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Kit Menkin's Leasing News www.leasingnews.org Friday, April 26, 2002 Accurate, fair and unbiased news for the equipment Leasing Industry Headlines Tyco to go IPO—“The Whole Truth, and Nothing But” Corporate Profile of DVI—Tell Me True ELA Funding Exhibition---More Reactions Leasing Recruiter Debate 1st Quarter e-tailer report e-Plus gets Reward 1st Source 1st Quarter Report Jeffrey Taylor To Lecture In Kuwait CIT 2nd Quarter Full Report ### Denotes Press Release Ten Top Things Not to Say at the EAEL/UAEL Joint Conference in Las Vegas ________________________________________________________________________ As Leasing News has reported from the very beginning, Tyco would go IPO: It is now official in the New York Times, Wall Street Journal, and
the “dedicated readers” can testify we were the first
to report that Tyco International Ltd. (TYC.N) would wind up filing
a public offering of its finance arm CIT Group ------after failing
to find a buyer for the unit ( they found buyers who wanted to steal the separate divisions or group, no where near the original
purchase price) had nothing but compliments, even over rates and other issues.
They employees work hard and espirt de corp never left,
even during all this turmoil. Leasing News also reported that the talks with GE Capital and Ford
Motor Credit Corporation fell apart, and that Tyco executives
scared a group that was trying to make a deal for an “employee
owned IPO” in conjunction with Merrill Lynch.
Then Merrill Lynch had their problems, as did GE Capital
and Ford Motor Company, and the interview on radio with Neutron
Jack and a $10 billion sale price jinxed it all ( Welch’s
girl friend Suzy Wetlaufer has left her Harvard Review editor
job, the New York Times reports, giving up a $276,963 year, including
a bonus---but then he gave up half of his assets for her, so it
must be “true love.” Readers say there is too much gossip,
but we don’t create it, we just report it. One reader sent me the full story on the PinnFund/PinnLeasing
story from the April 8 San Diego Weekly Reader---wow!!! the Enquirer
doesn’t even get this racy. It not only is too long to re-print,
but we’re trying to be a family news media. The Welch-Welaufer
story may make the movies one day—Sean Connery plays Jack
and Megan Ryan plays Suzy. Okay, back to CIT ) New York Times---Alex Berenson Under L. Dennis Kozlowski, its charismatic chairman and chief executive, Tyco has been an aggressive buyer of other companies since the early 1990's. Based in Bermuda with headquarters in Exeter, N.H., Tyco has 240,000 employees and makes everything from security systems to telecommunications equipment. Its best-known brands include ADT, a security company, and AMP, a big electronics manufacturer. Because it is incorporated in Bermuda, the company avoids paying American taxes on its profits generated overseas, and also shelters some United States income from taxes. It says that being a Bermuda corporation saved it more than $400 million last year alone. This year, Tyco says its overall worldwide tax rate will be about 18 percent, about half the corporate tax rate in the United States. Mr. Kozlowski has spoken repeatedly of his ambition to build a conglomerate that rivals Berkshire Hathaway or General Electric. But when Tyco's stock dipped in January after a series of negative news articles, Mr. Kozlowski suddenly announced that Tyco would break into four companies. Mr. Kozlowski, and Tyco's investment bankers, expected investors to embrace the change in strategy, even though it appeared to be mainly a response to its declining stock price, not a change in business fundamentals. Instead, the breakup announcement fed questions about whether Tyco's earnings were as good as they had appeared. The disclosure that Mr. Kozlowski and Mark H. Swartz, Tyco's chief financial officer, had sold more than $500 million in stock to the company since 1999 while saying they rarely sold shares further damaged management's credibility. Now Tyco's stock stands at less than half the level it was on Jan. 22, when the breakup was announced. Tyco fell $5.15 yesterday, closing at $20.75, down 19.9 percent. "The breakup plan was a mistake, and I take full responsibility for that mistake," Mr. Kozlowski said. "It was the wrong idea at the wrong time." Instead, Mr. Kozlowski said, Tyco will split off only its big financing division, the CIT Group. Tyco bought CIT for nearly $10 billion last year. Tyco, which initially hoped to sell CIT in its entirety to another company, now plans to sell it to investors in an initial public offering, which will cost hundreds of millions of dollars in fees. Tyco hopes to raise about $7 billion in the offering, money it will use to shore up its balance sheet and pay down debt. Some stock analysts questioned whether Tyco would be able to get that much for CIT. Tyco badly needs to sell the unit to raise cash to strengthen its balance sheet, said Nicholas Heymann, a stock analyst at Prudential Securities. With the Middle East in turmoil and the economy's recovery slowing, Tyco may run into a cash squeeze if it does not raise more equity soon, he said. "You really got to get much more liquid here," Mr. Heymann said. "If you don't get liquid with CIT prior to having a real credit freeze-up, you might be on a different path. It might end up that the keys get turned over to the creditors." Mr. Kozlowski called such concerns nonsense. Tyco continues to generate cash, he said, and its balance sheet is strong. Tyco has suspended its previous plan to sell its plastics unit because it could not find a buyer at a reasonable price, Mr. Kozlowski said. He said buyers were willing to pay no more than $3 billion for the unit, which generates about $400 million in cash flow a year. Tyco's electronics and telecommunications divisions, meanwhile, are sputtering. As a result, the company said yesterday that its earnings before one-time charges would be less than $2.70 a share for the fiscal year that ends in September, down from $2.81 a share last year. After those charges, to cover such things as office closings and severance costs, Tyco expects earnings to be about $1 a share this year, down from $2.17 last year. Only a few months ago, analysts had projected $3.70 a share. Tyco also said it planned to lay off 7,100 employees, or 3 percent of its work force, mostly in its electronics and telecommunications units. As it tries to get business back on track, Tyco will essentially stop making acquisitions, Mr. Kozlowski said. Tyco's problems are a sharp comedown for a company that was one of Wall Street's highest fliers in the late 1990's. From 1997 through 2001, an acquisition binge pushed Tyco's sales to $36 billion from $17 billion. Its reported income soared to $5.1 billion from $1.2 billion. With Tyco's earnings soaring, Wall Street happily supported Mr. Kozlowski's dreams with ever higher valuations and buy recommendations, even though a series of companies suffered spectacular failures a generation ago in trying to acquire their way into being industrial conglomerates. Short sellers, who bet on a decline in a stock's price, said that Tyco appeared to use aggressive accounting to generate big gains in profits and that most of its sales growth had come from acquisitions. Tyco said its accounting was proper. But the company's long string of profit growth has come to an end. Tyco's sliding earnings and plunging stock are another black eye for Wall Street analysts, who have come under heavy criticism recently for the poor quality of their research. Tyco has been one of Wall Street's most recommended stocks in recent years. Even this winter, as questions mounted about the company's accounting practices and the disclosure of the stock sales by Mr. Kozlowski, most analysts retained their buy ratings on Tyco. Among the most bullish was Phua Young of Merrill Lynch, who put out dozens of reports recommending the company. Like several other analysts, Mr. Young did not return calls for comment yesterday. But off Wall Street, comments were easier to come by. Graef Crystal, an executive pay expert, said Tyco's plunging stock proved that Mr. Kozlowski did not deserve the hundreds of millions of dollars in pay he had received. "He's just a big pig," Mr. Crystal said. "The only thing that has protected him is the stock price." Stephen
Frothingham Associated
Press "Investors
are running away because it looks like management doesn't have
a strong strategic plan for the long-run," said Rob Plaza,
an analyst with Chicago-based Morningstar. "There is very
little faith in the company right now, and that's why their stock
is being punished." Shares
of Tyco plunged nearly 20 percent Thursday after the company announced
it was backing away from the breakup plan unveiled in January.
