Nyse Cit 2005

to a future
of opportunity
from a foundation
of strength
CIT 2005 ANNUAL REPORT

CIT began 2005 with a unique set of advantages. A 97-year
legacy of customer loyalty and trust. An impressive under-
pinning of financial strength. An expanding portfolio
of financial products and services.
Most significantly, a team of 6,000 employees dedicated to

delivering value to our customers while building value
for our shareholders.
CIT emerged from 2005 an even stronger

company. We capitalized on our established
strengths while taking advantage of new
opportunities. We executed on a differenti-
ated corporate strategy built around sector
alignment, customer focus, productivity
management, prudent credit and risk
Financial
Highlights management, and capital discipline. The
for 2005 result: strong 2005 financial results – and
For the years ended a strong foundation for future growth.
December 31
Return on Total Equity

20
15 17.6%
14.8%
10 11.8%
0
2003 2004 2005
Earnings Per Share Growth

5
$4.44
4 $3.50
3 $2.66
0
2003 2004 2005
Diluted Earnings per Share
Dear Shareholders,
Over the past year, our management team has made great strides
toward realizing our goal of leading this successful, century-old
institution into its next chapter of life. We have always believed
that CIT is uniquely positioned to become a world-class finan-
cial services organization, and we have put in place the roadmap
to take us there.
Today, I am convinced that CIT has the financial and human
capital necessary to perform strongly throughout fluctuating
business cycles and become the leading global finance company
for the commercial middle market.
In 2005, we began a fundamental restructuring to unleash CIT’s
potential. We developed realistic long-term growth strategies
and enhanced cost and funding positions. We invested in our
leadership and culture with a focus on talent acquisition. We
rationalized our businesses by realigning our portfolio, shedding
slower-performing businesses and making strategic acquisitions
in areas like healthcare (Healthcare Business Credit Corpo-
ration), and factoring (SunTrust). We also entered the growing
student lending market with our acquisition of the Education
Lending Group.
Together, all these initiatives created a unified platform that will
enable CIT to deliver long-term growth supported by strong
risk standards for many years to come. We are not only pleased
with the results we are seeing from this new direction, but
excited that we exceeded our financial goals in the midst of a In the end, I am confident that after reviewing our
significant internal restructuring, enjoying 27% EPS growth 2005 annual report you will agree that CIT has “the
and a ROTE of 17.6% in 2005. right stuff ” to be a global financial services “leader,”
not just another “lender.”
That is proof that our realigned, strengthened business platform
combined with our deep industry expertise works. We believe it
will play to our strengths in any economic environment
allowing us to meet our objectives and become a more efficient
organization in the process. Moving forward, our vision and
strategy will continue to be driven by a strengthened sales Jeffrey M. Peek
culture, a more rational portfolio diversification and enhanced Chairman & CEO
risk and capital discipline.
2006, therefore, is all about execution. We’ll continue to recruit
new talent and experienced executives to supplement the strong
team at CIT. We’re injecting a sales-oriented focus throughout
the organization and will consider strategic acquisitions where
they make sense.
And, most importantly, we continue to believe that our greatest
growth opportunity is also our greatest strength: that we’re
uniquely positioned to be successful in the commercial and
consumer finance markets we serve. Having served the middle
market for nearly 100 years through 19 business cycles, we have
a deep understanding of the financial needs of our customers
and a clear view of what it takes to win.
1
from pulling
into your driveway
to taxiing down
the runway
2
CIT is one of the world’s preeminent trade and
vendor finance organizations, as well as a leader in
aircraft leasing and home lending.
In fact, with over $60 billion in assets under management, CIT has
the financial resources, industry expertise and product knowledge to
deliver value across dozens of industries around the globe. We are
aligning our company into five operating segments to focus more
effectively on our customers.
Our Transportation Finance segment provides longer-term, large ticket

equipment leases and other secured financing to companies in the aero-
space (including aerospace supply and defense) and rail industries. We
continued to deepen relationships with major airline carriers and manu-
facturers worldwide as air travel rebounded to its highest levels since 2000.
We placed major orders with Airbus and Boeing and closed new lease
deals with Air India, Aer Lingus and KLM, among other international
carriers. Our Rail Resources unit also turned in a strong year, growing
Small Business Lending our operating fleet by 37% in 2005.
Volume ($ millions)
Our Consumer/Small Business Lending segment provides collateralized
900 889 and government-secured loans to consumers and small businesses, lever-
812 823 aging broker and intermediary relationships. We are the #1 Small Business
800 Administration (SBA) lender for six consecutive years and one of the
717
nation’s fastest growing providers of student loans. CIT is also a premier
700 home lender, offering financing through a national network of over 4,600
brokers. CIT Bank is an industrial bank that offers financial products
609
0 and services for small ticket consumer transactions and contributes to
’01 ’02 ’03 ’04 ’05
the diversity of CIT’s funding through its deposit-taking capabilities.
Our Trade Finance segment provides factoring and other trade products
We have maintained our number
to companies in the retail supply chain worldwide. We tailor financial
one position in small business
lending through key alliances with solutions that help companies of all sizes increase sales, improve cash
franchisors including Cendant, flow, reduce operating margins and eliminate customer credit losses.
Cold Stone Creamery, Meineke, In 2005, we solidified our leading market position in trade finance.
and Quiznos.
CIT’s Vendor Finance segment provides financing solutions to manu-
facturers and distributors around the globe. We have strong leasing and
lending product capabilities, in-depth relationship structuring skills,
scalable services platforms, and best-in-class sales teams. Our customers
include Avaya, Dell, Snap-on, and Toshiba, among others.
Through our Corporate Finance segment, CIT provides lending, leasing

and other financial and advisory services to middle-market companies,
with a focus on specific industries, including healthcare, energy, and
communications, media and entertainment. We offer a uniquely broad
suite of solutions to middle-market customers, from equipment financing,
debt restructuring, and project finance to commercial real estate and
M&A advisory services. Because of our deep and enduring relationships
and the breadth of our offering, we are increasingly viewed as a trusted
strategic advisor as well as a provider of financing solutions.
From a diverse array of finance solutions for middle-market compa-

nies to a growing roster of specialty finance solutions for consumers
and vendors, CIT is solidifying its leadership in the markets we serve.
3
Many of our customer relationships have endured for
decades. We’ve helped companies grow from local enterprises
into established global competitors, providing the financing
and insights they need to build their businesses – and
realize their dreams.
At CIT, we believe that the key to long-lasting relationships is a customer-

centric, growth-oriented culture focused on service and execution.
We combine in-depth expertise in financing, keen industry knowledge
and a deep understanding of the needs of the middle market.
We are organizing our business around our customers. The goal: to

deepen the already strong relationships we have and build new ones.
This model was the driver behind our new, targeted industry strategy,
which enables us to focus on a core set of industries to be better
positioned to deliver our entire set of financial and advisory solutions.
Deep relationships have been a long-standing component of CIT’s
success, and we have aligned with our customers to expand our strong
relationships to new geographies. To that end, we have consolidated
platforms to serve our customers more effectively and efficiently.
Multiple Approaches to Driving Organic Growth

Refer Share Combine Sell Enterprise
Leads Customers Sales Forces Solutions
LOW COMPLEXITY HIGH
During 2005, we launched a formal program to accelerate organic

growth and grew our sales force by 22%. In concert with our industry
alignment, this will enable us to fully realize opportunities to help our
customers achieve their mission-critical goals. As part of our cross-
Cross-Selling Insurance Services selling program and sales force effectiveness initiative, we rolled out
We offer insurance and financial
protection products to customers salesforce.com throughout our organization. This tool allows us to
of CIT’s consumer and commer- more effectively identify opportunities to introduce new products
cial businesses. Products include and services to our customers, and to track organic growth and sales
debt protection, supplemental
insurance, membership products force productivity.
to consumers, property &
casualty, and employee benefits Another key strategy for promoting a sales culture is instituting a
to small business and middle- relationship management model for key accounts. This will empower
market companies. us to support our most valued customers throughout their lifecycle. As
their financing needs become more complex, we will be able to anticipate
them and offer more sophisticated solutions.
From a new sales and marketing structure to a reinvigorated

commitment to growth, CIT is capitalizing on our long-standing
reputation for market loyalty and customer service.
44
from
first year
to Fortune
1,000
55
from
an operating
lease
CIT is targeting the most attractive opportunities

in the middle market and broadening our product
set to deliver added value to customers.
“We selected CIT as our senior By focusing on high-growth industries, we capitalize on our core strengths
debt partner for a $300 million while diversifying our business to reflect a global economy. We have
acquisition financing when increased capital commitments to the fastest growing markets and
OncologyTherapeutics Network
disposed of over $2 billion in assets in non-core businesses. Targeted
was sold by Bristol-Myers Squibb
to One Equity Partners and growth industries include healthcare; communications, media and
management. CIT quickly entertainment; student lending; vendor finance; and energy. We are also
understood our business model, focused on penetrating new segments of industries in which we have
where we fit into the healthcare strong experience and expertise, such as retail, aerospace and rail.
delivery spectrum and delivered
on its promises. In the months Our expanding healthcare finance group illustrates our success in
since closing, the CIT team has capitalizing on a growth opportunity. The domestic healthcare financing
been instrumental in advising market is estimated to total $159 billion annually, and the healthcare
us on the management of our industry represents more than 15% of the U.S. Gross Domestic Product.
lending group and aiding us with CIT expanded its healthcare business in 2005, focusing on four of the
our first strategic acquisition.”
most attractive segments: managed care, outpatient facilities,
John Amos long-term care and hospitals. The 2005 acquisition of Healthcare
Chief Executive Officer Business Credit Corporation (HBCC), a full-service healthcare
Oncology Therapeutics Network financing company that specializes in asset-based and
6
to a
new lease
on life
cash-flow financing to U.S. healthcare providers, accelerated our pene-

tration of this business. By year-end, our healthcare financing assets had
grown by $1 billion to $1.5 billion.
In 2005, we entered another growth area, the $100 billion student lending
industry, with the acquisition of the Education Lending Group. With
nearly 900 partner schools, our Student Loan Xpress division is a national
lender of federal Stafford, PLUS, and consolidation loans, as well as private
loans. This business grew its volume by 72% and its assets to $5.3 billion in
2005. Its financialaid.com and campusdirt.com websites are some of the
most popular destinations for students. Student Loan Xpress’ strong
growth will further strengthen our leading position in consumer lending.
In addition to expanding our presence in growing markets, we are building

our advisory services practice to help serve our customers better. We have
relationships with tens of thousands of middle-market companies – the
bedrock of the U.S. economy. These companies are largely underserved
by large investment banks and financial advisory firms. Our new
Investment Banking Advisory Services group offers our clients a range of
solutions, including M&A advisory, merchant banking, capital markets,
fairness opinions and commercial real estate services. During 2005, we
complemented our existing advisory team with top investment banking
talent recruited from leading firms.
From new markets to new lending products, CIT is squarely aligned

around the expertise of our businesses and the needs of our customers.
7
As a global finance company with locations throughout
North America, Latin America, Europe, and Asia Pacific,
CIT is committed to searching the world for opportunities
to expand our business.
We have very strong global positions in a number of businesses, including

aerospace, vendor finance and factoring. Our international strategy is
focused on those core segments in which we have a differentiated advantage
and for which there is a sizable and growing market opportunity.
Factoring is a good illustration of this strategy. From our position as the

leading player in the U.S. factoring market, CIT has already built a
strong factoring presence overseas. Our acquisition in 2005 of the factor-
ing assets of Receivables Capital Management, a division of SunTrust,
accelerated our international presence, particularly in Europe and Asia
Pacific, and we will continue to leverage our strength in this area to
increase global penetration.
Locations Worldwide
“One of Dell’s key strategies going
forward is the globalization of
our business. We are very large
overseas now, a multibillion
dollar business, yet we have a
lower market share outside of
the U.S. So it is one of our key
priorities… We are working with
CIT to improve our global reach.”
James M. Schneider
Senior Vice President and
Chief Financial Officer
Dell Inc.
Vendor Finance offers another example of how we are leveraging a leader-

ship position to expand internationally. We are a leading global provider
Global Markets of financing solutions that drive incremental revenues for manufacturers,
Large and Growing distributors, and other intermediaries. The global leasing market is
Global Leasing Volume = $579 billion
estimated at $579 billion, with international markets growing faster than
40% Europe the U.S. market. To seize this huge opportunity, CIT built a global
15% Asia vendor financing capability supported by our highly efficient shared
3% Other services model. Today, with more than 400 sales professionals in more
than 30 countries, the Vendor Finance group has over $13 billion in
managed assets. During 2005, we added a number of global vendor
relationships to our portfolio, including EMC, Honeywell, NEC,
42% North America Oracle, Sharp, and Toshiba.
Source: 2006 World Leasing Yearbook From factoring to vendor finance to numerous other areas in
which we have a strong market position, CIT will continue to
look globally for attractive growth opportunities that complement
our U.S. businesses.
8
from
next door
to the
Netherlands
9
from day
one
As CIT moves forward with a robust plan to capitalize

on the considerable opportunities before us, we will be
looking to our employees to support our strategy and
drive success.
CIT’s management, business leaders, operations, and sales teams are fully
committed to unifying our employee base and communicating our
mission. We have initiated a variety of programs and strategies for sharing
best practices and information to build a stronger CIT and to better
serve our customers.
For example, we implemented a cultural initiative to break down internal

barriers to cross-selling while building effectiveness and efficiency. A key
component of this model is bringing together employees from across the
organization to share successes and develop new approaches to delivering
value to our customers. We initiated regional Sales meetings as well as a
10
to one CIT
pan-European Sales meeting. A first-ever Operations Summit showcased a company-wide employee engagement survey which netted an unusually
the best practices from every CIT location and in every line of business. high response rate – a key indicator that CIT employees support the
Town Hall meetings build a sense of shared purpose and enthusiasm. effort to build a growth-oriented, winning organization.
We codified our mission and core principles during 2005 into a program Fundamentally, the finance business is about people and relationships.
called PRIDE: Performance, Relationships, Integrity, Development It is the people of CIT who successfully established a 97-year heritage
and Empowerment. We disseminated this program through a series of of loyalty and trust. And it is the people of CIT who will leverage
600+ “cascade” meetings with employees worldwide. We conducted this strong foundation to create an even stronger company for our
customers and our shareholders.
P erformance
We have the drive, talent and capabilities to achieve ambitious goals and targets. From our front line account executives who maintain relationships
R elationships with customers to the dedicated support personnel who process
We earn the confidence of our clients and colleagues. millions of loans each year with near-flawless execution, CIT has
I ntegrity a solid team in place to build a future of continued success.
We demonstrate integrity in our actions, decisions and relationships.
D evelopment
We maintain and enhance the expertise our clients require.
E mpowerment
We are a diverse workforce, empowered to be proactive, creative, and fulfilled.
11
OUR CORPORATE MISSION
We will be the leading global finance
company, driving economic growth and
creating opportunities for businesses
and people around the world.
Building on a century of experience, we

provide innovative financial solutions and
services — bringing knowledge, expertise,
and creativity to every client relationship.
As we grow, our clients, communities, and

stakeholders will prosper with us.
GIVING BACK TO OUR COMMUNITIES

CIT has long been committed to its role
as a responsible corporate citizen, setting
standards for business practices and corpo-
rate values that exceed industry standards.
This commitment is the basis of CIT's
relationships with its employees, customers
and the communities in which they live
and work. The CIT Corporate Giving
Program provides support to institutions
in education, health, social services, and the
arts. In addition, CIT employees play an
active role in volunteering in the commu-
nities where CIT has a significant presence
around the world.
12
Corporate Information
Global Headquarters Board of Directors Investor Information
CIT Group Inc.
Jeffrey M. Peek Stock Exchange Information
505 Fifth Avenue
Chairman and Chief Executive Officer In the United States, CIT’s common stock is
New York, NY 10017
CIT Group Inc. listed on the New York Stock Exchange under
Telephone: (212) 771-0505
the ticker symbol “CIT.”
Gary C. Butler 3
Number of employees:
President and Chief Operating Officer Shareowner Services
Approximately 6,340 at 12/31/2005
Automatic Data Processing, Inc. To transfer securities and for address changes,
Number of beneficial shareholders: write to:
William M. Freeman 2
96,761 as of 2/15/2006 The Bank of New York
Former Chief Executive Officer
Receive and Deliver Department
Leap Wireless International, Inc.
P.O. Box 11002
Executive Officers
Hon. Thomas H. Kean 2 Church Street Station
Jeffrey M. Peek THK Consulting, LLC New York, NY 10286
Chairman and Chief Executive Officer Former Governor of New Jersey
For shareowner inquiries, write to:
Thomas B. Hallman Marianne Miller Parrs 1 The Bank of New York
Vice Chairman, Specialty Finance Executive Vice President Shareholder Relations Department
and Chief Financial Officer P.O. Box 11258, Church Street Station,
Robert J. Ingato
International Paper Company New York, NY 10286
Executive Vice President, General Counsel
Telephone: (866) 886-9905 in the U.S.
and Secretary Timothy M. Ring 2*
(610) 312-5303 outside the U.S. and Canada
Chairman and Chief Executive Officer
Joseph M. Leone
C.R. Bard, Inc. Telecommunications Device for the hearing
Vice Chairman and Chief Financial Officer
impaired: (800) 936-4237
Vice Admiral John R. Ryan, USN 3
Lawrence A. Marsiello E-mail address: shareowners@bankofny.com
Chancellor
Vice Chairman and Chief Lending Officer
State University of New York For internet access to general shareowner
Walter J. Owens information and frequently used forms,
Seymour Sternberg 1†
Executive Vice President including transfer instructions, visit The Bank
Chairman and Chief Executive Officer
and Chief Sales and Marketing Officer of New York Web site at www.stockbny.com.
New York Life Insurance Company
William J. Taylor Form 10-K and other reports
Peter J. Tobin 1
Executive Vice President, Controller A copy of Form 10-K and all quarterly filings
Retired Special Assistant to the President in
and Principal Accounting Officer on Form 10Q, Board Committee Charters,
Corporate Relations and Development
Corporate Governance Guidelines, Code of
Frederick E. Wolfert St. John’s University
Ethical Conduct and the Code of Business
Vice Chairman, Commercial Finance
Lois M. Van Deusen 3 Conduct are available without charge on our Web
Managing Partner site, www.cit.com or upon written request to:
The NYSE requires that the Chief Executive McCarter & English, LLP Investor Relations Department
Officer of a listed company certify annually CIT Group Inc.
1 Audit Committee
that he or she was not aware of any violation 1 CIT Drive
2 Compensation Committee
by the company of the NYSE’s corporate gov- Livingston, NJ 07039
3 Nominating and Governance Committee
ernance listing standards. Such certification
* Elected to the Board in January 2005 For additional information, please call
Design and financial simplification: Addison, NYC www.addison.com
was made by Mr. Peek on June 9, 2005.

† Elected to the Board in December 2005 (866) 54CITIR [(866) 542-4847]
Certifications by the Chief Executive Officer or send an e-mail to investor.relations@cit.com.
and the Chief Financial Officer of CIT pur-
suant to section 302 of the Sarbanes-Oxley
Act of 2002 have been filed as exhibits to
CIT’s Annual Report on Form 10-K. Media Inquiries Investor Inquiries
Kelley J. Gipson Valerie L. Gerard

Executive Vice President Executive Vice President, Investor Relations
Director, Brand Marketing CIT Group Inc.
and Communications 1 CIT Drive
CIT Group Inc. Livingston, NJ 07039
505 Fifth Avenue Telephone: (973) 422-3284
New York, NY 10017 Fax: (973) 597-2045
Telephone: (212) 771-9401 E-mail address: valerie.gerard@cit.com
E-mail address: kelley.gipson@cit.com For more information about CIT, visit our
Web site at www.cit.com.
www.cit.com
CIT 2005 FINANCIAL SECTION
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| Annual Report Pursuant to Section 13 or 15(d) or | | Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2005
Commission File Number: 001-31369
CIT G ROUP NC I .
(Exact name of registrant as specified in its charter)
Delaware 65-1051192
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
1211 Avenue of the Americas, New York, New York 10036

(Address of principal executive offices) (Zip Code)
(212) 536-1211
Registrant’s telephone number including area code:
Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
Preferred Stock, Series A par value $0.01 per share New York Stock Exchange
Common Stock, par value $0.01 per share New York Stock Exchange
5 7⁄8% Notes due October 15, 2008
Securities registered pursuant to Section 12(g) of the Act:

None
Indicate by check mark if the registrant is a well-known Stock ($42.97 per share, 209,890,252 shares of common stock
seasoned issuer, as defined in Rule 405 of the Securities Act. outstanding), which occurred on June 30, 2005, was
Yes |X| No | |. $9,018,984,128. For purposes of this computation, all officers
Indicate by check mark if the registrant is not required to file and directors of the registrant are deemed to be affiliates. Such
reports pursuant to Section 13 or Section 15(d) of the Act. determination shall not be deemed an admission that such
Yes | | No |X|. officers and directors are, in fact, affiliates of the registrant. At
February 15, 2006, 199,429,586 shares of CIT’s common stock,
Indicate by check mark whether the registrant (1) has filed all par value $0.01 per share, were outstanding.
reports required to be filed by Section 13 or 15(d) of the
Indicate by check mark whether the registrant is a shell
Securities Exchange Act of 1934 during the preceding
company (as defined in Rule 12b-2 of the Act). Yes | | No |X|.
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such DOCUMENTS INCORPORATED BY REFERENCE
filing requirements for the past 90 days. Yes |X| No | |. List here under the following documents if incorporated by
Indicate by check mark whether the registrant is a large reference and the Part of the Form 10-K (e.g., Part I, Part II,
accelerated filer, an accelerated filer, or a non-accelerated etc.) into which the document is incorporated: (1) Any annual
filer. Large accelerated filer |X| Accelerated filer | | report to security holders; (2) Any proxy or information
Non-accelerated filer | |. statement; and (3) Any prospectus filed pursuant to Rule 424
(b) or (c) under the Securities Act of 1933. The listed
Indicate by check mark if disclosure of delinquent filers
documents should be clearly described for identification
pursuant to Item 405 of Regulation S-K (229.405 of this
purposes (e.g., annual report to security holders for fiscal year
Chapter) is not contained herein, and will not be contained,
ended December 24, 1980).
to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
Portions of the registrant’s definitive proxy statement relating
this Form 10-K or any amendment to this Form 10-K. | |
to the 2006 Annual Meeting of Stockholders are incorporated
The aggregate market value of voting common stock held by by reference into Part III hereof to the extent described herein.
non-affiliates of the registrant, based on the New York Stock
Exchange Composite Transaction closing price of Common See pages 103 to 105 for the exhibit index.
CONTENTS
Part One Part Three
ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ITEM 10. Directors and Executive Officers of the Registrant . . . .102
ITEM 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . .102
ITEM 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . 12 ITEM 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters . . .102
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ITEM 13. Certain Relationships and Related Transactions . . . . . . .102
ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ITEM 14. Principal Accountant Fees and Services . . . . . . . . . . . . .102
ITEM 4. Submission of Matters to a Vote of Security Holders . . . . .12
Part Four
Part Two
ITEM 15. Exhibits and Financial Statement Schedules . . . . . . . . .103
ITEM 5. Market for Registrant’s Common Equity and Related

Stockholder Matters and Issuer Purchases of Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Where You Can Find More Information . . . . . . . . . . . . . . . . . . . . .107

ITEM 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ITEM 7. Management’s Discussion and Analysis of

Financial Condition and Results of Operations . . . . . . . . . .16
ITEM 7A. Quantitative and Qualitative Disclosure

about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
ITEM 8. Financial Statements and Supplementary Data . . . . . . . . . 51
ITEM 9. Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure . . . . . . . . . . . . . . 100
ITEM 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . 100
ITEM 9B. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Table of Contents 1
Part One
ITEM 1. Business
OVERVIEW
BUSINESS DESCRIPTION We also offer a wide variety of services to our commercial and
CIT Group Inc., a Delaware corporation (“we,” “CIT” or the consumer clients, including capital markets structuring and
“Company”), is a leading global commercial and consumer syndication, finance-based insurance, and advisory services in
finance company with a focus on middle-market companies. asset finance, balance sheet restructuring, merger and acquisi-
Founded in 1908, we provide financing and leasing capital for tion and commercial real estate analysis.
consumers and companies in a wide variety of industries.
We generate transactions through direct calling efforts with
We offer vendor, equipment and commercial finance products,
borrowers, lessees, equipment end-users, vendors, manufac-
factoring, home lending, small business lending, student lending,
turers and distributors, and through referral sources and other
structured financing products, and commercial real estate financ-
intermediaries. In addition, our business units work together
ing, as well as mergers and acquisitions and management
both in referring transactions among units (i.e. cross-selling)
advisory services. We manage $62.9 billion in assets, including
and by combining various products and structures to meet our
$7.3 billion in securitized assets. Our owned financing and leas-
customers’ overall financing needs. We also buy and sell partici-
ing assets were $55.6 billion and common stockholders’ equity
pations in and syndications of finance receivables and lines of
was $6.5 billion at December 31, 2005.
credit. From time to time, in the normal course of business, we
purchase finance receivables on a wholesale basis (commonly
We have broad access to customers and markets through our
called bulk portfolio purchases).
diverse businesses. Each business has industry alignment
and focuses on specific sectors, products, and markets, with We generate revenue by earning interest income on the
portfolios diversified by client and geography. The majority loans we hold on our balance sheet, collecting rentals on the
of our businesses focus on commercial clients ranging from equipment we lease and generating fee and other income from
small to larger companies with particular emphasis on the our service-based operations. We also sell certain finance
middle-market. We serve a wide variety of industries, including receivables and equipment to reduce our concentration risk,
manufacturing, transportation, retailing, wholesaling, manage our balance sheet or improve profitability.
construction, healthcare, communications and various service-
We fund our businesses in the capital markets. The primary
related industries. We also provide financing to consumers in
funding sources are term debt (U.S., European, and other),
the home and student loan markets.
commercial paper (U.S., Canada and Australia), and asset-
backed securities (U.S. and Canada).
Our commercial products include direct loans and leases,
operating leases, leveraged and single investor leases, secured
revolving lines of credit and term loans, credit protection, SEGMENT AND CONCENTRATION DATA
accounts receivable collection, import and export financing, See the “Results by Business Segments” and “Concentrations”
debtor-in-possession and turnaround financing, acquisition sections of Item 7. Management’s Discussion and Analysis of
and expansion financing and U.S. government-backed small Financial Condition and Results of Operations and Item 7A.
business loans. Consumer products are primarily first mortgage Quantitative and Qualitative Disclosures about Market Risk,
loans and government-backed student loans. Our commercial and Notes 5 and 20 of Item 8. Financial Statements and
and consumer offerings include both fixed and floating-interest Supplementary Data, for additional information. See page 9
rate products. for a glossary of key terms used by management in our business.
Managed Assets by Segment Managed Assets by Region
At December 31, 2005 (dollars in billions) At December 31, 2005
Specialty Finance Commercial Finance Latin America 1.7%

Other 0.6%
Commercial Services $6.7 Asia/Pacific 3.8%
Europe 7.4%
Commercial $14.3 Corporate Finance $9.6
Canada 7.5%
Capital Finance $10.5
Consumer $14.8 Equipment Finance $7.0 U.S. 79.0%
2 CIT GROUP INC 2005

BUSINESS SEGMENTS
CIT meets customers’ financing needs through six business segments organized into two groups.
Specialty Finance Group

We deliver significant value to vendor and consumer markets
through our core strengths in relationship management, risk
and behavior scoring capabilities, and global servicing reach.
Specialty Finance – Commercial

Vendor Finance – Provides innovative financing and leasing solutions to manufacturers and distributors around the globe.
Small Business Lending – Provides small business financing alternatives to entrepreneurs in a wide array of industries.
Specialty Finance – Consumer

Provides secured and government-guaranteed loans to consumers and small businesses through broker and intermediary
relationships. Units include:
Home lending Student Loan Xpress CIT Bank
Commercial Finance Group

We use our product acumen, industry expertise, structuring
capabilities and rapid decision making to build enduring
relationships by offering clients a full suite of products and
services through business cycles.
Commercial Services
Provides factoring and other trade products to companies in the retail supply chain, primarily in the US, but with increasing
international focus.
Corporate Finance
Provides lending, leasing and other banking services to middle-market companies with a focus on specific industries. Units include:
p Business Capital Communications, Media and Entertainment
p
p Energy & Infrastructure Healthcare

p
Capital Finance
Provides longer-term, large-ticket equipment leases and other secured financing to companies in transportation industries.
p
Aerospace Rail Resources
p
Equipment Finance
Provides secured financing and leasing products and services to manufacturers, dealers and end-users of small and mid-ticket
industrial equipment in a broad range of industries. Units include:
p Construction Diversified Industries
p
Item 1: Business 3
BUSINESS SEGMENTS
SPECIALTY FINANCE GROUP protection and credit insurance products that are underwritten
by third parties. Revenue from this operation is allocated to the
unit with the underlying financing relationship.
Our Specialty Finance – Commercial segment includes
financing and leasing assets in our vendor programs, small Specialty Finance – Consumer
business lending operation and the remaining assets of our Specialty Finance – Consumer includes our home lending and
liquidating portfolios (principally manufactured housing). student loan operations and CIT Bank, a Utah-based industrial
bank with deposit-taking capabilities.
Through our global relationships with industry-leading equip-
ment vendors, including manufacturers, dealers, and The home lending unit primarily originates, purchases and
distributors, we deliver customized financing solutions to services loans secured by first or second liens on detached,
both commercial and consumer customers of our vendor part- single-family, residential properties. Products include both
ners in a wide array of programs. These alliances allow our fixed and variable-rate, closed-end loans, and variable-rate lines
vendor partners to focus on their core competencies, reduce of credit. Customers borrow to finance a home purchase, con-
capital needs, manage credit risk and drive incremental sales solidate debts, refinance an existing mortgage, pay education
volume. As a part of these programs, we offer (1) credit financ- expenses, or for other purposes.
ing to the commercial and consumer end users for the purchase
or lease of products, and (2) enhanced sales tools, such as asset Loans are originated through brokers and correspondents with
management services, efficient loan processing, and real-time a high proportion of home lending applications processed elec-
credit adjudication. tronically over the Internet via BrokerEdgeSM, a proprietary
system. Through experienced lending professionals and
Certain of these partnership programs provide integration with automation, we provide rapid turnaround time from applica-
the vendor’s business planning process and product offering tion to loan funding, which is critical to broker relationships.
systems to improve execution and reduce cycle times. We have We also buy/sell individual loans and portfolios of loans
significant vendor programs in information technology, from/to banks, thrifts, and other originators of consumer loans
telecommunications equipment, and healthcare, and we serve to maximize the value of our origination network, to manage
many other industries through our global network. risk and to improve overall profitability.
Our centralized consumer asset service center services and col-

Our vendor alliances feature traditional vendor finance pro-
lects substantially all of our consumer receivables, other than
grams, joint ventures, profit sharing, and other transaction
student loans, including loans retained in our portfolio and
structures with large, sales-oriented vendor partners. In the
loans subsequently securitized or sold with servicing retained.
case of joint ventures, we and the vendor combine financing
We also service portfolios of loans owned by third parties for
activities through a distinct legal entity that is jointly owned.
a fee on a “contract” basis. These third-party portfolios totaled
Generally, we account for these arrangements on an equity
$3.0 billion at December 31, 2005.
basis, with profits and losses distributed according to the joint
venture agreement, and we purchase qualified finance receivables
In 2005, we broadened our consumer product offerings with
originated by the joint venture. We also use “virtual joint
the acquisition of Education Lending Group. Our student
ventures,” by which the assets are originated on our balance
lending unit, which markets under the name Student Loan
sheet, while profits and losses are shared with the vendor. These
Xpress, offers student loan products, services, and solutions
strategic alliances are a key source of business for us.
to students, parents, schools, and alumni associations. Our
Vendor finance also includes a small and mid-ticket commer- business is focused on originating and purchasing government-
cial business which focuses on leasing office products, guaranteed student loans made under the Federal Family
computers, and other technology products primarily in the Education Loan Program, known as FFELP, which includes
United States and Canada. We originate products through rela- consolidation loans, Stafford loans and Parent Loans for
tionships with manufacturers, dealers, distributors, and other Undergraduate Students (PLUS). We also offer and purchase
intermediaries as well as through direct calling. alternative supplemental loans that may be guaranteed by
a third-party guarantor.
Our small business lending unit is primarily focused on origi-
nating and servicing loans under the U.S. government’s Small To date, the majority of the loans we have originated are con-
Business Administration’s 7(a) loan program. Loans are granted solidation loans. We generally hold these loans on our balance
to qualifying clients in the retail, wholesale, manufacturing, sheet. Currently, we sell most of Stafford and PLUS loans we
and service sectors. CIT is an SBA preferred lender and has originate in the secondary market. The majority of our out-
been recognized as the nation’s #1 SBA Lender (based on vol- standing student loans are currently serviced by third parties,
ume) in each of the last six years. but we are shifting servicing in-house to Student Loan Xpress.
Specialty Finance – Commercial also houses our Global CIT Bank, with assets of $368 million and deposits of
Insurance Services unit, through which we offer insurance $273 million, is located in Salt Lake City, Utah and provides
products to existing CIT clients. We offer various collateral a benefit to us in the form of favorable funding rates for various
consumer and small business financing programs in both the well as cash flow and enterprise value, to a full range of borrow-
local and national marketplace. CIT Bank also originates certain ers from small to larger-sized companies, with emphasis on the
loans generated by bank affiliation programs with manufacturers middle market. We service clients in a broad array of industries
and distributors of consumer products. The Bank is chartered with focused industry specialized groups serving communica-
by the state of Utah as an industrial bank and is subject to regu- tions, media and entertainment, energy and infrastructure,
lation and examination by the Federal Deposit Insurance healthcare, commercial real estate and sponsor finance sectors
Corporation and the Utah Department of Financial Institutions. in the U.S. and abroad.
COMMERCIAL FINANCE GROUP We offer loan structures ranging from asset-based revolving
and term loans secured by accounts receivable, inventories, and
Commercial Services
fixed assets to loans based on earnings performance and enter-
Our Commercial Services segment provides factoring, receivable prise valuations to mid- and larger-sized companies. Our
and collection management products, and secured financing to clients use these loans primarily for working capital, asset
companies in apparel, textile, furniture, home furnishings, and growth, acquisitions, debtor-in-possession financing, and debt
other industries. restructurings. We sell and purchase participation interests in
these loans to and from other lenders.
We offer a full range of domestic and international customized
credit protection, lending, and outsourcing services that We meet our customer financing needs through our variable rate,
include working capital and term loans, factoring, receivable senior revolving and term loan products. We primarily structure
management outsourcing, bulk purchases of accounts receiv- financings on a secured basis, although we will periodically
able, import and export financing, and letter of credit programs. extend loans based on the sustainability of a customer’s operating
cash flow and ongoing enterprise valuations. We make revolving
We provide financing to clients through the purchase of and term loans on a variable interest-rate basis based on pub-
accounts receivable owed to clients by their customers, as well lished indices such as LIBOR or the prime rate of interest.
as by guaranteeing amounts due under letters of credit issued
to the clients’ suppliers, which are collateralized by accounts We also offer clients an array of financial and advisory services
receivable and other assets. The purchase of accounts receivable through an investment banking unit. The unit offers capital
is traditionally known as “factoring” and results in the payment markets structuring and syndication capabilities as well as
by the client of a factoring fee that is commensurate with the merger and acquisition, commercial real estate and balance
underlying degree of credit risk and recourse, and which is gen- sheet restructuring advisory services.
erally a percentage of the factored receivables or sales volume.
When we “factor” (i.e., purchase) a customer invoice from We originate business regionally through solicitation focused on
a client, we record the customer receivable as an asset and also various types of intermediaries and referrals. We maintain long-
establish a liability for the funds due to the client (“credit bal- term relationships with selected banks, finance companies, and
ances of factoring clients”). We also may advance funds to our other lenders both to obtain and to diversify our funding sources.
clients before collecting the receivables, typically in an amount
up to 80% of eligible accounts receivable (as defined for that
Capital Finance
transaction), charging interest on advances (in addition to any
factoring fees), and satisfying advances by the collection of Our Capital Finance segment specializes in providing cus-
receivables. We integrate our clients’ operating systems with tomized leasing and secured financing primarily to end-users
ours to facilitate the factoring relationship. of aircraft, locomotives, and railcars. Our services include oper-
ating leases, single investor leases, equity portions of leveraged
Clients use our products and services for various purposes, leases, and sale and leaseback arrangements, as well as loans
including improving cash flow, mitigating or reducing credit secured by equipment. Our typical customers are major and
risk, increasing sales, and improving management information. regional, domestic and international airlines, North American
Further, with our TotalSourceSM product, our clients can railroad companies, and middle-market to larger-sized compa-
outsource their bookkeeping, collection, and other receivable nies. We generate new business through direct calling,
processing to us. These services are attractive to industries out- supplemented with transactions introduced by intermediaries
side the traditional factoring markets. We generate business and other referrals.
regionally from a variety of sources, including direct calling
efforts and referrals from existing clients and other referral We have provided financing to commercial airlines for over
sources. We have centralized our accounts receivable, opera- 30 years, and our commercial aerospace portfolio includes most
tions, and other administrative functions. of the leading U.S. and foreign commercial airlines. As of
December 31, 2005, our commercial aerospace financing and
Corporate Finance leasing portfolio was $6.0 billion, consisting of 93 accounts
and 215 aircraft with a weighted average age of approximately
Our Corporate Finance segment provides secured financing,
6 years. We have developed strong relationships with most
including term and revolving loans based on asset values, as
Item 1: Business 5
major airlines and major aircraft and aircraft engine manufac- Equipment Finance
turers. These relationships provide us with access to technical Our Equipment Finance segment is a middle-market secured
information, which enhances our customer service and pro- equipment lender with a strong market presence throughout
vides opportunities to finance new business. We have entered North America. We provide customized financial solutions for
into purchase commitments with aircraft manufacturers for our customers, which include manufacturers, dealers, distribu-
66 aircraft to be delivered through 2013 at a current price of tors, intermediaries, and end-users of equipment. Our
$3.3 billion. In 2005, we opened our international aerospace financing and leasing assets reflect a diverse mix of customers,
servicing center, located in Dublin, Ireland, following the industries, equipment types, and geographic areas.
American Jobs Creation Act of 2004, which provides favorable
tax treatment for certain aircraft leasing operations conducted Our primary products in Equipment Finance include loans,
offshore. See “Concentrations” section of Item 7. Management’s leases, wholesale and retail financing packages, operating leases,
Discussion and Analysis of Financial Condition and Results of sale-leaseback arrangements, and revolving lines of credit.
Operations and Note 16 – Commitments and Contingencies of A core competency for us is assisting customers with the total
Item 8. Financial Statements and Supplementary Date for further life-cycle management of their capital assets including acquisi-
discussion of our aerospace portfolio. tion, maintenance, refinancing, and the eventual liquidation
of their equipment. We originate our products through direct
We have been financing the rail industry for over 25 years. relationships with manufacturers, dealers, distributors and
Our dedicated rail equipment group maintains relationships intermediaries, and through an extensive network of direct sales
with several leading railcar manufacturers and calls directly representatives and business partners located throughout the
on railroads and rail shippers in North America. Our rail port- United States and Canada.
folio, which totaled $3.5 billion at December 31, 2005,
includes leases to all of the U.S. and Canadian Class I railroads We build competitive advantage through an experienced staff
(which are railroads with annual revenues of at least $250 mil- that is both familiar with local market factors and knowledge-
lion) and other non-rail companies, such as shippers and power able about the industries they serve. We achieve operating
and energy companies. The operating lease fleet primarily efficiencies through our two servicing centers located in Tempe,
includes: covered hopper cars used to ship grain and agricul- Arizona and Burlington, Ontario. These offices centrally
tural products, plastic pellets and cement; gondola cars for coal, service and collect loans and leases originated throughout the
steel coil and mill service; open hopper cars for coal and aggre- United States and Canada.
gates; center beam flat cars for lumber; boxcars for paper and
auto parts; and tank cars. Our railcar operating lease fleet is Our Equipment Finance segment is organized in three primary
relatively young, with an average age of approximately 7 years operating units: Construction, Diversified Industries, and
and approximately 87% (based on net investment) built in Canadian Operations. Our Construction unit has provided
1996 or later. The rail owned and serviced fleet totals in excess financing to the construction industry in the United States for
of 80,000 railcars and over 500 locomotives. over fifty years. Products include equipment loans and leases,
collateral and cash flow loans, revolving lines of credit, and
Our Capital Finance segment has a global presence with other products that are designed to meet the special require-
operations in the United States, Canada, and Europe. We have ments of contractors, distributors, and dealers. Our Diversified
extensive experience in managing equipment over its full life Industries unit offers a wide range of financial products and
cycle, including purchasing new equipment, maintaining services to customers in specialized industries such as food
equipment, estimating residual values, and re-marketing by and beverage, defense and security, mining and energy, and
re-leasing or selling equipment. We manage the equipment, regulated industries. Our Canadian Operation has leadership
the residual value, and the risk of equipment remaining idle positions in the construction, healthcare, printing, plastics, and
for extended periods of time, and, where appropriate, we locate machine tool industries.
alternative equipment users or purchasers.

