CIT Reports 11.3 Percent First Quarter Earnings Growth; Reflecting Increased Margins, Broad Based Non-Spread Revenues and Further Leverage Reductions.Business Editors NEW YORK--(BUSINESS WIRE)--April 26, 2001 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 and Exchangeable Shares: TSE: CGX CGX Consolidated Graphics Inc. CGX Meigs Field, Chicago, Illinois (Airport Code) .U) today announced first quarter 2001 net income of $160.1 million, an increase of 11.3 percent over the same period last year. Earnings 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 were $0.61 for the first quarter compared to $0.55 in the first quarter of 2000. CIT's first quarter earnings growth was driven by improved finance margins and stable 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. , offset by lower venture capital gains. "Our first quarter results reflect CIT's diverse and balanced businesses, which have enabled us to sustain our consistent high quality growth for well over a decade regardless of the economic climate. We are well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. a wide range of opportunities in the marketplace," 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. . "By creating multiple revenue streams, operating efficiently and maintaining our focus on credit quality, CIT has been successful in increasing earnings." "Additionally, we look forward to the second quarter closing of the Tyco transaction. We will bring Tyco a significant financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. platform with the ability to provide comprehensive financing solutions to Tyco's customers, while allowing CIT to continue to build scale in its core franchises. We are very excited to be joining Tyco and look forward to working with Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the Kozlowski and his team in building Tyco's financial services enterprise." Financial Highlights: Margin. First quarter 2001 net finance margin improved to $404.7 million from $349.1 million in the first quarter of last year. 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 , first quarter net finance margin was 3.89 percent, up from 3.58 percent for the first quarter of 2000 reflecting CIT's continued focus on business mix and disciplined pricing and a declining interest rate environment. Improved margin also helped offset a decline in volume, which, excluding factoring, was $5.1 billion for the quarter. First quarter volume was impacted by reduced portfolio acquisition activity during the current year, and de-emphasis of lower margin business as well as some impact from the softer economy. Other Revenue. Other revenue for the three months ended March 31, 2001 totaled $211.6 million, compared to $238.2 million for the first quarter of 2000. Gains on venture capital investments were $4.9 million for the first quarter of 2001, down from $37.5 million in 2000, while 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 improved to $37.4 million from $19.0 million last year. Balance Sheet Leverage. Debt to tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. equity ratio ended the first quarter at 8.41 times, an improvement from 8.78 times at year end 2000. Similarly, the ratio of tangible stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. to managed assets improved to 8.23 percent from 7.82 percent at December December: see month. 31, 2000. These improvements represent continued progress toward CIT's balance sheet targets. Credit Quality. At March 31, 2001, total past dues as a percentage of finance 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 were 3.25 percent, up from 2.98 percent at year end 2000 due to the softer economic environment. First quarter net charge-offs were $66.7 million, 0.80 percent of average finance receivables, up from $53.0 million, or 0.67 percent, in the first quarter 2000. Commercial net charge-offs for the first quarter were $51.6 million, 0.71 percent, compared to $38.1 million, 0.55 percent, last year, while consumer net charge-offs were $15.1 million, 1.42 percent, compared to $14.9 million, 1.48 percent, for first quarter 2000. Adoption of New Derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. Accounting Standard. During the quarter, the new derivative accounting standard was adopted, with a $0.8 million non-cash reduction in net income. CIT's hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. strategies are principally designed to convert floating interest rate debt into fixed rate instruments to match fund fixed rate receivables. Accordingly, pursuant