The huge conglomerate also said it would close 24 plants. Tyco
said it will keep its plastics division, which it had hoped to
sell for as much as $4 billion, and sell its CIT financial division
in a public offering. Shares
of Tyco, based in Bermuda but run from Exeter, closed down $5.15
to $20.75 on the New York Stock Exchange. Analysts said the abrupt
shift in the company's plans added to Tyco's credibility problems,
which started earlier this year with Enron-inspired accounting
questions. "They're
not giving investors a lot of reason to trust them right now,"
Plaza said. In
a conference call, executives said Tyco lost $1.9 billion last
quarter and had lowered its profit projections for the year. Chairman
and chief executive Dennis Kozlowski said the breakup plan was
simply a mistake. "In
retrospect, it is now clear that we took the market by surprise
with our announcement, and failed adequately to take into account
the extraordinarily fragile market psychology and hostile environment
that has distracted and damaged our business in recent months,"
he said. The
layoffs, primarily in electronics and telecommunications, account
for about 3 percent of Tyco's worldwide work force of almost 250,000,
including about 1,200 in New Hampshire. Tyco blamed a "fierce
decline" in the electronics and telecommunications markets. Brad
McGee, a Tyco vice president, said six U.S. factories will close.
He did not know their locations, but said the employees had been
notified. Tyco's
products include electronic equipment, fire and security systems
and disposable medical supplies. Tyco
said the $1.9 billion loss, 96 cents per share, for the quarter
that ended March 31 contrasted with a profit of $1.1 billion,
or 62 cents per share, a year ago. Revenue
slipped to $8.66 billion from $8.81 billion in the same quarter
a year ago. A
writedown of assets and other charges in the second quarter totaled
$3.3 billion. Excluding the charges, quarterly earnings were 65
cents a share, 3 cents ahead of Wall Street expectations. The
company cut its projected earnings for the fiscal year to $2.60
to $2.70 per share, before charges. Analysts surveyed by Thomson
Financial/First Call had projected $3.14. Tyco
said its estimate assumed CIT would remain part of Tyco through
the fiscal year, which ends in September. In
a letter to shareholders, Kozlowski said the company is still
negotiating to sell CIT but decided that a public stock offering
would reduce Tyco's vulnerability to debt markets, make the company
less complex and allow it to focus on its core markets. Kozlowski
said senior corporate managers will not receive bonuses this year. The
breakup plan was partly a response to criticism of Tyco's accounting
practices and debt load following the Enron scandal. Officials
had said simplifying the company would make its accounting easier
to understand. But
reports of alleged accounting irregularities and uncertainty stemming
from the breakup plan significantly hurt Tyco's business this
spring, company officials said Thursday. They said customers were
reluctant to place orders and employees were uncertain of their
future.
"They had to fight some pricing battles to maintain their market share. Now it's a question of how quickly they can regain their footing," said Steven Altman, a bond analyst for Commerzbank in New York. Altman said Tyco's apparent indecision concerns investors and analysts. "Management now has to regain credibility, and the only way to do that is to outperform the market," he said. The largest part of the $3.3 billion charge is a $2.4 billion pretax write down of its TyCom Global Network, an undersea fiber optic cable operation. The company also wrote down $250 million in inventory $95 million in credits for receivables from Argentina for CIT. The loss was connected to the devaluation of Argentina's peso.
On the Net: Tyco: www.tyco.com (The best thing that could happen to CIT would be to leave the Tyco business group, who’s leadership has failed the stockholders in recent years. The IPO is a smart move for Tyco, CIT, and all the investors, plus the most important part, that the business writers have left out: the employees...and the customers of CIT. editor ) *** full CIT press release at end of Leasing News ______________________________________________________________
Corporate Profile of DVI—Tell Me True http://www.dvi-inc.com/ ( This copy did not reproduce in yesterday’s story about DVI: No one is talking if one division is sold or not sold, or for sale or not for sale and “if it isn’t one thing, it’s another.” Rosanne Roseanna Danna.)
http://www.dvi-inc.com/1999/AC.htm ----------------------------------------------------------------------------------- the First Equipment Leasing Co-Op One
World Leasing (OWL) made its debut on “Meet the Leasing News
Maker” on
April 8. Up to 75 readers
joined the session that featured both David Stearns, CEO of American
Leasing Alliance MainStreet's Richard Selby, who will serve
as interim CEO during the cooperative formation. During the session, the readers predicted a co-op of 90 plus brokers. Right
now OWL is “recruiting” members who will each receive
one share at
the cost of $5,000 and 10% of the “bonus” earned income
of the co-op. Their
goal is 25 qualified brokers. Each member has one share only and
cannot buy more than one. They have one vote in the election of
directors or policy decisions. The idea is the volume rate discount
can make the broker more competitive or earn more points per transaction,
and at the end of the year, share in the
profits of the co-op. Leasing
News asked for an up-date and received this e-mail: The only thing I can truthfully say is that we have received 12 verbal YES's. Richard Selby MainStreet Cooperative Group, Inc. 1553 W. Todd Dr., Suite 110 Tempe, Arizona 85283 tel. (480) 831-6118 ext. 40 E-mail: rselby@mainstreet.coop URL: www.mainstreet.coop ----------------------------------------------------------------------------------------- Equipment Leasing Association Funding
Exhibition---More Reactions My kudos to Mr. Kluga for his comments regarding his company, Cobra Capital and its business model. It is indeed refreshing to read positive, no-nonsense information from our industry. I agree with the comments made regarding the "black eye" given to the leasing segment by boom and bust players. Its hard to for me to grasp the lack of responsibility, selfishness and short-sightedness that some have displayed. The model with Enterprise Funding Group is similar to that of Cobra Capital. We view slow, managed growth, a quality portfolio and strong relationships being our key to long term success. We, too, have our "skin in the game". We are in it for the long haul and hope that our "traditional" business model proves to be the one that prevails. Quite possibly we have turned a corner in our industry and have learned from the mistakes of others. It is our hope that investors, banks and customers identify with and have confidence in those companies like Cobra Capital and Enterprise Funding-not flashy, but get the job done with professionalism, honesty and integrity. It can be done this way. EFG is living proof. Mike Coon mcoon@enterprisefundinggroup.com Sr. Vice President Enterprise Funding Group www.enterprisefundinggroup.com --- Well said Dale. Sincerely, Deborah J. Monosson President BOSTON FINANCIAL & EQUITY CORPORATION 20 Overland Street Boston MA 02215 617-267-2900 Tel 617-437-7601 ____ I read, with a high level of interest, Dale Kluga's comments yesterday on the traditional "skin in the game" business model. I could not agree with him more. Several years ago Curt Lysne and I did a workshop for the UAEL called "Shared Risk/Shared Rewards". We took a typical funding source ROE pricing model, put it up on the screen and then proceeded to demonstrate how it is that a funding source makes money. Many people were surprised by the fact that, on some transactions, a funding source did not make money. In