NEW YORK, April 19 /PRNewswire-FirstCall/ -- CIT Group Inc. today reported diluted earnings per share of $1.12 for the quarter, up 14.3% from last year (excluding gains on derivative contracts that were subsequently terminated in the fourth quarter of 2005). Net income was $229.7 million for the first quarter, up from $227.6 million last year ($211.9 million excluding gains on derivative contracts).
Profitability improved across our businesses in Commercial Finance and Specialty Finance. Return on average common equity was 14.1% (14.5% excluding the impact of option expensing) compared to 14.5% last quarter and 13.6% last year, excluding amounts related to terminated derivative contracts and other notable items in both prior year periods.
The 2006 first quarter included the following items of note that impacted comparisons to prior year operating trends:
* Option-related compensation expense totaled $10.3 million in connection
with the adoption of SFAS 123R in the quarter ($0.03 diluted EPS
decrease).
* A restructuring charge of $11.1 million comprised of termination
benefits relating to business realignments was recorded in the quarter
($0.04 diluted EPS decrease).
* Income tax expense was lowered by $6.5 million due to a deferred tax
adjustment related to higher utilization of net operating losses ($0.03
diluted EPS increase).
These three items decreased current quarter reported diluted earnings per share by $0.04.
Commenting on the Company's performance, Jeffrey M. Peek, Chairman and Chief Executive Officer, said:
"I am pleased to report a successful start to 2006, marked by solid earnings growth and strong profitability. Our operating performance was driven by a sharp focus on execution coupled with momentum in all five of our operating groups. The quarter also benefited from a historically strong credit performance.
"We saw terrific results from our investment in the sales force, as new business volume was strong and broad based across all origination channels, up over 50% from the prior year. Managed assets grew to over $65 billion. We achieved record volume in our healthcare, home lending and student lending businesses -- a direct result of recent sales initiatives. In addition, the proportion of overseas revenue more than doubled in the last two years, and now represents in excess of 20% of our pre-tax income.
"In all, we are tracking to our 2006 plan and I remain optimistic about the rest of the year. We continue to see opportunities to grow assets, improve shareholder returns and further strengthen leadership positions in our markets."
Segment Results:
Commercial Finance Group
Trade Finance
* Net income increased 16.1% from the prior year on the strength of an
acquisition in March 2005, strong interest margins and higher factoring
commissions.
* Owned assets were $6.7 billion at quarter end, unchanged from December
31, 2005 and down from $7.2 billion at March 31, 2005.
* Operating margin improved from last year on stronger interest income
driven by improved commission rates and higher volume levels. The
proportion of international factoring volume was up appreciably from
the prior year.
* Credit metrics remained strong. Net charge-offs were flat with last
year, while 60+ days past due and non-performing accounts approximated
low year-end levels.
* Salaries and general operating expenses were up modestly compared to
last year, reflecting a full quarter of last year's acquisition.
* Return on risk adjusted capital improved modestly from last year. This
segment remains one of our highest returning businesses.
Corporate Finance
* Net income improved 6.7% from 2005, reflecting improved margins, strong
non-spread revenue and low charge-offs. We saw improved profitability
in construction.
* Volume was strong across all of the businesses and up 39% from March
2005. Managed assets grew $541 million or 3.3% to $17.1 billion from
last quarter, with strength in healthcare and communications, media &
entertainment. Growth included a number of long-term care real estate,
sports and entertainment transactions.
* Operating margin improved from last year on strong performances in
communications, media & entertainment and healthcare. Non-spread
revenue improved 8% and included higher fee income in healthcare.
* Credit metrics remained strong. Net charge-offs were down $11.5
million from last year, benefiting from higher recoveries, and
delinquencies were down $17.3 million from December 31, 2005.
* Salaries and general operating expenses increased over last year
reflecting our build-out of our sales force, expansion of our product
offerings, as well as acquisitions.
* Return on risk adjusted capital was flat with last year.
Transportation Finance
* Net income improved 118% from 2005 reflecting an increase in operating
lease margins, including particularly strong aerospace rental and
prepayment fees, and a significant reduction in the effective tax rate
due to the continued relocation of aircraft to Ireland.
* Financing and leasing assets were $10.6 billion at March 31, 2006,
compared to $10.5 billion at December 31, 2005, and $8.7 billion at
March 31, 2005. We took delivery and placed four new aircraft from our
order book during the quarter. We had six off-lease aircraft. Rail
demand remains strong, with our fleet virtually fully utilized.
* Other revenue was up over last year on gains from equipment sales.
* Credit metrics remained strong. Charge-offs were minimal and down
significantly from last quarter and down from last year.
* Salaries and general operating expenses were up over last year due to
the establishment of our international aerospace platform as we
continue to grow these businesses.
* Return on risk-adjusted capital almost doubled from last year.
Specialty Finance Group
Vendor Finance
* Net income improved 11% from the prior year on strong performance in
international operations.
* Managed assets, essentially flat with last quarter and down from last
year on the accelerated liquidation of non-strategic assets, continue
to grow in the international operations.
