Exhibit 99.2
[CIT Logo]
For Information: Valerie L. Gerard - Senior Vice President - Investor Relations
(973) 422-3284
or
Yvette K. Rudich - Director - Corporate Communications
(973) 597-2095
CIT ANNOUNCES THIRD QUARTER NET INCOME OF $0.69 EPS, UP 6%
FROM PRIOR QUARTER AND UP 8% FROM PRIOR YEAR
o Managed assets up $1.7 billion from September 30, 2002 to $49.3 billion
o Return on tangible equity improves
o Credit quality improvement continues
NEW YORK, October 23, 2003 - CIT Group Inc. (NYSE: CIT) today reported net
income of $147.8 million or diluted earnings per share of $0.69 for the third
quarter, up from $136.9 million or diluted earnings per share of $0.65 for the
prior quarter. Return on tangible equity increased to 12.2% from 11.6% last
quarter.
"Our business model of maintaining a diverse business mix, focusing on
credit management, emphasizing a strong balance sheet and solidifying existing
leadership positions produced our highest quarterly earnings since our return to
the public equity marketplace," said Albert R. Gamper, Jr., Chairman and CEO.
"Further, the appointment of Jeff Peek as our president and chief
operating officer and the formation of the Office of the Chairman is an
important step for the future of CIT. I have every expectation that this group
will take CIT to an even higher level," concluded Gamper.
1
Financial Highlights:
Portfolio and Managed Assets
Total financing and leasing portfolio assets grew to $39.2 billion at
September 30, 2003, up from $36.4 billion at September 30, 2002 and $37.5
billion at June 30, 2003. Growth for the quarter included a $450 million
acquisition of factoring assets as well as seasonal factoring growth and strong
growth in the home equity unit of Specialty Finance. The increase from the prior
year was primarily in the home equity portfolio and the Capital Finance
operating lease portfolio, reflecting last quarter's rail acquisition and new
aircraft deliveries.
The liquidating portfolios (owner-operator trucking, franchise,
manufactured housing, recreational vehicle and inventory finance loans) declined
to $1.0 billion from $1.1 billion at June 30, 2003 and $1.5 billion at September
30, 2002. Managed assets increased to $49.3 billion, up from $47.6 billion at
September 30, 2002 and $47.9 billion last quarter.
Origination volume, excluding factoring, was up 6% and 25% from last
quarter and the prior year quarter. Increases in Specialty Finance and
Structured Finance drove the improvement from last quarter, while the increase
from the prior year quarter was mainly in Specialty Finance.
Net Finance and Risk Adjusted Margins
Net finance margin was flat with last quarter at 3.80% of average earning
assets, as dividends on preferred capital securities were included in interest
expense for the first time this quarter due to the adoption of SFAS 150. On a
comparable basis, net finance margin improved 5 basis points from the prior
quarter, primarily reflecting lower interest expense due to improved funding
rates and a modest improvement in net rental income, offset by lower
yield-related fees.
Risk adjusted margin (net finance margin after provision for credit
losses) increased to $259.4 million (2.88%), from $238.6 million (2.67%) last
quarter, due to improved net finance margin and lower charge-offs.
2
Credit Quality
Owned and managed 60+ day delinquencies improved for the fourth
consecutive quarter. Total 60+ day owned delinquencies declined to $863 million
(2.85% of finance receivables) at September 30, 2003, from $926 million (3.26%)
at June 30, 2003 and $1.070 billion (3.76%) at September 30, 2002. The
improvement from the prior quarter was principally due to reductions in
Equipment Finance. Managed 60+ day delinquencies decreased to $1.222 billion
(2.95%) at September 30, 2003 from $1.278 billion (3.20%) at June 30, 2003, and
$1.539 billion (3.78%) at September 30, 2002.
Non-performing assets also declined for the fourth consecutive quarter to
the lowest level since June 2001. Non-performing assets were $867 million (2.86%
of finance receivables), down from $941 million (3.31%) at June 30, 2003 and
$1.140 billion (4.01%) at September 30, 2002. The continued improvement from
last quarter was most notable in Equipment Finance. The improvement in
non-performing assets in Capital Finance reflected the conversion of a
non-performing Air Canada leveraged lease to a performing operating lease.
Total charge-offs for the September quarter were $90.6 million (1.23% of
average finance receivables), compared to $108.4 million (1.51%) for the prior
quarter. The tables that follow detail charge-offs for the current and prior
quarters by segment, both in amount and as a percentage of average finance
receivables with supplemental disclosure of charge-offs relating to the
liquidating and telecommunications portfolios.
