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, 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)
<PAGE>
Item 5. Other Events.
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See the attached press releases, which are incorporated herein by reference,
regarding:
1. The 1998 fourth quarter and annual earnings, filed as Exhibit 99.1; and
2. The declaration of a dividend for the quarter ending December 31, 1998 of
$.10 per share, payable on March 1, 1999 to holders of record at the close
of business on February 10, 1999, filed as Exhibit 99.2.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
(c) Exhibits.
99.1 Press Release, dated January 28, 1999,
Regarding 1998 Fourth Quarter and Annual Earnings.
99.2 Press Release, dated January 28, 1999, Regarding
Declaration of a Dividend for the Quarter Ending
December 31, 1998.
-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: January 28, 1999
-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.
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(Registrant)
By:
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Joseph M. Leone
Executive Vice President and
Chief Financial Officer
Dated: January 28, 1999
-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 FOURTH QUARTER AND RECORD ANNUAL NET INCOME
OF $87.3 MILLION, $.54 PER DILUTED SHARE AND $338.8 MILLION,
$2.08 PER DILUTED SHARE
11TH CONSECUTIVE INCREASE IN ANNUAL NET INCOME
NEW YORK, NEW YORK, January 28, 1999 --- The CIT Group, Inc.
(NYSE: CIT)today announced record quarterly and full year results, marking its
eleventh consecutive increase in annual net income. Fourth quarter 1998 net
income was $87.3 million, up from $71.0 million reported for 1997. Net income
for the 1998 full year totaled a record $338.8 million, up from $310.1 million
reported in 1997. The 1997 earnings included a one-time pretax gain on the sale
of an equity interest acquired in a loan workout and certain nonrecurring
expenses, including an IPO related charge in the fourth quarter.
Excluding the 1997 special items, earnings on a per share basis, for
both the year and the quarter, increased strongly in 1998. Earnings per diluted
share for the fourth quarter were $0.54, up 12.5% from $0.48 for the fourth
quarter of last year, with twelve month per share earnings increasing 14.9% to
$2.08 from $1.81. The improved 1998 earnings reflect continued significant
portfolio growth in all businesses, lower commercial credit losses, and further
improvements in operating efficiency.
<PAGE>
"The Company's strong financial performance in 1998 continues to
demonstrate the success of our strategy to be a highly diversified finance
company generating consistent earnings growth with a high quality balance sheet.
Managed assets increased over 17% primarily on internal growth. Credit costs
and productivity continued to improve. These accomplishments are noteworthy
considering the hyper-competitive and more volatile 1998 operating environment",
said Albert R. Gamper, Jr., president and chief executive officer. "Our
successful fourth quarter secondary offering further helps the Company by
increasing our public float and broadening our shareholder base. As we move
forward, I am confident that the experienced, hard working people at CIT will
continue to execute our growth strategy and deliver consistent financial
results."
Financial highlights:
Total managed assets increased to $26.2 billion at December 31,1998,
up 17.5% from $22.3 billion at December 31, 1997 on record internally generated
new business. Commercial financing and leasing assets grew to $18.4 billion, an
increase of $2.4 billion or 15.0% from year-end 1997. Consumer managed assets
increased to $7.8 billion, up approximately $1.5 billion or 23.8% from $6.3
billion at December 31, 1997.
Net finance income improved to $259.1 million in the fourth quarter compared
with $229.2 million in the same period last year. For the full year, net
finance income increased to $974.3 million from $887.5 million in 1997. Fourth
quarter net finance income as a percentage of average earning assets was 4.71%
compared to 4.88% in the fourth quarter of 1997, as lending yields declined more
rapidly than funding costs. For the full year, net finance income as a
percentage of average earning assets was 4.75% in 1998 compared to 4.87% last
year.
Fees and other income for the fourth quarter of 1998 were $59.3 million,
compared to $61.8 million for the fourth quarter of 1997. There were no
securitization gains in the 1998 fourth quarter, compared to $8.2 million in the
fourth quarter of 1997, the effect of which was partially offset by an increase
<PAGE>
of $6.9 million from gains on the sale of equipment coming off lease. Fees and
other income for the year were $255.4 million, up from $247.8 million in 1997.
The 1998 results reflect higher fees from servicing and commercial businesses
and improved gains on the sale of equipment coming off lease, offset by lower
gains on reduced securitization activity.
Productivity improved and expense growth was well contained. Salaries and
general operating expenses for the fourth quarter of 1998 totaled $106.8 million
compared with $104.3 million for the prior year, excluding the 1997 IPO related
charge of $10 million. The efficiency ratio improved to 40.2% in the 1998 fourth
quarter from 42.1% a year ago. Excluding the 1997 nonrecurring items, salaries
and general operating expenses for the full year increased 2.3% to $417.8
million.
