Exhibit 99.1
For Information: Valerie L. Gerard - Vice President - Investor Relations
(973) 422-3284
or
Yvette K. Rudich - Director - Corporate Communications
(973) 597-2095
CIT ANNOUNCES QUARTERLY AND FISCAL YEAR RESULTS
o Net earnings of $134.7 million for the quarter - diluted EPS of $0.64
o Net operating earnings of $157.1 million and $779.0 million for the year
o Commercial paper program at $4.7 billion and new bank credit facilities
completed
o Continued improvement in leverage ratios
NEW YORK, October 29, 2002 - CIT Group Inc. (NYSE: CIT) today reported net
income of $134.7 million, $0.64 diluted earnings per share, for the quarter
ended September 30, 2002 after $22.4 million ($36.2 million pretax) of charges
related to the run-off venture capital equity investment business. These charges
reflect continued deterioration in valuations, particularly investments in
private equity funds, and consist of both realized losses and write-downs for
other than temporary declines in value.
Current quarter net operating earnings were $157.1 million, down from
$166.7 million for the June 30, 2002 quarter, primarily reflecting lower
securitization gains from reduced securitization activity. These net operating
earnings consist of net income excluding this quarter's $36.2 million in pre-tax
venture capital charges and last quarter's reserving actions of $260.0 million
pre-tax and goodwill impairment charge of $1,999.0 million.
1
The following table summarizes the impact for the respective reporting
periods of goodwill-related items, certain reserving actions and other charges
and TCH losses (see note 2 below) that affect the comparability of our financial
results under GAAP ($ in millions).
Quarters Ended Twelve Months Ended
September 30, June 30, September 30, (3)
---------------------- ------------- ----------------------
2002 2001 2002 2002 2001
---- ---- ---- ---- ----
GAAP net income / (loss) $ 134.7 $ 128.6 $ (2,397.8) $ (6,698.7) $ 423.4
Add:
Goodwill impairment -- -- 1,999.0 6,511.7 --
Goodwill amortization -- 45.4 -- -- 112.4
Reserving actions and other
charges(1) 22.4 -- 161.2 242.5 158.0
TCH losses(2) -- 52.7 404.3 723.5 70.5
-------- -------- ---------- ---------- --------
Net operating earnings - before
charges $ 157.1 $ 226.7 $ 166.7 $ 779.0 $ 764.3
======== ======== ========== ========== ========
(1) Current year after tax charges include a $22.4 million write-down and loss
on venture capital investments, a $124.0 million telecommunication reserve
and a $83.7 million Argentina reserve. Reported results for the twelve
months ended September 30, 2001 included special charges totaling $158.0
million after-tax, including costs relating to the Tyco acquisition.
(2) CIT's historical consolidated results include Tyco Capital Holding, Inc.
(TCH), a former Tyco International Ltd. affiliate that was merged into CIT
in conjunction with CIT's July 2002 IPO. TCH had no impact on CIT
financial results for the September 2002 quarter due to a capital
contribution by Tyco immediately prior to the merger of TCH into CIT. TCH
will not impact future CIT results. TCH expenses consisted primarily of
interest expense to an affiliate of Tyco.
(3) The data for the twelve months ended September 30, 2001 is derived from
the quarters ended December 31, 2000, March 31, 2001 and September 30,
2001, plus the combined three months ended June 30, 2001, which reflects
CIT data subsequent to the purchase by Tyco on June 1, 2001.
"CIT posted solid results in a weak economy as evidenced by a 12% return
on tangible equity. During the quarter, we made good progress toward our primary
objectives of restoring our historical funding base and generating improved
origination volumes," said Albert R. Gamper, Jr., Chairman, President and CEO.
"Although we expect the current economic weakness to continue, we are
comfortable with the quality of our balance sheet and the business we are
originating. I am confident that the broad diversity of our businesses is a
strength, especially in this environment."
2
Financial Highlights:
Funding and Liquidity.
We re-launched our commercial paper program, quickly achieving
approximately $4.7 billion outstanding at attractive pricing levels. Existing
bank facilities were paid down, maintaining back-stop liquidity to fully cover
all outstanding commercial paper.
On October 15, 2002, we made further improvements in our maturity profile
by retiring the $3.7 billion bank facility due in March 2003 and negotiated a
new $2.3 billion committed credit facility expiring in October 2003. Proceeds
from the new facility, along with other liquidity sources, were utilized to pay
down the prior facility. The Company now has aggregate committed bank facilities
of approximately $7.35 billion, with $4.73 billion currently undrawn.
We also demonstrated successful access to the term-debt markets during the
quarter, issuing $700 million of eighteen-month floating-rate debt and $850
million in five-year fixed-rate debt. Securitized volume was approximately $1.0
billion, down from $2.7 billion in the prior quarter. We have approximately $2.0
billion of availability in our committed asset-backed facilities and $4.4
billion under shelf registrations.
Portfolio and Managed Assets.
Total financing and leasing portfolio assets increased during the quarter
to $36.4 billion versus $35.7 billion at June 30, 2002 and were down from $40.7
billion at September 30, 2001. With the exception of the Equipment Financing and
Leasing Segment, which was essentially flat with last quarter, all business
units grew core portfolio assets from June levels. The growth was primarily in
CIT's Business Credit business unit and seasonal factoring growth within the
Commercial Services business unit. Managed assets were flat relative to last
quarter at $47.6 billion, but were down from $50.9 billion at September 30,
2001. The liquidating portfolios (owner-operator trucking, franchise,
manufactured housing, recreational vehicle and inventory finance loans) declined
to $1.46 billion from $1.73 billion at June 30, 2002. The decline in the
liquidating portfolios included sales and continued run-off.
