Exhibit 99.02
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in millions -- except share data)
March 31, December 31,
2004 2003
--------- ------------
ASSETS
Financing and leasing assets:
Finance receivables........................................................ $32,187.4 $31,300.2
Reserve for credit losses.................................................. (636.7) (643.7)
--------- ---------
Net finance receivables.................................................... 31,550.7 30,656.5
Operating lease equipment, net............................................. 7,576.2 7,615.5
Finance receivables held for sale.......................................... 1,006.2 918.3
Cash and cash equivalents..................................................... 1,356.5 1,973.7
Retained interest in securitizations.......................................... 1,364.6 1,380.8
Goodwill and intangible assets................................................ 485.5 487.7
Other assets.................................................................. 2,912.7 3,310.3
--------- ---------
Total Assets.................................................................. $46,252.4 $46,342.8
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper........................................................... $ 4,820.2 $ 4,173.9
Variable-rate senior notes................................................. 9,170.7 9,408.4
Fixed-rate senior notes.................................................... 19,829.8 19,830.8
Preferred capital securities............................................... 255.1 255.5
--------- ---------
Total debt.................................................................... 34,075.8 33,668.6
Credit balances of factoring clients.......................................... 3,619.4 3,894.6
Accrued liabilities and payables.............................................. 3,025.9 3,346.4
--------- ---------
Total Liabilities.......................................................... 40,721.1 40,909.6
--------- ---------
Commitments and Contingencies (Note 10)
Minority interest............................................................. 38.6 39.0
Stockholders' Equity:
Preferred stock: $0.01 par value, 100,000,000 authorized, none issued...... -- --
Common stock: $0.01 par value, 600,000,000 authorized,
211,849,987 issued, 211,832,465 outstanding.............................. 2.1 2.1
Paid-in capital, net of deferred compensation of $52.8 and $30.6........... 10,668.2 10,677.0
Accumulated deficit........................................................ (4,980.5) (5,141.8)
Accumulated other comprehensive loss....................................... (196.4) (141.6)
Less: Treasury stock, 17,522 and 43,529 shares, at cost.................... (0.7) (1.5)
--------- ---------
Total Stockholders' Equity................................................. 5,492.7 5,394.2
--------- ---------
Total Liabilities and Stockholders' Equity................................. $46,252.4 $46,342.8
========= =========
See Notes to Consolidated Financial Statements.
1
CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($ in millions-- except per share data)
For the Quarters Ended March 31,
--------------------------------
2004 2003
-------- --------
Finance income................................................................ $ 902.9 $ 939.2
Interest expense.............................................................. 298.0 354.7
-------- --------
Net finance income............................................................ 604.9 584.5
Depreciation on operating lease equipment..................................... 234.5 278.8
-------- --------
Net finance margin............................................................ 370.4 305.7
Provision for credit losses................................................... 85.6 103.0
-------- --------
Net finance margin after provision for credit losses.......................... 284.8 202.7
Other revenue................................................................. 230.4 239.9
Gain (loss) on venture capital investments.................................... 0.7 (4.4)
-------- --------
Operating margin.............................................................. 515.9 438.2
Salaries and general operating expenses....................................... 247.3 225.6
Gain on redemption of debt.................................................... 41.8 --
-------- --------
Income before provision for income taxes...................................... 310.4 212.6
Provision for income taxes.................................................... (121.1) (82.9)
Dividends on preferred capital securities, after tax.......................... -- (2.7)
-------- --------
Net income.................................................................... $ 189.3 $ 127.0
======== ========
Earnings per share
Basic earnings per share...................................................... $ 0.89 $ 0.60
======== ========
Diluted earnings per share.................................................... $ 0.88 $ 0.60
======== ========
Number of shares - basic (thousands).......................................... 211,839 211,573
======== ========
Number of shares - diluted (thousands)........................................ 215,809 211,899
======== ========
Dividends per common share.................................................... $ 0.13 $ 0.12
======== ========
See Notes to Consolidated Financial Statements.
2
CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
($ in millions)
Accumulated Total Total
Common Paid-in Treasury (Deficit)/ Comprehensive Stockholders'
Stock Capital Stock Earnings (Loss)/Income Equity
------ --------- -------- ----------- ------------- -------------
Balance December 31, 2003......... $ 2.1 $10,677.0 $ (1.5) $(5,141.8) $(141.6) $5,394.2
Net income........................ -- -- -- 189.3 -- 189.3
Foreign currency translation
adjustments..................... -- -- -- -- 1.4 1.4
Change in fair values of
derivatives qualifying as
cash flow hedges................ -- -- -- -- (61.6) (61.6)
Unrealized gains on equity
and securitization
investments, net................ -- -- -- -- 5.4 5.4
--------
Total comprehensive income........ -- -- -- -- -- 134.5
--------
Cash dividends.................... -- -- -- (28.0) -- (28.0)
Restricted common
stock grants.................... -- 6.6 -- -- -- 6.6
Treasury stock purchased,
at cost......................... -- -- (37.1) -- -- (37.1)
Exercise of stock
option awards................... -- (15.4) 37.9 -- -- 22.5
----- --------- ------ --------- ------- --------
Balance March 31, 2004............ $ 2.1 $10,668.2 $ (0.7) $(4,980.5) $(196.4) $5,492.7
===== ========= ====== ========= ======= ========
See Notes to Consolidated Financial Statements.
