<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 JULY, 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- _______.)
<PAGE> 2
[CNH LOGO]
NEWS RELEASE
For Immediate Release
CNH REPORTS SECOND QUARTER RESULTS
For more - Second quarter operating earnings were $144
information contact: million, versus $206 million for the second
quarter of 1999, on a pro forma basis.
William B. Masterson - Net loss, before goodwill and restructuring,
01 262 636 5793 of $12 million, or $.08 per share.
- Revenues of $2.9 billion were down slightly
from the second quarter of 1999, on a pro
forma basis, reflecting significant
unfavorable foreign exchange impacts.
- Major steps in CNH's merger integration plan
announced to reduce global headcount and
achieve projected annual savings of at least
$500 million by 2003.
Racine, Wisconsin (July 25, 2000) - CNH Global
(N:CNH) today reported operating earnings of $144
million for the second quarter of 2000, compared
with $206 million for the second quarter of 1999, on
a pro forma basis. The company recorded a net loss,
before goodwill and restructuring, of $12 million,
or $.08 per share, for the second quarter of 2000.
In the prior year period, the company recorded net
income, before goodwill and restructuring, of $68
million, or $.46 per share, on a pro forma basis.
Including the impact of goodwill, the company had a
second quarter net loss before restructuring of $30
million, or $.20 per share, versus net income before
restructuring, on a pro forma basis, of $51 million,
or $.34 per share.
Revenues for the second quarter were $2.9 billion,
down slightly from the same period last year, on a
pro forma basis. The decline was a result of
unfavorable foreign exchange impacts, which
negatively affected second quarter sales by $150
million, compared to 1999.
"We are taking a number of actions to maximize our
operating performance in light of weaker retail
sales of agricultural equipment in North America,"
said Jean-Pierre Rosso, chairman and chief executive
officer. "However, we are continuing to see the
impact of higher interest rates and unfavorable
foreign exchange on our bottom line.
<PAGE> 3
"We have completed or announced major steps in our
merger integration process, which we expect to
deliver at least $500 million in annual savings by
2003," Rosso added.
Second quarter results reflect cost reductions
achieved through merger integration activities and
ongoing cost initiatives, as compared to the prior
year on a pro forma basis. In addition, pricing
continued to be slightly positive and the company
recorded a gain on the previously planned sale of a
components business in Europe. These were offset by
economic cost increases and a significant negative
foreign exchange impact, along with the items cited
by the company on June 21, 2000, including lower
sales volumes and product mix, higher loan loss
provisions, a writedown of product inventory in
Brazil, and the impact of higher interest rates for
both the equipment and financial services
businesses.
For the first six months of 2000, CNH had operating
earnings of $188 million, compared to $253 million
in the same period last year, on a pro forma basis.
The company had a net loss, before goodwill and
restructuring, of $49 million, or $.33 per share,
for the first six months of 2000, versus net income,
before goodwill and restructuring, of $31 million,
or $.21 per share, on a pro forma basis. Including
the impact of goodwill, the company had a first half
net loss before restructuring of $84 million, or
$.56 per share, versus a net loss before
restructuring, on a pro forma basis, of $3 million,
or $.02 per share.
Revenues for the first six months were $5.5 billion,
compared to $5.7 billion in the same period last
year, on a pro forma basis. In the first half of the
year, unfavorable foreign exchange rates negatively
impacted revenues, compared to 1999.
Consistent with its business and market outlook, the
company expects third quarter results, before
restructuring and goodwill, to be a loss of
approximately $.25 per share, compared to a loss of
$.09 per share, before restructuring and goodwill,
for the third quarter of 1999, on a pro forma basis.
The third quarter of 2000 reflects an increased
number of common shares outstanding at the beginning
of the period. For the full year, the company
continues to expect to be moderately unprofitable,
before restructuring and goodwill, and anticipates
that its results will be better than 1999, on a pro
forma basis.
