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

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Form 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 2003

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

Commission File Number: 001-31369

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

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

1 CIT Drive, Livingston, New Jersey, 07039
(Address of Registrant's principal executive offices)

(973) 740-5000
(Registrant's telephone number)

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____

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

As of October 31, 2003, there were 213,303,594 shares of the Registrant's
common stock outstanding.

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CIT GROUP INC. AND SUBSIDIARIES
TABLE OF CONTENTS

Page
----

Part I--Financial Information:

Item 1 Consolidated Financial Statements (Unaudited)................ 1
Consolidated Balance Sheets.................................. 1
Consolidated Statements of Income............................ 2
Consolidated Statements of Stockholders' Equity.............. 3
Consolidated Statements of Cash Flows........................ 4
Notes to Consolidated Financial Statements................... 5-19
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations and Quantitative
and Qualitative Disclosure about Market Risk............... 20-54
Item 4 Controls and Procedures...................................... 54

Part II--Other Information:

Item 1 Legal Proceedings............................................ 55
Item 6 Exhibits and Reports on Form 8-K............................. 55-56
Signatures................................................... 57

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

CIT GROUP INC. AND SUBSIDIARIES

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

September 30, December 31,
2003 2002
------------- ------------
ASSETS

Financing and leasing assets:
Finance receivables........................................................ $30,342.6 $27,621.3
Reserve for credit losses.................................................. (752.5) (760.8)
--------- ---------
Net finance receivables.................................................... 29,590.1 26,860.5
Operating lease equipment, net............................................. 7,485.3 6,704.6
Finance receivables held for sale.......................................... 1,017.9 1,213.4
Cash and cash equivalents..................................................... 2,269.0 2,036.6
Goodwill...................................................................... 388.7 384.4
Other assets.................................................................. 4,749.6 4,732.9
--------- ---------
Total Assets.................................................................. $45,500.6 $41,932.4
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Debt:
Commercial paper........................................................... $ 4,935.8 $ 4,974.6
Variable-rate bank credit facilities....................................... -- 2,118.0
Variable-rate senior notes................................................. 7,430.0 4,906.9
Fixed-rate senior notes.................................................... 21,390.4 19,681.8
Preferred capital securities............................................... 255.9 --
--------- ---------
Total debt.................................................................... 34,012.1 31,681.3
Credit balances of factoring clients.......................................... 3,103.0 2,270.0
Accrued liabilities and payables.............................................. 3,164.7 2,853.2
--------- ---------
Total Liabilities.......................................................... 40,279.8 36,804.5
--------- ---------
Commitments and Contingencies (Note 8)
Minority Interest............................................................. 39.9 --
Preferred capital securities.................................................. -- 257.2
Stockholders' Equity:
Preferred stock, $0.01 par value, 100,000,000 authorized; none issued...... -- --
Common stock, $0.01 par value, 600,000,000 authorized; 213,324,623
issued and 213,283,734 outstanding....................................... 2.1 2.1
Paid-in capital, net of deferred compensation of $34.3 and $5.5............ 10,679.1 10,676.2
Accumulated deficit........................................................ (5,271.5) (5,606.9)
Accumulated other comprehensive loss....................................... (227.6) (200.7)
Treasury stock, at cost.................................................... (1.2) --
--------- ---------
Total Stockholders' Equity................................................. 5,180.9 4,870.7
--------- ---------
Total Liabilities and Stockholders' Equity................................. $45,500.6 $41,932.4
========= =========

See Notes to Consolidated Financial Statements (Unaudited).

CIT GROUP INC. AND SUBSIDIARIES

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

For the Quarter For the Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
2003 2002 2003 2002
------ -------- -------- ---------

Finance income.................................... $921.2 $1,015.2 $2,803.6 $ 3,143.8
Interest expense.................................. 326.5 347.8 1,004.3 1,066.3
------ -------- -------- ---------
Net finance income................................ 594.7 667.4 1,799.3 2,077.5
Depreciation on operating lease equipment......... 252.4 296.6 804.1 902.5
------ -------- -------- ---------
Net finance margin................................ 342.3 370.8 995.2 1,175.0
Provision for credit losses....................... 82.9 122.7 286.5 675.4
------ -------- -------- ---------
Net finance margin after provision for
credit losses.................................. 259.4 248.1 708.7 499.6
Other revenue..................................... 220.7 209.0 673.8 687.2
------ -------- -------- ---------
Operating margin.................................. 480.1 457.1 1,382.5 1,186.8
------ -------- -------- ---------
Salaries and general operating expenses........... 237.5 235.6 698.3 707.7
Interest expense - TCH............................ -- -- -- 586.3
Goodwill impairment............................... -- -- -- 6,511.7
------ -------- -------- ---------
Operating expenses................................ 237.5 235.6 698.3 7,805.7
------ -------- -------- ---------
Income (loss) before provision for income taxes... 242.6 221.5 684.2 (6,618.9)
(Provision) for income taxes...................... (94.6) (84.1) (266.8) (255.8)
Minority interest, after tax...................... (0.2) -- (0.3) --
Dividends on preferred capital securities,
after tax ...................................... -- (2.7) (5.4) (8.1)
------ -------- -------- ---------
Net income (loss)................................. $147.8 $ 134.7 $ 411.7 $(6,882.8)
====== ======== ======== =========
Net income (loss) per basic share................. $ 0.70 $ 0.64 $ 1.95 $ (32.53)
====== ======== ======== =========
Net income (loss) per diluted share............... $ 0.69 $ 0.64 $ 1.94 $ (32.53)
====== ======== ======== =========
Dividends per common share........................ $ 0.12 $ -- $ 0.36 $ --
====== ======== ======== =========

Note: Per share calculations for the nine months ended September 30, 2002 assume
that common shares as a result of the July 2002 IPO (211.6 million) outstanding
for the quarter were outstanding for the nine months.

See Notes to Consolidated Financial Statements (Unaudited).

CIT GROUP INC. AND SUBSIDIARIES

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

Accumulated
Other Total
Common Paid-in Accumulated Comprehensive Treasury Stockholders'
Stock Capital Deficit (Loss) Stock Equity
---- --------- --------- ------------ -------- -------------

December 31, 2002................. $2.1 $10,676.2 $(5,606.9) $(200.7) $ -- $4,870.7
Net income........................ -- -- 411.7 -- -- 411.7
Foreign currency translation
adjustments..................... -- -- -- (26.9) -- (26.9)
Unrealized loss on equity
and securitization
investments..................... -- -- -- (9.6) -- (9.6)
Minimum pension
liability adjustment............ -- -- -- (1.8) -- (1.8)
Change in fair values of
derivatives qualifying
as cash flow hedges............. -- -- -- 11.4 -- 11.4
--------
Total comprehensive
income.......................... -- -- -- -- -- 384.8
--------
Cash dividends.................... -- -- (76.3) -- -- (76.3)
Restricted common
stock grants.................... -- 4.9 -- -- -- 4.9
Treasury stock purchased,
at cost......................... -- -- -- -- (11.4) (11.4)
Exercise of stock
option awards................... -- (2.0) -- -- 10.2 8.2
---- --------- --------- ------- ------ --------
September 30, 2003................ $2.1 $10,679.1 $(5,271.5) $(227.6) $ (1.2) $5,180.9
==== ========= ========= ======= ====== ========

See Notes to Consolidated Financial Statements (Unaudited).

CIT GROUP INC. AND SUBSIDIARIES

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

For the Nine Months
Ended September 30,
--------------------------
2003 2002
---------- -----------

Cash Flows From Operations
Net income (loss)............................................... $ 411.7 $ (6,882.8)
Adjustments to reconcile net income (loss) to net cash
flows from operations:
Goodwill impairment.......................................... -- 6,511.7
Provision for credit losses.................................. 286.5 675.4
Depreciation and amortization................................ 831.4 944.9
Provision for deferred federal income taxes.................. 229.6 122.2
Gains on equipment, receivable and investment sales.......... (158.9) (143.6)
Increase in other assets..................................... (161.6) (654.6)
Increase in accrued liabilities and payables................. 162.4 402.9
Other........................................................ (55.2) (55.6)
---------- -----------
Net cash flows provided by operations........................... 1,545.9 920.5
---------- -----------
Cash Flows From Investing Activities
Loans extended.................................................. (38,740.8) (35,351.6)
Collections on loans............................................ 32,794.5 30,822.9
Proceeds from asset and receivable sales........................ 5,693.7 7,961.9
Purchases of assets to be leased................................ (1,672.1) (1,329.1)
Net increase in short-term factoring receivables................ (529.4) (1,219.9)
Purchase of finance receivable portfolios....................... (961.9) (26.0)
Purchase of investment securities............................... (7.2) (149.9)
Other........................................................... 30.2 107.0
---------- -----------
Net cash flows (used for) provided by investing activities...... (3,393.0) 815.3
---------- -----------
Cash Flows From Financing Activities
Proceeds from the issuance of variable and fixed-rate notes..... 8,608.9 12,568.4
Repayments of variable and fixed-rate notes..................... (6,316.3) (10,781.3)
Net decrease in commercial paper................................ (38.8) (3,333.1)
Net repayments of non-recourse leveraged lease debt............. (96.8) (140.1)
Cash dividends paid............................................. (76.3) --
Purchase of treasury stock...................................... (1.2) --
Net capitalization from Tyco and Tyco affiliates................ -- 668.6
Proceeds from the issuance of common stock...................... -- 254.6
---------- -----------
Net cash flows provided by (used for) financing activities...... 2,079.5 (762.9)
---------- -----------
Net increase in cash and cash equivalents....................... 232.4 972.9
Cash and cash equivalents, beginning of period.................. 2,036.6 1,301.5
---------- -----------
Cash and cash equivalents, end of period........................ $ 2,269.0 $ 2,274.4
========== ===========
Supplementary Cash Flow Disclosure
Interest paid................................................... $ 1,110.3 $ 1,208.3
Federal, foreign, state and local income taxes paid, net........ $ 53.1 $ 71.8

See Notes to Consolidated Financial Statements (Unaudited).

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 -- Summary of Significant Accounting Policies

CIT Group Inc., a Delaware corporation ("we," "CIT" or the "Company"), is
a leading global source of financing and leasing capital for companies in a wide
variety of industries, including many of today's leading industries and emerging
businesses, offering vendor, equipment, commercial, factoring, consumer, and
structured financing capabilities. CIT operates primarily in North America, with
locations in Europe, Latin America, Australia and the Asia-Pacific region.

These financial statements, which have been prepared in accordance with
the instructions to Form 10-Q, do not include all of the information and note
disclosures required by accounting principles generally accepted in the United
States ("GAAP") and should be read in conjunction with the Company's Annual
Report on Form 10-K for the three-month transition period ended December 31,
2002. These financial statements have not been examined by independent
accountants in accordance with generally accepted auditing standards, but in the
opinion of management include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of CIT's financial
position and results of operations. Certain period amounts have been
reclassified to conform to the current presentation.

On June 1, 2001, The CIT Group, Inc. was acquired by a wholly-owned
subsidiary of Tyco International Ltd. ("Tyco"), in a purchase business
combination recorded under the "push-down" method of accounting, resulting in a
new basis of accounting for the "successor" period beginning June 2, 2001 and
the recognition of related goodwill. On July 8, 2002, Tyco completed a sale of
100% of CIT's outstanding common stock in an initial public offering ("IPO").
Immediately prior to the offering, CIT was merged with its parent Tyco Capital
Holding, Inc. ("TCH"), a company used to acquire CIT. As a result, the
historical financial results of TCH are included in the historical consolidated
CIT financial statements.

CIT consolidates entities in which it owns or controls more than fifty
percent of the voting shares. Entities that are twenty to fifty percent owned by
CIT are included in other assets and presented at the corresponding share of
equity plus loans and advances. Entities in which CIT owns less than twenty
percent of the voting shares, and over which the Company has no significant
influence, are included in other assets at cost, less declines in value that are
other than temporary. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities", Qualifying Special Purpose Entities
utilized in securitizations are not consolidated. Interests in securitizations
are included in other assets. All significant inter-company transactions have
been eliminated.

On February 1, 2003, CIT adopted FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46") for Variable Interest
Entities ("VIEs") acquired after January 31, 2003. FIN 46 addresses the
identification of a VIE and the consolidation of a VIE's assets, liabilities and
results of operations in a company's financial statements. VIEs are certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 requires the consolidation of a VIE by its
primary beneficiary if the VIE does not effectively distribute the economic
risks and rewards of ownership among the parties involved. The primary
beneficiary is the entity that has the majority of the economic risks and
rewards. As a result of the delay in the implementation of FIN 46, announced on
October 9, 2003, VIEs in existence at February 1, 2003 for which CIT is the
primary beneficiary, will be consolidated in the Company's financial statements
effective December 31, 2003.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

account receivables transactions, as on-balance sheet financings. Certain VIEs
acquired primarily in conjunction with selected financing and/or private equity
transactions may be consolidated under FIN 46. The consolidation of these
entities will not have a significant impact on the Company's financial position
or results of operations. Due to the complexity of the new guidance and evolving
interpretations among accounting professionals, the Company will consider such
further guidance, if any, and continue assessing the accounting and disclosure
impact of FIN 46.

For guarantees issued or modified subsequent to December 31, 2002,
liabilities are recognized at the estimated fair value of the obligation
undertaken at the inception of the guarantee.

Effective July, 1, 2003, CIT adopted SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("SFAS 150"). As a result of this adoption, Preferred Capital Securities are
included in debt in the Consolidated Balance Sheet, and the related dividend
expense is included in interest expense on a pretax basis. As prior periods may
not be conformed to the current period presentation, the obligation and related
dividends are displayed above equity and below minority interest on a net of tax
basis in the consolidated balance sheet and income statement, respectively for
prior periods. On November 7, 2003, certain measurement and classification
provisions of SFAS 150, relating to certain mandatorily redeemable
non-controlling interests, were deferred indefinitely. The adoption of these
delayed provisions, which relate primarily to minority interests associated with
finite-lived entities, is not expected to have a significant impact on the
financial position or results of operations.

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

Nine Months Ended September 30,
-------------------------------
2003 2002
------ ---------
Net income (loss) as reported................... $411.7 $(6,882.8)
Stock-based compensation expense -- fair
value method, after tax....................... 18.5 5.7
------ ---------
Pro forma net income (loss)..................... $393.2 $(6,888.5)
====== =========
Basic earnings per share as reported............ $ 1.95 $ (32.53)
====== =========
Basic earnings per share pro forma.............. $ 1.86 $ (32.56)
====== =========
Diluted earnings per share as reported.......... $ 1.94 $ (32.53)
====== =========
Diluted earnings per share pro forma............ $ 1.85 $ (32.56)
====== =========

Note 2 -- Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. The diluted
EPS computation includes the potential impact of dilutive securities, including
stock options and restricted stock grants. The dilutive effect of stock options
is computed using the treasury stock method, which assumes the repurchase of
common shares by CIT at the average market price for the period. Options that do
not have a dilutive effect (because the exercise price is above the market
price) are not included in the denominator and averaged approximately 17.6
million and 18.0 million shares for the quarter and nine months ended September
30, 2003.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

The reconciliation of the numerator and denominator of basic EPS with that
of diluted EPS is presented for the quarter and nine months ended September 30,
2003 and 2002. The denominator for the nine months ended September 30, 2002
assumes the shares outstanding for the quarter were outstanding for the nine
months. ($ in millions, except per share amounts, which are in whole dollars;
share balances in thousands):

Quarter Ended September 30, 2003 Quarter Ended September 30, 2002
----------------------------------- ------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------

Basic EPS:
Income available to common
stockholders.................... $147.8 211,735 $0.70 $134.7 211,573 $0.64
Effect of Dilutive Securities:
Restricted shares................. -- 284 -- -- 122 --
Stock options..................... -- 1,510 0.01 -- -- --
------ ------- ----- ------ ------- -----
Diluted EPS.......................... $147.8 213,529 $0.69 $134.7 211,695 $0.64
====== ======= ===== ====== ======= =====

Nine Months Ended September 30, 2003 Nine Months Ended September 30, 2002
------------------------------------ ------------------------------------
Income Shares Per Share (Loss) Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------

Basic EPS:
Income available to common
stockholders.................... $411.7 211,633 $1.95 $(6,882.8) 211,573 $(32.53)
Effect of Dilutive Securities:
Restricted shares................. -- 355 -- -- -- --
Stock options..................... -- 510 0.01 -- -- --
------ ------- ----- --------- ------- -------
Diluted EPS.......................... $411.7 212,498 $1.94 $(6,882.8) 211,573 $(32.53)
====== ======= ===== ========= ======= =======

Note 3 -- Derivative Financial Instruments

The components of the adjustment to Accumulated Other Comprehensive Loss
for derivatives qualifying as hedges of future cash flows at December 31, 2002
and at September 30, 2003 are presented in the following table ($ in millions):

Adjustment of
Fair Value of Income Tax Net Unrealized
Derivatives Effects Loss
----------- ---------- --------------

Balance at December 31, 2002....................................... $(190.8) $(72.5) $(118.3)
Changes in values of derivatives qualifying
as cash flow hedges.............................................. 18.7 7.3 11.4
------- ------ -------
Balance at September 30, 2003...................................... $(172.1) $(65.2) $(106.9)
======= ====== =======

The unrealized loss as of September 30, 2003, presented in the preceding
table, primarily reflects our use of interest rate swaps to convert
variable-rate debt to fixed-rate debt, and lower market interest rates. For the
quarter ended September 30, 2003, the ineffective portion of changes in the fair
value of cash flow hedges amounted to $0.4 million and has been recorded as a
decrease to interest expense. For the nine months ended September 30, 2003, the
ineffective portion of changes in the fair value of cash flow hedges was a
nominal charge to interest expense. Assuming no change in interest rates, $53.1
million, net of tax, of Accumulated Other Comprehensive Loss is expected to be
reclassified to earnings over the next twelve months as contractual cash
payments are made. The Accumulated Other Comprehensive Loss (along with the
corresponding swap liability) will be adjusted as market interest rates change
over the remaining life of the swaps.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

As part of managing the exposure to changes in market interest rates, CIT,
as an end-user, enters into various interest rate swap transactions, which are
transacted in over-the-counter markets with other financial institutions acting
as principal counter-parties. We use derivatives for hedging purposes only, and
do not enter into derivative financial instruments for trading or speculative
purposes. To ensure both appropriate use as a hedge and hedge accounting
treatment under SFAS 133, derivatives entered into are designated according to a
hedge objective against a specific liability, including commercial paper or a
specifically underwritten debt issue. The notional amounts, rates, indices and
maturities of our derivatives are required to closely match the related terms of
our hedged liabilities. CIT exchanges variable-rate interest on certain debt
instruments for fixed-rate amounts. These interest rate swaps are designated as
cash flow hedges. We also exchange fixed-rate interest on certain of our debt
for variable-rate amounts. These interest rate swaps are designated as fair
value hedges.

The following table presents the notional principal amounts of interest
rate swaps by class and the corresponding hedged liability position at September
30, 2003 and December 31, 2002 ($ in millions):

Notional Amount
------------------------------------
Interest Rate Swaps September 30, 2003 December 31, 2002 Comments
- ------------------- ------------------ ----------------- --------

Floating to fixed-rate swaps-- Effectively converts the interest
cash flow hedges..................... $2,729.4 $3,280.5 rate on an equivalent amount of
commercial paper and variable-rate
notes to a fixed rate.

Fixed to floating-rate swaps-- Effectively converts the interest
fair value hedges.................... 7,058.2 4,489.8 rate on an equivalent amount of
-------- -------- fixed-rate notes to a variable rate.
Total interest rate swaps ............. $9,787.6 $7,770.3
======== ========

CIT utilizes trusts as part of its ongoing securitization programs. As
part of these related activities, the Company enters into hedge transactions
with the trusts in order to protect the trusts against interest rate risk. CIT
offsets its associated risk by entering into substantially offsetting swap
transactions with third parties. The net effect is to protect the trusts and CIT
from interest rate risk. The notional amount of these swaps was $2.9 billion at
September 30, 2003.

CIT also utilizes foreign currency exchange forward contracts to hedge
currency risk underlying its net investments in foreign operations and cross
currency interest rate swaps to hedge both foreign currency and interest rate
risk underlying foreign debt. At September 30, 2003, CIT was party to foreign
currency exchange forward contracts with notional amounts totaling $2.3 billion
and maturities ranging from 2003 to 2006. CIT was also party to cross currency
interest rate swaps with notional amounts totaling $1.3 billion and maturities
ranging from 2004 to 2027.

During the quarter ended September 30, 2003, the Company executed treasury
lock interest rate hedges, totaling $1.2 billion in notional amount, with
forward dates ranging between December 15, 2003 and January 15, 2004. These
derivative contracts, which lock in a fixed rate of interest, were executed in
conjunction with planned term-debt refinancings. These contracts, which were
designated as cash flow hedges of a forecasted transaction, insulate CIT from
potential movement in U.S. Treasury rates until refinancing. The refinancing is
related to the call of $1.25 billion of debt securities outstanding. See
"Liquidity" in Management's Discussion and Analysis of Financial Condition and
Results of Operations for more information.