* New business volume was down from last year, but volume excluding
Dell in the U.S. grew 15% on the addition of new vendors and increased
penetration of existing relationships around the world. In addition,
Dell volume outside the U.S. jumped 21% from last year.
* Operating margin increased from last year on improved non-spread
revenue in the international operations.
* Credit metrics remained strong. Net charge-offs improved from last
year in the U.S., offset by higher credit costs in the international
operations. Both delinquencies and non-performing metrics were
relatively flat to year-end levels and down from last year.
* Salaries and general operating expenses were well controlled, down
slightly from last year.
* Return on risk-adjusted capital improved from last year to
approximately 26%.
Consumer and Small Business Lending
* Net income increased 34% from the prior year, reflecting improved
results in all businesses: Home Lending, Student Loan Xpress, Small
Business Lending, and CIT Bank.
* Managed assets increased 12.3% from December 31, 2005 and 42.6% from
last year. The increase for the quarter included $1.1 billion in
Student Loan Xpress and $1.0 billion in Home Lending. Student Loan
Xpress assets increased 43% from last year.
* New business volume increased $2.3 billion (147%) over last year on
strong originations at Home Lending and Student Loan Xpress. CIT is
the preferred lender to over 1,000 schools, up 73% from a year ago.
Progress is being made on bringing student loan servicing in-house in
support of our full-service strategy with serviced assets approximating
$2 billion at quarter end.
* During the quarter, we grew the deposit funding at CIT Bank, with
nearly $700 million in deposits and $1 billion in assets at quarter
end, on track with our plans.
* Operating margin increased from last year. Other revenue increased due
to strong fee generation.
* Net charge-offs were flat with last quarter and down 21 basis points
from last year (excluding U.S. government guaranteed loans at Student
Loan Xpress), driven by improvements in Small Business Lending.
* Salaries and general operating expenses grew over last year, mainly
from the expansion of our sales force in all businesses and Student
Loan Xpress.
* Segment return on risk-adjusted capital was 11.4%, versus 13.4% in
2005, as returns bear the cost of Student Loan Xpress goodwill and
acquired intangibles.
Corporate and other includes the previously discussed restructuring charge, tax adjustment and stock option expense, as well as $7.7 million in dividends on preferred securities.
Consolidated Financial Highlights:
Net Finance and Risk-Adjusted Margin
* Net finance margin was 3.36% as a percentage of average earning assets,
essentially unchanged from last quarter and down from 3.62% last
year. Compared to the prior quarter, margins on operating leases
improved on strong rents whereas lending margins declined. Yield-
related fees were particularly strong. The decline from last year was
primarily due to the effect of rising short-term interest rates,
longer-term debt financings, competitive market pricing on loan
products, and the impact of lower margin student loans.
* Operating lease margin was 6.60% of average operating leases, compared
to 6.17% last quarter and 5.83% last year, reflecting increased rents
on aerospace and rail equipment and a high level of prepayment fees and
past due rentals.
* Risk-adjusted margin (net finance margin after provision for credit
losses) was 3.11% as a percentage of average earning assets, up from
2.94% last quarter and down from 3.21% in the prior year quarter.
Other Revenue
* Other revenue totaled $260.1 million, compared to $288.8 million last
quarter ($267.2 million excluding a gain on sale of a micro-ticket
leasing business and a charge on derivatives that were terminated) and
$276.5 million last year ($238.0 million excluding a gain on
derivatives that were terminated and a gain on venture capital
investments). The increase over last year was driven by strong fee
(including syndication fees) and other income in our Corporate Finance
and Consumer businesses. The decrease from last quarter was principally
due to seasonally lower factoring fees.
* Securitization gains totaled $13.6 million, 4.0% of pretax income for
the quarter, up from $4.9 million and $11.8 million in the prior
quarter and prior year, on slightly higher securitization volume in
vendor finance in the U.S. and Canada.
Salaries and General Operating Expenses
* Employee headcount totaled approximately 6,630 at March 31, 2006 versus
6,340 at December 31, 2005, and 6,130 at March 31, 2005. The increase
includes additions to our sales force.
* Total operating expenses were $334.2 million versus $299.9 million last
quarter and $264.0 million a year ago. The current period includes a
restructuring charge of $11.1 million and a charge of $10.3 million
relating to the adoption of SFAS 123R, which mandates the expensing of
stock options. The remaining increase reflects higher incentive-based
compensation, salaries and other investments made in sales and
marketing.
* The efficiency ratio was 45.7% (excluding the restructuring charge), up
from 41.6% last quarter (excluding the gain on the micro-ticket
business sale, derivatives mark-to-market adjustments and other
charges) and 41.5% last year (excluding the derivatives mark-to-market
adjustments and gain on venture capital investments). The higher ratio
in the current quarter reflects stock option expensing and the
continued build out of our sales force, where incremental revenues
typically lag the initial expense.