3
CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in millions)
For the Quarters
Ended March 31,
--------------------------
2004 2003
---------- ----------
Cash Flows From Operations
Net income.................................................................... $ 189.3 $ 127.0
Adjustments to reconcile net income to net cash flows from operations:
Depreciation and amortization.............................................. 248.2 288.8
Provision for credit losses................................................ 85.6 103.0
Provision for deferred federal income taxes................................ 95.4 74.7
Gains on equipment, receivable and investment sales........................ (62.5) (60.7)
Gain on debt redemption.................................................... (41.8) --
Decrease (increase) in other assets........................................ 303.1 (116.7)
(Decrease) increase in accrued liabilities and payables.................... (346.6) 61.1
Other...................................................................... (26.0) 21.5
---------- ----------
Net cash flows provided by operations......................................... 444.7 498.7
---------- ----------
Cash Flows From Investing Activities
Loans extended................................................................ (12,699.8) (12,341.1)
Collections on loans.......................................................... 10,829.8 10,233.4
Proceeds from asset and receivable sales...................................... 1,731.9 1,699.2
Purchases of finance receivable portfolios.................................... (595.1) (360.8)
Net decrease in short-term factoring receivables.............................. (400.8) (182.7)
Purchases of assets to be leased.............................................. (268.7) (333.4)
Other ...................................................................... (1.1) (41.4)
---------- ----------
Net cash flows (used for) investing activities................................ (1,403.8) (1,326.8)
---------- ----------
Cash Flows From Financing Activities
Repayments of variable and fixed-rate notes................................... (3,011.5) (2,997.8)
Proceeds from the issuance of variable and fixed-rate notes................... 2,804.2 4,352.4
Net decrease in commercial paper.............................................. 646.3 (484.1)
Net repayments of non-recourse leveraged lease debt........................... (61.1) (28.2)
Cash dividends paid........................................................... (28.0) (25.4)
Other ...................................................................... (8.0) --
---------- ----------
Net cash flows provided by financing activities............................... 341.9 816.9
---------- ----------
Net (decrease) in cash and cash equivalents................................... (617.2) (11.2)
Cash and cash equivalents, beginning of period................................ 1,973.7 2,036.6
---------- ----------
Cash and cash equivalents, end of period...................................... $ 1,356.5 $ 2,025.4
========== ==========
Supplementary Cash Flow Disclosure
Interest paid................................................................. $ 287.5 $ 331.2
Federal, foreign, state and local income taxes paid, net...................... $ 24.7 $ 18.9
See Notes to Consolidated Financial Statements.
4
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 -- Summary of Significant Accounting Policies
CIT Group Inc., a Delaware corporation ("we," "CIT" or the "Company"), is
a global commercial and consumer finance company that was founded in 1908. CIT
provides financing and leasing capital for companies in a wide variety of
industries, offering vendor, equipment, commercial, factoring, consumer, and
structured financing products. CIT operates primarily in North America, with
locations in Europe, Latin America, Australia and the Asia-Pacific region.
These financial statements, which have been prepared in accordance with
the instructions to Form 10-Q, do not include all of the information and note
disclosures required by accounting principles generally accepted in the United
States ("GAAP") and should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 2003. Financial statements
in this Form 10-Q have not been examined by independent accountants in
accordance with generally accepted auditing standards, but in the opinion of
management include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of CIT's financial position and
results of operations. Certain prior period amounts have been reclassified to
conform to the current presentation.
In accordance with the provisions of FASB Interpretation No. 46R ("FIN
46"), "Consolidation of Variable Interest Entities," CIT consolidates variable
interest entities for which management has concluded that CIT is the primary
beneficiary. Entities that do not meet the definition of a variable interest
entity are subject to the provisions of Accounting Research Bulletin No. 51
("ARB 51"), "Consolidated Financial Statements" and are consolidated when
management has determined that it has the controlling financial interest.
Entities which do not meet the consolidation criteria in either FIN 46 or ARB 51
but which are significantly influenced by the Company, generally those entities
that are twenty to fifty percent owned by CIT, are included in other assets at
cost for securities not readily marketable and presented at the corresponding
share of equity plus loans and advances. Investments in entities which
management does not have significant influence are included in other assets at
cost, less declines in value that are other than temporary. In accordance with
Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities",
qualifying special purpose entities utilized in securitizations are not
consolidated. Inter-company transactions have been eliminated.
Stock Based Compensation
CIT has elected to apply Accounting Principles Board Opinion 25 ("APB 25")
rather than the optional provisions of SFAS No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123"), as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure" in accounting for its
stock-based compensation plans. Under APB 25, CIT does not recognize
compensation expense on the issuance of its stock options because the option
terms are fixed and the exercise price equals the market price of the underlying
stock on the grant date. The following table presents the pro forma information
required by SFAS 123 as if CIT had accounted for stock options granted under the
fair value method of SFAS 123, as amended ($ in millions, except per share
data):
For the Quarters Ended March 31,
--------------------------------
2004 2003
------ ------
Net income as reported.......................................................... $189.3 $127.0
Stock-based compensation expense-- fair value method, after tax................. 5.1 6.7
------ ------
Pro forma net income............................................................ $184.2 $120.3
====== ======
Basic earnings per share as reported............................................ $ 0.89 $ 0.60
====== ======
Basic earnings per share pro forma.............................................. $ 0.87 $ 0.57
====== ======
Diluted earnings per share as reported.......................................... $ 0.88 $ 0.60
====== ======
Diluted earnings per share pro forma............................................ $ 0.85 $ 0.57
====== ======
5
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
For the quarters ended March 31, 2004 and 2003, net income includes $4.0
million and $0.5 million of after-tax compensation cost related to restricted
stock awards.
Recent Accounting Pronouncements
In March 2004, the SEC issued Staff Accounting Bulletin 105 "Application
of Accounting Principles to Loan Commitments" ("SAB 105"). SAB 105 requires that
certain mortgage loan commitments issued after March 31, 2004 be accounted for
as derivatives until the loan is made or they expire unexercised. Management
does not expect the adoption of SAB 105 to have a material financial statement
impact.
In January 2004, the FASB issued FASB Staff Position No. FAS 106-1,
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003" (FSP 106-1). FSP 106-1 permits
employers that sponsor postretirement benefit plans providing prescription drug
benefits to retirees to make a one-time election to defer accounting for any
effects of the Medicare Prescription Drug Improvement and Modernization Act of
2003. CIT has elected to defer the related accounting pending further guidance
from the FASB.
In December 2003, the FASB revised SFAS No. 132 "Employers' Disclosures
about Pensions and Other Postretirement Benefits." This revision requires
interim disclosures regarding certain components of net periodic pension costs
and the employer's contribution paid, or expected to be paid during the current
fiscal year, if significantly different from amounts previously disclosed for
interim periods beginning after December 15, 2003. The additional required
disclosures are included in Note 9 -- Post Retirement and Other Benefit Plans.
