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) February 3, 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.
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See the attached press releases, which are incorporated herein by
reference, regarding:
1. The 1999 fourth quarter and annual earnings, filed as Exhibit 99.1; and
2. The declaration of a dividend for the quarter ending December 31, 1999
of $.10 per share, payable on February 28, 2000 to holders of record at
the close of business on February 10, 2000, filed as Exhibit 99.2.
3. Appointment of new Chairman of the Board and new Director and
retirement of one Director, filed as Exhibit 99.3.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release, dated February 3, 2000, regarding the 1999
fourth quarter and annual earnings.
99.2 Press Release, dated February 3, 2000, regarding declaration
of a dividend for the quarter ending December 31, 1999.
99.3 Press Release, dated February 3, 2000, regarding appointment
of new Chairman of the Board and new Director and retirement
of one Director.
-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: February 3, 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 1999:
o Twelfth Consecutive Year of Increased Net Income to Record Level of
$389.4 Million.
o Purchases of Newcourt Credit Group Inc. and Heller's Domestic
Factoring Operations Completed in the Quarter.
o Acquisitions Solidify CIT's Leadership Positions in Factoring,
Technology, Vendor Finance, Construction and Transportation.
o. Managed Assets Over $50 Billion.
NEW YORK, NEW YORK, February 3, 2000 --- The CIT Group, Inc. (NYSE: CIT)
today announced fourth quarter 1999 net income of $104.3 million, ($.49 cents
per diluted share) compared to $87.3 million, ($.54 cents per diluted share)
reported in 1998. Net income for the 1999 full year totaled a record $389.4
million compared to $338.8 million reported in 1998, up 14.9%. On a per diluted
share basis, earnings were $2.22 compared to $2.08 in 1998.
The increased earnings for the year reflect continued growth in the
commercial and equipment finance portfolios, solid fee generation, improved
consumer business profitability and continued strong credit quality. Excluding
goodwill amortization, earnings per share were $0.54 and $0.55 for the fourth
quarter of 1999 and 1998, respectively.
As announced previously, on November 15, 1999, CIT closed the stock
acquisition of Newcourt Credit Group Inc. ("Newcourt") by issuing shares of CIT
common stock and common stock equivalents. Accordingly, Newcourt's results are
included in the quarter only for the period
<PAGE>
following the acquisition. Newcourt's assets and liabilities were adjusted to
fair value at the acquisition date, and the excess purchase price over net
assets acquired has been allocated to goodwill. Newcourt contributed modestly to
CIT fourth quarter 1999 net income.
"The fourth quarter of 1999 concluded one of the most eventful years in
CIT's history as we closed our acquisitions of Newcourt's vendor technology and
structured finance operations, and Heller Financial, Inc.'s domestic factoring
operations. Newcourt's fourth quarter volume was strong in core areas and
on-balance sheet asset growth was strong. Our integration efforts are
progressing, and I look forward to further meshing the growth platforms and
vendor and structured finance expertise of Newcourt with CIT's discipline and
core franchises", noted Albert R. Gamper, Jr., Chairman and Chief Executive
Officer. "We continue to target significantly greater efficiencies in the
combined organization and will begin to see progress in the first quarter. We
delivered another solid quarter and posted our twelfth consecutive annual
increase in net income during a year of major change and challenges. This
performance is a testament to the hard work and talent of the people in our
highly diversified and strong operating platforms."
Financial Highlights:
Total managed assets increased to $50.4 billion at December 31, 1999, up
from $26.2 billion at December 31, 1998. The 1999 amounts include acquired
Newcourt managed assets of over $20 billion. Assets increased as a result of
strong new business volume and strategic purchases in the commercial finance
segment. On an owned basis, commercial financing and leasing assets grew to
$35.6 billion, an increase of $17.2 billion from year-end 1998. Commercial
managed assets increased $24.7 billion to $43.0 billion. Consumer managed assets
decreased to $7.3 billion from $7.8 billion at December 31, 1998 due to the
decision to de-emphasize certain product lines and selective whole loan sales.
<PAGE>
Due to the acquisitions and a higher proportion of operating leases, net
finance income improved to $450.9 million in the fourth quarter compared with
$259.1 million in the same period last year, and for the full year, net finance
income increased to $1,272.5 million from $974.3 million in 1998. As a
percentage of average earning assets, fourth quarter net finance income was
5.80% compared to 4.71% in the fourth quarter of 1998, and for the full year,
net finance income as a percentage of average earning assets was 4.98% in 1999
compared to 4.75% in 1998. The increases are due to changes in asset mix,
partially offset by higher funding costs in 1999. Net finance income after
depreciation on operating lease equipment was 3.51% of average earning assets in
the fourth quarter of 1999 compared to 3.83% in the fourth quarter of 1998 and
3.59% for the full year 1999, compared to 3.93% in 1998. The decreases are due
to higher 1999 funding costs and a higher percentage of leasing business, which
also generates equipment renewals and gains, other fees and tax depreciation
benefits.