2005 SEGMENT PERFORMANCE
Earnings and Return Summary (dollars in millions)
Net Return on Return on

For the year ended December 31, 2005 Income
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Assets
Equity
Specialty Finance – Commercial $326.6 2.96% 25.0%

Specialty Finance – Consumer 66.7
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
0.62% 9.4%
Total Specialty Finance Group 393.3
1.81% 19.1%
Commercial Services 184.7 6.78% 27.1%
Corporate Finance 177.1 2.10% 19.0%
Capital Finance 129.9 1.33% 9.9%
Equipment Finance 98.2
1.82% 12.3%
Total Commercial Finance Group 589.9
2.24% 15.8%
Corporate (46.8)
– –
Total $936.4
1.95% 15.1%
2006 SEGMENT REPORTING CHANGES
Effective January 1, 2006, we realigned select business The following charts depict our managed assets by segment
operations to better serve our clients. Following is a sum- on a historical and prospective basis.
mary of the changes from the reporting contained herein.
2005 Organization (dollars in billions)
p The Small Business Lending unit ($1.3 billion in owned
assets at December 31, 2005) was transferred from Specialty Specialty Finance Commercial Finance
Finance – Commercial to Specialty Finance – Consumer, Commercial Services $6.7
reflecting commonalities with our home lending and stu-
Commercial $14.3
dent loan businesses. Corporate Finance $9.6
p Consistent with our strategic focus on industry align-

ment, the Equipment Finance segment has been Capital Finance $10.5
consolidated into our Corporate Finance segment. This
combination will allow us to provide clients in the con-
struction and selected other industries access to the full Consumer $14.8
complement of CIT’s products and services. Equipment Finance $7.0
p We have also made name changes to clarify the market

focus of our segments. 2006 Organization (dollars in billions)
a) Specialty Finance – Commercial has been renamed Specialty Finance Commercial Finance
Vendor Finance Trade Finance $6.7
Vendor Finance $13.0
b) Specialty Finance – Consumer has been renamed
Consumer / Small Business Lending
c) Commercial Services has been renamed Trade Finance Corporate Finance $16.6
d) Capital Finance has been renamed Transportation

Finance
Consumer & Small Transportation Finance $10.5
Business Lending $16.1
Item 1: Business 7
EMPLOYEES
CIT employed approximately 6,340 people at December 31, 2005, of which approximately 4,865 were employed in the United States
and approximately 1,475 were outside the United States.
COMPETITION
Our markets are highly competitive, based on factors that vary ber of competitors, although the number of competitors has
depending upon product, customer, and geographic region. fallen in recent years because of continued consolidation in
Our competitors include captive and independent finance the industry.
companies, commercial banks and thrift institutions, industrial
banks, leasing companies, insurance companies, hedge funds, We compete primarily on the basis of financing terms, struc-
manufacturers, and vendors. Many bank holding, leasing, ture, client service, and price. From time to time, our
finance, and insurance companies that compete with us have competitors seek to compete aggressively on the basis of these
formed substantial financial services operations with global factors and we may lose market share to the extent we are
reach. On a local level, community banks and smaller inde- unwilling to match competitor pricing and terms in order to
pendent finance and mortgage companies are competitive with maintain interest margins or credit standards, or both.
substantial local market positions. Many of our competitors are
large companies that have substantial capital, technological, Other primary competitive factors include industry experience,
and marketing resources. Some of these competitors are larger equipment knowledge, and relationships. In addition, demand
than we are and may have access to capital at a lower cost than for an industry’s services and products and industry regulations
we do. The markets for most of our products have a large num- will affect demand for our products in some industries.
REGULATION
In some instances, our operations are subject to supervision In addition, CIT Bank, a Utah industrial bank wholly owned
and regulation by federal, state, and various foreign govern- by CIT, is subject to regulation and examination by the Federal
mental authorities. Additionally, our operations may be subject Deposit Insurance Corporation and the Utah Department of
to various laws and judicial and administrative decisions impos- Financial Institutions. CIT Small Business Lending
ing various requirements and restrictions. This oversight may Corporation, a Delaware corporation, is licensed by and sub-
serve to: ject to regulation and examination by the U.S. Small Business
Administration. CIT Capital Securities L.L.C., a Delaware
p regulate credit granting activities, including establishing limited liability company, is a broker-dealer licensed by the
licensing requirements, if any, in various jurisdictions, National Association of Securities Dealers, and is subject to
regulation by the NASD and the Securities and Exchange
p establish maximum interest rates, finance charges and
Commission. CIT Bank Limited, an English corporation, is
other charges,
licensed as a bank and subject to regulation and examination
p regulate customers’ insurance coverages, by the Financial Service Authority of the United Kingdom.
p require disclosures to customers,
Our insurance operations are conducted through the
p govern secured transactions, Equipment Insurance Company, a Vermont corporation,
and Highlands Insurance Company Limited, a Barbados
p set collection, foreclosure, repossession and claims handling
company. Each company is licensed to enter into insurance
procedures and other trade practices,
contracts. They are regulated by the local regulators in Vermont
p prohibit discrimination in the extension of credit and admin- and Barbados. In addition, we have various banking corpora-
istration of loans, and tions in France, Italy, Belgium, Sweden, and the Netherlands,
and broker-dealer entities in Canada and the United Kingdom,
p regulate the use and reporting of information related to a
each of which is subject to regulation and examination by bank-
borrower’s credit experience and other data collection.
ing regulators and securities regulators in their home country.

GLOSSARY OF TERMS
Average Earning Assets (AEA) is the average during the report- depreciation on the asset, and retain the risks of ownership,
ing period of finance receivables, operating lease equipment, including obsolescence.
financing and leasing assets held for sale, and some invest-
ments, less the credit balances of factoring clients. We use this Managed Assets are comprised of finance receivables, operating
average for certain key profitability ratios, including return on lease equipment, finance receivables held for sale, some invest-
AEA and margins as a percentage of AEA. ments, and receivables securitized and still managed by us. The
change in managed assets during a reporting period is one of
Average Finance Receivables (AFR) is the average during the our measurements of asset growth.
reporting period of finance receivables and includes loans and
Net Revenue is the sum of net finance margin and other revenue.
finance leases. It excludes operating lease equipment. We use
this average to measure the rate of net charge-offs on an owned Non-GAAP Financial Measures are balances, amounts or ratios
basis for the period. that do not readily agree to balances disclosed in financial state-
ments presented in accordance with accounting principles
Average Managed Assets (AMA) is the average earning assets
generally accepted in the U.S. We use non-GAAP measures to
plus the average of finance receivables previously securitized
provide additional information and insight into how current
and still managed by us. We use this average to measure the rate
operating results and financial position of the business compare
of net charge-offs on a managed basis for the period, to monitor
to historical operating results and the financial position of the
overall credit performance, and to monitor expense control.
business and trends, after adjusting for certain nonrecurring, or
Capital is the sum of common equity, preferred stock, and unusual, transactions.
preferred capital securities. Non-performing Assets include loans placed on non-accrual
Derivative Contract is a contract whose value is derived from status, due to doubt of collectibility of principal and interest,
a specified asset or an index, such as interest rates or foreign and repossessed assets.
currency exchange rates. As the value of that asset or index Non-spread Revenue includes syndication fees, gains from dis-
changes, so does the value of the derivative contract. We use positions of receivables and equipment, factoring commissions,
derivatives to reduce interest rate, foreign currency or credit loan servicing and other fees and is reported in Other Revenue.
risks. The derivative contracts we use include interest-rate
swaps, cross-currency swaps, foreign exchange forward con- Operating Margin is the total of net finance margin after provi-
tracts, and credit default swaps. sion for credit losses (risk adjusted margin) and other revenue.
Efficiency Ratio is the percentage of salaries and general operat- Retained Interest is the portion of the interest in assets we retain
ing expenses (including provision for restructuring) to operating when we sell assets in a securitization transaction.
margin, excluding the provision for credit losses. We use the Residual Values represent the estimated value of equipment at
efficiency ratio to measure the level of expenses in relation to the end of the lease term. For operating leases, it is the value to
revenue earned. which the asset is depreciated at the end of its useful economic
Finance Income includes both interest income on finance life (i.e., “salvage” or “scrap value”).
receivables and rental income on operating leases. Return on Equity or Tangible Equity is net income expressed
as a percentage of average common equity or average common
Financing and Leasing Assets include loans, capital and finance
tangible equity. These are key measurements of profitability.
leases, leveraged leases, operating leases, assets held for sale, and
other investments. Risk Adjusted Margin is net finance margin after provision
for credit losses.
Lease – capital and finance is an agreement in which the party
who owns the property (lessor) permits another party (lessee) Special Purpose Entity (SPE) is a distinct legal entity created
to use the property with substantially all of the economic bene- for a specific purpose in order to isolate the risks and rewards
fits and risks of ownership passed to the lessee. of owning its assets and incurring its liabilities. We typically use
SPEs in securitization transactions, joint venture relationships,
Lease – leveraged is a lease in which a third party, a long-term and certain structured leasing transactions.
creditor, provides non-recourse debt financing. We are party
to these lease types as creditor or as lessor. Tangible Metrics exclude goodwill, other intangible assets, and
some comprehensive income items. We use tangible metrics in
Leases – tax-optimized leveraged lease is a lease in which we are measuring capitalization and returns.
the lessor and a third-party creditor has a priority claim to the
leased equipment. We have an increased risk of loss in the event Yield-related Fees In addition to interest income, in certain
of default in comparison to other leveraged leases, because they transactions we collect yield-related fees in connection with our
typically feature higher leverage to increase tax benefits. assumption of underwriting risk. We report yield-related fees,
which include prepayment fees and certain origination fees and
Lease – operating is a lease in which we retain beneficial owner- are recognized over the life of the lending transaction, in
ship of the asset, collect rental payments, recognize Finance Income.
Item 1: Business 9
ITEM 1A. Risk Factors
You should carefully consider the following discussion of WE MAY NOT BE ABLE TO REALIZE OUR ENTIRE
risks, and the other information provided in this Annual INVESTMENT IN THE EQUIPMENT WE LEASE.
Report on Form 10-K. The risks described below are not
the only ones facing us. Additional risks that are presently The realization of equipment values (residual values) at the end
unknown to us or that we currently deem immaterial may of the term of a lease is an important element in the leasing
also impact our business. business. At the inception of each lease, we record a residual
value for the leased equipment based on our estimate of
WE MAY BE ADVERSELY AFFECTED BY A GENERAL the future value of the equipment at the expected disposition
DETERIORATION IN ECONOMIC CONDITIONS. date. Residual values are determined by experienced
internal equipment management specialists, as well as
A general recession or downturn in the economy could make external consultants.
it difficult for us to originate new business, given the resultant
reduced demand for consumer or commercial credit. In addi- A decrease in the market value of leased equipment at a rate
tion, a downturn in certain industries may result in a reduced greater than the rate we projected, whether due to rapid tech-
demand for the products we finance in that industry. nological or economic obsolescence, unusual wear and tear
on, or use of, the equipment or other factors, would adversely
Credit quality may also be impacted during an economic affect the residual values of such equipment. Consequently,
slowdown or recession as borrowers may fail to meet their debt there can be no assurance that our estimated residual values
payment obligations. While we maintain a reserve for poten- for equipment will be realized.
tial credit losses, this allowance could be insufficient depending
upon the severity of the economic downturn. Adverse eco- The degree of residual realization risk varies by transaction
nomic conditions may also result in declines in collateral values. type. Capital leases bear the least risk because contractual pay-
As a result, higher credit and collateral related losses could ments cover approximately 90% of the equipment’s cost at the
impact our financial position or operating results. inception of the lease. Operating leases have a higher degree of
risk because a smaller percentage of the equipment’s value is
OUR LIQUIDITY OR ABILITY TO RAISE CAPITAL covered by contractual cashflows at lease inception. We record
MAY BE LIMITED. periodic depreciation expense on operating lease equipment
based upon estimates of the equipment’s useful life and the
We rely upon access to the capital markets to fund asset
estimated future value of the equipment at the end of its useful
growth and to provide sources of liquidity. We actively
life. Leveraged leases bear the highest level of risk as third par-
manage and mitigate liquidity risk by: 1) maintaining diversi-
ties have a priority claim on equipment cashflows.
fied sources of funding; 2) maintaining committed alternate
sources of funding; 3) maintaining a contingency funding plan OUR RESERVE FOR CREDIT LOSSES MAY
to be implemented in the event of market disruption; and
PROVE INADEQUATE.
4) issuing debt with maturity schedules designed to mitigate
refinancing risk. Although we believe that we will maintain Our business depends on the creditworthiness of our cus-
sufficient access to the capital markets, adverse changes in tomers. We believe that our credit risk management systems
the economy, deterioration in our business performance or are adequate to limit our credit losses to a manageable level.
changes in our credit ratings could limit our access to We attempt to mitigate credit risks through the use of a corpo-
these markets. rate credit risk management group, formal credit management
processes implemented by each business unit and automated
WE MAY BE ADVERSELY AFFECTED BY SIGNIFICANT credit scoring capabilities for small ticket business.
CHANGES IN INTEREST RATES.
We maintain a consolidated reserve for credit losses on
Although we generally employ a matched funding approach finance receivables that reflects management’s judgment of
to managing our interest rate risk, including matching the losses inherent in the portfolio. We periodically review our
repricing characteristics of our assets with our liabilities, consolidated reserve for adequacy considering economic
significant increases in market interest rates, or the perception conditions and trends, collateral values and credit quality
that an increase may occur, could adversely affect both our indicators, including past charge-off experience and levels
ability to originate new finance receivables and our ability of past due loans and non-performing assets. We cannot be
to grow. Conversely, a decrease in interest rates could result certain that our consolidated reserve for credit losses will
in accelerated prepayments of owned and managed be adequate over time to cover credit losses in our portfolio
finance receivables. because of unanticipated adverse changes in the economy
or events adversely affecting specific customers, industries or
markets. If the credit quality of our customer base materially
decreases, or if our reserves for credit losses are not adequate,
our business, financial condition and results of operations
may suffer.
WE MAY BE ADVERSELY AFFECTED BY THE REGULATED equity securities and the incurrence of additional debt,
ENVIRONMENT IN WHICH WE OPERATE. which could have a material adverse effect on our business,
financial condition and results of operations. Such acquisi-
Our domestic operations are subject, in certain instances, to
tions may involve numerous other risks, including:
supervision and regulation by state and federal authorities
difficulties in integrating the operations, services, products
and may be subject to various laws and judicial and adminis-
and personnel of the acquired company; the diversion of
trative decisions imposing various requirements and
management’s attention from other business concerns; enter-
restrictions. Noncompliance with applicable statutes or regu-
ing markets in which we have little or no direct prior
lations could result in the suspension or revocation of any
experience; and the potential loss of key employees of the
license or registration at issue, as well as the imposition of
acquired company. In addition, acquired businesses and asset
civil fines and criminal penalties.
portfolios may have credit-related risks arising from substan-
tially different underwriting standards associated with those
The financial services industry is heavily regulated in many
businesses or assets.
jurisdictions outside the United States. As a result, growing
our international operations may be challenged by the varying
In the event of future dispositions of our businesses or asset
requirements of these jurisdictions. Given the evolving nature
portfolios, there can be no assurance that we will receive
of regulations in many of these jurisdictions, it may be diffi-
adequate consideration for those businesses or assets at the
cult for us to meet these requirements even after we establish
time of their disposition or will be able to adequately replace
operations and receive regulatory approvals. Our inability to
the volume associated with the businesses or asset portfolios
remain in compliance with regulatory requirements in a par-
that we dispose of with higher-yielding businesses or asset
ticular jurisdiction could have a material adverse effect on our
portfolios having acceptable risk characteristics. As a result,
operations in that market and on our reputation generally.
our future disposition of businesses or asset portfolios could
have a material adverse effect on our business, financial con-
WE COMPETE WITH A VARIETY OF FINANCING SOURCES
dition and results of operations.
FOR OUR CUSTOMERS.
Our markets are highly competitive and are characterized INVESTMENT IN AND REVENUES FROM OUR FOREIGN
by competitive factors that vary based upon product and OPERATIONS ARE SUBJECT TO THE RISKS ASSOCIATED
geographic region. Our competitors are varied and include WITH TRANSACTIONS INVOLVING FOREIGN CURRENCIES.
captive and independent finance companies, commercial banks
and thrift institutions, industrial banks, community banks, leas- While we do attempt to hedge our translation and transaction
ing companies, insurance companies, mortgage companies, exposures, foreign currency exchange rate fluctuations can
manufacturers and vendors. have a material adverse effect on the investment in interna-
tional operations and the level of international revenues that we
Competition from both traditional competitors and new generate from international asset based financing and leasing.
market entrants has intensified in recent years due to a Reported results from our operations in foreign countries may
strong economy, growing marketplace liquidity and increas- fluctuate from period to period due to exchange rate move-
ing recognition of the attractiveness of the commercial ments in relation to the U.S. dollar, particularly exchange
finance markets. In addition, the rapid expansion of the secu- rate movements in the Canadian dollar, which is our largest
ritization markets is dramatically reducing the difficulty in non-U.S. exposure. In addition, an economic recession or
obtaining access to capital, which is the principal barrier to downturn or increased competition in the international
entry into these markets. markets in which we operate could adversely affect us.
We compete primarily on the basis of pricing, terms and OUR BUSINESS INITIATIVES HAVE POTENTIAL
structure. To the extent that our competitors compete EXECUTION RISK.
aggressively on any combination of those factors, we could Our ability to improve our levels of asset and revenue genera-
lose market share. Should we match competitors’ terms, it is tion depends on our initiatives to align our businesses around
possible that we could experience some margin compression customers and industry sectors, and to expand our sales and
and/or increased losses. marketing platforms. These initiatives involve asset transfers,
changes in management accountabilities, as well as the
OUR ACQUISITION OR DISPOSITION OF BUSINESSES streamlining and realignment of related infrastructure,
OR ASSET PORTFOLIOS MAY ADVERSELY AFFECT including information technology and personnel. Our failure
OUR BUSINESS. to implement these initiatives successfully, or the failure of
such initiatives to result in increased asset and revenue levels,
As part of our long-term business strategy, we may pursue
could adversely affect our financial position and results
acquisitions of other companies or asset portfolios as well as
of operations.
dispose of non-strategic businesses or asset portfolios. Future
acquisitions may result in potentially dilutive issuances of
Item 1: Business 11
ITEM 1B. Unresolved Staff Comments
There are no unresolved SEC staff comments.
ITEM 2. Properties
CIT operates in the United States, Canada, Europe, Latin tially all of which is leased. Such office space is suitable and
America, Australia and the Asia-Pacific region. CIT occupies adequate for our needs and we utilize, or plan to utilize, sub-
approximately 2.2 million square feet of office space, substan- stantially all of our leased office space.
ITEM 3. Legal Proceedings

NORVERGENCE RELATED LITIGATION NorVergence Leases. CIT has entered into settlement agree-
On September 9, 2004, Exquisite Caterers Inc., et al. v. ments with the Attorneys General in each of these states,
Popular Leasing Inc., et al. ("Exquisite Caterers"), a putative except for Texas. Under those settlements, lessees in those states
national class action, was filed in the Superior Court of New have had an opportunity to resolve all claims by and against
Jersey against 13 financial institutions, including CIT, which CIT by paying a percentage of the remaining balance on their
had acquired equipment leases ("NorVergence Leases") from leases. CIT has also produced documents for transactions
NorVergence, Inc., a reseller of telecommunications and related to NorVergence at the request of the Federal Trade
Internet services to businesses. The complaint alleged that Commission ("FTC") and pursuant to a subpoena in a grand
NorVergence misrepresented the capabilities of, and over- jury proceeding being conducted by the U.S. Attorney for the
charged for, the equipment leased to its customers and that Southern District of New York in connection with an investi-
the NorVergence Leases are unenforceable. Plaintiffs seek gation of transactions related to NorVergence. CIT has
rescission, punitive damages, treble damages and attorneys’ entered into a settlement agreement with respect to the
fees. In addition, putative class action suits in Illinois and Exquisite Caterers case and the Texas putative class action.
Texas, all based upon the same core allegations and seeking Such settlement is subject to Court approval and is not
the same relief, were filed by NorVergence customers against expected to have a material adverse financial effect on CIT.
CIT and other financial institutions. The Court in Exquisite
Caterers certified a New Jersey-only class, and a motion for OTHER LITIGATION
decertification is pending. In addition, there are various proceedings that have been
brought against CIT in the ordinary course of business. While
On July 14, 2004, the U.S. Bankruptcy Court ordered the outcomes of the ordinary course legal proceedings, and the
the liquidation of NorVergence under Chapter 7 of the related activities, are not certain, based on present assessments,
Bankruptcy Code. Thereafter, the Attorneys General of sev- management does not believe that they will have a material
eral states commenced investigations of NorVergence and the adverse financial effect on CIT.
financial institutions, including CIT, that purchased
ITEM 4. Submission of Matters to a Vote of Security Holders

We did not submit any matters to a vote of security holders
during the three months ended December 31, 2005.

Part Two
ITEM 5. Market for Registrant’s Common Equity and Related

Stockholder Matters and Issuer Purchases of
Equity Securities
Our common stock is listed on the New York Stock Exchange. Our dividend practice is to pay a dividend while retaining
The following table sets forth the high and low reported clos- a strong capital base. The declaration and payment of
ing prices for CIT’s common stock for each of the quarterly future dividends are subject to the discretion of our Board
periods in the two years ended December 31, 2005. of Directors. Any determination as to the payment of divi-
2005 2004 dends, including the level of dividends, will depend on,
_______________ ______________
among other things, general economic and business condi-
Common Stock Prices HIGH
______ LOW
______ HIGH
______ LOW
______ tions, our strategic and operational plans, our financial results
First Quarter $46.07 $37.40 $39.91 $35.83 and condition, contractual, legal and regulatory restrictions
Second Quarter $43.17 $35.45 $38.73 $33.28 on the payment of dividends by us, and such other factors as
Third Quarter $46.80 $42.60 $38.48 $34.53 the Board of Directors may consider to be relevant.
Fourth Quarter $52.62 $43.62 $45.82 $36.51
As of February 15, 2006, there were 96,761 beneficial owners
During the year ended December 31, 2005, we paid a dividend of CIT common stock.
of $0.13 per common share for the first quarter and $0.16 for each
of the following three quarters for a total of $0.61 per share. During All equity compensation plans in effect during 2005 were
the year ended December 31, 2004, for each of the four quarters, approved by our shareholders, and are summarized in the
we paid a dividend of $0.13 per share for a total of $0.52 per share. following table.
On January 17, 2006, the Board of Directors approved a $0.04 per
share increase to the quarterly dividend to $0.20 per share.
Number of Securities
Remaining Available for
Number of Securities Future Issuance Under
to be Issued Weighted-Average Equity Compensation Plans
Upon Exercise of Exercise Price of (Excluding Securities
Outstanding Options(1)
______________________________________ Outstanding Options
___________________________________ Reflected in Column (A))
______________________________________________
(A) (B) (C)
Equity Compensation Plans
Approved by Security Holders 17,470,879 $37.80 5,191,152
(1) Excludes 1,278,099 unvested restricted shares and 1,876,193 unvested performance shares outstanding under the Long-Term Equity Compensation Plan.
We had no equity compensation plans that were not approved by shareholders. For further information on our equity compensation
plans, including the weighted average exercise price, see Item 8. Financial Statements and Supplementary Data, Note 15.
Item 5: Market for Registrant’s Common Equity 13

The following table details the repurchase activity of CIT common stock during the quarter ended December 31, 2005.
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 September 30, 2005 12,015,244
_________ 2,425,997
October 1 - 31, 2005 606,900 $ 44.83 606,900 1,819,097
November 1 - 30, 2005 533,900 $ 48.68 533,900 1,285,197
December 1 - 31, 2005 274,700 $ 52.06 274,700 1,010,497
Accelerated stock buyback 844,669
_________ $ 51.92 844,669 (1)
Total Purchases 2,260,169

_________
Reissuances(2) (1,070,056 )
_________
Balance December 31, 2005 13,205,357
_________
_________
(1) On July 28, 2005, the Company paid $500 million and received an initial delivery of 8,232,655 shares. The Company received an additional
1,830,812 shares in August and a final delivery of 844,669 shares in December.
(2) 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 January 17, 2006, our Board of Directors approved a con- common stock is held as treasury shares and may be used for
tinuation of the common stock repurchase program to acquire the issuance of shares under CIT’s employee stock plans.
up to an additional 5 million shares of our outstanding Acquisitions under the share repurchase program will be made
common stock in conjunction with employee equity compen- from time to time at prevailing prices as permitted by applica-
sation programs. These are in addition to the 1,010,497 shares ble laws, and subject to market conditions and other factors.
remaining from the previous program that was approved on The program may be discontinued at any time and is not
October 20, 2004. The program authorizes the company to expected to have a significant impact on our capitalization.
purchase shares on the open market from time to time over a
two-year period beginning January 18, 2006. The repurchased

ITEM 6. Selected Financial Data
The following tables set forth selected consolidated financial information regarding our results of operations and balance sheets.
The data presented below should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations and Item 7A. Quantitative and Qualitative Disclosures about Market Risk and Item 8. Financial Statements
and Supplementary Data.
(dollars in millions, except per share data)
At or for At or for
the Three At or for the the Nine
Months Ended Year Ended Months Ended
At or for the Years Ended December 31
_____________________________________ December 31, September 30, September 30,
2005
__________ 2004
__________ 2003 ____________
__________ 2002 ____________
2002 ____________
2001
Results of Operations
Net finance margin $ 1,635.2 $ 1,535.3 $ 1,303.1 $ 339.8 $ 1,619.4 $ 1,291.8
Provision for credit losses 217.0 214.2 387.3 133.4 788.3 332.5
Operating margin 2,555.6 2,208.2 1,775.1 463.5 1,763.4 1,531.9
Salaries and general operating expenses 1,113.8 1,012.0 888.2 227.5 903.3 767.5
Net income (loss) 936.4 753.6 566.9 141.3 (6,698.7)(2) 263.3
Net income (loss) per share — diluted 4.44 3.50 2.66 0.67 (31.66 ) 1.24
Dividends per share(1) 0.61 0.52 0.48 0.12 – 0.25
Balance Sheet Data
Total finance receivables $ 44,294.5 $ 35,048.2 $ 31,300.2 $ 27,621.3 $ 28,459.0 $ 31,879.4
Reserve for credit losses 621.7 617.2 643.7 760.8 777.8 492.9
Operating lease equipment, net 9,635.7 8,290.9 7,615.5 6,704.6 6,567.4 6,402.8
Total assets 63,386.6 51,111.3 46,342.8 41,932.4 42,710.5 51,349.3
Commercial paper 5,225.0 4,210.9 4,173.9 4,974.6 4,654.2 8,869.2
Variable-rate senior notes 15,485.1 11,545.0 9,408.4 4,906.9 5,379.0 9,614.6
Fixed-rate senior notes 22,853.6 21,715.1 19,830.8 19,681.8 18,385.4 17,113.9
Non-recourse, secured borrowings —
student lending 4,048.8 – – – – –
Total stockholders’ equity 6,962.7 6,055.1 5,394.2 4,870.7 4,757.8 5,947.6
Selected Profitability Ratios
Net income (loss) as a percentage of AEA 1.95% 1.93% 1.58% 1.73% (18.71)% 0.87%
Net income (loss) as a percentage of
average tangible common stockholders’ equity 17.6% 14.5% 11.8% 12.5% (160.0)% 8.5%
Net finance margin as a percentage of AEA 3.40% 3.94% 3.64% 4.22% 4.57% 4.29%
Efficiency ratio 41.1% 41.8% 41.1% 38.1% 35.4% 41.2%
Salaries and general operating expenses
as a percentage of AMA 2.05% 2.13% 1.94% 2.05% 1.91% 2.02%
Credit Quality
60+ days contractual delinquency as
a percentage of finance receivables 1.71% 1.73% 2.16% 3.63% 3.76% 3.46%
Non-accrual loans as a percentage
of finance receivables 1.04% 1.31% 1.81% 3.43% 3.43% 2.67%
Net credit losses as a percentage of AFR 0.60% 0.91% 1.77% 2.32% 1.67% 1.20%
Reserve for credit losses as a
percentage of finance receivables 1.40% 1.76% 2.06% 2.75% 2.73% 1.55%
Other
Total managed assets $ 62,866.4 $ 53,470.6 $ 49,735.6 $ 46,357.1 $ 47,622.3 $ 50,877.1
Tangible stockholders’ equity
to managed assets 9.8% 10.7% 10.4% 10.4% 9.9% 8.6%
Employees 6,340 5,860 5,800 5,835 5,850 6,785
(1) Net income (loss) and dividend per share calculations for the periods preceding September 30, 2002 assume that common shares outstanding as a result of
the July 2002 IPO (basic and diluted of 211.6 million and 211.7 million) were outstanding during such historical periods.
(2) Includes goodwill impairment charge of $6,511.7 million.
Item 6: Selected Financial Data 15
Part Two
ITEM 7. Management’s Discussion and Analysis of

Financial Condition and Results of Operations; and;
ITEM 7A. Quantitative and Qualitative Disclosures about
Market Risk
INTRODUCTION
In the following discussion we use financial terms that are rele- Qualitative Disclosure about Market Risk contains certain
vant to our business. You can find a glossary of other key terms non-GAAP financial measures. See “Non-GAAP Financial
used in our business in Part I Item 1. Business section. Measurements” for additional information. In the sections
that follow, we analyze our results.
This Management’s Discussion and Analysis of Financial
Condition and Results of Operations and Quantitative and
KEY PERFORMANCE METRICS AND MEASUREMENTS
Profitability Our ability to generate income on investments to p Net income per common share (EPS);
generate returns to our shareholders and build our capital base p Net income as a percentage of average tangible com-
to support future growth. We measure our performance in this mon equity (ROTE);
area with: p Net income as a percentage of average common equity
(ROE); and
p Net income as a percentage of average earning
assets (ROA).
Asset Generation Our ability to originate new business and p Origination volumes by channel;
build our earning assets. We measure our performance in these p Customer retention;
areas with: p Sales force productivity; and
p Levels of financing and leasing assets, and managed
assets (including securitized finance receivables that we
continue to manage).
Revenue Generation Our ability to lend money at rates in excess p Levels of net finance margin;
of our cost of borrowing and to generate non-spread revenue. p Levels of non-spread and other revenue;
We measure our performance in this area with: p Finance income as a percentage of AEA;
p Net finance margin as a percentage of AEA; and
p Operating lease margin as a percentage of average leased
equipment (“AOL”).
Liquidity and Market Rate Risk Management Our liquidity risk p Interest expense as a percentage of AEA;
management pertains to our ability to obtain funding at compet- p Net finance margin as a percentage of AEA; and
itive rates, which depends on maintaining high quality assets, p Various interest sensitivity and liquidity measurements,
strong capital ratios, and high credit ratings. Market rate risk which we discuss in “Risk Management.”
management pertains to our ability to manage our interest rate
and currency rate risk, where our goal is to substantially insulate
our interest margins and profits from movements in market
interest rates and foreign currency exchange rates. We measure
our liquidity and market rate risk management with:

KEY PERFORMANCE METRICS AND MEASUREMENTS (continued)
Equipment and Residual Risk Management Our ability to p Gains and losses on equipment sales; and
evaluate collateral risk in leasing and lending transactions and p Equipment utilization and value of equipment off lease.
to remarket equipment at lease termination. We measure these
activities with:
Credit Risk Management Our ability to evaluate the credit- p Net charge-offs as a percentage of average finance
worthiness of our customers, both during the credit granting receivables;
process and after the advancement of funds, and to maintain p Delinquent assets as a percentage of finance receivables;
high-quality assets while balancing income potential with ade- p Non-performing assets as a percentage of finance
quate credit loss reserve levels. We assess our credit risk receivables;
management with: p Reserve for credit losses as a percentage of finance
receivables, of delinquent assets, and of non-performing
assets; and
p Concentration risk by geographic region, industry and
by customer.
Expense Management Our ability to maintain efficient operat- p Efficiency ratio, which is the ratio of operating
ing platforms and infrastructure in order to run our business at expenses to net revenue; and
competitive cost levels. We track our efficiency with: p Operating expenses as a percentage of average man-
aged assets (“AMA”).
Capital Management Our ability to maintain a strong capital p Tangible capital base;
base. We measure our performance in this area with: p Tangible capital to managed assets ratio; and
p Tangible book value per common share.
Item 7: Management’s Discussion and Analysis 17

PROFITABILITY AND KEY BUSINESS TRENDS
Income Metrics
Net Income (dollars in millions) Diluted Earnings per Share
$1,000 $5
$936.4
$4.44
800 $753.6 4
$3.50
600 $566.9 3
$2.66
400 2
200 1
0 0
2003 2004 2005 2003 2004 2005
Diluted earnings per share and net income growth asset growth and improved capital discipline. 2005 EPS
approximated 25% in 2005 and 30% in 2004. The growth also benefitted from a reduction in share count
improved earnings reflect strong operating fundamentals, resulting from capital initiatives.
Return Metrics
Return on Assets Return on Equity
3%
20%
15.1%
15
2 1.93% 1.95% 13.2%
1.58% 10.9%
10
1
5
0
0
2003 2004 2005 2003 2004 2005
Return on assets and return on equity improved in both 2005 operations. Net finance margin, while stable during 2005,
and 2004 reflecting improved earnings in all segments. declined from 2004 due to growth in the lower risk and lower
margin – U.S. government guaranteed – student lending
Average earning assets grew 23% and 9%, and ending business, longer-term debt financing and competitive market
managed assets grew 18% and 8% during 2005 and 2004. pricing. We also made investments in sales and marketing
Our focus during both 2005 and 2004 was on prudent initiatives in 2005, which increased operating expenses.
growth, as we continued to supplement organic growth
with strategic acquisitions, offset by the liquidation of non- The earnings improvement in 2004 from 2003 was driven
strategic portfolios. primarily by improved finance margin and a considerable
reduction in charge-offs.
Earnings for 2005 reflected strong non-spread revenue, the
continuation of low charge-offs, and reduced tax expense, Other significant items in the 2005 and 2004 trends are dis-
in part due to the offshore relocation of certain aircraft leasing cussed further in the segment results discussion that follows.

RESULTS BY BUSINESS SEGMENT
Results by Business Segment for the years ended December 31 (dollars in millions)
2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2004
2003(1)
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Net Income (Loss)

Specialty Finance – Commercial $326.6 $268.3 $225.3
46.3
35.6
Total Specialty Finance Group 393.3

314.6
260.9
Commercial Services 184.7 161.1 127.6

Corporate Finance 177.1 148.6 147.7
Capital Finance 129.9 87.0 42.3
81.5
38.5
Total Commercial Finance 589.9

478.2
356.1
Corporate and Other (46.8)

(39.2)
(50.1)
Total $936.4
$753.6
$566.9
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For the years ended December 31

Return on Assets
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Return on Equity
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
(1)
2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2004
2003
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2005
2004
2003(1)
Specialty Finance – Commercial 2.96% 2.56% 2.21% 25.0% 21.0% 18.1%

Specialty Finance – Consumer 0.62% 1.20% 1.73% 9.4% 14.9% 21.5%
Total Specialty Finance 1.81% 2.19% 2.13% 19.1% 19.8% 19.3%
Commercial Services 6.78% 6.05% 5.43% 27.1% 25.7% 23.1%
Corporate Finance 2.10% 2.25% 2.32% 19.0% 22.2% 22.9%
Capital Finance 1.33% 1.06% 0.56% 9.9% 10.5% 5.5%
Equipment Finance 1.82% 1.18% 0.56% 12.3% 8.0% 3.8%
Total Commercial Finance 2.24% 1.96% 1.53% 15.8% 15.4% 12.0%
Total 1.95% 1.93% 1.58% 15.1% 13.2% 10.9%
(1)
2003 results reflect a uniform leverage ratio among the segments.
We measure segment performance using risk-adjusted capital, risk-adjusted capital allocations by segment (as a percentage
applying different leverage ratios to each business to allocate of average managed assets) are as follows: Specialty Finance –
capital based on market criteria and inherent differences in Commercial, 9%, Specialty Finance – Consumer, 5%, Commercial
risk levels. The capital allocations reflect the relative risk of Services, Corporate Finance and Equipment Finance, 10%
individual asset classes within the segments and range from and Capital Finance, 14%. See Note 20 – Business Segment
approximately 2% of managed assets for U.S. government Information of Item 8. Financial Statements and Supplementary
guaranteed education loans to approximately 15% of managed Data for details on our 2005 realignment initiatives and meas-
assets for longer-term assets such as aerospace. The targeted uring segment performance using risk-adjusted capital.

Results by segment were as follows: aircraft disposition loss, pretax income was up modestly from
2004, reflecting improved rentals in both aerospace and rail.
2005 versus 2004
p Equipment Finance net income improvement was driven by
p Specialty Finance – Commercial reflected improved profit-
lower charge-offs and a $14.4 million after-tax gain on the
ability in the vendor programs and international operations
strategic sale of certain business aircraft.
as well as a $26.8 million after tax gain on the sale of the
micro-ticket leasing point of sale unit, offset by the loss 2004 versus 2003
($11.9 million after tax) on the disposition of manufactured
p Specialty Finance – Commercial reflected improved prof-
housing receivables.
itability in the small and mid-ticket leasing business and the
p Specialty Finance – Consumer results reflected higher continuation of strong returns in the vendor programs, which
earnings in the home lending unit as well as earnings from were offset in part by the loss related to the accelerated liqui-
the student lending business acquired in the first quarter dation via sale of the manufactured housing portfolio.
of 2005. Returns both as a percentage of average earning
p Specialty Finance – Consumer results reflected higher net
assets and equity declined from the prior year. The decline
income and the continuation of good returns in the home
in return on average earning assets was due to the lower
lending unit. Home lending profitability also reflected lower
margins in the U.S. government guaranteed student lending
securitization gains in 2004.
business. The decline in return on average equity was due
to the allocation of capital related to goodwill associated with p Commercial Services earnings reflected continued high
the student lending acquisition. returns in our factoring operations as well as the benefit from
acquisitions completed in the latter part of 2003.
p Commercial Services earnings improvement was driven by
higher interest margin. Factoring commissions were up 4% p Corporate Finance earnings were essentially flat with 2003.
from the prior year as increased volume was mitigated by
p Capital Finance returns rebounded from disappointing
lower commission rates.
results in 2003, reflecting some improvement in aerospace
p Corporate Finance earnings reflected strong results across rentals and continued strong rail rentals, as well as increased
virtually all industry groups and increased non-spread non-spread revenue.
revenue, offset by increased operating expenses, as we
p Equipment Finance returns improved from the low 2003
continue to invest in sales initiatives.
level, reflecting sharply lower charge-offs and higher equip-
p Capital Finance net income includes a $52.8 million after-tax ment gains. Profitability improvement was broad, across
loss relating to the disposition of certain aircraft assets. This business lines in both the U.S. and Canada.
amount was offset by a significant reduction in tax expense
Corporate included after tax amounts as shown in the
($34.6 million after tax) due to the transfer of certain aero-
table below:
space leasing operations offshore and the resolution of a tax
liability in our international operations. Excluding the
Corporate for the years ended December 31 (dollars in millions)
2005 2004 2003

Unallocated expenses $(93.9) $(75.6) $ (3.3)

Real estate investment sale gain 69.7 – –
Mark-to-market on non-accounting hedge derivatives(1) 24.4 – –
Hurricane charges (25.6) – –
Specific Argentine and telecommunication provisions – 26.4 –
Preferred stock dividends (12.7) – –
Restructuring charges (15.4) – –
Gain on debt redemption – 25.5 30.8
Venture capital operating income/(losses)(2) 6.7
(15.5)
(77.6)
Total $(46.8)
$(39.2)
$(50.1)
(1)
See description in Other Revenue.
(2)
Venture capital operating losses include realized and unrealized gains and losses related to venture capital investments as well as interest costs and other operat-
ing expenses associated with these portfolios.
The increase in unallocated corporate operating expense in compensation, professional services, and other compliance-
both years was due primarily to increased performance-based related costs as well as higher unallocated funding costs.

REVENUE
Revenue (dollars in millions)
$3,000 $2,772.6 The trend in our revenues (total net revenues) from 2003 to
$2,422.4 2005 reflects both asset growth and a focus on non-spread
2,500
$2,162.4
2,000
$1,137.4 revenue growth. Non-spread revenue accounted for 41% of
$887.1
$859.3 net revenue in 2005, up from 37% in 2004 and 40% in
1,500
2003. Increasing non-spread revenue continues to be a
1,000 strategic focus.
500
$1,303.1 $1,535.3 $1,635.2
0
2003 2004 2005 2006
Net Finance Margin
Other Revenue (Non-Spread Revenue)
NET FINANCE MARGIN
Net Finance Margin for the years ended December 31 (dollars in millions)
2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2004
2003
Finance income – loans and capital leases $ 3,018.7 $ 2,363.8 $ 2,249.2

Rental income on operating leases 1,496.5 1,397.0 1,460.1
Interest expense 1,912.0
1,260.1
1,348.7
Net finance income 2,603.2 2,500.7 2,360.6

Depreciation on operating lease equipment 968.0
965.4
1,057.5
Net finance margin $ 1,635.2

$ 1,535.3
$ 1,303.1
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Average Earnings Assets (“AEA”) $48,128.2

$39,011.3
$35.813.4
As a % of AEA:
Finance income – loans and capital leases 6.27% 6.06% 6.28%
Rental income on operating leases 3.11% 3.58% 4.08%
Interest expense 3.97%
3.23%
3.77%
Net finance income 5.41% 6.41% 6.59%

Depreciation on operating lease equipment 2.01%
2.47%
2.95%
Net finance margin 3.40%

3.94%
3.64%
As a % of AOL:
Rental income on operating leases 17.03% 17.86% 20.16%
Depreciation on operating lease equipment 11.02%
12.34%
14.60%
Net operating lease margin 6.01%

5.52%
5.56%
Average Operating Lease Equipment (“AOL”) $ 8,788.5

$ 7,821.2
$ 7,241.1

The amount of net finance income increased during 2005 and In both 2005 and 2004, the proportion of longer-lived aero-
2004, reflecting the higher asset levels. As a percentage of aver- space and rail assets in Capital Finance increased from the
age earning assets, net finance income declined in both years preceding year. These longer-lived assets have lower rental rates
due to: 1) the blending of the lower rate, U.S. government and lower annual depreciation rates as a percentage of the
guaranteed student lending portfolio in 2005 (net finance operating lease assets than small to mid-ticket leasing assets in
income as a percentage of AEA excluding student lending was Specialty Finance – Commercial and Equipment Finance.
5.84% in 2005); 2) pricing pressure, reflecting liquidity in As a result operating lease rentals and depreciation expense
many of our lending businesses; and 3) an increasingly more declined as a percentage of operating lease assets during both
conservative liquidity profile during the periods, including years. The increase in net operating lease margin as a percent-
higher cash balances, the continued maturity extension of the age of operating lease assets reflected strengthening rental rates
debt portfolio and other increased alternative liquidity facili- in both aerospace and rail, including the impact of higher
ties. Yield related fees also declined in 2005. Market interest interest rates. See “Concentrations – Operating Leases” for
rates increased in both 2005 and 2004. Though we continu- additional information regarding our operating lease assets.
ously manage our interest rate sensitivity with essentially a
matched asset/liability position, we do fund a modest amount
of fixed-rate assets with variable rate debt. As a result, the rising
market interest rate environment also put modest pressure on
our margins.
NET FINANCE MARGIN AFTER PROVISION FOR CREDIT LOSSES

(RISK ADJUSTED MARGIN)
Net Finance Margin after Provision for Credit Losses (Risk Adjusted Margin) for the years ended December 31 (dollars in millions)
2005
2004
2003
Net finance margin $ 1,635.2 $ 1,535.3 $ 1,303.1

Provision for credit losses 217.0
214.2
387.3
Net finance margin after provision for credit losses (risk adjusted margin) $ 1,418.2
$ 1,321.1
$ 915.8
As a % of AEA:
Net finance margin 3.40% 3.94% 3.64%
Provision for credit losses 0.45%
0.55%
1.08%
Net finance margin after provision for credit losses (risk adjusted margin) 2.95%
3.39%
2.56%
Average Earnings Asset (“AEA”) $48,128.2

$39,011.3
$35,813.4
The growth in risk adjusted margin from 2003 to 2005 largely further in “Reserve for Credit Losses”. Excluding this item,
reflects the variances in net finance margin as discussed previ- adjusted margin as a percentage of AEA was 3.02% for 2005.
ously, as well as a benefit from lower charge-offs, which we During 2004, we reduced previously established specific
discuss further in “Credit Metrics”. reserves by $43.3 million relating to telecommunications assets.
Excluding this provision reduction, risk adjusted margin as
During 2005, we recorded a $34.6 million provision for credit a percentage of AEA was 3.28%.
losses related to estimated hurricane losses, which is discussed

OTHER REVENUE
Other Revenue for the years ended December 31 (dollars in millions)
2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2004
2003
Fees and other income $ 637.0 $518.6 $586.2

Factoring commissions 235.7 227.0 189.8
Gains on sales of leasing equipment 91.9 101.6 70.7
Gains on securitizations 39.1 59.1 100.9
Gain on real estate investment sale 115.0 – –
Charge related to aircraft accelerated liquidation (86.6) – –
Gain on sale of micro-ticket leasing business unit 44.3 – –
Gain on strategic sale of business aircraft 22.0 – –
Gain on derivatives 43.1 – –
Charges related to sale of manufactured housing loans (20.0) (15.7) –
Net gain (loss) on venture capital investments 15.9
(3.5)
(88.3)
Total other revenue $1,137.4

$887.1
$859.3
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Other revenue as a percentage of AEA 2.36%

2.27%
2.40%
Other revenue as a percentage of net revenues 41.0%

36.6%
39.7%
We continue to emphasize growth and diversification of other Securitization gains were 2.8% of pretax income in 2005, down
revenues to improve our overall profitability. from 4.8% and 10.8% in the preceding two years.
Fees and other income include securitization-related servicing The following items of note, the majority of which were the
fees and accretion, syndication fees, miscellaneous fees, and result of capital allocation activities, also impacted other rev-
gains from asset sales. Securitization-related fees (net of impair- enue. Excluding these amounts and venture capital investment
ment charges) were essentially flat in 2005 due to reduced gains and losses, other revenue was 2.09%, 2.32% and 2.65%
impairment charges, following a decline in 2004, corresponding of AEA and 38.0%, 37.1% and 42.1% of net revenues for
to a 14% decline in securitized assets. Our emphasis on funding 2005, 2004 and 2003.
home lending receivables on-balance sheet resulted in a
Gain on real estate investment resulted from the sale of an inter-
reduction in securitization-related revenues and an increase in
est in Waterside Plaza, a residential complex in New York City.
both interest margin and provision for credit losses in both years.
Strong fees and other income in Capital Finance and Corporate Charge related to aircraft held for sale resulted from manage-
Finance more than offset this factor. Gains on sales of receivables ment’s strategic decision to actively market certain older, out of
were up from 2005 due to sales of student lending receivables. production commercial, regional and business aircraft in the
third quarter of 2005 with a carrying value of approximately
Higher factoring commissions reflect strong volumes, including
$190 million. As of December 31, 2005, approximately $15.0
incremental volume from acquisitions, though commission
million have been sold at amounts approximating the written-
rates were down modestly from 2004. The increased commis-
down values. The remainder of the portfolio remains classified
sions in 2004 reflected two large acquisitions completed during
as assets held for sale.
the latter part of 2003.
Gain on sale of micro-ticket leasing business is the fourth quar-
Gains on sales of equipment remained strong in 2005, but were
ter 2005 sale of the micro-ticket leasing point-of-sale unit in
down from 2004, largely in Capital Finance. The increase in
Specialty Finance – Commercial.
2004 resulted from firming of equipment prices and higher
gains across virtually all leasing businesses, most notably in Gain on sale of business aircraft reflects the strategic sale of the
Equipment Finance and in the international unit of Specialty majority of the Equipment Finance business aircraft portfolio
Finance-Commercial. (approximately $900 million). The remainder of this portfolio
(approximately $600 million) was transferred to Capital Finance
Securitization gains decreased in 2005 and 2004 from the
following the completion of the sale in the second half of 2005.
preceding years, due to both a lower volume of receivables secu-
ritized and reduced gains on the amounts securitized. In 2005 Gain on derivatives relates to the mark-to-market of certain
and 2004, we funded home lending growth entirely on-balance compound cross-currency swaps that did not qualify for hedge
sheet, versus $489 million of home lending assets that were accounting treatment. All of the swaps were either terminated
securitized in 2003. The lower gains as a percentage of volume or had matured as of December 31, 2005. See Item 9A.
in both 2005 and 2004 were primarily due to a higher proportion Controls and Procedures for a discussion of internal controls
of, and tighter spreads on, vendor receivables sold. relating to derivative hedge accounting.

