Exhibit 99.1
[CIT Logo]
CIT ANNOUNCES DILUTED EPS OF $0.86 FOR THE QUARTER, UP 25% FROM LAST YEAR
o Return on tangible equity at 14.1%, up from 12.2% a year ago
o New business volume up 10% from prior year
o Managed assets up $2.6 billion, or 5%, from previous quarter
o Credit quality strengthens further
o Risk-adjusted margin at 3.5% target
NEW YORK, October 21, 2004 - CIT Group Inc. (NYSE: CIT) today reported net
income of $183.9 million for the third quarter, an increase from $147.8 million
last year. Diluted earnings per share were $0.86 for the quarter, up 25% from
last year. Return on tangible equity for the quarter increased to 14.1% from
12.2% last year. Net income for the nine months ended September 30, 2004 totaled
$549.8 million (diluted EPS $2.56), up from $411.7 million (diluted EPS $1.94)
last year, an increase of 34%. Current year results included a $25.5 million,
net of tax, ($0.12 EPS) gain on the redemption of debt in the first quarter.
Commenting on the company's performance, Jeffrey M. Peek, Chief Executive
Officer and President, said: "This was a strong quarter for CIT with gratifying
results for our shareholders and we continue to build momentum with the third
quarter performance. Reflecting the brisk business economy, we saw strong asset
growth across all the business segments, higher new business volumes in three of
our four segments and solid improvement in asset quality. In addition,
risk-adjusted margin of 3.5% is now firmly within the target set at the time of
our IPO."
"As a leading commercial finance company, we remain focused on building a
world-class finance and leasing organization. We continue to recruit talented
and experienced executives and sales personnel throughout the organization as we
work to deliver customer-focused products and services. The recent appointment
of Rick Wolfert as Vice Chairman, Commercial Finance, will enhance our ability
to organize our Capital Finance, Equipment Finance, Business Credit and
Commercial Services businesses around industry sectors and markets important to
CIT's future growth. Rick joins Tom Hallman, Vice Chairman, Specialty Finance,
in running the day-to-day business operations."
"Our latest strategic acquisition, CitiCapital's vendor finance lease
business in Western Europe, was closed ahead of schedule. This transaction is an
excellent fit for us because it adds scale to our European portfolio,
diversifies our customer and dealer base in vendor finance and accelerates our
international expansion."
1
Financial Highlights:
Portfolio and Managed Assets
o Total financing and leasing portfolio assets grew to $44.4 billion at
September 30, 2004, up 7% from June 30, 2004 and up 13% from last year.
The growth included approximately $700 million of financing and leasing
assets relating to the CitiCapital European vendor finance leasing
business acquisition, growth in both factoring and asset-based lending
within Commercial Finance and home equity lending within Specialty
Finance.
o Managed assets were $52.4 billion at September 30, 2004, up 5% from June
30, 2004 and up 6% from last September. The increase in managed assets
from last quarter reflects the above-mentioned activity, partially offset
by a decrease in securitized receivables and the sale of approximately
$105 million in liquidating recreational vehicle and marine assets.
o Securitized receivables (receivables we have previously securitized with
servicing retained) declined to $8.0 billion from $8.4 billion last
quarter and $10.1 billion last year, principally due to our continued
strategy of funding home equity receivables on balance sheet.
o Liquidating portfolios were $675 million versus $814 million at June 30,
2004.
o Origination volume for the quarter and the nine months, excluding
factoring, increased 10% (to $5.9 billion) and 11% (to $16.5 billion) from
the prior year. Volume was strong in the vendor and home equity programs
of Specialty Finance, and in the Equipment Finance segment.
Net Finance and Risk Adjusted Margin
o Net finance margin was 4.10% of average earning assets ("AEA"), an
improvement of 38 basis points from the prior year quarter, principally
fueled by lower borrowing costs, as interest expense declined to 3.22% of
AEA from 3.70% during the prior year quarter.
o Operating lease margins, at 6.14% of average operating leases, were up
slightly over last year, in part reflecting the positive impact of the
technology portfolio purchase in the second quarter of 2004.
o Risk-adjusted margin (net finance margin after provision for credit
losses) was 3.49%, up 69 basis points from the prior year quarter, as
lower charge-offs added to the margin improvement.
Credit Quality
o Credit performance continued to improve with lower charge-offs and
declines in delinquencies and non-performing assets for the eighth
consecutive quarter.
o Total 60+ day owned delinquencies were $573 million (1.66% of finance
receivables) at September 30, 2004, compared to $571 million (1.79%) last
quarter and $863 million (2.85%) last year. The improvement was across
virtually all segments, offset by an increase in the Capital Finance
regional aerospace portfolio.
o Managed 60+ day delinquencies decreased, ending the current quarter at
$850 million (1.92% of managed financial assets), down from $869 million
(2.08%) last quarter and $1.222 billion (2.95%) a year ago.
o Non-performing assets (non-accrual loans plus repossessed assets) declined
to $529 million (1.53% of finance receivables) from $562 million (1.77%)
last quarter and $867 million (2.86%) last year, due to improvements in
all segments.
o Charge-offs for the quarter fell to 0.88% of average finance receivables
from 1.23% last year as most business segments improved. Prior to
liquidating and telecommunications charge-offs, write-offs were 0.73% for
the quarter compared to 0.72% last quarter and 0.98% last year.
