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) January 28, 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)
<PAGE>
Item 5. Other Events.
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See the attached press release regarding 1997 fourth quarter
and annual earnings, filed as Exhibit 99.1. See also the attached press release
regarding election of a new director, filed as Exhibit 99.2, the Consolidated
Balance Sheets at December 31, 1997 and 1996, filed as Exhibit 99.3, and
Financing and Leasing Assets by Business Unit at December 31, 1997 and 1996,
filed as Exhibit 99.4.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release Regarding 1997 Fourth Quarter and Annual
Earnings, dated January 28, 1998.
99.2 Press Release Regarding Election of a New Director, dated
January 28, 1998.
99.3 Consolidated Balance Sheets of The CIT Group, Inc., at
December 31, 1997 and 1996.
99.4 Financing and Leasing Assets by Business Unit, at December
31, 1997 and 1996.
<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: January 28, 1998
Exhibit 99.1
[Logo of The CIT Group, Inc.]
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 FOURTH QUARTER AND TWELVE MONTH 1997 NET INCOME;
TENTH CONSECUTIVE INCREASE IN ANNUAL NET INCOME
NEW YORK, NEW YORK, January 28, 1998 --- The CIT Group, Inc. (NYSE: CIT)
today announced record quarterly and full year results, marking its tenth
consecutive increase in annual earnings. Fourth quarter 1997 net income was
$71.0 million, up from $62.8 million for 1996. Net income for the fourth quarter
of 1997 included an after-tax IPO-related charge of $6.2 million. Excluding the
IPO-related charge, net income per diluted share for the fourth quarter of 1997
was $0.48, up from $0.40 for 1996.
Net income for 1997 was $310.1 million, up from $260.1 million for 1996.
Full year 1997 net income per diluted share was $1.95, up from $1.64 for 1996.
Net income for 1997 included a one-time gain on sale of an equity interest
acquired in a loan workout recorded during the second quarter, partially offset
by the IPO-related charge and certain other nonrecurring expenses.
The fourth quarter and full year results reflect growth in net finance
income from a higher level of financing and leasing assets, lower net credit
losses, and improving operating efficiency.
"1997 was a successful and exciting year for The CIT Group. The Company
delivered its tenth consecutive year of increased earnings and continued to
focus on fundamentals, including growth in assets, consistent net interest
margins, improving operating efficiency and
<PAGE>
best in class credit quality", said Albert R. Gamper, Jr., president and chief
executive officer. "The success of our IPO, coupled with our franchise
businesses, position the Company to take advantage of new opportunities and
create value for all of our shareholders, including every employee", added
Gamper.
Financial highlights for 1997:
Total managed assets, which include both financing and leasing assets as
well as consumer finance receivables previously securitized, increased 12% to
$22.3 billion at December 31, 1997 from $20.0 billion at December 31, 1996. Both
the commercial and consumer portfolios increased from year end 1996, with
consumer growing at a faster pace. Consumer managed assets grew to 28% of total
managed assets up from 24% at year end 1996.
Net finance income rose to $229.2 million (4.88% of AEA) in the fourth
quarter of 1997 compared to $203.8 million (4.76% of AEA) in the fourth quarter
of 1996. For the full year, net finance income increased to $887.5 million
(4.87% of AEA) from $797.9 million (4.82% of AEA) in 1996. The improvements
primarily reflect increases in AEA (average of finance receivables, operating
lease equipment, consumer finance receivables held for sale and certain
investments, less credit balances of factoring clients).
Fees and other income for the fourth quarter of 1997 were $61.8 million,
down from $67.3 million for 1996 due to a lower level of gains from equipment
sales. Fees and other income for the year were $247.8 million, relatively
unchanged from the $244.1 million in 1996 due to higher factoring commissions
and gains from higher levels of securitization activity offset by a lower level
of gains from equipment sales.
Salaries and general operating expenses for the fourth quarter of 1997
totaled $114.3 million compared to $101.7 million for the 1996 period. In
conjunction with the Company's initial public offering, a long-term incentive
plan was terminated resulting in a $10.0 million ($6.2 million after-tax) charge
during the fourth quarter. Expenses, excluding this IPO-related charge,
increased 2.6% from the prior year fourth quarter and the efficiency ratio
improved to 42.1% from 43.5%. Salaries and general operating expenses for the
full year were $428.4 million compared to $393.1 million in the prior year.
As a result of lower net credit losses, the provision for credit losses
decreased $10.9 million to $21.9 million in the fourth quarter, from $32.8
million for the 1996 fourth quarter. Net
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<PAGE>
credit losses were $20.9 million, 0.46%
of average finance receivables, down from $30.1 million, 0.70%, for the fourth
quarter of 1996. The decrease reflects credit losses recorded in 1996 for
certain loans secured by oceangoing carriers and cruise line vessels and a
higher level of recoveries in the 1997 period. For the year ended December 31,
1997 the provision for credit losses was $113.7 million compared to $111.4
million in 1996. Net credit losses totaled $101.0 million, 0.59%, for 1997
compared to $101.5 million, 0.62%, in 1996.
