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, 2001.
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 SECOND QUARTER PROFIT
For more - Consolidated net revenues were $2.7 billion, compared
information contact: to $2.9 billion in the second quarter of 2000; adjusted
Jeffrey T. Walsh for divestitures and currency impact, revenues were
Media Relations essentially unchanged.
(1) 847-955-3939
44 1268 29 5111 - Industrial operating margin increased from $137 million
to $154 million for the quarter.
Albert Trefts Jr. - Year-over-year merger-related profit improvements of
Investor Relations $66 million were achieved in the second quarter; $126
(1) 847-955-3821 million in the first six months of 2001.
- Second quarter earnings per share, before
restructuring, were $.05, compared to a loss of $.20
per share last year.
Lake Forest, IL (July 24, 2001) - CNH Global N.V.
(NYSE:CNH) today reported second quarter consolidated net
revenues of $2.689 billion compared to revenues of $2.894
billion last year. When adjusted for the impact of
divestitures and adverse foreign exchange rates, net
revenues were essentially unchanged, as higher sales of
agricultural equipment offset lower sales of construction
equipment. The company's second quarter industrial
operating margin rose to $154 million from $137 million
for the same period in 2000.
On a net basis, CNH reported a second quarter profit of $6
million, compared to a loss of $31 million, for the second
quarter last year. Earnings per share for the quarter,
before restructuring, were $.05 per share, compared to a
loss of $.20 per share in 2000, in line with expectations.
Earnings per share, after restructuring, were $.02 for the
quarter. Per share results for the 2000 period are based
on a lower number of shares (see Notes to the Interim
Statements).
For the first six months of 2001, consolidated net
revenues totaled $5.143 billion compared to revenues of
$5.502 billion last year. During the first half of 2001
the adverse impact of foreign exchange rates on
consolidated net revenues totaled approximately $220
million; divestitures accounted for a further
CNH Global N.V. Global Management Office 100 South Saunders Road
Lake Forest, IL 60045 U.S.A. http://www.cnh.com
3
negative impact of about $210 million. The company's
industrial operating margin for the first six months was
$245 million, compared to $168 million for the same period
in 2000.
"In spite of the significant decline in the construction
equipment industry, we have achieved our objectives for
the second quarter," said Paolo Monferino, CNH president
and chief executive officer. "Our sales of agricultural
equipment have improved substantially, particularly in
North America where we have posted significant share gains
both in tractors and combine harvesters.
"Our restructuring is proceeding according to plan and we
have achieved our synergy targets for the quarter. We have
reduced our Equipment Operations SG&A expenses as a
percent of net revenue, reduced company and dealer
inventories, and maintained our gross margin in the face
of an unfavorable product mix. We are confident we will
achieve our full year objective of merger related profit
improvements of $300 million."
Restructuring Actions and Synergies. During the second
------------------------------------
quarter, the company achieved merger-related profit
improvements of approximately $66 million partly due to
the company's initial successes in marketing its extensive
product offering through its multiple distribution
channels. In addition, cost savings were achieved through
manufacturing efficiencies as well as reductions in
material costs and SG&A expenses. As previously reported,
the company has completed the sale of its Carr Hill
facility in the United Kingdom. Merger-related profit
improvements achieved during the first half of 2001
totaled $126 million.
On June 30, 2001, the company's employment level was
approximately 28,800, down 900, or 3%, from 29,700 on
March 31, 2001. The decrease includes over 200 personnel
employed in the divested Carr Hill facility. Total
employment has now been reduced by approximately 7,200
personnel, or 20%, since the merger.
Equipment Operations. Second quarter net sales from
---------------------
Equipment Operations were $2.497 billion, compared to
$2.723 billion for the same period in 2000. Significant
revenue growth came from sales of agricultural equipment
in North America as the company recorded market share
gains in an up market.
In Europe, the company held production and wholesale
levels significantly below retail sales levels in order to
reduce dealer inventory. Worldwide revenue from sales of
agricultural equipment were up 5%, net of currency impact
and divestitures.