Note 4 -- Business Segment Information

Segment reporting was modified, beginning in the prior quarter, to reflect
Equipment Finance and Capital Finance as separate segments. Previously, these
two strategic business units were combined as the Equipment Financing and
Leasing segment. This new presentation is intended to facilitate the analysis of
the Company's results for users of the financial statements.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

The selected financial information by business segment presented below is
based upon a fixed leverage ratio across business units and the allocation of
most corporate expenses. The business segments' operating margins and net income
for the nine months ended September 30, 2003 include the allocation (from
Corporate and Other) of additional borrowing costs stemming from the 2002
disruption to the Company's funding base and increased liquidity levels. These
additional borrowing and liquidity costs had a greater impact in 2003 than in
2002 and were included in Corporate and Other in 2002. Corporate and Other also
included the 2002 non-cash goodwill impairment charge, which substantially
wrote-off the goodwill established in conjunction with the June 2001 fresh start
accounting.

During the quarter ended March 31, 2003, in order to better align
competencies, we transferred certain small business loans and leases, including
the small business lending unit, totaling $1,078.6 million from Equipment
Finance to Specialty Finance. Prior periods have not been restated to conform to
this current presentation ($ in millions).

Corporate
Specialty Equipment Capital Commercial Structured Total and
Finance Finance Finance Finance Finance Segments Other Consolidated
------- ------- ------- ------- ------- -------- ----- ------------

For the quarter ended
September 30, 2003
Operating margin........... $ 218.7 $ 35.8 $ 37.7 $ 131.0 $ 36.3 $ 459.5 $ 20.6 $ 480.1
Income taxes............... 45.7 5.8 7.9 34.3 11.1 104.8 (10.2) 94.6
Operating earnings (loss).. 71.6 9.0 12.3 53.8 17.1 163.8 (16.0) 147.8

At or for the nine months
ended September 30, 2003
Operating margin........... $ 613.6 $ 111.8 $ 98.8 $ 392.2 $ 96.2 $ 1,312.6 $ 69.9 $ 1,382.5
Income taxes............... 119.3 17.7 18.6 104.4 28.2 288.2 (21.4) 266.8
Operating earnings (loss).. 186.8 27.6 29.1 163.5 44.0 451.0 (39.3) 411.7
Total financing and
leasing assets.......... 12,126.9 6,732.6 7,068.3 9,871.1 3,360.8 39,159.7 -- 39,159.7
Total managed assets....... 18,763.4 10,237.1 7,068.3 9,871.1 3,360.8 49,300.7 -- 49,300.7

For the quarter ended
September 30, 2002
Operating margin........... $ 205.4 $ 53.7 $ 47.3 $ 123.5 $ 33.0 $ 462.9 $ (5.8) $ 457.1
Income taxes............... 42.2 4.6 12.5 31.5 10.0 100.8 (16.7) 84.1
Operating earnings (loss).. 68.9 7.6 20.4 51.4 16.4 164.7 (30.0) 134.7

At or for the nine months
ended September 30, 2002
Operating margin........... $ 681.4 $ 258.0 $ 136.0 $ 353.4 $ 99.5 $ 1,528.3 $ (341.5) $ 1,186.8
Income taxes............... 154.9 48.5 35.8 89.7 29.6 358.5 (102.7) 255.8
Operating earnings (loss).. 252.7 79.2 58.4 146.3 48.3 584.9 (7,467.7) (6,882.8)
Total financing and
leasing assets.......... 10,119.4 8,398.8 5,868.4 8,910.2 3,090.8 36,387.6 -- 36,387.6
Total managed assets....... 16,970.0 12,782.9 5,868.4 8,910.2 3,090.8 47,622.3 -- 47,622.3

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

Note 5 -- Concentrations

The following table presents the geographic and industry compositions of
financing and leasing portfolio assets, based on the location and industry of
the customer, at September 30, 2003 and December 31, 2002 ($ in millions):

At September 30, 2003 At December 31, 2002
--------------------- --------------------
Amount Percent Amount Percent
------ ------- ------ -------

North America:
Northeast ................................... $ 8,140.3 20.8% $ 7,833.8 21.8%
West ........................................ 7,414.1 18.9% 6,223.8 17.4%
Midwest ..................................... 5,981.0 15.3% 5,748.3 16.0%
Southeast ................................... 5,374.1 13.7% 4,946.8 13.8%
Southwest ................................... 4,290.3 11.0% 3,691.9 10.3%
Canada ...................................... 1,943.9 5.0% 1,804.9 5.0%
--------- ----- --------- -----
Total North America ............................ 33,143.7 84.7% 30,249.5 84.3%
Other foreign .................................. 6,016.0 15.3% 5,625.2 15.7%
--------- ----- --------- -----
Total ....................................... $39,159.7 100.0% $35,874.7 100.0%
========= ===== ========= =====

At September 30, 2003 At December 31, 2002
--------------------- ---------------------
Amount Percent Amount Percent
------ ------- ------ -------

Manufacturing(1) (no industry greater than 2.9%) $ 7,420.7 18.9% $ 7,114.3 19.8%
Retail(2) ...................................... 5,179.3 13.2% 4,053.6 11.3%
Commercial Airlines ............................ 4,911.0 12.5% 4,570.3 12.7%
Transportation(3) .............................. 2,946.8 7.5% 2,703.9 7.5%
Consumer based lending-- home mortgage ......... 2,593.1 6.6% 1,292.7 3.6%
Service industries ............................. 2,510.8 6.4% 1,571.1 4.4%
Consumer based lending-- non-real estate(4) .... 1,942.1 5.0% 2,435.0 6.8%
Construction equipment ......................... 1,638.7 4.2% 1,712.7 4.8%
Communications(5) .............................. 1,396.3 3.6% 1,662.6 4.6%
Wholesaling .................................... 1,286.1 3.3% 1,305.2 3.6%
Automotive services ............................ 1,157.3 3.0% 1,138.8 3.2%
Other (no industry greater than 3.0%)(6) ....... 6,177.5 15.8% 6,314.5 17.7%
--------- ----- --------- -----
Total ....................................... $39,159.7 100.0% $35,874.7 100.0%
========= ===== ========= =====

- --------------------------------------------------------------------------------
(1) Includes manufacturers of textiles and apparel, industrial machinery and
equipment, electrical and electronic equipment and other.

(2) Includes retailers of apparel (6.0%) and general merchandise (3.6%).

(3) Includes rail, 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) Includes $600.2 million and $685.8 million of telecommunication related
assets at September 30, 2003 and December 31, 2002, respectively.

(6) Included in "Other" above are financing and leasing assets in the energy,
power and utilities sectors, which totaled $929.7 million, or 2.4% of total
financing and leasing assets at September 30, 2003. This amount includes
approximately $617 million in project financing and $264 million in rail
cars on lease.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

Note 6 -- Accumulated Other Comprehensive Loss

The following table details the September 30, 2003 and December 31, 2002
components of accumulated other comprehensive loss, net of tax ($ in millions):

September 30, December 31,
2003 2002
------------- -----------

Changes in fair values of derivatives
qualifying as cash flow hedges ................... $ (106.9) $ (118.3)
Foreign currency translation adjustments ........... (102.5) (75.6)
Minimum pension liability adjustments .............. (22.3) (20.5)
Unrealized gain on equity and securitization
investments ...................................... 4.1 13.7
-------- --------
Total accumulated other comprehensive loss ...... $ (227.6) $ (200.7)
======== ========

During the quarter ended September 30, 2003, the Company contributed $41.9
million to the CIT Group Inc. Retirement Plan. This contribution, and the
expected additional contribution planned for the quarter ended December 31,
2003, has the potential to substantially reduce the minimum pension liability
adjustment.

Note 7 -- Related Party Transactions

CIT is a partner with Dell Inc. ("Dell") in Dell Financial Services L.P.
("DFS"), a joint venture that offers financing to Dell customers. The joint
venture provides Dell with financing and leasing capabilities that are
complementary to its product offerings and provides CIT with a steady source of
new financings. CIT acquired this relationship through an acquisition during
November 1999, and the current agreement extends until October 2005. CIT
regularly purchases finance receivables from DFS at a premium, portions of which
are typically securitized within 90 days of purchase from DFS. CIT has limited
recourse back to DFS on defaulted contracts. In accordance with the joint
venture agreement, net income generated by DFS as determined under U.S. GAAP is
allocated 70% to Dell and 30% to CIT, after CIT has recovered any cumulative
losses. The DFS board of directors voting representation is equally weighted
between designees of CIT and Dell and an independent director. Any losses
generated by DFS as determined under U.S. GAAP are allocated to CIT. DFS is not
consolidated in CIT's September 30, 2003 financial statements and is accounted
for under the equity method. At September 30, 2003, financing and leasing assets
originated by DFS and purchased by CIT (included in the CIT Consolidated Balance
Sheet) were $1.4 billion whereas securitized assets included in managed assets
were $2.3 billion. In addition to the owned and securitized assets acquired from
DFS, CIT's maximum exposure to loss with respect to activities of the joint
venture is approximately $218 million pretax at September 30, 2003, which is
comprised of the investment in and loans to the joint venture.

CIT also has a joint venture arrangement with Snap-on Incorporated
("Snap-on") that has a similar business purpose and model to the DFS arrangement
described above, including credit recourse on defaulted receivables. CIT
acquired this relationship through an acquisition during November 1999. The
agreement with Snap-on extends until January 2007. CIT and Snap-on have 50%
ownership interests, 50% board of directors representation and share income and
losses equally. The Snap-on joint venture is accounted for under the equity
method and is not consolidated in CIT's financial statements. As of September
30, 2003, the related financing and leasing assets and securitized assets were
$1.1 billion and $0.1 billion, respectively. In addition to the owned and
securitized assets purchased from the Snap-on joint venture, CIT's maximum
exposure to loss with respect to activities of the joint venture is
approximately $14 million pretax at September 30, 2003, which is comprised of
the investment in and loans to the joint venture.

Since December 2000, CIT has been a joint venture partner with Canadian
Imperial Bank of Commerce ("CIBC") in an entity that is engaged in asset-based
lending in Canada. Both CIT and CIBC have a 50% ownership interest in the joint
venture and share income and losses equally. This entity is not consolidated in
CIT's financial statements and is accounted for under the equity method. As of
September 30, 2003, CIT's maximum exposure to loss with respect to activities of
the joint venture is $115 million pretax, which is comprised of the investment
in and loans to the joint venture.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

CIT invests in various trusts, partnerships, and limited liability
corporations established in conjunction with structured financing transactions
of equipment, power and infrastructure projects. CIT's interests in certain of
these entities were acquired by CIT in November 1999, and others were
subsequently entered into in the normal course of business. At September 30,
2003, other assets included $21 million of investments in non-consolidated
entities relating to such transactions that are accounted for under the equity
or cost methods. This investment is CIT's maximum exposure to loss with respect
to these interests as of September 30, 2003.

As of September 30, 2002, CIT bought receivables totaling $350.0 million
from certain subsidiaries of Tyco in a factoring transaction on an arms-length
basis. CIT has continued to purchase receivables from Tyco in similar factoring
transactions through September 30, 2003 on an arms-length basis.

Note 8 -- Commitments and Contingencies

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

Guarantees are issued primarily in conjunction with CIT's factoring
product, whereby CIT provides the client with credit protection for its trade
receivables without actually purchasing the receivables. The trade terms are
generally sixty days or less. In the event that the customer is unable to pay
according to the contractual terms, then the receivables would be purchased.

As of September 30, 2003, there were no outstanding liabilities relating
to these credit-related commitments or guarantees, as amounts are generally
billed and collected on a monthly basis.

The accompanying table summarizes the contractual amounts of
credit-related commitments. The reduction in guarantees outstanding from
December 31, 2002 reflects the transition to on-balance sheet factoring
products, which are included in credit balances of factoring clients in the CIT
consolidated balance sheet ($ in millions).

At
December 31,
At September 30, 2003 2002
----------------------------------- -----------
Due to Expire
---------------------
Within After Total Total
One Year One Year Outstanding Outstanding
-------- -------- ----------- -----------

Unused commitments to extend credit:
Financing and leasing assets.......................... $933.2 $4,293.4 $5,226.6 $3,618.9
Letters of credit and acceptances:
Standby letters of credit............................. 520.2 18.8 539.0 519.8
Other letters of credit............................... 478.5 23.8 502.3 583.3
Acceptances........................................... 14.0 -- 14.0 5.6
Guarantees.............................................. 104.2 -- 104.2 745.8
Venture capital fund and equity commitments............. -- 140.7 140.7 164.9

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

As of September 30, 2003, commitments to purchase commercial aircraft from
both Airbus Industrie and The Boeing Company totaled 67 units through 2007 at an
approximate value of $3,153.0 million as detailed below ($ in millions):

Calendar Year: Amount Units
- -------------- ------ -----
2003................................................. $ 201.0 5
2004................................................. 604.0 14
2005................................................. 1,072.0 24
2006................................................. 1,016.0 19
2007................................................. 260.0 5
-------- --
Total................................................ $3,153.0 67
======== ==

The order amounts exclude CIT's options to purchase additional aircraft.
All of the 2003 units and six of the 2004 units have lease commitments in place.

Outstanding commitments to purchase equipment, other than the aircraft
detailed above, totaled $124.2 million at September 30, 2003. In addition, CIT
is party to a railcar sale-leaseback transaction under which it is obligated to
pay a remaining total of $486 million, including approximately $28 million per
year through 2010 and declining thereafter through 2024, which is expected to be
more than offset by CIT's re-lease of the assets, contingent on its ability to
maintain railcar usage.

CIT has guaranteed the public and private debt securities of a number of
its wholly-owned, consolidated subsidiaries, including those disclosed in Note
13 -- Summarized Financial Information of Subsidiaries. In the normal course of
business, various consolidated CIT subsidiaries have entered into other credit
agreements and certain derivative transactions with financial institutions,
which are guaranteed by CIT and included in the consolidated financial
statements. These transactions are generally used by CIT's subsidiaries outside
of the U.S. to allow the local subsidiary to borrow funds in local currencies.
In addition, CIT has guaranteed, on behalf of certain non-consolidated
subsidiaries, $9.5 million of third party debt, which is not reflected in the
consolidated balance sheet at September 30, 2003.

Note 9 -- Legal Proceedings

On April 10, 2003, a putative class action lawsuit, asserting claims under
the Securities Act of 1933, was filed in the United States District Court for
the Southern District of New York against CIT, its Chief Executive Officer and
its Chief Financial Officer. The lawsuit contained allegations that the
registration statement and prospectus prepared and filed in connection with the
IPO were materially false and misleading, principally with respect to the
adequacy of CIT's telecommunications-related loan loss reserves at the time. The
lawsuit purported to have been brought on behalf of all those who purchased CIT
common stock in or traceable to the IPO, and sought, among other relief,
unspecified damages or rescission for those alleged class members who still hold
CIT stock and unspecified damages for other alleged class members. On June 25,
2003, by order of the United States District Court, the lawsuit was consolidated
with five other substantially similar suits, all of which had been filed after
April 10, 2003 and one of which named as defendants some of the underwriters in
the IPO and certain former directors of CIT (with respect to whom CIT may have
indemnification obligations). Glickenhaus & Co., a privately held investment
firm, was named lead plaintiff in the consolidated action.

On September 16, 2003, an amended and consolidated complaint was filed.
That complaint contains substantially the same allegations as the original
complaints. In addition to the foregoing, two similar suits have been brought by
certain shareholders on behalf of CIT against CIT and some of its present and
former directors under Delaware corporate law.

CIT believes that the allegations in each of these actions are without
merit and that its disclosures were proper, complete and accurate. CIT intends
to vigorously defend itself against these actions.

In addition, in the ordinary course of business, there are various legal
proceedings pending against CIT. Management believes that the aggregate
liabilities, if any, arising from such actions, including the class action suit
above, will not have a material adverse effect on the consolidated financial
position, results of operations or liquidity of CIT.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

Note 10 -- Severance and Facility Restructuring Reserves

The following table summarizes purchase accounting liabilities (pre-tax)
related to severance of employees and closing facilities that were recorded in
connection with the acquisition of CIT by Tyco, as well as utilization during
the current quarter ($ in millions):

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

Balance at December 31, 2002...................... 240 $ 17.2 22 $12.4 $ 29.6
Utilization....................................... (91) (11.9) (5) (4.6) (16.5)
Reduction......................................... (94) (1.7) -- -- (1.7)
--- ------ -- ----- ------
Balance at September 30, 2003..................... 55 $ 3.6 17 $ 7.8 $ 11.4
=== ====== == ===== ======

The downward revision to the severence reserves during the nine months
ended September 30, 2003 related to Specialty Finance restructuring activities
and was recorded as a reduction to goodwill.

The reserves remaining at September 30, 2003 relate largely to the
restructuring of the European operations. The facility reserves relate primarily
to shortfalls in sublease transactions and will be utilized over the remaining
lease terms, generally between 3 and 7 years. Severance reserves also include
amounts payable within the next year to individuals who chose to receive
payments on a periodic basis.

Note 11 -- Consolidating Financial Statements

The September 30, 2002 financial statements include the activity of TCH,
which was a wholly owned subsidiary of a Tyco affiliate and the holding company
for the acquisition of CIT by Tyco. In its capacity as the acquisition holding
company, TCH's activity included an outstanding loan from and related interest
expense and prepayment penalties payable to an affiliate of Tyco. Immediately
prior to the IPO of CIT on July 8, 2002, the prior activity of TCH (accumulated
net deficit) was eliminated by means of a capital contribution from Tyco. As a
result, the consolidated financial statements of CIT were not impacted by TCH
subsequent to June 30, 2002.

($ in millions) For the Nine Months Ended September 30, 2002
--------------------------------------------
CIT TCH Consolidated
--------- ------- ---------

Finance Income...................................................... $ 3,143.8 $ -- $ 3,143.8
Interest expense.................................................... 1,066.3 -- 1,066.3
--------- ------- ---------
Net finance income.................................................. 2,077.5 -- 2,077.5

Depreciation on operating lease equipment........................... 902.5 -- 902.5
--------- ------- ---------
Net finance margin.................................................. 1,175.0 -- 1,175.0
Provision for credit losses......................................... 675.4 -- 675.4
--------- ------- ---------
Net finance margin after provision for credit losses................ 499.6 -- 499.6
Other revenue....................................................... 687.2 -- 687.2
--------- ------- ---------
Operating margin.................................................... 1,186.8 -- 1,186.8
--------- ------- ---------
Salaries and general operating expenses............................. 692.9 14.8 707.7
Interest expense - TCH.............................................. -- 586.3 586.3
Goodwill impairment................................................. 6,511.7 -- 6,511.7
--------- ------- ---------
Operating expenses.................................................. 7,204.6 601.1 7,805.7
--------- ------- ---------
(Loss) before provision for income taxes............................ (6,017.8) (601.1) (6,618.9)
(Provision) for income taxes........................................ (188.3) (67.5) (255.8)
Dividends on preferred capital securities, after tax................ (8.1) -- (8.1)
--------- ------- ---------
Net (loss).......................................................... $(6,214.2) $(668.6) $(6,882.8)
========= ======= =========

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

Note 12 -- Accounting Change -- Goodwill

The Company periodically reviews and evaluates its goodwill and other
intangible assets for potential impairment. Effective October 1, 2001, the
Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142"), under which goodwill is no longer amortized but instead is assessed for
impairment at least annually. As part of the adoption, the Company allocated its
existing goodwill to each of its reporting units as of October 1, 2001. Under
the transition provisions of SFAS 142, there was no goodwill impairment as of
October 1, 2001.

During the quarter ended March 31, 2002, CIT's former parent, Tyco,
experienced disruptions to its business surrounding its announced break-up plan,
downgrades in its credit ratings, and a significant decline in its market
capitalization, which caused a disruption in the Company's ability to access
capital markets. As a result, management performed impairment analyses during
the quarters ended March 31, 2002 and June 30, 2002. These analyses resulted in
goodwill impairment charges of $4.513 billion and $1.999 billion for the
quarters ended March 31, 2002 and June 30, 2002, respectively.

The changes in the carrying amount of goodwill for the nine months ended
September 30, 2003 were as follows ($ in millions):

Specialty Capital Commercial
Finance Finance Finance Total
------- ------- ------- -----

Balance as of December 31, 2002............... $14.0 $ -- $370.4 $384.4
Goodwill related to rail acquisition ......... -- 5.4 -- 5.4
Severance reduction........................... (1.1) -- -- (1.1)
----- ----- ------ ------
Balance as of September 30, 2003.............. $12.9 $ 5.4 $370.4 $388.7
===== ===== ====== ======

The $5.4 million increase to goodwill during the nine months ended
September 30, 2003 related to the acquisition of a majority interest in Flex
Leasing Corporation by Capital Finance in April 2003. Flex, which is based in
San Francisco, California and was founded in 1996, leases approximately 7,200
general-purpose railcars, representing approximately $410.0 million in assets,
to railroads and shippers in the U.S. and Canada. The Flex results of operations
from the date of acquisition through September 30, 2003 are included in the CIT
consolidated results. Minority interest related to the Flex acquisition was
$39.9 million at September 30, 2003 and is reflected on the face of the
Consolidated Balance Sheet.

