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 FEBRUARY, 2002.
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- _______.)
[CNH LOGO]
NEWS RELEASE
CNH REPORTS 2001 FOURTH QUARTER AND FULL YEAR RESULTS
FOR MORE INFORMATION CONTACT:
JEFFREY T. WALSH Media Relations (1) 847 955 3939
ALBERT TREFTS JR. Investor Relations (1) 847 955 3821
- Fourth quarter revenues from sales of equipment grew by 7% compared to the
prior year period.
- Loss of $.35 per share, before restructuring, was within expectations for the
quarter.
- Share gains in most major markets helped boost worldwide sales of agricultural
equipment by 14% in the quarter.
- Profit improvement initiatives yielded $278 million in 2001.
Lake Forest, IL (February 7, 2002) CNH Global N.V. (NYSE:CNH) today reported
fourth quarter consolidated revenues of $2.413 billion, up 6% compared to $2.266
billion in 2000. When adjusted for the cumulative impact of foreign exchange
rates and divestitures, revenues were up 11% in the quarter.
On a net basis, CNH reported a fourth quarter loss of $155 million, compared to
a loss of $134 million, for the fourth quarter of 2000, as the company cut
production significantly in order to reduce company and dealer inventories,
especially in construction equipment. The loss per share, before restructuring,
was $.35, within expectations, despite the production cuts and provision for a
pretax loss of approximately $15 million ($.03 per share) related to the recent
devaluation of the Argentine peso and the resulting economic uncertainty in that
country. On a net basis, the loss per share was $.56, compared to a loss of $.48
per share for the fourth quarter of 2000.
For the full year 2001, consolidated revenues totaled $9.715 billion compared to
$10.041 billion in 2000. Adjusted for the adverse impact of foreign exchange
rates ($311 million) and divestitures ($351 million), consolidated revenues rose
by 3% compared to 2000, despite a declining construction equipment market.
Operating earnings for the year increased significantly to $245 million, up 54%
compared to $159 million in 2000. Improvements in the company's agricultural
business along with the achievement of planned profit improvement targets more
than offset the significant drop in profitability from construction equipment.
The loss per share, before restructuring, was $.91 in 2001, compared to a loss
of $1.26 in 2000.
/ / CNH Global N.V. Global Management Office 100 South Saunders Rd.
Lake Forest, IL 60045 U.S.A. http://www.cnh.com / /
------------------
"Our premier agricultural equipment brands, Case IH and New Holland, have
delivered another quarter of significant growth in markets around the world,"
Paolo Monferino, CNH president and chief executive officer, said. "We have
regained share lost through required divestitures and competitive pressure in
the early months after the merger. Thanks to the launch of the first of our new
products, and thanks to the profit improvement actions we have taken, we
increased our operating earnings significantly in 2001 in spite of global
weakness in the agricultural equipment industry and a decline in the
construction equipment industry.
"In 2002 we intend to do it again, for the third year in a row, even though we
do not anticipate any significant improvement in the industry. We are well
positioned to grow in 2002, with more new products and services for our
customers. On the construction equipment side, we have started 2002 by
finalizing our joint venture agreement with Kobelco, giving us full access to
Asian markets and a stronger position in North America and Western Europe.
Because we have aggressively pursued our opportunities for merger-related profit
improvements, we expect to achieve our $600 million target ahead of schedule."
Equipment Operations Fourth Quarter Performance. Fourth quarter net sales from
------------------------------------------------
Equipment Operations rose by 7% to $2.236 billion, compared to $2.096 billion
for the same period in 2000. Revenues from sales of agricultural equipment were
up 14% compared to the same period in 2000. In North America, the company
achieved share gains in nearly all product segments, with the biggest gains
coming in the high horsepower tractor segments. CNH also recorded share gains in
Latin America, Africa, and the Asia Pacific region. In Western Europe, where the
company is market leader, retail unit sales declined slightly more than the
industry, due mainly to the impact of divestitures. During the quarter, CNH
under-produced retail demand by 4%.
Compared to the fourth quarter of 2000, construction equipment revenues were
down 6%. In North America, retail sales of construction equipment were
essentially unchanged, while share gains in Latin America, Africa and the Asia
Pacific region offset modest declines in Western Europe. During the quarter, CNH
reduced both company and dealer inventories, under-producing retail demand by
28%.
Holding production levels significantly below retail sales in the fourth quarter
adversely impacted the Equipment Operations' gross margin, largely through an
unfavorable mix and under-absorption of fixed costs.