In December 2003, the SEC issued Staff Accounting Bulletin 104 "Revenue
Recognition" ("SAB 104"), which revises or rescinds portions of related
interpretive guidance in order to be consistent with current authoritative
accounting and auditing guidance and SEC rules and regulations. The adoption of
SAB 104 as of January 1, 2004 did not have a material financial statement
impact.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
pronouncement establishes standards for classifying and measuring certain
financial instruments as a liability (or an asset in some circumstances). This
pronouncement requires CIT to display the Preferred Capital Securities
(previously described as "Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures of the Company") within
the debt section on the face of the Consolidated Balance Sheets and show the
related expense with interest expense on a pre-tax basis. There was no impact to
net income upon adoption. This pronouncement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Prior period restatement is not permitted. On November 7, 2003, certain
measurement and classification provisions of SFAS 150, relating to certain
mandatorily redeemable non-controlling interests, were deferred indefinitely.
The adoption of these delayed provisions, which relate primarily to minority
interests associated with finite-lived entities, is not expected to have a
significant impact on the financial position or results of operations.
Note 2 -- Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. The diluted
EPS computation includes the potential impact of dilutive securities, including
stock options and restricted stock grants. The dilutive effect of stock options
is computed using the treasury stock method, which assumes the repurchase of
common shares by CIT at the average market price for the period. Options that do
not have a dilutive effect (because the exercise price is above the market
price) are not included in the denominator and averaged approximately 16.1
million shares for the quarter ended March 31, 2004 and 17.3 million shares for
the quarter ended March 31, 2003.
6
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
The reconciliation of the numerator and denominator of basic EPS with that
of diluted EPS is presented ($ in millions, except per share amounts, which are
in whole dollars; weighted-average share balances in thousands):
Quarter Ended March 31, 2004 Quarter Ended March 31, 2003
--------------------------------------- ---------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Basic EPS:
Income available to common
stockholders.................... $189.3 211,839 $ 0.89 $127.0 211,573 $0.60
Effect of Dilutive Securities:
Restricted shares................. -- 540 -- -- 326 --
Stock options..................... -- 3,430 (0.01) -- -- --
------ ------- ------ ------ ------- -----
Diluted EPS.......................... $189.3 215,809 $ 0.88 $127.0 211,899 $0.60
====== ======= ====== ====== ======= =====
Note 3 -- Business Segment Information
The selected financial information by business segment presented below is
based upon a fixed leverage ratio across business units and the allocation of
most corporate expenses. Corporate and Other includes operating losses on
venture capital investments, although those assets are included within
Capital Finance, which now manages those assets ($ in millions).
Total
Specialty Commercial Equipment Capital Business Corporate
Finance Finance Finance Finance Segments and Other Consolidated
--------- ---------- --------- ------- -------- --------- ------------
At and for the quarter ended
March 31, 2004
Operating margin ........... $ 228.1 $ 157.0 $ 47.3 $ 60.1 $ 492.5 $23.4 $ 515.9
Income taxes ............... 44.7 41.4 9.8 12.7 108.6 12.5 121.1
Net income ................. 78.2 68.0 15.2 21.7 183.1 6.2 189.3
Total financing and
leasing assets .......... 13,048.1 11,652.7 6,871.7 9,449.1 41,021.6 -- 41,021.6
Total managed assets ....... 19,062.6 11,652.7 9,924.2 9,449.1 50,088.6 -- 50,088.6
At and for the quarter ended
March 31, 2003
Operating margin ........... $ 190.5 $ 141.0 $ 40.2 $ 46.1 $ 417.8 $20.4 $ 438.2
Income taxes ............... 33.4 38.0 6.8 9.3 87.5 (4.6) 82.9
Net income (loss) .......... 52.2 59.5 10.7 14.5 136.9 (9.9) 127.0
Total financing and
leasing assets .......... 11,925.8 9,970.7 6,928.2 8,268.6 37,093.3 -- 37,093.3
Total managed assets ....... 18,336.3 9,970.7 10,905.4 8,268.6 47,481.0 -- 47,481.0
During the quarter ended June 30, 2004, the former Structured Finance
segment was combined into the Capital Finance segment to better align with the
marketplace and to improve efficiency. As part of this realignment,
approximately $1.3 billion of communications and media assets were transferred
to Commercial Finance. The table above has been revised from the historical
presentation to this new segment reporting structure.
7
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
Note 4 -- Concentrations
The following table summarizes the geographic and industry compositions
(by obligor) of financing and leasing portfolio assets ($ in millions):
March 31, 2004 December 31, 2003
-------------------- --------------------
Amount Percent Amount Percent
--------- ------- --------- -------
Geographic
North America:
Northeast............................................... $ 8,166.6 19.9% $ 8,319.8 20.8%
West.................................................... 7,870.8 19.2% 7,485.5 18.7%
Midwest................................................. 6,271.5 15.3% 5,996.2 14.9%
Southeast............................................... 5,782.7 14.1% 5,558.6 13.9%
Southwest............................................... 4,643.1 11.3% 4,423.1 11.0%
Canada.................................................. 2,009.6 4.9% 2,055.5 5.1%
--------- ----- --------- -----
Total North America........................................ 34,744.3 84.7% 33,838.7 84.4%
Foreign.................................................... 6,277.3 15.3% 6,245.2 15.6%
--------- ----- --------- -----
Total................................................... $41,021.6 100.0% $40,083.9 100.0%
========= ===== ========= =====
March 31, 2004 December 31, 2003
-------------------- --------------------
Amount Percent Amount Percent
--------- ------- --------- -------
Industry
Manufacturing(1) (no industry greater than 2.9%)........... $ 7,416.7 18.1% $ 7,340.6 18.3%
Retail(2).................................................. 5,700.7 13.9% 5,630.9 14.0%
Commercial airlines (including regional airlines).......... 5,029.6 12.3% 5,039.3 12.6%
Consumer based lending-- home mortgage..................... 3,465.1 8.4% 2,830.8 7.1%
Transportation(3).......................................... 2,920.8 7.1% 2,934.9 7.3%
Service industries......................................... 2,678.9 6.5% 2,608.3 6.5%
Consumer based lending-- non-real estate(4)................ 1,856.9 4.5% 1,710.9 4.3%
Construction equipment..................................... 1,471.3 3.6% 1,571.2 3.9%
Wholesaling................................................ 1,431.8 3.5% 1,374.7 3.4%
Communications(5).......................................... 1,317.7 3.2% 1,386.5 3.5%
Automotive Services........................................ 1,212.7 3.0% 1,152.3 2.9%
Other (no industry greater than 3.0%)(6)................... 6,519.4 15.9% 6,503.5 16.2%
--------- ----- --------- -----
Total................................................... $41,021.6 100.0% $40,083.9 100.0%
========= ===== ========= =====
- --------------------------------------------------------------------------------
(1) Includes manufacturers of textiles and apparel, industrial machinery and
equipment, electrical and electronic equipment and other industries.
