Edgar Filing: CIT GROUP INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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Form 10-Q/A
Amendment No. 1 to Form 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number: 001-31369

CIT Group Inc.
(Exact name of Registrant as specified in its charter)

Delaware 65-1051192
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)

1211 Avenue of the Americas, New York, New York 10036
(Address of Registrant's principal executive offices) (Zip Code)

(212) 536-1211
(Registrant's telephone number)

(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No [ ]_____

Indicate by check mark whether the registrant is an accelerated filer as
defined in Rule 12b-2 of the Securities Exchange Act of 1934. Yes |X| No [ ]

As of April 29, 2005, there were 210,481,259 shares of the Registrant's
common stock outstanding.

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Overview

We are filing this amendment to our Form 10-Q for the quarterly period
ended March 31, 2005 to restate financial statements and corresponding financial
information for certain derivative transactions that do not qualify for hedge
accounting. We are also including other previously identified, immaterial,
in-period financial statement changes in conjunction with this amendment.

The primary impacts of this restatement of non-cash items on our financial
statements and certain key financial ratios are as follows ($ in millions, per
share amounts in dollars):

Previously
At or for the Quarter Ended Reported Restated Change
March 31, 2005 ---------- -------- ------
Income Statement
Finance income ............................ $ 1,022.0 $ 1,028.0 $ 6.0
Interest expense .......................... 394.2 391.5 (2.7)
Other revenue ............................. 239.4 265.7 26.3
Salaries and general operating
expenses ................................ 261.0 264.0 3.0
Provision for income taxes ................ 122.8 137.6 14.8
Net income ................................ 210.4 227.6 17.2
Basic earnings per share .................. 1.00 1.08 0.08
Diluted earnings per share ................ 0.98 1.06 0.08
Balance Sheet
Finance receivables and education lending
receivables.............................. 41,182.5 41,180.1 (2.4)
Other assets .............................. 2,756.8 2,762.8 6.0
Total debt ................................ 42,525.3 42,493.9 (31.4)
Accrued liabilities and payables .......... 3,619.1 3,636.9 17.8
Total stockholders' equity ................ 6,318.0 6,335.2 17.2
Financial Ratios
Net finance margin as a percentage of
average earning assets .................. 3.54% 3.62%
Return on average earning assets .......... 1.91% 2.07%
Return on average common equity ........... 13.6% 14.7%
Return on average tangible common equity .. 15.3% 16.5%
Tangible stockholders' equity and
preferred capital securities to
managed assets .......................... 9.59% 9.62%
Efficiency Ratio .......................... 40.8% 39.1%

During the fourth quarter of 2005, we learned of an interpretation with
respect to applying the "matched terms" approach in hedge accounting under
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended ("SFAS 133"). We reviewed our
accounting for certain cross-currency interest rate swaps ("compound swaps" or
"compound derivatives") under SFAS 133.

We determined that eight compound cross-currency and interest rate swaps
with a notional principal of approximately $1.5 billion at March 31, 2005 were
not appropriately accounted for, even though these compound swaps were highly
effective economic hedges of the interest rate and currency exchange risks
associated with the corresponding foreign denominated debt. We documented these
swaps originally as "matched terms" hedges which assumes no hedge
ineffectiveness. The swaps would have qualified for "long-haul" hedge accounting
with ineffectiveness reflected in current earnings. However, the swaps did not
qualify for hedge accounting treatment from their inception, as SFAS 133 does
not allow for subsequent documentation modifications.

The elimination of hedge accounting from inception of the compound swaps
resulted in an increase to other revenue and earnings for the three months ended
March 31, 2005 to reflect the elimination of adjustments to the basis of the
corresponding debt under SFAS 133 fair value hedge accounting for changes in
interest rates during each period. This increase to revenues in the current
period will reduce future earnings by an equal amount through 2015.

As a result of the review of our accounting, we have terminated these
compound cross-currency swaps and replaced each with a pair of individual swaps
(a cross-currency basis swap and an interest rate swap, both with zero fair
value at inception) with the same counterparties and with the same terms as both
the hedged debt and the original compound derivatives. The replacement
derivative contracts achieve the same economics as the original compound
derivatives and will be accounted for as hedges under SFAS 133. Accessing
non-U.S. capital markets is a key element of our funding strategy, and we remain
committed to our risk management strategy to hedge, or significantly mitigate,
our interest and currency risk and to transact derivatives only for risk
management purposes. We plan to utilize stand alone swaps for similar hedge
transactions in the future.

After reviewing the above with the Audit Committee of the Board of
Directors on December 9, 2005, the Audit Committee agreed with management's
recommendation to adjust our financial statements. In light of this decision and
resulting restatement, the previously reported financial statements and other
information included in the CIT Group Inc. Form 10-Q for the quarterly period
ended March 31, 2005 should no longer be relied upon.

CIT GROUP INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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Page
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Part I--Financial Information:
Item 1. Consolidated Financial Statements............................ 1
Consolidated Balance Sheets (Unaudited)...................... 1
Consolidated Statements of Income (Unaudited)................ 2
Consolidated Statements of Stockholders' Equity (Unaudited).. 3
Consolidated Statements of Cash Flows (Unaudited)............ 4
Notes to Consolidated Financial Statements (Unaudited)....... 5-18
Item 2. Management's Discussion and Analysis of Financial Condition
and and Results of Operations and
Item 3. Quantitative and Qualitative Disclosure about Market Risk.... 19-42
Item 4. Controls and Procedures...................................... 43

Part II--Other Information:
Item 1. Legal Proceedings............................................ 45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.. 45
Item 3. Default Upon Senior Securities............................... 46
Item 4. Submission of Matters to a Vote of Security Holders.......... 46
Item 5. Other Information............................................ 46
Item 6. Exhibits..................................................... 46

Signatures ............................................................. 47

iii

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

CIT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in millions -- except share data)

March 31, December 31,
2005 2004
---------- ------------
(Restated)

ASSETS
Financing and leasing assets:
Finance receivables .............................................. $36,858.2 $35,048.2
Education lending receivables pledged ............................ 4,321.9 --
Reserve for credit losses ........................................ (620.4) (617.2)
--------- ---------
Net finance receivables .......................................... 40,559.7 34,431.0
Operating lease equipment, net ................................... 8,313.1 8,290.9
Finance receivables held for sale ................................ 1,481.3 1,640.8
Cash and cash equivalents, including $234.4 and $0.0 restricted ..... 1,638.1 2,210.2
Retained interest in securitizations and other investments .......... 1,123.2 1,228.2
Goodwill and intangible assets, net ................................. 906.4 596.5
Other assets ........................................................ 2,762.8 2,713.7
--------- ---------
Total Assets ........................................................ $56,784.6 $51,111.3
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt:
Commercial paper ................................................. $ 3,963.0 $ 4,210.9
Variable-rate senior unsecured notes ............................. 11,473.1 11,545.0
Fixed-rate senior unsecured notes ................................ 22,165.6 21,715.1
Non-recourse, secured borrowings -- education lending ............ 4,638.9 --
Preferred capital securities ..................................... 253.3 253.8
--------- ---------
Total debt .......................................................... 42,493.9 37,724.8
Credit balances of factoring clients ................................ 4,269.8 3,847.3
Accrued liabilities and payables .................................... 3,636.9 3,443.7
--------- ---------
Total Liabilities ................................................... 50,400.6 45,015.8
--------- ---------
Commitments and Contingencies (Note10)
Minority interest ................................................... 48.8 40.4
Preferred capital securities
Stockholders' Equity:
Preferred stock: $0.01 par value, 100,000,000 authorized;
none issued .................................................... -- --
Common stock: $0.01 par value, 600,000,000 authorized;
Issued: 212,119,700 and 212,112,203 ............................ 2.1 2.1
Outstanding: 210,771,309 and 210,440,170
Paid-in capital, net of deferred compensation of $68.6
and $39.3 ...................................................... 10,654.5 10,674.3
Accumulated deficit .............................................. (4,299.3) (4,499.1)
Accumulated other comprehensive income / (loss) .................. 31.2 (58.4)
Less: treasury stock, 1,348,391 and 1,672,033 shares, at cost ....... (53.3) (63.8)
--------- ---------
Total Stockholders' Equity .......................................... 6,335.2 6,055.1
--------- ---------
Total Liabilities and Stockholders' Equity .......................... $56,784.6 $51,111.3
========= =========

See Notes to Consolidated Financial Statements

CIT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($ in millions -- except per share data)

Quarters Ended
March 31,
----------------------
2005 2004
---------- ---------
(Restated)
Finance income ........................................ $ 1,028.0 $ 896.9
Interest expense ...................................... 391.5 298.0
--------- ---------
Net finance income .................................... 636.5 598.9
Depreciation on operating lease equipment ............. 237.6 235.8
--------- ---------
Net finance margin .................................... 398.9 363.1
Provision for credit losses ........................... 45.3 85.6
--------- ---------
Net finance margin after provision for credit losses .. 353.6 277.5
Other revenue ......................................... 265.7 230.4
Net gain on venture capital investments ............... 10.8 0.7
--------- ---------
Operating margin ...................................... 630.1 508.6
Salaries and general operating expenses ............... 264.0 240.0
Gain on redemption of debt ............................ -- 41.8
--------- ---------
Income before provision for income taxes .............. 366.1 310.4
Provision for income taxes ............................ (137.6) (121.1)
Minority interest, after tax .......................... (0.9) --
--------- ---------
Net income ............................................ $ 227.6 $ 189.3
========= =========
Earnings per share
Basic earnings per share .............................. $ 1.08 $ 0.89
Diluted earnings per share ............................ $ 1.06 $ 0.88
Number of shares -- basic (thousands) ................. 210,656 211,839
Number of shares -- diluted (thousands) ............... 215,090 215,809
Dividends per common share ............................ $ 0.13 $ 0.13

See Notes to Consolidated Financial Statements

CIT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
($ in millions)

Accumulated
Accumulated Other Total
Common Paid-in Treasury (Deficit) Comprehensive Stockholders
Stock Capital Stock Earnings Income/(Loss) Equity
------ --------- -------- ----------- ------------- ------------
(Restated) (Restated)

December 31, 2004 ................... $2.1 $10,674.3 $(63.8) $(4,499.1) $(58.4) $6,055.1
Net income .......................... 227.6 227.6
Foreign currency translation
adjustments ...................... 42.6 42.6
Change in fair values of
derivatives qualifying as cash
flow hedges ...................... 47.4 47.4
Unrealized loss on equity and
securitization investments, net .. (0.8) (0.8)
Minimum pension liability
adjustment ....................... 0.4 0.4
--------
Total comprehensive income .......... 317.2
--------
Cash dividends ...................... (27.8) (27.8)
Restricted common stock grants
amortization ..................... 9.7 9.7
Treasury stock purchased, at cost ... (59.3) (59.3)
Exercise of stock option awards ..... (29.3) 68.8 39.5
Employee stock purchase plan
participation .................... (0.2) 1.0 0.8
---- --------- ------ --------- ------ --------
March 31, 2005 ...................... $2.1 $10,654.5 $(53.3) $(4,299.3) $ 31.2 $6,335.2
==== ========= ====== ========= ====== ========

See Notes to Consolidated Financial Statements.

CIT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in millions)

Quarters Ended
March 31,
------------------------
2005 2004
---------- ---------
(Restated)

Cash Flows From Operations
Net income .................................................... $ 227.6 $ 189.3
Adjustments to reconcile net income to net cash flows
from operations:
Depreciation and amortization .............................. 248.3 248.2
Provision for deferred federal income taxes ................ 104.8 95.4
Provision for credit losses ................................ 45.3 85.6
Gains on equipment, receivable and investment sales ........ (66.6) (62.5)
Gain on debt redemption .................................... -- (41.8)
Net proceeds from finance receivables held for sale ........ 372.5 273.4
(Increase) decrease in other assets ........................ (54.5) 303.1
Increase (decrease) in accrued liabilities and payables .... 102.7 (346.6)
Other ...................................................... (44.1) (26.0)
--------- ---------
Net cash flows provided by operations ......................... 936.0 718.1
--------- ---------

Cash Flows From Investing Activities
Loans extended ................................................ (12,603.0) (11,743.3)
Collections on loans .......................................... 11,665.3 10,532.9
Proceeds from asset and receivable sales ...................... 900.3 798.9
Purchase of finance receivable portfolios ..................... (902.9) (595.1)
Net increase in short-term factoring receivables .............. (319.6) (400.8)
Purchases of assets to be leased .............................. (326.2) (268.7)
Acquisitions, net of cash acquired ............................ (152.6) --
Intangible assets acquired .................................... (29.0) --
Other ......................................................... 95.5 (1.1)
--------- ---------
Net cash flows (used for) investing activities ................ (1,672.2) (1,677.2)
--------- ---------

Cash Flows From Financing Activities
Proceeds from the issuance of variable and fixed-rate notes ... (3,067.0) (3,011.5)
Repayments of variable and fixed-rate notes ................... 3,675.4 2,804.2
Net (decrease) increase in commercial paper ................... (247.9) 646.3
Net loans extended -- pledged in conjunction with
secured borrowings ......................................... (167.9) --
Net repayments of non-recourse leveraged lease debt ........... 8.6 (61.1)
Cash dividends paid ........................................... (27.8) (28.0)
Other ......................................................... (9.3) (8.0)
--------- ---------

Net cash flows provided by financing activities ............... 164.1 341.9
--------- ---------
Net (decrease) in cash and cash equivalents ................... (572.1) (617.2)
Cash and cash equivalents, beginning of period ................ 2,210.2 1,973.7
--------- ---------
Cash and cash equivalents, end of period ...................... $ 1,638.1 $ 1,356.5
========= =========

Supplementary Cash Flow Disclosure
Interest paid ................................................. $ 367.9 $ 287.5
Federal, foreign, state and local income taxes paid, net ...... $ 21.7 $ 24.7

See Notes to Consolidated Financial Statements.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

Note 1 -- Summary of Significant Accounting Policies

CIT Group Inc., a Delaware corporation ("we," "CIT" or the "Company"), is
a global commercial and consumer finance company that was founded in 1908. CIT
provides financing and leasing capital for consumers and companies in a wide
variety of industries, offering vendor, equipment, commercial, factoring, home
lending, educational lending and structured financing products. CIT operates
primarily in North America, with locations in Europe, Latin America, Australia
and the Asia-Pacific region.

These financial statements, which have been prepared in accordance with
the instructions to Form 10-Q, do not include all of the information and note
disclosures required by accounting principles generally accepted in the United
States ("GAAP") and should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 2004. Financial statements
in this Form 10-Q have not been audited by the independent registered public
accounting firm in accordance with the standards of the Public Company
Accounting Oversight Board (U.S.), but in the opinion of management include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of CIT's financial position and results of operations. Certain
prior period amounts have been reclassified to conform to the current
presentation.

Education Lending Acquisition

In February 2005, CIT acquired Education Lending Group, Inc. (EDLG), a
specialty finance company principally engaged in providing education loans
(primarily U.S. government guaranteed), products and services to students,
parents, schools and alumni associations. The shareholders of EDLG received
$19.05 per share or approximately $383 million in cash. The acquisition was
accounted for under the purchase method, with the acquired assets and
liabilities recorded at their estimated fair values as of the February 17, 2005
acquisition date. The assets acquired included approximately $4.4 billion of
finance receivables and $287 million of goodwill and intangible assets. The net
income impact of the EDLG acquisition for the period of CIT's ownership during
the quarter ended March 31, 2005 was immaterial.

This business is largely funded with "Education Loan Backed Notes," which
are accounted for under SFAS No. 140 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." As EDLG retains certain
call features with respect to these borrowings, the transactions do not meet the
SFAS 140 requirements for sales treatment and are therefore recorded as secured
borrowings and are reflected in the Consolidated Balance Sheet as "Education
lending receivables pledged" and "Non-recourse, secured borrowings - education
lending." Certain cash balances, included in cash and cash equivalents, are
restricted in conjunction with these borrowings.

Stock-Based Compensation

CIT has elected to apply Accounting Principles Board Opinion 25 ("APB 25")
rather than the optional provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition
and Disclosure" in accounting for its stock-based compensation plans. Under APB
25, CIT does not recognize compensation expense on the issuance of its stock
options because the option terms are fixed and the exercise price equals the
market price of the underlying stock on the grant date. The following table
presents the pro forma information required by SFAS 123 as if CIT had accounted
for stock options granted under the fair value method of SFAS 123, as amended ($
in millions, except per share data):

Quarters Ended
March 31,
------------------
2005 2004
------ ------
(Restated)
Net income as reported .................................. $227.6 $189.3
Stock-based compensation expense --
fair value method, after tax .......................... (5.1) (5.1)
------ ------
Pro forma net income .................................... $222.5 $184.2
====== ======
Basic earnings per share as reported .................... $ 1.08 $ 0.89
Basic earnings per share pro forma ...................... $ 1.06 $ 0.87
Diluted earnings per share as reported .................. $ 1.06 $ 0.88
Diluted earnings per share pro forma .................... $ 1.03 $ 0.85

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

For the quarters ended March 31, 2005 and 2004, net income includes $7.8
million and $4.0 million of after-tax compensation cost related to restricted
stock awards.

Recent Accounting Pronouncements

On January 1, 2005, the Company adopted Statement of Position No. 03-3,
"Accounting for Certain Loans or Debt Securities Acquired in a Transfer" ("SOP
03-3"). SOP 03-3 requires acquired loans to be carried at fair value and
prohibits the establishment of credit loss valuation reserves at acquisition for
loans that have evidence of credit deterioration since origination. The
implementation of SOP 03-3 did not have a material financial statement impact.

In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based
Payment" ("FAS 123R"). FAS 123R requires the recognition of compensation expense
for all stock-based compensation plans as of the beginning of the first annual
reporting period that begins after June 15, 2005. The current accounting for
employee stock options is most impacted by this new standard, as costs
associated with restricted stock awards are already recognized in net income and
amounts associated with employee stock purchase plans are not significant.
Similar to the proforma amounts disclosed historically, the compensation cost
relating to options will be based upon the grant-date fair value of the award
and will be recognized over the vesting period. The financial statement impact
of adopting FAS 123R is not expected to differ materially from proforma amounts
previously disclosed.

