-----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, GErSg+qRLrlpn2X8GK3WCy+20FtGuOsa6ybo7HSCGAoxM0ExH2g/t5rcksbk1gMx KJJjRPwnBfgVUyKOVG10fQ== 0000020388-98-000006.txt : 19980203 0000020388-98-000006.hdr.sgml : 19980203 ACCESSION NUMBER: 0000020388-98-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980128 ITEM INFORMATION: FILED AS OF DATE: 19980202 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: 98519020 BUSINESS ADDRESS: STREET 1: 1211 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2125361950 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 RELEASES ON EARNINGS AND NEW DIRECTOR 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) January 28, 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 1997 fourth quarter and annual earnings, filed as Exhibit 99.1. See also the attached press release regarding election of a new director, filed as Exhibit 99.2, the Consolidated Balance Sheets at December 31, 1997 and 1996, filed as Exhibit 99.3, and Financing and Leasing Assets by Business Unit at December 31, 1997 and 1996, filed as Exhibit 99.4. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 99.1 Press Release Regarding 1997 Fourth Quarter and Annual Earnings, dated January 28, 1998. 99.2 Press Release Regarding Election of a New Director, dated January 28, 1998. 99.3 Consolidated Balance Sheets of The CIT Group, Inc., at December 31, 1997 and 1996. 99.4 Financing and Leasing Assets by Business Unit, at December 31, 1997 and 1996. 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: January 28, 1998 EX-99.1 2 PRESS RELEASE ON EARNINGS Exhibit 99.1 [Logo of The CIT Group, Inc.] 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 RECORD FOURTH QUARTER AND TWELVE MONTH 1997 NET INCOME; TENTH CONSECUTIVE INCREASE IN ANNUAL NET INCOME NEW YORK, NEW YORK, January 28, 1998 --- The CIT Group, Inc. (NYSE: CIT) today announced record quarterly and full year results, marking its tenth consecutive increase in annual earnings. Fourth quarter 1997 net income was $71.0 million, up from $62.8 million for 1996. Net income for the fourth quarter of 1997 included an after-tax IPO-related charge of $6.2 million. Excluding the IPO-related charge, net income per diluted share for the fourth quarter of 1997 was $0.48, up from $0.40 for 1996. Net income for 1997 was $310.1 million, up from $260.1 million for 1996. Full year 1997 net income per diluted share was $1.95, up from $1.64 for 1996. Net income for 1997 included a one-time gain on sale of an equity interest acquired in a loan workout recorded during the second quarter, partially offset by the IPO-related charge and certain other nonrecurring expenses. The fourth quarter and full year results reflect growth in net finance income from a higher level of financing and leasing assets, lower net credit losses, and improving operating efficiency. "1997 was a successful and exciting year for The CIT Group. The Company delivered its tenth consecutive year of increased earnings and continued to focus on fundamentals, including growth in assets, consistent net interest margins, improving operating efficiency and best in class credit quality", said Albert R. Gamper, Jr., president and chief executive officer. "The success of our IPO, coupled with our franchise businesses, position the Company to take advantage of new opportunities and create value for all of our shareholders, including every employee", added Gamper. Financial highlights for 1997: Total managed assets, which include both financing and leasing assets as well as consumer finance receivables previously securitized, increased 12% to $22.3 billion at December 31, 1997 from $20.0 billion at December 31, 1996. Both the commercial and consumer portfolios increased from year end 1996, with consumer growing at a faster pace. Consumer managed assets grew to 28% of total managed assets up from 24% at year end 1996. Net finance income rose to $229.2 million (4.88% of AEA) in the fourth quarter of 1997 compared to $203.8 million (4.76% of AEA) in the fourth quarter of 1996. For the full year, net finance income increased to $887.5 million (4.87% of AEA) from $797.9 million (4.82% of AEA) in 1996. The improvements primarily reflect increases in AEA (average of finance receivables, operating lease equipment, consumer finance receivables held for sale and certain investments, less credit balances of factoring clients). Fees and other income for the fourth quarter of 1997 were $61.8 million, down from $67.3 million for 1996 due to a lower level of gains from equipment sales. Fees and other income for the year were $247.8 million, relatively unchanged from the $244.1 million in 1996 due to higher factoring commissions and gains from higher levels of securitization activity offset by a lower level of gains from equipment sales. Salaries and general operating expenses for the fourth quarter of 1997 totaled $114.3 million compared to $101.7 million for the 1996 period. In conjunction with the Company's initial public offering, a long-term incentive plan was terminated resulting in a $10.0 million ($6.2 million after-tax) charge during the fourth quarter. Expenses, excluding this IPO-related charge, increased 2.6% from the prior year fourth quarter and the efficiency ratio improved to 42.1% from 43.5%. Salaries and general operating expenses for the full year were $428.4 million compared to $393.1 million in the prior year. As a result of lower net credit losses, the provision for credit losses decreased $10.9 million to $21.9 million in the fourth quarter, from $32.8 million for the 1996 fourth quarter. Net -2- credit losses were $20.9 million, 0.46% of average finance receivables, down from $30.1 million, 0.70%, for the fourth quarter of 1996. The decrease reflects credit losses recorded in 1996 for certain loans secured by oceangoing carriers and cruise line vessels and a higher level of recoveries in the 1997 period. For the year ended December 31, 1997 the provision for credit losses was $113.7 million compared to $111.4 million in 1996. Net credit losses totaled $101.0 million, 0.59%, for 1997 compared to $101.5 million, 0.62%, in 1996. At year end 1997, the reserve for credit losses was $235.6 million (1.33% of finance receivables) up from $220.8 million (1.30% of finance receivables) at December 31, 1996. 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) ### -3- THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (DOLLARS IN MILLIONS, EXCEPT NET INCOME PER SHARE)
FOR THE QUARTER ENDED FOR THE YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------ ------------------------------ Dollars in millions, except per share 1997 1996 1997 1996 ---- ---- ---- ---- Finance income $ 472.7 $ 423.9 $1,824.7 $1,646.2 Interest expense 243.5 220.1 937.2 848.3 -------- -------- -------- -------- Net finance income 229.2 203.8 887.5 797.9 Fees and other income 61.8 67.3 247.8 244.1 Gain on sale of equity interest acquired in loan workout - - 58.0 - -------- -------- -------- -------- Operating revenue 291.0 271.1 1,193.3 1,042.0 -------- -------- -------- -------- Salaries and general operating expenses 114.3 101.7 428.4 393.1 Provision for credit losses 21.9 32.8 113.7 111.4 Depreciation on operating lease equipment 38.5 37.4 146.8 121.7 Minority interest in subsidiary trust holding solely debentures of the Company 4.8 - 16.3 - -------- -------- -------- -------- Operating expenses 179.5 171.9 705.2 626.2 -------- -------- -------- -------- Income before provision for income taxes 111.5 99.2 488.1 415.8 Provision for income taxes 40.5 36.4 178.0 155.7 -------- -------- -------- -------- Net income $71.0 $62.8 $310.1 $260.1 ======== ======== ======== ======== Basic net income per share $0.44 $0.40 $1.96 $1.65 Weighted average shares outstanding 160,016,576 157,500,000 158,134,315 157,500,000 Diluted net income per share $0.44 $0.40 $1.95 $1.64 Weighted average shares outstanding 161,258,149 158,448,527 159,156,706 158,448,527