The downward revision to severence liabilities during the nine months
ended September 30, 2003 was related to Specialty Finance restucturing
activities and was recorded as a reduction to goodwill, as the severence
liability was established in conjunction with Tyco acquisition purchase
accounting adjustments.

Other intangible assets, net, comprised primarily of acquired customer
relationships, proprietary computer software and related transaction processes,
totaled $49.2 million and $16.5 million at September 30, 2003 and December 31,
2002, respectively, and are included in Other Assets on the Consolidated Balance
Sheets. The increase in other intangible assets during the nine months ended
September 30, 2003 was due to customer relationships acquired in the purchase of
a factoring portfolio in September 2003. Other intangible assets are being
amortized over periods ranging from five to twenty years on a straight-line
basis. Amortization expense totaled $3.3 million for each nine month period
ended September 30, 2003 and 2002.

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

Note 13 -- Summarized Financial Information of Subsidiaries

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

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

September 30, 2003
ASSETS
Net finance receivables.............. $ 1,509.4 $3,663.9 $1,154.4 $23,262.4 $ -- $29,590.1
Operating lease equipment, net....... -- 599.4 152.0 6,733.9 -- 7,485.3
Finance receivables held for sale.... -- 69.2 61.4 887.3 -- 1,017.9
Cash and cash equivalents............ 1,709.8 399.3 185.4 (25.5) -- 2,269.0
Other assets and goodwill............ 7,274.2 168.3 57.8 2,818.9 (5,180.9) 5,138.3
--------- -------- -------- --------- --------- ---------
Total Assets...................... $10,493.4 $4,900.1 $1,611.0 $33,677.0 $(5,180.9) $45,500.6
========= ======== ======== ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt................................. $30,340.9 $1,752.4 $1,543.7 $ 375.1 $ -- $34,012.1
Credit balances of
factoring clients................. -- -- -- 3,103.0 -- 3,103.0
Other liabilities.................... (25,028.4) 2,571.2 (1,489.3) 27,111.2 -- 3,164.7
--------- -------- -------- --------- --------- ---------
Total Liabilities................. 5,312.5 4,323.6 54.4 30,589.3 -- 40,279.8
Minority interest.................... -- -- -- 39.9 -- 39.9
Equity............................... 5,180.9 576.5 1,556.6 3,047.8 (5,180.9) 5,180.9
--------- -------- -------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity.............. $10,493.4 $4,900.1 $1,611.0 $33,677.0 $(5,180.9) $45,500.6
========= ======== ======== ========= ========= =========
December 31, 2002
ASSETS
Net finance receivables.............. $ 633.5 $3,541.4 $ 935.7 $21,749.9 $ -- $26,860.5
Operating lease equipment, net....... -- 734.6 157.1 5,812.9 -- 6,704.6
Finance receivables held for sale.... -- 159.1 62.8 991.5 -- 1,213.4
Cash and cash equivalents............ 1,310.9 231.1 293.7 200.9 -- 2,036.6
Other assets and goodwill............ 6,532.9 283.3 391.6 2,780.2 (4,870.7) 5,117.3
--------- -------- -------- --------- --------- ---------
Total Assets...................... $ 8,477.3 $4,949.5 $1,840.9 $31,535.4 $(4,870.7) $41,932.4
========= ======== ======== ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt................................. $27,760.7 $1,815.7 $2,116.8 $ (11.9) $ -- $31,681.3
Credit balances of
factoring clients................. -- -- -- 2,270.0 -- 2,270.0
Other liabilities.................... (24,154.1) 2,551.5 (1,396.1) 25,851.9 -- 2,853.2
--------- -------- -------- --------- --------- ---------
Total Liabilities................. 3,606.6 4,367.2 720.7 28,110.0 -- 36,804.5
Preferred capital securities......... -- -- -- 257.2 -- 257.2
Equity............................... 4,870.7 582.3 1,120.2 3,168.2 (4,870.7) 4,870.7
--------- -------- -------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity.............. $ 8,477.3 $4,949.5 $1,840.9 $31,535.4 $(4,870.7) $41,932.4
========= ======== ======== ========= ========= =========

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

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

Nine Months Ended
September 30, 2003
Finance income....................... $ 73.4 $ 592.1 $ 142.0 $1,996.1 $ -- $ 2,803.6
Interest expense..................... 3.0 244.5 12.2 744.6 -- 1,004.3
--------- ------- ------- -------- -------- ---------
Net finance income................... 70.4 347.6 129.8 1,251.5 -- 1,799.3
Depreciation on operating
lease equipment................... -- 287.2 53.6 463.3 -- 804.1
--------- ------- ------- -------- -------- ---------
Net finance margin................... 70.4 60.4 76.2 788.2 -- 995.2
Provision for credit losses.......... 30.6 33.9 12.2 209.8 -- 286.5
--------- ------- ------- -------- -------- ---------
Net finance margin, after provision
for credit losses................. 39.8 26.5 64.0 578.4 -- 708.7
Equity in net income of
subsidiaries...................... 392.8 -- -- -- (392.8) --
Other revenue........................ 4.2 86.8 74.2 508.6 -- 673.8
--------- ------- ------- -------- -------- ---------
Operating margin..................... 436.8 113.3 138.2 1,087.0 (392.8) 1,382.5
Operating expenses................... 30.0 134.4 73.3 460.6 -- 698.3
--------- ------- ------- -------- -------- ---------
Income (loss) before provision
for income taxes.................. 406.8 (21.1) 64.9 626.4 (392.8) 684.2
Benefit (provision) for
income taxes...................... 4.9 (30.8) (43.1) (197.8) -- (266.8)
Preferred dividends, after tax....... -- -- -- (5.4) -- (5.4)
Minority interest, after tax......... -- -- -- (0.3) -- (0.3)
--------- ------- ------- -------- -------- ---------
Net income (loss).................... $ 411.7 $ (51.9) $ 21.8 $ 422.9 $ (392.8) $ 411.7
========= ======= ======= ======== ======== =========
Nine Months Ended
September 30, 2002
Finance income....................... $ 147.8 $ 756.7 $169.0 $2,070.3 $ -- $ 3,143.8
Interest expense..................... (35.8) 318.6 3.8 779.7 -- 1,066.3
--------- ------- ------- -------- -------- ---------
Net finance income................... 183.6 438.1 165.2 1,290.6 -- 2,077.5
Depreciation on operating
lease equipment................... -- 363.4 73.9 465.2 -- 902.5
--------- ------- ------- -------- -------- ---------
Net finance margin................... 183.6 74.7 91.3 825.4 -- 1,175.0
Provision for credit losses.......... 281.3 192.8 22.1 179.2 -- 675.4
--------- ------- ------- -------- -------- ---------
Net finance margin, after
provision for credit losses....... (97.7) (118.1) 69.2 646.2 -- 499.6
Equity in net income of
subsidiaries...................... (275.3) -- -- -- 275.3 --
Other revenue........................ 20.6 95.6 68.2 502.8 -- 687.2
--------- ------- ------- -------- -------- ---------
Operating margin..................... (352.4) (22.5) 137.4 1,149.0 275.3 1,186.8
Operating expenses................... 6,567.4 145.6 43.9 1,048.8 -- 7,805.7
--------- ------- ------- -------- -------- ---------
Income (loss) before provision
for income taxes.................. (6,919.8) (168.1) 93.5 100.2 275.3 (6,618.9)
Benefit (provision) for
income taxes...................... 37.0 73.4 (47.1) (319.1) -- (255.8)
Preferred dividends, after tax....... -- -- -- (8.1) -- (8.1)
--------- ------- ------- -------- -------- ---------
Net (loss) income.................... $(6,882.8) $ (94.7) $ 46.4 $ (227.0) $ 275.3 $(6,882.8)
========= ======= ======= ======== ======== =========

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

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

Nine Months Ended
September 30, 2003
Cash Flows From
Operating Activities:
Net cash flows provided by
(used for) operations............. $ (164.9) $ 609.9 $ 1,544.5 $ (443.6) $ -- $ 1,545.9
--------- ------- --------- -------- -------- ---------
Cash Flows From
Investing Activities:
Net decrease in financing and
leasing assets.................... (904.6) (174.7) (254.8) (2,089.1) -- (3,423.2)
Decrease in inter-company loans
and investments................... (1,111.8) -- -- -- 1,111.8 --
Other................................ -- -- -- 30.2 -- 30.2
--------- ------- --------- -------- -------- ---------
Net cash flows (used for)
investing activities.............. (2,016.4) (174.7) (254.8) (2,058.9) 1,111.8 (3,393.0)
--------- ------- --------- -------- -------- ---------
Cash Flows From
Financing Activities:
Net increase (decrease) in debt...... 2,580.2 (63.3) (573.1) 213.2 -- 2,157.0
Inter-company financing.............. -- (203.7) (824.9) 2,140.4 (1,111.8) --
Cash dividends paid.................. -- -- -- (76.3) -- (76.3)
Purchase of treasury stock........... -- -- -- (1.2) -- (1.2)
--------- ------- --------- -------- -------- ---------
Net cash flows provided by
(used for) financing activities... 2,580.2 (267.0) (1,398.0) 2,276.1 (1,111.8) 2,079.5
--------- ------- --------- -------- -------- ---------
Net increase (decrease) in cash
and cash equivalents.............. 398.9 168.2 (108.3) (226.4) -- 232.4
Cash and cash equivalents,
beginning of period............... 1,310.9 231.1 293.7 200.9 -- 2,036.6
--------- ------- --------- -------- -------- ---------
Cash and cash equivalents,
end of period..................... $ 1,709.8 $ 399.3 $ 185.4 $ (25.5) $ -- $ 2,269.0
========= ======= ========= ======== ======== =========

CIT GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

Nine Months Ended
September 30, 2002
Cash Flows From
Operating Activities:
Net cash flows provided by
(used for) operations............. $ 474.5 $ (223.6) $(310.9) $ 980.5 $ -- $ 920.5
-------- -------- ------- ------- ------- ---------
Cash Flows From
Investing Activities:
Net increase in financing and
leasing assets.................... 513.2 381.6 243.4 (429.9) -- 708.3
Increase in inter-company loans
and investments................... (945.7) -- -- -- 945.7 --
Other................................ -- -- -- 107.0 -- 107.0
-------- -------- ------- ------- ------- ---------
Net cash flows provided by
(used for) investing activities... (432.5) 381.6 243.4 (322.9) 945.7 815.3
-------- -------- ------- ------- ------- ---------
Cash Flows From
Financing Activities:
Net increase (decrease) in debt...... (315.7) (1,065.0) 95.2 (400.6) -- (1,686.1)
Inter-company financing.............. -- 987.7 192.0 (234.0) (945.7) --
Capital contributions............. 668.9 -- -- (0.3) -- 668.6
Issuance of common stock ......... 254.6 -- -- -- -- 254.6
-------- -------- ------- ------- ------- ---------
Net cash flows (used for) provided
by financing activities........... 607.8 (77.3) 287.2 (634.9) (945.7) (762.9)
-------- -------- ------- ------- ------- ---------
Net increase (decrease) in cash
and cash equivalents.............. 649.8 80.7 219.7 22.7 -- 972.9
Cash and cash equivalents,
beginning of period............... 833.4 145.1 110.6 212.4 -- 1,301.5
-------- -------- ------- ------- ------- ---------
Cash and cash equivalents,
end of period..................... $1,483.2 $ 225.8 $ 330.3 $ 235.1 $ -- $ 2,274.4
======== ======== ======= ======= ======= =========

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

Overview

Net income for the quarter increased 9.7% from the prior year to $147.8
million. This increase reflected lower funding costs, lower charge-offs and
higher asset levels, which resulted in improved risk adjusted margin. The
quarter over prior-year quarter comparisons also benefitted from lower venture
capital losses. The increase in 2003 net income - before charges for the nine
months ended September 30, 2003, was due primarily to the specific
telecommunication and Argentine reserving actions in the first half of 2002,
which totalled $207.7 million after tax. Excluding the impact of the reserving
actions, the nine month comparisons reflect lower current year interest margin,
due to higher borrowing costs resulting from the funding base disruption.

Managed assets totaled $49.3 billion at September 30, 2003, versus $46.4
billion at December 31, 2002 and $47.6 billion at September 30, 2002. Financing
and leasing portfolio assets totaled $39.2 billion at September 30, 2003, versus
$35.9 billion at December 31, 2002, and $36.4 billion at September 30, 2002. The
portfolio growth for the current nine month period was primarily in the
Commercial Finance and Capital Finance segments. The Commercial Finance trend
reflected both seasonal growth and a portfolio acquisition in the factoring
business as well as strong asset-based lending growth. The Capital Finance
increase in the operating lease portfolio included new aircraft deliveries and
the acquisition of a rail portfolio. Home equity receivables also grew in the
Specialty Finance segment.

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

Key Business Initiatives and Trends

During the nine months ended September 30, 2003, we have restored our
funding base as evidenced by our repayment in full of previously drawn bank
lines, our consistent access to both the commercial paper and term debt markets
and the significant lowering of our term debt quality spreads (interest rate
cost over U.S. treasury rates) to pre-2002 levels. Our funding base was
disrupted in 2002 following our former parent's announcement of its break-up
plan and intent to sell CIT.

The past few years' weak economic conditions resulted in increased
defaults and downward pressure on collateral values, particularly in our
Equipment Finance segment. In response, we intensified our credit and collection
efforts, selectively tightened credit underwriting standards and strengthened
credit loss reserves. We have seen a significant improvement in our credit
metrics over recent quarters.

A more recent business initiative has been the pursuit of balanced growth,
focusing on core markets served through our strategic businesses. While organic
growth has been modest, consistent with the economic environment, we have
supplemented growth with strategic portfolio purchases where we benefit from
operating leverage attainable through our existing platforms. During the nine
months ended September 30, 2003, we completed the acquisition of Flex Leasing, a
railcar company, and the purchase of a significant factoring portfolio.

We continue to run off our venture capital portfolio as we are no longer
originating new investments, and we are exploring other more rapid exit
opportunities, including the possible sale of our direct investment portfolio.
If we were to pursue an outright sale, and thereby change our disposition
strategy, a sale-related disposition loss is possible.

Since our IPO in July of 2002, we have readily accessed the term markets,
issuing an aggregate $12.6 billion in term debt, comprised of $6.7 billion in
floating-rate debt and $5.9 billion in fixed-rate debt. These totals include
$2.0 billion issued through a retail note program, which was initiated in
November 2002.

The funding base disruption in the first half of 2002 resulted in a period
of increased cost of funds due to our borrowing spreads being higher than
traditionally experienced. The following table summarizes the trend in our
quality spreads in relation to 5-year treasuries. Amounts are in basis points
and represent the average spread during the stated periods:

Three Months Ended Years Ended
-------------------------------------- --------------------------------------------
September 30, June 30, March 31, September 30, September 30, December 31,
2003 2003 2003 2002 2001 2000
------------- -------- --------- ------------- ------------- ------------

Average spread over
U.S. Treasuries .......... 95 152 215 313 147 154

On October 27, 2003, we issued $500.0 million of 5-year senior fixed-rate
notes at 82 basis points over Treasuries.

Net Finance Margin

A comparison of finance income and net finance margin is set forth below
($ in millions):

Quarter Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------

Finance income....................................... $ 921.2 $ 1,015.2 $ 2,803.6 $ 3,143.8
Interest expense..................................... 326.5 347.8 1,004.3 1,066.3
--------- --------- --------- ---------
Net finance income................................. 594.7 667.4 1,799.3 2,077.5
Depreciation on operating lease equipment............ 252.4 296.6 804.1 902.5
--------- --------- --------- ---------
Net finance margin................................. $ 342.3 $ 370.8 $ 995.2 $ 1,175.0
========= ========= ========= =========
Average earning assets ("AEA")....................... $36,072.4 $33,959.4 $35,559.0 $34,674.5
========= ========= ========= =========
As a % of AEA:
Finance income....................................... 10.22% 11.96% 10.51% 12.09%
Interest expense..................................... 3.62% 4.10% 3.76% 4.10%
--------- --------- --------- ---------
Net finance income................................. 6.60% 7.86% 6.75% 7.99%
Depreciation on operating lease equipment............ 2.80% 3.49% 3.02% 3.47%
--------- --------- --------- ---------
Net finance margin as a % of AEA..................... 3.80% 4.37% 3.73% 4.52%
========= ========= ========= =========

The debt quality spread factors discussed previously in the "Key Business
Initiatives and Trends" section adversely impacted interest margin in relation
to 2002 periods. Finance income reflected the decline in market interest rates
from September 2002. However, interest expense did not fully reflect the
corresponding decrease in market interest rates, because the decrease was in
part offset by the draw down of bank facilities to pay off commercial paper, the
issuance of term debt at wider credit spreads and higher levels of excess cash
maintained for liquidity purposes.

Finance income (interest on loans and lease rentals) for the quarter ended
September 30, 2003 decreased $94.0 million from the same quarter in 2002 and
decreased $340.2 million for the nine months ended September 30, 2003 from the
prior year nine months. AEA for the quarter and nine months ended September 30,
2003 increased 6.2% and 2.6% from the prior year periods. However, the impact of
lower market interest rates more than offset the higher asset levels in the
finance income comparisons with 2002. This trend was also reflected in an 11.6%
reduction in operating lease rentals to $364.3 million from $412.3 million for
the prior year quarter and an 11.4% reduction to $1,123.7 million from $1,268.9
million for the prior year nine months, primarily resulting from lower rentals
on the aerospace portfolio due to the commercial airline industry downturn.

Interest expense as a percentage of AEA averaged 3.62% and 3.76% for the
quarter and nine months ended September 30, 2003, compared to 4.10% for both the
quarter and nine months ended September 30, 2002, as the favorable impact of
lower market interest rates was partially offset by wider borrowing spreads and
the higher cost of non-callable funding done following the funding base
disruption in the first half of 2002. As a result of adopting SFAS 150,
preferred capital securities dividends are reflected in interest expense for the
quarter ended September 30, 2003. For prior periods, these amounts are reflected
as minority interest net of tax. This change reduces net finance margin by
approximately 5 basis points in relation to prior periods. At September 30,
2003, CIT had

$4.9 billion in outstanding commercial paper and bank facilities were undrawn.
At December 31, 2002 and September 30, 2002, commercial paper outstanding was
$5.0 billion and $4.7 billion, respectively, while drawn commercial bank lines
were $2.1 billion and $4.0 billion, respectively.

The operating lease equipment portfolio was $7.5 billion at September 30,
2003, compared to $6.7 billion at December 31, 2002 and $6.6 billion at
September 30, 2002. The following table summarizes the total operating lease
portfolio by segment ($ in millions).

September 30, 2003 December 31, 2002 September 30, 2002
------------------ ----------------- ------------------

Capital Finance................ $5,859.4 $4,719.9 $4,388.9
Specialty Finance.............. 1,043.4 1,257.3 1,353.2
Equipment Finance.............. 461.7 668.3 765.8
Structured Finance............. 120.8 59.1 59.5
-------- -------- --------
Total.......................... $7,485.3 $6,704.6 $6,567.4
======== ======== ========

The increase in the Capital Finance operating lease portfolio in 2003
largely reflects the deliveries of new commercial aircraft, while the decline in
the Specialty Finance operating lease portfolio reflects the continued trend
toward finance leases and loans in the technology portfolio.

The table below summarizes operating lease margin, both in amount and as a
percentage of average operating lease equipment for the respective periods ($ in
millions).

Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------

Rental income............................................. $ 364.3 $ 412.3 $1,123.7 $1,268.9
Depreciation expense...................................... 252.4 296.6 804.1 902.5
-------- -------- -------- --------
Operating lease margin.................................. $ 111.9 $ 115.7 $ 319.6 $ 366.4
======== ======== ======== ========
Average operating lease equipment......................... $7,458.9 $6,615.0 $7,151.1 $6,597.3
======== ======== ======== ========
As a % of Average Operating Lease Equipment:
Rental income............................................. 19.5% 24.9% 21.0% 25.6%
Depreciation expense...................................... 13.5% 17.9% 15.0% 18.2%
-------- -------- -------- --------
Operating lease margin.................................. 6.0% 7.0% 6.0% 7.4%
======== ======== ======== ========

The decline in both operating lease margin and its components for the
quarter and nine months ended September 30, 2003 from the prior year periods
reflects a greater proportion of aircraft and rail assets with an average
depreciable life of 25 and 40 years, respectively, compared to smaller-ticket
asset lives generally of 3 years in the Specialty Finance and Equipment Finance
portfolios, as well as lower rentals on the aerospace portfolio due to the
commercial airline industry downturn.

Net Finance Margin After Provision for Credit Losses

The net finance margin after provision for credit losses (risk adjusted
interest margin) for the quarter and nine months ended September 30, 2003
increased by $11.3 million and $209.1 million to $259.4 million and $708.7
million from $248.1 million and $499.6 million for the comparable periods in
2002. These amounts equated to risk adjusted margins of 2.88% and 2.92% as a
percentage of AEA for the quarters ended September 30, 2003 and 2002, and 2.66%
and 1.92% for the nine months ended September 30, 2003 and 2002. The improved
risk adjusted margin in 2003 for the nine months largely reflect the impact of
specific reserving actions in 2002 relating to the telecommunications portfolio
and Argentine exposures. These reserving actions totaled $335.0 million (1.29%
as a percentage of AEA) for the nine months ended September 30, 2002.

