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 27, 2000
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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.
See the attached press releases, which are incorporated herein by
reference, regarding:
1. The 2000 first quarter earnings, filed as Exhibit 99.1; and
2. The declaration of a dividend for the quarter ending March 31, 2000
of $.10 per share, payable on May 31, 2000 to holders of record at
the close of business on May 10, 2000, filed as Exhibit 99.2.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release, dated April 27, 2000, regarding the 2000 first
quarter earnings.
99.2 Press Release, dated April 27, 2000, regarding declaration of
a dividend for the quarter ending March 31, 2000.
-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: April 27, 2000
-4-
Exhibit 99.1
[The CIT Group, Inc. Logo]
Contact:
James J. Egan, Jr.
Executive Vice President
Investor Relations
(973) 535-5911
FROM: THE CIT GROUP, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
FOR IMMEDIATE RELEASE
- ---------------------
CIT ANNOUNCES HIGHLIGHTS OF FIRST QUARTER 2000:
o Net Income $143.9 Million up 56.6% from 1999, EPS $0.55 Per Diluted
Share
o Managed Assets Exceed $53 Billion on Strong Business Volumes
o Strong Non-Spread Revenues
o Realized Integration Savings of Approximately $100 Million
Annualized
NEW YORK, NEW YORK, April 27, 2000 --- The CIT Group, Inc. (NYSE: CIT,
TSE: CIT.U) today announced first quarter 2000 net income of $143.9 million, up
56.6% from $91.9 million reported for the same period of 1999. Earnings per
diluted share for the first quarter were $0.55, compared to $0.57 for the first
quarter of last year. Before the amortization of goodwill, earnings per diluted
share were $0.62, compared to $0.58 for the same period of 1999. The first
quarter 2000 earnings reflect growth from our 1999 acquisition activities,
continued strong originations, excellent fee and other income as well as expense
savings related to our operational integrations.
"Revenue growth and new business volume were good. The higher interest
rate environment and competitive conditions put modest pressure on lending
spreads; however, strong fees and other non-spread revenues offset these
factors. Fee generation from our commercial lending businesses and gains in our
venture capital business were particularly strong," said Albert R.
<PAGE>
Gamper Jr., CIT Chairman, President and CEO. "The acquisitions we made in 1999
have added diversity to our origination platforms. While we have made real
progress integrating operations, we recognize that considerable work is still
ahead of us and additional expense reductions will be realized. In addition, we
initiated programs to shed non-strategic businesses. I am especially proud of
the commitment CIT employees have made to our first quarter accomplishments."
Financial Highlights:
Total managed assets increased to $53.1 billion at March 31, 2000, up 3.3%
from $51.4 billion at year end, and $27.1 billion at March 31, 1999. New
business volume was $13.2 billion, versus $6.4 billion during the first quarter
of 1999. Commercial financing and leasing assets grew to $37.6 billion, up from
$19.1 billion a year ago and a 5.8% increase from year end 1999. Commercial
managed assets were $45.6 billion at March 31, 2000 compared to $44.0 billion at
December 31, 1999. Consumer managed assets were $7.4 billion at March 31, 2000
compared to $7.3 billion at December 31, 1999, and were down from $7.9 billion a
year ago reflecting our decision to exit certain lower return product lines.
Net finance income improved to $656.9 million in the first quarter from
$268.2 million in the same period last year. First quarter net finance income as
a percentage of average earning assets was 6.74%, compared to 4.75% in the first
quarter of 1999 and 5.80% in the fourth quarter of 1999 as a result of product
mix changes. First quarter net finance margin as a percentage of average earning
assets was 3.58%, up from 3.51% in the fourth quarter of 1999 and down from
3.75% in the first quarter of 1999. The margin improvement from last quarter
largely reflects the full-quarter impact of the higher-yielding Vendor
Technology
2
<PAGE>
portfolio. The decline from the first quarter of last year results from the
combination of a greater proportion of operating leases, higher leverage, and
higher short term interest rates in a competitive environment.
Non-spread revenues for the first quarter of 2000 were $238.2 million,
compared to $64.7 million for the first quarter of 1999. The increase reflects
successes in our initiatives to broaden our revenue sources. Fees and other
income grew to $121.4 million from $30.9 million last year, reflecting
syndication and other non-spread revenues from Vendor Technology Finance and
Structured Finance. Factoring commissions grew $14.5 million to $38.5 million
over the prior year period due to internal growth and 1999 acquisitions. Venture
capital gains were $37.5 million, reflecting the harvesting of investments made
in prior years. Securitization gains were $19.0 million, or 8.2% of pretax
income, during the quarter, below our 15% target due to a lower level of
receivables being securitized.
