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• Net Sales increased 10.7% to $3.9 billion
• Operating Profit improved 105% to $330 million
• Construction equipment segment posts first profit since 2008
• Second quarter EPS before exceptional items at $0.59 per share
• Probable upgrade to FY guidance at the end of Q3

BURR RIDGE, IL. - (MARKETWIRE) - CNH Global N.V. (NYSE: CNH) announced its financial results for the second quarter which ended June 30, 2010. For the quarter, Net Sales increased 10.7% (7.9% on a constant currency basis) to $3.9 billion as positive performance in the Americas and Rest of World markets more than offset difficult economic conditions in Western and Eastern Europe. Equipment Operations posted an Operating Profit of $330 million as a result of higher volumes, better pricing and reduced industrial costs. Operating profit improved $169 million at a margin of 8.4%.
The segmental Net Sales split was 80% agricultural equipment and 20% construction equipment, largely in line with the comparable period of 2009, on a constant currency basis. The geographical distribution of revenue for the period was 42% North America, 24% Western Europe, 17% Latin America, and 17% Rest of World. The Group's ability to access the global agricultural and construction equipment markets through its dispersed manufacturing and dealership networks allowed CNH to increase revenues.
Equipment Operations generated $1.3 billion in cash flow from operating activities in the first half. This was used to finance capital expenditures of $90 million with the balance reducing Group indebtedness. During the quarter, CNH Equipment Operations completed a new refinancing transaction through the issuance of $1.5 billion in notes with a maturity of 2017, improving the Group's debt duration profile. The proceeds will be used to retire the Group's existing $500 million in notes due 2014 and to pay down certain inter-company debt by the end of 2010. CNH Equipment Operations ended the period with a net cash position of $1.8 billion, an increase of $2.1 billion from the comparable period in 2009.
CNH's 49% effective tax rate for the period is higher than the Group's normalized expectations of 32% to 36% and is largely due to losses in Europe, as a result of production curtailment, that could not be tax effected.
Net Income before restructuring and exceptional items for the period at $140 million ($144 million inclusive of exceptional items) resulted in the Group generating an EPS of $0.59 ($0.60 inclusive of exceptional items) compared to a loss of $(0.06) in the comparable prior year period.
2010 Market Outlook
CNH anticipates that global agricultural equipment markets will be flat in 2010. The CNH outlook for the global construction equipment markets is for an increase of 25% to 30% in 2010.
2010 CNH Outlook
It is probable, in view of the Group's performance to date and current forecasts for trading activity for the business in the remainder of the year, that CNH will upgrade guidance for 2010 when announcing Q3 2010 results.
SEGMENT RESULTS
Agricultural Equipment

Agricultural Equipment Industry and Market
Worldwide agricultural industry retail unit sales decreased 4% compared to the second quarter of 2009. Global tractor sales fell 4% and global combine sales fell 6% for the quarter. North American markets rose 3%, with tractors up 3% and combine sales stable as the outlook for net farm income supported continued strong demand in the large cash crop segments. Strong commodity prices and the continuation of government support programs drove demand in Latin America where tractor sales rose 39% and combines were up 41%. Difficult economic conditions drove the decline in Western Europe with industry sales dropping 17% for the quarter, with tractor sales down 16% and combines down 35%. Rest of World markets were down 7%, with a drop in tractor sales of 7% and a rise in combine sales of 10%.
CNH Agricultural Equipment Second Quarter Results
Net Sales in the agricultural equipment segment increased 4.5% for the quarter (2.3% on a constant currency basis) as solid performances in the Americas more than offset the difficult market conditions in Western and Eastern Europe, the CIS, and Australia. Operating Margin for the period increased to 10.1% from 8.5% in the comparable period in 2009. This improved profit performance was largely the result of improved industrial economics, product mix, and favorable geographic distribution of revenues.
Company and dealer inventories closed the period largely in line with estimated market demand and historical norms for the period.
CNH continued to invest in its agricultural equipment product portfolio and industrial capacity during the quarter. Significant effort continued to be invested in the preparation of Tier 4/Stage III A product introductions with product pre-sells to be launched in the second half of 2010. These new products, to be launched in the North American and European markets, will not only be upgraded to meet compliance standards for engine emissions, but will also encompass performance and styling upgrades.
Prior period capacity expansions contributed to CNH's ability to meet market demand, especially in Brazil with the Group's Sorocaba and Curitiba facilities for tractors and combines. In India, CNH has expanded capacity to meet local market and export tractor demand, and to increase component capacity in support of the CNH industrial network.
Construction Equipment

Construction Equipment Industry and Market
Global industry unit volume of construction equipment rose 60% in the second quarter compared to the prior year, with light equipment up 38% and heavy equipment up 82%. North American demand was up 13%, with heavy equipment volumes up 8% and light equipment rising 15%. Western European markets rose 17% as the industry stabilized off of last year's extremely low levels. In Latin America, the market more than doubled, driven by strong demand and a very low comparative base. Industry sales in Rest of World markets jumped approximately 90% on strong growth in the APAC region driven by steady growth in China.
CNH Construction Equipment Second Quarter Results
Construction equipment sector Net Sales increased 44.4% (38.6% on a constant currency basis) as, similar to the agricultural segment, unit demand in the Americas and certain Rest of World markets more than offset a decline in Net Sales in Europe. The sector posted an Operating Profit for the quarter of $13 million and an Operating Margin of 1.6%, reversing the $(94) million loss in the comparable quarter in 2009. This improved performance was a result of the increased commercial volume, the reduction in cost base from prior period restructuring actions, and improved industrial economics, resulting primarily from reduced input costs.
Despite the sector posting an improved performance, conditions remain tenuous in developed markets, resulting in a material portion of the sector's industrial capacity remaining under-utilized, primarily in Europe. The sector continued to make good progress reducing whole goods inventory levels primarily in North America, Western and Eastern Europe, with a corresponding improvement in working capital. Conversely, due to increased demand in Latin America, particularly Brazil, where CNH holds a strong share position and large installed machine park, capacity utilization is being expanded in two manufacturing sites to meet projected demand and reduce manufacturing bottlenecks.
CNH continued to invest in its construction equipment product portfolio during the period, with product launches for a new backhoe (designed for Tier 4 engine compliance) in Q4 2010 and a new skid steer in Q1 2011, on schedule; both products represent material upgrades in performance for the operator and are in line with the Group's global platform strategy.
CNH Financial Services Second Quarter Results