Charges related to the sales of manufactured housing loans and 2004. These assets were reclassified as held for sale on the
reflect the accelerated liquidation of approximately $125 mil- financial statements and marked to estimated fair value, result-
lion and $300 million in manufactured housing loans in 2005 ing in the above charges.
RESERVE FOR CREDIT LOSSES
Reserve for Credit Losses for the years ended December 31 (dollars in millions)
2005
2004
2003
Balance beginning of period $617.2

$643.7
$760.8
Provision for credit losses – finance receivables (by segment)

Specialty Finance – Commercial 93.2 109.2 132.8
Specialty Finance – Consumer 34.6 32.7 26.5
Equipment Finance 21.1 53.2 125.7
Corporate and Other, including specific reserving actions 37.4
(36.1)
15.9
Total provision for credit loss 217.0 214.2 387.3

Reserves relating to acquisitions, other movements 38.6
60.5
17.5
Additions to reserve for credit losses, net 255.6

274.7
404.8
Net credit losses – excluding telecommunications and Argentina:

Specialty Finance – Commercial 95.3 111.0 138.8
Specialty Finance – Consumer 53.2 41.0 27.2
53.2
125.7
Net credit losses – prior to telecommunication/Argentine chargeoffs 251.1 261.1 373.9

Telecommunications – 40.1 47.0
Argentine –
–
101.0
Total net credit losses 251.1

301.2
521.9
Balance end of period $621.7

$617.2
$643.7
Reserve for credit losses as a percentage of finance receivables 1.40% 1.76% 2.06%
Reserve for credit losses as a percentage of past due receivables (60 days or more) 82.0% 101.5% 95.2%
Reserve for credit losses as a percentage of non-performing assets 119.3% 114.4% 95.2%

The lower level of reserve for credit losses in the years presented segment owned and securitized receivables in the three most
above reflects the improvements in our credit metrics, specifi- impacted states (Louisiana, Alabama and Mississippi) were
cally the decline in charge-offs over the same periods. This approximately $925 million and $200 million. Of these
credit quality improvement, along with the addition of amounts, exposure to commercial and consumer customers
$5.1 billion of U.S. government guaranteed student lending located in the Federal Emergency Management Agency
receivables, drove the decline in the percentage of reserve to (“FEMA”) designated disaster areas and other areas that man-
finance receivables over the periods shown. Corporate and agement determined were significantly impacted were
Other includes specific amounts provided for estimated hurri- approximately $600 million and $50 million respectively,
cane losses in 2005 and the reversal of previously established including approximately $250 million in the FEMA desig-
specific telecommunications reserves in 2004. See Credit nated disaster areas relating principally to equipment and
Metrics for further discussion. vendor finance assets and home mortgages. For commercial
loans, management performed a loan-by-loan assessment of
We determine the reserve for credit losses using three key estimated loss. For equipment and vendor assets and home
components: (1) specific reserves for collateral and cash mortgages in the FEMA designated disaster areas, manage-
flow dependent loans that are impaired under SFAS 114, ment performed an analysis of exposure by zip code, including
(2) reserves for estimated losses inherent in the portfolio based flood versus non-flood designated locations, supplemented
upon historical and projected credit risk, and (3) reserves for with a range of corresponding estimated damage assessments.
economic environment risk and other factors. This estimate of loss involves considerable judgment and
assumptions about uncertain matters, including the existence
The reserve included specific reserves, excluding telecommuni- of insurance in force with respect to damages incurred, insur-
cation accounts, relating to impaired loans of $61.7 million, ance claims and proceeds and the extent of property damage.
$87.1 million and $66.4 million at December 31, 2005, 2004 Our current expectation is for related charge-offs to be realized
and 2003. The 2005 balance includes amounts for a power in the latter part of 2006 and into 2007. Management will
generation facility subject to bankruptcy proceedings and continue to assess the financial impact of the hurricanes as
Hurricanes Katrina and Rita, while the 2004 balance includes more information becomes available.
amounts related to U.S. commercial airline hub carriers. The
portion of the reserve related to inherent estimated loss and While the Hurricane reserves were provisioned through
estimation risk reflects our evaluation of trends in our key Corporate, a summary of the estimated incurred hurricane
credit metrics, as well as our assessment of risk in specific charges by segment is as follows:
industry sectors.
(dollars in millions)
In managing the consolidated reserve for credit losses to provide Reserve for
for losses inherent in the portfolio, we estimate the ultimate Credit Losses
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
outcome of collection efforts and realization of collateral Specialty Finance – Commercial $ 4.2
values, among other things. Therefore, we may make additions
or reductions to the consolidated reserve for credit losses Specialty Finance – Consumer 16.9
depending on changes in economic conditions or credit metrics, Total Specialty Finance Group 21.1
including past due and non-performing accounts, or other Commercial Services 3.0
events affecting specific obligors or industries. We continue
Corporate Finance 6.5
to believe that the credit risk characteristics of the portfolio are
well diversified by geography, industry, borrower, and collateral Equipment Finance 4.0
type. See “Concentrations” for more information. Total Commercial Finance Group 13.5
Total $34.6
During the third quarter of 2005, we established a $34.6 mil- 㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
lion reserve for credit losses related to Hurricanes Katrina and Based on currently available information and our portfolio
Rita. This amount reflects management’s best estimate of loss risk assessment, we believe that our total reserve for credit
based on available, relevant information. Total business losses is adequate.

CREDIT METRICS
NET CHARGE-OFFS
Net Charge-offs for the years ended December 31 (dollars in millions)
2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2004
2003
Owned
Specialty Finance – Commercial $ 95.3 1.08% $111.0 1.32% $239.8 2.96%
0.52% 41.0
1.11% 27.2
1.53%
Total Specialty Finance 148.5
0.78% 152.0
1.26% 267.0
2.71%
Commercial Services 22.9 0.34% 23.3 0.37% 27.6 0.54%
Corporate Finance 0.5 0.01% 66.1 1.00% 91.6 1.44%
Capital Finance 53.6 2.34% 6.6 0.37% 10.0 0.53%
0.51% 53.2
0.84% 125.7
2.03%
0.46% 149.2
0.71% 254.9
1.30%
Total $251.1
0.60% $301.2
0.91% $521.9
1.77%
Managed
Specialty Finance – Commercial $133.8 1.06% $155.4 1.25% $299.5 2.44%
0.72% 60.8
1.17% 40.6
1.02%
0.90% 216.2
1.22% 340.1
2.09%
Capital Finance 53.6 2.34% 6.6 0.37% 10.0 0.53%
0.56% 97.7
1.06% 210.8
2.14%
0.48% 193.7
0.81% 340.0
1.47%
Total $334.6
0.68% $409.9
0.99% $680.1
1.72%
Owned Charge-Offs (as a percentage of average finance receivables) Managed Charge-Offs (as a percentage of average managed receivables)
2% 2%
1.77% 1.72%
0.99%
1 0.91% 1
0.68%
0.60%
0 0
2003 2004 2005
2003 2004 2005
The trends in the tables above are positive, as charge-offs on an modest, particularly as a percentage of securitized assets given
owned and managed basis, both in amount and as a percentage our emphasis on balance sheet funding during 2005 and 2004.
of assets, declined in 2005 and 2004 across virtually every seg- Total securitized portfolio charge-offs were 1.12%, 1.28%
ment. Capital Finance was the only notable exception, as 2005 and 1.58% as a percentage of securitized assets in 2005, 2004
amounts included $48.5 million in airline receivable charge- and 2003, reflecting the higher proportion of vendor assets sold
offs on two bankrupt U.S. hub carriers. The improvement in (for which CIT has loss recourse) and improvement in the
charge-offs was largely in the owned portfolio, as the decline in Equipment Finance portfolios. Consumer home lending
securitized portfolio charge-offs during the two years was more securitization-related charge-offs increased approximately

$8 million or 139 basis points as a percentage of securitized Corporate Finance trends between 2003 and 2005 were driven
assets from 2004, due to seasoning in these portfolios and largely by charge-offs in the telecommunications portfolio that
the switch to on-balance sheet funding in this business. were taken against a specific reserve established in 2002.
Approximately $40 million of these telecommunication
Specialty Finance - Commercial charge-offs improved in 2005 charge-offs were taken in both 2003 and 2004, versus negligi-
due to improved credit in the vendor programs, the international ble amounts in 2005, as the current period benefited from
unit and small business lending. Charge-offs in 2003 included a recoveries in this portfolio.
$101.0 million write-off of owned assets in Argentina, which
reflected the substantial progress of collection and work out efforts Capital Finance 2005 charge-offs included the above-
in the Argentine portfolio. Excluding Argentina and liquidating mentioned charge-offs on two bankrupt U.S. hub carriers.
portfolios, Specialty Finance - Commercial charge-offs were
1.56% as a percentage of average finance receivables for 2003. Equipment Finance charge-off reductions in both 2005 and
2004 were across product lines in both the U.S. and Canada,
Specialty Finance - Consumer charge-offs in 2005 were up in reflecting improved underwriting standards, lower non-per-
amount from the prior year, but were down as a percentage of forming assets and strengthening collateral values.
average finance receivables, reflecting portfolio growth,
improved credit performance and the addition of the student
lending assets.
PAST DUE LOANS AND NON-PERFORMING ASSETS

Like charge-off trends, the trend in our delinquency and non- in the commercial businesses. Delinquencies increased in
performing metrics were favorable for the three-year period and 2005, primarily due to the student lending acquisition, as
ended 2005 at levels that are low in relation to our historical delinquency in this business is high in relation to our other
measures. Non-performing assets declined in both 2005 and portfolios, yet is not indicative of ultimate loss due to the U.S.
2004 from the preceding years, both in amount and as a per- government guarantee. Excluding these assets, owned delin-
centage of assets, with broad-based improvement, particularly quency was $625.5 million (1.59%) at December 31, 2005.
Past Due Loans (60 days or more) as of December 31 (dollars in millions, % as a percentage of finance receivables)
2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2004
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2003
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Owned Past Due

Specialty Finance – Commercial $296.8 3.49% $283.3 3.22% $ 287.3 3.59%
2.35% 116.4
2.27% 88.7
3.33%
2.79% 399.7
2.87% 376.0
3.53%
Capital Finance 17.0 0.90% 26.9 1.47% 17.4 1.03%
1.01% 50.1
0.79% 137.9
2.18%
0.64% 208.3
0.99% 300.3
1.45%
Total $758.2
1.71% $608.0
1.73% $ 676.3
2.16%
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Managed Past Due

Specialty Finance – Commercial $402.6 3.04% $402.1 2.82% $ 418.4 3.19%
2.71% 227.8
3.45% 197.6
4.22%
2.87% 629.9
3.02% 616.0
3.46%
Capital Finance 17.0 0.83% 26.9 1.47% 17.4 1.03%
0.90% 90.3
0.96% 243.6
2.49%
0.64% 248.5
1.03% 406.0
1.69%
Total $965.4
1.81% $878.4
1.95% $1,022.0
2.44%
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Specialty Finance – Commercial delinquency increased in Commercial Services delinquency was down in 2005 due to the
2005, reflecting higher delinquency levels in the vendor finance work-out of one significant account.
and international portfolios.
Corporate Finance, Capital Finance, and Equipment Finance
Specialty Finance – Consumer delinquency increased in 2005, delinquencies remained at the relatively low year-end 2004 levels.
primarily due to the student lending acquisition. Excluding stu-
dent lending receivables, delinquencies were $185.5 million
(2.18%), versus $116.4 million (2.27%) last year-end, reflecting
the home lending portfolio growth.
Non-performing Assets as of December 31 (dollars in millions, % as a percentage of finance receivables)
2005
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2004
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2003
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Specialty Finance – Commercial $155.2 1.83% $165.9 1.88% $179.7 2.25%

1.28% 119.3
2.32% 96.3
3.61%
1.49% 285.2
2.05% 276.0
2.59%
Capital Finance 22.3 1.18% 4.6 0.25% 12.2 0.73%
1.18% 131.2
2.06% 218.3
3.46%
0.87% 254.4
1.21% 400.5
1.94%
Total $521.2
1.18% $539.6
1.54% $676.5
2.16%
Non-accrual loans $460.7 $458.4 $566.5

Repossessed assets 60.5
81.2
110.0
Total non-performing assets $521.2

$539.6
$676.5
Non-performing assets decreased in both amount and per- Specialty Finance – Consumer. The decline in percentage
centage in 2005 and 2004. Improvements during 2005 in from 2004 also reflects the impact of acquired student
Commercial Services, Equipment Finance and the vendor lending receivables. The improvement in Corporate
finance business of Specialty Finance – Commercial were Finance during 2004 reflects the return to accrual status
offset by increased non-accrual assets in Corporate Finance of a waste-to-energy project. Repossessed asset inventory
($60 million lease on a power generation facility), Capital declined reflecting lower inventory levels primarily in
Finance (aerospace) and the home lending business of Equipment Finance.
SALARIES AND GENERAL OPERATING EXPENSES
Salaries and General Operating Expenses for the years ended December 31 (dollars in millions)
2005
2004
2003
Salaries and employee benefits $ 695.8 $ 612.2 $ 529.6

Other general operating expenses 418.0
399.9
358.6
Salaries and general operating expenses $ 1,113.8

$ 1,012.1
$ 888.2
Efficiency ratio(1) 41.1% 41.8% 41.1%

Salaries and general operating expenses (including the restructuring charge)
as a percentage of AMA 2.05% 2.13% 1.94%
Average Managed Assets $55,553.7
$47,519.3
$45,809.3
(1)
Excluding various “non-recurring” gains and losses (including real estate investment gains, derivative mark to market adjustments, venture capital gains and
losses and other items) in other revenue and the 2005 restructuring charge, the efficiency ratio was 42.2%, 41.5% and 39.5% for 2005, 2004 and 2003.

Salaries and general operating expenses in 2005 increased, The efficiency ratio, excluding non-recurring items, deteriorated
largely due to incremental operating expenses associated with for 2005 and 2004 as the rate of expense increase outpaced rev-
current year acquisitions (student lending in Specialty Finance enue growth in both years, particularly given our investment in
– Consumer and healthcare in Corporate Finance), invest- sales and marketing initiatives. Both the Specialty Finance and
ments made in our sales and marketing functions and higher Commercial Finance efficiency ratios deteriorated modestly from
incentive-based compensation. The 2005 expense also includes 2004. Personnel totaled 6,340 at December 31, 2005, versus
$10.5 million in charges relating to the combination of an early 5,860 and 5,800 at the end of the prior two years.
termination of a portion of our New York City building lease
and for a legal settlement. Both the business unit and corporate management monitor
expenses closely, and actual results are reviewed monthly in
The 2004 increase from 2003 was driven primarily by higher comparison to business plan and forecast. We have an approval
incentive-based compensation (including restricted stock and review procedure for major capital expenditures, such as
awards), increased professional fees, including higher compli- computer equipment and software, including post-implementa-
ance-costs related to the Sarbanes-Oxley Act and increased tion evaluations.
benefit expenses.
INCOME TAXES
Provision for Income Taxes for the years ended December 31 We have U.S. federal net operating losses (“NOL’s”) of approxi-
(dollars in millions) mately $850 million at December 31, 2005, which expire in
various years beginning in 2011. In addition, we have various
2005 2004 2003
state NOL’s that will expire in various years beginning in 2006.
Provision for income taxes $464.2 $483.2 $365.0 Federal and state operating losses may be subject to annual use
Effective tax rate 32.8% 39.0% 39.0% 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 tax-
The effective tax rate differs from the U.S. federal tax rate of
able income in future years and can avail itself of tax planning
35% primarily due to state and local income taxes, the domes-
strategies in order to utilize these federal losses fully.
tic and international geographic distribution of taxable income
Accordingly, we do not believe a valuation allowance is required
and corresponding foreign income taxes, as well as differences
with respect to these federal NOL’s. Based on management’s
between book and tax treatment of certain items. The 2004
assessment as to realizability, the net deferred tax liability
and 2003 effective tax rates exceed the U.S. federal rate prima-
includes a valuation allowance of approximately $19.0 million
rily due to state and local income taxes.
and $7.4 million as of December 31, 2005 and December 31,
2004 relating to state NOL’s.
The reduction in the 2005 effective tax rate reflects:
(1) improved profitability in our international operations,
We have open tax years in the U.S., Canada and other juris-
resulting from better platform efficiency coupled with asset
dictions that are currently under examination by the applicable
growth; (2) the relocation of certain aerospace assets to Ireland
taxing authorities, and certain tax years that may in the future
with offshore funding, as provisions of the American Jobs
be subject to examination. Management periodically evaluates
Creation Act of 2004 provide favorable tax treatment for cer-
the adequacy of our related tax reserves, taking into account
tain aircraft leasing operations conducted offshore; (3) the
our open tax return positions, tax assessments received, tax law
release of a $17.0 million deferred tax liability associated with
changes and third-party indemnifications. We believe that our
the Irish aerospace initiative; and (4) the release of a tax liability
tax reserves are appropriate. The final determination of tax
of $17.6 million relating to our international operations, as we
audits could affect our tax reserves.
finalized a tax filing position based on a favorable opinion
received from the local tax authorities.
See Item 9A. Controls and Procedures for a discussion of internal
controls relating to income taxes.

FINANCING AND LEASING ASSETS
Financing and Leasing Assets by Segment as of December 31 (dollars in millions)
% change
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
2005
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2004
2003
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05 vs 04 04 vs 03
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Specialty Finance Group

Finance receivables $ 8,503.0 $ 8,805.7 $ 7,996.5 (3.4)% 10.1%
Operating lease equipment, net 1,049.5 1,078.7 959.5 (2.7)% 12.4%
Financing and leasing assets held for sale 826.3
1,288.4
548.1
(35.9)% 135.1%
Owned assets 10,378.8 11,172.8 9,504.1 (7.1)% 17.6%
Finance receivables securitized and managed by CIT 3,921.6
4,165.5
4,557.9
(5.9)% (8.6)%
Managed assets 14,300.4
15,338.3
14,062.0
(6.8)% 9.1%
Specialty Finance – Consumer
Finance receivables – home lending 8,199.7 4,896.8 2,513.1 67.5% 94.9%
Finance receivables – student lending 5,051.0 – –
Finance receivables – other 302.9 236.0 151.2 28.3% 56.1%
241.7
150.0
61.4% 61.1%
Owned assets 13,943.8 5,374.5 2,814.3 159.4% 91.0%
Home lending finance receivables securitized and managed by CIT 838.8
1,228.7
1,867.6
(31.7)% (34.2)%
6,603.2
4,681.9
123.9% 41.0%
Commercial Finance Group
Commercial Services
Finance receivables 6,690.0
6,204.1
6,325.8
7.8% (1.9)%
Corporate Finance
Finance receivables 9,348.3 6,702.8 6,314.1 39.5% 6.2%
Operating lease equipment, net 73.3 35.1 – 108.8% –
–
–
Owned assets 9,549.5 6,737.9 6,314.1 41.7% 6.7%

Finance receivables securitized and managed by CIT 41.2
–
–

6,737.9
6,314.1
42.3% 6.7%
Capital Finance
Finance receivables 1,895.4 1,829.7 1,681.6 3.6% 8.8%
Operating lease equipment, net 8,408.5 6,736.5 6,236.4 24.8% 8.0%
–
–
Owned assets 10,454.2

8,566.2
7,918.0
22.0% 8.2%
Equipment Finance
Finance receivables 4,304.2 6,373.1 6,317.9 (32.5)% 0.9%
Operating lease equipment, net 104.4 440.6 419.6 (76.3)% 5.0%
110.7
220.2
13.5% (49.7)%
Owned assets 4,534.2 6,924.4 6,957.7 (34.5)% (0.5)%

Finance receivables securitized and managed by CIT 2,484.1
2,915.5
3,226.2
(14.8)% (9.6)%
9,839.9
10,183.9
(28.7)% (3.4)%
Other – Equity Investments 30.2
181.0
249.9
(83.3)% (27.6)%
Managed assets $62,866.4
$53,470.6
$49,735.6
17.6% 7.5%
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Total Managed Assets as of December 31 (dollars in billions) Record business volumes, reflecting the emphasis on sales initia-
tives and our more customer-centric perspective, drove financing
and leasing asset growth for 2005. Leading the 2005 growth was
$80 Specialty Finance – Consumer, Home Lending and Student
70 $62.9 Loan Xpress. (See “Concentration” section for specific detail
60 $53.5 $7.3 on these businesses). Home lending completed a second year
$49.7
50 $8.3 of strong growth as we strategically supplement our originations
$9.6
40
with bulk purchases. At the outset of 2005, we announced our
30
venture into the student lending business, which grew by about
20
$1 billion during the year. Corporate Finance experienced sig-
10
$40.1 $45.2 $55.6 nificant growth, notably in Telecommunications & Media,
0
2003 2004 2005 Capital Markets and especially in Healthcare, through an
acquisition and expansion beyond our traditional vendor financ-
Finance Receivables Securitized
and Managed by CIT ings. The Capital Finance aerospace portfolio continued to
Owned Assets timely place all deliveries of new aircraft (see “Concentration”
section for specific detail on this business). Strength in the rail
industry, provided opportunities to grow our rail assets to
In 2005, we launched several initiatives to grow our business $3.5 billion, an increase of $0.9 billion for the year. The decline
through expanding our sales force, broadening our market in Specialty Finance – Commercial is due primarily to sales,
reach via industry vertical alignment, improving certain higher including the sale of a micro-ticket leasing business as well as
growth industries such as healthcare and student lending, and manufactured housing assets. Equipment Finance decreased
improving our syndication and capital markets capabilities. We due to asset sales, as well as portfolio transfers, for which prior
continued to allocate capital to businesses with higher risk- period amounts have not been restated. During 2005, we sold
adjusted returns by liquidating non-strategic portfolios. Aided $0.9 billion of the business aircraft portfolio, and transferred
by an improving economy, this approach to growth and risk the remaining to Capital Finance (approximately $0.6 billion).
management led to continued declines in delinquency, non- (See “Disposition” section below for significant sale activity).
performing assets, and charge-off levels from 2004. The decline in receivables securitized reflects our funding home
lending growth on-balance sheet and a lower level of commercial
equipment securitizations.
BUSINESS VOLUMES
Total Business Volumes for the years ended December 31
$35,000
$31,250.5
30,000
25,000 $23,556.6
$20,232.1
20,000
15,000
10,000
5,000
0
2003 2004 2005
Business Volumes for the years ended December 31 (excluding factoring, dollars in millions)
2005
2004
2003
Specialty Finance – Commercial $10,642.4 $ 9,962.2 $ 9,047.3

Specialty Finance – Consumer 9,606.7 4,881.8 3,382.3
Corporate Finance 5,166.5 2,796.5 2,656.9
Capital Finance 2,264.1 1,333.7 1,321.5
Equipment Finance 3,570.8
4,582.4
3,824.1
Total new business volume $31,250.5

$23,556.6
$20,232.1

We had record business volume in all but one of our segments lending originators. Specialty Finance – Commercial continued
in 2005. Specialty Finance – Consumer volumes doubled as the to generate strong new business strong volumes as increased
relatively low interest rate environment resulted in strong pro- volumes during 2004 were followed by higher 2005 levels most
duction from our home lending broker origination channel, notably in the vendor and international units. Capital Finance
while softness with respect to liquidity and pricing in the home volumes increased over the two years on aircraft deliveries and
lending securitization markets afforded us the opportunity to rail growth. The decrease in Equipment Finance volumes
purchase newly originated portfolios in bulk from other home reflects related business transfers.
ACQUISITIONS
Acquisition Summary (dollars in millions)
Asset Type
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Assets
Closing
Segment
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Healthcare $ 500 3rd quarter 2005 Corporate Finance

Factoring 860 1st quarter 2005 Commercial Services
Student loans 4,300 1st quarter 2005 Specialty Finance – Consumer
Vendor finance 700 3rd quarter 2004 Specialty Finance – Commercial
Technology 520 2nd quarter 2004 Specialty Finance – Commercial
In January 2005, we announced our purchase of Education acquisition was an add-on to our established businesses. We
Lending Group, a student lending company, which provided acquired a healthcare business to quickly grow this strategic
CIT with a new product line with good growth opportunities, product line, which offers high growth opportunities coupled
and we have grown this portfolio by about $1 billion during with strong returns.
the year by expanding the business sales reach. The factoring
DISPOSITIONS
Disposition Summary (dollars in millions)
Asset Type
Assets
Closing
Segment
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Micro-ticket leasing $ 300 4th quarter 2005 Specialty Finance – Commercial

Manufactured housing 400 1st/4th quarters 2005 Specialty Finance – Commercial
Business aircraft 920 2nd quarter 2005 Equipment Finance
Venture capital 150 1st /2nd quarters 2005 Corporate and Other
Non-strategic portfolios (including
recreational marine and vehicle, franchise
finance and owner-operator trucking) 300 Various 2004 Specialty Finance – Commercial / Equipment Finance
Venture capital 70 2nd quarter 2004 Corporate and Other
Periodically during 2004 and 2005, we continued our disposition tion initiatives above, thereby freeing up the corresponding capital
of assets that we determined did not meet our risk-adjusted return for redeployment. We also targeted in the third quarter of 2005
criteria or did not fit in with our strategic direction, including approximately $200 million of Capital Finance commercial air-
growth and scale characteristics. This guided the scale and liquida- craft assets for sale and wrote them down to estimated fair value.
We anticipate these assets will be sold in the first half of 2006.

CONCENTRATIONS
Ten Largest Accounts assets at December 31, 2005 (the largest account being less
Our ten largest financing and leasing asset accounts in the than 1.0%), 5.3% at December 31, 2004, and 5.7% at
aggregate represented 4.5% of our total financing and leasing December 31, 2003. The decline is due to our consumer port-
folio growth during the year.
OPERATING LEASES
Operating Leases as of December 31 (dollars in millions)
2005
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2004
2003
Capital Finance – Aerospace $5,327.1 $4,461.0 $4,141.1

Capital Finance – Rail and Other 3,081.4 2,275.5 2,095.3
Specialty Finance – Commercial 1,049.5 1,078.7 959.5
Corporate Finance 73.3 35.1 –
440.6
419.6
Total $9,635.7
$8,290.9
$7,615.5
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We strive to maximize the profitability of the lease equipment The decline in Specialty Finance – Commercial operating
portfolio by balancing equipment utilization levels with mar- lease portfolio reflects a general market trend toward
ket rental rates and lease terms. financing equipment through finance leases and loans,
rather than operating leases. The increase in 2004 was due
The year over year increases in the Capital Finance aerospace to a technology financing business acquisition.
portfolio reflect deliveries of new commercial aircraft. The
increases in Capital Finance rail and other was due to strong The decline in Equipment Finance operating leases is
rail volumes, including bulk portfolio purchases, and utiliza- primarily due to the sale of the business aircraft portfolio.
tion, which allowed us to expand our owned railcar portfolio
from approximately 55,000 at the end of 2003 to in excess of
80,000 at December 31, 2005.
LEVERAGED LEASES
Leveraged Lease Portfolio as of December 31 (dollars in millions)
2005
2004
2003
Commercial aerospace – non-tax optimized $ 232.1 $ 336.6 $ 232.5

Commercial aerospace – tax optimized 135.2 221.0 217.9
Project finance 360.1 334.9 325.0
Rail 260.8 233.9 225.4
Other 32.5
115.4
122.1
Total leveraged lease transactions $1,020.7

$1,241.8
$1,122.9
As a percentage of finance receivables 2.3%

3.5%
3.6%
The major components of net investments in leveraged these transactions; 2) project finance transactions, primarily
leases include: 1) commercial aerospace transactions, in the power and utility sectors; and 3) rail transactions.
including tax-optimized leveraged leases, which generally The decline in the aerospace balances during 2005 reflects
have increased risk of loss in default for lessors in relation to the reclassification to operating leases of aircraft leased to
conventional lease structures due to additional leverage and airlines that filed for bankruptcy.
the third-party lender priority recourse to the equipment in

JOINT VENTURE RELATIONSHIPS
Our strategic relationships with industry-leading equipment Our financing and leasing assets include amounts related to
vendors are a significant origination channel for our financing the Dell, Snap-on, and Avaya joint venture programs. These
and leasing activities. These vendor alliances include traditional amounts include receivables originated directly by CIT as well
vendor finance programs, joint ventures and profit sharing as receivables purchased from joint venture entities.
structures. Our vendor programs with Dell, Snap-on and Avaya
are among our largest alliances. We have multiple program Returns relating to the joint venture relationships (i.e., net
agreements with Dell, the largest of which is Dell Financial income as a percentage of average managed assets) for 2005
Services (“DFS”), covering originations in the U.S. The agree- were somewhat in excess of our consolidated returns. A signifi-
ments provide Dell with the option to purchase CIT’s 30% cant reduction in origination volumes from any of these
interest in DFS in February 2008 and extends CIT’s right to alliances could have a material impact on our asset and net
purchase a percentage of DFS finance receivables through income levels. For additional information regarding certain
January 2010. The joint venture agreement with Snap-on was of our joint venture activities, see Note 19 – Certain
recently extended until January 2009, pursuant to an automatic Relationships and Related Transactions.
renewal provision in the agreement. The Avaya agreement,
which relates to profit-sharing on a CIT direct origination
program, extends through September 2006.
Joint Venture Relationships as of December 31 (dollars in millions)
2005
2004
2003
Owned Financing and Leasing Assets

Dell U.S. $1,986.3 $1,980.7 $1,408.1
Dell – International 1,528.3 1,408.7 1,170.1
Snap-on 1,035.7 1,114.7 1,093.4
Avaya Inc. 563.0 620.7 828.6
Securitized Financing and Leasing Assets
Dell U.S. $2,526.1 $2,484.1 $2,471.6
Dell – International 34.2 5.1 17.0
Snap-on 55.4 64.8 68.2
Avaya Inc. 460.5 599.6 781.0

GEOGRAPHIC COMPOSITION
Geographic Concentrations by Obligor as of December 31 (dollars in millions)
2005
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2004
2003
State
California 9.8% 10.3% 10.2%
Texas 7.5% 7.8% 7.7%
New York 6.7% 6.8% 7.4%
All other states 54.9%
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52.8%
54.0%
Total U.S. 78.9%

77.7%
79.3%
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Country
Canada 6.1% 5.5% 5.1%
England 3.5% 3.9% 2.8%
Australia 1.1% 1.3% 1.3%
France 1.0% 1.4% 1.1%
China 1.0% 1.2% 0.9%
Germany 0.8% 1.2% 1.0%
Mexico 0.9% 1.1% 1.0%
All other countries 6.7%
6.7%
7.5%
Total Outside U.S. 21.1%

22.3%
20.7%
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The table summarizes significant state concentrations portfolio assets due to the size of the U.S. student lending
greater than 5.0% and foreign concentrations in excess of acquisition. For each period presented, our managed asset
1.0% of our owned financing and leasing portfolio assets. geographic composition did not differ significantly from
International assets increased in amount from 2004, but our owned asset geographic composition.
were lower as a percentage of owned financing and leasing

INDUSTRY COMPOSITION
Our industry composition is detailed in Note 5 – Concentrations. We believe the following discussions, covering certain industries, are
of interest to investors.
Aerospace
Aerospace as of December 31 (dollars in millions)
2005
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2004
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2003
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Net Net Net

Investment
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Number
Investment
Number
Investment
Number
By Region:
Europe $2,348.4 75 $2,160.0 72 $1,991.0 65
North America 1,243.6 62 1,057.7 66 1,029.7 72
Asia Pacific 1,569.0 52 1,242.4 46 1,013.6 40
Latin America 533.7 20 611.3 25 612.7 28
Africa / Middle East 257.2
6
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
54.2
3
69.1
4
Total $5,951.9
215
$5,125.6
212
$4,716.1
209
By Manufacturer:
Boeing $2,644.6 124 $2,558.8 133 $2,581.7 140
Airbus 3,269.0 84 2,536.9 70 2,114.6 57
Other 38.3
7
29.9
9
19.8
12
Total $5,951.9
215
$5,125.6
212
$4,716.1
209
By Body Type(1):
Narrow body $4,331.0 165 $3,894.9 168 $3,415.7 159
Intermediate 1,347.2 27 842.7 18 877.0 18
Wide Body 235.4 16 358.1 17 403.6 20
Other 38.3
7
29.9
9
19.8
12
Total $5,951.9
215
$5,125.6
212
$4,716.1
209
By Product:
Operating lease $5,327.1 182 $4,324.6 167 $4,011.7 159
(2)
Leverage lease (other) 232.1 10 336.6 12 232.5 12
Leverage lease (tax optimized)(2) 135.2 7 221.0 9 217.9 9
Capital lease 67.7 3 137.4 6 135.6 7
Loan 189.8
13
106.0
18
118.4
22
Total $5,951.9
215
$5,125.6
212
$4,716.1
209
Other Data:
Number of accounts 93 92 84
Largest customer net investment $ 277.3 $ 286.4 $ 268.6
Weighted average age of fleet (years)(3) 6 6 6
Off-lease aircraft 10 2 5
(1)
Narrow body are single-aisle design and consist primarily of Boeing 737 and 757 series and Airbus A320 series aircraft. Intermediate body are smaller twin-
aisle design and consist primarily of Boeing 767 series and Airbus A330 series aircraft. Wide body are large twin-aisle design and consist primarily of Boeing
747 and 777 series and McDonnell Douglas DC10 series aircraft.
(2)
In general, the use of leverage increases the risk of a loss in the event of a default, with the greatest risk incurred in tax-optimization leveraged leases.
(3)
Based on dollar value weighted assets.

Our commercial and regional aerospace portfolios are in the December 31, 2005, our Northwest Airlines exposures include
Capital Finance segment. The commercial aircraft all comply $130.8 million in finance receivables on two Airbus aircraft
with Stage III noise regulations. The increase in the portfolio and one operating lease for $10.0 million for a Boeing aircraft.
was due to new aircraft deliveries from both Airbus and Boeing.
Our aerospace assets include both operating leases and capital
Our top five commercial aerospace exposures totaled leases. Management considers current lease rentals as well as
$1,073.5 million at December 31, 2005. All top five are to relevant and available market information (including third-
carriers outside of the U.S. The largest exposure to a U.S. car- party sales for similar equipment, published appraisal data and
rier at December 31, 2005 was $156.6 million. other marketplace information) both in determining undis-
counted future cash flows when testing for the existence of
The regional aircraft portfolio at December 31, 2005 consisted
impairment and in determining estimated fair value in measur-
of 104 planes and a net investment of $275.3 million. The car-
ing impairment. We adjust the depreciation schedules of
riers are primarily located in North America and Europe. Loans
commercial aerospace equipment on operating leases or resid-
make up approximately 63% of the portfolio, operating leases
ual values underlying capital leases when projected fair value at
account for about 32% of the portfolio, and the remainder are
the end of the lease term is less than the projected book value
capital leases. At December 31, 2004 the portfolio consisted of
at the end of the lease term. We review aerospace assets for
121 planes and a net investment of $302.6 million.
impairment annually, or more often should events or circum-
The following is a list of our exposure to aerospace carriers that stances warrant. Aerospace equipment is defined as impaired
have filed for bankruptcy protection and the current status of when the expected undiscounted cash flow over its expected
our aircraft at December 31, 2005: remaining life is less than its book value. We factor historical
information, current economic trends and independent
p UAL Corp. – United Airlines leases two CIT-owned narrow
appraisal data into the assumptions and analyses we use when
body aircraft (Boeing 757 aircraft) with a net investment of
determining the expected undiscounted cash flow. Included
$44.3 million. We hold Senior A tranche Enhanced
among these assumptions are the following:
Equipment Trust Certificates (“EETCs”) issued by United
Airlines, which are debt instruments collateralized by aircraft p Lease terms
operated by the airline, with a fair value of $12.1 million. p Remaining life of the asset
Further, we have an outstanding balance of $9.5 million p Lease rates
(with a commitment of $31.2 million) relating to a debtor-
in-possession facility in connection with United Airlines’ p Remarketing prospects
filing under Chapter 11. On February 1, 2006, UAL Corp. p Maintenance costs
formally exited bankruptcy, following confirmation of the Aerospace depreciation expense for the years ended December 31,
company’s Plan of Reorganization by the United States 2005, 2004 and 2003 totaled $248.4 million, $215.8 million
Bankruptcy Court. (including a $14.8 million impairment charge) and
p Delta Air Lines – On September 14, 2005, Delta Air Lines $165.4 million.
announced that it had filed for reorganization under Chapter At December 31, 2005, 10 commercial aircraft were off-lease
11 of the U.S. Bankruptcy Code. During the fourth quarter due to bankruptcy repossessions and late-year returns.
of 2005, we charged off $13.2 million. Currently we have Subsequent to year end, we signed one to a lease and have
three loans totaling $33.9 million and one operating lease for letters of intent for all the other aircraft. Generally, we write
$25.0 million secured by four Boeing aircraft. In addition, leases for terms between three and five years. Within the
we have an outstanding balance of $10.0 million (with a regional aircraft portfolio at December 31, 2005, there were
commitment of $15.0 million) relating to a debtor-in-posses- 5 aircraft off-lease.
sion facility.
See Item 8. Financial Statements and Supplementary Data,
p Northwest Airlines – On September 14, 2005, Northwest Note 16 – Commitments and Contingencies for addi-
Airlines announced that it had filed for reorganization under tional information regarding commitments to purchase
Chapter 11 of the U.S. Bankruptcy Code. During the fourth additional aircraft and Note 5 – Concentrations for further
quarter of 2005, we charged off $35.3 million. As of discussion on geographic and industry concentrations.

Home Lending Student Lending (Student Loan Xpress)
Selected statistics for our managed home lending portfolio are The Consumer Finance student lending portfolio, which is
as follows: marketed as Student Loan Xpress, totaled $5.3 billion at
December 31, 2005, representing 9.5% of owned and 8.4% of
As of or for the years ended December 31 (dollars in millions) managed assets. Loan origination volumes were $2.4 billion for
2005 2004 the period of CIT ownership (beginning in February 2005).
___________________ ___________________
Student Loan Xpress has arrangements with certain financial
Portfolio assets $8,335.7 $5,069.8
institutions to sell selected loans and works jointly with these
Managed assets $9,174.5 $6,298.5 financial institutions to promote these relationships.
Portfolio as a %
of owned total assets 15% 9% Finance receivables by product type for our student lending
Managed as a % portfolio are as follows:
of total managed assets 15% 12%
% of first mortgages 92% 92%
December 31, March 31,
Average loan size $ 118.3 $ 101.0 2005 2005
㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮㛮
Top state concentrations California California Consolidation loans $4,668.7 $3,996.9

Florida Florida
Texas, Illinois Texas, Ohio Other U.S. Government
New York Pennsylvania guaranteed loans 568.7 424.6
Top state concentrations as a % Private (nonguaranteed)
of managed portfolio 42% 45% loans and other 30.4
13.4
Fixed-rate mortgage % 43% 56% Total $5,267.8

$4,434.9
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Average loan-to-value 81% 80%

Average FICO score 633 631 Delinquencies (sixty days or more) were $132.7 million,
2.52% of finance receivables at December 31, 2005 and
Delinquencies (sixty days or more) 2.89% 3.59%
$112.6 million, 2.60% at March 31, 2005.
Net charge-offs 0.98% 1.11%
Top 5 state concentrations (California, New York,
The Specialty Finance-consumer home lending business is Pennsylvania, Texas, and Ohio) represented an aggregate
largely originated through a broker network. As part of 37.5% of the portfolio.
originating business through this core channel, we employ
an active portfolio management approach, whereby we target
desired portfolio mix / risk attributes in terms of product type,
lien position, and geographic concentrations, among other
factors, resulting in sales of a portion of our originations from
time to time. We supplement business with opportunistic pur-
chases in the secondary market when market conditions are
favorable from a credit and price perspective.

