-----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, MZqtPyEE5mnZfzvSfi1mdq7cH1anqEwxwjKnNfStbiEqpPH8kbh81yng4nYWmrtw lCBpREFX1muM4TK1abDa+A== 0000020388-99-000041.txt : 19991028 0000020388-99-000041.hdr.sgml : 19991028 ACCESSION NUMBER: 0000020388-99-000041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991025 ITEM INFORMATION: FILED AS OF DATE: 19991027 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: 99734417 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 3RD QUARTER EARNINGS PRESS RELEASE,DATED 10/25/99. 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) October 25, 1999 ---------------- 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, which is incorporated herein by reference, regarding the 1999 third quarter earnings, filed as Exhibit 99.1. -2- Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 99.1 Press Release, dated October 25, 1999, regarding the 1999 Third Quarter Earnings. -3- 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: October 25, 1999 -4- 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, INC. ANNOUNCES THREE RECORDS: |X| Third Quarter Net Income Of $96.9 Million. |X| Earnings Per Diluted Share Of $.60, Up 13.2%. |X| Managed Assets Of $28.6 Billion. NEW YORK, NEW YORK, OCTOBER 25, 1999 --- The CIT Group, Inc. (NYSE: CIT) today announced record third quarter net income of $96.9 million, up from $86.1 million for the same period of 1998. Nine month earnings totaled a record $285.1 million, up from $251.5 million in 1998. Earnings per diluted share for the third quarter of 1999 were $.60, up 13.2% from $.53 for the third quarter of last year. Nine month earnings per diluted share increased 14.3% to $1.76 from $1.54. The strong 1999 earnings were driven by double digit revenue growth, solid asset growth from the commercial finance and equipment segments, consistent credit quality, and continued improvements in operating efficiency. "CIT delivered another quarter of record earnings and excellent growth. We reaffirmed our commitment to the strategic acquisition of Newcourt Credit. We announced early in the fourth quarter our intention to purchase the domestic factoring operations of Heller Financial Inc., which will further enhance the scale of CIT's factoring business," said Albert R. Gamper, Jr., President and CEO of CIT. "Our plan to close the Newcourt transaction during the fourth quarter is on target. Newcourt met our earnings expectations for the third quarter. Federal Reserve and Canadian regulatory approvals have been received. Joint integration teams have been working diligently to prepare for the addition of Newcourt's Vendor and Technology Finance and Capital Finance businesses, and the combination of Newcourt and CIT staff departments once remaining approvals are obtained. The completion of the strategic initiatives made during 1999, coupled with CIT's existing franchise businesses, positions the company to create long term value for our stockholders," added Gamper. Financial Highlights: Total managed assets increased to a record $28.6 billion at September 30, 1999, up 12.5% from $25.4 billion a year ago, and up 9.1% from $26.2 billion at December 31, 1998. Commercial financing and leasing assets grew to $20.9 billion, up approximately 16.7% from September 30, 1998 and 14.0% from year-end 1998. Growth was particularly strong within the equipment and commercial finance portfolios. Consumer managed assets were $7.6 billion, up approximately $0.2 billion or 2.2% from $7.4 billion a year ago and down 2.8% from December 31, 1998. Certain lower returning consumer receivables were sold during the quarter as a result of ongoing risk and return management strategies. Net finance income improved to $279.8 million in the third quarter compared with $246.8 million in the third quarter of 1998. Third quarter 1999 net finance income as a percentage of average earning assets was 4.70% compared to 4.78% in the third quarter of 1998. Fees and other income for the third quarter of 1999 increased to $81.9 million, up 18.7% from $69.0 million for the third quarter of 1998 due to continued strong growth in lending fees, strong commissions from the factoring business bolstered by an acquisition and gains on sales of equipment coming off lease and certain consumer finance receivables. Salaries and general operating expenses for the third quarter of 1999 totaled $115.1 million, up 9.3% from $105.3 million for the third quarter of 1998 as a result of the factoring acquisition and product expansion in the