In December 2004, the FASB issued FASB Staff Position No. FAS 109-2,
"Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creation Act of 2004" ("FSP 109-2"). Given
the lack of clarification of certain provisions and the timing of the Act, FSP
109-2 allows for time beyond the year ended December 31, 2004 (the period of
enactment) to evaluate the effect of the Act on plans for reinvestment or
repatriation of foreign earnings for purposes of applying income tax accounting
under SFAS No. 109. The implementation of FSP 109-2 is not expected to have a
material financial statement impact on the Company, as there are no present
plans to repatriate foreign earnings.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." On
November 7, 2003, certain measurement and classification provisions of SFAS 150,
relating to certain mandatorily redeemable non-controlling interests, were
deferred indefinitely. The adoption of these delayed provisions, which relate
primarily to minority interests associated with finite-lived entities, is not
expected to have a material financial statement impact on the Company.

Restatement Relating to Derivative Hedge Accounting (see Note 15 -- Restatement
Relating to Derivative Hedge Accounting for additional information).

Note 2 -- Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. The diluted
EPS computation includes the potential impact of dilutive securities, including
stock options and restricted stock grants. The dilutive effect of stock options
is computed using the treasury stock method, which assumes the repurchase of
common shares by CIT at the average market price for the period. Options that do
not have a dilutive effect (because the exercise price is above the market
price) are not included in the denominator and averaged approximately 16.9
million shares and 16.1 million shares for the quarters ended March 31, 2005 and
2004, respectively.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

The reconciliation of the numerator and denominator of basic EPS with that
of diluted EPS is presented ($ in millions, except per share amounts, which are
in whole dollars; weighted-average share balances in thousands):

Quarter Ended March 31, 2005 Quarter Ended March 31, 2004
--------------------------------------- ---------------------------------------
(Restated)
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------

Basic EPS:
Income available to
common stockholders .......... $227.6 210,656 $1.08 $189.3 211,839 $0.89
Effect of Dilutive Securities:
Restricted shares .............. -- 1,308 -- 540
Stock options .................. -- 3,126 -- 3,430
------ ------- ------ -------
Diluted EPS ....................... $227.6 215,090 $1.06 $189.3 215,809 $0.88
====== ======= ====== =======

Note 3 -- Business Segment Information

The selected financial information by business segment presented below is
based upon the allocation of most corporate expenses. For the quarter ended
March 31, 2005, capital is allocated to the segments by applying different
leverage ratios to each business unit using market and risk criteria. The
capital allocations reflect the relative risk of individual asset classes within
segments and range from approximately 2% of managed assets for U.S. government
guaranteed loans to approximately 15% of managed assets for longer-term assets
such as aerospace and rail. Prior period balances have been adjusted to conform
to current period presentation. ($ in millions)

Specialty Specialty Total Corporate
Finance - Finance - Commercial Corporate Equipment Capital Business and
Commercial Consumer Services Finance Finance Finance Segments Other Consolidated
---------- --------- ---------- --------- --------- ------- -------- ---------- ------------
(Restated) (Restated) (Restated) (Restated) (Restated)

At and for the Quarter
Ended March 31, 2005
Operating margin .......... $ 211.3 $ 50.2 $ 88.6 $ 94.4 $ 56.7 $ 55.2 $ 556.4 $ 73.7 $ 630.1
Income taxes .............. 41.0 10.0 22.2 25.7 12.7 10.7 122.3 15.3 137.6
Net income (loss) ......... 77.9 15.7 37.3 42.7 20.3 26.6 220.5 7.1 227.6
Total financing and
leasing assets .......... 10,921.1 10,337.1 7,184.9 7,195.1 6,625.0 8,813.1 51,076.3 -- 51,076.3
Total managed assets ...... 14,791.3 11,468.6 7,184.9 7,195.1 9,339.9 8,813.1 58,792.9 -- 58,792.9
At and for the Quarter
Ended March 31, 2004
Operating margin .......... $ 195.7 $ 30.4 $ 87.9 $ 71.8 $ 48.3 $ 49.6 $ 483.7 $ 24.9 $ 508.6
Income taxes .............. 39.0 5.1 23.4 17.2 10.4 10.9 106.0 15.1 121.1
Net income ................ 68.8 8.0 37.5 30.9 15.6 23.3 184.1 5.2 189.3
Total financing and
leasing assets .......... 9,583.0 3,465.1 6,450.0 6,284.9 6,871.7 8,366.9 41,021.6 -- 41,021.6
Total managed assets ...... 13,945.6 5,117.0 6,450.0 6,284.9 9,924.2 8,366.9 50,088.6 -- 50,088.6

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

Note 4 -- Concentrations

The following table summarizes the geographic and industry compositions
(by obligor) of financing and leasing portfolio assets ($ in millions):

March 31, 2005 December 31, 2004
-------------------- --------------------
(Restated)

Geographic
North America:
West ............................................ $10,073.2 19.7% $ 8,595.3 19.0%
Northeast ....................................... 9,820.8 19.3% 8,463.4 18.7%
Midwest ......................................... 8,365.2 16.4% 6,907.0 15.3%
Southeast ....................................... 7,370.1 14.4% 6,283.3 14.0%
Southwest ....................................... 5,325.2 10.4% 4,848.3 10.7%
Canada .......................................... 2,510.4 4.9% 2,483.4 5.5%
--------- ----- --------- -----
Total North America ............................. 43,464.9 85.1% 37,580.7 83.2%
Other foreign ................................... 7,611.4 14.9% 7,580.2 16.8%
--------- ----- --------- -----
Total ........................................... $51,076.3 100.0% $45,160.9 100.0%
========= ===== ========= =====
Industry
Manufacturing(1) ................................ $ 7,522.2 14.7% $ 6,932.0 15.4%
Retail(2) ....................................... 6,669.9 13.1% 5,859.4 13.0%
Consumer based lending -- home lending .......... 5,598.7 11.0% 5,069.8 11.2%
Aerospace -- commercial and regional ............ 5,536.5 10.8% 5,512.4 12.2%
Consumer based lending -- education lending ..... 4,434.9 8.7% -- --
Transportation(3) ............................... 2,911.6 5.7% 2,969.6 6.6%
Service industries .............................. 2,749.8 5.4% 2,854.5 6.3%
Consumer based lending -- non-real estate(4) .... 2,362.9 4.6% 2,480.1 5.5%
Wholesaling ..................................... 1,813.9 3.5% 1,727.5 3.8%
Construction equipment .......................... 1,680.1 3.3% 1,603.1 3.5%
Communications(5) ............................... 1,190.5 2.3% 1,292.1 2.9%
Automotive Services ............................. 1,164.6 2.3% 1,196.3 2.6%
Other (no industry greater than 3.0%)(6) ........ 7,440.7 14.6% 7,664.1 17.0%
--------- ----- --------- -----
Total ........................................... $51,076.3 100.0% $45,160.9 100.0%
========= ===== ========= =====

--------------------------------------------------------------------------------
(1) Includes manufacturers of apparel (3.0%), followed by food and kindred
products, transportation equipment, chemical and allied products,
textiles, rubber and plastics, industrial machinery and equipment, and
other industries.

(2) Includes retailers of apparel (5.7%) and general merchandise (3.6%).

(3) Includes rail, bus, over-the-road trucking industries and business
aircraft.

(4) Includes receivables from consumers in the Specialty Finance - commercial
segment for products in various industries such as computers and related
equipment and the remaining manufactured housing portfolio.

(5) Includes $293.5 million and $335.2 million of equipment financed for the
telecommunications industry at March 31, 2005 and December 31, 2004,
respectively, but excludes telecommunications equipment financed for other
industries.

(6) Includes financing and leasing assets in the energy, power and utilities
sectors, which totaled $1.0 billion, or 2.1% of total financing and
leasing assets at March 31, 2005. This amount includes approximately
$703.4 million in project financing and $263.4 million in rail cars on
lease.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

Note 5 -- Retained Interests in Securitizations and Other Investments

The following table details the components of retained interests in
securitizations and other investments ($ in millions):

March 31, December 31,
2005 2004
--------- ------------
Retained interests in commercial loans:
Retained subordinated securities .................. $ 372.0 $ 446.2
Interest-only strips .............................. 306.8 292.4
Cash reserve accounts ............................. 300.4 323.4
-------- --------
Total retained interests in commercial loans ...... 979.2 1,062.0
-------- --------
Retained interests in consumer loans:(1)
Retained subordinated securities .................. 76.9 76.6
Interest-only strips .............................. 14.2 17.0
-------- --------
Total retained interests in consumer loans ........ 91.1 93.6
-------- --------
Total retained interests in securitizations .......... 1,070.3 1,155.6
Aerospace equipment trust certificates and other(2) .. 52.9 72.6
-------- --------
Total ............................................. $1,123.2 $1,228.2
======== ========

--------------------------------------------------------------------------------
(1) Comprised of amounts related to home lending receivables securitized.

(2) At December 31, 2004 other includes a $4.7 million investment in common
stock received as part of a loan work-out of an aerospace account.

Note 6 -- Accumulated Other Comprehensive Income / (Loss)

The following table details the components of accumulated other
comprehensive income / (loss), net of tax ($ in millions):

March 31, December 31,
2005 2004
--------- ------------

Changes in fair values of derivatives qualifying as cash flow hedges .... $20.3 $(27.1)
Foreign currency translation adjustments ................................ 5.4 (37.2)
Minimum pension liability adjustments ................................... (2.3) (2.7)
Unrealized gain on equity and securitization investments ................ 7.8 8.6
----- ------
Total accumulated other comprehensive income (loss) ..................... $31.2 $(58.4)
===== ======

The changes in fair values of derivatives qualifying as cash flow hedges
corresponded to higher market interest rates during the quarter, as these
derivatives effectively convert an equivalent amount of variable-rate debt,
including commercial paper, to fixed rates of interest. See Note 7 for
additional information.

Total comprehensive income for the quarters ended March 31, 2005 and 2004
was $317.2 million and $134.5 million.

Note 7 -- Derivative Financial Instruments

As part of managing exposure to interest rate, foreign currency, and, in
limited instances, credit risk, CIT, as an end-user, enters into various
derivative transactions, all of which are transacted in over-the-counter markets
with other financial institutions. Derivatives are utilized to hedge exposures,
and not for speculative purposes. To ensure both appropriate use as a hedge and
to achieve hedge accounting treatment, whenever possible, substantially all
derivatives entered into are designated according to a hedge objective against a
specific or forecasted liability or, in limited instances, assets. The notional
amounts, rates, indices, and maturities of our derivatives closely match the
related terms of the underlying hedged items.

CIT utilizes interest rate swaps to exchange variable-rate interest
underlying forecasted issuances of commercial paper, specific variable-rate debt
instruments, and, in limited instances, variable-rate assets for fixed-rate
amounts. These interest rate swaps are designated as cash flow hedges and
changes in fair value of these swaps, to the extent they are effective as a
hedge, are recorded in other comprehensive income. Ineffective amounts are
recorded in interest expense.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

The components of the adjustment to Accumulated Other Comprehensive Income
for derivatives qualifying as hedges of future cash flows are presented in the
following table ($ in millions).

Fair Value Total
Adjustments of Income Unrealized
Derivatives Tax Effects Gain (Loss)
-------------- ----------- ----------

Balance at December 31, 2004 -- unrealized loss .................... $(41.3) $ 14.2 $(27.1)
Changes in fair values of derivatives qualifying
as cash flow hedges .............................................. 77.7 (30.3) 47.4
------ ------ ------
Balance at March 31, 2005 -- unrealized gain ....................... $ 36.4 $(16.1) $ 20.3
====== ====== ======

The unrealized gain as of March 31, 2005, presented in the preceding
table, primarily reflects our use of interest rate swaps to convert
variable-rate debt to fixed-rate debt, followed by increasing market interest
rates. Assuming no change in interest rates, approximately $5.0 million, net of
tax, of Accumulated Other Comprehensive Income is expected to be reclassified to
earnings over the next twelve months as contractual cash payments are made. The
Accumulated Other Comprehensive Income (along with the corresponding swap asset
or liability) will be adjusted as market interest rates change over the
remaining life of the swaps.

The ineffective amounts, due to changes in the fair value of cash flow
hedges, are recorded as either an increase or decrease to interest expense as
presented in the following table ($ in millions).

Increase/Decrease
Ineffectiveness to Interest Expense
--------------- -------------------
For the quarter ended
March 31, 2005 (Restated)............. $2.3 Decrease
For the quarter ended March 31, 2004 ... $0.3 Decrease

CIT also utilizes interest rate swaps to convert fixed-rate interest on
specific debt instruments to variable-rate amounts. These interest rate swaps
are designated as fair value hedges and changes in fair value of these swaps are
effectively recorded as an adjustment to the carrying value of the hedged item,
as the offsetting changes in fair value of the swaps and the hedged items are
recorded in earnings.

The following table presents the notional principal amounts of interest
rate swaps by class and the corresponding hedged liability item ($ in millions):

March 31, December 31,
2005 2004
--------- ------------

Effectively converts the interest rate on
Floating to fixed-rate swaps......................... $ 3,292.1 $ 3,533.6 an equivalent amount of commercial
paper, variable-rate notes and selected
assets to a fixed rate.

Effectively converts the interest rate on
Fixed to floating-rate swaps......................... 6,880.3 7,642.6 an equivalent amount of fixed-rate notes
--------- --------- and selected assets to a variable rate.
Total interest rate swaps............................ $10,172.4 $11,176.2
========= =========

In addition to the swaps in the table above, in conjunction with
securitizations, at March 31, 2005, CIT has $2.1 billion in notional amount of
interest rate swaps outstanding with the related trusts to protect the trusts
against interest rate risk. CIT entered into offsetting swap transactions with
third parties totaling $2.1 billion in notional amount at March 31, 2005 to
insulate the related interest rate risk.

CIT also utilizes foreign currency exchange forward contracts and
cross-currency swaps to hedge currency risk underlying foreign currency loans to
subsidiaries and the net investments in foreign operations. These contracts are
designated as foreign currency cash flow hedges or net investment hedges and
changes in fair value of these contracts are recorded in other comprehensive
income along with the translation gains and losses on the underlying hedged
items. CIT utilizes cross currency swaps to hedge currency risk underlying
foreign currency debt and selected foreign currency assets. These swaps are
designated as foreign currency cash flow hedges or foreign currency fair value
hedges and changes in fair value of these contracts are recorded in other
comprehensive income (for cash flow hedges), or effectively as a basis
adjustment (including the impact of the offsetting adjustment to the carrying
value of the hedged item) to the hedged item (for fair value hedges) along with
the transaction gains and losses on the underlying hedged items.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

During 2005 and 2004, CIT entered into credit default swaps, with a
combined notional value of $118.0 million and terms of 5 years, to economically
hedge certain CIT credit exposures. These swaps do not meet the requirements for
hedge accounting treatment and therefore are recorded at fair value, with both
realized and unrealized gains or losses recorded in other revenue in the
consolidated statement of income. The fair value adjustment for the quarter
ended March 31, 2005 amounted to a $1.2 million pretax loss. CIT also has
certain cross-currency swaps (with a combined notional principal of $1,764
million (Restated)) and an interest rate swap (basis swap denominated in U.S.
dollars (with notional principal of $935 million) that was acquired in the
educational lending acquisition. These instruments economically hedge exposures,
but do not qualify for hedge accounting. These derivatives are recorded at fair
value, with both realized and unrealized gains or losses recorded in other
revenue in the consolidated statement of income.

Note 8 -- Certain Relationships and Related Transactions

CIT is a partner with Dell Inc. ("Dell") in Dell Financial Services L.P.
("DFS"), a joint venture that offers financing to Dell's customers. The joint
venture provides Dell with financing and leasing capabilities that are
complementary to its product offerings and provides CIT with a steady source of
new financings. The joint venture agreement provides Dell with the option to
purchase CIT's 30% interest in DFS in February 2008 based on a formula tied to
DFS profitability, within a range of $100 million to $345 million. CIT has the
right to purchase a minimum percentage of DFS's finance receivables on a
declining scale through January 2010.

CIT regularly purchases finance receivables from DFS at a premium,
portions of which are typically securitized within 90 days of purchase from DFS.
CIT has limited recourse to DFS on defaulted contracts. In accordance with the
joint venture agreement, net income and losses generated by DFS as determined
under GAAP are allocated 70% to Dell and 30% to CIT. The DFS board of directors
voting representation is equally weighted between designees of CIT and Dell,
with one independent director. DFS is not consolidated in CIT's financial
statements and is accounted for under the equity method. At March 31, 2005 and
December 31, 2004, financing and leasing assets related to the DFS program
included in the CIT Consolidated Balance Sheet (but excluding certain related
International receivables originated directly by CIT) were approximately $2.2
billion and $2.0 billion, and securitized assets included in managed assets were
approximately $2.2 billion and $2.5 billion, respectively. In addition to the
owned and securitized assets acquired from DFS, CIT's investment in and loans to
the joint venture were approximately $217 million and $267 million at March 31,
2005 and December 31, 2004.

CIT also has a joint venture arrangement with Snap-on Incorporated
("Snap-on") that has a similar business purpose and model to the DFS arrangement
described above, including limited credit recourse on defaulted receivables. The
agreement with Snap-on extends until January 2006. CIT and Snap-on have 50%
ownership interests, 50% board of directors' representation, and share income
and losses equally. The Snap-on joint venture is accounted for under the equity
method and is not consolidated in CIT's financial statements. At both March 31,
2005 and December 31, 2004, financing and leasing assets were approximately $1.1
billion and securitized assets included in managed assets were $0.1 billion. In
addition to the owned and securitized assets purchased from the Snap-on joint
venture, CIT's investment in and loans to the joint venture were approximately
$18 million and $16 million at March 31, 2005 and December 31, 2004. Both the
Snap-on and the Dell joint venture arrangements were acquired in a 1999
acquisition.

Since December 2000, CIT has been a joint venture partner with Canadian
Imperial Bank of Commerce ("CIBC") in an entity that is engaged in asset-based
lending in Canada. Both CIT and CIBC have a 50% ownership interest in the joint
venture, and share income and losses equally. This entity is not consolidated in
CIT's financial statements and is accounted for under the equity method. At
March 31, 2005 and December 31, 2004, CIT's investment in and loans to the joint
venture were approximately $218 million and $191 million.

