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 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) 536-1390
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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 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: July 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 RECORD SECOND QUARTER AND SIX
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MONTH EARNINGS; INCREASES OF 29% and 24% FROM THE 1996 PERIODS
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NEW YORK, NEW YORK, July 17, 1997 --- The CIT Group Holdings, Inc., one of
the nation's largest commercial and consumer lending organizations, today
reported record net income of $93.7 million for the second quarter of 1997, a
29.4% increase from the $72.4 million reported for 1996. Six months earnings
totaled a record $163.8 million, up 23.9% from $132.2 million in 1996. The
improvements reflect growth in net finance income from a higher level of earning
assets and a gain on the sale of an equity interest acquired in a loan workout.
"Once again, CIT's expertise and broad based approach to lending served us
well as we generated record profits and further strengthened our overall
financial position during the quarter," said Albert R. Gamper, Jr., president
and chief executive officer. "While earnings were bolstered by a one time gain,
core operating fundamentals remain strong. Our performance reflects the
creativity and discipline of our people. These qualities along with an efficient
infrastructure and effective marketing make it possible to "raise the bar","
added Gamper.
Financial highlights for 1997:
Return on average financing and leasing assets ("AEA") for the second
quarter of 1997 was 2.07%, up from 1.79% for the second quarter of 1996.
Return on AEA for the first six months of 1997 was 1.83% compared to
1.64% for the same period of 1996.
Earning assets, primarily comprised of finance receivables, operating lease
equipment and consumer finance receivables held for sale, totaled $19.4
billion at June 30, 1997, up 4.4% from $18.6 billion at year end 1996.
The increase was due to strong consumer loan originations and additions
to the operating lease portfolio. For the first six months of 1997, AEA
increased to $17.9 billion, up 10.7% from $16.1 billion in the 1996
period.
Net finance income rose to $218.3 million (4.82% of AEA) in the second
quarter of 1997 compared to $197.3 million (4.87% of AEA) in the second
quarter of 1996. For the six months ended June 30, 1997, net finance
income increased to $432.3 million (4.84% of AEA) from $392.7 million
(4.87% of AEA) in 1996. The changes reflect increases in AEA and lower
borrowing costs, offset by lower yields as the marketplace continues to
be highly competitive.
Fees and other income totaled $49.4 million in the second quarter of 1997
compared to $73.2 million in 1996. For the six months ended June 30,
1997, fees and other income decreased $18.8 million to $107.1 million.
The declines reflect lower securitization activity during the first half
of 1997 and lower gains in the venture capital portfolio.
Earnings included a $58.0 million pre-tax gain on sale of an equity interest
acquired in a loan workout. The loan was originated to a
telecommunications company in the 1980's which subsequently went into
default. The Corporation received all amounts due in 1991 and retained an
equity interest in the company which was sold in June 1997.
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Salaries and general operating expenses for the second quarter of 1997
totaled $110.6 million compared to $97.6 million for the second quarter
of 1996. As a percentage of AEA, salaries and general operating expenses
were 2.44% compared to 2.41% in the second quarter of 1996. Salaries and
general operating expenses for the six months ended June 30, 1997 were
$210.5 million (2.36% of AEA) compared to $193.5 million (2.40% of AEA)
during 1996. The increases are primarily the result of a provision for
vacant leased office space recorded in the second quarter of 1997 and
higher personnel related costs.
Net credit losses during the second quarter of 1997 were $29.9 million,
0.68% of average finance receivables, compared to $23.7 million, 0.59% of
average finance receivables, for the second quarter of 1996. Year-to-date
net credit losses totaled $55.5 million, 0.65% of average finance
receivables, compared to $49.1 million, 0.62% of average finance
receivables in 1996.
Depreciation on operating lease equipment for the second quarter and six
months of 1997 was $33.9 million and $66.0 million, compared to $28.8
million and $56.3 million for the corresponding 1996 periods.
Finance receivables on nonaccrual status declined to $107.1 million (0.64%
of finance receivables) at June 30, 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 six months to $284.1 million
(1.69% of finance receivables) at June 30, 1997, from $292.3 million
(1.72% of finance receivables) at December 31, 1996.
Assets received in satisfaction of loans decreased to $44.5 million at June
30, 1997 from $47.9 million at December 31, 1996.