Fees and other income for the fourth quarter of 1999 were $129.4 million,
compared to $59.3 million for the fourth quarter of 1998. For the year, fees and
other income totaled $350.8 million, increasing from $255.4 million in 1998. The
1999 results were primarily driven by higher factoring fees, improved gains on
sales of equipment coming off lease and sales of certain receivables, and higher
fees from the commercial lending and leasing businesses. For the fourth quarter
and the year, securitization gains totaled $9.4 million and $14.7 million,
respectively.
Salaries and general operating expenses for the fourth quarter of 1999
totaled $192.0 million compared with $103.6 million for the prior year. For the
year, salaries and general operating expenses were $516.0 million, up from
$407.7 million. Core operating expense growth was modest due to consumer
business productivity improvements and through the increased use of internet
processing in our factoring business. However, expenses increased due to the
Newcourt and
<PAGE>
factoring acquisitions. The efficiency ratio for the fourth quarter was 48.3%
compared to 39.0% in the same quarter of 1998, and for the year was 41.3%
compared to 39.2% for 1998 (all excluding goodwill amortization).
The provision for credit losses was $32.4 million for the 1999 fourth
quarter compared to $24.4 million in the prior year. Fourth quarter net
charge-offs were $27.5 million, 0.41% of average finance receivables, compared
to $20.8 million, 0.42%, for the same period last year. For the year, the
provision for credit losses was $110.3 million compared to $99.4 million in 1998
due to higher charge-offs. At December 31, 1999, the reserve for credit losses
was $446.9 million, 1.44% of finance receivables, up from $263.7 million, 1.33%,
at year-end 1998, reflecting higher reserve levels on the Newcourt finance
receivable portfolio.
CIT is a leading diversified finance company offering vendor, equipment,
commercial, 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).
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, except Net Income per Share)
<TABLE>
<CAPTION>
For the Quarter For the Year
Ended December 31, Ended December 31,
-------------------------- ------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Finance income $ 886.1 $ 533.7 $2,565.9 $2,015.1
Interest expense 435.2 274.6 1,293.4 1,040.8
--------- --------- -------- --------
Net finance income 450.9 259.1 1,272.5 974.3
Fees and other income 129.4 59.3 350.8 255.4
--------- --------- -------- --------
Operating revenue 580.3 318.4 1,623.3 1,229.7
--------- --------- -------- --------
Salaries and general operating expenses 192.0 103.6 516.0 407.7
Provision for credit losses 32.4 24.4 110.3 99.4
Depreciation on operating lease equipment 178.2 48.1 355.1 169.5
Goodwill amortization 12.6 3.2 25.7 10.1
Minority interest in subsidiary trust holding
solely debentures of the Company 4.8 4.8 19.2 19.2
--------- --------- --------- ---------
Operating expenses 420.0 184.1 1,026.3 705.9
--------- --------- --------- ---------
Income before provision for income taxes 160.3 134.3 597.0 523.8
Provision for income taxes 56.0 47.0 207.6 185.0
--------- --------- --------- ---------
Net income $ 104.3 $ 87.3 $ 389.4 $ 338.8
========= ========= ========= =========
Basic net income per share $0.49 $0.54 $2.24 $2.09
Weighted average shares outstanding 213,072,853 161,366,016 174,013,063 161,987,897
Diluted net income per share $0.49 $0.54 $2.22 $2.08
Weighted average shares outstanding 214,186,539 162,301,065 175,161,085 163,188,739
</TABLE>
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
<TABLE>
<CAPTION>
December 31, December 31,
------------ ------------
1999 1998
---- ----
<S> <C> <C>
Assets
Financing and leasing assets
Loans and Leases
Commercial $27,119.2 $15,589.1
Consumer 3,887.9 4,266.9
----------- -----------
Finance receivables 31,007.1 19,856.0
Reserve for credit losses (446.9) (263.7)
----------- -----------
