Exhibit 99.1
[LOGO] CIT
CIT ANNOUNCES SECOND QUARTER RESULTS; INCREASES GUIDANCE
o EPS up 26% from prior year
o Return on tangible equity is 16.3%
o New business volume up 47% from prior year
o Credit quality, capital generation and liquidity positions remain
strong
o EPS growth target raised to 20%+; ROTE to exceed 16% target
o Board approves $500 million share repurchase program
NEW YORK, July 20, 2005 - CIT Group Inc. (NYSE: CIT) today reported net
income of $220.7 million for the second quarter, an increase of 25% from $176.6
million last year. Diluted earnings per share were $1.03 for the quarter, up
from $0.82 last year. Net income for the six months ended June 30, 2005 totaled
$431.1 million (diluted EPS $2.01), up 18% from $365.9 million (diluted EPS
$1.70) last year. Return on average tangible equity ("ROTE") for the quarter and
the six months was 16.3% and 15.7%, compared to 13.7% and 14.4% last year.
Low charge-offs, strong non-spread revenues and a lower effective tax rate
drove the current quarter results. Net income for the quarter was also impacted
by two initiatives. First, we sold the majority (approximately $900 million) of
our business aircraft portfolio for a pretax gain of $22.0 million, which allows
for the redeployment of capital into higher returning businesses. Second, in
conjunction with the realignment of Commercial Finance and other business
streamlining activities, we recorded a $25.2 million pretax restructuring
charge, relating to termination benefits for approximately 200 employees.
Commenting on the Company's performance, Jeffrey M. Peek, Chairman and
Chief Executive Officer, said: "We are very pleased with our performance for the
first half of the year. We exceeded our ROTE target of 16%, new business volumes
increased company wide and credit quality continues to be terrific. These trends
support our confidence in the underlying momentum of the organization and
therefore we increased our earnings guidance for EPS growth to more than 20% and
ROTE to exceed 16% for 2005."
Mr. Peek continued, "For the remainder of the year, we will focus on
portfolio optimization, capital redeployment, and balance sheet strength. The
business aircraft divestiture and the acquisition of Healthcare Business Credit
Corporation are prime examples of our strategy in action. In addition, our
expanded share repurchase program is another demonstration of how improved
capital allocation permits us to increase shareholder returns."
1
Financial Highlights:
Profitability
o Return on average tangible equity was 16.3%, up from 15.3% and 13.7%
during last quarter and the prior year quarter.
o Return on average earning assets was 1.86% for the quarter, compared to
1.91% last quarter and 1.86% last year.
o Return on average managed assets was 1.61%, compared to 1.62% and 1.52%
during last quarter and the prior year quarter.
Net Finance and Risk-Adjusted Margin
o Net finance margin was 3.36% as a percentage of average earning assets,
compared to 3.54% last quarter and 3.91% last year. The decline from last
quarter was primarily due to lower yield-related fees, the full-quarter
impact of a greater mix of Student Loan Xpress assets, the effect of
rising short-term interest rates, maturity extensions and pricing
pressure.
o Operating lease margins, at 6.08% of average operating leases, were up
from 5.83% and 4.93% during last quarter and last year, reflecting
improved margins in both aerospace and rail.
o Risk-adjusted margin (net finance margin after provision for credit
losses) was 2.96%, compared to 3.13% and 3.21% last quarter and last year.
Other Revenue
o Total other revenue was $278.9 million for the quarter, up from $239.4
million and $233.5 million for the prior quarter and prior year due to
strong fees and other income and the gain on sale of the business aircraft
portfolio ($22.0 million).
o Fees and other income totaled $168.6 million, up from $150.2 million last
quarter and $141.0 million last year on strong fee income in Corporate
Finance and other income from education lending receivables. These were
partially offset by lower servicing fees and lower income from fewer
securitized assets.
o Securitization gains declined to $11.1 million, 3.3% of pretax income for
the quarter, from $11.8 million (3.5%) and $11.9 million (4.1%) in the
prior quarter and prior year. Securitization gains as a percentage of
volume securitized declined from both prior periods due to tighter spreads
on assets sold.
Salaries and General Operating Expenses
o Total operating expenses were $271.8 million, versus $261.0 million last
quarter and $252.4 million a year ago. The increase from last year
reflected higher incentive-based compensation and higher salaries due to
recent acquisitions. Operating expenses for Student Loan Xpress were $16.7
million for the June 2005 quarter, up from $7.0 million in the prior
quarter, reflecting the full quarter of ownership in the current period.
o The efficiency ratio was 41.4% excluding the gain from the business
aircraft sale and the restructuring charge. The increase from 40.8% last
quarter reflects up-front investments made in our sales and marketing
functions.
2
o Employee headcount totaled approximately 6,110 versus 6,130 at March 31,
2005, and 5,705 at June 30, 2004. The increase from the prior year was
largely due to recent acquisitions.
Effective Tax Rate
o The second quarter earnings benefited from a reduction in the effective
tax rate to 33.8% from 36.8% and 39.0% last quarter and last year. The
reduction reflects the continued execution on our plan to relocate and
fund certain aerospace assets offshore, and improved international
earnings.