to this new accounting standard, an unrealized mark to market loss was included in accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. other comprehensive (loss) income at March 31, 2001. Tyco Acquisition of CIT During the first quarter, Tyco International For the unrelated division of Mattel, see . Tyco International Ltd. NYSE: TYC is a diversified manufacturing conglomerate incorporated in Bermuda, with United States operational headquarters in New Jersey. Ltd. (NYSE:TYC TYC Texas Youth Commission TYC Torneos Y Competencias (Argentina) TYC To Your Credit TYC Toronto Youth Cabinet (youth members of the Toronto City Council) TYC Teconnaught Youth Club (Ireland) , BSX BSX Bermuda Stock Exchange BSX Bandai Satellaview-X BSX Bicycle Super-X (Cross) :TYC, LSE LSE - Language Sensitive Editor :TYI TYI Thank You India ), a diversified diversified (di·verˑ·s manufacturing and service company, announced that it would acquire CIT in a tax-free tax-free adj. Not subject to taxation; tax-exempt. tax-free Adjective not needing to have tax paid on it: a tax-free lump sum Adj. 1. , stock-for-stock exchange. A registration statement with respect to the acquisition has been filed by Tyco with the Securities and Exchange Commission and declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. effective. A special meeting of CIT shareholders with respect to the acquisition has been scheduled for May 23, 2001, with an expected date of closing of June June: see month. 1, 2001. Once completed, CIT will continue to file with the SEC relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its public debt. Earnings Conference Call and Web Cast CIT is hosting a conference call and simultaneous Web cast with visuals on April 26, 2001 at 11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss its first quarter financial results. Both the call and Web cast are open to the general public. The conference call is available at the following numbers: -- United States: (800) 810-0924 Passcode: 454217 -- International: (913) 981-4900 Passcode: 454217 Interested parties may also access the live call on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.cit.com Please go to the Web site at least 15 minutes before the broadcast to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary software. A replay of the call can be accessed 90 minutes after the call on the Internet via http://www.cit.com or by calling in the U.S. (800) 810-0924 or internationally (913) 981-4900 using the passcode 454217 (available until midnight, April 30, 2001). Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements contained in this document are forward-looking statements concerning our future earnings, financial condition and operations. These statements involve risks and uncertainties that may be difficult to predict. Forward-looking statements are based upon management's estimates of future economic conditions, fair values and future costs, using currently available information. Therefore, actual results may differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in those statements, due to various risks and uncertainties identified more fully in our 2000 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . About CIT: CIT is a leading, global source of financing and leasing capital and an advisor for companies in more than 30 industries. Managing more than $50 billion in assets across a diversified portfolio, CIT is the trusted financial engine empowering many of today's industry leaders and emerging businesses, offering vendor, equipment, commercial, factoring, consumer and structured financing capabilities. Founded in 1908, 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. . For more information on CIT, visit the Web site at http://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,
2001 2000
---------- ----------
Finance income $1,376.8 $1,228.8
Interest expense 625.7 571.9
----------- ----------
Net finance income 751.1 656.9
Depreciation on operating
lease equipment 346.4 307.8
----------- ----------
Net finance margin 404.7 349.1
Other revenue 211.6 238.2
----------- ----------
Operating revenue 616.3 587.3
----------- ----------
Salaries and general
operating expenses 263.5 268.2
Provision for credit losses 68.3 61.6
Goodwill amortization 22.5 20.5
Minority interest in subsidiary
trust holding solely
debentures of the Company 4.8 4.8
----------- ----------
Operating expenses 359.1 355.1
----------- ----------
Income before provision
for income taxes 257.2 232.2
Provision for income taxes 97.1 88.3
----------- ----------