At year end 1997, the reserve for credit losses was $235.6 million (1.33% of
finance receivables) up from $220.8 million (1.30% of finance receivables) at
December 31, 1996.
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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<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT NET INCOME PER SHARE)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------------ ------------------------------
Dollars in millions, except per share 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Finance income $ 472.7 $ 423.9 $1,824.7 $1,646.2
Interest expense 243.5 220.1 937.2 848.3
-------- -------- -------- --------
Net finance income 229.2 203.8 887.5 797.9
Fees and other income 61.8 67.3 247.8 244.1
Gain on sale of equity interest acquired
in loan workout - - 58.0 -
-------- -------- -------- --------
Operating revenue 291.0 271.1 1,193.3 1,042.0
-------- -------- -------- --------
Salaries and general operating expenses 114.3 101.7 428.4 393.1
Provision for credit losses 21.9 32.8 113.7 111.4
Depreciation on operating lease
equipment 38.5 37.4 146.8 121.7
Minority interest in subsidiary trust
holding solely debentures of the
Company 4.8 - 16.3 -
-------- -------- -------- --------
Operating expenses 179.5 171.9 705.2 626.2
-------- -------- -------- --------
Income before provision for income
taxes 111.5 99.2 488.1 415.8
Provision for income taxes 40.5 36.4 178.0 155.7
-------- -------- -------- --------
Net income $71.0 $62.8 $310.1 $260.1
======== ======== ======== ========
Basic net income per share $0.44 $0.40 $1.96 $1.65
Weighted average shares outstanding 160,016,576 157,500,000 158,134,315 157,500,000
Diluted net income per share $0.44 $0.40 $1.95 $1.64
Weighted average shares outstanding 161,258,149 158,448,527 159,156,706 158,448,527
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED AT OR FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------------- ----------------------------------
Dollars in millions 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED DATA AND RATIOS
PROFITABILITY
Ratios Based on Net Income
Net income per diluted share $0.44 $0.40 $1.95 $1.64
Return on average stockholders' equity 12.2% 12.2% 14.0% 13.0%
Return on AEA 1.51% 1.46% 1.70% 1.57%
Ratios Excluding Nonrecurring Items(1)
Net income per diluted share $0.48 $0.40 $1.81 $1.64
Return on average stockholders' equity 13.3% 12.2% 13.1% 13.0%
Return on AEA 1.64% 1.46% 1.58% 1.57%
Other
Net interest margin as a percentage of AEA 4.88% 4.76% 4.87% 4.82%
Salaries and general operating expenses as a
percentage of average serviced assets(2) 2.05% 2.14% 2.06% 2.15%
CREDIT QUALITY
Net credit losses as a percentage of average
finance receivables 0.46% 0.70% 0.59% 0.62%
60+ days contractual delinquency as a percentage of finance receivables 1.67% 1.72%
Nonperforming assets as a percentage of finance receivables(3) 0.69% 0.99%
Reserve for credit losses as a percentage of finance receivables 1.33% 1.30%
Ratio of reserve for credit losses to current period net credit losses 2.33x 2.18x
CAPITAL AND LEVERAGE
Total debt to stockholders' equity and Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding solely
debentures of the Company
5.71x 7.04x
Total debt to stockholders' equity (4) 6.40x 7.04x
Total common stockholders' equity $2,432.9 $2,075.4
OTHER
Commercial finance receivables $14,054.9 $13,757.6
Consumer finance receivables 3,664.8 3,239.0
Operating lease equipment, net 1,905.6 1,402.1
Consumer finance receivables held for sale 268.2 116.3
Other 65.8 53.0
-------- --------
Total financing and leasing assets 19,959.3 18,568.0
Consumer finance receivables previously securitized 2,385.6 1,437.4
-------- --------
Total managed assets $22,344.9 $20,005.4
========= =========
<FN>
(1) Earnings for the fourth quarter of 1997 exclude a $0.04 per diluted share
IPO-related charge. Earnings for the full year 1997 exclude $0.14 per diluted
share related to a one-time gain on sale, partially offset by the IPO-related
charge and certain other nonrecurring expenses.
(2) Average serviced assets reflect average earning assets plus the average of
consumer finance receivables previously securitized and currently managed by the
Company and consumer finance receivables serviced for third parties.
(3) Nonperforming assets reflect commercial 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 issued in February 1997.