Charge-offs: ($ in millions) Quarter Ended September 30, 2003
---------------------------------------------------------------------
Before
Total Liquidating/Telecom Liquidating/Telecom
------------------- ------------------- ---------------------
Specialty Finance - commercial.. $25.6 1.47% $25.2 1.45% $0.4 228.6%
Equipment Finance .............. 23.1 1.52% 18.1 1.26% 5.0 6.53%
Capital Finance ................ -- -- -- -- -- --
Commercial Finance ............. 19.7 0.84% 17.7 0.75% 2.0 66.12%
Structured Finance ............. 9.2 1.28% -- -- 9.2 6.01%
----- ----- -----
Total Commercial Segments ... 77.6 1.17% 61.0 0.95% 16.6 7.13%
Specialty Finance - consumer ... 13.0 1.80% 6.6 1.26% 6.4 3.22%
----- ----- -----
Total ....................... $90.6 1.23% $67.6 0.98% $23.0 5.33%
===== ===== =====
3
Charge-offs: ($ 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 8.87%
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 6.33%
====== ===== =====
Telecommunication and liquidating portfolios charge-offs were down from
last quarter, reflecting lower charge-offs in the Equipment Finance franchise
finance portfolio. Before liquidating portfolios and telecommunication
charge-offs, charge-offs were $67.6 million (0.98% of average finance
receivables) for the current quarter, down from $78.5 million (1.17%) last
quarter. The improvement from last quarter reflects declines in Equipment
Finance, the Specialty Finance home equity portfolio and the factoring business
of Commercial Finance.
Total reserve for credit losses was $752.5 million (2.48% of finance
receivables) at September 30, 2003, compared to $754.9 million (2.66%) at June
30, 2003 and $777.8 million (2.73%) at September 30, 2002. The decline in the
reserve, both in amount and percentage, reflects the telecommunication
charge-offs taken against the telecommunication reserve and improving credit
metrics. At September 30, 2003, the reserve for credit losses, before the
telecommunication ($116.6 million) and Argentine ($135.0 million) reserves, was
$500.9 million (1.69% of finance receivables), versus $491.8 million (1.78%) at
June 30, 2003 and $473.7 million (1.72%) at September 30, 2002.
The total telecommunications portfolio and the portion comprising the
competitive local exchange carrier ("CLEC") exposure was $623.6 million and
$216.7 million at September 30, 2003, versus $647.9 million and $224.3 million
at June 30, 2003. Total telecommunication non-performing accounts were $88.5
million, compared to $94.2 million last quarter. CLEC non-performing accounts
were $50.4 million, up from the comparative June 30, 2003 balance of $42.6
million. Total specific telecommunication reserves were $116.6 million at
September 30, 2003, down from $128.1 million at June 30, 2003, reflecting
current quarter net charge-offs.
4
Other Revenue
For the quarter, other revenue totaled $220.7 million, up from $217.6
million for the quarter ended June 30, 2003, reflecting increased syndication
and advisory fees in Structured Finance. Improved returns on securitized assets
and revenue from joint venture activities in the Specialty Finance segment also
drove other revenue higher. Partially offsetting these increases were lower
securitization gains, due to lower levels of securitization, and product mix.
Securitization gains during the current quarter totaled $18.3 million, 7.5% of
pretax income, compared to $33.8 million, 14.8% of pretax income, during the
prior quarter. Other revenue included venture capital losses of $11.3 million
during the current quarter, compared to losses of $12.1 million for the prior
quarter.
Salaries and General Operating Expenses
Salaries and general operating expenses were $237.5 million for the
quarter, up from $227.2 million for the June 2003 quarter. The increase from
last quarter was primarily the result of higher incentive-based compensation and
other employee related expenses. Salaries and general operating expenses were
2.06% of average managed assets during the quarter, versus 1.99% for the prior
quarter. The efficiency ratio for the quarter (salaries and general operating
expenses divided by operating margin, excluding provision for credit losses) was
42.2%, compared to 40.8% in the prior quarter.
Headcount of 5,780 at September 30, 2003 was down from 5,845 at June 30,
2003 and 5,850 at September 30, 2002.
Results by Business Segment
Total return on average earning assets was 1.64% for the quarter ended
September 30, 2003 versus 1.53% for the prior quarter, reflecting improved
performance in all segments except Commercial Finance.
The following tables provide individual segment data for the current
quarter compared to the second quarter of 2003. ($ in millions)
5
Specialty Finance
- --------------------------------------------------------------------------------
For the Quarter Ended
- --------------------------------------------------------------------------------
September 30, 2003 June 30, 2003
- --------------------------------------------------------------------------------
Operating margin $218.7 $204.4
- --------------------------------------------------------------------------------
Income before provision for income tax $117.3 $103.2
- --------------------------------------------------------------------------------
New business volume $3,445.0 $2,937.3
- --------------------------------------------------------------------------------
Specialty Finance operating margin improved, reflecting higher asset
levels and lower charge-offs in the home equity portfolio. New business volume
increased from the prior quarter due to improved demand throughout the vendor
finance businesses as well as bulk purchases of home equity portfolios.
Equipment Finance
- --------------------------------------------------------------------------------
For the Quarter Ended
- --------------------------------------------------------------------------------
September 30, 2003 June 30, 2003
- --------------------------------------------------------------------------------
Operating margin $35.8 $35.8
- --------------------------------------------------------------------------------
Income before provision for income tax $14.8 $13.0
- --------------------------------------------------------------------------------
New business volume $898.0 $857.5
- --------------------------------------------------------------------------------
Equipment Finance operating margin remained stable, reflecting decreased
financing and leasing revenue, offset by lower net charge-offs. The new business
volume increase was primarily in the U.S.