(2) Includes retailers of apparel (5.9%) and general merchandise (4.1%).
(3) Includes rail, bus, over-the-road trucking industries and business
aircraft.
(4) Includes receivables from consumers for products in various industries
such as manufactured housing, recreational vehicles, marine and computers
and related equipment.
(5) Includes $500.0 million and $556.3 million of equipment financed for the
telecommunications industry at March 31, 2004 and December 31, 2003,
respectively, but excludes telecommunications equipment financed for other
industries.
(6) Included in "Other" above are financing and leasing assets in the energy,
power and utilities sectors, which totaled $956.6 million, or 2.3% of
total financing and leasing assets at March 31, 2004. This amount includes
approximately $630.2 million in project financing and $269.0 million in
rail cars on lease.
8
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
Note 5 -- Retained Interests in Securitizations
The following table details the components of retained interests in
securitizations ($ in millions):
March 31, December 31,
2004 2003
--------- ------------
Retained interests in commercial loans:
Retained subordinated securities.......................................... $ 456.1 $ 536.6
Interest-only strips...................................................... 371.9 366.8
Cash reserve accounts..................................................... 303.3 226.3
-------- --------
Sub total................................................................. 1,131.3 1,129.7
-------- --------
Retained interests in consumer loans:
Retained subordinated securities.......................................... 89.9 86.7
Interest-only strips...................................................... 49.9 58.9
Cash reserve accounts..................................................... 26.1 34.0
-------- --------
Sub total................................................................. 165.9 179.6
-------- --------
Aerospace equipment trust certificates....................................... 67.4 71.5
-------- --------
Total..................................................................... $1,364.6 $1,380.8
======== ========
Note 6 -- Accumulated Other Comprehensive Loss
The following table details the components of accumulated other
comprehensive loss, net of tax ($ in millions):
March 31, December 31,
2004 2003
--------- ------------
Foreign currency translation adjustments..................................... $(104.4) $(105.8)
Changes in fair values of derivatives qualifying as cash flow hedges......... (102.9) (41.3)
Unrealized gain on equity and securitization investments..................... 11.7 6.3
Minimum pension liability adjustments........................................ (0.8) (0.8)
------- -------
Total accumulated other comprehensive loss................................ $(196.4) $(141.6)
======= =======
Note 7 -- Derivative Financial Instruments
As part of managing exposure to interest rate, foreign currency, and, in
limited instances, credit risk, CIT, as an end-user, enters into various
derivative transactions, all of which are transacted in over-the-counter markets
with other financial institutions acting as principal counter parties.
Derivatives are utilized for hedging purposes only, and policy prohibits
entering into derivative financial instruments for trading or speculative
purposes. To ensure both appropriate use as a hedge and to achieve hedge
accounting treatment, whenever possible, substantially all derivatives entered
into are designated according to a hedge objective against a specific or
forecasted liability or, in limited instances, assets. The notional amounts,
rates, indices, and maturities of our derivatives closely match the related
terms of the underlying hedged items.
CIT utilizes interest rate swaps to exchange variable-rate interest
underlying forecasted issuances of commercial paper, specific variable-rate debt
instruments, and, in limited instances, variable-rate assets for fixed-rate
amounts. These interest rate swaps are designated as cash flow hedges and
changes in fair value of these swaps, to the extent they are effective as a
hedge, are recorded in other comprehensive income. Ineffective amounts are
recorded in interest expense. Interest rate swaps are also utilized to convert
fixed-rate interest on specific debt instruments to variable-rate amounts. These
interest rate swaps are designated as fair value hedges and changes in fair
value of these swaps are recorded as basis adjustments to the underlying debt
balance.
9
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
The following table presents the notional principal amounts of interest
rate swaps by class and the corresponding hedged liability position ($ in
millions):
Notional Amount
----------------------------------
March 31, 2004 December 31, 2003
-------------- -----------------
Effectively converts the interest
rate on an equivalent amount of
forecasted commercial paper
Floating to fixed-rate swaps-- issuances, variable-rate notes and
cash flow hedges..................... $2,585.5 $2,615.0 selected assets to a fixed rate.
Effectively converts the interest
rate on an equivalent amount of
Fixed to floating-rate swaps-- fixed-rate notes and selected assets
fair value hedges ................... 6,751.2 6,758.2 to a variable rate.
-------- --------
Total interest rate swaps.............. $9,336.7 $9,373.2
======== ========
In addition to the swaps in the table above, in conjunction with
securitizations, CIT entered into $2.8 billion in notional amount of interest
rate swaps with the related trusts to protect the trusts against interest rate
risk. CIT is insulated from this risk by entering into offsetting swap
transactions with third parties totaling $2.8 billion in notional amount at
March 31, 2004.
CIT utilizes foreign currency exchange forward contracts to hedge currency
risk underlying foreign currency loans to subsidiaries and the net investments
in foreign operations. These contracts are designated as foreign currency cash
flow hedges or net investment hedges and changes in fair value of these
contracts are recorded in other comprehensive income along with the translation
gains and losses on the underlying hedged items. CIT also utilizes cross
currency interest rate swaps to hedge currency risk underlying foreign currency
debt. These swaps are designated as foreign currency cash flow hedges or foreign
currency fair value hedges and changes in fair value of these contracts are
recorded in other comprehensive income along with the translation gains and
losses on the underlying hedged items.
The components of the adjustment to Accumulated Other Comprehensive Loss
for derivatives qualifying as cash flow hedges are presented in the following
table ($ in millions).
Fair Value Total
Adjustments Income Tax Unrealized
of Derivatives Effects Loss
-------------- ---------- ----------
Balance at December 31, 2003-- unrealized loss..................... $ 64.6 $(23.3) $ 41.3
Changes in values of derivatives qualifying as cash flow hedges.... 101.0 (39.4) 61.6
------ ------ ------
Balance at March 31, 2004-- unrealized loss........................ $165.6 $(62.7) $102.9
====== ====== ======
The unrealized loss as of March 31, 2004, presented in the preceding
table, primarily reflects our use of interest rate swaps to convert
variable-rate debt to fixed-rate debt, followed by lower market interest rates.
