-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K+6hZo88QE4Kp0sPwRqTJzOk6zTduzJjlAocUAtpzUL5MrHY27wUX1Bnjw8BtJ1a rLyx3dky9G1UxBvH5BYXnA== 0000020388-98-000035.txt : 19980727 0000020388-98-000035.hdr.sgml : 19980727 ACCESSION NUMBER: 0000020388-98-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980722 ITEM INFORMATION: FILED AS OF DATE: 19980724 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIT GROUP INC CENTRAL INDEX KEY: 0000020388 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 132994534 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-01861 FILM NUMBER: 98670673 BUSINESS ADDRESS: STREET 1: 1211 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2125361390 MAIL ADDRESS: STREET 1: 1211 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: CIT GROUP HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CIT FINANCIAL CORP/OLD/ DATE OF NAME CHANGE: 19860512 8-K 1 PRESS RELEASE FOR THE SECOND QUARTER 1998 EARNINGS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 22, 1998 --------------- The CIT Group, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-1861 13-2994534 - -------------------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 1211 Avenue of the Americas New York, New York 10036 - -------------------------------------------------------------------------------- Registrant's telephone number, including area code (212) 536-1390 -------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events. -------------- See the attached press release regarding 1998 second quarter and six month earnings, filed as Exhibit 99.1. See also the attached press release regarding the declaration of a dividend for the quarter ending June 30, 1998 of $.10 per share, payable on August 31, 1998 to holders of record at the close of business on August 12, 1998, filed as Exhibit 99.2. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 99.1 Press Release, dated July 22, 1998, Regarding 1998 Second Quarter and Six Month Earnings. 99.2 Press Release, dated July 22, 1998, Regarding Declaration of a Dividend for the Quarter Ending June 30, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE CIT GROUP, INC. ------------------------------------- (Registrant) By: /s/ JOSEPH M. LEONE ------------------------------------- Joseph M. Leone Executive Vice President and Chief Financial Officer Dated: July 22, 1998 Exhibit 99.1 [The CIT Group, Inc. Logo] Contact: Jeffrey Simon Senior Vice President Investor Relations (973) 535-5911 FROM: THE CIT GROUP, INC. 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036 FOR IMMEDIATE RELEASE THE CIT GROUP ANNOUNCES SECOND QUARTER NET INCOME OF $83.7 MILLION, $.51 PER DILUTED SHARE AND RECORD SIX MONTH NET INCOME OF $165.4 MILLION, $1.01 PER DILUTED SHARE NEW YORK, NEW YORK, JULY 22, 1998 --- The CIT Group, Inc. (NYSE: CIT) today announced second quarter net income of $83.7 million and record six month earnings of $165.4 million. For the second quarter and first six months of 1997, net income was $93.7 million and $163.8 million, including a one-time $58 million pretax gain on the sale of an equity interest acquired in a loan workout and certain nonrecurring expenses. Excluding these special items, 1997 net income was $65.0 million for the second quarter and $135.1 million for the first six months. On a per share basis, excluding the 1997 special items, earnings improved strongly in 1998. Earnings per diluted share for the second quarter of 1998 were $.51, up 24.4% from $.41 for the second quarter of last year, with six month earnings per diluted share increasing 18.8% to $1.01 from $.85. The strong 1998 earnings reflect continued growth in all strategic business units, sharply lower commercial credit losses, and continued improvements in operating efficiency. "I am pleased with the improvements in each of our business fundamentals. Our diverse origination platforms provided us with good internal loan and leasing growth as managed assets approached $24 billion at the end of June. We continue to expand products and services offered to our customers