Capital Finance
- --------------------------------------------------------------------------------
For the Quarter Ended
- --------------------------------------------------------------------------------
September 30, 2003 June 30, 2003
- --------------------------------------------------------------------------------
Operating margin $37.7 $32.2
- --------------------------------------------------------------------------------
Income before provision for income tax $20.4 $14.8
- --------------------------------------------------------------------------------
New business volume $192.0 $453.0
- --------------------------------------------------------------------------------
The Capital Finance operating margin and pre-tax income improved,
reflecting increased gains on sales of aerospace and rail equipment, and a
modest increase in net rentals. New business volume declined on fewer aircraft
deliveries in the quarter. All five remaining 2003 aircraft deliveries have been
placed. Six of the fourteen scheduled 2004 aircraft have been placed. At
September 30, 2003, three commercial aircraft were off lease, compared to two at
June 30, 2003.
6
Commercial Finance
- --------------------------------------------------------------------------------
For the Quarter Ended
- --------------------------------------------------------------------------------
September 30, 2003 June 30, 2003
- --------------------------------------------------------------------------------
Operating margin $131.0 $131.3
- --------------------------------------------------------------------------------
Income before provision for income tax $88.1 $91.1
- --------------------------------------------------------------------------------
New business volume (including factoring) $559.0 $848.6
- --------------------------------------------------------------------------------
Commercial Finance operating margin declined slightly due to lower fee
income in asset based lending activities, partially offset by increased
commissions from higher seasonal factoring activity. New business volume was
down as the prior quarter included several large transactions in the asset based
lending business.
Structured Finance
- --------------------------------------------------------------------------------
For the Quarter Ended
- --------------------------------------------------------------------------------
September 30, 2003 June 30, 2003
- --------------------------------------------------------------------------------
Operating margin $36.3 $31.6
- --------------------------------------------------------------------------------
Income before provision for income tax $28.2 $24.0
- --------------------------------------------------------------------------------
New business volume $309.0 $141.3
- --------------------------------------------------------------------------------
The Structured Finance operating margin improved on strong fees from
advisory and structuring activities. New business volume increased, most notably
in the media portfolio.
Corporate and Other
- --------------------------------------------------------------------------------
For the Quarter Ended
- --------------------------------------------------------------------------------
September 30, 2003 June 30, 2003
- --------------------------------------------------------------------------------
Operating margin $20.6 $20.9
- --------------------------------------------------------------------------------
Loss before tax benefit $(26.2) $(17.3)
- --------------------------------------------------------------------------------
Corporate and Other reflects certain interest and other operating expenses
not allocated to business segments. The higher pre-tax loss was primarily the
result of higher incentive-based compensation and other employee benefit
expenses.
Funding and Liquidity
Commercial paper was $4.9 billion, up from $4.6 billion at June 30, 2003.
At September 30, 2003, $6.3 billion of committed bank lines were undrawn and
available.
7
Term-debt issued during the quarter totaled $2.4 billion, and consisted of
$1.8 billion in variable-rate medium-term notes, $0.5 billion three-year global
issue, comprised of fixed and floating rate tranches and $0.1 billion in
fixed-rate retail issues. Securitization volume was $1.3 billion compared to
$1.7 billion in the prior quarter.
Cash and cash equivalents increased to $2.3 billion at September 30, 2003,
compared to $1.4 billion at June 30, 2003, as we pre-funded a portion of
upcoming debt maturities at the end of the quarter. However, the average
quarterly invested cash balance declined from the prior quarter.
Capitalization and Leverage
The ratio of tangible equity to managed assets remains strong at 10.44% as
of September 30, 2003, compared to 10.53% as of June 30, 2003 and 9.93% at the
end of the prior year quarter.
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
until 11:59 pm (EST) October 29, 2003, by dialing 800-642-1687 for U.S. and
Canadian callers or 706-645-9291 for international callers with the pass-code
3122518, or at the following website: http://ir.cit.com.
8
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. This release includes certain non-GAAP financial measures
as defined under SEC rules. As required by SEC rules, we have provided a
reconciliation of those measures to the most directly comparable GAAP measures,
which is available with this release on our website at http://ir.cit.com.
