-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Amfsn2a/diRBADHffdSD5wHEgX2h+NWq5rkrHzx55CR9sIRpCYAKs2aUCUajepDu mIEZjLEhYLD7Zb596t63Kw== 0000891092-04-001850.txt : 20040422 0000891092-04-001850.hdr.sgml : 20040422 20040422144357 ACCESSION NUMBER: 0000891092-04-001850 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040422 ITEM INFORMATION: ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIT GROUP INC CENTRAL INDEX KEY: 0001171825 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE LESSORS [6172] IRS NUMBER: 651051192 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31369 FILM NUMBER: 04747923 BUSINESS ADDRESS: STREET 1: 1 CIT DRIVE CITY: LIVINGSTON STATE: NJ ZIP: 07039 BUSINESS PHONE: 9737405000 MAIL ADDRESS: STREET 1: 1 CIT DRIVE CITY: LIVINGSTON STATE: NJ ZIP: 07039 FORMER COMPANY: FORMER CONFORMED NAME: CIT GROUP INC DEL DATE OF NAME CHANGE: 20020422 8-K 1 e17587_8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 22, 2004 CIT GROUP INC. -------------- (Exact name of registrant as specified in its charter) Delaware 001-31369 65-1051192 ---------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 1 CIT Drive Livingston, New Jersey 07039 ---------------------------- (Address of registrant's principal executive office) Registrant's telephone number, including area code: (973) 740-5000 ------------------------------------------------------------------ ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. This Current Report on Form 8-K includes as an exhibit a press release, dated April 21, 2004, reporting that the Board of Directors of CIT Group Inc. declared a dividend of $.13 per share, payable on May 28, 2004 to shareholders of record on May 14, 2004. The press release is attached as Exhibit 99.1 and is incorporated by reference into this Item 5. Item 7. Financial Statements and Exhibits. (c) Exhibits. 99.1 Press release issued by CIT Group Inc. on April 21, 2004. 99.2 Press release issued by CIT Group Inc. on April 22, 2004. This document 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 document 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. Item 9. Regulation FD Disclosure. and Item 12. Results of Operations and Financial Measures. This Current Report on Form 8-K includes as an exhibit a press release, dated April 22, 2004, reporting the financial results of CIT Group Inc. as of and for the quarter ended March 31, 2004. The press release is attached as Exhibit 99.2. This press release includes certain non-GAAP financial measures. A reconciliation of those measures to the most directly comparable GAAP measures is included as a table to the press release. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CIT GROUP INC. (Registrant) By: /s/ Joseph M. Leone --------------------------- Joseph M. Leone Vice Chairman & Chief Financial Officer Dated: April 22, 2004 3 EX-99.1 3 e17587ex99_1.txt PRESS RELEASE Exhibit 99.1 [CIT Logo] CIT ANNOUNCES QUARTERLY DIVIDEND FOR FIRST QUARTER 2004 Livingston, NJ April 21, 2004-- CIT Group Inc. (NYSE: CIT) today announced that its Board of Directors has declared a regular quarterly cash dividend of $.13 per share, payable on May 28, 2004, to shareholders of record on May 14, 2004. 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 $50 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, holds leading positions in vendor financing, U.S. factoring, equipment and transportation financing, Small Business Administration loans, and asset-based and credit-secured 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. Investor Relations Contacts Media Contacts - ---------------------------- -------------- Valerie L. Gerard. Kelley J. Gipson CIT CIT (973) 422-3284 (973) 422-3235 EX-99.2 4 e17587ex99_2.txt PRESS RELEASE Exhibit 99.2 For Information: Valerie L. Gerard - Senior Vice President - Investor Relations (973) 422-3284 or Kelley Gipson - Executive Vice President - Corporate Marketing (973) 422-3235 CIT ANNOUNCES DILUTED EPS OF $0.88, $0.76 Excluding Debt redemption Gain o EPS improves for the fourth consecutive quarter o EPS improves 27% and ROTE exceeds 13%, excluding debt redemption gain o Borrowing costs tighten further o Continued improvement in credit NEW YORK, April 22, 2004 - CIT Group Inc. (NYSE: CIT) today reported net income of $189.3 million (diluted earnings per share of $0.88) for the quarter ended March 31, 2004. The results for the quarter include a pre-tax gain of $41.8 million ($25.5 million after-tax) related to the redemption of $512 million in term debt. Net income, excluding the gain on the debt call was $163.8 million, or $0.76 diluted EPS, up 27% from $0.60 ($127.0 million) for the prior year quarter. "We started the year on a very positive note," commented Albert R. Gamper, Jr., Chairman and CEO. "Our credit quality measurements and margins improved further and returns were better in our Equipment Finance and Capital Finance businesses. Earnings growth was strong from a year ago and our return on tangible equity increased to over 13%," concluded Gamper. "I am pleased with the trends in origination, credit and profitability throughout our business lines," said Jeffrey M. Peek, President and COO. "Owned financing and leasing assets grew 11% from last year and 2% from year-end. We remain committed to focused, prudent growth and our target of 8 - 10% in annual managed asset growth." 