Portfolio and Managed Assets
o Managed assets were $58.1 billion at June 30, 2005, versus $58.8 billion
and $49.9 billion last quarter and last year. The decline for the quarter
reflected the business aircraft sale, and almost $800 million in
Commercial Services seasonal runoff, which is typical for this business.
These factors were offset by continued home lending growth. The 16% growth
from last year was driven primarily by Student Loan Xpress, home lending
program growth and commercial aerospace deliveries.
o Total financing and leasing portfolio assets were $50.6 billion at June
30, 2005, compared to $51.0 billion last quarter and $41.3 billion last
year.
o Origination volume for the quarter, excluding factoring volume, increased
47% (to $8.0 billion) from the prior year. The primary drivers were home
lending (including bulk purchases) in Specialty Finance, capital markets
activities in Corporate Finance and aerospace deliveries in Capital
Finance.
Credit Quality
o Net charge-offs for the quarter were 0.52% of average finance receivables,
unchanged from last quarter and down from 1.04% last year. The most
notable improvements from the prior year came from Capital Finance,
Equipment Finance and the Capital Markets and Communications, Media &
Entertainment units within Corporate Finance. Recoveries for the quarter
were 0.16%, compared to 0.17% and 0.30% last quarter and last year.
o Total 60+ day owned delinquencies were $684 million, 1.69% of finance
receivables at June 30, 2005, compared to $723 million (1.76%) last
quarter and $571 million (1.79%) last year. The improvement from last
quarter is most notable in Commercial Services.
o Non-performing assets (non-accrual loans plus repossessed assets) were
$473 million or 1.17% of finance receivables, down from $528 million
(1.28%) last quarter and $562 million (1.77%) last year. The improvement
from last quarter included lower non-performing assets in Commercial
Services, while the decline in percentage from last year reflected the
impact of Student Loan Xpress.
o The reserve for credit losses was $622 million (1.54% of finance
receivables), compared to $620 million (1.51%) last quarter, and $621
million (1.95%) at June 30, 2004. The decline in the percentage from the
prior year reflects the impact of the education lending acquisition and
the improved credit metrics.
3
Capitalization and Leverage
o The ratio of tangible equity to managed assets at June 30, 2005 was 9.92%,
compared to 9.59% at March 31, 2005, and 10.89% at June 30, 2004.
o On July 19, 2005, the Company's Board of Directors approved a $500 million
share repurchase program. The Company entered into an agreement with
Goldman, Sachs & Co. for an accelerated stock buyback transaction.
Commercial Finance Group
Commercial Services (Retail / Factoring)
o Profitability improved due to higher factoring commissions.
o Financing and leasing assets were $6.4 billion at quarter end, versus $7.2
billion at March 31, 2005 and $5.8 billion at June 30, 2004. Growth from
last year reflected acquisitions, while the decline from last quarter was
due to seasonal runoff.
Capital Finance (Aerospace and Rail)
o Earnings improved considerably from the prior year due to stronger
operating lease margins in both aerospace and rail and the lower effective
tax rate resulting from the aircraft transfer to Ireland.
o Financing and leasing assets were $9.8 billion at June 30, 2005, compared
to $8.7 billion and $8.2 billion at March 31, 2005 and June 30, 2004. The
increase reflects commercial aerospace deliveries and the transfer of the
remaining business aircraft portfolio (approximately $600 million) from
Equipment Finance during the quarter.
o Eight new aircraft deliveries were funded during the quarter. Four of the
seven deliveries remaining for 2005 have been placed. Six commercial
aircraft were off lease at quarter end, though five aircraft had letters
of intent with customers in place.
Equipment Finance (Construction and Diversified Industries)
o Current quarter profitability reflected the $22 million pretax gain from
the sale of a majority of the business aircraft portfolio. Absent this
gain, net income was essentially flat with the prior periods.
o New business volume was up 14% from a seasonally soft first quarter and
flat with the prior year.
o Managed assets were $7.2 billion at June 30, 2005, compared to $8.8
billion and $9.8 billion at March 31, 2005 and June 30, 2004. The reduced
asset level reflects the business aircraft sale, the transfer of the
remaining $600 million of this portfolio to Capital Finance, as well as
several asset transfers to other units.
Corporate Finance (Communications, Media & Entertainment, Energy &
Infrastructure, Healthcare, Capital Markets & Advisory Services)
o Net income for the quarter improved from the prior quarter and prior year
due to higher fee income and lower charge-offs.
o New business volume was up 59% and 93% from the prior quarter and prior
year and was up across all industry units for both periods.
4
Specialty Finance Group
Specialty Finance - commercial
o Net income improved over the prior quarter and the prior year quarter,
primarily due to improved vendor program earnings.
o New business volume improved 15% and 11% from prior quarter and prior
year, with the most notable increase in the vendor programs.
o Managed assets were $14.5 billion at June 30, 2005, compared to $14.8
billion and $14.3 billion last quarter and last year.
Specialty Finance - consumer
o Net income was flat with the prior quarter reflecting lower securitization
income and above the prior year due to asset growth. The quarter also
benefited from a positive contribution from the education lending unit.
o New business volume increased $944 million (69%) and $1.4 billion (166%)
from last quarter and last year, reflecting home lending bulk purchases.
