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 15, 1998
----------------
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)
<PAGE>
Item 5. Other Events.
--------------
See the attached press releases, which are incorporated herein by
reference, regarding:
1. The 1998 third quarter and nine month earnings, filed as
Exhibit 99.1;
2. The declaration of a dividend for the quarter ending September 30,
1998 of $.10 per share, payable on November 30, 1998 to holders of
record at the close of business on November 11, 1998, filed as
Exhibit 99.2; and
3. The filing of a registration statement with the Securities and
Exchange Commission for 49 million shares of Class A Common Stock.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release, dated October 15, 1998, Regarding 1998
Third Quarter and Nine Month Earnings.
99.2 Press Release, dated October 15, 1998, Regarding
Declaration of a Dividend for the Quarter Ending
September 30, 1998.
99.3 Press Release, dated October 15, 1998, Regarding
Filing of a Registration Statement For 49 Million
Shares of Class A Common Stock.
-3-
<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.
--------------------------------
(Registrant)
By: /s/ JOSEPH M. LEONE
--------------------------------
Joseph M. Leone
Executive Vice President and
Chief Financial Officer
Dated: October 15, 1998
-4-
<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.
---------------------------------
(Registrant)
By:
---------------------------------
Joseph M. Leone
Executive Vice President and
Chief Financial Officer
Dated: October 15, 1998
-4-
<PAGE>
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 RECORD THIRD QUARTER AND RECORD NINE MONTH
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NET INCOME OF $86.1 MILLION, $.53 PER DILUTED SHARE AND $251.5 MILLION,
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$1.54 PER DILUTED SHARE
-----------------------
NEW YORK, NEW YORK, October 15, 1998 --- The CIT Group, Inc. (NYSE: CIT)
today announced record 1998 third quarter net income of $86.1 million, up 14.3%
from $75.3 million reported for 1997. Nine month net income totaled a record
$251.5 million, up from $239.1 million reported in 1997. The 1997 earnings
included a one-time $58 million pretax gain on the sale of an equity interest
acquired in a loan workout and certain nonrecurring expenses. Excluding these
special items, 1997 net income was $210.4 million for the first nine months.
Earnings per diluted share for the third quarter of 1998 were $0.53, up
from $0.48 for the third quarter of last year, with nine month earnings per
diluted share increasing to $1.54 from $1.33, excluding the 1997 special items.
The strong 1998 earnings for the quarter and nine months reflect continued
significant growth in all business units, sharply lower commercial credit
losses, and continued improvements in operating efficiency.
"The recent market upheaval highlights the important strengths of
financial service companies like CIT. Our highly rated balance sheet, diversity
of businesses, and strong capital position serve us well," said Albert R.
Gamper, Jr., president and chief executive officer. "We will continue to focus
on opportunities in line with our business strategy which includes an emphasis
on strong credit quality and collateral coverage, a domestic marketing focus,
and growing our franchise businesses."
<PAGE>
Financial highlights:
Total managed assets increased to $25.4 billion at September 30, 1998, up
13.9% from $22.3 billion December 31, 1997. Commercial financing and leasing
assets grew to $18.0 billion, up approximately $1.7 billion or 10.4% from
September 30, 1997 and an increase of $2.0 billion or 12.5% from year-end 1997.
Consumer managed assets increased to $7.4 billion, up approximately $1.5 billion
or 25.4% from $5.9 billion a year ago and 17.0% from December 31, 1997.
Net finance income improved to $246.8 million in the third quarter of 1998
compared with $226.0 million in the third quarter of 1997 as a result of strong
1998 asset growth. Third quarter net finance income as a percentage of average
earning assets was 4.78%, compared to 4.92% in the third quarter of 1997.
Fees and other income for the third quarter of 1998 were $69.0 million,
down 12.5% from $78.9 million for the third quarter of 1997. Lower gains on
securitizations of $7.3 million in 1998 versus $21.5 million in 1997, were
partially offset by higher servicing fees and gains on the sale of equipment
coming off lease.
Productivity improved while expense growth was well contained. Salaries
and general operating expenses for the third quarter of 1998 totaled $105.3
million compared with $103.6 million for the third quarter of 1997, an increase
of 1.6%. The efficiency ratio improved to 39.2% in the 1998 third quarter from
40.2% a year ago.