2
o The reserve for credit losses increased in amount during the quarter due
to portfolio growth, but declined in percentage due to charge-offs against
the specific telecommunications reserve and continued improvement in
credit metrics. Total reserves rose to $637.9 million (1.85% of finance
receivables), compared to $621.0 million (1.95%) at June 30, 2004.
o Telecommunication charge-offs were $11.2 million for the quarter, compared
to $15.9 million last quarter, and telecommunications non-performing
accounts were $24.5 million, compared to $48.5 million last quarter.
Other Revenue
o Other revenue totaled $212.5 million, down from $232.0 million for the
prior year due to reduced fee income, which reflected reduced structured
transaction volume, as well as lower gains on securitized assets. A lower
level of syndication activity drove the decline in other revenue from last
quarter. Factoring commissions continue to outpace the prior year
benefiting from the late 2003 acquisitions.
o Securitization volume was $0.8 billion for the current year quarter
compared with $1.3 billion last year, and as a result, securitization
gains dropped to $9.9 million, 3.3% of pretax income for 2004, from $18.3
million, 7.5% in 2003.
Salaries and General Operating Expenses
o Total operating expenses were $256.7 million, up from $230.3 million a
year ago. The increase was primarily the result of higher incentive-based
compensation, marketing, business development and compliance costs.
Salaries and general operating expenses declined $3.6 million from last
quarter as increased business development, compliance, and other costs
largely offset a $10.6 million reduction in employee related costs.
o The efficiency ratio was 41.5% compared to 42.3% last quarter.
o Expenses as a percentage of average managed assets were 2.18%, versus
2.23% for the prior quarter.
o Headcount totaled approximately 5,700, down from 5,780 at September 30,
2003, reflecting the sale of the test equipment rental business.
Capitalization and Leverage
o Internal capital generation remained strong, with the ratio of tangible
equity to managed assets at 10.57%, compared to 10.89% at June 30, 2004
and 10.34% last year. The European vendor finance acquisition increased
goodwill and acquired intangibles by approximately $80 million and
treasury stock increased to $81 million.
o On October 20, 2004, our Board of Directors approved a continuation of the
common stock repurchase program in connection with our employee stock
plans. The increase is for an additional three million shares.
Profitability
o The return on average tangible equity was 14.1% for the quarter and 14.3%
year to date (13.6% excluding the gain on debt), compared to 12.2% and
11.7% for the prior year periods.
o Return on average earning assets improved to 1.88% for the quarter from
1.64% last year and to 1.92% for the nine months from 1.54% last year.
o The return on average managed assets improved to 1.56% for the quarter
from 1.28% last year and to 1.57% for the nine months from 1.20% last
year.
3
Specialty Finance
o Owned assets increased $1.6 billion from June due to the European
acquisition and $649 million in home equity growth.
o Operating margin improved due to higher asset levels and lower funding
costs, with improved profitability most notably in the international and
home equity businesses.
o The increase in charge-offs for Specialty Finance - Commercial was due
largely to charge-offs taken with respect to leases to customers of
NorVergence, Inc., a bankrupt vendor currently subject to regulatory
investigations. At September 30, 2004, after taking into account
charge-offs and loan loss reserves, the remaining outstandings of
NorVergence customers is approximately $6.0 million.
o During the quarter, the major vendor unit finalized an extension and
modification of its U.S. vendor financing joint venture with Dell Inc.,
known as Dell Financial Services. The new agreement extends the joint
venture agreement for another five years through January 2010.
o The SBA business was recognized as the #1 SBA lender in the country - for
the fifth straight year. Profitability is strong and credit quality is
high in this portfolio.
o The International unit is well under way in integrating the European
vendor finance leasing unit, and contributions were strong in Europe and
Asia.
o Aided by routine bulk acquisitions, growth and profitability was strong in
the home equity unit.
Commercial Finance
o Asset growth was $1.2 billion for the quarter, including $955 million in
factoring receivables.
o Profitability improved on increased factoring activity resulting from the
acquisitions in the second half of 2003 and the continuation of strong
earnings in Business Credit.
o Business Credit volume remained ahead of 2003, although asset growth was
dampened by the effects of repayments due to increased liquidity in the
market place.
o Charge-offs were lower in both asset-based lending and factoring.
Equipment Finance
o Profitability improved on lower charge-offs, stronger margins and higher
equipment gains, as business performance continued to improve in both the
U.S. and Canada.
o New business volume increased primarily in the U.S., reflecting
improvement in the construction, industrial and corporate aircraft
sectors.
Capital Finance
o Earnings improved from prior year, though results reflect continued
compression in aerospace returns. Results reflected lower prepayment and
syndication fees in relation to the prior quarter.
o New business volume was down primarily due to lower aircraft delivery
fundings. All remaining 2004 aircraft deliveries have been placed, while
14 of 18 of the 2005 deliveries have been placed.
o At September 30, 2004, three commercial aircraft (all of which are covered
by signed letters of intent) were off lease.
