[CIT Logo] Exhibit 99.2
For Information: Valerie L. Gerard - Vice President - Investor Relations
(973) 422-3284
or
Yvette K. Rudich - Director - Corporate Communications
(973) 597-2095
CIT ANNOUNCES SECOND QUARTER NET INCOME OF $0.65 EPS ON IMPROVED MARGINS AND
CREDIT QUALITY FROM PRIOR QUARTER
o Second quarter net income increases 8% over prior quarter
o Risk adjusted margin improves
o Credit performance strengthens
o Bank lines fully repaid
NEW YORK, July 24, 2003 - CIT Group Inc. (NYSE: CIT) today reported
increased net income of $136.9 million or diluted earnings per share of $0.65,
for the second quarter from $127.0 million, or diluted earnings per share of
$0.60 for the prior quarter. Return on tangible equity increased to 11.6%.
"CIT delivered solid results this quarter which reflect improvement in
several of our key metrics. Credit quality continues to strengthen, net finance
margin and cost of funds improved, and the balance sheet is strong with solid
capital and reserve levels," said Albert R. Gamper, Jr. Chairman, President and
CEO. "Importantly, we fully repaid our outstanding bank lines during the
quarter."
"Commercial and Specialty Finance continue to make significant
contributions to the overall results of the organization while all of the
operating groups realized improvements within their businesses. I am very
pleased with the progress CIT has made on the game plan which we established
last year," concluded Gamper.
1
Financial Highlights:
Portfolio and Managed Assets
Total financing and leasing portfolio assets grew to $37.5 billion at June
30, 2003, up from $37.1 billion at March 31, 2003 and $35.7 billion at June 30,
2002. Growth for the quarter included a $410 million rail operating lease
portfolio acquisition and new commercial aircraft deliveries in Capital Finance,
as well as strong volume in Business Credit (asset based lending), and was
partially offset by the approximate $130 million sale of franchise finance
receivables from our liquidating portfolio in Equipment Finance.
Origination volume, excluding factoring, was up 12% and 19% from last
quarter and the prior year quarter. Business Credit and Capital Finance drove
the improvement from last quarter.
Managed assets increased slightly to $47.9 billion, up from $47.5 billion
last quarter, as securitized receivables remained relatively flat at $10.4
billion. The liquidating portfolios (owner-operator trucking, franchise,
manufactured housing, recreational vehicle and inventory finance loans) declined
to $1.09 billion from $1.28 billion at March 31, 2003 and $1.73 billion at June
30, 2002. Managed assets were $47.7 billion at June 30, 2002.
Net Finance and Risk Adjusted Margins
Net finance margin, at 3.80% of average earning assets for the current
quarter, increased from 3.63% during the prior quarter. The improvement
primarily reflects higher yield-related fees and lower interest expense due to
reduced excess liquidity and improved funding rates.
Risk adjusted margin (net finance margin after provision for credit
losses) increased to $238.6 million or 2.67%, from $210.7 million or 2.44% last
quarter, due to the aforementioned factors and lower charge-offs.
2
Credit Quality
Both owned and managed 60+ day delinquency improved for the third
consecutive quarter. Total 60+ day owned delinquency declined to $926 million
(3.26% of finance receivables) at June 30, 2003, from $971 million (3.39%) at
March 31, 2003 and $1.030 billion (3.69%) at June 30, 2002. The improvement from
the prior quarter was principally from reductions in Equipment Finance,
Commercial Finance and Specialty Finance - commercial. Managed 60+ day
delinquencies decreased to $1.278 billion (3.20% of managed financial assets) at
June 30, 2003 from $1.361 billion (3.38%) at March 31, 2003, and $1.520 billion
(3.74%) at June 30, 2002.
The level of non-performing assets also declined for the third consecutive
quarter. Non-performing assets were $941 million (3.31% of finance receivables),
down from $1.006 billion (3.51%) at March 31, 2003 and $1.053 billion (3.77%) at
June 30, 2002. The improvement from last quarter was across most business units,
with the most notable declines in Specialty Finance - commercial and Business
Credit.
Total charge-offs during the June quarter were $108.4 million (1.51% of
average finance receivables), compared to $114.3 million (1.61%) during the
prior quarter. The tables that follow detail charge-offs for the current and
prior quarters by segment, both in amount and as a percentage of average finance
receivables. In addition to total amounts, charge-offs relating to the
liquidating and telecommunications portfolios are also presented.