The provision for credit losses was $30.6 million in the 1998 third
quarter, a decrease of $5.2 million from the prior year principally due to lower
1998 chargeoffs. The 1998 third quarter net chargeoffs of $21.6 million, 0.46%
of average finance receivables, declined from $24.6 million, 0.57%, for the
third quarter of 1997. At September 30, 1998, the reserve for credit losses
<PAGE>
increased to $257.9 million, up $12.1 million from $245.8 million at
June 30, 1998, and up $22.3 million from $235.6 million at year-end 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).
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, except Net Income per Share)
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
------------------------------------------
1998 1997 1998 1997
---- ---- ---- ----
Finance income $510.6 $463.0 $1,481.4 $1,352.0
Interest expense 263.8 237.0 766.2 693.7
------ ------ ------- -------
Net finance income 246.8 226.0 715.2 658.3
Fees and other income 69.0 78.9 196.1 186.0
Gain on sale of equity interest
acquired in loan workout - _-__ -___ 58.0
------ ------- ----- -----
Operating revenue 315.8 304.9 911.3 902.3
------ ------- ------ -----
Salaries and general operating expenses 105.3 103.6 311.0 314.1
Provision for credit losses 30.6 35.8 75.0 91.8
Depreciation on operating lease equipment 42.7 42.3 121.4 108.3
Minority interest in subsidiary trust
holding solely debentures of the Company 4.8 4.8 14.4 11.5
----- -------- -------- -------
Operating expenses 183.4 186.5 521.8 525.7
----- -------- -------- -------
Income before provision for income taxes 132.4 118.4 389.5 376.6
Provision for income taxes 46.3 43.1 138.0 137.5
------ -------- ------- -------
Net income $ 86.1 $ 75.3 $251.5 $ 239.1
======== ========= ====== =======
Basic net income per share $0.53 $0.48 $1.55 $1.52
Weighted average shares
outstanding 162,143,304 157,500,000 162,197,469 157,500,000
Diluted net income per share $0.53 $0.48 $1.54 $1.51
Weighted average shares
outstanding 163,304,325 158,448,527 163,488,689 158,448,527
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
September 30, December 31,
1998 1997
---- ----
(unaudited)
Assets
Financing and leasing assets
Loans
Commercial $10,979.1 $ 9,922.5
Consumer 3,975.4 3,664.8
Commercial lease receivables 4,570.5 4,132.4
--------- -----------
Finance receivables 19,525.0 17,719.7
Reserve for credit losses (257.9) (235.6)
--------- -----------
Net finance receivables 19,267.1 17,484.1
Operating lease equipment, net 2,395.0 1,905.6
Consumer finance receivables held for sale 829.7 268.2
Cash and cash equivalents 175.4 140.4
Other assets 843.2 665.8
----------- -----------
Total assets $ 23,510.4 $ 20,464.1
=========== ===========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 7,079.1 $ 5,559.6
Variable rate senior notes 3,575.0 2,861.5
Fixed rate senior notes 6,953.0 6,593.8
Subordinated fixed rate notes 200.0 300.0
----------- -----------
Total debt 17,807.1 15,314.9
Credit balances of factoring clients 1,429.1 1,202.6
Accrued liabilities and payables 707.1 660.1
Deferred federal income taxes 677.5 603.6
----------- -----------
Total liabilities 20,620.8 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;
Authorized 700,000,000 shares
Issued: 37,146,379 shares in 1998 and 37,173,527
shares in 1997
Outstanding: 36,537,579 shares in 1998 and
37,173,527 shares in 1997 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 952.3 948.3
Retained earnings 1,701.8 1,482.9
Treasury stock at cost (608,800 shares; Class A) (16.2) __-____
---------- -------
Total stockholders' equity 2,639.6 2,432.9
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Total liabilities and stockholders' equity $23,510.4 $20,464.1
========= =========
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
For the Quarter Ended For the Nine Months
September 30, Ended September 30,
---------------------------------------------
1998 1997 1998 1997
Selected Data and Ratios
Profitability
Net income per diluted share $0.53 $0.48 $1.54 $1.51
Return on average
stockholders' equity 13.18% 13.52% 13.19% 14.72%
Return on AEA 1.67% 1.64% 1.68% 1.77%
Efficiency ratio 39.2% 40.2% 40.1% 40.1%
Ratios Excluding Nonrecurring Items(1)
Net Income per diluted share $0.53 $0.48 $1.54 $1.33
Return on average stockholder's equity 13.18% 13.64% 13.19% 13.01%
Return on AEA 1.67% 1.64% 1.68% 1.56%
Efficiency ratio 39.2% 40.2% 40.1% 42.0%
Other