3
Origination activities were strong in Business Credit and Specialty
Finance, where overall new business volumes increased 10.8% from the prior
quarter. Total new business volume, with and without factoring, was up 3.3% and
0.7%, respectively, from last quarter.
Net Finance and Risk Adjusted Margins.
Net finance margin improved during the current quarter to 4.37% from 4.11%
in the prior quarter, reflecting both slightly wider margins in most business
units and our return to the commercial paper market. Risk adjusted margin (net
finance margin after provision for credit losses) was 2.92% for the quarter
ended September 30, 2002, down slightly from 2.98% for the prior quarter due to
higher credit provisioning.
Credit Quality.
Total 60+ day delinquencies were $1.070 billion, (3.76% of finance
receivables), compared to $1.030 billion (3.69%) at June 30, 2002 and $1.104
billion (3.46%) at September 30, 2001. The increase from the prior quarter was
largely due to one transaction in the Equipment Financing and Leasing Segment,
which is collateralized by a municipal waste-to-energy project and underlying
revenue contracts. Managed 60+ day delinquencies increased to $1.539 billion
(3.78% of managed financial assets) at September 30, 2002 from $1.520 billion
(3.74%) at June 30, 2002, but are down from $1.640 billion (3.72%) at September
30, 2001.
Charge-offs were $105.4 million (1.63% of average finance receivables),
relatively flat with last quarter, $105.6 million (1.63%), excluding liquidating
portfolio charge-offs (trucking, franchise, manufactured housing, recreational
vehicle and inventory finance), and telecommunication charge-offs covered by
last quarter's $200 million specific reserving action. Total charge-offs during
the September quarter were $141.0 million (1.99%), including $18.4 million of
telecommunication loan charge-offs, compared to $126.0 million (1.79%) during
the prior quarter. The tables that follow detail charge-offs for the current and
prior quarters by segment, both in amount and as a percentage of average finance
receivables ($ in millions).
4
Charge-offs: Quarter Ended September 30, 2002
------------------------------------------------------------------------
Excluding
Liquidating/Telecom Liquidating/Telecom Total
----------------------- ----------------------- --------------------
Equipment Financing & Leasing ....... $ 59.2 2.88% $ 11.6 5.13% $ 70.8 3.10%
Specialty Finance - commercial ...... 17.6 1.15% 1.2 10.74% 18.8 1.22%
Commercial Finance .................. 22.4 1.06% -- -- 22.4 1.06%
Structured Finance................... -- -- 18.4 10.67% 18.4 2.78%
-------- ------- --------
Total Commercial Segments ........ 99.2 1.60% 31.2 7.62% 130.4 1.98%
Specialty Finance - consumer ........ 6.2 2.27% 4.4 2.05% 10.6 2.17%
-------- ------- --------
Total ............................ $ 105.4 1.63% $ 35.6 5.70% $ 141.0 1.99%
======== ======= ========
Charge-offs: Quarter Ended June 30, 2002
------------------------------------------------------------------------
Excluding
Liquidating/Telecom Liquidating/Telecom Total
----------------------- ----------------------- --------------------
Equipment Financing & Leasing ....... $ 50.5 2.33% $ 14.4 5.10% $ 64.9 2.65%
Specialty Finance - commercial ...... 19.3 1.28% 1.9 4.52% 21.2 1.36%
Commercial Finance .................. 29.0 1.61% -- -- 29.0 1.61%
Structured Finance .................. -- -- -- -- -- --
-------- ------- --------
Total Commercial Segments ........ 98.8 1.61% 16.3 5.03% 115.1 1.78%
Specialty Finance - consumer ........ 6.8 1.86% 4.1 1.88% 10.9 1.86%
-------- ------- --------
Total ............................ $ 105.6 1.63% $ 20.4 3.75% $ 126.0 1.79%
======== ======= ========
Non-performing assets ended the quarter at $1.140 billion, 4.01% of
finance receivables, up from $1.053 billion, 3.77%, at June 30, 2002, reflecting
the previously mentioned energy project transaction and increased non-accrual
competitive local exchange carrier ("CLEC") / telecommunication accounts, which
were considered in last quarter's reserving action. These increases were
partially mitigated by a reduction in Equipment Financing business unit
non-performing assets during the quarter. The CLEC portfolio totaled
approximately $275.2 million at September 30, 2002 (before reserves), of which
$109.9 million was on non-accrual status.
Total reserves for credit losses were $777.8 million (2.73% of finance
receivables), compared to $808.9 million (2.90%) at June 30, 2002 and $492.9
million (1.55%) at September 30, 2001. The reserve reduction compared to June
was the direct result of $30.9 million charged to the specific
telecommunications reserve, consisting of both telecommunication loan
charge-offs ($18.4 million) and telecommunication equipment write-downs ($12.5
million). We expect the telecommunications reserve to decline as further
impairment is realized. At September 30, 2002, the reserve for credit losses
excluding the telecommunication ($169.1 million) and
5
Argentine reserves ($135.0 million) was $473.7 million (1.72% of finance
receivables), versus $473.9 million (1.75%) at June 30, 2002 reflecting seasonal
growth in the factoring portfolio during the current quarter.
