-----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, WL2rWx6YaI/8kMeYYjbsZlyoGUMhV6+6tH6Kn/f+Nv4nlpncEBP2qBfLpyTAd3qQ WySWskqIrkA6HfvFAHP4oA== 0000020388-98-000021.txt : 19980424 0000020388-98-000021.hdr.sgml : 19980424 ACCESSION NUMBER: 0000020388-98-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980422 ITEM INFORMATION: FILED AS OF DATE: 19980423 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: 98599697 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 RELEASE FOR THE FIRST 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) April 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 first quarter earnings, filed as Exhibit 99.1. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 99.1 Press Release, dated April 22, 1998, Regarding Declaration of a Dividend for the Quarter Ending March 31, 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: April 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 16.5% INCREASE IN QUARTERLY NET INCOME; RECORD FIRST QUARTER NET INCOME OF $81.7 MILLION NEW YORK, NEW YORK, April 22, 1998 --- The CIT Group, Inc. (NYSE:CIT) today announced record first quarter net income of $81.7 million, up 16.5% from $70.1 million for the first quarter of 1997. Net income per diluted share for the first quarter of 1998 was $0.50, up from $0.44 for the first quarter of 1997. The improvements reflect growth in revenues from strong new business originations and a higher level of financing and leasing assets, continued improvements in operating efficiency, and lower credit losses. "Our first quarter performance continues to demonstrate our ability to generate internal growth from our business franchises and new initiatives. Our loan and lease originations were strong, with all units posting growth over the same period of 1997," said Albert R. Gamper, Jr., president and chief executive officer. "The first quarter record results continue to reflect our focus on operating fundamentals of quality growth, broad-based revenue generation, and efficient operations." Financial highlights: Total managed assets, which include both financing and leasing assets as well as finance receivables previously securitized, increased to $23.3 billion at March 31, 1998 from $22.3 billion at December 31, 1997, a 4.3% increase. Both the commercial and consumer portfolios increased approximately $500 million from year-end 1997. Total managed assets increased $2.8 billion or 13.4% from a year ago. Net finance income rose to $228.0 million (4.78% of average earning assets or "AEA") in the first quarter of 1998 as a result of the higher earning asset level, compared with $214.0 million (4.87% of AEA) in the first quarter of 1997. Fees and other income for the first quarter of 1998 were $66.4 million, up from $57.7 million for 1997 from a higher level of factoring commissions due to increased volume, strong lending and servicing fees, and higher gains from leasing equipment transactions. Salaries and general operating expenses for the first quarter of 1998 totaled $101.7 million compared with $99.9 million for the 1997 period, up 1.8% from the prior year. The efficiency ratio improved to 40.5% from 42.0%. The provision for credit losses decreased $4.5 million to $22.5 million in the first quarter as a result of lower net commercial credit losses. Net credit losses were $20.0 million, 0.45% of average finance receivables, down from $25.7 million, 0.60%, for the first quarter of 1997. At March 31, 1998, the reserve for credit losses increased to $240.2 million (1.33% of finance receivables) up from $235.6 million at December 31, 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 Ended March 31, ---------------------------- 1998 1997 ---- ---- Finance income $472.6 $437.1 Interest expense 244.6 223.1 ------ ------ Net finance income 228.0 214.0 Fees and other income 66.4 57.7 ------ ------ Operating revenue 294.4 271.7 ------ ------ Salaries and general operating expenses 101.7 99.9 Provision for credit losses 22.5 27.0 Depreciation on operating lease equipment 38.3 32.1 Minority interest in subsidiary trust holding solely debentures of the Company 4.8 1.9 ------ ------ Operating expenses 167.3 160.9 ------ ------ Income before provision for income taxes 127.1 110.8 Provision for income taxes 45.4 40.7 ------ ------ Net income $ 81.7 $ 70.1 ====== ====== Basic net income per share $ 0.50 $ 0.45 Weighted average shares outstanding 162,225,000 157,500,000 Diluted net income per share $0.50 $0.44 Weighted average shares outstanding 163,498,384 158,448,527 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Millions) March 31, December 31, 1998 1997 ---- ---- (unaudited) Assets Financing and leasing assets Loans Commercial $10,264.9 $ 9,922.5 Consumer 3,733.1 3,664.8 Commercial lease receivables 4,102.1 4,132.4 --------- --------- Finance receivables 18,100.1 17,719.7 Reserve for credit losses (240.2) (235.6) --------- --------- Net