<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF OCTOBER, 2000.
CNH GLOBAL N.V.
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
WORLD TRADE CENTER
TOWER B, 10TH FLOOR
AMSTERDAM AIRPORT
THE NETHERLANDS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
----------- ------------
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
----------- ------------
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- _______.)
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[CNH LOGO]
NEWS RELEASE
For Immediate Release
CNH REPORTS THIRD QUARTER RESULTS
MERGER SAVINGS EXPECTED TO GROW TO $600 MILLION ANNUALLY
For more - Third quarter operating earnings were $9 million,
information contact: versus $23 million for the third quarter of 1999, on
a pro forma basis.
William B. Masterson - Net loss, before goodwill and restructuring, of $64
01 262 636 5793 million, or $.23 per share.
- Revenues of $2.3 billion were down from the third
quarter of 1999, on a pro forma basis, reflecting
significant unfavorable foreign exchange impacts.
- Acceleration of restructuring and integration
activities will drive increased savings for the year.
Related restructuring charges total $106 million,
before tax, in the quarter.
- Further headcount reductions and facility closures or
sales expected to increase annual savings to at least
$600 million by 2003.
Racine, Wisconsin (October 26, 2000) - CNH Global
(N:CNH) today reported operating earnings of $9 million
for the third quarter of 2000, compared with $23 million
for the third quarter of 1999, on a pro forma basis. The
company recorded a net loss, before goodwill and
restructuring, of $64 million, or $.23 per share, for
the third quarter of 2000. In the prior year period, the
company had a net loss, before goodwill and
restructuring, of $13 million, or $.09 per share, on a
pro forma basis. Including the impact of goodwill, the
company had a third quarter net loss before
restructuring of $83 million, or $.30 per share, versus
a net loss before restructuring, on a pro forma basis,
of $30 million, or $.20 per share.
Revenues for the third quarter were $2.3 billion, down
from $2.6 billion in the same period last year, on a pro
forma basis. In addition to lower
- CNH Global N.V. Administrative Offices 700 State
Street Racine, WI 53404 U.S.A. http://www.cnh.com -
<PAGE> 3
sales volumes, the decline included negative foreign
exchange of $144 million, compared to 1999.
"Given our market environment, we are taking further
steps to increase the pace of our merger integration
activities," said Jean-Pierre Rosso, chairman and chief
executive officer. "As a result, we now anticipate that
annual savings from these activities will reach at least
$600 million. Our efforts to accelerate the integration
are expected to result in improved savings by the end of
this year."
Third quarter results reflect increased cost reduction
levels, as compared to the prior year on a pro forma
basis. These were achieved through merger integration
activities and ongoing cost initiatives. In addition,
pricing continued to be slightly positive. These were
offset primarily by economic cost increases, as well as
comparably lower sales volumes and a change in product
sales mix from the third quarter of 1999. In addition,
negative foreign exchange impact contributed to lower
results as did lower contributions from the company's
financial services business.
For the first nine months of 2000, CNH had operating
earnings of $197 million, compared to $276 million in
the same period last year, on a pro forma basis. The
company had a net loss, before goodwill and
restructuring, of $113 million, or $.59 per share, for
the first nine months of 2000, versus net income, before
goodwill and restructuring, of $18 million, or $.12 per
share, in 1999, on a pro forma basis. Including the
impact of goodwill, the company had a first nine-month
net loss before restructuring of $167 million, or $.87
per share, versus a net loss before restructuring, on a
pro forma basis, of $33 million, or $.22 per share.
Revenues for the first nine months were $7.8 billion,
compared to $8.2 billion in the same period last year,
on a pro forma basis. In the first nine months of the
year, unfavorable foreign exchange rates negatively
impacted revenues by $413 million, compared to 1999.
Lower volumes, particularly in the agricultural
equipment business, also contributed to lower sales
totals.
Through the first nine months of this year, CNH has
incurred pre-tax restructuring charges of $115 million,
primarily related to the sale of the Winnipeg, Canada,
products and plant, as well as the privatization of
selected retail stores in Europe, and administrative
headcount reductions. With its plan for industrial
rationalization and restructuring of its selling and
administrative organization now set, the company expects
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to take further restructuring charges of approximately
$400 million, before taxes, over the next two to three
years. CNH now expects to realize at least $600 million
in annual savings by 2003, up from the $500 million
previously anticipated. By year-end, CNH expects these
savings to reach approximately $155 million.