Other Revenue.
For the quarter, other revenue totaled $209.0 million, down from $246.1
million for the quarter ended June 30, 2002 reflecting lower securitization
gains and higher venture capital losses. Securitization gains during the current
quarter totaled $29.2 million, 13.5% of pretax income, on volume of $980.0
million, compared to $57.1 million ($2.7 billion in volume) during the prior
quarter. The reduction in securitization activity from last quarter reflects our
re-entry to the commercial paper and unsecured debt markets. The previously
discussed venture capital impairment valuations and write-downs of $36.2 million
were recognized as a reduction to other revenue in the quarter. Other revenue
also reflects seasonally strong factoring commissions and improved fee and other
income in relation to last quarter.
Salaries and General Operating Expenses.
Salaries and general operating expenses were $235.6 million for the
quarter, compared to $230.4 million reported for the June 2002 quarter. The
increase from last quarter included increased expenses associated with our
return to public ownership and the continuation of high collection and asset
disposition costs. The efficiency ratio for the quarter (salaries and general
operating expenses divided by operating margin, excluding provision for credit
losses) was 40.6% as compared to 38.3% in the prior quarter.
Headcount declined to approximately 5,850 employees at September 30, 2002
from 5,935 as of June 30, 2002 and 6,785 at the end of the prior year. Salaries
and general operating expenses were 2.08% of average managed assets during the
quarter, versus 2.02% for the prior quarter.
Capitalization and Leverage.
CIT further enhanced its capitalization and leverage ratios during the
quarter. The Company's ratio of tangible equity to managed assets improved to
9.93% as of September 30,
6
2002, compared to 9.25% as of June 30, 2002, and 8.48% in the prior year
quarter. On July 2, 2002, the underwriters sold 200 million shares of CIT's
stock in the Company's initial public offering. The net proceeds were paid to
Tyco, the selling stockholder. On July 12, 2002, as part of the Company's IPO,
the underwriters exercised a portion of their over-allotment option to purchase
an additional 11.6 million shares of CIT stock from the Company, increasing
capital by approximately $255 million.
Comparisons with Prior Year.
Net operating earnings before charges for the quarter of $157.1 million
declined from $226.7 million from the quarter ended September 30, 2001,
reflecting higher credit losses, due to a weaker economy, and lower interest
margins, primarily associated with the disruption to our funding base beginning
in the March 2002 quarter. For the twelve months ended September 30, 2002, net
operating earnings before charges of $779.0 million were up from $764.3 million
during the prior year, as increased fees and reduced operating expenses offset
the risk adjusted margin compression.
Net finance margin for the current quarter, at 4.37%, was below the prior
year level of 5.01% due to the continued impact of higher funding costs and
maintaining excess cash liquidity following the disruption to our funding base.
Additionally, reflecting the higher charge-offs in the current quarter, risk
adjusted margin, at 2.92%, was below the 4.00% level for the quarter ended
September 30, 2001. For the twelve months ended September 30, 2002, risk
adjusted margin was 3.43%, versus 3.45% for the same 2001 period, excluding the
previously mentioned reserving actions in both periods.
Charge-offs, excluding the liquidating and telecommunication portfolios
for the current quarter and twelve months and special charges in the prior year
twelve month period, were $105.4 million (1.63% of average finance receivables)
and $352.0 million (1.32%), versus $68.3 million (0.87%) and $272.4 million
(0.85%) during the September 30, 2001 quarter and twelve months then ended. This
increase was due to higher losses in the Equipment Financing portfolio, as
equipment collateral values remained soft in the current economic environment,
and higher losses in the Commercial Finance portfolio.
7
Conference Call and Webcast:
The Company will discuss this quarter's results, as well as on-going strategy,
on a conference call today at 11:00 am (EST). The interested parties may access
the conference call live today by dialing 800-811-0667 for U.S. and Canadian
callers or; 913-981-4901 for international callers, with the pass-code 418025,
or at the following website: http://ir.cit.com. A replay of the call will be
available beginning three hours after the conclusion of the call through 12:00
am (EDT) November 08, 2002, by dialing 888-203-1112 for U.S. and Canadian
callers or 719-457-0820 for international callers with the pass-code 418025 or
at the following website: http://ir.cit.com.
Forward Looking Statements:
This release contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All forward-looking statements
(including statements regarding future financial and operating results) involve
risks, uncertainties and contingencies, many of which are beyond CIT's control,
which may cause actual results, performance, or achievements to differ
materially from anticipated results, performance, or achievements. All
statements contained in this release that are not clearly historical in nature
are forward-looking, and the words "anticipate," "believe," "expect,"
"estimate," "plan," and similar expressions are generally intended to identify
forward-looking statements. Economic, business, funding market, competitive
and/or regulatory factors, among others, affecting CIT's businesses are examples
of factors that could cause actual results to differ materially from those
described in the forward-looking statements. More detailed information about
these factors are described in CIT's filings with the Securities and Exchange
Commission, including its Periodic Report on Form 8-K dated July 2, 2002 and
Annual Report on Form 10-K for the period ended September 30, 2001. CIT is under
no obligation to (and expressly disclaims any such obligation to) update or
alter its forward-looking statements, whether as a result of new information,
future events or otherwise.
8
About CIT:
CIT Group Inc. (NYSE: CIT), a leading commercial and consumer finance company,
provides clients with financing and leasing products and advisory services.