Net interest margin as a percentage of AEA 4.78% 4.92% 4.78% 4.87%
Salaries and general operating expenses
as a percentage of average
managed assets(2) 1.82% 2.05% 1.86% 2.11%
Net credit losses as a percentage of:
Total average finance receivables 0.46% 0.57% 0.42% 0.63%
Total average managed assets 0.37% 0.49% 0.35% 0.54%
Commercial average finance receivables 0.30% 0.43% 0.24% 0.52%
Consumer average finance receivables 1.08% 1.17% 1.12% 1.11%
Consumer average managed assets 0.87% 0.89% 0.89% 0.87%
Credit Quality At September 30, At December 31, At September 30,
60+ days contractual 1998 1997 1997
delinquency as a
percentage of finance
receivables
Commercial 1.26% 1.20% 1.22%
Consumer 3.30% 3.48% 3.28%
Total 1.67% 1.67% 1.60%
Total nonperforming assets
as a percentage of finance
receivables (3) 1.34% 1.17% 1.09%
Reserve for credit losses
as a percentage of finance
receivables 1.32% 1.33% 1.30%
Ratio of reserve for credit
losses to trailing twelve-month
net credit losses 3.27x 2.33x 2.12x
Capital and Leverage
Total debt to stockholders' equity
and Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely
debentures of the Company 6.16x 5.71x 6.25x
Total debt to stockholders'
equity (4) 6.84x 6.40x 7.06x
Total common stockholders'
equity (in millions) $2,639.6 $ 2,432.9 $ 2,242.7
(1) Earnings for the nine months of 1997 exclude $.18 per diluted share related
to the net effect of a gain on the sale of an equity interest acquired in a
loan workout and certain nonrecurring expenses.
(2) Average managed assets reflect average earning assets plus the average of
consumer finance receivables previously securitized and currently managed
by the Company.
(3) Total nonperforming assets reflect both commercial and consumer finance
receivables on nonaccrual status and assets received in satisfaction of
loans.
(4) 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 At September 30, At December 31, At September 30,
1998 1997 1997
---- ---- ----
Commercial:
Finance receivables $15,549.6 $ 14,054.9 $14,603.4
Operating lease
equipment, net 2,395.0 1,905.6 1,675.7
Other 87.3 65.8 60.0
-------- ---------- ---------
Total Commercial 18,031.9 16,026.3 16,339.1
---------- ---------- ---------
Consumer:
Finance receivables 3,975.4 3,664.8 3,344.9
Finance receivables held
for sale 829.7 268.2 654.3
Finance receivables
previously securitized 2,586.9 2,385.6 1,918.3
-------- -------- --------
Total Consumer 7,392.0 6,318.6 5,917.5
-------- -------- --------
Total managed assets $ 25,423.9 $ 22,344.9 $ 22,256.6
========== ========== ===========
MANAGED ASSETS BY BUSINESS UNIT
At September 30, At December 31, At September 30,
1998 1997 1997
---- ---- ----
Equipment Financing
Finance Receivables $8,060.3 $ 7,403.4 $ 7,182.1
Operating lease
equipment, net 676.7 623.8 533.5
-------- ------------ ------------
Total Equipment
Financing 8,737.0 8,027.2 7,715.6
-------- ------------ ------------
Capital Finance
Finance Receivables $1,662.0 $ 1,755.5 $ 1,790.3
Operating lease
equipment, net 1,690.6 1,251.8 1,101.2
-------- ------------ ---------
3,352.6 3,007.3 2,891.5
Liquidating Portfolio** 497.5 675.2 771.2
-------- ------------ ---------
Total Capital Finance 3,850.1 3,682.5 3,662.7
-------- ------------ ---------
Commercial Services 2,762.1 2,113.1 2,586.9
Business Credit* 1,545.5 1,247.9 1,435.7
Credit Finance* 1,049.9 889.8 878.2
Equity Investments 87.3 65.8 60.0
-------- ------------ ---------
Total Commercial 18,031.9 16,026.3 16,339.1
-------- ------------ ---------
Consumer Finance 2,123.7 1,992.3 1,856.4
Sales Financing 2,681.4 1,940.7 2,142.8
-------- ------------ ---------
Total Consumer 4,805.1 3,933.0 3,999.2
-------- ------------ ---------
Finance receivables
previously securitized:
Consumer Finance 661.2 453.8 482.9
Sales Financing 1,925.7 1,931.8 1,435.4
-------- ------------ ---------
2,586.9 2,385.6 1,918.3
-------- ------------ ---------
Total managed assets $25,423.9 $ 22,344.9 $ 22,256.6
========= ============ ============
Sales Financing managed
assets by product line:
Recreation vehicles $ 1,786.4 $ 1,596.5 $ 1,464.3
Manufactured housing 1,503.3 1,471.9 1,405.8
Recreational boat 1,092.4 682.5 609.7
Wholesale inventory
financing 225.1 121.6 98.4
--------- ------------ ------------
$ 4,607.2 $ 3,872.5 $ 3,578.2
========= ============ ============
* In October 1997, $95.0 million of finance receivables were transferred from
Business Credit to Credit Finance.
