CIT Announces Highlights of First Quarter 2000.Business Editors NEW YORK--(BUSINESS WIRE)--April 27, 2000 - Net Income $143.9 Million up 56.6% from 1999, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. $0.55 Per Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Share - Managed Assets Exceed $53 Billion on Strong Business Volumes - Strong Non-Spread Revenues - Realized Integration Savings of Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $100 Million Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. The CIT n. 1. A citizen; an inhabitant of a city; a pert townsman; - used contemptuously. Which past endurance sting the tender cit. - Emerson. Group, Inc. (NYSE NYSE See: New York Stock Exchange : CIT, TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). : CIT.U) today announced first quarter 2000 net income of $143.9 million, up 56.6% from $91.9 million reported for the same period of 1999. Earnings per diluted share for the first quarter were $0.55, compared to $0.57 for the first quarter of last year. Before the amortization of goodwill, earnings per diluted share were $0.62, compared to $0.58 for the same period of 1999. The first quarter 2000 earnings reflect growth from our 1999 acquisition activities, continued strong originations, excellent fee and other income as well as expense savings related to our operational integrations. "Revenue growth and new business volume were good. The higher interest rate environment and competitive conditions put modest pressure on lending spreads; however, strong fees and other non-spread revenues offset these factors. Fee generation from our commercial lending businesses and gains in our venture capital business were particularly strong," said Albert Albert, German churchman Albert, 1490–1545, German churchman, cardinal of the Roman Catholic Church. A member of the house of Brandenburg, he became (1514) Archbishop of Mainz. R. Gamper Jr., CIT Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The acquisitions we made in 1999 have added diversity to our origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real platforms. While we have made real progress integrating operations, we recognize that considerable work is still ahead of us and additional expense reductions will be realized. In addition, we initiated programs to shed shed rural building used for agricultural pursuits. shed hands miscellaneous workers in a shearing shed at shearing time, i.e. persons other than the shearers, wool classers. non-strategic businesses. I am especially proud of the commitment CIT employees have made to our first quarter accomplishments." Financial Highlights: Total managed assets increased to $53.1 billion at March 31, 2000, up 3.3% from $51.4 billion at year end, and $27.1 billion at March 31, 1999. New business volume was $13.2 billion, versus $6.4 billion during the first quarter of 1999. Commercial financing and leasing assets grew to $37.6 billion, up from $19.1 billion a year ago and a 5.8% increase from year end 1999. Commercial managed assets were $45.6 billion at March 31, 2000 compared to $44.0 billion at December December: see month. 31, 1999. Consumer managed assets were $7.4 billion at March 31, 2000 compared to $7.3 billion at December 31, 1999, and were down from $7.9 billion a year ago reflecting our decision to exit certain lower return product lines. Net finance income improved to $656.9 million in the first quarter from $268.2 million in the same period last year. First quarter net finance income as a percentage of average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin was 6.74%, compared to 4.75% in the first quarter of 1999 and 5.80% in the fourth quarter of 1999 as a result of product mix changes. First quarter net finance margin as a percentage of average earning assets was 3.58%, up from 3.51% in the fourth quarter of 1999 and down from 3.75% in the first quarter of 1999. The margin improvement from last quarter largely reflects the full-quarter impact of the higher-yielding Vendor Technology portfolio. The decline from the first quarter of last year results from the combination of a greater proportion of operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. , higher leverage, and higher short term interest rates in a competitive environment. Non-spread revenues for the first quarter of 2000 were $238.2 million, compared to $64.7 million for the first quarter of 1999. The increase reflects successes in our initiatives to broaden our revenue sources. Fees and other income grew to $121.4 million from $30.9 