MERGER INTEGRATION PLAN COMPLETED, ACTIONS ANNOUNCED
CNH recently announced significant elements of its
merger integration plan. These include the closure
of three manufacturing facilities in North America
and one in Europe. In addition, the company intends
to sell two facilities in North America and has
completed the sale of a
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<PAGE> 4
components business in Europe. The sale of these
facilities is a result of the company's plan to
further increase outsourcing of non-core components
from its facilities around the world. The transfer
of production at the affected facilities to new
locations will be timed with the introduction of new
global product platforms.
Manufacturing of some product lines will be
transferred within CNH as part of the merger
integration plan. Hay and forage equipment will be
transferred from the Grand Island, Nebraska,
facility to the Belleville, Pennsylvania, plant,
while skid steers will be moved from Belleville to
the Wichita, Kansas, facility, where Case skid steer
lines are currently manufactured.
In total, these integration consolidation actions
will result in a global workforce reduction of
approximately 1,800 employees.
The company expects to announce further actions
later this year in other regions of the world.
In addition, divestiture of certain company plants
and operations, which are in accordance with the
conditions under which regulatory agencies in North
America and Europe approved the business merger of
Case and New Holland, are expected to reduce CNH's
global headcount by approximately 1,700. These
include the previously announced divestiture
agreements for CNH facilities in Winnipeg, Canada;
Hesston, Kansas; Breganze, Italy; and Manchester,
England. The company continues to pursue the
divestiture of its operations in Doncaster, England.
In combination with previous integration actions
taken by the company, these announced steps, when
completed, would reduce CNH's global workforce by
approximately 5,000 people.
CNH EQUITY FINANCING MOVES INCREASE SHARE COUNT
On June 30, 2000, a $1.4 billion advance to capital
from Fiat that was part of the original financing of
New Holland's purchase of Case Corporation, was
converted into CNH common shares. This resulted in
the issuance of 127,918,782 additional shares of
common stock, bringing the total number of shares
outstanding to 277,503,782.
On July 3, 2000, the company commenced a share
rights offering, under which shareholders of record
as of June 30, 2000, are eligible to purchase
1.2021154 shares for every one share of common stock
that they own, at a price of $10.9444 for each
additional share purchased. The subscription period
for this offering concludes on August 4, 2000,
- Page 3
<PAGE> 5
and could result in an increase in the number of
common shares outstanding.
WORLDWIDE RETAIL EQUIPMENT SALES
Worldwide retail unit sales of CNH agricultural
equipment were slightly lower than the company's
combined sales in the second quarter of 1999,
compared to no change in industry sales. In North
America, CNH sales of large agricultural equipment
were negatively impacted by uncertainty surrounding
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, and new products launched
by competitors. As a result, sales of CNH
high-horsepower tractors were lower than in the
previous period. The industry was lower in
four-wheel drives, but reported gains in row-crop
tractors. CNH sales of combines were down in North
America, while the industry was unchanged from the
second quarter of 1999. However, retail sales of CNH
combines worldwide exceeded industry gains on the
strength of its global markets. In Europe, CNH
agricultural equipment sales were lower, in line
with the industry, reflecting uncertainty around the
divestiture of its Doncaster, England, operations.
In Latin America, sales were higher, while the
industry declined. In other markets around the
world, CNH reported strong gains in retail sales,
while the market declined.
Retail unit sales of CNH construction equipment kept
pace with the industry in North America, while sales
in Europe and Latin America were lower than the
industry. In North America, the industry and CNH
were slightly lower than the strong levels of 1999,
while in Europe, the market increased in the second
quarter, fueled by economic growth and building on
the strong performance of last year. In Latin
America, retail sales of CNH skid steers grew at a
rapid pace, but the growth was more than offset by
lower sales of heavy construction equipment. 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 $13 million for the
second quarter of 2000, compared to $30 million for
the same period last year, on a pro forma basis. Net
income for the first half was $27 million, compared
to $60 million in the comparable period last year,
on a pro forma basis. The year-over-year decrease in
net income is attributable to increased loan loss
provisions in its core equipment and diversified
portfolios as well as integration costs and lower
margins on receivables and lower gains on
asset-backed securitizations resulting from a rising
interest rate environment.