1 Financial Highlights: Portfolio and Managed Assets Total financing and leasing portfolio assets grew to $41.0 billion at March 31, 2004, up 2.3% from $40.1 billion at December 31, 2003 and 10.6% from $37.1 billion at March 31, 2003. Growth for the quarter reflects strong Specialty Finance originations, particularly in home equity, international and the vendor programs. Volume was also strong in the factoring and the asset-based lending units of Commercial Finance. Managed assets increased to $50.1 billion, up from $49.7 billion at December 31, 2003. Our securitized receivables (receivables we have previously securitized but retain the servicing) decreased to $9.1 billion from $9.7 billion during the quarter, as we continue to fund home equity receivables on balance sheet. Liquidating portfolios declined to $874 million from $923 million and $1.28 billion at December 31, 2003 and March 31, 2003. Origination volume for the quarter, excluding factoring, increased 15.7% from the prior year quarter as all segments, with the exception of Capital Finance, exceeded 2003. Net Finance and Risk Adjusted Margin Net finance margin was 4.02% of average earning assets ("AEA"), an improvement of 49 basis points from the prior year quarter. The stronger margin was principally fueled by lower borrowing costs, as interest expense declined to 3.23% of AEA from 4.10% during the prior year quarter. Risk adjusted margin (net finance margin after provision for credit losses) was 3.09% of AEA, up 75 basis points from the prior year quarter, as lower charge-offs also contributed to the improvement. Credit Quality Credit performance continued the improving trend with lower charge-offs, continued decline in delinquencies and a modest drop in non-performing assets. Owned and managed 60+ day delinquencies improved for the sixth consecutive quarter. Total 60+ day owned delinquencies declined to $609 million (1.89% of finance receivables) at March 31, 2004, from $676 million (2.16%) at December 31, 2003. Managed 60+ day delinquencies also decreased to $928 million (2.20%) at March 31, 2004, from $1.022 billion (2.44%) at December 31, 2003. The most notable improvements were in the Specialty Finance- 2 commercial portfolios and in Equipment Finance. Non-performing assets also declined for the sixth consecutive quarter to $667 million (2.07% of finance receivables), down from $677 million (2.16%) at December 31, 2003, and 34% below a year-ago levels. Charge-offs for the quarter fell to $99.3 million (1.26% as a percentage of average finance receivables) from $114.3 million (1.61%) in the prior year, as virtually all business segments improved. The increase in Structured Finance charge-offs was in the project finance portfolio. During the quarter, telecommunications portfolio charge-offs of $13.7 million were taken against the specific telecommunications reserve. Before liquidating portfolios and telecommunications charge-offs, charge-offs were $73.3 million (0.98% of average finance receivables) for the current quarter, down from $85.3 million (1.30%) last year. The decrease from last year's quarter reflects improvements in the Specialty Finance commercial portfolio, notably the international portfolio, as well as in Equipment Finance. The following tables provide additional charge-off data:
Charge-offs: ($ in millions) Quarter Ended March 31, 2004 ----------------------------------------------------------------- Before Liquidating Liquidating and Total and Telecommunications Telecommunications --------------- ---------------------- ------------------- Specialty Finance - commercial ...... $22.0 1.24% $21.5 1.21% $ 0.5 -- Commercial Finance .................. 12.5 0.48% 12.5 0.48% -- -- Equipment Finance ................... 26.3 1.67% 21.0 1.37% 5.3 12.35% Captal Finance ...................... -- -- -- -- -- -- Structured Finance .................. 21.8 2.96% 8.1 1.34% 13.7 10.38% ----- ----- ----- Total Commercial Segments ........ 82.6 1.19% 63.1 0.93% 19.5 11.13% Specialty Finance - consumer ........ 16.7 1.84% 10.2 1.42% 6.5 3.45% ----- ----- ----- Total ............................ $99.3 1.26% $73.3 0.98% $26.0 7.16% ===== ===== =====
3
Charge-offs: ($ in millions) Quarter Ended March 31, 2003 ----------------------------------------------------------------- Before Liquidating Liquidating and Total and Telecommunications Telecommunications --------------- ---------------------- ------------------- Specialty Finance - commercial ...... $ 31.0 1.73% $30.6 1.76% $ 0.4 8.65% Commercial Finance .................. 16.6 0.80% 16.6 0.80% -- -- Equipment Finance ................... 38.1 2.39% 29.7 2.02% 8.4 6.48% Capital Finance ..................... 1.8 0.55% 1.8 0.55% -- -- Structured Finance .................. 13.8 1.90% -- -- 13.8 8.23% ------ ----- ----- Total Commercial Segments ........ 101.3 1.55% 78.7 1.27% 22.6 7.48% Specialty Finance - consumer ........ 13.0 2.36% 6.6 1.92% 6.4 3.09% ------ ----- ----- Total ............................ $114.3 1.61% $85.3 1.30% $29.0 5.70% ====== ===== =====
