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 16, 1996
-------------
The CIT Group Holdings, 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) 536-1950
--------------
- -----------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
-------------
See attached press release.
<PAGE>
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.
----------------------------
(Registrant)
By /s/ JOSEPH M. LEONE
----------------------------
Joseph M. Leone
Executive Vice President and
Chief Financial Officer
Dated: July 16, 1996
<PAGE>
[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
- ---------------------
THE CIT GROUP REPORTS RECORD 28 PERCENT EARNINGS GROWTH
-------------------------------------------------------
IN SECOND QUARTER: $72.4 MILLION VS. $56.5 MILLION IN 1995;
----------------------------------------------------------
SIX MONTHS RECORD EARNINGS OF $132.2 MILLION, UP 21 PERCENT OVER 1995
---------------------------------------------------------------------
NEW YORK, NEW YORK, JULY 16, 1996 --- The CIT Group Holdings, Inc., one of
the nation's largest commercial and consumer lending organizations, today
reported record net income of $72.4 million for the second quarter ended June
30, 1996, a 28 percent increase from the $56.5 million reported for the second
quarter of 1995. Net income for the six months ended June 30, 1996 was also a
record at $132.2 million, 21 percent higher than the $109.3 million of 1995. The
improvements resulted from strong operating revenues due to gains from venture
capital investments and equipment sales as well as increased portfolio spreads,
partially offset by increased operating expenses.
"During the first half, we experienced strong performances by all of our
operating companies," said Albert R. Gamper, Jr., president and chief executive
officer. "We were especially pleased with the performance of our venture capital
business. We committed to this activity five years ago and are now beginning to
see the benefits of that strategic diversity.
<PAGE>
"Although we are less encouraged about new business activity in light of
recent and continuing rises in interest rates," Mr. Gamper continued, "the
outlook for the remainder of 1996 looks good for The CIT Group."
Other highlights:
o Return on average financing and leasing assets ("AEA") for the second
quarter of 1996 was 1.79 percent, up from 1.49 percent for the second
quarter of 1995. Return on AEA for the first six months of 1996 was 1.64
percent compared to 1.46 percent for the same period in 1995.
o Financing and leasing assets totaled $17.18 billion, up $275.6 million
from $16.91 billion at December 31, 1995, reflecting strong originations
in the consumer portfolio and Industrial Financing, offset by syndications
and the continued high level of liquidations of finance receivables.
o Net finance income rose to $197.3 million (4.87% of AEA) for the second
quarter of 1996 from $171.5 million (4.51% of AEA) in the second
quarter of 1995. For the six months ended June 30, 1996, net finance
income increased to $392.7 million (4.87% of AEA) from $336.0 million
(4.48% 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, higher fees on account
terminations and lower borrowing costs.
-2-
<PAGE>
o Fees and other income totaled $73.2 million in the second quarter of
1996, up from $41.9 million in the 1995 second quarter, primarily the
result of a $16.2 million pretax gain in the venture capital portfolio
as well as higher gains on equipment sales. For the six months ended
June 30, 1996, fees and other income totaled $125.9 million, compared
to $85.3 million in 1995. The 1996 period includes the higher level of
gains as well as higher fee income associated with the servicing of
third party receivables, including those that have been securitized by
the Corporation.
o Salaries and general operating expenses totaled $97.6 million (2.41% of
AEA) versus $82.3 million (2.16% of AEA) in the second quarter of
1995. For the six months ended June 30, 1996, salaries and general
operating expenses totaled $193.5 million (2.40% of AEA) compared to
$167.1 million (2.22% of AEA) in 1995. The increases in expenses are
primarily attributable to growth in Consumer Finance, servicing of a
higher managed asset portfolio in Sales Financing and expenses
associated with Industrial Financing's restructuring which will result
in operating efficiencies and improved market alignment.
o Depreciation on operating lease equipment for the second quarter and six
months of 1996 was $28.8 million and $56.3 million, up from $17.2 million
and $34.8 million for the same periods in 1995.
o Net credit losses for the second quarter of 1996 totaled $23.7 million
(0.59% of average finance receivables) compared to $17.2 million (0.46%
of average finance receivables) for the second quarter of 1995.
Year-to-date credit losses totaled $49.1 million (0.62% of average
finance receivables) compared to $34.7 million (0.46% 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.
-3-
<PAGE>
o Finance receivables past due 60 days or more declined to $252.1 million
(1.58% of finance receivables) at June 30, 1996, from $263.9 million
(1.67% of finance receivables) at December 31, 1995. Past due finance
receivables on nonaccrual status decreased to $105.0 million (0.66% of
finance receivables) at June 30, 1996 from $139.5 million (0.88% of
finance receivables) at year-end 1995. The decrease 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 $97.8 million at
June 30, 1996, from $42.0 million at December 31, 1995, due to the
previously mentioned transfers.
o Total nonperforming assets, comprised of past due finance receivables on
nonaccrual status and assets received in satisfaction of loans were $202.8
million at June 30, 1996 up from $181.5 million at year end. As a
percentage of finance receivables, total nonperforming assets were 1.27
percent at June 30, 1996 compared to 1.15 percent at December 31, 1995.
o The reserve for credit losses grew to $211.9 million at June 30, 1996
from $206.0 million at year-end 1995.
o The ratio of debt-to-equity was 6.98 to 1 at June 30, 1996 compared to
7.09 to 1 at December 31, 1995.
