SECURITIES AND EXCHANGE COMMISSION

 
FORM 6-K
 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 
For the month of October, 2004.
 

CNH GLOBAL N.V.

(Translation of Registrant’s Name Into English)

World Trade Center
Tower B, 10^th 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    o

     (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    o       No    x

     (If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________.)

Table of Contents

News Release

 
CNH Reports Third Quarter Profit Driven by Strong Sales of
Agricultural and Construction Equipment in the Americas
 

For more information contact:

Jeffrey T. Walsh Media Relations (1) 847 955 3939
Albert Trefts, Jr. Investor Relations (1) 847 955 3821

Lake Forest, Illinois (October 26, 2004) CNH Global N.V. (NYSE:CNH) today reported third quarter 2004 net income of $25 million, compared to a net loss of $36 million in the third quarter of 2003. These results include restructuring charges, net of tax, of $9 million and $21 million, respectively, in the two periods. Third quarter 2004 earnings per share were $.19 compared to a loss of $.27 per share in the third quarter of 2003, including restructuring charges of $.06 and $.16, respectively.

“Strong revenue growth in the Americas, for both our agricultural and construction equipment businesses, together with steadily improving performance in financial services, has brought CNH solidly into the black for the quarter,” Paolo Monferino, CNH president and chief executive officer said. “With the closing of the East Moline facility, we have closed the book on our manufacturing rationalization plan. Looking ahead, we fully expect to achieve our 2004 objective of about a $150 million improvement in the bottom line, excluding restructuring costs.”

CNH’s net income for the first nine months was $99 million in 2004, compared to a net loss of $46 million for the first nine months of 2003. These results include restructuring charges, net of tax, of $46 million and $47 million, respectively. Earnings per share for the first nine months of 2004 were $.74, compared to a loss of $.35 in the first nine months of 2003, including restructuring charges of $.35 and $.36, respectively.

Third quarter sales of agricultural equipment. Net sales of agricultural equipment increased by 14% to $1.918 billion for the quarter, compared to $1.684 billion for the third quarter of 2003. Substantial revenue growth in North America accounted for most of the improvement. When adjusted for currency fluctuations, net sales in Europe declined in the quarter while unit sales at the retail level remained essentially flat.

Third quarter 2004 North American industry unit sales of both over-40 horsepower agricultural tractors and combines increased significantly compared to the same period last year. In Western Europe, industry unit sales of tractors improved moderately while industry sales of combines declined. Industry sales of agricultural tractors increased slightly in Latin America in the third quarter, while industry sales of combines declined.

Overall retail unit sales of CNH agricultural equipment increased in line with the global market, with the greatest gains in the third quarter coming from over-40 horsepower tractors worldwide and combines in North America.

n CNH Global N.V. Global Management Office 100 South Saunders Rd, Lake Forest, IL 60045 U.S.A. http://www.cnh.com n

Third quarter sales of construction equipment. Net sales of construction equipment totaled $871 million, up 30% compared to $671 million for the third quarter of 2003. Substantially higher net sales were recorded in North America and Latin America. Sales in Western Europe declined slightly net of currency fluctuations.

Third quarter industry unit sales of heavy equipment improved dramatically in the Americas and moderately in Western Europe. Industry sales of light equipment showed moderate growth in all markets.

Worldwide retail unit sales of CNH heavy and light construction equipment kept pace with the market. In both North and Latin America, the brands of CNH gained market share in the recovering backhoe segment.

Equipment Operations third quarter financial results. Third quarter net sales of equipment were $2.789 billion, up 18% compared to $2.355 billion for the same period in 2003, led by robust growth in North America. Net of currency fluctuations, sales increased by 14% compared to the same period last year.

CNH Equipment Operations’ third quarter gross margin increased slightly year-over-year in spite of higher than expected steel costs in the period. Improved pricing, increased volume, and favorable currency were the major factors driving the third quarter increase in the margin.

The company’s third quarter industrial operating margin increased to $94 million, or 3.4% of net sales, compared to $72 million, or 3.1% of net sales, in the third quarter of 2003, reflecting the increase in the gross margin.

CNH Equipment Operations adjusted EBITDA was $135 million for the third quarter compared to $84 million in the same period last year.

Equipment Operations year-to-date results. For the first nine months of 2004, net sales of equipment totaled $8.714 billion, compared to $7.386 billion for the same period last year.