The total reserve for credit losses was $636.7 million (1.98% of finance receivables) at March 31, 2004, compared to $643.7 million (2.06%) at December 31, 2003. The decline in the reserve reflects the continuation of improving credit metrics. At March 31, 2004, the reserve for credit losses, before the telecommunications ($92.8 million) and Argentine ($12.5 million) reserves, was $531.4 million (1.68%), versus $524.6 million (1.71%) at December 31, 2003. The total telecommunications portfolio and the portion comprising the competitive local exchange carrier ("CLEC") exposure was $518.6 million and $191.3 million at March 31, 2004. Total telecommunications non-performing accounts were $65.7 million, compared to $57.2 million last quarter. CLEC non-performing accounts were $34.4 million, compared to $31.4 million at December 31, 2003. Total specific telecommunications reserves were $92.8 million at March 31, 2004, down from $106.6 million at December 31, 2003 due to current quarter charge-offs. Other Revenue For the quarter, other revenue totaled $230.4 million, compared to $239.9 million for the quarter ended March 31, 2003, reflecting lower securitization gains and other income, partially offset by higher factoring commissions due to the two acquisitions completed in the second half of 2003. Securitization volume was essentially unchanged from the prior year. However, product mix resulted in gains declining to $21.4 million, 6.9% of pretax income, from $30.7 million, 14.4%, during the prior year quarter. Equipment sale gains reflected general strengthening of equipment values. 4 Salaries and General Operating Expenses Salaries and general operating expenses were $247.3 million for the quarter, up from $225.6 million for the March 2003 quarter. The increase from the prior year quarter was primarily the result of higher incentive-based compensation, acquisition activities and other employee related and corporate expenses. Salaries and general operating expenses were 2.15% of average managed assets during the quarter, versus 2.01% for the prior year quarter. Headcount totaled approximately 5,795 at March 31, 2004 compared to 5,845 at March 31, 2003. Debt Redemption CIT had $1.25 billion of debt securities outstanding that were originally issued by the former AT&T Capital Corporation and were callable at par in December 2003 and January 2004. The redemption of $512 million on January 15, 2004 resulted in a pretax gain of $41.8 million, whereas the December 2003 redemption of $735 million resulted in a pre-tax gain of $50.4 million in the prior quarter. Consolidated Returns Total return on average earning assets improved to 2.05% for the quarter ended March 31, 2004, from 1.47% for the prior year quarter. Similarly, the return on managed assets improved to 1.64% from 1.13% and return on average tangible equity increased to 15.1% (13.1% excluding the debt redemption gain) from 11.0% during the first quarter of 2003. Results by Business Segment The following tables provide individual segment data ($ in millions): Specialty Finance For the Quarter Ended -------------------------------------- March 31, 2004 March 31, 2003 Operating margin $ 228.1 $ 190.5 Income before provision for income tax $ 122.9 $ 85.6 New business volume $ 3,575.9 $ 3,073.0 Specialty Finance operating margin improved due to higher asset levels, lower funding costs and lower charge-offs. Improved profitability was broad based across the vendor finance business, SBA and the small ticket leasing businesses, as Specialty Finance return on AEA improved to 2.47% from 1.75% during the prior year. New business volume increased from the prior year primarily on strong volumes in vendor finance and bulk receivable purchases in the consumer and international units. 5 Commercial Finance For the Quarter Ended -------------------------------------- March 31, 2004 March 31, 2003 Operating margin $142.3 $129.9 Income before provision for income tax $ 98.1 $ 88.7 New business volume (including factoring) $485.1 $328.2 Commercial Finance improvements reflected higher asset-based lending volume coupled with increased factoring activity resulting from prior year acquisitions and lower charge-offs in both asset-based lending and factoring. These improvements were partially offset by lower fees and other income in the asset-based lending unit compared to the prior year. Return on AEA continued to be strong at 3.62% for the quarter, versus 3.58% during the prior year. Equipment Finance For the Quarter Ended -------------------------------------- March 31, 2004 March 31, 2003 Operating margin $ 47.3 $ 40.2 Income before provision for income tax $ 25.0 $ 17.5 New business volume $922.1 $828.9 Equipment Finance operating margin and pretax profitability improvements reflected lower charge-offs and higher equipment gains, which were offset in part by lower fees. Return on AEA was 0.88% for the quarter, versus 0.60% for the prior year quarter. New business volume increased primarily in the U.S., reflecting some renewed strength in the construction and corporate aircraft sectors. Capital Finance For the Quarter Ended -------------------------------------- March 31, 2004 March 31, 2003 Operating margin $ 48.3 $ 28.9 Income before provision for income tax $ 28.8 $ 12.6 New business volume $102.0 $280.5 The stronger operating margin and pre-tax income resulted primarily from higher assets, increased commercial aircraft equipment gains and lower charge-offs. Return on AEA improved to 1.04% from 0.50% in the prior year. New business volume decreased due to fewer aircraft delivery fundings. All seventeen scheduled 2004 aircraft deliveries have been placed. At March 31, 2004, four commercial aircraft (for which one letter of intent has been signed) were off lease, compared to five at December 31, 2003. 