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• Positive Cash flow reduced Equipment Operations Net Debt by $550 million
• New Construction Equipment organization announced as part of restructuring plan
• Second Quarter Operating Profit and Margin improve compared with 1st Quarter
• North American Agricultural Equipment's Net Sales up 9% year-to-date

BURR RIDGE, IL. - (MARKETWIRE) - CNH Global N.V. (NYSE: CNH - News) July 22, 2009:
In the second quarter of 2009, CNH saw a continuation of the negative economic conditions experienced in the first quarter but limited their impact through strong pricing actions and aggressive operating cost and production controls. Equipment Operations generated positive cash flow through inventory reductions of $668 million, contributing to a reduction of Equipment Operations Net Debt by $550 million. CNH's second quarter 2009 diluted net loss per share, attributable to CNH common shareholders was $0.28 compared with earnings of $1.46 in the second quarter of 2008. The Net Loss attributable to CNH was $67 million in the quarter compared with Net Income attributable to CNH of $347 million in the same period of 2008. These results include restructuring charges, after tax, of $52 million, compared with $4 million in the prior year. These results also include a tax provision for Equipment Operations, excluding restructuring, of $67 million in the second quarter of 2009 compared with a provision of $171 million in the prior year. CNH's second quarter 2009 diluted loss per share before restructuring, after tax, attributable to CNH common shareholders was $0.06 compared with earnings of $1.48 in the second quarter of 2008.
CNH's first half 2009 diluted net loss per share, attributable to CNH common shareholders was $0.81 compared with earnings of $1.93 in the first half of 2008. The Net Loss attributable to CNH was $193 million in the first half compared with Net Income attributable to CNH of $459 million in the same period of 2008. Results include restructuring charges, after tax, of $53 million compared with $18 million in the first half of 2008. These results also include a tax provision for Equipment Operations, excluding restructuring, of $85 million in the first half of 2009 compared with a provision of $208 million in the prior year. CNH's first half 2009 diluted loss per share before restructuring, after tax, attributable to CNH common shareholders was $0.59 compared with earnings of $2.01 in the first half of 2008.

"In the second quarter of 2009, we continued taking actions to ensure that the company emerges from the current economic environment in a position of strength, ready to compete aggressively when market conditions improve. We maintained a tight grip on costs and production overall, reducing Equipment Operations inventories and receivables by $918 million and reducing permanent and temporary salaried and agency positions by 7% so far this year. On the construction side, we began remodeling the company's organization to better fit the new realities of the Construction Equipment market and initiated actions to rationalize our industrial footprint. We have maintained our commitment to product quality and new product development. Our product offering is second to none and that's how it will stay," said Harold Boyanovsky, CNH President and Chief Executive Officer.
"In terms of this quarter's results, we have now experienced almost a full year of significant global economic pressures with inevitable negative consequences for capital equipment markets and industry sales in both construction and agricultural equipment, with corresponding negative impacts on our Net Sales and Operating Profit. This, combined with the restructuring measures implemented during the quarter, resulted in a net loss for the quarter.
"In the second half, the actions in place already will continue to generate positive Equipment Operations cash flow, as we saw in the second quarter, and we expect to reduce working capital for the full year by approximately $1 billion. We anticipate that markets will remain challenging through at least the balance of the year and expect a net loss for the full year, excluding restructuring. Overall, with the corrective measures we have put in place, we are confident about the future of both the construction and agricultural equipment businesses."

Case IH Agriculture launched three new models of its Farmall line of compact tractors with continuously variable transmissions ('CVT') and the Austoft entry level sugar cane harvester designed for developing markets in Africa, India, South-East Asia and China.
New Holland Agriculture's new line of large and small square balers, launched in North America in the first quarter, became fully available. New Holland also launched the new Class 9, 500+ HP Combine (CR9080) in North America and Australia. It also invested for the third quarter launch of its new flagship T7000 series tractors (167 to 225 HP) with continuously variable "Auto Command" transmissions and new armrest control console in North America and Western Europe.
Case Construction continued its roll out of CX crawler excavators with a new CX 130B "long reach" model, with joystick steering for increased operator efficiency and comfort.
New Holland Construction added several new features to its North American crawler excavators to increase product applicability and protection for ground level demolition activities. In Europe, it added joystick steering as an option on its wheel loaders for enhanced product maneuverability as well as increased operator ergonomics and efficiency.

Worldwide agricultural tractor and combine industry retail unit sales declined 11% in the second quarter and 7% for the first half of 2009, driving Agricultural Equipment's Net Sales down 22% for the quarter and 17% for the first half compared with 2008. On a constant currency basis Agricultural Equipment's Net Sales were down 13% for the quarter and 8% for the first half. Despite the overall decline, growth in industry sales of higher horsepower tractors and combines continued to outperform the overall agricultural equipment market and CNH's North American Agricultural Equipment sales were up 6% in the second quarter and up 13% for the first six months on a constant currency basis. CNH under-produced retail unit sales by 24% in the quarter and by 7% for the first six months of the year. Agricultural Equipment's market share was stable to higher for both the quarter and the first six months in the Americas and Western Europe, but declined in the developing Rest of World markets in both periods.