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FOR THE QUARTER ENDED AT OR FOR THE YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------- ---------------------------------- Dollars in millions 1997 1996 1997 1996 ---- ---- ---- ---- SELECTED DATA AND RATIOS PROFITABILITY Ratios Based on Net Income Net income per diluted share $0.44 $0.40 $1.95 $1.64 Return on average stockholders' equity 12.2% 12.2% 14.0% 13.0% Return on AEA 1.51% 1.46% 1.70% 1.57% Ratios Excluding Nonrecurring Items(1) Net income per diluted share $0.48 $0.40 $1.81 $1.64 Return on average stockholders' equity 13.3% 12.2% 13.1% 13.0% Return on AEA 1.64% 1.46% 1.58% 1.57% Other Net interest margin as a percentage of AEA 4.88% 4.76% 4.87% 4.82% Salaries and general operating expenses as a percentage of average serviced assets(2) 2.05% 2.14% 2.06% 2.15% CREDIT QUALITY Net credit losses as a percentage of average finance receivables 0.46% 0.70% 0.59% 0.62% 60+ days contractual delinquency as a percentage of finance receivables 1.67% 1.72% Nonperforming assets as a percentage of finance receivables(3) 0.69% 0.99% Reserve for credit losses as a percentage of finance receivables 1.33% 1.30% Ratio of reserve for credit losses to current period net credit losses 2.33x 2.18x CAPITAL AND LEVERAGE Total debt to stockholders' equity and Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 5.71x 7.04x Total debt to stockholders' equity (4) 6.40x 7.04x Total common stockholders' equity $2,432.9 $2,075.4 OTHER Commercial finance receivables $14,054.9 $13,757.6 Consumer finance receivables 3,664.8 3,239.0 Operating lease equipment, net 1,905.6 1,402.1 Consumer finance receivables held for sale 268.2 116.3 Other 65.8 53.0 -------- -------- Total financing and leasing assets 19,959.3 18,568.0 Consumer finance receivables previously securitized 2,385.6 1,437.4 -------- -------- Total managed assets $22,344.9 $20,005.4 ========= ========= (1) Earnings for the fourth quarter of 1997 exclude a $0.04 per diluted share IPO-related charge. Earnings for the full year 1997 exclude $0.14 per diluted share related to a one-time gain on sale, partially offset by the IPO-related charge and certain other nonrecurring expenses. (2) Average serviced assets reflect average earning assets plus the average of consumer finance receivables previously securitized and currently managed by the Company and consumer finance receivables serviced for third parties. (3) Nonperforming assets reflect commercial finance receivables on nonaccrual status and assets received in satisfaction of loans. (4) 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 issued in February 1997.
-5- EX-99.2 3 PRESS RELEASE ON NEW DIRECTOR [Logo of The CIT Group, Inc.] Exhibit 99.2 Contact: Michael J. McGowan Vice President Communications Services (973)535-3506 mmcgowan@citgroup.com FROM: THE CIT GROUP 650 CIT DRIVE LIVINGSTON, NJ 07039 FOR IMMEDIATE RELEASE THE CIT GROUP NAMES DANIEL P. AMOS TO BOARD OF DIRECTORS LIVINGSTON, NJ (January 28, 1998) -- The CIT Group, Inc. [NYSE:CIT], one of the nation's largest commercial and consumer financing companies, today announced the appointment of Daniel P. Amos to its Board of Directors. Mr. Amos is President and Chief Executive Officer of AFLAC Incorporated [NYSE:AFL] and its primary subsidiary, American Family Life Assurance Company of Columbus (AFLAC). AFLAC is a leading provider of supplemental insurance at the work site in the United States and the largest foreign insurer in Japan. "We are pleased to have Daniel Amos join our Board of Directors," said Albert R. Gamper, Jr., President and Chief Executive Officer, The CIT Group. "His strategic view of the market and his experience as a successful Chief Executive Officer will provide a significant benefit to The CIT