transaction Type

     Financing  and  leasing  assets  by  transaction  type are set forth in the
following table.

                              1995         Percent         1994          Percent
                            --------       -------       ---------       -------
                                          Dollar Amounts in Millions     
Commercial ................ 11,708.2         69.2%      $10,925.0         69.8%
Consumer ..................  2,344.0         13.9         1,973.2         12.6
Factoring .................  1,743.3         10.3         1,896.2         12.1
Operating lease equipment .  1,113.0          6.6           867.9          5.5
                           ---------        -----       ---------        -----
                           $16,908.5        100.0%      $15,662.3        100.0%
                           =========        =====       =========        =====  

     Business units included in commercial  are  Industrial  Financing,  Capital
Equipment Financing, Business Credit and Credit Finance. Business units included
in consumer are Sales  Financing  and  Consumer  Finance.  Factoring  represents
Commercial Services.

                                       14
<PAGE>

Geographic Composition

      The following  table  presents  financing  and leasing  assets by customer
location.
                                                                   
                            At December 31, 1995       At December 31, 1994    
                           ----------------------      ---------------------    
                            Amount       Percent       Amount       Percent
                           ---------    ---------      -------      --------
                                        Dollar Amounts in Millions
United States
  Northeast ............. $  4,094.2      24.2%       $ 3,856.6       24.6%
  West ..................    3,959.9      23.4          3,679.4       23.5
  Midwest ...............    3,209.1      19.0          2,907.0       18.6
  Southeast .............    2,631.7      15.6          2,318.7       14.8
  Southwest .............    1,929.8      11.4          1,778.8       11.4
Foreign (principally                                                
   commercial aircraft) .    1,083.8       6.4          1,121.8        7.1
                           ---------     -----        ---------      -----     
    Total ...............  $16,908.5     100.0%       $15,662.3      100.0%
                           =========     =====        =========      ===== 
Industry Composition

      The following table presents financing and leasing assets by industry.
<TABLE>
<CAPTION>
 
                                                     At December 31, 1995        At December 31, 1994
                                                  -------------------------     -----------------------
                                                    Amount         Percent        Amount       Percent
                                                  ----------      ---------     -----------    --------
                                                                 Dollar Amounts in Millions
<S>                                               <C>               <C>         <C>               <C>  
Commercial airlines (a) ......................    $ 1,911.6         11.3        $ 1,899.3         12.1%
Construction equipment (b) ...................      1,463.9          8.7          1,337.4          8.5
Transportation (c) ...........................      1,043.1          6.1            744.9          4.7
Home equity ..................................      1,039.0          6.1            570.8          3.6
Manufactured housing (d) .....................        618.6          3.7            458.3          2.9
Recreational vehicles (e) ....................        586.5          3.5            898.0          5.7
Manufacturers
   Industrial machinery and equipment ........        607.4          3.6            455.5          2.9
   Steel and metal products ..................        530.6          3.1            485.6          3.1
   Textile and mill products .................        473.2          2.8            470.1          3.0
   Apparel ...................................        403.3          2.4            328.0          2.1
   Transportation equipment ..................        377.5          2.2            469.6          3.0
   Printing and paper products ...............        343.1          2.0            400.2          2.6
   Food and kindred products .................        297.2          1.8            283.6          1.8
   Electronic equipment ......................        253.0          1.5            276.3          1.8
   Other .....................................      1,043.3          6.2            885.7          5.7
Retailers
   Apparel ...................................        757.1          4.5            807.1          5.2
   General merchandise .......................        385.5          2.3            423.0          2.7
   Other .....................................        376.7          2.2            361.4          2.3
Printing and publishing ......................        581.8          3.4            560.1          3.6
Wholesaling ..................................        529.7          3.1            528.8          3.4
Shipping .....................................        512.0          3.0            536.6          3.4
Mining, oil and gas extraction ...............        400.0          2.4            300.1          1.9
Electrical generation ........................        270.4          1.6            243.1          1.6
Service businesses ...........................        248.3          1.5            217.4          1.4
Financial institutions .......................        235.6          1.4            183.2          1.2
Equipment leasing and rental .................        137.3          0.8            130.3          0.8
Others (none greater than 1.1% of total)......      1,482.8          8.8          1,407.9          9.0
                                                  ---------        -----        ---------        -----
     Total ...................................    $16,908.5        100.0%       $15,662.3        100.0%
                                                  =========        =====        =========        =====
</TABLE>

------------------
(a)  Refer to the Commercial  Airlines  section of "Financing and Leasing Assets
     Concentrations" for a discussion of the commercial airlines portfolio.

(b)  Primarily  relates to equipment.  Does not include real estate  development
     and acquisition.

(c)  Transportation  includes rail, bus,  over-the-road  trucking,  and business
     aircraft industries.

(d)  Excludes  securitized  finance  receivables  of $470.8  million  and $188.4
     million at December 31, 1995 and 1994, respectively.

(e)  Excludes  securitized  finance  receivables  of $445.7  million  and $118.3
     million at December 31, 1995 and 1994, respectively.


                                       15
<PAGE>

Financing and Leasing Assets Concentrations

Commercial Airlines

     Commercial airline finance  receivables of $1.4 billion and operating lease
equipment of $499.4 million  totaled $1.9 billion (11.3% of total  financing and
leasing assets) at December 31, 1995 compared with $1.9 billion (12.1%) in 1994.
The  portfolio  is  secured  by  commercial   aircraft  and  related  equipment.
Management  continues  to limit the growth in this  portfolio  relative to total
financing and leasing assets.

     The following  table  presents  information  about the  commercial  airline
industry portfolio.

                                                     At December 31,
                                             -------------------------------
                                               1995                   1994
                                             ---------              --------
                                                Dollar Amounts in Millions
Finance receivables
  Amount outstanding(a) ................      $1,412.2              $1,417.0
  Number of obligors ...................            51                    46
Operating lease equipment
  Net carrying value ...................      $  499.4              $  482.3
  Number of obligors ...................            24                    21
    Total ..............................      $1,911.6              $1,899.3
Number of obligors(b) ..................            68                    62
Number of aircraft(c) ..................           266                   282

--------------

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

(b)  Certain   obligors  have  both  finance   receivable  and  operating  lease
     transactions.

(c)  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  requirement than a Stage II
     aircraft.  The FAA has  issued  rules  which  phase out the use of Stage II
     aircraft  in the United  States  through the year 2000.  The  International
     Civil Aviation  Organization has issued similar requirements for Europe. At
     year-end  1995,  the portfolio  consisted of Stage III aircraft of $1,664.3
     million  (88.2%)  and Stage II aircraft of $222.2  million  (11.8%)  versus
     Stage III  aircraft  of $1,587.5  million  (85.3%) and Stage II aircraft of
     $273.6  million  (14.7%) at  year-end  1994.  The  decline in the number of
     aircraft from December 1994 principally reflects the maturity of loans with
     one obligor collateralized by 17 aircraft.

Foreign Outstandings

     Financing  and  leasing  assets  to  foreign  obligors,  primarily  to  the
commercial airline industry,  are all U. S. dollar denominated and totaled $1.08
billion at December 31, 1995. The largest exposures at December 31, 1995 were in
the United  Kingdom,  $145.5  million  (0.86% of financing and leasing  assets),
France,  $122.0 million (0.72%), and Mexico, $115.8 million (0.68%). The Mexican
exposure is principally  operating and direct financing leases of commercial and
business  aircraft all of which were current at December 31, 1995. The remaining
foreign  exposure  is  geographically   disbursed  with  no  individual  country
representing more than 0.57% of financing and leasing assets.

     At December  31, 1994,  financing  and leasing  assets to foreign  obligors
totaled $1.12 billion.  Outstandings  totaled $177.2 million (1.13%) to obligors
in the United Kingdom and $140.0 million (0.89%) to obligors in Mexico. No other
countries had obligors with aggregate  outstandings exceeding 0.75% of financing
and leasing assets.

Highly Leveraged Transactions

     The Corporation uses the following  criteria to classify a buyout financing
or  recapitalization  which equals or exceeds $20 million as a highly  leveraged
transaction (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.

     A  transaction  originally  reported  as an HLT can be  removed  from  this
classification  ("delisted")  if the  leveraged  company  has  demonstrated  the
ability to operate  successfully as a highly  leveraged  entity for at least two
years after the original financing and meets one of the following criteria:

     o    The  original   financing   has  been  repaid  using  cash  flow  from
          operations, planned asset sales, or a capital infusion, or

     o    The debt has been serviced  without undue reliance on unplanned  asset
          sales, and certain  leverage ratios (related to the original  criteria
          under which the financing qualified as an HLT) have been maintained.



                                       16
<PAGE>

     The  Corporation,   primarily  through  Business  Credit,   originates  and
participates  in HLTs,  which  totaled  $412.6  million  (2.4% of financing  and
leasing  assets) at  December  31,  1995,  down from  $436.1  million  (2.8%) at
December 31, 1994. The decline in HLT outstandings during 1995 was primarily due
to payoff of accounts as well as a company that met the aforementioned delisting
criteria,   partially  offset  by  new  HLT  fundings.   The  Corporation's  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 $220.4 million at December 31, 1995 compared with
$202.1 million at year-end 1994.

     At December  31,  1995,  the HLT  portfolio  consisted of 33 obligors in 11
different  industry  groups,  with  34.3%  of the  outstandings  located  in the
Southeast  region  of the  United  States  and 24.4% in the  West.  One  account
totaling  $20.1  million was  classified  as  nonaccrual  at December  31, 1995,
compared with four accounts totaling $57.7 million at year-end 1994.

Past Due and Nonaccrual Finance  Receivables and Assets Received 
in Satisfaction of Loans

     Finance  receivables  past due 60 days or more  increased to $263.9 million
(1.67% of finance receivables) at December 31, 1995, from $176.9 million (1.20%)
at December 31, 1994.  Finance  receivables of $42.9 million  collateralized  by
oceangoing  carriers  of  a  shipping  company  and  $36.6  million  of  finance
receivables  collateralized by two cruise line vessels were placed on nonaccrual
status during the third quarter of 1995. The shipping company ceased  operations
during  the third  quarter  and  during the  fourth  quarter,  the  cruise  line
discontinued  its operations  and filed for  protection  under Chapter 11 of the
Bankruptcy  Code.  The  Corporation  is  in  the  process  of  repossessing  and
remarketing the oceangoing carriers.  The Corporation has repossessed the cruise
line vessels and is in the process of remarketing the vessels.

     Finance  receivables  on  nonaccrual  status,  included in past due finance
receivables,  rose to $139.5 million (0.88% of finance  receivables) at December
31, 1995, from $110.2 million (0.75%) at December 31, 1994, primarily due to the
loans discussed above.

     Assets  received in  satisfaction  of loans  declined  to $42.0  million at
December 31, 1995 from $86.5 million at December 31, 1994. The December 31, 1994
balance  included two commercial  aircraft which were placed on long term leases
during 1995.

     The following  table  summarizes by type assets received in satisfaction of
loans.
                                                       At December 31,
                                                -------------------------
                                                1995                 1994
                                               -------             -------
                                                    Amounts in Millions
Retail merchandise, property and              
  accounts receivable(a) .................      $ 24.1              $ 32.3
Transportation(b) ........................        10.1                 6.2
Property and equipment ...................         3.5                 8.6
Commercial aircraft ......................          -                 36.0
Other ....................................         4.3                 3.4
                                                ------              ------
   Total .................................      $ 42.0              $ 86.5
                                                ======              ======

-------------
(a)  Retail  merchandise,  property and accounts  receivable  includes an equity
     interest in a building supply retailer.

(b)  Transportation  includes  carriers and  recreational  vehicles in 1995, and
     buses and recreational vehicles in 1994.

Credit Risk Management

     Financing and leasing assets are evaluated for credit and  collateral  risk
both during the credit granting process and  periodically  after the advancement
of funds.  Each business unit is responsible  for developing and  implementing a
formal credit  management  process in accordance with formal uniform  guidelines
established by the Executive  Credit Committee of the Corporation  (ECC).  These
guidelines set forth risk  acceptance  criteria for: (1) selected target markets
and products;  (2) the creditworthiness of borrowers,  including credit history,
financial  condition,  adequacy of cash flow and quality of management;  and (3)
the type and value of underlying  collateral and guarantees  (including recourse
to dealers and manufacturers).  As economic and market conditions change, credit
risk management practices are reviewed and modified,  if necessary,  to minimize
the risk of credit loss.

     Commercial  financing and leasing assets are  periodically  evaluated based
upon credit criteria  developed under the  Corporation's  uniform credit grading
system.  Concentrations  are  monitored  and limits are changed by management as
conditions warrant to minimize the risk of credit loss. Periodically, the status
of loans greater than $500,000 to obligors with higher  (riskier)  credit grades


                                       17
<PAGE>

is individually  reviewed with the Asset Quality Review Committee,  comprised of
members  of  senior  management  including  the Vice  Chairman,  Executive  Vice
President-Credit Adminstration and Chief Financial Officer.

     For consumer  loans,  management  has developed and  implemented  automated
credit   scoring  models  for  each  loan  type  (eg.   recreational   vehicles,
manufactured  housing,  home equity and recreational  marine), that include both
customer  demographics  and credit  bureau  characteristics.  The  Corporation's
credit criteria  include  reliance on scores combined with judgment.  The credit
scoring  models are reviewed for  effectiveness  monthly  utilizing  statistical
tools.  Consumer loans are periodically  evaluated using past due, vintage curve
and other  statistical  tools to analyze  trends and credit  performance by loan
type including  analysis of specific credit  characteristics  and other selected
subsets of the portfolios.

     Compliance  with  established  corporate  policies and  procedures  and the
credit  management  processes at each  business  unit is reviewed by an internal
credit audit group within the Corporation's  internal audit  department.  Credit
audits examine  adherence with established  credit policies and procedures,  and
test for  inappropriate  credit  practices,  including whether potential problem
accounts are being detected and reported on a timely basis.

Asset/Liability Management

     Management  strives to manage interest rate and liquidity risk and optimize
net finance  income  under  formal  policies  established  and  monitored by the
Capital Committee, which is comprised of members of senior management, including
the Chief Executive Officer, the Vice Chairman,  the Chief Financial Officer and
senior representatives of DKB and CBC. Four members of the Capital Committee are
also members of the  Corporation's  Board of  Directors.  The Capital  Committee
establishes  and regularly  reviews  interest rate  sensitivity,  funding needs,
liquidity,  and  asset-pricing  to determine  short-term  and long-term  funding
strategies,   including  the  use  of  off-balance  sheet  derivative  financial
instruments.   The  Corporation   does  not  enter  into  derivative   financial
instruments for trading or speculative purposes.

     Derivative positions,  all of which are entered into as hedges, are managed
in such a way that the  exposure to interest  rate,  credit or foreign  exchange
risk is in  accordance  with the  overall  operating  goals  established  by the
Capital  Committee.  There  is an  approved,  diversified  list of  creditworthy
counterparties  used for derivative  financial  instruments,  primarily interest
rate and currency swap  agreements,  each of whom has specific  credit  exposure
limits, which are based on market value. The Executive Credit Committee approves
each  counterparty  and its  related  market  value and  credit  exposure  limit
annually or more  frequently if any changes are  recommended.  Market values are
calculated  periodically for each swap contract,  summarized by counterparty and
reported to the Capital  Committee.  For  additional  information  regarding the
Corporation's  derivative  portfolio,  refer  to "Note  7--Derivative  Financial
Instruments" in Item 8. Financial Statements and Supplementary Data.

Interest Rate Risk Management

     Changes in market interest rates or in the relationships between short-term
and long-term  market  interest rates or different  interest rate indices (basis
risk) create risks which can potentially affect net finance income. Such changes
can affect the interest  rates charged on  interest-earning  assets  differently
than the interest rates paid on interest-bearing liabilities.

     The Capital  Committee  actively manages interest rate risk by changing the
proportion of fixed and floating rate debt and by utilizing  interest rate swaps
and,  to a lesser  extent,  caps to  modify  the  repricing  characteristics  of
existing interest-bearing liabilities.  Issuing new debt or hedging the interest
rate on existing  debt through the use of interest  rate swaps and caps are both
tools for managing interest rate risk. The decision to use one or the other or a
combination of both is driven by the relationship  between the relative interest
rate costs and  effectiveness  of the  alternatives,  and liquidity needs of the
Corporation.  For  example,  a fixed  rate,  fixed  term  loan  transaction  may
initially be funded by  commercial  paper,  resulting in interest  rate risk. To
reduce  this risk,  the  Corporation  may enter into a hedge that has an inverse
correlation to the interest rate  sensitivity  created,  whereby the Corporation
would pay a fixed  interest rate and receive a commercial  paper  interest rate.
Basis  risk  is  similarly  managed  through  the  issuance  of new  debt or the
utilization of interest rate swaps or caps.

     The  Corporation's  degree of interest  rate  sensitivity  is  continuously
monitored and  simulated  through  computer  modeling by measuring the repricing
characteristics of interest-sensitive  assets, liabilities and off-balance sheet
derivatives.  These  characteristics  include the  dollar  amounts,  maturities,
estimated prepayments,  interest rates, and reference rate or other market based
indices  which  are  updated  and  reviewed  periodically.  The model is used to
project net interest  income  assuming  stable interest rates as well as various



                                       18
<PAGE>

other hypothetical  interest rate scenarios and the results are reviewed monthly
by the Capital Committee.  Utilizing the Corporation's  computer modeling, if no
new fixed  rate  loans or  leases  were  extended  and no  actions  to alter the
existing  interest rate  sensitivity were taken subsequent to December 31, 1995,
an immediate hypothetical 1% parallel rise in the yield curve on January 1, 1996
would reduce net income by an estimated  $5.0  million  after-tax  over the next
twelve  months.  Although  management  believes  that this  measure  provides  a
meaningful estimate of the Corporation's interest rate sensitivity,  it does not
reflect changes in the credit quality, size and composition of the balance sheet
and other business  developments that could affect net income.  Further, it does
not necessarily  represent  management's  current view of future market interest
rate movements.

     The Corporation  periodically enters into structured  financings (involving
both the issuance of debt and an interest rate swap with corresponding  notional
principal  amount  and  maturity)  that not only  improve  liquidity  and reduce
interest  rate risk,  but result in a lower  overall  funding cost than could be
achieved by solely  issuing debt.  For example,  in order to fund LIBOR interest
rate based assets, a medium-term variable rate note based upon the Federal Funds
rate can be issued and coupled with an interest rate swap exchanging the Federal
Funds rate for a LIBOR  interest  rate.  This creates,  in effect,  a lower cost
LIBOR based  medium-term  obligation  which also reduces the interest rate basis
risk of funding LIBOR based assets with  commercial  paper or Federal Funds rate
based debt.

     Interest  rate swaps with  notional  principal  amounts of $5.27 billion at
December  31, 1995 and $5.46  billion at December  31, 1994 were  designated  as
hedges against outstanding debt and were principally used to effectively convert
the  interest  rate on  variable  rate  debt to a fixed  rate,  which  sets  the
Corporation's  fixed rate term debt borrowing cost over the life of the swap and
reduces  the  Corporation's  exposure to rising  interest  rates but reduces the
Corporation's  benefits from lower interest rates.  Interest rate swaps and caps
are further discussed in "Note 7--Derivative  Financial  Instruments" in Item 8.
Financial Statements and Supplementary Data.

