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 22, 1998
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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 the attached press release regarding 1998 first quarter
earnings, filed as Exhibit 99.1.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release, dated April 22, 1998, Regarding
Declaration of a Dividend for the Quarter Ending
March 31, 1998.
<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, 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 22, 1998
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Exhibit 99.1
[The CIT Group, Inc. Logo]
Contact: Jeffrey Simon
Senior Vice President
Investor Relations
(973) 535-5911
FROM: THE CIT GROUP, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
FOR IMMEDIATE RELEASE
THE CIT GROUP ANNOUNCES 16.5% INCREASE IN QUARTERLY NET INCOME;
RECORD FIRST QUARTER NET INCOME OF $81.7 MILLION
NEW YORK, NEW YORK, April 22, 1998 --- The CIT Group, Inc. (NYSE:CIT) today
announced record first quarter net income of $81.7 million, up 16.5% from $70.1
million for the first quarter of 1997. Net income per diluted share for the
first quarter of 1998 was $0.50, up from $0.44 for the first quarter of 1997.
The improvements reflect growth in revenues from strong new business
originations and a higher level of financing and leasing assets, continued
improvements in operating efficiency, and lower credit losses.
"Our first quarter performance continues to demonstrate our ability to
generate internal growth from our business franchises and new initiatives. Our
loan and lease originations were strong, with all units posting growth over the
same period of 1997," said Albert R. Gamper, Jr., president and chief executive
officer. "The first quarter record results continue to reflect our focus on
operating fundamentals of quality growth, broad-based revenue generation, and
efficient operations."
<PAGE>
Financial highlights:
Total managed assets, which include both financing and leasing assets as
well as finance receivables previously securitized, increased to $23.3 billion
at March 31, 1998 from $22.3 billion at December 31, 1997, a 4.3% increase. Both
the commercial and consumer portfolios increased approximately $500 million from
year-end 1997. Total managed assets increased $2.8 billion or 13.4% from a year
ago.
Net finance income rose to $228.0 million (4.78% of average earning assets
or "AEA") in the first quarter of 1998 as a result of the higher earning asset
level, compared with $214.0 million (4.87% of AEA) in the first quarter of 1997.
Fees and other income for the first quarter of 1998 were $66.4 million, up
from $57.7 million for 1997 from a higher level of factoring commissions due to
increased volume, strong lending and servicing fees, and higher gains from
leasing equipment transactions.
Salaries and general operating expenses for the first quarter of 1998
totaled $101.7 million compared with $99.9 million for the 1997 period, up 1.8%
from the prior year. The efficiency ratio improved to 40.5% from 42.0%.
The provision for credit losses decreased $4.5 million to $22.5 million in
the first quarter as a result of lower net commercial credit losses. Net credit
losses were $20.0 million, 0.45% of average finance receivables, down from $25.7
million, 0.60%, for the first quarter of 1997.
At March 31, 1998, the reserve for credit losses increased to $240.2 million
(1.33% of finance receivables) up from $235.6 million at December 31, 1997.
The CIT Group, Inc., one of the nation's largest commercial and consumer
lending organizations, is an affiliate of and majority-owned by The Dai-Ichi
Kangyo Bank, Limited, one of the largest banks in the world.
(SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA)
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THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, except Net Income per Share)
For the Quarter Ended
March 31,
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1998 1997
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Finance income $472.6 $437.1
Interest expense 244.6 223.1
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Net finance income 228.0 214.0
Fees and other income 66.4 57.7
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Operating revenue 294.4 271.7
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Salaries and general operating expenses 101.7 99.9
Provision for credit losses 22.5 27.0
Depreciation on operating lease equipment 38.3 32.1
Minority interest in subsidiary trust holding solely
debentures of the Company 4.8 1.9
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Operating expenses 167.3 160.9
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Income before provision for income taxes 127.1 110.8
Provision for income taxes 45.4 40.7
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Net income $ 81.7 $ 70.1
====== ======
Basic net income per share $ 0.50 $ 0.45
Weighted average shares outstanding 162,225,000 157,500,000
Diluted net income per share $0.50 $0.44
Weighted average shares outstanding 163,498,384 158,448,527
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
March 31, December 31,
1998 1997
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(unaudited)
Assets
Financing and leasing assets
Loans
Commercial $10,264.9 $ 9,922.5
Consumer 3,733.1 3,664.8
Commercial lease receivables 4,102.1 4,132.4
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Finance receivables 18,100.1 17,719.7
Reserve for credit losses (240.2) (235.6)
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Net finance receivables 17,859.9 17,484.1
Operating lease equipment, net 2,054.2 1,905.6
Consumer finance receivables held for sale 846.2 268.2
Cash and cash equivalents 242.2 140.4
Other assets 713.0 665.8
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Total assets $21,715.5 $20,464.1
========= =========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 5,835.5 $ 5,559.6
