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 17, 1997
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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: April 17, 1997
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[Logo of The CIT Group, Inc.] Contact: 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 FIRST QUARTER 1997 EARNINGS OF
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$70.1 MILLION, UP 17.4 PERCENT OVER 1996 FIRST QUARTER;
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NEW YORK, NEW YORK, April 17, 1997 --- The CIT Group Holdings, Inc., one
of the nation's largest commercial and consumer lending organizations, today
reported net income of $70.1 million for the first quarter of 1997, a 17.4%
increase from the $59.8 million reported for 1996. The improvement was the
result of an increase in average financing and leasing assets and corresponding
growth in net finance income as well as higher fees and other income.
"CIT's first quarter results were outstanding and I am pleased by our
solid overall performance, including sustained credit quality," said Albert R.
Gamper, Jr., president and chief executive officer. "Our success is the product
of our business diversification strategies. Despite upward pressure on interest
rates and heightened competition, we are optimistic about our prospects for the
remainder of 1997."
Financial highlights for 1997:
o Return on average financing and leasing assets ("AEA") for the first
quarter of 1997 was 1.60%, up from 1.49% for 1996.
o Earning assets, primarily comprised of finance receivables, operating lease
equipment and consumer finance receivables held for sale, totaled $19.1
billion at March 31, 1997, up
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2.9% from $18.6 billion at year end 1996. The increase was a result of
strong consumer loan and small to medium ticket equipment receivable
originations, additions to the operating lease portfolio and a seasonal
rise in factoring receivables.
o Net finance income rose to $214.0 million (4.87% of AEA) in the first
quarter of 1997 compared to $195.4 million (4.86% of AEA) in the first
quarter of 1996. The improvements reflect a 9.5% increase in AEA and lower
borrowing costs, offset by slightly lower yields.
o Fees and other income totaled $57.7 million in the first quarter of 1997,
up from $52.7 million in 1996. The increase reflects higher gains from
equipment sales and venture capital investment transactions, offset by
reduced securitization activity.
o Salaries and general operating expenses for the first quarter of 1997
totaled $99.9 million compared to $95.9 million for the first quarter of
1996, a 4.2% increase. As a percentage of AEA, salaries and general
operating expenses declined to 2.27% from 2.39% in 1996.
o Net credit losses during the first quarter of 1997 were $25.7 million,
0.60% of average finance receivables, compared to $25.4 million, 0.64% of
average finance receivables for the first quarter of 1996.
o Depreciation on operating lease equipment for the first quarter of 1997 was
$32.1 million compared to $27.5 million in 1996 as a result of growth in
the operating lease portfolio.
o The effective income tax rate for the first quarter of 1997 declined to
36.7% from 38.3% for the first quarter of 1996 due to lower state and local
taxes.
o Finance receivables on nonaccrual status declined to $97.8 million (0.57%
of finance receivables) at March 31, 1997 from $119.6 million (0.70% of
finance receivables) at the end of 1996. Finance receivables past due 60
days or more also decreased during the first
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quarter to $289.2 million (1.70% of finance receivables) at March 31, 1997,
from $292.3 million (1.72% of finance receivables) at December 31, 1996.
o Assets received in the settlement of loans were $46.9 million at March 31,
1997 and $47.9 million at year end 1996.
o Total nonperforming assets, comprised of finance receivables on nonaccrual
status and assets received in satisfaction of loans, as a percentage of
finance receivables, were 0.85% at March 31, 1997 down from 0.99% at
December 31, 1996.
o The reserve for credit losses increased to $222.0 million at March 31, 1997
from $220.8 million at December 31, 1996 and represented 1.30% of finance
receivables for both periods.
o The ratio of total debt to stockholders' equity, including the recently
issued redeemable preferred capital securities of subsidiary, was 6.25 to 1
at March 31, 1997 compared to 7.04 to 1 at December 31, 1996.
The CIT Group Holdings, Inc. is owned 80 percent by 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
MARCH 31,
1997 % TO AEA 1996 % TO AEA
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Finance income $ 437.1 9.87%* $ 402.6 9.97%*
Interest expense 223.1 5.00* 207.2 5.11 *
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Net finance income 214.0 4.87 195.4 4.86
Fees and other income 57.7 1.31 52.7 1.31
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Operating revenue 271.7 6.18 248.1 6.17
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Salaries and general operating expenses 99.9 2.27 95.9 2.39
Provision for credit losses 27.0 0.61 27.8 0.69
Depreciation on operating lease equipment 32.1 0.73 27.5 0.68
Minority interest in subsidiary holding
solely parent company debentures 1.9 0.04 - -
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Operating expenses 160.9 3.65 151.2 3.76
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Income before provision for income taxes 110.8 2.53 96.9 2.41
Provision for income taxes 40.7 0.93 37.1 0.92
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Net income $ 70.1 1.60% $ 59.8 1.49%
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Average financing and leasing assets (AEA) $17,590.1 $16,065.6
* Excludes interest income and interest expense relating to interest-bearing
deposits.
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THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN MILLIONS)
MARCH 31, DECEMBER 31,
1997 1996
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ASSETS
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FINANCING AND LEASING ASSETS
Loans
Commercial $ 9,996.4 $10,195.6
Consumer 3,186.0 3,239.0
Lease receivables 3,834.0 3,562.0
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Finance receivables 17,016.4 16,996.6
Reserve for credit losses (222.0) (220.8)
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Net finance receivables 16,794.4 16,775.8
Operating lease equipment, net 1,501.9 1,402.1
Consumer finance receivables held for sale 539.8 116.3
CASH AND CASH EQUIVALENTS 176.9 103.1
OTHER ASSETS 571.7 535.2
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TOTAL ASSETS $19,584.7 $18,932.5
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LIABILITIES AND STOCKHOLDERS' EQUITY
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DEBT
Commercial paper $ 6,143.1 $ 5,827.0
Variable rate senior notes 3,611.5 3,717.5
Fixed rate senior notes 4,829.9 4,761.2
Subordinated fixed rate notes 300.0 300.0
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Total debt 14,884.5 14,605.7
Credit balances of factoring clients 1,193.8 1,134.1
Accrued liabilities and payables 598.8 594.0
Deferred Federal income taxes 524.6 523.3
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Total liabilities 17,201.7 16,857.1
Redeemable preferred capital securities of
subsidiary holding solely parent company debentures 250.0 -
STOCKHOLDERS' EQUITY
Common stock - authorized, issued and
outstanding - 1,000 shares 250.0 250.0
Paid-in capital 573.3 573.3
Unrealized gain on investment securities, net of taxes 8.5 -
Retained earnings 1,301.2 1,252.1
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Total stockholders' equity 2,133.0 2,075.4
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $19,584.7 $18,932.5
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