and invest in sales and operations, while maintaining focus on credit quality," said Albert R. Gamper, Jr., president and chief executive officer. "Our consistent growth and solid financial performance in this competitive environment further demonstrates the strength of our franchises." Financial highlights: Total managed assets increased to $23.9 billion at June 30, 1998, up 14.9% from $20.8 billion a year ago, and up 7.2% from $22.3 billion at December 31, 1997. Commercial financing and leasing assets grew to $16.8 billion, up approximately $1.5 billion or 9.5% from June 30, 1997 and an increase of 4.8% from year-end 1997. Consumer managed assets increased to $7.1 billion, up approximately $1.6 billion or 30.5% from $5.5 billion a year ago and 12.6% from December 31, 1997. Net finance income improved to $240.4 million in the second quarter of 1998 as a result of the higher earning asset level, compared with $218.3 million in the second quarter of 1997. Net finance income as a percentage of average earning assets was 4.79%, essentially unchanged from 4.81% a year ago. Fees and other income for the second quarter of 1998 were $60.7 million, up 22.9% from $49.4 million for the second quarter of 1997, as a result of increases in servicing fees and gains on the sale of equipment coming off lease, as well as a gain from the securitization of $400.1 million of recreational vehicle receivables. Salaries and general operating expenses for the second quarter of 1998 totaled $104.0 million compared with $110.6 million for the second quarter of 1997. Reflecting ongoing productivity initiatives, the efficiency ratio improved to 40.6% in the 1998 second quarter from 43.9%, excluding the 1997 special items. The provision for credit losses was $21.9 million in the second quarter, a decrease of $7.1 million from the second quarter of 1997 due to lower chargeoffs, offset by a higher provision related to portfolio growth. Credit quality remained strong during the 1998 second quarter as net chargeoffs of $16.4 million, 0.36% of average finance receivables, declined from $29.9 million, 0.68%, for the second quarter of 1997. At June 30, 1998, the reserve for credit losses increased to $245.8 million (1.34% of finance receivables) up $5.6 million from $240.2 million at March 31, 1998, (1.33%) and up $10.2 million from $235.6 million (1.33%) at year-end 1997. The CIT Group, Inc., one of the nation's largest commercial and consumer lending organizations, is an affiliate of and majority-owned by The Dai-Ichi Kangyo Bank, Limited, one of the largest banks in the world. (SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA). THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (Dollars in Millions, except Net Income per Share) For the Quarter For the Six Months Ended June 30, Ended June 30, ----------------- -------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Finance income 498.2 $451.9 $970.8 $889.0 Interest expense 257.8 233.6 502.4 456.7 ------ ------ ------ ------- Net finance income 240.4 218.3 468.4 432.3 Fees and other income 60.7 49.4 127.1 107.1 Gain on sale of equity interest acquired in loan workout - 58.0 - 58.0 ------ ------ ------ ------- Operating revenue 301.1 325.7 595.5 597.4 ------ ------ ------ ------- Salaries and general operating expenses 104.0 110.6 205.7 210.5 Provision for credit losses 21.9 29.0 44.4 56.0 Depreciation on operating lease equipment 40.4 33.9 78.7 66.0 Minority interest in subsidiary trust holding solely debentures of the Company 4.8 4.8 9.6 6.7 ------ ------ ------ ------- Operating expenses 171.1 178.3 338.4 339.2 ------ ------ ------ ------- Income before provision for income taxes 130.0 147.4 257.1 258.2 Provision for income taxes 46.3 53.7 91.7 94.4 ------ ------ ------ ------- Net income $ 83.7 $ 93.7 $165.4 $ 163.8 ====== ====== ====== ======= Basic net income per share $ 0.52 $0.59 $1.02 $1.04 Weighted average shares outstanding 162,225,000 157,500,000 162,225,000 157,500,000 Diluted net income per share $0.51 $0.59 $1.01 $1.03 Weighted average shares