</FN>
</TABLE>
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[Logo of The CIT Group, Inc.] Exhibit 99.2
Contact: Michael J. McGowan
Vice President
Communications Services
(973)535-3506
[email protected]
FROM: THE CIT GROUP
650 CIT DRIVE
LIVINGSTON, NJ 07039
FOR IMMEDIATE RELEASE
THE CIT GROUP NAMES DANIEL P. AMOS TO BOARD OF DIRECTORS
LIVINGSTON, NJ (January 28, 1998) -- The CIT Group, Inc. [NYSE:CIT], one of
the nation's largest commercial and consumer financing companies, today
announced the appointment of Daniel P. Amos to its Board of Directors.
Mr. Amos is President and Chief Executive Officer of AFLAC Incorporated
[NYSE:AFL] and its primary subsidiary, American Family Life Assurance Company of
Columbus (AFLAC). AFLAC is a leading provider of supplemental insurance at the
work site in the United States and the largest foreign insurer in Japan.
"We are pleased to have Daniel Amos join our Board of Directors," said
Albert R. Gamper, Jr., President and Chief Executive Officer, The CIT Group.
"His strategic view of the market and his experience as a successful Chief
Executive Officer will provide a significant benefit to The CIT Group."
Mr. Amos is a director of Georgia Power Company. He serves as a member of
the Consumer Affairs Advisory Committee of the Securities and Exchange
Commission. Additionally, Mr. Amos is Chairman of the Board of The Japan-America
Society of Georgia and the University of Georgia Foundation. He also serves on
the board of trustees of Egleston Children's Health Care System in Atlanta and
the House of Mercy in Columbus, Georgia.
He has received numerous awards and recognitions, including: the Silver
Award in Financial World magazine's "CEO of the Year" competition, Executive of
the Year by the Georgia Securities Association, The Wall Street Transcript
Silver CEO in the life insurance category, and the University of Georgia
Business School's "Distinguished Alumnus Award." Mr. Amos holds a BBA from the
University of Georgia in risk management and insurance.
With more than $22 billion in managed assets, The CIT Group, Inc.
(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.
# # #
Exhibit 99.3
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------------
DOLLARS IN MILLIONS 1997 1996
---- ----
ASSETS
Financing and leasing assets
Loans
Commercial $ 9,922.5 $ 10,195.6
Consumer 3,664.8 3,239.0
Lease receivables 4,132.4 3,562.0
------------- ------------
Finance receivables 17,719.7 16,996.6
Reserve for credit losses (235.6) (220.8)
------------- ------------
Net finance receivables 17,484.1 16,775.8
Operating lease equipment, net 1,905.6 1,402.1
Consumer finance receivables held for sale 268.2 116.3
Cash and cash equivalents 140.4 103.1
Other assets 665.8 535.2
------------- ------------
Total assets $ 20,464.1 $ 18,932.5
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt
Commercial paper $ 5,559.6 $ 5,827.0
Variable rate senior notes 2,861.5 3,717.5
Fixed rate senior notes 6,593.8 4,761.2
Subordinated fixed rate notes 300.0 300.0
------------- ------------
Total debt 15,314.9 14,605.7
Credit balances of factoring clients 1,202.6 1,134.1
Accrued liabilities and payables 660.1 594.0
Deferred Federal income taxes 603.6 523.3
------------- ------------
Total liabilities 17,781.2 16,857.1
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures of the Company 250.0 -
Stockholders' equity
Common stock - 1,000 shares authorized,
issued and outstanding - 250.0
Class A common stock, par value $0.01 per
share, 700,000,000 shares authorized and
37,173,527 issued and outstanding 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 -
Paid-in capital 948.3 573.3
Retained earnings 1,482.9 1,252.1
------------- ------------
Total stockholders' equity 2,432.9 2,075.4
------------- ------------
Total liabilities and stockholders' equity $ 20,464.1 $ 18,932.5
============= ============
Exhibit 99.4
THE CIT GROUP, INC. AND SUBSIDIARIES
FINANCING AND LEASING ASSETS BY BUSINESS UNIT
DECEMBER 31,
----------------------------
1997 1996
---- ----
AMOUNTS IN MILLIONS
Capital Finance (1) $ 3,682.5 $ 5,278.2
Equipment Financing (1) 8,027.2 6,043.4
Business Credit (2) 1,247.9 1,235.6
Credit Finance (2) 889.8 797.8
Commercial Services 2,113.1 1,804.7
--------- ---------
Total Commercial 15,960.5 15,159.7
Sales Financing 1,940.7 1,349.8
Consumer Finance 1,992.3 2,005.5
--------- ---------
Total Consumer 3,933.0 3,355.3
--------- ---------
Other 65.8 53.0
--------- ---------
Total financing and leasing assets 19,959.3 18,568.0
Consumer finance receivables previously securitized
and currently managed by the Company 2,385.6 1,437.4
--------- ---------
Total managed assets $22,344.9 $20,005.4
========= =========
(1) In January of 1997, $1.5 billion of financing and leasing assets were
transferred from Capital Finance to Equipment Financing.
(2) In October of 1997, $95 million of finance receivables were transferred
from Business Credit to Credit Finance.