     A comparative  analysis of the weighted average  principal  outstanding and
interest  rates paid on the  Corporation's  debt  before and after the effect of
interest rate swaps is shown in the following table.
<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                    ------------------------------------------------------------------------------------------
                                                      1995                                            1994
                                    -----------------------------------------    ---------------------------------------------
                                        Before Swaps          After Swaps               Before Swaps            After Swaps
                                    -------------------    ------------------    ------------------        -------------------
                                                                 Dollar Amounts in Millions
<S>                                 <C>          <C>     <C>           <C>       <C>            <C>       <C>            <C>
Commercial paper and
  variable rate senior
  notes .......................     $ 9,785.4    6.03%   $ 7,226.0     6.02%     $ 8,847.5      4.46%     $ 6,865.7      4.41%
Fixed rate senior  notes ......       3,194.5    7.09%     5,753.9     6.78%       2,525.8      7.24%       4,507.6      6.70%
                                    ---------            ---------               ---------                ---------
Composite .....................     $12,979.9    6.29%   $12,979.9     6.36%     $11,373.3      5.07%     $11,373.3      5.32%
                                    =========            =========               =========                =========
</TABLE>

     The increases in the composite  interest  rates after the effect of hedging
activity  reflect  the  greater  proportion  of debt  effectively  paying  fixed
interest rates. The weighted average interest rates before the effect of hedging
activity do not reflect the interest  expense that would have been  incurred had
the  Corporation  chosen  to  manage  interest  rate  risk  without  the  use of
derivatives.

Liquidity Risk

     The Capital  Committee  manages  liquidity  risk by monitoring the relative
maturities of assets and  liabilities and by borrowing  funds,  primarily in the
United States money and capital markets.  Such cash is used to fund asset growth
(including  the  bulk  purchase  of  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  source  of  funding  is
commercial paper  borrowings,  proceeds from the sales of medium-term  notes and
other debt securities and securitizations.

Liquidity

     Commercial paper  outstanding  increased $445.4 million to $6.11 billion at
December 31, 1995, and represented 45.0% of total debt outstanding,  while fixed
rate notes  increased  to $3.64  billion at  December  31,  1995 (26.8% of total
debt), an increase of $717.7 million from December 31, 1994.  Variable rate debt
totaled $3.83 billion  (28.2% of total debt  outstanding)  at December 31, 1995.
These  changes  primarily  reflect the  increase in the level of  financing  and
leasing assets.

     Commercial  paper  borrowings  are  supported  by a variety of bank  credit
facilities.  At December 31,  1995,  credit  lines with 69 banks  totaled  $4.64

                                       19
<PAGE>

billion and support the current  commercial  paper position as well as growth in
the  foreseeable  future.  Credit line coverage  decreased to 77.7% of operating
commercial paper outstanding (commercial paper outstanding less interest-bearing
deposits)  at  year-end  1995,  as  compared  to 82.7% in 1994 due to the higher
balance of commercial paper outstanding at December 31, 1995. No borrowings have
been made under credit lines since 1970.

     The Corporation also has accessed the asset backed  securitization  markets
as an additional  liquidity  source.  During 1995, the  Corporation  securitized
manufactured  housing and recreational  vehicle receivables on four transactions
for a  total  of  $723.2  million,  an  increase  of  $524.5  million  over  two
transactions totaling $198.7 in 1994.

Capitalization

     The  following  table  presents  information  regarding  the  Corporation's
capital structure.
    
                                                 At December 31,
                                           ----------------------------
                                             1995                 1994
                                           ---------           ---------
                                             Dollar Amounts in Millions
Commercial paper ......................   $ 6,105.6            $ 5,660.2
Variable rate senior notes ............     3,827.5              3,812.5
Fixed rate senior and 
  subordinated notes ..................     3,637.0              2,919.4
                                          ---------            ---------
Total debt ............................   $13,570.1            $12,392.1
Stockholders' equity ..................     1,914.2              1,793.0
                                          ---------            ---------
Total capitalization ..................   $15,484.3            $14,185.1
                                          =========            =========
Debt-to-equity ratio ..................   7.09 to 1            6.91 to 1
                                          =========            =========

      The Corporation  operates under a dividend policy requiring the payment of
dividends by the  Corporation,  equal to and not  exceeding 50% of net operating
earnings on a quarterly basis. Through November 30, 1995, regular cash dividends
of $104.1  million were paid to DKB and CBC Holding based upon their  respective
stock ownership.  During the first quarter of 1996, the Corporation declared and
paid a dividend of $8.9 million based on actual earnings for December 1995.

     During the year,  $2.55 billion of variable rate notes and $1.15 billion of
fixed rate notes were  issued  with  individual  terms  ranging  from one to ten
years.  Repayments  of debt during 1995 totaled $2.97  billion.  At December 31,
1995,  $5.26  billion  of  registered  but  unissued  debt  securities  remained
available under shelf registration statements.

     The Corporation's commercial paper, publicly issued variable rate and fixed
rate senior debt,  and senior  subordinated  long-term  notes and debentures are
rated by Moody's  Investors  Service,  Duff & Phelps Credit  Rating  Company and
Standard & Poor's Corporation.

Recently Issued Accounting Pronouncements

     During the first  quarter of 1996,  the  Corporation  adopted  Statement of
Financial  Accounting  Standard  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121") and
Statement of Financial  Accounting  Standard No. 122,  "Accounting  for Mortgage
Servicing Rights" ("SFAS 122").

     SFAS 121 requires that a review for impairment be performed whenever events
or changes in  circumstances  indicate  that the carrying  amount of  long-lived
assets may not be recoverable. In performing the review for recoverability,  the
entity should  estimate the future  undiscounted  cash flows  expected to result
from the use of the asset and its eventual disposition. The adoption of SFAS 121
did not have a significant  impact on the Corporation's  consolidated  financial
position or results of operation.

     SFAS 122 requires an enterprise  that acquires  mortgage  servicing  rights
through  either the purchase or  origination of mortgage loans and then sells or
securitizes  those loans with  servicing  rights  retained to allocate the total
cost between the mortgage servicing rights and the loans based on their relative
fair values.  The Statement  requires that the enterprise assess its capitalized
mortgage  servicing  rights  for  impairment  based on the  fair  value of those
rights.  The  adoption  of SFAS 122 did not  have a  significant  impact  on the
Corporation's consolidated financial position or results of operations.

     The Financial Accounting Standards Board also issued Statement of Financial
Accounting Standard No. 123,  "Accounting for Stock-Based  Compensation"  ("SFAS
123")  which  requires  either a change in  accounting  or  additional  proforma
disclosures  for  stock-based  compensation  plans.  Management  has adopted the
disclosure  election of the Standard  during the first quarter of 1996 which did
not  have a  significant  impact  on the  Corporation's  consolidated  financial
position or results of operations.

                                       20
<PAGE>

1994 vs. 1993

Highlights

     Net  income  for the year  ended  December  31,  1994  was a record  $201.1
million,  an increase of $18.8 million (10.3%) from the $182.3 million earned in
1993. The fourth  consecutive year of record earnings  reflects improved finance
income, increased factoring commissions and a lower provision for credit losses,
offset, in part, by increased  operating  expenses,  including those of Barclays
Commercial  Corporation  (BCC) which was acquired in February 1994, and expanded
activity in Consumer Finance.

     Total financing and leasing assets,  which include finance  receivables and
operating lease equipment,  increased to a record $15.66 billion at December 31,
1994,  a $2.29  billion  (17.1%)  improvement,  compared  to $13.38  billion  at
December  31, 1993.  All  operating  units  experienced  year-over-year  growth.
Particularly  noteworthy was  Commercial  Services which added $914.3 million of
finance receivables,  including the BCC acquisition  involving over $700 million
of factored receivables.

Net Finance Income

     A comparison  of 1994 and 1993 finance  income and interest  expense is set
forth below.

<TABLE>
<CAPTION>
                                                     Years Ended December 31,                         Increase
                                                 ----------------------------------           ------------------------
                                                   1994                    1993               Amount           Percent
                                                 ----------              ----------           ---------         -------
                                                                       Dollar Amounts in Millions
<S>                                              <C>                     <C>                 <C>                 <C>  
Finance income ...............................   $  1,263.8              $  1,111.9          $   151.9           13.7%
Interest expense .............................        614.0                   508.0              106.0           20.9
                                                  ---------               ---------           --------            ---
Net finance income ...........................    $   649.8               $   603.9           $   45.9            7.6%
                                                  =========               =========           ========           ====
Average financing & leasing assets (AEA) .....    $13,630.3               $12,262.9           $1,367.4           11.2%
                                                  =========               =========           ========           ==== 
Net finance income as a percent of AEA .......         4.77%                   4.93%
                                                  =========               =========
</TABLE>

     The increase of $151.9 million in finance income  reflects  earnings on the
$1.37  billion  growth in AEA and the effect of rising  market  interest  rates,
which  enabled  finance  income,  as a percentage of AEA, to improve to 9.19% in
1994 from 8.93% in 1993.  These factors also impacted  interest  expense,  which
totaled $614.0 million in 1994, an increase of $106.0 million (20.9%),  compared
with $508.0  million in 1993. Net finance  income  totaled  $649.8  million,  an
increase of $45.9 million  (7.6%) from 1993.  However,  the  increased  interest
expense and more aggressive  competition in transaction pricing and structuring,
particularly  from  banks,  resulted  in a decline  in net  finance  income as a
percentage of AEA to 4.77% compared with 4.93% in 1993.

Fees and Other Income

     Fees and other income  totaled $174.4 million in 1994, an increase of $40.6
million  (30.3%),  compared  with $133.8  million in 1993.  The  improvement  is
principally attributable to higher factoring commissions,  reflecting additional
factored  receivable  volume from the  acquisition  of BCC and record new client
signings in 1994.

                                       21
<PAGE>

Provision and Reserve for Credit Losses

     A continued recovery in certain sectors of the U.S. economy  contributed to
an  improvement  of $10.2  million  (10.9%) in net credit  losses for 1994. As a
percentage of average  finance  receivables,  net credit losses fell to 0.61% in
1994 from 0.77% in 1993.  Information  concerning  the provision and reserve for
credit losses is summarized in the following table.


                                                   Years ended December 31,
                                                -----------------------------
                                                 1994                    1993
                                                --------               -------
                                                  Dollar Amounts in Millions
Net credit losses ..........................     $  84.2               $  94.4
Provision for finance 
   receivables increase ....................        12.7                  10.5
                                                 -------               -------
Total provision for credit losses ..........     $  96.9               $ 104.9
                                                 =======               =======
Net credit losses as a 
   percentage of average
   finance receivables .....................       0.61%                 0.77%
                                                 =======               =======
Reserve for credit losses ..................     $ 192.4               $ 169.4
                                                 =======               =======

Salaries and General Operating Expenses

     Salaries and general  operating  expenses totaled $337.9 million in 1994, a
$55.7  million  (19.8%)  increase,  compared  to $282.2  million  in 1993.  This
increase  includes  a $33.7  million  (22.2%)  rise  in  salaries  and  employee
benefits,  which totaled $185.8 million in 1994, compared with $152.1 million in
1993, and an additional  $22.0 million  (16.9%) of general  operating  expenses,
which totaled  $152.1  million in 1994,  compared  with $130.1  million in 1993.
Employee headcount increased to 2,689 at December 31, 1994 from 2,424 in 1993.

     These  increases  are  largely  attributable  to the  BCC  acquisition  and
expanded  Consumer  Finance  activity.  Since  the BCC  acquisition,  Commercial
Services  has had an  integration  plan in place  designed to maintain  business
momentum,  provide  uninterrupted  levels  of  quality  services,  and  generate
economies of scale.  Significant progress has been made in integrating operating
systems,   eliminating   duplicate  functions  and  consolidating   offices  and
departments. This process was substantially completed by year-end 1995. Salaries
and other employee  benefits in 1994 also included the effect of improvements to
employee sales and incentive compensation plans.

Income Taxes

     The provision  for Federal and state and local income taxes totaled  $123.9
million in 1994 compared with $128.5 million in 1993.  The effective  income tax
rate was 38.1%  compared to 41.3% in 1993. The 1993 amounts  reflect  additional
provisions to the Corporation's  current and deferred taxes to record the impact
of a 1% increase in the statutory Federal corporate income tax rate provided for
in the Revenue Reconciliation Act of 1993.

                                       22
<PAGE>

Financing and Leasing Assets

     Financing and leasing assets  (finance  receivables  plus  operating  lease
equipment)  increased  $2.29  billion  (17.1%)  in 1994  to  $15.66  billion  as
presented in the following table.

<TABLE>
<CAPTION>
                                                            December 31,                             Increase
                                                  --------------------------------         -----------------------------
                                                    1994                   1993              Amount            Percent
                                                  ---------              ---------         ----------        -----------
                                                                        Dollar Amounts in Millions
<S>                                               <C>                   <C>                <C>                   <C>  
Finance Receivables
  Business Credit ........................        $  1,442.1            $  1,282.1         $    160.0            12.5%
  Capital Equipment Financing ............           4,493.5               4,394.5               99.0             2.3
  Credit Finance .........................             719.6                 645.7               73.9            11.5
  Industrial Financing ...................           4,269.7               3,881.0              388.7            10.0
  Commercial Services ....................           1,896.2                 981.9              914.3            93.1
  Consumer Finance .......................             570.8                 131.3              439.5           334.7
  Sales Financing ........................           1,402.5               1,307.6               94.9             7.3
                                                   ---------             ---------          ---------            ---- 
     Total Finance Receivables ...........          14,794.4              12,624.1            2,170.3            17.2
                                                   ---------             ---------          ---------            ---- 
Operating Lease Equipment
  Capital Equipment Financing ............             648.7                 565.7               83.0            14.7
  Industrial Financing ...................             219.2                 186.2               33.0            17.7
                                                   ---------             ---------          ---------            ---- 
    Total Operating Lease Equipment ......             867.9                 751.9              116.0            15.4
                                                   ---------             ---------          ---------            ---- 
    Total Financing and Leasing Assets ...         $15,662.3             $13,376.0          $ 2,286.3            17.1%
                                                   =========             =========          =========            ==== 
</TABLE>

     The following table presents the new business  orginations of financing and
leasing assets including purchases of existing finance receivable portfolios.
<TABLE>
<CAPTION>

                                               Years Ended December 31,                       Increase
                                            -------------------------------            -----------------------
                                              1994                   1993              Amount          Percent
                                            --------                -------            -------         -------
                                                                   Dollar Amounts in Millions
<S>                                         <C>                    <C>                <C>                <C>   
  Business Credit(a) .....................  $   422.7              $  451.1           $  (28.4)          (6.3)%
  Capital Equipment Financing ............    1,148.9               1,029.1              119.8           11.7
  Credit Finance(a) ......................      196.5                 175.7               20.8           11.8
  Industrial Financing ...................    2,156.3               2,319.2             (162.9)          (7.0)
  Consumer Finance .......................      481.2                 153.9              327.3          212.7
  Sales Financing ........................      681.1                 621.5               59.6            9.6
                                            ---------             ---------           --------          ----- 
                                            $ 5,086.7             $ 4,750.5           $  336.2            7.1%
                                            =========             =========           ========           ==== 
  Commercial Services(b) .................  $12,853.0             $ 7,667.4           $5,185.6           67.6%
                                            =========             =========           ========           ==== 
</TABLE>

-----------
(a)   Represents initial borrowings under new lines of credit

(b)   Represents factored accounts receivable

     The changes in the preceding  tables are discussed  below for each business
unit.

     o Business Credit--Revolving and term loans, including debtor-in-possession
and workout financing,  to medium and larger-sized companies secured by accounts
receivable,  inventory  and fixed  assets.  Finance  receivables  totaled  $1.44
billion at December 31,  1994.  New business  volume and  additional  borrowings
under existing  credit  arrangements,  coupled with a return to more  historical
customer paydown levels, contributed to the 12.5% growth in finance receivables.

     o Capital Equipment  Financing--Customized  secured equipment financing and
leasing  of major  capital  equipment  for medium  and  larger-sized  companies.
Finance  receivables  rose modestly to $4.49  billion,  reflecting  improved new
business  funding volume offset,  in part, by higher than usual  prepayments and
finance  receivable  sales for credit risk  management  purposes.  The growth in
operating lease equipment resulted from the purchase of additional equipment for
lease,  principally  railcars  and  commercial  and business  aircraft,  and the
leasing of a commercial  aircraft included in assets received in satisfaction of
loans at December 31, 1993.

                                       23
<PAGE>

     o Credit Finance--Revolving and term loans, including  restructurings,  for
small and medium-sized  companies secured by accounts receivable,  inventory and
fixed assets.  Finance  receivables  continued to grow,  rising 11.5% in 1994 to
$719.6  million,  largely  due  to  record  new  business  volume  with  various
middle-market manufacturing companies.

     o  Industrial   Financing--Secured  equipment  financing  and  leasing  for
medium-sized  companies,  including dealer and manufacturer  financing.  Finance
receivables  rose  10.0% in 1994 to $4.27  billion  reflecting  another  year of
record new business  originations.  Operating lease equipment increased 17.7% to
$219.2 million principally due to the purchase of tractors,  trailers,  business
aircraft and other equipment for lease.

     o Commercial  Services--Factoring of accounts receivable,  including credit
protection,  bookkeeping and collection activities and revolving and term loans.
Finance  receivables totaled $1.90 billion at December 31, 1994. The increase of
$914.3 million from 1993 reflects the  acquisition of BCC, which added over $700
million of factored receivables, and record new client signings in 1994.

     o  Consumer   Finance--Loans  secured  by  first  or  second  mortgages  on
residential  real  estate,  and home equity  lines of credit  generated  through
brokers  and  direct  marketing.  Finance  receivables  rose  sharply  to $570.8
million,  reflecting the full year effect and continued development, in 1994, of
the marketing offices added late in 1993. This portfolio is expected to approach
$1.0 billion by the end of 1995.

     o Sales  Financing--Retail  secured  financing  of  recreational  vehicles,
recreational boats, and manufactured  housing through dealers and manufacturers.
The  increase  in  finance  receivables  is the  result  of  improved  volume in
manufactured   housing,   partially  offset  by  finance  receivable  sales  and
securitizations  of  $162  million  in  1994  and  the  reclassification  of  an
additional $69 million of  manufactured  housing  finance  receivables to assets
held for  sale in  December  1994.  In  addition  to its own  portfolio  of $1.4
billion,  Sales Financing also provides  servicing for portfolios owned by other
financial institutions and securitization trusts which totaled $498.1 million at
December 31, 1994 ($415.0 million in 1993).

Financing and Leasing Assets Composition

     Financing and leasing assets are  principally  composed of loans and direct
financing and leveraged  leases with commercial and consumer  customers  located
principally  in  the  United  States  and  operating  lease  equipment,  largely
commercial aircraft,  placed with lessees both domestically and internationally.
The portfolio composition did not change significantly from year-end 1993.

                                       24
<PAGE>

Financing and Leasing Assets Concentrations

Commercial Airlines

     Commercial airline finance receivables of $1.42 billion and operating lease
equipment of $482.3 million  totaled $1.90 billion (12.1% of total financing and
leasing  assets) at December 31, 1994  compared  with $1.89  billion  (14.2%) in
1993.  The  portfolio is secured by commercial  aircraft and related  equipment.
Management  continues  to limit the growth in this  portfolio  relative to total
financing and leasing assets.