fact, with the unreasonable commissions plus bonuses that some "funding sources" felt they had to pay in the name of competition, I am surprised that many of them survived as long as they did. It has also been difficult for the broker/lessor community who depended on the 20 point commission to wean themselves away from this business model. Mr. Kluga also points out the "black eye" the industry has received. He is correct in his assessment and anyone who is attempting to access the capital markets at this time has found that out. While it is not an impossible situation, the environment is far more conservative that it's ever been than any of the correctional cycles of the past 20 years. It is difficult to get any kind of decent leverage for warehouse lines, take out lenders are asking many more questions than they used to and nearly everyone is taking the "belt and suspenders" approach to underwriting. I do not fault anyone for this but there is something to be said for shutting the barn door after the horses have run away. Mr. Kluga's comments indicate that the "leasing business", collectively, appears to be back on the path to sanity. His description of the resurgence of the "skin in the game" leasing model also describes a return to a more careful time when a lessor took risks with their own capital to prove the viability of a transaction or even a vendor program. This was the business model that was prevalent when I first got into the leasing business and it was definitely not the path of lease resistance that many chose to take in the latter part of the 90s. There were mistakes made and there was a smattering of fraudulent players and bad actors but they usually didn't last very long. It was nothing like the carnage of the past couple of years, however. The return to the tried and true methods that made the industry prove the old adage which states that "The more things change, the more they stay the same". Bob Rod, CLP President LeaseNOW, Inc. drlease@leasenow.com. www.leasenow.com 1-800-321-LEAS (5327)x 101 ----------- Leasing Recruiter Debate I have read with interest your published debate between recruiters Fred and Teri. As an 18 year experienced leasing search person in the middle and large ticket markets, I can only side with Teri. Her comments are built upon experience and are to the point. Search is one thing, and Teri does that very well. Recruiting is quite another, and again, Teri does that very well. I won't take up space repeating her comments. Instead, please let me simply say that our own search and recruiting business, like hers, has been built upon a foundation of time proven effectiveness, credibility and the provision of consistent value to our client lessors. Like Teri, we have a unique understanding of our client lessors' businesses and an endless energy which we put into our work. Time is the prover, Teri is proven. Her success is typical of excellent search people; we represent our clients extremely well and we communicate that representation effectiviely, year in and year out. Thanks for the forum and keep up the interesting news!. Financial Search Group, Inc. Paul T. Luther financialsearchgrp@attbi.com ph. 978-682-4123 fax. 978-688-0516 ---- I can understand why people may not want their identity disclosed when they are discussing anything about the company they are, or were at. I don't understand why so many people send in opinions that would not jeopardize their jobs and then sign "anonymous". The most recent example is the recruiter that commented on the debate among the recruiters in your newsletter. Helene G. Kugit ( (Most do not explain it, but I think they are #1 afraid of any criticism, #2 often their company has a policy—no comments as it may reflect on us—CIT,GE Capital,CPL, are among those whose employees have told me their companies have expressed the policy not to make any comments to the press, particularly Leasing News. So it is not the sender’s policy, but their company’s policy, thus “Name Withheld” Not everyone is free to express their opinion, let alone sign their name. .editor ) --- Regarding the recruiting discussions, thanks, Kit, for disagreeing with "name withheld." If he or she wants to be on the phone, that is his or her business. If Teri, Fred, I or anyone else wants to spend time participating in an open and constructive forum of discussion that we hope will be of benefit to your readership, then with all due respect, that is our business. (I don't suppose we'll se a response from "name withheld," as I would expect this individual to be too busy recruiting.) As for me, I spend many hours a day doing my job and as long as my clients are satisfied with the people I've introduced to them and the candidates I've placed feel that there has been a significant improvement in the quality of their life, and my mortgage company isn't dunning me, then I go about doing my job and getting my name out in the manner that I prescribe, the one that best suits my style of operation. Incidentally, I've taken a different attitude to people who withhold their names from publication. If there is a chance that they may be targeted for disclosing inside information that they (and Leasing News) deems as relevant to the industry and readership, then I fully understand the perceived need to maintain confidentiality. On the other hand, if someone is merely expressing an opinion and is afraid to let others know who their name is, I will continue do discount their comments, for the most part, as irrelevant. Hal Hal T. Horowitz Account Executive Search West 340 North Westlake Blvd., Suite 200 Westlake Village, CA 91336 Phone: 805-496-6811 ext. 231 Fax: 805-496-9431 Cell: 818-730-0645 hal.horowitz@searchwest.com http://horowitz.searchwest.com "It is my mission to collaborate with my clients in order to further their success by identifying professionals of uncommon ability to whom my clients might not otherwise have access and who will make a valuable contribution to my clients' goals." To find superior people You must first define superior performance. ( You are in the majority, Hal, but Leasing News gets all its major information from insiders. They have their jobs to protect. In business, no one wants to offend anyone as it may lose a sale or a contact, but Leasing News gives them the chance to speak. All “name withheld”, Leasing News knows the person, and often verifies what they say, if necessary. When “anonymous,” we don’t know, and don’t print it unless we can confirm the information with two others, or deem it “safe” to print. However, after saying all this, it definitely gives more credence if the person signs their name. If readers knew it came from the president of American Express ( which two have ) or form a past president of a major leasing association ( often ) or direct from a top executive or former top executive, it sure would make readers sit up when they read what they had to say. We have a reputation for not revealing our sources. We have been hit with subpoenas over a half dozen times, and three calls from attorneys today on the CMC story. Leasing News has been disposed and we refused to divulge our sources. Let me tell you readers, there is a lot more to come here. This is a real mess. editor ) First-quarter Internet sales better than expected for many e-tailers By Anne D'Innocenzio, Associated Press, 4 NEW YORK (AP) The first quarter, usually a sleepy time in the retail business, turned out to be unusually busy for online merchants. The pace of Internet sales, which picked up momentum after Sept. 11, further accelerated in the first three months of 2002, fed by an improving economy, an influx of new shoppers on the Web as well as increased spending from previous customers, according to company reports released this week. On Tuesday, Amazon.com, defying critics' contention that its business was stagnating, reported a net loss smaller than Wall Street projections and said sales grew faster