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 25, 1999
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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, which is incorporated herein by
reference, regarding the 1999 third quarter earnings, filed as Exhibit 99.1.
-2-
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release, dated October 25, 1999, regarding the
1999 Third Quarter Earnings.
-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.
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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 25, 1999
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<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, INC. ANNOUNCES THREE RECORDS:
|X| Third Quarter Net Income Of $96.9 Million.
|X| Earnings Per Diluted Share Of $.60, Up 13.2%.
|X| Managed Assets Of $28.6 Billion.
NEW YORK, NEW YORK, OCTOBER 25, 1999 --- The CIT Group, Inc. (NYSE:
CIT) today announced record third quarter net income of $96.9 million, up from
$86.1 million for the same period of 1998. Nine month earnings totaled a record
$285.1 million, up from $251.5 million in 1998.
Earnings per diluted share for the third quarter of 1999 were $.60, up
13.2% from $.53 for the third quarter of last year. Nine month earnings per
diluted share increased 14.3% to $1.76 from $1.54. The strong 1999 earnings were
driven by double digit revenue growth, solid asset growth from the commercial
finance and equipment segments, consistent credit quality, and continued
improvements in operating efficiency.
"CIT delivered another quarter of record earnings and excellent growth. We
reaffirmed our commitment to the strategic acquisition of Newcourt Credit. We
announced early in the fourth quarter our intention to purchase the domestic
factoring
<PAGE>
operations of Heller Financial Inc., which will further enhance the
scale of CIT's factoring business," said Albert R. Gamper, Jr., President and
CEO of CIT. "Our plan to close the Newcourt transaction during the fourth
quarter is on target. Newcourt met our earnings expectations for the third
quarter. Federal Reserve and Canadian regulatory approvals have been received.
Joint integration teams have been working diligently to prepare for the addition
of Newcourt's Vendor and Technology Finance and Capital Finance businesses, and
the combination of Newcourt and CIT staff departments once remaining approvals
are obtained. The completion of the strategic initiatives made during 1999,
coupled with CIT's existing franchise businesses, positions the company to
create long term value for our stockholders," added Gamper.
Financial Highlights:
Total managed assets increased to a record $28.6 billion at September 30,
1999, up 12.5% from $25.4 billion a year ago, and up 9.1% from $26.2 billion at
December 31, 1998. Commercial financing and leasing assets grew to $20.9
billion, up approximately 16.7% from September 30, 1998 and 14.0% from year-end
1998. Growth was particularly strong within the equipment and commercial finance
portfolios. Consumer managed assets were $7.6 billion, up approximately $0.2
billion or 2.2% from $7.4 billion a year ago and down 2.8% from December 31,
1998. Certain lower returning consumer receivables were sold during the quarter
as a result of ongoing risk and return management strategies.
Net finance income improved to $279.8 million in the third quarter compared
with $246.8 million in the third quarter of 1998. Third quarter 1999 net finance
income as
<PAGE>
a percentage of average earning assets was 4.70% compared to 4.78% in
the third quarter of 1998.
Fees and other income for the third quarter of 1999 increased to $81.9
million, up 18.7% from $69.0 million for the third quarter of 1998 due to
continued strong growth in lending fees, strong commissions from the factoring
business bolstered by an acquisition and gains on sales of equipment coming off
lease and certain consumer finance receivables.
Salaries and general operating expenses for the third quarter of 1999
totaled $115.1 million, up 9.3% from $105.3 million for the third quarter of
1998 as a result of the factoring acquisition and product expansion in the
equipment financing and leasing businesses, offset by productivity gains in the
consumer segment. Efficiency measures continued to improve with the efficiency
ratio dropping to 39.0% for the third quarter of 1999. Operating expenses as a
percentage of average managed assets improved to 1.72% for the third quarter of
1999 compared to 1.82% in the same quarter of 1998.
The provision for credit losses was $32.2 million in the third quarter of
1999, an increase of $1.6 million compared to the third quarter of 1998. Third
quarter 1999 net charge-offs were $25.3 million, 0.48% of average finance
receivables, compared to $21.6 million, 0.46%, for the third quarter of 1998. At
September 30, 1999, the reserve for credit losses increased to $283.8 million
(1.33%), up from $263.7 million (1.33%) at year-end 1998, principally the result
of portfolio growth.
The CIT Group, Inc., is a leading diversified finance organization offering
secured commercial and consumer financing primarily in the United States to
smaller, middle-
<PAGE>
market and larger businesses and to individuals through a
nationwide distribution network.
(SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA).
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Amounts in Millions, except Net Income per Share)
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
Finance income $583.9 $510.6 $1,679.8 $1,481.4
Interest expense 304.1 263.8 858.2 766.2
------ ------ ------- -------
Net finance income 279.8 246.8 821.6 715.2
Fees and other income 81.9 69.0 221.4 196.1
------ ------ ------- -------
Operating revenue 361.7 315.8 1,043.0 911.3
------ ------ ------- -------
Salaries and general
operating expenses 115.1 105.3 337.1 311.0
Provision for credit losses 32.2 30.6 77.9 75.0
Depreciation on operating
lease equipment 61.6 42.7 176.9 121.4
Minority interest in
subsidiary trust holding
solely debentures of the
Company 4.8 4.8 14.4 14.4
------ ------ ------- -------
Operating expenses 213.7 183.4 606.3 521.8
------ ------ ------- -------
Income before provision for
income taxes 148.0 132.4 436.7 389.5
Provision for income taxes 51.1 46.3 151.6 138.0
------ ------ ------- -------
Net income $ 96.9 $ 86.1 $ 285.1 $ 251.5
======= ====== ======= =======
Basic net income per share $0.60 $0.53 $1.77 $1.55
Weighted average shares
outstanding 160,512,433 162,143,304 160,850,093 162,197,469
Diluted net income
per share $0.60 $0.53 $1.76 $1.54
Weighted average shares
outstanding 161,464,425 163,304,325 161,997,841 163,488,689
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
September 30, December 31,
1999 1998
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Assets
Financing and leasing assets
Loans
Commercial $13,151.5 $11,415.5
Consumer 4,068.8 4,266.9
Lease receivables 4,112.6 4,173.6
--------- ---------
Finance receivables 21,332.9 19,856.0
Reserve for credit losses (283.8) (263.7)
--------- ---------
Net finance receivables 21,049.1 19,592.3
Operating lease equipment, net 3,677.2 2,774.1
Consumer finance receivables held for sale 737.8 987.4
Cash and cash equivalents 143.0 73.6
Other assets 1,132.3 875.7
--------- ---------
Total assets $26,739.4 $24,303.1
========= =========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 5,472.6 $ 6,144.1
Variable rate senior notes 5,758.1 4,275.0
Fixed rate senior notes 8,611.8 8,032.3
Subordinated fixed rate notes 200.0 200.0
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Total debt 20,042.5 18,651.4
Credit balances of factoring clients 1,971.9 1,302.1
Accrued liabilities and payables 738.4 694.3
Deferred federal income taxes 822.0 703.7
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Total liabilities 23,574.8 21,351.5
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: 163,172,966 shares in 1999
and 163,144,879 shares in 1998
Outstanding: 161,147,581 shares in 1999
and 162,176,949 shares in 1998 1.7 1.7
Paid-in capital 958.2 952.5
Retained earnings 2,009.3 1,772.8
Treasury stock at cost (2,025,385 shares
in 1999 and 967,930 shares in 1998;
Class A Common Stock) (54.6) (25.4)
--------- ---------
Total stockholders' equity 2,914.6 2,701.6
--------- ---------
Total liabilities and stockholders' equity $26,739.4 $24,303.1
========== =========
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THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
For the Quarter For the Nine Months
Selected Data and Ratios Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
Profitability
Net income per diluted share $ 0.60 $ 0.53 $ 1.76 $ 1.54
Return on average
stockholders' equity 13.5% 13.2% 13.6% 13.2%
Return on AEA 1.63% 1.67% 1.64% 1.68%
Efficiency ratio 39.0% 39.2% 39.6% 40.1%
Other
Net interest margin as a
percentage of AEA 4.70% 4.78% 4.72% 4.78%
Salaries and general operating
expenses as a percentage of AMA(1) 1.72% 1.82% 1.73% 1.86%
Net credit losses as a percentage
of average:
Finance receivables 0.48% 0.46% 0.44% 0.42%
Commercial finance receivables 0.31% 0.30% 0.25% 0.24%
Consumer finance receivables 1.17% 1.08% 1.16% 1.12%
Consumer managed assets 1.01% 0.87% 1.01% 0.89%
Average Balances (in millions)
Average Stockholders' Equity $ 2,875.6 $ 2,612.8 $ 2,804.6 $ 2,542.2
Average Finance Receivables $21,082.1 $18,828.3 $20,549.5 $18,277.6
Average Earning Assets $23,818.5 $20,669.9 $23,213.9 $19,946.7
Average Managed Assets $26,750.8 $23,180.4 $25,969.2 $22,336.3
At September 30, At December 31, At September 30,
1999 1998 1998
---- ---- ----
Credit Quality
60+ days contractual delinquency
as a percentage of finance
receivables
Commercial 1.24% 1.17% 1.26%
Consumer 4.19% 3.89% 3.30%
Total 1.81% 1.75% 1.67%
Total nonperforming assets as a
percentage of finance
receivables (2) 1.35% 1.40% 1.34%
Reserve for credit losses as a
percentage of finance
receivables 1.33% 1.33% 1.32%
Ratio of reserve for credit
losses to trailing
twelve-month net credit losses 3.21x 3.35x 3.27x
Capital and Leverage
Total debt to stockholders' equity
and Company-obligated
mandatorily redeemable preferred
securities of subsidiary trust
holding solely debentures of the
Company 6.33x 6.32x 6.16x
Total debt to stockholders'
equity (3) 6.95x 7.00x 6.84x
(1) "AMA" or "Average Managed Assets", represents the sum of average earning
assets, which are net of credit balances of factoring clients, and 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.