CNH Equipment Operations adjusted EBITDA was $522 million, or 6% of net sales, for the first nine months of 2004 compared to $332 million, or 4.5% of net sales, in the same period last year. The interest coverage ratio for the twelve months ended on September 30, 2004 was 2.9, compared to 1.9 for the twelve months ended September 30, 2003.

Financial Services third quarter financial results. In the third quarter of 2004, CNH Capital reported net income of $48 million, compared to $24 million in the same period last year. The gain on sale from the company’s $1.5 billion ABS transaction in the quarter accounted for most of the change. In 2003, most of the company’s ABS transactions occurred in the second and fourth quarters.

Financial Services year-to-date financial results. For the first nine months of 2004, CNH Capital reported net income of $104 million, compared with $57 million in the first nine months of 2003. Better spreads on the company’s ABS transactions and higher margins accounted for the improvement in the bottom line in the first nine months of the year.

Balance sheet. Equipment Operations net debt declined by 30% to $1.340 billion on September 30, 2004 from $1.902 billion on December 31, 2003. Equipment Operations reported net cash flow from operating activities of $705 million for the first nine months of 2004. The reduction in net debt was driven primarily by the first step in a broad initiative to extend to Europe and Latin America, the North American business model for wholesale receivables management and the establishment of dedicated, independent funding structures for these receivables. As part of the transfer of responsibility for

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wholesale receivables to CNH Capital, CNH entered into a new securitization program, in Europe, whereby certain of its equipment operations subsidiaries sold a total of $484 million of receivables and CNH Capital Europe subscribed to $226 million of notes representing undivided retained interests.

Agricultural equipment market outlook for 2004. CNH expects North American industry sales of combines and over-40 horsepower tractors to outperform 2003 levels in the fourth quarter. In Europe, industry sales of tractors should remain near 2003 levels, while sales of combines should be moderately higher than in the fourth quarter last year. In Latin America, fourth quarter industry sales of agricultural tractors and combines should decline in comparison to a very strong 2003 fourth quarter.

Construction equipment market outlook for 2004. Industry sales of both heavy and light construction equipment are expected to increase moderately in North America in the fourth quarter, although the rate of the increase may slow as comparisons toughen. In Western Europe, fourth quarter industry sales of heavy and light equipment should continue to run moderately ahead of 2003 levels.

CNH outlook for 2004. CNH now believes that the adverse impact of higher steel costs, net of pricing, seen in the third quarter may continue through the balance of the year. Improved performance in Financial Services and higher volumes in CNH’s agricultural equipment business should offset the steel impact.

As previously announced, CNH expects to incur restructuring charges in 2004 of about $125 million, pretax, as the company completes its restructuring initiatives. CNH expects its full year 2004 net income to improve by approximately $150 million, excluding restructuring charges, on anticipated consolidated revenues of about $12 billion.

Calculation of weighted average common shares outstanding. In April 2003, CNH issued 8 million shares of Series A Preferred Stock in exchange for the retirement of $2 billion in Equipment Operations indebtedness owed to Fiat Group companies. The Series A Preferred Stock will automatically convert into 100 million CNH common shares if the market price of the common shares, defined as the average of the closing price per share for 30 consecutive trading days, is greater than $24 at anytime through and including December 31, 2006 or $21 at anytime on or after January 1, 2007. Due to recent changes in accounting principles effective in the fourth quarter, CNH will reflect the impact of these contingently convertible shares retroactively in its computation of diluted weighted average shares outstanding beginning with the company’s fourth quarter 2004 earnings release.

###

CNH management will hold a conference call later today to review its third quarter results. The conference call webcast will begin at approximately 10:00 am U.S. Eastern Time. 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 power behind leading agricultural and construction equipment brands of the Case and New Holland brand families. Supported by more than 12,000 dealers in approximately 160 countries, CNH brings together the knowledge and heritage of its brands with the strength and resources of its worldwide commercial, industrial, product support and finance organizations. More information about CNH and its products can be found on line at www.cnh.com.

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Forward looking statements. This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release, including statements regarding our competitive strengths, business strategy, future financial position, budgets, projected costs and plans and objectives of management, are forward-looking statements. These statements may include terminology such as “may,” “will,” “expect,” “should,” “intend,” “estimate,” “anticipate,” “believe,” “continue,” “on track,” or similar terminology.