For the quarter ended March 31, 2004, the ineffective portion of changes in the
fair value of cash flow hedges amounted to $0.3 million and has been recorded as
a decrease to interest expense. Assuming no change in interest rates,
approximately $43.3 million, net of tax, of Accumulated Other Comprehensive Loss
is expected to be reclassified to earnings over the next twelve months as
contractual cash payments are made. The Accumulated Other Comprehensive Loss
(along with the corresponding swap liability) will be adjusted as market
interest rates change over the remaining life of the swaps.
During the first quarter of 2004, CIT entered into credit default swaps,
with a combined notional value of $35.0 million and terms of 5 years, to
economically hedge certain credit exposures. These swaps do not meet the
requirements for hedge accounting treatment and therefore are recorded at fair
value, with both realized and unrealized gains or losses recorded in other
revenue in the consolidated statement of income. The fair value adjustment as of
March 31, 2004 was not significant.
10
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
Note 8 -- Certain Relationships and Related Transactions
CIT is a partner with Dell Inc. ("Dell") in Dell Financial Services L.P.
("DFS"), a joint venture that offers financing to Dell customers. The joint
venture provides Dell with financing and leasing capabilities that are
complementary to its product offerings and provides CIT with a steady source of
new financings. CIT acquired this relationship through an acquisition during
November 1999, and the current agreement extends until October 2005. CIT
regularly purchases finance receivables from DFS at a premium, portions of which
are typically securitized within 90 days of purchase from DFS. CIT has limited
recourse to DFS on defaulted contracts. In accordance with the joint venture
agreement, net income generated by DFS as determined under GAAP is allocated 70%
to Dell and 30% to CIT, after CIT has recovered any cumulative losses. The DFS
board of directors voting representation is equally weighted between designees
of CIT and Dell, with one independent director. Any losses generated by DFS as
determined under GAAP are allocated to CIT. DFS is not consolidated in CIT's
March 31, 2004 financial statements and is accounted for under the equity
method. At March 31, 2004, financing and leasing assets related to the DFS
program (included in the CIT Consolidated Balance Sheet) were $1.6 billion and
securitized assets included in managed assets were $2.4 billion. In addition to
the owned and securitized assets acquired from DFS, CIT's maximum exposure to
loss with respect to activities of the joint venture is approximately $202
million pretax at March 31, 2004, which is comprised of the investment in and
loans to the joint venture.
CIT also has a joint venture arrangement with Snap-on Incorporated
("Snap-on") that has a similar business purpose and model to the DFS arrangement
described above, including credit recourse on defaulted receivables. CIT
acquired this relationship through an acquisition during November 1999. The
agreement with Snap-on extends until January 2007. CIT and Snap-on have 50%
ownership interests, 50% board of directors representation and share income and
losses equally. The Snap-on joint venture is accounted for under the equity
method and is not consolidated in CIT's financial statements. As of March 31,
2004, the related financing and leasing assets and securitized assets were $1.1
billion and $0.1 billion, respectively. In addition to the owned and securitized
assets purchased from the Snap-on joint venture, CIT's maximum exposure to loss
with respect to activities of the joint venture is approximately $21 million
pretax at March 31, 2004, which is comprised of the investment in and loans to
the joint venture.
Since December 2000, CIT has been a joint venture partner with Canadian
Imperial Bank of Commerce ("CIBC") in an entity that is engaged in asset-based
lending in Canada. Both CIT and CIBC have a 50% ownership interest in the joint
venture and share income and losses equally. This entity is not consolidated in
CIT's financial statements and is accounted for under the equity method. As of
March 31, 2004, CIT's maximum exposure to loss with respect to activities of the
joint venture is $142 million pretax, which is comprised of the investment in
and loans to the joint venture.
CIT invests in various trusts, partnerships, and limited liability
corporations established in conjunction with structured financing transactions
of equipment, power and infrastructure projects. CIT's interests in certain of
these entities were acquired by CIT in November 1999, and others were
subsequently entered into in the normal course of business. At March 31, 2004,
other assets included $22 million of investments in non-consolidated entities
relating to such transactions that are accounted for under the equity or cost
methods. This investment is CIT's maximum exposure to loss with respect to these
interests as of March 31, 2004.
Certain shareholders of CIT provide investment management services in
conjunction with employee benefit plans. These services are provided in the
normal course of business.
11
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
Note 9 -- Post retirement and Other Benefit Plans
The following table discloses various components of pension expense ($ in
millions).
For the Quarters Ended March 31,
--------------------------------
2004 2003
---- ----
Retirement Plans
Service cost.................................. $ 4.5 $ 3.9
Interest cost................................. 3.9 3.6
Expected return on plan assets................ (4.1) (2.3)
Amortization of net loss...................... 0.7 0.9
----- -----
Net periodic benefit cost..................... $ 5.0 $ 6.1
===== =====
Postretirement Plans
Service cost.................................. $ 0.5 $ 0.4
Interest cost................................. 0.8 0.7
Amortization of net loss...................... 0.3 0.1
----- -----
Net periodic benefit cost..................... $ 1.6 $ 1.2
===== =====
Note 10 -- Commitments and Contingencies
In the normal course of meeting the financing needs of its customers, CIT
enters into various credit-related commitments, including standby letters of
credit, which obligate CIT to pay the beneficiary of the letter of credit in the
event that a CIT client to which the letter of credit was issued does not meet
its related obligation to the beneficiary. These financial instruments generate
fees and involve, to varying degrees, elements of credit risk in excess of the
amounts recognized in the consolidated balance sheets. To minimize potential
credit risk, CIT generally requires collateral and other credit-related terms
and conditions from the customer. At the time credit-related commitments are
granted, the fair value of the underlying collateral and guarantees typically
approximates or exceeds the contractual amount of the commitment. In the event a
customer defaults on the underlying transaction, the maximum potential loss will
generally be limited to the contractual amount outstanding less the value of all
underlying collateral and guarantees.
Guarantees are issued primarily in conjunction with CIT's factoring
product, whereby CIT provides the client with credit protection for its trade
receivables without actually purchasing the receivables. The trade terms are
generally sixty days or less. In the event that the customer is unable to pay
according to the contractual terms, then the receivables would be purchased. As
of March 31, 2004, there were no outstanding liabilities relating to these
credit-related commitments or guarantees, as amounts are generally billed and
collected on a monthly basis.