Construction Equipment's Net Sales declined 62% in the quarter, and were down 58% on a constant currency basis. Worldwide construction equipment industry retail unit sales declined approximately 47%, with industry retail unit sales of light construction equipment, where CNH has a stronger market position, down approximately 52% and industry retail unit sales of heavy equipment down 40%. CNH idled much of its construction equipment production capacity for the quarter to reduce inventories and destock dealers, under-producing retail unit sales by 52%. Destocking of dealers and distributors accounted for approximately 8% of the decline in net sales of construction equipment in the quarter. Industry retail unit sales declines were greatest in the Latin American and Western European markets during the quarter, declining 64% and 60% respectively.
Construction Equipment's Net Sales for the half declined 61%, and were down 57% on a constant currency basis. For the half, worldwide construction equipment industry retail unit sales declined 49%, with industry retail unit sales of light construction equipment down 55% and industry retail unit sales of heavy construction equipment down 42%. Destocking of dealers and distributors accounted for approximately 7% of the decline in net sales of construction equipment in the first half. Construction Equipment's market share was stable or improved in the Americas and Western Europe both in the quarter and in the first half of the year, but declined in Rest of World markets in both periods.

For the second quarter of 2009, CNH's improved pricing was offset by the global decline in industry retail unit sales, destocking actions and the negative impacts of exchange rate changes and economic cost increases. CNH's Gross Profit in the second quarter was $525 million compared with $1,064 million in the second quarter of 2008. Gross Margin was 14.8% in the second quarter of 2009 compared with 13.9% in the first quarter of 2009 and 20.2% in the second quarter of 2008.
For the first half of 2009, CNH's Gross Profit was $950 million compared with $1,764 million in the first half of 2008. Gross Margin was 14.4% compared with 18.8% in the first half of 2008. Margins declined for both Agricultural and Construction Equipment.


Equipment Operations Operating Profit was $161 million in the second quarter, compared with $585 million in the second quarter of 2008 as improvements in operating leverage from reduced SG&A and R&D costs did not offset the decline in gross margin. SG&A expenditures declined by $100 million compared with the second quarter of 2008, but increased as a percent of net sales to 7.6% compared with 7.0% in the second quarter of last year. R&D expenditures declined by $15 million compared with the second quarter of 2008, but increased as a percent of net sales to 2.7% compared with 2.1% of net sales in the prior year. Expenditures were reprioritized to focus on new products so the brands can continue to bring added value to their customers.

Agricultural Equipment's Operating Margin was 8.5% in the second quarter, reflecting the Gross Margin decline, partially offset by reduced R&D and SG&A costs. Agricultural Equipment's second quarter Operating Margin improved compared with the first quarter, and for the first half of the year was 6.9%.
Construction Equipment's second quarter Operating Margin, although improved compared with the first quarter, was negative in the quarter and for the six month period, reflecting the significant industry volume declines and effects of destocking actions.


CNH Financial Services' on-book asset portfolio totaled $9.0 billion at June 30, 2009, down 27% from the prior year and down from $9.8 billion at year-end 2008, primarily due to public and private securitization transactions, as well as loan originations. Second quarter Net Income of $45 million was down $25 million from a year ago, reflecting primarily lower average levels of on-book receivables and increased provisions for losses. SG&A, in the quarter, was substantially the same as in the second quarter of 2008 as reductions in general expenses were offset by increases in loss provisions from $25 million in the second quarter of 2008 to $34 million in the second quarter of 2009, primarily related to the downturn in the construction equipment market and additional reserves in Brazil, while the North American Agricultural Equipment portfolio quality remained high.
For the first half, Financial Services' Net Income was $46 million, down from $122 million in the prior year. First half 2009 loss provisions were $81 million compared with $43 million in the prior year.
In North America, all of Financial Services' maturing credit facilities were renewed or extended in the quarter. New transactions were closed for a total value exceeding $1.6 billion, including $1.0 billion of U.S. public ABS funding in the quarter. For the first half, Financial Services raised approximately $2.7 billion of new funding in North America, including $1.5 billion from the U.S. public ABS issuance, the same total level of new funding raised in the first half of 2008. Funding needs in Europe and Australia were similarly met by a combination of increasing credit limits on existing warehouse facilities and the sale of receivables to third party factors.