Net income $ 160.1 $ 143.9
=========== ==========
Basic net income per share $ 0.61 $ 0.55
Weighted average shares
outstanding 260.6 262.9
Diluted net income per share $ 0.61 $ 0.55
Weighted average shares
outstanding 264.3 263.6
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
March 31, December 31,
2001 2000
--------------------------------
Assets
Financing and leasing assets:
Loans and leases:
Commercial $29,102.2 $29,304.0
Consumer 4,198.5 4,193.5
--------------------------------
Finance receivables 33,300.7 33,497.5
Reserve for credit losses (462.0) (468.5)
--------------------------------
Net finance receivables 32,838.7 33,029.0
Operating lease equipment, net 7,186.7 7,190.6
Finance receivables held for sale 2,624.8 2,698.4
Cash and cash equivalents 740.0 812.1
Goodwill 1,942.1 1,964.6
Other assets 3,053.1 2,995.1
--------------------------------
Total assets $48,385.4 $48,689.8
================================
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 9,662.9 $ 9,063.5
Variable rate senior notes 10,798.3 11,130.5
Fixed rate senior notes 17,157.0 17,571.1
Subordinated fixed rate notes 100.0 200.0
--------------------------------
Total debt 37,718.2 37,965.1
Credit balances of factoring clients 2,131.4 2,179.9
Accrued liabilities and payables 1,691.4 1,640.8
Deferred federal income taxes 623.8 646.8
--------------------------------
Total liabilities 42,164.8 42,432.6
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 3,535.9 3,527.2
Retained earnings 2,736.9 2,603.3
Treasury stock at cost (133.1) (137.7)
--------------------------------
6,142.4 5,995.5
Accumulated other
comprehensive
(loss) income (171.8) 11.7
--------------------------------
Total stockholders' equity 5,970.6 6,007.2
--------------------------------
Total liabilities and
stockholders' equity $48,385.4 $48,689.8
================================
THE CIT GROUP, INC. AND SUBSIDIARIES
(dollars in millions)
MANAGED ASSETS BY STRATEGIC BUSINESS UNIT
At March 31, At December 31, At March 31,
2001 2000 2000
----------------------------------------
Equipment Financing:
Finance receivables (1) $10,396.9 $12,153.7 $11,081.1
Operating lease equipment,
net (1) 1,520.8 2,280.7 1,170.9
---------- --------- ---------
Total 11,917.7 14,434.4 12,252.0
---------- --------- ---------
Capital Finance:
Finance receivables 1,722.9 1,863.1 1,638.3
Operating lease
equipment, net 3,632.1 3,594.6 3,187.0
Liquidating portfolio (2) 171.7 185.9 259.7
---------- --------- ---------
Total 5,526.7 5,643.6 5,085.0
--------- --------- ---------
Total Equipment
Financing and
Leasing Segment 17,444.4 20,078.0 17,337.0
---------- --------- ---------
Vendor Technology Finance:
Finance receivables (1) 6,910.4 6,864.5 8,568.6
Operating lease
equipment, net (1) 1,849.0 1,256.5 2,091.0
---------- --------- ---------
Total Vendor Technology
Finance Segment 8,759.4 8,121.0 10,659.6
---------- --------- --------
Commercial Services 4,434.3 4,277.9 4,482.0
Business Credit 3,561.0 3,415.8 3,103.8
---------- --------- --------
Total Commercial
Finance Segment 7,995.3 7,693.7 7,585.8
---------- --------- --------
Structured Finance:
Finance receivables 2,507.0 2,347.3 2,014.4
Operating lease
equipment, net 54.9 58.8 28.8
Equity Investments 309.4 285.8 160.7
---------- --------- --------
Total Structured
Finance Segment 2,871.3 2,691.9 2,203.9
---------- --------- --------
Specialty Finance:
Consumer 5,071.8 4,901.8 4,532.5
Small ticket commercial
assets (1)(3) 1,056.3 - -
Liquidating portfolio (4) 254.5 298.2 439.1
---------- --------- --------
Total Specialty
Finance Segment 6,382.6 5,200.0 4,971.6
---------- --------- --------
TOTAL FINANCING AND
LEASING PORTFOLIO
ASSETS 43,453.0 43,784.6 42,757.9
---------- --------- --------
Finance receivables
previously securitized
and still managed
by us:
Commercial 8,605.7 9,075.9 7,963.2
Consumer 1,502.1 1,582.7 1,878.8
Consumer liquidating
portfolio (4) 432.6 457.7 549.6
---------- --------- ---------
Total 10,540.4 11,116.3 10,391.6
---------- --------- ---------
TOTAL MANAGED ASSETS $53,993.4 $54,900.9 $53,149.5
========== ========= =========
(1) During the first quarter of 2001, we transferred approximately
$637.4 million of finance receivables and $658.1 million of
operating lease equipment from Equipment Financing to Vendor
Technology Finance, $729.7 million of finance receivables and
$112.7 million of operating lease equipment from Equipment
Financing to Specialty Finance and $315.6 million of finance
receivables and $32.5 million of operating lease equipment from
Vendor Technology Finance to Specialty Finance.