Effective Tax Rate
* The effective tax rate was 29.8% (31.8% excluding the deferred income
tax adjustment), compared to 29.4% last quarter (34.1% excluding a
deferred income tax liability release) and 37.6% last year. The
reduction from last year reflects the continued relocation and funding
of certain aerospace assets offshore and improved international
earnings.
Portfolio and Managed Assets
* Managed assets were $65.5 billion at March 31, 2006, up 4.2% from
December 31, 2005 and 11.4% last year.
* Origination volume for the quarter, excluding factoring volume,
increased 52.9% to $8.7 billion from the prior year due to strong
originations across all our businesses and origination channels,
including student lending.
Credit Quality
* Credit quality for the quarter was excellent as net charge-offs were
0.37% of average finance receivables, down from 0.91% last quarter and
0.52% last year.
* Total 60+ day owned delinquencies were $822.4 million (1.76% of finance
receivables) at March 31, 2006, up from $758.2 million (1.71%) last
quarter and $723.1 million (1.76%) last year. Corporate Finance
delinquencies improved. Delinquencies increased in Consumer home
lending reflecting growth and seasoning of the portfolio, and were
higher in student lending due to a recent receivable purchase and
seasoning of the portfolio. Though delinquency is higher in the student
loan portfolio than in other portfolios, these amounts are not
indicative of potential loss due to the related U.S. government
guarantee.
* Non-performing assets (non-accrual loans plus repossessed assets) were
$542.3 million or 1.16% of finance receivables, compared to $521.2
million (1.18%) last quarter and $528.3 million (1.28%) last year. The
Consumer home lending increase from last quarter was due to portfolio
seasoning, and was partially offset by improvements in the Commercial
Finance Group.
* The reserve for credit losses was $620.3 million (1.52% excluding
student loans), compared to $621.7 million (1.58% excluding student
loans) last quarter, and $620.4 million (1.68% excluding student loans)
at March 31, 2005, reflecting lower credit losses in the current
period.
Capitalization and Leverage
* The ratio of total tangible equity to managed assets at March 31, 2006
was 9.72%, compared to 9.80% at year-end, and 9.62% last year.
2006 Segment Reporting Changes
Effective January 1, 2006, we realigned select business operations to serve our clients better. Following is a summary of the changes reflected herein. Prior periods have been conformed to the current period format, except for the diversified portfolio transfer noted below.
* The Small Business Lending unit ($1.3 billion in owned assets at March
31, 2006) was transferred from Specialty Finance - Commercial to
Specialty Finance - Consumer, now named Consumer and Small Business
Lending, reflecting commonalities with our home lending and student
loan businesses.
* Consistent with our strategic focus on industry alignment, a majority
of the Equipment Finance segment was consolidated into our Corporate
Finance segment. A diversified industry portfolio of approximately $350
million was transferred to Vendor Finance. This combination will allow
us to provide clients in the construction and selected other industries
access to the full complement of CIT's products and services.
* We have also made name changes to clarify the market focus of our
segments.
(a) Specialty Finance -- Commercial has been renamed Vendor Finance
(b) Specialty Finance -- Consumer has been renamed Consumer / Small
Business Lending
(c) Commercial Services has been renamed Trade Finance
(d) Capital Finance has been renamed Transportation Finance
Conference Call and Webcast:
We will discuss this quarter's results, as well as ongoing strategy, on a conference call today at 11:00 am (ET). Interested parties may access the conference call live today by dialing 877-558-5219 for U.S. and Canadian callers or 706-634-5419 for international callers, and reference "CIT First Quarter Earnings Call," or at the following website: http://ir.cit.com/. An audio replay of the call will be available beginning shortly after the conclusion of the call until 11:59 pm (ET) April 26, 2006, by dialing 800-642-1687 for U.S. and Canadian callers or 706-645-9291 for international callers with the pass-code 7280286, or at the following website: http://ir.cit.com/.
About CIT:
CIT Group Inc. , a leading commercial and consumer finance company, provides clients with financing and leasing products and advisory services. Founded in 1908, CIT has over $60 billion in assets under management and possesses the financial resources, industry expertise and product knowledge to serve the needs of clients across approximately 30 industries worldwide. CIT, a Fortune 500 company, and a component of the S&P 500 Index, holds leading positions in vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending. CIT, with its global headquarters in New York City, has over 6,500 employees in locations throughout North America, Europe, Latin and South America, and the Pacific Rim. For more information, visit http://www.cit.com/.
Forward-Looking Statements:
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond CIT's control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," "target," and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding market, competitive and/or regulatory factors, among others, affecting CIT's businesses are examples of factors that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these factors are described in CIT's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2005. CIT is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available with this release and on our website at http://ir.cit.com/.