Second quarter 2009 Net Loss attributable to CNH was $67 million, compared with Net Income of $347 million in the second quarter of 2008. For the quarter, in addition to the decline in Equipment Operations Operating Profit, Equity Income in Unconsolidated Subsidiaries was a loss of $15 million in 2009, compared with a profit of $22 million in the prior year, reflecting primarily the results of the company's unconsolidated construction equipment joint ventures. Results include restructuring charges, after tax, of $52 million in the second quarter of 2009, compared with $4 million in the comparable period for the prior year. CNH's Net Loss excluding restructuring charges, after tax, attributable to CNH was $15 million, compared with a profit of $351 million in the prior year. Equipment Operations tax provision, excluding restructuring, for the quarter was $67 million, reflecting losses where no immediate tax benefit is recognized and recording of valuation allowances against previously recognized deferred tax assets.
For the six months, the Net Loss attributable to CNH of $193 million was down compared with a Net Income of $459 million in 2008. For the half, in addition to the decline in Equipment Operations Operating Profit, Equity Income in Unconsolidated Subsidiaries was a loss of $36 million in 2009, compared with a profit of $33 million in the prior year, reflecting primarily the results of the company's unconsolidated construction equipment joint ventures. Results include restructuring charges, after tax, of $53 million in 2009, compared with $18 million in 2008. The Net Loss, excluding restructuring charges, after tax, attributable to CNH was $140 million, compared to Net Income of $477 million in the prior year. Equipment Operations tax provisions, excluding restructuring for the six months, was $85 million, reflecting losses where no immediate tax benefit is recognized and recording of valuation allowances against previously recognized deferred tax assets.


Equipment Operations' Net Debt position improved in the second quarter by $550 million to $338 million Net Debt. The $665 million of cash generated by Operating Activities was reduced by net cash used for Investing Activities of $55 million, primarily capital expenditures, and other impacts of $60 million, including the effects of changes in exchange rates.
In the quarter, the decrease in working capital was primarily due to decreases in inventories and receivables, partially offset by a reduction in payables. Inventories decreased by $668 million and receivables decreased by $250 million, reflecting the company's destocking actions and reduced production levels.
For the six month period, Equipment Operations' Net Debt position improved by $85 million. The $230 million of cash generated by Operating Activities was partially utilized for capital expenditures and other impacts, including the effects of exchange rate changes.
Financial Services Net Debt increased by $530 million during the quarter to $8.1 billion at June 30, 2009. Compared with December 31, 2008, Financial Services Net Debt decreased by $115 million from $8.2 billion.

CNH has already announced that it will be investing up to $250 million in consolidation and reorganization actions during 2009 to improve operational efficiency and adjust cost and operating levels to right size CNH's structure in light of the current economic situation and expectations, while preserving flexibility to take advantage of growth opportunities as market conditions allow. Planned actions included personnel reductions, cost reduction initiatives, reorganizations, and/or restructurings.
Personnel reduction actions taken through the second quarter have resulted in an 7% cumulative reduction in permanent and temporary salaried and agency positions, including a cumulative reduction of approximately 13% in construction equipment related positions. Additional actions to be taken in the second half of 2009 are expected to result in a full year company-wide reduction in permanent and temporary salaried and agency positions of 10 to 12%.
CNH has reorganized its Construction Equipment business's management structure, with the goal of increasing brand support and new product development, while reducing structural costs. The new organization, headed by Jim McCullough, is committed to managing the two brand networks and building the value of our construction equipment brands. In addition, CNH has started the information and consultation processes for the closing of its construction equipment plant located in Imola, Italy and to relocate that production to other CNH facilities. This action will downsize the company's manufacturing footprint.
Additional actions may be undertaken in the coming months as CNH seeks to further increase its ability to cost effectively manufacture quality products for its customers around the world. In accordance with labor and other regulations throughout the world, the company will meet and discuss proposed actions with affected parties prior to finalizing any initiatives and expects to announce further details as they become available.

Although we anticipate that full year global agricultural fundamentals will remain strong, we continue to believe worldwide industry retail unit sales will be impacted by tight financial and credit conditions. We anticipate that cash grain commodity prices will remain at higher levels than in 2007 while farm production input cost pressures will abate. We believe global corn, wheat and coarse grain production will exceed consumption resulting in higher corn and wheat stocks-to-use ratios. However, the stocks-to-use ratio for global soybeans is expected to decline. We expect that U.S. Net Farm Income will be strong, in the range of $65 to $71 billion, but unevenly distributed across market segments, as the dairy and livestock sectors remain under pressure. We now expect worldwide industry retail unit sales of Over-40 horsepower tractors to be down by 10 to 15% and industry retail unit sales of combines to be down 25 to 30%, with both sectors weaker than previously anticipated. We now expect further weakness in the Under-40 horsepower tractor segment in North America with industry retail unit sales down approximately 25%, as the weakness in the North American residential construction and housing markets continues.
For the third quarter of 2009, we expect global agricultural equipment industry retail unit sales to be weaker than in the first half of the year, down 20 to 25%. We expect worldwide industry retail unit sales of Over-40 horsepower tractors to decline by approximately 20% and industry retail unit sales of combines to be down approximately 35%. We expect the Under-40 horsepower tractor segment in North America to be down approximately 25%.
We also expect the weakness in global construction equipment industry retail unit sales to continue at levels close to those we experienced in the first half of the year, with full year industry retail unit sales down 45 to 50% compared with full year 2008, and we anticipate that light equipment markets, where CNH has a stronger presence, will decline by approximately 50%, with the heavy equipment markets declining by approximately 45%. We expect declines to occur in all major markets, with the most significant declines in the Western European and American markets. We do not expect that global or OECD GDP will grow and we expect construction activity levels will continue to weaken, due to the tight global financial and credit conditions. Although unprecedented levels of governmental stimulus actions are being enacted throughout the world, we expect that such actions will not impact construction equipment retail unit sales until much later in 2009.
For the third quarter of 2009, we expect global construction equipment industry retail unit sales to be down 50 to 55% compared with the third quarter of 2008. We expect that industry retail unit sales of light construction equipment will be down 45 to 50%, with heavy construction equipment sales down approximately 55%. The most significant declines are expected to continue in the Western European and American markets.