RISK MANAGEMENT
Our business activities involve various elements of risk. We oversees and manages credit risk throughout CIT. This group
consider the principal types of risk to be credit risk (including includes senior credit executives in each of the business units.
credit, collateral and equipment risk) and market risk (includ- Our Executive Credit Committee includes the Chief Executive
ing interest rate, foreign currency and liquidity risk). Managing Officer, the Chief Lending Officer and members of the
risks is essential to conducting our businesses and to our prof- Corporate Credit Risk Management group. The committee
itability. Accordingly, our risk management systems and approves transactions which are outside of established target
procedures are designed to identify and analyze key business market definitions and risk acceptance criteria, corporate excep-
risks, to set appropriate policies and limits, and to continually tions as delineated within the individual business unit credit
monitor these risks and limits by means of reliable administra- authority and transactions that exceed the strategic business
tive and information systems, along with other policies and units’ credit authority. The Corporate Credit Risk Management
programs. The position of Vice Chairman and Chief Lending group also includes an independent credit audit function.
Officer within the Office of the Chairman was established to Each of our strategic business units has developed and imple-
oversee risk management across the businesses. mented a formal credit management process in accordance
with formal uniform guidelines established by the credit risk
We review and monitor credit exposures, both owned and
management group. These guidelines set forth risk acceptance
managed, on an ongoing basis to identify, as early as possible,
criteria for:
customers that may be experiencing declining creditworthiness
or financial difficulty, and periodically evaluate the perform- p acceptable maximum credit lines;
ance of our finance receivables across the entire organization. p selected target markets and products;
We monitor concentrations by borrower, industry, geographic
region and equipment type, and we set or modify exposure p creditworthiness of borrowers, including credit history, finan-
limits as conditions warrant, to minimize credit concentrations cial condition, adequacy of cash flow, financial performance
and the risk of substantial credit loss. We have maintained a and quality of management; and
standard practice of reviewing our aerospace portfolio regularly p the type and value of underlying collateral and guarantees
and, in accordance with SFAS No. 13 and SFAS No. 144, we (including recourse from dealers and manufacturers).
test for asset impairment based upon projected cash flows and
Compliance with established corporate policies and proce-
relevant market data with any impairment in value charged to
dures, along with the credit management processes at each
earnings. Given the developments in the aerospace sector post
strategic business unit are reviewed by the credit audit group.
2001, performance, profitability and residual values relating to
The credit audit group examines adherence with established
aerospace assets have been reviewed more frequently with the
credit policies and procedures and tests for inappropriate credit
Executive Credit Committee. In conjunction with our capital
practices, including whether potential problem accounts are
allocation initiatives, we are in the process of enhancing our
being detected and reported on a timely basis.
credit risk management practices, including portfolio model-
ing, probability of default analysis, further development of In a limited number of instances, with the approval of
risk-based pricing tools, and reserve for credit loss analysis. Corporate Credit Risk Management, CIT has entered into
credit default swaps. These derivative contracts are designed
Our Asset Quality Review Committee is comprised of mem-
to economically hedge certain credit exposures to customers.
bers of senior management, including the Vice Chairman
and Chief Lending Officer, the Vice Chairman and Chief Commercial Credit Risk Management – The commercial credit
Financial Officer, the Chief Credit Officer, the Controller management process (other than small ticket leasing transac-
and the Director of Credit Audit. Periodically, this committee tions) begins with the initial evaluation of credit risk and
meets with senior executives of our business units and cor- underlying collateral at the time of origination and continues
porate credit risk management group to review portfolio over the life of the finance receivable or operating lease,
performance, including the status of individual financing and including collecting past due balances and liquidating under-
leasing assets, owned and managed, to obligors with higher lying collateral.
risk profiles. In addition, this committee periodically meets
with the Chief Executive Officer of CIT to review overall Credit personnel review a potential borrower’s financial condi-
credit risk, including geographic, industry and customer con- tion, results of operations, management, industry, customer
centrations, and the reserve for credit losses. base, operations, collateral and other data, such as third party
credit reports, to thoroughly evaluate the customer’s borrowing
CREDIT RISK MANAGEMENT and repayment ability. Borrowers are graded according to
We have developed systems specifically designed to manage credit quality based upon our uniform credit grading system,
credit risk in each of our business segments. We evaluate financ- which considers both the borrower’s financial condition and
ing and leasing assets for credit and collateral risk during the the underlying collateral. Credit facilities are subject to
credit granting process and periodically after the advancement approval within our overall credit approval and underwriting
of funds. The Corporate Credit Risk Management group, guidelines and are issued commensurate with the credit evalua-
which reports to the Vice Chairman and Chief Lending Officer, tion performed on each borrower.

Consumer and Small Ticket Leasing/Lending – For consumer Our Capital Committee sets policies, oversees and guides the
transactions and certain small-ticket leasing/lending transac- interest rate and currency risk management process, including
tions, we employ proprietary automated credit scoring models the establishment and monitoring of risk metrics, and ensures
by loan type that include customer demographics and credit the implementation of those policies. Other risks monitored
bureau characteristics. The profiles emphasize, among other by the Capital Committee include derivative counterparty
things, occupancy status, length of residence, employment, debt credit risk and liquidity risk. The Capital Committee meets
to income ratio (ratio of total installment debt and housing periodically and includes the Chief Executive Officer, Vice
expenses to gross monthly income), bank account references, Chairman and Chief Financial Officer, Vice Chairman and
credit bureau information, combined loan to value ratio, length Chief Lending Officer, Vice Chairman – Specialty Finance,
of time in business, industry category and geographic location. Vice Chairman – Commercial Finance, Treasurer, and
The models are used to assess a potential borrower’s credit stand- Controller, with business unit executives serving on a
ing and repayment ability considering the value or adequacy of rotating basis.
property offered as collateral. Our credit criteria include reliance
on credit scores, including those based upon both our propri- INTEREST RATE AND FOREIGN EXCHANGE RISK
etary internal credit scoring model and external credit bureau MANAGEMENT
scoring, combined with judgment. The credit scoring models are
Interest Rate Risk Management – We monitor our interest rate
regularly reviewed for effectiveness utilizing statistical tools.
sensitivity on a regular basis by analyzing the impact of interest
rate changes upon the financial performance of the business.
We regularly evaluate the consumer loan portfolio and the
We also consider factors such as the strength of the economy,
small ticket leasing portfolio using past due, vintage curve and
customer prepayment behavior and re-pricing characteristics of
other statistical tools to analyze trends and credit performance
our assets and liabilities.
by loan type, including analysis of specific credit characteristics
and other selected subsets of the portfolios. Adjustments to We evaluate and monitor risk through two primary metrics:
credit scorecards and lending programs are made when p Margin at Risk (MAR), which measures the impact of chang-
deemed appropriate. Individual underwriters are assigned ing interest rates upon interest income over the subsequent
credit authority based upon their experience, performance and twelve months.
understanding of the underwriting policies and procedures
of our consumer and small-ticket leasing operations. A credit p Value at Risk (VAR), which measures the net economic value
approval hierarchy also exists to ensure that an underwriter of assets by assessing the market value of assets, liabilities
with the appropriate level of authority reviews all applications. and derivatives.
We regularly monitor and simulate our degree of interest rate
EQUIPMENT/RESIDUAL RISK MANAGEMENT sensitivity by measuring the characteristics of interest-sensitive
We have developed systems, processes and expertise to manage assets, liabilities, and derivatives. The Capital Committee
the equipment and residual risk in our commercial segments. reviews the results of this modeling periodically.
Our process consists of the following: 1) setting residual value
The first interest rate sensitivity modeling technique (MAR)
at transaction inception; 2) systematic residual reviews; and
that we employ includes the creation of prospective twelve-
3) monitoring of residual realizations. Reviews for impairment
month baseline and rate shocked net interest income
are performed at least annually. Residual realizations, by
simulations. At the date that we model interest rate sensitivity,
business unit and product, are reviewed as part of our ongoing
we derive the baseline net interest income considering the
financial and asset quality review, both within the business
current level of interest-sensitive assets, the current level of inter-
units and by senior management.
est-sensitive liabilities, and the current level of derivatives. Our
baseline simulation assumes that, over the next successive twelve
MARKET RISK MANAGEMENT
months, market interest rates (as of the date of our simulation)
Market risk is the risk of loss arising from changes in values of are held constant and that no new loans or leases are extended.
financial instruments, and includes interest rate risk, foreign Once we calculate the baseline net interest income, we instanta-
exchange risk, derivative counterparty credit risk and liquidity neously raise market interest rates, which we previously held
risk. We engage in transactions in the normal course of busi- constant, 100 basis points across the entire yield curve, and a
ness that expose us to market risks. We conduct what we rate shocked simulation is run in which all interest rate sensitive
believe are appropriate management practices and maintain assets, liabilities and derivatives are immediately reset. We then
policies designed to effectively mitigate such risks. The objec- measure interest rate sensitivity as the difference between the
tives of our market risk management efforts are to preserve the calculated baseline and the rate shocked net interest income.
economic and accounting returns of our assets by matching
the repricing and maturity characteristics of our assets with An immediate hypothetical 100 basis point increase in the
that of our liabilities. Strategies for managing market risks asso- yield curve on January 1, 2006 would reduce our net income
ciated with changes in interest rates and foreign exchange rates by an estimated $14 million after-tax over the next twelve
are an integral part of the process, because those strategies affect months. A corresponding decrease in the yield curve would
our future expected cash flows as well as our cost of capital.

cause an increase in our net income of a like amount. value by $51 million. A 100 basis point increase in the yield
A 100 basis point increase in the yield curve on January 1, 2005 curve on January 1, 2005 would have increased our economic
would have reduced our net income by an estimated $20 mil- value by $37 million.
lion after tax, while a corresponding decrease in the yield curve Although we believe that these measurements provide an esti-
would have increased our net income by a like amount. mate of our interest rate sensitivity, they do not account for
The second interest rate modeling technique (VAR) we employ potential changes in the credit quality, size, composition, and
is focused on the net economic value of the firm by modeling prepayment characteristics of our balance sheet, nor do they
the current market value of assets, liabilities and derivatives, to account for other business developments that could affect our
determine our market value baseline. Once the baseline market net income or for management actions that could be taken.
value is calculated, we raise market interest rates 100 basis Accordingly, we can give no assurance that actual results would
points across the entire yield curve, and new market values are not differ materially from the estimated outcomes of our simu-
estimated. By modeling the economic value of the portfolio we lations. Further, such simulations do not represent our current
are able to understand how the economic value of the balance view of future market interest rate movements.
sheet would change under specific interest rate scenarios. A comparative analysis of the weighted average principal out-
An immediate hypothetical 100 basis point increase in the standing and interest rates on our debt before and after the
yield curve on January 1, 2006 would increase our economic effect of interest rate swaps is shown on the following table.
Before Swaps
______________ After Swaps
______________
For the year ended December 31, 2005
Commercial paper and variable-rate senior notes $17,238.8 3.55% $20,640.3 3.91%
Fixed-rate senior and subordinated notes 25,947.5
_______________ 5.10% 22,546.0
_______________ 4.90%
Composite $43,186.3
_______________ 4.48% $43,186.3
_______________ 4.43%
_______________ _______________
Commercial paper and variable-rate senior notes $15,138.8 1.88% $18,337.9 2.59%
_______________ 5.64% 16,556.5
_______________ 5.08%
Composite $34,894.4
_______________ 4.01% $34,894.4
_______________ 3.77%
_______________ _______________
Commercial paper, variable-rate senior notes and bank credit facilities $12,352.1 1.83% $15,942.0 2.63%
_______________ 6.06% 16,412.1
_______________ 5.82%
Composite $32,354.1
_______________ 4.45% $32,354.1
_______________ 4.25%
_______________ _______________
The weighted average interest rates before swaps do not neces- A matched asset/liability position is generally achieved through
sarily reflect the interest expense that we would have incurred a combination of financial instruments, including commercial
over the life of the borrowings had we managed the interest paper, medium-term notes, long-term debt, interest rate and
rate risk without the use of such swaps. currency swaps, foreign exchange contracts, and through secu-
We offer a variety of financing products to our customers, ritization. We do not speculate on interest rates or foreign
including fixed and floating-rate loans of various maturities and exchange rates, but rather seek to mitigate the possible impact
currency denominations, and a variety of leases, including of such rate fluctuations encountered in the normal course of
operating leases. Changes in market interest rates, relationships business. This process is ongoing due to prepayments, refinanc-
between short-term and long-term market interest rates, or ings and actual payments varying from contractual terms, as
relationships between different interest rate indices (i.e., basis well as other portfolio dynamics.
risk) can affect the interest rates charged on interest-earning We periodically enter into structured financings (involving the
assets differently than the interest rates paid on interest-bearing issuance of both debt and an interest rate swap with correspon-
liabilities, and can result in an increase in interest expense relative ding notional principal amount and maturity) to manage
to finance income. We measure our asset/liability position in liquidity and reduce interest rate risk at a lower overall funding
economic terms through duration measures and sensitivity cost than could be achieved by solely issuing debt.
analysis, and we measure the effect on earnings using maturity
gap analysis. Our asset portfolio is generally comprised of loans As part of managing exposure to interest rate, foreign currency,
and leases of short to intermediate term. As such, the duration of and, in limited instances, credit risk, CIT, as an end-user,
our asset portfolio is generally less than three years. We target to enters into various derivative transactions, all of which are
closely match the duration of our liability portfolio with that of transacted in over-the-counter markets with other financial
our asset portfolio. As of December 31, 2005, our liability port- institutions acting as principal counterparties. Derivatives are
folio duration was slightly longer than our asset portfolio duration. utilized to eliminate or mitigate economic risk only, and our
policy prohibits entering into derivative financial instruments are designated as cash flow hedges and changes in fair value of
for trading or speculative purposes. To ensure both appropriate these swaps, to the extent they are effective as a hedge, are
use as a hedge and to achieve hedge accounting treatment, recorded in other comprehensive income. Ineffective amounts
whenever possible, substantially all derivatives entered into are are recorded in interest expense. Interest rate swaps are also uti-
designated according to a hedge objective against a specific or lized to convert fixed-rate interest on specific debt instruments
forecasted liability or, in limited instances, assets. The notional to variable-rate amounts. These interest rate swaps are desig-
amounts, rates, indices, and maturities of our derivatives nated as fair value hedges and changes in fair value of these
closely match the related terms of the underlying hedged items. swaps are effectively recorded as an adjustment to the carrying
value of the hedged item, as the offsetting changes in fair value
CIT utilizes interest rate swaps to exchange variable-rate interest of the swaps and the hedged items are recorded in earnings.
underlying forecasted issuances of commercial paper, specific
variable-rate debt instruments, and, in limited instances, vari- The following table summarizes the composition of our inter-
able-rate assets for fixed-rate amounts. These interest rate swaps est rate sensitive assets and liabilities before and after swaps:
Before Swaps
_________________________________________________ After Swaps
_________________________________________________
Fixed rate
_________________ Floating rate
______________________ Fixed rate
_________________ Floating rate
______________________
December 31, 2005
Assets 49% 51% 49% 51%
Liabilities 50% 50% 44% 56%
December 31, 2004
Assets 55% 45% 55% 45%
Liabilities 60% 40% 46% 54%
Total interest sensitive assets were $51.9 billion and $41.7 bil- accounting treatment and therefore are recorded at fair value,
lion at December 31, 2005 and 2004. Total interest sensitive with both realized and unrealized gains or losses recorded in
liabilities were $45.6 billion and $35.9 billion at December 31, other revenue in the consolidated statement of income. See
2005 and 2004. Note 9 – Derivative Financial Instruments for further discus-
sion, including notional principal balances of interest rate
Foreign Exchange Risk Management – To the extent local foreign swaps, foreign currency exchange forward contracts, cross cur-
currency borrowings are not raised, CIT utilizes foreign currency swaps, Treasury locks, and credit default swaps.
rency exchange forward contracts to hedge or mitigate currency
risk underlying foreign currency loans to subsidiaries and the DERIVATIVE RISK MANAGEMENT
net investments in foreign operations. These contracts are des-
We enter into interest rate and currency swaps,foreign exchange
ignated as foreign currency cash flow hedges or net investment
forward contracts, and in limited instances, credit default swaps
hedges and changes in fair value of these contracts are recorded
and commodity swaps as part of our overall risk management
in other comprehensive income along with the translation
gains and losses on the underlying hedged items. Translation practices. We assess and manage the external and internal risks
gains and losses of the underlying foreign net investment, as associated with these derivative instruments in accordance
well as offsetting derivative gains and losses on designated with the overall operating goals established by our Capital
hedges, are reflected in other comprehensive income in the Committee. External risk is defined as those risks outside of our
Consolidated Balance Sheet. direct control, including counterparty credit risk, liquidity risk,
systemic risk, legal risk and market risk. Internal risk relates to
CIT also utilizes cross-currency swaps to hedge currency risk those operational risks within the management oversight struc-
underlying foreign currency debt and selected foreign currency ture and includes actions taken in contravention of CIT policy.
assets. The swaps that meet hedge accounting criteria are desig-
nated as foreign currency cash flow hedges or foreign currency The primary external risk of derivative instruments is counter-
fair value hedges and changes in fair value of these contracts are party credit exposure, which is defined as the ability of
recorded in other comprehensive income (for cash flow hedges), a counterparty to perform its financial obligations under a
or effectively as a basis adjustment (including the impact of the derivative contract. We control the credit risk of our derivative
offsetting adjustment to the carrying value of the hedged item) agreements through counterparty credit approvals, pre-estab-
to the hedged item (for fair value hedges) along with the trans- lished exposure limits and monitoring procedures.
action gains and losses on the underlying hedged items. CIT
The Capital Committee, in conjunction with Corporate Risk
also has certain cross-currency swaps that economically hedge
exposures, but do not qualify for hedge accounting treatment. Management, approves each counterparty and establishes
exposure limits based on credit analysis and market value. All
Other Market Risk Management – CIT has entered into credit derivative agreements are entered into with major money cen-
default swaps to economically hedge certain CIT credit expo- ter financial institutions rated investment grade by nationally
sures. These swaps do not meet the requirements for hedge recognized rating agencies, with the majority of our counter-

parties rated “AA” or better. Credit exposures are measured We maintain registration statements with the Securities and
based on the current market value and potential future expo- Exchange Commission (“SEC”) covering debt securities that we
sure of outstanding derivative instruments. Exposures are may sell in the future. At December 31, 2005, we had $0.8 bil-
calculated for each derivative contract and are aggregated by lion of registered, but unissued, debt securities available under
counterparty to monitor credit exposure. which we may issue debt securities and other capital market
securities. Subsequent to year end, we filed a new shelf registra-
See Item 9A. Control and Procedures for discussion related to tion statement that became effective. Our Board of Directors
derivative and hedge accounting. has approved up to $18 billion of debt funding under the state-
ment for 2006. Term-debt issued during 2005 totaled $13.3
LIQUIDITY RISK MANAGEMENT billion: $7.1 billion in variable-rate medium-term notes and
$6.2 billion in fixed-rate notes. Consistent with our strategy of
Liquidity risk refers to the risk of being unable to meet poten-
managing debt refinancing risk, the weighted average maturity
tial cash outflows promptly and cost-effectively. Factors that
of term-debt issued in 2005 was approximately five years.
could cause such a risk to arise might be a disruption of a secu-
Included with the fixed rate notes are issuances under a retail
rities market or other source of funds. We actively manage and
note program in which we offer fixed-rate senior, unsecured
mitigate liquidity risk by maintaining diversified sources of
notes utilizing numerous broker-dealers for placement to retail
funding and committed alternate sources of funding, and we
accounts. During the year, we issued $0.4 billion under this
maintain and periodically review a contingency funding plan
program having maturities of between 2 and 10 years. As part
to be implemented in the event of any form of market disrup-
of our strategy to further diversify our funding sources, $1.4 bil-
tion. Additionally, we target our debt issuance strategy to
lion of foreign currency denominated debt was issued during
achieve a maturity pattern designed to reduce refinancing risk.
2005. We plan on continuing to utilize diversified sources of
The primary funding sources are commercial paper (U.S.,
debt funding to meet our strategic global growth initiatives.
Canada and Australia), long-term debt (U.S. and
International) and asset-backed securities (U.S. and Canada). To further strengthen our funding capabilities, we maintain
Additional sources of liquidity are loan and lease payments committed asset backed facilities and shelf registration state-
from customers, whole-loan asset sales and loan syndications. ments, which cover a range of assets from equipment to
consumer home lending receivables and trade accounts receiv-
Outstanding commercial paper totaled $5.2 billion at able. While these are predominately in the U.S., we also
December 31, 2005, compared with $4.2 billion at maintain facilities for Canadian domiciled assets. As of
both December 31, 2004 and 2003. Our targeted U.S. December 31, 2005, we had approximately $4.8 billion of
program size remains at $5.0 billion with modest programs availability in our committed asset-backed facilities and $5.0
aggregating $500 million to be maintained in Canada and billion of registered, but unissued, securities available under
Australia. Our goal is to maintain committed bank lines in public shelf registration statements relating to our asset-backed
excess of aggregate outstanding commercial paper. We have securitization program.
aggregate bank facilities of $6.3 billion in multi-year facilities.
We also maintain committed bank lines of credit to provide We also target and monitor certain liquidity metrics to ensure
backstop support of commercial paper borrowings and local both a balanced liability profile and adequate alternate liquid-
bank lines to support our international operations. ity availability as outlined in the following table:
Current December 31, December 31, December 31,

Liquidity Measurement
___________________________________________________________________ Target
_____________ 2005
____________ 2004
____________ 2003
____________
Commercial paper to total debt Maximum of 15% 11% 11% 13%
Short-term debt to total debt Maximum of 35% 29% 31% 36%
Bank lines to commercial paper Minimum of 100% 131% 150% 149%
Aggregate alternative liquidity to short-term debt Minimum of 100% 110% 108% 93%
Our credit ratings are an important factor in meeting our expense discussion). The following credit ratings have been in
earnings and margin targets as better ratings generally correlate place since September 30, 2002:
to lower cost of funds (see Net Finance Margin, interest
Short-Term
__________ Long-Term
_________ Outlook
_______
Moody’s P-1 A2 Stable
Standard & Poor’s A-1 A Stable
Fitch F1 A Stable
DBRS R-1L 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 credit agreements also contain a minimum net worth require-
that govern our funding structures. The most significant ment of $4.0 billion.
covenant in CIT’s indentures and credit agreements is a nega-
tive pledge provision, which limits granting or permitting liens The following tables summarize significant contractual obliga-
on our assets, but provides for exceptions for certain ordinary tions and projected cash receipts, and contractual commitments
course liens needed to operate our business. In addition, our at December 31, 2005:
Payments and Collections by Year (dollars in millions)(3)
Total
________ 2006
________ 2007
________ 2008
_______ 2009
_______ 2010+
________
Commercial paper $ 5,225.0 $ 5,225.0 $ – $ – $ – $ –
Variable-rate senior unsecured notes 15,485.1 6,154.7 5,318.6 2,053.7 751.1 1,207.0
Fixed-rate senior unsecured notes 22,853.6 3,017.3 3,994.0 2,574.8 1,400.1 11,867.4
Non-recourse, secured borrowings 4,048.8 504.3 – – – 3,544.5
Preferred capital security 252.0 – – – – 252.0
Lease rental expense 340.3
________ 48.5
________ 43.7
________ 37.3
_______ 22.3
_______ 188.5
________
Total contractual obligations 48,204.8
________ 14,949.8
________ 9,356.3
________ 4,665.8
_______ 2,173.5
_______ 17,059.4
________
Finance receivables(1) 44,294.5 12,438.0 4,482.0 3,872.0 2,556.2 20,946.3
Operating lease rental income 4,074.8 1,164.0 1,017.6 713.5 482.3 697.4
(2)
Finance receivables held for sale 1,620.3 1,620.3 – – – –
Cash – current balance 3,658.6 3,658.6 – – – –
Retained interest in securitizations and other investments 1,152.7
________ 603.2
________ 254.4
________ 129.5
_______ 52.2
_______ 113.4
________
Total projected cash receipts 54,800.9
________ 19,484.1
________ 5,754.0
________ 4,715.0
_______ 3,090.7
_______ 21,757.1
________
Net projected cash inflow (outflow) $ 6,596.1
________ $ 4,534.3
________ $(3,602.3)
________ $ 49.2
_______ $ 917.2
_______ $ 4,697.7
________
________ ________ ________ _______ _______ ________
(1)
Based upon contractual cash flows; amount could differ due to prepayments, extensions of credit, charge-offs and other factors.
(2)
Based upon management’s intent to sell rather than 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 Year (dollars in millions)
Total
________ 2006
________ 2007
________ 2008
_______ 2009
_______ 2010+
________
Credit extensions $10,432.0 $1,907.8 $1,148.1 $1,187.0 $1,125.3 $5,063.8
Aircraft purchases 3,316.5 923.8 1,001.6 830.6 – 560.5
Letters of credit 1,047.6 927.7 26.3 39.1 24.7 29.8
Sale-leaseback payments 590.7 41.2 41.2 41.2 41.2 425.9
Manufacturer purchase commitments 696.2 668.1 28.1 – – –
Guarantees 206.5 194.6 – 10.5 1.4 –
Acceptances 20.1
________ 20.1
_______ _______– _______– _______– _______–
Total contractual commitments $16,309.6
________ $4,683.3
_______ $2,245.3
_______ $2,108.4
_______ $1,192.6
_______ $6,080.0
_______
________ _______ _______ _______ _______ _______

INTERNAL CONTROLS OFF-BALANCE SHEET ARRANGEMENTS
The Internal Controls Committee is responsible for monitor- Securitization Program
ing and improving internal controls and overseeing the internal We fund asset originations on our balance sheet by accessing
controls attestation mandated by Section 404 of the Sarbanes- various sectors of the capital markets, including the term debt
Oxley Act of 2002 (“SARBOX”). The committee, which is and commercial paper markets. In an effort to broaden funding
chaired by the Controller, includes the CFO, the Director of sources and provide an additional source of liquidity, we use an
Internal Audit and other senior executives in finance, legal, risk array of securitization programs, including both asset-backed
management and information technology. commercial paper and term structures, to access both the public
and private asset-backed securitization markets. Current prod-
See Item 9A. Controls and Procedures for Management’s Report ucts in these programs include receivables and leases secured by
on Internal Control over Financial Reporting. equipment as well as consumer loans secured by residential real
estate. The following table summarizes data relating to our secu-
ritization programs.
Securitized Assets at or for the years ended December 31 (dollars in millions)
2005
_______ 2004
_______ 2003
_______
Securitized Assets:
Specialty Finance – Commercial $3,921.6 $4,165.5 $4,557.9
Specialty Finance – Consumer (home lending) 838.8 1,228.7 1,867.6
Equipment Finance 2,484.1 2,915.5 3,226.2
Corporate Finance 41.2
_______ _______– _______–
Total securitized assets $7,285.7
_______ $8,309.7
_______ $9,651.7
_______
_______ _______ _______
Securitized assets as a % of managed assets 11.6% 15.5% 19.4%
Volume Securitized:
Specialty Finance – Commercial $3,230.9 $3,153.8 $3,416.2
Specialty Finance – Consumer (home lending) – – 489.2
Equipment Finance 1,089.6
_______ 1,280.7
_______ 1,414.8
_______
Total volume securitized $4,320.5
_______ $4,434.5
_______ $5,320.2
_______
_______ _______ _______
Under our typical asset-backed securitization, we sell a “pool” accounts on deposit in the special-purpose entity or interest
of secured loans or leases to a special-purpose entity (“SPE”), only receivables) and typically recognize a gain. Assets securi-
typically a trust. SPEs are used to achieve “true sale” require- tized are shown in our managed assets and our capitalization
ments for these transactions in accordance with SFAS No. 140, ratios on a managed basis.
“Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities.” The special-purpose entity, in In estimating residual cash flows and the value of the retained
turn, issues certificates and/or notes that are collateralized by interests, we make a variety of financial assumptions, including
the pool and entitle the holders thereof to participate in certain pool credit losses, prepayment speeds and discount rates. These
pool cash flows. assumptions are supported by both our historical experience
and anticipated trends relative to the particular products secu-
Accordingly, CIT has no legal obligations to repay the securities ritized. Subsequent to recording the retained interests, we
in the event of a default by the SPE. CIT retains the servicing review them quarterly for impairment based on estimated fair
rights of the securitized contracts, for which we earn a servicing value. These reviews are performed on a disaggregated basis.
fee. We also participate in certain “residual” cash flows (cash Fair values of retained interests are estimated utilizing current
flows after payment of principal and interest to certificate pool demographics, actual note/certificate outstandings,
and/or note holders, servicing fees and other credit-related dis- current and anticipated credit losses, prepayment speeds and
bursements). At the date of securitization, we estimate the discount rates.
“residual” cash flows to be received over the life of the securiti- Our retained interests had a carrying value at December 31,
zation, record the present value of these cash flows as a retained 2005 of $1,136.4 million. Retained interests are subject to
interest in the securitization (retained interests can include credit and prepayment risk. As of December 31, 2005,
bonds issued by the special-purpose entity, cash reserve approximately 50% of our outstanding securitization pool bal-

ances are in conduit structures. Securitized assets are subject partners. Receivables are originated by the joint venture and
to the same credit granting and monitoring processes which purchased by CIT. The vendor partner and CIT jointly own
are described in the “Credit Risk Management” section. See these distinct legal entities, and there is no third-party debt
Note 6 – Retained Interests in Securitizations and Other involved. These arrangements are accounted for using the
Balances for detail on balance and key assumptions. equity method, with profits and losses distributed according
to the joint venture agreement. See disclosure in Note 19 –
Joint Venture Activities Certain Relationships and Related Transactions.
We utilize joint ventures organized through distinct legal enti-
ties to conduct financing activities with certain strategic vendor
CAPITALIZATION
Capital Structure as of December 31 (dollars in millions)
2005
_______________ 2004
_______________ 2003
_______________
Commercial paper, term debt and secured borrowings $47,612.5
________ $37,471.0
________ $33,413.1
________
(1)
Total common stockholders’ equity 6,418.1 6,073.7 5,427.8
Preferred stock 500.0
________ ________– ________–
(1)
Total stockholders’ equity 6,918.1 6,073.7 5,427.8
Preferred capital securities 252.0
________ 253.8
________ 255.5
________
Total capital 7,170.1 6,327.5 5,683.3
Goodwill and other intangible assets (1,011.5)
________ (596.5)
________ (487.7)
________
Total tangible capital 6,158.6
________ 5,731.0
________ 5,195.6
________
Total tangible capitalization $53,771.1
________ $43,202.0
________ $38,608.7
________
________ ________ ________
Tangible capital to managed assets 9.80% 10.72% 10.45%
Tangible book value per common share(2) $ 27.15 $ 26.03 $ 23.32
(1)
Stockholders’ equity excludes the impact of the changes in fair values of derivatives qualifying as cash flow hedges 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.”
(2)
Tangible book value per common share outstanding is the sum of total common stockholders’ equity less goodwill and other intangible assets divided by
outstanding common stock.
The student lending acquisition in Specialty Finance-Consumer, The preferred capital securities are 7.70% Preferred Capital
a factoring purchase in Commercial Services and a healthcare Securities issued in 1997 by CIT Capital Trust I, a wholly-
acquisition in Corporate Finance drove the increase in goodwill owned subsidiary. CIT Capital Trust I invested the proceeds
and acquired intangibles from December 2004, while a Euro- of that issue in Junior Subordinated Debentures of CIT having
pean vendor finance acquisition increased goodwill and acquired identical rates and payment dates. Consistent with rating
intangibles during 2004. See Note 22 – Goodwill and Other agency measurements, preferred capital securities are included
Intangible Assets. in tangible equity in our leverage ratios. See “Non-GAAP
Financial Measurements” for additional information.
During the September 2005 quarter, CIT issued $500 million
aggregate amount of Series A and Series B preferred equity See “Liquidity Risk Management” for discussion of risks
securities. Series A has a stated value of $350 million, com- impacting our liquidity and capitalization.
prised of 14 million shares of 6.35% non-cumulative fixed rate
preferred stock, with a liquidation value of $25 per share. CRITICAL ACCOUNTING ESTIMATES
Series B has a stated value of $150 million, comprised of The preparation of financial statements in conformity with
1.5 million shares of 5.189% non-cumulative adjustable rate GAAP requires management to use judgment in making esti-
preferred stock, with a liquidation value of $100 per share. mates and assumptions that affect reported amounts of assets
(See Note 10 – Stockholders’ Equity for further detail on and liabilities, the reported amounts of income and expense
preferred stock.) during the reporting period and the disclosure of contingent
assets and liabilities at the date of the financial statements. The
following accounting estimates, which are based on relevant

information available at the end of each period, include inher- Officer and Controller, among others, in conjunction with set-
ent risks and uncertainties related to judgments and ting the reserve for credit losses.
assumptions made by management. We consider the following
accounting estimates to be critical in applying our accounting The reserve for credit losses is determined based on three key
policies due to the existence of uncertainty at the time the esti- components: (1) specific reserves for collateral dependent loans
mate is made, the likelihood of changes in estimates from which are impaired, based upon the value of underlying collat-
period to period and the potential impact that these estimates eral or projected cash flows (2) reserves for estimated losses
can have on the financial statements. inherent in the portfolio based upon historical and projected
credit trends and (3) reserves for economic environment and
Charge-off of Finance Receivables – Finance receivables are other factors. Historical loss rates are based on one to three-
reviewed periodically to determine the probability of loss. year averages, which are consistent with our portfolio life and
Charge-offs are taken after substantial collection efforts are provides what we believe to be appropriate weighting to cur-
conducted, considering such factors as the borrower’s finan- rent loss rates. The process involves the use of estimates and
cial condition and the value of underlying collateral and a high degree of management judgment. As of December 31,
guarantees (including recourse to dealers and manufacturers). 2005, the reserve for credit losses was $621.7 million or 1.40%
Net charge-offs for the year ended December 31, 2005 were of finance receivables. A hypothetical 5% change to the his-
$251.1 million. toric loss rates utilized in our reserve determination at
December 31, 2005 equates to the variance of $22.3 million,
Impaired Loans – Loan impairment is measured as any short- or 5 basis points (0.05%) in the percentage of reserves to
fall between the estimated value and the recorded investment finance receivables, and $0.07 in diluted earnings per share.
for those loans defined as impaired loans in the application of
SFAS 114. The estimated value is determined using the fair Retained Interests in Securitizations – Significant financial
value of the collateral or other cash flows, if the loan is collat- assumptions, including loan pool credit losses, prepayment
eral dependent, or the present value of expected future cash speeds and discount rates, are utilized to determine the fair val-
flows discounted at the loan’s effective interest rate. The deter- ues of retained interests, both at the date of the securitization
mination of impairment involves management’s judgment and in the subsequent quarterly valuations of retained interests.
and the use of market and third party estimates regarding These assumptions reflect both the historical experience and
collateral values. Valuations in the level of impaired loans and anticipated trends relative to the products securitized. Any
corresponding impairment as defined under SFAS 114 affect resulting losses, representing the excess of carrying value over
the level of the reserve for credit losses. At December 31, estimated fair value, are recorded in current earnings. However,
2005, the reserve for credit losses includes a $76.5 million unrealized gains are reflected in stockholders’ equity as part of
impairment valuation component. A 10% fluctuation in this other comprehensive income. See Note 6 – Retained Interests
valuation equates to $0.02 in diluted earnings per share. in Securitizations and Other Investments for additional infor-
mation regarding securitization retained interests and related
Reserve for Credit Losses – The reserve for credit losses is sensitivity analysis.
intended to provide for losses inherent in the portfolio, which
requires the application of estimates and significant judgment Lease Residual Values – Operating lease equipment is carried
as to the ultimate outcome of collection efforts and realization at cost less accumulated depreciation and is depreciated to
of collateral values, among other things. Therefore, changes in estimated residual value using the straight-line method over
economic conditions or credit metrics, including past due and the lease term or projected economic life of the asset. Direct
non-performing accounts, or other events affecting specific financing leases are recorded at the aggregated future minimum
obligors or industries may necessitate additions or reductions lease payments plus estimated residual values less unearned
to the reserve for credit losses. finance income. We generally bear greater risk in operating
lease transactions (versus finance lease transactions) as the
The reserve for credit losses is reviewed for adequacy based on duration of an operating lease is shorter relative to the equip-
portfolio collateral values and credit quality indicators, includ- ment useful life than a finance lease. Management performs
ing charge-off experience, levels of past due loans and periodic reviews of the estimated residual values, with non-
non-performing assets, evaluation of portfolio diversification temporary impairment recognized in the current period as an
and concentration as well as economic conditions. We review increase to depreciation expense for operating lease residual
finance receivables periodically to determine the probability impairment, or as an adjustment to yield for residual value
of loss, and record charge-offs after considering such factors as adjustments on finance leases. Data regarding equipment
delinquencies, the financial condition of obligors, the value values, including appraisals, and our historical residual realiza-
of underlying collateral, as well as third party credit enhance- tion experience are among the factors considered in evaluating
ments such as guarantees and recourse from manufacturers. estimated residual values. As of December 31, 2005, our direct
This information is reviewed formally on a quarterly basis with financing lease residual balance was $2.1 billion and our oper-
senior management, including the CEO, CFO, Chief Lending ating lease equipment balance was $9.6 billion. A hypothetical

10 basis points (0.1%) fluctuation in the total of these amounts and the use of estimates and projections, is required in assess-
equates to $0.03 in diluted earnings per share. ing our ability to realize net operating loss (“NOL’s”) and other
tax benefit carry-forwards, as these assets expire at various dates
Goodwill and Intangible Assets – CIT adopted SFAS No. 142, beginning in 2006, and they may be subject to annual use limi-
“Goodwill and Other Intangible Assets,” effective October 1, tations under the Internal Revenue Code and other limitations
2001. The Company determined at October 1, 2001 that there under certain state laws. Management utilizes historical and
was no impact of adopting this new standard under the transi- projected data, budgets and business plans in making these
tion provisions of SFAS No. 142. Since adoption, goodwill is estimates and assessments. Deferred tax assets relating to NOL’s
no longer amortized, but instead is assessed for impairment at were $428 million at December 31, 2005. A hypothetical 1%
least annually. During this assessment, management relies on fluctuation in the value of deferred tax assets relating to NOL’s
a number of factors, including operating results, business equates to $0.02 in diluted earnings per share.
plans, economic projections, anticipated future cash flows, and
market place data. See “Note 22 – Goodwill and Intangible See Item 9A. Controls and Procedures for discussion
Assets” for additional information. regarding internal controls related to income tax accounting
and reporting.
Intangible assets consist primarily of customer relationships
acquired with acquisitions, with amortization lives up to NON-GAAP FINANCIAL MEASUREMENTS
20 years, and computer software and related transaction The SEC adopted regulations that apply to any public disclo-
processes, which are being amortized over a 5-year life. An sure or release of material information that includes a
evaluation of the remaining useful lives and the amortization non-GAAP financial measure. The accompanying
methodology of the intangible assets is performed periodically Management’s Discussion and Analysis of Financial Condition
to determine if any change is warranted. Goodwill and and Results of Operations and Quantitative and Qualitative
Intangibles Assets was $1,011.5 million at December 31, Disclosure about Market Risk contain certain non-GAAP
2005. A hypothetical 5% fluctuation in the value equates to financial measures. The SEC defines a non-GAAP financial
$0.24 in diluted earnings per share. measure as a numerical measure of a company’s historical or
future financial performance, financial position, or cash flows
Income Tax Reserves and Deferred Income Taxes –We have open that excludes amounts, or is subject to adjustments that have
tax years in the U.S. and Canada and other jurisdictions that the effect of excluding amounts, that are included in the most
are currently under examination by the applicable taxing directly comparable measure calculated and presented in accor-
authorities, and certain later tax years that may in the future be dance with GAAP in the financial statements or includes
subject to examination. We periodically evaluate the adequacy amounts, or is subject to adjustments that have the effect of
of our related tax reserves, taking into account our open tax including amounts, that are excluded from the most directly
return positions, tax assessments received, tax law changes and comparable measure so calculated and presented.
third party indemnifications. The process of evaluating tax
reserves involves the use of estimates and a high degree of man- Non-GAAP financial measures disclosed in this report are
agement judgment. The final determination of tax audits could meant to provide additional information and insight regarding
affect our tax reserves. the historical operating results and financial position of the
business and in certain cases to provide financial information
Deferred tax assets and liabilities are recognized for the future that is presented to rating agencies and other users of financial
tax consequences of transactions that have been reflected in the information. These measures are not in accordance with, or a
Consolidated Financial Statements. Our ability to realize substitute for, GAAP and may be different from or inconsistent
deferred tax assets is dependent on prospectively generating with non-GAAP financial measures used by other companies.
taxable income by corresponding tax jurisdiction, and in some
cases on the timing and amount of specific types of future
transactions. Management’s judgment, regarding uncertainties

Non-GAAP Reconciliations as of December 31 (dollars in millions)
2005
_______________ 2004
_______________ 2003
_______________
(1)
Managed assets :
Finance receivables $44,294.5 $35,048.2 $31,300.2
Operating lease equipment, net 9,635.7 8,290.9 7,615.5
Financing and leasing assets held for sale 1,620.3 1,640.8 918.3
Equity and venture capital investments (included in other assets) 30.2
________ 181.0
________ 249.9
________
Total financing and leasing portfolio assets 55,580.7 45,160.9 40,083.9
Securitized assets 7,285.7
________ 8,309.7
________ 9,651.7
________
Managed assets $62,866.4
________ $53,470.6
________ $49,735.6
________
________ ________ ________
Earning assets(2):
Total financing and leasing portfolio assets $55,580.7 $45,160.9 $40,083.9
Credit balances of factoring clients (4,187.8)
________ (3,847.3)
________ (3,894.6)
________
Earning assets $51,392.9
________ $41,313.6
________ $36,189.3
________
________ ________ ________
Total tangible capital (3):
Total common stockholders’ equity $ 6,462.7 $ 6,055.1 $ 5,394.2
Other comprehensive (income) loss relating to derivative
financial instruments (27.6) 27.1 41.3
Unrealized gain on securitization investments (17.0) (8.5) (7.7)
Goodwill and intangible assets (1,011.5)
________ (596.5)
________ (487.7)
________
Tangible common stockholders’ equity 5,406.6 5,477.2 4,940.1
Preferred stock 500.0 – –
________ 253.8
________ 255.5
________
Total tangible capital $________
6,158.6 $________
5,731.0 $________
5,195.6
________ ________ ________
Debt, net of overnight deposits(4):
Total debt $47,864.5 $37,724.8 $33,668.6
Overnight deposits (2,703.1) (1,507.3) (1,529.4)
Preferred capital securities (252.0)
________ (253.8)
________ (255.5)
________
Debt, net of overnight deposits $44,909.4
________ $35,963.7
________ $31,883.7
________
________ ________ ________
(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 corre-
sponds to amounts funded, is a basis for revenues earned.
(3)
Total tangible stockholders’ equity is utilized in leverage ratios, and is consistent with certain rating agency measurements. Other comprehensive income/losses
and unrealized gains on securitization investments (both included in the separate component of equity) are excluded from the calculation, as these amounts are
not necessarily indicative of amounts which will be realized.
(4)
Debt, net of overnight deposits is utilized in certain leverage ratios. Overnight deposits are excluded from these calculations, as these amounts are retained by
the Company to repay debt. Overnight deposits are reflected in both debt and cash and cash equivalents.

FORWARD-LOOKING STATEMENTS All forward-looking statements involve risks and uncertainties,
Certain statements contained in this document are “forward- many of which are beyond our control, which may cause actual
looking statements” within the meaning of the U.S. Private results, performance or achievements to differ materially from
Securities Litigation Reform Act of 1995. All statements anticipated results, performance or achievements. Also, for-
contained herein that are not clearly historical in nature are ward-looking statements are based upon management’s
forward-looking and the words “anticipate,” “believe,” “expect,” estimates of fair values and of future costs, using currently
“estimate,” “target” and similar expressions are generally available information. Therefore, actual results may differ
intended to identify forward-looking statements. Any forward- materially from those expressed or implied in those statements.
looking statements contained herein, in press releases, written Factors that could cause such differences include, but are
statements or other documents filed with the Securities and not limited to:
Exchange Commission or in communications and discussions p risks of economic slowdown, downturn or recession,
with investors and analysts in the normal course of business
through meetings, webcasts, phone calls and conference calls, p industry cycles and trends,
concerning our operations, economic performance and p demographic trends,
financial condition are subject to known and unknown risks,
uncertainties and contingencies. Forward-looking statements p risks inherent in changes in market interest rates and
are included, for example, in the discussions about: quality spreads,
p our liquidity risk management, p funding opportunities and borrowing costs,
p our credit risk management, p changes in funding markets, including commercial paper,
term debt and the asset-backed securitization markets,
p our asset/liability risk management,
p uncertainties associated with risk management, including
p our funding, borrowing costs and net finance margin, credit, prepayment, asset/liability, interest rate and
p our capital, leverage and credit ratings, currency risks,
p our operational and legal risks, p adequacy of reserves for credit losses, including amounts
related to hurricane losses,
p our growth rates,
p risks associated with the value and recoverability of leased
p our commitments to extend credit or purchase equipment and lease residual values,
equipment, and
p changes in laws or regulations governing our business
p how we may be affected by legal proceedings. and operations,
p changes in competitive factors, and
p future acquisitions and dispositions of businesses or
asset portfolios.