The positive impact on risk adjusted margin, before the benefit of
refinancing at better rates, due to fair value adjustments to mark receivables
and debt to market remaining from the Tyco acquisition was 15 and 47 basis
points for the quarters ended September 30, 2003 and 2002, and 16 and 44 basis
points for the nine months ended September 30, 2003 and 2002.

In conjunction with the June 2001 acquisition-related fresh start
accounting, we used discounted cash flow projection analysis to estimate the
fair value of our various liquidating portfolios by modeling the portfolio
revenues, credit costs, servicing costs and other related expenses over the
remaining lives of the portfolios. These discounts are being accreted into
income as the portfolios liquidate. The positive impact on risk-adjusted margin
due to purchase accounting fair value adjustments related to the liquidating
portfolios was one and 16 basis points for the quarters ended September 30, 2003
and 2002 and was three basis points and 10 basis points for the nine months
ended September 30, 2003 and 2002.

Other Revenue

Other revenue for the quarter ended September 30, 2003 increased 5.6% to
$220.7 million from $209.0 million during the quarter ended September 30, 2002,
and for the nine months ended September 30, 2003 decreased 1.9% to $673.8
million from $687.2 million in the prior year period. Other revenue was 2.45%
and 2.46% as a percentage of AEA for the quarters ended September 30, 2003 and
2002 and 2.53% and 2.64% for the nine months ended September 30, 2003 and 2002.
The components of other revenue are set forth in the following table ($ in
millions):

Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2003 2002 2003 2002
------ ------ ------ ------

Fees and other income..................................... $151.5 $165.7 $430.8 $471.0
Factoring commissions..................................... 47.6 47.7 139.3 127.2
Gains on securitizations.................................. 18.3 29.2 82.8 121.0
Gains on sales of leasing equipment....................... 14.6 2.6 48.7 10.9
(Losses) on venture capital investments................... (11.3) (36.2) (27.8) (42.9)
------ ------ ------ ------
Total Other Revenue....................................... $220.7 $209.0 $673.8 $687.2
====== ====== ====== ======

The increase in total other revenue for the quarter was driven primarily
by reduced venture capital losses from 2002 levels. The prior year quarter and
nine months included an unusually high level of securitization activity due to
the disruption to our historical funding sources and the use of securitization
as an alternate funding source. Gains from the sales of leasing equipment were
up primarily in the Specialty Finance and Equipment Finance segments, reflecting
end-of-lease equipment sales of small to mid-ticket equipment. The reduction in
fees and other income reflected the continuation of lower net securitization
revenues in relation to the prior year, while the year-to-date amount for 2003
included a modest loss on the sale of a portion of the liquidating franchise
finance portfolio. The trend in fees and other income also reflects a migration
in new volume away from larger-ticket, DIP (debtor-in-possession) financings
back to more traditional, smaller working capital asset-based lending
facilities.

The following table presents information regarding securitization gains
included in the table above ($ in millions):

Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- ----------------------
2003 2002 2003 2002
---- ---- ---- ----

Volume securitized(1)..................................... $1,317.5 $980.0 $4,207.4 $6,444.6
Gains..................................................... $18.3 $29.2 $82.8 $121.0
Gains as a percentage of volume securitized............... 1.39% 2.98% 1.97% 1.88%

- --------------------------------------------------------------------------------
(1) Excludes short-term trade receivables securitized in 2002 for liquidity
purposes at no gain.

The lower gain as a percentage of volume securitized for the current
quarter reflects the sale of equipment assets from a conduit to a public term
structure (at no gain), the sale of a higher proportion of lower spread, shorter
duration assets and no consumer home equity loan sales this quarter. The greater
year to date volume securitized in 2002 was done primarily to meet funding and
liquidity needs.

The key assumptions used in measuring the retained interests at the date
of securitization for transactions completed during the nine months ended
September 30, 2003 were as follows:

Commercial Equipment Consumer
--------------------------- --------
Specialty Equipment Home
Finance Finance Equity
------- ------- ------

Weighted average prepayment speed......................... 32.21% 12.54% 24.40%
Weighted average expected credit losses................... 0.48% 1.12% 0.90%
Weighted average discount rate............................ 10.08% 9.00% 13.00%
Weighted average life (in years).......................... 1.29 1.88 3.51

Key assumptions used in calculating the fair value of the retained interests in
securitized assets by product type at September 30, 2003 were as follows:

Commercial Equipment Consumer
--------------------- ---------------------------
Manufactured
Specialty Equipment Housing & Recreational
Finance Finance Home Equity Vehicle & Boat
------- ------- ----------- --------------

Weighted average prepayment speed......................... 24.03% 12.02% 26.12% 17.67%
Weighted average expected credit losses................... 0.98% 1.60% 1.21% 0.75%
Weighted average discount rate............................ 9.05% 10.07% 13.08% 14.18%
Weighted average life (in years).......................... 1.15 1.43 3.10 3.17

The Specialty Finance -- commercial securitized assets include receivables
originated to consumers through DFS.

Salaries and General Operating Expenses

The efficiency ratio and the ratio of salaries and general operating
expenses to average managed assets ("AMA") are two metrics that management uses
to monitor productivity and are set forth in the following table. The efficiency
ratio measures the level of expenses in relation to revenue earned, whereas the
AMA relationship measures the efficiency of expenses in relation to loans and
leases we collect and service represented by our managed asset base. The AMA is
used to better reflect the relationship of expenses recognized in the Statements
of Income with the asset sources that drive expenses ($ in millions).

Quarter Ended Nine Months Ended
September 30, September 30,
---------------------- --------------------
2003 2002 2003 2002
------ ------ ------ ------

Efficiency ratio(1)....................................... 42.2% 40.6% 41.8% 37.2%
Salaries and general operating expenses as a
percentage of AMA(2).................................... 2.06% 2.08% 2.04% 2.01%
Salaries and general operating expenses................... $237.5 $235.6 $698.3 $692.9

- --------------------------------------------------------------------------------
(1) Efficiency ratio is the ratio of salaries and general operating expenses to
operating margin, excluding the provision for credit losses.
(2) "AMA" means average managed assets, which is average earning assets plus
the average of finance receivables previously securitized and still managed
by us.

Salaries and general operating expenses for the quarter ended September
30, 2003 increased 0.8% from the prior year quarter to $237.5 million,
reflecting increased incentive compensation and other employee benefit expenses,
which were in part offset by lower collection and repossession expenses. For the
nine months ended September 30, 2003, salaries and general operating expenses
increased 0.8% from the prior year period to $698.3 million, reflecting similar
trends to the quarterly expense comparisons. Personnel was 5,780 at September
30, 2003, compared to 5,845 last quarter and 5,850 at September 30, 2002.

The deterioration in efficiency ratios for the quarter and nine months
ended September 30, 2003 to 42.2% and 41.8% from 40.6% and 37.2% for the
comparable periods of 2002 is the result of lower net finance margin in 2003. We
continue to target an efficiency ratio in the mid 30% area and an AMA ratio
under 2.00%, as we have some existing capacity to increase assets without
additional expense.

Expenses are monitored closely by business unit and corporate management,
and are reviewed monthly with our senior management as to trends and forecasts.
To ensure overall project cost control, an approval and review procedure is in
place for major capital expenditures, such as computer equipment and software,
including post-implementation evaluations.

Provision for Credit Losses

The provision for credit losses was $82.9 million and $286.5 million for
the quarter and nine months ended September 30, 2003 versus $122.7 million and
$675.4 million for the same periods last year. The nine month 2002 provision
included specific reserving actions related to our telecommunications portfolio
($200.0 million) and the economic reforms instituted by the Argentine government
that resulted in the mandatory conversion of dollar-denominated receivables into
the peso ($135.0 million).

Our provision for credit losses and reserve for credit losses are
presented in the following table ($ in millions):

For the Quarter Ended For the nine Months Ended
--------------------------- ---------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------

Balance beginning of period............................ $754.9 $808.9 $760.8 $496.4
------ ------ ------ ------
Provision for credit losses............................ 82.9 122.7 286.5 340.4
Provision for credit losses -- telecommunications...... -- -- -- 200.0
Provision for credit losses -- Argentine exposure...... -- -- -- 135.0
Reserves relating to dispositions, acquisitions, other. 5.3 (12.8) 18.5 (14.6)
------ ------ ------ ------
Additions to reserve for credit losses............... 88.2 109.9 305.0 660.8
------ ------ ------ ------
Net credit losses:
Specialty Finance -- commercial........................ 25.6 18.8 80.5 59.6
Equipment Finance...................................... 23.1 70.7 99.8 196.7
Capital Finance........................................ -- 0.1 1.8 0.1
Commercial Finance..................................... 19.7 22.4 57.6 71.6
Structured Finance..................................... 9.2 18.4 31.6 18.5
Specialty Finance -- consumer.......................... 13.0 10.6 42.0 32.9
------ ------ ------ ------
Total net credit losses.............................. 90.6 141.0 313.3 379.4
------ ------ ------ ------
Balance end of period.................................. $752.5 $777.8 $752.5 $777.8
====== ====== ====== ======
Reserve for credit losses as a percentage of finance
Receivables(1)....................................... 2.48% 2.73%
====== ======
Reserve for credit losses as a percentage of past due
receivables (sixty days or more)(1).................. 87.2% 72.7%
====== ======
Reserve for credit losses as a percentage of
non-performing assets(1)............................. 86.8% 68.2%
====== ======

- --------------------------------------------------------------------------------
(1) The reserve for credit losses excluding the impact of telecommunication
and Argentine reserves as a percentage of finance receivables was 1.69% at
September 30, 2003 and 1.72% at September 30, 2002. The reserve for credit
losses excluding the impact of telecommunication and Argentine reserves as
a percentage of past due receivables (sixty days or more) was 62.0% and
45.3% at September 30, 2003 and 2002, respectively. The reserve for credit
losses excluding the impact of telecommunication and Argentine reserves as
a percentage of non-performing assets was 64.4% and 47.2% at September 30,
2003 and 2002, respectively.

The tables that follow detail net charge-offs for the quarters and nine
months ended September 30, 2003 and September 30, 2002 by segment, both in
amount and as a percentage of average finance receivables on an annualized
basis. In addition to total amounts, net charge-offs relating to the liquidating
and telecommunications portfolios are presented to provide enhanced analysis ($
in millions):

Quarter Ended September 30, 2003
----------------------------------------------------------
Before
Liquidating and Liquidating and
Total Telecommunications Telecommunications
-------------- ------------------ ------------------

Specialty Finance-- commercial .................. $25.6 1.47% $25.2 1.45% $ 0.4 228.57%
Equipment Finance ............................... 23.1 1.52% 18.1 1.26% 5.0 6.53%
Capital Finance ................................. -- -- -- -- -- --
Commercial Finance .............................. 19.7 0.84% 17.7 0.75% 2.0 66.12%
Structured Finance .............................. 9.2 1.28% -- -- 9.2 6.01%
----- ----- -----
Total Commercial Segments .................... 77.6 1.17% 61.0 0.95% 16.6 7.13%
Specialty Finance-- consumer .................... 13.0 1.80% 6.6 1.26% 6.4 3.22%
----- ----- -----
Total ........................................ $90.6 1.23% $67.6 0.98% $23.0 5.33%
===== ===== =====

Quarter Ended September 30, 2002
-----------------------------------------------------------
Before
Liquidating and Liquidating and
Total Telecommunications Telecommunications
--------------- ------------------ ------------------

Specialty Finance-- commercial .................. $ 18.8 1.22% $ 17.6 1.15% $ 1.2 10.74%
Equipment Finance ............................... 70.7 3.71% 59.1 3.52% 11.6 5.13%
Capital Finance ................................. 0.1 0.03% 0.1 0.03% -- --
Commercial Finance .............................. 22.4 1.06% 22.4 1.06% -- --
Structured Finance .............................. 18.4 2.78% -- -- 18.4 10.67%
------ ------ -----
Total Commercial Segments .................... 130.4 1.98% 99.2 1.60% 31.2 7.62%
Specialty Finance-- consumer .................... 10.6 2.17% 6.2 2.27% 4.4 2.05%
------ ------ -----
Total ........................................... $141.0 1.99% $105.4 1.63% $35.6 5.70%
====== ====== =====

Nine Months Ended September 30, 2003
-----------------------------------------------------------
Before
Liquidating and Liquidating and
Total Telecommunications Telecommunications
--------------- ------------------ ------------------

Specialty Finance-- commercial .................. $ 80.5 1.51% $ 79.7 1.49% $ 0.8 15.92%
Equipment Finance ............................... 99.8 2.14% 73.9 1.70% 25.9 8.34%
Capital Finance ................................. 1.8 0.19% 1.8 0.19% -- --
Commercial Finance .............................. 57.6 0.86% 52.9 0.80% 4.7 45.41%
Structured Finance .............................. 31.6 1.45% -- -- 31.6 6.57%
------ ------ -----
Total Commercial Segments .................... 271.3 1.37% 208.3 1.10% 63.0 7.81%
Specialty Finance-- consumer .................... 42.0 2.23% 23.1 1.81% 18.9 3.10%
------ ------ -----
Total ........................................ $313.3 1.45% $231.4 1.14% $81.9 5.79%
====== ====== =====

Nine Months Ended September 30, 2002
-----------------------------------------------------------
Before
Liquidating and Liquidating and
Total Telecommunications Telecommunications
--------------- ------------------ ------------------

Specialty Finance-- commercial .................. $ 59.6 1.28% $ 53.7 1.18% $ 5.9 6.51%
Equipment Finance ............................... 196.7 3.08% 142.0 2.54% 54.7 6.77%
Capital Finance ................................. 0.1 0.01% 0.1 0.01% -- --
Commercial Finance .............................. 71.6 1.28% 71.6 1.28% -- --
Structured Finance .............................. 18.5 0.97% 0.1 0.01% 18.4 3.45%
------ ------ -----
Total Commercial Segments .................... 346.5 1.76% 267.5 1.46% 79.0 5.51%
Specialty Finance-- consumer .................... 32.9 1.96% 18.7 1.62% 14.2 2.69%
------ ------ -----
Total ........................................... $379.4 1.77% $286.2 1.47% $93.2 4.75%
====== ====== =====

Certain small business loans and leases were transferred from Equipment
Finance to Specialty Finance -- commercial during the March 2003 quarter (prior
period amounts have not been restated). Charge-offs related to the transferred
portfolios during the quarter and nine months ended September 30, 2003 totaled
$4.0 million and $22.0 million, respectively, versus $4.7 million and $13.5
million during the quarter and nine months ended September 30, 2002,
respectively. Excluding the impact of the transfers, Equipment Finance
charge-offs were down significantly from both prior year periods, while
Specialty Finance -- commercial charge-offs were modestly above the prior year
for the quarter and slightly below 2002 for the nine months.

Reserve for Credit Losses

The reserve for credit losses was $752.5 million (2.48% of finance
receivables) at September 30, 2003 compared to $760.8 million (2.75%) at
December 31, 2002 and $777.8 million (2.73%) at September 30, 2002. The decrease
from both December 31, 2002 and September 30, 2002 reflects telecommunication
charge-offs which were applied to the specific telecommunications reserve
established in 2002, partially offset by reserves associated with loan growth
during the respective periods. In 2002, we took two specific reserving actions.
First, in light of the continued deterioration in the telecommunications sector,
particularly with respect to our competitive local exchange carrier ("CLEC")
portfolio, we added $200.0 million to the reserve for credit losses as at June
30, 2002. Additionally, as a result of the Argentine government's action to
convert dollar-denominated loans to pesos, and continued weakness in the peso,
we recorded a $135.0 million provision. The current balances for the specific
reserves are detailed below.

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

At September 30, 2003 At December 31, 2002 At September 30, 2002
--------------------- -------------------- --------------------
Amount % Amount % Amount %
------ --------- -------- -------- ------- -------

Finance receivables ........................... $500.9 1.69% $472.2 1.77% $473.7 1.72%
Telecommunications ............................ 116.6 19.43%(1) 153.6 22.40%(1) 169.1 24.77%(1)
Argentina ..................................... 135.0 83.64%(2) 135.0 73.11%(2) 135.0 71.85%(2)
------ ------ ------
Total ......................................... $752.5 2.48% $760.8 2.75% $777.8 2.73%
====== ====== ======

- --------------------------------------------------------------------------------
(1) Percentages of telecommunications portfolio finance receivables.

(2) Percentages of finance receivables in Argentina.

The reserve for credit losses, exclusive of the specific telecommunication
and Argentine reserves, increased in amount during 2003 due to increased
receivables but declined in percentage, reflecting improved credit metrics. The
reserve includes specific amounts relating to SFAS 114 impaired loans (excluding
telecommunications and Argentina) of $56.3 million at September 30, 2003,
compared to $52.9 million at December 31, 2002, and $111.7 million at September
30, 2002. Management continues to believe that the credit risk characteristics
of the portfolio are well diversified by geography, industry, borrower and
equipment type. Refer to "Concentrations" for more information.

The total telecommunications portfolio and the portion comprising the CLEC
exposure amounted to $623.6 million and $216.7 million at September 30, 2003,
compared to $710.1 million and $262.3 million at December 31, 2002 and $707.2
million and $275.2 million at September 30, 2002. Telecommunications net
charge-offs were $11.2 million and $36.3 million for the quarter and nine months
ended September 30, 2003, respectively. Management believes, based on a current
assessment of the portfolio, that the reserve is adequate at September 30, 2003.

We established a $135 million reserve for Argentine exposure in the first
half of 2002 to reflect the geopolitical risks associated with collecting our
peso-based assets and repatriating them into U.S. dollars that resulted from the
Argentine government instituting certain economic reforms. When established, the
reserve was about two-thirds of our combined currency and credit exposure. We
have made progress in collecting these balances and the portfolio's underlying
credit profile continues to perform as expected. Discussions with the Argentine
government are ongoing and additional recovery efforts continue. Management
expects to seek substantial resolution of collateral efforts in the coming
quarters and resulting charge-offs are expected to be recorded against the
reserve as these activities are concluded. Management believes, based on a
current assessment of the portfolio, that the reserve is adequate at September
30, 2003.

The consolidated reserve for credit losses is intended to provide for
losses inherent in the portfolio, which requires the application of estimates
and significant judgment as to the ultimate outcome of collection efforts and
realization of collateral, among other things. Therefore, changes in economic
conditions or credit metrics, including past due and non-performing accounts, or
other events affecting specific obligors or industries may necessitate additions
or reductions to the consolidated reserve for credit losses.

Past Due and Non-Performing Assets

The following table sets forth certain information concerning our past due
(sixty days or more) and non-performing assets (finance receivables on
non-accrual status and assets received in satisfaction of loans) and the related
percentages of finance receivables at September 30, 2003, December 31, 2002 and
September 30, 2002 ($ in millions):

At September 30, At December 31, At September 30,
2003 2002 2002
----------------- ------------------ ------------------

Finance receivables, past due 60 days or more:
Specialty Finance -- commercial .............. $245.9 3.60% $ 182.9 3.07% $ 215.4 3.54%
Equipment Finance ............................ 206.3 3.35% 359.3 4.88% 350.7 4.66%
Capital Finance .............................. 60.5 5.00% 85.5 6.40% 101.5 6.86%
Commercial Finance ........................... 130.2 1.32% 172.3 2.14% 209.4 2.35%
Structured Finance ........................... 82.8 2.83% 67.6 2.31% 65.8 2.45%
------ -------- --------
Total Commercial Segments .................... 725.7 2.69% 867.6 3.39% 942.8 3.53%
Specialty Finance -- consumer ................ 137.7 4.12% 133.7 6.66% 127.2 7.20%
------ -------- --------
Total ........................................ $863.4 2.85% $1,001.3 3.63% $1,070.0 3.76%
====== ======== ========
Non-performing assets:
Specialty Finance -- commercial .............. $132.7 1.94% $ 98.2 1.65% $ 103.1 1.69%
Equipment Finance ............................ 283.7 4.61% 403.5 5.48% 470.0 6.25%
Capital Finance .............................. 54.7 4.52% 154.9 11.60% 78.5 5.31%
Commercial Finance ........................... 108.0 1.09% 136.2 1.69% 176.1 1.98%
Structured Finance ........................... 141.6 4.84% 151.6 5.19% 172.2 6.40%
------ -------- --------
Total Commercial Segments .................... 720.7 2.67% 944.4 3.69% 999.9 3.75%
Specialty Finance -- consumer ................ 146.1 4.37% 141.4 7.04% 139.9 7.92%
------ -------- --------
Total ........................................ $866.8 2.86% $1,085.8 3.93% $1,139.8 4.01%
====== ======== ========
Non-accrual loans ............................... $732.2 $ 946.4 $ 976.6
Repossessed assets .............................. 134.6 139.4 163.2
------ -------- --------
Total non-performing assets .................. $866.8 $1,085.8 $1,139.8
====== ======== ========

Driven largely by across the board improvement in the Equipment Finance
segment, past due loans continued a declining trend, down $137.9 million from
December 31, 2002, ending the quarter at 2.85% of finance receivables, versus
3.63% and 3.76% at December 31, 2002 and September 30, 2002. The fluctuations in
the Equipment Finance and Specialty Finance -- commercial segments also reflect
the previously mentioned transfer in March 2003 of small business loans and
leases from Equipment Finance to Specialty Finance -- commercial. Past due
accounts related to these transferred portfolios approximated $75 million, $79
million and $65 million at September 30, 2003, December 31, 2002 and September
30 2002, respectively. Prior periods were not restated to reflect the March 2003
transfer. Excluding the impact of the transferred accounts, past due accounts in
Equipment Finance and Specialty Finance -- commercial were each below the
December and September 2002 amounts. The Commercial Finance decline from both
the 2002 periods was due to improvements in both the Commercial Services
(factoring) and Business Credit (asset-based lending) units. Capital Finance
delinquency improved $38.7 million during the current quarter, largely due to
the conversion of a non-performing Air Canada leveraged lease ($50 million,
after purchase of non-recourse debt) to a performing operating lease. The
improvement in Specialty Finance -- consumer deliquency as a percentage of
finance receivables reflects growth in the owned portfolio during 2003. This is
in contrast to 2002 when consumer assets were securitized to meet funding
requirements.