Consistent with its business and market outlook, CNH
will decrease production and dealer shipments of
agricultural and construction equipment in the fourth
quarter, due to weaker market conditions and lower
company sales. In addition, the company does not expect
overall pricing to be at the level previously
anticipated, due to an increasingly competitive market.
Results will be further impacted by unfavorable foreign
exchange rates, including the Euro and other currencies.
As a result, the company expects fourth quarter results,
before restructuring and goodwill, to be a loss of
approximately $.22 to $.30 per share. In the fourth
quarter, goodwill is expected to be approximately $.10
per share.
MERGER INTEGRATION ACTIONS CONTINUE
CNH is continuing to implement steps in its merger
integration plan. The company announced that it will
close its manufacturing plant in Soracaba, Brazil, by
the fourth quarter of 2001. Production of agricultural
and construction equipment for Latin American markets
will be consolidated at the company's three remaining
plants in that country. In addition, CNH announced that
it will move mini-excavator production from its
Manchester, England, plant by year-end in preparation
for the required divestiture of the Fermec construction
equipment business.
The company has plans for further merger integration
actions. These actions will be announced as details are
finalized.
WORLDWIDE RETAIL EQUIPMENT SALES
Worldwide retail unit sales of CNH agricultural
equipment in the third quarter were slightly lower than
the company's combined sales in the same period last
year, while industry sales registered a slight
improvement. In North America, CNH sales of large
agricultural equipment continued to be negatively
impacted by customer uncertainty regarding the
divestiture of New Holland's large row-crop and
four-wheel-drive tractor business, as well as industry
expectations of a new line of Case IH four-wheel drive
tractors that were introduced during the quarter.
Shipments of these tractors will begin in the fourth
quarter. As a result, retail unit sales of CNH
high-horsepower tractors were lower than in the previous
period, while the industry reported an improvement in
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tractor sales from the third quarter of 1999. CNH sales
of combines also were down in North America, while
industry sales were significantly better. In Europe, CNH
agricultural equipment sales were lower, reflecting
uncertainty around the divestiture of its Doncaster,
England, operations. The industry was also lower. In
Latin America, CNH sales of agricultural equipment were
up significantly from the company's previous year's
performance and better than the industry gains. And in
other markets around the world, CNH sales were slightly
higher than last year, while the industries in those
markets reported lower sales.
Worldwide retail unit sales of CNH construction
equipment were lower in the third quarter, while the
industry remained at previous year's levels. CNH sales
gains in Latin America and rest of world markets, were
offset by lower sales in North America and Europe. In
North America, sales of heavy equipment were up despite
an industry decline, while sales of skid steers and
loader backhoes were lower. In Europe, retail sales were
somewhat lower than the industry. Loader backhoes and
heavy equipment sales were relatively in line with
industry results, while skid steers were lower. In Latin
America, CNH, driven primarily by loader backhoes,
exceeded the industry's double-digit sales growth. In
other markets around the world, CNH retail sales were up
substantially, far exceeding the industry.
FINANCIAL SERVICES
CNH Capital, the financial services unit of CNH Global,
reported net income of $12 million for the third quarter
of 2000, compared to $32 million for the same period
last year, on a pro forma basis. Net income for the
first nine months was $39 million, compared to $92
million in the comparable period last year, on a pro
forma basis. The year-over-year decrease in net income
is primarily attributable to higher loan loss provisions
in its core equipment and diversified portfolios, as
well as higher integration costs, lower margins on
receivables and lower gains on asset-backed
securitizations resulting from interest rate increases
in the first half of the year.
Sustained weakness in the farm economy continues to put
pressure on the large agricultural equipment segment of
the business. During the quarter, CNH Capital increased
its loan loss provisions in North America and Australia
due to the prolonged weakness in this sector.
CNH Capital's managed portfolio increased to $11.5
billion, up more than 8 percent as compared to the prior
year, on a combined basis. The company's geographic
expansion and diversification initiatives
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accounted for a portion of this growth, along with the
transfer of CNH U.S. wholesale receivables to CNH
Capital's managed portfolio in the second quarter of
this year.
CNH Capital continues to execute its growth strategy. In
September, the company received a bank license in
Ireland, which will enable CNH Capital to operate as a
wholly owned pan-European financing organization. Plans
include opening branch offices in the company's major
markets throughout Western Europe during 2001.
"We're committed to leveraging our strength as one of
the world's largest equipment finance businesses to
ensure that financing is available for customers in all
regions of the world, despite significant market
pressures in our core business," stated Ted R. French,
chairman, CNH Capital. "Our decision to establish wholly
owned pan-European financing operations is a major
commitment to our dealers and customers throughout the
region. Our bank license gives us the control and
flexibility we need to expand the geographic scope of
our business and the breadth of our product offerings."