Education lending volume was $383 million for the quarter.
o Managed assets were $11.9 billion, up from $11.5 billion and $5.2 billion
last quarter and last year, as owned home lending assets grew $700 million
during the quarter and $2.7 billion during the past twelve months. The
increase from the prior year also includes the $4.3 billion education
lending acquisition.
Corporate and other includes the pretax restructuring provision of $25.2
million.
Forward-Looking Information:
Management updated the following financial targets for 2005:
o EPS growth will be more than 20%
o ROTE will exceed 16%
5
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 Second Quarter
Earnings Call," or at the following website: http://ir.cit.com. An audio replay
of the call will be available beginning shortly after the conclusion of the call
until 11:59 pm (EDT) July 27, 2005, by dialing 800-642-1687 for U.S. and
Canadian callers or 706-645-9291 for international callers with the pass-code
7308401, 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 nearly $60 billion in assets under management
and possesses the financial resources, industry expertise and product knowledge
to serve the needs of clients across approximately 30 industries. CIT, a Fortune
500 company, and a component of the S&P 500 Index, 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 6,000
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, 2004. 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 - Executive Vice President -
Investor Relations
(973) 422-3284
or
Kelley Gipson - Executive Vice President -
Marketing & Communications
(973) 422-3235
6
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
(dollars in millions, except per share data)
Quarters Ended Six Months Ended
----------------------------------------- --------------------------
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
----------- ----------- ----------- ----------- -----------
Finance income $ 1,106.7 $ 1,022.0 $ 908.9 $ 2,128.7 $ 1,805.8
Interest expense 466.7 394.2 300.0 860.9 598.0
----------- ----------- ----------- ----------- -----------
Net finance income 640.0 627.8 608.9 1,267.8 1,207.8
Depreciation on operating lease equipment 241.2 237.6 237.9 478.8 473.7
----------- ----------- ----------- ----------- -----------
Net finance margin 398.8 390.2 371.0 789.0 734.1
Provision for credit losses 47.2 45.3 65.7 92.5 151.3
----------- ----------- ----------- ----------- -----------
Net finance margin after provision for credit losses 351.6 344.9 305.3 696.5 582.8
Other revenue 278.9 239.4 233.5 518.3 463.9
Gain on venture capital investments 1.3 10.8 3.0 12.1 3.7
----------- ----------- ----------- ----------- -----------
Operating margin 631.8 595.1 541.8 1,226.9 1,050.4
Salaries and general operating expenses 271.8 261.0 252.4 532.8 492.4
Provision for restructuring 25.2 -- -- 25.2 --
Gain on redemption of debt -- -- -- -- 41.8
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes 334.8 334.1 289.4 668.9 599.8
Provision for income taxes (113.0) (122.8) (112.8) (235.8) (233.9)
Minority interest, after tax (1.1) (0.9) -- (2.0) --
----------- ----------- ----------- ----------- -----------
Net income $ 220.7 $ 210.4 $ 176.6 $ 431.1 $ 365.9
=========== =========== =========== =========== ===========
Earnings per share
Basic earnings per share $ 1.05 $ 1.00 $ 0.83 $ 2.05 $ 1.73
Diluted earnings per share $ 1.03 $ 0.98 $ 0.82 $ 2.01 $ 1.70
Number of shares - basic (thousands) 210,506 210,656 211,532 210,581 211,685
Number of shares - diluted (thousands) 214,699 215,090 215,359 214,894 215,584
Other Revenue
Fees and other income $ 168.6 $ 150.2 $ 141.0 $ 318.8 $ 267.7
Factoring commissions 56.3 54.8 53.5 111.1 108.5
Gains on sales of leasing equipment 20.9 22.6 27.1 43.5 54.4
Gain on sale of business aircraft portfolio 22.0 -- -- 22.0 --
Gains on securitizations 11.1 11.8 11.9 22.9 33.3
----------- ----------- ----------- ----------- -----------
Total other revenue $ 278.9 $ 239.4 $ 233.5 $ 518.3 $ 463.9
=========== =========== =========== =========== ===========
Fees and other income includes: servicing fees, structuring and advisory fees,
syndication fees and gains from other asset and receivable sales.