The CIT Group Holdings, Inc. is owned 80 percent by The Dai-Ichi Kangyo
Bank, Limited, one of the largest banks in the world, and 20 percent by The
Chase Manhattan Corporation, the largest bank holding company in the United
States.
(SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA)
# # #
-4-
<PAGE>
THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS)
THREE MONTHS ENDED
JUNE 30
--------------------------------------
1996 % TO AEA 1995 % TO AEA
--------- -------- --------- --------
Finance income ...........................$ 403.9 9.92%* $ 380.5 9.95%*
Interest expense ......................... 206.6 5.05* 209.0 5.44*
--------- ---- --------- ----
Net finance income ..................... 197.3 4.87 171.5 4.51
Fees and other income .................... 73.2 1.81 41.9 1.10
--------- ---- -------- ----
Operating revenue ...................... 270.5 6.68 213.4 5.61
--------- ---- - ------ ----
Salaries and general
operating expenses ................... 97.6 2.41 82.3 2.16
Net credit losses ........................ 23.7 0.59** 17.2 0.46**
Provision for finance
receivables increase ................. 2.9 0.07 5.0 0.13
--------- ---- -------- ----
Provision for credit losses ............ 26.6 0.66 22.2 0.59
Depreciation on operating lease equipment 28.8 0.71 17.2 0.45
--------- ---- -------- ----
Operating expenses ..................... 153.0 3.78 121.7 3.20
--------- ---- -------- ----
Income before provision for income taxes . 117.5 2.90 91.7 2.41
Provision for income taxes ............... 45.1 1.11 35.2 0.92
--------- ---- -------- ----
Net income .............................$ 72.4 1.79% $ 56.5 1.49%
========= ===== ========= ====
Average financing and leasing assets (AEA)$16,192.3 $15,224.3
Average finance receivables $16,051.9 $15,051.6
* Excludes interest income and interest expense relating to interest-bearing
deposits
**Percent to average finance receivables
<PAGE>
THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS)
SIX MONTHS ENDED
JUNE 30
--------------------------------------
1996 % TO AEA 1995 % TO AEA
--------- -------- --------- ---------
Finance income ...........................$ 806.5 9.94%* $ 744.2 9.86%*
Interest expense ......................... 413.8 5.07* 408.2 5.38*
--------- ---- --------- ----
Net finance income ..................... 392.7 4.87 336.0 4.48
Fees and other income .................... 125.9 1.56 85.3 1.13
--------- ---- --------- ----
Operating revenue ...................... 518.6 6.43 421.3 5.61
--------- ---- --------- ----
Salaries and general operating expenses .. 193.5 2.40 167.1 2.22
Net credit losses ........................ 49.1 0.62** 34.7 0.46**
Provision for finance receivables increase 5.3 0.07 8.5 0.11
--------- ---- --------- ----
Provision for credit losses ............ 54.4 0.67 43.2 0.58
Depreciation on operating lease equipment$ 56.3 0.70 34.8 0.46
---------- ---- --------- ----
Operating expenses ..................... 304.2 3.77 245.1 3.26
--------- ---- --------- ----
Income before provision for income taxes . 214.4 2.66 176.2 2.35
Provision for income taxes ...............$ 82.2 1.02 66.9 0.89
--------- ---- --------- ----
Net income .............................$ 132.2 1.64% $ 109.3 1.46%
========= ==== ========= ====
Average financing and leasing assets (AEA)$16,146.3 $15,028.3
Average finance receivables $15,915.6 $14,904.4
* Excludes interest income and interest expense relating to interest-bearing
deposits
**Percent to average finance receivables
<PAGE>
THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN MILLIONS)
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
ASSETS
- ------
FINANCING AND LEASING ASSETS
Loans
Commercial $10,105.4 $10,356.3
Consumer 2,698.6 2,344.0
Lease receivables 3,142.5 3,095.2
--------- ---------
Finance receivables 15,946.5 15,795.5
Reserve for credit losses (211.9) (206.0)
--------- ---------
Net finance receivables 15,734.6 15,589.5
Operating lease equipment 1,237.6 1,113.0
Cash and cash equivalents 110.1 161.5
Other assets 709.2 556.3
--------- ---------
TOTAL ASSETS $17,791.5 $17,420.3
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
DEBT
Commercial paper $ 5,573.3 $ 6,105.6
Variable rate senior notes 4,197.5 3,827.5
Fixed rate senior notes 3,798.1 3,337.0
Subordinated fixed rate notes 300.0 300.0
--------- ---------
Total debt 13,868.9 13,570.1
Credit balances of factoring clients 969.6 980.9
Accrued liabilities and payables 487.5 485.9
Deferred Federal income taxes 479.5 469.2
--------- ---------
Total liabilities 15,805.5 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 1,327.7 1,255.9
--------- ---------
Total stockholders' equity 1,986.0 1,914.2
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,791.5 $17,420.3
========= =========