     The following  table  presents  information  about the  commercial  airline
industry portfolio.


                                                       At December 31,
                                                ------------------------------
                                                  1994                 1993
                                                ---------           ----------
                                                 Dollar Amounts in Millions
Finance receivables
  Amount outstanding(a) ..................      $1,417.0              $1,437.3
  Number of obligors .....................            46                    43
                                                --------              --------
Operating lease equipment
  Net carrying value .....................     $   482.3             $   457.6
  Number of obligors .....................            21                    21
                                                --------              --------
     Total ...............................      $1,899.3              $1,894.9
                                                --------              --------
  Number of obligors(b) ..................            62                    58
                                                --------              --------
  Number of aircraft(c) ..................           282                   276
                                                --------              --------


----------------

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

(b)  Certain   obligors  have  both  finance   receivable  and  operating  lease
     transactions.

(c)  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  requirement than a Stage II
     aircraft.  The FAA has  issued  rules  which  phase out the use of Stage II
     aircraft  in the United  States  through the year 2000.  The  International
     Civil Aviation  Organization has issued similar requirements for Europe. At
     year-end 1994, the portfolio  consisted of 224 Stage III aircraft (79%) and
     58 of Stage II aircraft (21%) versus 214 of Stage III aircraft (78%) and 62
     of Stage II aircraft (22%) at year-end 1993.

     No obligor included in the Corporation's  commercial  airline portfolio was
subject to bankruptcy  proceedings at December 31, 1994. However, as of March 6,
1994, the Corporation has agreed to terms on a restructuring  of its outstanding
loan and lease transactions with Trans World Airlines,  Inc., which has publicly
announced that it may seek bankruptcy  protection if a major debt reduction plan
is not  approved.  Management  does not believe this  restructuring  will have a
significant effect on the Corporation's 1995 consolidated  financial position or
results of operations.

Foreign Outstandings

     Financing  and  leasing  assets  to  foreign  obligors,  primarily  to  the
commercial airline industry,  are all U. S. dollar denominated and totaled $1.12
billion  at  December  31,  1994,   consisting  of  $920.3  million  in  finance
receivables  and $201.5  million  in  operating  lease  equipment.  The  largest
exposures at December 31, 1994 were to England,  $177.2  million (1.11% of total
assets) and Mexico,  $140.0 million (.88%).  The Mexican exposure is principally
operating and direct financing leases of commercial and business aircraft all of
which were current at December  31,  1994.  The  remaining  foreign  exposure is
geographically  dispersed with no individual country representing more than .75%
of total assets.

     At December  31, 1993,  financing  and leasing  assets to foreign  obligors
totaled $1.05 billion,  consisting of $846.6 million in finance  receivables and
$204.5 million in operating lease equipment. Outstandings totaled $167.4 million
(1.22% of total  assets) to  obligors  in Mexico and  $128.0  million  (.93%) to
obligors in England.  Obligors in no other  country had  aggregate  outstandings
exceeding .75% of total assets.

                                       25
<PAGE>

Highly Leveraged Transactions

     The  Corporation,   primarily  through  Business  Credit,   originates  and
participates  in highly  leveraged  transactions  (HLT),  which  totaled  $436.1
million (2.8% of financing and leasing  assets) at December 31, 1994,  down from
$476.6  million  (3.6%) at December  31, 1993.  The decline in HLT  outstandings
during 1994 was  primarily  due to delisting  companies  that met the  delisting
criteria,   partially  offset  by  new  HLT  fundings.   The  Corporation's  HLT
outstandings are generally  secured by collateral,  as  distinguished  from HLTs
that rely primarily on cash flow from operations.  Unfunded  commitments to lend
in secured HLT  situations  were $202.1  million at December 31, 1994,  compared
with $123.1 million at year-end 1993.

     At December  31,  1994,  the HLT  portfolio  consisted of 32 obligors in 12
different  industry  groups,  with  36.5%  of the  outstandings  located  in the
Southeast  region of the  United  States  and 33.1% in the West.  Four  accounts
totaling  $57.7  million were  classified  as  nonaccrual  at December 31, 1994,
compared with three accounts totaling $34.7 million at year-end 1993.

Past Due and Nonaccrual Finance Receivables
and Assets Received in Satisfaction of Loans

     Finance  receivables  past due 60 days or more  improved to $176.9  million
(1.20% of finance receivables) at December 31, 1994, from $216.1 million (1.71%)
at December 31, 1993,  reflecting a continued recovery in certain sectors of the
economy.

     Finance  receivables  on  nonaccrual  status,  included in past due finance
receivables,  declined  to $110.2  million  (0.75% of  finance  receivables)  at
December  31,  1994,  from $139.9  million  (1.11%) at December  31,  1993.  The
decrease from December 31, 1993 includes final settlement with a manufacturer on
nonaccrual since 1992.

     The balance of assets  received  in  satisfaction  of loans was  relatively
unchanged from 1993 at $86.5 million. The December 31, 1994 balance includes two
commercial  aircraft which are the subject of litigation  with the  subordinated
debt holders wherein the Corporation,  as senior debt holder,  is foreclosing on
the aircraft.  An anticipated  satisfactory  conclusion of the litigation  would
enable the Corporation to proceed with the foreclosure.  These foreclosures were
offset  by the sale of  assets  and the  placing  of a  commercial  aircraft  on
operating lease that were included in the 1993 balance.

     The following  table presents the assets  received in satisfaction of loans
including in-substance foreclosures.


                                                        At December 31,
                                                    -------------------------
                                                   1994                   1993
                                                 -------                -------
                                                       Amounts in Millions
Commercial aircraft .......................        $ 36.0                $ 17.2
Retail merchandise, property 
   and accounts receivable(a) .............          32.3                  29.2
Property and equipment ....................           8.6                  13.5
Transportation(b) .........................           6.2                  15.3
Other .....................................           3.4                  11.8
                                                   ------                ------
  Total ...................................        $ 86.5                $ 87.0
                                                   ======                ======

---------------
(a)  Retail  merchandise,  property and accounts  receivable  includes an equity
     interest in a building supply retailer.

(b)  Transportation  includes  buses  and  recreational  vehicles  in 1994,  and
     business aircraft, trailers, and recreational vehicles in 1993.

                                       26
<PAGE>

Item 8.  Financial Statements and Supplementary Data.

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
The CIT Group Holdings, Inc.:

     We have audited the  accompanying  consolidated  balance  sheets of The CIT
Group Holdings,  Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated  statements of income, changes in stockholders' equity, and
cash flows for each of the years in the  three-year  period  ended  December 31,
1995. These  consolidated  financial  statements are the  responsibility  of the
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about  whether  the  financial  statements  are free from
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the financial  position of The CIT
Group  Holdings,  Inc. and  subsidiaries  at December 31, 1995 and 1994, and the
results  of  their  operations  and  cash  flows  for  each of the  years in the
three-year period ended December 31, 1995 in conformity with generally  accepted
accounting principles.

      As  discussed in Note 12 to the  consolidated  financial  statements,  the
Corporation  adopted  the  provisions  of  Statement  of  Financial   Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," in 1993.

                                                        KPMG PEAT MARWICK LLP


Short Hills, New Jersey
January 18, 1996

                                       27
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     Assets

                                                          December 31,
                                                       -------------------
                                                       1995           1994
                                                       ----           ----
                                                       Amounts in Millions
Financing and leasing assets
Loans
   Commercial ..................................   $  10,356.3      $   9,910.6
                                                   -----------      -----------
   Consumer ....................................       2,344.0          1,973.2
Lease receivables ..............................       3,095.2          2,910.6
                                                   -----------      -----------
      Finance receivables (Note 3) .............      15,795.5         14,794.4

Reserve for credit losses (Note 4) .............        (206.0)          (192.4)
                                                   -----------      -----------
      Net finance receivables ..................      15,589.5         14,602.0
Operating lease equipment (Note 5) .............       1,113.0            867.9
Cash and cash equivalents ......................         161.5              6.5
Other assets ...................................         556.3            483.3
                                                   -----------      -----------
      Total assets .............................   $  17,420.3      $  15,959.7
                                                   ===========      ===========

                      Liabilities and Stockholders' Equity

Debt (Notes 6 and 7)
Commercial paper ...............................   $   6,105.6      $   5,660.2
Variable rate senior notes .....................       3,827.5          3,812.5
Fixed rate senior notes ........................       3,337.0          2,619.4
Subordinated fixed rate notes ..................         300.0            300.0
                                                   -----------      -----------
   Total debt ..................................      13,570.1         12,392.1
Credit balances of factoring clients ...........         980.9            993.4
Accrued liabilities and payables ...............         485.9            354.7
Deferred Federal income taxes (Note 11) ........         469.2            426.5
                                                   -----------      -----------
    Total liabilities ..........................      15,506.1         14,166.7
Stockholders' equity (Note 8)
Common stock -- authorized, issued and
  outstanding -- 1,000 shares ..................         250.0            250.0
Paid-in capital ................................         408.3            408.3
Retained earnings ..............................       1,255.9          1,134.7
                                                   -----------      -----------
    Total stockholders' equity .................       1,914.2          1,793.0
                                                   -----------      -----------
    Total liabilities and stockholders' equity ..  $  17,420.3      $  15,959.7
                                                   ===========      ===========

See accompanying notes to consolidated financial statements.

                                       28
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                           Years Ended December 31,
                                                                  ------------------------------------------
                                                                    1995              1994          1993
                                                                    ----              ----          ----
                                                                             Amounts in Millions

<S>                                                               <C>               <C>           <C>     
Finance income ...........................................        $1,529.2          $1,263.8       $1,111.9
                                                                  --------          --------       --------
Interest expense .........................................           831.5             614.0          508.0
                                                                  --------          --------       --------
  Net finance income .....................................           697.7             649.8          603.9
Fees and other income (Note 9) ...........................           184.7             174.4          133.8
                                                                  --------          --------       --------
  Operating revenue ......................................           882.4             824.2          737.7
                                                                  --------          --------       --------
Salaries and general operating expenses (Note 10) ........           345.7             337.9          282.2
Provision for credit losses (Note 4) .....................            91.9              96.9          104.9
Depreciation on operating lease equipment (Note 5) .......            79.7              64.4           39.8
                                                                  --------          --------       --------
  Operating expenses .....................................           517.3             499.2          426.9
                                                                  --------          --------       --------
Income before provision for income taxes .................           365.1             325.0          310.8
Provision for income taxes (Note 11) .....................           139.8             123.9          128.5
                                                                  --------          --------       --------
  Net income .............................................         $ 225.3           $ 201.1        $ 182.3
                                                                  ========          ========       ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       29
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                    Years Ended December 31,
                                                                         -----------------------------------------

                                                                            1995              1994           1993
                                                                         ---------         ---------      ---------
<S>                                                                       <C>               <C>           <C>
Common stock
Balance, beginning and end of period ................................     $  250.0          $  250.0       $ 250.0
                                                                          --------          --------       -------
Paid-in capital
Balance, beginning and end of period ................................     $  408.3          $  408.3       $ 408.3
                                                                          --------          --------       -------
Retained earnings
Balance, beginning of period ........................................     $1,134.7          $1,033.9       $ 942.8
Net income ..........................................................        225.3             201.1         182.3

Dividends paid ......................................................       (104.1)           (100.3)        (91.2)
                                                                          --------          --------       -------
Balance, end of period ..............................................      1,255.9           1,134.7       1,033.9
                                                                          --------          --------       -------
    Total stockholders' equity (Note 8) .............................     $1,914.2          $1,793.0      $1,692.2
                                                                          ========          ========      ========

</TABLE>

See accompanying notes to consolidated financial statements.

                                       30
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                    Years Ended December 31,
                                                                         --------------------------------------------
                                                                            1995              1994            1993
                                                                         ---------          --------        ---------
                                                                                      Amounts in Millions
<S>                                                                      <C>              <C>              <C>      
Cash flows from operations
Net income ........................................................      $   225.3        $    201.1       $   182.3
Adjustments to reconcile net income to net cash 
  flows from operations:
    Provision for credit losses ...................................           91.9              96.9           104.9
    Depreciation and amortization .................................           88.7              75.4            49.7
    Provision for deferred Federal income taxes ...................           42.5              27.7            34.9
    Gains on asset and receivable sales ...........................          (36.8)            (26.1)          (23.9)
    Increase in accrued liabilities and payables ..................          131.2              24.2            32.0
    (Increase) decrease in other assets ...........................          (17.7)              (.1)            1.9
    Other .........................................................          (22.7)            (17.2)          (27.6)
                                                                         ---------         ---------       --------- 
     Net cash flows provided by operations ........................          502.4             381.9           354.2
                                                                         ---------         ---------       --------- 
Cash flows from investing activities                                        
Loans extended ....................................................      (30,927.9)        (23,610.9)      (20,854.0)
Collections on loans ..............................................       28,750.8          22,394.0        20,081.9
Proceeds from asset and receivable sales ..........................          816.8             535.6           215.5
Purchases of equipment to be leased ...............................         (719.5)         (1,039.7)         (940.9)
Collections on lease receivables ..................................          712.9             632.2           486.3
Net decrease (increase) in short-term
  factoring receivables ...........................................          123.6            (207.4)           90.5
Proceeds from sales of assets received in
  satisfaction of loans ...........................................           26.2              40.4            43.0
Purchases of finance receivables portfolios .......................          (22.7)           (181.7)         (477.4)
Acquisition of Barclays Commercial Corporation ....................            --             (435.6)            --
Other .............................................................          (55.5)            (47.8)          (16.9)
                                                                         ---------         ---------       --------- 
     Net cash flows used for investing activities .................       (1,295.3)         (1,920.9)       (1,372.0)
                                                                         ---------         ---------       --------- 
Cash flows from financing activities
Proceeds from the issuance of variable and
  fixed rate notes ................................................        3,698.6           3,985.8         2,183.9
Repayments of variable and fixed rate notes .......................       (2,966.0)         (1,529.6)       (2,062.8)
Net increase (decrease) in commercial paper .......................          445.4            (855.9)          342.7
Repayments of non-recourse leveraged lease debt ...................         (135.7)           (103.1)          (71.5)
Proceeds from non-recourse leveraged lease debt ...................            9.7              47.0           118.5
Cash dividends paid ...............................................         (104.1)           (100.3)          (91.2)
                                                                         ---------         ---------       --------- 
Net cash flows provided by financing activities ...................          947.9           1,443.9           419.6
                                                                         ---------         ---------       --------- 
Net increase (decrease) in cash and
  cash equivalents ................................................          155.0             (95.1)         (598.2)
Cash and cash equivalents, beginning of year ......................            6.5             101.6           699.8
                                                                         ---------         ---------       --------- 
Cash and cash equivalents, end of year ............................      $   161.5         $     6.5       $   101.6
                                                                         =========         =========       ========= 
Supplemental disclosures
Interest paid .....................................................      $   958.8         $   616.8       $   505.3
Federal and State and local income taxes paid .....................      $    95.0         $    98.9       $    85.7
Noncash transfer of assets received in satisfaction
  of loans to finance receivables .................................      $    40.6         $     --        $     --
Noncash transfer of receivables to other assets (principally
  securitizations) ................................................      $   772.5         $   117.1       $   305.0
Noncash transfers of receivables to assets
  received in satisfaction of loans ...............................      $    30.8         $    80.5       $   166.9
Noncash transfers of assets received in satisfaction
  of loans to operating lease equipment ...........................      $     --          $    17.3       $    85.2
Noncash transfer of receivables to operating lease equipment ......      $     --          $     --        $     6.0
</TABLE>

See accompanying notes to consolidated financial statements.

                                       31
<PAGE>

                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1--The Corporation

     The CIT Group Holdings,  Inc. (the "Corporation") engages in commercial and
consumer  financial  services  activities  through  a  nationwide   distribution
network.

     The  Dai-Ichi  Kangyo  Bank,  Limited  ("DKB")  owns 80% of the  issued and
outstanding   stock  of  the  Corporation,   60%  of  which  it  purchased  from
Manufacturers  Hanover  Corporation  ("MHC") in 1989. DKB acquired an additional
20% of the Corporation  from Chemical  Banking  Corporation  ("CBC") in December
1995. The remaining 20% of the  Corporation's  issued and  outstanding  stock is
owned by CBC.  DKB has a five  year  option,  expiring  December  15,  2000,  to
purchase the remaining twenty percent (20%) common stock interest from CBC.

Note 2--Summary of Significant Accounting Policies

Basis of Presentation

     The consolidated  financial  statements and accompanying  notes include the
accounts of The CIT Group Holdings,  Inc. and its subsidiaries.  All significant
intercompany   transactions   have  been   eliminated.   Prior  period  amounts,
principally  loans and lease  receivables  by type in the  Consolidated  Balance
Sheets, have been reclassified to conform to the current presentation.

Financing and Leasing Assets

     The Corporation  provides  funding for a variety of financing  arrangements
including term loans,  lease financing and operating  leases.  Lease receivables
include leveraged  leases,  for which a major portion of the funding is provided
by third party lenders,  on a nonrecourse basis, with the Corporation  providing
the balance and acquiring  title to the  property.  The amounts  outstanding  on
loans and leases are referred to as finance  receivables and, when combined with
the net book value of operating lease equipment, represent financing and leasing
assets.

Income Recognition

     Finance  income  includes  interest on loans,  the  accretion  of income on
direct financing leases, and rents on operating leases.  Related origination and
other nonrefundable fees and direct origination costs are deferred and amortized
as  an  adjustment  of  finance  income  over  the   contractual   life  of  the
transactions.  Income on  finance  receivables  other than  leveraged  leases is
recognized on an accrual  basis  commencing  in the month of  origination  using
methods that generally  approximate the interest method.  Leveraged lease income
is recognized  on a basis  calculated  to achieve a constant  after-tax  rate of
return for periods in which the  Corporation  has a positive  investment  in the
transaction, net of related deferred tax liabilities. Rental income on operating
leases is recognized on an accrual basis.

     Except  for  certain  consumer  loans,   which  are  subject  to  automatic
charge-off procedures, the accrual of finance income is suspended and an account
is placed on nonaccrual status either when a payment is contractually delinquent
for 90 days or more and collateral is insufficient to cover both the outstanding
principal  and  accrued  finance  income or  immediately  if, in the  opinion of
management, full collection of all principal and income is doubtful. Accrued but
uncollected  income at the date an  account  is placed on  nonaccrual  status is
reversed and charged  against  income to the extent the estimated  fair value of
collateral  does not satisfy both the principal and accrued income  outstanding.
Such accrued but uncollected income is immaterial. Subsequent income received is
applied to the outstanding  principal  balance until such time as the account is
collected, charged-off or returned to accrual status.

     Fees and other income includes: (1) factoring commissions,  (2) commitment,
facility,  letters of credit and  syndication  fees,  (3) servicing fees and (4)
gains and losses from sale of assets coming off lease,  securitization of loans,
disposition of assets  received in  satisfaction of loans and sales of loans and
other investments.