For Information: Valerie L. Gerard - Executive Vice President - Investor
Relations
(973) 422-3284
Steven Klimas - Vice President - Investor Relations
(973) 535-3769
or
Kelley Gipson - Executive Vice President - Marketing &
Communications
(973) 422-3235
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
(dollars in millions, except per share data)
Quarters Ended
December
March 31, 31, March 31,
2006 2005 2005
Finance income $1,294.6 $1,232.8 $1,028.0
Interest expense 598.3 557.3 391.5
Net finance income 696.3 675.5 636.5
Depreciation on operating lease
equipment 249.4 246.6 237.6
Net finance margin 446.9 428.9 398.9
Provision for credit losses 33.3 54.6 45.3
Net finance margin after provision for
credit losses 413.6 374.3 353.6
Other revenue 260.1 288.8 276.5
Operating margin 673.7 663.1 630.1
Salaries and general operating
expenses 323.1 299.9 264.0
Provision for restructuring 11.1 -- --
Income before provision for income
taxes 339.5 363.2 366.1
Provision for income taxes (101.3) (106.9) (137.6)
Minority interest, after tax (0.8) (0.5) (0.9)
Net income before preferred stock
dividends 237.4 255.8 227.6
Preferred stock dividends (7.7) (7.5) --
Net income available to common
stockholders $229.7 $248.3 $227.6
Earnings per common share
Basic earnings per share $1.15 $1.24 $1.08
Diluted earnings per share $1.12 $1.21 $1.06
Number of shares - basic (thousands) 199,462 199,973 210,656
Number of shares - diluted (thousands) 204,455 205,195 215,090
Other Revenue
Fees and other income $168.8 $170.0 $148.8
Factoring commissions 55.8 61.1 54.8
Gains on sales of leasing equipment 21.4 27.7 22.6
Gains on securitizations 13.6 4.9 11.8
Gain on sale of micro-ticket leasing
business unit -- 44.3 --
(Loss) gain on derivatives -- (22.7) 27.7
Gain on venture capital investments 0.5 3.5 10.8
Total other revenue $260.1 $288.8 $276.5
Fees and other income includes: servicing fees, structuring and advisory
fees, syndication fees and gains and (losses) from other asset and
receivable sales.
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
March 31, December 31,
2006 2005
ASSETS
Financing and leasing assets:
Finance receivables $46,841.3 $44,294.5
Reserve for credit losses (620.3) (621.7)
Net finance receivables 46,221.0 43,672.8
Operating lease equipment, net 10,166.0 9,635.7
Financing and leasing assets held
for sale 1,551.0 1,620.3
Cash and cash equivalents 2,265.7 3,658.6
Retained interests in securitizations
and other investments 1,117.1 1,152.7
Goodwill and intangible assets, net 1,013.5 1,011.5
Other assets 2,396.2 2,635.0
Total Assets $64,730.5 $63,386.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper $4,282.3 $5,225.0
Deposits 687.9 261.9
Variable-rate senior unsecured
notes 17,847.4 15,485.1
Fixed-rate senior unsecured notes 22,652.3 22,591.7
Non-recourse secured borrowings -
student lending 3,423.3 4,048.8
Preferred capital securities 251.6 252.0
Total debt 49,144.8 47,864.5
Credit balances of factoring clients 4,048.9 4,187.8
Accrued liabilities and payables 4,281.7 4,321.8
Total Liabilities 57,475.4 56,374.1
Minority interest 50.2 49.8
Stockholders' Equity:
Preferred stock 500.0 500.0
Common stock 2.1 2.1
Paid-in capital 10,639.0 10,632.9
Accumulated deficit (3,502.7) (3,691.4)
Accumulated other comprehensive income 151.1 115.2
Less: Treasury stock, at cost (584.6) (596.1)
Total Common Stockholders' Equity 6,704.9 6,462.7
Total Stockholders' Equity 7,204.9 6,962.7
Total Liabilities and Stockholders'
Equity $64,730.5 $63,386.6
Other Assets
Investments in and receivables from
non-consolidated subsidiaries $440.3 $549.8
Accrued interest and receivables from
derivative counterparties 409.1 350.2
Deposits on commercial aerospace
flight equipment 323.6 317.4
Prepaid expenses 143.5 145.9
Repossessed assets and off-lease
equipment 87.5 80.7
Direct and private fund equity
investments 31.1 30.2
Furniture and fixtures, miscellaneous
receivables and other assets 961.1 1,160.8
$2,396.2 $2,635.0
CIT GROUP INC. AND SUBSIDIARIES
OWNED AND MANAGED ASSET COMPOSITION
(dollars in millions)
March 31, December 31, March 31,
2006 2005 2005
Specialty Finance Group
Vendor Finance(2)