than anticipated. The industry bellwether credited the improvement to a combination of price cuts and offers of free shipping. Meanwhile, 1-800 Flowers, a Web site that sells flowers and other gifts, announced a slight profit for its fiscal third quarter its second straight period of profitability beating Wall Street projections of a 2 cent loss. Sales met expectations, but the company was able to attract a larger-than-anticipated number of new customers even with a decrease in marketing spending, CEO Jim McMann said. Online jeweler Bluenile.com, which achieved a 10 percent sales gain and met Wall Street's profit expectations for the first quarter, has had a 30 percent increase in April from a year ago, according to Diane Irvine, chief financial officer. And Bluefly.com, which sells discounted designer goods, announced a smaller-than-expected first- quarter loss and said it is even more confident it will be profitable by the fourth quarter. ''It is typical of emerging industries to usually top out. This industry slowed down and is now reaccelerating,'' said Chuck Davis, chief executive of Bizrate.com, a Web site and research firm that tracks and compares 2,000 online sites. He noted that the number of new shoppers on the Web is gaining momentum. Bizrate.com estimated that this year's first-quarter Internet sales of new goods, not including travel, soared 41 percent to $11.6 billion, exceeding expectations of 27 percent growth. The better-than-anticipated first-quarter results prompted Bizrate.com to raise its expectations for sales growth this year to 44 percent from 26 percent. In a separate report, comScore Networks Inc. said Internet sales, including travel, generated $17 billion for the first quarter, representing a 48 percent increase, compared to a year ago. Online sales, excluding travel, totaled $10.1 billion, reflecting a 30 percent growth from a year ago. According to Bizrate.com, Internet sales rose 24 percent in 2001, helped in part by a rush of new Web users who logged on to donate money to various charities following Sept. 11 and then became shoppers. There were 66 million new online shoppers at the beginning of this year, and Jupiter Research expects that figure to increase to 82 million by yearend, representing a 24 percent gain. That was on top of last year's 34 percent rise. The strong first-quarter performance came as a surprise to analysts and retail executives because the period is traditionally slow, following the holiday season. Executives also were heartened by the increase in average purchases. At Bluenile.com, officials said sales of big diamonds, defined as two or more carats, doubled in April from a year earlier. According to comScore, many retail categories did well, particularly the bruised travel industry, which had an 87 percent sales gain from a year ago. Lisa Strand, director and chief analyst at NetRatings Inc., an Internet research firm, noted the increase in online travel sales came at the expense of brick and mortar businesses, but said it is too early to tell whether the gains in other categories are hurting offline retailing. In any case, Internet executives acknowledge that the fight for consumers' dollars online remains fierce. For example, free shipping offers with a minimum purchase a common strategy last Christmas remains popular with many sites. ''E-tailers are fighting for share and loyalty and the way to get that is to offer bigger discounts and shipping offers,'' Davis said. ''Offline, loyalty is created geographically. Online, loyalty has to be earned on every purchase.'' Bluefly.com's chief executive Ken Seiff noted that the company is buying its goods more effectively and therefore can give consumers bigger markdowns. Discounts on average are more than 60 percent, compared to 50 percent a year ago, he said. Recent bargains included Prada sunglasses, marked down to $129 from $250, and $540 Fendi sandals marked down to $199. Cutting prices and free shipping on orders over $99 appears to be working for Amazon.com, which forecast sales for the rest of the year will be better than anticipated. On Tuesday, the retailer, which has been working hard to cut costs and pass those savings to consumers, announced its third price cut on books in a year, giving customers a 30 percent savings on books over $15. Last July, Amazon introduced 30 percent discounts on books over $20. On the Net: Amazon.com: www.amazon.com Bluefly.com: www.bluefly.com Bluenile.com: www.bluenile.com 1-800-Flowers.com: www.1-800-Flowers.com ##### ###################################################### ePlus Receives Compaq's Most Valuable Partner Award; Customer Service Rating is 100% Satisfaction HERNDON, VaePlus inc., (Nasdaq:PLUS), a leading provider of business solutions and services, announced today that one of its technology fulfillment units has received the Most Valuable Partner (MVP) award from Compaq Computer Corporation for exceptional performance in both customer satisfaction and operations.
A Compaq Business Partner since 1987, ePlus performs pre-sales consulting, design, configuration and customization, 24/7 maintenance, on-site support and other strategic services for all Compaq commercial line equipment, including Proliant servers, Evo desktops and Armada Notebook PCs. ePlus also builds customized storage solutions for mission critical data. The MVP award was given to ePlus for maintaining a flawless 100% customer satisfaction level for three consecutive months.
"We applaud ePlus for its all star performance in demonstrating exceptional service levels and providing total customer satisfaction to Compaq customers," said Walter Mello, North America Director of Channel Services, Compaq Computer Corporation. "With partners like ePlus, Compaq can look forward with confidence to continued growth that will benefit our customers and partners alike."
In addition to sales and service of Compaq equipment, ePlus Technology delivers value added services and solutions to a wide spectrum of clients through its project management, network design and analysis, security products and consulting services, equipment fulfillment configuration and logistics services. Providing everything needed to buy, maintain, and replace IT equipment, ePlus is focused on delivering integrated eBusiness solutions to maximize the computing infrastructure of diverse organizations.
"ePlus is honored to be recognized with Compaq's MVP award," said Phillip G. Norton, President and CEO, ePlus inc. "This is a testament to our continued focus of giving our customers the highest level of attention and detail in all their business processes - from service, to software, to managing the entire business solution lifecycle."
With over 10 years of experience and sustained profitability, ePlus offers total business process automation through the seamless integration of products and services. ePlusSuite consistently helps clients achieve their goals by leveraging a combination of collaborative disciplines such as business and financial services, asset management, eProcurement, and IT Sales and Services.
About ePlus inc.
A leading provider of Web-based e-procurement, asset management, financing, leasing, sourcing, and eContent technology and services, ePlus delivers comprehensive and high-value business solutions. The ePlusSuite of products and services, including Procure+, Manage+, Finance+, Content+, and ePlusMarket, helps businesses dynamically streamline, improve and gain management control of spending and fixed assets. ePlus solutions integrate and automate each aspect of the supply chain process: from requisition to approval, fulfillment, financing and asset management, delivering the highest return on investment.
ePlus(TM), ePlusSuite(TM), Procure+(TM) , Manage+(TM) , Service+(TM), and MarketBuilder(TM) are trademarks of ePlus Inc. Finance+(SM) is a registered service mark of ePlus inc. ePlus ePlus Content Framework(SM) is a service marks applied for of ePlus.