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Total nonperforming assets, comprised of finance receivables on nonaccrual
status and assets received in satisfaction of loans, as a percentage of
finance receivables, were 0.90% at June 30, 1997, down from 0.99% at
December 31, 1996.
The reserve for credit losses increased to $221.9 million (1.32% of finance
receivables) at June 30, 1997 from $220.8 million (1.30% of finance
receivables) at December 31, 1996.
The ratio of total debt to stockholders' equity, including the redeemable
preferred securities of subsidiary trust, was 6.27 to 1 at June 30, 1997
compared to 7.04 to 1 at December 31, 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
June 30,
1997 % to AEA 1996 % to AEA
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Finance income $ 451.9 9.89%* $ 403.9 9.92%*
Interest expense 233.6 5.07* 206.6 5.05 *
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Net finance income 218.3 4.82 197.3 4.87
Fees and other income 49.4 1.09 73.2 1.81
Gain on sale of equity interest
acquired in loan workout 58.0 1.28 - -
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Operating revenue 325.7 7.19 270.5 6.68
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Salaries and general operating
expenses 110.6 2.44 97.6 2.41
Provision for credit losses 29.0 0.64 26.6 0.66
Depreciation on operating lease
equipment 33.9 0.75 28.8 0.71
Minority interest in subsidiary
trust holding solely debentures
of the company 4.8 0.11 - -
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Operating expenses 178.3 3.94 153.0 3.78
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Income before provision for
income taxes 147.4 3.25 117.5 2.90
Provision for income taxes 53.7 1.18 45.1 1.11
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Net income $ 93.7 2.07% $ 72.4 1.79%
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Average financing and leasing
assets (AEA) $18,132.7 $16,192.3
* Excludes interest income and interest expense relating to interest-bearing
deposits.
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THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollar Amounts in Millions)
Six Months Ended
June 30,
1997 % to AEA 1996 % to AEA
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Finance income $ 889.0 9.87%* $ 806.5 9.94%*
Interest expense 456.7 5.03* 413.8 5.07 *
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Net finance income 432.3 4.84 392.7 4.87
Fees and other income 107.1 1.20 125.9 1.56
Gain on sale of equity interest
acquired in loan workout 58.0 0.65 - -
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Operating revenue 597.4 6.69 518.6 6.43
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Salaries and general operating
expenses 210.5 2.36 193.5 2.40
Provision for credit losses 56.0 0.63 54.4 0.67
Depreciation on operating lease
equipment 66.0 0.74 56.3 0.70
Minority interest in subsidiary
trust holding solely debentures
of the company 6.7 0.07 - -
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Operating expenses 339.2 3.80 304.2 3.77
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Income before provision for
income taxes 258.2 2.89 214.4 2.66
Provision for income taxes 94.4 1.06 82.2 1.02
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Net income $ 163.8 1.83% $ 132.2 1.64%
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Average financing and leasing
assets (AEA) $17,870.0 $16,146.3
* 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)
June 30, December 31,
1997 1996
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Assets
Financing and leasing assets
Loans
Commercial $ 9,776.3 $10,195.6
Consumer 3,100.1 3,239.0
Lease receivables 3,938.3 3,562.0
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Finance receivables 16,814.7 16,996.6
Reserve for credit losses (221.9) (220.8)
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Net finance receivables 16,592.8 16,775.8
Operating lease equipment, net 1,573.0 1,402.1
Consumer finance receivables held for sale 950.1 116.3
Cash and cash equivalents 252.0 103.1
Other assets 585.7 535.2
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Total assets $19,953.6 $18,932.5
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Liabilities and Stockholders' Equity
Debt
Commercial paper $ 6,377.8 $ 5,827.0
Variable rate senior notes 3,261.5 3,717.5
Fixed rate senior notes 5,360.5 4,761.2
Subordinated fixed rate notes 300.0 300.0
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Total debt 15,299.8 14,605.7
Credit balances of factoring clients 1,089.1 1,134.1
Accrued liabilities and payables 603.3 594.0
Deferred Federal income taxes 520.8 523.3
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Total liabilities 17,513.0 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 1,367.3 1,252.1
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Total stockholders' equity 2,190.6 2,075.4
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Total liabilities and stockholders' equity $19,953.6 $18,932.5
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