finance receivables 17,859.9 17,484.1 Operating lease equipment, net 2,054.2 1,905.6 Consumer finance receivables held for sale 846.2 268.2 Cash and cash equivalents 242.2 140.4 Other assets 713.0 665.8 --------- --------- Total assets $21,715.5 $20,464.1 ========= ========= Liabilities and Stockholders' Equity Debt Commercial paper $ 5,835.5 $ 5,559.6 Variable rate senior notes 3,100.0 2,861.5 Fixed rate senior notes 7,151.7 6,593.8 Subordinated fixed rate notes 300.0 300.0 --------- --------- Total debt 16,387.2 15,314.9 Credit balances of factoring clients 1,243.4 1,202.6 Accrued liabilities and payables 720.4 660.1 Deferred federal income taxes 614.8 603.6 --------- --------- Total liabilities 18,965.8 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 37,167,810 and 37,173,527 issued and outstanding at March 31, 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 949.7 948.3 Retained earnings 1,548.3 1,482.9 --------- --------- Total stockholders' equity 2,499.7 2,432.9 --------- --------- Total liabilities and stockholders' equity $21,715.5 $20,464.1 ========= ========= THE CIT GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA For the Quarter Ended March 31, ------------------------------------------- Dollars in Millions 1998 1997 Selected Data and Ratios Profitability Net income per diluted share $ 0.50 $ 0.44 Return on average common stockholders' equity 13.2% 13.3% Return on AEA 1.71% 1.60% Other Net interest margin as a percentage of AEA 4.78% 4.87% Salaries and general operating expenses as a percentage of average managed assets(1) 1.90% 2.10% Efficiency ratio 40.5% 42.0% Net credit losses as a percentage of average finance receivables 0.45% 0.60% At March 31, At December 31, At March 31, 1998 1997 1997 Credit Quality 60+ days contractual delinquency as a percentage of finance receivables Commercial 1.27% 1.20% 1.52% Consumer 3.28% 3.48% 2.49% Total 1.68% 1.67% 1.70% Total nonperforming assets as a percentage of finance receivables (2) 1.35% 1.17% 1.15% Reserve for credit losses as a percentage of finance receivables 1.33% 1.33% 1.30% Ratio of reserve for credit losses to trailing twelve-month net credit losses 2.52x 2.33x 2.19x Capital and Leverage Total debt to stockholders' equity and Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 5.96x 5.71x 6.25x Total debt to stockholders' equity (3) 6.66x 6.40x 7.10x Total common stockholders' equity $ 2,499.7 $ 2,432.9 $ 2,133.0 Managed Assets Commercial: Finance receivables $14,367.0 $14,054.9 $13,830.4 Operating lease equipment, net 2,054.2 1,905.6 1,501.9 Other 63.3 65.8 55.4 --------- --------- --------- Total Commercial 16,484.5 16,026.3 15,387.7 --------- --------- --------- Consumer: Finance receivables 3,733.1 3,664.8 3,186.0 Finance receivables held for sale 846.2 268.2 539.8 Finance receivables previously securitized 2,231.6 2,385.6 1,429.2 --------- --------- --------- Total Consumer 6,810.9 6,318.6 5,155.0 --------- --------- --------- Total managed assets $23,295.4 $22,344.9 $20,542.7 ========= ========= ========= (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. THE CIT GROUP, INC. AND SUBSIDIARIES (Amounts in Millions) MANAGED ASSETS BY BUSINESS UNIT March 31, December 31, March 31, 1998 1997 1997 ---- ---- ---- Capital Finance $ 3,743.3 $ 3,682.5 $ 3,603.9 Equipment Financing 8,163.5 8,027.2 7,568.6 Commercial Services 2,312.4 2,113.1 2,009.4 Business Credit* 1,298.2 1,247.9 1,351.4 Credit Finance* 903.8 889.8 799.0 Equity Investments 63.3 65.8 55.4 --------- --------- --------- Total Commercial 16,484.5 16,026.3 15,387.7 --------- --------- --------- Consumer Finance 2,284.9 1,992.3 2,143.8 Sales Financing 2,294.4 1,940.7 1,582.0 --------- --------- ---------- Total Consumer 4,579.3 3,933.0 3,725.8 --------- --------- ---------- Finance receivables previously securitized: Consumer Finance 419.6 453.8 - Sales Financing 1,812.0 1,931.8 1,429.2 --------- --------- --------- 2,231.6 2,385.6 1,429.2 --------- --------- --------- Total managed assets $23,295.4 $22,344.9 $20,542.7 ========= ========= ========= Sales Financing managed assets by product line: Recreation vehicles $ 1,664.3 $ 1,596.5 $ 1,291.2 Manufactured housing 1,488.4 1,471.9 1,249.8 Recreational boat 799.8 682.5 425.7 Wholesale inventory financing 153.9 121.6 44.5 --------- --------- --------- $ 4,106.4 $ 3,872.5 $ 3,011.2 ========= ========= ========= * In October 1997, $95.0 million of finance receivables were transferred from Business Credit to Credit Finance. FEES AND OTHER INCOME ------------------------- Three Months Ended March 31, ------------------------- 1998 1997 ---- ---- Factoring commissions $23.0 $21.2 Fees and other 22.1 17.0 Gains on sales of leasing equipment 14.8 11.4 Gains on sales of venture capital investments 6.5 7.7 Gains on securitizations and sales of finance receivables - 0.4 ----- ----- $66.4 $57.7 ===== ===== -----END PRIVACY-ENHANCED MESSAGE-----