ITEM 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Reporting appearing under Item 9A, that CIT Group Inc.
CIT Group Inc.: maintained effective internal control over financial reporting
as of December 31, 2005 based on criteria established in
We have completed integrated audits of CIT Group Inc.’s Internal Control - Integrated Framework issued by the
2005 and 2004 consolidated financial statements and of its Committee of Sponsoring Organizations of the Treadway
internal control over financial reporting as of December 31, Commission (COSO), is fairly stated, in all material respects,
2005, and an audit of its 2003 consolidated financial state- based on those criteria. Furthermore, in our opinion, the
ments in accordance with the standards of the Public Company Company maintained, in all material respects, effective inter-
Accounting Oversight Board (United States). Our opinions, nal control over financial reporting as of December 31, 2005,
based on our audits, are presented below. based on criteria established in Internal Control – Integrated
Framework issued by the COSO. The Company’s manage-
CONSOLIDATED FINANCIAL STATEMENTS ment is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effective-
In our opinion, the consolidated financial statements listed in
ness of internal control over financial reporting. Our
the index appearing under Item 15(a)(1) present fairly, in all
responsibility is to express opinions on management’s assess-
material respects, the financial position of CIT Group Inc.
ment and on the effectiveness of the Company’s internal
and its subsidiaries at December 31, 2005 and 2004, and the
control over financial reporting based on our audit. We con-
results of their operations and their cash flows for each of
ducted our audit of internal control over financial reporting in
the three years in the period ended December 31, 2005 in
accordance with the standards of the Public Company
conformity with accounting principles generally accepted in
Accounting Oversight Board (United States). Those
the United States of America. These financial statements
standards require that we plan and perform the audit to
are the responsibility of the Company’s management. Our
obtain reasonable assurance about whether effective internal
responsibility is to express an opinion on these financial state-
control over financial reporting was maintained in all
ments based on our audits. We conducted our audits of these
material respects. An audit of internal control over financial
statements in accordance with the standards of the Public
reporting includes obtaining an understanding of internal
Company Accounting Oversight Board (United States).
control over financial reporting, evaluating management’s
Those standards require that we plan and perform the audit
assessment, testing and evaluating the design and operating
to obtain reasonable assurance about whether the financial
effectiveness of internal control, and performing such other
statements are free of material misstatement. An audit of
procedures as we consider necessary in the circumstances.
financial statements includes examining, on a test basis,
We believe that our audit provides a reasonable basis for
evidence supporting the amounts and disclosures in the
our opinions.
financial statements, assessing the accounting principles
used and significant estimates made by management, and
A company’s internal control over financial reporting is a
evaluating the overall financial statement presentation.
process designed to provide reasonable assurance regarding
We believe that our audits provide a reasonable basis for
the reliability of financial reporting and the preparation of
our opinion.
financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s
INTERNAL CONTROL OVER FINANCIAL REPORTING
internal control over financial reporting includes those
Also, in our opinion, management’s assessment, included in policies and procedures that (i) pertain to the maintenance of
Management’s Report on Internal Control Over Financial
Item 8: Financial Statements and Supplementary Data 51

records that, in reasonable detail, accurately and fairly reflect Because of its inherent limitations, internal control over finan-
the transactions and dispositions of the assets of the company; cial reporting may not prevent or detect misstatements. Also,
(ii) provide reasonable assurance that transactions are recorded projections of any evaluation of effectiveness to future periods
as necessary to permit preparation of financial statements in are subject to the risk that controls may become inadequate
accordance with generally accepted accounting principles, and because of changes in conditions, or that the degree of compli-
that receipts and expenditures of the company are being made ance with the policies or procedures may deteriorate.
only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assur-
ance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that PricewaterhouseCoopers LLP
could have a material effect on the financial statements. New York, New York
March 2, 2006

CIT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – Assets December 31 (dollars in millions – except share data)
2005
________________ 2004
________________
Financing and leasing assets:
Finance receivables $39,243.5 $35,048.2
Student lending receivables pledged 5,051.0 –
Reserve for credit losses (621.7)
________________ (617.2)
________________
Net finance receivables 43,672.8 34,431.0
Operating lease equipment, net 9,635.7 8,290.9
Financing and leasing assets held for sale 1,620.3 1,640.8
Cash and cash equivalents, including $311.1 and $0.0 restricted 3,658.6 2,210.2
Retained interest in securitizations and other investments 1,152.7 1,228.2
Goodwill and intangible assets, net 1,011.5 596.5
Other assets 2,635.0
________________ 2,713.7
________________
Total Assets $63,386.6
________________ $51,111.3
________________
________________ ________________
CONSOLIDATED BALANCE SHEETS – Liabilities and Stockholders’ Equity
Debt:
Commercial paper $ 5,225.0 $ 4,210.9
Variable-rate senior unsecured notes 15,485.1 11,545.0
Fixed-rate senior unsecured notes 22,853.6 21,715.1
Non-recourse, secured borrowings – student lending 4,048.8 –
________________ 253.8
________________
Total debt 47,864.5 37,724.8
Credit balances of factoring clients 4,187.8 3,847.3
Accrued liabilities and payables 4,321.8
________________ 3,443.7
________________
Total Liabilities 56,374.1 45,015.8
Commitments and Contingencies (Note 16)
Minority interest 49.8 40.4
Stockholders’ Equity:
Preferred stock: $0.01 par value, 100,000,000 authorized, Issued and outstanding:
Series A 14,000,000 with a liquidation preference of $25 per share 350.0 –
Series B 1,500,000 with a liquidation preference of $100 per share 150.0 –
Common stock: $0.01 par value, 600,000,000 authorized,
Issued: 212,315,498 and 212,112,203 2.1 2.1
Outstanding: 199,110,141 and 210,440,170
Paid-in capital, net of deferred compensation of $49.5 and $39.3 10,632.9 10,674.3
Accumulated deficit (3,691.4) (4,499.1)
Accumulated other comprehensive income/(loss) 115.2 (58.4)
Less: treasury stock, 13,205,357 and 1,672,033 shares, at cost (596.1)
________________ (63.8)
________________
Total Common Stockholders’ Equity 6,462.7
________________ 6,055.1
________________
Total Stockholders’ Equity 6,962.7
________________ 6,055.1
________________
Total Liabilities and Stockholders’ Equity $63,386.6
________________ $51,111.3
________________
________________ ________________

CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31 (dollars in millions – except per share data)
2005
________________ 2004
________________ 2003
________________
Finance income $ 4,515.2 $ 3,760.8 $ 3,709.3
Interest expense 1,912.0
________________ 1,260.1
________________ 1,348.7
________________
Net finance income 2,603.2 2,500.7 2,360.6
Depreciation on operating lease equipment 968.0
________________ 965.4
________________ 1,057.5
________________
Net finance margin 1,635.2 1,535.3 1,303.1
________________ 214.2
________________ 387.3
________________
Net finance margin after provision for credit losses 1,418.2 1,321.1 915.8
Other revenue 1,137.4
________________ 887.1
________________ 859.3
________________
Operating margin 2,555.6 2,208.2 1,775.1
Salaries and general operating expenses 1,113.8 1,012.1 888.2
Provision for restructuring 25.2 – –
Gain on redemption of debt ________________– 41.8
________________ 50.4
________________
Income before provision for income taxes 1,416.6 1,237.9 937.3
Provision for income taxes (464.2) (483.2) (365.0)
Minority interest, after tax (3.3) (1.1) –
Dividends on preferred capital securities, after tax ________________– ________________– (5.4)
________________
Net income before preferred stock dividends 949.1 753.6 566.9
Preferred stock dividends (12.7)
________________ –
________________ –
________________
Net income available to common stockholders $________________
936.4 $________________
753.6 $________________
566.9
________________ ________________ ________________
Per common share data
Basic earnings per share $ 4.54 $ 3.57 $ 2.68
Diluted earnings per share $ 4.44 $ 3.50 $ 2.66
Weighted average number of shares – basic (thousands) 206,059 211,017 211,681
Weighted average number of shares – diluted (thousands) 210,734 215,054 213,143
Dividends per share $ 0.61 $ 0.52 $ 0.48

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (dollars in millions)
Accumulated
Accumulated Other Total
Preferred Common Paid-in Earnings/ Comprehensive Treasury Stockholders’
Stock _______________
________________ Stock ________________
Capital (Deficit) __________________________
______________________ (Loss) / Income ______________
Stock _______________________
Equity
December 31, 2002 $ – $ 2.1 $10,676.2 $(5,606.9) $(200.7) $ – $4,870.7
Net income 566.9 566.9
Foreign currency translation adjustments (30.2) (30.2)
Change in fair values of derivatives
qualifying as cash flow hedges 77.0 77.0
Unrealized loss on equity and
securitization investments (7.4) (7.4)
Minimum pension liability adjustment 19.7 19.7
________
Total comprehensive income 626.0
________
Cash dividends (101.8) (101.8)
Restricted common stock grants 8.8 8.8
Treasury stock purchased, at cost (28.9) (28.9)
Exercise of stock option awards (7.3) 27.4 20.1
Employee stock purchase plan participation ______ (0.7)
____ _________ ________ _______ ______ (0.7)
________
December 31, 2003 – 2.1 10,677.0 (5,141.8) (141.6) (1.5) 5,394.2
Foreign currency translation adjustments 68.6 68.6
Unrealized gain on equity and
securitization investments 2.3 2.3
Minimum pension liability adjustment (1.9) (1.9)
________
Total comprehensive income 836.8
________
Restricted common stock grants 23.5 23.5
____ _________ ________ _______ 0.9
______ 0.3
________
December 31, 2004 – 2.1 10,674.3 (4,499.1) (58.4) (63.8) 6,055.1
Foreign currency translation adjustments 110.7 110.7
Unrealized gain on equity and
securitization investments 8.7 8.7
Minimum pension liability adjustment (0.5) (0.5)
________
Total comprehensive income 1,110.0
________
Issuance of Series A and B preferred stock 500.0 (10.1) 489.9
Stock repurchase agreement (8.5) (491.5) (500.0)
Restricted common stock grants amortization 43.3 43.3
____ _________ ________ _______ 4.4
______ 3.8
________
December 31, 2005 $500.0
______ $____
2.1 $10,632.9 $(3,691.4) $ 115.2 $(596.1) $6,962.7
______ ____ _________
_________ ________
________ _______
_______ _______
_______ ________
________

CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31 (dollars in millions)

2005
________________ 2004
_________________ 2003
_________________
Cash Flows From Operations
Net income $ 936.4 $ 753.6 $ 566.9
Adjustments to reconcile net income to net cash flows from operations:
Depreciation and amortization 1,001.2 998.8 1,086.6
Provision for deferred federal income taxes 295.7 321.0 265.1
Provision for credit losses 217.0 214.2 387.3
Gains on equipment, receivable and investment sales (242.4) (208.8) (164.7)
Gain on debt redemption – (41.8) (50.4)
Decrease/(increase) in other assets 339.0 (282.2) (174.2)
Decrease/(increase) in finance receivables held for sale 199.3 (394.5) 295.1
Increase in accrued liabilities and payables 294.3 328.9 279.2
Other (127.2)
________________ (71.5)
_________________ (8.7)
_________________
Net cash flows provided by operations 2,913.3
________________ 1,617.7
_________________ 2,482.2
_________________
Cash Flows From Investing Activities
Loans extended (57,596.2) (57,062.0) (53,157.8)
Collections on loans 53,986.5 48,944.1 45,123.9
Proceeds from asset and receivable sales 6,351.9 8,491.4 7,419.0
Purchase of finance receivable portfolios (4,633.1) (3,180.0) (1,097.5)
Purchases of assets to be leased (2,359.1) (1,489.2) (2,096.3)
Acquisitions, net of cash acquired (548.9) (726.8) –
Goodwill and intangibles assets acquired (436.5) (122.1) (92.6)
Net decrease (increase) in short-term factoring receivables 96.5 48.3 (396.1)
Other 154.0
________________ 41.6
_________________ 14.8
_________________
Net cash flows (used for) investing activities (4,984.9)
________________ (5,054.7)
_________________ (4,282.6)
_________________
Cash Flows From Financing Activities
Proceeds from the issuance of variable and fixed-rate notes 13,869.3 13,005.6 13,034.6
Repayments of variable and fixed-rate notes (9,133.8) (8,824.1) (10,265.6)
Net loans extended – pledged in conjunction with secured borrowings (1,708.1) – –
Net increase (decrease) in commercial paper 1,014.1 37.0 (800.7)
Treasury stock repurchases (584.7) – –
Proceeds from issuance of preferred stock 489.9 – –
Net repayments of non-recourse leveraged lease debt (630.0) (367.2) (125.4)
Cash dividends paid (128.7) (110.9) (101.8)
Other 20.9
________________ (66.9)
_________________ (3.6)
_________________
Net cash flows provided by financing activities 3,208.9
________________ 3,673.5
_________________ 1,737.5
_________________
Net increase (decrease) in cash and cash equivalents 1,137.3 236.5 (62.9)
Unrestricted cash and cash equivalents, beginning of period 2,210.2
________________ 1,973.7
_________________ 2,036.6
_________________
Unrestricted cash and cash equivalents, end of period $________________
3,347.5 $ 2,210.2
_________________ $_________________
1,973.7
________________ _________________ _________________
Supplementary Cash Flow Disclosure
Interest paid $ 1,651.5 $ 1,241.5 $ 1,517.6
Federal, foreign, state and local income taxes paid, net $ 115.6 $ 115.0 $ 80.6

CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BUSINESS AND SUMMARY OF Income Recognition

SIGNIFICANT ACCOUNTING POLICIES Finance income includes interest on loans, the accretion of
CIT Group Inc., a Delaware corporation (“we,” “CIT” or the income on direct financing leases, and rents on operating leases.
“Company”), is a global commercial and consumer finance Related origination and other nonrefundable fees and direct
company that was founded in 1908. CIT provides financing and origination costs are deferred and amortized as an adjustment
leasing capital for consumers and companies in a wide variety of finance income over the contractual life of the transactions.
of industries, offering vendor, equipment, commercial, factoring, Income on finance receivables other than leveraged leases is rec-
home lending, student lending and structured financing prod- ognized on an accrual basis commencing in the month of
ucts as well as offering management advisory services. CIT origination. Leveraged lease income is recognized on a basis cal-
operates primarily in North America, with locations in Europe, culated to achieve a constant after-tax rate of return for periods
Latin America, Australia and the Asia-Pacific region. in which CIT has a positive investment in the transaction, net of
related deferred tax liabilities. Rental income on operating leases
Basis of Presentation is recognized on an accrual basis.
The Consolidated Financial Statements include the results of The accrual of finance income on commercial finance receivables
CIT and its subsidiaries and have been prepared in U.S. dollars is generally suspended and an account is placed on non-accrual
in accordance with accounting principles generally accepted status when payment of principal or interest is contractually
in the United States. Inter-company transactions have been elim- delinquent for 90 days or more, or earlier when, in the opinion
inated. Certain prior period amounts have been reclassified to of management, full collection of all principal and interest due is
conform to the current presentation, including certain rail and doubtful. To the extent the estimated fair value of collateral does
aerospace maintenance costs related to equipment under operat- not satisfy both the principal and accrued interest outstanding,
ing leases that were previously included in salaries and general accrued but uncollected interest at the date an account is placed
operating expenses and reclassified to net finance margin. on non-accrual status is reversed and charged against income.
Subsequent interest received is applied to the outstanding princi-
In accordance with the provisions of FASB Interpretation No. pal balance until such time as the account is collected, charged-off
46R (“FIN 46”), “Consolidation of Variable Interest Entities,” or returned to accrual status. The accrual of finance income on
CIT consolidates variable interest entities for which management consumer loans is suspended, and all previously accrued but
has concluded that CIT is the primary beneficiary. Entities that uncollected income is reversed, when payment of principal
do not meet the definition of a variable interest entity are subject and/or interest is contractually delinquent for 90 days or more.
to the provisions of Accounting Research Bulletin No. 51 (“ARB
51”), “Consolidated Financial Statements” and are consolidated Other revenue includes the following: (1) factoring commissions,
when management has determined that it has the controlling (2) commitment, facility, letters of credit, advisory and syndica-
financial interest. Entities which do not meet the consolidation tion fees, (3) servicing fees, including servicing of securitized
criteria in either FIN 46 or ARB 51 but which are significantly loans, (4) gains and losses from sales of leasing equipment and
influenced by the Company, generally those entities that are sales of finance receivables, (5) gains from and fees related to
twenty to fifty percent owned by CIT, are included in other securitizations including accretion related to retained interests
assets at cost for securities not readily marketable and presented (net of impairment), (6) equity in earnings of joint ventures and
at the corresponding share of equity plus loans and advances. unconsolidated subsidiaries and (7) gains and losses related to
Investments in entities which management does not have signifi- certain derivative transactions.
cant influence over are included in other assets at cost, less Lease Financing
declines in value that are other than temporary. In accordance
with Statement of Financial Accounting Standards (“SFAS”) No. Direct financing leases are recorded at the aggregate future
140, “Accounting for Transfers and Servicing of Financial Assets minimum lease payments plus estimated residual values less
and Extinguishment of Liabilities”, qualifying special purpose unearned finance income. Operating lease equipment is
entities utilized in securitizations are not consolidated. carried at cost less accumulated depreciation and is depreciated
to estimated residual value using the straight-line method
Financing and Leasing Assets over the lease term or projected economic life of the asset.
Equipment acquired in satisfaction of loans is recorded at the
CIT provides funding through a variety of financing arrange- lower of carrying value or estimated fair value when acquired.
ments, including term loans, lease financing and operating leases. Lease receivables include leveraged leases, for which a major
The amounts outstanding on loans and direct financing leases are portion of the funding is provided by third party lenders on
referred to as finance receivables and, when combined with a nonrecourse basis, with CIT providing the balance and
finance receivables held for sale, net book value of operating lease acquiring title to the property. Leveraged leases are recorded
equipment, and certain investments, represent financing and at the aggregate value of future minimum lease payments plus
leasing assets. estimated residual value, less non-recourse third party debt
and unearned finance income. Management performs periodic
At the time of designation for sale, securitization or syndication reviews of estimated residual values with other than temporary
by management, assets are classified as finance receivables held impairment recognized in current period earnings.
for sale. These assets are carried at lower of cost or fair value.

Reserve for Credit Losses on Finance Receivables Long-Lived Assets

The reserve for credit losses is intended to provide for losses A review for impairment of long-lived assets, such as certain
inherent in the portfolio and is periodically reviewed for ade- operating lease equipment, is performed at least annually and
quacy considering economic conditions, collateral values and whenever events or changes in circumstances indicate that the
credit quality indicators, including historical and expected carrying amount of long-lived assets may not be recoverable.
charge-off experience and levels of and trends in past due loans, Impairment of assets is determined by comparing the carrying
non-performing assets and impaired loans. Changes in eco- amount of an asset to future undiscounted net cash flows
nomic conditions or other events affecting specific obligors expected to be generated by the asset. If an asset is considered
or industries may necessitate additions or deductions to the to be impaired, the impairment is the amount by which the
reserve for credit losses. carrying amount of the asset exceeds the fair value of the asset.
Fair value is based upon discounted cash flow analysis and
The reserve for credit losses is determined based on three key
available market data. Current lease rentals, as well as relevant
components: (1) specific reserves for loans that are impaired
and available market information (including third party sales
under SFAS 114, based upon the value of underlying collateral
for similar equipment, published appraisal data and other
or projected cash flows, (2) reserves for estimated losses inherent
marketplace information), is considered, both in determining
in the portfolio based upon historical and projected credit risk
undiscounted future cash flows when testing for the existence
and (3) reserves for economic environment risk and other factors.
of impairment and in determining estimated fair value in measur-
In management’s judgment, the reserve for credit losses is ade-
ing impairment. Depreciation expense is adjusted when projected
quate to provide for credit losses inherent in the portfolio.
fair value at the end of the lease term is below the projected book
Charge-off of Finance Receivables value at the end of the lease term. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less
Finance receivables are reviewed periodically to determine the costs to dispose.
probability of loss. Charge-offs are taken after considering such
factors as the borrower’s financial condition and the value of Goodwill and Other Identified Intangibles
underlying collateral and guarantees (including recourse to deal-
ers and manufacturers). Such charge-offs are deducted from the SFAS No. 141 “Business Combinations” requires that business
carrying value of the related finance receivables. To the extent combinations be accounted for using the purchase method. The
that an unrecovered balance remains due, a final charge-off is purchase method of accounting requires that the cost of an
taken at the time collection efforts are deemed no longer useful. acquired entity be allocated to the assets acquired and liabilities
Charge-offs are recorded on consumer and certain small ticket assumed based on their estimated fair values at the date of acqui-
commercial finance receivables beginning at 180 days of contrac- sition. The difference between the fair values and the purchase
tual delinquency based upon historical loss severity. Collections price is recorded to goodwill. Also under SFAS 141, identified
on accounts previously charged off are recorded as recoveries. intangible assets acquired in a business combination must be sep-
arately valued and recognized on the balance sheet if they meet
Impaired Finance Receivables certain requirements.
Impaired finance receivables include any loans or capital leases of
$500 thousand or greater that are placed on non-accrual status Goodwill represents the excess of the purchase price over the fair
and are subject to periodic individual review by CIT’s Asset value of identifiable assets acquired, less the fair value of liabilities
Quality Review Committee (“AQR”). The AQR, which is com- assumed from business combinations. CIT adopted SFAS No.
prised of members of senior management, reviews overall 142, “Goodwill and Other Intangible Assets” effective
portfolio performance, as well as individual accounts meeting cer- October 1, 2001. Since adoption, goodwill is no longer amor-
tain credit risk grading parameters. Excluded from impaired tized, but instead is assessed for impairment at least annually.
finance receivables are: 1) certain individual commercial non- During this assessment, management relies on a number of fac-
accrual finance receivables for which the collateral value supports tors, including operating results, business plans, economic
the outstanding balance and the continuation of earning status, projections, anticipated future cash flows and market place data.
2) home lending and other homogeneous pools of loans, which
are subject to automatic charge-off procedures, and 3) short-term Intangible assets consist primarily of customer relationships
factoring customer finance receivables, generally having terms of acquired, which have amortizable lives up to 20 years, and com-
no more than 30 days. Impairment occurs when, based on current puter software and related transactions processes, which are being
information and events, it is probable that CIT will be unable to amortized over a 5-year life. An evaluation of the remaining use-
collect all amounts due according to the contractual terms of the ful lives and the amortization methodology of the intangible
financing agreement. Impairment is measured as any shortfall assets is performed periodically to determine if any change
between the estimated value and the recorded investment in the is warranted.
finance receivable, with the estimated value determined using the
fair value of the collateral and other cash flows if the finance
receivable is collateralized, or the present value of expected future
cash flows discounted at the contract’s effective interest rate.

Student Lending Acquisition and interest to certificate and/or note holders and credit-related
In February 2005, CIT acquired Education Lending Group, Inc. disbursements) that exceeds the estimated cost of servicing is
(“EDLG”), a specialty finance company principally engaged in recorded at the time of sale as a “retained interest.” Retained
providing education loans (primarily U.S. government guaran- interests in securitized assets are classified as available-for-sale
teed), products and services to students, parents, schools and securities under SFAS No. 115. CIT, in its estimation of those
alumni associations. The acquisition was accounted for under net cash flows and retained interests, employs a variety of finan-
the purchase method, with the acquired assets and liabilities cial assumptions, including loan pool credit losses, prepayment
recorded at their estimated fair values as of the February 17, speeds and discount rates. These assumptions are supported by
2005 acquisition date. The assets acquired included approxi- both CIT’s historical experience, market trends and anticipated
mately $4.4 billion of finance receivables and $300 million of performance relative to the particular assets securitized.
goodwill and intangible assets. This business is largely funded Subsequent to the recording of retained interests, estimated cash
with “Education Loan Backed Notes,” which are accounted for flows underlying retained interests are periodically updated based
under SFAS No. 140 “Accounting for Transfers and Servicing upon current information and events that management believes
of Financial Assets and Extinguishments of Liabilities.” The assets a market participant would use in determining the current fair
related to these borrowings are owned by a special purpose entity value of the retained interest. If the analysis indicates that an
that is consolidated in the CIT financial statements, and the adverse change in estimated cash flows has occurred, an “other-
creditors of that special purpose entity have received ownership than temporary” impairment is recorded and included in net
and / or security interests in the assets. As EDLG retains certain income to write down the retained interest to estimated fair
call features with respect to these borrowings, the transactions value. Unrealized gains are not credited to current earnings, but
do not meet the SFAS 140 requirements for sales treatment and are reflected in stockholders’ equity as part of other comprehen-
are therefore recorded as secured borrowings and are reflected in sive income.
the Consolidated Balance Sheet as “student lending receivables
pledged” and “non-recourse, secured borrowings – student Servicing assets or liabilities are established when the fees for
lending.” Certain cash balances, included in cash and cash servicing securitized assets are more or less than adequate com-
equivalents, are restricted in conjunction with these borrowings. pensation to CIT for servicing the assets. CIT securitization
transactions generally do not result in servicing assets or liabilities,
Other Assets
as typically the contractual fees are adequate compensation in
relation to the associated servicing costs. To the extent applicable,
Assets received in satisfaction of loans are carried at the lower of
servicing assets or liabilities are recognized in earnings over the
carrying value or estimated fair value less selling costs, with write-
servicing period and are periodically evaluated for impairment.
downs generally reflected in provision for credit losses.
Derivative Financial Instruments
Realized and unrealized gains (losses) on marketable equity secu-
rities included in CIT’s venture capital portfolios are recognized As part of managing economic risk and exposure to interest rate,
currently in operations. Unrealized gains and losses, representing foreign currency, and, in limited instances, credit risk, CIT, as an
the difference between carrying value and estimated current fair end-user, enters into various derivative transactions, which are
market value, for other debt and equity securities are recorded transacted in over-the-counter markets with other financial insti-
in other accumulated comprehensive income, a separate compo- tutions. To ensure both appropriate use as a hedge and to achieve
nent of equity. hedge accounting treatment, whenever possible, derivatives
entered into are designated according to a hedge objective against
Investments in joint ventures are accounted for using the equity a specific liability, forecasted transaction or, in limited instances,
method, whereby the investment balance is carried at cost and assets. The critical terms of the derivatives, including notional
adjusted for the proportionate share of undistributed earnings or amounts, rates, indices, and maturities, match the related terms
losses. Unrealized intercompany profits and losses are eliminated of the underlying hedged items. CIT does not enter into deriva-
until realized, as if the joint venture were consolidated. tive financial instruments for trading or speculative purposes.
Derivative instruments are transacted as economic hedges,
Investments in debt and equity securities of non-public compa- though certain derivative instruments do not qualify for hedge
nies are carried at fair value. Gains and losses are recognized upon accounting. In these limited instances, related activity is reflected
sale or write-down of these investments as a component of oper- in current earnings.
ating margin.
Major hedge strategies include: (1) Interest rate risk management
Securitization Sales
to match fund asset portfolio growth. Interest rate swaps,
whereby CIT pays a fixed interest rate and receives a variable
Pools of assets are originated and sold to special purpose entities
interest rate, are utilized to hedge either forecasted commercial
which, in turn, issue debt securities backed by the asset pools or
paper issuances or specific variable-rate debt instruments. These
sell individual interests in the assets to investors. CIT retains the
transactions are classified as cash flow hedges and effectively con-
servicing rights and participates in certain cash flows from the
vert variable-rate debt to fixed-rate debt. Interest rate swaps,
pools. For transactions meeting accounting sale criteria, the pres-
whereby CIT pays a variable interest rate and receives a fixed
ent value of expected net cash flows (after payment of principal

interest rate, are utilized to hedge specific fixed-rate debt. These Foreign Currency Translation
transactions are classified as fair value hedges and effectively CIT has operations in Canada, Europe and other countries out-
convert fixed-rate debt to a variable-rate debt. (2) Currency side the United States. The functional currency for these foreign
risk management to hedge foreign funding sources. Cross- operations is generally the local currency. The value of the assets
currency swaps, whereby CIT pays U.S. dollars and receives and liabilities of these operations is translated into U.S. dollars at
various foreign currencies, are utilized to effectively convert the rate of exchange in effect at the balance sheet date. Revenue
foreign-denominated debt to U.S. dollar debt. These transactions and expense items are translated at the average exchange rates
are classified as either foreign currency cash flow or foreign effective during the year. The resulting foreign currency transla-
currency fair value hedges. (3) Currency risk management to tion gains and losses, as well as offsetting gains and losses on
hedge investments in foreign operations. Cross-currency swaps hedges of net investments in foreign operations, are reflected in
and foreign currency forward contracts, whereby CIT pays accumulated other comprehensive income. Transaction gains and
various foreign currencies and receives U.S. dollars, are utilized losses resulting from exchange rate changes on transactions
to effectively convert U.S. dollar denominated debt to foreign denominated in currencies other than the functional currency are
currency denominated debt. These transactions are classified as included in net income.
foreign currency net investment hedges, or foreign currency
cash flow hedges, with resulting gains and losses reflected in Income Taxes
accumulated other comprehensive income as a separate compo-
nent of equity. Deferred tax assets and liabilities are recognized for the expected
future taxation of events that have been reflected in the
Derivative instruments are recognized in the balance sheet at Consolidated Financial Statements. Deferred tax liabilities and
their fair values in other assets and accrued liabilities and assets are determined based on the differences between the book
payables, and changes in fair values are recognized immediately values and the tax basis of particular assets and liabilities, using
in earnings, unless the derivatives qualify as cash flow hedges. tax rates in effect for the years in which the differences are
For derivatives qualifying as hedges of future cash flows, the expected to reverse. A valuation allowance is provided to offset
effective portion of changes in fair value is recorded temporarily any net deferred tax assets if, based upon the available evidence,
in accumulated other comprehensive income as a separate com- it is more likely than not that some or all of the deferred tax
ponent of equity, and contractual cash flows, along with the assets will not be realized. U.S. income taxes are generally not
related impact of the hedged items, continue to be recognized in provided on undistributed earnings of foreign operations as such
earnings. Any ineffective portion of a hedge is reported in current earnings are permanently invested. Income tax reserves reflect
earnings. Amounts accumulated in other comprehensive income open tax return positions, tax assessments received, tax law
are reclassified to earnings in the same period that the hedged changes and third party indemnifications, and are included in
transaction impacts earnings. current taxes payable, which is reflected in accrued liabilities
and payables.
Hedge effectiveness is assessed both at the inception of the hedge
and on an on-going basis, at least every quarter. Hedge ineffec- Accounting for Costs Associated with Exit or Disposal
tiveness is measured in accordance with contemporaneous hedge Activities
documentation as of each financial statement period. A liability for costs associated with exit or disposal activities,
other than in a business combination, is recognized when the lia-
The net interest differential, including premiums paid or bility is incurred. The liability is measured at fair value, with
received, if any, on interest rate swaps, is recognized on an accrual adjustments for changes in estimated cash flows recognized
basis as an adjustment to finance income or as interest expense in earnings.
to correspond with the hedged position. In the event of early
termination of derivative instruments, the gain or loss is
reflected in earnings as the hedged transaction is recognized Other Comprehensive Income/Loss
in earnings. Other comprehensive income/loss includes unrealized gains on
securitization retained interests and other investments, foreign
CIT is exposed to credit risk to the extent that the counterparty currency translation adjustments pertaining to both the net
fails to perform under the terms of a derivative instrument. This investment in foreign operations and the related derivatives des-
risk is measured as the market value of derivative transactions with ignated as hedges of such investments, the changes in fair values
a positive fair value, reduced by the effects of master netting agree- of derivative instruments designated as hedges of future cash
ments. We manage this credit risk by requiring that all derivative flows and minimum pension liability adjustments.
transactions be conducted with counterparties rated investment
grade by nationally recognized rating agencies, with the majority Consolidated Statements of Cash Flows
of the counterparties rated “AA” or higher, and by setting limits
Cash and cash equivalents includes cash and interest-bearing
on the exposure with any individual counterparty. Accordingly,
deposits, which generally represent overnight money market
counterparty credit risk is not considered significant.
investments of excess cash maintained for liquidity purposes.
Cash inflows and outflows from commercial paper borrowings

and most factoring receivables are presented on a net basis in the Stock-Based Compensation
Statements of Cash Flows, as their original term is generally less CIT has elected to apply Accounting Principles Board Opinion
than 90 days. 25 (“APB 25”) rather than the optional provisions of SFAS No.
123 “Accounting for Stock-Based Compensation” (“SFAS 123”),
Use of Estimates as amended by SFAS No. 148, “Accounting for Stock-Based
The preparation of financial statements in conformity with Compensation – Transition and Disclosure” in accounting for its
accounting principles generally accepted in the United States of stock-based compensation plans. Under APB 25, CIT does not
America requires management to make extensive use of estimates recognize compensation expense on the issuance of its stock
and assumptions that affect: 1) the reported amounts of assets options because the option terms are fixed and the exercise price
and liabilities at the date of the financial statements; 2) the equals the market price of the underlying stock on the grant date.
reported amounts of income and expenses during the reporting The following table presents the proforma information required
period; and 3) the disclosure of contingent assets and liabilities at by SFAS 123 as if CIT had accounted for stock options granted
the date of the financial statements. Actual amounts could differ under the fair value method of SFAS 123.
from those estimates.
Years Ended December 31, (dollars in millions except per share data)
2005
____________ 2004
____________ 2003
____________
Net income available for common shareholders as reported $ 936.4 $ 753.6 $ 566.9
Stock-based compensation expense – fair value method, after tax (19.2)
____________ (20.6)
____________ (23.0)
____________
Proforma net income $ 917.2
____________ $ 733.0
____________ $ 543.9
____________
____________ ____________ ____________
Basic earnings per share as reported $ 4.54 $ 3.57 $ 2.68
Basic earnings per share proforma $ 4.45 $ 3.47 $ 2.57
Diluted earnings per share as reported $ 4.44 $ 3.50 $ 2.66
Diluted earnings per share proforma $ 4.35 $ 3.41 $ 2.55
Compensation expense related to restricted stock awards is recog- of various financial instruments, and other factors. These
nized over the respective vesting periods and totaled (net of tax) estimates are subjective in nature, involving uncertainties and
$26.4 million, $14.3 million and $5.5 million for the years matters of significant judgment and, therefore, cannot be
ended December 31, 2005, 2004 and 2003. determined with precision. Changes in assumptions or estima-
tion methods may significantly affect the estimated fair values.
Earnings per Share Because of these limitations, management provides no assurance
Basic EPS is computed by dividing net income by the weighted- that the estimated fair values presented would necessarily be
average number of common shares outstanding for the period. realized upon disposition or sale.
The diluted EPS computation includes the potential impact of Actual fair values in the marketplace are affected by other signifi-
dilutive securities, including stock options and restricted stock cant factors, such as supply and demand, investment trends and
grants. The dilutive effect of stock options is computed using the the motivations of buyers and sellers, which are not considered
treasury stock method, which assumes the repurchase of com- in the methodology used to determine the estimated fair values
mon shares by CIT at the average market price for the period. presented. In addition, fair value estimates are based on existing
Options that have an anti-dilutive effect are not included in the financial instruments without attempting to estimate the value
denominator and averaged approximately 17.0 million, of future business transactions and the value of assets and liabilities
17.0 million and 17.4 million shares for the years ended that are part of CIT’s overall value but are not considered finan-
December 31, 2005, 2004 and 2003. cial instruments. Significant assets and liabilities that are not
considered financial instruments include customer base, operat-
Fair Value of Financial Instruments
ing lease equipment, premises and equipment, assets received
SFAS No. 107 “Disclosures About Fair Value of Financial in satisfaction of loans, and deferred tax balances. In addition,
Instruments” requires disclosure of the estimated fair value of tax effects relating to the unrealized gains and losses (differences
CIT’s financial instruments, excluding leasing transactions in estimated fair values and carrying values) have not been
accounted for under SFAS 13. The fair value estimates are made considered in these estimates and can have a significant effect
at a discrete point in time based on relevant market information on fair value estimates. The carrying amounts for cash and cash
and information about the financial instrument, assuming ade- equivalents approximate fair value because they have short matu-
quate market liquidity. Because no established trading market rities and do not present significant credit risks. Credit-related
exists for a significant portion of CIT’s financial instruments, fair commitments, as disclosed in Note 16 – “Commitments and
value estimates are based on judgments regarding future expected Contingencies”, are primarily short-term floating-rate contracts
loss experience, current economic conditions, risk characteristics whose terms and conditions are individually negotiated, taking

into account the creditworthiness of the customer and the NOTE 2 – FINANCE RECEIVABLES
nature, accessibility and quality of the collateral and guarantees.
The following table presents finance receivables by loans and
Therefore, the fair value of credit-related commitments, if exer-
lease receivables, as well as finance receivables previously securi-
cised, would approximate their contractual amounts.
tized and still serviced by CIT.
Accounting Pronouncements
December 31, (dollars in millions)
On January 1, 2005, the Company adopted Statement of
Position No. 03-3, “Accounting for Certain Loans or Debt 2005
_______________ 2004
_______________
Securities Acquired in a Transfer” (“SOP 03-3”). SOP 03-3 Loans $37,410.3 $27,566.2
requires acquired loans to be carried at fair value and prohibits Leases 6,884.2 7,482.0
_______________ _______________
the establishment of credit loss valuation reserves at acquisition
Finance receivables $44,294.5
_______________ $35,048.2
_______________
for loans that have evidence of credit deterioration since origina- _______________ _______________
tion. The implementation of SOP 03-3 did not have a material Finance receivables securitized and
financial statement impact. serviced by CIT $_______________
7,285.7 $_______________
8,309.7
_______________ _______________
In December 2004, the FASB issued a revision to SFAS No. 123, Finance receivables include the following:
“Share-Based Payment” (“FAS 123R”). FAS 123R requires the
December 31, (dollars in millions)
recognition of compensation expense for all stock-based com-
pensation plans as of the beginning of the first annual reporting 2005
_______________ 2004
_______________
period that begins after June 15, 2005. The current accounting Unearned income $(3,436.3) $(3,242.8)
for employee stock options is most impacted by this new stan-
Equipment residual values $ 2,064.7 $ 2,389.7
dard, as costs associated with the Company’s restricted stock
awards are already recognized in net income and amounts associ- Leveraged leases, net $ 1,020.7 $ 1,241.8
ated with employee stock purchase plans are not significant.
Leveraged leases exclude the portion funded by third party non-
Similar to the proforma amounts disclosed historically, the com-
recourse debt payable of $2,311.4 million and $2,941.5 million
pensation cost relating to options will be based upon the
at December 31, 2005 and 2004.
grant-date fair value of the award and will be recognized over the
vesting period. FAS 123R will be adopted as of January 1, 2006, The following table sets forth the contractual maturities of
utilizing the modified prospective application method, whereby finance receivables by respective fiscal period.
the expense relating to post-adoption grants and unvested grants as December 31, (dollars in millions)
of the adoption date will be recognized in earnings. The estimated
impact for the year 2006 is approximately $0.10 diluted EPS. 2005
___________________________ 2004
__________________________
Due Within Year:
In December 2004, the FASB issued FASB Staff Position No. 1 $12,438.0 28.1% $11,799.5 33.7%
FAS 109-2, “Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the American 2 4,482.0 10.1% 4,827.0 13.8%
Jobs Creation Act of 2004” (“FSP 109-2”). The implementation 3 3,872.0 8.7% 3,720.8 10.6%
of FSP 109-2 is not expected to have a material financial state- 4 2,556.2 5.8% 2,465.3 7.0%
ment impact on the Company, as there are no present plans to
5 2,494.9 5.6% 2,066.8 5.9%
repatriate foreign earnings.
Thereafter 18,451.4 _________
________________ 41.7% 10,168.8 _________
________________ 29.0%
In May 2003, the FASB issued SFAS No. 150, “Accounting for Total $44,294.5 _________
________________ 100.0% ________________
$35,048.2 _________
100.0%
________________ _________ ________________ _________
Certain Financial Instruments with Characteristics of both
Liabilities and Equity.” On November 7, 2003, certain measure- Non-performing assets reflect both finance receivables on non-
ment and classification provisions of SFAS 150, relating to accrual status (primarily finance receivables that are ninety
certain mandatorily redeemable non-controlling interests, were days or more delinquent) and assets received in satisfaction of
deferred indefinitely. The implementation of these delayed provi- loans (repossessed assets). The following table sets forth certain
sions, which relate primarily to minority interests associated with information regarding total non-performing assets.
finite-lived entities, is not expected to have a material financial
statement impact on the Company. December 31, (dollars in millions)
2005
___________ 2004
___________
The FASB has issued FASB Staff Position (“FSP”) No. 13-a Non-accrual finance receivables $460.7 $458.4
“Accounting for a Change or Projected Change in the Timing of
Assets received in satisfaction of
Cash Flows Related to Income Taxes Generated by a Leveraged finance receivables 60.5 81.2
Lease Transaction.” As CIT does not participate in “lease in lease __________ __________
out” transactions, the adoption of the FSP as proposed is not Total non-performing assets $521.2
__________ $539.6
__________
__________ __________
expected to have a material financial statement impact. Percentage of finance receivables 1.18%
__________ 1.54%
__________
__________ __________

The following table contains information on finance receivables evaluated for impairment and the reserve for credit losses.
At or for the Years Ended December 31, (dollars in millions) 2005
___________ 2004
___________ 2003
___________
Finance receivables considered for impairment $302.5 $400.9 $516.5
Impaired finance receivables with specific allowance(1) $229.7 $235.4 $279.8
Specific allowance(1) $ 76.5 $110.3 $120.7
Impaired finance receivables with no specific allowance $ 72.8 $165.5 $236.7
Average monthly investment in impaired finance receivables(2) $315.5 $445.4 $690.5
(1)
The allowance is the excess of the recorded investment in the finance receivables over the related estimated fair value of collateral and other cash flows
(if the finance receivable is collateralized) or the present value of expected future cash flows discounted at the contracts’ effective interest rates.
(2)
Includes telecommunications related accounts totaling $129.3 million, $224.3 million and $316.0 million for the years ended December 31, 2005,
2004 and 2003.
NOTE 3 – RESERVE FOR CREDIT LOSSES

The following table presents changes in the reserve for credit losses.
At or for the Years Ended December 31, (dollars in millions) 2005
_____________ 2004
_____________ 2003
_____________
Balance, beginning of period $ 617.2
_____________ $ 643.7
_____________ $ 760.8
_____________
Provision for credit losses 182.4 270.0 408.8
Provision for credit losses – specific reserving actions (1) 34.6 (55.8) (21.5)
Reserves relating to dispositions, acquisitions and other 38.6
_____________ 60.5
_____________ 17.5
_____________
Additions to the reserve for credit losses 255.6
_____________ 274.7
_____________ 404.8
_____________
Charged-off – finance receivables (328.7) (340.3) (424.9)
Charged-off – telecommunications – (40.1) (47.0)
Charged-off – Argentine – – (101.0)
Recoveries on finance receivables previously charged-off 77.6
_____________ 79.2
_____________ 51.0
_____________
Net credit losses (251.1)
_____________ (301.2)
_____________ (521.9)
_____________
Balance, end of period $ 621.7
_____________ $ 617.2
_____________ $ 643.7
_____________
_____________ _____________ _____________
Reserve for credit losses as a percentage of finance receivables 1.40% 1.76% 2.06%
(1)
The 2005 amount relates to a reserve for credit losses for estimated incurred losses associated with Hurricanes Katrina and Rita. The 2004 amount
includes a $43.3 million reduction to the telecommunications specific reserve following improvements in the underlying accounts and a $12.5 million
reduction of the Argentine reserve following the sale of the remaining assets in this portfolio. The 2003 amount reflects a reduction of a previously
established Argentine reserve after substantial work-out efforts were completed.

