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 14, 1997
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The CIT Group, 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) 536-1390
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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, 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 14, 1997
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[Logo of The CIT Group, Inc.]
Contact: Joseph M. Leone
Chief Financial Officer
(973) 740-5752
FROM: THE CIT GROUP, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
FOR IMMEDIATE RELEASE
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THE CIT GROUP REPORTS THIRD QUARTER AND NINE MONTH NET INCOME;
INCREASES OF 16% and 21% FROM THE 1996 PERIODS
NEW YORK, NEW YORK, October 14, 1997 --- The CIT Group, Inc., one of the
nation's largest commercial and consumer lending organizations, today reported
net income of $75.3 million for the third quarter of 1997, a 15.7% increase from
the $65.1 million reported for 1996. Nine month net income totaled a record
$239.1 million, up 21.2% from $197.3 million in 1996. The third quarter and nine
month results reflect growth in net finance income from a higher level of
financing and leasing assets, increased noninterest revenue and improvements in
operating expense efficiency.
"The CIT Group has again demonstrated the success of its broad based
approach to business" said Albert R. Gamper, Jr. president and chief executive
officer. "While the current economy continues to create opportunities for the
company, it also continues to increase the competition we face from other
lending sources. Our continued growth in earnings and assets is indicative of
both our long standing commitment to the markets we serve, as well as the
talented individuals at CIT" added Gamper.
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Financial highlights for 1997:
Return on average earning assets or "AEA" (average financing and leasing
assets less average credit balances of factoring clients) for the third
quarter of 1997 was 1.64%, up from 1.57% for the third quarter of 1996.
Return on AEA for the first nine months of 1997 was 1.77%, compared to
1.61% for the same period in 1996.
Financing and leasing assets, primarily comprised of finance receivables,
operating lease equipment and consumer finance receivables held for
sale, totaled $20.3 billion at September 30, 1997, up 9.5% from $18.6
billion at year end 1996.
Total managed assets, which include both financing and leasing assets as
well as consumer finance receivables previously securitized and
currently managed by the company, increased 11.3% to $22.3 billion at
September 30, 1997 from $20.0 billion at December 31, 1996. Growth was
broad based, with increases in both the commercial and consumer
segments.
Net finance income rose to $226.0 million (4.92% of AEA) in the third
quarter of 1997 compared to $201.4 million (4.84% of AEA) in the third
quarter of 1996. For the nine months ended September 30, 1997, net
finance income increased to $658.3 million (4.87% of AEA) from $594.1
million (4.86% of AEA) in 1996. The improvements primarily reflect
increases in AEA.
Fees and other income totaled $78.9 million in the third quarter of 1997
compared to $50.9 million in 1996. For the nine months ended September
30, 1997, fees and other income increased to $186.0 million, up $9.2
million from $176.8 million during the same period in 1996. The
improvements reflect increased factoring commissions and higher gains on
securitizations and equipment sales, partially offset by lower venture
capital gains in the nine month period.
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Salaries and general operating expenses for the third quarter of 1997
totaled $103.6 million compared to $97.9 million for the third quarter
of 1996. As a percentage of AEA, salaries and general operating expenses
were 2.25% compared to 2.35% in the third quarter of 1996. Salaries and
general operating expenses for the nine months ended September 30, 1997
were $314.1 million (2.32% of AEA) compared to $291.4 million (2.38% of
AEA) during 1996.
The provision for credit losses rose $11.6 million to $35.8 million in the
third quarter of 1997, compared to $24.2 million for the third quarter
of 1996. The increase was primarily the result of the rise in finance
receivables. Net credit losses during the third quarter of 1997 were
$24.6 million, 0.57% of average finance receivables excluding consumer
finance receivables held for sale, compared to $22.3 million, 0.54%, for
the third quarter of 1996. For the nine months ended September 30, 1997
the provision for credit losses increased to $91.8 million from $78.6
million in 1996. For the nine months ended September 30, 1997, net
credit losses totaled $80.1 million, 0.65%, compared to $71.4 million,
0.59%, in 1996.
Depreciation on operating lease equipment for the third quarter and nine
months of 1997 increased to $42.3 million and $108.3 million, compared
to $28.0 million and $84.3 million for the corresponding 1996 periods,
reflecting growth in the operating lease portfolio.
Finance receivables past due 60 days or more decreased during the first nine
months to $287.9 million (1.60% of finance receivables) at September 30,
1997, from $292.3 million (1.72% of finance receivables) at December 31,
1996. Finance receivables on nonaccrual status also declined to $83.6
million (0.47% of finance receivables) at September 30, 1997 from $119.6
million (0.70% of finance receivables) at year end 1996.
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Assets received in satisfaction of loans decreased to $37.7 million at
September 30, 1997 from $47.9 million at December 31, 1996.
Nonperforming assets, comprised of finance receivables on nonaccrual status
and assets received in satisfaction of loans, as a percentage of finance
receivables, were 0.68% at September 30, 1997, down from 0.99% at
December 31, 1996.