"Although our 2009 industry outlook continues to be disappointing, we remain optimistic about the future prospects for our agricultural and construction equipment businesses and are taking the actions necessary to ensure that CNH and its dealers and distributors will be ready and able to compete aggressively as market conditions improve," Boyanovsky said. "CNH is managing its businesses to control variable costs, managing its production systems to reduce inventories and receivables, reorganizing and right sizing its construction equipment operations, and reviewing all options for improving the efficiency and results of its construction equipment operations. We remain focused on providing our dealers and customers with high quality, innovative new products and services so they may be more efficient and cost effective."
CNH expects Equipment Operations Net Sales for full year 2009 to be down 25 to 30% from 2008, including a reduction of approximately 5% related to currency translation, following the trend of the first half of the year. To compensate for lower levels of market demand and to reduce inventory levels, CNH plans to continue to under-produce expected retail unit sales by 10 to 15% for agricultural equipment and by 50 to 55% for construction equipment. CNH anticipates that markets will remain challenging through at least the balance of the year and expects a net loss for the full year, excluding restructuring. Overall, with the corrective measures it has put in place, the Company is confident about the future of both the construction and agricultural equipment businesses.
The Company remains focused on strict underwriting controls and disciplined receivables management. For the full year 2009, CNH anticipates that net income from Financial Services will be in the range of $115 to $125 million, and in the range of $30 to $40 million for the third quarter.
These expectations are based upon the ability of the Financial Services business to secure funding at competitive rates. CNH continues to explore, in coordination with Fiat Treasury, other various sources of funding, such as through the TALF enabled securitization markets in the U.S., or by way of third party financing. In this challenging economic environment we anticipate that the activity levels and profitability of Financial Services will remain limited. However, we do not believe this will have a negative impact on Equipment Operations sales and margins, as it did not in the first half of the year.

CNH Global N.V. is a world leader in the agricultural and construction equipment businesses. Supported by more than 11,300 dealers in 170 countries, CNH brings together the knowledge and heritage of its Case and New Holland brand families with the strength and resources of its worldwide commercial, industrial, product support and finance organizations. CNH Global N.V., whose stock is listed at the New York Stock Exchange (NYSE:CNH), is a majority-owned subsidiary of Fiat S.p.A. (FIA.MI). More information about CNH and its Case and New Holland products can be found online at www.cnh.com.

CNH management will hold a conference call later today, to review its second quarter and first half 2009 results. The conference call Webcast will begin at approximately 7:00 a.m. U.S. Central Time; 8:00 a.m. U.S. Eastern Time. This call can be accessed through the investor information section of the company's Web site at www.cnh.com 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, operating results, budgets, projected costs and plans and objectives of management, are forward-looking statements. These statements may include terminology such as "may," "will," "expect," "could," "should," "intend," "estimate," "anticipate," "believe," "outlook," "continue," "remain," "on track," "goal," 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 the availability of credit and to interest rates and government spending. Some of the other significant factors which may affect our results 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 customers' access to credit, actions by rating agencies concerning the ratings of our debt securities and asset backed securities, risks related to our relationship with Fiat S.p.A., political uncertainty and civil unrest or war in various areas of the world, pricing, product initiatives and other actions by competitors, disruptions in production capacity, excess inventory levels, the effect of changes in laws and regulations (including government subsidies and international trade regulations), the 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, relations with and the financial strength of dealers, the cost and availability of supplies from our suppliers, 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 fuel and fertilizer costs. Additionally, our achievement of the anticipated benefits of our margin improvement initiatives depends upon, among other things, industry volumes as well as our ability to effectively rationalize our operations and to execute our brand strategy. Further information concerning factors that could significantly affect expected results is included in our annual report on Form 20-F for the year ended December 31, 2008.
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.

