CNH GLOBAL N.V.
ANNUAL REPORT 2011
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ANNUAL REPORT 2011
Table of Contents
Management Report
Introduction
Structure and activities of the Company
Key events during the year
Financial review and results
Main risks and uncertainties
CNH outlook for 2012
Directors’ remuneration
Human resources
Research and Innovations
Corporate governance report
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5
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10
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15
15
15
15
18
Financial statements
Consolidated financial statements
Consolidated income statements
Consolidated statements of comprehensive income
Consolidated statements of financial position
Consolidated statements of cash flows
Statements of changes in consolidated equity
Notes to the consolidated financial statements
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27
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31
32
Corporate financial statements
Corporate balance sheets
Corporate profit and loss accounts
Notes to the corporate financial statements
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Other information
Independent auditor’s report
Proposed appropriation of results
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103
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Signatures
Directors
Harold D. Boyanovsky
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Thomas Colligan
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Dr. Edward A. Hiler
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Léo W. Houle
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Dr. Rolf M. Jeker
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Dr. Peter Kalantzis
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John Lanaway
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Kenneth Lipper
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Sergio Marchionne
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Paolo Monferino
Jacques Theurillat
__________________________________
___________________________________
General Counsel and Secretary
Michael P. Going
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Confirmed and adopted by the Shareholders of the Company on April 3, 2012
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MANAGEMENT REPORT
Introduction
CNH Global N.V. (“CNH” or the “Company”) is incorporated in, and under the laws of, The Netherlands. Operating through
its direct and indirect subsidiaries ("Subsidiaries"), CNH is one of the world’s leaders in the manufacturing, marketing and
distribution of agricultural and construction equipment.
CNH is listed on the New York Stock Exchange under the symbol “CNH”. To satisfy the filing requirements of the United
States Securities and Exchange Commission (“SEC”), the Company also prepares consolidated financial statements in
accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The financial statements
under U.S. GAAP were made available to all shareholders of the Company when filed with the SEC on Form 20-F on
February 29, 2012. The Company also prepares consolidated financial statements in accordance with International
Financial Reporting Standards (“IFRS”), which are included in this Annual Report. The underlying management report
summarizes, per caption, the relevant information as required by Dutch law. For further details, reference is made to the
extensive analyses provided in our Annual Report on Form 20-F, which can be found on our website.
CNH's worldwide agricultural equipment and construction equipment operations are collectively referred to as "Equipment
Operations". CNH's worldwide financial services operations are collectively referred to as "Financial Services". Within its
Equipment Operations, CNH markets its products globally through its two highly recognized brand families, Case and New
Holland. Case IH (along with Steyr in Europe) and New Holland make up the agricultural brand family. Case and New
Holland Construction (along with Kobelco in North America) make up the construction equipment brand family.
In agricultural equipment, CNH believes it is one of the leading global manufacturers of agricultural tractors and combines
based on units sold, and it has leading positions in hay and forage equipment and specialty harvesting equipment. In
construction equipment, it has a leading position in backhoe loaders and a strong position in skid steer loaders in North
America and crawler excavators in Western Europe. In addition, CNH provides a complete range of replacement parts and
services to support its equipment.
As of December 31, 2011, the Company was manufacturing its products in 37 facilities throughout the world and
distributing its products in approximately 170 countries through a network of approximately 11,300 dealers and distributors.
Unless otherwise indicated, all financial data set forth in this Annual Report is expressed in U.S. dollars.
As of December 31, 2011, Fiat Netherlands Holding N.V. (“Fiat Netherlands”) owned approximately 88% of the outstanding
ordinary shares of CNH. As of December 31, 2011, Fiat Netherlands was a direct, wholly-owned subsidiary of Fiat
Industrial S.p.A. (“Fiat Industrial”, and, together with its subsidiaries, the "Fiat Industrial Group"). Fiat Industrial is a
corporation organized under the laws of the Republic of Italy whose stock is traded on the Milan stock exchange. Fiat
Industrial Group’s three sectors design, produce, sell and finance trucks, commercial vehicles, buses, special vehicles
(Iveco), tractors, and agricultural and construction equipment (CNH), in addition to engines and transmissions for those
vehicles and engines for marine applications (FPT Industrial).
Fiat Netherlands was a direct, wholly-owned subsidiary of Fiat S.p.A. (“Fiat”, and, together with its subsidiaries, the “Fiat
Group”) until December 31, 2010. On January 1, 2011, Fiat effected a “demerger” under Article 2506 of the Italian Civil
Code. Pursuant to the demerger, Fiat transferred its ownership interest in Fiat Netherlands to a new holding company, Fiat
Industrial, including Fiat’s indirect ownership of CNH Global, as well as Fiat’s truck and commercial vehicles business and
its industrial and marine powertrain business. Consequently, as of January 1, 2011, CNH Global became a subsidiary of
Fiat Industrial. In connection with the demerger transaction, shareholders of Fiat received shares of the capital stock of Fiat
Industrial.
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Structure and activities of the Company
CNH was built on the experience of brands that over the years have played a key role in the development of the agricultural
and construction equipment industries in both Europe and the United States and that today offer customers the best
technological solutions available. Agricultural equipment is sold under the New Holland Agriculture and Case IH brands, as
well as the Steyr brand in Europe. Construction equipment is sold under the New Holland Construction and Case
Construction brands, as well as the Kobelco brand in North America.
CNH offers customers adaptable, high quality, high productivity products, backed by full service support (CNH Parts &
Service) and tailored financing solutions (CNH Capital).
Case IH Agriculture
The Case IH Agriculture brand has a long tradition of leadership in the agricultural sector. The brand is synonymous with
incomparable performance, reliability and operating efficiency.
The range of tractors, balers and combines continues in the tradition of notable predecessors such as Case International
Harvester and David Brown, to name but a few. Today, Case IH is a global supplier of powerful, reliable, highly-productive
machines backed by an organization dedicated to the provision of professional services to support agriculture producers in
the optimized, 360 degree management of their activities.
New Holland Agriculture
New Holland Agriculture provides solutions that improve farming efficiency and productivity through the use of affordable
technologies. In 2006, the brand launched its Clean Energy Leader strategy to actively promote sustainable agricultural
technology.
New Holland offers cash crop producers, livestock farmers, contractors, vineyards and ground-care professionals the
largest choice of easy-to-operate tractors, harvesters and material handling equipment with more than 80 product lines and
over 300 models.
New Holland complements its agricultural equipment offering with efficient parts & service support and a range of tailored
financial services. Through its global network of highly professional dealers, the brand guarantees full service support.
Steyr
For more than 60 years, Steyr has been known for the quality, reliability and excellence of its agricultural tractors. Steyr’s
distinctive tractors, with the trademark red-white-red design first used in 1967, are produced at the St. Valentin plant in
Austria. The brand is leader in the “premium” segment in Austria and exports 60% of production, principally to
Germany, Switzerland, France, Italy, Belgium, the Netherlands, Luxembourg, Scandinavia and Eastern Europe. Nineteen
tractor models are produced at the St. Valentin plant in Austria, including the Kompakt, 9000 MT, Profi and CVT series, as
well as products for municipal and forestry applications. A range of products that demonstrates the brand's ability to
respond rapidly to the ever-changing demands of the market.
New Holland Construction
New Holland Construction is a leader in the global construction equipment market. Behind the trademark black and yellow
livery is the wealth of know-how and experience inherited from Fiat Kobelco, Kobelco, O&K, New Holland and
Fiat Allis, whose strengths were combined to form a brand that offers advanced solutions to the construction sector and
strives constantly for total customer satisfaction.
Complementing New Holland Construction's full product offer is an extensive network of dealers that operate by a simple
yet key philosophy: listen to customers, take a personal approach to their problems and rapidly find an effective solution.
Case Construction
Since it was established in Racine, Wisconsin (USA) more than 170 years ago, Case Construction has built a reputation as
a premium manufacturer of a wide range of technologically-advanced products for the construction equipment industry.
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With more than 90 models carrying the Case name and colors, the brand has a solution for every application. The product
lineup includes skid steer loaders, mini excavators, backhoe loaders, crawler and wheel excavators, and wheel loaders –
all designed to face extreme climate conditions or operate in high-risk situations.
In addition, for more than a century, Case has had an enviable reputation as supplier to the armed forces, and
governmental and non-governmental organizations around the world engaged in activities such as dismantling land mines
and re-building communities devastated by natural disasters.
Kobelco
Kobelco manufactures and sells a complete range of compact, mid-size and full-size excavators ranging from 1.9 to 88
tons. Particular attention is given to the power and precision of its machines to ensure they exceed customer expectations.
Kobelco excavators are sold through over 250 distribution outlets in North America and customers are supported by a
network of experienced dealers.
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Key Events during the year
JANUARY
NEW HOLLAND / CASE IH: ASABE awards the AE50 to New Holland Agriculture and Cash IH Agriculture for innovative
technologies in Agricultural equipment.
CASE IH: Release of 235-340 hp Tier 4A/Stage IIIB Magnum Series tractors (with global armrest controls) in North America
and Europe.
CASE Launch of the new C-series crawler excavator with Tier4A/Stage IIIB engines.
FEBRUARY
NEW HOLLAND: Launch in Europe of new Tier 4A/Stage IIIB compliant CX combines equipped with ECOBlue SCR
technology.
NEW HOLLAND: The new T4 PowerStar utility tractor range with 55-100 hp engines is introduced in Europe and North
America.
CASE Launch of new Alpha Series skid steers and compact track loaders for the Agricultural and construction markets.
MARCH
CNH Global N.V. acquires full ownership of L&T – Case Equipment Private Limited (a 50/50 JV with Larsen & Toubro
Limited), part of CNH’s long-term commitment to consolidating its construction and building equipment business in India.
NEW HOLLAND U.S. launch of the Roll Belt 450 Utility round baler for small acreage farmers.
CASE IH: Release of 350–500 hp Tier 4A/Stage IIIB Steiger Series tractors and Module Express 635 cotton picker with 400
hp engine in North America.
CASE At ConExpo in Las Vegas, Case Construction introduces new B Series motor grader, with the 865B variable
horsepower model, and new F-Series wheel loaders, including the 1021F and 1221F for quarry, aggregate and truckloading. All are equipped with SCR Tier 4A/Stage IIIB engines.
CASE Launch of 3 new DV Series double-drum compactors and the PT240, the brand’s First pneumatic tire compactor.
CASE Launch of new CX800B crawler excavator in Latin America.
NEW HOLLAND: At ConExpo in Las Vegas, the brand launches updates to the B-Series tractor loader backhoe and the allnew compact excavator E55BX.
NEW HOLLAND: Presentation at Samoter (in Italy) of new C-series crawler excavator with Tier 4A/Stage IIIB compliant
SCR engines and new wheel loaders.
NEW HOLLAND: Also presented were the new 200 Series Skid Steer and Compact Track loaders with patented vertical lift
Super Boom
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APRIL
CNH: CNH announces plan to produce combines and tractors in Argentina for the Latin American market. Initially, $100
million is to be invested in new production lines and expansion of existing Fiat Industrial site in Cordoba.
CASE IH: In North America, Case IH begins shipment of 550–600 hp Steiger/Quadtrac 4WD series tractors with best-inclass fuel efficiency and hydraulic flow.
NEW HOLLAND: Release in Latin America of the D140B dozer and new models of motor graders.
MAY
NEW HOLLAND: At Agrishow, the brand presents the 273-389 hp T8 tractor range, the highest horsepower tractors
produced in Brazil, and the TL Exitus tractor and new SP3500 Sprayer.
JUNE
CASE IH: Case IH sugar cane harvesters receive “Top of Mind” award from Revista Rural in Brazil.
CASE: In North America, the Case 850L crawler dozer, Case 580M loader/backhoe, Case 440 Series 3 skid steer loader
and Case 621E wheel loader are recognized as “Contractor’s Choice” machines for 2011 by Roads & Bridges.
CASE: Launch of new B-series graders in Latin America.
AUGUST
CASE IH: At Farm Progress Show in the U.S., the brand introduces the new Efficient Power Axial- Flow 30 Series
combines, Patriot 4430 sprayer and Maxxum tractor series, all Tier 4A/Stage IIIB emission compliant.
CASE IH: Case IH launches new Magnum series tractors in Latin America and the new Axial Flow 2566, its first ever class
5 combine for that market.
SEPTEMBER
CNH: Celebration of 600 thousandth tractor produced by TürkTraktör, the CNH joint venture with Koç Holding.
NEW HOLLAND: New Holland Agriculture consolidates leadership in Tier 4A/Stage IIIB compliant equipment with
introduction of CX and flagship Twin Rotor CR Series in Europe and in North America. All combines feature ECOBlue SCR
technology.
CASE IH: The Case IH Diesel Saver Automatic Productivity Management (APM) System – with fully-integrated rivetrain
management for the Case IH Steiger 4WD and Quadtrac tractors – receives ASABE 2011 Rain Bird Engineering Concept
of the Year Award.
OCTOBER
CNH: CNH announces a strategic alliance with Semeato, leader in Brazil for no-till grain seeding technologies. The
collaboration will cover a variety of areas, further strengthening CNH’s leadership in Latin America.
CNH: CNH announces agreement with De Lage Landen (a wholly-owned subsidiary of Rabobank) for provision of retail
financing under the CNH Capital brand to customers in the Russian Federation.
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NOVEMBER
CNH: CNH Capital LLC issues a $500 million bond due November 2016.
NEW HOLLAND: Introduction of new midrange T5 and T6 tractor series (with Tier 4A/Stage IIIB engines) and TD5 at
Agritechnica. The second-generation NH2TM hydrogen tractor is also displayed. Agritechnica awards "Machine of the Year
2012" to the new CR combine and five silver medals for New Holland’s innovative technologies.
NEW HOLLAND: The Braud 9090X olive harvester and ECOBraud sustainable viticulture, awarded at Agritechnica, also
receive recognition from the awards panel of SITEVI, the international exhibition in France for the vinewine & fruit-vegetable
sectors.
DECEMBER
CNH: CNH announces initial $90 million investment for new manufacturing plant in Harbin in northeast China. The new
facility will produce high horsepower tractors, combine harvesters and other advanced machinery.
CASE IH: The new Case IH Patriot 4430 sprayer is chosen as the “2011 CropLife IRON Product of the Year”.
CASE: Introduction in Europe of the new 40 ton class CX470C and the CX470C ME crawler excavators, Tier A/Stage IIIB
compliant.
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Financial review and results
Worldwide agricultural equipment industry unit sales increased 12% over 2010, with global demand up 12% for tractors and
16% or combines. North American tractor sales were up 2%, for both over and under 40 hp segments, and combine sales
were down 5%. Latin American tractor sales decreased 2% and combine sales increased 21%. EAME & CIS (Europe,
Africa Middle East and CIS) markets continued to improve during 2011, with tractor sales up 25% and combine sales up
39%. APAC (Asia Pacific) markets recorded a 12% increase for tractors and 22% for combines.
Worldwide agricultural equipment market share was in line with industry demand with continued positive performance for
tractors overall in Europe and in the high horsepower segment in North America, as the FPT Industrial powered Tier
4A/Stage IIIB equipment was well received by the market for its fuel efficiency and performance characteristics. Combine
market share was up in North America, despite the year-over-year decrease in industry retail sales, and in the APAC
region. Market share was down in the EAME & CIS, where unit retail sales increased, although less than the market
overall, due to local content tariff restrictions. In Latin America, market share performance was stable for tractors and for
combines, despite difficult trading conditions in the fourth quarter and a difficult environment for cross-border transactions.
Industrial production trailed retail sales in the fourth quarter with retail activity strong, as demonstrated by the fourth quarter
market share performance. In addition, there was an overall effort to manage down company and dealer inventories, as
reflected by the cash flow from working capital in the fourth quarter. As a result, CNH began 2012 with a healthy profile for
both new and used finished goods inventory.
Global construction equipment industry unit sales rose 27% over the prior year, with a positive trend in all regions. Light
equipment was up 30% and heavy equipment up 23%. North American demand was up 38% and EAME & CIS markets
rose 35% as the industry continued to rebuild from low 2010 levels. In Latin America, the market was up 25%, driven by
strong demand from projects in both the public and private sectors. In APAC markets, industry sales were up 19% for the
year, although significantly weaker in the second half of the year.
Worldwide construction equipment market share for 2011 was in line with industry growth in both the light and heavy
segments. In North America, the success of new products in the light equipment segment continued to gain traction.
Losses in market share experienced in the first half, resulting from manufacturing downtime attributable to new product
launches, were regained over the second half. For heavy equipment, the supply of whole-goods and componentry
improved in the second half as Japanese suppliers recovered from the earthquake and tsunami early in the year and the
APAC excavator market slowed. Trading conditions in Europe deteriorated in the fourth quarter as a result of the deepening
financial crisis, and in Latin America demand for heavy equipment diminished as infrastructure spending was deferred to
2012. As a consequence, production activity was slowed in line with demand expectations for individual markets and to
ensure company and dealer inventories matched demand on a worldwide basis.
As part of its global growth strategy, CNH implemented several strategic activities.
At the end of March, CNH Global N.V. acquired full ownership of L&T – Case Equipment Private Limited, a 50/50 joint
venture established in 1999 with Larsen & Toubro Limited that manufactures and sells construction and building equipment
in India. The company employs around 600 people, with a production facility located Pithampur in Madhya Pradesh, a
network of 56 dealers and a total of 144 outlets. This investment is an important step in CNH’s long-term commitment to
consolidating its construction equipment business in India and other export markets, and developing a manufacturing base
in India that is fully integrated with the CNH global industrial activities.
In April, CNH announced plans to produce combines and tractors in Argentina for the Latin American market. An initial
$100 million is to be invested in new production lines and expansion of the Fiat Industrial site in Cordoba, Argentina,
generating some 600 direct and 1,500 indirect jobs. At the new facility, CNH will produce (for both agricultural brands) the
most powerful class of advanced, high-productivity combines, as well as specialized tractors for vineyards and orchards,
which CNH does not currently produce in Latin America. The machines will be equipped with locally-produced FPT
Industrial engines. This investment is a key element in the Group’s growth strategy in Latin America and it will provide Latin
American customers better access to products that are currently being imported.
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On September 26, 2011, TürkTraktör – CNH’s joint venture with Koç Holding and one of the leading producers of
agricultural equipment in Turkey since 1954 – celebrated the production of its 600 thousandth tractor at a special ceremony
at the company’s plant in Ankara.
During the latter part of the year, CNH was active in the development of strategic alliances. In October, CNH announced an
alliance with Semeato, a leading supplier of agricultural equipment and attachments in Brazil that specializes in no-till grain
seeding technologies. The two companies will collaborate in a variety of areas, further strengthening CNH’s leadership in
Latin America and enabling it to offer a full range of planters and seeders. Products will be sold through each partner’s
respective dealer network under the Semeato, Case IH and New Holland Agriculture brands.
Also in October, CNH entered into an agreement with De Lage Landen, a wholly-owned subsidiary of Rabobank, for the
provision of retail financing to customers in the Russian Federation under the CNH Capital brand. The program has been
operational since the beginning of 2012 and is being run by a dedicated sales team working closely with four CNH brands –
Case IH, New Holland Agriculture, New Holland Construction and Case Construction Equipment – and their dealers and
customers.
In December, CNH announced an initial investment of $90 million to build a new plant in Harbin, in Heilongjiang Province in
northeast China. The new facility will produce high horsepower tractors, combine harvesters and other advanced
machinery, expanding CNH’s existing manufacturing base in China, which currently includes a plant in Harbin where high
horsepower tractors and other agricultural equipment is assembled and a plant in Shanghai where low and medium
horsepower tractors are produced.
INNOVATION AND PRODUCTS
During 2011, Case IH Agriculture expanded its successful Tier 4A/Stage IIIB offering in Europe and North America
releasing the Magnum 235-340 hp Series tractors with global armrest controls, the 4WD Steiger 350–500 hp Series tractors
with row crop frames and cab suspension, the 4WD Steiger/Quadtrac 550–600 hp Series tractors with best-inclass fuel
efficiency and hydraulic flow. The Module Express 635 Cotton Picker is now available in North America with a 400 hp
engine. At the Farm Progress Show in the U.S., the brand introduced the new Efficient Power Axial-Flow 30 Series
combines, Patriot 4430 sprayer and Maxxum tractor series, all with Tier 4A/Stage IIIB compliant engines. In Latin America,
Case IH launched the new Magnum tractor series and the new Axial Flow 2566, the brand’s first ever Class 5 combine for
the region.
SIMA, in France awarded two prizes for innovation to Case IH for a new automatic vehicle-to-vehicle synchronization
system and for the world’s first continuous variable PTO transmission for tractors. Case IH sugar cane harvesters were
honored with the “Top of Mind” award by the Brazilian trade publication Revista Rural. The Case IH Diesel Saver Automatic
Productivity Management (APM) System was given the ASABE 2011 Rain Bird Engineering Concept of the Year Award for
the fully-integrated drivetrain management system offered on the Case IH Steiger 4WD and Quadtrac tractors. The new
Case IH Patriot 4430 sprayer was chosen as the “2011 CropLife IRON Product of the Year”, receiving more than half of all
votes cast. Also, Case IH Axial Flow combines were found by independent researchers at Göttingen University (Germany)
to have the lowest parts costs and lowest overall operating costs of all models tested.
During 2011, New Holland Agriculture consolidated its leadership as a supplier of Tier 4A/Stage IIIB compliant equipment
with the introduction, in Europe and in North America, of new CX and flagship CR Series combines all featuring the
ECOBlue SCR technology that delivers up to 10% lower fuel consumption. The Tier 4A/Stage IIIB product offering now
includes 27 tractor and 16 combine models. The flagship CR Series Twin Rotor combines can now also be equipped with
the all-new SmartTrax system for reduced soil compaction, the Dynamic Stone Protection system as well as the new OptiSpread technology for evenly chopped straw distribution across the full header width. Also launched in Europe and North
America was the T4 PowerStar utility tractor range, available with engines from 55 to 100 hp and featuring an all-new cab
design with improved headroom, visibility and comfort, and a newly designed fully integrated loader. The Crop ID™ system,
which records information for large square balers in real time, was launched in Europe and North America and received a
Silver Medal in the SIMA Innovation Awards in France. In the US, New Holland also released the Roll Belt 450 Utility round
baler, which is designed for small acreage farmers and requires as little as 40 PTO hp to operate. In Latin America, the
brand launched the T8 tractor range, from 273 to 389 hp, the highest horsepower tractors produced in Brazil, targeted at
cash grain and sugar cane growers, the new SP3500 Sprayer and TL Exitus tractor with cab ideal for spraying applications.
In November, at Agritechnica in Germany, New Holland Agriculture introduced the new mid-range tractor series TD5, T5
and T6, completely remodeling the offering below 120 hp. The T5 and T6 now also feature Tier 4A/Stage IIIB engines. The
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second generation NH²™ hydrogen powered tractor, which will be tested this year at La Bellotta in Italy (the first Energy
Independent farm), was also on display. The Agritechnica judges named the new CR combine “Machine of the Year 2012”
for its efficient Tier 4A/Stage IIIB ECOBlue SCR engines, new super-lightweight aluminum Varifeed header and state-ofthe-art SmartTrax rubber track system. New Holland’s innovative technologies also received five silver medals from the
DLG jury at the fair for the Intelligent Trailer Braking System, the SmartKey, the SynchroKnife drive for combine headers,
the Braud 9090X olive harvester and the ECOBraud sustainable viticulture. The Braud 9090X and ECOBraud also received
recognition from the SITEVI (international exhibition for the vine-wine & fruit-vegetable sectors) awards panel. In January
2011, the American Society of Agricultural and Biological Engineers (ASABE) gave an AE50 award for innovation to Case
IH Agriculture for the 3020 Flex Head, with patented Terra Flex system and to New Holland Agriculture for the new OptiFanTM automatic speed regulator for the fan on the cleaning system for combines.
In 2011, Case Construction launched 38 new models, accounting for nearly half of its product range. At the ConExpo trade
show in Las Vegas, Case Construction introduced the new B Series motor grader with the 865B variable horsepower model
and the F Series wheel loader, with the largest models, 1021F and 1221F, specifically engineered for quarry, aggregate
and truck-loading applications. The F Series, which was also introduced in Europe, offers customers increased productivity
and reduced fuel consumption, as a result of the Tier 4A/Stage IIIB emission compliant diesel engines. With the launch of
the first models in its F Series wheel loader line, Case became the first manufacturer to introduce a SCR Tier 4A/Stage IIIB
emission compliant machine in this class. In collaboration with Case IH, the brand also launched the new Alpha Series skid
steers and compact track loaders for both the agricultural and construction markets. Also launched during the year were 3
new models in the DV Series of double-drum compactors and the PT240, the brand's first pneumatic tire compactor. Case
Construction also launched cleaner and more efficient C Series crawler excavators, including the CX250C, CX300C,
CX350C and CX370C models and, in Europe, the new 40-ton class CX470C crawler excavator and the CX470C ME, all
equipped with Tier 4A/Stage IIIB emission compliant engines that offer up to a 10% fuel efficiency improvement over the B
series. In Latin America, the brand also launched the new CX800B Crawler Excavator and the new B series motor graders.
The Case 850L crawler dozer, the Case 580M loader/backhoe, the Case 440 Series 3 skid steer loader and the Case 621E
wheel loader were recognized in North America as “Contractor’s Choice” machines for 2011 by Roads & Bridges magazine.
At the Samoter exhibition in Italy, New Holland Construction presented the new C Series crawler excavators, with two 27 to
31 ton class models, as well as the W170C, W190C and W230C wheel loaders. In the fourth quarter, the brand introduced
three more C Series crawler excavator models, extending the Series to a total of five models in the 21 to 35 ton range. The
new C Series crawler excavators are all equipped with Tier 4A/Stage IIIB compliant SCR engines that deliver a 10%
increase in productivity in terms of cubic meters per hour and up to 10% lower fuel consumption in ECO mode compared to
the B Series. Also introduced were the new 200 Series Skid Steer and Compact Track loaders featuring the patented
vertical lift Super Boom design delivering best-in-class forward dump height and reach. The new models were launched in
North America, Latin America and Europe. At ConExpo in Las Vegas, the brand launched updates to the B-Series tractor
loader backhoe, that was also introduced in Latin America, and the E55BX, an all-new compact excavator model. In
addition, New Holland Construction launched in Latin America three new motor grader models and the D140B Dozer.
SERVICES
CNH’s Customer Care department actively collaborates with brands, dealers, technical services and many other CNH
departments to develop, manage and support customer service solutions that contribute to building solid, long-term
relationships with customers by meeting their needs and expectations. Its main objectives include providing customers
easy access to CNH and its brands through multiple communication channels, offering the necessary support, and
measuring customer satisfaction.
CNH Customer Care operates through three customer service centers (located in Europe, North America and Latin
America), which serve as key points of contact between the CNH brands and their customers.
In 2011, CNH continued in its commitment to supporting the sales network through service programs for each brand that
aim to strengthen relationships with customers and deliver rapid service response to minimize downtime and maximize
productivity.
Breakdown Assistance (BDA) services are available to customers in the USA, Canada, Brazil and 19 European countries
(including Baltic countries beginning 2011), to provide rapid response and repair and minimize loss of productivity for the
customer.
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In Europe, a new customer satisfaction survey pilot program was launched to gather customer feedback on sales and aftersales services. In North America, new procedures for information gathering standard and criteria for opening new cases
were established to reduce service delays.
In Latin America, Customer Care launched customer relations services for CNH’s construction brands and Breakdown
Assistance services for New Holland Agriculture and Case Construction. Case Construction also launched new customer
relations services in Colombia in November and Peru in December. During the year, Customer Care also extended its
Customer Experience service in the region and plans to expand the service in 2012.
CNH offers financial services in North America, Europe, Brazil and Australia with provision of a comprehensive range of
financial products such as dealer and end-customer financing, finance leases, operating leases, credit cards, equipment
rental programs and insurance products. Differentiated financial services are offered for both the agricultural equipment and
construction equipment businesses.
In North America, the company’s financial services activity is carried out through wholly-owned financial services
companies that support sales through dealer and end-customer financing, as well medium/long-term operating leases.
In Europe, end-customer financing is primarily managed through CNH Capital Europe S.a.S., a joint venture with BNP
Paribas Group (49.9% owned by CNH and accounted for under the equity method) that operates in Italy, France, Germany,
Belgium, the Netherlands, Luxembourg, the UK and Austria. Vendor programs with banking partners also exist in France,
Spain, Portugal, Denmark and Poland.
Dealer financing and end-customer financing activities not managed by the joint venture with BNP Paribas are managed
through captive financial services subsidiaries.
In Brazil, Banco CNH Capital S.A., a captive financial services company, offers both dealer and end-customer financing.
For end-customer financing, the company mainly serves as intermediary for funding provided by the Banco Nacional de
Desenvolvimento Economico e Social (BNDES), a federally-owned company connected to the Brazilian Ministry of
Development, Industry and Foreign Trade. Vendor programs offered jointly with banking partners are also in place.
In Australia, CNH offers dealer and end-customer financing through a captive financial services company.
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Main risks and uncertainties
Credit risk
Wholesale, retail and finance lease receivables have significant concentrations of credit risk in the agricultural and
construction businesses, the majority of which are in North America. CNH typically retains, as collateral, a security interest
in the equipment associated with wholesale and retail notes receivable. Such risk is mitigated by the large number of
counterparties and customers.
Financial assets are recognized in the statements of financial position net of write-downs for the risk that counterparties
may be unable to fulfill their contractual obligations, determined on the basis of the available information as to the
creditworthiness of the customer and historical data.
Liquidity risk
In the continuing environment of uncertainty in the financial markets, CNH’s policy is to keep a high degree of flexibility with
its funding and investment options in order to maintain its desired level of liquidity. In managing its liquidity requirements,
CNH is pursuing a financing strategy that includes open access to a variety of financing sources. These sources include
U.S. and international capital markets, commercial bank lines, and the funding of Financial Services with a combination of
receivables securitizations, unsecured borrowings, conduit financing, and other transactions.
The continuation of a difficult economic situation in the markets in which CNH operates and the uncertainties that
characterize the financial markets necessitate giving special attention to the management of liquidity risk. In that sense
measures taken to generate financial resources through operations and to maintain an adequate level of available liquidity
are an important factor in ensuring normal operating conditions and addressing strategic challenges over the next few
years. CNH therefore plans to meet its requirements to settle liabilities as they fall due and to cover expected capital
expenditures by using cash flows from operations and available liquidity, renewing or refinancing bank loans and making
recourse to the bond market and other forms of funding.
Interest rate risk and currency risk
As a multinational company that has operations throughout the world, CNH is exposed to market risks from fluctuations in
foreign currency exchange and interest rates.
The exposure to foreign currency risk arises both in connection with the geographical distribution of CNH’s industrial
activities compared to the markets in which it sells its products, and in relation to the use of external borrowing
denominated in foreign currencies.
The exposure to interest rate risk arises from the need to fund industrial and financial operating activities and the necessity
to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or decreasing CNH’s net
profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
CNH regularly assesses its exposure to interest rate and foreign currency risk and manages those risks through the use of
derivative financial instruments in accordance with its established risk management policies.
CNH’s policy permits derivatives to be used only for managing the exposure to fluctuations in exchange and interest rates
connected with future cash flows and assets and liabilities, and not for speculative purposes.
CNH utilizes derivative financial instruments designated as fair value hedges, mainly to hedge:

the currency risk on financial instruments denominated in foreign currency;

the interest rate risk on fixed rate loans and borrowings.
The exchange rate exposure on forecasted commercial flows is hedged by currency swaps, forward contracts and currency
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options. Interest rate exposures are usually hedged by interest rate swaps and, in limited cases, by forward rate
agreements.
CNH uses derivative financial instruments as cash flow hedges for the purpose of pre-determining:

the exchange rate at which forecasted transactions denominated in foreign currencies will be accounted for;

the interest paid on borrowings, both to match the fixed interest received on loans (customer financing activity), and
to achieve a pre-defined mix of floating versus fixed rate funding structured loans.
Counterparties to these agreements include certain Fiat Industrial subsidiaries in 2011 and certain Fiat subsidiaries in
2010.
Information on the fair value of derivative financial instruments held at the statement of financial position date is provided in
Note 20, Other financial assets and Other financial liabilities to the consolidated financial statements.
Additional qualitative information on the financial risks to which CNH is exposed is provided in Note 33, Information on
financial risks.
CNH outlook for 2012
Demand in the agricultural and construction equipment markets is expected to remain positive for 2012. Agricultural
equipment demand is projected to be flat to up 5% on the back of firm agricultural commodity prices. Construction
equipment demand is expected to continue its recovery with industry retail unit sales expected to be up 15% to 20%.
Financial Services will continue to focus on receivables management in order to maintain solid portfolio performance.
Directors’ Remuneration
See Note 11. Directors' Remuneration to the corporate financial statements for a detailed discussion of Directors’
Remuneration.
Human Resources
At December 31, 2011 and 2010, we had approximately 32,700 and 28,800, employees, respectively. As of December 31,
2011, there were approximately 20,800 employees in the agricultural equipment business, 5,000 in the construction
equipment business, and 900 in the financial services business, with the remaining 6,000 in parts and service and other
roles shared by all business units.
Unions represent many of our production and maintenance employees. Our collective bargaining agreement with the UAW,
which represents approximately 1,300 of our hourly production and maintenance employees in the United States, continues
through April 2016. The International Association of Machinists, which represents approximately 780 of our employees in
Fargo, North Dakota, ratified a contract in October 2006, which expires in April 2012. We will begin negotiating with the
International Association of Machinists in late March with an anticipated contract ratification in April 2012.
Our employees in Europe are also covered by laws that afford employees, through local and central works councils, certain
rights of information and consultation with respect to matters involving the business and operations of their employers,
including the downsizing or closure of facilities and the termination of employment. Over the years, we have experienced
various work slow-downs, stoppages and other labor disruptions.
Research and Innovations
During 2011, Fiat Industrial Group carried out research and innovation activities, aimed at promoting sustainable mobility
on several fronts, in close collaboration with CRF (Centro Ricerche Fiat).
Following the demerger of activities from Fiat S.p.A., CRF remained a part of Fiat Group. To ensure continued support for
Fiat Industrial Group, a number of researchers involved in specific projects were transferred to Fiat Industrial, and service
agreements were established in relation to support for the research and development activities of the Fiat Industrial Group.
Centro Ricerche Fiat (CRF)
CRF was established in 1978 as a center for innovation and development. Internationally recognized today as a center of
excellence, the mission of CRF (headquartered in Orbassano, near Turin) is to utilize innovation as a strategic lever for the
businesses of Fiat and Fiat Industrial.
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With approximately 942 employees, CRF draws on a broad array of technical skills in addition to a series of state-of the-art
laboratories for testing powertrain systems and electromagnetic compatibility, and conducting NVH analyses and driving
simulations. CRF has achieved significant results over the years, with 2,860 patents filed or pending at the end of 2011,
and has developed a global network of more than 1,760 industrial partners, universities and research centers that further
strengthen the CRF’s innovation strategies, facilitate local implementation of projects, and enable development of
specialized know-how.
At the international level, CRF had more than 19 projects approved in 2011 under the EU’s Seventh Framework Program
for 2007-2013, bringing the total active projects under this Program to 133. Its status as a well-established European
research center together with its recognized know-how and extensive presence throughout Italy have also led to its
participation in many public-private partnerships (PPPs) set up to focus public and private research on areas of common
interest and on industrial applications both in Italy and at the European level (Green Car Initiative, Factories of the Future).
Particularly active in the area of sustainable mobility, CRF studies innovative solutions through a 360-degree approach to
mobility encompassing vehicles, components, energy, safety, telematics, innovative materials and related technologies,
mechatronics and optics, as well as innovative concepts in engine technologies, alternative propulsion systems and
transmissions.
CRF’s activities are focused in the following three macro areas: environmental sustainability, social sustainability and
economically-sustainable competition.
CRF Projects for CNH
Environmental Sustainability
This area consists of research aimed at increasing the energy efficiency of engines and reducing environmental impacts
over their entire life cycle (i.e., production to dismantling achievements in 2011 include:

Liquid Natural Gas (LNG). It has been amply demonstrated that natural gas engines can dramatically reduce
polluting emissions such as gases that contribute to photochemical smog (nitrogen oxides), particulates,
greenhouse gases (CO2) and noise emissions. To date, however, use in the Heavy sector has been limited due to
the weight of compressed gas tanks and their limited range. LNG provides a solution to this problem because it
has 3 times the energy density of CNG, is 99% pure and costs less at the pump. A version of the Cursor 8 engine
has been developed that can run on LNG which, using an on-board cryogenic storage system, is stored in liquid
form and reconverted to gas prior to combustion. This significantly extends the vehicle’s range, thereby
overcoming the restrictions of the current limited distribution network. At the same time, a European initiative has
been launched to create “LNG blue corridors” with strategic refueling points. The LNG version of the Cursor 8,
available on the Iveco Stralis beginning 2012, offers a 70% reduction in polluting emissions and a 10% reduction
in CO2 emissions over the diesel version. Due to the innovative configuration of the air intake valves, it also has
5% lower fuel consumption than the existing CNG version and an effective power output of up to 243 kW. The
higher level of purity of LNG compared to CNG enables enhanced control of air intake/combustion and up to a
40% reduction in operating costs over the diesel version, particularly on long distances.