4
Conference Call and Webcast:
We will discuss this quarter's results, as well as ongoing strategy, on a
conference call today at 11:00 am (EDT). 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 (EDT) October 27, 2004, by dialing 800-642-1687 for U.S. and
Canadian callers or 706-645-9291 for international callers with the pass-code
1133893, or at the following website: 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 approximately $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, factoring,
equipment and transportation financing, Small Business Administration loans, and
asset-based lending. CIT, with its principal offices in Livingston, New Jersey
and New York City, has approximately 5,700 employees in locations throughout
North America, Europe, Latin and South America, and the Pacific Rim. For more
information, visit www.cit.com.
Forward-Looking Statements:
This release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. All forward-looking
statements (including statements regarding future financial and operating
results) involve risks, uncertainties and contingencies, many of which are
beyond CIT's control, which may cause actual results, performance, or
achievements to differ materially from anticipated results, performance, or
achievements. All statements contained in this release that are not clearly
historical in nature are forward-looking, and the words "anticipate," "believe,"
"expect," "estimate," "plan," and similar expressions are generally intended to
identify forward-looking statements. Economic, business, funding market,
competitive and/or regulatory factors, among others, affecting CIT's businesses
are examples of factors that could cause actual results to differ materially
from those described in the forward-looking statements. More detailed
information about these factors are described in CIT's filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K for
the year ended December 31, 2003. 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 and on our website at http://ir.cit.com.
###
For Information: Valerie L. Gerard - Senior Vice President - Investor Relations
(973) 422-3284
or
Chris Hardwick - Vice President - Director, External
Communications
(973) 597-2095
5
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
For the Three and Nine Month Periods Ended September 30, 2004 and 2003
(dollars in millions, except per share data)
Quarters Ended Nine Months Ended
----------------------------------------------- ------------------------------
September 30, June 30, September 30, September 30, September 30,
2004 2004 2003 2004 2003
------------- ----------- ------------- ------------- -------------
Finance income $ 963.1 $ 915.2 $ 921.2 $ 2,781.2 $ 2,803.6
Interest expense 315.4 300.0 333.7 913.4 1,026.2
----------- ----------- ----------- ----------- -----------
Net finance income 647.7 615.2 587.5 1,867.8 1,777.4
Depreciation on operating lease
equipment 245.7 236.3 252.4 716.5 804.1
----------- ----------- ----------- ----------- -----------
Net finance margin 402.0 378.9 335.1 1,151.3 973.3
Provision for credit losses 60.2 65.7 82.9 211.5 286.5
----------- ----------- ----------- ----------- -----------
Net finance margin after provision for
credit losses 341.8 313.2 252.2 939.8 686.8
Other revenue(1) 212.5 233.5 232.0 676.4 701.6
Gain (loss) on venture capital
investments 4.2 3.0 (11.3) 7.9 (27.8)
----------- ----------- ----------- ----------- -----------
Operating margin 558.5 549.7 472.9 1,624.1 1,360.6
Salaries and general operating expenses 256.7 260.3 230.3 764.3 676.4
Gain on redemption of debt -- -- -- 41.8 --
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes 301.8 289.4 242.6 901.6 684.2
Provision for income taxes (117.7) (112.8) (94.6) (351.6) (266.8)
Minority interest, after tax (0.2) -- (0.2) (0.2) (0.3)
Dividends on preferred capital securities,
after tax -- -- -- -- (5.4)
----------- ----------- ----------- ----------- -----------
Net income $ 183.9 $ 176.6 $ 147.8 $ 549.8 $ 411.7
=========== =========== =========== =========== ===========
Earnings per share
Basic earnings per share $ 0.87 $ 0.83 $ 0.70 $ 2.60 $ 1.95
Diluted earnings per share $ 0.86 $ 0.82 $ 0.69 $ 2.56 $ 1.94
Number of shares -basic (thousands) 210,489 211,532 211,735 211,286 211,633
Number of shares -diluted (thousands) 214,179 215,359 213,529 215,116 212,498
Certain prior period balances have been reclassified to conform to current
period presentation; debt-related costs totaling $7.2 million and $21.9 million
for the quarter and nine months ended September 30, 2003, have been reclassified
to interest expense from operating expenses.
Quarters Ended Nine Months Ended
----------------------------------------------- ------------------------------
September 30, June 30, September 30, September 30, September 30,
(1)Other Revenue 2004 2004 2003 2004 2003
------------- ----------- ------------- ------------- -------------
Fees and other income $ 119.6 $ 141.0 $ 151.5 $ 387.3 $ 430.8
Factoring commissions 59.5 53.5 47.6 168.0 139.3
Gains on sales of leasing equipment 23.5 27.1 14.6 77.9 48.7
Gains on securitizations 9.9 11.9 18.3 43.2 82.8
----------- ----------- ----------- ----------- -----------
Total other revenue $ 212.5 $ 233.5 $ 232.0 $ 676.4 $ 701.6
=========== =========== =========== =========== ===========
Fees and other income include: servicing fees, structuring and advisory fees,
syndication fees and gains from other asset and receivable sales. Prior period
balances have been conformed to current year presentation to show venture
capital gains and losses separately.