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Revenues from the sale of higher margin heavy and light
construction equipment were down 10% worldwide, net of
adverse currency impact and divestitures. Unit sales of
all CNH construction equipment were down slightly more
than the industry. In sales of heavy equipment, the CNH
brands significantly outperformed the industry in both
Europe and Latin America but slightly underperformed the
industry in the United States. In light equipment, the
company's worldwide market share was essentially
unchanged, as significant share gains in skid steer
loaders and other light equipment lines offset lower sales
of backhoe loaders.
Equipment Operations' gross margin as a percent of net
sales of equipment improved to 18.8% in the second quarter
of 2001, compared to 18.5% for the same period last year.
Manufacturing efficiencies and other merger related cost
savings more than compensated for the adverse impact
resulting from the decline in construction equipment
sales, an overall unfavorable product mix in agricultural
equipment, and an unfavorable currency impact.
Compared to the same period last year, SG&A expenses
decreased in the quarter, both in absolute terms and as a
percent of net sales of equipment, reflecting the
company's ongoing actions to achieve synergy targets and a
favorable currency impact.
The second quarter industrial operating margin was $154
million, compared to $137 million in the same quarter last
year.
Year-to-date net sales from Equipment Operations totaled
$4.783 billion, compared to $5.146 billion for the first
six months of 2000. The company's industrial operating
margin totaled $245 million for the same period, up from
$168 million in 2000.
Financial Services. CNH Capital, the financial services
-------------------
unit of CNH Global, reported a net income of $16 million
for the second quarter of 2001 compared to a net income of
$13 million for the same period last year. Second quarter
net income benefited from CNH Capital's successful
completion of ABS transactions totaling $713 million,
partially offset by higher loan loss provisions and lower
volumes resulting from the company's decision to exit
non-core businesses. CNH Capital's managed portfolio at
the end of the second quarter was $11.6 billion,
essentially unchanged from March 31, 2001 levels.
Balance Sheet and Cash Flow. Pre-tax operating cash flow
----------------------------
(defined as industrial operating margin plus depreciation,
less capital expenditures and financial expense) generated
by the core business was approximately $63 million
positive for the first half of 2001, $77 million better
than in the comparable period last year.
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Company inventories were reduced during the quarter, both
with respect to the prior quarter and year-over-year; June
30, 2001 inventory levels were approximately $150 million
lower than June 30, 2000 levels.
Total debt is slightly higher ($258 million) than December
31, 2000, due to the normal seasonal increase in working
capital. The increase in long term debt in the quarter
resulted from the refinancing of current maturities
through utilization of short time credit lines and a new
medium term note with Fiat S.p.A. In addition, the company
launched a new asset-backed commercial paper conduit in
Australia. On June 30, 2001, CNH had remaining credit
lines available in the amount of $3.5 billion.
Market Outlook for Agricultural Equipment. Through the
------------------------------------------
first half of the year, the industry in the Americas has
continued to perform better than last year and somewhat
better than expected, with the strongest results in the
United States and Brazil. As a result, the company now
expects the industry will be up by as much as 5% in the
Americas for the full year. In Europe, the market has
performed as expected and the forecast for the full year
is unchanged: down by 8%. Foot and mouth disease in
Western Europe appears to have nearly run its course, but
the possible impact of BSE remains unclear.
Market Outlook for Construction Equipment. In the second
------------------------------------------
quarter, industry sales of construction equipment were
down significantly in North America while Europe and Asia
weakened slightly, and growth in Latin America slowed
somewhat. Although further deterioration is not expected,
neither is any significant recovery anticipated in 2001.
Consequently, the company now expects that the segments of
the construction equipment industry served by CNH will end
the year down as much as 10% from 2000 levels, on a global
basis.
CNH Outlook for 2001. The success of the company's overall
---------------------
integration process is evident in the steady growth of
merger related profit improvements ($300 million expected
for the full year) and the consistent improvement in the
gross margin as well as the significant share gains and
reductions in dealer and company inventory reported this
quarter. Based on the success of the company's first
actions to improve its supply chain management process,
CNH expects to under produce retail sales levels through
the balance of the year, while delivering improved levels
of service to the market with lower inventory levels. As a
result, the company's operating margin for the full year
is expected to be in the range of $350 to $400 million,
depending on the extent of the impact of weaker than
expected foreign exchange rates and market conditions for
construction
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equipment in North America. The year-over-year reduction
in net loss is expected to be $50 to $100 million.