CIT invests in various trusts, partnerships, and limited liability
corporations established in conjunction with structured financing transactions
of equipment, power and infrastructure projects. CIT's interests in certain of
these entities were acquired by CIT in a 1999 acquisition, and others were
subsequently entered into in the normal course of business. At both March 31,
2005 and December 31, 2004, other assets included approximately $19 million of
investments in non-consolidated entities relating to such transactions that are
accounted for under the equity or cost methods.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

Certain shareholders of CIT provide investment management, banking and
investment banking services in the normal course of business.

Note 9 -- Postretirement and Other Benefit Plans

The following table discloses various components of pension expense ($ in
millions):

For the Quarters
Ended March 31,
----------------
2005 2004
---- ----
Retirement Plans
Service cost ....................... $5.0 $4.5
Interest cost ...................... 4.3 3.9
Expected return on plan assets ..... (4.8) (4.1)
Amortization of net loss ........... 0.7 0.7
---- ----
Net periodic benefit cost .......... $5.2 $5.0
==== ====

Postretirement Plans
Service cost ....................... $0.6 $0.5
Interest cost ...................... 0.8 0.8
Amortization of net (gain) loss .... 0.2 0.3
---- ----
Net periodic benefit cost .......... $1.6 $1.6
==== ====

Note 10 -- Commitments and Contingencies

The accompanying table summarizes the contractual amounts of
credit-related commitments and purchase and funding commitments. ($ in
millions).

March 31, 2005
--------------------------------------
Due to Expire December 31,
---------------------- 2004
During 2006 Total Total
2005 and beyond Outstanding Outstanding
-------- ---------- ----------- ------------

Credit Related Commitments
Financing and leasing assets ............... $1,180.6 $7,850.1 $9,030.7 $8,428.3
Letters of credit and acceptances:
Standby letters of credit ................ 559.6 36.7 596.3 618.3
Other letters of credit .................. 539.4 0.5 539.9 588.3
Acceptances .............................. 20.3 -- 20.3 16.4
Guarantees ................................. 82.8 12.2 95.0 133.1
Purchase and Funding Commitments
Aerospace purchase commitments ............. 774.0 1,254.0 2,028.0 2,168.0
Other manufacturer purchase commitments .... 470.2 -- 470.2 397.0
Sale-leaseback payments .................... 8.8 464.5 473.3 495.4
Venture capital fund commitments ........... 0.5 36.1 36.6 79.8

In the normal course of meeting the financing needs of its customers, CIT
enters into various credit-related commitments, including commitments to provide
financing and leasing capital, letters of credit and guarantees. Standby letters
of credit obligate CIT to pay the beneficiary of the letter of credit in the
event that a CIT client to which the letter of credit was issued does not meet
its related obligation to the beneficiary. These financial instruments generate
fees and involve, to varying degrees, elements of credit risk in excess of the
amounts recognized in the consolidated balance sheets. To minimize potential
credit risk, CIT generally requires collateral and other credit-related terms
and conditions from the customer. At the time credit-related commitments are
granted, the fair value of the underlying collateral and guarantees typically
approximates or exceeds the contractual amount of the commitment. In the event a
customer defaults on the underlying transaction, the maximum potential loss will
generally be limited to the contractual amount outstanding less the value of all
underlying collateral and guarantees.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

Guarantees are issued primarily in conjunction with CIT's factoring
product, whereby CIT provides the client with credit protection for its trade
receivables without actually purchasing the receivables. The trade terms are
generally sixty days or less. In the event that the customer is unable to pay
according to the contractual terms, then the receivables would be purchased. As
of March 31, 2005, there were no outstanding liabilities relating to these
credit-related commitments or guarantees, as amounts are generally billed and
collected on a monthly basis.

CIT has entered into aerospace commitments to purchase commercial aircraft
from both Airbus Industrie and The Boeing Company. The commitment amounts
detailed in the table are based on appraised values, actual amounts will vary
based upon market factors at the time of delivery. The remaining units to be
purchased are 41, with 15 to be completed in 2005. Lease commitments are in
place for twelve of the fifteen units to be delivered in 2005. The order amount
excludes CIT's options to purchase additional aircraft.

Outstanding commitments to purchase equipment to be leased to customers,
other than the aircraft detailed above, relates primarily to rail equipment.
Additionally, CIT is party to railcar sale-leaseback transactions under which it
is obligated to pay a remaining total of $473.3 million, approximately $31
million per year through 2010 and declining thereafter through 2024, which is
more than offset by CIT's re-lease of the assets, contingent on its ability to
maintain railcar usage. In conjunction with this sale-leaseback transaction, CIT
has guaranteed all obligations of the related consolidated lessee entity.

CIT has guaranteed the public and private debt securities of a number of
its wholly-owned, consolidated subsidiaries, including those disclosed in Note
14 -- Summarized Financial Information of Subsidiaries. In the normal course of
business, various consolidated CIT subsidiaries have entered into other credit
agreements and certain derivative transactions with financial institutions that
are guaranteed by CIT. These transactions are generally used by CIT's
subsidiaries outside of the U.S. to allow the local subsidiary to borrow funds
in local currencies.

Note 11 -- Legal Proceedings

On September 9, 2004, Exquisite Caterers v. Popular Leasing et al.
("Exquisite Caterers"), a putative national class action, was filed against 13
financial institutions, including CIT, who had acquired equipment leases
("NorVergence Leases") from NorVergence, Inc., a reseller of telecommunications
and Internet services to businesses. The Exquisite Caterers lawsuit is now
pending in the Superior Court of New Jersey, Monmouth County. Exquisite Caterers
based its complaint on allegations that NorVergence misrepresented the
capabilities of the equipment leased to its customers and overcharged for the
equipment. The complaint asserts that the NorVergence Leases are unenforceable
and seeks rescission, punitive damages, treble damages and attorneys' fees. In
addition, putative class action suits in Florida, Illinois, New York, and Texas
and several individual suits, all based upon the same core allegations and
seeking the same relief, have been filed by NorVergence customers against CIT
and other financial institutions.

On July 14, 2004, the U.S. Bankruptcy Court ordered the liquidation for
NorVergence under Chapter 7 of the Bankruptcy Code. Thereafter, the Attorneys
General of several states commenced investigations of NorVergence and the
financial institutions, including CIT, that purchased NorVergence Leases. CIT
entered into settlement negotiations with those Attorneys General. CIT reached
separate settlements with the New York and New Jersey Attorneys General. Under
those settlements, lessees in those states will have an opportunity to resolve
all claims by and against CIT by paying a percentage of the remaining balance on
their lease. Negotiations with other Attorneys General are continuing. CIT has
also been asked by the Federal Trade Commission to produce documents for
transactions related to NorVergence. In addition, on February 15, 2005, CIT was
served with a subpoena seeking the production of documents in a grand jury
proceeding being conducted by the U.S. Attorney for the Southern District of New
York in connection with an investigation of transactions related to NorVergence.
CIT is in the process of complying with these information requests.

In addition, there are various proceedings against CIT, which have arisen
in the ordinary course of business. While the outcomes of the NorVergence
related litigation and the ordinary course legal proceedings, and the related
activities, are not certain, based on present assessments, management does not
believe that they will have a material adverse effect on the financial condition
of CIT.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

Note 12 -- Severance and Facility Restructuring Reserves

The following table summarizes previously established purchase accounting
liabilities (pre-tax) related to severance of employees and closing facilities,
as well restructuring activities during 2005 ($ in millions):

Severance Facilities
--------------------- ----------------------
Number of Number of Total
Employees Reserve Facilities Reserve Reserves
--------- ------- ---------- ------- --------

Balance at December 31, 2004 ... 129 $12.2 15 $5.7 $17.9
2005 additions ................. -- -- -- 2.5 2.5
2005 utilization ............... (20) (3.9) (1) (0.7) (4.6)
--- ----- -- ---- -----
Balance at March 31, 2005 ...... 109 $ 8.3 14 $7.5 $15.8
=== ===== == ==== =====

The beginning severance reserves relate primarily to the 2004 acquisition
of a Western European vendor finance and leasing business, and include amounts
payable within the year after the acquisition to individuals who chose to
receive payments on a periodic basis. Severance and facilities restructuring
liabilities were established under purchase accounting in conjunction with fair
value adjustments to acquired assets and liabilities. The additions during the
quarter ended March 31, 2005 correspond to facility exit plan refinements
relating to the acquired Western European vendor finance and leasing business,
and were similarly recorded as fair value adjustments to purchased liabilities
(additions to goodwill). The facility reserves relate primarily to shortfalls in
sublease transactions and will be utilized over the remaining lease terms,
generally 6 years.

Note 13 -- Goodwill and Intangible Assets, Net

Goodwill and intangible assets totaled $906.4 million and $596.5 million
at March 31, 2005 and December 31, 2004. The Company periodically reviews and
evaluates its goodwill and other intangible assets for potential impairment.
Effective October 1, 2001, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), under which goodwill is no longer amortized but
instead is assessed periodically for impairment.

The most recent goodwill impairment analysis was performed during the
fourth quarter of 2004, which indicated that the fair value of goodwill was in
excess of the carrying value.

The following table summarizes the goodwill balance by segment ($ in
millions):

Specialty Specialty
Finance - Finance - Commercial
Commercial Consumer Finance Total
---------- ---------- ---------- ------

Balance at December 31, 2004 ...................... $62.3 $ -- $370.4 $432.7
Additions, foreign currency translation, other .... 0.7 257.6 -- 258.3
----- ------ ------ ------
Balance at March 31, 2005 ......................... $63.0 $257.6 $370.4 $691.0
===== ====== ====== ======

The increase in goodwill during the quarter was primarily due to the
education lending acquisition in Specialty Finance -- consumer. Management is in
the process of finalizing additional integration plans relating to this
acquisition. Accordingly, additional purchase accounting refinements may result
in an adjustment to goodwill and acquired intangibles.

Other intangible assets, net, are comprised primarily of acquired customer
relationships (Specialty Finance and Commercial Finance balances), as well as
proprietary computer software and related transaction processes (Commercial
Finance). The following table summarizes the net intangible asset balances by
segment ($ in millions):

Specialty Specialty
Finance - Finance - Commercial
Commercial Consumer Finance Total
---------- ---------- ---------- ------

Balance at December 31, 2004 ...................... $68.0 $ -- $ 95.8 $163.8
Additions, foreign currency translation, other .... (2.8) 29.0 30.0 56.2
Amortization ...................................... (2.4) -- (2.2) (4.6)
----- ----- ------ ------
Balance at March 31, 2005 ......................... $62.8 $29.0 $123.6 $215.4
===== ===== ====== ======

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

The increase was primarily related to the education lending acquisition in
Specialty Finance - consumer and a factoring acquisition in Commercial Finance.
Other intangible assets are being amortized over their corresponding lives
ranging from five to twenty years in relation to the related cash flows, where
applicable. Amortization expense totaled $4.6 million and $2.2 million for the
quarters ended March 31, 2005 and 2004. Accumulated amortization totaled $28.3
million and $23.7 million at March 31, 2005 and December 31, 2004. The projected
amortization for the years ended December 31, 2005 through December 31, 2009 is:
$20.8 million for 2005; $20.3 million for 2006; $17.0 million for 2007; $17.1
million for 2008 and $17.3 million for 2009.

Note 14 -- Summarized Financial Information of Subsidiaries

The following presents condensed consolidating financial information for
CIT Holdings LLC and Capita Corporation (formerly AT&T Capital Corporation). CIT
has guaranteed on a full and unconditional basis the existing debt securities
that were registered under the Securities Act of 1933 and certain other
indebtedness of these subsidiaries. CIT has not presented related financial
statements or other information for these subsidiaries on a stand-alone basis.
($ in millions)

CIT
CONSOLIDATING CIT Capita Holdings Other
BALANCE SHEETS Group Inc. Corporation LLC Subsidiaries Eliminations Total
-------------- ---------- ----------- -------- ------------ ------------ ---------

March 31, 2005 (Restated)
ASSETS
Net finance receivables ............... $ 1,078.0 $3,434.1 $1,759.7 $34,287.9 $ -- $40,559.7
Operating lease equipment, net ........ -- 517.0 126.8 7,669.3 -- 8,313.1
Finance receivables held for sale ..... -- 117.4 69.6 1,294.3 -- 1,481.3
Cash and cash equivalents ............. 826.5 667.3 73.6 70.7 -- 1,638.1
Other assets .......................... 10,068.0 91.4 292.5 675.7 (6,335.2) 4,792.4
--------- -------- -------- --------- --------- ---------
Total Assets ........................ $11,972.5 $4,827.2 $2,322.2 $43,997.9 $(6,335.2) $56,784.6
========= ======== ======== ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt .................................. $35,845.2 $ 459.2 $1,224.0 $ 4,965.5 $ -- $42,493.9
Credit balances of factoring clients .. -- -- -- 4,269.8 -- 4,269.8
Accrued liabilities and payables ...... (30,207.9) 3,800.1 (451.2) 30,495.9 -- 3,636.9
--------- -------- -------- --------- --------- ---------
Total Liabilities ................... 5,637.3 4,259.3 772.8 39,731.2 -- 50,400.6
Minority interest ..................... -- -- -- 48.8 -- 48.8
Total Stockholders' Equity ............ 6,335.2 567.9 1,549.4 4,217.9 (6,335.2) 6,335.2
--------- -------- -------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity ................ $11,972.5 $4,827.2 $2,322.2 $43,997.9 $(6,335.2) $56,784.6
========= ======== ======== ========= ========= =========

December 31, 2004
ASSETS
Net finance receivables ............... $ 1,121.1 $3,129.8 $1,682.7 $28,497.4 $ -- $34,431.0
Operating lease equipment, net ........ -- 517.9 130.8 7,642.2 -- 8,290.9
Finance receivables held for sale ..... -- 122.4 72.0 1,446.4 -- 1,640.8
Cash and cash equivalents ............. 1,311.4 670.8 127.5 100.5 -- 2,210.2
Other assets .......................... 9,536.8 (278.9) 316.2 1,019.4 (6,055.1) 4,538.4
--------- -------- -------- --------- --------- ---------
Total Assets ........................ $11,969.3 $4,162.0 $2,329.2 $38,705.9 $(6,055.1) $51,111.3
========= ======== ======== ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt .................................. $34,699.1 $ 487.8 $1,383.8 $ 1,154.1 $ -- $37,724.8
Credit balances of factoring clients .. -- -- -- 3,847.3 -- 3,847.3
Accrued liabilities and payables ...... (28,784.9) 3,184.5 (591.3) 29,635.4 -- 3,443.7
--------- -------- -------- --------- --------- ---------
Total Liabilities ................... 5,914.2 3,672.3 792.5 34,636.8 -- 45,015.8
Minority interest ..................... -- -- 40.4 -- 40.4
Total Stockholders' Equity ............ 6,055.1 489.7 1,536.7 4,028.7 (6,055.1) 6,055.1
--------- -------- -------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity ................ $11,969.3 $4,162.0 $2,329.2 $38,705.9 $(6,055.1) $51,111.3
========= ======== ======== ========= ========= =========

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

CIT
CONSOLIDATING CIT Capita Holdings Other
STATEMENTS OF INCOME Group Inc. Corporation LLC Subsidiaries Eliminations Total
-------------------- ---------- ----------- -------- ------------ ------------ --------

Three Months Ended March 31, 2005 (Restated)
Finance income ............................ $ 5.5 $162.9 $ 55.7 $803.9 $ -- $1,028.0
Interest expense .......................... (26.1) 41.6 3.6 372.4 -- 391.5
------ ------ ------ ------ ------- --------
Net finance income ........................ 31.6 121.3 52.1 431.5 -- 636.5
Depreciation on operating
lease equipment ......................... -- 66.5 11.0 160.1 -- 237.6
------ ------ ------ ------ ------- --------
Net finance margin ........................ 31.6 54.8 41.1 271.4 -- 398.9
Provision for credit losses ............... 1.8 11.1 2.1 30.3 -- 45.3
------ ------ ------ ------ ------- --------
Net finance margin, after provision
for credit losses ....................... 29.8 43.7 39.0 241.1 -- 353.6
Equity in net income of subsidiaries ...... 226.6 -- -- -- (226.6) --
Other revenue ............................. 32.2 33.3 21.4 178.8 -- 265.7
Net gain on venture capital investments -- -- -- 10.8 -- 10.8
------ ------ ------ ------ ------- --------
Operating margin .......................... 288.6 77.0 60.4 430.7 (226.6) 630.1
Operating expenses ........................ 55.1 26.6 18.5 163.8 -- 264.0
------ ------ ------ ------ ------- --------
Income (loss) before provision for
income taxes ............................ 233.5 50.4 41.9 266.9 (226.6) 366.1
Benefit (Provision) for income taxes ...... (5.9) (18.9) (15.4) (97.4) -- (137.6)
Minority interest, after tax .............. -- -- -- (0.9) -- (0.9)
------ ------ ------ ------ ------- --------
Net income ................................ $227.6 $ 31.5 $ 26.5 $168.6 $(226.6) $ 227.6
====== ====== ====== ====== ======= ========

Three Months Ended March 31, 2004
Finance income ............................ $ 9.5 $184.4 $ 47.6 $655.4 $ -- $ 896.9
Interest expense .......................... (22.9) 54.1 3.9 262.9 -- 298.0
------ ------ ------ ------ ------- --------
Net finance income ........................ 32.4 130.3 43.7 392.5 -- 598.9
Depreciation on operating
lease equipment ......................... -- 84.6 11.1 140.1 -- 235.8
------ ------ ------ ------ ------- --------
Net finance margin ........................ 32.4 45.7 32.6 252.4 -- 363.1
Provision for credit losses ............... 4.2 10.7 2.6 68.1 -- 85.6
------ ------ ------ ------ ------- --------
Net finance margin, after provision
for credit losses ....................... 28.2 35.0 30.0 184.3 -- 277.5
Equity in net income of subsidiaries ...... 155.6 -- -- -- (155.6) --
Other revenue ............................. 0.6 31.3 32.6 165.9 -- 230.4
Net gain on venture capital investments -- -- -- 0.7 -- 0.7
------ ------ ------ ------ ------- --------
Operating margin .......................... 184.4 66.3 62.6 350.9 (155.6) 508.6
Operating expenses ........................ 18.6 36.7 23.2 161.5 -- 240.0
Gain on redemption of debt ................ 41.8 -- -- -- -- 41.8
------ ------ ------ ------ ------- --------
Income (loss) before provision for
income taxes ............................ 207.6 29.6 39.4 189.4 (155.6) 310.4
Provision for income taxes ................ (18.3) (11.5) (15.4) (75.9) -- (121.1)
------ ------ ------ ------ ------- --------
Net income ................................ $189.3 $ 18.1 $ 24.0 $113.5 $(155.6) $ 189.3
====== ====== ====== ====== ======= ========