CNG-powered Steyr Tractor. During the year, CRF completed development of a prototype CNG-powered Steyr
tractor for CNH. The new tractor’s versatile CNG-powered 136 hp, 3.0 4-cylinder F1C engine is also suitable for
application on a variety of on-road vehicles (i.e., Fiat Ducato and Iveco Daily). This prototype engine can run on
100% CNG and has the same power output and torque as the diesel version, with a significant reduction in noise
emissions. Equipped with 9 gas tanks, the tractor can carry 50 kg of CNG and operate for approximately half a
day without refueling. Depending on local fuel prices, the use of CNG rather than diesel enables an average
reduction in fuel costs of between 25% and 40%. The tractor is also equipped with a 15-liter gasoline tank for
emergency use. On average, noxious emissions are 80% lower than the diesel version, so with a standard 3-way
catalytic converter for exhaust treatment the tractor can achieve Tier 4 emissions levels without the use of urea or
other costly after-treatment components. This engine can also run on biomethane, which farmers produce directly
from organic waste, offering further cost savings and reducing CO 2 emissions almost to zero, as direct emission of
biogases from the original biomass (e.g., animal refuse, vegetable waste) can be avoided in the production
process (anaerobic digestion and purification). Testing on the prototype was completed in October and it was
presented by CNH at Agritechnica 2011 in Hanover.
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
Advanced Temperature Management Systems. As part of the “Next Generation Thermal Systems” project, an
innovative heating system based on two cooling circuits was developed: a high temperature circuit dedicated to
cooling the engine and hydraulic systems and a low temperature circuit that supplements the condenser cooling,
intercooler and other on-board systems (e.g., batteries and electric propulsion systems). This system simplifies the
forward thermal module consisting of two radiators, one high and one low temperature, and enables greater
compactness of on-board systems (e.g., engine intake, climate control). In 2011, CRF completed development
and testing of a system for the Iveco Daily light commercial vehicle based on this concept. That system adopts an
active shutter system that uses a conventional thermal module for cooling, together with planar heat exchangers
built into the aerodynamic base to reduce the thermal load on the radiators and maximize the efficiency of the
active shutters. Tests of the prototype show a 15% reduction in fuel consumption and improved compactness of
the system. The entire project, and in particular the development of the components, was supported by the
European funded Thermal Systems Integration for Fuel Economy (TIFFE) project. In 2011, CRF completed a
feasibility study for CNH for application of the system on agricultural tractors. The study demonstrated the
technical feasibility and identified prototype components already available that can be used to develop a prototype
system able to demonstrate the benefits under test conditions.
Social Sustainability
This area consists of research aimed at enhancing accident prevention capabilities through systems that can identify
potential dangers, assist the driver in taking evasive action, and also ensure maximum protection for the vehicle occupants
and other road users in the event of an accident. One of the most significant achievements in 2011 was:

Intelligent Trailer Brake Valve. The Intelligent Trailer Braking system improves safety through automatic activation of
the trailer’s braking system to equalize the braking effect between tractor and trailer. The system uses specially
developed algorithms to calibrate the response independently from the braking action of the driver. This is particularly
important for tractors using CVT transmission as it limits the potential for jack-knifing, when braking for combined
tractor and the trailer relies solely on the tractor brakes. This enhanced control of stopping distance increases safety in all
driving conditions, especially when combined with ABS on both tractor and trailer. The system was awarded a Silver Medal at
Agritechnica 2011.
Economically-sustainable competition
This area consists of research aimed at increasing the competitiveness of new products through enhancements in
performance and functionality and a reduction in the time it takes to bring new technologies to market.
Self-cleaning Plastics. Agricultural equipment works in particularly hostile environments. Bodywork and external
components are under constant attack from dust, mud, and chemicals used for treating crops (e.g., pesticides,
herbicides and fertilizers). As a result, anything that reduces their impact or keeps vehicles cleaner can improve
maintenance and the average life of vehicles and, ultimately, lead to a potential competitive advantage. In 2011, CRF
worked with CNH to explore technological solutions that modify the chemical and physical characteristics of external
surfaces to reduce dirt retention and improve cleaning. Transparent silicon- and fluoride-based protective coatings
were examined and selected for their low cost, duration and performance. Preliminary laboratory tests were then
conducted to assess the effectiveness and duration of the coatings, examine methods of application and whether
expected characteristics matched those observed. Coatings with the greatest potential were then tested on agricultural
vehicles under normal working conditions. The coatings were applied to various surface materials (glass, painted SMC)
and components (cabin windows and engine hood) with different levels of exposure to the contaminants. Continuous
monitoring of the state of the vehicles showed an improvement in the performance of the coated surfaces, which were
more resistant to attack from chemicals in particular and were cleaner overall.
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CORPORATE GOVERNANCE REPORT
Summary of the Company’s Corporate Governance Structure and Guidelines
CNH is a limited liability company incorporated in The Netherlands, whose ordinary shares are registered with the SEC and
listed on the New York Stock Exchange (“NYSE”). As such, the Company is subject to the laws of The Netherlands and the
laws and regulations applicable to foreign private issuers in the U.S. The Dutch Corporate Governance Code (the “Dutch
Code”), which became effective as of January 1, 2004, the United States Sarbanes-Oxley Act of 2002 and the NYSE listing
standards are of particular significance to CNH’s corporate governance. Both the Dutch and NYSE corporate governance
regimes were adopted with the goal of restoring trust and confidence in the honesty, integrity and transparency of how
business is conducted at and by public companies. Because these corporate governance regimes are based on the same
principles, they are similar in many respects. However, certain differences exist between Dutch and NYSE corporate
governance rules, as described below. CNH also discloses significant differences between its corporate governance
practices and those required of domestic companies by the NYSE listing standards on its internet website at www.cnh.com.
Any deviations from the Dutch Code not specifically described herein are attributable to the Company’s compliance with the
NYSE rules referred to below. In general the Company believes that its corporate governance practices and guidelines (the
“Guidelines”) are consistent with those required of foreign private issuers listed on the NYSE. The Company’s Guidelines
were approved by the Board on March 24, 2005, and by the Company’s shareholders on May 3, 2005.
The Company has a one-tier management structure, (i.e. a management board (the “Board”)) which may be comprised of
both members having responsibility for the day-to-day operations, who are referred to as "executive directors", and
members not having such responsibility, referred to as "non-executive directors". A majority of the Board consists of nonexecutive directors, who meet the independence requirements of the Dutch Code.
Dutch legal requirements concerning director independence differ in certain respects from the NYSE independence rules.
While, under most circumstances, both legal regimes require a majority of board members to be “independent,” the
definition of this term under the Dutch Code is not identical to that used by the NYSE.
In some cases, the Dutch requirement is more stringent, such as by requiring a longer “look back” period for executive
directors and employees and by requiring that only one board member may be “dependent”. The current composition of
the Board is not in compliance with the best practice provisions of the Dutch Code regarding the independence of directors.
Three members do not qualify as “independent” within the meaning of these provisions, which are: Mr. Marchionne, who is
Chief Executive Officer of Fiat S.p.A. and Chairman of Fiat Industrial; Mr. Monferino, who was Chief Executive Officer of
Iveco until October 2010; and Mr. Boyanovsky, who was the Company’s President and Chief Executive Officer until his
retirement on December 31, 2011.
The Board believes that it is appropriate for the role of the Chief Executive Officer and the Chairman to be separate, and
that the Chairman of the Board should be a non-executive director. Should an executive director be appointed as
Chairman, the Board will also designate a non-executive director as lead director, who will chair executive sessions of the
Board.
The Board shall have an Audit Committee, a Corporate Governance and Compensation Committee and such other
committees as the Board may determine from time to time. Members of these two already appointed committees shall meet
any applicable independence requirements of the NYSE and the Dutch Code. The charters of the committees are posted
on the Company's website (www.cnh.com). Further information on these committees is provided below.
The Board is entitled to rely on the advice, reports and opinions of management, legal counsel, accountants, auditors and
other expert advisors. Each member of the Board is appointed for one year and can be reappointed immediately.
Financial objectives and strategy
The Company’s strategic objectives are:

to focus on its customers while continuously improving its distribution, service capabilities, product quality and
reliability, all designed to increase customer satisfaction and market penetration;

to achieve industry leading margins and deliver profitability throughout the industry cycles;

to generate cash; and

to continue to position CNH to take advantage of future opportunities for expansion in key emerging markets such
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as Russia, Brazil, China, India, and Eastern Europe.
The Company believes successfully achieving its goals of meeting the needs of its dealers and customers, improving the
quality and reliability of its products, and reducing the costs of those products and increasing the efficiency of operations,
will result in increased volumes, a stronger market position and higher margins for its subsidiaries. The Company believes
higher margins at its subsidiaries will generate better overall profitability at its subsidiaries throughout industry cycles.
Accounting Principles and Risk Factors
The corporate financial statements are part of the financial statements of CNH Global N.V. and are prepared in accordance
with the legal requirements of Title 9, Book 2 of the Dutch Civil Code. In addition, article 2:362 paragraph 8 of the Dutch
Civil Code is being applied, under which it is allowed to use valuation principles of International Financial Reporting
Standards (“IFRS”), for the Dutch GAAP corporate financial statements as used in the consolidated financial statements.
The Company also prepares consolidated financial statements in accordance with U.S. GAAP, that are filed with the SEC
on Form 20-F. The Form 20-F contains, among other things, disclosure concerning the risks related to the Company’s and
its subsidiaries' business, strategy and operations. The Form 20-F also contains disclosures concerning the application of
critical accounting estimates. Readers of the Company’s corporate financial statements should review these sections of
the Company’s most recent Form 20-F filed with the SEC, as well as consolidated financials of CNH prepared in
accordance with IFRS, and the management report in these statements in which the main market risks are disclosed.
Board of Directors
Harold D. Boyanovsky, Non-Executive Director, born on August 15, 1944, retired as President and Chief Executive Officer
of CNH Global N.V. on December 31, 2011. Prior to this, Mr. Boyanovsky was appointed President, Construction
Equipment Business on September 1, 2002, President and Chief Executive Officer on February 28, 2005, and Director on
December 7, 2005. He served as President, Worldwide Agricultural Equipment Products of CNH from November 1999 to
October 2002 and as interim President, New Holland Agricultural Equipment from September 2007 to September 2008.
Prior to the business merger of New Holland and Case, he served as a Senior Vice President of Case from May 1997 to
November 1999. Between December 1966 and November 1999, Mr. Boyanovsky served in a variety of executive positions
with Case and International Harvester. Mr. Boyanovsky is currently a director and retired corporate executive. Nationality:
American.
Thomas J. Colligan, Non-Executive Director, born on July 16, 1944, was appointed to the Board on January 6, 2011 and
elected a Director on March 29, 2011. Mr. Colligan is currently a member of the Boards of Directors of Office Depot, Inc.
and Targus Group International, Inc. and has previously served on the boards of Schering Plough Corporation, Educational
Management Corporation and Anesiva, Inc. His most recent position was as Vice Dean of the University of Pennsylvania—
Wharton School’s Aresty Institute of Executive Education, where he was responsible for the non-degree executive
education programs from July 2007 until his retirement in June 2010. From 2001 to 2004, Mr. Colligan was Vice Chairman
of PricewaterhouseCoopers LLP (“PwC”) and served PwC in other capacities from 1969 to 2004, including 25 years as a
Partner. Mr. Colligan is a Certified Public Accountant and has a degree in Accounting from Fairleigh Dickinson University.
Mr. Colligan is currently a director and retired corporate executive. Nationality: American.
Dr. Edward A. Hiler, Non-Executive Director, born on May 14, 1939, was elected a Director of CNH on May 7, 2002.
Dr. Hiler served the Texas A&M University System as the Ellison Chair in International Floriculture and Professor of
Horticultural Science from 2004-2007. He previously held the position of Vice Chancellor for Agriculture and Life Sciences
and Dean of the College of Agriculture and Life Sciences. He served as Director of the Texas Agricultural Experiment
Station. Since joining the faculty of Texas A&M as an assistant professor in 1966, Dr. Hiler has held a series of positions
including professor and head of the University’s Department of Agricultural Engineering, and deputy chancellor for
Academic and Research Programs of the Texas A&M University System. He retired from academia in 2007. Dr. Hiler
earned his Ph.D. in Agricultural Engineering at The Ohio State University, and he has served as President of the American
Society of Agricultural Engineers and is an elected member of the National Academy of Engineering. He consults on
aspects of water conservation, environmental quality, and energy from biological processes to various government
agencies and the U.S. Congress. A licensed professional engineer and recipient of numerous educational and research
awards, Dr. Hiler is the author of over 100 professional publications. Dr. Hiler is currently a director and retired from
academia. Nationality: American.
Léo W. Houle, Non-Executive Director, born on August 24, 1947, was elected a Director of CNH on April 7, 2006. On
September 6, 2011, Mr. Houle was appointed to the Board of Directors of Chrysler Group LLC. Mr. Houle was Chief Talent
Officer of BCE Inc. and Bell Canada, Canada’s largest communications company, since June 2001 until his retirement in
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July 2008. Prior to joining BCE and Bell Canada, Mr. Houle was Senior Vice-President, Corporate Human Resources of
Algroup Ltd., a Swiss-based diversified industrial company. From 1966 to 1987, Mr. Houle held various managerial
positions with the Bank of Montreal, the last of which was Senior Manager, Human Resources Administration Centers. In
1987, Mr. Houle joined the Lawson Mardon Group Limited and served as Group Vice-President, Human Resources until
1994 when Algroup Ltd. acquired Lawson Mardon Group at which time he was appointed Head of Human Resources for
the packaging division of Algroup and in 1997 Head of Corporate Human Resources of Algroup, Ltd. Mr. Houle completed
his studies at the College Saint Jean in Edmonton, attended the Executive Development Program in Human Resources at
the University of Western Ontario in 1987 and holds the designation of Certified Human Resources Professional (CHRP)
from the Province of Ontario. Mr. Houle is currently a director and retired corporate executive. Nationality: Canadian.
Dr. Rolf M. Jeker, Non-Executive Director, born July 30, 1946, was elected a Director of CNH on April 7, 2006. Dr. Jeker
has been working as Executive Vice President and a member of the Group Executive Board of SGS Société Générale de
Surveillance, SA, Geneva, Switzerland from May 1999 to July 2006. From June 1990 to May 1999, Dr. Jeker served as
Under-Secretary and State Secretary a.i. for Foreign Economic Affairs; Chairman of Swiss Export Risk Guarantee Board
and Chairman of the Swiss Investment Risk Guarantee Board. Dr. Jeker was a member of the Board of Directors of
Precious Woods Holding Ltd.; Chairman of the Board of the Swiss Export Promotion Office; Chairman of the My ClimateCLIPP Foundation; and Member of the Board of the Swiss Climate Penny Foundation. Presently Dr. Jeker is Chairman of
Emerging Market Services Ltd.; CEO and Vice –Chairman of AO Foundation and Chairman of Carbura. Dr. Jeker holds a
Masters and Ph.D. in Economics, business and public administration from the University of St. Gall, Switzerland. Dr. Jeker
is the author of various books and articles on development and finance. Dr. Jeker is currently Chief Executive Officer and
Vice-Chairman of AO Foundation. Nationality: Swiss.
Dr. Peter Kalantzis, Non-Executive Director, born December 12, 1945, was elected a Director of CNH on April 7, 2006.
Dr. Kalantzis has been a non-executive member of various board of directors since 2001. Prior to 2000, he was responsible
for Alusuisse-Lonza Group’s corporate development and actively involved in the de-merger and stock market launch of
Lonza, as well as the merger process of Alusuisse and Alcan. Dr. Kalantzis served as head of the Chemicals Division of
Alusuisse-Lonza Group from 1991 until 1996. In 1991 Dr. Kalantzis was appointed Executive Vice-President and Member
of the Executive Committee of the Alusuisse-Lonza Group. Between 1971 and 1990 he held a variety of positions at Lonza
Ltd. in Basel. Dr. Kalantzis is Chairman of the Board of Directors of Movenpick-Holding Ltd., Cham, (Switzerland);
Chairman of the Board of Clair Ltd., Cham; Chairman of Von Roll Holding Ltd., Breitenbach (Switzerland); Chairman of
Lamda Development Ltd., Athens (Greece); Chairman of Elpe-Thraki S.A., Athens (Greece) and Chairman of Zuricher
Goldhandel AG, Cham. He is a member of the Board of Paneuropean Oil and Industrial Holdings, Luxembourg; of Lamda
Consolidated Holdings, Luxembourg; of Transbalkan Pipeline BV (Amsterdam); of SGS Ltd., Geneva (Switzerland); and of
Hardstone Services SA, Geneva (Switzerland). From 1993 until 2002, he served on the Board of the Swiss Chemical and
Pharmaceutical Association as Vice-President and in 2001-2002 as President. Dr. Kalantzis holds a Ph.D. in Economics
and Political Sciences from the University of Basel and engaged in research as a member of the Institute for Applied
Economics Research at the University of Basel between 1969 and 1971. Dr. Kalantzis is currently an independent
business and industrial consultant. Nationality: Swiss and Greek.
John B. Lanaway, Non-Executive Director, born on April 13, 1950, was elected a Director of CNH on April 7, 2006. On
September 6, 2011, Mr. Lanaway was appointed to the Board of Directors of Chrysler Group LLC. Mr. Lanaway was
Executive Vice President and Chief Financial Officer, North America, of McCann Erickson, one of the largest marketing
communications networks in the world, from November 2007 until June 2011. From January 2001 to November 2007, he
held similar positions at Ogilvy North America. Previously, he has held the positions of Chief Financial Officer and Senior
Vice President at Geac Computer Corporation Limited from 1999 to 2001; Chief Financial Officer of Algorithmics
Incorporated from 1997 to 1999; and Senior Vice President and Chief Financial Officer at Spar Aerospace from 1995 to
1996. Beginning in 1985 to 1995 Mr. Lanaway held various positions with Lawson Mardon Group Limited, including Sector
Vice President, Labels North America from 1993 to 1995; Group Vice President and Chief Financial Officer from 1989 to
1992; General Manager, Lawson Mardon Graphics from 1988 to 1989; and Vice President, Financial Reporting and Control
from 1985 to 1987. At Deloitte & Touche he served as Client Service Partner from 1980 to 1985 and as Student-Staff
Accountant-Supervisor-Manager from 1971 to 1980. Mr. Lanaway graduated from the Institute of Chartered Accountants of
Ontario, C.A. and has a Bachelor of Arts degree from the University of Toronto. Mr. Lanaway is currently a director and
consultant. Nationality: American, Canadian and British.
Kenneth Lipper, Non-Executive Director, born on June 19, 1941, is Chairman and CEO of Lipper & Company, an asset
management and investment banking firm, since 1987. He has served as a Director of CNH since 1996. From 2005 to
2010, Mr. Lipper was Executive Vice President and Senior Advisor of Cushman & Wakefield, Inc. He was Deputy Mayor of
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the City of New York under Mayor Edward Koch from 1983 to 1985. Mr. Lipper was a general partner of Salomon Brothers
from 1976 to 1982 and Lehman Brothers from 1969 to 1975. Prior to that, Mr. Lipper was the Director of Industrial Policy for
the U.S. Office of Foreign Direct Investment and an associate with the law firm of Fried, Frank, Harris, Shriver & Jacobson.
Mr. Lipper received an Academy Award in 1999 as Producer of “The Last Days”. He wrote the novel “Wall Street” and was
chief technical advisor of the film; he wrote the novel and screenplay “City Hall”, and was producer on the film; he was
producer of the play and film “The Winter Guest.” He is co-owner and co-publisher of the celebrated biography series
“Penguin Lives”, under the Lipper/Viking Penguin imprint. He is a trustee of The Hampton Film Festival and of The
Jerome & Kenneth Lipper Foundation; he is a member of the Council on Foreign Relations, Economic Club of New York
and the Century Club. Mr. Lipper received a B.A. from Columbia University, a JD from Harvard Law School and Master’s in
Civil Law from New York University/Faculty of Law & Economics, Paris. Mr. Lipper is currently Chief Executive Officer of
Lipper & Co., an investment management and investment banking firm. Nationality: American.
Sergio Marchionne, Non-Executive Director and Chairman of the Board, born on June 17, 1952, was appointed Director of
CNH on July 22, 2004, and Chairman on April 7, 2006. He is a barrister, solicitor and chartered accountant. He began his
professional career in Canada. From 1983 to 1985, he worked as an accountant and tax specialist for Deloitte & Touche.
From 1985 to 1988, he was Group Controller and then Director of Corporate Development at the Lawson Mardon Group of
Toronto. In 1989 and 1990, he served as Executive Vice President of Glenex Industries. From 1990 to 1992, he was Vice
President of Finance and Chief Financial Officer at Acklands Ltd. From 1992 to 1994, also in Toronto, he held the position
of Vice President of Legal and Corporate Development and Chief Financial Officer of the Lawson Group, which was
acquired by Alusuisse Lonza (Algroup) in 1994. From 1994 to 2000, he held various positions of increasing responsibility at
Algroup, headquartered in Zurich, until becoming Chief Executive Officer. He then went on to head the Lonza Group Ltd,
following its demerger from Algroup, first as Chief Executive Officer (2000-2001) and then as Chairman (2002). In February
2002, he became Chief Executive Officer of the SGS Group of Geneva, a world leader in the area of inspection,
verification, testing and certification services. In March 2006, he was appointed Chairman of the company, a position which
he continues to hold. He was non-executive Vice Chairman and Senior Independent Director of UBS from 2008 until April
2010. He has been a member of the Board of Fiat S.p.A. since May 2003 and was appointed Chief Executive Officer on
June 1, 2004. In February 2005, he was also appointed Chief Executive Officer of Fiat Group Automobiles and in April
2006, Chairman of CNH. He became Chief Executive Officer of Chrysler Group LLC in June 2009 and Chairman in
September 2011. In May 2010, he joined the Board of Directors of Exor. In July 2010 he was appointed Chairman of Fiat
Industrial S.p.A. He is a member of the Board of Philip Morris International Inc. and President of ACEA (European
Automobile Manufacturers Association). He is also a member of the Board of the Peterson Institute for International
Economics and Chairman of the Italian Branch of the Council for the United States and Italy. He is a permanent member of
the Fondazione Giovanni Agnelli. Mr. Marchionne holds a Bachelor of Arts with a major in Philosophy and a bachelor of
Laws from the University of Toronto, as well as a Masters in Business Administration and a Bachelor of Commerce from
the University of Windsor (Canada). He is also a recipient of: an Honorary Doctor of Laws degree from the University of
Windsor (Canada) and honorary Doctor of Business Administration from the University of Toledo (Ohio), a Master honoris
causa from the CUOA Foundation (Italy), a degree in Economics honoris causa from the University of Cassino (Italy), and a
degree ad honorem in Industrial Engineering and Management from Polytechnic University in Turin. Mr. Marchionne also
holds the honor of Cavaliere del Lavoro. Mr. Marchionne’s primary occupation is, among other things, serving as Chief
Executive Officer for Fiat S.p.A. and Chrysler Group LLC. Nationality: Canadian and Italian.
Paolo Monferino, Non-Executive Director, born on December 15, 1946, served as President and Chief Operating Officer of
CNH from March 24, 2000 to November 7, 2000. On November 8, 2000, Mr. Monferino was appointed a Director and
President and Chief Executive Officer, leading the overall management of CNH, including the execution of our wide-ranging
integration plan. Mr. Monferino resigned as President and Chief Executive Officer on February 28, 2005 and became Chief
Executive Officer of Iveco, the lead company of Fiat Group’s Commercial Vehicle Sector. Mr. Monferino has more than
20 years of experience in the agricultural and construction equipment business beginning in the United States with Fiatallis,
a joint venture between Fiat’s construction equipment business and Allis Chalmers. In 1983, he was named Chief
Executive Officer of Fiatallis’ Latin American operations in Brazil. Two years later, he was appointed Chief Operating Officer
at Fiatallis and in 1987 was named the Chief Operating Officer at FiatAgri, the farm machinery division of the Fiat Group.
Following Fiat Geotech’s 1991 acquisition of Ford New Holland, Mr. Monferino was named Executive Vice President of the
new company headquartered in London. He was responsible for strategy and business development, including product,
marketing and industrial policies. Mr. Monferino retired from the Fiat Group in October 2010. Since the middle of November
2010, he has assumed the position of Head of the Health Department of the Piemonte Region in Italy. Nationality: Italian.
Jacques Theurillat, Non-Executive Director, born on March 20, 1959, was elected a Director of CNH on April 7, 2006. Since
May, 2008, Mr. Theurillat has served as Managing Partner of Ares Life Sciences, a private equity fund whose objective is to
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build a portfolio in life sciences. Mr. Theurillat served as the Serono SA Deputy CEO until December 2006. In addition to his
role as Deputy CEO, he was appointed Senior Executive Vice President, Strategic Corporate Development in May 2006
and was responsible for developing the company’s global strategy and pursuing Serono’s acquisition and in-licensing
initiatives. From 2002 to 2006, Mr. Theurillat served as Serono’s President of European and International Sales &
Marketing. In this position he was responsible for Serono’s commercial operations in Europe, IBO, Asia-Pacific,
Oceania/Japan, Latin America and Canada. He became a Board member in May 2000. From 1996 to 2002, he was Chief
Financial Officer. He previously served as Managing Director of the Istituto Farmacologico Serono in Rome, where he
started in 1994. In 1993, he was appointed Vice President Taxes and Financial Planning for Serono. In 1990-1993,
Mr. Theurillat worked outside Serono, running his own law and tax firm. Before that, he was Serono’s Corporate Tax
Director, a post to which he was appointed in 1988. He first joined Serono in 1987 as a Corporate Lawyer working on
projects such as the company’s initial public offering. Mr. Theurillat is a Swiss barrister and holds Bachelor of Law degrees
from both Madrid University and Geneva University. He also holds a Swiss Federal Diploma (Tax Expert) and has a
Master’s degree in Finance. Mr. Theurillat is currently the Managing Partner of Ares Life Sciences. Nationality: Swiss.
Meetings of the Board and its Committees
During 2011, there were seven meetings of the Company’s Board of Directors. Attendance at these meetings was 95%.
The Audit Committee met eight times during 2011 and attendance of directors at those meetings was 97%. The Corporate
Governance and Compensation Committee met four times during 2011 with 100% attendance of directors at such
meetings. The Board of Directors and the Corporate Governance and Compensation Committee have each discussed the
performance of the Board and its committees. The Audit Committee discusses, among other things, the Company's risk
assessment and management processes. The work plan of the Audit Committee provides that this assessment will take
place annually. The Board also typically schedules one annual meeting that is devoted to discussing the Company’s
strategy (this meeting did not take place in 2011).
Control Systems
The Company is subject to Section 404 of the United States Sarbanes-Oxley Act of 2002 as a registrant with the SEC. As
required, the Company provided a report concerning its internal control over financial reporting in connection with the filing
of its annual report on Form 20-F for the fiscal year ending December 31, 2011. The Company has established a project
management office to manage the internal control assessment process. The Audit Committee monitors the progress of the
Company toward meeting the Section 404 requirements. The Company must also file with the SEC annual certifications
from its Chief Executive Officer and its Chief Financial Officer under Sections 302 and 404 of the Sarbanes-Oxley Act. The
Section 302 and 404 certifications include a statement that the officer providing the certification has disclosed to the
Company’s independent registered public accounting firm and the Audit Committee all significant deficiencies and material
weaknesses, if any, in the design or operation of internal controls over financial reporting, which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report financial information.
Compliance with provisions II.1.4 and II.1.5 of the Dutch Corporate Governance Code
Provisions II.1.4 and II.1.5 of the Dutch Corporate Governance Code require management to assess the adequacy of the
internal risk management and control systems. The concept of internal risk management and control systems as used in
the Dutch Corporate Governance Code varies from the concept of disclosure controls and procedures and internal control
over financial reporting under the U.S. Securities and Exchange Act of 1934 (the "Exchange Act") and the related SEC
rules referred to above. CNH Global N.V. distinguishes between internal risk management and control systems for
financial reporting risks, and those for other risks, including operational/strategic and legislative/regulatory risks. With
respect to financial reporting risks, the Board has concluded that the Company’s compliance with (Section 404 of) the
Sarbanes-Oxley Act constitutes compliance with requirements of the provision II.1.5 of the Dutch Corporate Governance
Code. Regarding risks other than financial reporting risks, reference is made to the most important Company risk factors
as listed in the management report and the Risk Factors described in its most recent annual report on Form 20-F filed with
the SEC. In addition, each year the Company formally reassesses the most significant risks with respect to the operations
of the Company in terms of probability of occurrence and potential impact, together with the actions taken to prevent,
minimize and manage such risks. In view of the above, the Board is of the opinion that it is in compliance with the
requirements of provisions II.1.4 and II.1.5 of the Dutch Corporate Governance Code.
With regard to the “in-control statement” reference is made to Management Annual Report on Internal Control Over
Financial Reporting on page 94 of the Annual Report filed on Form 20-F.
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Independence
The current composition of the Board is not in compliance with the best practice provisions of the Dutch Code regarding the
independence of directors. Three members do not qualify as “independent” within the meaning of these provisions and they
are: Mr. Marchionne, who is Chief Executive Officer of Fiat S.p.A. and Chairman of Fiat Industrial; Mr. Monferino, who was
Chief Executive Officer of Iveco until October 2010; and Mr. Boyanovsky, who was the Company’s President and Chief
Executive Officer until his retirement on December 31,2011.
Transactions between the Company and Fiat Industrial
In 2011 there were transactions between the Company and Fiat Industrial (shareholder). See Note 35: Related Party
Information" to the consolidated financial statements.
Audit Committee
The Audit Committee is appointed by the Board to assist in monitoring (1) the integrity of the financial statements of CNH;
(2) qualifications and the independence of CNH’s independent registered public accounting firm; (3) the performance of
CNH’s internal audit function and its independent registered public accounting firm; (4) the compliance by CNH with legal
and regulatory requirements; (5) the systems of internal controls that management and the Board of Directors have
established and (6) it reviews and approves, if appropriate, any related party transactions and transactions under which any
director could have a material conflict of interest. Directors are required to immediately report any actual or potential conflict
of interest that is of material significance to the Company or to themselves. In 2011 there were no transactions where a
Director had such a (potential) conflict of interest with the Company.
The Audit Committee currently consists of Messrs. Theurillat, Colligan, Kalantzis, and Lanaway. The Audit Committee is
currently chaired by Mr. Theurillat. At its meetings, the Audit Committee customarily meets with the Chief Financial Officer,
the General Counsel and Corporate Secretary, the Chief Accounting Officer, the Vice President of Internal Audit, the Vice
President Corporate Tax, the Treasurer, and representatives from CNH's independent registered public accounting firm.
After such meetings, the Audit Committee routinely meets separately, in executive session, with the Chief Financial Officer,
the Vice President of Internal Audit, and representatives from CNH's independent registered public accounting firm. In
addition, at least once per year (and more often as necessary) the Audit Committee meets with representatives from CNH's
independent registered public accounting firm without any management present. The Charter for the Audit Committee is
available on the CNH web site (www.cnh.com).
Corporate Governance and Compensation Committee
The Corporate Governance and Compensation Committee is responsible for, among other things, the design,
development, implementation and review of the compensation and terms of employment of CNH's executive officers and
the fees paid to the members of the Board as well as succession planning issues relating to executive officers and
directors. The Corporate Governance and Compensation Committee is responsible for making sure that the compensation
of the Company’s executive personnel is related to and aligned with the short-term and long-term objectives and operating
performance of CNH (and the shareholders of CNH). The directors’ compensation terms and conditions are set forth in the
CNH Directors’ Compensation Plan, the terms of which are approved by CNH's shareholders. The Corporate Governance
and Compensation Committee makes its recommendations to the Board. The Corporate Governance and Compensation
Committee also advises the Board on candidates for the Board for a first appointment, to fill a vacancy, and on members
for the Board for possible reappointment after each term. The Corporate Governance and Compensation Committee
currently consists of Messrs. Houle, Hiler, Jeker, Lipper and Marchionne. The Corporate Governance and Compensation
Committee is currently chaired by Mr. Houle. The Charter for the Corporate Governance and Compensation Committee is
available on the CNH web site (www.cnh.com).
April 2, 2012
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CNH GLOBAL N.V. FINANCIAL
STATEMENTS
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CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2011
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CONSOLIDATED INCOME STATEMENTS
Note
2011
2010
Net revenues
(1)
19,341
15,782
Cost of sales
(2)
15,671
13,049
Selling, general and administrative costs
(3)
1,623
1,415
Research and development costs
(4)
396
274
Other expenses
(5)
45
43
1,606
1,001
35
7
($ million)
TRADING PROFIT
Gains on the disposal of investments
(6)
Restructuring (benefit) costs
(7)
OPERATING PROFIT
(3)
7
1,644
1,001
Financial expenses
(8)
322
342
Result from investments:
(9)
118
100
1,440
759
417
212
1,023
547
PROFIT BEFORE TAXES
Income taxes
(10)
PROFIT
PROFIT ATTRIBUTABLE TO:
Owners of the parent
Non-controlling interests
1,038
558
(15)
(11)
(in USD)
BASIC EARNINGS PER ORDINARY SHARE
(12)
4.33
2.35
DILUTED EARNINGS PER ORDINARY SHARE
(12)
4.32
2.34
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CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
($ million)
Note
PROFIT (A)
2011
2010
1,023
547
(57)
16
(Losses)/Gains on cash flow hedges
(24)
Gains on fair value of available-for-sale financial assets
(24)
-
1
(Losses)/Gains on exchange differences on translating foreign operations
(24)
(400)
144
Change in non-controlling interest due to change in ownership
(24)
(2)
-
Income tax relating to components of Other comprehensive income
(24)
11
(7)
(448)
154
575
701
Owners of the parent
597
715
Non-controlling interests
(22)
(14)
TOTAL OTHER COMPREHENSIVE (LOSS)/INCOME, NET OF TAX (B)
TOTAL COMPREHENSIVE INCOME (A)+(B)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
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80051616 M 7389676 / 1
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
Note
At December 31, 2011
At December 31, 2010
Intangible assets
(13)
3,638
3,490
Property, plant and equipment
(14)
1,921
1,769
Investments:
(15)
509
492
504
486
5
6
($ million)
ASSETS
Investments accounted for using the equity method
Investments at cost
Leased assets
(16)
666
622
Defined benefit plan assets
(24)
278
222
Deferred tax assets
(10)
725
877
7,737
7,472
2,983
Total Non-current assets
Inventories
(17)
3,706
Trade receivables
(18)
445
471
Receivables from financing activities
(18)
13,784
13,381
Current tax receivables
(18)
878
747
Other current assets
(18)
765
730
200
131
32
Current financial assets:
Current securities
(19)
88
Other financial assets
(20)
112
99
Cash and cash equivalents
(21)
2,989
4,500
Deposits in Fiat Industrial subsidiaries' cash management pools
(22)
4,116
-
Deposits in Fiat subsidiaries' cash management pools
(22)
-
1,760
26,883
24,703
Total Current assets
Assets held for sale
(23)
TOTAL ASSETS
Total assets adjusted for asset-backed financing transactions
11
11
34,631
32,186
23,584
21,858
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CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(CONTINUED)
($ million)
Note
At December 31. 2011
At December 31, 2010
(24)
8,588
7,895
8,517
7,811
EQUITY AND LIABILITIES
Equity:
Issued capital and reserves attributable to owners of the parent
Non-controlling interest
Provisions:
71
84
3,799
3,590
1,963
Employee benefits
(25)
1,932
Other provisions
(26)
1,867
1,627
(27)
17,287
16,582
Asset-backed financing
(27)
11,047
10,328
Other debt
(27)
6,240
6,254
Other financial liabilities
(20)
120
144
Trade payables
(28)
3,071
2,471
768
646
120
69
Debt:
Current tax payables
Deferred tax liabilities
(10)
Other current liabilities
(29)
TOTAL EQUITY AND LIABILITIES
Total equity and liabilities adjusted for asset-backed financing transactions
878
789
34,631
32,186
23,584
21,858
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CONSOLIDATED STATEMENTS OF CASH
FLOWS
($ million)
Note
2011
2010
A) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
(21)
4,500
1,926
1,023
547
406
364
3
1
(35)
(7)
B) CASH FLOWS FROM OPERATING ACTIVITIES DURING THE YEAR
Profit
Amortization and depreciation (excluding operating leases)
(Gains)/losses on disposal of:
Property plant and equipment and intangible assets
Investments
Share-based payment
(24)
63
34
Other non-cash items
(37)
98
182
Dividends received
57
21
Change in provisions
217
42
Change in deferred income taxes
159
30
Change in operating lease items
(43)
40
Change in working capital
(134)
829
TOTAL
1,814
2,083
(687)
(592)
(62)
-
19
42
(37)
C) CASH FLOWS USED IN INVESTMENT ACTIVITIES:
Investments in:
Property, plant and equipment and intangible assets (excluding operating lease)
Entities consolidated on a line-by-line basis
Proceeds from the sale of assets and investments
Deposits in Fiat Industrial subsidiaries' cash management pools
Withdrawals from Fiat subsidiaries' cash management pools
Net change in receivables from financing activities
(2,419)
-
-
462
(909)
371
Change in other current securities
(66)
22
Other changes
(66)
39
(4,190)
344
497
1,500
TOTAL
D) CASH FLOWS FROM FINANCING ACTIVITIES:
Bonds issued
Repayment of bonds
-
(500)
411
(946)
Capital increase
34
26
Purchase of ownership interests in subsidiaries
(2)
-
Net change in other financial payables and other financial assets/liabilities
Other
(1)
(1)
TOTAL
939
79
Translation exchange differences
(74)
68
(1,511)
2,574
2,989
4,500
E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS
F) CASH AND CASH EQUIVALENTS AT END OF THE YEAR
(21)
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80051616 M 7389676 / 1
STATEMENT OF CHANGES IN
CONSOLIDATED EQUITY
Cumulative
Cumulative
translation share of OCI of
adjustment
entities
reserve
consolidated
Share
capital
Capital
reserves
Earnings
reserves
Cash flow
hedge
reserve
591
6,242
478
(25)
525
Capital increase
4
27
-
-
-
Share-based award and related tax benefit
-
70
-
-
-
Sale of unconsolidated subsidiary
-
11
-
-
Total comprehensive income for the year
-
-
1,038
Other changes
-
1
-
595
6,351
1,516
($ million)
AT JANUARY 1, 2011
Noncontrolling
interests
Total
84
7,895
-
-
31
-
-
70
-
-
-
11
(46)
(399)
(2)
(16)
575
-
-
2
3
6
(71)
126
-
71
8,588
Changes in equity for 2011
AT DECEMBER 31, 2011
31
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
PRINCIPAL ACTIVITIES
CNH Global N.V. (“CNH” or the “Company”) is incorporated in, and under the laws of, The Netherlands. CNH’s
Equipment Operations manufacture, market and distribute a full line of agricultural and construction equipment and
parts on a worldwide basis. CNH’s financial services activities and operation offer an array of financial products and
services, including retail financing for the purchase or lease of new and used CNH and other manufacturers’ products
and other retail financing programs and wholesale financing to dealers. CNH's worldwide agricultural equipment and
construction equipment operations are collectively referred to as "Equipment Operations". CNH's worldwide financial
services operations are collectively referred to as "Financial Services”. In agricultural equipment, CNH believes it is
one of the leading global manufacturers of agricultural tractors and combines based on units sold, and it has leading
positions in hay and forage equipment and specialty harvesting equipment. In construction equipment, it has a
leading position in backhoe loaders and a strong position in skid steer loaders in North America and crawler
excavators in Western Europe. In addition, CNH provides a complete range of replacement parts and services to
support its equipment.
As of December 31, 2011, the Company was manufacturing its products in 37 facilities throughout the world and
distributing its products in approximately 170 countries through a network of approximately 11,300 dealers and
distributors.
As of December 31, 2011, Fiat Industrial S.p.A. and its subsidiaries (“Fiat Industrial” or the “Fiat Industrial Group”)
owned approximately 88% of CNH’s outstanding ordinary shares through Fiat Netherlands Holding N.V. (“Fiat
Netherlands”).
On January 1, 2011, Fiat S.p.A. (“Fiat” and, together with its subsidiaries, the “Fiat Group”) effected a “demerger”
under Article 2506 of the Italian Civil Code. Pursuant to the demerger, Fiat transferred its ownership interest in Fiat
Netherlands to a new holding company, Fiat Industrial, including Fiat’s indirect ownership of CNH Global, as well as
Fiat’s truck and commercial vehicles business and its industrial and marine powertrain business. Consequently, as of
January 1, 2011, CNH Global became a subsidiary of Fiat Industrial. In connection with the demerger transaction,
shareholders of Fiat received shares of capital stock of Fiat Industrial. Accordingly, effective as of January 1, 2011,
Fiat Industrial owned approximately 89% of its outstanding ordinary shares through its direct, wholly-owned
subsidiary Fiat Netherlands.
SIGNIFICANT ACCOUNTING POLICIES
Basic of presentation
CNH has prepared the accompanying consolidated financial statements in accordance with the International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and
adopted by the European Union. The consolidated financial statements include CNH Global N.V. and its consolidated
subsidiaries. The designation “IFRS” also includes all valid International Accounting Standards (“IAS”), as well as all
interpretations of the IFRS Interpretations Committee, formerly the Standing Interpretations Committee (“SIC”), and
then the International Financial Reporting Interpretations Committee (“IFRIC”).
These financial statements have been prepared on a historical cost basis, except for certain financial instruments,
which have been measured at fair value. The consolidated financial statements are expressed in U.S. dollars
(currency of the primary economic environment in which the CNH operates), and unless otherwise indicated, all
financial data set forth in these consolidated financial statements is expressed in U.S. dollars.
Despite operating in a continuingly difficult economic and financial environment, CNH’s assessment is that no
material uncertainties (as defined in paragraph 25 of IAS 1) exist about its ability to continue as a going concern, in
view also of the measures already undertaken by CNH to adapt to the changed levels of demand and CNH’s financial
and operating flexibility. Accordingly, the Company continues to employ the going concern basis of accounting in
preparing its consolidated financial statements.
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80051616 M 7389676 / 1
Format of the financial statements
The Company presents an income statement using a classification based on the function of expenses (otherwise
known as the “cost of sales” method), rather than based on their nature, as this is believed to provide information that
is more relevant. The format selected is that used for managing the business and for management reporting
purposes and is consistent with international practice in the capital goods sector. In this income statement, in which
the classification of expenses is based on their function, Trading profit is reported specifically as part of Operating
profit and separate from the income and expense resulting from the non-recurring operations of the business, such as
Gains on the sale of investments, Restructuring costs and any Other income/ (expenses) defined as unusual and of a
similar nature to these items. By doing this, it is believed that the Company’s actual performance from normal trading
operations may be measured in a clearer way, while disclosing specific details of unusual income and expenses.
For the statements of financial position, a mixed format has been selected to present current and non-current assets
and liabilities, as permitted by IAS 1. Both Equipment Operations and Financial Services are consolidated in the
Company’s financial statements. The investment portfolios of Financial Services are included in current assets, as the
investments will be realized in their normal operating cycle.
The statements of cash flows have been reported using the indirect method.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by CNH, as defined in IAS 27 – Consolidated and Separate Financial Statements.
Control exists when CNH has the power, directly or indirectly, to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. Subsidiaries are consolidated in CNH’s financial statements from the
date that CNH obtains control, and continue to be consolidated until the date that such control ceases. Noncontrolling interests in the net assets of consolidated subsidiaries and non-controlling interests in the profit or loss of
consolidated subsidiaries, are presented separately from the interests of the owners of the parent in the consolidated
statements of financial position and income statements, respectively. Losses applicable to non-controlling interests
which exceed the minority’s interests in the subsidiary’s equity are allocated against the non-controlling interests.
Changes in the interests in a subsidiary which do not lead to the acquisition or loss of control are recognized directly
in equity.
Changes in CNH's ownership interests in subsidiaries that do not result in the loss of control are accounted for as
equity transactions. The carrying amounts of the equity attributable to owners of the parent and non-controlling
interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the
book value of the non-controlling interests and the fair value of the consideration paid or received is recognized
directly in the equity attributable to the owners of the parent.
If CNH loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest,
and (ii) the carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling
interests. Any profits or losses recognized in other comprehensive income in respect of the measurement of the
assets of the subsidiary are accounted for as if the subsidiary had been sold (i.e. are reclassified to profit or loss or
transferred directly to retained earnings depending on the applicable IFRS). The fair value of any investment retained
in the former subsidiary is measured in accordance with IAS 39, IAS 28 or IAS 31, depending on the type of
investment.
Jointly controlled entities
Jointly controlled entities are entities in which CNH has contractually agreed to share control, or for which a
contractual arrangement exists whereby two or more parties undertake an economic activity that is subject to joint
control. Investments in jointly controlled entities are accounted for using the equity method from the date that joint
control is obtained until the date that joint control ceases.
Associates
Associates are entities over which CNH has significant influence, but not control or joint control, over the financial and
operating policies, as defined in IAS 28 – Investments in Associates. The consolidated financial statements include
the Company’s share of the earnings of associates under the equity method, from the date that significant influence is
obtained until the date that significant influence ceases. When the Company’s share of losses of an associate, if any,
exceeds the carrying amount of the associate in the Company’s statement of financial position, the carrying amount is
reduced to nil, and recognition of further losses is discontinued except to the extent that the Company has incurred
obligations in respect of the associate.
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Transactions eliminated in consolidation
All significant intercompany transactions, including activity within and between Equipment Operations and Financial
Services, have been eliminated in deriving the consolidated financial statements and data.
Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign exchange rate at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated at the exchange rate at the statement of
position date. Exchange gains or losses on settlement of foreign currency transactions translated at the exchange
rate at the date of the transactions, or the translation of monetary assets and liabilities at period end exchange rates,
are recognized in the consolidated income statement.
Consolidation of foreign entities
All assets and liabilities of foreign consolidated companies with a functional currency other than U.S. dollar are
translated using the exchange rates in effect at the statement of financial position date. Income and expenses are
translated at the average exchange rate for the period. Translation differences resulting from the application of this
method are classified as equity until the disposal of the investment. Average rates of exchange are used to translate
the cash flows of foreign subsidiaries in preparing the consolidated statements of cash flows.
Goodwill, assets acquired and liabilities assumed arising on the acquisition of entities with a functional currency other
than U.S. dollar, are recognized in the functional currency, and translated at the exchange rate at the acquisition
date. These balances are subsequently translated at the exchange rate at the statement of financial position date.
The principal exchange rates used in 2011 and 2010 to translate into U.S. dollars the consolidated financial
statements prepared in currencies other than U.S. dollar were as follows:
Average 2011
December 31, 2011
Average 2010
December 31, 2010
Euro
0.718
0.773
0.754
0.748
Pound sterling
1.604
1.549
1.545
1.552
Swiss franc
0.886
0.939
1.041
0.936
Polish zloty
2.960
3.445
3.013
2.975
Brazilian real
1.671
1.867
1.759
1.660
Argentine peso
4.125
4.298
3.910
3.969
Business Combinations
Business combinations are accounted for by applying the acquisition method. Under this method, the consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date
fair values of the assets transferred and liabilities assumed by the Company, and the equity interests issued in
exchange for control of the acquiree. Acquisition-related costs are expensed as incurred.
The identifiable assets acquired and liabilities assumed are measured at their acquisition-date fair values, except for
the following which are measured in accordance with the relevant standards:

deferred tax assets and liabilities;

assets and liabilities relating to employee benefit arrangements;

liabilities or equity instruments relating to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Company entered into to replace share-based payment arrangements of the
acquiree;

assets (or disposal groups) that are classified as held for sale.
Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any noncontrolling interest in the acquire, and the acquisition-date fair value of the acquirer's previously held equity interest in
the acquiree (if any), over the net of the acquisition-date fair values of the identifiable assets acquired and the
liabilities assumed.
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Intangible assets
Goodwill and Intangible assets with indefinite useful lives
Goodwill acquired in a business combination is measured at the amount recognized at the acquisition date, less any
impairment losses.
Other intangibles with indefinite lives principally consist of acquired trademarks which have no legal, regulatory,
contractual, competitive, economic, or other factor that limits their useful life.
Goodwill and Intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment
annually, or more frequently if events or changes in circumstances indicate that they might be impaired, in
accordance with IAS 36.
Development costs
Development costs are recognized as an asset if and only if both of the following conditions are met: development
costs can be measured reliably and technical feasibility of the product, volumes and pricing support the view that the
development expenditure will generate future economic benefits. Capitalized development costs include all direct and
indirect costs that may be directly attributed to the development process. Capitalized development costs are
amortized on a systematic basis from the start of production of the related product over a product‘s estimated useful
life which averages five years.
All other development costs are expensed as incurred.
Other intangible assets
Other purchased and internally-generated intangible assets are recognized as assets in accordance with IAS 38 –
Intangible Assets, where it is probable that the use of the asset will generate future economic benefits and where the
costs of the asset can be determined reliably.
Such assets are measured at purchase price or manufacturing cost and amortized on a straight-line basis over their
estimated useful lives, if these assets have definite useful lives.
Other intangible assets acquired as part of the acquisition of a business are capitalized separately from goodwill if
their fair value can be measured reliably.
Property, plant and equipment
Cost
Property, plant and equipment are stated at acquisition or production cost, less accumulated depreciation.
Subsequent expenditures and replacing costs of an asset are capitalized only if they increase the future economic
benefits embodied in that asset. All other expenditures are expensed as incurred. When such replacement costs are
capitalized, the carrying amount of the parts that are replaced is recognized in the income statement.
Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are classified as
operating leases. Operating lease expenditures are expensed on a straight-line basis over the lease terms.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Depreciation rates
Buildings
2.5% - 10%
Plant, machinery and equipment
6.2% - 20%
Other assets
10%- 33.3%
Land is not depreciated.
Finance leases
Future minimum lease payments from lessees are classified as Receivables from financing activities. Lease
payments are recognized as the repayment of the principal and financial income remunerating the initial investment
and the services provided.
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Leased assets
Leased assets include equipment leased to retail customers by CNH's leasing companies under operating lease
arrangements. They are stated at cost and depreciated at an annual rate of 20%.
When such assets cease to be leased, CNH reclassifies their carrying amount to Inventories.
Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets (as
defined under IAS 23 – Borrowing Costs) are capitalized and added to the project cost during construction until such
time as the assets are considered substantially ready for their intended use i.e. when they are capable of production.
These costs are capitalized and amortized over the useful life of the class of assets to which they refer.
All other borrowing costs are recognized in the income statement in the period in which they are incurred using the
effective interest rate method.
Impairment of assets
The Company reviews, at least annually, the recoverability of the carrying amount of intangible assets (including
capitalized development costs) and property, plant and equipment, to determine whether there are any indicators of
impairment, such as that the carrying values of the assets may not be recoverable. If indications of impairment are
present, the carrying amount of the asset is reduced to its recoverable amount. An intangible asset with an indefinite
useful life is tested for impairment annually or more frequently, if there is an indication that the asset may be
impaired.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount of an asset is the higher of fair value, less disposal costs, and its value in use. In assessing
its value in use, the pre-tax estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money, and the risks specific to the asset. An
impairment loss is recognized when the recoverable amount is lower than the carrying amount. A previously
recognized impairment loss for assets other than goodwill, is reversed only if there has been a change in the
estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is
the case, the carrying amount of the asset is increased to its recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized for the asset in prior
years. Such reversals are recognized in the income statement.
Financial instruments
Presentation
Financial instruments held by CNH are presented in the financial statements as described in the following
paragraphs.
Investments and other non-current financial assets comprise investments in unconsolidated companies and other
non-current financial assets (non-current loans and receivables and other non-current available-for-sale financial
assets).
Current financial assets, as defined in IAS 39, include trade receivables, receivables from financing activities (retail
financing, dealer financing, lease financing and other current loans to third parties), current securities and other
current financial assets (which include derivative financial instruments stated at fair value as assets), as well as cash
and cash equivalents.
In particular, Cash and cash equivalents include cash at banks, units in liquidity funds and other money market
securities that are readily convertible into cash and are subject to an insignificant risk of changes in value.
Deposits in Fiat Industrial subsidiaries and Fiat subsidiaries' cash management pools represents a cash management
system CNH participates in with Fiat Industrial. CNH accesses funds deposited in these accounts on a daily basis
and has the contractual right to withdraw these funds on demand and terminate these cash management
arrangements. The carrying value of Deposits with Fiat Industrial and Fiat approximates fair value based on the short
maturity of these investments.
Current securities include short-term or marketable securities which represent temporary investments of available
funds and do not satisfy the requirements for being classified as cash equivalents; current securities include both
available-for-sale and held for trading securities.
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Financial liabilities refer to debt, which includes asset-backed financing, and other financial liabilities (which include
derivative financial instruments stated at fair value as liabilities), trade payables and other payables.
Measurement
Investments in unconsolidated companies classified as non-current financial assets are accounted for as described in
the section Basis of consolidation.
Non-current financial assets other than investments, as well as current financial assets and financial liabilities, are
accounted for in accordance with IAS 39 – Financial Instruments: Recognition and Measurement.
Current financial assets are recognized on the basis of the settlement date and, on initial recognition, are measured
at acquisition cost, including transaction costs.
Subsequent to initial recognition, available-for-sale financial assets are measured at fair value. When market prices
are not available, the fair value of available-for-sale financial assets is measured using appropriate valuation
techniques e.g. discounted cash flow analysis based on market information available at the statement of financial
position date.
Gains and losses on available-for-sale financial assets are recognized directly in other comprehensive income until
the financial asset is disposed or is determined to be impaired; when the asset is disposed of, the cumulative gains or
losses, including those previously recognized in other comprehensive income, are reclassified to the income
statement for the period; when the asset is impaired, accumulated losses are recognized in the income statement.
Loans and receivables which are not held by the Company for trading (loans and receivables originating in the course
of business), held-to-maturity securities and all financial assets for which published price quotations in an active
market are not available and whose fair value cannot be determined reliably, are measured, to the extent that they
have a fixed term, at amortized cost, using the effective interest method. When the financial assets do not have a
fixed term, they are measured at acquisition cost. Receivables with maturities of over one year which bear no interest
or an interest rate significantly lower than market rates are discounted using market rates.
Assessments are made regularly as to whether there is any objective evidence that a financial asset or group of
assets may be impaired. If any such evidence exists, an impairment loss is included in the income statement for the
period.
Except for derivative instruments, financial liabilities are measured at amortized cost using the effective interest
method.
Financial assets and liabilities hedged by derivative instruments are measured in accordance with hedge accounting
principles applicable to fair value hedges: gains and losses arising from remeasurement at fair value, due to changes
in the respective hedged risk, are recognized in the income statement and are offset by the effective portion of the
loss or gain arising from remeasurement at fair value of the hedging instrument.
Derivative Instruments
Derivative financial instruments are used for hedging purposes, in order to reduce currency and interest rate risks. In
accordance with IAS 39, derivative financial instruments qualify for hedge accounting only when at the inception of
the hedge there is formal designation and documentation of the hedging relationship, the hedge is expected to be
highly effective, its effectiveness can be reliably measured and it is highly effective throughout the financial reporting
periods for which it is designated.
All derivative financial instruments are measured in accordance with IAS 39 at fair value.
When derivative financial instruments qualify for hedge accounting, the following accounting treatment applies:

Fair value hedges – Where a derivative financial instrument is designated as a hedge of the exposure to
changes in fair value of a recognized asset or liability that is attributable to a particular risk and could affect the
income statement, the gain or loss from remeasuring the hedging instrument at fair value is recognized in the
income statement. The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying
amount of the hedged item and is recognized in the income statement.

Cash flow hedges – Where a derivative financial instrument is designated as a hedge of the exposure to
variability in future cash flows of a recognized asset or liability or a highly probable forecasted transaction and
could affect the income statement, the effective portion of any gain or loss on the derivative financial
instrument is recognized directly in other comprehensive income. The cumulative gain or loss is removed from
other comprehensive income and recognized in the income statement at the same time as the economic effect
arising from the hedged item affects income. The gain or loss associated with a hedge or part of a hedge that
has become ineffective is recognized in the income statement immediately. When a hedging instrument or
hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative gain or
loss realized to the point of termination remains in other comprehensive income and is recognized in the
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income statement at the same time as the underlying transaction occurs. If the hedged transaction is no longer
probable, the cumulative unrealized gain or loss held in other comprehensive income is recognized in the
income statement immediately.
If hedge accounting cannot be applied, the gains or losses from the fair value measurement of derivative financial
instruments are recognized immediately in the income statement.
Sales of receivables
CNH sells a significant portion of its financial and trade receivables through either securitization programs or factoring
transactions.
A securitization transaction entails the sale of a portfolio of receivables to a securitization vehicle. This special
purpose entity finances the purchase of the receivables by issuing asset-backed securities (i.e. securities whose
repayment and interest flow depend upon the cash flow generated by the portfolio). Asset-backed securities are
divided into classes according to their degree of seniority and rating: the most senior classes are placed with
investors on the market; the junior class, whose repayment is subordinated to the senior classes, is normally
subscribed for by the seller. The residual interest in the receivables retained by the seller is therefore limited to the
junior securities it has subscribed for. In accordance with SIC 12 – Consolidation – Special Purpose Entities (“SPE”),
all securitization vehicles are included in the scope of consolidation, because the subscription of the junior assetbacked securities by the seller entails its control in substance over the SPE.
Furthermore, factoring transactions may be with or without recourse to the seller; certain factoring agreements
without recourse include deferred purchase price clauses (i.e. the payment of a minority portion of the purchase price
is conditional upon the full collection of the receivables), require a first loss guarantee of the seller up to a limited
amount or imply a continuing significant exposure to the receivables cash flow. These kinds of transactions do not
meet IAS 39 requirements for asset derecognition, since the risks and rewards have not been substantially
transferred.
Consequently, all receivables sold through both securitization and factoring transactions which do not meet IAS 39
derecognition requirements are recognized as such in the Company’s consolidated financial statements even though
they have been legally sold; a corresponding financial liability is recorded in the consolidated statement of financial
position as Asset-backed financing. Gains and losses relating to the sale of such assets are not recognized until the
assets are removed from the Company’s statement of financial position.
Inventories
Inventories of raw materials, work-in-progress and finished goods, (including assets leased under operating leases)
are stated at the lower of cost and net realizable value. Cost is determined by the first in-first-out (FIFO) method. The
cost of finished goods and work-in-progress includes the cost of raw materials, other direct costs, and production
overheads. Provision is made for obsolete and slow-moving raw materials, finished goods, spare parts and other
supplies based on their expected future use, and realizable value. Net realizable value represents estimated selling
price in the ordinary course of business less any further costs expected to be incurred to completion and disposal.
Assets held for sale
Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly
probable and the non-current assets are available for immediate sale in their present condition. Non-current assets
held for sale are carried at the lower of the carrying amount prior to being classified as held for sale, and fair value
less costs to sell.
Employee benefits
Pension plans
CNH sponsors numerous defined benefit and defined contribution pension plans, in accordance with local conditions
and practices in the countries in which CNH operates.
CNH's defined benefit pension plans are accounted for in accordance with IAS 19, Employee Benefits, such that the
plan liabilities are measured by actuarial valuations using the projected unit credit method. CNH recognizes actuarial
gains and losses falling outside a “corridor” of the greater of 10% of the benefit obligation or 10% of the assets,
amortized over the expected average future working lifetime of the employees in the arrangements. The expense is
charged to the consolidated income statement to match the cost of providing these benefits to the period of service of
the employees.
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The post-employment benefit obligation recognized in the statement of financial position represents the present value
of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses, arising from the application
of the corridor method and unrecognized past service cost, reduced by the fair value of plan assets. Any net asset
resulting from this calculation is recognized at the lower of its amount and the total of any cumulative unrecognized
net actuarial losses and past service cost, and the present value of any economic benefits available in the form of
refunds from the plan or reductions in future contributions to the plan.
If amendments are made to a plan that modify the benefits due for past service, or if a new plan is introduced
regarding past service, then past service costs are recognized in the income statement on a straight-line basis over
the average period remaining until the benefits become vested. If an amendment is made to a plan that significantly
reduces the number of participants, or that modifies the terms of the plan, such that employees will no longer be
entitled to the same benefits for a significant part of their future service, or if such benefits will be reduced, any
income or expense resulting from such changes is immediately recognized in the consolidated income statement.
Any other expense and income resulting from the measurement of pension plan provisions is allocated to costs by
function in the income statement, except for interest cost on unfunded defined benefit plans, which is reported as part
of Financial expenses.
Contributions to defined contribution pension plans are expensed in the consolidated income statement as incurred.
Post-employment plans other than pensions
CNH provides certain post-employment defined benefits, mainly health care plans. The method of accounting and the
frequency of valuations are similar to those used for defined benefit pension plans.
Equity compensation plans
Certain members of senior management and employees receive part of their remuneration in the form of sharedbased compensation awards. The cost of these shared-based compensation awards is measured at fair value at the
date at which they are granted. The fair value is expensed in installments on a straight-line basis over the vesting
period based on CNH’s estimate of shares that will eventually vest. The estimate of the number of awards likely to
vest is reviewed at each statement of financial position date up to the vesting date, at which point the estimate is
adjusted to reflect actual outcome of awards which have vested. No adjustment is made to the fair value after the
vesting date, even if the awards are forfeited or not exercised.
Provisions
CNH records provisions when it has an obligation, legal or constructive, as a result of a past event, and it is probable
that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be
made.
Changes in estimates are reflected in the income statement in the period in which the change occurs.
Revenue recognition
Revenue is recognized to the extent that is probable that the economic benefits will flow to CNH and the revenue can
be reliably measured. Appropriate provisions for discounts, rebates, allowances and sales incentive program costs
are recorded on an accrual basis, consistent with the recognition of the related sales.
Revenue associated with the sale of products is recognized when all significant risks and rewards of ownership are
transferred to the independent dealer or other customer, according to the terms of sale, generally upon shipment or
delivery of goods. Revenues from the sale of extended warranties and maintenance contracts are recognized over
the period during which the service is provided.
Finance and interest income on retail and other notes receivable and finance leases is recorded using the effective
yield method.
Income from operating leases is recognized over the term of the lease on a straight-line basis.
Cost of sales
Cost of sales comprises cost of manufacturing products and acquisition cost of purchased merchandise which has
been sold. It includes all directly attributable material and production costs, and all production overheads. These
include depreciation of property, plant and equipment, and the amortization of intangible assets relating to production
and write-downs of inventories. Cost of sales also includes freight and insurance costs relating to deliveries to dealer
and agency fees in the case of direct sales.
Cost of sales also includes provisions made to cover the estimated cost of product warranties at the time of sale to
dealer networks or to the end customer.
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Expenses which are directly attributable to Financial Services, including the interest expense related to the financing
of Financial Services as a whole and charges for risk provisions and write-downs, are reported in Cost of sales.
Research and development costs
This item includes research and development costs which don’t meet the criteria for recognition as an asset, and the
amortization of development costs recognized as assets in accordance with IAS 38 (see Notes 4. Research and
Development Costs, and 13. Intangible Assets to the consolidated financial statements).
Government grants
Government grants are recognized in the consolidated financial statements when there is reasonable assurance that
the Company will comply with the conditions for receiving such grants and that the grants themselves will be
received. Government grants are recognized as income over the periods necessary to match them with the related
costs which they are intended to offset.
The benefit of a government loan at a below-market rate of interest is treated as a government grant. The benefit of
the below-market rate of interest is measured as the difference between the initial carrying amount of the loan (fair
value plus transaction costs) and the proceeds received, and is accounted for in accordance with the same policies
used for the recognition of government grants.
Income Taxes
Income taxes include all taxes based upon the taxable profits of CNH. Income taxes are recognized in the
consolidated income statement except to the extent that they relate to items charged or credited directly to equity, in
which case the related income taxes are recognized in equity. Provisions for income taxes that could arise on the
distribution of a subsidiary’s undistributed profits are only made where there is a current intention to distribute such
profits. Deferred taxes are provided using the balance sheet liability method, providing for temporary differences
between the tax base of assets and liabilities and the carrying amounts in the consolidated financial statements,
except for those arising on non-tax-deductible goodwill, and for those related to investments in subsidiaries where the
timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future. A deferred tax asset is recognized only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilized. Current and deferred income tax assets
and liabilities are offset when the income taxes are levied by the same taxation authority and where there is a legally
enforceable right of offset. Deferred tax assets and liabilities are measured at the substantively enacted tax rates in
the respective jurisdictions in which CNH operates that are expected to apply to taxable income in the periods in
which temporary differences reverse or expire.
Earnings per share
Basic earnings per share are calculated by dividing profit or loss attributable to CNH’s ordinary equity holders by the
weighted average number of ordinary shares outstanding during the period. Diluted earnings per share are based on
the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the period.
Unvested performance-based awards are considered outstanding and included in the computation of diluted earnings
per share based on the number of shares that would be issuable if the end of the reporting period were the end of the
contingency period.
Use of estimates
The preparation of financial statements in conformity with IFRS requires management to use estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the
reporting period. The accounting policies requiring management to use significant estimates and assumptions relate
to allowances for doubtful accounts, receivable and inventories, non-current assets (tangible and intangible assets),
residual values of vehicles leased under operating lease arrangements, sales allowances, product warranties,
pension and other post-retirement benefits, deferred tax assets and contingent liabilities. Although these estimates
are based on management’s best knowledge of current events and actions, actual results ultimately may differ from
those estimates.
The following are the critical judgments and key assumptions concerning the future, that management has made in
the process of applying the Company’s accounting policies and that have the most significant effect on the amounts
recognized in the consolidated financial statements.
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Allowance for doubtful accounts
The allowance for doubtful accounts reflects management’s estimate of losses inherent in the wholesale and retail
credit portfolio. This allowance is based on CNH’s estimate of the losses to be incurred, which considers past
experience with similar receivables, current and historical past due amounts, dealer termination rates, write-offs and
collections, on-going monitoring of the credit quality, and current and projected economic and market conditions.
Allowance for obsolete and slow-moving inventory
The allowance for obsolete and slow-moving inventory reflects management’s estimate of the loss in value expected
by CNH, and has been determined on the basis of past experience and historical and expected future trends in the
used vehicle market.
Recoverability of non-current assets (including goodwill)
Non-current assets include property, plant and equipment, intangible assets (including goodwill), investments and
other financial assets. Management reviews the carrying values when events or changes in circumstances indicate
the carrying value may be impaired. If any such indication exists, the recoverable amount of the asset is estimated to
determine the extent of impairment loss. As asset’s recoverable amount is the higher of an asset’s or cash generating
unit’s fair value less costs to sell and its value-in-use. In assessing value-in-use, its estimated future cash flow is
discounted to its present value using a pre-tax discount rate that reflects the current market assessments of the time
value of money and the risk specific to the asset.
In view of the present economic and financial situation, CNH has the following considerations in respect of its future
prospects:

When carrying out impairment testing of tangible and intangible assets, CNH took into account its performance
forecasted in its 2012 budget.