Compared to the fourth quarter of 2000, Equipment Operations' SG&A expenses
declined as a percentage of revenues due mainly to the company's success in
implementing its merger-related profit improvement initiatives on schedule.
During the quarter, CNH completed the closure of its Sorocaba, Brazil facility,
and three parts depots in Latin America.
Equipment Operations Full Year Performance. Net sales from Equipment Operations
-------------------------------------------
in 2001 were $9.030 billion, compared to $9.337 billion in the prior year.
Adjusted for the impact of unfavorable exchange rates and divestitures, net
sales rose by 4% compared to 2000.
Sales of agricultural equipment grew significantly during the year, more than
offsetting revenue lost through government-mandated divestitures, while sales of
construction equipment, which carry higher average margins, declined with the
industry. The combination of lower volumes, unfavorable mix, and adverse
currency impact offset
Page 2
margin improvements achieved through CNH's merger-related profit improvement
initiatives.
CNH's merger-related profit improvement initiatives totaled $83 million in the
fourth quarter, bringing the total for the full year to $278 million. Since the
merger, the company has achieved a total of $433 million in merger-related
profit improvements.
The company's industrial operating margin for 2001 improved to $223 million, up
30% compared to $172 million in 2000.
During the fourth quarter, the company's employment level was reduced by
approximately 400 personnel, ending the year at approximately 28,100. During
2001, divestitures accounted for a reduction of approximately 1,300 personnel.
Total employment has now been reduced by approximately 7,900, or 22%, since the
merger; salaried employment has been reduced by 25%.
Financial Services. In the fourth quarter of 2001, CNH Capital completed its
-------------------
transformation into a financial services company dedicated solely to the support
of CNH dealers and customers across all its brands. In the final phase of the
transition, begun in the first quarter of 2001, CNH Capital exited the
commercial lending business, ended retail financing activities outside its own
dealer networks, and reorganized its European businesses to better support the
company's customers and dealers.
During the fourth quarter, the company recorded additional loss provisions
related to loans in the non-core businesses. This was partially offset by a gain
resulting from the difference in the timing of the company's ABS transactions in
2001 compared to 2000. As a result, the Financial Services Operations reported a
net loss of $7 million for the fourth quarter of 2001 compared to a net loss of
$13 million for the same period in 2000. Originations in the core business were
up 6% compared to the fourth quarter of 2000.
For the full year, CNH Capital reported net income of $4 million, compared to
net income of $26 million in 2000. For the year, the company's loan loss
provisions were higher by approximately $30 million, on a pre-tax basis, mainly
due to loans made in the non-core businesses.
Balance Sheet and Cash Flow. The year-over-year increase in net debt at December
----------------------------
31, 2001, was due mainly to the combination of expenditures for property, plant
and equipment, cash restructuring, and the annual dividend. Net of depreciation
and amortization expenses the cash impact of the net loss was essentially
breakeven. The year-over-year decline in equity was also due to additional
minimum pension liability requirements of approximately $117 million and the
impact of adverse foreign exchange rates of about $110 million.
Market Outlook for Agricultural Equipment. In 2002 CNH anticipates that industry
------------------------------------------
sales of agricultural equipment will be slightly lower than the levels seen in
2001. In North America, the company expects total industry sales to be
relatively flat in the first quarter followed by a slight decline in industry
sales through the balance of the year. Sales of under 40 horsepower tractors,
which closely follow consumer confidence indicators, are expected to remain
somewhat below 2001 levels throughout the year, with some improvement in the
second half. Sales of over 40 horsepower tractors are expected to decline after
the first quarter, reflecting the uncertainty generated by the protracted debate
surrounding the US farm bill. In Latin America, CNH expects industry sales to be
down by about 5% from 2001 levels, reflecting the impact of the devaluation of
the Argentine peso and the uncertainty surrounding continued subsidized
financing in Brazil. Sales in Western Europe are expected to decline slightly.
Page 3
Market Outlook for Construction Equipment. Across all the markets it serves,
------------------------------------------
with the possible exception of Latin America, CNH expects industry sales of
construction equipment to be down by as much as 15% from 2001 levels during the
first half of the year. Expected improvements in economic conditions, if
accompanied by increases in infrastructure spending, may result in improved
second half industry sales levels, perhaps approaching 2001 levels.