Similar to past due loans, non-performing assets declined for the fourth
consecutive quarter at September 30, 2003, with the improvement primarily in the
Equipment Finance and Capital Finance segments. The Capital Finance reduction
from December 31, 2002 reflects the conversion of United Airlines receivables to
short-term operating leases and the Air Canada transaction discussed above.

Managed past due loans, which also include securitized loans, decreased to
2.95% of managed financial assets (managed assets less operating leases and
venture capital investments) at September 30, 2003 from 3.55% and 3.78% at
December 31, 2002 and September 30, 2002, respectively, as shown in the table
below ($ in millions):

September 30, 2003 December 31, 2002 September 30, 2002
------------------ ----------------- ------------------

Managed Financial Assets, past due
60 days or more:
Specialty Finance -- commercial $ 332.4 2.90% $ 265.1 2.62% $ 303.3 2.94%
Equipment Finance 332.7 3.40% 545.7 4.78% 609.1 5.07%
Capital Finance 60.5 5.00% 85.5 6.40% 101.5 6.86%
Commercial Finance 130.1 1.32% 172.3 2.14% 209.4 2.35%
Structured Finance 82.8 2.83% 67.6 2.31% 65.8 2.45%
-------- -------- --------
Total Commercial 938.5 2.66% 1,136.2 3.36% 1,289.1 3.64%
Specialty Finance -- consumer 283.9 4.54% 259.4 4.71% 249.5 4.71%
-------- -------- --------
Total $1,222.4 2.95% $1,395.6 3.55% $1,538.6 3.78%
======== ======== ========

The managed past due table above includes the impact of securitized assets
in the Equipment Finance and Specialty Finance segments, and reflects the trends
discussed previously in the owned delinquency section.

Income Taxes

The effective tax rate was 39.0% for both the quarter and nine months
ended September 30, 2003, and 38.0% and (3.9)% for the respective prior year
periods. The provision for income taxes totaled $94.6 million and $84.1 million
for the quarters ended September 30, 2003 and 2002, respectively, and $266.8
million and $255.8 million for the comparable prior year nine month periods. The
effective tax rate for the prior year nine months, excluding the impact of TCH
and the non-cash goodwill impairment charge, was 38.1%.

As of September 30, 2003, we had approximately $1,559.0 million of tax
loss carryforwards, primarily related to U.S. federal and state jurisdictions.
The federal loss carryforwards expire at various dates through 2021. These loss
carryforwards are available to offset current federal income tax liabilities,
subject to certain limitations.

In connection with the June 2001 acquisition by Tyco, our income tax
compliance, reporting and planning function was transferred to Tyco. Following
our 2002 IPO, we have made substantial progress in rebuilding our tax functions,
including hiring and training personnel, and rebuilding systems, processes and
controls.

Results by Business Segment

Our segment reporting has been modified and prior periods restated to
reflect Equipment Finance and Capital Finance as separate segments. Previously,
these two strategic business units were combined as the Equipment Financing and
Leasing segment. This presentation is intended to facilitate the analysis of our
results for our financial statement users.

The table that follows summarizes selected financial information by
business segment, based upon a fixed leverage ratio across business units, a
39.0% and 38.0% effective tax rate for 2003 and 2002 across the units and the
allocation of most corporate expenses. Certain allocation methodologies,
including those related to funding costs, were changed resulting in relative
performance variances as described below ($ in millions):

Quarter Ended Nine Months Ended
--------------------------- ---------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------

Net Income (Loss)
Specialty Finance................................... $ 71.6 $ 68.9 $186.8 $ 252.7
Equipment Finance................................... 9.0 7.6 27.6 79.2
Capital Finance..................................... 12.3 20.4 29.1 58.4
Commercial Finance.................................. 53.8 51.4 163.5 146.3
Structured Finance.................................. 17.1 16.4 44.0 48.3
------ ------ ------ ---------
Total Segments.................................... 163.8 164.7 451.0 584.9
Corporate, including certain charges................ (16.0) (30.0) (39.3) (7,467.7)
------ ------ ------ ---------
Total............................................. $147.8 $134.7 $411.7 $(6,882.8)
====== ====== ====== =========
Return on AEA
Specialty Finance................................... 2.34% 2.66% 2.04% 3.05%
Equipment Finance................................... 0.53% 0.35% 0.53% 1.10%
Capital Finance..................................... 0.69% 1.38% 0.58% 1.39%
Commercial Finance.................................. 3.22% 3.41% 3.40% 3.58%
Structured Finance.................................. 2.29% 2.42% 1.96% 2.44%
Total Segments.................................... 1.83% 1.96% 1.71% 2.27%
Corporate, including certain charges................ (0.19)% (0.37)% (0.17)% (28.74)%
Total............................................. 1.64% 1.59% 1.54% (26.47)%

The improvement in the return on AEA over the prior year periods was
primarily the result of certain corporate charges described below. On a segment
basis, results reflect the dampened but improving returns in Capital Finance and
Equipment Finance, continued strong performance by Commercial Finance, reduced
securitization gains in Specialty Finance and the allocation to the segments of
higher corporate borrowing costs in 2003 as described below.

Corporate included the following items in the nine months ended September
30, 2002: (1) goodwill impairment of $6,511 million, (2) TCH expenses of $601.1
million ($668.6 million after tax), (3) specific loan loss reserves of $335.0
million ($207.7 million after tax) relating to telecommunication exposures and
economic reforms instituted by the Argentine government which resulted in the
mandatory conversion of dollar-denominated receivables into pesos and (4)
venture capital operating losses of $66.8 million ($41.4 million after tax) and
$43.3 million ($26.9 million after tax) for the nine months and quarter ended
September 30, 2002. Corporate included $57.3 million ($35.0 million after tax)
and $21.2 million ($12.9 million after tax) of venture capital operating losses
for the nine months and quarter ended September 30, 2003. Excluding these items,
unallocated corporate expenses and funding costs after tax were $3.1 million and
$3.1 million during the quarters ended September 30, 2003 and 2002 and were $4.3
million and $38.3 million for the nine months ended September 30, 2003 and 2002,
respectively, reflecting the change in borrowing cost allocation as explained
below.

For the first nine months of 2003, return on AEA was down across all
segments in relation to the 2002 period reflecting margin compression offset in
part by lower charge-offs from the year ago levels. The business segments' risk
adjusted margins for the quarter and nine months ended September 30, 2003 were
further dampened by the allocation (from Corporate) of additional borrowing
costs stemming from the 2002 disruption to the Company's funding base and
enhanced liquidity levels. These additional costs have had a greater impact in
2003 in that they have been allocated to the units whereas the additional
borrowing and liquidity costs were included in Corporate in 2002.

The unfavorable variance in Equipment Finance reflected reduced returns in
construction and industrial, while Capital Finance included lower aerospace
profitability. In addition to lower risk adjusted margins, the Specialty Finance
comparisons with the prior year reflected higher levels of securitization
activity during the prior

year done primarily for liquidity purposes. The profitability for the Business
Credit unit of Commercial Finance reflects a migration in new volume away from
larger-ticket, DIP financings back to more traditional, smaller working capital
asset-based lending facilities.

During the quarter ended March 31, 2003, in order to better align
competencies, we transferred $1,078.6 million of certain small business loans
and leases, including the small business lending unit, from Equipment Finance to
Specialty Finance -- commercial. Prior periods have not been restated to conform
to this current presentation.

Financing and Leasing Assets

Owned financing and leasing portfolio assets totaled $39.2 billion at
September 30, 2003, up from $35.9 billion at December 31, 2002. Managed assets,
comprised of owned financing and leasing assets and finance receivables
previously securitized that we continue to manage, totaled $49.3 billion at
September 30, 2003, up from $46.4 billion at December 31, 2002. Excluding
factoring, total origination volume was up from 2002 by 25% and 13% for the
quarter and the nine months. The favorable variances were primarily driven by
Specialty Finance. Growth in our portfolio assets for the nine months ended
September 30, 2003 was most notable in Capital Finance, Specialty Finance --
consumer and Commercial Finance. The Capital Finance growth was due to a $410.0
million rail operating lease portfolio acquisition and new aircraft deliveries.
The Specialty Finance increase was in the home equity portfolio, reflecting
solid platform origination levels as well as bulk purchases, and the Commercial
Finance growth was due to the seasonal factoring new business volumes and a $450
million factoring acquisition. During the March 2003 quarter, certain asset
portfolios totaling approximately $1 billion were transferred from Equipment
Finance to Specialty Finance -- commercial. The prior period was not restated to
reflect this transfer.

As of September 30, 2003, the net investment in leveraged leases totaled
$1.2 billion, or 3.9% of finance receivables. The major components of this
amount are as follows: $447 million in commercial aerospace transactions,
including $217 million of tax-optimization leveraged leases, which generally
have increased risk for lessors in relation to conventional lease structures due
to additional leverage in the transactions; $317 million of project finance
transactions, primarily in the power and utility sector; and $259 million in
rail transactions.

Our non-strategic/liquidating portfolios are presented in the following
table ($ in millions):

Portfolio September 30, 2003(1) December 31, 2002(1)
--------- --------------------- --------------------
Manufactured housing.................. $ 594 $ 624
Franchise finance..................... 144 322
Owner-operator trucking............... 134 218
Recreational marine................... 93 123
Recreational vehicle(2)............... 64 34
Wholesale inventory finance .......... 2 18
------ ------
Sub total - liquidating portfolios.. 1,031 1,339
Venture capital....................... 314 335
------ ------
Total............................... $1,345 $1,674
====== ======
- --------------------------------------------------------------------------------
(1) On-balance sheet financing and leasing assets.

(2) The increase is due to repurchase of previously securitized receivables.

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

At At Change
September 30, December 31, ---------------------
2003 2002 $ %
------------- ------------ -------- ---------

Specialty Finance:
Commercial:
Finance receivables(1)............................. $ 7,593.6 $ 6,722.4 $ 871.2 13.0%
Operating lease equipment, net..................... 1,043.4 1,257.3 (213.9) (17.0)%
--------- --------- --------
Total commercial................................. 8,637.0 7,979.7 657.3 8.2%
--------- --------- --------
Consumer:
Home equity......................................... 2,443.1 1,292.7 1,150.4 89.0%
Other............................................... 1,046.8 1,044.4 2.4 0.2%
--------- --------- --------
Total consumer.................................... 3,489.9 2,337.1 1,152.8 49.3%
--------- --------- --------
Total Specialty Finance Segment.................... 12,126.9 10,316.8 1,810.1 17.5%
--------- --------- --------
Equipment Finance:
Finance receivables(1).............................. 6,270.9 7,476.9 (1,206.0) (16.1)%
Operating lease equipment, net...................... 461.7 668.3 (206.6) (30.9)%
--------- --------- --------
Total Equipment Finance Segment..................... 6,732.6 8,145.2 (1,412.6) (17.3)%
--------- --------- --------
Capital Finance:
Finance receivables................................. 1,208.9 1,335.8 (126.9) (9.5)%
Operating lease equipment, net...................... 5,859.4 4,719.9 1,139.5 24.1%
--------- --------- --------
Total Capital Finance Segment..................... 7,068.3 6,055.7 1,012.6 16.7%
--------- --------- --------
Commercial Finance:
Commercial Services................................. 5,697.8 4,392.5 1,305.3 29.7%
Business Credit..................................... 4,173.3 3,649.1 524.2 14.4%
--------- --------- --------
Total Commercial Finance Segment.................. 9,871.1 8,041.6 1,829.5 22.8%
--------- --------- --------
Structured Finance:
Finance receivables................................. 2,926.1 2,920.9 5.2 0.2%
Operating lease equipment, net...................... 120.8 59.1 61.7 104.4%
--------- --------- --------
Total Structured Finance Segment.................. 3,046.9 2,980.0 66.9 2.2%
--------- --------- --------
Sub-total -- Financing and Leasing Assets........... 38,845.8 35,539.3 3,306.5 9.3%
--------- --------- --------
Equity investments(3).................................. 313.9 335.4 (21.5) (6.4)%
--------- --------- --------
TOTAL FINANCING AND LEASING
PORTFOLIO ASSETS.................................. 39,159.7 35,874.7 3,285.0 9.2%
--------- --------- --------
Finance receivables securitized:
Specialty Finance -- commercial........................ 3,876.8 3,377.4 499.4 14.8%
Specialty Finance -- consumer.......................... 2,759.7 3,168.8 (409.1) (12.9)%
Equipment Finance...................................... 3,504.5 3,936.2 (431.7) (11.0)%
--------- --------- --------
Total............................................. 10,141.0 10,482.4 (341.4) (3.3)%
--------- --------- --------
TOTAL MANAGED ASSETS(2)........................... $49,300.7 $46,357.1 $2,943.6 6.4%
========= ========= ========

- --------------------------------------------------------------------------------
(1) During the quarter ended March 31, 2003, finance receivables totaling
$1,078.6 million were transferred from Equipment Finance to Specialty
Finance -- commercial, principally representing small business loans. Prior
periods have not been restated to conform to the current presentation.
Specialty Finance-Commercial includes loans originated to consumers,
primarily through DFS, of $1,045.3 million and $1,420.1 million at
September 30, 2003 and December 31, 2002, respectively.

(2) Managed assets are comprised of financing and leasing assets (finance
receivables, finance receivables held for sale, operating leases and equity
investments) and finance receivables previously securitized that we
continue to manage.

(3) Included in other assets in the consolidated balance sheet.

Concentrations

Our ten largest financing and leasing asset accounts in the aggregate
represented 5.1% of our total financing and leasing assets at September 30, 2003
(with the largest account representing less than 1.0%) and 5.0% at December 31,
2002. For both periods, these accounts were primarily commercial accounts and
were secured by equipment, accounts receivable or inventory.

Our strategic relationships with industry-leading equipment vendors are a
significant origination channel for our financing and leasing activities. These
vendor alliances include traditional vendor finance programs, joint ventures and
profit sharing structures. Our vendor programs with Dell, Snap-on and Avaya Inc.
are among our largest alliances. The joint venture agreements with Dell and
Snap-on extend until October 2005 and January 2007, respectively. The Avaya
agreement, which relates to profit sharing on a CIT direct origination program,
was recently extended through September 2006.

At September 30, 2003, our financing and leasing assets included $1,438
million, $1,066 million and $819 million related to the Dell, Snap-on and Avaya
programs, respectively. These amounts include receivables originated directly by
CIT as well as receivables purchased from joint venture entities. Securitized
assets included $2,349 million, $78 million and $702 million from the Dell,
Snap-on and Avaya origination sources, respectively, at September 30, 2003. Any
significant reduction in origination volumes from any of these alliances could
have a material impact on our asset levels. For additional information regarding
certain of our joint venture activities, see Note 7 -- Related Party
Transactions.

Geographic Composition

September 30, December 31,
2003 2002
------------ ------------
State
California ............................. 10.5% 9.8%
Texas .................................. 7.5% 7.0%
New York ............................... 7.4% 7.9%
Total U.S. ................................ 79.7% 79.3%
Country
Canada ................................. 5.0% 5.0%
England ................................ 3.0% 3.2%
Australia .............................. 1.2% 1.3%
Germany ................................ 1.0% 1.1%
China .................................. (1) 1.2%
France ................................. (1) 1.0%
Brazil ................................. (1) 1.1%
Total Outside U.S. ........................ 20.3% 20.7%
- --------------------------------------------------------------------------------
(1) The applicable balances are less than 1.0%.

Industry Composition

At September 30, 2003, our commercial aerospace portfolio in the Capital
Finance business unit consisted of financing and leasing assets of $4,575.7
million covering 204 aircraft. These aircraft had an average age of
approximately 7 years (based on a dollar value weighted average). The portfolio
was spread over 84 accounts, with the majority placed with major airlines around
the world. The commercial aerospace portfolio at December 31, 2002 was $4,072.8
million of financing and leasing assets, which covered 194 aircraft spread over
78 accounts, with a weighted average age of approximately 7 years. The
commercial aircraft all comply with stage III noise regulations.

The following table summarizes the composition of the commercial aerospace
portfolio as of September 30, 2003 and December 31, 2002 ($ in millions):

At September 30, 2003 At December 31, 2002
------------------------ ------------------------
Net Number of Net Number of
Investment Planes Investment Planes
---------- --------- ---------- ---------

By Geography:
Europe .............. $1,980.9 64 $1,506.5 51
North America(1) .... 1,065.8 73 1,042.2 75
Asia Pacific ........ 875.1 36 853.6 35
Latin America ....... 529.1 25 595.9 29
Africa/Middle East .. 124.8 6 74.6 4
-------- --- -------- ---
Total .................. $4,575.7 204 $4,072.8 194
======== === ======== ===
By Manufacturer:
Boeing .............. $2,626.5 141 $2,388.1 135
Airbus .............. 1,928.2 51 1,647.9 42
Other ............... 21.0 12 36.8 17
-------- --- -------- ---
Total .................. $4,575.7 204 $4,072.8 194
======== === ======== ===
By Body Type(2):
Narrow .............. $3,285.9 155 $2,799.4 142
Intermediate ........ 881.0 18 859.2 17
Wide ................ 387.8 19 377.4 18
Other ............... 21.0 12 36.8 17
-------- --- -------- ---
Total .................. $4,575.7 204 $4,072.8 194
======== === ======== ===
- --------------------------------------------------------------------------------
(1) Comprised of net investments of $856.3 million (67 aircraft) in the U.S.
and $209.5 million (6 aircraft) in Canada at September 30, 2003 and $832.7
million (69 aircraft) in the U.S. and $209.5 million (6 aircraft) in Canada
at December 31, 2002.

(2) 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.

As of September 30, 2003, operating leases represented approximately 83%
of the commercial aerospace portfolio, with the remainder consisting of capital
leases (including leveraged leases) and loans. Tax-optimization leveraged
leases, which generally have increased risk in comparison to our other lease and
leveraged lease structures, were approximately $216.7 million at September 30,
2003. Total leveraged leases, including the tax optimization structures
described above, were $446.7 million or 9.8% of the aerospace portfolio at
September 30, 2003. Of the 204 aircraft, 3 are off-lease, 2 of which have been
remarketed with leases pending as of September 30, 2003.

The regional aircraft portfolio at September 30, 2003 consisted of 116
planes and a net investment of $310.0 million, primarily in the Structured
Finance segment. The planes are primarily located in North America and Europe.
Operating leases accounted for about 38% of the portfolio at September 30, 2003,
with the rest being capital leases or loans. There are 12 aircraft in this
portfolio that are off-lease. At December 31, 2002, the regional aircraft
portfolio consisted of 117 planes and a net investment of $344.0 million.

The following is a list of CIT's exposure to bankrupt carriers and the
current status of related aircraft as of September 30, 2003.

o UAL Corp. -- On December 9, 2002, UAL Corp., the parent of United
Airlines, announced its Chapter 11 bankruptcy filing. Under existing
agreements, United Airlines leases 4 CIT-owned narrow body aircraft
(2 Boeing 757 aircraft and 2 Boeing 737 aircraft) with a net book
value of $90.5 million. These leases were converted from single
investor capital leases to short-term operating leases during the
March 2003 quarter.

o Avianca Airlines -- Avianca Airlines filed voluntary petitions for
re-organization under Chapter 11 of the U.S. Bankruptcy Code on
March 21, 2003. Under existing agreements, CIT has operating leases
with Avianca Airlines whereby it is the lessee of one MD 80
aircraft. A Boeing 757 aircraft was returned to CIT and is committed
to another airline. That aircraft has been replaced by another
Boeing 757 that was returned from another carrier. Current net
investment is $31.2 million.

o Air Canada -- Air Canada filed for protection from creditors on April
1, 2003 under the Companies' Creditors Arrangement Act, the Canadian
reorganization law. CIT's exposure in aircraft to Air Canada is
approximately USD $50 million, relating to one Boeing 767 aircraft
which was converted from an investment in a non-accrual leveraged
lease (not a tax-optimized structure) to a performing operating lease
during the quarter ended September 30, 2003 and a $25.6 million loan
collateralized by 12 Bombardier Dash 8 aircraft. The loan is fully
guaranteed by the Canadian government. CIT had a second 767 aircraft
that came off-lease on June 1, 2003 and has been re-leased to another
carrier.