The provision for credit losses was $24.4 million in the 1998 fourth
quarter, an increase of $2.5 million from the prior year, principally due to
reserve growth for higher receivables. Fourth quarter net chargeoffs were $20.8
million, 0.42% of average finance receivables, compared to $20.9 million, 0.46%,
for the same period last year. For the year, the provision for credit losses was
$99.4 million compared to $113.7 million in 1997 due to lower chargeoffs
partially offset by increased provisions for portfolio growth. Annual net
chargeoffs were $78.8 million, 0.42% of average finance receivables in 1998,
down from $101.0 million, 0.59%, for 1997. At December 31, 1998, the reserve
for credit losses was $263.7 million, up from $257.9 million at
September 30, 1998, and $235.6 million at year-end 1997.
The CIT Group, Inc. is a leading diversified finance organization offering
secured commercial and consumer financing primarily in the United States to
smaller, middle-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
(Dollars in Millions, except Net Income per Share)
For the Quarter For the Year
Ended December 31, Ended December 31,
1998 1997 1998 1997
---- ---- ---- ----
Finance income $533.7 $472.7 $2,015.1 $1,824.7
Interest expense 274.6 243.5 1,040.8 937.2
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Net finance income 259.1 229.2 974.3 887.5
Fees and other income 59.3 61.8 255.4 247.8
Gain on sale of equity interest
acquired in loan workout - - - 58.0
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Operating revenue 318.4 291.0 1,229.7 1,193.3
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Salaries and general
operating expenses 106.8 114.3 417.8 428.4
Provision for credit losses 24.4 21.9 99.4 113.7
Depreciation on operating lease
equipment 48.1 38.5 169.5 146.8
Minority interest in subsidiary trust
holding solely debentures of the
Company 4.8 4.8 19.2 16.3
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Operating expenses 184.1 179.5 705.9 705.2
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Income before provision for
income taxes 134.3 111.5 523.8 488.1
Provision for income taxes 47.0 40.5 185.0 178.0
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Net income $ 87.3 $ 71.0 $ 338.8 $310.1
======= ====== ======= ======
Basic net income per share $0.54 $0.44 $2.09 $1.96
Weighted average shares
outstanding 161,366,016 160,016,576 161,987,897 158,134,315
Diluted net income per share $0.54 $0.44 $2.08 $1.95
Weighted average shares
outstanding 162,301,065 161,258,149 163,188,739 159,156,706
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
December 31, December 31,
1998 1997
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Assets
Financing and leasing assets
Loans
Commercial $10,829.8 $ 9,922.5
Consumer 4,266.9 3,664.8
Commercial lease receivables 4,759.3 4,132.4
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Finance receivables 19,856.0 17,719.7
Reserve for credit losses (263.7) (235.6)
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Net finance receivables 19,592.3 17,484.1
Operating lease equipment, net 2,774.1 1,905.6
Consumer finance receivables held for sale 987.4 268.2
Cash and cash equivalents 73.6 140.4
Other assets 875.7 665.8
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Total assets $ 24,303.1 $ 20,464.1
========== ==========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 6,144.1 $ 5,559.6
Variable rate senior notes 4,275.0 2,861.5
Fixed rate senior notes 8,032.3 6,593.8
Subordinated fixed rate notes 200.0 300.0
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Total debt 18,651.4 15,314.9
Credit balances of factoring clients 1,302.1 1,202.6
Accrued liabilities and payables 694.3 660.1
Deferred federal income taxes 703.7 603.6
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Total liabilities 21,351.5 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: 163,144,879 shares in 1998 and 37,173,527
shares in 1997
Outstanding: 162,176,949 shares in 1998 and
37,173,527 shares in 1997 1.7 0.4
Class B common stock, par value $0.01 per share,
510,000,000 shares authorized and in 1997
126,000,000 issued and outstanding - 1.3
Paid-in capital 952.5 948.3
Retained earnings 1,772.8 1,482.9
Treasury stock at cost (967,930 shares; Class A) (25.4) -
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Total stockholders' equity 2,701.6 2,432.9
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Total liabilities and stockholders' equity $ 24,303.1 $ 20,464.1
========== ==========
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
For the Quarter Ended For the Year
Selected Data and Ratios December 31, Ended December 31,
Profitability 1998 1997 1998 1997
Net income per diluted share $0.54 $0.44 $ 2.08 $1.95
Return on average
stockholders' equity 13.1% 12.2% 13.2% 14.0%
Return on AEA 1.59% 1.51% 1.65% 1.70%
Efficiency ratio 40.2% 46.1% 40.1% 41.6%
Ratios Excluding
Nonrecurring Items(1)
Net Income per diluted share $0.54 $0.48 $ 2.08 $1.81