MARKET OUTLOOK
The outlook for CNH's agricultural equipment market is
heavily impacted by continued low commodity prices.
Projections for the 2000 harvest are slightly lower than
that of 1999 on a global basis, but significantly higher
than last year in North America. As a result, global
grain stock levels are not expected to significantly
decrease from last year, placing continued pressure on
commodity prices. In addition, CNH's sales have been
impacted by customer and dealer uncertainty regarding
the availability of products that the company agreed to
divest as conditions for regulatory approval of the
business merger of New Holland and Case Corporation.
And, in some instances, customer anticipation of new
product models also has delayed purchases. In addition
to these demand factors, market conditions have made it
increasingly difficult for the company to realize
planned pricing increases this year. The impact of these
conditions has been particularly strong in North
America. The company expects these conditions to
continue for the balance of the year. In its other
markets around the world, the company expects industry
sales to be moderately lower than 1999.
In its construction equipment business, the company
expects slightly lower industry sales in North America,
compared to the strong levels of last year, due to the
impact of higher interest rates on construction
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activity. The company now expects overall construction
activity in North America to be slightly lower for the
balance of 2000 and into 2001, particularly in the
housing sector. In Europe, the sales outlook remains
slightly higher than last year due to stronger market
conditions. In Latin America and other markets around
the world, the company continues to expect significant
sales improvement, compared to relatively low 1999
levels, as a result of more stable economic conditions.
The gains in Europe, Latin America and the rest of the
world are now expected to slightly offset the
anticipated decline in North America.
With strong global brands, CNH is a leader in the
agricultural equipment, construction equipment and
financial services industries and had combined 1999
revenues of approximately $11 billion. CNH sells its
products in 160 markets through a network of more than
10,000 dealers and distributors. CNH products are sold
under the following brands: Case, Case IH, Fermec,
Fiatallis, Fiat-Hitachi, Link-Belt earth-moving
equipment, New Holland, New Holland Construction, O&K
and Steyr.
******
On October 11, CNH announced the departure of two
members of its Board of Directors. An Extraordinary
General Meeting of the Shareholders will be held at the
offices of the Company in the World Trade Center
Amsterdam Airport, 10th Floor, Tower B, Schiphol
Boulevard 217, 1118 BH Schiphol Airport, The
Netherlands, on Wednesday, November 8, 2000 at 10:00
a.m. (Amsterdam time) for the purpose of appointing a
new director. In accordance with Dutch law, only persons
who are registered shareholders on the day of the
meeting or persons who, on the day of the meeting, are
permitted by law to attend or their proxy holders are
entitled to attend and may only vote shares held of
record on the day of the meeting.
On October 20, CNH announced a reorganization of its
manufacturing operations in Latin America as part of the
company's continued consolidation of its global
industrial organization. These actions follow previously
announced consolidation plans in North America and parts
of Europe. The consolidation will further improve the
company's competitive position as one of the world's
largest equipment manufacturers.
******
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CNH management will hold a conference call later today
to review its third quarter results. The conference call
will begin at approximately 9:00 am U.S. CDT. Those who
would like to access this call can do so by dialing
800-289-0518 or 913-981-5532 in the U.S. and Canada,
0800-028-7957 in the U.K. and +44-113-383-0462 in
continental Europe. Callers are encouraged to be on line
15 minutes prior to the call.
******
FORWARD LOOKING STATEMENTS
The information included in this news release contains
forward-looking statements and involves risk and
uncertainties that could cause actual results to differ
materially from those in the forward-looking statements.
The company's outlook is predominantly based on its
interpretation of what it considers key economic
assumptions. Crop production and commodity prices are
strongly affected by weather and can fluctuate
significantly. Housing starts and other construction
activity are sensitive to interest rates and government
spending. Some of the other significant factors for the
company include general economic and capital market
conditions, the cyclical nature of our business,
currency exchange rate movements, our hedging practices,
the company's and its customers' access to credit,
political uncertainty and civil unrest in various areas
of the world, pricing, product initiatives and other
actions taken by competitors, disruptions in production
capacity, excess inventory levels, the effect of changes
in laws and regulations (including government subsidies
and international trade regulations), the effect of
conversion to the Euro, technological difficulties,
changes in environmental laws, and employee and labor
relations. Additionally, CNH's achievement of the
anticipated benefits of the merger of New Holland and
Case, including the realization of expected annual
operating synergies, depends upon, among other things,
its ability to integrate effectively the operations and
employees of New Holland and Case, and to execute its
multi-branding strategy. The timing and costs for
implementing CNH's merger integration initiatives is
subject to the outcome of negotiations with numerous
third parties, including governmental regulators,
purchasers of product lines required to be divested,
labor unions, dealers and others. Further information
concerning factors that could significantly impact
expected results is included in the following sections
of the company's Form 20-F for 1999, as filed with the
Securities and Exchange Commission: Business--Business
Strategy, Employees, Environmental Matters, Seasonality
and Production Schedules and Competition; Legal
Proceedings; and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
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CNH GLOBAL N.V.