Additionally, CIT holds Senior A tranche Enhanced Equipment Trust
Certificates (EETCs) with a fair value of $39.1 million issued by United
Airlines, which are debt instruments collateralized by aircraft operated by the
airline. In connection with United Airlines' filing under Chapter 11, CIT is a
co-arranger in a $1.2 billion secured revolving and term loan facility with a
commitment of $102.0 million. This debtor-in-possession facility, with an
outstanding balance of $28.0 million at September 30, 2003, is secured by, among
other collateral, previously unencumbered aircraft.

The top five commercial aerospace exposures totaled $1,017.9 million at
September 30, 2003, the largest of which was $289.7 million. All are to carriers
outside of the U.S. and the top three of these exposures are to European
carriers. The largest exposure to a U.S. carrier at September 30, 2003 was
$140.6 million. Future revenues and aircraft values could be impacted by the
actions of the carriers, management's actions with respect to re-marketing the
aircraft, airline industry performance and aircraft utilization.

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

o Lease terms

o Remaining life of the asset

o Lease rates supplied by independent appraisers

o Remarketing prospects

o Maintenance costs

An impairment loss is recognized if the asset book value exceeds the
corresponding asset fair value. There were no recorded impairment charges
related to the commercial aerospace assets during the quarter ended September
30, 2003, while $1.8 million was recorded during the March 2003 quarter.
Management remains comfortable with valuations of the commercial aerospace
portfolio. Utilization is good, demonstrating the ability to place aircraft.
However, these current placements are at compressed rental rates, which reflect
current market conditions. Generally, leases are being written for terms between
three and five years.

Our telecommunications portfolio is included in "Communications" in the
industry composition table included in Note 5 to the Consolidated Financial
Statements. This portfolio totals approximately $623.6 million at September 30,
2003, or approximately 1.6% of total financing and leasing assets. The portfolio
consists of 49 accounts with an average balance of approximately $12.7 million.
The 10 largest accounts in the portfolio aggregate $254.9 million with the
largest single account totaling $32.5 million. Non-performing accounts totaled
$88.5 million (9 accounts) or 14.2% of this portfolio. At December 31, 2002, the
portfolio totaled $710.1 million (approximately 2.0% of total financing and
leasing assets) and consisted of 52 accounts with an average balance of
approximately $13.7 million. The 10 largest accounts in the portfolio aggregated
$264.5 million with the largest single account totaling $32.9 million.
Non-performing accounts totaled $120.2 million (10 accounts) or 16.9% of this
portfolio. The telecommunications portfolio includes CLECs, wireless and towers,
with the largest group being CLEC accounts, which totaled $216.7 million, or
34.7% of the telecommunications portfolio, at September 30,

2003. Many of these CLEC accounts are still in the process of building out their
networks and developing their customer bases. Our telecommunications
transactions are collateralized by the assets of the customer (equipment,
receivables, cash, etc.) and typically are also secured by a pledge of the stock
of non-public companies. Weak economic conditions and industry overcapacity have
driven down values in this sector. As discussed in "Provision and Reserve for
Credit Losses," $116.6 million of previously recorded reserves remain for
telecommunication exposures. As management continues to monitor and work out the
individual accounts in this portfolio, charge-offs will likely be recorded
against this reserve in subsequent periods.

The portfolio of direct and private fund venture capital equity
investments totaled $313.9 million at September 30, 2003 and $335.4 million at
December 31, 2002. At September 30, 2003, this portfolio was comprised of direct
investments of approximately $161.5 million in 47 companies and $152.4 million
in 52 private equity funds. Our direct investments totaled $188.8 million (57
companies) and our investment in private equity funds amounted to $146.6 million
(52 funds) as of December 31, 2002. These investments are principally in
emerging growth enterprises in selected industries, including industrial buyout,
information technology, life science and consumer products. In 2001, we ceased
making new venture capital investments beyond existing commitments, which
totaled approximately $140.7 million at September 30, 2003 and $164.9 million at
December 31, 2002. These commitments, which are mainly to private equity funds,
may or may not be drawn. Performance of both our direct investments and our fund
investments will depend upon the performance of the underlying companies, and
public and private market valuations of these companies. During the quarters
ended September 30, 2003 and 2002, we recognized pre-tax losses of $11.3 million
and $36.2 million and for the nine months ended September 30, 2003 and 2002,
losses totaled $27.8 million and $42.9 million. We continue to liquidate our
venture capital portfolio in the normal course of business, while exploring
other more rapid exit opportunities, including the possible sale of our direct
investment portfolio. If we were to pursue an outright sale, and thereby change
our disposition strategy, a sale-related disposition loss is possible.

At September 30, 2003, we had approximately $161.4 million of loans and
assets outstanding to customers located or doing business in Argentina. During
2002, the Argentine government instituted economic reforms that were detrimental
to the realization of our investment, including the conversion of certain
dollar-denominated loans into pesos. Due to these actions and the weakness of
the peso, we established a reserve of $135.0 million during 2002. The underlying
portfolio continues to perform as to collection, but payments are now
predominantly in pesos. Collection efforts and discussions with the Argentine
government continue in order to maximize recovery efforts. Management expects to
seek resolution in the coming quarters and charge-offs are expected to be
recorded against the reserve as these activities are concluded.

Management strives to maximize the profitability of the operating lease
equipment portfolio by balancing equipment utilization levels with market rental
rates and lease terms. Substantially all such equipment was subject to lease
agreements throughout the first nine months of 2003 and 2002. Total equipment
not subject to lease agreements was $253.7 million and $385.9 million at
September 30, 2003 and December 31, 2002, respectively. The current weakness in
the commercial airline industry and the slower economy could further adversely
impact both rental and utilization rates prospectively.

See Note 5 -- Concentrations of Item 1. Consolidated Financial Statements
for further discussion on concentrations.

Other Assets

Other assets totaled $4.7 billion at both September 30, 2003 and December
31, 2002, as both the total balance and the underlying components were
essentially unchanged. Other assets primarily consisted of the following at
September 30, 2003: securitization assets, including interest-only strips,
retained subordinated securities, cash reserve accounts and servicing assets of
$1.4 billion, accrued interest and receivables from derivative counterparties of
$0.8 billion, investments in and receivables from joint ventures and
non-consolidated subsidiaries of $0.7 billion, deposits on commercial aerospace
flight equipment of $0.3 billion, direct and private fund equity investments of
$0.3 billion, repossessed assets of $0.1 billion, prepaid expenses of $0.1
billion and investment in aerospace securities of $0.1 billion. The remaining
balance includes furniture and fixtures, miscellaneous receivables and other
assets.

Goodwill and Other Intangible Assets Impairment and Amortization

During the quarter ended March 31, 2002, our former parent, Tyco,
experienced disruptions to its business surrounding its announced break-up plan,
downgrades in its credit ratings, and a significant decline in its market
capitalization, which caused a disruption in our access to the capital markets.
As a result, management performed impairment analyses during the quarters ended
March 31, 2002 and June 30, 2002. These analyses resulted in goodwill impairment
charges of $4.513 billion and $1.999 billion for the quarters ended March 31,
2002 and June 30, 2002, respectively.

The changes in the carrying amount of goodwill for the nine months ended
September 30, 2003 were as follows ($ in millions):

Specialty Capital Commercial
Finance Finance Finance Total
-------- ------- ---------- -----
Balance as of December 31, 2002 ........ $ 14.0 $ -- $ 370.4 $ 384.4
Goodwill related to rail acquisition ... -- 5.4 -- 5.4
Severance reduction .................... (1.1) -- -- (1.1)
----- ---- ------ ------
Balance as of September 30, 2003 ....... $ 12.9 $5.4 $ 370.4 $ 388.7
===== ==== ====== ======

The downward revision to severence liabilities during the nine months
ended September 30, 2003 was related to Specialty Finance restructuring
activities and was recorded as a reduction to goodwill, as the severence
liability was established in conjunction with Tyco acquisition purchase
accounting adjustments.

Other intangible assets, net, comprised primarily of acquired customer
relationships, proprietary computer software and related transaction processes,
totaled $49.2 million and $16.5 million at September 30, 2003 and December 31,
2002, respectively, and are included in Other Assets on the Consolidated Balance
Sheets. The increase in other intangible assets during the nine months ended
September 30, 2003 was due to customer relationships acquired in the purchase of
a factoring business. Other intangible assets are being amortized over periods
ranging from five to twenty years on a straight-line basis. Amortization expense
totaled $3.3 million for each nine month period ended September 30, 2003 and
2002.

Results and Trends in Relation to the Prior Quarter

The following analysis is provided in addition to the year-over-prior year
period analysis in order to discuss trends in our business on a sequential
quarter basis, for periods subsequent to our July 2002 IPO.

Net income for the quarter ended September 30, 2003 was $147.8 million, or
$0.69 per diluted share, compared to $136.9 million, or $0.65 per diluted share
for the quarter ended June 30, 2003. The table that follows presents results for
the quarters ended September 30, 2003 and June 30, 2003, both in amount and as a
percentage of AEA ($ in millions):

Quarter Ended Quarter Ended
September 30, 2003 June 30, 2003
Amount % AEA Amount % AEA
--------- ----- --------- -----

Finance income ................................................ $ 921.2 10.22% $ 943.2 10.57%
Interest expense .............................................. 326.5 3.62% 331.1 3.71%
--------- ---- --------- ----
Net finance income ............................................ 594.7 6.60% 612.1 6.86%
Depreciation on operating lease equipment ..................... 252.4 2.80% 272.9 3.06%
--------- ---- --------- ----
Net finance margin ............................................ 342.3 3.80% 339.2 3.80%
Provision for credit losses ................................... 82.9 0.92% 100.6 1.13%
--------- ---- --------- ----
Net finance margin after provision for credit losses .......... 259.4 2.88% 238.6 2.67%
Other revenue ................................................. 220.7 2.45% 217.6 2.44%
--------- ---- --------- ----
Operating margin .............................................. 480.1 5.33% 456.2 5.11%
Salaries and general operating expenses ....................... 237.5 2.64% 227.2 2.55%
--------- ---- --------- ----
Income before provision for income taxes ...................... 242.6 2.69% 229.0 2.56%
Provision for income taxes .................................... (94.6) (1.05)% (89.3) (1.00)%
Minority interest ............................................. (0.2) --% (0.1) --%
Dividends on preferred capital securities, after tax .......... -- --% (2.7) (0.03)%
--------- ---- --------- ----
Net income .................................................... $ 147.8 1.64% $ 136.9 1.53%
========= ==== ========= ====
Net income per share-- basic .................................. $ 0.70 $ 0.65
========= =========
Net income per share-- diluted ................................ $ 0.69 $ 0.65
========= =========
Average Earning Assets (AEA) .................................. $36,072.4 $35,700.0
========= =========

The increase in net income from the prior quarter primarily reflected
lower charge-offs, partially off-set by higher incentive-based compensation and
other employee related expenses.

For the quarter ended September 30, 2003, net finance margin was 3.80% of
average earning assets, flat with the prior quarter. Current quarter dividends
on preferred capital securities were included in interest expense for the first
time due to the adoption of SFAS 150. These dividends were presented on an after
tax basis below minority interest in prior periods. On a comparable basis, net
finance margin improved 5 basis points from the prior quarter, primarily
reflecting lower interest expense due to improved funding rates and a modest
improvement in net rental income, offset by lower yield-related fees. The
positive impact on risk adjusted margin due to fair value adjustments to mark
finance receivables and debt to market remaining from the Tyco acquisition,
before the benefit of refinancing at better rates, was 15 basis points compared
to 13 basis points last quarter.

The table below summarizes operating lease margin for the respective
periods ($ in millions).

Quarter Ended
---------------------------
September 30, June 30,
2003 2003
------------ ----------
Rental income .................................. $ 364.3 $ 379.3
Depreciation expense ........................... 252.4 272.9
---------- ----------
Operating lease margin ....................... $ 111.9 $ 106.4
========== ==========
Average operating lease equipment .............. $ 7,458.9 $ 7,304.2
========== ==========

Operating lease equipment decreased to $7,485.3 million from $7,560.0
million at June 30, 2003 primarily due to the decline in smaller-ticket assets
in the Specialty Finance segment. Operating lease margin (rental income less
depreciation expense) as a percentage of average operating lease equipment was
6.0% during the quarter ended September 30, 2003 versus 5.9% during the prior
quarter, reflecting a modest improvement from compressed aerospace rental rates.
The decline in depreciation expense for the quarter reflects a greater
proportion of aircraft and rail assets with average depreciable lives of
approximately 25 and 40 years, compared to smaller ticket asset

lives of approximately 3 years. Our depreciable assets range from
smaller-ticket, shorter-term leases (e.g. computers) to larger-ticket,
longer-term leases (e.g. commercial aircraft and rail assets).

Total net charge-offs during the quarter ended September 30, 2003 were
$90.6 million (1.23%), including $11.2 million of telecommunication loan net
charge-offs, compared to $108.4 million (1.51%) during the quarter ended June
30, 2003. The tables that follow detail net charge-offs for the current and
prior quarters by segment, both in amount and as a percentage of average finance
receivables. In addition to total amounts, net charge-offs relating to the
liquidating and telecommunications portfolios are also presented to provide
enhanced analysis ($ in millions):

Net Charge-offs: Quarter Ended September 30, 2003
--------------------------------------------------------------
Before Liquidating and Liquidating and
Total Telecommunications Telecommunications
--------------- ---------------------- ------------------

Specialty Finance -- commercial .............. $ 25.6 1.47% $25.2 1.45% $ 0.4 228.57%
Equipment Finance ............................ 23.1 1.52% 18.1 1.26% 5.0 6.53%
Commercial Finance ........................... 19.7 0.84% 17.7 0.75% 2.0 66.12%
Capital Finance .............................. -- -- -- -- -- --
Structured Finance ........................... 9.2 1.28% -- -- 9.2 6.01%
------ ----- -----
Total Commercial Segments .................. 77.6 1.17% 61.0 0.95% 16.6 7.13%
Specialty Finance -- consumer ................ 13.0 1.80% 6.6 1.26% 6.4 3.22%
------ ----- -----
Total ...................................... $ 90.6 1.23% $67.6 0.98% $23.0 5.33%
====== ===== =====

Net Charge-offs: Quarter Ended June 30, 2003
--------------------------------------------------------------
Before Liquidating and Liquidating and
Total Telecommunications Telecommunications
--------------- ---------------------- ------------------

Specialty Finance -- commercial .............. $ 23.9 1.33% $23.9 1.33% $ -- --
Equipment Finance ............................ 38.6 2.51% 26.1 1.82% 12.5 12.00%
Commercial Finance ........................... 21.3 0.96% 18.6 0.84% 2.7 76.80%
Capital Finance .............................. -- -- -- -- -- --
Structured Finance ........................... 8.6 1.18% -- -- 8.6 5.38%
------ ----- -----
Total Commercial Segments .................. 92.4 1.40% 68.6 1.09% 23.8 8.87%
Specialty Finance -- consumer ................ 16.0 2.62% 9.9 2.43% 6.1 3.01%
------ ----- -----
Total ...................................... $108.4 1.51% $78.5 1.17% $29.9 6.33%
====== ===== =====

Liquidating and telecommunications net charge-offs were down $6.9 million
from last quarter due to lower net charge-offs in the liquidating franchise and
trucking portfolios, as the prior quarter included charge-offs relating to sold
assets. Before liquidating portfolio charge-offs and telecommunication
charge-offs covered by specific 2002 reserving actions, net charge-offs were
$67.6 million (0.98% of average finance receivables) for the current quarter,
down from $78.5 million (1.17%) last quarter. The improvement from last quarter
primarily reflects declines in Equipment Finance in the construction and
industrial equipment businesses and in Specialty Finance -- consumer charge-offs
of home equity loans.

Other Revenue totaled $220.7 million for the quarter ended September 30,
2003, up slightly from $217.6 million for the quarter ended June 30, 2003,
reflecting increased syndication and advisory fees in Structured Finance,
coupled with improved returns on previously securitized assets and revenue from
joint venture activities in the Specialty Finance segment, and higher factoring
commissions. Partially offsetting these increases were lower securitization
gains due to lower levels of securitization and changes in the mix of products
securitized. Securitization gains during the current quarter totaled $18.3
million, 7.5% of pretax income, on securitization volume of $1,317.5 million,
compared to $33.8 million, 14.8% of pretax income, on securitization volume of
$1,652.5 million during the prior quarter. Other revenue included venture
capital losses of $11.3 million during the current quarter, compared to losses
of $12.1 million for the prior quarter. The components of Other Revenue are set
forth in the following table ($ in millions):

Quarter Ended
---------------------------
September 30, June 30,
2003 2003
------------- ----------
Fees and other income ........................... $151.5 $134.6
Factoring commissions ........................... 47.6 44.8
Gains on securitizations ........................ 18.3 33.8
Gains on sales of leasing equipment ............. 14.6 16.5
Loss on venture capital investments ............. (11.3) (12.1)
------ ------
Total ......................................... $220.7 $217.6
====== ========

Salaries and general operating expenses were $237.5 million for the
current quarter, compared to $227.2 million reported for the June 30, 2003
quarter. The increase from last quarter was primarily the result of higher
incentive-based compensation and other employee related expenses. Salaries and
general operating expenses were 2.06% of average managed assets during the
quarter, versus 1.99% for the prior quarter. The efficiency ratio for the
quarter (salaries and general operating expenses divided by operating margin,
excluding provision for credit losses) was 42.2%, compared to 40.8% in the prior
quarter. Headcount was 5,780 at September 30, 2003 down from 5,845 at June 30,
2003.

Risk Management

We performed additional risk management procedures in 2002 and into 2003
in light of the factors discussed previously in the "Key Business Initiatives
and Trends" section. During the third quarter of 2003, we have further elevated
the prominence of risk management throughout the organization with the
establishment of the newly-created position of Vice Chairman & Chief Credit
Officer within the Office of the Chairman. Our ongoing risk management
activities, beyond these special liquidity and capital measures, are described
more fully in the sections that follow. Our business activities involve various
elements of risk. We consider the principal types of risk to be credit risk
(including credit, collateral and equipment risk) and market risk (including
interest rate, foreign currency and liquidity risk.)

We consider the management of risk essential to conducting our commercial
and consumer businesses and to maintaining profitability. Accordingly, our risk
management systems and procedures are designed to identify and analyze risks, to
set appropriate policies and limits and to continually monitor these risks and
limits by means of reliable administrative and information systems, and other
policies and programs.

We review and monitor credit exposures, both owned and managed, on an
ongoing basis to identify, as early as possible, those customers that may be
experiencing declining creditworthiness or financial difficulty, and
periodically evaluate our finance receivables across the entire organization. We
monitor concentrations by borrower, industry, geographic region and equipment
type, and we adjust limits as conditions warrant to minimize the risk of
substantial credit loss. We have maintained a standard practice of reviewing our
aerospace portfolio regularly and, in accordance with SFAS No. 13 and SFAS No.
144, we test for asset impairment based upon projected cash flows and relevant
market data, with any impairment in value charged to operating earnings. Given
the developments in the aerospace sector during 2002 and into 2003, performance,
profitability and residual values relating to aerospace assets have been
reviewed more frequently with the Executive Credit Committee.

Our Asset Quality Review Committee is comprised of members of senior
management, including the Vice Chairman & Chief Credit Officer, the Vice
Chairman & Chief Financial Officer, the Chief Risk Officer, the Controller and
the Director of Credit Audit. Periodically, the Committee meets with senior
executives of our

strategic business units and corporate credit risk management group to review
portfolio performance, including the status of individual financing and leasing
assets, owned and managed, to obligors with higher risk profiles. In addition,
this committee periodically meets with the Chief Executive Officer of CIT to
review overall credit risk, including geographic, industry and customer
concentrations, and the reserve for credit losses.

Credit Risk Management

We have developed systems specifically designed to manage credit risk in
each of our business segments. We evaluate financing and leasing assets for
credit and collateral risk during the credit granting process and periodically
after the advancement of funds. The Corporate Credit Risk Management group,
which reports to the Vice Chairman & Chief Credit Officer, oversees and manages
credit risk throughout CIT. This group includes senior credit executives aligned
with each of the business units, as well as a senior executive with
corporate-wide asset recovery and workout responsibilities. Our Executive Credit
Committee includes the Chief Executive Officer, the Chief Operating Officer, the
Chief Credit Officer and members of the Corporate Credit Risk Management group.
The committee approves transactions which are outside of established target
market definitions and risk acceptance criteria, corporate "standard" exceptions
and/or "non-traditional" business as well as transactions that exceed the
strategic business units' credit authority. The Corporate Credit Risk Management
group also includes an independent credit audit function.

Each of our strategic business units has developed and implemented a
formal credit management process in accordance with formal uniform guidelines
established by the credit risk management group. These guidelines set forth risk
acceptance criteria for:

o acceptable maximum credit lines;

o selected target markets and products;

o creditworthiness of borrowers, including credit history, financial
condition, adequacy of cash flow, financial performance and quality
of management; and

o the type and value of underlying collateral and guarantees
(including recourse from dealers and manufacturers).