Finance receivables $ 7,325.8 $7,264.4 $ 7,699.5
Operating lease equipment, net 1,028.1 1,049.5 1,030.9
Financing and leasing assets
held for sale 655.9 720.3 955.3
Owned assets 9,009.8 9,034.2 9,685.7
Finance receivables
securitized and managed by CIT 3,875.9 3,921.6 3,870.2
Managed assets 12,885.7 12,955.8 13,555.9
Consumer and Small Business Lending(2)
Finance receivables -
home lending 8,982.5 8,199.7 5,423.5
Finance receivables -
education lending 6,117.3 5,051.0 4,321.9
Finance receivables -
small business lending 1,237.6 1,238.6 1,137.1
Finance receivables - other 376.6 302.9 255.8
Financing and leasing assets
held for sale 616.2 496.2 434.2
Owned assets 17,330.2 15,288.4 11,572.5
Home lending finance receivables
securitized and managed by CIT 781.6 838.8 1,131.5
Managed assets 18,111.8 16,127.2 12,704.0
Commercial Finance Group
Trade Finance
Finance receivables 6,719.5 6,690.0 7,184.9
Corporate Finance(1)
Finance receivables 14,533.3 13,652.5 13,266.2
Operating lease equipment, net 165.9 177.7 462.1
Financing and leasing assets
held for sale 195.1 253.5 91.8
Owned assets 14,894.3 14,083.7 13,820.1
Finance receivables securitized
and managed by CIT 2,255.6 2,525.3 2,714.9
Managed assets 17,149.9 16,609.0 16,535.0
Transportation Finance
Finance receivables 1,548.7 1,895.4 1,891.2
Operating lease equipment, net 8,972.0 8,408.5 6,820.1
Financing and leasing assets
held for sale 83.8 150.3 --
Owned assets 10,604.5 10,454.2 8,711.3
Other - Equity Investments 31.1 30.2 101.8
Total
Finance receivables $46,841.3 $44,294.5 $41,180.1
Operating lease equipment, net 10,166.0 9,635.7 8,313.1
Financing and leasing assets
held for sale 1,551.0 1,620.3 1,481.3
Financing and leasing assets
excl. equity investments 58,558.3 55,550.5 50,974.5
Equity investments
(included in other assets) 31.1 30.2 101.8
Owned assets 58,589.4 55,580.7 51,076.3
Finance receivables securitized
and managed by CIT 6,913.1 7,285.7 7,716.6
Managed assets $65,502.5 $62,866.4 $58,792.9
(1) During the quarter, the assets of Equipment Finance were transferred
to Corporate Finance. At the same time, a portfolio of approximately
$350 million of vendor related assets that were part of Equipment
Finance, were transferred to Vendor Finance. Prior year data has been
conformed for the transfer to Corporate Finance, but not the portfolio
asset transfer to Vendor Finance.
(2) During the quarter Small Business Lending was transferred from Vendor
Finance to Consumer, prior periods have been conformed to this
presentation.
CIT GROUP INC. AND SUBSIDIARIES
SEGMENT DATA
(dollars in millions)
Quarters Ended
March 31, December 31, March 31,
2006 2005 2005
Commercial Finance Group
Trade Finance
Net finance income $37.0 $44.9 $28.3
Provision for credit losses 6.6 4.5 6.6
Other revenue 69.7 78.5 67.0
Operating margin 100.1 118.9 88.7
Provision for income taxes (26.1) (34.3) (22.2)
Net income 43.3 56.4 37.3
Return on AEA 7.16% 8.09% 6.02%
Return on risk-adjusted capital 27.1% 30.6% 24.4%
New business volume $129.6 $138.0 $96.0
Corporate Finance
Net finance income $125.2 $122.2 $122.0
Depreciation on operating lease
equipment 8.6 8.7 14.3
Provision for credit losses (1.7) 3.1 12.1
Other revenue 60.0 65.3 55.5
Operating margin 178.3 175.7 151.1
Provision for income taxes (41.2) (40.2) (38.4)
Net income 67.2 66.4 63.0
Return on AEA 1.86% 1.88% 1.82%
Return on risk-adjusted capital 14.6% 14.6% 14.7%
New business volume $2,438.0 $2,691.9 $1,749.4
Transportation Finance
Net finance income $184.9 $159.0 $132.9
Depreciation on operating lease
equipment 104.3 97.0 82.5
Provision for credit losses -- 1.9 0.4
Other revenue 6.1 11.4 5.2
Operating margin 86.7 71.5 55.2
Provision for income taxes (4.8) 10.9 (10.7)
Net income 57.9 58.6 26.6
Return on AEA 2.21% 2.27% 1.22%
Return on risk-adjusted capital 16.2% 16.7% 8.8%
New business volume $497.1 $701.3 $251.2
Total Commercial Finance Group
Net finance income $347.1 $326.1 $283.2
Depreciation on operating lease
equipment 112.9 105.7 96.8
Provision for credit losses 4.9 9.5 19.1
Other revenue 135.8 155.2 127.7
Operating margin 365.1 366.1 295.0
Provision for income taxes (72.1) (63.6) (71.3)