REVENUES AND NET SALES
SEPTEMBER 30, 2000
(Unaudited - Dollars in Millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------------- --------------------------------------
2000 1999 % 2000 1999 %
ACTUAL PRO FORMA CHANGE ACTUAL PRO FORMA CHANGE
------- --------- ------ ------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales
Agricultural equipment $ 1,339 $1,512 (11%) $ 4,532 $4,791 (5%)
Construction equipment 756 867 (13%) 2,709 2,860 (5%)
------- ------ ------- ------
Total net sales 2,095 2,379 (12%) 7,241 7,651 (5%)
Financial services 207 206 - 597 594 1%
Eliminations and other (36) (19) (70) (28)
------- ------ ------- ------
Total revenues $ 2,266 $2,566 (12%) $ 7,768 $8,217 (5%)
======= ====== ======= ======
Net sales:
North America $ 898 $ 867 4% $ 3,242 $3,179 2%
Western Europe 774 1,023 (24%) 2,728 3,185 (14%)
Latin America 171 146 17% 471 446 6%
Rest of World 252 343 (27%) 800 841 (5%)
------- ------ ------- ------
Total net sales $ 2,095 $2,379 (12%) $ 7,241 $7,651 (5%)
======= ====== ======= ======
</TABLE>
<PAGE> 10
CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF INCOME
(Millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
-------------------- ----------------------- ------------------
2000 1999 2000 1999 2000 1999
ACTUAL PRO FORMA ACTUAL PRO FORMA ACTUAL PRO FORMA
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $2,095 $2,379 $2,095 $2,379 $ - $ -
Finance and interest income 171 187 13 10 207 206
------ ------ ------ ------ ----- -----
Total 2,266 2,566 2,108 2,389 207 206
---------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 1,772 2,005 1,772 2,005 - -
Selling, general and administrative 290 315 231 282 61 33
Research and development 77 88 77 88 - -
Restructuring charge 106 8 106 8 - -
Interest expense 189 204 127 125 109 108
Other, net 51 40 30 22 21 18
------ ------ ------ ------ ----- -----
Total 2,485 2,660 2,343 2,530 191 159
---------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 1 - 12 32 1 -
Equipment Operations 1 - 1 - - -
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (217) (94) (222) (109) 17 47
Income tax provision (benefit) (61) (59) (67) (74) 6 15
Minority interest 1 1 2 1 (1) -
---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (157) $ (36) $ (157) $ (36) $ 12 $ 32
====== ====== ====== ====== ===== =====
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $(0.23) $(0.09)
EPS before restructuring $(0.30) $(0.20)
EPS $(0.57) $(0.24)
</TABLE>
See Notes to Interim Financial Statements.
<PAGE> 11
CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF INCOME
(Millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
-------------------- ----------------------- ------------------
2000 1999 2000 1999 2000 1999
ACTUAL PRO FORMA ACTUAL PRO FORMA ACTUAL PRO FORMA
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $7,241 $7,651 $7,241 $7,651 $ - $ -
Finance and interest income 527 566 55 60 597 594
------ ------ ------ ------ ----- -----
Total 7,768 8,217 7,296 7,711 597 594
----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 6,034 6,329 6,034 6,329 - -
Selling, general and administrative 939 956 771 861 172 95
Research and development 253 268 253 268 - -
Restructuring charge 115 15 115 15 - -
Interest expense 608 607 420 393 309 302
Other, net 136 130 77 75 59 55
------ ------ ------ ------ ----- -----
Total 8,085 8,305 7,670 7,941 540 452
----------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 3 - 39 92 3 -
Equipment Operations 3 8 3 8 - -
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (311) (80) (332) (130) 60 142
Income tax provision (benefit) (69) (38) (91) (88) 22 50
Minority interest 5 2 6 2 (1) -
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (247) $ (44) $ (247) $ (44) $ 39 $ 92
====== ====== ====== ====== ===== =====
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $(0.59) $ 0.12
EPS before restructuring $(0.87) $(0.22)
EPS $(1.29) $(0.30)
</TABLE>
See Notes to Interim Financial Statements.
