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 17, 1996
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The CIT Group Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-1861 13-2994534
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1211 Avenue of the Americas
New York, New York 10036
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Registrant's telephone number, including area code (212) 536-1950
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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See attached press release.
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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 HOLDINGS, INC.
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(Registrant)
By /s/ JOSEPH M. LEONE
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Joseph M. Leone
Executive Vice President and
Chief Financial Officer
Dated: October 17, 1996
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[Logo of The CIT Group, Inc.]
Joseph M. Leone
Chief Financial Officer
(201) 740-5752
FROM: THE CIT GROUP HOLDINGS, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
FOR IMMEDIATE RELEASE
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THE CIT GROUP REPORTS 11.3 PERCENT EARNINGS GROWTH
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IN THIRD QUARTER: $65.1 MILLION VS. $58.5 MILLION IN 1995;
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NINE MONTHS RECORD EARNINGS OF $197.3 MILLION, UP 17.6 PERCENT OVER 1995
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NEW YORK, NEW YORK, October 17, 1996 --- The CIT Group Holdings, Inc., one
of the nation's largest commercial and consumer lending organizations, today
reported net income of $65.1 million for the third quarter ended September 30,
1996, an 11.3 percent increase from the $58.5 million reported for the third
quarter of 1995. Net income for the nine months ended September 30, 1996 was a
record at $197.3 million, 17.6 percent higher than the $167.8 million of 1995.
The improvements resulted from strong operating revenues including increased
portfolio spreads, partially offset by increased operating expenses.
"We again saw broad based contributions from our businesses in the third
quarter. Credit quality remained strong. Despite a competitive lending
environment, margins improved due to consumer loan growth and efficient
funding," said Albert R. Gamper, Jr., president and chief executive officer. "As
we look forward to the remainder of 1996, we see significant liquidity in the
markets in which we compete. Continued vigilance in the areas of credit quality
and productivity, while growing the organization, is the key to our continued
success."
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Other highlights:
o Return on average financing and leasing assets ("AEA") for the third quarter
of 1996 was 1.57 percent, up from 1.50 percent for the third quarter of
1995. Return on AEA for the first nine months of 1996 was 1.61 percent,
improving from 1.47 percent for the same period in 1995.
o Financing and leasing assets totaled $17.93 billion, up $741.1 million
(4.3%) from June 30, 1996 and $1.02 billion (6.0%) from $16.91 billion at
December 31, 1995, reflecting strong originations in Consumer Finance and
Industrial Financing and growth in operating lease equipment, offset by a
continued high level of liquidations of finance receivables.
o Net finance income rose to $201.4 million (4.84% of AEA) for the third
quarter of 1996 from $178.8 million (4.60% of AEA) in the third quarter
of 1995. For the nine months ended September 30, 1996, net finance income
increased to $594.1 million (4.86% of AEA) from $514.8 million (4.52% of
AEA) in 1995. The improvements reflect an increase in average financing
and leasing assets, a change in portfolio mix toward higher-yielding
consumer finance receivables, lower borrowing costs and higher fees on
account terminations.
o Fees and other income totaled $50.9 million in the third quarter of 1996, up
from $47.8 million in the 1995 third quarter, reflecting increased
factoring commissions and fees associated with the servicing of third
party receivables, including those that have been securitized by the
Corporation. For the nine months ended September 30, 1996, fees and other
income totaled $176.8 million, compared to $133.1 million in 1995. The
1996 nine month period includes the higher level of servicing fees
mentioned above as well as higher gains from the venture capital
operation and other asset sales.
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o Salaries and general operating expenses totaled $97.9 million (2.35% of AEA)
versus $85.9 million (2.21% of AEA) in the third quarter of 1995. For the
nine months ended September 30, 1996, salaries and general operating
expenses totaled $291.4 million (2.38% of AEA) compared to $253.0 million
(2.22% of AEA) in 1995. The increases in expenses are primarily
attributable to growth in Consumer Finance and servicing of a higher
managed asset portfolio in Sales Financing.
o Depreciation on operating lease equipment for the third quarter and nine
months of 1996 was $28.0 million and $84.3 million, up from $21.4 million
and $56.2 million for the same periods in 1995 due to increased levels of
operating lease equipment.
o Net credit losses for the third quarter of 1996 totaled $22.3 million (0.54%
of average finance receivables) compared to $21.9 million (0.57% of
average finance receivables) for the third quarter of 1995. Year-to-date
credit losses totaled $71.4 million (0.59% of average finance
receivables) compared to $56.6 million (0.50% of average finance
receivables) in 1995. The increases were primarily attributable to
provisions related to certain nonaccrual loans secured by shipping and
cruise line vessels.
o Finance receivables past due 60 days or more declined to $248.0 million
(1.50% of finance receivables) at September 30, 1996, from $263.9 million
(1.67% of finance receivables) at December 31, 1995. Past due finance
receivables on nonaccrual status decreased to $88.1 million (0.53% of
finance receivables) at September 30, 1996 from $139.5 million (0.88% of
finance receivables) at year-end 1995. The decrease primarily reflects
transfers of certain shipping and cruise line vessels to assets received
in satisfaction of loans.
o Assets received in satisfaction of loans increased to $66.9 million at
September 30, 1996, from $42.0 million at December 31, 1995, due to the
previously mentioned transfers offset by the sale of an equity interest
in a building supply retailer.