6
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
September 30, December 31,
2004 2003
------------- -------------
ASSETS
Financing and leasing assets:
Finance receivables $ 34,542.8 $ 31,300.2
Reserve for credit losses (637.9) (643.7)
------------- -------------
Net finance receivables 33,904.9 30,656.5
Operating lease equipment, net 7,932.9 7,615.5
Finance receivables held for sale 1,757.3 918.3
Cash and cash equivalents 2,160.1 1,973.7
Retained interests in securitizations and other investments 1,188.4 1,380.8
Goodwill and intangible assets 594.4 487.7
Other assets (1) 2,475.7 3,310.3
------------- -------------
Total Assets $ 50,013.7 $ 46,342.8
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper $ 4,496.5 $ 4,173.9
Variable-rate senior notes 11,507.7 9,408.4
Fixed-rate senior notes 21,022.2 19,830.8
Preferred capital securities 254.2 255.5
------------- -------------
Total debt 37,280.6 33,668.6
Credit balances of factoring clients 3,929.9 3,894.6
Accrued liabilities and payables 2,925.5 3,346.4
------------- -------------
Total Liabilities 44,136.0 40,909.6
Minority interest 40.7 39.0
Stockholders' Equity:
Common stock 2.1 2.1
Paid-in capital 10,672.2 10,677.0
Accumulated deficit (4,675.6) (5,141.8)
Accumulated other comprehensive loss (81.1) (141.6)
Less: Treasury stock, at cost (80.6) (1.5)
------------- -------------
Total Stockholders' Equity 5,837.0 5,394.2
------------- -------------
Total Liabilities and Stockholders' Equity $ 50,013.7 $ 46,342.8
============= =============
(1) Other Assets primarily include the following at September 30, 2004:
$0.7 billion of investments in and receivables from joint ventures and
non-consolidated subsidiaries, $0.4 billion of deposits on flight equipment,
$0.3 billion of accrued interest and receivables from derivative counterparties,
$0.2 billion of equity investments, $0.1 billion of repossessed and off-lease
equipment and $0.1 billion of prepaid expenses. The remaining balance includes
furniture and fixtures, miscellaneous receivables and other assets.
7
CIT GROUP INC. AND SUBSIDIARIES
OWNED AND MANAGED ASSET COMPOSITION
(dollars in millions)
September 30, June 30, September 30,
2004 2004 2003
------------- ----------- -------------
Specialty Finance Segment
Commercial
Finance receivables $ 8,166.3 $ 7,441.6 $ 6,839.1
Operating lease equipment, net 1,057.0 1,084.0 1,043.4
Finance receivables held for sale 1,447.9 1,053.0 754.5
----------- ----------- -----------
Owned assets 10,671.2 9,578.6 8,637.0
Finance receivables securitized
and managed by CIT 3,251.1 3,480.2 3,876.8
----------- ----------- -----------
Managed assets 13,922.3 13,058.8 12,513.8
----------- ----------- -----------
Consumer
Finance receivables - home equity 3,996.4 3,377.2 2,345.9
Finance receivables - other 840.2 857.8 994.0
Finance receivables held for sale 209.0 265.1 150.0
----------- ----------- -----------
Owned assets 5,045.6 4,500.1 3,489.9
Home equity finance receivables
securitized and managed by CIT 1,352.6 1,487.9 2,064.9
Other finance receivables securitized
and managed by CIT 466.5 528.0 694.8
----------- ----------- -----------
Managed assets 6,864.7 6,516.0 6,249.6
----------- ----------- -----------
Commercial Finance Segment
Commercial Services
Finance receivables 6,764.0 5,808.6 5,697.8
Business Credit
Finance receivables 5,699.6 5,409.1 5,494.3
----------- ----------- -----------
Owned assets 12,463.6 11,217.7 11,192.1
----------- ----------- -----------
Equipment Finance Segment
Finance receivables 6,343.2 6,285.3 6,157.5
Operating lease equipment, net 401.0 380.6 461.7
Finance receivables held for sale 100.4 181.6 113.4
----------- ----------- -----------
Owned assets 6,844.6 6,847.5 6,732.6
Finance receivables securitized and
managed by CIT 2,924.7 2,904.9 3,504.5
----------- ----------- -----------
Managed assets 9,769.3 9,752.4 10,237.1
----------- ----------- -----------
Capital Finance Segment
Finance receivables 2,733.1 2,649.0 2,814.0
Operating lease equipment, net 6,474.9 6,374.2 5,980.2
Finance receivables held for sale -- 95.5 --
----------- ----------- -----------
Owned assets 9,208.0 9,118.7 8,794.2
----------- ----------- -----------
Other - Equity Investments 186.2 190.9 313.9
----------- ----------- -----------
Total
Finance receivables $ 34,542.8 $ 31,828.6 $ 30,342.6
Operating lease equipment, net 7,932.9 7,838.8 7,485.3
Finance receivables held for sale 1,757.3 1,595.2 1,017.9
----------- ----------- -----------
Financing and leasing assets excl.
equity investments 44,233.0 41,262.6 38,845.8
Equity investments (included in other
assets) 186.2 190.9 313.9
----------- ----------- -----------
Owned assets 44,419.2 41,453.5 39,159.7
Finance receivables securitized and
managed by CIT 7,994.9 8,401.0 10,141.0
----------- ----------- -----------
Managed assets $ 52,414.1 $ 49,854.5 $ 49,300.7
=========== =========== ===========
During the June 2004 quarter, assets of the former Structured Finance segment
were transferred to Capital Finance and Business Credit. All historical balances
have been restated to reflect this realignment.