<PAGE> 12
CNH GLOBAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)
(Unaudited)
<TABLE>
<CAPTION>
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
---------------------------- --------------------------- ---------------------------
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2000 1999 2000 1999 2000 1999
------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 514 $ 466 $ 449 $ 387 $ 65 $ 79
Accounts, notes receivable and other - net 6,680 7,173 2,231 2,546 5,014 4,768
Inventories 2,336 2,422 2,336 2,422 - -
Property, plant and equipment - net 1,705 1,875 1,692 1,867 13 8
Equipment on operating leases - net 616 557 - - 616 557
Investment in Financial Services - - 1,116 1,080 - -
Investments in unconsolidated affiliates 289 328 269 305 26 23
Goodwill and intangibles 3,416 3,495 3,267 3,338 149 157
Other assets 1,326 1,362 909 983 484 417
------- ------- ------- ------- ------ ------
Total Assets $16,882 $17,678 $12,269 $12,928 $6,367 $6,009
======= ======= ======= ======= ====== ======
----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Equity
Short-term debt $ 4,261 $ 4,953 $ 2,523 $ 3,879 $2,244 $1,160
Accounts payable 1,263 1,362 1,262 1,373 20 28
Long-term debt 5,064 4,558 2,492 1,098 2,586 3,474
Subordinated advance to capital - 1,400 - 1,400 - -
Accrued and other liabilities 3,690 3,695 3,388 3,468 395 267
------- ------- ------- ------- ------ ------
14,278 15,968 9,665 11,218 5,245 4,929
Equity 2,604 1,710 2,604 1,710 1,122 1,080
------- ------- ------- ------- ------ ------
Total Liabilities and Equity $16,882 $17,678 $12,269 $12,928 $6,367 $6,009
======= ======= ======= ======= ====== ======
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Interim Financial Statements.
<PAGE> 13
CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF INCOME
(Millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
--------------------- --------------------- ---------------------
2000 1999 2000 1999 2000 1999
CNH NEW HOLLAND CNH NEW HOLLAND CNH NEW HOLLAND
------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $2,095 $ 1,240 $2,095 $ 1,240 $ - $ -
Finance and interest income 171 67 13 - 207 93
------ -------- ------ --------- ------ -------
Total 2,266 1,307 2,108 1,240 207 93
------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 1,772 1,011 1,772 1,011 - -
Selling, general and administrative 290 160 231 144 61 16
Research and development 77 43 77 43 - -
Restructuring charges 106 8 106 8 - -
Interest expense 189 48 127 18 109 56
Other, net 51 (3) 30 (2) 21 (1)
------ -------- ------ --------- ------ -------
Total 2,485 1,267 2,343 1,222 191 71
------------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 1 - 12 16 1 -
Equipment Operations 1 4 1 4 - -
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (217) 44 (222) 38 17 22
Income tax provision (benefit) (61) 7 (67) 1 6 6
Minority interest 1 - 2 - (1) -
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (157) $ 37 $ (157) $ 37 $ 12 $ 16
====== ======== ====== ========= ====== =======
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $(0.23) $ 0.30
EPS before restructuring $(0.30) $ 0.28
EPS $(0.57) $ 0.25
</TABLE>
See Notes to Interim Financial Statements.
<PAGE> 14
CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF INCOME
(Millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
--------------------- --------------------- ---------------------
2000 1999 2000 1999 2000 1999
CNH NEW HOLLAND CNH NEW HOLLAND CNH NEW HOLLAND
------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $7,241 $ 4,082 $7,241 $ 4,082 $ - $ -
Finance and interest income 527 186 55 - 597 265
------ -------- ------ --------- ------ -------
Total 7,768 4,268 7,296 4,082 597 265
------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 6,034 3,269 6,034 3,269 - -
Selling, general and administrative 939 463 771 420 172 43
Research and development 253 128 253 128 - -
Restructuring charge 115 15 115 15 - -
Interest expense 608 147 420 74 309 152
Other, net 136 (13) 77 (13) 59 -
------ -------- ------ --------- ------ -------
Total 8,085 4,009 7,670 3,893 540 195
------------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 3 - 39 47 3 -
Equipment Operations 3 12 3 12 - -
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (311) 271 (332) 248 60 70
Income tax provision (benefit) (69) 86 (91) 63 22 23
Minority interest 5 2 6 2 (1) -
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (247) $ 183 $ (247) $ 183 $39 $ 47
====== ======== ====== ========= ====== =======
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $(0.59) $ 1.32
EPS before restructuring $(0.87) $ 1.30
EPS $(1.29) $ 1.23
</TABLE>
See Notes to Interim Financial Statements.