Lease Financing

     Direct  financing leases are recorded at the aggregate future minimum lease
payments plus estimated residual values less unearned finance income.  Operating
lease  equipment  is  carried  at  cost  less  accumulated  depreciation  and is

                                       32
<PAGE>
                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

depreciated to estimated residual value using the straight-line  method over the
lease term or  projected  economic  life of the  asset.  Equipment  acquired  in
satisfaction of loans and subsequently  placed on operating lease is recorded at
the lower of carrying  value or estimated  fair value when  acquired.  Leveraged
leases are recorded at the aggregate value of future minimum lease payments plus
estimated residual value, less amounts due to non-recourse  third-party  lenders
and  unearned  finance  income.  Management  performs  periodic  reviews  of the
estimated residual values, with other than temporary  impairment,  if any, being
recognized in the current period.

Reserve for Credit Losses on Finance Receivables

     The reserve for credit losses is established and periodically  reviewed for
adequacy  based on the  nature and  characteristics  of the  obligors,  economic
conditions  and  trends,  charge-off  experience,  delinquencies,  and  value of
underlying   collateral  and  guarantees  (including  recourse  to  dealers  and
manufacturers).  It is management's  judgment that the reserve for credit losses
is adequate to provide for potential credit losses.

Charge-off of Finance Receivables

     Finance receivables are reviewed  periodically to determine the probability
of loss on individual receivables.  Charge-offs are taken after considering such
factors  as the  customer's  financial  condition  and the  value of  underlying
collateral and  guarantees  (including  recourse to dealers and  manufacturers).
Such  charge-offs  are deducted from the carrying  value of the related  finance
receivables.  To the extent that an  unrecovered  balance  remains  due, a final
charge-off is taken at the time collection  efforts are no longer deemed useful.
Although certain consumer loans are reviewed  individually for charge-offs,  all
other  consumer  receivables  have  automatic  charge-offs  when no  contractual
payments are received for 120 days,  or at 180 days when partial  payments  have
been received.

Impaired Loans

     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards  No. 114,  "Accounting  by Creditors  for  Impairment of a
Loan",  in May  1993 and  amended  it with  Statement  of  Financial  Accounting
Standards No. 118,  "Accounting  by Creditors for Impairment of a Loan -- Income
Recognition and Disclosures",  issued in October 1994 (collectively  referred to
hereafter as "SFAS 114").  SFAS 114 requires  that the value of an impaired loan
be  measured  based upon 1) the  present  value of  expected  future  cash flows
discounted at the loan's effective interest rate or, 2) at the fair value of the
collateral, if the loan is collateral dependent.

     Impaired  loans  include  any loan  transaction  on  nonaccrual  status  or
troubled  debt  restructuring  subject to periodic  review by the  Corporation's
Asset Quality Review Committee, comprised of members of senior management, which
covers  finance  receivables  of $500,000 or more  meeting  certain  credit risk
grading  parameters.  Excluded  from impaired  loans are: 1) certain  individual
small  dollar  commercial  nonaccrual  loans  (under  $500,000)  for  which  the
collateral value supports the outstanding  balance,  2) consumer loans which are
subject to automatic charge-off procedures, and 3) short-term factoring customer
receivables,  generally  having terms of no more than 30 days.  In general,  the
impaired loans are collateral dependent. Any shortfall between the value and the
recorded  investment  in the loan is recognized  by  establishing  a reserve for
credit losses.

Other Assets

     At the time management  decides to proceed with a securitization  of loans,
such  loans are  considered  available  for sale and are  reclassified  to other
assets. Loans held for sale are carried at the lower of aggregate cost or market
value.

     Certain  consumer loans are  originated and sold to trusts which,  in turn,
issue  asset-backed  securities  to  investors.   The  Corporation  retains  the
servicing  rights and  participates  in certain  cash flows from the loans.  The
present  value of expected net cash flows which  exceeds the  estimated  cost of
servicing  is  recorded  at the time of sale as "excess  servicing  assets".  In
determining  expected net cash flows, the Corporation  considers  assumptions of

                                       33
<PAGE>

                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

prepayment  and loss  experience and market  interest  rates.  Excess  servicing
assets  are  stated  at the  lower of  amortized  cost or fair  value,  which is
determined by adjusting the present value of the remaining cash flows for actual
prepayment and loss  experience.  Amortization is recognized on excess servicing
assets  to the  extent  that the rate of  return  is not  commensurate  with the
discount rate.

     The excess of  purchase  price over fair  market  value of assets  acquired
(goodwill) in connection  with business  acquisitions is amortized on a straight
line basis over a period not to exceed 20 years.

     Assets  received  in  satisfaction  of loans  are  carried  at the lower of
carrying value or estimated fair value less selling costs,  with  write-downs at
the time of  receipt  charged  to the  reserve  for  credit  losses.  Subsequent
write-downs of such assets,  which may be required due to a decline in estimated
fair market value after receipt, are reflected in general operating expenses.

     Fixed  assets  are  stated  at  cost  less  accumulated   depreciation  and
amortization.  Depreciation and amortization are computed  principally using the
straight-line method over the estimated useful lives of the related assets.

Derivative Financial Instruments

     The  Corporation  enters into interest rate swap  agreements as part of its
overall  interest rate risk management.  These  transactions are entered into as
hedges  against  the  effects  of  future   interest  rate   fluctuations   and,
accordingly,  are not carried at fair market  value.  The  Corporation  does not
enter into derivative financial instruments for trading or speculative purposes.

     The net interest differential, including premiums paid or received, if any,
on interest  rate swaps is  recognized  on an accrual  basis as an adjustment to
finance  income or  interest  expense to  correspond  with the  hedged  asset or
liability position, respectively. In the infrequent event that early termination
of a  derivative  instrument  occurs,  the net  proceeds  paid or  received  are
deferred and amortized over the shorter of the remaining  original contract life
of the  interest  rate swap or the  maturity  of the hedged  asset or  liability
position.

     On  occasion,  the  Corporation  will also  purchase a short  term  forward
interest  rate  agreement or option to hedge the expected  interest rate used to
price the anticipated  securitization of loans. Such transactions are designated
as  hedges  against  a  securitization  that  is  probable  and  for  which  the
significant  characteristics  and terms have been identified but for which there
is no legally  binding  obligation.  The loans to be securitized  are considered
held for sale and reclassified to other assets. The net interest differential on
the  derivative  instrument,  including  premium  paid or  received,  if any, is
recognized as an adjustment to the basis of the corresponding assets at the time
of sale. In the unlikely event the  anticipated  securitization  does not occur,
the related hedge position would be liquidated  with any gain or loss recognized
at such time, and the related assets are reclassified to loans.

Income Taxes

     On  January 1, 1993,  the  Corporation  adopted,  on a  prospective  basis,
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes" ("SFAS 109").  Under the asset and liability method of SFAS 109, deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributable to temporary  differences  between the financial statement carrying
amounts of  existing  assets and  liabilities  and their  respective  tax bases.
Deferred  tax assets and  liabilities  are  determined  using  enacted tax rates
expected to apply in the year in which those temporary  differences are expected
to be  recovered  or settled.  Under SFAS 109, the effect on deferred tax assets
and  liabilities of a change in tax rates is recognized in income at the time of
enactment.  The  adoption of SFAS 109 did not have a  significant  impact on the
Corporation's  consolidated  results  of  operations  in 1993  due to the  prior
adoption of Statement of Financial  Accounting Standards No. 96, "Accounting for
Income Taxes".

      Federal  investment tax credits  realized for income tax purposes on lease
financing  transactions have been deferred for financial  statement purposes and
are  included in  deferred  Federal  income  taxes on the  Consolidated  Balance
Sheets.  Such credits are  amortized as a reduction of the  provision for income
taxes using an actuarial method over the related lease term.

                                       34
<PAGE>

                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Consolidated Statements of Cash Flows

     Cash and cash  equivalents  includes  cash and  interest-bearing  deposits,
which  generally  represent  overnight  money market  investments of excess cash
borrowed in the commercial  paper market and maintained for liquidity  purposes.
Cash inflows and outflows from  commercial  paper  borrowings and most factoring
receivables  are  presented  on a net basis in the  Statements  of Cash Flows as
their term is generally less than 90 days.

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported  amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

Note 3--Finance Receivables

     Included in lease  receivables  at December 31, 1995 and 1994 are leveraged
lease receivables of $576.7 million and $541.6 million, respectively.  Leveraged
lease  receivables  exclude the portion of lease  receivables  offset by related
non-recourse  debt  payable to  third-party  lenders of $2.14  billion and $2.22
billion at December 31, 1995 and 1994,  respectively,  including amounts owed to
affiliates  of DKB which totaled  $501.3  million at year-end  1995,  and $525.7
million at year-end  1994.  Also  excluded  from finance  receivables  are $1.25
billion of finance  receivables  at December 31, 1995  ($498.1  million in 1994)
owned by  other  financial  institutions  or  securitization  trusts  which  are
serviced by the Corporation.

     Commercial  and consumer loans and lease  receivables  are presented net of
unearned income of $569.9  million,  $1.3 million and $978.9 million at December
31, 1995 and $479.3  million,  $20.7 million and $973.1  million at December 31,
1994, respectively.

     The  following  table  sets  forth the  contractual  maturities  of finance
receivables.
<TABLE>
<CAPTION>

                                                 December 31, 1995                       December 31, 1994
                                             -------------------------               -------------------------
                                              Amount           Percent                Amount           Percent
                                             --------          --------              ---------         -------
                                                                   Dollar Amounts in Millions
<S>                                          <C>                 <C>                 <C>                <C>   
Due Within One Year ....................     $ 5,523.6           34.97%              $ 5,278.6          35.68%
Due Within One to Two Years ............       2,488.8           15.76                 2,464.8          16.66
Due Within Two to Four Years ...........       3,288.7           20.82                 3,095.5          20.92
Due After Four Years ...................       4,494.4           28.45                 3,955.5          26.74
                                             ---------           -----               ---------          ----- 
                                             $15,795.5          100.00%              $14,794.4         100.00%
                                             =========          ======               =========         ====== 
</TABLE>

     The following table sets forth information regarding finance receivables on
nonaccrual status and assets received in satisfaction of loans.

<TABLE>
<CAPTION>
                                                                                           At December 31,
                                                                                     ---------------------------
                                                                                       1995               1994
                                                                                     -------             -------
                                                                                         Amounts in Millions
<S>                                                                                   <C>                 <C>    
Nonaccrual finance receivables .................................................      $139.5              $ 110.2
Assets received in satisfaction of loans .......................................        42.0                 86.5
                                                                                      ------              -------
    Total nonperforming assets .................................................      $181.5              $ 196.7
                                                                                      ======              =======
Percent to finance receivables .................................................        1.15%                1.33%
                                                                                      ======              =======
</TABLE>

     The amount of finance  income  recognized  on year-end  nonaccrual  finance
receivables  totaled $8.0 million,  $6.2 million and $3.9 million in 1995,  1994
and 1993,  respectively.  The amount of  finance  income  which  would have been
recorded under contractual terms for such nonaccrual  receivables  totaled $29.3
million, $20.7 million, and $21.2 million in 1995, 1994 and 1993, respectively.

                                       35
<PAGE>

                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     At December 31, 1995, and 1994, the Corporation had $30.0 million and $14.0
million,  respectively, of finance receivables that met the criteria of troubled
debt  restructurings,  which were not included in the preceding table.  With the
1995 adoption of SFAS 114, the definition of a troubled debt  restructuring  was
modified. Finance income recognized on troubled debt restructurings totaled $2.8
million,  $0.8  million and $0.8 million in 1995,  1994 and 1993,  respectively.
Finance income on these  restructured  receivables would have been $3.3 million,
$2.1 million and $2.3 million for 1995,  1994 and 1993,  respectively,  based on
original contractual terms.

     At December 31, 1995, the recorded  investment in impaired loans, which are
generally  collateral  dependent,  totaled $159.3 million. The fair value of the
collateral  or the  present  value of  expected  future  cash  flows  equaled or
exceeded the recorded  investment for the impaired loans and, as such, there was
no related SFAS 114 allowance for credit losses.  The average  monthly  recorded
investment in the impaired  loans was $116.9 million for the year ended December
31, 1995.  During 1995,  finance  income of $1.0 million was recognized on these
loans after being  classified as impaired loans.  The adoption of SFAS 114 as at
January  1, 1995 had no  material  effect on the  Corporation's  1995  financial
condition or results of operations.

Note 4--Reserve for Credit Losses

     The following table presents changes in the reserve for credit losses.
<TABLE>
<CAPTION>

                                                                                1995               1994              1993
                                                                               ------             ------            ------
                                                                                           Amounts in Millions
<S>                                                                           <C>                <C>               <C>   
Balance, January 1 ........................................................    $192.4             $169.4            $158.5
                                                                               ------             ------            ------
Finance receivables charged-off ...........................................     (96.9)             (95.4)           (105.6)
                                                                               ------             ------            ------
Recoveries on finance receivables previously charged-off ..................      19.7               11.2              11.2
   Net credit losses ......................................................     (77.2)             (84.2)            (94.4)
                                                                               ------             ------            ------
Provision for credit losses ...............................................      91.9               96.9             104.9
Portfolio acquisitions (dispositions), net ................................      (1.1)              10.3                .4
                                                                               ------             ------            ------
Net addition to the reserve for credit losses .............................      90.8              107.2             105.3
                                                                               ------             ------            ------
Balance, December 31 ......................................................    $206.0             $192.4            $169.4
                                                                               ======             ======            ======
Reserve for credit losses as a percentage of finance
   receivables ............................................................      1.30%              1.30%             1.34%
                                                                               ======             ======            ======
</TABLE>

                                       36
<PAGE>

                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 5--Operating Lease Equipment

     The following  table provides an analysis of operating  lease  equipment by
equipment  type, net of accumulated  depreciation  of $198.1 million in 1995 and
$129.7 million in 1994. 

                                                            At December 31,
                                                       -------------------------
                                                         1995             1994
                                                       -------           -------

                                                          Amounts in Millions
Commercial aircraft ..............................    $  499.4            $482.3
Trucks, trailers and buses .......................       163.2              94.3
Railroad and other transportation equipment ......       153.4              69.1
Business aircraft ................................       141.2              97.8
Oil refinery .....................................        80.2              83.1
Construction and mining equipment ................        21.8              18.5
Manufacturing equipment ..........................        20.6              10.8
Other ............................................        33.2              12.0
                                                      --------            ------
    Total ........................................    $1,113.0            $867.9
                                                      ========            ======

     Included in the preceding table is equipment not currently subject to lease
agreements  (off-lease equipment) of $24.4 million and $35.3 million at December
31, 1995 and 1994, respectively.

     Rental  income on operating  leases,  included in finance  income,  totaled
$128.8  million in 1995,  $97.2 million in 1994 and $67.2  million in 1993.  The
following  table  presents  future  minimum  lease  rentals  on   noncancellable
operating leases as of December 31, 1995.  Excluded from this table are variable
rentals calculated on the level of asset usage, re-leasing rentals, and expected
sales proceeds from remarketing  operating lease equipment at lease  expiration,
all of which are important components of operating lease profitability.

Years Ended December 31,                                   Amounts in Millions
-----------------------                                    -------------------
      1996 ..............................................        $143.8
      1997 ..............................................         118.3
      1998 ..............................................         103.1
      1999 ..............................................          76.0
      2000 ..............................................          58.0
      Thereafter ........................................          85.4
                                                                 ------
          Total .........................................        $584.6
                                                                 ======

Note 6--Debt

     The  following  table  presents  data on commercial  paper  borrowings.  
<TABLE>
<CAPTION>

                                                                                   1995              1994               1993
                                                                                ----------         ----------         ---------
                                                                                           Dollar Amounts in Millions
<S>                                                                               <C>                <C>               <C>     
At December 31,
Borrowings outstanding ...................................................        $6,105.6           $5,660.2          $6,516.1
Weighted average interest rate ...........................................            5.75%              5.65%            3.35%
Weighted average maturity ................................................         45 days            22 days           55 days

Year ended December 31,
Daily average borrowings .................................................        $5,800.1           $6,532.5          $6,080.5
Maximum amount outstanding ...............................................        $6,672.1           $7,207.3          $6,709.4
Weighted average interest rate (excluding amounts related
   to interest bearing deposits) .........................................            5.95%              4.31%             3.29%
</TABLE>

                                       37
<PAGE>

                 THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The following  table presents the  contractual  maturities of total debt at
December 31, 1995 and 1994.
<TABLE>
<CAPTION>

                                                                       Commercial       Variable rate      1995           1994
                                                                         paper          senior notes       Total          Total
                                                                       ----------       ------------       -----          -----
                                                                                           Amounts in Millions
<S>                                                                    <C>              <C>               <C>          <C>     
Due in 1995 (rates ranging from 4.81% to 6.36%) .............           $    --          $    --           $   --       $8,195.2
Due in 1996 (rates ranging from 5.55% to 5.95%) .............            6,105.6          2,400.0          8,505.6         250.0
Due in 1997 (rates ranging from 5.04% to 6.14%) .............                --             806.0            806.0         556.0    
Due in 1998 (rates ranging from 5.79% to 6.03%) .............                --             241.5            241.5          91.5
Due in 1999 (rates ranging from 5.04% to 6.06%) .............                --             380.0            380.0         380.0
                                                                        --------         --------         --------      --------
    Total ...................................................           $6,105.6         $3,827.5         $9,933.1      $9,472.7
                                                                        ========         ========         ========      ========
</TABLE>

<TABLE>
<CAPTION>

                                                                            Fixed Rate Notes               1995           1994
                                                                         Senior         Subordinated       Total          Total
                                                                       ----------       ------------       -----          -----
                                                                                           Amounts in Millions
<S>                                                                    <C>                <C>            <C>           <C>     
Due in 1995 (rates ranging from 5.02% to 6.00%) .............           $   --             $  --          $    --       $  430.0
Due in 1996 (rates ranging from 4.75% to 8.88%) .............            1,030.0              --           1,030.0         930.0
Due in 1997 (rates ranging from 5.50% to 8.75%) .............              702.0              --             702.0         603.0
Due in 1998 (rates ranging from 5.63% to 8.75%) (1) .........              800.0              --             800.0         250.0
Due in 1999 (rate of 5.92%) .................................               20.0              --              20.0          20.0
Due in 2000 (rate of 6.15%) .................................               20.0              --              20.0          20.0
Due after 2000 (rates ranging from 5.37% to 9.25%)(2) .......              770.2            300.0          1,070.2         670.2
                                                                        --------           ------         --------      --------
Face amount of maturities ...................................            3,342.2            300.0          3,642.2       2,923.2
Issue discount ..............................................               (5.2)             --              (5.2)         (3.8)
                                                                        --------           ------         --------      --------
    Total ...................................................           $3,337.0           $300.0         $3,637.0      $2,919.4
                                                                        ========           ======         ========      ========
</TABLE>

-----------
(1)  $61.5  million  may be repaid at the  option  of the  holder  upon 30 days'
     notice.

(2)  $100.0  million  may be repaid at the  option of the  holder  upon 30 days'
     notice.

     Fixed rate debt  outstanding  at December 31, 1995 matures at various dates
through 2008 at interest  rates  ranging from 4.75% to 9.25%.  The  consolidated
weighted average interest rates on fixed rate debt at December 31, 1995 and 1994
were 7.00% and 6.96%,  respectively.  Variable rate senior notes  outstanding at
December  31, 1995 with  interest  rates  ranging  from 5.04% to 6.14% mature at
various dates through 1999. The consolidated  weighted average interest rates on
variable  rate senior  notes at December 31, 1995 and 1994 were 5.64% and 5.91%,
respectively.