Net finance receivables 30,560.2 19,592.3
Operating lease equipment, net 6,125.9 2,774.1
Finance receivables held for sale 3,123.7 987.4
Cash and cash equivalents 1,073.4 73.6
Goodwill 1,850.5 216.5
Other assets 2,347.4 659.2
----------- -----------
Total assets $ 45,081.1 $ 24,303.1
=========== ===========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 8,974.0 $ 6,144.1
Variable rate senior notes 7,147.2 4,275.0
Fixed rate senior notes 19,052.3 8,032.3
Subordinated fixed rate notes 200.0 200.0
----------- -----------
Total debt 35,373.5 18,651.4
Credit balances of factoring clients 2,200.6 1,302.1
Accrued liabilities and payables 1,191.8 694.3
Deferred federal income taxes 510.8 703.7
----------- -----------
Total liabilities 39,276.7 21,351.5
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 1.7
Paid-in capital 3,521.8 952.5
Retained earnings 2,100.4 1,772.8
Treasury stock at cost (70.5) (25.4)
----------- -----------
Total stockholders' equity 5,554.4 2,701.6
----------- -----------
Total liabilities and stockholders' equity $ 45,081.1 $ 24,303.1
=========== ===========
</TABLE>
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Quarter Ended For the Year
Selected Data and Ratios December 31, Ended December 31,
------------------------- ----------------------
Profitability 1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income per diluted share $ 0.49 $ 0.54 $ 2.22 $ 2.08
Net income per diluted share (ex. goodwill amortization) $ 0.54 $ 0.55 $ 2.33 $ 2.11
Book value per common share $ 20.97 $ 16.66
Return on average stockholders' equity 9.9% 13.1% 12.0% 13.2%
Return on average tangible stockholders' equity (5) 12.7% 14.3% 14.2% 14.0%
Return on average tangible stockholders' equity (ex. goodwill
amortization) (5) 14.0% 14.6% 14.9% 14.2%
Return on AEA 1.34% 1.59% 1.52% 1.65%
Return on AMA (2) 1.11% 1.42% 1.32% 1.48%
Other
Net finance income as a percentage of AEA 5.80% 4.71% 4.98% 4.75%
Net finance income as a percentage of AEA after operating lease
depreciation 3.51% 3.83% 3.59% 3.93%
Efficiency ratio(1) 48.3% 39.0% 41.3% 39.2%
Salaries and general operating expenses as a percentage of AMA(1)(2) 2.05% 1.69% 1.75% 1.78%
Net credit losses as a percentage of average:
Total Finance receivables 0.41% 0.42% 0.42% 0.42%
Commercial finance receivables 0.26% 0.17% 0.25% 0.22%
Consumer finance receivables 1.26% 1.35% 1.19% 1.18%
Consumer managed assets 1.10% 1.00% 1.03% 0.92%
Volume securitized $ 476.9 $ 124.5 $ 1,512.9 $ 866.0
Gains on Securitizations as a percentage of pretax income 5.86% -- 2.46% 2.38%
Average Balances
Average Stockholders' Equity $ 4,233.6 $ 2,664.3 $ 3,235.7 $ 2,572.3
Average Finance Receivables $26,740.0 $19,950.8 $22,426.8 $18,711.7
Average Earning Assets $31,104.1 $22,012.5 $25,569.5 $20,495.8
Average Managed Assets $37,476.5 $24,558.8 $29,438.8 $22,918.8
Credit Quality 1999 1998
---- ----
60+ days contractual delinquency as a percentage of finance receivables
Commercial 2.42% 1.17%
Consumer 4.62% 3.89%
Total 2.71% 1.75%
60+ days managed asset contractual delinquency as a percentage of managed assets
Commercial 2.40% 1.17%
Consumer 3.49% 3.18%
Total 2.55% 1.64%
Total nonperforming assets as a percentage of finance receivables (3) 1.91% 1.40%
Total nonperforming managed assets as a percentage of managed assets 1.91% 1.31%
Reserve for credit losses as a percentage of finance receivables 1.44% 1.33%
Capital and Leverage
Debt (net of overnight deposits) to stockholders' equity (4) 5.96x 6.32x
Debt (net of overnight deposits) to tangible stockholders' equity(4)(5) 8.75x 6.82x
</TABLE>
(1) Amortization of goodwill is excluded from these ratios.
(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) Total nonperforming assets reflect both commercial and consumer finance
receivables on nonaccrual status and assets received in satisfaction of
loans.
(4) 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.
(5) Tangible stockholders' equity excludes goodwill.