CNH Outlook for the Current Quarter. For the first quarter of 2002, CNH expects
------------------------------------
revenues to improve, as CNH's agricultural equipment business continues to grow,
and the newly acquired Kobelco operations begin to contribute incremental
revenue in North America. The company intends to cut production and wholesales
of construction equipment by over 25% compared to the first quarter of 2001,
resulting in lower dealer and company inventory levels. The company expects that
there will be pressure on margins, due to mix and capacity under-utilization. On
a pre-tax basis, earnings in the first quarter will be negatively impacted by
approximately $17 million of increased employee benefit and pension costs. As a
result, CNH expects to report a loss for the quarter of between $.20 and $.30
per share, before restructuring and without goodwill amortization. This compares
to a loss per share of $.17 in the first quarter of 2001, before restructuring
and goodwill.
CNH Outlook for 2002. While the pressure on margins will likely continue into
---------------------
the second quarter, CNH believes that the growing strength of its global
agricultural business, along with possible second-half improvements in the
construction equipment industry, will contribute significantly to the company's
bottom line in the second half of the year. Based on the progress achieved in
the company's accelerated profit improvement actions during the second half of
2001, CNH now expects to achieve most of the remaining $170 million in
merger-related profit improvements in 2002, bringing the company to its $600
million target ahead of schedule.
Overall, and for the third year in a row, CNH expects to record improved bottom
line performance in spite of weakness in the agricultural equipment industry and
a declining market for construction equipment. Under the current market
scenario, the company anticipates achieving a considerable improvement in its
industrial operating margin for the year. With significant improvement
anticipated in Financial Services' contribution to the bottom line, and lower
interest rates compared to 2001, CNH expects to reduce its net loss
substantially in 2002, before restructuring and without goodwill amortization.
Through the company's supply chain initiatives, as well as the reengineering of
other processes, CNH believes that significant reductions in working capital may
be achieved during 2002. Specifically, inventories are targeted for a reduction
of $300 million, year-over-year, mostly in construction equipment inventories.
CNH expects to reduce company and dealer inventories of agricultural equipment,
already well below industry averages, on a selective basis.
###
CNH management will hold a conference call later today to review its fourth
quarter and full year 2001 results. The conference call webcast will begin at
approximately 10:00 am U.S. EST. This call can be accessed through the investor
information section of the company's web site at www.cnh.com and is being
carried by CCBN. -----------
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 2001 totaled $9.7
billion. Based in the
Page 4
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, Kobelco, Link-Belt, New Holland, and O&K brands.
Forward Looking Statements. The information contained herein involves
---------------------------
forward-looking statements based on what CNH considers key economic assumptions,
and involves risk and uncertainties that could cause actual results to differ.
Some 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),
technological difficulties, changes in environmental laws, employee and labor
relations, weather conditions, energy prices, real estate values, animal
diseases, crop pests, harvest yields, government farm programs and consumer
confidence, housing starts and construction activity, concerns pertaining to
genetically modified organisms, fuel and fertilizer costs.
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, industry volumes, as well as CNH's
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 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 5
CNH GLOBAL N.V.
REVENUES AND NET SALES
(DOLLARS IN MILLIONS)
(UNAUDITED)
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------------------ -----------------------------------------
% %
2001 2000 CHANGE 2001 2000 CHANGE
------------- ------------ ------------- ------------ ------------- ------------
Revenues:
Net sales
Agricultural equipment $ 1,532 $ 1,345 14% $ 6,073 $ 5,877 3%
Construction equipment 704 751 (6%) 2,957 3,460 (15%)
--------- -------- -------- --------
Total net sales 2,236 2,096 7% 9,030 9,337 (3%)
Financial Services 184 195 (6%) 739 799 (8%)
Eliminations and other (7) (25) (54) (95)
--------- -------- -------- --------
Total revenues $ 2,413 $ 2,266 6% $ 9,715 $ 10,041 (3%)
========= ======== ======== ========
Net sales:
North America $ 1,009 $ 830 22% $ 4,197 $ 4,072 3%
Western Europe 782 885 (12%) 3,168 3,613 (12%)
Latin America 155 162 (4%) 587 633 (7%)
Rest of World 290 219 32% 1,078 1,019 6%
--------- -------- -------- --------
Total net sales $ 2,236 $ 2,096 7% $ 9,030 $ 9,337 (3%)
========= ======== ======== ========
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
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------- --------------------------- -------------------------
2001 2000 2001 2000 2001 2000
------------- ------------ ------------- ------------ ------------- ----------
Revenues
Net sales $2,236 $2,096 $2,236 $2,096 - -
Finance and interest income 177 170 39 13 $ 184 $ 195
--------- -------- --------- -------- -------- --------
Total 2,413 2,266 2,275 2,109 184 195
Costs and Expenses
Cost of goods sold 1,944 1,786 1,944 1,786 - -
Selling, general and administrative 339 331 237 236 102 95
Research and development 81 85 81 85 - -
Restructuring and other merger related costs 75 42 68 42 7 -
Interest expense 173 185 148 122 71 101
Other, net 19 50 - 23 19 27
--------- -------- --------- -------- -------- --------
Total 2,631 2,479 2,478 2,294 199 223
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 1 (1) (7) (13) 1 (1)
Equipment Operations 2 1 2 1 - -
--------- -------- --------- -------- -------- --------
Income (loss) before taxes and minority interest (215) (213) (208) (197) (14) (29)
Income tax provision (benefit) (62) (84) (55) (68) (7) (16)
Minority interest 2 5 2 5 - -
--------- -------- --------- -------- -------- --------
Net income (loss) $ (155) $ (134) $ (155) $ (134) $ (7) $ (13)
========= ======== ========= ======== ======== ========
Basic and diluted earnings (loss) per common
share (EPS):
EPS before goodwill and restructuring and
other merger related costs ($0.28) ($0.30)
EPS before restructuring and other merger
related costs ($0.35) ($0.37)
EPS ($0.56) ($0.48)
See Notes to Financial Statements.