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
Livingston, New Jersey and New York City, 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 Three and Nine Month Periods Ended
September 30, 2003 and September 30, 2002
(dollars in millions, except per share data)
Three Months Ended Nine Months Ended
--------------------------------------- -----------------------------------------------------------
September 30, June 30, September 30, September 30, September 30,
2003 2003 2002 2003 2002 (1)
------------ --------- ---------- ------------- --------------------------------------------
CIT TCH Consolidated
Finance income $ 921.2 $ 943.2 $ 1,015.2 $ 2,803.6 $ 3,143.8 $ -- $ 3,143.8
Interest expense 326.5 331.1 347.8 1,004.3 1,066.3 -- 1,066.3
------------ --------- ---------- ---------- ------------ ---------- ----------
Net finance income 594.7 612.1 667.4 1,799.3 2,077.5 -- 2,077.5
Depreciation on operating lease
equipment 252.4 272.9 296.6 804.1 902.5 -- 902.5
------------ --------- ---------- ---------- ------------ ---------- ----------
Net finance margin 342.3 339.2 370.8 995.2 1,175.0 -- 1,175.0
Provision for credit losses 82.9 100.6 122.7 286.5 675.4 -- 675.4
------------ --------- ---------- ---------- ------------ ---------- ----------
Net finance margin after
provision for credit losses 259.4 238.6 248.1 708.7 499.6 -- 499.6
Other revenue(2) 220.7 217.6 209.0 673.8 687.2 -- 687.2
------------ --------- ---------- ---------- ------------ ---------- ----------
Operating margin 480.1 456.2 457.1 1,382.5 1,186.8 -- 1,186.8
------------ --------- ---------- ---------- ------------ ---------- ----------
Salaries and general operating
expenses 237.5 227.2 235.6 698.3 692.9 14.8 707.7
Goodwill impairment -- -- -- -- 6,511.7 -- 6,511.7
Interest expense - TCH -- -- -- -- -- 586.3 586.3
------------ --------- ---------- ---------- ------------ ---------- ----------
Operating expenses 237.5 227.2 235.6 698.3 7,204.6 601.1 7,805.7
------------ --------- ---------- ---------- ------------ ---------- ----------
Income (loss) before provision
for income taxes 242.6 229.0 221.5 684.2 (6,017.8) (601.1) (6,618.9)
Provision for income taxes (94.6) (89.3) (84.1) (266.8) (188.3) (67.5) (255.8)
Minority interest (0.2) (0.1) -- (0.3) -- -- --
Dividends on preferred capital
securities, after-tax -- (2.7) (2.7) (5.4) (8.1) -- (8.1)
------------ --------- ---------- ---------- ------------ ---------- ----------
Net income (loss) (3) $ 147.8 $ 136.9 $ 134.7 $ 411.7 $ (6,214.2) $ (668.6) $ (6,882.8)
============ ========= ========== ========== ============ ========== ==========
Earnings per share
Basic earnings per share $ 0.70 $ 0.65 $ 0.64 $ 1.95
Diluted earnings per share $ 0.69 $ 0.65 $ 0.64 $ 1.94
Number of shares -basic
(thousands) 211,735 211,588 211,573 211,633
Number of shares -diluted
(thousands) 213,529 212,066 211,695 212,498
(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 Nine Months Ended
-------------------------------------- ---------------------------
September 30, June 30, September 30, September 30, September 30,
(2) Other Revenue 2003 2003 2002 2003 2002
------------ -------- ------------ ------------ -------------
Fees and other income $ 151.5 $ 134.6 $ 165.7 $ 430.8 $ 471.0
Factoring commissions 47.6 44.8 47.7 139.3 127.2
Gains on securitization 18.3 33.8 29.2 82.8 121.0
Gains on sales of leasing equipment 14.6 16.5 2.6 48.7 10.9
Losses on venture capital investments (11.3) (12.1) (36.2) (27.8) (42.9)
------- ------- ------- ------- -------
Total other revenue $ 220.7 $ 217.6 $ 209.0 $ 673.8 $ 687.2
======= ======= ======= ======= =======
Fees and other income include: servicing fees, structuring and advisory fees,
syndication fees and gains from other asset and receivable sales.
Three Months Ended Nine Months Ended
------------------------------------- --------------------------
September 30, June 30, September 30, September 30, September 30,
(3) Net income (loss) by segment 2003 2003 2002 2003 2002
------------ -------- ------------ ------------ ------------
Specialty Finance $ 71.6 $ 63.0 $ 68.9 $ 186.8 $ 252.7
Equipment Finance 9.0 7.9 7.6 27.6 79.2
Capital Finance 12.3 9.1 20.4 29.1 58.4
Commercial Finance 53.8 55.6 51.4 163.5 146.3
Structured Finance 17.1 14.7 16.4 44.0 48.3
------- ------- ------- ------- -------
Total Segments 163.8 150.3 164.7 451.0 584.9
Corporate, including certain charges (16.0) (13.4) (30.0) (39.3) (7,467.7)
------- ------- ------- ------- -------
Total $ 147.8 $ 136.9 $ 134.7 $ 411.7 $ (6,882.8)
======= ======= ======= ======= =======
10
CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
September 30, December 31,
2003 2002
------------- ------------
(unaudited)
ASSETS
Financing and leasing assets:
Finance receivables $ 30,342.6 $ 27,621.3
Reserve for credit losses (752.5) (760.8)
---------- ----------
Net finance receivables 29,590.1 26,860.5
Operating lease equipment, net 7,485.3 6,704.6
Finance receivables held for sale 1,017.9 1,213.4
Cash and cash equivalents 2,269.0 2,036.6
Goodwill 388.7 384.4
Other assets (1) 4,749.6 4,732.9
---------- ----------
Total Assets $ 45,500.6 $ 41,932.4
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper $ 4,935.8 $ 4,974.6
Variable-rate bank credit facilities -- 2,118.0
Variable-rate senior notes 7,430.0 4,906.9
Fixed-rate senior notes 21,390.4 19,681.8
Preferred capital securities 255.9 --
---------- ----------
Total debt 34,012.1 31,681.3
Credit balances of factoring clients 3,103.0 2,270.0
Accrued liabilities and payables 3,164.7 2,853.2
---------- ----------
Total Liabilities 40,279.8 36,804.5
Minority interest 39.9 --
Preferred capital securities -- 257.2
Stockholders' Equity:
Common stock 2.1 2.1
Paid-in capital 10,679.1 10,676.2
Accumulated deficit (5,271.5) (5,606.9)
Accumulated other comprehensive loss (227.6) (200.7)
Less: Treasury stock, at cost (1.2) --
---------- ----------
Total Stockholders' Equity 5,180.9 4,870.7
---------- ----------
Total Liabilities and Stockholders' Equity $ 45,500.6 $ 41,932.4
========== ==========
(1) Other Assets primarily include the following at September 30, 2003: $1.4
billion of securitization assets, $0.8 billion of accrued interest and
receivables from derivative counterparties, $0.7 billion of investments in 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.