Should the assumptions underlying the forecast deteriorate, the following is noted:
The Company’s tangible and intangible assets with a definite useful life relate to models or products with a
high technological content in line with the latest environmental laws and regulations, which makes them
competitive in the present economic environment, especially in the more mature economies in which
particular attention is placed on the eco-sustainability of those types of products. As a result, despite the fact
that the capital goods sector (in particular, construction equipment in certain specific geographical areas) is
one of the markets most affected by the crisis in the immediate term, it is considered highly probable that the
life cycle of these products can be lengthened to span over the period of time involved in a slower economic
recovery, allowing CNH to achieve sufficient earnings flows to cover the investments, albeit over a longer
timescale.
At December 31, 2011, approximately 70% or $1,635 million of capitalized goodwill relates to the Agricultural
equipment business, while 25% or $593 million of capitalized goodwill relates the Construction equipment
business. See Note 13. Intangible Assets to the consolidated financial statements, for further detail in
recoverability tests performed by CNH.
Residual values of assets leased under operating lease arrangements
CNH reports assets leased to customers under operating leases as tangible assets. CNH recognizes income from
such operating leases on a straight-line basis over the term of the lease. These assets are depreciated on a straightline basis over the lease term, to their estimated residual value at the end of the lease term. The estimated residual
value of leased assets is calculated at the lease inception date, based on published industry information and
historical experience.
Realization of the residual values is dependent on CNH’s future ability to market the assets under the then-prevailing
market conditions. CNH assesses, on an ongoing basis, whether events and circumstances have occurred which
impact the estimated residual values of the assets under operating lease arrangements.
Sales allowances
CNH grants certain sales incentives to stimulate sales of its products to retail customers. The expense for such
incentive programs is recorded as a deduction in arriving at the net sales amount at the time of the sale of the product
to the dealer. The expense for new programs is accrued at the inception of the program. The amounts of incentives to
be paid are estimated based upon historical data, estimated future market demand for products, field inventory levels,
announced incentive programs, competitive pricing and interest rates, among other things.
Product warranties
At the time a sale of equipment or parts to a dealer is recognized, CNH records the estimated future warranty costs
for the product, primarily basic warranty coverage. CNH determines its total warranty liability by applying historical
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claims rate experience to the estimated amount of equipment that has been sold and is still under warranty.
Campaigns are formal post-production modification programs approved by management. The liabilities for such
programs are recognized when approved, based on an estimate of the total cost of the program.
Pension and other post-retirement benefits
CNH sponsors pension and other post-retirement benefits in various countries, mainly in the United States, in the
United Kingdom, and in Germany.
The defined benefit obligation is calculated annually by external actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash flows using
interest rates that reference high-quality corporate bonds that have maturity dates approximating the terms of CNH’s
benefit obligations. A number of key assumptions have to be made in calculating the fair value of CNH’s defined
benefit pension plans. These assumptions impact the statement of financial position assets and liabilities, operating
profit and financial expense. The most critical assumptions are the discount rate, the rate of inflation and mortality
assumptions to be applied to future pension plan liabilities. The most important assumption for the plan assets is the
future expected return. In determining these assumptions, management takes into account the advice of professional
external actuaries and benchmarks against external data.
Changes in any of these assumptions may have an effect on future contributions to the plans and expense, assets
and liability. The effects resulting from revising the estimates for the above parameters are not recognized in the
Statement of financial position and income statement when they arise but are recognized using the “corridor method”
adopted by CNH. See Employee benefits section above for description of this approach.
Realization of deferred tax assets
At December 31, 2011 and 2010, CNH had deferred tax assets and theoretical tax benefits arising from tax loss
carry forwards of $599 million and $937 million, respectively, of which $355 million and $669 million are not
recognized in the consolidated financial statements. Valuation allowances are recorded to reduce deferred tax assets
to an amount that is probable it will be realized. In making these adjustments, management has taken into
consideration figures from budgets and forecasts consistent with those used for impairment testing and discussed in
the preceding paragraph relating to the recoverable amount of non-current assets.
Contingent liabilities
CNH is the subject of legal proceedings and tax issues covering a range of matters, which are pending in various
jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters.
The cases and claims against CNH often raise difficult and complex factual and legal issues, which are subject to
many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the
jurisdiction and the differences in applicable law. In the normal course of business management consults with legal
counsel and certain other experts on matters related to litigation and taxes. CNH records a liability when it is
determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the
event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.
Accounting principles, amendments and interpretations adopted from January 1, 2011
On November 4, 2009, the IASB issued a revised version of IAS 24 - Related Party Disclosures that simplifies the
disclosure requirements for government-related entities and clarifies the definition of a related party. Application of
this amendment did not have any significant effects on the measurement of items in the Company’ s consolidated
financial statements and had only limited effects on the disclosures for related party information provided in Note 35.
Related party information to the consolidated financial statements.
Accounting principles, amendments and interpretations not yet applicable and not early adopted by CNH
Except for the amendments to IFRS 7 – Financial Instruments: Disclosures issued on 7 October 2011 described
below, the European Union had not yet completed its endorsement process for these standards and amendments at
the date of these Consolidated Financial Statements:

On November 12, 2009, the IASB issued a new standard IFRS 9 – Financial Instruments that was
subsequently amended. The standard, having an effective date for mandatory adoption of January 1, 2015
retrospectively, represents the completion of the first part of a project to replace IAS 39 and introduces new
requirements for the classification and measurement of financial assets and financial liabilities. The new
standard uses a single approach to determine whether a financial asset is measured at amortized cost or fair
value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on how an entity
manages its financial instruments and the contractual cash flow characteristics of the financial assets. The
most significant effect of the standard regarding the classification and measurement of financial liabilities
relates to the accounting for changes in fair value attributable to changes in the credit risk of financial
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80051616 M 7389676 / 1
liabilities designated as at fair value through profit or loss. Under the new standard these changes are
recognized in Other comprehensive income and are not subsequently reclassified to the Income statement.

On December 20, 2010, the IASB issued amendments to IAS 12 – Income Taxes which clarify the
accounting for deferred tax relating to investment properties measured at fair value. The amendments
introduce the presumption that the carrying amount of deferred taxes relating to investment properties
measured at fair value under IAS 40 will be recovered through sale. As a result of the amendments, SIC-21
Income Taxes – Recovery of Revalued Non-Depreciable Assets no longer applies. These amendments are
effective for annual periods beginning on or after January 1, 2012.

On May 12, 2011, the IASB issued IFRS 10 – Consolidated Financial Statements replacing SIC-12 –
Consolidation-Special Purpose Entities and parts of IAS 27 – Consolidated and Separate Financial
Statements (which has been renamed Separate Financial Statements and addresses the accounting
treatment of investments in separate financial statements). The new standard builds on existing principles by
identifying the concept of control as the determining factor in whether an entity should be included within the
consolidated financial statements of the parent company. The standard provides additional guidance to
assist in the determination of control where this is difficult to assess. The standard is effective retrospectively
from January 1, 2013.

On May 12, 2011, the IASB issued IFRS 11 – Joint Arrangements superseding IAS 31 – Interests in Joint
Ventures and SIC-13 – Jointly-controlled Entities-Non-monetary Contributions by Venturers. The new
standard provides the criteria for identifying joint arrangements by focusing on the rights and obligations of
the arrangement, rather than its legal form and requires a single method to account for interests in jointlycontrolled entities, the equity method. The standard is effective retrospectively from January 1, 2013.
Following the issue of the new standard, IAS 28 – Investments in Associates has been amended to include
accounting for investments in jointly-controlled entities in its scope of application (from the effective date of
the standard).

On May 12, 2011, the IASB issued IFRS 12 – Disclosure of Interests in Other Entities, a new and
comprehensive standard on disclosure requirements for all forms of interests in other entities, including
subsidiaries, joint arrangements, associates, special purpose vehicles and other unconsolidated vehicles.
The standard is effective for annual periods beginning after January 1, 2013.

On May 12, 2011, the IASB issued IFRS 13 – Fair Value Measurement, clarifying the determination of the
fair value for the purpose of the financial statements and applying to all IFRSs permitting or requiring a fair
value measurement or the presentation of disclosures based on fair value. The standard is effective
prospectively from 1 January 2013.

On June 16, 2011, the IASB issued an amendment to IAS 1 – Presentation of Financial Statements requiring
companies to group together items within Other comprehensive income that may be reclassified to the profit
or loss section of the income statement. The amendment is applicable for periods beginning on or after 1
July 1, 2012.

On June 16, 2011, the IASB issued an amended version of IAS 19 – Employee Benefits. The amendments
make improvements to the previous version by eliminating the option to defer the recognition of gains and
losses, known as the “corridor method”, and by requiring the fund’s deficit or surplus to be presented in the
statement of financial position, the components of cost relating to service and net interest to be recognized
in profit or loss and actuarial gains and losses arising from the remeasurement of assets and liabilities to be
recognized in Other comprehensive income. In addition, the return on assets included in net interest costs
must now be calculated using the discount rate applicable to liabilities and no longer the expected return on
the assets. The amendments also introduce the requirement for additional disclosures to be provided in the
notes. The amended version of IAS 19 is applicable on a retrospective basis from January 1, 2013.

On December 16, 2011, the IASB issued certain amendments to IAS 32 – Financial Instruments:
Presentation to clarify the application of certain offsetting criteria for financial assets and financial liabilities in
IAS 32. The amendments are effective for annual periods beginning on or after January 1, 2014 and are
required to be applied retrospectively.

On December 16, 2011, the IASB issued certain amendments to IFRS 7 – Financial Instruments:
Disclosures. The amendments require information about the effect or potential effect of netting
arrangements for financial assets and liabilities on an entity’s financial position. Entities are required to apply
the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods
within those annual periods. The required disclosures should be provided retrospectively.
Finally, on October 7, 2010, the IASB issued amendments to IFRS 7 – Financial Instruments: Disclosures. The
amendments will allow users of financial statements to improve their understanding of transfers (“derecognition”) of
financial assets, including an understanding of the possible effects of any risks that may remain with the entity that
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transferred the assets. The amendments also require additional disclosures if a disproportionate amount of a transfer
transaction is undertaken at the end of a reporting period. Entities are required to apply the amendments for annual
periods beginning on or after July 1, 2011. Application of this amendment is not expected to have any effects on the
measurement of items in the financial statements.
RISK MANAGEMENT
Credit risk
Wholesale, retail and finance lease receivables have significant concentrations of credit risk in the agricultural and
construction businesses, the majority of which are in North America. CNH typically retains, as collateral, a security
interest in the equipment associated with wholesale and retail notes receivable. Such risk is mitigated by the large
number of counterparties and customers.
Financial assets are recognized in the statements of financial position net of write-downs for the risk that
counterparties may be unable to fulfill their contractual obligations, determined on the basis of the available
information as to the creditworthiness of the customer and historical data.
Liquidity risk
In the continuing environment of uncertainty in the financial markets, CNH’s policy is to keep a high degree of
flexibility with its funding and investment options in order to maintain its desired level of liquidity. In managing its
liquidity requirements, CNH is pursuing a financing strategy that includes open access to a variety of financing
sources. These sources include U.S. and international capital markets, commercial bank lines, and the funding of
Financial Services with a combination of receivables securitizations, unsecured borrowings, conduit financing, and
other transactions.
The continuation of a difficult economic situation in the markets in which CNH operates and the uncertainties that
characterize the financial markets necessitate giving special attention to the management of liquidity risk. In that
sense measures taken to generate financial resources through operations and to maintain an adequate level of
available liquidity are an important factor in ensuring normal operating conditions and addressing strategic challenges
over the next few years. CNH therefore plans to meet its requirements to settle liabilities as they fall due and to cover
expected capital expenditures by using cash flows from operations and available liquidity, renewing or refinancing
bank loans and making recourse to the bond market and other forms of funding.
Interest rate risk and currency risk
As a multinational company that has operations throughout the world, CNH is exposed to market risks from
fluctuations in foreign currency exchange and interest rates.
The exposure to foreign currency risk arises both in connection with the geographical distribution of CNH’s industrial
activities compared to the markets in which it sells its products, and in relation to the use of external borrowing
denominated in foreign currencies.
The exposure to interest rate risk arises from the need to fund industrial and financial operating activities and the
necessity to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or
decreasing CNH’s net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing
transactions.
CNH regularly assesses its exposure to interest rate and foreign currency risk and manages those risks through the
use of derivative financial instruments in accordance with its established risk management policies.
CNH’s policy permits derivatives to be used only for managing the exposure to fluctuations in exchange and interest
rates connected with future cash flows and assets and liabilities, and not for speculative purposes.
CNH utilizes derivative financial instruments designated as fair value hedges, mainly to hedge:

the currency risk on financial instruments denominated in foreign currency;

the interest rate risk on fixed rate loans and borrowings.
The exchange rate exposure on forecasted commercial flows is hedged by currency swaps, forward contracts and
currency options. Interest rate exposures are usually hedged by interest rate swaps and, in limited cases, by forward
rate agreements.
CNH uses derivative financial instruments as cash flow hedges for the purpose of pre-determining:
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80051616 M 7389676 / 1

the exchange rate at which forecasted transactions denominated in foreign currencies will be accounted for;

the interest paid on borrowings, both to match the fixed interest received on loans (customer financing activity),
and to achieve a pre-defined mix of floating versus fixed rate funding structured loans.
Counterparties to these agreements include certain Fiat Industrial subsidiaries in 2011 and certain Fiat subsidiaries in
2010.
Information on the fair value of derivative financial instruments held at the statement of financial position date is
provided in Note 20, Other financial assets and Other financial liabilities to the consolidated financial statements.
Additional qualitative information on the financial risks to which CNH is exposed is provided in Note 33, Information
on financial risks.
SCOPE OF CONSOLIDATION
The consolidated financial statements of CNH as of December 31, 2011 include CNH Global N.V. and its subsidiaries
in which CNH Global N.V., directly or indirectly, has a majority of the voting rights, over which it exercises control, or
from which it is able to derive benefit by virtue of its power to govern corporate financial and operating policies.
During 2011 the following main changes in the scope of consolidation occurred:

on March 31, 2011, CNH Global N.V. acquired full ownership of L&T – Case Equipment Private Limited
(subsequently renamed Case New Holland Construction Equipment India Private Limited), an unconsolidated
joint venture established in 1999 with Larsen & Toubro Limited to manufacture and sell construction and
building equipment in India. CNH has accordingly applied the acquisition method, consolidating the subsidiary
on a line-by-line basis beginning March 31, 2011; this transaction is further discussed in Note 36. Acquisition of
subsidiaries to the consolidated financial statements;

on October 20, 2011, CNH Global N.V. acquired Fiat Switzerland SA from Fiat; this is a minor company whose
total assets and net revenues are not significant for CNH;

the following subsidiaries, which were at a development stage until December 31, 2010 and whose operations
were not significant, have been consolidated on a line-by-line basis beginning January 1, 2011: CNH-KAMAZ
Industrial B.V., LLC CNH-KAMAZ Commerce, LLC CNH-KAMAZ Industry.
Interests in jointly controlled entities are accounted for using the equity method. Condensed financial information
relating to CNH’s pro-rata interest in the above entity is as follows:
($ million)
Non-current assets
Current assets
TOTAL ASSETS
Debt
Other liabilities
At December 31, 2011
At December 31, 2010
95
352
447
76
146
116
352
468
83
151
The combined amounts of CNH’s share in the principal income statement items of jointly controlled entities accounted
for using the equity method are as follows:
2011
2010
Net revenues
657
599
Operating profit
104
96
Profit before taxes
104
76
81
58
($ million)
Profit
Interests in associates are accounted for using the equity method. The main aggregate amounts related to CNH
interests in associates are as follows:
At December 31, 2011
At December 31, 2010
Total assets
1,636
1,444
Total liabilities
1,385
1,224
($ million)
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COMPOSITION AND PRINCIPAL CHANGES
1. Net revenues
Net revenues may be analyzed as follows:
($ million)
Sales of goods
2011
2010
17,833
14,262
Interest income from customers and other financial income from Financial Services
879
956
Services
247
216
Income on operating leases
167
160
Other
Total Net revenues
215
188
19,341
15,782
2011
2010
2. Cost of sales
Cost of sales comprises the following:
($ million)
Interest cost and other financial expenses from Financial Services
721
869
Other costs of sales
14,950
12,180
Total Cost of sales
15,671
13,049
3. Selling, general and administrative costs
Selling costs amount to $682 million in 2011 ($615 million in 2010) and comprise mainly marketing, advertising, and
sales personnel costs.
General and administrative costs amount to $941 million in 2011 ($801 million in 2010) and comprise mainly
expenses which are not attributable to sales, production and research and development functions.
4. Research and development costs
In 2011, Research and development costs of $396 million ($274 million in 2010) comprise all the research and
development costs not recognized as assets in the year, amounting to $294 million ($194 million in 2010), and the
amortization of capitalized development costs of $102 million ($80 million in 2010). During 2011, CNH incurred new
expenditures for capitalized development costs of $241 million ($265 million in 2010).
5. Other expenses
This item consists of miscellaneous operating costs which cannot be allocated to specific functional areas, such as
indirect taxes and duties, and accruals for various provisions not attributable to other items of Cost of sales or Selling,
general and administrative costs, net of income arising on trading operations which is not attributable to the sale of
goods and services.
In 2010 Other expenses consisted primarily of income of approximately $40 million resulting from changes in the
North American health care plans.
6. Gains on the disposal of investments
The gain of $35 million in 2011 mainly includes mainly $34 million gain resulting from the purchase of additional
ownership interest L&T – Case Equipment Private Limited. See Note 36. Acquisition of subsidiaries to the
consolidated financial statements.
In 2010 this item resulted in a net gain of $6 million which mainly consisted of the gains realized on the sale of the
investment in the joint venture LBX Company LLC.
7. Restructuring costs
Restructuring credit of $3 million in 2011 is due to a change in estimate of prior year reserves.
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8. Financial expenses
In addition to the items included in the specific lines of the income statement, Net financial expenses in 2011 also
includes the Interest income from customers and other financial income of financial services companies included in
Net revenues for $879 million ($955 million in 2010) and Interest expense and other financial charges from Financial
Services included in Cost of sales for $721 million ($869 million in 2010).
A reconciliation to the income statement is provided at the foot of the following table.
2011
($ million)
2010
Financial income:
Interest earned and other financial income
85
36
879
955
964
991
85
36
Interest expense and other financial expenses
870
851
Write-downs of financial assets
215
282
Interest income from customers and other financial income of Financial Services
Total financial income
of which:
Financial income, excluding financial services companies (a)
Interest and other financial expenses:
Interest costs on employee benefits
Total interest and other financial expenses
Net (income)/expenses from derivative financial instruments and exchange losses
Total interest and other financial expenses, net expenses from derivative financial instruments
and exchange losses
of which:
Interest and other financial expenses, effects resulting from derivative financial instruments and
exchange differences, excluding financial services companies (b)
Net financial expenses excluding financial services companies (a) - (b)
74
76
1,159
1,209
(31)
38
1,128
1,247
407
378
(322)
(342)
2011
2010
Interest income and other financial income may be analyzed as follows:
($ million)
Interest income from banks
10
4
Other interest income and financial income
75
32
Total Interest income and other financial income
85
36
Interest cost and other financial expenses may be analyzed as follows:
2011
2010
Interest expenses on bonds
282
193
Bank interest expenses
168
207
Interest expenses on trade payables
1
3
Commission expenses
-
1
Other interest cost and financial expenses
419
447
Total Interest cost and other financial expenses
870
851
($ million)
9. Result from investments
In 2011 the net gain amounting to $118 million (a net gain of $100 million in 2010), represents CNH’s share of the net
profit of the investees accounted for using the equity method.
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10. Income taxes
Income taxes consist of the following:
2011
2010
Total current taxes
307
249
Total deferred taxes
182
35
Taxes relating to prior periods
(72)
(72)
Total Income taxes
417
212
($ million)
Overall, the increase in the charge for current taxes in 2011 with respect to 2010 is due mainly to an increase in
taxable profits.
Taxes relating to prior periods include the costs arising from certain disputes with tax authorities net of the income
resulting from the reversal of various provisions.
The effective tax rate for 2011 was 29% (effective tax rate of 28% in 2010).
The reconciliation between the tax charges recorded in the consolidated financial statements and the tax charge
calculated on the basis of the statutory tax rate in effect in The Netherlands, is the following:
($ million)
2011
2010
Income taxes at Staturory rate
Tax effect of permanent differences
Taxes relating to prior years
Difference between foreign tax rates and the statutory tax rate
Deferred taxes relating to prior years
Deferred tax assets not recognized
Other differences
Current and deferred income taxes recognized in the financial statements
396
(66)
68
(21)
21
19
417
193
(41)
6
81
(44)
24
(7)
212
Permanent differences in the above reconciliations include the tax effect of non-taxable income of ($52) million in
2011 (($41) million in 2010) and other items of ($14) million in 2011 (zero in 2010).
Deferred tax assets had an overall zero effect on the reconciliation in 2011 as the result of the non-recognition of
deferred tax assets on temporary differences and tax losses arising during the year of $21 million, which was fully
offset by the recognition of previously unrecognized deferred tax assets of $21 million.
Other differences included unrecoverable withholding tax for $30 million in 2011 ($25 million in 2010).
Net deferred tax assets at 31 December 2011 consist of deferred tax assets, net of deferred tax liabilities, which have
been offset where possible by the individual consolidated companies. The net balance of Deferred tax assets and
Deferred tax liabilities may be analyzed as follows:
($ million)
Deferred tax assets
Deferred tax liabilities
Total
At December 31, 2011
At December 31, 2010
725
(120)
605
877
(69)
808
The decrease in net deferred tax assets by $203 million, as analyzed in the following table, is mainly due to the
following:

for $184 million recorded in the income statement for the utilization, net of valuation allowances, of deferred tax
assets/liabilities recognized on temporary differences and tax losses arising during the year;

for $11 million relating to the negative tax effect of items recognized directly in equity; and