Net income 168.4 181.4 126.9
Return on AEA 2.46% 2.67% 2.03%
Return on risk-adjusted capital 17.2% 18.2% 14.4%
New business volume $3,064.7 $3,531.2 $2,096.6
CIT GROUP INC. AND SUBSIDIARIES
SEGMENT DATA
(dollars in millions)
Quarters Ended
March 31, December 31, March 31,
2006 2005 2005
Specialty Finance Group
Vendor Finance
Net finance income $266.3 $274.5 $273.2
Depreciation on operating lease
equipment 136.5 140.8 140.9
Provision for credit losses 12.9 21.0 12.9
Other revenue 84.8 124.4 71.0
Operating margin 201.7 237.1 190.4
Provision for income taxes (44.2) (59.7) (39.5)
Net income 74.5 99.7 67.1
Return on AEA 3.21% 4.24% 2.72%
Return on risk-adjusted capital 25.5% 33.8% 22.7%
New business volume $1,949.0 $2,528.4 $2,151.0
Consumer and Small Business
Lending
Net finance income $80.7 $69.9 $55.1
Provision for credit losses 15.5 12.3 13.7
Other revenue 39.2 29.1 28.7
Operating margin 104.4 86.7 70.1
Provision for income taxes (18.6) (16.5) (15.3)
Net income 30.4 26.6 22.7
Return on AEA 0.73% 0.74% 1.00%
Return on risk-adjusted capital 11.4% 11.2% 13.4%
New business volume $3,831.6 $3,750.6 $1,549.0
Total Specialty Finance Group
Net finance income $347.0 $344.4 $328.3
Depreciation on operating lease
equipment 136.5 140.8 140.9
Provision for credit losses 28.4 33.3 26.6
Other revenue 124.0 153.5 99.7
Operating margin 306.1 323.8 260.5
Provision for income taxes (62.8) (76.2) (54.8)
Net income 104.9 126.3 89.8
Return on AEA 1.62% 2.13% 1.90%
Return on risk-adjusted capital 18.7% 23.2% 19.2%
New business volume $5,780.6 $6,279.0 $3,700.0
Corporate and Other
Net finance income $2.2 $5.0 $25.0
Provision for credit losses - 11.8 (0.4)
Other revenue 0.3 (19.9) 49.1
Operating margin 2.5 (26.8) 74.6
Provision for income taxes 33.6 32.9 (11.5)
Net income (loss) (43.6) (59.4) 10.9
Return on AEA (0.33)% (0.47)% 0.06%
CIT GROUP INC. AND SUBSIDIARIES
CREDIT METRICS
(dollars in millions)
Quarters Ended
March 31, 2006 December 31, 2005 March 31, 2005
$ % $ % $ %
Net Credit Losses - Owned as a Percentage of Average Finance Receivables
Vendor Finance $13.8 0.74% $21.4 1.15% $13.4 0.69%
Consumer and Small
Business Lending 21.6 0.54% 17.9 0.53% 17.0 0.79%
Total Specialty
Finance Group 35.4 0.60% 39.3 0.75% 30.4 0.74%
Trade Finance 6.7 0.42% 4.5 0.25% 6.6 0.42%
Corporate Finance 0.2 0.01% 5.5 0.16% 11.7 0.35%
Transportation Finance -- -- 50.9 9.86% 0.4 0.09%
Total Commercial
Finance Group 6.9 0.12% 60.9 1.05% 18.7 0.35%
Total $42.3 0.37% $100.2 0.91% $49.1 0.52%
Net Credit Losses - Managed as a Percentage of Average Managed Finance
Receivables
Vendor Finance $21.7 0.77% $30.4 1.07% $23.7 0.81%
Consumer and Small
Business Lending 28.2 0.67% 25.2 0.70% 22.5 0.92%
Total Specialty
Finance Group 49.9 0.71% 55.6 0.86% 46.2 0.86%
Trade Finance 6.7 0.42% 4.5 0.25% 6.6 0.42%
Corporate Finance 1.3 0.03% 11.3 0.28% 17.2 0.43%
Transportation Finance -- -- 50.9 9.86% 0.4 0.09%
Total Commercial
Finance Group 8.0 0.13% 66.7 1.04% 24.2 0.40%
Total $57.9 0.44% $122.3 0.95% $70.4 0.62%
March 31, 2006 December 31, 2005 March 31, 2005
$ % $ % $ %
Finance Receivables Past Due 60 days or more - Owned as a Percentage of
Finance Receivables
Vendor Finance $223.4 3.05% $251.8 3.47% $233.6 3.03%
Consumer and Small
Business Lending 464.8 2.78% 363.2 2.46% 284.7 2.56%
Total Specialty
Finance Group 688.2 2.86% 615.0 2.79% 518.3 2.75%
Trade Finance 42.8 0.64% 39.3 0.59% 91.9 1.28%
Corporate Finance 69.6 0.48% 86.9 0.64% 92.0 0.69%
Transportation Finance 21.8 1.41% 17.0 0.90% 20.9 1.11%
Total Commercial
Finance Group 134.2 0.59% 143.2 0.64% 204.8 0.92%
Total $822.4 1.76% $758.2 1.71% $723.1 1.76%
Non-performing Assets - Owned as a Percentage of Finance Receivables
Vendor Finance 103.6 1.41% $112.1 1.54% $124.1 1.61%
Consumer and Small
Business Lending 256.4 1.53% 216.1 1.46% 173.1 1.55%
Total Specialty
Finance Group 360.0 1.50% 328.2 1.49% 297.2 1.58%
Trade Finance 4.4 0.07% 5.3 0.08% 57.5 0.80%
Corporate Finance 163.7 1.13% 165.4 1.21% 161.3 1.22%
Transportation Finance 14.2 0.92% 22.3 1.18% 12.3 0.65%
Total Commercial
Finance Group 182.3 0.80% 193.0 0.87% 231.1 1.03%