Founded in 1990, the company is headquartered in Herndon, VA and has more than 30 locations in the US. For more information, visit our website at www.eplus.com, call 800-827-5711 or email to info@eplus.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release which are not historical facts may be deemed to be "forward-looking statements". Actual and anticipated future results may vary due to certain risks and uncertainties, including, without limitation, general economic conditions; the possibility of defects in our products or catalog content data; our ability to hire and retain sufficient personnel; our ability to protect our intellectual property; the creditworthiness of our customers; our ability to raise capital and obtain non-recourse financing for our transactions; our ability to realize our investment in leased equipment; our ability to reserve adequately for credit losses; fluctuations in our operating results; our reliance on our management team; and other risks or uncertainties detailed in our Securities and Exchange Commission filings.
CONTACT:
ePlus inc., Herndon
Lisa Savino, 631/218-9510
lsavino@eplus.com
or
ePlus inc.
Kley Parkhurst, 703/709-1924
kparkhurst@eplus.com ### ###################################################### 1st Source Corporation: 1st Quarter Earnings Announced, Dividend Reported (Nonperforming Assets to Loans and Leases 2.01 1.02 this year versus last year ) SOUTH BEND, Ind--1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, reported net income of $4.21 million for the first quarter of 2002 compared with $13.64 million of the first quarter of 2001. Diluted net income per share of common stock for the first quarter of 2002 amounted to $0.20 compared with $0.65 for the first quarter of 2001. Return on average common shareholders' equity for 1st Source Corporation was 5.47 percent compared to 19.91 percent for the first quarter of 2001. Return on average total assets was 0.49 percent compared to 1.73 percent a year ago. Last year's first quarter results were positively affected by the sale of $1.0 billion in servicing rights from the Trustcorp Mortgage portfolio which added $6.87 million (net of tax) to the quarter, and by a $639,000 (net of tax) venture capital gain. At their meeting today, the Board of Directors approved a first quarter cash dividend of $0.09 per common share. The cash dividend will be payable on May 15, 2002, to shareholders of record May 6, 2002, and is a 5.0 percent increase over the first quarter cash dividend in 2001. As of March 31, 2002, the common equity-to-assets ratio for 1st Source was 8.8 percent, the same as a year ago. Common shareholders' equity was $308.1 million, up 7.2 percent from March 31, 2001. And, at the end of the first quarter of 2002, total assets were $3.48 billion, up 7.0 percent from a year ago. Loans and deposits were up 4.8 percent and 7.9 percent, respectively, from a year ago. For the first quarter of 2002, 1st Source increased its provision for loan losses to $12.55 million as compared to $7.30 million for the first quarter of 2001. Net charge-offs were $11.54 million for the first quarter of 2002 compared to $3.41 million in the fourth quarter 2001. The resulting reserve for loan losses as of March 31, 2002 was 2.29 percent of total loans, compared to 2.27 percent as of December 31, 2001. The ratio of nonperforming assets to net loans and leases was 2.01 percent on March 31, 2002 compared to 1.63 percent on December 31, 2001. During the corporation's annual meeting, Christopher J. Murphy III, Chairman and Chief Executive Officer, commented on the company's performance by saying, "We are obviously disappointed in the results for early 2002. After years of steadily rising profits and growth at 1st Source, last year became much more challenging. That challenge continues today with a rocky start for the first quarter of 2002." Murphy continued, "Our Specialty Finance Group's focus on the transportation industry exposes us to a series of cyclical businesses which can have wonderful results for long periods of time with the potential to experience short periods of high losses. We know this and have tried to prepare for it. We have tried to build appropriate reserves and properly reflect income. Fortunately, during the strong economy of the late `90's and early 2000's, we anticipated some of these swings and continued to build reserves as we sensed the need to do so. This prepared us to deal with these large losses that resulted from the weakening economy and the impact of 9/11." "While we had anticipated the economic changes, we never dreamed that something could happen so quickly that would ground all aircraft in America for a week or impact the car rental industry so seriously. Who would have thought that all rental cars in the country would be used for a few days, driven across America, left there, and then have no one to rent them for the next few months." "Our losses and growth in nonperforming assets have primarily come from aircraft dealers, charter and air cargo operators, auto rental companies, and related entities. At quarter end, we had an aircraft portfolio of $515 million of which $108 million was to aircraft dealers and related entities and $288 million to charter and air cargo operators. We also had $168 million in auto and light truck rental loans and leases for the car rental leasing industry. We have $160 million in heavy duty truck loans, $413 million in construction machinery loans and $81 million in environmental equipment loans rounding out the group. Additionally, $350 million in aircraft and auto loans are securitized." Allen Qualey, President of 1st Source's Specialty Finance Group, added, "It is important to note that because of the economy and 9/11, the specialty finance area has experienced a much higher than normal default rate. To respond to this we have developed a three pronged approach to work through high delinquency and nonperforming asset levels." "Number 1 - 1st Source is focused on selling many of these assets provided reasonable values can be obtained. All of the loans are collateralized. The value of the collateral is assessed knowing that market values fluctuate. We strive to sell an asset for its reasonable, fair market value. We know that panic sales create diminished returns while patient sales can generally produce higher returns. Accordingly, we plan to work out of these in an orderly manner to optimize their value." "Number 2 - A portion of the assets we have foreclosed on have been leased or rented to other customers. Even though classified as nonperforming, they are producing income for us until they are sold. The lease or rental income, for the most part, is being used to reduce principal and will be applied to income when better market condition recovery is assured." "Number 3 - In some instances, when deemed prudent, we have allowed the original customer to retain the equipment with temporarily reduced payments. In these cases, we expect that the investment will be recouped with less loss than if the equipment was taken and sold into a depressed market." "Clearly, there is value in the nonperforming assets. These loans are secured by equipment whose value is believed to approximate the loan balance if sold in an orderly liquidation. This is what we intend to do." Mr. Murphy concluded his remarks by stating, "In spite of what has occurred, we are a strong company. We have learned some hard lessons on the importance of discipline, especially in volatile industries. Committing these "lessons learned" to our Corporate memory will make us a better bank, and a more competitive bank in the future." 