Group." Mr. Amos is a director of Georgia Power Company. He serves as a member of the Consumer Affairs Advisory Committee of the Securities and Exchange Commission. Additionally, Mr. Amos is Chairman of the Board of The Japan-America Society of Georgia and the University of Georgia Foundation. He also serves on the board of trustees of Egleston Children's Health Care System in Atlanta and the House of Mercy in Columbus, Georgia. He has received numerous awards and recognitions, including: the Silver Award in Financial World magazine's "CEO of the Year" competition, Executive of the Year by the Georgia Securities Association, The Wall Street Transcript Silver CEO in the life insurance category, and the University of Georgia Business School's "Distinguished Alumnus Award." Mr. Amos holds a BBA from the University of Georgia in risk management and insurance. With more than $22 billion in managed assets, The CIT Group, Inc. (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. # # # EX-99.3 4 CONSOLIDATED BALANCE SHEETS Exhibit 99.3 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, ------------------------------- DOLLARS IN MILLIONS 1997 1996 ---- ---- ASSETS Financing and leasing assets Loans Commercial $ 9,922.5 $ 10,195.6 Consumer 3,664.8 3,239.0 Lease receivables 4,132.4 3,562.0 ------------- ------------ Finance receivables 17,719.7 16,996.6 Reserve for credit losses (235.6) (220.8) ------------- ------------ Net finance receivables 17,484.1 16,775.8 Operating lease equipment, net 1,905.6 1,402.1 Consumer finance receivables held for sale 268.2 116.3 Cash and cash equivalents 140.4 103.1 Other assets 665.8 535.2 ------------- ------------ Total assets $ 20,464.1 $ 18,932.5 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Debt Commercial paper $ 5,559.6 $ 5,827.0 Variable rate senior notes 2,861.5 3,717.5 Fixed rate senior notes 6,593.8 4,761.2 Subordinated fixed rate notes 300.0 300.0 ------------- ------------ Total debt 15,314.9 14,605.7 Credit balances of factoring clients 1,202.6 1,134.1 Accrued liabilities and payables 660.1 594.0 Deferred Federal income taxes 603.6 523.3 ------------- ------------ Total liabilities 17,781.2 16,857.1 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 250.0 - Stockholders' equity Common stock - 1,000 shares authorized, issued and outstanding - 250.0 Class A common stock, par value $0.01 per share, 700,000,000 shares authorized and 37,173,527 issued and outstanding 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 - Paid-in capital 948.3 573.3 Retained earnings 1,482.9 1,252.1 ------------- ------------ Total stockholders' equity 2,432.9 2,075.4 ------------- ------------ Total liabilities and stockholders' equity $ 20,464.1 $ 18,932.5 ============= ============ EX-99.4 5 FINANCING AND LEASING ASSETS BY BUSINESS UNIT Exhibit 99.4 THE CIT GROUP, INC. AND SUBSIDIARIES FINANCING AND LEASING ASSETS BY BUSINESS UNIT DECEMBER 31, ---------------------------- 1997 1996 ---- ---- AMOUNTS IN MILLIONS Capital Finance (1) $ 3,682.5 $ 5,278.2 Equipment Financing (1) 8,027.2 6,043.4 Business Credit (2) 1,247.9 1,235.6 Credit Finance (2) 889.8 797.8 Commercial Services 2,113.1 1,804.7 --------- --------- Total Commercial 15,960.5 15,159.7 Sales Financing 1,940.7 1,349.8 Consumer Finance 1,992.3 2,005.5 --------- --------- Total Consumer 3,933.0 3,355.3 --------- --------- Other 65.8 53.0 --------- --------- Total financing and leasing assets 19,959.3 18,568.0 Consumer finance receivables previously securitized and currently managed by the Company 2,385.6 1,437.4 --------- --------- Total managed assets $22,344.9 $20,005.4 ========= ========= (1) In January of 1997, $1.5 billion of financing and leasing assets were transferred from Capital Finance to Equipment Financing. (2) In October of 1997, $95 million of finance receivables were transferred from Business Credit to Credit Finance. -----END PRIVACY-ENHANCED MESSAGE-----