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Unaudited) (Continued)

CIT
CONSOLIDATING CIT Capita Holdings Other
STATEMENT OF CASH FLOWS Group Inc. Corporation LLC Subsidiaries Eliminations Total
----------------------- ---------- ----------- -------- ------------ ------------ ---------

Three Months Ended March 31, 2005 (Restated)
Cash Flows From Operating Activities:
Net cash flows provided by
(used for) operations ................... $ 2,681.8 $(294.3) $ 280.8 $(1,732.3) $ -- $ 936.0
--------- ------- ------- --------- --------- ---------
Cash Flows From Investing Activities:
Net (decrease) increase in financing and
leasing assets .......................... 42.4 (359.2) (78.3) (1,372.6) -- (1,767.7)
Decrease in inter-company loans
and investments ......................... (4,327.4) -- -- -- 4,327.4 --
Other ..................................... -- -- -- 95.5 -- 95.5
--------- ------- ------- --------- --------- ---------
Net cash flows (used for) provided by
investing activities .................... (4,285.0) (359.2) (78.3) (1,277.1) 4,327.4 (1,672.2)
--------- ------- ------- --------- --------- ---------
Cash Flows From Financing Activities:
Net increase (decrease) in debt ........... 1,146.1 (28.6) (159.8) (588.6) -- 369.1
Net loans extended-pledged ................ -- -- -- (167.9) -- (167.9)
Inter-company financing ................... -- 678.6 (96.6) 3,745.4 (4,327.4) --
Cash dividends paid ....................... (27.8) -- -- -- -- (27.8)
Other ..................................... -- -- -- (9.3) -- (9.3)
--------- ------- ------- --------- --------- ---------
Net cash flows provided by
(used for) financing activities ......... 1,118.3 650.0 (256.4) 2,979.6 (4,327.4) 164.1
--------- ------- ------- --------- --------- ---------
Net (decrease) in cash and
cash equivalents ........................ (484.9) (3.5) (53.9) (29.8) -- (572.1)
Cash and cash equivalents,
beginning of period ..................... 1,311.4 670.8 127.5 100.5 -- 2,210.2
--------- ------- ------- --------- --------- ---------
Cash and cash equivalents,
end of period ........................... $ 826.5 $ 667.3 $ 73.6 $ 70.7 $ -- $ 1,638.1
========= ======= ======= ========= ========= =========

Three Months Ended March 31, 2004
Cash Flows From Operating Activities:
Net cash flows provided by
(used for) operations ................... $ 65.0 $ (83.3) $(141.1) $ 877.5 $ -- $ 718.1
--------- ------- ------- --------- --------- ---------
Cash Flows From Investing Activities:
Net (decrease) increase in financing and
leasing assets .......................... 374.0 154.4 18.1 (2,222.6) -- (1,676.1)
Decrease in inter-company loans
and investments ......................... (2,508.4) -- -- -- 2,508.4 --
Other ..................................... -- -- -- (1.1) -- (1.1)
--------- ------- ------- --------- --------- ---------
Net cash flows (used for) provided by
investing activities .................... (2,134.4) 154.4 18.1 (2,223.7) 2,508.4 (1,677.2)
--------- ------- ------- --------- --------- ---------
Cash Flows From Financing Activities:
Net increase (decrease) in debt ........... 1,222.7 (467.2) 25.7 (403.3) -- 377.9
Inter-company financing ................... -- 458.1 126.1 1,924.2 (2,508.4) --
Cash dividends paid ....................... -- -- -- (28.0) -- (28.0)
Other ..................................... -- -- -- (8.0) -- (8.0)
--------- ------- ------- --------- --------- ---------
Net cash flows provided by
(used for) financing activities ......... 1,222.7 (9.1) 151.8 1,484.9 (2,508.4) 341.9
--------- ------- ------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents ........................ (846.7) 62.0 28.8 138.7 -- (617.2)
Cash and cash equivalents,
beginning of period ..................... 1,479.9 410.6 227.5 (144.3) -- 1,973.7
--------- ------- ------- --------- --------- ---------
Cash and cash equivalents,
end of period ........................... $ 633.2 $ 472.6 $ 256.3 $ (5.6) $ -- $ 1,356.5
========= ======= ======= ========= ========= =========

Note 15 -- Restatement Relating to Derivative Hedge Accounting

We determined that certain compound swaps were not appropriately accounted
for, even though these compound swaps were highly effective economic hedges of
the interest rate and currency exchange risks associated with foreign
denominated debt. We documented these swaps originally as "matched terms"
hedges, which assumes no hedge ineffectiveness. The swaps would have qualified
for "long-haul" hedge accounting with ineffectiveness reflected in current
earnings. However, the swaps did not qualify for hedge accounting treatment from
their inception, as SFAS 133 does not allow for subsequent documentation
modifications.

The elimination of hedge accounting from inception of the compound swaps
resulted in an increase in pre-tax income of $27.7 million for the three months
ended March 31, 2005, to reflect the elimination of adjustments to the basis of
the corresponding debt under SFAS 133 fair value hedge accounting for changes in
interest rates during the period. This amount includes an increase of
approximately $17 million in other revenue for 2004 and prior derivative hedge
accounting adjustments that management determined to be immaterial to the 2004
annual and interim financial statements. This increase to revenues in the
current period will reduce future earnings by an equal amount through 2015. We
are also including other previously identified, immaterial, in-period financial
statement changes for various revenue and expense accruals in conjunction with
this restatement with respect to year to date results.

The primary impacts of this restatement of non-cash items on our financial
statements are as follows ($ in millions, per share amounts in dollars):

The effect of the restatement on our statement of financial position at
the end of the reported period is immaterial and the restatement has no effect
on our cash flows.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
and
Item 3. Quantitative and Qualitative Disclosure about Market Risk

Certain data within this section has been "Restated" as detailed in Note
15 -- Restatement Relating to Derivative Hedge Accounting to the financial
statements.

CIT Group Inc., a Delaware corporation, is a global commercial and
consumer finance company that was founded in 1908. CIT provides financing and
leasing capital for consumers and companies in a wide variety of industries,
offering vendor, equipment, commercial, factoring, home lending, educational
lending and structured financing products.

Refer to the Company's Annual Report on Form 10-K for the year ended
December 31, 2004 for a glossary of key terms used in our business and an
overview of profitability drivers and related metrics.

This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Quantitative and Qualitative Disclosure about Market
Risk" contain certain non-GAAP financial measures. See "Non-GAAP Financial
Measurements" for additional information.

Profitability and Asset Growth

Net income for the quarter ended March 31, 2005 was $227.6 million, up
from $189.3 million in the first quarter of 2004. Prior year net income included
a $25.5 million after tax gain on early debt redemption. The improved results
reflected lower charge-offs, strong non-spread revenues and a lower effective
tax rate. Also, the current year quarter includes a pre-tax gain of $27.7
million related to derivatives that do not qualify for hedge accounting
treatment.

Profitability measurements for the respective periods are presented in the
table below:

Quarters Ended
March 31,
--------------
2005 2004
----- -----
(Restated)
Net income per diluted share ................................. $1.06 $0.88
Net income as a percentage of average earning assets (AEA) ... 2.07% 2.05%
Return on average tangible equity ............................ 16.5% 15.1%
Return on average equity ..................................... 14.7% 13.8%

--------------------------------------------------------------------------------
For the quarter ended March 31, 2004, net income per diluted share, net income
as a percentage of AEA, return on average tangible equity and return on average
equity excluding the gain on redemption of debt, were $0.76, 1.78%, 13.1% and
11.9%, respectively.

Managed assets were $58.8 billion at March 31, 2005, up 10.0% and 17.4%
from last quarter and last year. The increase for the quarter included $4.4
billion in receivables from the acquisition of Education Lending Group, $864
million from a factoring purchase and continued home lending program growth.
These increases were in part offset by the sale of approximately $400 million in
non-strategic assets.

Results by Business Segment

The tables that follow summarize selected financial information by
business segment. During the quarter, we began measuring segment performance
using risk-adjusted capital, which allocates capital to the segments by applying
different leverage ratios to each business using market and risk criteria. The
capital allocations reflect the relative risk of individual asset classes within
the segments and range from approximately 2% of managed assets for U.S.
government guaranteed education loans to approximately 15% of managed assets for
longer-term assets such as aerospace and rail. The 2004 results have been
conformed to the current presentation. ($ in millions)

Quarters Ended March 31,
-----------------------------------------------------------------------------
2005 (Restated) 2004
------------------------------------ ------------------------------------
Return on Return on
Net Return Risk-Adjusted Net Return Risk-Adjusted
Income on AEA Capital Income on AEA Capital
------ ------ ------------- ------ ------ -------------

Specialty Finance -- commercial .......... $ 77.9 2.81% 22.5% $ 68.8 2.82% 21.6%
Specialty Finance -- consumer ............ 15.7 0.80% 12.4% 8.0 1.10% 11.5%
------ ------
Total Specialty Finance ............... 93.6 1.98% 19.7% 76.8 2.43% 19.7%
------ ------
Commercial Finance ....................... 73.6 3.40% 24.0% 66.6 3.33% 22.8%
Equipment Finance ........................ 20.3 1.23% 8.7% 15.6 0.91% 6.3%
Capital Finance .......................... 33.0 1.35% 9.6% 25.1 1.11% 7.8%
------ ------
Total Commercial Finance .............. 126.9 2.03% 14.4% 107.3 1.79% 12.5%
------ ------
Corporate, including certain charges .... 7.1 0.06% -- 5.2 0.04% --
------ ------
Total ................................. $227.6 2.07% 16.5% $189.3 2.05% 15.1%
====== ======

Results by segment were as follows:

o Specialty Finance -- commercial reflected higher earnings in the
international, small / mid-ticket leasing and small business lending
units. These improvements were partially offset by lower major
vendor earnings.

o Specialty Finance -- consumer reported strong home lending results
due to a higher earnings assets base and lower charge-offs.
Education lending was essentially break-even after costs of funding
for the period of CIT's ownership.

o Commercial Finance earnings benefited from continued high returns in
both the factoring and asset-based lending (Business Credit)
businesses. The earnings improvement from the prior year was
particularly strong in the Business Credit unit, reflecting higher
risk-adjusted margins and non-spread revenue, as factoring
commissions were down modestly from last year. The factoring
acquisition closed on March 31 and did not impact first quarter
earnings.

o Equipment Finance returns, while still below management's
expectations, improved from 2004, reflecting strong improvement in
the level of charge-offs.

o Capital Finance returns rebounded from lower prior year results. The
2005 improvement reflects stronger lease rentals in both aerospace
and rail, as well as lower charge-offs.

Corporate included amounts as shown in the table below (after tax):

Quarters Ended March 31,
------------------------
2005 2004
------ ------
(Restated)
Unallocated expenses .............................. $(14.3) $(16.5)
Gain on derivatives................................ 15.7 --
Gain on debt redemption ........................... -- 25.5
Venture capital operating income / (losses)(1) .... 5.7 (3.8)
------ ------
Total .......................................... $ 7.1 $ 5.2
====== ======

--------------------------------------------------------------------------------
(1) Venture capital operating income / (losses) include realized and
unrealized gains and losses related to venture capital investments as well
as interest costs and other operating expenses associated with these
portfolios.

Net Finance Margin

A table summarizing the components of net finance margin is set forth
below ($ in millions):

Quarters Ended March 31,
------------------------
2005 2004
--------- ---------
(Restated)
Finance income -- loans and capital leases ..... $ 670.0 $ 556.6
Rental income on operating leases(1) ........... 358.0 340.3
Interest expense ............................... 391.5 298.0
--------- ---------
Net finance income .......................... 636.5 598.9
Depreciation on operating lease equipment(2) ... 237.6 235.8
--------- ---------
Net finance margin .......................... $ 398.9 $ 363.1
========= =========
Average Earnings Asset ("AEA") ................. $44,083.4 $36,865.1
========= =========
As a % of AEA:
Finance income -- loans and capital leases ..... 6.08% 6.04%
Rental income on operating leases .............. 3.25% 3.69%
Interest expense ............................... 3.55% 3.23%
--------- ---------
Net finance income .......................... 5.78% 6.50%
Depreciation on operating lease equipment ...... 2.16% 2.56%
--------- ---------
Net finance margin .......................... 3.62% 3.94%
========= =========
As a % of AOL:
Rental income on operating leases .............. 17.33% 17.93%
Depreciation on operating lease equipment ...... 11.50% 12.42%
--------- ---------
Net operating lease margin .................. 5.83% 5.51%
========= =========
Average Operating Lease Equipment ("AOL") ...... $ 8,264.1 $ 7,590.0
========= =========

--------------------------------------------------------------------------------
(1) Reduced by certain rail maintenance costs of $7.9 million and $6.0 million
in 2005 and 2004

(2) Reduced by certain aerospace maintenance costs of $3.8 million and $1.3
million in 2005 and 2004

Analysis of net finance margin is as follows:

o Finance income increased in amount from 2004, but was essentially
flat as a percentage of AEA, as the benefit of variable-rate assets
repricing was offset by the blending of the lower-yielding education
lending receivables into the portfolio and an interest charge that
reduced 2005 income. The education lending acquisition, though owned
by CIT for only half the quarter, dampened 2005 margin by
approximately 13 basis points, given the lower margin of these
low-risk, U.S. government guaranteed loans. The interest charge was
a 12 basis point ($13.1 million), one-time reduction in interest
previously accrued in a Specialty Finance - commercial vendor
program. This amount related to third-party servicing errors which
began in 2003.

o Interest expense increased from 2004, reflecting the higher 2005
interest rate environment, longer-term debt issuances and a greater
proportion of fixed-rate debt in the portfolio.

o The decline in net finance margin as a percentage of AEA reflects
the above factors as well as a pricing environment that is
competitive in the lending businesses, particularly in the Business
Credit unit and in Equipment Finance. Lease margin trends were
favorable as discussed below.

o Both rental income and depreciation expense declined as a percentage
of AOL from 2004, reflecting the continued asset mix change from
shorter-term to longer-lived assets. These longer-lived assets in
Capital Finance have lower rental rates as a percentage of the asset
base than small to mid-ticket leasing assets in Specialty Finance
and Equipment Finance.

o Operating lease margin improved 32 basis points from 2004,
reflecting improved aerospace and rail pricing in Capital Finance.
See "Concentrations -- Operating Leases" for additional information
regarding our operating lease assets.

During the first quarter of 2005, we reclassified certain aerospace and
rail maintenance costs from operating expense to lease margin to align public
reporting with our internal business measures. The amounts are specific to
individual assets. These costs include amounts that are reimbursed through rail
lease payments and expenditures to place aircraft with new lessors, including
improvements and configuration changes. The impact was a reduction to margin of
$11.7 million (0.11% and 0.57% as a percentage of AEA and AOL) and $7.3 million
(0.08% and 0.38%) for 2005 and 2004. Prior period balances have been conformed
to the current presentation.

We regularly monitor and simulate our degree of interest rate sensitivity
by measuring the repricing characteristics of interest-sensitive assets,
liabilities, and derivatives. The Capital Committee reviews the results of this
modeling periodically. The interest rate sensitivity modeling techniques we
employ include the creation of prospective twelve month "baseline" and "rate
shocked" net interest income simulations.

At the date that interest rate sensitivity is modeled, "baseline" net
interest income is derived considering the current level of interest-sensitive
assets, the current level of interest-sensitive liabilities and related
maturities, and the current level of derivatives. The "baseline" simulation
assumes that, over the next successive twelve months, market interest rates (as
of the date of simulation) are held constant and that no new loans or leases are
extended. Once the "baseline" net interest income is calculated, market interest
rates, which were previously held constant, are raised instantaneously 100 basis
points across the entire yield curve, and a "rate shocked" simulation is run.
Interest rate sensitivity is then measured as the difference between calculated
"baseline" and "rate shocked" net interest income.

An immediate hypothetical 100 basis point increase in the yield curve on
April 1, 2005 would reduce net income by an estimated $17 million after-tax over
the next twelve months. A corresponding decrease in the yield curve would cause
an increase in net income of a like amount. A 100 basis point increase in the
yield curve on April 1, 2004 would have reduced net income by an estimated $15
million after tax, while a corresponding decrease in the yield curve would have
increased net income by a like amount. Although management believes that this
measure provides an estimate of our interest rate sensitivity, it does not
account for potential changes in the credit quality, size, composition and
prepayment characteristics of the balance sheet and other business developments
that could affect net income. Accordingly, no assurance can be given that actual
results would not differ materially from the estimated outcomes of our
simulations. Further, such simulations do not represent management's current
view of future market interest rate movements.

A comparative analysis of the weighted average principal outstanding and
interest rates on our debt before and after the effect of interest rate swaps is
shown in the following table ($ in millions):

Before Swaps After Swaps
------------------ ------------------

Quarter Ended March 31, 2005 (Restated)
Commercial paper, variable-rate senior
notes and bank credit facilities ......... $15,328.3 2.81% $19,609.4 3.23%
Fixed-rate senior and subordinated notes .... 24,288.1 4.92% 20,007.0 4.66%
--------- ---------
Composite ................................... $39,616.4 4.10% $39,616.4 3.95%
========= =========
Quarter Ended March 31, 2004
Commercial paper, variable-rate senior
notes and bank credit facilities ......... $13,704.2 1.56% $17,823.7 2.26%
Fixed-rate senior and subordinated notes .... 18,948.1 5.70% 14,828.6 5.34%
--------- ---------
Composite ................................... $32,652.3 3.96% $32,652.3 3.66%
========= =========

The weighted average interest rates before swaps do not necessarily
reflect the interest expense that would have been incurred over the life of the
borrowings had the interest rate risk been managed without the use of such
swaps.