Founded in 1908, CIT has nearly $50 billion in assets under management and
possesses the financial resources, industry expertise and product knowledge to
serve the needs of clients across approximately 30 industries. CIT holds leading
positions in vendor financing, U.S. factoring, equipment and transportation
financing, Small Business Administration loans, and asset-based and
credit-secured lending. CIT, with its principal offices in New York City and
Livingston, New Jersey, has approximately 6,000 employees in locations
throughout North America, Europe, Latin and South America, and the Pacific Rim.
For more information, visit www.cit.com.
###
9
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
For the Quarters Ended September 30, 2002 and 2001
(dollars in millions, except per share data)
2002 (1) 2001
----------- ------------------------------------------
CIT TCH (1) Consolidated
Finance income $ 1,015.2 $ 1,258.6 $ -- $ 1,258.6
Interest expense 347.8 435.3 -- 435.3
--------- --------------------------------------
Net finance income 667.4 823.3 -- 823.3
Depreciation on operating lease equipment 296.6 338.6 -- 338.6
--------- --------------------------------------
Net finance margin 370.8 484.7 -- 484.7
Provision for credit losses 122.7 97.5 -- 97.5
--------- --------------------------------------
Net finance margin after provision for credit losses 248.1 387.2 -- 387.2
Other revenue(2) 209.0 239.2 -- 239.2
--------- --------------------------------------
Operating margin 457.1 626.4 -- 626.4
--------- --------------------------------------
Salaries and general operating expenses 235.6 255.9 7.2 263.1
Intercompany interest expense - net -- -- 73.8 73.8
Goodwill impairment -- -- -- --
Goodwill amortization -- 45.4 -- 45.4
Acquisition related costs -- -- -- --
Minority interest in subsidiary trust holding
solely debentures of the Company 4.4 4.8 -- 4.8
--------- --------------------------------------
Operating expenses 240.0 306.1 81.0 387.1
--------- --------------------------------------
Income (loss) before provision for income taxes 217.1 320.3 (81.0) 239.3
(Provision) benefit for income taxes (82.4) (139.0) 28.3 (110.7)
--------- --------------------------------------
Net income (loss) $ 134.7 $ 181.3 $ (52.7) $ 128.6
========= ======================================
Earnings per share
Basic earnings per share $ 0.64
Diluted earnings per share $ 0.64
(1) TCH was a wholly-owned subsidiary of a Tyco affiliate domiciled in Bermuda
and was the holding company for the acquisition of CIT by Tyco. Prior to the IPO
of CIT on July 8, 2002, the activity of TCH (net deficit) was unwound via a
capital contribution from Tyco. The consolidated financial statements of CIT
were not impacted by TCH subsequent to June 30, 2002. The eliminating entries,
including TCH's investment in CIT, are included within the TCH column.
September 30, September 30,
(2) Other Revenue 2002 2001
------------- -------------
Fees and other income $ 165.7 $ 163.3
Factoring commissions 47.7 39.9
Gains on securitization 29.2 25.6
Gains on sales of leasing equipment 2.6 11.1
(Losses) on venture capital investments (36.2) (0.7)
------- --------
Total other revenue $ 209.0 $ 239.2
======= ========
Fees and other income include: servicing fees, certain structuring and advisory
fees, syndication fees and gains from asset sales.
10
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
For the Twelve Months Ended September 30, 2002 and 2001
(dollars in millions)
2002 2001 (2)
--------------------------------------- -------------------------------------
CIT TCH (1) Consolidated CIT TCH (1) Consolidated
Finance income $ 4,342.8 $ -- $ 4,342.8 $ 5,366.5 $ -- $ 5,366.5
Interest expense 1,439.3 -- 1,439.3 2,272.0 -- 2,272.0
------------------------------------- -------------------------------------
Net finance income 2,903.5 -- 2,903.5 3,094.5 -- 3,094.5
Depreciation on operating lease equipment 1,241.0 -- 1,241.0 1,385.1 -- 1,385.1
------------------------------------- -------------------------------------
Net finance margin 1,662.5 -- 1,662.5 1,709.4 -- 1,709.4
Provision for credit losses 788.3 -- 788.3 396.3 -- 396.3
------------------------------------- -------------------------------------
Net finance margin after provision for credit losses 874.2 -- 874.2 1,313.1 -- 1,313.1
Other revenue(3) 932.3 -- 932.3 789.9 -- 789.9
------------------------------------- -------------------------------------
Operating margin 1,806.5 -- 1,806.5 2,103.0 -- 2,103.0
------------------------------------- -------------------------------------
Salaries and general operating expenses 923.4 23.0 946.4 1,044.2 9.6 1,053.8
Intercompany interest expense - net -- 662.6 662.6 -- 98.8 98.8
Goodwill impairment 6,511.7 -- 6,511.7 -- -- --
Goodwill amortization -- -- -- 120.1 -- 120.1
Acquisition related costs -- -- -- 54.0 -- 54.0
Minority interest in subsidiary trust holding
solely debentures of the Company 16.9 -- 16.9 19.2 -- 19.2
------------------------------------- -------------------------------------
Operating expenses 7,452.0 685.6 8,137.6 1,237.5 108.4 1,345.9
------------------------------------- -------------------------------------
(Loss) income before provision for income taxes (5,645.5) (685.6) (6,331.1) 865.5 (108.4) 757.1
(Provision) benefit for income taxes (329.7) (37.9) (367.6) (371.6) 37.9 (333.7)
------------------------------------- -------------------------------------
Net (loss) income $(5,975.2) $ (723.5) $ (6,698.7) $ 493.9 $ (70.5) $ 423.4
===================================== =====================================
(1) TCH was a wholly-owned subsidiary of a Tyco affiliate domiciled in Bermuda
and was the holding company for the acquisition of CIT by Tyco. Prior to the IPO
of CIT on July 8, 2002, the activity of TCH (net deficit) was unwound via a
capital contribution from Tyco. The consolidated financial statements of CIT
were not impacted by TCH subsequent to June 30, 2002. The eliminating entries,
including TCH's investment in CIT, are included within the TCH column.
