Exhibit 99.1
[CIT Logo]
CIT ANNOUNCES FIRST QUARTER RESULTS
o EPS of $1.12 up 14% from prior year, excluding 2005 derivative gains
o New business volume up 53% over prior year
o Managed assets up 11% from prior year on balanced growth
o Continued strong credit metrics
NEW YORK, April 19, 2006 - CIT Group Inc. (NYSE: CIT) today reported
diluted earnings per share of $1.12 for the quarter, up 14.3% from last year
(excluding gains on derivative contracts that were subsequently terminated in
the fourth quarter of 2005). Net income was $229.7 million for the first
quarter, up from $227.6 million last year ($211.9 million excluding gains on
derivative contracts).
Profitability improved across our businesses in Commercial Finance and
Specialty Finance. Return on average common equity was 14.1% (14.5% excluding
the impact of option expensing) compared to 14.5% last quarter and 13.6% last
year, excluding amounts related to terminated derivative contracts and other
notable items in both prior year periods.
The 2006 first quarter included the following items of note that impacted
comparisons to prior year operating trends:
o Option-related compensation expense totaled $10.3 million in connection
with the adoption of SFAS 123R in the quarter ($0.03 diluted EPS
decrease).
o A restructuring charge of $11.1 million comprised of termination benefits
relating to business realignments was recorded in the quarter ($0.04
diluted EPS decrease).
o Income tax expense was lowered by $6.5 million due to a deferred tax
adjustment related to higher utilization of net operating losses ($0.03
diluted EPS increase).
These three items decreased current quarter reported diluted earnings per
share by $0.04.
Commenting on the Company's performance, Jeffrey M. Peek, Chairman and
Chief Executive Officer, said:
"I am pleased to report a successful start to 2006, marked by solid
earnings growth and strong profitability. Our operating performance was driven
by a sharp focus on execution coupled with momentum in all five of our operating
groups. The quarter also benefited from a historically strong credit
performance.
"We saw terrific results from our investment in the sales force, as new
business volume was strong and broad based across all origination channels, up
over 50% from the prior year. Managed assets grew to over $65 billion. We
achieved record volume in our healthcare, home lending and student lending
businesses---a direct result of recent sales initiatives. In addition, the
proportion of overseas revenue more than doubled in the last two years, and now
represents in excess of 20% of our pre-tax income.
"In all, we are tracking to our 2006 plan and I remain optimistic about
the rest of the year. We continue to see opportunities to grow assets, improve
shareholder returns and further strengthen leadership positions in our markets."
1
Segment Results:
Commercial Finance Group
Trade Finance
o Net income increased 16.1% from the prior year on the strength of an
acquisition in March 2005, strong interest margins and higher factoring
commissions.
o Owned assets were $6.7 billion at quarter end, unchanged from December 31,
2005 and down from $7.2 billion at March 31, 2005.
o Operating margin improved from last year on stronger interest income
driven by improved commission rates and higher volume levels. The
proportion of international factoring volume was up appreciably from the
prior year.
o Credit metrics remained strong. Net charge-offs were flat with last year,
while 60+ days past due and non-performing accounts approximated low
year-end levels.
o Salaries and general operating expenses were up modestly compared to last
year, reflecting a full quarter of last year's acquisition.
o Return on risk adjusted capital improved modestly from last year. This
segment remains one of our highest returning businesses.
Corporate Finance
o Net income improved 6.7% from 2005, reflecting improved margins, strong
non-spread revenue and low charge-offs. We saw improved profitability in
construction.
o Volume was strong across all of the businesses and up 39% from March 2005.
Managed assets grew $541 million or 3.3% to $17.1 billion from last
quarter, with strength in healthcare and communications, media &
entertainment. Growth included a number of long-term care real estate,
sports and entertainment transactions.
o Operating margin improved from last year on strong performances in
communications, media & entertainment and healthcare. Non-spread revenue
improved 8% and included higher fee income in healthcare.
o Credit metrics remained strong. Net charge-offs were down $11.5 million
from last year, benefiting from higher recoveries, and delinquencies were
down $17.3 million from December 31, 2005.
o Salaries and general operating expenses increased over last year
reflecting our build-out of our sales force, expansion of our product
offerings, as well as acquisitions.
o Return on risk adjusted capital was flat with last year.
Transportation Finance
o Net income improved 118% from 2005 reflecting an increase in operating
lease margins, including particularly strong aerospace rental and
prepayment fees, and a significant reduction in the effective tax rate due
to the continued relocation of aircraft to Ireland.
o Financing and leasing assets were $10.6 billion at March 31, 2006,
compared to $10.5 billion at December 31, 2005, and $8.7 billion at March
31, 2005. We took delivery and placed four new aircraft from our order
book during the quarter. We had six off-lease aircraft. Rail demand
remains strong, with our fleet virtually fully utilized.
o Other revenue was up over last year on gains from equipment sales.
o Credit metrics remained strong. Charge-offs were minimal and down
significantly from last quarter and down from last year.
2
o Salaries and general operating expenses were up over last year due to the
establishment of our international aerospace platform as we continue to
grow these businesses.
o Return on risk-adjusted capital almost doubled from last year.