8
CIT GROUP INC. AND SUBSIDIARIES
SEGMENT DATA
(dollars in millions)
Specialty Commercial Equipment Capital
Finance Finance Finance Finance
---------- --------- --------- ---------
Quarter Ended September 30, 2004
Operating margin $ 238.7 $ 173.4 $ 54.6 $ 71.1
Income before provision for income tax 136.5 126.1 31.3 39.0
Income taxes 52.0 47.8 12.2 13.5
Net income (loss) 84.1 78.3 19.1 25.8
Return on AEA 2.31% 3.74% 1.11% 1.12%
New business volume $ 3,823.4 $ 671.8 $ 1,115.1 $ 357.2
Quarter Ended September 30, 2003
Operating margin $ 218.7 $ 142.0 $ 35.8 $ 63.0
Income before provision for income tax 117.3 96.3 14.8 40.4
Income taxes 45.7 37.5 5.8 15.8
Net income (loss) 71.6 58.8 9.0 24.4
Return on AEA 2.34% 2.94% 0.53% 1.11%
New business volume $ 3,445.0 $ 726.0 $ 898.0 $ 334.0
Quarter Ended June 30, 2004
Operating margin $ 230.3 $ 164.5 $ 52.7 $ 80.1
Income before provision for income tax 124.6 114.7 30.0 49.3
Income taxes 42.9 43.4 11.7 18.2
Net income (loss) 81.7 71.2 18.3 31.2
Return on AEA 2.43% 3.47% 1.06% 1.36%
New business volume $ 3,278.3 $ 778.4 $ 1,049.2 $ 487.5
Nine Months Ended
September 30, 2004
Operating margin $ 697.1 $ 494.9 $ 154.6 $ 211.3
Income before provision for income tax 384.0 350.2 86.3 122.7
Income taxes 139.6 132.6 33.7 44.4
Net income (loss) 244.0 217.6 52.6 78.6
Return on AEA 2.38% 3.54% 1.02% 1.15%
New business volume $ 10,677.6 $ 2,117.4 $ 3,086.4 $ 1,007.3
Nine Months Ended
September 30, 2003
Operating margin $ 613.6 $ 429.1 $ 111.8 $ 158.1
Income before provision for income tax 306.1 297.1 45.3 91.0
Income taxes 119.3 115.8 17.7 35.4
Net income (loss) 186.8 181.3 27.6 55.3
Return on AEA 2.04% 3.14% 0.53% 0.88%
New business volume $ 9,455.3 $ 2,111.8 $ 2,584.4 $ 1,100.0
Total
Business Corporate
Segments and Other Consolidated
---------- --------- ------------
Quarter Ended September 30, 2004
Operating margin $ 537.8 $ 20.7 $ 558.5
Income before provision for income tax 332.9 (31.1) 301.8
Income taxes 125.5 (7.8) 117.7
Net income (loss) 207.3 (23.4) 183.9
Return on AEA 2.13% (0.25)% 1.88%
New business volume $ 5,967.5 $ -- $ 5,967.5
Quarter Ended September 30, 2003
Operating margin $ 459.5 $ 13.4 $ 472.9
Income before provision for income tax 268.8 (26.2) 242.6
Income taxes 104.8 (10.2) 94.6
Net income (loss) 163.8 (16.0) 147.8
Return on AEA 1.83% (0.19)% 1.64%
New business volume $ 5,403.0 $ -- $ 5,403.0
Quarter Ended June 30, 2004
Operating margin $ 527.6 $ 22.1 $ 549.7
Income before provision for income tax 318.6 (29.2) 289.4
Income taxes 116.2 (3.4) 112.8
Net income (loss) 202.4 (25.8) 176.6
Return on AEA 2.14% (0.28)% 1.86%
New business volume $ 5,593.4 $ -- $ 5,593.4
Nine Months Ended
September 30, 2004
Operating margin $ 1,557.9 $ 66.2 $ 1,624.1
Income before provision for income tax 943.2 (41.6) 901.6
Income taxes 350.3 1.3 351.6
Net income (loss) 592.8 (43.0) 549.8
Return on AEA 2.09% (0.17)% 1.92%
New business volume $ 16,888.7 $ -- $ 16,888.7
Nine Months Ended
September 30, 2003
Operating margin $ 1,312.6 $ 48.0 $ 1,360.6
Income before provision for income tax 739.5 (55.3) 684.2
Income taxes 288.2 (21.4) 266.8
Net income (loss) 451.0 (39.3) 411.7
Return on AEA 1.71% (0.17)% 1.54%
New business volume $ 15,251.5 $ -- $ 15,251.5
Net income for Capital Finance includes the results of the former Structured
Finance except for the results relating to the communications and media
portfolio, which are reflected in Commercial Finance.