     The following table represents  information on unsecured revolving lines of
credit with 69 banks at December 31, 1995.

              Maturity                                 Amount
              --------                                --------
                                                Amounts in Millions
              May 1996 .......................        $1,250.0
              August 1996 ....................           210.0
              September 1997 .................           325.0
              August 1998 ....................           210.0
              June 1999 ......................           770.0
              March 2000 .....................         1,250.0
              May 2000 .......................           625.0
                                                      --------
                  Total Credit Lines .........        $4,640.0
                                                      ========
                                              
                                       38
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The credit line  agreements  contain clauses which allow the Corporation to
extend the termination dates upon written consent from the participating  banks.
Credit lines with DKB in the preceding  table totaled $240.0 million at December
31, 1995 and $245.0 million at December 31, 1994.  There have been no borrowings
under the lines of credit since 1970.

Note 7--Derivative Financial Instruments

     As part of managing the exposure to changes in market interest  rates,  the
Corporation,   as  an  end-user,   enters  into  various   interest   rate  swap
transactions,  all of which are  transacted in  over-the-counter  (OTC) markets,
with other financial institutions acting as principal counterparties,  including
subsidiaries  of DKB  and  CBC.  The  Corporation's  objectives  and  strategies
regarding the management of interest rate risk,  including the use of derivative
instruments,  are  discussed in the  Interest  Rate Risk  Management  section of
"Asset/Liability  Management" in Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.  In 1994, the Corporation adopted
Statement  of  Financial   Accounting   Standards  No.  119,  "Disclosure  About
Derivative Financial Instruments and Fair Value of Financial Instruments", which
requires  disclosure  about  amounts,  nature  and  terms of  certain  financial
instruments.

     The  following  table  presents the notional  principal  amounts,  weighted
average  interest  rates  expected to be  received  or paid and the  contractual
maturities of interest rate swaps at December 31, 1995.
<TABLE>
<CAPTION>

Years ending                       Floating to                          Fixed to                          Floating to
December 31,                       Fixed Rate                         Floating Rate                      Floating Rate
------------            -------------------------------      ----------------------------       ------------------------------
                                                             Notional Amounts in Millions
                        Notional     Receive       Pay       Notional     Receive    Pay        Notional     Receive       Pay
                         Amount       Rate         Rate       Amount       Rate      Rate        Amount       Rate        Rate
                        --------       -------     ----      --------     -------    ----        -------     ------       ----

<C>                    <C>             <C>         <C>        <C>          <C>       <C>        <C>          <C>          <C>  
1996 .............     $  350.0        5.85%       8.05%      $130.0       6.89%     5.80%      $100.0       5.88%        5.99%
1997 .............      1,425.0        5.70%       5.99%       252.0       6.94%     5.79%       456.0       5.50%        5.73%
1998 .............        450.0        5.79%       6.90%         --          --        --         30.0       5.35%        5.53%
1999 .............        925.0        5.72%       6.14%         --         --         --        130.0       5.40%        5.82%
2000 .............        400.0        5.73%       7.47%        20.0       6.15%     5.64%         --          --           --
2001-2008 ........        200.0        5.65%       7.45%       400.0       5.87%     5.57%         --          --           --
                       --------        ----        ----       ------       ----      ----       ------       ----         ---- 
                       $3,750.0                               $802.0                            $716.0
                       ========                               ======                            ======
Weighted
  average rate                         5.73%       6.57%                   6.38%     5.68%                   5.53%        5.78%
                                       ====        ====                    ====      ====                    ====         ==== 
</TABLE>

     All rates were those in effect at December  31,  1995.  Variable  rates are
based  on the  reference  rate or  other  market  rate  indices  and may  change
significantly, affecting future cash flows.

     The following  table  presents the notional  principal  amounts of interest
rate swaps by class and the corresponding hedged liability position.

                                       39
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
                                                 Notional Amounts
Interest Rate Swaps                                 in Millions                          Comments
-----------------                                ----------------                        ---------
<S>                                                   <C>               <C>                                                         
Floating to fixed rate swaps
  Hedging commercial paper                            $2,750.0          Effectively converts the interest rate on an
                                                                        equivalent amount of commercial paper to a fixed rate.
  Hedging variable rate notes                          1,000.0          Effectively converts the interest rate on an
                                                                        equivalent amount of variable rate notes with matched 
                                                                        terms to a fixed rate.
                                                      --------          ---------------------------------------------------         
  Total floating to fixed rate swaps                   3,750.0
                                                      --------
Fixed to floating rate swaps
  Hedging fixed rate notes                               802.0          Effectively converts the interest rate on an
                                                                        equivalent amount of fixed rate notes to a variable
                                                                        rate.
                                                                        ---------------------------------------------------
Basis swaps
  Hedging variable rate debt                             716.0          Effectively fixes the spread between the rates
                                                                        on an equivalent amount of variable rate
                                                                        notes and various market interest rate indices.
                                                      --------          ---------------------------------------------------         
Total interest rate swaps                             $5,268.0
                                                      ========
</TABLE>

     The  Corporation's  hedging  activity  increased  interest  expense by $7.8
million,  $27.3 million and $36.4 million in 1995,  1994 and 1993,  respectively
over the interest  expense that would have been incurred with an identical  debt
structure  but  without  the  Corporation's   hedging  activity.   However  this
calculation  of  interest  expense  does not take into  account  any actions the
Corporation  could have  taken to reduce  interest  rate risk in the  absence of
hedging activity,  such as issuing more fixed rate debt which would also tend to
increase interest expense.

     Basis swap agreements  involve the exchange of two different  floating rate
interest  payment  obligations  and are used to manage  the basis  risk  between
floating rate indices.

     Additionally, there were cross-currency interest rate swaps with a notional
principal  amount of $190.2 million on which the Corporation was paying interest
at a  weighted  average  rate of 5.66% at  December  31,  1995 that  effectively
converted  yen  denominated  fixed  rate debt  into  variable  rate U.S.  dollar
obligations. These swaps have maturities ranging from 1999 to 2004 to correspond
with the terms of the debt.

     In connection with an anticipated  securitization  of finance  receivables,
the Corporation  entered into a series of forward  interest rate agreements with
notional  principal  amounts of $100.0  million  maturing in February 1996 which
hedge  the  interest  rate  used to price  the sale of an  equivalent  amount of
finance receivables from interest rate fluctuations.

     The  Corporation  is  exposed to credit  risk to the extent a  counterparty
fails to perform under the terms of an interest rate swap. This risk is measured
as the  market  value of  interest  rate  swaps  with a  positive  fair value at
December  31,  1995,  reduced by the  effects of master  netting  agreements  as
presented in Footnote 16--Fair Values of Financial Instruments.  However, due to
the  investment  grade credit  ratings of all  counterparties  and limits on the
exposure with any individual counterparty, the Corporation's actual counterparty
credit risk is not considered significant.

Note 8--Stockholders' Equity

     Under the most restrictive provisions of agreements relating to outstanding
debt, the Corporation may not,  without the consent of the holders of such debt,
permit stockholders' equity to be less than $300.0 million.

                                       40
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 9--Fees and Other Income

     The following table sets forth the components of fees and other income.
<TABLE>
<CAPTION>

                                                                        Years ended December 31,
                                                                 ------------------------------------
                                                                  1995           1994          1993
                                                                 -------        -------       -------
                                                                           Amounts in Millions
   <S>                                                            <C>           <C>            <C>   
    Commissions, fees and other .............................     $147.9        $148.3         $109.9
    Gains on sales of finance receivables ...................       26.3          16.0           15.8
    Gains on asset sales ....................................       10.5          10.1            8.1
                                                                  ------        ------         ------
                                                                  $184.7        $174.4         $133.8
                                                                  ======        ======         ======
</TABLE>

Note 10--Salaries and General Operating Expenses

     The  following  table sets forth the  components  of  salaries  and general
operating expenses.
<TABLE>
<CAPTION>

                                                                        Years ended December 31,
                                                                  ----------------------------------
                                                                   1995          1994          1993
                                                                  -------      ---------      ------
                                                                          Amounts in Millions
    <S>                                                           <C>           <C>            <C>   
    Salaries and employee benefits ..........................     $193.4        $185.8         $152.1
    General operating expenses ..............................      152.3         152.1          130.1
                                                                  ------        ------         ------
                                                                  $345.7        $337.9         $282.2
                                                                  ======        ======         ======
</TABLE>

Note 11--Income Taxes

     The effective tax rate of the Corporation varied from the statutory Federal
corporate income tax rate as follows: 
<TABLE>
<CAPTION>

                                                                           Years ended December 31,
                                                                    ------------------------------------
                                                                     1995           1994         1993
                                                                    -------        -------       -------
                                                                         Percentage of Pretax Income
    <S>                                                             <C>           <C>            <C>  
    Federal income tax rate .................................       35.0%         35.0%          35.0%
    Increase (decrease) due to:
      State and local income taxes, net
        of Federal income tax benefit .......................        5.1           5.3            5.2
      Investment tax credits ................................       (0.3)         (0.3)          (0.7)
      Other .................................................       (1.5)         (1.9)          (1.0)
      Effect of 1% tax rate increase on
        Federal deferred tax balances .......................        --           --              2.8
                                                                    ----          ----           ---- 
    Effective tax rate ......................................       38.3%         38.1%          41.3%
                                                                    ====          ====           ==== 
</TABLE>

     The Revenue  Reconciliation Act of 1993 (the "Act"), which became effective
in August 1993,  provided for a 1% increase in the statutory  Federal  corporate
income tax rate. The rate change  resulted in a 1993 increase of $8.2 million to
deferred tax balances, primarily related to the lease portfolio. In addition, as
required by Statement of Financial  Accounting Standards No. 13, "Accounting for
Leases"  ("SFAS 13"),  the after-tax rate of return and the allocation of income
was recalculated from inception for the leveraged lease portfolio to reflect the
impact of the change in rate, the net effect of which was not significant.

     The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
                                                                        Years ended December 31,
                                                                  -------------------------------------
                                                                   1995            1994          1993
                                                                  -------       ---------      --------
                                                                          Amounts in Millions
    <S>                                                           <C>           <C>            <C>   
    Current Federal income tax provision ....................     $ 68.5        $ 69.5         $ 68.7
    Deferred Federal income tax provision ...................       42.5          27.7           34.9
                                                                  ------       -------        -------
    Total Federal income taxes ..............................      111.0          97.2          103.6
    State and local income taxes ............................       28.8          26.7           24.9
                                                                  ------       -------        -------
    Total provision for income taxes ........................     $139.8       $ 123.9        $ 128.5
                                                                  ======       =======        =======
</TABLE>

                                       41
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The tax  effects of  temporary  differences  that give rise to  significant
portions of the deferred Federal income tax assets and liabilities are presented
below.

                                                 Years ended December 31,
                                              ------------------------------
                                                1995                   1994
                                              ---------             ---------
                                                    Amounts in Millions
Assets
  Provision for credit losses ............... $  (73.8)              $ (61.3)
  Loan origination fees .....................     (9.1)                 (7.2)
  Market discount income ....................     (2.5)                 (4.1)
  Other .....................................    (17.7)                 (9.0)
                                               -------               -------
      Total deferred tax assets .............   (103.1)                (81.6)
                                               -------               -------
Liabilities
  Leasing transactions ......................    549.5                 490.8
  Amortization of intangibles ...............     11.2                   7.2
  Prepaid pension costs .....................      2.3                    .6
  Depreciation of fixed assets ..............       .3                   1.2
  Other .....................................      2.7                   1.1
                                               -------               -------
      Total deferred tax liabilities ........    566.0                 500.9
                                               -------               -------
      Net deferred tax liability ............  $ 462.9               $ 419.3
                                               =======               =======

     Also, included in deferred Federal income taxes on the Consolidated Balance
Sheets are  unamortized  investment tax credits of $6.3 million and $7.2 million
at December  31,  1995 and  December  31,  1994,  respectively.  Included in the
accrued liabilities and payables caption in the Consolidated  Balance Sheets are
state and local  deferred tax  liabilities of $86.4 million and $77.5 million at
December  31,  1995  and  December  31,  1994,  respectively,  arising  from the
temporary differences shown in the above tables.

Note 12--Postretirement and Other Benefit Plans

Retirement Plan

     Substantially  all employees of the Corporation who have completed one year
of service and are 21 years of age participate in The CIT Group  Holdings,  Inc.
Retirement Plan (the "Plan").  The retirement  benefits under the Plan are based
on the employee's age, years of benefit service,  and a percentage of qualifying
compensation  during  the final  years of  employment.  Plan  assets  consist of
marketable securities,  including common stock and government and corporate debt
securities. The Corporation funds the plan by the amount charged to salaries and
employee  benefits  expense  to  the  extent  it  qualifies  for an  income  tax
deduction.

                                       42
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The  accompanying  table sets  forth the funded  status of the Plan and the
amounts recognized in the Consolidated Balance Sheets. 

<TABLE>
<CAPTION>
                                                                                 Years ended December 31,
                                                                        --------------------------------------
                                                                         1995              1994           1993
                                                                        ------            -------        ------
                                                                                    Amounts in Millions
<S>                                                                    <C>                  <C>           <C>  
Actuarial present value of benefit obligations:
  Accumulated benefit obligation including vested
    benefits of $54.0 in 1995, $36.2 in 1994,
    and $34.9 in 1993 ............................................      $  58.1             $39.7         $43.0
                                                                         ======             =====         =====
Plan assets at fair market value .................................       $101.2             $81.5         $86.8
Projected benefit obligation .....................................        (79.9)            (55.8)        (60.1)
                                                                         ------             -----         -----
Excess plan assets ...............................................         21.3              25.7          26.7
Unrecognized prior service cost ..................................          1.9               2.1           2.0
Unrecognized net gain ............................................         10.5              13.8          14.7
                                                                         ------             -----         -----
Prepaid pension cost .............................................       $  8.9             $ 9.8         $10.0
                                                                         ======             =====         =====
Pension cost (benefit) included the following components:
Service cost-benefits earned during the period ...................       $  3.8             $ 4.0         $ 3.3
Interest cost on projected benefit obligation ....................          4.9               4.5           4.1
Actual (return)/loss on plan assets ..............................        (21.9)              2.7         (12.4)
Net amortization and deferral ....................................         14.1             (11.0)          4.8
                                                                         ------             -----         -----
Pension cost (benefit) ...........................................        $  .9             $  .2         $ (.2)
                                                                         ======             =====         =====
</TABLE>

     The following  assumptions were used for calculating the projected  benefit
obligations shown in the preceding table.

<TABLE>
<CAPTION>

                                                                           1995             1994           1993
                                                                           ----             ----           ----                     
<S>                                                                       <C>               <C>           <C>  
Discount rate ....................................................        7.25%             8.75%         7.50%
Rate of increase in compensation .................................        4.50%             5.00%         5.00%
Expected long-term rate of return on plan assets .................       10.00%             9.00%         9.00%
</TABLE>

Postretirement Medical and Life Insurance Benefits

     The Corporation provides certain health care and life insurance benefits to
eligible retired  employees.  In 1995,  salaried  participants  generally become
eligible for retiree health care benefits after reaching age 55 with 10 years of
benefit  service and 11 years of medical plan  participation,  increasing  to 12
years in 1996.  Generally,  the medical  plans pay a stated  percentage  of most
medical  expenses  reduced  by a  deductible  as  well  as by  payments  made by
government programs and other group coverage. The plans are unfunded.

     The Corporation  adopted  Statement of Financial  Accounting  Standards No.
106,  "Employers'  Accounting of  Postretirement  Benefits  Other Than Pensions"
("SFAS 106") as of January 1, 1993.  SFAS 106  requires the accrual,  during the
active service period of the employee,  of the cost of providing  postretirement
benefits, including medical and life insurance coverage. The Corporation elected
to amortize the SFAS 106 transition obligation over a twenty-year period.

                                       43
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

      The postretirement benefit liability at December 31, 1995 and December 31,
1994 is set forth in the following table.
                                                    1995                 1994
                                                   -------              -------
                                                        Amounts in Millions
Accumulated postretirement benefit
  obligation ("APBO"):
    Retirees ....................................   $21.8                $23.5
    Fully eligible, active plan participants ....     4.8                  3.7
    Other active plan participants ..............    13.8                 11.0
                                                    -----                -----
Unfunded postretirement obligation ..............    40.4                 38.2
Unrecognized prior service cost .................     (.5)                --
Unrecognized net gain ...........................     (.8)                (1.1)
Unrecognized transition obligation ..............    28.3                 30.0
                                                    -----                -----
Accrued postretirement benefit obligation .......   $13.4                $ 9.3
                                                    =====                =====

     The components of net periodic postretirement benefit cost were as follows.

                                                  Years ended December 31,
                                         --------------------------------------
                                         1995              1994            1993
                                         -----             -----           ----
                                                   Amounts in Millions
Service cost, benefits 
   earned during the period ............  $1.1             $1.2            $1.1
Interest cost on accumulated 
   postretirement benefit obligation ...   3.2              2.8             2.9
Amortization of unrecognized 
   transition obligation ...............   1.7              1.7             1.7
Amortization of unrecognized
   prior service cost ..................  (0.1)             --              --
                                          ----             ----            ----
Net periodic postretirement
   benefit cost ........................  $5.9             $5.7            $5.7
                                          ====             ====            ====

     The following  assumptions  were used for calculating the APBO shown in the
preceding tables.

                                          1995              1994          1993
                                         -------           -------       -------
Discount Rate .........................   7.25%             8.75%         7.50%
Rate of increase in compensation ......   4.50%             5.00%         5.00%
Assumed Health Care Cost Trend Rate:
  Retirees prior to reaching age 65 ...  10.00%            11.00%        12.00%
  Retirees older than 65 ..............   7.00%             8.00%         9.00%



     The assumed  health care cost trend rates  decline to an ultimate  level of
4.75% in 2003 for retirees  prior to reaching age 65 and 2000 for retirees older
than 65 for 1995,  6.25% in 2001 for all  retirees for 1994 and 5.5% in 2000 for
all retirees for 1993.

      If the health  care cost trend rate were  increased  by 1%, the APBO as of
December 31, 1995,  would be increased by $4.7 million  (11.6%),  and the sum of
the service cost and interest  cost  components  of net periodic  postretirement
benefit cost for 1995 would be increased by $0.6 million (14.1%).

Savings Incentive Plan

      Certain  employees  of  the  Corporation  participate  in  The  CIT  Group
Holdings,  Inc. Savings Incentive Plan. This plan qualifies under section 401(k)
of the Internal  Revenue Code.  The  Corporation's  expense is based on specific
percentages  of  employee   contributions  and  plan  administrative  costs  and
aggregated $8.2 million,  $8.0 million and $6.8 million for 1995, 1994 and 1993,
respectively.

                                       44
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 13--Lease Commitments

      The Corporation has entered into noncancellable long-term lease agreements
for premises and equipment.  The following table presents future minimum rentals
under such noncancellable  leases that have initial or remaining terms in excess
of one year at December 31, 1995.


At December 31,                                              Amounts in Millions
---------------                                             
    1996 .................................................        $ 22.1
    1997 .................................................          19.3
    1998 .................................................          18.4
    1999 .................................................          15.5
    2000 .................................................          13.8
    Thereafter ...........................................          75.1
                                                                  ------
      Total                                                       $164.2
                                                                  ======

     In addition to fixed lease rentals,  leases require  payment of maintenance
expenses  and  real  estate  taxes,  both of which  are  subject  to  escalation
provisions.  Minimum  payments have not been reduced by minimum sublease rentals
of $22.7 million due in the future under noncancellable subleases.