Specialty Finance Group
Vendor Finance
o Net income improved 11% from the prior year on strong performance in the
international operations.
o Managed assets, essentially flat with last quarter and down from last year
on the accelerated liquidation of non-strategic assets, continue to grow
in the international operations.
o New business volume was down from last year, but volume excluding Dell in
the U.S. grew 15% on the addition of new vendors and increased penetration
of existing relationships around the world. In addition, Dell volume
outside the U.S. jumped 21% from last year.
o Operating margin increased from last year on improved non-spread revenue
in the international operations.
o Credit metrics remained strong. Net charge-offs improved from last year in
the U.S., offset by higher credit costs in the international operations.
Both delinquencies and non-performing metrics were relatively flat to
year-end levels and down from last year.
o Salaries and general operating expenses were well controlled, down
slightly from last year.
o Return on risk-adjusted capital improved from last year to approximately
26%.
Consumer and Small Business Lending
o Net income increased 34% from the prior year, reflecting improved results
in all businesses: Home Lending, Student Loan Xpress, Small Business
Lending, and CIT Bank.
o Managed assets increased 12.3% from December 31, 2005 and 42.6% from last
year. The increase for the quarter included $1.1 billion in Student Loan
Xpress and $1.0 billion in Home Lending. Student Loan Xpress assets
increased 43% from last year.
o New business volume increased $2.3 billion (147%) over last year on strong
originations at Home Lending and Student Loan Xpress. CIT is the preferred
lender to over 1,000 schools, up 73% from a year ago. Progress is being
made on bringing student loan servicing in-house in support of our
full-service strategy with serviced assets approximating $2 billion at
quarter end.
o During the quarter, we grew the deposit funding at CIT Bank, with nearly
$700 million in deposits and $1 billion in assets at quarter end, on track
with our plans.
o Operating margin increased from last year. Other revenue increased due to
strong fee generation.
o Net charge-offs were flat with last quarter and down 21 basis points from
last year (excluding U.S. government guaranteed loans at Student Loan
Xpress), driven by improvements in Small Business Lending.
o Salaries and general operating expenses grew over last year, mainly from
the expansion of our sales force in all businesses and Student Loan
Xpress.
o Segment return on risk-adjusted capital was 11.4%, versus 13.4% in 2005,
as returns bear the cost of Student Loan Xpress goodwill and acquired
intangibles.
Corporate and other includes the previously discussed restructuring charge, the
tax adjustment and stock option expense, as well as $7.7 million in dividends on
preferred securities.
3
Consolidated Financial Highlights:
Net Finance and Risk-Adjusted Margin
o Net finance margin was 3.36% as a percentage of average earning assets,
essentially unchanged from last quarter and down from 3.62% last year.
Compared to the prior quarter, margins on operating leases improved on
strong rents whereas lending margins declined. Yield-related fees were
particularly strong. The decline from last year was primarily due to the
effect of rising short-term interest rates, longer-term debt financings,
competitive market pricing on loan products, and the impact of lower
margin student loans.
o Operating lease margin was 6.60% of average operating leases, compared to
6.17% last quarter and 5.83% last year, reflecting increased rents on
aerospace and rail equipment and a high level of prepayment fees and past
due rentals.
o Risk-adjusted margin (net finance margin after provision for credit
losses) was 3.11% as a percentage of average earning assets, up from 2.94%
last quarter and down from 3.21% in the prior year quarter.
Other Revenue
o Other revenue totaled $260.1 million, compared to $288.8 million last
quarter ($267.2 million excluding a gain on sale of a micro-ticket leasing
business and a charge on derivatives that were terminated) and $276.5
million last year ($238.0 million excluding a gain on derivatives that
were terminated and a gain on venture capital investments). The increase
over last year was driven by strong fee (including syndication fees) and
other income in our Corporate Finance and Consumer businesses. The
decrease from last quarter was principally due to seasonally lower
factoring fees.
o Securitization gains totaled $13.6 million, 4.0% of pretax income for the
quarter, up from $4.9 million and $11.8 million in the prior quarter and
prior year, on slightly higher securitization volume in vendor finance in
the U.S. and Canada.
Salaries and General Operating Expenses
o Employee headcount totaled approximately 6,630 at March 31, 2006 versus
6,340 at December 31, 2005, and 6,130 at March 31, 2005. The increase
includes additions to our sales force.
o Total operating expenses were $334.2 million versus $299.9 million last
quarter and $264.0 million a year ago. The current period includes a
restructuring charge of $11.1 million and a charge of $10.3 million
relating to the adoption of SFAS 123R, which mandates the expensing of
stock options. The remaining increase reflects higher incentive-based
compensation, salaries and other investments made in sales and marketing.
o The efficiency ratio was 45.7% (excluding the restructuring charge), up
from 41.6% last quarter (excluding the gain on the micro-ticket business
sale, derivatives mark-to-market adjustments and other charges) and 41.5%
last year (excluding the derivatives mark-to-market adjustments and gain
on venture capital investments). The higher ratio in the current quarter
reflects stock option expensing and the continued build out of our sales
force, where incremental revenues typically lag the initial expense.