11
CIT GROUP INC. AND SUBSIDIARIES
OWNED AND MANAGED ASSET COMPOSITION
(dollars in millions)
September 30, June 30, September 30,
2003 2003 2002
------------- -------- -------------
Specialty Finance Segment
Commercial
Finance receivables (1) $ 6,839.1 $ 6,975.4 $ 6,091.5
Operating lease equipment, net 1,043.4 1,171.2 1,353.2
Finance receivables held for sale 754.5 622.6 528.7
---------- ---------- ----------
Owned assets 8,637.0 8,769.2 7,973.4
Finance receivables securitized and managed by CIT 3,876.8 3,473.9 3,703.1
---------- ---------- ----------
Managed assets 12,513.8 12,243.1 11,676.5
---------- ---------- ----------
Consumer
Finance receivables - home equity 2,443.1 1,502.1 934.2
Finance receivables - other 896.8 934.5 831.8
Finance receivables held for sale 150.0 395.0 380.0
---------- ---------- ----------
Owned assets 3,489.9 2,831.6 2,146.0
Home equity finance receivables securitized and managed
by CIT 2,064.9 2,276.7 2,115.9
Other finance receivables securitized and managed by CIT 694.8 786.0 1,031.6
---------- ---------- ----------
Managed assets 6,249.6 5,894.3 5,293.5
---------- ---------- ----------
Equipment Finance Segment
Finance receivables (1) 6,157.5 6,014.6 7,522.2
Operating lease equipment, net 461.7 504.0 765.8
Finance receivables held for sale 113.4 192.4 110.8
---------- ---------- ----------
Owned assets 6,732.6 6,711.0 8,398.8
Finance receivables securitized and managed by CIT 3,504.5 3,819.9 4,384.1
---------- ---------- ----------
Managed assets 10,237.1 10,530.9 12,782.9
---------- ---------- ----------
Capital Finance Segment
Finance receivables 1,208.9 1,185.2 1,479.5
Operating lease equipment, net 5,859.4 5,783.2 4,388.9
---------- ---------- ----------
Owned assets 7,068.3 6,968.4 5,868.4
---------- ---------- ----------
Commercial Finance Segment
Commercial Services
Finance receivables 5,697.8 4,766.3 5,040.4
Business Credit
Finance receivables 4,173.3 4,147.1 3,869.8
---------- ---------- ----------
Owned assets 9,871.1 8,913.4 8,910.2
---------- ---------- ----------
Structured Finance Segment
Finance receivables 2,926.1 2,888.4 2,689.6
Operating lease equipment, net 120.8 101.6 59.5
---------- ---------- ----------
Owned assets 3,046.9 2,990.0 2,749.1
---------- ---------- ----------
Other - Equity Investments 313.9 325.4 341.7
---------- ---------- ----------
Total
Finance receivables $ 30,342.6 $ 28,413.6 $ 28,459.0
Operating lease equipment, net 7,485.3 7,560.0 6,567.4
Finance receivables held for sale 1,017.9 1,210.0 1,019.5
---------- ---------- ----------
Financing and leasing assets excl. equity investments 38,845.8 37,183.6 36,045.9
Equity investments (included in other assets) 313.9 325.4 341.7
---------- ---------- ----------
Owned assets 39,159.7 37,509.0 36,387.6
Finance receivables securitized and managed by CIT 10,141.0 10,356.5 11,234.7
---------- ---------- ----------
Managed assets $ 49,300.7 $ 47,865.5 $ 47,622.3
========== ========== ==========
(1) During the March 31, 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.