7
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
June 30, December 31,
2005 2004
--------- ------------
ASSETS
Financing and leasing assets:
Finance receivables $40,509.3 $35,048.2
Reserve for credit losses (622.3) (617.2)
--------- ---------
Net finance receivables 39,887.0 34,431.0
Operating lease equipment, net 8,642.9 8,290.9
Finance receivables held for sale 1,435.9 1,640.8
Cash and cash equivalents 2,231.7 2,210.2
Retained interests in securitizations and other investments 1,122.0 1,228.2
Goodwill and intangible assets, net 903.1 596.5
Other assets 3,084.1 2,713.7
--------- ---------
Total Assets $57,306.7 $51,111.3
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper $ 3,253.4 $ 4,210.9
Variable-rate senior unsecured notes 13,556.0 11,545.0
Fixed-rate senior unsecured notes 22,457.4 21,715.1
Non-recourse, secured borrowings - education lending 3,938.8 --
Preferred capital securities 252.9 253.8
--------- ---------
Total debt 43,458.5 37,724.8
Credit balances of factoring clients 3,649.2 3,847.3
Accrued liabilities and payables 3,748.5 3,443.7
--------- ---------
Total Liabilities 50,856.2 45,015.8
Minority interest 49.3 40.4
Stockholders' Equity:
Common stock 2.1 2.1
Paid-in capital 10,648.1 10,674.3
Accumulated deficit (4,129.9) (4,499.1)
Accumulated other comprehensive loss (29.6) (58.4)
Less: Treasury stock, at cost (89.5) (63.8)
--------- ---------
Total Stockholders' Equity 6,401.2 6,055.1
--------- ---------
Total Liabilities and Stockholders' Equity $57,306.7 $51,111.3
========= =========
Other Assets
Investments in and receivables from non-consolidated subsidiaries $ 660.4 $ 719.5
Accrued interest and receivables from derivative counterparties 471.7 390.0
Deposits on commercial aerospace flight equipment 249.6 333.1
Direct and private fund equity investments 31.6 181.0
Prepaid expenses 94.3 105.3
Repossessed assets and off-lease equipment 121.0 98.9
Furniture and fixtures, miscellaneous receivables and other assets 1,455.5 885.9
--------- ---------
$ 3,084.1 $ 2,713.7
========= =========
8
CIT GROUP INC. AND SUBSIDIARIES
OWNED AND MANAGED ASSET COMPOSITION
(dollars in millions)
June 30, March 31, June 30,
2005 2005 2004
--------- --------- ---------
Specialty Finance Group
Specialty Finance - commercial Segment
Finance receivables $ 8,590.2 $ 8,838.0 $ 8,080.1
Operating lease equipment, net 1,105.8 1,030.9 1,084.0
Finance receivables held for sale 1,031.9 1,053.6 1,158.1
--------- --------- ---------
Owned assets 10,727.9 10,922.5 10,322.2
Finance receivables securitized and managed by CIT 3,797.2 3,870.2 4,008.2
--------- --------- ---------
Managed assets 14,525.1 14,792.7 14,330.4
--------- --------- ---------
Specialty Finance - consumer Segment
Finance receivables - home lending 6,123.6 5,423.5 3,377.2
Finance receivables - education lending 4,170.9 4,322.9 --
Finance receivables - other 322.5 255.8 219.3
Finance receivables held for sale 282.0 335.9 160.0
--------- --------- ---------
Owned assets 10,899.0 10,338.1 3,756.5
Home lending finance receivables securitized
and managed by CIT 1,027.6 1,131.5 1,487.9
--------- --------- ---------
Managed assets 11,926.6 11,469.6 5,244.4
--------- --------- ---------
Commercial Finance Group
Commercial Services
Finance receivables 6,417.2 7,184.9 5,808.6
--------- --------- ---------
Corporate Finance(1)(2)
Finance receivables 7,998.0 7,546.1 6,297.0
Operating lease equipment, net 78.3 82.4 38.2
Finance receivables held for sale 27.9 -- --
--------- --------- ---------
Owned assets 8,104.2 7,628.5 6,335.2
Finance receivables securitized and managed by CIT 54.0 59.4 --
--------- --------- ---------
Managed assets 8,158.2 7,687.9 6,335.2
--------- --------- ---------
Equipment Finance Segment(1)(2)(3)
Finance receivables 4,420.7 5,720.1 6,285.3
Operating lease equipment, net 121.4 379.7 380.6
Finance receivables held for sale 94.1 91.8 181.6
--------- --------- ---------
Owned assets 4,636.2 6,191.6 6,847.5
Finance receivables securitized and managed by CIT 2,581.1 2,655.5 2,904.9
--------- --------- ---------
Managed assets 7,217.3 8,847.1 9,752.4
--------- --------- ---------
Capital Finance Segment(3)
Finance receivables 2,466.2 1,891.2 1,761.1
Operating lease equipment, net 7,337.4 6,820.1 6,336.0
Finance receivables held for sale -- -- 95.5
--------- --------- ---------
Owned assets 9,803.6 8,711.3 8,192.6
--------- --------- ---------
Other - Equity Investments 31.6 101.8 190.9
--------- --------- ---------
Total
Finance receivables $40,509.3 $41,182.5 $31,828.6
Operating lease equipment, net 8,642.9 8,313.1 7,838.8
Finance receivables held for sale 1,435.9 1,481.3 1,595.2
--------- --------- ---------
Financing and leasing assets excl. equity investments 50,588.1 50,976.9 41,262.6
Equity investments (included in other assets) 31.6 101.8 190.9
--------- --------- ---------
Owned assets 50,619.7 51,078.7 41,453.5
Finance receivables securitized and managed by CIT 7,459.9 7,716.6 8,401.0
--------- --------- ---------
Managed assets $58,079.6 $58,795.3 $49,854.5
========= ========= =========
(1) During the March 2005 quarter, approximately $400 million in sports and
gaming assets were transferred from Equipment Finance to Corporate
Finance. Prior periods have not been restated.