1st Source Corporation takes pride in its identification as the largest locally owned financial institution headquartered in the Northern Indiana-Southwestern Michigan area. While delivering a comprehensive range of consumer and commercial banking services, 1st Source Bank has distinguished itself with innovative products and highly personalized services. 1st Source also competes for business nationally by offering specialized financing services for used private and cargo aircraft, automobiles for leasing and rental agencies, heavy duty trucks, construction and environmental equipment. The corporation includes 64 banking locations in 17 counties, 8 Trustcorp Mortgage offices in Indiana, Ohio, Michigan and North Carolina; and 29 locations nationwide for the 1st Source Bank Specialty Finance Group. With a history dating back to 1863, 1st Source has a tradition of providing superior service to customers while playing a leadership role in the continued development of the communities in which it serves. 1st Source may be accessed on its home page at "www.1stsource.com." Its common stock is traded on the Nasdaq Stock Market under "SRCE" and appears in the National Market System tables in many daily newspapers under the code name "1st Src." Marketmakers in 1st Source common shares are Dain Rauscher, Inc., First Tennessee Securities Corporation; Keefe, Bruyette & Woods, Inc.; Merrill Lynch, Pierce, Fenner; Morgan Stanley & Co., Inc.; NatCity Investments; Sandler O'Neill & Partners; Spear, Leeds & Kellogg; Stifel, Nicolaus & Company, Incorporated; and William Blair & Company. 1st Source's fixed and floating rate cumulative trust preferred securities are traded on the Nasdaq stock market under the symbols "SRCEP" and "SRCEO", respectively. The rate on the fixed rate securities is 9.0 percent and the rate for the second quarter, 2002 on the floating rate securities is 4.06 percent. Marketmakers in those securities are Spear, Leeds & Kellogg; and Stifel, Nicolaus & Company, Incorporated. Except for historical information contained herein, the matters discussed in this document, and other information contained in 1st Source's SEC filings, may express "forward-looking statements." Those "forward-looking statements" may involve risk and uncertainties, including statements concerning future events, performance and assumptions and other statements that are other than statements of historical facts. 1st Source wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Readers are advised that various factors -- including, but not limited to, changes in laws, regulations or generally accepted accounting principles; 1st Source's competitive position within the markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; any unforeseen downturns in the local, regional or national economies -- could cause 1st Source's actual results or circumstances for future periods to differ materially from those anticipated or projected. CONTACT: 1st Source Corporation Larry Lentych, 574/235-2702 or Andrea Short, 574/235-2348 URL: www.1stsource.com ################## ################################# Jeffrey Taylor To Lecture In Kuwait SALT LAKE CITY,Utah - - Jeffrey Taylor, Founder of ExecutiveCaliber - Global Lease Training, has accepted an invitation from A'ayan Leasing and Investment Company of Kuwait to conduct an advanced pricing lecture to a select group of leasing professionals at the 1st Annual Leasing Symposium on May 13-14 in Kuwait. The symposium will emphasize the importance of leasing as a financing tool in the Middle East and promote the State of Kuwait as a regional financial center. The symposium will be opened by Youssef al-Ibrahim (Kuwait Minister of Finance), Ali Mohammed Thunayan Alghanim (Chairman of A'ayan) and Ahmad Abdullatif Al-Dousary (Managing Director and CEO of A'ayan). In order to perform this engagement, Mr. Taylor had to extensively research the unique characteristics of leasing under Islamic Laws and Customs known as Sharia which prohibit charging 'interest' or 'riba'. Mr. Taylor will discuss various lease products authorized under Ijara and alternative lease structuring techniques. For the past twenty years, Mr. Taylor has lectured on basic and advanced leasing topics all over the world. His experiences have allowed him to customize each lecture to meet the specific needs of his audience. "The training business has gone through a lot of changes over the years. Nowadays, you have to incorporate the latest multi-media techniques, such as audio, video and animation, to keep an audience motivated for 8 hours", says Taylor. "On top of that you have to be current on accounting, tax and legal environments in every country." When he is not lecturing he maintains a free lease training website which contains sample audio clips, articles, technical information and research on a wide variety of leasing topics, including advanced selling techniques. You can check out the website at http://executivecaliber.ws or call 1-801-299-9332. Interview Contact: JTaylor@executivecaliber.ws ExecutiveCaliber - Global Lease Training 2144 South 1150 East Bountiful, UT 84010 (801) 299-9932 (fax) -------------------------------------------------------------------------------------- Top Ten Things Not to Say at the EAEL-UAEL Conference 10. Do you know the way to the CapitalStream suite? 9. Didn’t Bob Fisher work for CIT? 8. Wasn’t that Bob Rodi with two show girls? 7. Stand Up, Vic Harris! Oh, you are, sorry. 6. Do you know the way to Ginny Young’s Suite? 5. This is the easiest $50 I ever made, racing Bill Grohe in the outside swimming pool. 4. Do you know the way to Bette Kerhoulas’s suite? 3. Ziegfried and Roy invited me over for a “Leasing Wallbanger.” 2. I am a friend of Ray Williams. 1. Do you belong to EAEL or UAEL # # # ################################################# CIT Reports Second Fiscal Quarter Results Continued Commitment to Balance Sheet Strength, Liquidity and Credit Ratings
NEW YORK, / -- CIT Group Inc., a subsidiary of Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC), today announced second fiscal quarter 2002 net income of $157.3 million, compared to $160.1 million in the corresponding period of 2001. The current quarter results include a $95.0 million pretax ($58.9 million after tax) provision relating to the economic reforms instituted by the Argentine government that resulted in the conversion of CIT's dollar-denominated receivables into pesos. The prior year quarter included $22.5 million in goodwill amortization ($19.9 million after tax). Excluding the Argentina-related provision and goodwill amortization, earnings increased to $216.2 million in 2002 from $180.0 million last year. This improvement reflected higher risk-adjusted margins and improved operating expense efficiency. Earnings declined from $239.0 million last quarter, primarily due to the Argentina loss provision, lower fee income and lower risk adjusted margins reflecting CIT's higher cost of funds on bank borrowings and increased liquidity. Management expects the continuation of higher borrowing costs relating to these liquidity issues to continue in the near term. For the six months ended March 31, 2002, net income was $396.3 million, compared to $320.2 million in the prior year period. Excluding the Argentina-related provision and goodwill amortization, earnings for the six months ended March 31, 2002 were $455.2 million, compared to $360.0 million for the six months ended March 31, 2001. The most recent quarter was a challenging one for CIT. Cost of funds were