million last year, reflecting syndication See syndication format. and other non-spread revenues from Vendor Technology Finance and Structured Finance. Factoring commissions grew $14.5 million to $38.5 million over the prior year period due to internal growth and 1999 acquisitions. Venture capital gains were $37.5 million, reflecting the harvesting har·vest n. 1. The act or process of gathering a crop. 2. a. The crop that ripens or is gathered in a season. b. The amount or measure of the crop gathered in a season. c. of investments made in prior years. Securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. gains were $19.0 million, or 8.2% of pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. , during the quarter, below our 15% target due to a lower level of receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed being securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. . Salaries and general operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the first quarter of 2000 totaled $268.2 million, compared with $105.8 million for the prior year, reflecting increased personnel and facilities due to the 1999 acquisitions and normal expense increases. The efficiency ratio increased to 46.0% from 38.9% a year ago. Salaries and general operating expenses as a percentage of average managed assets increased to 2.15% for the period ended March 31, 2000 from 1.68% for the period ended March 31, 1999, reflecting the effect of our 1999 acquisitions. However, the first quarter expenses include annualized run rate savings of approximately $100 million (of our target of $150 million) from pre-acquisition levels and we anticipate that additional integration cost savings will be realized later in 2000. Headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. was 7,650 at quarter end, down 600 from year end 1999. The provision for credit losses was $61.6 million in the 2000 first quarter, up from $21.9 million in the prior year reflecting higher charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. levels and growth in the portfolios. First quarter net charge-offs were $53.0 million, 0.67% of average finance receivables, up from $20.9 million, 0.42%, for the same period last year as a result of product mix changes due to the acquisitions. At March 31, 2000, the reserve for credit losses was $476.2 million, up from $446.9 million at December 31, 1999 and $265.8 million at March 31, 1999. As a percentage of finance receivables, the reserve for credit losses was 1.43% at March 31, 2000 compared to 1.44% and 1.32% at December 31, 1999 and March 31, 1999, respectively. Commercial past dues as a percentage of finance receivables were 2.65% at March 31, 2000, up from 2.42% at year end 1999 and 1.36% at March 31, 1999, reflecting higher delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. levels in the acquired portfolios as well as increases due to the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of our collection operations. Consumer past dues, as a percentage of finance receivables, were 4.32% at March 31, 2000 compared to 4.62% at December 31, 1999 and 3.57% at March 31, 1999. The decrease from December 31, 1999 reflects improvements across most product lines. The increased delinquency from March 31, 1999 is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of certain consumer product lines. CIT is a leading diversified diversified (di·verˑ·s finance company offering vendor, equipment, commercial, factoring, consumer and structured financing capabilities. CIT operates extensively in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of with strategic locations in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , and the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. . CIT has been in business since 1908 and is recognized as a leader in many of the markets it serves. For more information on CIT, visit the website at www.cit.com.
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, except per share amounts)
For the Quarters Ended March 31,
2000 1999
---------- ----------
Finance income $ 1,228.8 $ 541.5
Interest expense 571.9 273.3
---------- ----------
Net finance income 656.9 268.2
Depreciation on
operating lease
equipment 307.8 56.1
---------- ----------
Net finance margin 349.1 212.1
Fees and other income 238.2 64.7
---------- ----------
Operating revenue 587.3 276.8
---------- ----------
Salaries and general
operating expenses 268.2 105.8
Provision for credit losses 61.6 21.9
Goodwill amortization 20.5 3.2
Minority interest in
subsidiary trust