for $30 million relating to foreign exchange differences ($42 million) and other changes (($12) million).
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Deferred tax assets, net of Deferred tax liabilities may be analyzed by source as follows:
($ million)
Deferred tax assets arising from:
Provisions
Inventories
Allowances for doubtful accounts
Provision for employee benefits
Intangible assets
Write-downs of financial assets
Measurement of derivative financial
instruments
Other
Total Deferred tax assets
At
December 31, 2010
Recognized
in income
statement
486
127
191
481
18
122
(21)
(52)
(52)
-
31
184
1,518
9
(86)
(80)
Translation
differences
and other
changes
Charged to
equity
-
At
December 31, 2011
(17)
(2)
(10)
(2)
-
591
104
129
427
1
(1)
(31)
41
97
1,407
-
4
-
(375)
(99)
(23)
(230)
(199)
(926)
-
-
18
Deferred tax liabilities arising from:
Deferred tax on gains on disposal
Inventories
Provision for employee benefits
Capitalization of development costs
Other
Total Deferred tax liabilities
Theoretical tax benefit arising from tax loss
carry forwards
Adjustments for assets whose recoverability
is not probable
Total Deferred tax assets, net of Deferred
tax liabilities
(338)
(95)
(5)
(196)
(201)
(835)
(41)
(4)
(3)
(36)
(37)
(121)
11
11
(15)
2
28
19
937
(323)
-
(15)
599
(812)
340
-
(3)
(475)
808
(184)
-
(30)
605
The decision to recognize Deferred tax assets is taken for each company of CNH by assessing whether the
conditions exist for the future recoverability of such assets on the basis of updated strategic plans, accompanied by
the related tax plans. For this reason, the total theoretical future tax benefits arising from deductible temporary
differences ($1,407 million at December 31, 2011 and $1,518 million at December 31, 2010) and tax loss carry
forwards ($599 million at December 31, 2011 and $937 million at December 31, 2010) have been reduced by $475
million at December 31, 2011 and by $812 million at December 31, 2010.
In particular, deferred tax assets, net of Deferred tax liabilities, include $244 million at December 31, 2011 ($268
million at December 31, 2010) of tax benefits arising from tax loss carry forwards. At December 31, 2011, a further
tax benefit of $355 million ($669 million at December 31, 2010) resulting from tax loss carry forwards has not been
recognized.
Deferred taxes have not been provided on the undistributed earnings of subsidiaries since CNH is able to control the
timing of the distribution of these reserves and it is probable that they will not be distributed in the foreseeable future.
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The totals of deductible and taxable temporary differences and accumulated tax losses at December 31, 2011,
including losses for which deferred tax assets have not been recognized, analyzed by year of expiry, are as follows:
($ million)
Temporary differences and tax losses relating to State
taxation (IRES in the case of Italy):
Year of expiry
Unlimited/
Beyond indetermin
2015
able
Total
at December 31,
2011
2012
2013
2014
2015
4,093
(2,601)
1,866
2,247
(349)
-
366
(563)
-
366
(563)
-
366
(563)
-
748
(563)
-
1,866
(2,181)
(235)
(38)
(38)
(38)
(78)
(1,754)
1,177
1,663
(235)
(235)
(235)
107
112
839
-
-
-
-
-
839
839
-
-
-
-
-
839
Deductible temporary differences
Taxable temporary differences
Tax losses
Temporary differences and tax losses for which deferred
tax assets have not been recognized
Temporary differences and tax losses relating to State
taxation
Temporary differences and tax losses relating to local
taxation (IRAP in the case of Italy):
Tax losses
Temporary differences and tax losses relating to local
taxation
11. Other information by nature
The income statement includes personnel costs for $2,393 million in 2011 ($1,970 million in 2010).
An analysis of the average number of employees by category is as follows:
Managers
White-collar
Blue-collar
Average number of employees
2011
2010
485
10,699
19,732
30,916
475
9,667
18,315
28,457
12. Earnings per share
CNH reflects potential ordinary shares in its computation of diluted weighted average shares outstanding when
applicable and when inclusion is not anti-dilutive. The effect of dilutive securities is calculated using the treasury stock
method.
The following table presents the numerator and denominator of the basic and diluted earnings per share
computations for the years ended December 31, 2011 and 2010:
2011
2010
$1,038
$558
Weighted average ordinary shares outstanding – basic
239.4
237.8
Basic earnings per ordinary share
$4.33
$2.35
($ million, except per share data)
Basic:
Profit attributable to CNH Global N.V.
Diluted:
Profit attributable to CNH Global N.V.
Weighted average ordinary shares outstanding – basic
Effect of diluted securities (when dilutive):
Stock compensation plans (A)
$1,038
$558
239.4
237.8
1.0
0.8
Weighted average ordinary shares outstanding – diluted
240.4
238.6
Diluted earnings per ordinary share
$4.32
$2.34
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13. Intangible assets
In 2011, changes in the gross carrying amount of Intangible assets were as follows:
Translation
differences
At
and other
At
December 31, 2010 Additions Divestitures
changes December 31, 2011
($ million)
2,979
Goodwill
Trademarks and other intangible assets with indefinite useful lives
Development costs internally generated
Patents, concessions and licenses externally acquired
Other intangible assets externally acquired
Total gross carrying amount of Intangible assets
-
-
3,005
26
292
-
-
-
292
1,170
241
(4)
(28)
1,379
384
-
-
(2)
382
475
33
-
20
528
5,300
274
(4)
16
5,586
In 2011, changes in accumulated amortization and impairment losses were as follows:
Translation
differences
and other
Amortization Divestitures
changes
At
December 31,
2010
($ million)
At
December 31,
2011
649
-
-
-
649
60
-
-
-
60
Development costs internally generated
523
102
(3)
(12)
610
Patents, concessions and licenses externally acquired
236
17
-
(3)
250
Other intangible assets externally acquired
Total accumulated amortization and impairment of Intangible
assets
342
41
-
(4)
379
1,810
160
(3)
(19)
1,948
Goodwill
Trademarks and other intangible assets with indefinite useful lives
In 2011, changes in the net carrying amount of Intangible assets were as follows:
($ million)
Goodwill
Trademarks and other intangible assets with indefinite useful
lives
Translation
At
differences
December 31,
and other
2010
Additions Amortization Divestitures
changes
2,330
-
-
-
At
December
31, 2011
26
2,356
232
-
-
-
-
232
Development costs internally generated
647
241
(102)
(1)
(16)
769
Patents, concessions and licenses externally acquired
148
-
(17)
-
1
132
Other intangible assets externally acquired
Total net carrying amount of Intangible assets
133
33
(41)
-
24
149
3,490
274
(160)
(1)
35
3,638
The Foreign exchange loss of $30 million in 2011 (loss of $3 million in 2010) principally reflects the appreciation of
the U.S. Dollar against the Euro.
In 2011, the column Translation differences and other changes also includes net goodwill of $35 million arising from
the line-by-line consolidation of L&T – Case Equipment Private Limited.
Goodwill
Goodwill is allocated to CNH’s cash-generating units (“CGUs”).
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The cash generating units to which goodwill has been allocated consist of the following product lines:
Amount allocated
to goodwill
at December 31, 2011
($ million)
Agricultural Equipment
1,635
Construction Equipment
593
Financial Services
128
Total net carrying amount of goodwill
2,356
To determine the recoverable amount of these cash-generating units, CNH utilized two valuation techniques: the
income approach and the market approach.
The income approach is a valuation technique used to convert future expected cash flows to a present value. CNH
used the income approach to measure the value in use of the Equipment Operations reporting units. CNH believes
the income approach provides the best measure of value in use for Equipment Operations reporting units as this
approach considers factors unique to each of reporting units and related long range plans that may not be
comparable to other companies and that are not yet publicly available. The income approach is dependent on several
critical management assumptions, including estimates of future sales growth, gross margins, operating costs, income
tax rates, terminal value growth rates, capital expenditures, changes in working capital requirements and the
weighted average cost of capital (discount rate). Discount rate assumptions are based on an assessment of the risks
inherent in the future cash flows of the respective reporting units. The following discount rates before taxes as of
December 31, 2011 were selected by CNH:
2011
2010
Agricultural Equipment
18.8%
17.0%
Construction Equipment
17.0%
17.4%
Expected cash flows used under this method are developed in conjunction with the budgeting and forecasting
process of CNH and represent the most likely amounts and timing of future cash flows based on the long range plan
of CNH. The long range plan, which is updated annually and is reviewed by the senior management of CNH,
includes, among other things, the expected benefits of planned manufacturing and product development actions as
well as expectations regarding product pricing, market share and commodity costs, consistent with the assumptions
reflected in Fiat Group's Strategic Plan, as prudently revised down or up, if necessary, for expected changes in
market conditions. CNH uses eight years of expected cash flows as management believes that this period generally
reflects the underlying market cycles for its businesses.
A terminal value is included at the end of the projection period used in the discounted cash flow analyses in order to
reflect the remaining value that each cash-generating unit is expected to generate. The terminal value represents the
present value in the last year of the projection period of all subsequent cash flows into perpetuity. The terminal value
growth rate is a key assumption used in determining the terminal value as it represents the annual growth of all
subsequent cash flows into perpetuity. The terminal value growth rate selected in 2011 and 2010 for the Agricultural
Equipment cash-generating unit was 1% and that selected for the Construction Equipment cash generating unit
was 2%.
The market approach measures the fair value of the cash-generating units based on prices generated by market
transactions involving identical or comparable assets or liabilities. CNH used the market approach to measure the fair
value of the Financial Services reporting unit as it derives value based primarily on the assets under management.
Under this approach, CNH makes use of market price data of corporations whose stock is actively traded in a public,
free and open market, either on an exchange or over-the counter basis. Although it is clear that no two companies
are entirely alike, the corporations selected as guideline companies must be engaged in the same or similar line of
business or be subject to similar financial and business risks, including the opportunity for growth. The guideline
company method of the market approach provides an indication of fair value by relating the equity or invested capital
(debt plus equity) of guideline companies to various measures of their earnings and cash flow, then applying such
multiples to the business being valued.
At 31 December 2011, the recoverable amounts of each of the three cash-generating units and assets with indefinite
useful life calculated using the above methods substantially exceeded the respective carrying values.
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80051616 M 7389676 / 1
Trademarks and intangible assets with indefinite useful life
Trademarks and Other intangible assets with indefinite useful life consist of acquired trademarks and similar rights
which have no legal, contractual, competitive or economic factors that limit their useful lives. For the purposes of
impairment testing, these assets were attributed to the respective cash-generating units without the need for any
recognition of impairment.
Development costs
The amortization of development costs and impairment losses are reported in the income statement as Research and
development costs.
Development costs recognized as assets are attributed to cash generating units and are tested for impairment
together with the related tangible fixed assets, using the discounted cash flow method for determining their
recoverable amount.
14. Property, plant and equipment
In 2011, changes in the gross carrying amount of Property, plant and equipment were as follows:
At
December
31, 2010
($ million)
Land
Owned industrial buildings
Industrial buildings leased under finance leases
Total Industrial buildings
Owned plant, machinery and equipment
Plant, machinery and equipment leased under finance
leases
Additions
Translation
differences
Divestitures
At
December
31, 2011
Other
changes
109
-
-
(2)
4
111
1,293
56
(26)
(55)
91
1,359
6
1
-
-
(1)
6
1,299
57
(26)
(55)
90
1,365
2,356
94
(60)
(98)
198
2,490
13
-
-
-
-
13
2,369
94
(60)
(98)
198
2,503
Owned other tangible assets
412
16
(66)
(7)
46
401
Advances and tangible assets in progress
Total gross carrying amount of Property, plant and
equipment
194
246
-
(4)
(269)
167
4,383
413
(152)
(166)
69
4,547
Total Plant, machinery and equipment
In 2011, changes in accumulated depreciation were as follows:
($ million)
Owned industrial buildings
Industrial buildings leased under finance
leases
Total Industrial buildings
Owned plant, machinery and equipment
Plant, machinery and equipment leased
under finance leases
Total Plant, machinery and equipment
Owned other tangible assets
Total accumulated depreciation and
impairment of Property, plant and
equipment
At December
31, 2010
Depreciation
686
Translation
differences
Divestitures
57
(23)
Other
changes
At December
31, 2011
(21)
(1)
698
4
-
-
-
(3)
1
690
57
(23)
(21)
(4)
699
1,617
160
(58)
(59)
1
1,661
10
1
-
-
-
11
1,627
161
(58)
(59)
1
1,672
297
28
(66)
(4)
-
255
2,614
246
(147)
(84)
(3)
2,626
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In 2011, changes in the net carrying amount of Property, plant and equipment were as follows:
($ million)
At December
31, 2010
Land
Owned industrial buildings
Industrial buildings leased under finance
leases
Additions
Depreciation
Translation
differences
Divestitures
Other
changes
At December
31, 2011
109
-
-
-
(2)
4
111
607
56
(57)
(3)
(34)
92
661
2
1
-
-
-
2
5
609
57
(57)
(3)
(34)
94
666
739
94
(160)
(2)
(39)
197
829
3
-
(1)
-
-
-
2
Total Plant, machinery and equipment
742
94
(161)
(2)
(39)
197
831
Owned other tangible assets
115
16
(28)
-
(3)
46
146
Advances and tangible assets in progress
Total net carrying amount of Property,
plant and equipment
194
246
-
-
(4)
(269)
167
1,769
413
(246)
(5)
(82)
72
1,921
Total Industrial buildings
Owned plant, machinery and equipment
Plant, machinery and equipment leased
under finance leases
The column Other changes includes the reclassification of the prior year balances for Advances and tangible assets
in progress to the appropriate categories when the assets were effectively acquired and put into operation.
15. Investments
($ million)
At December 31, 2011
At December 31, 2010
504
486
Investments accounted for using the equity method
Investments at cost
Total Investments
5
6
509
492
Investments
Changes in Investments in 2011 are set out below:
($ million)
At December
31,
2010
Investments in unconsolidated subsidiaries
Disposals
and other
changes
Translation
differences
Revaluations/
At December
31,
2011
6
-
(1)
-
5
Investments in jointly controlled entities
203
83
(20)
(70)
196
Investments in associates
283
35
5
(15)
308
Total Investments
492
118
(16)
(85)
509
Disposals and other changes, a reduction of $85 million in 2011, mainly consists of a decrease of $13 million due to
the line-by-line consolidation of L&T – Case Equipment Private Limited, and a decrease of $59 million as the result of
the distribution of dividends by companies accounted for using the equity method. The item Investments in jointly
controlled entities comprises the following:
At December 31, 2011
At December 31, 2010
% of interest
($ million)
Turk Traktor Ve Ziraat Makineleri A.S.
37.5
112
37.5
105
New Holland HFT Japan Inc.
50.0
54
50.0
44
CNH de Mexico SA de CV
50.0
25
50.0
28
Other
Total Investments in jointly controlled entities
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80051616 M 7389676 / 1
% of interest
($ million)
5
26
196
203
The item Investments in associates comprises the following:
At December 31, 2011
At December 31, 2010
% of interest
($ million)
% of interest
($ million)
Kobelco Construction Machinery Co. Ltd.
20.0
185
20.0
161
CNH Capital Europe S.a.S.
49.9
89
49.9
88
Al-Ghazi Tractors Ltd.
43.2
31
43.2
29
Other
Total Investments in associates
3
5
308
283
At December 31, 2011, the stock market quotation of Investments in listed jointly controlled entities and listed
associates is as follows:
($ million)
Turk Traktor Ve Ziraat Makineleri A.S.
Al-Ghazi Tractors Ltd.
Total Investments in listed jointly controlled entities and associates
Carrying value
Stock market
quotation
112
358
31
40
143
398
16. Leased assets
CNH leases certain assets, mainly their own products, as part of its Financial Services business. This item changed
as follows in 2011:
($ million)
Gross carrying amount
Less: Depreciation and impairment
Net carrying amount of Leased assets
At
December
31, 2010
Additions
Disposals
and other
changes
Translation
differences
Depreciation
At
December
31, 2011
819
394
-
(5)
(354)
854
(197)
-
(115)
-
124
(188)
622
394
(115)
(5)
(230)
666
At December 31, 2011 minimum lease payments from non-cancellable operating leases amount to $196 million
($241 million at December 31, 2010) and fall due as follows:
At December 31, 2011 At December 31, 2010
($ million)
Within one year
96
111
Between one and five years
99
128
Beyond five years
Total Minimum lease payments
1
2
196
241
17. Inventories
At December 31, 2011 At December 31, 2010
($ million)
Raw materials, supplies and finished goods
3,706
2,983
Total Inventories
3,706
2,983
At December 31, 2011, Inventories include assets which are no longer subject to operating lease arrangements and
are held for sale for $57 million ($60 million at December 31, 2010). Excluding this item, Inventories increased by
$727 million in 2011.
At December 31 2011, Inventories include those measured at net realizable value (estimated selling price less cost to
sell) amounting to $212 million ($803 million at December 31, 2010).
The provision to inventory reserve is $59 million in 2011($36 million in 2010). Amounts recognized as income from
the reversal of write-downs on items sold during the year were not significant.
There were no inventories pledged as security at December 31, 2011 and 2010.
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18. Current receivables and Other current assets
The composition of the caption is as follows:
At December 31, 2011
($ million)
Trade receivables
At December 31, 2010
445
471
13,784
13,381
878
747
Other current receivables
640
586
Accrued income and prepaid expenses
125
144
765
730
15,872
15,329
Receivables from financing activities
Current tax receivables
Other current assets:
Total Other current assets
Total Current receivables and Other current assets
The analysis by due date is as follows:
At December 31, 2011
($ million)
Trade receivables
Receivables from financing activities
Current tax receivables
Other current receivables
Total Current receivables
At December 31, 2010
due
due due between beyond
within one and five
five
Total one year
years
years
Total
due due between
within one and five due beyond
one year
years
five years
296
-
149
445
337
7
7,588
5,646
550
13,784
7,068
5,118
871
7
-
878
739
6
560
46
34
640
454
110
9,315
5,699
733
15,747
8,598
5,241
127
471
1,195 13,381
2
747
22
586
1,346 15,185
At December 31, 2011, Current receivables include receivables sold and financed through both securitization and
factoring transactions of $10,902 million ($10,133 million at December 31, 2010) which do not meet IAS 39
derecognition requirements. These receivables are recognized as such in the Company’s consolidated financial
statements even though they have been legally sold; a corresponding financial liability is recorded in the consolidated
statements of financial position as Asset-backed financing (see Note 27. Debt to the consolidated financial
statements).
Trade receivables
Trade receivables are shown net of allowances for doubtful accounts of $63 million at December 31, 2011
($62 million at December 31, 2010), determined on the basis of historical losses on receivables. Changes in the
allowance accounts during 2011 are as follows:
($ million)
At December 31, 2010
Provision
62
Allowances for doubtful accounts
36
Use and other
changes
(35)
At December 31, 2011
63
The carrying amount of Trade receivables approximates their fair value at the date.
Receivables from financing activities
Receivables from financing activities include the following:
At December 31, 2011
($ million)
Retail financing
Finance leases
Dealer financing
Other
Total Receivables from financing activities
8,487
311
4,959
27
13,784
At December 31, 2010
8,272
494
4,598
17
13,381
Total Receivables from financing activities increased by $403 million over the period, mainly due to increase in Dealer
and Retail financing in North America.
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Receivables from financing activities are shown net of an allowance for doubtful accounts determined on the basis of
specific insolvency risks. At December 31, 2011 the allowance amounts to $344 million ($533 million at December
31, 2010). Changes in the allowance accounts during the years considered are as follows:
At
December
31, 2010
($ million)
Use and
other
changes
Provision
At
December
31, 2011
Allowance for receivables:
Retail financing
408
198
(359)
247
Finance leases
14
9
(5)
18
Dealer financing
111
9
(41)
79
Total allowance on Receivables from financing activities
533
216
(405)
344
Finance lease receivables relate to equipment leased under finance lease arrangements. The interest rate implicit in
the lease is determined at the commencement of the lease for the whole lease term. The average interest rate implicit
in total finance lease receivables varies depending on prevailing market interest rates.
The item may be analyzed as follows stated gross of an allowance of $18 million at December 31, 2011 ($14 million
at December 31, 2010):
At December 31, 2011
($ million)
Receivables for future minimum lease payments
Less: unrealized interest income
Present value of future minimum lease
payments
due
due due between beyond
within one and five
five
one year
years
years
due
within
one
Total
year
At December 31, 2010
due
between
one and
due
five
beyond
years five years Total
178
184
4
366
260
284
5
549
14
23
-
37
17
25
-
42
164
161
4
329
243
259
5
507
No contingent rents were recognized as finance lease during 2011 or 2010 and unguaranteed residual values at
December 31, 2011 and 2010 are not significant.
Receivables for dealer financing are typically generated by sales and are generally managed under dealer network
financing programs as a component of the portfolio of Financial Services. These receivables are interest bearing, with
the exception of an initial limited, non-interest bearing period. The contractual terms governing the relationships with
the dealer networks vary from sector to sector and from country to country, although payment terms range from two
to six months.
The fair value of receivables from financing activities at December 31, 2011 amounts to $14,241 million
($13,620 million at December 31, 2010) and has been calculated using a discounted cash flow method based on the
following discount rates, adjusted, where necessary, to take account of the specific risk of insolvency of the
underlying financial instrument.
(In %)
EUR
USD
GBP
CAD
AUD
BRL
PLN
Interest rate for six months
1.62
0.81
1.38
1.45
4.43
10.16
5.00
Interest rate for one year
1.95
1.13
1.87
1.65
3.88
10.04
4.88
Interest rate for five years
1.73
1.23
1.57
1.46
4.31
10.74
4.81
Other current assets
At December 31, 2011, Other current assets mainly consist of Other tax receivables for VAT and other indirect taxes
of $495 million ($427 million at December 31, 2010), Receivables from employees of $7 million ($8 million
at December 31, 2010) and Accrued income and prepaid expenses of $125 million ($144 million at December 31,
2010).
At December 31,2011, the carrying amount of Other current assets approximates their fair value.
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19. Current securities
Current securities consist of short-term or marketable securities which represent temporary investments, but which do
not satisfy all the requirements for being classified as cash equivalents. In particular:
At December 31, 2011
($ million)
At December 31, 2010
Current securities available-for-sale
88
32
Total Current securities
88
32
This item includes investments of $80 million held in Brazilian sovereign bonds purchased by CNH. These securities,
known as LTFs (Letra Financeira do Tesouro), have maturities between 2013 and 2015, bear interest at a variable
rate and may be readily traded as they are listed on liquid markets.
20. Other financial assets and Other financial liabilities
These items consist of derivative financial instruments measured at fair value at statement of financial position date.
Specifically:
At December 31, 2011
Positive fair
Negative fair
value
value
($ million)
At December 31, 2010
Positive fair Negative fair
value
value
Fair value hedges:
Interest rate risk - Interest rate swaps
Total Fair value hedges
73
-
14
(16)
73
-
14
(16)
23
(85)
42
(62)
-
(19)
13
(17)
23
(104)
55
(79)
16
(16)
30
(49)
112
(120)
99
(144)
Cash flow hedges:
Currency risks - Forward contracts and Currency swaps
Interest rate risk - Interest rate swaps
Total Cash flow hedges
Undesignated hedges
Other financial assets/(liabilities)
The fair value of derivative financial instruments is determined by taking into consideration market parameters at the
balance sheet date and using valuation techniques widely accepted in the financial business environment. In
particular:

the fair value of forward contracts and currency swaps is determined by taking the prevailing exchange rate
and interest rates in the two currencies at the balance sheet date;

the fair value of interest rate swaps and forward rate agreements is determined by using the discounted cash
flow method;
The overall increase in Other financial assets from $99 million at December 31, 2010 to $112 million at December 31,
2011, and decrease in Other financial liabilities from $144 million at December 31, 2010 to $120 million at December
31, 2011 is mostly due to changes in exchange rates and interest rates during the year.
As this item consists of hedging instruments, the change in their value is compensated by the change in the value of
the hedged item.
Undesignated hedge derivatives consist principally of derivatives (mostly currency based derivatives) acquired to
hedge receivables and payables subject to currency risk and/or interest rate risk which are not formally designated as
hedges at CNH.
At December 31, 2011, the notional amount of outstanding derivative financial instruments is as follows:
At December 31, 2011
($ million)
At December 31, 2010
Currency risk management
4,100
4,200
Interest rate risk management
3,800
4,000
Total notional amount
7,900
8,200
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The following table provides an analysis by due date of outstanding derivatives financial instruments at December 31,
2011 based on their notional amounts:
($ million)
At December 31, 2011
due within one due between one due beyond five
year
and five years
years
Currency risk management
Interest rate risk management
Total notional amount
Total
4,000
100
-
4,100
800
2,000
1,100
3,800
4,800
2,100
1,100
7,900
Cash flow hedges
The effects arising on the income statement mainly refer to the management of the currency risk and, to a lesser
extent, to the hedges relating to the debt of Financial Services.
CNH's policy for managing currency risk normally requires that a portion of future cash flows from trading activities
which will occur for accounting purposes within the following twelve months, and from orders acquired (or contracts in
progress), whatever their due dates, be hedged. As a result, it is reasonable to estimate that the hedging effect
arising from the cash flow hedges reserve will be recognized in income, mainly during the following year.
Where a derivative financial instrument is designated as a hedge of the exposure to variability in cash flows of a
recognized asset or liability or a highly probable forecasted transaction and could affect the income statement, the
effective portion of any gain or loss on the derivative financial instrument is recognized directly in Other
comprehensive income. The cumulative gain or loss is transferred from other comprehensive income and recognized
in the income statement at the same time as the economic effect arising from the hedged item affects income. The
gain or loss associated with a hedge or part of a hedge that has become ineffective is recognized in the Income
statement immediately. When a hedging instrument or hedge relationship is terminated but the hedged transaction is
still expected to occur, the cumulative gain or loss realized to the point of termination remains in Other
comprehensive income and is recognized at the same time as the related transaction occurs. If the hedged
transaction is no longer probable, the cumulative unrealized gain or loss held in other comprehensive income is
recognized in the Income statement immediately.
In 2011 CNH transferred to income losses of $5 million ($85 million in 2010), net of tax effect, previously recognized
directly in Other comprehensive income presented in the following line items:
($ million)
2011
2010
Currency risk:
Decrease in Net revenues
Decrease/(Increase) in Cost of sales
Financial expenses
(26)
50
(6)
(15)
(20)
(29)
Interest rate risk:
Financial expenses
(26)
(48)
3
(5)
27
(85)
Income tax benefit
Total recognized in the income statement
The ineffectiveness of cash flow hedges was not material in 2011 or 2010.
Fair value hedges
The gains and losses arising from the valuation of interest rate and currency derivatives (mostly for managing
currency risk) and interest rate derivatives (for managing the interest rate risk) recognized in accordance with fair
value hedge accounting and the gains and losses arising from the respective hedged items are set out in the
following table:
2011
($ million)
2010
Interest rate risk:
Net gains/(losses) on qualifying hedges
Fair value changes in hedged items
Net gains
76
(3)
(75)
3
1
-
The ineffective portion of transactions treated as fair value hedges in 2011 was not significant in 2011 and 2010.
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21. Cash and cash equivalents
Cash and cash equivalents include:
($ million)
At December 31, 2011
At December 31, 2010
2,048
3,586
Cash at banks
Restricted cash
Total Cash and cash equivalents
941
914
2,989
4,500
Amounts shown are readily convertible into cash and are subject to an insignificant risk of changes in value. The
carrying amount of cash and cash equivalents is considered to approximate their fair value at the balance sheet date.
Restricted cash mainly consists of amounts whose use is restricted to the repayment of the debt relating to
securitizations classified as Asset-backed financing.
The credit risk associated with Cash and cash equivalents is considered not significant, because it mainly relates to
deposits spread across primary national and international financial institutions.
22. Deposits in Fiat Industrial/Fiat subsidiaries' cash management pools
CNH participates in a group-wide cash management system with Fiat Industrial. Under this system, operated by Fiat
Industrial treasury subsidiaries in a number of jurisdictions, the cash balances of Fiat Industrial and its subsidiaries,
including CNH, are aggregated at the end of each business day in central pooling accounts (the Fiat Industrial
treasury subsidiaries’ cash management pools). CNH’s positive cash deposits, if any, at the end of each business
day may be invested by Fiat Industrial treasury subsidiaries in highly rated, highly liquid money market instruments or
bank deposits or applied by Fiat Industrial treasury subsidiaries to meet financial needs of other Fiat Industrial
subsidiaries and vice versa. Deposits with Fiat Industrial treasury subsidiaries earn interest at LIBOR plus 0.15%.
Interest earned on CNH’s deposits with Fiat Industrial treasury subsidiaries included in finance and interest income
was approximately $31 million in 2011. The equivalent amount was approximately $44 million in the year ended
December 31, 2010 under the group-wide cash management system with Fiat.
Further to the demerger, CNH entered into new cash management arrangements with Fiat Industrial treasury
subsidiaries effective on January 1, 2011. The cash deposits in Fiat treasury subsidiaries’ cash management pools as
of December 31, 2010 were transferred to Fiat Industrial treasury subsidiaries’ cash management pools on January 1,
2011. Accordingly, no cash residual balances were outstanding with Fiat treasury subsidiaries’ cash management
system pools as of close of business January 1, 2011.
The terms and conditions applicable to Fiat Industrial’s cash management pools at the time of the demerger were
substantially the same as the terms and conditions governing Fiat cash management pools as of the same date.
23. Assets held for sale
At December 31, 2011 and 2010, Assets held for sale include certain buildings and land.
The items included in Assets held for sale may be summarized as follows:
At December 31, 2011 At December 31, 2010
($ million)
Property, plant and equipment
11
11
Total Assets
11
11
24. Equity
Consolidated equity at December 31, 2011 increased by $693 million from December 31, 2010. The increase in
equity is due to the profit for the year of $1,038 million, partially offset by the decrease in the translation reserve of
$399 million arising from changes in the exchange rates used to translate the financial statements of subsidiaries
denominated in currencies other than U.S. dollars.
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Share capital
During the years ended December 31, 2011 and 2010, changes in CNH ordinary shares issued were as follows:
Ordinary Shares
(in thousands)
Issued as of beginning of year
2011
2010
238,588
237,553
Issuances of CNH Ordinary Shares:
Shares issued to Directors
Share-based compensation
Issued as of end of year
32
6
1,251
1,029
239,871
238,588
Policies and processes for managing capital
The Company’s Articles of Association provide that the authorized share capital of the Company amounts to one
billion three hundred fifty million Euros (€1,350,000,000), divided into four hundred million (400,000,000) ordinary
shares and two hundred million (200,000,000) Series A preference shares of nominal value two Euro and twenty-five
Euro cent (€2.25) each. Where shares of a particular class are subscribed at a higher amount than the nominal value,
the difference between such amounts shall be carried to the share premium reserve of that class. The general
meeting of the Company’s shareholders or, alternatively, the Board of Directors (if it has been designated to do so by
the general meeting of shareholders) has the authority to resolve on any further issue of shares. As of December 31,
2011 there were 239,716,408 ordinary shares outstanding and no Series A preference shares outstanding.
Additional paid-in capital at December 31, 2011 was $6,351 million. The Company’s total equity as of December 31,
2011 (including ordinary and preferred shares, paid-in capital, treasury stock, retained earnings, accumulated other
comprehensive loss, and non-controlling interests) was $8,588 million and $7,895 million as of December 31, 2010.
The general meeting of shareholders shall have the power to pass a resolution to reduce the Company’s issued
share capital by the cancellation of shares or by reducing the amount of shares by means of an amendment to the
Company’s Articles of Association. For a resolution to reduce the capital a majority of at least two-thirds of the votes
cast shall be required, if less than one half of the issued capital is represented at the meeting of shareholders.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. In light of the difficult
economic conditions and significant market uncertainty and in order to strengthen the Company’s balance sheet with
a view toward achieving investment grade rating, in 2009, 2010 and 2011 the Board of Directors recommended, and
the shareholders approved, that no dividend be paid to shareholders.
The Company’s objectives when managing capital are to create value for shareholders as a whole, safeguard
business continuity and support the growth of the Company’s subsidiaries and to maintain an optimal capital structure
to reduce the overall cost of capital. As a result, the Company seeks to maintain an adequate level of capital that at
the same time enables it to obtain satisfactory economic return for its shareholders and facilitate its subsidiaries
access to external sources of funds, including by means of achieving an adequate credit rating. The Company’s
capital is managed by the Treasurer who reports to our Chief Financial Officer and also works closely with the
Treasurer of Fiat Industrial.
CNH participates in a group-wide cash management system with other companies within the Fiat Industrial Group.
CNH’s positive cash deposits with Fiat Industrial, if any, are either invested by Fiat Industrial treasury subsidiaries in
highly rated, highly liquid money market instruments or bank deposits, or may be applied by Fiat Industrial treasury
subsidiaries to meet the financial needs of other Fiat Industrial Group members and vice versa. At December 31,
2011, the Company’s cash and cash equivalents include approximately $4.1 billion of cash deposited in the Fiat
Industrial treasury subsidiaries’ cash management pools, compared with $1.8 billion of cash deposited in the Fiat
Treasury subsidiaries’ cash management pools at the end of 2010. The total amount deposited in the Fiat Industrial
treasury subsidiaries’ cash management pools as of December 31, 2011, included $1.8 billion deposited by our
subsidiaries in the United States and in Canada and $2.3 billion deposited by certain of our European subsidiaries.
For further information regarding our liquidity and capital resources, see “Item 5.B. Liquidity and Capital Resources”
in the Company’s annual report prepared in accordance with U.S. GAAP on Form 20-F for the year ended December
31, 2011.
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Other comprehensive income
Other comprehensive income may be analyzed as follows:
2011
2010
(65)
(96)
8
112
(57)
16
Gains on the remeasurement of available-for-sale financial assets arising during the year
-
1
Gains on the remeasurement of available-for-sale financial assets
-
1
Exchange losses/(gains) on translating foreign operations arising during the year
(400)
144
Exchange losses/(gains) on translating foreign operations
(400)
144
(2)
-
($ million)
Losses on cash flow hedging instruments arising during the year
Gains on cash flow hedging instruments reclassified to profit or loss
Losses/(Gains) on cash flow hedging instruments
Other change
Tax effect of the other components of Other comprehensive income/(loss)
Total Other comprehensive income/(loss), net of tax
11
(7)
(448)
154
The tax effect relating to Other comprehensive income/ (loss) may be analyzed as follows:
2011
($ million)
Gains/(losses) on cash flow hedging
instruments
Gains on the remeasurement of available-forsale financial assets
Exchange gains/(losses) on translating foreign
operations
Pre- tax
amount
Net balance
Tax expense Net balance
(57)
11
(46)
16
(7)
9
-
-
-
1
-
1
(400)
-
(400)
144
-
144
(2)
-
(2)
-
-
-
(459)
11
(448)
161
(7)
154
Other changes
Total Other comprehensive income/(loss)
Tax benefit
2010
Pre-tax
amount
Non-controlling interest
The non-controlling interest amounts to $71 million at December 31, 2011 ($84 million at December 31, 2010).
Share-based compensation
Stock Option plans linked to CNH Global N.V. ordinary shares
CNH Global N.V. (“CNH”) has granted share-based compensation to director’s officers and employees which are
linked to shares and which have the following terms.
The CNH Global N.V. Directors’ Compensation Plan (“CNH Directors’ Plan”)
This plan provides for the payment of the following to eligible members of the CNH Global N.V. Board in the form of
cash, and/or ordinary shares of CNH, and/or options to purchase ordinary shares of CNH, provided that such
members do not receive salary or other employment compensation from Fiat Industrial S.p.A., CNH Global N.V., Fiat
S.p.A., and their subsidiaries and affiliates:

an annual retainer fee of 100,000 USD;

an Audit Committee membership fee of 20,000 USD;

a Corporate Governance and Compensation Committee membership fee of 15,000 USD;

