CIT » Topics » Quarterly Financial Highlights

This excerpt taken from the CIT 8-K filed Jul 18, 2007.

Quarterly Financial Highlights

Loss of $0.70 per share, with $2.58 per share loss on home lending business exit
$0.71 per share gain on sale of U.S. construction portfolio
Completed Healthcare REIT and CLO transactions
Commercial credit metrics remain favorable

        NEW YORK – July 18, 2007 – CIT Group Inc. (NYSE: CIT), today reported a diluted loss per share of $0.70 for the 2007 quarter, versus $1.16 of earnings per share for the 2006 quarter. The net loss attributable to common shareholders was $134.5 million for the current quarter, versus $236.0 million income for the prior year quarter.

        The net loss included noteworthy items related to executing active portfolio management and other operating initiatives as follows:

a pretax charge of $765 million (net of pre-existing credit reserves of $228 million, but including unamortized origination costs) relating to a fair value adjustment on $10.6 billion of receivables transferred to assets held for sale in connection with the planned exit of our home lending business ($495.3 million after tax, $2.58 per share loss);
a pretax gain of $228.7 million, from the sale of our $2.6 billion U.S. construction portfolio ($136.9 million after tax, $0.71 per share gain); and
a pretax charge of $34.9 million for employee termination benefits in conjunction with non-home lending work force reductions ($21.1 million after tax, $0.11 per share loss).

        “Although we made progress executing on our business strategy, it was a challenging quarter where we had to make some tough decisions,” said Jeffrey M. Peek, Chairman and Chief Executive Officer of CIT. “All CIT’s businesses must meet rigorous return standards. As a result, we decided to exit home lending and construction enabling us to redeploy resources to higher returning businesses. While we believe exiting home lending is the right decision, it significantly impacted our current results.”

        ”In terms of strategic progress, we advanced our business through active portfolio management and asset manager initiatives. We acquired Citigroup’s $2 billion U.S. Business Technology Finance unit and Edgeview Partners, further building our core franchise. The completion of our CLO and a healthcare REIT reflect solid progress in building an asset manager model. We have also decided to pursue a public offering option for a portion of our Aerospace portfolio. We are confident that our actions in this difficult quarter will deliver long-term shareholder value.”

        Excluding the noteworthy items described above, quarterly earnings improved over the prior year on higher finance revenue, due to higher earning assets, a lower effective tax rate and strong year over year volume growth. The current quarter was also negatively impacted by a $22.5 million charge ($0.07 EPS) in non-spread revenue relating to the disposition of a waste-to-energy plant previously acquired in a loan workout and $14.6 million of home lending operating losses ($0.04 EPS).


 
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