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THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
MANAGED ASSETS BY SEGMENT & STRATEGIC BUSINESS UNIT
At September 30, At December 31, At September 30,
1999 1998 1998
---- ---- ----
Equipment Financing:
Finance receivables $ 8,745.9 $ 8,497.6 $ 8,060.3
Operating lease equipment,
net 849.9 765.1 676.7
---------- ---------- ----------
Total 9,595.8 9,262.7 8,737.0
---------- ---------- ----------
Capital Finance:
Finance receivables 1,598.3 1,655.4 1,662.0
Operating lease equipment,
net 2,807.0 1,982.0 1,690.6
---------- ---------- ----------
4,405.3 3,637.4 3,352.6
Liquidating portfolio* 324.9 466.9 497.5
---------- ---------- ----------
Total 4,730.2 4,104.3 3,850.1
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Total Equipment Financing
& Leasing 14,326.0 13,367.0 12,587.1
---------- ---------- ----------
Commercial Services 3,714.8 2,481.8 2,762.1
Business Credit 1,726.9 1,477.9 1,545.5
Credit Finance 1,173.6 1,036.5 1,049.9
---------- ---------- ----------
Total Commercial Finance 6,615.3 4,996.2 5,357.5
---------- ---------- ----------
Total Commercial Segments 20,941.3 18,363.2 17,944.6
---------- ---------- ----------
Consumer Finance 2,229.3 2,244.4 2,123.7
Sales Financing 2,577.3 3,009.9 2,681.4
---------- ---------- ----------
Total Consumer Segment 4,806.6 5,254.3 4,805.1
---------- ---------- ----------
Other - Equity Investments 115.8 81.9 87.3
---------- ---------- ----------
Total Financing and
Leasing Assets 25,863.7 23,699.4 22,837.0
---------- ---------- ----------
Finance receivables
previously securitized:
Consumer Finance 464.0 607.6 661.2
Sales Financing 2,286.0 1,909.3 1,925.7
---------- ---------- ----------
Total 2,750.0 2,516.9 2,586.9
---------- ---------- ----------
Total Managed Assets -
Consumer Segment 7,556.6 7,771.2 7,392.0
---------- ---------- ----------
Total Managed Assets $ 28,613.7 $ 26,216.3 $ 25,423.9
========== ========== ==========
Sales Financing managed
assets by product line:
Recreation vehicles $ 1,894.1 $ 1,884.6 $ 1,786.4
Manufactured housing 1,900.3 1,695.9 1,617.3
Recreational boat 848.2 1,038.6 978.4
Wholesale inventory
financing 220.7 300.1 225.1
---------- ---------- ----------
$ 4,863.3 $ 4,919.2 $ 4,607.2
========== ========== ==========
* Consists primarily of oceangoing maritime and project finance.
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FEES AND OTHER INCOME Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ---------------------
1999 1998 1999 1998
---- ---- ---- ----
Factoring commissions $31.1 $24.8 $84.1 $70.4
Fees and other income 36.2 24.8 87.5 69.0
Gains on sales of
leasing equipment 14.6 11.5 44.5 35.2
Gains on securitizations - 7.3 5.3 12.5
Gains on sales of venture
capital investments - 0.6 - 9.0
----- ----- ----- ----
$81.9 $69.0 $221.4 $196.1
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