holding solely
debentures of the
Company 4.8 4.8
---------- ----------
Operating expenses 355.1 135.7
---------- ----------
Income before
provision for
income taxes 232.2 141.1
Provision for
income taxes 88.3 49.2
---------- ----------
Net income $ 143.9 $ 91.9
========== ==========
Basic net income
per share $ 0.55 $ 0.57
Weighted average
shares outstanding 262,931,435 161,166,060
Diluted net income
per share $ 0.55 $ 0.57
Weighted average
shares outstanding 263,620,102 162,421,027
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
March 31, December 31,
2000 1999
----------- -------------
Assets
Financing and leasing assets
Loans and leases
Commercial $ 29,211.9 $ 27,119.2
Consumer 4,127.2 3,887.9
--------- ---------
Finance receivables 33,339.1 31,007.1
Reserve for credit losses (476.2) (446.9)
--------- ---------
Net finance receivables 32,862.9 30,560.2
Operating lease
equipment, net 6,495.6 6,125.9
Finance receivables
held for sale 2,762.5 3,123.7
Cash and cash equivalents 388.8 1,073.4
Goodwill 1,830.1 1,850.5
Other assets 2,310.4 2,347.4
--------- ---------
Total assets $ 46,650.3 $ 45,081.1
========= =========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 10,618.1 $ 8,974.0
Variable rate senior notes 7,914.7 7,147.2
Fixed rate senior notes 18,180.6 19,052.3
Subordinated fixed rate notes 200.0 200.0
--------- ---------
Total debt 36,913.4 35,373.5
Credit balances of
factoring clients 2,256.7 2,200.6
Accrued liabilities
and payables 1,020.1 1,191.8
Deferred federal
income taxes 558.5 510.8
--------- ---------
Total liabilities 40,748.7 39,276.7
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trust
holding solely
debentures of the Company 250.0 250.0
Stockholders' equity
Common stock 2.7 2.7
Paid-in capital 3,524.7 3,521.8
Retained earnings 2,214.9 2,097.6
Accumulated other
comprehensive income 0.1 2.8
Treasury stock at cost (90.8) (70.5)
--------- ---------
Total stockholders' equity 5,651.6 5,554.4
--------- ---------
Total liabilities and
stockholders' equity $ 46,650.3 $ 45,081.1
========= =========
THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
MANAGED ASSETS BY STRATEGIC BUSINESS UNIT
December 1999 managed asset balances have been adjusted to conform to
the current quarter presentation
At March 31, At December 31, At March 31,
2000 1999 1999
---------------------------------------------
Equipment Financing:
Finance receivables $ 11,081.1 $ 10,899.3 $ 8,456.4
Operating lease
equipment, net 1,170.9 1,066.2 862.9
--------- --------- ---------
Total 12,252.0 11,965.5 9,319.3
--------- --------- ---------
Capital Finance:
Finance receivables 1,638.3 1,838.0 1,603.3
Operating lease
equipment, net 3,187.0 2,931.8 2,289.5
Liquidating
portfolio (1)(2) 259.7 281.4 428.1
--------- --------- ---------
Total 5,085.0 5,051.2 4,320.9
--------- --------- ---------
Total Equipment
Financing and
Leasing Segment 17,337.0 17,016.7 13,640.2
--------- --------- ---------
Vendor Technology Finance:
Finance receivables 8,568.6 7,488.9 -
Operating lease
equipment, net 2,091.0 2,108.8 -
--------- --------- ---------
Total Vendor Technology
Finance Segment 10,659.6 9,597.7 -
--------- --------- ---------
Structured Finance
Finance receivables 2,014.4 1,933.9 -
Operating lease
equipment, net 28.8 - -
--------- --------- ---------
Total Structured
Finance Segment 2,043.2 1,933.9 -
--------- --------- ---------
Commercial Services 4,482.0 4,165.1 2,863.5
Business Credit 3,103.8 2,837.0 2,602.9
--------- --------- ---------
Total Commercial
Finance Segment 7,585.8 7,002.1 5,466.4
--------- --------- ---------
Total Commercial
Segments 37,625.6 35,550.4 19,106.6
--------- --------- ---------
Home equity 2,408.4 2,215.4 2,342.8
Manufactured housing 1,687.1 1,666.9 1,516.6
Recreational vehicles 437.0 361.2 841.6
Liquidating portfolio (3) 439.1 462.8 432.1
--------- --------- ---------
Total Consumer Segment 4,971.6 4,706.3 5,133.1
--------- --------- ---------
Other - Equity Investments 160.7 137.3 84.6
--------- --------- ---------
Total Financing
and Leasing
Portfolio Assets 42,757.9 40,394.0 24,324.3
--------- --------- ---------
Finance receivables
previously
securitized:
Commercial 7,963.2 8,471.5 -
Consumer 1,878.8 1,987.0 1,870.0
Consumer liquidating
portfolio (3) 549.6 580.8 910.3
--------- --------- ---------
Total 10,391.6 11,039.3 2,780.3
--------- --------- ---------
Total Managed Assets $ 53,149.5 $ 51,433.3 $ 27,104.6
========= ========= =========
(1) Consists primarily of ocean going maritime and project
finance. Capital Finance discontinued marketing to these
sectors in 1997.