(2) Corporate Finance includes: the former Business Credit unit, the power,
energy and infrastructure assets transferred from Capital Finance
(approximately $1.0 billion) and Healthcare assets transferred from
Equipment Finance (approximately $0.5 billion). Prior year data has only
been restated for the power, energy and infrastructure asset transfer.
(3) During the second quarter of 2005, the remaining corporate aircraft
portfolio of approximately $0.6 billion was transferred from Equipment
Finance to Capital Finance. Prior periods have not been restated.
9
CIT GROUP INC. AND SUBSIDIARIES
SEGMENT DATA
(dollars in millions)
Quarters Ended Six Months Ended
------------------------------------------- ----------------------------
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
--------- --------- --------- ---------- ----------
Specialty Finance Group
Specialty Finance - commercial
Operating margin $ 222.2 $ 206.7 $ 187.5 $ 428.9 $ 382.7
Net income 79.1 75.1 65.6 154.2 134.5
Return on AEA 2.84% 2.70% 2.66% 2.76% 2.74%
Return on risk-adjusted capital 23.9% 23.2% 20.3% 23.5% 20.6%
New business volume $ 2,685.2 $ 2,337.5 $ 2,411.0 $ 5,022.7 $ 4,929.0
Specialty Finance - consumer
Operating margin $ 60.6 $ 51.2 $ 39.8 $ 111.8 $ 70.3
Net income 16.1 16.3 14.2 32.4 21.7
Return on AEA 0.61% 0.84% 1.60% 0.71% 1.33%
Return on risk-adjusted capital 9.2% 11.5% 18.7% 10.2% 15.2%
New business volume $ 2,306.3 $ 1,362.5 $ 867.3 $ 3,668.8 $ 1,925.2
Total Specialty Finance Group
Operating margin $ 282.8 $ 257.9 $ 227.3 $ 540.7 $ 453.0
Net income 95.2 91.4 79.8 186.6 156.2
Return on AEA 1.76% 1.94% 2.37% 1.84% 2.39%
Return on risk-adjusted capital 18.4% 19.5% 20.0% 18.9% 19.9%
New business volume $ 4,991.5 $ 3,700.0 $ 3,278.3 $ 8,691.5 $ 6,854.2
Commercial Finance Group
Commercial Services
Operating margin $ 97.3 $ 88.6 $ 92.6 $ 185.9 $ 179.2
Net income 42.6 37.3 40.0 79.9 76.3
Return on AEA 6.43% 6.02% 5.87% 6.23% 5.76%
Return on risk-adjusted capital 25.5% 24.4% 26.2% 25.0% 25.0%
New business volume $ 76.1 $ 96.0 $ 142.4 $ 172.1 $ 253.5
Corporate Finance
Operating margin $ 100.6 $ 95.5 $ 110.0 $ 196.1 $ 182.9
Net income 43.4 41.7 48.3 85.1 78.2
Return on AEA 2.21% 2.18% 2.97% 2.19% 2.40%
Return on risk-adjusted capital 21.6% 21.5% 28.5% 21.5% 23.1%
New business volume $ 1,324.7 $ 834.4 $ 685.0 $ 2,159.1 $ 1,291.4
Equipment Finance
Operating margin $ 72.6 $ 55.6 $ 53.6 $ 128.2 $ 102.0
Net income 34.2 21.3 19.3 55.5 35.4
Return on AEA 2.19% 1.38% 1.12% 1.78% 1.03%
Return on risk-adjusted capital 15.6% 9.6% 7.5% 12.6% 6.9%
New business volume $ 1,044.6 $ 915.1 $ 1,049.2 $ 1,959.7 $ 1,971.3
Capital Finance
Operating margin $ 59.4 $ 55.2 $ 33.2 $ 114.6 $ 82.6
Net income 38.9 26.6 13.2 65.5 35.7
Return on AEA 1.72% 1.22% 0.65% 1.48% 0.88%
Return on risk-adjusted capital 12.6% 8.5% 6.3% 10.5% 8.7%
New business volume $ 641.7 $ 251.2 $ 438.4 $ 892.9 $ 550.9
Total Commercial Finance Group
Operating margin $ 329.9 $ 294.9 $ 289.4 $ 624.8 $ 546.7
Net income 159.1 126.9 120.8 286.0 225.6
Return on AEA 2.47% 2.03% 1.99% 2.25% 1.87%
Return on risk-adjusted capital 17.5% 14.4% 14.3% 16.0% 13.4%
New business volume $ 3,087.1 $ 2,096.7 $ 2,315.0 $ 5,183.8 $ 4,067.1
Corporate and Other
Operating margin $ 19.1 $ 42.3 $ 25.1 $ 61.4 $ 50.7
Net loss (33.6) (7.9) (24.0) (41.5) (15.9)
Return on AEA (0.29)% (0.08)% (0.27)% (0.19)% (0.10)%