###
CNH management will hold a conference call later today to
review its second quarter 2001 results. The conference
call webcast will begin at approximately 10:00 am U.S.
EDT. This call is being webcast by CCBN and can be
accessed through the investor information section of the
company's web site at www.cnh.com.
CNH is the number one manufacturer of agricultural
tractors and combines in the world, the third largest
maker of construction equipment, and has one of the
industry's largest equipment finance operations. Revenues
in 2000 were over $10 billion. Based in the United States,
CNH's network of dealers and distributors operates in over
160 countries. CNH agricultural products are sold under
the Case IH, New Holland and Steyr brands. CNH
construction equipment is sold under the Case, Fiatallis,
Fiat-Hitachi, Link-Belt, New Holland, and O&K brands.
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. CNH'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 conditions, energy
prices, real estate values, animal diseases, crop pests,
harvest yields, government farm programs and consumer
confidence and can fluctuate significantly. Housing starts
and other construction activity are sensitive to interest
rates and government spending. The spread of
foot-and-mouth disease and other animal diseases within
and outside of Europe also could adversely affect
livestock and feed prices and overall levels of farmer's
confidence. Concerns pertaining to genetically modified
organisms and China's delayed entry into the World Trade
Organization also may affect farm exports. In addition,
higher fuel and fertilizer costs could have a negative
impact on farm income. Some of the other significant
factors for CNH include general economic and capital
market conditions, the cyclical nature of its business,
foreign currency movements, hedging practices, CNH'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),
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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 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 CNH's Form 20-F for 2000, as filed with the
Securities and Exchange Commission: Key Information;
Information on the Company; Operating and Financial Review
and Prospects; Directors, Senior Management and Employees;
and Financial Information.
- Page 6
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CNH GLOBAL N.V.
Revenues and Net Sales
(Unaudited - Dollars in Millions)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------- -----------------------------------------
% %
2001 2000 CHANGE 2001 2000 CHANGE
----------- ------------------ ----------- ------------ ----------- ------------
Revenues:
Net sales
Agricultural equipment $ 1,649 $ 1,717 (4%) $ 3,167 $ 3,193 (1%)
Construction equipment 848 1,006 (16%) 1,616 1,953 (17%)
----------- ------------------ ------------ -----------
Total net sales 2,497 2,723 (8%) 4,783 5,146 (7%)
Financial services 212 204 4% 394 390 1%
Eliminations and other (20) (33) (34) (34)
----------- ------------------ ------------ -----------
Total revenues $ 2,689 $ 2,894 (7%) $ 5,143 $ 5,502 (7%)
=========== ================== ============ ===========
Net sales:
North America $ 1,302 $ 1,219 7% $ 2,352 $ 2,344 0%
Western Europe 758 1,026 (26%) 1,655 1,954 (15%)
Latin America 145 151 (4%) 292 300 (3%)
Rest of World 292 327 (11%) 484 548 (12%)
----------- ------------------ ------------ -----------
Total net sales $ 2,497 $ 2,723 (8%) $ 4,783 $ 5,146 (7%)
=========== ================== ============ ===========
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CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
------------------------ --------------------------- ---------------------
2001 2000 2001 2000 2001 2000
---------- ----------- ----------- ----------- -------- ----------
Revenues
Net sales $ 2,497 $ 2,723 $ 2,497 $ 2,723 $ - $ -
Finance and interest income 192 171 37 14 212 204
---------- ----------- ----------- ----------- -------- ----------
Total 2,689 2,894 2,534 2,737 212 204
Costs and Expenses
Cost of goods sold 2,027 2,219 2,027 2,219 - -
Selling, general and administrative 310 343 242 280 72 65
Research and development 74 87 74 87 - -
Restructuring and other merger related costs 10 1 10 1 - -
Interest expense 199 213 163 155 89 103
Other, net 51 36 25 19 26 17
---------- ----------- ----------- ----------- -------- ----------
Total 2,671 2,899 2,541 2,761 187 185
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 2 2 16 13 2 2
Equipment Operations 3 2 3 2 - -
---------- ----------- ----------- ----------- -------- ----------
Income (loss) before taxes and minority interest 23 (1) 12 (9) 27 21
Income tax provision (benefit) 14 27 3 19 11 8
Minority interest 3 3 3 3 - -
---------- ----------- ----------- ----------- -------- ----------
Net income (loss) $ 6 $ (31) $ 6 $ (31) $ 16 $ 13
========== =========== =========== =========== ======== ==========
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring $ 0.13 ($0.08)
EPS before restructuring $ 0.05 ($0.20)
EPS $ 0.02 ($0.21)
See Notes to Interim Financial Statements.