Charge-offs: ($ in millions) Quarter Ended June 30, 2003
----------------------------------------------------------------------------
Before
Total Liquidating/Telecom Liquidating / Telecom
---------------------- -------------------- ---------------------
Specialty Finance - commercial ................ $ 23.9 1.33% $ 23.9 1.33% $ -- --%
Equipment Finance ............................. 38.6 2.51% 26.1 1.82% 12.5 12.00%
Capital Finance ............................... -- -- -- -- -- --
Commercial Finance ............................ 21.3 0.96% 18.6 0.84% 2.7 76.80%
Structured Finance ............................ 8.6 1.18% -- -- 8.6 5.38%
------ ------ ------
Total Commercial Segments .................... 92.4 1.40% 68.6 1.09% 23.8 8.74%
Specialty Finance - consumer .................. 16.0 2.62% 9.9 2.43% 6.1 3.01%
------ ------ ------
Total ........................................ $108.4 1.51% $ 78.5 1.17% $ 29.9 6.28%
====== ====== ======
3
Charge-offs: ($ millions) Quarter Ended March 31, 2003
----------------------------------------------------------------------------
Before
Total Liquidating/Telecom Liquidating / Telecom
---------------------- -------------------- ---------------------
Specialty Finance - commercial .............. $ 31.0 1.73% $ 30.6 1.71% $ 0.4 8.65%
Equipment Finance ........................... 38.1 2.39% 29.7 2.02% 8.4 6.48%
Capital Finance ............................. 1.8 0.55% 1.8 0.55% -- --
Commercial Finance .......................... 16.6 0.80% 16.6 0.80% -- --
Structured Finance .......................... 13.8 1.90% -- -- 13.8 8.23%
------ ------ ------
Total Commercial Segments .................. 101.3 1.55% 78.7 1.27% 22.6 7.48%
Specialty Finance - consumer ................ 13.0 2.36% 6.6 1.92% 6.4 3.09%
------ ------ ------
Total ...................................... $114.3 1.61% $ 85.3 1.30% $ 29.0 5.70%
====== ====== ======
Combined telecommunication and liquidating charge-offs were up from last
quarter, reflecting higher charge-offs in the Equipment Finance franchise
finance portfolio, in part offset by lower write-offs in the telecommunications
portfolio. Before liquidating and telecommunication charge-offs, charge-offs
were $78.5 million (1.17% of average finance receivables) for the current
quarter, down from $85.3 million (1.30%) last quarter. The improvement from last
quarter primarily reflects declines in the small ticket commercial portfolios in
Specialty Finance, partially offset by higher charge-offs in that segment's home
equity portfolio.
Total reserves for credit losses were $754.9 million (2.66% of finance
receivables) at June 30, 2003, compared to $757.0 million (2.64%) at March 31,
2003 and $808.9 million (2.90%) at June 30, 2002. The reserve reduction during
the quarter was primarily the result of $11.7 million in telecommunication loan
net charge-offs that were applied to the specific telecommunication reserve. At
June 30, 2003, the reserve for credit losses, before the telecommunication
($128.1 million) and Argentine reserves ($135.0 million), was $491.8 million
(1.78% of finance receivables), versus $482.2 million (1.74%) at March 31, 2003
and $473.9 million (1.75%) at June 30, 2002. Additionally, reserves related to
loan impairment (as defined under SFAS 114) included in the above reserve
balances totaled approximately $130 million at June 30, 2003, down from $136
million at March 31, 2003 and $207 million at June 30, 2002.
The total telecommunications portfolio and the portion comprising the
competitive local exchange carrier ("CLEC") exposure was $647.9 million and
$224.3 million at June 30, 2003, versus $678.7 million and $238.0 million at
March 31, 2003. Total telecommunication non-
4
performing accounts were $94.2 million, compared to $85.5 million last quarter,
reflecting primarily increased non-accruals in the wireless portfolio. CLEC
non-performing accounts were $42.6 million, down from comparative March 31, 2003
balances of $59.0 million. Total specific telecommunication reserves were $128.1
million at June 30, 2003, down from $139.8 million at March 31, 2003, reflecting
current quarter net charge-offs.
Other Revenue
For the quarter, other revenue totaled $217.6 million, down from $235.5
million for the quarter ended March 31, 2003, reflecting lower other income
mainly in the Specialty Finance segment and an increase of $7.7 million in
losses (to $12.1 million) on venture capital investments. Securitization gains
during the current quarter totaled $33.8 million, 14.8% of pretax income, on
volume of $1,653 million, compared to $30.7 million, 14.4% of pretax income, on
volume of $1,237 million during the prior quarter.
Salaries and General Operating Expenses
Salaries and general operating expenses were $ 227.4 million for the
quarter, down from $233.6 million for the March 2003 quarter. The decrease from
last quarter was primarily the result of lower repossession and collection
expenses and reduced costs associated with securitization facilities. Salaries
and general operating expenses were 1.99% of average managed assets during the
quarter, versus 2.08% for the prior quarter. The efficiency ratio for the
quarter (salaries and general operating expenses divided by operating margin,
excluding provision for credit losses) was 40.8%, as compared to 42.5% in the
prior quarter, reflecting lower expenses and improved margins in the current
quarter.
Headcount, of 5,845 at June 30, 2003, was unchanged from March 31, 2003
and down from 5,935 at June 30, 2002.
Results by Business Segment
Total return on average earning assets was 1.53% for the quarter ended
June 30, 2003 versus 1.47% for the prior quarter, reflecting improved
performances in the Specialty Finance and Structured Finance segments, as well
as the continuation of strong returns in the Commercial
5
Finance segment. Equipment Finance and Capital Finance returns were comparable
to the prior quarter, reflecting dampened profitability in the construction,
industrial and aerospace sectors. The details of net income and returns by
segment are displayed on pages 11 and 15 of the financial tables.