Consolidated
Operating margin $ 631.8 $ 595.1 $ 541.8 $ 1,226.9 $ 1,050.4
Net income 220.7 210.4 176.6 431.1 365.9
Return on AEA 1.86% 1.91% 1.86% 1.88% 1.95%
Return on average tangible
stockholders' equity 16.3% 15.3% 13.7% 15.7% 14.4%
New business volume $ 8,078.6 $ 5,796.7 $ 5,593.3 $ 13,875.3 $ 10,921.3
10
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
Quarters Ended Six Months Ended
--------------------------------------------- ------------------------------
June 30, 2005 March 31, 2005 June 30, 2004 June 30, 2005 June 30, 2004
$ % $ % $ % $ % $ %
------------- -------------- ------------- ------------- -------------
Net Credit Losses - Owned as a Percentage
of Average Finance Receivables
Specialty Finance - commercial $ 26.1 1.17% $ 19.4 0.87% $ 23.5 1.17% $ 45.5 1.02% $ 52.0 1.30%
Specialty Finance - consumer 13.5 0.53% 11.0 0.59% 9.9 1.18% 24.5 0.55% 20.1 1.30%
------ ------ ------ ------ ------
Total Specialty Finance Group 39.6 0.83% 30.4 0.74% 33.4 1.17% 70.0 0.79% 72.1 1.30%
------ ------ ------ ------ ------
Commercial Services 5.5 0.33% 6.6 0.42% 5.0 0.32% 12.1 0.38% 10.0 0.33%
Corporate Finance 1.9 0.10% 5.3 0.30% 23.2 1.43% 7.2 0.19% 51.4 1.59%
Equipment Finance 6.9 0.48% 6.4 0.43% 15.5 0.99% 13.3 0.47% 41.8 1.33%
Capital Finance -- -- 0.4 0.08% 6.5 1.49% 0.4 0.04% 7.6 0.88%
------ ------ ------ ------ ------
Total Commercial Finance Group 14.3 0.26% 18.7 0.35% 50.2 0.97% 33.0 0.31% 110.8 1.08%
------ ------ ------ ------ ------
Total $ 53.9 0.52% $ 49.1 0.52% $ 83.6 1.04% $103.0 0.52% $182.9 1.15%
====== ====== ====== ====== ======
Net Credit Losses - Managed as a Percentage
of Average Managed Finance Receivables
Specialty Finance - commercial $ 35.6 1.12% $ 29.7 0.92% $ 34.9 1.15% $ 65.3 1.03% $ 74.9 1.22%
Specialty Finance - consumer 20.1 0.72% 16.5 0.76% 15.0 1.21% 36.6 0.74% 29.7 1.25%
------ ------ ------ ------ ------
Total Specialty Finance Group 55.7 0.93% 46.2 0.86% 49.9 1.17% 101.9 0.90% 104.6 1.23%
------ ------ ------ ------ ------
Commercial Services 5.5 0.33% 6.6 0.42% 5.0 0.32% 12.1 0.38% 10.0 0.33%
Corporate Finance 2.1 0.11% 5.6 0.32% 23.2 1.43% 7.7 0.21% 51.4 1.59%
Equipment Finance 10.1 0.49% 11.6 0.56% 27.4 1.19% 21.7 0.53% 69.0 1.49%
Capital Finance -- -- 0.4 0.08% 6.5 1.49% 0.4 0.04% 7.6 0.88%
------ ------ ------ ------ ------
Total Commercial Finance Group 17.7 0.29% 24.2 0.41% 62.1 1.05% 41.9 0.35% 138.0 1.17%
------ ------ ------ ------ ------
Total $ 73.4 0.60% $ 70.4 0.62% $112.0 1.10% $143.8 0.61% $242.6 1.19%
====== ====== ====== ====== ======
June 30, 2005 March 31, 2005 June 30, 2004
$ % $ % $ %
------------- -------------- -------------
Finance Receivables Past Due 60 days or
more - Owned as a Percentage of
Finance Receivables
Specialty Finance - commercial $281.2 3.27% $278.5 3.15% $249.5 3.09%
Specialty Finance - consumer 249.6 2.35% 239.8 2.40% 99.5 2.77%
------ ------ ------
Total Specialty Finance Group 530.8 2.76% 518.3 2.75% 349.0 2.99%
------ ------ ------
Commercial Services 39.7 0.62% 91.9 1.28% 39.2 0.67%
Corporate Finance 46.5 0.58% 35.8 0.47% 75.1 1.19%
Equipment Finance 41.1 0.93% 49.6 0.87% 95.9 1.53%
Capital Finance 25.7 1.04% 27.5 1.45% 11.3 0.64%
------ ------ ------
Total Commercial Finance Group 153.0 0.72% 204.8 0.92% 221.5 1.10%
------ ------ ------
Total $683.8 1.69% $723.1 1.76% $570.5 1.79%
====== ====== ======
Non-performing Assets - Owned as a