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o Total nonperforming assets, comprised of past due finance receivables on
nonaccrual status and assets received in satisfaction of loans declined
to $155.0 million at September 30, 1996 from $181.5 million at year end.
As a percentage of finance receivables, total nonperforming assets were
0.94 percent at September 30, 1996 down from 1.15 percent at December 31,
1995.
o The reserve for credit losses grew to $214.2 million (1.29% of finance
receivables) at September 30, 1996 from $206.0 million (1.30%) at
year-end 1995.
o The ratio of debt-to-equity was 7.08 to 1 at September 30, 1996 compared to
7.09 to 1 at December 31, 1995.
o Stockholders' equity reached $2.0 billion at September 30, 1996.
The CIT Group Holdings, Inc. is owned 80 percent by The Dai-Ichi Kangyo
Bank, Limited, one of the largest banks in the world, and 20 percent by The
Chase Manhattan Corporation, the largest bank holding company in the United
States.
(SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA)
# # #
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THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollar Amounts in Millions)
Three Months Ended
September 30
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1996 % to AEA 1995 % to AEA
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Finance income $ 415.8 9.95%* $ 388.8 9.97%*
Interest expense 214.4 5.11* 210.0 5.37*
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Net finance income 201.4 4.84 178.8 4.60
Fees and other income 50.9 1.23 47.8 1.23
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Operating revenue 252.3 6.07 226.6 5.83
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Salaries and general operating expenses 97.9 2.35 85.9 2.21
Net credit losses 22.3 0.54** 21.9 0.57**
Provision for finance
receivables increase 1.9 0.05 2.1 0.05
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Provision for credit losses 24.2 0.58 24.0 0.62
Depreciation on operating
lease equipment 28.0 0.68 21.4 0.55
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Operating expenses 150.1 3.61 131.3 3.38
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Income before provision for income taxes 102.2 2.46 95.3 2.45
Provision for income taxes 37.1 0.89 36.8 0.95
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Net income $ 65.1 1.57% $ 58.5 1.50%
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Average financing and
leasing assets (AEA) $16,636.6 $15,555.1
Average finance receivables $16,419.7 $15,550.0
* Excludes interest income and interest expense relating to interest-bearing
deposits
** Percent to average finance receivables
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THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollar Amounts in Millions)
Nine Months Ended
September 30
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1996 % to AEA 1995 % to AEA
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Finance income $ 1,222.3 9.94%* $ 1,133.0 9.90%*
Interest expense 628.2 5.08* 618.2 5.38*
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Net finance income 594.1 4.86 514.8 4.52
Fees and other income 176.8 1.44 133.1 1.17
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Operating revenue 770.9 6.30 647.9 5.69
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Salaries and general operating expenses 291.4 2.38 253.0 2.22
Net credit losses 71.4 0.59** 56.6 0.50**
Provision for finance
receivables increase 7.2 0.06 10.6 0.09
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Provision for credit losses 78.6 0.64 67.2 0.59
Depreciation on operating
lease equipment 84.3 0.69 56.2 0.49
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Operating expenses 454.3 3.71 376.4 3.30
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Income before provision for income taxes 316.6 2.59 271.5 2.39
Provision for income taxes 119.3 0.98 103.7 0.92
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Net income $ 197.3 1.61% $ 167.8 1.47%
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Average financing and
leasing assets (AEA) $16,311.9 $15,200.0
Average finance receivables $16,090.3 $15,212.6
* Excludes interest income and interest expense relating to interest-bearing
deposits
** Percent to average finance receivables
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THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Millions)
September 30, December 31,
1996 1995
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ASSETS
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FINANCING AND LEASING ASSETS
Loans
Commercial $10,526.2 $10,356.3
Consumer 2,730.3 2,344.0
Lease receivables 3,303.7 3,095.2
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Finance receivables 16,560.2 15,795.5
Reserve for credit losses (214.2) (206.0)
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Net finance receivables 16,346.0 15,589.5
Operating lease equipment 1,365.0 1,113.0
CASH AND CASH EQUIVALENTS 117.0 161.5
OTHER ASSETS 797.5 556.3
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TOTAL ASSETS $18,625.5 $17,420.3
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LIABILITIES AND STOCKHOLDERS' EQUITY
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DEBT
Commercial paper $ 5,913.2 $ 6,105.6
Variable rate senior notes 3,997.5 3,827.5
Fixed rate senior notes 4,182.0 3,337.0
Subordinated fixed rate notes 300.0 300.0
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Total debt 14,392.7 13,570.1
Credit balances of factoring clients 1,155.4 980.9
Accrued liabilities and payables 539.2 485.9
Deferred Federal income taxes 506.8 469.2
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Total liabilities 16,594.1 15,506.1
STOCKHOLDERS' EQUITY
Common stock - authorized, issued and
outstanding - 1,000 shares 250.0 250.0
Paid-in capital 408.3 408.3
Retained earnings 1,373.1 1,255.9
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Total stockholders' equity 2,031.4 1,914.2
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $18,625.5 $17,420.3
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