6 Structured Finance For the Quarter Ended -------------------------------------- March 31, 2004 March 31, 2003 Operating margin $ 26.5 $ 28.3 Income before provision for income tax $ 16.9 $ 20.0 New business volume $242.8 $100.2 Profitability continued to benefit from strong fee activity, offset by increased project finance charge-offs. Return on AEA was 1.31% versus 1.63% in the prior year. New business volume was up considerably from the prior year in communications/media and project finance. Corporate and Other For the Quarter Ended -------------------------------------- March 31, 2004 March 31, 2003 Operating margin $ 23.4 $ 20.4 Income/(loss) before income tax $ 18.7 $(11.9) Corporate and Other reflects certain interest and other operating expenses not allocated to business segments, as well as the gain on debt redemption and venture capital gains and losses. Funding and Liquidity Commercial paper was $4.8 billion, up from $4.2 billion at year-end. Term-debt issued during the quarter totaled $2.8 billion - $1.5 billion in variable-rate, medium-term notes and $1.3 billion in fixed-rate notes. Securitization volume was $1.2 billion, approximately the same level as the prior year quarter. Consistent with our liquidity management strategy to extend our maturity profile, on April 14, 2004 we retired a $2.0 billion bank facility due in March 2005, and $2.1 billion due in October 2004, and we negotiated two new $2.1 billion facilities due April 2009 and April 2005. The company now has aggregate bank facilities of $6.3 billion with $4.2 billion in multi-year facilities. Capitalization and Leverage The ratio of tangible equity to managed assets improved further to 10.69% as of March 31, 2004, compared to 10.45% at December 31, 2003, as the internal capital generation ratio was strong for the quarter. 7 Subsequent Event On April 21, 2004, our Board of Directors approved a common stock repurchase program to acquire up to three million shares of our outstanding common stock. The program authorizes the Company to purchase shares on the open market and through negotiated transactions from time to time over a two-year period beginning April 23, 2004. The repurchased common stock will be held as treasury shares and may be used for the issuance of shares under CIT's employee stock plans. Acquisitions under the share repurchase program will be made from time to time at prevailing prices as permitted by applicable laws, and subject to market conditions and other factors. The program may be discontinued at any time and is not expected to have a significant impact on our capitalization. Conference Call and Webcast: We will discuss this quarter's results, as well as on-going 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) April 28, 2004, by dialing 800-642-1687 for U.S. and Canadian callers or 706-645-9291 for international callers with the pass-code 6401042, or at the following website: http://ir.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 8 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. 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, U.S. factoring, equipment and transportation financing, Small Business Administration loans, and asset-based and credit-secured 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. ### 9 CIT GROUP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED INCOME STATEMENTS For the Quarters Ended March 31, 2004, December 31, 2003 and March 31, 2003 (dollars in millions, except per share data)
Quarters Ended ----------------------------------------------------- March 31, December 31, March 31, 2004 2003 2003 ----------- ------------ ----------- Finance income $ 902.9 $ 925.9 $ 939.2 Interest expense 298.0 322.5 354.7 ----------- ----------- ----------- Net finance income 604.9 603.4 584.5 Depreciation on operating lease equipment 234.5 248.9 278.8 ----------- ----------- ----------- Net finance margin 370.4 354.5 305.7 Provision for credit losses 85.6 100.8 103.0 ----------- ----------- ----------- Net finance margin after provision for credit losses 284.8 253.7 202.7 Other revenue(1) 230.4 246.0 239.9 Gain (loss) on venture capital investments 0.7 (60.5) (4.4) ----------- ----------- ----------- Operating margin 515.9 439.2 438.2 Salaries and general operating expenses 247.3 236.5 225.6 Gain on redemption of debt 41.8 50.4 -- ----------- ----------- ----------- Income before provision for income taxes 310.4 253.1 212.6 Provision for income taxes (121.1) (98.2) (82.9) Minority interest -- 0.3 -- Dividends on preferred capital securities, after tax -- -- (2.7) ----------- ----------- ----------- Net income(2) $ 189.3 $ 155.2 $ 127.0 =========== =========== =========== Earnings per share Basic earnings per share $ 0.89 $ 0.73 $ 0.60 Diluted earnings per share $ 0.88 $ 0.72 $ 0.60 Number of shares -basic (thousands) 211,839 211,828 211,573 Number of shares -diluted (thousands) 215,809 215,078 211,899
Certain prior period balances have been reclassified to conform to current period presentation. Certain debt related costs totaling $7.5 million and $8.0 million for the quarters ended Decemeber 31, 2003 and March 31, 2003, have been reclassified to interest expense from operating expenses.
Quarters Ended ---------------------------------------------------- March 31, December 31, March 31, (1) Other Revenue 2004 2003 2003 --------- ------------ --------- Fees and other income $ 126.7 $ 155.4 $ 144.7 Factoring commissions 55.0 50.5 46.9 Gains on sales of leasing equipment 27.3 22.0 17.6 Gains on securitizations 21.4 18.1 30.7 ------- ------- ------- Total other revenue $ 230.4 $ 246.0 $ 239.9 ======= ======= =======
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 losses seperately.