equipment financing and leasing businesses, offset by productivity gains in the consumer segment. Efficiency measures continued to improve with the efficiency ratio dropping to 39.0% for the third quarter of 1999. Operating expenses as a percentage of average managed assets improved to 1.72% for the third quarter of 1999 compared to 1.82% in the same quarter of 1998. The provision for credit losses was $32.2 million in the third quarter of 1999, an increase of $1.6 million compared to the third quarter of 1998. Third quarter 1999 net charge-offs were $25.3 million, 0.48% of average finance receivables, compared to $21.6 million, 0.46%, for the third quarter of 1998. At September 30, 1999, the reserve for credit losses increased to $283.8 million (1.33%), up from $263.7 million (1.33%) at year-end 1998, principally the result of portfolio growth. The CIT Group, Inc., is a leading diversified finance organization offering secured commercial and consumer financing primarily in the United States to smaller, middle- market and larger businesses and to individuals through a nationwide distribution network. (SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA). THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS (Amounts in Millions, except Net Income per Share) For the Quarter For the Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Finance income $583.9 $510.6 $1,679.8 $1,481.4 Interest expense 304.1 263.8 858.2 766.2 ------ ------ ------- ------- Net finance income 279.8 246.8 821.6 715.2 Fees and other income 81.9 69.0 221.4 196.1 ------ ------ ------- ------- Operating revenue 361.7 315.8 1,043.0 911.3 ------ ------ ------- ------- Salaries and general operating expenses 115.1 105.3 337.1 311.0 Provision for credit losses 32.2 30.6 77.9 75.0 Depreciation on operating lease equipment 61.6 42.7 176.9 121.4 Minority interest in subsidiary trust holding solely debentures of the Company 4.8 4.8 14.4 14.4 ------ ------ ------- ------- Operating expenses 213.7 183.4 606.3 521.8 ------ ------ ------- ------- Income before provision for income taxes 148.0 132.4 436.7 389.5 Provision for income taxes 51.1 46.3 151.6 138.0 ------ ------ ------- ------- Net income $ 96.9 $ 86.1 $ 285.1 $ 251.5 ======= ====== ======= ======= Basic net income per share $0.60 $0.53 $1.77 $1.55 Weighted average shares outstanding 160,512,433 162,143,304 160,850,093 162,197,469 Diluted net income per share $0.60 $0.53 $1.76 $1.54 Weighted average shares outstanding 161,464,425 163,304,325 161,997,841 163,488,689 THE CIT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Millions) September 30, December 31, 1999 1998 ------------- ------------ Assets Financing and leasing assets Loans Commercial $13,151.5 $11,415.5 Consumer 4,068.8 4,266.9 Lease receivables 4,112.6 4,173.6 --------- --------- Finance receivables 21,332.9 19,856.0 Reserve for credit losses (283.8) (263.7) --------- --------- Net finance receivables 21,049.1 19,592.3 Operating lease equipment, net 3,677.2 2,774.1 Consumer finance receivables held for sale 737.8 987.4 Cash and cash equivalents 143.0 73.6 Other assets 1,132.3 875.7 --------- --------- Total assets $26,739.4 $24,303.1 ========= ========= Liabilities and Stockholders' Equity Debt Commercial paper $ 5,472.6 $ 6,144.1 Variable rate senior notes 5,758.1 4,275.0 Fixed rate senior notes 8,611.8 8,032.3 Subordinated fixed rate notes 200.0 200.0 --------- --------- Total debt 20,042.5 18,651.4 Credit balances of factoring clients 1,971.9 1,302.1 Accrued liabilities and payables 738.4 694.3 Deferred federal income taxes 822.0 703.7 --------- --------- Total liabilities 23,574.8 21,351.5 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 250.0 250.0 Stockholders' equity Class A Common Stock, par value $0.01 per share; Authorized: 700,000,000 shares Issued: 163,172,966 shares in 1999 and 163,144,879 shares in 1998 Outstanding: 161,147,581 shares in 1999 and 162,176,949 shares in 1998 1.7 1.7 Paid-in capital 958.2 952.5 Retained earnings 2,009.3 1,772.8 Treasury stock at cost (2,025,385 shares in 1999 and 967,930 shares in 1998; Class A Common Stock) (54.6) (25.4) --------- --------- Total stockholders' equity 2,914.6 2,701.6 --------- --------- Total liabilities and stockholders' equity $26,739.4 $24,303.1 ========== ========= THE CIT GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA For the Quarter For the Nine Months Selected Data and Ratios Ended September 30, Ended September 30, ------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Profitability Net