Effective Tax Rate
o The effective tax rate was 29.8% (31.8% excluding the deferred income tax
adjustment), compared to 29.4% last quarter (34.1% excluding a deferred
income tax liability release) and
4
37.6% last year. The reduction from last year reflects the continued
relocation and funding of certain aerospace assets offshore and improved
international earnings.
Portfolio and Managed Assets
o Managed assets were $65.5 billion at March 31, 2006, up 4.2% from December
31, 2005 and 11.4% last year.
o Origination volume for the quarter, excluding factoring volume, increased
52.9% to $8.7 billion from the prior year due to strong originations
across all our businesses and origination channels, including student
lending.
Credit Quality
o Credit quality for the quarter was excellent as net charge-offs were 0.37%
of average finance receivables, down from 0.91% last quarter and 0.52%
last year.
o Total 60+ day owned delinquencies were $822.4 million (1.76% of finance
receivables) at March 31, 2006, up from $758.2 million (1.71%) last
quarter and $723.1 million (1.76%) last year. Corporate Finance
delinquencies improved. Delinquencies increased in Consumer home lending
reflecting growth and seasoning of the portfolio, and were higher in
student lending due to a recent receivable purchase and seasoning of the
portfolio. Though delinquency is higher in the student loan portfolio than
in other portfolios, these amounts are not indicative of potential loss
due to the related U.S. government guarantee.
o Non-performing assets (non-accrual loans plus repossessed assets) were
$542.3 million or 1.16% of finance receivables, compared to $521.2 million
(1.18%) last quarter and $528.3 million (1.28%) last year. The Consumer
home lending increase from last quarter was due to portfolio seasoning,
and was partially offset by improvements in the Commercial Finance Group.
o The reserve for credit losses was $620.3 million (1.52% excluding student
loans), compared to $621.7 million (1.58% excluding student loans) last
quarter, and $620.4 million (1.68% excluding student loans) at March 31,
2005, reflecting lower credit losses in the current period.
Capitalization and Leverage
o The ratio of total tangible equity to managed assets at March 31, 2006 was
9.72%, compared to 9.80% at year-end, and 9.62% last year.
5
2006 Segment Reporting Changes
Effective January 1, 2006, we realigned select business operations to serve our
clients better. Following is a summary of the changes reflected herein. Prior
periods have been conformed to the current period format, except for the
diversified portfolio transfer noted below.
o The Small Business Lending unit ($1.3 billion in owned assets at March 31,
2006) was transferred from Specialty Finance - Commercial to Specialty
Finance - Consumer, now named Consumer and Small Business Lending,
reflecting commonalities with our home lending and student loan
businesses.
o Consistent with our strategic focus on industry alignment, a majority of
the Equipment Finance segment was consolidated into our Corporate Finance
segment. A diversified industry portfolio of approximately $350 million
was transferred to Vendor Finance. This combination will allow us to
provide clients in the construction and selected other industries access
to the full complement of CIT's products and services.
o We have also made name changes to clarify the market focus of our
segments.
(a) Specialty Finance - Commercial has been renamed Vendor Finance
(b) Specialty Finance - Consumer has been renamed Consumer/Small
Business Lending
(c) Commercial Services has been renamed Trade Finance
(d) Capital Finance has been renamed Transportation Finance
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 (ET). Interested parties may access the
conference call live today by dialing 877-558-5219 for U.S. and Canadian callers
or 706-634-5419 for international callers, and reference "CIT First 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 (ET) April 26, 2006, by dialing 800-642-1687 for U.S. and
Canadian callers or 706-645-9291 for international callers with the pass-code
7280286, or at the following website: http://ir.cit.com.
6
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 over $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 worldwide. 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 global headquarters in New York City, has over 6,500 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," "target," 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, 2005. 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
Steven Klimas - Vice President - Investor Relations
(973) 535-3769
or
Kelley Gipson - Executive Vice President -
Marketing & Communications
(973) 422-3235
7
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
(dollars in millions, except per share data)
Quarters Ended
-----------------------------------------
March 31, December 31, March 31,
2006 2005 2005
----------- ------------ -----------
Finance income $ 1,294.6 $ 1,232.8 $ 1,028.0
Interest expense 598.3 557.3 391.5
----------- ------------ -----------
Net finance income 696.3 675.5 636.5
Depreciation on operating lease equipment 249.4 246.6 237.6
----------- ------------ -----------
Net finance margin 446.9 428.9 398.9
Provision for credit losses 33.3 54.6 45.3
----------- ------------ -----------
Net finance margin after provision for credit losses 413.6 374.3 353.6
Other revenue 260.1 288.8 276.5
----------- ------------ -----------
Operating margin 673.7 663.1 630.1
Salaries and general operating expenses 323.1 299.9 264.0
Provision for restructuring 11.1 -- --
----------- ------------ -----------
Income before provision for income taxes 339.5 363.2 366.1
Provision for income taxes (101.3) (106.9) (137.6)
Minority interest, after tax (0.8) (0.5) (0.9)
----------- ------------ -----------
Net income before preferred stock dividends 237.4 255.8 227.6
Preferred stock dividends (7.7) (7.5) --
----------- ------------ -----------
Net income available to common stockholders $ 229.7 $ 248.3 $ 227.6
=========== ============ ===========
Earnings per common share
Basic earnings per share $ 1.15 $ 1.24 $ 1.08
Diluted earnings per share $ 1.12 $ 1.21 $ 1.06
Number of shares - basic (thousands) 199,462 199,973 210,656
Number of shares - diluted (thousands) 204,455 205,195 215,090
Other Revenue
Fees and other income $ 168.8 $ 170.0 $ 148.8
Factoring commissions 55.8 61.1 54.8
Gains on sales of leasing equipment 21.4 27.7 22.6
Gains on securitizations 13.6 4.9 11.8
Gain on sale of micro-ticket leasing business unit -- 44.3 --
(Loss) gain on derivatives -- (22.7) 27.7
Gain on venture capital investments 0.5 3.5 10.8
----------- ----------- -----------
Total other revenue $ 260.1 $ 288.8 $ 276.5
=========== =========== ===========
Fees and other income includes: servicing fees, structuring and advisory fees,
syndication fees and gains and (losses) from other asset and receivable sales.