adversely impacted by liquidity events. In addition, due to limited access to the public debt markets and the continuation of soft economic conditions in the U.S., the asset portfolio declined. Despite these adverse conditions, the quarterly results reflected operating efficiencies and balance sheet strength as demonstrated by an improved leverage ratio. Financial Highlights: Funding and Liquidity Plan. During the quarter, CIT completed more than $3 billion in new securitization facilities backed by home equity loans and receivables to improve liquidity and broaden funding access. CIT also drew down on its $8.5 billion unsecured bank credit facilities and is using the proceeds to pay off outstanding commercial paper at scheduled maturities. In addition, on April 1, 2002, CIT completed a $2.5 billion public unsecured bond offering as part of the previously announced strategy to strengthen its liquidity position. Managed Assets. Managed assets were $48.1 billion, down from $49.1 billion at December 31, 2001 and down from $54.0 billion at March 31, 2001. The decline from a year ago reflects the exit or liquidation of non-strategic businesses and lower financing volumes. The decline in volume is attributable to growth constraints following the draw down of bank facilities by CIT in early 2002, as well as lower demand in the soft economic environment. Risk Adjusted Margin. Excluding the provision associated with CIT's loans in Argentina, second fiscal quarter 2002 risk adjusted margin (finance margin less provision for credit losses) was $348.2 million (3.87 percent of average earning assets) versus $374.6 million (4.00 percent of average earning assets) last quarter and $336.4 million (3.23 percent of average earning assets) for the same period in 2001. The year over year margin improvement reflects lower interest expense, the Company's sale or liquidation of certain non-strategic and under-performing assets, and improved leverage, partially offset by higher net charge-offs in the current period. Risk adjusted margin declined from last quarter primarily due to increased interest cost associated with the draw down of credit facilities to pay off commercial paper and higher levels of excess cash liquidity. Credit Quality. At March 31, 2002, total 60+ days delinquencies as a percentage of finance receivables were 3.90 percent, unchanged from 3.90 percent last quarter and up from 3.25 percent at March 31, 2001. Second fiscal quarter net charge-offs were $112.4 million, 1.58 percent of average finance receivables, compared to $112.8 million, 1.44 percent, last quarter and up from $66.7 million, 0.80 percent, for the quarter ended March 31, 2001. Excluding the impact of liquidating portfolios, net charge-offs were $78.1 million, 1.11 percent, for the quarter compared to $65.8 million, 0.90 percent, last quarter. At March 31, 2002, the reserve for credit losses was 2.11 percent of finance receivables. Excluding the provision for Argentina financing and leasing asset exposures, the reserve was 1.75 percent of finance receivables, compared to 1.64 percent, at December 31, 2001. Other Revenue. Other revenue for the second fiscal quarter totaled $232.1 million compared to $245.1 million last quarter and $211.6 million for the same period last year. Both the improvement from last year and the decline from last quarter resulted primarily from fluctuations in fee income and losses on venture capital investments during the current quarter. Securitization gains in the current quarter, resulting from the need to broaden funding access, increased to $34.7 million for the quarter, from $28.0 million last quarter. Securitization gains decreased from $37.4 million for the same period last year due to product mix changes and lower current period gains related to equipment securitization transactions. Salaries and General Operating Expenses. Expenses were $226.9 million for the current quarter, down from $230.5 million last quarter and $263.5 million in the prior year quarter. For the quarter, CIT's efficiency ratio of 33.4 percent was consistent with CIT's targeted mid-30's range, compared to 31.5 percent last quarter and 43.1 percent for the prior year quarter. Employees totaled approximately 6,235 at March 31, 2002 compared to 6,320 at December 31, 2001 and 7,475 last March. Operating expenses were 1.93 percent of average managed assets during the quarter, improved from last year and relatively unchanged from the prior quarter. Capitalization and Leverage. The ratio of tangible equity to managed assets at the end of the second fiscal quarter was 9.14 percent, an improvement from 8.72 percent at the end of the prior quarter and 8.23 percent at the end of the prior year quarter. Similarly, the ratio of debt to tangible equity improved to 7.30x at March 31, 2002 from 7.79x and 8.41x at December 31, 2001 and March 31, 2001, respectively. International Subsidiaries. On February 11, 2002, CIT repurchased certain international subsidiaries that had previously been sold to an affiliate of Tyco on September 30, 2001. The financial information presented with this release includes these subsidiaries for all periods shown. Forward-Looking Statements: This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. 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. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: economic, business, competitive and regulatory factors affecting CIT's businesses and the execution of its plan; and other factors described in Tyco's and CIT's Annual Report on Form 10-K for the year ended September 30, 2001 and in CIT's Quarterly Report on Form 10-Q for the quarter ended December 31, 2001. About CIT: The CIT family of companies are subsidiaries of Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC). CIT is a leading, global source of financing and leasing capital and an advisor for companies in more than 30 industries. Managing approximately $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 and Canada with strategic locations in Europe, Latin and South America, and the Pacific Rim. CIT GROUP INC. AND SUBSIDIARIES Unaudited CONSOLIDATED INCOME STATEMENTS (Dollars in Millions) For the Quarters Ended March 31, December 31, March 31, 2002 2001 2001 (successor) (successor) (predecessor) Finance income $1,106.7 $1,199.0 $1,376.8 Interest expense 348.3 373.0 625.7 Net finance income 758.4 826.0 751.1 Depreciation on operating 310.2 338.5 346.4 Net finance margin 448.2 487.5 404.7 Provision for credit losses(2) 195.0 112.9 68.3 Net finance margin after provision for credit losses 253.2 374.6 336.4 Other revenue 232.1 245.1 211.6 Operating margin 485.3 619.7 548.0 Salaries and general operating expenses 226.9 230.5 263.5 Goodwill amortization -- -- 22.5 Operating expenses 226.9 230.5 286.0 Income before provision for income taxes 258.4 389.2 262.0 Provision for income taxes (98.4) (147.9) (99.0) Minority interest in subsidiary trust holding solely debentures of the Company, after tax (2.7) (2.3) (2.9) Net income $157.3 $239.0 $160.1 For the Six Months Ended March 31, 2002(1) 2001 (successor) (predecessor) Finance income $2,305.7 $2,768.0 Interest expense 721.3 1,277.9 Net finance income 1,584.4 1,490.1 Depreciation on operating lease equipment 648.7 694.8 Net finance margin 935.7 795.3 Provision for credit losses(2) 307.9 132.1 Net finance margin after provision for credit losses 627.8 663.2 Other revenue 477.2 428.9 Operating margin 1,105.0 1,092.1 Salaries and general operating expenses 457.4 522.8 Goodwill amortization -- 45.0 Operating expenses 457.4 567.8 Income before provision