The following tables provide individual segment data for the current
quarter compared to the first quarter of 2003. ($ in millions)
Specialty Finance
At or for the Quarter Ended
--------------------------------
June 30, 2003 March 31, 2003
------------- --------------
Operating margin $ 204.4 $ 190.5
- --------------------------------------------------------------------------------
Income before provision for income tax $ 103.2 $ 85.6
- --------------------------------------------------------------------------------
New business volume $ 2,937.3 $3,073.0
- --------------------------------------------------------------------------------
Specialty Finance operating margin included higher securitization gains
and lower charge-offs in the small ticket commercial businesses, in part offset
by higher charge-offs in the home equity portfolio. New business volume, while
down slightly from the prior quarter, was strong in relation to the prior year
for virtually all business lines and included strong home equity volume.
Equipment Finance
At or for the Quarter Ended
------------------------------
June 30, 2003 March 31, 2003
------------- --------------
Operating margin $ 35.8 $ 40.2
- --------------------------------------------------------------------------------
Income before provision for income tax $ 13.0 $ 17.5
- --------------------------------------------------------------------------------
New business volume $857.5 $828.9
- --------------------------------------------------------------------------------
Equipment Finance operating margin reflected improved interest margin,
which was offset by reduced securitization gains and a modest loss on the sale
of certain franchise finance portfolio loans. New business volume increased
primarily in Canada.
6
Capital Finance
At or for the Quarter Ended
------------------------------
June 30, 2003 March 31, 2003
------------- --------------
Operating margin $ 32.2 $ 28.9
- --------------------------------------------------------------------------------
Income before provision for income tax $ 14.8 $ 12.6
- --------------------------------------------------------------------------------
New business volume $453.0 $280.5
- --------------------------------------------------------------------------------
The Capital Finance operating margin and pre-tax income reflected reduced
aerospace charge-offs and a modest contribution from the rail portfolio acquired
during the second quarter. New business volume was higher reflecting new
aircraft deliveries. Of the remaining deliveries for 2003, 6 of the 8 planes
have been placed. At June 30, 2003, two commercial aircraft were off lease, down
from seven at March 31, 2003.
Commercial Finance
At or for the Quarter Ended
------------------------------
June 30, 2003 March 31, 2003
------------- --------------
Operating margin $131.3 $129.9
- --------------------------------------------------------------------------------
Income before provision for income tax $ 91.1 $ 88.7
- --------------------------------------------------------------------------------
New business volume (including factoring) $848.6 $328.2
- --------------------------------------------------------------------------------
Commercial Finance operating margin and pre-tax income improved, driven by
asset based lending activities. New business volume was also up due primarily to
strong asset based lending volume.
Structured Finance
At or for the Quarter Ended
------------------------------
June 30, 2003 March 31, 2003
------------- --------------
Operating margin $ 31.6 $ 28.3
- --------------------------------------------------------------------------------
Income before provision for income tax $ 24.0 $ 20.0
- --------------------------------------------------------------------------------
New business volume $141.3 $100.2
- --------------------------------------------------------------------------------
The Structured Finance performance reflected both higher fees and a modest
increase in interest margin. New business volume increased most notably in the
media portfolio.
7
Corporate and Other
At or for the Quarter Ended
------------------------------
June 30, 2003 March 31, 2003
------------- --------------
Operating margin $ 20.9 $ 28.4
- --------------------------------------------------------------------------------
Loss before tax benefit $ (17.3) $ (11.9)
- --------------------------------------------------------------------------------
Corporate and Other amounts reflect certain interest and other operating
expenses not allocated to business segments. The reduced operating margin
reflected additional interest expense retained by corporate, while the higher
pre-tax loss was also the result of increased losses on venture capital
investments.
Funding and Liquidity
During the quarter we repaid the remaining $1.3 billion of bank line
borrowings outstanding at March 31, 2003, resulting in no drawn bank lines at
June 30, 2003. Commercial paper was $4.6 billion, up slightly from $4.5 billion
at March 31, 2003. At June 30, 2003, $6.3 billion of committed bank lines were
available.
Term-debt issued during the quarter totaled $1.8 billion, and consisted of
a $0.5 billion five-year, fixed-rate global issue, $1.0 billion in variable-rate
medium-term notes and $0.3 billion in fixed-rate retail issues. Securitization
volume was $1.7 billion compared to $1.2 billion in the prior quarter.
Cash and cash equivalents were $1.4 billion at June 30, 2003, compared to
$2.0 billion at March 31, 2003, as excess liquidity was reduced this quarter.
However, the level of cash liquidity remains in excess of historical amounts.
Capitalization and Leverage
The ratio of tangible equity to managed assets strengthened further to
10.53% as of June 30, 2003, compared to 10.42% as of March 31, 2003 and 9.25% at
the end of the prior year quarter. The return on tangible equity was 11.6%,
compared to 11.0% for the prior quarter.