Total $542.3 1.16% $521.2 1.18% $528.3 1.28%
Finance Receivables Past Due 60 days or more - Managed as a Percentage of
Managed Financial Assets
Vendor Finance $319.3 2.69% $357.6 3.00% $326.1 2.60%
Consumer and Small
Business Lending 537.5 2.97% 446.0 2.77% 388.6 3.06%
Total Specialty
Finance Group 856.8 2.86% 803.6 2.87% 714.7 2.83%
Trade Finance 42.8 0.64% 39.3 0.59% 91.9 1.28%
Corporate Finance 74.8 0.44% 105.5 0.64% 120.7 0.75%
Transportation Finance 21.8 1.34% 17.0 0.83% 20.9 1.11%
Total Commercial
Finance Group 139.4 0.55% 161.8 0.64% 233.5 0.93%
Total $996.2 1.80% $965.4 1.81% $948.2 1.88%
CIT GROUP INC. AND SUBSIDIARIES
RATIOS AND OTHER DATA
(dollars in millions, except per share data)
Quarters Ended
March 31, December 31, March 31,
Profitability 2006 2005 2005
Net finance margin as a
percentage of AEA 3.36% 3.37% 3.62%
Net finance margin after provision
for credit losses
as a percentage of AEA 3.11% 2.94% 3.21%
Salaries and general operating
expenses as a percentage of AMA(1) 2.14% 2.06% 2.03%
Efficiency ratio(2) 45.7% 41.6% 41.5%
Return on average common
stockholders' equity 14.1% 16.0% 14.7%
Return on average tangible common
stockholders' equity 16.7% 19.2% 16.5%
Return on AEA 1.73% 1.95% 2.07%
Return on AMA 1.52% 1.71% 1.75%
(1) The March 2006 ratio excludes the restructuring charge, including that
charge, the ratio was 2.22%.
(2) The March 2006 ratio excludes the restructuring charge, including that
charge, the efficiency was 47.3%. The December 2005 ratio excludes
derivative losses and the gain on sale of micro-ticket business and
the March 2005 ratio excludes the derivative gain and gain on sale of
venture capital investments. Including these, the ratios were 41.8%
and 39.1% for the quarters ended December 31 and March 31, 2005.
Securitization Volume
Vendor Finance $866.0 $732.4 $675.1
Corporate Finance 80.6 209.9 253.9
Total $946.6 $942.3 $929.0
Average Assets
Average Finance Receivables (AFR) $45,765.1 $44,169.8 $37,764.9
Average Earning Assets (AEA) 53,222.2 50,937.8 44,083.4
Average Managed Assets (AMA) 60,276.7 58,243.8 51,953.5
Average Operating Leases (AOL) 9,825.4 9,379.5 8,264.1
Average Common Stockholders' Equity 6,508.1 6,196.4 6,174.6
Average Tangible Common
Stockholders' Equity 5,487.1 5,185.6 5,502.8
March 31, December 31, March 31,
2006 2005 2005
Capital and Leverage
Total tangible stockholders'
equity to managed assets 9.72% 9.80% 9.62%
Debt (net of overnight deposits)
to total tangible stockholders'
equity 7.48x 7.29x 7.29x
Tangible book value per common
share $28.10 $27.15 $25.62
Reserve for Credit Losses
Reserve for credit losses as a
percentage of finance receivables 1.32% 1.40% 1.51%
Reserve for credit losses as a
percentage of finance receivables,
excluding student loans 1.52% 1.58% 1.68%
Reserve for credit losses as a
percentage of finance receivables
past due 60 days or more 75.4% 82.0% 85.8%
Reserve for credit losses as a
percentage of non-performing
assets 114.4% 119.3% 117.4%
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 2006(2) 2005(2) 2005
Commercial $6,166.2 $5,951.9 $5,186.5
Regional $257.4 $275.3 $ 292.0
Number of planes:
Commercial 212 215 208
Regional 93 104 121
March 31, 2006 December 31, 2005 March 31, 2005
Commercial Aerospace Portfolio:
By Region: Net Number Net Number Net Number
Investment Investment Investment
Europe $2,340.2 73 $2,348.4 75 $2,150.5 70
North America 1,214.8 54 1,243.6 62 1,114.6 62
Asia Pacific 1,635.6 54 1,569.0 52 1,257.1 48
Latin America 680.2 24 533.7 20 598.7 24
Africa /
Middle East 295.4 7 257.2 6 65.6 4
Total $6,166.2 212 $5,951.9 215 $5,186.5 208
By Manufacturer:
Boeing 2,594.1 115 2,644.6 124 $2,572.5 128
Airbus 3,538.6 91 3,269.0 84 2,559.2 71
Other 33.5 6 38.3 7 54.8 9
Total $6,166.2 212 $5,951.9 215 $5,186.5 208
By Body Type(1):
Narrow body $4,553.1 168 $4,331.0 165 $3,956.5 164
Intermediate 1,394.3 28 1,347.2 27 828.2 18
Wide body 185.3 10 235.4 16 347.0 17
Other 33.5 6 38.3 7 54.8 9
Total $6,166.2 212 $5,951.9 215 $5,186.5 208
By Product:
Operating
lease $5,651.8 187 $5,327.1 182 $4,394.2 162
Leverage lease
(other) 147.9 5 232.1 10 337.2 12
Leverage lease
(tax optimized) 90.0 5 135.2 7 218.0 9