12
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
For the Quarters Ended
---------------------------------------------------------
September 30, 2003 June 30, 2003 September 30, 2002
$ % $ % $ %
---------------------------------------------------------
Net Credit Losses - Owned as a Percentage of Average
Finance Receivables
Specialty Finance - Commercial(1) $ 25.6 1.47% $ 23.9 1.33% $ 18.8 1.22%
Equipment Finance(1) 23.1 1.52% 38.6 2.51% 70.7 3.71%
Capital Finance -- -- -- -- 0.1 0.03%
Commercial Finance 19.7 0.84% 21.3 0.96% 22.4 1.06%
Structured Finance 9.2 1.28% 8.6 1.18% 18.4 2.78%
-------- -------- --------
Total Commercial 77.6 1.17% 92.4 1.40% 130.4 1.98%
Specialty Finance - Consumer 13.0 1.80% 16.0 2.62% 10.6 2.17%
-------- -------- --------
Total $ 90.6 1.23% $ 108.4 1.51% $ 141.0 1.99%
======== ======== ========
For the Nine Months Ended
--------------------------------------
September 30, 2003 September 30, 2002
$ % $ %
--------------------------------------
Net Credit Losses - Owned as a Percentage of
Average Finance Receivables
Specialty Finance - Commercial(1) $ 80.5 1.51% $ 59.6 1.28%
Equipment Finance(1) 99.8 2.14% 196.7 3.08%
Capital Finance 1.8 0.19% 0.1 0.01%
Commercial Finance 57.6 0.86% 71.6 1.28%
Structured Finance 31.6 1.45% 18.5 0.97%
-------- --------
Total Commercial 271.3 1.37% 346.5 1.76%
Specialty Finance - Consumer 42.0 2.23% 32.9 1.96%
-------- --------
Total $ 313.3 1.45% $ 379.4 1.77%
======== ========
September 30, 2003 June 30, 2003 September 30, 2002
$ % $ % $ %
---------------------------------------------------------
Finance Receivables Past Due 60 days or
more - Owned as a Percentage of Finance
Receivables
Specialty Finance - Commercial(1) $ 245.9 3.60% $ 249.6 3.58% $ 215.4 3.54%
Equipment Finance(1) 206.3 3.35% 253.0 4.21% 350.7 4.66%
Capital Finance 60.5 5.00% 99.2 8.37% 101.5 6.86%
Commercial Finance 130.2 1.32% 130.5 1.46% 209.4 2.35%
Structured Finance 82.8 2.83% 65.7 2.27% 65.8 2.45%
-------- -------- --------
Total Commercial 725.7 2.69% 798.0 3.07% 942.8 3.53%
Specialty Finance - Consumer 137.7 4.12% 128.1 5.26% 127.2 7.20%
-------- -------- --------
Total $ 863.4 2.85% $ 926.1 3.26% $1,070.0 3.76%
======== ======== ========
Non-performing Assets - Owned as
a Percentage of Finance Receivables(2)
Specialty Finance - Commercial(1) $ 132.7 1.94% $ 140.0 2.01% $ 103.1 1.69%
Equipment Finance(1) 283.7 4.61% 337.8 5.62% 470.0 6.25%
Capital Finance 54.7 4.52% 83.1 7.01% 78.5 5.31%
Commercial Finance 108.0 1.09% 107.4 1.20% 176.1 1.98%
Structured Finance 141.6 4.84% 133.9 4.64% 172.2 6.40%
-------- -------- --------
Total Commercial 720.7 2.67% 802.2 3.09% 999.9 3.75%
Specialty Finance - Consumer 146.1 4.37% 139.0 5.70% 139.9 7.92%
-------- -------- --------
Total $ 866.8 2.86% $ 941.2 3.31% $1,139.8 4.01%
======== ======== ========
Finance Receivables Past Due 60 days or
more - Managed as a Percentage of
Managed Financial Assets(3)
Specialty Finance - Commercial(1) $ 332.4 2.90% $ 318.5 2.88% $ 303.3 2.94%
Equipment Finance(1) 332.7 3.40% 395.5 3.94% 609.1 5.07%
Capital Finance 60.5 5.00% 99.2 8.37% 101.5 6.86%
Commercial Finance 130.1 1.32% 130.5 1.46% 209.4 2.35%
Structured Finance 82.8 2.83% 65.7 2.27% 65.8 2.45%
------- -------- --------
Total Commercial 938.5 2.66% 1,009.4 2.96% 1,289.1 3.64%
Specialty Finance - Consumer 283.9 4.54% 268.4 4.55% 249.5 4.71%
-------- -------- --------
Total $1,222.4 2.95% $1,277.8 3.20% $1,538.6 3.78%
======== ======== ========
Reserve for Credit Losses
Reserve for credit losses as a percentage of
finance receivables $ 752.5 2.48% $ 754.9 2.66% $ 777.8 2.73%
Reserve for credit losses as a percentage of
finance receivables past due 60 days or more 87.2% 81.5% 72.7%
(1) During the quarter ended March 31, 2003, certain portfolios were
tranferred from Equipment Finance to Specialty Finance - Commercial.
Charge-offs for the quarter ending September 30, 2003 relating to these
portfolios totaled approximately $4 million. At September 30, 2003
approximately $75 million past due 60+ accounts (both owned and managed)
and $73 million non-performing accounts related to the transferred
portfolios, versus $65 million and $60 million at September 30, 2002,
respectively. Prior period balances have not been restated to conform to
current 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.