 

 

For more information please contact:

Communications (630) 887-2345

• Positive Cash flow reduced Equipment Operations Net Debt by $550 million
• New Construction Equipment organization announced as part of restructuring plan
• Second Quarter Operating Profit and Margin improve compared with 1st Quarter
• North American Agricultural Equipment's Net Sales up 9% year-to-date

BURR RIDGE, IL. - (MARKETWIRE) - CNH Global N.V. (NYSE: CNH - News) July 22, 2009:
In the second quarter of 2009, CNH saw a continuation of the negative economic conditions experienced in the first quarter but limited their impact through strong pricing actions and aggressive operating cost and production controls. Equipment Operations generated positive cash flow through inventory reductions of $668 million, contributing to a reduction of Equipment Operations Net Debt by $550 million. CNH's second quarter 2009 diluted net loss per share, attributable to CNH common shareholders was $0.28 compared with earnings of $1.46 in the second quarter of 2008. The Net Loss attributable to CNH was $67 million in the quarter compared with Net Income attributable to CNH of $347 million in the same period of 2008. These results include restructuring charges, after tax, of $52 million, compared with $4 million in the prior year. These results also include a tax provision for Equipment Operations, excluding restructuring, of $67 million in the second quarter of 2009 compared with a provision of $171 million in the prior year. CNH's second quarter 2009 diluted loss per share before restructuring, after tax, attributable to CNH common shareholders was $0.06 compared with earnings of $1.48 in the second quarter of 2008.
CNH's first half 2009 diluted net loss per share, attributable to CNH common shareholders was $0.81 compared with earnings of $1.93 in the first half of 2008. The Net Loss attributable to CNH was $193 million in the first half compared with Net Income attributable to CNH of $459 million in the same period of 2008. Results include restructuring charges, after tax, of $53 million compared with $18 million in the first half of 2008. These results also include a tax provision for Equipment Operations, excluding restructuring, of $85 million in the first half of 2009 compared with a provision of $208 million in the prior year. CNH's first half 2009 diluted loss per share before restructuring, after tax, attributable to CNH common shareholders was $0.59 compared with earnings of $2.01 in the first half of 2008.

"In the second quarter of 2009, we continued taking actions to ensure that the company emerges from the current economic environment in a position of strength, ready to compete aggressively when market conditions improve. We maintained a tight grip on costs and production overall, reducing Equipment Operations inventories and receivables by $918 million and reducing permanent and temporary salaried and agency positions by 7% so far this year. On the construction side, we began remodeling the company's organization to better fit the new realities of the Construction Equipment market and initiated actions to rationalize our industrial footprint. We have maintained our commitment to product quality and new product development. Our product offering is second to none and that's how it will stay," said Harold Boyanovsky, CNH President and Chief Executive Officer.
"In terms of this quarter's results, we have now experienced almost a full year of significant global economic pressures with inevitable negative consequences for capital equipment markets and industry sales in both construction and agricultural equipment, with corresponding negative impacts on our Net Sales and Operating Profit. This, combined with the restructuring measures implemented during the quarter, resulted in a net loss for the quarter.
"In the second half, the actions in place already will continue to generate positive Equipment Operations cash flow, as we saw in the second quarter, and we expect to reduce working capital for the full year by approximately $1 billion. We anticipate that markets will remain challenging through at least the balance of the year and expect a net loss for the full year, excluding restructuring. Overall, with the corrective measures we have put in place, we are confident about the future of both the construction and agricultural equipment businesses."

Case IH Agriculture launched three new models of its Farmall line of compact tractors with continuously variable transmissions ('CVT') and the Austoft entry level sugar cane harvester designed for developing markets in Africa, India, South-East Asia and China.
New Holland Agriculture's new line of large and small square balers, launched in North America in the first quarter, became fully available. New Holland also launched the new Class 9, 500+ HP Combine (CR9080) in North America and Australia. It also invested for the third quarter launch of its new flagship T7000 series tractors (167 to 225 HP) with continuously variable "Auto Command" transmissions and new armrest control console in North America and Western Europe.
Case Construction continued its roll out of CX crawler excavators with a new CX 130B "long reach" model, with joystick steering for increased operator efficiency and comfort.
New Holland Construction added several new features to its North American crawler excavators to increase product applicability and protection for ground level demolition activities. In Europe, it added joystick steering as an option on its wheel loaders for enhanced product maneuverability as well as increased operator ergonomics and efficiency.

Worldwide agricultural tractor and combine industry retail unit sales declined 11% in the second quarter and 7% for the first half of 2009, driving Agricultural Equipment's Net Sales down 22% for the quarter and 17% for the first half compared with 2008. On a constant currency basis Agricultural Equipment's Net Sales were down 13% for the quarter and 8% for the first half. Despite the overall decline, growth in industry sales of higher horsepower tractors and combines continued to outperform the overall agricultural equipment market and CNH's North American Agricultural Equipment sales were up 6% in the second quarter and up 13% for the first six months on a constant currency basis. CNH under-produced retail unit sales by 24% in the quarter and by 7% for the first six months of the year. Agricultural Equipment's market share was stable to higher for both the quarter and the first six months in the Americas and Western Europe, but declined in the developing Rest of World markets in both periods.