8
Conference Call and Webcast:
We will discuss this quarter's results, as well as on-going strategy, on a
conference call today at 11:00 am (EDT). The interested parties may access the
conference call live today by dialing 877-558-5219 for U.S. and Canadian callers
or 706-634-5438 for international callers, and reference "CIT earnings call," or
at the following website: http://ir.cit.com. An audio replay of the call will be
available beginning no later than three hours after the conclusion of the call
through 12:00 am (EDT) July 31, 2003, by dialing 800-642-1687 for U.S. and
Canadian callers or 706-645-9291 for international callers with the pass-code
1511172, or at the following website: http://ir.cit.com.
9
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 Transitional Report on Form
10-K for the period from October 1, 2002 to December 31, 2002. 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.
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 applies its financial resources, industry expertise and product knowledge to
serve the needs of clients across approximately 30 industries. CIT, a Fortune
500 company, 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.
###
10
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
For the Three and Six Month Periods Ended June 30, 2003 and June 30, 2002
(dollars in millions, except per share data)
Three Months Ended Six Months Ended
----------------------------------------------------- -------------------------------------------
June 30, March 31, June 30, June 30, June 30,
2003(1) 2003 2002(1) 2003(1) 2002(1)
-------- --------- -------------------------------- -------- --------------------------------
CIT TCH Consolidated CIT TCH Consolidated
Finance income $ 943.2 $ 939.2 $ 1,021.9 $ -- $ 1,021.9 $1,882.4 $ 2,128.6 $ -- $ 2,128.6
Interest expense 331.1 346.7 370.2 -- 370.2 677.8 718.5 -- 718.5
-------- -------- ------------------------------- -------- -------------------------------
Net finance income 612.1 592.5 651.7 -- 651.7 1,204.6 1,410.1 -- 1,410.1
Depreciation on operating
lease equipment 272.9 278.8 295.7 -- 295.7 551.7 605.9 -- 605.9
-------- -------- ------------------------------- -------- -------------------------------
Net finance margin 339.2 313.7 356.0 -- 356.0 652.9 804.2 -- 804.2
Provision for credit losses 100.6 103.0 357.7 -- 357.7 203.6 552.7 -- 552.7
-------- -------- ------------------------------- -------- -------------------------------
Net finance margin after
provision for credit losses 238.6 210.7 (1.7) -- (1.7) 449.3 251.5 -- 251.5
Other revenue(2) 217.6 235.5 246.1 -- 246.1 453.1 478.2 -- 478.2
-------- -------- ------------------------------- -------- -------------------------------
Operating margin 456.2 446.2 244.4 -- 244.4 902.4 729.7 -- 729.7
-------- -------- ------------------------------- -------- -------------------------------
Salaries and general operating
expenses 227.4 233.6 230.4 7.5 237.9 461.0 457.3 14.8 472.1
Goodwill impairment -- -- 1,999.0 -- 1,999.0 -- 6,511.7 -- 6,511.7
Interest expense - TCH -- -- -- 281.3 281.3 -- -- 586.3 586.3
-------- -------- ------------------------------- -------- -------------------------------
Operating expenses 227.4 233.6 2,229.4 288.8 2,518.2 461.0 6,969.0 601.1 7,570.1
-------- -------- ------------------------------- -------- -------------------------------
Income (loss) before provision
for income taxes 228.8 212.6 (1,985.0) (288.8) (2,273.8) 441.4 (6,239.3) (601.1) (6,840.4)
Provision for income
taxes (89.2) (82.9) (5.8) (115.5) (121.3) (172.1) (104.2) (67.5) (171.7)
Minority interest in subsidiary
trust holding solely
debentures of the Company,
after tax (2.7) (2.7) (2.7) -- (2.7) (5.4) (5.4) -- (5.4)
-------- -------- ------------------------------- -------- -------------------------------
Net income (loss) (3) $ 136.9 $ 127.0 $(1,993.5) $(404.3) $(2,397.8) $ 263.9 $(6,348.9) $(668.6) $(7,017.5)
======== ======== =============================== ======== ===============================
Earnings per share
Basic earnings per share $ 0.65 $ 0.60 $ 1.25
Diluted earnings per share $ 0.65 $ 0.60 $ 1.24
Number of shares -basic
(thousands) 211,588 211,573 211,581
Number of shares -diluted
(thousands) 212,066 211,899 211,975
(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 completion of the IPO of CIT on July 8, 2002, the cumulative activity
of TCH (net deficit) was offset via a capital contribution from Tyco. The
consolidated financial statements of CIT were not impacted by TCH
subsequent to June 30, 2002.
Three Months Ended Six Months Ended
-------------------------------------- -----------------------
June 30, March 31, June 30, June 30, June 30,
(2) Other Revenue 2003 2003 2002 2003 2002
-------- -------- -------- -------- --------
Fees and other income $ 134.6 $ 144.7 $ 144.4 $ 279.3 $ 305.3
Factoring commissions 44.8 46.9 42.0 91.7 79.5
Gains on securitization 33.8 30.7 57.1 64.5 91.8
Gains on sales of leasing equipment 16.5 17.6 4.0 34.1 8.3
Losses on venture capital investments (12.1) (4.4) (1.4) (16.5) (6.7)
-------- -------- -------- -------- --------
Total other revenue $ 217.6 $ 235.5 $ 246.1 $ 453.1 $ 478.2
======== ======== ======== ======== ========
Fees and other income include: servicing fees, structuring and advisory fees,
syndication fees and gains from other asset and receivable sales.