     Rental expense,  net of sublease  income on premises and equipment,  was as
follows.

                                                Years ended December 31,
                                      -----------------------------------------
                                       1995              1994            1993
                                      -------          --------         -------
                                                   Amounts in Millions

 Premises .........................   $18.0            $18.3           $17.3
 Equipment ........................     5.7              5.2             6.7
 Less sublease income .............    (1.3)            (1.3)           (1.3)
                                     ------           ------          ------
Total .............................   $22.4            $22.2           $22.7
                                     ======           ======          ======

     Rental  expense  paid to CBC totaled  $0.6  million,  $1.6 million and $2.1
million in 1995, 1994 and 1993, respectively.

Note 14--Legal Proceedings

     In the ordinary  course of business,  there are various  legal  proceedings
pending  against  the  Corporation.   Management  believes  that  the  aggregate
liabilities,  if any, arising from such actions will not have a material adverse
effect on the  consolidated  financial  position or results of operations of the
Corporation.

Note 15--Credit-Related Commitments

     In the normal course of meeting the financing  needs of its customers,  the
Corporation  enters into various  credit-related  commitments.  These  financial
instruments  generate fees and involve,  to varying degrees,  elements of credit
risk in excess of the amounts recognized in the Consolidated  Balance Sheets. To
minimize potential credit risk, the Corporation  generally  requires  collateral
and other  credit-related  terms and conditions  from the customer.  At the time
credit-related  commitments are granted,  management  believes the fair value of
the underlying collateral and guarantees approximates or exceeds the contractual
amount of the  commitment.  In the event a customer  defaults on the  underlying
transaction,  the  maximum  potential  loss to the  Corporation  represents  the
contractual amount  outstanding less the value of all underlying  collateral and
guarantees.

                                       45
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     The accompanying table summarizes the contractual amounts of credit-related
commitments.

<TABLE>
<CAPTION>

                                                        Due to expire    
                                                   ----------------------             Total            Total
                                                   Within           After          outstanding      outstanding
At December 31,                                    one year       one year             1995             1994
--------------                                    --------        --------          ----------       ----------
                                                                        Amounts in Millions
<S>                                                <C>                <C>             <C>             <C>     
Unused commitments to extend credit
  Loans ........................................   $1,244.0           $ --            $1,244.0        $1,373.0
  Leases .......................................       61.6             --                61.6            41.2
Letters of credit and acceptances
  Standby letters of credit ....................      170.0             6.9              176.9           167.9
  Other letters of credit ......................      190.1             7.1              197.2           230.7
  Acceptances ..................................        3.9            --                  3.9             2.1
Guarantees .....................................       79.7            21.5              101.2            88.7
Foreign exchange contracts .....................         .1             --                  .1             1.6
</TABLE>

Note 16--Fair Values of Financial Instruments

     Statement of Financial  Accounting  Standards No. 107,  "Disclosures  About
Fair Value of Financial  Instruments"  ("SFAS 107")  requires  disclosure of the
estimated  fair  value of the  Corporation's  financial  instruments,  excluding
leasing  transactions  accounted for under SFAS 13. The fair value estimates are
made at a  discrete  point in time  based on  relevant  market  information  and
information about the financial instrument.  Since no established trading market
exists for a significant  portion of the  Corporation's  financial  instruments,
fair value  estimates  are based on judgments  regarding  future  expected  loss
experience,   current  economic  conditions,  risk  characteristics  of  various
financial  instruments,  and other  factors.  These  estimates are subjective in
nature,  involving  uncertainties  and  matters  of  significant  judgment  and,
therefore,  cannot be  determined  with  precision.  Changes in  assumptions  or
estimation methods may significantly  affect the estimated fair values.  Because
of these limitations,  management  provides no assurance that the estimated fair
values presented would necessarily be realized upon disposition or sale.

     Actual fair values in the  marketplace  are  affected by other  significant
factors,  such as supply and demand,  investment  trends and the  motivations of
buyers  and  sellers,  which  are  not  considered  in the  methodology  used to
determine the estimated fair values presented. In addition, fair value estimates
are based on existing on-and  off-balance  sheet financial  instruments  without
attempting to estimate the value of future business  transactions  and the value
of assets and liabilities that are part of the  Corporation's  overall value but
are not considered  financial  instruments.  Significant  assets and liabilities
that are not considered  financial  instruments include customer base, operating
lease  equipment,  premises and equipment,  assets  received in  satisfaction of
loans,  and deferred tax  balances.  In  addition,  tax effects  relating to the
unrealized  gains and losses  (differences in estimated fair values and carrying
values) have not been  considered in these  estimates and can have a significant
effect  on fair  value  estimates.  The  carrying  amounts  for  cash  and  cash
equivalents approximate fair value because they have short maturities and do not
present significant credit risks.  Credit-related  commitments,  as disclosed in
Note 15, are  primarily  short term  floating  rate  contracts  whose  terms and
conditions are individually negotiated, taking into account the creditworthiness
of the customer and the nature,  accessibility and quality of the collateral and
guarantees.   Therefore,  the  fair  value  of  credit-related  commitments,  if
exercised, would approximate their contractual amounts.

                                       46
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     Estimated fair values,  recorded  carrying  values and various  assumptions
used in valuing the Corporation's financial instruments at December 31, 1995 and
1994 are set forth below.

<TABLE>
<CAPTION>

                                                                        1995                               1994
                                                              --------------------------        -------------------------
                                                               Carrying         Estimated         Carrying      Estimated
                                                                Value          Fair Value          Value        Fair Value
                                                             ----------         ---------       ----------      ---------
                                                                Asset             Asset            Asset          Asset
                                                             (Liability)       (Liability)      (Liability)    (Liability)
                                                             ----------         ---------       ----------      ---------
                                                                                   Amounts in Millions
<S>                                                            <C>              <C>               <C>             <C>      
Finance Receivables--Loans(a) .........................        $12,563.4        $12,844.1         $11,868.7       $11,905.3
Other Assets(b) .......................................        $   300.9        $   328.6         $   183.5       $   205.1
Commercial Paper(c) ...................................        $(6,105.6)       $(6,105.6)        $(5,660.2)      $(5,660.2)
Fixed rate senior notes and
  subordinated fixed rate notes(d) ....................        $(3,637.0)       $(3,762.2)        $(2,919.4)      $(2,854.8)
Variable rate senior notes(d) .........................        $(3,827.5)       $(3,827.5)        $(3,812.5)      $(3,807.4)
Credit balances of factoring clients &
  Accrued liabilities and payables(e) .................        $(1,333.3)       $(1,333.3)        $(1,231.9)      $(1,231.9)
Derivative Financial Instruments(f)
  Interest Rate Swaps
    Off-balance sheet assets ..........................        $     2.3        $     2.8         $     (.2)      $    92.7
    Off-balance sheet liabilities .....................        $    (9.1)       $  (107.8)        $    (5.5)      $   (60.3)
    Cross currency interest rate swaps ................        $     --         $    36.8         $     --        $    21.0
    Forward interest rate agreement ...................        $     --         $     (.5)        $     --        $     (.6)
</TABLE>

-------------- 
a)   The fair value of performing  fixed-rate  loans was estimated  based upon a
     present value discounted cash flow analysis, using interest rates that were
     being  offered  at the end of the  year for  loans  with  similar  terms to
     borrowers of similar  credit  quality.  Discount  rates used in the present
     value  calculation  range  from 8.46% to 9.99% for 1995 and 9.42% to 10.65%
     for 1994. The maturities used represent the average contractual  maturities
     adjusted for prepayments.  For floating rate loans that reprice  frequently
     and have no significant  change in credit quality,  fair values approximate
     carrying  value.  The net carrying value of lease finance  receivables  not
     subject  to fair value  disclosure  totaled  $3.0  billion in 1995 and $2.7
     billion in 1994.

(b)  Other assets  subject to fair value  disclosure  include  accrued  interest
     receivable  and  investment  securities.  The  carrying  amount of  accrued
     interest receivable approximates fair value. Investment securities actively
     traded in a secondary  market were valued  using  quoted  available  market
     prices.  Investments not actively traded in a secondary  market were valued
     based upon  recent  selling  price or present  value  discounted  cash flow
     analysis.  The  carrying  value of other  assets not  subject to fair value
     disclosure  totaled  $250.8  million  in 1995 and  $297.8  million in 1994.
     Accrued interest receivable related to swap agreements totaled $4.6 million
     in 1995 and $5.8 million in 1994 and is included in the  carrying  value of
     interest rate swaps.

(c)  The estimated fair value of commercial  paper  approximates  carrying value
     due to the relatively short maturities.

(d)  Fixed rate notes were valued  using a present  value  discounted  cash flow
     analysis  with a  discount  rate  approximating  current  market  rates for
     issuances by the  Corporation  of similar term debt at the end of the year.
     Discount rates used in the present value  calculation  ranged from 5.30% to
     6.25% in 1995 and  6.50% to 8.60% in 1994.  The  estimated  fair  value for
     variable rate notes (except for approximately  $130.0 million of structured
     notes with imbedded caps at December 31, 1994) approximates  carrying value
     because the debt reprices to market terms within 90 days.

(e)  The  estimated  fair  value  of  credit   balances  of  factoring   clients
     approximates  carrying value due to their short settlement  terms.  Accrued
     liabilities  and payables with no stated  maturities have an estimated fair
     value  which  approximates  carrying  value.  The  carrying  value of other
     liabilities not subject to fair value disclosure  totaled $591.2 million in
     1995 and $531.2 million in 1994.  Accrued  interest payable related to swap
     agreements totaled $11.5 million in 1995 and in 1994 and is included in the
     carrying value of interest rate swaps.

(f)  As previously  disclosed in Note 7-Derivative  Financial  Instruments,  the
     notional  principal  amount of  interest  rate swaps  designated  as hedges
     against the  Corporation's  debt totaled $5.27 billion at December 31, 1995
     ($0.7  billion of which  related to  interest  rate swaps whose fair market
     value  represented an asset and $4.6 billion related to interest rate swaps
     whose fair market value represented a liability, after adjusting for master
     netting  agreements) and $5.4 billion at December 31, 1994 ($3.9 billion of
     assets and $1.5 billion of liabilities).  The notional  principal amount of
     cross  currency  interest rate swaps totaled $190.2 million at December 31,
     1995 and  December  31,  1994.  Forward  interest  rate  agreements  with a
     notional principal amount of $100.0 million hedge the interest rate used to
     price  the  sale  of an  equivalent  amount  of  finance  receivables.  The
     estimated fair values of derivative financial instruments are obtained from
     dealer  quotes  and  represent  the net  amount  receivable  or  payable to
     terminate the agreement,  taking into account current market interest rates
     and  counterparty  credit  risk.  The amounts  shown under  carrying  value
     represent the net interest  receivable or payable,  or the unamortized cost
     of these agreements.

                                       47
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 17--Investments in Debt and Equity Securities

     Effective  January 1, 1994, the Corporation  adopted Statement of Financial
Accounting  Standards No. 115,  "Accounting for Certain  Investments in Debt and
Equity  Securities"  (SFAS 115) which addresses the accounting and reporting for
investments in equity securities that have readily  determinable fair values and
for all investments in debt securities.  At December 31, 1995 and 1994, the book
value of the Corporation's  investments in debt and equity securities subject to
the provision of SFAS 115 totaled $22.3 million and $20.3 million, respectively,
all of which was designated as available for sale.  Unrealized gains and losses,
representing the difference between amortized cost and current fair market value
were immaterial.

Note 18--Recently Issued Accounting Pronouncements

     During the first  quarter of 1996,  the  Corporation  adopted  Statement of
Financial  Accounting  Standard  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121") and
Statement of Financial  Accounting  Standard No. 122,  "Accounting  for Mortgage
Servicing Rights" ("SFAS 122").

     SFAS 121 requires that a review for impairment be performed whenever events
or changes in  circumstances  indicate  that the carrying  amount of  long-lived
assets may not be recoverable. In performing the review for recoverability,  the
entity should  estimate the future  undiscounted  cash flows  expected to result
from the use of the asset and its eventual disposition. The adoption of SFAS 121
did not have a significant  impact on the Corporation's  consolidated  financial
position or results of operations.

     SFAS 122 requires an enterprise  that acquires  mortgage  servicing  rights
through  either the purchase or  origination of mortgage loans and then sells or
securitizes  those loans with  servicing  rights  retained to allocate the total
cost between the mortgage servicing rights and the loans based on their relative
fair values.  The Statement  requires that the enterprise assess its capitalized
mortgage  servicing  rights  for  impairment  based on the  fair  value of those
rights.The  adoption  of SFAS  122  did not  have a  significant  impact  on the
Corporation's consolidated financial position or results of operations.

     The Financial Accounting Standards Board also issued Statement of Financial
Accounting Standard No. 123,  "Accounting for Stock-Based  Compensation"  ("SFAS
123")  which  requires  either a change in  accounting  or  additional  proforma
disclosures  for  stock-based  compensation  plans.  Management  has adopted the
disclosure  election of the Standard  during the first quarter of 1996 which did
not  have a  significant  impact  on the  Corporation's  consolidated  financial
position or results of operations.

Note 19--Acquisition of Barclays Commercial Corporation

     On  February  28,  1994,  the  Corporation  acquired,  for  cash,  Barclays
Commercial  Corporation  ("BCC"), a company of the Barclays Group. BCC had total
assets of approximately  $700.0 million at December 31, 1993 and total factoring
volume of approximately $5.0 billion for the year then ended.

Note 20--Certain Relationships and Related Transactions

     The  Corporation  has in the past and may in the future  enter into certain
transactions  with affiliates of the  Corporation.  It is anticipated  that such
transactions will be entered into at a fair market value for the transaction.

     The Corporation's  interest-bearing  deposits generally represent overnight
money  market  investments  of excess  cash that are  maintained  for  liquidity
purposes.   At  December  31,  1995,  the  Corporation  had  $135.0  million  of
interest-bearing  deposits  with DKB.  From time to time,  the  Corporation  may
maintain such deposits with DKB or CBC.

                                       48
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     At December 31, 1995, the Corporation's  credit line coverage with 69 banks
totaled $4.64 billion of committed facilities.  Additional information regarding
these credit lines can be found in Note 6-Debt.  At December 31, 1995, DKB was a
committed bank under a $1.25 billion Revolving Credit Facility, a $770.0 million
revolving credit facility, and a $325.0 million revolving credit facility,  with
commitments of $55.0 million,  $80.0 million and $105.0  million,  respectively.
DKB is a Co-Agent  under the $1.25 billion and $770.0 million  Revolving  Credit
Facilities and the Agent under the $325.0 million facility.

     The  Corporation  has entered into  interest  rate swap and cross  currency
interest rate swap  agreements with financial  institutions  acting as principal
counterparties,  including  affiliates of DKB and CBC. At December 31, 1995, the
notional  principal amount outstanding on interest rate swap agreements with DKB
and CBC totaled $270.0 million and $300.0  million,  respectively.  The notional
principal  amount  outstanding on foreign  currency swaps totaled $140.2 million
with DKB at year-end 1995.

     The Corporation has entered into leveraged leasing  arrangements with third
party loan participants, including affiliates of DKB. Amounts owed to affiliates
of DKB are discussed in Note 3-Finance Receivables.

     The  Corporation  holds  a  $9.0  million  letter  of  credit  from  CBC as
additional  collateral  on a $23.1  million  business  aircraft  loan to a third
party. CBC is also indebted to the Corporation in the amount of $7.7 million for
financing relating to the purchase of a business aircraft by CBC.

     The  Corporation  has also entered into  various  noncancellable  long-term
facility lease  agreements  with CBC.  Future minimum rentals under these leases
are $0.5  million in 1996,  $0.5  million in 1997,  $0.5  million in 1998,  $0.4
million in 1999 and $0.1 million in 2000.

     At December  31, 1995,  the  Corporation  had entered  into  credit-related
commitments  with DKB in the form of letters of credit  totaling  $21.7  million
equal to the amount of the single lump sum premium  necessary  to provide  group
life insurance  coverage to certain eligible retired  employees and an amount to
fund certain overseas finance receivables.

     The Corporation has issued a Prospectus,  dated August 8, 1994, relating to
certain  debt  securities  of the  Corporation  that are  currently  issued  and
outstanding  with  respect to which offers and sales  relating to  market-making
transactions  may be made by Chemical  Securities,  Inc.  and/or its affiliates.
Chemical  Securities,  Inc.  is  a  wholly-owned  subsidiary  of  CBC.  Chemical
Securities,  Inc.  paid  all  expenses  of  the  Corporation  of  preparing  the
Prospectus.

     A  subsidiary  of the  Corporation  has entered into cash  collateral  loan
agreements  with DKB  pursuant  to which  DKB made  loans to two  separate  cash
collateral  trusts in order to provide  additional  security for payments on the
certificates of the contracts trusts. These contracts trusts were formed for the
purpose of securitizing  certain  recreational  vehicle finance receivables that
were acquired from another subsidiary of the Corporation.  At December 31, 1995,
the principal amount outstanding on the cash collateral loans was $12.3 million.

                                       49
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Note 21--Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                                                                 1995
                                                                 -------------------------------------------------------------------
                                                                   First          Second         Third          Fourth
                                                                  Quarter         Quarter       Quarter         Quarter        Year
                                                                 --------        --------       -------        ---------      ------
                                                                                    Amounts in Millions

<S>                                                              <C>             <C>            <C>            <C>         <C>     
Net finance income .....................................         $  164.5        $  171.5       $  178.8       $  182.9    $  697.7
Fees and other income ..................................             43.4            41.9           47.8           51.6       184.7
Salaries and general
  operating expenses ...................................             84.8            82.3           85.9           92.7       345.7
Net credit losses ......................................             17.5            17.2           21.9           20.6        77.2
Provision for finance
  receivables increase .................................              3.5             5.0            2.1            4.1        14.7
Depreciation on operating
  lease equipment ......................................             17.6            17.2           21.4           23.5        79.7
Provision for income taxes .............................             31.7            35.2           36.8           36.1       139.8
Net income .............................................         $   52.8        $   56.5       $   58.5       $   57.5    $  225.3
                                                                 -------------------------------------------------------------------

<CAPTION>

                                                                                                 1994
                                                                 -------------------------------------------------------------------
                                                                   First          Second         Third          Fourth
                                                                  Quarter         Quarter       Quarter         Quarter        Year
                                                                 --------        --------       -------        ---------      ------
                                                                                            Amounts in Millions
Net finance income .....................................         $  157.1        $  168.3       $  160.8       $  163.6      $ 649.8
Fees and other income ..................................             39.9            44.9           47.0           42.6        174.4
Salaries and general
  operating expenses ...................................             80.5            86.4           85.2           85.8        337.9
Net credit losses ......................................             25.9            23.1           18.2           17.0         84.2
Provision for finance receivables
  increase (decrease) ..................................              (.9)            4.3            1.8            7.5         12.7
Depreciation on operating
  lease equipment ......................................             14.3            16.6           16.4           17.1         64.4
Provision for income taxes .............................             29.2            31.8           33.6           29.3        123.9
Net income .............................................         $   48.0        $   51.0       $   52.6       $   49.5      $ 201.1
                                                                 -------------------------------------------------------------------
</TABLE>

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.