Percentage of Finance Receivables
Specialty Finance - commercial $163.1 1.90% $172.2 1.95% $155.0 1.92%
Specialty Finance - consumer 135.2 1.27% 125.0 1.25% 104.3 2.90%
------ ------ ------
Total Specialty Finance Group 298.3 1.55% 297.2 1.58% 259.3 2.22%
------ ------ ------
Commercial Services 10.2 0.16% 57.5 0.80% 4.9 0.08%
Corporate Finance 69.4 0.87% 56.5 0.75% 118.1 1.88%
Equipment Finance 78.5 1.78% 98.2 1.72% 173.6 2.76%
Capital Finance 16.3 0.66% 18.9 1.00% 6.3 0.36%
------ ------ ------
Total Commercial Finance Group 174.4 0.82% 231.1 1.03% 302.9 1.50%
------ ------ ------
Total $472.7 1.17% $528.3 1.28% $562.2 1.77%
====== ====== ======
Finance Receivables Past Due 60 days or
more - Managed as a Percentage of Managed
Financial Assets
Specialty Finance - commercial $362.4 2.70% $371.0 2.70% $363.7 2.75%
Specialty Finance - consumer 348.0 2.92% 343.7 3.00% 211.4 4.03%
------ ------ ------
Total Specialty Finance Group 710.4 2.80% 714.7 2.83% 575.1 3.11%
------ ------ ------
Commercial Services 39.7 0.62% 91.9 1.28% 39.2 0.67%
Corporate Finance 47.3 0.59% 36.9 0.49% 75.1 1.19%
Equipment Finance 57.7 0.81% 77.2 0.91% 168.1 1.79%
Capital Finance 25.7 1.04% 27.5 1.45% 11.3 0.64%
------ ------ ------
Total Commercial Finance Group 170.4 0.71% 233.5 0.93% 293.7 1.26%
------ ------ ------
Total $880.8 1.78% $948.2 1.88% $868.8 2.08%
====== ====== ======
11
CIT GROUP INC. AND SUBSIDIARIES
RATIOS AND OTHER DATA
(dollars in millions, except per share data)
Quarters Ended Six Months Ended
-------------------------------------- ------------------------
June 30, March 31, June 30, June 30, June 30,
Profitability 2005 2005 2004 2005 2004
---------- ---------- ---------- ---------- ----------
Net finance margin as a percentage of AEA 3.36% 3.54% 3.91% 3.44% 3.92%
Net finance margin after provision as a percentage of AEA 2.96% 3.13% 3.21% 3.04% 3.11%
Salaries and general operating expenses as a percentage of AMA 2.16% 2.01% 2.17% 2.09% 2.12%
Efficiency ratio(1) 41.4% 40.8% 41.5% 41.1% 41.0%
Return on average stockholders' equity 13.9% 13.6% 12.5% 13.8% 13.1%
Return on average tangible stockholders' equity 16.3% 15.3% 13.7% 15.7% 14.4%
Return on AMA 1.61% 1.62% 1.52% 1.61% 1.58%
See "Non-GAAP Disclosures" for additional information regarding profitability
ratio and metric comparisons
(1) 43.7% and 42.3% for the quarter and six months ended June 30, 2005,
including the provision for restructuring and the gain on sale of business
aircraft portfolio
Securitization Volume
Specialty Finance - Commercial $ 787.2 $ 675.1 $ 475.5 $ 1,462.3 $ 1,438.8
Equipment Finance 265.5 253.9 371.7 519.4 644.8
---------- ---------- ---------- ---------- ----------
Total $ 1,052.7 $ 929.0 $ 847.2 $ 1,981.7 $ 2,083.6
========== ========== ========== ========== ==========
Average Assets
Average Finance Receivables (AFR) $ 41,247.4 $ 37,766.1 $ 32,115.0 $ 39,449.5 $ 31,737.5
Average Earning Assets (AEA) 47,484.3 44,084.6 37,992.8 45,870.8 37,499.1
Average Managed Assets (AMA) 54,912.7 51,954.7 46,608.4 53,428.2 46,406.5
Average Operating Leases (AOL) 8,508.7 8,264.1 7,628.5 8,413.7 7,613.6
Average Stockholders' Equity 6,336.8 6,170.3 5,631.7 6,248.3 5,566.9
Average Tangible Stockholders' Equity 5,431.6 5,498.5 5,138.9 5,476.7 5,076.6
Note: Quarter and six month averages are based on ending 4 and 7 month averages,
respectively.