Capital lease 68.9 2 67.7 3 132.7 6
Loan 207.6 13 189.8 13 104.4 19
Total $6,166.2 212 $5,951.9 215 $5,186.5 208
Off-lease aircraft 6 10 1
Number of accounts 92 93 94
Weighted average age
of fleet (years) 6 6 7
Largest customer
net investment $296.3 $ 277.3 $ 284.5
New Aircraft Delivery Order Book (dollars in billions)
For the Years Ending December 31,
2005
(Remaining 2005) $0.8 15
2006
(Remaining 2006) $0.8 15 $0.9 19 0.9 19
2007 1.0 23 1.0 23 0.3 7
2008 0.8 19 0.8 19 -- --
Thereafter 0.5 5 0.6 5 -- --
Total $3.1 62 $3.3 66 $2.0 41
(1) Narrow body are single aisle design and consist primarily of Boeing
737 and 757 series and Airbus A320 series aircraft. Intermediate body
are smaller twin aisle design and consist primarily of Boeing 767
series and Airbus A330 series aircraft. Wide body are large twin aisle
design and consist primarily of Boeing 747 and 777 series and
McDonnell Douglas DC10 series aircraft.
(2) Balances include aircraft held for sale.
CIT GROUP INC. AND SUBSIDIARIES
Non-GAAP Disclosures
(dollars in millions)
March 31, December 31, March 31,
2006 2005 2005
Managed assets (1):
Finance receivables $46,841.3 $44,294.5 $41,180.1
Operating lease equipment, net 10,166.0 9,635.7 8,313.1
Financing and leasing assets held
for sale 1,551.0 1,620.3 1,481.3
Equity and venture capital
investments (included in other
assets) 31.1 30.2 101.8
Total financing and leasing
portfolio assets 58,589.4 55,580.7 51,076.3
Securitized assets 6,913.1 7,285.7 7,716.6
Managed assets $65,502.5 $62,866.4 $58,792.9
Earning assets (2):
Total financing and leasing
portfolio assets $58,589.4 $55,580.7 $51,076.3
Credit balances of factoring
clients (4,048.9) (4,187.8) (4,269.8)
Earning assets $54,540.5 $51,392.9 $46,806.5
Total tangible stockholders' equity
(3):
Total common stockholders' equity $6,704.9 $6,462.7 $6,335.2
Less:
Other comprehensive income
relating to derivative financial
instruments (60.4) (27.6) (20.3)
Unrealized gain on securitization
investments (13.1) (17.0) (7.7)
Goodwill and intangible assets (1,013.5) (1,011.5) (906.4)
Tangible common stockholders'
equity 5,617.9 5,406.6 5,400.8
Preferred stock 500.0 500.0 --
Preferred capital securities 251.6 252.0 253.3
Total tangible stockholders' equity $6,369.5 $6,158.6 $5,654.1
Debt, net of overnight deposits
(4):
Total debt $49,144.8 $47,864.5 $42,493.9
Overnight deposits (1,239.0) (2,703.1) (1,006.3)
Preferred capital securities (251.6) (252.0) (253.3)
Debt, net of overnight deposits $47,654.2 $44,909.4 $41,234.3
Non-GAAP financial measures disclosed by management are meant to
provide additional information and insight relative to trends in the
business to investors and, in certain cases, to present financial
information as measured by rating agencies and other users of financial
information. These measures are not in accordance with, or a
substitute for, GAAP and may be different from, or inconsistent with,
non-GAAP financial measures used by other companies.
1) Managed assets are utilized in certain credit and expense ratios.
Securitized assets are included in managed assets because CIT retains
certain credit risk and the servicing related to assets that are
funded through securitizations.
2) Earning assets are utilized in certain revenue and earnings ratios.
Earning assets are net of credit balances of factoring clients. This
net amount, which corresponds to amounts funded, is a basis for
revenues earned.
3) Total tangible stockholders' equity is utilized in leverage ratios,
and is consistent with certain rating agency measurements. Other
comprehensive income/losses and unrealized gains on securitization
investments (both included in the separate component of equity) are
excluded from the calculation, as these amounts are not necessarily
indicative of amounts which will be realized.
4) Debt, net of overnight deposits is utilized in certain leverage
ratios. Overnight deposits are excluded from these calculations, as
these amounts are retained by the Company to repay debt. Overnight
deposits are reflected in both debt and cash and cash equivalents.
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