<PAGE> 15
CNH GLOBAL N.V.
Notes to Interim Financial Statements
(1) CNH Global N.V. combines the operations of New Holland N.V. ("New
Holland") and Case Corporation ("Case") as a result of their business
merger on November 12, 1999 ("the merger date"). Effective with the
closing of the merger, New Holland changed its name to CNH Global N.V.
("CNH" or "the Company").
The accompanying financial statements reflect the consolidated results
of CNH and its consolidated subsidiaries and have been prepared in
accordance with generally accepted accounting principles in the United
States, or U.S. GAAP. Prior to the merger date, New Holland presented
its consolidated financial statements in accordance with International
Accounting Standards, or IAS. CNH has presented New Holland's
historical financial results in U.S. GAAP, and certain
reclassifications have been made to conform the historical financial
statements to the CNH presentation. The accompanying financial
statements reflect the historical operating results of New Holland in
accordance with U.S. GAAP, including the results of operations of Case
since the merger date.
CNH has prepared the accompanying unaudited pro forma income statement
data to illustrate the estimated effects of the acquisition of Case by
New Holland as if this transaction had occurred as of January 1, 1999.
The pro forma data reflects the impact of the fair market value
adjustments to the Case assets and liabilities acquired, as well as
incremental interest expense for the related merger financing. These
adjustments are being amortized over the periods estimated to be
benefited and primarily include additional depreciation of fixed assets
and the amortization of (i) the fair value adjustments for acquired
receivables and inventories, (ii) identifiable intangibles, and (iii)
goodwill.
CNH has presented the accompanying unaudited pro forma financial data
for illustrative purposes only. This pro forma data is based on a
preliminary allocation of the purchase price and is not necessarily
indicative of (i) the results of operations that would have occurred
had the transaction been effective as of January 1, 1999, or (ii) the
results of operations that CNH will attain in the future. In addition,
the pro forma financial data does not reflect any synergies, cost
savings or restructuring actions that may occur as a result of the
merger.
The supplemental financial information captioned "Equipment Operations"
includes the results of operations of CNH's agricultural and
construction equipment operations, with the Company's financial
services businesses reflected on the equity basis. The supplemental
financial information captioned "Financial Services" reflects the
consolidation of CNH's credit subsidiaries.
(2) New Holland acquired Case for approximately $4.6 billion in cash,
including related costs and expenses. CNH financed the acquisition with
total borrowings of $3.0 billion under short-term credit facilities, a
subordinated advance to capital of $1.4 billion from Fiat Netherlands
Holding N.V., formerly New Holland Holdings N.V., a wholly owned
subsidiary of Fiat S.p.A., and available cash of $200 million. This
acquisition was accounted for as a purchase and, accordingly, the
purchase price was allocated to the assets and liabilities of Case
based upon their respective estimated fair values, including
identifiable intangibles, with the remainder allocated to goodwill.
The allocation of purchase price resulted in goodwill of approximately
$2.4 billion. Goodwill allocated to Case's equipment operations of
approximately $2.3 billion is being amortized on a straight-line basis
over 30 years. Goodwill allocated to Case's financial services
operations of approximately $100 million is being amortized on a
straight-line basis over 20 years.
In connection with the acquisition, CNH management is assessing and
formulating a plan to integrate the operations of the Case and New
Holland businesses. As the plan is completed and management commits to
the activities of the plan, the Company anticipates that it will (i)
record additional adjustments to goodwill for identified actions
relative to the Case business, and (ii) incur charges beginning in 2000
to exit certain activities and to further restructure CNH operations.
<PAGE> 16
CNH GLOBAL N.V.