(2) Operating lease equipment, net, of $17.9 million, $19.1
million and $25.8 million are included in the liquidating
portfolio for the quarter ended March 31, 2000, the year ended
December 31, 1999 and the quarter ended March 31, 1999,
respectively.
(3) In 1999, we decided to exit the recreational boat and
wholesale loan product lines.
For the Quarters Ended March 31,
FEES AND OTHER INCOME 2000 1999
---------------------
------------ -----------
Fees and other income $121.4 $30.9
Factoring commissions 38.5 24.0
Gains on venture capital investments 37.5 -
Gains on sales of leasing equipment 21.8 9.2
Gains on securitizations 19.0 0.6
------- ------
$238.2 $64.7
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
Selected Data and Ratios For the Quarters Ended March 31,
2000 1999
Profitability
Net income per diluted share $ 0.55 $ 0.57
Net income per diluted share,
excluding goodwill amortization $ 0.62 $ 0.58
Book value per common share $ 21.45 $ 17.12
Return on average stockholders' equity 10.3% 13.5%
Return on average
tangible stockholders' equity(1) 15.3% 14.6%
Return on AEA 1.48% 1.63%
Return on AMA(2) 1.16% 1.46%
Other
Net finance income as a percentage of AEA 6.74% 4.75%
Net finance margin as a percentage of AEA 3.58% 3.75%
Efficiency ratio(3) 46.0% 38.9%
Salaries and general operating expenses
as a percentage of AMA(2)(3) 2.15% 1.68%
Net credit losses as a percentage of average:
Total finance receivables 0.67% 0.42%
Commercial finance receivables 0.55% 0.22%
Consumer finance receivables 1.48% 1.17%
Volume securitized $ 680.0 $ 470.5
Gains on Securitizations as a percentage
of pretax income 8.18% 0.43%
Average Balances
Average Stockholders' Equity $ 5,597.7 $ 2,733.4
Average Finance Receivables $ 31,612.6 $ 19,904.3
Average Earning Assets $ 38,968.1 $ 22,603.8
Average Managed Assets $ 49,793.2 $ 25,177.5
At March 31, At December 31, At March 31,
Credit Quality 2000 1999 1999
60+ days contractual delinquency
as a percentage of finance
receivables
Commercial 2.65% 2.42% 1.36%
Consumer 4.32% 4.62% 3.57%
Total 2.85% 2.71% 1.82%
60+ days managed financial asset
contractual delinquency
as a percentage of managed
financial assets(4)
Commercial 3.22% 2.72% 1.36%
Consumer 3.26% 3.49% 2.84%
Total 3.23% 2.84% 1.85%
Total non-performing
assets as a percentage of finance
receivables(5) 2.46% 2.05% 1.41%
Total non-performing
managed assets as a percentage of
managed financial assets(4) 2.65% 2.23% 1.52%
Reserve for credit
losses as a percentage of
finance receivables 1.43% 1.44% 1.32%
Capital and Leverage
Debt (net of overnight deposits)
to stockholders' equity(6) 6.23x 5.96x 6.27x
Debt (net of overnight
deposits) to tangible
stockholders' equity(1) (6) 9.04x 8.75x 6.74x
(1) Tangible stockholders' equity excludes goodwill.
(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 commercial and consumer
finance receivables previously securitized and currently
managed by the Company.
(3) Amortization of goodwill is excluded from these ratios.
(4) Managed financial assets excludes operating leases and Equity
Investments.
(5) Total non-performing assets reflect both commercial and
consumer finance receivables on non-accrual status and assets
received in satisfaction of loans.
(6) Total debt excludes, and stockholders' equity includes $250.0
million of Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures of
the Company.
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