Quarters Ended ---------------------------------------------------- March 31, December 31, March 31, (2) Net income (loss) by segment 2004 2003 2003 --------- ------------ --------- Specialty Finance $ 78.2 $ 74.1 $ 52.2 Commercial Finance 60.6 57.8 54.1 Equipment Finance 15.2 10.9 10.7 Capital Finance 19.0 6.9 7.7 Structured Finance 10.1 16.3 12.2 ------- ------- ------- Total Segments 183.1 166.0 136.9 Corporate, including certain charges 6.2 (10.8) (9.9) ------- ------- ------- Total $ 189.3 $ 155.2 $ 127.0 ======= ======= =======
10 CIT GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in millions)
March 31, December 31, 2004 2003 --------- ------------ (unaudited) ASSETS Financing and leasing assets: Finance receivables $32,187.4 $31,300.2 Reserve for credit losses (636.7) (643.7) --------- --------- Net finance receivables 31,550.7 30,656.5 Operating lease equipment, net 7,576.2 7,615.5 Finance receivables held for sale 1,006.2 918.3 Cash and cash equivalents 1,356.5 1,973.7 Retained interest in securitizations 1,364.6 1,380.8 Goodwill and intangible assets 485.5 487.7 Other assets (1) 2,912.7 3,310.3 --------- --------- Total Assets $46,252.4 $46,342.8 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Debt: Commercial paper $ 4,820.2 $ 4,173.9 Variable-rate senior notes 9,170.7 9,408.4 Fixed-rate senior notes 19,829.8 19,830.8 Preferred capital securities 255.1 255.5 --------- --------- Total debt 34,075.8 33,668.6 Credit balances of factoring clients 3,619.4 3,894.6 Accrued liabilities and payables 3,025.9 3,346.4 --------- --------- Total Liabilities 40,721.1 40,909.6 Minority interest 38.6 39.0 Stockholders' Equity: Common stock 2.1 2.1 Paid-in capital 10,668.2 10,677.0 Accumulated deficit (4,980.5) (5,141.8) Accumulated other comprehensive loss (196.4) (141.6) Less: Treasury stock, at cost (0.7) (1.5) --------- --------- Total Stockholders' Equity 5,492.7 5,394.2 --------- --------- Total Liabilities and Stockholders' Equity $46,252.4 $46,342.8 ========= =========
(1) Other Assets primarily include the following at March 31, 2004: $0.7 billion of investments in and receivables from joint ventures and non-consolidated subsidiaries, $0.4 billion of accrued interest and receivables from derivative counterparties, $0.3 billion of deposits on flight equipment, $0.3 billion of equity investments, $0.1 billion of prepaid expenses and $0.1 billion of repossessed and off-lease equipment. The remaining balance includes furniture and fixtures, miscellaneous receivables and other assets. 11 CIT GROUP INC. AND SUBSIDIARIES OWNED AND MANAGED ASSET COMPOSITION (dollars in millions)
March 31, December 31, March 31, 2004 2003 2003 --------- ------------ --------- Specialty Finance Segment Commercial Finance receivables $ 7,135.6 $ 7,150.0 $ 7,201.5 Operating lease equipment, net 919.1 959.5 1,227.6 Finance receivables held for sale 737.1 548.1 899.6 --------- --------- --------- Owned assets 8,791.8 8,657.6 9,328.7 Finance receivables securitized and managed by CIT 3,769.0 3,915.4 3,191.7 --------- --------- --------- Managed assets 12,560.8 12,573.0 12,520.4 --------- --------- --------- Consumer Finance receivables - home equity 3,315.1 2,664.3 1,391.3 Finance receivables - other 791.2 846.5 995.8 Finance receivables held for sale 150.0 150.0 210.0 --------- --------- --------- Owned assets 4,256.3 3,660.8 2,597.1 Home equity finance receivables securitized and managed by CIT 1,651.9 1,867.6 2,358.6 Other finance receivables securitized and managed by CIT 593.6 642.5 860.2 --------- --------- --------- Managed assets 6,501.8 6,170.9 5,815.9 --------- --------- --------- Commercial Finance Segment Commercial Services Finance receivables 6,450.0 6,325.8 4,726.1 Business Credit Finance receivables 4,105.9 3,936.1 3,956.6 --------- --------- --------- Owned assets 10,555.9 10,261.9 8,682.7 --------- --------- --------- Equipment Finance Segment Finance receivables 6,367.0 6,317.9 6,237.4 Operating lease equipment, net 385.6 419.6 527.4 Finance receivables held for sale 119.1 220.2 163.4 --------- --------- --------- Owned assets 6,871.7 6,957.7 6,928.2 Finance receivables securitized and managed by CIT 3,052.5 3,226.2 3,977.2 --------- --------- --------- Managed assets 9,924.2 10,183.9 10,905.4 --------- --------- --------- Capital Finance Segment Finance receivables 1,087.1 1,097.4 1,223.7 Operating lease equipment, net 6,142.1 6,103.8 