June 30, March 31, June 30, June 30, June 30,
(3) Net income (loss) by segment 2003 2003 2002 2003 2002
-------- -------- -------- -------- --------
Specialty Finance $ 63.0 $ 52.2 $ 83.8 $ 115.2 $ 183.8
Equipment Finance 7.9 10.7 31.7 18.6 72.1
Capital Finance 9.1 7.7 22.8 16.8 45.0
Commercial Finance 55.6 54.1 46.0 109.7 92.2
Structured Finance 14.7 12.2 15.3 26.9 31.7
-------- -------- --------- -------- ---------
Total Segments 150.3 136.9 199.6 287.2 424.8
Corporate, including certain charges (13.4) (9.9) (2,597.4) (23.3) (7,442.3)
-------- -------- --------- -------- ---------
Total $ 136.9 $ 127.0 $(2,397.8) $ 263.9 $(7,017.5)
======== ======== ========= ======== =========
11
CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
June 30, December 31,
2003 2002
------------------------
(unaudited)
ASSETS
Financing and leasing assets:
Finance receivables $28,413.6 $27,621.3
Reserve for credit losses (754.9) (760.8)
------------------------
Net finance receivables 27,658.7 26,860.5
Operating lease equipment, net 7,560.0 6,704.6
Finance receivables held for sale 1,210.0 1,213.4
Cash and cash equivalents 1,423.3 2,036.6
Goodwill 389.8 384.4
Other assets (1) 4,942.9 4,732.9
------------------------
Total Assets $43,184.7 $41,932.4
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper $ 4,576.7 $ 4,974.6
Variable-rate bank credit facilities -- 2,118.0
Variable-rate senior notes 6,637.3 4,906.9
Fixed-rate senior notes 21,216.8 19,681.8
------------------------
Total debt 32,430.8 31,681.3
Credit balances of factoring clients 2,471.6 2,270.0
Accrued liabilities and payables 2,968.3 2,853.2
------------------------
Total Liabilities 37,870.7 36,804.5
Company-obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely debentures of
the Company 256.4 257.2
Stockholders' Equity:
Common stock 2.1 2.1
Paid-in capital 10,677.8 10,676.2
Accumulated deficit (5,393.8) (5,606.9)
Accumulated other comprehensive loss (228.5) (200.7)
------------------------
Total Stockholders' Equity 5,057.6 4,870.7
------------------------
Total Liabilities and Stockholders' Equity $43,184.7 $41,932.4
========================
(1) Other Assets primarily include the following at June 30, 2003: $1.4
billion of securitization assets, $0.9 billion of accrued interest and
receivables from derivative counterparties, $0.8 billion of investments
and receivables from joint ventures and non-consolidated subsidiaries,
$0.3 billion of deposits on flight equipment, $0.3 billion of equity
investments, $0.1 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
OWNED AND MANAGED ASSET COMPOSITION
(dollars in millions)
June 30, March 31, June 30,
2003 2003 2002
--------- --------- ---------
Specialty Finance Segment
Commercial
Finance receivables (1) $ 6,975.4 $ 7,201.5 $ 6,154.7
Operating lease equipment, net 1,171.2 1,227.6 1,546.9
Finance receivables held for sale 622.6 899.6 216.9
--------- --------- ---------
Owned assets 8,769.2 9,328.7 7,918.5
Finance receivables securitized and
managed by CIT 3,473.9 3,191.7 4,145.9
--------- --------- ---------
Managed assets 12,243.1 12,520.4 12,064.4
--------- --------- ---------
Consumer
Finance receivables - home equity 1,502.1 1,391.3 856.0
Finance receivables - other 934.5 995.8 838.7
Finance receivables held for sale 395.0 210.0 396.5
--------- --------- ---------
Owned assets 2,831.6 2,597.1 2,091.2
Home equity finance receivables
securitized and managed by CIT 2,276.7 2,358.6 2,035.9
Other finance receivables securitized
and managed by CIT 786.0 860.2 1,127.9
--------- --------- ---------
Managed assets 5,894.3 5,815.9 5,255.0
--------- --------- ---------
Equipment Finance Segment
Finance receivables (1) 6,014.6 6,237.4 7,770.8
Operating lease equipment, net 504.0 527.4 818.6
Finance receivables held for sale 192.4 163.4 117.4
--------- --------- ---------
Owned assets 6,711.0 6,928.2 8,706.8
Finance receivables securitized and
managed by CIT 3,819.9 3,977.2 4,658.2
--------- --------- ---------
Managed assets 10,530.9 10,905.4 13,365.0
--------- --------- ---------
Capital Finance Segment
Finance receivables 1,185.2 1,223.7 1,530.2