8
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
March 31, December 31,
2006 2005
--------- ------------
ASSETS
Financing and leasing assets:
Finance receivables $46,841.3 $44,294.5
Reserve for credit losses (620.3) (621.7)
--------- ------------
Net finance receivables 46,221.0 43,672.8
Operating lease equipment, net 10,166.0 9,635.7
Financing and leasing assets held for sale 1,551.0 1,620.3
Cash and cash equivalents 2,265.7 3,658.6
Retained interests in securitizations and other investments 1,117.1 1,152.7
Goodwill and intangible assets, net 1,013.5 1,011.5
Other assets 2,396.2 2,635.0
--------- ------------
Total Assets $64,730.5 $63,386.6
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper $ 4,282.3 $ 5,225.0
Deposits 687.9 261.9
Variable-rate senior unsecured notes 17,847.4 15,485.1
Fixed-rate senior unsecured notes 22,652.3 22,591.7
Non-recourse secured borrowings - student lending 3,423.3 4,048.8
Preferred capital securities 251.6 252.0
--------- ------------
Total debt 49,144.8 47,864.5
Credit balances of factoring clients 4,048.9 4,187.8
Accrued liabilities and payables 4,281.7 4,321.8
--------- ------------
Total Liabilities 57,475.4 56,374.1
Minority interest 50.2 49.8
Stockholders' Equity:
Preferred stock 500.0 500.0
Common stock 2.1 2.1
Paid-in capital 10,639.0 10,632.9
Accumulated deficit (3,502.7) (3,691.4)
Accumulated other comprehensive income 151.1 115.2
Less: Treasury stock, at cost (584.6) (596.1)
--------- ------------
Total Common Stockholders' Equity 6,704.9 6,462.7
--------- ------------
Total Stockholders' Equity 7,204.9 6,962.7
--------- ------------
Total Liabilities and Stockholders' Equity $64,730.5 $63,386.6
========= ============
Other Assets
Investments in and receivables from non-consolidated subsidiaries $ 440.3 $ 549.8
Accrued interest and receivables from derivative counterparties 409.1 350.2
Deposits on commercial aerospace flight equipment 323.6 317.4
Prepaid expenses 143.5 145.9
Repossessed assets and off-lease equipment 87.5 80.7
Direct and private fund equity investments 31.1 30.2
Furniture and fixtures, miscellaneous receivables and other assets 961.1 1,160.8
--------- ---------
$ 2,396.2 $ 2,635.0
========= =========
9
CIT GROUP INC. AND SUBSIDIARIES
OWNED AND MANAGED ASSET COMPOSITION
(dollars in millions)
March 31, December 31, March 31,
2006 2005 2005
--------- ------------ ---------
Specialty Finance Group
Vendor Finance(2)
Finance receivables $ 7,325.8 $ 7,264.4 $ 7,699.5
Operating lease equipment, net 1,028.1 1,049.5 1,030.9
Financing and leasing assets held for sale 655.9 720.3 955.3
--------- ------------ ---------
Owned assets 9,009.8 9,034.2 9,685.7
Finance receivables securitized and managed by CIT 3,875.9 3,921.6 3,870.2
--------- ------------ ---------
Managed assets 12,885.7 12,955.8 13,555.9
--------- ------------ ---------
Consumer and Small Business Lending(2)
Finance receivables - home lending 8,982.5 8,199.7 5,423.5
Finance receivables - education lending 6,117.3 5,051.0 4,321.9
Finance receivables - small business lending 1,237.6 1,238.6 1,137.1
Finance receivables - other 376.6 302.9 255.8
Financing and leasing assets held for sale 616.2 496.2 434.2
--------- ------------ ---------
Owned assets 17,330.2 15,288.4 11,572.5
Home lending finance receivables securitized and managed by CIT 781.6 838.8 1,131.5
--------- ------------ ---------
Managed assets 18,111.8 16,127.2 12,704.0
--------- ------------ ---------
Commercial Finance Group
Trade Finance
Finance receivables 6,719.5 6,690.0 7,184.9
--------- ------------ ---------
Corporate Finance(1)
Finance receivables 14,533.3 13,652.5 13,266.2
Operating lease equipment, net 165.9 177.7 462.1
Financing and leasing assets held for sale 195.1 253.5 91.8
--------- ------------ ---------
Owned assets 14,894.3 14,083.7 13,820.1
Finance receivables securitized and managed by CIT 2,255.6 2,525.3 2,714.9
--------- ------------ ---------
Managed assets 17,149.9 16,609.0 16,535.0
--------- ------------ ---------
Transportation Finance
Finance receivables 1,548.7 1,895.4 1,891.2
Operating lease equipment, net 8,972.0 8,408.5 6,820.1