Our outlook is predominantly based on our interpretation of what we consider key economic assumptions and involves risks and uncertainties that could cause actual results to differ. Crop production and commodity prices are strongly affected by weather and can fluctuate significantly. Housing starts and other construction activity are sensitive to interest rates and government spending. Some of the other significant factors for us include general economic and capital market conditions, the cyclical nature of our business, customer buying patterns and preferences, foreign currency exchange rate movements, our hedging practices, our and our customers’ access to credit, actions by rating agencies, political uncertainty and civil unrest or war 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), results of legal proceedings, technological difficulties, results of our research and development activities, changes in environmental laws, employee and labor relations, pension and health care costs, raw material costs and availability, energy prices, real estate values, animal diseases, crop pests, harvest yields, government farm programs and consumer confidence, housing starts and construction activity, concerns related to modified organisms, and fertilizer costs. Additionally, our achievement of the anticipated benefits of our profit improvement initiatives depends upon, among other things, industry volumes as well as our ability to effectively rationalize operations and to execute our multiple brand strategy. Further information concerning factors that could significantly affect expected results is included in our Form 20-F for the year ended December 31, 2003.

We can give no assurance that the expectations reflected in our forward-looking statements will prove to be correct. Our actual results could differ materially from those anticipated in these forward-looking statements. All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by the factors we disclose that could cause our actual results to differ materially from our expectations. We undertake no obligation to update or revise publicly any forward-looking statements.

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CNH Global N.V.
Revenues and Net Sales
(Dollars in Millions)
(Unaudited)

CNH GLOBAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND SUPPLEMENTAL INFORMATION
(Millions, except per share data)
(Unaudited)

See Notes to Condensed Financial Statements.

CNH GLOBAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND SUPPLEMENTAL INFORMATION
(Millions, except per share data)
(Unaudited)

See Notes to Condensed Financial Statements.

CNH GLOBAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
AND SUPPLEMENTAL INFORMATION
(Millions)
(Unaudited)

See Notes to Condensed Financial Statements.

CNH GLOBAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
AND SUPPLEMENTAL INFORMATION
(Millions)
(Unaudited)

See Notes to Condensed Financial Statements.

CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

1

CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

2

CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

3

CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2004 and December 31, 2003, the Company’s intangible assets and related accumulated amortization consisted of the following:

CNH recorded amortization expense of approximately $33 million for the nine months ended September 30, 2004. CNH recorded amortization expense of approximately $37 million for the year ended December 31, 2003. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the years 2004 to 2008 is approximately $45 million. As acquisitions and dispositions occur in the future, as currency fluctuates and as purchase price allocations are finalized, these amounts may vary.

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CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

On May 18, 2004, $500 million of Case New Holland, Inc. 6% Senior Notes due 2009 (the “6% Senior Notes”) were issued. The 6% Senior Notes, issued at a discount, resulted in net proceeds of approximately $474 million. The 6% Senior Notes, like the $1.05 billion of Case New Holland, Inc. 9 1/4% Senior Notes due 2011, are fully and unconditionally guaranteed by CNH and certain of its direct and indirect subsidiaries and contain certain covenants that restrict our ability to, among other things, incur additional debt; pay dividends on our capital stock or repurchase our capital stock; make certain investments; enter into certain types of transactions with affiliates; restrict dividend or other payments by our restricted subsidiaries; use assets as security in other transactions; enter into sale and leaseback transactions; and sell certain assets or merge with, or into, other companies. In addition, certain of the related agreements governing our subsidiaries’ indebtedness contain covenants limiting their incurrence of secured debt or structurally senior debt.

At September 30, 2004, CNH had approximately $4.1 billion available under $7.8 billion of total lines of credit and asset-backed facilities.

Cash and cash equivalents deposited with Fiat and its affiliates as part of the Fiat cash management system is repayable to CNH upon one business day’s notice. To the extent that Fiat is unable to return any such amounts upon one business day’s notice, and in the event of a bankruptcy or insolvency of Fiat, CNH may be unable to secure the return of such funds, and CNH may be viewed as a creditor of such Fiat entity with respect to such funds. There is no assurance that the future operations of the Fiat cash management system may not adversely impact CNH’s ability to recover its funds to the extent one or more of the above described events were to occur.

5

CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

The FASB issued FASB Staff Position (“FSP”) No. FAS 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”, (“FSP No.106-1”) that allowed sponsors to elect to defer recognition of the effects of the Medicare Act. In May 2004, the FASB issued FSP No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP No. 106-2”) which provides guidance on accounting for the effects of the Medicare Act for employers that sponsor postretirement heath care plans that provide prescription drug benefits.