13
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 Nine Months Ended
----------------------------------------- -----------------------------
September 30, June 30, September 30, September 30, September 30,
Profitability 2003 2003 2002 2003 2002
----------------------------------------- -----------------------------
Net finance margin as a
percentage of AEA (see note below) 3.80% 3.80% 4.37% 3.73% 4.52%
Net finance margin after provision as
a percentage of AEA 2.88% 2.67% 2.92% 2.66% 1.92%
Salaries & general operating expenses as
a percentage of AMA(1) 2.06% 1.99% 2.08% 2.04% 2.01%
Efficiency ratio 42.2% 40.8% 40.6% 41.8% 37.2%
Return on tangible stockholders' equity 12.2% 11.6% 12.3% 11.7% (196.1)%
Return on AMA(1) 1.28% 1.20% 1.19% 1.20% (18.0)%
Return on AEA (by segment)
Specialty Finance 2.34% 2.07% 2.66% 2.04% 3.05%
Equipment Finance 0.53% 0.46% 0.35% 0.53% 1.10%
Capital Finance 0.69% 0.54% 1.38% 0.58% 1.39%
Commercial Finance 3.22% 3.44% 3.41% 3.40% 3.58%
Structured Finance 2.29% 1.95% 2.42% 1.96% 2.44%
Total Segments 1.83% 1.70% 1.96% 1.71% 2.27%
Corporate, including certain charges (0.19)% (0.17)% (0.37)% (0.17)% (28.74)%
Total 1.64% 1.53% 1.59% 1.54% (26.47)%
Note: For the three months
ended September 30, 2003,
dividends on preferred capital
securities are reflected in
interest expense (5 basis
points impact) as a result of
adopting FAS 150
Securitization Volume(2)
Specialty Finance - Commercial $ 936.0 $ 1,201.0 $ 305.5 $ 2,546.3 $ 1,761.1
Equipment Finance 381.5 329.4 410.5 1,171.9 1,945.0
Specialty Finance - Consumer -- 122.1 264.0 489.2 2,738.5
-------------------------------------- ----------------------------
Total $ 1,317.5 $ 1,652.5 $ 980.0 $ 4,207.4 $ 6,444.6
===================================== ============================
Average Assets
Average Finance Receivables (AFR) $ 29,431.3 $ 28,766.5 $ 28,325.8 $ 28,871.2 $ 28,539.2
Average Earning Assets (AEA) 36,072.4 35,700.0 33,959.4 35,559.0 34,674.5
Average Managed Assets (AMA)(1) 46,052.0 45,764.8 45,356.5 45,648.4 46,021.2
Average Operating Leases (AOL) 7,458.9 7,304.2 6,615.0 7,151.1 6,597.3
Note: These averages are based on an
ending four or ten month average.
September 30, June 30, September 30,
2003 2003 2002
--------------------------------------------
Capital & Leverage(3),(4)
Tangible stockholders' equity to managed assets 10.44% 10.53% 9.93%
Debt (net of overnight deposits) to
tangible stockholders' equity(5) 6.22x 6.28x 6.54x
Tangible book value per share $22.93 $22.55 $21.08
Note: The above data for the nine months ended
September 30, 2002 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 September 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 and includes
Preferred Capital Securities.
(5) Total debt excludes, and stockholders' equity includes, Preferred Capital
Securities.
Owned Portfolio Information September 30, June 30, September 30,
2003 2003 2002
-----------------------------------------------------
Liquidating Portfolios:
Balance $ 1,030.5 $ 1,085.4 $ 1,459.9
Non-performing accounts $ 121.0 $ 143.1 $ 155.8
Past due 60+ days $ 105.4 $ 124.7 $ 146.2
Telecommunications(6):
Financing and leasing assets $ 623.6 $ 647.9 $ 707.2
Number of accounts 49 53 52
Largest customer account balance $ 32.5 $ 33.4 $ 34.1
Non-performing accounts $ 88.5 $ 94.2 $ 137.0
Number of accounts 9 10 11
Past due 60+ days $ 54.9 $ 42.3 $ 24.2
CLEC exposure $ 216.7 $ 224.3 $ 275.2
Equity and Venture Capital Investments:
Total investment balance $ 313.9 $ 325.4 $ 341.7
Direct investments $ 161.5 $ 169.1 $ 196.6
Number of companies 47 49 60
Private equity funds $ 152.4 $ 156.3 $ 145.1
Number of funds 52 52 52
Remaining fund and equity commitments $ 140.7 $ 149.2 $ 181.0
(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.
14
CIT GROUP INC. AND SUBSIDIARIES
Aerospace Portfolio Data
(dollars in millions unless specified)
Total Aerospace Portfolio: September 30, June 30, September 30,
Financing and leasing assets 2003 2003 2002
------------- ------------- -------------
Commercial $4,575.7 $4,479.2 $3,986.7
Regional $ 310.0 $ 316.9 $ 301.0
Investment in aerospace assets (EETC's)
including accrued interest $ 100.4 $ 104.2 $ 96.7
Number of planes:
Commercial 204 203 193
Regional 116 122 94
September 30, 2003 June 30, 2003 September 30, 2002
------------------------ ----------------------- ------------------------
Commercial Aerospace Portfolio:
By Region: Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Europe $1,980.9 64 $1,930.9 62 $1,586.9 55
North America (1) 1,065.8 73 1,060.9 76 1,025.9 76
Asia Pacific 875.1 36 879.5 36 813.4 31
Latin America 529.1 25 536.2 25 483.3 27
Africa / Middle East 124.8 6 71.7 4 77.2 4
-------- -------- -------- -------- -------- --------
Total $4,575.7 204 $4,479.2 203 $3,986.7 193
======== ======== ======== ======== ======== ========
By Manufacturer: Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Boeing $2,626.5 141 $2,607.9 140 $2,439.6 137
Airbus 1,928.2 51 1,847.5 48 1,507.7 38
Other 21.0 12 23.8 15 39.4 18
-------- -------- -------- -------- -------- --------
Total $4,575.7 204 $4,479.2 203 $3,986.7 193
======== ======== ======== ======== ======== ========
By Body Type (2): Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Narrow body $3,285.9 155 $3,218.7 152 $2,723.3 141
Intermediate 881.0 18 865.4 18 849.0 16
Wide body 387.8 19 371.3 18 375.0 18
Other 21.0 12 23.8 15 39.4 18
-------- -------- -------- -------- -------- --------
Total $4,575.7 204 $4,479.2 203 $3,986.7 193
======== ======== ======== ======== ======== ========
Largest customer net investment $ 289.7 $ 292.5 $ 193.5
Number of accounts 84 83 77
Weighted average age of fleet (years) 7 7 7
September 30, 2003 June 30, 2003 September 30, 2002
----------------------- --------------------- ---------------------
New Aircraft Delivery Order Book
(dollars in billions) Amount Number Amount Number Amount Number
-------- -------- -------- -------- -------- ------
For the Years Ending December 31,
2002 $ 0.1 3
2003 (Remaining 2003) $ 0.2 5 $ 0.3 8 0.8 19
2004 0.6 14 0.8 16 1.2 25
2005 1.1 24 1.2 27 1.2 25
2006 1.0 19 0.9 16 0.5 9
2007 0.3 5 0.1 1 0.1 1
-------- -------- -------- -------- -------- --------
Total $ 3.2 67 $ 3.3 68 $ 3.9 82
======== ======== ======== ======== ======== ========
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 September 30, 2003, all of the 2003
deliveries and 6 of the 2004 deliveries were placed.