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<PAGE> 6
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 due to the prolonged weakness in this
sector.
CNH Capital's managed portfolio increased to $11.8
billion, up more than 14 percent as compared to the
prior year, on a combined basis. The company's
geographic expansion and diversification initiatives
accounted for a portion of this growth, along with
the transfer of CNH U.S. wholesale receivables to
CNH Capital's managed portfolio.
During the quarter, CNH Capital acquired U.S.
wholesale receivables from the Case business,
consistent with New Holland's business practice. A
related asset-back securitization program was also
transferred during the quarter. As a result of these
actions, CNH Capital's net assets increased by $257
million by June 30, 2000.
CNH Capital continues to execute its growth
strategy. Significant progress was made during the
period toward establishing a pan-European bank with
headquarters in Ireland. Plans also include opening
branch offices in the company's major markets
throughout Western Europe by 2002.
"We're pleased with the progress we continue to make
toward growing our business in all regions of the
world, despite significant market pressures in our
core business," stated Ted R. French, chairman, CNH
Capital. "We're committed to leveraging our strength
as one of the world's largest equipment finance
businesses to ensure that financing is available for
our equipment customers in all regions of the
world."
In financial services, the current pressure from
higher interest rates is expected to continue during
2000. Over time, the company can incorporate rate
changes into its pricing, but until they stabilize,
higher interest rates are expected to negatively
impact earnings.
MARKET OUTLOOK
The outlook for CNH's agricultural equipment and
construction equipment markets is consistent with
statements made by the company on June 21, 2000.
This is being driven by the global impact of lower
commodity prices and the anticipated effect of
higher interest rates on construction activity in
North America. In addition, rising interest rates
and unfavorable foreign exchange continue to
adversely impact the company's equipment and
financial services operations.
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<PAGE> 7
Recently improved growing conditions have reduced
the outlook for increased commodity prices this
year. These factors have been particularly strong in
North America, resulting in significantly lower
industry sales of four-wheel drive tractors and
combines through the first six months of 2000. As a
result, CNH expects North American industry sales of
large agricultural equipment to decline by
approximately 10 to 15 percent this year as compared
to 1999. CNH sales through the first half of 2000
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. In addition to these
demand factors, market conditions have made it
increasingly difficult for the company to realize
planned pricing increases this year. The company
expects these conditions to continue for the balance
of the year. In its other markets around the world,
the company expects the industry 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 activity. The company now expects
overall construction activity in North America to be
slightly lower for the balance of 2000, 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
expected to 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,
Fiatallis, Fiat-Hitachi, Link-Belt earth-moving
equipment, New Holland, New Holland Construction,
O&K and Steyr.
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
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<PAGE> 8
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. 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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<PAGE> 9
CNH GLOBAL N.V.