Compliance with established corporate policies and procedures and the
credit management processes at each strategic business unit are reviewed by the
credit audit group. The credit audit group examines adherence with established
credit policies and procedures and tests for inappropriate credit practices,
including whether potential problem accounts are being detected and reported on
a timely basis.

Commercial

The commercial credit management process (other than small ticket leasing
transactions) starts with the initial evaluation of credit risk and underlying
collateral at the time of origination and continues over the life of the finance
receivable or operating lease, including collecting past due balances and
liquidating underlying collateral.

Credit personnel review each potential borrower's financial condition,
results of operations, management, industry, customer base, operations,
collateral and other data, such as third party credit reports, to thoroughly
evaluate the customer's borrowing and repayment ability. Borrowers are graded
according to credit quality based upon our uniform credit grading system, which
considers both the borrower's financial condition and the underlying collateral.
Credit facilities are subject to approval within our overall credit approval and
underwriting guidelines and are issued commensurate with the credit evaluation
performed on each borrower.

Consumer and Small Ticket Leasing

For consumer transactions and small-ticket leasing transactions, we employ
proprietary automated credit scoring models by loan type that include customer
demographics and credit bureau characteristics. The profiles emphasize, among
other things, occupancy status, length of residence, length of employment, debt
to income ratio (ratio of total installment debt and housing expenses to gross
monthly income), bank account references, credit bureau information, combined
loan to value ratio, length of time in business, industry category and
geographic location. The models are used to assess a potential borrower's credit
standing and repayment ability considering the

value or adequacy of property offered as collateral. Our credit criteria include
reliance on credit scores, including those based upon both our proprietary
internal credit scoring model and external credit bureau scoring, combined with
judgment. The credit scoring models are regularly reviewed for effectiveness
utilizing statistical tools.

We regularly evaluate the consumer loan portfolio and the small ticket
leasing portfolio using past due, vintage curve and other statistical tools to
analyze trends and credit performance by loan type, including analysis of
specific credit characteristics and other selected subsets of the portfolios.
Adjustments to credit scorecards and lending programs are made when deemed
appropriate. Individual underwriters are assigned credit authority based upon
their experience, performance and understanding of the underwriting policies and
procedures of our consumer and small-ticket leasing operations. A credit
approval hierarchy also exists to ensure that an underwriter with the
appropriate level of authority reviews all applications.

Equipment/Residual Risk Management

We have developed systems, processes and expertise to manage the equipment
and residual risk in our commercial segments. Our process consists of the
following: 1) setting residual value at deal inception; 2) systematic residual
reviews; and 3) monitoring of residual realizations. Reviews for impairment are
performed at least annually. Residual realizations, by business unit and
product, are reviewed as part of our ongoing financial and asset quality review,
both within the business units and by senior management.

Market Risk Management

Market risk is the risk of loss arising from changes in values of
financial instruments, including interest rate risk, foreign exchange risk,
derivative credit risk and liquidity risk. We engage in transactions in the
normal course of business that expose us to market risks. However, we maintain
what we believe are appropriate management practices and policies designed to
effectively mitigate such risks. The objectives of our market risk management
efforts are to preserve company value by hedging changes in future expected net
cash flows and to decrease the cost of capital. Strategies for managing market
risks associated with changes in interest rates and foreign exchange rates are
an integral part of the process, because those strategies affect our future
expected cash flows as well as our cost of capital.

Our Capital Committee sets policies, oversees and guides the interest
rate and currency risk management process, including the establishment and
monitoring of risk metrics, and ensures the implementation of those policies.
Other risks monitored by the Capital Committee include derivative credit risk
and liquidity risk. The Capital Committee meets periodically and includes the
Chief Executive Officer, Chief Operating Officer, Vice Chairman and Chief
Financial Officer, Vice Chairman and Chief Credit Officer, Vice Chairman -
Specialty Finance, Treasurer, and Controller, with business unit executives
serving on a rotating basis.

Interest Rate and Foreign Exchange Risk Management

We offer a variety of financing products to our customers, including fixed
and floating-rate loans of various maturities and currency denominations, and a
variety of leases, including operating leases. Changes in market interest rates,
relationships between short-term and long-term market interest rates, or
relationships between different interest rate indices (i.e., basis risk) can
affect the interest rates charged on interest-earning assets differently than
the interest rates paid on interest-bearing liabilities, and can result in an
increase in interest expense relative to finance income. We measure our
asset/liability position in economic terms through duration measures and
sensitivity analysis, and we periodically measure the effect on earnings using
maturity gap analysis.

A matched asset/liability position is generally achieved through a
combination of financial instruments, including commercial paper, medium-term
notes, long-term debt, interest rate and currency swaps, foreign exchange
contracts, and through securitization. We do not speculate on interest rates or
foreign exchange rates, but rather seek to mitigate the possible impact of such
rate fluctuations encountered in the normal course of business. This process is
ongoing due to prepayments, refinancings and actual payments varying from
contractual terms, as well as other portfolio dynamics.

We periodically enter into structured financings (involving the issuance
of both debt and an interest rate swap with corresponding notional principal
amount and maturity) to manage liquidity and reduce interest rate risk at a
lower overall funding cost than could be achieved by solely issuing debt.

CIT uses derivatives for hedging purposes only, and does not enter into
derivative financial instruments for trading or speculative purposes. As part of
managing the exposure to changes in market interest rates, CIT, as an end-user,
enters into various interest rate swap transactions in the over-the-counter
markets, with other financial institutions acting as principal counterparties.
To ensure both appropriate use as a hedge and hedge accounting treatment under
SFAS 133, all derivatives entered into are designated according to a hedge
objective against a specified liability, including long-term debt and commercial
paper. CIT's primary hedge objectives include the conversion of variable-rate
liabilities to fixed rates, and the conversion of fixed-rate liabilities to
variable rates. The notional amounts, rates, indices and maturities of CIT's
derivatives are required to closely match the related terms of CIT's hedged
liabilities.

We target to match the basis of assets with that of our liabilities (i.e.
fixed rate assets funded with fixed rate liabilities and floating rate assets
funded with floating rate liabilities), while also targeting to preserve the
economic returns of our assets through duration matching. Interest rate swaps
are an effective means of achieving our target matched funding objectives by
converting debt to the desired basis and duration.

Interest rate swaps with notional principal amounts of $9.8 billion at
September 30, 2003 and $9.2 billion at June 30, 2003 were designated as hedges
against outstanding debt. The net increase in notional principal amounts of
interest rate swaps as of September 30, 2003 consisted of a $536.9 million
increase in fixed to floating-rate swaps (fair value hedges) and a $92.4 million
increase in floating to fixed-rate swaps (cash flow hedges). The increase in
fair value hedges was due to the combination of fixed rate notes issued during
the quarter which were swapped to float and retail fixed-rate debt issuances
being swapped to float. In addition, CIT enters into hedge transactions in
conjunction with its securitization programs. See Note 3 to the Consolidated
Financial Statements for further details.

The following table summarizes the composition of our assets and
liabilities before and after swaps at September 30 and June 30, 2003:

Before Swaps After Swaps
-------------------------- -------------------------
Fixed Rate Floating Rate Fixed Rate Floating Rate
---------- ------------- ---------- -------------

September 30, 2003
Assets .......................... 51% 49% 51% 49%
Liabilities ..................... 63% 37% 49% 51%

June 30, 2003
Assets .......................... 52% 48% 52% 48%
Liabilities ..................... 65% 35% 53% 47%

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

Quarter Ended September 30, 2003
-------------------------------------------
Before Swaps After Swaps
------------------ --------------------

Commercial paper and variable rate senior notes
and bank credit facilities........................ $11,728.3 1.77% $15,917.6 2.58%
Fixed rate senior and subordinated notes............. 20,297.9 6.04% 16,108.6 5.78%
--------- ---------
Composite............................................ $32,026.2 4.48% $32,026.2 4.19%
========= =========

Quarter Ended June 30, 2003
-------------------------------------------
Before Swaps After Swaps
------------------ --------------------

Commercial paper and variable rate senior notes
and bank credit facilities....................... $12,030.2 1.90% $15,646.8 2.72%
Fixed rate senior and subordinated notes............. 20,284.9 6.13% 16,668.3 5.93%
--------- ---------
Composite............................................ $32,315.1 4.56% $32,315.1 4.37%
========= =========

Quarter Ended September 30, 2002
-------------------------------------------
Before Swaps After Swaps
------------------ --------------------

Commercial paper and variable rate senior notes
and bank credit facilities......................... $14,103.2 2.20% $13,552.1 2.68%
Fixed rate senior and subordinated notes............. 16,443.4 6.88% 16,994.5 6.63%
--------- ---------
Composite $30,546.6 4.72% $30,546.6 4.88%
========= =========

Nine Months Ended September 30, 2003
-------------------------------------------
Before Swaps After Swaps
------------------ --------------------

Commercial paper and variable rate senior notes and bank
credit facilities................................. $12,154.3 1.87% $15,412.0 2.69%
Fixed rate senior and subordinated notes............. 20,092.9 6.17% 16,835.2 5.94%
--------- ---------
Composite............................................ $32,247.2 4.55% $32,247.2 4.39%
========= =========

Nine Months Ended September 30, 2002
-------------------------------------------
Before Swaps After Swaps
------------------ --------------------

Commercial paper and variable rate senior notes
and bank credit facilities........................ $16,486.7 2.19% $14,472.8 2.45%
Fixed rate senior and subordinated notes............. 16,866.1 5.88% 18,880.0 5.80%
--------- ---------
Composite............................................ $33,352.8 4.06% $33,352.8 4.35%
========= =========

The weighted average interest rates before swaps do not necessarily
reflect the interest expense that would have been incurred over the life of the
borrowings had we chosen to manage interest rate risk without the use of such
swaps. Derivatives are discussed further in Note 3 -- Derivative Financial
Instruments to the Consolidated Financial Statements.

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

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

An immediate hypothetical 100 basis point increase in the yield curve on
October 1, 2003 would have reduced net income by an estimated $15 million after
tax over the next twelve months, while a decrease in the yield curve would have
increased net income by a like amount. Although management believes that this
measure provides a meaningful estimate of our interest rate sensitivity, it does
not account for potential changes in the credit quality, size, composition and
prepayment characteristics of the balance sheet and other business developments
that could affect net income. Accordingly, no assurance can be given that actual
results would not differ materially from the potential outcome of our
simulations. Further, it does not necessarily represent management's current
view of future market interest rate movements.

We also utilize foreign currency exchange forward contracts to hedge
currency risk underlying our net investments in foreign operations and cross
currency interest rate swaps to hedge both foreign currency and interest rate
risk underlying foreign debt. At September 30, 2003, CIT was party to foreign
currency exchange forward contracts with notional amounts totaling $2.3 billion
and maturities ranging from 2003 to 2006. CIT was also party to cross currency
interest rate swaps with notional amounts totaling $1.3 billion and maturities
ranging from 2004 to 2027. At June 30, 2003, CIT was party to $2.4 billion in
notional principal amount of foreign currency exchange forward contracts and
$1.4 billion in notional principal amount of cross currency interest rate swaps.
At

September 30, 2002, CIT was party to $3.1 billion in notional principal amount
of foreign currency exchange forward contracts and $1.7 billion in notional
principal amount of cross currency swaps. Translation gains and losses of the
underlying foreign net investment, as well as offsetting derivative gains and
losses on designated hedges, are reflected in other comprehensive income in the
Consolidated Balance Sheet.

During the quarter ended September 30, 2003, the Company executed treasury
lock interest rate hedges totaling $1.2 billion in notional amount, with forward
dates ranging between December 15, 2003 and January 15, 2004. These derivative
contracts, which lock in a fixed rate of interest, were executed in conjunction
with planned term-debt refinancings. These contracts were designated as cash
flow hedges of a forecasted transaction and insulate CIT from potential movement
in U.S. Treasury rates related to the refinancing. See "Liquidity" for
discussion of the related term-debt refinancings.

Derivative Risk Management

We enter into interest rate and currency swaps and foreign exchange
forward contracts as part of our overall market risk management practices. We
assess and manage the external and internal risks associated with these
derivative instruments in accordance with the overall operating goals
established by our Capital Committee. External risk is defined as those risks
outside of our direct control, including counterparty credit risk, liquidity
risk, systemic risk, legal risk and market risk. Internal risk relates to those
operational risks within the management oversight structure and includes actions
taken in contravention of CIT policy.

The primary external risk of derivative instruments is counterparty credit
exposure, which is defined as the ability of a counterparty to perform its
financial obligations under a derivative contract. We control the credit risk of
our derivative agreements through counterparty credit approvals, pre-established
exposure limits and monitoring procedures.

The Capital Committee approves each counterparty and establishes exposure
limits based on credit analysis and market value. All derivative agreements are
entered into with major money center financial institutions rated investment
grade by nationally recognized rating agencies, with the majority of our
counterparties rated "AA" or better. Credit exposures are measured based on the
market value of outstanding derivative instruments. Exposures are calculated for
each derivative contract to monitor counterparty credit exposure.

Liquidity Risk Management

Liquidity risk refers to the risk of CIT being unable to meet potential
cash outflows promptly and cost effectively. Factors that could cause such a
risk to arise might be a disruption of a securities market or other source of
funds. We actively manage and mitigate liquidity risk by maintaining diversified
sources of funding and committed alternate sources of funding. The primary
funding sources are commercial paper (U.S.), long-term debt (U.S. and
International) and asset-backed securities (U.S. and Canada). Included as part
of our securitization programs are committed asset-backed commercial paper
programs in the U.S. and Canada. We also maintain committed bank lines of credit
to provide backstop support of commercial paper borrowings and local bank lines
to support our international operations. Additional sources of liquidity are
loan and lease payments from customers, whole-loan asset sales and loan
syndications.

We also target and monitor certain liquidity metrics to ensure both a
balanced liability profile and adequate alternate liquidity availability. Among
the target ratios are maximum percentage of outstanding commercial paper to
total debt, minimum percentage of committed bank line coverage to outstanding
commercial paper and minimum percentage of alternate liquidity sources to
current cash obligations.

Internal Controls

In 2003, we formed an Internal Controls Committee that is responsible for
monitoring and improving internal controls and overseeing the internal controls
attestation mandated by Section 404 of the Sarbanes-Oxley Act of 2002
("SARBOX"). The committee, which is chaired by the Controller, includes the CFO,
Director of Internal Audit as well as other senior executives in finance, legal,
risk management and information technology. We are currently in the
documentation phase of the SARBOX project and expect to begin the testing,
assessment and remediation of internal controls in 2004. The final self
assessment is planned for the second half of 2004.

Liquidity

The commercial paper program closed the quarter at $4.9 billion, versus
$4.6 billion at June 30, 2003 and $5.0 billion at December 31, 2002. Our
targeted program size remains at $5.0 billion and our goal is to maintain at
least 100% back-up liquidity.

At September 30, 2003, we had undrawn total bank credit facilities of
$6,270.0 million. Accordingly, backstop liquidity coverage of outstanding
commercial paper was in excess of 100% at September 30, 2003. During October
2003, we negotiated two new facilities totaling $4,200.0 million and
concurrently reduced another facility to $2,000.0 million.

In addition to the commercial paper markets, CIT accesses the unsecured
term debt markets. CIT maintains registration statements with the Securities and
Exchange Commission covering debt securities that it may sell in the future. At
September 30, 2003, we had $14.5 billion of registered, but unissued, debt
securities available under a shelf registration statement. Term-debt issued
during the quarter ended September 30, 2003 consisted of a $0.5 billion
three-year, global issue and $1.8 billion in variable-rate medium-term notes. In
November 2002, we introduced a retail note program in which we offer senior,
unsecured notes utilizing numerous broker-dealers for placement to retail
accounts. During the quarter, we issued $141 million under this program. As of
September 30, 2003, we had issued $2.0 billion of notes under this program
having maturities of between 2 and 10 years.

To further strengthen our funding capabilities, we maintain committed
asset backed facilities, which cover a range of assets from equipment to
consumer home equity receivables, and trade accounts receivable. While these
facilities are predominately in the U.S., we also maintain facilities for
Canadian domiciled assets. As of September 30, 2003, we had approximately $2.9
billion of availability in our committed asset-backed facilities and $1.8
billion of registered, but unissued, securities available under public shelf
registration statements relating to our asset-backed securitization program.
Securitization volume was $1.3 billion, compared to $1.7 billion last quarter.

The following credit ratings have been in place since September 30, 2002:

Short Term Long Term
---------- ----------
Moody's ........................ P-1 A2
Standard & Poor's .............. A-1 A
Fitch .......................... F1 A
- --------------------------------------------------------------------------------
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 some material covenants within our legal documents that govern our
funding sources. The most significant covenant in CIT's indentures and credit
agreements is a negative pledge provision, which limits granting or permitting
liens on our assets, but provides for exceptions for certain ordinary course
liens needed to operate our business. As of September 30, 2003, various credit
agreements also contained a minimum net worth test of $3.75 billion. The bank
lines established on October 14, 2003 contained the same provisions, with a
minimum net worth test of $4.0 billion, commensurate with the Company's larger
capital base.

The following tables summarize various contractual obligations, selected
contractual cash receipts and contractual commitments as of September 30, 2003.
Projected proceeds from the sale of operating lease equipment, interest revenue
from finance receivables, debt interest expense and other items are excluded ($
in millions):

Payments and Collections by Period
--------------------------------------------------------------------
Remaining After
Contractual Obligations Total 2003 2004 2005 2006 2006
- ----------------------- --------- --------- --------- --------- --------- ---------

Commercial Paper ................... $ 4,935.8 $ 4,935.8 $ -- $ -- $ -- $ --
Variable-rate term debt ............ 7,430.0 997.9 3,806.4 2,333.3 35.3 257.1
Fixed-rate term debt ............... 21,390.4 2,491.8 3,322.0 4,231.5 2,827.7 8,517.4
Lease rental expense ............... 177.1 18.8 47.5 38.4 27.4 45.0
--------- --------- --------- --------- --------- ---------
Total contractual obligations ... 33,933.3 8,444.3 7,175.9 6,603.2 2,890.4 8,819.5
--------- --------- --------- --------- --------- ---------
Finance receivables(1) ............. 30,342.6 7,375.6 5,077.1 4,268.7 2,960.5 10,660.7
Operating lease rental income ...... 3,012.8 309.6 947.0 619.4 376.8 760.0
Finance receivables held for sale(2) 1,017.9 1,017.9 -- -- -- --
Cash-- current balance ............. 2,269.0 2,269.0 -- -- -- --
--------- --------- --------- --------- --------- ---------
Total projected cash availability 36,642.3 10,972.1 6,024.1 4,888.1 3,337.3 11,420.7
--------- --------- --------- --------- --------- ---------
Net projected cash inflow (outflow) $ 2,709.0 $ 2,527.8 $(1,151.8) $(1,715.1) $ 446.9 $ 2,601.2
========= ========= ========= ========= ========= =========

- --------------------------------------------------------------------------------
(1) Based upon contractual cash flows; amount could differ due to prepayments,
charge-offs and other factors.

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

Commitment Expiration by Period
----------------------------------------------------------------
Remaining After
Contractual Commitments Total 2003 2004 2005 2006 2006
- ----------------------- --------- -------- -------- -------- -------- --------

Aircraft purchases ......................... $ 3,153.0 $ 201.0 $ 604.0 $1,072.0 $1,016.0 $ 260.0
Credit extensions .......................... 5,226.6 933.2 809.8 696.7 714.7 2,072.2
Letters of credit .......................... 1,041.3 998.7 41.6 0.3 0.3 0.4
Sale-leaseback payments .................... 486.4 -- 28.5 28.5 28.5 400.9
Manufacturer purchase commitments .......... 124.2 124.2 -- -- -- --
Venture capital fund and
equity commitments ....................... 140.7 -- 2.5 0.4 0.3 137.5
Guarantees ................................. 104.2 104.2 -- -- -- --
Acceptances ................................ 14.0 14.0 -- -- -- --
--------- -------- -------- -------- -------- --------
Total Commitments .......................... $10,290.4 $2,375.3 $1,486.4 $1,797.9 $1,759.8 $2,871.0
========= ======== ======== ======== ======== ========

CIT has $1.25 billion of debt securities outstanding, which were
originally issued by the former AT&T Capital Corporation, that are callable at
par in December 2003 and January 2004. These notes are listed on the New York
Stock Exchange under the ticker symbols CIC and CIP and are commonly known as
PINEs ("Public Income Notes"). The securities carry coupon rates of 8.125% and
8.25%, but were marked down to a yield of approximately 7.5% in CIT's financial
statements through purchase accounting adjustments. In light of the high coupon
rates, we plan to call the securities for redemption pursuant to the terms
outlined in the prospectuses. Once called, we would record non-recurring
after-tax gains estimated to total approximately $90 million ($55 million
after-tax), as the cash we would outlay is less than the current carrying value
of the securities. These gains would be spread over two quarters, coinciding
with the timing of each note redemption. Margins may also benefit prospectively
as we refinance the debt at lower rates. See Interest Rate and Foreign Exchange
Risk Management section of "Risk Management" for discussion of hedging
activities related to the call of these notes.