Construction Equipment's Net Sales declined 62% in the quarter, and were down 58% on a constant currency basis. Worldwide construction equipment industry retail unit sales declined approximately 47%, with industry retail unit sales of light construction equipment, where CNH has a stronger market position, down approximately 52% and industry retail unit sales of heavy equipment down 40%. CNH idled much of its construction equipment production capacity for the quarter to reduce inventories and destock dealers, under-producing retail unit sales by 52%. Destocking of dealers and distributors accounted for approximately 8% of the decline in net sales of construction equipment in the quarter. Industry retail unit sales declines were greatest in the Latin American and Western European markets during the quarter, declining 64% and 60% respectively.
Construction Equipment's Net Sales for the half declined 61%, and were down 57% on a constant currency basis. For the half, worldwide construction equipment industry retail unit sales declined 49%, with industry retail unit sales of light construction equipment down 55% and industry retail unit sales of heavy construction equipment down 42%. Destocking of dealers and distributors accounted for approximately 7% of the decline in net sales of construction equipment in the first half. Construction Equipment's market share was stable or improved in the Americas and Western Europe both in the quarter and in the first half of the year, but declined in Rest of World markets in both periods.

For the second quarter of 2009, CNH's improved pricing was offset by the global decline in industry retail unit sales, destocking actions and the negative impacts of exchange rate changes and economic cost increases. CNH's Gross Profit in the second quarter was $525 million compared with $1,064 million in the second quarter of 2008. Gross Margin was 14.8% in the second quarter of 2009 compared with 13.9% in the first quarter of 2009 and 20.2% in the second quarter of 2008.
For the first half of 2009, CNH's Gross Profit was $950 million compared with $1,764 million in the first half of 2008. Gross Margin was 14.4% compared with 18.8% in the first half of 2008. Margins declined for both Agricultural and Construction Equipment.


Equipment Operations Operating Profit was $161 million in the second quarter, compared with $585 million in the second quarter of 2008 as improvements in operating leverage from reduced SG&A and R&D costs did not offset the decline in gross margin. SG&A expenditures declined by $100 million compared with the second quarter of 2008, but increased as a percent of net sales to 7.6% compared with 7.0% in the second quarter of last year. R&D expenditures declined by $15 million compared with the second quarter of 2008, but increased as a percent of net sales to 2.7% compared with 2.1% of net sales in the prior year. Expenditures were reprioritized to focus on new products so the brands can continue to bring added value to their customers.

Agricultural Equipment's Operating Margin was 8.5% in the second quarter, reflecting the Gross Margin decline, partially offset by reduced R&D and SG&A costs. Agricultural Equipment's second quarter Operating Margin improved compared with the first quarter, and for the first half of the year was 6.9%.
Construction Equipment's second quarter Operating Margin, although improved compared with the first quarter, was negative in the quarter and for the six month period, reflecting the significant industry volume declines and effects of destocking actions.


CNH Financial Services' on-book asset portfolio totaled $9.0 billion at June 30, 2009, down 27% from the prior year and down from $9.8 billion at year-end 2008, primarily due to public and private securitization transactions, as well as loan originations. Second quarter Net Income of $45 million was down $25 million from a year ago, reflecting primarily lower average levels of on-book receivables and increased provisions for losses. SG&A, in the quarter, was substantially the same as in the second quarter of 2008 as reductions in general expenses were offset by increases in loss provisions from $25 million in the second quarter of 2008 to $34 million in the second quarter of 2009, primarily related to the downturn in the construction equipment market and additional reserves in Brazil, while the North American Agricultural Equipment portfolio quality remained high.
For the first half, Financial Services' Net Income was $46 million, down from $122 million in the prior year. First half 2009 loss provisions were $81 million compared with $43 million in the prior year.
In North America, all of Financial Services' maturing credit facilities were renewed or extended in the quarter. New transactions were closed for a total value exceeding $1.6 billion, including $1.0 billion of U.S. public ABS funding in the quarter. For the first half, Financial Services raised approximately $2.7 billion of new funding in North America, including $1.5 billion from the U.S. public ABS issuance, the same total level of new funding raised in the first half of 2008. Funding needs in Europe and Australia were similarly met by a combination of increasing credit limits on existing warehouse facilities and the sale of receivables to third party factors.