Salaries and general operating expenses for the first quarter of 2000
totaled $268.2 million, compared with $105.8 million for the prior year,
reflecting increased personnel and facilities due to the 1999 acquisitions and
normal expense increases. The efficiency ratio increased to 46.0% from 38.9% a
year ago. Salaries and general operating expenses as a percentage of average
managed assets increased to 2.15% for the period ended March 31, 2000 from 1.68%
for the period ended March 31, 1999, reflecting the effect of our 1999
acquisitions. However, the first quarter expenses include annualized run rate
savings of approximately $100 million (of our target of $150 million) from
pre-acquisition levels and we anticipate that additional integration cost
savings will be realized later in 2000. Headcount was 7,650 at quarter end, down
600 from year end 1999.
The provision for credit losses was $61.6 million in the 2000 first
quarter, up from $21.9 million in the prior year reflecting higher charge-off
levels and growth in the portfolios. First quarter net charge-offs were $53.0
million, 0.67% of
3
<PAGE>
average finance receivables, up from $20.9 million, 0.42%, for the same period
last year as a result of product mix changes due to the acquisitions. At March
31, 2000, the reserve for credit losses was $476.2 million, up from $446.9
million at December 31, 1999 and $265.8 million at March 31, 1999. As a
percentage of finance receivables, the reserve for credit losses was 1.43% at
March 31, 2000 compared to 1.44% and 1.32% at December 31, 1999 and March 31,
1999, respectively.
Commercial past dues as a percentage of finance receivables were 2.65% at
March 31, 2000, up from 2.42% at year end 1999 and 1.36% at March 31, 1999,
reflecting higher delinquency levels in the acquired portfolios as well as
increases due to the restructuring of our collection operations. Consumer past
dues, as a percentage of finance receivables, were 4.32% at March 31, 2000
compared to 4.62% at December 31, 1999 and 3.57% at March 31, 1999. The decrease
from December 31, 1999 reflects improvements across most product lines. The
increased delinquency from March 31, 1999 is primarily attributable to the
liquidation of certain consumer product lines.
CIT is a leading diversified finance company offering vendor, equipment,
commercial, factoring, consumer and structured financing capabilities. CIT
operates extensively in the United States and Canada with strategic locations in
Europe, Latin and South America, and the Pacific Rim. CIT has been in business
since 1908 and is recognized as a leader in many of the markets it serves.
For more information on CIT, visit the website at www.cit.com.
(SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA).
4
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, except per share amounts)
<TABLE>
<CAPTION>
For the Quarters Ended March 31,
2000 1999
---------- ----------
<S> <C> <C>
Finance income $ 1,228.8 $ 541.5
Interest expense 571.9 273.3
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Net finance income 656.9 268.2
Depreciation on operating lease equipment 307.8 56.1
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Net finance margin 349.1 212.1
Fees and other income 238.2 64.7
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Operating revenue 587.3 276.8
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Salaries and general operating expenses 268.2 105.8
Provision for credit losses 61.6 21.9
Goodwill amortization 20.5 3.2
Minority interest in subsidiary trust holding solely
debentures of the Company 4.8 4.8
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Operating expenses 355.1 135.7
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Income before provision for income taxes 232.2 141.1
Provision for income taxes 88.3 49.2
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Net income $ 143.9 $ 91.9
========== ==========
Basic net income per share $ 0.55 $ 0.57
Weighted average shares outstanding 262,931,435 161,166,060
Diluted net income per share $ 0.55 $ 0.57
Weighted average shares outstanding 263,620,102 162,421,027
</TABLE>
5
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
<S> <C> <C>
Assets
- ------
Financing and leasing assets
Loans and leases
Commercial $ 29,211.9 $ 27,119.2
Consumer 4,127.2 3,887.9
----------- -----------
Finance receivables 33,339.1 31,007.1
Reserve for credit losses (476.2) (446.9)