Financing and leasing assets held for sale 83.8 150.3 --
--------- ------------ ---------
Owned assets 10,604.5 10,454.2 8,711.3
--------- ------------ ---------
Other - Equity Investments 31.1 30.2 101.8
--------- ------------ ---------
Total
Finance receivables $46,841.3 $44,294.5 $41,180.1
Operating lease equipment, net 10,166.0 9,635.7 8,313.1
Financing and leasing assets held for sale 1,551.0 1,620.3 1,481.3
--------- ------------ ---------
Financing and leasing assets excl. equity investments 58,558.3 55,550.5 50,974.5
Equity investments (included in other assets) 31.1 30.2 101.8
--------- ------------ ---------
Owned assets 58,589.4 55,580.7 51,076.3
Finance receivables securitized and managed by CIT 6,913.1 7,285.7 7,716.6
--------- ------------ ---------
Managed assets $65,502.5 $62,866.4 $58,792.9
========= ============ =========
(1) During the quarter, the assets of Equipment Finance were transferred to
Corporate Finance. At the same time, a portfolio of approximately $350 million
of vendor related assets that were part of Equipment Finance, were transferred
to Vendor Finance. Prior year data has been conformed for the transfer to
Corporate Finance, but not the portfolio asset transfer to Vendor Finance.
(2) During the quarter Small Business Lending was transferred from Vendor
Finance to Consumer, prior periods have been conformed to this presentation.
10
CIT GROUP INC. AND SUBSIDIARIES
SEGMENT DATA
(dollars in millions)
Quarters Ended
-----------------------------------------
March 31, December 31, March 31,
2006 2005 2005
----------- ------------ -----------
Commercial Finance Group
Trade Finance
Net finance income $ 37.0 $ 44.9 $ 28.3
Provision for credit losses 6.6 4.5 6.6
Other revenue 69.7 78.5 67.0
Operating margin 100.1 118.9 88.7
Provision for income taxes (26.1) (34.3) (22.2)
Net income 43.3 56.4 37.3
Return on AEA 7.16% 8.09% 6.02%
Return on risk-adjusted capital 27.1% 30.6% 24.4%
New business volume $ 129.6 $ 138.0 $ 96.0
Corporate Finance
Net finance income $ 125.2 $ 122.2 $ 122.0
Depreciation on operating lease equipment 8.6 8.7 14.3
Provision for credit losses (1.7) 3.1 12.1
Other revenue 60.0 65.3 55.5
Operating margin 178.3 175.7 151.1
Provision for income taxes (41.2) (40.2) (38.4)
Net income 67.2 66.4 63.0
Return on AEA 1.86% 1.88% 1.82%
Return on risk-adjusted capital 14.6% 14.6% 14.7%
New business volume $ 2,438.0 $ 2,691.9 $ 1,749.4
Transportation Finance
Net finance income $ 184.9 $ 159.0 $ 132.9
Depreciation on operating lease equipment 104.3 97.0 82.5
Provision for credit losses -- 1.9 0.4
Other revenue 6.1 11.4 5.2
Operating margin 86.7 71.5 55.2
Provision for income taxes (4.8) 10.9 (10.7)
Net income 57.9 58.6 26.6
Return on AEA 2.21% 2.27% 1.22%
Return on risk-adjusted capital 16.2% 16.7% 8.8%
New business volume $ 497.1 $ 701.3 $ 251.2
Total Commercial Finance Group
Net finance income $ 347.1 $ 326.1 $ 283.2
Depreciation on operating lease equipment 112.9 105.7 96.8
Provision for credit losses 4.9 9.5 19.1
Other revenue 135.8 155.2 127.7
Operating margin 365.1 366.1 295.0
Provision for income taxes (72.1) (63.6) (71.3)
Net income 168.4 181.4 126.9
Return on AEA 2.46% 2.67% 2.03%
Return on risk-adjusted capital 17.2% 18.2% 14.4%
New business volume $ 3,064.7 $ 3,531.2 $ 2,096.6
11
CIT GROUP INC. AND SUBSIDIARIES
SEGMENT DATA
(dollars in millions)
Quarters Ended
-----------------------------------------
March 31, December 31, March 31,
2006 2005 2005
----------- ------------ -----------
Specialty Finance Group
Vendor Finance
Net finance income $ 266.3 $ 274.5 $ 273.2
Depreciation on operating lease equipment 136.5 140.8 140.9
Provision for credit losses 12.9 21.0 12.9
Other revenue 84.8 124.4 71.0
Operating margin 201.7 237.1 190.4
Provision for income taxes (44.2) (59.7) (39.5)
Net income 74.5 99.7 67.1
Return on AEA 3.21% 4.24% 2.72%
Return on risk-adjusted capital 25.5% 33.8% 22.7%
New business volume $ 1,949.0 $ 2,528.4 $ 2,151.0
Consumer and Small Business Lending
Net finance income $ 80.7 $ 69.9 $ 55.1
Provision for credit losses 15.5 12.3 13.7
Other revenue 39.2 29.1 28.7
Operating margin 104.4 86.7 70.1
Provision for income taxes (18.6) (16.5) (15.3)