Second quarter 2009 Net Loss attributable to CNH was $67 million, compared with Net Income of $347 million in the second quarter of 2008. For the quarter, in addition to the decline in Equipment Operations Operating Profit, Equity Income in Unconsolidated Subsidiaries was a loss of $15 million in 2009, compared with a profit of $22 million in the prior year, reflecting primarily the results of the company's unconsolidated construction equipment joint ventures. Results include restructuring charges, after tax, of $52 million in the second quarter of 2009, compared with $4 million in the comparable period for the prior year. CNH's Net Loss excluding restructuring charges, after tax, attributable to CNH was $15 million, compared with a profit of $351 million in the prior year. Equipment Operations tax provision, excluding restructuring, for the quarter was $67 million, reflecting losses where no immediate tax benefit is recognized and recording of valuation allowances against previously recognized deferred tax assets.
For the six months, the Net Loss attributable to CNH of $193 million was down compared with a Net Income of $459 million in 2008. For the half, in addition to the decline in Equipment Operations Operating Profit, Equity Income in Unconsolidated Subsidiaries was a loss of $36 million in 2009, compared with a profit of $33 million in the prior year, reflecting primarily the results of the company's unconsolidated construction equipment joint ventures. Results include restructuring charges, after tax, of $53 million in 2009, compared with $18 million in 2008. The Net Loss, excluding restructuring charges, after tax, attributable to CNH was $140 million, compared to Net Income of $477 million in the prior year. Equipment Operations tax provisions, excluding restructuring for the six months, was $85 million, reflecting losses where no immediate tax benefit is recognized and recording of valuation allowances against previously recognized deferred tax assets.


Equipment Operations' Net Debt position improved in the second quarter by $550 million to $338 million Net Debt. The $665 million of cash generated by Operating Activities was reduced by net cash used for Investing Activities of $55 million, primarily capital expenditures, and other impacts of $60 million, including the effects of changes in exchange rates.
In the quarter, the decrease in working capital was primarily due to decreases in inventories and receivables, partially offset by a reduction in payables. Inventories decreased by $668 million and receivables decreased by $250 million, reflecting the company's destocking actions and reduced production levels.
For the six month period, Equipment Operations' Net Debt position improved by $85 million. The $230 million of cash generated by Operating Activities was partially utilized for capital expenditures and other impacts, including the effects of exchange rate changes.
Financial Services Net Debt increased by $530 million during the quarter to $8.1 billion at June 30, 2009. Compared with December 31, 2008, Financial Services Net Debt decreased by $115 million from $8.2 billion.

CNH has already announced that it will be investing up to $250 million in consolidation and reorganization actions during 2009 to improve operational efficiency and adjust cost and operating levels to right size CNH's structure in light of the current economic situation and expectations, while preserving flexibility to take advantage of growth opportunities as market conditions allow. Planned actions included personnel reductions, cost reduction initiatives, reorganizations, and/or restructurings.
Personnel reduction actions taken through the second quarter have resulted in an 7% cumulative reduction in permanent and temporary salaried and agency positions, including a cumulative reduction of approximately 13% in construction equipment related positions. Additional actions to be taken in the second half of 2009 are expected to result in a full year company-wide reduction in permanent and temporary salaried and agency positions of 10 to 12%.
CNH has reorganized its Construction Equipment business's management structure, with the goal of increasing brand support and new product development, while reducing structural costs. The new organization, headed by Jim McCullough, is committed to managing the two brand networks and building the value of our construction equipment brands. In addition, CNH has started the information and consultation processes for the closing of its construction equipment plant located in Imola, Italy and to relocate that production to other CNH facilities. This action will downsize the company's manufacturing footprint.
Additional actions may be undertaken in the coming months as CNH seeks to further increase its ability to cost effectively manufacture quality products for its customers around the world. In accordance with labor and other regulations throughout the world, the company will meet and discuss proposed actions with affected parties prior to finalizing any initiatives and expects to announce further details as they become available.

Although we anticipate that full year global agricultural fundamentals will remain strong, we continue to believe worldwide industry retail unit sales will be impacted by tight financial and credit conditions. We anticipate that cash grain commodity prices will remain at higher levels than in 2007 while farm production input cost pressures will abate. We believe global corn, wheat and coarse grain production will exceed consumption resulting in higher corn and wheat stocks-to-use ratios. However, the stocks-to-use ratio for global soybeans is expected to decline. We expect that U.S. Net Farm Income will be strong, in the range of $65 to $71 billion, but unevenly distributed across market segments, as the dairy and livestock sectors remain under pressure. We now expect worldwide industry retail unit sales of Over-40 horsepower tractors to be down by 10 to 15% and industry retail unit sales of combines to be down 25 to 30%, with both sectors weaker than previously anticipated. We now expect further weakness in the Under-40 horsepower tractor segment in North America with industry retail unit sales down approximately 25%, as the weakness in the North American residential construction and housing markets continues.
For the third quarter of 2009, we expect global agricultural equipment industry retail unit sales to be weaker than in the first half of the year, down 20 to 25%. We expect worldwide industry retail unit sales of Over-40 horsepower tractors to decline by approximately 20% and industry retail unit sales of combines to be down approximately 35%. We expect the Under-40 horsepower tractor segment in North America to be down approximately 25%.
We also expect the weakness in global construction equipment industry retail unit sales to continue at levels close to those we experienced in the first half of the year, with full year industry retail unit sales down 45 to 50% compared with full year 2008, and we anticipate that light equipment markets, where CNH has a stronger presence, will decline by approximately 50%, with the heavy equipment markets declining by approximately 45%. We expect declines to occur in all major markets, with the most significant declines in the Western European and American markets. We do not expect that global or OECD GDP will grow and we expect construction activity levels will continue to weaken, due to the tight global financial and credit conditions. Although unprecedented levels of governmental stimulus actions are being enacted throughout the world, we expect that such actions will not impact construction equipment retail unit sales until much later in 2009.
For the third quarter of 2009, we expect global construction equipment industry retail unit sales to be down 50 to 55% compared with the third quarter of 2008. We expect that industry retail unit sales of light construction equipment will be down 45 to 50%, with heavy construction equipment sales down approximately 55%. The most significant declines are expected to continue in the Western European and American markets.