CNH GLOBAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
YEARS ENDED YEARS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------- --------------------------- -------------------------
2001 2000 2001 2000 2001 2000
------------- ------------ ------------- ------------ ------------- ----------
Revenues
Net sales $9,030 $9,337 $9,030 $9,337 $ - $ -
Finance and interest income 685 704 149 68 739 799
--------- -------- --------- -------- -------- --------
Total 9,715 10,041 9,179 9,405 739 799
Costs and Expenses
Cost of goods sold 7,586 7,820 7,586 7,820 - -
Selling, general and administrative 1,224 1,277 915 1,007 314 274
Research and development 306 338 306 338 - -
Restructuring and other merger related costs 104 157 97 157 7 -
Interest expense 726 793 585 542 339 410
Other, net 193 186 112 100 81 86
--------- -------- --------- -------- -------- --------
Total 10,139 10,571 9,601 9,964 741 770
Equity in income (loss) of unconsolidated
subsidiaries and affiliates:
Financial Services 6 2 4 26 6 2
Equipment Operations (14) 4 (14) 4 - -
--------- -------- --------- -------- -------- --------
Income (loss) before taxes and minority interest (432) (524) (432) (529) 4 31
Income tax provision (benefit) (105) (153) (105) (159) - 6
Minority interest 5 10 5 11 - (1)
--------- -------- --------- -------- -------- --------
Net income (loss) $ (332) $ (381) $ (332) $ (381) $ 4 $ 26
========= ======== ========= ======== ======== ========
Basic and diluted earnings (loss) per share (EPS):
EPS before goodwill and restructuring and other
merger related costs ($0.61) ($0.92)
EPS before restructuring and other merger
related costs ($0.91) ($1.26)
EPS ($1.20) ($1.79)
See Notes to Financial Statements.
CNH GLOBAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------- --------------------------- -------------------------
2001 2000 2001 2000 2001 2000
------------- ------------ ------------- ------------ ------------- ----------
Assets
Cash and cash equivalents $ 663 $ 886 $ 378 $ 593 $ 285 $ 293
Accounts, notes receivable and other - net 6,160 6,150 1,993 1,815 4,413 4,427
Intersegment notes receivable - - 1,636 590 344 195
Inventories 2,204 2,374 2,204 2,374 - -
Property, plant and equipment - net 1,354 1,474 1,333 1,455 21 19
Equipment on operating leases - net 612 643 - - 612 643
Investment in Financial Services - - 1,147 1,122 - -
Investments in unconsolidated affiliates 266 282 235 258 31 24
Goodwill and intangibles 3,647 3,817 3,508 3,669 139 148
Other assets 2,191 1,951 1,684 1,361 507 651
--------- -------- --------- -------- -------- --------
Total Assets $ 17,097 $17,577 $ 14,118 $13,237 $ 6,352 $ 6,400
========= ======== ========= ======== ======== ========
Liabilities and Equity
Short-term debt $ 4,177 $ 4,186 $ 2,596 $ 2,529 $ 1,581 $ 1,657
Intersegment short-term debt - - 344 195 524 576
Accounts payable 1,217 1,256 1,287 1,221 166 97
Long-term debt 5,686 5,539 4,303 3,066 1,383 2,473
Intersegment long-term debt - - - - 1,112 14
Accrued and other liabilities 4,108 4,082 3,679 3,712 439 461
--------- -------- --------- -------- -------- --------
15,188 15,063 12,209 10,723 5,205 5,278
Equity 1,909 2,514 1,909 2,514 1,147 1,122
--------- -------- --------- -------- -------- --------
Total Liabilities and Equity $ 17,097 $17,577 $ 14,118 $13,237 $ 6,352 $ 6,400
========= ======== ========= ======== ======== ========
See Notes to Financial Statements.