Net income 30.4 26.6 22.7
Return on AEA 0.73% 0.74% 1.00%
Return on risk-adjusted capital 11.4% 11.2% 13.4%
New business volume $ 3,831.6 $ 3,750.6 $ 1,549.0
Total Specialty Finance Group
Net finance income $ 347.0 $ 344.4 $ 328.3
Depreciation on operating lease equipment 136.5 140.8 140.9
Provision for credit losses 28.4 33.3 26.6
Other revenue 124.0 153.5 99.7
Operating margin 306.1 323.8 260.5
Provision for income taxes (62.8) (76.2) (54.8)
Net income 104.9 126.3 89.8
Return on AEA 1.62% 2.13% 1.90%
Return on risk-adjusted capital 18.7% 23.2% 19.2%
New business volume $ 5,780.6 $ 6,279.0 $ 3,700.0
Corporate and Other
Net finance income $ 2.2 $ 5.0 $ 25.0
Provision for credit losses -- 11.8 (0.4)
Other revenue 0.3 (19.9) 49.1
Operating margin 2.5 (26.8) 74.6
Provision for income taxes 33.6 32.9 (11.5)
Net income (loss) (43.6) (59.4) 10.9
Return on AEA (0.33)% (0.47)% 0.06%
12
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
Quarters Ended
---------------------------------------------------
March 31, 2006 December 31, 2005 March 31, 2005
$ % $ % $ %
-------------- ----------------- ---------------
Net Credit Losses - Owned as a Percentage of
Average Finance Receivables
Vendor Finance $ 13.8 0.74% $ 21.4 1.15% $ 13.4 0.69%
Consumer and Small Business Lending 21.6 0.54% 17.9 0.53% 17.0 0.79%
------ ------ ------
Total Specialty Finance Group 35.4 0.60% 39.3 0.75% 30.4 0.74%
------ ------ ------
Trade Finance 6.7 0.42% 4.5 0.25% 6.6 0.42%
Corporate Finance 0.2 0.01% 5.5 0.16% 11.7 0.35%
Transportation Finance -- -- 50.9 9.86% 0.4 0.09%
------ ------ ------
Total Commercial Finance Group 6.9 0.12% 60.9 1.05% 18.7 0.35%
------ ------ ------
Total $ 42.3 0.37% $100.2 0.91% $ 49.1 0.52%
====== ====== ======
Net Credit Losses - Managed as a Percentage of
Average Managed Finance Receivables
Vendor Finance $ 21.7 0.77% $ 30.4 1.07% $ 23.7 0.81%
Consumer and Small Business Lending 28.2 0.67% 25.2 0.70% 22.5 0.92%
------ ------ ------
Total Specialty Finance Group 49.9 0.71% 55.6 0.86% 46.2 0.86%
------ ------ ------
Trade Finance 6.7 0.42% 4.5 0.25% 6.6 0.42%
Corporate Finance 1.3 0.03% 11.3 0.28% 17.2 0.43%
Transportation Finance -- -- 50.9 9.86% 0.4 0.09%
------ ------ ------
Total Commercial Finance Group 8.0 0.13% 66.7 1.04% 24.2 0.40%
------ ------ ------
Total $ 57.9 0.44% $122.3 0.95% $ 70.4 0.62%
====== ====== ======
March 31, 2006 December 31, 2005 March 31, 2005
$ % $ % $ %
-------------- ----------------- ---------------
Finance Receivables Past Due 60 days or more -
Owned as a Percentage of Finance Receivables
Vendor Finance $223.4 3.05% $251.8 3.47% $233.6 3.03%
Consumer and Small Business Lending 464.8 2.78% 363.2 2.46% 284.7 2.56%
------ ------ ------
Total Specialty Finance Group 688.2 2.86% 615.0 2.79% 518.3 2.75%
------ ------ ------
Trade Finance 42.8 0.64% 39.3 0.59% 91.9 1.28%
Corporate Finance 69.6 0.48% 86.9 0.64% 92.0 0.69%
Transportation Finance 21.8 1.41% 17.0 0.90% 20.9 1.11%
------ ------ ------
Total Commercial Finance Group 134.2 0.59% 143.2 0.64% 204.8 0.92%
------ ------ ------
Total $822.4 1.76% $758.2 1.71% $723.1 1.76%
====== ====== ======
Non-performing Assets - Owned as a Percentage of
Finance Receivables
Vendor Finance $103.6 1.41% $112.1 1.54% $124.1 1.61%
Consumer and Small Business Lending 256.4 1.53% 216.1 1.46% 173.1 1.55%
------ ------ ------
Total Specialty Finance Group 360.0 1.50% 328.2 1.49% 297.2 1.58%
------ ------ ------
Trade Finance 4.4 0.07% 5.3 0.08% 57.5 0.80%
Corporate Finance 163.7 1.13% 165.4 1.21% 161.3 1.22%
Transportation Finance 14.2 0.92% 22.3 1.18% 12.3 0.65%
------ ------ ------
Total Commercial Finance Group 182.3 0.80% 193.0 0.87% 231.1 1.03%
------ ------ ------
Total $542.3 1.16% $521.2 1.18% $528.3 1.28%
====== ====== ======
Finance Receivables Past Due 60 days or more -
Managed as a Percentage of Managed Financial Assets
Vendor Finance $319.3 2.69% $357.6 3.00% $326.1 2.60%
Consumer and Small Business Lending 537.5 2.97% 446.0 2.77% 388.6 3.06%
------ ------ ------
Total Specialty Finance Group 856.8 2.86% 803.6 2.87% 714.7 2.83%
------ ------ ------
Trade Finance 42.8 0.64% 39.3 0.59% 91.9 1.28%