outstanding 163,655,210 158,448,527 163,579,696 158,448,527 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Millions) June 30, December 31, 1998 1997 ---- ---- (unaudited) Assets Financing and leasing assets Loans Commercial $10,327.8 $ 9,922.5 Consumer 3,828.5 3,664.8 Commercial lease receivables 4,249.1 4,132.4 --------- --------- Finance receivables 18,405.4 17,719.7 Reserve for credit losses (245.8) (235.6) --------- --------- Net finance receivables 18,159.6 17,484.1 Operating lease equipment, net 2,147.0 1,905.6 Consumer finance receivables held for sale 846.0 268.2 Cash and cash equivalents 169.4 140.4 Other assets 726.8 665.8 -------- -------- Total assets $22,048.8 $20,464.1 ========= ========= Liabilities and Stockholders' Equity Debt Commercial paper $ 6,197.0 $ 5,559.6 Variable rate senior notes 3,050.0 2,861.5 Fixed rate senior notes 7,253.3 6,593.8 Subordinated fixed rate notes 200.0 300.0 --------- --------- Total debt 16,700.3 15,314.9 Credit balances of factoring clients 1,193.9 1,202.6 Accrued liabilities and payables 677.9 660.1 Deferred federal income taxes 642.0 603.6 --------- --------- Total liabilities 19,214.1 17,781.2 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 250.0 250.0 Stockholders' equity Class A common stock, par value $0.01 per share, 700,000,000 shares authorized and 37,166,070 and 37,173,527 issued and outstanding at June 30, 1998 and December 31, 1997, respectively 0.4 0.4 Class B common stock, par value $0.01 per share, 510,000,000 shares authorized and 126,000,000 issued and outstanding 1.3 1.3 Paid-in capital 951.0 948.3 Retained earnings 1,632.0 1,482.9 --------- --------- Total stockholders' 2,584.7 2,432.9 --------- --------- Total liabilities and stockholders' equity $22,048.8 $20,464.1 ========= ========= THE CIT GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA For the Quarter Ended For the Six June 30, Months Ended June 30, ----------------------- ----------------- Dollars in Millions 1998 1997 1998 1997 Selected Data and Ratios Profitability Net income per diluted share $0.51 $0.59 $1.01 $1.03 Return on average common stockholders' equity 13.16% 17.36% 13.19% 15.36% Return on AEA 1.67% 2.07% 1.69% 1.83% Ratios Excluding Nonrecurring Items(4) Net Income per diluted share $0.51 $0.41 $1.01 $0.85 Return on average stockholder's equity 13.16% 12.09% 13.19% 12.69% Return on AEA 1.67% 1.43% 1.69% 1.51% Efficiency ratio 40.6% 43.9% 40.6% 43.0% Other Net interest margin as a percentage of AEA 4.79% 4.81% 4.78% 4.84% Salaries and general operating expenses as a percentage of average managed assets(1) 1.86% 2.27% 1.88% 2.18% Net credit losses as a percentage of average finance receivables 0.36% 0.68% 0.41% 0.67% Credit Quality At June 30, At December 31, At June 30, ----------- --------------- ----------- 60+ days contractual delinquency 1998 1997 1997 as a percentage of finance receivables Commercial 1.43% 1.20% 1.40% Consumer 3.37% 3.48% 2.95% Total 1.83% 1.67% 1.69% Total nonperforming assets as a percentage of finance receivables (2) 1.48% 1.17% 1.26% Reserve for credit losses as a percentage of finance receivables 1.34% 1.33% 1.32% Ratio of reserve for credit losses to trailing twelve-month net credit losses 3.00x 2.33x 2.06x Capital and Leverage Total debt to stockholders' equity and Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 5.89x 5.71x 6.27x Total debt to stockholders' equity (3) 6.56x 6.40x 7.10x Total common stockholders' equity $ 2,584.7 $ 2,432.9 $ 2,190.6 Managed Assets Commercial: Finance receivables $14,576.9 $14,054.9 $13,714.6 Operating lease equipment, net 2,147.0 1,905.6 1,573.0 Other 75.5 65.8 53.1 --------- --------- --------- Total Commercial 16,799.4 16,026.3 15,340.7 --------- --------- --------- Consumer: Finance receivables 3,828.5 3,664.8 3,100.1 Finance receivables held for sale 846.0 268.2 950.1 Finance receivables previously securitized 2,446.0 2,385.6 1,403.2 --------- --------- --------- Total Consumer 7,120.5 6,318.6 5,453.4 --------- --------- --------- Total managed assets $23,919.9 $22,344.9 $20,794.1 ========= ========= ========= (1) Average managed assets reflect average earning assets plus the average of consumer finance receivables previously securitized and currently managed by the Company. (2) Total nonperforming assets reflect both commercial and consumer finance receivables on nonaccrual status and assets received in satisfaction of loans. (3) Total debt includes, and stockholders' equity excludes, $250.0 million of Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company. (4) Earnings for the second quarter and six months of 1997 exclude $.18 per diluted share related to the net effect of a gain on the sale of an equity interest acquired in a loan workout and certain nonrecurring expenses. THE CIT GROUP, INC. AND SUBSIDIARIES (Amounts in Millions) MANAGED ASSETS BY BUSINESS UNIT June 30, December 31, June 30, 1998 1997 1997 ---- ---- ---- Equipment Financing Finance Receivables $ 7,649.2 $ 7,403.4 $ 7,121.2 Operating lease equipment, net 641.0 623.8 471.7 --------- --------- --------- Total Equipment Financing 8,290.2 8,027.2 7,592.9 --------- --------- --------- Capital Finance Finance Receivables $ 1,679.4 $ 1,755.5 $ 1,764.3 Operating lease equipment, net 1,476.1 1,251.8 1,041.4 --------- --------- --------- 3,155.5 3,007.3 2,805.7 Liquidating Portfolio** 568.9 675.2 825.1 --------- --------- --------- Total Capital Finance 3,724.4 3,682.5 3,630.8 --------- --------- --------- Commercial Services 2,295.3 2,113.1 1,894.4 Business Credit* 1,448.1 1,247.9 1,357.2 Credit Finance* 965.9 889.8 812.3 Equity Investments 75.5 65.8 53.1 --------- --------- --------- Total Commercial 16,799.4 16,026.3 15,340.7 --------- --------- --------- Consumer Finance 2,397.3 1,992.3 2,202.2 Sales Financing 2,277.2 1,940.7 1,848.0 --------- --------- --------- Total Consumer 4,674.5 3,933.0 4,050.2 --------- --------- --------- Finance receivables previously securitized: Consumer Finance 374.6 453.8 - Sales Financing 2,071.4 1,931.8 1,403.2 --------- --------- --------- 2,446.0 2,385.6 1,403.2 --------- --------- --------- Total managed assets $23,919.9 $22,344.9 $20,794.1 ========= ========= ========= Sales Financing managed assets by product line: Recreation vehicles $ 1,710.5 $ 1,596.5 $ 1,343.7 Manufactured housing 1,487.6 1,471.9 1,344.6 Recreational boat 966.5 682.5 503.1 Wholesale inventory financing 184.0 121.6 59.8 --------- --------- --------- $ 4,348.6 $ 3,872.5 $ 3,251.2 ========= ========= ========= * In October 1997, $95.0 million of finance receivables were transferred from Business Credit to Credit Finance. ** Consists primarily of oceangoing maritime and project finance. ------------------------------------------------------------------------------- FEES AND OTHER INCOME Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Factoring commissions $22.6 $22.1 $ 45.6 $ 43.3 Fees and other 21.9 18.2 44.0 35.2 Gains on sales of leasing equipment 8.9 5.7 23.7 17.1 Gains on sales of equity investments 1.9 2.3 8.4 10.0 Gains on securitizations and sales of finance receivables 5.4 1.1 5.4 1.5 ----- ----- ------ ------ $60.7 $49.4 $127.1 $107.1 ===== ===== ====== ====== Exhibit 99.2 [The CIT Group, Inc. Logo] Contact: Jeffrey Simon Senior Vice President Investor Relations (973) 535-5911 jsimon@www.citgroup.com FROM: THE CIT GROUP, INC. 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036 FOR IMMEDIATE RELEASE THE CIT GROUP, INC. DECLARES REGULAR QUARTERLY DIVIDEND NEW YORK, NEW YORK, July, 22, 1998 --- The Board of Directors of The CIT Group, Inc. (NYSE:CIT) today declared a regular quarterly cash dividend of $.10 per common share for shareholders of record on August 12, 1998. The cash dividend is payable on August 31, 1998. With more than $23 billion in managed assets, The CIT Group, Inc. (http://www.citgroup.com) is one of the nation's largest commercial and consumer financing companies. Founded in 1908, the Company provides diversified financing products and services to a broad range of customers through strategically focused business units. # # # -----END PRIVACY-ENHANCED MESSAGE-----