for income taxes 647.6 524.3 Provision for income taxes (246.3) (198.3) Minority interest in subsidiary trust holding solely debentures of the Company, after tax (5.0) (5.8) Net income $396.3 $320.2 (1) The results above, for all periods shown, include the results of operations of the international subsidiaries repurchased from Tyco during the quarter ended March 31, 2002. (2) The 2002 periods include a $95.0 million provision for Argentina financing and leasing asset exposures. CIT GROUP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (in millions) March 31, December 31, September 30, 2002 2001(1) 2001(1) ASSETS Financing and leasing assets: Finance receivables $26,297.7 $30,333.0 $31,879.4 Reserve for credit losses (554.9) (496.4) (492.9) Net finance receivables 25,742.8 29,836.6 31,386.5 Operating lease equipment, net 6,604.0 6,465.6 6,402.8 Finance receivables held for sale 645.2 1,510.3 2,014.9 Interest in trade receivables, net of loss reserves of $23.0 2,510.9 -- -- Cash and cash equivalents 2,257.8 1,301.5 808.0 Receivables from affiliates -- -- 200.0 Goodwill, net 6,896.1 6,857.1 6,569.5 Other assets 4,293.9 3,616.9 3,708.4 Total Assets $48,950.7 $49,588.0 $51,090.1 LIABILITIES AND SHAREHOLDER'S EQUITY Debt: Commercial paper $709.9 $8,016.1 $8,869.2 Variable-rate bank credit facilities 8,518.4 -- -- Variable-rate senior notes 8,700.5 9,237.2 9,614.6 Fixed-rate senior notes 15,806.1 16,748.8 17,113.9 Subordinated fixed-rate notes -- -- 100.0 Total debt 33,734.9 34,002.1 35,697.7 Credit balances of factoring clients 1,543.5 2,184.2 2,392.9 Accrued liabilities and payables 2,401.0 2,300.5 2,141.5 Total liabilities 37,679.4 38,486.8 40,232.1 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company 258.6 259.0 260.0 Shareholder's Equity: Parent company investment 10,422.4 10,422.4 10,422.4 Retained earnings 648.7 491.4 252.4 Accumulated other comprehensive loss (58.4) (71.6) (76.8) Total Shareholder's Equity 11,012.7 10,842.2 10,598.0 Total Liabilities and Shareholder's Equity $48,950.7 $49,588.0 $51,090.1 (1) The balances above include the international subsidiaries repurchased from Tyco for all periods shown. CIT GROUP INC. AND SUBSIDIARIES (dollars in millions) FINANCING AND LEASING ASSETS BY STRATEGIC BUSINESS UNIT At At At At March 31, December 31, September 30, March 31, 2002 2001 2001 2001 Specialty Finance $ 10,937.4 $ 12,401.6 $ 12,791.1 $ 15,142.0 Equipment Financing 10,004.3 10,310.4 11,063.7 11,917.7 Capital Finance 5,484.9 5,269.2 5,045.4 5,526.7 Commercial Services 756.1 4,316.2 5,112.2 4,434.3 Business Credit 3,680.6 3,541.0 3,544.9 3,561.0 Structured Finance 3,035.7 2,808.7 3,171.9 2,871.3 TOTAL FINANCING AND LEASING PORTFOLIO ASSETS 33,899.0 38,647.1 40,729.2 43,453.0 Finance receivables securitized and managed by CIT (by type) Commercial 7,920.0 8,901.8 8,488.0 8,605.7 Consumer 2,836.4 1,540.4 1,659.9 1,934.7 Commercial Services trade receivables 3,432.4 -- -- -- TOTAL MANAGED ASSETS $48,087.8 $49,089.3 $50,877.1 $53,993.4 OTHER REVENUE For the For the Quarters Ended Six Months Ended March 31, December 31, March 31, March 31, March 31, 2002 2001 2001 2002 2001 Fees and other income $ 160.9 $ 173.5 $ 106.6 $ 334.4 $ 218.2 Factoring commissions 37.5 38.3 36.7 75.8 75.5 Gains on securitizations 34.7 28.0 37.4 62.7 78.0 Gains on sales of leasing equipment 4.3 2.7 26.0 7.0 58.4 (Losses)/gains on venture capital investments (5.3) 2.6 4.9 (2.7) (1.2) TOTAL OTHER REVENUE $ 232.1 $ 245.1 $ 211.6 $ 477.2 $ 428.9 Note: The balances and other revenue amounts above include the international subsidiaries repurchased from Tyco for all periods shown. CIT GROUP INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA For the For the Quarters Ended Six Months Ended March 31, December 31, March 31, March 31, March 31, 2002(1) 2001 2001 2002(1) 2001(1) Selected Data and Ratios Profitability Return on average tangible shareholder's equity(3)(4)(5) 15.4% 23.3% 15.6% 19.3% 16.0% Return on AEA(3) 1.75% 2.55% 1.54% 2.14% 1.54% Return on AMA(3) 1.34% 2.02% 1.23% 1.67% 1.22% Other Net finance margin as a percentage of AEA 4.98% 5.20% 3.89% 5.04% 3.82% Net finance margin after provision as a percentage of AEA(3) 2.81% 4.00% 3.23% 3.38% 3.18% Efficiency ratio(7) 33.4% 31.5% 43.1% 32.4% 43.0% Salaries and general operating expenses as a percentage of AMA(6)(7) 1.93% 1.93% 2.03% 1.92% 2.00% Net credit losses as a percentage of average: Total finance receivables 1.58% 1.44% 0.80% 1.49% 0.75% Commercial finance receivables 1.59% 1.41% 0.71% 1.48% 0.67% Consumer finance receivables 1.51% 1.70% 1.42% 1.60% 1.34% Volume securitized(8) (dollars in millions) $2,725.9 $1,223.8 $1,096.4 $3,949.7 $2,300.6 At March 31, At Dec. 31, At Sept. 30, At March 31, Credit Quality 2002 2001 2001 2001 60+ days contractual delinquency as a percentage of finance receivables Commercial(9) 3.71% 3.67% 3.18% 3.03% Consumer 5.96% 5.88% 6.12% 4.76% Total(9) 3.90% 3.90% 3.46% 3.25% 60+ days managed contractual delinquency as a percentage of managed financial assets(10) Commercial(9) 4.02% 3.91% 3.63% 3.52% Consumer 4.51% 4.82% 4.32% 3.63% Total(9) 4.09% 4.02% 3.72% 3.54% Total non-performing assets as a percentage of finance receivables(11) 3.32% 3.24% 3.04% 2.70% Reserve for credit losses as a percentage of finance receivables(3) 2.11% 1.64% 1.55% 1.39% Capital and Leverage Tangible shareholder's equity to managed assets(4)(5)(12) 9.14% 8.72% 8.48% 8.23% Debt (net of overnight deposits) to tangible shareholder's equity(4)(5)(13) 7.30x 7.79x 8.20x 8.41x (1) The selected data and ratios above include the results of the international subsidiaries repurchased from Tyco for all periods shown. (2) The data for the six months ended March 31, 2001 is derived from the quarters ended December 31, 2000 and March 31, 2001. (3) The 2002 calculations include the impact of a $95 million provision for finance receivables and lease exposures in Argentina. Excluding this charge, the quarter and six month respective figures would be: return on average tangible shareholder's equity 21.1% and 22.1%; return on AEA 2.40% and 2.45%; return on AMA 1.84% and 1.91%; net finance margin after provision as a percentage of AEA 3.87% and 3.90%; and reserve for credit losses as a percentage of finance receivables 1.75%. (4) Shareholder's equity excludes the impact of accounting changes for derivative financial instruments and unrealized gains on retained interests. (5) Tangible shareholder's equity excludes goodwill. (6) "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. (7) Excludes amortization of goodwill. (8) Excludes trade receivable securitizations of $3.2 billion, with a retained interest of $2.5 billion at March 31, 2002. (9) March 2002 balances include the past due accounts and securitized receivable balance of the factoring transaction. (10) Managed financial assets exclude operating leases and certain equity investments. (11) Total non-performing assets reflect both commercial and consumer finance receivables on non-accrual status and assets received in satisfaction of loans. (12) Tangible shareholder's equity (excludes the impact of accounting changes for derivative financial instruments and unrealized gains on retained interests) includes Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely debentures of the Company ("Preferred Capital Securities"). (13) Total debt excludes, and shareholder's equity includes Preferred Capital Securities. ### ################################################ _______________________________________________________ www.leasingnews.org
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