The accompanying table summarizes the contractual amounts of
credit-related commitments ($ in millions).
At
December 31,
At March 31, 2004 2003
------------------------------------ ------------
Due to Expire
---------------------
Within After Total Total
One Year One Year Outstanding Outstanding
-------- -------- ----------- -----------
Financing and leasing assets............................ $1,428.8 $5,486.0 $6,914.8 $5,934.3
Letters of credit and acceptances:
Standby letters of credit............................. 508.5 22.3 530.8 508.7
Other letters of credit............................... 627.2 72.8 700.0 694.0
Acceptances........................................... 11.2 -- 11.2 9.3
Guarantees.............................................. 97.5 12.4 109.9 133.2
Venture capital fund commitments........................ 3.4 113.7 117.1 124.2
12
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
As of March 31, 2004, commitments to purchase commercial aircraft from
both Airbus Industrie and The Boeing Company are detailed below ($ in millions).
Calendar Year: Amount Number
- -------------- ------ ------
2004............................................. $ 715.0 17
2005............................................. 918.0 18
2006............................................. 996.0 20
2007............................................. 260.0 5
-------- --
Total............................................ $2,889.0 60
======== ==
The order amounts exclude CIT's options to purchase additional aircraft.
Outstanding commitments to purchase equipment, other than the aircraft
detailed above, totaled $206.7 million at March 31, 2004. CIT is party to a
railcar sale-leaseback transaction under which it is obligated to pay a
remaining total of $465.7 million, approximately $28 million per year through
2010 and declining thereafter through 2024, which is more than offset by CIT's
re-lease of the assets, contingent on its ability to maintain railcar usage. In
conjunction with this sale-leaseback transaction, CIT has guaranteed all
obligations of the related consolidated lessee entity.
CIT has guaranteed the public and private debt securities of a number of
its wholly-owned, consolidated subsidiaries, including those disclosed in Note
14 -- Summarized Financial Information of Subsidiaries. In the normal course of
business, various consolidated CIT subsidiaries have entered into other credit
agreements and certain derivative transactions with financial institutions that
are guaranteed by CIT. These transactions are generally used by CIT's
subsidiaries outside of the U.S. to allow the local subsidiary to borrow funds
in local currencies. In addition, CIT has guaranteed, on behalf of certain
non-consolidated subsidiaries, $11.9 million of third party debt, which is not
reflected in the consolidated balance sheet at March 31, 2004.
Note 11 -- Legal Proceedings
On April 10, 2003, a putative class action lawsuit, asserting claims under
the Securities Act of 1933, was filed in the United States District Court for
the Southern District of New York against CIT, its Chief Executive Officer and
its Chief Financial Officer. The lawsuit contained allegations that the
registration statement and prospectus prepared and filed in connection with
CIT's 2002 IPO were materially false and misleading, principally with respect to
the adequacy of CIT's telecommunications-related loan loss reserves at the time.
The lawsuit purported to have been brought on behalf of all those who purchased
CIT common stock in or traceable to the IPO, and sought, among other relief,
unspecified damages or rescission for those alleged class members who still hold
CIT stock and unspecified damages for other alleged class members. On June 25,
2003, by order of the United States District Court, the lawsuit was consolidated
with five other substantially similar suits, all of which had been filed after
April 10, 2003 and one of which named as defendants some of the underwriters in
the IPO and certain former directors of CIT. Glickenhaus & Co., a privately held
investment firm, has been named lead plaintiff in the consolidated action.
On September 16, 2003, an amended and consolidated complaint was filed.
That complaint contains substantially the same allegations as the original
complaints. In addition to the foregoing, two similar suits were brought by
certain shareholders on behalf of CIT against CIT and some of its present and
former directors under Delaware corporate law.
CIT believes that the allegations in each of these actions are without
merit and that its disclosures were proper, complete and accurate. CIT intends
to vigorously defend itself in these actions.
In addition, there are various legal proceedings pending against CIT,
which have arisen in the ordinary course of business. Management believes that
the aggregate liabilities, if any, arising from such actions, including the
class action suit above, will not have a material adverse effect on the
consolidated financial position, results of operations or liquidity of CIT.
13
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
Note 12 -- Severance and Facility Restructuring Reserves
The following table summarizes purchase accounting liabilities (pre-tax)
related to severance of employees and closing facilities that were recorded in
connection with the acquisition of CIT by Tyco, as well as utilization during
the current quarter ($ in millions):
Severance Facilities
-------------------- ---------------------
Number of Number of Total
Employees Reserve Facilities Reserve Reserves
--------- ------- ---------- ------- --------
Balance December 31, 2003......................... 43 $ 2.3 12 $ 7.2 $ 9.5
Utilization....................................... (12) (0.8) (2) (4.2) (5.0)
--- ----- -- ----- -----
Balance at March 31, 2004......................... 31 $ 1.5 10 $ 3.0 $ 4.5
== ===== == ===== =====
The reserves remaining at March 31, 2004 relate largely to the
restructuring of the European operations. Severance reserves include amounts
payable within the next year to individuals who chose to receive payments on a
periodic basis. The facility reserves relate primarily to shortfalls in sublease
transactions and will be utilized over the remaining lease terms, generally
within 6 years.
Note 13 -- Goodwill and Intangible Assets
Goodwill and intangible assets totaled $485.5 million and $487.7 million
at March 31, 2004 and December 31, 2003, respectively. The Company periodically
reviews and evaluates its goodwill and other intangible assets for potential
impairment. Effective October 1, 2001, the Company adopted SFAS No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), under which goodwill is no
longer amortized but instead is assessed for impairment at least annually. As
part of the adoption, the Company allocated its existing goodwill to each of its
reporting units as of October 1, 2001. Under the transition provisions of SFAS
142, there was no goodwill impairment as of October 1, 2001.