Operating lease equipment, net 5,783.2 4,973.0 4,262.4
Finance receivables held for sale -- -- --
--------- --------- ---------
Owned assets 6,968.4 6,196.7 5,792.6
--------- --------- ---------
Commercial Finance Segment
Commercial Services
Finance receivables 4,766.3 4,726.1 4,536.4
Business Credit
Finance receivables 4,147.1 3,956.6 3,644.1
--------- --------- ---------
Owned assets 8,913.4 8,682.7 8,180.5
--------- --------- ---------
Structured Finance Segment
Finance receivables 2,888.4 2,922.2 2,594.5
Operating lease equipment, net 101.6 103.4 61.8
--------- --------- ---------
Owned assets 2,990.0 3,025.6 2,656.3
--------- --------- ---------
Other - Equity Investments 325.4 334.3 362.5
--------- --------- ---------
Total
Finance receivables $28,413.6 $28,654.6 $27,925.4
Operating lease equipment, net 7,560.0 6,831.4 6,689.7
Finance receivables held for sale 1,210.0 1,273.0 730.8
Equity investments 325.4 334.3 362.5
--------- --------- ---------
Owned assets 37,509.0 37,093.3 35,708.4
Finance receivables securitized and
managed by CIT 10,356.5 10,387.7 11,967.9
--------- --------- ---------
Managed assets $47,865.5 $47,481.0 $47,676.3
========= ========= =========
(1) During the March 2003 quarter, certain owned finance receivables totaling
$1,078.6 million at March 31, 2003 were transferred from Equipment Finance
to Specialty Finance - Commercial, principally representing small business
loans and leases. Prior period data has not been restated to conform to
present period presentation.
13
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
For the Quarters Ended
---------------------------------------------------------------------
June 30, 2003 March 31, 2003 June 30, 2002
$ % $ % $ %
---------------------------------------------------------------------
Net Credit Losses - Owned as a Percentage
of Average Finance Receivables
Specialty Finance - Commercial(1) $ 23.9 1.33% $ 31.0 1.73% $ 21.2 1.36%
Equipment Finance(1) 38.6 2.51% 38.1 2.39% 64.9 3.14%
Capital Finance -- -- 1.8 0.55% -- --
Commercial Finance 21.3 0.96% 16.6 0.80% 29.0 1.61%
Structured Finance 8.6 1.18% 13.8 1.90% -- --
-------- -------- --------
Total Commercial 92.4 1.40% 101.3 1.55% 115.1 1.78%
Specialty Finance - Consumer 16.0 2.62% 13.0 2.36% 10.9 1.86%
-------- -------- --------
Total $ 108.4 1.51% $ 114.3 1.61% $ 126.0 1.79%
======== ======== ========
For the Six Months Ended
---------------------------------------------
June 30, 2003 June 30, 2002
$ % $ %
---------------------------------------------
Specialty Finance - Commercial(1) $ 54.9 1.53% $ 40.8 1.31%
Equipment Finance(1) 76.7 2.45% 126.0 2.82%
Capital Finance 1.8 0.29% -- --
Commercial Finance 37.9 0.88% 49.2 1.40%
Structured Finance 22.4 1.54% 0.1 0.01%
-------- --------
Total Commercial 193.7 1.48% 216.1 1.65%
Specialty Finance - Consumer 29.0 2.53% 22.3 1.83%
-------- --------
Total $ 222.7 1.56% $ 238.4 1.66%
======== ========
June 30, 2003 March 31, 2003 June 30, 2002
$ % $ % $ %
---------------------------------------------------------------------
Finance Receivables Past Due 60 days or
more - Owned as a Percentage of
Finance Receivables
Specialty Finance - Commercial(1) $ 249.6 3.58% $ 264.7 3.68% $ 250.3 4.06%
Equipment Finance(1) 253.0 4.21% 292.5 4.69% 370.5 4.77%
Capital Finance 99.2 8.37% 74.0 6.05% 36.8 2.40%
Commercial Finance 130.5 1.46% 152.8 1.76% 195.3 2.39%
Structured Finance 65.7 2.27% 55.2 1.89% 44.9 1.73%
-------- -------- --------
Total Commercial 798.0 3.07% 839.2 3.19% 897.8 3.42%
Specialty Finance - Consumer 128.1 5.26% 132.0 5.53% 132.4 7.81%
-------- -------- --------
Total $ 926.1 3.26% $ 971.2 3.39% $1,030.2 3.69%
======== ======== ========
Non-performing Assets - Owned as a
Percentage of Finance Receivables(2)
Specialty Finance - Commercial(1) $ 140.0 2.01% $ 160.4 2.23% $ 125.7 2.04%
Equipment Finance(1) 337.8 5.62% 338.5 5.43% 484.5 6.23%
Capital Finance 83.1 7.01% 86.9 7.10% 25.5 1.67%
Commercial Finance 107.4 1.20% 128.0 1.47% 143.2 1.75%
Structured Finance 133.9 4.64% 143.4 4.91% 128.3 4.95%
-------- -------- --------
Total Commercial 802.2 3.09% 857.2 3.26% 907.2 3.46%