10
CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
------------------------ --------------------------- ---------------------
2001 2000 2001 2000 2001 2000
---------- ----------- ----------- ----------- -------- ----------
Revenues
Net sales $ 4,783 $ 5,146 $ 4,783 $ 5,146 $ - $ -
Finance and interest income 360 356 70 42 394 390
----------- ---------- ----------- ---------- --------- ---------
Total 5,143 5,502 4,853 5,188 394 390
Costs and Expenses
Cost of goods sold 3,921 4,262 3,921 4,262 - -
Selling, general and administrative 613 649 470 540 146 111
Research and development 147 176 147 176 - -
Restructuring and other merger related costs 14 9 14 9 - -
Interest expense 383 419 303 293 181 200
Other, net 121 85 73 47 48 38
----------- ---------- ----------- ---------- --------- ---------
Total 5,199 5,600 4,928 5,327 375 349
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 3 2 13 27 3 2
Equipment Operations (17) 2 (17) 2 - -
-------------------------------------------------------------------------------
Income (loss) before taxes and minority interest (70) (94) (79) (110) 22 43
Income tax provision (benefit) (9) (8) (18) (24) 9 16
Minority interest 3 4 3 4 - -
-------------------------------------------------------------------------------
Net income (loss) $ (64) $ (90) $ (64) $ (90) $ 13 $ 27
=========== ========== =========== ========== ========= =========
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring ($0.04) ($0.33)
EPS before restructuring ($0.19) ($0.56)
EPS ($0.23) ($0.60)
See Notes to Interim Financial Statements.
11
CNH GLOBAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
----------------------- ----------------------- ------------------------
June 30, December 31, June 30, December 31, June 30, December 31,
2001 2000 2001 2000 2001 2000
------- ------------ ------- ------------ ------- ------------
Assets
Cash and cash equivalents $ 372 $ 886 $ 254 $ 593 $ 118 $ 293
Accounts, notes receivable and other - net 6,886 6,150 3,602 2,405 5,733 4,622
Inventories 2,295 2,374 2,295 2,374 - -
Property, plant and equipment - net 1,343 1,474 1,323 1,455 20 19
Equipment on operating leases - net 697 643 - - 697 643
Investment in Financial Services - - 1,121 1,122 - -
Investments in unconsolidated affiliates 264 282 236 258 28 24
Goodwill and intangibles 3,733 3,817 3,589 3,669 144 148
Other assets 1,784 1,951 1,433 1,361 351 651
------- ------- ------- ------- ------- -------
Total Assets $17,374 $17,577 $13,853 $13,237 $ 7,091 $ 6,400
======= ======= ======= ======= ======= =======
Liabilities and Equity
Short-term debt $ 4,252 $ 4,186 $ 2,814 $ 2,724 $ 2,982 $ 2,233
Accounts payable 1,321 1,256 1,317 1,221 194 97
Long-term debt 5,731 5,539 3,989 3,066 2,455 2,487
Accrued and other liabilities 3,767 4,082 3,430 3,712 339 461
------- ------- ------- ------- ------- -------
15,071 15,063 11,550 10,723 5,970 5,278
Equity 2,303 2,514 2,303 2,514 1,121 1,122
------- ------- ------- ------- ------- -------
Total Liabilities and Equity $17,374 $17,577 $13,853 $13,237 $ 7,091 $ 6,400
======= ======= ======= ======= ======= =======
See Notes to Interim Financial Statements.