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Net finance receivables 32,862.9 30,560.2
Operating lease equipment, net 6,495.6 6,125.9
Finance receivables held for sale 2,762.5 3,123.7
Cash and cash equivalents 388.8 1,073.4
Goodwill 1,830.1 1,850.5
Other assets 2,310.4 2,347.4
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Total assets $ 46,650.3 $ 45,081.1
=========== ===========
Liabilities and Stockholders' Equity
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Debt
Commercial paper $ 10,618.1 $ 8,974.0
Variable rate senior notes 7,914.7 7,147.2
Fixed rate senior notes 18,180.6 19,052.3
Subordinated fixed rate notes 200.0 200.0
----------- -----------
Total debt 36,913.4 35,373.5
Credit balances of factoring clients 2,256.7 2,200.6
Accrued liabilities and payables 1,020.1 1,191.8
Deferred federal income taxes 558.5 510.8
----------- -----------
Total liabilities 40,748.7 39,276.7
Company-obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely debentures of the Company 250.0 250.0
Stockholders' equity
Common stock 2.7 2.7
Paid-in capital 3,524.7 3,521.8
Retained earnings 2,214.9 2,097.6
Accumulated other comprehensive income 0.1 2.8
Treasury stock at cost (90.8) (70.5)
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Total stockholders' equity 5,651.6 5,554.4
----------- -----------
Total liabilities and stockholders' equity $ 46,650.3 $ 45,081.1
=========== ===========
</TABLE>
6
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
MANAGED ASSETS BY STRATEGIC BUSINESS UNIT
- -----------------------------------------
December 1999 managed asset balances have been adjusted to conform to
the current quarter presentation
<TABLE>
<CAPTION>
At March 31, At December 31, At March 31,
2000 1999 1999
------------ --------------- ------------
<S> <C> <C> <C>
Equipment Financing:
Finance receivables $ 11,081.1 $ 10,899.3 $ 8,456.4
Operating lease equipment, net 1,170.9 1,066.2 862.9
----------- ----------- -----------
Total 12,252.0 11,965.5 9,319.3
----------- ----------- -----------
Capital Finance:
Finance receivables 1,638.3 1,838.0 1,603.3
Operating lease equipment, net 3,187.0 2,931.8 2,289.5
Liquidating portfolio (1) (2) 259.7 281.4 428.1
----------- ----------- -----------
Total 5,085.0 5,051.2 4,320.9
----------- ----------- -----------
Total Equipment Financing and Leasing Segment 17,337.0 17,016.7 13,640.2
----------- ----------- -----------
Vendor Technology Finance:
Finance receivables 8,568.6 7,488.9 --
Operating lease equipment, net 2,091.0 2,108.8 --
----------- ----------- -----------
Total Vendor Technology Finance Segment 10,659.6 9,597.7 --
----------- ----------- -----------
Structured Finance:
Finance receivables 2,014.4 1,933.9 --
Operating lease equipment, net 28.8 -- --
----------- ----------- -----------
Total Structured Finance Segment 2,043.2 1,933.9 --
----------- ----------- -----------
Commercial Services 4,482.0 4,165.1 2,863.5
Business Credit 3,103.8 2,837.0 2,602.9
----------- ----------- -----------
Total Commercial Finance Segment 7,585.8 7,002.1 5,466.4
----------- ----------- -----------
Total Commercial Segments 37,625.6 35,550.4 19,106.6
----------- ----------- -----------
Home equity 2,408.4 2,215.4 2,342.8
Manufactured housing 1,687.1 1,666.9 1,516.6
Recreational vehicles 437.0 361.2 841.6
Liquidating portfolio (3) 439.1 462.8 432.1
----------- ----------- -----------
Total Consumer Segment 4,971.6 4,706.3 5,133.1
----------- ----------- -----------
Other - Equity Investments 160.7 137.3 84.6
----------- ----------- -----------
Total Financing and Leasing Portfolio Assets 42,757.9 40,394.0 24,324.3
----------- ----------- -----------
Finance receivables previously securitized:
Commercial 7,963.2 8,471.5 --
Consumer 1,878.8 1,987.0 1,870.0
Consumer liquidating portfolio (3) 549.6 580.8 910.3
----------- ----------- -----------
Total 10,391.6 11,039.3 2,780.3
----------- ----------- -----------
Total Managed Assets $ 53,149.5 $ 51,433.3 $ 27,104.6
=========== =========== ===========
</TABLE>
(1) Consists primarily of ocean going maritime and project finance. Capital
Finance discontinued marketing to these sectors in 1997.
(2) Operating lease equipment, net, of $17.9 million, $19.1 million and $25.8
million are included in the liquidating portfolio for the quarter ended
March 31, 2000, the year ended December 31, 1999 and the quarter ended
March 31, 1999, respectively.
(3) In 1999, we decided to exit the recreational boat and wholesale loan
product lines.