Specialty Finance - Consumer 139.0 5.70% 149.2 6.25% 145.4 8.58%
-------- -------- --------
Total $ 941.2 3.31% $1,006.4 3.51% $1,052.6 3.77%
======== ======== ========
Finance Receivables Past Due 60 days or more -
Managed as a Percentage of Managed Financial
Assets(3)
Specialty Finance - Commercial(1) $ 318.5 2.88% $ 343.0 3.04% $ 331.7 3.15%
Equipment Finance(1) 395.5 3.94% 466.7 4.50% 680.6 5.42%
Capital Finance 99.2 8.37% 74.0 6.05% 36.8 2.40%
Commercial Finance 130.5 1.46% 152.8 1.76% 195.3 2.39%
Structured Finance 65.7 2.27% 55.2 1.89% 44.9 1.73%
-------- -------- --------
Total Commercial 1,009.4 2.96% 1,091.7 3.16% 1,289.3 3.65%
Specialty Finance - Consumer 268.4 4.55% 269.6 4.64% 230.8 4.39%
-------- -------- --------
Total $1,277.8 3.20% $1,361.3 3.38% $1,520.1 3.74%
======== ======== ========
Reserve for Credit Losses
Reserve for credit losses as a percentage $ 754.9 2.66% $ 757.0 2.64% $ 808.9 2.90%
of finance receivables
Reserve for credit losses as a percentage 81.5% 77.9% 78.5%
of finance receivables past due 60
days or more
(1) During the quarter ended March 31, 2003, certain portfolios were
transferred from Equipment Finance to Specialty Finance - Commercial.
Charge-offs for the quarter ending June 30, 2003 relating to these
portfolios totaled approximately $7 million. At June 30, 2003
approximately $74 million past due 60+ accounts (both owned and managed)
and $72 million non-performing accounts related to the transferred
portfolios, versus $61 million and $61 million at June 30, 2002,
respectively. Prior period balances have not been restated to conform to
present period presentation.
(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 OWNED PORTFOLIO INFORMATION
(dollars in millions, except per share data)
Selected Data For the Three Months Ended For the Six Months Ended
------------------------------------- ------------------------
June 30, March 31, June 30, June 30, June 30,
Profitability 2003 2003 2002 2003 2002
------------------------------------- ------------------------
Net finance margin as percentage of AEA 3.80% 3.63% 4.11% 3.71% 4.58%
Net finance margin after provision as percentage of AEA 2.67% 2.44% (0.02)% 2.55% 1.43%
Salaries & general operating expenses as percentage of AMA(1) 1.99% 2.08% 2.02% 2.03% 1.97%
Efficiency ratio 40.8% 42.5% 38.3% 41.7% 35.7%
Return on tangible stockholders' equity 11.6% 11.0% (191.3)% 11.3% (307.8)%
Return on AMA(1) 1.20% 1.13% (17.4)% 1.16% (27.3)%
Return on AEA (by segment)
Specialty Finance 2.07% 1.75% 3.12% 1.91% 3.22%
Equipment Finance 0.46% 0.60% 1.35% 0.53% 1.44%
Capital Finance 0.54% 0.50% 1.59% 0.52% 1.63%
Commercial Finance 3.44% 3.58% 3.20% 3.50% 3.57%
Structured Finance 1.95% 1.63% 2.31% 1.79% 2.43%
Total Segments 1.70% 1.60% 2.33% 1.65% 2.45%
Corporate, including certain charges (0.17)% (0.13)% (25.33)% (0.15)% (38.65)%
Total 1.53% 1.47% (23.00)% 1.50% (36.21)%
Securitization Volume(2)
Specialty Finance - Commercial $ 1,201.0 $ 409.3 $ 782.4 $ 1,610.3 $ 1,455.6
Equipment Finance 329.4 461.0 1,170.4 790.4 1,534.5
Specialty Finance - Consumer 122.1 367.1 785.9 489.2 2,474.5
------------------------------------- -----------------------
Total $ 1,652.5 $ 1,237.4 $ 2,738.7 $ 2,889.9 $ 5,464.6
===================================== =======================
Average Assets
Average Finance Receivables (AFR) $28,766.5 $28,328.8 $28,157.7 $28,505.9 $28,695.6
Average Earning Assets (AEA) 35,700.0 34,600.6 34,670.1 35,194.8 35,069.7
Average Managed Assets (AMA)(1) 45,764.8 44,967.8 45,734.3 45,385.8 46,483.3
Average Operating Leases (AOL) 7,304.2 6,712.6 6,657.1 7,033.7 6,600.4
Note: These averages are based on an ending four month average.
At June 30, At March 31, At June 30,
2003 2003 2002
-------------------------------------
Capital & Leverage(3),(4)
Tangible stockholders' equity to
managed assets 10.53% 10.42% 9.25%
Debt (net of overnight deposits)
to tangible stockholders' equity(5) 6.28x 6.29x 7.07x
Tangible book value per share
(for the quarter ended) $22.55 $22.14 --
Note: The above data for all relevant periods shown reflects the activity for
CIT only and excludes the consolidating TCH expenses.