NOTE 4 – OPERATING LEASE EQUIPMENT

The following table provides an analysis of the net book value (net of accumulated depreciation of $1.9 billion at the end of both years)
of operating lease assets, by equipment type.
December 31 (dollars in millions)
2005
______________ 2004
______________
Commercial aircraft (including regional aircraft) $5,187.0 $4,461.0
Railcars and locomotives 3,100.1 2,212.8
Information technology 382.1 430.4
Office equipment 290.0 274.2
Communications 188.7 237.8
Medical Equipment 97.6 –
Business aircraft 27.2 189.1
Other 363.0
______________ 485.6
______________
Total $9,635.7
______________ $8,290.9
______________
______________ ______________
Off-lease equipment $ 245.1
______________ $ 118.3
______________
______________ ______________
Rental income on operating leases, which is included in finance Years Ended December 31, (dollars in millions)
income, totaled $1.5 billion for the year ended December 31,
Amount
______________
2005, $1.4 billion for the year ended December 31, 2004, and
$1.5 billion for the year ended December 31, 2003. The 2006 $1,164.0
following table presents future minimum lease rentals on non- 2007 1,017.6
cancelable operating leases at December 31, 2005. Excluded
2008 713.5
from this table are variable rentals calculated on the level of asset
usage, re-leasing rentals, and expected sales proceeds from remar- 2009 482.3
keting operating lease equipment at lease expiration, all of which 2010 293.5
are components of operating lease profitability. Thereafter 403.9
_____________
Total $4,074.8
_____________
_____________
NOTE 5 – CONCENTRATIONS
The following table summarizes the geographic and industry compositions (by obligor) of financing and leasing portfolio assets.
2005
___________________________________________ 2004
___________________________________________
Geographic Amount
_______________ Percent
_______________ Amount
_______________ Percent
_______________
North America:
Northeast $10,544.8 19.0% $ 8,463.4 18.7%
West 10,445.8 18.8% 8,595.3 19.0%
Midwest 9,479.7 17.0% 6,907.0 15.3%
Southeast 7,749.5 13.9% 6,283.3 14.0%
Southwest 5,604.4 10.1% 4,848.3 10.7%
Canada 3,384.7
_______________ 6.1%
_________ 2,483.4
_______________ 5.5%
_________
Total North America 47,208.9 84.9% 37,580.7 83.2%
Other foreign 8,371.8
_______________ 15.1%
_________ 7,580.2
_______________ 16.8%
_________
Total $55,580.7
_______________ 100.0%
_________ $45,160.9
_______________ 100.0%
_________
_______________ _________ _______________ _________

2005
___________________________________________ 2004
___________________________________________
Industry Amount
_______________ Percent
_______________ Amount
_______________ Percent
_______________
Consumer based lending – home mortgage $ 8,335.7 15.0% $ 5,069.8 11.2%
(1)(6)
Manufacturing 7,185.3 12.9% 6,932.0 15.4%
Commercial airlines (including regional airlines) 6,426.9 11.6% 5,512.4 12.2%
(2)
Retail 6,322.3 11.4% 5,859.4 13.0%
Consumer based lending – student lending 5,267.8 9.5% – –
Service industries 3,096.5 5.6% 2,854.5 6.3%
Transportation(3) 2,543.6 4.6% 2,969.6 6.6%
Healthcare 2,123.7 3.8% 992.5 2.2%
Consumer based lending – non-real estate(4) 1,878.7 3.4% 2,480.1 5.5%
Wholesaling 1,834.4 3.3% 1,727.5 3.8%
Construction equipment 1,451.1 2.6% 1,603.1 3.5%
(5)(6)
Other (no industry greater than 3.0%) 9,114.7
_______________ 16.3%
_________ 9,160.0
_______________ 20.3%
_________
Total $55,580.7
_______________ 100.0%
_________ $45,160.9
_______________ 100.0%
_________
_______________ _________ _______________ _________
(1)
Includes manufacturers of apparel (2.2%), followed by food and kindred products, chemical and allied products, rubber and plastics, industrial machinery
and equipment, textiles, transportation equipment, and other industries.
(2)
Includes retailers of apparel (4.8%) and general merchandise (3.7%).
(3)
Includes rail, bus, over-the-road trucking and business aircraft.
(4)
Includes receivables from consumers for products in various industries such as manufactured housing, recreational vehicles, marine and computers and
related equipment.
(5)
Included in “Other” above are financing and leasing assets in the energy, power and utilities sectors, which totaled $1.4 billion, or 2.5% of total financing
and leasing assets at December 31, 2005. This amount includes approximately $853.5 million in project financing and $382.5 million in rail cars
on lease.
(6)
Total exposure to manufacturers of automobile and related suppliers included in Manufacturing and Other was less than 1% of total financing and
leasing assets at December 31, 2005.
NOTE 6 – RETAINED INTERESTS IN SECURITIZATIONS AND OTHER INVESTMENTS

Both retained interests in securitizations and other investments are designated as available for sale and shown in the following table.
2005
______________ 2004
______________
Retained interests in commercial loans:
Retained subordinated securities $ 426.8 $ 446.2
Interest-only strips 387.2 292.4
Cash reserve accounts 276.8
______________ 323.4
______________
Total retained interests in commercial loans 1,090.8
______________ 1,062.0
______________
Retained interests in home lending consumer loans:
Retained subordinated securities 45.6 76.6
Interest-only strips –
______________ 17.0
______________
Total retained interests in consumer loans 45.6
______________ 93.6
______________
Total retained interests in securitizations 1,136.4 1,155.6
(1)
Aerospace equipment trust certificates and other 16.3
______________ 72.6
______________
Total $1,152.7
______________ $1,228.2
______________
______________ ______________
(1)
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.

The following table summarizes the net accretion recognized in pretax earnings, the related impairment charges, and unrealized after-
tax gains, reflected as a part of accumulated other comprehensive income.
Years Ended December 31 (dollars in millions)

2005
_________ 2004
_________ 2003
_________
Net accretion in pre-tax earnings $62.5 $44.2 $81.5
Impairment charges, included in net accretion $39.4 $62.4 $66.6
Unrealized after tax gains $17.0 $ 8.4 $ 7.7
The prepayment speed, in the tables below, is based on Constant Commercial Equipment
___________________________________________
Prepayment Rate, which expresses payments as a function of the Specialty Equipment
declining amount of loans at a compound annual rate. Weighted Finance Finance
_______________ __________________
average expected credit losses are expressed as annual loss rates.
Weighted average prepayment speed 39.19% 12.66%
The key assumptions used in measuring the retained interests Weighted average expected credit losses 0.34% 0.73%
at the date of securitization for transactions completed during Weighted average discount rate 7.88% 9.00%
2005 (there were no consumer transactions during 2005) were Weighted average life (in years) 1.26 2.03
as follows:
Key assumptions used in calculating the fair value of the retained interests in securitized assets by product type at December 31, 2005
were as follows:
Commercial Equipment
___________________________________________ Consumer
___________________________________________________
Manufactured Recreational
Specialty Equipment Housing and Vehicle and
Finance
_______________ Finance
__________________ Home Equity
_______________________ Boat
_____________________
Weighted average prepayment speed 22.09% 11.79% 28.09% 21.53%
Weighted average expected credit losses 0.94% 1.36% 2.14% 1.20%
Weighted average discount rate 7.71% 9.26% 13.10% 15.00%
Weighted average life (in years) 1.08 1.49 2.81 2.61
The impact of adverse changes to the key assumptions on the fair value of retained interests as of December 31, 2005 is shown in the
following table.
Consumer
__________________________________________________
Manufactured Recreational
Commercial Housing and Vehicle and
Equipment
____________________ Home Equity _____________________
_______________________ Boat
Prepayment speed:
10 percent adverse change $ (14.8) $ (3.4) $ –
20 percent adverse change (28.4) (6.4) 0.1
Expected credit losses:
10 percent adverse change (7.1) (4.1) (0.1)
Weighted average discount rate:

These sensitivities are hypothetical and should be used with cau- in changes in another (for example, increases in market interest
tion. Changes in fair value based on a 10 percent or 20 percent rates may result in lower prepayments and increased credit
variation in assumptions generally cannot be extrapolated losses), which might magnify or counteract the sensitivities.
because the relationship of the change in assumptions to the
change in fair value may not be linear. Also, in this table, The following table summarizes static pool credit losses, which
the effect of a variation in a particular assumption on the fair represent the sum of actual losses (life to date) and projected
value of the retained interest is calculated without changing any future credit losses, divided by the original balance of each pool
other assumption. In reality, changes in one factor may result of the respective assets for the securitizations during the period.
Commercial Equipment Home Equity

Securitizations During:
_________________________________________________________ Securitizations During:
_________________________________________________________
2005
_________ 2004
_________ 2003
_________ 2005
_________ 2004
_________ 2003
_________
Actual and projected losses at:
(1) (1)
December 31, 2005 1.54% 1.08% 1.34% 3.00%
(1)
December 31, 2004 1.25% 1.52% 2.78%
December 31, 2003 1.74% 3.07%
(1)
There were no home equity securitizations during 2004 and 2005, because all home equity finance receivables were funded on balance sheet.
The table that follows summarizes the roll-forward of retained interest balances and certain cash flows received from and paid to securi-
tization trusts.
Year Ended December 31 (dollars in millions)

2005
_____________ 2004
_____________ 2003
_____________
Retained Interests
Retained interest at beginning of period $1,155.6 $1,309.3 $1,355.9
New sales 683.0 499.5 640.9
Distributions from trusts (797.6) (682.5) (728.6)
Change in fair value 13.7 1.2 (21.1)
Other, including net accretion, and clean-up calls 81.7
_____________ 28.1
_____________ 62.2
_____________
Retained interest at end of period $1,136.4
_____________ $1,155.6
_____________ $1,309.3
_____________
_____________ _____________ _____________
Cash Flows During the Periods
Proceeds from new securitizations $3,543.9 $3,870.4 $4,589.5
Other cash flows received on retained interests 788.4 719.0 688.2
Servicing fees received 67.8 80.3 80.2
Reimbursable servicing advances, net 12.9 (6.0) 7.3
Repurchases of delinquent or foreclosed assets and ineligible contracts (11.6) (16.1) (63.0)
Purchases of contracts through clean-up calls (320.5) (164.5) (439.8)
Guarantee draws (2.2)
_____________ (3.2)
_____________ (2.1)
_____________
Total, net $4,078.7
_____________ $4,479.9
_____________ $4,860.3
_____________
_____________ _____________ _____________

The following table presents net charge-offs and accounts past due 60 days or more, on both an owned portfolio basis and managed
receivable basis.
At or for the Year Ended December 31 (dollars in millions)

2005
_________________________________ 2004
_________________________________ 2003
___________________________________
Net Charge-offs of Average Finance Receivables
Commercial $197.9 0.63% $260.2 0.88% $ 494.7 1.79%
Consumer 53.2
___________ 0.52% 41.0
___________ 1.11% 27.2
_____________ 1.53%
Total $251.1
___________ 0.60% $301.2
___________ 0.91% $_____________
521.9 1.77%
___________ ___________ _____________
Net Charge-offs of Average Managed Receivables
Commercial $253.8 0.67% $349.2 0.96% $ 639.5 1.80%
Consumer 80.8
___________ 0.72% 60.7
___________ 1.17% 40.6
_____________ 1.02%
Total $334.6
___________ 0.68% $409.9
___________ 0.99% $_____________
680.1 1.72%
___________ ___________ _____________
Finance Receivables Past Due 60 Days or More
Commercial $440.0 1.43% $491.6 1.64% $ 587.6 2.05%
(1)
Consumer 318.2
___________ 2.35% 116.4
___________ 2.27% 88.7
_____________ 3.33%
Total(1) $758.2
___________ 1.71% $608.0
___________ 1.73% $_____________
676.3 2.16%
___________ ___________ _____________
Managed Receivables Past Due 60 Days or More
Commercial $564.4 1.47% $650.6 1.69% $ 824.4 2.22%
(1)
Consumer 401.0
___________ 2.71% 227.8
___________ 3.45% 197.6
_____________ 4.22%
Total(1) $965.4
___________ 1.81% $878.4
___________ 1.95% $1,022.0
_____________ 2.44%
___________ ___________ _____________
(1)
Excluding student lending, consumer finance receivables past due would have been $185.5 million (2.18%) while total finance receivables past due would
have been $625.5 million (1.59%) and consumer managed receivables past due would have been $268.3 million (2.82%) while total managed receiv-
ables past due would have been $832.7 million (1.73%).
NOTE 7 – OTHER ASSETS

The following table presents the primary components of other assets.

2005
_____________ 2004
_____________
Accrued interest and receivables from derivative counterparties $ 350.2 $ 390.0
Investments in and receivables from non-consolidated subsidiaries 549.8 719.5
Deposits on commercial aerospace flight equipment 317.4 333.1
Direct and private fund equity investments 30.2 181.0
Prepaid expenses 145.9 105.3
Repossessed assets and off-lease equipment 80.7 98.9
Furniture and fixtures, miscellaneous receivables and other assets 1,160.8
_____________ 885.9
_____________
$2,635.0
_____________ $2,713.7
_____________
_____________ _____________
NOTE 8 – DEBT
The following table presents data on commercial paper borrowings.

2005
_____________ 2004
_____________
Borrowings outstanding $5,225.0 $4,210.9
Weighted average interest rate 3.70% 2.55%
Weighted average number of days to maturity 47 days 45 days

Year Ended December 31 (dollars in millions)

2005
_____________ 2004
_____________ 2003
_____________
Daily average borrowings $4,693.2 $4,831.3 $4,648.2
Maximum amount outstanding $5,914.0 $5,326.1 $4,999.1
Weighted average interest rate 3.45% 1.68% 1.25%
The consolidated weighted average interest rates on variable-rate totaled $4,787.9 million at December 31, 2005, of which
senior notes at December 31, 2005 and December 31, 2004 $4,025.7 million was fixed-rate and $762.2 million was
were 4.43% and 2.63%, respectively. Fixed-rate senior debt variable-rate. Foreign currency-denominated debt (stated in
outstanding at December 31, 2005 matures at various dates U.S. Dollars) totaled $5,017.5 million at December 31, 2004,
through 2015. The consolidated weighted-average interest of which $4,335.4 million was fixed-rate and $682.1 million
rates on fixed-rate senior debt at December 31, 2005 and was variable-rate.
December 31, 2004 were 5.16% and 5.53%, respectively.
Foreign currency-denominated debt (stated in U.S. Dollars) The following tables present total variable-rate and fixed-rate debt.
Commercial Variable-rate December 31, December 31,
Variable-Rate Debt
________________________________ Paper
____________________ Senior Notes
______________________ 2005
_______________________ 2004
_______________________
Due in 2005 $ – $ – $ – $ 7,566.3
Due in 2006 5,225.0 6,154.7 11,379.7 3,946.3
Due in 2007 – 5,318.6 5,318.6 3,169.0
Due in 2008 – 2,053.7 2,053.7 50.9
Due in 2009 – 751.2 751.2 836.0
Due in 2010 – 714.5 714.5 –
Due after 2010 –
______________ 492.4
________________ 492.4
________________ 187.4
________________
Total $5,225.0
______________ $15,485.1
________________ $20,710.1
________________ $15,755.9
________________
______________ ________________ ________________ ________________
Fixed-Rate Term Debt

____________________________________
Due in 2005 $ – $ 4,589.4
Due in 2006 (rates ranging from 1.70% to 6.50%) 3,017.3 2,723.6
Due in 2010 (rates ranging from 4.05% to 6.80%) 3,041.6 763.1
Due after 2010 (rates ranging from 3.80% to 7.75%) 8,825.8
________________ 6,394.1
________________
Total $22,853.6
________________ $21,715.1
________________
________________ ________________
At December 31, 2005, $0.8 billion of unissued debt securities credit at December 31, 2005, that can be drawn upon to sup-
remained under a shelf registration statement. The following port U.S. commercial paper borrowings.
table represents information on unsecured committed lines of
Expiration
_________________ Total
________ Drawn
___________ Available
________________
October 14, 2008(1) $2,100.0 $ – $2,100.0
April 14, 2009 2,100.0 – 2,100.0
April 13, 2010 2,100.0
______________ –
______________ 2,100.0
______________
Total credit lines $6,300.0
______________ $______________– $6,300.0
______________
______________ ______________ ______________
(1)
CIT has the ability to issue up to $400 million of letters of credit under the $2.1 billion facility expiring in 2008, which, if utilized, reduces available
borrowings under this facility.

The credit line agreements contain clauses that permit extensions Preferred Capital Securities
beyond the expiration dates upon written consent from the par- In February 1997, CIT Capital Trust I (the “Trust”), a
ticipating lenders. In addition to the above lines, CIT has wholly-owned subsidiary of CIT, issued in a private offering
undrawn, unsecured committed lines of credit of $146.5 million, $250.0 million liquidation value of 7.70% Preferred Capital
which supports the Australia commercial paper program. Certain Securities (the “Capital Securities”), which were subsequently
foreign operations utilize local financial institutions to fund registered with the Securities and Exchange Commission
operations. At December 31, 2005, local credit facilities totaled pursuant to an exchange offer. Each capital security was
$128.7 million, of which $58.4 million was undrawn and avail- recorded at the liquidation value of $1,000. The Trust subse-
able. During 2005 CIT also entered into a $750 million, five year quently invested the offering proceeds in $250.0 million
letter of credit facility, primarily in conjunction with the factor- principal amount of Junior Subordinated Debentures (the
ing business. As of December 31, 2005, $397 million was undrawn “Debentures”) of CIT, having identical rates and payment dates.
and available under this facility. The Debentures of CIT represent the sole assets of the Trust.
Holders of the Capital Securities are entitled to receive cumula-
Non-recourse secured borrowings – student lending tive distributions at an annual rate of 7.70% through either the
In February 2005, CIT acquired a student lending business redemption date or maturity of the Debentures (February 15,
(“Student Loan Xpress”), which is funded largely with Education 2027). Both the Capital Securities issued by the Trust and the
Loan Backed Notes. As Student Loan Xpress retains certain call Debentures of CIT owned by the Trust are redeemable in whole
features with respect to the related assets (collateral), the transac- or in part on or after February 15, 2007 or at any time in
tions do not meet the SFAS 140 requirements for sales treatment whole upon changes in specific tax legislation, bank regulatory
and are therefore recorded as secured borrowings. The outstand- guidelines or securities law at the option of CIT at their liquida-
ing non-recourse secured borrowings totaled $4.0 billion at tion value or principal amount. The securities are redeemable
December 31, 2005, of which $0.5 billion was due in 2006 and at a specified premium through February 15, 2017, at which
the remaining due in 2011 and thereafter. The consolidated time the redemption price will be at par, plus accrued interest.
weighted average interest rates on these secured borrowings Distributions by the Trust are guaranteed by CIT to the extent
at December 31, 2005 was 4.52%. that the Trust has funds available for distribution.
NOTE 9 – DERIVATIVE FINANCIAL INSTRUMENTS

The following table presents the notional principal amounts of interest rate swaps by class and the corresponding hedged positions.
December 31
____________________________________________ Hedge
2005
______________ 2004
______________ Hedged Item
______________________ Classification
______________________
Variable-rate to fixed-rate swaps
$3,260.2 $3,054.1 Cash flow variability related to forecasted commercial paper issuances Cash flow
4,935.2
______________ 479.5
______________ Cash flow variability associated with specific variable-rate debt Cash flow
$8,195.4
______________
______________ $3,533.6
______________
______________
CIT pays a fixed rate of interest and receives a variable rate of interest. These swaps hedge the cash flow variability associated with forecasted commercial
paper issuances and specific variable-rate debt.
Fixed-rate to variable-rate swaps
$10,320.1 $7,223.9 Specific fixed-rate debt Fair value
–
________________ 418.7
______________ Cash flow variability associated with specific variable-rate assets Cash flow
$10,320.1
________________ $7,642.6
______________
________________ ______________
CIT pays a variable rate of interest and receives a fixed rate of interest. These swaps hedge specific fixed-rate debt instruments and the interest rate
variability associated with specific variable-rate assets.
In addition to the swaps in the table above, CIT had $2.0 billion transactions with third parties totaling $2.0 billion in notional
in notional amount of interest rate swaps outstanding with amount at December 31, 2005 to insulate the Company from
securitization trusts at December 31, 2005 to protect the trusts the related interest rate risk.
against interest rate risk. CIT entered into offsetting swap

The following table presents the maturity, notional principal amounts and the weighted average interest rates received or paid on U.S.
dollar denominated interest rate swaps at December 31, 2005.
Maturity Floating to Fixed-rate

______________________________________________________________ Fixed to Floating-rate
______________________________________________________________
Years Ending Notional Receive Pay Notional Receive Pay
December 31, Amount
______________ Rate
_____________ Rate
________ Amount
______________ Rate
_____________ Rate
________
2006 $3,298.5 4.50% 4.61% $ 40.8 5.18% 6.83%
2007 1,956.3 4.52% 4.76% 637.7 5.53% 6.36%
2008 1,480.2 4.53% 4.71% 797.9 4.79% 5.08%
2009 172.7 4.50% 5.65% 1,300.0 4.47% 5.22%
2010 666.2 4.51% 5.24% 1,750.0 4.75% 4.64%
2011 – Thereafter 459.7 4.85% 5.87% 2,476.6 6.65% 5.83%
_____________ _____________
Total $8,033.6
_____________ $7,003.0
_____________
_____________ _____________
The following table presents the maturity, notional principal amounts and the weighted average interest rates received or paid, of
foreign currency denominated interest rate swaps at December 31, 2005.
Floating to Fixed-rate
______________________________________________________________ Fixed to Floating-rate
______________________________________________________________
Notional Receive Pay Notional Receive Pay Maturity
Foreign Currency Amount
______________ Rate
_____________ Rate
________ Amount
______________ Rate
_____________ Rate
________ Range
______________
Euro $ – – – $2,396.9 4.33% 3.28% 2011-2015
British Pound – – – 894.8 5.51% 5.20% 2008-2014
Japanese Yen – – – 25.4 3.25% 3.19% 2006
Canadian Dollar 94.5 3.33% 3.92% – – – 2009-2010
Australian Dollar 67.3
__________ 5.62% 5.49% –
_____________ – – 2006-2009
$161.8
__________ $3,317.1
_____________
__________ _____________

Variable rates are based on the contractually determined rate or The following table presents the notional principal amounts
other market rate indices and may change significantly, affecting of cross-currency swaps by class and the corresponding
future cash flows. hedged positions.
December 31
_____________________________________ Hedge
2005
_____________ 2004
_____________ Hedged Item
_______________________________ Classification
______________________ Description
____________________________________________________________________________________________
$2,623.0 $ 603.4 Foreign denominated Foreign currency CIT pays a U.S. variable rate of interest and receives a variable
debt fair value foreign rate of interest. These swaps hedge the fair value
changes in foreign currency associated with specific foreign
denominated debt and are designated as foreign currency fair
value hedges.
249.5 631.6 Foreign denominated Foreign currency CIT pays a U.S. fixed rate of interest and receives a fixed foreign
fixed-rate debt cash flow rate of interest. These swaps hedge the currency cash flow
variability associated with payments on specific foreign denomi-
nated fixed-rate debt and are designated as foreign currency
cash flow hedges.
100.0 157.6 Foreign currency Foreign currency CIT receives a U.S. fixed rate of interest and pays a fixed foreign
loans to subsidiaries cash flow rate of interest. These swaps hedge the currency cash flow vari-
ability associated with payments on specific fixed-rate foreign
denominated inter-company receivables and are designated as
foreign currency cash flow hedges.
5.3 36.5 Foreign currency Foreign currency CIT receives a U.S. variable rate of interest and pays a variable
loans to subsidiaries fair value foreign rate of interest. These swaps hedge the fair value cur-
rency changes associated with specific foreign denominated
variable-rate inter-company receivables and are designated as
foreign currency fair value hedges.
– 418.7 Foreign currency Foreign currency CIT receives a U.S. fixed rate of interest and pays a fixed foreign
equity investments net investment rate of interest. These swaps designated as net investment
_____________ _____________ in subsidiaries hedges of foreign denominated investments in subsidiaries.
$2,977.8
_______ $1,847.8
_______
_______ _______
Foreign currency forward exchange contracts The following table presents the maturity and notional principal
amounts of foreign currency hedges at December 31, 2005.
CIT sells various foreign currencies forward. These contracts
are designated as either cash flow hedges of specific foreign (dollars in millions)
denominated inter-company receivables or as net investment Maturity
hedges of foreign denominated investments in subsidiaries. Years Ending Foreign Currency Cross-Currency
The following table presents the notional principal amounts December 31
_______________________ Exchange Forwards
________________________________ Swaps
_________________________
of foreign currency forward exchange contracts and the corres- 2006 $1,745.1 $ 24.9
ponding hedged positions.
2007 2,174.0 16.5
(dollars in millions) 2008 505.4 185.7
December 31
_____________________________________ 2009 – 603.4
Hedge
2005
_____________ 2004
_____________ Hedged Item
_____________________ Classification
______________________ 2010 – 171.6
$1,579.6 $1,611.7 Foreign currency Foreign currency 2011 – Thereafter ______________– 1,975.7
______________
loans to subsidiaries cash flow Total $4,424.5 $2,977.8
______________
______________ ______________
______________
2,844.9 1,207.4 Foreign currency Foreign currency
equity investments net investment
in subsidiaries During the fourth quarter of 2005, CIT executed a variable to
_____________ _____________
fixed-rate natural gas commodity swap. This swap hedges fore-
$4,424.5
_____________ $2,819.1
_____________
_____________ _____________ casted cash flows associated with a specific energy investment
and is accounted for as a cash flow hedge. The mark-to-market
of this swap was a decrease in value of $2.62 million at
December 31, 2005 with the effective portion of $2.57 million
recorded in accumulated other comprehensive income.

The table that follows summarizes economic hedges that do not During 2005 and 2004, CIT entered into credit default swaps,
qualify for hedge accounting under SFAS 133. with terms of 5 years, to economically hedge certain CIT credit
exposures. The change in the fair value adjustment for the year
(dollars in millions) ended December 31, 2005 amounted to a $6.1 million pretax
gain. CIT also has certain cross-currency swaps, certain U.S. dol-
December 31
_____________________________________ lar interest rate swaps, and interest rate caps that are economic
2005
_____________ 2004
_____________ Type of Swaps/Caps
_________________________________ hedges of certain interest rate and foreign currency exposures.
$ 118.0 $ 98.0 Credit default swaps The mark-to-market adjustment relating to these derivatives for
the year ended December 31, 2005 including the gain on certain
246.5 1,045.4 Compound cross-currency swaps
compound cross-currency swaps that were terminated in 2005
936.4 – U.S. dollar Interest rate swaps amounted to a $41.7 million pretax increase to earnings. See
6.8
_____________ 24.3
_____________ Interest rate caps Note 25 – Selected Quarterly Financial Data and Item 9A.
$1,307.7 $1,167.7
Controls and Procedures.
_____________
_____________ _____________
_____________
The components of the adjustment to Accumulated Other Comprehensive Income/Loss for derivatives qualifying as hedges of future
cash flows are presented in the following table.
Fair Value Income Tax Total Unrealized
of Derivatives
________________________ Effects
___________________ Gain (Loss)
___________________________
Balance at December 31, 2003 – unrealized loss $(64.6) $ 23.3 $(41.3)
Changes in values of derivatives qualifying as cash flow hedges 23.3
__________ (9.1)
_________ 14.2
__________
Balance at December 31, 2004 – unrealized loss (41.3) 14.2 (27.1)
Changes in values of derivatives qualifying as cash flow hedges 89.7
__________ (35.0)
_________ 54.7
__________
Balance at December 31, 2005 – unrealized gain $ 48.4
__________ $(20.8)
_________ $ 27.6
__________
__________ _________ __________
The unrealized gain as of and for the year ended December 31, Hedge ineffectiveness occurs in certain cash flow hedges, and is
2005 reflects higher market interest rates since the inception of recorded as either an increase or decrease to interest expense as
the hedges. The Accumulated Other Comprehensive Income presented in the following table.
(along with the corresponding swap asset or liability) will be
adjusted as market interest rates change over the remaining lives (dollars in millions)
of the swaps. Assuming no change in interest rates, approxi- Increase/
mately $3.8 million, net of tax, of the Accumulated Other Decrease to
Comprehensive Income as of December 31, 2005 is expected to Ineffectiveness
_________________________ Interest Expense
____________________________
be reclassified to earnings over the next twelve months as con- Year ended December 31, 2005 $1.5 Increase
tractual cash payments are made.
Year ended December 31, 2004 $1.4 Decrease
Year ended December 31, 2003 $0.2 Decrease

NOTE 10 – STOCKHOLDERS’ EQUITY

Preferred Stock
On July 26, 2005, the Company issued $500 million aggregate amount of Series A and Series B preferred equity securities. The key
terms of the issuances are as follows.
Series A Series B
Securities issued Stated value of $350 million, comprised of 14 million Stated value of $150 million, comprised of 1.5 million
shares of 6.35% non-cumulative fixed rate preferred shares of 5.189% non-cumulative adjustable rate pre-
stock, $0.01 par value per share, with a liquidation ferred stock, $0.01 par value per share, with a
value of $25. liquidation value of $100.
Dividends Annual fixed-rate of 6.35%, payable quarterly, when Annual fixed-rate of 5.189%, payable quarterly, when
and if declared by the Board of Directors. Dividends are and if declared by the Board of Directors, through
non-cumulative. September 15, 2010, and thereafter at an annual float-
ing rate spread over a pre-specified benchmark rate.
Dividends are non-cumulative.
Redemption/maturity No stated maturity date. Not redeemable prior to No stated maturity date. Not redeemable prior to
September 15, 2010. Redeemable thereafter at September 15, 2010. Redeemable thereafter at
$25 per share at the option of CIT. $100 per share at the option of CIT.
Voting rights No voting rights. No voting rights.
Common Stock
The following table summarizes changes in common stock outstanding for the respective periods.
Issued
___________________ Less Treasury
______________________ Outstanding
_____________________
Balance at December 31, 2004 212,112,203 (1,672,033) 210,440,170
Treasury shares purchased (6,388,253) (6,388,253)
Treasury shares purchased – accelerated buyback program (10,908,136) (10,908,136)
Stock options exercised 5,659,182 5,659,182
Employee stock purchase plan participation 103,883 103,883
Restricted shares vested 203,295
___________________ __________________ 203,295
___________________
Balance at December 31, 2005 212,315,498
___________________ (13,205,357)
__________________ 199,110,141
___________________
___________________ __________________ ___________________
Treasury Stock On August 12, 2005, the Company received an additional

Pursuant to authorization by the Company’s Board of Directors, 1,830,812 shares and a final delivery of 844,669 was received on
on July 19, 2005, the Company entered into an agreement to December 21, 2005.
purchase shares of the Company’s common stock for an aggre-
gate purchase price of $500 million under an accelerated stock Accumulated Other Comprehensive Income/(Loss)
buyback program. On July 28, 2005, the Company paid The following table details the components of accumulated
$500 million and received an initial delivery of 8,232,655 shares. other comprehensive income/(loss), net of tax.

2005
___________ 2004
__________ 2003
____________
Changes in fair values of derivatives qualifying as cash flow hedges $ 27.6 $(27.1) $ (41.3)
Foreign currency translation adjustments 73.5 (37.2) (105.8)
Minimum pension liability adjustments (3.2) (2.7) (0.8)
Unrealized gain on equity investments and securitization interests 17.3
___________ 8.6
__________ 6.3
____________
Total accumulated other comprehensive income (loss) $115.2
___________ $(58.4)
__________ $(141.6)
____________
___________ __________ ____________

During the year ended December 31, 2005, $87.4 million controls, including additional proof and control procedures,
of tax benefits, net of foreign currency translation losses relat- with respect to income tax and foreign currency accounting.
ing to foreign currency net investments and related hedging
transactions, were recorded in the foreign currency translation NOTE 11 – EARNINGS PER SHARE
component of equity, with offsetting amounts recorded in The reconciliation of the numerator and denominator of basic
other assets and liabilities. These adjustments followed the EPS with that of diluted EPS is presented.
completion of remediation and enhancements in internal
(dollars in millions, except per share amounts, which are in whole dollars, shares in thousands)
Income Shares Per Share
(Numerator)
____________________ (Denominator)
________________________ Amount
______________
Year Ended December 31, 2005
Basic EPS:
Income available to common stockholders $936.4 206,059 $4.54
Effect of Dilutive Securities:
Restricted shares – 1,706
Stock options ___________– 2,969
_____________
Diluted EPS $936.4
___________ 210,734
_____________ $4.44
___________ _____________
Basic EPS:
Restricted shares – 764
Stock options ___________– 3,273
_____________
Diluted EPS $753.6
___________ 215,054
_____________ $3.50
___________ _____________
Basic EPS:
Restricted shares – 396
Stock options ___________– 1,066
_____________
Diluted EPS $566.9
___________ 213,143
_____________ $2.66
___________ _____________

NOTE 12 – OTHER REVENUE

The following table sets forth the components of other revenue.

2005
______________ 2004
___________ 2003
___________
Fees and other income $ 637.0 $518.6 $586.2
Factoring commissions 235.7 227.0 189.8
Gains on sales of equipment 91.9 101.6 70.7
Gains on securitizations 39.1 59.1 100.9
Gain on sale of real estate investment (1) 115.0 – –
Gain on sale of business aircraft (2) 22.0 – –
Gain on sale of micro-ticket leasing business unit (3) 44.3 – –
Charge related to aircraft held for sale(4) (86.6) – –
Charges related to manufactured housing assets held for sale (5) (20.0) (15.7) –
Gain on derivatives(6) 43.1 – –
Gain (loss) on venture capital investments 15.9
______________ (3.5)
___________ (88.3)
___________
Total other revenue $1,137.4
______________ $887.1
___________ $859.3
___________
______________ ___________ ___________
(1)
The gain resulted from the sale of an interest in Waterside Plaza, a residential complex in New York City.
(2)
The gain resulted from the sale of approximately $900 million of the business aircraft portfolio.
(3)
The gain resulted from the sale of the micro-ticket leasing point-of-sale unit, which included approximately $295 million of equipment leases.
(4)
The charge resulted from placing approximately $190 million of certain older, out-of- production commercial, regional and business aircraft as held for sale
and marking the assets to an estimated fair value.
(5)
The charges resulted from classifying approximately $125 million and $300 million of manufactured housing loans as held for sale in 2005 and 2004 and
marking the loans to an estimated fair value. The $300 million in loans were sold in the first quarter of 2005 while $91 million of the $125 million was sold
during the fourth quarter of 2005.
(6)
The gain on derivatives relates to the mark-to-market of specific cross-currency swaps that did not qualify for hedge accounting treatment.
NOTE 13 – SALARIES AND GENERAL OPERATING EXPENSES

The following table sets forth the components of salaries and general operating expenses.

2005
______________ 2004
______________ 2003
___________
Salaries and employee benefits $ 695.8 $ 612.2 $529.6
Other operating expenses 418.0
______________ 399.9
______________ 358.6
___________
Total $1,113.8
______________ $1,012.1
______________ $888.2
___________
______________ ______________ ___________
NOTE 14 – INCOME TAXES

The effective tax rate varied from the statutory federal corporate income tax rate as follows:
Percentage of Pretax Income Years Ended December 31
2005
________ 2004
________ 2003
________
Federal income tax rate 35.0% 35.0% 35.0%
Increase (decrease) due to:
State and local income taxes, net of
federal income tax benefit 3.1 3.2 3.7
Tax on global operations (2.1) 1.4 1.0
Other (3.2)
_______ (0.6)
_______ (0.7)
_______
Effective tax rate 32.8%
_______ 39.0%
_______ 39.0%
_______
_______ _______ _______

The provision for income taxes is comprised of the following.

2005
___________ 2004
___________ 2003
___________
Current federal income tax provision $ 20.4 $ 1.5 $ –
Deferred federal income tax provision 295.7
___________ 321.0
___________ 265.1
___________
Total federal income taxes 316.1 322.5 265.1
State and local income taxes 69.7 69.1 53.5
Foreign income taxes 78.4
___________ 91.6
___________ 46.4
___________
Total provision for income taxes $464.2
___________ $483.2
___________ $365.0
___________
___________ ___________ ___________
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are pre-
sented below. Certain 2004 balances have been conformed to the current period presentation.

2005
______________ 2004
______________
Assets:
Net operating loss carryforwards $ 428.2 $ 712.8
Provision for credit losses 216.8 208.5
Alternative minimum tax credits 162.0 142.0
Accrued liabilities and reserves 89.8 80.2
Other 171.4
______________ 177.7
______________
Total deferred tax assets 1,068.2
______________ 1,321.2
______________
Liabilities:
Operating leases (968.4) (930.0)
Leveraged leases (483.7) (501.2)
Loans and direct financing leases (287.5) (327.6)
Securitizations (173.4) (259.4)
Joint ventures (74.1) (72.4)
Other (57.1)
______________ (33.1)
______________
Total deferred tax liabilities (2,044.2)
______________ (2,123.7)
______________
Net deferred tax (liability) $______________
(976.0) $______________
(802.5)
______________ ______________
At December 31, 2005, CIT had U.S. federal net operating have sufficient taxable income in future years and can avail itself
losses of approximately $850 million, which expire in various of tax planning strategies in order to fully utilize the federal
years beginning in 2011. In addition, CIT has a deferred tax losses. Accordingly, CIT does not believe a valuation allowance
asset of approximately $131.5 million related to various state is required with respect to these federal net operating losses.
net operating losses that will expire in various years beginning in Based on management’s assessment as to realizability, the net
2006. Federal and state operating losses may be subject to deferred tax liability includes a valuation allowance of approxi-
annual use limitations under section 382 of the Internal mately $19.0 million and $7.4 million relating to state net
Revenue Code of 1986, as amended, and other limitations operating losses at December 31, 2005 and 2004.
under certain state laws. Management believes that CIT will

NOTE 15 – RETIREMENT, OTHER POSTRETIREMENT AND 5.01% for the plan years ended December 31, 2005, 2004, and
OTHER BENEFIT PLANS 2003, respectively. Upon termination or retirement after five
years of employment, the amount credited to a member is to be
Retirement and Postretirement Medical and Life
paid in a lump sum or converted into an annuity at the option
Insurance Benefit Plans
of the member.
CIT has a number of funded and unfunded noncontributory
defined benefit pension plans covering certain of its U.S. and CIT also provides certain healthcare and life insurance benefits
non-U.S. employees, each of which is designed in accordance to eligible retired U.S. employees. For most eligible retirees, the
with the practices and regulations in the countries concerned. healthcare benefit is contributory and the life insurance benefit is
Retirement benefits under the defined benefit pension plans are noncontributory. Salaried participants generally become eligible
based on the employee’s age, years of service and qualifying com- for retiree healthcare benefits upon completion of ten years of
pensation. CIT’s funding policy is to make contributions to the continuous service after attaining age 50. Individuals hired prior
extent such contributions are not less than the minimum to November 1999 become eligible for postretirement benefits
required by applicable laws and regulations, are consistent with after 11 years of continuous CIT service after age 44. Generally,
our long-term objective of ensuring sufficient funds to finance the medical plan pays a stated percentage of most medical
future retirement benefits, and are tax deductible as actuarially expenses, reduced by a deductible as well as by payments made
determined. Contributions are charged to the salaries and by government programs and other group coverage. The retiree
employee benefits expense on a systematic basis over the expected health care benefit includes a limit on CIT’s share of costs for all
average remaining service period of employees expected to employees who retired after January 31, 2002. The plans are
receive benefits. funded on a pay as you go basis.
The largest plan is the CIT Group Inc. Retirement Plan (the The discount rate assumptions used for pension and post-
“Plan”), which accounts for 78% of the total benefit obligation at retirement benefit plan accounting reflect the prevailing rates
December 31, 2005. The Plan covers U.S. employees of CIT available on high-quality, fixed-income debt instruments
who have completed one year of service and have attained the age with maturities that match the benefit obligation. The rate
of 21. The Company also maintains a Supplemental Retirement of compensation used in the actuarial model for pension
Plan for employees whose benefit in the Plan is subject to accounting is based upon the Company’s long-term plans for
Internal Revenue Code limitations. such increases, taking into account both market data and
historical pay increases.
The Plan has a “cash balance” formula that became effective
January 1, 2001, at which time certain eligible members had the The disclosure and measurement dates included in this report
option of remaining under the Plan formula as in effect prior to for the Retirement and Postretirement Medical and Life
January 1, 2001. Under the cash balance formula, each member’s Insurance Plans are December 31, 2005, 2004, and 2003.
accrued benefits as of December 31, 2000 were converted to a
lump sum amount, and every year thereafter, the balance is cred- The following tables set forth the change in benefit obligation,
ited with a percentage (5% to 8% depending on years of service) plan assets and funded status of the retirement plans as well as
of the member’s “Benefits Pay” (comprised of base salary, plus the net periodic benefit cost. All periods presented include
certain annual bonuses, sales incentives and commissions). These amounts and assumptions relating to the Plan, the Supplemental
balances also receive annual interest credits, subject to certain Retirement Plan, an Executive Retirement Plan and various
government limits. The interest credit was 4.88%, 5.11%, and international plans.