Notes to Interim Financial Statements
(3) CNH has three reportable operating segments: agricultural equipment,
construction equipment and financial services. CNH evaluates segment
performance based on operating earnings. CNH defines operating earnings
as the income of Equipment Operations before interest, taxes and
restructuring charges, including the income of Financial Services on an
equity basis. A reconciliation of Equipment Operations' net income
(loss) to operating earnings is as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------ -----------------------------------
1999 1999
-------------------- --------------------
2000 Pro New 2000 Pro New
Actual Forma Holland Actual Forma Holland
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $(157) $ (36) $ 37 $(247) $ (44) $ 183
Income tax provision
(benefit) (67) (74) 1 (91) (88) 63
Interest expense 127 125 18 420 393 74
Restructuring charge 106 8 8 115 15 15
----- ----- ----- ----- ----- -----
Operating earnings $ 9 $ 23 $ 64 $ 197 $ 276 $ 335
===== ===== ===== ===== ===== =====
</TABLE>
The following summarizes operating earnings by segment (in millions):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------ -----------------------------------
1999 1999
-------------------- --------------------
2000 Pro New 2000 Pro New
Actual Forma Holland Actual Forma Holland
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Agricultural equipment $ (19) $ (47) $ 24 $ (14) $ (8) $ 199
Construction equipment 16 38 24 172 192 89
Financial services 12 32 16 39 92 47
----- ----- ----- ----- ----- -----
Operating earnings $ 9 $ 23 $ 64 $ 197 $ 276 $ 335
===== ===== ===== ===== ===== =====
</TABLE>
(4) The Company's effective income tax rates were 22.2% and 31.7% for the
first nine months of 2000 and 1999, respectively. The tax rates differ
from the Dutch statutory rate of 35% primarily due to differences in
the geographical mix of profits, losses in jurisdictions for which no
immediate tax benefit is recognizable, non-deductible expenses and
changes in valuation reserves attributable to prior-year losses. On a
pro forma basis, the Company's 1999 effective tax rate of 47.5% was
primarily impacted by differences in the geographical mix of profits,
losses in jurisdictions for which no immediate tax benefit was
recognizable, non-deductible expenses and changes in valuation reserves
attributable to prior-year losses.
(5) Earnings (loss) per common share ("EPS")
(in millions, except per share data):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------ -----------------------------------
1999 1999
-------------------- --------------------
2000 Pro New 2000 Pro New
Actual Forma Holland Actual Forma Holland
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $ (157) $ (36) $ 37 $ (247) $ (44) $ 183
Restructuring charge, net of tax 74 6 5 80 11 10
------ ------ ----- ------ ------ -----
Net income (loss) before
restructuring (83) (30) 42 (167) (33) 193
Goodwill 19 17 2 54 51 4
------ ------ ----- ------ ------ -----
Net income (loss) before
goodwill and restructuring $ (64) $ (13) $ 44 $ (113) $ 18 $ 197
====== ====== ===== ====== ====== =====
Weighted-average shares
Outstanding 276.9 149.0 149.0 192.0 149.0 149.0
EPS before goodwill and
restructuring $(0.23) $(0.09) $0.30 $(0.59) $ 0.12 $1.32
EPS before restructuring $(0.30) $(0.20) $0.28 $(0.87) $(0.22) $1.30
EPS $(0.57) $(0.24) $0.25 $(1.29) $(0.30) $1.23
</TABLE>
<PAGE> 17
CNH GLOBAL N.V.
Notes to Interim Financial Statements
For the three and nine months ended September 30, 2000, basic and
diluted EPS were the same as the effects of the potentially dilutive
securities and contingently issuable shares assumed upon conversion are
antidilutive. For the three and nine months ended September 30, 1999,
basic and diluted EPS were the same as there were no potentially
dilutive securities or contingently issuable shares.
(6) On November 12, 1999, Fiat Netherlands Holding N.V. the majority
shareholder of CNH, contributed $1.4 billion to CNH in the form of an
advance to capital to partially finance the business merger of New
Holland and Case. The terms of this advance to capital provided that
Fiat Netherlands Holding would receive common shares of CNH in exchange
for its advance at the earlier of (1) any public equity offering by
CNH, or (2) June 30, 2000. If CNH had conducted a public equity
offering before June 30, 2000, Fiat Netherlands Holding would have
received that number of CNH common shares that it could have purchased
with $1.4 billion at the public offering price, less any underwriting
discount. CNH did not conduct a public equity offering prior to June
30, 2000. On June 30, 2000, Fiat Netherlands Holding received
127,918,782 CNH common shares, or the number of shares that it could
have purchased with $1.4 billion at $10.9444 per share, a price
determined by averaging the daily closing prices (after excluding the
highest and lowest prices) of CNH common shares on the New York Stock
Exchange during the 20 trading days immediately preceding June 30,
2000. The Board of Directors of CNH approved and CNH paid a
discretionary return to Fiat Netherlands Holding on its advance to
capital of $56 million, an annual rate of 6.25%.