(1) "AMA" or "Average Managed Assets" represents the sum of average earning
assets, which are net of credit balances of factoring clients, and the
average of finance receivables previously securitized and still managed by
CIT.
(2) Quarter ended June 30, 2002 excludes trade receivables securitization
activity due to the short-term nature of the receivables and facilities.
(3) Tangible stockholders' equity excludes goodwill.
(4) 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").
(5) Total debt excludes, and stockholders' equity includes, Preferred Capital
Securities.
Owned Portfolio Information June 30, March 31, June 30,
2003 2003 2002
----------------------------------
Liquidating Portfolios:
Balance $1,085.4 $1,282.2 $1,727.8
Non-performing accounts $ 143.1 $ 142.9 $ 176.4
Past due 60+ days $ 124.7 $ 149.6 $ 151.7
Telecommunications(6):
Financing and leasing assets $ 647.9 $ 678.7 $ 725.7
Number of accounts 53 53 56
Largest customer account balance $ 33.4 $ 33.4 $ 34.1
Non-performing accounts $ 94.2 $ 85.5 $ 111.9
Number of accounts 10 9 9
Past due 60+ days $ 42.3 $ 35.5 $ 25.2
CLEC exposure $ 224.3 $ 238.0 $ 288.3
Equity and Venture Capital
Investments:
Total investment balance $ 325.4 $ 334.3 $ 362.5
Direct investments $ 169.1 $ 179.6 $ 202.0
Number of companies 49 57 60
Private equity funds $ 156.3 $ 154.7 $ 160.5
Number of funds 52 52 52
Remaining fund commitments $ 144.3 $ 153.7 $ 191.4
(6) 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
Aerospace Portfolio Data
(dollars in millions unless specified)
Total Aerospace Portfolio: June 30, March 31, December 31,
Financing and leasing assets 2003 2003 2002
-------- --------- ------------
Commercial $4,479.2 $4,179.7 $4,072.8
Regional $ 316.9 $ 309.1 $ 344.0
Investment in aerospace assets (EETC's)
including accrued interest $ 104.2 $ 90.4 $ 98.5
Number of planes:
Commercial 203 195 194
Regional 122 115 117
June 30, 2003 March 31, 2003 December 31, 2002
------------------------- -------------------------- --------------------------
Commercial Aerospace Portfolio:
By Region: Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Europe $1,930.9 62 $1,537.4 51 $1,506.5 51
North America (1) 1,060.9 76 1,110.1 78 1,042.2 75
Asia Pacific 879.5 36 886.5 36 853.6 35
Latin America 536.2 25 572.5 26 595.9 29
Africa / Middle East 71.7 4 73.2 4 74.6 4
-------- --- -------- --- -------- ---
Total $4,479.2 203 $4,179.7 195 $4,072.8 194
======== === ======== === ======== ===
By Manufacturer: Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Boeing $2,607.9 140 $2,514.2 138 $2,388.1 135
Airbus 1,847.5 48 1,640.8 42 1,647.9 42
Other 23.8 15 24.7 15 36.8 17
-------- --- -------- --- -------- ---
Total $4,479.2 203 $4,179.7 195 $4,072.8 194
======== === ======== === ======== ===
By Body Type (2): Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Narrow body $3,218.7 152 $2,909.8 144 $2,799.4 142
Intermediate 865.4 18 871.6 18 859.2 17
Wide body 371.3 18 373.6 18 377.4 18
Other 23.8 15 24.7 15 36.8 17
-------- --- -------- --- -------- ---
Total $4,479.2 203 $4,179.7 195 $4,072.8 194
======== === ======== === ======== ===
Largest customer net investment $ 292.5 $ 242.6 $ 193.0
Number of accounts 83 74 78
Weighted average age of fleet (years) 7 7 7
New Aircraft Delivery Order Book
(dollars in billions) Amount Number Amount Number Amount Number
------ ------ ------ ------ ------ ------
For the Years Ending December 31,
2003 (Remaining 2003) $ 0.3 8 $ 0.7 17 $ 0.8 19
2004 0.8 16 0.8 17 1.0 22
2005 1.2 27 1.3 27 1.3 27
2006 0.8 14 0.7 13 0.6 10
2007 0.1 1 0.1 1 0.1 1
-------- --- -------- --- -------- ---
Total $ 3.2 66 $ 3.6 75 $ 3.8 79
======== === ======== === ======== ===
The order amounts are based on current appraised values in 2002 base dollars and
exclude CIT's option to purchase additional planes. Contractual maturities,
sales and other dispositions, as well as depreciation expense, are expected to
largely offset the new deliveries. At June 30, 2003, 6 of the 2003 deliveries
and 5 of the 2004 deliveries were placed.
(1) Comprised of net investments in the U.S. and Canada of $871.6 million (70
aircraft) and $189.3 million (6 aircraft) at June 30, 2003, $902.0 million
(72 aircraft) and $208.1 million (6 aircraft) at March 31, 2003, and
$832.7 million (69 aircraft) and $209.5 million (6 aircraft) at December
31, 2002, respectively.
(2) 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