CNH GLOBAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(MILLIONS)
(UNAUDITED)
EQUIPMENT FINANCIAL
CONSOLIDATED OPERATIONS SERVICES
YEARS ENDED YEARS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------- ------------------------- ----------------------
2001 2000 2001 2000 2001 2000
------------- ------------ ------------- ---------- ---------- ----------
Operating Activities:
Net income (loss) $ (332) $ (381) $ (332) $ (381) $ 4 $ 26
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization 424 429 319 336 105 93
Changes in operating assets and liabilities (181) 870 (243) 667 62 437
Other, net (93) (110) (12) (337) (85) (33)
--------- -------- --------- -------- -------- --------
Net cash from operating activities (182) 808 (268) 285 86 523
--------- -------- --------- -------- -------- --------
Investing Activities:
Expenditures for property, plant and equipment (229) (228) (221) (213) (8) (15)
Expenditures for equipment on operating leases (322) (180) - - (322) (180)
Other, net (primarily acquisitions and
divestitures 279 112 52 73 172 14
--------- -------- --------- -------- -------- --------
Net cash from investing activities (272) (296) (169) (140) (158) (181)
--------- -------- --------- -------- -------- --------
Financing Activities:
Intersegment activity - - (1,102) (318) 1,102 318
Net increase (decrease) in indebtedness 291 124 1,371 586 (1,080) (462)
Dividends paid (28) (82) (28) (82) - -
Other, net - (84) - (79) 55 20
--------- -------- --------- -------- -------- --------
Net cash from financing activities 263 (42) 241 107 77 (124)
--------- -------- --------- -------- -------- --------
Other, net (32) (50) (19) (46) (13) (4)
--------- -------- --------- -------- -------- --------
Increase (decrease) in cash and cash equivalents (223) 420 (215) 206 (8) 214
Cash and cash equivalents, beginning of year 886 466 593 387 293 79
--------- -------- --------- -------- -------- --------
Cash and cash equivalents, end of year $ 663 $ 886 $ 378 $ 593 $ 285 $ 293
========= ======== ========= ======== ======== ========
See Notes to Financial Statements.
CNH GLOBAL N.V.
Notes to 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 and other merger related costs, 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 Years Ended
December 31, December 31,
------------------ ----------------
2001 2000 2001 2000
----- ----- ----- -----
Net income (loss) $(155) $(134) $(332) $(381)
Income tax provision (benefit) (55) (68) (105) (159)
Interest expense 148 122 585 542
Restructuring and other merger
related costs 68 42 97 157
----- ----- ----- -----
Operating earnings $ 6 $ (38) $ 245 $ 159
===== ===== ===== =====
The following summarizes operating earnings by segment (in millions):
Three Months Ended Years Ended
December 31, December 31,
------------------ ----------------
2001 2000 2001 2000
----- ----- ----- -----
Agricultural equipment $ 19 $ (81) $ 177 $ (95)
Construction equipment (6) 56 64 228
Financial services (7) (13) 4 26
----- ----- ----- -----
Operating earnings $ 6 $ (38) $ 245 $ 159
===== ===== ===== =====
(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 Years Ended
December 31, December 31,
------------------- ----------------
2001 2000 2001 2000
----- ----- ----- -----
Net sales $ 2,236 $ 2,096 $ 9,030 $ 9,337
Less:
Cost of goods sold 1,944 1,786 7,586 7,820
Selling, general and
administrative 237 236 915 1,007
Research and development 81 85 306 338
------- ------- ------- -------
Operating margin $ (26) $ (11) $ 223 $ 172
======= ======= ======= =======
CNH GLOBAL N.V.
Notes to Financial Statements
(4) The Company's effective income tax rates were 24% and 29% for 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.
