FOR IMMEDIATE RELEASE
Trading Symbol: NCT Contact: JOHN SADLER
SENIOR VICE PRESIDENT
Exchange Listings: TORONTO Corporate Affairs
MONTREAL (416) 594-2400
NEW YORK
NEWCOURT CAPS 1997 WITH 86% GROWTH IN OPERATING INCOME
TORONTO, FEBRUARY 4, 1998 -- Newcourt Credit Group today reported operating
income before restructuring charges and taxes of $119.1 million (US$86.1
million) for the year ended December 31, 1997, representing an 86% increase over
the $64.2 million in operating income reported last year.
On January 12, 1998, Newcourt completed its acquisition of AT&T Capital
Corporation. A charge of $55 million ($0.43 per share) covering severance
packages, office relocations and system costs was applied against fourth quarter
earnings. As a result, net income for the year ended December 31, 1997 was $36.4
million (US$26.3 million) as compared with the $50.7 million reported for the
previous year.
Based on an average of 70,219,175 shares outstanding during the year, the
Company's earnings per share before the restructuring charges were $1.33
(US$0.96) as compared with $0.96 (US$0.70) for last year. The restructuring
charges reduced the basic and fully diluted earnings per share to $0.52
(US$0.38).
At a meeting of the Board of Directors held February 4, 1998, a quarterly
dividend of $0.04 per share (US$0.03) was approved for payment on February 27,
1998 to the common shareholders of record as at the close of business on
February 19, 1998. As well, the Board approved the appointments of David
Sharpless as Newcourt's Deputy Chairman and David Banks, former AT&T Capital
CEO, as Chairman of the Board. Guy Hands, Managing Director of Nomura
International's Principal Finance Group, representing Hercules Holdings, was
also appointed to the Board and to the Company's Investment Committee.
As of December 31, 1997, Newcourt's owned and managed loans totaled $11.4
billion (US$8.0 billion). The Company grew its portfolio by 73% this year from
the $6.6 billion reported at the end of 1996. The owned portion of financial
assets accounted for $3.7 billion versus $2.0 billion in 1996.
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Through its commercial and corporate finance businesses, Newcourt Financial and
Newcourt Capital, the Company more than doubled its production of new
asset-based financings during the year to $8.9 billion, a 54% increase over last
year's $5.8 billion. Of the $8.9 billion, Newcourt Financial generated $5.3
billion (60%) in new loans, while Newcourt Capital originated the remaining $3.6
billion. The U.S. and Canadian markets each accounted for 47.5% of this volume
with the remaining 5% attributed to international markets.
Revenue, as measured by total asset finance income, rose 86% to $318.4 million
for 1997 from $171.6 million last year. Fee-based income represented nearly
three quarters of the Company's revenue mix, accounting for $234.1 million (74%)
of total asset finance income as compared with $119.2 million (70%) for the same
period in 1996. Net finance income increased 61% to total $84.3 million as
compared to last year's $52.4 million.
Asset quality remains strong with credit losses as a percentage of investment in
finance assets for the year of 0.36%. This compares with the Company's credit
loss experience for the previous year of 0.29% of owned finance assets.
"1997 was the year that confirmed the value of Newcourt's unique business
model,' noted Steven K. Hudson, Newcourt's Chief Executive Officer. 'During the
year, Newcourt established firm footing on the global stage with expanded
origination and processing capabilities and greater utilization of international
financial markets. It was also the year we refined our successful vendor-based
origination model to maximize the services we bring to our vendors through
value-added, long-term joint ventures. The relationship we developed with global
computer manufacturer Dell Computer Corporation last April demonstrates our
ability to deliver customized solutions to meet the needs of these clients."
"Our fourth quarter agreement to acquire AT&T Capital is a key component in our
global growth strategy,' Hudson continued. 'Thanks to outstanding technological
capabilities and the global platform from which we are now serving our North
American-based customers, we anticipate increasing our new business volumes by
up to 40% to $25 billion (US$17 billion) in 1998. Continued earnings growth will
be achieved in 1998 by meeting these origination targets and capturing
significant cost savings through the early integration of our combined
operations."
Newcourt is making swift progress on its integration plan. Paul Currie, as head
of a six-person senior management team, is leading a group of 60 employees on 12
task forces to review operations and implement changes. Projects that will
consolidate and rationalize the world-wide origination and operations platforms
are well under way. Immediate cost savings measures have been enacted, including
the cessation of discretionary expenditures and a freeze on hiring. Full
integration is expected to be completed within the next eighteen months.
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The combination of Newcourt Credit Group and AT&T Capital creates one of the
world's leading sources of asset-based financing serving the corporate,
commercial and institutional markets with owned and managed assets of $31.2
billion (US$21.8 billion) and a global distribution capability in 24 countries.
FINANCIAL HIGHLIGHTS
(C$, millions, except share data)
THREE MONTHS TWELVE MONTHS
ENDED ENDED
DECEMBER 31 DECEMBER 31
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1997 1996 1997 1996
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Total asset finance income 126.2 56.5 318.4 171.6
Operating income before taxes & one time restructuring charges 43.8 22.2 119.1 64.2
Net income(1) 3.3 17.6 36.4 50.7
Earnings per share
Basic 0.02 0.31 0.52 0.96
Fully diluted 0.02 0.31 0.52 0.96
Dividends per share 0.04 0.035 .15 0.13
Total new asset financings 2,899 1,375 8,912 5,803
AS AT DECEMBER AS AT DECEMBER
31, 1997 31, 1996
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Total owned and managed assets $11.4 billion $6.6 billion
Common shares outstanding 83,070,958 60,182,688
Subscription rights outstanding 38,500,000 --
Note (1): Inclusive of total one-time restructuring charges