CIT Late on Annual Report; Guides For Losses (CIT)

Not surprisingly, CIT Group Inc. (NYSE: CIT) filed with the SEC a form NT 10-K… That is a non-timely annual report notification.  The company said it would be unable to file its annual report for 2009 by the March 1 deadline ‘without unreasonable effort and expense.’  CIT did note that it expects to complete and file the annual report on or before March 16, 2010.  We are also getting some guidance for what the P&L looks like in the report.

This was already announced, but the company is adopting fresh start accounting as of the Emergence Date and adjusting the historical carrying value of its assets and liabilities to their respective fair values at the Emergence Date.   It further noted, “The time period between the Emergence Date and the statutory Form 10-K filing date was not sufficient for the Company to complete the appropriate level of research, analysis, due diligence and review with respect to certain accounting and disclosure matters related to the application of fresh start accounting without unreasonable effort and expense.”

CIT expects to report a net loss, prior to the impact of reorganization and fresh start accounting adjustments, of about $900 million for its Q4 period, and $4 billion for the 2009 year-end.

The annual results from continuing operations include a $692 million goodwill and intangible asset impairment charge, increased provision for credit losses and reduced net interest revenue, and a higher level of professional fees. The comparable amount for the 2008 period was a loss of $2.9 billion, after a $2.2 billion loss from a discontinued operation from the sale of CIT’s home lending business and a $468 million goodwill and intangible asset impairment charge.  The $4 billion loss is expected to mostly be offset by the impact of reorganization and fresh start accounting adjustments.

No one likes to see a late 10-K.  But the issue at hand is that CIT has only just recently emerged from a prepackaged bankruptcy.  It has also just brought on John Thain as CEO.  Today’s delay should be of very little surprise.  The only real surprise will be if the annual report does not have some variation of a “going concern” note from its auditors.

Jon C. Ogg