4,973.0 --------- --------- --------- Owned assets 7,229.2 7,201.2 6,196.7 --------- --------- --------- Structured Finance Segment Finance receivables 2,935.5 2,962.2 2,922.2 Operating lease equipment, net 129.4 132.6 103.4 --------- --------- --------- Owned assets 3,064.9 3,094.8 3,025.6 --------- --------- --------- Other - Equity Investments 251.8 249.9 334.3 --------- --------- --------- Total Finance receivables $32,187.4 $31,300.2 $28,654.6 Operating lease equipment, net 7,576.2 7,615.5 6,831.4 Finance receivables held for sale 1,006.2 918.3 1,273.0 --------- --------- --------- Financing and leasing assets excl. equity investments 40,769.8 39,834.0 36,759.0 Equity investments (included in other assets) 251.8 249.9 334.3 --------- --------- --------- Owned assets 41,021.6 40,083.9 37,093.3 Finance receivables securitized and managed by CIT 9,067.0 9,651.7 10,387.7 --------- --------- --------- Managed assets $50,088.6 $49,735.6 $47,481.0 ========= ========= =========
12 CIT GROUP INC. AND SUBSIDIARIES CREDIT METRICS (dollars in millions)
For the Quarters Ended -------------------------------------------------------------------- March 31, 2004 December 31, 2003 March 31, 2003 $ % $ % $ % -------------------------------------------------------------------- Net Credit Losses - Owned as a Percentage of Average Finance Receivables Specialty Finance - Commercial $ 22.0 1.24% $ 30.0 1.73% $ 31.0 1.73% Specialty Finance - Commercial: Argentina -- -- 101.0 NM -- -- -------- -------- -------- Total Specialty Finance - Commercial 22.0 1.24% 131.0 7.46% 31.0 1.73% Commercial Finance 12.5 0.48% 16.5 0.64% 16.6 0.80% Equipment Finance 26.3 1.67% 25.9 1.68% 38.1 2.39% Capital Finance -- -- 11.3 3.76% 1.8 0.55% Structured Finance 21.8 2.96% 10.4 1.42% 13.8 1.90% -------- -------- -------- Total Commercial 82.6 1.19% 195.1 2.83% 101.3 1.55% Specialty Finance - Consumer 16.7 1.84% 13.5 1.56% 13.0 2.36% -------- -------- -------- Total $ 99.3 1.26% $ 208.6 2.69% $ 114.3 1.61% ======== ======== ======== NM - Resulting annualized data % is not meaningful
March 31, 2004 December 31, 2003 March 31, 2003 $ % $ % $ % -------------------------------------------------------------------- Finance Receivables Past Due 60 days or more - Owned as a Percentage of Finance Receivables Specialty Finance - Commercial $ 185.8 2.60% $ 226.4 3.17% $ 264.7 3.68% Commercial Finance 107.2 1.02% 105.9 1.03% 152.8 1.76% Equipment Finance 113.8 1.79% 137.9 2.18% 292.5 4.69% Capital Finance 10.7 0.98% 9.5 0.87% 74.0 6.05% Structured Finance 32.9 1.12% 47.0 1.59% 55.2 1.89% -------- -------- -------- Total Commercial 450.4 1.60% 526.7 1.90% 839.2 3.19% Specialty Finance - Consumer 159.0 3.87% 149.6 4.26% 132.0 5.53% -------- -------- -------- Total $ 609.4 1.89% $ 676.3 2.16% $ 971.2 3.39% ======== ======== ======== Non-performing Assets - Owned as a Percentage of Finance Receivables(1) Specialty Finance - Commercial $ 102.3 1.43% $ 119.8 1.68% $ 160.4 2.23% Commercial Finance 77.0 0.73% 75.6 0.74% 128.0 1.47% Equipment Finance 213.9 3.36% 218.3 3.46% 338.5 5.43% Capital Finance 3.4 0.31% 3.6 0.33% 86.9 7.10% Structured Finance 104.9 3.57% 103.0 3.48% 143.4 4.91% -------- -------- -------- Total Commercial 501.5 1.79% 520.3 1.87% 857.2 3.26% Specialty Finance - Consumer 165.9 4.04% 156.2 4.45% 149.2 6.25% -------- -------- -------- Total $ 667.4 2.07% $ 676.5 2.16% $1,006.4 3.51% ======== ======== ======== Finance Receivables Past Due 60 days or more - Managed as a Percentage of Managed Financial Assets(2) Specialty Finance - Commercial $ 273.7 2.35% $ 321.2 2.77% $ 343.0 3.04% Commercial Finance 107.2 1.02% 105.9 1.03% 152.8 1.76% Equipment Finance 199.1 2.09% 243.6 2.49% 466.7 4.50% Capital Finance 10.7 0.98% 9.5 0.87% 74.0 6.05% Structured Finance 32.9 1.12% 47.0 1.59% 55.2 1.89% -------- -------- -------- Total Commercial 623.6 1.74% 727.2 2.04% 1,091.7 3.16% Specialty Finance - Consumer 304.2 4.68% 294.8 4.78% 269.6 4.64% -------- -------- -------- Total $ 927.8 2.20% $1,022.0 2.44% $1,361.3 3.38% ======== ======== ======== Reserve for Credit Losses Reserve for credit losses as a percentage of finance receivables $ 636.7 1.98% $ 643.7 2.06% $ 757.0 2.64% Reserve for credit losses as a percentage of finance receivables past due 60 days or more 104.5% 95.2% 77.9% Reserve for credit losses as a percentage of non-performing assets 95.4% 95.2% 75.2%