9
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
Quarters Ended
-----------------------------------------------------------
September 30, 2004 June 30, 2004 September 30, 2003
$ % $ % $ %
------------------ ---------------- ------------------
Net Credit Losses - Owned as a Percentage of Average Finance
Receivables
Specialty Finance - Commercial $ 28.1 1.49% $ 13.2 0.73% $ 25.6 1.47%
Commercial Finance(1) 21.6 0.72% 28.2 0.97% 28.9 1.08%
Equipment Finance 7.8 0.49% 15.5 0.99% 23.1 1.52%
Capital Finance(1) 0.4 0.05% 6.5 0.96% -- --
------ ------ --------
Total Commercial 57.9 0.81% 63.4 0.91% 77.6 1.17%
Specialty Finance - Consumer 14.4 1.30% 20.2 1.94% 13.0 1.80%
------ ------ --------
Total $ 72.3 0.88% $ 83.6 1.04% $ 90.6 1.23%
====== ====== ========
Total Before Liquidating and Telecommunications $ 58.5 0.73% $ 55.4 0.72% $ 67.6 0.98%
====== ====== ========
Nine Months Ended
---------------------------------------
September 30, 2004 September 30, 2003
$ % $ %
------------------ ------------------
Specialty Finance - Commercial $ 63.3 1.15% $ 80.5 1.51%
Commercial Finance(1) 76.2 0.86% 83.9 1.10%
Equipment Finance 49.6 1.05% 99.8 2.14%
Capital Finance(1) 14.8 0.73% 7.1 0.33%
------ ------
Total Commercial 203.9 0.97% 271.3 1.37%
Specialty Finance - Consumer 51.3 1.67% 42.0 2.23%
------ ------
Total $255.2 1.06% $313.3 1.45%
====== ======
Total Before Liquidating and Telecommunications $187.2 0.81% $231.4 1.14%
====== ======
September 30, 2004 June 30, 2004 September 30, 2003
$ % $ % $ %
------------------ ---------------- ------------------
Finance Receivables Past Due 60 days or more - Owned as a
Percentage of Finance Receivables
Specialty Finance - Commercial $212.3 2.60% $185.7 2.50% $ 245.9 3.60%
Commercial Finance(1) 106.0 0.85% 107.4 0.96% 191.2 1.71%
Equipment Finance 66.6 1.05% 95.9 1.53% 206.3 3.35%
Capital Finance(1) 28.4 1.04% 18.2 0.69% 82.3 2.92%
------ ------ --------
Total Commercial 413.3 1.39% 407.2 1.48% 725.7 2.69%
Specialty Finance - Consumer 159.9 3.31% 163.3 3.86% 137.7 4.12%
------ ------ --------
Total $573.2 1.66% $570.5 1.79% $ 863.4 2.85%
====== ====== ========
Non-performing Assets - Owned as a Percentage of Finance
Receivables(2)
Specialty Finance - Commercial $ 87.8 1.08% $ 93.4 1.26% $ 132.7 1.94%
Commercial Finance(1) 96.9 0.78% 116.1 1.03% 203.0 1.81%
Equipment Finance 164.9 2.60% 173.6 2.76% 283.7 4.61%
Capital Finance(1) 11.5 0.42% 13.2 0.50% 101.3 3.60%
------ ------ --------
Total Commercial 361.1 1.22% 396.3 1.44% 720.7 2.67%
Specialty Finance - Consumer 167.6 3.47% 165.9 3.92% 146.1 4.37%
------ ------ --------
Total $528.7 1.53% $562.2 1.77% $ 866.8 2.86%
====== ====== ========
Finance Receivables Past Due 60 days or more - Managed as a
Percentage of Managed Financial Assets(3)
Specialty Finance - Commercial $294.8 2.29% $266.1 2.22% $ 332.4 2.90%
Commercial Finance(1) 106.0 0.85% 107.4 0.96% 191.1 1.71%
Equipment Finance 116.2 1.24% 168.1 1.79% 332.7 3.40%
Capital Finance(1) 28.4 1.04% 18.2 0.66% 82.3 2.92%
------ ------ --------
Total Commercial 545.4 1.46% 559.8 1.59% 938.5 2.66%
Specialty Finance - Consumer 304.9 4.44% 309.0 4.74% 283.9 4.54%
------ ------ --------
Total $850.3 1.92% $868.8 2.08% $1,222.4 2.95%
====== ====== ========
Reserve for Credit Losses
Reserve for credit losses as a percentage of finance
receivables $637.9 1.85% $621.0 1.95% $ 752.5 2.48%
Reserve for credit losses as a percentage of finance
receivables before Telecommunications and Argentina $572.2 1.67% $544.1 1.73% $ 500.9 1.69%
Reserve for credit losses as a percentage of finance
receivables past due 60 days or more 111.3% 108.9% 87.2%
Reserve for credit losses as a percentage of non-
performing assets 120.7% 110.5% 86.8%
(1) The data for Capital Finance includes the former Structured Finance except
for the communications and media portfolios, which are reflected in
Commercial Finance.
(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.