Net Finance Margin after Provision for Credit Losses (Risk-Adjusted Margin)

The following table summarizes risk-adjusted margin, both in amount and as
a percentage of AEA ($ in millions):

Quarters Ended
March 31,
------------------
2005 2004
------ ------
(Restated)
Net finance margin ............................... $398.9 $363.1
Provision for credit losses ...................... 45.3 85.6
------ ------
Net finance margin after provision for credit
losses (risk adjusted margin) .................. $353.6 $277.5
====== ======
As a % of AEA:
Net finance margin ............................... 3.62% 3.94%
Provision for credit losses ...................... 0.41% 0.93%
------ ------
Net finance margin after provision for credit
losses (risk adjusted margin) .................. 3.21% 3.01%
====== ======

Risk-adjusted margin improved from 2004 as lower charge-offs more than
offset the previously-discussed decline in net finance margin. Charge-off trends
are discussed further in "Credit Metrics".

Other Revenue

The components of other revenue are set forth in the following table ($ in
millions):

Quarters Ended
March 31,
------------------
2005 2004
------ ------
(Restated)
Fees and other income ............................. $148.8 $126.7
Factoring commissions ............................. 54.8 55.0
Gain on derivatives ..................... 27.7 --
Gains on sales of leasing equipment ............... 22.6 27.3
Gains on securitizations .......................... 11.8 21.4
------ ------
Total other revenue ............................ $265.7 $230.4
====== ======
Other revenue as a percentage of AEA .............. 2.41% 2.50%
====== ======
Other revenue as a percentage of total revenue .... 20.5% 20.4%
====== ======

We continue to emphasize growth and diversification of other revenues to
improve our overall profitability.

o Fees and other income include securitization-related servicing fees
and accretion, syndication fees, miscellaneous fees and gains from
asset sales. Securitization-related fees were essentially flat with
2004, as lower servicing fees corresponding to the decline in
securitized assets were offset by reduced impairment charges,
reflecting improved loss and prepayment experience in 2005. The
increase in other fees and income from 2004 was broad-based, with
the strongest improvement in the Specialty Finance --commercial
segment and the Business Credit unit of Commercial Finance.

o Factoring commissions, though flat in amount, reflected slightly
lower factoring rates (as a percentage of factoring volume).

o Gains on sales of equipment declined from 2004, reflecting lower
gains in Capital Finance.

o Securitization gains decreased in 2005, due to both a lower volume
of receivables securitized and the mix of assets securitized. The
volume decline included a $288 million drop in Specialty Finance --
commercial assets sold.

The following table presents information regarding gains on
securitizations ($ in millions):

Quarters Ended
March 31,
----------------------
2005 2004
-------- --------
Total volume securitized ....................... $ 929.0 $1,236.4
Gains .......................................... $ 11.8 $ 21.4
Gains as a percentage of volume securitized .... 1.27% 1.73%
Gains as a percentage of pre-tax
income (Restated)............................. 3.2% 6.9%
Securitized assets ............................. $7,716.6 $9,067.0
Retained interest in securitized assets ........ $1,070.2 $1,297.2

Reserve for Credit Losses

The changes to the reserve for credit losses, including related
provisions, are presented in the following table ($ in millions):

Quarters Ended
March 31,
------------------
2005 2004
------ ------

Balance beginning of period .................................................. $617.2 $643.7
------ ------
Provision for credit losses -- finance receivables ........................... 45.3 85.6
Reserves relating to asset purchases and other ............................... 7.0 6.7
------ ------
Additions to reserve for credit losses, net ............................... 52.3 92.3
------ ------
Net credit losses
Specialty Finance -- commercial ........................................... 19.4 28.5
Specialty Finance -- consumer ............................................. 11.0 10.2
Commercial Finance ........................................................ 11.4 26.4
Equipment Finance ......................................................... 6.9 26.3
Capital Finance ........................................................... 0.4 7.9
------ ------
Total net credit losses ................................................... 49.1 99.3
------ ------
Balance end of period ........................................................ $620.4 $636.7
====== ======
Reserve for credit losses as a percentage of finance receivables ............. 1.51% 1.98%
====== ======
Reserve for credit losses as a percentage of past due
receivables (60 days or more)(1) .......................................... 85.8% 104.5%
====== ======
Reserve for credit losses as a percentage of non-performing assets(1)(2) ..... 117.4% 95.4%
====== ======

--------------------------------------------------------------------------------
(1) The reserve for credit losses as a percentage of past due receivables and
non-performing accounts, excluding telecommunications and Argentine
reserves and account balances, were 89.9% and 88.3% at March 31, 2004,
respectively.

(2) At March 31, 2005, the reserve to non-performing asset percentage exceeded
the reserve to delinquency percentage primarily due to the fact that the
education lending portfolio has no non-performing assets, as education
lending past due receivables are not classified as non-performing assets
to the extent such loans are subject to the U.S. government guarantee.

The following table presents the components of the reserve for credit
losses, both in amount and as a percentage of corresponding finance receivables
($ in millions):

March 31, 2005 December 31, 2004 March 31, 2004
----------------- ----------------- -----------------

Finance receivables ....... $597.2 1.46% $594.0 1.71% $531.4 1.68%
Telecommunications (1) .... 23.2 7.90% 23.2 6.92% 92.8 18.56%
Argentina (2) ............. -- -- -- -- 12.5 69.83%
------ ------ ------
Total ..................... $620.4 1.51% $617.2 1.76% $636.7 1.98%
====== ====== ======

--------------------------------------------------------------------------------
(1) Percentage of finance receivables in telecommunications portfolio.

(2) Percentage of finance receivables in Argentina.

The reserve for credit losses, while up in amount from December 31, 2004,
declined as a percentage of finance receivables primarily due to the impact of
the education lending acquisition. Excluding this acquisition, the total reserve
for credit losses was 1.68% of finance receivables at March 31, 2005. The
decline in both amount and percentage from last March resulted from credit
quality improvements across portfolios, including telecommunication and
Argentine assets.

Effective January 1, 2005, we adopted Statement of Position 03 - 3,
"Accounting for Certain Loans or Debt Securities Acquired in a Transfer." As a
result, approximately $5.0 million of reserves associated with the education
lending portfolio are included as a component of finance receivables at March
31, 2005. Given the U.S. government guarantee of these loans, the associated
reserve levels are significantly lower than our other asset classes.

The reserve for credit losses is determined based on three key components:
(1) specific reserves for collateral and cash flow dependent loans that are
impaired under SFAS 114; (2) reserves for estimated losses inherent in the
portfolio based upon historical and projected credit trends; and (3) reserves
for economic environment and other factors.

The reserve included specific reserves, excluding telecommunication
accounts, relating to impaired loans of $26.7 million, $42.4 million, and $50.2
million at March 31, 2005, December 31, 2004 and March 31, 2004. The portion of
the reserve related to inherent estimated loss and estimation risk reflects our
evaluation of trends in our key credit metrics, as well as our assessment of
risk in certain industry sectors, including commercial aerospace.

The consolidated reserve for credit losses is intended to provide for
losses inherent in the portfolio, which requires the application of estimates
and significant judgment as to the ultimate outcome of collection efforts and
realization of collateral values, among other things. Therefore, changes in
economic conditions or credit metrics, including past due and non-performing
accounts, or other events affecting specific obligors or industries may
necessitate additions or reductions to the consolidated reserve for credit
losses. Management continues to believe that the credit risk characteristics of
the portfolio are well diversified by geography, industry, borrower and
equipment type. Refer to "Concentrations" for more information.

Based on currently available information, management believes that our
total reserve for credit losses is adequate.

Credit Metrics

Net Charge-offs

Net charge-offs, both in amount and as a percentage of average finance
receivables, are shown in the following table ($ in millions):

Quarters Ended
-------------------------------
March 31, 2005 March 31, 2004
-------------- --------------
$ % $ %
----- ---- ----- ----
Specialty Finance -- commercial ...... $19.4 0.87% $28.5 1.43%
Specialty Finance -- consumer ........ 11.0 0.59% 10.2 1.47%
----- -----
Total Specialty Finance Group ..... 30.4 0.74% 38.7 1.44%
----- -----
Commercial Finance ................... 11.4 0.37% 26.4 0.91%
Equipment Finance .................... 6.9 0.46% 26.3 1.67%
Capital Finance ...................... 0.4 0.06% 7.9 1.16%
----- -----
Total Commercial Finance Group .... 18.7 0.35% 60.6 1.17%
----- -----
Total ............................. $49.1 0.52% $99.3 1.26%
===== =====

The improvement from 2004 was broad-based across segments. Excluding the
impact of the education lending acquisition, total net charge-offs were $49.1
million or 0.55% of finance receivables at March 31, 2005. The prior year
included $26.0 million (7.16% of related finance receivables) of net charge-offs
related to telecommunication and liquidating portfolios. Net charge-offs for the
quarter ended March 31, 2004 on the "core" portfolios were $99.3 million
(1.26%). For the quarter ended March 31, 2005, there were no telecommunication
charge-offs and charge-offs related to liquidating portfolios were not
significant. Additional analysis by segment follows:

o Specialty Finance -- commercial charge-offs declined from 2004 due
to improved credit in the vendor programs and in international
operations.

o Specialty Finance -- consumer home lending charge-offs, while up in
amount, were down as a percentage of average finance receivables
from the prior year, reflecting portfolio growth, improved credit
performance and the addition of the student lending assets.

o Commercial Finance charge-off improvement was driven by a
significant decline in Business Credit charge-offs. Factoring
charge-offs were modestly above the prior year.

o Equipment Finance charge-off improvement continued in the first
quarter of 2005, as current period charge-offs, both in amount and
percentage, were roughly one third of the 2004 levels (excluding
liquidating portfolios).

o Capital Finance charge-offs were below 2004 due to a project finance
write-off in the prior year.

Net charge-offs on a managed basis, including securitized receivables,
both in amount and as a percentage of average managed receivables, are shown in
the following table ($ in millions):

Quarters Ended
----------------------------------
March 31, 2005 March 31, 2004
-------------- --------------
Specialty Finance -- commercial ..... $29.7 0.92% $ 40.0 1.29%
Specialty Finance -- consumer ....... 16.5 0.76% 14.7 1.29%
----- ------
Total Specialty Finance Group ..... 46.2 0.86% 54.7 1.29%
----- ------
Commercial Finance .................. 11.4 0.37% 26.4 0.91%
Equipment Finance ................... 12.4 0.57% 41.6 1.78%
Capital Finance ..................... 0.4 0.06% 7.9 1.16%
----- ------
Total Commercial Finance Group .... 24.2 0.41% 75.9 1.28%
----- ------
Total ............................. $70.4 0.62% $130.6 1.29%
===== ======

The previously discussed trends in owned portfolio charge-offs were the
primary cause of fluctuations in charge-offs on a managed basis.

Past Due Loans and Non-performing Assets

The following table sets forth certain information concerning our past due
(sixty days or more) and non-performing assets and the related percentages of
finance receivables ($ in millions):

March 31, 2005 December 31, 2004
-------------- -----------------
Past due accounts:
Specialty Finance -- commercial ..... $278.5 3.15% $283.3 3.22%
Specialty Finance -- consumer ....... 239.8 2.40% 116.4 2.27%
------ ------
Total Specialty Finance Group ..... 518.3 2.75% 399.7 2.87%
------ ------
Commercial Finance .................. 124.5 0.93% 124.7 1.06%
Equipment Finance ................... 52.9 0.87% 50.1 0.79%
Capital Finance ..................... 27.4 0.97% 33.5 1.13%
------ ------
Total Commercial Finance Group .... 204.8 0.92% 208.3 0.99%
------ ------
Total ............................. $723.1 1.76% $608.0 1.73%
====== ======

March 31, 2005 December 31, 2004
-------------- -----------------
Non-performing accounts:
Specialty Finance -- commercial .... $172.2 1.95% $165.9 1.88%
Specialty Finance -- consumer ...... 125.0 1.25% 119.3 2.32%
------ ------
Total Specialty Finance Group .... 297.2 1.58% 285.2 2.05%
------ ------
Commercial Finance ................. 110.0 0.82% 112.1 0.95%
Equipment Finance(1) ............... 102.2 1.67% 131.2 2.06%
Capital Finance .................... 18.9 0.67% 11.1 0.38%
------ ------
Total Commercial Finance Group ... 231.1 1.03% 254.4 1.21%
------ ------
Total ............................ $528.3 1.28% $539.6 1.54%
====== ======
Non-accrual loans ..................... $464.0 $458.4
Repossessed assets .................... 64.3 81.2
------ ------
Total non-performing accounts .... $528.3 $539.6
====== ======

--------------------------------------------------------------------------------
(1) Equipment Finance non-performing assets include accounts that are less
than sixty days past due.

Delinquency levels increased during the quarter primarily due to the
education lending acquisition, as excluding these assets, delinquency was $611
million (1.66%) at March 31, 2005. Although delinquency is higher in this
portfolio, this metric is not indicative of ultimate loss, given the U.S.
government guarantee of these loans. Additional analysis follows:

o Specialty Finance -- commercial delinquency was essentially
unchanged from the prior quarter, as a modest increase in small
business lending was offset by a decline in major vendor past dues.

o Specialty Finance -- consumer delinquency excluding education
lending receivables was $127 million (2.24%), versus $116 million
(2.27%) last quarter, reflecting the continued home lending growth.

o Commercial Finance past due amounts were flat in amount with the
fourth quarter of 2004, but down in percentage due to factoring
growth.

o Equipment Finance and Capital Finance delinquencies remained at the
relative low year end 2004 levels.

Similarly, non-performing assets remained at the low fourth quarter 2004
levels, and the percentage trends were impacted by the education lending
acquisition, which had no non-performing accounts at March 31, 2005. The greater
improvement in Equipment Finance non-performing assets (in relation to
delinquency) reflected a decline in repossessed corporate / business aircraft.

Managed past due loans in dollar amount and as a percentage of managed
financial assets are shown in the table below ($ in millions):

March 31, 2005 December 31, 2004
-------------- -----------------
Managed past due accounts:
Specialty Finance -- commercial ..... $371.0 2.70% $402.1 2.82%
Specialty Finance -- consumer ....... 343.7 3.00% 227.8 3.45%
------ ------
Total Specialty Finance Group ..... 714.7 2.83% 629.9 3.02%
------ ------
Commercial Finance .................. 124.5 0.93% 124.7 1.06%
Equipment Finance ................... 81.6 0.92% 90.3 0.96%
Capital Finance ..................... 27.4 0.97% 33.5 1.13%
------ ------
Total Commercial Finance Group .... 233.5 0.93% 248.5 1.03%
------ ------
Total ............................. $948.2 1.88% $878.4 1.95%
====== ======

The trends in the table above largely reflect the previously discussed
fluctuations in the owned portfolios.

Salaries and General Operating Expenses

The efficiency ratio and the ratio of salaries and general operating
expenses to average managed assets ("AMA") are summarized in the following table
($ in millions):

Quarters Ended
March 31,
-------------------------
2005 2004
--------- ---------
(Restated)
Salaries and employee benefits ................. $ 169.3 $ 145.4
Other general operating expenses ............... 94.7 94.6
--------- ---------
Salaries and general operating expenses ........ $ 264.0 $ 240.0
========= =========
Efficiency ratio(1) ............................ 39.1% 40.4%
Salaries and general operating expenses
as a percentage of AMA(2) ................... 2.03% 2.08%
Average Managed Assets ......................... $51,953.5 $46,104.0

--------------------------------------------------------------------------------
(1) Efficiency ratio is the ratio of salaries and general operating expenses
to operating margin, excluding the provision for credit losses. Excluding
the gains on derivatives, the efficiency ratio was 40.8% for the quarter
ended March 31, 2005.

(2) "AMA" means average managed assets, which is average earning assets plus
the average of finance receivables previously securitized and still
managed by us.

Salaries and general operating expenses for the quarter ended March 31,
2005 increased from 2004 due to incremental salaries and other operating
expenses related to recent acquisitions, as well as higher incentive-based costs
(driven primarily by higher restricted stock awards), consistent with the
improved volume, fees and profitability. Excluding the education lending
acquisition, operating expenses were $257.0 million and the efficiency ratio was
38.0% for the quarter ended March 31, 2005.

Personnel totaled approximately 6,130 at March 31, 2005, versus 5,860 last
quarter and 5,795 last year. The increase during the quarter was largely due to
the education lending acquisition.

Improvement in the efficiency ratio remains one of management's primary
goals for 2005 and several initiatives are underway to reduce costs, including
system consolidations and process efficiency improvements. We have the capacity
to grow assets without commensurate expense increases, and we expect
compliance-related expenses to decline from 2004. We anticipate reinvesting some
of these savings in sales and growth initiatives.

During the first quarter of 2005, we reclassified certain aerospace and
rail maintenance costs ($11.7 million and $7.3 million for 2005 and 2004) from
operating expense to lease margin to align public reporting with our internal
business measure. Prior period balances have been conformed to the current
presentation.

Income Taxes

The effective tax rate differs from the U.S. Federal tax rate of 35%
primarily due to state and local income taxes, the domestic and international
geographic distribution of taxable income and corresponding foreign income
taxes, as well as differences between book and tax treatment of certain items.

The effective tax rate was 37.6% and 39.0% for the quarters ended March
31, 2005 and 2004. The reduction in the 2005 effective tax rate was primarily
due to increased profitability in lower-taxed international operations,
including the placement of certain aerospace assets in Ireland. The increased
profitability from the international businesses resulted from our initiative to
grow our international profitability via improved platform efficiency coupled
with asset growth. In addition, certain provisions of the American Jobs Creation
Act of 2004 provide favorable treatment for certain aircraft leasing operations
conducted offshore. During the quarter, we initiated actions to transfer 15
commercial jets to, and place future scheduled aircraft deliveries in, Ireland.
We anticipate transferring approximately 20 to 30 additional aerospace assets
during the remainder of the year. These initiatives, as well as other
opportunities that we are evaluating, could result in an effective tax rate of
36% or lower for the year 2005.