(1) Total non-performing assets reflect both commercial and consumer finance receivables on non-accrual status and assets received in satisfaction of loans. (2) Managed financial assets exclude operating leases and certain equity investments. 13 CIT GROUP INC. AND SUBSIDIARIES SELECTED DATA AND OWNED PORTFOLIO INFORMATION (dollars in millions, except per share data)
Selected Data Quarters Ended --------------------------------------------- March 31, December 31, March 31, Profitability 2004 2003 2003 --------------------------------------------- Net finance margin as a percentage of AEA(1) 4.02% 3.88% 3.53% Net finance margin after provision as a percentage of AEA 3.09% 2.78% 2.34% Salaries & general operating expenses as a percentage of AMA(2) 2.15% 2.04% 2.01% Efficiency ratio 41.1% 43.8% 41.7% Return on tangible stockholders' equity 15.1% 12.6% 11.0% Return on AMA(2) 1.64% 1.34% 1.13% Return on AEA (by segment) Specialty Finance 2.47% 2.38% 1.75% Commercial Finance 3.62% 3.46% 3.58% Equipment Finance 0.88% 0.64% 0.60% Capital Finance 1.04% 0.38% 0.50% Structured Finance 1.31% 2.13% 1.63% Total Segments 1.99% 1.83% 1.60% Corporate, including certain charges 0.06% (0.13)% (0.13)% Total 2.05% 1.70% 1.47% See "Non-GAAP Disclosures" for additional information regarding profitablility comparisons Securitization Volume Specialty Finance - Commercial $ 963.3 $ 869.9 $ 409.3 Equipment Finance 273.1 242.9 461.0 Specialty Finance - Consumer -- -- 367.1 ---------- ---------- ---------- Total $ 1,236.4 $ 1,112.8 $ 1,237.4 ========== ========== ========== Average Assets Average Finance Receivables (AFR) $ 31,415.1 $ 31,051.8 $ 28,328.8 Average Earning Assets (AEA) 36,865.1 36,523.2 34,600.6 Average Managed Assets (AMA)(2) 46,104.0 46,322.4 44,967.8 Average Operating Leases (AOL) 7,590.0 7,529.1 6,712.6 Note: These averages are based on an ending 4 month average
March 31, December 31, March 31, 2004 2003 2003 --------------------------------------------- Capital & Leverage(3),(4) Tangible stockholders' equity to managed assets 10.69% 10.45% 10.39% Debt (net of overnight deposits) to tangible stockholders' equity(5) 6.15x 6.14x 6.31x Tangible book value per share $ 24.07 $ 23.32 $ 22.18
March 31, December 31, March 31, Owned Portfolio Information 2004 2003 2003 --------------------------------------------- Liquidating Portfolios: Balance $ 874.0 $ 923.3 $ 1,282.2 Non-performing accounts $ 101.2 $ 108.4 $ 142.9 Past due 60+ days $ 85.6 $ 92.3 $ 149.6 Telecommunications(6): Financing and leasing assets $ 518.6 $ 579.0 $ 678.7 Number of accounts 42 44 53 Largest customer account balance $ 30.6 $ 31.0 $ 33.4 Non-performing accounts $ 65.7 $ 57.2 $ 85.5 Number of accounts 8 6 9 Past due 60+ days $ 18.2 $ 25.7 $ 35.5 CLEC exposure $ 191.3 $ 197.8 $ 238.0 Equity and Venture Capital Investments: Total investment balance $ 251.8 $ 249.9 $ 334.3 Direct investments $ 100.6 $ 101.1 $ 179.6 Number of companies 47 47 57 Private equity funds $ 151.2 $ 148.8 $ 154.7 Number of funds 52 52 52 Remaining fund and equity commitments $ 117.1 $ 124.2 $ 153.7
(1) For the quarters ended March 31, 2004 and December 31, 2003, dividends on preferred capital securities are reflected in interest expense (5 basis points impact) as a result of adopting FAS 150. The dividends for the quarter ended March 31, 2003 are shown after-tax on the consolidated statement of income. (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) Telecommunication portfolio data consists of lending and leasing directly to the telecommunication sector, and does not include lending and leasing for telecom related equipment to non-telecom companies. 14 CIT GROUP INC. AND SUBSIDIARIES Aerospace Portfolio Data (dollars in millions unless specified)
Total Aerospace Portfolio: March 31, December 31, March 31, Financing and leasing assets 2004 2003 2003 --------- ------------ --------- Commercial $4,700.9 $4,716.1 $4,179.7 Regional $ 291.7 $ 291.6 $ 309.1 Number of planes: Commercial 209 209 195 Regional 119 119 115
March 31, 2004 December 31, 2003 March 31, 2003 ----------------------- ----------------------- ----------------------- Commercial Aerospace Portfolio: By Region: Net Investment Number Net Investment Number Net Investment Number -------------- ------ -------------- ------ -------------- ------ Europe $ 1,994.8 66 $ 1,991.0 65 $ 1,537.4 51 North America (1) 1,001.7 72 1,029.7 72 1,110.1 78 Asia Pacific 1,040.8 40 1,013.6 40 886.5 36 Latin America 606.5 28 612.7 28 572.5 26 Africa / Middle East 57.1 3 69.1 4 73.2 4 ---------- --- ---------- --- ---------- --- Total $ 4,700.9 209 $ 4,716.1 209 $ 4,179.7 195 ========== === ========== === ========== ===