an Audit Committee chair fee of 35,000 USD; and

a Corporate Governance and Compensation Committee chair fee of 25,000 USD (collectively, the “Fees”).
Each quarter of the CNH Director’s Plan year, the eligible directors elect the form of payment of their Fees. If the
elected form is ordinary shares, the eligible director will receive as many ordinary shares as equal to the amount of
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80051616 M 7389676 / 1
Fees the director elects to forego, divided by the fair market value of a CNH Global N.V. ordinary share. Ordinary
shares issued vest immediately upon grant, but cannot be sold for a period of six months. If the elected form is
options, the eligible director will receive as many options as the amount of Fees that the director elects to forego,
multiplied by four and divided by the fair market value of a ordinary share, such fair market value being equal to the
average of the highest and lowest sale price of a CNH Global N.V. ordinary share on the last trading day of the New
York Stock Exchange preceding the start of each quarter. Stock options granted as a result of such an election vest
immediately, but shares purchased under options cannot be sold for six months following the date of exercise. Stock
options terminate upon the earlier of: (1) ten years after the grant date; or (2) six months after the date an individual
ceases to be a director.
At December 31, 2011 and 2010, there were 690,993 and 693,914 ordinary shares, respectively reserved for
issuance under the CNH Directors’ Plan. Directors eligible to receive compensation under the CNH Directors’ Plan do
not receive benefits upon termination of their service as directors.
A summary of outstanding stock options under the CNH Directors’ Plan at December 31, 2011 and 2010 is as
follows:
At December 31, 2011
At December 31, 2010
Weighted Average
remaining
Options
contractual life
outstanding
(in years)
Options
outstanding
Weighted Average
remaining
contractual life
(in years)
17.28 - 26.00
11,656
4.2
29,076
6.7
26.01 - 40.00
35,913
5.4
44,188
6.4
40.01 - 56.00
11,162
6.1
11,162
7.1
6,414
5.9
6,414
6.9
Exercise price (in USD)
56.01 – 66.41
Total
65,145
90,840
Changes during the year under the CNH Directors’ Plan are as follows:
Number of
options
Weighted
Average
Exercise Price
(in USD)
2011
Number of
options
2010
Weighted
Average
Exercise Price
(in USD)
90,840
31.24
117,419
27.54
3,101
37.09
12,904
26.73
(28,796)
24.28
(36,610)
15.61
-
-
(2,873)
59.17
Outstanding at the end of the year
65,145
34.59
90,840
31.24
Exercisable at the end of the year
65,145
34.59
90,840
31.24
Outstanding at the beginning of the year
Granted
Exercised
Expired
The CNH Equity Incentive Plan (the “CNH EIP”)
The plan provides for grants of various types of awards on specific performance targets linked to the IFRS results of
CNH, to officers and employees of CNH and its subsidiaries. As of December 31, 2011, CNH has reserved
25,900,000 shares for the CNH EIP (15,900,000 shares at December 31, 2010). The plan envisages stock options
and share incentives as described below.
Stock option plan
Beginning in 2006, CNH began to issue performance-based stock options under the CNH EIP. In April 2011, CNH
granted approximately 1 million performance-based stock options (at target award levels) under the CNH EIP. As
CNH’s 2011 results exceeded the target performance levels, approximately 1.8 million of these options were granted.
One-third of the options vested in February 2012 following the approval of 2011 results by the CNH Board of
Directors. The remaining options will vest equally on the first and second anniversary of the initial vesting date.
Options granted under the CNH EIP have a contractual life of five years from the initial vesting date.
Options granted prior to 2006 have a contract life of ten years. However, the number of shares outstanding for these
grants was immaterial as of December 31, 2011 and these shares are expected to expire in early 2012.
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The following table summarizes outstanding stock options under the CNH EIP:
At December 31, 2011
At December 31, 2010
Weighted
Average
Number of options
Exercise Price
Outstanding
(in USD)
Number of options
Outstanding
Weighted Average
remaining
Contractual
life (in years)
Weighted
Average
Exercise Price
(in USD)
13.58 - 19.99
965,672
3.0
13.65
1,536,464
13.66
20.00 - 29.99
27,896
0.2
21.20
53,333
21.20
30.00 - 39.99
2,913,085
3.7
32.65
3,734,654
33.00
40.00 - 57.30
2,218,760
4.8
47.60
464,520
49.33
Total
6,125,413
Exercise Price (in USD)
5,788,971
Changes during the period in all CNH stock option plans are as follows:
2011
2010
Weighted
Average
Number of Exercise Price
shares
(in USD
Number of
shares
Weighted
Average
Exercise Price
(in USD)
Outstanding at the beginning of the year
5,788,971
29.07
4,332,835
26.67
Granted
1,813,557
47.20
2,888,625
31.69
Forfeited
(269,379)
28.77
(324,494)
31.91
(1,181,765)
24.44
(992,535)
20.69
(25,971)
39.54
(115,460)
68.85
Outstanding at the end of the year
6,125,413
35.02
5,788,971
29.07
Exercisable at the end of the year
1,895,828
33.49
1,431,524
36.40
Exercised
Expired
Performance Share Grants
Under the CNH EIP, performance-based shares may also be granted to selected key employees and executive
officers. CNH establishes the period and conditions of performance for each award. Performance-based shares vest
upon the attainment of specified performance objectives.
In September 2010, CNH granted approximately 2 million performance-based share awards under the CNH EIP.
These performance shares will vest in three equal installments if specified performance targets are achieved on a
cumulative basis during the three-, four- and five-year periods ending 31 December 2012, 2013 and 2014. The fair
value of this award is USD 34.74 per share. In 2011, CNH granted 154,000 additional shares which are subject to
the same vesting condition and periods as the 2010 award. The weighted average fair value of the award is USD
39.10 per share.
CNH granted performance-based share awards under the Top Performance Plan ("TPP") in 2006 through 2009.
Vesting of the TPP performance shares was dependent on achievement of specified targets by 2010. Achievement of
the performance targets was not achieved in 2010 and these awards were forfeited. CNH did not recognize any
share-based compensation expense related to TPP awards in 2010.
The following table reflects performance-based share activity under the CNH EIP:
2011
Non-vested at the beginning of the year
Granted
Forfeited
Vested
Non-vested at the end of the year
Number of
shares
Weighted
average grant
date fair value
(in USD)
Number of
shares
2010
Weighted
average grant
date fair value
(in USD)
2,017,000
34.74
1,349,000
31.22
154,000
39.10
2,027,000
34.74
(151,000)
34.74
(1,359,000)
31.25
-
-
-
-
2,020,000
35.07
2,017,000
34.74
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Restricted Share Grants
In 2011, CNH granted 272,750 restricted share awards to selected key employees under the CNH EIP, of which
269,000 shares were granted in September 2011. The restricted share awards in September 2011 will vest in three
equal installments over a three-year period ended September 30, 2014 and have a fair value of $26.65 per share.
The following table reflects restricted share activity under the CNH EIP:
Number of
shares
2011
Weighted
average grant
date fair value
(in USD)
Number of
shares
2010
Weighted
average grant
date fair value
(in USD)
316,000
34.62
-
-
Granted
272,750
26.91
326,000
34.56
Forfeited
(17,122)
34.74
(2,000)
34.74
(101,359)
34.58
(8,000)
32.35
470,269
30.15
316,000
34.62
Non-vested at the beginning of the year
Vested
Non-vested at the end of the year
As of December 31, 2011, there were 13,112,372 CNH Global N.V. ordinary shares (4,992,271 CNH Global N.V.
ordinary shares at December 31, 2010) available for issuance under the CNH EIP.
The Black-Scholes pricing model was used to calculate the fair value of stock options by the CNH. The weightedaverage assumptions used under the Black-Scholes pricing model were as follows:
Directors’ plan
2011
Equity
incentive plan
Directors’ plan
2010
Equity
incentive plan
Option life (years)
5.00
3.81
5.00
3.73
Price volatility of CNH Global N.V. shares (%)
70.4
75.1
66.9
74.1
Expected dividend yield (%)
0.4
0.3
0.6
0.5
Risk-free interest rate (%)
1.0
1.4
2.0
1.9
Based on this model, the weighted-average fair values of stock options awarded by CNH for the years ended
December 31, 2011 and 2010 were as follows:
2011
2010
Directors’ Plan
20.96
14.60
Equity incentive plan
26.24
16.10
(in USD)
The total cost recognized in the 2011 income statement for all share-based compensation linked to CNH Global N.V.
ordinary shares amounts to $63 million ($34 million in 2010).
25. Provisions for employee benefits
CNH companies provide post-employment benefits for their active employees and for retirees, either directly or by
contributing to independently administered funds. The way these benefits are provided varies according to the legal,
fiscal and economic conditions of each country in which CNH operates, the benefits generally being based on the
employees’ remuneration and years of service.
CNH companies provide post-employment benefits under defined benefit and defined contribution plans.
Defined benefit plans may be unfunded, or they may be wholly or partly funded by contributions by an entity, and
sometimes by its employees, into an entity, or fund, that is legally separate from the employer and from which the
employee benefits are paid. Benefits are generally payable under these plans after the completion of employment.
The plans are classified by CNH on the basis of the type of benefit provided as follows: Health care plans, Pension
plans and Other.
In the case of defined contribution plans, CNH pays contributions to publicly or privately administered pension
insurance plans on a mandatory, contractual or voluntary basis. Once the contributions have been paid, CNH has no
further payment obligations. The entity recognize the contribution cost when the employee has rendered his service
and includes this cost by function in Cost of sales, Selling, general and administrative costs and Research and
development costs. In 2011, these expenses totaled $39 million ($33 million in 2010).
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Health care plans
The item Health care plans comprise obligations for health care and insurance plans granted to employees of CNH
working in the United States and Canada. These plans generally cover employees retiring on or after reaching the
age of 55 who have had at least 10 years of service. CNH United States salaried and non-represented hourly
employees and Canadian employees hired after January 1, 2001 and January 1, 2002, respectively, are not eligible
for postretirement health care and life insurance benefits under the CNH plans. Until December 31, 2006 these plans
were fully unfunded; starting in 2007, CNH began making contributions on a voluntary basis to a separate and
independently managed fund established to finance the North American health care plans.
Pension plans
The item Pension plans consists principally of the obligations of the CNH companies operating in the United States
and in the United Kingdom.
Under these plans, a contribution is generally made to a separate fund (trust) which independently administers the
plan assets. CNH’s funding policy is to contribute amounts to the plan equal to the amounts required to satisfy the
minimum funding requirements prescribed by the laws and regulations of each individual country. Prudently CNH
makes discretionary contributions in addition to the funding requirements. If these funds are overfunded, that is if they
present a surplus compared to the requirements of law, CNH companies concerned could not be required to
contribute to the plan in respect of a minimum performance requirement as long as the fund is in surplus.
The investment strategy for these assets depends on the features of the plan and on the maturity of the obligations.
Typically long-term plan benefit obligations are funded by investing mainly in equity securities, as they are expected
to achieve long-term growth while exceeding inflation; short and medium-term plan benefit obligations are funded by
investing in fixed income securities, which are less volatile.
Other
The item Other includes loyalty bonuses, which are due to employees who reach a specified seniority and are
generally settled when an employee leaves the company. This line item also consists of the residual obligation for
employees leaving entitlements. These schemes are unfunded.
Provisions for employee benefits at December 31, 2011 and 2010 are as follows:
At December 31, 2011
At December 31, 2010
1,140
1,148
Pension Plans
419
439
Other
156
167
Total Post-employment benefits
1,715
1,754
Other provisions for employees
207
199
10
10
1,932
1,963
Defined benefit plan assets
278
222
Total Defined benefits plan assets
278
222
($ million)
Post-employment benefits:
Health care plans
Other long-term employee benefits
Total Provision for employee benefits
The item Other provisions for employees consists of primarily cash bonus accruals.
In 2011changes in Other provisions for employees and in Other long-term employee benefits are as follows:
($ million)
Other provisions for employees
Other long-term employee benefits
Total
At December 31, 2010
Provision
Utilization
Change in the
scope of
consolidation
and other
changes
199
-
-
8
9
2
(1)
-
10
208
2
(1)
8
217
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At December 31, 2011
207
Post-employment benefits and Other long-term employee benefits are calculated on the basis of the following main
assumptions:
At December 31, 2011
At December 31, 2010
(in %)
Italy
USA
UK
Germany
Italy
USA
Discount rate
4.46
4.60
5.00
4.70
4.20
5.20
5.20
UK Germany
4.20
Future salary increase
2.71
n/a
3.50
3.00
3.00
n/a
3.50
3.00
Inflation rate
2.00
n/a
3.25
n/a
2.00
n/a
3.50
n/a
Weighted average, initial healthcare cost trend rate
n/a
7.50
n/a
n/a
n/a
8.00
n/a
n/a
Weighted average, ultimate healthcare cost trend rate
n/a
5.00
n/a
n/a
n/a
5.00
n/a
n/a
Expected return on plan assets
n/a
7.75
6.75
4.25
n/a
8.00
7.00
4.25
Assumed discount rates are used in measurements of pension and postretirement benefit obligations and interest
cost components of net periodic cost. CNH selects its assumed discount rates based on the consideration of
equivalent yields on high-quality fixed income investments at the measurement date.
The assumed health care trend rate represents the rate at which health care costs are assumed to increase. Rates
are determined based on specific experience, consultation with actuaries and outside consultants, and various trend
factors including general and health care sector-specific inflation projections from the United States Department of
Health and Human Services Health Care Financing Administration for CNH’s U.S. assumptions. The initial trend is a
short-term assumption based on recent experience and prevailing market conditions. The ultimate trend is a longterm assumption of health care cost inflation based on general inflation, incremental medical inflation, technology,
new medicine, government cost-shifting, utilization changes, aging population, and a changing mix of medical
services.
The expected long-term rate of return on plan assets reflects management’s expectations on long-term average rates
of return on funds invested to provide for benefits included in the projected benefit obligations. The expected return is
based on the outlook for inflation, fixed income returns and equity returns, while also considering asset allocation and
investment strategy, premiums for active management to the extent asset classes are actively managed and plan
expenses. Return patterns and correlations, consensus return forecasts and other relevant financial factors are
analyzed to check for reasonability and appropriateness.
The amounts recognized in the statement of financial position for post-employment benefits at December 31, 2011
and 2010 are as follows:
($ million)
Present value of obligations
Fair Value of plan assets
Unrecognized actuarial gains/(losses)
Unrecognized past service cost
Net liability
Health care plans
Pension Plans
At December 31
At December 31
Other
At December 31
2011
2010
2011
2010
2011
2010
1,161
1,146
2,683
2,699
157
173
(80)
(74)
(2,135)
(2,048)
-
-
54
66
(407)
(434)
1
(3)
5
10
-
-
(2)
(3)
1,140
1,148
141
217
156
167
1,140
1,148
419
439
156
167
-
-
278
222
-
-
1,140
1.148
141
217
156
167
Amounts at year end:
Liabilities
Assets
Net liability
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The amounts recognized in the income statement for Post-employment benefits are as follows:
Health care plans
Pension Plans
Other
2011
2010
2011
2010
2011
2010
8
9
20
18
6
5
Interest costs
57
59
135
137
7
7
Expected return on plan assets
(5)
(5)
(146)
(138)
-
-
-
(3)
30
35
1
(1)
Past service costs
(5)
(55)
-
4
-
-
Total Costs
55
5
39
56
14
11
Actual return on plan assets
16
8
149
186
N/A
N/A
($ million)
Current service cost
Net actuarial losses/(gains) recognized
Changes in the present value of Post-employment obligations are as follows:
Health care plans
($ million)
Present value of obligation at the beginning of the year
Current service cost
Interest costs
Contribution by plan participants
Actuarial losses/(gains) generated
Exchange rate differences
Benefits paid
Past service cost
Other changes
Present value of obligation at the end of the year
Pension Plans
Other
2011
2010
2011
2010
2011
2010
1,146
1,141
2,699
2,622
173
179
8
9
20
18
5
5
57
59
135
137
6
7
6
5
2
2
-
-
23
58
4
144
(7)
7
(2)
2
(14)
(58)
(5)
(12)
(77)
(78)
(174)
(169)
(15)
(22)
-
(50)
-
3
-
2
-
-
11
-
-
7
1,161
1,146
2,683
2,699
157
173
The past service cost in the obligation and in the composition of defined benefit plan expenses in 2010 were mainly
related to a change CNH made in 2010 in U.S. to the coverage for participants eligible for Medicare from a Medicare
Advantage Plan to a Customized Supplement Plan.
Changes in the fair value of plan assets are as follows:
Health-care Plans
($ million)
Fair value of plan assets at the beginning of the year
Expected return on plan assets
Pension plans
2011
2010
2011
2010
74
66
2,048
1,953
138
5
5
146
Actuarial gains generated
10
3
3
48
Exchange rate differences
-
-
(8)
(31)
62
73
110
107
Contribution by employer
Contribution by plan participants
Benefits paid
Other changes
Fair value of plan assets at the end of the year
6
5
2
2
(77)
(78)
(174)
(169)
-
-
8
-
80
74
2,135
2,048
As discussed earlier, CNH began making contributions on a voluntary basis in 2007 to a separate and independently
managed fund established to finance the North American health care plans.
Plan assets for Pension and Health-care plans mainly consist of listed equity instruments, fixed income securities,
cash in hand and other types of investments.
Plan assets do not include treasury shares of CNH Global N.V. or properties occupied by CNH companies.
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Plan assets may be summarized as follows:
At December 31, 2011
At December 31, 2010
33%
54%
13%
36%
51%
13%
Third party equity instruments
Third party debt instruments
Other assets
Assumed health care cost trend rates have a significant effect on the amount recognized in the 2011 income
statement. A one percentage point change in assumed health care cost trend rates would have the following effects:
($ million)
One percentage
point increase
One percentage point
decrease
8
145
(6)
(110)
Effect on the aggregate of the service costs and interest cost
Effect on defined benefit obligation
The present value of the defined benefit obligations, the fair value of plan assets and the surplus or deficit of the
plans for 2011 and 2010 as follows:
At December 31, 2011
At December 31, 2010
Health care plans
1,161
1,146
Pension plans
2,683
2,699
157
173
($ million)
Present value of obligation:
Others
Fair value of plan assets:
Health care plans
80
74
2,135
2,048
(1,081)
(1,072)
Pension plans
(548)
(651)
Others
(157)
(173)
Pension plans
Deficit of the plan:
Health care plans
The best estimate of expected contribution to pension and health care plan for 2012 is as follows:
2012
($ million)
Pension plans
Health care plans
Total expected contribution
110
85
195
26. Other provisions
Changes in Other provisions are as follows:
($ million)
Warranty and technical assistance provision
At
December 31, 2010
Charge
Utilization
Other
changes
At
December 31, 2011
404
350
446
(382)
(10)
32
(3)
(10)
-
19
Other risks
1,245
3,448
(3,208)
(41)
1,444
Total Other provisions
1,627
3,891
(3,600)
(51)
1,867
Restructuring provision
In 2011, the effect of exchange rate differences amounts to $(52) million ($4 million in 2010).
The warranty and technical assistance provision represents management’s best estimate of commitments given by
CNH for contractual, legal or constructive obligations arising from product warranties given for a specified period of
time which begins at the date of delivery to the customer. This estimate has been calculated considering past
experience and specific contractual terms.
The restructuring provision comprises the estimated amount of benefits payable to employees on termination in
connection with restructuring plans amounting to $17 million at December 31, 2011 ($31 million at December 31,
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2010), other costs for exiting activities amounting to $2 million at December 31, 2011 ($1 million at December 31,
2010).
The provision for other risks represents the amounts set aside by CNH principally in connection with contractual and
commercial risks and disputes. The more significant balances of these provisions are as follows:
($ million)
At December 31, 2011
At December 31, 2010
Sales incentives
1,011
758
Legal proceedings
281
270
Commercial risks
48
141
Environmental risks
46
50
Other reserves for risk and charges
Total Other risks
58
26
1,444
1,245
A description of these follows:

Sales incentives - these provisions relate to sales incentives that are offered on a contractual basis to the
dealer networks, primarily on the basis of the dealers achieving a specific cumulative level of sales
transactions during the year. This provision is estimated based on the information available regarding the sales
made by the dealers during the year.

Legal proceedings and other disputes - this provision represents management’s best estimate of the liability to
be recognized by CNH with regard to:
Legal proceedings arising in the ordinary course of business with dealers, customers, suppliers or regulators
(such as contractual or patent disputes).
Legal proceedings involving claims with active and former employees.
Legal proceedings involving different tax authorities.
None of these provisions is individually significant. CNH recognizes a provision for legal proceedings when it is
deemed probable that the proceedings will result in an outflow of resources. In determining the best estimate
of the probable liability, CNH evaluates the legal proceedings on a case-by-case basis to estimate the
probable losses that typically arise from events of the type giving rise to the liability. The estimate takes into
account, as applicable, the views of legal counsel and other experts, the experience of the company and
others in similar situations and the company’s intentions with regard to further action in each proceeding.

Commercial risks - this provision includes the amount of obligations arising in connection with the sale of
products and services such as maintenance contracts. An accrual is recorded when the expected costs to
complete the services under these contracts exceed the revenues expected to be realized.

Environmental risks – this provision represents management’s best estimate of CNH probable environmental
obligations. Amounts included in the estimate comprise direct costs expected to be incurred in connection with
environmental obligations associated with current or formerly owned facilities and sites. This provision also
includes costs related to claims on environmental matters.
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27. Debt
A breakdown of debt and an analysis by due date is as follows:
($ million)
Asset-backed financing
Bonds
Borrowings from banks
Payables represented by
securities
At December 31, 2011
Due between
Due within
one and Due beyond
one year
five years
five years
Total
6,708
4,299
40
11,047
At December 31, 2010
Due between
Due within
one and Due beyond
one year
five years
five years
Total
5,841
4,468
19
10,328
69
1,759
1,500
3,328
24
966
1,754
2,744
1,134
866
52
2,052
1,505
953
51
2,509
101
15
-
116
60
96
-
156
649
95
-
744
513
332
-
845
Total Other debt
1,953
2,735
1,552
6,240
2,102
2,347
1,805
6,254
Total Debt
8,661
7,034
1,592
17,287
7,943
6,815
1,824
16,582
Other
Asset-backed financing represents the amount of financing received through both securitization and factoring
transactions which do not meet IAS 39 derecognition requirements and is recognized as an asset in the statements of
financial position.
There was an increase of approximately $719 million in asset backed financing, excluding exchange differences. This
increase mainly reflects the increase in the portfolio of receivables managed by Financial Services.
The amount of bonds outstanding as of December 31, 2011 reflects the issuance of a new USD 500 million note in
2011. The bonds outstanding as of December 31, 2011 are shown in the following table:
Currency
Case New Holland Inc.
CNH America LLC
CNH Capital LLC
Case New Holland Inc.
Total Bonds
Hedging effect and amortized cost valuation
Total Bonds
Face value of
outstanding
bonds
(in USD
million)
USD
USD
USD
USD
1,000
254
500
1,500
Coupon
Maturity
7.750%
7.250%
6.250%
7.875%
1 September 2013
15 January 2016
1 November 2016
1 December 2017
Outstanding
amount
($ million)
1,026
262
505
1,510
3,303
25
3,328
More in particular:

Bond issued by Case New Holland Inc. in August 2009 at a price of 97.062% of its nominal value, having a
nominal value of USD 1 billion, maturing in 2013 and bearing fixed interest at a rate of 7.75% p.a., payable
semi-annually in arrears;

Bond issued by Case Corp. (now CNH America LLC) in January 1996 for a total amount outstanding of USD
254 million and maturing in 2016, paying a fixed coupon of 7.25% p.a., payable semi-annually in arrears;

Bond issued by CNH Capital LLC in November 2011 at par value, having a nominal value of USD 500 million,
maturing in 2016 and paying a fixed coupon of 6.25% p.a., payable semi-annually in arrears.

Bond issued by Case New Holland Inc. in June 2010 at a price of 99.32% of its nominal value, having a
nominal value of USD1,5 billion, maturing in 2017 and paying a fixed coupon of 7.875% p.a., payable semiannually in arrears.
The reduction in the borrowing from banks in 2011 by approximately $457 million compared to 2010 mainly reflects
increased profitability and positive cash-flow from Equipment Operations.
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The annual interest rates and the nominal currencies of debt at December 31, 2011 are as follows:
($ million)
less
than 5%
US Dollar
Euro
Brazilian Real
Canadian Dollar
Australian Dollar
Chinese Renminbi
British Pound
Polish Zloty
Danish Krone
Other
Total Debt
(7,834)
(1,251)
(56)
(1,650)
(4)
(33)
(1)
(71)
(1)
(10,901)
from 5%
to 7.5%
Interest rate
from 7.5%
to 10%
(971)
(75)
(910)
(148)
(1,013)
(27)
(89)
(16)
(3,249)
from 10%
to 12.5%
(2,500)
(169)
(1)
(14)
(10)
(2,694)
greater
than 12.5%
(1)
(334)
(335)
Total
(11,311)
(1,326)
(1,564)
(1,798)
(1,018)
(41)
(33)
(100)
(71)
(25)
(17,287)
(5)
(95)
(8)
(108)
Debt with annual nominal interest rates in excess of 10% mainly relates to the companies operating Brazil.
For further information on the management of interest rate and currency risk reference should be made to the
previous section Risk Management and to Note 33. Information on financial risks to the consolidated financial
statements.
The fair value of Debt at December 31, 2011 amounts to $17,614 million ($16,752 million at December 31, 2010),
determined using the quoted market price of financial instruments, if available, or the related future cash flows. The
amount is calculated using the interest rates stated in Note 18. Current receivables and Other current assets to the
consolidated financial statements, suitably adjusted to take account of CNH’s current creditworthiness.
28. Trade payables
An analysis by due date of trade payables is as follows:
($ million)
Trade payables
Due
within
one year
3,064
At December 31, 2011
Due
between
Due
one and
beyond
five years
five years
5
2
Total
Due
within
one year
3,071
2,464
At December 31, 2010
Due
between
Due
one and
beyond
five years
five years
5
2
Total
2,471
The carrying amount of Trade payables approximates fair value at the statement of financial position date.
29. Other current liabilities
An analysis of Other current liabilities is as follows:
At December 31, 2011
($ million)
At December 31, 2010
Indirect tax payables
247
233
Accrued expenses and deferred income
287
278
Payables to personnel
148
117
Social security payables
104
102
Other
Total current liabilities
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92
59
878
789
An analysis of Other current liabilities (excluding Accrued expenses and deferred income) by due date is as follows:
($ million)
Other current liabilities
(excluding Accrued expenses
and deferred income)
Due within
one year
588
At December 31, 2011
Due
between
one and Due beyond
five years
five years
3
-
Total
Due within
one year
591
507
At December 31, 2010
Due
between
one and Due beyond
five years
five years
4
-
Total
511
The carrying amount of Other current liabilities approximates their fair value.
30. Guarantees granted, commitments and contingent liabilities
Guarantees granted
At December 31, 2011, CNH has provided guarantees on the debt or commitments of third parties or jointly controlled
and associated entities totaling $627 million ($637 million at December 31, 2010).
Sales of receivables
CNH has discounted receivables without recourse having due dates after December 31, 2011 amounting to $172
million ($117 million at December 31, 2010, with due dates after that dates), which refer to trade receivables and
other receivables for $154 million ($84 million at December 31, 2010) and receivables from financing for $18 million
($33 million at December 31, 2010).
Operating lease contracts
CNH has entered into operating lease contracts for the right to use industrial buildings and equipment with an
average term of 10-20 years and 3-5 years, respectively. The total future minimum lease payments under noncancellable lease contracts are as follows:
($ million)
Future minimum lease
payments under operating
lease agreements
Due within
one year
32
At December 31, 2011
Due
between
one and Due beyond
five years
five years
78
Total
Due within
one year
153
32
43
At December 31, 2010
Due
between
one and Due beyond
five years
five years
66
58
Total
156
During 2011, CNH has recorded costs for lease payments for $33 million ($35 million in 2010).
Contingent liabilities
As a global company with a diverse business portfolio, CNH is exposed to numerous legal risks, particularly in the
areas of product liability, competition and antitrust law, environmental risks and tax matters. The outcome of any
current or future proceedings cannot be predicted with certainty. It is therefore possible that legal judgments could
give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could affect
CNH's financial position and results. At December 31, 2011, contingent liabilities estimated by CNH amount to
approximately $45 million (approximately $41 million at December 31, 2010), for which no provisions have been
recognized since an outflow of resources is not considered probable at the present moment.
Instead, when it is probable that an outflow of resources embodying economic benefits will be required to settle
obligations and this amount can be reliably estimated, CNH recognizes specific provision for this purpose.
31. Segment reporting
Segment Information
CNH has three reportable segments: Agricultural Equipment, Construction Equipment and Financial Services.
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Agricultural Equipment
The agricultural equipment segment manufactures and distributes a full line of farm machinery and implements,
including two-wheel and four-wheel drive tractors, combines, cotton pickers, grape and sugar cane harvesters, hay
and forage equipment, planting and seeding equipment, soil preparation and cultivation implements and material
handling equipment.
Construction Equipment
The construction equipment segment manufactures and distributes a full line of construction equipment including
excavators, crawler dozers, graders, wheel loaders, backhoe loaders, skid steer loaders and trenchers.
Financial Services
The financial services segment is engaged in broad-based financial services through wholly owned subsidiaries and
joint ventures in North America, Latin America, Europe and Australia. CNH provides and administers retail financing
to end-use customers for the purchase or lease of new and used CNH and other agricultural and construction
equipment sold by CNH dealers and distributors. CNH also facilitates the sale of insurance products and other
financing programs to retail customers. In addition, CNH provides wholesale financing to CNH dealers and rental
equipment operators, as well as financing options to dealers to finance working capital, real estate and other fixed
assets and maintenance equipment in connection with their operations.
CNH evaluates segment performance based on trading profit. Transactions between segments are accounted for at
market value.
The following summarizes trading profit by reportable segment:
At December 31, 2011
(USD, million)
Agricultural equipment
Construction equipment
Financial services
Total Trading Profit
At December 31, 2010
1,264
839
27
(43)
315
205
1,606
1,001
A summary of additional reportable segment information, as of and for the years ended December 31, 2011 and
2010 is as follows:
At December 31, 2011
(USD, million)
At December 31, 2010
Revenues:
Agricultural equipment
14,183
11,528
Construction equipment
3,876
2,946
Financial services
1,629
1,617
Eliminations
(347)
(309)
19,341
15,782
Agricultural equipment
303
264
Construction equipment
102
97
Net Revenues
Depreciation and amortization:
Financial services
Depreciation and amortization
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117
124
522
485
Total assets:
Agricultural equipment
13,182
11,913
4,423
3,729
18,106
17,346
12,678
11,742
Eliminations
(13,758)
(12,544)
Total assets
34,631
32,186
9,419
8,830
Construction equipment
Financial services
Assets not allocated to segments, principally goodwill, other
Intangibles and taxes
Total liabilities:
Agricultural equipment
Construction equipment
Financial services
Liabilities not allocated to segments
2,498
2,250
16,076
15,356
6,349
6,312
Eliminations
(8,299)
(8,457)
Total liabilities
26,043
24,291
Expenditures for additions to non-current assets*:
Agricultural equipment
532
448
Construction equipment
156
144
Financial services
394
364
Expenditures for additions to non-current assets
1,082
956
* Includes equipment on operating leases and property, plant and equipment
At December 31, 2011
At December 31, 2010
Investments in unconsolidated subsidiaries, jointly controlled entities and associates:
Agricultural equipment
205
221
Construction equipment
221
188
83
83
509
492
Financial services
Investments in unconsolidated subsidiaries, jointly controlled entities and
associates
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32. Information by geographical area
CNH is organized under the laws of the Netherlands. Geographical information for CNH pertaining to the
Netherlands is not significant. The following is an analysis of total revenues by destination:
($ million)
2011
United States
6,786
5,771
Brazil
2,420
2,355
Canada
1,592
1,102
France
1,031
716
721
547
Australia
Germany
Other
Total Revenue
2010
650
518
6,141
4,773
19,341
15,782
Total non-current Assets, excluding financial assets, deferred tax assets and defined benefit assets are located as
follows:
($ million)
2011
United States
4,178
3,973
2010
Canada
435
429
Brazil
366
332
France
75
76
Germany
44
47
Australia
40
34
Other
1,087
990
Total non-current assets
6,225
5,881
In 2011 and 2010, no single external customer of CNH accounted for 10% or more of consolidated revenue.
33. Information on financial risks
CNH is exposed to the following financial risks connected with its operations:

credit risk, regarding its normal business relations with customers and dealers, and its financing activities;

liquidity risk, with particular reference to the availability of funds and access to the credit market and to
financial instruments in general;

market risk (principally relating to exchange rates, interest rates), since CNH operates at an international level
in different currencies and uses financial instruments which generate interest.
As described in the section Risk management, CNH constantly monitors the financial risks to which it is exposed, in
order to detect those risks in advance and take the necessary actions to mitigate them.
The following section provides qualitative and quantitative disclosures on the effect that these risks may have upon
CNH.
The quantitative data reported in the following do not have any predictive value; in particular the sensitivity analysis
on market risks does not reflect the complexity of the market or the reaction which may result from any changes that
are assumed to take place.
Credit risk
The maximum credit risk to which CNH is theoretically exposed at December 31, 2011 is represented by the carrying
amounts stated for financial assets in the statement of financial position and the nominal value of the guarantees
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provided on liabilities or commitments to third parties as discussed in Note 30. Guarantees granted, commitments
and contingent liabilities to the consolidated financial statements.
Dealers and final customers are subject to specific assessments of their creditworthiness under a detailed scoring
system; in addition to carrying out this screening process, CNH also obtains financial and non-financial guarantees
for risks arising from credit granted for the sale of agricultural and construction equipment. These guarantees are
further strengthened where possible by reserve of title clauses or specific guarantees on financed sales to the sales
network and on vehicles assigned under finance leasing agreements.
Balances which are objectively uncollectible either in part or for the whole amount are written down on a specific
basis if they are individually significant. The amount of the write-down takes into account an estimate of the
recoverable cash flows and the date of receipt, the costs of recovery and the fair value of any guarantees received.
Impairment losses are recognized for receivables which are not written down on a specific basis, determined on the
basis of historical experience and statistical information.
Receivables for financing activities amounting to $13,784 million at December 31, 2011 ($13,381 million at December
31, 2010) contains balances totaling $70 million ($83 million at December 31, 2010) that have been written down on
an individual basis. Of the remainder, balances totaling $239 million ($233 million at 31 December 2010) are past due
by up to one month, while balances totaling $183 million are past due by more than one month ($692 million at
December 31, 2010). In the event of installment payments, even if only one installment is overdue, the whole amount
of the receivable is classified as such.
Trade receivables and Other receivables totaling $1,085 million at December 31, 2011 ($1,057 million at December
31, 2010) contain, balances totaling $1 million ($2 million at December 31, 2010) have been written down on an
individual basis. Of the remainder, balances totaling $89 million ($59 million at December 31, 2010) are past due by
up to one month, while balances totaling $66 million ($72 million at December 31, 2010) are past due by more than
one month.
The significant decrease in the past due component in receivables from financing activities is partially attributable to
the gradual collection of loans granted by Banco CNH Capital S.A. as part of the development/subsidized loans
program for agriculture of the Brazilian development agency managed through Banco Nacional de Desenvolvimento
Economico e Social (“BNDES”). These receivables fell under the scope of the general debt relief programs that were
implemented from time to time by the Brazilian government between 2005 and 2008 to support an agricultural
industry going through a difficult period. With the rescheduling programs now at an end, the Company has taken all
the measures necessary to collect installments falling due, adjusting the level of its loan allowances in relation to the
extent to which the overdue balances are being repaid.
Total rescheduled outstanding loans issued by Banco CNH Capital S.A. amount to approximately 0.5 billion Reals
(approximately $0.2 billion) at December 31, 2011, representing a decrease of approximately 0.7 billion Reals
over December 31, 2010; Banco CNH Capital S.A. had a net overdue balance with its customers of approximately
0.3 billion Reals (approximately $0.1 billion), representing a decrease of approximately 0.6 billion Reais over
December 31, 2010. During the year, approximately 0.5 billion (approximately $0.2 billion) Reals were written off by
Banco CNH Capital S.A. Although the continual rescheduling of the recent past have contributed to an increase in the
uncertainty as to the timing and means by which customers will make repayment, the amounts provided are
considered sufficient to cover the residual credit risk. In the meantime, the BNDES has continued its financial support
for the company and the subsidized loan programs.
Liquidity risk
Liquidity risk arises if CNH is unable to obtain the funds needed to carry out its operations under economic
conditions.
The two main factors that determine CNH’s liquidity situation are the funds generated by or used in operating and
investing activities and the debt lending period and its renewal features or the liquidity of the funds employed and
market terms and conditions.
CNH has adopted a series of policies and procedures whose purpose is to optimize the management of funds and to
reduce the liquidity risk, as follows:

centralizing the management of receipts and payments, where it may be economical in the context of the local
currency and fiscal regulations of the countries in which CNH is present;

maintaining an adequate level of available liquidity;

diversifying the means by which funds are obtained and maintaining a continuous and active presence on the
capital markets;

obtaining adequate credit lines; and

monitoring future liquidity on the basis of business planning.
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Details as to the repayment structure of CNH’s financial assets and liabilities are provided in Note 18. Current
receivables and Other current assets, and in Note 27. Debt to the consolidated financial statements. Details of the
repayment structure of derivative financial instruments are provided in Note 20. Other financial assets and Other
financial liabilities to the consolidated financial statements.
Management believes that the funds currently available, in addition to those funds that will be generated from
operating and financing activities, will enable CNH to satisfy its requirements resulting from its investing activities and
its working capital needs and to fulfill its obligations to repay its debts at their natural due date.
Currency risk
CNH manufactures products and purchases raw materials from many locations around the world. CNH’s cost base is
diversified over a number of European, Asia-Pacific, and Latin American currencies, as well as the U.S. and
Canadian dollars. CNH regularly monitors its currency exchange rate exposure, executes policy-defined hedging
strategies and reviews the ongoing effectiveness of such strategies. CNH’s strategy is to use a mixture of foreign
exchange forward contracts and options contracts depending on its view of market conditions and the nature of the
underlying cash flow exposure.
Sensitivity analysis
All foreign currency hedging instruments are recognized in CNH’s Statement of financial position at fair value. CNH
performed a sensitivity analysis to determine the effects that market risk exposures may have on the fair value of the
foreign currency hedging instruments. The sensitivity analysis computes the hypothetical impact on the fair value of
the foreign currency hedging instruments if there were a 10% change in the foreign currency exchange rates relative
to the currency of the contracts, assuming no change in interest rates. The fair value of the foreign currency hedging
instruments would be negatively impacted by approximately $25 million and positively impacted by $70 million at
December 31, 2011 and 2010, respectively. However, the above movements in foreign exchange rates would have
an offsetting impact on the underlying business transactions that the financial instruments are used to hedge.
Interest rate risk
CNH monitors interest rate risk to achieve a predetermined level of matching between the interest rate structure of
CNH’s financial assets and liabilities. Fixed-rate financial instruments, including receivables, debt, ABS certificates
and other investments, are segregated from floating-rate instruments in evaluating the potential impact of changes in
applicable interest rates.
The fixed rate financial instruments used by CNH consist principally of part of the portfolio of Financial Services
(customer financing and financial leases) and part of debt (including subsidized loans and bonds).
Floating rate financial instruments consist principally of cash and cash equivalents, loans provided by Financial
Services to the sales network and part of debt. The effect of the sale of receivables is also considered in the
sensitivity analysis as well as the effect of hedging derivative instruments.
Sensitivity analysis
A sensitivity analysis was performed to compute the hypothetical impact on fair value which would be caused by a
10% change in the interest rates used to discount each category of financial assets and liabilities. The net impact on
the fair value of the financial instruments and derivative instruments held as of December 31, 2011 and 2010,
resulting from a hypothetical 10% change in interest rates, would be approximately $20 million and $2 million,
respectively. For the sensitivity analysis the financial instruments are grouped according to the currency in which
financial assets and liabilities are denominated and the applicable interest rate index. As a result, CNH’s interest rate
risk sensitivity model may overstate the impact of interest rate fluctuations for such financial instruments, as
consistently unfavorable movements of all interest rates are unlikely.
34. Fair value hierarchy
IFRS 7 requires financial instruments recognized in the statement of financial position at fair value to be classified on
the basis of a hierarchy that reflects the significance of the inputs used in determining fair value. The following levels
are used in this hierarchy:

Level 1 – quoted prices in active markets for the assets or liabilities being measured;

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) on the market;

Level 3 – inputs that are not based on observable market data.
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The following table provides an analysis under this hierarchy of financial assets and liabilities measured at fair value
at December 31, 2011.
Note
Level 1
Level 2
Level 3
Total
Other Non – current securities
(16)
-
-
-
-
Current securities available for sale
(19)
88
-
-
88
($ million)
Assets available-for-sale measured at fair value:
Financial assets held for trading measured at fair value:
Other financial assets
(20)
Total Assets
Other financial liabilities
(20)
Total Liabilities
-
112
-
112
88
112
-
200
-
(120)
-
(120)
-
(120)
-
(120)
In 2011 there were no transfers from Level 1 to Level 2 or vice versa.
The following table provides changes in Level 3 in 2011:
Other financial liabilities
($ million)
Balance at December 31, 2010
(5)
Gains recognized in profit or loss
5
Balance at December 31, 2011
-
In 2011 there were no transfers from Level 3 to other levels or vice versa.
35. Related party information
In accordance with IAS 24, related parties of CNH are companies and individuals who are in the position of exercising
control or joint control, or who have a significant influence over CNH and its subsidiaries.
As of December 31, 2011, the Company’s outstanding capital stock consisted of ordinary shares, par value €2.25
(U.S. $2.91) per share. As of December 31, 2011, there were 239,716,408 ordinary shares outstanding. At
December 31, 2011, CNH had 564 registered holders of record of its ordinary shares in the United States. Registered
holders and indirect beneficial owners hold approximately 12% of CNH’s outstanding ordinary shares. Fiat
Netherlands, a wholly owned subsidiary of Fiat Industrial, is the largest single shareholder.
Consequently, at December 31, 2011, Fiat Netherlands controlled all matters submitted to a vote of the Company’s
shareholders, including approval of annual dividends, election and removal of its directors and approval of
extraordinary business combinations. Fiat Netherlands has the same voting rights as the Company’s other
shareholders.
Historically, the Company and its subsidiaries have developed a variety of relationships, and engaged in a number of
transactions, with various Fiat Group or Fiat Industrial Group companies. Following the demerger effected on
January 1, 2011, Fiat has no obligation to provide assistance to the Company or its subsidiaries other than pursuant
to contractual agreements that have been negotiated between the applicable parties.
In connection with the demerger transaction Fiat and Fiat Industrial entered into a Master Services Agreement
(“MSA”) which sets forth the primary terms and conditions pursuant to which the various service provider subsidiaries
of such entities provide services (such as purchasing, tax, accounting and other back office services, security and
training) to the various service receiving subsidiaries. As structured, the applicable service provider and service
receiver subsidiaries become parties to the MSA through the execution of an Opt-In letter which may contain
additional terms and conditions. Pursuant to the MSA, service receivers are required to pay to service providers the
actual cost of the services plus a negotiated margin. In March 2011, upon review and recommendation of a special
committee of independent Board members, the Company’s Board approved the MSA and the applicable related OptIn letters.
As of December 31, 2011, the Company’s outstanding consolidated debt with Fiat Industrial and its subsidiaries was
$643 million, compared to $784 million of outstanding consolidated debt with Fiat and its subsidiaries as of
December 31, 2010. As a result of the demerger, all financing arrangements previously provided by Fiat treasury
subsidiaries outstanding as of December 31, 2010 were assigned to Fiat Industrial treasury subsidiaries on
January 1, 2011.
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Various Fiat subsidiaries, including CNH, were parties to a €1 billion ($1.3 billion) syndicated credit facility with a
group of banks. As of December 31, 2010, this facility was fully drawn, €300 million ($401 million) by CNH and
€700 million ($935 million) by other Fiat subsidiaries. The amounts were repaid in full and the syndicated credit facility
was cancelled in January 2011.
As of December 31, 2011, Fiat Industrial guaranteed $896 million of the Company’s debt with BNDES (Brazil). The
Company pays Fiat Industrial a guarantee fee based on the average amount outstanding under facilities guaranteed
by Fiat Industrial. In 2011, the Company paid a guarantee fee of 0.0625% per annum.
Like other companies that are part of multinational groups, the Company participates in a group-wide cash
management system with Fiat Industrial. Under this system, operated by Fiat Industrial treasury subsidiaries in a
number of jurisdictions, the cash balances of Fiat Industrial and its subsidiaries, including CNH, are aggregated at the
end of each business day in central pooling accounts (the Fiat Industrial treasury subsidiaries’ cash management
pools). CNH’s positive cash deposits, if any, at the end of each business day may be invested by Fiat Industrial
treasury subsidiaries in highly rated, highly liquid money market instruments or bank deposits or applied by Fiat
Industrial treasury subsidiaries to meet financial needs of other Fiat Industrial subsidiaries and vice versa. Deposits
with Fiat Industrial treasury subsidiaries earn interest at LIBOR plus 0.15%. Interest earned on CNH’s deposits with
Fiat Industrial treasury subsidiaries included in finance and interest income was approximately $31 million in 2011.
The equivalent amount was approximately $44 million in the year ended December 31, 2010 under the group-wide
cash management system with Fiat.
Further to the demerger, CNH entered into new cash management arrangements with Fiat Industrial treasury
subsidiaries effective on January 1, 2011. The cash deposits in Fiat treasury subsidiaries’ cash management pools as
of December 31, 2010 were transferred to Fiat Industrial treasury subsidiaries’ cash management pools on
January 1, 2011. Accordingly, no cash residual balances were outstanding with Fiat treasury subsidiaries’ cash
management system pools as of close of business January 1, 2011.
The terms and conditions applicable to Fiat Industrial’s cash management pools at the time of the demerger were
substantially the same as the terms and conditions governing Fiat cash management pools as of the same date.
As a result of CNH’s participation in Fiat Industrial’s cash management pools, the Company is exposed to Fiat
Industrial’s credit risk to the extent that the Fiat Industrial entity in whose name the deposit is pooled is unable to
return the funds. In the event of a bankruptcy or insolvency of Fiat Industrial (or any other Fiat Industrial member in
the jurisdictions with set off agreements) or in the event of a bankruptcy or insolvency of the Fiat Industrial entity in
whose name the deposit is pooled, CNH may be unable to secure the return of such funds to the extent they belong
to CNH, and CNH may be viewed as a creditor of such Fiat Industrial entity with respect to such deposits. Because of
the affiliated nature of CNH’s relationship with Fiat Industrial, it is possible that CNH’s claims as a creditor could be
subordinated to the rights of third party creditors in certain situations.
As of December 31, 2011, CNH had approximately $3 billion in cash and cash equivalents. This amount compares to
approximately $4.5 billion in cash and cash equivalents CNH had as of December 31, 2010; this latter amount
included approximately $2 billion of funds which would have historically been deposited with the relevant cash
management pools managed by Fiat treasury subsidiaries in the U.S. and in Europe. In anticipation of the demerger,
at the end of 2010, these funds were deposited with primary financial institutions in Europe and the U.S. for a shortterm period. At the maturity of these short-term deposits, in the month of January 2011, these funds were deposited
with the applicable Fiat Industrial subsidiaries’ cash management pools.
For material related party transactions involving the purchase of goods and services, the Company generally solicits
and evaluates bid proposals prior to entering into any such transactions. CNH’s Audit Committee conducts a review
to determine that all related party transactions are on what the Committee believes to be arm’s-length terms.
CNH purchases engines and other components from Fiat Industrial and its subsidiaries as well as Fiat and its
subsidiaries, and companies of the Fiat Group provide CNH with administrative services such as accounting and
internal audit, cash management, maintenance of plant and equipment, plant, security, research and development,
information systems and training. Fiat subsidiaries also provide purchasing services to CNH. CNH may sell certain
goods or provide certain services to Fiat and/or its subsidiaries. In addition, the Company enters into hedging
arrangements with counterparties that are subsidiaries of Fiat Industrial. The principal purchases of goods from Fiat
Industrial subsidiaries and Fiat subsidiaries include engines from Iveco and Fiat Powertrain Technologies, dump
trucks from Iveco, robotic equipment and paint systems from Comau, and castings from Teksid. The Company was
party to foreign exchange hedges having an aggregate contract value of $3.5 billion as of December 31, 2011 and
2010, to which subsidiaries of Fiat Industrial subsidiaries were counterparties.
Fiat provided accounting services to CNH in Europe and Brazil through a subsidiary that uses shared service centers
to provide such services to various Fiat companies. Fiat provided internal audit services at the direction of CNH’s
internal audit department in certain locations where the Company believed it is more cost effective to use existing Fiat
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resources. In 2005 and 2004, CNH purchased network and hardware support from and outsourced a portion of the
Company’s information services to, a joint venture that Fiat had formed with IBM. In 2005 Fiat entered into a nine
year strategic agreement with IBM under which IBM assumed full ownership of this joint venture as well as the
management of a significant part of the information technology needs of members of the Fiat Group, including CNH.
Fiat also provided training services through a subsidiary. The Company used a broker that is a subsidiary of Fiat to
purchase a portion of its insurance coverage. The Company purchased research and development services from an
Italian joint venture set up by Fiat and owned by various Fiat subsidiaries. This joint venture benefits from Italian
government incentives granted to promote work in the less developed areas of Italy. A substantial portion of these
services continue to be provided to CNH subsidiaries by Fiat through Fiat Industrial under the terms and conditions of
the MSA and the applicable Opt-In Letters.
The Company participated in tax sharing agreements with Fiat Industrial and certain of its subsidiaries in the United
Kingdom (U.K.) and Italy. CNH’s management believes the terms of these agreements are customary for agreements
of this type and are advantageous as tax losses generated in one company can offset income of the other companies
within the group. During 2011, CNH derived $61 million and $66 million for the years ended December 31, 2011 and
2010 of tax benefit from the tax sharing agreements.
In order to optimize the tax efficiency of the Company, New Holland Tractors and Fiat India Private Limited
effectuated an amalgamation as of April 1, 2007 for Indian fiscal and statutory purposes, which was approved by the
Delhi and Bombay High Court on September 23, 2008. CNH obtained a fairness opinion from an independent third
party financial advisor that documents that the consideration received by the parties to the transaction represents an
arm’s-length “value-for-value” exchange.
On October 20, 2011 CNH acquired Fiat Switzerland SA from Fiat for $19 million. As the purchase price
approximated the equity of the acquired company, this transaction did not significantly impact the CNH’s financial
position.
On December 31, 2011 CNH sold to FPT Industrial S.p.A. its ownership interest (33%) in European Engine Alliance
Scrl for $17 million. As this sale represented a transaction between entities under common control, the $11 million
gain resulting from the sale was recorded as additional-paid in capital. In connection with the demerger transaction of
Fiat and Fiat Industrial, in 2010 CNH sold its ownership interest in several small investments to entities within the Fiat
Group. These transactions did not significantly impact CNH’s financial position.
During 2008 CNH entered into a reimbursement agreement with Fiat in connection with the sponsorship contract Fiat
signed with the Juventus Football Club S.p.A. The sponsorship contract was for a three year term that expired in
2010 and was not renewed. The Company paid $10 million related to this reimbursement agreement in 2010. The
Juventus Football Club S.p.A., in which EXOR S.p.A. has a 60% stake, is listed on the Electronic Share Market of the
Italian stock exchange. EXOR is one of the major investment holding companies in Europe. Among other things,
EXOR also manages a portfolio that includes investments in Fiat, SGS S.A., and Cushman & Wakefield, Inc. CNH
obtains services from SGS, for verification, inspection, control and certification activities and also obtain real estate
services from Cushman & Wakefield.
If the goods or services or financing arrangements described above were not available from related parties, the
Company would have to obtain them from other sources. The Company can offer no assurance that such alternative
sources would provide such goods and services, or would provide them on terms as favorable as those offered by
such related parties.
The following table summarizes CNH’s sales, purchase, and finance income with Fiat Industrial Group, Fiat Group
and joint ventures that are not already separately reflected in the consolidated statements of operations for the years
ended December 31, 2011 and 2010:
($ million)
Sales to affiliated companies and joint ventures
Purchase of materials, production parts, merchandise and services
Finance and interest income
2011
2010
309
204
1,388
895
31
44
As of December 31, 2011 and 2010, CNH had trade payables to affiliated companies and joint ventures of $470
million and $367 million, respectively.
36. Acquisition of subsidiary
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Acquisition
As discussed in the section Scope of consolidation, on March 31, 2011 CNH Global N.V. acquired the remaining 50%
interest L&T – Case Equipment Private Limited (subsequently renamed Case New Holland Construction Equipment
India Private Limited), an equally held joint venture established in 1999 with Larsen & Toubro Limited to manufacture
and sell earth moving equipment in India, thereby obtaining control. This transaction has been accounted for as an
acquisition achieved in stages in accordance with IFRS 3 - Business Combinations, and the Group has accordingly
applied the acquisition method, finalized in December, consolidating the subsidiary on a line-by-line basis from March
31, 2011.
This transaction led to the recognition of income of $34 million arising from the combination. The identifiable assets
acquired and liabilities assumed have been recognized at their fair values at the Acquisition date (March 31, 2011)
and are set out below:
At the
Acquisition date
($ million)
Non-current assets
Current assets
Total assets acquired (a)
46
52
98
Liabilities assumed (b)
Net assets acquired (a) – (b)
36
62
37. Explanatory notes to the statements of cash flows
The Statements of cash flows set out changes in cash and cash equivalents during the year. As required by IAS 7 –
Statement of Cash Flows, cash flows are separated into operating, investing and financing activities. The effects of
changes in exchange rates on cash and cash equivalents are shown separately under the line item Translation
exchange differences.
Cash flows from operating activities derive mainly from CNH’s main revenue producing activities.
Cash flows generated by operating lease arrangements are included in operating activities in a single line item which
includes capital expenditures, amortization, depreciation, impairment losses and changes in inventories.
The non-cash items of $98 million in 2011 ($182 million in 2010) include $118 million of CNH's share of the net profit
of the investees accounted for using the equity method and $216 million provision of the credit allowance for
receivables from financing activities.
Overall, cash flows for income tax payments net of refunds in 2011 amount to $308 million ($207 million in 2010).
Overall, interest of $743 million was paid and interest of $739 million was received in 2011 (interest of $881 million
was paid in 2010 and interest of $958 million was received in 2010).
Cash flows used in investing activities represent the extent to which expenditures have been made for resources
intended to generate future income and cash flows. Only expenditures resulting in an asset recognized in statement
of financial position are classified as investing activities in the Statement of cash flows.
The consideration paid and received for the acquisition of subsidiary is discussed in Note 36. Acquisition of subsidiary
to the consolidated financial statements.
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CORPORATE FINANCIAL
STATEMENTS
At December 31, 2011
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CNH Global N.V.
CORPORATE BALANCE SHEETS
(Before profit appropriation)
($ thousand)
Note
At December 31, 2011
At December 31, 2010
6,571,536
6,439,831
6,571,536
6,438,831
1,200,000
-
Assets
FIXED ASSETS
Financial fixed assets
(2)
Total fixed assets
NON-CURRENT ASSETS
Long term receivables from subsidiaries and affiliated companies
(3)
Deferred tax assets
(7)
Total Non-current assets
16,620
-
1,216,620
-
728,238
1,040,939
1,054
2,350
CURRENT ASSETS
Receivables form sub subsidiaries and affiliated companies
(3)
Receivables from third parties
Cash and cash equivalents
Total Current assets
Total Assets
601,889
1,101,385
1,331,181
2,144,674
9,119,337
8,583,505
Shareholder's Equity and Liabilities
SHAREHOLDERS' EQUITY
Ordinary share capital
(5)
698,331
717,305
Ordinary share premium
(5)
5,209,422
5,105,061
Treasury stock
(5)
(7,675)
(7,675)
Legal reserves
(5)
983,148
1,201,197
Retained earnings
(5)
656,211
255,583
Current net profit
(5)
1,038,031
558,466
8,577,468
7,829,937
241,128
267,111
241,128
267,111
Total shareholder's equity
LONG TERM LIABILITIES
Provisions
(2)
Total long term liabilities
CURRENT LIABILITIES
Bank loans payables
(4)
300,000
400,860
Loans payable to subsidiaries and affiliated companies
(3)
-
69,738
Other payables to affiliated companies
(3)
12
15,059
729
800
Payables to third parties
Total current liabilities
TOTAL Shareholder's Equity and Liabilities
See accompanying notes to the corporate financial statements.
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300,741
486,457
9,119,337
8,583,505
CNH Global N.V.
CORPORATE PROFIT AND LOSS ACCOUNTS
($ thousand)
Note
2011
2010
Financial Income / (Expense)
Interest income - affiliates
32,183
62,038
84
18
(625)
(63,958)
Interest expense - third parties
(1,428)
(2,846)
Net exchange loss
(4,817)
(2,263)
(634)
(1,858)
24,763
(8,869)
Interest income - third parties
Interest expense - affiliates
Net other financial expenses
NET FINANCIAL INCOME / (EXPENSE)
Other Expense
Legal, audit and other professional fees
(1,951)
(1,158)
(26,831)
(23,888)
TOTAL OTHER EXPENSE
(28,782)
(25,046)
Net Operating Loss
(4,019)
(33,915)
Results from investments
1,025,223
591,835
1,021,204
557,920
Other expense
(6)
Results before tax
Income tax benefits
(16,827)
(546)
1,038,031
558,466
Basic profit per share
$4.33
$2.35
Diluted profit per share
$4.32
$2.34
(7)
NET PROFIT
PER SHARE DATA:
See accompanying notes to the corporate financial statements.
85
NOTES TO THE CORPORATE
FINANCIAL STATEMENTS
1. Accounting policies
General
The corporate financial statements are part of the financial statements of CNH Global N.V. and are prepared in
accordance with the legal requirements of Title 9, Book 2 of the Dutch Civil Code. In addition, article 2:362 paragraph
8 of the Dutch Civil Code is being applied, under which it is allowed to use the same (IFRS) valuation principles for
the Dutch GAAP Corporate financial statements as used in the consolidated financial statements. Except where
otherwise indicated, all assets and liabilities are stated at the amounts at which they were acquired or incurred.
Valuation and accounting principles
The standards of valuation and determination of the result used for the corporate financial statements are the same
as those used for the consolidated financial statements. Unless other standards are stated, the reader is referred to
the standards stated in the consolidated financial statements.
Financial fixed assets
Financial fixed assets comprise investments in Subsidiaries and are stated at net asset value if the Company
effectively exercises significant influence over the operational and financial activities of these investments. The net
asset value is determined on the basis of financial statements prepared in accordance IFRS.
If the equity of a subsidiary turns negative as a result of operating losses, the value of CNH's investment in the
subsidiary will be reduced to zero. If CNH has the legal or constructive obligation to continue funding such a
subsidiary or has guaranteed its debt, a provision is made in the amount equal to the negative equity of the
subsidiary.
Income taxes
Current income taxes are provided on the basis of the tax liability for the year in accordance with tax legislation in The
Netherlands.
2. Financial fixed assets
Investments as of December 31, 2011, and 2010 are summarized as follows:
($ thousand)
Balance at beginning of year
2011
2010
6,438,831
7,615,689
Acquisitions and capital increases
1,805,653
251,854
Disposals and capital repayments
(2,141,830)
(2,259,082)
Results from investments
1,025,223
591,835
Dividends received
(119,879)
(16,220)
Foreign exchange movements
(398,817)
146,633
Transfers from provisions
(25,983)
109,304
Other
(11,662)
(1,182)
6,571,536
6,438,831
Balance at end of year
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Acquisitions and capital increases in 2011 relate to capital increases for CNH Europe Holding SA ($1 billion), CNH
Östereich GMbH ($704 million) and CNH Italia S.p.A. ($69 million).
Acquisitions and capital increases in 2010 related to capital increases for CNH UK ($125 million), CNH Ostereich
($71 million), CNH Italia ($24 million), CNH Capital Benelux ($20 million) and CNH-Kamaz Industrial LLC ($10
million).
Disposals and capital repayments in 2011 primarily relate to the repayment of capital by Case New Holland Inc. ($2
billion), and the sale of CNH’s 37.5% share in Turk Traktor Ve Ziraat to CNH Östereich GMbH ($106 million).
Disposals and capital repayments in 2010 related to the repayment of capital by Case New Holland Inc. ($2.1 billion)
and the sale of CNH Capital UK Ltd. to CNH Capital Benelux ($165 million).
If the equity of a subsidiary turns negative as a result of operating losses, the value of CNH's investment in the
subsidiary will be reduced to zero. If CNH has the legal or constructive obligation to continue funding such a
subsidiary or has guaranteed its debt, a provision is made in the amount equal to the negative equity of the
subsidiary.
Movement of the Provision:
2011
2010
(in thousands)
Beginning of the year
Additions
Reversal
Exchange rate differences
End of the year
$267
35
(55)
(6)
$241
$158
121
—
(12)
$267
3. Receivables from and payables to investments and affiliated companies
At December 31, 2011 CNH had a long term receivable from Case New Holland Inc. in the amount of $1.2 billion.
Certain reclassifications to the current receivables at December 31, 2010 have been made to be comparable with
2011.
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A summary of current receivables from affiliated companies and Subsidiaries at December 31, 2011 and 2010 is set
forth in the following table:
2011
2010
(in thousands)
Current Receivables from affiliated Companies:
Fiat Industrial Finance Europe SA ................................................................
Fiat Finance and Trade Ltd. .........................................................................
Total Current Receivables from affiliated Companies
Current Receivables from Subsidiaries:
CNH Capital Benelux S.A. ............................................................................
CNH International S.A. .................................................................................
CNH Italia S.p.A. . .........................................................................................
CNH America LLC. ........................................................................................
Case New Holland Inc. ..................................................................................
New Holland Credit Company LLC .............................................................
Al Ghazi Tractors Ltd.....................................................................................
CNH France S.A. ..........................................................................................
New Holland Holding Ltd. ..............................................................................
CNH Capital U.K. .........................................................................................
CNH Asian Holding N.V. ..............................................................................
CNH Australia Pty Ltd. .................................................................................
CNH U.K. Limited ..........................................................................................
Other .............................................................................................................
Total Current Receivables from Subsidiaries
Total Current Receivables from Subsidiaries and affiliated companies
$
421,254
—
421,254
$
$
$
$
$
—
20,428
20,428
146,721
67,134
54,762
15,416
8,803
4,971
2,013
1,220
—
—
—
—
—
5,944
145,972
—
100,700
5,616
301,694
3,140
584
74,176
137,289
96,263
79,795
71,394
1,098
2,790
306,984
$ 1,020,511
728,238
$
1,040,939
CNH had no short term loans payable to Subsidiaries and affiliated companies at December 31, 2011. Short term
loans payable to Subsidiaries and affiliated companies at December 31, 2010 bore interest at a weighted-average
interest rate of 6.80%. Accrued interest on loans receivable from affiliated companies was approximately $2 million
at both December 31, 2011 and December 31, 2010. Loans payable to affiliated companies and related accrued
interest at December 31, 2010 consist of the following:
New Holland Tractor Ltd. N.V. ........................................................
CNH Deutschland GmbH ...............................................................
Case Harvesting System GmbH .....................................................
CNH Europe Holding S.A................................................................
CNH International S.A.....................................................................
Other ...............................................................................................
Total Short Term Loans payable to affiliated companies
2010
(in
thousands)
$
22,715
20,043
14,698
8,000
4,242
40
$
69,738
Other payables to affiliated companies at December 31, 2010 consisted of $14 million to Fiat Finance and Trade Ltd.
and $1 million to other affiliates.
4. Bank loans payable
The $300 million syndicated credit facility at December 31, 2011 represents a one-year revolving committed credit
facility CNH Global entered into with a syndicated group of banks in December 2010. Ninety percent of the facility is
insured by the Export-Import Bank of the United States. The facility was available to support U.S. export sales and
provided advances with repayment terms of up to 360 days. The facility was fully utilized as of the end of 2011.
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The €300 million ($401 million) syndicated credit facility at December 31, 2010 represents the amount allocated to
CNH by Fiat under a €1.0 billion ($1.3 billion) Fiat credit facility syndicated with third parties. The amount allocated to
CNH was fully drawn down as of December 31, 2010. The facility was prepaid in whole and cancelled on January 5,
2011. Loans under this facility accrued interest at fluctuating rates based on EURIBOR (or other index rates, such as
LIBOR depending on the currency borrowed), plus a margin relating to the credit ratings of Fiat. In addition to paying
interest on any borrowings it made under this facility, CNH was required to pay a commitment fee, the calculation of
which took into account Fiat credit ratings and any unused portion of the €300 million ($401 million) allocation as well
as its pro rata share (based on the number of borrowers from time to time) of any remaining commitment fees and
other fees related to the facility.
5. Shareholders’ equity
The Articles of Association of CNH provide for authorized share capital of €1.35 billion, divided into 400 million
ordinary shares and 200 million Series A preference shares, each with a per share par value of €2.25. At the general
meeting of the shareholders held on March 29, 2011, the shareholders authorized CNH’s Board of Directors to issue
shares for a period ending in March 2016.
As of December 31, 2011, CNH had 239,871,221 ordinary shares issued, of which 239,716,408 shares were
outstanding while 154,813 shares were held by CNH as treasury shares. Treasury shares consist principally of CNH
shares reacquired from restricted shares issued under a previous deferred compensation plan. As of December 31,
2011, Fiat Netherlands held 211,866,037 shares of the Company’s 239,716,408 outstanding ordinary shares. As a
result of the demerger transaction implemented by Fiat effective on January 1, 2011, Fiat transferred to Fiat Industrial
its ownership interest in Fiat Netherlands and, as a result, the Company became a subsidiary of Fiat Industrial.
Movements in shareholders’ equity are summarized as follows:
Legal Reserves
Balance, January 1, 2010
Appropriation of prior year
results
Results of the year
Movements in share
capital and share premium
Translation Adjustment
Adjustment Legal
Reserves Other
Balance, December 31,
2010
Appropriation of prior year
results
Results for the year
Movements in share
capital and share premium
Translation Adjustment
Adjustment Legal
Reserves Other
Balance, December 31,
2011
Ordinary
Share
Capital
Ordinary
Share
Premium
Treasury
Stock
$769,993
$5,057,928
($7,675)
$267,771
$452,775
—
—
—
122,317
(122,317)
—
—
—
—
—
—
558,466
—
—
—
558,466
Current Net
Retained
Profit/(Loss)
Earnings
(in thousands)
($122,317)
656,100
Cumulative
Translation
Adjustment
Other
Total
$7,074,575
3,130
47,133
—
—
—
—
—
50,263
(55,818)
—
—
—
—
202,451
—
146,633
—
—
—
—
(278,200)
—
278,200
—
$717,305
$5,105,061
($7,675)
$558,466
$255,583
$470,222
$730,975
$7,829,937
—
—
—
(558,466)
558,466
—
—
—
—
—
—
1,038,031
—
—
—
1,038,031
3,956
104,361
—
—
—
—
—
108,317
(22,930)
—
—
—
—
(375,887)
—
(398,817)
—
—
—
—
(157,838)
—
157,838
—
$698,331
$5,209,422
($7,675)
$1,038,031
$656,211
$94,335
$888,813
$8,577,468
The change in ordinary share capital for 2011 and 2010 relates to the issuance of shares due to the exercise or
vesting of share-based awards.
The 2011 movement in ordinary share premium was approximately $104 million, of which $27 million related to the
issuance of shares from the exercise or vesting of share-based awards, $65 million was due to share-based
compensation expenses and related tax benefit, and $11 million capital contribution resulting from the sale of CNH's
investment in European Engine Alliance to FTP Industrial. This sale was accounted for as a capital transaction as
CNH and FTP Industrial are entities that operate under common control of Fiat Industrial.
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The 2010 change in ordinary share premium was approximately $47 million, of which $16 million related to the
issuance of shares from the exercise of share-based awards, $35 million was due to share-based compensation
expenses and related tax benefit, and ($4) million due to the impact of the change of ownership of CNH Italia in New
Holland Kobelco Construction Machinery S.p.A..
The Other Legal Reserves primarily consist of the retained earnings of CNH's investments in China, India and Brazil
and the cumulative share in income of joint ventures less dividends received and adjusted for any other capital
transactions. Legal Reserves are not available for distribution to the Company’s shareholders. If the currency
translation adjustment has a negative balance, this balance will not be used to reduce the Other Legal Reserves that
are restricted for distribution.
Ordinary Share Capital as of December 31, 2011 and 2010 was €539.71 million and €536.82 million, which are
converted to U.S. dollar using exchange rates of $1.2939 and $1.3362, respectively. An increase in 2011 of €2.89
million was due to exercises and vesting of share-based awards.
During the years ended December 31, 2011 and 2010, changes in CNH ordinary shares issued were as follows:
Issued as of beginning of year.................................................
Issuances of CNH Ordinary Shares:
Stock-based compensation......................................................
Shares issued to Directors........................................................
Issued as of end of year...........................................................
Ordinary Shares
2011
2010
(in thousands)
238,588
237,553
1,251
32
239,871
1,029
6
238,588
No dividend was declared or paid in 2011 or 2010.
CNH has granted share-based compensation to officers and employees of CNH and its subsidiaries. See Note 24.
Equity to the consolidated financial statements for further discussion of the CNH Equity Incentive Plan.
6. Other expense
In 2011, other expense mainly consists of $32 million withholding tax related to the repayment of capital from Case
New Holland Inc. as mentioned in Note 2. Financial Fixed Assets to the corporate financial statements. $634 million
of the repayment of capital was treated as a distribution of dividend for U.S. tax filing purposes subject to 5%
withholding tax. Additionally, CNH recorded other income of $7 million for a tax refund related to the repayment of
capital from Case New Holland Inc. in 2010.
In 2010, other expense was primarily related to $22 million withholding tax with regard to repayment of capital from
Case New Holland Inc. as mentioned previously in Note 2. Financial Fixed Assets to the corporate financial
statements. $448 million of the capital repayment was treated as a distribution of dividend for US tax filing purposes
subject to 5% withholding tax.
7. Income taxes
The effective income tax benefits for 2011 and 2010 are $17 million and $1 million, respectively. The 2011 tax benefit
of $17 million reflects the recognition of a $17 million deferred tax asset as CNH has determined it is probable that
the asset will be realized based upon available evidence. Tax losses of $67 million at December 31, 2011 were
derived from the years 2005 to 2009 and have been recorded at the statutory tax rate for 2011 of 25%. The tax loss
carry forwards as of December 31, 2010 were approximately $84 million. The period within which tax losses can be
carried forward in the Netherlands is nine years.
The effective income tax rate differs from the Dutch statutory tax rate of 25% principally due to the applicability of the