      None.

                                       50
<PAGE>

                  THE CIT GROUP HOLDINGS, INC. AN SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                                    PART III

Item 10.    Directors and Executive Officers of the Registrant.

     The  names  and  ages of all  directors,  executive  officers  and  certain
significant  employees  of  the  Corporation  as  of  February  1,  1996,  and a
biographical  summary of each such person,  appear on the  following  pages.  No
family  relationship  exists among these  persons.  The executive  officers were
appointed by and hold office at the will of the Board of Directors.

<TABLE>
<CAPTION>

                                                                                             Other Positions/Offices
                                          Current Positions/Offices                      Held During the Past Five Years
      Name and Age                         and Date of Appointment                           and Date of Appointment
----------------------------   -----------------------------------------------     -----------------------------------------------
<S>                      <C>                                              <C>                                                   <C> 
DIRECTORS

Hisao Kobayashi          60    Senior Advisor, DKB                        5/95     Senior Managing Director, The Dai-Ichi       5/93
                               Chairman, The CIT Group                    7/92     Kangyo Bank, Limited ("DKB")
                               Holdings, Inc. ("CIT")                              Managing Director, DKB                       6/91
                               Director, CIT                             12/89     Director & General Manager,                  9/88
                                                                                   International Planning & Coordination
                                                                                   Division, DKB

Albert R. Gamper Jr.     53    President & Chief Executive Officer,      12/89     Not applicable
                               CIT
                               Director, CIT                              5/84


Takasuke Kaneko          53    Director CIT                               6/95     Director and General Manager                 8/94
                               Managing Director, DKB                     5/95     International Planning and Coordination
                                                                                   Division, DKB
                                                                                   Director and General Manager                 6/94
                                                                                   International Planning Division, DKB
                                                                                   General Manager International                5/94
                                                                                   Planning Division, DKB
                                                                                   General Manager International Finance        5/93
                                                                                   Division, DKB
                                                                                   Senior Executive Vice President, CIT         1/90
                                                                                   Director, CIT                               12/89


Michio Murata            48    Senior Executive Vice President, CIT       5/93     Executive Vice President, CIT                5/92
                               Director, CIT                              5/92     General Manager, Gaien-Mae Branch, DKB       4/90


Kenji Nakamura           52    Director, CIT                              6/95     General Manager                              5/95
                               Director and General Manager               6/95     New York Branch and Cayman
                               New York Branch, DKB                                Branch, DKB
                                                                                   General Manager                             10/93
                                                                                   Otemnchi, Branch DKB
                                                                                   Deputy General Manager                       5/92
                                                                                   Personnel Division, DKB
                                                                                   Deputy General Manager                       6/91
                                                                                   Personnel Planning
                                                                                   Division, DKB
                                                                                   Deputy General Manager                       2/91
                                                                                   Credit Supervision Division III DKB


Joseph A. Pollicino      56    Vice Chairman, CIT                         12/89    Not applicable
                               Director, CIT                              8/86

Paul N. Roth             56    Director, CIT                              12/89    Not applicable
                               Partner, Schulte Roth & Zabel              8/69

Peter J. Tobin           51    Chief Financial Officer, Chemical          1/92     Executive Vice President & Chief            12/85
                               Bank & Chemical Banking                             Financial Officer, Manufacturers Hanover
                               Corporation                                         Trust Company & Manufacturers Hanover
                               Director, CIT                              5/84     Corporation

Keiji Torii              48    Executive Vice President, CIT              5/93     Chief Inspector,                             2/93
                               Director, CIT                              5/93     Inspecting Division, DKB
                                                                                   Assistant General Manager,                   6/90
                                                                                   Securities Division, DKB
</TABLE>


                                       51
<PAGE>

<TABLE>
<CAPTION>
                                                                                             Other Positions/Offices
                                          Current Positions/Offices                      Held During the Past Five Years
      Name and Age                         and Date of Appointment                           and Date of Appointment
----------------------------   -----------------------------------------------     -----------------------------------------------
EXECUTIVE OFFICERS (1)

<S>                      <C>                                              <C>      <C>                                          <C> 
Thomas L. Abbate         50    Executive Vice President, Chief            8/90     Not applicable
                               Credit Officer, The CIT Group/
                               Industrial Financing & Executive Vice
                               President, Credit Administration,
                               The CIT Group

Thomas C. Bloch          51    President and CEO, The CIT Group/          2/96     Executive Vice President, The CIT Group/     4/95
                               Business Credit                                     Business Credit
                                                                                   Senior Vice President, The CIT Group/        4/85
                                                                                   Capital Equipment Financing

James J. Egan Jr.        56    President & CEO, The CIT                   9/87     Not applicable
                               Group/Sales Financing

George J. Finguerra      55    Senior Executive Vice President,           4/91     President & CEO, The CIT                     6/87
                               The CIT Group/Capital                               Group/Equipment & Project Financing
                               Equipment Financing
 
Thomas B. Hallman        43    President and CEO, The CIT Group/          5/95     President & Director, National Product       6/94
                               Consumer Finance                                    Division, Globe Mortgage Company
                                                                                   Director, National Residential Lending       3/93
                                                                                   First Nationwide Bank
                                                                                   Director, National Mortgage Origination,     8/85
                                                                                   Citibank, N.A. & Citicorp

Thomas A. Johnson        49    General Auditor, CIT                       1/90     Not applicable

Joseph M. Leone          42     Executive Vice President &                7/95     Executive Vice President, The CIT            6/91
                                Chief Financial Officer, CIT                       Group/Sales Financing
                                                                                   Senior Vice President & Controller,          3/87
                                                                                   The CIT Group

Lawrence A. Marsiello    46    President & CEO, The CIT                   1/92     President, The CIT Group/Factoring           8/90
                               Group/Commercial Services

Robert J. Merritt        54    President & CEO, The CIT                   12/86    Not applicable
                               Group/Industrial Financing

Drew Neidorf             42    President & CEO, The CIT                   2/91     Not applicable
                               Group/Credit Finance

William M. O'Grady       56    Executive Vice President,                  1/86     Not applicable
                               Administration, The CIT Group

Thomas J. O'Rourke       57    Senior Vice President, Marketing,          10/84    Not applicable
                               The CIT Group
 
Ernest D. Stein          55    Executive Vice President,                  2/94     Senior Vice President & Deputy General       4/93
                               General Counsel & Secretary, CIT                    Counsel, CIT
                                                                                   Senior Vice President & Assistant            3/92
                                                                                   General Counsel,  CIT 
                                                                                   Executive Vice President & General          12/85
                                                                                   Counsel, Manufacturers Hanover Corp.

Nikita Zdanow            58    President & CEO, The CIT Group/            4/91     President & CEO, The CIT                     4/85
                               Capital Equipment Financing                         Group/Capital Financing
</TABLE>

-----------
(1)  Messrs. Gamper, Murata, Torii, and Pollicino,  whose biographical summaries
     are  listed on the  preceding  page,  are also  Executive  Officers  of the
     Corporation.

Stockholders Agreement

     The Corporation entered into a Stockholders  Agreement  simultaneously with
the  acquisition  of a sixty percent (60%)  interest in the  Corporation by DKB,
which  agreement  was  amended on  December  15,  1995  simultaneously  with the
acquisition  of an additional  twenty percent (20%) common stock interest in the
Corporation by DKB from CBC Holding. The agreement,  as amended,  provides for a
Board of  Directors  consisting  of ten  directors.  CBC  Holding,  as  minority
stockholder,  has the right to designate one nominee for director. DKB agreed to
vote for the nominees for director of CBC Holding. Regular meetings of the Board
of Directors are held quarterly. See Item 1 "Business--General".

Outside Directorships

     As  indicated  in the  table,  some  of the  Directors  of the  Corporation
concurrently hold positions as directors or executive  officers of DKB or CBC or
of  subsidiaries  or other  affiliates  of the  Corporation,  DKB,  or CBC.  Mr.
Kobayashi is a director of AFLAC, Inc., a life insurance  company,  which is not
affiliated  with the  Corporation  and  which is  listed  on the New York  Stock
Exchange.  A number of the  Executive  Officers are also  directors of privately
held and not-for-profit organizations not affiliated with the Corporation.

                                       52
<PAGE>

Item 11.  Executive Compensation.

     The table below sets forth the annual and long-term compensation, including
bonuses and deferred compensation, of the President and Chief Executive Officer,
the Vice  Chairman,  and the  other  three  most  highly  compensated  executive
officers of the  Corporation  for  services  rendered in all  capacities  to the
Corporation  and its  subsidiaries  during the fiscal  years ended  December 31,
1995, 1994, and 1993.

                           SUMMARY COMPENSATION TABLE
                                                                                
<TABLE>
<CAPTION>
                                                                                                     Long-Term
                                                                                                    Compensation
                                                                                                    -----------
                                                              Annual Compensation                      Payouts
                                                    ----------------------------------------         ----------
          (a)                         (b)            (c)              (d)             (e)                (f)             (g)
       Name and                                                                  Other Annual           LTIP           All Other
  Principal Position                  Year          Salary          Bonus(1)     Compensation(2)      Payouts(3)     Compensation(4)
    ---------------                   ----          ------          -----        -------------         -------       ------------
<S>                                   <C>          <C>              <C>              <C>              <C>              <C>    
Albert R. Gamper, Jr. ..........      1995         $542,302         $675,000         $87,626          $722,369          $30,692
President and Chief ............      1994         $530,379         $600,000         $46,092          $295,748          $30,215
Executive Officer ..............      1993         $489,996         $500,000         $48,919          $295,748          $28,594
                                                                                                                      
Joseph A. Pollicino ............      1995         $401,523         $475,000         $51,205          $433,400          $25,061
Vice Chairman ..................      1994         $392,294         $425,000         $28,340          $177,440          $24,692
                                      1993         $359,996         $355,000         $29,220          $177,440          $23,394
                                                                                                                      
Nikita Zdanow ..................      1995         $270,054         $250,000         $22,224          $198,606          $19,802
President and Chief ............      1994         $261,404         $250,000         $14,637          $ 96,128          $19,456
Executive Officer ..............      1993         $242,654         $210,000         $15,779          $ 96,128          $18,700
Capital Equipment Financing                                                                                           
                                                                                                                      
Robert J. Merritt ..............      1995         $268,064         $240,000         $22,726          $198,606          $19,723
President and Chief ............      1994         $257,115         $210,000         $13,359          $ 81,312          $19,285
Executive Officer ..............      1993         $245,000         $160,000         $14,009          $ 81,312          $18,794
Industrial Financing                                                                                                  
                                                                                                                      
Lawrence A. Marsiello ..........      1995         $237,000         $220,000         $19,490          $173,360          $18,480
President and Chief ............      1994         $227,308         $200,000         $12,035          $ 73,948          $18,092
Executive Officer ..............      1993         $216,000         $140,000         $12,766          $ 73,948          $15,889
Commercial Services                                                                                                  
</TABLE>

------
(1)   Under The CIT Group Bonus Plan,  cash awards for each calendar year may be
      paid in amounts  determined  by the  Executive  Committee  of the Board of
      Directors  in its  discretion.  Senior  Officer  awards are  reviewed  and
      approved  by the Board of  Directors.  The  amount of awards  depends on a
      variety  of  factors,   including  corporate  performance  and  individual
      performance  during the calendar year for which awards are made.  All or a
      part of a cash  award  for a  particular  year  may be paid  currently  or
      deferred and paid upon  retirement in up to 5 annual  installments  at the
      option of the participant. All awards are subject to appropriate taxes and
      deferred amounts are credited annually with interest.

(2)   The  payments  set forth under Other  Annual  Compensation  represent  the
      dividends paid under the CIT Career  Incentive  Plan. For the  performance
      period  1990-1992  under the CIT Career  Incentive  Plan,  Mr. Gamper held
      6,666 phantom shares of stock,  Mr.  Pollicino 4,000 phantom  shares,  Mr.
      Marsiello 1,666 phantom  shares,  Mr. Merritt 1,833 phantom shares and Mr.
      Zdanow  2,166  phantom  shares,  all of  which  were  vested  and paid out
      pursuant  to the  scheduled  payout  as of  December  31,  1994.  For  the
      performance  period  1993-1995,  Mr. Gamper was initially  awarded  12,000
      phantom  shares of stock,  which was  later  increased  to 20,000  phantom
      shares,  Mr. Pollicino was initially  awarded 7,500 phantom shares,  which
      was later increased to 12,000 phantom shares,  Mr. Marsiello was initially
      awarded 3,225 phantom  shares,  which was later increased to 4,800 phantom
      shares, Mr. Merritt was initially awarded 3,600 phantom shares,  which was
      later  increased to 5,500  phantom  shares,  and Mr.  Zdanow was initially
      awarded 3,750 phantom  shares,  which was later increased to 5,500 phantom
      shares. The shares awarded for the performance period 1993-1995 are vested
      in one-third increments commencing January 1996.

(3)   The payments set forth under LTIP Payouts  represent  the payout of shares
      vested  under the CIT  Career  Incentive  Plan.  The payout in 1995 is for
      shares awarded for the performance  period 1993-1995.  The payouts in 1994
      and 1993 were for shares  awarded for the  performance  period  1990-1992.
      Dividends  received  under  this Plan are set  forth  under  Other  Annual
      Compensation.  (The CIT Career  Incentive  Plan is described in "Long Term
      Incentive Plan".)

(4)   The payments set forth under All Other Compensation represent the matching
      employer  contribution  to  each  participant's  account  and an  employer
      flexible retirement contribution to each participant's flexible retirement
      account under The CIT Group  Holdings,  Inc.  Savings  Incentive Plan (the
      "CIT Savings Plan").  The matching employer  contribution is made pursuant
      to a compensation  deferral  feature of the CIT Savings Plan under Section
      401(k) of the Internal  Revenue Code of 1986. The payments set forth under
      All Other Compensation also represent  contributions to each participant's
      account under the Supplemental  Savings Plan of CIT (the "CIT Supplemental
      Savings Plan"), which is an unfunded, non-qualified plan.



                                       53
<PAGE>

LONG-TERM INCENTIVE PLAN

     Under The CIT Group Holdings,  Inc. Career  Incentive Plan (the "CIT Career
Incentive  Plan"),  awards are granted in the form of phantom shares of stock by
the  Executive   Committee  of  the  Board  of  Directors  in  its   discretion.
Participants  in the CIT Career  Incentive  Plan are  selected by the  Executive
Committee from among the executives of the Corporation and its  subsidiaries who
are in a position to make a substantial  contribution to the long-term financial
success of the  Corporation  or its  subsidiaries.  Grants to the members of the
Executive  Committee are made by the Board of  Directors.  The amount of phantom
shares eligible for allocation during a Performance  Period is determined by the
Committee.  The Performance Period is at least three consecutive calendar years.
The Committee  determines the  Performance  Goals for each  Performance  Period,
which are tied to net income  growth  targets and return on equity  performance.
The value of the phantom  shares is  determined  at the end of each  Performance
Period and compared against the pre-established Performance Goals. Following the
end of a Performance  Period,  one-third vest  immediately and one-third vest at
the end of each of the next two years.  Cash dividends on individual  shares are
paid quarterly during the performance period and the vesting period based on the
number of phantom shares granted to a participant.  The basis of the dividend is
the quarterly return on equity of the Corporation.

     All or a part of the value of a vested  award may either be paid  currently
in cash or  deferred  in up to five annual  installments.  Deferred  amounts are
credited with interest at a rate determined annually by the Committee.


                            LONG-TERM INCENTIVE PLANS
                           AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
                                                                                             Estimated Future Payouts
                                                                                         Under Non-Stock Price-Based Plans
                                                                                ----------------------------------------------------
                 (a)                           (b)                (c)                (d)                (e)                (f)

                                        Number of Shares,   Performance or
                                         Units or Other   Other Period Until      Threshold           Target             Maximum
                Name                       Rights (#)    Maturation or Payout   ($ per share)      ($ per share)      ($ per share)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>                  <C>                <C>               <C>   
Albert R. Gamper, Jr. ..............           8,000           1993-1995             --                69.15             151.15
President and Chief
Executive Officer

Joseph A. Pollicino ................           4,500           1993-1995             --                69.15             151.15
Vice Chairman

Nikita Zdanow ......................           1,750           1993-1995             --                69.15             151.15
President and Chief
Executive Officer
Capital Equipment
Financing

Robert J. Merritt ..................           1,900           1993-1995             --                69.15             151.15
President and Chief
Executive Officer
Industrial Financing

Lawrence A. Marsiello ..............           1,575           1993-1995             --                69.15             151.15
President and Chief
Executive Officer
Commercial Services
</TABLE>

DEFINED BENEFIT PLANS

Retirement Plans

     Effective  January 1, 1990, The CIT Group  Holdings,  Inc.  Retirement Plan
(the "CIT Retirement  Plan") was  established.  Assets necessary to fund the CIT
Retirement  Plan  were  transferred  from the MHC  Retirement  Plan,  Inc.,  the
predecessor plan in which the Corporation's employees participated.  Accumulated
years of benefit  service  under the MHC  Retirement  Plan are  included  in the
benefit formula of the CIT Retirement  Plan,  which covers officers and salaried
employees who have one year of service and have attained age 21.

                                       54
<PAGE>

     Subject  to certain  exceptions,  at the  normal  retirement  age of 65, an
employee's  pension is 1.25% of final average salary, as defined below, for each
of the  first 20 years of  benefit  service  as a  participant  and .75% of such
salary for each year of the next 20 years of benefit  service.  In  general,  an
employee who was a participant in the MHC  Retirement  Plan before 1985 will not
receive a pension of less than 2% of final average  salary for each of the first
20 years of benefit  service as a participant  and 1% of such salary for each of
the  next 20 years  of  benefit  service,  reduced  by .4% of the  participant's
covered compensation for each year of such benefit service up to a maximum of 35
years and further reduced by the value of certain benefits under the CIT Savings
Plan. An employee who was a  participant  in the former CIT  Retirement  Plan on
June 30,  1986,  will not  receive a pension of less than 1.1% of final  average
salary up to certain Social  Security  limits plus 1.5 % of final average salary
in excess of the Social Security  limits,  for each year of benefit service to a
maximum of 35 years,  reduced by certain  benefits  under the CIT Savings  Plan.
"Final average salary" is the highest average annual salary received in any five
consecutive years in the last ten years. "Salary" includes all wages paid by the
Corporation, including before-tax contributions made to the CIT Savings Plan and
salary   reduction   contributions  to  any  Section  125  Plan,  but  excluding
commissions,   bonuses,  incentive  compensation,   overtime,  reimbursement  of
expenses, directors' fees, severance pay, and deferred compensation. This salary
is comparable to the "Salary"  shown in the Summary  Compensation  Table.  After
completing  5  years  of  service,   an  employee  whose   employment  with  the
participating  company  has  terminated  is  entitled  to a  benefit,  as of the
employee's  normal  retirement  date, equal to the benefit earned to the date of
termination of employment,  or an actuarially  reduced benefit commencing at any
time after age 55 if the participant is eligible for early  retirement under the
CIT Retirement Plan.  Certain death benefits are available to eligible surviving
spouses of participants.