"Although our 2009 industry outlook continues to be disappointing, we remain optimistic about the future prospects for our agricultural and construction equipment businesses and are taking the actions necessary to ensure that CNH and its dealers and distributors will be ready and able to compete aggressively as market conditions improve," Boyanovsky said. "CNH is managing its businesses to control variable costs, managing its production systems to reduce inventories and receivables, reorganizing and right sizing its construction equipment operations, and reviewing all options for improving the efficiency and results of its construction equipment operations. We remain focused on providing our dealers and customers with high quality, innovative new products and services so they may be more efficient and cost effective."
CNH expects Equipment Operations Net Sales for full year 2009 to be down 25 to 30% from 2008, including a reduction of approximately 5% related to currency translation, following the trend of the first half of the year. To compensate for lower levels of market demand and to reduce inventory levels, CNH plans to continue to under-produce expected retail unit sales by 10 to 15% for agricultural equipment and by 50 to 55% for construction equipment. CNH anticipates that markets will remain challenging through at least the balance of the year and expects a net loss for the full year, excluding restructuring. Overall, with the corrective measures it has put in place, the Company is confident about the future of both the construction and agricultural equipment businesses.
The Company remains focused on strict underwriting controls and disciplined receivables management. For the full year 2009, CNH anticipates that net income from Financial Services will be in the range of $115 to $125 million, and in the range of $30 to $40 million for the third quarter.
These expectations are based upon the ability of the Financial Services business to secure funding at competitive rates. CNH continues to explore, in coordination with Fiat Treasury, other various sources of funding, such as through the TALF enabled securitization markets in the U.S., or by way of third party financing. In this challenging economic environment we anticipate that the activity levels and profitability of Financial Services will remain limited. However, we do not believe this will have a negative impact on Equipment Operations sales and margins, as it did not in the first half of the year.

CNH Global N.V. is a world leader in the agricultural and construction equipment businesses. Supported by more than 11,300 dealers in 170 countries, CNH brings together the knowledge and heritage of its Case and New Holland brand families with the strength and resources of its worldwide commercial, industrial, product support and finance organizations. CNH Global N.V., whose stock is listed at the New York Stock Exchange (NYSE:CNH), is a majority-owned subsidiary of Fiat S.p.A. (FIA.MI). More information about CNH and its Case and New Holland products can be found online at www.cnh.com.

CNH management will hold a conference call later today, to review its second quarter and first half 2009 results. The conference call Webcast will begin at approximately 7:00 a.m. U.S. Central Time; 8:00 a.m. U.S. Eastern Time. This call can be accessed through the investor information section of the company's Web site at www.cnh.com 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, operating results, budgets, projected costs and plans and objectives of management, are forward-looking statements. These statements may include terminology such as "may," "will," "expect," "could," "should," "intend," "estimate," "anticipate," "believe," "outlook," "continue," "remain," "on track," "goal," 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 the availability of credit and to interest rates and government spending. Some of the other significant factors which may affect our results 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 customers' access to credit, actions by rating agencies concerning the ratings of our debt securities and asset backed securities, risks related to our relationship with Fiat S.p.A., political uncertainty and civil unrest or war in various areas of the world, pricing, product initiatives and other actions by competitors, disruptions in production capacity, excess inventory levels, the effect of changes in laws and regulations (including government subsidies and international trade regulations), the 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, relations with and the financial strength of dealers, the cost and availability of supplies from our suppliers, 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 fuel and fertilizer costs. Additionally, our achievement of the anticipated benefits of our margin improvement initiatives depends upon, among other things, industry volumes as well as our ability to effectively rationalize our operations and to execute our brand strategy. Further information concerning factors that could significantly affect expected results is included in our annual report on Form 20-F for the year ended December 31, 2008.
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.