(1) Comprised of net investments in the U.S. and Canada of $856.3 million (67
aircraft) and $209.5 million (6 aircraft) at September 30, 2003, $871.6 million
(70 aircraft) and $189.3 million (6 aircraft) at June 30, 2003, and $847.5
million (70 aircraft) and $178.4 million (6 aircraft) at September 30, 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.
15
CIT GROUP INC. AND SUBSIDIARIES
Non-GAAP Disclosures
(dollars in millions)
September 30, 2003 June 30, 2003 December 31, 2002 September 30, 2002
------------------ ------------- ----------------- ------------------
Managed assets (1):
Finance receivables $30,342.6 $28,413.6 $27,621.3 $28,459.0
Operating lease equipment, net 7,485.3 7,560.0 6,704.6 6,567.4
Finance receivables held for sale 1,017.9 1,210.0 1,213.4 1,019.5
Equity and venture capital investments
(included in other assets) 313.9 325.4 335.4 341.7
--------- --------- --------- ---------
Total financing and leasing portfolio assets 39,159.7 37,509.0 35,874.7 36,387.6
Securitized assets 10,141.0 10,356.5 10,482.4 11,234.7
--------- --------- --------- ---------
Managed Assets $49,300.7 $47,865.5 $46,357.1 $47,622.3
========= ========= ========= =========
Earning assets (2):
Total financing and leasing portfolio assets $39,159.7 $37,509.0 $35,874.7 $36,387.6
Credit balances of factoring clients (3,103.0) (2,471.6) (2,270.0) (2,513.8)
--------- --------- --------- ---------
Earning assets $36,056.7 $35,037.4 $33,604.7 $33,873.8
========= ========= ========= =========
Tangible equity (3):
Total equity $ 5,180.9 $ 5,057.6 $ 4,870.7 $ 4,757.8
Other comprehensive loss relating to
derivative financial instruments 106.9 122.1 118.3 120.5
Unrealized gain on securitization
investments (8.0) (7.9) (20.5) (23.6)
Goodwill (388.7) (389.8) (384.4) (384.4)
--------- --------- --------- ---------
Tangible common equity 4,891.1 4,782.0 4,584.1 4,470.3
Preferred capital securities 255.9 256.4 257.2 257.7
--------- --------- --------- ---------
Tangible equity $ 5,147.0 $ 5,038.4 $ 4,841.3 $ 4,728.0
========= ========= ========= =========
Debt, net of overnight deposits (4):
Total Debt $34,012.1 $32,430.8 $31,681.3 $32,456.0
Overnight deposits (1,722.9) (781.3) (1,578.7) (1,550.6)
Preferred capital securities (255.9) -- -- --
--------- --------- --------- ---------
Debt, net of overnight deposits $32,033.3 $31,649.5 $30,102.6 $30,905.4
========= ========= ========= =========
- --------------------------------------------------------------------------------
Non-GAAP financial measures disclosed by management are meant to provide
additional information and insight relative to trends in the business to
investors and, in certain cases, to present financial information as measured by
rating agencies and other users of financial information. These measures are not
in accordance with, or a substitute for, GAAP and may be different from, or
inconsistent with, non-GAAP financial measures used by other companies.
1) Managed assets are utilized in certain credit and expense ratios. Securitized
assets are included in managed assets because CIT retains certain credit risk
and the servicing related to assets that are funded through securitizations.
2) Earning assets are utilized in certain revenue and earnings ratios. Earning
assets are net of credit balances of factoring clients. This net amount, which
corresponds to amounts funded, is a basis for revenues earned.
3)Tangible equity is utilized in leverage ratios, and is consistent with certain
rating agency measurements. Other comprehensive losses and unrealized gains on
securitization investments (both included in the separate component of equity)
are excluded from the calculation, as these amounts are not necessarily
indicative of amounts which will be realized.
4) Debt, net of overnight deposits is utilized in certain leverage ratios.
Overnight deposits are excluded from these calculations, as these amounts are
retained by the Company to repay debt. Overnight deposits are reflected in both
debt and cash and cash equivalents.
16