Retirement Benefits for the years ended December 31 (dollars in millions)

2005
___________ 2004
___________ 2003
___________
Change in Benefit Obligation
Benefit obligation at beginning of period $314.5 $273.0 $225.2
Service cost 19.6 17.7 15.6
Interest cost 17.1 15.6 14.4
Actuarial loss 3.3 18.0 23.9
Benefits paid (5.9) (5.1) (4.6)
Plan settlements and curtailments (18.2) (6.2) (4.5)
Termination benefits 2.3 – –
Currency translation adjustment (2.2) 1.5 2.2
Other ___________– ___________– 0.8
___________
Benefit obligation at end of period $330.5
___________ $314.5
___________ $273.0
___________
___________ ___________ ___________
Change in Plan Assets
Fair value of plan assets at beginning of period $250.6 $212.8 $123.1
Actual return on plan assets 20.5 25.5 28.7
Employer contributions 26.1 23.0 69.4
Plan settlements (18.0) (6.2) (4.5)
Benefits paid (5.9) (5.1) (4.6)
Currency translation adjustment (1.2)
___________ 0.6
___________ 0.7
___________
Fair value of plan assets at end of period $272.1
___________ $250.6
___________ $212.8
___________
___________ ___________ ___________
Reconciliation of Funded Status
Funded status $ (58.4) $ (63.9) $ (60.2)
Unrecognized net actuarial loss 62.0 63.9 57.8
Unrecognized prior service cost ___________– ___________– ___________–
Net amount recognized $ 3.6
___________ $ –
___________ $ (2.4)
___________
___________ ___________ ___________
Amounts Recognized in the Consolidated Balance Sheets
Prepaid benefit cost $ 52.9 $ 51.3 $ 45.2
Accrued benefit liability (53.8) (55.1) (48.9)
Intangible asset – – –
Accumulated other comprehensive income 4.5
___________ 3.8
___________ 1.3
___________
Net amount recognized $ 3.6
___________ $ –
___________ $ (2.4)
___________
___________ ___________ ___________
Weighted-average Assumptions Used to Determine Benefit Obligations at Period End
Discount rate 5.67% 5.70% 5.96%
Rate of compensation increase 4.25% 4.25% 4.26%
Weighted-average Assumptions Used to Determine Net Periodic Pension Cost for Periods
Discount rate 5.69% 5.96% 6.45%
Expected long-term return on plan assets 7.93% 7.95% 7.92%
Components of Net Periodic Benefit Cost
Service cost $ 19.6 $ 17.7 $ 15.6
Expected return on plan assets (19.2) (16.2) (9.4)
Amortization of net loss 2.8 2.8 3.5
Amortization of prior service cost – – –
Settlement and Curtailment loss 0.4 – –
Termination benefits 2.3
___________ ___________– ___________–
Total net periodic expense $ 23.0
___________ $ 19.9
___________ $ 24.1
___________
___________ ___________ ___________

Expected long-term rate of return assumptions for pension assets $232.4 million, at December 31, 2005, 2004, and 2003, respec-
are based on projected asset allocation and historical and tively. Plans with accumulated benefit obligations in excess of
expected future returns for each asset class. Independent analysis plan assets relate primarily to non-qualified U.S. plans and cer-
of historical and projected asset class returns, inflation and inter- tain international plans. The Company decided not to fund
est rates are provided by our investment consultants and certain of its non-US plans that had unfunded positions to the
reviewed as part of the process to develop our assumptions. Accumulated Benefit Obligation (“ABO”) level, and as a result,
recorded an AML (additional minimum liability) adjustment
The accumulated benefit obligation for all defined benefit of $0.7 million, in accordance with FAS 87.
pension plans was $286.8 million, $271.2 million, and
Retirement Benefits for the years ended December 31 (dollars in millions)
2005
___________ 2004
___________ 2003
___________
Expected Future Cashflows
Expected Company Contributions in the following fiscal year $ 3.5 $ 4.0
Expected Benefit Payments
1st Year following the disclosure date $ 24.2 $ 22.7
2nd Year following the disclosure date $ 14.4 $ 13.5
3rd Year following the disclosure date $ 14.2 $ 18.7
4th Year following the disclosure date $ 16.0 $ 14.0
5th Year following the disclosure date $ 16.4 $ 16.6
Years 6 thru 10 following the disclosure date $120.3 $106.6
Pension Plan Weighted-average Asset Allocations
Equity securities 65.7% 59.7% 67.6%
Debt securities 28.3% 36.0% 32.1%
Real estate – – –
Other 6.0%
___________ 4.3%
___________ 0.3%
___________
Total pension assets 100.0%
___________ 100.0%
___________ 100.0%
___________
___________ ___________ ___________
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets
Projected benefit obligation $ 71.6 $ 74.2 $ 61.2
Accumulated benefit obligation 57.0 59.0 47.4
Fair value of plan assets 10.9 9.9 7.1
Additional Information
(Decrease) increase in Minimum Liability Included in Other Comprehensive Income $ 0.7 $ 2.5 $ (32.3)
CIT maintains a “Statement of Investment Policies and external investment consultants to ensure the long-term invest-
Objectives” which specifies investment guidelines pertaining ment objectives are achieved. Members of the Committee are
to the investment, supervision and monitoring of pension appointed by the Chief Executive Officer of CIT and include
assets so as to ensure consistency with the long-term objective the Chief Executive Officer, Chief Financial Officer, General
of ensuring sufficient funds to finance future retirement bene- Counsel, and other senior executives.
fits. The policy asset allocation guidelines allow for assets to
be invested between 50% to 70% in Equities and 30% to 50% There were no direct investment in equity securities of CIT
in Fixed-Income investments. The policy provides specific or its subsidiaries included in the pension plan assets at
guidance related to asset class objectives, fund manager guide- December 31, 2005, 2004, and 2003, respectively. CIT expects
lines and identification of both prohibited and restricted to contribute $3.5 million to its pension plans and $4.7 million
transactions, and is reviewed on a periodic basis by both the to its other postretirement benefit plans in 2006.
Employee Benefits Plans Committee of CIT and the Plans’

The following tables set forth data relating to postretirement plans.

Postretirement Benefits for the years ended December 31 (dollars in millions)
2005
___________ 2004
___________ 2003
___________
Change in Benefit Obligation
Benefit obligation at beginning of period $ 59.9 $ 58.0 $ 48.1
Service cost 2.2 1.9 1.5
Actuarial loss 3.7 0.7 9.6
Employee contributions 1.0 0.8 –
Benefits paid (6.8) (4.7) (4.2)
Plan amendments (0.8)
___________ ___________– ___________–
Benefit obligation at end of period $ 62.4
___________ $ 59.9
___________ $ 58.0
___________
___________ ___________ ___________
Change in Plan Assets
Fair value of plan assets at beginning of period $ – $ – $ –
Benefits paid (6.8) (4.7) (4.2)
Employee contributions 1.0 0.8 –
Employer contributions 5.8
___________ 3.9
___________ 4.2
___________
Fair value of plan assets at end of period $ –
___________ $ –
___________ $ –
___________
___________ ___________ ___________
Reconciliation of Funded Status
Funded status $ (62.4) $ (59.9) $ (58.0)
Unrecognized prior service cost (0.8) – –
Unrecognized net actuarial loss 18.4
___________ 15.6
___________ 15.5
___________
Accrued cost $ (44.8)
___________ $ (44.3)
___________ $ (42.5)
___________
___________ ___________ ___________
Amounts Recognized in the Consolidated Balance Sheets
Prepaid benefit cost $ – $ – $ –
Accrued benefit liability (44.8) (44.3) (42.5)
Intangible asset – – –
Accumulated other comprehensive income ___________– ___________– ___________–
Net amount recognized $ (44.8)
___________ $ (44.3)
___________ $ (42.5)
___________
___________ ___________ ___________
Weighted-average Assumptions Used to Determine Benefit Obligations at Period End
Discount rate 5.50% 5.50% 6.00%
Weighted-average Assumptions Used to Determine Net Periodic Benefit Cost for periods
Discount rate 5.50% 6.00% 6.50%
Components of Net Periodic Benefit Cost
Service cost $ 2.2 $ 1.9 $ 1.5
Amortization of prior service cost – – –
Amortization of net loss 0.9
___________ 0.6
___________ 0.1
___________
Total net periodic expense $ 6.3
___________ $ 5.7
___________ $ 4.6
___________
___________ ___________ ___________
Assumed Health Care Trend Rates at Period End
Health care cost trend rate assumed for next year Pre-65 11.50% 12.00% 12.00%
Post-65 9.75% 10.00% 12.00%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.00% 5.00% 5.00%
Year that the rate reaches the ultimate trend rate 2018 2018 2018

Assumed healthcare cost trend rates have a significant effect on healthcare trend rates. A one-percentage point change in
the amounts reported for the healthcare plans. The Company assumed healthcare cost trend rates would have the following
relies on both external and historical data to determine estimated effects.
Postretirement Benefits for the years ended December 31 (dollars in millions)

2005
_________ 2004
_________ 2003
_________
Effect of One-percentage Point Increase on:
Period end postretirement benefit obligation $ 2.6 $ 2.8 $ 2.7
Total of service and interest cost components $ 0.2 $ 0.2 $ 0.1
Effect of One-percentage Point Decrease on:
Period end postretirement benefit obligation $(2.3) $(2.7) $(2.6)
Total of service and interest cost components $(0.1) $(0.2) $(0.1)
The Medicare Prescription Drug, Improvement and No. FAS 106-2, “Accounting and Disclosure Requirements
Modernization Act of 2003 introduced a prescription drug related to the Medicare Prescription Drug, Improvement and
benefit under Medicare (Medicare Part D) as well as a federal Modernization Act of 2003”, CIT began prospective recognition
subsidy to sponsors of retiree healthcare benefit plans that of the effects of the subsidy in the third quarter 2004. Projected
provide a benefit that is at least actuarially equivalent to benefit payments and the effects of the Medicare Rx subsidy
Medicare Part D. In accordance with FASB Staff Position recognition are as follows:
For the years ended December 31, 2005

_________ 2004
_________
Expected Future Cashflows:
Expected company contributions in the following fiscal year $ 4.7 $ 4.0
Expected Benefit Payments:
Gross
In the first year following the disclosure date $ 4.7 $ 4.0
In the second year following the disclosure date 4.9 4.2
In the third year following the disclosure date 5.0 4.5
In the fourth year following the disclosure date 5.2 4.7
In the fifth year following the disclosure date 5.2 4.8
In years six through ten following the disclosure date 27.6 24.2
Medicare Rx Subsidy
In the first year following the disclosure date $ – $ –
Net
In the first year following the disclosure date $ 4.7 $ 4.0

Savings Incentive Plan For the year ended December 31, 2004, $74.4 million in
CIT also has a number of defined contribution retirement plans bonuses were awarded.
covering certain of its U.S. and non-U.S. employees, designed in
accordance with conditions and practices in the countries con- Long-Term Equity Compensation Plan
cerned. Employee contributions to the plans are subject to CIT sponsors a Long-Term Equity Compensation Plan (the
regulatory limitations and the specific plan provisions. The “ECP”). The ECP allows CIT to issue to employees up to
largest plan is the CIT Group Inc. Savings Incentive Plan, which 36,000,000 shares of common stock through grants of annual
qualifies under section 401(k) of the Internal Revenue Code and incentive awards, incentive and non-qualified stock options,
accounts for 79% of CIT’s total Savings Incentive Plan expense stock appreciation rights, restricted stock, performance shares
for the year ended December 31, 2005. CIT’s expense is based and performance units. Of the 36,000,000 shares, no more than
on specific percentages of employee contributions and plan 5,000,000 shares may be issued in connection with awards of
administrative costs and aggregated $20.0 million, $19.9 million restricted stock, performance shares and performance units.
and $16.9 million and for the years ended December 31, 2005, Common stock issued under the ECP may be either authorized
2004 and 2003. but unissued shares, treasury shares or any combination thereof.
Options granted to employees in 2005 have a vesting schedule of
Corporate Annual Bonus Plan one third per year for three years or a 3 year cliff, have a 10-year
The CIT Group Inc. Annual Bonus Plan and Discretionary term from the date of grant and were issued with strike prices
Bonus Plan together make-up CIT’s annual cash bonus plan. equal to the fair market value of the common stock on the date
The amount of awards depends on a variety of factors, of grant or the date of quarterly earnings announced, whichever
including corporate performance and individual performance was later. Restricted stock granted to employees in 2004 has two
during the fiscal period for which awards are made and is or three-year cliff vesting. Performance Shares granted have a
subject to approval by the Compensation Committee of the three-year performance-based vesting.
Board of Directors. Bonus payments of $78.6 million for Data for the stock option plans is summarized as follows:
the year ended December 31, 2005, were paid in February 2006.
For the years ended December 31

2005
_______________________________________________ 2004
______________________________________________
Weighted Weighted
Average Price Average Price
Options ________________________
__________________ Per Option Options ________________________
__________________ Per Option
Outstanding at beginning of period 19,863,907 $33.07 18,766,824 $30.48
January Grant 1,358,895 $41.89 1,895,632 $39.22
July Grant 2,056,229 $43.01 1,802,050 $37.60
Granted – Other 266,470 $42.34 673,624 $35.12
Exercised (5,659,182) $24.20 (2,970,754) $23.52
Forfeited (415,440)
__________________ $38.76 (303,469)
__________________ $36.67
Outstanding at end of period 17,470,879
__________________ $37.80 19,863,907
__________________ $33.07
__________________ __________________
Options exercisable at end of period 8,850,333
__________________ $39.88 8,201,726
__________________ $39.34
__________________ __________________
In 2005, 3,415,124 options were granted to employees as part The weighted average fair value of new options granted was
of the long-term incentive process. In addition, 219,015 $8.35 and $7.51 for the years ended December 31, 2005 and
CIT options were granted to new hires as well as for retention 2004. The fair value of new options granted was determined at
purposes and 47,455 were issued to independent members the date of grant using the Black-Scholes option-pricing model,
of the Board of Directors. In 2004, 3,697,682 options were based on the following assumptions. Due to limited Company
granted to employees as part of the long-term incentive process. history as a public company, no forfeiture rate was used.
In addition, 673,624 CIT options were granted to new hires as
well as for retention purposes.

Expected Average Expected Risk Free

Option Life Dividend Volatility Interest
Option Issuance
_________________________________________________________________________________________ Range
____________________ Yield
_______________ Range
_____________________ Rate Range
_____________________
2005
January, 2005 3-5 Years 1.53% 18.0% – 20.6% 3.42% – 3.72%
January, 2005 — Director Grant 10 Years 1.53% 21.5% 4.21%
January, 2005 — Section 16b (named officers) 5.5-6.5 Years 1.53% 21.4% – 22.1% 3.78% – 3.91%
February, 2005 3-5 Years 1.58% 18.0% – 20.6% 3.63% – 3.87%
March, 2005 — Section 16b (named officers) 5.5-6.5 Years 1.53% 21.4% – 22.1% 4.09% – 4.18%
April, 2005 3-5 Years 1.61% 17.9% – 20.3% 3.64% – 3.85%
May, 2005 3-5 Years 1.60% 17.9% – 20.3% 3.78% – 3.91%
May, 2005 — Director Grant 10 Years 1.60% 21.5% 4.21%
July, 2005 3-5 Years 1.49% 17.5% – 19.5% 3.93% – 3.99%
July, 2005 — Director Grant 10 Years 1.49% 21.40% 4.20%
July, 2005 — Section 16b (named officers) 5.5-6.5 Years 1.49% 19.9% – 21.2% 4.01% – 4.05%
October, 2005 3-5 Years 1.76% 15.6% – 19.2% 4.30% – 4.34%
October, 2005 — Director Grant 10 Years 1.76% 21.8% 4.49%
December, 2005 — Director Grant 10 Years 1.57% 21.8% 4.56%
2004
January, 2004 3-5 Years 1.22% 21.5% – 23.4% 2.20% – 3.02%
February, 2004 3-5 Years 1.33% 21.5% – 23.4% 2.16% – 2.98%
February, 2004 — Director Grant 10 Years 1.33% 22.4% 4.02%
April, 2004 5 Years 1.48% 23.3% 3.52%
May, 2004 5 Years 1.51% 23.3% 3.96%
May, 2004 — Director Grant 10 Years 1.51% 22.4% 4.83%
July, 2004 3-5 Years 1.38% 20.5% – 23.0% 3.10% – 3.72%
September, 2004 3-5 Years 1.41% 20.5% – 23.0% 2.83% – 3.38%
October, 2004 3-5 Years 1.42% 18.4% – 22.6% 2.78% – 3.26%
The following table summarizes information about stock options outstanding and options exercisable at December 31, 2005 and 2004.
Options Outstanding
_____________________________________________________________________ Options Exercisable
____________________________________________
Weighted Weighted Weighted
Average Average Average
Number Contractual Exercise Number Exercise
Range of Exercise Price
_________________________________________________________________________________________ Outstanding ____________________
_____________________ Life ____________________
Price ____________________
Exercisable ____________________ Price
2005
$ 18.14 – $ 27.21 5,430,088 6.7 $ 22.31 3,442,824 $ 22.61
$ 27.22 – $ 40.83 5,924,823 7.7 $ 36.26 2,718,383 $ 35.66
$ 40.84 – $ 61.26 4,265,520 8.4 $ 44.26 838,678 $ 50.78
$ 61.27 – $ 91.91 1,720,626 2.3 $ 68.91 1,720,626 $ 68.91
$ 91.92 – $137.87 128,232 2.1 $130.89 128,232 $130.89
$137.88 – $206.82 1,590
_________________ 2.4 $160.99 1,590
________________ $160.99
17,470,879
_________________ 8,850,333
________________
_________________ ________________
2004
$ 18.14 – $ 27.21 10,503,846 7.7 $ 22.35 4,076,055 $ 22.62
$ 27.22 – $ 40.83 6,608,016 8.7 $ 36.20 1,373,626 $ 34.66
$ 40.84 – $ 61.26 858,846 4.9 $ 51.24 858,846 $ 51.24
$ 61.27 – $ 91.91 1,758,648 3.3 $ 68.89 1,758,648 $ 68.89
$ 91.92 – $137.87 132,961 3.1 $131.01 132,961 $131.01
$137.88 – $206.82 1,590
__________________ 3.4 $160.99 1,590
__________________ $160.99
19,863,907
__________________ 8,201,726
__________________
__________________ __________________

Employee Stock Purchase Plan shares awarded totaled 761,635 and 693,328 for 2005 and 2004.
Changes were made to the Employee Stock Purchase Plan (“ESPP”) These shares have a three-year performance-based vesting period.
which will be effective January 1, 2006. Eligibility for participation in The performance targets are based upon a combination of con-
the ESPP includes all employees of CIT and its participating sub- solidated return on tangible equity measurements and
sidiaries who are customarily employed for at least 20 hours per week, compounded annual EPS growth rates.
with the exception of those employees designated as highly compen-
sated. The ESPP is available to employees in the United States and to During 2005 and 2004, 143,236 and 59,163 restricted shares
certain international employees. Under the ESPP, CIT is authorized were awarded to employees under the Long-Term Equity
to issue up to 1,000,000 shares of common stock to eligible employ- Compensation Plan. These shares were awarded at the fair mar-
ees. Eligible employees can choose to have between 1% and 10% of ket value on the date of the grant and have a two or three-year
their base salary withheld to purchase shares quarterly, at a purchase cliff-vest period. In addition, 9,369 and 10,481 shares were
price equal to 85% of the fair market value of CIT common stock granted during 2005 and 2004 to independent members of the
on the last business day of the quarterly offering period. Previously, Board of Directors, who elected to receive shares in lieu of cash
CIT gave employees 85% of the lower of the fair market value of CIT compensation for their retainer. The restricted shares issued to
common stock on the first or last business day of the offering period. directors in lieu of cash compensation vest on the first anniver-
The amount of common stock that may be purchased by a partici- sary of the grant.
pant through the plan is generally limited to $25,000 per year. A total
of 103,883 shares were purchased under the plan in 2005 and 87,551 For the year ended December 31, 2005, 2004 and 2003,
shares were purchased under the plan in 2004. $43.3 million, $23.5 million and $8.8 million, respectively,
of expenses are included in salaries and general operating
expenses related to restricted stock.
Restricted Stock
A new Performance Shares program was launched in February
2004 under the Long-Term Compensation Plan. Performance
NOTE 16 – COMMITMENTS AND CONTINGENCIES

The accompanying table summarizes the contractual amounts of credit-related commitments and purchase and funding commitments.
2005
_____________________________________________________________________________ 2004
______________________
Due to Expire
___________________________________________
Within After Total Total
One Year
_______________ One Year
________________ Outstanding
______________________ Outstanding
______________________
Credit Related Commitments
Financing and leasing assets $1,907.8 $8,524.2 $10,432.0 $8,428.3
Letters of credit and acceptances:
Standby letters of credit 452.8 117.5 570.3 618.3
Other letters of credit 474.9 2.4 477.3 588.3
Acceptances 20.1 – 20.1 16.4
Guarantees 194.6 11.9 206.5 133.1
Purchase and Funding Commitments
Aerospace purchase commitments 923.8 2,392.7 3,316.5 2,168.0
Other manufacturer purchase commitments 668.1 28.1 696.2 397.0
Sale-leaseback payments 41.2 549.5 590.7 495.4
Venture capital fund commitments – – – 79.8
In addition to the amounts shown in the table above, unused, In the normal course of meeting the needs of its customers, CIT
cancelable lines of credit to consumers in connection with a third- also enters into commitments to provide financing, letters of credit
party vendor program, which may be used to finance additional and guarantees. Standby letters of credit obligate CIT to pay the
technology product purchases, amounted to approximately $18.4 beneficiary of the letter of credit in the event that a CIT client to
billion and $9.8 billion at December 31, 2005 and 2004. These whom the letter of credit was issued does not meet its related obli-
uncommitted vendor-related lines of credit can be reduced or gation to the beneficiary. These financial instruments generate fees
canceled by CIT at any time without notice. Our experience with and involve, to varying degrees, elements of credit risk in excess
this program indicates that customers typically will not exercise of the amounts recognized in the consolidated balance sheets. To
their entire available line of credit at any point in time.
minimize potential credit risk, CIT generally requires collateral Pursuant to existing contractual commitments, 66 aircraft will be
and other forms of credit support from the customer. purchased (19 in 2006), with lease commitments in place for
fourteen of the 2006 deliveries. The order amount excludes
Guarantees are issued primarily in conjunction with CIT’s CIT’s options to purchase additional aircraft. During 2005, CIT
factoring business, whereby CIT provides the client with entered into a purchase commitment with Airbus Industrie for
credit protection for its trade receivables without actually 29 aircraft to be delivered between 2007 and 2013 and with
purchasing the receivables. The trade terms are generally sixty Delta Air Lines for ten Boeing 737 aircraft to be delivered in
days or less. If the customer is unable to pay according to the 2007 and 2008, all of which are included in the preceding table.
contractual terms, then CIT purchases the receivables from
the client. As of December 31, 2005, there were no outstanding Outstanding commitments to purchase equipment to be leased
liabilities relating to these credit-related commitments or to customers, other than aircraft, relates primarily to rail equip-
guarantees, as amounts are generally billed and collected on ment. Rail equipment purchase commitments are at fixed prices
a monthly basis. subject to price increases for inflation and manufacturing com-
ponents. The time period between commitment and purchase
CIT’s firm purchase commitments relate predominantly to for rail equipment is generally less than 18 months. Additionally,
purchases of rail equipment and commercial aircraft. The CIT is party to railcar sale-leaseback transactions under which it
aerospace equipment purchases are contracted for a specific is obligated to pay a remaining total of $590.7 million, or
model aircraft, using a baseline aircraft specification at fixed approximately $41 million per year through 2010 and declining
prices, which reflect discounts from fair market purchase thereafter through 2024. These lease payments are expected to be
prices prevailing at the time of commitment. These purchase more than offset by rental income associated with re-leasing the
commitments are fixed price, but are subject to customary assets, subject to actual railcar utilization and rentals. In conjunc-
price increases for future changes in inflation and manu- tion with this sale-leaseback transaction, CIT has guaranteed all
facturing components. The delivery price of an aircraft obligations of the related consolidated lessee entity.
may also change depending on the final specifications of
the aircraft, including engine thrust, aircraft weight and CIT has guaranteed the public and private debt securities of a
seating configuration. number of its wholly-owned, consolidated subsidiaries, including
those disclosed in Note 24 – Summarized Financial Information
Equipment purchases are recorded at delivery date at the final of Subsidiaries. In the normal course of business, various consoli-
purchase price paid, which includes purchase price discounts, dated CIT subsidiaries have entered into other credit agreements
price changes relating to specification changes and price and certain derivative transactions with financial institutions that
increases relating to inflation and manufacturing components. are guaranteed by CIT. These transactions are generally used by
Accordingly, the commitment amounts detailed in the preceding CIT’s subsidiaries outside of the U.S. to allow the local sub-
table are based on estimated values. sidiary to borrow funds in local currencies.
NOTE 17 – LEASE COMMITMENTS

The following table presents future minimum rentals under non- subject to rent escalation provisions. Minimum payments have
cancellable long-term lease agreements for premises and not been reduced by minimum sublease rentals of $17.0 million
equipment at December 31, 2005. due in the future under noncancellable subleases.
For the years ended December 31 (dollars in millions) Rental expense, net of sublease income on premises and equip-
Amount ment, was as follows.
______________
2006 $ 48.5 For the years ended December 31 (dollars in millions)
2007 43.7 2005 2004 2003
_________ _________ _________
2008 37.3 Premises $34.6 $31.8 $34.0
2009 22.3 Equipment 8.3 8.4 9.3
2010 18.3 Less sublease income (7.1) (9.1) (9.4)
_____ _____ _____
Thereafter 170.2
___________ Total $35.8 $31.1 $33.9
_____
_____ _____
_____ _____
_____
Total $340.3
___________
___________
In addition to fixed lease rentals, leases generally require payment

of maintenance expenses and real estate taxes, both of which are

NOTE 18 – FAIR VALUES OF FINANCIAL INSTRUMENTS

Estimated fair values, recorded carrying values and various assumptions used in valuing CIT’s financial instruments are set forth below.
December 31
2005 2004
Asset/(Liability)
_____________________________________________ Asset/(Liability)
_____________________________________________
Carrying Estimated Carrying Estimated
(dollars in millions) Value
_________________ Fair Value
___________________ Value
_________________ Fair Value
___________________
Net finance receivables-loans(1) $36,885.2 $36,689.1 $27,080.8 $27,186.5
Finance receivables-held for sale 1,620.3 1,620.3 1,640.8 1,640.8
Retained interest in securitizations and other investments(2) 1,152.7 1,152.7 1,228.2 1,228.2
Other assets (3) 1,160.7 1,160.7 1,133.5 1,133.5
Commercial paper(4) (5,225.0) (5,225.0) (4,210.9) (4,210.9)
Variable-rate senior notes (including accrued interest payable)(5) (15,555.9) (15,558.8) (11,576.2) (11,635.3)
Fixed-rate senior notes (including accrued interest payable)(5) (23,148.2) (23,332.8) (22,037.2) (22,659.1)
Non-recourse, secured borrowings – student lending
(including accrued interest payable) (4,087.9) (4,087.9) – –
Preferred capital securities (including accrued interest payable)( 6) (257.5) (277.9) (261.3) (280.3)
Credit balances of factoring clients and other liabilities(7) (6,960.3) (6,960.3) (6,025.1) (6,025.1)
Derivative financial instruments(8):
Interest rate swaps, net (109.4) (109.4) (17.2) (17.2)
Cross-currency swaps, net (29.2) (29.2) 369.9 369.9
Foreign exchange forwards, net (74.7) (74.7) (161.8) (161.8)
Natural gas commodity swap (2.6) (2.6) – –
Credit default swaps, net (0.8) (0.8) 5.4 5.4
Interest rate caps – – 0.2 0.2
(1) The fair value of performing fixed-rate loans was estimated based upon a present value discounted cash flow analysis, using interest rates that were being
offered at the end of the year for loans with similar terms to borrowers of similar credit quality. Discount rates used in the present value calculation range
from 5.35% to 10.24% for December 31, 2005 and 3.90% to 8.65% for December 31, 2004. The maturities used represent the average contractual
maturities adjusted for prepayments. For floating-rate loans that reprice frequently and have no significant change in credit quality, fair value approxi-
mates carrying value. The net carrying value of lease finance receivables not subject to fair value disclosure totaled $6.8 billion at December 31, 2005 and
$7.4 billion at December 31, 2004.
(2) Fair values of retained interests in securitizations are calculated utilizing current and anticipated credit losses, prepayment speeds and discount rates.
Other investment securities actively traded in a secondary market were valued using quoted available market prices.
(3) Other assets subject to fair value disclosure include accrued interest receivable, certain investment securities and miscellaneous other assets. The carrying
amount of accrued interest receivable approximates fair value. The carrying value of other assets not subject to fair value disclosure totaled $1.5 billion at
December 31, 2005 and $1.6 billion at December 31, 2004.
(4) The estimated fair value of commercial paper approximates carrying value due to the relatively short maturities.
(5) The difference between the carrying value of fixed-rate senior notes, variable-rate senior notes and preferred capital securities and the corresponding
balances reflected in the consolidated balance sheets is accrued interest payable. These amounts are excluded from the other liabilities balances in this table.
Fixed-rate notes were valued using a present value discounted cash flow analysis with a discount rate approximating current market rates for issuances by
CIT of similar term debt at the end of the year. Discount rates used in the present value calculation ranged from 4.33% to 5.84% at December 31, 2005
and 2.74% to 6.03% at December 31, 2004.
(6) Preferred capital securities were valued using a present value discounted cash flow analysis with a discount rate approximating current market rates of
similar issuances at the end of the year.
(7) The estimated fair value of credit balances of factoring clients approximates carrying value due to their short settlement terms. Other liabilities include
accrued liabilities and deferred federal income taxes. Accrued liabilities and payables with no stated maturities have an estimated fair value that approximates
carrying value. The carrying value of other liabilities not subject to fair value disclosure totaled $1.1 billion and $0.9 billion December 31, 2005 and 2004.
Letters of credit and guarantees are generally billed and collected on a monthly basis and therefore have no recorded value and zero net fair value.
(8) CIT enters into derivative financial instruments for hedging purposes only. The estimated fair values are calculated internally using independent
market data, or in limited instances, market values obtained from counterparties, and represent the net amount receivable or payable to terminate the
agreement, taking into account current market rates. See Note 9 — “Derivative Financial Instruments” for notional principal amounts associated with
the instruments.

NOTE 19 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CIT is a partner with Dell Inc. (“Dell”) in Dell Financial Services representation, and share income and losses equally. The Snap-on
L.P. (“DFS”), a joint venture that offers financing to Dell’s cus- joint venture is accounted for under the equity method and is
tomers. The joint venture provides Dell with financing and leasing not consolidated in CIT’s financial statements. At December 31,
capabilities that are complementary to its product offerings and 2005 and 2004, financing and leasing assets were approximately
provides CIT with a source of new financings. The joint venture $1.0 billion and $1.1 billion. Securitized assets included in
agreement provides Dell with the option to purchase CIT’s 30% managed assets were $0.1 billion at both December 31, 2005
interest in DFS in February 2008 based on a formula tied to DFS and 2004. In addition to the owned and securitized assets pur-
profitability, within a range of $100 million to $345 million. CIT chased from the Snap-on joint venture, CIT’s equity investment
has the right to purchase a minimum percentage of DFS’s finance in and loans to the joint venture were approximately $14 million
receivables on a declining scale through January 2010. and $16 million at December 31, 2005 and 2004.
CIT regularly purchases finance receivables from DFS at a pre- Since December 2000, CIT has been a joint venture partner with
mium, portions of which are typically securitized within 90 days Canadian Imperial Bank of Commerce (“CIBC”) in an entity
of purchase from DFS. CIT has limited recourse to DFS on that is engaged in asset-based lending in Canada. Both CIT and
defaulted contracts. In accordance with the joint venture agree- CIBC have a 50% ownership interest in the joint venture, and
ment, net income and losses generated by DFS as determined share income and losses equally. This entity is not consolidated in
under GAAP are allocated 70% to Dell and 30% to CIT. The CIT’s financial statements and is accounted for under the equity
DFS board of directors voting representation is equally weighted method. CIT’s investment in and loans to the joint venture were
between designees of CIT and Dell, with one independent direc- approximately $280 million and $191 million at December 31,
tor. DFS is not consolidated in CIT’s financial statements and is 2005 and 2004.
accounted for under the equity method. At both December 31,
2005 and 2004, financing and leasing assets related to the DFS CIT invests in various trusts, partnerships, and limited liability
program included in the CIT Consolidated Balance Sheet (but corporations established in conjunction with structured financ-
excluding certain related international receivables originated ing transactions of equipment, power and infrastructure projects.
directly by CIT) were approximately $2.0 billion and securitized CIT’s interests in certain of these entities were acquired by CIT
assets included in managed assets were approximately $2.5 bil- in a 1999 acquisition, and others were subsequently entered
lion. CIT’s equity investment in and loans to the joint venture into in the normal course of business. Other assets included
was approximately $214 million and $267 million at approximately $18 million and $19 million of investments in
December 31, 2005 and 2004. non-consolidated entities relating to such transactions that are
accounted for under the equity or cost methods at December 31,
CIT also has a joint venture arrangement with Snap-on 2005 and 2004.
Incorporated (“Snap-on”) that has a similar business purpose and
model to the DFS arrangement described above, including lim- Certain shareholders of CIT provide investment management,
ited credit recourse on defaulted receivables. The agreement with banking and investment banking services in the normal course
Snap-on was recently extended until January 2009. CIT and of business.
Snap-on have 50% ownership interests, 50% board of directors’
NOTE 20 – BUSINESS SEGMENT INFORMATION
Management’s Policy in Identifying from Equipment Finance to Corporate Finance, and d) trans-
Reportable Segments ferred the remaining business aircraft portfolio from Equipment
Finance to Capital Finance. Prior periods have been restated for
CIT’s reportable segments are comprised of strategic business
the separation for Commercial Finance and the transfer of the
units or “verticals” that are aggregated into segments primarily
power, energy and infrastructure businesses, but not the portfolio
based upon industry categories and to a lesser extent, the core
transfers. This updated presentation is consistent with the report-
competencies relating to product origination, distribution meth-
ing to management.
ods, operations and servicing, and the nature of their regulatory
environment. This segment reporting is consistent with the
Types of Products and Services
presentation to management.
CIT has six reportable segments: Specialty Finance – Commercial,
The following segment reporting changes were made during
Specialty Finance – Consumer, Commercial Services,
2005: a) the former Commercial Finance segment was separated
Corporate Finance, Capital Finance and Equipment Finance.
into Commercial Services, primarily factoring, and Corporate
Specialty Finance – Commercial, Capital Finance and
Finance, which offers asset based lending, b) transferred the
Equipment Finance offer secured lending and leasing products to
power, energy and infrastructure businesses from Capital Finance
midsize and larger companies across a variety of industries,
to Corporate Finance, c) transferred the healthcare portfolio

including aerospace, construction, rail, machine tool, business and rail. For 2003, capital was allocated using a uniform leverage
aircraft, technology, manufacturing and transportation. ratio among the segments.
Commercial Services and Corporate Finance offer secured lend-
ing and receivables collection as well as other financial products Corporate and Other results for 2005 include a reserve for credit
and services to small and midsize companies. These include losses of $34.6 million and a $6.8 million pretax securitization
secured revolving lines of credit and term loans, credit protec- retained interest impairment charge relating to estimated
tion, accounts receivable collection, import and export financing Hurricanes Katrina and Rita losses. Also included is a pre-tax
and factoring, debtor-in-possession and turnaround financing gain of $115.0 million on a sale of a real estate investment.
and management advisory services. The Specialty Finance – Corporate and Other for 2004 included the reduction to the
Consumer segment offers home lending products to consumers specific telecommunications reserve for credit losses and the first
primarily through a network of brokers and correspondents and quarter gain on the call of debt. For 2003, Corporate and Other
student lending through Student Loan Xpress. included an after-tax charge of $38.4 million related to the write-
down of equity investments, an after-tax benefit of $30.8 million
Segment Profit and Assets from a gain on a call of debt as well as unallocated expenses. For
all periods shown, Corporate and Other includes the results of
The selected financial information by business segment pre-
the venture capital business.
sented below is based upon the allocation of most corporate
expenses. For the 2005 and 2004 periods, capital is allocated to
The business segments’ net finance income and net income for
the segments by applying different leverage ratios to each busi-
the year ended December 31, 2003 include the allocation (from
ness unit using market capitalization and risk criteria. The capital
Corporate and Other) of additional borrowing costs stemming
allocations reflect the relative risk of individual asset classes
from the 2002 disruption to the Company’s funding base and
within segments and range from approximately 2% of managed
increased liquidity levels.
assets for U.S. government guaranteed loans to approximately
15% of managed assets for longer-term assets such as aerospace

The following table presents reportable segment information and the reconciliation of segment balances to the consolidated financial
statement totals and the consolidated managed assets. The selected financial information by business segment presented below reflects
the allocation of most corporate expenses.
Specialty Specialty Corporate
Finance – Finance – Commercial Corporate Capital Equipment Total and
Commercial _________
__________ Consumer __________
Services _________
Finance Finance
_______ Finance Segments
_________ Other Consolidated
________ ________ ___________
Net finance income $ 1,158.3 $ 200.9 $ 143.6 $ 309.2 $ 580.1 $ 168.3 $ 2,560.4 $ 42.8 $ 2,603.2
Depreciation on operating lease equipment 567.3 – – 11.3 354.9 34.5 968.0 – 968.0
Provision for credit losses 93.2 34.6 22.9 3.2 4.6 21.1 179.6 37.4 217.0
Other revenue 385.7 72.1 290.9 138.9 (50.1) 116.4 953.9 183.5 1,137.4
Income taxes (196.6) (41.7) (112.0) (108.9) 41.2 (58.6) (476.6) 12.4 (464.2)
Net income (loss) 326.6 66.7 184.7 177.1 129.9 98.2 983.2 (46.8) 936.4
Total financing and leasing assets 10,378.8 13,943.8 6,690.0 9,549.5 10,484.4 4,534.2 55,580.7 – 55,580.7
Total managed assets 14,300.4 14,782.6 6,690.0 9,590.7 10,484.4 7,018.3 62,866.4 – 62,866.4
Depreciation on operating lease equipment 589.9 – – 4.3 319.1 52.1 965.4 – 965.4
Provision for credit losses 109.2 32.7 23.4 24.5 7.3 53.2 250.3 (36.1) 214.2
Other revenue 290.9 43.6 284.9 119.9 34.2 111.3 884.8 2.3 887.1
Income taxes (158.9) (30.3) (103.8) (102.3) (35.4) (49.5) (480.2) (3.0) (483.2)
Net income (loss) 268.3 46.3 161.1 148.6 87.0 81.5 792.8 (39.2) 753.6
Depreciation on operating lease equipment 718.2 – – – 268.8 70.5 1,057.5 – 1,057.5
Provision for credit losses 132.8 26.5 27.6 46.5 12.3 125.7 371.4 15.9 387.3
Other revenue 350.7 82.0 237.2 120.8 33.4 115.8 939.9 (80.6) 859.3
Income taxes (146.8) (20.0) (81.5) (94.7) (27.0) (24.6) (394.6) 29.6 (365.0)
Net income (loss) 225.3 35.6 127.6 147.7 42.3 38.5 617.0 (50.1) 566.9
Finance income and other revenues derived from United States $125 million in manufactured housing receivables. These
based financing and leasing assets were $4,617.6 million, assets were reclassified to Financing and Leasing Assets Held
$3,864.4 million and $3,695.2 million for the years ended for Sale and marked to estimated fair value, which resulted
December 31, 2005, 2004 and 2003. Finance income and in pretax losses recorded in other revenue of $86.6 million in
other revenues derived from foreign based financing and leasing Capital Finance related to aircraft and $20.0 million in Specialty
assets, were $1,055.6 million, $850.2 million and $944.0 million Finance – Commercial related to the manufactured housing
for the years ended December 31, 2005, 2004 and 2003. receivables. The estimated fair values were developed from rele-
vant market information, including third party sales for similar
During the third quarter of 2005, management initiated actions equipment, published appraisal data and other relevant market
to sell $190 million of older, out-of-production aircraft and place data.

NOTE 21 – LEGAL PROCEEDINGS institutions, including CIT, that purchased NorVergence Leases.
CIT has entered into settlement agreements with the Attorneys
NorVergence Related Litigation
General in each of these states, except for Texas. Under those
On September 9, 2004, Exquisite Caterers Inc. et al. v. Popular settlements, lessees in those states have had an opportunity to
Leasing Inc. et al. (“Exquisite Caterers”), a putative national class resolve all claims by and against CIT by paying a percentage of
action, was filed against 13 financial institutions, including CIT, the remaining balance on their leases. CIT has also produced
which had acquired equipment leases (“NorVergence Leases”) documents for transactions related to NorVergence at the request
from NorVergence, Inc., a reseller of telecommunications and of the Federal Trade Commission ("FTC") and pursuant to a
Internet services to businesses. The complaint alleged that subpoena in a grand jury proceeding being conducted by the
NorVergence misrepresented the capabilities of the equipment U.S. Attorney for the Southern District of New York in connec-
leased to its customers and overcharged for the equipment, and tion with an investigation of transactions related to NorVergence.
that the NorVergence Leases are unenforceable. Plaintiffs seek CIT has entered into a settlement agreement with respect to the
rescission, punitive damages, treble damages and attorneys’ fees. Exquisite Caterers case and the Texas putative class action. Such
In addition, putative class action suits in Illinois and Texas, all settlement is subject to Court approval and is not expected to
based upon the same core allegations and seeking the same relief, have a material adverse financial effect on CIT.
were filed by NorVergence customers against CIT and other
financial institutions. The Court in Exquisite Caterers certified a Other Litigation
New Jersey-only class, and a motion for decertification is pending.
In addition, there are various legal proceedings against CIT, which
On July 14, 2004, the U.S. Bankruptcy Court ordered the have arisen in the ordinary course of business. While the out-
liquidation of NorVergence under Chapter 7 of the Bankruptcy comes of the ordinary course legal proceedings and the related
Code. Thereafter, the Attorneys General of several states activities are not certain, based on present assessments, manage-
commenced investigations of NorVergence and the financial ment does not believe that they will have a material adverse
financial effect on CIT.