At March 31, 2005, CIT had U.S. federal net operating losses of
approximately $2.0 billion, which expire in various years beginning in 2011. In
addition, CIT has various state net operating losses that will expire in various
years beginning in 2005. Federal and state operating losses may be subject to
annual use limitations under section 382 of the Internal Revenue Code of 1986,
as amended, and other limitations under certain state laws. Management believes
that CIT will have sufficient taxable income in future years and can avail
itself of tax planning strategies in order to fully utilize these federal
losses. Accordingly, we do not believe a valuation allowance is required with
respect to these federal net operating losses. As of March 31, 2005, based on
management's assessment as to realizability, the net deferred tax liability
includes a valuation allowance of approximately $7.4 million relating to state
net operating losses.

CIT has open tax years in the U.S., Canada and other jurisdictions that
are currently under examination by the applicable taxing authorities, and
certain tax years that may in the future be subject to examination. Management
periodically evaluates the adequacy of our related tax reserves, taking into
account our open tax return positions, tax assessments received, tax law changes
and third party indemnifications. We believe that our tax reserves are
appropriate. The final determination of tax audits could affect our tax
reserves.

See Item 4. Controls and Procedures for a discussion of internal controls
relating to income taxes.

Financing and Leasing Assets

The managed assets of our business segments and the corresponding
strategic business units are presented in the following table ($ in millions):

March 31, December 31, Percentage
2005 2004 Change
---------- ------------ ----------
(Restated)

Specialty Finance -- commercial Segment
Finance receivables ................................... $ 8,836.6 $ 8,805.7 0.4%
Operating lease equipment, net ........................ 1,030.9 1,078.7 (4.4)%
Finance receivables held for sale ..................... 1,053.6 1,288.4 (18.2)%
--------- ---------
Owned assets ....................................... 10,921.1 11,172.8 (2.2)%
Finance receivables securitized and managed by CIT .... 3,870.2 4,165.5 (7.1)%
--------- ---------
Managed assets ........................................ 14,791.3 15,338.3 (3.6)%
--------- ---------
Specialty Finance -- consumer Segment
Finance receivables -- home lending ................... 5,423.5 4,896.8 10.8%
Finance receivables -- education lending .............. 4,321.9 -- N/A
Finance receivables -- other .......................... 255.8 236.0 8.4%
Finance receivables held for sale ..................... 335.9 241.7 39.0%
--------- ---------
Owned assets ....................................... 10,337.1 5,374.5 92.3%
Home lending receivables securitized
and managed by CIT ................................. 1,131.5 1,228.7 (7.9)%
--------- ---------
Managed assets ........................................ 11,468.6 6,603.2 73.7%
--------- ---------
Commercial Finance Segment
Commercial Services
Finance receivables ................................. 7,184.9 6,204.1 15.8%
Business Credit
Finance receivables ................................. 6,221.3 5,576.3 11.6%
--------- ---------
Owned assets ....................................... 13,406.2 11,780.4 13.8%
--------- ---------
Equipment Finance Segment
Finance receivables ................................... 6,105.1 6,373.1 (4.2)%
Operating lease equipment, net ........................ 428.1 440.6 (2.8)%
Finance receivables held for sale ..................... 91.8 110.7 (17.1)%
--------- ---------
Owned assets ....................................... 6,625.0 6,924.4 (4.3)%
Finance receivables securitized and managed by CIT .... 2,714.9 2,915.5 (6.9)%
--------- ---------
Managed assets ........................................ 9,339.9 9,839.9 (5.1)%
--------- ---------
Capital Finance Segment
Finance receivables ................................... 2,831.0 2,956.2 (4.2)%
Operating lease equipment, net ........................ 6,854.1 6,771.6 1.2%
--------- ---------
Owned assets ....................................... 9,685.1 9,727.8 (0.4)%
--------- ---------
Other -- Equity Investments ........................... 101.8 181.0 (43.8)%
--------- ---------
Totals
Finance receivables ................................... $41,180.1 $35,048.2 17.5%
Operating lease equipment, net ........................ 8,313.1 8,290.9 0.3%
Finance receivables held for sale ..................... 1,481.3 1,640.8 (9.7)%
--------- ---------
Financing and leasing assets excluding
equity investments ................................. 50,974.5 44,979.9 13.3%
Equity investments (included in other assets) ......... 101.8 181.0 (43.8)%
--------- ---------
Owned assets ....................................... 51,076.3 45,160.9 13.1%
Finance receivables securitized and managed by CIT .... 7,716.6 8,309.7 (7.1)%
--------- ---------
Managed assets ..................................... $58,792.9 $53,470.6 10.0%
========= =========

The quarterly activity includes the following:

o Specialty Finance -- commercial declined due to a sale of over $300
million of liquidating manufactured housing assets and
securitization of assets.

o Specialty Finance -- consumer increased reflecting the acquisition
of EDLG and the continued strength in the home equity lending market
where originations of $577 million and purchases of $546 million
were partially offset by sales of $251 million to balance certain
portfolio demographics and risk characteristics.

o Commercial Finance increased, reflecting the purchase of
substantially all of the factoring assets of Receivables Capital
Management, a division of SunTrust. The acquired gross receivables
approximate $864 million with acquired net assets of approximately
$238 million (net of credit balances of factoring clients). The
increase in Business Credit (asset based lending) reflects the
transfer of approximately $400 million of sports and gaming
portfolio assets from Equipment Finance on top of a strong quarter
of new business originations.

o Equipment Finance was up slightly excluding the asset transfer on
lower first quarter volume (from the fourth quarter of 2004), which
is typical of business seasonality for this segment.

o Capital Finance funded three new aircraft during the quarter, but
this asset growth was offset by a high rate of risk management
related syndication activity.

Business Volumes

The following table presents new business origination volume (excluding
factoring) by segment ($ in millions):

Quarters Ended
March 31,
----------------------
2005 2004
-------- --------
Specialty Finance -- commercial ............. $2,337.5 $2,518.0
Specialty Finance -- consumer ............... 1,362.5 1,057.9
Commercial Finance (excluding factoring) .... 678.6 556.2
Equipment Finance ........................... 988.0 922.1
Capital Finance ............................. 334.1 162.6
-------- --------
Total new business volume ................ $5,700.7 $5,216.8
======== ========

o Specialty Finance -- commercial lower volumes were primarily in the
vendor business.

o Specialty Finance -- consumer volume increase included strong
origination volume and bulk receivable acquisitions in home lending.
The current balance also includes $170.7 million of volume from
EDLG.

o Commercial Finance's asset based lending activity posted strong
volumes, which increased asset levels in Business Credit, as noted
above.

o Equipment Finance volume is seasonally weak in the first quarter,
but did improve 7% from last year.

o Capital Finance year-over-year volume increase reflected additional
aircraft funding as well as several structured transactions.

Non-strategic Business Lines

The remaining non-strategic business lines totaled $286.8 million,
consisting primarily of manufactured housing ($249.1 million), certain
owner-operator trucking receivables and franchise finance.

In addition, we have $101.8 million remaining in our venture capital
portfolio at March 31, 2005, down from $181.0 million at December 31, 2004, as
we closed approximately $75 million in private equity fund sales pursuant to the
fourth quarter 2004 agreement to sell the majority of the private equity fund
portfolio. The amount remaining at March 31, 2005 consists of private equity
funds ($77.1 million) and direct investments ($24.7 million). We had previously
ceased making new investments beyond our existing commitments, and during the
second quarter of 2004, we sold a significant portion of the direct investment
portfolio. We expect to close the sale of the majority

of the remaining private equity funds in 2005, which would leave us with less
than $30 million in total venture capital investments to liquidate on a
systematic, longer-term basis. We may consider additional opportunities for more
rapid liquidation of non-strategic assets to the extent available. These actions
are consistent with our ongoing initiative to re-deploy capital in higher return
businesses.

Concentrations

Ten Largest Accounts

Our ten largest financing and leasing asset accounts in the aggregate
represented 4.8% of our total financing and leasing assets at March 31, 2005
(the largest account being less than 1.0%), compared to 5.3% at December 31,
2004. The decline is due to the addition of the education lending receivables.

Operating Leases

The following table summarizes the total operating lease portfolio by
segment ($ in millions):

March 31, December 31,
2005 2004
--------- ------------
Capital Finance -- Aerospace ......... $4,512.2 $4,461.0
Capital Finance -- Rail and Other .... 2,341.9 2,310.6
Specialty Finance .................... 1,030.9 1,078.7
Equipment Finance .................... 428.1 440.6
-------- --------
Total ............................. $8,313.1 $8,290.9
======== ========

The increases in the Capital Finance aerospace portfolio reflected
deliveries of three new commercial aircraft, partially offset by the disposition
of seven aircraft.

Management strives to maximize the profitability of the lease equipment
portfolio by balancing equipment utilization levels with market rental rates and
lease terms. Equipment not subject to lease agreements totaled $111.5 million
and $118.3 million at March 31, 2005 and December 31, 2004, respectively.
Weakness in the commercial airline industry could adversely impact prospective
rental and utilization rates.

Leveraged Leases

The major components of net investments in leveraged leases include:
commercial aerospace transactions, including tax-optimized leveraged leases,
which generally have increased risk of loss in default for lessors in relation
to conventional lease structures due to additional leverage and the third party
lender priority recourse to the equipment in these transactions, project finance
transactions, primarily in the power and utility sectors, and rail transactions.
The balances are as follows ($ in millions):

March 31, December 31,
2005 2004
--------- ------------
Commercial aerospace -- non-tax optimized .... $ 337.2 $ 336.6
Commercial aerospace -- tax optimized ........ 218.0 221.0
Project finance .............................. 342.8 334.9
Rail ......................................... 237.7 233.9
Other ........................................ 121.2 115.4
-------- --------
Total leveraged lease transactions ......... $1,256.9 $1,241.8
======== ========
As a percentage of finance receivables ....... 3.1% 3.5%
======== ========

Joint Venture Relationships

Our strategic relationships with industry-leading equipment vendors are a
significant origination channel for our financing and leasing activities. These
vendor alliances include traditional vendor finance programs, joint ventures and
profit sharing structures. Our vendor programs with Dell, Snap-on and Avaya are
among our largest alliances. The agreements with Dell grants Dell the option to
purchase CIT's 30% interest in Dell Financial Services L.P. ("DFS") in February
2008 and extends CIT's right to purchase a percentage of DFS's finance
receivables through January 2010. The joint venture agreement with Snap-on runs
until January 2006. The Avaya agreement, which relates to profit sharing on a
CIT direct origination program, extends through September 2006.

Our financing and leasing assets include amounts related to the Dell,
Snap-on and Avaya joint venture programs. These amounts include receivables
originated directly by CIT as well as receivables purchased from joint venture
entities. The asset balances for these programs are as follows ($ in millions):

March 31, December 31,
2005 2004
--------- ------------
Owned Financing and Leasing Assets

Dell............................................................. $3,651.4 $3,389.4
Snap-on.......................................................... 1,081.4 1,114.7
Avaya............................................................ 567.0 620.7
Securitized Financing and Leasing Assets
Dell............................................................. $2,288.4 $2,489.2
Snap-on.......................................................... 61.4 64.8
Avaya............................................................ 582.8 599.6
Dell International Financing and Leasing Assets Included above
Dell -- owned.................................................... $1,492.9 $1,408.7
Dell -- securitized.............................................. 49.9 5.1

Returns relating to the joint venture relationships (i.e., net income as a
percentage of average managed assets) for 2005 were somewhat in excess of CIT's
consolidated returns. A significant reduction in origination volumes from any of
these alliances could have a material impact on our asset and net income levels.
For additional information regarding certain of our joint venture activities,
see Note 8 -- Certain Relationships and Related Transactions.

Home Lending Portfolio

The Specialty Finance -- consumer home lending portfolio totaled $5.6
billion (owned) and $6.7 billion (managed) at March 31, 2005, representing 11.0%
and 11.4% of owned and managed assets, respectively. Selected statistics for our
managed home lending portfolio are as follows:

o 92% first mortgages.

o Average loan size of approximately $103.9 thousand.

o Top 5 state concentrations (California, Texas, Florida, Ohio, and
Pennsylvania) represented an aggregate 44% of the managed portfolio.

o 54% fixed-rate with an average loan-to-value of 76% and an average
FICO score of 636.

o Delinquencies (sixty days or more) were 3.41% and 3.59% at March 31,
2005 and December 31, 2004.

o Charge-offs were 0.95% and 1.27% for the quarters ended March 31,
2005 and 2004.

Education Lending Portfolio

The Specialty Finance -- consumer education lending portfolio totaled $4.4
billion at March 31, 2005, representing 8.7% of owned and 7.5% of managed
assets. Selected statistics for our education lending portfolio as of March 31,
2005 are as follows:

Finance receivables by product type (Restated)
Consolidation loans ......................................... $3,996.9
Other U.S. Government guaranteed loans ...................... 424.6
Private (non-guaranteed) loans and other .................... 13.4
--------
Total .................................................... $4,434.9
========

o Delinquencies (sixty days or more) were $112.6 million, 2.60% of
finance receivables.

o Top 5 state concentrations (California, New York, Pennsylvania,
Texas, and Ohio) represented an aggregate 36% of the portfolio.

Geographic Composition

The following table summarizes significant state concentrations greater
than 5.0% and foreign concentrations in excess of 1.0% of our owned financing
and leasing portfolio assets. For each period presented, our managed asset
geographic composition did not differ significantly from our owned asset
geographic composition.

March 31, December 31,
2005 2004
--------- ------------
State
California ..................................... 10.6% 10.3%
Texas .......................................... 7.4% 7.8%
New York ....................................... 6.8% 6.8%
All other states ............................... 55.4% 52.8%
---- ----
Total U.S. ............................... 80.2% 77.7%
==== ====
Country
Canada ......................................... 4.9% 5.5%
England ........................................ 3.6% 3.9%
France ......................................... 1.1% 1.4%
Australia ...................................... 1.1% 1.3%
China .......................................... 1.1% 1.3%
Germany ........................................ 1.0% 1.2%
Mexico ......................................... 1.0% 1.1%
All other countries ............................ 6.0% 6.6%
---- ----
Total Outside U.S. ....................... 19.8% 22.3%
==== ====

Industry Composition

The following discussions provide information with respect to selected
industry compositions.

Aerospace

Our commercial and regional aerospace portfolios reside in the Capital
Finance segment.

The commercial aircraft all comply with Stage III noise regulations. The
following table summarizes the composition of the commercial aerospace portfolio
($ in millions):

March 31, 2005 December 31, 2004
------------------- --------------------
Net Net
Investment Number Investment Number
---------- ------ ---------- ------
By Region:
Europe ...................... $2,150.5 70 $2,160.0 72
North America ............... 1,114.6 62 1,057.7 66
Asia Pacific ................ 1,257.1 48 1,242.4 46
Latin America ............... 598.7 24 611.3 25
Africa / Middle East ........ 65.6 4 54.2 3
-------- --- -------- ---
Total .......................... $5,186.5 208 $5,125.6 212
======== === ======== ===
By Manufacturer:
Boeing ...................... $2,572.5 128 $2,558.8 133
Airbus ...................... 2,559.2 71 2,536.9 70
Other ....................... 54.8 9 29.9 9
-------- --- -------- ---
Total .......................... $5,186.5 208 $5,125.6 212
======== === ======== ===
By Body Type (1):
Narrow body ................. $3,956.5 164 $3,894.9 168
Intermediate ................ 828.2 18 842.7 18
Wide body ................... 347.0 17 358.1 17
Other ....................... 54.8 9 29.9 9
-------- --- -------- ---
Total .......................... $5,186.5 208 $5,125.6 212
======== === ======== ===
By Product:
Operating lease ............. $4,394.2 162 $4,324.6 167
Leverage lease (other) ...... 337.2 12 336.6 12
Leverage lease
(tax optimized) ........... 218.0 9 221.0 9
Capital lease ............... 132.7 6 137.4 6
Loan ........................ 104.4 19 106.0 18
-------- --- -------- ---
Total .......................... $5,186.5 208 $5,125.6 212
======== === ======== ===
Other Data:
Off-lease aircraft ............. 1 2
Number of accounts ............. 94 92
Weighted average age
of fleet (years) ............. 7 6
Largest customer net
investment ................... $ 284.5 $ 286.4

----------
(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.

The top five commercial aerospace exposures totaled $1,067.2 million at
March 31, 2005. All top five are to carriers outside of the U.S. The largest
exposure to a U.S. carrier at March 31, 2005 was $163.0 million. Future revenues
and aircraft values could be impacted by the actions of the carriers,
management's actions with respect to re-marketing the aircraft, airline industry
performance and aircraft utilization levels.

The regional aircraft portfolio at March 31, 2005 consisted of 121 planes
and a net investment of $292.0 million. The carriers are primarily located in
North America and Europe. Operating leases account for about 40% of the
portfolio, with the remainder capital leases or loans. At December 31, 2004, the
portfolio consisted of 121 planes with a net investment of $302.6 million.

Commercial airline equipment utilization was high at March 31, 2005, with
only one aircraft off-lease (book value of $7.1 million) which demonstrates our
ability to place aircraft. Despite some recent improvement in rental rates,
current placements remain at compressed rental rates, which reflects current
market conditions. Generally, leases are being written for terms between three
and five years. Within the regional aircraft portfolio at March 31, 2005, there
were 7 aircraft off-lease with a total book value of approximately $18.4
million.

Our aerospace assets include both operating leases and capital leases.
Management monitors economic conditions affecting equipment values, trends in
equipment values, and periodically obtains third party appraisals of commercial
aerospace equipment, which include projected rental rates. We adjust the
depreciation schedules of commercial aerospace equipment on operating leases or
residual values underlying capital leases when required. Aerospace assets are
reviewed for impairment annually, or more often should events or circumstances
warrant. An aerospace asset is defined as impaired when the expected
undiscounted cash flow over its expected remaining life is less than its book
value. Both historical information and current economic trends are factored into
the assumptions and analyses used when determining the expected undiscounted
cash flow. Included among these assumptions are the following:

o Lease terms

o Remaining life of the asset

o Lease rates supplied by independent appraisers

o Remarketing prospects

o Maintenance costs

See table in "Risk Management" section for additional information
regarding commitments to purchase additional aircraft. See Note 10 --
Commitments and Contingencies for additional information regarding commitments
to purchase additional aircraft. See Note 4 -- Concentrations for further
discussion on concentrations.