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
MANAGED ASSETS BY STRATEGIC BUSINESS UNIT
<TABLE>
<CAPTION>
At December 31, At December 31,
--------------- ---------------
1999 1998
---- ----
<S> <C> <C>
Equipment Financing:
Finance receivables $ 10,899.3 $ 8,497.6
Operating lease equipment, net 1,066.2 765.1
------------ ------------
Total 11,965.5 9,262.7
------------ ------------
Capital Finance:
Finance receivables 1,838.0 1,655.4
Operating lease equipment, net 2,931.8 1,982.0
Liquidating portfolio(1) 281.4 466.9
------------ ------------
Total 5,051.2 4,104.3
------------ ------------
Total Equipment Financing and Leasing 17,016.7 13,367.0
------------ ------------
Structured Finance:
Finance receivables 1,933.9 --
------------
Vendor Technology Finance:
Finance receivables 7,488.9 --
Operating lease equipment, net 2,108.8 --
------------
Total Vendor Technology Finance 9,597.7 --
------------
Commercial Services 4,165.1 2,481.8
Business Credit 2,837.0 2,514.4
------------ ------------
Total Commercial Finance 7,002.1 4,996.2
------------ ------------
Total Commercial 35,550.4 18,363.2
------------ ------------
Home equity 2,215.4 2,244.4
Manufactured housing 1,666.9 1,417.5
Recreation vehicles 361.2 744.0
Liquidating portfolio(2) 462.8 848.4
------------ ------------
Total Consumer 4,706.3 5,254.3
------------ ------------
Other - Equity Investments 137.3 81.9
------------ ------------
Total Financing and Leasing Portfolio Assets 40,394.0 23,699.4
------------ ------------
Finance receivables previously securitized:
Commercial 7,471.5 --
Consumer 2,567.8 2,516.9
------------ ------------
Total 10,039.3 2,516.9
------------ ------------
Total Managed Assets $ 50,433.3 $ 26,216.3
============ ============
</TABLE>
(1) Consists primarily of oceangoing maritime and project finance.
(2) Consists of recreational boats and wholesale inventory financing.
<TABLE>
<CAPTION>
FEES AND OTHER INCOME For the Three Months Ended For the Year Ended
- --------------------- December 31, December 31,
-------------------------- ----------------------
1999 1998 1999 1998
---- ---- ------ ------
<S> <C> <C> <C> <C>
Factoring commissions $34.6 $25.3 $118.7 $95.7
Fees and other income 73.5 21.7 161.0 90.7
Gains on sales of leasing equipment 11.9 10.0 56.4 45.2
Gains on securitizations 9.4 - 14.7 12.5
Gains on sales of venture capital investments - 2.3 - 11.3
------ ----- ------ -------
$129.4 $59.3 $350.8 $255.4
====== ===== ====== ======
</TABLE>
Exhibit 99.2
[The CIT Group, Inc. Logo]
Contact: Michael J. McGowan
Vice President
Communications Services
(973) 535-3506
[email protected]
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
-------------------------------------------------------
LIVINGSTON, NEW JERSEY, February 3, 2000 --- The Board of Directors of The
CIT Group, Inc. (NYSE:CIT; TSE:CGN.U) today declared a regular quarterly cash
dividend of $.10 per common share for shareholders of record on February 9,
2000. The cash dividend is payable on February 28, 2000.
CIT is one of the largest commercial and consumer financing companies in
the world. 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. Logo]
Contact: Michael J. McGowan
Vice President
Communications Services
(973) 535-3506
[email protected]
FROM: THE CIT GROUP, INC.
650 CIT DRIVE
LIVINGSTON, NJ 07039
FOR IMMEDIATE RELEASE
THE CIT GROUP NAMES ALBERT R. GAMPER, JR., CHAIRMAN;
HISAO KOBAYASHI RETIRES AND TAKATSUGU MURAI JOINS BOARD
-------------------------------------------------------
LIVINGSTON, NEW JERSEY, February 3, 2000 --- The CIT Group, Inc.
(NYSE:CIT; TSE:CGN.U) announced that Albert R. Gamper, Jr., CIT President and
CEO, has also been named Chairman of the Board. Hisao Kobayashi, who served as
Chairman since 1992, announced his retirement today.
Takatsugu Murai, 56, Senior Managing Director, The Dai-Ichi Kangyo Bank,
Ltd., ("DKB") joins the CIT Board as a replacement for Mr. Kobayashi. Mr. Murai
has been with DKB since 1967, serving in a variety of capacities.
Mr. Kobayashi, 64, served as a CIT Director since 1989. He was recently a
Senior Advisor of DKB where he was an employee since 1959.
"During the last 10 years, Hisao Kobayashi's contributions to CIT's
success have been immense," said Mr. Gamper. "When DKB first took an equity
stake in our Company, he was at the forefront of that substantial undertaking
and, while that stake has diminished over time, his support and guidance have
been invaluable," he added.
Mr. Gamper, 57, has served as President and CEO of CIT since 1989 and as a
Director since 1984.
CIT is the world's largest publicly owned commercial finance company. For
more information, access the Company's Web Site at www.cit.com.
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