participation exemption on a majority of CNH’s taxable income. For corporate income tax purposes CNH heads a
fiscal unity regime that includes CNH Trade N.V., the Netherlands branches of CNH Belgium N.V. and CNH Financial
Services S.A. CNH Global is severally liable for corporate income taxes of the fiscal unity.
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Expiry years of tax losses
(in millions)
2011
2013
2010
—
$
$
13.6
2014
—
3.3
2015
8.2
10.7
2016
18.7
18.7
2017
17.3
17.3
2018
15.4
15.4
2019
6.9
5.2
$
66.5
$
84.2
8. Employees
At December 31, 2011, and 2010, CNH Global N.V. had no employees. CNH contracts for services with Fiat
Netherlands.
9. Directors’ remuneration
The following table summarizes remuneration paid or accrued to Directors for the year ended December 31, 2011, excluding
directors who are employees of Fiat Industrial or Fiat and are not compensated by CNH:
G ra nt
Ha rold
Thoma s J.
Dr. Edwa rd
Le o W.
Dr. P e te r
P ric e
Boya novsky
Colliga n
A. Hile r
Houle
Ka la ntzis La na wa y
$
$
Salary
$
853,117
(a) $
Annual Fees
-
$
87,964
115,000
-
140,000
120,000
John B.
$
84,000
Ke nne th
Dr. Rolf
P a olo
Ja c que s
Lippe r
M. Je ke r
Monfe rino
The urilla t
$
$
$
$
86,250
115,000
110,278
-
Tota l
$ 853,117
116,250
974,742
18,688
Ordinary Shares Granted
3/28/2011
$46.89
9,000
9,688
6/27/2011
$36.10
9,000
9,687
18,687
9/26/2011
$26.78
9,000
9,688
33,688
12/27/2011
$37.09
9,000
9,687
27,687
Use of Company Car
15,000
9,000
8,704
13,621
8,576
30,901
Future Remuneration:
Pension Plan
85,389 (a)
85,389
Bonus:
Cash
1,593,520
Total
2,540,730
1,593,520
111,964
115,000
153,621
120,000
128,576
86,250
115,000
110,278
155,000 3,636,419
(a) Mr. Boyanovsky exercised stock options during 2011 resulting in $1.8 million of earnings and, in connection with the terms
of his retirement in 2011, will receive future cash remuneration totaling $1.4 million. These amounts are not included in the
table above.
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Directors eligible for compensation also may elect to have a portion of their compensation paid in stock options. See Note
24. Equity to the consolidated financial statements for further discussion of the CNH Directors' Compensation Plan.
Share Ownership
Collectively, CNH's directors and executive officers beneficially own, or were granted options with respect to, less than
one percent of CNH's ordinary shares. Directors’ elective option awards vest immediately upon grant. Directors’ options
terminate six months after a director leaves the Board of Directors if not exercised. In any event, directors’ options
terminate if not exercised by the tenth anniversary of the grant date.
Options issued to eligible directors are issued from the CNH Directors’ Plan. Options issued to CNH's employees who are
also board members are issued from the CNH Equity Incentive Plan (“EIP”). The following table summarizes outstanding
stock options for directors as of December 31, 2011, excluding directors who are employees of Fiat Industrial or Fiat
Industrial Group companies and have not been compensated by CNH:
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E xe rc is e
G ra nt D a t e
P ric e
B o ya no v s k y
H ile r
H o ule
Jeker
Ka la nt zis
La na wa y
Lippe r
T he urilla t
T o tal
—
—
4,000
B eginning B alance as o f 1/1/11
(auto matic o ptio n)
4/26/2004
21.22
—
4,000
—
—
—
—
(auto matic o ptio n)
5/3/2005
17.28
—
4,000
—
—
—
—
(auto matic o ptio n)
4/7/2006
27.70
—
4,000
4,000
4,000
$
—
4,000
24,000
4,000
4,000
4,000
7/5/2006
23.87
—
—
—
—
—
—
—
1,047
1,047
10/3/2006
22.32
—
—
4,480
1,008
—
—
—
1,121
6,609
12/29/2006
27.45
—
—
3,643
820
—
—
—
911
5,374
2/16/2007
37.96
42,299
—
—
—
—
—
—
—
42,299
3/30/2007
38.04
—
—
2,629
592
—
—
—
657
3,878
6/30/2007
50.95
—
—
1,963
442
—
—
—
491
2,896
9/28/2007
60.54
—
—
1,652
—
—
—
1,487
413
3,552
12/27/2007
66.41
—
—
1,506
—
—
—
1,356
—
2,862
3/19/2008
50.08
—
—
1,997
—
—
—
1,798
—
3,795
6/2/2008
48.12
10,574
—
—
—
—
—
—
—
10,574
6/17/2008
42.51
—
—
2,353
—
—
—
2,118
—
4,471
9/15/2008
29.58
—
—
—
—
—
—
3,043
—
3,043
4/30/2009
13.58
57,015
—
—
—
—
—
—
—
57,015
9/15/2009
18.23
—
—
—
—
—
—
3,761
—
3,761
12/14/2009
24.74
—
—
—
—
—
—
4,648
—
4,648
—
—
—
—
—
—
4,333
—
4,333
—
—
—
—
—
—
—
93,391
3/11/2010
26.54
4/30/2010
31.69
6/9/2010
22.95
—
—
—
—
—
—
5,011
—
5,011
9/7/2010
32.30
—
—
—
—
—
—
3,560
—
3,560
203,279
12,000
24,223
6,862
4,000
35,115
8,640
294,119
49,341
12,000
24,223
6,862
4,000
35,115
8,640
140,181
153,938
—
—
—
—
—
—
—
153,938
—
—
—
—
—
—
3,101
—
3,101
—
—
—
—
—
—
3,101
—
3,101
4,000
B eginning To tal
– Vested/No t Exercised
– No t Vested
93,391
To tal Optio ns Granted in 2011
12/28/2011
37.09
2011Sub-To tal
Optio ns Exercised in 2011
To tal Optio ns Exercised 2011
4/26/2004
21.22
—
4,000
—
—
—
—
—
—
4/7/2006
27.70
—
—
—
—
—
—
4,000
—
4,000
2/16/2007
37.96
42,299
—
—
—
—
—
—
42,299
9/15/2008
25.58
—
—
—
—
—
—
4/30/2009
13.58
28,503
—
—
—
—
—
—
—
—
—
—
—
3,761
—
3,761
—
—
—
—
—
4,648
—
4,648
4,333
3,043
—
3,403
—
28,503
9/15/2009
18.23
12/14/2009
24.74
3/11/2010
26.54
—
—
—
—
—
—
4,333
—
6/9/2010
22.95
—
—
—
—
—
—
5,011
—
5,011
70,802
4,000
—
—
—
—
24,796
—
99,598
Clo sing B alance as o f 12/31/2011
132,477
8,000
24,223
6,862
—
4,000
13,420
8,640
197,622
– Vested/No t Exercised
41,704
8,000
24,223
6,862
—
4,000
13,420
8,640
106,849
No t Vested
90,773
—
—
—
—
—
—
—
90,773
Clo sing To tal
The following table summarizes outstanding performance share units held by directors with respect to which vesting has
not yet occurred:
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Grant Date
Price
Beginning Balance as of January 1, 2011
Total Beginning Balance—Not Vested .................................................................................
09/30/2010
$ 34.74
Shares Forfeited .........................................................................................................
$ 34.74
09/30/2010
Ending Balance as of December 31, 2011—Not Vested......................................................
Harold
Boyanovsky
100,000
(60,000)
40,000
Executive Officers’ Compensation
The aggregate amount of compensation paid to or accrued for executive officers that held office during 2011 was
approximately $8.7 million, including $600,000 of pension and similar benefits paid or set aside by CNH.
10. Guarantees
The Company fully, unconditionally and irrevocably guarantees approximately $3.0 billion of outstanding debt securities
issued by its wholly owned Subsidiaries.
11. Commitments and contingencies
CNH and its subsidiaries are party to various legal proceedings in the ordinary course of business, including product
liability, product warranty, environmental, asbestos, dealer disputes, disputes with suppliers and service providers,
workers compensation, patent infringement, and customer and employment matters. Although the ultimate outcome of
legal matters pending against CNH and its subsidiaries cannot be predicted, the Company believes the reasonable
possible range of losses for these unresolved legal actions in addition to the amounts accrued would not have a material
effect on its financial statements.
Environmental
Pursuant to the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”),
which imposes strict and, under certain circumstances, joint and several liability for remediation and liability for natural
resource damages, and other federal and state laws that impose similar liabilities, CNH has received inquiries for
information or notices of its potential liability regarding 52 non-owned sites at which regulated materials allegedly
generated by us were released or disposed (“Waste Sites”). Of the Waste Sites, 18 are on the National Priority List
(“NPL”) promulgated pursuant to CERCLA. For 47 of the Waste Sites, the monetary amount or extent of the Company’s
liability has either been resolved; it has not been named as a potentially responsible party (“PRP”); or its liability is likely de
minimis.
In September, 2004, the United States Environmental Protection Agency ( EPA”) proposed listing the Parkview Well Site
in Grand Island, Nebraska on the NPL. Within its proposal the EPA discussed two alleged alternatives, one of which
identified historical on-site activities that occurred during prior ownership at CNH America’s Grand Island manufacturing
plant property as a possible contributing source of area groundwater contamination. CNH America filed comments on the
proposed listing which reflected its opinion that the data does not support the EPA’s reliance on the Grand Island facility
as a potential basis for listing. In April, 2006, the EPA finalized the listing. After subsequent remedial investigations were
completed by the EPA and the Company in 2006, the EPA advised that it will proceed with a remediation funded by the
Federal Superfund without further participation by CNH. The U.S. EPA continues to search for PRPs other than CNH. In
December, 2004, a toxic tort suit was filed by area residents against CNH, certain of its subsidiaries including CNH
America, and prior owners of the property. While the outcome of this proceeding is uncertain, CNH believes that it has
strong legal and factual defenses, and will vigorously defend this lawsuit.
Because estimates of remediation costs are subject to revision as more information becomes available about the extent
and cost of remediation and because settlement agreements can be reopened under certain circumstances, the
Company’s potential liability for remediation costs associated with the 52 Waste Sites could change. Moreover, because
liability under CERCLA and similar laws can be joint and several, CNH could be required to pay amounts in excess of its
pro rata share of remediation costs. However, when appropriate, the financial strength of other PRPs has been considered
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in the determination of the Company’s potential liability. CNH believes that the costs associated with the Waste Sites will
not have a material effect on the Company’s business, financial position or results of operations.
The Company is conducting environmental investigatory or remedial activities at certain properties that are currently or
were formerly owned and/or operated or which are being decommissioned. The Company believes that the outcome of
these activities will not have a material adverse effect on its business, financial position or results of operations.
The actual costs for environmental matters could differ materially from those costs currently anticipated due to the nature
of historical handling and disposal of hazardous substances typical of manufacturing and related operations, the discovery
of currently unknown conditions, and as a result of more aggressive enforcement by regulatory authorities and changes in
existing laws and regulations. As in the past, CNH plans to continue funding its costs of environmental compliance from
operating cash flows.
Based upon information currently available, the Company estimates its subsidiaries' potential environmental liabilities
including remediation, decommissioning, restoration, monitoring, and other closure costs associated with current or
formerly owned or operated facilities, the Waste Sites, and other claims to be in the range of $29 million to $87 million.
Investigation, analysis and remediation of environmental sites is a time consuming activity. The Company expects such
costs to be incurred and claims to be resolved over an extended period of time which could exceed 30 years for some
sites. As of December 31, 2011 and 2010, environmental reserves of approximately $46 million and $50 million,
respectively, were established to address these specific estimated potential liabilities. Such reserves are undiscounted
and do not include anticipated recoveries, if any, from insurance companies.
Product Liability
Product liability claims against CNH arise from time to time in the ordinary course of business. There is an inherent
uncertainty as to the eventual resolution of unsettled claims. However, in the opinion of management, any losses with
respect to these existing claims will not have a material adverse effect on CNH’s financial position or its results of
operations.
Other Litigation
Yolton: In December 2002 six individuals acting on behalf of a purported class filed a lawsuit, Gladys Yolton, et al. v. El
Paso Tennessee Pipeline Co. and Case Corporation, styled as a class action, in the Federal District Court for the Eastern
District of Michigan against El Paso Tennessee Pipeline Co. (formerly Tenneco Inc., “El Paso”) and Case, LLC (now
known as CNH America LLC, “CNH”). The lawsuit alleged breach of contract and violations of various provisions of the
Employee Retirement Income Security Act and Labor Management Relations Act arising due to alleged changes in health
insurance benefits provided to employees of the Tenneco Inc. agriculture and construction equipment business who
retired before selected assets of that business were transferred to CNH in June 1994. El Paso administers the health
insurance programs for these retirees. An agreement had been reached with the UAW capping the premium amounts that
El Paso would be required to pay. Any amount above the cap limit would be the responsibility of the retirees. In 1998, in
exchange for a release of all further liability for above-cap costs, CNH contributed $28 million to a Voluntary Employee’s
Beneficiary Association (“VEBA”) to help defray the retirees’ above-cap costs.
The lawsuit arose after El Paso notified the retirees that the VEBA funds were exhausted and the retirees thereafter would
be required to pay the premiums above the cap amounts. The plaintiffs also filed a motion for preliminary injunction in
March 2003, asking the district court to order El Paso and/or CNH to pay the above-cap amounts. On March 9, 2004,
based on an “alter ego” theory, the district court held that CNH was liable and ordered that CNH pay the above-cap health
insurance benefits. CNH filed a motion for reconsideration and a motion for stay, both of which the district court denied on
June 3, 2004. CNH and El Paso appealed to the Sixth Circuit Court of Appeals, but the Sixth Circuit affirmed the district
court’s decision. El Paso and CNH each filed a petition for a writ of certiorari seeking review by the U.S. Supreme Court.
On November 6, 2006 the U.S. Supreme Court denied El Paso’s and CNH’s petitions and the matter was returned to the
district court. After extensive discovery, El Paso and the plaintiffs filed summary judgment motions. CNH filed a summary
judgment motion on the “alter ego” and VEBA release issues.
On March 7, 2008, the district court entered several orders. First it denied El Paso’s motion for summary judgment with
respect to the benefits vesting issue, and granted plaintiff’s summary judgment motion with respect to liability. The court
also denied CNH’s motion for summary judgment with respect to the “alter ego” basis of liability, effectively ruling for the
plaintiffs on that issue. The court denied CNH’s motion for summary judgment on the VEBA release issue. The VEBA
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release issue was tried the week of January 26, 2009. On October 27, 2009, the court ruled against CNH on the VEBA
release issue.
In conjunction with the above litigation, CNH filed a summary judgment motion with the district court asking the court to
enforce the terms of a Reorganization Agreement, which CNH contended obligated El Paso to defend CNH and indemnify
it for all expenses and losses arising from this lawsuit. The court granted that motion and the decision has been upheld on
appeal by the Sixth Circuit Court of Appeals. Based on CNH’s rights to indemnification under the Reorganization
Agreement now being final, CNH and El Paso reached a settlement, whereby El Paso fully repaid CNH the amounts
previously paid to the retirees and committed to pay CNH’s costs in litigating the “alter ego” issue and the VEBA release
issue going forward.
In November 2011, the district court approved a settlement of the Yolton case. The settlement agreement between
plaintiffs and El Paso provides that El Paso will pay certain retiree benefits to the class and that the benefits are
guaranteed by El Paso’s corporate parent, EI Paso Corporation, who is obligated to provide security for its guaranty in the
event its debt falls below investment grade. However, CNH could be responsible for certain payments and obligations in
the future if the El Paso entities default on their obligations under the settlement. In connection with the final approval of
the Yolton case, CNH agreed to dismiss its lawsuit against the UAW. CNH can reinitiate its claims if certain events and
defaults occur under the Yolton settlement. On October 17, 2011, it was announced that El Paso Corporation would be
acquired by Kinder Morgan Inc. The acquisition is not expected to affect the El Paso entities’ performance or guarantees
of their settlement obligations. Despite the fact that El Paso has been finally determined to be financially responsible for
the benefits which the plaintiffs seek, CNH could be exposed to losses if El Paso and its corporate parent(s) at some
future time are unable to fulfill their indemnification obligations to CNH under the Reorganization Agreement. CNH is
unable to quantify the amount of the health care obligations and cannot estimate the possible loss or range of losses on
this matter as El Paso administers the health care plan. It is possible that such losses could be material.
ACT: Three of CNH’s subsidiaries, New Holland Limited, New Holland Holding Limited and CNH (U.K.) Limited (together
“CNH U.K.”), are claimants in group litigation (Class 2 and Class IV) against the Inland Revenue of the United Kingdom
(“Revenue”) arising out of the discrimination under EU law in the advance corporation tax (“ACT”) regime operated by the
Revenue between 1974 and 1999. The test claimant, Pirelli, was unsuccessful in both the High Court and the Court of
Appeal during 2010 on the Class 2 and Class IV arguments, with no granting of an appeal to the Supreme Court allowed
by the Court of Appeal. The judgment in the Court of Appeal is therefore final.
In December 2010 CNH UK repaid all monies received from the Revenue. The total repayment to the Revenue by CNH
UK was £24.7 million including simple interest. As CNH UK had already provided in full for these repayments no further
adverse impact on the results of CNH UK arose.
Oil for Food: In February 2006, Fiat S.p.A. received a subpoena from the SEC Division of Enforcement with respect to a
formal investigation entitled In the Matter of Certain Participants in the Oil for Food Program. This subpoena requested
documents relating to certain Fiat S.p.A. and CNH-related entities with respect to matters relating to the United Nations
Oil-for-Food Program with Iraq (the “OFF Program”). A substantial number of companies, including certain CNH
subsidiaries, were mentioned in the “Report of the Independent Inquiry Committee into the United Nations Oil-for-Food
Programme” issued in October 2005 (the “Report”). The Report alleged that these companies engaged in transactions
under the OFF Program that involved inappropriate payments. There are two CNH subsidiaries named in the Report: CNH
Italia S.p.A. and Case France (now known as CNH France).
On December 22, 2008, Fiat and CNH reached a settlement with the SEC and U.S. Department of Justice (“DOJ”) to
resolve potential civil and criminal claims arising from their subsidiaries’ participation in the OFF Program. Under the terms
of the settlement, Fiat and CNH collectively agreed to pay a $7.0 million criminal penalty, a $3.6 million civil penalty, and
disgorgement of $5.3 million in profits (plus $1.9 million in prejudgment interest). Fiat paid these amounts in early January
2009 and CNH reimbursed Fiat an amount of $8.3 million. CNH neither admitted nor denied the allegations of the SEC,
but agreed to be enjoined from violating certain provisions of federal law in the future. As part of the DOJ settlement,
criminal complaints were filed against CNH Italia and CNH France, charging them with conspiracy to violate the books and
records provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”). Pursuant to a deferred prosecution agreement
entered on the same date, the DOJ agreed to drop these charges upon the expiration of a three-year term, provided CNH
meets certain obligations such as cooperating with the DOJ and maintaining an adequate FCPA compliance program. The
DOJ is in the process of dropping these charges as the deferred prosecution agreement has expired.
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Cheron: In connection with a logistics Services Agreement among CNH Global N.V., PGN Logistics Ltd. (“PGN”) and
certain affiliated companies, PGN entered into a subcontract with Transport Cheron N.V. (“Cheron”). The subcontract was
signed by Cheron and by PGN purportedly “in the name and on behalf of” CNH Global N.V. (“CNH Global”). CNH Global
contends that it is not a party to the subcontract and that PGN was not authorized to sign the subcontract on its behalf. In
early 2005 and as a result of the termination of the Services Agreement Cheron filed suit in the District Court in Haarlem,
the Netherlands against both PGN and CNH Global for breach of the subcontract and for preliminary relief. In March 2005
the district court issued an order requiring CNH Global to pay €1.5 million ($2.4 million) to Cheron as a preliminary
payment of lost profit damages. CNH Global appealed this decision to the Court of Appeals in Amsterdam, and, on
November 24, 2005, the Court of Appeals rendered its decision in effect holding that liability had not been demonstrated
with a degree of certainty sufficient to warrant a preliminary award of damages. At that point, the matter returned to the
district court for a determination of liability.
On September 24, 2008, the district court issued its interim award with respect to liability. The district court held that CNH
Global is liable under the subcontract for damages that Cheron suffered as a result of the alleged breach of the
subcontract. Cheron has alleged damages in the amount of approximately €21 million ($34 million). CNH Global believes
that the damages alleged by Cheron are improperly calculated and, as a result, are materially overstated. Moreover, CNH
Global believes the district court interim award with respect to liability is incorrect. The damages phase of the case is
currently pending. On July 14, 2010 the District Court in Haarlem issued an interim judgment on damages in effect
rejecting Cheron’s arguments in favor of a materially longer time period during which lost profit damages accrued. CNH
continues to believe Cheron’s damages claim is materially inflated and unsustainable and will vigorously defend this
matter. Management has considered relevant facts in connection with this matter and has established what it believes to
be a reasonable accrual. It is possible that the actual loss may exceed the amount accrued but, in the Company’s view,
any such excess is unlikely to be material.
Ligon: On February 5, 2009, a lawsuit was filed by Ligon Capital LLC and HTI LLC (a former CNH supplier) against CNH
America LLC. Plaintiffs allege fraudulent suppression and breach of contract resulting from termination of HTI as a CNH
supplier in June 2008. Ligon and HTI claim that CNH defrauded them by failing to disclose plans to source from other
suppliers and induced Ligon to purchase and process unique components to fulfill CNH’s forecasted hydraulic cylinder
orders. The case was tried in Birmingham, AL in December 2011. At trial, plaintiffs sought $9.5 million in compensatory
damages consisting of unpurchased inventory, capital improvements, expedited freight charges and overtime allegedly
incurred to meet CNH’s forecasted orders, and lost profits. Plaintiffs also sought punitive damages of $25 million. CNH
argued at trial that, in the absence of an express contract, it had no duty to disclose its plans to source from other
suppliers and any reliance upon forecasted orders (as opposed to firm orders) was unreasonable, because forecasted
orders were subject to modification and cancellation. CNH also disputed the amount of alleged damages as being
overstated and vigorously defended the case before and during trial. On December 16, 2011, the jury returned its verdict,
finding for CNH on the breach of contract claim and for plaintiffs on the fraudulent suppression claim. The jury awarded
plaintiffs $3.8 million in compensatory damages and $7.6 million in punitive damages. CNH has filed for post-trial relief as
to the verdict and the damages awards. Management has considered relevant facts in connection with this matter and has
established what it believes to be a reasonable accrual.
Liability statements
CNH has affirmed that it will provide ongoing financial support to the following subsidiaries:
CNH Italia S.p.A.
CNH Baumaschinen GmbH
New Holland Tractor Ltd. N.V.
CNH Deutschland GmbH
New Holland Kobelco Construction Machinery S.p.A.
New Holland Holding Ltd.
Steyr Center Nord GmbH
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11. Accountant fees and services
Ernst & Young LLP, the member firms of Ernst & Young and their respective affiliates (collectively, the “Ernst & Young
Entities”) were appointed to serve as CNH's independent registered public accounting firm for the year ended
December 31, 2011. Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates
(collectively, the “Deloitte Entities”) were appointed to serve as our independent registered public accounting firm for the
year ended December 31, 2010. We incurred the following fees from the Ernst & Young Entities and the Deloitte Entities
for professional services for the years ended December 31, 2011 and 2010, respectively:
Audit Fees
2011
2010
$4,893,000
$8,078,000
1,575,200
1,557,000
330,000
12,000
$6,798,200
$9,647,000
Audit-Related Fees
Tax Fees
Total
The fees incurred from Ernst & Young Netherlands for the 2011 audit of CNH Global N.V. were approximately $16,000.
The fees incurred from Deloitte Netherlands for the 2010 audit of the CNH Global N.V. corporate financial statements were
approximately $30,000.
12. Major subsidiaries
Below is a list of major subsidiaries directly or indirectly owned by CNH as of December 31, 2011.
Company Name
Country
Banco CNH Capital S.A.
Brazil
100
BLI Group, Inc.
USA
100
Blue Leaf I.P., Inc.
USA
100
Blue Leaf Insurance Company
USA
100
Case Brazil Holdings, Inc.
USA
100
Case Canada Receivables, Inc.
Canada (Alberta)
100
Case Construction Equipment, Inc.
USA
100
Case Construction Machinery (Shanghai) Co., Ltd.
China
100
Case Credit Holdings Limited
USA
100
Case Dealer Holding Company LLC
USA
100
Case Equipment Holdings Limited
USA
100
Case Equipment International Corporation
USA
100
Case Europe S.a.r.l.
France
100
98
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Percentage
Company Name
Country
Percentage
Case Harvesting Systems GmbH
Germany
100
Case IH Agricultural Equipment, Inc.
USA
100
Case IH Machinery Trading (Shanghai) Co. Ltd.
China
100
Case India Limited
USA
100
Case International Marketing, Inc.
USA
100
Case LBX Holdings, Inc.
USA
100
Case New Holland Construction Equipment (India) Private LimitedIndia
100
Case New Holland Inc.
USA
100
Case New Holland Machinery (Harbin) Limited
China
100
Case United Kingdom Limited
United Kingdom
100
CNH Administradora de Serviços Ltda.
Brazil
100
CNH America LLC
USA
100
CNH Argentina S.A.
Argentina
100
CNH Asian Holding Limited N.V.
Belgium
100
CNH Australia Pty Limited
Australia
100
CNH Baumaschinen GmbH
Germany
100
CNH Belgium N.V.
Belgium
100
CNH Canada, Ltd.
Canada (Ontario)
100
CNH Capital America LLC
USA
100
CNH Capital Australia Pty Limited
Australia
100
CNH Capital Benelux N.V.
Belgium
100
CNH Capital Canada Insurance Agency Ltd.
Canada (Alberta)
100
CNH Capital Canada Ltd.
Canada (Alberta)
100
CNH Capital Equipment Loan and Lease Facility LLC
USA
100
CNH Capital Insurance Agency Inc.
USA
100
CNH Capital Finance LLC
USA
100
CNH Capital LLC
USA
100
99
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Company Name
Country
CNH Capital Operating Lease Equipment Receivables LLC
USA
100
CNH Capital Receivables LLC
USA
100
CNH Capital U.K. Ltd.
United Kingdom
100
CNH Componentes, S.A. de C.V.
Mexico
100
CNH Danmark A/S
Denmark
100
CNH Deutschland GmbH
Germany
100
CNH Engine Corporation
USA
100
CNH Europe Holding S.A.
Luxembourg
100
CNH Financial Services A/S
Denmark
100
CNH Financial Services GmbH
Germany
100
CNH Financial Services S.A.S.
France
100
CNH France
France
100
CNH International S.A.
Switzerland
100
CNH Italia S.p.A.
Italy
100
CNH Latin America Ltda.
Brazil
100
CNH Maquinaria Spain, S.A.
Spain
100
CNH Osterreich GmbH
Austria
100
CNH Polska Sp. z o.o.
Poland
100
CNH Portugal Comercio de Tractores e
Maquinas Agricolas, Ltda.
Portugal
100
CNH Receivables LLC
USA
100
CNH Services S.r.l
Italy
100
CNH Services (Thailand) Limited.
Thailand
100
CNH (Shanghai) Equipment R&D Co., Ltd.
China
100
CNH Trade N.V.
The Netherlands
100
CNH U.K. Limited
United Kingdom
100
CNH Wholesale Receivables LLC
USA
100
100
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Percentage
Company Name
Country
Farmers New Holland, Inc.
USA
100
Farmpower Pty. Limited.
Australia
100
Fermec North America, Inc.
USA
100
Fiatallis North America LLC
USA
100
Fiat Switzerland S.A.
Switzerland
100
Flagship Dealer Holding Company, LLC
USA
100
Flexi-Coil (U.K.) Limited
United Kingdom
100
HFI Holdings, Inc.
USA
100
International Harvester Company
USA
100
J.I. Case Company Limited
United Kingdom
100
Limited Liability Company “CNH Parts and Service Operations”
Russia
100
MBA AG
Switzerland
100
New Holland Agricultural Equipment S.p.A.
Italy
100
New Holland Australia Pty Ltd
Australia
100
New Holland Construction Equipment S.p.A.
Italy
100
New Holland Credit Company, LLC
USA
100
New Holland Excavator Holdings LLC
USA
100
New Holland Holding Limited
United Kingdom
100
New Holland Holding (Argentina) S.A.
Argentina
100
New Holland Ltd.
United Kingdom
100
New Holland Tractor Ltd. N.V.
Belgium/U.K.
100
O&K Hilfe GmbH
Germany
100
Pryor Foundry, Inc.
USA
100
Receivables Credit II Corporation
Canada (Alberta)
100
Steyr Center Nord GmbH
Austria
100
Sunrise Tractor & Equipment Inc.
USA
100
101
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Percentage
Company Name
Country
New Holland Fiat (India) Pvt. Ltd.
India
96
New Holland Kobelco Construction
Machinery S.p.A.
Jackson New Holland, Inc.
Italy
96
USA
94
Mid State New Holland, Inc.
USA
88
Northside New Holland, Inc.
USA
70
Kobelco Construction Machinery America LLC
USA
65
Shanghai New Holland Agricultural
Machinery Corporation Limited
UzCaseMash LLC
China
60
Uzbekistan
60
Ridgeview New Holland, Inc.
USA
57
CNH-KAMAZ Commercial B.V.
The Netherlands
51
LLC CNH-KAMAZ Commerce
Russia
51
UzCaseagroleasing LLC
Uzbekistan
51
UzCaseService LLC
Uzbekistan
51
UzCaseTractor LLC
Uzbekistan
51
102
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Percentage
OTHER INFORMATION
1)
INDEPENDENT AUDITOR'S REPORT
The report of the Company’s independent auditor, Ernst & Young Accountants, LLP, is set forth following this Annual
Report.
2)
APPROPRIATION OF PROFIT
According to article 20 of the Articles of Association of CNH Global NV the Company’s shareholders may establish
reserves out of its annual profits at a general meeting of shareholders, subject to a proposal of its board of directors. The
shareholders have discretion as to the use of that portion of the Company’s annual profits remaining after the
establishment of reserves and payment of dividends on the preference shares, if any, for distribution of dividends on the
ordinary shares only.
The Board of Directors may recommend to the shareholders that they resolve at the annual general meeting that the
Company pay dividends out of its share premium account or out of any other reserve available for shareholder
distributions under Dutch law, provided that payment from reserves may only be made to the shareholders who are
entitled to the relevant reserve upon its dissolution. However, the Company may not pay dividends if the payment would
reduce shareholders’ equity to an amount less than the aggregate share capital plus required statutory reserves. The
Board of Directors may resolve that the Company pay interim dividends, but the payments are also subject to these
statutory restrictions. If a shareholder does not collect any cash dividend or other distribution within six years after the date
on which it became due and payable, the right to receive the payment reverts to the Company.
At any general meeting of shareholders, the Company’s shareholders may declare dividends in the form of cash (in U.S.
Dollars), ordinary shares or a combination of both.
In the event of dissolution or liquidation, whatever remains of the Company’s equity after all its debts have been
discharged will be distributed to the holders of ordinary shares in proportion to the aggregate nominal amount of their
ordinary shares.
The 2011 annual report is approved at the general meeting of shareholders held on April 3, 2012. The general meeting of
shareholders has determined the appropriation of profit in accordance with the proposal being made by the Board of
Directors not to declare any dividend in 2012.
The Board of Directors proposes, awaiting the decision of the shareholders, that the result for the financial year 2011
amounting to $1,038 million should be transferred to reserves without payment of dividend.
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INDEPENDENT AUDITOR'S REPORT
To: shareholders of CNH Global N.V.
Report on the financial statements
We have audited the accompanying financial statements 2011 of CNH Global N.V., Amsterdam. The financial statements
include the consolidated financial statements and the company financial statements. The consolidated financial
statements comprise the consolidated statement of financial position as of December 31, 2011, the consolidated
statements of income and comprehensive income, changes in equity and cash flows for the year then ended, and notes,
comprising a summary of the significant accounting policies and other explanatory information. The company financial
statements comprise the company balance sheet as of December 31, 2011 the company profit and loss account for the
year then ended and the notes, comprising a summary of the accounting policies and other explanatory information.
Management's responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch
Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Dutch Civil
Code. Furthermore management is responsible for such internal control as it determines is necessary to enable the
preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion with respect to the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position of CNH Global N.V.
as of December 31, 2011 its result and its cash flows for the year then ended in accordance with International Financial
Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code.
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Opinion with respect to the company financial statements
In our opinion, the company financial statements give a true and fair view of the financial position of CNH Global N.V. as
of December 31, 2011 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil
Code.
Report on other legal and regulatory requirements
Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to
report as a result of our examination whether the
management board report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this
Code, and whether the information as required under Section 2:392 sub 1 at b-h has been annexed. Further we report that
the management board report, to the extent we can assess, is consistent with the financial statements as required by
Section 2:391 sub 4 of the Dutch Civil Code.
Rotterdam, April 2, 2012
Ernst & Young Accountants LLP
/s/ J.J.J. Sluijter
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