Risk Management

Our risk management process is described in more detail in our 2004 Annual
Report on Form 10-K. Our processes remained substantially the same as outlined
in our 2004 Form 10-K.

Interest Rate Risk Management -- We monitor our interest rate sensitivity
on a regular basis by analyzing the impact of interest rate changes upon the
financial performance of the business. We also consider factors such as the
strength of the economy, customer prepayment behavior and re-pricing
characteristics of our assets and liabilities.

We evaluate and monitor various risk metrics:

o Margin at Risk (MAR), which measures the impact of changing interest
rates upon interest income over the subsequent twelve months. See
Net Finance Margin section for discussion and results of this
simulation.

o Value at Risk (VAR), which measures the net economic value of assets
by assessing the duration of assets and liabilities.

The following table summarizes the composition of our interest rate
sensitive assets and liabilities before and after swaps:

Before Swaps After Swaps
----------------- -----------------
Fixed Floating Fixed Floating
rate rate rate rate
----- -------- ----- --------
March 31, 2005
Assets ............................ 47% 53% 47% 53%
Liabilities (Restated)............. 53% 47% 41% 59%

December 31, 2004
Assets ............................ 55% 45% 55% 45%
Liabilities ....................... 60% 40% 46% 54%

Total interest sensitive assets were $47.2 billion and $41.7 billion at
March 31, 2005 and December 31, 2004. Total interest sensitive liabilities were
$41.5 billion and $35.9 billion at March 31, 2005 and December 31, 2004. The
addition of the education lending receivables and related debt during the
quarter increased the proportions of floating-rate assets and liabilities at
March 31, 2005, as compared to December 31, 2004.

Foreign Exchange Risk Management -- To the extent local foreign currency
borrowings are not raised, CIT utilizes foreign currency exchange forward
contracts to hedge or mitigate currency risk underlying foreign currency loans
to subsidiaries and the net investments in foreign operations. These contracts
are designated as foreign currency cash flow hedges or net investment hedges and
changes in fair value of these contracts are recorded in other comprehensive
income along with the translation gains and losses on the underlying hedged
items. Translation gains and losses of the underlying foreign net investment, as
well as offsetting derivative gains and losses on designated hedges, are
reflected in other comprehensive income in the Consolidated Balance Sheet. CIT
also utilizes cross currency swaps to hedge currency risk underlying foreign
currency debt and selected foreign currency assets. These swaps are designated
as foreign currency cash flow hedges or foreign currency fair value hedges and
changes in fair value of these contracts are recorded in other comprehensive
income (for cash flow hedges), or effectively as a basis adjustment (including
the impact of the offsetting adjustment to the carrying value of the hedged
item) to the hedged item (for fair value hedges) along with the transaction
gains and losses on the underlying hedged items. CIT also has certain
cross-currency swaps which economically hedge exposures, but don't qualify for
hedge accounting.

Liquidity Risk Management and Capital Resources -- Liquidity risk refers to the
risk of being unable to meet potential cash outflows promptly and
cost-effectively. Factors that could cause such a risk to arise might be a
disruption of a securities market or other source of funds. We actively manage
and mitigate liquidity risk by maintaining diversified sources of funding and
committed alternate sources of funding, and we maintain and periodically review
a contingency funding plan to be implemented in the event of any form of market
disruption. Additionally, we target our debt issuance strategy to achieve a
maturity pattern designed to reduce refinancing risk. The primary funding
sources are commercial paper (U.S., Canada and Australia), long-term debt (U.S.
and International) and asset-backed securities (U.S. and Canada).

Outstanding commercial paper totaled $4.0 billion at March 31, 2005,
compared with $4.2 billion at December 31, 2004. Our targeted U.S. program size
remains at $5.0 billion with modest programs aggregating approximately $500
million to be maintained in Canada and Australia. Our goal is to maintain
committed bank lines in excess of aggregate outstanding commercial paper. We
have aggregate bank facilities of $6.3 billion in multi-year facilities. In
addition, we have a separate 364-day unsecured committed line of credit of $154
million, which supports the Australian commercial paper program.

We maintain registration statements with the Securities and Exchange
Commission ("SEC") covering debt securities that we may sell in the future. At
March 31, 2005, our registration statements had $9.2 billion of registered, but
unissued, securities available, under which we may issue debt securities and
other capital market securities. Term-debt issued during 2005 totaled $3.5
billion: $1.3 billion in variable-rate medium-term notes and $2.2 billion in
fixed-rate notes. Included with the fixed rate notes are issuances under a
retail note program in which we offer fixed-rate senior, unsecured notes
utilizing numerous broker-dealers for placement to retail accounts. During the
quarter, we issued $0.1 billion under this program having maturities of between
2 and 10 years.

To further strengthen our funding capabilities, we maintain committed
asset backed facilities and shelf registration statements, which cover a range
of assets from equipment to consumer home lending receivables and trade accounts
receivable. While these are predominately in the U.S., we also maintain
facilities for Canadian domiciled assets. As of March 31, 2005, we had
approximately $4.8 billion of availability in our committed asset-backed
facilities and $5.6 billion of registered, but unissued, securities available
under public shelf registration statements relating to our asset-backed
securitization program. In addition, we also maintain facilities in connection
with our education lending assets; a term shelf with an undrawn capacity of $1.0
billion and an available committed asset-backed facility of $0.4 billion.

Our committed asset-backed commercial paper programs in the U.S. and
Canada provide a substantial source of alternate liquidity. We also maintain
committed bank lines of credit to provide backstop support of commercial paper
borrowings and local bank lines to support our international operations.
Additional sources of liquidity are loan and lease payments from customers,
whole-loan asset sales and loan syndications.

We also target and monitor certain liquidity metrics to ensure both a
balanced liability profile and adequate alternate liquidity availability as
outlined in the following table.

March 31, December 31,
Liquidity Measurement Current Target 2005 2004
--------------------- -------------- --------- ------------
Commercial paper to total debt......... Maximum of 15% 9% 11%
Short-term debt to total debt.......... Maximum of 45% 24% 31%
Bank lines to commercial paper......... Minimum of 100% 154% 150%
Aggregate alternate liquidity to
short-term debt*.................... Minimum of 75% 117% 108%

--------------------------------------------------------------------------------
* Aggregate alternative liquidity includes available bank facilities,
asset-backed facilities and cash.

Our credit ratings are an important factor in meeting our earnings and
margin targets as better ratings generally correlate to lower cost of funds (see
Net Finance Margin, interest expense discussion). The following credit ratings
have been in place since September 30, 2002:

Short-Term Long-Term Outlook
---------- --------- -------
Moody's ............................... P-1 A2 Stable
Standard & Poor's ..................... A-1 A Stable
Fitch ................................. F1 A Stable

The credit ratings stated above are not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal by the assigning
rating organization. Each rating should be evaluated independently of any other
rating.

We have certain covenants contained in our legal documents that govern our
funding sources. The most significant covenant in CIT's indentures and credit
agreements is a minimum net worth requirement of $4.0 billion.

The following tables summarize significant contractual obligations and
projected cash receipts, and contractual commitments at March 31, 2005 ($ in
millions):

Payments and Collections by Period(3)
------------------------------------------------------------------------------
Remaining
Total 2005 2006 2007 2008 2009+
--------- --------- --------- --------- --------- ---------
(Restated) (Restated) (Restated)

Commercial paper ................................ $ 3,963.0 $ 3,963.0 $ -- $ -- $ -- $ --
Variable-rate senior unsecured notes ............ 11,473.1 1,786.9 5,228.5 3,181.1 239.1 1,037.5
Fixed-rate senior unsecured notes ............... 22,165.6 3,314.0 2,703.6 3,881.2 1,753.2 10,513.6
Non-recourse, secured borrowings ................ 4,638.9 1,011.2 -- -- 11.9 3,615.8
Preferred capital security ...................... 253.3 1.2 1.7 0.4 -- 250.0
Lease rental expense ............................ 170.8 45.3 41.8 33.9 28.4 21.4
--------- --------- --------- --------- --------- ---------
Total contractual obligations ................ 42,664.7 10,121.6 7,975.6 7,096.6 2,032.6 15,438.3
--------- --------- --------- --------- --------- ---------
Finance receivables (1) ......................... 41,180.1 11,607.3 5,163.7 3,972.1 2,789.0 17,648.0
Operating lease rental income ................... 3,078.3 846.6 821.4 513.1 341.0 556.2
Finance receivables held for sale (2) ........... 1,481.3 1,481.3 -- -- -- --
Cash -- current balance ......................... 1,638.1 1,638.1 -- -- -- --
Retained interest in securitizations
and other investments ........................ 1,123.2 510.1 341.8 123.5 72.8 75.0
--------- --------- --------- --------- --------- ---------
Total projected cash receipts ................ 48,501.0 16,083.4 6,326.9 4,608.7 3,202.8 18,279.2
--------- --------- --------- --------- --------- ---------
Net projected cash inflow (outflow) ............. $ 5,836.3 $ 5,961.8 $(1,648.7) $(2,487.9) $ 1,170.2 $ 2,840.9
========= ========= ========= ========= ========= =========

----------
(1) Based upon contractual cash flows; actual amounts could differ due to
prepayments, extensions of credit, charge-offs and other factors.

(2) Based upon management's intent to sell rather than the contractual
maturities of underlying assets.

(3) Projected proceeds from the sale of operating lease equipment, interest
revenue from finance receivables, debt interest expense and other items
are excluded. Obligations relating to postretirement programs are also
excluded.

Commitment Expiration by Period
---------------------------------------------------------------------
Remaining
Total 2005 2006 2007 2008 2009+
--------- -------- -------- -------- -------- --------

Credit extensions ............................. $ 9,030.7 $1,180.6 $ 972.4 $ 863.8 $1,068.4 $4,945.5
Aircraft purchases ............................ 2,028.0 774.0 910.0 344.0 -- --
Letters of credit ............................. 1,136.2 1,099.0 36.8 0.1 0.3 --
Sale-leaseback payments ....................... 473.3 8.8 31.0 31.0 31.0 371.5
Manufacturer purchase commitments ............. 470.2 470.2 -- -- -- --
Venture capital commitments ................... 36.6 0.5 -- -- 2.9 33.2
Guarantees .................................... 95.0 82.8 -- -- 10.5 1.7
Acceptances ................................... 20.3 20.3 -- -- -- --
--------- -------- -------- -------- -------- --------
Total contractual commitments .............. $13,290.3 $3,636.2 $1,950.2 $1,238.9 $1,113.1 $5,351.9
========= ======== ======== ======== ======== ========

Internal Controls

The Internal Controls Committee is responsible for monitoring and
improving internal controls and overseeing the internal controls attestation
mandated by Section 404 of the Sarbanes-Oxley Act of 2002 ("SARBOX"), for which
the implementation year was 2004. The committee, which is chaired by the
Controller, includes the CFO, the Director of Internal Audit and other senior
executives in finance, legal, risk management and information technology.

As discussed in "Net Finance Margin" we recorded a charge during the
quarter ended March 31, 2005 relating to third-party servicing errors. During
the quarter ended March 31, 2005, and subsequent to March 31, 2005 in
conjunction with the preparation of the financial statements, we received and
reviewed the servicer's internal control enhancements and remediation plan. The
servicer's remediation plan includes improved reconciliation procedures and
additional systems change controls. We also initiated enhancements to our
analytical review controls with respect to information provided to us by the
servicer.

See Item 4. Controls and Procedures for further discussion.

Off-Balance Sheet Arrangements

Securitization Program

We fund asset originations on our balance sheet by accessing various
sectors of the capital markets, including the term debt and commercial paper
markets. In an effort to broaden funding sources and provide an additional
source of liquidity, we use an array of securitization programs, including both
asset-backed commercial paper and term structures, to access both the public and
private asset-backed securitization markets. Current products in these programs
include receivables and leases secured by equipment as well as consumer loans
secured by residential real estate. The following table summarizes data relating
to our securitization balance and activity ($ in millions):

March 31, December 31,
2005 2004
-------- -----------
Securitized Assets:
Specialty Finance -- commercial ................. $3,870.2 $4,165.5
Specialty Finance -- home lending ............... 1,131.5 1,228.7
Equipment Finance ............................... 2,714.9 2,915.5
-------- --------
Total securitized assets ..................... $7,716.6 $8,309.7
======== ========
Securitized assets as a % of managed assets ..... 13.1% 15.5%
======== ========

Quarters Ended
March 31,
---------------------
2005 2004
-------- --------
Volume Securitized:
Specialty Finance -- commercial ................. $675.1 $ 963.3
Equipment Finance ............................... 253.9 273.1
------ --------
Total volume securitized ..................... $929.0 $1,236.4
====== ========

Under our typical asset-backed securitization, we sell a "pool" of secured
loans or leases to a special-purpose entity ("SPE"), typically a trust. SPEs are
used to achieve "true sale" requirements for these transactions in accordance
with SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities." The special-purpose entity, in turn, issues
certificates and/or notes that are collateralized by the pool and entitle the
holders thereof to participate in certain pool cash flows. Accordingly, CIT has
no legal obligations to repay the securities in the event of a default by the
SPE. CIT retains the servicing rights of the securitized contracts, for which we
earn a servicing fee. We also participate in certain "residual" cash flows (cash
flows after payment of principal and interest to certificate and/or note
holders, servicing fees and other credit-related disbursements). At the date of
securitization, we estimate the "residual" cash flows to be received over the
life of the securitization, record the present value of these cash flows as a
retained interest in the securitization (retained interests can include bonds
issued by the special-purpose entity, cash reserve accounts on deposit in the
special-purpose entity or interest only receivables) and typically recognize a
gain. Assets securitized are shown in our managed assets and our capitalization
ratios on a managed basis.

In estimating residual cash flows and the value of the retained interests,
we make a variety of financial assumptions, including pool credit losses,
prepayment speeds and discount rates. These assumptions are supported by both
our historical experience and anticipated trends relative to the particular
products securitized. Subsequent to recording the retained interests, we review
them quarterly for impairment based on estimated fair value. These reviews are
performed on a disaggregated basis. Fair values of retained interests are
estimated utilizing current pool demographics, actual note/certificate
outstandings, current and anticipated credit losses, prepayment speeds and
discount rates.

Our retained interests had a carrying value at March 31, 2005 of $1.1
billion. Retained interests are subject to credit and prepayment risk. As of
March 31, 2005, approximately 50% of our outstanding securitization pool
balances are in conduit structures. These assets are subject to the same credit
granting and monitoring processes which are described in the "Credit Risk
Management" section.

The key assumptions used in measuring the retained interests at the date
of securitization for transactions completed during 2005 were as follows:

Commercial Equipment
-----------------------
Specialty Equipment
Finance Finance
--------- ---------
Weighted average prepayment speed ............... 46.8% 12.0%
Weighted average expected credit losses ......... 0.52% 0.71%
Weighted average discount rate .................. 7.62% 9.00%
Weighted average life (in years) ................ 1.31 2.12

The key assumptions used in measuring the fair value of retained interests
in securitized assets at March 31, 2005 were as follows:

Commercial Equipment Home Lending
-------------------- and Recreational
Specialty Equipment Manufactured Vehicles
Finance Finance Housing and Boat
------- ------- ------- --------
Weighted average
prepayment speed ........... 32.1% 11.6% 25.9% 21.5%
Weighted average
expected credit losses ..... 1.06% 1.22% 1.49% 1.55%
Weighted average
discount rate .............. 7.87% 9.49% 13.09% 15.00%
Weighted average
life (in years) ............ 1.10 1.40 3.12 2.69

The education lending business, which was acquired in February 2005, is
funded largely with securitization structures that do not meet the accounting
requirements for sales treatment, and are therefore accounted for as secured
borrowings. Accordingly, the receivables and related debt are "on balance
sheet," and there are no gains on sale or retained interests in securitizations
related to these transactions. See disclosure in Item 1. Consolidated Financial
Statements, Note 1 -- Summary of Significant Accounting Policies.

Joint Venture Activities

We utilize joint ventures organized through distinct legal entities to
conduct financing activities with certain strategic vendor partners. Receivables
are originated by the joint venture and purchased by CIT. The vendor partner and
CIT jointly own these distinct legal entities, and there is no third-party debt
involved. These arrangements are accounted for using the equity method, with
profits and losses distributed according to the joint venture agreement. See
disclosure in Item 1. Consolidated Financial Statements, Note 8 -- Certain
Relationships and Related Transactions.

Capitalization

The following table presents information regarding our capital structure
($ in millions):

March 31, December 31,
2005 2004
---------- ------------
(Restated)
Commercial paper and term debt ............... $42,240.6 $37,471.0
--------- ---------
Preferred capital securities ................. 253.3 253.8
Stockholders' equity (1) ..................... 6,307.2 6,073.7
Goodwill and other intangible assets ......... (906.4) (596.5)
--------- ---------
Total tangible stockholders' equity
and preferred capital securities ........ 5,654.1 5,731.0
--------- ---------
Total tangible capitalization ................ $47,894.7 $43,202.0
========= =========
Tangible stockholders' equity (1)
and preferred capital
securities to managed assets .............. 9.62% 10.72%

--------------------------------------------------------------------------------
(1) Stockholders' equity excludes the impact of the accounting change for
derivative financial instruments described in Note 7 to the Consolidated
Financial Statements and certain unrealized gains or losses on retained
interests and investments, as these amounts are not necessarily indicative
of amounts that will be realized. See "Non-GAAP Financial Measurements."

The EDLG acquisition and factoring purchase increased goodwill and
acquired intangibles by approximately $317 million.

The preferred capital securities are 7.70% Preferred Capital Securities
issued in 1997 by CIT Capital Trust I, a wholly-owned subsidiary. CIT Capital
Trust I invested the proceeds of that issue in Junior Subordinated Debentures of
CIT having identical rates and payment dates. Preferred capital securities are
included in tangible equity in our leverage ratios. See "Non-GAAP Financial
Measurements" for additional information.