Return on average
stockholders' equity 13.1% 13.3% 13.2% 13.1%
Return on AEA 1.59% 1.64% 1.65% 1.58%
Efficiency ratio 40.2% 42.1% 40.1% 42.0%
Other
Net interest margin as a
percentage of AEA 4.71% 4.88% 4.75% 4.87%
Salaries and general operating
expenses as a percentage of AMA(2) 1.74% 2.20% 1.82% 2.16%
Net credit losses as a percentage
of average:
Finance receivables 0.42% 0.46% 0.42% 0.59%
Managed assets 0.42% 0.49% 0.43% 0.58%
Commercial finance receivables 0.17% 0.33% 0.22% 0.47%
Consumer finance receivables 1.35% 1.02% 1.18% 1.09%
Consumer managed assets 1.00% 0.89% 0.92% 0.91%
Average Balances
Average Stockholders' Equity $ 2,664.3 $ 2,336.8 $ 2,572.3 $ 2,212.0
Average Finance Receivables $19,950.8 $17,992.0 $18,711.7 $17,168.0
Average Earning Assets $22,012.5 $18,797.3 $20,495.8 $18,224.5
Average Managed Assets $24,558.8 $20,805.9 $22,918.8 $19,863.5
1998 1997
---- ----
Credit Quality
60+ days contractual delinquency
as a percentage of finance
receivables
Commercial 1.17% 1.20%
Consumer 3.89% 3.48%
Total 1.75% 1.67%
Total nonperforming assets
as a percentage of
finance receivables (3) 1.40% 1.17%
Reserve for credit losses
as a percentage of
finance receivables 1.33% 1.33%
Ratio of reserve for credit losses
to trailing twelve-month net
credit losses 3.35x 2.33x
Capital and Leverage
Total debt to stockholders'equity
and Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely
debentures of the Company 6.32x 5.71x
Total debt to stockholders'
equity (4) 7.00x 6.40x
Total common stockholders'
equity (in millions) $ 2,701.6 2,432.9
(1) Earnings for the fourth quarter of 1997 exclude a $0.04 per diluted share
IPO related charge. Earnings for the twelve months of 1997 exclude $0.14
per diluted share related to the net effect of a gain on the sale of an
equity interest acquired in a loan workout, partially offset by the IPO
related charge and certain nonrecurring expenses.
(2) "AMA" means 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 BY SEGMENT & STRATEGIC BUSINESS UNIT
At December 31, At December 31,
1998 1997
---- ----
Equipment Financing:
Finance Receivables $ 8,497.6 $ 7,403.4
Operating lease equipment, net 765.1 623.8
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Total 9,262.7 8,027.2
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Capital Finance:
Finance Receivables 1,655.4 1,755.5
Operating lease equipment, net 1,982.0 1,251.8
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3,637.4 3,007.3
Liquidating Portfolio** 466.9 675.2
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Total 4,104.3 3,682.5
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Total Equipment Financing & Leasing 13,367.0 11,709.7
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Commercial Services 2,481.8 2,113.1
Business Credit* 1,477.9 1,247.9
Credit Finance* 1,036.5 889.8
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Total Commercial Finance 4,996.2 4,250.8
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Total Commercial Segments 18,363.2 15,960.5
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Consumer Finance 2,244.4 1,992.3
Sales Financing 3,009.9 1,940.7
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Total 5,254.3 3,933.0
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Finance receivables previously securitized:
Consumer Finance 607.6 453.8
Sales Financing 1,909.3 1,931.8
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Total 2,516.9 2,385.6
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Total Consumer Segment 7,771.2 6,318.6
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Other - Equity Investments 81.9 65.8
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Total Managed Assets $ 26,216.3 $ 22,344.9
============ ============
Sales Financing managed assets by
product line:
Recreation vehicles $ 1,884.6 $ 1,596.5
Manufactured housing 1,695.9 1,471.9
Recreational boat 1,038.6 682.5
Wholesale inventory financing 300.1 121.6
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$ 4,919.2 $ 3,872.5
========== ==========
* 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.
FEES AND OTHER INCOME For the Three Months Ended For the Year Ended
- ---------------------
December 31, December 31,
---------------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
Factoring commissions $25.3 $25.8 $95.7 $95.2
Fees and other income 21.7 20.0 90.7 73.8
Gains on sales of
leasing equipment 10.0 3.1 45.2 30.1
Gains on securitizations - 8.2 12.5 32.0
Gains on sales of venture
capital investments 2.3 4.7 11.3 16.7
----- ----- ------ ------
$59.3 $61.8 $255.4 $247.8
===== ===== ====== ======
<PAGE>
Exhibit 99.2
[The CIT Group, Inc. Logo]
Jeffrey D. 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, January 28, 1999 --- 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 February 10, 1999. The cash
dividend is payable on March 1, 1999.
With more than $26 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.
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