June 30, March 31, June 30,
2005 2005 2004
-------- --------- --------
Capital and Leverage
Tangible stockholders' equity to managed assets 9.92% 9.59% 10.89%
Debt (net of overnight deposits) to tangible stockholders' equity 7.30x 7.32x 6.09x
Tangible book value per share $ 26.24 $ 25.54 $ 24.51
Reserve for Credit Losses
Reserve for credit losses as a percentage of finance receivables 1.54% 1.51% 1.95%
Reserve for credit losses as a percentage of finance receivables past due 60 days or more 91.0% 85.8% 108.9%
Reserve for credit losses as a percentage of non-performing assets 131.6% 117.4% 110.5%
12
CIT GROUP INC. AND SUBSIDIARIES
Aerospace Portfolio Data
(dollars in millions unless specified)
Total Aerospace Portfolio: June 30, March 31, June 30,
Financing and leasing assets 2005 2005 2004
-------- --------- --------
Commercial $5,573.1 $5,186.5 $4,933.3
Regional $ 349.0 $ 292.0 $ 309.2
Number of planes:
Commercial 215 208 209
Regional 119 121 124
June 30, 2005 March 31, 2005 June 30, 2004
------------------- ------------------- -------------------
Net Net Net
Investment Number Investment Number Investment Number
---------- ------ ---------- ------ ---------- ------
Commercial Aerospace Portfolio:
By Region:
Europe $2,226.7 71 $2,150.5 70 $2,241.7 72
North America 1,081.4 61 1,114.6 62 930.4 68
Asia Pacific 1,511.0 55 1,257.1 48 1,080.9 41
Latin America 594.2 23 598.7 24 624.3 25
Africa / Middle East 159.8 5 65.6 4 56.0 3
-------- --- -------- --- -------- ---
Total $5,573.1 215 $5,186.5 208 $4,933.3 209
======== === ======== === ======== ===
By Manufacturer:
Boeing $2,708.6 132 $2,572.5 128 $2,653.9 138
Airbus 2,818.9 75 2,559.2 71 2,250.0 61
Other 45.6 8 54.8 9 29.4 10
-------- --- -------- --- -------- ---
Total $5,573.1 215 $5,186.5 208 $4,933.3 209
======== === ======== === ======== ===
By Body Type (1):
Narrow body $4,262.8 171 $3,956.5 164 $3,673.3 163
Intermediate 920.4 19 828.2 18 853.7 18
Wide body 344.3 17 347.0 17 376.9 18
Other 45.6 8 54.8 9 29.4 10
-------- --- -------- --- -------- ---
Total $5,573.1 215 $5,186.5 208 $4,933.3 209
======== === ======== === ======== ===
By Product:
Operating lease $4,791.5 169 $4,394.2 162 $4,038.4 158
Leverage lease (other) 339.7 12 337.2 12 332.9 16
Leverage lease (tax optimized) 219.3 9 218.0 9 219.9 9
Capital lease 130.3 6 132.7 6 241.1 7
Loan 92.3 19 104.4 19 101.0 19
-------- --- -------- --- -------- ---
Total $5,573.1 215 $5,186.5 208 $4,933.3 209
======== === ======== === ======== ===
Number of accounts 96 94 85
Weighted average age of fleet (years) 6 7 7
Largest customer net investment $ 281.9 $ 284.5 $ 316.9
New Aircraft Delivery Order Book (dollars in billions)
For the Years Ending December 31,
2004 (Remaining 2004) $ 0.4 10
2005 (Remaining 2005) $ 0.3 7 $ 0.8 15 0.9 18
2006 0.9 19 0.9 19 1.0 20
2007 0.3 8 0.3 7 0.3 5
-------- --- -------- --- -------- ---
Total $ 1.5 34 $ 2.0 41 $ 2.6 53
======== === ======== === ======== ===
(1) Narrow body are single aisle design and consist primarily of Boeing 737
and 757 series and Airbus A320 series aircraft. Intermediate body are
smaller twin aisle design and consist primarily of Boeing 767 series and
Airbus A330 series aircraft. Wide body are large twin aisle design and
consist primarily of Boeing 747 and 777 series and McDonnell Douglas DC10
series aircraft.
13
CIT GROUP INC. AND SUBSIDIARIES
Non-GAAP Disclosures
(dollars in millions)
June 30, March 31, June 30,
2005 2005 2004
--------- --------- ---------
Managed assets (1):
Finance receivables $40,509.3 $41,182.5 $31,828.6
Operating lease equipment, net 8,642.9 8,313.1 7,838.8
Finance receivables held for sale 1,435.9 1,481.3 1,595.2
Equity and venture capital investments (included
in other assets) 31.6 101.8 190.9
--------- --------- ---------
Total financing and leasing portfolio assets 50,619.7 51,078.7 41,453.5
Securitized assets 7,459.9 7,716.6 8,401.0
--------- --------- ---------
Managed assets $58,079.6 $58,795.3 $49,854.5
========= ========= =========
Earning assets (2):
Total financing and leasing portfolio assets $50,619.7 $51,078.7 $41,453.5
Credit balances of factoring clients (3,649.2) (4,269.8) (3,292.1)
--------- --------- ---------
Earning assets $46,970.5 $46,808.9 $38,161.4
========= ========= =========
Tangible equity (3):
Total equity $ 6,401.2 $ 6,318.0 $ 5,691.8
Other comprehensive (income) loss relating
to derivative financial instruments 29.5 (20.3) 8.1
Unrealized gain on securitization investments (17.0) (7.7) (6.8)
Goodwill and intangible assets (903.1) (906.4) (516.4)
--------- --------- ---------
Tangible common equity 5,510.6 5,383.6 5,176.7
Preferred capital securities 252.9 253.3 254.6
--------- --------- ---------
Tangible equity $ 5,763.5 $ 5,636.9 $ 5,431.3
========= ========= =========
Debt, net of overnight deposits (4):
Total debt $43,458.5 $42,525.3 $34,686.9
Overnight deposits (1,149.2) (1,006.3) (1,347.4)
Preferred capital securities (252.9) (253.3) (254.6)
--------- --------- ---------
Debt, net of overnight deposits $42,056.4 $41,265.7 $33,084.9
========= ========= =========
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.
14