(2) The data for the twelve months ended September 30, 2001 is derived from the
quarters ended December 31, 2000, March 31, 2001 and September 30, 2001 plus the
combined three months ended June 30, 2001 which reflects CIT data subsequent to
the purchase by Tyco on June 1, 2001.
September 30, September 30,
(3) Other Revenue 2002 2001
------------ -------------
Fees and other income $ 644.5 $ 498.8
Factoring commissions 165.5 150.7
Gains on securitization 149.0 138.3
Gains on sales of leasing equipment 13.6 80.3
(Losses) on venture capital investments (40.3) (0.1)
Special charges -- (78.1)
-------- --------
Total Other Revenue $ 932.3 $ 789.9
======== ========
Fees and other income include: servicing fees, structuring and advisory fees,
syndication fees and gains from receivable sales.
11
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
September 30,
2002 (1) September 30, 2001(1)
------------- ------------------------------------------------------------
CIT TCH Eliminations Consolidated
ASSETS
Financing and leasing assets:
Finance receivables $ 28,459.0 $ 31,879.4 $ -- $ -- $ 31,879.4
Reserve for credit losses (777.8) (492.9) -- -- (492.9)
----------- -----------------------------------------------------------
Net finance receivables 27,681.2 31,386.5 -- -- 31,386.5
Operating lease equipment, net 6,567.4 6,402.8 -- -- 6,402.8
Finance receivables held for sale 1,019.5 2,014.9 -- -- 2,014.9
Cash and cash equivalents 2,274.4 808.0 -- -- 808.0
Goodwill, net 384.4 6,547.5 -- -- 6,547.5
Receivables from Tyco Affiliates -- 200.0 362.7 (200.0) 362.7
Investment in Subsidiaries -- -- 10,598.0 (10,598.0) --
Other assets (2) 4,783.6 3,627.3 199.6 -- 3,826.9
----------- -----------------------------------------------------------
Total Assets $ 42,710.5 $ 50,987.0 $ 11,160.3 $ (10,798.0) $ 51,349.3
=========== ===========================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial Paper $ 4,654.2 $ 8,869.2 $ -- $ -- $ 8,869.2
Variable-rate bank credit facilities 4,037.4 -- -- -- --
Variable-rate senior notes 6,082.7 9,614.6 -- -- 9,614.6
Fixed-rate senior notes 17,681.7 17,113.9 -- -- 17,113.9
Subordinated fixed-rate notes -- 100.0 -- -- 100.0
----------- -----------------------------------------------------------
Total Debt 32,456.0 35,697.7 -- -- 35,697.7
Notes and payables to Tyco affiliates -- 7.6 5,209.7 (200.0) 5,017.3
Credit balances of factoring clients 2,513.8 2,392.9 -- -- 2,392.9
Accrued liabilities and payables 2,725.2 2,030.8 3.0 -- 2,033.8
----------- -----------------------------------------------------------
Total Liabilities 37,695.0 40,129.0 5,212.7 (200.0) 45,141.7
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely
debentures of the Company 257.7 260.0 -- -- 260.0
Stockholders' Equity:
Common stock 2.1 -- -- -- --
Paid-in capital 10,674.8 -- -- -- --
Contributed capital -- 10,422.4 5,842.6 (10,422.4) 5,842.6
Accumulated (deficit) earnings (5,722.8) 252.4 181.8 (252.4) 181.8
Accumulated other comprehensive (loss) income (196.3) (76.8) (76.8) 76.8 (76.8)
----------- -----------------------------------------------------------
Total Stockholders' Equity 4,757.8 10,598.0 5,947.6 (10,598.0) 5,947.6
----------- -----------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 42,710.5 $ 50,987.0 $ 11,160.3 $ (10,798.0) $ 51,349.3
=========== ===========================================================
Note: Certain prior year balances have been conformed to current year
presentation.
(1) The 2001 balance sheet includes the activity of TCH. TCH was a wholly-owned
subsidiary of a Tyco affiliate domiciled in Bermuda. TCH's only activity has
been in connection with its capacity as the holding company for the acquisition
of CIT by Tyco. Prior to the IPO of CIT on July 8, 2002, all of the activity of
TCH was unwound via a capital contribution from Tyco. Accordingly, the
consolidated financial statements of CIT were not impacted by TCH subsequent to
June 30, 2002.
(2) Other Assets primarily include the following at September 30, 2002:
securitization assets $1.4 billion, accrued interest and receivables from
derivative counterparties $0.7 billion, investments and receivables from joint
ventures and non-consolidated subsidiaries $0.7 billion, deposits on flight
equipment $0.3 billion, equity investments $0.3 billion, $0.2 billion of
repossessed and off-lease equipment, $0.1 billion of prepaid expenses, and $0.1
billion of investments in aerospace securities. The remaining balance includes
furniture and fixtures, miscellaneous receivables and other assets.