The most recent goodwill impairment analysis was performed during the
fourth quarter of 2003, which indicated that the fair value of goodwill was in
excess of the carrying value. There were no changes in the carrying values of
goodwill during the quarter ended March 31, 2004. The following table summarizes
the remaining goodwill balance by segment ($ in millions):
Specialty Commercial
Finance Finance Total
--------- ---------- -----
Balance as of March 31, 2004............ $12.7 $370.4 $383.1
Other intangible assets, net, comprised primarily of acquired customer
relationships, proprietary computer software and related transaction processes,
totaled $102.4 million and $104.6 million, at March 31, 2004 and December 31,
2003, and are included in Goodwill and Intangible Assets in the Consolidated
Balance Sheets. Other intangible assets are being amortized in relation to the
related revenue streams over their respective lives that range from five to
twenty years. Amortization expense totaled $2.2 million for the quarter ended
March 31, 2004 versus $1.1 million for the quarter ended March 31, 2003. The
projected amortization for the years ended December 31, 2004 through December
31, 2008 are: $9.1 million for 2004 and 2005; $8.0 million for 2006; and $4.7
million for 2007 and 2008.
Note 14 -- Summarized Financial Information of Subsidiaries
The following presents condensed consolidating financial information for
CIT Holdings LLC and Capita Corporation (formerly AT&T Capital Corporation). CIT
has guaranteed on a full and unconditional basis the existing debt securities
that were registered under the Securities Act of 1933 and certain other
indebtedness of these subsidiaries. CIT has not presented related financial
statements or other information for these subsidiaries on a stand-alone basis ($
in millions).
14
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
CIT
CONSOLIDATING CIT Capita Holdings Other
BALANCE SHEETS Group Inc. Corporation LLC Subsidiaries Eliminations Total
-------------- ---------- ----------- -------- ------------ ------------ -----
March 31, 2004
ASSETS
Net finance receivables.............. $ 1,203.3 $3,523.0 $1,300.4 $25,524.0 $ -- $31,550.7
Operating lease equipment, net....... -- 586.9 117.4 6,871.9 -- 7,576.2
Finance receivables held for sale.... -- 74.6 77.0 854.6 -- 1,006.2
Cash and cash equivalents............ 633.2 472.6 256.3 (5.6) -- 1,356.5
Other assets......................... 7,648.8 310.4 349.5 1,946.8 (5,492.7) 4,762.8
---------- -------- -------- --------- --------- ---------
Total Assets...................... $ 9,485.3 $4,967.5 $2,100.6 $35,191.7 $(5,492.7) $46,252.4
========== ======== ======== ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt................................. $ 31,879.4 $ 536.3 $1,433.4 $ 226.7 $ -- $34,075.8
Credit balances of
factoring clients................. -- -- -- 3,619.4 -- 3,619.4
Accrued liabilities and payables..... (27,886.8) 3,829.2 (555.6) 27,639.1 -- 3,025.9
---------- -------- -------- --------- --------- ---------
Total Liabilities................. 3,992.6 4,365.5 877.8 31,485.2 -- 40,721.1
Minority interest.................... -- -- -- 38.6 -- 38.6
Total Stockholders' Equity........... 5,492.7 602.0 1,222.8 3,667.9 (5,492.7) 5,492.7
---------- -------- -------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity.............. $ 9,485.3 $4,967.5 $2,100.6 $35,191.7 $(5,492.7) $46,252.4
========== ======== ======== ========= ========= =========
December 31, 2003
ASSETS
Net finance receivables.............. $ 1,581.3 $3,755.4 $1,208.8 $24,111.0 $ -- $30,656.5
Operating lease equipment, net....... -- 580.3 146.4 6,888.8 -- 7,615.5
Finance receivables held for sale.... -- 80.0 163.8 674.5 -- 918.3
Cash and cash equivalents............ 1,479.9 410.6 227.5 (144.3) -- 1,973.7
Other assets......................... 8,308.2 198.1 174.1 1,892.6 (5,394.2) 5,178.8
---------- -------- -------- --------- --------- ---------
Total Assets...................... $ 11,369.4 $5,024.4 $1,920.6 $33,422.6 $(5,394.2) $46,342.8
========== ======== ======== ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt................................. $ 30,656.7 $1,003.5 $1,407.7 $ 600.7 $ -- $33,668.6
Credit balances of
factoring clients................. -- -- -- 3,894.6 -- 3,894.6
Accrued liabilities and payables..... (24,681.5) 3,412.0 (701.2) 25,317.1 -- 3,346.4
---------- -------- -------- --------- --------- ---------
Total Liabilities................. 5,975.2 4,415.5 706.5 29,812.4 -- 40,909.6
Minority interest.................... -- -- -- 39.0 -- 39.0
Total Stockholders' Equity........... 5,394.2 608.9 1,214.1 3,571.2 (5,394.2) 5,394.2
---------- -------- -------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity.............. $ 11,369.4 $5,024.4 $1,920.6 $33,422.6 $(5,394.2) $46,342.8
========== ======== ======== ========= ========= =========
15
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
CIT
CONSOLIDATING CIT Capita Holdings Other
STATEMENTS OF INCOME Group Inc. Corporation LLC Subsidiaries Eliminations Total
-------------------- ---------- ----------- -------- ------------ ------------ -----
Quarter Ended
March 31, 2004
Finance income....................... $ 9.5 $184.4 $47.6 $661.4 $ -- $902.9
Interest expense..................... (22.9) 54.1 3.9 262.9 -- 298.0
------ ------ ----- ------ ------- ------
Net finance income................... 32.4 130.3 43.7 398.5 -- 604.9
Depreciation on operating
lease equipment................... -- 84.6 11.1 138.8 -- 234.5
------ ------ ----- ------ ------- ------
Net finance margin................... 32.4 45.7 32.6 259.7 -- 370.4
Provision for credit losses.......... 4.2 10.7 2.6 68.1 -- 85.6
------ ------ ----- ------ ------- ------
Net finance margin, after provision
for credit losses................. 28.2 35.0 30.0 191.6 -- 284.8
Equity in net income
of subsidiaries................... 155.6 -- -- -- (155.6) --
Other revenue........................ 0.6 31.3 32.6 165.9 -- 230.4
Gain on venture capital
investments....................... -- -- -- 0.7 -- 0.7