Revenues and Net Sales
June 30, 2000
(Unaudited - Dollars in Millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX 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 $ 1,717 $ 1,784 (4%) $ 3,193 $ 3,279 (3%)
Construction equipment 1,006 1,069 (6%) 1,953 1,993 (2%)
------- ------- ------- -------
Total net sales 2,723 2,853 (5%) 5,146 5,272 (2%)
Financial services 204 199 3% 390 388 1%
Eliminations and other (33) (6) (34) (9)
------- ------- ------- -------
Total revenues $ 2,894 $ 3,046 (5%) $ 5,502 $ 5,651 (3%)
======= ======= ======= =======
Net sales:
North America $ 1,219 $ 1,214 -- $ 2,344 $ 2,312 1%
Western Europe 1,026 1,196 (14%) 1,954 2,162 (10%)
Latin America 151 158 (4%) 300 300 --
Rest of World 327 285 15% 548 498 10%
------- ------- ------- -------
Total net sales $ 2,723 $ 2,853 (5%) $ 5,146 $ 5,272 (2%)
======= ======= ======= =======
</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
June 30, June 30, June 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 $ 2,723 $ 2,853 $ 2,723 $ 2,853 $ -- $ --
Finance and interest income 171 193 14 23 204 199
------- ------- ------- ------- ------- ------
Total 2,894 3,046 2,737 2,876 204 199
-----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 2,219 2,308 2,219 2,308 -- --
Selling, general and administrative 343 310 280 279 65 31
Research and development 87 89 87 89 -- --
Restructuring charge 1 2 1 2 -- --
Interest expense 213 208 155 137 103 100
Other, net 36 53 19 33 17 20
------- ------- ------- ------- ------- ------
Total 2,899 2,970 2,761 2,848 185 151
-----------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated subsidiaries and affiliates:
Financial Services 2 -- 13 30 2 --
Equipment Operations 2 12 2 12 -- --
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (1) 88 (9) 70 21 48
Income tax provision (benefit) 27 35 19 17 8 18
Minority interest 3 3 3 3 -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (31) $ 50 $ (31) $ 50 $ 13 $ 30
======= ======= ======= ======= ======= =======
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $ (0.08) $ 0.46
EPS before restructuring $ (0.20) $ 0.34
EPS $ (0.21) $ 0.34
</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
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 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 $ 5,146 $ 5,272 $ 5,146 $ 5,272 $ -- $ --
Finance and interest income 356 379 42 50 390 388
------- ------- ------- ------- ------- -------
Total 5,502 5,651 5,188 5,322 390 388
-------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 4,262 4,324 4,262 4,324 -- --
Selling, general and administrative 649 641 540 579 111 62
Research and development 176 180 176 180 -- --
Restructuring charge 9 7 9 7 -- --
Interest expense 419 403 293 268 200 194
Other, net 85 90 47 53 38 37
------- ------- ------- ------- ------- -------
Total 5,600 5,645 5,327 5,411 349 293
-------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 2 -- 27 60 2 --
Equipment Operations 2 8 2 8 -- --
-------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (94) 14 (110) (21) 43 95
Income tax provision (benefit) (8) 21 (24) (14) 16 35
Minority interest 4 1 4 1 -- --
-------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (90) $ (8) $ (90) $ (8) $ 27 $ 60
======= ======= ======= ======= ======= =======
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $ (0.33) $ 0.21
EPS before restructuring $ (0.56) $ (0.02)
EPS $ (0.60) $ (0.05)
</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
---------------------- ---------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
2000 1999 2000 1999 2000 1999
-------- ----------- --------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 509 $ 466 $ 456 $ 387 $ 53 $ 79
Accounts, notes receivable and other - net 7,628 7,173 2,684 2,546 5,419 4,768
Inventories 2,446 2,422 2,446 2,422 -- --
Property, plant and equipment - net 1,784 1,875 1,775 1,867 9 8
Equipment on operating leases - net 593 557 -- -- 593 557
Investment in Financial Services -- -- 1,106 1,080 -- --
Investments in unconsolidated affiliates 287 328 263 305 24 23
Goodwill and intangibles 3,439 3,495 3,286 3,338 153 157
Other assets 1,513 1,362 1,112 983 471 417
------- ------- ------- ------- ------- -------
Total Assets $18,199 $17,678 $13,128 $12,928 $ 6,722 $ 6,009