12
CNH GLOBAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(MILLIONS)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
------------------------ --------------------------- ---------------------
2001 2000 2001 2000 2001 2000
---------- ----------- ----------- ----------- -------- ----------
Operating Activities:
Net income (loss) $ (64) $ (90) $ (64) $ (90) $ 13 $ 27
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization 204 225 150 182 54 43
Changes in operating assets and liabilities (703) (327) (97) 122 (606) (449)
Other, net (90) 60 (65) 35 (38) (2)
----- ----- ----- ----- ----- -----
Net cash from operating activities (653) (132) (76) 249 (577) (381)
----- ----- ----- ----- ----- -----
Investing Activities:
Expenditures for property, plant and equipment (61) (79) (58) (78) (3) (1)
Expenditures for equipment on operating leases (133) (84) - - (133) (84)
Other, net (primarily acquisitions and
divestitures) 83 70 46 60 30 10
----- ----- ----- ----- ----- -----
Net cash from investing activities (111) (93) (12) (18) (106) (75)
----- ----- ----- ----- ----- -----
Financing Activities:
Intercompany activity - - (788) 62 788 (62)
Net increase (decrease) in indebtedness 307 371 594 (121) (287) 492
Dividends paid (28) (82) (28) (82) - -
Other, net - 1 - 1 7 -
----- ----- ----- ----- ----- -----
Net cash from financing activities 279 290 (222) (140) 508 430
----- ----- ----- ----- ----- -----
Other, net (29) (22) (29) (22) - -
----- ----- ----- ----- ----- -----
Increase (decrease) in cash and cash equivalents (514) 43 (339) 69 (175) (26)
Cash and cash equivalents, beginning of period 886 466 593 387 293 79
----- ----- ----- ----- ----- -----
Cash and cash equivalents, end of period $ 372 $ 509 $ 254 $ 456 $ 118 $ 53
===== ===== ===== ===== ===== =====
See Notes to Interim Financial Statements.
13
CNH GLOBAL N.V.
Notes to Interim Financial Statements
-------------------------------------
(1) The accompanying financial statements reflect the consolidated results
of CNH Global N.V. and its consolidated subsidiaries ("CNH") and have
been prepared in accordance with generally accepted accounting
principles in the United States, or U.S. GAAP. 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) 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 (loss) of Equipment Operations before interest, taxes and
restructuring charges, including the income (loss) of Financial
Services on an equity basis. A reconciliation of Equipment Operations'
net income (loss) to operating earnings is as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2001 2000 2001 2000
---- ---- ---- ----
Net income (loss) $ 6 $(31) $(64) $(90)
Income tax provision (benefit) 3 19 (18) (24)
Interest expense 163 155 303 293
Restructuring charge 10 1 14 9
---- ---- ---- ----
Operating earnings $182 $144 $235 $188
==== ==== ==== ====
The following summarizes operating earnings by segment (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2001 2000 2001 2000
---- ---- ---- ----
Agricultural equipment $117 $ 37 $138 $ 5
Construction equipment 49 94 84 156
Financial services 16 13 13 27
---- ---- ---- ----
Operating earnings $182 $144 $235 $188
==== ==== ==== ====
(3) CNH defines industrial operating margin as the net sales of Equipment
Operations less cost of goods sold, selling, general and administrative
and research and development. Industrial operating margin is as follows
(in millions):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2001 2000 2001 2000
------ ------ ------ ------
Net sales $2,497 $2,723 $4,783 $5,146
Less:
Cost of goods sold 2,027 2,219 3,921 4,262
Selling, general and
administrative 242 280 470 540
Research and development 74 87 147 176
------ ------ ------ -------
Operating margin $ 154 $ 137 $ 245 $ 168
====== ====== ====== =======
(4) The Company's effective income tax rates were 12.9% and 8.5% for the
first six months of 2001 and 2000, 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.
14
CNH GLOBAL N.V.