------ ------ ----- ------ ------- ------
Operating margin..................... 184.4 66.3 62.6 358.2 (155.6) 515.9
Operating expenses................... 18.6 36.7 23.2 168.8 -- 247.3
Gain on redemption of debt........... 41.8 -- -- -- -- 41.8
------ ------ ----- ------ ------- ------
Income (loss) before provision
for income taxes.................. 207.6 29.6 39.4 189.4 (155.6) 310.4
Provision for income taxes........... 18.3 11.5 15.4 75.9 -- 121.1
------ ------ ----- ------ ------- ------
Net income (loss).................... $189.3 $ 18.1 $24.0 $113.5 $(155.6) $189.3
====== ====== ===== ====== ======= ======
Quarter Ended
March 31, 2003
Finance income....................... $ 29.7 $202.6 $48.5 $658.4 $ -- $939.2
Interest expense..................... (2.1) 88.9 (2.7) 270.6 -- 354.7
------ ------ ----- ------ ------- ------
Net finance income................... 31.8 113.7 51.2 387.8 -- 584.5
Depreciation on operating
lease equipment................... -- 98.2 20.1 160.5 -- 278.8
------ ------ ----- ------ ------- ------
Net finance margin................... 31.8 15.5 31.1 227.3 -- 305.7
Provision for credit losses.......... 12.7 13.3 2.7 74.3 -- 103.0
------ ------ ----- ------ ------- ------
Net finance margin, after
provision for credit losses....... 19.1 2.2 28.4 153.0 -- 202.7
Equity in net income of
subsidiaries...................... 107.7 -- -- -- (107.7) --
Other revenue........................ 0.6 34.0 21.1 184.2 -- 239.9
Loss on venture capital
investments....................... -- -- -- (4.4) -- (4.4)
------ ------ ----- ------ ------- ------
Operating margin..................... 127.4 36.2 49.5 332.8 (107.7) 438.2
Operating expenses................... (1.9) 40.1 40.0 147.4 -- 225.6
------ ------ ----- ------ ------- ------
Income (loss) before provision for
income taxes...................... 129.3 (3.9) 9.5 185.4 (107.7) 212.6
Provision (benefit) for income taxes. 2.3 (1.5) 3.7 78.4 -- 82.9
Dividends on preferred capital
securities, after tax............. -- -- -- (2.7) -- (2.7)
------ ------ ----- ------ ------- ------
Net income (loss).................... $127.0 $ (2.4) $ 5.8 $104.3 $(107.7) $127.0
====== ====== ===== ====== ======= ======
16
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
CIT
CONSOLIDATING STATEMENT CIT Capita Holdings Other
OF CASH FLOWS Group Inc. Corporation LLC Subsidiaries Eliminations Total
----------------------- ---------- ----------- -------- ------------ ------------ -----
Quarter Ended
March 31, 2004
Cash Flows From
Operating Activities:
Net cash flows provided by
(used for) operations............. $ 65.0 $ (83.3) $(141.1) $ 604.1 $ -- $ 444.7
--------- ------- ------- --------- --------- ---------
Cash Flows From
Investing Activities:
Net (increase) decrease in financing
and leasing assets................ 374.0 154.4 18.1 (1,949.2) -- (1,402.7)
Decrease in inter-company loans
and investments................... (2,508.4) -- -- -- 2,508.4
Other................................ -- -- -- (1.1) -- (1.1)
--------- ------- ------- --------- --------- ---------
Net cash flows (used for) provided
by investing activities........... (2,134.4) 154.4 18.1 (1,950.3) 2,508.4 (1,403.8)
--------- ------- ------- --------- --------- ---------
Cash Flows From
Financing Activities:
Net increase (decrease) in debt...... 1,222.7 (467.2) 25.7 (403.3) -- 377.9
Inter-company financing.............. -- 458.1 126.1 1,924.2 (2,508.4) --
Cash dividends paid.................. -- -- -- (28.0) -- (28.0)
Other................................ -- -- -- (8.0) -- (8.0)
--------- ------- ------- --------- --------- ---------
Net cash flows provided by
(used for) financing activities... 1,222.7 (9.1) 151.8 1,484.9 (2,508.4) 341.9
--------- ------- ------- --------- --------- ---------
Net (decrease) increase in cash
and cash equivalents.............. (846.7) 62.0 28.8 138.7 -- (617.2)
Cash and cash equivalents,
beginning of period............... 1,479.9 410.6 227.5 (144.3) -- 1,973.7
--------- ------- ------- --------- --------- ---------
Cash and cash equivalents,
end of period..................... $ 633.2 $ 472.6 $ 256.3 $ (5.6) $ -- $ 1,356.5
========= ======= ======= ========= ========= =========
17
CIT GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
CIT
CONSOLIDATING STATEMENT CIT Capita Holdings Other
OF CASH FLOWS Group Inc. Corporation LLC Subsidiaries Eliminations Total
----------------------- ---------- ----------- -------- ------------ ------------ -----
Quarter Ended
March 31, 2003
Cash Flows From
Operating Activities:
Net cash flows provided
by (used for) operations.......... $ (534.5) $ 466.3 $ (77.4) $ 644.3 $ -- $ 498.7
-------- ------- ------- --------- ------- ---------
Cash Flows From
Investing Activities:
Net decrease in financing and
leasing assets.................... (2.2) (12.6) (42.1) (1,228.5) -- (1,285.4)
Decrease in inter-company loans
and investments................... (430.9) -- -- -- 430.9 --
Other................................ -- -- -- (41.4) -- (41.4)
-------- ------- ------- --------- ------- ---------
Net cash flows (used for)
investing activities.............. (433.1) (12.6) (42.1) (1,269.9) 430.9 (1,326.8)
-------- ------- ------- --------- ------- ---------
Cash Flows From
Financing Activities:
Net increase (decrease) in debt...... 1,073.3 (16.4) (249.0) 34.4 -- 842.3
Inter-company financing.............. -- (379.9) 146.9 663.9 (430.9) --
Cash dividends paid.................. -- -- -- (25.4) -- (25.4)
-------- ------- ------- --------- ------- ---------
Net cash flows provided by
(used for) financing activities... 1,073.3 (396.3) (102.1) 672.9 (430.9) 816.9
-------- ------- ------- --------- ------- ---------
Net (decrease) increase in cash
and cash equivalents.............. 105.7 57.4 (221.6) 47.3 -- (11.2)
Cash and cash equivalents,
beginning of period............... 1,310.9 231.1 293.7 200.9 -- 2,036.6
-------- ------- ------- --------- ------- ---------
Cash and cash equivalents,
end of period..................... $1,416.6 $ 288.5 $ 72.1 $ 248.2 $ -- $ 2,025.4
======== ======= ======= ========= ======= =========
18