12
CIT GROUP INC. AND SUBSIDIARIES
PORTFOLIO AND MANAGED ASSET COMPOSITION
(dollars in millions)
September 30, June 30, September 30,
2002 2002 2001
------------- ----------- -------------
Equipment Financing & Leasing Segment
Equipment Financing
Finance receivables $ 7,522.2 $ 7,770.8 $ 9,668.9
Operating lease equipment, net 765.8 818.6 1,281.7
Finance receivables held for sale 110.8 117.4 113.1
----------- ----------- -----------
Portfolio assets 8,398.8 8,706.8 11,063.7
Finance receivables securitized and managed by CIT 4,384.1 4,658.2 4,464.8
----------- ----------- -----------
Managed assets 12,782.9 13,365.0 15,528.5
----------- ----------- -----------
Capital Finance
Finance receivables 1,479.5 1,530.2 1,773.0
Operating lease equipment, net 4,388.9 4,262.4 3,272.4
Finance receivables held for sale -- -- --
----------- ----------- -----------
Portfolio and managed assets 5,868.4 5,792.6 5,045.4
----------- ----------- -----------
Specialty Finance Segment
Commercial
Finance receivables 6,091.5 6,154.7 6,533.2
Operating lease equipment, net 1,353.2 1,546.9 1,796.1
Finance receivables held for sale 528.7 216.9 258.4
----------- ----------- -----------
Portfolio assets 7,973.4 7,918.5 8,587.7
Finance receivables securitized and managed by CIT 3,703.1 4,145.9 4,023.2
----------- ----------- -----------
Managed assets 11,676.5 12,064.4 12,610.9
----------- ----------- -----------
Consumer
Finance receivables - home equity 934.2 856.0 2,410.2
Finance receivables - other 831.8 838.7 663.5
Finance receivables held for sale 380.0 396.5 1,129.7
----------- ----------- -----------
Portfolio assets 2,146.0 2,091.2 4,203.4
Home equity finance receivables securitized and managed by CIT 2,115.9 2,035.9 252.2
Other finance receivables securitized and managed by CIT 1,031.6 1,127.9 1,407.7
----------- ----------- -----------
Managed assets 5,293.5 5,255.0 5,863.3
----------- ----------- -----------
Commercial Finance Segment
Commercial Services
Finance receivables and managed assets 5,040.4 4,536.4 5,112.2
----------- ----------- -----------
Business Credit
Finance receivables and managed assets 3,869.8 3,644.1 3,544.9
----------- ----------- -----------
Structured Finance Segment
Finance receivables 2,689.6 2,594.5 2,263.4
Operating lease equipment, net 59.5 61.8 52.6
Finance receivables held for sale -- -- 513.7
Equity investments 341.7 362.5 342.2
----------- ----------- -----------
Portfolio and managed assets 3,090.8 3,018.8 3,171.9
----------- ----------- -----------
Total
Finance receivables $ 28,459.0 $ 27,925.4 $ 31,969.3
Operating lease equipment, net 6,567.4 6,689.7 6,402.8
Finance receivables held for sale 1,019.5 730.8 2,014.9
Equity investments 341.7 362.5 342.2
----------- ----------- -----------
Portfolio assets 36,387.6 35,708.4 40,729.2
Finance receivables securitized and managed by CIT 11,234.7 11,967.9 10,147.9
----------- ----------- -----------
Managed assets $ 47,622.3 $ 47,676.3 $ 50,877.1
=========== =========== ===========
Note: Certain prior year balances have been conformed to current year
presentation.
13
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
For the Quarters Ended
------------------------------------------------------------------
September 30, 2002 June 30, 2002 September 30, 2001
$ % $ % $ %
------------------------------------------------------------------
Net Credit Losses
Equipment Financing and Leasing $ 70.8 3.10% $ 64.9 2.65% $ 33.9 1.15%
Specialty Finance - Commercial 18.8 1.22% 21.2 1.36% 12.1 0.75%
Commercial Finance 22.4 1.06% 29.0 1.61% 10.3 0.51%
Structured Finance 18.4 2.78% -- 0.00% (2.1) -0.40%
-------- -------- -------
Total Commercial 130.4 1.98% 115.1 1.78% 54.2 0.76%
Specialty Finance - Consumer 10.6 2.17% 10.9 1.86% 14.1 1.91%
-------- -------- -------
Total $ 141.0 1.99% $ 126.0 1.79% $ 68.3 0.87%
======== ======== =======
For the Twelve Months Ended
---------------------------------------------
September 30, 2002 September 30, 2001(1)
$ % $ %
---------------------------------------------
Equipment Financing and Leasing $ 258.9 2.51% $ 104.8 0.85%
Specialty Finance - Commercial 80.3 1.26% 74.9 1.07%
Commercial Finance 88.2 1.13% 50.3 0.63%
Structured Finance 18.5 0.75% 64.8 3.59%
-------- --------
Total Commercial 445.9 1.65% 294.8 1.01%
Specialty Finance - Consumer 46.4 1.78% 57.1 1.55%
-------- --------
Total $ 492.3 1.67% $ 351.9 1.08%
======== ========
September 30, 2002 June 30, 2002 September 30, 2001
$ % $ % $ %
-------------------------------------------------------------------
Finance Receivable Past Due 60 days or