     Since various laws and regulations set limits on the amounts allocable to a
participant  under the CIT Savings  Plan and benefits  under the CIT  Retirement
Plan, the Corporation has a supplemental  retirement plan (the "CIT Supplemental
Retirement  Plan").  The CIT  Supplemental  Retirement Plan provides  retirement
benefits on an unfunded basis to  participants  who retire from the  Corporation
(whose benefits under the CIT Retirement Plan would be restricted by the limits)
of an amount  equal to the  difference  between the annual  retirement  benefits
permitted  and the  amount  that  would  have been paid but for the  limitations
imposed.

     The amounts  set forth in the table are the amounts  which would be paid to
employees  hired  before 1985  pursuant to the CIT  Retirement  Plan and the CIT
Supplemental  Retirement Plan at a participant's  normal retirement age assuming
the indicated  final average salary and the indicated  years of benefit  service
and assuming  that the straight life annuity form of benefit will be elected and
that CIT  Supplemental  Retirement  Plan benefits will be paid in the form of an
annuity.  The amounts may be  overstated  to the extent that they do not reflect
the reduction for any benefits under the CIT Savings Plan.


                               PENSION PLAN TABLE

<TABLE>
<CAPTION>

     Final
    Average                                 Annual Benefits Based on Years of Credited Service (1)
   Salary of            --------------------------------------------------------------------------------------------
   Employee                  15            20              25               30               35                40
  ----------                 ---          ----            ----            ------            ----             ------

<S>                        <C>           <C>             <C>              <C>              <C>               <C>   
 $150,000 ...........      43,345        57,794          64,742           71,691           78,639            86,139
  200,000 ...........      58,345        77,794          87,242           96,691          106,139           116,139      
  250,000 ...........      73,345        97,794         109,742          121,691          133,639           146,139
  300,000 ...........      88,345       117,794         132,242          146,691          161,139           176,139
  350,000 ...........     103,345       137,794         154,742          171,691          188,639           206,139
  400,000 ...........     118,345       157,794         177,242          196,691          216,139           236,139      
  450,000 ...........     133,345       177,794         199,742          221,691          243,639           266,139
  500,000 ...........     148,345       197,794         222,242          246,691          271,139           296,139
  550,000 ...........     163,345       217,794         244,742          271,691          298,639           326,139
  600,000 ...........     178,345       237,794         267,242          296,691          326,139           356,139
  650,000 ...........     193,345       257,794         289,742          321,691          353,639           386,139
</TABLE>
                     
-----------------
(1) At December 31, 1995, Messrs.  Gamper,  Pollicino,  Marsiello,  Merritt, and
Zdanow had 28, 31, 20, 21 and 28 years of benefit service, respectively.

                                       55
<PAGE>

Executive Retirement Plan

     Executive officers of the Corporation, including Mr. Gamper, Mr. Pollicino,
Mr. Marsiello,  Mr. Merritt and Mr. Zdanow, are participants under the Executive
Retirement  Plan. The benefit  provided is life insurance equal to approximately
three times  salary  during such  participants  employment,  with a life annuity
option payable monthly by the Corporation upon retirement.  The Participant pays
a portion of the annual premium and the  Corporation  pays the balance on behalf
of the participant.  The Corporation is entitled to recoup its payments from the
proceeds of the policy. Upon the participant's retirement a life annuity will be
payable  out of the  current  income  of the  Corporation  and  the  Corporation
anticipates  recovering  the cost of the life annuity out of the proceeds of the
life insurance policy payable upon the death of the employee.

     In addition to the table of pension  benefits shown on the preceding  page,
the  Corporation is  conditionally  obligated to make annual  payments under the
Executive  Retirement Plan in the amounts  indicated to the following persons at
retirement:  Mr. Gamper,  $319,130,  Mr.  Pollicino,  $201,642,  Mr.  Marsiello,
$153,608, Mr. Merritt, $169,983 and Mr. Zdanow, $112,116.

Compensation Committee Interlocks and Insider Participation

     The  Executive  Committee  of  the  Board  of  Directors  functions  as the
compensation  committee  and sets the  compensation  for all  executives  except
Messrs.  Gamper,  Pollicino,  Murata and  Torii.  The  members of the  Executive
Committee are as follows:

     Albert R. Gamper, Jr.
     Michio Murata
     Joseph A. Pollicino
     Peter J. Tobin
     Keiji Torii

     The Board of Directors,  except for Messrs.  Gamper and Pollicino,  who are
absent  from any  portion of  meetings  when their  compensation  is  discussed,
deliberates  over  the  compensation  of  Messrs.  Gamper  and  Pollicino.   DKB
determines  the  compensation  for  Messrs.  Murata and Torii.  Mr.  Tobin is an
executive of CBC.

EMPLOYMENT AGREEMENTS

     Mr. Gamper has an employment  agreement with the Corporation which provides
that he will serve as the Chief Executive  Officer,  President,  Chairman of the
Executive Committee and member of the Board of Directors of the Corporation. His
employment  agreement  initially ran for five years from December 29, 1989,  and
subsequently  was extended until  December 1997. The agreement  provides for the
payment of an annual base salary of $400,000,  to be reviewed at least  annually
by the Board of Directors of the  Corporation,  subject to increases  but not to
decreases.  Mr.  Gamper's  employment  agreement  also  provides  for  executive
incentive  compensation  under  Incentive  Plans which will be designed to be no
less  favorable to him than the Incentive  Plans in effect prior to the purchase
by DKB of 60% of the Corporation's shares.

     Mr.  Pollicino  has an  employment  agreement  with the  Corporation  which
provides  that he shall  serve as the Vice  Chairman  and member of the Board of
Directors of the Corporation. Mr. Pollicino's employment agreement initially ran
for five years from  December  29, 1989,  and  subsequently  was extended  until
December 1997.  The agreement  provides for the payment of an annual base salary
of $300,000,  to be reviewed at least  annually by the Board of Directors of the
Corporation,  subject  to  increases  but  not  to  decreases.  Mr.  Pollicino's
employment  agreement also provides for executive  incentive  compensation under
Incentive  Plans which will be designed to be no less  favorable to him than the
Incentive  Plans  in  effect  prior  to  the  purchase  by  DKB  of  60%  of the
Corporation's shares.

     In addition to Mr. Gamper and Mr. Pollicino, Mr. Marsiello, Mr. Merritt and
Mr.  Zdanow  have  employment  agreements  with the  Corporation,  each of which
initially ran for three years from December 29, 1989 through  December 31, 1992,
and subsequently were extended until December 1996. Their agreements provide for
the payment of an annual base salary of not less than the amount  received prior
to the purchase by DKB of 60% of the  Corporations's  shares,  to be reviewed at
least annually by the Chief Executive  Officer,  subject to increases but not to


                                       56
<PAGE>

decreases.  Their  employment  agreements  also provide for executive  incentive
compensation  under  Incentive  Plans  which  will  be  designed  to be no  less
favorable to him than the Incentive Plans in effect prior to the purchase by DKB
of 60% of the Corporation's shares.

TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS

     Mr. Gamper's and Mr. Pollicino's employment agreements with the Corporation
provide that if their employment is terminated  without cause (as defined in the
agreement) or if they resign for good reason (as defined in the agreement)  they
will be entitled to receive  severance  payments  equal to their base salary for
the greater of  thirty-six  months or the  remainder of the term,  provided that
they do not violate the  non-competition  or  confidentiality  provisions of the
agreement,  in which case the  Corporation  would have no obligation to make any
remaining payments.  Further, if Mr. Gamper's and Mr. Pollicino's  employment is
terminated  without  cause or if they  resign  for  good  reason,  they  will be
entitled to receive,  among other things, full employee welfare benefit coverage
as if they had  retired  with the  Corporation's  consent  at age 55, a  pension
benefit  commencing at age 55 in an amount equal to their accrued  benefit under
the  Corporation's  Retirement  Plan as of the  date  of  their  termination  of
employment  as if they had attained age 55 and had retired on such date with the
Corporation's  consent,  a lump  sum  equal  to the  then  full  value  of their
restricted  stock award under the Long Term Incentive  Program of  Manufacturers
Hanover  Corporation and its  subsidiaries  (the "MHC Long Term Incentive Plan")
and any vested  award  under any  similar  plan as may have been  adopted by the
Corporation,  and a single life  annuity  equivalent  to the single life annuity
they would have  normally  been  entitled  to  receive  under the  Corporation's
Executive Retirement Plan.

     The  employment  agreements of Mr.  Marsiello,  Mr.  Merritt and Mr. Zdanow
provide that if their employment is terminated  without cause (as defined in the
agreement) or if they resign for good reason (as defined in the agreement), they
will be entitled to receive  severance  payments  equal to their base salary for
the greater of  twenty-four  months or the remainder of the term,  provided that
they do not violate the  non-competition  or  confidentiality  provisions of the
agreement,  in which case the  Corporation  would have no obligation to make any
remaining  payments.  Further,  if the employment of such  executive  officer is
terminated  without cause or if he resigns for good reason,  he will be entitled
to continued  participation  in employee  welfare benefit  coverage for eighteen
months,  a lump sum equal to the then full value of his  restricted  stock award
under the MHC Long Term Incentive Program and any vested award under any similar
plan as may have been adopted by the Corporation,  and if age 55 or older on the
date of  termination,  the benefits  payable under the  Corporation's  Executive
Retirement  Plan or if under  age 55 a lump sum  payment  which  represents  the
equivalent  of the net  after-tax  present value of the single life annuity that
would have been payable to the individual executive officer at age 55.

     If, during the Term of their respective employment agreements, a "Change of
Control" occurs, Mr. Gamper, Mr. Pollicino,  Mr. Marsiello,  Mr. Merritt and Mr.
Zdanow  will be  entitled  to  receive a "Special  Payment."  The amount of such
Special  Payment shall equal,  with respect to Mr. Gamper,  the sum of his prior
four  years  annual  bonuses  under  the CIT Bonus  Plan,  with  respect  to Mr.
Pollicino,  the sum of his prior three years annual  bonuses under the CIT Bonus
Plan, and with respect to Mr. Marsiello,  Mr. Merritt and Mr. Zdanow, the sum of
their  prior two years  annual  bonuses  under The CIT Bonus  Plan.  The Special
Payment  will be payable  over a two year period as follows:  1/3 of the payment
shall be paid within 30 days after the Change of  Control;  1/3 shall be paid on
or before the first anniversary of such Change of Control; and 1/3 shall be paid
on or before the second  anniversary  date of such Change of Control.  If during
the two year period  commencing on the date of such Change of Control and ending
on the  second  anniversary  of such date,  their  employment  is  involuntarily
terminated by the Company for cause or they voluntarily terminate employment for
any reason other than "Good  Reason" as defined in their  respective  employment
agreements or they breach the non-compete or confidentiality provisions of their
agreements,  they shall not receive any remaining  unpaid  installments  of this
"Special Payment."

                                       57
<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The  following  table  sets  forth the  ownership  of all of the issued and
outstanding common stock of the Corporation, as of March 1, 1996.

    Name and Address of Owner              Shares Owned        Percentage
    -------------------------              ------------        ----------
The Dai-Ichi Kangyo Bank, Limited                800              80%
   1-5, Uchisaiwaicho 1-chome
   Chiyoda-ku, Tokyo 100

CBC Holding (Delaware) Inc.                      200              20%
   270 Park Avenue
   New York, NY 10017

     No officer or  director  of the  Corporation  owns any common  stock of the
Corporation.  In addition,  the voting  securities of any class of securities of
DKB and CBC,  the parent of CBC  Holding,  owned by each officer and director of
the Corporation  individually,  and all officers and directors as a group,  does
not exceed one percent of the issued and outstanding  securities  comprising any
such class of stock so owned.

Item 13.  Certain Relationships and Related Transactions.
Transactions with Management and Others

     The  Corporation  has in the past and may in the future  enter into certain
transactions  with affiliates of the  Corporation.  It is anticipated  that such
transactions  will be entered into at a fair market  value for the  transaction.
Additional  information  regarding  these  transactions  can be found in Item 8.
Financial Statements and Supplementary Data, "Note 20--Certain Relationships and
Related Transactions".

     Schulte  Roth & Zabel,  of which  Mr.  Roth is a  partner,  provides  legal
services to the Corporation.  Schulte Roth & Zabel has been retained in the past
and will continue in the future to serve as outside counsel for DKB.


                                       58
<PAGE>

                                    PART IV

Item 14.    Exhibits, Financial Statement Schedule and Reports on Form 8-K.


     (a) The  following  documents  are filed with the  Securities  and Exchange
Commission as part of this report:

          1. The  financial  statements  of The CIT  Group  Holdings,  Inc.  and
             Subsidiaries as set forth on pages 28-53.

          2. All  schedules  are  omitted  because  they are not  applicable  or
             because  the  required  information  appears  in  the  consolidated
             financial statements or the notes thereto.

          3. The  following is an index of the Exhibits  required by Item 601 of
             Regulation S-K filed with the Securities and Exchange Commission as
             part of this report:

             3(a)      Restated  Certificate of  Incorporation  of The CIT Group
                       Holdings,   Inc.,   amended  as  of  December   29,  1989
                       (incorporated  by  reference to Exhibit 3(a) to Form 10-K
                       filed  by the  Corporation  for  the  fiscal  year  ended
                       December 31, 1989).

             3(b)      By-Laws of The CIT Group  Holdings,  Inc.,  amended as of
                       December 29, 1989  (incorporated  by reference to Exhibit
                       3(b) to Form 10-K filed by the Corporation for the fiscal
                       year ended December 31, 1989).

             4(a)      Upon  the  request  of  the   Securities   and   Exchange
                       Commission,  the  Registrant  will  furnish a copy of all
                       instruments  defining  the rights of holders of long-term
                       debt of the Registrant.

             10(a)(1)  Stockholders  Agreement  (incorporated  by  reference  to
                       Exhibit 10(a) to Form 10-K filed by the  Corporation  for
                       the fiscal year ended December 31, 1989).

             10(a)(2)  Amendment,  dated December 15, 1995, to the  Stockholders
                       Agreement,  dated  December  29,  1989  (incorporated  by
                       reference to Exhibit 10(a) to Form 8-K dated December 15,
                       1995).

             10(a)(3)  Registration  Rights  Agreement,  dated December 15, 1995
                       (incorporated  by reference to Exhibit  10(b) to Form 8-K
                       dated December 15, 1995).

             10(b)(1)  Employment   Agreement   of   Albert   R.   Gamper,   Jr.
                       (incorporated  by reference to Exhibit 10(b) to Form 10-K
                       filed  by the  Corporation  for  the  fiscal  year  ended
                       December 31, 1989).

             10(b)(2)  Extension  of  Employment  Agreement of Albert R. Gamper,
                       Jr.  (incorporated  by  reference to Exhibit 10 (b)(2) to
                       Form 10-K filed by the  Corporation  for the fiscal  year
                       ended December 31, 1992).

             10(b)(3)  Extension  of  Employment  Agreement of Albert R. Gamper,
                       Jr.  (incorporated  by reference  to Exhibit  10(b)(3) to
                       Form 10-K filed by the  Corporation  for the fiscal  year
                       ended December 31, 1994).

             10(c)(1)  Employment  Agreement of Nikita Zdanow  (incorporated  by
                       reference  to Exhibit  10(c)(1) to Form 10-K filed by the
                       Corporation for the fiscal year ended December 31, 1992).

             10(c)(2)  Extension  of  Employment   Agreement  of  Nikita  Zdanow
                       (incorporated  by reference  to Exhibit  10(c)(2) to Form
                       10-K filed by the  Corporation  for the fiscal year ended
                       December 31, 1992).

             10(c)(3)  Extension  of  Employment   Agreement  of  Nikita  Zdanow
                       (incorporated  by reference  to Exhibit  10(c)(3) to Form
                       10-K filed by the  Corporation  for the fiscal year ended
                       December 31, 1994).

             10(d)     The CIT Group Bonus Plan  (incorporated  by  reference to
                       Exhibit 10(d) to Form 10-K filed by the  Corporation  for
                       the fiscal year ended December 31, 1992).

             10(e)     The  CIT  Group  Holdings,  Inc.  Career  Incentive  Plan
                       (incorporated  by reference to Exhibit 10(e) to Form 10-K
                       filed  by the  Corporation  for  the  fiscal  year  ended
                       December 31, 1992).

             10(f)     The CIT Group Holdings,  Inc.  Supplemental  Savings Plan
                       (incorporated  by reference to Exhibit 10(f) to Form 10-K
                       filed  by the  Corporation  for  the  fiscal  year  ended
                       December 31, 1992).

                                       59
<PAGE>

             10(g)     The CIT Group Holdings, Inc. Supplemental Retirement Plan
                       (incorporated  by reference to Exhibit 10(g) to Form 10-K
                       filed  by the  Corporation  for  the  fiscal  year  ended
                       December 31, 1992).

             12        Computation of Ratios of Earnings to Fixed Charges.

             21        Subsidiaries of the Registrant.

             23        Consent of KPMG Peat Marwick LLP.

             24        Powers of Attorney.

             27        Financial Data Schedule (filed electronically)



     (b) A Current  Report on Form 8-K dated October 12, 1995 was filed with the
Commission  reporting the Corporation's  announcement of results for the quarter
ended September 30, 1995.

     A Current  Report on Form 8-K dated  December  15,  1995 was filed with the
Commission  reporting  the  Corporation's  announcement  that DKB  purchased  an
additional  twenty percent (20%) stock  interest in the  Corporation on December
15, 1995 from CBC.

     A Current  Report on Form 8-K dated  January  18,  1996 was filed  with the
Commission  reporting  the  Corporation's  announcement  of results for the year
ended December 31, 1995.


                                       60
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                   THE CIT GROUP HOLDINGS, INC.


                                   By:        /s/ ERNEST D. STEIN
                                     -------------------------------------------
                                                 Ernest D. Stein
                                       Executive Vice President, General Counsel
                                                  and Secretary

March 22, 1996

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>

              Signature and Title                                                                    Date                   
              -------------------                                                                    ----

<S>                                                                                                <C>
            ALBERT R. GAMPER, JR.*
-----------------------------------------------
President, Chief Executive Officer and Director
         (principal executive officer)

               HISAO KOBAYASHI*
-----------------------------------------------
                   Director

               TAKASUKE KANEKO*
-----------------------------------------------
                   Director


                MICHIO MURATA*
-----------------------------------------------
                   Director

                KENJI NAKAMURA*
-----------------------------------------------
                   Director       
                                                                 By:   /s/ Ernest D. Stein        March 22, 1996
                                                                    -----------------------
                                                                           Ernest D. Stein
             JOSEPH A. POLLICINO*                                          Attorney-In-Fact
-----------------------------------------------
                   Director

                 PAUL N. ROTH*
-----------------------------------------------
                   Director

                PETER J. TOBIN*
-----------------------------------------------
                   Director

                 KEIJI TORII*
-----------------------------------------------
                   Director

              /S/ JOSEPH M. LEONE                                                                 March 22, 1996
-----------------------------------------------
                Joseph M. Leone
         Executive Vice President and
            Chief Financial Officer
        (principal accounting officer)
</TABLE>

     Original powers of attorney  authorizing  Albert R. Gamper,  Jr., Ernest D.
Stein,  and  Donald  J.  Rapson  and  each of them  to  sign  on  behalf  of the
above-mentioned  directors  and are held by the  Corporation  and  available for
examination by the Securities and Exchange Commission pursuant to Item 302(b) of
Regulation S-T.


                                       61