(2) Ocean going maritime and project finance receivables.
(3) Includes $129.9 million of operating lease equipment.
(4) Recreational boat and wholesale loan receivables.
For the Quarters Ended March 31,
OTHER REVENUE 2001 2000
-------------
------------ ------------
Fees and other income $106.6 $121.4
Gains on securitizations 37.4 19.0
Factoring commissions 36.7 38.5
Gains on sales of
leasing equipment 26.0 21.8
Gains on venture
capital investments 4.9 37.5
------------ ------------
$211.6 $238.2
============ ============
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
Selected Data and Ratios For the Quarters Ended March 31,
2001 2000
---------------- --------------
Profitability
Net income per diluted share $ 0.61 $ 0.55
Net income per diluted share,
excluding goodwill amortization $ 0.68 $ 0.62
Book value per common share (1) $ 23.40 $ 21.45
Return on average stockholders'
equity (1) 10.6% 10.3%
Return on average tangible
stockholders' equity(1) (2) 15.6% 15.3%
Return on average stockholders'
equity (1) (ex. goodwill
amortization) 11.9% 11.6%
Return on AEA 1.54% 1.48%
Return on AMA(3) 1.23% 1.16%
Other
Net finance income as
a percentage of AEA 7.22% 6.74%
Net finance margin as
a percentage of AEA 3.89% 3.58%
Efficiency ratio(4) 43.1% 46.0%
Salaries and general
operating expenses as
a percentage of AMA(3)(4) 2.03% 2.15%
Net credit losses as a
percentage of average:
Total finance receivables 0.80% 0.67%
Commercial finance receivables 0.71% 0.55%
Consumer finance receivables 1.42% 1.48%
Volume securitized
(dollars in millions) $1,096.4 $ 680.0
Gains on securitizations as a
percentage of pretax income 14.5% 8.2%
Average Balances
(dollars in millions)
Average Stockholders'
Equity (1) $6,055.6 $5,597.7
Average Finance Receivables $33,395.4 $31,612.6
Average Earning Assets $41,635.3 $38,968.1
Average Managed Assets $51,961.8 $49,793.2
At March 31, At December 31, At March 31,
Credit Quality 2001 2000 2000
------------- -------------- ------------
60+ days contractual
delinquency as a percentage
of finance receivables
Commercial 3.03% 2.69% 2.65%
Consumer 4.76% 5.03% 4.32%
Total 3.25% 2.98% 2.85%
60+ days managed contractual
delinquency as a percentage
of managed financial assets(5)
Commercial 3.52% 3.18% 3.22%
Consumer 3.63% 3.86% 3.26%
Total 3.54% 3.29% 3.23%
Total non-performing assets
as a percentage of finance 2.70% 2.47% 2.46%
receivables(6)
Total non-performing managed
assets as a percentage of
managed financial assets(5) 2.90% 2.74% 2.65%
Reserve for credit losses as
a percentage of finance
receivables 1.39% 1.40% 1.43%
Capital and Leverage
Tangible stockholders' equity
to managed assets (1) (2) (7) 8.23% 7.82% 7.65%
Debt (net of overnight deposits)
to tangible stockholders' 8.41x 8.78x 9.04x
equity(1) (8)
----------------------------------------------------------------------
(1) For these 2001 calculations, stockholders' equity excludes the
impact of accounting changes for derivative financial instruments.
(2) Tangible stockholders' equity excludes goodwill.
(3) "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 still managed by the
Company.
(4) Amortization of goodwill is excluded from these ratios.
(5) Managed financial assets exclude operating leases and Equity
Investments.
(6) Total non-performing assets reflect both commercial and consumer
finance receivables on non-accrual status and assets received in
satisfaction of loans.
(7) Tangible stockholders' equity (excludes the impact of accounting
changes for derivative financial instruments) includes $250.0
million of Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures of the
Company ("Preferred Capital Securities").
(8) Total debt excludes, and stockholders' equity includes $250.0
million of Preferred Capital Securities.
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