10
CIT GROUP INC. AND SUBSIDIARIES
SELECTED DATA AND OWNED PORTFOLIO INFORMATION
(dollars in millions, except per share data)
Selected Data Quarters Ended Nine Months Ended
---------------------------------------------- ----------------------------
September 30, June 30, September 30, September 30, September 30,
2004 2004 2003 2004 2003
---------------------------------------------- -----------------------------
Profitability
Net finance margin as a percentage
of AEA(1) 4.10% 3.99% 3.72% 4.03% 3.65%
Net finance margin after provision
as a percentage of AEA 3.49% 3.30% 2.80% 3.29% 2.58%
Salaries & general operating expenses
as a percentage of AMA(2) 2.18% 2.23% 2.00% 2.18% 1.98%
Efficiency ratio 41.5% 42.3% 41.4% 41.6% 41.1%
Return on average tangible
stockholders' equity 14.1% 13.7% 12.2% 14.3% 11.7%
Return on AMA(2) 1.56% 1.52% 1.28% 1.57% 1.20%
See "Non-GAAP Disclosures" for additional information regarding
profitability ratio and metric comparisons
Securitization Volume
Specialty Finance - Commercial $ 458.4 $ 475.5 $ 936.0 $ 1,897.2 $ 2,546.3
Equipment Finance 325.4 371.7 381.5 970.2 1,171.9
Specialty Finance - Consumer -- -- -- -- 489.2
----------- ----------- ----------- ----------- -----------
Total $ 783.8 $ 847.2 $ 1,317.5 $ 2,867.4 $ 4,207.4
=========== =========== =========== =========== ===========
Average Assets
Average Finance Receivables (AFR) $ 32,957.8 $ 32,115.0 $ 29,431.3 $ 32,217.3 $ 28,871.2
Average Earning Assets (AEA) 39,195.6 37,992.8 36,072.4 38,119.0 35,559.0
Average Managed Assets (AMA)(2) 47,166.8 46,608.4 46,052.0 46,737.1 45,648.4
Average Operating Leases (AOL) 7,873.2 7,628.5 7,458.9 7,720.1 7,151.1
Note: These averages are based on an ending 4 and 10 month average
September 30, June 30, September 30,
2004 2004 2003
----------------------------------------------
Capital & Leverage(3),(4)
Tangible stockholders' equity to
managed assets 10.57% 10.89% 10.34%
Debt (net of overnight deposits)
to tangible stockholders' equity(5) 6.38x 6.09x 6.28x
Tangible book value per share $ 25.20 $ 24.51 $ 22.70
September 30, June 30, September 30,
Owned Portfolio Information 2004 2004 2003
----------------------------------------------
Liquidating Portfolios:
Balance $ 675.2 $ 814.2 $ 1,030.5
Non-performing accounts $ 79.7 $ 90.9 $ 121.0
Past due 60+ days $ 70.1 $ 81.7 $ 105.4
Telecommunications(6):
Financing and leasing assets $ 347.6 $ 422.6 $ 623.6
Number of accounts 29 36 49
Largest customer account balance $ 29.3 $ 30.7 $ 32.5
Non-performing accounts $ 24.5 $ 48.5 $ 88.5
Number of accounts 5 7 9
Past due 60+ days $ 4.8 $ 5.6 $ 54.9
CLEC exposure $ 117.4 $ 159.0 $ 216.7
Equity and Venture Capital Investments:
Total investment balance $ 186.2 $ 190.9 $ 313.9
Direct investments $ 31.9 $ 35.8 $ 161.5
Number of companies 10 13 47
Private equity funds $ 154.3 $ 155.1 $ 152.4
Number of funds 52 52 52
Remaining fund and equity commitments $ 97.0 $ 104.1 $ 140.7
(1) For the 2004 periods and the 2003 quarter, dividends on preferred capital
securities are reflected in interest expense (quarterly 5 basis points
impact) as a result of adopting FAS 150. The dividends for the 2003 year
to date reflect six months shown after-tax on the consolidated statement
of income, plus the September quarter in interest expense.
(2) "AMA" or "Average Managed Assets" represents the sum of average earning
assets, which are net of credit balances of factoring clients, and the
average of finance receivables previously securitized and still managed by
CIT.
(3) Tangible stockholders' equity excludes goodwill and intangible assets.
Prior period balances have been conformed to current period presentation.
(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.
(6) Telecommunications portfolio data consists of lending and leasing directly
to the telecommunications sector, and does not include lending and leasing
for telecom related equipment to non-telecom companies.