======= ======= ======= ======= ======= =======
------------------------------------------------------------------------------------------------------------------
Liabilities and Equity
Short-term debt $ 4,085 $ 4,953 $ 2,580 $ 3,879 $ 1,899 $ 1,160
Accounts payable 1,488 1,362 1,473 1,373 45 28
Long-term debt 5,865 4,558 2,516 1,098 3,363 3,474
Subordinated advance to capital -- 1,400 -- 1,400 -- --
Accrued and other liabilities 3,899 3,695 3,697 3,468 309 267
------- ------- ------- ------- ------- -------
15,337 15,968 10,266 11,218 5,616 4,929
Equity 2,862 1,710 2,862 1,710 1,106 1,080
------- ------- ------- ------- ------- -------
Total Liabilities and Equity $18,199 $17,678 $13,128 $12,928 $ 6,722 $ 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
June 30, June 30, June 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 $ 2,723 $ 1,507 $ 2,723 $ 1,507 $ -- $ --
Finance and interest income 171 62 14 -- 204 87
------- ------- ------- ------- ------- -------
Total 2,894 1,569 2,737 1,507 204 87
------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 2,219 1,194 2,219 1,194 -- --
Selling, general and administrative 343 147 280 134 65 13
Research and development 87 43 87 43 -- --
Restructuring charge 1 2 1 2 -- --
Interest expense 213 56 155 31 103 50
Other, net 36 1 19 -- 17 1
------- ------- ------- ------- ------- -------
Total 2,899 1,443 2,761 1,404 185 64
------------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 2 -- 13 15 2 --
Equipment Operations 2 8 2 8 -- --
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (1) 134 (9) 126 21 23
Income tax provision (benefit) 27 45 19 37 8 8
Minority interest 3 3 3 3 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (31) $ 86 $ (31) $ 86 $ 13 $ 15
======= ======= ======= ======= ======= =======
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $ (0.08) $ 0.59
EPS before restructuring $ (0.20) $ 0.58
EPS $ (0.21) $ 0.58
</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
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 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 $ 5,146 $ 2,842 $ 5,146 $ 2,842 $ -- $ --
Finance and interest income 356 119 42 -- 390 172
------- ------- ------- ------- ------- -------
Total 5,502 2,961 5,188 2,842 390 172
------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 4,262 2,258 4,262 2,258 -- --
Selling, general and administrative 649 303 540 276 111 27
Research and development 176 85 176 85 -- --
Restructuring charge 9 7 9 7 -- --
Interest expense 419 99 293 56 200 96
Other, net 85 (10) 47 (11) 38 1
------- ------- ------- ------- ------- -------
Total 5,600 2,742 5,327 2,671 349 124
------------------------------------------------------------------------------------------------------------------------------------
Equity in income (loss) of unconsolidated subsidiaries and affiliates:
Financial Services 2 -- 27 31 2 --
Equipment Operations 2 8 2 8 -- --
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (94) 227 (110) 210 43 48
Income tax provision (benefit) (8) 79 (24) 62 16 17
Minority interest 4 2 4 2 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (90) $ 146 $ (90) $ 146 $ 27 $ 31
======= ======= ======= ======= ======= =======
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $ (0.33) $ 1.03
EPS before restructuring $ (0.56) $ 1.01
EPS $ (0.60) $ 0.98
</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
(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 June 30, Six Months Ended June 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) $ (31) $ 50 $ 86 $ (90) $ (8) $ 146
Income tax provision (benefit) 19 17 37 (24) (14) 62
Interest expense 155 137 31 293 268 56
Restructuring charge 1 2 2 9 7 7
----- ----- ----- ----- ----- -----
Operating earnings $ 144 $ 206 $ 156 $ 188 $ 253 $ 271
===== ===== ===== ===== ===== =====
<CAPTION>
The following summarizes operating earnings by segment (in millions):
Three Months Ended June 30, Six Months Ended June 30,
------------------------------------- -----------------------------------
1999 1999
------------------------ -----------------------
2000 Pro New 2000 Pro New
Actual Forma Holland Actual Forma Holland
--------- --------- ---------- -------- --------- ----------
Agricultural equipment $ 37 $ 80 $ 102 $ 5 $ 39 $ 175
Construction equipment 94 96 39 156 154 65