more - Owned as a Percentage of Finance
Receivables
Equipment Financing and Leasing $ 452.2 5.02% $ 407.3 4.38% $ 466.5 4.08%
Specialty Finance - Commercial 215.4 3.54% 250.3 4.07% 259.5 3.97%
Commercial Finance 209.4 2.35% 195.3 2.39% 151.4 1.75%
Structured Finance 65.8 2.45% 44.9 1.73% 38.3 1.75%
---------- ---------- ----------
Total Commercial 942.8 3.53% 897.8 3.42% 915.7 3.18%
Specialty Finance - Consumer 127.2 7.20% 132.4 7.81% 188.2 6.12%
---------- ---------- ----------
Total $ 1,070.0 3.76% $ 1,030.2 3.69% $ 1,103.9 3.46%
========== ========== ==========
Non-performing Assets - Owned as a Percentage
of Finance Receivables(2)
Equipment Financing and Leasing $ 548.5 6.09% $ 510.0 5.48% $ 459.1 4.02%
Specialty Finance - Commercial 103.1 1.69% 125.7 2.04% 124.2 1.90%
Commercial Finance 176.1 1.98% 143.2 1.75% 106.0 1.22%
Structured Finance 172.2 6.40% 128.3 4.95% 110.4 5.05%
---------- ---------- ----------
Total Commercial 999.9 3.75% 907.2 3.46% 799.7 2.78%
Specialty Finance - Consumer 139.9 7.92% 145.4 8.58% 170.0 5.53%
---------- ---------- ----------
Total $ 1,139.8 4.01% $ 1,052.6 3.77% $ 969.7 3.04%
========== ========== ==========
Finance Receivable Past Due 60 days or
more - Managed as a Percentage of Managed
Financial Assets(3)
Equipment Financing and Leasing $ 710.6 5.27% $ 717.4 5.10% $ 810.5 5.06%
Specialty Finance - Commercial 303.3 2.94% 331.7 3.15% 386.4 3.57%
Commercial Finance 209.4 2.35% 195.3 2.39% 151.4 1.75%
Structured Finance 65.8 2.45% 44.9 1.73% 38.3 1.75%
---------- ---------- ----------
Total Commercial 1,289.1 3.64% 1,289.3 3.65% 1,386.6 3.63%
Specialty Finance - Consumer 249.5 4.71% 230.8 4.39% 253.2 4.32%
---------- ---------- ----------
Total $ 1,538.6 3.78% $ 1,520.1 3.74% $ 1,639.8 3.72%
========== ========== ==========
Note: CIT monitors credit quality on a managed basis, as comparable underwriting
standards and collection procedures are employed for securitized and owned
assets.
Reserve for Credit Losses
Reserve for credit losses as a percentage of
finance receivables 2.73% 2.90% 1.55%
Note: The above data for all relevant periods shown reflects the activity for
CIT only and excludes TCH balances.
(1) The data for the twelve months year ended September 30, 2001 is derived from
the quarters ended December 31, 2000, March 31, 2001 and September 30, 2001 plus
the combined three months ended June 30, 2001 which reflects CIT data subsequent
to the purchase by Tyco on June 1, 2001.
(2) Total non-performing assets reflect both commercial and consumer finance
receivables on non-accrual status and assets received in satisfaction of loans.
(3) Managed financial assets exclude operating leases and certain equity
investments.
14
CIT GROUP INC. AND SUBSIDIARIES
SELECTED DATA AND PORTFOLIO INFORMATION
(dollars in millions unless specified)
Selected Data For the Quarters Ended For the Twelve Months Ended
--------------------------------------------- ------------------------------
September 30, June 30, September 30, September 30, September 30,
2002 2002 2001 2002 2001(1)
--------------------------------------------- ------------------------------
Profitability
Net finance margin as percentage of AEA 4.37% 4.11% 5.01% 4.64% 4.21%
Net finance margin after provision as
percentage of AEA(2) 2.92% -0.02% 4.00% 2.44% 3.23%
Salaries & general operating expenses as
percentage of AMA(3) 2.08% 2.02% 2.09% 1.96% 2.05%
Efficiency ratio 40.6% 38.3% 35.4% 35.6% 41.8%
Securitization Volume(4)
Equipment Financing $ 305.5 $ 1,170.4 $ 407.7 $ 2,327.9 $ 1,778.5
Specialty Finance - Commercial 410.5 782.4 484.7 2,602.0 2,719.0
Specialty Finance - Consumer 264.0 785.9 -- 2,738.6 --
--------------------------------------------- ------------------------------
Total $ 980.0 $ 2,738.7 $ 892.4 $ 7,668.5 $ 4,497.5
============================================= ==============================
Average Assets
Average finance receivables (AFR) $ 28,325.8 $ 28,157.7 $ 31,353.7 $ 29,473.9 $ 32,709.4
Average earning assets (AEA) 33,959.4 34,670.1 38,735.7 35,796.4 40,644.5
Average managed assets (AMA)(3) 45,356.5 45,734.3 48,888.0 47,126.9 50,983.3
Average operating leases (AOL) 6,615.0 6,657.1 7,031.2 6,554.8 7,088.3
September 30, June 30, September 30,
2002 2002 2001
----------------------------------------
Capital & Leverage(5),(6)
Tangible stockholders' equity
to managed assets 9.93% 9.25% 8.48%
Debt (net of overnight deposits)
to tangible stockholders' equity(7) 6.54x 7.07x 8.20x
Note: The above data for all relevant periods shown reflects the activity for
CIT only and excludes the TCH expenses.