11
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 2004 2004 2003
-------------- -------- --------------
Commercial $ 4,905.2 $4,933.3 $ 4,575.7
Regional $ 351.9 $ 309.2 $ 310.0
Number of planes:
Commercial 205 209 204
Regional 127 124 116
September 30, 2004 June 30, 2004
-------------------------- --------------------------
Commercial Aerospace Portfolio:
By Region: Net Investment Number Net Investment Number
-------------- -------- -------------- --------
Europe $ 2,175.1 72 $ 2,241.7 72
North America (1) 926.9 62 930.4 68
Asia Pacific 1,129.3 43 1,080.9 41
Latin America 618.8 25 624.3 25
Africa / Middle East 55.1 3 56.0 3
-------------- -------- -------------- --------
Total $ 4,905.2 205 $ 4,933.3 209
============== ======== ============== ========
By Manufacturer: Net Investment Number Net Investment Number
-------------- -------- -------------- --------
Boeing $ 2,540.4 132 $ 2,653.9 138
Airbus 2,329.5 64 2,250.0 61
Other 35.3 9 29.4 10
-------------- -------- -------------- --------
Total $ 4,905.2 205 $ 4,933.3 209
============== ======== ============== ========
By Body Type (2): Net Investment Number Net Investment Number
-------------- -------- -------------- --------
Narrow body $ 3,657.1 161 $ 3,673.3 163
Intermediate 848.8 18 853.7 18
Wide body 364.0 17 376.9 18
Other 35.3 9 29.4 10
-------------- -------- -------------- --------
Total $ 4,905.2 205 $ 4,933.3 209
============== ======== ============== ========
Number of accounts 89 85
Weighted average age of fleet (years) 6 7
Largest customer net investment $ 288.4 $ 316.9
September 30, 2004 June 30, 2004
-------------------------- --------------------------
New Aircraft Delivery Order Book
(dollars in billions) Amount Number Amount Number
-------------- -------- -------------- --------
For the Years Ending December 31,
2003 (Remaining 2003)
2004 (Remaining 2004) $ 0.3 7 $ 0.4 10
2005 0.9 18 0.9 18
2006 1.0 20 1.0 20
2007 0.3 5 0.3 5
-------------- -------- -------------- --------
Total $ 2.5 50 $ 2.6 53
============== ======== ============== ========
September 30, 2003
--------------------------
Commercial Aerospace Portfolio:
By Region: Net Investment Number
-------------- --------
Europe $ 1,980.9 64
North America (1) 1,065.8 73
Asia Pacific 875.1 36
Latin America 529.1 25
Africa / Middle East 124.8 6
-------------- --------
Total $ 4,575.7 204
============== ========
By Manufacturer: Net Investment Number
-------------- --------
Boeing $ 2,626.5 141
Airbus 1,928.2 51
Other 21.0 12
-------------- --------
Total $ 4,575.7 204
============== ========
By Body Type (2): Net Investment Number
-------------- --------
Narrow body $ 3,285.9 155
Intermediate 881.0 18
Wide body 387.8 19
Other 21.0 12
-------------- --------
Total $ 4,575.7 204
============== ========
Number of accounts 84
Weighted average age of fleet (years) 7
Largest customer net investment $ 289.7
September 30, 2003
--------------------------
New Aircraft Delivery Order Book
(dollars in billions) Amount Number
-------------- --------
For the Years Ending December 31,
2003 (Remaining 2003) $ 0.2 5
2004 (Remaining 2004) 0.6 14
2005 1.1 24
2006 1.0 19
2007 0.3 5
-------------- --------
Total $ 3.2 67
============== ========
The order amounts 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,
2004, all of the 2004 deliveries and 14 of the 2005 deliveries were placed.
(1) Comprised of net investments in the U.S. and Canada of $744.2 million (56
aircraft) and $182.7 million (6 aircraft) at September 30, 2004, $745.7 million
(62 aircraft) and $184.7 million (6 aircraft) at June 30, 2004, and $856.3
million (67 aircraft) and $209.5 million (6 aircraft) at September 30, 2003,
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.
12
CIT GROUP INC. AND SUBSIDIARIES
Non-GAAP Disclosures
(dollars in millions)
September 30, 2004 June 30, 2004 September 30, 2003
------------------ ------------------ ------------------
Managed assets (1):
Finance receivables $ 34,542.8 $ 31,828.6 $ 30,342.6
Operating lease equipment, net 7,932.9 7,838.8 7,485.3
Finance receivables held for sale 1,757.3 1,595.2 1,017.9
Equity and venture capital investments
(included in other assets) 186.2 190.9 313.9
------------------ ------------------ ------------------
Total financing and leasing portfolio assets 44,419.2 41,453.5 39,159.7
Securitized assets 7,994.9 8,401.0 10,141.0
------------------ ------------------ ------------------
Managed Assets $ 52,414.1 $ 49,854.5 $ 49,300.7
================== ================== ==================
Earning assets (2):
Total financing and leasing portfolio assets $ 44,419.2 $ 41,453.5 $ 39,159.7
Credit balances of factoring clients (3,929.9) (3,292.1) (3,103.0)
------------------ ------------------ ------------------
Earning assets $ 40,489.3 $ 38,161.4 $ 36,056.7
================== ================== ==================
Tangible equity (3):
Total equity $ 5,837.0 $ 5,691.8 $ 5,180.9
Other comprehensive loss relating to
derivative financial instruments 52.5 8.1 106.9
Unrealized gain on securitization
investments (7.2) (6.8) (8.0)
Goodwill and intangible assets (594.4) (516.4) (437.9)
------------------ ------------------ ------------------
Tangible common equity 5,287.9 5,176.7 4,841.9
Preferred capital securities 254.2 254.6 255.9
------------------ ------------------ ------------------
Tangible equity $ 5,542.1 $ 5,431.3 $ 5,097.8
================== ================== ==================
Debt, net of overnight deposits (4):
Total debt $ 37,280.6 $ 34,686.9 $ 34,012.1
Overnight deposits (1,651.7) (1,347.4) (1,722.9)
Preferred capital securities (254.2) (254.6) (255.9)
------------------ ------------------ ------------------
Debt, net of overnight deposits $ 35,374.7 $ 33,084.9 $ 32,033.3
================== ================== ==================
Earnings per share, excluding certain items(5)
GAAP Earnings per share $ 0.86 $ 0.82 $ 0.69
(Gain)/loss on venture capital investments (0.01) (0.01) 0.03
------------------ ------------------ ------------------
Adjusted earnings per share $ 0.85 $ 0.81 $ 0.72
================== ================== ==================
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.
5) The diluted EPS related to the items listed are shown separately, as the
items are not indicative of our ongoing operations.
13