income per diluted share $ 0.60 $ 0.53 $ 1.76 $ 1.54 Return on average stockholders' equity 13.5% 13.2% 13.6% 13.2% Return on AEA 1.63% 1.67% 1.64% 1.68% Efficiency ratio 39.0% 39.2% 39.6% 40.1% Other Net interest margin as a percentage of AEA 4.70% 4.78% 4.72% 4.78% Salaries and general operating expenses as a percentage of AMA(1) 1.72% 1.82% 1.73% 1.86% Net credit losses as a percentage of average: Finance receivables 0.48% 0.46% 0.44% 0.42% Commercial finance receivables 0.31% 0.30% 0.25% 0.24% Consumer finance receivables 1.17% 1.08% 1.16% 1.12% Consumer managed assets 1.01% 0.87% 1.01% 0.89% Average Balances (in millions) Average Stockholders' Equity $ 2,875.6 $ 2,612.8 $ 2,804.6 $ 2,542.2 Average Finance Receivables $21,082.1 $18,828.3 $20,549.5 $18,277.6 Average Earning Assets $23,818.5 $20,669.9 $23,213.9 $19,946.7 Average Managed Assets $26,750.8 $23,180.4 $25,969.2 $22,336.3 At September 30, At December 31, At September 30, 1999 1998 1998 ---- ---- ---- Credit Quality 60+ days contractual delinquency as a percentage of finance receivables Commercial 1.24% 1.17% 1.26% Consumer 4.19% 3.89% 3.30% Total 1.81% 1.75% 1.67% Total nonperforming assets as a percentage of finance receivables (2) 1.35% 1.40% 1.34% Reserve for credit losses as a percentage of finance receivables 1.33% 1.33% 1.32% Ratio of reserve for credit losses to trailing twelve-month net credit losses 3.21x 3.35x 3.27x Capital and Leverage Total debt to stockholders' equity and Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 6.33x 6.32x 6.16x Total debt to stockholders' equity (3) 6.95x 7.00x 6.84x (1) "AMA" or "Average Managed Assets", represents the sum of average earning assets, which are net of credit balances of factoring clients, and 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 SEGMENT & STRATEGIC BUSINESS UNIT At September 30, At December 31, At September 30, 1999 1998 1998 ---- ---- ---- Equipment Financing: Finance receivables $ 8,745.9 $ 8,497.6 $ 8,060.3 Operating lease equipment, net 849.9 765.1 676.7 ---------- ---------- ---------- Total 9,595.8 9,262.7 8,737.0 ---------- ---------- ---------- Capital Finance: Finance receivables 1,598.3 1,655.4 1,662.0 Operating lease equipment, net 2,807.0 1,982.0 1,690.6 ---------- ---------- ---------- 4,405.3 3,637.4 3,352.6 Liquidating portfolio* 324.9 466.9 497.5 ---------- ---------- ---------- Total 4,730.2 4,104.3 3,850.1 ---------- ---------- ---------- Total Equipment Financing & Leasing 14,326.0 13,367.0 12,587.1 ---------- ---------- ---------- Commercial Services 3,714.8 2,481.8 2,762.1 Business Credit 1,726.9 1,477.9 1,545.5 Credit Finance 1,173.6 1,036.5 1,049.9 ---------- ---------- ---------- Total Commercial Finance 6,615.3 4,996.2 5,357.5 ---------- ---------- ---------- Total Commercial Segments 20,941.3 18,363.2 17,944.6 ---------- ---------- ---------- Consumer Finance 2,229.3 2,244.4 2,123.7 Sales Financing 2,577.3 3,009.9 2,681.4 ---------- ---------- ---------- Total Consumer Segment 4,806.6 5,254.3 4,805.1 ---------- ---------- ---------- Other - Equity Investments 115.8 81.9 87.3 ---------- ---------- ---------- Total Financing and Leasing Assets 25,863.7 23,699.4 22,837.0 ---------- ---------- ---------- Finance receivables previously securitized: Consumer Finance 464.0 607.6 661.2 Sales Financing 2,286.0 1,909.3 1,925.7 ---------- ---------- ---------- Total 2,750.0 2,516.9 2,586.9 ---------- ---------- ---------- Total Managed Assets - Consumer Segment 7,556.6 7,771.2 7,392.0 ---------- ---------- ---------- Total Managed Assets $ 28,613.7 $ 26,216.3 $ 25,423.9 ========== ========== ========== Sales Financing managed assets by product line: Recreation vehicles $ 1,894.1 $ 1,884.6 $ 1,786.4 Manufactured housing 1,900.3 1,695.9 1,617.3 Recreational boat 848.2 1,038.6 978.4 Wholesale inventory financing 220.7 300.1 225.1 ---------- ---------- ---------- $ 4,863.3 $ 4,919.2 $ 4,607.2 ========== ========== ========== * Consists primarily of oceangoing maritime and project finance. FEES AND OTHER INCOME Three Months Ended Nine Months Ended September 30, September 30, ------------------------ --------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Factoring commissions $31.1 $24.8 $84.1 $70.4 Fees and other income 36.2 24.8 87.5 69.0 Gains on sales of leasing equipment 14.6 11.5 44.5 35.2 Gains on securitizations - 7.3 5.3 12.5 Gains on sales of venture capital investments - 0.6 - 9.0 ----- ----- ----- ---- $81.9 $69.0 $221.4 $196.1 ===== ===== ====== ====== -----END PRIVACY-ENHANCED MESSAGE-----