The Company has adopted this FSP and re-measured its related plans in the third quarter of 2004. This resulted in a reduction in the accumulated postretirement benefit obligation (“APBO”) for the subsidy related to benefits attributed to past service of approximately $70 million. The company has elected to reflect the impact of the Medicare Act prospectively from the date of the change. The subsidy resulted in a reduction in third quarter 2004 net periodic postretirement benefit costs of approximately $3 million. The Company has not incurred a reduction in current gross benefit payments and expects to receive subsidy payments beginning in 2006.

In the United States, our contract with the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the “UAW”) expired in May 2004 though operations continue as normal in the covered facilities. Current negotiations cover approximately 675 active hourly production and maintenance employees as well as hourly retirees from UAW represented facilities. Negotiations began during the first quarter of 2004. The Company’s current contract proposal includes changes to the U.S. defined benefit pension plans and post-retirement healthcare plans for active UAW represented employees. If these proposed changes become effective, they would result in changes to our benefit cost computation in periods following the effective date of any such change.

During the second and third quarters of 2004, CNH made discretionary contributions to its U.S. defined benefit pension plan trust of $80 million and $75 million, respectively.

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CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

Through the first nine months of 2004, considering our on-going contributions to plan assets, asset returns less than our assumptions and the current discount rate environment, the Company would expect an increase in the minimum pension liability of about $75 million at year end, which would result in a non-cash charge to shareholders’ equity of about $50 million, net of tax.

In April 2003, CNH issued 8 million shares of Series A preference shares (“Series A Preferred Stock”) in exchange for the retirement of $2 billion in Equipment Operations indebtedness owed to Fiat Group companies. The Series A Preferred Stock will not accrue dividends until January 1, 2005. Subsequently, the Series A Preferred Stock will pay a dividend at the then prevailing common dividend yield. However, should CNH achieve certain defined financial performance measures, the annual dividend will be fixed at the prevailing common dividend yield, plus an additional 150 basis points. Dividends will be payable annually in arrears, subject to certain provisions that allow for a deferral for a period not to exceed five consecutive years. The Series A Preferred Stock has a liquidation preference of $250 per share and each share is entitled to one vote on all matters submitted to CNH’s shareholders. The Series A Preferred Stock will automatically convert into 100 million CNH common shares at a conversion price of $20 per share if the market price of the common shares, defined as the average of the closing price per share for 30 consecutive trading days, is greater than $24 at anytime through and including December 31, 2006 or $21 at anytime on or after January 1, 2007, subject to anti-dilution adjustment. In the event of dissolution or liquidation, whatever remains of the company’s equity, after all its debts have been discharged, will first be applied to distribute to the holders of the Series A Preferred Stock the nominal amount of their preference shares and thereafter the amount of the share premium reserve relating to the Series A Preferred Stock. Any remaining assets will be distributed to the holders of common shares in proportion to the aggregate nominal amount of their common shares.

7

CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

On October 13, 2004 the FASB Emerging Issues Task Force (“EITF”) ratified the consensus reached on Issue No. 04-8, “The Effect of Contingently Convertible Instruments on Diluted Earnings per Share” (“Issue No. 04-8”) which changes the timing of when CNH must reflect the impact of contingently issuable shares from the potential conversion of the Series A Preferred Stock in diluted weighted average shares outstanding. Under the provisions of Issue No. 04-8, CNH is required to retroactively reflect the contingent issuance of 100 million common shares in its computation of diluted weighted average shares outstanding, when inclusion is not anti-dilutive, beginning in the fourth quarter of 2004.

Subsequent to the issuance of Financial Accounting Standards Board (“FASB”) Statement No. 128, “Earnings Per Share” (“Statement No. 128”) the FASB staff issued Topic No. D-95, “Effect of Participating Convertible Securities on the Computation of Basic Earnings per Share,” (“Topic D-95”) to address the effect of participating convertible securities on the computation of basic EPS. Topic D-95 clarifies that participating securities that are convertible into common stock be included in the computation of basic EPS if the effect is dilutive. Topic D-95 states that the determination of how participating convertible securities should be included in the computation of basic EPS (that is, using either the if-converted method or the two-class method) is an accounting policy decision; however, the dilutive effect on basic EPS cannot be less than that which would result from the application of the two-class method that would be required if the same security were not convertible. EITF Issue No. 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128” (“EITF No. 03-6”) provides the EITF’s consensus on various issues related to these topics. EITF No. 03-6 will likely have an impact on CNH’s computation of basic earnings per share in 2005. We continue to evaluate the magnitude of this impact.

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CNH GLOBAL N.V.
Notes to Unaudited Condensed Consolidated Financial Statements