(5) Earnings (loss) per common share ("EPS")
(in millions, except per share data):
Three Months Ended Years Ended
December 31, December 31,
--------------------- ---------------------
2001 2000 2001 2000
----- ----- ----- -----
Net income (loss) $(155) $(134) $(332) $(381)
Restructuring and other merger related costs,
net of tax 57 32 79 112
----- ----- ----- -----
Net income (loss) before restructuring and other
merger related costs (98) (102) (253) (269)
Goodwill 21 18 83 72
----- ----- ----- -----
Net income (loss) before goodwill and restructuring
and other merger related costs $ (77) $ (84) $(170) $(197)
===== ===== ===== =====
Weighted-average shares outstanding 277.1 277.0 277.0 213.3
EPS before goodwill and restructuring and other
merger related costs $(0.28) $(0.30) $(0.61) $(0.92)
EPS before restructuring and other merger
related costs $(0.35) $(0.37) $(0.91) $(1.26)
EPS $(0.56) $(0.48) $(1.20) $(1.79)
(6) During the year ended December 31, 2001, CNH expensed $107 million of
restructuring and $15 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 year ended
December 31, 2001, CNH reversed $18 million of restructuring reserves
through restructuring and other merger-related costs, primarily due to
changes in estimates related to closing, selling and downsizing existing
facilities. During the year ended December 31, 2001, CNH reversed $31
million of purchase accounting restructuring reserves through goodwill,
primarily due to changes in estimates related to involuntary employee
severance and closing, selling and downsizing existing facilities. During
the year ended December 31, 2001, CNH utilized approximately $189 million
and $46 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
$785 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.
CNH GLOBAL N.V.
Notes to Financial Statements
(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 Years Ended
December 31, December 31,
----------------- ------------------
2001 2000 2001 2000
------ ------ ------ ------
Net revenues $2,397 $2,234 $9,653 $9,951
Results of operations $ 20 $ (59) $ 188 $ 42
(9) During December 2001 the Company's second joint venture in China, Shanghai
New Holland Agricultural Machinery Corp., Ltd., received its business
license from the Shanghai Industrial & Commercial Administration Management
Bureau of the People's Republic of China. Shanghai New Holland Agricultural
Machinery Corp., Ltd., was formed by an agreement between Shanghai Tractor
and Internal Combustion Engine Corporation, a wholly-owned subsidiary of
Shanghai Automotive Industry Corporation, and CNH's New Holland brand of
agricultural equipment. The joint venture company will manufacture,
distribute and ultimately export agricultural tractors under 100
horsepower.
(10) On January 10, 2002, the Company finalized its global alliance with Kobe
Steel, Ltd. and Kobelco Construction Machinery Co., Ltd. for the
development, production and selling of crawler excavators, including
mini-excavators, on a worldwide basis.
(11) In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations." SFAS No. 141 addresses financial accounting and reporting
for business combinations. This Statement requires that all business
combinations be accounted for by the purchase method. As required by SFAS
No. 141, the Company adopted this new accounting standard for all business
combinations initiated after June 30, 2001. The adoption of SFAS No. 141
did not have a material impact on the Company's financial statements.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses financial accounting and reporting for
intangible assets and goodwill. The Statement requires that goodwill and
intangible assets having indefinite useful lives not be amortized, rather
tested at least annually for impairment. Intangible assets that have finite
useful lives will continue to be amortized over their useful lives. As
required by SFAS No. 142, the Company will adopt this new accounting
standard on January 1, 2002. Application of the non-amortization provision
of SFAS No. 142 is expected to result in a pretax increase in earnings of
approximately $116 million per year related to goodwill and approximately
$11 million per year related to acquired trademarks with indefinite lives.
The Company is currently defining its reporting units and performing the
required transitional impairment tests of goodwill and indefinite-lived
intangible assets. The Company has not yet determined the financial impact,
if any, of these transitional impairment tests. During 2001 the Company
continued to evaluate the recoverability of goodwill in compliance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of."
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible,
long-lived assets and the associated asset retirement costs. This Statement
requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred by
capitalizing it as part of the carrying amount of the long-lived assets. As
required by SFAS No. 143, the Company will adopt this new accounting
standard on January 1, 2003. The Company believes the adoption of SFAS No.
143 will not have a material impact on its financial statements.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This Statement establishes a
single accounting model for the impairment or disposal of
CNH GLOBAL N.V.
Notes to Financial Statements
long-lived assets. As required by SFAS No. 144, the Company will adopt this
new accounting standard on January 1, 2002. The Company believes the
adoption of SFAS No. 144 will not have a material impact on its financial
statements.
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
February 8, 2002