The reserve for credit losses increased to $233.3 million (1.30% of finance
receivables) at September 30, 1997 from $220.8 million (1.30% of finance
receivables) at December 31, 1996.
The ratio of total debt to stockholders' equity and redeemable preferred
securities of subsidiary trust, was 6.25 to 1 at September 30, 1997,
compared to 7.04 to 1 at December 31, 1996. The ratio of total debt and
redeemable preferred securities of subsidiary trust to stockholders'
equity was 7.06 to 1 at September 30, 1997, compared to 7.04 to 1 at
December 31, 1996.
On September 26, 1997, The CIT Group, Inc. announced that it had filed a
registration statement with the Securities and Exchange Commission for
an initial public offering of 20% of CIT's common stock. Shares of
common stock of CIT may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. The
offering will be made only by means of a prospectus. This press release
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of the common stock in any state in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state.
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The CIT Group, 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, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollar Amounts in Millions)
Three Months Ended
September 30,
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1997 % to AEA 1996 % to AEA
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Finance income $ 463.0 9.96%* $ 415.8 9.95%*
Interest expense 237.0 5.04* 214.4 5.11 *
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Net finance income 226.0 4.92 201.4 4.84
Fees and other income 78.9 1.71 50.9 1.23
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Operating revenue 304.9 6.63 252.3 6.07
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Salaries and general operating
expenses 103.6 2.25 97.9 2.35
Provision for credit losses 35.8 0.78 24.2 0.58
Depreciation on operating lease
equipment 42.3 0.92 28.0 0.68
Minority interest in subsidiary trust
holding solely debentures of the
company 4.8 0.10 - -
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Operating expenses 186.5 4.05 150.1 3.61
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Income before provision for income
taxes 118.4 2.58 102.2 2.46
Provision for income taxes 43.1 0.94 37.1 0.89
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Net income $ 75.3 1.64% $ 65.1 1.57%
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Average earning assets
(AEA) $ 18,389.9 $ 16,636.6
* Excludes interest income and interest expense relating to interest-bearing
deposits.
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THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollar Amounts in Millions)
Nine Months Ended
September 30,
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1997 % to AEA 1996 % to AEA
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Finance income $ 1,352.0 9.91%* $ 1,222.3 9.94%*
Interest expense 693.7 5.04* 628.2 5.08 *
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Net finance income 658.3 4.87 594.1 4.86
Fees and other income 186.0 1.38 176.8 1.44
Gain on sale of equity interest
acquired in loan workout 58.0 0.43 - -
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Operating revenue 902.3 6.68 770.9 6.30
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Salaries and general operating
expenses 314.1 2.32 291.4 2.38
Provision for credit losses 91.8 0.68 78.6 0.64
Depreciation on operating lease
equipment 108.3 0.80 84.3 0.69
Minority interest in subsidiary
trust holding solely debentures
of the company 11.5 0.09 - -
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Operating expenses 525.7 3.89 454.3 3.71
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Income before provision for
income taxes 376.6 2.79 316.6 2.59
Provision for income taxes 137.5 1.02 119.3 0.98
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Net income $ 239.1 1.77% $ 197.3 1.61%
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Average earning assets
(AEA) $ 18,029.8 $ 16,311.9
* Excludes interest income and interest expense relating to interest-bearing
deposits.
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THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Millions)
September 30, December 31,
1997 1996
Assets ------------- -----------
Financing and leasing assets
Loans
Commercial $ 10,540.3 $ 10,195.6
Consumer 3,344.9 3,239.0
Lease receivables 4,063.1 3,562.0
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Finance receivables 17,948.3 16,996.6
Reserve for credit losses (233.3) (220.8)
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Net finance receivables 17,715.0 16,775.8
Operating lease equipment, net 1,675.7 1,402.1
Consumer finance receivables held for sale 654.3 116.3
Cash and cash equivalents 202.9 103.1
Other assets 606.4 535.2
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Total assets $ 20,854.3 $ 18,932.5
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Liabilities and Stockholders' Equity
Debt
Commercial paper $ 6,168.7 $ 5,827.0
Variable rate senior notes 3,461.5 3,717.5
Fixed rate senior notes 5,659.6 4,761.2
Subordinated fixed rate notes 300.0 300.0
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Total debt 15,589.8 14,605.7
Credit balances of factoring clients 1,535.3 1,134.1
Accrued liabilities and payables 686.3 594.0
Deferred Federal income taxes 550.2 523.3
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Total liabilities 18,361.6 16,857.1
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures of the company 250.0 -
Stockholders' equity
Common stock - authorized, issued and
outstanding - 1,000 shares 250.0 250.0
Paid-in capital 573.3 573.3
Retained earnings 1,419.4 1,252.1
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Total stockholders' equity 2,242.7 2,075.4
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Total liabilities and stockholders' equity $ 20,854.3 $18,932.5
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