(1) The data for the twelve months ended September 30, 2001 is derived from the
quarters ended December 31, 2000, March 31, 2001 and September 30, 2001 plus the
combined three months ended June 30, 2001 which reflects CIT data subsequent to
the purchase by Tyco on June 1, 2001.
(2) Net finance margin after provision for the quarter ended June 30, 2002 was
2.98%, excluding reserving actions related to telecommunications and Argentine
portfolios.
(3) "AMA" or "Average Managed Assets" represents the sum of average earning
assets, which are net of credit balances of factoring client, and the average of
finance receivables previously securitized and still managed by the Company.
(4) Twelve months ended September 30, 2002 excludes trade receivables
securitizaton activity.
(5) Tangible stockholders' equity excludes goodwill.
(6) Tangible stockholders' equity (excludes the impact of accounting changes for
derivative financial instruments and unrealized gains) includes
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely debentures of the Company ("Preferred Capital Securities").
(7) Total debt excludes, and stockholders' equity includes, Preferred Capital
Securities. Total debt also excludes notes payable to Tyco affiliates.
Portfolio Information September 30, June 30, September 30,
2002 2002 2001
-----------------------------------------------
Liquidating Portfolios:
Financing and leasing assets $ 1,459.9 $ 1,727.8 $ 3,122.6
Non-performing accounts $ 155.8 $ 176.4 $ 199.4
Past due 60+ days $ 146.2 $ 151.7 $ 203.2
The September 30, 2002 liquidating portfolio is comprised of the following:
manufactured housing ($0.6 billion), franchise finance ($0.4 billion), trucking
($0.3 billion) and other ($0.2 billion)
Telecommunications(8):
Financing and leasing assets $ 707.2 $ 725.7 $ 637.7
Number of accounts 52 56 58
Largest customer account balance $ 34.1 $ 34.1 $ 32.8
Non-performing accounts $ 137.0 $ 111.9 $ 70.4
Number of accounts 11 9 6
Past due 60+ days $ 24.2 $ 25.2 $ 45.2
CLEC exposure $ 275.2 $ 288.3 $ 301.0
Equity and Venture Capital Investments:
Financing and leasing assets $ 341.7 $ 362.5 $ 342.2
Direct investments $ 196.6 $ 202.0 $ 207.6
Number of companies 60 60 71
Private equity funds $ 145.1 $ 160.5 $ 134.6
Number of funds 52 52 52
Remaining fund commitments $ 176.6 $ 191.4 $ 225.2
Aerospace:
Financing and leasing assets
Commercial $ 3,986.7 $ 3,941.9 $ 3,200.7
Regional $ 301.0 $ 300.4 $ 211.6
Investment in aerospace assets $ 96.7 $ 79.6 $ --
Number of planes:
Commercial 193 193 191
Regional 94 94 93
Remaining purchase commitment deliveries (through 2007) 82 84 94
Remaining purchase commitments (through 2007) ($ in billions) $ 3.9 $ 3.8 $ 4.5
(8) Telecommunication portfolio data consists of lending and leasing directly to
the telecommunication sector, and does not include lending and leasing for
telecom related equipment to non-telecom companies.
15
CIT GROUP INC. AND SUBSIDIARIES
Commercial Aerospace Portfolio Data as of September 30, 2002
(dollars in millions unless specified)
Commercial Aerospace Portfolio:
Net Investment Number
-------------- ----------
By Region:
Europe $ 1,586.9 55
North America 1,025.9 76
Asia Pacific 813.4 31
Latin America 483.3 27
Africa / Middle East 77.2 4
---------- -----
Total $ 3,986.7 193
========== =====
By Manufacturer: Net Investment Number
-------------- ----------
Boeing $ 2,439.6 137
Airbus 1,507.7 38
Other 39.4 18
---------- -----
Total $ 3,986.7 193
========== =====
By Body Type(1): Net Investment Number
-------------- ----------
Narrow body $ 2,723.3 141
Intermediate 849.0 16
Wide body 375.0 18
Other 39.4 18
---------- -----
Total $ 3,986.7 193
========== =====
Largest customer net investment $ 193.5
Number of accounts 77
Weighted average age of fleet (years) 7.4
New Aircraft Delivery Order Book (dollars in billions) Amount Number
-------------- ----------
Calendar Year:
2002 - fourth quarter $ 0.1 3
2003 0.8 19
2004 1.2 25
2005 1.2 25
2006 0.5 9
2007 0.1 1
---------- -----
Total $ 3.9 82
========== =====
Total calendar 2002 delivery book was $0.7 billion and 16 planes.
The order amounts are based on current appraised values in 2002 base dollars and
exclude CIT's option to purchase 10 planes ($0.6 billion). Contractual
maturities, sales and other dispositions, as well as depreciation expense are
expected to largely offset the new deliveries.
(1) Narrow body are single aisle design and consist primarily of Boeing 737 and
757 series and Airbus A320 series aircraft. Intermediate body are smaller twin
aisle design and consist primarily of Boeing 767 series and Airbus A330 series
aircraft. Wide body are large twin aisle design and consist primarily of Boeing
747 and 777 series and McDonnell Douglas DC10 series aircraft.
16