(7) On July 3, 2000, CNH set the terms for its previously announced share
rights offering. Shareholders of record as of June 30, 2000 were
eligible to purchase 1.2021154 shares for every one share of common
stock that they owned at a price of $10.9444 per share. The
subscription period for the offering commenced on July 3, 2000 and
concluded on August 4, 2000. The rights offering price was determined
by averaging the daily closing prices (after excluding the highest and
lowest prices) of CNH common shares on the New York Stock Exchange
during the 20 trading days immediately preceding June 30, 2000. The
number of shares eligible for purchase was determined from a ratio that
enabled shareholders to maintain their ownership position relative to
Fiat Netherlands Holding N.V., CNH's largest shareholder, following the
conversion of Fiat Netherlands Holding's $1.4 billion advance to
capital into CNH common shares, which occurred on June 30, 2000. Fiat
Netherlands Holding agreed not to purchase additional shares through
this rights offering. The rights were issued to shareholders as of the
June 30, 2000 record date and were non-transferable. Unexercised rights
expired at 5 p.m. (U.S. EDT) on August 4, 2000. On August 11, 2000, CNH
issued 30,048 common shares through the share rights offering.
(8) In approving the business merger of Case and New Holland, the European
Commission and the U.S. Department of Justice identified a number of
competitive concerns related to the combined operations of Case and New
Holland in specified product lines and markets. These competitive
concerns have been addressed and Case and New Holland have committed to
a number of actions, including the divestiture of several product lines
and facilities.
On May 11, 2000, CNH completed the sale of selected agricultural
equipment assets to ARGO S.p.A., the holding company of Landini S.p.A.
The transaction includes a plant in Breganze, Italy, the Laverda line
of non-hillside combines that are produced there, and a number of large
square balers sold in Europe.
On May 16, 2000, CNH completed the sale of its interest in Hay and
Forage Industries to AGCO Corporation.
On July 31, 2000, CNH completed the sale of its New Holland Versatile,
Genesis and G/70 series four-wheel and two-wheel drive tractor lines,
together with the Winnipeg, Canada, plant in which they are made, to
Buhler Versatile Inc., a subsidiary of Buhler Industries Inc.
<PAGE> 18
CNH GLOBAL N.V.
Notes to Interim Financial Statements
(9) During the nine months ended September 30, 2000, CNH expensed $115
million of restructuring and other merger-related costs. The
restructuring and other merger-related costs primarily relate to the
third quarter sale of the New Holland Versatile, Genesis and G/70
series four-wheel and two-wheel drive tractor lines, together with the
Winnipeg, Canada, plant in which they are made, to Buhler Versatile
Inc. The balance of the restructuring and other merger-related costs
pertain to involuntary employee severance costs, relocation costs paid
on behalf of employees, lease termination penalties, systems
integration costs and other legal and professional fees.
(10) CNH fully, unconditionally and irrevocably guaranteed Case's $900
million in outstanding debt securities that were issued pursuant to two
registration statements under the U.S. Securities Act of 1933, as
amended. The following tables present summary financial information for
Case (in millions):
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
BASIS OF ACCOUNTING BASIS OF ACCOUNTING
---------------------- --------------------------
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ------------ ------------
2000 1999 1998
---------------------- ------------ ------------
<S> <C> <C> <C>
Net sales.................................... $ 903 $1,139 $1,418
Gross profit*................................ $ 87 $ 145 $ 269
Net income (loss)............................ $ (98) $ (3) $ 63
POST-ACQUISITION PRE-ACQUISITION
BASIS OF ACCOUNTING BASIS OF ACCOUNTING
---------------------- --------------------------
FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ------------ ------------
2000 1999 1998
---------------------- ------------ ------------
Net sales.................................... $3,121 $3,569 $4,361
Gross profit*............................... $ 364 $ 549 $ 919
Net income (loss)............................ $ (264) $ (15) $ 258
POST-ACQUISITION
BASIS OF ACCOUNTING
--------------------------------
SEPTEMBER 30, DECEMBER 31,
2000 1999
---------------- --------------
Current assets.................................................... $4,002 $4,172
Non-current assets................................................ $7,235 $7,441
Current liabilities............................................... $4,610 $2,519
Non-current liabilities........................................... $3,418 $5,530
Minority interests................................................ $ 8 $ 8
----------
* Gross profit is defined as net sales less cost of goods sold.
</TABLE>
<PAGE> 19
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.
CNH Global N.V.
By: /s/ Kevin. J. Hallagan
-----------------------------------
Kevin J. Hallagan
Vice President, Associate General
Counsel and Assistant Secretary
October 26, 2000