See "Liquidity Risk Management and Capital Resources" for discussion of
risks impacting our liquidity and capitalization.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires
management to use judgment in making estimates and assumptions that affect
reported amounts of assets and liabilities, the reported amounts of income and
expense during the reporting period and the disclosure of contingent assets and
liabilities at the date of the financial statements. We consider accounting
estimates relating to the following to be critical in applying our accounting
policies:

o Investments

o Charge-off of Finance Receivables

o Impaired Loans

o Reserve for Credit Losses

o Retained Interests in Securitizations

o Lease Residual Values

o Goodwill and Intangible Assets

o Income Tax Reserves and Deferred Income Taxes

There have been no significant changes to the methodologies and processes
used in developing estimates relating to these items from what is described in
our 2004 Annual Report on Form 10-K.

Statistical Data

The following table presents components of net income as a percentage of
AEA, along with other selected financial data ($ in millions):

Quarters Ended
March 31,
------------------------
2005 2004
---------- ----------
(Restated)
Finance income ..................................... 9.33% 9.73%
Interest expense ................................... 3.55% 3.23%
--------- ---------
Net finance income ................................. 5.78% 6.50%
Depreciation on operating lease equipment .......... 2.16% 2.56%
--------- ---------
Net finance margin ................................. 3.62% 3.94%
Provision for credit losses ........................ 0.41% 0.93%
--------- ---------
Net finance margin after provision for credit losses 3.21% 3.01%
Other revenue ...................................... 2.41% 2.50%
Gain (loss) on venture capital investments ......... 0.10% 0.01%
--------- ---------
Operating margin ................................... 5.72% 5.52%
Salaries and general operating expenses ............ 2.40% 2.60%
Gain on redemption of debt ......................... -- 0.45%
--------- ---------
Income before provision for income taxes ........... 3.32% 3.37%
Provision for income taxes ......................... (1.24)% (1.32)%
Minority interest, after tax ....................... (0.01)% --
--------- ---------
Net income ....................................... 2.07% 2.05%
========= =========
Average Earning Assets ............................. $44,083.4 $36,865.1
========= =========

Non-GAAP Financial Measurements

The U.S. Securities and Exchange Commission ("SEC") adopted Regulation G,
which applies to any public disclosure or release of material information that
includes a non-GAAP financial measure. The accompanying Management's Discussion
and Analysis of Financial Condition and Results of Operations and Quantitative
and Qualitative Disclosure about Market Risk contain certain non-GAAP financial
measures. The SEC defines a non-GAAP financial measure as a numerical measure of
a company's historical or future financial performance, financial position, or
cash flows that excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly comparable
measure calculated and presented in accordance with GAAP in the financial
statements or includes amounts, or is subject to adjustments that have the
effect of including amounts, that are excluded from the most directly comparable
measure so calculated and presented.

Non-GAAP financial measures disclosed in this report are meant to provide
additional information and insight relative to historical operating results and
financial position of the business and in certain cases to provide financial
information that is presented to 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.

Selected non-GAAP disclosures are presented and reconciled in the table
below ($ in millions):

March 31, December 31,
2005 2004
--------- -----------
(Restated)
Managed assets(1):
Finance receivables (including
pledged education lending receivables) ......... $41,180.1 $35,048.2
Operating lease equipment, net ................... 8,313.1 8,290.9
Finance receivables held for sale ................ 1,481.3 1,640.8
Equity and venture capital investments
(included in other assets) ..................... 101.8 181.0
--------- ---------
Total financing and leasing portfolio assets ..... 51,076.3 45,160.9
Securitized assets ............................... 7,716.6 8,309.7
--------- ---------
Managed assets ................................. $58,792.9 $53,470.6
========= =========
Earning assets (2):
Total financing and leasing portfolio assets ..... $51,076.3 $45,160.9
Credit balances of factoring clients ............. (4,269.8) (3,847.3)
--------- ---------
Earning assets ................................. $46,806.5 $41,313.6
========= =========
Tangible equity(3):
Total equity ................................... $ 6,336.8 $ 6,055.1
Other comprehensive (income) loss
relating to derivative financial instruments ... (20.3) 27.1
Unrealized gain on securitization investments .... (7.7) (8.5)
Goodwill and intangible assets ................... (906.4) (596.5)
--------- ---------
Tangible common equity ........................... 5,402.4 5,477.2
Preferred capital securities ..................... 253.3 253.8
--------- ---------
Tangible equity ................................ $ 5,655.7 $ 5,731.0
========= =========
Debt, net of overnight deposits(4):
Total debt ....................................... $42,493.9 $37,724.8
Overnight deposits ............................... (1,006.3) (1,507.3)
Preferred capital securities ..................... (253.3) (253.8)
--------- ---------
Debt, net of overnight deposits ................ $41,234.3 $35,963.7
========= =========
Earnings per share, excluding certain items(5)
GAAP earnings per share .......................... $ 1.06 $ 0.95
Gain on derivatives............................... (0.07) --
Loss on accelerated liquidations
-- manufactured housing ........................ -- 0.04
(Gain)/loss on accelerated liquidations
-- venture capital investments ................. (0.03) 0.04
Reduction of specific credit loss reserves ....... -- (0.12)
--------- ---------
Adjusted earnings per share .................... $ 0.96 $ 0.91
========= =========

--------------------------------------------------------------------------------
(1) Managed assets are utilized in certain credit and expense ratios.
Securitized assets are included in managed assets because CIT retains
certain credit risk and the servicing related to assets that are funded
through securitizations.

(2) Earning assets are utilized in certain revenue and earnings ratios.
Earning assets are net of credit balances of factoring clients. This net
amount, which corresponds to amounts funded, is a basis for revenues
earned.

(3) Tangible equity is utilized in leverage ratios. Other comprehensive losses
and unrealized gains on securitization investments (both included in the
separate component of equity) are excluded from the calculation, as these
amounts are not necessarily indicative of amounts that will be realized.

(4) Debt, net of overnight deposits is utilized in certain leverage ratios.
Overnight deposits are excluded from these calculations, as these amounts
are retained by the Company to repay debt. Overnight deposits are
reflected in both debt and cash and cash equivalents.

(5) The diluted EPS related to the items listed are shown separately, as the
items are not indicative of our on-going operations.

Forward-Looking Statements

Certain statements contained in this document are "forward-looking
statements" within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. All statements contained herein that are not clearly historical in
nature are forward-looking and the words "anticipate," "believe," "expect,"
"estimate," "target" and similar expressions are generally intended to identify
forward-looking statements. Any forward-looking statements contained herein, in
press releases, written statements or other documents filed with the Securities
and Exchange Commission or in communications and discussions with investors and
analysts in the normal course of business

through meetings, webcasts, phone calls and conference calls, concerning our
operations, economic performance and financial condition are subject to known
and unknown risks, uncertainties and contingencies. Forward-looking statements
are included, for example, in the discussions about:

o our liquidity risk management,

o our credit risk management,

o our asset/liability risk management,

o our funding, borrowing costs and net finance margin,

o our capital, leverage and credit ratings,

o our operational and legal risks,

o our ability to remediate the material weakness in internal controls
related to income taxes,

o our growth rates,

o our commitments to extend credit or purchase equipment, and

o how we may be affected by legal proceedings.

All forward-looking statements involve risks and uncertainties, many of
which are beyond our control, which may cause actual results, performance or
achievements to differ materially from anticipated results, performance or
achievements. Also, forward-looking statements are based upon management's
estimates of fair values and of future costs, using currently available
information. Therefore, actual results may differ materially from those
expressed or implied in those statements. Factors that could cause such
differences include, but are not limited to:

o risks of economic slowdown, downturn or recession,

o industry cycles and trends,

o demographic trends,

o risks inherent in changes in market interest rates and quality
spreads,

o funding opportunities and borrowing costs,

o changes in funding markets, including commercial paper, term debt
and the asset-backed securitization markets,

o uncertainties associated with risk management, including credit,
prepayment, asset/liability, interest rate and currency risks,

o adequacy of reserves for credit losses,

o risks associated with the value and recoverability of leased
equipment and lease residual values,

o changes in laws or regulations governing our business and
operations,

o changes in competitive factors, and

o future acquisitions and dispositions of businesses or asset
portfolios.

Item 4. Controls and Procedures

Conlcusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures as such term
is defined under Rule 13-a15(e) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
disclosure controls and procedures were not effective as of the end of the
period covered by this interim quarterly report because of the material
weaknesses discussed below.

Changes in Internal Control Over Financial Reporting

Income Tax Accounting

As previously disclosed, management has determined that the lack of a
control to reconcile the difference between the tax basis and book basis of each
component of the Company's balance sheet with the deferred tax asset and
liability accounts constitutes a material weakness. Management has performed
alternative analyses and reconciliations of the income tax balance sheet and
income statement accounts and based thereon believes that the income tax
provision is appropriate and that the remediation will not result in a material
adjustment to the Company's reported balance sheet or net income.

In connection with the June 2001 acquisition by Tyco, our income tax
compliance, reporting and planning function was transferred to Tyco. This caused
a lapse in maintaining, developing and implementing changes to various income
tax financial reporting processes that are currently required. Following our
2002 IPO, we classified our tax reporting as a "reportable condition", as
defined by standards established by the American Institute of Certified Public
Accountants. As previously reported, we have made substantial progress with
respect to the reportable condition by hiring and training personnel, rebuilding
tax reporting systems, preparing amendments to prior U.S. Federal income tax
returns, and implementing processes and controls with respect to income tax
reporting and compliance. We continued to develop the processes and controls to
complete an analysis of our income tax asset and liability accounts, including
the refinement of, and reconciliation to transactional level detail of, book to
tax differences. During the quarter ended March 31, 2005, we completed the
transactional-level reconciliations of book to tax differences for several of
our business units, which in turn validated our current methodology in
connection with remediating the material weakness.

As of the end of the period covered by this report, we have not fully
remediated the material weakness in the Company's internal control over income
tax deferred assets and liabilities but anticipate a resolution during 2005.

Derivative Hedge Accounting

During the fourth quarter of 2005, we learned of an interpretation with
respect to applying the "matched terms" approach in hedge accounting under
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended ("SFAS 133"). We reviewed our
accounting for certain cross currency interest rate swaps ("compound swaps" or
"compound derivatives") under SFAS 133.

We determined that certain compound swaps were not appropriately accounted
for, even though these compound swaps were highly effective economic hedges of
the interest rate and currency exchange risks associated with corresponding
foreign denominated debt. We documented these swaps originally as "matched
terms" hedges, which assumes no hedge ineffectiveness. The swaps would have
qualified for "long-haul" hedge accounting with ineffectiveness reflected in
current earnings. However, the swaps did not qualify for hedge accounting
treatment from their inception, as SFAS 133 does not allow for subsequent
documentation modifications.

The elimination of hedge accounting from inception of the compound swaps
resulted in adjustments to originally reported earnings in each of the quarterly
periods of 2005 to reflect a significant component of the mark-to-market on
these swaps in earnings, which was previously reported as an adjustment to the
basis of the corresponding debt. These adjustments to earnings will reduce
future earnings by an equal amount through 2015.

A material weakness is a control deficiency, or combination of control
deficiencies, that results in more that a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.

As of December 31, 2004, the Company did not maintain effective controls
over the valuation and documentation of certain of its compound derivative
transactions. Specifically, the Company recognized certain derivative financial
instruments as hedges of interest rate risk without sufficient documentation as
required by accounting principles generally accepted in the United States.
Furthermore, the Company did not perform required periodic hedge effectiveness
testing because it was inappropriately assumed that the hedges were effective.
This control deficiency did not result in a material misstatement to the 2004
annual or interim consolidated financial statements. However, this control
deficiency resulted in the restatement of the Company's 2005 first, second and
third quarter interim consolidated financial statements. In addition, this
control deficiency could result in the misstatement of derivative related
accounts including other revenue, debt and other comprehensive income that would
result in a material misstatement of the annual or interim financial statements
that would not be prevented or detected. Accordingly, management has concluded
that this control deficiency constitutes a material weakness as of March 31,
2005.

In connection with this restatement, under the direction of our principal
executive officer and our principal financial officer, we determined that the
above constituted a material weakness in internal control with respect to our
accounting treatment and related hedge documentation for certain cross-currency
swaps as of March 31, 2005.

Remediation of Derivative Hedge Accounting Material Weakness in Internal Control
Over Financial Reporting

As of the date of this filing, we have fully remediated this material
weakness relating to derivative documentation and hedge accounting treatment.
Our remediation actions included the following:

o All of the subject compound swaps have been replaced with corresponding
stand alone replacement swaps (a cross-currency basis swap and an interest
rate swap, both with zero fair value at inception), which qualify for
hedge accounting treatment under SFAS 133.

o We do not intend to transact compound swaps prospectively and have
communicated a formal prohibition against such transactions to the
appropriate treasury, accounting, legal and internal audit personnel.

o We have updated our derivative policy manual to specifically prohibit the
use of compound swaps.

o We have conducted training sessions with the appropriate treasury,
accounting, legal and internal audit personnel with respect to the above
to ensure that we evaluate and document derivative transactions in
compliance with SFAS 133.

Other than the changes discussed above with respect to income tax
accounting and derivative hedge accounting, there have been no changes to the
Company's internal controls over financial reporting that occurred since the
beginning of the Company's first quarter of 2005 that have materially affected,
or are reasonably likely to materially affect, the Company's internal control
over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NorVergence Related Litigation

On September 9, 2004, Exquisite Caterers v. Popular Leasing et al.
("Exquisite Caterers"), a putative national class action, was filed against 13
financial institutions, including CIT, who had acquired equipment leases
("NorVergence Leases") from NorVergence, Inc., a reseller of telecommunications
and Internet services to businesses. The Exquisite Caterers lawsuit is now
pending in the Superior Court of New Jersey, Monmouth County. Exquisite Caterers
based its complaint on allegations that NorVergence misrepresented the
capabilities of the equipment leased to its customers and overcharged for the
equipment. The complaint asserts that the NorVergence Leases are unenforceable
and seeks rescission, punitive damages, treble damages and attorneys' fees. In
addition, putative class action suits in Florida, Illinois, New York and Texas
and several individual suits, all based upon the same core allegations and
seeking the same relief, have been filed by NorVergence customers against CIT
and other financial institutions.

Other Litigation

In addition, there are various legal proceedings against CIT, which have
arisen in the ordinary course of business. While the outcomes of the NorVergence
related litigation and the ordinary course legal proceedings ,and the related
activities, are not certain, based on present assessments, management does not
believe that they will have a material adverse effect on the financial condition
of CIT.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table details the repurchase activity of CIT common stock
during the March 31, 2005 quarter:

Total Number of Maximum Number
Total Average Shares Purchased of Shares that May
Number of Price as Part of Publicly Yet be Purchased
Shares Paid Announced Plans Under the Plans
Purchased Per Share or Programs or Programs
--------- --------- ----------- -----------

Balance at December 31, 2004.......... 1,672,033 $38.17 2,381,000
----------
January 1 - 31, 2005............... 400,000 $42.32 400,000 1,981,000
February 1 - 28, 2005.............. 390,000 $41.13 390,000 1,591,000
March 1 - 31, 2005................. 660,000 $39.83 660,000 931,000
----------
Total Purchases.................... 1,450,000
----------
Reissuances(1)........................ (1,773,642)
----------
Balance at March 31, 2005............. 1,348,391
==========

--------------------------------------------------------------------------------
(1) Includes the issuance of common stock held in treasury upon exercise of
stock options, payment of employee stock purchase plan obligations and the
vesting of restricted stock.

On April 18, 2005, our Board of Directors approved an expanded common
stock repurchase program to acquire up to an additional five million shares of
our outstanding common stock. These are in addition to the shares remaining from
a previously approved program. The repurchased common stock is held as treasury
shares and may be used for the issuance of shares under CIT's employee stock
purchase plans and for general corporate purposes. The program authorizes the
Company to purchase shares over a two-year period beginning April 19, 2005.
Acquisitions under the share repurchase program will be made on the open market
from time to time at prevailing prices as permitted by applicable laws, and
subject to market conditions and other factors. The program may be discontinued
at any time and is not expected to have a significant impact on our
capitalization.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

(a) Exhibits

3.1 Second Restated Certificate of Incorporation of the Company
(incorporated by reference to Form 10-Q filed by CIT on August
12, 2003).

3.2 Amended and Restated By-laws of the Company (incorporated by
reference to Form 10-Q filed by CIT on August 12, 2003).

4.1 Indenture dated as of August 26, 2002 by and among CIT Group
Inc., Bank One Trust Company, N.A., as Trustee and Bank One
NA, London Branch, as London Paying Agent and London
Calculation Agent, for the issuance of unsecured and
unsubordinated debt securities (incorporated by reference to
Exhibit 4.18 to Form 10-K filed by CIT on February 26, 2003).

4.2 Indenture dated as of October 29, 2004 between CIT Group Inc.
and J.P. Morgan Trust Company, National Association for the
issuance of senior debt securities (Incorporated by reference
to Exhibit 4.4 to Form S-3/A filed by CIT on October 28,
2004).

4.3 Certain instruments defining the rights of holders of CIT's
long-term debt, none of which authorize a total amount of
indebtedness in excess of 10% of the total amounts outstanding
of CIT and its subsidiaries on a consolidated basis have not
been filed as exhibits. CIT agrees to furnish a copy of these
agreements to the Commission upon request.

12.1 CIT Group Inc. and Subsidiaries Computation of Earnings to
Fixed Charges.

31.1 Certification of Jeffrey M. Peek pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.

31.2 Certification of Joseph M. Leone pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.

32.1 Certification of Jeffrey M. Peek pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

32.2 Certification of Joseph M. Leone pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

CIT GROUP INC.

By: /s/ JOSEPH M. LEONE
------------------------------------------
Joseph M. Leone
Vice Chairman and Chief Financial Officer

By: /s/ WILLIAM J. TAYLOR
------------------------------------------
William J. Taylor
Executive Vice President, Controller
and Principal Accounting Officer

December 13, 2005