Notes to Interim Financial Statements
-------------------------------------
(5) Earnings (loss) per common share ("EPS")
(in millions, except per share data):
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ---------------------
2001 2000 2001 2000
-------- --------- --------- --------
Basic and Diluted EPS
Net income (loss) $ 6 $ (31) $ (64) $ (90)
Restructuring, net of tax 8 1 11 6
----- ------ ------- ------
Net income (loss) before restructuring 14 (30) (53) (84)
Goodwill 20 18 41 35
----- ------ ------- ------
Net income (loss) before goodwill and restructuring $ 34 $ (12) $ (12) $ (49)
===== ====== ======= ======
Weighted-average shares outstanding - Basic 277.0 149.0 277.0 149.0
Basic EPS before goodwill and restructuring $0.13 $(0.08) $(0.04) $(0.33)
Basic EPS before restructuring $0.05 $(0.20) $(0.19) $(0.56)
Basic EPS $0.02 $(0.21) $(0.23) $(0.60)
Weighted-average shares outstanding - Basic 277.0 149.0 277.0 149.0
Effect of dilutive securities (when dilutive):
Incremental common shares applicable to
restricted common shares 0.0 N/A N/A N/A
Incremental common shares applicable to
common stock options N/A N/A N/A N/A
----- ------ ------- ------
Weighted-average shares outstanding - Diluted 277.0 149.0 277.0 149.0
===== ======= ======= ======
Diluted EPS before goodwill and restructuring $0.13 $(0.08) $(0.04) $(0.33)
Diluted EPS before restructuring $0.05 $(0.20) $(0.19) $(0.56)
Diluted EPS $0.02 $(0.21) $(0.23) $(0.60)
(6) During the six months ended June 30, 2001, CNH expensed $9 million of
restructuring and $5 million of other merger-related costs. The other
merger-related costs primarily relate to relocation costs paid on
behalf of employees, systems integration costs and other legal and
professional fees related to the merger of New Holland and Case. During
the six months ended June 30, 2001, CNH utilized approximately $82
million and $8 million of its restructuring reserves established during
2000 and 2001, respectively. The utilized amounts primarily represent
involuntary employee severance costs and cost related to the sale of
its tractor production facility in Doncaster, England, and its
components facility in St. Dizier, France.
(7) CNH fully, unconditionally and irrevocably guarantees Case
Corporation's $813 million in outstanding 6.25% Notes due 2003, 7.25%
Notes due 2005, and 7.25% Notes due 2016 that were issued pursuant to
two registration statements under the Securities Act of 1933, as
amended. Reference is made to Note 23, "Guarantee of Subsidiary's
Outstanding Debt Securities," of CNH's Form 20-F for the year ended
December 31, 2000 for further discussion.
(8) CNH reports its results of operations to Fiat S.p.A. ("Fiat") in
accordance with the accounting principles followed by Fiat. CNH net
revenues reported to Fiat exclude finance and interest income of the
Equipment Operations, which are classified as a component of net
financial expenses. Fiat defines results of operations as the income
(loss) before net financial expenses, taxes, restructuring and equity
income (loss) in unconsolidated subsidiaries. Net financial expenses
primarily include finance and interest income and expenses of the
Equipment Operations. A summary of CNH's results as reported to Fiat is
as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net revenues $2,671 $2,877 $5,102 $5,457
Results of operations $ 153 $ 104 $ 204 $ 94
15
CNH GLOBAL N.V.
Notes to Interim Financial Statements
-------------------------------------
(9) During the second quarter of 2001, the Company completed the sale of
its Carr Hill Works, Doncaster, England, components facility to
Graziano Transmissioni S.p.A.
Also during the second quarter of 2001, the Company announced its joint
venture agreement with Shanghai Tractor and Internal Combustion Engine
Corporation, a wholly-owned subsidiary of Shanghai Automotive Industry
Corporation (Group), to manufacture, distribute and ultimately export
agricultural tractors under 100 horsepower.
(10) In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 requires all business combinations initiated after June
30, 2001, to be accounted for using the purchase method. SFAS No. 142
addresses the recognition and amortization of intangible assets
acquired in a business combination as well as the recognition of
goodwill and subsequent assessment of impairment. The Company is
currently evaluating the impact of adopting SFAS No. 141 and No. 142.
16
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/ Debra E. Kuper
----------------------------
Debra E. Kuper
Assistant Secretary
July 24, 2001