By Manufacturer: Net Investment Number Net Investment Number Net Investment Number -------------- ------ -------------- ------ -------------- ------ Boeing $ 2,577.0 140 $ 2,581.7 140 $ 2,514.2 138 Airbus 2,104.8 57 2,114.6 57 1,640.8 42 Other 19.1 12 19.8 12 24.7 15 ---------- --- ---------- --- ---------- --- Total $ 4,700.9 209 $ 4,716.1 209 $ 4,179.7 195 ========== === ========== === ========== ===
By Body Type (2): Net Investment Number Net Investment Number Net Investment Number -------------- ------ -------------- ------ -------------- ------ Narrow body $ 3,416.5 159 $ 3,415.7 159 $ 2,909.8 144 Intermediate 866.5 18 877.0 18 871.6 18 Wide body 398.8 20 403.6 20 373.6 18 Other 19.1 12 19.8 12 24.7 15 ---------- --- ---------- --- ---------- --- Total $ 4,700.9 209 $ 4,716.1 209 $ 4,179.7 195 ========== === ========== === ========== === Largest customer net investment $ 266.6 $ 268.6 $ 242.6 Number of accounts 85 84 74 Weighted average age of fleet (years) 7 6 7
March 31, 2004 December 31, 2003 March 31, 2003 --------------- ----------------- ---------------- New Aircraft Delivery Order Book (dollars in billions) Amount Number Amount Number Amount Number ------ ------ ------ ------ ------ ------ For the Years Ending December 31, 2003 (Remaining 2003) $ -- -- $ -- -- $ 0.7 17 2004 (Remaining 2004) 0.7 17 0.6 15 0.8 17 2005 0.9 18 0.9 20 1.3 27 2006 1.0 20 1.1 21 0.7 13 2007 0.3 5 0.3 5 0.1 1 ------ ---- ------ ---- ------ ---- Total $ 2.9 60 $ 2.9 61 $ 3.6 75 ====== ==== ====== ==== ====== ====
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 March 31, 2004, all of the 2004 deliveries were placed. (1) Comprised of net investments in the U.S. and Canada of $781.2 million (65 aircraft) and $220.5 million (7 aircraft) at March 31, 2004, $822.7 million (66 aircraft) and $207.0 million (6 aircraft) at December 31, 2003, and $902.0 million (72 aircraft) and $208.1 million (6 aircraft) at March 31, 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. 15 CIT GROUP INC. AND SUBSIDIARIES Non-GAAP Disclosures (dollars in millions)
March 31, 2004 December 31, 2003 March 31, 2003 -------------- ----------------- -------------- Managed assets (1): Finance receivables $ 32,187.4 $ 31,300.2 $ 28,654.6 Operating lease equipment, net 7,576.2 7,615.5 6,831.4 Finance receivables held for sale 1,006.2 918.3 1,273.0 Equity and venture capital investments (included in other assets) 251.8 249.9 334.3 ---------- ---------- ---------- Total financing and leasing portfolio assets 41,021.6 40,083.9 37,093.3 Securitized assets 9,067.0 9,651.7 10,387.7 ---------- ---------- ---------- Managed Assets $ 50,088.6 $ 49,735.6 $ 47,481.0 ========== ========== ========== Earning assets (2): Total financing and leasing portfolio assets $ 41,021.6 $ 40,083.9 $ 37,093.3 Credit balances of factoring clients (3,619.4) (3,894.6) (2,437.9) ---------- ---------- ---------- Earning assets $ 37,402.2 $ 36,189.3 $ 34,655.4 ========== ========== ========== Tangible equity (3): Total equity $ 5,492.7 $ 5,394.2 $ 4,996.6 Other comprehensive loss relating to derivative financial instruments 102.9 41.3 92.6 Unrealized gain on securitization investments (11.3) (7.7) (12.5) Goodwill and intangible assets (485.5) (487.7) (399.8) ---------- ---------- ---------- Tangible common equity 5,098.8 4,940.1 4,676.9 Preferred capital securities 255.1 255.5 256.8 ---------- ---------- ---------- Tangible equity $ 5,353.9 $ 5,195.6 $ 4,933.7 ========== ========== ========== Debt, net of overnight deposits (4): Total debt $ 34,075.8 $ 33,668.6 $ 32,551.8 Overnight deposits (884.0) (1,529.4) (1,432.5) Preferred capital securities (255.1) (255.5) -- ---------- ---------- ---------- Debt, net of overnight deposits $ 32,936.7 $ 31,883.7 $ 31,119.3 ========== ========== ========== Earnings per share, excluding certain items(5) GAAP Earnings per share $ 0.88 $ 0.72 $ 0.60 Gain on debt redemption (0.12) (0.14) -- Loss on venture capital investments -- 0.17 0.01 ---------- ---------- ---------- Adjusted earnings per share $ 0.76 $ 0.75 $ 0.61 ========== ========== ==========
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 on-going operations. 16 -----END PRIVACY-ENHANCED MESSAGE-----