Financial services 13 30 15 27 60 31
----- ----- ----- ----- ----- -----
Operating earnings $ 144 $ 206 $ 156 $ 188 $253 $ 271
===== ===== ===== ===== ===== =====
<CAPTION>
(4) The Company's effective income tax rates were 8.5% and 34.8% for the first six 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 150.0%
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):
Three Months Ended June 30, Six Months Ended June 30,
------------------------------------- ------------------------------------
1999 1999
----------------------- -----------------------
2000 Pro New 2000 Pro New
Actual Forma Holland Actual Forma Holland
--------- --------- ---------- --------- --------- ----------
Net income (loss) $ (31) $ 50 $ 86 $ (90) $ (8) $ 146
Restructuring charge, net of tax 1 1 1 6 5 5
----- ----- ----- ----- ----- -----
Net income (loss) before
restructuring (30) 51 87 (84) (3) 151
Goodwill 18 17 1 35 34 2
----- ----- ----- ----- ----- -----
Net income (loss) before
goodwill and restructuring $ (12) $ 68 $ 88 $ (49) $ 31 $ 153
===== ===== ===== ===== ===== =====
Weighted-average shares
outstanding 149.0 149.0 149.0 149.0 149.0 149.0
EPS before goodwill and
restructuring $(0.08) $0.46 $0.59 $(0.33) $ 0.21 $1.03
EPS before restructuring $(0.20) $0.34 $0.58 $(0.56) $(0.02) $1.01
EPS $(0.21) $0.34 $0.58 $(0.60) $(0.05) $0.98
</TABLE>
<PAGE> 17
CNH GLOBAL N.V.
Notes to Interim Financial Statements
For the three and six months ended June 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 six months ended June 30, 1999, basic and diluted EPS were
the same as there were no potentially dilutive securities or contingently
issuable shares.
(6) On April 18, 2000, the board of directors of CNH recommended a dividend for
the year 1999 of $0.55 per share, payable on July 5, 2000 to shareholders
of record on June 21, 2000. Payment of the dividend was approved at CNH's
Annual General Meeting of Shareholders on June 7, 2000.
(7) 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%.
(8) On July 3, 2000, CNH set the terms for its previously announced share
rights offering. Shareholders of record as of June 30, 2000 are eligible to
purchase 1.2021154 shares for every one share of common stock that they own
at a price of $10.9444 per share. The subscription period for the offering
commences on July 3, 2000 and concludes 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 enables 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 has agreed not to purchase additional shares through
this rights offering. The rights are issued to shareholders as of the June
30, 2000 record date and are non-transferable. Any unexercised rights will
expire as of 5 p.m. (U.S. EDT) on August 4, 2000.
(9) 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 20, 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
(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
JUNE 30, JUNE 30,
----------------------- -----------------------------
2000 1999 1998
----------------------- ------------- --------------
<S> <C> <C> <C>
Net sales.................................... $1,174 $1,346 $1,646
Gross profit*................................ $ 164 $ 252 $ 372
Net income (loss)............................ $ (81) $ 36 $ 126
POST-ACQUISITION PRE-ACQUISITION
BASIS OF ACCOUNTING BASIS OF ACCOUNTING
----------------------- -----------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------------
2000 1999 1998
----------------------- ------------- --------------
Net sales.................................... $2,218 $2,430 $2,943
Gross profit*................................ $ 269 $ 404 $ 650
Net income (loss)............................ $ (166) $ (12) $ 195
POST-ACQUISITION
BASIS OF ACCOUNTING
-----------------------------
JUNE 30, DECEMBER 31,
2000 1999
------------- --------------
Current assets....................................................... $4,321 $4,172
Non-current assets................................................... $7,317 $7,441
Current liabilities.................................................. $3,125 $2,519
Non-current liabilities.............................................. $5,159 $5,530
Minority interests................................................... $ 7 $ 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
July 26, 2000