Variable rate senior notes 3,100.0 2,861.5
Fixed rate senior notes 7,151.7 6,593.8
Subordinated fixed rate notes 300.0 300.0
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Total debt 16,387.2 15,314.9
Credit balances of factoring clients 1,243.4 1,202.6
Accrued liabilities and payables 720.4 660.1
Deferred federal income taxes 614.8 603.6
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Total liabilities 18,965.8 17,781.2
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely debentures of the Company 250.0 250.0
Stockholders' equity
Class A common stock, par value $0.01 per share,
700,000,000 shares authorized and 37,167,810 and
37,173,527 issued and outstanding at March 31, 1998
and December 31, 1997, respectively 0.4 0.4
Class B common stock, par value $0.01 per share,
510,000,000 shares authorized and 126,000,000 issued
and outstanding 1.3 1.3
Paid-in capital 949.7 948.3
Retained earnings 1,548.3 1,482.9
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Total stockholders' equity 2,499.7 2,432.9
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Total liabilities and stockholders' equity $21,715.5 $20,464.1
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THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
For the Quarter Ended March 31,
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Dollars in Millions 1998 1997
Selected Data and Ratios
Profitability
Net income per diluted share $ 0.50 $ 0.44
Return on average common
stockholders' equity 13.2% 13.3%
Return on AEA 1.71% 1.60%
Other
Net interest margin
as a percentage of AEA 4.78% 4.87%
Salaries and general operating
expenses as a percentage of average
managed assets(1) 1.90% 2.10%
Efficiency ratio 40.5% 42.0%
Net credit losses as a percentage
of average finance receivables 0.45% 0.60%
At March 31, At December 31, At March 31,
1998 1997 1997
Credit Quality
60+ days contractual delinquency
as a percentage of finance receivables
Commercial 1.27% 1.20% 1.52%
Consumer 3.28% 3.48% 2.49%
Total 1.68% 1.67% 1.70%
Total nonperforming assets as a
percentage of finance receivables (2) 1.35% 1.17% 1.15%
Reserve for credit losses as a
percentage of finance receivables 1.33% 1.33% 1.30%
Ratio of reserve for credit losses
to trailing twelve-month net
credit losses 2.52x 2.33x 2.19x
Capital and Leverage
Total debt to stockholders' equity and
Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely
debentures of the Company 5.96x 5.71x 6.25x
Total debt to stockholders' equity (3) 6.66x 6.40x 7.10x
Total common stockholders' equity $ 2,499.7 $ 2,432.9 $ 2,133.0
Managed Assets
Commercial:
Finance receivables $14,367.0 $14,054.9 $13,830.4
Operating lease equipment, net 2,054.2 1,905.6 1,501.9
Other 63.3 65.8 55.4
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Total Commercial 16,484.5 16,026.3 15,387.7
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Consumer:
Finance receivables 3,733.1 3,664.8 3,186.0
Finance receivables held for sale 846.2 268.2 539.8
Finance receivables previously
securitized 2,231.6 2,385.6 1,429.2
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Total Consumer 6,810.9 6,318.6 5,155.0
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Total managed assets $23,295.4 $22,344.9 $20,542.7
========= ========= =========
(1)Average managed assets reflect average earning assets plus the average of
consumer finance receivables previously securitized and currently managed by
the Company.
(2)Total nonperforming assets reflect both commercial and consumer finance
receivables on nonaccrual status and assets received in satisfaction of
loans.
(3)Total debt includes, and stockholders' equity excludes, $250.0 million of
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely debentures of the Company.
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
MANAGED ASSETS BY BUSINESS UNIT
March 31, December 31, March 31,
1998 1997 1997
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Capital Finance $ 3,743.3 $ 3,682.5 $ 3,603.9
Equipment Financing 8,163.5 8,027.2 7,568.6
Commercial Services 2,312.4 2,113.1 2,009.4
Business Credit* 1,298.2 1,247.9 1,351.4
Credit Finance* 903.8 889.8 799.0
Equity Investments 63.3 65.8 55.4
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Total Commercial 16,484.5 16,026.3 15,387.7
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Consumer Finance 2,284.9 1,992.3 2,143.8
Sales Financing 2,294.4 1,940.7 1,582.0
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Total Consumer 4,579.3 3,933.0 3,725.8
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Finance receivables previously
securitized:
Consumer Finance 419.6 453.8 -
Sales Financing 1,812.0 1,931.8 1,429.2
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2,231.6 2,385.6 1,429.2
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Total managed assets $23,295.4 $22,344.9 $20,542.7
========= ========= =========
Sales Financing managed assets
by product line:
Recreation vehicles $ 1,664.3 $ 1,596.5 $ 1,291.2
Manufactured housing 1,488.4 1,471.9 1,249.8
Recreational boat 799.8 682.5 425.7
Wholesale inventory financing 153.9 121.6 44.5
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$ 4,106.4 $ 3,872.5 $ 3,011.2
========= ========= =========
* In October 1997, $95.0 million of finance receivables
were transferred from Business Credit to Credit
Finance.
FEES AND OTHER INCOME
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Three Months Ended
March 31,
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1998 1997
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Factoring commissions $23.0 $21.2
Fees and other 22.1 17.0
Gains on sales of leasing equipment 14.8 11.4
Gains on sales of venture capital investments 6.5 7.7
Gains on securitizations and sales of finance receivables - 0.4
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$66.4 $57.7
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