Corporate Finance 74.8 0.44% 105.5 0.64% 120.7 0.75%
Transportation Finance 21.8 1.34% 17.0 0.83% 20.9 1.11%
------ ------ ------
Total Commercial Finance Group 139.4 0.55% 161.8 0.64% 233.5 0.93%
------ ------ ------
Total $996.2 1.80% $965.4 1.81% $948.2 1.88%
====== ====== ======
13
CIT GROUP INC. AND SUBSIDIARIES
RATIOS AND OTHER DATA
(dollars in millions, except per share data)
Quarters Ended
---------------------------------------
March 31, December 31, March 31,
Profitability 2006 2005 2005
--------- ------------ ---------
Net finance margin as a percentage of AEA 3.36% 3.37% 3.62%
Net finance margin after provision for credit losses as a percentage of AEA 3.11% 2.94% 3.21%
Salaries and general operating expenses as a percentage of AMA(1) 2.14% 2.06% 2.03%
Efficiency ratio(2) 45.7% 41.6% 41.5%
Return on average common stockholders' equity 14.1% 16.0% 14.7%
Return on average tangible common stockholders' equity 16.7% 19.2% 16.5%
Return on AEA 1.73% 1.95% 2.07%
Return on AMA 1.52% 1.71% 1.75%
(1) The March 2006 ratio excludes the restructuring charge, including that
charge, the ratio was 2.22%.
(2) The March 2006 ratio excludes the restructuring charge, including that
charge, the efficiency was 47.3%. The December 2005 ratio excludes
derivative losses and the gain on sale of micro-ticket business and the
March 2005 ratio excludes the derivative gain and gain on sale of venture
capital investments. Including these, the ratios were 41.8% and 39.1% for
the quarters ended December 31 and March 31, 2005.
Securitization Volume
Vendor Finance $ 866.0 $ 732.4 $ 675.1
Corporate Finance 80.6 209.9 253.9
--------- --------- ---------
Total $ 946.6 $ 942.3 $ 929.0
========= ========= =========
Average Assets
Average Finance Receivables (AFR) $45,765.1 $44,169.8 $37,764.9
Average Earning Assets (AEA) 53,222.2 50,937.8 44,083.4
Average Managed Assets (AMA) 60,276.7 58,243.8 51,953.5
Average Operating Leases (AOL) 9,825.4 9,379.5 8,264.1
Average Common Stockholders' Equity 6,508.1 6,196.4 6,174.6
Average Tangible Common Stockholders' Equity 5,487.1 5,185.6 5,502.8
March 31, December 31, March 31,
2006 2005 2005
Capital and Leverage --------- ------------ ---------
Total tangible stockholders' equity to managed assets 9.72% 9.80% 9.62%
Debt (net of overnight deposits) to total tangible stockholders' equity 7.48x 7.29x 7.29x
Tangible book value per common share $ 28.10 $ 27.15 $ 25.62
Reserve for Credit Losses
Reserve for credit losses as a percentage of finance receivables 1.32% 1.40% 1.51%
Reserve for credit losses as a percentage of finance receivables, excluding student loans 1.52% 1.58% 1.68%
Reserve for credit losses as a percentage of finance receivables past due 60 day or more 75.4% 82.0% 85.8%
Reserve for credit losses as a percentage of non-performing assets 114.4% 119.3% 117.4%
14
CIT GROUP INC. AND SUBSIDIARIES
Aerospace Portfolio Data
(dollars in millions unless specified)
March 31, December 31, March 31,
Total Aerospace Portfolio: 2006(2) (2005)(2) (2005)
--------- ----------- ---------
Financing and leasing assets
Commercial $ 6,166.2 $ 5,951.9 $ 5,186.5
Regional $ 257.4 $ 275.3 $ 292.0
Number of planes:
Commercial 212 215 208
Regional 93 104 121
March 31, 2006 December 31, 2005 March 31, 2005
---------------------------- ------------------------- ----------------------
Commercial Aerospace Portfolio:
By Region: Net Investment Number Net Investment Number Net Investment Number
-------------- ------ -------------- ------ -------------- ------
Europe $ 2,340.2 73 $ 2,348.4 75 $ 2,150.5 70
North America 1,214.8 54 1,243.6 62 1,114.6 62
Asia Pacific 1,635.6 54 1,569.0 52 1,257.1 48
Latin America 680.2 24 533.7 20 598.7 24
Africa / Middle East 295.4 7 257.2 6 65.6 4
-------------- ------ -------------- ------ -------------- ------
Total $ 6,166.2 212 $ 5,951.9 215 $ 5,186.5 208
============== ====== ============== ====== ============== ======
By Manufacturer:
Boeing $ 2,594.1 115 $ 2,644.6 124 $ 2,572.5 128
Airbus 3,538.6 91 3,269.0 84 2,559.2 71
Other 33.5 6 38.3 7 54.8 9
-------------- ------ -------------- ------ -------------- ------