NOTE 22 – GOODWILL AND INTANGIBLE ASSETS

The following tables summarize goodwill and intangible assets, net balances by segment.
Specialty Specialty
Finance – Finance – Commercial Corporate
Commercial ____________________
____________________ Consumer ____________________
Services Finance
____________________ Total
____________________
Goodwill
Balance at December 31, 2003 $ 12.7 $ – $261.6 $108.8 $383.1
Acquisitions, other 49.6
__________ ___________– ___________– ___________– 49.6
___________
Balance at December 31, 2004 62.3 – 261.6 108.8 432.7
Acquisitions, other (8.0)
__________ 270.7
___________ (0.1)
___________ 99.8
___________ 362.4
___________
Balance at December 31, 2005 $ 54.3
__________ $270.7
___________ $261.5
___________ $208.6
___________ $795.1
___________
__________ ___________ ___________ ___________ ___________
Intangible Assets
Balance at December 31, 2003 $ – $ – $104.6 $ – $104.6
Additions 72.1 – 0.4 – 72.5
Amortization (4.1)
__________ ___________– (9.2)
___________ ___________– (13.3)
___________
Balance at December 31, 2004 68.0 – 95.8 – 163.8
Additions (13.3) 29.4 30.3 27.4 73.8
Amortization (9.2)
__________ (0.5)
___________ (10.6)
___________ (0.9)
___________ (21.2)
___________
Balance at December 31, 2005 $ 45.5
__________ $ 28.9
___________ $115.5
___________ $ 26.5
___________ $216.4
___________
__________ ___________ ___________ ___________ ___________
In accordance with SFAS No. 142, “Goodwill and Other amortization totaled $44.9 million and $23.7 million at
Intangible Assets” (“SFAS 142”), goodwill is no longer December 31, 2005 and 2004. The projected amortization for
amortized but instead is assessed periodically for impairment. the years ended December 31, 2006 through December 31,
The Company periodically reviews and evaluates its goodwill 2010 is: $21.6 million for 2006; $18.5 million for 2007;
and intangible assets for potential impairment at a minimum $18.8 million for 2008 $19.1 million for 2009 and $19.3 million
annually, or more frequently if circumstances indicate that for 2010. The increase in other intangible assets during 2004
impairment is possible. The most recent goodwill and intangible was due primarily to customer relationships acquired in the
asset impairment analyses as of October 1, 2005 indicated that Western European vendor finance and leasing business acqui-
the fair values of each were in excess of the carrying values. sition and in a purchase of a technology leasing business.
The increase in Specialty Finance – Consumer goodwill during Certain fair value adjustments relating to this acquisition were
2005 was due to the Student Lending Xpress business acquisition modified during 2005, resulting in the reduction to intangible
while the increase in Corporate Finance was due to the Health- assets in 2005.
care Business Credit Corporation acquisition. The increase in
Specialty Finance – Commercial goodwill during 2004 was Healthcare Acquisition
primarily due to a Western European vendor finance and leasing In July 2005, CIT acquired, for cash, Healthcare Business Credit
business acquisition. Certain fair value adjustments relating to Corporation (“HBCC”), a full service health care financing
this acquisition were modified during 2005, resulting in the company that specializes in asset-based and cash flow financing
reduction to goodwill in 2005. to U.S. healthcare providers. The HBCC acquisition was accounted
for under the purchase method, with the acquired assets and liabili-
Other intangible assets, net, are comprised primarily of acquired ties recorded at their estimated fair values as of the acquisition date.
customer relationships (Specialty Finance and Commercial The assets acquired included approximately $500 million of finance
Services), as well as proprietary computer software and related receivables and $127 million of goodwill and intangible assets.
transaction processes (Commercial Services). The increase was
primarily related to acquisitions: a student lending acquisition
Student Lending Acquisition
in Specialty Finance – Consumer, a healthcare acquisition in
Corporate Finance and a factoring acquisition in Commercial In February 2005, CIT acquired Education Lending Group, Inc.
Services. Other intangible assets are being amortized over their (“EDLG”), a specialty finance company principally engaged in
corresponding lives ranging from five to twenty years in relation providing education loans (primarily U.S. government guaran-
to the related cash flows, where applicable. Amortization expense teed), products and services to students, parents, schools and
totaled $21.2 million, $13.3 million and $4.9 million for the alumni associations. The shareholders of EDLG received $19.05
years ended December 31, 2005, 2004 and 2003. Accumulated per share or approximately $383 million in cash. The acquisition

was accounted for under the purchase method, with the acquired During 2005, segment reporting was modified in conjunction
assets and liabilities recorded at their estimated fair values as of with various business realignments. The December 31, 2004 bal-
the February 17, 2005 acquisition date. The assets acquired ances have been conformed to the current presentation. See Note
included approximately $4.4 billion of finance receivables and 20 – Business Segment Information for additional information.
$300 million of goodwill and intangible assets.
NOTE 23 – 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 as 2004 and 2005 restructuring activities:
Severance
__________________________________________ Facilities
__________________________________________
Number of Number of Total
Employees __________________
__________________ Reserve Facilities __________________
__________________ Reserve Reserves
__________________
Balance December 31, 2003 43 $ 2.3 12 $ 7.2 $ 9.5
2004 additions 175 15.2 6 4.5 19.7
2004 utilization (89)
________ (5.3)
__________ (3)
______ (6.0)
________ (11.3)
__________
Balance December 31, 2004 129 12.2 15 5.7 17.9
2005 additions 191 21.6 – 2.0 23.6
2005 utilization (297)
________ (25.7)
__________ (6)
______ (2.6)
________ (28.3)
__________
Balance December 31, 2005 23
________ $ 8.1
__________ 9
______ $ 5.1
________ $ 13.2
__________
________ __________ ______ ________ __________
The additions during 2005 are largely employee termination leasing business acquisition were established under purchase
benefits related to the realignment of the Commercial Finance accounting in conjunction with fair value adjustments to pur-
Group business segments and other business streamlining activities chased assets and liabilities.
($20.3 million, which was recorded in the quarter ended
June 30, 2005 as part of the $25.2 million restructuring charge
recorded in Corporate and Other). The 2005 addition also
included facility exit plan refinements relating to the acquired NOTE 24 – SUMMARIZED FINANCIAL INFORMATION OF
Western European vendor finance and leasing business, SUBSIDIARIES (UNAUDITED)
which were recorded as fair value adjustments to purchased The following presents condensed consolidating financial
liabilities / adjustments to goodwill. The employee termination information for CIT Holdings LLC. CIT has guaranteed on a
benefits were largely paid during the quarter ended September full and unconditional basis the existing debt securities that were
30, 2005. The facility reserves relate primarily to shortfalls in registered under the Securities Act of 1933 and certain other
sublease transactions and will be utilized over the remaining indebtedness of this subsidiary. CIT has not presented related
lease terms, generally 6 years. financial statements or other information for this subsidiary on a
stand-alone basis. The remaining debt associated with Capita
The additions to restructuring reserves in 2004 relate to two ini- Corporation (formerly AT&T Capital Corporation), a
tiatives: (1) the second quarter combination of the former subsidiary previously disclosed, matured in 2005 and prior
Structured Finance with Capital Finance and a back-office period amounts associated with this subsidiary are included in
restructuring in Commercial Finance ($4.1 million) and (2) the the “Other Subsidiaries” column in the tables that follow. Also
third quarter acquisition of a Western European vendor finance included under “Other Subsidiaries” is a 100%-owned finance
and leasing business ($15.6 million). Costs related to the Capital subsidiary of CIT Group Inc., Canadian Funding Company
Finance combination were included in current period earnings, LLC, for which CIT has fully and unconditionally guaranteed
while restructuring liabilities related to the vendor finance and the debt securities.

CONSOLIDATING BALANCE SHEETS (dollars in millions)

CIT
CIT Holdings Other
__________ __________ __________ Eliminations
Group Inc. LLC Subsidiaries __________ Total
__________
December 31, 2005
ASSETS
Net finance receivables $ 1,041.7 $ 2,360.3 $40,270.8 $ – $43,672.8
Operating lease equipment, net – 175.4 9,460.3 – 9,635.7
Finance receivables held for sale – 75.3 1,545.0 – 1,620.3
Cash and cash equivalents 2,502.9 129.6 1,026.1 – 3,658.6
_________________ 272.1
_______________ 1,196.7
________________ (6,962.7)
________________ 4,799.2
________________
Total Assets $ 13,837.7
_________________ $_______________
3,012.7 $53,498.9
________________ $ (6,962.7)
________________ $63,386.6
________________
_________________ _______________ ________________ ________________ ________________
LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt $ 35,701.2 $ 4,336.4 $ 7,826.9 $ – $47,864.5
Credit balances of factoring clients – – 4,187.8 – 4,187.8
Accrued liabilities and payables (28,826.2)
_________________ (1,773.5)
_______________ 34,921.5
________________ ________________– 4,321.8
________________
Total Liabilities 6,875.0 2,562.9 46,936.2 – 56,374.1
Minority interest – – 49.8 – 49.8
_________________ 449.8
_______________ 6,512.9
________________ (6,962.7)
________________ 6,962.7
________________
Total Liabilities and Stockholders’ Equity $ 13,837.7
_________________ $_______________
3,012.7 $53,498.9
________________ $ (6,962.7)
________________ $63,386.6
________________
_________________ _______________ ________________ ________________ ________________
December 31, 2004
ASSETS
Net finance receivables $ 1,121.1 $ 1,682.7 $31,627.2 $ – $34,431.0
Operating lease equipment, net – 130.8 8,160.1 – 8,290.9
Finance receivables held for sale – 72.0 1,568.8 – 1,640.8
Cash and cash equivalents 1,311.4 127.5 771.3 – 2,210.2
_________________ 316.2
_______________ 740.5
________________ (6,055.1)
________________ 4,538.4
________________
Total Assets $ 11,969.3
_________________ $_______________
2,329.2 $42,867.9
________________ $ (6,055.1)
________________ $51,111.3
________________
_________________ _______________ ________________ ________________ ________________
LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt $ 34,699.1 $ 1,383.8 $ 1,641.9 $ – $37,724.8
Credit balances of factoring clients – – 3,847.3 – 3,847.3
Accrued liabilities and payables (28,784.9)
_________________ (591.3)
_______________ 32,819.9
________________ ________________– 3,443.7
________________
Total Liabilities 5,914.2 792.5 38,309.1 – 45,015.8
Minority interest – – 40.4 – 40.4
_________________ 1,536.7
_______________ 4,518.4
________________ (6,055.1)
________________ 6,055.1
________________
Total Liabilities and Stockholders’ Equity $ 11,969.3
_________________ $_______________
2,329.2 $42,867.9
________________ $ (6,055.1)
________________ $51,111.3
________________
_________________ _______________ ________________ ________________ ________________

CONSOLIDATING STATEMENTS OF INCOME (dollars in millions)

CIT
CIT Holdings Other
__________ __________ __________ Eliminations
__________
Finance income $ 41.0 $242.5 $4,231.7 $ – $4,515.2
Interest expense (56.1)
______________ 82.6
___________ 1,885.5
______________ _____________– 1,912.0
______________
Net finance income 97.1 159.9 2,346.2 – 2,603.2
Depreciation on operating lease equipment ______________– 48.2
___________ 919.8
______________ _____________– 968.0
______________
Net finance margin 97.1 111.7 1,426.4 – 1,635.2
______________ 13.7
___________ 185.2
______________ _____________– 217.0
______________
Net finance margin, after provision for credit losses 79.0 98.0 1,241.2 – 1,418.2
Equity in net income of subsidiaries 973.3 – – (973.3) –
Other revenue 38.2
______________ 109.8
___________ 989.4
______________ _____________– 1,137.4
______________
Operating margin 1,090.5 207.8 2,230.6 (973.3) 2,555.6
Operating expenses 154.4 79.9 879.5 – 1,113.8
Provision for restructuring ______________– ___________– 25.2
______________ _____________– 25.2
______________
Income (loss) before provision for income taxes 936.1 127.9 1,325.9 (973.3) 1,416.6
Benefit (provision) for income taxes 13.0 (46.6) (430.6) – (464.2)
Minority interest, after tax – – (3.3) – (3.3)
Dividends on preferred capital securities, after tax (12.7)
______________ ___________– ______________– _____________– (12.7)
______________
Net income $ 936.4
______________ $ 81.3
___________ $ 892.0
______________ $ (973.3)
_____________ $ 936.4
______________
______________ ___________ ______________ _____________ ______________
Finance income $ 38.3 $187.5 $3,535.0 $ – $3,760.8
______________ 10.9
___________ 1,399.5
______________ _____________– 1,260.1
______________
Depreciation on operating lease equipment ______________– 43.8
___________ 921.6
______________ _____________– 965.4
______________
______________ 12.0
___________ 174.7
______________ –
_____________ 214.2
______________
Net finance margin, after provision for credit losses 161.1 120.8 1,039.2 – 1,321.1
Other revenue 65.6
______________ 86.9
___________ 734.6
______________ _____________– 887.1
______________
Operating margin 918.4 207.7 1,773.8 (691.7) 2,208.2
Operating expenses 167.1 67.7 777.3 – 1,012.1
Gain on redemption of debt 41.8
______________ ___________– ______________– _____________– 41.8
______________
Income (loss) before provision for income taxes 793.1 140.0 996.5 (691.7) 1,237.9
Provision for income taxes (39.5) (54.6) (389.1) – (483.2)
Minority interest, after tax ______________– ___________– (1.1)
______________ _____________– (1.1)
______________
Net income $ 753.6
______________ $ 85.4
___________ $ 606.3
______________ $(691.7)
_____________ $ 753.6
______________
______________ ___________ ______________ _____________ ______________

CONSOLIDATING STATEMENTS OF INCOME (continued, dollars in millions)

CIT
CIT Holdings Other
__________ __________ __________ Eliminations
__________
Finance income $ 89.0 $195.0 $3,425.3 $ – $3,709.3
___________ 6.6
___________ 1,365.4
______________ ____________– 1,348.7
_____________
Depreciation on operating lease equipment ___________– 68.5
___________ 989.0
______________ ____________– 1,057.5
_____________
___________ 14.6
___________ 336.0
______________ –
____________ 387.3
_____________
Net finance margin, after provision for credit losses 75.6 105.3 734.9 – 915.8
Other revenue 10.0
___________ 95.7
___________ 753.6
______________ ____________– 859.3
_____________
Operating margin 566.9 201.0 1,488.5 (481.3) 1,775.1
Operating expenses 28.0 90.3 769.9 – 888.2
Gain on redemption of debt 50.4
___________ ___________– ______________– ____________– 50.4
_____________
Income (loss) before provision for income taxes 589.3 110.7 718.6 (481.3) 937.3
Provision for income taxes (22.4) (43.2) (299.4) – (365.0)
Minority interest, after tax ___________– ___________– (5.4)
______________ ____________– (5.4)
_____________
Net income $___________
566.9 $ 67.5
___________ $ 413.8
______________ $(481.3)
____________ $_____________
566.9
___________ ___________ ______________ ____________ _____________

CONSOLIDATING STATEMENTS OF CASH FLOWS (dollars in millions)

CIT
CIT Holdings Other
__________ __________ __________ Eliminations
__________
Cash Flows From Operating Activities:
Net cash flows provided by (used for) operations $______________
8,027.2 $______________
385.0 $(5,498.9)
______________ $______________– $______________
2,913.3
Cash Flows From Investing Activities:
Net increase (decrease) in financing and leasing assets 61.1 (760.8) (4,439.2) – (5,138.9)
Decrease in inter-company loans and investments (7,675.4) – – 7,675.4 –
Other ______________– ____________– 154.0
______________ ______________– 154.0
______________
Net cash flows (used for) provided by investing activities (7,614.3)
______________ (760.8)
____________ (4,285.2)
______________ 7,675.4
______________ (4,984.9)
______________
Cash Flows From Financing Activities:
Net increase (decrease) in debt 1,002.1 2,952.6 1,070.1 – 5,024.8
Net loans extended – pledged in conjunction with secured borrowings – – (1,708.1) – (1,708.1)
Inter-company financing – (2,574.7) 10,250.1 (7,675.4) –
Cash dividends paid (128.7) – – – (128.7)
Other (94.8)
______________ ________________– 115.7
________________ –
_______________ 20.9
________________
Net cash flows provided by (used for) financing activities 778.6
_______________ 377.9
________________ 9,727.8
________________ (7,675.4)
_______________ 3,208.9
________________
Net increase (decrease) in cash and cash equivalents 1,191.5 2.1 (56.3) – 1,137.3
Unrestricted cash and cash equivalents, beginning of period 1,311.4
________________ 127.5
________________ 771.3
________________ _______________– 2,210.2
________________
Unrestricted cash and cash equivalents, end of period $ 2,502.9
________________ $ 129.6
________________ $ 715.0
________________ $ –
_______________ $ 3,347.5
________________
________________ ________________ ________________ _______________ ________________
Net cash flows provided by (used for) operations $(1,110.9)
________________ $ 116.1
________________ $ 2,612.5
________________ $ –
_______________ $ 1,617.7
________________
Net increase (decrease) in financing and leasing assets 433.0 (389.4) (5,139.9) – (5,096.3)
Other ________________– ________________– 41.6
________________ _______________– 41.6
________________
________________ (389.4)
________________ (5,098.3)
________________ 3,527.0
_______________ (5,054.7)
________________
Net increase (decrease) in debt 4,147.3 177.7 (473.7) – 3,851.3
Inter-company financing – (4.4) 3,531.4 (3,527.0) –
Other ________________– ________________– (66.9)
________________ _______________– (66.9)
________________
Net cash flows provided by (used for) financing activities 4,036.4
________________ 173.3
________________ 2,990.8
________________ (3,527.0)
_______________ 3,673.5
________________
Net (decrease) increase in cash and cash equivalents (168.5) (100.0) 505.0 – 236.5
Cash and cash equivalents, beginning of period 1,479.9
________________ 227.5
________________ 266.3
________________ _______________– 1,973.7
________________
Cash and cash equivalents, end of period $ 1,311.4
________________ $ 127.5
________________ $ 771.3
________________ $ –
_______________ $ 2,210.2
________________
________________ ________________ ________________ _______________ ________________

CONSOLIDATING STATEMENTS OF CASH FLOWS (continued, dollars in millions)

CIT
CIT Holdings Other
__________ __________ __________ Eliminations
__________
Net cash flows provided by operations $______________
979.0 $ 275.3
____________ $______________
1,227.9 $______________– $______________
2,482.2
Net increase (decrease) in financing and leasing assets (986.6) (366.6) (2,944.2) – (4,297.4)
Other ______________– ____________– 14.8
______________ ______________– 14.8
______________
______________ (366.6)
____________ (2,929.4)
______________ 2,775.7
______________ (4,282.6)
______________
Net increase (decrease) in debt 3,054.1 (910.8) (300.4) – 1,842.9
Inter-company financing – 935.9 1,839.8 (2,775.7) –
Other ______________– ____________– (3.6)
______________ ______________– (3.6)
______________
Net cash flows provided by (used for) financing activities 2,952.3
______________ 25.1
____________ 1,535.8
______________ (2,775.7)
______________ 1,737.5
______________
Net (decrease) increase in cash and cash equivalents 169.0 (66.2) (165.7) – (62.9)
Cash and cash equivalents, beginning of period 1,310.9
______________ 293.7
____________ 432.0
______________ ______________– 2,036.6
______________
Cash and cash equivalents, end of period $______________
1,479.9 $ 227.5
____________ $______________
266.3 $______________– $______________
1,973.7
______________ ____________ ______________ ______________ ______________

NOTE 25 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data are presented below.
Year Ended December 31, 2005 (dollars in millions, except per share data)
First Second Third Fourth
Quarter
_____________ Quarter
_____________ Quarter
_____________ Quarter
_____________
Net finance margin $ 398.9 $ 391.7 $415.7 $ 428.9
Provision for credit losses 45.3 47.2 69.9 54.6
Other revenue 276.5 332.6 239.5 288.8
Salaries and general operating expenses 264.0 268.8 281.1 299.9
Provision for restructuring – 25.2 – –
Provision for income taxes (137.6) (132.9) (86.8) (106.9)
Minority interest after tax (0.9) (1.1) (0.8) (0.5)
Preferred stock dividends – – (5.2) (7.5)
Net income available to common stockholders $ 227.6 $ 249.1 $211.4 $ 248.3
Net income per diluted common share $ 1.06 $ 1.16 $ 1.02 $ 1.21
The 2005 first, second and third quarter information reflects (EPS) of $0.08 and $0.13 for the first and second quarters and a
amendments from originally filed Form 10-Q reports, primarily decrease of $0.04 EPS for the third quarter. These derivative
related to certain derivative transactions that did not qualify for transactions decreased fourth quarter EPS by $0.06. Year-to-date
hedge accounting. The amendments largely impacted other rev- EPS increased by $0.11 as a result of these adjustments. See
enue and amounted to an increase in diluted earnings per share Item 9A. Controls and Procedures.
Quarter
_____________ Quarter
_____________ Quarter
_____________ Quarter
_____________
Net finance margin $ 363.1 $ 371.0 $ 393.4 $ 407.8
Other revenue 231.1 236.5 216.7 202.8
Gain on debt call 41.8 – – –
Minority interest after tax – – (0.2) (0.9)
Net income available to common stockholders $ 189.3 $ 176.6 $ 183.9 $ 203.8
Quarter
_____________ Quarter
_____________ Quarter
_____________ Quarter
_____________
Net finance margin $300.5 $326.5 $329.0 $347.1
Other revenue 235.5 217.6 220.7 185.5
Gain on debt call – – – 50.4
Dividends on preferred capital securities, after tax (2.7) (2.7) – –
Minority interest after tax – (0.1) (0.2) 0.3
Net income available to common stockholders $127.0 $136.9 $147.8 $155.2

ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
ITEM 9A. Controls and Procedures

CONCLUSION REGARDING THE EFFECTIVENESS OF the Committee of Sponsoring Organizations of the Treadway
DISCLOSURE CONTROLS AND PROCEDURES Commission in Internal Control – Integrated Framework. We
believe that this evaluation provides a reasonable basis for
Under the supervision and with the participation of our man-
our opinion.
agement, including our principal executive officer and principal
financial officer, we conducted an evaluation of our disclosure
Based on the assessment performed, management concluded
controls and procedures, as such term is defined under Rule
that as of December 31, 2005 the Company’s internal control
13a-15(e) promulgated under the Securities Exchange Act of
over financial reporting was effective.
1934, as amended (the Exchange Act). Based on this evaluation,
our principal executive officer and our principal financial officer
Management’s assessment of the effectiveness of the Company’s
concluded that our disclosure controls and procedures were
internal control over financial reporting as of December 31,
effective as of the end of the period covered by this
2005 has been audited by PricewaterhouseCoopers LLP, an
annual report.
independent registered public accounting firm, as stated in their
report which appears on pages 51 through 52.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
CHANGES IN INTERNAL CONTROL OVER
Management of CIT is responsible for establishing and main- FINANCIAL REPORTING
taining adequate internal control over financial reporting, as such
term is identified in Exchange Act Rules 13a-15(f ). Internal Income Tax Accounting
control over financial reporting is a process designed to provide As of the end of the period covered by this report, we have reme-
reasonable assurance regarding the reliability of financial diated the material weakness in the Company’s internal control
reporting and the preparation of financial statements for over income tax deferred assets and liabilities that existed as of
external purposes in accordance with generally accepted December 31, 2004. Our remediation during 2005 focused on
accounting principles. A company’s internal control over developing a reconciliation between the tax basis and book basis
financial reporting includes those policies and procedures that of each component of the Company’s balance sheet with the
(i) pertain to the maintenance of records that, in reasonable deferred tax asset and liability accounts. Key elements of our
detail, accurately and fairly reflect the transactions and disposi- remediation actions included the following:
tions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit p Hired and trained additional tax personnel;
preparation of financial statements in accordance with generally
p Enhanced tax reporting systems and implemented
accepted accounting principles, and that receipts and expendi-
processes and controls with respect to income tax reporting
tures of the company are being made only in accordance with
and compliance;
authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or p Computed the book to tax basis differences on an asset and
timely detection of unauthorized acquisition, use, or disposition liability transactional level and further automated the related
of the company’s assets that could have a material effect on the calculations and controls;
financial statements.
p Documented and tested remediated tax reporting internal
Because of its inherent limitations, internal control over finan- controls; and
cial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods p Updated and formalized tax accounting policies
are subject to the risk that controls may become inadequate and procedures.
because of changes in conditions, or that the degree of compli-
ance with the policies or procedures may deteriorate. With respect to our 2004 financial statements, management
performed alternative analyses and reconciliations of the
Management of CIT, including our principal executive officer income tax balance sheet and income statement accounts
and principal financial officer, conducted an evaluation of the and based thereon concluded that no material adjustment
effectiveness of the Company’s internal control over financial to the Company’s reported balance sheet or net income as of
reporting as of December 31, 2005 using the criteria set forth by or for the year ended December 31, 2004 was required.

Derivative Hedge Accounting We determined that certain compound swaps were not appro-
As of the end of the period covered by this report, we have reme- priately accounted for, even though these swaps were highly
diated the material weakness relating to derivative effective economic hedges of the interest rate and currency
documentation and hedge accounting treatment that is described exchange risks associated with corresponding foreign denomi-
below. Our remediation actions included the following: nated debt. We documented these swaps originally as “matched
terms” hedges, which assumes no hedge ineffectiveness. The
p All of the subject compound swaps have been replaced with swaps would have qualified for “long-haul” hedge accounting,
corresponding stand alone replacement swaps (a cross- with ineffectiveness reflected in current earnings. However,
currency basis swap and an interest rate swap, both with zero the swaps did not qualify for hedge accounting treatment from
fair value at inception), which qualify for hedge accounting their inception, as SFAS 133 does not allow for retroactive
treatment under SFAS 133. documentation modifications.
p We do not intend to transact compound swaps prospectively The elimination of hedge accounting from inception of the
and have communicated a formal prohibition against such compound swaps resulted in the restatement of previously-issued
transactions to the appropriate treasury, accounting, and financial statements in each of the first three quarterly periods of
legal personnel. 2005 to reflect the elimination of adjustments to the correspon-
ding debt under SFAS 133 fair value hedge accounting for
p We have updated our derivative policy manual to specifically changes in interest rates during each period. These adjustments
prohibit the use of compound swaps. to earnings which amounted to $26.7 million after tax, will
reduce future earnings by an equal amount through 2015.
p We have conducted training sessions with the appropriate
treasury, accounting, legal and internal audit personnel with In connection with the restatement as filed on December 13,
respect to the above to ensure that we evaluate and document 2005, under the direction of our principal executive officer and
derivative transactions in compliance with SFAS 133. our principal financial officer, we determined that the above con-
dition constituted a material weakness in internal control with
A material weakness is a control deficiency, or combination of respect to our accounting treatment and related hedge documen-
control deficiencies, that results in more than a remote likelihood tation for certain cross-currency swaps as of December 31, 2004.
that a material misstatement of the annual or interim financial
statements will not be prevented or detected. Other than the changes discussed above, there have been no
changes to the Company’s internal control over financial report-
During the fourth quarter of 2005, we learned of an interpreta- ing that occurred since the beginning of the Company’s fourth
tion with respect to applying the “matched terms” approach in quarter of 2005 that have materially affected, or are reasonably
hedge accounting under Statement of Financial Accounting likely to materially affect, the Company’s internal control over
Standards No. 133, “Accounting for Derivative Instruments and financial reporting.
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.
ITEM 9B. Other Information

None
101
Part Three
ITEM 10. Directors and Executive Officers of the Registrant

The information called for by Item 10 is incorporated by refer- Directors” and “Election of Directors – Executive Officers” in our
ence from the information under the caption “Election of Proxy Statement for our 2006 annual meeting of stockholders.
ITEM 11. Executive Compensation

The information called for by Item 11 is incorporated by refer- Directors and Executive Officers” in our Proxy Statement for
ence from the information under the caption “Compensation of our 2006 annual meeting of stockholders.
ITEM 12. Security Ownership of Certain Beneficial Owners

and Management and Related Stockholder Matters
The information called for by Item 12 is incorporated by refer- Shareholders” in our Proxy Statement for our 2006 annual
ence from the information under the caption “Principal meeting of stockholders.
ITEM 13. Certain Relationships and Related Transactions

The information called for by Item 13 is incorporated by refer- Relationships and Related Transactions” in our Proxy Statement
ence from the information under the caption “Certain for our 2006 annual meeting of stockholders.
ITEM 14. Principal Accountant Fees and Services

The information called for by Item 14 is incorporated by refer- Independent Accountants” in our Proxy Statement for our 2006
ence from the information under the caption “Appointment of annual meeting of stockholders.

Part Four
ITEM 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed with the Securities and 4.2 Indenture dated as of August 26, 2002 by and among
Exchange Commission as part of this report (see Item 8): CIT Group Inc., J.P. Morgan Trust Company,
National Association (as successor to Bank One Trust
1. The following financial statements of CIT and Company, N.A.), as Trustee and Bank One NA,
Subsidiaries: London Branch, as London Paying Agent and London
Calculation Agent, for the issuance of unsecured and
Report of Independent Registered Public Accounting Firm unsubordinated debt securities (Incorporated by refer-
ence to Exhibit 4.18 to Form 10-K filed by CIT on
Consolidated Balance Sheets at December 31, 2005 and February 26, 2003).
December 31, 2004.
4.3 Form of Indenture dated as of October 29, 2004
Consolidated Statements of Income for the years ended between CIT Group Inc. and J.P. Morgan Trust
December 31, 2005, 2004 and 2003. Company, National Association for the issuance
of senior debt securities (Incorporated by reference
Consolidated Statements of Stockholders’ Equity for the to Exhibit 4.4 to Form S-3/A filed by CIT on
years ended December 31, 2005, 2004 and 2003. October 28, 2004).
Consolidated Statements of Cash Flows for the years ended 4.4 Form of Indenture dated as of October 29, 2004
December 31, 2005, 2004 and 2003. between CIT Group Inc. and J.P. Morgan Trust
Company, National Association for the issuance of
Notes to Consolidated Financial Statements subordinated debt securities (Incorporated by refer-
ence to Exhibit 4.5 to Form S-3/A filed by CIT on
2. All schedules are omitted because they are not applicable or October 28, 2004).
because the required information appears in the
Consolidated Financial Statements or the notes thereto. 4.5 Certain instruments defining the rights of holders of
CIT’s long-term debt, none of which authorize a
(b) Exhibits total amount of indebtedness in excess of 10% of
the total amounts outstanding of CIT and its
3.1 Second Restated Certificate of Incorporation of the subsidiaries on a consolidated basis have not been
Company (incorporated by reference to Form 10-Q filed as exhibits. CIT agrees to furnish a copy of these
filed by CIT on August 12, 2003). agreements to the Commission upon request.
3.2 Amended and Restated By-laws of the Company 4.6 5-Year Credit Agreement, dated as of October 10,
(incorporated by reference to Form 10-Q filed by CIT 2003 among J.P. Morgan Securities Inc., a joint lead
on August 12, 2003). arranger and bookrunner, Citigroup Global Markets
Inc., as joint lead arranger and bookrunner, JP
3.3 Certificate of Designations relating to the Company’s Morgan Chase Bank as administrative agent, Bank of
6.350% Non-Cumulative Preferred Stock, Series A America, N.A. as syndication agent, and Barclays
(incorporated by reference to Exhibit 3 to Form 8-A Bank PLC, as documentation agent (Incorporated by
filed by CIT on July 29, 2005). reference to Exhibit 4.2 to Form 10-Q filed by CIT
on November 7, 2003).
3.4 Certificate of Designations relating to the Company’s
Non-Cumulative Preferred Stock, Series B (incorpo-
4.7 364-Day Credit Agreement, dated as of April 14,
rated by reference to Exhibit 3 to Form 8-A filed by
2004, among CIT Group Inc., the several banks and
CIT on July 29, 2005).
financial institutions named therein, J.P. Morgan
Securities, Inc., and Banc of America Securities LLC,
4.1 Form of Certificate of Common Stock of CIT (incor-
as joint lead arrangers and bookrunners, JP Morgan
porated by reference to Exhibit 4.1 to Amendment
Chase Bank, as administrative agent, and Bank of
No. 3 to the Registration Statement on Form S-3 filed
America, N.A. and Citibank N.A., as syndication
June 26, 2002).
103
agents and Barclays Bank PLC, as documentation 10.8* Amendment to Employment Agreement by and
agent (Incorporated by reference to Exhibit 4.2 among CIT Group Inc. and Jeffrey M. Peek dated
to Form 10-Q filed by CIT on May 7, 2004). as of July 22, 2004 (Incorporated by reference
to Exhibit 10.1 to Form 10-Q filed by CIT on
4.8 5-Year Credit Agreement, dated as of April 14, 2004, November 9, 2004).
among CIT Group Inc., the several banks and finan-
cial institutions named therein, J.P. Morgan 10.9* Employment Agreement by and among CIT Group
Securities Inc. and Citigroup Global Markets Inc., Inc. and Frederick E. Wolfert dated as of August 1,
as joint lead arrangers and bookrunners, JP Morgan 2004 (Incorporated by reference to Exhibit 10.5 to
Chase Bank, as administrative agent, Bank of Form 10-Q filed by CIT on November 9, 2004).
America, N.A., as syndication agents and Barclays
Bank PLC, as documentation agent (Incorporated by 10.10* 2004 Extension and Funding Agreement dated
reference to Exhibit 4.3 to Form 10-Q filed by CIT September 8, 2004, by and among Dell Financial
on May 7, 2004). Services L.P., Dell Credit Company L.L.C., DFS-SPV
L.P., DFS-GP, Inc., Dell Inc., Dell Gen. P. Corp., Dell
10.1 Agreement dated as of June 1, 2001 between CIT DFS Corporation, CIT Group Inc., CIT Financial
Holdings (NV) Inc., a wholly-owned subsidiary of USA, Inc., CIT DCC Inc., CIT DFS Inc., CIT
Tyco International Ltd., and CIT (formerly known Communications Finance Corporation, and CIT
as Tyco Capital Corporation and Tyco Acquisition Credit Group USA Inc. (Incorporated by reference to
Corp. XX (NV) and successor to The CIT Group, Form 8-K filed by CIT on September 9, 2004).
Inc.), a Nevada corporation, regarding transactions
between CIT Holdings and CIT (incorporated 10.11* Executive Severance Plan (incorporated by reference
by reference to Exhibit 10.1 to Amendment No. 3 to Exhibit 10.24 to Amendment No. 3 to the
to the Registration Statement on Form S-3 filed Registration Statement on Form S-3 filed
June 7, 2002). June 26, 2002).
10.2 Form of Separation Agreement by and between Tyco 10.12* Long-Term Equity Compensation Plan (incorporated
International Ltd. and CIT (incorporated by reference by reference to Form DEF-14A filed April 23, 2003).
to Exhibit 10.2 to Amendment No. 3 to the Registration
Statement on Form S-3 filed June 26, 2002). 10.13 Form of Indemnification Agreement (incorporated
by reference to Exhibit 10.26 to Amendment No. 3
10.3 Form of Financial Services Cooperation Agreement by to the Registration Statement on Form S-3 filed
and between Tyco International Ltd. and CIT (incor- June 26, 2002).
porated by reference to Exhibit [10.3] to Amendment
No. 3 to the Registration Statement on Form S-3 filed 10.14 Form of Tax Agreement by and between Tyco
June 12, 2002). International Ltd. and CIT (incorporated by
reference to Exhibit 10.27 to Amendment No. 3
10.4* Employment Agreement for Joseph M. Leone dated as to the Registration Statement on Form S-3 filed
of August 1, 2004 (incorporated by reference to June 26, 2002).
Exhibit 10.3 to Form 10-Q filed by CIT on
November 9, 2004). 10.15 Master Confirmation Agreement and the related
Supplemental Confirmation dated as of July 19, 2005
10.5* Employment Agreement for Thomas B. Hallman between Goldman, Sachs and Co. and CIT Group
dated as of August 1, 2004 (incorporated by reference Inc. relating to CIT’s accelerated stock repurchase pro-
to Exhibit 10.2 to Form 10-Q filed by CIT on gram (incorporated by reference to Exhibit 10.1
November 9, 2004). to Form 10-Q filed by CIT on August 5, 2005).
10.6* Employment Agreement for Lawrence A. Marsiello 10.16 Agreement and Plan of Merger, dated as of January 4,
dated as of August 1, 2004 (incorporated by reference 2005, among Education Lending Group, Inc. CIT
to Exhibit 10.4 to Form 10-Q filed by CIT on Group Inc. and CIT ELG Corporation (incorporated
November 9, 2004). by reference to Exhibit 99.2 to the Form 8-K filed by
CIT on January 6, 2005).
10.7* Employment Agreement for Jeffrey M. Peek dated as
of July 22, 2003 (incorporated by reference to Form 12.1 CIT Group Inc. and Subsidiaries Computation of
10-Q filed by CIT on November 7, 2003). Earnings to Fixed Charges.

21.1 Subsidiaries of CIT. 31.2 Certification of Joseph M. Leone pursuant to Rules
13a-15(e) and 15d-15(f ) of the Securities Exchange
23.1 Consent of PricewaterhouseCoopers LLP. Commission, as promulgated pursuant to Section
13(a) of the Securities Exchange Act and Section 302
24.1 Powers of Attorney. of the Sarbanes-Oxley Act of 2002.
31.1 Certification of Jeffrey M. Peek pursuant to Rules 32.1 Certification of Jeffrey M. Peek pursuant to 18 U.S.C.
13a-15(e) and 15d-15(f ) of the Securities Exchange Section 1350, as adopted pursuant to Section 906 of
Commission, as promulgated pursuant to Section the Sarbanes-Oxley Act of 2002.
13(a) of the Securities Exchange Act and Section 302
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.
* Indicates a management contract or compensatory plan or arrangement.
105
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/ Robert J. Ingato
____________________________________________________________________________________________________
March 6, 2006 Robert J. Ingato
Executive Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
March 6, 2006 in the capacities indicated below.
NAME NAME
/s/ Jeffrey M. Peek

____________________________________________________________________________________________________ Seymour Sternberg*
____________________________________________________________________________________________________
Jeffrey M. Peek Seymour Sternberg
Chairman and Chief Executive Officer Director
and Director
Peter J. Tobin*
____________________________________________________________________________________________________
Gary C. Butler*
____________________________________________________________________________________________________ Peter J. Tobin
Gary C. Butler Director
Director
Lois M.Van Deusen*
____________________________________________________________________________________________________
William Freeman*
____________________________________________________________________________________________________ Lois M. Van Deusen
William Freeman Director
Director
/s/ Joseph M. Leone
____________________________________________________________________________________________________
Thomas H. Kean*
____________________________________________________________________________________________________ Joseph M. Leone
Thomas H. Kean Vice Chairman and Chief Financial Officer
Director
/s/ William J. Taylor
____________________________________________________________________________________________________
Marianne Miller Parrs*
____________________________________________________________________________________________________ William J. Taylor
Marianne Miller Parrs Executive Vice President, Controller and
Director Principal Accounting Officer
Timothy M. Ring*
____________________________________________________________________________________________________ By: /s/ Robert J. Ingato*
____________________________________________________________________________________________________
Timothy M. Ring Robert J. Ingato
Director Executive Vice President, General Counsel
and Secretary
____________________________________________________________________________________________________
John R. Ryan
Director
* Original powers of attorney authorizing Robert J. Ingato, and James P. Shanahan and each of them to sign on behalf of the above-mentioned directors are
held by the Corporation and available for examination by the Securities and Exchange Commission pursuant to Item 302(b) of Regulation S-T.

Where You Can Find More Information The Annual Report on Form 10-K, including the exhibits and
A copy of the Annual Report on Form 10-K, including the schedules thereto, and other SEC filings, are available free of
exhibits and schedules thereto, may be read and copied at charge on the Company’s Internet site at http://www.cit.com as
the SEC’s Public Reference Room at 450 Fifth Street, N.W., soon as reasonably practicable after such material is electronically
Washington D.C. 20549. Information on the Public Reference filed with the SEC. Copies of our Corporate Governance
Room may be obtained by calling the SEC at 1-800-SEC-0330. Guidelines, the Charters of the Audit Committee, the
In addition, the SEC maintains an Internet site at Compensation Committee, and the Nominating and
http://www.sec.gov, from which interested parties can electroni- Governance Committee, and our Code of Business Conduct are
cally access the Annual Report on Form 10-K, including the available, free of charge, on our internet site at
exhibits and schedules thereto. http://www.cit.com, and printed copies are available by contact-
ing Investor Relations, 1 CIT Drive, Livingston, NJ 07039 or by
telephone at (973) 740-5000.
107
EXHIBIT 12.1
CIT Group Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges
Three Months Nine Months
Year Ended Year Ended Year Ended Ended Year Ended Ended
December 31, December 31, December 31, December 31, September 30, September 30,
2005
_______________________ 2004
_______________________ 2003
_______________________ 2002
_______________________ 2002 ________________________
________________________ 2001
Net income $ 936.4 $ 753.6 $ 566.9 $141.3 $(6,698.7) $ 263.3
Provision for income taxes 464.2
______________ 483.3
______________ 361.6
______________ 90.3
__________ 367.6 `
______________ 236.3
______________
Earnings before provision
for income taxes 1,400.6
______________ 1,236.9
______________ 928.5
______________ 231.6
__________ (6,331.1)`
______________ 499.6
______________
Fixed charges:
Interest and debt
expenses on
indebtedness 1,894.3 1,242.6 1,348.7 349.5 1,464.6 1,636.9
Minority interest
in subsidiary
trust holding
Solely debentures of the
Company, before tax 17.7 17.5 8.8 4.4 16.9 14.4
Interest factor-one-third
of rentals on real and
personal properties 14.3
______________ 13.4
______________ 14.4
______________ 3.8
__________ 15.6 `
______________ 13.5
______________
Total fixed charges 1,926.3
______________ 1,273.5
______________ 1,371.9
______________ 357.7
__________ 1,497.1 `
______________ 1,664.8
______________
Total earnings before
provisions for income
taxes and fixed charges $3,326.9
______________ $2,510.4
______________ $2,300.4
______________ $589.3
__________ $(4,834.0)
______________ `` $2,164.4
______________
______________ ______________ ______________ __________ ______________ ______________
Ratios of earnings to
fixed charges 1.73x 1.97x 1.68x 1.65x (1) 1.30x
(1) Earnings were insufficient to cover fixed charges by $6,331.1 million in the year ended September 30, 2002. Earnings for the year ended September 30, 2002
included a goodwill impairment charge of $6,511.7 million in accordance with SFAS 142, “Goodwill and Other Intangible Assets.”
EXHIBIT 31.1
Certifications
I, Jeffrey M. Peek, certify that:
1. I have reviewed this annual report on Form 10-K of CIT Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and proce-
dures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f ) and 15d-15(f )) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated sub-
sidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the prepara-
tion of financial statements for external purposes in accordance with generally accepted accounting principals;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over finan-
cial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: March 6, 2006
/s/ Jeffrey M. Peek

____________________________________________________________________________________________________
Jeffrey M. Peek
Chairman and Chief Executive Officer
EXHIBIT 31.2
Certifications
I, Joseph M. Leone, certify that:
1. I have reviewed this annual report on Form 10-K of CIT Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and proce-
dures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f ) and 15d-15(f )) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated sub-
sidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the prepara-
tion of financial statements for external purposes in accordance with generally accepted accounting principals;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over finan-
cial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: March 6, 2006
/s/ Joseph M. Leone

____________________________________________________________________________________________________
Joseph M. Leone
Vice Chairman and Chief Financial Officer
EXHIBIT 32.1
Certification Pursuant to Section 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of CIT Group Inc. (“CIT”) on Form 10-K for the year ended December 31, 2005, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey M. Peek, the Chief Executive Officer of CIT,
certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;
(i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of
1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of opera-
tions of CIT.
/s/ Jeffrey M. Peek

____________________________________________________________________________________________________
Dated: March 6, 2006 Jeffrey M. Peek
Chairman and
Chief Executive Officer
CIT Group Inc.
EXHIBIT 32.2
Certification Pursuant to Section 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of CIT Group Inc. (“CIT”) on Form 10-K for the year ended December 31, 2005, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph M. Leone, the Chief Financial Officer of
CIT, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;
(i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of
1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of opera-
tions of CIT.
/s/ Joseph M. Leone

____________________________________________________________________________________________________
Dated: March 6, 2006 Joseph M. Leone
Vice Chairman and Chief Financial Officer
CIT Group Inc.

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to a future

CIT 2005 ANNUAL REPORT

Most signiﬁcantly, a team of 6,000 employees dedicated to

CIT emerged from 2005 an even stronger

Return on Total Equity

Earnings Per Share Growth

Our Transportation Finance segment provides longer-term, large ticket

Through our Corporate Finance segment, CIT provides lending, leasing

From a diverse array of ﬁnance solutions for middle-market compa-

At CIT, we believe that the key to long-lasting relationships is a customer-

We are organizing our business around our customers. The goal: to

Multiple Approaches to Driving Organic Growth

During 2005, we launched a formal program to accelerate organic

From a new sales and marketing structure to a reinvigorated

CIT is targeting the most attractive opportunities

cash-ﬂow ﬁnancing to U.S. healthcare providers, accelerated our pene-

In addition to expanding our presence in growing markets, we are building

From new markets to new lending products, CIT is squarely aligned

We have very strong global positions in a number of businesses, including

Factoring is a good illustration of this strategy. From our position as the

Vendor Finance offers another example of how we are leveraging a leader-

As CIT moves forward with a robust plan to capitalize

For example, we implemented a cultural initiative to break down internal

Building on a century of experience, we

As we grow, our clients, communities, and

GIVING BACK TO OUR COMMUNITIES

was made by Mr. Peek on June 9, 2005.

Kelley J. Gipson Valerie L. Gerard

Commission File Number: 001-31369

1211 Avenue of the Americas, New York, New York 10036

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Part One Part Three

ITEM 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . .102

ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ITEM 4. Submission of Matters to a Vote of Security Holders . . . . .12

ITEM 5. Market for Registrant’s Common Equity and Related

Where You Can Find More Information . . . . . . . . . . . . . . . . . . . . .107

ITEM 7. Management’s Discussion and Analysis of

ITEM 7A. Quantitative and Qualitative Disclosure

ITEM 8. Financial Statements and Supplementary Data . . . . . . . . . 51

ITEM 9. Changes in and Disagreements with Accountants

ITEM 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . 100

ITEM 9B. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Specialty Finance Commercial Finance Latin America 1.7%

Capital Finance $10.5

Consumer $14.8 Equipment Finance $7.0 U.S. 79.0%

2 CIT GROUP INC 2005

Specialty Finance Group

Specialty Finance – Commercial

Specialty Finance – Consumer

Commercial Finance Group

p Energy & Infrastructure Healthcare

Our centralized consumer asset service center services and col-

6 CIT GROUP INC 2005

Earnings and Return Summary (dollars in millions)

Net Return on Return on

Specialty Finance – Commercial $326.6 2.96% 25.0%