For the Quarters Ended March 31,
FEES AND OTHER INCOME 2000 1999
- --------------------- ------ ------
Fees and other income $121.4 $30.9
Factoring commissions 38.5 24.0
Gains on venture capital investments 37.5 --
Gains on sales of leasing equipment 21.8 9.2
Gains on securitizations 19.0 0.6
------ -----
$238.2 $64.7
====== =====
7
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Selected Data and Ratios For the Quarters Ended March 31,
2000 1999
-------------- ------------
<S> <C> <C>
Profitability
Net income per diluted share $ 0.55 $ 0.57
Net income per diluted share, excluding goodwill amortization $ 0.62 $ 0.58
Book value per common share $ 21.45 $ 17.12
Return on average stockholders' equity 10.3% 13.5%
Return on average tangible stockholders' equity(1) 15.3% 14.6%
Return on AEA 1.48% 1.63%
Return on AMA(2) 1.16% 1.46%
Other
Net finance income as a percentage of AEA 6.74% 4.75%
Net finance margin as a percentage of AEA 3.58% 3.75%
Efficiency ratio(3) 46.0% 38.9%
Salaries and general operating expenses as a percentage of AMA(2)(3) 2.15% 1.68%
Net credit losses as a percentage of average:
Total finance receivables 0.67% 0.42%
Commercial finance receivables 0.55% 0.22%
Consumer finance receivables 1.48% 1.17%
Volume securitized $ 680.0 $ 470.5
Gains on Securitizations as a percentage of pretax income 8.18% 0.43%
Average Balances
Average Stockholders' Equity $ 5,597.7 $ 2,733.4
Average Finance Receivables $31,612.6 $19,904.3
Average Earning Assets $38,968.1 $22,603.8
Average Managed Assets $49,793.2 $25,177.5
</TABLE>
<TABLE>
<CAPTION>
At March 31, At December 31, At March 31,
2000 1999 1999
----------------- -------------------- -----------------
<S> <C> <C> <C>
Credit Quality
60+ days contractual delinquency as a percentage of
finance receivables
Commercial 2.65% 2.42% 1.36%
Consumer 4.32% 4.62% 3.57%
Total 2.85% 2.71% 1.82%
60+ days managed financial asset contractual delinquency
as a percentage of managed financial assets(4)
Commercial 3.22% 2.72% 1.36%
Consumer 3.26% 3.49% 2.84%
Total 3.23% 2.84% 1.85%
Total non-performing assets as a percentage of finance
receivables(5) 2.46% 2.05% 1.41%
Total non-performing managed assets as a percentage of
managed financial assets(4) 2.65% 2.23% 1.52%
Reserve for credit losses as a percentage of finance
receivables 1.43% 1.44% 1.32%
Capital and Leverage
Debt (net of overnight deposits) to stockholders' equity(6) 6.23x 5.96x 6.27x
Debt (net of overnight deposits) to tangible stockholders'
equity(1) (6) 9.04x 8.75x 6.74x
</TABLE>
(1) Tangible stockholders' equity excludes goodwill.
(2) "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 commercial and consumer finance receivables previously
securitized and currently managed by the Company.
(3) Amortization of goodwill is excluded from these ratios.
(4) Managed financial assets excludes operating leases and Equity Investments.
(5) Total non-performing assets reflect both commercial and consumer finance
receivables on non-accrual status and assets received in satisfaction of
loans.
(6) Total debt excludes, and stockholders' equity includes $250.0 million of
Company-obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely debentures of the Company.
8
Exhibit 99.2
[The CIT Group, Inc. Logo]
Contact: Joan Russo
Vice President
Corporate Communications
(973) 740-5437
[email protected]
FROM: THE CIT GROUP, INC.
650 CIT DRIVE
LIVINGSTON, NEW JERSEY 07039
FOR IMMEDIATE RELEASE
THE CIT GROUP, INC. DECLARES REGULAR QUARTERLY DIVIDEND
-------------------------------------------------------
LIVINGSTON, NEW JERSEY, April 27, 2000 --- The Board of Directors of The
CIT Group, Inc. (NYSE:CIT; TSE:CIT.U) declared a regular quarterly cash dividend
of $.10 per common share for shareholders of record on May 10, 2000. The cash
dividend is payable on May 31, 2000.
CIT is one of the largest commercial and consumer financing companies in
the world. Founded in 1908, the Company (www.cit.com) provides diversified
financing products and services to a broad range of customers through
strategically focused business units.
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