Total $ 6,166.2 212 $ 5,951.9 215 $ 5,186.5 208
============== ====== ============== ====== ============== ======
By Body Type(1):
Narrow body $ 4,553.1 168 $ 4,331.0 165 $ 3,956.5 164
Intermediate 1,394.3 28 1,347.2 27 828.2 18
Wide body 185.3 10 235.4 16 347.0 17
Other 33.5 6 38.3 7 54.8 9
-------------- ------ -------------- ------ -------------- ------
Total $ 6,166.2 212 $ 5,951.9 215 $ 5,186.5 208
============== ====== ============== ====== ============== ======
By Product:
Operating lease $ 5,651.8 187 $ 5,327.1 182 $ 4,394.2 162
Leverage lease (other) 147.9 5 232.1 10 337.2 12
Leverage lease (tax optimized) 90.0 5 135.2 7 218.0 9
Capital lease 68.9 2 67.7 3 132.7 6
Loan 207.6 13 189.8 13 104.4 19
-------------- ------ -------------- ------ -------------- ------
Total $ 6,166.2 212 $ 5,951.9 215 $ 5,186.5 208
============== ====== ============== ====== ============== ======
Off-lease aircraft 6 10 1
Number of accounts 92 93 94
Weighted average age of fleet (years) 6 6 7
Largest customer net investment $ 296.3 $ 277.3 $ 284.5
New Aircraft Delivery Order Book (dollars in billions)
For the Years Ending December 31,
2005 (Remaining 2005) $ 0.8 15
2006 (Remaining 2006) $ 0.8 15 $ 0.9 19 0.9 19
2007 1.0 23 1.0 23 0.3 7
2008 0.8 19 0.8 19 -- --
Thereafter 0.5 5 0.6 5 -- --
-------------- ------ -------------- ------ -------------- ------
Total $ 3.1 62 $ 3.3 66 $ 2.0 41
============== ====== ============== ====== ============== ======
(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.
(2) Balances include aircraft held for sale.
15
CIT GROUP INC. AND SUBSIDIARIES
Non-GAAP Disclosures
(dollars in millions)
March 31, December 31, March 31,
2006 2005 2005
--------- ------------ ---------
Managed assets (1):
Finance receivables $46,841.3 $44,294.5 $41,180.1
Operating lease equipment, net 10,166.0 9,635.7 8,313.1
Financing and leasing assets held for sale 1,551.0 1,620.3 1,481.3
Equity and venture capital investments (included in other assets) 31.1 30.2 101.8
--------- --------- ---------
Total financing and leasing portfolio assets 58,589.4 55,580.7 51,076.3
Securitized assets 6,913.1 7,285.7 7,716.6
--------- --------- ---------
Managed assets $65,502.5 $62,866.4 $58,792.9
========= ========= =========
Earning assets (2):
Total financing and leasing portfolio assets $58,589.4 $55,580.7 $51,076.3
Credit balances of factoring clients (4,048.9) (4,187.8) (4,269.8)
--------- --------- ---------
Earning assets $54,540.5 $51,392.9 $46,806.5
========= ========= =========
Total tangible stockholders' equity (3):
Total common stockholders' equity $ 6,704.9 $ 6,462.7 $ 6,335.2
Less:
Other comprehensive income relating to derivative financial instruments (60.4) (27.6) (20.3)
Unrealized gain on securitization investments (13.1) (17.0) (7.7)
Goodwill and intangible assets (1,013.5) (1,011.5) (906.4)
--------- --------- ---------
Tangible common stockholders' equity 5,617.9 5,406.6 5,400.8
Preferred stock 500.0 500.0 --
Preferred capital securities 251.6 252.0 253.3
--------- --------- ---------
Total tangible stockholders' equity $ 6,369.5 $ 6,158.6 $ 5,654.1
========= ========= =========
Debt, net of overnight deposits (4):
Total debt $49,144.8 $47,864.58 $42,493.9
Overnight deposits (1,239.0) (2,703.1) (1,006.3)
Preferred capital securities (251.6) (252.0) (253.3)
--------- --------- ---------
Debt, net of overnight deposits $47,654.2 $44,909.4 $41,234.3
========= ========= =========
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) Total tangible stockholders' equity is utilized in leverage ratios, and is
consistent with certain rating agency measurements. Other comprehensive
income/losses and unrealized gains on securitization investments (both
included in the separate component of equity) are excluded from the
calculation, as these amounts are not necessarily indicative of amounts
which will be realized.
4) Debt, net of overnight deposits is utilized in certain leverage ratios.
Overnight deposits are excluded from these calculations, as these amounts
are retained by the Company to repay debt. Overnight deposits are
reflected in both debt and cash and cash equivalents.
16