** Consists primarily of oceangoing maritime and project finance.
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
FEES AND OTHER INCOME Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------
1998 1997 1998 1997
---- ---- ---- ----
Factoring commissions $ 24.8 $ 26.0 $ 70.4 $ 69.4
Fees and other income 24.9 19.5 69.0 53.8
Gains on sales of leasing
equipment 11.4 7.9 35.2 27.0
Gains on securitizations 7.3 21.5 12.5 23.8
Gains on sales of venture
capital investments .6 4.0 9.0 12.0
------ ------ ------ -------
$ 69.0 $ 78.9 $196.1 $ 186.0
====== ====== ====== =======
<PAGE>
Exhibit 99.2
[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, INC. DECLARES REGULAR QUARTERLY DIVIDEND
-------------------------------------------------------
NEW YORK, NEW YORK, October 15, 1998 --- The Board of Directors of The
CIT Group, Inc. (NYSE:CIT) declared a regular quarterly cash dividend of $.10
per common share for shareholders of record on November 11, 1998. The cash
dividend is payable on November 30, 1998.
With more than $25 billion in managed assets, The CIT Group, Inc.
(http://www.citgroup.com) is one of the nation's largest commercial and consumer
financing companies. Founded in 1908, the Company provides diversified financing
products and services to a broad range of customers through strategically
focused business units.
# # #
<PAGE>
Exhibit 99.3
[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 TO REGISTER 49 MILLION SHARES OF COMMON STOCK
-----------------------------------------------------------
FOR THE DAI-ICHI KANGYO BANK.
-----------------------------
NEW YORK, NEW YORK, OCTOBER 15,1998--THE CIT GROUP, INC. (NYSE:CIT) announced
today that it will file a registration statement with the SEC on behalf of The
Dai-Ichi-Kangyo Bank, ("DKB"), to sell 49 million Class A common shares of The
CIT Group, representing 30% of the outstanding shares. After this sale, DKB will
have economic and voting interests of approximately 47% of CIT.
"We have decided to sell down part of our stake in CIT in order to raise
capital, deconsolidate our investment, and at the same time, provide greater
liquidity in CIT's public shares", said Takasuke Kaneko, Deputy President of
DKB. "CIT is a terrific strategic investment for DKB that has grown in value in
the 1990's. Our continuing stake provides us with an investment in a company
with a strong position in the United States."
"CIT management strongly supports DKB's decision and we believe that the
structure of this transaction will enhance shareholder value over time", said
Albert R. Gamper, Jr., President and CEO of CIT.
Currently, DKB owns all 126 million shares of the Class B common stock which
have five votes per share. The public owns all of the 36.5 million shares of the
Class A common stock which have one vote per share. Concurrent with the sale of
the 49 million shares, all of DKB's Class B shares will be converted to Class A
shares.
J. P. Morgan & Co. will be running the books on the Offering.
The Offering will only be made by means of a prospectus. This press release
shall not constitute an offer to sell or the solicitation of an offer to buy.
THE CIT GROUP, Inc., established in 1908, is one of the nation's largest
commercial and consumer lending organizations.