See the "Overview" and "Net Finance Margin" sections for information
regarding the impact of our liquidity and capitalization plan on results of
operations.

Capitalization

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

September 30, December 31,
2003 2002
------------- ------------
Commercial paper .................................. $ 4,935.8 $ 4,974.6
Bank credit facilities ............................ -- 2,118.0
Term debt ......................................... 28,820.4 24,588.7
Preferred capital securities ...................... 255.9 257.2
Stockholders' equity(1) ........................... 5,279.8 4,968.5
--------- ---------
Total capitalization .............................. 39,291.9 36,907.0
Goodwill .......................................... (388.7) (384.4)
--------- ---------
Total tangible capitalization ..................... $38,903.2 $36,522.6
========= =========
Total tangible stockholders' equity ............... $ 4,891.1 $ 4,584.1
========= =========
Tangible stockholders' equity(1) and
Preferred Capital Securities to managed assets .. 10.44% 10.44%
Total debt (excluding overnight deposits) to
tangible stockholders' equity(1) and Preferred
Capital Securities .............................. 6.22x 6.22x
- --------------------------------------------------------------------------------
(1) Stockholders' equity for these calculations excludes accumulated other
comprehensive loss relating to derivative financial instruments and
unrealized gains on securitization investments of $98.9 million and $97.8
million at September 30, 2003 and December 31, 2002, respectively, as these
losses and gains are not necessarily indicative of amounts which will be
realized.

The preferred capital securities are 7.70% Preferred Capital Securities
issued in 1997 by CIT Capital Trust I, a wholly-owned subsidiary. CIT Capital
Trust I invested the proceeds of that issue in Junior Subordinated Debentures of
CIT having identical rates and payment dates. Consistent with rating agency
measurements, preferred capital securities are included in tangible equity in
our leverage ratios. See "Non-GAAP Financial Measurements" for additional
information. Also see Note 1 Summary of Significant Accounting Policies for
information regarding the accounting and reporting for these securities.

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

Securitization and Joint Venture Activities

We utilize special purpose entities ("SPE's") and joint ventures in the
normal course of business to execute securitization transactions and conduct
business in key vendor relationships.

Securitization Transactions -- SPE's are used to achieve "true sale"
requirements for these transactions in accordance with SFAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities." Pools of assets are originated or acquired and sold to SPE's,
which in turn issue debt securities to investors solely backed by asset pools.
Accordingly, CIT has no legal obligations to repay the securities in the event
of a default by the SPE. CIT retains the servicing rights and participates in
certain cash flows of the pools. The present value of expected net cash flows
that exceeds the estimated cost of servicing is recorded in other assets as a
"retained interest." Assets securitized are shown in our managed assets and our
capitalization ratios on managed assets. Under the recently issued rules
relating to consolidation and SPE's, non-qualifying securitization entities will
have to be consolidated. Based on our preliminary analysis, we believe that all
of our existing asset-backed SPE structures meet the definition of a qualifying
special purpose entity ("QSPE") as defined by SFAS 140 and will therefore
continue to qualify as off-balance sheet transactions. As part of these related
activities, the Company enters into hedge transactions with the trusts (SPE) in
order to protect the trust against interest rate risk. CIT insulates its
associated risk by entering into offsetting swap transactions with third
parties. The net effect is to protect the trust and CIT from interest rate risk.
The notional amount of these swaps was $2.9 billion at September 30, 2003.
During February 2003, we successfully completed a consent solicitation to amend
the negative pledge provision in our 1994 debt indenture. This action conforms
the 1994 debt indenture to our other agreements and provides flexibility in
structuring our securitizations as accounting sales or secured financings.

Joint Ventures -- We utilize joint ventures to conduct financing
activities with certain strategic vendor partners. Receivables are originated by
the joint venture and purchased by CIT. The vendor partner and CIT jointly own
these distinct legal entities, and there is no third-party debt involved. These
arrangements are accounted for

using the equity method, with profits and losses distributed according to the
joint venture agreement. See related FIN 46, "Consolidation of Variable Interest
Entities" discussion in "Accounting and Technical Pronouncements" and disclosure
in Note 7 -- Related Party Transactions.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires
management to use judgment in making estimates and assumptions that affect
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of income and expenses during the reporting period. The following accounting
policies include inherent risks and uncertainties related to judgments and
assumptions made by management. Management's estimates are based on the relevant
information available at the end of each period.

Investments -- Investments, for which CIT does not have the ability to
exercise significant influence and for which there is not a readily determinable
market value, the majority of which are venture capital equity investments, are
accounted for under a lower of cost or fair value method. Accordingly,
management uses judgment in determining fair value and in determining when an
unrealized loss is deemed to be other than temporary, in which case such loss is
charged to earnings. As of September 30, 2003, venture capital equity
investments totaled $313.9 million. A 10% fluctuation in value of venture
capital investments equates to $0.09 in earnings per share.

Charge-off of Finance Receivables -- Finance receivables are reviewed
periodically to determine the probability of loss. Charge-offs are taken after
substantial collection efforts are conducted, considering such factors as the
borrower's financial condition and the value of underlying collateral and
guarantees (including recourse to dealers and manufacturers).

Impaired Loans -- Loan impairment is defined as any shortfall between the
estimated value and the recorded investment for those loans defined as impaired
loans in the Company's application of SFAS 114, with the estimated value
determined using the fair value of the collateral and other cash flows, if the
loan is collateral dependent, or the present value of expected future cash flows
discounted at the loan's effective interest rate. The determination of
impairment involves management's judgment and the use of market and third party
estimates regarding collateral values. Valuations in the level of impaired loans
and corresponding impairment as defined under SFAS 114 affect the level of the
reserve for credit losses.

Reserve for Credit Losses -- Our consolidated reserve for credit losses is
periodically reviewed for adequacy based on portfolio collateral values and
credit quality indicators, including charge-off experience, levels of past due
loans and non-performing assets, evaluation of portfolio
diversification/concentration and economic conditions. We review finance
receivables periodically to determine the probability of loss, and record
charge-offs after considering such factors as delinquencies, the financial
condition of obligors, the value of underlying collateral, as well as third
party credit enhancements such as guarantees and recourse from manufacturers.
This information is reviewed formally on a quarterly basis with senior
management, including the CEO, COO, CFO, Chief Credit Officer and Controller
among others, in conjunction with setting the reserve for credit losses.

The reserve for credit losses is set and recorded based on the development
of three key components (1) specific reserves for collateral dependent loans
which are impaired under SFAS 114, (2) reserves for estimated losses inherent in
the portfolio based upon historical and projected credit trends and, (3) general
reserves for estimation risk. The process involves the use of estimates and a
high degree of management judgement. As of September 30, 2003, the reserve for
credit losses was $752.5 million or 2.48% of finance receivables and 87.2% of 60
days or more past due receivables. A $10.0 million change in the reserve for
credit losses equates to the following variances: 3 basis points (0.03%) in the
percentage of reserves to finance receivables; 116 basis points (1.16%) in the
percentage of reserves to past due receivables and $0.03 in earnings per share.

Retained Interests in Securitizations -- Significant financial
assumptions, including loan pool credit losses, prepayment speeds and discount
rates, are utilized to determine the fair values of retained interests, both at
the date of the securitization and in the subsequent quarterly valuations of
retained interests. Any resulting losses, representing the excess of carrying
value over estimated fair value, are recorded against current earnings. However,
unrealized gains are reflected in stockholders' equity as part of other
comprehensive income.

Lease Residual Values -- Operating lease equipment is carried at cost less
accumulated depreciation and is depreciated to estimated residual value using
the straight-line method over the lease term or projected economic life of the
asset. Direct financing leases are recorded at the aggregated future minimum
lease payments plus estimated residual values less unearned finance income. We
generally bear greater risk in operating lease transactions (versus finance
lease transactions) as the duration of an operating lease is generally shorter
relative to the equipment useful life than a finance lease. Management performs
periodic reviews of the estimated residual values, with non-temporary impairment
recognized in the current period. As of September 30, 2003, our direct financing
lease residual balance was $2,451.7 million and our operating lease equipment
balance was $7,485.3 million. A 10 basis points (0.1%) fluctuation in the total
of these amounts equates to $0.03 in earnings per share.

Goodwill -- CIT adopted SFAS No. 142, "Goodwill and Other Intangible
Assets," effective October 1, 2001. The Company determined at October 1, 2001
that there was no impact of adopting this new standard under the transition
provisions of SFAS No. 142. Since adoption, goodwill is no longer amortized, but
instead will be assessed for impairment at least annually. During this
assessment, management relies on a number of factors including operating
results, business plans, economic projections, anticipated future cash flows,
and market place data. See "-- Goodwill and Other Intangible Assets
Amortization" for a discussion of our impairment analysis. Goodwill was $388.7
million at September 30, 2003. A 10% fluctuation in the value of goodwill
equates to $0.18 in earnings per share.

Accounting and Technical Pronouncements

In January 2003, the FASB issued FIN 46, which requires the consolidation
of VIEs by their primary beneficiaries if they do not effectively disperse the
risks among the parties involved. On October 9, 2003, the FASB announced the
delay in implementation of FIN 46 for VIEs in existence as of February 1, 2003.
VIEs are certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. The primary beneficiary is
the entity that has the majority of the economic risks and rewards of ownership
of the VIE. See Note 1 -- Summary of Significant Accounting Policies for
additional information regarding the implementation of FIN 46.

The FIN 46 potential impact to CIT is primarily related to three types of
transactions: 1) strategic vendor partner joint ventures, 2) securitizations,
and 3) selected financing and private equity transactions. Based on
interpretations of FIN 46 currently available, we believe the implementation of
this standard will not change the current equity method of accounting for our
strategic vendor partner joint ventures (see Note 7 -- Related Party
Transactions). Our securitization transactions outstanding at September 30, 2003
will continue to qualify as off-balance sheet transactions. The Company may
structure certain future securitization transactions, including factoring trade
account receivables transactions, as on-balance sheet financings. Certain VIEs
acquired primarily in conjunction with selected financing and/or private equity
transactions may be consolidated under FIN 46. The consolidation of these
entities will not have a significant impact on our financial position or results
of operations. Due to the complexity of the new guidance and evolving
interpretations among accounting professionals, the Company will consider such
further guidance, if any, and continue assessing the accounting and disclosure
impact of FIN 46 on its VIEs.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
pronouncement establishes standards for classifying and measuring certain
financial instruments as a liability (or an asset in some circumstances). This
pronouncement requires CIT to display the Preferred Capital Securities
(previously described as "Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures of the Company") within
the debt section on the face of the Consolidated Balance Sheets and show the
related expense with interest expense on a pre-tax basis. There was no impact to
net income upon adoption. This pronouncement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Prior period restatement is not permitted. On November 7, 2003, certain
measurement and classification provisions of SFAS 150, relating to certain
mandatorily redeemable non-controlling interests, were deferred indefinitely.
The adoption of these delayed provisions, which relate primarily to minority
interests associated with finite-lived entities, is not expected to have a
significant impact on the financial position or results of operations.
Consistent with rating agency measurements, preferred capital securities are
included in tangible equity in our leverage ratios. See "Non-GAAP Financial
Measurements" for additional information.

Statistical Data

The following table presents components of net income, including TCH in
2002, as a percent of AEA, along with other selected financial data ($ in
millions):

Nine Months Ended
September 30,
-------------------------
2003 2002
---------- ----------
Finance income .................................... 10.51% 12.09%
Interest expense .................................. 3.76% 4.10%
--------- ---------
Net finance income .............................. 6.75% 7.99%
Depreciation on operating lease equipment ......... 3.02% 3.47%
--------- ---------
Net finance margin .............................. 3.73% 4.52%
Provision for credit losses ....................... 1.07% 2.60%
--------- ---------
Net finance margin, after provision
for credit losses ............................... 2.66% 1.92%
Other revenue ..................................... 2.52% 2.64%
--------- ---------
Operating margin .................................. 5.18% 4.56%
--------- ---------
Salaries and general operating expenses ........... 2.62% 2.73%
Goodwill impairment ............................... -- 25.04%
Interest expense-- TCH ............................ -- 2.25%
--------- ---------
Operating expenses ................................ 2.62% 30.02%
--------- ---------
Income (loss) before income taxes ................. 2.56% (25.46)%
Provision for income taxes ........................ (1.00)% (0.98)%
Minority interest ................................. -- --
Dividends on preferred capital securities,
after tax ....................................... (0.02)% (0.03)%
--------- ---------
Net income (loss) ............................... 1.54% (26.47)%
--------- ---------
Average earning assets ............................ $35,559.0 $34,674.5
========= =========

Non-GAAP Financial Measurements

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

Non-GAAP financial measures disclosed in this report are meant to provide
additional information and insight relative to historical operating results and
financial position of the business and in certain cases to provide financial
information that is presented to rating agencies and other users of financial
information. These measures are not in accordance with, or a substitute for,
GAAP and may be different from or inconsistent with non-GAAP financial measures
used by other companies.

Selected non-GAAP disclosures as of September 30, 2003 and December 31,
2002 are presented and reconciled in the table below:

September 30, December 31,
2003 2002
------------ ------------
Managed assets(1):
Finance receivables ............................... $30,342.6 $27,621.3
Operating lease equipment, net .................... 7,485.3 6,704.6
Finance receivables held for sale ................. 1,017.9 1,213.4
Equity and venture capital investments (included
in other assets) ................................ 313.9 335.4
--------- ---------
Total financing and leasing portfolio assets ...... 39,159.7 35,874.7
Securitized assets ............................... 10,141.0 10,482.4
--------- ---------
Managed assets .................................... $49,300.7 $46,357.1
========= =========
Earning assets(2):
Total financing and leasing portfolio assets ...... $39,159.7 $35,874.7
Credit balances of factoring clients ............. (3,103.0) (2,270.0)
--------- ---------
Earning assets .................................... $36,056.7 $33,604.7
========= =========
Tangible equity(3):
Total equity ...................................... $ 5,180.9 $ 4,870.7
Other comprehensive loss relating to derivative
financial instruments ............................ 106.9 118.3
Unrealized gain on securitization investments .... (8.0) (20.5)
Goodwill ......................................... (388.7) (384.4)
--------- ---------
Total common equity ............................... 4,891.1 4,584.1
Preferred capital securities ..................... 255.9 257.2
--------- ---------
Tangible equity ................................... $ 5,147.0 $ 4,841.3
========= =========
Debt, net of overnight deposits(4):
Total debt ........................................ $34,012.1 $31,681.3
Overnight deposits ................................ (1,722.9) (1,578.7)
Preferred capital securities ...................... (255.9) --
--------- ---------
Debt, net of overnight deposits ................... $32,033.3 $30,102.6
========= =========
- --------------------------------------------------------------------------------
1) Managed assets are utilized in certain credit and expense ratios. Securitized
assets are included in managed assets because CIT retains certain credit risk
and the servicing related to assets that are funded through securitizations.

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

3) Tangible equity is utilized in leverage ratios, and is consistent with our
presentation to rating agencies. Other comprehensive losses and unrealized
gains on securitization investments (both included in the separate component
of equity) are excluded from the calculation, as these amounts are not
necessarily indicative of amounts 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.

Note 1 to the accompanying Consolidated Financial Statements describes our
IPO and the inclusion of TCH in our consolidated accounts. Prior to our IPO on
July 8, 2002, the activity of TCH consisted primarily of interest expense
payable to an affiliate of Tyco, and the TCH accumulated net deficit was
relieved via a capital contribution from Tyco. TCH had no operations subsequent
to June 30, 2002. Although the financial statements and notes thereto include
the activity of TCH in conformity with accounting principles generally accepted
in the U.S., management believes that it is most meaningful to discuss our
financial results excluding TCH, due to its temporary status as a Tyco
acquisition company with respect to CIT. Therefore, throughout this section, in
order to provide comparability with prospective results, prior period year to
date comparisons exclude the results of TCH. Consolidating income statements for
CIT, TCH and CIT consolidated for the nine months ended September 30, 2002 are
displayed in Item 1. Consolidating Financial Statements and Supplementary Data,
Note 11 - Consolidating Financial Statements.

The following table summarizes the impact of various items for the
respective reporting periods that affect the comparability of our financial
results under GAAP. We are presenting these items as a supplement to the GAAP
results to facilitate the comparability of results between periods. The adoption
of SFAS No. 142, "Goodwill and Other Intangible Assets" eliminated goodwill
amortization and introduced goodwill impairment charges. The impairment charge
in the period ended June 30, 2002 was a non-cash charge and did not impact our
tangible capital. The TCH results relate to a Tyco acquisition company that had
temporary status with respect to Tyco's acquisition of CIT. For these reasons,
we believe that this table, in addition to the GAAP results, aids in the
analysis of the significant trends in our business over the periods presented ($
in millions):

Quarter Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2003 2002 2003 2002
-------- -------- ------- ---------

Net income (loss)-- GAAP basis ............... $147.8 $134.7 $411.7 $(6,882.8)
Charges included in net income (loss):
Goodwill impairment ........................ -- -- -- 6,511.7
TCH losses ................................. -- -- -- 668.6
------ ------ ------ -------
Net income-- before charges .................. $147.8 $134.7 $411.7 $ 297.5
====== ====== ====== =======

Forward-Looking Statements

Certain statements contained in this document are "forward-looking
statements" within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. All statements contained herein that are not clearly historical in
nature are forward-looking and the words "anticipate," "believe," "expect,"
"estimate" and similar expressions are generally intended to identify
forward-looking statements. Any forward-looking statements contained herein, in
press releases, written statements or other documents filed with the Securities
and Exchange Commission or in communications and discussions with investors and
analysts in the normal course of business through meetings, webcasts, phone
calls and conference calls, concerning our operations, economic performance and
financial condition are subject to known and unknown risks, uncertainties and
contingencies. Forward-looking statements are included, for example, in the
discussions about:

o our liquidity risk management,

o our credit risk management,

o our asset/liability risk management,

o our funding, borrowing costs and net finance margin

o our capital, leverage and credit ratings,

o our operational and legal risks,

o our commitments to extend credit or purchase equipment, and

o how we may be affected by legal proceedings.

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

o risks of economic slowdown, downturn or recession,

o industry cycles and trends,

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

o funding opportunities and borrowing costs,

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

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

o adequacy of reserves for credit losses,

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

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

o changes in competitive factors, and

o future acquisitions and dispositions of businesses or asset
portfolios.

Item 4. Controls and Procedures

As of the end of the period covered by this report, the Company evaluated
the effectiveness of the design and operation of its disclosure controls and
procedures. The Company's disclosure controls and procedures are designed to
ensure that the information that the Company must disclose in its reports filed
under the Securities Exchange Act of 1934 is communicated and processed in a
timely manner. Albert R. Gamper, Jr., Chairman and Chief Executive Officer, and
Joseph M. Leone, Vice Chairman and Chief Financial Officer, participated in this
evaluation.

Based on this evaluation, Messrs. Gamper and Leone concluded that, as of
the date of their evaluation, the Company's disclosure controls and procedures
were effective, except as noted in the next paragraph. Since the date of the
evaluation described above, there have not been any significant changes in the
Company's internal controls or in other factors that could significantly affect
those controls.

During our fiscal 2002 financial reporting process, management, with the
Company's independent accountants, identified a deficiency in our tax financial
reporting process relating to the calculation of deferred tax assets and
liabilities which constitutes a "Reportable Condition" under standards
established by the American Institute of Certified Public Accountants.
Management currently believes that this matter has not had any material impact
on our financial statements. Management has completed the design and development
of processes and controls to address this deficiency. The testing of systems and
data integrity is underway. The project initiatives also include historic tax
basis data gathering, as well as quality control review and process and control
documentation. The significant aspects of this project will be completed in
2003.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

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

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

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

4.2 Form of 5-Year Credit Agreement, dated as of October 10, 2003,
among CIT Group Inc., a Delaware corporation, the several
banks and other financial institutions, J.P. Morgan Securities
Inc. and Citigroup Global Markets Inc., acting as joint lead
arrangers and bookrunners, Citibank, N.A. and Bank of America,
N.A., as syndication agents, Barclays Bank Plc, as
documentation agent and JPMorgan Chase Bank, as administrative
agent.

4.3 Form of 364-Day Credit Agreement, dated as of October 10,
2003, among CIT Group Inc., a Delaware corporation, the
several banks and other financial institutions, J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., as joint
lead arrangers and bookrunners, Citibank, N.A. and Bank of
America, N.A., as syndication agents, Barclays Bank Plc, as
documentation agent and JPMorgan Chase Bank, as administrative
agent.

10.1 Employment Agreement for Jeffrey M. Peek, dated July 22, 2003.

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

31.1 Certification of Albert R. Gamper, Jr. pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.

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

32.1 Certification of Albert R. Gamper, Jr. pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

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

(b) Reports on Form 8-K

Current Report on Form 8-K filed July 24, 2003, reporting the
financial results of CIT as of and for the quarter ended June
30, 2003, and announcing the formation of an Office of the
Chairman.

Current Report on Form 8-K filed August 1, 2003, declaring a
dividend $0.12 per share, payable on August 29, 2003 to
shareholders of record on August 15, 2003, and announcing the
expansion of the Board of Directors.

SIGNATURES

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

CIT GROUP INC.

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

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

November 7, 2003