Financial Services' Net Income for the quarter ending June 30, 2010 was $33 million, a reduction of $12 million compared to the quarter ending June 30, 2009. Due to the adoption of the new accounting standards, on-book receivables are higher by $5.7 billion compared to June 2009, with corresponding higher interest margins and risk costs, as well as the absence of gains and losses on ABS transactions.
While retail originations for the first half of the year were higher than 2009, the managed asset portfolio decreased $1.1 billion from June 2009 due to lower activity levels in the construction equipment market as well as lower dealer financing balances. Delinquency levels during the second quarter showed improvement in both absolute and as percentage values.
Unconsolidated Equipment Operations Subsidiaries
During the second quarter results for the Group's unconsolidated Equipment Operations subsidiaries improved to $21 million from a $(15) million net loss in the comparable period in the prior year. This improvement in performance was largely driven by the Group's joint venture in Turkey with TTF, in Japan through our distribution partner HFT and Kobelco Construction Machinery and in Pakistan with Al Ghazi in agricultural tractors. In India, our joint venture with L&T for backhoe production and distribution has improved performance significantly.
Business Development
In Russia, CNH completed the commercial joint venture with Kamaz on May 27, 2010, which is integrally related to the industrial JV which was completed in the first quarter. The company has initiated commercial and industrial activities with the completion of these milestones, with investments to be progressively increased in conjunction with our partners and Russian regulatory approvals. Despite the difficult economic and harvest conditions present in many areas of the CIS, total industry volumes are beginning to recover. Reduced wheat stocks, and a gradually improving financing environment point to improved market conditions for agricultural and construction equipment in 2011.
Other
Exceptional and Other Items
As part of the Group's divestment of LBX Company LLC on May 10, 2010, the Company recognized an after-tax gain of $4 million.
The Company anticipates the completion of the redemption of its $500 million in notes due in 2014 on July 28, 2010, and as a result, CNH will incur a loss on retirement of debt of $22 million in the third quarter of 2010.
Equipment Operations Cash Flow and Net Debt

ABOUT CNH
CNH Global N.V. is a world leader in the agricultural and construction equipment businesses. Supported by more than 11,600 dealers in approximately 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 CONFERENCE CALL AND WEBCAST
CNH management will hold a conference call tomorrow, to review its second quarter 2010 results. The conference call webcast will begin at 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 website at www.cnh.com and will be transmitted by CCBN.
NON-GAAP MEASURES
CNH utilizes various figures that are "Non-GAAP Financial Measures" as this term is defined under Regulation G as promulgated by the SEC. In accordance with Regulation G, CNH has detailed either the computation of these measures from multiple U.S. GAAP figures or reconciled these non-GAAP financial measures to the most relevant U.S. GAAP equivalent in the accompanying tables to this press release. Some of these measures do not have standardized meanings and investors should consider that the methodology applied in calculating such measures may differ among companies and analysts. CNH's management believes these non-GAAP measures provide useful supplementary information to investors in order that they may evaluate CNH's financial performance using the same measures used by our management. These non-GAAP financial measures should not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with U.S. GAAP.
CNH defines "Equipment Operations gross profit" as net sales of equipment less costs classified as cost of goods sold. CNH defines "Equipment Operations operating profit" as gross profit less costs classified as selling, general and administrative and research and development costs. CNH defines "Equipment Operations gross margin" as gross profit as a percent of net sales of equipment. CNH defines "Equipment Operations operating margin" as operating profit as a percent of net sales of equipment. "Net Debt (Cash)" is defined as total debt (including intersegment debt) less cash and cash equivalents, deposits in Fiat affiliates cash management pools, cash held in trust for redemption of notes due in 2014 and intersegment notes receivable. CNH defines "Net income (loss) and diluted EPS before restructuring and exceptional items" as Net income (loss) attributable to CNH, less restructuring charges and exceptional items, after tax. Equipment Operations "working capital" is defined as accounts and notes receivable and other-net, excluding intersegment notes receivables, plus inventories less accounts payable. The U.S. dollar computation of cash generated from working capital, as defined, is impacted by the effect of foreign currency translation and other non-cash transactions. CNH defines the "change in net sales on a constant currency basis" as the difference between prior year actual net sales and current year net sales translated at prior year average exchange rates. Elimination of the currency translation effect provides constant comparisons without the distortion of currency rate fluctuations.
FORWARD LOOKING STATEMENTS
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, 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, restrictive covenants in our debt agreements, 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., the effect of the contemplated demerger pursuant to which CNH would be separated from Fiat S.p.A.'s automotive business, 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 those related to tax, healthcare, retiree benefits, government subsidies and international trade), 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 and critical suppliers, 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, 2009.
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.